1 00:00:02,960 --> 00:00:11,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg day 2 00:00:11,760 --> 00:00:14,120 Speaker 1: Break Weekend, our global look at the top stories in 3 00:00:14,160 --> 00:00:16,920 Speaker 1: the coming week from our Daybreak anchors all around the world. 4 00:00:17,120 --> 00:00:20,919 Speaker 1: Straight ahead on the program, data on inflation and economic 5 00:00:20,960 --> 00:00:23,200 Speaker 1: growth this week, and we take a look at the 6 00:00:23,320 --> 00:00:27,480 Speaker 1: US cruise industry earnings from the world's biggest cruise operator. 7 00:00:27,800 --> 00:00:29,200 Speaker 1: I'm Tom Busby in New York. 8 00:00:29,240 --> 00:00:31,440 Speaker 2: I'm kunin Hepger here in London, where we're looking at 9 00:00:31,480 --> 00:00:34,519 Speaker 2: the chocolate industry faced with sour in coco prices. 10 00:00:34,720 --> 00:00:36,920 Speaker 3: I'm Brian Curnis in Hong Kong. I'll take a look 11 00:00:36,960 --> 00:00:41,360 Speaker 3: at the upcoming results from YD the business, the expansion plans, 12 00:00:41,520 --> 00:00:43,480 Speaker 3: and of course the geopolitics. 13 00:00:43,960 --> 00:00:47,960 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 14 00:00:48,000 --> 00:00:50,479 Speaker 4: E Loove Them three own New York, Bloomberg ninety nine 15 00:00:50,520 --> 00:00:53,920 Speaker 4: to one, Washington, DC, Bloomberg one O six one, Boston, 16 00:00:53,960 --> 00:00:58,800 Speaker 4: Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 17 00:00:58,920 --> 00:01:02,160 Speaker 4: XM one nineteen and around the world on Bloomberg Radio 18 00:01:02,240 --> 00:01:04,560 Speaker 4: dot com and via the Bloomberg Business App. 19 00:01:08,400 --> 00:01:10,600 Speaker 1: Good day to you. I'm Tom Busby, and we begin 20 00:01:10,680 --> 00:01:13,560 Speaker 1: today's program with the third and final reads out this 21 00:01:13,640 --> 00:01:18,080 Speaker 1: week on US economic growth and inflation, the core personal 22 00:01:18,120 --> 00:01:21,759 Speaker 1: consumption expenditures for the final quarter of twenty twenty three, 23 00:01:22,160 --> 00:01:24,600 Speaker 1: and we'll talk about what that means for the FED. 24 00:01:24,760 --> 00:01:29,160 Speaker 1: For more, we welcome Annawong, chief US economist for Bloomberg Economics. Anna, 25 00:01:29,240 --> 00:01:30,160 Speaker 1: thank you for being here. 26 00:01:30,360 --> 00:01:31,320 Speaker 5: Hi, good to be here. 27 00:01:31,520 --> 00:01:33,720 Speaker 1: Well, before we talk about what you expect to see 28 00:01:33,760 --> 00:01:36,920 Speaker 1: from Q four GDP and Q four PCE, let's begin 29 00:01:37,319 --> 00:01:39,959 Speaker 1: with your reaction to what the Central Bank did this 30 00:01:40,040 --> 00:01:43,399 Speaker 1: past week, holding rates unchanged, that's the fifth meeting in 31 00:01:43,400 --> 00:01:47,800 Speaker 1: a row, while maintaining the outlook for three rate cuts 32 00:01:47,880 --> 00:01:49,120 Speaker 1: this year. What do you make of that? 33 00:01:49,800 --> 00:01:53,560 Speaker 5: Well, that met our expectation because we thought that Powell 34 00:01:53,640 --> 00:01:57,040 Speaker 5: himself is the medium voter, and as long as Powell 35 00:01:57,120 --> 00:01:59,520 Speaker 5: is of the view that three rate cuts is still 36 00:01:59,520 --> 00:02:02,559 Speaker 5: appropriate for this year, I think he will carry most 37 00:02:02,600 --> 00:02:07,360 Speaker 5: of the FED board members with him. I thought more significantly, though, 38 00:02:07,560 --> 00:02:11,240 Speaker 5: is that they revised up their view of what FED 39 00:02:11,440 --> 00:02:15,320 Speaker 5: funds rate should be beyond twenty twenty four. And basically 40 00:02:15,360 --> 00:02:18,640 Speaker 5: the message there is that they believe that the underlying 41 00:02:19,919 --> 00:02:25,200 Speaker 5: neutral rates in the economy, for you know, for the layman. 42 00:02:25,280 --> 00:02:28,160 Speaker 5: What that means is it's the interest rate that should 43 00:02:28,160 --> 00:02:31,639 Speaker 5: prevail in the long term consistent with two percent inflation. 44 00:02:32,000 --> 00:02:35,040 Speaker 5: The SEP shows that the Committee believes the neutral rate 45 00:02:35,120 --> 00:02:37,880 Speaker 5: has risen and a lot of the dots in the 46 00:02:37,919 --> 00:02:42,440 Speaker 5: dot flot have moved up to about three percent for 47 00:02:44,360 --> 00:02:47,120 Speaker 5: the neutral rate. So I think that's significant because it 48 00:02:47,200 --> 00:02:50,359 Speaker 5: means that in the next year or two we would 49 00:02:50,400 --> 00:02:52,280 Speaker 5: see less rate cuts on the whole. 50 00:02:52,680 --> 00:02:56,680 Speaker 1: So, despite some disappointment about a recent rise in inflation, overall, 51 00:02:56,680 --> 00:02:59,800 Speaker 1: this looks like a pretty upbeat outlook for economic growth, 52 00:03:00,160 --> 00:03:01,799 Speaker 1: labor market, and inflation. 53 00:03:02,240 --> 00:03:05,240 Speaker 5: Yeah, I mean, I think that the Fed still believes 54 00:03:05,360 --> 00:03:09,440 Speaker 5: mostly that inflation could return to two percent without generating 55 00:03:09,480 --> 00:03:13,760 Speaker 5: a lot of losses. On the employment side, they revised 56 00:03:13,840 --> 00:03:17,639 Speaker 5: down the unemployment forecast for this year from four point 57 00:03:17,760 --> 00:03:21,840 Speaker 5: one percent last December to four point zero percent, and 58 00:03:22,040 --> 00:03:24,959 Speaker 5: unemployment rate is already at three point nine percent. I 59 00:03:25,040 --> 00:03:28,760 Speaker 5: think they basically see just a very minor deterioration in 60 00:03:28,800 --> 00:03:31,079 Speaker 5: the stabilizing on that level. 61 00:03:31,480 --> 00:03:34,040 Speaker 1: Meanwhile, we heard from FED Chair J Powell last week 62 00:03:34,080 --> 00:03:37,360 Speaker 1: after Federal Reserve policymakers stuck to their path of interest 63 00:03:37,440 --> 00:03:40,040 Speaker 1: rate cuts at least for now, after hitting a bump 64 00:03:40,040 --> 00:03:42,080 Speaker 1: on the road to low and steady inflation. 65 00:03:42,280 --> 00:03:44,560 Speaker 6: We believe that our policy rate is likely at its 66 00:03:44,600 --> 00:03:48,000 Speaker 6: peak for this tightening cycle, and that if the economy 67 00:03:48,000 --> 00:03:51,600 Speaker 6: evolves broadly as expected, it will likely be appropriate to 68 00:03:51,680 --> 00:03:55,520 Speaker 6: begin dialing back policy restraint at some point this year. 69 00:03:56,640 --> 00:03:59,840 Speaker 6: The economic outlook is uncertain, however, and we remain highly 70 00:04:00,080 --> 00:04:01,640 Speaker 6: ten of two inflation risks. 71 00:04:02,000 --> 00:04:05,800 Speaker 1: However, Bloomberg opinion columnst Mohammad l Arian said the Fed 72 00:04:05,840 --> 00:04:08,360 Speaker 1: should push out their rate cut timeline. 73 00:04:08,480 --> 00:04:11,440 Speaker 7: We're living in a world where the supply side isn't 74 00:04:11,480 --> 00:04:14,560 Speaker 7: flexible enough, and you get almost every week you get 75 00:04:14,600 --> 00:04:18,240 Speaker 7: indication of changing supply chains, you get indication of the 76 00:04:18,279 --> 00:04:20,640 Speaker 7: label of the tightness of the labor market, you get 77 00:04:20,680 --> 00:04:23,120 Speaker 7: indication of an energy transition that's not going as well 78 00:04:23,120 --> 00:04:25,840 Speaker 7: as people want it. All these things mean the supply 79 00:04:26,000 --> 00:04:30,120 Speaker 7: side is less flexible, and the underlying inflation rate that 80 00:04:30,240 --> 00:04:33,479 Speaker 7: is consistent with the economic well being for now is 81 00:04:33,520 --> 00:04:35,120 Speaker 7: somewhat higher than two percent. 82 00:04:34,960 --> 00:04:37,400 Speaker 1: And former New York Fed President Bill Dudley says the 83 00:04:37,440 --> 00:04:40,040 Speaker 1: Fed is sticking to its two percent target. 84 00:04:40,240 --> 00:04:42,880 Speaker 8: We still think minetary policy is tight. We still think 85 00:04:42,920 --> 00:04:45,200 Speaker 8: we're going to get more confident about getting inflation down 86 00:04:45,240 --> 00:04:47,200 Speaker 8: to two percent, and so we still think we're going 87 00:04:47,200 --> 00:04:49,160 Speaker 8: to cut rates this year time. He's uncertain, and he 88 00:04:49,480 --> 00:04:51,560 Speaker 8: said over and over again, it depends on the data. 89 00:04:51,640 --> 00:04:54,960 Speaker 1: Well, the Fed always says it is all data dependent. 