WEBVTT - Bloomberg Daybreak Weekend: Queen, CPI, China, GOP (Podcast) 0:00:02.680 --> 0:00:05.800 This is Bloomberg Daybreak Weekend, our global look at the 0:00:05.840 --> 0:00:08.560 top stories in the coming week from our Daybreak anchors 0:00:08.680 --> 0:00:11.440 all around the world. Straight ahead on the program, is 0:00:11.480 --> 0:00:15.120 inflation getting worse or slowing down? Time to place your beds. 0:00:15.360 --> 0:00:18.239 I'm Nathan Hagar. I'm Caroline he in London, where we're 0:00:18.239 --> 0:00:21.560 looking at plans for the Queen's state funeral. Brian Curtis 0:00:21.680 --> 0:00:24.480 in Hong Kong. What are the chances the upcoming data 0:00:24.680 --> 0:00:28.440 in China change the picture for markets? I'm Amy Morris 0:00:28.440 --> 0:00:31.280 in Washington, will look into the changing fortunes of the 0:00:31.320 --> 0:00:37.280 Republican Party as the midterm campaigns heat up. That's all 0:00:37.320 --> 0:00:41.400 straight ahead on Bloomberg Daybreak Weekend on Bloomberg Eliven Free 0:00:41.479 --> 0:00:45.760 on New York, Bloomberg one, Washington d C, Bloomberg one 0:00:45.800 --> 0:00:49.519 oh six one, Boston, Bloomberg nine sixties, San Francisco, d 0:00:49.680 --> 0:00:53.840 A B Digital Radio London, Sirius XM one and around 0:00:53.840 --> 0:00:56.440 the world on Bloomberg Radio dot Com and via the 0:00:56.560 --> 0:01:01.800 Bloomberg Business App. Good day to you. I'm Nathan Hagar. 0:01:01.920 --> 0:01:04.720 We begin today's program with a look at inflation and 0:01:04.720 --> 0:01:07.679 whether we could be in line for some relief for 0:01:07.760 --> 0:01:11.160 that I'm joined by Bloomberg's Global Economics and Policy correspondent 0:01:11.520 --> 0:01:14.720 Michael McKee. So, Mike, we're all waiting for the release 0:01:14.760 --> 0:01:19.000 of the August Consumer Price Index on Tuesday. What are 0:01:19.040 --> 0:01:22.480 you expecting. Well, there's a good possibility we could see 0:01:22.560 --> 0:01:25.800 on a month over month basis a slight decline in 0:01:25.959 --> 0:01:29.440 a CPI because energy prices continued to fall during the 0:01:29.480 --> 0:01:32.959 month of August. That made a big difference in July 0:01:33.240 --> 0:01:37.880 when month over month inflation came in basically flat. So 0:01:38.200 --> 0:01:41.200 forecast a consensus forecast at this point for about a 0:01:41.200 --> 0:01:43.440 tenth of a percentage point decline. Now that would only 0:01:43.480 --> 0:01:46.399 push year over year inflation down to about eight point 0:01:46.480 --> 0:01:50.160 one percent, So still very high and something that will 0:01:50.200 --> 0:01:55.120 be concerning Americans. But progress. Yeah, progress, And I guess 0:01:55.160 --> 0:01:57.960 the question is, as it has been for some time, 0:01:58.160 --> 0:02:01.880 whether we've hit the peak of inflation. Can we say that, 0:02:02.200 --> 0:02:04.600 given that so much of it is driven, as you 0:02:04.720 --> 0:02:08.720 rightly point out, by energy and food prices. Yeah, that's 0:02:08.760 --> 0:02:12.160 the problem. Um, in an ordinary world you'd say we'd 0:02:12.200 --> 0:02:15.200 hit the peak. A number of categories are probably going 0:02:15.240 --> 0:02:19.560 to start going down. Now we've seen, UH, car assemblies 0:02:19.639 --> 0:02:22.520 start to pick up, so h new car prices should 0:02:22.560 --> 0:02:26.119 start to fall. Use car prices are already falling, and 0:02:26.200 --> 0:02:30.600 with the decline in how home sales market, we're seeing 0:02:30.720 --> 0:02:35.320 appliances start to uh, you know, stop their increases at 0:02:35.360 --> 0:02:37.520 least put it that way in in some cases fall. 0:02:37.960 --> 0:02:41.440 Even though housing will still contribute to inflation, the things 0:02:41.520 --> 0:02:43.840 we buy two put in our homes may not, so 0:02:43.880 --> 0:02:46.400 that could have a big impact, particularly on core inflation. 