1 00:00:02,360 --> 00:00:04,800 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,800 --> 00:00:06,920 Speaker 1: the top stories in the coming week from our day 3 00:00:06,920 --> 00:00:09,560 Speaker 1: Break anchors all around the world, and straight ahead on 4 00:00:09,560 --> 00:00:12,280 Speaker 1: the program, a big week ahead on Wall Street, a 5 00:00:12,280 --> 00:00:16,320 Speaker 1: FED decision and a jobs report. Also out earnings from Apple. 6 00:00:16,480 --> 00:00:18,000 Speaker 1: I'm Tom Busby in New York. 7 00:00:18,160 --> 00:00:21,079 Speaker 2: I'm Kaylee Lynes in Washington, where the House finally has 8 00:00:21,160 --> 00:00:24,079 Speaker 2: a new speaker, Mike Johnson of Louisiana. 9 00:00:24,320 --> 00:00:27,360 Speaker 3: I'm Stephen Carol in London, where the economic data is gloomy, 10 00:00:27,440 --> 00:00:29,760 Speaker 3: but that could be welcome news for the Bank of 11 00:00:29,760 --> 00:00:30,920 Speaker 3: England's upcoming meeting. 12 00:00:31,080 --> 00:00:35,040 Speaker 4: I'm deg Prisner China. Evergrand faces a critical day in court. 13 00:00:35,440 --> 00:00:38,720 Speaker 5: That's all straight ahead on Bloomberg day Break Weekend, the 14 00:00:38,760 --> 00:00:41,360 Speaker 5: business news you need to wrap up your week in 15 00:00:41,520 --> 00:00:45,760 Speaker 5: just one fifteen minute podcast available on Apple, Spotify, The 16 00:00:45,760 --> 00:00:49,040 Speaker 5: Bloomberg Business Appen everywhere you get your podcasts. 17 00:00:52,320 --> 00:00:54,400 Speaker 1: Good day to you. I'm Tom Busby. We begin today's 18 00:00:54,400 --> 00:00:56,880 Speaker 1: program with a focus on the economy, and this week, 19 00:00:57,080 --> 00:00:59,560 Speaker 1: not only do we get an interest rate decision by 20 00:00:59,600 --> 00:01:03,280 Speaker 1: the Fed will reserve policymakers, but we'll cap the week 21 00:01:03,320 --> 00:01:05,200 Speaker 1: with the jobs report for the month of October and 22 00:01:05,240 --> 00:01:08,360 Speaker 1: to help us break it all down. We welcome Bloomberg 23 00:01:08,400 --> 00:01:12,480 Speaker 1: International Economics and Policy correspondent Michael McKee. Welcome, Michael. 24 00:01:13,000 --> 00:01:14,120 Speaker 6: Thanks great to be here. 25 00:01:14,680 --> 00:01:17,120 Speaker 1: Now let's start with that two day meeting by the 26 00:01:17,120 --> 00:01:20,400 Speaker 1: Federal Open Market Committee. After another pause in interest rate 27 00:01:20,480 --> 00:01:23,080 Speaker 1: hikes at the fed's last meeting in September, what are 28 00:01:23,080 --> 00:01:24,520 Speaker 1: we expecting to see this week? 29 00:01:24,720 --> 00:01:29,839 Speaker 6: Another pause? The Fed has pretty much made it clear, 30 00:01:29,920 --> 00:01:34,679 Speaker 6: and Jaypowell last week talking with Bloomberg's David Weston, kind 31 00:01:34,680 --> 00:01:37,520 Speaker 6: of emphasized the idea that the FED can at this 32 00:01:37,680 --> 00:01:40,280 Speaker 6: point wait and see what's going to happen. Because market 33 00:01:40,360 --> 00:01:43,080 Speaker 6: rates have gone up so much in recent weeks that 34 00:01:43,240 --> 00:01:45,360 Speaker 6: they're doing part of the job for the FED. And 35 00:01:45,400 --> 00:01:49,120 Speaker 6: so if the Fed is worried about inflation going back 36 00:01:49,200 --> 00:01:52,640 Speaker 6: up again, which they aren't particularly but you never know 37 00:01:53,000 --> 00:01:58,000 Speaker 6: these days, then the market rates will help put pressure 38 00:01:58,480 --> 00:02:02,400 Speaker 6: on the economy and inflation and slow things down more. 39 00:02:02,680 --> 00:02:05,880 Speaker 6: And also, because you have the market rates this high 40 00:02:06,120 --> 00:02:08,520 Speaker 6: and it slows down the economy, they don't want to 41 00:02:08,520 --> 00:02:12,280 Speaker 6: pile on and make things worse and send us into recessions. 42 00:02:12,320 --> 00:02:14,680 Speaker 6: So they're going to watch and wait. There is no 43 00:02:15,240 --> 00:02:19,040 Speaker 6: new economic forecasts and no new dot plot, so it's 44 00:02:19,080 --> 00:02:21,840 Speaker 6: really only the decision and then what the chairman says 45 00:02:21,840 --> 00:02:26,480 Speaker 6: in his news conference afterwards. And nobody's really expecting either 46 00:02:27,080 --> 00:02:29,160 Speaker 6: thing to make a lot of news because Pile's going 47 00:02:29,240 --> 00:02:31,760 Speaker 6: to want to say, we're going to watch the data 48 00:02:31,840 --> 00:02:33,800 Speaker 6: as they have. So then the focus will turn to 49 00:02:33,840 --> 00:02:37,040 Speaker 6: the December meeting. But for right now, the Fed is 50 00:02:37,080 --> 00:02:41,200 Speaker 6: probably going to be one of the lesser influences on 51 00:02:41,280 --> 00:02:44,880 Speaker 6: the market's week, which is unusual. 52 00:02:45,320 --> 00:02:47,440 Speaker 1: But there is a big influence on the markets coming 53 00:02:47,560 --> 00:02:49,720 Speaker 1: up that very same day. That morning, Why don't you 54 00:02:49,720 --> 00:02:51,680 Speaker 1: tell us what's going on with the treasury refunding. 55 00:02:51,919 --> 00:02:55,720 Speaker 6: Yeah, the Fed figures into that a little bit. Every quarter, 56 00:02:55,840 --> 00:02:59,680 Speaker 6: the Treasury announces how much it anticipates borrowing for the 57 00:02:59,680 --> 00:03:02,680 Speaker 6: next three months, and of course, with the deficit where 58 00:03:02,680 --> 00:03:07,400 Speaker 6: it is now, the Treasury is forecast to announce it 59 00:03:07,440 --> 00:03:11,480 Speaker 6: will need to borrow a trillion dollars in three months. 60 00:03:12,000 --> 00:03:13,280 Speaker 6: That's a lot. 61 00:03:13,639 --> 00:03:15,000 Speaker 1: And so the. 62 00:03:17,000 --> 00:03:18,959 Speaker 6: Estimate is that we're going to see a lot of 63 00:03:19,000 --> 00:03:21,720 Speaker 6: volatility in the treasury market depending on how they lay 64 00:03:21,720 --> 00:03:26,640 Speaker 6: this out. Which tenor what maturities three year, five years, 65 00:03:26,639 --> 00:03:28,480 Speaker 6: seven year, ten year are they going to spread this 66 00:03:28,600 --> 00:03:31,280 Speaker 6: out over how much of it will be in treasury bills, 67 00:03:31,280 --> 00:03:34,440 Speaker 6: how much of it will be in bonds, And so 68 00:03:34,760 --> 00:03:38,080 Speaker 6: the question for the market is who's going to buy 69 00:03:38,400 --> 00:03:41,560 Speaker 6: all this and therefore then at what price? And the 70 00:03:41,600 --> 00:03:43,760 Speaker 6: FED figures into it because of course they've been raising 71 00:03:43,800 --> 00:03:46,640 Speaker 6: interest rates and that adds to the amount of interest 72 00:03:46,680 --> 00:03:49,760 Speaker 6: the government has to pay, which adds to the deficit. 73 00:03:50,280 --> 00:03:54,240 Speaker 6: And it also raises the question of how much are 74 00:03:55,040 --> 00:04:00,480 Speaker 6: market participants going to have to pay to to buy 75 00:04:00,480 --> 00:04:04,560 Speaker 6: these bonds because the Fed has raised rates and you're 76 00:04:04,600 --> 00:04:09,720 Speaker 6: not going to buy treasuries at a lower price than 77 00:04:10,320 --> 00:04:13,680 Speaker 6: what the Fed is already put out there. So it's 78 00:04:13,680 --> 00:04:16,560 Speaker 6: going to be a very interesting dynamic on Wednesday morning. 79 00:04:16,600 --> 00:04:20,760 Speaker 6: And basically the outlook seems to be look for volatility. 80 00:04:20,920 --> 00:04:25,800 Speaker 1: And volatility not only in the treasury market, but in stocks. 