1 00:00:02,440 --> 00:00:04,960 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,000 --> 00:00:07,120 Speaker 1: the top stories in the coming week from our day 3 00:00:07,160 --> 00:00:09,920 Speaker 1: Break anchors all around the world, and straight ahead on 4 00:00:09,960 --> 00:00:13,760 Speaker 1: the program. Fetchair. J Powell Headstick Capitol Hill. I'm Tom 5 00:00:13,800 --> 00:00:14,800 Speaker 1: Busby in New York. 6 00:00:14,840 --> 00:00:18,160 Speaker 2: I'm Gaily Liones in Washington, where Federal Reserve nominees will 7 00:00:18,160 --> 00:00:20,360 Speaker 2: be appearing in a Senate hearing next week. 8 00:00:20,440 --> 00:00:22,800 Speaker 3: I'm Caroline Hetkee here in London, where we're looking at 9 00:00:22,800 --> 00:00:26,520 Speaker 3: the Bank of England's unenviable position at the June rate 10 00:00:26,640 --> 00:00:27,400 Speaker 3: setting meeting. 11 00:00:27,640 --> 00:00:31,040 Speaker 4: I'm Doug Christner. Prime Minister Narin Bermodi comes to the US. 12 00:00:31,120 --> 00:00:34,720 Speaker 4: We look at the complicated relationship between the US and India. 13 00:00:35,440 --> 00:00:39,440 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 14 00:00:39,479 --> 00:00:43,280 Speaker 5: Eleve Them three own New York, Bloomberg ninety nine to one, Washington, DC, 15 00:00:43,600 --> 00:00:47,640 Speaker 5: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 16 00:00:47,880 --> 00:00:52,080 Speaker 5: DAB Digital Radio, London, Sirius XM one nineteen and around 17 00:00:52,159 --> 00:00:54,800 Speaker 5: the world on Bloomberg Radio dot Com and via the 18 00:00:54,840 --> 00:00:56,040 Speaker 5: Bloomberg Business App. 19 00:01:00,200 --> 00:01:02,480 Speaker 1: Good day to you. I'm Tom Busby. We begin today's 20 00:01:02,520 --> 00:01:06,120 Speaker 1: program with the Federal Reserve, which paused its string of 21 00:01:06,160 --> 00:01:09,880 Speaker 1: interest rate hikes this past week after ten rate increases 22 00:01:09,880 --> 00:01:13,800 Speaker 1: in as many beatings, but policymakers signaled two more rate 23 00:01:13,840 --> 00:01:16,520 Speaker 1: hikes may be coming this year and that rate cuts 24 00:01:16,959 --> 00:01:19,319 Speaker 1: are still a long way off. And this week, Vetchair 25 00:01:19,440 --> 00:01:21,720 Speaker 1: Jerome Powell heads to Capitol Hill for his semi annual 26 00:01:21,720 --> 00:01:25,200 Speaker 1: testimony to Congress on the Central Bank's monetary policy report. 27 00:01:25,720 --> 00:01:28,640 Speaker 1: For more about what's behind the Fed's latest action and 28 00:01:28,680 --> 00:01:31,520 Speaker 1: what to expect this week, we turned to Bloomberg's Global 29 00:01:31,560 --> 00:01:35,280 Speaker 1: Economics and Policy editor Michael McKee. Michael, thanks for being here. 30 00:01:35,680 --> 00:01:36,479 Speaker 6: Happy to be here. 31 00:01:37,120 --> 00:01:40,679 Speaker 1: Well, Fed policymakers would not have left rates unchanged without 32 00:01:40,680 --> 00:01:45,520 Speaker 1: good reasons, encouraging economic data about jobs or retail spending, inflation, housing, 33 00:01:46,040 --> 00:01:50,480 Speaker 1: energy prices. So what will we be watching for Chairman 34 00:01:50,560 --> 00:01:51,520 Speaker 1: pal to say this week? 35 00:01:51,840 --> 00:01:55,000 Speaker 6: I think people will want to know how serious the 36 00:01:55,040 --> 00:01:58,080 Speaker 6: Fed is about doing two more rate increases. It seems 37 00:01:58,160 --> 00:02:00,480 Speaker 6: that at least one is locked in, and that's what 38 00:02:00,520 --> 00:02:04,080 Speaker 6: the markets are pricing. The dot plot suggested they would 39 00:02:04,120 --> 00:02:08,080 Speaker 6: do too. What would it take for the Fed to 40 00:02:08,160 --> 00:02:14,040 Speaker 6: decide it needed to raise another fifty basis points? Inflation 41 00:02:14,400 --> 00:02:18,040 Speaker 6: going the wrong way. Is it inflation not moving, Is 42 00:02:18,080 --> 00:02:21,080 Speaker 6: it some sign that the economy is collapsing? What are 43 00:02:21,120 --> 00:02:21,799 Speaker 6: they looking for? 44 00:02:22,560 --> 00:02:26,000 Speaker 1: But we have seen good data. We have seen jobs 45 00:02:26,120 --> 00:02:29,040 Speaker 1: a little uneven there, but the inflation some of the 46 00:02:29,120 --> 00:02:32,440 Speaker 1: key inflation statistics that they look at, those metrics have 47 00:02:32,480 --> 00:02:36,560 Speaker 1: been pretty good. Housing prices have gone down, energy prices 48 00:02:36,560 --> 00:02:40,120 Speaker 1: have stabilized, even declined a little bit. Retail spending we 49 00:02:40,200 --> 00:02:42,160 Speaker 1: got a real surprise for may Well. 50 00:02:42,200 --> 00:02:44,640 Speaker 6: It looks like the economy is doing what the Fed wants. 51 00:02:44,720 --> 00:02:50,280 Speaker 6: It is slowing down gradually, and that's the scenario, the 52 00:02:50,320 --> 00:02:53,480 Speaker 6: soft landing scenario that they want to have. The question 53 00:02:53,600 --> 00:02:57,400 Speaker 6: is does it speed up its drop? Will we start 54 00:02:57,440 --> 00:02:59,919 Speaker 6: to see things fall off a cliff? So far we haven't. 55 00:03:00,240 --> 00:03:03,519 Speaker 6: As you noted that jobs numbers were still strong, even 56 00:03:03,520 --> 00:03:08,200 Speaker 6: though unemployment rose, it's still three point seven percent. And 57 00:03:09,000 --> 00:03:13,720 Speaker 6: we saw retail sales rise, which was something of a surprise. 58 00:03:13,800 --> 00:03:18,080 Speaker 6: But in each category, I think only gasoline fell, but 59 00:03:18,240 --> 00:03:21,639 Speaker 6: in each category the increases were smaller than they had 60 00:03:21,639 --> 00:03:24,680 Speaker 6: been in previous months. So it does suggest that people 61 00:03:24,760 --> 00:03:27,400 Speaker 6: are still spending, they're just not spending as much. And 62 00:03:27,440 --> 00:03:30,480 Speaker 6: that's what the whole point of the fed's tightening campaign 63 00:03:30,600 --> 00:03:32,320 Speaker 6: is about now. 64 00:03:32,360 --> 00:03:36,200 Speaker 1: This past week, Chairman Powell told reporters we shouldn't call 65 00:03:36,280 --> 00:03:39,040 Speaker 1: this pause, that he just made a skip, and he 66 00:03:39,040 --> 00:03:41,560 Speaker 1: says the FED needs more time to make sure that 67 00:03:41,640 --> 00:03:43,720 Speaker 1: they made the right move. So let's listen into what 68 00:03:43,760 --> 00:03:44,760 Speaker 1: he told reporters. 69 00:03:45,360 --> 00:03:48,080 Speaker 7: We don't know the full extent of the consequences of 70 00:03:48,120 --> 00:03:51,320 Speaker 7: the banking turmoil that we've seen. It would be early 71 00:03:51,360 --> 00:03:53,040 Speaker 7: to see those, but we don't know what the extent is. 72 00:03:53,040 --> 00:03:55,320 Speaker 7: We'll have some more time to see that unfolding. It's 73 00:03:55,360 --> 00:03:57,880 Speaker 7: just the idea that we're trying to get this right. 