1 00:00:00,240 --> 00:00:07,680 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,600 --> 00:00:13,640 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,640 --> 00:00:16,240 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,360 --> 00:00:19,080 Speaker 2: all around the world. Straight Ahead on the program, we'll 5 00:00:19,079 --> 00:00:21,400 Speaker 2: look ahead to jobs data in the US and what 6 00:00:21,440 --> 00:00:24,960 Speaker 2: they may mean for FED policy. I'm Nathan Hager in Washington. 7 00:00:25,160 --> 00:00:27,680 Speaker 3: I'm Carolin Hedgod London, where we discussed what the Maid 8 00:00:27,760 --> 00:00:30,680 Speaker 3: in Europe plan means for countries and companies. 9 00:00:30,960 --> 00:00:33,800 Speaker 4: I'm deg Prisner looking ahead to the reading on sentiment 10 00:00:33,880 --> 00:00:36,480 Speaker 4: among Chinese purchasing managers. 11 00:00:38,159 --> 00:00:42,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,240 --> 00:00:45,920 Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,440 --> 00:00:51,559 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 14 00:00:51,720 --> 00:00:55,240 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,280 --> 00:00:57,520 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:02,440 --> 00:01:05,000 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 17 00:01:05,040 --> 00:01:07,880 Speaker 2: program with some key economic data in the US. We 18 00:01:07,959 --> 00:01:10,800 Speaker 2: get non farm payrolls for the month of February at 19 00:01:10,840 --> 00:01:14,399 Speaker 2: eight thirty am Wall Street Time on Friday. For more 20 00:01:14,440 --> 00:01:17,480 Speaker 2: on how this latest jobs report could affect FED policy 21 00:01:17,520 --> 00:01:20,920 Speaker 2: and interest rates. Let's bring in Bloomberg International Economics and 22 00:01:20,959 --> 00:01:24,840 Speaker 2: Policy correspondent Michael McKee. Mike, thanks for being here. Of course, 23 00:01:25,040 --> 00:01:29,640 Speaker 2: this comes after that surprisingly strong January jobs report. Is 24 00:01:29,640 --> 00:01:31,160 Speaker 2: that going to be a one off or could it 25 00:01:31,200 --> 00:01:32,199 Speaker 2: be the start of a trend. 26 00:01:32,760 --> 00:01:36,399 Speaker 5: Well, that's the question that this whole data release will 27 00:01:36,440 --> 00:01:39,080 Speaker 5: turn on. And for once we can say that this 28 00:01:39,280 --> 00:01:44,399 Speaker 5: is an important number because we've had several FED officials say, 29 00:01:44,920 --> 00:01:47,480 Speaker 5: particularly Chris Waller, say that if we get the same 30 00:01:47,600 --> 00:01:50,880 Speaker 5: kind of number this month, then he would think that 31 00:01:51,440 --> 00:01:54,920 Speaker 5: he probably would vote to hold instead of dissenting in 32 00:01:54,960 --> 00:01:58,480 Speaker 5: favor of a rate cut on March eighteenth. So it 33 00:01:58,560 --> 00:02:02,360 Speaker 5: does have somess. Of course, the other side of that 34 00:02:02,720 --> 00:02:06,080 Speaker 5: is does unemployment go up? The forecast at the moment 35 00:02:06,440 --> 00:02:08,600 Speaker 5: is for it to tick up to four point four 36 00:02:08,600 --> 00:02:11,840 Speaker 5: percent from four point three. That might not move the 37 00:02:11,880 --> 00:02:14,440 Speaker 5: needle for the FED, but if it were anything more 38 00:02:14,520 --> 00:02:19,080 Speaker 5: than that, then they might get nervous and cut rates. 39 00:02:19,120 --> 00:02:22,360 Speaker 5: So there's gonna be a lot of scrutiny of this 40 00:02:22,480 --> 00:02:23,240 Speaker 5: number this time. 41 00:02:23,360 --> 00:02:25,720 Speaker 2: So it sounds like it could really go one way 42 00:02:25,840 --> 00:02:28,240 Speaker 2: or the other at a time when a lot of 43 00:02:28,320 --> 00:02:31,400 Speaker 2: market participants have been thinking maybe the FED might stay 44 00:02:31,440 --> 00:02:33,200 Speaker 2: on hold just until we get a new chair. 45 00:02:34,000 --> 00:02:37,959 Speaker 5: Well that's probably the case. It would I think take 46 00:02:38,080 --> 00:02:42,160 Speaker 5: a lot for the FED itself to change its views. 47 00:02:42,639 --> 00:02:45,120 Speaker 5: In general, the majority are in favor of being on 48 00:02:45,200 --> 00:02:47,760 Speaker 5: hold for right now, because they think they're tight enough 49 00:02:48,919 --> 00:02:52,280 Speaker 5: that they can bring down inflation if they leave rates 50 00:02:52,280 --> 00:02:55,679 Speaker 5: where they are without hurting the labor market. Now, the 51 00:02:55,800 --> 00:02:58,920 Speaker 5: question is what hurts the labor market these days, because 52 00:02:58,960 --> 00:03:02,880 Speaker 5: with the lack of people entering the labor force, in 53 00:03:03,040 --> 00:03:07,040 Speaker 5: large part because of all the deportations. What you're seeing 54 00:03:07,200 --> 00:03:11,960 Speaker 5: is maybe fifty sixty thousand being a neutral rate, the 55 00:03:12,040 --> 00:03:16,320 Speaker 5: level that keeps the unemployment rate unchanged. And so if 56 00:03:16,320 --> 00:03:18,680 Speaker 5: you get something much higher like we got last month, 57 00:03:19,000 --> 00:03:21,360 Speaker 5: then it looks really good for the labor market and 58 00:03:21,400 --> 00:03:23,000 Speaker 5: you don't need to cut rates. If you get something 59 00:03:23,040 --> 00:03:26,959 Speaker 5: significantly below that, then they'll get a little concerned going 60 00:03:27,040 --> 00:03:30,800 Speaker 5: into it. We're looking at about sixty thousand as an estimate, 61 00:03:30,840 --> 00:03:32,440 Speaker 5: but that could change over the week. 62 00:03:32,800 --> 00:03:34,880 Speaker 2: Of course, as you know, a lot of the discussion 63 00:03:34,920 --> 00:03:37,320 Speaker 2: that's been cropping up in the FED is about how 64 00:03:37,520 --> 00:03:40,560 Speaker 2: artificial intelligence might be affecting the labor market. As well, 65 00:03:40,640 --> 00:03:43,520 Speaker 2: not just the immigration story. Do you expect that to 66 00:03:43,600 --> 00:03:46,200 Speaker 2: feed into the February numbers or is that kind of 67 00:03:46,240 --> 00:03:47,320 Speaker 2: a broader discussion. 68 00:03:47,840 --> 00:03:50,600 Speaker 5: It's a broader discussion at this point. Most economists, I 69 00:03:50,600 --> 00:03:53,880 Speaker 5: think the vast majority, don't think AI is showing up 70 00:03:53,880 --> 00:03:57,680 Speaker 5: in the data yet other than the money that's being 71 00:03:57,680 --> 00:04:02,760 Speaker 5: spent on being a building AI. Yeah, but the technology 72 00:04:02,800 --> 00:04:06,520 Speaker 5: is too new and hasn't been adopted by enough companies 73 00:04:06,640 --> 00:04:12,000 Speaker 5: in enough scale to really change the way companies are organized, 74 00:04:12,480 --> 00:04:14,840 Speaker 5: and so it's not going to be in the labor 75 00:04:14,880 --> 00:04:19,839 Speaker 5: market data, and it's not been adopted widely enough to 76 00:04:19,960 --> 00:04:22,680 Speaker 5: change the inflation data yet. This is something that's on 77 00:04:22,760 --> 00:04:25,720 Speaker 5: the horizon and it's certainly got everybody talking about it, 78 00:04:26,680 --> 00:04:28,080 Speaker 5: but it's not there yet. 79 00:04:28,279 --> 00:04:30,280 Speaker 2: Well, one phrase I keep hearing from you and your 80 00:04:30,320 --> 00:04:34,880 Speaker 2: coverage of this labor market is low higher, low fire. 81 00:04:35,920 --> 00:04:38,160 Speaker 2: Is that still where we are? And if we do 82 00:04:38,600 --> 00:04:41,599 Speaker 2: get some job growth in this report, where do you 83 00:04:41,600 --> 00:04:42,680 Speaker 2: think it's going to show up? 84 00:04:43,560 --> 00:04:45,400 Speaker 5: Well, the best bet for job growth is going to 85 00:04:45,440 --> 00:04:48,680 Speaker 5: be in healthcare services, because that's where almost all the 86 00:04:48,760 --> 00:04:52,240 Speaker 5: job growth has been for some months. The people who 87 00:04:52,279 --> 00:04:54,799 Speaker 5: take care of all the baby boomers who are retiring 88 00:04:54,800 --> 00:04:57,599 Speaker 5: that sort of thing. We haven't seen much job growth 89 00:04:57,600 --> 00:05:01,760 Speaker 5: anywhere else. There has been some construction because of the 90 00:05:01,960 --> 00:05:06,960 Speaker 5: AI build out, but I think what we're still seeing 91 00:05:06,960 --> 00:05:09,359 Speaker 5: at this point is a lot of companies sitting on 92 00:05:09,400 --> 00:05:12,720 Speaker 5: the sidelines, not sure what the business climate is going 93 00:05:12,760 --> 00:05:15,640 Speaker 5: to be like. And now even more so it wouldn't 94 00:05:15,680 --> 00:05:18,599 Speaker 5: show up in these February numbers, but even more so 95 00:05:18,760 --> 00:05:22,400 Speaker 5: because of the tariff decision by the Supreme Court. We 96 00:05:22,400 --> 00:05:23,960 Speaker 5: don't know what tariffs are going to be, We don't 97 00:05:23,960 --> 00:05:26,520 Speaker 5: know what they'll put them on again, and so you 98 00:05:26,520 --> 00:05:28,960 Speaker 5: don't know what companies are going to do. So at 99 00:05:29,000 --> 00:05:32,320 Speaker 5: this point, don't look for a huge amount of hiring, 100 00:05:32,680 --> 00:05:37,320 Speaker 5: and you're right, it's low firing. Jobless claims remain extremely low. 101 00:05:37,720 --> 00:05:40,719 Speaker 5: Don't give any indication that companies are making big layoffs. 