WEBVTT - Daybreak Weekend: Biden Prepares for Xi Meeting, Inflation Data, Government Shutdown 0:00:02.200 --> 0:00:04.400 This is Bloomberg day Break Weekend, our global look at 0:00:04.400 --> 0:00:06.680 the top stories in the coming week from our Daybreak 0:00:06.720 --> 0:00:09.879 anchors all around the world, and straight ahead on the program, 0:00:10.080 --> 0:00:13.360 a huge week on the economic front. I'll have that story. 0:00:13.520 --> 0:00:16.000 I'm callin Hetcke here in London, where we're looking ahead 0:00:16.040 --> 0:00:18.439 to the Dubai Air Show and why airlines have a 0:00:18.520 --> 0:00:21.680 fear of missing out when it comes to plane orders. 0:00:21.960 --> 0:00:24.880 I'm deg Krisner. We preview the meeting of Presidents Biden 0:00:24.920 --> 0:00:27.520 and She on the sidelines of the APEC summit in 0:00:27.600 --> 0:00:28.400 San Francisco. 0:00:28.600 --> 0:00:31.360 I'm Keiley Lines in Washington, where Congress is racing to 0:00:31.400 --> 0:00:35.200 avert a government shutdown with just days until funding runs out. 0:00:35.479 --> 0:00:39.239 That's all straight ahead on Bloomberg Daybreak Weekend, the business 0:00:39.280 --> 0:00:41.600 news you need to wrap up your week in just 0:00:41.760 --> 0:00:46.320 one fifteen minute podcast available on Apple, Spotify, The Bloomberg 0:00:46.360 --> 0:00:49.040 Business Appen everywhere you get your podcasts. 0:00:51.840 --> 0:00:54.000 Good day to you. I'm Tom Busby. We begin today's 0:00:54.000 --> 0:00:58.880 program with a focus on the US economy and specifically inflation. 0:00:59.520 --> 0:01:02.800 Investor and the Fed will be scrutinizing two big readings 0:01:02.800 --> 0:01:05.320 on inflation. On Tuesday, we get the Consumer Price Index 0:01:05.400 --> 0:01:09.199 for October on Wednesday, the Producer Price Index and for more, 0:01:09.720 --> 0:01:12.720 we're pleased to welcome Anna Wong, chief US economist with 0:01:12.720 --> 0:01:18.640 Bloomberg Economics, and Michael McKee, Bloomberg International Economics and Policy correspondent. Well, 0:01:18.720 --> 0:01:22.160 let's start with Anna and that read on consumer inflation. Anna, 0:01:22.680 --> 0:01:24.960 what are you expecting to see this week? 0:01:25.080 --> 0:01:28.200 We are expecting the headline CPI to be very soft 0:01:28.319 --> 0:01:33.360 because seasonally adjusted gasoline prices actually came down over five 0:01:33.400 --> 0:01:38.680 percent in October, so a monthly reading of a monthly 0:01:38.800 --> 0:01:41.840 increase of zero point one percent on the headline CPI. 0:01:42.319 --> 0:01:45.960 And we are also expecting core CPI to come in, 0:01:46.440 --> 0:01:51.360 you know, in the zero two five range, so it 0:01:51.400 --> 0:01:55.400 could easily round to either point three or point two. 0:01:55.480 --> 0:02:00.400 But nonetheless, it is a reading that won't sound of 0:02:00.560 --> 0:02:03.520 alarm bells among the Fed officials. 0:02:03.800 --> 0:02:07.000 Well, and Michael, this sounds pretty good, not just won't 0:02:07.120 --> 0:02:08.360 set off alarm bells. 0:02:08.919 --> 0:02:12.960 Well, we are still almost six weeks away from the 0:02:12.960 --> 0:02:15.680 next FED meeting, and there will be another CPI report 0:02:15.680 --> 0:02:18.800 and a PCEE inflation report before we get to that, 0:02:19.040 --> 0:02:22.239 so they'll focus on the more recent data. But yes, 0:02:22.639 --> 0:02:25.760 this would if we get the scenario that Anna is 0:02:25.800 --> 0:02:28.120 talking about, and that's pretty much the consensus. 0:02:29.040 --> 0:02:29.760 It will tell the. 0:02:29.680 --> 0:02:31.800 FED that they are still on the right track, and 0:02:32.400 --> 0:02:36.200 it will suggest to them that they are in restrictive 0:02:36.320 --> 0:02:40.280 enough territory because they're pushing down on inflation, and so 0:02:41.000 --> 0:02:44.840 it won't change anyone's call to a higher rate or 0:02:44.880 --> 0:02:45.560 something like that. 0:02:45.720 --> 0:02:48.320 Well, month over month, Anna is zero point one percent. 