WEBVTT - Daybreak Weekend: Fed Decision, Trump UK Visit, BOJ Policy 0:00:00.240 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.080 --> 0:00:12.480 This is Bloomberg day Break Weekend, our global look at 0:00:12.480 --> 0:00:14.480 the top stories in the coming week from our day 0:00:14.480 --> 0:00:17.439 Break anchors all around the world. Straight ahead on the program, 0:00:17.440 --> 0:00:20.160 and look ahead to this week's long awaited interest rate 0:00:20.239 --> 0:00:23.919 decision from the Federal Reserve. I'm Tom Busby in New York. 0:00:24.239 --> 0:00:26.920 I'm Caroline Hetker in London, where we're looking ahead to 0:00:27.040 --> 0:00:30.200 President Trump's second state visit to the UK. 0:00:30.680 --> 0:00:33.639 I'm Dot Krisner with a preview of next week's rate 0:00:33.680 --> 0:00:35.159 decision from the Bank of Japan. 0:00:36.440 --> 0:00:40.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:40.479 --> 0:00:44.200 eleven three Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:44.720 --> 0:00:49.720 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, Syria, 0:00:50.000 --> 0:00:53.520 XM one twenty one, and around the world on Bloomberg Radio, 0:00:53.560 --> 0:00:55.760 dot Com and the Bloomberg Business App. 0:01:00.640 --> 0:01:02.440 Good day to you. I'm Tom Busby, and we begin 0:01:02.480 --> 0:01:05.240 today's program with a decision on rates from the Federal 0:01:05.280 --> 0:01:08.880 Reserve this Wednesday. All signs point to a twenty five 0:01:08.920 --> 0:01:12.080 basis point rate cut, But could the central bankers go 0:01:12.200 --> 0:01:15.640 even bigger? And how does the FED sea inflation, the 0:01:15.760 --> 0:01:18.800 labor market and other fundamentals of the US economy. For more, 0:01:19.160 --> 0:01:24.840 we're joined by Michael McKee, Bloomberg International Economics and Policy correspondent. Well, Michael, 0:01:24.880 --> 0:01:27.200 thank you so much for being here. Let's just start 0:01:27.200 --> 0:01:29.920 with what you expect the FED to decide this week, 0:01:30.600 --> 0:01:32.960 how you think sentiment will be split among the voting 0:01:32.959 --> 0:01:36.120 members of the FOMC, and what does the FED sea 0:01:36.160 --> 0:01:38.959 as far as inflation they're dual mandates of inflation and 0:01:39.000 --> 0:01:39.800 the labor market. 0:01:40.160 --> 0:01:42.800 Well, a lot of interesting questions there, which is something 0:01:42.840 --> 0:01:44.920 that I hadn't been able to say going into a 0:01:44.920 --> 0:01:48.600 lot of FED meetings in recent months. The Fed is 0:01:48.640 --> 0:01:51.520 probably going to do it's twenty five basis point cut. 0:01:51.960 --> 0:01:54.600 The data that have come in suggests that the economy 0:01:54.680 --> 0:01:59.000 is weakening on the labor mandate side, still an issue 0:01:59.120 --> 0:02:02.560 on the the inflation side, which will keep them from 0:02:02.600 --> 0:02:06.000 doing fifty basis points. But the question is what do 0:02:06.040 --> 0:02:09.320 they do after the September seventeenth meeting, And that's where 0:02:09.360 --> 0:02:16.200 we may see some market moving or things that will 0:02:16.200 --> 0:02:19.600 cause the markets not to move if you get what 0:02:19.639 --> 0:02:22.160 I mean in the sense that if the markets are 0:02:22.200 --> 0:02:25.560 expecting something there's a potential for surprise, and that is 0:02:26.760 --> 0:02:29.640 what do they think the path is going forward? Is 0:02:29.720 --> 0:02:34.280 the inflation that we got this past week enough to 0:02:34.440 --> 0:02:38.080 warn them off of saying anything specific about October and 0:02:38.160 --> 0:02:41.360 December those FED meetings? And what does the dot plot 0:02:41.440 --> 0:02:45.880 say about next year and the path of rates going forward? 0:02:46.200 --> 0:02:49.040 Do they lower the terminal rate? Do they say that 0:02:49.520 --> 0:02:52.160 rates are going to go even lower than the markets 0:02:52.200 --> 0:02:55.080 had anticipated, which they have said is about three percent. 