1 00:00:00,240 --> 00:00:07,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,360 --> 00:00:12,680 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,680 --> 00:00:14,920 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:14,960 --> 00:00:17,480 Speaker 2: anchors all around the world. Straight ahead on the program, 5 00:00:17,480 --> 00:00:20,680 Speaker 2: and look at how tariffs on lumber and timber could 6 00:00:20,800 --> 00:00:24,119 Speaker 2: impact the US housing market. I'm Tom Busby in New York. 7 00:00:24,200 --> 00:00:28,400 Speaker 3: I'm Caroline Hebge in London. What's in a prize, specifically 8 00:00:28,600 --> 00:00:30,520 Speaker 3: the Nobel Prize Decisions. 9 00:00:30,800 --> 00:00:34,200 Speaker 4: I'm Dog Prisner looking at Chinese consumers during Golden Week 10 00:00:34,320 --> 00:00:37,160 Speaker 4: plus trouble with some Hong Kong real estate. 11 00:00:38,080 --> 00:00:42,120 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,159 --> 00:00:45,840 Speaker 1: eleven to three year, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,360 --> 00:00:51,479 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirias, 14 00:00:51,640 --> 00:00:55,120 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,240 --> 00:00:57,440 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:02,280 --> 00:01:04,479 Speaker 2: Good day to you. I'm Tom Busby. We begin today's 17 00:01:04,480 --> 00:01:07,000 Speaker 2: program with a new batch of tariffs announced by President 18 00:01:07,000 --> 00:01:09,960 Speaker 2: Trump on imports of soft wood, timber, and lumber, as 19 00:01:09,959 --> 00:01:13,320 Speaker 2: well as levees on kitchen cabinets, vanities, and upholstered wood 20 00:01:13,319 --> 00:01:16,200 Speaker 2: products brought into the US. How will this impact the 21 00:01:16,200 --> 00:01:19,280 Speaker 2: housing market moving forward? And what about housing prices? 22 00:01:19,400 --> 00:01:19,880 Speaker 5: For more? 23 00:01:20,160 --> 00:01:25,240 Speaker 2: We're joined by Drew Redding, Bloomberg Intelligence US home building Analyst. Well, Drew, 24 00:01:25,280 --> 00:01:28,200 Speaker 2: thank you so much for being here, appreciated home builders. 25 00:01:28,240 --> 00:01:31,080 Speaker 2: Home buyers now, they've already been paying sky high prices, 26 00:01:31,200 --> 00:01:35,240 Speaker 2: elevated mortgage rates, they've been paying tariffs on imported kitchen appliances, 27 00:01:35,360 --> 00:01:38,679 Speaker 2: washers and dryers, and now October fourteenth, they'll be paying 28 00:01:38,840 --> 00:01:42,520 Speaker 2: ten percent levees on softwood, lumber and timber, twenty five 29 00:01:42,560 --> 00:01:46,280 Speaker 2: percent on kitchen cabinets, vanities, other pre assembled I mean, 30 00:01:46,760 --> 00:01:49,120 Speaker 2: this is looking This is not good, is it? 31 00:01:50,480 --> 00:01:53,800 Speaker 6: Yeah? Well, certainly, you know, the consumer doesn't need higher 32 00:01:53,840 --> 00:01:57,680 Speaker 6: costs when it comes to housing, given the affordability constraints 33 00:01:57,680 --> 00:02:00,200 Speaker 6: that they've been under for the last several years. Just 34 00:02:00,200 --> 00:02:02,160 Speaker 6: to take a step back on the tariffs, to put 35 00:02:02,160 --> 00:02:05,840 Speaker 6: it in perspective, the US imports about thirteen million dollars 36 00:02:06,120 --> 00:02:09,200 Speaker 6: or seven percent roughly of the goods used in new 37 00:02:09,200 --> 00:02:12,959 Speaker 6: residential construction. So at the headline level, it's not necessarily 38 00:02:13,040 --> 00:02:15,680 Speaker 6: a massive piece. But you know, there are particular areas 39 00:02:15,720 --> 00:02:18,960 Speaker 6: where tariffs will be felt perhaps more than others. If 40 00:02:18,960 --> 00:02:20,680 Speaker 6: you look at the top of three countries that we 41 00:02:20,760 --> 00:02:24,760 Speaker 6: import from, it's China. That's about twenty seven percent of imports. 42 00:02:25,400 --> 00:02:28,640 Speaker 6: From there, we're talking about things like appliance, is lighting, 43 00:02:28,680 --> 00:02:33,280 Speaker 6: electrical components, hand tools. The second is Mexico and from 44 00:02:33,320 --> 00:02:35,880 Speaker 6: there we're primarily talking about gypsum products. So I think 45 00:02:36,040 --> 00:02:39,000 Speaker 6: drywall Mexico is about seventy two percent of imports there. 46 00:02:39,040 --> 00:02:41,799 Speaker 6: And then third, you know, which has really come into 47 00:02:41,840 --> 00:02:46,200 Speaker 6: focus now is Canada, which accounts for eighty five percent 48 00:02:46,360 --> 00:02:49,079 Speaker 6: of lumber imports. So when you put all this together, 49 00:02:49,240 --> 00:02:53,560 Speaker 6: the previously announced tariffs, you know, country specific fat and 50 00:02:53,600 --> 00:02:57,800 Speaker 6: on reciprocal tariffs, along with these newly announced tariffs, we 51 00:02:57,919 --> 00:03:00,880 Speaker 6: think that the costs, the total cost to a builder 52 00:03:00,919 --> 00:03:05,520 Speaker 6: will be about ten thousand dollars per home, which which 53 00:03:05,560 --> 00:03:07,160 Speaker 6: is a pretty staggering number. Now, we don't think the 54 00:03:07,200 --> 00:03:10,360 Speaker 6: builders will ultimately absorb all of these costs. I think, 55 00:03:10,520 --> 00:03:13,480 Speaker 6: you know, they'll probably be spread throughout the supply chain. 56 00:03:14,080 --> 00:03:16,679 Speaker 6: And when you think about the large public builders, they're 57 00:03:16,720 --> 00:03:19,600 Speaker 6: really better positioned in this environment given you know, their 58 00:03:19,680 --> 00:03:22,680 Speaker 6: scale now in terms of their ability to pass on 59 00:03:22,760 --> 00:03:25,480 Speaker 6: to consumers. You know, I think that could be tough. 60 00:03:25,520 --> 00:03:28,800 Speaker 6: And you know, you've got prices already coming down for 61 00:03:28,880 --> 00:03:32,160 Speaker 6: a lot of builders due to affordability, and then they're 62 00:03:32,200 --> 00:03:35,760 Speaker 6: still having to use an elevated degree of incentives, which 63 00:03:35,800 --> 00:03:38,560 Speaker 6: is accounted for as a reduction in salespace. So there's 64 00:03:38,600 --> 00:03:40,240 Speaker 6: a lot of moving pieces. But at the end of 65 00:03:40,280 --> 00:03:43,200 Speaker 6: the day, the point is that it becomes increasingly expensive 66 00:03:44,120 --> 00:03:45,800 Speaker 6: to build a home, and I. 67 00:03:45,720 --> 00:03:47,960 Speaker 2: Mean this could really deter a lot of builders. Like 68 00:03:48,000 --> 00:03:49,800 Speaker 2: you said, we're not worried about the KB homes and 69 00:03:49,840 --> 00:03:51,920 Speaker 2: the Pulties of the world, but a lot of smaller 70 00:03:51,920 --> 00:03:54,880 Speaker 2: ones from constructing new homes, at least initially. 71 00:03:55,000 --> 00:03:55,160 Speaker 5: Right. 