1 00:00:02,520 --> 00:00:05,480 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:05,519 --> 00:00:08,320 Speaker 1: top stories in the coming week from our Daybreak anchors 3 00:00:08,400 --> 00:00:11,400 Speaker 1: all around the world. Straight ahead on the program, more 4 00:00:11,480 --> 00:00:14,000 Speaker 1: bank earnings and there could be some surprises. 5 00:00:14,480 --> 00:00:18,160 Speaker 2: I'm deg Chrisner. After three decades of deflation in Japan, 6 00:00:18,640 --> 00:00:20,720 Speaker 2: we look at the flip side inflation. 7 00:00:21,040 --> 00:00:24,040 Speaker 3: I'm Kaylee Lines in Washington, where the Senate Judiciary Committee 8 00:00:24,120 --> 00:00:26,759 Speaker 3: is getting such a vote on a Supreme Court ethics bill. 9 00:00:26,960 --> 00:00:29,560 Speaker 4: I'm Stephen Carolyn London. We're looking ahead to the general 10 00:00:29,600 --> 00:00:33,880 Speaker 4: election in Spain and the challenges facing Prime Minister Pedro Sanchez. 11 00:00:35,440 --> 00:00:39,440 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:39,479 --> 00:00:42,959 Speaker 5: Eleve them three on New York Bloomberg ninety nine to one, Washington, 13 00:00:43,040 --> 00:00:46,720 Speaker 5: d C, Bloomberg one O six one, Boston, Bloomberg nine sixty, 14 00:00:46,840 --> 00:00:51,400 Speaker 5: San Francisco, DAB Digital Radio, London, Sirius XM one nineteen 15 00:00:51,600 --> 00:00:54,360 Speaker 5: and around the world on Bloomberg Radio, dot com and 16 00:00:54,480 --> 00:00:56,320 Speaker 5: via the Bloomberg Business app. 17 00:01:00,120 --> 00:01:00,200 Speaker 4: You. 18 00:01:00,240 --> 00:01:02,720 Speaker 1: I'm Amy Morris in Washington. We spent most of the 19 00:01:02,760 --> 00:01:05,840 Speaker 1: past week focusing on inflation and the economy, but now 20 00:01:05,880 --> 00:01:08,880 Speaker 1: we're turning our attention to bank earnings with a kickoff 21 00:01:09,000 --> 00:01:11,920 Speaker 1: of the second quarter reporting season. Joining me now to 22 00:01:11,959 --> 00:01:14,160 Speaker 1: talk about all of this is Alison Williams. She's our 23 00:01:14,200 --> 00:01:17,959 Speaker 1: global senior bank analyst for Bloomberg Intelligence and Alison, it 24 00:01:18,000 --> 00:01:20,520 Speaker 1: has been quite a week. We had JP Morgan, Chase, 25 00:01:20,560 --> 00:01:24,080 Speaker 1: Wells Fargo, City Group reporting, as we've been talking about, 26 00:01:24,440 --> 00:01:26,760 Speaker 1: and there's a we have been waiting now on the 27 00:01:26,760 --> 00:01:30,119 Speaker 1: next wave. Bank of America, Morgan Stanley, Charles Schwab will 28 00:01:30,120 --> 00:01:33,560 Speaker 1: be reporting on Tuesday, Goldman Sachs, m and T Bank, 29 00:01:33,680 --> 00:01:37,560 Speaker 1: US Bank Corporate others on Wednesday. Let's start with JP Morgan. 30 00:01:37,640 --> 00:01:40,480 Speaker 1: That was some record revenue, just your initial reaction. 31 00:01:40,880 --> 00:01:43,840 Speaker 6: So it was a very strong quarter at JP Morgan, 32 00:01:44,000 --> 00:01:47,760 Speaker 6: especially the return on tangible equity of twenty five percent 33 00:01:48,600 --> 00:01:51,920 Speaker 6: very impressive, and a few things happening there. First of all, 34 00:01:51,960 --> 00:01:55,160 Speaker 6: the net interest income coming in much better than expected 35 00:01:55,760 --> 00:02:00,200 Speaker 6: and the bank increasing their guidance for the year that 36 00:02:00,280 --> 00:02:04,520 Speaker 6: we think that's going to fuel higher revenue and EPs estimates, 37 00:02:04,920 --> 00:02:08,800 Speaker 6: and in fact we did get relatively resilient net interest 38 00:02:08,880 --> 00:02:13,320 Speaker 6: income across JP Morgan, Wells Fargo and City Group. Wells 39 00:02:13,360 --> 00:02:17,840 Speaker 6: Fargo also raising their net interest income guidance whereas City 40 00:02:17,880 --> 00:02:23,280 Speaker 6: Group has some offsets from weaker fee income. But again 41 00:02:23,320 --> 00:02:27,520 Speaker 6: focusing on JP Morgan, they are they have better than 42 00:02:27,560 --> 00:02:33,880 Speaker 6: expected revenue they're trading and fees coming in a little 43 00:02:33,919 --> 00:02:41,680 Speaker 6: bit better than expected, and also on the costs stable. Lastly, 44 00:02:41,840 --> 00:02:45,880 Speaker 6: on the provision side of things, they are taking reserves. 45 00:02:45,880 --> 00:02:48,040 Speaker 6: A lot of that has to do with car growth 46 00:02:48,120 --> 00:02:50,720 Speaker 6: that's been a contributor to the net interest income line, 47 00:02:51,400 --> 00:02:54,280 Speaker 6: and I get that's something that we're seeing across the bank. 48 00:02:55,200 --> 00:02:59,639 Speaker 1: How much of this is impacted by those regional bank failures, 49 00:02:59,639 --> 00:03:02,720 Speaker 1: and what I mean is the absorption or being able 50 00:03:02,720 --> 00:03:05,480 Speaker 1: to merge with them. Has that proven to be a 51 00:03:05,480 --> 00:03:08,320 Speaker 1: good deal, particularly I'm thinking with First Republic. 52 00:03:08,720 --> 00:03:13,399 Speaker 6: So JP Morgan you certainly is seeing the benefit of 53 00:03:13,680 --> 00:03:17,160 Speaker 6: that deal. But I would say that some of the 54 00:03:17,240 --> 00:03:23,440 Speaker 6: industry dynamics that came into play in March and perhaps 55 00:03:23,520 --> 00:03:27,919 Speaker 6: early April have really stabilized in terms of we are 56 00:03:27,960 --> 00:03:34,520 Speaker 6: seeing deposits migrate into higher yielding alternatives, but I think 57 00:03:35,080 --> 00:03:40,600 Speaker 6: not at a pace that investors had fears. So a 58 00:03:40,640 --> 00:03:43,640 Speaker 6: migration and not a flight, I would say with regard 59 00:03:43,720 --> 00:03:47,760 Speaker 6: to deposits, and so as the cost of those deposits 60 00:03:47,840 --> 00:03:51,240 Speaker 6: are rising, but perhaps not as great as feirit. That's 61 00:03:51,280 --> 00:03:54,240 Speaker 6: also aiding the interesting income line for these banks. 62 00:03:54,720 --> 00:03:57,440 Speaker 1: Now, I was reading on the Bloomberg terminal about trading 63 00:03:57,440 --> 00:04:00,160 Speaker 1: and investment banking had actually been down from a year go, 64 00:04:00,280 --> 00:04:03,920 Speaker 1: but still came in ahead of analysts expectations. What would 65 00:04:03,960 --> 00:04:06,240 Speaker 1: be driving all of this or is there any one 66 00:04:06,280 --> 00:04:06,920 Speaker 1: thing driving it? 67 00:04:07,960 --> 00:04:11,400 Speaker 6: So when you look at the trading and fees, they 68 00:04:11,440 --> 00:04:13,320 Speaker 6: are both down, but it is a little bit of 69 00:04:13,360 --> 00:04:17,960 Speaker 6: a tale of two cities because trading is normalizing in 70 00:04:18,000 --> 00:04:23,200 Speaker 6: a historically higher range, whereas investment banking fees are normalizing 71 00:04:23,440 --> 00:04:28,120 Speaker 6: in a weaker range, similar to pre pandemic levels. On 72 00:04:28,160 --> 00:04:32,720 Speaker 6: the trading side of things, fixed income trading is really 73 00:04:33,240 --> 00:04:36,520 Speaker 6: the story this year, but also last year as well. 74 00:04:36,800 --> 00:04:41,400 Speaker 6: There's a benefit from interest rate volatility. What we're also 75 00:04:41,480 --> 00:04:47,719 Speaker 6: seeing in this year is credit trading improving. Credit trading 76 00:04:47,760 --> 00:04:51,120 Speaker 6: was very weak last year, so to some extent, you know, 77 00:04:51,160 --> 00:04:55,000 Speaker 6: when we look at the comparisons, they are easier, but 78 00:04:55,040 --> 00:04:58,800 Speaker 6: we also did have some pretty good high yield issuance 79 00:04:58,920 --> 00:05:03,919 Speaker 6: growth that helps the secondary volumes a little bit. The 80 00:05:04,000 --> 00:05:06,599 Speaker 6: other thing that we're seeing on the just moving to 81 00:05:06,640 --> 00:05:10,159 Speaker 6: the f side of things, so high yield issuance growth 82 00:05:10,279 --> 00:05:14,880 Speaker 6: is helpful. Equity undwriting also seeing some green shoots there, 83 00:05:14,960 --> 00:05:18,960 Speaker 6: so some good growth off very weak levels, but the 84 00:05:19,120 --> 00:05:22,080 Speaker 6: M and A headwind is really overwhelming there. M and 85 00:05:22,160 --> 00:05:24,960 Speaker 6: A continue to be very strong last year, and now 86 00:05:24,960 --> 00:05:29,760 Speaker 6: we're seeing that weakness and that turning to a headwind. 