1 00:00:00,240 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,440 --> 00:00:13,440 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,440 --> 00:00:16,040 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,079 --> 00:00:18,560 Speaker 2: all around the world. Straight Ahead on the program, we 5 00:00:18,640 --> 00:00:21,080 Speaker 2: look ahead to how big tech may fare in twenty 6 00:00:21,160 --> 00:00:23,760 Speaker 2: twenty six. I'm Nathan Hager in Washington. 7 00:00:23,880 --> 00:00:26,479 Speaker 3: I'm Caroline Hebcker here in London. We look to a 8 00:00:26,560 --> 00:00:30,000 Speaker 3: year in UK politics and what twenty twenty six may 9 00:00:30,040 --> 00:00:32,519 Speaker 3: hold in store for Prime Minister Kissedalma. 10 00:00:32,800 --> 00:00:35,159 Speaker 4: I'm Doug Prisoner, looking at what's in store for the 11 00:00:35,280 --> 00:00:37,080 Speaker 4: Chinese economy in the new year. 12 00:00:38,360 --> 00:00:42,360 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,400 --> 00:00:46,120 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,600 --> 00:00:51,640 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syria 15 00:00:51,920 --> 00:00:55,400 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:55,480 --> 00:00:57,640 Speaker 1: dot Com and the Bloomberg Business App. 17 00:01:02,280 --> 00:01:05,120 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 18 00:01:05,120 --> 00:01:07,920 Speaker 2: program with a look at the economy. On Tuesday, we 19 00:01:07,959 --> 00:01:11,319 Speaker 2: get a second read on third quarter GDP. This comes 20 00:01:11,319 --> 00:01:13,920 Speaker 2: on the heels of some softer than expected readings on 21 00:01:13,959 --> 00:01:16,800 Speaker 2: inflation and kind of a mixed report on the labor 22 00:01:16,840 --> 00:01:18,839 Speaker 2: market as we start to get more of the releases 23 00:01:18,840 --> 00:01:21,559 Speaker 2: that we should have gotten weeks ago but we're getting 24 00:01:21,600 --> 00:01:24,319 Speaker 2: now due to the government shutdown. For more on this 25 00:01:24,400 --> 00:01:26,440 Speaker 2: and what to expect from the economy in the new 26 00:01:26,520 --> 00:01:28,440 Speaker 2: year as well, we are very pleased to be joined 27 00:01:28,440 --> 00:01:32,119 Speaker 2: by Ed Harrison, senior strategist at Bloomberg News and author 28 00:01:32,160 --> 00:01:35,399 Speaker 2: of Bloomberg's The Everything Risk newsletter. Great to have you 29 00:01:35,440 --> 00:01:37,920 Speaker 2: with us on the program, Ed, and I'd just like 30 00:01:37,920 --> 00:01:41,440 Speaker 2: to get your expectations for the GDP print this week, 31 00:01:41,480 --> 00:01:44,600 Speaker 2: given some of the questions around some of the latest 32 00:01:44,680 --> 00:01:46,840 Speaker 2: data we've seen in this past week. 33 00:01:48,160 --> 00:01:52,400 Speaker 5: Yeah, Nathan, is a good question, because the CPI report 34 00:01:52,840 --> 00:01:57,160 Speaker 5: was marred by the inability to collect data in the 35 00:01:57,200 --> 00:02:01,800 Speaker 5: previous month, that's October. But luckily, this GDP report is 36 00:02:01,800 --> 00:02:06,320 Speaker 5: a revision of data that goes from July to September. 37 00:02:06,440 --> 00:02:09,040 Speaker 5: So these are numbers that aren't going to have any 38 00:02:09,080 --> 00:02:12,800 Speaker 5: sort of anomalies because of lack of collection. We've already 39 00:02:12,800 --> 00:02:16,440 Speaker 5: seen one number. The Atlanta Fed is talking to us 40 00:02:16,520 --> 00:02:20,160 Speaker 5: about three point five percent number that's the GDP now 41 00:02:20,200 --> 00:02:24,480 Speaker 5: that they put out. But where we actually stand as 42 00:02:24,520 --> 00:02:25,519 Speaker 5: anyone's guess. 43 00:02:25,919 --> 00:02:27,840 Speaker 2: Three and a half percent would be a pretty big 44 00:02:27,919 --> 00:02:30,640 Speaker 2: jump from the preliminary number. What's got you thinking that 45 00:02:30,680 --> 00:02:34,600 Speaker 2: we could see even more of an eye popping number 46 00:02:34,600 --> 00:02:35,280 Speaker 2: this time around? 47 00:02:36,639 --> 00:02:39,960 Speaker 5: Yeah, I think just based on the data that have 48 00:02:40,120 --> 00:02:44,760 Speaker 5: come out for Q three, they've done the statistical analysis 49 00:02:44,760 --> 00:02:48,079 Speaker 5: and they updated the Atlanta FED and run it through 50 00:02:48,120 --> 00:02:52,680 Speaker 5: their models to produce a now cast, and that's telling 51 00:02:52,720 --> 00:02:55,960 Speaker 5: them that it's going to be at three point five percent. 52 00:02:56,320 --> 00:02:59,760 Speaker 5: The range of the top ten and the bottom ten 53 00:02:59,760 --> 00:03:04,359 Speaker 5: four casts are you know, somewhere between two and a 54 00:03:04,480 --> 00:03:06,640 Speaker 5: half and three and a half percent, So that's at 55 00:03:06,639 --> 00:03:10,080 Speaker 5: the high end of the range of economists that are 56 00:03:10,080 --> 00:03:11,040 Speaker 5: predicting that number. 57 00:03:11,320 --> 00:03:15,480 Speaker 2: Of course, third quarter GDP is a backward looking indicator, 58 00:03:15,720 --> 00:03:18,160 Speaker 2: and we're trying to think ahead about where the US 59 00:03:18,200 --> 00:03:21,520 Speaker 2: economy could be going into twenty twenty six and the 60 00:03:21,600 --> 00:03:24,640 Speaker 2: current quarter as well. Are we going to be thinking 61 00:03:24,720 --> 00:03:27,880 Speaker 2: about this third quarter print as something of an anomaly 62 00:03:28,040 --> 00:03:30,919 Speaker 2: given some of the data that we've gotten a more 63 00:03:30,960 --> 00:03:33,720 Speaker 2: forward looking view of the economy. 64 00:03:34,320 --> 00:03:37,040 Speaker 5: No, you know, I think that, you know, there's a 65 00:03:37,040 --> 00:03:40,680 Speaker 5: lot of anngst about the labor market, but there's less 66 00:03:40,720 --> 00:03:43,720 Speaker 5: angst about the growth level of the economy, and I 67 00:03:43,760 --> 00:03:47,560 Speaker 5: think that this bifurcation is due to this so called 68 00:03:47,680 --> 00:03:51,160 Speaker 5: case shaped economy where there's a lot of price pressure 69 00:03:51,240 --> 00:03:56,240 Speaker 5: still in the pipeline. Lower income, lower wage workers are 70 00:03:56,240 --> 00:03:59,640 Speaker 5: feeling that even more, and they're also taking the brunt 71 00:03:59,760 --> 00:04:03,160 Speaker 5: of a slowdown in the labor market. But at the 72 00:04:03,200 --> 00:04:07,680 Speaker 5: same time, there's this AI spend that's happening, there's a 73 00:04:07,840 --> 00:04:13,360 Speaker 5: large government deficits, and the well to do are actually 74 00:04:13,360 --> 00:04:17,400 Speaker 5: doing relatively well. So people are expecting numbers both for 75 00:04:17,640 --> 00:04:21,159 Speaker 5: Q four and for twenty twenty six to be relatively good. 76 00:04:21,480 --> 00:04:24,960 Speaker 5: And we know that especially because of the tax cuts 77 00:04:24,960 --> 00:04:28,719 Speaker 5: that are due to hit already in the first quarter 78 00:04:28,880 --> 00:04:30,120 Speaker 5: of next year. 79 00:04:30,400 --> 00:04:33,680 Speaker 2: Well, you raise the question there about whether the top 80 00:04:33,760 --> 00:04:38,840 Speaker 2: line numbers on GDP sort of mask what everyday Americans 81 00:04:38,880 --> 00:04:41,880 Speaker 2: could be feeling when we think about, as you mentioned, 82 00:04:41,920 --> 00:04:44,920 Speaker 2: all the spending going into artificial intelligence. I mean, what 83 00:04:44,960 --> 00:04:48,360 Speaker 2: could that mean for a labor market that the Federal 84 00:04:48,400 --> 00:04:51,839 Speaker 2: Reserve has put a lot of attention on, saying that 85 00:04:51,839 --> 00:04:54,040 Speaker 2: they're worried about some of those cracks that we're seeing 86 00:04:54,080 --> 00:04:54,559 Speaker 2: in the data. 87 00:04:55,920 --> 00:04:58,360 Speaker 5: Yeah, I think if you look back in terms of 88 00:04:58,400 --> 00:05:00,920 Speaker 5: the numbers that we've seen. We did not an unemployment 89 00:05:01,040 --> 00:05:06,799 Speaker 5: number for October, but we have gotten from the Establishments 90 00:05:07,080 --> 00:05:10,920 Speaker 5: the Establishment Survey in the last six