74 00:03:58,600 --> 00:04:01,840 Speaker 7: And this is if you think of the two things 75 00:04:01,880 --> 00:04:05,040 Speaker 7: as separate variables, and I think that the skip, I 76 00:04:05,080 --> 00:04:08,400 Speaker 7: shouldn't call it a skip. The decision makes sense, all. 77 00:04:08,440 --> 00:04:11,200 Speaker 1: Right, So not a skip? Okay, Michael. Does that give 78 00:04:11,280 --> 00:04:13,080 Speaker 1: us any sense of what the FED might do at 79 00:04:13,080 --> 00:04:16,640 Speaker 1: its next meeting in July or the three remaining meetings 80 00:04:16,640 --> 00:04:17,039 Speaker 1: this year? 81 00:04:17,520 --> 00:04:21,880 Speaker 6: Well, the skip language that he accidentally used, and then 82 00:04:21,920 --> 00:04:25,560 Speaker 6: he kept saying that the July meeting is live. We're 83 00:04:25,600 --> 00:04:27,880 Speaker 6: sort of being read as signals by the markets that 84 00:04:27,920 --> 00:04:31,080 Speaker 6: the FED is planning to raise rates again at the 85 00:04:31,160 --> 00:04:35,640 Speaker 6: July twenty sixth meeting. That brings us back to what 86 00:04:35,640 --> 00:04:37,520 Speaker 6: we were talking about earlier about what does the market 87 00:04:37,560 --> 00:04:42,360 Speaker 6: want to hear in terms of the FED and what 88 00:04:42,400 --> 00:04:46,640 Speaker 6: it would take to get them to stop or to 89 00:04:46,720 --> 00:04:49,360 Speaker 6: move forward or do fifty basis points instead of twenty 90 00:04:49,360 --> 00:04:53,919 Speaker 6: five in July. The question then becomes what happens after 91 00:04:53,960 --> 00:04:57,719 Speaker 6: that when they get to September? Do they have a 92 00:04:57,880 --> 00:05:01,599 Speaker 6: rate increase in train? I guess we have to wait 93 00:05:01,640 --> 00:05:06,039 Speaker 6: and see what the data show us. And to go 94 00:05:06,160 --> 00:05:08,919 Speaker 6: back to your very first question, I'm sure that is 95 00:05:08,960 --> 00:05:10,200 Speaker 6: a line that you'll hear from j. 96 00:05:10,360 --> 00:05:10,720 Speaker 5: Powell. 97 00:05:10,839 --> 00:05:15,039 Speaker 1: Yeah, data dependent, data dependent, But even until July, we 98 00:05:15,160 --> 00:05:18,440 Speaker 1: get some pretty important data points. So what will we 99 00:05:18,440 --> 00:05:19,120 Speaker 1: get before then? 100 00:05:19,240 --> 00:05:24,719 Speaker 6: Well, we get another payrolls report the week of Friday 101 00:05:24,720 --> 00:05:28,200 Speaker 6: after July fourth, and then we get another CPI report 102 00:05:28,279 --> 00:05:32,480 Speaker 6: and another PCE inflation report. The interesting thing is between 103 00:05:32,560 --> 00:05:38,719 Speaker 6: the March and May meetings we had between them, I'm sorry, 104 00:05:38,839 --> 00:05:42,520 Speaker 6: between the March and June meetings there were two or 105 00:05:42,560 --> 00:05:47,760 Speaker 6: three CPI reports, two jobs reports. Now before July there's 106 00:05:47,839 --> 00:05:51,320 Speaker 6: only be one of each, so they will have a 107 00:05:51,560 --> 00:05:55,520 Speaker 6: less robust data set to judge how much the economy 108 00:05:55,560 --> 00:05:57,039 Speaker 6: has changed. One way or the other. 109 00:05:57,600 --> 00:06:00,200 Speaker 1: And during the summer, I mean, anything could hapen happen 110 00:06:00,320 --> 00:06:03,680 Speaker 1: with summer jobs lifting payrolls higher, but kids coming out 111 00:06:03,720 --> 00:06:04,880 Speaker 1: of school, we really can. 112 00:06:04,920 --> 00:06:07,800 Speaker 6: Well, it's interesting because of course, the the Bureau of 113 00:06:07,839 --> 00:06:11,880 Speaker 6: Labor Statistics seasonally adjusts UH to sort of take the 114 00:06:12,080 --> 00:06:15,440 Speaker 6: lumpiness out of things like summer jobs for kids or 115 00:06:15,560 --> 00:06:20,000 Speaker 6: teachers coming off the payroll because in summertime. But since 116 00:06:20,040 --> 00:06:23,800 Speaker 6: the pandemic, their seasonal adjustment efforts have been troubled. It's 117 00:06:23,960 --> 00:06:28,080 Speaker 6: it's been difficult to do. So it'll be interesting to 118 00:06:28,120 --> 00:06:31,000 Speaker 6: see what kind of numbers we get when we start 119 00:06:31,040 --> 00:06:35,120 Speaker 6: to see the June We see the June payrolls number 120 00:06:35,160 --> 00:06:38,400 Speaker 6: in July, because that's a month where the swimming pools 121 00:06:38,440 --> 00:06:41,760 Speaker 6: open up the June in June, and you know, the 122 00:06:42,279 --> 00:06:45,599 Speaker 6: the ice cream shops take on extra workers and stuff 123 00:06:45,640 --> 00:06:47,720 Speaker 6: like that. We'll see how how that all plays out. 124 00:06:47,880 --> 00:06:49,760 Speaker 1: Well, you make it sound so nice, I gotta tell you. 125 00:06:50,720 --> 00:06:53,400 Speaker 1: All right, Well, you know, let's let's go back to 126 00:06:53,520 --> 00:06:57,400 Speaker 1: the what's coming up this week Wednesday and Thursday. Chairman 127 00:06:57,440 --> 00:07:03,200 Speaker 1: Palse testimony to Congress. Now, some say that a lot 128 00:07:03,279 --> 00:07:05,920 Speaker 1: of these people on the committees have less of a 129 00:07:06,839 --> 00:07:11,280 Speaker 1: monetary agenda, more of a political agenda with the Chairman 130 00:07:11,360 --> 00:07:13,680 Speaker 1: Powell and with the Fed. But Chairman pal has been, 131 00:07:13,840 --> 00:07:16,400 Speaker 1: you know, there with a Republican president, now with the 132 00:07:16,480 --> 00:07:20,600 Speaker 1: Democratic president. He has seen it all. Let's talk about 133 00:07:20,640 --> 00:07:24,400 Speaker 1: what he can expect to hear from people like Massachusetts 134 00:07:24,400 --> 00:07:27,320 Speaker 1: Senator Elizabeth Warren on the Senate Banking Committee. She's been 135 00:07:27,400 --> 00:07:30,040 Speaker 1: very critical of the FED, very critical of the banking system, 136 00:07:30,440 --> 00:07:34,160 Speaker 1: very critical of corporations, and very critical of, you know, 137 00:07:34,280 --> 00:07:37,120 Speaker 1: the record setting profits that we've made. What can we 138 00:07:37,200 --> 00:07:39,040 Speaker 1: expect to hear from her and others like her? 139 00:07:39,520 --> 00:07:41,720 Speaker 6: Well, you know that Elizabeth Warren, and this is just 140 00:07:41,800 --> 00:07:45,320 Speaker 6: based on past performance, is going to lecture Jay Powell 141 00:07:45,440 --> 00:07:49,480 Speaker 6: on the evils of tightening too much because then people 142 00:07:49,520 --> 00:07:52,239 Speaker 6: lose their jobs, unemployment goes up to which his answer 143 00:07:52,360 --> 00:07:54,880 Speaker 6: can be, we're very sensitive to that and three point 144 00:07:54,960 --> 00:07:56,080 Speaker 6: seven percent unemployment. 145 00:07:56,160 --> 00:07:56,360 Speaker 5: Yeh. 146 00:07:56,480 --> 00:07:58,720 Speaker 6: By the way, we're not doing that to you yet, 147 00:07:59,640 --> 00:08:01,640 Speaker 6: but you could expect that from her. Others will be 148 00:08:01,760 --> 00:08:05,760 Speaker 6: talking trying to talk about the debt, the US national debt, 149 00:08:05,880 --> 00:08:09,800 Speaker 6: and the deficits and how much money we're spending. You 150 00:08:09,880 --> 00:08:12,280 Speaker 6: can expect that from the Republicans. They usually try to 151 00:08:12,320 --> 00:08:16,280 Speaker 6: get him to say that we need to have budget discipline, 152 00:08:16,640 --> 00:08:19,640 Speaker 6: and he will try to stay out of those arguments. 153 00:08:19,760 --> 00:08:22,560 Speaker 1: Ye, not my job, job as much as possible. Yes, 154 00:08:23,480 --> 00:08:25,600 Speaker 1: well let's get back to more of those failed banks, 155 00:08:26,120 --> 00:08:29,560 Speaker 1: because that's going to come up with him. It was 156 00:08:29,800 --> 00:08:32,319 Speaker 1: just starting the last time he spoke. He did this 157 00:08:33,120 --> 00:08:37,600 Speaker 1: monetary policy in March, but then it became a crisis. 