87 00:05:29,880 --> 00:05:32,040 Speaker 6: And so the other trend we're seeing at banks is 88 00:05:32,120 --> 00:05:35,920 Speaker 6: that they're starting to right size, they're staffing to these 89 00:05:35,960 --> 00:05:36,799 Speaker 6: weaker levels. 90 00:05:36,880 --> 00:05:38,719 Speaker 1: Yeah, I wanted to talk about that a little bit 91 00:05:38,760 --> 00:05:42,400 Speaker 1: because when you talk about them right sizing their staffing, 92 00:05:42,920 --> 00:05:45,560 Speaker 1: the flip side of that coin. Another way of interpreting 93 00:05:45,600 --> 00:05:49,240 Speaker 1: that is they're letting people go, and maybe that bodes 94 00:05:49,360 --> 00:05:52,000 Speaker 1: poorly for the future. But it sounds like just from 95 00:05:52,000 --> 00:05:54,719 Speaker 1: what you've said, this is a trend that's a very 96 00:05:54,760 --> 00:05:57,400 Speaker 1: strong trend and that we can expect more growth. 97 00:05:58,600 --> 00:06:03,000 Speaker 6: Well, the strength is really on the trading side of things, 98 00:06:03,080 --> 00:06:06,800 Speaker 6: and again we're just looking at sort of historically high things, 99 00:06:07,080 --> 00:06:10,120 Speaker 6: you know, normalizing in a historically high range there. So 100 00:06:10,800 --> 00:06:14,000 Speaker 6: it is a little bit soft and down compared to 101 00:06:14,120 --> 00:06:16,400 Speaker 6: last year, but it's not the same weakness that we're 102 00:06:16,400 --> 00:06:20,799 Speaker 6: seeing on the investment banking fee side, and it perhaps 103 00:06:20,960 --> 00:06:24,960 Speaker 6: isn't so much a statement about things getting worse on 104 00:06:25,040 --> 00:06:29,840 Speaker 6: investment banking fees, but more that staffing levels are kind 105 00:06:29,839 --> 00:06:31,880 Speaker 6: of coming to the reality that we've seen over the 106 00:06:31,960 --> 00:06:35,360 Speaker 6: last several quarters. Keep in mind that twenty twenty one 107 00:06:35,760 --> 00:06:38,800 Speaker 6: was a record year for equities for M and A. 108 00:06:38,880 --> 00:06:42,280 Speaker 6: It was very strong. The banks were scrambling for headcount, 109 00:06:43,120 --> 00:06:46,039 Speaker 6: especially the hiring of junior bankers, and you recall the 110 00:06:46,120 --> 00:06:50,599 Speaker 6: stories about pay for junior bankers happening at that time. 111 00:06:50,760 --> 00:06:54,120 Speaker 6: So when we saw fees basically get cut in half 112 00:06:54,360 --> 00:06:59,520 Speaker 6: last year, the banks were really hesitant to reduce their 113 00:06:59,560 --> 00:07:02,960 Speaker 6: staffing to meet those lower levels. They were holding out 114 00:07:02,960 --> 00:07:06,680 Speaker 6: hope that things would really pick up in twenty twenty three, 115 00:07:07,440 --> 00:07:10,480 Speaker 6: and as of the first half, that really has not happened. 116 00:07:10,520 --> 00:07:13,000 Speaker 6: As I said, we saw some we've seen some green shoots, 117 00:07:13,920 --> 00:07:16,559 Speaker 6: but not to the level of optimism that the banks 118 00:07:16,600 --> 00:07:19,360 Speaker 6: have expected. And so it's really kind of coming to, 119 00:07:20,480 --> 00:07:24,320 Speaker 6: as I said, the reality of those lower levels. And 120 00:07:25,160 --> 00:07:27,040 Speaker 6: you know, there's some hope for the second half, but 121 00:07:27,160 --> 00:07:30,480 Speaker 6: really banks and the M and A boutiques are really 122 00:07:30,480 --> 00:07:32,880 Speaker 6: talking more about twenty twenty four at this point. 123 00:07:32,840 --> 00:07:35,800 Speaker 1: And we are talking with Alison Williams with Bloomberg Intelligence 124 00:07:35,840 --> 00:07:38,680 Speaker 1: about bank earnings. I want to shift gears just a 125 00:07:38,720 --> 00:07:41,560 Speaker 1: little bit talking about Bank of America often seen as 126 00:07:41,560 --> 00:07:44,400 Speaker 1: a bell Weather, partly because of who its clients are, 127 00:07:44,640 --> 00:07:47,400 Speaker 1: small business accounts making up the backbone of the US 128 00:07:47,520 --> 00:07:51,720 Speaker 1: economy and so many consumer clients as well. As we 129 00:07:51,800 --> 00:07:54,400 Speaker 1: watch what that bank says, what should we be looking 130 00:07:54,480 --> 00:07:57,560 Speaker 1: for if we are trying to gauge the direction of 131 00:07:57,600 --> 00:08:00,240 Speaker 1: the economy or the health or the trends of the 132 00:08:00,280 --> 00:08:01,160 Speaker 1: banking industry. 133 00:08:01,360 --> 00:08:04,360 Speaker 6: So, as you said, they are Bellweather, and we will 134 00:08:04,360 --> 00:08:08,400 Speaker 6: be looking across their businesses and their client base. But 135 00:08:08,480 --> 00:08:13,280 Speaker 6: I think the commercial and industrial lending side we may 136 00:08:13,320 --> 00:08:17,240 Speaker 6: see some weakness there. The bank has talked about the 137 00:08:17,280 --> 00:08:22,000 Speaker 6: fact that utilization rates of their commercial lines had been improving. 138 00:08:22,800 --> 00:08:26,720 Speaker 6: That means that companies are drawing down on those lines, 139 00:08:27,320 --> 00:08:30,400 Speaker 6: but that has sort of stabilized. And if we look 140 00:08:30,440 --> 00:08:34,280 Speaker 6: at the industry data, we did see that commercial industrial 141 00:08:34,320 --> 00:08:38,440 Speaker 6: loans was the area of weakness, sort of flatish leans overall. 142 00:08:38,600 --> 00:08:42,320 Speaker 6: So Bank of America will also benefit from the credit 143 00:08:42,360 --> 00:08:47,480 Speaker 6: card side of things that we're seeing from JPMorgan City 144 00:08:47,520 --> 00:08:52,040 Speaker 6: Group and Walls Bargo, but they will see that offset 145 00:08:52,440 --> 00:08:56,440 Speaker 6: in terms of the commercial industrial loans. Will also be 146 00:08:56,520 --> 00:09:00,480 Speaker 6: looking at the wealth business for Bank of America. That's 147 00:09:00,480 --> 00:09:04,400 Speaker 6: a very significant business for them, and we're going to 148 00:09:04,440 --> 00:09:09,040 Speaker 6: be watching for the deposit costs. The wealth business is 149 00:09:09,080 --> 00:09:11,559 Speaker 6: one of the more sensitive businesses in terms of the 150 00:09:11,640 --> 00:09:15,400 Speaker 6: rising cost of deposits. But there is a potential that 151 00:09:15,480 --> 00:09:19,880 Speaker 6: we could see things again leveling out and perhaps those 152 00:09:19,920 --> 00:09:23,920 Speaker 6: costs rising a little bit less than feared after some 153 00:09:24,000 --> 00:09:25,920 Speaker 6: of the increases that we saw last quarter. 