1 00:00:02,920 --> 00:00:07,280 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,520 --> 00:00:13,000 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,000 --> 00:00:15,440 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:15,440 --> 00:00:17,840 Speaker 2: all around the world. Straight ahead, on the program, we 5 00:00:17,920 --> 00:00:20,720 Speaker 2: discuss some key economic data in the US and how 6 00:00:20,760 --> 00:00:24,239 Speaker 2: it might impact FED policy moving forward, Plus a look 7 00:00:24,239 --> 00:00:27,160 Speaker 2: at corporate earnings from the nation's largest department store chain. 8 00:00:27,480 --> 00:00:29,040 Speaker 2: I'm Tom Busby in New York. 9 00:00:29,240 --> 00:00:31,840 Speaker 3: I'm callin Hedger in London, where we're looking ahead to 10 00:00:32,000 --> 00:00:34,879 Speaker 3: a key gathering of the biggest names in British business. 11 00:00:35,240 --> 00:00:38,280 Speaker 4: I'm dek Krisner, looking ahead to next week's policy decision 12 00:00:38,320 --> 00:00:40,760 Speaker 4: from the Bank of Korea, as well as the state 13 00:00:40,800 --> 00:00:42,960 Speaker 4: of global trade. 14 00:00:43,320 --> 00:00:46,879 Speaker 2: That's all it's truly had on Bloomberg Daybreak Weekend on 15 00:00:47,000 --> 00:00:51,480 Speaker 2: Bloomberg eleven, TRIEO, New York, Bloomberg ninety nine to one, Washington, DC, 16 00:00:51,880 --> 00:00:55,960 Speaker 2: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 17 00:00:56,360 --> 00:00:59,360 Speaker 2: Sirius XM one twenty one, and around the world on 18 00:00:59,400 --> 00:01:08,000 Speaker 2: Bloomberg Radio, dot Com and The Bloomberg Business. A good 19 00:01:08,040 --> 00:01:10,080 Speaker 2: day to you. I'm Tom Busby, and we begin today's 20 00:01:10,080 --> 00:01:13,120 Speaker 2: program with some key data coming out in the US. 21 00:01:13,480 --> 00:01:15,800 Speaker 2: In this holiday shortened week ahead, we get a second 22 00:01:15,800 --> 00:01:18,760 Speaker 2: read on US third quarter GDP and a read on 23 00:01:18,800 --> 00:01:22,840 Speaker 2: what Americans are earning and spending with October's Personal consumption 24 00:01:22,920 --> 00:01:24,280 Speaker 2: Expenditures Price Index. 25 00:01:24,360 --> 00:01:25,120 Speaker 5: That's a mouthful. 26 00:01:25,520 --> 00:01:28,880 Speaker 2: How might this impact FED policy moving forward? For more, 27 00:01:29,040 --> 00:01:33,360 Speaker 2: we're joined by Stuart Paul, us economist with Bloomberg Economics. Stuart, 28 00:01:33,360 --> 00:01:35,679 Speaker 2: thank you for joining us. Now let's start with what 29 00:01:35,720 --> 00:01:39,039 Speaker 2: you expect to see this Wednesday, the second estimate as 30 00:01:39,040 --> 00:01:41,040 Speaker 2: far as Q three economic growth. 31 00:01:41,319 --> 00:01:44,040 Speaker 6: So, as we saw in the first estimate, GDP growth 32 00:01:44,200 --> 00:01:46,760 Speaker 6: ran at an annualized pace of two point eight percent, 33 00:01:46,880 --> 00:01:50,000 Speaker 6: pretty robust in the third quarter. We still think that 34 00:01:50,040 --> 00:01:52,400 Speaker 6: two point eight percent is about right, but there is 35 00:01:52,600 --> 00:01:55,120 Speaker 6: room for an upward revision. When we look at the 36 00:01:55,240 --> 00:01:57,600 Speaker 6: spending data that we saw over the past few months, 37 00:01:57,600 --> 00:02:00,919 Speaker 6: there have been some upward revisions, especially at August and September, 38 00:02:01,320 --> 00:02:04,640 Speaker 6: and so we can see the already exceptional pace of 39 00:02:05,120 --> 00:02:08,400 Speaker 6: personal spending growth get revised up further to almost an 40 00:02:08,440 --> 00:02:12,400 Speaker 6: annualized pace of four percent, beyond the actual number itself. 41 00:02:12,639 --> 00:02:14,799 Speaker 6: What I think matter is most to the FED is 42 00:02:14,880 --> 00:02:18,480 Speaker 6: where that spending is and some of the categories that 43 00:02:18,520 --> 00:02:22,960 Speaker 6: were revised up were things like spending out at bars 44 00:02:23,000 --> 00:02:26,000 Speaker 6: and restaurants, some of the more discretionary categories that show 45 00:02:26,040 --> 00:02:28,480 Speaker 6: that people aren't raining in their spending habits as much 46 00:02:28,520 --> 00:02:31,880 Speaker 6: as maybe the FED had expected given where rates were. 47 00:02:32,600 --> 00:02:34,680 Speaker 6: And so when the FED is starting to think about 48 00:02:34,680 --> 00:02:38,359 Speaker 6: where policy should go, and it takes into consideration what 49 00:02:38,440 --> 00:02:41,120 Speaker 6: it is likely to see with these revisions, a potential 50 00:02:41,200 --> 00:02:43,720 Speaker 6: upward revision to growth, the back of an upward revision 51 00:02:43,760 --> 00:02:48,320 Speaker 6: to household spending, it's indicative that the FED should be 52 00:02:48,360 --> 00:02:51,400 Speaker 6: maybe moving a little bit slower in its rate cut 53 00:02:51,480 --> 00:02:53,760 Speaker 6: trajectory than it had previously planned. 54 00:02:54,040 --> 00:02:56,880 Speaker 2: Well, let's go back to spending. So you think bars, restaurants, 55 00:02:56,919 --> 00:03:00,560 Speaker 2: I imagine, back to school spending. I imagine also travel. 56 00:03:00,840 --> 00:03:03,160 Speaker 2: Were there laggards and as it always come back to 57 00:03:03,200 --> 00:03:04,640 Speaker 2: housing when it comes to laggards. 58 00:03:05,160 --> 00:03:08,000 Speaker 6: Well, so what we're really looking at in next week's 59 00:03:08,040 --> 00:03:12,880 Speaker 6: data is the revision two Q three data, and fortunately 60 00:03:12,960 --> 00:03:15,280 Speaker 6: we have some monthly data that give us a little 61 00:03:15,280 --> 00:03:17,360 Speaker 6: bit of an insight into what we can expect for 62 00:03:17,400 --> 00:03:20,320 Speaker 6: the revision to the quarterly print. And when we look 63 00:03:20,320 --> 00:03:24,320 Speaker 6: at those monthly figures, households really just were not as 64 00:03:24,720 --> 00:03:28,440 Speaker 6: frugal in some of those discretionary categories as we had 65 00:03:28,520 --> 00:03:32,360 Speaker 6: previously believed. And so the FED, when it started on 66 00:03:32,440 --> 00:03:36,560 Speaker 6: its rate cut trajectory, now has fresher data in hand 67 00:03:36,600 --> 00:03:39,320 Speaker 6: that shows well, at the time that you started making 68 00:03:39,400 --> 00:03:43,360 Speaker 6: those cuts, we previously believed that households were starting to 69 00:03:43,360 --> 00:03:45,560 Speaker 6: get a little bit more frugal, they were starting to 70 00:03:45,560 --> 00:03:48,040 Speaker 6: get a little bit worried, so we started cutting rates. Well, 71 00:03:48,040 --> 00:03:49,920 Speaker 6: now it turns out, based on some of the revisions 72 00:03:49,920 --> 00:03:52,480 Speaker 6: that we've seen to the monthly data, maybe they haven't 73 00:03:52,480 --> 00:03:54,840 Speaker 6: been as frugal as we thought. When we look at 74 00:03:54,840 --> 00:03:57,880 Speaker 6: the quarterly data, there's room for that upward revision, and 75 00:03:57,920 --> 00:04:00,200 Speaker 6: so the FED can sort of slow its pace of 76 00:04:00,280 --> 00:04:01,480 Speaker 6: cuts going forward. 77 00:04:01,800 --> 00:04:05,080 Speaker 2: Okay, got it. So people were emboldened by that do 78 00:04:05,120 --> 00:04:08,240 Speaker 2: a little more spending with that first half a percent 79 00:04:08,320 --> 00:04:12,320 Speaker 2: rate cut, exactly. All right, let's move on. Then. Also Wednesday, 80 00:04:12,360 --> 00:04:14,360 Speaker 2: we get something I know you look at very closely, 81 00:04:14,440 --> 00:04:18,760 Speaker 2: October's Personal Income and Outlayser Report PCE spending and personal income. 82 00:04:19,400 --> 00:04:21,240 Speaker 2: What do you see? What are you looking at there 83 00:04:21,360 --> 00:04:23,640 Speaker 2: and how is that related to that third quarter growth? 84 00:04:23,760 --> 00:04:25,960 Speaker 6: So that third quarter growth, we're probably going to get 85 00:04:26,000 --> 00:04:28,920 Speaker 6: a modest revision upward. And then on the same day, 86 00:04:29,040 --> 00:04:31,279 Speaker 6: at the same time, we're going to get the October 87 00:04:31,320 --> 00:04:34,400 Speaker 6: as you said, Personal Income and Outlayser Report, which really 88 00:04:34,440 --> 00:04:38,960 Speaker 6: has three main components to it October personal spending, October 89 00:04:39,000 --> 00:04:44,480 Speaker 6: personal income, and PCE inflation, the Fed's preferred gauge of prices. 