158 00:08:38,559 --> 00:08:41,240 Speaker 1: But things have settled down. So how will that play in, 159 00:08:41,320 --> 00:08:43,600 Speaker 1: do you think to the testimony this week. 160 00:08:43,840 --> 00:08:46,319 Speaker 6: Well, he will repeat what he said at the press 161 00:08:46,360 --> 00:08:50,720 Speaker 6: conference this past week that the FED anticipates there will 162 00:08:50,760 --> 00:08:55,440 Speaker 6: be some credit impacts from the bank situation. And there's 163 00:08:55,440 --> 00:08:57,599 Speaker 6: certainly a lot of people out there who think that 164 00:08:57,760 --> 00:08:59,720 Speaker 6: we're going to see more banks fail and we're going 165 00:08:59,760 --> 00:09:03,400 Speaker 6: to see more problems. The data don't support that at 166 00:09:03,440 --> 00:09:07,240 Speaker 6: the moment. This is a little wonky, but everybody's been 167 00:09:07,320 --> 00:09:11,440 Speaker 6: watching this new funding lending program that the FED set 168 00:09:11,520 --> 00:09:16,640 Speaker 6: up for banks, and it's still rising, and so people 169 00:09:16,720 --> 00:09:19,520 Speaker 6: are thinking, well, the banks are still troubled, but there's 170 00:09:19,559 --> 00:09:24,880 Speaker 6: another measure that accounts for all of the banks borrowings, 171 00:09:25,000 --> 00:09:28,000 Speaker 6: not just from that, and it seems that the banks 172 00:09:28,120 --> 00:09:31,320 Speaker 6: borrowed a lot from the federal home loan banks. They're 173 00:09:31,360 --> 00:09:34,040 Speaker 6: paying those off and going to the Fed facility. So 174 00:09:34,920 --> 00:09:37,959 Speaker 6: when you look at the overall borrowing by banks, it 175 00:09:38,080 --> 00:09:41,000 Speaker 6: has come down some and it does appear that things have, 176 00:09:41,280 --> 00:09:43,720 Speaker 6: as you said, settled down quite a bit. 177 00:09:44,200 --> 00:09:48,760 Speaker 1: Got it so July again. The money right now on 178 00:09:48,840 --> 00:09:52,160 Speaker 1: Wall Street is we're looking at perhaps a twenty five 179 00:09:52,200 --> 00:09:57,280 Speaker 1: basis point increase. Yes, whispers of a fifty basis point. 180 00:09:57,400 --> 00:10:00,680 Speaker 6: Well, it's just math. They said they would do two more, which, 181 00:10:01,200 --> 00:10:04,120 Speaker 6: since they do twenty five at a time, is a 182 00:10:04,160 --> 00:10:07,120 Speaker 6: total of fifty. So you could do fifty at once. 183 00:10:07,320 --> 00:10:09,640 Speaker 6: If you figure you need to get to that level, 184 00:10:09,760 --> 00:10:12,000 Speaker 6: you might as well do it right away. But then 185 00:10:12,120 --> 00:10:14,400 Speaker 6: that begs the question of why they didn't do it 186 00:10:14,640 --> 00:10:20,160 Speaker 6: last week. So we'll see. It's more likely, given the 187 00:10:21,400 --> 00:10:24,760 Speaker 6: way Powell has framed this as an exercising caution to 188 00:10:24,920 --> 00:10:28,840 Speaker 6: see the lagged impacts of the moves they've already made 189 00:10:28,880 --> 00:10:30,920 Speaker 6: and what impact they're going to have on the economy 190 00:10:30,960 --> 00:10:34,120 Speaker 6: going forward, that they don't want to go too high, 191 00:10:34,200 --> 00:10:36,839 Speaker 6: too fast, and if they just do twenty five, that 192 00:10:37,520 --> 00:10:39,439 Speaker 6: is a cautious kind of move. 193 00:10:39,800 --> 00:10:40,120 Speaker 5: All right. 194 00:10:40,280 --> 00:10:44,160 Speaker 1: Bloomberg's Global Economic policy editor, Michael McKee. Thanks for joining 195 00:10:44,280 --> 00:10:47,040 Speaker 1: us again. Coming up on Bloomberg day Break weekend, the 196 00:10:47,120 --> 00:10:50,480 Speaker 1: Bank of England and all the political economic pressure there 197 00:10:50,679 --> 00:11:05,199 Speaker 1: Right now, I'm Tom Busby and this is Bloomberg. This 198 00:11:05,360 --> 00:11:07,680 Speaker 1: is Bloomberg day Break Weekend, our global look ahead at 199 00:11:07,720 --> 00:11:10,320 Speaker 1: the top stories for investors in the coming week. I'm 200 00:11:10,400 --> 00:11:13,120 Speaker 1: Tom Busby in New York. Up later in the program, 201 00:11:13,360 --> 00:11:16,040 Speaker 1: India's Prime Minister heads to the White House. But first, 202 00:11:16,280 --> 00:11:19,160 Speaker 1: the Bank of England out with a rate decision in 203 00:11:19,200 --> 00:11:21,440 Speaker 1: the coming week, and it hits us at a time 204 00:11:21,520 --> 00:11:25,559 Speaker 1: of continued economic and political pressure in the UK. For more, 205 00:11:25,679 --> 00:11:28,520 Speaker 1: let's head to London and bring in Bloomberg Daybreak Europe 206 00:11:28,559 --> 00:11:29,920 Speaker 1: banker Caroline Hepger. 207 00:11:30,280 --> 00:11:33,400 Speaker 3: Tom, the UK has an inflation problem. Price rises worth 208 00:11:33,440 --> 00:11:36,720 Speaker 3: a four decade high last year, and although the figures 209 00:11:36,720 --> 00:11:40,000 Speaker 3: have come down from eleven point one percent to eight 210 00:11:40,120 --> 00:11:43,480 Speaker 3: point seven percent now, it has remained stronger than the 211 00:11:43,520 --> 00:11:46,560 Speaker 3: Bank of England, and of course most economists had expected. 212 00:11:47,040 --> 00:11:49,920 Speaker 3: For more on this, I'm joined by Bloomberg's UK correspondent 213 00:11:50,040 --> 00:11:53,560 Speaker 3: Lizzie Burden. Lizzie, the Bank of England has a very 214 00:11:53,800 --> 00:11:55,440 Speaker 3: difficult job on its hands. 215 00:11:55,720 --> 00:11:58,880 Speaker 8: Yeah, we saw in that Hot jobs data. The economy 216 00:11:58,960 --> 00:12:01,600 Speaker 8: is resilient, and also saw that in the GDP data, 217 00:12:01,720 --> 00:12:04,920 Speaker 8: But the flip side is it's going to spur inflation. 218 00:12:05,080 --> 00:12:08,160 Speaker 8: So Bloomberg Economics as a result changed its call. It 219 00:12:08,280 --> 00:12:10,319 Speaker 8: did just see a rate hike in June, now it 220 00:12:10,440 --> 00:12:14,840 Speaker 8: sees one in August as well. Markets have ramped up 221 00:12:14,880 --> 00:12:17,319 Speaker 8: their bets for where the Bank of England's peak rate 222 00:12:17,400 --> 00:12:20,520 Speaker 8: will be. Increasingly it looks like six percent and it's 223 00:12:20,679 --> 00:12:23,439 Speaker 8: nearing the levels that they saw in the aftermath of 224 00:12:23,480 --> 00:12:28,080 Speaker 8: the Liztrus's mini budget. So for the June meeting on Thursday, 225 00:12:28,360 --> 00:12:31,040 Speaker 8: it's not really a question of whether they'll hike or not. 226 00:12:31,679 --> 00:12:34,040 Speaker 8: Now it's becoming a question of will it be by 227 00:12:34,080 --> 00:12:37,040 Speaker 8: a quarter point or by a half point and crucial 228 00:12:37,080 --> 00:12:39,400 Speaker 8: to that will be the latest inflation data. Yeah. 229 00:12:39,440 --> 00:12:42,559 Speaker 3: Absolutely, Well, you mentioned the growth and the labor data 230 00:12:42,640 --> 00:12:45,000 Speaker 3: that we've had out in the last few days. So 231 00:12:45,120 --> 00:12:48,880 Speaker 3: the UK's finally joined other G seven economies in regaining 232 00:12:48,920 --> 00:12:51,480 Speaker 3: the GDP that it lost during the pandemic. Took a 233 00:12:51,520 --> 00:12:54,200 Speaker 3: long time. Output rows by two tenths of one percent 234 00:12:54,280 --> 00:12:57,199 Speaker 3: in March, so now we are back up with three 235 00:12:57,320 --> 00:13:00,480 Speaker 3: tenths of one percent larger in terms of the GDP 236 00:13:00,640 --> 00:13:03,880 Speaker 3: than we were pre pandemic levels. In terms of the 237 00:13:03,960 --> 00:13:08,520 Speaker 3: reaction to that, his Blueberg's Senior UK economist Dan Hanson discussing, I. 238 00:13:08,559 --> 00:13:10,520 Speaker 9: Mean, I think it came in broadly as expected. It 239 00:13:10,600 --> 00:13:12,120 Speaker 9: was a little bit weaker than we thought it would be, 240 00:13:12,200 --> 00:13:14,000 Speaker 9: but I think it's broadly in line. I mean that 241 00:13:14,120 --> 00:13:17,199 Speaker 9: the big picture from the GDP data is that it's 242 00:13:17,320 --> 00:13:20,240 Speaker 9: just holding up much better than anyone I'd expected, even 243 00:13:20,400 --> 00:13:21,959 Speaker 9: sort of six months ago. And there are sort of 244 00:13:21,960 --> 00:13:23,880 Speaker 9: lots of reasons. So that one is the labor market. 