0:02:48.440 --> 0:02:50.640 What is it? Year over year October to October? 0:02:50.919 --> 0:02:54.920 The year over year for core inflation is looking to 0:02:54.960 --> 0:02:59.680 be below three point six percent, and that means that 0:03:00.800 --> 0:03:03.040 at the end of this year, the fourth quarter year 0:03:03.080 --> 0:03:07.880 over year would be likely be undershooting the fed's own 0:03:07.960 --> 0:03:11.440 forecast of three point seven percent. So this, as Mike 0:03:11.520 --> 0:03:14.400 McKee was saying, this is the reason why the FED 0:03:14.440 --> 0:03:18.520 does not feel the urgency to do that extra realize. 0:03:18.560 --> 0:03:21.200 That extra twenty five basis point hike they had in 0:03:21.240 --> 0:03:24.680 the September dot plot is just because inflation is now 0:03:24.760 --> 0:03:27.320 on track to undershoot their forecast. 0:03:27.400 --> 0:03:31.080 But their long term forecasts two percent were still a 0:03:31.120 --> 0:03:34.400 ways away from there. Is there a dot plot for 0:03:34.440 --> 0:03:37.040 when we could reach that? Will we ever reach that? 0:03:37.240 --> 0:03:41.440 Mike? That's the question I asked JPU at the last 0:03:41.760 --> 0:03:46.360 FED news conference the FED in September said on the 0:03:46.680 --> 0:03:48.920 blot that there was an extra twenty five basis points 0:03:49.920 --> 0:03:53.560 priced in in their forecast before the end of the year. 0:03:54.200 --> 0:03:59.160 But as Powell answered me, those forecasts decay over time 0:03:59.400 --> 0:04:02.600 and just the data comes in market adjusts every day, 0:04:02.680 --> 0:04:06.160 minute by minute, the Fed once every three months. So 0:04:06.640 --> 0:04:09.720 he suggested that perhaps nobody would be putting that into 0:04:10.000 --> 0:04:12.600 not nobody, but almost nobody would be putting that into 0:04:12.680 --> 0:04:16.640 a dot plot today. The question is do we leave 0:04:16.680 --> 0:04:19.320 out the rate increase or do we leave out the 0:04:19.400 --> 0:04:22.479 time frame. If you leave out the idea that it 0:04:22.560 --> 0:04:25.000 had to be by the end of the year, that's 0:04:25.080 --> 0:04:27.960 probably more likely, but it doesn't mean that they're done. 0:04:28.120 --> 0:04:30.719 And if inflation should start to go back up again, 0:04:31.800 --> 0:04:34.600 that rate increase is still on the table, and then 0:04:34.640 --> 0:04:38.120 they could add more. So you have to look at 0:04:38.320 --> 0:04:41.360 every meeting December and then January and going forward as 0:04:41.360 --> 0:04:44.640 a potential rate increase until they tell us differently. 0:04:44.880 --> 0:04:49.359 There's always that doubt always. And let's switch now to 0:04:49.400 --> 0:04:51.760 the producer price index, because you brought up a big 0:04:51.800 --> 0:04:55.160 factor there and that is a decline in energy prices 0:04:55.160 --> 0:04:58.080 and how will that impact your forecast there? 0:04:58.760 --> 0:05:01.880 Yeah, I think the important of the PPI is what 0:05:02.040 --> 0:05:06.839 it implies for the FEDS preferred inflation metric, which is 0:05:06.839 --> 0:05:10.240 the PCE deflator. So the things in the PPI report 0:05:10.320 --> 0:05:14.040 that's very important for the FEDS preferred metric is airfares 0:05:14.200 --> 0:05:18.880 and also healthcare prices. So healthcare prices account for you know, 0:05:19.440 --> 0:05:23.240 over ten percent of the PCE basket. And we have 0:05:23.400 --> 0:05:25.640 seen over the last couple of years that there's still 0:05:25.680 --> 0:05:31.880 significant labor shortages in healthcare services sector, and also that 0:05:32.000 --> 0:05:37.200 a lot of the you know, wage increase is still 0:05:37.279 --> 0:05:40.120 coming from the healthcare sector. So it could be that 0:05:41.000 --> 0:05:47.800 through twenty twenty four, the remaining the lingering inflation impulse 0:05:47.920 --> 0:05:52.279 could be coming from sectors like healthcare wages, where you know, 0:05:52.360 --> 0:05:54.200 we still saw this year that there were a lot 0:05:54.240 --> 0:05:59.560 of labor strikes in you know, in UAW and Hollywood 0:05:59.600 --> 0:06:04.680 screen but you know, the healthcare workers still are the 0:06:04.720 --> 0:06:08.080 ones who who have been burned, who have been overworking 0:06:08.160 --> 0:06:11.000 during the pandemic, and their wage increase have not been 0:06:11.600 --> 0:06:14.279 catching up to inflation. So I think a risk is 0:06:14.320 --> 0:06:16.640 that next year we'll see more of the strikes coming 0:06:16.680 --> 0:06:20.000 from the healthcare sector and eventually those would be passed 0:06:20.000 --> 0:06:23.960 onto PC prices, so I would be paying attention to 0:06:24.000 --> 0:06:26.719 airfares and healthcare prices in the PPI. 0:06:27.480 --> 0:06:30.479 Well and Mike more on that. How are airfares looking. 0:06:30.560 --> 0:06:33.920 I mean, we've seen a demand still strong, especially in 0:06:34.000 --> 0:06:37.520 the national travel but it looks a little weakness domestically. 0:06:38.800 --> 0:06:43.320 We are still seeing some declines in air prices overall. 0:06:43.680 --> 0:06:46.120 The question on a month over month basis is how 0:06:46.200 --> 0:06:49.120 they get accounted for, because, as anybody who's tried to 0:06:49.160 --> 0:06:52.359 buy an airline ticket knows, the prices are quite volatile. 0:06:52.400 --> 0:06:55.880 They go up and down. But this is the time 0:06:55.880 --> 0:06:59.880 of year when prices tend to decline because everybody's gone 0:06:59.880 --> 0:07:02.960 by school, it's fall, weather's not great, so the tourists 0:07:03.040 --> 0:07:06.680 kind of stop. We'll see airfares probably go up again 0:07:07.160 --> 0:07:10.000 when we get closer, well, we're getting pretty close to 0:07:10.000 --> 0:07:16.440 Thanksgiving and then the Christmas New Year's period airfares should 0:07:16.480 --> 0:07:20.000 go up again, but the government does seasonally adjust that, 0:07:20.080 --> 0:07:22.480 so we'll have to see how it all plays out. 0:07:22.640 --> 0:07:26.600 One of the interesting areas in all of these price 0:07:26.640 --> 0:07:29.480 indexes has used cars, and they have just fallen off 0:07:29.480 --> 0:07:33.600 a cliff lately, so that could be something that puts 0:07:33.640 --> 0:07:36.280 downward pressure on these inflation measures. 0:07:36.480 --> 0:07:39.080 Now we talked about Thanksgiving, which is coming a lot 0:07:39.160 --> 0:07:41.800 faster than I think anyone realizes. Christmas just a few 0:07:41.840 --> 0:07:44.520 weeks ahead, and that leads us to retail sales, because 0:07:44.520 --> 0:07:47.920 we get a read on retail sales for October this week, 0:07:48.320 --> 0:07:52.240 and a lot of the biggies, Walmart, Target, Amazon all 0:07:52.360 --> 0:07:56.080 had early Black Friday sales during the month of October, 0:07:56.880 --> 0:07:59.120 and what are we expecting to see for retail sales? 0:07:59.120 --> 0:08:01.160 And my I'll ask you what it tells us about 0:08:01.200 --> 0:08:01.680 the consumer? 0:08:01.880 --> 0:08:04.960 Yeah, I think the early Black Friday sales. What it 0:08:05.000 --> 0:08:08.120 does is that it could potentially make for a retail 0:08:08.160 --> 0:08:11.920 reading that's stronger than what the consensus is penciling in. 0:08:12.040 --> 0:08:15.360 So we have been saying that the consumption should be 0:08:15.360 --> 0:08:20.320 slowing down and retail sales should be entering into negative 0:08:20.720 --> 0:08:24.720 territory in the fall. However, if it's true that there's 0:08:24.800 --> 0:08:27.960 a lot of early Black Friday sales and people took 0:08:28.040 --> 0:08:31.360 advantage of that those sales, it could mean that they 0:08:31.400 --> 0:08:35.280 won't be they would be stronger seasonally adjusted sales. But 0:08:35.320 --> 0:08:38.800 that doesn't mean that that's permanent, because what that means 0:08:38.880 --> 0:08:41.360 is that it will just pull forward to Christmas. Spending, 0:08:41.400 --> 0:08:44.119 so that will be weaker November and December. 