1 00:00:02,240 --> 00:00:04,680 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,720 --> 00:00:07,080 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,120 --> 00:00:09,080 Speaker 1: anchors all around the world, and straight. 4 00:00:08,840 --> 00:00:09,959 Speaker 2: Ahead on the program. 5 00:00:10,000 --> 00:00:14,120 Speaker 1: Apple set to launch the iPhone fifteen this week. I'm 6 00:00:14,160 --> 00:00:15,360 Speaker 1: Tom Busby in New York. 7 00:00:15,680 --> 00:00:18,400 Speaker 3: I'm Carolyn hege Hair in London, where we're looking ahead 8 00:00:18,440 --> 00:00:21,479 Speaker 3: to the crucial ECB interest rate decision. 9 00:00:21,720 --> 00:00:24,600 Speaker 4: I'm Brian Curtis in Hong Kong. We look at upcoming 10 00:00:24,680 --> 00:00:27,800 Speaker 4: data in China and what might serve as a catalyst 11 00:00:27,880 --> 00:00:29,000 Speaker 4: for a market recovery. 12 00:00:29,080 --> 00:00:31,639 Speaker 5: I'm Keilly Lines in Washington, where the House is returning 13 00:00:31,640 --> 00:00:34,919 Speaker 5: from its August recess and racing to avoid a government shutdown. 14 00:00:35,479 --> 00:00:39,440 Speaker 6: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 15 00:00:39,479 --> 00:00:43,280 Speaker 6: Eleve Them three own New York, Bloomberg ninety nine to one, Washington, DC, 16 00:00:43,600 --> 00:00:47,600 Speaker 6: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 17 00:00:47,880 --> 00:00:52,080 Speaker 6: DAB Digital Radio London, Sirius XM one nineteen and around 18 00:00:52,159 --> 00:00:54,800 Speaker 6: the world on Bloomberg Radio dot Com and via the 19 00:00:54,800 --> 00:00:56,000 Speaker 6: Bloomberg Business App. 20 00:01:00,200 --> 00:01:02,880 Speaker 1: I'm Tom Busby, and we begin today's program with Apple 21 00:01:03,080 --> 00:01:06,679 Speaker 1: and it's new product unveiling next week, which risks being 22 00:01:06,680 --> 00:01:11,240 Speaker 1: overshadowed by a growing government iPhone ban in China, Apple's 23 00:01:11,319 --> 00:01:14,360 Speaker 1: largest market outside the US. Now for all things Apple, 24 00:01:14,560 --> 00:01:17,800 Speaker 1: we're joined by Bloomberg Technology co host ed Ludlow in 25 00:01:17,880 --> 00:01:18,600 Speaker 1: San Francisco. 26 00:01:18,760 --> 00:01:18,800 Speaker 7: Ed. 27 00:01:18,840 --> 00:01:21,039 Speaker 2: Thanks for joining us, Thank you for having me. Wow 28 00:01:21,080 --> 00:01:22,600 Speaker 2: what a week. Oh yeah. 29 00:01:22,680 --> 00:01:25,240 Speaker 1: Now, before we talk about the upcoming iPhone fifteen and 30 00:01:25,280 --> 00:01:29,120 Speaker 1: Apple Watch upgrades, let's start with last week and what 31 00:01:29,480 --> 00:01:32,840 Speaker 1: happened with the iPhone in China what that did to 32 00:01:32,959 --> 00:01:35,720 Speaker 1: Apple shares this past week on Wall Street. 33 00:01:35,800 --> 00:01:37,840 Speaker 8: I mean, the reality is that the news was so 34 00:01:37,840 --> 00:01:42,160 Speaker 8: significant that on Wednesday and Thursday, across two sessions, Apple 35 00:01:42,240 --> 00:01:45,119 Speaker 8: lost almost two hundred billion dollars in market cap, which 36 00:01:45,120 --> 00:01:47,400 Speaker 8: for Apple, that just doesn't happen, you know, It's it's 37 00:01:47,480 --> 00:01:51,080 Speaker 8: kind of this steady ship technology giant. But the news 38 00:01:51,640 --> 00:01:54,320 Speaker 8: is kind of a see saw of things that The 39 00:01:54,360 --> 00:01:58,440 Speaker 8: headline is that, according to Bloomberg sources, China's government is 40 00:01:58,520 --> 00:02:03,240 Speaker 8: telling other government agents and state backed corporations that their 41 00:02:03,320 --> 00:02:07,320 Speaker 8: staff cannot use iPhone and they cannot use handsets from 42 00:02:07,320 --> 00:02:11,960 Speaker 8: other non Chinese handset makers. And what that looks like, 43 00:02:12,560 --> 00:02:15,799 Speaker 8: you know, is similar to what we saw a year ago, 44 00:02:15,919 --> 00:02:18,040 Speaker 8: actually in May of twenty twenty two, when the Chinese 45 00:02:18,080 --> 00:02:21,359 Speaker 8: government said a similar thing about personal computers or PCs. 46 00:02:21,400 --> 00:02:24,520 Speaker 8: They basically said, you have two years to transition from 47 00:02:24,560 --> 00:02:27,600 Speaker 8: a foreign brand to a Chinese brand, and you have 48 00:02:27,680 --> 00:02:31,240 Speaker 8: to use a you have to use a Chinese PC. 49 00:02:31,480 --> 00:02:36,200 Speaker 8: And they're now replicating that playbook with smartphones. 50 00:02:36,320 --> 00:02:39,600 Speaker 1: So is this like an opening salvo by Beijing in 51 00:02:39,680 --> 00:02:43,280 Speaker 1: a crackdown on all US technology? Also it comes at 52 00:02:43,280 --> 00:02:45,440 Speaker 1: the same time a new Huawei phone comes out. 53 00:02:45,560 --> 00:02:48,239 Speaker 8: Yes, So I would note that there are several cell 54 00:02:48,280 --> 00:02:52,919 Speaker 8: side analysts that point out, despite the headline and all 55 00:02:52,960 --> 00:02:56,760 Speaker 8: of the news reports, it's likely that the Chinese government, 56 00:02:56,800 --> 00:02:59,440 Speaker 8: as a matter of policy, you know, has been telling 57 00:02:59,720 --> 00:03:04,200 Speaker 8: govvernment workers, agencies, and state back corporations for some time, like, hey, 58 00:03:04,200 --> 00:03:08,000 Speaker 8: come on, let's be using Chinese brands, not our own brands, 59 00:03:08,000 --> 00:03:11,120 Speaker 8: domestic brands, not a foreign or international brand. 60 00:03:11,880 --> 00:03:13,320 Speaker 2: So it's hard to gauge like what. 61 00:03:13,360 --> 00:03:16,360 Speaker 8: Kind of impact that would have. Next week, and I 62 00:03:16,360 --> 00:03:18,000 Speaker 8: know we'll get into it is the launch of the 63 00:03:18,080 --> 00:03:20,880 Speaker 8: iPhone fifteen, and this is kind of the most substantive 64 00:03:21,400 --> 00:03:25,600 Speaker 8: and significant technology upgrade to the iPhone handset for some time. 65 00:03:25,840 --> 00:03:29,000 Speaker 8: But go back to the Chinese consumer. China Greater China 66 00:03:29,040 --> 00:03:32,239 Speaker 8: is about twenty percent of Apple's revenues, and in the 67 00:03:32,480 --> 00:03:36,560 Speaker 8: quarter just gone, the June quarter, Apple actually grew in 68 00:03:36,640 --> 00:03:40,680 Speaker 8: China eight percent, whereas overall sales declined. So if you're 69 00:03:40,720 --> 00:03:43,840 Speaker 8: a consumer in China and your government is telling you like, hey, 70 00:03:44,240 --> 00:03:46,200 Speaker 8: if you work for the government or a government agency 71 00:03:46,280 --> 00:03:48,560 Speaker 8: or a state back corporation, we don't want using iPhone, 72 00:03:48,800 --> 00:03:51,520 Speaker 8: and then Apple brings out a new iPhone, what are 73 00:03:51,520 --> 00:03:53,240 Speaker 8: you going to do? And that is the part that 74 00:03:53,280 --> 00:03:55,560 Speaker 8: the market and the analysts and that all of us 75 00:03:55,600 --> 00:03:58,440 Speaker 8: tech journalists are finally hard to quantify, like what the 76 00:03:58,480 --> 00:04:01,320 Speaker 8: impact will be? And you absolutely right. The surprise of 77 00:04:01,400 --> 00:04:05,200 Speaker 8: last week was Huawei, that's been out of the handset 78 00:04:05,240 --> 00:04:08,240 Speaker 8: game for a little while, bringing to market a mysterious 79 00:04:08,320 --> 00:04:12,080 Speaker 8: new smartphone which we literally lifted the lid on. 80 00:04:13,120 --> 00:04:17,200 Speaker 1: Now there's Mate sixty Pro five G capable updated. It 81 00:04:17,279 --> 00:04:19,839 Speaker 1: sounds like they are really pushing this to take the 82 00:04:19,839 --> 00:04:21,320 Speaker 1: place of all those Apple products. 