90 00:04:44,600 --> 00:04:47,360 Speaker 6: So taking those in order, we have some income data 91 00:04:47,360 --> 00:04:50,280 Speaker 6: that again might make the FED want to slow its 92 00:04:50,400 --> 00:04:53,880 Speaker 6: role just a little bit. Personal income growth likely increased 93 00:04:53,920 --> 00:04:56,760 Speaker 6: at a monthly pace in October of zero point four 94 00:04:56,839 --> 00:04:59,440 Speaker 6: percent per month. That's up from a pace of zero 95 00:04:59,440 --> 00:05:02,000 Speaker 6: point three per in September. Now you might be thinking 96 00:05:02,000 --> 00:05:06,520 Speaker 6: to yourself, we had such a dismal jobs report in October, 97 00:05:06,560 --> 00:05:08,960 Speaker 6: how could it be that personal income is growing, but 98 00:05:09,320 --> 00:05:13,719 Speaker 6: wages increase during the month, headcount increase just very slightly 99 00:05:13,920 --> 00:05:17,440 Speaker 6: enough to boost labor income, and we also saw transfer 100 00:05:17,480 --> 00:05:22,280 Speaker 6: payments from unemployment insurance claims and interest income likely increasing 101 00:05:22,440 --> 00:05:25,400 Speaker 6: about one percent during the month. And that's enough to 102 00:05:25,480 --> 00:05:28,360 Speaker 6: keep personal income growing at a pace that's a bit 103 00:05:28,520 --> 00:05:32,200 Speaker 6: too hot for comfort for the FED to cut in 104 00:05:32,279 --> 00:05:34,680 Speaker 6: these big chunks or even to cut maybe even twenty 105 00:05:34,680 --> 00:05:37,800 Speaker 6: five basis points in October. And then the next major 106 00:05:37,880 --> 00:05:42,279 Speaker 6: line item within that personal income and outlaser report spending October. 107 00:05:42,320 --> 00:05:48,360 Speaker 6: Personal spending really supported by spending on autos. And then 108 00:05:48,400 --> 00:05:51,520 Speaker 6: when we think about inflation, it's really auto price. Is 109 00:05:51,640 --> 00:05:56,240 Speaker 6: vehicle prices that put the brakes on the disinflation process. 110 00:05:56,560 --> 00:05:59,960 Speaker 6: We're expecting core PCEE inflation, the annual pace of core 111 00:06:00,120 --> 00:06:04,000 Speaker 6: PC inflation to register two point eight percent in October. 112 00:06:04,240 --> 00:06:07,640 Speaker 6: That's up from two point seven percent, where that figure 113 00:06:07,720 --> 00:06:10,800 Speaker 6: had been lingering for about three months. So all these 114 00:06:10,880 --> 00:06:13,479 Speaker 6: numbers sort of point to the Fed maybe needing to 115 00:06:13,560 --> 00:06:16,479 Speaker 6: slow down just a little bit. It caught up to 116 00:06:16,520 --> 00:06:19,680 Speaker 6: the curve with that fifty bases point cut early. We 117 00:06:19,760 --> 00:06:22,880 Speaker 6: got another twenty five basis points off just during the month, 118 00:06:23,320 --> 00:06:26,000 Speaker 6: and now when we're thinking about December and twenty twenty five, 119 00:06:26,120 --> 00:06:28,560 Speaker 6: the Fed can move just a little bit slower as 120 00:06:28,600 --> 00:06:29,240 Speaker 6: it cuts rates. 121 00:06:29,400 --> 00:06:31,760 Speaker 2: FED Chair Jerome Palce said the bank is in no rush, 122 00:06:32,120 --> 00:06:34,440 Speaker 2: no rush to lower that benchmark rate, and of course, 123 00:06:34,600 --> 00:06:37,719 Speaker 2: as always, it's all data dependent, so he's put the 124 00:06:37,720 --> 00:06:40,080 Speaker 2: signals out there. Don't get too excited, that's right. 125 00:06:40,160 --> 00:06:42,560 Speaker 6: The keyword from all the Fed speak that we've heard 126 00:06:42,560 --> 00:06:46,080 Speaker 6: over the past week has been cautious, cautious, cautious. 127 00:06:46,800 --> 00:06:49,200 Speaker 2: Well, we got a lot of data dump this short 128 00:06:49,279 --> 00:06:52,279 Speaker 2: this holiday shortened week ahead our thanks to Stuart Pohl, 129 00:06:52,400 --> 00:06:56,120 Speaker 2: us economist with Bloomberg Economics. We move next to third 130 00:06:56,160 --> 00:06:58,599 Speaker 2: quarter earning season, which may be winding down, but this 131 00:06:58,680 --> 00:07:02,200 Speaker 2: Tuesday we hear from retail giant Macy's. How will those 132 00:07:02,200 --> 00:07:05,040 Speaker 2: results position the chain ahead of the all important holiday 133 00:07:05,040 --> 00:07:08,480 Speaker 2: shopping season. For more, we're joined by Mary Ross Gilbert 134 00:07:08,520 --> 00:07:13,640 Speaker 2: Bloomberg Intelligence, senior equity analyst covering retail. Mary, thank you 135 00:07:13,680 --> 00:07:16,679 Speaker 2: so much for joining us. Well, we know Americans continue 136 00:07:16,720 --> 00:07:18,960 Speaker 2: to spend a lot of money. Have they been spending 137 00:07:18,960 --> 00:07:21,200 Speaker 2: their money at Macy's, That's the question. 138 00:07:21,680 --> 00:07:24,760 Speaker 7: Tom. They have been spending their money at Macy's, but 139 00:07:24,960 --> 00:07:28,400 Speaker 7: not as much as they're spending money elsewhere. So with 140 00:07:28,480 --> 00:07:32,000 Speaker 7: their third quarter numbers due out on Tuesday, we're expecting 141 00:07:32,040 --> 00:07:35,480 Speaker 7: them to miss the top line estimates, and we think 142 00:07:35,480 --> 00:07:37,920 Speaker 7: they'll probably beat on the profit line. They've done a 143 00:07:37,920 --> 00:07:42,080 Speaker 7: really good job managing costs, managing inventories, and they've beat 144 00:07:42,120 --> 00:07:45,480 Speaker 7: their earnings for the past eight quarters, so we think 145 00:07:45,520 --> 00:07:47,560 Speaker 7: they beat again on the bottom line, but we think 146 00:07:47,600 --> 00:07:49,880 Speaker 7: they miss on the top line. So we're showing they 147 00:07:49,920 --> 00:07:54,880 Speaker 7: could miss consensus estimates for sales to decline about one 148 00:07:54,920 --> 00:07:57,840 Speaker 7: and a half percent. We think it could decline more 149 00:07:57,960 --> 00:08:00,720 Speaker 7: like maybe three to five percent, So we'll see when 150 00:08:00,760 --> 00:08:04,160 Speaker 7: they go to report, But the big focus really will 151 00:08:04,160 --> 00:08:07,160 Speaker 7: be once they come out with the results, what comparable 152 00:08:07,240 --> 00:08:11,160 Speaker 7: sales look like. And while we think generally they'll be down, 153 00:08:11,720 --> 00:08:15,640 Speaker 7: we're really looking for the first fifty stores that they've 154 00:08:15,680 --> 00:08:20,200 Speaker 7: completely transformed. That means they've added personnel to the shoot 155 00:08:20,240 --> 00:08:23,440 Speaker 7: apartment so they have more service, and also in women's 156 00:08:23,440 --> 00:08:27,720 Speaker 7: apparel and men's apparel. So we think that with all 157 00:08:27,760 --> 00:08:30,320 Speaker 7: the improvements that they made to the first fifty stores 158 00:08:30,760 --> 00:08:33,319 Speaker 7: in the first two quarters of the year, they were 159 00:08:33,360 --> 00:08:36,040 Speaker 7: able to show positive comps. So we're looking to see 160 00:08:36,080 --> 00:08:39,720 Speaker 7: if they can still continue that trend in the third quarter, 161 00:08:40,080 --> 00:08:43,120 Speaker 7: and that could show some encouraging signs as they seek 162 00:08:43,200 --> 00:08:44,960 Speaker 7: to transform the business. 163 00:08:45,200 --> 00:08:49,160 Speaker 2: So refreshed stores, more salespeople on the floor, designer brands, 164 00:08:49,360 --> 00:08:51,480 Speaker 2: all of that adding up in the last couple of 165 00:08:51,520 --> 00:08:54,600 Speaker 2: quarters to a little bump in sales. But we think 166 00:08:55,520 --> 00:08:58,720 Speaker 2: is it the consumer, Is it Macy's what may have 167 00:08:59,040 --> 00:09:01,280 Speaker 2: held back sale in the third quarter. 168 00:09:01,679 --> 00:09:05,679 Speaker 7: Clearly department stores has been seeing a weakness there's been 169 00:09:05,679 --> 00:09:08,760 Speaker 7: a trend away from department stores going toward more off 170 00:09:08,840 --> 00:09:11,160 Speaker 7: price and also in the mass channel. So if you 171 00:09:11,200 --> 00:09:16,360 Speaker 7: look at Walmart's numbers out, they reported robust results, exceeded 172 00:09:16,480 --> 00:09:20,080 Speaker 7: estimates on the top line, and they indicated that two 173 00:09:20,160 --> 00:09:24,320 Speaker 7: thirds of their beat was related to consumers who have 174 00:09:24,559 --> 00:09:28,040 Speaker 7: come from households that earn over one hundred thousand. Now 175 00:09:28,080 --> 00:09:32,200 Speaker 7: Macy's their core customer earns under one hundred thousand, so 176 00:09:32,320 --> 00:09:36,880 Speaker 7: the largest contingent that shops Macy's. But they're shutting down 177 00:09:36,920 --> 00:09:39,240 Speaker 7: about one hundred and fifty stores, so they sort of 178 00:09:39,240 --> 00:09:42,440 Speaker 7: have two classifications. One would be the go forward stores. 