154 00:09:27,120 --> 00:09:30,679 Speaker 1: Let's shift gears again. Morgan Stanley, Goldman Sachs. Those are 155 00:09:30,679 --> 00:09:33,040 Speaker 1: going to be coming up deal making important for them. 156 00:09:33,080 --> 00:09:35,720 Speaker 1: There have been those job cuts that we've already touched 157 00:09:35,720 --> 00:09:38,760 Speaker 1: on anything particular that you're going to be watching for 158 00:09:38,840 --> 00:09:40,600 Speaker 1: what we may be expecting from them. 159 00:09:41,400 --> 00:09:45,880 Speaker 6: So for Goldman Sacks, they as you point out that 160 00:09:45,960 --> 00:09:50,480 Speaker 6: the fees are weak M and A fees on the 161 00:09:50,640 --> 00:09:53,840 Speaker 6: M and A side of things, they are always by 162 00:09:53,960 --> 00:09:58,200 Speaker 6: far the revenue leader, and so that represents not just 163 00:09:58,240 --> 00:10:02,400 Speaker 6: their ranking within the M and A league tables, but 164 00:10:02,440 --> 00:10:04,800 Speaker 6: also the fact that they tend to be the lead 165 00:10:05,600 --> 00:10:08,880 Speaker 6: advisor and more profitable deals. As I said, that's a headwind. 166 00:10:08,960 --> 00:10:13,319 Speaker 6: So they will be feeling that headwind they are also 167 00:10:13,400 --> 00:10:15,240 Speaker 6: likely to see some of the some of the benefit 168 00:10:15,280 --> 00:10:17,760 Speaker 6: of the green shoots on the equity side of things. 169 00:10:18,440 --> 00:10:22,160 Speaker 6: But I think that the bank has definitely flagged a 170 00:10:22,200 --> 00:10:24,920 Speaker 6: few things to watch out for. We are going to 171 00:10:25,160 --> 00:10:29,960 Speaker 6: likely see more impairments on some of their real estate. 172 00:10:30,679 --> 00:10:32,600 Speaker 6: That was that was a drag last quarter. We're going 173 00:10:32,679 --> 00:10:34,640 Speaker 6: to continue to see that a drag this quarter. 174 00:10:35,000 --> 00:10:36,960 Speaker 1: We're going to watch it with you. Alison, Thank you 175 00:10:37,040 --> 00:10:39,319 Speaker 1: so much for this insight. We are looking forward to 176 00:10:39,360 --> 00:10:42,720 Speaker 1: those earnings coming up in the week ahead. Alison Williams 177 00:10:42,720 --> 00:10:46,360 Speaker 1: a Global senior bank analyst for Bloomberg Intelligence. Now coming 178 00:10:46,440 --> 00:10:49,040 Speaker 1: up on Bloomberg day Break weekend, we are on inflation 179 00:10:49,160 --> 00:10:51,880 Speaker 1: watch when it comes to Japan. I'm Amy Morris and 180 00:10:52,000 --> 00:11:06,560 Speaker 1: this is Bloomberg. This is Bloomberg Daybreak weekend, our global 181 00:11:06,600 --> 00:11:09,240 Speaker 1: look ahead at the top stories for investors in the 182 00:11:09,240 --> 00:11:12,800 Speaker 1: coming week. I'm Amy Morris in Washington. Up later in 183 00:11:12,840 --> 00:11:16,320 Speaker 1: our program, lawmakers are considering new ethics rules for the 184 00:11:16,360 --> 00:11:21,120 Speaker 1: Supreme Court. But how much authority does Congress have? But first, 185 00:11:21,200 --> 00:11:25,040 Speaker 1: investors are watching for more signs of inflation in Asia. 186 00:11:25,160 --> 00:11:27,880 Speaker 1: We're watching for key data from Japan this coming week 187 00:11:28,240 --> 00:11:30,880 Speaker 1: and for more we go to Bloomberg Daybreak Asia host 188 00:11:31,040 --> 00:11:32,800 Speaker 1: Doug Krisner Doug Amy. 189 00:11:32,840 --> 00:11:35,640 Speaker 2: Perhaps no other major economy in the world has had 190 00:11:35,679 --> 00:11:39,559 Speaker 2: to deal with the deflation problem like Japan. It's persisted 191 00:11:39,920 --> 00:11:43,520 Speaker 2: for three decades, but within the last year, price pressures 192 00:11:43,559 --> 00:11:45,959 Speaker 2: have been building and it's creating a unique challenge for 193 00:11:46,040 --> 00:11:48,520 Speaker 2: the Bank of Japan. Joining me now for a closer 194 00:11:48,520 --> 00:11:51,400 Speaker 2: look is Bloomberg's Paul Jackson. He is based in Tokyo 195 00:11:51,520 --> 00:11:55,120 Speaker 2: and he covers the governments and economies of both Japan 196 00:11:55,160 --> 00:11:57,959 Speaker 2: and South Korea. Paul, it's a pleasure to have you here, 197 00:11:58,040 --> 00:12:00,439 Speaker 2: and I'm going to begin with the inflation data that 198 00:12:00,480 --> 00:12:03,040 Speaker 2: we are expecting in the coming week. Just fill us 199 00:12:03,080 --> 00:12:06,000 Speaker 2: in on what the markets are forecasting right now and 200 00:12:06,000 --> 00:12:07,199 Speaker 2: what economist's saying. 201 00:12:08,320 --> 00:12:12,439 Speaker 7: Well, I think we're expecting CPI to stay firm around 202 00:12:12,559 --> 00:12:16,600 Speaker 7: three point two percent for June. Now, that might not 203 00:12:16,760 --> 00:12:20,600 Speaker 7: sound that high by international standards, but for Japan, after 204 00:12:20,640 --> 00:12:24,360 Speaker 7: all these decades of deflation, that is high. And it's 205 00:12:24,400 --> 00:12:29,439 Speaker 7: been above two percent since April twenty twenty two. So 206 00:12:29,520 --> 00:12:32,719 Speaker 7: people are asking, you know, just when is the BOCHA 207 00:12:33,679 --> 00:12:36,000 Speaker 7: going to change policy? You know, we see a lot 208 00:12:36,000 --> 00:12:39,600 Speaker 7: of data that suggests that finally we are close to 209 00:12:39,840 --> 00:12:43,920 Speaker 7: some kind of movement in this price trend that has 210 00:12:43,960 --> 00:12:48,600 Speaker 7: been so sluggish over the years. We've seen, you know 211 00:12:48,679 --> 00:12:54,079 Speaker 7: BOJ survey on household expectations, that households are expecting prices 212 00:12:54,120 --> 00:12:57,800 Speaker 7: to go up at a faster rate. We saw wage growth, 213 00:12:57,840 --> 00:12:59,839 Speaker 7: which the Bank of Japan has been saying is the 214 00:13:00,080 --> 00:13:04,640 Speaker 7: very important to ensure that price is continueizing. We saw 215 00:13:04,720 --> 00:13:08,160 Speaker 7: gains of two point five percent in the most recent data. 216 00:13:08,440 --> 00:13:11,600 Speaker 7: Although you know, there's lots of complications to unpick that 217 00:13:11,760 --> 00:13:15,319 Speaker 7: data and suggest it's volatile and can't be totally relied upon, 218 00:13:15,760 --> 00:13:20,040 Speaker 7: but still it's a sign that things are bubbling up 219 00:13:20,640 --> 00:13:24,600 Speaker 7: and that the time for the BOJ to consider policy 220 00:13:24,679 --> 00:13:29,560 Speaker 7: change is coming upon us. And we do have a 221 00:13:29,679 --> 00:13:34,760 Speaker 7: meeting coming up later this month, which economists surveyed by 222 00:13:34,760 --> 00:13:38,680 Speaker 7: Bloomberg last month said was the most likely meeting for 223 00:13:38,920 --> 00:13:43,200 Speaker 7: any near term tweaks to BOJ policy. 