81 00:04:25,839 --> 00:04:27,240 Speaker 1: It's going to impact a lot. 82 00:04:27,880 --> 00:04:31,640 Speaker 6: It could impact stocks as well, given where things settle out. 83 00:04:32,760 --> 00:04:35,400 Speaker 6: And obviously we get close to the day, we'll see 84 00:04:35,640 --> 00:04:38,880 Speaker 6: when issued prices are going to be. But it's beginning 85 00:04:38,920 --> 00:04:41,400 Speaker 6: to look like this is going to be one of 86 00:04:41,440 --> 00:04:46,080 Speaker 6: the bigger refunding announcements that we've had in decades. 87 00:04:46,240 --> 00:04:49,320 Speaker 1: Will we get more good news this coming Friday from 88 00:04:49,360 --> 00:04:51,480 Speaker 1: the October jobs report. That's a biggie. 89 00:04:52,000 --> 00:04:52,240 Speaker 7: Yeah. 90 00:04:52,839 --> 00:04:55,599 Speaker 6: It seems that the markets have given up on the 91 00:04:55,640 --> 00:04:59,920 Speaker 6: idea that we're going to see a major change in payroll. 92 00:05:00,960 --> 00:05:04,839 Speaker 6: The forecast is for one hundred and eighty five thousand 93 00:05:04,880 --> 00:05:08,080 Speaker 6: at this point, which would be fairly strong, and it's 94 00:05:08,160 --> 00:05:11,240 Speaker 6: higher than the forecast in previous months that turned out 95 00:05:11,240 --> 00:05:14,440 Speaker 6: to be wrong because job growth was so strong, So 96 00:05:14,480 --> 00:05:16,159 Speaker 6: the market seemed to thrown in the talent and said 97 00:05:16,160 --> 00:05:20,040 Speaker 6: we'll probably get a pretty good number. The Fed has 98 00:05:20,240 --> 00:05:23,240 Speaker 6: been looking for something around one hundred thousand, and one 99 00:05:23,320 --> 00:05:26,240 Speaker 6: hundred and eighty five would not be anywhere close. No 100 00:05:26,400 --> 00:05:30,000 Speaker 6: change in the unemployment rate is expected three point eight percent, 101 00:05:31,279 --> 00:05:34,200 Speaker 6: which is also not what the Fed expected. They thought 102 00:05:34,520 --> 00:05:37,640 Speaker 6: we would get easily into the middle of the foes 103 00:05:37,800 --> 00:05:41,960 Speaker 6: the five range. They've since dialed that back down to 104 00:05:42,080 --> 00:05:44,720 Speaker 6: four point one percent, but three point eight is not 105 00:05:44,880 --> 00:05:48,440 Speaker 6: four point one. And at the same time, the forecasts 106 00:05:48,440 --> 00:05:51,520 Speaker 6: are that we see average hourly earnings on an annual 107 00:05:51,560 --> 00:05:55,839 Speaker 6: basis continue to drop a little bit. So it's like 108 00:05:55,880 --> 00:06:00,200 Speaker 6: all good there now, Tom, you have just jinxed the 109 00:06:00,279 --> 00:06:04,080 Speaker 6: US economy because no, we said things are all good 110 00:06:04,320 --> 00:06:08,080 Speaker 6: there has to be something that is out there. 111 00:06:08,520 --> 00:06:10,359 Speaker 1: Well, there is a lot to look forward to. Michael. 112 00:06:10,400 --> 00:06:13,240 Speaker 1: Thank you, Our thanks to Bloomberg International Economics and Policy 113 00:06:13,240 --> 00:06:16,120 Speaker 1: correspondent Michael McKee. We now go from the economy to 114 00:06:16,200 --> 00:06:19,320 Speaker 1: the ongoing corporate earning season, which continues in earnest. More 115 00:06:19,360 --> 00:06:21,640 Speaker 1: than one hundred sixty companies in the S and P 116 00:06:21,760 --> 00:06:24,000 Speaker 1: five hundred reporting in the week ahead, and at the 117 00:06:24,000 --> 00:06:27,000 Speaker 1: top of that list is Apple, the most valuable company 118 00:06:27,000 --> 00:06:29,960 Speaker 1: on the planet, worth a staggering two point sixty three 119 00:06:30,080 --> 00:06:32,720 Speaker 1: trillion dollars. And for more, we're going to bring in 120 00:06:32,839 --> 00:06:36,320 Speaker 1: anarag Rana, he's senior tech analyst with Bloomberg Intelligence. Well, 121 00:06:36,360 --> 00:06:39,000 Speaker 1: the Apple shares they've really took off this year, up 122 00:06:39,040 --> 00:06:41,520 Speaker 1: thirty percent, to just put out the new iPhone fifteen 123 00:06:41,600 --> 00:06:44,880 Speaker 1: line a month ago. It's got another new product launch 124 00:06:45,000 --> 00:06:50,000 Speaker 1: on Tuesday. Earnings Thursday. About those earnings, what do you expect. 125 00:06:49,760 --> 00:06:52,599 Speaker 7: You know, from a mathematical point of view, which is 126 00:06:52,720 --> 00:06:55,680 Speaker 7: not the most exciting quartered in the for Apple, just 127 00:06:55,760 --> 00:06:59,000 Speaker 7: because it's right before the holiday season, which is the 128 00:06:59,000 --> 00:07:01,760 Speaker 7: biggest quarter for the U. But you know, we do 129 00:07:01,839 --> 00:07:05,120 Speaker 7: have some early indications of or we hope to hear 130 00:07:05,160 --> 00:07:08,440 Speaker 7: about the early indications of the brand new iPhone fifteen 131 00:07:08,520 --> 00:07:11,320 Speaker 7: launch and how it's doing. So I think it's going 132 00:07:11,320 --> 00:07:13,120 Speaker 7: to the conference call is going to be far more 133 00:07:13,120 --> 00:07:15,680 Speaker 7: exciting in our view than the numbers itself. 134 00:07:15,840 --> 00:07:17,800 Speaker 1: And as far as those numbers, what are you expecting 135 00:07:17,800 --> 00:07:18,200 Speaker 1: to see? 136 00:07:18,240 --> 00:07:23,320 Speaker 7: Relatively modest growth? Frankly, because this is an area in 137 00:07:23,360 --> 00:07:26,200 Speaker 7: constant currency. There could be some headwinds because of fex 138 00:07:26,640 --> 00:07:28,720 Speaker 7: but other than that, you know, you're going to look 139 00:07:28,760 --> 00:07:32,680 Speaker 7: at nothing so exciting. Services revenue, which is you know, 140 00:07:32,720 --> 00:07:35,240 Speaker 7: the one that is the higher growth area, could be 141 00:07:35,280 --> 00:07:39,600 Speaker 7: around the eight to ten percent mark. iPhones pretty flat, 142 00:07:39,760 --> 00:07:43,520 Speaker 7: nothing so exciting about that. So, I mean, overall, I'm 143 00:07:43,560 --> 00:07:49,160 Speaker 7: not really baking in a big surprise, but the comments 144 00:07:49,200 --> 00:07:52,120 Speaker 7: about the iPhone, and more importantly, how is it doing 145 00:07:52,160 --> 00:07:56,920 Speaker 7: in China? Everything related to the China iPhone is going 146 00:07:56,960 --> 00:08:01,480 Speaker 7: to dictate how Apple essentially grow and trades over the 147 00:08:01,480 --> 00:08:02,360 Speaker 7: next twelve months. 148 00:08:02,440 --> 00:08:05,160 Speaker 1: And now how is the iPhone, especially the lineup of 149 00:08:05,240 --> 00:08:07,960 Speaker 1: the new fifteens, how is it doing in China and 150 00:08:08,040 --> 00:08:08,920 Speaker 1: the rest of the world. 151 00:08:09,200 --> 00:08:10,880 Speaker 7: I think this is the you know, we got some 152 00:08:11,040 --> 00:08:13,760 Speaker 7: early indications that it's not doing so well in China, 153 00:08:13,800 --> 00:08:15,760 Speaker 7: but that was just like the first fifteen days or 154 00:08:15,800 --> 00:08:19,880 Speaker 7: seventeen days. There's some industry reports, you know, in our view, 155 00:08:19,960 --> 00:08:23,680 Speaker 7: it should do better in China only because there is 156 00:08:23,720 --> 00:08:27,320 Speaker 7: an easier comparison to last year. So the Apple story 157 00:08:27,560 --> 00:08:29,760 Speaker 7: is a little bit more simpler in when it comes 158 00:08:29,800 --> 00:08:32,200 Speaker 7: to the iPhone than most people think about it, because 159 00:08:33,000 --> 00:08:35,760 Speaker 7: the way I look at it is there is a 160 00:08:35,800 --> 00:08:39,240 Speaker 7: massive pace of iPhones around the World's let's call it 161 00:08:39,240 --> 00:08:41,280 Speaker 7: eight hundred and you know, somewhere around eight hundred and 162 00:08:41,280 --> 00:08:46,040 Speaker 7: forty million iPhones around the world. The average refresh cycle 163 00:08:46,280 --> 00:08:48,960 Speaker 7: or average refreat rate for a human being is about 164 00:08:48,960 --> 00:08:51,840 Speaker 7: four years. So at any given year, they're going to 165 00:08:51,880 --> 00:08:54,640 Speaker 7: sell let's say, about two hundred and twenty million units. 