179 00:09:42,760 --> 00:09:45,560 Speaker 7: We really think that's the most important metric to look at, 180 00:09:45,840 --> 00:09:49,200 Speaker 7: but we will also look at the fifty refresh store 181 00:09:49,880 --> 00:09:52,920 Speaker 7: performance too as a sign of what could come in 182 00:09:53,000 --> 00:09:56,400 Speaker 7: terms of improving performance. But generally the department store space 183 00:09:56,480 --> 00:10:00,480 Speaker 7: has seen a decline, and looking at our transaction data 184 00:10:01,080 --> 00:10:04,800 Speaker 7: early we only have fifteen days in their fourth quarter, 185 00:10:05,280 --> 00:10:08,080 Speaker 7: but we haven't seen an improvement. One of the things 186 00:10:08,160 --> 00:10:10,240 Speaker 7: that we've noticed in looking at this data is that 187 00:10:10,320 --> 00:10:12,920 Speaker 7: October was pretty weak across the board, and we think 188 00:10:12,960 --> 00:10:16,840 Speaker 7: it was because of unusual warm weather around the country 189 00:10:17,160 --> 00:10:20,600 Speaker 7: and now that the weather has turned colder, that should 190 00:10:20,679 --> 00:10:24,840 Speaker 7: improve outerwear sales, which are higher margin. But a change 191 00:10:24,880 --> 00:10:29,640 Speaker 7: in weather is the number one reason why consumers will 192 00:10:29,640 --> 00:10:32,320 Speaker 7: buy something new, according to a survey that we just 193 00:10:32,440 --> 00:10:34,120 Speaker 7: conducted this week and published. 194 00:10:34,440 --> 00:10:37,680 Speaker 2: Wow. And speaking of weather, how do you think Macy's 195 00:10:37,760 --> 00:10:40,839 Speaker 2: was impacted by a series of devastating storms? I mean 196 00:10:40,840 --> 00:10:43,280 Speaker 2: one affecting about a quarter of the country. 197 00:10:43,840 --> 00:10:48,319 Speaker 7: That's exactly right, Florida, in North Carolina, but mainly Florida. 198 00:10:48,400 --> 00:10:50,959 Speaker 7: So yes, they will be impacted by that. We saw 199 00:10:51,000 --> 00:10:54,760 Speaker 7: that with tj X, which reported their results and again 200 00:10:54,960 --> 00:10:58,880 Speaker 7: they beat, and they their guidance was sort of light, 201 00:10:58,960 --> 00:11:02,240 Speaker 7: but they typically beat, so we think generally the news 202 00:11:02,280 --> 00:11:05,480 Speaker 7: coming out of TJX was very positive. But they did 203 00:11:05,559 --> 00:11:09,280 Speaker 7: say that they were impacted by the hurricanes and then 204 00:11:09,480 --> 00:11:15,160 Speaker 7: also impacted by unseasonably warm weather in October. So we 205 00:11:15,200 --> 00:11:17,640 Speaker 7: think we'll hear something similar to that when we get 206 00:11:17,679 --> 00:11:19,040 Speaker 7: results out of Macy's. 207 00:11:19,400 --> 00:11:23,760 Speaker 2: And now you talked about the discount stores Walmart. How 208 00:11:23,840 --> 00:11:27,120 Speaker 2: is Macy's faring in online sales? And of course you 209 00:11:27,160 --> 00:11:29,160 Speaker 2: know the big bugaboo there is Amazon. 210 00:11:29,840 --> 00:11:32,800 Speaker 7: Yes, absolutely, well it's not just Amazon. If you look 211 00:11:32,840 --> 00:11:37,280 Speaker 7: at Walmart, and Target. They both reported double digit increases 212 00:11:37,320 --> 00:11:41,160 Speaker 7: in online sales, so they're actually doing really well on 213 00:11:41,200 --> 00:11:46,560 Speaker 7: the e comm part. Now for Macy's, Macy's online sales 214 00:11:46,559 --> 00:11:48,720 Speaker 7: are about, you know, sort of a little. It's over 215 00:11:48,800 --> 00:11:51,640 Speaker 7: thirty percent, somewhere around that thirty three thirty four percent 216 00:11:51,679 --> 00:11:56,720 Speaker 7: of sales is online, and that business has been doing okay. 217 00:11:57,240 --> 00:12:00,480 Speaker 7: But again they're really more of an omni channel, Taylor. 218 00:12:00,880 --> 00:12:04,559 Speaker 7: So you might have a consumer originated transaction and then 219 00:12:04,600 --> 00:12:06,800 Speaker 7: pick it up in store. So I think it's going 220 00:12:06,880 --> 00:12:10,200 Speaker 7: to follow the trend that the overall business is seeing 221 00:12:10,280 --> 00:12:12,040 Speaker 7: generally in terms of increases. 222 00:12:12,480 --> 00:12:14,800 Speaker 2: Wow, A lot to look forward to. Macy's Q three 223 00:12:14,840 --> 00:12:18,120 Speaker 2: earnings out this Tuesday. Our thanks to Mary Ross Gilbert, 224 00:12:18,120 --> 00:12:22,440 Speaker 2: Bloomberg Intelligence senior echoity analyst covering retail. Coming up on 225 00:12:22,440 --> 00:12:24,520 Speaker 2: Bloomberg day Break weekend, we look ahead to a key 226 00:12:24,559 --> 00:12:28,240 Speaker 2: gathering in the biggest names in British business. I'm Tom 227 00:12:28,280 --> 00:12:42,840 Speaker 2: Busby and this is Bloomberg. This is Bloomberg day Break Weekend, 228 00:12:42,840 --> 00:12:45,280 Speaker 2: our global look ahead at the top stories for investors 229 00:12:45,360 --> 00:12:47,760 Speaker 2: in the coming week. I'm Tom Busby in New York. 230 00:12:48,000 --> 00:12:50,120 Speaker 2: Up later in the program, we look ahead to a 231 00:12:50,160 --> 00:12:53,120 Speaker 2: meeting from the Bank of Korea. But first, it's been 232 00:12:53,120 --> 00:12:55,520 Speaker 2: an eventful year for British business, the first change in 233 00:12:55,559 --> 00:12:59,240 Speaker 2: government in fourteen years, a pivotal autumn budget announcement, an 234 00:12:59,400 --> 00:13:03,680 Speaker 2: uncertain g' your political environment. This week, entrepreneurs, finance leaders, 235 00:13:03,720 --> 00:13:07,840 Speaker 2: politicians all convene at the Confederation for British Industry's annual 236 00:13:07,840 --> 00:13:11,360 Speaker 2: conference to discuss what's ahead in twenty twenty five and 237 00:13:11,400 --> 00:13:13,520 Speaker 2: for more, let's go to London and bring in Bloomberg 238 00:13:13,600 --> 00:13:16,559 Speaker 2: day break, euro banker Caroline hepgar Tom. 239 00:13:16,720 --> 00:13:19,880 Speaker 3: The UK's business leaders and politicians may be at odds 240 00:13:19,920 --> 00:13:23,440 Speaker 3: on some matters, but both groups agree on one thing, 241 00:13:23,840 --> 00:13:28,080 Speaker 3: the need for sustainable economic growth in Britain. It is 242 00:13:28,120 --> 00:13:31,880 Speaker 3: something that has proven elusive in twenty twenty four, but 243 00:13:32,040 --> 00:13:34,880 Speaker 3: with a new Labour government to out the country's helm, 244 00:13:35,160 --> 00:13:40,120 Speaker 3: many are still hoping that next year will bring more prosperity. 245 00:13:40,240 --> 00:13:44,079 Speaker 3: The Confederation for British Industry says that the problem is evident. 246 00:13:44,160 --> 00:13:47,839 Speaker 3: The economy is faltering and firms are struggling to solve 247 00:13:47,960 --> 00:13:52,240 Speaker 3: challenges without support. The group has also bemoaned the cost 248 00:13:52,280 --> 00:13:55,800 Speaker 3: of doing business in the UK against the backdrop of 249 00:13:56,040 --> 00:14:00,440 Speaker 3: unreliable supply chains and a declining stock market in London. 250 00:14:00,960 --> 00:14:04,520 Speaker 3: In response, the Chancellor Rachel Reeves is doing her best 251 00:14:04,600 --> 00:14:08,440 Speaker 3: to rev up the engine of industry. The Chancellor used 252 00:14:08,440 --> 00:14:13,079 Speaker 3: her landmark mansion House address to announce a swathe of measures, 253 00:14:13,120 --> 00:14:18,000 Speaker 3: including bringing bonus payments forwards for financial professionals and a 254 00:14:18,040 --> 00:14:23,480 Speaker 3: reassessment of Posts two thousand and eight crisis regulation. But 255 00:14:23,520 --> 00:14:26,480 Speaker 3: will her efforts be enough to spur growth given the 256 00:14:26,560 --> 00:14:29,880 Speaker 3: uncertain backdrop? The threat of headwinds is something I've been 257 00:14:29,880 --> 00:14:33,080 Speaker 3: discussing with the director of research at the think tank 258 00:14:33,120 --> 00:14:37,040 Speaker 3: the Resolution Foundation, James Smith. I started off by asking 259 00:14:37,120 --> 00:14:41,160 Speaker 3: him where the recent hard than expected UK inflation numbers 260 00:14:41,440 --> 00:14:43,560 Speaker 3: are an indicator of worse to come. 261 00:14:44,280 --> 00:14:47,440 Speaker 8: It's a pretty disappointing inflation release all round. As you say, 262 00:14:47,800 --> 00:14:50,720 Speaker 8: inflation is up. We expected that. 263 00:14:50,720 --> 00:14:53,239 Speaker 5: Because energy bills were going. 