WEBVTT - Bloomberg Daybreak Weekend: Economy, Budget, Xi 0:00:02.600 --> 0:00:05.320 This is Bloomberg Daybreak Weekend, our global look at the 0:00:05.360 --> 0:00:08.399 top stories in the coming week from our Daybreak anchors 0:00:08.400 --> 0:00:10.480 all around the world, and straight ahead on the program. 0:00:10.560 --> 0:00:13.640 Fed Chair J Powell heads for Capitol Hill. I'm Tom 0:00:13.680 --> 0:00:16.520 Busby in New York. I'm Stephen card in London, Whereishi 0:00:16.520 --> 0:00:19.080 Stanaka is hoping to build on an improvement in ties 0:00:19.120 --> 0:00:21.520 with his European neighbors as he heads to France for 0:00:21.560 --> 0:00:25.239 a summit with President and Nanionncom. I'm Joe Matthew in Washington, 0:00:25.320 --> 0:00:28.280 where we're preparing for President Biden to drop his new budget. 0:00:28.320 --> 0:00:30.840 I Ran Curtis in Hong Kong. We look at President 0:00:30.920 --> 0:00:36.280 she touting intense changes to China's governance. That's all straight 0:00:36.280 --> 0:00:40.680 ahead on Bloomberg Daybreak Weekend on Bloomberg eleven, FREEO, New York, 0:00:40.760 --> 0:00:44.400 Bloomberg ninety nine one, Washington, d C, Bloomberg one oh 0:00:44.440 --> 0:00:48.919 six one, Boston, Bloomberg nine sixty, San Francisco, DAB, Digital 0:00:49.000 --> 0:00:52.480 Radio London, Sirius XM one nineteen and around the world 0:00:52.560 --> 0:00:55.920 on Bloomberg Radio dot com and via the Bloomberg Business App. 0:00:59.600 --> 0:01:01.680 Good day to you. I'm Tom Busby, and we begin 0:01:01.720 --> 0:01:05.400 today's program with Federal Reserve Chair Jay Powell, the FED head. 0:01:05.680 --> 0:01:08.800 We'll be giving a semi annual monetary policy report to 0:01:08.840 --> 0:01:12.039 Congress this week. Also a look at the strength of 0:01:12.120 --> 0:01:15.000 the US labor market with the February jobs report. This 0:01:15.080 --> 0:01:17.360 is coming Friday. Now. Joining me now to talk about 0:01:17.400 --> 0:01:22.440 all of that. Bloomberg's International and Economics policy correspondent Michael McKee. Michael, 0:01:22.640 --> 0:01:26.080 thank you for being here. Lovely to be here. All right. 0:01:26.760 --> 0:01:31.000 Inflation still soubornly high, borrowing rates keep going higher, consumers 0:01:31.000 --> 0:01:33.560 are worried despite the strength and the job market and 0:01:33.600 --> 0:01:37.080 the stock market as apparently stalled. What will Chairmer and 0:01:37.080 --> 0:01:40.600 Powell's message to be to lawmakers. Well, higher for longer 0:01:40.720 --> 0:01:43.040 is going to be the shorthand version of what he's 0:01:43.040 --> 0:01:46.319 going to be saying. The question is how high and 0:01:46.560 --> 0:01:50.080 for how long the latest data have, As you mentioned, 0:01:50.080 --> 0:01:53.960 I've been particularly great. We have seen strength in the 0:01:54.040 --> 0:01:58.640 labor market and strength in wages, and consumers have been 0:01:58.640 --> 0:02:00.800 spending a lot of money, which all would be good 0:02:00.800 --> 0:02:03.160 in a normal period, but with inflation where it is, 0:02:03.480 --> 0:02:05.640 the FED would like to see some sort of slowdown 0:02:05.720 --> 0:02:09.320 in demand. So the question is, did the latest numbers 0:02:09.360 --> 0:02:12.680 that we've gotten push the Fed. Will it push the 0:02:12.720 --> 0:02:16.120 Fed to do fifty basis points instead of twenty five 0:02:16.160 --> 0:02:18.960 basis points on March twenty second? And how long do 0:02:19.000 --> 0:02:22.760 they think they need to leave rates high? We had 0:02:22.960 --> 0:02:25.960 some Fed speakers saying at least through the end of 0:02:25.960 --> 0:02:31.120 the year. We'll see where the chairman is on that. Yeah, 0:02:31.120 --> 0:02:33.960 we had several top FED officials talking about being open 0:02:34.000 --> 0:02:37.440 to bigger interest rate hikes if necessary. Here's what Minneapolis 0:02:37.480 --> 0:02:40.160 Fed President Neil cash Carey had to say about that 0:02:40.320 --> 0:02:42.840 this week. There's a lot of attention to the next 0:02:42.880 --> 0:02:45.280 meeting in March. Is it going to be twenty five 0:02:45.360 --> 0:02:47.600 or is it going to be fifty? I'm open minded 0:02:47.720 --> 