1 00:00:02,440 --> 00:00:07,360 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:08,840 --> 00:00:12,479 Speaker 2: Welcome to a special edition of Bloomberg Daybreak Weekend, our 3 00:00:12,520 --> 00:00:14,760 Speaker 2: global look at the top stories in the coming week 4 00:00:15,280 --> 00:00:18,480 Speaker 2: from all of our Daybreak anchors, including Tom Busby. This 5 00:00:18,560 --> 00:00:22,599 Speaker 2: is not Tom Busby, it's Tom Kean McKee out of 6 00:00:22,640 --> 00:00:24,480 Speaker 2: tantrum and said, I'm only going to talk to Tom 7 00:00:24,560 --> 00:00:28,520 Speaker 2: Keen about next week. It's just so so exciting. Michael 8 00:00:28,560 --> 00:00:32,599 Speaker 2: McKee joins now driving all of our economic work here, 9 00:00:32,680 --> 00:00:34,720 Speaker 2: of course off a blowout two hundred and seventy two 10 00:00:34,800 --> 00:00:39,800 Speaker 2: thousand job statistic. Once again, it's morning in America except 11 00:00:39,800 --> 00:00:42,720 Speaker 2: for inflation. Inflation is out there and to drive Daybreak 12 00:00:42,760 --> 00:00:45,800 Speaker 2: forward into next week. Am I right that we have 13 00:00:45,840 --> 00:00:50,080 Speaker 2: an inflation report at eight thirty in a Fed report 14 00:00:50,159 --> 00:00:51,040 Speaker 2: at two pm. 15 00:00:51,320 --> 00:00:54,360 Speaker 3: Yes, the Fed will be getting the inflation numbers just 16 00:00:54,480 --> 00:00:57,640 Speaker 3: before they vote. However, they've probably done most of the math, 17 00:00:57,760 --> 00:01:02,440 Speaker 3: and generally economists are pretty good at forecasting the price indexes, 18 00:01:02,520 --> 00:01:06,840 Speaker 3: so there might be a surprise. But if there's no surprise, 19 00:01:06,959 --> 00:01:10,200 Speaker 3: then not going to change anything in their outlook. They 20 00:01:10,240 --> 00:01:12,800 Speaker 3: will have submitted their views on what they think is 21 00:01:12,800 --> 00:01:15,160 Speaker 3: going to happen going forward, and we'll get the dot 22 00:01:15,200 --> 00:01:17,000 Speaker 3: plot and we'll see what they say. 23 00:01:17,120 --> 00:01:19,320 Speaker 2: Is this a two hour conversation you and I could 24 00:01:19,319 --> 00:01:21,680 Speaker 2: have it? I mean, there's so much going on. Yeah, 25 00:01:21,800 --> 00:01:24,679 Speaker 2: my head's absolutely spinning about this from the jobs report, 26 00:01:24,720 --> 00:01:26,840 Speaker 2: and we can look back at that. We'll touch on 27 00:01:26,880 --> 00:01:29,200 Speaker 2: that in a moment, but let's stay on inflation now. 28 00:01:29,680 --> 00:01:32,600 Speaker 2: I was making a joke with Claudia Sam about the 29 00:01:32,720 --> 00:01:36,679 Speaker 2: lift in cat food prices, which is tangible. Are we 30 00:01:36,800 --> 00:01:41,920 Speaker 2: still seeing the shock in goods prices like Claudius Sam 31 00:01:42,080 --> 00:01:44,720 Speaker 2: saw with Puffy the cat. 32 00:01:44,840 --> 00:01:47,760 Speaker 3: Not the same way food prices and I'm sorry her 33 00:01:47,800 --> 00:01:49,960 Speaker 3: cat food went up, But food prices have been flat 34 00:01:50,000 --> 00:01:50,640 Speaker 3: for the last. 35 00:01:50,480 --> 00:01:51,080 Speaker 4: Couple of months. 36 00:01:51,080 --> 00:01:53,880 Speaker 3: They haven't been rising, when one of the bright spots 37 00:01:54,080 --> 00:01:58,760 Speaker 3: for inflation. Overall goods inflation has gone up a little 38 00:01:58,800 --> 00:02:02,520 Speaker 3: bit in the last two months, but very little. It's 39 00:02:02,520 --> 00:02:05,440 Speaker 3: still services price inflation that is rising, and that's been 40 00:02:05,920 --> 00:02:09,440 Speaker 3: the Fed's worry because labor is such a big part 41 00:02:09,480 --> 00:02:13,240 Speaker 3: of service price costs. Labor went up, and we saw 42 00:02:13,560 --> 00:02:15,960 Speaker 3: an increase in average hourly earnings. 43 00:02:16,000 --> 00:02:17,680 Speaker 2: Well, let's span the globe as they used to do 44 00:02:17,760 --> 00:02:21,240 Speaker 2: on Wide World of Sports. Claudia Sam's got the cats, 45 00:02:21,400 --> 00:02:24,000 Speaker 2: cat food up. I got vet Bill and Kennel Fee, 46 00:02:24,040 --> 00:02:27,079 Speaker 2: and let me tell you. I can tell you service 47 00:02:27,160 --> 00:02:33,200 Speaker 2: sector online is up, and it's not up modest like 48 00:02:33,280 --> 00:02:37,000 Speaker 2: these are real jumps. Let's talk about service sector inflation 49 00:02:37,120 --> 00:02:39,800 Speaker 2: that we're gonna see the same day as the Fed. 50 00:02:39,919 --> 00:02:44,120 Speaker 2: It's still tangible, isn't it. It's not disinflation, right. 