90 00:04:55,240 --> 00:04:57,200 Speaker 1: And right now, let's get back to the data we're 91 00:04:57,200 --> 00:05:00,400 Speaker 1: going to see this week on fourth quarter GDP final 92 00:05:00,440 --> 00:05:04,200 Speaker 1: read and also PCE. What are you expecting to see? 93 00:05:04,279 --> 00:05:06,080 Speaker 1: Is this going to be good news? 94 00:05:06,320 --> 00:05:10,200 Speaker 5: Well, first of all, Tom, the GDP revisions does not 95 00:05:10,480 --> 00:05:14,800 Speaker 5: just end on the third revision. They go on for 96 00:05:14,960 --> 00:05:18,680 Speaker 5: years and years and years until it could be revised 97 00:05:18,680 --> 00:05:23,920 Speaker 5: even five years. But for the third revision, which we 98 00:05:24,360 --> 00:05:27,480 Speaker 5: are going to get next week, we're expecting the fourth 99 00:05:27,560 --> 00:05:31,119 Speaker 5: quarter GDP to be little a little change at about 100 00:05:31,120 --> 00:05:34,920 Speaker 5: three percent. But more interestingly is that they are going 101 00:05:34,960 --> 00:05:40,599 Speaker 5: to be releasing the information the quarterly change for gd I. 102 00:05:41,360 --> 00:05:45,360 Speaker 5: And in the past two years, gd I has been 103 00:05:45,480 --> 00:05:50,240 Speaker 5: running lower than GDP growth, even though theoretically they are 104 00:05:50,279 --> 00:05:53,480 Speaker 5: measuring the same things. So on a year over year basis, 105 00:05:54,279 --> 00:05:58,440 Speaker 5: gross domestic income actually was running negative as of the 106 00:05:58,480 --> 00:06:02,360 Speaker 5: fourth quarter of last year in contrast to the pretty 107 00:06:03,080 --> 00:06:06,440 Speaker 5: robust increase in GDP growth. So I think we would 108 00:06:06,440 --> 00:06:09,080 Speaker 5: be paying a lot of attention to that because from 109 00:06:09,279 --> 00:06:14,400 Speaker 5: the perspective of the economists too, would be deciding on 110 00:06:14,480 --> 00:06:18,360 Speaker 5: the NBER Business Cycle Dating Committee on whether there is 111 00:06:18,400 --> 00:06:21,760 Speaker 5: a recession. It actually is the average of GDP and 112 00:06:21,839 --> 00:06:23,120 Speaker 5: GDI that matters. 113 00:06:23,520 --> 00:06:23,640 Speaker 4: Now. 114 00:06:23,680 --> 00:06:26,880 Speaker 1: The FED has six more policy meetings this year, the 115 00:06:26,920 --> 00:06:29,800 Speaker 1: next one and April thirtieth may first. Based on what 116 00:06:29,880 --> 00:06:33,240 Speaker 1: we know now, and we won't know this latest figures 117 00:06:33,080 --> 00:06:36,080 Speaker 1: for a few more days. Is it still too soon 118 00:06:36,160 --> 00:06:38,080 Speaker 1: to expect one of those three rate cuts? I mean, 119 00:06:38,160 --> 00:06:40,120 Speaker 1: is June meeting a lot more likely for that? 120 00:06:40,600 --> 00:06:43,200 Speaker 5: Yeah, June is our baseline, and I think June is 121 00:06:43,200 --> 00:06:45,920 Speaker 5: the baseline for the market as well. So I think 122 00:06:45,960 --> 00:06:49,279 Speaker 5: the crucial assumption of that is, as you said, if 123 00:06:49,360 --> 00:06:54,960 Speaker 5: things evolve as we see now, So if unemployment rate 124 00:06:55,560 --> 00:06:58,880 Speaker 5: barely rises, you know, stay in the three point nine 125 00:06:59,080 --> 00:07:04,760 Speaker 5: to four point zero zero range. If core PCE inflation 126 00:07:05,120 --> 00:07:10,760 Speaker 5: comes in, you know, at zero point two to zero 127 00:07:10,840 --> 00:07:14,320 Speaker 5: point three percent per month in the next couple of months, 128 00:07:14,400 --> 00:07:16,240 Speaker 5: I think we will get a June rate cut. 129 00:07:16,880 --> 00:07:17,200 Speaker 4: Wow. 130 00:07:17,320 --> 00:07:19,240 Speaker 1: Well, a lot to look forward to. Well, our thanks 131 00:07:19,280 --> 00:07:24,000 Speaker 1: to Anawong, Chief US economist for Bloomberg Economics, We now 132 00:07:24,040 --> 00:07:26,520 Speaker 1: turn to the state of the cruising industry and the 133 00:07:26,600 --> 00:07:29,080 Speaker 1: latest earnings out this week from the biggest of them all, 134 00:07:29,200 --> 00:07:32,000 Speaker 1: Carnival Cruise Lines. And for more we welcome Brian Egger, 135 00:07:32,280 --> 00:07:36,880 Speaker 1: Bloomberg Intelligence Senior Gaming and Lodging Analyst. Now, Brian, let's start. 136 00:07:36,920 --> 00:07:39,480 Speaker 1: There has been a stunning turnaround in the cruise market 137 00:07:39,480 --> 00:07:42,000 Speaker 1: from the depths of the pandemic just a few years ago. 138 00:07:42,520 --> 00:07:44,440 Speaker 1: How remarkable has this turnaround been. 139 00:07:44,760 --> 00:07:47,720 Speaker 9: It's pretty remarkable. So the industry was basically in a 140 00:07:47,760 --> 00:07:51,760 Speaker 9: state of suspension from an operating perspective from during twenty 141 00:07:51,800 --> 00:07:54,440 Speaker 9: twenty and twenty twenty one. Now we are back to 142 00:07:54,560 --> 00:07:58,640 Speaker 9: essentially pre pandemic levels of both deployment and acmancy. So 143 00:07:58,640 --> 00:08:02,000 Speaker 9: we've kind of seen a full turnaround. And the revenue yields, 144 00:08:02,000 --> 00:08:05,760 Speaker 9: which are the key metric for Carnival, last year, they 145 00:08:05,760 --> 00:08:08,240 Speaker 9: were slightly above what they were in twenty nineteen, so 146 00:08:08,240 --> 00:08:09,400 Speaker 9: we're kind of gone full circle. 147 00:08:09,640 --> 00:08:11,920 Speaker 1: And what are the driving forces for this demand? I mean, 148 00:08:12,280 --> 00:08:16,080 Speaker 1: is the cruise industry? Is it pricing, is it just marketing? 149 00:08:16,240 --> 00:08:18,560 Speaker 1: Is it the people just have got to get out 150 00:08:18,600 --> 00:08:19,200 Speaker 1: on those ships. 151 00:08:19,320 --> 00:08:21,640 Speaker 9: Certainly, we left the pandemic with a lot of pent 152 00:08:21,760 --> 00:08:24,200 Speaker 9: up demand. There were some of that revenge travel phenomenon 153 00:08:24,240 --> 00:08:27,320 Speaker 9: going on, but beyond that, you ei, there's still we've 154 00:08:27,320 --> 00:08:31,120 Speaker 9: seen this across the industry's recover which include lodging, a 155 00:08:31,240 --> 00:08:36,319 Speaker 9: strong sustain appetite among North American consumers and global consumers 156 00:08:36,320 --> 00:08:40,559 Speaker 9: for a leisure travel combined with a relatively moderate benign 157 00:08:40,600 --> 00:08:42,960 Speaker 9: pace of supply growth in the industry. And that is 158 00:08:43,040 --> 00:08:46,079 Speaker 9: a recipe for what has been a very nice pace 159 00:08:46,080 --> 00:08:47,360 Speaker 9: of yield growth recovery. 160 00:08:47,880 --> 00:08:51,360 Speaker 1: And how has the industry changed, How have the ships changed, 161 00:08:51,679 --> 00:08:54,719 Speaker 1: the procedures, the safety protocols. 162 00:08:55,040 --> 00:08:58,880 Speaker 9: Safety protocols were big focus during the pandemic. A lot 163 00:08:58,920 --> 00:09:03,360 Speaker 9: of the voice civic restrictions, vaccines, masking, et cetera. Those 164 00:09:03,400 --> 00:09:05,439 Speaker 9: are now kind of in the past. But we're left 165 00:09:05,480 --> 00:09:08,600 Speaker 9: with an industry that's reattuned to some of these protocols. 166 00:09:08,840 --> 00:09:10,760 Speaker 9: And at the same time, you know what's happened to 167 00:09:10,800 --> 00:09:14,920 Speaker 9: companies like Carnival, they also during the pandemic sold less 168 00:09:14,920 --> 00:09:19,559 Speaker 9: efficient ships have also since then introduced new capacity. So 169 00:09:19,600 --> 00:09:23,520 Speaker 9: the industry from a fleet perspective has fairly current stated 170 00:09:23,520 --> 00:09:28,199 Speaker 9: the art capacity and certainly you know, good operating efficiencies, 171 00:09:28,240 --> 00:09:31,600 Speaker 9: cost efficiencies that really originated during. 172 00:09:31,400 --> 00:09:34,080 Speaker 1: The pandemic, and these ships are bigger than they've ever been. 173 00:09:34,240 --> 00:09:39,040 Speaker 1: They keep getting better, yes, more amenities, roller coasters and 174 00:09:39,320 --> 00:09:44,319 Speaker 1: surfing simulations I mean, and yet they're able to pack 175 00:09:44,520 --> 00:09:46,160 Speaker 1: these cruises in right. 