224 00:13:43,440 --> 00:13:46,360 Speaker 2: I'm wondering whether there is anyone that is concerned about 225 00:13:46,360 --> 00:13:49,040 Speaker 2: the time that the BOJ is taking. I mean, you 226 00:13:49,080 --> 00:13:52,400 Speaker 2: can understand from Uwaita's point of view or any other 227 00:13:52,400 --> 00:13:56,680 Speaker 2: BOJ governor, if you've been in a deflationary environment for 228 00:13:56,720 --> 00:14:00,679 Speaker 2: three decades. You want to be very confident that inflation 229 00:14:00,800 --> 00:14:03,680 Speaker 2: has re emerged. But I'm wondering whether or not anyone 230 00:14:03,800 --> 00:14:07,319 Speaker 2: is saying this is a dangerous exercise to keep monetary 231 00:14:07,440 --> 00:14:09,880 Speaker 2: policy so accommodated for so long. 232 00:14:11,080 --> 00:14:14,560 Speaker 7: Well, of course, there's been a lot of criticism of 233 00:14:14,840 --> 00:14:19,840 Speaker 7: Japan's addiction to keeping stimulus rolling when the rest of 234 00:14:19,840 --> 00:14:23,480 Speaker 7: the world is raising rates and trying to really tackle inflation. 235 00:14:23,760 --> 00:14:26,280 Speaker 7: But I think, Doug Ive, you've honed in on the point. 236 00:14:26,320 --> 00:14:28,840 Speaker 7: You know, Japan has been in deflation for decades, so 237 00:14:29,600 --> 00:14:32,640 Speaker 7: you know Japan doesn't want to stuff it up under 238 00:14:32,680 --> 00:14:37,840 Speaker 7: the new governor Huada. Remember that Huaida was on the 239 00:14:37,960 --> 00:14:42,680 Speaker 7: board back in the early two thousands when Japan prematurely 240 00:14:42,840 --> 00:14:47,320 Speaker 7: raised interest rates and then fell back into deflation shortly afterwards, 241 00:14:47,600 --> 00:14:52,080 Speaker 7: And at that time Uada dissented from that decision. He said, 242 00:14:52,120 --> 00:14:54,880 Speaker 7: we are moving too early. So this is a guy 243 00:14:54,920 --> 00:14:58,240 Speaker 7: who does not want to see that happen again under 244 00:14:58,280 --> 00:15:00,720 Speaker 7: his watch. So he's turned out to be a little 245 00:15:00,760 --> 00:15:04,440 Speaker 7: bit more cautious than we expected. So that points to 246 00:15:04,920 --> 00:15:09,600 Speaker 7: a big change in BOJ policy coming later. The question 247 00:15:10,120 --> 00:15:13,360 Speaker 7: is will the BOJ do some kind of stop gap 248 00:15:13,520 --> 00:15:18,480 Speaker 7: measure to make its stimulus more sustainable in the meantime, 249 00:15:18,800 --> 00:15:22,320 Speaker 7: and that takes us to its control of the yield 250 00:15:22,440 --> 00:15:25,240 Speaker 7: curve and potential change for that in July. 251 00:15:25,480 --> 00:15:29,200 Speaker 2: What about changing the inflation forecast? Is that something that 252 00:15:29,240 --> 00:15:31,960 Speaker 2: the BOJ could use also to kind of help the 253 00:15:31,960 --> 00:15:33,960 Speaker 2: market understand what its intentions are. 254 00:15:34,800 --> 00:15:39,640 Speaker 7: Well, that's a very good point because Casuwdo is an economist, 255 00:15:39,720 --> 00:15:43,800 Speaker 7: spent all his career as an economist, so he wants 256 00:15:43,840 --> 00:15:48,800 Speaker 7: to have you know, data evidence to draw upon for change. Now, 257 00:15:48,880 --> 00:15:53,400 Speaker 7: I think everyone is expecting the BOJ to raise its 258 00:15:53,760 --> 00:15:58,080 Speaker 7: inflation forecast for this year because currently it says it's 259 00:15:58,120 --> 00:16:01,000 Speaker 7: only going to average one point eight percent. Now, how 260 00:16:01,040 --> 00:16:04,080 Speaker 7: is that possible when we're already you know, we're still 261 00:16:04,120 --> 00:16:07,320 Speaker 7: at three point two percent. So I think everyone thinks 262 00:16:07,320 --> 00:16:10,000 Speaker 7: he's going to go above two percent for this year. 263 00:16:10,200 --> 00:16:13,520 Speaker 7: But the thing is is the BOJ needs to see 264 00:16:13,560 --> 00:16:18,120 Speaker 7: inflation staying above two percent for a period of time, 265 00:16:18,240 --> 00:16:20,480 Speaker 7: like you know, the next two or three years. That's 266 00:16:20,640 --> 00:16:23,640 Speaker 7: when the stars are aligned for big change. 267 00:16:23,720 --> 00:16:25,840 Speaker 2: The other thing that I'm wondering about is I look 268 00:16:25,880 --> 00:16:29,840 Speaker 2: at the yen over the last week strengthened tremendously against 269 00:16:29,840 --> 00:16:34,160 Speaker 2: the dollar. How this would affect the boj's thinking, What 270 00:16:34,280 --> 00:16:35,640 Speaker 2: do you what do you think about that? 271 00:16:36,280 --> 00:16:38,320 Speaker 7: Well, of course there's been a lot of you know, 272 00:16:39,440 --> 00:16:43,480 Speaker 7: worrying concern about the end going two week and the 273 00:16:43,480 --> 00:16:46,880 Speaker 7: possibility of intervention, and then since we've seen this strengthening. 274 00:16:47,160 --> 00:16:52,640 Speaker 7: Obviously the us CPI figures, cooling has helped that. But 275 00:16:52,720 --> 00:16:56,160 Speaker 7: if you look at the differentials between ten year yields 276 00:16:56,520 --> 00:17:00,560 Speaker 7: and put that against whether dollar yen is that the 277 00:17:00,680 --> 00:17:03,920 Speaker 7: yen is definitely out of sync with where it should 278 00:17:03,960 --> 00:17:07,200 Speaker 7: be on that chart. It is a little bit stronger 279 00:17:07,760 --> 00:17:10,600 Speaker 7: than it should be. So that suggests in markets there's 280 00:17:10,640 --> 00:17:14,239 Speaker 7: a little bit of uneasiness about this July meeting, and 281 00:17:14,920 --> 00:17:17,600 Speaker 7: they're not wanting to bet that the BOJ will just 282 00:17:17,800 --> 00:17:20,199 Speaker 7: do nothing. They want to be in a better position 283 00:17:20,280 --> 00:17:24,520 Speaker 7: in case there is change. I would just caution that 284 00:17:24,600 --> 00:17:28,960 Speaker 7: if we really had people betting on change happening, we 285 00:17:29,040 --> 00:17:32,639 Speaker 7: would be seeing the BOJ having to buy bonds at 286 00:17:32,720 --> 00:17:36,440 Speaker 7: its fixed rate operations each day. We're still not quite 287 00:17:36,480 --> 00:17:40,280 Speaker 7: there yet. Although yields are very close to its zero 288 00:17:40,320 --> 00:17:42,240 Speaker 7: point five percent cap. 289 00:17:42,400 --> 00:17:45,959 Speaker 2: Isn't the BOJ somewhat trapped by the current structure of 290 00:17:46,000 --> 00:17:49,160 Speaker 2: the economy in Japan, and I'm kind of opening up 291 00:17:49,480 --> 00:17:53,640 Speaker 2: the conversation to include declining birth rates and aging populations. 292 00:17:53,640 --> 00:17:57,600 Speaker 2: So there are certain structural variables that really have not 293 00:17:57,800 --> 00:18:01,240 Speaker 2: shifted and that's only made the job a lot more difficult. 294 00:18:01,480 --> 00:18:05,560 Speaker 7: Well, it's true, I mean, in terms of the demographics 295 00:18:05,920 --> 00:18:10,160 Speaker 7: of Japan, things are not working in favor of like 296 00:18:10,640 --> 00:18:16,280 Speaker 7: a very vigorous, aggressively growing economy. Maybe at some point 297 00:18:16,480 --> 00:18:21,879 Speaker 7: Japanese policymakers just have to understand and accept that Japan's economy, 298 00:18:22,600 --> 00:18:25,399 Speaker 7: like you know, mature economies across the world, has to 299 00:18:25,480 --> 00:18:29,639 Speaker 7: accept lower levels of growth, and that Japan's levels of 300 00:18:29,680 --> 00:18:32,679 Speaker 7: growth maybe need to be at the lower end of 301 00:18:32,720 --> 00:18:33,240 Speaker 7: the scale. 302 00:18:33,359 --> 00:18:36,119 Speaker 2: In the G seven, one of the things that I 303 00:18:36,200 --> 00:18:40,159 Speaker 2: think has been critical for igniting or let's say reigniting 304 00:18:40,320 --> 00:18:43,639 Speaker 2: inflation in Japan has been the wage component that was 305 00:18:43,680 --> 00:18:47,680 Speaker 2: a long time coming. Is this being celebrated now as 306 00:18:47,720 --> 00:18:49,720 Speaker 2: a major pivotal point. 