Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world, and straight ahead on the program,
Speaker 1: a huge week on the economic front. I'll have that story.
Speaker 2: I'm callin Hetcke here in London, where we're looking ahead
Speaker 2: to the Dubai Air Show and why airlines have a
Speaker 2: fear of missing out when it comes to plane orders.
Speaker 3: I'm deg Krisner. We preview the meeting of Presidents Biden
Speaker 3: and She on the sidelines of the APEC summit in
Speaker 3: San Francisco.
Speaker 4: I'm Keiley Lines in Washington, where Congress is racing to
Speaker 4: avert a government shutdown with just days until funding runs out.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend, the business
Speaker 5: news you need to wrap up your week in just
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Speaker 1: Good day to you. I'm Tom Busby. We begin today's
Speaker 1: program with a focus on the US economy and specifically inflation.
Speaker 1: Investor and the Fed will be scrutinizing two big readings
Speaker 1: on inflation. On Tuesday, we get the Consumer Price Index
Speaker 1: for October on Wednesday, the Producer Price Index and for more,
Speaker 1: we're pleased to welcome Anna Wong, chief US economist with
Speaker 1: Bloomberg Economics, and Michael McKee, Bloomberg International Economics and Policy correspondent. Well,
Speaker 1: let's start with Anna and that read on consumer inflation. Anna,
Speaker 1: what are you expecting to see this week?
Speaker 6: We are expecting the headline CPI to be very soft
Speaker 6: because seasonally adjusted gasoline prices actually came down over five
Speaker 6: percent in October, so a monthly reading of a monthly
Speaker 6: increase of zero point one percent on the headline CPI.
Speaker 6: And we are also expecting core CPI to come in,
Speaker 6: you know, in the zero two five range, so it
Speaker 6: could easily round to either point three or point two.
Speaker 6: But nonetheless, it is a reading that won't sound of
Speaker 6: alarm bells among the Fed officials.
Speaker 1: Well, and Michael, this sounds pretty good, not just won't
Speaker 1: set off alarm bells.
Speaker 7: Well, we are still almost six weeks away from the
Speaker 7: next FED meeting, and there will be another CPI report
Speaker 7: and a PCEE inflation report before we get to that,
Speaker 7: so they'll focus on the more recent data. But yes,
Speaker 7: this would if we get the scenario that Anna is
Speaker 7: talking about, and that's pretty much the consensus.
Speaker 1: It will tell the.
Speaker 7: FED that they are still on the right track, and
Speaker 7: it will suggest to them that they are in restrictive
Speaker 7: enough territory because they're pushing down on inflation, and so
Speaker 7: it won't change anyone's call to a higher rate or
Speaker 7: something like that.
Speaker 1: Well, month over month, Anna is zero point one percent.
Speaker 1: What is it? Year over year October to October?
Speaker 6: The year over year for core inflation is looking to
Speaker 6: be below three point six percent, and that means that
Speaker 6: at the end of this year, the fourth quarter year
Speaker 6: over year would be likely be undershooting the fed's own
Speaker 6: forecast of three point seven percent. So this, as Mike
Speaker 6: McKee was saying, this is the reason why the FED
Speaker 6: does not feel the urgency to do that extra realize.
Speaker 6: That extra twenty five basis point hike they had in
Speaker 6: the September dot plot is just because inflation is now
Speaker 6: on track to undershoot their forecast.
Speaker 1: But their long term forecasts two percent were still a
Speaker 1: ways away from there. Is there a dot plot for
Speaker 1: when we could reach that? Will we ever reach that?
Speaker 7: Mike? That's the question I asked JPU at the last
Speaker 7: FED news conference the FED in September said on the
Speaker 7: blot that there was an extra twenty five basis points
Speaker 7: priced in in their forecast before the end of the year.
Speaker 7: But as Powell answered me, those forecasts decay over time
Speaker 7: and just the data comes in market adjusts every day,
Speaker 7: minute by minute, the Fed once every three months. So
Speaker 7: he suggested that perhaps nobody would be putting that into
Speaker 7: not nobody, but almost nobody would be putting that into
Speaker 7: a dot plot today. The question is do we leave
Speaker 7: out the rate increase or do we leave out the
Speaker 7: time frame. If you leave out the idea that it
Speaker 7: had to be by the end of the year, that's
Speaker 7: probably more likely, but it doesn't mean that they're done.
Speaker 7: And if inflation should start to go back up again,
Speaker 7: that rate increase is still on the table, and then
Speaker 7: they could add more. So you have to look at
Speaker 7: every meeting December and then January and going forward as
Speaker 7: a potential rate increase until they tell us differently.