166 00:08:55,200 --> 00:08:57,440 Speaker 7: In good years, they will sell a little bit more. 167 00:08:57,480 --> 00:09:00,240 Speaker 7: In bad years, they will sell a little less. Last 168 00:09:00,280 --> 00:09:03,120 Speaker 7: year we saw a little bit less because of some 169 00:09:03,160 --> 00:09:06,720 Speaker 7: supply chain problems we faced in China because of COVID 170 00:09:07,320 --> 00:09:10,679 Speaker 7: you know breakout over there. So from that point of time, 171 00:09:10,760 --> 00:09:13,440 Speaker 7: I mean that comparison becomes a little bit easier in 172 00:09:13,520 --> 00:09:16,280 Speaker 7: fourth quarter, but then there is some you know, additional 173 00:09:16,360 --> 00:09:19,800 Speaker 7: drama going on China with you know, launch of a 174 00:09:19,880 --> 00:09:24,199 Speaker 7: new phone, potential nationalism, potential government restrictions. 175 00:09:24,240 --> 00:09:25,960 Speaker 8: I mean, there is a there's there's. 176 00:09:26,080 --> 00:09:28,480 Speaker 7: A lot of noise around that topic. So when Apple 177 00:09:28,520 --> 00:09:30,880 Speaker 7: comes out and gives us a clear indication of what's 178 00:09:30,880 --> 00:09:34,320 Speaker 7: happening in China, I think it's going to be either 179 00:09:34,360 --> 00:09:35,880 Speaker 7: good for the stock or bad for the stock. 180 00:09:36,120 --> 00:09:39,280 Speaker 1: Okay, and and a rag very quickly Tuesday, we're expecting 181 00:09:39,280 --> 00:09:41,600 Speaker 1: a new product launch. What do you expect to see 182 00:09:41,760 --> 00:09:42,240 Speaker 1: from Apple? 183 00:09:42,360 --> 00:09:43,920 Speaker 7: That's a very I mean I would say in a 184 00:09:44,280 --> 00:09:47,440 Speaker 7: very normal way, that is the next upgrade for the 185 00:09:47,520 --> 00:09:50,360 Speaker 7: for the Max. And I think the real, you know, 186 00:09:50,400 --> 00:09:52,680 Speaker 7: fun part over there is they have their own ship 187 00:09:53,120 --> 00:09:57,520 Speaker 7: and because of the design chip by them, the MAX 188 00:09:57,679 --> 00:09:59,920 Speaker 7: have done really well. I think they've been taking market 189 00:10:00,120 --> 00:10:04,200 Speaker 7: Chioto be from the genetic PCs or the high end 190 00:10:04,240 --> 00:10:07,840 Speaker 7: PCs for some time and the performance of these machines 191 00:10:07,880 --> 00:10:10,840 Speaker 7: are truly remarkable. And I think I would attribute a 192 00:10:10,840 --> 00:10:13,480 Speaker 7: lot to act with not just the design of these products, 193 00:10:13,760 --> 00:10:16,240 Speaker 7: but the chip that they have built in house. 194 00:10:16,640 --> 00:10:16,880 Speaker 5: Wow. 195 00:10:16,920 --> 00:10:18,880 Speaker 1: Well, there's a lot going on, a lot to look 196 00:10:18,880 --> 00:10:22,559 Speaker 1: forward to. Anna rag Rana, Senior tech analyst with Bloomberg Intelligence, 197 00:10:22,600 --> 00:10:25,280 Speaker 1: Thank you so much for joining us today. Happy to 198 00:10:25,280 --> 00:10:28,120 Speaker 1: be here, coming up on Bloomberg day Break weekend, Lawmakers 199 00:10:28,200 --> 00:10:31,320 Speaker 1: finally elect a new Speaker of the House. We'll look 200 00:10:31,360 --> 00:10:34,840 Speaker 1: at who Mike Johnson is and what challenges he faces 201 00:10:34,960 --> 00:10:48,800 Speaker 1: going forward. I'm Tom Busby. This is Bloomberg. This is 202 00:10:48,800 --> 00:10:51,120 Speaker 1: Bloomberg day Break weekend, our global look ahead at the 203 00:10:51,160 --> 00:10:53,880 Speaker 1: top stories for investors in the coming week. I'm Tom 204 00:10:53,920 --> 00:10:56,680 Speaker 1: Busby in New York. Up later on our program, we 205 00:10:56,800 --> 00:10:59,440 Speaker 1: preview another key rate decision, this one from the Bank 206 00:10:59,480 --> 00:11:03,280 Speaker 1: of England. But first, after weeks of infighting and jockeying 207 00:11:03,320 --> 00:11:07,160 Speaker 1: for votes, lawmakers finally elected Republican Congressman Mike Johnson of 208 00:11:07,200 --> 00:11:11,679 Speaker 1: Louisiana as the fifty sixth Speaker of the House. For more, 209 00:11:11,960 --> 00:11:15,760 Speaker 1: let's bring in Bloomberg sound on. Co host Kaylee lines. 210 00:11:15,679 --> 00:11:19,240 Speaker 2: That's right, Tom. After three full weeks of paralysis without 211 00:11:19,280 --> 00:11:22,400 Speaker 2: a House Speaker, someone finally has the gavel in hand. 212 00:11:22,800 --> 00:11:26,640 Speaker 2: Congressman Mike Johnson of Louisiana. Let's take it back to 213 00:11:26,679 --> 00:11:29,760 Speaker 2: the House floor this past week when he secured that gavel. 214 00:11:29,920 --> 00:11:32,199 Speaker 7: The total number of votes cast is four hundred and 215 00:11:32,240 --> 00:11:35,760 Speaker 7: twenty nine love, which the Honorable Mike Johnson of the 216 00:11:35,800 --> 00:11:39,040 Speaker 7: State of Louisiana has received two hundred and twenty votes. 217 00:11:43,880 --> 00:11:45,920 Speaker 2: So there you have it. He was elected to the 218 00:11:45,920 --> 00:11:49,920 Speaker 2: post with two hundred and twenty votes, accomplishing what Tom Emmer, 219 00:11:50,200 --> 00:11:54,079 Speaker 2: Jim Jordan, and Steve Scalice could not before him, galvanizing 220 00:11:54,200 --> 00:11:57,560 Speaker 2: enough support within the Republican Conference. But you couldn't be 221 00:11:57,600 --> 00:12:01,120 Speaker 2: blamed if you're sitting there asking yourself who is Mike Johnson? 222 00:12:01,520 --> 00:12:02,679 Speaker 2: So I thought it would be a good idea to 223 00:12:02,679 --> 00:12:05,200 Speaker 2: get Mike Dorning, who helps lead our congressional coverage here 224 00:12:05,240 --> 00:12:09,120 Speaker 2: at Bloomberg, to help us answer those questions and others. Mike, 225 00:12:09,160 --> 00:12:10,360 Speaker 2: good to see you, as. 226 00:12:10,200 --> 00:12:11,480 Speaker 9: Always, great to see you. 227 00:12:11,679 --> 00:12:13,640 Speaker 2: So let's talk about who this guy is. He has 228 00:12:13,679 --> 00:12:18,080 Speaker 2: been vaulted from essentially being a backbencher to second in 229 00:12:18,120 --> 00:12:20,720 Speaker 2: line to the presidency. What do we need to know 230 00:12:21,240 --> 00:12:22,240 Speaker 2: about Speaker Johnson? 231 00:12:22,400 --> 00:12:25,000 Speaker 9: Well, probably the most important thing to know about him 232 00:12:25,120 --> 00:12:30,040 Speaker 9: is he's someone who has very strong evangelical Christian beliefs 233 00:12:30,120 --> 00:12:33,760 Speaker 9: and he's, even before he was an elective office, very 234 00:12:33,800 --> 00:12:37,320 Speaker 9: involved in the legal agenda of the Christian right. He 235 00:12:37,440 --> 00:12:44,239 Speaker 9: worked with the legal advocacy group that pursued conservative cultural causes, 236 00:12:45,040 --> 00:12:49,559 Speaker 9: and that's been sort of the core of who he 237 00:12:49,720 --> 00:12:53,040 Speaker 9: was even before he entered politics, and he's going to 238 00:12:53,080 --> 00:12:56,600 Speaker 9: be the most conservative speaker in modern times on both 239 00:12:56,720 --> 00:13:02,480 Speaker 9: social and economic issues. And he's a guy, importantly, who 240 00:13:02,600 --> 00:13:07,760 Speaker 9: doesn't have a lot of experience yet in these big negotiations. 241 00:13:07,760 --> 00:13:10,280 Speaker 9: He's just been, as you said, you know, a very 242 00:13:10,360 --> 00:13:14,080 Speaker 9: junior member of leadership, was not involved in any of 243 00:13:14,080 --> 00:13:17,800 Speaker 9: the big negotiations. So he'll be taking on a completely 244 00:13:17,920 --> 00:13:19,280 Speaker 9: new set of tasks. 