102 00:05:40,960 --> 00:05:42,520 Speaker 2: So does that mean we're in kind of wait in 103 00:05:42,600 --> 00:05:45,240 Speaker 2: C mode as far as a company thinking is going 104 00:05:45,279 --> 00:05:48,320 Speaker 2: in terms of where wages go as well, because we 105 00:05:48,800 --> 00:05:52,000 Speaker 2: have heard at least some talk from the administration that 106 00:05:52,040 --> 00:05:54,960 Speaker 2: they think that wages are keeping up with or even 107 00:05:55,040 --> 00:05:56,080 Speaker 2: outpacing inflation. 108 00:05:56,160 --> 00:05:58,760 Speaker 5: At this point, wages have been growing a little faster 109 00:05:58,880 --> 00:06:01,440 Speaker 5: than inflation, which is what you want to see. You 110 00:06:01,480 --> 00:06:04,240 Speaker 5: don't want to see wages shooting up because then that 111 00:06:04,400 --> 00:06:09,520 Speaker 5: could create inflation issue. But that's not the historical pattern. 112 00:06:09,600 --> 00:06:12,680 Speaker 5: We did see wages rise significantly coming out of the 113 00:06:12,680 --> 00:06:16,320 Speaker 5: pandemic because companies were desperate to try to get workers 114 00:06:16,360 --> 00:06:19,279 Speaker 5: to come work for them. But now since they're not hiring, 115 00:06:19,360 --> 00:06:22,320 Speaker 5: wages have been coming down and they're just about at 116 00:06:22,320 --> 00:06:25,640 Speaker 5: a kind of a neutral level where they're not an 117 00:06:25,640 --> 00:06:28,679 Speaker 5: inflation problem, but they're still enough to get you ahead 118 00:06:28,680 --> 00:06:34,000 Speaker 5: of inflation. So the wage issue isn't going to change 119 00:06:34,040 --> 00:06:35,240 Speaker 5: much probably either. 120 00:06:35,760 --> 00:06:39,280 Speaker 2: Appreciate this, Mike, ahead of another Jobs Friday later on 121 00:06:39,320 --> 00:06:43,400 Speaker 2: this week. That's Michael McKee, international economics and policy correspondent 122 00:06:43,440 --> 00:06:46,480 Speaker 2: for Bloomberg Radio and Television. Let's take a look now 123 00:06:46,520 --> 00:06:48,640 Speaker 2: at some stocks making news in the week ahead. I'm 124 00:06:48,720 --> 00:06:52,919 Speaker 2: Nathan Hager, joined by Bloomberg Equities reporter Carmen Reinikey. On 125 00:06:53,000 --> 00:06:56,159 Speaker 2: another pretty busy week for earnings, despite the fact almost 126 00:06:56,160 --> 00:06:59,200 Speaker 2: everybody's reported already, but we hear from a big name 127 00:06:59,640 --> 00:07:04,240 Speaker 2: in retail this week, Target on Tuesday. It seems like 128 00:07:04,279 --> 00:07:06,880 Speaker 2: it's been tough for Target for several quarters now. 129 00:07:06,960 --> 00:07:10,120 Speaker 6: Carmen, Yeah, it's true, So a key figure for them 130 00:07:10,360 --> 00:07:13,280 Speaker 6: is comparable sales growth. It's been negative in the last 131 00:07:13,360 --> 00:07:16,560 Speaker 6: three quarters, and it's something that analysts are expecting will 132 00:07:16,600 --> 00:07:19,440 Speaker 6: fall again. So that's something I'm definitely going to be watching. 133 00:07:20,560 --> 00:07:22,720 Speaker 6: Shares have actually gotten a little bit of a resurgence 134 00:07:22,800 --> 00:07:25,400 Speaker 6: so far this year. They're up about seventeen percent after 135 00:07:25,560 --> 00:07:29,000 Speaker 6: four consecutive years of falling, so that's going to be 136 00:07:29,080 --> 00:07:33,040 Speaker 6: really important. You know, earnings generally speaking, move stocks. I'm 137 00:07:33,040 --> 00:07:36,080 Speaker 6: also watching this after Walmart's report earlier in the month. 138 00:07:36,200 --> 00:07:38,720 Speaker 6: It forecasts less earnings growth for the year than Wall 139 00:07:38,760 --> 00:07:42,440 Speaker 6: Street anticipated and had a pretty conservative view of the 140 00:07:42,520 --> 00:07:47,080 Speaker 6: US economy and sort of unpredictable times for consumers, which 141 00:07:47,200 --> 00:07:49,040 Speaker 6: I think raised a little bit of a red flag. 142 00:07:49,160 --> 00:07:52,000 Speaker 6: So Walmart usually does offer a kind of conservative guidance 143 00:07:52,040 --> 00:07:53,640 Speaker 6: at the start of the year and then raises it 144 00:07:53,680 --> 00:07:56,120 Speaker 6: in the following quarters. But this is still one that 145 00:07:56,160 --> 00:07:58,760 Speaker 6: people are really watching, as you know, a bell weather 146 00:07:58,920 --> 00:08:02,000 Speaker 6: for the US economy, and Target is right in line 147 00:08:02,040 --> 00:08:02,680 Speaker 6: sort of after that. 148 00:08:02,960 --> 00:08:07,160 Speaker 2: Yeah, absolutely. You mentioned that the stock has been on 149 00:08:07,200 --> 00:08:09,920 Speaker 2: the rise since the start of the year despite all 150 00:08:09,960 --> 00:08:12,880 Speaker 2: the troubles. Does that really kind of raise the bar 151 00:08:13,000 --> 00:08:16,760 Speaker 2: for Target? When it comes to meeting those earning expectations, 152 00:08:17,120 --> 00:08:17,840 Speaker 2: it certainly could. 153 00:08:17,960 --> 00:08:21,040 Speaker 6: It's the next catalyst for sure that investors will be 154 00:08:21,240 --> 00:08:24,160 Speaker 6: watching for, you know, deciding if they want to continue 155 00:08:24,200 --> 00:08:26,480 Speaker 6: to buy the stock or sell. I think the target's 156 00:08:26,480 --> 00:08:29,040 Speaker 6: gotten so beat up in the last few years that 157 00:08:29,280 --> 00:08:33,800 Speaker 6: it's maybe not the biggest indicator that the bar is raised. 158 00:08:34,160 --> 00:08:37,080 Speaker 6: And especially because we know they're in the turnaround, I 159 00:08:37,080 --> 00:08:40,520 Speaker 6: think expectations aren't super high for them, so we'll see. 160 00:08:40,559 --> 00:08:43,599 Speaker 6: I mean, certainly bulls want to see this rally continue. 161 00:08:44,400 --> 00:08:49,320 Speaker 2: And we also hear from another software name, CrowdStrike on 162 00:08:49,400 --> 00:08:53,080 Speaker 2: Tuesday as well. You know, every time I think about CrowdStrike, 163 00:08:53,120 --> 00:08:55,760 Speaker 2: I think about the outage from a year or so ago. 164 00:08:56,320 --> 00:08:58,120 Speaker 2: Is that something investors still think about? 165 00:08:58,360 --> 00:08:59,600 Speaker 6: You know, that's such a good question. 166 00:08:59,760 --> 00:09:00,000 Speaker 7: I think. 167 00:09:00,000 --> 00:09:02,440 Speaker 6: I think the CrowdStrike was able to really move past 168 00:09:02,480 --> 00:09:06,080 Speaker 6: that quite quickly. It's not something that I've necessarily seen 169 00:09:06,160 --> 00:09:09,720 Speaker 6: is the biggest problem for CrowdStrike in the last few months. 170 00:09:09,760 --> 00:09:11,920 Speaker 6: I mean, certainly, the bigger thing that I'm kind of 171 00:09:11,920 --> 00:09:14,760 Speaker 6: looking at is that we've seen really broad based weakness 172 00:09:14,840 --> 00:09:17,959 Speaker 6: in software and this was actually one of the stocks 173 00:09:17,960 --> 00:09:22,840 Speaker 6: that got hit recently when Anthropic announced a new security 174 00:09:22,880 --> 00:09:26,440 Speaker 6: feature and it's clawed AI models, so it's a cyber 175 00:09:26,800 --> 00:09:30,320 Speaker 6: security company. And other companies sort of in that space, 176 00:09:30,679 --> 00:09:35,959 Speaker 6: Cloud flare Z scaler sale point slumped, so Crowdstrikes regained 177 00:09:35,960 --> 00:09:40,240 Speaker 6: some of those losses. It's down still though, nineteen percent 178 00:09:40,320 --> 00:09:43,560 Speaker 6: almost twenty percent on the year. So that's actually something 179 00:09:43,600 --> 00:09:45,760 Speaker 6: that I'm looking for sort of most in these earnings 180 00:09:45,800 --> 00:09:48,680 Speaker 6: is what are they going to say about AI going 181 00:09:48,720 --> 00:09:51,680 Speaker 6: forward and how they're incorporating it. If they're you know, 182 00:09:51,880 --> 00:09:54,160 Speaker 6: they are worried about disruption, or if they sort of 183 00:09:54,160 --> 00:09:57,040 Speaker 6: have plans to maybe integrate it and you know, build 184 00:09:57,040 --> 00:09:58,599 Speaker 6: their business going forward. 