0:02:46.680 --> 0:02:50.720 The problem is you have something like Vladimir Putin's addressed 0:02:50.840 --> 0:02:56.040 last week in which he said that the gas is 0:02:56.080 --> 0:02:58.960 going to stay off for a while and Europe's gonna 0:02:59.000 --> 0:03:02.560 have a cold winder oil being fungible around the world, 0:03:02.800 --> 0:03:06.400 a global price. We could easily see headline inflation go 0:03:06.480 --> 0:03:09.280 back up if an energy prices go back up, And 0:03:09.320 --> 0:03:12.080 of course that's something that the Federal Reserve doesn't have 0:03:12.160 --> 0:03:15.560 much control over with the tools it has, and it's 0:03:15.560 --> 0:03:19.400 gonna stay focused on, as you mentioned earlier, the core. 0:03:19.960 --> 0:03:22.640 What are we looking at from the core? Well, we 0:03:22.720 --> 0:03:26.320 are looking at this point, uh for a three ten 0:03:26.639 --> 0:03:30.800 percent gain, that's the consensus so far, and that would 0:03:31.120 --> 0:03:34.280 bring the core rate on a year over your basis 0:03:34.320 --> 0:03:37.280 because of base effects up from where it was was 0:03:37.360 --> 0:03:39.320 five point nine percent of July would go up to 0:03:39.840 --> 0:03:44.600 six in this case, Given where we are with inflation 0:03:44.920 --> 0:03:52.200 and the unique nature of pandemic induced inflationary episode, I 0:03:52.240 --> 0:03:54.240 think the FED would be satisfied to see some of 0:03:54.240 --> 0:03:58.320 the major categories going down even if the overall headline 0:03:58.360 --> 0:04:03.400 inflation doesn't go down. If we get a real surprise 0:04:04.480 --> 0:04:09.280 rise in core inflation, that would certainly seal seventy bases 0:04:09.320 --> 0:04:12.080 point increase at the FED meeting on the twenty one, 0:04:12.320 --> 0:04:14.880 But that's probably baked in anyway. It would take quite 0:04:14.880 --> 0:04:18.560 a fall for the FED to change their minds about that. Now. Yeah, 0:04:18.600 --> 0:04:22.200 it sounds like the Fed itself is almost baked that in, 0:04:22.360 --> 0:04:25.040 given some of the hawkish commentary we've heard in the 0:04:25.160 --> 0:04:28.120 run up, not just to this inflation print, but to 0:04:28.200 --> 0:04:32.200 the decision coming up later this month. Yeah, the Feds 0:04:32.200 --> 0:04:35.000 seems to have gotten more hawkish as time went by, 0:04:35.080 --> 0:04:37.520 and that maybe in part of by product of that 0:04:37.600 --> 0:04:40.320 strong jobs report we got for the month of August. 0:04:40.640 --> 0:04:42.840 And if inflation doesn't fall a lot, then it just 0:04:42.920 --> 0:04:46.159 it makes their decision a whole lot easier. Uh. I 0:04:46.200 --> 0:04:50.359 think Jim Bullard put it best. Uh, He's been a 0:04:50.520 --> 0:04:53.440 hawk all along of pushing for seventy five basis points, 0:04:53.720 --> 0:04:55.760 and he said, if you're going to get to a 0:04:55.800 --> 0:04:58.200 certain level, which they all agree they need to do 0:04:58.320 --> 0:05:02.640 slightly restrictive, why wait, do it now, and then if 0:05:02.680 --> 0:05:05.320 you need to you can reverse it. But by dragging 0:05:05.360 --> 0:05:08.720 it out, you only let inflation get more firmly entrenched. 0:05:08.760 --> 0:05:11.680 And so I think that's kind of what they've all embraced. 0:05:11.960 --> 0:05:16.279 There's a tactical, uh question about how high you need 0:05:16.320 --> 0:05:19.839 to go, whether they need to go over four percent 0:05:19.960 --> 0:05:24.040 or not, what is restrictive, but the strategy is all 0:05:24.120 --> 0:05:26.080 kind of the same. We get up to that restrictive 0:05:26.160 --> 0:05:28.480 level and leave it there for a while. Yeah, I 0:05:28.520 --> 0:05:31.360 was gonna say, I'm sure there's a lot of discussion, 0:05:31.480 --> 0:05:35.479 a lot of debate about whether we're already in restrictive territory, 0:05:35.600 --> 0:05:39.120 even though, as you say, the markets are expecting that 0:05:39.400 --> 0:05:42.960 rates are going to continue going higher, and even if 0:05:43.000 --> 0:05:45.719 it starts too slow, we are going to see further 0:05:45.839 --> 0:05:48.599 increases for the rest of this year. Yeah, this is 0:05:48.640 --> 0:05:50.520 where we get a little nerdy and point out that 0:05:50.560 --> 0:05:54.440 the FED looks at the long term neutral rate as 0:05:54.600 --> 0:05:56.760 about two and a half percent. That would be with 0:05:56.880 --> 0:06:01.320 