Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 1: top stories in the coming week from our Daybreak anchors
Speaker 1: all around the world, and straight ahead on the program
Speaker 1: CPI PPI Retail Sales. We've got a busy week of
Speaker 1: economic data ahead. I'm Tom Busby in New York. I'm
Speaker 1: Stephen Caren in London, where the UK's Chancellor is facing
Speaker 1: a chorus of calls for tax cuts and more spending
Speaker 1: in his budget. I'm Brian Curtis in Hong Kong the
Speaker 1: implications of Apple supplier Home High setting up a plant
Speaker 1: in India. I'm Joe Matthew in Washington. We'll look ahead
Speaker 1: of the first Republican primary on the calendar. That's all
Speaker 1: straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three,
Speaker 1: on New York, Bloomberg ninety nine one, Washington, DC, Bloomberg
Speaker 1: one oh six one, Boston, Bloomberg nine sixty, San Francisco,
Speaker 1: DAB Digital Radio, London, Sirius XM one nineteen and around
Speaker 1: the world on Bloomberg Radio dot Com and via the
Speaker 1: Bloomberg Business App. Good day to you. I'm Tom Busby,
Speaker 1: and we've got February jobs report on Friday, and this
Speaker 1: week the economic data does not slow down. We'll get CPI,
Speaker 1: PPI and retail sales for February. For more, I'm joined
Speaker 1: by Ira Jersey, Bloomberg Intelligence senior rate strategists, and Jess Menton,
Speaker 1: she's deputy team leader for US Equities for Bloomberg News. Ira,
Speaker 1: We're going to start with that February jobs report that
Speaker 1: we got on Friday. Another strong headline number, three hundred
Speaker 1: eleven thousand jobs added, more than forecast. The news, though,
Speaker 1: was mixed, the unemployment rate moving two notches higher, and
Speaker 1: although wage growth did slow, it still moved up, ramping
Speaker 1: up inflationary pressures. Let's hear what President Biden had to
Speaker 1: say about the report. This may be the part of
Speaker 1: pleased me the most about the report of jobs reports.
Speaker 1: People who've been staying out of the job market are
Speaker 1: moving back in, beginning to move back in. Jobs are available, Okay, Ira.
Speaker 1: The Federal Reserve says it all the time. The decision
Speaker 1: policymakers will come to on interest rates will be data driven.
Speaker 1: What does this data mean for the Federal Reserve. Yeah,
Speaker 1: it means a little bit more of the same. I
Speaker 1: think that the fear that they Fed was going to
Speaker 1: hike fifty basis points is still on the table, but
Speaker 1: not not because of just this number, but because of
Speaker 1: how strong the January data was. I think that the
Speaker 1: Fed is going to be a little bit happier with
Speaker 1: some of the some of the numbers within the payrolls
Speaker 1: report that we received on Friday. But but I think
Speaker 1: importantly this week's data, as you mentioned at the top
Speaker 1: of the at the top of the show, it's going
Speaker 1: to it's going to matter way more so the CPI
Speaker 1: data on Tuesday, as well as the PPI data later
Speaker 1: in the week, and then retail sales of course is
Speaker 1: going to be huge as well. And keep in mind,
Speaker 1: we get this data right when the Federal Reserve goes
Speaker 1: into their quiet period, so we're not going to hear
Speaker 1: a lot of reaction from members of the Federal Reserve
Speaker 1: by the time we get the numbers until that we
Speaker 1: actually get the release of the meeting minutes, meeting statement
Speaker 1: on March twenty second. All right, the FED meets. It's
Speaker 1: less than two weeks away, the twenty first, the twenty second.
Speaker 1: Already after that February jobs report, swaps are talking about
Speaker 1: the chance of a fifty basis point hike now only
Speaker 1: at fifty percent, so a lot of people counting on
Speaker 1: a smaller one. Is anybody counting on a supersized one
Speaker 1: even bigger than fifty basis points? Yeah? I think that
Speaker 1: given the volatility and some of the issues that we're
Speaker 1: having in the financial sector right now that really affected
Speaker 1: rates late in the week last week, you know, moving
Speaker 1: two year yield to twenty five basis points because of
Speaker 1: what went on with SVB and some of the other
Speaker 1: financial institutions in the equity market. That seventy five is
Speaker 1: at you know, almost a zero percent probability at this point,
Speaker 1: I think. But so the question still remains fifty or
Speaker 1: twenty five. You know, you get somewhat slower PPI data,
Speaker 1: somewhat slower retail sales data, and then you know, fifty
Speaker 1: five probably becomes more likely, you know, the probability that
Speaker 1: that chance that you mentioned of a fifty or twenty
Speaker 1: five that keeps bouncing around massively, so that the market
Speaker 1: is still very skittish as and and really uncertain about
Speaker 1: what the Fed's move is going to be, just because
Speaker 1: this coming week's data is so incredibly important to that decision.
Speaker 1: And Jay Powell made that exceptionally clear over during his
Speaker 1: testimony last week before the House Financial Services Committee and
Speaker 1: the Senate Banking Committee. And about that data good news.