185 00:09:58,320 --> 00:10:00,679 Speaker 2: You know what that kind of decline and with you know, 186 00:10:00,800 --> 00:10:03,400 Speaker 2: the way that software stocks have been hammered so far 187 00:10:03,480 --> 00:10:06,360 Speaker 2: in this discussion around AI disruption, you have to wonder 188 00:10:06,360 --> 00:10:09,720 Speaker 2: whether after these earnings maybe some investors might see CrowdStrike 189 00:10:09,760 --> 00:10:13,000 Speaker 2: as a buy opportunity. Is that something that you're thinking about, Oh, totally. 190 00:10:13,080 --> 00:10:15,640 Speaker 6: I mean, we've seen so many valuations kind of come 191 00:10:15,679 --> 00:10:18,320 Speaker 6: in because of these big sell offs. So if you 192 00:10:18,440 --> 00:10:20,559 Speaker 6: are a value investor, if you're even just looking for 193 00:10:20,760 --> 00:10:24,000 Speaker 6: you know, stocks at a discount, there are a lot 194 00:10:24,000 --> 00:10:27,840 Speaker 6: of names in software that maybe makes sense. So definitely 195 00:10:27,880 --> 00:10:30,440 Speaker 6: going to be watching there and seeing if investors you know, 196 00:10:30,520 --> 00:10:32,520 Speaker 6: hear good things in the report and say, Okay, this 197 00:10:32,640 --> 00:10:33,800 Speaker 6: is definitely the time to buy. 198 00:10:34,200 --> 00:10:38,240 Speaker 2: And then on Wednesday, Broadcom reports its results. With all 199 00:10:38,280 --> 00:10:42,440 Speaker 2: this nervousness around the AI spending story, where is the 200 00:10:42,480 --> 00:10:47,160 Speaker 2: bar for the AI infrastructure company Broadcom. 201 00:10:46,960 --> 00:10:49,280 Speaker 6: You know, especially after Nvidia. I think it's going to 202 00:10:49,280 --> 00:10:53,160 Speaker 6: be really interesting to see how investors react to this report. 203 00:10:53,280 --> 00:10:57,240 Speaker 6: So it's another chip maker, it's also kind of gotten 204 00:10:57,280 --> 00:11:00,079 Speaker 6: some shine as maybe you know, moving in and the 205 00:11:00,240 --> 00:11:02,960 Speaker 6: kind of grabbing more market share in the chip making space. 206 00:11:03,360 --> 00:11:06,640 Speaker 6: But that being said, it's also kind of moved sideways. 207 00:11:06,679 --> 00:11:07,120 Speaker 8: This year. 208 00:11:07,160 --> 00:11:09,960 Speaker 6: We've seen you know, investors really rotating out of these 209 00:11:10,000 --> 00:11:13,559 Speaker 6: sort of big tech companies, these you know, early sort 210 00:11:13,600 --> 00:11:16,800 Speaker 6: of picks and shovels AI companies and into you know, 211 00:11:16,960 --> 00:11:20,080 Speaker 6: just maybe safer parts of the market. So broad comes 212 00:11:20,120 --> 00:11:24,160 Speaker 6: down ten percent so far this year, and I'm I'm 213 00:11:24,200 --> 00:11:28,120 Speaker 6: just really interested to see how investors react to this report. 214 00:11:28,640 --> 00:11:32,720 Speaker 6: Analysts still expect really solid figures out of Broadcom, so 215 00:11:32,720 --> 00:11:36,440 Speaker 6: they're estimating you know, adjusted earnings per share growth and 216 00:11:36,600 --> 00:11:40,080 Speaker 6: revenue growth of more than twenty seven twenty eight percent 217 00:11:40,840 --> 00:11:43,760 Speaker 6: for this company, So we could see another kind of 218 00:11:43,760 --> 00:11:46,400 Speaker 6: similar reaction where you know, the results are really good 219 00:11:46,400 --> 00:11:51,240 Speaker 6: and investors just still aren't convinced and you know, buying 220 00:11:51,280 --> 00:11:51,840 Speaker 6: shares here. 221 00:11:52,240 --> 00:11:54,280 Speaker 2: Yeah, I mean it used to be you know, it's 222 00:11:54,320 --> 00:11:58,760 Speaker 2: twenty something percent earnings growth was huge, but after Nvidia 223 00:11:58,880 --> 00:12:02,560 Speaker 2: reporting something like sex and d plus percent, the bar 224 00:12:02,720 --> 00:12:05,720 Speaker 2: is kind of in a different place for these companies, 225 00:12:05,760 --> 00:12:06,960 Speaker 2: isn't it totally? 226 00:12:07,000 --> 00:12:10,120 Speaker 6: And it's also just under this umbrella of the like 227 00:12:10,280 --> 00:12:14,200 Speaker 6: wide based anxiety around AI and kind of coming from 228 00:12:14,240 --> 00:12:16,480 Speaker 6: two sides. I mean, we talked about software people worried 229 00:12:16,480 --> 00:12:18,840 Speaker 6: about disruption there, but then on the flip side, you 230 00:12:18,880 --> 00:12:22,280 Speaker 6: know all of the CAPEX spending that's you know, boosted 231 00:12:22,360 --> 00:12:24,960 Speaker 6: Nvidia and you know Broadcome would also be a beneficiary 232 00:12:25,040 --> 00:12:28,680 Speaker 6: of is worrying to investors. They're worried about cyclicality. They're 233 00:12:28,679 --> 00:12:30,960 Speaker 6: worried that it's going to stop at some point. So 234 00:12:32,040 --> 00:12:35,240 Speaker 6: that's really you know, overshadowed one just stocks in the 235 00:12:35,280 --> 00:12:36,840 Speaker 6: e eye trade, but the broader market. 236 00:12:37,320 --> 00:12:39,000 Speaker 2: You have some big names to keep an eye on 237 00:12:39,040 --> 00:12:41,440 Speaker 2: this week. Thank you of Carmen really appreciate this. That's 238 00:12:41,520 --> 00:12:45,360 Speaker 2: Carmen Rhynie equities reporter for Bloomberg News, and coming up 239 00:12:45,400 --> 00:12:47,880 Speaker 2: on Bloomberg day Break weekend, we'll look at the Maid 240 00:12:48,000 --> 00:12:50,400 Speaker 2: in Europe plan and what it'll mean in the EU 241 00:12:50,760 --> 00:12:54,640 Speaker 2: and me on I'm Nathan Hager and this is Bloomberg. 242 00:13:05,120 --> 00:13:07,800 Speaker 2: This is Bloomberg day Break Weekend, our global look ahead 243 00:13:07,800 --> 00:13:10,160 Speaker 2: at the top stories for investors in the coming week. 244 00:13:10,320 --> 00:13:13,160 Speaker 2: I'm Nathan Hager in Washington. Up later in the program, 245 00:13:13,200 --> 00:13:16,520 Speaker 2: we'll look ahead to manufacturing data in China, but first 246 00:13:16,840 --> 00:13:19,440 Speaker 2: made in Europe. That's the tagline of a new scheme 247 00:13:19,480 --> 00:13:23,600 Speaker 2: to rejuvenate Europe's defense, energy and manufacturing sectors. The raft 248 00:13:23,640 --> 00:13:27,360 Speaker 2: of policy ideas proposed by the EU Commission is drastic. 249 00:13:27,440 --> 00:13:31,760 Speaker 2: They include forcing government procurement processes to look locally, tying 250 00:13:31,800 --> 00:13:35,880 Speaker 2: foreign investors into joint ventures, and hiring European workers. The 251 00:13:35,920 --> 00:13:38,480 Speaker 2: Act is set to be adopted by the EU Parliament 252 00:13:38,559 --> 00:13:41,520 Speaker 2: next week. Let's get more now from Bloomberg Daybreak Europe 253 00:13:41,559 --> 00:13:43,280 Speaker 2: banker Caroline Hepger in London. 254 00:13:43,600 --> 00:13:46,960 Speaker 3: For decades, Europe has advocated for and been built on 255 00:13:47,080 --> 00:13:49,679 Speaker 3: free trade. But in the next few days, the European 256 00:13:49,800 --> 00:13:53,360 Speaker 3: Union is hoping to introduce a strategy to reverse the 257 00:13:53,400 --> 00:13:57,800 Speaker 3: continent's d industrialization. The so called Made in Europe plan 258 00:13:57,960 --> 00:14:01,560 Speaker 3: will enforce strict rules to keep investment factories and know 259 00:14:01,679 --> 00:14:06,240 Speaker 3: how inside the EU, but it's causing fights not just 260 00:14:06,360 --> 00:14:11,040 Speaker 3: internally between countries within the EU's borders, but externally from 261 00:14:11,080 --> 00:14:15,280 Speaker 3: those who are warning against protectionism. Recently, Stephen cowl and 262 00:14:15,320 --> 00:14:19,680 Speaker 3: I spoke to the US Ambassador to the EU, Andrew Pozda. 263 00:14:20,080 --> 00:14:22,600 Speaker 3: He called the idea a serious mistake. 