1 00:00:03,279 --> 00:00:06,160 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:06,200 --> 00:00:08,760 Speaker 1: top stories in the coming week from our daybreak anchors 3 00:00:08,800 --> 00:00:12,119 Speaker 1: all around the world, and straight ahead on the program Inflation. 4 00:00:12,560 --> 00:00:14,400 Speaker 2: I'm Tom Busby in New York. 5 00:00:14,560 --> 00:00:17,079 Speaker 3: I'm Karlin Hety here in London, where we're looking ahead 6 00:00:17,120 --> 00:00:21,000 Speaker 3: to Europe's insurers reporting earnings admit extreme weather. 7 00:00:21,280 --> 00:00:23,759 Speaker 4: I'm Brian Curtis in Hong Kong. We look forward to 8 00:00:23,920 --> 00:00:27,200 Speaker 4: Ali Baba's earnings and to see if the environment has 9 00:00:27,240 --> 00:00:28,040 Speaker 4: really changed. 10 00:00:28,320 --> 00:00:31,360 Speaker 5: I'm Daily Liones in Washington, where we're thinking about libor 11 00:00:31,440 --> 00:00:33,680 Speaker 5: strife and its impact on President Biden. 12 00:00:36,400 --> 00:00:40,400 Speaker 6: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:40,440 --> 00:00:44,240 Speaker 6: Eleve them three on New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:44,560 --> 00:00:48,560 Speaker 6: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 15 00:00:48,880 --> 00:00:53,040 Speaker 6: DAB Digital Radio, London, Sirius XM one nineteen and around 16 00:00:53,120 --> 00:00:55,720 Speaker 6: the world on Bloomberg Radio, dot Com and via the 17 00:00:55,760 --> 00:00:57,000 Speaker 6: Bloomberg Business App. 18 00:01:00,080 --> 00:01:00,640 Speaker 2: Good day to you. 19 00:01:00,720 --> 00:01:03,480 Speaker 1: I'm Tom Busby, and we begin today's program with Inflation, 20 00:01:03,800 --> 00:01:07,240 Speaker 1: as we await July inflation data coming out this Thursday, 21 00:01:07,280 --> 00:01:09,080 Speaker 1: and joining us to talk about what do you expect 22 00:01:09,120 --> 00:01:13,120 Speaker 1: and so much more. Bloomberg's Global Economics and Policy editor 23 00:01:13,120 --> 00:01:13,840 Speaker 1: Michael McKee. 24 00:01:13,880 --> 00:01:15,000 Speaker 2: Michael, thanks for being here. 25 00:01:15,120 --> 00:01:16,040 Speaker 7: Great to be here again. 26 00:01:16,160 --> 00:01:19,120 Speaker 1: Well for starters, What are we expecting to see in 27 00:01:19,160 --> 00:01:20,800 Speaker 1: the July consumer Prices report? 28 00:01:21,400 --> 00:01:23,000 Speaker 8: I hate to do this to you, but I'll start 29 00:01:23,040 --> 00:01:26,360 Speaker 8: by being a little nerdy here. We are expecting inflation 30 00:01:26,560 --> 00:01:29,920 Speaker 8: to rise because there was no inflation in July of 31 00:01:30,000 --> 00:01:34,720 Speaker 8: last year. Inflation came in flat at zero percent change 32 00:01:34,920 --> 00:01:37,479 Speaker 8: in July of twenty twenty two. So if we get 33 00:01:37,520 --> 00:01:40,720 Speaker 8: a little inflation, and we're predicting a little inflation, it 34 00:01:40,920 --> 00:01:43,760 Speaker 8: just is going to make inflation overall go up. So 35 00:01:43,800 --> 00:01:46,880 Speaker 8: we're expecting at this point a two tenths percent gain 36 00:01:46,959 --> 00:01:49,400 Speaker 8: for the month of July, which would push inflation up 37 00:01:49,400 --> 00:01:52,920 Speaker 8: to three point two percent from three percent. Obviously, that 38 00:01:53,280 --> 00:01:56,640 Speaker 8: is something the Fed is going to look through and 39 00:01:56,880 --> 00:01:59,200 Speaker 8: analysts are going to look through and not think it's 40 00:01:59,640 --> 00:02:00,720 Speaker 8: a may your issue. 41 00:02:00,800 --> 00:02:03,800 Speaker 1: Well, the Fed last month in June three percent. That 42 00:02:04,000 --> 00:02:07,520 Speaker 1: was very encouraging. Still, the Fed voted unanimously to hike 43 00:02:07,560 --> 00:02:10,320 Speaker 1: ats benchmark lending grade twenty five basis points. That's after 44 00:02:10,639 --> 00:02:13,960 Speaker 1: a slight pause in the previous meeting. What would it 45 00:02:14,000 --> 00:02:18,080 Speaker 1: take in terms of CPI for the Fed to change 46 00:02:18,160 --> 00:02:21,040 Speaker 1: up to pause again to know what would we they 47 00:02:21,080 --> 00:02:21,440 Speaker 1: look for. 48 00:02:22,360 --> 00:02:24,840 Speaker 8: J Powell was asked that question at his news conference 49 00:02:24,880 --> 00:02:27,400 Speaker 8: after that FED decision, and basically he said it would take. 50 00:02:27,320 --> 00:02:28,920 Speaker 7: Several months of a trend. 51 00:02:29,240 --> 00:02:32,919 Speaker 8: In other words, if we saw inflation rising for several months, 52 00:02:33,280 --> 00:02:36,000 Speaker 8: then they would start to think that we have a problem, 53 00:02:36,040 --> 00:02:38,680 Speaker 8: that inflation is coming back and they need to crack 54 00:02:38,760 --> 00:02:42,480 Speaker 8: down more. If inflation were a surprise to the downside 55 00:02:42,480 --> 00:02:45,919 Speaker 8: this month and maybe another month, then the Fed might 56 00:02:46,000 --> 00:02:48,520 Speaker 8: be inclined when they get to the September meeting to 57 00:02:48,600 --> 00:02:49,359 Speaker 8: hold off again. 58 00:02:49,480 --> 00:02:51,359 Speaker 1: And the next day we get producer prices. 59 00:02:51,680 --> 00:02:53,399 Speaker 2: What have we seen there there? 60 00:02:53,440 --> 00:02:56,880 Speaker 8: We've seen some disinflation. Producer prices have come down, particularly 61 00:02:56,919 --> 00:03:01,480 Speaker 8: for energy and food and some of the more basic numbers. 62 00:03:01,520 --> 00:03:04,480 Speaker 8: The issue is that we have seen oil prices rise 63 00:03:05,040 --> 00:03:09,320 Speaker 8: in the last couple of weeks, and that could catch 64 00:03:09,880 --> 00:03:12,280 Speaker 8: It wasn't through much of July, but that could catch 65 00:03:12,320 --> 00:03:14,320 Speaker 8: on to the end of the survey and we could 66 00:03:14,400 --> 00:03:17,120 Speaker 8: see end up seeing a little bit of a rise 67 00:03:17,480 --> 00:03:20,720 Speaker 8: in headline producer prices. We'll be watching the core to 68 00:03:20,720 --> 00:03:24,080 Speaker 8: see if progress continues to be made there. Producer prices 69 00:03:24,080 --> 00:03:27,520 Speaker 8: and consumer prices are not directly linked because there are 70 00:03:27,600 --> 00:03:31,480 Speaker 8: middlemen in the middle, but they give you a sort 71 00:03:31,520 --> 00:03:33,280 Speaker 8: of trend idea of which way you're going. 72 00:03:33,480 --> 00:03:36,400 Speaker 1: Now, you talked about energy prices. Oil prices back to 73 00:03:36,480 --> 00:03:39,040 Speaker 1: eighty bucks a barrel. We haven't seen that in several months. 74 00:03:39,640 --> 00:03:42,080 Speaker 1: Gasoline up twenty five cents a gallon in just the 75 00:03:42,120 --> 00:03:45,520 Speaker 1: past week. So now there are legitimate factors in this, 76 00:03:45,640 --> 00:03:49,000 Speaker 1: the heat O peck plus. But is there any end 77 00:03:49,160 --> 00:03:51,000 Speaker 1: is demand is actually down? 78 00:03:51,720 --> 00:03:54,760 Speaker 8: Yeah, the real problem has been time that we've had 79 00:03:54,960 --> 00:03:59,200 Speaker 8: some refinery outages, especially down south, in part because of 80 00:03:59,240 --> 00:04:03,200 Speaker 8: the heat, some unusual outages of refineries, and that's made 81 00:04:03,160 --> 00:04:06,320 Speaker 8: gasoline more scarce. So the price has gone up, and 82 00:04:06,440 --> 00:04:09,760 Speaker 8: there's a feeling that if and when things cool off 83 00:04:09,800 --> 00:04:12,080 Speaker 8: down there. I feel lucky because we're in the Northeast 84 00:04:12,080 --> 00:04:15,360 Speaker 8: where it's not been that hot, But if and when 85 00:04:15,400 --> 00:04:17,360 Speaker 8: things cool off down there, then we should see the 86 00:04:17,400 --> 00:04:19,480 Speaker 8: refineries come back online and prices dropped. 87 00:04:19,520 --> 00:04:21,400 Speaker 7: So sometime within the next month. 