Speaker 1: There's always that doubt always. And let's switch now to
Speaker 1: the producer price index, because you brought up a big
Speaker 1: factor there and that is a decline in energy prices
Speaker 1: and how will that impact your forecast there?
Speaker 6: Yeah, I think the important of the PPI is what
Speaker 6: it implies for the FEDS preferred inflation metric, which is
Speaker 6: the PCE deflator. So the things in the PPI report
Speaker 6: that's very important for the FEDS preferred metric is airfares
Speaker 6: and also healthcare prices. So healthcare prices account for you know,
Speaker 6: over ten percent of the PCE basket. And we have
Speaker 6: seen over the last couple of years that there's still
Speaker 6: significant labor shortages in healthcare services sector, and also that
Speaker 6: a lot of the you know, wage increase is still
Speaker 6: coming from the healthcare sector. So it could be that
Speaker 6: through twenty twenty four, the remaining the lingering inflation impulse
Speaker 6: could be coming from sectors like healthcare wages, where you know,
Speaker 6: we still saw this year that there were a lot
Speaker 6: of labor strikes in you know, in UAW and Hollywood
Speaker 6: screen but you know, the healthcare workers still are the
Speaker 6: ones who who have been burned, who have been overworking
Speaker 6: during the pandemic, and their wage increase have not been
Speaker 6: catching up to inflation. So I think a risk is
Speaker 6: that next year we'll see more of the strikes coming
Speaker 6: from the healthcare sector and eventually those would be passed
Speaker 6: onto PC prices, so I would be paying attention to
Speaker 6: airfares and healthcare prices in the PPI.
Speaker 1: Well and Mike more on that. How are airfares looking.
Speaker 1: I mean, we've seen a demand still strong, especially in
Speaker 1: the national travel but it looks a little weakness domestically.
Speaker 7: We are still seeing some declines in air prices overall.
Speaker 7: The question on a month over month basis is how
Speaker 7: they get accounted for, because, as anybody who's tried to
Speaker 7: buy an airline ticket knows, the prices are quite volatile.
Speaker 7: They go up and down. But this is the time
Speaker 7: of year when prices tend to decline because everybody's gone
Speaker 7: by school, it's fall, weather's not great, so the tourists
Speaker 7: kind of stop. We'll see airfares probably go up again
Speaker 7: when we get closer, well, we're getting pretty close to
Speaker 7: Thanksgiving and then the Christmas New Year's period airfares should
Speaker 7: go up again, but the government does seasonally adjust that,
Speaker 7: so we'll have to see how it all plays out.
Speaker 7: One of the interesting areas in all of these price
Speaker 7: indexes has used cars, and they have just fallen off
Speaker 7: a cliff lately, so that could be something that puts
Speaker 7: downward pressure on these inflation measures.
Speaker 1: Now we talked about Thanksgiving, which is coming a lot
Speaker 1: faster than I think anyone realizes. Christmas just a few
Speaker 1: weeks ahead, and that leads us to retail sales, because
Speaker 1: we get a read on retail sales for October this week,
Speaker 1: and a lot of the biggies, Walmart, Target, Amazon all
Speaker 1: had early Black Friday sales during the month of October,
Speaker 1: and what are we expecting to see for retail sales?
Speaker 1: And my I'll ask you what it tells us about
Speaker 1: the consumer?
Speaker 6: Yeah, I think the early Black Friday sales. What it
Speaker 6: does is that it could potentially make for a retail
Speaker 6: reading that's stronger than what the consensus is penciling in.
Speaker 6: So we have been saying that the consumption should be
Speaker 6: slowing down and retail sales should be entering into negative
Speaker 6: territory in the fall. However, if it's true that there's
Speaker 6: a lot of early Black Friday sales and people took
Speaker 6: advantage of that those sales, it could mean that they
Speaker 6: won't be they would be stronger seasonally adjusted sales. But
Speaker 6: that doesn't mean that that's permanent, because what that means
Speaker 6: is that it will just pull forward to Christmas. Spending,
Speaker 6: so that will be weaker November and December.
Speaker 1: You think so much. You think it seems like people
Speaker 1: just spend, spend, spend, but you know, maybe they are
Speaker 1: pulling back.
Speaker 7: Well, the question is when they spend and how it
Speaker 7: will compare. Obviously to what we saw in the last
Speaker 7: couple of year. Everything's been very distorted by the pandemic.