245 00:13:24,080 --> 00:13:27,439 Speaker 9: There's energy, lower energy prices that's helping the global economy 246 00:13:27,559 --> 00:13:29,560 Speaker 9: generally is probably doing a little bit better than people 247 00:13:29,600 --> 00:13:30,280 Speaker 9: have expected. 248 00:13:30,559 --> 00:13:33,679 Speaker 3: So that was Dan Hanson, bloomberg'st Senior UK Economics so 249 00:13:33,840 --> 00:13:37,679 Speaker 3: reacting to the latest data, I mean, yes, it does 250 00:13:37,800 --> 00:13:39,959 Speaker 3: put the UK in a difficult position. 251 00:13:40,679 --> 00:13:42,520 Speaker 8: It does for the Bank of England, as I say, 252 00:13:42,520 --> 00:13:46,040 Speaker 8: it's going to spur inflation probably which means more hikes. 253 00:13:46,400 --> 00:13:49,640 Speaker 8: Further down the line, those hikes might mean that Britain 254 00:13:49,920 --> 00:13:52,839 Speaker 8: enters a recession. I know you're speaking to Karen Ward 255 00:13:52,880 --> 00:13:55,760 Speaker 8: of JP Morgan Asset Management, who's also as a side 256 00:13:55,840 --> 00:13:58,800 Speaker 8: hustle an economic advisor to the Chancellor Jeremy Hunt. She 257 00:13:58,920 --> 00:14:02,160 Speaker 8: thinks that a recession maybe likely, and that was even 258 00:14:02,240 --> 00:14:06,280 Speaker 8: before we saw this job data. Also, I have to say, 259 00:14:06,840 --> 00:14:10,079 Speaker 8: zero point two percent growth, it's pretty anemic, isn't it. 260 00:14:10,320 --> 00:14:10,520 Speaker 10: Yeah. 261 00:14:10,520 --> 00:14:14,160 Speaker 3: Absolutely, it's not that much to shout about, I suppose, 262 00:14:14,280 --> 00:14:16,240 Speaker 3: and yet of course the government will want to show 263 00:14:16,280 --> 00:14:19,720 Speaker 3: that it's positive. And when it comes to that, Richie 264 00:14:19,760 --> 00:14:23,360 Speaker 3: Sunac has pledged to half inflation, one of his big 265 00:14:23,640 --> 00:14:27,800 Speaker 3: five pledges, which are largely economic in focus. Of course, 266 00:14:28,440 --> 00:14:31,800 Speaker 3: given the turnover that we've had in prime ministers in 267 00:14:32,080 --> 00:14:34,800 Speaker 3: the UK, this was you know, this is his big 268 00:14:34,920 --> 00:14:39,640 Speaker 3: kind of flagship bid for voters. And then Mervin King 269 00:14:39,760 --> 00:14:43,119 Speaker 3: in recent days has come out and said very publicly 270 00:14:43,400 --> 00:14:45,680 Speaker 3: in the national media that actually he thinks that that 271 00:14:45,920 --> 00:14:47,760 Speaker 3: sort of pledge is a bad idea. 272 00:14:48,120 --> 00:14:51,320 Speaker 8: Yeah, so this is in an interview with LBC's Andrew Marr. 273 00:14:51,560 --> 00:14:55,760 Speaker 8: I have to say, policymakers and actually even Tory politicians 274 00:14:55,800 --> 00:14:58,000 Speaker 8: behind the scenes when I speak to them, have said 275 00:14:58,040 --> 00:15:00,880 Speaker 8: that this is a bad idea. Look, she's Sunak. The 276 00:15:00,960 --> 00:15:05,440 Speaker 8: thinking is, I hear felt like lots of people blamed 277 00:15:05,520 --> 00:15:08,480 Speaker 8: liss Trust for higher inflation. So when he came in, 278 00:15:08,720 --> 00:15:11,880 Speaker 8: he felt like he needed to grip the issue. And 279 00:15:12,040 --> 00:15:14,280 Speaker 8: even though it's really the Bank of England's job to 280 00:15:14,840 --> 00:15:20,160 Speaker 8: reduce inflation, he's taking responsibility for him. But there's a 281 00:15:20,240 --> 00:15:24,880 Speaker 8: difference between actively reducing inflation and not doing anything to 282 00:15:24,960 --> 00:15:27,360 Speaker 8: add to it, right, So he's in a risky position 283 00:15:27,880 --> 00:15:31,160 Speaker 8: when inflation is proving stickier and stickier as the months 284 00:15:31,240 --> 00:15:33,640 Speaker 8: go on. And I thought it was very interesting listening 285 00:15:33,680 --> 00:15:37,240 Speaker 8: to him at Prime Minister's Questions on Wednesday. He didn't 286 00:15:37,440 --> 00:15:40,120 Speaker 8: really talk about halving inflation by the end of the 287 00:15:40,240 --> 00:15:43,360 Speaker 8: year so much as reducing it. So is he shifting 288 00:15:43,400 --> 00:15:44,080 Speaker 8: the goalposts? 289 00:15:44,160 --> 00:15:44,360 Speaker 1: Yeah? 290 00:15:44,360 --> 00:15:48,440 Speaker 3: Absolutely, And the former Bank of Governor Andrew Mervin king 291 00:15:48,600 --> 00:15:51,480 Speaker 3: talking about how it's not bad to claim credit for 292 00:15:51,640 --> 00:15:56,440 Speaker 3: it once it's actually happens, you know, but not before perhaps, 293 00:15:57,440 --> 00:16:01,640 Speaker 3: And so too the relationship between government and business, which 294 00:16:01,720 --> 00:16:04,760 Speaker 3: is the other big struggle I think for issues and 295 00:16:05,240 --> 00:16:08,240 Speaker 3: for the Cabinet. In our reporting around whether the UK 296 00:16:08,400 --> 00:16:11,720 Speaker 3: is a drift or not, we've had a number of 297 00:16:11,960 --> 00:16:17,440 Speaker 3: interviews with disgruntled, even despairing business leaders about this issue, 298 00:16:17,960 --> 00:16:20,680 Speaker 3: including with Archie Norman, who's the chairman of Marx and Spencer. 299 00:16:20,800 --> 00:16:23,720 Speaker 3: He spoke to me at length about why the UK 300 00:16:24,080 --> 00:16:29,480 Speaker 3: needs a broader industrial strategy, a real plan for the economy, 301 00:16:29,600 --> 00:16:33,080 Speaker 3: a skills agenda, so that the UK, although it's under 302 00:16:33,080 --> 00:16:35,800 Speaker 3: a great deal of pressure, can actually compete globally. Have 303 00:16:35,880 --> 00:16:37,040 Speaker 3: a listen to what he said. 304 00:16:37,320 --> 00:16:40,560 Speaker 10: An industrial strategy has to be profound, and it's not 305 00:16:40,880 --> 00:16:44,800 Speaker 10: just about our atsues where we want to compete, It's 306 00:16:44,840 --> 00:16:48,240 Speaker 10: about what skills do we want to have. Government plays 307 00:16:48,280 --> 00:16:51,840 Speaker 10: a very big part in creating skills. We have something 308 00:16:51,920 --> 00:16:54,960 Speaker 10: called the Apprenticeship Levy, which is a tax on skills 309 00:16:55,400 --> 00:16:57,960 Speaker 10: and a tax on training. A large part of that 310 00:16:58,080 --> 00:17:00,240 Speaker 10: tax is taken by the treasury and not recent spent. 311 00:17:01,000 --> 00:17:03,800 Speaker 10: Other countries are saying, no, we need laboratory as systems, 312 00:17:03,880 --> 00:17:05,840 Speaker 10: No we need more coders, No we we need more 313 00:17:05,920 --> 00:17:09,320 Speaker 10: data scienttists. We seem to be agnostic. We don't know 314 00:17:09,400 --> 00:17:11,840 Speaker 10: what we need, and that's not good enough. When France 315 00:17:11,960 --> 00:17:14,560 Speaker 10: and Singapore and Canada and the US have a point 316 00:17:14,600 --> 00:17:16,560 Speaker 10: of view, we have to have a point of view too, 317 00:17:16,720 --> 00:17:19,560 Speaker 10: So you've got to start planning ahead. The footprint of 318 00:17:19,640 --> 00:17:22,760 Speaker 10: government is too big in the economy to say we're 319 00:17:22,920 --> 00:17:26,600 Speaker 10: just hands off, that we let the market decide because 320 00:17:26,640 --> 00:17:31,280 Speaker 10: government does create and shape the future direction. A competitive 321 00:17:31,320 --> 00:17:34,560 Speaker 10: economy is one where the public and private sector work together. 