0:02:55.720 --> 0:02:57.560 So there are a lot of open questions out there 0:02:57.560 --> 0:03:00.600 that people are going to be asking, and the idea 0:03:00.720 --> 0:03:03.480 of what they think about inflation is going to be 0:03:03.680 --> 0:03:06.000 a good question for J. 0:03:06.160 --> 0:03:06.560 Powell. 0:03:06.639 --> 0:03:09.320 Well, let's talk about inflation, because this last week we 0:03:09.400 --> 0:03:11.760 got a couple of reads. We got producer price index 0:03:11.800 --> 0:03:14.520 which actually surprised to the upside a little bit, not 0:03:14.639 --> 0:03:18.120 much down one tenth of a percent. Consumer prices though 0:03:18.160 --> 0:03:21.040 a little bit hotter than forecast, higher costs for housing 0:03:21.080 --> 0:03:24.360 and of course food, not good news for this president 0:03:24.400 --> 0:03:26.919 who insists the food prices have been plummeting on his watch. 0:03:27.240 --> 0:03:30.519 What were your big takeaways from that, CPI read in August. 0:03:30.320 --> 0:03:32.160 Well, there is a political component to it, and the 0:03:32.200 --> 0:03:37.120 food and gasoline prices were up significantly, and so that's 0:03:37.200 --> 0:03:39.720 not going to be a good look for the president. 0:03:39.800 --> 0:03:43.560 But what was really interesting is it wasn't so much 0:03:43.680 --> 0:03:47.200 the goods prices that went up as the services prices. 0:03:47.320 --> 0:03:51.160 The goods prices we expected to rise because we thought 0:03:51.280 --> 0:03:55.040 the tariffs would leak into the data, but things like furnishings. 0:03:55.040 --> 0:03:58.240 Household furnishings only up a tenth of a percent, toys 0:03:58.240 --> 0:04:01.440 were down eight tenths of a percent. But we saw 0:04:02.000 --> 0:04:07.920 service prices, particularly for things like airline fares lodging away 0:04:07.960 --> 0:04:13.040 from home, those went up significantly. And if service prices 0:04:13.080 --> 0:04:16.720 are going up unrelated to tariffs, that's an inflation problem 0:04:17.200 --> 0:04:20.880 that the Fed will have to address in a different 0:04:20.920 --> 0:04:23.840 way than the way they would think about it in 0:04:23.920 --> 0:04:28.039 terms of tariff driven inflation. So they're going to have 0:04:28.040 --> 0:04:29.560 to keep a close eye on this, which is why 0:04:29.600 --> 0:04:31.679 I think, to answer my own question that I posed 0:04:31.720 --> 0:04:34.800 about what do they do for October in December, I 0:04:34.839 --> 0:04:38.599 think they kind of punt on giving serious guidance on 0:04:38.640 --> 0:04:40.680 that because they'll want to see more data between now 0:04:40.720 --> 0:04:41.039 and then. 0:04:41.560 --> 0:04:44.320 Did you see any other good news as far as inflation. 0:04:44.960 --> 0:04:49.680 Yeah, in some areas of service prices. Medical care services 0:04:49.680 --> 0:04:52.479 were down a tenth of a percent, recreation services down 0:04:52.520 --> 0:04:55.440 two tents. And people thought that those would be areas 0:04:55.480 --> 0:04:59.240 that might rise because they had risen in previous months 0:04:59.600 --> 0:05:04.400 service price increases. In this case they did not. So 0:05:04.760 --> 0:05:07.600 it's not an easy thing to say what is causing 0:05:07.760 --> 0:05:10.880 the service price inflation to rise, and that's something the 0:05:10.920 --> 0:05:13.320 FED is going to want to investigate. 0:05:13.680 --> 0:05:16.960 Well, let's talk then about the labor market, which every 0:05:17.040 --> 0:05:19.640 sign we're seeing it continues to weaken. And just this 0:05:19.680 --> 0:05:22.520 past week we got what a near four year high 0:05:23.120 --> 0:05:26.479 on jobless claims. What's your read on that and what 0:05:26.560 --> 0:05:27.360 is the FED see? 0:05:28.040 --> 0:05:29.800 You need to take it with a little bit of 0:05:29.880 --> 0:05:34.200 caution because the last week before this past week when 0:05:34.240 --> 0:05:37.320 the jobless claims were tallied was the week with Labor 0:05:37.400 --> 0:05:40.000 Day and a holiday. Is always difficult to seasonally adjust 0:05:40.040 --> 0:05:42.400 for the Department of Labor because the holidays move around. 