Speaker 7: It's been hard to know exactly what's happening with consumer
Speaker 7: spending because of the pandemic bonuses you got from the
Speaker 7: government and the fact that when everybody went back to
Speaker 7: work they got raises, so it isn't quite clear what's
Speaker 7: going to happen, and all of that sort of distorted
Speaker 7: the timing of spending as well. But now the question
Speaker 7: is do we see a rebound because people still have
Speaker 7: money in the bank and they still they're making more money,
Speaker 7: they spend their paychecks and they're feeling good enough to
Speaker 7: go out and buy stuff, or do they pull back somewhat.
Speaker 7: Now last year we saw a rise in retail sales
Speaker 7: for October that then was eliminated in November and we
Speaker 7: went way way down. November and December were week. Do
Speaker 7: we see that same pattern again or do we get
Speaker 7: back to what we were seeing before the pandemic. And
Speaker 7: the one thing I wonder about is going into the pandemic,
Speaker 7: the psychology for a lot of buyers was wait till
Speaker 7: the last minute and prices will go down. While in
Speaker 7: an inflationary environment like this, maybe that's what people are
Speaker 7: going to start doing again. And then we wait and
Speaker 7: see what happens in November December.
Speaker 1: All right, well, our thanks to Annawong, Chief US Economists
Speaker 1: with Bloomberg Economics, Michael McKee, Bloomberg International Economics and Policy correspondent.
Speaker 1: Thank you both for being here and coming up on
Speaker 1: Bloomberg day Break Weekend. What to look for at this
Speaker 1: week's Dubai Air Show. I'm Tom Busby, and this is Bloomberg.
Speaker 1: This is Bloomberg day Break Weekend, our global look ahead
Speaker 1: of the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Up later in our
Speaker 1: program we preview one of the year's most crucial and
Speaker 1: a meeting of US and Chinese leaders. But first, it's
Speaker 1: shaping up to be among the hottest years ever for
Speaker 1: large aircraft deals and the buying spree expected to continue
Speaker 1: at the Dubai Air Show. In the days ahead. This
Speaker 1: comes has production at both Airbus and Boeing are having
Speaker 1: trouble meeting demand because of a shortage of parts, and
Speaker 1: that's intensifying the race among airlines for the last remaining
Speaker 1: production slots available this decade. And for more we head
Speaker 1: to London and Bloomberg Daybreak Europe anchor Caroline.
Speaker 2: Hepgar Tom The Dubai Air Show is an important barometer
Speaker 2: for the health of the aviation industry, measured by the
Speaker 2: appetite for deals. The industry's last big gathering was in
Speaker 2: Paris in June. It resulted in about one three hundred
Speaker 2: aircraft sales, and the organizer of the Dubai Air Show
Speaker 2: they are hoping to see something similar. The event caters
Speaker 2: to some of the world's largest wide body operators. The
Speaker 2: local champion Emirates has already teased that it wants to
Speaker 2: order more. Anna Edwards and I have been speaking to
Speaker 2: ours aviation reporters, Saidel Philip about what to expect from
Speaker 2: this major event, but first to get a flavor of
Speaker 2: the industry. Air Boss CEO Gillumfori says that the company
Speaker 2: expects higher output in twenty twenty four thanks to surging demand.
Speaker 2: He's been speaking to bring back to the main Bostic
Speaker 2: and Guy Johnson after Airbus's third quarter results.
Speaker 8: The single ale business, so the short and mid range
Speaker 8: activity will continue to dominate a number of planes. We've
Speaker 8: seen the activity on the single isle recovering much faster
Speaker 8: after COVID than it was for white bodies for long range,
Speaker 8: but we think long range will follow up, will also
Speaker 8: recover first and probably even stronger moving forward. And when
Speaker 8: we look at the long term perspectives for the market,
Speaker 8: we expect both single lile and white bodies to significantly grow,
Speaker 8: to the extent that we believe there will be around
Speaker 8: forty thousand plans to be delivered in the next twenty years.
Speaker 9: You're ramping up, as you just confirmed to me the
Speaker 9: three fifty program. You're going to go to ten a
Speaker 9: month twenty twenty six. That's not a big push higher.
Speaker 9: You're basically going from eight to nine to ten by
Speaker 9: twenty twenty six. Picking up on Romain's point is that
Speaker 9: you talk you signaling caution that you actually think the
Speaker 9: big push we're saying for long haul demand at the
Speaker 9: moment is not sustainable. Could you take that program higher
Speaker 9: by that point? If demand remains as robust as it
Speaker 9: is now.
Speaker 8: Actually, we see the demand growing, we see a recovery
Speaker 8: in the demand, and we will at a low point
Speaker 8: of a rate four on the every fifty during COVID.