322 00:17:35,000 --> 00:17:39,199 Speaker 10: That doesn't mean in an old fashioned sense of taxpayers 323 00:17:39,240 --> 00:17:41,920 Speaker 10: money going into owning company or anything like that. It 324 00:17:42,040 --> 00:17:47,800 Speaker 10: means we're working together on regulation, on trade, on investment 325 00:17:47,920 --> 00:17:53,760 Speaker 10: in skills, on how government supports entrepreneurs, how we shape 326 00:17:53,800 --> 00:17:57,520 Speaker 10: the tax system. At the moment that's come slightly adrift 327 00:17:57,680 --> 00:18:00,640 Speaker 10: post Brexit. So there used to be a good hand 328 00:18:00,720 --> 00:18:04,560 Speaker 10: in hand working relationship that was all swept away in 329 00:18:04,960 --> 00:18:09,119 Speaker 10: the sort of Boris Johnson era and now we need 330 00:18:09,200 --> 00:18:10,119 Speaker 10: to rebuild it again. 331 00:18:10,520 --> 00:18:13,520 Speaker 3: So that was Archie Norman there saying we need an 332 00:18:13,600 --> 00:18:16,960 Speaker 3: industrial strategy in the UK. So then let's wrap it 333 00:18:17,000 --> 00:18:19,480 Speaker 3: all together as we think about the coming few days 334 00:18:19,760 --> 00:18:22,080 Speaker 3: and you know what Andrew Bailey is going to do 335 00:18:22,160 --> 00:18:23,320 Speaker 3: about UK rates. 336 00:18:23,680 --> 00:18:26,040 Speaker 8: It's a really difficult position to be in for the 337 00:18:26,160 --> 00:18:30,040 Speaker 8: governor looking at the data that has just come and 338 00:18:30,160 --> 00:18:33,119 Speaker 8: as I say, we'll get more on inflation just before 339 00:18:33,400 --> 00:18:37,000 Speaker 8: this BOE decision, but then thinking about the forecasts and 340 00:18:37,080 --> 00:18:39,719 Speaker 8: what lies ahead when you've got members of the Monetary 341 00:18:39,720 --> 00:18:42,960 Speaker 8: Policy Committee like Swatti Dingra warning about this lag in 342 00:18:43,040 --> 00:18:46,920 Speaker 8: money Tree transmission eighteen months to two years. It seems 343 00:18:47,000 --> 00:18:49,880 Speaker 8: to take four rates to pass through to the economy 344 00:18:49,920 --> 00:18:53,240 Speaker 8: because of so many people having fixed rate mortgages. It's 345 00:18:53,240 --> 00:18:55,879 Speaker 8: a divided committee. It looks like it's going to be 346 00:18:55,960 --> 00:18:59,159 Speaker 8: between twenty five basis points and fifty basis points. But 347 00:18:59,240 --> 00:19:02,040 Speaker 8: we'll be watching our clues for what happens the rest 348 00:19:02,119 --> 00:19:04,960 Speaker 8: of the year. Will there be a pause in August? 349 00:19:05,320 --> 00:19:08,320 Speaker 8: When will the cuts come? It looks like the Bank 350 00:19:08,400 --> 00:19:11,080 Speaker 8: of England may have been first to the rate hiking party, 351 00:19:11,280 --> 00:19:13,080 Speaker 8: but it's going to be the last to leave and 352 00:19:13,200 --> 00:19:15,400 Speaker 8: take longer than the ECB and the FED to get 353 00:19:15,400 --> 00:19:15,919 Speaker 8: to the pivot. 354 00:19:16,440 --> 00:19:18,800 Speaker 3: Okay, Lizzie, thank you so much for being with me. 355 00:19:18,880 --> 00:19:21,120 Speaker 3: You'll be with me throughout the coming days, of course, 356 00:19:21,200 --> 00:19:26,240 Speaker 3: to cover all things UK economy. Bloomberg's UK correspondent, Lizzie Burden. 357 00:19:26,720 --> 00:19:29,080 Speaker 3: I'm Caroline Hebger here in London and you can catch 358 00:19:29,160 --> 00:19:32,000 Speaker 3: us every weekday morning for Bloomberg Daybreak you at beginning 359 00:19:32,000 --> 00:19:34,960 Speaker 3: at six am in London. That's one am on Wall Street. 360 00:19:35,080 --> 00:19:35,320 Speaker 6: Tom. 361 00:19:36,280 --> 00:19:40,320 Speaker 1: Thank you, Caroline. That was Bloomberg Daybreak Europepost Caroline Hepgar 362 00:19:41,280 --> 00:19:44,320 Speaker 1: and coming up on Bloomberg day Break weekend, India's Prime 363 00:19:44,359 --> 00:19:47,280 Speaker 1: Minister comes to the US to meet with President Biden. 364 00:19:47,760 --> 00:19:49,560 Speaker 1: I'm Tom Busby and this is. 365 00:19:49,600 --> 00:20:09,000 Speaker 5: Bloomberg broadcasting live from the Bloomberg it a active Brokers 366 00:20:09,040 --> 00:20:12,480 Speaker 5: studio in New York. Bloomberg elemon three oh to Washington, 367 00:20:12,560 --> 00:20:15,880 Speaker 5: d C, Bloomberg ninety nine one to Boston, Bloomberg one 368 00:20:15,920 --> 00:20:19,119 Speaker 5: oh sixty one to San Francisco, Bloomberg nine sixteen to 369 00:20:19,240 --> 00:20:22,399 Speaker 5: the Country Syrius XM Channel one to nineteen to London 370 00:20:22,560 --> 00:20:26,240 Speaker 5: DAB Digital Radio, and around the globe the Bloomberg Business 371 00:20:26,320 --> 00:20:30,880 Speaker 5: app in Bloomberg Radio dot Com. This is Bloomberg Daybreak Weekend. 372 00:20:37,480 --> 00:20:39,560 Speaker 1: I'm Tom Busby in New York with your global look 373 00:20:39,560 --> 00:20:42,040 Speaker 1: ahead at the top stories for investors in the coming week. 374 00:20:42,440 --> 00:20:46,080 Speaker 1: President Biden will host India's Prime Minister, Narendra Mody in 375 00:20:46,200 --> 00:20:48,440 Speaker 1: a state dinner in the coming week. And for more, 376 00:20:48,800 --> 00:20:51,280 Speaker 1: let's go to Hong Kong and Bloomberg Daybreak Asia host 377 00:20:51,560 --> 00:20:52,240 Speaker 1: Doug Prisner. 378 00:20:52,440 --> 00:20:56,720 Speaker 4: Tom The Biden administration recently characterized the relationship with India 379 00:20:56,880 --> 00:20:59,639 Speaker 4: as the most important for the US in the world. 380 00:21:00,280 --> 00:21:02,720 Speaker 4: India is viewed as a vital partner in the US 381 00:21:02,800 --> 00:21:06,520 Speaker 4: effort to push back against China's expanding influence. 382 00:21:06,080 --> 00:21:06,520 Speaker 1: In the world. 383 00:21:07,040 --> 00:21:09,320 Speaker 4: We want to take a closer look now with Bloomberg's 384 00:21:09,359 --> 00:21:14,560 Speaker 4: Rebecca Chung Wilkins. She is our Asia Government and Politics correspondent. Rebecca, 385 00:21:14,600 --> 00:21:16,400 Speaker 4: it's always a pleasure. I think we have to begin 386 00:21:16,480 --> 00:21:19,240 Speaker 4: with the fact that this relationship with the US is 387 00:21:19,320 --> 00:21:23,120 Speaker 4: somewhat complicated, and you have to look no further than 388 00:21:23,400 --> 00:21:28,480 Speaker 4: India's failure to criticize Russia's invasion of Ukraine. Can Prime 389 00:21:28,520 --> 00:21:31,600 Speaker 4: Minister Mody be counted on as a reliable partner for 390 00:21:31,680 --> 00:21:34,680 Speaker 4: the US or will India kind of go its own 391 00:21:34,760 --> 00:21:37,040 Speaker 4: way without a strong alignment? What do you think? 