83 00:04:21,480 --> 00:04:23,240 Speaker 8: Yes, so I talked about that tit for tat and 84 00:04:23,240 --> 00:04:27,000 Speaker 8: the geopolitics. The Commerce Secretary, Gina Romondo was in China 85 00:04:27,160 --> 00:04:31,000 Speaker 8: week before this, right last week and time to that 86 00:04:31,279 --> 00:04:34,960 Speaker 8: this mysterious phone hits the market, and it's mysterious because 87 00:04:35,000 --> 00:04:37,640 Speaker 8: it's not registered. The specs are not registered with the 88 00:04:37,720 --> 00:04:42,280 Speaker 8: China regulator, which is highly unusual. It on paper is 89 00:04:43,200 --> 00:04:47,599 Speaker 8: competitive with the leading smartphones. What Bloomberg did is we 90 00:04:47,640 --> 00:04:50,480 Speaker 8: actually got hold of one because it sold out within hours, 91 00:04:51,000 --> 00:04:53,279 Speaker 8: and we took it to a specialist tech insights and 92 00:04:53,279 --> 00:04:57,080 Speaker 8: they tore the thing apart and what they discovered is, yes, okay, 93 00:04:57,200 --> 00:04:59,920 Speaker 8: it's more technologically advanced than we thought. China was cap 94 00:05:00,080 --> 00:05:03,080 Speaker 8: of love. It has a seven animeter processor, but that 95 00:05:03,200 --> 00:05:06,159 Speaker 8: is still two generations behind the cutting edge of chip making. 96 00:05:06,400 --> 00:05:10,000 Speaker 8: But it raised all these alarm bells about whether China 97 00:05:10,080 --> 00:05:12,599 Speaker 8: is breaching sanctions that the US currently has in place. 98 00:05:13,120 --> 00:05:15,040 Speaker 8: But the point, as it relates to Apple is will 99 00:05:15,040 --> 00:05:17,920 Speaker 8: hold on. This has come out of nowhere? Could Huawei 100 00:05:17,920 --> 00:05:20,960 Speaker 8: take some market share from Apple at the same time 101 00:05:21,040 --> 00:05:24,120 Speaker 8: that the government is cracking down on products like the iPhone? 102 00:05:24,160 --> 00:05:26,400 Speaker 8: And so that was part of the nervousness in the 103 00:05:26,440 --> 00:05:28,840 Speaker 8: market and one reason that Apple share has fell. 104 00:05:29,520 --> 00:05:30,800 Speaker 2: Oh boy did they fall. Now. 105 00:05:31,000 --> 00:05:33,919 Speaker 1: Some analysts, though, I mean JP Morgan Chase says this 106 00:05:34,080 --> 00:05:37,000 Speaker 1: is bad not you know, the high valuation for the 107 00:05:37,040 --> 00:05:39,960 Speaker 1: company and the risks with this band. But some like 108 00:05:40,080 --> 00:05:43,599 Speaker 1: Dan Ives had Wedbush Security saying this band is really 109 00:05:43,640 --> 00:05:45,359 Speaker 1: nothing to worry about. Let's hear what he said to 110 00:05:45,400 --> 00:05:47,000 Speaker 1: Bloomberg this just on Friday. 111 00:05:47,360 --> 00:05:50,040 Speaker 9: In my opinion, Barcelot worse than bite. I mean, there's 112 00:05:50,160 --> 00:05:54,440 Speaker 9: essentially been a pseudo ban of government employse for Apple 113 00:05:54,440 --> 00:05:56,960 Speaker 9: in terms of iPhones the last two years. Now, maybe 114 00:05:57,000 --> 00:05:59,280 Speaker 9: there was a little more restrictions here, but we're still 115 00:05:59,279 --> 00:06:02,640 Speaker 9: talking about what we with five hundred thousand iPhones max. 116 00:06:03,320 --> 00:06:05,200 Speaker 9: Relative to a week, We've going to be forty five 117 00:06:05,279 --> 00:06:08,800 Speaker 9: million sold in China in the next year. 118 00:06:09,400 --> 00:06:11,960 Speaker 1: And let's face it, ed Apple still valued at around 119 00:06:11,960 --> 00:06:15,200 Speaker 1: two point eight trillion dollars, the most valuably valuable publicly 120 00:06:15,240 --> 00:06:16,920 Speaker 1: traded company in the US. 121 00:06:17,160 --> 00:06:19,599 Speaker 8: So there's two things here. Whether the bark is worse 122 00:06:19,640 --> 00:06:22,760 Speaker 8: than its bite in the context of China's government, and 123 00:06:22,800 --> 00:06:25,279 Speaker 8: it's its attitude towards Apple, we don't know. You know, 124 00:06:25,600 --> 00:06:28,680 Speaker 8: Dan talked about this sort of unit volume that could 125 00:06:28,680 --> 00:06:31,560 Speaker 8: be impacted. Think about it a slightly different way, think 126 00:06:31,560 --> 00:06:35,120 Speaker 8: about how it might impact the broad suite of Apple products. 127 00:06:35,160 --> 00:06:37,720 Speaker 8: The iPhone is still everything for Apple, but if you're 128 00:06:37,720 --> 00:06:41,200 Speaker 8: a consumer, and again, you know that your government is saying, hey, 129 00:06:41,240 --> 00:06:43,320 Speaker 8: we don't want you using iPhone. In the context of 130 00:06:43,320 --> 00:06:46,279 Speaker 8: a government agency or a state backed corporation, do you 131 00:06:46,360 --> 00:06:48,680 Speaker 8: then hold off on buying an Apple Watch or a 132 00:06:48,680 --> 00:06:52,080 Speaker 8: MacBook or using other Apple products. So that's the unquantifiable 133 00:06:52,120 --> 00:06:54,240 Speaker 8: side of it. I'll tell you what we know, and 134 00:06:54,279 --> 00:06:57,280 Speaker 8: the data is really important. That the June quarter was 135 00:06:57,320 --> 00:07:00,479 Speaker 8: a record for Apple in Greater China, and what Tim 136 00:07:00,520 --> 00:07:03,880 Speaker 8: Cook said was responsible for that was what he called switches. 137 00:07:04,520 --> 00:07:07,400 Speaker 8: Switches are consumers that are buying an iPhone for the 138 00:07:07,480 --> 00:07:12,680 Speaker 8: first time, or they're switching from another handset maker to iPhone. 139 00:07:12,680 --> 00:07:15,360 Speaker 8: Maybe they've had one in the past, but they're switches. 140 00:07:15,800 --> 00:07:18,320 Speaker 8: And so what we concluded from that was China was 141 00:07:18,320 --> 00:07:21,480 Speaker 8: growing because people were moving to iPhone and this story 142 00:07:21,560 --> 00:07:25,480 Speaker 8: in literally the last week or so has changed that narrative. 143 00:07:25,800 --> 00:07:28,560 Speaker 8: And as Dan kind of pointed out, we don't know 144 00:07:28,640 --> 00:07:31,600 Speaker 8: the number of handsets. You can try to calculate, but 145 00:07:31,760 --> 00:07:33,800 Speaker 8: it's going to be interesting to see how the Chinese 146 00:07:33,800 --> 00:07:34,679 Speaker 8: consumer reacts. 147 00:07:34,920 --> 00:07:37,080 Speaker 1: Let's face it, we have a few months here before 148 00:07:37,120 --> 00:07:39,680 Speaker 1: the holidays, we have these new products coming out. It 149 00:07:39,720 --> 00:07:42,920 Speaker 1: could really change things. Let's talk about what is happening 150 00:07:42,920 --> 00:07:46,000 Speaker 1: at Apple headquarters that's coming Tuesday. What are you expecting 151 00:07:46,040 --> 00:07:47,840 Speaker 1: to see in these new products. 152 00:07:47,960 --> 00:07:51,160 Speaker 8: Yeah, we're excited to be down in Cupertino at Apple HQ. 153 00:07:51,360 --> 00:07:53,800 Speaker 8: The event is called wonder Lust. We actually don't have 154 00:07:53,840 --> 00:07:56,000 Speaker 8: a really clear handle on why, but this is the 155 00:07:56,040 --> 00:07:58,120 Speaker 8: biggest event of the year, and it's all about the 156 00:07:58,160 --> 00:08:01,320 Speaker 8: iPhone fifteen. And like Apple was done with prior generations, 157 00:08:01,320 --> 00:08:05,320 Speaker 8: there will be four individual submodels of the fifteen generation. 