0:05:42.960 --> 0:05:45.880 So in this case we can look at it with 0:05:45.960 --> 0:05:48.720 a sort of a jaundic sty say this is something 0:05:48.800 --> 0:05:50.520 to worry about if it continues. 0:05:50.680 --> 0:05:53.360 The Fed's two day policy meeting kicking off this Tuesday, 0:05:53.720 --> 0:05:57.120 a decision Wednesday, followed by a Jerome Powell press conference 0:05:57.320 --> 0:06:01.680 our thanks to Michael McKee, Bloomberg International Economy and Policy correspondent. 0:06:02.040 --> 0:06:04.280 We move next to corporate earnings from the shipping and 0:06:04.320 --> 0:06:07.760 logistics giant FedEx, coming out on Thursday after Wall Street's 0:06:07.760 --> 0:06:11.400 closing bell, just ahead of the industry's peak holiday shipping season. 0:06:11.839 --> 0:06:15.000 How are rising costs, worries about US consumer spending, and 0:06:15.000 --> 0:06:18.360 the end of deminimous exemptions on small package shipments into 0:06:18.400 --> 0:06:22.359 the US all impacting the company? For more, we're joined 0:06:22.360 --> 0:06:28.120 by Lee Clasgow, Bloomberg Intelligence Senior Transport, Logistics and shipping analysts. Lee, 0:06:28.200 --> 0:06:30.400 thank you so much for joining us. You know, FedEx 0:06:30.440 --> 0:06:33.080 coming off a very solid earnings beat for the springs 0:06:33.080 --> 0:06:36.760 fourth quarter, saying it's successfully slashed four billion in costs. 0:06:36.760 --> 0:06:38.960 It plans to cut a billion more this fiscal year. 0:06:39.360 --> 0:06:42.280 But FedEx and the whole industry now facing a lot 0:06:42.320 --> 0:06:44.479 more headwinds. So what are you expecting to see in 0:06:44.520 --> 0:06:46.480 this week's earnings results. 0:06:47.560 --> 0:06:50.520 Yeah, it's gonna be tough. They're facing a lot of headwinds. 0:06:50.600 --> 0:06:53.039 A lot of those headwinds are related to the kind 0:06:53.040 --> 0:06:57.040 of more protectionist stances from the Trump administration. One of 0:06:57.080 --> 0:07:00.320 those which actually had bi partisans support back in the 0:07:00.360 --> 0:07:04.440 Biden days was getting rid of demnimous exemptions, which really 0:07:04.480 --> 0:07:07.839 allows lower value goods to be imported into the United 0:07:07.880 --> 0:07:12.080 States without facing any duties or tarifs. And that that 0:07:12.160 --> 0:07:15.080 floor was at eight hundred dollars and so what that 0:07:15.120 --> 0:07:18.360 did is allowed a lot of e commerce providers outside 0:07:18.400 --> 0:07:21.680 the United States to directly shift to consumers. So you know, 0:07:21.720 --> 0:07:24.960 if you bought that thing, that that skirt or T 0:07:25.080 --> 0:07:28.160 shirt from Sheen or something off of Team U or 0:07:28.200 --> 0:07:32.080 even off of the Amazon marketplace, some of that stuff 0:07:32.560 --> 0:07:36.240 might have been originated in China and you know it's 0:07:36.280 --> 0:07:39.560 going into the United States and kind of avoiding custom 0:07:39.640 --> 0:07:42.280 duties because of that loophole. And you know, they got 0:07:42.360 --> 0:07:45.440 rid of that loophole for imports that are going into 0:07:45.480 --> 0:07:49.080 the United States from China and Hong Kong in May. 0:07:49.840 --> 0:07:52.640 They also got rid of that loophole for everyone else 0:07:53.160 --> 0:07:55.920 at the end of last month. So you know, we're 0:07:55.960 --> 0:07:58.800 really going to start to see the impact. And you know, 0:07:58.920 --> 0:08:03.160 FedEx kind of doesn't report on a calendar basis. They 0:08:03.240 --> 0:08:06.240 have on physical basis. And you know we heard from 0:08:06.400 --> 0:08:10.760 UPS already and they said, you know, for two months 0:08:10.560 --> 0:08:13.720 of their quarter that they reported which this will be 0:08:13.760 --> 0:08:16.920 included in FedEx earnings, is that you know, their China 0:08:16.960 --> 0:08:21.360 to US business was down pretty significantly and we expect 0:08:21.400 --> 0:08:24.520 that read through to apply to FedEx as well. And 0:08:24.560 --> 0:08:28.200 then you know, FedEx is also dealing with, you know, 0:08:28.240 --> 0:08:31.400 a weaker industrial economy. People don't really think of FedEx 0:08:31.440 --> 0:08:34.320 as a trucking company, but they're they're actually the largest 0:08:34.400 --> 0:08:37.520 less than truckload provider. That's a business that they're looking 0:08:37.559 --> 0:08:41.360 to spin off, but they still operate it and it's 0:08:41.400 --> 0:08:45.240 really tied to you know, industrial production is m and 0:08:45.320 --> 0:08:48.960 the ism has been you know, contraction territory for I 0:08:48.960 --> 0:08:51.240 believe thirty one out of the last thirty three months. 