Speaker 1: We have Jess right here, and Jess, why don't we
Speaker 1: talk about Well, first we're going to get CPI right Tuesday,
Speaker 1: then PPI, and then we'll get to retail sales. But
Speaker 1: let's talk about those two and the difference and what
Speaker 1: you're looking forward to seeing. Well, the big thing, and
Speaker 1: as you know, the big focus is always on consumer prices,
Speaker 1: but producer prices might arguably just be as important. And
Speaker 1: the reason is when I'm talking with my sources, they
Speaker 1: like to look toward that as far as what do
Speaker 1: you input costs look like? And they look to that
Speaker 1: as far as maybe we'll see the signs of relief
Speaker 1: there before they start filtering into consumer prices. So I've
Speaker 1: been tracking the CPI PPI spread, and this is something
Speaker 1: Gina Martin Adams of Bloomberg Intelligen her team crunch the
Speaker 1: numbers very frequently on in the spread actually turned positive
Speaker 1: for the first time in December in two years. And
Speaker 1: the reason that matters is that bodes well for corporate
Speaker 1: margins and then in turn eventually also for stock prices,
Speaker 1: so you are seeing those glimmers of hope there on
Speaker 1: the producer prices side, even though in January is data
Speaker 1: we saw a tick up a bit, but if we
Speaker 1: can see that trend continue. When I'm speaking with my sources,
Speaker 1: they feel like that will eventually filter even more so
Speaker 1: toward consumer prices. So that's going to be a big
Speaker 1: focus next week as well, in addition to just the
Speaker 1: headline number on CPI. And the headline number is we're
Speaker 1: looking at a four tenth of one percent increase, correct,
Speaker 1: and that is lower than January it is exactly, and
Speaker 1: then year over year that would be at six percent.
Speaker 1: I know we focus more on month over month to
Speaker 1: see that trend. But something that also is important if
Speaker 1: you look at the past eight hiking cycles of the
Speaker 1: Federal Reserve, they didn't stop until the terminal rate was
Speaker 1: above CPI, So we still have a bit of a
Speaker 1: gap there, but it's beginning to narrow more. So the
Speaker 1: question is how much further, obviously would the Federals or
Speaker 1: have to go. If you even just look at the
Speaker 1: bank side of things, Citigroup and Goldman sacks they had
Speaker 1: actually lifted their forecast recently that they're expecting fifty basis
Speaker 1: points at this next meeting, But JP Morgan and Bank
Speaker 1: of America are still holding that view of twenty five
Speaker 1: basis points. But a lot of that does hinge on
Speaker 1: what that CPI data is going to look like next week.
Speaker 1: So that's going to be really key to see how
Speaker 1: do these banks views change potentially on what that number
Speaker 1: does look like and IRA, how does that factor in
Speaker 1: with your thinking on what the FED is thinking? Yeah,
Speaker 1: so I think it's important to note that you know
Speaker 1: that the FED has tended to hike until quote unquote
Speaker 1: the federal funds rate has been positive. But keep in
Speaker 1: mind that the indicator that they look at form for
Speaker 1: the inflation gates, their preferred measure is the PC to Flater. So,
Speaker 1: and the gap between CPI and PC has widened quite
Speaker 1: a lot. You used to be around forty five fifty
Speaker 1: basis points. Now it's over one hundred basis points. So so,
Speaker 1: so the fact that you have this this big divide
Speaker 1: between those two inflation measures UM you know, you know,
Speaker 1: I think is important because if if UM, if PC,
Speaker 1: the PC deflator remains around five point four percent, then
Speaker 1: if the Federal Reserve hikes another seventy five basis points.
Speaker 1: They're there, whereas if if the Federal Reserve were to
Speaker 1: only UM were to look at CPI, they might have
Speaker 1: to actually hike much higher, because you're talking about, you know,
Speaker 1: six percent, a six percent CPI number this week, assuming
Speaker 1: that we get it now. Importantly, a lot of the
Speaker 1: inflation data that we look at, and if you look
Speaker 1: at CPI on that three month rolling basis, cpis come
Speaker 1: off quite a lot. And when you look at and
Speaker 1: when you look at core goods in particular, they're actually
Speaker 1: growing at a negative rate. So so the good sector
Speaker 1: inflation is over, it's really going to be you know,
Speaker 1: where is how does the services sector inflation really ramp up?
Speaker 1: Particularly the what j Powell has said is kind of
Speaker 1: the Fed's new UM measure that they really look at,
Speaker 1: which is core services excuting housing. So around forty percent
Speaker 1: of CPI is this core services, that services excluding energy services.
Speaker 1: So if those data come out very strong, then the
Speaker 1: Fed reserved while they might only go twenty five basis points.
Speaker 1: Remember we also get the Summary of Economic Projections, which
Speaker 1: includes that dot plot. So it's possible that if inflation
Speaker 1: seems to be stickier than the FED is hoping, then
Speaker 1: those dots could go higher and we could see a
Speaker 1: higher terminal rate being priced in. So again, like instead
Speaker 1: of five and a half percent, maybe it's five and
Speaker 1: three quarters or six percent winds up getting placed in
Speaker 1: those dot plots, and I think that the market will
Speaker 1: react to any significant uptick in the dots this month.