unemployment somewhere in the low four percent rate and inflation 0:06:01.880 --> 0:06:05.880 somewhere around two percent. But since inflation is elevated and 0:06:06.120 --> 0:06:09.479 unemployment is lower than what the Fed thinks is a 0:06:09.560 --> 0:06:14.039 neutral level, it is likely that the Fed thinks the 0:06:14.080 --> 0:06:16.839 neutral rate is temporarily much higher. In other words, it'll 0:06:16.880 --> 0:06:20.919 it'll take more of rate increase to bring down the 0:06:21.000 --> 0:06:23.960 inflation rate to what it thinks is neutral, and then 0:06:24.000 --> 0:06:27.080 they could bring down UH interest rates. So you could 0:06:27.080 --> 0:06:30.680 expect that the Fed is going to get to somewhere 0:06:30.680 --> 0:06:33.359 in the vicinity of foreign if we have a surprise, 0:06:33.400 --> 0:06:36.480 go over it UH and hold it there for quite 0:06:36.520 --> 0:06:40.800 some time. Unless we get signs of recession. It is 0:06:40.880 --> 0:06:44.040 likely that we're going to leave interest rates in this 0:06:44.080 --> 0:06:47.760 neighborhood or above for at least a year. All right, Mike, 0:06:47.800 --> 0:06:50.440 thanks for being with us. That's Bloomberg Global Economics and 0:06:50.520 --> 0:06:55.000 Policy correspondent Michael McKean, and coming up on Bloomberg Daybreak weekend, 0:06:55.080 --> 0:06:57.880 we turned to the UK with Britain in ten days 0:06:57.920 --> 0:07:00.960 of mourning following the death of the Queen. I'm Nathan 0:07:01.000 --> 0:07:08.599 Hagar and this is Bloomberger. This is Bloomberg Daybreak weekend. 0:07:08.640 --> 0:07:11.360 Our global look ahead at the top stories for investors 0:07:11.360 --> 0:07:13.920 in the coming week. I'm Nathan Hagar. Up. Later in 0:07:13.960 --> 0:07:16.920 our program we'll look at the Chinese economy, but first 0:07:17.040 --> 0:07:19.520 we head across the pond to the UK, where the 0:07:19.560 --> 0:07:23.120 British people lost their queen this week. Now the country 0:07:23.200 --> 0:07:25.680 enters a period of mourning. For more on the details 0:07:25.680 --> 0:07:28.560 and the path ahead, we turned to BLUEMBERG Daybreak Europe 0:07:28.520 --> 0:07:32.400 anchors Caroline Hepger and Stephen Caroll. Nathan. The Queen died 0:07:32.480 --> 0:07:35.800 peacefully at balm Mole on Thursday, the eighth of September, 0:07:35.920 --> 0:07:38.800 and on Friday the nation went into a period of 0:07:38.840 --> 0:07:42.400 ten days of morning. What are we expecting over these 0:07:42.480 --> 0:07:45.520 coming days, Well, the lying in state of the Queen, 0:07:45.680 --> 0:07:49.040 King Charles the Third's first speech to the nation as King, 0:07:49.480 --> 0:07:52.960 and of course then the state funeral of Queen Elizabeth. 0:07:53.400 --> 0:07:55.960 Now I expect the mood in London will no doubt 0:07:56.000 --> 0:07:59.440 be extremely somber in the coming days. Stephen, Yes, already 0:07:59.440 --> 0:08:02.360 we could see in the mere moments after the news 0:08:02.400 --> 0:08:05.560 was announced, already the formal process was in place. The 0:08:05.600 --> 0:08:08.920 new Prime Minister, Liz Trust said that Queen Elizabeth the 0:08:08.920 --> 0:08:12.480 Second was the rock on which modern Britain was built 0:08:12.480 --> 0:08:15.640 her predecessor. Boris Johnson also commenting saying that in the 0:08:15.680 --> 0:08:17.640 hearts of every one of us there was there is 0:08:17.680 --> 0:08:19.760 an ache at the passing of our queen, a deep 0:08:19.800 --> 0:08:23.280 and personal sense of loss, far more intense perhaps than 0:08:23.320 --> 0:08:26.240 we expected. Interesting that he reflects on that point of 0:08:26.560 --> 0:08:31.720 her being such a constant in people's lives in this country, 0:08:31.920 --> 0:08:35.120 and how even though she was ninety six years old, 0:08:35.360 --> 0:08:37.960 it still has come as a shock and and deeply 0:08:37.960 --> 0:08:40.920 affected so many people here. Yeah. Absolutely, I think the 0:08:41.040 --> 0:08:46.080 nation was already on alert on Thursday when on Bloomberg 0:08:46.160 --> 0:08:49.480 Radio we were focused, of course on the economics and politics. 