0:08:44.520 --> 0:08:47.839 You think so much. You think it seems like people 0:08:47.920 --> 0:08:50.160 just spend, spend, spend, but you know, maybe they are 0:08:50.160 --> 0:08:50.720 pulling back. 0:08:50.840 --> 0:08:55.320 Well, the question is when they spend and how it 0:08:55.400 --> 0:08:59.600 will compare. Obviously to what we saw in the last 0:08:59.600 --> 0:09:04.040 couple of year. Everything's been very distorted by the pandemic. 0:09:04.920 --> 0:09:08.840 It's been hard to know exactly what's happening with consumer 0:09:08.880 --> 0:09:12.640 spending because of the pandemic bonuses you got from the 0:09:12.640 --> 0:09:15.080 government and the fact that when everybody went back to 0:09:15.120 --> 0:09:19.600 work they got raises, so it isn't quite clear what's 0:09:19.679 --> 0:09:22.720 going to happen, and all of that sort of distorted 0:09:22.760 --> 0:09:26.280 the timing of spending as well. But now the question 0:09:26.440 --> 0:09:31.560 is do we see a rebound because people still have 0:09:31.800 --> 0:09:37.080 money in the bank and they still they're making more money, 0:09:37.080 --> 0:09:39.800 they spend their paychecks and they're feeling good enough to 0:09:39.800 --> 0:09:43.680 go out and buy stuff, or do they pull back somewhat. 0:09:43.720 --> 0:09:48.840 Now last year we saw a rise in retail sales 0:09:49.040 --> 0:09:54.280 for October that then was eliminated in November and we 0:09:54.320 --> 0:09:57.599 went way way down. November and December were week. Do 0:09:57.720 --> 0:10:02.400 we see that same pattern again or do we get 0:10:02.400 --> 0:10:04.640 back to what we were seeing before the pandemic. And 0:10:04.760 --> 0:10:07.920 the one thing I wonder about is going into the pandemic, 0:10:07.960 --> 0:10:10.600 the psychology for a lot of buyers was wait till 0:10:10.640 --> 0:10:13.160 the last minute and prices will go down. While in 0:10:13.200 --> 0:10:16.720 an inflationary environment like this, maybe that's what people are 0:10:16.760 --> 0:10:19.560 going to start doing again. And then we wait and 0:10:19.600 --> 0:10:22.040 see what happens in November December. 0:10:22.120 --> 0:10:25.439 All right, well, our thanks to Annawong, Chief US Economists 0:10:25.440 --> 0:10:30.320 with Bloomberg Economics, Michael McKee, Bloomberg International Economics and Policy correspondent. 0:10:30.600 --> 0:10:32.800 Thank you both for being here and coming up on 0:10:32.840 --> 0:10:35.640 Bloomberg day Break Weekend. What to look for at this 0:10:35.720 --> 0:10:39.880 week's Dubai Air Show. I'm Tom Busby, and this is Bloomberg. 0:10:50.000 --> 0:10:52.360 This is Bloomberg day Break Weekend, our global look ahead 0:10:52.360 --> 0:10:54.560 of the top stories for investors in the coming week. 0:10:54.720 --> 0:10:57.559 I'm Tom Busby in New York. Up later in our 0:10:57.600 --> 0:11:00.640 program we preview one of the year's most crucial and 0:11:00.720 --> 0:11:04.400 a meeting of US and Chinese leaders. But first, it's 0:11:04.440 --> 0:11:06.520 shaping up to be among the hottest years ever for 0:11:06.720 --> 0:11:10.520 large aircraft deals and the buying spree expected to continue 0:11:10.559 --> 0:11:13.000 at the Dubai Air Show. In the days ahead. This 0:11:13.120 --> 0:11:15.600 comes has production at both Airbus and Boeing are having 0:11:15.679 --> 0:11:18.800 trouble meeting demand because of a shortage of parts, and 0:11:18.920 --> 0:11:22.960 that's intensifying the race among airlines for the last remaining 0:11:23.000 --> 0:11:26.080 production slots available this decade. And for more we head 0:11:26.080 --> 0:11:29.520 to London and Bloomberg Daybreak Europe anchor Caroline. 