176 00:09:46,240 --> 00:09:48,720 Speaker 9: Yeah, so these ships are more efficient from a fuel 177 00:09:48,720 --> 00:09:52,480 Speaker 9: consumption and operating perspective when they run full. But we've 178 00:09:52,480 --> 00:09:55,800 Speaker 9: definitely seen the combination of strong bookings and moderate supply 179 00:09:55,880 --> 00:09:59,080 Speaker 9: growth low single digits for Carnival the next few years 180 00:09:59,080 --> 00:10:01,600 Speaker 9: translate into good book and you do have on the 181 00:10:01,600 --> 00:10:04,160 Speaker 9: cost side, of course, some pressures from cost inflation and 182 00:10:04,720 --> 00:10:07,800 Speaker 9: advertising dry dout costs, So there are some pressures. There's 183 00:10:07,800 --> 00:10:10,400 Speaker 9: always the geopolitical risk, for example, the conflict in the 184 00:10:10,400 --> 00:10:13,480 Speaker 9: Middle East, you know, removing some capacity from the Red 185 00:10:13,480 --> 00:10:16,800 Speaker 9: Sea area, small part of their capacity, but generally speaking 186 00:10:16,840 --> 00:10:20,760 Speaker 9: they are now on a very attractive trajectory. 187 00:10:20,840 --> 00:10:21,000 Speaker 4: Yeah. 188 00:10:21,040 --> 00:10:23,920 Speaker 1: Also Haiti just very recently, Yeah, and they had redirect 189 00:10:23,960 --> 00:10:27,160 Speaker 1: ships away from a popular port there. Well, then let's 190 00:10:27,160 --> 00:10:29,880 Speaker 1: talk about Carnival and what you expect to see this Tuesday. 191 00:10:30,600 --> 00:10:33,480 Speaker 9: Sure, so our overall forecast for this is actually going 192 00:10:33,520 --> 00:10:36,280 Speaker 9: to be for their first fiscal quarter which ended February 193 00:10:36,320 --> 00:10:39,679 Speaker 9: twenty ninth. That they're on a November fiscal year the 194 00:10:39,679 --> 00:10:43,280 Speaker 9: February quarter. You know, we kind of go by the 195 00:10:43,320 --> 00:10:46,720 Speaker 9: consensus thinking as a benchmark, which is for revenue up 196 00:10:46,720 --> 00:10:50,920 Speaker 9: twenty two percent. The components or that are the revenue 197 00:10:51,040 --> 00:10:55,000 Speaker 9: yield metric is up about sixteen seventeen percent based on 198 00:10:55,040 --> 00:10:57,959 Speaker 9: their guidance, and capacities at four percent. So you kind 199 00:10:57,960 --> 00:11:01,120 Speaker 9: of add that together. You've got you've got pricing, you've 200 00:11:01,160 --> 00:11:05,200 Speaker 9: got low twenties kind of revenue growth based on consensus guidance. 201 00:11:05,679 --> 00:11:07,480 Speaker 1: And how does Carnival compare to some of the other 202 00:11:07,480 --> 00:11:10,600 Speaker 1: big players. There's Norwegian, Royal Caribbean, Disney of course. 203 00:11:10,720 --> 00:11:12,800 Speaker 9: Yeah, so I mean the way I kind of think 204 00:11:12,840 --> 00:11:14,840 Speaker 9: about how they compared to the rivals is when you 205 00:11:14,880 --> 00:11:18,280 Speaker 9: look at twenty twenty four overall, how does their revenue 206 00:11:18,320 --> 00:11:21,000 Speaker 9: yield growth expectation compared to those And you know, and 207 00:11:21,040 --> 00:11:25,480 Speaker 9: what we've seen right now is preliminarily Carnival expecting eight 208 00:11:25,520 --> 00:11:28,680 Speaker 9: and a half percent yuel growth. You know, that's pretty 209 00:11:28,679 --> 00:11:31,440 Speaker 9: similar to like Royal Caribbean actually just raise their guidance 210 00:11:31,880 --> 00:11:34,240 Speaker 9: for reals after they report of the quarter. So now 211 00:11:34,240 --> 00:11:37,320 Speaker 9: it's seven and a quarter percent roughly a midpoint. So 212 00:11:37,320 --> 00:11:40,600 Speaker 9: they're all kind of they're similarly looking for that mid 213 00:11:40,640 --> 00:11:44,360 Speaker 9: to high single digit rate of revenue yield improvement on 214 00:11:44,480 --> 00:11:47,240 Speaker 9: top of twenty three, which is a year where we 215 00:11:47,720 --> 00:11:51,680 Speaker 9: basically reverted back to pre pandemic levels of revenue yield. 216 00:11:51,800 --> 00:11:54,200 Speaker 9: So it's growth on top of that, which is which 217 00:11:54,240 --> 00:11:54,880 Speaker 9: is very healthy. 218 00:11:55,520 --> 00:11:58,800 Speaker 1: And for Carnival now we have we're in Q two right, 219 00:11:58,840 --> 00:12:02,360 Speaker 1: spring has sprung. Everyone's planning their trips for either spring 220 00:12:02,360 --> 00:12:04,960 Speaker 1: break or of course is this the time that they're 221 00:12:05,000 --> 00:12:06,200 Speaker 1: going to see their big bookings. 222 00:12:06,240 --> 00:12:08,240 Speaker 9: So the key part of the booking season, it's called 223 00:12:08,240 --> 00:12:10,880 Speaker 9: the wave season and the cruise industry both as a 224 00:12:10,880 --> 00:12:13,840 Speaker 9: pun on oceanic pun, but also because that's like the 225 00:12:13,880 --> 00:12:16,640 Speaker 9: crest wave in bookings we see that typically happens between 226 00:12:16,800 --> 00:12:20,360 Speaker 9: years and kind of like January February, all indications from 227 00:12:20,440 --> 00:12:23,640 Speaker 9: other companies as well as that booking season has been robust. 228 00:12:24,000 --> 00:12:27,280 Speaker 1: Wow well Carnival Cruise Lines reporting this Tuesday and our 229 00:12:27,320 --> 00:12:30,480 Speaker 1: thanks to Brian Egger, Senior Gaming and Lodging analysts at 230 00:12:30,520 --> 00:12:33,960 Speaker 1: Bloomberg Intelligence and coming up on Bloomberg day Break weekend, 231 00:12:34,000 --> 00:12:37,440 Speaker 1: the challenges for Europe's chocolate industry just ahead of the 232 00:12:37,440 --> 00:12:51,439 Speaker 1: Easter holiday. I'm Tom Busby, and this is Bloomberg. This 233 00:12:51,480 --> 00:12:53,920 Speaker 1: is Bloomberg day Break weekend, our global look ahead at 234 00:12:53,920 --> 00:12:56,520 Speaker 1: the top stories for investors in the coming week. I'm 235 00:12:56,600 --> 00:12:59,640 Speaker 1: Tom Busby in New York. Up later in our program, 236 00:12:59,679 --> 00:13:02,439 Speaker 1: earning this week from some of China's biggest banks and 237 00:13:02,520 --> 00:13:05,880 Speaker 1: that nation's biggest ev maker. But first, it's one of 238 00:13:05,880 --> 00:13:08,760 Speaker 1: the biggest events of the year in the chocolate industry. 239 00:13:09,120 --> 00:13:12,520 Speaker 1: Easter means big business in the UK alone, Consumers will 240 00:13:12,559 --> 00:13:15,800 Speaker 1: spend as much as four hundred and fifteen million pounds 241 00:13:16,160 --> 00:13:19,640 Speaker 1: on festive chocolate this season, but this year, soaring cocoa 242 00:13:19,640 --> 00:13:22,840 Speaker 1: prices are threatening to push prices even higher. So what 243 00:13:22,880 --> 00:13:25,840 Speaker 1: will this mean for Europe's confectionery sector. Well, for more, 244 00:13:26,160 --> 00:13:28,520 Speaker 1: let's go to London and bring in Bloomberg Daybreak europe 245 00:13:28,520 --> 00:13:30,840 Speaker 1: banker Caroline hepgar Tom. 246 00:13:30,960 --> 00:13:35,080 Speaker 2: A difficult harvest season for crucial West African farmers has 247 00:13:35,080 --> 00:13:38,199 Speaker 2: seen cocoa prices shoot up by more than one hundred 248 00:13:38,240 --> 00:13:42,320 Speaker 2: percent this year, raising costs for the world's chocolate makers 249 00:13:42,600 --> 00:13:46,280 Speaker 2: that risk being passed on to consumers. The record breaking 250 00:13:46,360 --> 00:13:50,600 Speaker 2: rally has sent Coco's a fourteen day relative strength index 251 00:13:50,640 --> 00:13:54,280 Speaker 2: above seventy percent. This is a signal to some that 252 00:13:54,400 --> 00:13:57,960 Speaker 2: prices may have jumped too fast, but that has been 253 00:13:58,000 --> 00:14:01,240 Speaker 2: the case several times since January, and cocoa prices are 254 00:14:01,280 --> 00:14:04,240 Speaker 2: still climbing higher now ahead of one of the biggest 255 00:14:04,320 --> 00:14:09,120 Speaker 2: days on the calendar for chocolate consumption. Global supplies are stretched, 256 00:14:09,440 --> 00:14:12,600 Speaker 2: with farmers skeptical that incoming rain can make up for 257 00:14:12,640 --> 00:14:16,400 Speaker 2: a season decimated by hot and dry weather in the 258 00:14:16,440 --> 00:14:21,560 Speaker 2: most important cocoa producing regions. Bloomberg's opinion columnist Javier blast 259 00:14:21,560 --> 00:14:24,600 Speaker 2: says that he's been stocking up on sweet treats in 260 00:14:24,640 --> 00:14:26,880 Speaker 2: anticipation of a shortage. 