0:02:50.200 at this point about whether it's twenty five or fifty 0:02:50.200 --> 0:02:53.520 basis points. To me much what's much more important than 0:02:53.560 --> 0:02:56.640 whether it's twenty five or fifty is what we signal 0:02:57.160 --> 0:03:01.200 in what's called the plot. I've got my own dot plot, 0:03:01.320 --> 0:03:04.280 and it's all about inflation and trying to combat it. 0:03:04.480 --> 0:03:07.480 How bad is inflation right now or how does the 0:03:07.520 --> 0:03:10.280 FEDS c inflation right now? And why does the scene 0:03:10.280 --> 0:03:12.840 to be getting worse? To you, ask anybody on the street, 0:03:12.880 --> 0:03:15.959 anybody in the store, You know, it just keeps getting worse. Well, 0:03:15.960 --> 0:03:20.119 the problem is nothing moves in a straight line. Inflation 0:03:20.200 --> 0:03:22.839 has come down significantly. It was around nine percent when 0:03:23.160 --> 0:03:26.240 the FED got started, and now we're in the sixes 0:03:26.240 --> 0:03:29.600 for CPI and the fives for the FEDS indicator PC. 0:03:30.280 --> 0:03:32.919 So we have seen a big drop in inflation. It's 0:03:32.960 --> 0:03:37.680 about halved, but it's still significantly above where the FEDS 0:03:37.760 --> 0:03:41.880 target is, the two percent target. And at this point, 0:03:41.920 --> 0:03:47.040 the easy, low hanging fruit to bring inflation down much 0:03:47.040 --> 0:03:49.800 of that has gone away. We've already seen a decline 0:03:49.800 --> 0:03:53.680 in goods prices, we have seen energy prices come down. 0:03:54.120 --> 0:03:57.800 It's the stuff on the services side, driven in many 0:03:57.840 --> 0:04:02.200 cases by higher wages that's still has to be attacked 0:04:02.240 --> 0:04:04.840 by the Fed. And that's why they're thinking they're going 0:04:04.880 --> 0:04:07.560 to need to be at a higher rate for longer, 0:04:07.640 --> 0:04:10.360 because they need to have the full weight of the 0:04:10.400 --> 0:04:15.800 infest rates they've increased hit decision making in the economy. Now, 0:04:15.960 --> 0:04:21.080 this idea of higher rates for longer to come, will 0:04:21.120 --> 0:04:24.240 it be a tough sell to Congress? I mean there's 0:04:24.279 --> 0:04:27.039 a lot on his plate, Pal's plate. How is he 0:04:27.040 --> 0:04:29.040 going to sell it to these and what's the reception 0:04:29.120 --> 0:04:32.919 going to be first to the House, then to the Senate. Well, 0:04:33.720 --> 0:04:36.120 the FED chairman is always caught between the two political 0:04:36.160 --> 0:04:41.080 parties up on Capitol Hill. Each one will try to 0:04:41.120 --> 0:04:45.120 turn the testimony to try to see if there's some 0:04:45.160 --> 0:04:49.240 support from the FED chair for their political views. In 0:04:49.240 --> 0:04:52.559 this case, it's the Democrats who are worried about infest 0:04:52.640 --> 0:04:54.679 rates being too high for too long because they're worried 0:04:54.680 --> 0:04:58.600 about unemployment going up, and usually when unemployment goes up, 0:04:58.640 --> 0:05:03.560 the lowest on the economic scale suffer the most. The 0:05:03.600 --> 0:05:05.720 answer to that, Paul will say is, we don't think 0:05:05.839 --> 0:05:08.520 we have to have unemployment goal up a lot, because 0:05:08.839 --> 0:05:11.480 the market is a labor market and the economy are 0:05:11.520 --> 0:05:15.680 so strong it can withstand some higher interest rates. Republicans 0:05:15.680 --> 0:05:18.520 will counter that by saying, while the economy is so strong, 0:05:19.200 --> 0:05:21.920 inflation is not coming down fast enough, so you need 0:05:21.960 --> 0:05:24.479 to do more. And Pau will try to steer a 0:05:24.600 --> 0:05:28.680 course between the two of them, protecting the Fed's independence 0:05:28.680 --> 0:05:31.440 and saying we will do what's best for the economy 0:05:31.760 --> 0:05:34.880 in our best judgment and laying out those goals for 0:05:34.920 --> 0:05:38.680 the economy. For his policy for interest rates, I mean, 0:05:39.360 --> 0:05:42.720 he's not going to win against divided Congress is you 0:05:42.760 --> 0:05:46.520 can't ever win up on Capitol Hill. No matter what 0:05:46.560 --> 0:05:50.000 the Fed Chairman says, somebody is going to be