88 00:04:21,680 --> 00:04:27,479 Speaker 8: Now, obviously, as opek plus raises the price of the 89 00:04:27,520 --> 00:04:31,279 Speaker 8: input to this oil, that's going to put some upward 90 00:04:31,320 --> 00:04:34,080 Speaker 8: pressure on gasoline prices, but nothing to the extent that 91 00:04:34,120 --> 00:04:36,839 Speaker 8: we have seen. And what would end up happening is 92 00:04:36,920 --> 00:04:40,880 Speaker 8: gasoline prices would not rise by as much and so 93 00:04:40,920 --> 00:04:43,480 Speaker 8: you'd see a down trend in headline. 94 00:04:43,520 --> 00:04:46,640 Speaker 1: And again, people are not filling up like they were before. 95 00:04:46,720 --> 00:04:49,159 Speaker 1: People still working from home, don't need the gas, so 96 00:04:49,839 --> 00:04:52,200 Speaker 1: it's confounding to see it keep going up even though 97 00:04:52,240 --> 00:04:53,480 Speaker 1: demand has leveled off. 98 00:04:53,800 --> 00:04:56,279 Speaker 8: Well, it's been an unusual kind of situation. But what 99 00:04:56,400 --> 00:05:00,400 Speaker 8: happened after this pandemic. Maybe people are flying more, people 100 00:05:00,400 --> 00:05:02,919 Speaker 8: are ta I don't know about taking a train, but 101 00:05:03,000 --> 00:05:04,440 Speaker 8: taking cruise ships, things like that. 102 00:05:04,480 --> 00:05:06,840 Speaker 7: We've seen good reports from the airlines, so. 103 00:05:08,400 --> 00:05:11,120 Speaker 8: Maybe it isn't a driving summer for a lot of people. 104 00:05:11,160 --> 00:05:13,080 Speaker 8: And I guess with the heat that wait it is, 105 00:05:13,160 --> 00:05:14,600 Speaker 8: you can understand. 106 00:05:14,120 --> 00:05:17,640 Speaker 1: That well people are traveling. Part of that consumer confidence 107 00:05:17,640 --> 00:05:20,800 Speaker 1: has moved higher. Fears about a recession. We just had 108 00:05:20,880 --> 00:05:24,840 Speaker 1: last week Bank of America squash the previous forecast for 109 00:05:24,880 --> 00:05:29,120 Speaker 1: a recession, but there are signs consumers maybe pulling back 110 00:05:29,160 --> 00:05:30,560 Speaker 1: on their spending. Let me give you a couple of 111 00:05:30,560 --> 00:05:32,960 Speaker 1: examples that I saw on that as Altria, the maker 112 00:05:33,000 --> 00:05:36,640 Speaker 1: of Marlborough saying people are cigarettes are so expensive, they're 113 00:05:36,640 --> 00:05:41,520 Speaker 1: buying discount smokes. Pepsi says, people want pepsi, but they're 114 00:05:41,520 --> 00:05:44,040 Speaker 1: going to dollar stores, They're going to warehouse clubs trying 115 00:05:44,080 --> 00:05:47,680 Speaker 1: to get a deal. So are we seeing that you 116 00:05:48,320 --> 00:05:51,240 Speaker 1: are there signs that consumers are being more conservative. 117 00:05:51,279 --> 00:05:54,000 Speaker 8: Now we're kind of getting back to spending levels and 118 00:05:54,000 --> 00:05:57,400 Speaker 8: spending patterns that we saw before the pandemic. A lot 119 00:05:57,440 --> 00:06:01,360 Speaker 8: of people went to the walmarts and dollar stores and 120 00:06:01,400 --> 00:06:04,040 Speaker 8: things like that, trying to save money in the past 121 00:06:04,080 --> 00:06:08,160 Speaker 8: on groceries, et cetera. And they're going back to that behavior. 122 00:06:08,560 --> 00:06:10,680 Speaker 8: But this is all kind of what you would expect 123 00:06:10,839 --> 00:06:13,880 Speaker 8: in a world that's not overstimulated by the government and 124 00:06:14,560 --> 00:06:19,240 Speaker 8: that is facing higher interest rates and costs of doing business, 125 00:06:19,320 --> 00:06:21,599 Speaker 8: because if it is trying to tamp down on demand, 126 00:06:22,160 --> 00:06:25,600 Speaker 8: the issue becomes when it crosses some sort of line 127 00:06:25,960 --> 00:06:29,520 Speaker 8: and we get to the point where people start to 128 00:06:29,520 --> 00:06:33,160 Speaker 8: worry about recession and then pull back even more and 129 00:06:33,200 --> 00:06:35,919 Speaker 8: we get what results in a contraction. 130 00:06:35,960 --> 00:06:38,360 Speaker 1: And the clock is ticking on something that could really 131 00:06:38,480 --> 00:06:42,560 Speaker 1: change that for forty million Americans. That's the looming restart 132 00:06:42,640 --> 00:06:45,680 Speaker 1: of those federal student loan payments. And that's in October. 133 00:06:45,760 --> 00:06:46,960 Speaker 1: That's coming up pretty quickly. 134 00:06:47,240 --> 00:06:49,560 Speaker 8: That is coming quickly, and it's going to be interesting 135 00:06:49,600 --> 00:06:53,040 Speaker 8: to see what happens because for a lot of people, 136 00:06:53,960 --> 00:06:58,560 Speaker 8: they just use that money to spend on other things 137 00:06:58,600 --> 00:07:00,760 Speaker 8: and in theory still have it. 138 00:07:00,800 --> 00:07:03,040 Speaker 7: They just have to reprogram it to paying bills. 139 00:07:03,279 --> 00:07:06,280 Speaker 8: But a lot of people took out other loans and 140 00:07:07,520 --> 00:07:09,920 Speaker 8: use the money they were saving on their student loan 141 00:07:09,960 --> 00:07:12,000 Speaker 8: bills to pay the other loans. And now they're going 142 00:07:12,040 --> 00:07:14,720 Speaker 8: to have two sets of bills and one set of payments. 143 00:07:15,520 --> 00:07:19,440 Speaker 8: And then there's another group that kept paying throughout the 144 00:07:19,640 --> 00:07:21,920 Speaker 8: entire time period because they figured, well, it's going to 145 00:07:21,960 --> 00:07:25,600 Speaker 8: come back anyway, and I should make progress on bringing 146 00:07:25,640 --> 00:07:28,520 Speaker 8: down my loan, especially when they're not charging me interest. 147 00:07:29,120 --> 00:07:31,480 Speaker 8: And so how that all plays out isn't going to 148 00:07:31,520 --> 00:07:34,760 Speaker 8: be clear, but it isn't completely clear, but it is 149 00:07:34,840 --> 00:07:36,040 Speaker 8: expected to have an impact. 150 00:07:36,080 --> 00:07:36,240 Speaker 2: Now. 151 00:07:36,240 --> 00:07:39,480 Speaker 8: I economists sort of extrapolate from the total number of 152 00:07:39,480 --> 00:07:43,840 Speaker 8: people with loans and their average loan payment and come 153 00:07:43,920 --> 00:07:46,120 Speaker 8: up with a number like a tenth or two tenths 154 00:07:46,160 --> 00:07:50,560 Speaker 8: off GDP, so not a huge amount, but enough to 155 00:07:50,800 --> 00:07:51,960 Speaker 8: make a difference. 156 00:07:51,560 --> 00:07:54,440 Speaker 1: Well a huge amount for people in their twenties and thirties. 157 00:07:54,480 --> 00:07:56,680 Speaker 1: I would think, well, let's talk a little bit more 158 00:07:56,720 --> 00:08:00,320 Speaker 1: about the FED and their timeline the next meeting number 159 00:08:00,320 --> 00:08:03,800 Speaker 1: twentieth right, correct, Well, what do we see between then 160 00:08:04,040 --> 00:08:07,000 Speaker 1: and now that's going to influence the Fed's next decision 161 00:08:07,040 --> 00:08:10,600 Speaker 1: as far as consumer spending, inflation, jobs, and more. 162 00:08:10,960 --> 00:08:15,400 Speaker 8: Well, I've got the couple of jobs reports like the 163 00:08:15,440 --> 00:08:18,840 Speaker 8: one we just saw, and we have another one coming 164 00:08:18,920 --> 00:08:21,200 Speaker 8: up which will give us the August payrolls at the 165 00:08:21,240 --> 00:08:25,160 Speaker 8: beginning of September, and then the CPI report we're talking 166 00:08:25,200 --> 00:08:28,240 Speaker 8: about in another CPI report before they meet again, and 167 00:08:28,280 --> 00:08:32,280 Speaker 8: we'll have one more PCE inflation report along with consumer 168 00:08:32,320 --> 00:08:35,160 Speaker 8: spending at the end of August. So the Fed will 169 00:08:35,200 --> 00:08:38,160 Speaker 8: have a couple of months worth of data before they 170 00:08:38,200 --> 00:08:39,880 Speaker 8: meet again. And that goes back to the point I 171 00:08:39,920 --> 00:08:42,559 Speaker 8: made about what Jay Poal said that they want to 172 00:08:42,600 --> 00:08:45,920 Speaker 8: see a couple of months trend to have an idea 173 00:08:45,920 --> 00:08:48,200 Speaker 8: of where we're really going with this. Are we seeing 174 00:08:48,240 --> 00:08:52,800 Speaker 8: inflation come down and demand soften? Are we seeing incipient 175 00:08:52,920 --> 00:08:56,319 Speaker 8: signs of a recession because people are pulling back a lot, 176 00:08:57,160 --> 00:08:59,920 Speaker 8: or is inflation coming back? Those are the questions that 177 00:09:00,080 --> 00:09:02,080 Speaker 8: they hope a lot of this data will answer. 