264 00:14:23,440 --> 00:14:27,320 Speaker 7: Well, they made in europeuels would be a direct contravention 265 00:14:27,480 --> 00:14:30,880 Speaker 7: of not only the terms but the spirit of the 266 00:14:30,920 --> 00:14:34,160 Speaker 7: framework trade agreement that was agreed to in Scotland, because 267 00:14:34,720 --> 00:14:37,720 Speaker 7: we've agreed not to have those kinds of preferences between 268 00:14:37,760 --> 00:14:40,960 Speaker 7: our two countries, and I think adopting them would be 269 00:14:40,960 --> 00:14:43,280 Speaker 7: a serious mistake. I would say, particularly in the area 270 00:14:43,320 --> 00:14:48,440 Speaker 7: of defense, because we have a very intermixed defense industrial 271 00:14:48,480 --> 00:14:54,640 Speaker 7: base between the United States and Europe. Many of the weapons, 272 00:14:54,640 --> 00:14:58,040 Speaker 7: the armaments that were using not only in NATO but 273 00:14:58,120 --> 00:15:04,280 Speaker 7: also shipping to Ukraine, have production capacities in Europe as 274 00:15:04,280 --> 00:15:06,760 Speaker 7: well as the United States, and the machines that make them. 275 00:15:07,200 --> 00:15:09,280 Speaker 7: Some are made in the Czech Republic in Finland, some 276 00:15:09,320 --> 00:15:13,520 Speaker 7: are made in the US, there's a very intermixed supply chain, 277 00:15:13,960 --> 00:15:18,200 Speaker 7: a defense industrial base, and a focus on having our 278 00:15:18,280 --> 00:15:22,640 Speaker 7: defense products be interoperable. In other words, that if we are, 279 00:15:23,040 --> 00:15:26,080 Speaker 7: if we're a NATO member and we're producing military hardware 280 00:15:26,120 --> 00:15:28,400 Speaker 7: we wanted to be, we want to you know, we 281 00:15:28,440 --> 00:15:31,760 Speaker 7: can't have it. You know, you're working for different sized 282 00:15:31,800 --> 00:15:34,840 Speaker 7: train rails or weights that are that don't work on 283 00:15:34,920 --> 00:15:38,080 Speaker 7: European highways. We have to have these things interoperable, and 284 00:15:38,240 --> 00:15:43,000 Speaker 7: these by europe preference, particularly in these defense procurement initiatives, 285 00:15:43,040 --> 00:15:45,680 Speaker 7: is a real threat to our defense industrial base, and 286 00:15:45,800 --> 00:15:46,760 Speaker 7: that worries me a lot. 287 00:15:47,240 --> 00:15:50,280 Speaker 3: That was the US is Ambassador to the European Union, 288 00:15:50,520 --> 00:15:54,600 Speaker 3: Andrew Posda, speaking to Stephen Cowl and I on Bloomberg Radio. 289 00:15:55,200 --> 00:15:58,280 Speaker 3: Joining me now to discuss is our Brussels Bureau chief 290 00:15:58,320 --> 00:16:03,920 Speaker 3: Suzanne Lynch and our chief europe correspondent Oliver Krook Susan firstly, 291 00:16:04,160 --> 00:16:07,280 Speaker 3: what is the plan from the European Commission when it 292 00:16:07,320 --> 00:16:08,960 Speaker 3: comes to this legislation. 293 00:16:10,320 --> 00:16:13,280 Speaker 9: Look, I think this is the culmination of a long 294 00:16:13,360 --> 00:16:17,320 Speaker 9: running discussion here in Brussels about the EU's competitiveness problem. 295 00:16:17,520 --> 00:16:20,480 Speaker 9: We've been hearing for a long time about problems within 296 00:16:20,600 --> 00:16:23,360 Speaker 9: this single market, that businesses field, that there are. 297 00:16:23,280 --> 00:16:24,680 Speaker 8: Too many regulations. 298 00:16:25,080 --> 00:16:28,920 Speaker 9: And I think those reports, that those twin reports from 299 00:16:29,000 --> 00:16:33,880 Speaker 9: two former Italian leaders, Mario Dragy and Rico Letta really 300 00:16:34,200 --> 00:16:37,960 Speaker 9: focused mind in Brussels. So I think this Made in europeplan, 301 00:16:38,000 --> 00:16:41,440 Speaker 9: this Industrial Accelerator Act is going to be the full 302 00:16:41,480 --> 00:16:45,720 Speaker 9: crumb of this plan to boost European competitiveness. And I 303 00:16:45,720 --> 00:16:47,440 Speaker 9: think it can be seen as a kind of follow 304 00:16:47,560 --> 00:16:51,400 Speaker 9: up document or repost if you like, to these calls 305 00:16:51,440 --> 00:16:55,800 Speaker 9: for better European competitiveness, a stronger European economy that Mario 306 00:16:55,920 --> 00:16:59,040 Speaker 9: Dragy in particular articulated in his report. 307 00:16:59,200 --> 00:17:03,960 Speaker 3: This seems to be coming in some part from France, 308 00:17:04,520 --> 00:17:07,280 Speaker 3: but it also has seen a lot of delays. Why 309 00:17:07,320 --> 00:17:08,920 Speaker 3: does it keep getting delayed? 310 00:17:09,440 --> 00:17:12,199 Speaker 8: I think it's a sign you're absolutely right. 311 00:17:12,240 --> 00:17:17,040 Speaker 9: Look, France has been vocal for years about, you know, 312 00:17:17,119 --> 00:17:20,040 Speaker 9: it belief that Europe needs to be, as they put it, 313 00:17:20,119 --> 00:17:23,080 Speaker 9: more strategically autonomous, that it needs to stand on its 314 00:17:23,080 --> 00:17:25,440 Speaker 9: own when it comes not just to defense, but also 315 00:17:25,720 --> 00:17:29,560 Speaker 9: to the economy. And you know, I think some of 316 00:17:29,560 --> 00:17:33,720 Speaker 9: the stereotypes Caroline and Europe are sometimes close to the bone. 317 00:17:33,720 --> 00:17:36,399 Speaker 8: I think France has taken a more we would say. 318 00:17:36,280 --> 00:17:40,200 Speaker 9: Protectionist approach to how the single market works. For years 319 00:17:40,200 --> 00:17:42,600 Speaker 9: in the EU it's been always a strong voice for that. 320 00:17:42,760 --> 00:17:44,760 Speaker 9: So yes, France has been pushing this, and the French 321 00:17:44,760 --> 00:17:48,119 Speaker 9: Commissioner says, your na is in the lead on this. However, 322 00:17:48,200 --> 00:17:50,960 Speaker 9: I think what we've seen is pushback or at least 323 00:17:51,119 --> 00:17:54,280 Speaker 9: deep questioning by a lot of other stakeholders in Brussels. 324 00:17:54,320 --> 00:17:57,600 Speaker 9: So firstly within the European Commission itself, that's where this 325 00:17:58,119 --> 00:18:00,600 Speaker 9: plan is going to be published, for this is the 326 00:18:00,640 --> 00:18:05,200 Speaker 9: starting point for EU legislation. There have been several other 327 00:18:05,320 --> 00:18:09,280 Speaker 9: commissioners or their you know, their dgs, their their sections 328 00:18:09,280 --> 00:18:11,760 Speaker 9: of the European Commission, who've had questions about this, about 329 00:18:11,760 --> 00:18:14,240 Speaker 9: how it's going to work in practice, about how is 330 00:18:14,280 --> 00:18:18,080 Speaker 9: it still in tune with the European Union's free trade 331 00:18:18,080 --> 00:18:21,320 Speaker 9: policies for example. So you've got initial blowback within the 332 00:18:21,320 --> 00:18:24,360 Speaker 9: Commission itself before they even publish their document, and then 333 00:18:24,400 --> 00:18:27,720 Speaker 9: outside the European Commission you've got EU member states also 334 00:18:27,840 --> 00:18:30,560 Speaker 9: questioning this. So you've got this coming down the on 335 00:18:30,600 --> 00:18:34,920 Speaker 9: the usual path those more free trade economies, maybe the Nordics, Ireland, 336 00:18:35,200 --> 00:18:37,600 Speaker 9: Germany as well. I mean, we've already had Friedrich mart 337 00:18:37,640 --> 00:18:39,639 Speaker 9: saying yes, we agree there should be a bit of 338 00:18:39,640 --> 00:18:42,240 Speaker 9: a made in Europe policy, but let's make sure that 339 00:18:42,280 --> 00:18:44,080 Speaker 9: this is just in certain sectors and we don't go 340 00:18:44,160 --> 00:18:46,320 Speaker 9: too far down that route. And then there's kind of 341 00:18:46,320 --> 00:18:49,880 Speaker 9: a third pillar, and that's the the other partners of. 342 00:18:49,840 --> 00:18:52,920 Speaker 8: The EU, so be it the UK and the United States. 343 00:18:53,000 --> 00:18:57,000 Speaker 9: They've also raised questions about at a time when these 344 00:18:57,040 --> 00:18:58,800 Speaker 9: third countries are trying to move. 345 00:18:58,600 --> 00:19:00,960 Speaker 8: Closer to Europe and are working closer with Europe, for. 346 00:19:00,920 --> 00:19:04,880 Speaker 9: Example on defense, why is the EU potentially putting off 347 00:19:04,960 --> 00:19:08,400 Speaker 9: barriers as they see it, to collaboration. So I think 348 00:19:08,480 --> 00:19:10,719 Speaker 9: that's why there has been a delay at the European 349 00:19:10,720 --> 00:19:13,120 Speaker 9: Commission is trying to get it right, and even though 350 00:19:13,320 --> 00:19:15,480 Speaker 9: they know what always happens in the EUS, this is 351 00:19:15,560 --> 00:19:18,120 Speaker 9: just the first step. They will put out this Industrial 352 00:19:18,200 --> 00:19:21,120 Speaker 9: Accelerator Act and then everyone will pile in and try 353 00:19:21,160 --> 00:19:23,040 Speaker 9: and get concessions and try and make changes. 354 00:19:23,160 --> 00:19:23,960 Speaker 8: But they're trying as. 355 00:19:23,960 --> 00:19:27,680 Speaker 9: Much as possible to get this to as close of 356 00:19:28,080 --> 00:19:31,560 Speaker 9: a consensus document as they can before it's published here 357 00:19:31,600 --> 00:19:32,280 Speaker 9: in Brussels. 