unhappy 0:05:50.040 --> 0:05:52.880 with it, and many of them will give speeches rather 0:05:52.960 --> 0:05:56.680 than ask questions because that's what politicians do. One of 0:05:56.720 --> 0:06:00.160 the interesting things to watch is going to be what 0:06:00.320 --> 0:06:04.800 he says about the debt limit. That's going to be 0:06:04.880 --> 0:06:08.080 a question that someone will bring up, and he has 0:06:08.640 --> 0:06:12.240 largely avoided any kind of characterization about what it would 0:06:12.240 --> 0:06:14.640 do to the economy. He says, only there's that's only 0:06:14.680 --> 0:06:17.159 one solution, raise the debt limit, and I'm not going 0:06:17.240 --> 0:06:19.520 to talk about it beyond that. But you can imagine 0:06:19.560 --> 0:06:23.000 that both sides will try to get him to comment 0:06:23.120 --> 0:06:26.080 in some way, and it's also totally out of his purview. 0:06:26.120 --> 0:06:30.440 That is Congress's exactly. Well, it's an economic issue for 0:06:30.600 --> 0:06:35.480 the US, so the Fed chairman has credibility on economic issues, 0:06:35.720 --> 0:06:38.440 so they'll try to get him to The Republicans will 0:06:38.480 --> 0:06:41.719 ask him to say that we need to cut spending 0:06:41.800 --> 0:06:45.960 significantly because we're on an unsustainable fiscal path, which he 0:06:46.000 --> 0:06:48.320 has said before. He just hasn't said that you need 0:06:48.360 --> 0:06:52.000 to do it today, And the Democrats will say, well, 0:06:52.080 --> 0:06:55.120 you're going to crash the economy if you breach the 0:06:55.160 --> 0:06:58.800 debt limit and default, and he doesn't want to get 0:06:59.200 --> 0:07:02.919 in between the two sides. Got it all right, Michael, 0:07:02.960 --> 0:07:05.919 Let's start to this Friday's February jobs report in the 0:07:05.960 --> 0:07:08.200 state of the US labor market. Boy, we have a 0:07:08.240 --> 0:07:11.360 real surprise in January, over half a million jobs added, 0:07:11.600 --> 0:07:15.080 the unemployment rate, the Lowison's nineteen sixty nine first time 0:07:15.160 --> 0:07:18.200 jobless claims. The last few weeks we've seen an upside 0:07:18.240 --> 0:07:21.760 surprise there. What are we looking at for the labor 0:07:21.840 --> 0:07:25.120 market for jobs added in February, Well, we're kind of 0:07:25.120 --> 0:07:27.920 in the same position we were a month ago, where 0:07:28.800 --> 0:07:33.000 economists are looking for a significant slowdown from last month. 0:07:33.160 --> 0:07:35.840 They're looking for about the same number that they forecast 0:07:35.920 --> 0:07:39.400 last month, two hundred and twenty thousand and an unemployment 0:07:39.480 --> 0:07:42.440 rate that's unchanged at three point four percent. Both would 0:07:42.480 --> 0:07:45.880 be very strong numbers. It's a little harder to characterize 0:07:45.920 --> 0:07:50.400 the total jobs numbers in that way because of five 0:07:50.560 --> 0:07:53.760 hundred and seventeen thousand jobs in January, but a lot 0:07:53.840 --> 0:07:55.440 of people, a lot of you kind of think that 0:07:55.440 --> 0:07:58.360 that was a function of the weather and some seasonal 0:07:58.360 --> 0:08:01.480 adjustment changes that the bl makes and so that it 0:08:01.600 --> 0:08:04.320 should come down. But at this point there doesn't seem 0:08:04.360 --> 0:08:07.440 to be any significant sign in any of the other 0:08:07.520 --> 0:08:12.840 indicators of labor market strength that would suggest we're seeing 0:08:12.880 --> 0:08:15.840 the kind of results that the FED is expecting a 0:08:15.960 --> 0:08:20.280 rising unemployment rate because demand is falling in the economy. 