245 00:13:19,440 --> 00:13:21,319 Speaker 2: Yeah, and I want to get to that lack of 246 00:13:21,400 --> 00:13:23,680 Speaker 2: leadership experience in just a moment. But also when we 247 00:13:23,720 --> 00:13:26,240 Speaker 2: think about the idea that this is a very staunch conservative, 248 00:13:26,280 --> 00:13:28,679 Speaker 2: it's also important to note this is someone who's pretty 249 00:13:28,679 --> 00:13:31,480 Speaker 2: closely aligned with former President Trump and was really one 250 00:13:31,559 --> 00:13:34,160 Speaker 2: of the leaders of the effort within the House to 251 00:13:34,600 --> 00:13:38,040 Speaker 2: overturn or not certify the results of the twenty twenty election. 252 00:13:38,200 --> 00:13:41,800 Speaker 2: And I wonder, especially for those endangered moderates in his 253 00:13:41,920 --> 00:13:45,880 Speaker 2: conference who are in districts that Biden won in twenty twenty, 254 00:13:46,320 --> 00:13:48,800 Speaker 2: how much pushback is he likely to get from those 255 00:13:48,840 --> 00:13:51,880 Speaker 2: individuals because of his position on Trump and the election, 256 00:13:52,000 --> 00:13:54,520 Speaker 2: And that obviously ties into how hard it will be 257 00:13:54,559 --> 00:13:56,880 Speaker 2: for him to keep the Republican Conference together. 258 00:13:57,559 --> 00:14:02,560 Speaker 9: Well, they all voted for him, embraced him. His positions 259 00:14:03,120 --> 00:14:08,040 Speaker 9: themselves won't play well in those districts because he's above all, 260 00:14:09,120 --> 00:14:13,760 Speaker 9: very conservative on cultural issues like abortion, same sex marriage, 261 00:14:14,040 --> 00:14:20,520 Speaker 9: even you know, he supported criminalization of gay sex quite 262 00:14:20,600 --> 00:14:24,920 Speaker 9: late in his career, and he was one of the 263 00:14:25,040 --> 00:14:29,080 Speaker 9: leaders of the election denialism in the House, and he 264 00:14:29,200 --> 00:14:33,200 Speaker 9: has that record. I mean that said, we don't know 265 00:14:33,280 --> 00:14:39,760 Speaker 9: how much Democrats will succeed in making him a caricature 266 00:14:39,920 --> 00:14:43,760 Speaker 9: that you know, people can rally around in the same 267 00:14:43,800 --> 00:14:48,280 Speaker 9: way that they did Nut Gingrich or Republicans did Nancy Pelosi. 268 00:14:48,960 --> 00:14:53,840 Speaker 9: He has a personality and a style that's not as 269 00:14:53,960 --> 00:14:59,560 Speaker 9: confrontational as Jim Jordan or Nut Gingrich or Donald Trump 270 00:14:59,640 --> 00:15:03,000 Speaker 9: for that matter. So even though he has these very 271 00:15:03,320 --> 00:15:08,600 Speaker 9: sort of out of the mainstream political positions, his persona, 272 00:15:08,760 --> 00:15:11,720 Speaker 9: what you see on TV, what you hear in his voice, 273 00:15:12,400 --> 00:15:16,000 Speaker 9: is not that sort of combative, confrontational style. 274 00:15:16,600 --> 00:15:19,280 Speaker 2: Yeah. One member of the Republican conference told me this 275 00:15:19,360 --> 00:15:22,880 Speaker 2: past week that it's just really hard to dislike Mike Johnson, 276 00:15:22,920 --> 00:15:25,160 Speaker 2: and ultimately maybe that's why he was able to secure 277 00:15:25,200 --> 00:15:27,400 Speaker 2: the votes when so many others could not. But to 278 00:15:27,440 --> 00:15:30,640 Speaker 2: the point you were making earlier Mike about this idea 279 00:15:30,880 --> 00:15:35,520 Speaker 2: that this is not someone who is in a position 280 00:15:36,280 --> 00:15:39,400 Speaker 2: where he has had a lot of experience being a leader, 281 00:15:39,440 --> 00:15:42,160 Speaker 2: being in the room with people like Mitch McConnell or 282 00:15:42,240 --> 00:15:45,560 Speaker 2: Chuck Schumer or ultimately possibly even President Biden. If we're 283 00:15:45,600 --> 00:15:48,080 Speaker 2: really getting down to having to hammer out a deal 284 00:15:48,120 --> 00:15:51,520 Speaker 2: on spending to keep the government funded by November, by 285 00:15:52,040 --> 00:15:54,360 Speaker 2: November seventeenth, which of course is the deadline when that 286 00:15:54,360 --> 00:15:57,800 Speaker 2: funding is going to run out, how challenging is it 287 00:15:57,840 --> 00:15:59,600 Speaker 2: going to be for Mike Johnson to kind of step 288 00:15:59,600 --> 00:16:02,760 Speaker 2: into that, to step into these rooms, and it is a. 289 00:16:02,680 --> 00:16:06,240 Speaker 9: Big challenge for anyone. I mean, he will have advisors 290 00:16:06,440 --> 00:16:09,720 Speaker 9: around him, and he will have people like Steve Scalise, 291 00:16:09,880 --> 00:16:13,960 Speaker 9: the Majority Leader, who has some experience in that. But 292 00:16:14,080 --> 00:16:18,239 Speaker 9: it's very different than just being a member of Congress 293 00:16:18,320 --> 00:16:24,240 Speaker 9: taking positions on legislation. He's got to as a negotiator 294 00:16:25,480 --> 00:16:28,600 Speaker 9: both be facing some of some very seasoned people in 295 00:16:28,720 --> 00:16:33,840 Speaker 9: Chuck Schumer and Mitch McConnell and Joe Biden, and having 296 00:16:33,880 --> 00:16:38,120 Speaker 9: to suss out where he can take the Republican Conference, 297 00:16:38,640 --> 00:16:44,440 Speaker 9: which is very conservative at the moment, and calculate the 298 00:16:44,520 --> 00:16:47,360 Speaker 9: odds of how much damage it would do to the 299 00:16:47,400 --> 00:16:51,560 Speaker 9: Republican Party to have a shutdown, have a face off, 300 00:16:51,680 --> 00:16:56,520 Speaker 9: be unwilling to compromise. And those are very different strategic 301 00:16:57,560 --> 00:17:01,040 Speaker 9: calculations than a backbench member of Congress has to make. 302 00:17:01,280 --> 00:17:04,719 Speaker 2: Yeah, so what do we know about his plans to 303 00:17:04,760 --> 00:17:06,879 Speaker 2: fund the government to try to figure out something that 304 00:17:06,920 --> 00:17:09,639 Speaker 2: will appease his conference, but also that the Senate in 305 00:17:09,640 --> 00:17:11,119 Speaker 2: the White House can sign onto. 306 00:17:11,840 --> 00:17:15,399 Speaker 9: Well, he's indicated in a letter that he sent around 307 00:17:15,400 --> 00:17:19,040 Speaker 9: to his colleagues shortly before he was elected Speaker that 308 00:17:19,160 --> 00:17:22,040 Speaker 9: he would be willing to do another short term funding 309 00:17:22,119 --> 00:17:27,720 Speaker 9: deal to stave off mid November shutdown and hopefully at 310 00:17:27,800 --> 00:17:30,800 Speaker 9: least get into next year. That way, there's a little 311 00:17:30,840 --> 00:17:34,240 Speaker 9: bit more time to come up with a legislation and 312 00:17:34,359 --> 00:17:39,359 Speaker 9: negotiating position think things out. What's unclear though, is whether 313 00:17:39,440 --> 00:17:43,320 Speaker 9: he would attach some of these conditions that just won't 314 00:17:43,359 --> 00:17:47,880 Speaker 9: fly with Democrats, like big changes to asylum laws or 315 00:17:48,080 --> 00:17:53,000 Speaker 9: you know, previously he voted against the temporary funding. The 316 00:17:53,040 --> 00:17:56,639 Speaker 9: only temporary funding he was willing to support as a 317 00:17:56,880 --> 00:18:01,719 Speaker 9: member of Congress was with a thirty percent cut in funding, 318 00:18:01,800 --> 00:18:05,560 Speaker 9: which would be a draconian cut and you know, unlikely 319 00:18:05,680 --> 00:18:08,600 Speaker 9: for Democrats. To agree to, especially for just you know, 320 00:18:08,680 --> 00:18:11,400 Speaker 9: to get six more weeks of federal funding. 321 00:18:11,840 --> 00:18:14,679 Speaker 2: What about the issue of funding for Israel or maybe 322 00:18:14,680 --> 00:18:16,840 Speaker 2: more difficult, Ukraine. 