158 00:08:05,720 --> 00:08:09,360 Speaker 8: Two base models iPhone fifteen and iPhone fifteen plus a 159 00:08:09,440 --> 00:08:12,320 Speaker 8: plus sized version six point seven inch screen, and then 160 00:08:12,360 --> 00:08:15,080 Speaker 8: the Pro models. And the Pro model is everything. It's 161 00:08:15,120 --> 00:08:19,960 Speaker 8: so important. Higher average selling price consumers tend to favor 162 00:08:20,000 --> 00:08:24,120 Speaker 8: those kind of very tech heavy, substantive upgrades. And you 163 00:08:24,160 --> 00:08:26,280 Speaker 8: know with the Pro you will get an iPhone fifteen 164 00:08:26,360 --> 00:08:30,000 Speaker 8: Pro and an iPhone fifteen Pro Max. All according to 165 00:08:30,040 --> 00:08:32,520 Speaker 8: Bloomberg's reporting, and in particular, I shout out my good 166 00:08:32,520 --> 00:08:35,080 Speaker 8: friend and colleague Mark German because he always scoops this 167 00:08:35,120 --> 00:08:38,520 Speaker 8: stuff ahead of time. And there are two key things 168 00:08:38,559 --> 00:08:40,640 Speaker 8: about the iPhone on the Pro side, the Pro and 169 00:08:40,720 --> 00:08:44,120 Speaker 8: Pro Max, higher spec materials. We're going to have titanium 170 00:08:44,160 --> 00:08:48,120 Speaker 8: around the edges instead of aluminum or stainless steel, so 171 00:08:48,200 --> 00:08:52,080 Speaker 8: a higher quality but lighter weight product, a slightly wider screen. 172 00:08:52,520 --> 00:08:55,079 Speaker 8: They're called bezels, the sort of edge of the phone 173 00:08:55,120 --> 00:08:58,439 Speaker 8: the screen will stretch further. But then I'm a geek, right, 174 00:08:58,480 --> 00:09:01,400 Speaker 8: I love the compute, I love the processors to look 175 00:09:01,440 --> 00:09:04,480 Speaker 8: out for what they talk about, the proprietary silicon and 176 00:09:04,520 --> 00:09:08,120 Speaker 8: again what drives upgrades in the smartphone market. It's real 177 00:09:08,200 --> 00:09:11,720 Speaker 8: cutting edge tech. In this generation of iPhone fifteen Pro, 178 00:09:11,800 --> 00:09:15,800 Speaker 8: we expect Apple's own a seventeen processor, the latest processor 179 00:09:15,800 --> 00:09:19,880 Speaker 8: they do, built on three nanometer technology that will give 180 00:09:19,880 --> 00:09:23,440 Speaker 8: it faster processing. It will give a greater memory bandwidth 181 00:09:23,440 --> 00:09:27,280 Speaker 8: in conjunction with the memory chips. But also we're looking 182 00:09:27,320 --> 00:09:30,000 Speaker 8: at the next generation of RF or radio frequency chip 183 00:09:30,040 --> 00:09:31,840 Speaker 8: as well, the U two across all of them Pro 184 00:09:31,960 --> 00:09:34,440 Speaker 8: and the base model fifteen's that will give it just 185 00:09:34,480 --> 00:09:39,880 Speaker 8: better connectivity and in short medium range, which if you 186 00:09:40,360 --> 00:09:44,600 Speaker 8: care about those things, right, and beyond that, some OS 187 00:09:44,600 --> 00:09:45,960 Speaker 8: and functionality update as well. 188 00:09:46,320 --> 00:09:50,160 Speaker 2: Also a refreshed Apple Watch AirPods. There may be news there. 189 00:09:50,679 --> 00:09:52,320 Speaker 8: Yeah, so the air pods are kind of getting a 190 00:09:52,360 --> 00:09:54,360 Speaker 8: slight refresh. I think the big thing we missed on 191 00:09:54,400 --> 00:09:56,640 Speaker 8: iPhone and I apologize I should have got to it sooner. 192 00:09:56,679 --> 00:09:58,800 Speaker 8: But is that we're going to go back to us 193 00:09:59,000 --> 00:10:02,600 Speaker 8: or we're going too USBC charging, So everyone out there 194 00:10:02,679 --> 00:10:06,840 Speaker 8: that's sort of insanely furious, like HI about how many 195 00:10:06,880 --> 00:10:09,199 Speaker 8: different charges you have to use every day? Apple is 196 00:10:09,240 --> 00:10:13,000 Speaker 8: moving the iPhone to USBC, which is substantive, right, It's 197 00:10:13,040 --> 00:10:18,520 Speaker 8: going from thirty pen to lightning to now USBC, and 198 00:10:18,559 --> 00:10:21,600 Speaker 8: the air pods will also get that USBC upseight and 199 00:10:21,640 --> 00:10:23,839 Speaker 8: that's pretty much it beyond the software at the AirPods 200 00:10:23,880 --> 00:10:27,480 Speaker 8: and then very modest changes to Apple Watch two updated 201 00:10:27,520 --> 00:10:31,320 Speaker 8: lines series nine forty one millimeter forty five millimeter and 202 00:10:31,320 --> 00:10:34,560 Speaker 8: then a second generation Ultra forty nine millimeter in size. 203 00:10:34,559 --> 00:10:36,800 Speaker 8: So it's slight tweaks, but the real updates are in 204 00:10:36,840 --> 00:10:37,280 Speaker 8: the iPhone. 205 00:10:37,520 --> 00:10:39,640 Speaker 1: Well, there is a lot to look forward to, ED, 206 00:10:39,760 --> 00:10:42,800 Speaker 1: and be sure to tune into Bloomberg Technology weekdays at 207 00:10:42,840 --> 00:10:45,560 Speaker 1: noon on Bloomberg Television, and ED is going to be 208 00:10:45,600 --> 00:10:49,160 Speaker 1: in Cooper Tino at Apple Headquarters this Tuesday, following all 209 00:10:49,240 --> 00:10:52,720 Speaker 1: the action on Bloomberg TV. Coming up on Bloomberg Day 210 00:10:52,760 --> 00:10:55,160 Speaker 1: Break weekend, we head to Europe and preview the upcoming 211 00:10:55,240 --> 00:10:56,520 Speaker 1: ECB decision. 212 00:10:56,800 --> 00:10:58,840 Speaker 2: I'm Tom Busby. This is Bloomberg. 213 00:11:09,280 --> 00:11:11,960 Speaker 1: This is Bloomberg Daybreak, weekend, our global look ahead at 214 00:11:11,960 --> 00:11:14,640 Speaker 1: the top stories for investors in the coming week. I'm 215 00:11:14,679 --> 00:11:16,920 Speaker 1: Tom Busby in New York. And up later in our 216 00:11:16,960 --> 00:11:19,959 Speaker 1: program a look at the market recovery in China. But first, 217 00:11:20,240 --> 00:11:22,760 Speaker 1: the European Central Bank meets in the coming days, where 218 00:11:22,800 --> 00:11:25,760 Speaker 1: policymakers will decide whether or not to prolong the most 219 00:11:25,760 --> 00:11:29,960 Speaker 1: aggressive bout of monetary tightening in its history. Investors are 220 00:11:30,000 --> 00:11:32,880 Speaker 1: split on whether or not the ECB will pause, as 221 00:11:32,920 --> 00:11:36,000 Speaker 1: the latest data show the pace of price increases are 222 00:11:36,160 --> 00:11:39,560 Speaker 1: slowing along with the downturn in the services sector. 223 00:11:39,920 --> 00:11:40,760 Speaker 2: For more, let's go. 224 00:11:40,720 --> 00:11:43,840 Speaker 1: To London and bring in Bloomberg Daybreak europe Banker Caroline 225 00:11:43,880 --> 00:11:44,800 Speaker 1: Hepger Tom. 226 00:11:44,840 --> 00:11:47,320 Speaker 3: To pause or not to pause is the question that 227 00:11:47,400 --> 00:11:50,680 Speaker 3: ECB policymakers will be mulling in the run up two 228 00:11:50,679 --> 00:11:55,640 Speaker 3: thursdays rate decision. A chorus of Governing Council members have 229 00:11:55,800 --> 00:11:59,360 Speaker 3: in recent days been reiterating their desire to hike interest 230 00:11:59,440 --> 00:12:03,240 Speaker 3: rate in another point, to bring down inflation in Europe, 231 00:12:03,600 --> 00:12:06,280 Speaker 3: but there are others who are worried that the effects 232 00:12:06,320 --> 00:12:09,120 Speaker 3: of the last nine hikes are starting to take their 233 00:12:09,240 --> 00:12:13,320 Speaker 3: toll on the economy well. Economic growth remains resilient in 234 00:12:13,360 --> 00:12:16,360 Speaker 3: the second quarter. In the twenty member euro Area, the 235 00:12:16,480 --> 00:12:21,160 Speaker 3: latest PMI surveys have shown the services sector following manufacturing 236 00:12:21,320 --> 00:12:25,640 Speaker 3: into a downturn. I've been discussing this with Bloomberg's ECB 237 00:12:25,800 --> 00:12:30,400 Speaker 3: reporter Jana Randau and our senior Euro Area economist David Powell. 