Speaker 1: I'm glad you brought up the dot plots because on
Speaker 1: the equity side of things, when I've been speaking with
Speaker 1: my sources, they feel like, especially portfolio managers, they feel
Speaker 1: like the equity market can withstand a potential peak terminal
Speaker 1: rate of around five and a half percent, maybe even
Speaker 1: a little bit higher. But something that spooks them is
Speaker 1: more or when it gets potentially closer if it were
Speaker 1: to happen at six percent or higher. But they feel
Speaker 1: like when you're looking at where the market is trying
Speaker 1: to figure that out. At the end of January it
Speaker 1: was just below five percent. Now it's those projections trying
Speaker 1: to figure out maybe that's around five and a half percent.
Speaker 1: Barclays was actually thinking that the median dot plot could
Speaker 1: potentially rise from five point one percent, which it was
Speaker 1: in December, to potentially five point four percent so even
Speaker 1: if we do see that happen with the Federal Reserve,
Speaker 1: when it comes to the equity markets, they're arguing that
Speaker 1: if that is where the Fed does go, you might
Speaker 1: not necessarily see some sort of sell off in the
Speaker 1: broader equity markets because that's kind of what they've been
Speaker 1: pricing in. But if you see sort of a dramatic
Speaker 1: change there where maybe it's above five and a half percent,
Speaker 1: that's where potentially we could see some bigger movements and
Speaker 1: bigger swings to the downside in stock prices. One other
Speaker 1: big data point coming out this week retail sales. Retail sales,
Speaker 1: the survey says point one percent month over month increase.
Speaker 1: At least it's an increase nothing like what we saw
Speaker 1: in ja January. Well, especially because that number in January
Speaker 1: came in a lot stronger than expected than even in December.
Speaker 1: Typically you would you would see that in December because
Speaker 1: that ties into holiday sales, but that also carried over
Speaker 1: into January, so some of that potentially has arguably been
Speaker 1: maybe it's due to seasonality factors, But if we do
Speaker 1: begin to see that pull back, that could actually potentially
Speaker 1: bode well for equity prices because they kind of want
Speaker 1: to see this sweet spot where obviously you want the
Speaker 1: consumer spending because that's more than two thirds of what's
Speaker 1: pushing the economy and growing the economy, but not spending
Speaker 1: so much to where this is keeping the inflation equation
Speaker 1: a problem for the Federal Reserve. So it's pulling it
Speaker 1: back enough to where you feel like what the Federal
Speaker 1: Reserve has been doing is beginning to filter into the economy,
Speaker 1: but not so much to where you are starting to
Speaker 1: worry about the economy going into a recession. I re jest.
Speaker 1: Thanks so much for joining us. Coming up on Bloomberg
Speaker 1: Daybreak weekend, we had to London to preview the UK
Speaker 1: Chancellor's upcoming budget proposal. I'm Tom Busby and this this
Speaker 1: is Bloomberg Daybreak Weekend, our global look at the top
Speaker 1: stories for investors in the coming week. I'm Tom Busby
Speaker 1: in New York. Up later in our program, Apple's partner
Speaker 1: Fox con plans to invest about seven hundred million dollars
Speaker 1: on a new plant in India, but first in the UK.
Speaker 1: The Chancellor, Jeremy Hunt will unveil his tax and spending
Speaker 1: plans in the coming days, with the business community calling
Speaker 1: on him to incentivize investment and tackle skills shortages. This
Speaker 1: is the UK economy narrowly avoided recession last year. For more,
Speaker 1: let's head to London and bring in Bloomberg Daybreak Europe
Speaker 1: anchor Stephen Carroll to Jeremy Hunt's downplayed hopes of any
Speaker 1: major large ast from the UK government in this budget,
Speaker 1: but an improvement in the economic situation is giving him
Speaker 1: a bit more room to maneuver. He faces calls for giveaways,
Speaker 1: including freezing fuel jusy improving public sector pay, something he's considering,
Speaker 1: according to Bloomberg, reporting tax breaks to boost business investment
Speaker 1: on Bloomberg Radio, We've been discussing this with Tina Lee,
Speaker 1: Deutsche Banks UK and Ireland chief executive. For me, it's
Speaker 1: really around how do you create an environment that attracts
Speaker 1: investment whilst at the same time dealing with some very
Speaker 1: real issues that are not yet resolved. And we've seen
Speaker 1: the news around the FED and making sure that inflation
Speaker 1: is something which needs to be overcome and that's true
Speaker 1: here in the UK as well. So more broadly, I
Speaker 1: think what I'll be looking for is what happens around
Speaker 1: public sector pay, because again that will feed through into
Speaker 1: the inflationary numbers and ultimately set the tone I think
Speaker 1: for the latter half of the year because remember I
Speaker 1: mean we do have a backdrop of the Northern Ireland Protocol, yes,
Speaker 1: and whilst that not has yet been signed, I think
Speaker 1: we're all optimistic that will happen. So that's Tina Lee
Speaker 1: from Deutsche Bank Bloomberg's New UK kind of as Danhanson
Speaker 1: with being now from more on this down looking ahead
Speaker 1: then to the budgers, what source of fiscal headroom? How
Speaker 1: much money does Jeremy Hunt have to play with? Yeah,
Speaker 1: so I think it's the way to think about it
Speaker 1: is sort of through two lenses. One is in the
Speaker 1: short term, So in the short term he's got a lot.