323 00:18:17,359 --> 00:18:21,960 Speaker 9: Now that's a He has in the past opposed funding 324 00:18:22,040 --> 00:18:28,520 Speaker 9: for Ukraine, as have a significant portion of House Republicans. 325 00:18:29,520 --> 00:18:33,120 Speaker 9: But he has said that he wouldn't necessarily oppose Ukraine 326 00:18:33,160 --> 00:18:36,960 Speaker 9: funding and that is something that most Democrats support and 327 00:18:37,000 --> 00:18:40,480 Speaker 9: a lot of Republican support. So there's broad support for 328 00:18:40,920 --> 00:18:44,920 Speaker 9: Ukraine funding in the House, but there is division within 329 00:18:45,000 --> 00:18:48,080 Speaker 9: the Republican Party on that, and we don't yet know 330 00:18:48,119 --> 00:18:51,399 Speaker 9: how he'll navigate that. We do know that, you know, 331 00:18:51,440 --> 00:18:53,960 Speaker 9: when he was voting for himself, he was voting against it. 332 00:18:54,600 --> 00:18:56,560 Speaker 2: Yeah, and of course, as we talk about all these 333 00:18:56,840 --> 00:18:59,240 Speaker 2: legislative efforts that he's going to have to undertake. We 334 00:18:59,280 --> 00:19:01,840 Speaker 2: know that in politics, because it isn't just about what 335 00:19:01,880 --> 00:19:04,000 Speaker 2: you do on the hill, it's also about going out 336 00:19:04,040 --> 00:19:06,800 Speaker 2: and raising money to spend on campaigns so you can 337 00:19:06,840 --> 00:19:09,679 Speaker 2: stay on the hill. So when Johnson would want you 338 00:19:09,680 --> 00:19:13,000 Speaker 2: can keep the majority, that probably is more important. What 339 00:19:13,080 --> 00:19:16,320 Speaker 2: do we know about his record as a fundraiser. 340 00:19:16,680 --> 00:19:19,080 Speaker 9: Well, he hasn't done a lot of fundraising. He doesn't 341 00:19:19,080 --> 00:19:23,840 Speaker 9: have a large mailing list of or email list these 342 00:19:23,920 --> 00:19:28,239 Speaker 9: days of small dollar donors, and he hasn't raised a 343 00:19:28,280 --> 00:19:30,520 Speaker 9: ton of big dollar money, although we do know the 344 00:19:30,560 --> 00:19:33,359 Speaker 9: oil and gas industry has been a big supporter of his. 345 00:19:33,600 --> 00:19:37,280 Speaker 9: Not surprisingly, he comes from Louisiana, which is big oil 346 00:19:37,359 --> 00:19:41,520 Speaker 9: and gas country, and he's sort of previously pushed against 347 00:19:41,560 --> 00:19:44,960 Speaker 9: any climate change action, which kind of fits the oil 348 00:19:45,000 --> 00:19:48,040 Speaker 9: and gas industry's agenda. He's also raised a bit of 349 00:19:48,080 --> 00:19:51,959 Speaker 9: money from defense contractors. He's on the Armed Services Committee 350 00:19:52,440 --> 00:19:57,080 Speaker 9: and authorizing weapons systems is very important to defense contractors, 351 00:19:58,160 --> 00:20:03,280 Speaker 9: though he doesn't have that much experience. Kevin McCarthy's top 352 00:20:03,320 --> 00:20:09,359 Speaker 9: fundraiser has already indicated that he's going to work with 353 00:20:09,359 --> 00:20:12,720 Speaker 9: with the new speaker. So yeah, that's someone who really 354 00:20:12,760 --> 00:20:14,960 Speaker 9: knows how to do this. So on a staff level, 355 00:20:16,119 --> 00:20:19,640 Speaker 9: they've got the connections, and once you're the speaker, it's 356 00:20:19,680 --> 00:20:21,800 Speaker 9: going to be very easy to get a lot of 357 00:20:21,920 --> 00:20:23,879 Speaker 9: big business groups to support you. 358 00:20:24,080 --> 00:20:27,000 Speaker 2: Yeah, certainly has a lot of work cut out for him. 359 00:20:27,000 --> 00:20:30,320 Speaker 2: Getting the gavel may have been the easy part for him, yes, 360 00:20:30,800 --> 00:20:32,879 Speaker 2: and so the hard stuff still to come. Mike Dorning, 361 00:20:32,880 --> 00:20:35,880 Speaker 2: who helps lead our congressional coverage here, at Bloomberg in Washington. 362 00:20:35,920 --> 00:20:38,080 Speaker 2: Thank you very much, and Tom, we'll send. 363 00:20:37,880 --> 00:20:38,359 Speaker 9: It back to you. 364 00:20:38,560 --> 00:20:41,679 Speaker 1: Our thanks to Bloomberg sound on co host Kylee Lines. 365 00:20:41,720 --> 00:20:44,120 Speaker 1: And coming up on Bloomberg day Break weekend, we take 366 00:20:44,160 --> 00:20:46,920 Speaker 1: you to Europe. We reve you another key rate decision, 367 00:20:46,960 --> 00:20:49,120 Speaker 1: this one from the Bank of England. I'm Tom Busby 368 00:20:49,240 --> 00:21:02,120 Speaker 1: and this is Bloomberg. I'm Tom Busby in New York 369 00:21:02,160 --> 00:21:03,960 Speaker 1: with your global look ahead at the top stories for 370 00:21:04,040 --> 00:21:06,800 Speaker 1: investors in the coming week. The Bank of England in 371 00:21:06,920 --> 00:21:09,440 Speaker 1: focus in the coming days as its rate centers meet. 372 00:21:09,520 --> 00:21:11,359 Speaker 1: Much of the recent data for the UK has shown 373 00:21:11,400 --> 00:21:14,840 Speaker 1: the economy weakening a bit, and policymakers have pointed to 374 00:21:14,880 --> 00:21:18,159 Speaker 1: the fact that the effect of the past fourteen hikes 375 00:21:18,200 --> 00:21:21,200 Speaker 1: still feeding through for more. Now let's go to London 376 00:21:21,200 --> 00:21:24,600 Speaker 1: and bring in Bloomberg Daybreak Europe banker Stephen Carroll. Tom. 377 00:21:24,960 --> 00:21:28,119 Speaker 3: The backdrop to this Bank of England meeting is looking 378 00:21:28,240 --> 00:21:32,080 Speaker 3: decidedly gloomy. The UK economy is starting to creak under 379 00:21:32,119 --> 00:21:35,119 Speaker 3: the strain of higher interest rates. The Bank of England 380 00:21:35,160 --> 00:21:38,360 Speaker 3: paused its hiking cycle at its last meeting in September. 381 00:21:38,720 --> 00:21:42,560 Speaker 3: Since then, flash pmis have shown a continuing contraction in 382 00:21:42,600 --> 00:21:47,399 Speaker 3: the services and manufacturing sectors. Business optimism is in short supply, 383 00:21:47,760 --> 00:21:50,720 Speaker 3: and the labor market is showing signs of weakness too. 384 00:21:51,240 --> 00:21:54,879 Speaker 3: I've been discussing the prospects for this upcoming meeting with 385 00:21:55,000 --> 00:21:58,600 Speaker 3: our senior UK economist, Dan Hansen. I started by asking 386 00:21:58,680 --> 00:22:00,840 Speaker 3: him to put the recent data in contact for us. 387 00:22:01,200 --> 00:22:04,560 Speaker 3: Is this a gradual slowdown or something a bit more dramatic. 388 00:22:04,920 --> 00:22:07,159 Speaker 10: I think it's still probably a gradual slowdown, But I 389 00:22:07,160 --> 00:22:09,720 Speaker 10: think context is important because we've been in a world 390 00:22:10,000 --> 00:22:13,720 Speaker 10: in the UK where we've had zero growth a little 391 00:22:13,720 --> 00:22:15,560 Speaker 10: bit of growth, so we've been sort of on the 392 00:22:15,680 --> 00:22:20,399 Speaker 10: verge of GDP falling for a number of quarters now 393 00:22:20,480 --> 00:22:22,600 Speaker 10: and it sort of hasn't. It wouldn't have taken much 394 00:22:22,640 --> 00:22:24,960 Speaker 10: at any point to get a drop in GDP, and 395 00:22:25,800 --> 00:22:29,160 Speaker 10: I think now we're in the world where GDP probably 396 00:22:29,240 --> 00:22:33,639 Speaker 10: is more likely falling than it is rising. But in 397 00:22:33,680 --> 00:22:36,639 Speaker 10: the broader context it is It's very modest the falls 398 00:22:36,680 --> 00:22:38,399 Speaker 10: we're talking about, you know, a point one or a 399 00:22:38,480 --> 00:22:41,119 Speaker 10: point two percent fall, So we're not a in a 400 00:22:41,160 --> 00:22:44,040 Speaker 10: sort of headed for a deep recession world, we don't think, 401 00:22:44,160 --> 00:22:46,119 Speaker 10: but we do think that it's more likely than not 402 00:22:46,200 --> 00:22:48,600 Speaker 10: the economy is probably contracting at the moment, and I 403 00:22:48,640 --> 00:22:53,240 Speaker 10: think the PMI number you point two is an important one. 404 00:22:53,480 --> 00:22:55,480 Speaker 8: I also think if you look at the GDP data 405 00:22:55,560 --> 00:22:58,680 Speaker 8: as well, actually it looks unlikely that the economy grew 406 00:22:58,720 --> 00:23:00,760 Speaker 8: in the third quarter, So we could get a contraction 407 00:23:00,960 --> 00:23:02,560 Speaker 8: in the third course, which is a little bit earlier 408 00:23:02,600 --> 00:23:05,159 Speaker 8: than we've been expecting and actually a lot lower than 409 00:23:05,160 --> 00:23:07,320 Speaker 8: what the Bank of England was expecting back in its 410 00:23:07,520 --> 00:23:10,200 Speaker 8: August forecast, which is the last forecast it put together. 