72 00:03:56,040 --> 00:03:57,720 Speaker 6: No, it's a good point. And you know why we 73 00:03:57,760 --> 00:04:01,440 Speaker 6: haven't seen a huge packed impact on you know, tariffs 74 00:04:01,440 --> 00:04:03,160 Speaker 6: to this point. One of the things we have heard, 75 00:04:03,200 --> 00:04:07,160 Speaker 6: and to your point, really from the smaller private builders, 76 00:04:07,240 --> 00:04:10,040 Speaker 6: is that there hasn't been a lot of certainty, so 77 00:04:10,040 --> 00:04:11,520 Speaker 6: they don't know what their costs are going to be. 78 00:04:11,520 --> 00:04:12,960 Speaker 6: When you don't know what your costs are going to be, 79 00:04:13,280 --> 00:04:15,160 Speaker 6: it's hard for you to plan out into the future 80 00:04:15,160 --> 00:04:17,640 Speaker 6: and put new production into the ground. So I do 81 00:04:17,680 --> 00:04:21,000 Speaker 6: think it is definitely more challenging for the smaller names 82 00:04:21,040 --> 00:04:23,479 Speaker 6: in the group. One thing that I think that's worth 83 00:04:23,480 --> 00:04:25,800 Speaker 6: pointing out on the lumber side of this is that 84 00:04:26,560 --> 00:04:29,280 Speaker 6: prior to this announcement of a ten percent tariff on 85 00:04:29,400 --> 00:04:33,640 Speaker 6: software imports, we already had duties on lumber coming in 86 00:04:33,680 --> 00:04:36,919 Speaker 6: from Canada. If you're talking about forty five percent on 87 00:04:36,960 --> 00:04:40,680 Speaker 6: Canadian lumber imports, which again is eighty five percent of 88 00:04:40,760 --> 00:04:42,440 Speaker 6: all the lumber imported into the US. 89 00:04:42,600 --> 00:04:44,880 Speaker 2: Yeah, I mean it sounds like some of these Canadian 90 00:04:44,960 --> 00:04:49,479 Speaker 2: lumber makers, these these manufacturers could really be struggling now 91 00:04:49,560 --> 00:04:51,040 Speaker 2: if you know, sales get hurt. 92 00:04:51,520 --> 00:04:53,720 Speaker 6: Yeah, it's a great point. And you know, the announcement 93 00:04:53,800 --> 00:04:57,919 Speaker 6: really came because the administration wanted to open an investigation 94 00:04:58,000 --> 00:05:00,560 Speaker 6: as to, you know, whether or not the lumber trade 95 00:05:00,680 --> 00:05:04,479 Speaker 6: was of risk to national security, which they determined that 96 00:05:04,560 --> 00:05:07,720 Speaker 6: it was. So the question becomes, well, can the US 97 00:05:07,800 --> 00:05:11,320 Speaker 6: produce enough lumber domestically to meet all the demand. And 98 00:05:11,720 --> 00:05:13,839 Speaker 6: I think the answer for now is no. And you know, 99 00:05:13,920 --> 00:05:16,240 Speaker 6: as I mentioned, we produced about seventy percent of the 100 00:05:16,320 --> 00:05:19,520 Speaker 6: lumber utilized in the US and to get that to 101 00:05:19,560 --> 00:05:22,480 Speaker 6: one hundred percent would really require a lot of time. 102 00:05:22,760 --> 00:05:26,279 Speaker 6: The National Association of home builders estimates you know, somewhere 103 00:05:26,279 --> 00:05:28,080 Speaker 6: around ten years to be able to achieve this. So 104 00:05:28,279 --> 00:05:29,839 Speaker 6: certainly no small feat. 105 00:05:29,800 --> 00:05:33,600 Speaker 2: And not only the industrial or resilience, but also Trump's 106 00:05:33,600 --> 00:05:36,599 Speaker 2: had the high quality jobs that this would create. Would 107 00:05:36,640 --> 00:05:38,520 Speaker 2: they really be high quality jobs? 108 00:05:39,040 --> 00:05:41,560 Speaker 6: I mean that remains to be seen. And like I said, 109 00:05:41,600 --> 00:05:44,120 Speaker 6: it's will take a lot of time to add new 110 00:05:44,160 --> 00:05:47,760 Speaker 6: capacity to the industry. But you know, there are a 111 00:05:47,760 --> 00:05:50,239 Speaker 6: lot of jobs along the supply train and in terms 112 00:05:50,240 --> 00:05:53,279 Speaker 6: of you know, just the not only jobs you're creating 113 00:05:53,320 --> 00:05:56,719 Speaker 6: at the mills, but logistics and you know, getting wood 114 00:05:56,760 --> 00:05:59,159 Speaker 6: to factories to job sites and things like that. So 115 00:05:59,320 --> 00:06:00,279 Speaker 6: it would certainly help. 116 00:06:00,480 --> 00:06:02,800 Speaker 2: Now let's talk about the other tariffs, and these are big. 117 00:06:02,839 --> 00:06:08,400 Speaker 2: They're twenty five percent on on kitchen bathroom, Vanity's kitchen cabinets, 118 00:06:08,400 --> 00:06:10,640 Speaker 2: that type of thing. We know that Ethan Allen, Lazy 119 00:06:10,720 --> 00:06:12,840 Speaker 2: Boys source and manufacture a lot of their products in 120 00:06:12,880 --> 00:06:16,200 Speaker 2: the US, But there are big retailers that import a 121 00:06:16,200 --> 00:06:19,080 Speaker 2: ton of goods Wayfair William soonoma our Age formerly a 122 00:06:19,200 --> 00:06:22,480 Speaker 2: restoration hardware. I mean, they may really be impacted by 123 00:06:22,480 --> 00:06:23,839 Speaker 2: these tariffs, right, you. 124 00:06:23,839 --> 00:06:27,359 Speaker 6: Know, I think from from their perspective, you know, the 125 00:06:27,400 --> 00:06:29,760 Speaker 6: impact isn't going to be as great as you might expect. 126 00:06:29,760 --> 00:06:32,839 Speaker 6: But if you think about the individual consumer who is 127 00:06:32,880 --> 00:06:36,120 Speaker 6: going out and making a single purchase, you know, on 128 00:06:36,200 --> 00:06:38,200 Speaker 6: a kitchen cabinet or vanity, and was looking for a 129 00:06:38,200 --> 00:06:40,960 Speaker 6: low cost option, all of a sudden to them that 130 00:06:41,080 --> 00:06:43,760 Speaker 6: becomes significantly more expensive. So there's I think there's a 131 00:06:43,760 --> 00:06:46,839 Speaker 6: big difference between how you know a home improvement retailer 132 00:06:46,920 --> 00:06:49,479 Speaker 6: can manage the situation versus individual consumer. 133 00:06:50,040 --> 00:06:52,320 Speaker 2: A lot of challenges well our thanks to Drew Redding, 134 00:06:52,360 --> 00:06:56,640 Speaker 2: Bloomberg Intelligence US home Building analyst. We move next to 135 00:06:56,720 --> 00:06:59,880 Speaker 2: a turning point for big pharma. This past week, five 136 00:07:00,040 --> 00:07:03,320 Speaker 2: US negotiated a three year reprieve on drug import tariffs 137 00:07:03,320 --> 00:07:05,520 Speaker 2: in exchange for a promise to reduce what it charges 138 00:07:05,880 --> 00:07:10,080 Speaker 2: Medicaid for some prescription meds, also to price future drugs 139 00:07:10,120 --> 00:07:12,360 Speaker 2: on part with what it charges other wealthy nations, and 140 00:07:12,480 --> 00:07:15,920 Speaker 2: to sell certain drugs at discounted prices to the public. Now, 141 00:07:15,920 --> 00:07:19,080 Speaker 2: how might this impact the pharmaceutical space, what other drug 142 00:07:19,080 --> 00:07:21,360 Speaker 2: makers are working on their own deals, and what does 143 00:07:21,400 --> 00:07:24,280 Speaker 2: it mean for consumers. For all that, we're joined by 144 00:07:24,280 --> 00:07:27,920 Speaker 2: Madison Muller, Bloomberg Health reporter. Madison, thanks for being here. 145 00:07:28,040 --> 00:07:29,760 Speaker 7: Thanks for having me. I appreciate it. 146 00:07:30,280 --> 00:07:32,800 Speaker 2: Can you kind of detail the finer points of this 147 00:07:32,840 --> 00:07:36,680 Speaker 2: agreement with the White House? And I'm most curious about 148 00:07:36,720 --> 00:07:40,320 Speaker 2: trump RX. It sounds a little like his answer to Obamacare. 149 00:07:40,440 --> 00:07:43,840 Speaker 7: But yeah, it's an interesting concept, and I think we 150 00:07:43,920 --> 00:07:46,200 Speaker 7: knew that they were working on something like this. I mean, 151 00:07:46,240 --> 00:07:49,360 Speaker 7: for the last few months, the administration has been talking 152 00:07:49,360 --> 00:07:54,240 Speaker 7: about direct to consumer websites and platforms. Some drug makers 153 00:07:54,240 --> 00:07:56,960 Speaker 7: had already started doing that. Eli Lilly, for example, has 154 00:07:57,040 --> 00:07:59,640 Speaker 7: Lily direct. Nova Nordisk has been doing this for some 155 00:07:59,680 --> 00:08:02,440 Speaker 7: of the real high demand drugs like GLP one weight 156 00:08:02,440 --> 00:08:05,040 Speaker 7: loss drugs, And so we knew the administration was thinking 157 00:08:05,040 --> 00:08:09,400 Speaker 7: about doing something like this, and its answer to one 158 00:08:09,440 --> 00:08:13,280 Speaker 7: of the biggest priorities in terms of healthcare is lowering 159 00:08:13,360 --> 00:08:15,640 Speaker 7: drug prices, and this is sort of one of the 160 00:08:16,200 --> 00:08:19,680 Speaker 7: one of multiple things that the administration thinks could help 161 00:08:19,720 --> 00:08:23,320 Speaker 7: address that by making a website where drug makers can 162 00:08:23,480 --> 00:08:27,120 Speaker 7: put their drugs on there and at a steep discount 163 00:08:27,160 --> 00:08:30,160 Speaker 7: to the list price and have consumers sort of directly 164 00:08:30,200 --> 00:08:33,040 Speaker 7: buy them from the manufacturers as a way to cut 165 00:08:33,120 --> 00:08:36,840 Speaker 7: drug prices. But it's an interesting concept, and cash pay 166 00:08:37,440 --> 00:08:41,679 Speaker 7: might not necessarily be super popular for other medications like 167 00:08:41,720 --> 00:08:44,320 Speaker 7: it has been for the GLP one weight loss drugs. 