Speaker 8: So we went from four and we keep growing and
Speaker 8: we are now targeting ten. It's slightly or it's very
Speaker 8: comparable to what we had recovered, and we had said
Speaker 8: that the traffic itself would be recovering back to pre
Speaker 8: COVID levels between twenty three to twenty five, twenty twenty
Speaker 8: three to twenty twenty five. So I think we are
Speaker 8: consistent with the evaluation, the assessment we made of the
Speaker 8: recovery of the market going just out of COVID. Do
Speaker 8: we have the potential for more Yes, the three fifty
Speaker 8: has the potential to go up to rate thirteen based
Speaker 8: on the existing production system, and we will continue to
Speaker 8: monitor the demand, the recovery of the demand with a
Speaker 8: big replacement cycle for white bodies that is just starting,
Speaker 8: and also some expectations for growth. So the market has
Speaker 8: the potential to go higher, and we have the potential
Speaker 8: to continue to serve that market by further ramping up.
Speaker 1: But I'd like to.
Speaker 8: Just confirm that rate ten on the three fifty is
Speaker 8: already a very big number.
Speaker 2: So that was the airbus CI high hypes. Then airlines
Speaker 2: will continue expanding, but there are plenty of headwinds for
Speaker 2: the industry, including obviously the disruption in the Middle East,
Speaker 2: the war in Ukraine, high all prices and why do
Speaker 2: economic uncertainty, So I asked our own said Oar Philip
Speaker 2: ahead of the Dubai Air Show, what he thinks the
Speaker 2: mood in the industry is going into the event.
Speaker 10: In terms of the mood for the industry at the moment,
Speaker 10: the industry is sort of struggling to get any aircraft.
Speaker 10: So everyone's sort of trying to order as many aircraft
Speaker 10: as they can as they look to tap into growth
Speaker 10: and demand over the next coming years. Remember that during
Speaker 10: the pandemic everything really slowed down and so now airlines
Speaker 10: are sort of ramped up again and they're trying to
Speaker 10: get as much demand de indicter to as much demand
Speaker 10: as they can, and that involves by new aircraft.
Speaker 11: Yes, it does involves by new aircraft. Hello, good to
Speaker 11: speak to you. So what are the orders that we're
Speaker 11: expecting to get in Dubai.
Speaker 10: So, yeah, we're expecting to we're expecting Emerits, which is
Speaker 10: the local carrier of the UAE of Dubai, is basically
Speaker 10: expected to make a massive splash. And Tim Clark has
Speaker 10: been saying that he's in the market for more white
Speaker 10: body jets. In June he talked about how he might
Speaker 10: order as many as one hundred, two hundred and fifty
Speaker 10: eCraft and he said he was looking at both Boeing
Speaker 10: and Airbas's largest models. So it's really a question of
Speaker 10: seeing how much Emeritz actually does sort of manage to
Speaker 10: succeed in terms of trying to get those orders across
Speaker 10: the line. We're also going to see some action possibly
Speaker 10: from Ria. There they're a brand new airline that Saudi
Speaker 10: Arabia is building from scratch and that's run by the
Speaker 10: former Etihad CEO Tony Douglas, and they've said that they're
Speaker 10: putting the final touches on what's going to be a
Speaker 10: sizeable order involving narrowbody plane. And we understand that RIA
Speaker 10: they're likely to order the Boeing seven thry seven Max
Speaker 10: jets and that's still not finalized but and talks ongoing,
Speaker 10: but we should be able to see how that plays
Speaker 10: out in the next couple of days.
Speaker 2: Okay, But with so many orders, what about the squeeze consumer?
Speaker 2: Are they pulling back on travel? What an airline's saying
Speaker 2: about demand?
Speaker 10: It seems to be a mixed picture at the moment.
Speaker 10: Some airlines are talking about how demand is slowing in
Speaker 10: terms of growth, So demand hasn't actually fallen down, but
Speaker 10: the growth percentages is slowing, especially in the US. We've
Speaker 10: seen some carriers talking about slowing demand growth. And also,
Speaker 10: I mean there's been some experienced industry watchers, including Steven
Speaker 10: Udvarhazi who's the chairman of Allies, and he's been talking
Speaker 10: about how there's a concern that airlines are over ordering aircraft,
Speaker 10: especially because of the fact that they've gone from virtually
Speaker 10: no traffic to one hundred percent and now everyone's sort
Speaker 10: of binging on aircraft.
Speaker 11: That was a feature of the of the airline industry
Speaker 11: decades ago, wasn't it said they're sort of overordering in
Speaker 11: good times and then paying the price sending all the
Speaker 11: planes to the desert in the bad times. How are
Speaker 11: the big planemakers then coping with this surge in demand?