Speaker 1: So borrowing has come in significantly under what the OBR
Speaker 1: was expecting, somewhere in the region of thirty to forty
Speaker 1: billion pounds. So this fiscal year and next fiscal year
Speaker 1: we think borrowing will be around that much lower. So
Speaker 1: that's a lot. But what's important for his fiscal rule,
Speaker 1: So the Chancellor wants debt to be falling as a
Speaker 1: share of GDP in the final year of the forecast period,
Speaker 1: which is twenty twenty seven twenty eight against that target.
Speaker 1: In November he had nine billion pounds. We think he
Speaker 1: might have about double that this time, so an extra
Speaker 1: eight nine billion pounds. And I think what's really important.
Speaker 1: So the point is that the good news this year
Speaker 1: will dissipate over the course of the forecast period and
Speaker 1: there will be there'll be a little pot of money
Speaker 1: at the end. What I would say is that in
Speaker 1: the contexts of a three trillion pound economy, which is
Speaker 1: how big the UK will be, nine million pounds is peanuts,
Speaker 1: So there isn't there is some months there might be
Speaker 1: a bit of money there, but to really go ahead,
Speaker 1: and we've been hearing about potential for tax cuts, but
Speaker 1: to really go ahead and do something meaningful, he hasn't
Speaker 1: really got the headroom to do that just yet. So
Speaker 1: I think, I mean, we'll talk about the policy he
Speaker 1: might focus on, but I think, you know, I think
Speaker 1: it's going to be a lot of it's going to
Speaker 1: be around near term temporary measures that he's going to use.
Speaker 1: He's going to use that near term headroom and probably
Speaker 1: bank that money just and use it closer to the election.
Speaker 1: What's the broader economic backdrop here? We had been told
Speaker 1: them in the Bank of England gave us dire forecast
Speaker 1: for a session in the UK. Things are looking a
Speaker 1: little bit better now, how are they looking for this year?
Speaker 1: So I think they're looking they're looking a lot better.
Speaker 1: I mean, I think we've spoken this year and the
Speaker 1: key thing that's happened, well, there are two key things
Speaker 1: that have and first is the data is just show
Speaker 1: more momentum, more resilience. And the second thing, as we
Speaker 1: all know, we've had this big fall in gas prices
Speaker 1: and those two things combined I think will mean that
Speaker 1: the OBR will predict it probably will still predict a recession,
Speaker 1: but a very very shallow one and probably only lasting
Speaker 1: in the first half of this year, with growth or
Speaker 1: some very very minimal growth returning in the second half
Speaker 1: of the year. And that's obviously a very different pictures
Speaker 1: what they were talking about in November, which was a
Speaker 1: peach trough fall in GDP of a little over two percent.
Speaker 1: You know, if it wouldn't surprise me if the peach
Speaker 1: troth fall in GDP was less than one percent now,
Speaker 1: so cutting the side of the recession in half. So
Speaker 1: the news has been good on the economy, particularly in
Speaker 1: the near term I think the question for the public
Speaker 1: finances though, isn't just about the near term picture. It's
Speaker 1: about the medium term picture as well, and that feeds
Speaker 1: into the questions around productivity growth, around labor force participation,
Speaker 1: and actually there which goes back to why we don't
Speaker 1: think good news on the public finances will last. We
Speaker 1: think the OBI will probably take a slightly dimer view
Speaker 1: of the UK's medium term prospects. And what that does,
Speaker 1: how that interacts with the fiscal picture is that it
Speaker 1: means that tax receipts don't grow as fast, and it
Speaker 1: means the fiscal picture isn't quite as rosy looking when
Speaker 1: you look at the medium term, which is where his
Speaker 1: fiscal target sits. So that's something to watch out when
Speaker 1: we get the Office for Budget Responsibilities report as well,
Speaker 1: which is of course the government's fiscal watch dog. Is
Speaker 1: there anything then, given that context, is there I think
Speaker 1: the Chancellor can do to try and booth growth at
Speaker 1: this stage or is it really just only the short
Speaker 1: term prospects that he can look at. He goes to again,
Speaker 1: I was split into two buckets. One is the near
Speaker 1: term picture. We know he wants to haver inflation. We
Speaker 1: know that's one of the government's goals, So that means
Speaker 1: you want to you don't want to do anything that's
Speaker 1: going to put that at risk. I think as things stand,
Speaker 1: the inflation picture has probably improved a little bit as well.
Speaker 1: In the UK, we've had data out that suggests it's
Speaker 1: it's a little bit. The underlying picture is a little
Speaker 1: bit weaker than most to commonistferre expecting. Obviously, the falling
Speaker 1: gas prices has a big effect as well going through
Speaker 1: the course of this year, and one thing I think
Speaker 1: he'll do is keep the cap on the unit cost
Speaker 1: of energy prices at two and a half thousand pounds
Speaker 1: rather than really important for household exactly. So that's that's
Speaker 1: one thing. That's that's But he's he's he's definitely going
Speaker 1: to be focused, I think, at least at least at
Speaker 1: this point. And taking into account the fact he doesn't
Speaker 1: have a huge amount of headroom to play with for
Speaker 1: sort of medium term tax cuts that affect the medium
Speaker 1: term picture, I think he's just going to very much
Speaker 1: be focused on shorter term if there are giveaways, ones
Speaker 1: that affect the public finances in the near term but
Speaker 1: don't affect the medium term picture. So as I say
Speaker 1: that the price cap on household energy bills, we might
Speaker 1: see something around capital allowances, but again I think that
Speaker 1: will likely be a temporary thing rather than a permanent thing.