411 00:23:10,880 --> 00:23:12,800 Speaker 3: So if we have if it looks like we're heading 412 00:23:12,840 --> 00:23:15,200 Speaker 3: for a contraction in a third quarter, does that mean 413 00:23:15,280 --> 00:23:17,959 Speaker 3: the likelihood of a recession is that much higher by 414 00:23:18,000 --> 00:23:18,640 Speaker 3: the end of the year. 415 00:23:19,400 --> 00:23:21,320 Speaker 8: I think yeah, I mean I think it does. I 416 00:23:21,320 --> 00:23:25,320 Speaker 8: mean again, i'd just be very cautious about you know, 417 00:23:25,359 --> 00:23:29,000 Speaker 8: the word recession. It see a word that people associate 418 00:23:29,040 --> 00:23:31,359 Speaker 8: with very, very bad outcomes. I mean, I'm not what 419 00:23:31,400 --> 00:23:33,399 Speaker 8: I'm saying here is that I think we're headed for 420 00:23:33,440 --> 00:23:38,720 Speaker 8: a mild recession, particularly relative to historical standards, and it's 421 00:23:38,880 --> 00:23:40,720 Speaker 8: you know, it's not I don't think it's going to 422 00:23:40,720 --> 00:23:43,120 Speaker 8: feel that much different to what the economy. The way 423 00:23:43,160 --> 00:23:46,760 Speaker 8: the economy has been performing over the past twelve months 424 00:23:46,840 --> 00:23:49,400 Speaker 8: or so, where we've had to say zero growth, maybe 425 00:23:49,440 --> 00:23:52,040 Speaker 8: a point one or a point two here or there. 426 00:23:52,119 --> 00:23:54,160 Speaker 8: So it's it's a very mild recession we think we're 427 00:23:54,160 --> 00:23:57,280 Speaker 8: heading for, but on the very narrow definition of two 428 00:23:57,400 --> 00:24:01,040 Speaker 8: consecutive quarters of negative growth, we think it's more likely 429 00:24:01,080 --> 00:24:02,560 Speaker 8: than not we're going to get that by the end 430 00:24:02,560 --> 00:24:03,040 Speaker 8: of this year. 431 00:24:03,760 --> 00:24:07,000 Speaker 3: Is this essentially what the Bank of England was aiming for? 432 00:24:07,040 --> 00:24:09,879 Speaker 3: Are they then achieving their goals by by having the 433 00:24:09,960 --> 00:24:12,320 Speaker 3: sort of landing for the economy? 434 00:24:12,760 --> 00:24:15,720 Speaker 8: I mean, I think on this one you have to 435 00:24:16,080 --> 00:24:18,359 Speaker 8: you have to think of the broader view, the broader 436 00:24:18,400 --> 00:24:22,160 Speaker 8: context around the UK economy. So the economy's trend rate 437 00:24:22,240 --> 00:24:25,000 Speaker 8: of growth is probably one one one and a bit 438 00:24:25,200 --> 00:24:27,920 Speaker 8: a year, one percent a year, so that means a 439 00:24:28,040 --> 00:24:31,800 Speaker 8: quarter you get zero point three ish a quarter, so 440 00:24:31,840 --> 00:24:36,040 Speaker 8: it doesn't take much for what and that then that 441 00:24:36,080 --> 00:24:38,240 Speaker 8: then means that the Bank of England needs to slow 442 00:24:38,280 --> 00:24:40,239 Speaker 8: the economy so that it grows slower than that, so 443 00:24:40,280 --> 00:24:43,359 Speaker 8: that the heat gets taken out of the economy. So 444 00:24:43,480 --> 00:24:46,240 Speaker 8: I think, yes, this is what the Bank of England 445 00:24:46,280 --> 00:24:48,720 Speaker 8: is aiming for. But in terms of the landing spot 446 00:24:48,760 --> 00:24:52,800 Speaker 8: between slowing the economy below that point three percent level 447 00:24:52,920 --> 00:24:55,840 Speaker 8: and going into recession. There's quite a small landing spot 448 00:24:55,920 --> 00:24:58,480 Speaker 8: for that. So I think, you know they are this 449 00:24:58,600 --> 00:25:01,160 Speaker 8: is what they're looking to do. This is the only 450 00:25:01,200 --> 00:25:04,400 Speaker 8: way they have through interest rates to bring the economy 451 00:25:04,440 --> 00:25:07,600 Speaker 8: back into balance and eventually inflation back to two percent. 452 00:25:08,240 --> 00:25:11,480 Speaker 3: It's a question too about the lag in the interest 453 00:25:11,520 --> 00:25:14,359 Speaker 3: rates we've had up until this point the illustrate rises. 454 00:25:14,880 --> 00:25:17,440 Speaker 3: One of the members of the Monetary Party Committee, Swati Dengra, 455 00:25:17,560 --> 00:25:20,280 Speaker 3: recently giving an interview in which she said only up 456 00:25:20,320 --> 00:25:23,119 Speaker 3: to about a quarter of the impact of rate hikes 457 00:25:23,160 --> 00:25:26,080 Speaker 3: had fed through into the economy so far. What's your 458 00:25:26,119 --> 00:25:29,600 Speaker 3: analysis of the impact of the rate rises on the 459 00:25:29,600 --> 00:25:31,160 Speaker 3: economy up until now. 460 00:25:32,440 --> 00:25:34,800 Speaker 8: Yeah, So I'm that slightly worried me, to be honest, 461 00:25:34,840 --> 00:25:37,560 Speaker 8: that she thought that, because that feels like, obviously there's 462 00:25:37,560 --> 00:25:39,880 Speaker 8: an awful lot still to come and we're sort of 463 00:25:40,320 --> 00:25:43,200 Speaker 8: on the verge of recession now. So if that's true, 464 00:25:43,280 --> 00:25:46,560 Speaker 8: then you know, there's quite it's quite possible we get 465 00:25:46,600 --> 00:25:49,760 Speaker 8: something a little bit deeper over the next twelve months 466 00:25:49,840 --> 00:25:52,160 Speaker 8: or so in terms of the fall in GDP. I mean, 467 00:25:52,520 --> 00:25:54,680 Speaker 8: we're a little bit more I guess you would call 468 00:25:54,680 --> 00:25:57,360 Speaker 8: it optimistic if you like that more of it has 469 00:25:57,400 --> 00:25:59,440 Speaker 8: come through, and I think our view challenge a little 470 00:25:59,480 --> 00:26:01,680 Speaker 8: bit more with huge pills. He said about half has 471 00:26:01,720 --> 00:26:04,639 Speaker 8: come through. He thinks he pills the chief economists at 472 00:26:04,640 --> 00:26:07,800 Speaker 8: the Bank of England and we're we're sort of broadly 473 00:26:07,840 --> 00:26:11,560 Speaker 8: in along those lines as well in terms of underpinning 474 00:26:11,600 --> 00:26:14,840 Speaker 8: our forecast. That's how much has come through to date. 475 00:26:15,000 --> 00:26:17,040 Speaker 8: So there's still fifty percent of it to come through, 476 00:26:17,119 --> 00:26:20,000 Speaker 8: but it's more than the twenty five percent than DiGRA thinks. 477 00:26:20,920 --> 00:26:23,080 Speaker 3: All of those things to be pointing to the Bank 478 00:26:23,119 --> 00:26:25,480 Speaker 3: of England being at the end or very close to 479 00:26:25,520 --> 00:26:28,000 Speaker 3: the end of its hiking cycle. 480 00:26:28,520 --> 00:26:29,600 Speaker 1: Do you think we're there? 481 00:26:31,480 --> 00:26:33,439 Speaker 8: Yeah, I think I think we are. I mean, if 482 00:26:33,520 --> 00:26:35,359 Speaker 8: you if you think of the data in the run 483 00:26:35,440 --> 00:26:38,199 Speaker 8: up to the September decision where if you remember they 484 00:26:38,280 --> 00:26:42,320 Speaker 8: decided to pause. The data we've had since then is 485 00:26:42,400 --> 00:26:46,400 Speaker 8: no more worrying and the bank is clearly very data dependent. 