months three numbers 91 00:05:10,960 --> 00:05:14,440 Speaker 5: that were negative, saying that nonfarm payrolls actually declined in 92 00:05:14,440 --> 00:05:16,440 Speaker 5: three of the last six months, and so the running 93 00:05:16,520 --> 00:05:22,400 Speaker 5: total average over the last six months has been very low. Basically, 94 00:05:22,480 --> 00:05:26,400 Speaker 5: what that means is for the average worker, the job 95 00:05:26,480 --> 00:05:29,800 Speaker 5: opportunities are lesser, even though we have this boom in AI. 96 00:05:30,279 --> 00:05:35,600 Speaker 5: You could call it a mismatch between job availability and 97 00:05:36,480 --> 00:05:40,960 Speaker 5: the abilities of the working population. But the only positive 98 00:05:41,000 --> 00:05:44,320 Speaker 5: that we've seen is that in the last report, more 99 00:05:44,360 --> 00:05:48,520 Speaker 5: people came off the sidelines, re entered the labor market 100 00:05:48,880 --> 00:05:52,279 Speaker 5: and we're looking for work, and that's usually a sign 101 00:05:52,480 --> 00:05:55,240 Speaker 5: that they're optimistic that they'll be able to find a job. 102 00:05:55,839 --> 00:05:58,480 Speaker 2: Are you expecting that we're going to see the kinds 103 00:05:58,480 --> 00:06:02,400 Speaker 2: of levels in AI spending that we've seen not just 104 00:06:02,520 --> 00:06:04,880 Speaker 2: this year, but in the years prior as well, And 105 00:06:05,200 --> 00:06:08,080 Speaker 2: what could that mean for inflationary pressures? 106 00:06:08,839 --> 00:06:13,400 Speaker 5: You know, Nathan, I think that AI that it's from 107 00:06:13,400 --> 00:06:18,280 Speaker 5: an investment perspective, we're sort of at a tipping point now. Recently, 108 00:06:19,000 --> 00:06:22,599 Speaker 5: in the past two or three weeks, we've seen a 109 00:06:22,800 --> 00:06:26,599 Speaker 5: rotation out of the large cap tech companies that have 110 00:06:26,760 --> 00:06:29,960 Speaker 5: been driving the market forward, which are very AI related, 111 00:06:30,279 --> 00:06:34,600 Speaker 5: and the reason for that is concern about number one, 112 00:06:34,680 --> 00:06:37,920 Speaker 5: the level of spend and whether that's sustainable, but also 113 00:06:38,240 --> 00:06:41,680 Speaker 5: the fact that the spend that's being done now is 114 00:06:41,720 --> 00:06:46,240 Speaker 5: increasingly done with diminished cash on the balance sheet and 115 00:06:46,720 --> 00:06:50,560 Speaker 5: higher debt levels. And there's a concern particularly around companies 116 00:06:50,600 --> 00:06:56,359 Speaker 5: like Oracle and their balance sheet, their ability to continue 117 00:06:56,480 --> 00:07:03,400 Speaker 5: to invest into artificial and given the deterioration their balance sheets. 118 00:07:03,760 --> 00:07:06,440 Speaker 2: I really appreciate this and thanks again for being with us. 119 00:07:06,480 --> 00:07:09,760 Speaker 2: That is Edward Harrison, senior strategist at Bloomberg News, author 120 00:07:09,800 --> 00:07:12,920 Speaker 2: of Bloomberg's The Everything Risk newsletter. I want to get 121 00:07:13,000 --> 00:07:16,160 Speaker 2: more now on big tech because the Magnificent seven stocks 122 00:07:16,240 --> 00:07:19,600 Speaker 2: once again fueled double digit gains on Wall Street, even 123 00:07:19,640 --> 00:07:22,320 Speaker 2: with those questions about whether the valuations on some of 124 00:07:22,320 --> 00:07:25,440 Speaker 2: these companies may have run too far too fast. Let's 125 00:07:25,440 --> 00:07:27,600 Speaker 2: get more and what to expect from tech in twenty 126 00:07:27,680 --> 00:07:30,160 Speaker 2: twenty six. We are joined by man Deep Saying, Global 127 00:07:30,160 --> 00:07:34,400 Speaker 2: head of Tech research at Bloomberg Intelligence. Man Deep, I'll 128 00:07:34,520 --> 00:07:37,160 Speaker 2: start off with the question that does seem to dominate 129 00:07:37,200 --> 00:07:40,640 Speaker 2: the market all of twenty twenty five. Is it a bubble? 130 00:07:41,480 --> 00:07:44,960 Speaker 6: Well, I mean the best way to fram it is, 131 00:07:45,640 --> 00:07:49,480 Speaker 6: you know, look at the multiples of these companies, both 132 00:07:49,520 --> 00:07:52,920 Speaker 6: in terms of earnings and free cash flow. And when 133 00:07:52,960 --> 00:07:55,800 Speaker 6: it comes to earnings, I think what this year has 134 00:07:55,840 --> 00:08:00,840 Speaker 6: shown is earnings have been very resilient and these companies 135 00:08:00,960 --> 00:08:05,640 Speaker 6: have the levers when it comes to you know, cost rationalization, 136 00:08:05,960 --> 00:08:10,360 Speaker 6: slower hiring, and they can sustain you know, low to 137 00:08:10,440 --> 00:08:14,400 Speaker 6: mid team's growth easily. When it comes to free cash flow, 138 00:08:14,440 --> 00:08:19,360 Speaker 6: the story maybe different in twenty twenty six, given all 139 00:08:19,440 --> 00:08:24,400 Speaker 6: of these hyperscalers are looking to raise their capex by 140 00:08:24,440 --> 00:08:28,760 Speaker 6: forty to fifty percent and we are already at very 141 00:08:28,800 --> 00:08:33,000 Speaker 6: elevated levels. And what that means is even for a 142 00:08:33,040 --> 00:08:37,640 Speaker 6: company like Meta, you know, you may see negative free 143 00:08:37,640 --> 00:08:40,720 Speaker 6: cash flow, which is why they've been talking about, you know, 144 00:08:41,640 --> 00:08:46,600 Speaker 6: rationalizing their spending on the metaverse for example, and I 145 00:08:46,679 --> 00:08:51,240 Speaker 6: think you may see more of that in the first half, 146 00:08:51,280 --> 00:08:56,720 Speaker 6: where companies may have to prioritize you know, certain types 147 00:08:56,760 --> 00:09:01,680 Speaker 6: of AI spend and really offset it with either you know, 148 00:09:01,880 --> 00:09:06,440 Speaker 6: slower hiring or in some case even headcount productions. If 149 00:09:07,000 --> 00:09:12,320 Speaker 6: the ROI on AI is getting questioned more and more, 150 00:09:12,360 --> 00:09:15,880 Speaker 6: and we know this is frontloaded in terms of spend, 151 00:09:16,200 --> 00:09:19,719 Speaker 6: and that's where I think you may see a bifurcation 152 00:09:20,200 --> 00:09:23,439 Speaker 6: when it comes to some of these mag seven names. 153 00:09:23,200 --> 00:09:27,280 Speaker 2: When you talk about prioritizing AI spend, the types of 154 00:09:27,320 --> 00:09:29,520 Speaker 2: AI spend, what are you looking at, what's going to 155 00:09:29,559 --> 00:09:31,040 Speaker 2: be a winner, what's going to be a loser. 156 00:09:32,840 --> 00:09:37,480 Speaker 6: So the clear ROI when it comes to AI spend 157 00:09:37,600 --> 00:09:41,839 Speaker 6: is with the inferencing workloads. And that's what Microsoft has 158 00:09:42,600 --> 00:09:45,920 Speaker 6: shown us this year is they were very selective in 159 00:09:46,040 --> 00:09:50,320 Speaker 6: terms of you know, how they you know, partnered with 160 00:09:50,440 --> 00:09:53,480 Speaker 6: open ai and what they left it for someone like 161 00:09:53,679 --> 00:09:59,400 Speaker 6: Oracle to you know, take up. And I think Microsoft 162 00:09:59,679 --> 00:10:03,679 Speaker 6: has shown that they have the best visibility in terms 163 00:10:03,720 --> 00:10:08,360 Speaker 6: of what kind of workloads enterprises are willing to pay for, 164 00:10:08,960 --> 00:10:13,520 Speaker 6: and they have really positioned the company that way. Oracle, 165 00:10:13,559 --> 00:10:17,839 Speaker 6: on the other hand, has this huge i would say 166 00:10:17,880 --> 00:10:21,760 Speaker 6: exposure to open ai when it comes to their backlog, 167 00:10:21,840 --> 00:10:25,400 Speaker 6: and that's where the quality of Oracle's backlog is getting 168 00:10:25,520 --> 00:10:30,200 Speaker 6: questioned because if open ai doesn't ramp up their revenue 169 00:10:30,240 --> 00:10:32,480 Speaker 6: the way they have laid out to investors, you know, 170 00:10:32,559 --> 00:10:34,960 Speaker 6: in terms of getting to two hundred billion dollars in 171 00:10:35,080 --> 00:10:38,840 Speaker 6: revenue by twenty thirty. Then that will limit their ability 172 00:10:38,880 --> 00:10:41,800 Speaker 6: to spend you know, the one point four trillion in 173 00:10:41,840 --> 00:10:44,840 Speaker 6: commitments that they've made, and that will have a bearing 174 00:10:44,920 --> 00:10:46,080 Speaker 6: on someone like Oracle. 