168 00:08:45,200 --> 00:08:47,839 Speaker 2: Is that because so many of those other medications are so. 169 00:08:47,920 --> 00:08:51,839 Speaker 7: Expensive exactly, and the insurance landscape for weight loss drugs 170 00:08:51,920 --> 00:08:55,079 Speaker 7: is quite patchy still, it's very difficult to get insurance coverage. 171 00:08:55,200 --> 00:08:57,160 Speaker 7: The drugs are expensive, so a lot of people are 172 00:08:57,200 --> 00:09:00,120 Speaker 7: willing to pay out of pocket for those medications. But 173 00:09:00,480 --> 00:09:02,960 Speaker 7: in terms of this Feiser deal, some of the medications 174 00:09:02,960 --> 00:09:06,160 Speaker 7: that we know that Pfizer will be discounting, like It's 175 00:09:06,200 --> 00:09:10,160 Speaker 7: blood thinner Eloquist, those are usually covered by insurance anyway, 176 00:09:10,280 --> 00:09:12,960 Speaker 7: so people with insurance will have coverage for that. There 177 00:09:12,960 --> 00:09:15,320 Speaker 7: wouldn't really be a reason for them to buy it 178 00:09:15,360 --> 00:09:18,120 Speaker 7: directly from the manufacturer on a website like trump Orex, 179 00:09:19,320 --> 00:09:22,160 Speaker 7: and those who don't have insurance, it's probably still going 180 00:09:22,200 --> 00:09:25,000 Speaker 7: to be pretty expensive for now. 181 00:09:25,400 --> 00:09:28,560 Speaker 2: Some of the drugs that are made by Pfizer, by Lilly, 182 00:09:28,640 --> 00:09:31,679 Speaker 2: by Johnson and Johnson all made or mostly made in 183 00:09:31,720 --> 00:09:34,880 Speaker 2: the US. Let's talk about what Trump threatened to impose 184 00:09:35,240 --> 00:09:38,320 Speaker 2: on branded drugs from outside the US. A one hundred 185 00:09:38,360 --> 00:09:40,559 Speaker 2: percent tariff. Now, that's not going to help a whole 186 00:09:40,600 --> 00:09:41,480 Speaker 2: lot of consumers is. 187 00:09:41,480 --> 00:09:43,960 Speaker 7: It right exactly. I mean, that's one thing that's been 188 00:09:44,040 --> 00:09:47,280 Speaker 7: sort of in conflict with the administration's efforts to lower 189 00:09:47,320 --> 00:09:50,960 Speaker 7: drug prices is if there are tariffs on pharmaceutical products, 190 00:09:50,960 --> 00:09:53,240 Speaker 7: that could end up raising drug prices because it will 191 00:09:53,240 --> 00:09:55,679 Speaker 7: make it a lot more expensive for manufacturers to make 192 00:09:55,720 --> 00:09:58,840 Speaker 7: these medications. And like you said, all of the big 193 00:09:59,000 --> 00:10:03,040 Speaker 7: US and you know, international drug makers have plants, have 194 00:10:03,160 --> 00:10:06,000 Speaker 7: manufacturing plants in the US. They're building more in the US, 195 00:10:06,280 --> 00:10:09,000 Speaker 7: but the pharmaceutical supply chain is really complex, and they 196 00:10:09,040 --> 00:10:13,040 Speaker 7: do have some elements of their manufacturing or supply outside 197 00:10:13,040 --> 00:10:16,120 Speaker 7: of the US. ELI Lilly, for example, makes the critical 198 00:10:16,160 --> 00:10:19,800 Speaker 7: first step in their weight loss and diabetes drugs Manjarro 199 00:10:19,880 --> 00:10:22,240 Speaker 7: and zepbound in Ireland and then they ship it here 200 00:10:22,280 --> 00:10:24,600 Speaker 7: and the rest of the manufacturing process happens here. So 201 00:10:25,160 --> 00:10:30,360 Speaker 7: tariffs really had, you know, huge potential implications for this industry. 202 00:10:30,840 --> 00:10:34,040 Speaker 7: And what Peiser has been able to do is negotiate 203 00:10:34,040 --> 00:10:37,160 Speaker 7: a three year reprieve and it's the assumption that other 204 00:10:37,240 --> 00:10:39,520 Speaker 7: drug makers are going to try to follow suit with this. 205 00:10:40,000 --> 00:10:42,200 Speaker 2: Well, part Offiser's deal is they made a seventy billion 206 00:10:42,280 --> 00:10:45,480 Speaker 2: dollar pledge to expand manufacturing and research and development here. 207 00:10:46,000 --> 00:10:49,280 Speaker 2: So what is in Peiser's plans and what are some 208 00:10:49,320 --> 00:10:51,160 Speaker 2: of the other US manufacturers doing. 209 00:10:51,600 --> 00:10:55,400 Speaker 7: Yeah, so, like we said, there are other US manufacturers 210 00:10:55,440 --> 00:10:59,960 Speaker 7: and international manufacturers that have pledged billions of dollars of investments. 211 00:11:00,040 --> 00:11:02,440 Speaker 7: Over the last couple of months we've seen I mean, 212 00:11:02,480 --> 00:11:05,000 Speaker 7: I think Lily was the first one back in February, 213 00:11:05,000 --> 00:11:08,880 Speaker 7: and since then there's been a lot of other pledges 214 00:11:08,960 --> 00:11:13,120 Speaker 7: to invest. And so right now, what we're hearing is 215 00:11:13,160 --> 00:11:16,040 Speaker 7: that these negotiations are sort of on hold for the 216 00:11:16,080 --> 00:11:18,480 Speaker 7: time being in terms of this one hundred percent tariffs 217 00:11:18,480 --> 00:11:21,840 Speaker 7: that Trump had threatened. And there was also this ongoing 218 00:11:21,920 --> 00:11:25,880 Speaker 7: two thirty two investigation, which is a national security investigation 219 00:11:26,160 --> 00:11:30,040 Speaker 7: into the pharmaceutical supply chain sort of as to lay 220 00:11:30,080 --> 00:11:32,680 Speaker 7: the groundwork for eventual tariffs. So we're hearing right now, 221 00:11:32,720 --> 00:11:35,120 Speaker 7: as these sort of deals are going on, that all 222 00:11:35,160 --> 00:11:37,880 Speaker 7: of that is on pause for the time being. And 223 00:11:38,960 --> 00:11:40,719 Speaker 7: I guess it was a couple of months ago the 224 00:11:40,760 --> 00:11:44,600 Speaker 7: Trump administration sent letters to seventeen drug makers laying out 225 00:11:44,640 --> 00:11:48,040 Speaker 7: a couple of specific demands, you know, to lower drug prices, 226 00:11:48,040 --> 00:11:53,200 Speaker 7: look into direct to consumer, you know, offer discounts through medicaid, 227 00:11:53,400 --> 00:11:55,920 Speaker 7: and so what we're seeing is Pfizer follow through on 228 00:11:55,960 --> 00:11:58,360 Speaker 7: some of those demands and make promises that they will 229 00:11:58,400 --> 00:12:01,880 Speaker 7: discount a lot of their drugs on this trump are 230 00:12:02,040 --> 00:12:05,080 Speaker 7: X website, that they'll just count drugs through medicaid, which 231 00:12:05,760 --> 00:12:08,640 Speaker 7: that it's sort of Actually for the industry was a 232 00:12:08,679 --> 00:12:11,440 Speaker 7: bit of a relief because they thought it was going 233 00:12:11,520 --> 00:12:13,480 Speaker 7: to be worse than this, and it could be worse 234 00:12:13,559 --> 00:12:18,120 Speaker 7: than this if there were sweeping most favored nation policies 235 00:12:18,320 --> 00:12:22,000 Speaker 7: or tariffs implemented, and so for Pfizer, actually it was 236 00:12:22,240 --> 00:12:24,160 Speaker 7: a good thing and there was some fault, you know, 237 00:12:24,360 --> 00:12:26,240 Speaker 7: I guess follow through for the rest of the industry 238 00:12:26,280 --> 00:12:28,160 Speaker 7: that this would be a good thing too well. 239 00:12:28,160 --> 00:12:30,160 Speaker 2: A lot to look forward to in a lot of deals, 240 00:12:30,360 --> 00:12:33,679 Speaker 2: likely in the pipeline. Our thanks to Madison Muller, Bloomberg 241 00:12:33,800 --> 00:12:36,560 Speaker 2: Health Reporter, and coming up on Bloomberg Gay Break Weekend, 242 00:12:36,600 --> 00:12:39,400 Speaker 2: we'll look at the global political implications of the Nobel 243 00:12:39,559 --> 00:12:54,600 Speaker 2: Prize decisions. I'm Tom Busby and this is Bloomberg. This 244 00:12:54,640 --> 00:12:57,000 Speaker 2: is Bloomberg Gay Break Weekend, our global look ahead at 245 00:12:57,000 --> 00:12:59,600 Speaker 2: the top stories for investors in the coming week. I'm 246 00:12:59,640 --> 00:13:02,599 Speaker 2: Tom in New York. Up later in our program, a 247 00:13:02,679 --> 00:13:05,320 Speaker 2: look at the Golden Week holiday in China and what 248 00:13:05,440 --> 00:13:08,600 Speaker 2: it'll mean for consumer spending. But first, a new batch 249 00:13:08,640 --> 00:13:11,160 Speaker 2: of recipients for the Nobel Prize, one of the world's 250 00:13:11,160 --> 00:13:14,840 Speaker 2: most prestigious accolades, established in the will of Swedish chemist 251 00:13:14,840 --> 00:13:18,679 Speaker 2: and inventor Alfred Nobel to honor individuals who made outstanding 252 00:13:18,760 --> 00:13:22,679 Speaker 2: contributions to humankind. The awards have become an emblem of achievement, 253 00:13:22,840 --> 00:13:26,560 Speaker 2: even capturing the interest of US President Donald Trump. For more, 254 00:13:26,679 --> 00:13:29,240 Speaker 2: Let's go to London and bring in Bloomberg Daybreak Europe 255 00:13:29,240 --> 00:13:31,560 Speaker 2: anchor Caroline hepger Tom. 256 00:13:31,679 --> 00:13:34,760 Speaker 3: It's no secret that President Trump has been courting the 257 00:13:34,800 --> 00:13:38,720 Speaker 3: idea of winning a Nobel Peace Prize for some time. 258 00:13:39,160 --> 00:13:43,200 Speaker 3: According to Bloomberg opinion columnist Andres Klouth, it's one of 259 00:13:43,240 --> 00:13:46,199 Speaker 3: the reasons he's been pushing so hard for a cease 260 00:13:46,240 --> 00:13:50,560 Speaker 3: far between Russia and Ukraine. Other political leaders, including the 261 00:13:50,640 --> 00:13:54,960 Speaker 3: Congolese president, have weighed into the debate, saying Trump will 262 00:13:55,000 --> 00:13:57,600 Speaker 3: have earned the award if he can end more than 263 00:13:57,679 --> 00:14:02,600 Speaker 3: three decades of conflict between Rwanda and the Democratic Republic 264 00:14:02,640 --> 00:14:06,600 Speaker 3: of Congo. And of course, previous US presidents have managed 265 00:14:06,600 --> 00:14:10,400 Speaker 3: to impress the Nobel Committee in the past. Prior winners 266 00:14:10,440 --> 00:14:15,559 Speaker 3: include Theodore Roosevelt, Jimmy Carter, and most recently Barack Obama 267 00:14:15,840 --> 00:14:20,280 Speaker 3: in two thousand and nine. The current president mentioned the 268 00:14:20,320 --> 00:14:24,840 Speaker 3: prize during his recent address to the United Nations General Assembly, 269 00:14:25,120 --> 00:14:29,160 Speaker 3: although he did remain philosophical about his chances of winning. 270 00:14:29,760 --> 00:14:32,400 Speaker 8: I didn't think of it at the time because I 271 00:14:32,480 --> 00:14:36,000 Speaker 8: was too busy working to save millions of lives, that is, 272 00:14:36,040 --> 00:14:39,640 Speaker 8: the saving and stopping of these wars. But later I 273 00:14:39,720 --> 00:14:42,560 Speaker 8: realized that the United Nations wasn't there for us. 274 00:14:42,680 --> 00:14:43,440 Speaker 9: They weren't there. 275 00:14:44,480 --> 00:14:48,040 Speaker 8: I thought of it really after the fact, not during 276 00:14:48,080 --> 00:14:52,040 Speaker 8: these negotiations, which were not easy. That being the case, 277 00:14:53,000 --> 00:14:55,640 Speaker 8: what is the purpose of the United Nations? The UN 278 00:14:55,720 --> 00:15:01,120 Speaker 8: has such tremendous potential. I've always said it, such tremendous, 279 00:15:01,120 --> 00:15:05,560 Speaker 8: tremendous potential. But it's not even coming close to living 280 00:15:05,760 --> 00:15:08,720 Speaker 8: up to that potential for the most part, at least 281 00:15:08,760 --> 00:15:11,720 Speaker 8: for now. All they seem to do is write a 282 00:15:11,760 --> 00:15:16,120 Speaker 8: really strongly worded letter and then never follow that letter up. 283 00:15:16,440 --> 00:15:21,440 Speaker 8: It's empty words, and empty words don't solve war. The 284 00:15:21,440 --> 00:15:26,080 Speaker 8: only thing that solves war and wars is action. Now, 285 00:15:26,160 --> 00:15:30,280 Speaker 8: after ending all of these wars and also earlier negotiating 286 00:15:30,400 --> 00:15:34,160 Speaker 8: the Abraham Accords, which is a very big thing for 287 00:15:34,240 --> 00:15:39,440 Speaker 8: which our country received no credit, never receives credit. Everyone 288 00:15:39,520 --> 00:15:41,960 Speaker 8: says that I should get the Nobel Peace Prize for 289 00:15:42,040 --> 00:15:45,920 Speaker 8: each one of these achievements. But for me, the real 290 00:15:46,000 --> 00:15:48,800 Speaker 8: prize will be the sons and daughters who live to 291 00:15:48,880 --> 00:15:52,400 Speaker 8: grow up with the mothers and fathers, because millions of 292 00:15:52,440 --> 00:15:58,800 Speaker 8: people are no longer being killed in endless and unglorious wars. 293 00:15:59,400 --> 00:16:03,040 Speaker 3: That Donald Trump speaking there at the UN General Assembly 294 00:16:03,040 --> 00:16:05,880 Speaker 3: in New York, so just how likely is it that 295 00:16:05,920 --> 00:16:10,440 Speaker 3: he'll walk away with Nobel recognition and how important is 296 00:16:10,480 --> 00:16:13,880 Speaker 3: the upcoming prize giving. It's something I've been discussing with 297 00:16:13,960 --> 00:16:19,160 Speaker 3: our Nordic managing editor Katy Poyan Palo and Stockholm bureau 298 00:16:19,240 --> 00:16:22,600 Speaker 3: chief Charles Daily. Charles, can I start with you Firstie? 299 00:16:22,800 --> 00:16:26,280 Speaker 3: So the Nobels are obviously hugely prestigious. They are known 300 00:16:26,360 --> 00:16:28,880 Speaker 3: around the world, just in terms of the history and 301 00:16:28,880 --> 00:16:30,800 Speaker 3: where we are for this year. To tell us a 302 00:16:30,840 --> 00:16:33,520 Speaker 3: bit about the history of the Nobels and how they've 303 00:16:33,520 --> 00:16:34,360 Speaker 3: come about. 304 00:16:35,080 --> 00:16:36,880 Speaker 5: Yep, sure, I mean to do that. We have to 305 00:16:36,920 --> 00:16:39,840 Speaker 5: go back to eighteen ninety five and the Last Will 306 00:16:39,880 --> 00:16:43,360 Speaker 5: and Testament, of a Swedish engineer and chemist by the 307 00:16:43,440 --> 00:16:47,960 Speaker 5: name of Alfred Nobel, who is known really as well 308 00:16:47,960 --> 00:16:51,000 Speaker 5: as the Nobel Prizes, he's also known for inventing dynamite 309 00:16:51,280 --> 00:16:54,760 Speaker 5: as his claim to fame. In that will, he listed 310 00:16:54,800 --> 00:16:58,640 Speaker 5: five prizes for those who have conferred the greatest benefit 311 00:16:58,720 --> 00:17:02,160 Speaker 5: to mankind in the preceding year. And there were five 312 00:17:02,240 --> 00:17:07,920 Speaker 5: categories of prizes in the will physics, chemistry, physiology or medicine, 313 00:17:08,200 --> 00:17:12,159 Speaker 5: literature and peace, and they were first awarded in nineteen 314 00:17:12,240 --> 00:17:16,520 Speaker 5: oh one. Some years later, in nineteen sixty eight, however, 315 00:17:17,359 --> 00:17:20,080 Speaker 5: a prize was added in memory of Alfred Nobel, and 316 00:17:20,160 --> 00:17:23,400 Speaker 5: that was established by the central bank here in Sweden, 317 00:17:23,440 --> 00:17:27,480 Speaker 5: which is called the Risbank, and not surprisingly that is 318 00:17:27,520 --> 00:17:29,679 Speaker 5: called now the Economics Prize. 