264 00:14:53,040 --> 00:14:55,560 Speaker 8: Up some falls in the past, we dropping out of 265 00:14:55,640 --> 00:15:01,400 Speaker 8: the twelvemonth calculation. But what we've seen is inflation tacking 266 00:15:01,480 --> 00:15:04,840 Speaker 8: up a little bit. We've seen services inflation up from 267 00:15:04,840 --> 00:15:08,640 Speaker 8: four point nine percent in September to five percent in October, 268 00:15:09,000 --> 00:15:12,600 Speaker 8: and those underlying measures of inflation what really the Bank 269 00:15:12,640 --> 00:15:13,800 Speaker 8: of England is watching. 270 00:15:14,000 --> 00:15:16,240 Speaker 5: So those rises there. 271 00:15:16,040 --> 00:15:19,000 Speaker 8: They're not big, but and they have been a little 272 00:15:19,000 --> 00:15:22,640 Speaker 8: bit erratic in recent months, but still there's a disappointing 273 00:15:23,080 --> 00:15:27,160 Speaker 8: release and doesn't really encourage us to think there's very 274 00:15:27,280 --> 00:15:29,160 Speaker 8: rapid cuts and interest rates coming. 275 00:15:29,200 --> 00:15:30,840 Speaker 5: Inflation still looks quite sticky. 276 00:15:31,640 --> 00:15:34,400 Speaker 3: Okay, Yeah, in terms of the work that you have 277 00:15:34,520 --> 00:15:37,880 Speaker 3: done then on the pressures that there might be for 278 00:15:38,000 --> 00:15:41,480 Speaker 3: higher inflation, and also on the data, it's quite fascinating. 279 00:15:41,520 --> 00:15:44,720 Speaker 3: We've known for two years that the official Labor for 280 00:15:45,000 --> 00:15:48,720 Speaker 3: survey that's produced by the RNs has had significant problems. 281 00:15:49,280 --> 00:15:51,520 Speaker 3: What do you think that the official data has missed 282 00:15:51,600 --> 00:15:53,560 Speaker 3: because you know it's close to a million people. 283 00:15:53,600 --> 00:15:54,080 Speaker 6: Maybe. 284 00:15:54,960 --> 00:15:55,200 Speaker 7: Yeah. 285 00:15:56,320 --> 00:15:58,280 Speaker 8: We've known for as you say, for quite some time 286 00:15:58,320 --> 00:16:02,640 Speaker 8: that the Labor four Survey, the key measure of employment 287 00:16:02,720 --> 00:16:06,480 Speaker 8: lad market quantities in the UK, has had problems of 288 00:16:06,560 --> 00:16:10,280 Speaker 8: declining response rates. So what we've been doing is trying 289 00:16:10,320 --> 00:16:13,480 Speaker 8: to figure out what the lad market might look like 290 00:16:13,520 --> 00:16:17,960 Speaker 8: if you just use ADMIN data, so the HMRC Real 291 00:16:18,000 --> 00:16:23,800 Speaker 8: Time Indicators measure of employment and HRC data on self 292 00:16:23,880 --> 00:16:26,360 Speaker 8: employment to try and give you an overall sense of employment. 293 00:16:26,400 --> 00:16:29,320 Speaker 8: And if you do that calculation, it suggests that as 294 00:16:29,360 --> 00:16:32,960 Speaker 8: you say, something like a million more people might be 295 00:16:33,840 --> 00:16:34,640 Speaker 8: in employment. 296 00:16:34,720 --> 00:16:35,480 Speaker 5: So the laborforce. 297 00:16:35,480 --> 00:16:41,440 Speaker 8: Ser they could be really seriously underestimating the amount of 298 00:16:41,720 --> 00:16:44,400 Speaker 8: the extent of which people are in employment in the UK, 299 00:16:44,560 --> 00:16:47,600 Speaker 8: and we really think, you know, that could be quite 300 00:16:47,600 --> 00:16:49,560 Speaker 8: a big difference. We're not at all certain about what 301 00:16:49,600 --> 00:16:52,400 Speaker 8: that level looks like. This is giving you a sense 302 00:16:52,440 --> 00:16:55,480 Speaker 8: of where employment might be. But the key thing here 303 00:16:55,560 --> 00:16:57,920 Speaker 8: is in terms of future inflation is if you look 304 00:16:58,360 --> 00:17:03,000 Speaker 8: at measures of un employment, particularly unemployment relative to the 305 00:17:03,040 --> 00:17:05,879 Speaker 8: amount of vacancies in the economy, the so called tightness 306 00:17:05,960 --> 00:17:09,639 Speaker 8: of the labor market, this doesn't radically change your view there. 307 00:17:09,760 --> 00:17:15,080 Speaker 8: So the counterpart to higher employment is lower inactivity. So 308 00:17:15,119 --> 00:17:18,600 Speaker 8: the thing we've been talking about is lots of people 309 00:17:18,640 --> 00:17:20,960 Speaker 8: falling out the labor market. If more people are in 310 00:17:21,040 --> 00:17:25,240 Speaker 8: employment that we expect, then the obvious counterpart that would 311 00:17:25,320 --> 00:17:28,639 Speaker 8: be the less of a problem on the inactivity side. 312 00:17:28,800 --> 00:17:31,119 Speaker 9: I'm interested to hear more from you on that front, 313 00:17:31,200 --> 00:17:34,520 Speaker 9: because this is a narrative that we've had in the 314 00:17:34,640 --> 00:17:37,760 Speaker 9: UK since the pandemic, that so many more people were 315 00:17:37,800 --> 00:17:42,560 Speaker 9: inactive in the workforce. Would looking at the calculations that 316 00:17:42,600 --> 00:17:44,840 Speaker 9: you've done, I mean, how differently should we be thinking 317 00:17:44,880 --> 00:17:46,000 Speaker 9: about that problem. 318 00:17:46,080 --> 00:17:49,480 Speaker 8: Well, it's still clear that we have got a problem 319 00:17:49,800 --> 00:17:55,320 Speaker 8: of higher levels of poor health, so more people say 320 00:17:55,400 --> 00:17:59,600 Speaker 8: that they have stability. We certainly are paying more for 321 00:17:59,640 --> 00:18:02,680 Speaker 8: this little benefit, so that that's not quite the same 322 00:18:02,720 --> 00:18:04,160 Speaker 8: thing as a sort of survey. 323 00:18:03,880 --> 00:18:05,560 Speaker 5: Measures of ill health. 324 00:18:05,560 --> 00:18:09,000 Speaker 8: So there's still the types of problems we've been talking about. 325 00:18:09,080 --> 00:18:13,320 Speaker 8: Those are still there, but the overall effect on in 326 00:18:13,400 --> 00:18:17,160 Speaker 8: activity through higher employment might be quite a lot smaller. 327 00:18:17,200 --> 00:18:20,639 Speaker 8: So there could be other things going on pushing down 328 00:18:21,200 --> 00:18:25,600 Speaker 8: in activity. So more people in work or older people 329 00:18:25,880 --> 00:18:29,840 Speaker 8: you know, without health problems, and more women participating in 330 00:18:29,840 --> 00:18:32,560 Speaker 8: the labor market for example, could be the ways in 331 00:18:32,640 --> 00:18:35,360 Speaker 8: which you reconcile those two estimates. 332 00:18:35,800 --> 00:18:38,359 Speaker 3: How much does it mean that government policy has to shift? 333 00:18:38,400 --> 00:18:40,920 Speaker 3: I mean only last month Kirs Starmer told the Labor 334 00:18:40,920 --> 00:18:44,360 Speaker 3: Party conference that the long term sick needed to get 335 00:18:44,359 --> 00:18:48,560 Speaker 3: back to work where they could, saying quote that he 336 00:18:48,680 --> 00:18:51,199 Speaker 3: was talking to his Labour party. Obviously we have to 337 00:18:51,240 --> 00:18:55,000 Speaker 3: do everything we can to tackle worklessness. Liz Kendall, who's 338 00:18:55,040 --> 00:18:57,280 Speaker 3: the Working Pension Secretary, is meant to be launching big 339 00:18:57,280 --> 00:19:00,800 Speaker 3: reforms of job centers later this then you know, the 340 00:19:00,840 --> 00:19:03,920 Speaker 3: way that people get back into work sort of extraordinary. 341 00:19:03,920 --> 00:19:06,560 Speaker 3: But it does mean that government policy that has flowed 342 00:19:06,560 --> 00:19:08,760 Speaker 3: from this data probably has to change. 343 00:19:09,080 --> 00:19:11,000 Speaker 8: I think the key thing here is that the government 344 00:19:11,119 --> 00:19:14,560 Speaker 8: have said that they want to get the employment rate 345 00:19:14,680 --> 00:19:15,680 Speaker 8: up to eighty percent. 346 00:19:15,800 --> 00:19:18,200 Speaker 5: So that's a very ambitious target. 