175 00:10:46,600 --> 00:10:50,440 Speaker 2: We have seen though open ai making announcements of a 176 00:10:50,480 --> 00:10:53,439 Speaker 2: lot of investments it's planning to get into the new year. 177 00:10:53,440 --> 00:10:56,240 Speaker 2: I'm thinking, particularly just this past week about a deal 178 00:10:56,280 --> 00:11:00,800 Speaker 2: that they made with Amazon. Is there further room for 179 00:11:01,160 --> 00:11:04,520 Speaker 2: more deals like this for some of these large language models. 180 00:11:05,000 --> 00:11:09,720 Speaker 6: So you're right that open ais it clearly has pivoted 181 00:11:09,840 --> 00:11:16,920 Speaker 6: away from Microsoft and now it's actually working with like 182 00:11:17,200 --> 00:11:21,080 Speaker 6: someone like Amazon. That would have been unimaginable twolve months back. 183 00:11:21,640 --> 00:11:26,920 Speaker 6: But you have to remember the Microsoft contract with open 184 00:11:26,960 --> 00:11:32,000 Speaker 6: ai and the binding they have extends to twenty thirty two. 185 00:11:32,600 --> 00:11:35,760 Speaker 6: So it's not as if, you know, open ai can 186 00:11:35,880 --> 00:11:41,360 Speaker 6: natively integrate with Amazon or Oracle, you know, in terms 187 00:11:41,400 --> 00:11:44,319 Speaker 6: of what they do at the model level, they could 188 00:11:44,400 --> 00:11:47,320 Speaker 6: use the compute from an Amazon, they could use the 189 00:11:47,360 --> 00:11:52,760 Speaker 6: compute from Oracle. But Microsoft still remains in terms of, 190 00:11:52,880 --> 00:11:57,959 Speaker 6: you know, how they build their API and the LLM functionality, 191 00:11:58,080 --> 00:12:01,040 Speaker 6: and that I think will be a limiting factor for 192 00:12:01,160 --> 00:12:05,360 Speaker 6: someone like open Ai that is looking to partner with 193 00:12:05,440 --> 00:12:09,800 Speaker 6: as many companies. In fact, the Disney partnership was notable 194 00:12:09,880 --> 00:12:12,800 Speaker 6: as well in terms of what they're looking to do 195 00:12:12,840 --> 00:12:16,320 Speaker 6: on the content side. But they just can get off, 196 00:12:16,880 --> 00:12:20,240 Speaker 6: you know, what they have to do in terms of 197 00:12:20,720 --> 00:12:24,240 Speaker 6: Microsoft partnership, and that will have a bearing in terms 198 00:12:24,240 --> 00:12:26,760 Speaker 6: of how they roll out the product and their large 199 00:12:26,760 --> 00:12:27,320 Speaker 6: angry mob. 200 00:12:27,559 --> 00:12:29,720 Speaker 2: Thanks for this, Man Deep, great having you on with us. 201 00:12:29,800 --> 00:12:32,360 Speaker 2: That's Man Deep Saying, Global head of Tech research at 202 00:12:32,400 --> 00:12:35,680 Speaker 2: Bloomberg Intelligence. Hey, coming up on Bloomberg day Break weekend, 203 00:12:35,679 --> 00:12:38,120 Speaker 2: we'll look back at the year in UK politics and 204 00:12:38,160 --> 00:12:40,640 Speaker 2: what twenty twenty six may hold in store for Prime 205 00:12:40,679 --> 00:12:45,199 Speaker 2: Minister Keir Starmer. I'm Nathan Hager, and this is Bloomberg. 206 00:12:56,040 --> 00:12:58,880 Speaker 2: This is Bloomberg day Break Weekend, our global look ahead 207 00:12:58,880 --> 00:13:01,200 Speaker 2: at the top stories for investors in the coming week. 208 00:13:01,360 --> 00:13:04,480 Speaker 2: I'm Nathan Hager in Washington. Up later in our program, 209 00:13:04,520 --> 00:13:06,679 Speaker 2: we'll look at what's in store for the world's second 210 00:13:06,800 --> 00:13:10,120 Speaker 2: largest economy in twenty twenty six. But first, from the 211 00:13:10,240 --> 00:13:13,320 Speaker 2: US perspective, the UK looks like it did pretty well 212 00:13:13,360 --> 00:13:16,360 Speaker 2: from this second Trump administration. Britain was first to get 213 00:13:16,400 --> 00:13:19,199 Speaker 2: a trade deal with the US. A second state visit 214 00:13:19,280 --> 00:13:23,640 Speaker 2: delivered FaceTime for brand Britain, with royals and politicians alongside 215 00:13:23,720 --> 00:13:27,360 Speaker 2: President Trump and his entourage, while American business leaders at 216 00:13:27,360 --> 00:13:31,679 Speaker 2: one point promised major AI investments. But from the UK perspective, 217 00:13:31,720 --> 00:13:35,040 Speaker 2: the gains haven't been so easy to see. A midweek growth, 218 00:13:35,200 --> 00:13:38,319 Speaker 2: US demands and a government that's lurched from U turn 219 00:13:38,440 --> 00:13:41,559 Speaker 2: to crisis. Let's get more now. From Bloomberg Daybreak, euro 220 00:13:41,679 --> 00:13:43,920 Speaker 2: banker Caroline Hepgar in London. 221 00:13:44,000 --> 00:13:49,360 Speaker 3: Nathan, not too bad. I'm surviving typical responses in the 222 00:13:49,480 --> 00:13:52,880 Speaker 3: UK if you ask a citizen how are you? And 223 00:13:52,960 --> 00:13:55,720 Speaker 3: so it can be said of the Labor government barely 224 00:13:55,760 --> 00:13:58,600 Speaker 3: a year and a half into office, Kirs Starmer's government 225 00:13:58,640 --> 00:14:02,040 Speaker 3: has little to really hear about and a long list 226 00:14:02,120 --> 00:14:05,800 Speaker 3: of troubles to ponder. And joining me now to discuss 227 00:14:05,840 --> 00:14:09,360 Speaker 3: where we are at is Bloomberg's UK Political editor Alex 228 00:14:09,400 --> 00:14:13,600 Speaker 3: Wickham and our Bloomberg opinion columnist Rosa Prince. Great to 229 00:14:13,600 --> 00:14:16,280 Speaker 3: have you both with me, Alex, Can I start with you? 230 00:14:17,080 --> 00:14:20,440 Speaker 3: What do we know about this government at the end 231 00:14:20,520 --> 00:14:23,080 Speaker 3: of this year that we didn't know when they got 232 00:14:23,120 --> 00:14:25,359 Speaker 3: elected in twenty twenty four. 233 00:14:25,760 --> 00:14:31,600 Speaker 7: I think just how unstable they are and that the 234 00:14:31,640 --> 00:14:33,400 Speaker 7: Labor government would be I think, I think, you know, 235 00:14:33,480 --> 00:14:37,880 Speaker 7: Kirsten was elected in twenty twenty four and basically the 236 00:14:37,920 --> 00:14:39,840 Speaker 7: pitch was We're not going to be like the Tories. 237 00:14:39,880 --> 00:14:42,920 Speaker 7: We're not going to go through constant political crises and 238 00:14:43,000 --> 00:14:46,000 Speaker 7: scandals and dramas and change the leader every five minutes 239 00:14:46,040 --> 00:14:48,640 Speaker 7: and all of this stuff. I always remember this line 240 00:14:48,680 --> 00:14:51,280 Speaker 7: that Kirs Starmer had in the election that politics should 241 00:14:51,320 --> 00:14:54,480 Speaker 7: tread more lightly on everybody's lives, which was sort of 242 00:14:54,520 --> 00:14:59,000 Speaker 7: a you know, wish for thinking, shall we say and instead, 243 00:14:59,240 --> 00:15:04,320 Speaker 7: you know, almost straight away Labor went straight into basically 244 00:15:04,560 --> 00:15:07,960 Speaker 7: copying what the Tories did in terms of you know, 245 00:15:08,120 --> 00:15:11,320 Speaker 7: a lot of a lot of political nonsense and you 246 00:15:11,360 --> 00:15:14,680 Speaker 7: know where we are quite astonishingly, you know, at the 247 00:15:14,760 --> 00:15:16,920 Speaker 7: end of this year is you know, question marks over 248 00:15:16,960 --> 00:15:19,200 Speaker 7: whether star War will still be there in a year's time, 249 00:15:19,280 --> 00:15:22,600 Speaker 7: which you would never have thought even a year ago, 250 00:15:22,640 --> 00:15:23,440 Speaker 7: eighteen months ago. 251 00:15:23,880 --> 00:15:28,440 Speaker 3: Rosa, has it gone wrong? What has gone wrong? And why? 252 00:15:28,960 --> 00:15:31,760 Speaker 8: Yeah, lots and lots have gone wrong. I mean the 253 00:15:31,760 --> 00:15:35,440 Speaker 8: poll speak to themselves for themselves. Labour's ending the year 254 00:15:35,440 --> 00:15:38,080 Speaker 8: in a terrible position. And Kiss Starmer is the most 255 00:15:38,120 --> 00:15:41,560 Speaker 8: unpopular primers that ever, I think, including the dreadful Liz 256 00:15:41,600 --> 00:15:45,000 Speaker 8: trust I think why I'll kind of give a macro 257 00:15:45,120 --> 00:15:48,840 Speaker 8: and a micro answer for a financial podcast Macro. I 