0:08:51.480 --> 0:08:54.000 So you know that's going to definitely weigh on tonnage. 0:08:54.640 --> 0:08:57.920 So you know, volumes are really facing headwinds, whether it's 0:08:57.920 --> 0:09:03.160 their parcel international parcel business or their you know, less 0:09:03.160 --> 0:09:04.720 than trucklo business and FedEx freight. 0:09:04.960 --> 0:09:06.960 Now these are big changes, right, I mean, we could 0:09:06.960 --> 0:09:10.280 really see a significant hit to earnings, maybe not in 0:09:10.800 --> 0:09:13.000 this report, but certainly in the next one. 0:09:13.440 --> 0:09:15.640 Yeah, you know, I think all eyes will be on, 0:09:15.960 --> 0:09:19.280 you know, any guidance that the company is able to offer. 0:09:19.800 --> 0:09:23.160 Companies in my world have been less apt to provide 0:09:23.200 --> 0:09:25.960 guidance at least longer, longer term guidance, just because of 0:09:26.000 --> 0:09:30.720 the uncertainty tied around the trade policies out of Washington, 0:09:31.240 --> 0:09:34.840 which has created a significant amount of volatility and uncertainty. 0:09:34.960 --> 0:09:39.000 We'll see kind of where management thinks they're going to be. 0:09:40.200 --> 0:09:44.319 My guess is though they probably will provide, if any insight, 0:09:44.480 --> 0:09:48.880 maybe into their second quarter. Just again, given that, you know, 0:09:48.920 --> 0:09:53.560 everyone's crystal ball is quite foggy and correct right now. 0:09:53.880 --> 0:09:56.320 Yeah, yeah, Well, well let's talk about something you brought 0:09:56.360 --> 0:09:59.720 up is the possibility of spinning off FedEx Freight. But 0:10:00.600 --> 0:10:03.559 FedEx had a couple of initiatives Drive and Network two 0:10:03.600 --> 0:10:07.680 point zero. How have the company cut costs and shed businesses? 0:10:07.720 --> 0:10:10.320 How has that impacted the business? And what is there 0:10:10.440 --> 0:10:13.880 left besides FedEx Freight to cut? 0:10:14.520 --> 0:10:17.320 Yeah, so, you know, looking at FedEx as a whole, 0:10:18.080 --> 0:10:22.160 you know, they're doing a number of initiatives you mentioned 0:10:22.240 --> 0:10:24.920 Driver Network two point zero that are trying to take 0:10:24.960 --> 0:10:27.600 out costs of the network. Is what they really need 0:10:27.600 --> 0:10:30.480 to do, is they really need to restructure their networks 0:10:30.480 --> 0:10:33.280 to the new reality. You know, the old reality would 0:10:33.320 --> 0:10:35.800 be you know, one hundred envelopes go to a lawyer's office, 0:10:35.840 --> 0:10:38.840 and that FedEx driver would pick up another one hundred 0:10:38.920 --> 0:10:42.480 envelopes to be delivered. And that kind of density really 0:10:42.679 --> 0:10:45.640 helps with margins. And you know, fast forward to today, 0:10:45.679 --> 0:10:48.040 we're all buying things from Amazon or wherever, and we 0:10:48.120 --> 0:10:52.719 get one package per day, and those deliveries are extremely expensive, 0:10:52.720 --> 0:10:55.480 and that's been really weighing on margins. So you know, 0:10:55.600 --> 0:10:58.120 we're not going backwards, we're going forwards. Is probably just 0:10:58.200 --> 0:11:01.920 going to be more B two C UH traffic relative 0:11:02.320 --> 0:11:05.280 to B two B traffic UH. And and so they're 0:11:05.320 --> 0:11:09.640 they're making changes in Those changes include increasing automation, UH, 0:11:09.679 --> 0:11:14.640 reducing overlaps, and networks they're combining uh, you know, slowly 0:11:14.640 --> 0:11:18.000 combining their ground and air networks, something they've been really 0:11:18.720 --> 0:11:20.760 you know, they push back for a number of