Speaker 11: Are there are there still supply issues or are they
Speaker 11: able to deliver.
Speaker 10: There are still Supply issues have been We heard from
Speaker 10: Elbas and Eirbus was talking about how the supply chain
Speaker 10: continues to be constrained, and everyone's been trying to ramp
Speaker 10: up production ever since the lows of COVID, and they
Speaker 10: haven't yet been able to. That's partly because they're sort
Speaker 10: of cut back, especially smaller suppliers in the supply chain,
Speaker 10: cut back on staffing, they cut back on tooling, they
Speaker 10: cut back on facilities, and so bringing all of that
Speaker 10: back has been much harder than they anticipated. We've seen
Speaker 10: EBS talking about how they want to go to seventy
Speaker 10: five aircraft a month by twenty twenty six on the
Speaker 10: eighty twenty one wide narrowbodies, and they've talked about how
Speaker 10: they want to go to ten a month on the
Speaker 10: eight three fifty wide body, and so but at the
Speaker 10: moment they're still trying to ramp up. I mean, Boeing's
Speaker 10: had its own issues with suppliers. It's currently trying to
Speaker 10: rework issues with its seventy seven Max jets, which because
Speaker 10: of an issue with a Spirit Aero system in terms
Speaker 10: of production, and so everyone sort of trying to bring
Speaker 10: back production, but so far it is pretty slow going.
Speaker 2: So that was our senior aviation reporter, said our Philip
Speaker 2: speaking to me an to Bloomberg's Anna Edwards. I'm Caroline
Speaker 2: Hepkee here in London. You can catch us every weekday
Speaker 2: morning for Boomberg day Break you at beginning at six
Speaker 2: am in London. That's one am on Wall Street.
Speaker 7: Tom.
Speaker 1: Thank you, Caroline, And coming up on Bloomberg day Break weekend,
Speaker 1: we preview a big scheduled meeting with President Biden and
Speaker 1: Chinese President Chi Jinping. I'm Tom Busby, and this is Bloomberg.
Speaker 1: I'm Tom Busby in New York with your global look ahead,
Speaker 1: the top stories for investors in the coming week. On
Speaker 1: the sidelines of this week's Asia Pacific Economic Summit in
Speaker 1: San Francisco, a crucial meeting between the leaders of the
Speaker 1: US and China taking place. And for more, let's check
Speaker 1: in with Bloomberg Daybreak Asia anchor Doug Krisner.
Speaker 3: Tom. The last meeting of Presidents Biden and She was
Speaker 3: one year ago at the G twenty summit in Bali.
Speaker 3: Back then, the goal was to improve relations, but those
Speaker 3: talks were derailed when a suspected Chinese spy balloon flew
Speaker 3: over the US. Well, now both sides have reason to reset.
Speaker 3: Biden is seeking stability as he gears up for a
Speaker 3: presidential election next year, and she wants to attract more
Speaker 3: foreign investment to help reinvigorate china slowing economy. For some
Speaker 3: help previewing this meeting, I'm joined by Bloomberg's Chill diesis,
Speaker 3: our China Economy and Government editor. She joins us from
Speaker 3: our studios in Hong Kong. What do we know about
Speaker 3: the preparations for this face to face? What type of
Speaker 3: groundwork has been laid?
Speaker 12: Hi, Doug, Yeah, well, I think that at this point
Speaker 12: it really feels like we've been preparing for this meeting
Speaker 12: since she and Biden last met in Bali a year ago.
Speaker 12: I mean, as you mentioned, the Chinese spy balloon incident
Speaker 12: earlier this year certainly seemed to derail some of the
Speaker 12: preparation for this. But what we've seen the US in
Speaker 12: particular do over the past several months is send various
Speaker 12: high level delegations to China trying to lay the groundwork
Speaker 12: for this meeting. We saw Secretary of State Anthony Blincoln
Speaker 12: go to China. We saw the US Secretary of Commerce
Speaker 12: Juina Ramando go to China. We saw Janet yell and
Speaker 12: go to China, the US Treasurer Secretary, and all of
Speaker 12: this prep to try to lay the groundwork for this
Speaker 12: eventual She Biden meeting. So there's been a lot of
Speaker 12: these sort of high level talks between people who either
Speaker 12: aren't Sheer Biden or in some cases She meeting with
Speaker 12: some of the top level Biden officials to kind of
Speaker 12: pave the way for what I think both sides eventually
Speaker 12: hope is a very smooth meeting between their top leaders.
Speaker 3: You and I were talking a short while ago about
Speaker 3: He's written by Bloomberg opinion columnist Mention Pay and he
Speaker 3: was basically taking the view that this meeting holds very
Speaker 3: little in the way.