0:08:20.400 --> 0:08:23.440 This is a completely different time. We're coming out of 0:08:23.480 --> 0:08:28.640 the pandemic recession and employers couldn't find workers for a 0:08:28.760 --> 0:08:33.000 very long time, and in some sectors they still can't, 0:08:33.480 --> 0:08:36.199 and so it seems that at this point companies are 0:08:36.240 --> 0:08:39.839 holding on to workers rather than letting them go as 0:08:39.840 --> 0:08:44.120 they might ordinarily do when the economy slows. And anecdotally 0:08:44.160 --> 0:08:46.959 we hear of tech sector workers being laid off on 0:08:47.280 --> 0:08:50.079 moss at some big companies finding jobs elsewhere. Whether it's 0:08:50.080 --> 0:08:52.920 a autowindustry, yeah, well, the tech industry is those are 0:08:53.000 --> 0:08:55.640 high scaled people generally, and so they can find jobs 0:08:55.720 --> 0:08:58.920 more easily. I remember a CEO of a tech company 0:08:58.960 --> 0:09:00.959 telling me a couple years ago every company is a 0:09:01.000 --> 0:09:03.920 tech company now because we all have websites and we 0:09:04.000 --> 0:09:06.959 all have technology that needs to be maintained. So there 0:09:07.000 --> 0:09:09.160 are jobs out there. It's more the people on the 0:09:09.160 --> 0:09:15.200 lower end construction workers. With housing slowing, there should be 0:09:15.400 --> 0:09:18.240 an impact on construction, but we haven't seen it yet. 0:09:18.800 --> 0:09:23.440 Retail sales, there should be an impact on retail sales workers, 0:09:23.480 --> 0:09:26.240 and we haven't seen it yet. That's what everybody's waiting for, 0:09:26.320 --> 0:09:29.079 is some of those early signs that maybe the economy 0:09:29.120 --> 0:09:32.160 is slowing in companies or don't need as many workers, 0:09:32.200 --> 0:09:35.600 but it hadn't happen yet. Well, speaking of retail sales, 0:09:35.600 --> 0:09:38.959 we heard from some major retailers last week. Most reported 0:09:39.040 --> 0:09:42.600 pretty solid holiday quarterly sales, but just about all of 0:09:42.600 --> 0:09:45.320 them with week outlooks for the full year expecting a 0:09:45.360 --> 0:09:47.960 big pullback in consumer spending, a lot of worries about 0:09:47.960 --> 0:09:51.120 the economy slowing. What does this tell us about retailers, 0:09:51.160 --> 0:09:55.720 about the economy and how retailers see consumers right now. Well, 0:09:55.760 --> 0:09:59.160 I think retailers are like everybody else, reading the headlines 0:09:59.400 --> 0:10:03.480 and listening to everybody talk about the inevitable recession, the 0:10:03.480 --> 0:10:08.240 most the longest awaited recession in history. Perhaps it may 0:10:08.240 --> 0:10:13.120 be the goodot of recessions, and so they're talking at 0:10:13.120 --> 0:10:17.680 this point like they're preparing, they've drawn up the plans 0:10:17.760 --> 0:10:19.960 for dealing with a recession. But they haven't put them 0:10:19.960 --> 0:10:24.800 into practice yet because we haven't seen a pullback significantly 0:10:25.240 --> 0:10:28.480 in consumer spending, and so where you may see it 0:10:28.559 --> 0:10:31.040 first is in retail inventories. They may not buy as 0:10:31.120 --> 0:10:34.720 much stuff ahead of time. The question is how long 0:10:35.240 --> 0:10:38.240 do they hold off, because when you get into June, 0:10:39.600 --> 0:10:41.680 that's about the time that they start ordering for the 0:10:41.720 --> 0:10:44.000 holiday season. And they've got to try to make a 0:10:44.040 --> 0:10:46.560 prediction for the holiday season, and this year I can 0:10:46.600 --> 0:10:49.200 imagine it's going to be very difficult. Well, Michael McKay, 0:10:49.200 --> 0:10:52.600 Bloomberg's International Economics and Policy correspondent, Thank you so much 0:10:52.640 --> 0:10:55.600 for being here, Michael. Coming up on Bloomberg Daybreak weekend, 0:10:55.720 --> 0:10:59.360 Britain's Prime minister meets with France's leader, Emmanuel McCrone. I'm 0:10:59.400 --> 0:11:15.960 Tom Buzzby and this is Bloomberg. This is Bloomberg Daybreak weekend, 0:11:15.960 --> 0:11:18.439 our global look ahead at the top stories for investors 0:11:18.440 --> 0:11:20.880 in the coming week. I'm Tom Busby in New York. 0:11:21.200 --> 0:11:24.559 Up later in our program Biden's next budget and Republican 0:11:24.640 --> 0:11:28.440 pressure for spending cuts. But first after the post breaks 0:11:28.440 --> 0:11:31.240 it agreement on Northern Ireland reach between the EU and 0:11:31.240 --> 0:11:34.720 the UK, the British Prime Minister has another important European 0:11:34.800 --> 0:11:38.040 rendezvous looming as he heads to Paris for a summit 0:11:38.080 --> 0:11:41.640 with Francis Emmanuel Macrone. For more, let's hit to London 0:11:41.679 --> 0:11:45.160 and bring in Bloomberg Daybreak europe banker Stephen Carroll