years 0:11:20.800 --> 0:11:23.440 about doing and then they're finally now leading into that. 0:11:24.520 --> 0:11:26.240 And what I would say is that some of the 0:11:26.240 --> 0:11:29.960 benefits that they're generating from these changes were probably not 0:11:30.000 --> 0:11:32.160 going to really see them that much, because to really 0:11:32.200 --> 0:11:34.880 see them, you need you need good volume growth, You 0:11:34.960 --> 0:11:38.600 need that that that that operational leverage that you're going 0:11:38.679 --> 0:11:41.240 to get. So I suspect, you know, when things do 0:11:41.360 --> 0:11:44.680 turn around. You know. Again, the big question is when 0:11:45.679 --> 0:11:49.280 you are going to see that flywheel start operating in 0:11:49.280 --> 0:11:54.079 that that operating leverage, generating better margins than they are today. 0:11:54.559 --> 0:11:56.320 But the but the problem is is that you know 0:11:56.400 --> 0:11:59.480 FedEx and and you know it's competitor ups kind of 0:11:59.480 --> 0:12:02.560 a show me stories because they're both undergoing these kind 0:12:02.559 --> 0:12:07.719 of restructurings. And we really have to see a how 0:12:07.760 --> 0:12:11.160 these companies look coming out of these restructurings and from 0:12:11.160 --> 0:12:14.240 an operational standpoint when I'm talking about restructurings. And then 0:12:14.440 --> 0:12:17.880 also you know, b what does that new network from 0:12:17.920 --> 0:12:21.400 a profitability standpoint look like when volumes are back on 0:12:21.480 --> 0:12:22.320 track for growth. 0:12:22.640 --> 0:12:25.320 Hello, a lot to look forward to. FedEx fiscal first 0:12:25.400 --> 0:12:28.560 quarter earnings out this Thursday after Wall Street's closing bell 0:12:28.880 --> 0:12:33.160 Our thanks to Lee Klascal, Bloomberg Intelligence senior Transport, Logistics 0:12:33.200 --> 0:12:36.360 and Chipping analysts and coming up on Bloomberg Day Break weekend, 0:12:36.360 --> 0:12:39.600 President Trump heads to the UK. I'm Tom Busby, and 0:12:39.720 --> 0:12:53.679 this is Bloomberg. This is Bloomberg Day Break Weekend, our 0:12:53.720 --> 0:12:56.120 global look ahead at the top stories for investors in 0:12:56.160 --> 0:12:59.400 the coming week. I'm Tom Busby in New York. Up 0:12:59.480 --> 0:13:01.760 later in our program and look ahead to a monetary 0:13:01.800 --> 0:13:04.960 policy decision from the Bank of Japan. But first, just 0:13:05.000 --> 0:13:07.880 a few weeks after President Trump's personal visit to Scotland, 0:13:07.920 --> 0:13:11.040 He's headed back to the UK, where he's expected to 0:13:11.080 --> 0:13:15.240 mix royal mingling with important geopolitical discussions on a three 0:13:15.320 --> 0:13:18.320 day trip. But the visit takes place under the shadow 0:13:18.360 --> 0:13:21.160 of the sacking of Peter Mandelssohn as the UK's US 0:13:21.160 --> 0:13:26.280 ambassador for previous links to disgrace financier Jeffrey Epstein for more, 0:13:26.640 --> 0:13:28.680 Let's go to London and bring in Bloomberg day Break 0:13:28.679 --> 0:13:30.959 euro banker Caroline Hepger. 0:13:31.120 --> 0:13:35.560 Tom Britton's ambassador to Washington, Peter Mandelsson, has recently been 0:13:35.679 --> 0:13:39.920 removed from his post after further revelations about the extent 0:13:40.000 --> 0:13:44.319 of his relationship to the late p Dephar financier Jeffrey Epstein. 0:13:44.960 --> 0:13:49.280 That decision comes only days before President Donald Trumps state 0:13:49.520 --> 0:13:54.520 visit to Britain, the UK ambassador to Washington usually playing 0:13:54.559 --> 0:13:58.320 a key role in those events, and it complicates what 0:13:58.520 --> 0:14:03.160 is an already careful, fully choreographed few days. It's an 0:14:03.200 --> 0:14:06.720 event that will be important to UK Prime Minister Kirs Starmer, 0:14:06.960 --> 0:14:11.040 who has prioritized good relations with Donald Trump since taking 0:14:11.080 --> 0:14:14.440 office just over a year ago, stressing the importance of 0:14:14.480 --> 0:14:18.760 Britain's defense and security alliance with America and taking care 0:14:18.960 --> 0:14:24.320 not