486 00:26:48,119 --> 00:26:50,720 Speaker 8: And I think you know that we've spoken about the 487 00:26:50,760 --> 00:26:56,560 Speaker 8: economy inflation to it's surprised relative to the consensus for you, 488 00:26:56,640 --> 00:26:58,560 Speaker 8: but you have to remember it's come in below the 489 00:26:58,600 --> 00:27:03,119 Speaker 8: Bank of England's forecast, it's August forecasts. And also Bailey, 490 00:27:03,400 --> 00:27:05,640 Speaker 8: Andrew Bailey, the governor, came out and said that core 491 00:27:05,720 --> 00:27:07,920 Speaker 8: inflation was a little bit weaker than they had been 492 00:27:07,960 --> 00:27:09,840 Speaker 8: expecting as well, So that was a sort of a 493 00:27:09,920 --> 00:27:13,680 Speaker 8: nuance as well there. And the other thing, the big 494 00:27:13,720 --> 00:27:15,720 Speaker 8: thing I think that's happened is that there are finally 495 00:27:15,800 --> 00:27:18,359 Speaker 8: some signs that pay growth is turning over. So that 496 00:27:18,480 --> 00:27:22,879 Speaker 8: was the one metric that was continuing to rise and 497 00:27:23,000 --> 00:27:25,800 Speaker 8: going into the September decision as well, which is the 498 00:27:25,800 --> 00:27:28,040 Speaker 8: big reason why we thought they would hike and they 499 00:27:28,160 --> 00:27:31,520 Speaker 8: decided not to. But actually that's just turned over as well. 500 00:27:31,560 --> 00:27:33,320 Speaker 8: So I think if you look at the data as 501 00:27:33,320 --> 00:27:36,719 Speaker 8: a whole, the whole, the whole, across the spectrum, I 502 00:27:36,720 --> 00:27:38,960 Speaker 8: don't think there's good reason for them to hike in 503 00:27:38,960 --> 00:27:39,760 Speaker 8: November at all. 504 00:27:40,040 --> 00:27:41,840 Speaker 3: Yeah, because we had that update on the labor markets 505 00:27:41,880 --> 00:27:44,240 Speaker 3: in the past few days and that sort of painted 506 00:27:44,240 --> 00:27:47,439 Speaker 3: a picture of things cooling down a little bit but 507 00:27:47,600 --> 00:27:50,800 Speaker 3: not perhaps indicating major job blasts, and that sort of 508 00:27:50,800 --> 00:27:53,439 Speaker 3: speaks to what you were talking about earlier. This you know, 509 00:27:53,480 --> 00:27:56,919 Speaker 3: the recession may common technical terms but won't feel that 510 00:27:57,080 --> 00:28:00,000 Speaker 3: much different. What's the outlook for the labor and mind, 511 00:28:00,040 --> 00:28:00,679 Speaker 3: I guess. 512 00:28:01,640 --> 00:28:03,639 Speaker 8: Yeah, so I think I mean, up to now, the 513 00:28:03,720 --> 00:28:06,879 Speaker 8: labor market outcome in the UK has been certainly on 514 00:28:06,880 --> 00:28:09,560 Speaker 8: the unemployment side. And I know there are a lot 515 00:28:09,560 --> 00:28:12,679 Speaker 8: of questions about the unemployment data now given what's happened 516 00:28:12,680 --> 00:28:17,440 Speaker 8: with these experimental statistics, but the broad pitch, if you 517 00:28:17,440 --> 00:28:20,240 Speaker 8: look at the UK unemployment rate relative to what's been happening, 518 00:28:20,320 --> 00:28:24,040 Speaker 8: say in the US, in the Euro Area, unemployment has 519 00:28:24,119 --> 00:28:26,439 Speaker 8: risen by more and the labor market appears to have 520 00:28:26,480 --> 00:28:29,960 Speaker 8: loosened by more than in other countries. Though it's not 521 00:28:30,840 --> 00:28:33,439 Speaker 8: you know, unemployment rate of four point two percent, it's 522 00:28:33,480 --> 00:28:36,600 Speaker 8: still extremely low by historical standards, and it's important to 523 00:28:37,000 --> 00:28:39,960 Speaker 8: make that point. The other good bit of news is that, 524 00:28:40,240 --> 00:28:42,520 Speaker 8: you know, the labor market has been loosening on a 525 00:28:42,520 --> 00:28:44,560 Speaker 8: lot of other metrics that are sort of, if you like, 526 00:28:44,680 --> 00:28:49,280 Speaker 8: less damaging for the outlook. So vacancies have been falling. 527 00:28:49,360 --> 00:28:52,440 Speaker 8: That's a sign that the economies, sorry, the labor market 528 00:28:52,480 --> 00:28:55,239 Speaker 8: is loosening. So I think the bank will look at 529 00:28:55,240 --> 00:28:56,880 Speaker 8: it and going back to sort of what we were 530 00:28:56,920 --> 00:29:00,480 Speaker 8: talking about earlier and what they're sort of desired for 531 00:29:00,520 --> 00:29:03,320 Speaker 8: all of this is that so far at least it 532 00:29:03,440 --> 00:29:06,320 Speaker 8: hasn't probably been as damaging as they might have thought 533 00:29:06,400 --> 00:29:08,040 Speaker 8: had they If had you told them a year ago 534 00:29:08,080 --> 00:29:10,240 Speaker 8: they'd have to take rates to five point two five percent, 535 00:29:10,240 --> 00:29:13,560 Speaker 8: they'd have been extremely worried about the outcome. Where we 536 00:29:13,600 --> 00:29:16,400 Speaker 8: stand now, yes, we might be sort of on the 537 00:29:16,520 --> 00:29:20,320 Speaker 8: verge of this technical mild technical recession, but actually the 538 00:29:20,360 --> 00:29:23,640 Speaker 8: economy's held up pretty well given the amount of tightening 539 00:29:23,640 --> 00:29:24,600 Speaker 8: that's been put in place. 540 00:29:25,160 --> 00:29:27,640 Speaker 3: Quite about the prospect of rate cuts, then, how far 541 00:29:27,720 --> 00:29:29,200 Speaker 3: away do they look at this point? 542 00:29:29,360 --> 00:29:33,200 Speaker 8: Yeah, there's a balance here between obviously if the economy 543 00:29:33,240 --> 00:29:35,560 Speaker 8: isn't doing as well, and I think that the fact 544 00:29:35,600 --> 00:29:37,840 Speaker 8: that they pause in September suggests to me that they 545 00:29:37,840 --> 00:29:41,280 Speaker 8: are going to be quite sensitive to this going into 546 00:29:41,640 --> 00:29:43,280 Speaker 8: going into the end of the year and into twenty 547 00:29:43,360 --> 00:29:45,800 Speaker 8: twenty four. Of course, you still have to weigh that 548 00:29:45,840 --> 00:29:47,240 Speaker 8: against the inflation picture. 549 00:29:47,760 --> 00:29:50,960 Speaker 3: That's our senior UK economist Dan Hansen, and will have 550 00:29:51,040 --> 00:29:53,920 Speaker 3: full coverage of the Bank of England's rate decision on 551 00:29:54,080 --> 00:29:58,000 Speaker 3: Bloomberg Radio this week. I'm Stephen Carroll in London. You 552 00:29:58,000 --> 00:30:00,320 Speaker 3: can catch us every weekday morning here for Blue Imberg 553 00:30:00,360 --> 00:30:03,200 Speaker 3: Daybreak here at beginning at six am in London on 554 00:30:03,200 --> 00:30:04,680 Speaker 3: one am on Wall Streets. 555 00:30:04,880 --> 00:30:07,320 Speaker 1: Tom, thank you, Steven, and coming up here on Bloomberg 556 00:30:07,400 --> 00:30:09,640 Speaker 1: day Break weekend, we take you to Asia in what 557 00:30:09,760 --> 00:30:11,880 Speaker 1: is shaping up to be a critical week for a 558 00:30:11,920 --> 00:30:16,320 Speaker 1: big property developer. There, I'm Tom Busby, and this is Bloomberg. 