307 00:18:50,480 --> 00:18:53,800 Speaker 7: Well, I think there's still a little bit of doubt 308 00:18:53,920 --> 00:18:58,320 Speaker 7: and suspicion as to whether this will continue now. Obviously, 309 00:18:58,400 --> 00:19:01,760 Speaker 7: if you've got prices going up, it's a lot easier 310 00:19:01,800 --> 00:19:05,199 Speaker 7: for unions and workers to demand more pay and a 311 00:19:05,200 --> 00:19:10,160 Speaker 7: lot easier for executives to offer more pay and explain 312 00:19:10,200 --> 00:19:13,359 Speaker 7: it to their shareholders. So we've got a bit of 313 00:19:13,359 --> 00:19:15,760 Speaker 7: a chicken and an egg thing here. We need the 314 00:19:15,800 --> 00:19:18,720 Speaker 7: prices to go up to justify the wages, but then 315 00:19:18,760 --> 00:19:20,920 Speaker 7: the Bank of Japan saying you need the wages going 316 00:19:21,000 --> 00:19:22,560 Speaker 7: up to push up the prices. 317 00:19:22,640 --> 00:19:25,520 Speaker 2: So we've talked a lot about the macro in Japan. 318 00:19:25,960 --> 00:19:29,560 Speaker 2: Tell me how this intersects with the current political environment. 319 00:19:30,400 --> 00:19:32,960 Speaker 7: Well, in terms of the current political environment, we were 320 00:19:33,080 --> 00:19:39,040 Speaker 7: expecting an early election, with Prime Minister Fum taking advantage 321 00:19:39,080 --> 00:19:44,400 Speaker 7: of up to in popularity ratings. However, things have turned 322 00:19:44,440 --> 00:19:48,520 Speaker 7: in the other direction in the last few weeks. He's 323 00:19:48,520 --> 00:19:53,520 Speaker 7: got a problem with an identification number scheme that the 324 00:19:53,600 --> 00:19:55,920 Speaker 7: government's been trying to roll out. It's got all kinds 325 00:19:55,920 --> 00:20:00,320 Speaker 7: of technical problems and this has led to a in 326 00:20:00,400 --> 00:20:04,639 Speaker 7: his popularity. And so this means the likelihood of an 327 00:20:04,640 --> 00:20:08,159 Speaker 7: early election, certainly over the summer, has totally gone. Even 328 00:20:08,359 --> 00:20:12,240 Speaker 7: in the autumn it's looking far more doubtful. And what 329 00:20:12,320 --> 00:20:16,720 Speaker 7: this means is the boj doesn't have to worry about 330 00:20:16,960 --> 00:20:20,760 Speaker 7: getting in the way of election or ruffling markets, because 331 00:20:20,800 --> 00:20:23,720 Speaker 7: as an election going away, that factor is now taken 332 00:20:23,720 --> 00:20:27,000 Speaker 7: out of the equation, and so investors I think should 333 00:20:27,080 --> 00:20:29,960 Speaker 7: be a little bit more on guard for some kind 334 00:20:30,000 --> 00:20:34,120 Speaker 7: of stopgap measure for the boj at this coming meeting. 335 00:20:33,880 --> 00:20:36,080 Speaker 2: Paul, thank you so much for being with us. Bloomberg's 336 00:20:36,080 --> 00:20:40,080 Speaker 2: Paul Jackson. He covers the government's and economies of Japan 337 00:20:40,280 --> 00:20:43,280 Speaker 2: and South Korea. I'm Doug Prisoner. You can join Brian 338 00:20:43,320 --> 00:20:47,000 Speaker 2: Curtison and myself weekdays from Bloomberg Daybreak Asia beginning at 339 00:20:47,000 --> 00:20:51,359 Speaker 2: six am in Hong Kong, six pm on Wall Street Amy. 340 00:20:51,680 --> 00:20:54,600 Speaker 1: Thank you, Doug, and coming up on Bloomberg day Break weekend. 341 00:20:54,920 --> 00:20:57,760 Speaker 1: Senate Democrats are pushing for a set of ethics rules 342 00:20:57,800 --> 00:21:02,440 Speaker 1: for Supreme Court justices. Morris. This is Bloomberg. 343 00:21:12,000 --> 00:21:15,760 Speaker 5: Broadcasting live from the Bloomberg It a active Brokers studio 344 00:21:15,880 --> 00:21:19,040 Speaker 5: in New York. Bloomberg Elemon three oh to Washington, d C, 345 00:21:19,200 --> 00:21:22,600 Speaker 5: Bloomberg ninety nine one to Boston, Bloomberg one oh six 346 00:21:22,720 --> 00:21:26,000 Speaker 5: one to San Francisco, Bloomberg nine sixteen to the country, 347 00:21:26,080 --> 00:21:30,359 Speaker 5: Serrius XM Channel one nineteen to London DAB Digital Radio, 348 00:21:30,440 --> 00:21:33,560 Speaker 5: and around the globe the Bloomberg Business app in Bloomberg 349 00:21:33,640 --> 00:21:37,200 Speaker 5: Radio dot Com. This is Bloomberg Date Break weekend. 350 00:21:43,359 --> 00:21:46,439 Speaker 1: I'm Ammy Morris in Washington with your global look ahead 351 00:21:46,440 --> 00:21:49,080 Speaker 1: at the top stories for investors in the coming week. 352 00:21:49,480 --> 00:21:52,440 Speaker 1: Senate Democrats are pushing for a law that would essentially 353 00:21:52,480 --> 00:21:54,920 Speaker 1: set a new code of conduct for the Supreme Court. 354 00:21:55,240 --> 00:21:58,440 Speaker 1: That's after a string of controversies related to the High Court. 355 00:21:58,800 --> 00:22:00,960 Speaker 1: For more, let's head to our Bloomberg ninety nine to 356 00:22:01,000 --> 00:22:04,320 Speaker 1: one newsroom in Washington and Bloomberg Sound On co host 357 00:22:04,400 --> 00:22:06,160 Speaker 1: Kaylee Lines, Kaylee. 358 00:22:05,840 --> 00:22:09,200 Speaker 3: That's right, Amy. The Senate Judiciary Committee, led by Democratic 359 00:22:09,280 --> 00:22:12,480 Speaker 3: chairman Senator Dick Durbin, will vote this coming Thursday on 360 00:22:12,560 --> 00:22:16,080 Speaker 3: a bill that would require Supreme Court justices to adopt 361 00:22:16,119 --> 00:22:19,879 Speaker 3: a code of conduct. Let's first remind ourselves of the 362 00:22:19,920 --> 00:22:24,400 Speaker 3: reason why this push is happening, or reasons. Perhaps. Joining 363 00:22:24,440 --> 00:22:26,680 Speaker 3: me now is Greg Store, who covers the High Court 364 00:22:26,760 --> 00:22:29,840 Speaker 3: for us here at Bloomberg. So, Greg, just to start, 365 00:22:29,880 --> 00:22:32,479 Speaker 3: can you just give us a brief recap about all 366 00:22:32,480 --> 00:22:35,840 Speaker 3: of the perhaps ethically questionable information that has come to 367 00:22:35,920 --> 00:22:38,639 Speaker 3: light about certain justices in recent months. 368 00:22:38,840 --> 00:22:40,800 Speaker 8: Yeah, there's a growing list, and for all we know, 369 00:22:40,880 --> 00:22:43,480 Speaker 8: the let's make get longer by the time that they 370 00:22:43,480 --> 00:22:46,480 Speaker 8: hold this vote. The biggest stories had to do with 371 00:22:46,640 --> 00:22:50,040 Speaker 8: Justice Clarence Thomas accepting luxury travel over the course of 372 00:22:50,040 --> 00:22:52,640 Speaker 8: a couple decades from a Republican mega donor, a guy 373 00:22:52,720 --> 00:22:56,720 Speaker 8: named Harlan Crowe. There's been another revelation that Justice sam 374 00:22:56,720 --> 00:23:02,000 Speaker 8: Alito took a trip that was also funded by Republican donors. 