392 00:21:37,240 --> 00:21:38,840 Speaker 11: Well, listen, I don't want to go too far back, 393 00:21:38,960 --> 00:21:43,040 Speaker 11: but India, the very basis of its foreign policy goes 394 00:21:43,119 --> 00:21:45,800 Speaker 11: back to sort of the Cold War when it essentially 395 00:21:45,880 --> 00:21:49,760 Speaker 11: decided to set up this non aligned country framework. So 396 00:21:49,840 --> 00:21:52,760 Speaker 11: it's important to sort of understand that India from the outset, 397 00:21:52,920 --> 00:21:57,000 Speaker 11: since its independent has approached foreign relations with this idea 398 00:21:57,080 --> 00:22:00,760 Speaker 11: of always being somewhat a neutral figure, somewhat a middle man. 399 00:22:01,119 --> 00:22:03,880 Speaker 11: And of course, you know, again during the Cold War 400 00:22:04,040 --> 00:22:06,920 Speaker 11: that really was about striking a balance between the US 401 00:22:07,000 --> 00:22:10,840 Speaker 11: and Russia, and while refraining from being a full on partner, 402 00:22:10,880 --> 00:22:14,240 Speaker 11: a full on ally still developing relationships with both those 403 00:22:14,320 --> 00:22:18,840 Speaker 11: countries that benefit them. Now, India and the US have 404 00:22:19,160 --> 00:22:22,760 Speaker 11: grown much closer over the recent years, and it's really 405 00:22:23,359 --> 00:22:28,800 Speaker 11: particularly accentuated by the fact that India increasingly views China's 406 00:22:29,400 --> 00:22:33,200 Speaker 11: military aggression over disputed territory with India and whatnot as 407 00:22:33,280 --> 00:22:35,840 Speaker 11: sort of an increasing threat. And so as a result, 408 00:22:35,960 --> 00:22:41,280 Speaker 11: we have seen these closer ties between India and the US. 409 00:22:41,760 --> 00:22:45,920 Speaker 11: So Biden is now welcoming Mody, and Mody very much 410 00:22:46,119 --> 00:22:49,160 Speaker 11: wants to be a participant in that. But I think 411 00:22:49,200 --> 00:22:53,880 Speaker 11: it's unlikely that we see any kind of explicit criticism 412 00:22:54,600 --> 00:22:57,359 Speaker 11: on Modi or India's part of Russia. And that's in 413 00:22:57,440 --> 00:23:00,080 Speaker 11: part because it has these very close defense ties to 414 00:23:00,160 --> 00:23:03,680 Speaker 11: Russia and also has been purchasing crude oil from it. 415 00:23:04,040 --> 00:23:06,720 Speaker 4: Yeah, we've heard from the oil minister in India saying 416 00:23:06,800 --> 00:23:10,040 Speaker 4: his country intends to continue doing so. So we know 417 00:23:10,560 --> 00:23:12,920 Speaker 4: given the war in Ukraine, that the West has isolated 418 00:23:13,000 --> 00:23:16,840 Speaker 4: Russia over that conflict, although Moscow has the support of Beijing, 419 00:23:16,960 --> 00:23:21,240 Speaker 4: and I'm curious about the relationship between presidents Putin and 420 00:23:21,400 --> 00:23:24,399 Speaker 4: Chi and how Moody may view that well. 421 00:23:24,320 --> 00:23:27,280 Speaker 11: That is a complicating factor, and much has been made 422 00:23:27,440 --> 00:23:31,840 Speaker 11: of the so called no limits friendship between Vladimir Putin 423 00:23:32,080 --> 00:23:36,840 Speaker 11: and Presidency Dimping. I think we have started to see, however, 424 00:23:36,920 --> 00:23:39,760 Speaker 11: the limits of that. I mean, China has been quite 425 00:23:39,920 --> 00:23:44,720 Speaker 11: vocal about the need for the conflict to avoid any 426 00:23:44,840 --> 00:23:49,480 Speaker 11: kind of nuclear aspect, and it does seem that China 427 00:23:49,560 --> 00:23:53,760 Speaker 11: has become somewhat more public about not explicit criticism in 428 00:23:53,800 --> 00:23:57,040 Speaker 11: any way of Moscow, but at least about the need 429 00:23:57,240 --> 00:24:00,199 Speaker 11: to try and find some kind of peaceful resolution. Chin 430 00:24:00,320 --> 00:24:02,560 Speaker 11: of course has put forward its own so caused a 431 00:24:02,680 --> 00:24:05,959 Speaker 11: peace proposal or a blueprint, but that has been received 432 00:24:05,960 --> 00:24:09,080 Speaker 11: by much skepticism, partly because of season things very cozy 433 00:24:09,160 --> 00:24:12,320 Speaker 11: ties with Putin and also because it's ultimately an agreement 434 00:24:12,440 --> 00:24:13,840 Speaker 11: that favors Moscow. 435 00:24:14,080 --> 00:24:17,840 Speaker 4: Now India doesn't support the Western sanctions on Russia, and 436 00:24:18,000 --> 00:24:22,680 Speaker 4: India continues to place orders for Russian made military weapons. 437 00:24:23,000 --> 00:24:25,840 Speaker 4: How is the US going to navigate that territory? Do 438 00:24:25,880 --> 00:24:26,560 Speaker 4: you have a sense of that? 439 00:24:26,800 --> 00:24:29,679 Speaker 11: Yeah, I mean it's interesting. My colleague Ian Marlow had 440 00:24:29,680 --> 00:24:34,359 Speaker 11: an excellent story citing US senior US defense officials really 441 00:24:34,600 --> 00:24:38,320 Speaker 11: explaining how the US is going to navigate this On 442 00:24:38,440 --> 00:24:41,800 Speaker 11: the one hand, we've sort of seen them staying quiet 443 00:24:41,920 --> 00:24:46,000 Speaker 11: on issues around human rights and civil rights and whatnot 444 00:24:46,040 --> 00:24:49,320 Speaker 11: in India. But the expectation does seem that they're not 445 00:24:49,520 --> 00:24:53,800 Speaker 11: going to be sort of too overtly critical because of 446 00:24:53,960 --> 00:24:57,800 Speaker 11: how important it is for them to win over India 447 00:24:57,880 --> 00:25:00,199 Speaker 11: when it comes to kind of trying to contain nor 448 00:25:00,359 --> 00:25:03,840 Speaker 11: curb China's rise. So we are going to expect to 449 00:25:04,000 --> 00:25:07,040 Speaker 11: see the US sort of rolling out the red carpet 450 00:25:07,160 --> 00:25:11,720 Speaker 11: for India and staying away somewhat from these tricky topics. 451 00:25:12,000 --> 00:25:14,520 Speaker 11: It is worth stressing though, too, like the reason why 452 00:25:15,920 --> 00:25:20,240 Speaker 11: India and Russia that relationship persists, from Modi's point of view, 453 00:25:20,359 --> 00:25:24,359 Speaker 11: is in part because of Chinese military aggression. So India, 454 00:25:24,400 --> 00:25:27,600 Speaker 11: for example, relies on some of those defense supplies to 455 00:25:27,720 --> 00:25:32,040 Speaker 11: actually push back against Chinese military aggression on some of 456 00:25:32,080 --> 00:25:34,920 Speaker 11: those disputed territories in the Himalayan border, for example. 457 00:25:35,119 --> 00:25:38,359 Speaker 4: Well, speaking of rolling out the red carpet, while the 458 00:25:38,400 --> 00:25:41,440 Speaker 4: Prime Minister is in the US, he will reportedly be 459 00:25:41,520 --> 00:25:45,480 Speaker 4: meeting with the CEOs of twenty of the top American firms. 460 00:25:45,560 --> 00:25:47,520 Speaker 4: Now we know that since the pandemic, many of these 461 00:25:47,560 --> 00:25:50,919 Speaker 4: global companies have been reevaluating their supply chains and their 462 00:25:51,000 --> 00:25:55,040 Speaker 4: reliance on exposure to China. So I guess you could 463 00:25:55,119 --> 00:25:58,600 Speaker 4: call it diversifying away from China and towards India. Is 464 00:25:58,720 --> 00:26:02,000 Speaker 4: that enough to entire Modi into changing some of his 465 00:26:02,200 --> 00:26:03,639 Speaker 4: behavior or maybe not? 466 00:26:03,960 --> 00:26:06,119 Speaker 11: I mean, we have certainly seen both China and the 467 00:26:06,280 --> 00:26:08,600 Speaker 11: US sort of try and rival one another to actually 468 00:26:08,640 --> 00:26:11,159 Speaker 11: be India's top trading partner, so US again sort of 469 00:26:11,200 --> 00:26:13,480 Speaker 11: inching out now, And that I think is in part, 470 00:26:13,520 --> 00:26:16,399 Speaker 11: as you say, because India is this very attractive so 471 00:26:16,600 --> 00:26:20,200 Speaker 11: called third country and alternative to China for companies that 472 00:26:20,280 --> 00:26:24,960 Speaker 11: are seeking to diversify. I think it is certainly to 473 00:26:25,200 --> 00:26:27,800 Speaker 11: Modi's advantage, and we have seen that that sort of 474 00:26:27,920 --> 00:26:34,000 Speaker 11: advantage rather than let's say, values based motivations, really driving 475 00:26:34,080 --> 00:26:36,200 Speaker 11: a lot of his decision making when it comes to 476 00:26:36,320 --> 00:26:40,720 Speaker 11: sort of closer ties, forging closer ties with China versus 477 00:26:41,080 --> 00:26:41,600 Speaker 11: the US. 478 00:26:42,080 --> 00:26:44,760 Speaker 4: Do you think that for Beijing the government is a 479 00:26:44,800 --> 00:26:49,119 Speaker 4: little irritated that India has become this other destination point 480 00:26:49,240 --> 00:26:54,280 Speaker 4: for manufacturing of certain types of goods made by Western companies. 