238 00:12:30,720 --> 00:12:35,800 Speaker 3: I started by talking to Yanna about her expectations, having 239 00:12:36,040 --> 00:12:39,880 Speaker 3: spoken to the Dutch Central Bank governor class Not, who 240 00:12:39,880 --> 00:12:43,959 Speaker 3: told Bloomberg that investors betting against the rate hike maybe 241 00:12:44,080 --> 00:12:46,720 Speaker 3: underestimating the likelihood of it happening. 242 00:12:46,880 --> 00:12:52,480 Speaker 7: Well, I think he actually describes the controversy or the 243 00:12:52,840 --> 00:12:58,000 Speaker 7: challenges rather well. He didn't say raids will rise, nor 244 00:12:58,080 --> 00:13:02,640 Speaker 7: did he say raids will be on hold. Reading between 245 00:13:02,679 --> 00:13:06,880 Speaker 7: the lines, I sensed a slight preference for another hike, 246 00:13:07,320 --> 00:13:11,080 Speaker 7: but he was very clear in saying it is complicated. Right, 247 00:13:12,240 --> 00:13:17,960 Speaker 7: the inflation outlook proves to be disappointing. It's sticky, it's 248 00:13:18,040 --> 00:13:20,760 Speaker 7: not coming down as quickly as they want. At the 249 00:13:20,800 --> 00:13:25,959 Speaker 7: same time, economic surveys point to a very quick deterioration 250 00:13:26,080 --> 00:13:29,520 Speaker 7: in the economic outlook. Hard data is so far, he 251 00:13:29,640 --> 00:13:35,600 Speaker 7: said on quite showing that yet the second quarter GDP 252 00:13:35,760 --> 00:13:40,000 Speaker 7: figures were actually rather promising. The labor market is holding up, 253 00:13:40,040 --> 00:13:44,520 Speaker 7: the housing market seems to have bottomed out. So so 254 00:13:44,679 --> 00:13:48,920 Speaker 7: a very very tricky situation. And we've heard, of course, 255 00:13:48,920 --> 00:13:52,640 Speaker 7: from from policymakers from from across the spectrum. We've had 256 00:13:53,080 --> 00:13:58,679 Speaker 7: the very hawkish people, the Slovak Central Bank governor speaking 257 00:13:59,120 --> 00:14:04,120 Speaker 7: about the need for one more hike and preferably preferably 258 00:14:04,520 --> 00:14:08,760 Speaker 7: in September. We heard from Mario sent In or the 259 00:14:09,040 --> 00:14:12,960 Speaker 7: Portuguese saying downside rescus some materializing. So the spectrum is 260 00:14:13,040 --> 00:14:17,080 Speaker 7: rather wide and it's very difficult, but I think not 261 00:14:17,600 --> 00:14:22,840 Speaker 7: view of ever so slightly preferring a move in September, 262 00:14:23,280 --> 00:14:25,440 Speaker 7: that is where I would put my. 263 00:14:25,440 --> 00:14:29,720 Speaker 3: Money, Okay, really between the lines and of the ECB officials, David, 264 00:14:29,800 --> 00:14:33,000 Speaker 3: Inflation has been slowing in the Euro Area, but the 265 00:14:33,040 --> 00:14:36,200 Speaker 3: economy is slowing down to how difficult a balancing act 266 00:14:36,400 --> 00:14:38,280 Speaker 3: is the ECB facing. 267 00:14:38,480 --> 00:14:42,080 Speaker 10: Well, the ECB's primary focus, in fact only focus really 268 00:14:42,160 --> 00:14:44,840 Speaker 10: is inflation, unlike the Federal Reserve. So it's going to 269 00:14:44,840 --> 00:14:48,600 Speaker 10: be it's going to look at that most and as 270 00:14:48,680 --> 00:14:52,360 Speaker 10: Jhanna said, inflation remains very high. In fact, it is 271 00:14:52,520 --> 00:14:57,160 Speaker 10: higher than they forecast when they last released their forecast 272 00:14:57,240 --> 00:15:01,320 Speaker 10: in June. And also inflation expectation are very high despite 273 00:15:01,360 --> 00:15:04,640 Speaker 10: the slow down in the economy. So we think they're 274 00:15:04,680 --> 00:15:10,119 Speaker 10: going to hike again in September. And as Jana also highlighted, 275 00:15:10,200 --> 00:15:13,400 Speaker 10: the some of the hawkish members have been speaking about 276 00:15:13,440 --> 00:15:17,040 Speaker 10: that preference for a hike in September, and they probably 277 00:15:17,080 --> 00:15:19,480 Speaker 10: know the window of opportunity will soon close to get 278 00:15:19,480 --> 00:15:22,440 Speaker 10: a last hike in It's clear that the economy is 279 00:15:22,520 --> 00:15:25,360 Speaker 10: facing a period of significant weakness and that's probably going 280 00:15:25,400 --> 00:15:27,280 Speaker 10: to get worse in the second half of this year. 281 00:15:27,600 --> 00:15:30,840 Speaker 10: There's not only the surveys, there's more forward looking indicators 282 00:15:30,920 --> 00:15:34,640 Speaker 10: like the ECB's bank lending survey and data and credit 283 00:15:34,720 --> 00:15:39,120 Speaker 10: that show the picture is getting worse. So they'll probably 284 00:15:39,160 --> 00:15:41,280 Speaker 10: try to push this through now because it may be 285 00:15:41,360 --> 00:15:42,760 Speaker 10: the last opportunity to do so. 286 00:15:43,040 --> 00:15:46,080 Speaker 3: Yeah, Okay, Yana, how divided you think that the Council 287 00:15:46,240 --> 00:15:48,160 Speaker 3: will be though on this decision? 288 00:15:48,840 --> 00:15:54,120 Speaker 7: I would say the times when everybody agrees easily and 289 00:15:54,800 --> 00:15:57,960 Speaker 7: is very happy with the outcome, those times are over. 290 00:15:58,760 --> 00:16:03,520 Speaker 7: Do I expect big, big fight? Probably not, but but 291 00:16:03,760 --> 00:16:08,880 Speaker 7: you do see different opinions emerging, and and very much 292 00:16:08,920 --> 00:16:11,560 Speaker 7: along the Hawkish and Dorvish lines. You would you would 293 00:16:11,600 --> 00:16:16,440 Speaker 7: expect with those in the dobbage camp really looking at 294 00:16:16,480 --> 00:16:21,200 Speaker 7: the economy, at the risks, at at how demand is slowing, 295 00:16:21,400 --> 00:16:25,920 Speaker 7: how the slowdown in China is affecting manufacturing, which if 296 00:16:25,920 --> 00:16:29,240 Speaker 7: you believe the the p M I S is really 297 00:16:29,280 --> 00:16:32,560 Speaker 7: really doing poorly. And and of course now that weakness 298 00:16:32,640 --> 00:16:35,200 Speaker 7: is building into services to some extent. So the the 299 00:16:35,400 --> 00:16:38,960 Speaker 7: eyes of the doves are really on those indicators, whereas 300 00:16:39,000 --> 00:16:44,600 Speaker 7: the hawks do pay attention to to inflation expectations a 301 00:16:44,600 --> 00:16:48,520 Speaker 7: little more uh to to the risk that that there 302 00:16:48,560 --> 00:16:51,680 Speaker 7: is there is still upset risk to the inflation outlook. 303 00:16:52,040 --> 00:16:54,840 Speaker 7: So I think by the end of it we will 304 00:16:54,880 --> 00:16:58,480 Speaker 7: come out with an agreement with with the consensus, but 305 00:16:58,640 --> 00:17:03,760 Speaker 7: it will be very difficult called to communicate and accommodate 306 00:17:03,840 --> 00:17:07,080 Speaker 7: all those views and all those concerns. So I would say, 307 00:17:07,440 --> 00:17:10,280 Speaker 7: you know, a little bit more politics if you want, 308 00:17:11,280 --> 00:17:14,639 Speaker 7: is what it takes from from the president, from Christine 309 00:17:14,680 --> 00:17:18,720 Speaker 7: Lagard and brokering that consensus. It won't be as easy 310 00:17:19,320 --> 00:17:22,520 Speaker 7: because the path forward is not as obvious as it 311 00:17:22,640 --> 00:17:23,040 Speaker 7: used to be. 312 00:17:23,760 --> 00:17:27,240 Speaker 3: David, do you think that the diversions you say, this 313 00:17:27,359 --> 00:17:29,399 Speaker 3: might may be you know, the last sort of chance 314 00:17:29,440 --> 00:17:32,560 Speaker 3: of the central bank in Europe to raise rays the divergence? 