0:11:29.000 --> 0:11:32.600 Hepgar Tom The Dubai Air Show is an important barometer 0:11:32.760 --> 0:11:35.440 for the health of the aviation industry, measured by the 0:11:35.480 --> 0:11:38.960 appetite for deals. The industry's last big gathering was in 0:11:39.000 --> 0:11:42.560 Paris in June. It resulted in about one three hundred 0:11:42.640 --> 0:11:46.480 aircraft sales, and the organizer of the Dubai Air Show 0:11:47.280 --> 0:11:50.600 they are hoping to see something similar. The event caters 0:11:50.640 --> 0:11:53.560 to some of the world's largest wide body operators. The 0:11:53.679 --> 0:11:56.760 local champion Emirates has already teased that it wants to 0:11:56.960 --> 0:11:59.600 order more. Anna Edwards and I have been speaking to 0:11:59.640 --> 0:12:03.320 ours aviation reporters, Saidel Philip about what to expect from 0:12:03.360 --> 0:12:07.000 this major event, but first to get a flavor of 0:12:07.040 --> 0:12:11.640 the industry. Air Boss CEO Gillumfori says that the company 0:12:11.679 --> 0:12:15.880 expects higher output in twenty twenty four thanks to surging demand. 0:12:16.280 --> 0:12:18.199 He's been speaking to bring back to the main Bostic 0:12:18.280 --> 0:12:22.280 and Guy Johnson after Airbus's third quarter results. 0:12:22.200 --> 0:12:27.160 The single ale business, so the short and mid range 0:12:27.480 --> 0:12:32.200 activity will continue to dominate a number of planes. We've 0:12:32.200 --> 0:12:36.080 seen the activity on the single isle recovering much faster 0:12:36.679 --> 0:12:40.800 after COVID than it was for white bodies for long range, 0:12:41.840 --> 0:12:45.800 but we think long range will follow up, will also 0:12:46.559 --> 0:12:50.719 recover first and probably even stronger moving forward. And when 0:12:50.760 --> 0:12:54.440 we look at the long term perspectives for the market, 0:12:54.840 --> 0:12:59.920 we expect both single lile and white bodies to significantly grow, 0:13:00.679 --> 0:13:03.920 to the extent that we believe there will be around 0:13:04.040 --> 0:13:07.360 forty thousand plans to be delivered in the next twenty years. 0:13:08.360 --> 0:13:10.280 You're ramping up, as you just confirmed to me the 0:13:10.720 --> 0:13:13.679 three fifty program. You're going to go to ten a 0:13:13.720 --> 0:13:17.520 month twenty twenty six. That's not a big push higher. 0:13:18.200 --> 0:13:20.559 You're basically going from eight to nine to ten by 0:13:20.600 --> 0:13:24.320 twenty twenty six. Picking up on Romain's point is that 0:13:24.880 --> 0:13:28.319 you talk you signaling caution that you actually think the 0:13:28.600 --> 0:13:31.440 big push we're saying for long haul demand at the 0:13:31.440 --> 0:13:35.320 moment is not sustainable. Could you take that program higher 0:13:35.360 --> 0:13:38.600 by that point? If demand remains as robust as it 0:13:38.679 --> 0:13:39.080 is now. 0:13:39.400 --> 0:13:42.079 Actually, we see the demand growing, we see a recovery 0:13:42.160 --> 0:13:45.400 in the demand, and we will at a low point 0:13:45.600 --> 0:13:48.960 of a rate four on the every fifty during COVID. 0:13:49.440 --> 0:13:53.800 So we went from four and we keep growing and 0:13:53.840 --> 0:13:58.280 we are now targeting ten. It's slightly or it's very 0:13:58.280 --> 0:14:01.760 comparable to what we had recovered, and we had said 0:14:01.760 --> 0:14:05.920 that the traffic itself would be recovering back to pre 0:14:06.000 --> 0:14:09.520 COVID levels between twenty three to twenty five, twenty twenty 0:14:09.559 --> 0:14:13.640 three to twenty twenty five. So I think we are 0:14:13.720 --> 0:14:19.040 consistent with the evaluation, the assessment we made of the 0:14:19.080 --> 0:14:22.880 recovery of the market going just out of COVID. Do 0:14:22.920 --> 0:14:25.840 we have the potential for more Yes, the three fifty 0:14:25.880 --> 0:14:29.280 has the potential to go up to rate thirteen based 0:14:29.320 --> 0:14:32.640 on the existing production system, and we will continue to 0:14:32.680 --> 0:14:35.640 monitor the demand, the recovery of the demand with a 0:14:35.720 --> 0:14:39.480 big replacement cycle for white bodies that is just starting, 0:14:40.200 --> 0:14:44.240 and also some expectations for growth. So the market has 0:14:44.280 --> 0:14:47.479 the potential to go higher, and we have the potential 0:14:47.520 --> 0:14:50.840 to continue to serve that market by further ramping up. 0:14:50.880 --> 0:14:51.680 But I'd like to. 0:14:52.080 --> 0:14:55.080 Just confirm that rate ten on the three fifty is 0:14:55.120 --> 0:14:56.440 already a very big number. 