347 00:19:18,280 --> 00:19:20,320 Speaker 8: You know, we were in the early seventies in terms 348 00:19:20,359 --> 00:19:24,640 Speaker 8: of employment rate at the moment, but if the ADMIN 349 00:19:24,760 --> 00:19:27,040 Speaker 8: measure of employment is to be believed, we're a lot 350 00:19:27,080 --> 00:19:30,679 Speaker 8: closer to that target than we work previously. So we still, 351 00:19:30,720 --> 00:19:32,760 Speaker 8: as I say, we still have a challenge in terms 352 00:19:32,840 --> 00:19:37,440 Speaker 8: of the overall welfare bill for those receiving benefits related 353 00:19:37,480 --> 00:19:41,320 Speaker 8: to health. So the set of policy issues that are there, 354 00:19:41,400 --> 00:19:43,399 Speaker 8: and we be hearing about that in the budget with 355 00:19:43,520 --> 00:19:47,400 Speaker 8: the chance of saying that she would continue to try 356 00:19:47,440 --> 00:19:50,480 Speaker 8: and make cuts to disability benefits put. 357 00:19:50,280 --> 00:19:52,640 Speaker 5: In place by her predecessor, Jeremy Hunt. 358 00:19:52,760 --> 00:19:56,639 Speaker 8: So there are definitely, you know, still problems there that 359 00:19:56,680 --> 00:19:57,960 Speaker 8: the government need to be addressed. 360 00:19:57,960 --> 00:20:00,800 Speaker 5: But it's good news potentially for their if. 361 00:20:00,680 --> 00:20:04,240 Speaker 8: More people are in work, more people are paying tax, 362 00:20:04,320 --> 00:20:07,639 Speaker 8: and you know that's the kind of key counterpart to 363 00:20:07,680 --> 00:20:07,960 Speaker 8: all this. 364 00:20:08,440 --> 00:20:11,560 Speaker 3: That was the director of research at the Resolution Foundation, 365 00:20:11,760 --> 00:20:15,560 Speaker 3: James Smith, speaking to me and Stephen Caroll on Bloomberg Radio. 366 00:20:16,000 --> 00:20:18,199 Speaker 3: So growth is the name of the game. How to 367 00:20:18,359 --> 00:20:20,800 Speaker 3: get there though, no doubt that will be the question 368 00:20:20,960 --> 00:20:25,040 Speaker 3: on the lips of different sector leaders and influential voices 369 00:20:25,320 --> 00:20:30,240 Speaker 3: at the upcoming CBI Industry Conference. I've been discussing what's 370 00:20:30,240 --> 00:20:33,640 Speaker 3: ahead with Bloomberg's UK Business editor Julian Harris. 371 00:20:34,080 --> 00:20:36,800 Speaker 10: I mean, it never ends for British businesses really. I 372 00:20:36,840 --> 00:20:38,680 Speaker 10: guess you could say that in a lot of countries 373 00:20:38,720 --> 00:20:42,120 Speaker 10: as well. Just as they think the coast is clear, 374 00:20:42,240 --> 00:20:45,560 Speaker 10: something comes up. The latest thing, of course, was the budget. 375 00:20:45,680 --> 00:20:48,080 Speaker 10: It was expected to be quite severe, but it probably 376 00:20:48,119 --> 00:20:51,879 Speaker 10: went further than many expected, and the hit from tax 377 00:20:52,400 --> 00:20:56,280 Speaker 10: is huge. It does depend what kind of business you are, though, 378 00:20:56,400 --> 00:20:59,720 Speaker 10: and sometimes the CBI has been accused in the past 379 00:20:59,720 --> 00:21:04,560 Speaker 10: of of just representing the biggest businesses in the UK 380 00:21:06,080 --> 00:21:08,520 Speaker 10: and not focusing as much on the smaller ones. And 381 00:21:08,520 --> 00:21:12,719 Speaker 10: then a hit from NI really depends on how the 382 00:21:12,760 --> 00:21:15,600 Speaker 10: form of your business, how many staff you employed, how 383 00:21:15,600 --> 00:21:18,280 Speaker 10: many of them are part time. So businesses are real 384 00:21:18,320 --> 00:21:21,320 Speaker 10: link to a certain extent, but that there's certainly a 385 00:21:21,320 --> 00:21:22,480 Speaker 10: big hit from costs. 386 00:21:22,760 --> 00:21:24,919 Speaker 3: What do you think is the biggest concern for British 387 00:21:25,000 --> 00:21:28,439 Speaker 3: businesses currently? Is it the new incoming US president. Is 388 00:21:28,480 --> 00:21:32,560 Speaker 3: it the regulatory changes for example that Rachel Reeves announced 389 00:21:32,560 --> 00:21:35,359 Speaker 3: that Manchin hows or is it that budget that is 390 00:21:35,480 --> 00:21:37,160 Speaker 3: the big issue, perhaps something else. 391 00:21:37,840 --> 00:21:39,800 Speaker 10: I think there are the things that they know about 392 00:21:39,880 --> 00:21:42,040 Speaker 10: and that they can plan for, and then the things 393 00:21:42,040 --> 00:21:44,800 Speaker 10: that they can't. So from most businesses that we speak 394 00:21:44,840 --> 00:21:46,879 Speaker 10: to at the moment, when you talk about Trump and 395 00:21:47,600 --> 00:21:50,320 Speaker 10: the thread of trade war and tariffs, they just kind 396 00:21:50,359 --> 00:21:53,720 Speaker 10: of shrugged their shoulders and well, we don't know what's 397 00:21:53,760 --> 00:21:57,400 Speaker 10: going to happen there. There's so many different factors in play. Obviously, 398 00:21:57,440 --> 00:22:00,679 Speaker 10: if Trump did introduce all his tariffs that the effect 399 00:22:00,760 --> 00:22:04,199 Speaker 10: would be huge. In the UK is so exposed to 400 00:22:04,280 --> 00:22:07,680 Speaker 10: what happens internationally that it can't be neglected. And that's 401 00:22:07,760 --> 00:22:11,040 Speaker 10: why we're seeing people like Rachel Reeves and even Andrew 402 00:22:11,040 --> 00:22:15,720 Speaker 10: Bailey kind of almost evangelizing about free trade because that 403 00:22:16,160 --> 00:22:19,400 Speaker 10: is what the UK needs. But business executives themselves are 404 00:22:19,400 --> 00:22:21,640 Speaker 10: just saying, well, there's not a huge amount they can 405 00:22:21,680 --> 00:22:24,440 Speaker 10: do about that. What they do know is happening are 406 00:22:24,480 --> 00:22:27,800 Speaker 10: these changes from labor that we talked about, sort of taxes, 407 00:22:27,800 --> 00:22:30,760 Speaker 10: but also the increase in the minimum wage, the workers 408 00:22:30,840 --> 00:22:33,960 Speaker 10: rights packages, these things are all written down now and 409 00:22:34,000 --> 00:22:36,320 Speaker 10: are coming down the line. The worker's rights one is 410 00:22:36,359 --> 00:22:39,879 Speaker 10: still in negotiation, but the others can be planned for. 411 00:22:40,119 --> 00:22:43,240 Speaker 10: But from a lot of businesses sort of we're hearing 412 00:22:43,480 --> 00:22:45,960 Speaker 10: you know that the effect is very, very big. So 413 00:22:46,000 --> 00:22:48,760 Speaker 10: they're figuring out how to manage that. Do they put 414 00:22:48,840 --> 00:22:52,840 Speaker 10: up prices or do they try to stay competitive? 415 00:22:53,680 --> 00:22:56,959 Speaker 3: There are a lot of different sectors of British business 416 00:22:57,040 --> 00:23:00,560 Speaker 3: who are concerned post a budget. Do you think that 417 00:23:00,640 --> 00:23:03,199 Speaker 3: the government is getting the tone right? What do you 418 00:23:03,200 --> 00:23:07,440 Speaker 3: think businesses will be saying at this event. Obviously the 419 00:23:07,560 --> 00:23:14,320 Speaker 3: Labor leadership courted business assiduously, but then business confidence absolutely 420 00:23:14,359 --> 00:23:17,560 Speaker 3: slumped ahead of the budget, and then after the budget 421 00:23:17,640 --> 00:23:19,879 Speaker 3: has as I said, a lot of different sectors have 422 00:23:20,000 --> 00:23:23,200 Speaker 3: criticized Rachel Reeves's choices and decisions in the budget. What 423 00:23:23,240 --> 00:23:24,399 Speaker 3: do you think the tone will be like? 424 00:23:25,520 --> 00:23:28,200 Speaker 10: Yeah, I don't think they've got the tone right at all. 425 00:23:28,840 --> 00:23:32,119 Speaker 10: And there has been a real change in the months 426 00:23:32,119 --> 00:23:34,600 Speaker 10: since Labor came to power. So they had this sort 427 00:23:34,640 --> 00:23:38,800 Speaker 10: of schmoozy event in Downing Street Garden shortly after their 428 00:23:39,040 --> 00:23:43,080 Speaker 10: landslide victory and the mood was said to be absolutely buoyant. 429 00:23:43,119 --> 00:23:46,159 Speaker 10: I mean it helped that it was summer and it 430 00:23:46,240 --> 00:23:50,040 Speaker 10: was all very very positive and people, you know, business 431 00:23:50,440 --> 00:23:52,440 Speaker 10: leaders were coming out of that and they were talking 432 00:23:52,440 --> 00:23:57,160 Speaker 10: to journalists and being very upbeat. That's now really changed 433 00:23:57,200 --> 00:23:59,399 Speaker 10: in terms of sectors you ask about, I mean a 434 00:23:59,560 --> 00:24:04,080 Speaker 10: retail obvious one, hospitalities another, and there are business figures 435 00:24:04,080 --> 00:24:07,440 Speaker 10: in those areas saying, you know, this really is not 436 00:24:07,560 --> 00:24:09,960 Speaker 10: what we expected. We knew that there was going to 437 00:24:10,000 --> 00:24:12,560 Speaker 10: be some fiscal adjustment, but the scale of it is 438 00:24:13,280 --> 00:24:15,840 Speaker 10: far beyond what we thought. And there just seems to 439 00:24:15,880 --> 00:24:18,440 Speaker 10: be a sort of lack of understanding from laboring in 440 00:24:18,520 --> 00:24:21,960 Speaker 10: terms of how kind of devastating that can be, and 441 00:24:22,600 --> 00:24:25,960 Speaker 10: Labour's emphasize growth so much, and a lot of people 442 00:24:25,960 --> 00:24:29,080 Speaker 10: in business are saying, well, well, how can the economy 443 00:24:29,160 --> 00:24:32,320 Speaker 10: grow when you're imposing these costs on it? 444 00:24:32,320 --> 00:24:33,639 Speaker 5: It doesn't really make sense. 