315 00:17:32,680 --> 00:17:34,879 Speaker 3: Is that going to be an issue for the euro? 316 00:17:35,320 --> 00:17:38,480 Speaker 3: What happens if the ECB pauses, Well, the. 317 00:17:38,440 --> 00:17:41,359 Speaker 10: Federal Reserve is probably done hiking, and that will also 318 00:17:41,400 --> 00:17:45,000 Speaker 10: give the EAC be another reason to think about whether 319 00:17:45,040 --> 00:17:48,200 Speaker 10: they want to continue hiking. So they don't. They don't 320 00:17:48,240 --> 00:17:51,680 Speaker 10: have to worry about a huge surge in the euro 321 00:17:52,440 --> 00:17:54,479 Speaker 10: if they were to if they were to kind of 322 00:17:54,880 --> 00:17:58,199 Speaker 10: continue hiking, although there probably would be a reaction in 323 00:17:58,200 --> 00:18:00,280 Speaker 10: the market because right now the market is not expecting 324 00:18:00,280 --> 00:18:03,800 Speaker 10: a hike in September. It's only about a twenty percent 325 00:18:04,000 --> 00:18:07,160 Speaker 10: probability of that priced in. So the immediate market reaction 326 00:18:07,200 --> 00:18:09,760 Speaker 10: will probably be a higher euro, but it wouldn't be 327 00:18:09,840 --> 00:18:13,160 Speaker 10: the start of some kind of very long trend of divergence. 328 00:18:13,480 --> 00:18:16,639 Speaker 3: And just in terms of the outlook economically for Europe, 329 00:18:16,720 --> 00:18:18,560 Speaker 3: you know, as we go into the end of this year, 330 00:18:19,040 --> 00:18:23,200 Speaker 3: more importantly, our view on the economic performance next year. 331 00:18:23,800 --> 00:18:27,199 Speaker 10: Next year will be will be a difficult year. We 332 00:18:27,280 --> 00:18:30,399 Speaker 10: have all of these problems at the euro areas facing 333 00:18:30,440 --> 00:18:32,760 Speaker 10: and not only the area, but the rest of the 334 00:18:32,800 --> 00:18:36,600 Speaker 10: Western world, the United States, the United Kingdom in terms 335 00:18:36,680 --> 00:18:39,560 Speaker 10: of tighter monetary policy and the full impact of that 336 00:18:39,640 --> 00:18:41,960 Speaker 10: finally being felt. There is a long lag that comes 337 00:18:41,960 --> 00:18:46,360 Speaker 10: with raising interest rates, so the pain will be more 338 00:18:46,400 --> 00:18:49,359 Speaker 10: obvious towards the end of this year and into next year. 339 00:18:50,119 --> 00:18:54,800 Speaker 3: David Okay, very interesting, Yanna. In terms of the ECB's 340 00:18:54,880 --> 00:19:00,840 Speaker 3: inflation expectations survey, it showed that consumers see inflation at 341 00:19:00,840 --> 00:19:03,320 Speaker 3: three point four percent of the next twelve months. How 342 00:19:03,400 --> 00:19:05,479 Speaker 3: much of a problem is it, you know that this 343 00:19:05,600 --> 00:19:10,920 Speaker 3: is how embedded are inflation expectations becoming for consumers and businesses. 344 00:19:11,119 --> 00:19:14,879 Speaker 7: Yeah, I mean the rate or the expectations for the 345 00:19:14,880 --> 00:19:18,080 Speaker 7: next year. You would expect that to still be high, 346 00:19:18,800 --> 00:19:24,200 Speaker 7: just because inflation is still high and even official forecasts 347 00:19:24,240 --> 00:19:27,080 Speaker 7: don't see it coming back to two percent over the 348 00:19:27,160 --> 00:19:31,399 Speaker 7: next twelve months. So the ECB will look at the 349 00:19:31,480 --> 00:19:35,479 Speaker 7: trajectory and see how that measure has actually come down, 350 00:19:35,560 --> 00:19:38,119 Speaker 7: and it has come down quite a bit. What's slightly 351 00:19:38,160 --> 00:19:42,080 Speaker 7: more interesting is the three year horizon, and there we've 352 00:19:42,200 --> 00:19:45,639 Speaker 7: seen that number up and down over the past months, 353 00:19:45,640 --> 00:19:49,560 Speaker 7: but the last move was up slightly, so our consumers 354 00:19:50,840 --> 00:19:55,040 Speaker 7: slightly raised their expectations for inflation in three years, and 355 00:19:55,080 --> 00:19:58,719 Speaker 7: that rate also still is quite significantly above two percent. 356 00:19:58,880 --> 00:20:02,120 Speaker 3: That was Brian Beg's DCB reporter Jana Vanda and our 357 00:20:02,200 --> 00:20:06,440 Speaker 3: senior year area economist David Powell from Bloomberg Economics. I'm 358 00:20:06,480 --> 00:20:09,280 Speaker 3: Caroline hepget here in London. You can catch us every 359 00:20:09,359 --> 00:20:12,200 Speaker 3: weekday morning for Bloomberg Daybreak you at beginning at six 360 00:20:12,200 --> 00:20:14,919 Speaker 3: am in London. That's one am on Wall Street. 361 00:20:15,040 --> 00:20:18,840 Speaker 1: Tom coming up on Bloomberg day Break weekend. China's economy 362 00:20:19,000 --> 00:20:22,159 Speaker 1: is it slumping toward I rebound? I'm Tom Busby and 363 00:20:22,320 --> 00:20:22,960 Speaker 1: this is. 364 00:20:22,920 --> 00:20:37,080 Speaker 6: Bloomberg Broadcasting live from the Bloomberg It a active brokers 365 00:20:37,160 --> 00:20:40,560 Speaker 6: studio in New York. Bloomberg E Lemon Free Oh to Washington, 366 00:20:40,640 --> 00:20:43,960 Speaker 6: d C, Bloomberg ninety nine one to Boston, Bloomberg one 367 00:20:44,000 --> 00:20:47,240 Speaker 6: O six one to San Francisco, Bloomberg nine sixteen to 368 00:20:47,320 --> 00:20:51,080 Speaker 6: the country, Syrius XM Channel one nineteen to London DAB 369 00:20:51,359 --> 00:20:54,680 Speaker 6: Digital Radio, and around the globe the Bloomberg Business app 370 00:20:54,760 --> 00:20:59,040 Speaker 6: in Bloomberg Radio dot Com. This is Bloomberg Daybreak Weekend. 371 00:21:05,119 --> 00:21:07,200 Speaker 1: I'm Tom Busby in New York with your global look 372 00:21:07,200 --> 00:21:09,640 Speaker 1: ahead at the top stories for investors in the coming week. 373 00:21:10,080 --> 00:21:13,760 Speaker 1: Ahead of a slew of Chinese economic data coming out 374 00:21:13,760 --> 00:21:16,359 Speaker 1: next week, we take a look at that country's lackluster 375 00:21:16,440 --> 00:21:21,000 Speaker 1: economic recovery, will affading economic momentum, and danger China's growth 376 00:21:21,040 --> 00:21:23,919 Speaker 1: target this year. For more, Let's get to Bloomberg Daybreak 377 00:21:23,960 --> 00:21:26,359 Speaker 1: Asia host Ryan Curtis. 378 00:21:25,960 --> 00:21:30,679 Speaker 4: To China's growth is slowing, the REMMBE is weakening, imports 379 00:21:30,680 --> 00:21:35,080 Speaker 4: and exports are slower, prices are falling, and youth unemployment 380 00:21:35,119 --> 00:21:37,880 Speaker 4: is running above twenty percent. And in the coming week 381 00:21:38,000 --> 00:21:42,080 Speaker 4: we're expecting more data on retail sales, factory output, and 382 00:21:42,160 --> 00:21:46,240 Speaker 4: fixed asset investment, and few are expecting any kind of 383 00:21:46,359 --> 00:21:50,280 Speaker 4: dramatic turnaround in that set. Looming above all of this 384 00:21:50,400 --> 00:21:54,040 Speaker 4: as well is the property crisis. We caught up with 385 00:21:54,040 --> 00:21:57,960 Speaker 4: Bloomberg columnist John Authers, who said, as bad as things 386 00:21:58,000 --> 00:21:59,960 Speaker 4: are now, they could be a lot worse. 