258 00:15:48,880 --> 00:15:52,760 Speaker 8: think there's generally been a lack of vision and purpose 259 00:15:52,840 --> 00:15:56,200 Speaker 8: with this labor government. Kiss Starmer often doesn't seem as 260 00:15:56,240 --> 00:15:58,200 Speaker 8: if he knows what he wants to do with this 261 00:15:58,400 --> 00:16:03,520 Speaker 8: enormous power he has big majority and also many many 262 00:16:03,600 --> 00:16:07,120 Speaker 8: own goals. There were really accident prone government. They were 263 00:16:07,160 --> 00:16:09,920 Speaker 8: dealt a tough hand coming in and they've kind of 264 00:16:10,360 --> 00:16:14,280 Speaker 8: handled it really really badly. Specifically, the micro things I 265 00:16:14,280 --> 00:16:17,080 Speaker 8: think they got wrong this year were a failure to 266 00:16:17,160 --> 00:16:19,600 Speaker 8: deliver growth, which is what they put all of their 267 00:16:19,680 --> 00:16:23,040 Speaker 8: kind of eggs in that basket on the economy. A 268 00:16:23,120 --> 00:16:26,880 Speaker 8: failure really to get a grip on people's concerns about immigration, 269 00:16:27,080 --> 00:16:30,840 Speaker 8: which has allowed the Reform UK and Nigel Farad party 270 00:16:30,920 --> 00:16:34,560 Speaker 8: to really thrive this year. And also a failure by 271 00:16:34,640 --> 00:16:38,480 Speaker 8: the government in Kirstarmer to control his own labor MPs, 272 00:16:38,800 --> 00:16:41,680 Speaker 8: which meant he hasn't in particular been able to get 273 00:16:41,720 --> 00:16:45,440 Speaker 8: those public spending cuts through government, which he really needed 274 00:16:45,480 --> 00:16:47,280 Speaker 8: to do to make the sums add up. 275 00:16:47,600 --> 00:16:53,040 Speaker 3: Okay, so record on popularity, some quite complex policy problems 276 00:16:53,040 --> 00:16:54,840 Speaker 3: to solve, as you say, the big one was to 277 00:16:54,880 --> 00:16:59,360 Speaker 3: try to deliver growth, but really a massive challenge. Where 278 00:16:59,400 --> 00:17:03,120 Speaker 3: does that leave Kirs Starmer and also let's let her 279 00:17:03,160 --> 00:17:06,960 Speaker 3: in Rachel Reeves as well, the Chancellor going into twenty 280 00:17:07,000 --> 00:17:07,600 Speaker 3: twenty six. 281 00:17:08,119 --> 00:17:11,800 Speaker 7: I mean, they faced this sort of slightly mind bending 282 00:17:12,320 --> 00:17:17,160 Speaker 7: prospect that they could be a leadership challenge in May 283 00:17:17,320 --> 00:17:20,520 Speaker 7: after the local elections, you know, which Labour's expected to 284 00:17:20,520 --> 00:17:23,959 Speaker 7: do very badly. All of the questions all that anybody 285 00:17:24,040 --> 00:17:27,119 Speaker 7: wants to talk about in Westminster are is you know, 286 00:17:27,240 --> 00:17:30,040 Speaker 7: Andy Burnham gonna get a seat in the House of 287 00:17:30,040 --> 00:17:33,440 Speaker 7: Commons so he can run. Is west streeting going to 288 00:17:33,520 --> 00:17:36,359 Speaker 7: be the sort of the pretender to the throne. Is 289 00:17:36,400 --> 00:17:40,879 Speaker 7: Angela Rainer going to be a candidate from more from 290 00:17:40,920 --> 00:17:44,479 Speaker 7: the left. And all at the same time, Kirs Starmer 291 00:17:44,560 --> 00:17:47,879 Speaker 7: has got to contend with this sort of immensely difficult 292 00:17:47,880 --> 00:17:50,520 Speaker 7: international situation which takes up so much of his time 293 00:17:50,560 --> 00:17:53,399 Speaker 7: on Ukraine US relations. 294 00:17:53,960 --> 00:17:55,480 Speaker 4: Rachel Reeves has got. 295 00:17:55,320 --> 00:17:58,280 Speaker 7: To sort out growth. As Rosa was saying that, you know, 296 00:17:58,320 --> 00:18:01,800 Speaker 7: it is just the shock absence of any growth strategy 297 00:18:02,000 --> 00:18:05,200 Speaker 7: is just therefore to see and they have to find 298 00:18:05,400 --> 00:18:08,040 Speaker 7: a way to deal with these policy problems immigration as well, 299 00:18:08,119 --> 00:18:12,240 Speaker 7: so important for voters, and you know, being able to 300 00:18:13,000 --> 00:18:16,840 Speaker 7: get through the next few months is just looking very 301 00:18:16,840 --> 00:18:19,639 Speaker 7: difficult now. You know, I would say it is hard 302 00:18:19,680 --> 00:18:22,159 Speaker 7: to change the prime minister. You know, I always remember 303 00:18:22,200 --> 00:18:27,400 Speaker 7: back in the sort of Theresa may Boris Johnson days, 304 00:18:28,040 --> 00:18:30,840 Speaker 7: for a long time journalists would say, oh, this prime 305 00:18:30,840 --> 00:18:33,280 Speaker 7: Minister's finished, and it took them a long time to go. 306 00:18:34,000 --> 00:18:36,280 Speaker 7: So it's easier said than done. And people have been 307 00:18:36,320 --> 00:18:38,439 Speaker 7: saying kiss Darma's finished for a few months now and 308 00:18:38,480 --> 00:18:40,879 Speaker 7: he's still there, and you know, there is just a 309 00:18:41,000 --> 00:18:43,880 Speaker 7: chance that he might just survive because it's really hard 310 00:18:43,920 --> 00:18:45,760 Speaker 7: to get rid of the prime minister. I think that's 311 00:18:45,800 --> 00:18:48,760 Speaker 7: perhaps slightly underpriced at the minute, but it doesn't mean 312 00:18:48,840 --> 00:18:51,360 Speaker 7: all of these problems aren't there still. 313 00:18:52,160 --> 00:18:55,000 Speaker 3: And it is quite difficult because each of the political 314 00:18:55,040 --> 00:18:57,520 Speaker 3: parties has their own system for how they get rid 315 00:18:57,640 --> 00:19:00,919 Speaker 3: of their leader, and that leader bit the prime minister 316 00:19:00,960 --> 00:19:04,439 Speaker 3: of course when they're in government. ROSA, how seriously should 317 00:19:04,440 --> 00:19:08,400 Speaker 3: we take a leadership challenge? And who are the potential successors? 318 00:19:08,880 --> 00:19:12,240 Speaker 3: I will just remind listeners. Of course, that the deputy leader, 319 00:19:12,280 --> 00:19:16,320 Speaker 3: Angela Rayner, resigned earlier this year, and she's seen as 320 00:19:16,359 --> 00:19:20,800 Speaker 3: a significant potential candidate. Let's listen in to a little 321 00:19:20,800 --> 00:19:21,840 Speaker 3: bit from Angela Rayner. 322 00:19:22,080 --> 00:19:26,200 Speaker 8: The trade union movement taught me that it's not about yourself, 323 00:19:26,760 --> 00:19:31,199 Speaker 8: it's about us. It's about who we're here for. 324 00:19:32,040 --> 00:19:35,639 Speaker 3: And everything that I've done has been an endeavor for us, 325 00:19:35,880 --> 00:19:40,760 Speaker 3: for our people who are elected doors and who we serve. Rosa. 326 00:19:40,840 --> 00:19:45,359 Speaker 3: In terms of Rayner, is she the lead contender? Who 327 00:19:45,520 --> 00:19:49,040 Speaker 3: else might be possibilities if there were to be a 328 00:19:49,119 --> 00:19:50,119 Speaker 3: leadership challenge? 329 00:19:50,480 --> 00:19:53,159 Speaker 8: Funny enough, I'm right in a column about this because 330 00:19:53,240 --> 00:19:55,680 Speaker 8: my view is that I agree with Alex one hundred 331 00:19:55,680 --> 00:19:58,920 Speaker 8: percent that Starmer is in real trouble. I'm going to 332 00:19:58,960 --> 00:20:01,040 Speaker 8: the same parties and here the same things, which is 333 00:20:01,080 --> 00:20:03,520 Speaker 8: that everyone's very fed up with him. But each of 334 00:20:03,600 --> 00:20:07,680 Speaker 8: the candidates to replace him has serious issues and flaws 335 00:20:07,680 --> 00:20:10,639 Speaker 8: that make it hard for them to achieve it. So, yes, 336 00:20:10,880 --> 00:20:14,880 Speaker 8: people talk about Angela Rainer, but Angela Rana has resigned 337 00:20:14,880 --> 00:20:17,720 Speaker 8: in disgrace only a couple of months ago. There is 338 00:20:17,800 --> 00:20:20,639 Speaker 8: some polling out which shows that the public do not 339 00:20:20,800 --> 00:20:23,720 Speaker 8: welcome her return to government. Now, she's very popular in 340 00:20:23,760 --> 00:20:26,159 Speaker 8: the Labor Party, but I'm not so sure she is 341 00:20:26,200 --> 00:20:29,479 Speaker 8: popular in the country at large. And if the idea 342 00:20:29,560 --> 00:20:32,160 Speaker 8: is you want to get rid of an unpopular prime minister, 343 00:20:32,600 --> 00:20:35,240 Speaker 8: why would you replace him with somebody who is also 344 00:20:35,640 --> 00:20:39,160 Speaker 8: very unpopular, actually more unpopular than he is. The big 345 00:20:39,160 --> 00:20:42,440 Speaker 8: problem with the most popular candidate, who is Andy Burnham, 346 00:20:42,760 --> 00:20:45,080 Speaker 8: is that he's not a member of Parliament. Now he's 347 00:20:45,119 --> 00:20:47,359 Speaker 8: been giving interviews saying well, I could get a seat, 348 00:20:47,400 --> 00:20:50,240 Speaker 8: I could keep back. It's really difficult to do that 349 00:20:50,359 --> 00:20:52,800 Speaker 8: if you've not got the backing of the Labor Party, 350 00:20:52,840 --> 00:20:56,920 Speaker 8: and at the moment the Labor Party, the National Executive Committee, 351 00:20:56,920 --> 00:20:59,879 Speaker 8: which is in charge of this stuff, runs elections and 352 00:21:00,080 --> 00:21:02,840 Speaker 8: elections and probably wouldn't put him in there. So I 353 00:21:02,880 --> 00:21:05,480 Speaker 8: think he can be counted out for the short term. 354 00:21:05,680 --> 00:21:08,800 Speaker 8: And then you've got other candidates like Where Streeting the 355 00:21:08,840 --> 00:21:12,439 Speaker 8: Health Secretary, is Shabana Mahmoud the Home Secretary. Both I 356 00:21:12,480 --> 00:21:15,880 Speaker 8: think are a little bit more popular than say Angelina 357 00:21:16,080 --> 00:21:18,240 Speaker 8: with the public, but they're from the right of the 358 00:21:18,280 --> 00:21:22,720 Speaker 8: party and this Labor Party leans left, particularly the membership does, 359 00:21:23,119 --> 00:21:25,200 Speaker 8: and I think they would find it hard to win 360 00:21:25,240 --> 00:21:30,040 Speaker 8: an election so there's no clear successor to Kirs Starmer, 361 00:21:30,240 --> 00:21:32,359 Speaker 8: which at the moment I think is pretty much what's 362 00:21:32,520 --> 00:21:33,439 Speaker 8: keeping him in the. 363 00:21:33,480 --> 00:21:37,280 Speaker 3: Job, all of which is quite negative for the government. 364 00:21:37,600 --> 00:21:42,200 Speaker 3: Is there a flip side alex where Kirs Starmer manages 365 00:21:42,280 --> 00:21:45,439 Speaker 3: to turn things around? Is it possible? What might be 366 00:21:45,520 --> 00:21:46,639 Speaker 3: the criteria for that? 367 00:21:47,320 --> 00:21:49,960 Speaker 7: Yes, it is possible. I mean, I think Kirs Starmer 368 00:21:50,000 --> 00:21:52,320 Speaker 7: would say, I'm a year and a half in of 369 00:21:52,359 --> 00:21:55,320 Speaker 7: a five year term. It's too soon to write me 370 00:21:55,359 --> 00:21:57,719 Speaker 7: off completely. And to be fair to him that you know, 371 00:21:57,800 --> 00:22:00,840 Speaker 7: that is not an unreasonable argument that you know, he's 372 00:22:00,880 --> 00:22:04,320 Speaker 7: the first labor prime minister in fourteen years. Give him 373 00:22:04,359 --> 00:22:07,520 Speaker 7: a bit more of a chance basically, you know, yes, 374 00:22:07,560 --> 00:22:11,040 Speaker 7: there could be some interest rate cuts. You know, next year, 375 00:22:11,200 --> 00:22:15,320 Speaker 7: people could start to feel that the economy has turned 376 00:22:15,320 --> 00:22:19,240 Speaker 7: a corner a bit. They need to make serious headway 377 00:22:19,600 --> 00:22:24,399 Speaker 7: on immigration and find a way to reduce the numbers 378 00:22:24,400 --> 00:22:27,359 Speaker 7: of small boat crossings. You know, that is I do 379 00:22:27,440 --> 00:22:31,840 Speaker 7: think fundamental to their electoral chances. They're polling the ability 380 00:22:31,840 --> 00:22:34,240 Speaker 7: of them to sort of nip in the buds the 381 00:22:34,400 --> 00:22:38,440 Speaker 7: rise of reform. You know, could they do slightly less 382 00:22:38,440 --> 00:22:41,240 Speaker 7: badly than feared at the local ellections in May and 383 00:22:41,600 --> 00:22:44,320 Speaker 7: launch that as a bit of a way of turning around. 384 00:22:44,359 --> 00:22:46,800 Speaker 7: I think the other big unknown is is what does 385 00:22:46,800 --> 00:22:50,320 Speaker 7: he do on Brexit, because there could be this just 386 00:22:50,440 --> 00:22:54,359 Speaker 7: sort of slight hail Meherry, which is an unpopular leader, 387 00:22:54,520 --> 00:22:58,200 Speaker 7: needs to find a big, game changing policy to get 388 00:22:58,240 --> 00:23:02,000 Speaker 7: his party back on side. And if he just junked 389 00:23:02,000 --> 00:23:05,119 Speaker 7: his red lines on negotiations with the EU on things 390 00:23:05,200 --> 00:23:08,760 Speaker 7: like the custom a customs union and certain even if 391 00:23:08,800 --> 00:23:10,840 Speaker 7: not that you know, some other way of forging a 392 00:23:10,840 --> 00:23:14,920 Speaker 7: closer relationship that could just keep his party happier. 393 00:23:15,440 --> 00:23:15,720 Speaker 9: Rosa. 394 00:23:16,040 --> 00:23:19,520 Speaker 3: Was this the year of Nigel Pharage and the reform 395 00:23:19,760 --> 00:23:20,640 Speaker 3: UK Party? 396 00:23:21,200 --> 00:23:24,720 Speaker 8: Oh yeah, it really was. Everything seems to be coming 397 00:23:24,760 --> 00:23:28,320 Speaker 8: up Rosie for Nigel Farage well ahead in the polls, 398 00:23:28,760 --> 00:23:32,399 Speaker 8: lots of defections from the Conservative Party, which seems to 399 00:23:32,440 --> 00:23:36,520 Speaker 8: be actually killing off what has been the most successful 400 00:23:36,560 --> 00:23:40,040 Speaker 8: electoral party not just in Britain but in the Western world, 401 00:23:40,480 --> 00:23:44,159 Speaker 8: getting lots of council seats wins. He's had some bumps 402 00:23:44,160 --> 00:23:47,359 Speaker 8: in the road, He's fallen out with members of his 403 00:23:47,440 --> 00:23:51,120 Speaker 8: own party. He had some stories which were very unwelcome 404 00:23:51,160 --> 00:23:53,760 Speaker 8: for him recently about his school days when he was 405 00:23:53,760 --> 00:23:57,160 Speaker 8: accused of being pretty unpleasant and even racist, so it's 406 00:23:57,200 --> 00:23:59,800 Speaker 8: not all gone his way. But he even ends the 407 00:24:00,520 --> 00:24:02,679 Speaker 8: year with a member of the House of Lords for 408 00:24:02,720 --> 00:24:06,360 Speaker 8: the first time. So yes, at the moment in less 409 00:24:06,400 --> 00:24:09,800 Speaker 8: Labor can pull themselves together, or perhaps the Tories emerge 410 00:24:10,160 --> 00:24:13,120 Speaker 8: from where they've been sleeping. It looks like we are 411 00:24:13,119 --> 00:24:15,000 Speaker 8: heading towards a reform government. 412 00:24:14,960 --> 00:24:18,520 Speaker 3: After such an unpredictable twenty twenty five. Is it possible 413 00:24:18,520 --> 00:24:21,320 Speaker 3: to list what the risks might be in twenty twenty six, 414 00:24:21,640 --> 00:24:24,280 Speaker 3: what the key themes rosa might be for this UK 415 00:24:24,359 --> 00:24:26,160 Speaker 3: government in this new year. 416 00:24:26,480 --> 00:24:28,720 Speaker 8: Well, all eyes are on May, which is when we 417 00:24:28,760 --> 00:24:32,719 Speaker 8: have local elections and elections in Wales and Scotland, and 418 00:24:32,760 --> 00:24:35,760 Speaker 8: that's being seen as a big test of Keir Starmer's 419 00:24:35,800 --> 00:24:39,159 Speaker 8: premiership and also of Kemy Badenoch, the leader of the 420 00:24:39,160 --> 00:24:42,320 Speaker 8: Conservative Party, who's actually ends the year in a slightly 421 00:24:42,359 --> 00:24:46,600 Speaker 8: stronger position. Since the summer, she's been seen as doing 422 00:24:46,680 --> 00:24:49,159 Speaker 8: quite well in the House of Commons. She had a 423 00:24:49,160 --> 00:24:52,160 Speaker 8: pretty good conference. The trouble for her is that her 424 00:24:52,240 --> 00:24:55,919 Speaker 8: poll ratings are stubbornly the same. She's actually now polling 425 00:24:55,960 --> 00:24:58,639 Speaker 8: on the same level as the Green Party. So I 426 00:24:58,680 --> 00:25:02,400 Speaker 8: think the next sort of big landmark moment is may. 427 00:25:02,840 --> 00:25:06,560 Speaker 8: Aside from that, it's generally these themes. So the rise 428 00:25:06,600 --> 00:25:09,720 Speaker 8: of reform, does that continue, what's going to happen with 429 00:25:09,760 --> 00:25:13,280 Speaker 8: the Ukraine and the impact here, and just individual policy 430 00:25:13,560 --> 00:25:16,800 Speaker 8: areas such as the NHS where we have ongoing strikes 431 00:25:16,840 --> 00:25:20,160 Speaker 8: such as energy bills which the government's promised to get 432 00:25:20,160 --> 00:25:22,280 Speaker 8: down and aren't and so on and so forth. 