319 00:17:30,400 --> 00:17:33,040 Speaker 3: So how important do you think it is then to 320 00:17:33,480 --> 00:17:34,440 Speaker 3: Swedish people. 321 00:17:35,520 --> 00:17:38,320 Speaker 5: I think the fact that a Nobel Prize is seen 322 00:17:38,359 --> 00:17:41,480 Speaker 5: as you know, the most prestigious award in the world 323 00:17:41,520 --> 00:17:45,760 Speaker 5: in its field is really a source of national pride 324 00:17:45,800 --> 00:17:48,000 Speaker 5: for a country that, you know, let's be honest, is 325 00:17:48,080 --> 00:17:51,440 Speaker 5: only ten point five million people on the northern edges 326 00:17:51,480 --> 00:17:55,240 Speaker 5: of Europe. I think it's worth also noting that Sweden 327 00:17:55,280 --> 00:17:58,439 Speaker 5: is a nation that looks outward beyond its borders in 328 00:17:58,480 --> 00:18:03,480 Speaker 5: many respects. So the international attention that these prizes gone 329 00:18:04,000 --> 00:18:07,760 Speaker 5: is of huge importance to the country. Nobel Day on 330 00:18:07,840 --> 00:18:11,919 Speaker 5: December tenth, which is the anniversary of Nobel's death, is 331 00:18:11,960 --> 00:18:14,760 Speaker 5: when the prizes are awarded by the King and there 332 00:18:14,800 --> 00:18:18,200 Speaker 5: is a lavish banquet in Stockholm City Hall. And it's 333 00:18:18,200 --> 00:18:21,639 Speaker 5: probably fair to say that that is the biggest academic 334 00:18:21,720 --> 00:18:24,000 Speaker 5: and cultural highlight of the year in Sweden. 335 00:18:25,440 --> 00:18:29,400 Speaker 3: So deliberations normally do take place in secret. So what 336 00:18:29,480 --> 00:18:31,680 Speaker 3: do we know about the process for this year. 337 00:18:34,000 --> 00:18:37,080 Speaker 5: Yeah, the process for this year is as with other years. 338 00:18:37,160 --> 00:18:41,520 Speaker 5: So Nobel in his will listed the institutions responsible for 339 00:18:41,600 --> 00:18:45,040 Speaker 5: awarding the prize, for example the Royal Swedish Academy of 340 00:18:45,080 --> 00:18:49,120 Speaker 5: Sciences and for the Peace Prize it is a committee 341 00:18:49,119 --> 00:18:53,439 Speaker 5: of five elected by Norway's Parliament. Then there is an 342 00:18:53,480 --> 00:18:58,879 Speaker 5: approved list of nominators, for example former winners, members of 343 00:18:58,920 --> 00:19:04,359 Speaker 5: the Swedish Academy, or professors or chair people affiliated with universities, 344 00:19:04,680 --> 00:19:06,879 Speaker 5: and they can then put forward a name and a 345 00:19:06,960 --> 00:19:10,840 Speaker 5: voting committee then decides on the winner or winners. There 346 00:19:10,920 --> 00:19:15,600 Speaker 5: can only be three winners per prize. Is the maximum 347 00:19:15,720 --> 00:19:20,240 Speaker 5: number of winners per prize, and disclosure about nominations is 348 00:19:20,320 --> 00:19:25,840 Speaker 5: restricted for fifty years, so very a process shrouded in secrecy. 349 00:19:26,960 --> 00:19:30,280 Speaker 3: So Katy, let me turn to you the history of 350 00:19:30,320 --> 00:19:35,879 Speaker 3: awarding the Peace Prize by Norway to foreign leaders. It 351 00:19:35,920 --> 00:19:37,560 Speaker 3: has at times been controversial. 352 00:19:37,680 --> 00:19:40,720 Speaker 9: Well, absolutely, it's been controversial. So one thing to know 353 00:19:40,760 --> 00:19:43,320 Speaker 9: about this prize is you cannot ever give it to 354 00:19:43,359 --> 00:19:48,720 Speaker 9: a person that has deceased, And so living people tend 355 00:19:48,800 --> 00:19:53,399 Speaker 9: to after being awarded, continue their careers and lives, and 356 00:19:53,480 --> 00:19:58,360 Speaker 9: sometimes they do things that don't really kind of fit 357 00:19:58,440 --> 00:20:00,960 Speaker 9: in with the spirit of why they were awarded a 358 00:20:01,119 --> 00:20:05,840 Speaker 9: peace prize. One super well known example is two thousand 359 00:20:05,880 --> 00:20:11,240 Speaker 9: and nine when Barack Obama was awarded the Nobel Peace 360 00:20:11,280 --> 00:20:15,679 Speaker 9: Prize just nine months after becoming US president, and he 361 00:20:15,760 --> 00:20:18,560 Speaker 9: of course went on to take a lot of US 362 00:20:18,640 --> 00:20:20,000 Speaker 9: troops into Afghanistan. 363 00:20:20,440 --> 00:20:25,080 Speaker 3: Yes, and of course we know that President Trump has 364 00:20:25,119 --> 00:20:29,119 Speaker 3: been talking about wanting to win the prize for some time, 365 00:20:29,960 --> 00:20:35,480 Speaker 3: and so again this perhaps put some pressure, adds some 366 00:20:35,600 --> 00:20:39,160 Speaker 3: pressure to these awards. When did we first find out 367 00:20:39,520 --> 00:20:40,720 Speaker 3: about his ambitions? 368 00:20:41,640 --> 00:20:44,840 Speaker 9: Trump has been talking about this for almost a decade. 369 00:20:45,760 --> 00:20:50,240 Speaker 9: He keeps bringing up the fact that Obama was given 370 00:20:50,760 --> 00:20:54,800 Speaker 9: the prize and says, you know, if he were named Obama, 371 00:20:54,960 --> 00:20:57,520 Speaker 9: he would have been given this prize. In ten seconds. 372 00:20:57,640 --> 00:21:03,520 Speaker 9: Trump talks about having brokeered peace or helped end seven wars, 373 00:21:04,040 --> 00:21:07,440 Speaker 9: but many of these are actually a little bit questionable. 374 00:21:07,800 --> 00:21:12,320 Speaker 3: Indeed, in terms of the political implications. Then the pressure, 375 00:21:12,400 --> 00:21:16,879 Speaker 3: I wonder whether that is being felt. And maybe also 376 00:21:17,600 --> 00:21:20,720 Speaker 3: we don't know were the US president to win, what 377 00:21:20,880 --> 00:21:22,880 Speaker 3: might be the implications in the fallout. 378 00:21:23,640 --> 00:21:26,720 Speaker 9: I think the big question is what if he doesn't win. 379 00:21:27,480 --> 00:21:31,240 Speaker 9: This is where the main implication is or Norway. Really 380 00:21:31,720 --> 00:21:36,080 Speaker 9: very recently, Trump declared that not winning would represent a 381 00:21:36,240 --> 00:21:40,760 Speaker 9: big insult to our country. He there sort of applied 382 00:21:40,800 --> 00:21:45,600 Speaker 9: some pressure on the Norwegians. Norwegians are really worried about this. 383 00:21:46,200 --> 00:21:50,160 Speaker 9: They're bracing for what's happening if Trump doesn't win. Now, 384 00:21:50,240 --> 00:21:52,760 Speaker 9: if Trump were to win, I think a lot of 385 00:21:52,840 --> 00:21:57,639 Speaker 9: people would put to question the sort of foundation of 386 00:21:57,680 --> 00:22:01,080 Speaker 9: the Nobel Peace Prize and what it's done for. But 387 00:22:01,200 --> 00:22:05,159 Speaker 9: the same question has been raised with the previous winner. 388 00:22:05,200 --> 00:22:08,240 Speaker 9: As you know, Obama himself questioned his own. 389 00:22:08,160 --> 00:22:11,639 Speaker 3: Victory indeed, But then, of course, the Peace Prize is 390 00:22:11,680 --> 00:22:16,440 Speaker 3: separate from the Norwegian government. So whilst there might be trepidation, 391 00:22:17,320 --> 00:22:20,159 Speaker 3: how does that factor into the kind of decision making. 392 00:22:20,600 --> 00:22:23,720 Speaker 9: The committee is independent, we know that, and some of 393 00:22:23,720 --> 00:22:28,080 Speaker 9: the controversial decisions it's taken in the past were precisely 394 00:22:28,119 --> 00:22:32,360 Speaker 9: because it is independent. The Norwegian government wanted no conflict 395 00:22:32,400 --> 00:22:36,320 Speaker 9: with China in twenty ten, and yet the committee you know, 396 00:22:36,400 --> 00:22:38,720 Speaker 9: went and awarded the Chinese dissident that year. 397 00:22:39,480 --> 00:22:43,439 Speaker 3: Charles, just coming back to you in our specific sphere, 398 00:22:43,520 --> 00:22:47,320 Speaker 3: there's always lots of interest in the prize in economics, 399 00:22:47,359 --> 00:22:50,719 Speaker 3: as well as the other sciences that are awarded, in 400 00:22:50,920 --> 00:22:54,880 Speaker 3: literature and so on. Again, we don't know very much 401 00:22:54,920 --> 00:22:58,000 Speaker 3: about those awards, But what do you think might be 402 00:22:58,080 --> 00:23:00,119 Speaker 3: in the mix here for all of those of the 403 00:23:00,960 --> 00:23:03,080 Speaker 3: hugely important nobels. 