375 00:23:02,440 --> 00:23:06,480 Speaker 8: A new story out by the Associated Press involving Justice 376 00:23:06,600 --> 00:23:11,200 Speaker 8: Sonya Sodomayor using her staff members to when she would 377 00:23:11,200 --> 00:23:16,400 Speaker 8: go out on speeches to encourage the venues to acquire 378 00:23:16,400 --> 00:23:18,680 Speaker 8: her book books so that people she could sign them 379 00:23:18,680 --> 00:23:21,560 Speaker 8: for people. So there's a kind of a panoply of 380 00:23:21,600 --> 00:23:24,760 Speaker 8: things and I'm really just kind of scraping the surface here. 381 00:23:25,119 --> 00:23:27,360 Speaker 3: Well, and that of course is on both sides, right 382 00:23:27,400 --> 00:23:30,720 Speaker 3: conservative leaning justices as well as those on the other end, 383 00:23:30,920 --> 00:23:34,280 Speaker 3: which raises the question about what ethics checks really exist 384 00:23:34,400 --> 00:23:36,399 Speaker 3: for the court. Now we've kind of learned that there 385 00:23:36,440 --> 00:23:37,400 Speaker 3: aren't many, right. 386 00:23:37,920 --> 00:23:40,720 Speaker 8: Yeah, they are not bound by any code of conduct. 387 00:23:40,880 --> 00:23:44,160 Speaker 8: They say they follow the code of conduct that applies 388 00:23:44,240 --> 00:23:48,000 Speaker 8: to lower court judges, but there's really no mechanism for 389 00:23:48,280 --> 00:23:51,080 Speaker 8: enforcing it. And that is part of the problem here 390 00:23:51,200 --> 00:23:55,159 Speaker 8: that when there are these stories that come out and 391 00:23:55,400 --> 00:23:58,119 Speaker 8: you know, people are complaining about them. There's no place 392 00:23:58,160 --> 00:24:02,400 Speaker 8: for them really to turn where an independent entity will 393 00:24:02,400 --> 00:24:04,680 Speaker 8: look at them and say either you did or did 394 00:24:04,680 --> 00:24:06,760 Speaker 8: not violate the ethics rules. 395 00:24:07,119 --> 00:24:10,040 Speaker 3: So that brings us to this legislations bill that the 396 00:24:10,119 --> 00:24:12,719 Speaker 3: Judiciary Committee is set to vote on this coming week. 397 00:24:13,080 --> 00:24:15,000 Speaker 3: What is it trying to accomplish. 398 00:24:15,800 --> 00:24:19,240 Speaker 8: It's trying to require the Court, as you said at 399 00:24:19,240 --> 00:24:22,760 Speaker 8: the beginning, to put in place a code. It's not 400 00:24:23,160 --> 00:24:26,680 Speaker 8: imposing one from the outside, because it is the idea 401 00:24:27,200 --> 00:24:29,560 Speaker 8: by the Democratic senators who are pushing it is that 402 00:24:29,800 --> 00:24:33,119 Speaker 8: the court would know best about exactly how to craft it, 403 00:24:33,160 --> 00:24:35,359 Speaker 8: and they don't want to be too intrusive, they say, 404 00:24:35,840 --> 00:24:41,240 Speaker 8: but it would require the court to have clearer disclosure rules, 405 00:24:41,280 --> 00:24:46,920 Speaker 8: clearer rules about conflicts of interests, and it would set 406 00:24:46,960 --> 00:24:50,520 Speaker 8: up an enforcement mechanism involving lower court judges so that 407 00:24:50,560 --> 00:24:52,320 Speaker 8: if there were a complaint, there would be somebody to 408 00:24:52,359 --> 00:24:52,840 Speaker 8: review that. 409 00:24:53,400 --> 00:24:55,920 Speaker 3: So I guess, really this is more about avoiding ethics 410 00:24:56,080 --> 00:24:58,720 Speaker 3: conflicts in the future than the ones of the past 411 00:24:58,760 --> 00:25:01,960 Speaker 3: that we now about, right, is that a fair characterization? 412 00:25:02,440 --> 00:25:06,240 Speaker 8: It mostly is, you know, it remains to be seen 413 00:25:07,840 --> 00:25:10,000 Speaker 8: how exactly this might apply to past things. You know, 414 00:25:10,040 --> 00:25:12,879 Speaker 8: somebody could perhaps you know, file a complaint having to 415 00:25:12,920 --> 00:25:15,199 Speaker 8: do with something that happened in the past. And of 416 00:25:15,200 --> 00:25:18,200 Speaker 8: course this is just legislation, right, awful lot of hurdles, 417 00:25:18,200 --> 00:25:20,520 Speaker 8: including the filibuster in the Senate, than the fact that 418 00:25:20,520 --> 00:25:22,080 Speaker 8: the House is controlled by Republicans. 419 00:25:22,320 --> 00:25:24,000 Speaker 3: Well, that's what I was going to ask. Next, Is 420 00:25:24,040 --> 00:25:26,000 Speaker 3: this something that it seems like it's going to get 421 00:25:26,000 --> 00:25:28,159 Speaker 3: bipartisan support at this point? 422 00:25:28,240 --> 00:25:34,639 Speaker 8: No, you know, Republicans have generally said that these complaints 423 00:25:34,680 --> 00:25:38,159 Speaker 8: about the Supreme Court, which are mostly geared towards the 424 00:25:38,240 --> 00:25:43,000 Speaker 8: more conservative justices, Republicans have generally sort of said this is, 425 00:25:43,160 --> 00:25:45,439 Speaker 8: you know, basically a proxy for complaints about the Court's 426 00:25:45,440 --> 00:25:47,840 Speaker 8: outputs in the Court, of course, has had a number 427 00:25:47,880 --> 00:25:50,480 Speaker 8: both this term and last term, a number of very big, 428 00:25:50,680 --> 00:25:54,520 Speaker 8: very conservative decisions. So it does not at this point 429 00:25:54,640 --> 00:25:57,600 Speaker 8: look as though there's going to be enough Republican support 430 00:25:57,640 --> 00:26:00,160 Speaker 8: to get it over the finish line. 431 00:26:00,440 --> 00:26:03,840 Speaker 3: I want to come back to the perhaps controversial decisions 432 00:26:04,200 --> 00:26:06,000 Speaker 3: that have been made in the last several months and 433 00:26:06,040 --> 00:26:08,359 Speaker 3: what that has done to the Court's standing on the 434 00:26:08,400 --> 00:26:10,160 Speaker 3: part of the American public. But first, if I could 435 00:26:10,200 --> 00:26:12,959 Speaker 3: just ask you one last question, around what's happening on 436 00:26:13,000 --> 00:26:15,720 Speaker 3: the Capitol hillside. It's worth noting that the Judiciary Committee 437 00:26:15,760 --> 00:26:18,800 Speaker 3: isn't just trying to vote on this legislation. They've also 438 00:26:18,840 --> 00:26:22,320 Speaker 3: been seeking information. They asked Harlan Crowe, who you mentioned, 439 00:26:22,320 --> 00:26:26,720 Speaker 3: the billionaire involved with the Clarence Thomas dealings that had 440 00:26:26,720 --> 00:26:29,359 Speaker 3: been spotlighted. They've asked him for information. He has refused 441 00:26:29,400 --> 00:26:32,320 Speaker 3: to cooperate. And I believe they've had outreach toward Chief 442 00:26:32,440 --> 00:26:35,720 Speaker 3: Justice John Roberts as well, and these efforts haven't necessarily 443 00:26:35,760 --> 00:26:36,639 Speaker 3: been fruitful. 444 00:26:37,160 --> 00:26:40,919 Speaker 8: Right, Dick Durbin, who's the chairman of the Senate Judiciary Committee, 445 00:26:41,440 --> 00:26:47,159 Speaker 8: invited John Roberts to testify. The Chief Justice declined in 446 00:26:48,040 --> 00:26:51,000 Speaker 8: a letter that really didn't even sort of acknowledge there 447 00:26:51,160 --> 00:26:53,960 Speaker 8: was an issue here. The Court did put out this 448 00:26:54,080 --> 00:26:56,919 Speaker 8: statement of ethical principles that they say they follow, but 449 00:26:57,040 --> 00:27:00,760 Speaker 8: that didn't go nearly as far as of the Court 450 00:27:00,800 --> 00:27:04,320 Speaker 8: want to. So far, the Court has not not been 451 00:27:04,359 --> 00:27:08,080 Speaker 8: willing to engage much on these issues. And you know, 452 00:27:08,119 --> 00:27:11,480 Speaker 8: one question here is the Court has also never acknowledged 453 00:27:11,480 --> 00:27:15,200 Speaker 8: that Congress has a constitutional right to impose any sorts 454 00:27:15,200 --> 00:27:19,400 Speaker 8: of ethical requirements on them. So even if this legislation 455 00:27:19,480 --> 00:27:21,800 Speaker 8: were to go forward, it's not clear that the Supreme 456 00:27:21,880 --> 00:27:24,680 Speaker 8: Court would necessarily accept it as something that's binding on them. 457 00:27:25,040 --> 00:27:29,000 Speaker 3: So the Court could rule about itself almost. 