to openly criticize Trump's tariff policies. When Stalmer visited 0:14:24.320 --> 0:14:27.480 the Oval Office back in February, he brandished the King's 0:14:27.560 --> 0:14:31.320 invitation to Trump, which the U S President called an honor, 0:14:31.640 --> 0:14:36.040 describing King Charles as a beautiful and wonderful man. Those 0:14:36.120 --> 0:14:39.240 overtures appear to be paying off, at least in part. 0:14:39.640 --> 0:14:42.440 The UK became the first country to sign a tariff 0:14:42.480 --> 0:14:45.960 reduction deal with the US in May, with some of 0:14:46.000 --> 0:14:50.640 it already implemented. However, some tensions remain. For example, steel 0:14:50.800 --> 0:14:54.520 is an area of issue. UK officials are still working 0:14:54.560 --> 0:14:57.080 to secure a deal that would remove the twenty five 0:14:57.120 --> 0:15:00.600 percent US tariffs on the sector, as to a drag 0:15:00.680 --> 0:15:04.480 on for months after Prime Minister Starmer and President Trump 0:15:04.520 --> 0:15:09.520 agreed a broader tariff cutting plan. There are also geopolitical 0:15:09.600 --> 0:15:13.440 issues too, with the potential to spark turbulence in the 0:15:13.560 --> 0:15:17.520 so called special relationship. The US Ambassador to Israel said 0:15:17.600 --> 0:15:20.600 last month that the UK and France have handed victory 0:15:20.640 --> 0:15:25.720 to hamas by announcing intentions to recognize a Palestinian state. 0:15:26.520 --> 0:15:29.560 The visit also takes place during a testing time at 0:15:29.560 --> 0:15:33.080 home for Starmer. He's facing scandal within his own party 0:15:33.160 --> 0:15:37.360 and he's battling challenges from the right wing party Reform UK, 0:15:37.960 --> 0:15:41.440 who have proven popular in the polls. The group's leader, 0:15:41.520 --> 0:15:45.040 Nigel Faragh, recently visited the White House at the invitation 0:15:45.440 --> 0:15:50.080 of Donald Trump. Bloomberg's London bureau chief Ruth David explains 0:15:50.280 --> 0:15:54.040 why that trip spoke volumes. 0:15:53.560 --> 0:15:57.200 That photograph of him standing with President Trump. I mean 0:15:57.520 --> 0:16:00.200 a photo speaks more than all of the real of 0:16:00.240 --> 0:16:03.960 coverage right to have that kind of backing and to 0:16:04.080 --> 0:16:08.480 have that kind of support globally. We saw Tony Blair 0:16:08.800 --> 0:16:11.040 going to the US, We're seeing Nigel Farad and the 0:16:11.120 --> 0:16:14.080 question is where is Gastamo? And I know Donald Trump 0:16:14.160 --> 0:16:17.360 is coming to the UK later, but it definitely seems 0:16:17.400 --> 0:16:20.160 to be like for urges riding on a hype. 0:16:20.040 --> 0:16:23.000 That was Bloomberg's, with David speaking there to Bloomberg's Tom 0:16:23.040 --> 0:16:26.400 McKenzie and Guy Johnson. So will the honor of a 0:16:26.520 --> 0:16:30.120 royal banquet be enough to curry the favor of President Trump? 0:16:30.360 --> 0:16:36.360 Is something I've been discussing with Bloomberg's political correspondent Ellen Milligan. Ellen, just, firstly, 0:16:36.520 --> 0:16:39.600 what are we expecting to see President Trump do on 0:16:39.680 --> 0:16:43.080 this second state visit that he's paying to the UK. 0:16:43.720 --> 0:16:46.400 Yes, I mean this has never happened before that. Only 0:16:47.360 --> 0:16:49.680 other US presidents who have had a state visit were 0:16:49.680 --> 0:16:53.080 Barack Obama and George Bush. But no other president has 0:16:53.120 --> 0:16:56.960 had two state visits. This one will be a bit 0:16:57.000 --> 0:16:58.840 different from the last. First of all, what will be 0:16:58.840 --> 0:17:02.640 hosted by King Charles. The last one in twenty nineteen 0:17:02.720 --> 0:17:06.120 was obviously hosted by the Late Queen. The other big 0:17:06.200 --> 0:17:08.639 change is that it will be primarily hosted at Windsor 0:17:08.680 --> 0:17:14.320 Castle because Buckingham Palace is undergoing renovations. So there will 0:17:14.320 --> 0:17:18.760 be the usual traditional state banquet, the exchange of gifts 0:17:18.760 --> 0:17:22.119 between the King and Queen and the President and the 0:17:22.119 --> 