445 00:24:33,960 --> 00:24:36,560 Speaker 10: At the same time, like Reeves has been very positive 446 00:24:36,600 --> 00:24:39,159 Speaker 10: towards the city, so there are some people in the 447 00:24:39,160 --> 00:24:42,240 Speaker 10: city who are probably quite happy, but that's very different 448 00:24:42,280 --> 00:24:44,399 Speaker 10: from say, supermarket CEOs. 449 00:24:45,040 --> 00:24:47,879 Speaker 3: My thanks to Bloomberg's Julian Harris for looking ahead to 450 00:24:47,960 --> 00:24:52,359 Speaker 3: the CBI's annual conference. In recent days, they've talked about 451 00:24:52,359 --> 00:24:57,000 Speaker 3: how the UK economy stalled over the third quarter. Uncertainty 452 00:24:57,080 --> 00:25:00,399 Speaker 3: ahead of the budget probably played a big part in 453 00:25:00,440 --> 00:25:05,320 Speaker 3: their words and their expectations that bompier inflation will rule 454 00:25:05,440 --> 00:25:08,119 Speaker 3: out the prospect of a faster pace of Bank of 455 00:25:08,160 --> 00:25:11,479 Speaker 3: England rate cuts in the year ahead. So it'll be 456 00:25:11,600 --> 00:25:14,439 Speaker 3: an interesting moment then to get the temperature of business 457 00:25:14,520 --> 00:25:18,160 Speaker 3: leaders and their biggest trade group in the next few days. 458 00:25:18,200 --> 00:25:21,080 Speaker 3: And we will have full coverage of the gathering in 459 00:25:21,119 --> 00:25:25,000 Speaker 3: central London here on Bloomberg Radio. I'm Caroline Hepkeitt in London. 460 00:25:25,080 --> 00:25:27,600 Speaker 3: You can catch us every weekday morning for Bloomberg Daybreak. 461 00:25:27,600 --> 00:25:30,040 Speaker 3: Youre at beginning at six am in London. That's one 462 00:25:30,080 --> 00:25:31,159 Speaker 3: am on Wall Street. 463 00:25:31,320 --> 00:25:34,439 Speaker 2: Tom, Thank you, Caroline, and coming up on Bloomberg day 464 00:25:34,440 --> 00:25:37,280 Speaker 2: Break weekend and look ahead to a Bank of Korea meeting. 465 00:25:37,640 --> 00:25:51,600 Speaker 2: I'm Tom Busby and this is Bloomberg. This is Bloomberg 466 00:25:51,640 --> 00:25:53,560 Speaker 2: day Break weekend, our global look ahead at the top 467 00:25:53,600 --> 00:25:56,440 Speaker 2: stories for investors in the coming week. I'm Tom Busby 468 00:25:56,440 --> 00:25:59,200 Speaker 2: in New York. This past week, the IMF lowered it's 469 00:25:59,200 --> 00:26:02,600 Speaker 2: forecast for South Korea's economic growth, pointing to rising headwinds 470 00:26:02,920 --> 00:26:06,800 Speaker 2: facing the export reliant nation. Those are the same headwinds 471 00:26:06,800 --> 00:26:10,400 Speaker 2: that'll be weighed by the country seven central bankers this week, 472 00:26:10,440 --> 00:26:12,560 Speaker 2: and for more, we turned to the host of the 473 00:26:12,640 --> 00:26:15,000 Speaker 2: Daybreak Asia podcast, Doug Krisner. 474 00:26:15,560 --> 00:26:17,680 Speaker 4: Tom in the coming week, we'll get a great decision 475 00:26:17,720 --> 00:26:21,080 Speaker 4: from the Bank of Korea. Now, the bok has recently 476 00:26:21,160 --> 00:26:25,520 Speaker 4: tilted toward cutting rates, so question will the duvishnists prevail 477 00:26:25,600 --> 00:26:28,160 Speaker 4: in the coming days. For a closer look, I'm joined 478 00:26:28,160 --> 00:26:32,040 Speaker 4: by Paul Jackson, Bloomberg Asia Eco GUV editor. Paul joins 479 00:26:32,040 --> 00:26:35,760 Speaker 4: from our studios in Tokyo. Help me understand the dynamic. 480 00:26:35,920 --> 00:26:39,680 Speaker 4: I really enjoy talking with you because you're so abreast 481 00:26:39,720 --> 00:26:41,879 Speaker 4: of everything that's happening, not just in South Korea but 482 00:26:41,960 --> 00:26:45,879 Speaker 4: Japan as well. Last month, the Bokay cut rates for 483 00:26:45,920 --> 00:26:47,639 Speaker 4: the first time in more than four years, and it 484 00:26:47,680 --> 00:26:50,360 Speaker 4: seemed at that time that it was really the concern 485 00:26:50,440 --> 00:26:54,440 Speaker 4: over the weakness in the economy that outweighed concern about 486 00:26:54,800 --> 00:26:58,000 Speaker 4: high household debt. Is that going to continue to be 487 00:26:58,440 --> 00:27:02,040 Speaker 4: kind of the underlying fabri here, the basic assumption that 488 00:27:02,040 --> 00:27:02,840 Speaker 4: we should be making. 489 00:27:03,600 --> 00:27:06,640 Speaker 11: Yeah, I think going forward it's going to be on 490 00:27:06,760 --> 00:27:11,320 Speaker 11: this rate cutting path. I think next week's meeting we're 491 00:27:11,359 --> 00:27:12,960 Speaker 11: going to have a hold. I think it's one of 492 00:27:13,000 --> 00:27:18,679 Speaker 11: those classic central bank Okay, let's wait and monitor and 493 00:27:18,800 --> 00:27:22,800 Speaker 11: see how the impact of our previous decision filters through 494 00:27:22,840 --> 00:27:25,760 Speaker 11: the economy. So I think it's hold for now, and 495 00:27:25,800 --> 00:27:31,280 Speaker 11: then the rate cuts start again next year, probably in January, 496 00:27:31,600 --> 00:27:37,199 Speaker 11: and economists are forecasting three rate cuts next year. But 497 00:27:37,880 --> 00:27:41,359 Speaker 11: of course we do have the emergency of Donald Trump, 498 00:27:41,760 --> 00:27:46,280 Speaker 11: which is getting some economists to change their views of 499 00:27:46,359 --> 00:27:48,520 Speaker 11: how the Bank of Career will act. 500 00:27:48,680 --> 00:27:51,440 Speaker 4: Before we get to the issue of US South Korean trade, 501 00:27:51,880 --> 00:27:53,920 Speaker 4: talk to me a little bit about the inflation story 502 00:27:53,920 --> 00:27:57,160 Speaker 4: as we understand it right now for South Korea. Are 503 00:27:57,200 --> 00:27:59,480 Speaker 4: things under control at this point? 504 00:27:59,640 --> 00:28:02,360 Speaker 11: I think think that if you look at the statement 505 00:28:02,400 --> 00:28:05,800 Speaker 11: that came out in October, the policymakers on the board 506 00:28:06,600 --> 00:28:11,000 Speaker 11: said that sees clear signs of stabilization in the inflation trend. 507 00:28:11,400 --> 00:28:15,480 Speaker 11: We saw it slow below two percent in September and 508 00:28:15,600 --> 00:28:19,040 Speaker 11: even further in October. So I think the checkbox of 509 00:28:19,160 --> 00:28:25,520 Speaker 11: inflation is marked. But the matrix of calculations, the calculus 510 00:28:26,200 --> 00:28:29,960 Speaker 11: for the Bank of Career is rather complicated because we've 511 00:28:30,000 --> 00:28:33,240 Speaker 11: got this household debt that you alluded to, and obviously 512 00:28:33,320 --> 00:28:36,560 Speaker 11: you want to keep the rates, you know, relatively high 513 00:28:36,600 --> 00:28:41,040 Speaker 11: and restrictive to stop that trend continuing. Also, you know 514 00:28:41,120 --> 00:28:43,960 Speaker 11: the currency remains weak, and of course you know you 515 00:28:44,040 --> 00:28:48,000 Speaker 11: cut the rates, that's going to encourage further weakness in 516 00:28:48,040 --> 00:28:53,200 Speaker 11: the currency going forward. On the side in favoring cutting rates, 517 00:28:53,240 --> 00:28:55,120 Speaker 11: obviously you've got the economic growth. 518 00:28:55,160 --> 00:28:56,200 Speaker 1: Now, you know, the. 519 00:28:56,200 --> 00:28:59,880 Speaker 11: Economy is ticking over well over two percent growth does 520 00:29:00,120 --> 00:29:02,880 Speaker 11: seemed too bad for many economies. I think Japan would 521 00:29:03,200 --> 00:29:06,080 Speaker 11: jump at those kind of figures. But if you look 522 00:29:06,080 --> 00:29:09,600 Speaker 11: at the trend of Korean growth for the economy over 523 00:29:09,600 --> 00:29:12,760 Speaker 11: the last ten years, it's usually around two point six percent. 