261 00:14:27,240 --> 00:14:29,960 Speaker 10: I'm a stockpilings on chocolate because we eat quite a 262 00:14:30,000 --> 00:14:33,720 Speaker 10: lot at home, must confess that. And the price of 263 00:14:33,760 --> 00:14:35,880 Speaker 10: coco is app one hundred and fifty percent. You make 264 00:14:35,960 --> 00:14:38,840 Speaker 10: chocolate out of coco, a bit of sugar, a bit 265 00:14:38,880 --> 00:14:42,359 Speaker 10: of milk. Prices of chocolate on the on the supermarket, 266 00:14:42,440 --> 00:14:45,800 Speaker 10: it's gonna go up and go up quite significantly over 267 00:14:45,800 --> 00:14:49,920 Speaker 10: the next six months. The market for coco is facing 268 00:14:50,000 --> 00:14:55,960 Speaker 10: a structural deficit. Supply is well behind the demand. Probably 269 00:14:56,000 --> 00:14:59,840 Speaker 10: the gap between demand and production is going to be 270 00:14:59,840 --> 00:15:02,800 Speaker 10: in twenty twenty four. The largacy has been at least 271 00:15:02,800 --> 00:15:06,200 Speaker 10: in sixty five years. So we have a problem and 272 00:15:06,240 --> 00:15:09,600 Speaker 10: the only cure for the market right now is higher prices, 273 00:15:09,640 --> 00:15:11,440 Speaker 10: or we have going to see a bit of higher 274 00:15:11,560 --> 00:15:16,040 Speaker 10: prices in the supermarket. So I'm just anticipating from that. 275 00:15:16,040 --> 00:15:20,240 Speaker 2: That was Bloomberg opinion columnist Javier Blast sharing his perspective 276 00:15:20,280 --> 00:15:23,200 Speaker 2: there now. He might just be right to suggest that 277 00:15:23,240 --> 00:15:25,720 Speaker 2: things will get even worse before they get better. In 278 00:15:25,760 --> 00:15:28,880 Speaker 2: the Ivory Coast, the world's biggest cocoa producer in the world, 279 00:15:29,280 --> 00:15:33,560 Speaker 2: cocoa farmers are busy cleaning their plantations, applying chemicals and 280 00:15:33,600 --> 00:15:38,480 Speaker 2: pruning trees in preparations for the mid crop harvest, clinging 281 00:15:38,520 --> 00:15:41,560 Speaker 2: onto the hope that better weather can make up for 282 00:15:41,600 --> 00:15:44,600 Speaker 2: the losses that they've seen. We've been covering this story 283 00:15:44,640 --> 00:15:47,760 Speaker 2: closely at Bloomberg, and our analysis has shown that the 284 00:15:47,840 --> 00:15:51,600 Speaker 2: coco crisis is being felt the most here in Europe, 285 00:15:51,840 --> 00:15:56,080 Speaker 2: which is also the world's biggest chocolate consuming region, because 286 00:15:56,160 --> 00:15:58,880 Speaker 2: of new sustainability rules which are threatening to make the 287 00:15:58,960 --> 00:16:03,640 Speaker 2: shortage of beans even worse. EU regulations aimed at stopping 288 00:16:03,680 --> 00:16:08,680 Speaker 2: products which could harm forests iedforestation from being sold in 289 00:16:08,760 --> 00:16:12,080 Speaker 2: shops here could make it even harder for chocolate makers 290 00:16:12,080 --> 00:16:15,840 Speaker 2: to secure the supplies that they need, and it looks 291 00:16:15,880 --> 00:16:17,840 Speaker 2: like the jump in prices is here to stay. The 292 00:16:17,880 --> 00:16:23,440 Speaker 2: International Cocoa Organization projected that global cocoa supply deficits would 293 00:16:23,520 --> 00:16:28,000 Speaker 2: increase by four hundred and five percent in the years ahead. 294 00:16:28,160 --> 00:16:33,120 Speaker 2: This as climate change only heightens the threat to cocoa production. Now, 295 00:16:33,160 --> 00:16:35,440 Speaker 2: all of these challenges in production are likely to have 296 00:16:35,440 --> 00:16:38,440 Speaker 2: a knock on effect on consumers hoping to snag a 297 00:16:38,520 --> 00:16:42,080 Speaker 2: sweet treat this Easter. Manufacturers could be forced to increase 298 00:16:42,120 --> 00:16:46,760 Speaker 2: prices and shrink production, as well as diversify away from 299 00:16:46,840 --> 00:16:50,840 Speaker 2: chocolate products. In retail terms, there's set to be little 300 00:16:50,880 --> 00:16:54,320 Speaker 2: price difference actually between some of the luxury chocolate products 301 00:16:54,640 --> 00:16:58,800 Speaker 2: and their traditionally more budget friendly counterparts. Is something I've 302 00:16:58,800 --> 00:17:02,920 Speaker 2: been talking to our Bloomberg Commodities reporter Mumbig Guitar About 303 00:17:03,320 --> 00:17:08,440 Speaker 2: and retail reporter Helen Chandler wild Now. I began by 304 00:17:08,480 --> 00:17:12,359 Speaker 2: asking Mumbie how bad the situation is for coco producers 305 00:17:12,440 --> 00:17:12,960 Speaker 2: right now? 306 00:17:13,240 --> 00:17:16,919 Speaker 11: I think, let's first a later base here. In just 307 00:17:17,200 --> 00:17:20,800 Speaker 11: less than three months, cocoa futures have doubled. So we 308 00:17:20,880 --> 00:17:24,280 Speaker 11: started the year at four thousand dollars a ton, and 309 00:17:24,440 --> 00:17:27,080 Speaker 11: right now we are above eight thousand dollars a ton, 310 00:17:27,359 --> 00:17:29,800 Speaker 11: and all this is because of the cocoa production issues 311 00:17:29,840 --> 00:17:32,439 Speaker 11: that we have in every Cost and Ghana. These are 312 00:17:32,480 --> 00:17:35,399 Speaker 11: the two biggest coco producers. 313 00:17:34,840 --> 00:17:35,240 Speaker 3: In the world. 314 00:17:35,280 --> 00:17:38,800 Speaker 11: They produced two thousand of global production, so any declines 315 00:17:38,840 --> 00:17:42,680 Speaker 11: in those two countries will be felt globally. Ghana alone 316 00:17:42,680 --> 00:17:44,840 Speaker 11: will have a drop of about twenty percent, and so 317 00:17:44,960 --> 00:17:47,359 Speaker 11: we livery cost and we are seeing that in the 318 00:17:47,440 --> 00:17:51,040 Speaker 11: export and arrivals data that we are getting. So production 319 00:17:51,160 --> 00:17:55,080 Speaker 11: has been pretty disappointing. I don't think the industry expected 320 00:17:55,160 --> 00:17:57,639 Speaker 11: it to be this disappointing, and that's why we are 321 00:17:57,640 --> 00:18:00,919 Speaker 11: seeing the market rally this much. Because of that, we 322 00:18:00,960 --> 00:18:03,960 Speaker 11: are going to have a third year of coco deficit. 323 00:18:04,119 --> 00:18:05,880 Speaker 11: And we love our chocolate too much. 324 00:18:06,920 --> 00:18:10,920 Speaker 2: Yes, absolutely, Why have we seen such a radical move 325 00:18:11,000 --> 00:18:13,000 Speaker 2: and prices? Is it all around weather? 326 00:18:13,920 --> 00:18:17,480 Speaker 11: Yes, it's all around weather and also diseases. But also 327 00:18:17,520 --> 00:18:20,240 Speaker 11: we know that farmers have not been well paid for 328 00:18:20,280 --> 00:18:22,879 Speaker 11: a really long time. If you're not well paid, then 329 00:18:22,920 --> 00:18:25,800 Speaker 11: you don't have the incentive to invest back into your farm, 330 00:18:25,840 --> 00:18:28,640 Speaker 11: and so they've not pretty much taken care of their 331 00:18:28,640 --> 00:18:32,520 Speaker 11: farms or invested in fertilizers, Okay, because I needed to 332 00:18:32,600 --> 00:18:36,199 Speaker 11: keep the diseases at bay. But also the weather change 333 00:18:36,280 --> 00:18:40,720 Speaker 11: has made it incredibly difficult for those trees to remain resilient. 334 00:18:41,760 --> 00:18:46,040 Speaker 2: So that's the baseline that producer prices are going up, 335 00:18:46,080 --> 00:18:48,840 Speaker 2: farmers prices are going up. How much more expensive do 336 00:18:48,880 --> 00:18:51,480 Speaker 2: you think a chocolate is going to get for the consumer? 337 00:18:52,520 --> 00:18:55,280 Speaker 11: So the chocolate that you're currently seeing on the shelf 338 00:18:55,800 --> 00:18:59,880 Speaker 11: was probably manufactured sometime towards the end of last year 339 00:19:00,200 --> 00:19:03,359 Speaker 11: when prices were still very low. So we may see 340 00:19:03,359 --> 00:19:06,639 Speaker 11: some increments in chocolate prices given just the rally that 341 00:19:06,680 --> 00:19:09,360 Speaker 11: we saw last year. But I think more pain will 342 00:19:09,400 --> 00:19:12,119 Speaker 11: come towards the end of this year when you're buying 343 00:19:12,160 --> 00:19:15,320 Speaker 11: your hallow in chocolate, when you're buying your Christmas chocolate, 344 00:19:15,400 --> 00:19:18,160 Speaker 11: and next year's Easter, because we have to take their 345 00:19:18,600 --> 00:19:22,200 Speaker 11: account the doubling of prices just between January and match. 