Speaker 1: And the whole point here is, and the whole sort
Speaker 1: of bigger political backdrop, is that you have an election
Speaker 1: probably next year, and it's the point at which essentially
Speaker 1: he uses up all his firepower to say to the electorate, look,
Speaker 1: this is our offering. And I think probably now is
Speaker 1: a little bit early, and the fiscal picture doesn't quite
Speaker 1: allow for it as well, But I think now it's
Speaker 1: just a bit early for him to go ahead and
Speaker 1: do that. Yeah, I mean it's interesting that you talk
Speaker 1: about some of those allowances because we have been reporting
Speaker 1: that he's considering doing something around incentivizing investment. This is
Speaker 1: sort of a long running problem within the UK economy,
Speaker 1: particularly since Bragnics are trying to get businesses to invest more.
Speaker 1: How how can you put that in context for us?
Speaker 1: How big a problem is that? And so yeah, I
Speaker 1: mean it's a huge it's a huge problem. I mean,
Speaker 1: I think I think the level of business investment now
Speaker 1: was only just about got back to its pretty pandemic level.
Speaker 1: So it's it's it's really struggled to recover from the pandemic.
Speaker 1: And if you look at it in the context of
Speaker 1: what's happened, as you say, since the Brexit referendum, we're
Speaker 1: well beneath the performance of other G seven economies the
Speaker 1: UK economy, so I think there's something there is definitely
Speaker 1: something to be done. The context again here though, is
Speaker 1: that the government has put in place a massive rising
Speaker 1: corporation tax that's going to take effects from April. Yeah, exactly.
Speaker 1: So you've got a six percentage point rise in the
Speaker 1: CT rate. That's obviously a massive disincentive for investment at
Speaker 1: a time when interest rates are going through the roof.
Speaker 1: So what the government is going to try and do
Speaker 1: is sweeten that that hit, essentially by introducing tax allowances.
Speaker 1: And this is something that Richie soon Act toyed with
Speaker 1: when he was chancellor. He introduced this temporary superdeduction and
Speaker 1: this is something that's actually expiring at the end of
Speaker 1: at the end of March, and I think that the
Speaker 1: government will want to or Hunt will want to put
Speaker 1: something in place to at least temporarily replace that. Bloomberg
Speaker 1: Senior UK economist Dan Hansen thank you very much for
Speaker 1: your insights. I'm Stephen Carroll in London. You can catch
Speaker 1: us every weekday morning here for Bloomberg Daybreak Europe, beginning
Speaker 1: at six am in London and one am on Wall Street. Tom.
Speaker 1: Thanks Stephen. Coming up on Bloomberg Daybreak weekend, we had
Speaker 1: to DC and get a look at the week ahead
Speaker 1: in the nation's capital. I'm Tom Busby, and this is
Speaker 1: Bloomberg broadcasting live from the Bloomberg Interactive Broker Studio in
Speaker 1: New York. Bloomberg Elomon Freo to Washington, DC, Bloomberg ninety
Speaker 1: nine one to Boston, Bloomberg one oh sixty one to
Speaker 1: San Francisco, Bloomberg nine sixty to the country, Sirius XM
Speaker 1: Channel one nineteen to London, DAB Digital Radio, and around
Speaker 1: the globe the Bloomberg Business app and Bloomberg Radio dot Com.
Speaker 1: This is Bloomberg Daybreak Weekend. I'm Tom Busby in New
Speaker 1: York with your global look ahead at the top stories
Speaker 1: for investors in the coming week. We had to Washington,
Speaker 1: DC now for a look ahead at the week in politics.
Speaker 1: We're joined now by Bloomberg Sound On host Joe Matthew. Joe.
Speaker 1: Thanks Tom, We're gonna look ahead now to the first
Speaker 1: Republican primary on the calendar. That would be Iowa, the
Speaker 1: fifth of February twenty twenty four. The fact of the
Speaker 1: matter is the candidates are not waiting Ron de Santis
Speaker 1: in Iowa today. We are gonna go on offense. I'm
Speaker 1: gonna find issues. I'm not just gonna sit back and
Speaker 1: waited for come to me. And I sat at my
Speaker 1: desk the first day as governor, I looked around the
Speaker 1: office and I said, you know, I don't know what
Speaker 1: soob is going to succeed me in this office, but
Speaker 1: I can tell I'll tell you this. They are not
Speaker 1: going to have very much to do because I'm taking
Speaker 1: all the meat off the bone there is and I'm
Speaker 1: gonna get all this done. You wonder why he assumes
Speaker 1: the next governor's an s ob like what if they're friends?