524 00:29:12,800 --> 00:29:14,600 Speaker 11: That's been the average over the last ten years. If 525 00:29:14,600 --> 00:29:17,480 Speaker 11: you go back to twenty ten, it's like averaging three 526 00:29:17,520 --> 00:29:20,840 Speaker 11: point one percent. So it's looking a bit anemic. And 527 00:29:21,200 --> 00:29:24,440 Speaker 11: one of the key things here is that the Korean 528 00:29:24,520 --> 00:29:30,640 Speaker 11: economy is very, very reliant upon export performance. You know, 529 00:29:30,680 --> 00:29:34,520 Speaker 11: we're talking exports. So the equivalent of forty percent of 530 00:29:34,640 --> 00:29:38,280 Speaker 11: GDP in South Korea. Now look over the over in 531 00:29:38,360 --> 00:29:41,800 Speaker 11: Japan and the figures closer to twenty percent, which speaks 532 00:29:41,800 --> 00:29:44,400 Speaker 11: to a kind of broader economy that they have over 533 00:29:44,480 --> 00:29:48,440 Speaker 11: in Tokyo. So for South Korea. You know what happens 534 00:29:48,440 --> 00:29:52,520 Speaker 11: to the exports going down the line, and you know 535 00:29:52,560 --> 00:29:57,160 Speaker 11: the policy that is implemented by Donald Trump. You know 536 00:29:57,240 --> 00:30:01,120 Speaker 11: that has key implications for growth going forward. 537 00:30:01,320 --> 00:30:05,000 Speaker 4: So protectionism obviously is a theme that mister Trump has 538 00:30:05,000 --> 00:30:07,320 Speaker 4: been touting, and it would make I would imagine a 539 00:30:07,400 --> 00:30:11,520 Speaker 4: very strong case in the future for deeper raid cuts 540 00:30:11,560 --> 00:30:13,840 Speaker 4: from the b Okay right to make up for what 541 00:30:13,880 --> 00:30:17,000 Speaker 4: you're expecting to see as a drag on exports. Do 542 00:30:17,040 --> 00:30:17,720 Speaker 4: I have that right? 543 00:30:18,080 --> 00:30:21,600 Speaker 11: That's right? So, I mean if the Trump administration were 544 00:30:21,640 --> 00:30:26,920 Speaker 11: to go ahead with your sixty percent tariffs on Chinese 545 00:30:27,360 --> 00:30:30,720 Speaker 11: goods and twenty percent blanket rate for the rest of 546 00:30:30,760 --> 00:30:33,840 Speaker 11: the world, and of course we imagine this is kind 547 00:30:33,880 --> 00:30:37,720 Speaker 11: of like your starting point for negotiation. Remember it's all 548 00:30:37,720 --> 00:30:41,840 Speaker 11: the art of the deal, right. However, if he actually 549 00:30:42,280 --> 00:30:46,960 Speaker 11: ended up coming out at that extreme, Bloomberg Economics estimates 550 00:30:47,080 --> 00:30:51,560 Speaker 11: that South Korean exports to the US would fall by 551 00:30:51,720 --> 00:30:55,640 Speaker 11: fifty five percent by twenty twenty eight. So that is 552 00:30:56,080 --> 00:31:01,400 Speaker 11: a concerning figure, as you can imagine, and that's also 553 00:31:01,520 --> 00:31:06,240 Speaker 11: leading into Bloomberg Economics predicting more rate cuts now that 554 00:31:06,560 --> 00:31:09,920 Speaker 11: Donald Trump has been voted in they're seeing four cuts 555 00:31:09,960 --> 00:31:12,720 Speaker 11: in twenty twenty five and another one to follow up 556 00:31:12,800 --> 00:31:14,320 Speaker 11: in early twenty twenty six. 557 00:31:14,400 --> 00:31:16,520 Speaker 4: So you mentioned the behavior of the currency, and I 558 00:31:16,560 --> 00:31:20,520 Speaker 4: have to ask, because I know the BOKA monitors the 559 00:31:20,520 --> 00:31:23,960 Speaker 4: financial system quite closely in South Korea, how is that 560 00:31:24,080 --> 00:31:26,520 Speaker 4: holding up? I mean, has there been volatility right now, 561 00:31:26,560 --> 00:31:30,400 Speaker 4: particularly since the US election or are things fairly stable? 562 00:31:30,800 --> 00:31:31,000 Speaker 8: No? 563 00:31:31,000 --> 00:31:34,440 Speaker 11: No, we have had quite a lot of high volatility. 564 00:31:35,200 --> 00:31:38,440 Speaker 11: We're around close to this one thousand, four hundred mark 565 00:31:38,520 --> 00:31:42,840 Speaker 11: the Korean one to the dollar. That scene as kind 566 00:31:42,840 --> 00:31:45,440 Speaker 11: of it's not exactly a line in the sand, but 567 00:31:45,520 --> 00:31:48,520 Speaker 11: it's certainly seen as a very weak level. I think 568 00:31:48,560 --> 00:31:52,080 Speaker 11: back in twenty twenty two we got up to four 569 00:31:52,120 --> 00:31:56,040 Speaker 11: hundred and fifty, so any moves in that direction will 570 00:31:56,080 --> 00:32:00,640 Speaker 11: be a cause of concern. And of course Korea does 571 00:32:00,800 --> 00:32:04,480 Speaker 11: tend to dip into the market to try and smooth 572 00:32:04,520 --> 00:32:08,840 Speaker 11: over movements in the currency. Does spend billions of dollars 573 00:32:09,160 --> 00:32:14,320 Speaker 11: doing this, and recently it was added to the US 574 00:32:14,400 --> 00:32:18,440 Speaker 11: Treasury's monitoring list for special attention in terms of its 575 00:32:18,520 --> 00:32:19,480 Speaker 11: currency policy. 576 00:32:20,000 --> 00:32:22,520 Speaker 4: Paul, thanks so much for your time. That's Paul Jackson, 577 00:32:22,640 --> 00:32:26,320 Speaker 4: Asia Eco, guv editor for Bloomberg News. Joining us from Tokyo. 578 00:32:26,920 --> 00:32:30,520 Speaker 4: We move next to global trade. As President electromp builds 579 00:32:30,520 --> 00:32:33,640 Speaker 4: out his cabinet, there are questions as to whether or 580 00:32:33,720 --> 00:32:36,080 Speaker 4: not he will make good on his campaign promise for 581 00:32:36,120 --> 00:32:40,880 Speaker 4: those sweeping tariffs, specifically those targeting China. We are joined 582 00:32:40,920 --> 00:32:45,000 Speaker 4: now by Katherine Thorbeck, tech columnist for Bloomberg Opinion. She 583 00:32:45,120 --> 00:32:48,440 Speaker 4: joins us from our studios in Tokyo. Catherine, you write 584 00:32:48,440 --> 00:32:53,240 Speaker 4: that Trump's policies will only strengthen Beijing's push for self sufficiency. 585 00:32:53,560 --> 00:32:57,080 Speaker 4: When I read that, I immediately thought, semiconductors. Is that 586 00:32:57,120 --> 00:32:58,280 Speaker 4: what you're alluding to. 587 00:32:58,680 --> 00:33:01,320 Speaker 1: So semiconductors is sort of a big part of this, 588 00:33:01,440 --> 00:33:04,440 Speaker 1: and I think that's probably the strongest argument from the 589 00:33:04,520 --> 00:33:07,000 Speaker 1: US side, that you know, China won't be able to 590 00:33:07,000 --> 00:33:09,080 Speaker 1: get ahead. But at the same time, I think, you know, 591 00:33:09,120 --> 00:33:12,200 Speaker 1: there was new research from my Bloomberg Economics and Bloomberg 592 00:33:12,280 --> 00:33:14,920 Speaker 1: Intelligence colleagues that came out last month that said, you know, 593 00:33:15,360 --> 00:33:18,800 Speaker 1: despite years of sanctions and export controls and all of 594 00:33:18,800 --> 00:33:21,040 Speaker 1: these US efforts to sort of hold China back, it's 595 00:33:21,080 --> 00:33:24,320 Speaker 1: still made pretty good headway in terms of sort of 596 00:33:24,360 --> 00:33:27,240 Speaker 1: dominating industries of the future and sort of leading the 597 00:33:27,320 --> 00:33:30,160 Speaker 1: US in the tech race. It's still behind in some areas, 598 00:33:30,160 --> 00:33:32,880 Speaker 1: but it's it's made some significant gains and other sort 599 00:33:32,880 --> 00:33:35,880 Speaker 1: of strategic areas. And I think chips, whether it can 600 00:33:35,920 --> 00:33:38,640 Speaker 1: catch up in chips will sort of ultimately decide if 601 00:33:38,680 --> 00:33:41,640 Speaker 1: it does come out ahead. But I think right now, 602 00:33:41,680 --> 00:33:44,000 Speaker 1: the US I think historically has had a sort of 603 00:33:44,000 --> 00:33:47,440 Speaker 1: tendency to underestimate China, and I worry that when it 604 00:33:47,480 --> 00:33:50,520 Speaker 1: comes to the current you know, battle for tech supremacy, 605 00:33:51,080 --> 00:33:53,120 Speaker 1: that's that's not a good thing to do at this juncture. 606 00:33:53,240 --> 00:33:55,120 Speaker 4: So what do we know about the extent to which 607 00:33:55,400 --> 00:34:00,120 Speaker 4: President Chi jinping has been allocating resources to a lot 608 00:34:00,120 --> 00:34:03,200 Speaker 4: of these industries, whether it's semiconductors or anything that may 609 00:34:03,200 --> 00:34:05,960 Speaker 4: be kind of connected to that ecosystem. 