178 00:09:02,000 --> 00:09:04,760 Speaker 1: And it's not just our central bank, but in England 179 00:09:04,880 --> 00:09:08,640 Speaker 1: and in the Eurozone they're dealing with very similar situations, 180 00:09:08,640 --> 00:09:11,800 Speaker 1: but in a way a worse inflation problem over there. 181 00:09:11,960 --> 00:09:14,440 Speaker 1: Is it influencing the US inflation or is. 182 00:09:14,440 --> 00:09:16,800 Speaker 2: It the opposite? Are we helping them. 183 00:09:18,280 --> 00:09:21,360 Speaker 8: At this point we are not helping Europe all that 184 00:09:21,480 --> 00:09:24,599 Speaker 8: much because the dollar is strong, so their trade is 185 00:09:24,640 --> 00:09:31,040 Speaker 8: not as vigorous with the US, but it does help 186 00:09:31,760 --> 00:09:35,920 Speaker 8: the United States some now. Trade in this case, because 187 00:09:36,480 --> 00:09:40,000 Speaker 8: we're in a post pandemic situation, is less important between 188 00:09:40,000 --> 00:09:42,520 Speaker 8: the United States and these other countries than it is 189 00:09:42,679 --> 00:09:47,920 Speaker 8: among those countries. The European Union trades heavily among itself, 190 00:09:48,000 --> 00:09:50,480 Speaker 8: and people there have done sort of the same thing 191 00:09:50,520 --> 00:09:53,840 Speaker 8: that we have in terms of cutting back on goods spending, 192 00:09:54,400 --> 00:09:58,199 Speaker 8: and companies have cut back on investments and that's hurting them. 193 00:09:58,240 --> 00:10:02,800 Speaker 8: Manufacturing powers like Germany in France and Italy there because 194 00:10:03,480 --> 00:10:09,600 Speaker 8: their economies are struggling with the lack of manufacturing, and 195 00:10:09,920 --> 00:10:12,560 Speaker 8: we've seen that in the PMI numbers, and we see 196 00:10:12,559 --> 00:10:15,600 Speaker 8: that in the industrial production numbers in the UK. It's 197 00:10:15,640 --> 00:10:18,960 Speaker 8: accommodation of things. It's a little bit of that but 198 00:10:19,120 --> 00:10:24,079 Speaker 8: it's also the bureaucracy brought on by Brexit for trade 199 00:10:24,480 --> 00:10:28,640 Speaker 8: has slowed trade and made it more expensive. They're still 200 00:10:28,679 --> 00:10:32,439 Speaker 8: trying to negotiate new free trade agreements and they haven't 201 00:10:32,480 --> 00:10:35,520 Speaker 8: had a lot of luck, certainly not with the United 202 00:10:35,559 --> 00:10:38,440 Speaker 8: States yet, so they have the added costs from that 203 00:10:38,600 --> 00:10:41,720 Speaker 8: as well. And then they've got a very strong labor 204 00:10:41,760 --> 00:10:44,240 Speaker 8: market in the same way that the United States does, 205 00:10:44,440 --> 00:10:46,680 Speaker 8: which also puts upward pressure on prices. 206 00:10:46,800 --> 00:10:47,760 Speaker 2: Well, thank you, Michael. 207 00:10:47,840 --> 00:10:51,920 Speaker 1: And that was Bloomberg's Global Economics and Policy editor Michael McKee. 208 00:10:51,920 --> 00:10:54,880 Speaker 1: And coming up on Bloomberg day Break weekend, insurance companies 209 00:10:54,920 --> 00:10:58,400 Speaker 1: attempt to change with climate change risk lurking. 210 00:10:58,679 --> 00:11:01,079 Speaker 2: I'm Tom Busby and this is Bloomberg. 211 00:11:10,960 --> 00:11:13,280 Speaker 1: This is Bloomberg day Break Weekend, our global look at 212 00:11:13,280 --> 00:11:15,760 Speaker 1: the top stories in the coming week from our Daybreak 213 00:11:15,800 --> 00:11:17,480 Speaker 1: anchors all around the world. 214 00:11:17,640 --> 00:11:19,840 Speaker 2: Up later in our program. 215 00:11:19,280 --> 00:11:22,520 Speaker 1: Earnings from Chinese e commerce giant Ali Baba and the 216 00:11:22,640 --> 00:11:26,040 Speaker 1: Chinese government's role in tech in that country. But first, 217 00:11:26,440 --> 00:11:29,520 Speaker 1: extreme weather gripping many parts of the world, with July 218 00:11:30,000 --> 00:11:33,160 Speaker 1: likely to be announced as the world's hottest month on record. 219 00:11:33,600 --> 00:11:37,080 Speaker 1: The impact on society is enormous and on the insurers 220 00:11:37,200 --> 00:11:39,680 Speaker 1: who navigate climate change for more, or let's head to 221 00:11:39,720 --> 00:11:44,000 Speaker 1: London and bring in Bloomberg Daybreak Europe anchor Caroline Hepgirk Tom. 222 00:11:44,160 --> 00:11:48,520 Speaker 3: Europe's big insurers, from Alians to generally munich Ree and 223 00:11:48,640 --> 00:11:51,679 Speaker 3: Zero Insurance, are reporting their earnings in the days ahead, 224 00:11:52,240 --> 00:11:56,480 Speaker 3: but Europeans are among the least insured against certain types 225 00:11:56,520 --> 00:12:00,160 Speaker 3: of extreme weather and other natural disasters, something that we've 226 00:12:00,160 --> 00:12:03,080 Speaker 3: seen a lot of across the continent over the last 227 00:12:03,160 --> 00:12:06,480 Speaker 3: few months. For more, I'm joined by Blomberg's Germany correspondent 228 00:12:06,520 --> 00:12:10,240 Speaker 3: Oliver Crook. Oliver, great to have you with us. Extreme 229 00:12:10,280 --> 00:12:12,480 Speaker 3: weather has hit Europe in the past few months in 230 00:12:12,520 --> 00:12:15,800 Speaker 3: a way I think, I'm sure you'll agree that has 231 00:12:16,000 --> 00:12:19,800 Speaker 3: made many people think about climate change in a totally 232 00:12:19,840 --> 00:12:21,640 Speaker 3: new light. Don't you think I. 233 00:12:21,559 --> 00:12:23,520 Speaker 9: Would think so? But you know, obviously, as you know, 234 00:12:23,559 --> 00:12:27,360 Speaker 9: this is an exceedingly polarized issue for some people. It's hard, though, 235 00:12:27,400 --> 00:12:29,560 Speaker 9: when you see the kind of trend in terms of 236 00:12:29,640 --> 00:12:32,640 Speaker 9: the temperatures rising over the last century to kind of 237 00:12:33,080 --> 00:12:36,000 Speaker 9: not at least pose yourself the question, particularly when you 238 00:12:36,000 --> 00:12:38,280 Speaker 9: see the ways that it touches, you know, human life 239 00:12:38,320 --> 00:12:39,920 Speaker 9: in all this different way. We've talked about how it 240 00:12:39,960 --> 00:12:43,439 Speaker 9: touches agriculture. Sometimes it's cooking food right on. 241 00:12:43,400 --> 00:12:44,560 Speaker 1: The branch you have. 242 00:12:44,840 --> 00:12:47,240 Speaker 9: You know, all these rivers drying up. The Rhine is 243 00:12:47,240 --> 00:12:49,040 Speaker 9: one we've talked about a lot of the most important 244 00:12:49,360 --> 00:12:52,280 Speaker 9: waterway in Europe. You know that moves just tons and 245 00:12:52,320 --> 00:12:54,720 Speaker 9: tons and tons down, up and down every single day, 246 00:12:54,760 --> 00:12:58,280 Speaker 9: and that basically becomes unnavigable at a certain point. We've 247 00:12:58,320 --> 00:13:00,560 Speaker 9: seen it in France with the nuclear react they can't 248 00:13:00,640 --> 00:13:03,880 Speaker 9: draw enough water to cool off, and obviously these wildfires 249 00:13:03,880 --> 00:13:05,920 Speaker 9: in Greece. So I think it's front of mine for everybody. 250 00:13:05,960 --> 00:13:08,400 Speaker 9: I think the challenge that the market has is how 251 00:13:08,400 --> 00:13:10,120 Speaker 9: do you price these risks and how do you think 252 00:13:10,160 --> 00:13:11,160 Speaker 9: about these financially? 