Speaker 1: But I digress. On his way to Iowa for the
Speaker 1: first time since announcing next week, Donald Trump, you know,
Speaker 1: Ronda Sanctimonius head the crowd and Stadnila today, one hundred
Speaker 1: and thirty nine people in Satnay. We got a lot
Speaker 1: of people. We have one hundred and thirty nine times
Speaker 1: about thirty. We got a lot of people here, but
Speaker 1: I always say hit your enemy a little bit early.
Speaker 1: Some people say don't, but I say do. Okay. That
Speaker 1: was back in February, almost a year to the day
Speaker 1: ahead of voting, and we're joined by Bloomberg Government Congress
Speaker 1: reporter Emily Wilkins and Bloomberg Politics reporter Ryan Teak back
Speaker 1: with as we take a peek into the landscape of
Speaker 1: twenty twenty four and look a little bit into the
Speaker 1: week ahead. Ryan, it's great to see you here. Thanks
Speaker 1: for coming along Iowa. Of course, we do need to
Speaker 1: establish this. It's a separate calendar for Republicans and Democrats
Speaker 1: this time, but we're talking the Republican field. How important
Speaker 1: is Iowa going to be for Donald Trump? You know,
Speaker 1: he didn't win Iowa in twenty sixteen. I think that
Speaker 1: he's doing better among Iowa voters now than he did then.
Speaker 1: He sort of established that beachhead, So I don't think
Speaker 1: losing there is killer for him. I think he could
Speaker 1: he could withstand that if he's on the ropes against
Speaker 1: a guy named DeSantis, though, Could it be more imperative
Speaker 1: to start winning early? Yeah, I think that there, it's
Speaker 1: definitely the field is going to narrow much faster than
Speaker 1: in twenty sixteen when he last based a competitive one
Speaker 1: and it was sort of dragging on about who was
Speaker 1: going to be the mysterious candidate X to find to
Speaker 1: be in the final two, and I think that ultimately
Speaker 1: divided the competition. So I think that there's going to
Speaker 1: be a push among everyone if someone shows themselves strong
Speaker 1: in an early state like Iowa, to among Republicans to
Speaker 1: sort of annoint that person as that's it, this is
Speaker 1: the alternative to Trump and and get behind that person quickly.
Speaker 1: Are we assuming Ronda Santis is running here? Ryan? Yeah?
Speaker 1: I mean I this. You know, I almost corrected you
Speaker 1: they there when you called him in Candida because technically
Speaker 1: he is not yet running, But I mean, you know,
Speaker 1: he's running. So that's where we're at. Emily Wilkins, what
Speaker 1: do you think Donald Trump's acting like Ronda Santis is running?
Speaker 1: Rhonda Santis is acting like Ronda Santis is running, but
Speaker 1: he's in no hurry to win outs, right. I don't
Speaker 1: think one just goes to Iowa casually and speech, especially
Speaker 1: when one is the governor of the state of Florida. Yeah,
Speaker 1: and to be to you know, to the to your question,
Speaker 1: which is a great one of when he's actually going
Speaker 1: to get in the race. I mean what he has
Speaker 1: said and what sort of those near to him have
Speaker 1: have implied that he's going to wait until the Florida
Speaker 1: State Legislature session is over, which makes sense in a way.
Speaker 1: I mean, he's he's already kind of a known quantity
Speaker 1: out there. He's not someone who could kind of benefit
Speaker 1: from getting into a race like this being one of
Speaker 1: the first couple to really get in and get his
Speaker 1: name out there. Um. At the same point, it kind
Speaker 1: of makes sense for him to, you know, be able
Speaker 1: to focus on finishing up what's what's going on in
Speaker 1: the Florida State Legislature because certainly some of those things
Speaker 1: will be things that he will run on when he
Speaker 1: does launch his campaign. Yeah, that's right. And he's getting
Speaker 1: a lot of publicity from stuff he's doing as governor.
Speaker 1: I mean, I think if you're Nicki Haley, you have
Speaker 1: to be you know, campaigning for anyone to pay attention
Speaker 1: to you, because you don't have a day job, right,
Speaker 1: But like he's Florida governor, and literally every bill he
Speaker 1: does is something that's designed to get national media right,
Speaker 1: tack all the national media, you know, and get Republican
Speaker 1: voters excited. So he doesn't really need to be officially
Speaker 1: running to get attention. He hasn't gone after Donald Trump's
Speaker 1: certainly not in the way Trump has gone after him.
Speaker 1: But he has been asked about that, and he's he's
Speaker 1: been very careful in choosing his words to react. This
Speaker 1: is Rhonda Santis the beginning of February. I spend my
Speaker 1: time delivering results for the people of Florida and fighting
Speaker 1: against Joe Biden. That's how I spend my time. Okay,
Speaker 1: big rout of applause on that. You know, he's not
Speaker 1: here to attack other cannabis as the other Republicans, the idea,
Speaker 1: I don't spend my time trying to smear other Republicans.