404 00:23:03,840 --> 00:23:07,280 Speaker 5: That's a very difficult question because it really is hard 405 00:23:07,320 --> 00:23:10,240 Speaker 5: to name names. I mean, the betting odds at the 406 00:23:10,280 --> 00:23:13,639 Speaker 5: moment are really only available for the Peace and Literature prizes. 407 00:23:14,400 --> 00:23:19,000 Speaker 5: The favorites for the literature this year include the Australian 408 00:23:19,040 --> 00:23:23,560 Speaker 5: fiction writer Gerald Mernaine and also the Mexican author Christina 409 00:23:23,720 --> 00:23:29,240 Speaker 5: Rivera Gaza. So yeah, in conclusion, it's really hard to 410 00:23:29,280 --> 00:23:32,720 Speaker 5: sort of say were we think the winners might be. 411 00:23:33,200 --> 00:23:35,560 Speaker 5: It might be worth noting though, however, in terms of 412 00:23:36,000 --> 00:23:40,200 Speaker 5: the science related awards, prizes are typically shared by multiple 413 00:23:40,240 --> 00:23:44,359 Speaker 5: scholars and they often have an affiliation to universities on 414 00:23:44,680 --> 00:23:49,120 Speaker 5: the respective research departments. The North America and Europe tend 415 00:23:49,200 --> 00:23:53,800 Speaker 5: to dominate the science related prizes as well. And I 416 00:23:53,800 --> 00:23:57,159 Speaker 5: think you know, one area that's caught a lot of 417 00:23:57,200 --> 00:24:00,880 Speaker 5: media attention rightly in recent years has been the lack 418 00:24:00,920 --> 00:24:04,840 Speaker 5: of women representation on the awards. And you know, I 419 00:24:04,880 --> 00:24:08,200 Speaker 5: don't think that necessarily reflects badly on the Nobel committee 420 00:24:08,240 --> 00:24:12,199 Speaker 5: per se, but probably is more a reflection of the 421 00:24:12,240 --> 00:24:16,560 Speaker 5: barriers that women face in working and progressing through the 422 00:24:16,600 --> 00:24:17,760 Speaker 5: scientific community. 423 00:24:18,280 --> 00:24:21,800 Speaker 3: So my thanks there to Bloomberg's Charles Daily and Katty 424 00:24:21,880 --> 00:24:25,680 Speaker 3: poyan Palo. We'll have full coverage of the Nobel Prize 425 00:24:25,720 --> 00:24:29,800 Speaker 3: ceremonies across at Bloomberg platforms. I'm Caroline Hepgar here in 426 00:24:29,840 --> 00:24:32,600 Speaker 3: London and you can catch us every weekday morning for 427 00:24:32,640 --> 00:24:35,440 Speaker 3: Blueberg Daybreak you at beginning at six am in London, 428 00:24:35,680 --> 00:24:37,200 Speaker 3: that's one am on Wall Street. 429 00:24:37,320 --> 00:24:41,280 Speaker 2: Tom, Thank you Caroline, and coming up on Bloomberg Daybreak weekend, 430 00:24:41,280 --> 00:24:43,840 Speaker 2: I'll look at China's Golden Week holiday and what it 431 00:24:43,880 --> 00:24:47,320 Speaker 2: could reveal about the strength of the Chinese consumer. I'm 432 00:24:47,359 --> 00:25:00,679 Speaker 2: Tom Busby and this is Bloomberg. This is Bloomberg day 433 00:25:00,680 --> 00:25:02,959 Speaker 2: Break Weekend, our global look ahead of the top stories 434 00:25:02,960 --> 00:25:05,440 Speaker 2: for investors in the coming week. I'm Tom Busby in 435 00:25:05,520 --> 00:25:09,160 Speaker 2: New York. In China, the Golden Week holiday is now underway. 436 00:25:09,200 --> 00:25:12,600 Speaker 2: It began last Wednesday with National Day and runs through 437 00:25:12,640 --> 00:25:15,920 Speaker 2: the mid Autumn festival, and the government is hoping Chinese 438 00:25:15,920 --> 00:25:19,400 Speaker 2: consumers will celebrate for more. Let's get to the host 439 00:25:19,440 --> 00:25:21,840 Speaker 2: of the Daybreak Asia podcast, Doug Krisner. 440 00:25:22,359 --> 00:25:25,840 Speaker 4: Tom, Golden Week is regarded as the most important travel 441 00:25:25,880 --> 00:25:29,720 Speaker 4: period in China. Authorities are expecting two point four billion 442 00:25:29,760 --> 00:25:32,920 Speaker 4: people to travel during this eight day break, and needless 443 00:25:32,960 --> 00:25:36,840 Speaker 4: to say, the holiday represents a major opportunity for more 444 00:25:36,920 --> 00:25:41,480 Speaker 4: domestic consumption. Joining me now is Bloomberg's Catherine Lim, retail 445 00:25:41,520 --> 00:25:45,159 Speaker 4: analyst for Bloomberg Intelligence. She's on the line from Singapore. 446 00:25:45,520 --> 00:25:47,359 Speaker 4: Thank you so much for making time to chat with me. 447 00:25:47,880 --> 00:25:49,760 Speaker 4: Can you give me a sense on the extent to 448 00:25:49,800 --> 00:25:53,840 Speaker 4: which there is optimism over the outlook for consumer spending 449 00:25:53,880 --> 00:25:54,280 Speaker 4: this year? 450 00:25:55,119 --> 00:25:55,320 Speaker 8: Right? 451 00:25:55,440 --> 00:25:57,680 Speaker 10: You know, happy to be here and gen as you've 452 00:25:57,720 --> 00:26:03,560 Speaker 10: highlighted we are into the world holiday period. Over eight days, 453 00:26:03,760 --> 00:26:06,920 Speaker 10: you're gonna see celebrations not just for National Day, but 454 00:26:06,960 --> 00:26:10,879 Speaker 10: also the mid Autumn festival, which is a traditional, you 455 00:26:10,920 --> 00:26:15,520 Speaker 10: know event that family and friends together. So it was 456 00:26:15,680 --> 00:26:20,520 Speaker 10: very timely seeing how some of the cities are issuing 457 00:26:20,600 --> 00:26:26,720 Speaker 10: consumption vouchers out to their consumers so that you could 458 00:26:26,760 --> 00:26:31,240 Speaker 10: stimulate a little bit more of that spending, which admittedly 459 00:26:31,520 --> 00:26:34,040 Speaker 10: had put on a dreg in August because there was 460 00:26:34,080 --> 00:26:38,000 Speaker 10: a calender shift in that very important mid autumn festival 461 00:26:38,080 --> 00:26:41,560 Speaker 10: that I've just talked about, where by family and friends gether. 462 00:26:41,800 --> 00:26:44,760 Speaker 4: I'm wondering about sentiment right now, and maybe we can 463 00:26:44,800 --> 00:26:47,200 Speaker 4: tie to the equity markets in China which have been 464 00:26:47,280 --> 00:26:52,840 Speaker 4: performing very well. Is that expected to provide some positivity 465 00:26:52,880 --> 00:26:53,400 Speaker 4: to sentiment? 466 00:26:53,480 --> 00:26:53,880 Speaker 2: Do you think? 467 00:26:55,119 --> 00:26:57,840 Speaker 10: Well, definitely, I guess you know, when you look at 468 00:26:58,200 --> 00:27:04,320 Speaker 10: asset and asset value creation, it's either property if not. 469 00:27:04,560 --> 00:27:07,119 Speaker 10: Do you know the equity market, and I think in 470 00:27:07,160 --> 00:27:10,040 Speaker 10: the last two to three years, both of these market 471 00:27:10,119 --> 00:27:13,000 Speaker 10: hasn't been you know, in the best of shape. In 472 00:27:13,320 --> 00:27:18,240 Speaker 10: year to date, equity market the rarely definitely brings relieved 473 00:27:18,440 --> 00:27:22,399 Speaker 10: and you know, does help stimulate that centiment if you 474 00:27:22,440 --> 00:27:22,800 Speaker 10: ask me. 475 00:27:23,359 --> 00:27:25,720 Speaker 4: So, when I think of destinations in China, one of 476 00:27:25,800 --> 00:27:29,800 Speaker 4: the things that comes to mind is Macau and the casinos. 