0:08:49.520 --> 0:08:53.040 We were watching the brand new Prime Minister delivering a 0:08:53.160 --> 0:08:57.560 significant speech on energy bills, and in Parliament at some 0:08:57.640 --> 0:09:00.640 point after that speech, key politicians were added a slip 0:09:00.640 --> 0:09:04.400 of paper. Then we got the Bucking and Palace release 0:09:04.440 --> 0:09:07.520 of a statement about the Queen's health. That really did 0:09:07.960 --> 0:09:11.880 put the country on notice about the gravity of the situation. 0:09:12.480 --> 0:09:16.600 It wasn't though, until six thirty or around that point 0:09:16.679 --> 0:09:19.680 on Thursday evening, that we learned of the death of 0:09:19.720 --> 0:09:22.360 the Queen. As that news has been thinking in here, 0:09:22.360 --> 0:09:25.880 we've been speaking to Charles Anson, whose communications consultant and 0:09:25.920 --> 0:09:28.920 a former press secretary to the Queen. He was speaking 0:09:28.920 --> 0:09:31.160 to us on Bloomberg Radio and here some of his 0:09:31.200 --> 0:09:34.200 reflections on the Queen's legacy and what might be to 0:09:34.280 --> 0:09:37.280 come under King Charles the Third. The reason that the 0:09:37.320 --> 0:09:42.080 British monarchy has survived and prospered over a thousand years, 0:09:42.080 --> 0:09:45.720 with difficult times and good times as well. The reason 0:09:45.760 --> 0:09:49.240 it has survived it has been able to adapt, and 0:09:50.000 --> 0:09:53.439 none more so than in these last seventy years have 0:09:53.640 --> 0:09:56.640 changed since the Second World War. And what the Queen 0:09:56.679 --> 0:10:00.080 has brought is a sort of steady modernizing approach of 0:10:00.080 --> 0:10:04.480 the monarchy, whilst remaining herself the same character she was 0:10:04.640 --> 0:10:10.839 when she stood and knelt in Westminster Abbey her coronation. 0:10:11.480 --> 0:10:14.720 And I think that combination of appearing to be the 0:10:14.800 --> 0:10:17.920 same whilst being open to new ideas and new ways 0:10:17.920 --> 0:10:22.480 of doing things has served the monarchy very well and 0:10:23.080 --> 0:10:26.719 reflects that there's society in the country that we now 0:10:26.800 --> 0:10:30.680 live in. And I think the process and embracing change 0:10:30.720 --> 0:10:34.040 in a very quiet sort of way has been very effective. 0:10:34.160 --> 0:10:37.720 And of course this has been admired by other great 0:10:38.160 --> 0:10:43.319 political figures around the world. News Mandela Barack Obama virtually 0:10:43.400 --> 0:10:47.480 every American president has valued the Queen's and take on things. 0:10:47.480 --> 0:10:53.199 Her experience is enormous, and she's used it and projected 0:10:53.240 --> 0:10:58.520 Britain in a way that has been a touching to 0:10:58.640 --> 0:11:02.600 many people. Given that legacy and influence of the Queen, 0:11:02.960 --> 0:11:07.000 what sort of king do you think that Charles will be? Well? 0:11:07.040 --> 0:11:11.080 I think each monarch brings his own his or her 0:11:11.120 --> 0:11:16.160 own style and some beliefs to the role, But essentially 0:11:16.600 --> 0:11:24.520 the core value of the monarchy is to remain politically 0:11:24.559 --> 0:11:29.360 neutral above the political fray, and to work for society 0:11:30.080 --> 0:11:32.959 and the nation as a whole. And I think the 0:11:33.120 --> 0:11:36.280 aim very much of the Prince of Wales now King 0:11:36.360 --> 0:11:40.880 Charles the Third, and of his mother, Queen Elizabeth, was 0:11:40.960 --> 0:11:44.480 to try to make a better world, one that was 0:11:44.520 --> 0:11:48.040 more tolerant, one that was more stable and steady, and 0:11:48.160 --> 0:11:50.760 one that was able to deal with adversity as well 0:11:50.760 --> 0:11:54.680 as with triumph. And I think that combination of quiet 0:11:54.760 --> 0:11:59.400 steadiness making the world a certainly better place is a 0:11:59.440 --> 0:12:04.280 tremendous ingredient in the world where politics is often a 0:12:04.480 --> 0:12:09.120 very rough business, and the constitutional monarchy there's an overlay 0:12:09.280 --> 0:12:13.559 to the political and economics society and God embodies a 0:12:13.640 --> 0:12:19.000 set of values about decency, about tolerance, about fairness, about inclusion, 0:12:19.640 --> 0:12:22.560 about good relations with people in the matter what their 0:12:22.559 --> 0:12:25.400 religion are, what their color are, so and so forth. 