0:17:25.439 First Lady. Usually they have some kind of private meeting, 0:17:25.480 --> 0:17:31.480 either over lunch or tea when the President first greets them. 0:17:31.840 --> 0:17:34.520 Then they'll have this banquet where we're expecting a lot 0:17:34.520 --> 0:17:38.520 of famous businessmen and celebrities, as well as the border 0:17:38.640 --> 0:17:42.880 royal family to be there, like Prince William, who Trump 0:17:42.960 --> 0:17:46.720 has also met before. And then after all that pageantry, 0:17:47.119 --> 0:17:51.240 there'll be the political portion where Trump goes to visit 0:17:51.800 --> 0:17:55.800 Prime Minister in his countryside estate at Chequers for a 0:17:55.800 --> 0:17:56.760 bilateral meeting. 0:17:57.200 --> 0:17:59.760 Huge opportunity then for the UK to be front of 0:17:59.800 --> 0:18:04.840 the you know, to show off what they want to offer. 0:18:04.880 --> 0:18:07.720 I'm sure in terms of business ties, Kis Starmer will 0:18:07.760 --> 0:18:11.399 surely be trying to use this as kind of bargaining power. 0:18:11.520 --> 0:18:14.520 What do you think is going to be his main message? 0:18:14.760 --> 0:18:18.720 Yeah, I mean the Prime Minister is effectively using the 0:18:18.800 --> 0:18:23.400 King as his chief diplomat and it's already paid off 0:18:23.440 --> 0:18:26.080 for the UK. I mean, you'll remember the moment where 0:18:26.400 --> 0:18:29.760 Kis Starmer visited the White House in February and brandished 0:18:30.119 --> 0:18:34.080 this letter hand signed by the King himself inviting the 0:18:34.119 --> 0:18:37.879 President over to the UK again. That I think, in 0:18:38.240 --> 0:18:41.439 large part has been why Trump and Starma have managed 0:18:41.480 --> 0:18:46.080 to establish a close relationship despite their political differences. And 0:18:46.480 --> 0:18:49.400 you know, the UK was the first country to sign 0:18:49.480 --> 0:18:53.639 a trade agreement where they avoided the same level severe 0:18:53.680 --> 0:18:58.440 tariffs that other allies did. He Trump was also hosted 0:18:58.440 --> 0:19:01.119 by the UK in Scotland couple of months ago. That 0:19:01.240 --> 0:19:04.440 was a private visit but had very much a political 0:19:04.480 --> 0:19:09.199 element where he was mostly promoting his golf courses but 0:19:09.280 --> 0:19:11.760 also had a meeting with Starma and with the EU's 0:19:11.800 --> 0:19:15.320 Wonder Lion while there as well. So it's already paid 0:19:15.320 --> 0:19:20.639 off for Starma. I think he's hoping that other deals 0:19:20.960 --> 0:19:24.520 could be struck, potentially on tech, potentially on AI, although 0:19:24.560 --> 0:19:27.359 this state visit will will mostly be about the royal 0:19:27.359 --> 0:19:29.359 element rather than the political one. 0:19:29.400 --> 0:19:32.080 Absolutely, it seems I think to many observers in the 0:19:32.200 --> 0:19:34.840 UK a bit like a Netflix movie Letter to the 0:19:34.920 --> 0:19:38.080 King could have been the title. And it was also 0:19:38.200 --> 0:19:40.840 seen as quite a savvy move by the British Prime 0:19:40.840 --> 0:19:45.159 Minister by some voters because President Trumps still deeply unpopular, 0:19:45.280 --> 0:19:48.240 isn't he amongst a lot of voters? And yet there's 0:19:48.280 --> 0:19:51.000 also an edge to voters in the UK that they 0:19:51.119 --> 0:19:54.880 understand the UK has to try to do well by 0:19:55.000 --> 0:20:00.399 obviously its biggest ally in the world in terms of 0:20:00.480 --> 0:20:04.840 how we should expect then the negotiations to go. Do 0:20:04.920 --> 0:20:07.359 you think that there are going to be specific things 0:20:07.760 --> 0:20:11.560 that Starma can perhaps gain from this, maybe on steel, 0:20:11.680 --> 0:20:15.359 as you say, which is still got levees from the US. 0:20:15.440 --> 0:20:18.360 I mean, Britain managed to get what has been seen 0:20:18.400 --> 0:20:21.680 as a better trade deal than a lot of other countries. 