tom 0:11:45.280 --> 0:11:48.480 Rishis Nach's trip to Paris falls neatly after he's resolved 0:11:48.520 --> 0:11:51.839 the biggest beef with his neighbors, disagreements over the post 0:11:51.840 --> 0:11:55.000 Brexit trading grils for Northern Ireland. This Franco British summit 0:11:55.040 --> 0:11:57.800 has meant to relaunch closer ties between the UK and 0:11:57.840 --> 0:12:01.040 France after years of strained relations. To discuss what's on 0:12:01.080 --> 0:12:03.880 the agenda, I'm joined out by Bloomberg opinion columnist Leonel 0:12:03.920 --> 0:12:06.160 Laurent in Paris and tries Raphael with me here in 0:12:06.240 --> 0:12:08.640 London now. I want to just set up our conversation 0:12:08.880 --> 0:12:12.199 with the snippet of a Bloomberg interview with Luke Alice, 0:12:12.280 --> 0:12:15.040 the CEO of the world's largest publicly traded hedge fund, 0:12:15.160 --> 0:12:18.480 Man Group, expressing a sentiment I think many people have 0:12:18.640 --> 0:12:21.240 felt after the UK's deal with the EU last week, 0:12:22.240 --> 0:12:25.120 if we never had to talk about Brexit again, the 0:12:25.200 --> 0:12:27.760 UK would be more investable. I hope that the last 0:12:27.760 --> 0:12:31.000 couple of days gives us a firm place to move 0:12:31.040 --> 0:12:34.840 forward for the relationship with Europe and that will definitely 0:12:34.880 --> 0:12:38.840 improve the way people think about the UK. Okay terres 0:12:39.160 --> 0:12:42.040 Raphael with me in studio. How relieved will Rishi sacB 0:12:42.160 --> 0:12:44.320 that this meeting with Emmanuel Macron doesn't have to be 0:12:44.320 --> 0:12:48.600 about Brexit. Oh, I think it's symbolically very important that 0:12:48.679 --> 0:12:51.320 they're meeting, and the fact that you know, he's just 0:12:51.440 --> 0:12:55.680 got this Winter Framework, the kind of updated, reworked Northern 0:12:55.720 --> 0:12:59.000 Ireland Protocol, makes it more than symbolic, because I think 0:12:59.040 --> 0:13:02.359 it gives him the opportunity to build on that momentum 0:13:02.400 --> 0:13:05.560 and try to uh, you know, reach some kind of 0:13:05.720 --> 0:13:11.120 agreement with Macrol on mutual areas of interest for SUNAC 0:13:11.240 --> 0:13:14.000 that is clearly going to you know, be that list 0:13:14.040 --> 0:13:18.680 would be topped by h stopping migrant votes boats, which 0:13:18.760 --> 0:13:21.080 was one of his five priorities that he set out 0:13:21.880 --> 0:13:24.400 earlier this year. And you know, I don't think there's 0:13:24.440 --> 0:13:27.040 been leone will check me in this. I don't think 0:13:27.040 --> 0:13:31.559 there's been a bilateral h big bilateral since twenty eighteen, 0:13:31.800 --> 0:13:35.000 so so we're really looking at a kind of reset 0:13:35.080 --> 0:13:39.439 of Anglo French relations which have over the I was 0:13:39.480 --> 0:13:43.520 going to say years, but centuries. You had everything from 0:13:43.600 --> 0:13:48.480 the time ward arrival read to alliance. So I think 0:13:48.480 --> 0:13:52.640 it's quite important. And yes, Brexit not top of the 0:13:52.679 --> 0:13:55.400 list for once, Yes, Leonella Ryan Paris. What's in this 0:13:55.559 --> 0:13:57.880 for France? Then, what does a manual Macron want to achieve? 0:13:57.920 --> 0:14:02.080 Basically Macro also wants to kind of get over the 0:14:02.120 --> 0:14:05.800 Brexit period, the Brexit hump, not because France had as 0:14:05.800 --> 0:14:08.280 bad a time as the UK. I mean, the fact 0:14:08.400 --> 0:14:11.839 is that mac Horn was reelected recently, while the UK 0:14:11.920 --> 0:14:15.320 has gone through several prime ministers, but the whole Brexit 0:14:15.440 --> 0:14:18.600 effect has kind of faded. In terms of France's leadership 0:14:19.000 --> 0:14:23.080 in Europe, France is feeling a bit trapped at the 0:14:23.160 --> 0:14:27.720 moment because Germany really seems to be capitalizing the most 0:14:27.760 --> 0:14:31.640 in terms of leadership in the wake of the Ukraine War. 0:14:31.920 --> 0:14:34.840 France is kind of having trouble with German either. The 0:14:34.880 --> 0:14:37.320 relationship there is kind of stuck, and so I think 0:14:37.320 --> 0:14:41.560 it's looking around for friends. And the UK historically has, 0:14:41.920 --> 0:14:44.680 as Terres says, it's been an enemy but also a friends. 