Speaker 1: Of upside for Biden.
Speaker 3: The China issue on the US side has become so toxic.
Speaker 3: Minchin was saying, any diplomatic outreach can be cast as
Speaker 3: appeasement and by extension, I'm thinking weakness.
Speaker 1: Now.
Speaker 3: She, on the other hand, has several reasons to maybe
Speaker 3: shift this downward spiral in relations with the US. Most
Speaker 3: obviously is this problem with investor confidence and the notion
Speaker 3: that China is uninvestable. Does Minchin have an accurate read
Speaker 3: on this dynamic, do you think.
Speaker 12: I do think he has a good point. I mean, look,
Speaker 12: I think that on the Biden side of things, it's
Speaker 12: definitely about politics here. I mean, Biden has a year
Speaker 12: to gear up for the next presidential election. Certainly Democrats
Speaker 12: were winning in some key races leading.
Speaker 10: Up to that.
Speaker 12: They just had a slew of victories and various US
Speaker 12: states that seemed very promising for the Democratic Party. But
Speaker 12: I think that as Biden gears up to challenge whoever
Speaker 12: his kind of part is going to be in the
Speaker 12: next presidential election, it looks most likely to be Trump.
Speaker 12: He's really got to project this idea that he's going
Speaker 12: to be very tough on China, and I think that
Speaker 12: the risk with any kind of meeting with she is
Speaker 12: that he comes across as a concessionary depending on what
Speaker 12: exactly he says. That though, I think really pales in
Speaker 12: comparison to some of the big problems that are facing
Speaker 12: presidents chijin Ping and China. As you mentioned, I think
Speaker 12: foreign investments in particular is a pretty significant issue for
Speaker 12: China right now. The most recent information on foreign direct
Speaker 12: investment into China, this came from the country's balance of
Speaker 12: payments data that was just released recently showed falling into
Speaker 12: the negative for the first time since records were kept
Speaker 12: since nineteen ninety eight. And we've seen all year long
Speaker 12: this big push by China, by Xijin Ping to try
Speaker 12: to lure foreign investment back. It's just really not taken
Speaker 12: hold that's obviously due to a number of reasons, whether
Speaker 12: it's holdover from COVID zero and all of the different
Speaker 12: restrictions that were placed on China over the last several years,
Speaker 12: whether it's regulatory issues, whether it's lack of clarity over
Speaker 12: how exactly the government is handling a lot of those
Speaker 12: regulatatory issues. That's all really led to this level of
Speaker 12: lack of confidence and mistrust in China from foreign investors.
Speaker 12: And I think that she is really on a mission
Speaker 12: here to try to bring that back.
Speaker 3: Yeah, maybe we can also talk about the role that
Speaker 3: geopolitics plays in that level of unease. Taiwan, we know,
Speaker 3: gets a lot of attention when it comes to flashpoints,
Speaker 3: but increasingly the Philippines has become a little bit of
Speaker 3: a concern. The US recently renewing a warning that it
Speaker 3: would defend the Philippines in case of an armed attack
Speaker 3: under a nineteen fifty one treaty that was after some
Speaker 3: Chinese ships blocked and collided with two Filipino vessels. Do
Speaker 3: you think this is a hot topic right now for
Speaker 3: the relationship between Biden and She.
Speaker 10: Yes.
Speaker 12: I mean, I think that anything involving the South China
Speaker 12: Sea is certainly going to some particular issues. This issue
Speaker 12: with the Philippines has been kind of unfolding for many
Speaker 12: many months now, leading to obviously some of these military
Speaker 12: confrontations there. I think that Biden's willingness to kind of
Speaker 12: come out in the US's willingness to kind of come
Speaker 12: up publicly and you know, issue that support for the
Speaker 12: Philippines does obviously signify that any kind of relationships military,
Speaker 12: geopolitical relationships that the US has in the South China
Speaker 12: see with any of its allies there or any other
Speaker 12: nations there are really particularly you know, important, strategically important
Speaker 12: for the US to you know, kind of protect you know,
Speaker 12: I don't know one hundred percent whether this is going
Speaker 12: to come up at the She Biden meeting, but certainly
Speaker 12: you would think that it's probably pretty top of mind
Speaker 12: for Biden to you know kind of you know, bring
Speaker 12: up the fact that this is a geopolitical flashpoints, as
Speaker 12: is Taiwan, as as many other issues here.
Speaker 3: Yeah, and I think that geopolitics extends to the Mid East.