253 00:13:11,760 --> 00:13:11,920 Speaker 10: Yeah? 254 00:13:11,960 --> 00:13:14,839 Speaker 3: Absolutely, And you were speaking to someone very interesting Munich 255 00:13:14,920 --> 00:13:17,839 Speaker 3: reads ernst Rauch about this, because they've got a whole 256 00:13:17,840 --> 00:13:22,240 Speaker 3: climate center and they do big reporting not just on 257 00:13:22,320 --> 00:13:25,520 Speaker 3: their own business, but kind of more broadly across the 258 00:13:25,559 --> 00:13:29,440 Speaker 3: insurance sector. They've also Munich re itself has its earnings 259 00:13:29,520 --> 00:13:34,280 Speaker 3: coming up in the days ahead. Is weather making certain 260 00:13:34,320 --> 00:13:35,600 Speaker 3: things uninsurable? 261 00:13:36,280 --> 00:13:38,040 Speaker 9: So this is the this is the question. I asked 262 00:13:38,080 --> 00:13:40,400 Speaker 9: him if it made things uninsurable? And so he gave 263 00:13:40,400 --> 00:13:42,480 Speaker 9: a sort of interesting response that he said, listen, we're 264 00:13:42,480 --> 00:13:45,560 Speaker 9: an insurance company. We will ensure anything. The problem is 265 00:13:45,600 --> 00:13:47,560 Speaker 9: you will not be able to afford it. And they 266 00:13:47,600 --> 00:13:49,720 Speaker 9: look at a sort of simple equation about kind of 267 00:13:49,760 --> 00:13:52,760 Speaker 9: the risk that is generated by kind of natural disasters, 268 00:13:52,880 --> 00:13:54,920 Speaker 9: how vulnerable we know, how in what ways have you 269 00:13:55,040 --> 00:13:57,960 Speaker 9: mitigated it, and the underlying value of the assets, and 270 00:13:58,000 --> 00:14:00,480 Speaker 9: he says that even despite the latter two, what he's 271 00:14:00,480 --> 00:14:04,920 Speaker 9: seeing across the globe is a high higher risk of 272 00:14:05,040 --> 00:14:07,920 Speaker 9: basically weather related events. He says eighty to ninety percent 273 00:14:08,320 --> 00:14:10,280 Speaker 9: is down to weather, and that a third of all 274 00:14:10,320 --> 00:14:12,360 Speaker 9: of the losses in the first half of this year 275 00:14:12,559 --> 00:14:14,560 Speaker 9: we're not down to actually a single weather event, but 276 00:14:14,640 --> 00:14:17,560 Speaker 9: just more powerful storms over in the United States. 277 00:14:17,840 --> 00:14:18,000 Speaker 4: Yeah. 278 00:14:18,040 --> 00:14:22,320 Speaker 3: Absolutely, And the data that munich Re pulled together showing 279 00:14:22,360 --> 00:14:25,600 Speaker 3: a near record year for losses due to natural disasters, 280 00:14:25,640 --> 00:14:28,920 Speaker 3: so things like earthquakes in Turkey and Syria and the 281 00:14:28,960 --> 00:14:31,560 Speaker 3: storms that you mentioned in the US. I mean, the 282 00:14:31,640 --> 00:14:33,600 Speaker 3: numbers globally are quite staggering, aren't they. 283 00:14:34,200 --> 00:14:34,360 Speaker 11: Yeah. 284 00:14:34,400 --> 00:14:36,520 Speaker 9: Absolutely, I mean one hundred and ten billion dollars in 285 00:14:36,520 --> 00:14:38,720 Speaker 9: the first half of the year. And really, again I 286 00:14:38,800 --> 00:14:41,320 Speaker 9: was very interested to speak to him, because you know, 287 00:14:41,560 --> 00:14:44,200 Speaker 9: in a topic that is polarized for many people, it's 288 00:14:44,240 --> 00:14:47,360 Speaker 9: their business to understand what is going on in the 289 00:14:47,360 --> 00:14:49,680 Speaker 9: world and to try to appraise that risk. So I 290 00:14:49,720 --> 00:14:52,720 Speaker 9: asked him about kind of how he really thinks about 291 00:14:52,720 --> 00:14:54,600 Speaker 9: climate change and how many you know, how much are 292 00:14:54,640 --> 00:14:57,800 Speaker 9: these losses can we say are really attributable to climate change? 293 00:14:58,120 --> 00:15:02,600 Speaker 12: We observe up what of losses from weather related events 294 00:15:02,640 --> 00:15:05,840 Speaker 12: in many parts of the world, and with many weather 295 00:15:05,880 --> 00:15:10,120 Speaker 12: related perils, depending on the region, it is flooding, it 296 00:15:10,160 --> 00:15:13,800 Speaker 12: can be what's called these convective storms of severe thunderstorms 297 00:15:13,840 --> 00:15:16,880 Speaker 12: in the United States, or wildfires in some parts of 298 00:15:16,920 --> 00:15:20,440 Speaker 12: the world. So with this upward trend, we of course 299 00:15:20,480 --> 00:15:23,560 Speaker 12: as a risk management company, we need to understand what 300 00:15:23,840 --> 00:15:27,840 Speaker 12: are the drivers of this trend, and the first element 301 00:15:28,000 --> 00:15:33,360 Speaker 12: of these drivers are socioeconomic factors, so increasing wealth and 302 00:15:33,440 --> 00:15:37,840 Speaker 12: population and inflation of course today plays a major role 303 00:15:37,880 --> 00:15:42,800 Speaker 12: in this as well. However, even after adjusting for inflation 304 00:15:42,920 --> 00:15:46,400 Speaker 12: and wells, we do see in some regions upward trends 305 00:15:47,080 --> 00:15:50,160 Speaker 12: with respect to losses which cannot be explained by these 306 00:15:50,160 --> 00:15:54,800 Speaker 12: socio economic factors. And here we analyze and also meteorological data. 307 00:15:54,840 --> 00:15:59,560 Speaker 12: We collaborate with scientific organizations in order to understand whether 308 00:15:59,600 --> 00:16:05,000 Speaker 12: there is a link between increasingly severe weathers it's understorms 309 00:16:05,000 --> 00:16:08,680 Speaker 12: of flooding, extreme rainfalls and others and the losses we observe. 310 00:16:09,120 --> 00:16:12,520 Speaker 12: And the outcome is as of today, is that we 311 00:16:12,680 --> 00:16:17,600 Speaker 12: have strong indications, not a scientific proof, but strong indications 312 00:16:18,000 --> 00:16:21,480 Speaker 12: that part of the increase of losses is already driven 313 00:16:21,560 --> 00:16:25,600 Speaker 12: by changing weather patterns, and they are by themselves driven 314 00:16:25,600 --> 00:16:26,960 Speaker 12: by climate change, and. 315 00:16:26,920 --> 00:16:29,320 Speaker 9: Sort of regardless of the cause. If this is just 316 00:16:29,400 --> 00:16:32,640 Speaker 9: proportionally and numerically going up, this obviously is going to 317 00:16:32,680 --> 00:16:35,800 Speaker 9: bear on the price of ensuring things. Can you talk 318 00:16:35,800 --> 00:16:38,400 Speaker 9: to me about how much more expensive insurance is going 319 00:16:38,440 --> 00:16:40,240 Speaker 9: to get as a result of these changes. 320 00:16:40,880 --> 00:16:45,040 Speaker 13: Well, first of all, if the has a component of 321 00:16:45,160 --> 00:16:49,680 Speaker 13: our analysis, so the probability of severe flooding or severe 322 00:16:49,840 --> 00:16:53,600 Speaker 13: other weather events is increasing and or the intensity of 323 00:16:53,960 --> 00:16:58,560 Speaker 13: these events, then yes, the overall risk increases. 324 00:16:57,920 --> 00:16:59,760 Speaker 11: And that drives the premium. 325 00:17:00,240 --> 00:17:04,800 Speaker 12: Now the question is, of course, by how much, and 326 00:17:04,880 --> 00:17:08,960 Speaker 12: there is no simple answer, especially no uniform answer for 327 00:17:09,119 --> 00:17:11,160 Speaker 12: all parts of the gold and all parents. 328 00:17:11,240 --> 00:17:12,720 Speaker 9: I also want to talk to you about the risk 329 00:17:12,800 --> 00:17:16,000 Speaker 9: not just of insurance prices going up, but basically parts 330 00:17:16,000 --> 00:17:19,120 Speaker 9: of the world becoming unensurable. We hear about this in Florida, 331 00:17:19,440 --> 00:17:22,000 Speaker 9: you know, California possibly a risk. Now we see kind 332 00:17:22,000 --> 00:17:25,040 Speaker 9: of weather patterns changing and how hot it's getting across Europe. 333 00:17:25,720 --> 00:17:28,640 Speaker 9: What's the risk for the uninsurable portions of the world 334 00:17:28,640 --> 00:17:30,560 Speaker 9: where you just cannot make an assessment or it's just 335 00:17:30,600 --> 00:17:31,159 Speaker 9: too risky. 