433 00:25:22,680 --> 00:25:26,560 Speaker 3: That is Bloomberg opinion columnist Rosa Prince and Bloomberg's UK 434 00:25:26,680 --> 00:25:31,199 Speaker 3: Political editor Alex Wickham. Always a beautiful summary and a 435 00:25:31,240 --> 00:25:34,119 Speaker 3: big thought for us with your columns, of which we 436 00:25:34,119 --> 00:25:37,200 Speaker 3: look forward to in twenty twenty six. Thank you. I'm 437 00:25:37,240 --> 00:25:39,840 Speaker 3: Caroline Hepgar here in London and you can catch us 438 00:25:39,880 --> 00:25:42,800 Speaker 3: every weekday morning for Bloomberg Daybreak here at beginning at 439 00:25:42,800 --> 00:25:45,600 Speaker 3: six am in London. That's one am on Wall Street. 440 00:25:45,680 --> 00:25:49,520 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend, 441 00:25:49,560 --> 00:25:52,320 Speaker 2: we look at how domestic demand in China will be 442 00:25:52,359 --> 00:25:56,600 Speaker 2: impacted next year. I'm Nathan Hager and this is Bloomberg. 443 00:26:07,520 --> 00:26:10,399 Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead at 444 00:26:10,400 --> 00:26:12,800 Speaker 2: the top stories for investors in the coming week. I'm 445 00:26:12,880 --> 00:26:15,840 Speaker 2: Nathan Hager in Washington. Let's turn out to China and 446 00:26:15,880 --> 00:26:18,679 Speaker 2: the challenge is facing the world's second largest economy in 447 00:26:18,720 --> 00:26:21,280 Speaker 2: the new year. Here's Bloomberg's Doug Krisner, host of the 448 00:26:21,359 --> 00:26:22,639 Speaker 2: Daybreak Asia podcast. 449 00:26:23,359 --> 00:26:26,400 Speaker 4: Nathan, the Chinese economy is wrapping up twenty twenty five 450 00:26:26,440 --> 00:26:29,120 Speaker 4: in a stronger place than where it started the year. 451 00:26:29,280 --> 00:26:31,840 Speaker 4: It's whether a trade war with the US, and the 452 00:26:31,880 --> 00:26:36,200 Speaker 4: government has focused on confronting several domestic challenges. So what's 453 00:26:36,240 --> 00:26:38,760 Speaker 4: happening now and where do we go from here? For 454 00:26:38,840 --> 00:26:41,359 Speaker 4: a closer look, I'm joined by John Leu. He is 455 00:26:41,440 --> 00:26:45,200 Speaker 4: Bloomberg Chief China correspondent. John joins us from our studios 456 00:26:45,240 --> 00:26:48,680 Speaker 4: in Beijing. Thank you for being here. Over the past year, John, 457 00:26:48,720 --> 00:26:51,080 Speaker 4: you and I have talked about the many challenges that 458 00:26:51,200 --> 00:26:54,360 Speaker 4: China is facing, and there has been a very important 459 00:26:54,400 --> 00:26:57,360 Speaker 4: event recently. It's earlier in the month that the government 460 00:26:57,440 --> 00:27:01,000 Speaker 4: convened the Central Economic Work Conference for twenty twenty six. 461 00:27:01,560 --> 00:27:04,919 Speaker 4: How much do we know about what was discussed. 462 00:27:04,720 --> 00:27:07,200 Speaker 9: Well, we know that what came out of the meeting 463 00:27:07,600 --> 00:27:12,320 Speaker 9: was this readout that emphasized the need to increase consumer 464 00:27:12,520 --> 00:27:16,040 Speaker 9: consumption here domestically in China. There was also a lot 465 00:27:16,080 --> 00:27:21,160 Speaker 9: of emphasis on pushing forward with technology, trying to make 466 00:27:21,280 --> 00:27:25,360 Speaker 9: China a more innovative economy and economy that creates new products, 467 00:27:25,480 --> 00:27:28,440 Speaker 9: new technologies that people around the world will want to buy, 468 00:27:28,720 --> 00:27:32,560 Speaker 9: and that also, by the way, would reduce China's reliance 469 00:27:32,600 --> 00:27:35,000 Speaker 9: on the United States for a lot of those technologies, 470 00:27:35,040 --> 00:27:38,200 Speaker 9: which we've all seen has become part of this trade 471 00:27:38,240 --> 00:27:42,080 Speaker 9: war as a weaponized way that the US has tried 472 00:27:42,080 --> 00:27:43,200 Speaker 9: to put pressure on China. 473 00:27:43,320 --> 00:27:45,919 Speaker 4: So this is part of the weak domestic demand story 474 00:27:45,960 --> 00:27:48,640 Speaker 4: that you and I have spoken about. And the elephant 475 00:27:48,680 --> 00:27:51,800 Speaker 4: in the room is the property market. It's been I 476 00:27:51,800 --> 00:27:55,240 Speaker 4: think we can say, persistently soft and weighing very much 477 00:27:55,280 --> 00:27:58,639 Speaker 4: on consumer sentiment, and the headlines right now really aren't 478 00:27:58,640 --> 00:28:02,240 Speaker 4: improving much. And I'm thinking in particular of China von Kah. 479 00:28:02,280 --> 00:28:05,639 Speaker 4: This company was once the largest home builder in China 480 00:28:05,720 --> 00:28:09,400 Speaker 4: and it's been way down, as many property developers have been, 481 00:28:09,520 --> 00:28:12,040 Speaker 4: by enormous debt. And now we're being told that von 482 00:28:12,119 --> 00:28:15,240 Speaker 4: Ka seems to be moving towards some type of debt restructuring. 483 00:28:15,680 --> 00:28:18,240 Speaker 4: Default right now doesn't seem to be an option. Since 484 00:28:18,359 --> 00:28:21,960 Speaker 4: Vonka is viewed from what I understand as almost a 485 00:28:22,040 --> 00:28:24,240 Speaker 4: quasi backed company. Am I wrong in that? 486 00:28:25,240 --> 00:28:28,440 Speaker 9: I think the chances of a default are probably greater 487 00:28:28,560 --> 00:28:34,000 Speaker 9: than you think, Doug. We have passed the date of 488 00:28:34,119 --> 00:28:37,440 Speaker 9: maturity for a bond that VANKA was supposed to pay 489 00:28:37,760 --> 00:28:41,080 Speaker 9: on the fifteenth of this month. They have a five 490 00:28:41,160 --> 00:28:44,400 Speaker 9: day grace period that takes us into Monday of next week, 491 00:28:44,440 --> 00:28:49,560 Speaker 9: the nineteenth. It's not clear if VANKA is going to 492 00:28:49,600 --> 00:28:53,040 Speaker 9: get an extension on that deadline, which they are asking 493 00:28:53,080 --> 00:28:59,480 Speaker 9: those bondholders for. We should find out soon, but there 494 00:28:59,560 --> 00:29:02,960 Speaker 9: is ants that they will not get that extension and 495 00:29:03,040 --> 00:29:04,520 Speaker 9: they will be in default. 496 00:29:04,720 --> 00:29:07,320 Speaker 4: John, Let's imagine that there is a default. What might 497 00:29:07,360 --> 00:29:08,360 Speaker 4: the reaction look like. 498 00:29:09,000 --> 00:29:11,800 Speaker 9: I think in terms of the markets, there will probably 499 00:29:11,880 --> 00:29:15,800 Speaker 9: be more pessimism as a result, more concerned about where 500 00:29:15,960 --> 00:29:19,120 Speaker 9: property is headed and how much lower we can go. 501 00:29:19,720 --> 00:29:22,800 Speaker 9: I think based on what we got from the Central 502 00:29:22,800 --> 00:29:26,000 Speaker 9: Economic Work meeting and based on the rhetoric that we've 503 00:29:26,000 --> 00:29:28,280 Speaker 9: heard out of the government, it seems Beijing is a 504 00:29:28,320 --> 00:29:32,440 Speaker 9: little bit less concerned. It seems Beijing's feeling is that 505 00:29:32,480 --> 00:29:35,440 Speaker 9: if there were a default, it is something that the 506 00:29:35,480 --> 00:29:38,040 Speaker 9: government could deal with, It could keep it under control, 507 00:29:38,080 --> 00:29:41,520 Speaker 9: and it will not become some sort of systemic issue 508 00:29:41,560 --> 00:29:43,240 Speaker 9: that cascades throughout the economy. 509 00:29:43,320 --> 00:29:46,160 Speaker 4: So it's not a too big to fail situation. From 510 00:29:46,160 --> 00:29:47,320 Speaker 4: what I'm hearing right. 511 00:29:47,560 --> 00:29:51,280 Speaker 9: That looks like what the government has determined at this point. 512 00:29:51,880 --> 00:29:57,120 Speaker 9: That could change based on what the reaction is in markets, 513 00:29:57,240 --> 00:29:59,960 Speaker 9: what the reaction might be for home buyers out there. 