Speaker 3: A but we were told there was a story on
Speaker 3: the Bloomberg Terminal highlight lighting the fact that President Biden
Speaker 3: had been briefed recently on what his invisors see as
Speaker 3: a Chinese plan to build a military facility in Oman.
Speaker 3: I mean that seems to probably be very concerning, I
Speaker 3: would imagine to the Biden administration.
Speaker 12: Yes, I think that's particularly concerning in light of how
Speaker 12: China has really stepped up its diplomatic involvement in that region.
Speaker 12: I mean that, you know, sort of predates the Hamas
Speaker 12: attack in Israel we've saw earlier this year. Obviously, she
Speaker 12: has really kind of played this role or tried to
Speaker 12: play this role as a peacemaker in the region. He
Speaker 12: helped broker a tentative to tent between Iran and Saudi Arabia.
Speaker 12: He's also held joint naval drills not just with Iran
Speaker 12: but with Russia in the Gulf of Oman just around
Speaker 12: that time. So I think that the Biden administration is
Speaker 12: likely keen to you know, look to see what China
Speaker 12: is doing in the Middle East as the conflict between
Speaker 12: Israel and Hamas continues to unfold. Obviously, whatever role China
Speaker 12: plays with you know, broker, any other relationships in that region,
Speaker 12: particularly with Iran, I think is going to be top
Speaker 12: of mind for the Biden administration.
Speaker 3: Well, you mentioned Russia there, and I'm curious about the
Speaker 3: recent comments from Vladimir Putin telling a senior Chinese military
Speaker 3: official that Moscow and Beijing should expand their cooperation on
Speaker 3: military satellites and other prospective defense technologies. And I'm wondering
Speaker 3: how China's relationship with Russia complicates anything that she is
Speaker 3: attempting to get out of the US.
Speaker 12: Well, I think what we've seen over the past couple
Speaker 12: of years in particular, is certainly she has not been
Speaker 12: afraid to tout this diplomatic alliance with Russia in many ways.
Speaker 12: I mean, we just saw a few weeks ago at
Speaker 12: the Belton Road Conference in Beijing, Putin attended, He was
Speaker 12: there with She. They talked side by side certainly a lot.
Speaker 12: I mean, this is a particularly important relationship for she
Speaker 12: to uphold, and I think that as we were continuing
Speaker 12: to see fallout from Russia's invasion in Ukraine. That is
Speaker 12: again I think sort of a sticking point with the
Speaker 12: Biden administration.
Speaker 3: Does there need to be a lot more in the
Speaker 3: way of good communication happening between the US and China
Speaker 3: where the military is concerned.
Speaker 12: Yes, I mean I think that it's certainly true. Look, Doug,
Speaker 12: over the past several years in particular, I don't think
Speaker 12: that you can discount also the relationship that COVID zero
Speaker 12: has had with you know, sort of fracturing a lot
Speaker 12: of these ties and communication between the US and China.
Speaker 12: I mean, when it's difficult to get into the country,
Speaker 12: difficult to get diplomats into the country, you sort of
Speaker 12: lose or those lines of communication or those lines of
Speaker 12: communication between those medium level, mid level, you know, diplomats
Speaker 12: in the US and China get certainly very freed.
Speaker 3: Jill, thank you so much for helping us preview the
Speaker 3: meeting between Presidents Biden and she. Bloomberg's Jill desis our
Speaker 3: China Economy and Government editor. I'm Doug Prisner. You can
Speaker 3: catch Brian Kurta and myself weekdays here for Bloomberg Day
Speaker 3: Break Asia, beginning at seven am in Hong Kong six
Speaker 3: PM on Wall Street, Tom.
Speaker 1: Our thanks to Bloomberg day Break Asia anchor Doug Krisner,
Speaker 1: And coming up here on Bloomberg day Break weekend, another
Speaker 1: possible government shutdown looming. We take you to Washington next
Speaker 1: for the latest. I'm Tom Busby, and this is Bloomberg.
Speaker 1: This is Bloomberg day Break Weekend, our global look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Could the federal government
Speaker 1: be hurtling toward a devastating shutdown? Could happen?
Speaker 11: For more?
Speaker 1: Let's head to our Bloomberg ninety nine to one newsroom
Speaker 1: in Washington and Bloomberg Sound On. Co host Kaylee lines.