481 00:26:54,440 --> 00:26:56,560 Speaker 11: I mean, perhaps to a certain extent. I think the 482 00:26:56,600 --> 00:27:00,399 Speaker 11: bigger concern really for Beijing is this fear that India 483 00:27:00,480 --> 00:27:03,760 Speaker 11: has the ability to tip that balance of power, and 484 00:27:03,880 --> 00:27:06,520 Speaker 11: that as the US tries to kind of form this 485 00:27:06,720 --> 00:27:11,520 Speaker 11: more formal and closer allegiance of countries that are trying 486 00:27:11,600 --> 00:27:14,640 Speaker 11: to contain China, particularly when it comes to strategic tech 487 00:27:14,680 --> 00:27:18,040 Speaker 11: and whatnot, that India can play a pivotal role. And 488 00:27:18,160 --> 00:27:21,440 Speaker 11: of course this shift to the Indo Pacific again in 489 00:27:21,600 --> 00:27:24,680 Speaker 11: terms of sort of military strength, India again plays a 490 00:27:24,760 --> 00:27:27,360 Speaker 11: sort of critical role there as well. So I think 491 00:27:27,520 --> 00:27:31,080 Speaker 11: there is some concern domestic concern for China that it 492 00:27:31,200 --> 00:27:33,520 Speaker 11: really does need to get its economy back up and running, 493 00:27:33,560 --> 00:27:37,800 Speaker 11: and that does of course involve encouraging foreign companies in 494 00:27:37,880 --> 00:27:40,760 Speaker 11: particular to stay in China, to continue expanding in China. 495 00:27:41,000 --> 00:27:43,640 Speaker 11: So any threat to that, of course is somewhat sort 496 00:27:43,640 --> 00:27:46,359 Speaker 11: of undermines that agenda. But I think the bigger issue 497 00:27:46,640 --> 00:27:51,280 Speaker 11: is how the sort of geopolitics is shifting and where 498 00:27:51,640 --> 00:27:54,639 Speaker 11: India ultimately comes out. And we've seen since about twenty 499 00:27:54,720 --> 00:27:59,800 Speaker 11: seventeen India has sort of more closely to the US. 500 00:28:00,320 --> 00:28:03,200 Speaker 4: When you look at the India China relationship, they do 501 00:28:03,400 --> 00:28:07,000 Speaker 4: share a disputed border of more than two thousand miles. 502 00:28:07,320 --> 00:28:10,920 Speaker 4: Can you help me understand how significant this is in 503 00:28:11,200 --> 00:28:12,440 Speaker 4: just the overall relationship. 504 00:28:12,600 --> 00:28:15,680 Speaker 11: Absolutely, it's a really critical part of why India views 505 00:28:15,800 --> 00:28:17,720 Speaker 11: China as such a big threat. And China has tried 506 00:28:17,760 --> 00:28:20,640 Speaker 11: to separate this issue away from, for example, is economic 507 00:28:20,760 --> 00:28:23,800 Speaker 11: and trade issues with India, but India has maintained this 508 00:28:24,000 --> 00:28:28,119 Speaker 11: is really a critical sticking point. And essentially, since twenty twenty, 509 00:28:28,560 --> 00:28:34,040 Speaker 11: China India have been locked in their deadliest border conflict 510 00:28:34,200 --> 00:28:38,520 Speaker 11: in about four decades. Both countries have had fatalities, and 511 00:28:38,560 --> 00:28:41,680 Speaker 11: both countries have tried to increasingly militarize the areas around 512 00:28:41,720 --> 00:28:45,760 Speaker 11: that border, bringing in more soldiers, bringing in more artillery, guns, 513 00:28:46,040 --> 00:28:48,960 Speaker 11: fighter jets and so on. So that really is a 514 00:28:49,160 --> 00:28:52,560 Speaker 11: big sticking point for Mody and seedsmping. 515 00:28:52,160 --> 00:28:55,120 Speaker 4: Rebecca, thank you so much for helping us understand this 516 00:28:55,440 --> 00:28:59,160 Speaker 4: complicated relationship between the US and India as the US 517 00:28:59,240 --> 00:29:02,600 Speaker 4: prepares for the state visit of Prime Minister Narendra Modi 518 00:29:02,680 --> 00:29:04,520 Speaker 4: in the coming week. By the way, he's also been 519 00:29:04,560 --> 00:29:08,920 Speaker 4: invited to address a joint meeting of Congress. Bloomberg's Rebecca 520 00:29:09,000 --> 00:29:13,720 Speaker 4: Chung Wilkins. She is our Asia Government and Politics correspondent. 521 00:29:13,920 --> 00:29:16,080 Speaker 4: I'm Doug Prisner. You can join us weekdays here from 522 00:29:16,080 --> 00:29:19,080 Speaker 4: Bloomberg day Break Asia beginning at six am in Hong Kong, 523 00:29:19,600 --> 00:29:21,200 Speaker 4: six pm on Wall Street. 524 00:29:21,520 --> 00:29:23,800 Speaker 1: Tom, thank you, Doug, and you can hear hosts Doug 525 00:29:23,880 --> 00:29:27,160 Speaker 1: Prisner and colleagues on Bloomberg day Break Asia Sunday through 526 00:29:27,280 --> 00:29:30,000 Speaker 1: Thursday Evening's Wall Street Time and coming up here on 527 00:29:30,080 --> 00:29:32,680 Speaker 1: Bloomberg day Break Weekend, we turn our attention back to 528 00:29:32,760 --> 00:29:35,800 Speaker 1: the Fed because a key Senate committee has scheduled the 529 00:29:35,880 --> 00:29:39,920 Speaker 1: nomination hearing for a number of FED positions. I'm Tom Busby, 530 00:29:40,080 --> 00:29:58,560 Speaker 1: and this is Bloomberg. This is Bloomberg day Break Weekend, 531 00:29:58,720 --> 00:30:01,080 Speaker 1: our global look ahead at the top stories for investors 532 00:30:01,160 --> 00:30:03,440 Speaker 1: in the coming week. I'm Tom Busby in New York. 533 00:30:04,000 --> 00:30:06,800 Speaker 1: A key Senate committee a scheduled a nomination hearing for 534 00:30:06,920 --> 00:30:10,800 Speaker 1: a number of Federal Reserve positions. Talking about the Senate 535 00:30:10,840 --> 00:30:13,840 Speaker 1: Committee on Banking, Housing and Urban Affairs and for more, 536 00:30:13,920 --> 00:30:16,240 Speaker 1: Let's head to our Bloomberg ninety nine one newsroom in 537 00:30:16,400 --> 00:30:20,640 Speaker 1: Washington and Bloomberg Sound On. Co host Kaylee Lines. 538 00:30:20,520 --> 00:30:22,840 Speaker 2: Yeah, Tom, that's right. The Senate Banking Committee will hold 539 00:30:22,880 --> 00:30:25,640 Speaker 2: a hearing this coming Wednesday to consider the nominations of 540 00:30:25,760 --> 00:30:28,600 Speaker 2: Philip Jefferson who's a current board member to be promoted 541 00:30:28,600 --> 00:30:31,400 Speaker 2: to vice chair, and Lisa Cook and Audrena Kogler to 542 00:30:31,440 --> 00:30:34,080 Speaker 2: be FED governors. Cook of course, already became a governor 543 00:30:34,200 --> 00:30:35,960 Speaker 2: last year, but filled a seat with a term that 544 00:30:36,120 --> 00:30:39,360 Speaker 2: ends in January, so she's been renominated to serve another 545 00:30:39,520 --> 00:30:42,480 Speaker 2: full fourteen year term. So the question is will they 546 00:30:42,680 --> 00:30:45,960 Speaker 2: sail through this process or could we see this get political? 547 00:30:46,480 --> 00:30:48,680 Speaker 2: Joining me now as Kate Davidson, who leads our FED 548 00:30:48,760 --> 00:30:52,400 Speaker 2: coverage here in Washington. So, Kate, are we expecting these 549 00:30:52,480 --> 00:30:55,960 Speaker 2: confirmations to be politically difficult at all? Obviously we've seen 550 00:30:56,000 --> 00:30:58,720 Speaker 2: this in the past. Everybody remembers what happened with Sarah 551 00:30:58,720 --> 00:31:02,520 Speaker 2: Bloom Raskin, for example. But if Jefferson and Cook already 552 00:31:02,560 --> 00:31:05,400 Speaker 2: are in the seats, does that make it easier? 