514 00:30:00,400 --> 00:30:02,440 Speaker 9: That could change, but right now, I think that's what 515 00:30:02,520 --> 00:30:03,160 Speaker 9: we're looking at. 516 00:30:03,240 --> 00:30:05,320 Speaker 4: So we're nearly at the end of the year, and 517 00:30:05,360 --> 00:30:08,000 Speaker 4: I'm wondering whether it's likely that China is going to 518 00:30:08,040 --> 00:30:11,240 Speaker 4: reach that five percent growth target for twenty twenty five. 519 00:30:11,400 --> 00:30:14,719 Speaker 4: Perhaps there's the risk that it misses this marked by 520 00:30:14,720 --> 00:30:15,520 Speaker 4: a small degree. 521 00:30:16,360 --> 00:30:18,760 Speaker 9: So I think this is a very interesting question, and 522 00:30:18,800 --> 00:30:20,960 Speaker 9: I will try an answer in two parts. The first 523 00:30:20,960 --> 00:30:24,520 Speaker 9: part is they will definitely hit the about five percent target, 524 00:30:24,920 --> 00:30:28,200 Speaker 9: there's little doubt about that. The second part of that answer, 525 00:30:28,240 --> 00:30:30,959 Speaker 9: which I think is more interesting, is the number that 526 00:30:31,000 --> 00:30:35,160 Speaker 9: they report for GDP growth is the real GDP growth number. 527 00:30:35,240 --> 00:30:37,960 Speaker 9: It's not nominal if you look at nominal, which is 528 00:30:38,080 --> 00:30:41,160 Speaker 9: just you know, however, many trillions of dollars the economy 529 00:30:41,360 --> 00:30:44,160 Speaker 9: was in twenty twenty five minus what it was in 530 00:30:44,160 --> 00:30:46,880 Speaker 9: twenty four and what the difference is the nominal rate 531 00:30:47,000 --> 00:30:50,160 Speaker 9: of growth is actually much lower and may not even 532 00:30:50,160 --> 00:30:53,480 Speaker 9: get to four percent this year. When they calculate for 533 00:30:53,640 --> 00:30:57,440 Speaker 9: the impact of inflation and deflation, and because China is 534 00:30:57,440 --> 00:30:59,640 Speaker 9: going through this bout of deflation at the time, you 535 00:30:59,680 --> 00:31:02,320 Speaker 9: actually get an increase of about a one percent growth 536 00:31:02,560 --> 00:31:06,360 Speaker 9: two five percent, And so actually the way people are 537 00:31:06,400 --> 00:31:10,160 Speaker 9: experiencing the economy is they are not experiencing the same 538 00:31:10,360 --> 00:31:14,040 Speaker 9: rate of growth as that real GDP number might suggest. 539 00:31:14,600 --> 00:31:16,640 Speaker 4: You and I have spoken in the past about the 540 00:31:16,680 --> 00:31:21,880 Speaker 4: issue of overcapacity, particularly in industries like electric vehicles, and 541 00:31:21,960 --> 00:31:26,000 Speaker 4: I'm wondering whether that issue was addressed at the Central 542 00:31:26,040 --> 00:31:27,240 Speaker 4: Economic Work Conference. 543 00:31:27,760 --> 00:31:32,080 Speaker 9: It wasn't. It didn't seem to be addressed that specifically, 544 00:31:32,200 --> 00:31:35,560 Speaker 9: but it is very much on the minds of officials, 545 00:31:35,560 --> 00:31:39,520 Speaker 9: and there's some language in the communicator around that idea. 546 00:31:40,360 --> 00:31:44,040 Speaker 9: We've seen, for example, just this past week, China actually 547 00:31:44,120 --> 00:31:49,200 Speaker 9: impose some new rules that will impose legal enforcement of 548 00:31:49,720 --> 00:31:52,560 Speaker 9: how car makers price their cars, and so if car 549 00:31:52,600 --> 00:31:56,000 Speaker 9: makers are selling cars priced below the cost of production, 550 00:31:56,480 --> 00:31:59,320 Speaker 9: they actually face legal implications for that now. And so 551 00:31:59,360 --> 00:32:05,120 Speaker 9: that just shows how very meaningful this idea of excess 552 00:32:05,160 --> 00:32:07,440 Speaker 9: capacity is. For the government and how much weight they're 553 00:32:07,480 --> 00:32:09,320 Speaker 9: putting on trying to get through it. 554 00:32:09,480 --> 00:32:12,120 Speaker 4: There was an interesting piece in The New York Times 555 00:32:12,160 --> 00:32:15,560 Speaker 4: in the last week reporting on how Chinese car makers 556 00:32:15,560 --> 00:32:19,120 Speaker 4: are winning over drivers in the UK, where tariffs are 557 00:32:19,120 --> 00:32:21,720 Speaker 4: low and buyers seem to be a little bit more 558 00:32:21,760 --> 00:32:25,120 Speaker 4: open to new brands. This goes to the use of 559 00:32:25,280 --> 00:32:29,360 Speaker 4: exports as a way of addressing the problem of over capacity. 560 00:32:29,400 --> 00:32:32,800 Speaker 4: But I would imagine it's got limitations. So if there 561 00:32:32,840 --> 00:32:36,720 Speaker 4: has to be greater reliance on domestic Chinese demand, what 562 00:32:36,800 --> 00:32:39,440 Speaker 4: would it take to get there? And I'm curious maybe 563 00:32:39,440 --> 00:32:41,800 Speaker 4: you can weigh in on what the local car market 564 00:32:41,880 --> 00:32:42,960 Speaker 4: in China has been like. 565 00:32:43,880 --> 00:32:46,680 Speaker 9: So the local car market has suffered. It's slowed down 566 00:32:46,720 --> 00:32:49,000 Speaker 9: a lot in the latter part of twenty twenty five, 567 00:32:49,040 --> 00:32:53,200 Speaker 9: and that's because the government was offering quite generous subsidies 568 00:32:53,240 --> 00:32:56,239 Speaker 9: to get people out and buying goods and products. Not 569 00:32:56,280 --> 00:33:00,520 Speaker 9: services yet, but cars definitely had subsidies, and then towards 570 00:33:00,560 --> 00:33:03,240 Speaker 9: the end of the year those subsidies starts to taper out. 571 00:33:03,640 --> 00:33:06,280 Speaker 9: We don't have great clarity on whether there will be 572 00:33:06,320 --> 00:33:09,640 Speaker 9: more subsidies or how that's going to happen, But as 573 00:33:09,680 --> 00:33:12,200 Speaker 9: those subsidies started to taper out. You saw the market 574 00:33:12,280 --> 00:33:14,840 Speaker 9: start to turn and people buying fewer cars. 575 00:33:15,240 --> 00:33:17,800 Speaker 4: So let's look at the trade situation between China and 576 00:33:17,880 --> 00:33:22,600 Speaker 4: the United States. Recently, Scott Bess and US Treasury Secretary, 577 00:33:22,760 --> 00:33:25,720 Speaker 4: said that thus far, China has done everything that was 578 00:33:25,800 --> 00:33:29,960 Speaker 4: negotiated with regard to that trade truce. I'm wondering, from 579 00:33:30,000 --> 00:33:32,240 Speaker 4: your point of view, John, are things pretty much on 580 00:33:32,320 --> 00:33:35,880 Speaker 4: an even keel now or is there some sort of 581 00:33:36,000 --> 00:33:38,840 Speaker 4: risk that we could see another blow up in these relations. 582 00:33:39,480 --> 00:33:42,120 Speaker 9: So so far, so good. Everything that we've heard and 583 00:33:42,160 --> 00:33:44,760 Speaker 9: seen so far suggests that both sides are sticking to 584 00:33:44,800 --> 00:33:49,320 Speaker 9: the agreement. We've seen soybean purchases by China. We've seen 585 00:33:49,480 --> 00:33:53,400 Speaker 9: some more rare earth licenses issued on the American side. 586 00:33:53,880 --> 00:33:58,240 Speaker 9: We've seen the tariffs lowered, We've seen that additional add 587 00:33:58,280 --> 00:34:02,200 Speaker 9: on to putting sanctions on the subsidiaries of already sanctioned company. 