336 00:17:31,680 --> 00:17:35,000 Speaker 11: The challenge is much more if we look at the 337 00:17:35,200 --> 00:17:40,360 Speaker 11: need to adjust our prices in line with increasing risks, 338 00:17:40,480 --> 00:17:44,120 Speaker 11: and here climate change drives up the risks and as 339 00:17:44,119 --> 00:17:47,680 Speaker 11: a consequent drives up the risk premium. 340 00:17:47,840 --> 00:17:51,159 Speaker 3: So that was ernsw Ralph ahead of Corporate Climate Center 341 00:17:51,280 --> 00:17:55,040 Speaker 3: at munich RE speaking to you Oliver. As we think 342 00:17:55,080 --> 00:18:00,280 Speaker 3: then about you know, the financial consequences of this, how 343 00:18:00,320 --> 00:18:02,760 Speaker 3: do we think about then the earnings that we're going 344 00:18:02,800 --> 00:18:06,040 Speaker 3: to get from munich Re Zero Insurance, General ARLI and 345 00:18:06,119 --> 00:18:09,080 Speaker 3: the other big insurance names across Europe. 346 00:18:09,359 --> 00:18:11,800 Speaker 9: Yeah, so listen, I'll talk about Alians because they're sort 347 00:18:11,840 --> 00:18:14,080 Speaker 9: of the biggest and they would released over on Thursday, 348 00:18:14,119 --> 00:18:16,119 Speaker 9: and so they you know, they've actually have had a 349 00:18:16,119 --> 00:18:18,560 Speaker 9: pretty good run. And what's interesting is because Alliance also 350 00:18:18,680 --> 00:18:22,800 Speaker 9: has this massive asset management unit, but actually this year 351 00:18:23,480 --> 00:18:26,000 Speaker 9: it's the insurance that's done the heavy lifting. Their insurance 352 00:18:26,000 --> 00:18:28,439 Speaker 9: side of the business has done very well and they 353 00:18:28,440 --> 00:18:31,199 Speaker 9: may even raise you know, operating profit outlook, and so 354 00:18:31,240 --> 00:18:34,320 Speaker 9: things are looking very solid in the insurance sector. They've 355 00:18:34,320 --> 00:18:36,920 Speaker 9: actually you know, they I don't know how big natural 356 00:18:36,960 --> 00:18:39,800 Speaker 9: catastrophe will be in terms of their bottom line. We 357 00:18:39,880 --> 00:18:42,600 Speaker 9: may see some more claims in Italy and Germany in 358 00:18:42,640 --> 00:18:44,920 Speaker 9: the second quarter due to the floods, but they did 359 00:18:44,960 --> 00:18:49,000 Speaker 9: not have huge natural catastrophe expenses over in the first quarter, 360 00:18:49,080 --> 00:18:51,679 Speaker 9: and that is in part, perhaps, Caroline, something that we 361 00:18:51,760 --> 00:18:53,720 Speaker 9: I'm sure we will talk about is the lack of 362 00:18:53,760 --> 00:18:56,960 Speaker 9: insurance for natural disasters here in Europe. I was actually 363 00:18:56,960 --> 00:18:58,359 Speaker 9: astounded by some of these numbers. 364 00:18:58,720 --> 00:18:58,880 Speaker 14: Yeah. 365 00:18:58,880 --> 00:19:04,280 Speaker 3: Absolutely, This, this idea of the underinsured in Europe is 366 00:19:04,800 --> 00:19:07,960 Speaker 3: a big issue, especially as you say, you've highlighted, well, 367 00:19:08,000 --> 00:19:10,600 Speaker 3: the wildfare is increased, but there've been drought conditions in 368 00:19:10,640 --> 00:19:13,080 Speaker 3: Spain as well as along the River Rhine. 369 00:19:13,640 --> 00:19:13,840 Speaker 7: Yeah. 370 00:19:13,840 --> 00:19:15,840 Speaker 9: Absolutely. And when you look at a sort of global 371 00:19:15,880 --> 00:19:19,879 Speaker 9: breakdown of kind of what is uninsured Asia Pacific, fifty 372 00:19:19,960 --> 00:19:23,320 Speaker 9: seven percent of the direct losses are uninsured North America. 373 00:19:23,440 --> 00:19:26,879 Speaker 9: That's only twenty four percent globally. On average, it's sixty 374 00:19:26,920 --> 00:19:30,679 Speaker 9: one percent. In Europe it's almost ninety percent. So I 375 00:19:30,680 --> 00:19:32,600 Speaker 9: mean that that to me came as a you know, 376 00:19:32,600 --> 00:19:34,119 Speaker 9: as a real shock. You think of a kind of 377 00:19:34,200 --> 00:19:36,920 Speaker 9: more developed nations and richer nations are kind of more 378 00:19:37,000 --> 00:19:39,760 Speaker 9: risk averse and more willing to ensure certain assets, and 379 00:19:39,800 --> 00:19:42,200 Speaker 9: I was really stunned to discover that that's the sort 380 00:19:42,240 --> 00:19:43,720 Speaker 9: of European figure here. 381 00:19:44,359 --> 00:19:47,119 Speaker 3: Absolutely, Oliver, thank you so much for joining me. We 382 00:19:47,160 --> 00:19:50,520 Speaker 3: look ahead then and await the earnings in the next 383 00:19:50,520 --> 00:19:53,200 Speaker 3: few days from the big insurance names hit in Europe 384 00:19:53,240 --> 00:19:57,520 Speaker 3: Alians generally Munich, Re's Insurance and others, so there'll be 385 00:19:57,520 --> 00:19:59,560 Speaker 3: a lot of focus on those results. Thank you so 386 00:19:59,640 --> 00:20:02,359 Speaker 3: much for being with me. I'm Caroline Hepga here in London. 387 00:20:02,400 --> 00:20:04,080 Speaker 3: You can catch us every weekday morning for we've been 388 00:20:04,160 --> 00:20:06,399 Speaker 3: bag Daybreak. You're at the beginning at six am in London. 389 00:20:06,400 --> 00:20:07,720 Speaker 3: That's one am on Wall Street. 390 00:20:07,800 --> 00:20:08,040 Speaker 2: John. 391 00:20:08,760 --> 00:20:11,760 Speaker 1: Thank you, Caroline, and coming up on Bloomberg day Break weekend, 392 00:20:11,920 --> 00:20:14,720 Speaker 1: Ali Baba earnings and the Chinese tech industry. 393 00:20:15,160 --> 00:20:17,679 Speaker 2: I'm Tom Busby. This is Bloomberg. 394 00:20:23,240 --> 00:20:25,360 Speaker 1: I'm Tom Busby in New York with your global look 395 00:20:25,400 --> 00:20:28,080 Speaker 1: ahead at the top stories for investors in the coming week. 396 00:20:28,160 --> 00:20:31,119 Speaker 1: What's next for tech companies in China following the end 397 00:20:31,280 --> 00:20:34,680 Speaker 1: of a government crackdown. Chinese e commerce giant Ali Baba 398 00:20:34,720 --> 00:20:37,160 Speaker 1: among those in focus with an earnings report on tap 399 00:20:37,160 --> 00:20:39,360 Speaker 1: and for more, Let's go to Hong Kong and Bloomberg 400 00:20:39,400 --> 00:20:41,840 Speaker 1: Daybreak Asia host Brian Curtis. 401 00:20:41,640 --> 00:20:44,600 Speaker 4: Tom Alibaba reports earnings in the coming week, and the 402 00:20:44,680 --> 00:20:47,280 Speaker 4: results will be arriving at a time that the landscape 403 00:20:47,359 --> 00:20:51,200 Speaker 4: is changing fast, especially for big platform companies in China. 404 00:20:51,280 --> 00:20:54,240 Speaker 4: Ali Baba, May Twan and Peers make it an extra 405 00:20:54,359 --> 00:20:58,359 Speaker 4: subsidy through twenty twenty four to speed up their business expansion. 406 00:20:58,600 --> 00:21:00,639 Speaker 4: That's a step that Paul, as you make, is hope 407 00:21:00,800 --> 00:21:03,680 Speaker 4: will speed up consumption in the country. China has been 408 00:21:03,680 --> 00:21:07,399 Speaker 4: making a number of efforts of late to stimulate the economy, 409 00:21:07,640 --> 00:21:10,480 Speaker 4: and consumption is a very big part of that story. 410 00:21:10,840 --> 00:21:14,560 Speaker 4: Joining us now is Sarah Jung, Bloomberg China Technology Reporter. 411 00:21:14,880 --> 00:21:17,640 Speaker 4: So Sarah, let's talk about the earnings first, and then 412 00:21:17,680 --> 00:21:21,000 Speaker 4: we'll take a look at the broader environment and see 413 00:21:21,040 --> 00:21:23,879 Speaker 4: how that is changing. What are we expecting in terms 414 00:21:23,920 --> 00:21:27,240 Speaker 4: of sales and profits from these earnings in this latest quarter. 