0:14:44.760 --> 0:14:47.080 You have a kind of freenemy relationship, but the two 0:14:47.080 --> 0:14:52.280 countries look more alike today than they did around Brexit, 0:14:52.520 --> 0:14:55.880 because they're both kind of service based economies that have 0:14:55.960 --> 0:15:02.840 a proud history of military hitability and intervention. They're both 0:15:02.920 --> 0:15:07.960 kind of looking for their place in this geopolitically risky world. 0:15:08.040 --> 0:15:11.320 They've they've both pledged a support for Ukraine and so 0:15:11.360 --> 0:15:13.840 I think mac Hall's really gonna try to look for 0:15:14.280 --> 0:15:18.760 defense and an industrial policy as his priorities in this meeting. 0:15:18.920 --> 0:15:21.360 So as one of the things that you mentioned it 0:15:21.440 --> 0:15:24.720 their immigration and this migration channel across the English Channel. 0:15:25.120 --> 0:15:27.520 Soonac frames that is being stopping small boats as being 0:15:27.520 --> 0:15:30.840 one of his key policy goals. What would look like 0:15:30.840 --> 0:15:35.160 an advance for Rishi Sonac from this encounter on that issue. Yeah, 0:15:35.200 --> 0:15:39.120 I think there will have to be something concrete that 0:15:39.200 --> 0:15:41.720 he can point to at the end of this meeting 0:15:41.960 --> 0:15:45.160 on small boat And it may be I mean that 0:15:45.720 --> 0:15:49.560 really problems got a lot worse when the UK, you know, 0:15:49.800 --> 0:15:52.680 could no longer be part of the I mean, someone 0:15:52.720 --> 0:15:57.360 could argue defunct Dublin arrangement for returning refugees. But also 0:15:57.400 --> 0:16:01.480 I think access you know, maybe to UM maybe it's 0:16:01.480 --> 0:16:05.000 not direct access, but some way of tapping into EU databases, 0:16:05.080 --> 0:16:10.120 police cooperation, um, you know, that combination of policing returns. 0:16:10.120 --> 0:16:12.720 I mean, this is a it's a really difficult issue. 0:16:12.760 --> 0:16:15.080 I don't think they're going to just somehow snap their 0:16:15.120 --> 0:16:17.800 fingers and come up with a way of stopping the 0:16:17.880 --> 0:16:21.200 migrant boats. But you know, as we saw with the protocol, 0:16:21.360 --> 0:16:24.760 so much depends on good faith negotiations and so much 0:16:24.800 --> 0:16:28.480 depends on the trust between leaders and having a different 0:16:28.600 --> 0:16:32.280 UK Prime minister fronting this I think well has a 0:16:32.320 --> 0:16:34.560 potential to make a difference. I mean, let's not forget 0:16:34.560 --> 0:16:36.280 you know, it was twenty twenty one. We had Jacob 0:16:36.320 --> 0:16:39.400 riesmog tweeting that the French are still sore about Agincourt 0:16:39.480 --> 0:16:42.280 and Trafalgar. We had Liz trust saying, you know, she 0:16:42.320 --> 0:16:44.640 wasn't really sure whether France was a you know, friend 0:16:44.760 --> 0:16:48.360 or foe. So all of that kind of um mood 0:16:48.480 --> 0:16:53.280 music really soured the ability of these bilateral you know 0:16:54.040 --> 0:16:57.400 talks to achieve anything. And you know, as Lionel rightly said, 0:16:57.440 --> 0:17:01.120 the full crumb of that relationship, which is completely off 0:17:01.160 --> 0:17:04.680 the headlines for years, has been the defense and security relationship, 0:17:04.760 --> 0:17:09.119 and that arguably wasn't that affected by Brexit. You know, 0:17:09.160 --> 0:17:11.960 the Lancaster House treaties that were signed in twenty ten 0:17:12.040 --> 0:17:15.919 between Cameron and Sarkoz the sharing of nuclear facilities. You know, 0:17:15.960 --> 0:17:20.919 those were fifty year agreement and I think that the 0:17:20.960 --> 0:17:26.560 other one was was a combined expeditionary force. So things 0:17:26.600 --> 0:17:29.119 have been at a stalemate since twenty sixteen. But the 0:17:29.160 --> 0:17:34.240 security and defense side of things are very much, you know, 0:17:34.359 --> 0:17:36.560 at the heart of that relationship. And you know, the 0:17:36.640 --> 0:17:39.600 Lionel says that these are geostrategic twins in many ways. 0:17:39.840 --> 0:17:42.120 They're the two nuclear powers in Europe. They're the two 0:17:42.160 --> 0:17:44.760 powers that use their military as a key part of 0:17:44.800 --> 0:17:48.159 their foreign policy. You know, they have similar economies. And 0:17:50.080 --> 0:17:52.840 the big change now is there is war in Europe, 0:17:53.200 --> 0:17:57.520 and really I think that just changes everything for both countries. 