0:12:25.960 --> 0:12:30.480 And I think you know, under in reign of the 0:12:30.600 --> 0:12:34.920 new King, it will be interesting to see how King 0:12:35.040 --> 0:12:39.240 Charles the Third takes forward and this sense of inclusion 0:12:39.320 --> 0:12:42.920 in society which he has spent over the fifty years 0:12:43.120 --> 0:12:48.319 and promoting and encouraging amongst young people of different colors 0:12:48.360 --> 0:12:51.560 and religions in the sort of modern society that we 0:12:51.640 --> 0:12:54.400 have now. And I think that's a forceful influence. It's 0:12:54.440 --> 0:12:58.920 not a party political influence, but for the body politics 0:12:58.960 --> 0:13:03.280 ahult to have a constitutional monarchy doesn't interfere with the 0:13:03.480 --> 0:13:07.400 day to day political process, but there's art and minds 0:13:08.559 --> 0:13:13.599 of that monarchy are for the changes needed in the 0:13:13.720 --> 0:13:16.360 mode societies and make it work well and to make 0:13:16.400 --> 0:13:19.400 it work more fairly. I think there are a great 0:13:19.440 --> 0:13:21.720 force for good in that respect. And I think whether 0:13:21.760 --> 0:13:25.360 you're a monarchist or not, our constitutional monarchy is a 0:13:25.480 --> 0:13:33.320 mechanism that offers a bit more stability and prospect for 0:13:33.480 --> 0:13:38.080 sensible change, for good manners and for high standards in 0:13:38.360 --> 0:13:42.959 society and particularly in political and public life. And they 0:13:43.040 --> 0:13:46.760 said that example in the Queen is a superb an 0:13:46.760 --> 0:13:51.080 exemplar of that. That's trans Anson, former Press Ecretary to 0:13:51.120 --> 0:13:54.440 the Queen. How fascinating to hear those insights from someone 0:13:54.480 --> 0:13:57.800 who knows the royal family so well about the challenges 0:13:58.080 --> 0:14:02.600 not insignificant face King Charles the Third, he is seventy 0:14:02.640 --> 0:14:05.000 three years old and we know him well. Of course, 0:14:05.000 --> 0:14:07.880 he is the oldest person to accede to the throne 0:14:07.880 --> 0:14:12.360 in British history. We know and understand how much rests 0:14:12.400 --> 0:14:16.920 now upon his shoulders. But I think Stephen, over these 0:14:16.960 --> 0:14:20.600 coming days, I and many Britain's will be grieving, no doubt, 0:14:20.720 --> 0:14:24.640 quite personally for the loss of the longest reigning monarch 0:14:24.680 --> 0:14:27.840 in British history. We're going to be continuing our reporting 0:14:27.880 --> 0:14:30.800 here on Bloomberg Radio as we look to the state 0:14:30.840 --> 0:14:35.000 funeral of Queen Elizabeth the Second and we commemorate her 0:14:35.040 --> 0:14:38.120 life and times. I'm Stephen Carroll in London. You can 0:14:38.160 --> 0:14:41.080 catch us every weekday morning here for Bloomberg Daybreak Europe, 0:14:41.120 --> 0:14:43.720 starting at six am in London and one am on 0:14:43.800 --> 0:14:47.200 Wall Street. Nathan, thank you, Caroline and Stephen, and coming 0:14:47.240 --> 0:14:50.760 up I'm Bloomberg Daybreak Weekend. How much is China's economy 0:14:50.880 --> 0:15:07.600 really slowing? I'm Nathan Hager, and this is Bloomberg broadcasting 0:15:07.680 --> 0:15:11.400 live from the Bloomberg Interactive Broker Studio in New York. 0:15:11.480 --> 0:15:16.160 Bloomberg eleven three oh to Washington, d C, Bloomberg to Boston, 0:15:16.240 --> 0:15:19.640 Bloomberg one O six one to San Francisco, Bloomberg nine 0:15:19.760 --> 0:15:23.040 six to the country Sirius XM Channel one nineteen to 0:15:23.200 --> 0:15:26.320 London d A B Digital Radio, and around the globe 0:15:26.400 --> 0:15:30.000 the Bloomberg Business Act and Bloomberg Radio dot Com. This 0:15:30.320 --> 0:15:39.600 is Bloomberg day Break Weekend. I'm Nathan Hager with your 0:15:39.640 --> 0:15:42.240 global look ahead at the top stories for investors in 0:15:42.280 --> 0:15:46.160 the coming week. China's economy has been experiencing some pacups, 0:15:46.200 --> 0:15:48.200 we'll call them, and we may learn more in the 0:15:48.240 --> 0:15:51.400 comic week about just how big the challenges or problems 0:15:51.520 --> 0:15:54.080 really are in Beijing for more. Let's head to Hong 0:15:54.160 --> 0:15:57.960 Kong and Bloomberg Daybreak Asia host Brian Curtis. Nathan will 0:15:58.000 --> 0:16:00.280 get a slew of Chinese data in the coming week 0:16:00.360 --> 0:16:03.560 that will shed further light on the health of the economy. 