0:14:56.720 --> 0:15:00.520 So that was the airbus CI high hypes. Then airlines 0:15:00.560 --> 0:15:05.320 will continue expanding, but there are plenty of headwinds for 0:15:05.400 --> 0:15:09.200 the industry, including obviously the disruption in the Middle East, 0:15:09.280 --> 0:15:13.000 the war in Ukraine, high all prices and why do 0:15:13.200 --> 0:15:17.200 economic uncertainty, So I asked our own said Oar Philip 0:15:17.440 --> 0:15:20.320 ahead of the Dubai Air Show, what he thinks the 0:15:20.360 --> 0:15:23.200 mood in the industry is going into the event. 0:15:24.000 --> 0:15:26.720 In terms of the mood for the industry at the moment, 0:15:27.080 --> 0:15:30.400 the industry is sort of struggling to get any aircraft. 0:15:30.720 --> 0:15:33.680 So everyone's sort of trying to order as many aircraft 0:15:33.680 --> 0:15:37.360 as they can as they look to tap into growth 0:15:37.400 --> 0:15:41.240 and demand over the next coming years. Remember that during 0:15:41.280 --> 0:15:44.720 the pandemic everything really slowed down and so now airlines 0:15:44.720 --> 0:15:46.800 are sort of ramped up again and they're trying to 0:15:46.800 --> 0:15:50.480 get as much demand de indicter to as much demand 0:15:50.480 --> 0:15:53.400 as they can, and that involves by new aircraft. 0:15:54.960 --> 0:15:57.720 Yes, it does involves by new aircraft. Hello, good to 0:15:57.760 --> 0:15:59.320 speak to you. So what are the orders that we're 0:15:59.360 --> 0:16:00.880 expecting to get in Dubai. 0:16:02.120 --> 0:16:05.880 So, yeah, we're expecting to we're expecting Emerits, which is 0:16:05.880 --> 0:16:10.600 the local carrier of the UAE of Dubai, is basically 0:16:10.640 --> 0:16:14.280 expected to make a massive splash. And Tim Clark has 0:16:14.360 --> 0:16:16.760 been saying that he's in the market for more white 0:16:16.800 --> 0:16:20.000 body jets. In June he talked about how he might 0:16:20.160 --> 0:16:22.000 order as many as one hundred, two hundred and fifty 0:16:22.000 --> 0:16:25.040 eCraft and he said he was looking at both Boeing 0:16:25.080 --> 0:16:28.280 and Airbas's largest models. So it's really a question of 0:16:28.320 --> 0:16:31.120 seeing how much Emeritz actually does sort of manage to 0:16:31.120 --> 0:16:34.280 succeed in terms of trying to get those orders across 0:16:34.320 --> 0:16:36.600 the line. We're also going to see some action possibly 0:16:36.640 --> 0:16:40.000 from Ria. There they're a brand new airline that Saudi 0:16:40.040 --> 0:16:43.440 Arabia is building from scratch and that's run by the 0:16:43.480 --> 0:16:47.600 former Etihad CEO Tony Douglas, and they've said that they're 0:16:47.640 --> 0:16:49.960 putting the final touches on what's going to be a 0:16:50.000 --> 0:16:55.600 sizeable order involving narrowbody plane. And we understand that RIA 0:16:55.680 --> 0:16:59.400 they're likely to order the Boeing seven thry seven Max 0:16:59.480 --> 0:17:04.000 jets and that's still not finalized but and talks ongoing, 0:17:04.119 --> 0:17:07.080 but we should be able to see how that plays 0:17:07.080 --> 0:17:08.560 out in the next couple of days. 0:17:09.040 --> 0:17:13.480 Okay, But with so many orders, what about the squeeze consumer? 0:17:13.640 --> 0:17:16.160 Are they pulling back on travel? What an airline's saying 0:17:16.200 --> 0:17:17.440 about demand? 0:17:18.080 --> 0:17:20.000 It seems to be a mixed picture at the moment. 0:17:20.119 --> 0:17:23.840 Some airlines are talking about how demand is slowing in 0:17:23.920 --> 0:17:27.320 terms of growth, So demand hasn't actually fallen down, but 0:17:27.400 --> 0:17:30.760 the growth percentages is slowing, especially in the US. We've 0:17:30.800 --> 0:17:35.040 seen some carriers talking about slowing demand growth. And also, 0:17:35.119 --> 0:17:40.480 I mean there's been some experienced industry watchers, including Steven 0:17:40.600 --> 0:17:44.920 Udvarhazi who's the chairman of Allies, and he's been talking 0:17:44.920 --> 0:17:49.280 about how there's a concern that airlines are over ordering aircraft, 0:17:49.800 --> 0:17:53.600 especially because of the fact that they've gone from virtually 0:17:53.640 --> 0:17:56.680 no traffic to one hundred percent and now everyone's sort 0:17:56.680 --> 0:17:58.320 of binging on aircraft. 