346 00:19:22,480 --> 00:19:25,359 Speaker 11: So as much as it will be expensive this time, 347 00:19:25,880 --> 00:19:28,719 Speaker 11: I think the pain will be felt much more towards 348 00:19:28,760 --> 00:19:29,560 Speaker 11: the end of the year. 349 00:19:29,800 --> 00:19:33,400 Speaker 2: And then also you've written about how perhaps the effects 350 00:19:33,400 --> 00:19:35,639 Speaker 2: of the shortage are going to be more pronounced in 351 00:19:35,680 --> 00:19:37,360 Speaker 2: Europe than elsewhere why. 352 00:19:37,400 --> 00:19:40,760 Speaker 11: And Europe tends to be very responsible when it comes 353 00:19:40,800 --> 00:19:45,760 Speaker 11: to be to its imports. So they have this European 354 00:19:45,800 --> 00:19:50,440 Speaker 11: deforestation law that's going to make it difficult for Importance 355 00:19:50,480 --> 00:19:52,879 Speaker 11: to bring in coco. They have to make sure that 356 00:19:52,960 --> 00:19:55,199 Speaker 11: the cocoa that they bring in was not grown on 357 00:19:55,280 --> 00:19:58,399 Speaker 11: deforested land. Now, to make sure and to prove to 358 00:19:58,440 --> 00:20:00,880 Speaker 11: the ear that it wasn't grown on first that land, 359 00:20:01,119 --> 00:20:05,240 Speaker 11: they need to map every single farmer. So every shipment 360 00:20:05,280 --> 00:20:08,359 Speaker 11: that arrives at the EU ports has to be traceable 361 00:20:08,560 --> 00:20:10,760 Speaker 11: back to the farm. If you can't trace it back 362 00:20:10,760 --> 00:20:12,680 Speaker 11: to the farm, you can't bring it to the EU. 363 00:20:12,920 --> 00:20:16,600 Speaker 2: Okay, So there's a price to that to consumers then, 364 00:20:16,680 --> 00:20:19,760 Speaker 2: isn't there? Yes, in terms of quality standards I suppose 365 00:20:19,760 --> 00:20:22,960 Speaker 2: and traceability. Do you think the cocoa futures are likely 366 00:20:23,080 --> 00:20:24,080 Speaker 2: to stay high? 367 00:20:24,200 --> 00:20:24,320 Speaker 5: Then? 368 00:20:24,359 --> 00:20:27,560 Speaker 2: And if you say the feed through to consume prices 369 00:20:27,600 --> 00:20:31,800 Speaker 2: hasn't actually yet hit, what about the future's market. 370 00:20:31,160 --> 00:20:35,200 Speaker 11: Because the future market actually looks at deliveries in the future. 371 00:20:35,640 --> 00:20:38,520 Speaker 11: I think we I wouldn't say whether we've picked or not. 372 00:20:38,680 --> 00:20:40,879 Speaker 11: I don't have the crystal ball. It's had to see. 373 00:20:41,119 --> 00:20:44,080 Speaker 11: But in such a volatile market will probably continue to 374 00:20:44,080 --> 00:20:47,000 Speaker 11: see the wild swings that we've been seeing, so we'll 375 00:20:47,000 --> 00:20:49,400 Speaker 11: see another shoot and then we might see a correction 376 00:20:49,520 --> 00:20:53,040 Speaker 11: at some point. But if these shortages persist, it's going 377 00:20:53,080 --> 00:20:55,760 Speaker 11: to take some time before these coco prices come down. 378 00:20:56,000 --> 00:20:59,359 Speaker 2: Okay, and then what does it mean. I suppose for 379 00:20:59,440 --> 00:21:02,280 Speaker 2: others in the manufacturing chain along. 380 00:21:02,040 --> 00:21:06,199 Speaker 11: The line right now, they are trying to increase the 381 00:21:06,280 --> 00:21:10,240 Speaker 11: prices for your chocolate just so that they can absorb 382 00:21:10,440 --> 00:21:13,000 Speaker 11: that part of the cost, and consumers can absorb part 383 00:21:13,040 --> 00:21:15,520 Speaker 11: of that cost. But they're also paying so much for 384 00:21:15,600 --> 00:21:19,679 Speaker 11: coco lasts. Yesterday we ran a story about grinder in 385 00:21:19,760 --> 00:21:23,159 Speaker 11: Asia who's paying a premium just to get the cocoa beans. 386 00:21:23,280 --> 00:21:26,399 Speaker 11: So there's a scramble among manufacturers for who can pay 387 00:21:26,720 --> 00:21:30,440 Speaker 11: more for cocoa, particularly in markets that are more liberalized. 388 00:21:30,480 --> 00:21:33,800 Speaker 11: But you may start to see some manufacturers push to 389 00:21:33,840 --> 00:21:38,200 Speaker 11: you some white chocolates or chocolate, it's more nuts and 390 00:21:38,600 --> 00:21:41,240 Speaker 11: fruit so that they can try and bring down their 391 00:21:41,520 --> 00:21:42,480 Speaker 11: coco consumption. 392 00:21:43,119 --> 00:21:47,000 Speaker 2: Interesting. Let me bring in Helen Chandler World now to 393 00:21:47,320 --> 00:21:50,119 Speaker 2: the conversation. So we've heard a little bit about the 394 00:21:50,200 --> 00:21:54,200 Speaker 2: cocoa issues and prices having sowed in recent months. How 395 00:21:54,240 --> 00:21:56,879 Speaker 2: expensive do you think chocolate is going to get for 396 00:21:56,920 --> 00:21:58,760 Speaker 2: the end consumer, Helen See. 397 00:21:58,840 --> 00:22:01,000 Speaker 12: I think, as we're just here, there will probably be 398 00:22:01,040 --> 00:22:03,760 Speaker 12: a slight delay on prices increasing just because of the 399 00:22:03,760 --> 00:22:06,320 Speaker 12: amount of time that takes actually make the chocolate, which 400 00:22:06,520 --> 00:22:09,720 Speaker 12: does take a little bit of time. But we have 401 00:22:09,880 --> 00:22:12,000 Speaker 12: seen that already. There was a bit of research in 402 00:22:12,040 --> 00:22:14,840 Speaker 12: the growser that showed that a lot of Easter eggs 403 00:22:14,840 --> 00:22:16,840 Speaker 12: at the lower end of the market were already fifty 404 00:22:16,880 --> 00:22:19,639 Speaker 12: percent more expensive than the work last year, which just 405 00:22:19,720 --> 00:22:23,520 Speaker 12: sort of rise almost about the same amount as Coto prices. 406 00:22:23,840 --> 00:22:25,919 Speaker 2: What do you think is going to happen then to 407 00:22:26,000 --> 00:22:28,840 Speaker 2: the marketing of I mean, we started talking about chocolate 408 00:22:28,880 --> 00:22:32,760 Speaker 2: for Easter, so in terms of you know, affordable versus luxury, 409 00:22:32,800 --> 00:22:34,520 Speaker 2: what does the market look like then. 410 00:22:34,440 --> 00:22:37,720 Speaker 12: This Easter well, and the price increases I think will 411 00:22:37,760 --> 00:22:39,880 Speaker 12: actually be predominantly in the lower end of the market 412 00:22:39,920 --> 00:22:42,679 Speaker 12: where there's like almost no profit margin in the first place. 413 00:22:42,800 --> 00:22:45,840 Speaker 12: Whereas I spoke to some more luxury producers, no telling me. 414 00:22:46,200 --> 00:22:48,639 Speaker 12: We've always paid our farmers a lot of money, so 415 00:22:48,640 --> 00:22:50,760 Speaker 12: there's always been that extra bit of margin there, so 416 00:22:50,920 --> 00:22:53,800 Speaker 12: the price increase won't be quite as much, but we're seeing, 417 00:22:53,840 --> 00:22:55,440 Speaker 12: like you know, some Easter eggs and sort of lower 418 00:22:55,480 --> 00:22:58,480 Speaker 12: end of the market like Cadbury. I love it, it's delicious, 419 00:22:58,520 --> 00:23:01,439 Speaker 12: but some of those eggsert now ten pounds, which is 420 00:23:01,680 --> 00:23:03,359 Speaker 12: quite a lot of money compared to what they used 421 00:23:03,400 --> 00:23:06,320 Speaker 12: to be, So then it might feel a bit worse 422 00:23:06,359 --> 00:23:08,840 Speaker 12: it to spash out twenty pounds and get something that's 423 00:23:09,000 --> 00:23:10,520 Speaker 12: about a thousand times nicer. 424 00:23:10,880 --> 00:23:13,040 Speaker 2: So do you think a more expensive chocolate then is 425 00:23:13,040 --> 00:23:15,959 Speaker 2: now the new norm? As the industry accepted. 426 00:23:15,440 --> 00:23:17,520 Speaker 12: That well, I was speaking to some people who are 427 00:23:17,520 --> 00:23:20,119 Speaker 12: making Easter eggs really at the top lux end of 428 00:23:20,280 --> 00:23:23,080 Speaker 12: market where they are charging eighty or ninety pounds for 429 00:23:23,160 --> 00:23:26,760 Speaker 12: an Easter egg, which might sound crazy, but if things 430 00:23:26,920 --> 00:23:30,159 Speaker 12: are generally more expensive anyway, then ninety pounds on the 431 00:23:30,200 --> 00:23:32,640 Speaker 12: Easter egg is much cheaper than going on holiday, which 432 00:23:32,680 --> 00:23:35,199 Speaker 12: might be totally out of your budget. But having that 433 00:23:35,200 --> 00:23:37,400 Speaker 12: little spurgeon an East egg might be just a nice 434 00:23:37,440 --> 00:23:37,920 Speaker 12: little treat. 435 00:23:38,920 --> 00:23:42,879 Speaker 2: Absolutely. How important then is that kind of marketing factor 436 00:23:43,560 --> 00:23:47,320 Speaker 2: in terms of the coco producers and b the big 437 00:23:47,400 --> 00:23:49,879 Speaker 2: push I mean, is it all around certain dates in 438 00:23:49,920 --> 00:23:54,160 Speaker 2: the calendar? Is obviously a hugely popular item in Europe. 