358 00:19:32,680 --> 00:19:37,760 Speaker 3: Indeed, I mean embedding European preference into public procurement. Of course, 359 00:19:37,760 --> 00:19:41,840 Speaker 3: it has unleashed a lot of questions within Europe and 360 00:19:42,000 --> 00:19:46,240 Speaker 3: without Oliver in terms of your assessment of what's driven 361 00:19:46,400 --> 00:19:51,879 Speaker 3: Europe into this new phase maybe of industrial strategy. You know, 362 00:19:52,040 --> 00:19:54,119 Speaker 3: I suppose to remind us of why we're here and 363 00:19:54,240 --> 00:19:55,119 Speaker 3: just what's at stake. 364 00:19:55,560 --> 00:19:57,800 Speaker 10: Well, what's really funny is that actually the Drag Report 365 00:19:57,840 --> 00:20:01,360 Speaker 10: came out before Trump was elected president of the United States, right, 366 00:20:01,400 --> 00:20:03,159 Speaker 10: and so there was this idea that this might just 367 00:20:03,520 --> 00:20:05,360 Speaker 10: sort of end up in a drawer somewhere. It might 368 00:20:05,400 --> 00:20:07,320 Speaker 10: just be, you know, make for yet another report and 369 00:20:07,400 --> 00:20:09,760 Speaker 10: a door stop, you know, for somewhere in Brussels. And 370 00:20:09,800 --> 00:20:13,359 Speaker 10: then there was the election and inauguration of President Donald Trump, 371 00:20:13,359 --> 00:20:16,600 Speaker 10: and then all of these questions about European competitiveness, the 372 00:20:16,680 --> 00:20:19,120 Speaker 10: lack of it, the fact that they're not these big companies. 373 00:20:19,160 --> 00:20:21,800 Speaker 10: I mean, you can really go through some many of 374 00:20:21,840 --> 00:20:23,919 Speaker 10: the sort of superlatives used by Mario Draghi. 375 00:20:23,960 --> 00:20:24,360 Speaker 9: One of my. 376 00:20:24,320 --> 00:20:26,720 Speaker 10: Favorite was that basically, no, I think it was no 377 00:20:26,800 --> 00:20:29,399 Speaker 10: company that was founded in the last fifty years in 378 00:20:29,400 --> 00:20:32,520 Speaker 10: Europe's market cap exceeds something like two hundred billion dollars. 379 00:20:32,520 --> 00:20:34,960 Speaker 10: And of course every single one that exceeds a trillion 380 00:20:35,000 --> 00:20:38,080 Speaker 10: dollars in the United States was founded within the last 381 00:20:38,119 --> 00:20:40,000 Speaker 10: fifty years, and so that is sort of the issue 382 00:20:40,000 --> 00:20:41,399 Speaker 10: that is trying to be addressed here. And it was 383 00:20:41,440 --> 00:20:44,879 Speaker 10: really brought home obviously with the maga sort of foreign 384 00:20:44,920 --> 00:20:47,760 Speaker 10: policy of the America first, and then this American foreign 385 00:20:47,800 --> 00:20:51,120 Speaker 10: policy that was obviously not just obsessed with tariffs, which 386 00:20:51,400 --> 00:20:54,360 Speaker 10: it obviously was, but also taking a much more sort 387 00:20:54,359 --> 00:20:57,520 Speaker 10: of active role in economic stake craft and you know, 388 00:20:57,560 --> 00:21:01,040 Speaker 10: buying equity stakes in companies across the United States to 389 00:21:01,160 --> 00:21:04,080 Speaker 10: try to stave off again some of the major issues 390 00:21:04,119 --> 00:21:06,720 Speaker 10: that the United States saw within their own supply chains 391 00:21:06,720 --> 00:21:10,199 Speaker 10: and within their own sovereignty, namely critical raw materials and 392 00:21:10,240 --> 00:21:12,560 Speaker 10: things like that. And the problem is that under this 393 00:21:12,560 --> 00:21:15,560 Speaker 10: Trump administration that has a much more sort of solidified 394 00:21:15,800 --> 00:21:19,840 Speaker 10: and consolidated ability to exert power in the United States, 395 00:21:19,960 --> 00:21:22,160 Speaker 10: the Europeans have sort of come up against the issue 396 00:21:22,200 --> 00:21:24,080 Speaker 10: and the sort of obstacle that they now face in 397 00:21:24,119 --> 00:21:26,800 Speaker 10: this sort of new magaled world, which is that politically 398 00:21:26,840 --> 00:21:29,240 Speaker 10: they're still so sort of fragmented and they cannot move 399 00:21:29,280 --> 00:21:32,680 Speaker 10: with the same speed and effectiveness as the United States. 400 00:21:32,720 --> 00:21:35,480 Speaker 10: So really this is about trying to get the European 401 00:21:35,480 --> 00:21:38,439 Speaker 10: economy further on sort of more economic footing, and it's 402 00:21:38,480 --> 00:21:41,359 Speaker 10: really made brought to urgency and brought out of the 403 00:21:41,400 --> 00:21:43,360 Speaker 10: abstract I think by the Trump administration. 404 00:21:44,000 --> 00:21:48,399 Speaker 3: Yeah, absolutely, Suzanne. Do you think that there will be 405 00:21:48,480 --> 00:21:51,719 Speaker 3: a target for the share of European products that are 406 00:21:51,720 --> 00:21:54,800 Speaker 3: domestically produced for example? Will it go that far? Do 407 00:21:54,920 --> 00:21:59,000 Speaker 3: these rules have the potential also to make your more 408 00:21:59,080 --> 00:22:03,520 Speaker 3: self sufficient in certain really really key areas, like in 409 00:22:03,600 --> 00:22:05,080 Speaker 3: a defense for example. 410 00:22:05,760 --> 00:22:06,800 Speaker 8: Yeah, I think there will be. 411 00:22:06,880 --> 00:22:09,399 Speaker 9: I think this is where the you know, the point 412 00:22:09,400 --> 00:22:12,200 Speaker 9: of contention will be, you know, who is a trusted 413 00:22:12,240 --> 00:22:17,040 Speaker 9: partner and how far or how much or what percentage 414 00:22:17,480 --> 00:22:20,800 Speaker 9: of any rules you know, it made in Europe only 415 00:22:20,920 --> 00:22:23,680 Speaker 9: for example. Now, I mean I think there's a couple 416 00:22:23,720 --> 00:22:27,640 Speaker 9: of things at play here. For example, there is a division, 417 00:22:27,680 --> 00:22:30,080 Speaker 9: if you like, between you know, the EU is made 418 00:22:30,119 --> 00:22:33,760 Speaker 9: of twenty seven countries with very different economies. So there's 419 00:22:33,760 --> 00:22:37,159 Speaker 9: always been a suspicion by the smaller countries frankly that 420 00:22:37,480 --> 00:22:40,760 Speaker 9: big countries like France and Germany they have the resources 421 00:22:40,800 --> 00:22:43,760 Speaker 9: to plow money into their own economies. But if you're 422 00:22:43,920 --> 00:22:47,160 Speaker 9: from Finland or Ireland or you know, a smaller country Estonia. 423 00:22:47,520 --> 00:22:50,399 Speaker 9: You don't necessarily want to build a factory in your country, 424 00:22:50,440 --> 00:22:53,199 Speaker 9: do you know? You don't you want? Actually, you have 425 00:22:53,400 --> 00:22:56,720 Speaker 9: thrived through free trade. You like this foreign investment by 426 00:22:56,800 --> 00:22:59,640 Speaker 9: other countries, and that's what made you successful as an economy. 427 00:22:59,760 --> 00:23:03,320 Speaker 9: So I think there are very different visions of economic success, 428 00:23:03,680 --> 00:23:05,720 Speaker 9: and you're back to this age old problem with the EU. 429 00:23:05,800 --> 00:23:09,240 Speaker 9: One of the reasons Ali just explain perfectly there why 430 00:23:09,280 --> 00:23:11,840 Speaker 9: the European Union is like this is because the europe 431 00:23:11,960 --> 00:23:13,879 Speaker 9: Union is not a country, you know, it's a collection 432 00:23:13,960 --> 00:23:16,360 Speaker 9: of different countries. So it's always been. 433 00:23:16,240 --> 00:23:18,880 Speaker 8: Held back by this obvious fact that. 434 00:23:19,000 --> 00:23:21,119 Speaker 9: Even though the single market does work in lots of 435 00:23:21,119 --> 00:23:24,240 Speaker 9: ways free movement of people, of capital. 436 00:23:23,800 --> 00:23:25,960 Speaker 8: Of labor, etc. There are barriers. 437 00:23:26,000 --> 00:23:29,000 Speaker 9: And I mean I think with Earthena vander Lyon who 438 00:23:29,080 --> 00:23:32,439 Speaker 9: used the example of a truck in Belgium and there 439 00:23:32,480 --> 00:23:35,160 Speaker 9: are certain restrictions on how much tonnage it can carry, 440 00:23:35,160 --> 00:23:37,119 Speaker 9: and then and then when it goes over the border 441 00:23:37,119 --> 00:23:40,040 Speaker 9: to France that changes. Now as an aside, that sometimes 442 00:23:40,040 --> 00:23:44,000 Speaker 9: happens in the US between different states, but look, that 443 00:23:44,040 --> 00:23:46,960 Speaker 9: does illustrate these issues and that is replicated all over 444 00:23:46,960 --> 00:23:49,240 Speaker 9: the place. If you're an accountant, you want to work 445 00:23:49,280 --> 00:23:51,479 Speaker 9: in one country, but it's too hard to move your 446 00:23:51,480 --> 00:23:52,440 Speaker 9: profession to that country. 