553 00:31:06,200 --> 00:31:08,960 Speaker 12: I mean, it's certainly that would be the expectation, right, So, 554 00:31:09,800 --> 00:31:13,480 Speaker 12: Phil Jefferson, he was confirmed I think ultimately ninety seven 555 00:31:13,520 --> 00:31:14,640 Speaker 12: to three I think was the vote. 556 00:31:14,760 --> 00:31:14,920 Speaker 8: It was. 557 00:31:15,080 --> 00:31:18,600 Speaker 12: It was very bipartisan, and he's expected to get a 558 00:31:18,640 --> 00:31:20,680 Speaker 12: lot of supporting and this is a promotion for him. 559 00:31:20,800 --> 00:31:22,200 Speaker 12: He's in a he'll be in a bigger, kind of 560 00:31:22,240 --> 00:31:24,760 Speaker 12: more influential role. You know, the FED Vice chair is 561 00:31:24,800 --> 00:31:28,000 Speaker 12: typically like the right hand man, right or woman of 562 00:31:28,160 --> 00:31:30,560 Speaker 12: the FED chair. You know, he plays a big role 563 00:31:30,680 --> 00:31:33,680 Speaker 12: in getting out the message of the committee and sort 564 00:31:33,680 --> 00:31:38,080 Speaker 12: of reinforcing or amplifying what Chair j Powell wants to communicate. 565 00:31:38,160 --> 00:31:39,960 Speaker 12: I mean typically, right, Leil Brainerd, who was in the 566 00:31:40,040 --> 00:31:42,040 Speaker 12: job before, had a little bit you know, different stuff. 567 00:31:42,040 --> 00:31:44,640 Speaker 12: I mean she you'd occasionally hear her sounded a different 568 00:31:44,720 --> 00:31:47,040 Speaker 12: note on some things, but for the most part that's 569 00:31:47,680 --> 00:31:50,200 Speaker 12: you know, it's an important job. So for sure, I 570 00:31:50,240 --> 00:31:52,520 Speaker 12: think we can expect that he'll get some tough questions 571 00:31:52,880 --> 00:31:55,480 Speaker 12: from members on both sides, and I would imagine that 572 00:31:55,760 --> 00:31:58,080 Speaker 12: you know, Senator Elizabeth Warren, for example, she's been very 573 00:31:58,160 --> 00:32:01,200 Speaker 12: tough on Powell. I'm sure she's going to push Jefferson 574 00:32:01,320 --> 00:32:03,880 Speaker 12: to commit to, you know, backing off of the raid 575 00:32:03,960 --> 00:32:06,080 Speaker 12: hiking campaign, which which of course he won't do. I 576 00:32:06,120 --> 00:32:08,720 Speaker 12: think he'll probably just say what we've heard other FED 577 00:32:08,760 --> 00:32:10,800 Speaker 12: officials say, which is that their data dependent and it 578 00:32:10,920 --> 00:32:14,320 Speaker 12: depends on how the economy evolves. So I think that 579 00:32:15,000 --> 00:32:18,120 Speaker 12: ultimately he'll probably be fine. Lisa Cook, it's a little 580 00:32:18,120 --> 00:32:21,719 Speaker 12: bit less certain. She faced a difficult, difficult confirmation there 581 00:32:21,840 --> 00:32:25,080 Speaker 12: was a lot of pushback from Republicans who had a 582 00:32:25,160 --> 00:32:27,560 Speaker 12: lot of different arguments that you know, frankly, some folks 583 00:32:27,560 --> 00:32:30,680 Speaker 12: said were kind of unfair and we're you know, not 584 00:32:31,360 --> 00:32:33,920 Speaker 12: arguments that some of her colleagues or other people who 585 00:32:33,920 --> 00:32:36,120 Speaker 12: are nominated at the time were facing. But you know, 586 00:32:36,240 --> 00:32:39,560 Speaker 12: things like she she didn't have, you know, the proper experience, 587 00:32:39,640 --> 00:32:42,720 Speaker 12: she wasn't qualified. I mean, obviously she she got widespread 588 00:32:42,760 --> 00:32:46,320 Speaker 12: support from the economic community, so she eventually did get through. 589 00:32:46,560 --> 00:32:49,440 Speaker 12: We haven't heard that same kind of chatter this time around. 590 00:32:49,720 --> 00:32:51,600 Speaker 12: She's on the board now. She made it through, so 591 00:32:52,000 --> 00:32:54,160 Speaker 12: I think we can expect that she'll be fine. You know, 592 00:32:54,200 --> 00:32:56,640 Speaker 12: Democrats still control the Senate, so there are more of them. 593 00:32:57,440 --> 00:32:59,520 Speaker 12: I don't think it will be a problem, but again, 594 00:32:59,560 --> 00:33:02,520 Speaker 12: you could you know, there could be I wouldn't say fireworks, 595 00:33:02,560 --> 00:33:04,960 Speaker 12: but definitely, you know, perhaps a tough line of questioning 596 00:33:05,040 --> 00:33:07,200 Speaker 12: of her and the decision she's made. Since she's been 597 00:33:07,240 --> 00:33:09,520 Speaker 12: on the board, things that she's said. She's kept a 598 00:33:09,560 --> 00:33:12,800 Speaker 12: pretty low profile, so that could also help her. But 599 00:33:12,880 --> 00:33:15,720 Speaker 12: then we do have a third third nominee, Adriana Kougler, 600 00:33:16,080 --> 00:33:19,120 Speaker 12: who was new so that's sort of the big question Mark, 601 00:33:19,160 --> 00:33:19,400 Speaker 12: I think. 602 00:33:19,680 --> 00:33:21,840 Speaker 2: And finally, if all of them were to be confirmed, 603 00:33:22,120 --> 00:33:25,200 Speaker 2: how could FED policy look different under them? So I 604 00:33:25,280 --> 00:33:26,120 Speaker 2: don't think it will. 605 00:33:25,920 --> 00:33:28,120 Speaker 12: Look too different, because, as we've been saying, you know, 606 00:33:28,160 --> 00:33:31,560 Speaker 12: two of them are already on the board, but that third, 607 00:33:31,680 --> 00:33:34,200 Speaker 12: you know, that third official Coogler, I mean she she's 608 00:33:34,240 --> 00:33:38,040 Speaker 12: being nominated by the by the Biden administration, by President Biden, 609 00:33:38,160 --> 00:33:41,480 Speaker 12: so it's fair to expect that probably her views will 610 00:33:41,520 --> 00:33:44,280 Speaker 12: align with, you know, what he would like to see. 611 00:33:44,480 --> 00:33:46,600 Speaker 12: The White House is always pretty careful to not weigh 612 00:33:46,640 --> 00:33:48,960 Speaker 12: in directly on what the FED is doing, but I 613 00:33:49,000 --> 00:33:51,440 Speaker 12: think they recognize inflation is still too high and needs 614 00:33:51,440 --> 00:33:53,400 Speaker 12: to be brought out under control. But also you don't 615 00:33:53,400 --> 00:33:56,040 Speaker 12: want to do too much to undercut the labor market. 616 00:33:56,120 --> 00:33:58,320 Speaker 12: So I would expect that she would hue pretty closely 617 00:33:58,800 --> 00:34:01,520 Speaker 12: to that. That message what we're hearing from from other 618 00:34:01,640 --> 00:34:05,239 Speaker 12: FED officials who were nominated by this administration and are 619 00:34:05,280 --> 00:34:06,080 Speaker 12: currently on the board. 620 00:34:06,680 --> 00:34:09,319 Speaker 2: All right, Kate Davidson, who leads our FED coverage here 621 00:34:09,400 --> 00:34:11,960 Speaker 2: at Bloomberg, thank you so much, and Tom, we'll look 622 00:34:12,000 --> 00:34:12,840 Speaker 2: forward to Wednesday. 623 00:34:13,200 --> 00:34:16,520 Speaker 1: Thank you, Kaylee. That was Bloomberg's SOUNDWN co host Kaylee 624 00:34:16,600 --> 00:34:20,440 Speaker 1: Lines reporting from our Bloomberg ninety nine one newsroom in Washington, 625 00:34:20,840 --> 00:34:23,359 Speaker 1: and you can hear sound on weekdays one to three 626 00:34:23,440 --> 00:34:26,160 Speaker 1: pm on Bloomberg Radio. And that does it for this 627 00:34:26,400 --> 00:34:29,080 Speaker 1: edition of Bloomberg day Break Weekend. Join us again Monday 628 00:34:29,120 --> 00:34:31,440 Speaker 1: morning at five am Wall Street Time for the latest 629 00:34:31,560 --> 00:34:34,239 Speaker 1: on the markets, overseas and the news you need to 630 00:34:34,320 --> 00:34:37,520 Speaker 1: start your day. I'm Tom Buzzby. Stay with us top 631 00:34:37,600 --> 00:34:40,359 Speaker 1: stories and global business headlines. You're coming up right now.