0:16:03.800 --> 0:16:07.080 Markets in China have been choppy for months now in 0:16:07.200 --> 0:16:11.120 light of further COVID lockdowns, the property crisis, a tough 0:16:11.200 --> 0:16:16.520 regulatory overhanging, and rising geopolitical tensions. Joining us to see 0:16:16.560 --> 0:16:19.280 what it all means here for markets going forward in 0:16:19.440 --> 0:16:24.720 China is Sophia Orte Costa, Bloomberg's chief China market correspondent. Sophia, 0:16:24.760 --> 0:16:27.400 thanks very much for taking some time with this. So 0:16:27.440 --> 0:16:30.600 the c s I three, it's interesting it had strong 0:16:30.800 --> 0:16:35.600 outperformance against global peers from the period of April until 0:16:36.040 --> 0:16:38.680 about the end of June, and then all of a sudden, 0:16:38.680 --> 0:16:42.240 the door was slammed and we've been grinding lower from 0:16:42.280 --> 0:16:44.760 that time. What happened, Yeah, there was a sense that 0:16:44.800 --> 0:16:48.400 the worst was kind of over around April in terms 0:16:48.400 --> 0:16:52.400 of lockdowns, COVID zero and also the property market. That's 0:16:52.480 --> 0:16:56.160 kind of when officials and authorities in a Chinese hits 0:16:56.160 --> 0:16:59.680 he started rolling back some of the strictest measures around 0:16:59.680 --> 0:17:03.240 prop to around housing. That's also when we saw the 0:17:03.280 --> 0:17:06.240 officials really react quite strongly to the risk of the 0:17:06.280 --> 0:17:09.440 mortgage boycott's kind of going out of control. So there 0:17:09.480 --> 0:17:12.320 was a little bit of faith in financial markets that 0:17:12.680 --> 0:17:16.359 um that things would get better. The problem is these 0:17:16.400 --> 0:17:19.960 rebounds really don't last inflows don't stick, and nothing really 0:17:20.040 --> 0:17:25.000 changes despite vows of more action from Beijing. The problem 0:17:25.080 --> 0:17:29.280 really is when we saw that economic data actually turn 0:17:29.400 --> 0:17:33.120 worse after the summer, people really started thinking that actually, 0:17:33.119 --> 0:17:35.159 you know, now is not the right time to buy, 0:17:35.200 --> 0:17:39.040 and confidence really really really declined from there. And it's 0:17:39.040 --> 0:17:45.280 both internal and external demand that is lagging, yes, exactly, 0:17:45.320 --> 0:17:49.800 I mean within China domestically. The problem is the fiscal 0:17:49.840 --> 0:17:54.560 stimulus plans and the the surprise interest rate cuts. Um, 0:17:54.600 --> 0:17:58.720 they're really not that's all on the demand side of things, um. Sorry, 0:17:58.720 --> 0:18:01.360 on the supply side of things, it's not doing anything 0:18:01.400 --> 0:18:04.879 to stir up demand. UM. When you have retail sales 0:18:04.920 --> 0:18:07.560 really low. I mean we're getting uh and the number 0:18:07.600 --> 0:18:11.800 for August is expected to be around three point growth UM. 0:18:11.840 --> 0:18:14.520 But that's not that's not great when you consider the 0:18:14.560 --> 0:18:19.560 impact of COVID zero and the never ending extended lockdowns 0:18:19.600 --> 0:18:22.800 in big cities like cheng Do. That is the key thing, 0:18:22.840 --> 0:18:25.440 and that kind of stops everything else from being effective. 0:18:25.480 --> 0:18:28.439 It doesn't matter what Bijing does, the more vows of 0:18:28.480 --> 0:18:32.000 more action and actual action keep falling flat. In terms 0:18:32.160 --> 0:18:34.960 of the stimulus, I mean, we can't say that policymakers 0:18:35.000 --> 0:18:38.879 haven't acted. They have rolled out measures, but it's just 0:18:39.119 --> 0:18:42.800 no shock and awe. It's been drip, drip drip. Now, 0:18:42.840 --> 0:18:47.040 if we were to get a U shape recovery, plenty 0:18:47.080 --> 0:18:49.400 of economists tell us on our show Bloomberg Dave brak 0:18:49.400 --> 0:18:52.480 Asia that that's what we can expect, the U shaped recovery. 