588 00:34:02,200 --> 00:34:05,040 Speaker 9: We've seen that paused, and so it looks like both 589 00:34:05,080 --> 00:34:07,960 Speaker 9: sides are sticking to the agreement. I think what's interesting 590 00:34:08,000 --> 00:34:10,960 Speaker 9: for twenty twenty six is you have a situation where 591 00:34:11,000 --> 00:34:13,560 Speaker 9: the two presidents, Presidents She and Trump could meet each 592 00:34:13,560 --> 00:34:16,320 Speaker 9: other four times and so President Trump is supposed to 593 00:34:16,360 --> 00:34:20,400 Speaker 9: come to China in April. President She is supposed to 594 00:34:20,400 --> 00:34:22,080 Speaker 9: travel to the US, and then at the end of 595 00:34:22,080 --> 00:34:24,840 Speaker 9: the year, China hosts APEC in November, and then the 596 00:34:24,960 --> 00:34:28,279 Speaker 9: US hosts G twenty in Miami, with four meetings on 597 00:34:28,320 --> 00:34:30,840 Speaker 9: the schedule. I think there are two outcomes. One it 598 00:34:30,880 --> 00:34:33,640 Speaker 9: could be a pillar for stability. But at the same time, 599 00:34:33,680 --> 00:34:36,720 Speaker 9: we've seen as the two presidents get ready for a meeting, 600 00:34:36,719 --> 00:34:39,400 Speaker 9: we've seen a tendency on both sides to try to 601 00:34:39,440 --> 00:34:42,360 Speaker 9: look for advantages at the bargaining table, and sometimes that 602 00:34:42,440 --> 00:34:44,799 Speaker 9: actually leads to more tension in the short run. 603 00:34:45,080 --> 00:34:49,120 Speaker 4: It's clear that we've seen many advancements in Chinese technology 604 00:34:49,160 --> 00:34:52,200 Speaker 4: over the course of twenty twenty five. On the hardware side, 605 00:34:52,200 --> 00:34:57,080 Speaker 4: I'm thinking of domestically produced semiconductors. On the software side, 606 00:34:57,120 --> 00:35:00,920 Speaker 4: think of those large language models like deep seak. Is 607 00:35:00,960 --> 00:35:04,360 Speaker 4: there still a fair amount of optimism that these industries, 608 00:35:04,400 --> 00:35:08,759 Speaker 4: whether it's chips or AI, will continue contributing in a 609 00:35:08,840 --> 00:35:11,520 Speaker 4: meaningful way to overall growth in the new year. 610 00:35:12,080 --> 00:35:14,520 Speaker 9: If you look at financial markets here in China and 611 00:35:14,560 --> 00:35:17,040 Speaker 9: Hong Kong, there is a lot of optimism. I would 612 00:35:17,080 --> 00:35:21,240 Speaker 9: say bordering on excessive. So we had this chip maker 613 00:35:21,480 --> 00:35:24,839 Speaker 9: in Shahai called meta x. It was founded by some 614 00:35:25,000 --> 00:35:28,560 Speaker 9: engineers who used to work at AMD. There's this thought 615 00:35:28,600 --> 00:35:30,640 Speaker 9: here in China that it could become sort of a 616 00:35:30,719 --> 00:35:34,000 Speaker 9: Chinese competitor to Nvidia and am D and other American 617 00:35:34,080 --> 00:35:37,640 Speaker 9: chip makers. And when that stock listed on the Shahaigh exchange, 618 00:35:38,000 --> 00:35:40,440 Speaker 9: it went up more than six hundred percent on the 619 00:35:40,440 --> 00:35:42,600 Speaker 9: first day of trading. So there is a lot of 620 00:35:42,640 --> 00:35:45,479 Speaker 9: interest and excitement about the future of technology in China. 621 00:35:45,880 --> 00:35:49,280 Speaker 9: But I would make the distinction between financial markets and 622 00:35:49,760 --> 00:35:54,000 Speaker 9: real economics in that that excitement might be there in markets, 623 00:35:54,000 --> 00:35:57,879 Speaker 9: but we have not yet seen it filter into real 624 00:35:57,960 --> 00:35:58,960 Speaker 9: economic activity. 625 00:35:59,239 --> 00:36:02,080 Speaker 4: So to what extent is the government invested in maintaining 626 00:36:02,120 --> 00:36:03,080 Speaker 4: that enthusiasm. 627 00:36:03,600 --> 00:36:07,680 Speaker 9: I think the excitement is beneficial for China's technology drive 628 00:36:07,719 --> 00:36:13,160 Speaker 9: in that it makes financing for innovative new companies much 629 00:36:13,200 --> 00:36:17,360 Speaker 9: easier to get. It makes that financing lower cost for 630 00:36:17,440 --> 00:36:20,840 Speaker 9: these companies to get. I think the other thing that 631 00:36:20,880 --> 00:36:23,880 Speaker 9: this excitement about tech does for China is people who 632 00:36:23,920 --> 00:36:26,480 Speaker 9: are in the market, people who own stocks, people who 633 00:36:26,520 --> 00:36:30,480 Speaker 9: have pensions or have funds. They see the value of 634 00:36:30,520 --> 00:36:34,560 Speaker 9: those assets go up and there is a beneficial sort 635 00:36:34,560 --> 00:36:37,759 Speaker 9: of wealth effect, and hopefully, I think the government is 636 00:36:37,800 --> 00:36:40,799 Speaker 9: hoping that results in people actually being willing to spend 637 00:36:40,840 --> 00:36:41,280 Speaker 9: more money. 638 00:36:41,360 --> 00:36:44,400 Speaker 4: So we've touched on some areas of the Chinese economy. 639 00:36:44,520 --> 00:36:46,239 Speaker 4: But before I let you go, John, i'd like to 640 00:36:46,280 --> 00:36:49,800 Speaker 4: get your sense of what we may see in terms 641 00:36:49,880 --> 00:36:53,400 Speaker 4: of stimulus in the new year. Is something that is 642 00:36:53,480 --> 00:36:55,879 Speaker 4: going to be handled in a very conservative way, would 643 00:36:55,880 --> 00:36:57,000 Speaker 4: you imagine? 644 00:36:57,040 --> 00:36:59,720 Speaker 9: All indications that we have gotten so far is yes, 645 00:36:59,760 --> 00:37:03,200 Speaker 9: it will be relatively conservative in terms of how much 646 00:37:03,239 --> 00:37:08,120 Speaker 9: additional stimulus we get from Beijing. Indications are that the 647 00:37:08,160 --> 00:37:11,680 Speaker 9: central government looks like it's going to keep its budget 648 00:37:11,680 --> 00:37:16,280 Speaker 9: deficit unchanged from twenty twenty five, so about four percent 649 00:37:16,320 --> 00:37:19,040 Speaker 9: of GDP. If that is the case, then that would 650 00:37:19,080 --> 00:37:22,320 Speaker 9: suggest the government is taking a much more measured approach, 651 00:37:22,480 --> 00:37:26,480 Speaker 9: that it's not trying to flood the system with money 652 00:37:26,480 --> 00:37:29,440 Speaker 9: to try and change the trajectory of the economy, but 653 00:37:29,520 --> 00:37:33,879 Speaker 9: it's going to take a more targeted approach. And there 654 00:37:33,880 --> 00:37:36,960 Speaker 9: are some areas that may not get as much assistance 655 00:37:37,000 --> 00:37:39,440 Speaker 9: as maybe had previously been hoped. 656 00:37:39,480 --> 00:37:42,360 Speaker 4: And I'm wondering John about the extent to which currency 657 00:37:42,440 --> 00:37:44,480 Speaker 4: is a part of that story if you're trying to 658 00:37:44,520 --> 00:37:48,239 Speaker 4: manage an economy that is so heavily reliant on exports 659 00:37:48,760 --> 00:37:51,400 Speaker 4: while at the same time not wanting to trigger the 660 00:37:51,440 --> 00:37:52,480 Speaker 4: outflow of capital. 661 00:37:53,120 --> 00:37:57,040 Speaker 9: On the currency front, China's actually in a relatively better 662 00:37:57,080 --> 00:37:59,759 Speaker 9: position going into twenty twenty six. Then coming into this year, 663 00:37:59,800 --> 00:38:03,080 Speaker 9: the currency's been gaining versus the US dollar, it's been 664 00:38:03,120 --> 00:38:06,440 Speaker 9: gaining versus many of its trading partners. That I think 665 00:38:06,520 --> 00:38:08,880 Speaker 9: is a reflection of the perception of how the Chinese 666 00:38:08,920 --> 00:38:13,560 Speaker 9: economy is doing. It is also aided by that trade 667 00:38:13,600 --> 00:38:16,760 Speaker 9: surplus that you were talking about, Doug, and so heading 668 00:38:16,760 --> 00:38:20,240 Speaker 9: into twenty twenty six, what we've been seeing is action 669 00:38:20,360 --> 00:38:22,560 Speaker 9: is being taken by the Chinese government to try and 670 00:38:23,600 --> 00:38:27,760 Speaker 9: hold back the currency so it's not strengthening too quickly. 671 00:38:28,200 --> 00:38:30,719 Speaker 9: And so I think that is good for China or 672 00:38:30,760 --> 00:38:33,120 Speaker 9: it makes the jobs of the regulators easier because it 673 00:38:33,160 --> 00:38:36,280 Speaker 9: makes the concern about outflows less. 674 00:38:36,480 --> 00:38:38,640 Speaker 4: Okay, John, we'll leave it there. It's always a pleasure. 675 00:38:38,680 --> 00:38:41,439 Speaker 4: Thank you so very much. John lou There, Bloomberg Chief 676 00:38:41,520 --> 00:38:44,399 Speaker 4: China correspondent. I'm Doug Krisner, and you can catch us 677 00:38:44,400 --> 00:38:48,400 Speaker 4: weekdays for the Daybreak Asia podcast. It's available wherever you 678 00:38:48,440 --> 00:38:49,320 Speaker 4: get your podcast. 679 00:38:49,640 --> 00:38:52,840 Speaker 2: Nathan, thanks Doug, and that does it for this edition 680 00:38:52,880 --> 00:38:55,880 Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning 681 00:38:55,880 --> 00:38:58,080 Speaker 2: at five am Wall Street Time for the latest on 682 00:38:58,160 --> 00:39:00,919 Speaker 2: markets overseas and the news you need to start your day. 683 00:39:01,239 --> 00:39:04,240 Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global 684 00:39:04,239 --> 00:39:06,160 Speaker 2: business headlines are coming up right now.