415 00:21:27,359 --> 00:21:30,240 Speaker 10: We're expecting to see some of the recovery that you 416 00:21:30,400 --> 00:21:35,320 Speaker 10: just talked about being reflected. Obviously, consumption has been more 417 00:21:35,400 --> 00:21:40,040 Speaker 10: uneven than expected following China's reopening, but there have been 418 00:21:40,960 --> 00:21:44,840 Speaker 10: new revenue growth factors that have been, you know, injecting 419 00:21:45,080 --> 00:21:48,600 Speaker 10: momentum in the various businesses. And that's because Ali Baba 420 00:21:48,680 --> 00:21:54,200 Speaker 10: announced its historic reshuffling with a division into six individual 421 00:21:54,200 --> 00:21:57,560 Speaker 10: business units earlier this year, and so that's given each 422 00:21:57,600 --> 00:22:02,040 Speaker 10: of the units a chance to actually seek independent funding 423 00:22:02,320 --> 00:22:06,119 Speaker 10: or public listings. So that in addition to some of 424 00:22:06,119 --> 00:22:10,680 Speaker 10: the latest leadership announcements and reshufflings that we've seen, are 425 00:22:10,720 --> 00:22:15,040 Speaker 10: expected to bring more optimism for investors. 426 00:22:15,359 --> 00:22:19,600 Speaker 4: We understand that the consumption boom is lagging a little 427 00:22:19,600 --> 00:22:23,359 Speaker 4: bit compared to what was expected. Is that the case 428 00:22:23,440 --> 00:22:26,159 Speaker 4: at that end, at the sort of e commerce segment 429 00:22:26,680 --> 00:22:30,000 Speaker 4: that Alibaba represents, or is it right across the board. 430 00:22:30,119 --> 00:22:33,439 Speaker 10: Yeah, we're expecting that to be reflected in terms of 431 00:22:33,480 --> 00:22:35,600 Speaker 10: year on year growth, especially for the bread and butter 432 00:22:35,640 --> 00:22:39,040 Speaker 10: business Talba and t Mal, and also in the international business. 433 00:22:39,480 --> 00:22:42,640 Speaker 10: There's going to be some headwinds from just the broader 434 00:22:42,760 --> 00:22:48,399 Speaker 10: macroeconomic environment for Ali Express, Lozada and Traniol, which is 435 00:22:48,440 --> 00:22:51,159 Speaker 10: their businesses in Europe and Southeast Asia. 436 00:22:51,160 --> 00:22:54,360 Speaker 4: What about the cloud business is that something that will 437 00:22:54,400 --> 00:22:56,600 Speaker 4: stand out in terms of the rest of the earnings. 438 00:22:56,920 --> 00:22:59,840 Speaker 10: So Cloud is very interesting because we saw that the CEO, 439 00:23:00,240 --> 00:23:02,960 Speaker 10: Daniel Jong, he's stepping down and he's going to focus 440 00:23:03,480 --> 00:23:07,280 Speaker 10: just on heading up Cloud. Cloud is expected to be, 441 00:23:07,440 --> 00:23:09,479 Speaker 10: it was expected to be a pillar of growth for 442 00:23:09,520 --> 00:23:12,800 Speaker 10: Ali Baba in the years to come. It's been you know, 443 00:23:12,920 --> 00:23:14,719 Speaker 10: lost making so far, and it's been losing a bit 444 00:23:14,720 --> 00:23:17,359 Speaker 10: of market share to some of the government state backed 445 00:23:17,640 --> 00:23:21,280 Speaker 10: cloud providers. But because of the energy and the frenzy 446 00:23:21,480 --> 00:23:24,600 Speaker 10: and excitement around AI in China's market right now, that 447 00:23:24,760 --> 00:23:27,719 Speaker 10: is something that we're looking to see Ali Cloud now 448 00:23:27,760 --> 00:23:30,800 Speaker 10: that it's separate and has its own operating environment where 449 00:23:30,840 --> 00:23:34,119 Speaker 10: Daniel John can focus entirely on Cloud to give it 450 00:23:34,240 --> 00:23:35,719 Speaker 10: some new energy. 451 00:23:36,200 --> 00:23:39,480 Speaker 4: So at the top now, with Joe's high there, it 452 00:23:39,640 --> 00:23:42,439 Speaker 4: seems like it's coincided with his being named to that 453 00:23:42,560 --> 00:23:45,760 Speaker 4: position and Daniel Jong being moved to the Cloud exclusively 454 00:23:46,359 --> 00:23:49,080 Speaker 4: that the stock has kind of caught fire. I'm not 455 00:23:49,160 --> 00:23:51,360 Speaker 4: sure the two are connected, but if you could say 456 00:23:51,400 --> 00:23:53,239 Speaker 4: a couple of words about what it means to have 457 00:23:53,320 --> 00:23:55,080 Speaker 4: Joe's High back in that position. 458 00:23:55,520 --> 00:23:58,040 Speaker 10: Sure, So Joe's High. He's a known entity. He's been 459 00:23:58,040 --> 00:24:01,000 Speaker 10: with Alibaba since the very beginning. Having him there as 460 00:24:01,040 --> 00:24:04,400 Speaker 10: a reliable, you know, person at the helm of the company, 461 00:24:04,600 --> 00:24:08,240 Speaker 10: that's something that investors are excited about. Same with the 462 00:24:08,320 --> 00:24:11,399 Speaker 10: new CEO, Eddie Wu. He's also been a longtime veteran 463 00:24:11,480 --> 00:24:14,320 Speaker 10: of the company. So these are people who have been 464 00:24:14,560 --> 00:24:16,840 Speaker 10: with Jack Maw, who's sort of still the spiritual leader 465 00:24:16,880 --> 00:24:20,640 Speaker 10: of the company from the very beginning. Again, known entities, 466 00:24:20,800 --> 00:24:23,480 Speaker 10: known quantities who have been heading up some of the 467 00:24:23,560 --> 00:24:26,560 Speaker 10: major units since the beginning. Eddie Wu, for example, he 468 00:24:27,000 --> 00:24:29,280 Speaker 10: was the chief architect of some of Ali Baba's flagship 469 00:24:29,320 --> 00:24:32,480 Speaker 10: products like Taba and t mal. So we know that 470 00:24:32,640 --> 00:24:34,080 Speaker 10: we know that it's a positive. 471 00:24:34,320 --> 00:24:35,000 Speaker 6: It's a positive. 472 00:24:35,119 --> 00:24:35,600 Speaker 10: That's right. 473 00:24:35,680 --> 00:24:38,680 Speaker 4: You mentioned Jack Maw is still the spiritual leader of 474 00:24:38,720 --> 00:24:41,800 Speaker 4: Ali Baba, and I'm just curious about to what extent 475 00:24:41,840 --> 00:24:44,080 Speaker 4: he's still involved in the running of the company. 476 00:24:44,600 --> 00:24:47,880 Speaker 10: It's interesting because earlier this year when he reappeared on campus, 477 00:24:47,920 --> 00:24:51,280 Speaker 10: employees were so excited to see him, and that sort 478 00:24:51,320 --> 00:24:55,240 Speaker 10: of speaks to the mantra and maxims that he has 479 00:24:55,280 --> 00:24:58,399 Speaker 10: instilled in the company's culture from the beginning. Joe Zai 480 00:24:58,440 --> 00:25:00,560 Speaker 10: and Eddie Woo, like I mentioned, they both embody that 481 00:25:00,600 --> 00:25:03,760 Speaker 10: as well. He is not directly involved in the day 482 00:25:03,800 --> 00:25:07,800 Speaker 10: to day operations from what we know anymore, given the 483 00:25:07,840 --> 00:25:10,600 Speaker 10: regulatory scrutiny and the tech crackdown over the last two years, 484 00:25:10,600 --> 00:25:13,240 Speaker 10: he's really been stepping back from the limelight. And there 485 00:25:13,240 --> 00:25:15,480 Speaker 10: was a lot of speculation before about whether or not 486 00:25:15,520 --> 00:25:18,880 Speaker 10: he could return to China. We did see him back 487 00:25:18,920 --> 00:25:22,600 Speaker 10: in Honzo, so that's another positive sign from the regulatory side. 488 00:25:22,720 --> 00:25:26,000 Speaker 4: Now, I'm curious about the overall environment. We've had a 489 00:25:26,000 --> 00:25:28,200 Speaker 4: little bit of a change in thinking in China, I 490 00:25:28,240 --> 00:25:32,159 Speaker 4: think from policymakers, even to the extent that in the 491 00:25:32,200 --> 00:25:35,280 Speaker 4: property market, what they've been saying now is they've sort 492 00:25:35,320 --> 00:25:38,439 Speaker 4: of not repeated the old mantra that houses are for 493 00:25:38,520 --> 00:25:42,320 Speaker 4: living in, not for investing in. I wonder if the 494 00:25:42,359 --> 00:25:45,720 Speaker 4: attitude has changed for the big technology companies, the big 495 00:25:45,720 --> 00:25:49,520 Speaker 4: platform companies. It seems like ever since the ant IPO 496 00:25:49,720 --> 00:25:53,639 Speaker 4: was pulled that big was bad and they wanted to 497 00:25:53,720 --> 00:25:56,919 Speaker 4: support smaller companies, and I wonder whether or not that 498 00:25:57,000 --> 00:25:58,520 Speaker 4: has changed right exactly. 499 00:25:58,600 --> 00:26:01,040 Speaker 10: It's really interesting we're seeing more and more signs from 500 00:26:01,119 --> 00:26:04,800 Speaker 10: regulators that they want the big tech companies Tencent, Ali 501 00:26:04,840 --> 00:26:07,760 Speaker 10: Baba by doing the rest to help them resuscitate what's 502 00:26:07,800 --> 00:26:10,439 Speaker 10: really a flagging economy at the moment. 