Speaker 4: Yeah, Tom, we're running out of sand in the hour
Speaker 4: glass here, and yes, we've been here before. Remember in
Speaker 4: government funding almost ran out at the end of September. Well,
Speaker 4: we avoided that though a continuing resolution that ultimately costs
Speaker 4: former Speaker Kevin McCarthy his job was the price, and
Speaker 4: that just kicked the can down the road, a road
Speaker 4: that ends on November seventeenth. So this coming week, it's
Speaker 4: going to be up to the new Speaker, Mike Johnson
Speaker 4: and the rest of Congress to figure out how to
Speaker 4: extend funding again and avoid a government shutdown. So how
Speaker 4: do they get it done? Here with some insight, hopefully
Speaker 4: is Megan Scully. He leads our congressional coverage here at Bloomberg,
Speaker 4: So Megan. Obviously they're not going to be able to
Speaker 4: get all of the different appropriation bills done by the
Speaker 4: end of next week. There's no time. So it's going
Speaker 4: to have to be another CR.
Speaker 13: It will be another continuing resolution, yes, if they can
Speaker 13: agree to one. The House is currently trying to figure
Speaker 13: out what exactly could get through that chamber. The new speaker,
Speaker 13: Speaker Mike Johnson, is finding himself in the same difficult
Speaker 13: position that his predecessor, Kevin McCarthy was in just about
Speaker 13: two months ago, and he's trying to get consensus within
Speaker 13: the Republican party in the House. But whatever they do
Speaker 13: decide on still has to pass muster with the Senate,
Speaker 13: which is controlled by Democrats. So there's going to be
Speaker 13: a lot of maneuvering in the week ahead.
Speaker 4: Absolutely, And of course one of the big sticking points
Speaker 4: between Republicans and Democrats, or the big policy differences, is
Speaker 4: people who want greater fiscal restraint versus maybe not so much. Right,
Speaker 4: Can something clean get through? Are we going to have
Speaker 4: to see spending cuts involved?
Speaker 13: There's discussion about a clean cr maybe one that lasts
Speaker 13: until January. There's also been sort of this new made
Speaker 13: up concept of a laddered cr H. What is that
Speaker 13: some government agencies would close earlier than others, and the
Speaker 13: dates could be December and January or January and February.
Speaker 13: Sort of a rolling shutdown that would decrease the at
Speaker 13: least the initial impact of a shutdown. You know, maybe
Speaker 13: the Defense Department stays open for a couple of extra weeks,
Speaker 13: but it doesn't solve the problem of we need to
Speaker 13: fund the government until the fiscal year ends on September thirtieth.
Speaker 13: So basically they are trying to negotiate exactly what to do,
Speaker 13: whether to take this laddered approach that is perhaps clean,
Speaker 13: or another clean spending bill that is very short and
Speaker 13: just buys the House sometime to figure out what to
Speaker 13: do next. Because remember this is sort of the first
Speaker 13: time this new speaker is involved in these high stakes
Speaker 13: Washington negotiations.
Speaker 4: Well, and it's not just a question of Senate Democrats.
Speaker 4: It feels like there's also a good deal of daylight
Speaker 4: between Republicans in the Senate and Republicans in the House.
Speaker 13: Absolutely, especially over sort of extra issues, things that aren't
Speaker 13: necessarily directly tied to the government shut down, but are
Speaker 13: extraneous to that. And that is, of course the emergency
Speaker 13: spending on Ukraine, on Israel, on Taiwan, and along the border.
Speaker 4: Well, on the subject of the border funding, talk to
Speaker 4: us about how that is fitting into the equation here,
Speaker 4: because obviously that's something Republicans are pushing really heavily for,
Speaker 4: and it seems like that's something the White House is
Speaker 4: willing to give, right at least in terms of monetary giving.
Speaker 13: Yes, the devil is certainly in the details. Immigration is
Speaker 13: an issue that has long dogged lawmakers in Washington and
Speaker 13: the White House. The migrant crisis right now that is
Speaker 13: affecting not just communities along the border, but cities like
Speaker 13: New York and Chicago, really blue areas, areas that Democratic
Speaker 13: strongholds are being affected by this migrant crisis, which is
Speaker 13: making Democrats perhaps more willing to deal on border and
Speaker 13: immigration policies.
Speaker 4: All right, Well, the clock is ticking, as it always
Speaker 4: seems to be. Megan Scully, the leader of Bloomberg's congressional coverage.
Speaker 4: Thank you so much. And Tom, you better watch that clock.
Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host
Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine one newsroom
Speaker 1: in Washington. And you can hear sound on weekdays one
Speaker 1: to three pm on Bloomberg Radio. And that does it
Speaker 1: for this edition of Bloomberg Daybreak Weekend. Join us again
Speaker 1: Monday morning, five am Wall Street Time for the latest
Speaker 1: on the markets, overseas and the news you need to
Speaker 1: start your day. I'm Tom Buzby. Stay with us. Top
Speaker 1: stories and global business headlines are coming up right now.