447 00:23:52,480 --> 00:23:53,439 Speaker 8: It's got different rules. 448 00:23:53,560 --> 00:23:55,480 Speaker 9: But at the end of the day, these measures to 449 00:23:55,800 --> 00:24:00,159 Speaker 9: fix that would require a seeding of national sovereignty a 450 00:24:00,160 --> 00:24:02,120 Speaker 9: lot of key areas by countries, and I don't think 451 00:24:02,160 --> 00:24:04,679 Speaker 9: they're prepared to do that. So I think what we 452 00:24:04,760 --> 00:24:07,760 Speaker 9: may see in this proposal is that sometimes the European 453 00:24:07,760 --> 00:24:10,480 Speaker 9: Commission aims high because they know that it will be 454 00:24:10,520 --> 00:24:15,399 Speaker 9: watered down eventually when it goes through the other EU institutions, 455 00:24:15,400 --> 00:24:18,240 Speaker 9: for example, But they know there's always this in built 456 00:24:18,359 --> 00:24:22,359 Speaker 9: break if you like, on developing the European Union Single market. 457 00:24:22,600 --> 00:24:24,720 Speaker 9: But look, I do think, even though I mentioned about 458 00:24:24,720 --> 00:24:27,480 Speaker 9: these divides about certain countries, even the most free trade 459 00:24:27,520 --> 00:24:30,840 Speaker 9: minded countries, except that over the last few years, particularly 460 00:24:30,880 --> 00:24:34,080 Speaker 9: on defense, but also since COVID, that the European Union 461 00:24:34,160 --> 00:24:36,399 Speaker 9: does need to look after itself more, that there needs 462 00:24:36,440 --> 00:24:38,479 Speaker 9: to be a turning inwards of such that you can't 463 00:24:38,520 --> 00:24:41,720 Speaker 9: just depend on China for example, for resources, or on 464 00:24:41,760 --> 00:24:43,800 Speaker 9: the United States for trade. So I think everyone the 465 00:24:43,840 --> 00:24:45,000 Speaker 9: page has turned on that. 466 00:24:45,520 --> 00:24:45,840 Speaker 8: Also. 467 00:24:45,920 --> 00:24:48,720 Speaker 9: I think another important dynamic is and you're asking about 468 00:24:48,720 --> 00:24:50,320 Speaker 9: the specifics of this when it comes out of the 469 00:24:50,320 --> 00:24:53,880 Speaker 9: Commission is that the European Commission and the EU leadership has. 470 00:24:53,720 --> 00:24:55,280 Speaker 8: Shifted a bit to the right on this. 471 00:24:55,720 --> 00:24:59,920 Speaker 9: When the European Union talks about reassessing some EU regulation 472 00:25:00,240 --> 00:25:02,560 Speaker 9: and they're doing this through the so called Omnibus builds, 473 00:25:02,760 --> 00:25:05,320 Speaker 9: you will always have figures around the EU table who say, 474 00:25:05,440 --> 00:25:10,439 Speaker 9: hang on, we can't sacrifice Europe's strict rules and regulations. 475 00:25:10,480 --> 00:25:13,480 Speaker 9: That is part of what the public wants, but also 476 00:25:13,600 --> 00:25:16,200 Speaker 9: certainty for businesses. I think there are fewer of those 477 00:25:16,280 --> 00:25:19,120 Speaker 9: voices now, so I think that's one of the reasons 478 00:25:19,280 --> 00:25:21,840 Speaker 9: the EU is kind of moving now, because it's kind 479 00:25:21,840 --> 00:25:24,159 Speaker 9: of shifted more for want of a better phrase, to 480 00:25:24,200 --> 00:25:27,720 Speaker 9: the right on this issue since the last European elections. 481 00:25:28,080 --> 00:25:31,480 Speaker 3: Suzanne, thank you, My thanks to Suzanne Lynch, Bloomberg's Brussels 482 00:25:31,520 --> 00:25:34,840 Speaker 3: Bury chief, and to Oliver Cook, our chief Europe correspondent. 483 00:25:35,080 --> 00:25:37,280 Speaker 3: I'm Caline Hepge here in London. You can catch us 484 00:25:37,320 --> 00:25:40,159 Speaker 3: every weekday morning for BlueBag Daybreak you at beginning at 485 00:25:40,200 --> 00:25:42,800 Speaker 3: six am in London. That's one am on Wall Street. 486 00:25:42,880 --> 00:25:46,840 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend 487 00:25:46,880 --> 00:25:49,920 Speaker 2: we look ahead to PMI data in the world's second 488 00:25:50,000 --> 00:26:04,720 Speaker 2: largest economy. I'm Nathan Hager, and this is Bloomberg. This 489 00:26:04,840 --> 00:26:07,720 Speaker 2: is Bloomberg Daybreak weekend, our global look ahead at the 490 00:26:07,760 --> 00:26:10,600 Speaker 2: top stories for investors in the coming week. I'm Nathan 491 00:26:10,600 --> 00:26:14,000 Speaker 2: Hager in Washington. This week we get official PMI data 492 00:26:14,119 --> 00:26:16,840 Speaker 2: for China. For a preview, let's get to Doug Prisner, 493 00:26:16,840 --> 00:26:19,240 Speaker 2: host of the Bloomberg Daybreak Asia podcast. 494 00:26:19,760 --> 00:26:23,399 Speaker 4: Thanks Nathan. It's not a secret China's economy has faced 495 00:26:23,440 --> 00:26:27,160 Speaker 4: many challenges in recent years. The most glaring is weak 496 00:26:27,200 --> 00:26:30,960 Speaker 4: domestic demand. This is largely a reflection of a prolonged 497 00:26:31,000 --> 00:26:34,400 Speaker 4: downturn in the property market, and with that soft demand 498 00:26:34,440 --> 00:26:38,960 Speaker 4: there has been entrenched deflationary pressure. Beyond that, there is 499 00:26:39,119 --> 00:26:42,680 Speaker 4: US tariff policy and an ensuing trade war, which really 500 00:26:42,720 --> 00:26:47,040 Speaker 4: forced China to expand markets outside the United States. So 501 00:26:47,200 --> 00:26:49,639 Speaker 4: will we learn anything new this week with the release 502 00:26:49,680 --> 00:26:53,480 Speaker 4: of the official PMI data. Let's bring in Bloomberg's Alan Wong. 503 00:26:53,640 --> 00:26:56,800 Speaker 4: Alan is China ecogov editor and he joins us from 504 00:26:56,800 --> 00:26:59,520 Speaker 4: our studios in Hong Kong. Thank you so much for 505 00:26:59,560 --> 00:27:02,560 Speaker 4: being here. Help me understand what's going on right now. 506 00:27:02,600 --> 00:27:04,919 Speaker 4: I know we're just coming off of the Lunar New 507 00:27:05,000 --> 00:27:07,240 Speaker 4: Year holiday. Can you give me a sense of what's 508 00:27:07,240 --> 00:27:11,280 Speaker 4: happening in the big picture in regard to the Chinese economy. 509 00:27:11,920 --> 00:27:15,119 Speaker 11: I think the underlying weaknesses that you described at the 510 00:27:15,160 --> 00:27:19,000 Speaker 11: start still remain, and then coming off of the holiday season, 511 00:27:19,119 --> 00:27:21,679 Speaker 11: we now have more data points, but they do not 512 00:27:21,840 --> 00:27:25,680 Speaker 11: paint a very clear picture of whether the Chinese economy 513 00:27:25,760 --> 00:27:28,840 Speaker 11: is improving in a meaningful way. I'll just give you 514 00:27:28,840 --> 00:27:32,480 Speaker 11: a couple of examples. We're seeing hotels, days, spending, and 515 00:27:32,880 --> 00:27:37,760 Speaker 11: travel trips being up on all measures. But that is 516 00:27:38,160 --> 00:27:42,320 Speaker 11: not as bullish as many people might think, because the 517 00:27:42,400 --> 00:27:47,159 Speaker 11: per capita spending actually was flat and the total spending 518 00:27:47,200 --> 00:27:50,840 Speaker 11: went up partly because the national holiday this year was 519 00:27:50,960 --> 00:27:53,159 Speaker 11: nine days long, which is one day longer than the 520 00:27:53,200 --> 00:27:55,840 Speaker 11: previous year. And as you can imagine, if you get 521 00:27:55,840 --> 00:27:59,919 Speaker 11: people more holidays, they probably spend more time spending and consuming. 522 00:28:00,119 --> 00:28:03,159 Speaker 11: So that is some sort of a statatistical noise that 523 00:28:03,640 --> 00:28:06,520 Speaker 11: distors the picture. And in terms of the PMI, the 524 00:28:06,640 --> 00:28:10,280 Speaker 11: Chinese New Year is also injecting some uncertainty into just 525 00:28:10,359 --> 00:28:13,120 Speaker 11: exactly how we can read it. We know that back 526 00:28:13,160 --> 00:28:17,640 Speaker 11: in January, China's manufacturing sectors contractor based on the official 527 00:28:17,680 --> 00:28:22,880 Speaker 11: PMI and economists forecasted the same degree of contraction almost 528 00:28:23,520 --> 00:28:27,000 Speaker 11: in February, and you can imagine that because of the 529 00:28:27,560 --> 00:28:32,960 Speaker 11: long Chinese Lunar New Year holiday period, factories just operates 530 00:28:33,000 --> 00:28:37,000 Speaker 11: at a lower capacities and orders my slow. So if 531 00:28:37,040 --> 00:28:40,680 Speaker 11: those two months are contracted consecutively, that would be a 532 00:28:40,760 --> 00:28:43,959 Speaker 11: pretty rare event. We've only seen that happen twice over 533 00:28:44,000 --> 00:28:47,720 Speaker 11: the last ten years, that with the manufacturing contractions seen 534 00:28:47,800 --> 00:28:49,200 Speaker 11: at the first two months of the year. 535 00:28:49,600 --> 00:28:53,200 Speaker 4: So is the problem in manufacturing and in turn the 536 00:28:53,240 --> 00:28:56,880 Speaker 4: export economy in China solely the result of what's been 537 00:28:56,920 --> 00:28:59,920 Speaker 4: going on with those US tariffs and US trade policy 538 00:29:00,200 --> 00:29:02,160 Speaker 4: or are there other factors at play here? 539 00:29:02,520 --> 00:29:04,760 Speaker 11: There are certainly many factors at play, and the tariff 540 00:29:04,760 --> 00:29:08,600 Speaker 11: policy actually worked in a way that was quite counterintuitive. 