610 00:34:06,280 --> 00:34:08,800 Speaker 1: So I think when Xi jinping has signaled that something 611 00:34:08,880 --> 00:34:11,439 Speaker 1: is a strategic priority for the country, he really has 612 00:34:11,480 --> 00:34:13,840 Speaker 1: the power to sort of move a lot of levers 613 00:34:13,920 --> 00:34:17,319 Speaker 1: to you know, to boost these industries. And I think 614 00:34:17,520 --> 00:34:19,400 Speaker 1: how the US plays into this and and sort of 615 00:34:19,400 --> 00:34:22,480 Speaker 1: one example is, you know, Huawei. The US really went 616 00:34:22,520 --> 00:34:25,840 Speaker 1: all out, and this started under Trump's first term to 617 00:34:25,960 --> 00:34:28,200 Speaker 1: sort of you know, strangle Huawei and make sure that 618 00:34:28,239 --> 00:34:30,440 Speaker 1: it doesn't get ahead, and there was a point when 619 00:34:30,440 --> 00:34:34,080 Speaker 1: it really seemed like Huawei was done for. But then 620 00:34:34,480 --> 00:34:38,000 Speaker 1: Xijinping and Beijing got involved and sort of use their 621 00:34:38,040 --> 00:34:40,080 Speaker 1: muscles to sort of prop up its own you know, 622 00:34:40,120 --> 00:34:43,120 Speaker 1: domestic tech giant, and now by a lot of measures, 623 00:34:43,160 --> 00:34:46,000 Speaker 1: Huawei is sort of stronger than ever. And I think 624 00:34:46,040 --> 00:34:49,000 Speaker 1: that the US should should be careful with how it 625 00:34:49,080 --> 00:34:52,800 Speaker 1: sort of attacks these you know, Chinese tech industries because 626 00:34:53,040 --> 00:34:55,080 Speaker 1: in some senses, it's coming back stronger. 627 00:34:55,400 --> 00:34:58,160 Speaker 4: You're going to test my memory here because as I recalled, 628 00:34:58,239 --> 00:35:01,560 Speaker 4: during the first administration, it wasn't Tuahwei, it was Zte, 629 00:35:02,040 --> 00:35:04,840 Speaker 4: and the concern was that some of this telecom equipment, 630 00:35:05,200 --> 00:35:09,000 Speaker 4: the devices that these companies manufactured, the concern was there 631 00:35:09,080 --> 00:35:13,480 Speaker 4: may have been firmware embedded in those chips that could 632 00:35:13,520 --> 00:35:19,440 Speaker 4: potentially be used by actors in China to spy on communications. 633 00:35:19,480 --> 00:35:23,520 Speaker 4: And as I also recall, the Trump administration tried to 634 00:35:23,600 --> 00:35:29,000 Speaker 4: gather other countries to think similarly about what the Chinese 635 00:35:29,040 --> 00:35:31,720 Speaker 4: may have the capability to do, and they were trying 636 00:35:31,760 --> 00:35:39,560 Speaker 4: to curtail usage of Huawei or Zte products in telcosystems globally, right. 637 00:35:39,719 --> 00:35:41,960 Speaker 1: Right, So, I think the Zte example is actually a 638 00:35:42,200 --> 00:35:47,160 Speaker 1: really interesting example specifically for Trump, because he sort of 639 00:35:47,200 --> 00:35:50,000 Speaker 1: has a history of flip flopping when it comes to 640 00:35:50,080 --> 00:35:54,480 Speaker 1: issues related to China's tech sector specifically and ZTE, for example, 641 00:35:54,560 --> 00:35:57,840 Speaker 1: you know, it faced punishments from Washington for violating sanctions, 642 00:35:58,200 --> 00:36:00,680 Speaker 1: and then Trump actually tried to lift those actions, and 643 00:36:00,719 --> 00:36:03,200 Speaker 1: he announced this in a tweet at one point saying 644 00:36:03,680 --> 00:36:06,040 Speaker 1: it was because too many Chinese jobs were lost, which 645 00:36:06,040 --> 00:36:07,719 Speaker 1: he he sort of faced a lot of criticism for, 646 00:36:08,640 --> 00:36:11,200 Speaker 1: and then later he said that he was actually negotiating 647 00:36:11,239 --> 00:36:14,400 Speaker 1: a broader trade deal with She and that this this 648 00:36:14,520 --> 00:36:18,960 Speaker 1: move to sort of save ZT essentially was especially reflective 649 00:36:18,960 --> 00:36:20,360 Speaker 1: of his what he said at the time was his 650 00:36:20,400 --> 00:36:23,560 Speaker 1: close personal relationship with She. So I think for Trump, 651 00:36:23,640 --> 00:36:26,359 Speaker 1: it's like he focuses a lot on sort of transactions 652 00:36:26,360 --> 00:36:29,000 Speaker 1: and deal making, and there's a lot of uncertainty when 653 00:36:29,000 --> 00:36:30,879 Speaker 1: it comes to, you know, what he will actually do 654 00:36:31,520 --> 00:36:33,279 Speaker 1: and sort of going off that. I think another sort 655 00:36:33,320 --> 00:36:35,839 Speaker 1: of more recent high profile u turn that we've seen 656 00:36:35,880 --> 00:36:38,680 Speaker 1: Trump do when it comes to Chinese tech is on TikTok, 657 00:36:39,200 --> 00:36:41,880 Speaker 1: which you know, he initially in his first term sort 658 00:36:41,920 --> 00:36:44,320 Speaker 1: of spearheaded a lot of the scrutiny on TikTok in Washington. 659 00:36:44,360 --> 00:36:46,759 Speaker 1: You know, he signed an executive order that would ban 660 00:36:46,880 --> 00:36:50,120 Speaker 1: it in the US because of these perceived national security 661 00:36:50,120 --> 00:36:52,960 Speaker 1: concerns over its parent company being a Chinese parent company, 662 00:36:53,000 --> 00:36:55,600 Speaker 1: Bye Dance, And he sort of tried to broker a 663 00:36:55,680 --> 00:36:58,440 Speaker 1: sale of TikTok in the US and that ultimately didn't 664 00:36:58,440 --> 00:37:01,040 Speaker 1: go through and his executive orders didn't hold up in court. 665 00:37:01,160 --> 00:37:03,600 Speaker 1: But you know, if you flash forward to two earlier 666 00:37:03,640 --> 00:37:07,920 Speaker 1: this year, President Biden actually signed legislation that would once 667 00:37:07,960 --> 00:37:10,960 Speaker 1: again force TikTok to divest from its Chinese parent company 668 00:37:11,040 --> 00:37:13,840 Speaker 1: or face a US ban. And then on the campaign trail, 669 00:37:14,040 --> 00:37:17,319 Speaker 1: Trump posted a video to his True social platform where 670 00:37:17,320 --> 00:37:19,560 Speaker 1: he said, you know, if you want to save TikTok 671 00:37:19,560 --> 00:37:21,279 Speaker 1: in the US, you should vote for me. So he 672 00:37:21,360 --> 00:37:24,640 Speaker 1: really campaigned on actually saving TikTok, which is a little 673 00:37:24,680 --> 00:37:27,399 Speaker 1: bit confusing, but at the same time it's it sort 674 00:37:27,440 --> 00:37:30,000 Speaker 1: of shows this tendency of him to sort of flip flop. 675 00:37:30,040 --> 00:37:33,719 Speaker 1: And I think it's interesting because you know, he historically 676 00:37:33,760 --> 00:37:37,319 Speaker 1: hasn't necessarily been a huge national security hawk when it 677 00:37:37,320 --> 00:37:39,759 Speaker 1: comes to China. You know, he campaigned a lot on 678 00:37:39,800 --> 00:37:41,760 Speaker 1: the economy and on sort of you know, the prices 679 00:37:41,760 --> 00:37:45,720 Speaker 1: that Americans are feeling. But he's surrounded himself in his cabinet, 680 00:37:45,800 --> 00:37:48,040 Speaker 1: or it seems like he's surrounding himself with some real 681 00:37:48,440 --> 00:37:51,120 Speaker 1: sort of China security hawks, you know, from Marco Rubio 682 00:37:51,160 --> 00:37:54,520 Speaker 1: to Mike Walls. So it's going to be interesting to 683 00:37:54,520 --> 00:37:56,920 Speaker 1: see how this plays out if he can, you know, 684 00:37:57,400 --> 00:38:00,040 Speaker 1: sort of bring his art of the deal making to this, 685 00:38:00,160 --> 00:38:03,239 Speaker 1: you know, US technology at US China Tech race what 686 00:38:03,360 --> 00:38:05,840 Speaker 1: sort of ends up on the negotiating table and what 687 00:38:06,000 --> 00:38:07,440 Speaker 1: sort of becomes bargaining chips. 688 00:38:07,680 --> 00:38:10,160 Speaker 4: Catherine, I appreciate you taking the time to chat with us. 689 00:38:10,400 --> 00:38:14,120 Speaker 4: Katherine Thorbeck is Bloomberg Opinion columnists, joining us from our 690 00:38:14,160 --> 00:38:17,080 Speaker 4: studios in Tokyo. You can read her work and other 691 00:38:17,120 --> 00:38:20,600 Speaker 4: stories from Bloomberg Opinion at Bloomberg dot com, slash Opinion, 692 00:38:20,960 --> 00:38:24,160 Speaker 4: or on the terminal by typing opin than the Green 693 00:38:24,239 --> 00:38:27,160 Speaker 4: go Key. I'm Doug Krisner. You can catch us weekdays 694 00:38:27,239 --> 00:38:31,080 Speaker 4: for the Daybreak Asia podcast. You can find us on Apple, Spotify, 695 00:38:31,320 --> 00:38:36,200 Speaker 4: the Bloomberg Podcast YouTube channel, or wherever you get your podcast. Tom. 696 00:38:36,760 --> 00:38:39,040 Speaker 2: Thank you, Doug, and that does it for this edition 697 00:38:39,080 --> 00:38:41,799 Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning 698 00:38:41,800 --> 00:38:43,680 Speaker 2: at five am Wall Street Time for the latest on 699 00:38:43,760 --> 00:38:46,600 Speaker 2: markets overseas and the news you need to start your day. 700 00:38:47,040 --> 00:38:50,000 Speaker 2: I'm Tom Buzby. Stay with US. Top stories and global 701 00:38:50,000 --> 00:38:52,960 Speaker 2: business headlines are coming up right now.