439 00:23:55,160 --> 00:24:00,320 Speaker 11: That's usually mainly on the manufacturer side of things, having 440 00:24:00,359 --> 00:24:03,280 Speaker 11: a calendar of events. So we started with Christmas, then 441 00:24:03,359 --> 00:24:06,399 Speaker 11: we had Valentine's, then we had Mother's Day, then we 442 00:24:06,480 --> 00:24:10,320 Speaker 11: had Easter. So the idea is to have chocolate for 443 00:24:10,400 --> 00:24:14,520 Speaker 11: every single event that we have across the ears. As 444 00:24:14,560 --> 00:24:16,600 Speaker 11: long as we have an event coming up, you're more 445 00:24:16,680 --> 00:24:18,200 Speaker 11: likely to buy chocolate as a gift. 446 00:24:18,760 --> 00:24:21,480 Speaker 2: Helen, what are you detecting then in the trends this 447 00:24:21,600 --> 00:24:25,880 Speaker 2: year for the chocolate distributors, Yeah. 448 00:24:25,680 --> 00:24:28,359 Speaker 12: There definitely is a move towards kind of differentiating a 449 00:24:28,400 --> 00:24:30,720 Speaker 12: product a lot more. I see even in my own 450 00:24:30,720 --> 00:24:34,560 Speaker 12: local supermarket, there's fear of the traditional miniac or moltias 451 00:24:34,560 --> 00:24:38,000 Speaker 12: as Easter eggs. Now even Cabria has started doing slightly 452 00:24:38,040 --> 00:24:40,440 Speaker 12: fancier ones with different ones, and then higher up the 453 00:24:40,480 --> 00:24:44,679 Speaker 12: bracket they get extremely decorative and beautiful and it's always 454 00:24:44,680 --> 00:24:46,159 Speaker 12: a thing you know, you can take a picture of 455 00:24:46,160 --> 00:24:48,320 Speaker 12: and shout out social media which sort of does its 456 00:24:48,320 --> 00:24:49,359 Speaker 12: own marketing as well. 457 00:24:49,680 --> 00:24:53,480 Speaker 2: So that was Bloomberg reporters Helen Chandler Wild and Mumbi 458 00:24:53,560 --> 00:24:57,240 Speaker 2: Guitu speaking to me about the situation for cocoa farmers, 459 00:24:57,280 --> 00:25:01,240 Speaker 2: producers and the retailers here in your my thanks to them. 460 00:25:01,560 --> 00:25:03,560 Speaker 2: I'm Caroline Hebge here in London. You can catch us 461 00:25:03,560 --> 00:25:06,560 Speaker 2: every weekday morning for Bloomberg Daybreak. Youre at beginning at 462 00:25:06,600 --> 00:25:10,479 Speaker 2: six am in London. That's one am on Wall Street. Tom. 463 00:25:10,800 --> 00:25:13,760 Speaker 1: Thank you Caroline, and coming up on Bloomberg day Break weekend. 464 00:25:13,800 --> 00:25:16,639 Speaker 1: Earnings this week from the biggest EV maker in the 465 00:25:16,680 --> 00:25:21,880 Speaker 1: world's biggest EV market. Also earnings from China's megabanks. I'm 466 00:25:21,920 --> 00:25:35,280 Speaker 1: Tom Busby and this is Bloomberg. Good day to you. 467 00:25:35,359 --> 00:25:38,119 Speaker 1: This is Bloomberg day Break weekend. I'm Tom Busby and 468 00:25:38,200 --> 00:25:40,280 Speaker 1: New York with your global look ahead at the top 469 00:25:40,320 --> 00:25:43,840 Speaker 1: stories for investors in the coming week. Chinese megabanks set 470 00:25:43,880 --> 00:25:47,280 Speaker 1: to release earnings this week amid sluggish borrowing demand, a 471 00:25:47,440 --> 00:25:51,840 Speaker 1: stalled property market, and a stagnant overall economy. We also 472 00:25:51,840 --> 00:25:55,960 Speaker 1: get the latest earnings from Chinese ev giant BYD this week, 473 00:25:56,280 --> 00:25:58,359 Speaker 1: and for more on what to expect, we turned to 474 00:25:58,359 --> 00:26:01,160 Speaker 1: Bloomberg Daybreak co host Brian Curtis. 475 00:26:01,560 --> 00:26:04,040 Speaker 3: Tom. The results come at a critical juncture in the 476 00:26:04,200 --> 00:26:07,440 Speaker 3: EV industry, both in China and around the rest of 477 00:26:07,480 --> 00:26:11,600 Speaker 3: the world. BYD recently overtook Tesla as the number one 478 00:26:11,680 --> 00:26:15,119 Speaker 3: seller of EV's, but it's having to cut prices and 479 00:26:15,200 --> 00:26:19,200 Speaker 3: it's facing geopolitical challenges for its business outside of China. 480 00:26:19,680 --> 00:26:21,760 Speaker 3: We thought it was a good time to crunch through 481 00:26:21,800 --> 00:26:24,720 Speaker 3: some of these issues as we look forward to Byde's 482 00:26:24,800 --> 00:26:28,360 Speaker 3: numbers and its commentary. Joining us now in our studios 483 00:26:28,400 --> 00:26:31,439 Speaker 3: in Hong Kong is Bloomberg reporter Linda lu who covers 484 00:26:31,560 --> 00:26:35,520 Speaker 3: China cars. So Linda B. White's stock is up more 485 00:26:35,600 --> 00:26:38,359 Speaker 3: than fifteen percent or so over the past month, but 486 00:26:38,440 --> 00:26:42,120 Speaker 3: it had declined for the previous six months. A lot 487 00:26:42,119 --> 00:26:44,920 Speaker 3: of factors are at play in this, but let's talk 488 00:26:44,960 --> 00:26:49,560 Speaker 3: first about what we might see in sales and profit numbers. 489 00:26:49,240 --> 00:26:50,040 Speaker 8: In the next week. 490 00:26:50,240 --> 00:26:54,000 Speaker 13: Yeah. Byde is actually doing really well in sales. They've 491 00:26:54,040 --> 00:26:58,240 Speaker 13: broken records, and that shows a trend of China's growing 492 00:26:58,440 --> 00:27:01,879 Speaker 13: EV markets. But the unfortunate thing is part of that 493 00:27:02,000 --> 00:27:05,880 Speaker 13: sales was probably propelled by discounts that bid has had 494 00:27:05,880 --> 00:27:09,640 Speaker 13: to do due to such an intense competition in this market. 495 00:27:10,240 --> 00:27:14,280 Speaker 13: So despite a record sales in the fourth quarter of 496 00:27:14,400 --> 00:27:18,399 Speaker 13: last year, their net income actually fell compared to the 497 00:27:18,480 --> 00:27:19,240 Speaker 13: quarter before that. 498 00:27:19,560 --> 00:27:22,159 Speaker 3: Yeah, the price war seems to be hurting margins for 499 00:27:22,280 --> 00:27:26,199 Speaker 3: all of the EV makers in China. I'm curious in 500 00:27:26,240 --> 00:27:30,040 Speaker 3: a sense is that good or bad for BYD, particularly 501 00:27:30,080 --> 00:27:31,840 Speaker 3: from a standpoint of market share. 502 00:27:32,520 --> 00:27:35,720 Speaker 13: So BYD is still very dominant in the market. They 503 00:27:35,800 --> 00:27:40,359 Speaker 13: probably account for around thirty percent of all of the 504 00:27:40,400 --> 00:27:43,679 Speaker 13: evs and plug and hybrids sold in this market. But 505 00:27:43,880 --> 00:27:47,760 Speaker 13: overall the growth is slowing. You've got a weakening economy 506 00:27:47,920 --> 00:27:51,680 Speaker 13: in China, and there's more than one hundred brands that's 507 00:27:51,960 --> 00:27:54,520 Speaker 13: all competing in this market, and some of them are 508 00:27:54,600 --> 00:27:59,240 Speaker 13: trying to differentiate themselves with better technology advanced assists. The 509 00:27:59,320 --> 00:28:03,600 Speaker 13: driving feature is that BIDS isn't so strong, and so 510 00:28:03,720 --> 00:28:07,440 Speaker 13: they're also investing a lot to catch up in technology features. 511 00:28:07,720 --> 00:28:10,480 Speaker 3: So this move to a mass market lineup, I'm curious 512 00:28:10,720 --> 00:28:14,760 Speaker 3: the impact of that. That's lower retail prices. It might 513 00:28:14,800 --> 00:28:18,040 Speaker 3: suggest to some that the company is kind of shooting 514 00:28:18,160 --> 00:28:20,560 Speaker 3: for increasing its market share and just going for a 515 00:28:20,600 --> 00:28:21,280 Speaker 3: lot of volume. 516 00:28:21,480 --> 00:28:25,600 Speaker 13: That's exactly right. Some of these new lineups have pricing 517 00:28:25,840 --> 00:28:30,800 Speaker 13: that's probably half of what these models we're selling a 518 00:28:30,840 --> 00:28:34,399 Speaker 13: few or a couple of years before. Obviously, that's a 519 00:28:34,440 --> 00:28:36,000 Speaker 13: really good thing for consumers. 