477 00:27:29,960 --> 00:27:34,640 Speaker 4: Are people feeling reasonably optimistic about casino business this year 478 00:27:34,840 --> 00:27:37,960 Speaker 4: and traffic at the big places, well. 479 00:27:37,760 --> 00:27:41,159 Speaker 10: We've also seen traffic, and I would say, you know, 480 00:27:41,280 --> 00:27:46,280 Speaker 10: the table roles, etc. Picking up in terms of our crowd, 481 00:27:46,840 --> 00:27:49,640 Speaker 10: so that is a good sign. On the other hand, 482 00:27:49,680 --> 00:27:52,239 Speaker 10: what I'll say is that you know, a lot of 483 00:27:52,280 --> 00:27:55,560 Speaker 10: these spenders, whether your gamblers or your shoppers per se, 484 00:27:55,960 --> 00:28:00,320 Speaker 10: there is more discerning spending that we have observed, So 485 00:28:00,400 --> 00:28:03,640 Speaker 10: I'm not sure whether we should be putting that much 486 00:28:03,720 --> 00:28:07,920 Speaker 10: bet on Macau. Similarly, you know, even Hong Kong per se, 487 00:28:08,200 --> 00:28:11,280 Speaker 10: I would say that, you know, after the recent typhoon 488 00:28:11,359 --> 00:28:16,359 Speaker 10: hits and we are anticipating another typhoon hitting you know, 489 00:28:16,440 --> 00:28:19,960 Speaker 10: the South over the next ten days, et cetera, it 490 00:28:20,040 --> 00:28:23,000 Speaker 10: may not actually be you know, the biggest thing for 491 00:28:23,119 --> 00:28:27,639 Speaker 10: these two autonomous regions within the country itself. I'm a 492 00:28:27,640 --> 00:28:32,880 Speaker 10: little more optimistic about domestic tourism within the country, as 493 00:28:33,000 --> 00:28:37,439 Speaker 10: you know, more of the shoppers or consumers take a 494 00:28:37,480 --> 00:28:41,560 Speaker 10: break out into you know, the suburban regions and there 495 00:28:41,560 --> 00:28:45,400 Speaker 10: are more camping sites as well as you know, areas 496 00:28:45,720 --> 00:28:48,640 Speaker 10: that consumers can take a break from the city. 497 00:28:49,120 --> 00:28:52,080 Speaker 4: So you mentioned a moment ago that domestic governments in 498 00:28:52,160 --> 00:28:56,160 Speaker 4: China are handing out vouchers and coupons and things to 499 00:28:56,280 --> 00:29:00,720 Speaker 4: kind of stimulate domestic consumption. Give me a sense of 500 00:29:00,840 --> 00:29:03,280 Speaker 4: how they are applied and whether we should be looking 501 00:29:03,360 --> 00:29:07,920 Speaker 4: for kind of high frequency data among retailers, whether it's 502 00:29:08,000 --> 00:29:11,400 Speaker 4: more a story about restaurants, whether it's a story about 503 00:29:11,720 --> 00:29:12,800 Speaker 4: air travel. 504 00:29:13,920 --> 00:29:18,360 Speaker 10: Right, you know, for restaurants, definitely, because you know, we 505 00:29:18,600 --> 00:29:24,520 Speaker 10: are still seeing lots of promotions ongoing for platforms like 506 00:29:24,640 --> 00:29:28,440 Speaker 10: Ali Baba, may twe and JD dot Com when it 507 00:29:28,480 --> 00:29:31,960 Speaker 10: comes to food delivery and quick commerce. You know, you 508 00:29:32,000 --> 00:29:36,760 Speaker 10: would have heard of the competition that was ongoing among 509 00:29:36,840 --> 00:29:40,920 Speaker 10: these three companies since the beginning, since the middle of 510 00:29:41,320 --> 00:29:45,760 Speaker 10: this year itself, and it continues to actually intensify as 511 00:29:45,800 --> 00:29:49,360 Speaker 10: we go into the holiday season again, you know, all 512 00:29:49,400 --> 00:29:52,960 Speaker 10: the gatherings that's going on now that will likely come 513 00:29:53,080 --> 00:29:58,360 Speaker 10: through and on a more intensified level into October and November. Doug, 514 00:29:58,440 --> 00:30:01,560 Speaker 10: Let's not forget that we are now very close to 515 00:30:01,720 --> 00:30:05,360 Speaker 10: the start of the Singles Day shopping festival, which is 516 00:30:05,600 --> 00:30:10,560 Speaker 10: essentially a near two month long shopping festival, and it 517 00:30:10,640 --> 00:30:15,480 Speaker 10: will kick start sometimes on the seventh of October, which 518 00:30:15,520 --> 00:30:20,840 Speaker 10: is essentially next week itself. Once the consumers returns from 519 00:30:20,920 --> 00:30:24,960 Speaker 10: the holidays, they may actually be shopping more online. So 520 00:30:25,040 --> 00:30:27,320 Speaker 10: I would say that, going back to your earlier point 521 00:30:27,360 --> 00:30:32,040 Speaker 10: about consumption vouchers, it's definitely good to actually have an 522 00:30:32,080 --> 00:30:37,200 Speaker 10: extra vouchure on hand to spend. But we'll let's look 523 00:30:37,280 --> 00:30:41,400 Speaker 10: at the discretionary side of things itself. Those spending may 524 00:30:41,440 --> 00:30:46,680 Speaker 10: actually come through in October and November, particularly during the 525 00:30:46,720 --> 00:30:48,200 Speaker 10: Singles Day promotions. 526 00:30:48,640 --> 00:30:50,960 Speaker 4: Catherine will leave it there. Thank you so very much, 527 00:30:50,960 --> 00:30:56,440 Speaker 4: Bloomberg's Catherine Lim, retail analyst for Bloomberg Intelligence. Catherine joining 528 00:30:56,480 --> 00:30:59,840 Speaker 4: us from Singapore, So we go from the Chinese consumer 529 00:31:00,080 --> 00:31:03,080 Speaker 4: to the challenges facing some of the most wealthy families 530 00:31:03,120 --> 00:31:06,640 Speaker 4: in Hong Kong. Joining me now is Bloomberg Shirley Joo. 531 00:31:06,800 --> 00:31:09,920 Speaker 4: Shirley and her team have been reporting on how trouble 532 00:31:10,400 --> 00:31:14,520 Speaker 4: in several high profile real estate projects is creating financial 533 00:31:14,600 --> 00:31:19,440 Speaker 4: risk for some very wealthy families in China. Shirley, thank 534 00:31:19,440 --> 00:31:21,400 Speaker 4: you for making time to chat with me before we 535 00:31:21,480 --> 00:31:25,480 Speaker 4: get to specific examples. Can you help me understand the 536 00:31:25,520 --> 00:31:28,560 Speaker 4: state of the Hong Kong real estate market right now? 537 00:31:29,120 --> 00:31:33,680 Speaker 11: So, Hong Kong's property market has been in a crisis 538 00:31:33,840 --> 00:31:39,040 Speaker 11: since COVID. It's mainly to do with the rising interest 539 00:31:39,120 --> 00:31:44,560 Speaker 11: rate globally and the slowing economy in China. A lot 540 00:31:44,600 --> 00:31:49,680 Speaker 11: of developers borrowed a lot of money before COVID and 541 00:31:49,760 --> 00:31:53,240 Speaker 11: before you know, Hong Kong sort of plunged into years 542 00:31:53,280 --> 00:31:57,840 Speaker 11: of political turmoil and the COVID isolation around the time 543 00:31:57,920 --> 00:32:01,640 Speaker 11: of twenty seventeen and twenty eighteen. That was when you know, 544 00:32:01,760 --> 00:32:06,440 Speaker 11: a lot of developers and a lot of smaller businesses 545 00:32:06,880 --> 00:32:10,240 Speaker 11: borrowed a lot of money and invested heavily into the 546 00:32:10,240 --> 00:32:14,360 Speaker 11: real estate sector. But then, you know, during COVID, people 547 00:32:14,440 --> 00:32:19,840 Speaker 11: stopped traveling and the retail businesses really did very badly. 548 00:32:20,240 --> 00:32:25,640 Speaker 11: And after COVID, China's economy started to slow down, and 549 00:32:25,680 --> 00:32:29,200 Speaker 11: that really put a lot of pressure on developers and 550 00:32:29,280 --> 00:32:32,000 Speaker 11: the businesses that sort of went on in the real 551 00:32:32,160 --> 00:32:37,720 Speaker 11: estate sector. Today, real estate prices, we have data showing 552 00:32:37,760 --> 00:32:42,680 Speaker 11: that it's about thirty percent down from the pre COVID level. 553 00:32:43,280 --> 00:32:46,080 Speaker 4: So can you give me an example of how a 554 00:32:46,120 --> 00:32:49,520 Speaker 4: wealthy family in Hong Kong made a big bet on 555 00:32:49,640 --> 00:32:54,320 Speaker 4: a major real estate project, only to see that project 556 00:32:54,440 --> 00:32:57,600 Speaker 4: underperform in a major way mis expectations wildly. 