541 00:29:09,040 --> 00:29:11,760 Speaker 11: We know China said that it achieved its five percent 542 00:29:11,840 --> 00:29:14,640 Speaker 11: growth target last year. It actually surprised lots of people 543 00:29:14,680 --> 00:29:17,120 Speaker 11: because at the start of the year, with Trump returning 544 00:29:17,160 --> 00:29:20,840 Speaker 11: to the White House, people expected the tariff policy to 545 00:29:20,960 --> 00:29:24,880 Speaker 11: really slow China's exports to the United States, but export 546 00:29:24,920 --> 00:29:27,160 Speaker 11: turned out to be a major driver of growth of 547 00:29:27,240 --> 00:29:31,160 Speaker 11: China last year, but that was partly because of the tariffs, 548 00:29:31,280 --> 00:29:36,040 Speaker 11: because how tariffs accelerated buyers in the US and globally 549 00:29:36,160 --> 00:29:39,800 Speaker 11: to front load their orders, so people bought more than 550 00:29:39,840 --> 00:29:42,880 Speaker 11: they would have otherwise, and that actually ended up helping 551 00:29:42,960 --> 00:29:46,400 Speaker 11: China's economy grow as much as it did. So the 552 00:29:46,520 --> 00:29:49,880 Speaker 11: question now is whether that effects has been exhausted and 553 00:29:49,920 --> 00:29:52,560 Speaker 11: whether we're now seeing some sort of a payback period. 554 00:29:52,840 --> 00:29:55,200 Speaker 4: So my understanding is that China in the meantime has 555 00:29:55,240 --> 00:29:58,640 Speaker 4: been looking for other markets for its goods. I know 556 00:29:58,720 --> 00:30:01,160 Speaker 4: that the ev story as it relates to Europe is 557 00:30:01,200 --> 00:30:04,440 Speaker 4: a big concern, but hasn't the business community in China 558 00:30:04,480 --> 00:30:08,320 Speaker 4: been doing a very effective job at finding newer export markets. 559 00:30:08,680 --> 00:30:12,120 Speaker 11: They have. In fact, growth in exports to markets such 560 00:30:12,160 --> 00:30:18,120 Speaker 11: as Southeast Asia, Europe and Africa had been overperforming since 561 00:30:18,120 --> 00:30:20,600 Speaker 11: the start of last year, and they more or less 562 00:30:20,640 --> 00:30:22,720 Speaker 11: they actually they more than make up for the loss 563 00:30:22,760 --> 00:30:25,160 Speaker 11: to the US market. But note that some of those 564 00:30:25,200 --> 00:30:29,560 Speaker 11: shipments are meant for the US at the end because 565 00:30:29,600 --> 00:30:33,280 Speaker 11: of some of the goods of being rerouted to avoid tariffs, 566 00:30:33,360 --> 00:30:35,560 Speaker 11: so there's actually not a very clear picture of how 567 00:30:35,640 --> 00:30:39,880 Speaker 11: much those increase in exports to non US markets actually 568 00:30:40,080 --> 00:30:42,400 Speaker 11: ended up in the US and was tied to the 569 00:30:42,560 --> 00:30:43,240 Speaker 11: US demand. 570 00:30:43,560 --> 00:30:45,960 Speaker 4: So Alan, I'm curious when it comes to the story 571 00:30:46,040 --> 00:30:49,800 Speaker 4: on weak domestic demand, what do we know about efforts 572 00:30:49,840 --> 00:30:52,520 Speaker 4: on the part of the government to change the narrative. 573 00:30:52,920 --> 00:30:56,920 Speaker 11: I think a government's efforts has mostly been to put 574 00:30:56,960 --> 00:31:02,719 Speaker 11: a floor on the consumption trend more than really drastically 575 00:31:02,720 --> 00:31:07,360 Speaker 11: boosting how much people spend, because one long time weakness 576 00:31:07,400 --> 00:31:11,320 Speaker 11: in the Chinese demand side of the equation is just 577 00:31:11,400 --> 00:31:14,640 Speaker 11: how wage growth has been slow and people are not 578 00:31:14,840 --> 00:31:18,959 Speaker 11: feeling economically secure enough to spend more of their savings, 579 00:31:19,280 --> 00:31:23,480 Speaker 11: and that has continued, and the government has used policies 580 00:31:23,520 --> 00:31:27,320 Speaker 11: such as subsidies for certain purchases to encourage people to buy. 581 00:31:27,800 --> 00:31:32,560 Speaker 11: But economists see those as short term effects, because people 582 00:31:32,640 --> 00:31:36,920 Speaker 11: might as well buy a refrigerator earlier than they expect it, 583 00:31:37,000 --> 00:31:40,560 Speaker 11: not necessarily buy more appliances than they plan to. So 584 00:31:40,680 --> 00:31:43,800 Speaker 11: this is one way that the economist plane is how 585 00:31:43,840 --> 00:31:48,360 Speaker 11: those subsidies are just front loading the purchases to use 586 00:31:48,360 --> 00:31:52,920 Speaker 11: that word again, and not necessarily improving a demand for products. 587 00:31:53,040 --> 00:31:56,640 Speaker 4: So the Communist Party will hold the annual parliamentary meeting 588 00:31:56,640 --> 00:31:59,480 Speaker 4: in a couple of weeks. The NPC. What do you 589 00:31:59,480 --> 00:32:01,480 Speaker 4: think we're going to learn from that event? 590 00:32:01,920 --> 00:32:05,400 Speaker 11: The NPC will set the next five year plan for 591 00:32:05,520 --> 00:32:08,680 Speaker 11: China's social and economic development. A lot of people we 592 00:32:08,800 --> 00:32:12,160 Speaker 11: will be watching very closely as to just how seriously 593 00:32:12,320 --> 00:32:15,840 Speaker 11: China's looking to boost consumption. As we know, more developed 594 00:32:15,880 --> 00:32:19,560 Speaker 11: economies rely a lot more on consumption, especially in the 595 00:32:19,560 --> 00:32:23,560 Speaker 11: services sector, to keep their economy growing, and China has 596 00:32:23,600 --> 00:32:27,440 Speaker 11: been a laggard in that regard, and the policy makers 597 00:32:27,480 --> 00:32:31,479 Speaker 11: have for years try to improve people's consumption, but that 598 00:32:31,600 --> 00:32:35,080 Speaker 11: hasn't had a meaningful effects so far, and from the 599 00:32:35,120 --> 00:32:37,760 Speaker 11: policy we've seen in the last two years, we can 600 00:32:37,760 --> 00:32:41,360 Speaker 11: engauge how the underlying weakness is still a main drag 601 00:32:41,440 --> 00:32:44,600 Speaker 11: on people's mood to consume. The other thing to watch 602 00:32:44,640 --> 00:32:47,920 Speaker 11: out for from the NPC and in the five year 603 00:32:47,960 --> 00:32:51,360 Speaker 11: plan in particular, is just how important China see's technology 604 00:32:51,640 --> 00:32:54,640 Speaker 11: as a future growth pillar. And there's so many different 605 00:32:54,640 --> 00:32:57,240 Speaker 11: ways to look at this. AI is a big sector 606 00:32:57,280 --> 00:33:00,720 Speaker 11: that China wants to grow, but there's also worries that 607 00:33:01,000 --> 00:33:05,720 Speaker 11: automation and AI adoption could actually replace some workers, which, 608 00:33:06,080 --> 00:33:08,479 Speaker 11: as you can imagine, will not help with consumption right 609 00:33:08,520 --> 00:33:11,840 Speaker 11: if people aren't earning more money or earning enough, then 610 00:33:11,880 --> 00:33:15,080 Speaker 11: they wouldn't feel confident enough to go and job is. 611 00:33:15,080 --> 00:33:18,680 Speaker 4: The government involved in supporting research and development? Are there 612 00:33:18,880 --> 00:33:22,280 Speaker 4: funds available for companies to tap into if they're trying 613 00:33:22,320 --> 00:33:26,640 Speaker 4: to develop new forms of technology, whether it's related to 614 00:33:26,760 --> 00:33:28,800 Speaker 4: robotics or artificial intelligence? 