387 00:22:00,400 --> 00:22:03,800 Speaker 11: The concerns for China or the worries about Chinese growth 388 00:22:04,080 --> 00:22:07,119 Speaker 11: aren't having as big an effect on the rest of 389 00:22:07,160 --> 00:22:10,119 Speaker 11: the world as they used to. This looks like a 390 00:22:10,200 --> 00:22:13,880 Speaker 11: much more serious situation for China than twenty fifteen, when 391 00:22:14,040 --> 00:22:18,119 Speaker 11: they're badly handled Chinese evaluation really did lead to a 392 00:22:18,119 --> 00:22:20,119 Speaker 11: minor crisis that got very scary. 393 00:22:20,600 --> 00:22:23,320 Speaker 4: So to take a look at how investors are responding 394 00:22:23,359 --> 00:22:26,679 Speaker 4: to this weakness in the Chinese economy. Joining me is 395 00:22:26,720 --> 00:22:32,120 Speaker 4: Tu Laning, Bloomberg's managing editor for Asia Stocks Leanink. Some 396 00:22:32,240 --> 00:22:35,919 Speaker 4: might argue that it is worse now that China seems 397 00:22:35,960 --> 00:22:40,320 Speaker 4: to be in a kind of secular and cyclical decline. 398 00:22:40,359 --> 00:22:42,560 Speaker 4: What are you hearing from investors. 399 00:22:42,160 --> 00:22:44,680 Speaker 12: A bit of a mixed views. I think the predominant 400 00:22:44,840 --> 00:22:48,600 Speaker 12: view is that people are a parish and that is 401 00:22:48,720 --> 00:22:52,000 Speaker 12: backed by data. The latest data that we saw from 402 00:22:52,200 --> 00:22:57,920 Speaker 12: northbound flows into China as well as the prime brokers 403 00:22:57,960 --> 00:23:01,240 Speaker 12: from Goldman, Sachs and Morgan Stanley. They've all shown that 404 00:23:01,840 --> 00:23:05,640 Speaker 12: loan only investors and also hedge funds globally have been 405 00:23:05,640 --> 00:23:09,720 Speaker 12: pulling money out of China and their positioning actually has 406 00:23:09,800 --> 00:23:14,440 Speaker 12: lowered to the level just before the pandemic. So that's 407 00:23:14,480 --> 00:23:17,960 Speaker 12: a pretty dismal sort of picture right now. But on 408 00:23:18,000 --> 00:23:21,280 Speaker 12: the other side, we are also seeing an emergence of 409 00:23:22,040 --> 00:23:25,480 Speaker 12: investors who are actually ready to have a bit of 410 00:23:25,520 --> 00:23:31,000 Speaker 12: a tactical move into the Chinese equities because we did 411 00:23:31,040 --> 00:23:35,400 Speaker 12: see it's not quite Bazuka, but some heavy measures from 412 00:23:35,400 --> 00:23:39,359 Speaker 12: the Chinese government to support the housing sector, and there 413 00:23:39,400 --> 00:23:43,720 Speaker 12: is some concrete evidence that people are actually lining up 414 00:23:43,840 --> 00:23:47,199 Speaker 12: at least in mega cities like Beijing and Shanghai to 415 00:23:47,320 --> 00:23:50,879 Speaker 12: buy homes. And that's sort of like the first concrete 416 00:23:50,920 --> 00:23:53,920 Speaker 12: thing or evidence that we are seeing from all these 417 00:23:53,960 --> 00:23:57,360 Speaker 12: stumulus measures for the housing sector that people are actually 418 00:23:57,400 --> 00:24:02,159 Speaker 12: reacting to it. And some of them would just be speculation, 419 00:24:02,320 --> 00:24:05,520 Speaker 12: as we saw in the you know, some of the 420 00:24:05,560 --> 00:24:12,520 Speaker 12: property names on Wednesday, the likes of Evergrand and Sunak 421 00:24:12,760 --> 00:24:14,040 Speaker 12: and Chumau and these. 422 00:24:14,119 --> 00:24:16,879 Speaker 4: Yeah, we saw those big gains, you know, something like 423 00:24:17,160 --> 00:24:20,879 Speaker 4: to sixty five to eighty three percent and everything. So 424 00:24:20,920 --> 00:24:25,480 Speaker 4: you mentioned those measures about property, What specifically are investors 425 00:24:25,520 --> 00:24:28,679 Speaker 4: looking for in terms of a catalyst that might spark 426 00:24:28,720 --> 00:24:30,120 Speaker 4: a broader market recovery. 427 00:24:30,359 --> 00:24:34,000 Speaker 12: Yeah, I think it all comes down to reviving demand 428 00:24:34,240 --> 00:24:38,280 Speaker 12: from home buyers, right, And so far, basically people were 429 00:24:38,280 --> 00:24:42,440 Speaker 12: disappointed because whatever the government was trying to do, demand 430 00:24:42,480 --> 00:24:44,920 Speaker 12: is not coming back. We saw a few months of 431 00:24:44,960 --> 00:24:49,439 Speaker 12: housing a sales slump from official data. But now we 432 00:24:49,480 --> 00:24:53,280 Speaker 12: are actually seeing some kind of demand coming and it 433 00:24:53,320 --> 00:24:56,040 Speaker 12: may not be quite animal spirit as of yet, but 434 00:24:56,240 --> 00:24:59,920 Speaker 12: that's probably the initial science of some kind of warm 435 00:25:00,240 --> 00:25:04,480 Speaker 12: up or revival of the market, and that if that 436 00:25:04,520 --> 00:25:08,080 Speaker 12: can continue and that will show up in the September data, 437 00:25:08,240 --> 00:25:11,280 Speaker 12: and that would really be the catalyst that people are 438 00:25:11,320 --> 00:25:14,000 Speaker 12: looking for. And again it should not just show show 439 00:25:14,080 --> 00:25:16,360 Speaker 12: up in one month's data. It would have to kind 440 00:25:16,400 --> 00:25:19,040 Speaker 12: of last as well for people to actually engauge how 441 00:25:19,160 --> 00:25:23,000 Speaker 12: much demand pantep demand there actually is among home buyers 442 00:25:23,240 --> 00:25:23,760 Speaker 12: in China. 443 00:25:24,320 --> 00:25:27,040 Speaker 4: In that furious rally that we saw after some of 444 00:25:27,080 --> 00:25:30,200 Speaker 4: those measures, particularly that story in the Securities Times about 445 00:25:30,240 --> 00:25:34,560 Speaker 4: more coming, we basically saw a lot of the developers 446 00:25:34,600 --> 00:25:38,360 Speaker 4: that had been hit the hardest rebound sharply, but not 447 00:25:38,400 --> 00:25:41,160 Speaker 4: so much for some of the steadier hands like China 448 00:25:41,200 --> 00:25:45,520 Speaker 4: Overseas and China Resources Land. Is it the case that 449 00:25:46,280 --> 00:25:49,040 Speaker 4: for those brave souls, they're just looking to make a 450 00:25:49,119 --> 00:25:50,879 Speaker 4: quick buck on a quick recovery. 451 00:25:51,119 --> 00:25:53,320 Speaker 12: Yeah, so far. That is a sense that we are 452 00:25:53,359 --> 00:25:58,240 Speaker 12: getting by talking to the market participants. Yeah, these distressed 453 00:25:58,280 --> 00:26:02,320 Speaker 12: and names such as Eragrant and Sunnak and Shima, their 454 00:26:02,760 --> 00:26:06,800 Speaker 12: stock valuations are really really low. They've all become penny stocks. 455 00:26:06,840 --> 00:26:09,960 Speaker 12: And even with yesterday's rally, bear in mind most of 456 00:26:10,000 --> 00:26:13,600 Speaker 12: them still saw their stock prices drop more than seventy 457 00:26:13,600 --> 00:26:17,320 Speaker 12: percent in the last couple of years. And I think 458 00:26:17,359 --> 00:26:20,000 Speaker 12: for hedge funds, it's difficult to get into the distressed 459 00:26:20,080 --> 00:26:24,040 Speaker 12: debt space because of the lack of liquidity, and of 460 00:26:24,040 --> 00:26:27,040 Speaker 12: course in the stock market, there's still plenty of liquidity 461 00:26:27,080 --> 00:26:29,960 Speaker 12: for them to take a punt at something that they 462 00:26:30,000 --> 00:26:33,200 Speaker 12: think may actually generate you know, double or triple digit 463 00:26:33,240 --> 00:26:35,040 Speaker 12: return in a short period of time. 464 00:26:35,200 --> 00:26:38,560 Speaker 4: Outside of hedge funds who are quite opportunistic and looking 465 00:26:38,600 --> 00:26:43,040 Speaker 4: for some quick gains. For asset managers and bigger investors 466 00:26:43,400 --> 00:26:45,359 Speaker 4: to take a look at China, will they need to 467 00:26:45,359 --> 00:26:50,720 Speaker 4: see domestic investors get bullish first, or will they dare 468 00:26:50,800 --> 00:26:51,200 Speaker 4: to get. 469 00:26:51,080 --> 00:26:51,600 Speaker 11: Out in front. 