503 00:26:10,880 --> 00:26:11,920 Speaker 4: So so big is okay. 504 00:26:11,960 --> 00:26:14,560 Speaker 10: Now, we won't see them return to sort of the 505 00:26:15,200 --> 00:26:20,240 Speaker 10: swaggering days of before COVID zero, before the tech crackdown 506 00:26:21,000 --> 00:26:26,520 Speaker 10: in but we will see them slightly be unshackled to 507 00:26:26,520 --> 00:26:29,400 Speaker 10: be able to pursue sort of tech sectors that Beijing 508 00:26:29,520 --> 00:26:36,000 Speaker 10: sees as its primary priorities strategically, So for example, in AI, cloud, computing, chips, 509 00:26:36,160 --> 00:26:38,280 Speaker 10: these are all strategic areas they need to compete with 510 00:26:38,320 --> 00:26:40,240 Speaker 10: the US, and we're going to see them be able 511 00:26:40,280 --> 00:26:42,080 Speaker 10: to move forward in those areas. 512 00:26:42,160 --> 00:26:44,680 Speaker 4: In the past, they snapped up a lot of smaller companies, 513 00:26:44,720 --> 00:26:49,760 Speaker 4: startups and really used the energy there. And you know, 514 00:26:49,800 --> 00:26:54,360 Speaker 4: the push in new technology areas is that likely to continue. 515 00:26:53,920 --> 00:26:56,879 Speaker 10: That it seems like is still being rained in to 516 00:26:57,440 --> 00:26:59,520 Speaker 10: some extent, So we're not going to see them be 517 00:26:59,800 --> 00:27:03,080 Speaker 10: the main drivers of venture capital and investment. So a 518 00:27:03,080 --> 00:27:05,359 Speaker 10: lot of the startups we're talking to now they're not 519 00:27:05,520 --> 00:27:08,960 Speaker 10: really looking for investments from Tencent and some of the 520 00:27:09,000 --> 00:27:12,040 Speaker 10: big giants anymore. Now they're more focused on just like 521 00:27:12,080 --> 00:27:17,960 Speaker 10: smaller level applications and working with maybe early stage kind 522 00:27:17,960 --> 00:27:20,480 Speaker 10: of investors rather than trying to be acquired by the 523 00:27:20,520 --> 00:27:21,160 Speaker 10: big giants. 524 00:27:21,760 --> 00:27:24,240 Speaker 4: And I wonder whether or not they're as successful as 525 00:27:24,240 --> 00:27:26,600 Speaker 4: they were before in attracting talent. 526 00:27:27,480 --> 00:27:30,240 Speaker 10: Talent is a big problem. Like we've been sort of 527 00:27:30,280 --> 00:27:33,720 Speaker 10: dancing around this issue of China's likeish economy and so 528 00:27:33,880 --> 00:27:37,040 Speaker 10: youth unemployment. That's a really big issue. Another reason why 529 00:27:37,080 --> 00:27:40,159 Speaker 10: Beijing wants these big tech companies to come back and 530 00:27:40,240 --> 00:27:45,199 Speaker 10: revive some of that employment situation. But yeah, talent is 531 00:27:45,200 --> 00:27:47,800 Speaker 10: definitely a big issue. We were seeing some layoffs from 532 00:27:47,800 --> 00:27:51,880 Speaker 10: some of these companies and just a lot of anecdotes 533 00:27:52,040 --> 00:27:55,080 Speaker 10: about people leaving the industry or not being able to 534 00:27:55,119 --> 00:27:57,120 Speaker 10: get the same kind of bonuses that they did before. 535 00:27:57,560 --> 00:28:01,160 Speaker 4: Now, we had an interesting moment recently where and wanted 536 00:28:01,200 --> 00:28:05,000 Speaker 4: to buy back shares and wanted to buy back shares 537 00:28:05,080 --> 00:28:09,040 Speaker 4: from all the shareholders, including the biggest one, Ali Baba, 538 00:28:09,119 --> 00:28:12,040 Speaker 4: and Ali Baba chose not to sell. Now, some people 539 00:28:12,080 --> 00:28:15,320 Speaker 4: interpreted that as a positive because it meant that Ali 540 00:28:15,359 --> 00:28:20,199 Speaker 4: Baba wanted to retain, you know, more ownership and involvement 541 00:28:20,600 --> 00:28:23,240 Speaker 4: in Ant and others might have wondered whether or not 542 00:28:23,640 --> 00:28:26,000 Speaker 4: that meant that there was a little bit of difference. 543 00:28:25,640 --> 00:28:28,440 Speaker 7: In the management teams. Have we been able to explore 544 00:28:28,440 --> 00:28:29,560 Speaker 7: that we. 545 00:28:29,560 --> 00:28:32,119 Speaker 10: Have, So I think what Ali Baba said officially is 546 00:28:32,160 --> 00:28:34,800 Speaker 10: that they decided not to sell any of their stake 547 00:28:34,920 --> 00:28:38,040 Speaker 10: because and is still an important strategic partner to them. 548 00:28:38,280 --> 00:28:41,320 Speaker 10: And what analysts say is that actually they're really hoping that, 549 00:28:41,640 --> 00:28:43,600 Speaker 10: you know, as Ant starts to come back, they're able 550 00:28:43,640 --> 00:28:46,560 Speaker 10: to build up their business again they can help contribute to, 551 00:28:47,120 --> 00:28:50,920 Speaker 10: for example, Ali Baba Cloud Ali Cloud's growth going forward. 552 00:28:51,000 --> 00:28:54,320 Speaker 10: They have been a really big contributor to their revenue, 553 00:28:54,520 --> 00:28:56,600 Speaker 10: and now that they can build themselves back up again 554 00:28:56,840 --> 00:29:00,440 Speaker 10: and expand, they can again be one of the highest 555 00:29:00,480 --> 00:29:02,680 Speaker 10: contributors to that cloud revenue. 556 00:29:03,000 --> 00:29:06,480 Speaker 4: So we've seen Ali Baba split into six different parts, 557 00:29:06,880 --> 00:29:09,960 Speaker 4: and that's it's kind of slow in rolling out. For 558 00:29:10,080 --> 00:29:12,720 Speaker 4: the other big companies like ten Cent and may Twan 559 00:29:13,760 --> 00:29:16,360 Speaker 4: and perhaps a few others, is it likely they'll take 560 00:29:16,400 --> 00:29:17,240 Speaker 4: that path as well. 561 00:29:18,000 --> 00:29:21,680 Speaker 10: Alibaba actually is relatively unique in this aspect where we've 562 00:29:21,760 --> 00:29:24,160 Speaker 10: when we talk to analysts, they say that splitting into 563 00:29:24,240 --> 00:29:27,680 Speaker 10: six different units allows them to unlock different kinds of 564 00:29:27,840 --> 00:29:31,040 Speaker 10: business potential of these individual units. So for example, like 565 00:29:31,560 --> 00:29:36,280 Speaker 10: Ali Clouds Hinau, which is a logistics arm and uh 566 00:29:36,400 --> 00:29:40,000 Speaker 10: International Digital commerce, so for example al Express, Lozada. They 567 00:29:40,040 --> 00:29:43,760 Speaker 10: all have business models that can be spun off relatively independently. 568 00:29:43,960 --> 00:29:46,400 Speaker 10: Where it's different from a company like Tencent, which is 569 00:29:46,440 --> 00:29:49,360 Speaker 10: built around we Chat, this everything app that everyone uses 570 00:29:49,400 --> 00:29:52,240 Speaker 10: in China. It's a lot harder to break off parts 571 00:29:52,280 --> 00:29:56,360 Speaker 10: of the Tencent, you know, business from that core ecosystem. 572 00:29:56,520 --> 00:29:59,680 Speaker 10: So we're not expecting to see the same kinds of 573 00:29:59,720 --> 00:30:02,640 Speaker 10: movement from competitors like Tencent. 574 00:30:02,960 --> 00:30:07,040 Speaker 4: Sarah Jong, Bloomberg China Technology Reporter. I'm Brian Curtis along 575 00:30:07,040 --> 00:30:10,080 Speaker 4: with Doug Christner. You can catch us every weekday here 576 00:30:10,120 --> 00:30:13,000 Speaker 4: for Bloomberg day Break Asia, beginning at six am in 577 00:30:13,080 --> 00:30:15,719 Speaker 4: Hong Kong and six pm on Wall Street. 578 00:30:15,960 --> 00:30:18,800 Speaker 1: Tom, thank you, Brian, And coming up here on Bloomberg 579 00:30:18,840 --> 00:30:21,200 Speaker 1: day Break Weekend, we go to Washington and I'll look 580 00:30:21,200 --> 00:30:24,400 Speaker 1: at all the union activity lately and what this means 581 00:30:24,520 --> 00:30:28,240 Speaker 1: for the presidential race. I'm Tom Busby. This is Bloomberg. 