Speaker 1: There it is so emily though at a certain point
Speaker 1: he's probably gonna have to write, you can't beat Donald
Speaker 1: Trump without going up against Donald Trump without getting in
Speaker 1: the ring. Right. Absolutely, But at the same point, I think,
Speaker 1: to a certain extent, if you are a Republican for
Speaker 1: the nomination right now, you are not trying to completely
Speaker 1: isolate Trump supporters. At this point, You're trying to figure
Speaker 1: out a way how you can appeal to those some
Speaker 1: of those supporters get them over on their side. So
Speaker 1: it's probably not a good idea of right out the
Speaker 1: bat to slam the guy too hard. But certainly, you know,
Speaker 1: as this continues, if DeSantis and Trump both wind up
Speaker 1: continuing to be the strong nominees that they seem to
Speaker 1: be at this point in the game, yeah, eventually you're
Speaker 1: you're going to be seen a little more headbutting between
Speaker 1: the two of them. You know, Ryan, we mentioned the
Speaker 1: fact that the primaries and fib we've got debates way
Speaker 1: before that. When does this field finally come together or
Speaker 1: will we actually have some debates without a full field
Speaker 1: this summer. I mean, you could have people filing as
Speaker 1: late as to fall if they feel like there's a
Speaker 1: weak point. You know, you've seen in the when we've
Speaker 1: had bigger fields, and I have a story about this
Speaker 1: right now. There's in some past years they were like seven,
Speaker 1: eight nine people running by this point, but there also
Speaker 1: have been years where they didn't really kick and intel
Speaker 1: may or June. So we're not we're not anywhere near
Speaker 1: the final field. We've only had one person who people
Speaker 1: were watching, Larry Hogan, former Maryland governor bow out. So far,
Speaker 1: there's a lot of other people who are at least
Speaker 1: keeping their names alive as potential candidates, which is sometimes
Speaker 1: just a ploy to get more attention for your book
Speaker 1: or whatever whatever you're angling for. Yeah, so you know,
Speaker 1: there's a chance that somebody might come in if they
Speaker 1: if de Santis looks like he's not as strong against
Speaker 1: Trump as some of the folks who don't want Trump
Speaker 1: are hoping, then there might be some late joining person.
Speaker 1: I mean, I think there's also a real question of
Speaker 1: the debates, I mean, whether they can pull this together.
Speaker 1: Like Trump has not said that he will support the
Speaker 1: eventual nominee. Rona McDaniel, the RNC chair, has said that
Speaker 1: she wants to require all the candidates to agree to
Speaker 1: that before they get on stage. Of some of the
Speaker 1: anti Trump candidates have said that they wouldn't do that
Speaker 1: for if its Trump, So that's kind of messy, Um,
Speaker 1: it's it's us. So just potential that you know, if
Speaker 1: Trump decides not to show up at a debate like
Speaker 1: theyone gonna watch, if it's the Santist debating, like Nicki Haley,
Speaker 1: I mean, he could just sort of kill the whole format.
Speaker 1: I know how how he would answer that, it's all
Speaker 1: about the ratings. And now, as as Ronda Santist, Donald
Speaker 1: Trump and others head for Iowa, Joe Biden is heading
Speaker 1: to the West coast next week. Emily Wilkins, this is
Speaker 1: all about the budget. This is the post state of
Speaker 1: the Union, post budget road show that now begins once
Speaker 1: all the bluster is out there. Though, when do actual
Speaker 1: negotiations begin between these two parties. We know the Republican
Speaker 1: budget won't be out for weeks, maybe a couple of months. Yeah,
Speaker 1: at this point, they've got that going on. At the
Speaker 1: same point, remember that the negotiations around the budget and
Speaker 1: the debt limit are still somewhat similar from the negotiations
Speaker 1: around actually funding the government for the next year, and
Speaker 1: that's something that we expect lawmakers to really start digging
Speaker 1: in the White House. Releasing their budget is kind of
Speaker 1: the unofficial kickoff of that happening. And I think it's
Speaker 1: going to be very interesting this year. With Republicans in
Speaker 1: the House running the floor with only a five vote margin,
Speaker 1: they have vowed to bring. You know, they've got a
Speaker 1: huge government. They break it up into twelve spending bills.
Speaker 1: It is really difficult for them to actually bring all
Speaker 1: twelve spending bills to the floor, kind of go through
Speaker 1: the regular process, if you will. But that is what
Speaker 1: Republicans are really pushing for right now. Thanks to Ryan
Speaker 1: Teague Beckwith and Emily Wilkins and Tom is a programming note,
Speaker 1: an important one for you. Starting Monday, Balance of Power
Speaker 1: moves to five pm on Bloomberg Television, now hosted by
Speaker 1: Anne Marie Hordern and myself will be at the intersection
Speaker 1: of Washington and Wall Street every weekday bringing you the
Speaker 1: latest political news. Balance of Power at a new time,
Speaker 1: five pm Eastern on Bloomberg Television. Tom, thanks Joe, and
Speaker 1: good luck on the new show. Be sure to tune
Speaker 1: into Bloomberg Sound on weekdays from one to three pm.