0:17:59.400 --> 0:18:02.119 That was a feature of the of the airline industry 0:18:02.160 --> 0:18:05.240 decades ago, wasn't it said they're sort of overordering in 0:18:05.320 --> 0:18:07.439 good times and then paying the price sending all the 0:18:07.440 --> 0:18:09.359 planes to the desert in the bad times. How are 0:18:09.400 --> 0:18:12.560 the big planemakers then coping with this surge in demand? 0:18:12.560 --> 0:18:15.399 Are there are there still supply issues or are they 0:18:15.440 --> 0:18:16.800 able to deliver. 0:18:18.119 --> 0:18:20.000 There are still Supply issues have been We heard from 0:18:20.000 --> 0:18:22.520 Elbas and Eirbus was talking about how the supply chain 0:18:22.560 --> 0:18:25.680 continues to be constrained, and everyone's been trying to ramp 0:18:25.760 --> 0:18:29.160 up production ever since the lows of COVID, and they 0:18:29.160 --> 0:18:31.680 haven't yet been able to. That's partly because they're sort 0:18:31.680 --> 0:18:35.520 of cut back, especially smaller suppliers in the supply chain, 0:18:35.640 --> 0:18:38.560 cut back on staffing, they cut back on tooling, they 0:18:38.640 --> 0:18:41.680 cut back on facilities, and so bringing all of that 0:18:41.840 --> 0:18:45.600 back has been much harder than they anticipated. We've seen 0:18:45.720 --> 0:18:48.280 EBS talking about how they want to go to seventy 0:18:48.320 --> 0:18:50.919 five aircraft a month by twenty twenty six on the 0:18:51.040 --> 0:18:54.159 eighty twenty one wide narrowbodies, and they've talked about how 0:18:54.160 --> 0:18:56.560 they want to go to ten a month on the 0:18:56.600 --> 0:18:59.679 eight three fifty wide body, and so but at the 0:18:59.720 --> 0:19:02.040 moment they're still trying to ramp up. I mean, Boeing's 0:19:02.040 --> 0:19:05.520 had its own issues with suppliers. It's currently trying to 0:19:05.560 --> 0:19:10.320 rework issues with its seventy seven Max jets, which because 0:19:10.359 --> 0:19:13.520 of an issue with a Spirit Aero system in terms 0:19:13.560 --> 0:19:16.920 of production, and so everyone sort of trying to bring 0:19:17.040 --> 0:19:20.800 back production, but so far it is pretty slow going. 0:19:21.280 --> 0:19:24.280 So that was our senior aviation reporter, said our Philip 0:19:24.359 --> 0:19:27.359 speaking to me an to Bloomberg's Anna Edwards. I'm Caroline 0:19:27.359 --> 0:19:29.560 Hepkee here in London. You can catch us every weekday 0:19:29.600 --> 0:19:31.760 morning for Boomberg day Break you at beginning at six 0:19:31.800 --> 0:19:34.560 am in London. That's one am on Wall Street. 0:19:34.640 --> 0:19:34.960 Tom. 0:19:35.320 --> 0:19:38.199 Thank you, Caroline, And coming up on Bloomberg day Break weekend, 0:19:38.240 --> 0:19:41.840 we preview a big scheduled meeting with President Biden and 0:19:41.920 --> 0:19:46.440 Chinese President Chi Jinping. I'm Tom Busby, and this is Bloomberg. 0:19:57.840 --> 0:20:00.000 I'm Tom Busby in New York with your global look ahead, 0:20:00.080 --> 0:20:02.639 the top stories for investors in the coming week. On 0:20:02.720 --> 0:20:06.000 the sidelines of this week's Asia Pacific Economic Summit in 0:20:06.040 --> 0:20:09.280 San Francisco, a crucial meeting between the leaders of the 0:20:09.359 --> 0:20:12.480 US and China taking place. And for more, let's check 0:20:12.480 --> 0:20:15.200 in with Bloomberg Daybreak Asia anchor Doug Krisner. 0:20:15.400 --> 0:20:18.399 Tom. The last meeting of Presidents Biden and She was 0:20:18.440 --> 0:20:21.080 one year ago at the G twenty summit in Bali. 0:20:21.119 --> 0:20:24.280 Back then, the goal was to improve relations, but those 0:20:24.280 --> 0:20:27.520 talks were derailed when a suspected Chinese spy balloon flew 0:20:27.600 --> 0:20:31.119 over the US. Well, now both sides have reason to reset. 