582 00:30:33,600 --> 00:30:36,000 Speaker 1: This is Bloomberg day Break Weekend, our global look ahead 583 00:30:36,040 --> 00:30:38,160 Speaker 1: at the top stories for investors in the coming week, 584 00:30:38,320 --> 00:30:41,360 Speaker 1: I'm Tom Busby in New York labor and politics and 585 00:30:41,480 --> 00:30:44,680 Speaker 1: focus as we head to the twenty twenty four presidential election. 586 00:30:45,000 --> 00:30:47,320 Speaker 1: For more, let's head to our Bloomberg ninety nine one 587 00:30:47,360 --> 00:30:51,880 Speaker 1: newsroom in Washington and Bloomberg Sound On. Co host Kaylee lines. 588 00:30:51,880 --> 00:30:54,640 Speaker 5: Tom, that's right, labor has been a hot button issue 589 00:30:54,640 --> 00:30:57,040 Speaker 5: this summer. So joining me now to talk more about 590 00:30:57,120 --> 00:30:59,920 Speaker 5: labor is Ian Colgran, who reports on the subject for us. 591 00:31:00,080 --> 00:31:03,360 Speaker 5: You're at Bloomberg. So first of all, let's just talk 592 00:31:03,360 --> 00:31:06,400 Speaker 5: about ups. This deal with the Teamsters is just a 593 00:31:06,440 --> 00:31:08,680 Speaker 5: handshake deal at this point, right, Is there any chance 594 00:31:08,720 --> 00:31:10,200 Speaker 5: that it's not going to be ratified. 595 00:31:10,440 --> 00:31:14,040 Speaker 14: There's always a chance that a deal won't be ratified 596 00:31:14,160 --> 00:31:17,040 Speaker 14: and that everybody is going to be surprised. At this point. 597 00:31:17,080 --> 00:31:21,520 Speaker 14: It's looking, however, like the deal probably will get through. 598 00:31:21,760 --> 00:31:25,200 Speaker 14: There was a near unanimous vote of the local chapters 599 00:31:25,240 --> 00:31:28,080 Speaker 14: of the Teamsters that endorsed it. However, that doesn't mean 600 00:31:28,080 --> 00:31:31,080 Speaker 14: there's not grassroots opposition to this deal, and in fact 601 00:31:31,160 --> 00:31:34,800 Speaker 14: there is. Just yesterday talked to one of the leaders 602 00:31:35,080 --> 00:31:38,600 Speaker 14: of one of the vote No campaigns who is just 603 00:31:38,640 --> 00:31:44,520 Speaker 14: starting to ramp up the campaign and holding webinars and 604 00:31:44,600 --> 00:31:48,040 Speaker 14: getting the word out on Twitter and Instagram other social media. 605 00:31:48,440 --> 00:31:51,880 Speaker 14: So we'll see if some of this opposition metastasizes in 606 00:31:51,920 --> 00:31:54,800 Speaker 14: the next couple of weeks as teamsters vote. But at 607 00:31:54,800 --> 00:31:58,680 Speaker 14: this point it's looking fairly fairly safe to say there 608 00:31:58,720 --> 00:31:59,440 Speaker 14: won't be a strike. 609 00:32:00,000 --> 00:32:01,920 Speaker 5: Maybe we won't see a strike in that case, but 610 00:32:01,960 --> 00:32:05,280 Speaker 5: what's the likelihood we will see more strikes this summer 611 00:32:05,600 --> 00:32:07,560 Speaker 5: or later on this year. I'm thinking of the auto 612 00:32:07,600 --> 00:32:08,840 Speaker 5: workers primarily here. 613 00:32:09,160 --> 00:32:12,120 Speaker 14: Strikes, as we've seen over the past few months, are 614 00:32:12,760 --> 00:32:16,360 Speaker 14: events that tend to build on one another. You see 615 00:32:16,560 --> 00:32:20,719 Speaker 14: all of the action going on in Hollywood right now. 616 00:32:20,960 --> 00:32:25,640 Speaker 14: There is certainly a possibility that the auto workers could 617 00:32:26,000 --> 00:32:30,880 Speaker 14: strike when their contract expires in September. It's something that 618 00:32:30,880 --> 00:32:33,840 Speaker 14: they have not been shy to do in the past. 619 00:32:34,200 --> 00:32:36,280 Speaker 14: In twenty nineteen, they went on a six week strike, 620 00:32:36,320 --> 00:32:40,320 Speaker 14: which was the longest strike ever for the autoworker's longest 621 00:32:40,600 --> 00:32:43,840 Speaker 14: auto strike in the history of the United States. And 622 00:32:43,880 --> 00:32:48,600 Speaker 14: now they have a fiery new leader who has promised 623 00:32:48,640 --> 00:32:53,240 Speaker 14: to really take the companies to task, and that will 624 00:32:53,520 --> 00:32:56,640 Speaker 14: be a whole different dynamic here. As we get closer 625 00:32:56,800 --> 00:32:59,400 Speaker 14: to the drop dead day for negotiation. 626 00:33:00,040 --> 00:33:02,320 Speaker 5: Speaking of leaders Ian, how does all this play for 627 00:33:02,480 --> 00:33:05,920 Speaker 5: President Biden, who has tried very hard to bill himself 628 00:33:06,000 --> 00:33:07,440 Speaker 5: as a pro labor president. 629 00:33:07,720 --> 00:33:10,960 Speaker 14: All of these strikes put President Biden in a tough 630 00:33:11,000 --> 00:33:17,400 Speaker 14: spot because it essentially forces him to choose between the 631 00:33:17,520 --> 00:33:20,280 Speaker 14: union and the company, and that's not a choice that 632 00:33:20,360 --> 00:33:24,040 Speaker 14: he wants to make under any circumstance. He's somebody who 633 00:33:24,040 --> 00:33:30,200 Speaker 14: has also tried very hard to champion manufacturing and American 634 00:33:30,600 --> 00:33:34,360 Speaker 14: innovation under his administration. And it's just sort of a 635 00:33:34,400 --> 00:33:38,200 Speaker 14: just sort of a no win situation for the president 636 00:33:38,400 --> 00:33:40,680 Speaker 14: if he is to intervene in some of these strikes, 637 00:33:40,720 --> 00:33:43,600 Speaker 14: because he's going to have to make somebody really unhappy. 638 00:33:43,800 --> 00:33:47,240 Speaker 14: And in the case of the rail deal late last year, 639 00:33:47,680 --> 00:33:50,120 Speaker 14: he did have to make a lot of union members 640 00:33:50,320 --> 00:33:55,720 Speaker 14: really unhappy by forcing a deal through Congress to avoid 641 00:33:55,760 --> 00:33:58,040 Speaker 14: a potentially crippling strike for the US suppled chain. 642 00:33:58,200 --> 00:34:00,320 Speaker 5: So how do you think this will play in the 643 00:34:00,360 --> 00:34:03,520 Speaker 5: twenty twenty four race. Considering he's not just sitting president, 644 00:34:03,560 --> 00:34:05,480 Speaker 5: he's seeking reelection, He's. 645 00:34:05,320 --> 00:34:09,200 Speaker 14: Certainly risks alienating his base if he angers too many 646 00:34:09,280 --> 00:34:13,640 Speaker 14: union members by siding against them in some of these negotiations. 647 00:34:13,719 --> 00:34:16,960 Speaker 14: They're going to be watching closely to thee whether his 648 00:34:17,160 --> 00:34:23,320 Speaker 14: actions and his words match. It's something that no president 649 00:34:23,440 --> 00:34:28,279 Speaker 14: really wants to deal with during a reelection campaign. It's 650 00:34:28,280 --> 00:34:32,799 Speaker 14: a show of populist anger from the base that has 651 00:34:33,719 --> 00:34:40,120 Speaker 14: very little chance of benefiting a moderate incmbent like President Vibe. 652 00:34:40,280 --> 00:34:44,160 Speaker 5: Well, looking forward to your continued coverage of the labor strife. 653 00:34:44,160 --> 00:34:46,600 Speaker 5: Ian Kulgrin, who reports on labor for Bloomberg, thank you 654 00:34:46,640 --> 00:34:48,160 Speaker 5: so much, and Tom back to you. 655 00:34:48,480 --> 00:34:51,279 Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host 656 00:34:51,400 --> 00:34:54,440 Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine one newsroom 657 00:34:54,480 --> 00:34:57,560 Speaker 1: in Washington, and you can hear sound on weekdays one 658 00:34:57,600 --> 00:34:59,960 Speaker 1: to three pm on Bloomberg Radio. And that does a 659 00:35:00,080 --> 00:35:02,319 Speaker 1: for this edition of Bloomberg day Break Weekend. Join us 660 00:35:02,320 --> 00:35:04,480 Speaker 1: again Monday morning at five am Wall Street Time for 661 00:35:04,520 --> 00:35:05,879 Speaker 1: the latest on markets. 662 00:35:05,520 --> 00:35:08,040 Speaker 2: Overseas and the news you need to start your day. 663 00:35:08,239 --> 00:35:09,920 Speaker 2: I'm Tom Buzby. Stay with us. 664 00:35:10,000 --> 00:35:12,879 Speaker 1: Top stories and global business headlines are coming up right now.