458 00:27:28,440 --> 00:27:31,439 Speaker 8: It could rule, or it could just say, and of 459 00:27:31,440 --> 00:27:36,000 Speaker 8: course these are nine individuals, say I or we are 460 00:27:36,040 --> 00:27:38,960 Speaker 8: not going to abide by this. You know, one of 461 00:27:38,960 --> 00:27:41,560 Speaker 8: the issues that John Roberts has over at the Court is, 462 00:27:43,240 --> 00:27:46,000 Speaker 8: you know, imposing putting in place a code of conduct 463 00:27:46,680 --> 00:27:48,680 Speaker 8: isn't necessarily something that can be done on a five 464 00:27:48,680 --> 00:27:50,960 Speaker 8: to four or six to three vote, like other things 465 00:27:51,000 --> 00:27:53,280 Speaker 8: that the Court does. It's the kind of thing that 466 00:27:54,119 --> 00:27:57,240 Speaker 8: probably requires buy in from everybody since you're going to 467 00:27:57,359 --> 00:28:01,240 Speaker 8: expect everybody to abide by it. So that will be 468 00:28:01,520 --> 00:28:04,240 Speaker 8: a hurdle that that you know, the Court, the Court 469 00:28:04,240 --> 00:28:05,040 Speaker 8: has to deal with. 470 00:28:05,320 --> 00:28:08,439 Speaker 3: Well, especially if some of the justices that would need 471 00:28:08,480 --> 00:28:09,879 Speaker 3: to sign on are the ones that have been in 472 00:28:09,920 --> 00:28:11,920 Speaker 3: the spotlight for some of these ethics issues and could 473 00:28:12,080 --> 00:28:15,280 Speaker 3: fear potential repercussions. So if we could just bring this 474 00:28:15,359 --> 00:28:17,800 Speaker 3: around more broadly to kind of what you were suggesting 475 00:28:17,800 --> 00:28:19,480 Speaker 3: about some of the decisions they've been made, and just 476 00:28:19,520 --> 00:28:22,439 Speaker 3: the issue of trust in the Court or faith in 477 00:28:22,480 --> 00:28:26,200 Speaker 3: the Supreme Court. Where is it standing in America right now? 478 00:28:26,560 --> 00:28:29,919 Speaker 8: Pretty darn lowe ad or near record lows. And that 479 00:28:30,040 --> 00:28:33,359 Speaker 8: is especially among Democrats, because of course Democrats are the 480 00:28:33,400 --> 00:28:36,680 Speaker 8: ones more likely to be unhappy with how the Court 481 00:28:36,720 --> 00:28:40,120 Speaker 8: has been ruling. Yeah, and you know exactly what is 482 00:28:40,160 --> 00:28:42,160 Speaker 8: causing that, and you know, the questions don't always get 483 00:28:42,160 --> 00:28:45,280 Speaker 8: into that. Undoubtedly some of it is because of the 484 00:28:45,280 --> 00:28:48,280 Speaker 8: Court's rulings. Undoubtedly some of it is because of the 485 00:28:48,280 --> 00:28:51,280 Speaker 8: the way Republicans, both in the White House and the 486 00:28:51,280 --> 00:28:54,480 Speaker 8: Senate have managed to get to get their nominees on 487 00:28:54,600 --> 00:28:58,680 Speaker 8: the Court. Of course, the you know, the well documented 488 00:28:58,760 --> 00:29:03,040 Speaker 8: Mitch McConnell's hold open of that seat before the election 489 00:29:03,120 --> 00:29:06,320 Speaker 8: that elected Donald Trump rushed to get Amy Cony Barrett 490 00:29:06,320 --> 00:29:10,360 Speaker 8: co affirmed before the last presidential election. And then we 491 00:29:10,440 --> 00:29:12,840 Speaker 8: have all these ethics issues on top of that, and 492 00:29:14,200 --> 00:29:17,320 Speaker 8: you know, it's a time where more and more people 493 00:29:17,400 --> 00:29:20,160 Speaker 8: are saying, I don't have confidence in this court. 494 00:29:20,360 --> 00:29:23,120 Speaker 3: So aside from you know, just this legislation around the 495 00:29:23,120 --> 00:29:25,320 Speaker 3: Code of Conduct, it raises a question of whether or 496 00:29:25,360 --> 00:29:28,640 Speaker 3: not we're going to have a more serious conversation about 497 00:29:28,680 --> 00:29:32,080 Speaker 3: reform to the Court in some way or another, whether 498 00:29:32,160 --> 00:29:34,600 Speaker 3: or not that means expanding it, which always isn't a 499 00:29:34,600 --> 00:29:37,360 Speaker 3: politically a popular idea or something else. 500 00:29:38,720 --> 00:29:42,040 Speaker 8: We'll continue to have that conversation, I'm sure, but the 501 00:29:42,080 --> 00:29:47,560 Speaker 8: political reality is it's not likely to happen anytime soon, 502 00:29:48,720 --> 00:29:52,320 Speaker 8: even if Democrats, like even if Joe Biden were to wholeheartedly, 503 00:29:52,600 --> 00:29:55,200 Speaker 8: you know, get on board saying I want to expand 504 00:29:55,200 --> 00:29:57,680 Speaker 8: the Supreme Court, or I want to impose term limits. 505 00:29:58,400 --> 00:30:02,480 Speaker 8: These are things that at a minimum would require legislation 506 00:30:02,600 --> 00:30:06,200 Speaker 8: that requires it has all the congressional hurdles that we 507 00:30:06,280 --> 00:30:11,480 Speaker 8: talked about earlier. And to the extent, and I think 508 00:30:11,560 --> 00:30:13,840 Speaker 8: inter large extent, this is happening, and the Supreme Court 509 00:30:13,920 --> 00:30:17,360 Speaker 8: is being looked upon as kind of a zero sum game, 510 00:30:17,440 --> 00:30:21,680 Speaker 8: as an extension of the political process. A lot of 511 00:30:21,680 --> 00:30:24,320 Speaker 8: Republicans are very happy with what the Court's been doing 512 00:30:24,360 --> 00:30:27,880 Speaker 8: on abortion, affirmive action. You know, you go down the list. 513 00:30:27,720 --> 00:30:29,760 Speaker 3: All right, So a lot of cases to look forward to, 514 00:30:29,800 --> 00:30:31,480 Speaker 3: and of course Greg Store is going to have them 515 00:30:31,520 --> 00:30:34,680 Speaker 3: all covered for us, our wonderful Supreme Court reporter here 516 00:30:34,920 --> 00:30:36,880 Speaker 3: at Bloomberg and Amy. We'll send it back to you. 517 00:30:37,040 --> 00:30:39,560 Speaker 1: Thank you, Kaylee. That was Bloomberg sound on co host 518 00:30:39,640 --> 00:30:42,560 Speaker 1: Kaylee lines reporting from our Bloomberg ninety nine to one 519 00:30:42,600 --> 00:30:46,200 Speaker 1: newsroom in Washington, and you can hear sound on weekdays 520 00:30:46,200 --> 00:30:49,920 Speaker 1: from one until three pm on Bloomberg Radio. Coming up 521 00:30:50,000 --> 00:30:53,640 Speaker 1: on Bloomberg Daybreak weekend, some big elections are coming up 522 00:30:53,680 --> 00:30:57,400 Speaker 1: in Spain. We'll tell you why we're watching so closely. Hi, 523 00:30:57,520 --> 00:31:12,120 Speaker 1: Maybe Morris, This is Bloomberg. This is Bloomberg Daybreak weekend. 524 00:31:12,280 --> 00:31:15,280 Speaker 1: Our global look ahead at the top stories for investors 525 00:31:15,320 --> 00:31:18,920 Speaker 1: in the coming week. I Amy Morris in Washington. Spain's 526 00:31:18,960 --> 00:31:21,920 Speaker 1: political parties are heading into the final week of campaigning 527 00:31:21,960 --> 00:31:25,680 Speaker 1: ahead of the general election next weekend. Outgoing Prime Minister 528 00:31:25,720 --> 00:31:29,600 Speaker 1: Pedro Sanchez is seeking reelection for his Socialist Party, but 529 00:31:29,680 --> 00:31:33,920 Speaker 1: he faces strong opposition from the Conservative People's Party. For more, 530 00:31:34,080 --> 00:31:37,080 Speaker 1: let's head to London and bring in Bloomberg Daybreak Europe 531 00:31:37,120 --> 00:31:38,200 Speaker 1: anchor Stephen Carroll. 