0:18:52.520 --> 0:18:54.919 If we were to get that, what might the catalysts be? 0:18:55.840 --> 0:18:58.080 I spoke to someone this this week. Actually, it will 0:18:58.119 --> 0:19:00.919 be a long grind. There is expectation of a U 0:19:01.000 --> 0:19:04.960 shaped recovery. We we do have the Key Party Congress 0:19:04.960 --> 0:19:08.280 on October sixteenth, and my sense that there's so much 0:19:08.359 --> 0:19:12.919 baked into, so much expectation of of some kind of 0:19:12.960 --> 0:19:16.000 pivot after that. The question for me is what would 0:19:16.000 --> 0:19:18.280 the pivot look like. It doesn't look like she jumping 0:19:18.880 --> 0:19:21.239 is really easy off on the COVID zero Pulsey and 0:19:21.280 --> 0:19:24.840 that is Brian, really the biggest overhang in markets. The 0:19:24.880 --> 0:19:28.680 catalyst would be a suggestion that that will be pulled back. 0:19:28.760 --> 0:19:31.639 We know that that will be gradual and we know 0:19:31.800 --> 0:19:34.359 what it's like. I mean here in Hong Kong it's 0:19:34.359 --> 0:19:37.879 been a very slow reopening, but any kind of sense 0:19:38.000 --> 0:19:40.720 or sign that China is moving in the right direction 0:19:41.240 --> 0:19:43.800 in terms of opening up the economy and opening up 0:19:43.800 --> 0:19:47.000 its borders would be a significant catalyst for markets. We 0:19:47.040 --> 0:19:49.280 had the regulatory overhang, which seems like it would never 0:19:49.320 --> 0:19:51.560 go away, and I'm not sure that it has, but 0:19:52.000 --> 0:19:53.959 it does seem like it doesn't really get as much 0:19:54.000 --> 0:19:56.159 attention right now. It seems like they've backed off a 0:19:56.200 --> 0:20:00.000 little bit on that side of things. Could that possible 0:20:00.160 --> 0:20:04.000 happen with dynamic zero, Brian, It's all about watching the 0:20:04.040 --> 0:20:07.200 signs and seeing where China is going. If we do get, 0:20:07.240 --> 0:20:12.560 for example, m a relaxation of cross border testing, or 0:20:12.640 --> 0:20:14.920 if we get any sense that there are more flights 0:20:15.119 --> 0:20:19.720 from overseas into China, or if even within China there's 0:20:19.760 --> 0:20:23.359 an easing of movement between provinces, that would be a 0:20:23.480 --> 0:20:26.760 very good sign, at least from where we're standing, that 0:20:26.760 --> 0:20:29.280 that China is moving forward with this. Thanks so much 0:20:29.320 --> 0:20:31.199 for joining us to take a close look at this, 0:20:31.240 --> 0:20:35.520 Sophia or Too Acosta, Bloomberg's chief China market correspondent. I'm 0:20:35.520 --> 0:20:38.200 Brian Curtis, along with Doug Krisner. You can catch us 0:20:38.200 --> 0:20:41.720 every weekday here for Bloomberg Daybreak. Asia, beginning at six 0:20:41.760 --> 0:20:45.719 am in Hong Kong and six pm on Wall Street. Nathan, 0:20:46.080 --> 0:20:49.040 Thank you, Brian. And coming up on Bloomberg Daybreak weekend, 0:20:49.080 --> 0:20:52.040 the GOP gets ready to try to end internal bickering 0:20:52.400 --> 0:20:56.320 with a new platform. I'm Nathan Hagar, and this is Bloomberg. 0:21:07.000 --> 0:21:10.159 This is Bloomberg Daybreak Weekend, our global look ahead at 0:21:10.200 --> 0:21:12.840 the top stories for investors in the coming week. I'm 0:21:12.920 --> 0:21:15.920 Nathan Hagar. The Republican Party is getting ready to try 0:21:15.920 --> 0:21:19.399 to end its internal bickering with a new GOP platform. 0:21:19.520 --> 0:21:21.480 For more on exactly what they're doing ahead of the 0:21:21.520 --> 0:21:24.160 mid terms, let's go to Amy Morris in the Bloomberg 0:21:24.960 --> 0:21:28.560 newsroom in Washington. Amy, that's right, Nathan. Republican leaders are 0:21:28.600 --> 0:21:32.800 aiming to unveil a unified party platform. House Minority Leader 0:21:32.880 --> 0:21:36.320 Kevin McCarthy planning to do this in September on the nineteenth. 