557 00:32:58,720 --> 00:33:02,840 Speaker 11: New World is one of the most high profile examples 558 00:33:02,960 --> 00:33:07,720 Speaker 11: of this. They borrowed a lot of money to invest 559 00:33:08,120 --> 00:33:13,960 Speaker 11: in developing several major projects, including a huge shopping mall 560 00:33:14,080 --> 00:33:18,240 Speaker 11: and hotel complex near Hong Kong's famous Victoria Harbor and 561 00:33:18,720 --> 00:33:22,600 Speaker 11: mega shopping mall near Hong Kong's International Airport, as well 562 00:33:22,640 --> 00:33:27,080 Speaker 11: as a sports park near Hong Kong's old Airport. And 563 00:33:27,240 --> 00:33:31,080 Speaker 11: they did that in twenty seventeen and twenty eighteen, and 564 00:33:31,160 --> 00:33:34,520 Speaker 11: they spent a lot of money, fueled by debt, and 565 00:33:34,560 --> 00:33:38,080 Speaker 11: then in twenty nineteen, Hong Kong started to enter this 566 00:33:38,240 --> 00:33:44,560 Speaker 11: prolonged period of political turmoil and COVID isolation, and after COVID, 567 00:33:44,600 --> 00:33:48,560 Speaker 11: Hong Kong's economy didn't rebound, it slowed down, so a 568 00:33:48,560 --> 00:33:52,360 Speaker 11: lot of these projects didn't really have time to materialize. 569 00:33:52,520 --> 00:33:56,200 Speaker 11: They didn't have the chance to generate cash for New 570 00:33:56,240 --> 00:33:59,280 Speaker 11: World to pay off their debt, and that's why New 571 00:33:59,280 --> 00:34:03,960 Speaker 11: World's step problem really emerged over the past two years 572 00:34:04,400 --> 00:34:07,800 Speaker 11: and it was pushed to the brink of default. And 573 00:34:07,880 --> 00:34:12,320 Speaker 11: it had to line up Hong Kong's biggest ever refinancing 574 00:34:12,680 --> 00:34:16,719 Speaker 11: with dozens of banks, and it put it off. But 575 00:34:16,760 --> 00:34:20,000 Speaker 11: then banks started to feel that they had too much 576 00:34:20,040 --> 00:34:21,360 Speaker 11: exposure on your world. 577 00:34:21,600 --> 00:34:23,720 Speaker 4: One of the things that I think is very interesting 578 00:34:23,760 --> 00:34:26,800 Speaker 4: here in terms of context is the notion of family 579 00:34:26,880 --> 00:34:30,919 Speaker 4: empires being involved here. It's not just a company. It's 580 00:34:30,920 --> 00:34:34,040 Speaker 4: almost like a dynasty, isn't it. And you mentioned in 581 00:34:34,080 --> 00:34:37,200 Speaker 4: your piece this issue which I found very interesting the 582 00:34:37,239 --> 00:34:41,040 Speaker 4: notion of self correcting. So when a family makes a mistake, 583 00:34:41,680 --> 00:34:44,719 Speaker 4: it's the dynamics of the family sometimes that can make 584 00:34:44,840 --> 00:34:47,840 Speaker 4: the correcting process even more challenging, right. 585 00:34:48,320 --> 00:34:51,840 Speaker 11: Right, Yeah, So the issue with a lot of family 586 00:34:51,880 --> 00:34:55,120 Speaker 11: owned businesses is that a lot of the decision making 587 00:34:55,280 --> 00:34:59,719 Speaker 11: is sometimes down to the personal whim of family members. 588 00:35:00,160 --> 00:35:05,120 Speaker 11: Even though they hired professional managers to run their companies, 589 00:35:05,480 --> 00:35:09,760 Speaker 11: the final decision making will be swighed by the will 590 00:35:09,840 --> 00:35:14,360 Speaker 11: of family members, and that's making management more difficult and 591 00:35:14,520 --> 00:35:19,759 Speaker 11: less professional. And in New World's case, because they expanded 592 00:35:19,880 --> 00:35:24,160 Speaker 11: so aggressively in twenty seventeen and twenty eighteen and the 593 00:35:24,239 --> 00:35:28,440 Speaker 11: timing was really bad. So now there that problem really showed, 594 00:35:28,840 --> 00:35:33,520 Speaker 11: and that's really raising an alarm bell for a lot 595 00:35:33,560 --> 00:35:37,720 Speaker 11: of other family owned businesses in Hong Kong and around 596 00:35:37,760 --> 00:35:38,680 Speaker 11: the world as well. 597 00:35:38,960 --> 00:35:41,080 Speaker 4: So we know on the mainland, the government's been very 598 00:35:41,160 --> 00:35:44,040 Speaker 4: concerned about problems with the property market. How is the 599 00:35:44,080 --> 00:35:48,319 Speaker 4: local government in Hong Kong viewing this situation right now? 600 00:35:48,400 --> 00:35:49,880 Speaker 4: Are people very concerned? 601 00:35:50,360 --> 00:35:54,440 Speaker 11: People are concerned, and that was why you would see 602 00:35:54,480 --> 00:35:59,520 Speaker 11: reports about Hong Kong's mondatary Authority actually following up on 603 00:35:59,640 --> 00:36:02,920 Speaker 11: New wor World refinancing effort. You know, there were reports 604 00:36:02,960 --> 00:36:06,879 Speaker 11: about Hong Kong Monetary Authority calling banks up to check 605 00:36:07,160 --> 00:36:11,200 Speaker 11: on the status on their refinancing arrangement with New World, 606 00:36:11,320 --> 00:36:14,640 Speaker 11: and banks felt that they didn't want to be the 607 00:36:14,680 --> 00:36:20,160 Speaker 11: one that make New World default and trigger the rippling 608 00:36:20,160 --> 00:36:23,760 Speaker 11: effect on Hong Kong's economy. So there is this saying 609 00:36:23,880 --> 00:36:27,239 Speaker 11: that New World is too big to fail, and that 610 00:36:27,360 --> 00:36:32,120 Speaker 11: really showed during its refinancing effort with the banks and 611 00:36:32,200 --> 00:36:35,279 Speaker 11: with the involvement of Hong Kong's monetary authorities. 612 00:36:35,600 --> 00:36:38,800 Speaker 4: When I think about the residential market in Hong Kong, 613 00:36:38,920 --> 00:36:41,880 Speaker 4: I know that for years there have been challenges trying 614 00:36:41,880 --> 00:36:45,560 Speaker 4: to add to new supplies. So many restrictions on developing 615 00:36:45,680 --> 00:36:49,120 Speaker 4: land and yet here we have a situation where commercial 616 00:36:49,160 --> 00:36:52,520 Speaker 4: developers don't seem to have any problems. Can you imagine 617 00:36:52,560 --> 00:36:55,920 Speaker 4: a world where things get turned and so that perhaps 618 00:36:55,920 --> 00:36:59,400 Speaker 4: in a way, these companies begin to focus their energy, 619 00:36:59,440 --> 00:37:03,440 Speaker 4: maybe more on residential property than on commercial property. 620 00:37:03,600 --> 00:37:06,839 Speaker 11: That's exactly what New World is doing right now. So 621 00:37:07,000 --> 00:37:11,759 Speaker 11: now they are refocusing on selling and building more residential 622 00:37:11,840 --> 00:37:17,120 Speaker 11: projects and from selling apartments that will generate money for 623 00:37:17,239 --> 00:37:21,480 Speaker 11: them to pay down debt. So that's their main strategy 624 00:37:21,560 --> 00:37:22,040 Speaker 11: right now. 625 00:37:22,520 --> 00:37:24,719 Speaker 4: Shirley, we'll leave it there. Thank you so very much, 626 00:37:24,760 --> 00:37:28,240 Speaker 4: Bloomberg Shirley Joe in Hong Kong, and I'm Doug Chrisner. 627 00:37:28,360 --> 00:37:31,840 Speaker 4: Catch us weekdays for the Daybreak Asia podcast. It's available 628 00:37:31,880 --> 00:37:34,319 Speaker 4: wherever you get your podcast. Tom. 629 00:37:34,600 --> 00:37:36,759 Speaker 2: Thanks Doug, and that does it for this edition of 630 00:37:36,760 --> 00:37:39,480 Speaker 2: Bloomberg day Break Weekend. Join us again Monday morning at 631 00:37:39,520 --> 00:37:41,760 Speaker 2: five am Wall Street Time for the latest on markets 632 00:37:41,760 --> 00:37:44,000 Speaker 2: overseas and the news you need to start your day. 633 00:37:44,320 --> 00:37:47,160 Speaker 2: I'm Tom Buzzby. Stay with us. Top stories and global 634 00:37:47,200 --> 00:37:50,160 Speaker 2: business headlines are coming up right now.