615 00:33:29,080 --> 00:33:32,960 Speaker 11: The government has some sort of national strategy to accelerate 616 00:33:32,960 --> 00:33:35,560 Speaker 11: the use of AI and to make sure that it's 617 00:33:35,560 --> 00:33:39,320 Speaker 11: spread to industrial use in a responsible way in their words, 618 00:33:39,960 --> 00:33:43,280 Speaker 11: But it's mainly the private companies, the private sector that've 619 00:33:43,320 --> 00:33:46,760 Speaker 11: been pouring money into R and D in AI, building 620 00:33:46,840 --> 00:33:52,600 Speaker 11: data centers. Our Bloomberg Intelligence Research estimates that China's AI 621 00:33:52,640 --> 00:33:56,960 Speaker 11: companies will have spent ninety billion dollars between twenty five 622 00:33:57,000 --> 00:34:01,720 Speaker 11: and twenty seven on AI. That number is mostly a 623 00:34:01,760 --> 00:34:06,280 Speaker 11: private company spending on these services and hardware just to 624 00:34:06,320 --> 00:34:07,760 Speaker 11: stay ahead in the AI race. 625 00:34:08,040 --> 00:34:10,200 Speaker 4: So Alan, in the last week in the States, we 626 00:34:10,280 --> 00:34:13,480 Speaker 4: heard from in Nvidia and on the call with analysts, 627 00:34:13,520 --> 00:34:16,719 Speaker 4: the company said that competitors in China are making progress. 628 00:34:17,320 --> 00:34:19,480 Speaker 4: So where is China right now in the race to 629 00:34:19,600 --> 00:34:21,560 Speaker 4: produce advanced computer chips? 630 00:34:22,080 --> 00:34:25,000 Speaker 11: China buy, most estimates are still a couple of years behind. 631 00:34:25,000 --> 00:34:28,680 Speaker 11: It really cutting edge chip making technologies, but it is 632 00:34:28,760 --> 00:34:32,960 Speaker 11: catching up in many ways, and as Nvidia flagged, there's 633 00:34:33,160 --> 00:34:38,000 Speaker 11: real worry that if left to freely compete, China could 634 00:34:38,080 --> 00:34:40,560 Speaker 11: really catch up with the US. But it's a constantly 635 00:34:40,600 --> 00:34:44,200 Speaker 11: moving target, so it's up to anyone's guess as to 636 00:34:44,400 --> 00:34:46,840 Speaker 11: just when China will catch up and in what sectors 637 00:34:46,840 --> 00:34:50,600 Speaker 11: In particular. There are areas where China is lacking behind 638 00:34:50,680 --> 00:34:53,920 Speaker 11: more than others, but there are also areas that China 639 00:34:53,960 --> 00:34:56,759 Speaker 11: is seen as closer with the cutting edge applications, such 640 00:34:56,760 --> 00:34:59,520 Speaker 11: as when it comes to large language models. China is 641 00:34:59,560 --> 00:35:02,880 Speaker 11: constantly coming out with models as surprise the US competitors 642 00:35:02,880 --> 00:35:05,920 Speaker 11: and leaders, and the US leaders in this field like 643 00:35:06,280 --> 00:35:09,399 Speaker 11: open Ai and Anthropic have complained that China has been 644 00:35:09,760 --> 00:35:13,839 Speaker 11: using their models to train their models to accelerate their 645 00:35:13,880 --> 00:35:14,800 Speaker 11: development efforts. 646 00:35:15,320 --> 00:35:17,480 Speaker 4: In the next few weeks. We know that President Trump 647 00:35:17,520 --> 00:35:21,160 Speaker 4: is expected to visit Beijing in the last week. During 648 00:35:21,200 --> 00:35:23,520 Speaker 4: his State of the Union address, he vowed to keep 649 00:35:23,560 --> 00:35:27,080 Speaker 4: fighting for his tariffs, and that seems very much related 650 00:35:27,120 --> 00:35:30,000 Speaker 4: to the China story, although it is a little unclear 651 00:35:30,080 --> 00:35:33,160 Speaker 4: at the moment. Trump did not mention China in his speech, 652 00:35:33,640 --> 00:35:35,400 Speaker 4: and I think it's fair to say, there's still a 653 00:35:35,400 --> 00:35:38,839 Speaker 4: little bit of intrigue into how these new tariffs from 654 00:35:38,840 --> 00:35:44,160 Speaker 4: the administration may impact China and obviously trade flows as well. 655 00:35:44,280 --> 00:35:46,160 Speaker 4: Have you seen any clues on this. 656 00:35:46,640 --> 00:35:50,000 Speaker 11: I think the overall picture is that the bilateral ties 657 00:35:50,040 --> 00:35:53,240 Speaker 11: will continue to be stable. There have been some recent 658 00:35:53,239 --> 00:35:59,719 Speaker 11: developments tariffs, but those are more marginal than compared to 659 00:35:59,760 --> 00:36:03,880 Speaker 11: them broad a trajectory of stabilized ties. For example, after 660 00:36:04,000 --> 00:36:06,560 Speaker 11: the Supreme Court struck down some of Trump's terroriffs on 661 00:36:06,640 --> 00:36:11,040 Speaker 11: China among our countries, the trade representative James and Korea 662 00:36:11,200 --> 00:36:16,120 Speaker 11: said the administration would use probe into China's compliance with 663 00:36:16,239 --> 00:36:19,920 Speaker 11: an earlier trade deal as a way to keep tariff 664 00:36:20,000 --> 00:36:24,160 Speaker 11: levels up. So after that, China responded with a statement 665 00:36:24,200 --> 00:36:27,400 Speaker 11: saying that if they use these so called excuses to 666 00:36:27,440 --> 00:36:29,760 Speaker 11: put new tariffs on China, China will have no choice 667 00:36:29,800 --> 00:36:32,560 Speaker 11: but to use necessary measures to respond to the US. 668 00:36:33,160 --> 00:36:36,799 Speaker 11: But after that very quickly, Grea also said in a 669 00:36:36,840 --> 00:36:40,960 Speaker 11: Fox Business interview that the US doesn't seek escalation. So 670 00:36:41,000 --> 00:36:44,000 Speaker 11: based on this exchange alone, you can tell that both 671 00:36:44,040 --> 00:36:47,080 Speaker 11: countries still want to make sure that their relations are 672 00:36:47,080 --> 00:36:50,799 Speaker 11: on stable footing until at least the summit between She 673 00:36:50,960 --> 00:36:51,840 Speaker 11: and Trump. 674 00:36:51,880 --> 00:36:54,440 Speaker 4: So what about the trade relations that China has with 675 00:36:54,560 --> 00:36:59,120 Speaker 4: both Japan and South Korea. Obviously those countries are US allies. 676 00:36:59,600 --> 00:37:01,920 Speaker 4: How would you describe the current flow of trade. 677 00:37:02,480 --> 00:37:06,720 Speaker 11: Well, China and Japan, they've engaged, and China and Japan 678 00:37:06,760 --> 00:37:10,839 Speaker 11: are still locked in a pretty bitter diplomatic dispute over 679 00:37:10,880 --> 00:37:15,279 Speaker 11: what Japan's leader previously said about possibly defending Taiwan in 680 00:37:15,320 --> 00:37:19,560 Speaker 11: the event of an invasion by the by China's military. 681 00:37:20,080 --> 00:37:25,640 Speaker 11: So trade has been affected to some extent. It's mostly 682 00:37:25,760 --> 00:37:30,919 Speaker 11: the tourism sector and a few small pockets of the 683 00:37:30,960 --> 00:37:36,520 Speaker 11: trade relationships where things are obviously being affected, but in 684 00:37:36,560 --> 00:37:38,920 Speaker 11: the broad scheme of in the grand scheme of things, 685 00:37:39,640 --> 00:37:45,000 Speaker 11: they're not that important to China's overall trade. But there 686 00:37:45,080 --> 00:37:49,239 Speaker 11: are some areas that even small steps might hurt either 687 00:37:49,280 --> 00:37:52,640 Speaker 11: countries more. For example, if China uses this to further 688 00:37:52,719 --> 00:37:56,480 Speaker 11: withhold the shipments of rare earths to Japan, it might 689 00:37:56,640 --> 00:38:00,239 Speaker 11: impact some of Japan's sectors more than others. China to 690 00:38:00,280 --> 00:38:07,080 Speaker 11: recently impose new export control measures on twenty Japanese companies 691 00:38:08,280 --> 00:38:11,560 Speaker 11: and then to put another twenty Japanese companies on a 692 00:38:11,640 --> 00:38:14,480 Speaker 11: so called watch lists, so that just shows that China 693 00:38:14,600 --> 00:38:17,680 Speaker 11: isn't giving up on his pressure campaign on Tokyo and 694 00:38:17,760 --> 00:38:21,400 Speaker 11: on Japanese Prime Minist Takaichi to drop her previous comment 695 00:38:21,560 --> 00:38:22,120 Speaker 11: on Taiwan. 696 00:38:22,239 --> 00:38:24,040 Speaker 4: Alan will leave it there. Thank you so very much, 697 00:38:24,120 --> 00:38:27,480 Speaker 4: Bloomberg's Alan Wong. There. He is China Eco guv editor, 698 00:38:27,560 --> 00:38:30,600 Speaker 4: joining from our studios in Hong Kong. I'm Doug Krisner. 699 00:38:30,640 --> 00:38:33,400 Speaker 4: You can catch us weekdays for the Daybreak Asia podcast. 700 00:38:33,760 --> 00:38:35,960 Speaker 4: It's available wherever you get your podcast. 701 00:38:36,320 --> 00:38:39,520 Speaker 2: Nathan, Thanks Doug, and that does it for this edition 702 00:38:39,560 --> 00:38:42,879 Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at 703 00:38:42,920 --> 00:38:45,600 Speaker 2: five am Wall Street Time for the latest on markets 704 00:38:45,600 --> 00:38:48,239 Speaker 2: overseas and the news you need to start your day. 705 00:38:48,600 --> 00:38:51,720 Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global 706 00:38:51,760 --> 00:38:54,320 Speaker 2: business headlines are coming up right now.