0:21:36.680 --> 0:21:39.840 Joining me now to talk about this, Bloomberg political reporter 0:21:39.920 --> 0:21:43.239 Gregory Cordy. Greg thanks so much for joining us. We 0:21:43.280 --> 0:21:46.760 really appreciate taking the time. Sure, now, the Republicans really 0:21:46.800 --> 0:21:48.879 trying to get off the back foot here, tell us 0:21:48.920 --> 0:21:52.840 what their strategy is. Well, one of the things they're 0:21:52.840 --> 0:21:57.640 trying to do is to uh present a campaign that's 0:21:57.680 --> 0:22:02.359 more than just being against President Joe Biden and his agenda, 0:22:02.560 --> 0:22:05.439 but trying to give voters something to vote for. And 0:22:05.520 --> 0:22:08.680 so what they're gonna be doing UH in later this 0:22:08.720 --> 0:22:12.720 month is going to the city outside of Pittsburgh, Pennsylvania, 0:22:13.040 --> 0:22:17.120 which is significant in and of itself, to unveil this 0:22:17.560 --> 0:22:21.680 commitment with America, which is a uh something that kind 0:22:21.680 --> 0:22:24.439 of harkens back to New Gingrich's Contract with America back 0:22:25.480 --> 0:22:27.560 when Republicans took the House for the first time in 0:22:27.640 --> 0:22:31.640 decades and sort of layout what their agenda would be 0:22:31.760 --> 0:22:34.200 if they took back the House. So it includes things 0:22:34.280 --> 0:22:41.080 like of the economy, uh, emphasizing energy production, on safety, 0:22:41.160 --> 0:22:44.359 talking about building that border wall that President Trump didn't 0:22:44.400 --> 0:22:49.440 quite finish, also just holding the Biden administration to account 0:22:49.480 --> 0:22:53.119 with more aggressive congressional oversight. Was back in June of 0:22:53.320 --> 0:22:56.240 last year the Republicans first started working on this, and 0:22:56.280 --> 0:22:59.160 of course that was a much different political environment when 0:22:59.800 --> 0:23:02.480 uh Joe Biden was a lot more popular. But as 0:23:02.800 --> 0:23:05.920 the President's popularity has waned a little bit as inflation 0:23:06.000 --> 0:23:08.280 has gone up, the economy is is certainly a lot 0:23:08.320 --> 0:23:11.720 different than it was a year or two ago. Talking 0:23:11.760 --> 0:23:15.960 to Republican strategists and posters, they've they've seen this momentum 0:23:16.119 --> 0:23:19.000 on paper, it's the great time to run as a Republican, 0:23:19.280 --> 0:23:22.080 and yet they're struggling. You see a lot of more 0:23:22.119 --> 0:23:25.840 Democratic enthusiasm in part because of the abortion issue, but 0:23:25.920 --> 0:23:29.040 also the president's approval is coming back, and so yes, 0:23:29.119 --> 0:23:32.200 this is an acknowledgement by Republicans that they need something 0:23:32.320 --> 0:23:35.560 more than maybe just against everything that Joe Biden is doing. 0:23:35.800 --> 0:23:37.800 They need to tell people what they're going to do. 0:23:38.119 --> 0:23:41.000 By the way, that sets up to the table when 0:23:41.200 --> 0:23:43.919 Republicans hope to take back the way out. And the 0:23:44.040 --> 0:23:47.000 thing about this happening though in a mid term election year, 0:23:47.040 --> 0:23:51.639 is that mid terms are primarily about anchor. People do 0:23:51.880 --> 0:23:54.639 come out because they're against something, and that's why it 0:23:55.000 --> 0:23:58.240 usually favors the party that's out of power. Well, now 0:23:58.280 --> 0:24:01.280 here's a very emotional issue that now has energized the 0:24:01.280 --> 0:24:05.719 other side and sort of balanced that. And so the 0:24:05.720 --> 0:24:08.040 only thing that mid terms are is that you talk 0:24:08.080 --> 0:24:11.359 to political scientists, uh, they are thermostatic, and what they 0:24:11.359 --> 0:24:13.960 mean by that is that voters tend to sort of 0:24:14.000 --> 0:24:17.480 adjust the temperature up or down based on where they 0:24:17.520 --> 0:24:20.359 think the center should be. And if voters since that 0:24:20.400 --> 0:24:23.240 the country is moving too far in one direction or 0:24:23.280 --> 0:24:26.360 the other, uh, they'll try to dial the thermostatic back 0:24:26.400 --> 0:24:30.800 to the center. Usually in the president's first two terms, 0:24:30.800 --> 0:24:33.880