520 00:28:36,040 --> 00:28:36,280 Speaker 9: Now. 521 00:28:36,480 --> 00:28:38,800 Speaker 13: If you're in the market today looking to buy a car. 522 00:28:38,880 --> 00:28:42,480 Speaker 13: You're getting a great deal. But we've heard previous owners 523 00:28:42,480 --> 00:28:44,560 Speaker 13: that bought a BYD car a couple of years ago 524 00:28:44,720 --> 00:28:47,080 Speaker 13: complaining that, you know, they bought a car at a 525 00:28:47,120 --> 00:28:50,200 Speaker 13: higher pricing with features that are not as new and 526 00:28:50,320 --> 00:28:53,640 Speaker 13: flashy as the cars that's on the market now. So 527 00:28:53,920 --> 00:28:58,280 Speaker 13: I think BYD is having to consider the sustainability of 528 00:28:58,320 --> 00:29:00,080 Speaker 13: such a strategy over the long. 529 00:29:00,920 --> 00:29:05,080 Speaker 3: Bid has some presence in Europe, and the cost structure 530 00:29:05,120 --> 00:29:07,800 Speaker 3: there is kind of interesting, and it's been more or 531 00:29:07,880 --> 00:29:10,200 Speaker 3: less locked out of the US market. And we've been 532 00:29:10,240 --> 00:29:12,800 Speaker 3: reporting at Bloomberg that BYD is now looking into the 533 00:29:12,840 --> 00:29:16,440 Speaker 3: possibility of building a plant in Mexico and then perhaps 534 00:29:16,600 --> 00:29:19,760 Speaker 3: making cars there. It'll take some time for that to happen, 535 00:29:20,120 --> 00:29:23,320 Speaker 3: and then be able to use the MCA to get 536 00:29:23,400 --> 00:29:27,160 Speaker 3: cars into the United States and avoid the high punishing 537 00:29:27,240 --> 00:29:30,680 Speaker 3: tariff levels. What do we know, if anything, about any 538 00:29:30,720 --> 00:29:33,760 Speaker 3: progress on finding a site and thinking about building a 539 00:29:33,800 --> 00:29:34,600 Speaker 3: factory in Mexico. 540 00:29:34,840 --> 00:29:38,760 Speaker 13: That's a strategy that's taken by quite a few Chinese 541 00:29:38,800 --> 00:29:42,960 Speaker 13: manufacturers now, not just BYD. We've heard that Tesla is 542 00:29:43,480 --> 00:29:49,920 Speaker 13: also encouraging its Chinese suppliers to follow along to Mexico. 543 00:29:50,040 --> 00:29:53,520 Speaker 13: When the plants is built there. I think BYD will 544 00:29:53,520 --> 00:29:57,960 Speaker 13: really have to consider quite a few factors over where 545 00:29:58,000 --> 00:30:00,160 Speaker 13: to set up a Mexico That will obviously have to 546 00:30:00,200 --> 00:30:03,560 Speaker 13: consider what kind of incentives the local government will give, 547 00:30:04,240 --> 00:30:07,240 Speaker 13: whether it is a good supply chain that can be 548 00:30:07,880 --> 00:30:10,360 Speaker 13: also set up in the local area to make it 549 00:30:10,400 --> 00:30:13,680 Speaker 13: really cost efficient, and ultimately I think a lot will 550 00:30:13,720 --> 00:30:16,280 Speaker 13: depend on the US policy in the future. Trump has 551 00:30:16,320 --> 00:30:19,400 Speaker 13: talked about, you know, closing loopholes. A lot of things 552 00:30:19,440 --> 00:30:23,120 Speaker 13: to consider before they ultimately make that huge investment into 553 00:30:23,120 --> 00:30:23,880 Speaker 13: building a plant. 554 00:30:24,080 --> 00:30:26,560 Speaker 3: On another front, the company is looking to introduce some 555 00:30:26,600 --> 00:30:30,280 Speaker 3: new models in Japan and will expand its dealership there, 556 00:30:30,520 --> 00:30:34,080 Speaker 3: but that's very tough competition there. The market is saturated 557 00:30:34,120 --> 00:30:37,680 Speaker 3: by hybrids and domestic brands. What's the overall strategy for 558 00:30:37,800 --> 00:30:38,760 Speaker 3: BYD in Japan? 559 00:30:39,480 --> 00:30:44,720 Speaker 13: Japan is a very interesting market, especially challenging for BYD. 560 00:30:45,000 --> 00:30:48,280 Speaker 13: Like you said, it's got a lot of strong incumbents. 561 00:30:48,360 --> 00:30:51,520 Speaker 13: You know, some of the world's biggest automakers are there, 562 00:30:51,600 --> 00:30:56,200 Speaker 13: like Toyota, and the market preference in Japan is for hybrids, 563 00:30:56,280 --> 00:31:00,760 Speaker 13: which BYD doesn't have that strong an offering. They're really 564 00:31:00,840 --> 00:31:04,520 Speaker 13: hoping to educate the customers in Japan, maybe hoping to 565 00:31:04,680 --> 00:31:08,160 Speaker 13: really tempt them to try out EV's and maybe plug 566 00:31:08,200 --> 00:31:10,800 Speaker 13: in hybrids to show that, you know, there are these 567 00:31:10,840 --> 00:31:14,200 Speaker 13: even more environmentally friendly cars that could be cheaper to 568 00:31:14,280 --> 00:31:17,719 Speaker 13: run if you just power them on electricity rather than 569 00:31:17,800 --> 00:31:20,640 Speaker 13: hybrids which is still running on gasoline. 570 00:31:20,680 --> 00:31:24,680 Speaker 3: Yeah, so maybe some tough sledding there. I mentioned Europe earlier. 571 00:31:24,760 --> 00:31:29,040 Speaker 3: We're still waiting on that probe looking at electric vehicles 572 00:31:29,120 --> 00:31:32,000 Speaker 3: coming from China. What do we know about when do you 573 00:31:32,040 --> 00:31:32,520 Speaker 3: expect that. 574 00:31:32,960 --> 00:31:37,120 Speaker 13: There's a lot of questions about when the investigation may 575 00:31:37,160 --> 00:31:39,280 Speaker 13: wrap up and the result from that. I think the 576 00:31:39,360 --> 00:31:44,200 Speaker 13: consensus is that there will probably be higher tariffs against 577 00:31:44,320 --> 00:31:49,600 Speaker 13: auto imports from China, especially on evs. There's a whole 578 00:31:49,680 --> 00:31:53,760 Speaker 13: range of numbers, anything from another eight to fifteen percent 579 00:31:53,960 --> 00:31:57,120 Speaker 13: on top of the about ten percent now that Chinese 580 00:31:57,120 --> 00:31:59,680 Speaker 13: EV's face when going into the European market, which will 581 00:31:59,720 --> 00:32:03,920 Speaker 13: make it probably prohibitive for the Chinese manufacturers to enter 582 00:32:04,360 --> 00:32:07,480 Speaker 13: in the market. So we see in lbid as trying 583 00:32:07,520 --> 00:32:10,880 Speaker 13: to localize production and the EU, you know, setting up 584 00:32:10,880 --> 00:32:13,520 Speaker 13: factory and hungry to try to head off Linda. 585 00:32:13,560 --> 00:32:16,400 Speaker 3: Thanks so much for joining us. Linda lu who covers 586 00:32:16,520 --> 00:32:20,400 Speaker 3: China cars for Bloomberg. I'm Brian Curtis, along with Doug Krisner. 587 00:32:20,440 --> 00:32:23,840 Speaker 3: You can catch us every weekday here for Bloomberg Daybreak Asia, 588 00:32:24,160 --> 00:32:27,040 Speaker 3: beginning at eight am in Hong Kong and eight pm 589 00:32:27,160 --> 00:32:27,920 Speaker 3: on Wall Street. 590 00:32:28,240 --> 00:32:31,080 Speaker 14: Doug, Thanks Brian. The big banks in China will be 591 00:32:31,160 --> 00:32:32,600 Speaker 14: reporting earnings in the coming week. 592 00:32:32,720 --> 00:32:32,880 Speaker 4: Now. 593 00:32:32,960 --> 00:32:36,800 Speaker 14: We know that government has been struggling to revive borrowing demand. 594 00:32:37,240 --> 00:32:41,000 Speaker 14: The property market keeps slumping, consumer confidence remains near a 595 00:32:41,120 --> 00:32:44,720 Speaker 14: record low. Needless to say, it's not a great environment 596 00:32:44,760 --> 00:32:47,120 Speaker 14: if you're a bank. For a closer look, now, let's 597 00:32:47,120 --> 00:32:50,560 Speaker 14: bring in Bloomberg's Greater China correspondent. He is John Liu, 598 00:32:50,640 --> 00:32:53,720 Speaker 14: and he joins us from our studios in Beijing. One 599 00:32:53,760 --> 00:32:56,000 Speaker 14: of the things that I think is important to begin 600 00:32:56,080 --> 00:32:59,480 Speaker 14: on John, is the conversation around loan demand. Even though 601 00:33:00,560 --> 00:33:04,040 Speaker 14: are at historically low levels in China, there just doesn't 602 00:33:04,040 --> 00:33:07,920 Speaker 14: seem to be a lot of demand for credit. What's 603 00:33:08,040 --> 00:33:09,920 Speaker 14: driving this? Do you think property? 604 00:33:10,080 --> 00:33:13,240 Speaker 15: There used to be a lot of demand for money 605 00:33:13,240 --> 00:33:16,320 Speaker 15: for mortgages. People are not buying homes, so that has 606 00:33:16,360 --> 00:33:18,600 Speaker 15: fallen way off. There used to be a lot of 607 00:33:18,640 --> 00:33:22,600 Speaker 15: demand from property developers for loans that they would use 608 00:33:23,120 --> 00:33:26,120 Speaker 15: not only to build their properties and their real estate, 609 00:33:26,160 --> 00:33:29,800 Speaker 15: but also to buy land that no longer exists because 610 00:33:30,120 --> 00:33:32,920 Speaker 15: many of those property developers are now struggling to pay 611 00:33:32,920 --> 00:33:35,080 Speaker 15: off their debt, and so they are not in an 612 00:33:35,120 --> 00:33:40,640 Speaker 15: expansionary mode. They are retrenching, and that has really hit 613 00:33:41,080 --> 00:33:42,160 Speaker 15: demand for loans. 614 00:33:42,360 --> 00:33:44,960 Speaker 14: Last week, we know that the big major banks in 615 00:33:45,040 --> 00:33:48,480 Speaker 14: China maintained their lending rates. These are the loan prime rates. 