0:17:57.720 --> 0:18:01.159 And that's made this this um you know, the alliance 0:18:01.200 --> 0:18:03.840 and the partnership and the friendship side of this bilateral 0:18:03.840 --> 0:18:09.800 relationship far more important than the niggling issues between them. 0:18:10.080 --> 0:18:13.000 Whether it's accus, which is obviously, you know, not such 0:18:13.040 --> 0:18:14.960 a small issue. It was quite important to the French 0:18:15.280 --> 0:18:18.480 and the small boats issue, which is hugely politically important 0:18:18.480 --> 0:18:22.000 to sooner. The other issue that the europe is facing 0:18:22.000 --> 0:18:24.760 as a whole, and I include the UK, so we're 0:18:24.800 --> 0:18:28.960 referring geographically the Inflation Reduction Act posing a question about 0:18:29.000 --> 0:18:33.120 subsidies rivaling the US. So far, the US talking about 0:18:33.119 --> 0:18:36.040 its plan to rival at the UK hasn't caught up 0:18:36.080 --> 0:18:39.720 so much yet. Could this be an area perhaps of cooperation. Yeah, 0:18:39.720 --> 0:18:42.000 that's a really interesting question because the EU has come 0:18:42.080 --> 0:18:45.520 up with its own response. Actually, Lionel's written very well 0:18:45.520 --> 0:18:50.000 on that recently, and it's it's it's a complicated response. 0:18:50.040 --> 0:18:53.800 They're different pillars. Parts of it, you know, include easing 0:18:53.800 --> 0:18:58.600 the regulatory environment, but there's also you know, a nod 0:18:58.640 --> 0:19:03.000 to UM, you know, opening the floodgates potentially for more 0:19:03.080 --> 0:19:05.800 state aid and that makes UM the UK nervous because 0:19:05.800 --> 0:19:08.320 it doesn't have its own response. I think, you know, 0:19:08.720 --> 0:19:11.000 it would be interesting to see whether from the readout 0:19:11.400 --> 0:19:15.359 there are any discussions about coordinating, because I think it 0:19:15.520 --> 0:19:21.360 is Sunac ideologically is is you know, would be an 0:19:21.359 --> 0:19:24.800 opponent of this, uh, you know, of of of state 0:19:24.840 --> 0:19:28.480 aid becoming the answer here, and because we know that 0:19:28.520 --> 0:19:30.960 France and Germany, the deeper pockets, will be the ones 0:19:31.040 --> 0:19:33.600 to uh you know, throw more at their industries. At 0:19:33.600 --> 0:19:36.600 the same time, Britain will need to formulate its own response. 0:19:36.680 --> 0:19:38.040 The only other thing I would add is, you know 0:19:38.119 --> 0:19:41.760 Maccolm's European political community, which was something that you know, 0:19:41.840 --> 0:19:45.440 trust signaled support of, is one way that you know 0:19:45.480 --> 0:19:50.080 the two could potentially also find common ground outside the EU. 0:19:50.200 --> 0:19:54.000 SUNAC could potentially throw some support behind that as well. 0:19:54.240 --> 0:19:56.280 Excellent plenty to watch out for. Thank you to our 0:19:56.320 --> 0:20:00.480 powerhouses of Bloomberg Opinion, Leonel Laurent Entorez Raphael for your 0:20:00.600 --> 0:20:03.280 views as we look ahead to some of which of 0:20:03.280 --> 0:20:05.720 course we will be covering here on Bloomberg Radio. I'm 0:20:05.760 --> 0:20:08.480 Stephen Carlin London. You can catch us every weekday morning 0:20:08.480 --> 0:20:10.960 here for Bloomberg Daybreak. You're at beginning at six am 0:20:10.960 --> 0:20:14.159 in London and one am on Wall Streets. Tom, thank you, 0:20:14.240 --> 0:20:17.639 And coming up on Bloomberg Daybreak weekend, President Biden's budget 0:20:17.680 --> 0:20:20.520 proposal is about to come out. How much support can 0:20:20.600 --> 0:20:24.359 he win from Republicans? I'm Tom Busby and this is 0:20:24.400 --> 0:20:39.119 Bloomberg Broadcasting live from the Bloomberg Interactive Broker Studio in 0:20:39.200 --> 0:20:43.240 New York. Bloomberg Elomon FREEO to