559 00:30:27,080 --> 00:30:29,240 Speaker 1: This is Bloomberg day Break Weekend, our global look at 560 00:30:29,280 --> 00:30:31,800 Speaker 1: the top stories for investors in the coming week. I'm 561 00:30:31,840 --> 00:30:36,080 Speaker 1: Tom Busby in New York. China's embattled property giant, Evergrand, 562 00:30:36,120 --> 00:30:39,560 Speaker 1: the world's most indebted real estate developer, faces a critical 563 00:30:39,600 --> 00:30:42,640 Speaker 1: court date in the week ahead. Bloomberg Daybreak Asia co 564 00:30:42,720 --> 00:30:44,400 Speaker 1: host Doug Krisner has more. 565 00:30:44,600 --> 00:30:47,760 Speaker 4: Tom, Evergrand has become the poster child of China's real 566 00:30:47,840 --> 00:30:51,760 Speaker 4: estate debt crisis. This company has liabilities totally about three 567 00:30:51,800 --> 00:30:55,080 Speaker 4: hundred and twenty seven billion dollars and in the week ahead, 568 00:30:55,160 --> 00:30:58,120 Speaker 4: a court hearing has been set and this will determine 569 00:30:58,120 --> 00:31:01,320 Speaker 4: the future of Evergrand. Let's take a closer look now 570 00:31:01,360 --> 00:31:05,600 Speaker 4: with Bloomberg's Alice Huang, Bloomberg's China credit reporter. She's also 571 00:31:05,880 --> 00:31:09,640 Speaker 4: the deputy team leader. Alice, Thanks for joining us. I 572 00:31:09,720 --> 00:31:11,960 Speaker 4: think we have to begin with the fact that Evergrand 573 00:31:12,000 --> 00:31:16,240 Speaker 4: has been struggling to finalize a restructuring plan. Where are 574 00:31:16,280 --> 00:31:17,840 Speaker 4: we in that process right now? 575 00:31:18,320 --> 00:31:20,680 Speaker 11: Thank you for having me. We can say that we're 576 00:31:20,720 --> 00:31:24,280 Speaker 11: back to square one. Where Evergrand, like you mentioned, does 577 00:31:24,360 --> 00:31:28,200 Speaker 11: not have a concrete restructuring proposal. So we've had a 578 00:31:28,280 --> 00:31:32,040 Speaker 11: long back and forth, a long journey since Evergrand defaulted 579 00:31:32,760 --> 00:31:36,680 Speaker 11: in twenty twenty one, and fast forward to two years later, 580 00:31:36,840 --> 00:31:40,440 Speaker 11: the company still does not have a restructuring proposal at hand. Now, 581 00:31:40,480 --> 00:31:43,880 Speaker 11: it did have one earlier this year after a lengthy 582 00:31:43,960 --> 00:31:48,000 Speaker 11: negotiation with the creditors. Some of the major creditors have 583 00:31:48,120 --> 00:31:52,080 Speaker 11: already agreed to this plan. However, the company surprised them 584 00:31:52,120 --> 00:31:55,800 Speaker 11: in September when it canceled a creditor meeting last minute 585 00:31:55,880 --> 00:31:59,400 Speaker 11: when creditors were supposed to vote on the plan, and 586 00:31:59,720 --> 00:32:02,440 Speaker 11: it also said it would have to revisit the restructuring 587 00:32:02,480 --> 00:32:06,960 Speaker 11: plan that previously already won these key creditors support. And 588 00:32:07,080 --> 00:32:10,120 Speaker 11: another development we've seen is that its founder is now 589 00:32:10,200 --> 00:32:13,760 Speaker 11: under police control. So all of these developments are bringing 590 00:32:13,800 --> 00:32:17,520 Speaker 11: back the restructuring progress. Like I said, back to square one. 591 00:32:17,720 --> 00:32:20,320 Speaker 4: So I mentioned the court hearing and the key issue 592 00:32:20,320 --> 00:32:22,600 Speaker 4: for the judge in this case is to decide whether 593 00:32:22,640 --> 00:32:27,320 Speaker 4: Evergrant should be liquidated. That seems pretty extreme. Is there 594 00:32:27,720 --> 00:32:31,520 Speaker 4: any way at any point that this process could be 595 00:32:31,560 --> 00:32:32,640 Speaker 4: avoided liquidation? 596 00:32:33,480 --> 00:32:37,680 Speaker 11: Yeah, So the company has already managed to get delays 597 00:32:37,720 --> 00:32:41,520 Speaker 11: from the judge from the Hong Kong Judge several times 598 00:32:41,600 --> 00:32:45,040 Speaker 11: on the basis that, you know, it would have meaningful 599 00:32:45,080 --> 00:32:48,560 Speaker 11: debt negotiation progress. So last time Evergrant was in court 600 00:32:48,840 --> 00:32:51,840 Speaker 11: a plan to get the restructuring plan approved by creditors 601 00:32:52,440 --> 00:32:55,320 Speaker 11: by the next hearing. And now that's you know, it's 602 00:32:55,400 --> 00:32:57,680 Speaker 11: really behind that schedule, and like I said, we're back 603 00:32:57,720 --> 00:33:00,640 Speaker 11: to the beginning where it doesn't even have a decided 604 00:33:00,680 --> 00:33:04,600 Speaker 11: restructuring proposal. And you know, winding up hearings have become 605 00:33:04,680 --> 00:33:08,960 Speaker 11: really popular among frustrated creditors of Chinese developers who have 606 00:33:09,000 --> 00:33:12,000 Speaker 11: seen little restructuring progress as a way to try to 607 00:33:12,040 --> 00:33:15,400 Speaker 11: recover losses or at least negotiate with the company. And 608 00:33:15,480 --> 00:33:18,480 Speaker 11: if the judge gives the company winding up order, you know, 609 00:33:18,520 --> 00:33:21,680 Speaker 11: a liquidator can come in season sale its assets to 610 00:33:21,720 --> 00:33:25,840 Speaker 11: repay his creditors. The fact that it's looking like a 611 00:33:25,920 --> 00:33:29,880 Speaker 11: theme possibility that Evergrind can ever get its restructuring negotiation 612 00:33:30,080 --> 00:33:33,120 Speaker 11: done is giving the judge now ample reasons to try 613 00:33:33,120 --> 00:33:34,200 Speaker 11: to wind up this company. 614 00:33:34,280 --> 00:33:36,640 Speaker 4: I'm trying to imagine what kind of reaction there would 615 00:33:36,640 --> 00:33:40,040 Speaker 4: be in markets to liquidation, especially when you consider the 616 00:33:40,080 --> 00:33:44,959 Speaker 4: case of another very very troubled property developer, Country Garden. 617 00:33:45,000 --> 00:33:48,280 Speaker 4: What are analysts saying about the impact of liquidation. 618 00:33:48,840 --> 00:33:51,040 Speaker 11: Yeah, first of all, like I mentioned, directors and management 619 00:33:51,040 --> 00:33:54,040 Speaker 11: will lose control. But in reality the asset seizing process 620 00:33:54,400 --> 00:33:57,160 Speaker 11: will not be easy. And in terms of market reaction, 621 00:33:57,440 --> 00:33:59,360 Speaker 11: we don't know about Evergraham per se, but we have 622 00:33:59,440 --> 00:34:03,479 Speaker 11: seen other developers who have been liquidated and you know, 623 00:34:03,520 --> 00:34:07,720 Speaker 11: their bonds were just wiped out because the fire sale 624 00:34:07,800 --> 00:34:11,240 Speaker 11: will mean that creditors will probably have very little in return. 625 00:34:12,200 --> 00:34:14,799 Speaker 11: So a lot of the bonds from developers who have 626 00:34:14,920 --> 00:34:17,880 Speaker 11: been liquidated, their bonds are trading at like one cent 627 00:34:18,040 --> 00:34:21,399 Speaker 11: on the dollar, so less than one percent of face 628 00:34:21,480 --> 00:34:24,799 Speaker 11: value really, and it would be a challenge to both 629 00:34:24,880 --> 00:34:27,680 Speaker 11: jurisdictions in Hong Kong and China to handle what would 630 00:34:27,719 --> 00:34:30,240 Speaker 11: be the largest insolvency case in recent years. 631 00:34:30,320 --> 00:34:32,160 Speaker 4: Alice, thank you so much for being with us. That 632 00:34:32,239 --> 00:34:35,920 Speaker 4: is Bloomberg's Alice Long. She is our China Credit reporter 633 00:34:36,040 --> 00:34:39,160 Speaker 4: and deputy team leader. I'm Doug Prisner, and you can 634 00:34:39,239 --> 00:34:42,760 Speaker 4: join Brian Curtison myself weekdays here for Daybreak Asia beginning 635 00:34:42,800 --> 00:34:45,879 Speaker 4: at six am in Hong Kong six pm on Wall 636 00:34:45,920 --> 00:34:47,160 Speaker 4: Street tom. 637 00:34:46,880 --> 00:34:49,840 Speaker 1: Our thanks to Bloomberg Daybreak Asia co host Doug Krisner. 638 00:34:49,960 --> 00:34:52,200 Speaker 1: And that does it for this edition of Bloomberg day 639 00:34:52,200 --> 00:34:54,759 Speaker 1: Break Weekend. Join us again Monday morning at five am 640 00:34:54,800 --> 00:34:57,920 Speaker 1: Wall Street Time for the latest on markets overseas and 641 00:34:57,960 --> 00:35:01,000 Speaker 1: the news you need to start your day. I'm Tom Buzzby. 642 00:35:01,239 --> 00:35:04,000 Speaker 1: Stay with us. Top stories and global business headlines are 643 00:35:04,000 --> 00:35:05,239 Speaker 1: coming up right now