0:20:31.600 --> 0:20:34.520 Biden is seeking stability as he gears up for a 0:20:34.560 --> 0:20:37.560 presidential election next year, and she wants to attract more 0:20:37.600 --> 0:20:42.080 foreign investment to help reinvigorate china slowing economy. For some 0:20:42.200 --> 0:20:45.560 help previewing this meeting, I'm joined by Bloomberg's Chill diesis, 0:20:45.640 --> 0:20:49.360 our China Economy and Government editor. She joins us from 0:20:49.400 --> 0:20:52.200 our studios in Hong Kong. What do we know about 0:20:52.240 --> 0:20:54.959 the preparations for this face to face? What type of 0:20:55.040 --> 0:20:56.240 groundwork has been laid? 0:20:57.200 --> 0:20:59.320 Hi, Doug, Yeah, well, I think that at this point 0:20:59.359 --> 0:21:01.919 it really feels like we've been preparing for this meeting 0:21:02.040 --> 0:21:04.960 since she and Biden last met in Bali a year ago. 0:21:05.119 --> 0:21:09.560 I mean, as you mentioned, the Chinese spy balloon incident 0:21:09.960 --> 0:21:12.720 earlier this year certainly seemed to derail some of the 0:21:12.720 --> 0:21:15.080 preparation for this. But what we've seen the US in 0:21:15.160 --> 0:21:19.679 particular do over the past several months is send various 0:21:19.760 --> 0:21:23.400 high level delegations to China trying to lay the groundwork 0:21:23.400 --> 0:21:26.800 for this meeting. We saw Secretary of State Anthony Blincoln 0:21:27.040 --> 0:21:29.520 go to China. We saw the US Secretary of Commerce 0:21:29.920 --> 0:21:31.960 Juina Ramando go to China. We saw Janet yell and 0:21:31.960 --> 0:21:34.840 go to China, the US Treasurer Secretary, and all of 0:21:34.840 --> 0:21:37.639 this prep to try to lay the groundwork for this 0:21:37.720 --> 0:21:40.560 eventual She Biden meeting. So there's been a lot of 0:21:40.560 --> 0:21:44.000 these sort of high level talks between people who either 0:21:44.000 --> 0:21:47.080 aren't Sheer Biden or in some cases She meeting with 0:21:47.480 --> 0:21:50.880 some of the top level Biden officials to kind of 0:21:51.760 --> 0:21:54.760 pave the way for what I think both sides eventually 0:21:54.840 --> 0:21:57.040 hope is a very smooth meeting between their top leaders. 0:21:57.200 --> 0:21:59.760 You and I were talking a short while ago about 0:22:00.080 --> 0:22:04.320 He's written by Bloomberg opinion columnist Mention Pay and he 0:22:04.480 --> 0:22:07.280 was basically taking the view that this meeting holds very 0:22:07.280 --> 0:22:07.960 little in the way. 0:22:07.880 --> 0:22:08.960 Of upside for Biden. 0:22:09.040 --> 0:22:12.360 The China issue on the US side has become so toxic. 0:22:12.920 --> 0:22:16.119 Minchin was saying, any diplomatic outreach can be cast as 0:22:16.160 --> 0:22:18.720 appeasement and by extension, I'm thinking weakness. 0:22:19.280 --> 0:22:19.520 Now. 0:22:19.680 --> 0:22:23.440 She, on the other hand, has several reasons to maybe 0:22:23.480 --> 0:22:26.720 shift this downward spiral in relations with the US. Most 0:22:26.720 --> 0:22:31.399 obviously is this problem with investor confidence and the notion 0:22:31.480 --> 0:22:35.480 that China is uninvestable. Does Minchin have an accurate read 0:22:35.520 --> 0:22:36.720 on this dynamic, do you think. 0:22:37.440 --> 0:22:39.719 I do think he has a good point. I mean, look, 0:22:39.840 --> 0:22:41.880 I think that on the Biden side of things, it's 0:22:41.920 --> 0:22:45.680 definitely about politics here. I mean, Biden has a year 0:22:45.720 --> 0:22:49.200 to gear up for the next presidential election. Certainly Democrats 0:22:49.240 --> 0:22:52.360 were winning in some key races leading. 0:22:52.240 --> 0:22:52.639 Up to that. 0:22:53.160 --> 0:22:55.800 They just had a slew of victories and various US 0:22:55.840 --> 0:22:59.800 states that seemed very promising for the Democratic Party. But 0:22:59.840 --> 0:23:04.200 I think that as Biden gears up to challenge whoever 0:23:04.320 --> 0:23:06.840