Washington, DC, Bloomberg ninety 0:20:43.320 --> 0:20:46.320 nine one to Boston, Bloomberg one O six one to 0:20:46.440 --> 0:20:50.080 San Francisco, Bloomberg nine sixty to the country, Sirius XM 0:20:50.119 --> 0:20:54.159 Channel one nineteen to London, DAB digital radio, and around 0:20:54.160 --> 0:20:58.040 the globe the Bloomberg Business app in Bloomberg Radio dot Com. 0:20:58.040 --> 0:21:07.639 This is Bloomberg Daybreak Weekend. I've Tom bust be in 0:21:07.720 --> 0:21:09.480 New York with your global look ahead at the top 0:21:09.520 --> 0:21:13.760 stories for investors in the coming week. President Biden presumably 0:21:13.800 --> 0:21:16.919 putting the finishing touches on his twenty twenty four budget request. 0:21:16.960 --> 0:21:20.080 We're expecting to come out this coming Thursday. Joining us 0:21:20.080 --> 0:21:22.880 now with some insight on what to expect and just 0:21:22.920 --> 0:21:26.480 how tricky this one will be. Bloomberg Sound On host 0:21:26.680 --> 0:21:29.920 Joe Matthew. Thank you Tom. The budget, of course, is 0:21:29.960 --> 0:21:32.280 a blueprint. It's far from a final version of the 0:21:32.280 --> 0:21:35.640 President's been talking about some of his top priorities lately. 0:21:35.640 --> 0:21:38.119 Folks in Congress. They want to eliminate a lot of 0:21:38.119 --> 0:21:41.800 healthcare coverage, so its mega Republicans, increased costs for millions 0:21:41.840 --> 0:21:45.159 of Americans. Joining us now for some insights, Bloomberg Government's 0:21:45.200 --> 0:21:49.240 Jack Fitzpatrick, who specializes in the budget process. He covers 0:21:49.280 --> 0:21:51.800 appropriations and it's great to see it. Jack did we 0:21:51.840 --> 0:21:54.040 get a clue. Where have we been getting clues about 0:21:54.080 --> 0:21:56.560 the president's budget in the recent string of speeches, Like 0:21:56.600 --> 0:21:58.040 the State of the Union, of course would be the 0:21:58.080 --> 0:22:00.399 big one, So this won't actually be much of a 0:22:00.400 --> 0:22:03.439 surprise when he drops it. The big stuff is not 0:22:03.480 --> 0:22:06.280 going to be surprising, but it is. There's some nuance 0:22:06.359 --> 0:22:09.199 here that a lot of the president's top priorities that 0:22:09.240 --> 0:22:11.920 we heard about in the State of the Union, when 0:22:11.960 --> 0:22:14.639 he's gone after Republicans saying well, now they want to 0:22:14.640 --> 0:22:16.680 go after your Medicaid, they used to want to go 0:22:16.720 --> 0:22:19.080 after your Social Security, Medicare, I'm going to stop that. 0:22:19.240 --> 0:22:23.040 A lot of that is what he opposes about things 0:22:23.080 --> 0:22:27.320 that Republicans have brought up. It's not necessarily clear how 0:22:27.359 --> 0:22:31.280 he weaves that into a budget proposal now, I will say, 0:22:31.359 --> 0:22:34.600 even talking to members of Congress over the last week, 0:22:34.640 --> 0:22:36.879 I talked to Brendan Boyle, the top Democrat on the 0:22:36.880 --> 0:22:39.960 House Budget Committee, who said, really, the top stuff he's 0:22:39.960 --> 0:22:44.040 looking for in the budget is protecting and maintaining the 0:22:44.119 --> 0:22:47.960 things that Democrats feel they have already accomplished, whether it's 0:22:49.560 --> 0:22:53.480 an Affordable Care Act, making sure Republicans don't chip away 0:22:53.520 --> 0:22:56.520 at Medicaid, or anything like that, or even making sure 0:22:56.560 --> 0:22:59.000 the money continues to go out in an infrastructure bill. 0:23:00.160 --> 0:23:02.720 This does not appear to be one of those budgets 0:23:02.920 --> 0:23:06.480 where there's one ask that he's making of Congress. That's 0:23:06.520 --> 0:23:09.359 the big thing. It's really almost more about what he 0:23:09.440 --> 0:23:12.800 wants Republicans to not do any things he likes, and, 0:23:13.160 --> 0:23:15.760 like you said, preserving what's already been accomplished in the 0:23:15.800 --> 0:23:19.760 last two years. You mentioned a major entitlement program though, 0:23:19.760 --> 0:23:22.360 and I wonder what we're going to hear about Social Security, Medicare, 0:23:22.400 --> 0:23:25.640 and so on, following this sort of endless debate recently 0:23:25.720 --> 0:23:29.879