532 00:31:38,440 --> 00:31:41,520 Speaker 4: This is a Snapsummer election called by Pedro Sanchez after 533 00:31:41,560 --> 00:31:44,000 Speaker 4: a poor showing for the Socialist Party in local and 534 00:31:44,040 --> 00:31:47,760 Speaker 4: region elections in May. The Conservative People's Party won seven 535 00:31:47,800 --> 00:31:49,720 Speaker 4: of the twelve regions that were up for grabs in 536 00:31:49,800 --> 00:31:52,440 Speaker 4: that vote. They're also leading in polls heading into this 537 00:31:52,520 --> 00:31:55,240 Speaker 4: election as well. For more, let's bring in Bloomberg's Madrid 538 00:31:55,280 --> 00:31:59,840 Speaker 4: bureau chief, Rodrigo Uruguelo Rodrigo. What was Pedro Sanchez's strategy 539 00:31:59,840 --> 00:32:02,880 Speaker 4: in calling this election now in the height of summer. 540 00:32:03,080 --> 00:32:07,920 Speaker 9: The strategy was basically that he tried to put an 541 00:32:08,080 --> 00:32:10,960 Speaker 9: end to the momentum the peep he was going to 542 00:32:11,640 --> 00:32:14,120 Speaker 9: get if he waited for six more months. They already 543 00:32:14,120 --> 00:32:17,160 Speaker 9: had the momentum from winning the election in May, and 544 00:32:17,280 --> 00:32:21,440 Speaker 9: his main concern was that if he stayed in power 545 00:32:21,480 --> 00:32:25,880 Speaker 9: for six more months with them celebrating all along those 546 00:32:26,360 --> 00:32:28,280 Speaker 9: six months, he was going to become a bit of 547 00:32:28,320 --> 00:32:31,200 Speaker 9: what Americans would call a lame duck, even though you 548 00:32:31,200 --> 00:32:32,840 Speaker 9: know it's not technically the same, but that was kind 549 00:32:32,840 --> 00:32:36,760 Speaker 9: of the impression. And also in Spain, you have to 550 00:32:36,760 --> 00:32:38,600 Speaker 9: focus on the two main parties, but also on the 551 00:32:39,560 --> 00:32:41,560 Speaker 9: junior parties on each side of what we call the 552 00:32:41,640 --> 00:32:45,520 Speaker 9: right and left blocks. And on the left of Pedro 553 00:32:45,600 --> 00:32:48,239 Speaker 9: Sanchez and the Socialist there is a key partner for him, 554 00:32:48,280 --> 00:32:51,400 Speaker 9: which is his junior partner in government, and they were 555 00:32:51,600 --> 00:32:54,520 Speaker 9: melting down and having a breakdown, and so by basically 556 00:32:54,560 --> 00:32:57,200 Speaker 9: calling a snap election, he was also telling them pull 557 00:32:57,200 --> 00:33:00,240 Speaker 9: your act together and you know, start, start, campaigning because 558 00:33:00,240 --> 00:33:01,320 Speaker 9: the election is around the corner. 559 00:33:01,400 --> 00:33:04,280 Speaker 4: What are the issues that have dominated this campaign so far. 560 00:33:04,600 --> 00:33:08,320 Speaker 9: The one issue that Pedro Sanchez was betting on dominating 561 00:33:08,360 --> 00:33:10,880 Speaker 9: the campaign in his favor was the economy, because the 562 00:33:10,880 --> 00:33:16,160 Speaker 9: Spanish economy has recovered in quite impressive form from the 563 00:33:16,200 --> 00:33:20,040 Speaker 9: COVID crisis. It has right now the lowest inflation rate 564 00:33:20,160 --> 00:33:25,680 Speaker 9: in Europe and probably the highest GDP growth rate. However, 565 00:33:26,040 --> 00:33:28,640 Speaker 9: this has not benefited him in any way. It didn't 566 00:33:28,640 --> 00:33:31,680 Speaker 9: benefit him in the May election and it's not benefiting 567 00:33:31,840 --> 00:33:36,040 Speaker 9: him now. Everybody seems to be focused on other issues. 568 00:33:36,200 --> 00:33:41,240 Speaker 9: The main one is the endless topic of regional nationalisms 569 00:33:41,280 --> 00:33:46,480 Speaker 9: in Spain, so his proximity to Catalan and Basque In 570 00:33:47,040 --> 00:33:51,120 Speaker 9: secessionists has become a big, big point of attack for 571 00:33:51,320 --> 00:33:54,760 Speaker 9: the right. And the other issue that is dominating at 572 00:33:54,840 --> 00:33:59,280 Speaker 9: a little slightly lower level are local cultural wars. 573 00:33:59,440 --> 00:34:02,200 Speaker 4: Well, let's talk about the main challenger then to Pedro Sanchez. 574 00:34:02,200 --> 00:34:04,959 Speaker 4: This is the leader of the People's Party, Alberto Nunez Fejo. 575 00:34:05,480 --> 00:34:07,880 Speaker 4: He's the key figure to watch in this election. What 576 00:34:07,880 --> 00:34:08,640 Speaker 4: do we know about him? 577 00:34:09,000 --> 00:34:13,719 Speaker 9: The PP has traditionally been a broad church for the right. 578 00:34:13,920 --> 00:34:19,960 Speaker 9: They included everything from centrist liberals to extreme right conservatives, 579 00:34:20,160 --> 00:34:25,040 Speaker 9: and Faiho has always been rather ambiguous in where he stands, 580 00:34:25,360 --> 00:34:28,880 Speaker 9: but the general consensus is that he is more towards 581 00:34:28,960 --> 00:34:32,920 Speaker 9: the center than to the extreme right. But he can 582 00:34:32,960 --> 00:34:38,960 Speaker 9: also play to both extremes. That is his strongest strength. 583 00:34:39,600 --> 00:34:43,160 Speaker 9: He ruled his region, which is Galicia in the northwest, 584 00:34:43,200 --> 00:34:46,800 Speaker 9: for twelve years, and as years went by he gained 585 00:34:46,840 --> 00:34:50,200 Speaker 9: more and more power and clout over the region. He 586 00:34:50,360 --> 00:34:54,719 Speaker 9: was quiet. He was rather protected and shielded from some 587 00:34:54,760 --> 00:34:58,040 Speaker 9: of the scrutiny that you get from the national stage. 588 00:34:58,520 --> 00:35:02,840 Speaker 9: There's not much of a critical media establishment in Galicia. 589 00:35:03,120 --> 00:35:06,399 Speaker 9: He didn't have much of a position, and interestingly enough, 590 00:35:06,440 --> 00:35:11,200 Speaker 9: he also managed to put to bed the local nationalist movement, 591 00:35:11,360 --> 00:35:15,080 Speaker 9: regional nationalist movement, which was the pro Galician independence movement. 592 00:35:15,200 --> 00:35:18,799 Speaker 9: He has been quite skillful at keeping them at bay. 593 00:35:18,920 --> 00:35:21,000 Speaker 4: Okay, well, it sounds like a very interesting last week 594 00:35:21,040 --> 00:35:23,719 Speaker 4: of campaigning there in Spain ahead of the vote on 595 00:35:23,800 --> 00:35:27,400 Speaker 4: the twenty third of July. Thank you so much to 596 00:35:27,400 --> 00:35:29,720 Speaker 4: Bloomberg's Rodrigo Aurguela in Madrid. 597 00:35:29,719 --> 00:35:29,919 Speaker 5: There. 598 00:35:29,960 --> 00:35:32,600 Speaker 4: I'm Stephen Carolyn London. You can catch us every weekday 599 00:35:32,600 --> 00:35:34,879 Speaker 4: morning here for Bloomberg Daybreak here at beginning at six 600 00:35:34,880 --> 00:35:37,560 Speaker 4: am in London and one am on Wall Street. 601 00:35:37,920 --> 00:35:40,200 Speaker 1: Thank you, Steven, and that does it for this edition 602 00:35:40,280 --> 00:35:43,440 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 603 00:35:43,480 --> 00:35:45,880 Speaker 1: at five am Wall Street time for the latest on 604 00:35:46,000 --> 00:35:49,279 Speaker 1: markets overseas and the news you need to start your day. 605 00:35:49,680 --> 00:35:52,319 Speaker 1: I n Amy Morris stay with us. Top stories and 606 00:35:52,480 --> 00:35:56,440 Speaker 1: global business headlines are coming up right now.