470 00:26:51,800 --> 00:26:54,560 Speaker 12: Yeah, they're not coming back. I think that's just the fact. 471 00:26:54,760 --> 00:26:59,240 Speaker 12: From everyone that we're talking to, all those major long 472 00:26:59,280 --> 00:27:03,040 Speaker 12: only mutual fun especially global ones, very very few have 473 00:27:03,240 --> 00:27:06,960 Speaker 12: said that they have the appetite to add China weight. 474 00:27:08,480 --> 00:27:11,880 Speaker 12: The only exception I would say is GQG. They did 475 00:27:11,960 --> 00:27:15,399 Speaker 12: say to us a few weeks ago that they're actually 476 00:27:15,480 --> 00:27:18,560 Speaker 12: quite bullish on China tech stocks, and their timing I 477 00:27:18,560 --> 00:27:22,919 Speaker 12: think was quite optune because since they said it, the 478 00:27:23,200 --> 00:27:25,920 Speaker 12: tech stocks actually added about eight percent in value. 479 00:27:25,960 --> 00:27:30,160 Speaker 4: We are still getting state media stories about tighter regulations 480 00:27:30,200 --> 00:27:33,920 Speaker 4: in various industries. Will this spook investors once again? 481 00:27:34,280 --> 00:27:37,159 Speaker 12: I think there is a difference between this wave of 482 00:27:37,480 --> 00:27:40,919 Speaker 12: sort of tightening in regulation versus what we saw in 483 00:27:40,960 --> 00:27:44,399 Speaker 12: the tech crackdown a year ago or two years ago. 484 00:27:45,280 --> 00:27:50,119 Speaker 12: Right now, it's really targeted at sort of maintaining the 485 00:27:50,200 --> 00:27:54,359 Speaker 12: fact that children will actually have you know, they won't 486 00:27:54,359 --> 00:27:58,160 Speaker 12: be addicted, and parents can set them, can be comfortable 487 00:27:58,680 --> 00:28:02,280 Speaker 12: with their kids using techy. So that is really catering 488 00:28:02,320 --> 00:28:05,439 Speaker 12: to the needs of the citizens and their well being. 489 00:28:05,720 --> 00:28:08,320 Speaker 12: So I would say that's slightly different from the kind 490 00:28:08,359 --> 00:28:11,440 Speaker 12: of unpredictable crackdowns on all kinds of sectors a few 491 00:28:11,480 --> 00:28:16,879 Speaker 12: years ago, and also from markets perspective, the latest tightening 492 00:28:17,000 --> 00:28:20,840 Speaker 12: in the gaming addiction actually didn't have any impact at all. 493 00:28:20,920 --> 00:28:23,679 Speaker 12: So all that I think overall has been priced in, 494 00:28:24,160 --> 00:28:28,160 Speaker 12: and the broader view among investors about the tech regulation 495 00:28:28,440 --> 00:28:31,600 Speaker 12: or the broader regulation is that China actually wants to 496 00:28:31,640 --> 00:28:35,560 Speaker 12: support the domestic tech giants right now, and the main 497 00:28:35,640 --> 00:28:39,120 Speaker 12: reason for that is to create jobs because, as you know, 498 00:28:39,200 --> 00:28:42,480 Speaker 12: the youth unemployment is at the au tum high right now, yeah, 499 00:28:42,480 --> 00:28:42,840 Speaker 12: and it. 500 00:28:42,760 --> 00:28:44,960 Speaker 4: Was the tech giants that were most appealing to a 501 00:28:44,960 --> 00:28:47,520 Speaker 4: lot of Western investors in the past. Let's go back 502 00:28:47,560 --> 00:28:50,080 Speaker 4: to John Authurs, because one of the things he was 503 00:28:50,120 --> 00:28:53,240 Speaker 4: concerned about was whether or not the turmoil that we've 504 00:28:53,280 --> 00:28:56,800 Speaker 4: seen in the China markets was spreading outward. Let's hear 505 00:28:56,840 --> 00:28:58,880 Speaker 4: again from our columnist John. 506 00:28:58,640 --> 00:29:02,160 Speaker 11: Authors, the fact a lot of Western investors have already 507 00:29:02,880 --> 00:29:07,280 Speaker 11: abandoned their direct exposure to China. The emphasize direct because 508 00:29:07,400 --> 00:29:10,200 Speaker 11: everybody has a lot of indirect exposures as well. That 509 00:29:10,320 --> 00:29:13,080 Speaker 11: fact has something to do with why it hasn't really 510 00:29:13,120 --> 00:29:14,800 Speaker 11: impeded other global markets. 511 00:29:15,000 --> 00:29:17,800 Speaker 4: Is that another shoe to drop though? To Lienting that 512 00:29:18,000 --> 00:29:21,920 Speaker 4: perhaps this would spread outward from China, this kind of market. 513 00:29:21,680 --> 00:29:24,720 Speaker 12: Turmoil, I would say most of the people that we spoke 514 00:29:24,800 --> 00:29:29,680 Speaker 12: to have said that they see limited impact from China 515 00:29:29,760 --> 00:29:35,680 Speaker 12: slowdown to major Western economies like the US and Europe. 516 00:29:36,200 --> 00:29:39,920 Speaker 12: Especially in the US. I think overall, US and China 517 00:29:39,960 --> 00:29:43,160 Speaker 12: has been decoupling, and as you saw in the latest 518 00:29:43,560 --> 00:29:46,560 Speaker 12: US export data, I think import data, I should say, 519 00:29:46,880 --> 00:29:50,320 Speaker 12: China accounted for I think a much smaller portion than 520 00:29:50,360 --> 00:29:53,560 Speaker 12: it accounted for in twenty eighteen. And also there is 521 00:29:53,600 --> 00:29:57,200 Speaker 12: a bit of a decoupling between the two nations banking 522 00:29:57,240 --> 00:30:01,120 Speaker 12: system as well, so from both the you know, export 523 00:30:01,320 --> 00:30:05,200 Speaker 12: link and the banking link, there is actually not a 524 00:30:05,280 --> 00:30:09,000 Speaker 12: huge amount of China influence or you know, us exposure 525 00:30:09,080 --> 00:30:12,240 Speaker 12: to China that investors are really worried about right now. 526 00:30:12,240 --> 00:30:15,400 Speaker 4: Venting, thanks so much for joining us. Tulian Ting, Bloomberg's 527 00:30:15,440 --> 00:30:19,200 Speaker 4: Managing editor for Asia stocks him Brian Curtis, along with 528 00:30:19,240 --> 00:30:21,680 Speaker 4: Doug Chrisner. You can catch us every weekday here for 529 00:30:21,800 --> 00:30:25,200 Speaker 4: Bloomberg Daybreak Asia, beginning at six am in Hong Kong 530 00:30:25,360 --> 00:30:27,280 Speaker 4: and six pm on Wall Street. 531 00:30:27,600 --> 00:30:30,239 Speaker 1: Tom, Thanks Brian, and coming up here on Bloomberg day 532 00:30:30,280 --> 00:30:32,480 Speaker 1: Break Weekend, we head to the nation's capital for a 533 00:30:32,520 --> 00:30:35,280 Speaker 1: look at the biggest political stories in the upcoming week. 534 00:30:35,840 --> 00:30:49,320 Speaker 1: I'm Tom Busby, and this is Bloomberg. This is Bloomberg 535 00:30:49,360 --> 00:30:51,440 Speaker 1: day Break Weekend, our global look ahead at the top 536 00:30:51,480 --> 00:30:54,440 Speaker 1: stories for investors in the coming week. I'm Tom Busby 537 00:30:54,480 --> 00:30:57,720 Speaker 1: in New York. The House reconvenes this week, and top 538 00:30:57,720 --> 00:31:00,800 Speaker 1: of the agenda is an impending government show down. For more, 539 00:31:00,880 --> 00:31:03,240 Speaker 1: let's add to our Bloomberg ninety nine one newsroom in 540 00:31:03,320 --> 00:31:07,120 Speaker 1: Washington and Bloomberg sound On co host Kaylee Lines. 541 00:31:07,360 --> 00:31:10,560 Speaker 5: That's right, Tom, They're coming back the House of Representatives. 