0:20:22.240 --> 0:20:25.480 Yes, that was the big element on steel that was 0:20:25.560 --> 0:20:29.560 missing from the trade deal that they signed back at 0:20:29.600 --> 0:20:33.719 the G seven in Canada in a couple of months ago, 0:20:34.320 --> 0:20:37.399 and that still hasn't been resolved. We've now got a 0:20:37.440 --> 0:20:41.439 new Business and Trade Secretary in the UK and I 0:20:41.520 --> 0:20:44.879 know that the government is pretty desperate to get that sorted. 0:20:45.040 --> 0:20:48.560 Whether that will happen at next week's state visit, I 0:20:48.600 --> 0:20:52.840 think that, you know, I'm not hearing much optimism on that. 0:20:53.680 --> 0:20:57.240 The briefings are more around a kind of agreement on 0:20:57.359 --> 0:21:01.399 quantum or AI or tech, some kind of deal in 0:21:01.440 --> 0:21:05.719 those areas, and there's been reports that various tech billionaires 0:21:05.880 --> 0:21:08.480 are coming over with Trump to join him in the 0:21:08.920 --> 0:21:11.600 state banquet as well. So I think the focus will 0:21:11.600 --> 0:21:13.560 be on that dangers. 0:21:13.720 --> 0:21:17.680 What are the dangers in this state visit? It lasts 0:21:17.680 --> 0:21:21.400 several days. I mean we're expecting some level of protest 0:21:21.560 --> 0:21:26.440 by some groups in the UK and also there it's 0:21:26.480 --> 0:21:30.800 a double edged sword, the relationship, a close relationship with 0:21:30.880 --> 0:21:34.600 President Trump. We've seen some global leaders humiliated. I suppose 0:21:34.640 --> 0:21:36.399 one of the pitfalls people are thinking about. 0:21:36.600 --> 0:21:39.120 There are actually a lot of dangers, and the government 0:21:39.200 --> 0:21:41.760 officials I've been speaking to who have been involved in 0:21:42.040 --> 0:21:44.679 the planning for the state visit are really really worried 0:21:44.720 --> 0:21:49.160 about it. The primary thing is that just days after 0:21:49.200 --> 0:21:54.160 Trump departs, the government is expected to recognize the state 0:21:54.200 --> 0:22:00.520 of Palestine at the United Nations Assembly. Apro the the 0:22:00.640 --> 0:22:03.919 UK US approach to Israel is one of the big 0:22:03.960 --> 0:22:11.600 opposing differences, and the US administration, including Marco Rubio, have 0:22:11.760 --> 0:22:15.280 very much condemned the UK and France's and Canada's plan 0:22:15.400 --> 0:22:20.560 to recognize Palestine. So that will be you know, a 0:22:20.600 --> 0:22:25.120 moment of peril potentially if that's brought up. I mean. 0:22:25.160 --> 0:22:29.120 The other thing is Trump Trump isn't afraid to insult 0:22:29.200 --> 0:22:33.560 various political allies of the Prime Minister. I mean even 0:22:33.600 --> 0:22:37.040 in Scotland he was asked about London Mercedy Khan and 0:22:37.320 --> 0:22:40.800 made very disparaging remarks which Kis Starma had to interrupt 0:22:40.800 --> 0:22:44.080 and remind the President that he was a friend and 0:22:44.119 --> 0:22:50.480 political ally of Kastarmer's. And there are other elements as well, 0:22:50.480 --> 0:22:53.000 on free speech, for example, this is something that jd 0:22:53.160 --> 0:22:56.040 Vance has has lectured and tried to score the UK 0:22:56.160 --> 0:23:01.359 on Trump's vice president also, So there are these political differences. 0:23:01.400 --> 0:23:03.760 And the Prime Minister and the President will be giving 0:23:03.760 --> 0:23:07.080 a joint press conference at the end where they'll be 0:23:07.160 --> 0:23:09.040 probed on some of those issues as well. 0:23:09.560 --> 0:23:13.080 And do you expect Nigel Farage or Reform UK to 0:23:13.160 --> 0:23:14.119 feature at all? 0:23:14.720 --> 0:23:17.199 You know Farage he might get brought up in that 0:23:17.240 --> 0:23:20.760 press conference. For example, Forage to go over to the 0:23:20.920 --> 0:23:25.000 over Office and get and meet President Trump just a 0:23:25.000 --> 0:23:28.920 couple of weeks ago and got his picture standing next 0:23:28.920 --> 0:23:32.879 to the President at his desk. You know they are 0:23:32.920 --> 0:23:37.760 close political allies and Trump isn't you know? It is 0:23:37.800 --> 0:23:42.399 an embarrassed or about the lack of diplomacy that comes 0:23:42.440 --> 0:23:45.520 with saying that in front of the Prime Minister sometimes. 0:23:45.080 --> 0:23:48.439