616 00:33:48,480 --> 00:33:51,360 Speaker 14: I think that represent kind of the real loan for 617 00:33:51,400 --> 00:33:54,880 Speaker 14: the real economy. Not a surprise that these loans were 618 00:33:54,880 --> 00:33:58,360 Speaker 14: held steady since the PBOC the central Bank decided to 619 00:33:58,560 --> 00:34:01,760 Speaker 14: hold steady some of the key policy rates that feed 620 00:34:01,840 --> 00:34:05,480 Speaker 14: into the loan prime rates. But I'm wondering, do you 621 00:34:05,520 --> 00:34:08,200 Speaker 14: think regulators feel as though they're pushing on a string 622 00:34:08,239 --> 00:34:11,240 Speaker 14: no matter how low they cut interest rates. There's really 623 00:34:11,280 --> 00:34:13,799 Speaker 14: not a way of addressing the problem with sentiment that 624 00:34:13,840 --> 00:34:15,800 Speaker 14: would then go to what we were just talking about 625 00:34:15,920 --> 00:34:16,560 Speaker 14: with demand. 626 00:34:16,840 --> 00:34:19,680 Speaker 15: I think that is part of the problem. You put 627 00:34:19,719 --> 00:34:23,080 Speaker 15: it very well in the sense that what can the 628 00:34:23,120 --> 00:34:25,600 Speaker 15: central bank do. The central bank can cut rates and 629 00:34:25,680 --> 00:34:28,960 Speaker 15: raise rates, and cut reserve requirements and raise reserve requirements. 630 00:34:29,000 --> 00:34:32,320 Speaker 15: They can't really do much in terms of getting people 631 00:34:32,360 --> 00:34:35,520 Speaker 15: out and spending or borrowing or companies investing, and so 632 00:34:35,640 --> 00:34:38,720 Speaker 15: they are trying to do what they can. The other issue, 633 00:34:38,760 --> 00:34:41,400 Speaker 15: of course, is if you keep cutting interest rates, it 634 00:34:41,480 --> 00:34:44,919 Speaker 15: is going to affect the banks adversely in the sense 635 00:34:45,000 --> 00:34:47,960 Speaker 15: of their margins. The amount of money they make on 636 00:34:48,120 --> 00:34:51,520 Speaker 15: loans is going to shrink and compress, and there is 637 00:34:51,560 --> 00:34:54,799 Speaker 15: an element of having to consider the health of the 638 00:34:54,880 --> 00:34:58,120 Speaker 15: financial system as China is trying to do what it 639 00:34:58,160 --> 00:35:00,960 Speaker 15: can to get people spending companies investing in. 640 00:35:01,320 --> 00:35:04,000 Speaker 14: Well, I'm glad you bring up the subject of net 641 00:35:04,000 --> 00:35:06,600 Speaker 14: interest margin because when I look at analysis and from 642 00:35:06,640 --> 00:35:09,480 Speaker 14: Bloomberg Intelligence on the big banks in China, it's clear 643 00:35:09,800 --> 00:35:13,200 Speaker 14: the chief concern is margin, and I'm wondering whether or 644 00:35:13,239 --> 00:35:16,759 Speaker 14: not the government is equally concerned about how this may 645 00:35:16,840 --> 00:35:19,240 Speaker 14: be impacting the bank's balance sheets. 646 00:35:19,640 --> 00:35:22,759 Speaker 15: There was a report in the Financial News, which is 647 00:35:23,320 --> 00:35:26,680 Speaker 15: a newspaper that is published by the Central Bank. It 648 00:35:26,800 --> 00:35:30,160 Speaker 15: talked about how banks are really suffering and facing lots 649 00:35:30,160 --> 00:35:34,600 Speaker 15: of challenges because as the central government lowers interest rates, 650 00:35:35,080 --> 00:35:37,960 Speaker 15: they're making less on every loan that they make, and 651 00:35:38,000 --> 00:35:41,680 Speaker 15: that is making it a more difficult operating system or 652 00:35:41,920 --> 00:35:44,879 Speaker 15: environment for the banks, And you have to remember these 653 00:35:44,960 --> 00:35:49,160 Speaker 15: banks are state owned. The biggest banks in China are 654 00:35:49,200 --> 00:35:52,160 Speaker 15: all owned by the central government. Even the Central Bank 655 00:35:52,200 --> 00:35:55,279 Speaker 15: governor that we have today, Pungu Chang, he was the 656 00:35:55,440 --> 00:35:59,520 Speaker 15: chairman of Agricultural Bank back in the day, and so 657 00:35:59,600 --> 00:36:02,759 Speaker 15: there is a strong connection between the commercial side of 658 00:36:02,800 --> 00:36:05,440 Speaker 15: the banking system and the regulatory side. 659 00:36:05,680 --> 00:36:07,799 Speaker 14: We also know that they have loan books, right and 660 00:36:07,840 --> 00:36:10,000 Speaker 14: when you think about the quality of loans, do we 661 00:36:10,040 --> 00:36:13,960 Speaker 14: have a sense of how well loans are performing right now? Okay, 662 00:36:14,000 --> 00:36:17,080 Speaker 14: we know property is a problem, but more broadly, are 663 00:36:17,200 --> 00:36:19,960 Speaker 14: loans beginning to become an issue? Is there a question 664 00:36:20,040 --> 00:36:21,879 Speaker 14: around people's ability to service debt? 665 00:36:22,400 --> 00:36:25,879 Speaker 15: There is, and this is a reason why the non 666 00:36:25,960 --> 00:36:30,560 Speaker 15: performing loans number is going to be really closely scrutinized 667 00:36:30,560 --> 00:36:33,480 Speaker 15: when we get that from these earnings. In the third quarter, 668 00:36:33,520 --> 00:36:37,120 Speaker 15: we actually saw that number of the mpls come down 669 00:36:37,239 --> 00:36:40,200 Speaker 15: slightly for all the big commercial banks and more broadly 670 00:36:40,239 --> 00:36:42,879 Speaker 15: for the banking system. That was for the third quarter. 671 00:36:43,160 --> 00:36:45,840 Speaker 15: Whether or not that continued in the fourth quarter, we 672 00:36:45,920 --> 00:36:47,480 Speaker 15: have to wait and see, but there is a lot 673 00:36:47,480 --> 00:36:53,000 Speaker 15: of concern. Anecdotally, there have been an increase in the 674 00:36:53,120 --> 00:36:56,880 Speaker 15: number of people not paying their mortgages. The number of 675 00:36:57,000 --> 00:36:59,919 Speaker 15: foreclosures we've had in China, it's starting from a low base, 676 00:37:00,120 --> 00:37:02,240 Speaker 15: but it's growing fairly rapidly. 677 00:37:02,400 --> 00:37:05,040 Speaker 14: What do we know about the level of deposits. I'm 678 00:37:05,040 --> 00:37:09,080 Speaker 14: wondering whether or not people are so fearful. Maybe that's 679 00:37:09,120 --> 00:37:12,359 Speaker 14: too strong a word, but they lack confidence in such 680 00:37:12,360 --> 00:37:15,880 Speaker 14: a way that they feel that there's no alternative except 681 00:37:16,000 --> 00:37:17,719 Speaker 14: just to keep the money in the bank, I mean, 682 00:37:17,760 --> 00:37:20,800 Speaker 14: and for that reason, our deposit levels fairly high. 683 00:37:21,040 --> 00:37:25,400 Speaker 15: Deposit levels have been rising after the pandemic, After China 684 00:37:25,440 --> 00:37:29,040 Speaker 15: lifted its zero COVID policies, we actually saw a big 685 00:37:29,080 --> 00:37:32,160 Speaker 15: increase in the amount of money individuals and companies were 686 00:37:32,239 --> 00:37:35,400 Speaker 15: keeping in the bank in terms of deposits. More recently 687 00:37:35,440 --> 00:37:39,319 Speaker 15: that seems to have slowed. It does, as you say, 688 00:37:39,520 --> 00:37:43,640 Speaker 15: show a lack of confidence or a lack of animal spirits, 689 00:37:43,640 --> 00:37:44,080 Speaker 15: as it were. 690 00:37:44,280 --> 00:37:46,120 Speaker 14: John, thank you so much for taking the time to 691 00:37:46,200 --> 00:37:48,200 Speaker 14: chat with us and helping us kind of set the 692 00:37:48,239 --> 00:37:50,719 Speaker 14: table for the earnings reports that we are expecting in 693 00:37:50,760 --> 00:37:53,600 Speaker 14: the coming week for the big banks in China. John 694 00:37:53,680 --> 00:37:57,080 Speaker 14: Louis is Bloomberg's Greater China correspondent, joining us from our 695 00:37:57,120 --> 00:38:00,319 Speaker 14: Studios in Beijing. I'm Doug Krisner. You can join Brian 696 00:38:00,360 --> 00:38:04,280 Speaker 14: Curtis and myself weekdays here from Bloomberg Daybreak Asia beginning 697 00:38:04,400 --> 00:38:08,840 Speaker 14: at eight am in Hong Kong eight pm on Wall Street. Tom. 698 00:38:09,280 --> 00:38:12,120 Speaker 1: Thank you Doug, and also thank you Brian. And that 699 00:38:12,239 --> 00:38:14,560 Speaker 1: does it for this edition of Bloomberg day Break Weekend. 700 00:38:14,880 --> 00:38:17,120 Speaker 1: Join us again Monday morning at five am Wall Street 701 00:38:17,160 --> 00:38:19,880 Speaker 1: time for the latest on markets overseas and the news 702 00:38:19,920 --> 00:38:22,919 Speaker 1: you need to start your day. I'm Tom Buzzby. Stay 703 00:38:22,960 --> 00:38:25,480 Speaker 1: with us. Top stories and global business headlines are coming 704 00:38:25,600 --> 00:38:27,280 Speaker 1: up right now