542 00:31:10,600 --> 00:31:14,320 Speaker 5: That is, after a long August recess which still wasn't 543 00:31:14,400 --> 00:31:17,320 Speaker 5: short of drama. Congressmen and women will be returning to 544 00:31:17,360 --> 00:31:20,440 Speaker 5: Capitol Hill next week, but they'll come back into session 545 00:31:20,440 --> 00:31:23,800 Speaker 5: this coming Tuesday with a big deadline looming on the horizon. 546 00:31:24,600 --> 00:31:27,520 Speaker 5: A clock is ticking quite loudly trying to avert a 547 00:31:27,520 --> 00:31:31,760 Speaker 5: government shutdown before funding runs out on September thirtieth. Joining 548 00:31:31,840 --> 00:31:33,960 Speaker 5: us now with more of the preview is Mike Dorning, 549 00:31:34,000 --> 00:31:37,680 Speaker 5: Bloomberg News Deputy Congressional Editor. So Mike, first of all, 550 00:31:37,800 --> 00:31:41,480 Speaker 5: let's just talk about the clock. There's what eleven legislative 551 00:31:41,520 --> 00:31:44,840 Speaker 5: days between when they come back and when that deadline is. 552 00:31:45,880 --> 00:31:50,840 Speaker 13: That's about right. They have until September thirtieth, and then 553 00:31:50,960 --> 00:31:53,800 Speaker 13: the government funding runs out, so the government will shut 554 00:31:53,840 --> 00:31:56,760 Speaker 13: down October first if they can't agree to something. 555 00:31:57,400 --> 00:32:01,040 Speaker 5: So that's if they can't pass all twelve appropriations bills 556 00:32:01,040 --> 00:32:03,480 Speaker 5: that they need to, or if they are unable to 557 00:32:03,520 --> 00:32:08,200 Speaker 5: pass a continuing resolution basically just punt kick it down 558 00:32:08,240 --> 00:32:11,360 Speaker 5: the road. It being the can if it's a continuing 559 00:32:11,440 --> 00:32:15,400 Speaker 5: resolution that they want to pursue. What questions are there 560 00:32:15,880 --> 00:32:16,480 Speaker 5: around that. 561 00:32:17,560 --> 00:32:21,360 Speaker 13: Well, one of the key questions is whether they can 562 00:32:21,400 --> 00:32:24,960 Speaker 13: get enough of the House Conservatives to agree to a 563 00:32:25,200 --> 00:32:29,120 Speaker 13: continuing resolution that Speaker McCarthy's willing to put it on 564 00:32:29,160 --> 00:32:32,440 Speaker 13: the floor. They can easily get something like that passed 565 00:32:32,440 --> 00:32:35,520 Speaker 13: through the Senate. The Republican leader in the Senate has 566 00:32:35,560 --> 00:32:38,880 Speaker 13: already said he's for it. It's in the House where 567 00:32:39,440 --> 00:32:41,640 Speaker 13: although there's plenty of votes for it, it's a question 568 00:32:41,680 --> 00:32:45,920 Speaker 13: of how much Speaker McCarthy's willing to anger the Conservatives. 569 00:32:46,400 --> 00:32:48,800 Speaker 13: And then it's a question of what will be in 570 00:32:48,840 --> 00:32:52,200 Speaker 13: the continuing resolution and what won't That could be a 571 00:32:52,280 --> 00:32:53,200 Speaker 13: key issue. 572 00:32:53,320 --> 00:32:56,200 Speaker 5: Well, in one of those issues is in regard to 573 00:32:56,320 --> 00:32:58,480 Speaker 5: Ukraine funding. And this is where there seems to be 574 00:32:58,520 --> 00:33:01,880 Speaker 5: a lot of daylight even between Republicans, as you say, 575 00:33:01,920 --> 00:33:04,440 Speaker 5: in the House and then in the Senate. Can you 576 00:33:04,480 --> 00:33:07,560 Speaker 5: walk us through that issue in particular, and where especially 577 00:33:07,880 --> 00:33:10,920 Speaker 5: those on the far right end of Republicans in the 578 00:33:10,920 --> 00:33:11,760 Speaker 5: House are on this. 579 00:33:13,040 --> 00:33:17,880 Speaker 13: Absolutely. Traditionally Republicans had been very strong on defense, and 580 00:33:17,960 --> 00:33:20,840 Speaker 13: that's what where the Senate Republicans are coming from, that 581 00:33:20,920 --> 00:33:27,040 Speaker 13: old Reagan Esque project American military power in the House 582 00:33:27,120 --> 00:33:30,360 Speaker 13: on the far right, there's a lot of unease with 583 00:33:30,520 --> 00:33:36,360 Speaker 13: the American support for Ukraine, and there there's opposition to 584 00:33:36,440 --> 00:33:41,400 Speaker 13: sending more money to Ukraine, and House Speaker McCarthy has 585 00:33:41,640 --> 00:33:45,960 Speaker 13: puoted the idea of stripping that out and separately having 586 00:33:45,960 --> 00:33:49,479 Speaker 13: a bill that would require Biden to meet demands on 587 00:33:49,560 --> 00:33:54,480 Speaker 13: border enforcement and changes in asylum policy and other immigration 588 00:33:54,560 --> 00:33:57,480 Speaker 13: issues if they're going to give more money to Ukraine. 589 00:33:58,080 --> 00:34:00,280 Speaker 5: So all of this to say, it's going to be 590 00:34:00,640 --> 00:34:03,920 Speaker 5: really complicated threading this needle trying to get enough support 591 00:34:04,000 --> 00:34:07,280 Speaker 5: even for a cr let alone an actual spending package 592 00:34:07,600 --> 00:34:10,240 Speaker 5: at the end of the day. So at the moment, 593 00:34:10,560 --> 00:34:13,160 Speaker 5: how likely does a government shutdown seem. 594 00:34:13,040 --> 00:34:16,480 Speaker 13: Certainly looking like a bigger risk because there are these problems, 595 00:34:16,480 --> 00:34:20,640 Speaker 13: there's these fights, This idea that McCarthy has raised to 596 00:34:20,760 --> 00:34:24,120 Speaker 13: tie Ukraine aid to border and force some policy all 597 00:34:24,160 --> 00:34:28,719 Speaker 13: make a shutdown more likely. That said, in Congress, a 598 00:34:28,719 --> 00:34:31,480 Speaker 13: lot of times all this gets resolved at the last minute, 599 00:34:31,480 --> 00:34:33,680 Speaker 13: So we really won't know for sure until a day 600 00:34:33,760 --> 00:34:36,480 Speaker 13: or two before the shutdown how likely it is. 601 00:34:37,480 --> 00:34:40,320 Speaker 5: So waiting until the clock is at like eleven fifty 602 00:34:40,360 --> 00:34:42,840 Speaker 5: eight before it strikes or. 603 00:34:42,840 --> 00:34:45,320 Speaker 13: At least you know, maybe the same day, as often 604 00:34:45,400 --> 00:34:47,759 Speaker 13: the case, before you know what's going on now here. 605 00:34:48,280 --> 00:34:51,799 Speaker 13: One likely scenario is they just punt the issue down 606 00:34:51,800 --> 00:34:55,360 Speaker 13: the road for six, eight, ten weeks. So if that happened, 607 00:34:55,640 --> 00:34:57,120 Speaker 13: the whole drama begins again. 608 00:34:57,320 --> 00:35:00,799 Speaker 5: I'm sensing a theme here. Mike Dawning bloo whty can 609 00:35:00,920 --> 00:35:06,080 Speaker 5: christ over exactly, Thank you very much, and Tom get 610 00:35:06,120 --> 00:35:07,560 Speaker 5: ready for the shutdown showdown. 611 00:35:07,719 --> 00:35:10,439 Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host 612 00:35:10,520 --> 00:35:13,600 Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine one newsroom 613 00:35:13,640 --> 00:35:16,520 Speaker 1: in Washington, and you can hear sound on weekdays one 614 00:35:16,520 --> 00:35:19,680 Speaker 1: to three pm on Bloomberg Radio. And that does it 615 00:35:19,719 --> 00:35:22,359 Speaker 1: for this edition of Bloomberg day Break Weekend. Join us 616 00:35:22,360 --> 00:35:24,560 Speaker 1: again Monday morning at five am Wall Street Time for 617 00:35:24,600 --> 00:35:26,920 Speaker 1: the latest on the market's overseas and the news you 618 00:35:27,040 --> 00:35:28,120 Speaker 1: need to start your day. 619 00:35:28,600 --> 00:35:30,319 Speaker 2: I'm Tom Buzzby. Stay with us. 620 00:35:30,480 --> 00:35:33,600 Speaker 1: Top stories and global business headlines are coming up right now.