Speaker 1: Wall Street Time here on Bloomberg Radio. Coming up on
Speaker 1: Bloomberg Daybreak weekends and Apple Supplier focuses on India, will
Speaker 1: bring you the details. I'm Tom Busby, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Weekend, our global look ahead at
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: Tom Busby in New York. We learned this week that
Speaker 1: iPhone parts maker Fox Contechnology Group plans to invest about
Speaker 1: seven hundred million dollars on a new plant in India
Speaker 1: to ramp up local production for more Now, we're joined
Speaker 1: by Bloomberg Daybreak Asia anchors Doug Chrisner and Brian Curtis
Speaker 1: Tom With US China tension simmering as they are, Apple
Speaker 1: supplier Houn High has confirmed that he will set up
Speaker 1: a new plant in India. The confirmation caused quite a
Speaker 1: stir in China as it raises the prospect of Apple
Speaker 1: shifting its manufacturing supply chain out of China, and indeed,
Speaker 1: Bloomberg reported this week that Apple itself is expected to
Speaker 1: increase its focus on India. On High, or fox Khon
Speaker 1: as it's often called, will invest seven hundred million dollars
Speaker 1: on a new plant in India's Kannataka state. One of
Speaker 1: the big issues for the company over the past year
Speaker 1: has been the lockdowns in China. Yes, and even though
Speaker 1: China has reopened, fox Kon said this week that sales
Speaker 1: dropped eleven point seven percent in February from a year earlier,
Speaker 1: even with the strong January, it raised a few eyebrows.
Speaker 1: Dug and I thought we would explore all the questions
Speaker 1: raised by Foxcon making this decision to do more in India.
Speaker 1: Bloomberg Tech editor lad Sevof joins us, what do we
Speaker 1: think is the prime reason, Flad that Foxcon is doing this.
Speaker 1: It's one that Folkscon itself is not going to say,
Speaker 1: but it really is a customer demand, and Folkscon's biggest
Speaker 1: customer is Apple. We will, but it is a theme
Speaker 1: and a trend that really transcends these two titans of
Speaker 1: the industry, as we might put them. Fellow Taiwanese suppliers
Speaker 1: such as Wistron are also looking to expand in India.
Speaker 1: We heard from a Goetech executive, a Chinese supplier that's
Speaker 1: expanding in Vietnam, and he spoke perhaps most candidly out
Speaker 1: of any of these supply chain executives, really just saying
Speaker 1: customers want this. They want us to have alternatives to
Speaker 1: China now. But he's saying, take out manufacturing out of
Speaker 1: China and put it elsewhere. But what customers are really
Speaker 1: asking for is more geographic diversification. So that diversification, I
Speaker 1: would imagine, is kind of like an insurance policy against
Speaker 1: problems down the road with your supply chain. So in effect,
Speaker 1: it's not as much as an increase in capacity. It's
Speaker 1: more about redundancy. Am I right or wrong in that?
Speaker 1: That's right? That's right. Now. That being said, it is interesting,
Speaker 1: like one of the bits of off the cuff analysis
Speaker 1: that you could put together is to just look at
Speaker 1: iPhone production in India in recent times. Now, Fox going
Speaker 1: again is one of the leading assemblers there that doubled
Speaker 1: in the past year, and it is happening much faster
Speaker 1: relative to production and assembly of iPhones in China. And
Speaker 1: when you look at iPhone sales on an annual basis,
Speaker 1: they kind of flat. So if iPhone sales overall flat
Speaker 1: and India production is increasing, that kind of tends to
Speaker 1: give you the suggestion that some production is moving out
Speaker 1: of China. We've long thought that American manufacturing might move
Speaker 1: to India, but one of the big problems in the
Speaker 1: past has been infrastructure. They simply haven't had the same
Speaker 1: sort of supply chains are developing there that we've seen
Speaker 1: in China, and nor the physical attributes to get it
Speaker 1: from a facility to pour it to customer. Has that
Speaker 1: changed It should be changing over time, of course, nobody
Speaker 1: has China's infrastructure system. The other thing we have to
Speaker 1: bear in mind is that so many of the raw
Speaker 1: materials and the basic supplies and basing components that go
Speaker 1: into devices are they're made in China, So you're covering
Speaker 1: smaller grounds, smaller distances, even if you don't have the
Speaker 1: world class infrastructure that China has. Now, the other thing
Speaker 1: to bear in mind is the seven hundred million dollar
Speaker 1: plan that Foxscon is planning is to primarily start with
Speaker 1: iPhone components. Down the line, it may actually assemble iPhones too,
Speaker 1: but that's what we're seeing here as well. India itself,
Speaker 1: it's subsidizing companies like Foxconn set enough factories, it is
Speaker 1: providing its own investment in its own infrastructure, and then
Speaker 1: companies like Foxcon are building let's say, the peripheral ecosystem
Speaker 1: around an iPhone factory. Lad, thanks so much for joining
Speaker 1: us and shedding some light on this story, which speaks
Speaker 1: to a much bigger story down the road. Bloomberg Tech
Speaker 1: editor Lad Savov and Brian Curtis, along with Doug Christener.
Speaker 1: You can catch us every weekday here for Bloomberg Daybreak Asia,
Speaker 1: beginning at six am in Hong Kong and six pm
Speaker 1: on Wall Street. Tom, thank you Brian and Doug. And
Speaker 1: that does it for this edition of blue Bird Daybreak Weekend.
Speaker 1: Join us again Monday morning at five am Wall Street
Speaker 1: Time for the latest on markets overseas and the news
Speaker 1: you need to start your day. I'm Tom Husby. Stay
Speaker 1: with us. Top stories and global business headlines are coming
Speaker 1: up right now.