51 00:02:44,440 --> 00:02:49,120 Speaker 3: Well, it's disinflation, but it's not deflation. Certainly, it's not flat. 52 00:02:49,200 --> 00:02:51,919 Speaker 3: It's been going up at a slightly slower pace. Give 53 00:02:51,919 --> 00:02:54,400 Speaker 3: me a note. Well, it's been rising about four tenths 54 00:02:54,400 --> 00:02:57,200 Speaker 3: a month, and the Fed wants to see that down 55 00:02:57,320 --> 00:03:00,959 Speaker 3: around two tenths or or lower. The question is how 56 00:03:00,960 --> 00:03:03,079 Speaker 3: fast do they get there? How fast do we see 57 00:03:03,080 --> 00:03:04,320 Speaker 3: this stuff squeeze out? 58 00:03:04,360 --> 00:03:04,520 Speaker 5: Now? 59 00:03:04,520 --> 00:03:08,280 Speaker 3: We had the big rise in average hourly earnings last month, 60 00:03:08,760 --> 00:03:12,639 Speaker 3: and some of that may have been the rise in 61 00:03:12,680 --> 00:03:19,080 Speaker 3: California's minimum wage, which mostly affects service industry workers. So 62 00:03:20,280 --> 00:03:24,160 Speaker 3: you have that service industry inflation still coming through because 63 00:03:24,160 --> 00:03:27,560 Speaker 3: I'm sure restaurants raise their costs to try to recoup 64 00:03:27,919 --> 00:03:30,680 Speaker 3: some of what they had to pay in the additional wages. 65 00:03:31,440 --> 00:03:34,160 Speaker 3: But then it's a one off. Do we then see 66 00:03:34,240 --> 00:03:39,200 Speaker 3: next month that it drops back that's the guess the 67 00:03:39,240 --> 00:03:40,200 Speaker 3: FED has to make. 68 00:03:40,480 --> 00:03:43,600 Speaker 2: Let's go to the FED meeting, and I'm going to 69 00:03:43,640 --> 00:03:46,840 Speaker 2: start with something I believe I've never seen. We had 70 00:03:46,880 --> 00:03:53,440 Speaker 2: an ECB rate cut last week, inflation forecasts up by 71 00:03:53,440 --> 00:03:57,960 Speaker 2: the ECB. I believe I've never seen that. The Fed's 72 00:03:58,000 --> 00:04:01,680 Speaker 2: not going to do that. When they cut, They've got 73 00:04:01,680 --> 00:04:04,360 Speaker 2: to have an inflation forecast coming down, don't. 74 00:04:04,080 --> 00:04:06,960 Speaker 3: They Yes, absolutely, and we get a new forecast from them. 75 00:04:07,080 --> 00:04:10,040 Speaker 3: They'll put out their summary of Economic Projections with the 76 00:04:10,080 --> 00:04:13,880 Speaker 3: dots with the dot plot, and they will have new 77 00:04:13,920 --> 00:04:18,400 Speaker 3: inflation forecasts. Whether they'll change it or not is a question, 78 00:04:18,480 --> 00:04:20,720 Speaker 3: because these are forecasts where we're going to be at 79 00:04:20,720 --> 00:04:23,039 Speaker 3: the end of this year, at the end of next year, 80 00:04:23,360 --> 00:04:26,600 Speaker 3: and they've already forecast that inflation is going to drop 81 00:04:26,640 --> 00:04:28,840 Speaker 3: and drop slowly, but it's going to get there. So 82 00:04:28,920 --> 00:04:31,400 Speaker 3: we may not see a big change in the inflation forecast. 83 00:04:31,880 --> 00:04:34,080 Speaker 3: It's pretty clear now that we will see a change 84 00:04:34,080 --> 00:04:38,919 Speaker 3: in the dot plot because everybody, including City Group, on 85 00:04:39,040 --> 00:04:42,400 Speaker 3: Friday after the Jobs report, priced out their July rate cut. 86 00:04:42,560 --> 00:04:46,080 Speaker 3: So you don't have three rate cuts anymore. You're going 87 00:04:46,160 --> 00:04:48,880 Speaker 3: to have two or one. That's going to be the 88 00:04:48,920 --> 00:04:51,599 Speaker 3: issue for the beneficials submitting their guesses. 89 00:04:51,720 --> 00:04:56,000 Speaker 2: Tom Buzby would be polite on Bloomberg Daybreak, I'm not 90 00:04:56,040 --> 00:04:58,400 Speaker 2: going to be polite. Do you have a question yet 91 00:04:58,440 --> 00:04:59,040 Speaker 2: for the chairman? 92 00:05:00,279 --> 00:05:04,680 Speaker 3: Well, the question that presents itself following what we've seen 93 00:05:04,800 --> 00:05:09,040 Speaker 3: in the last week, and we saw stronger than expected 94 00:05:09,120 --> 00:05:15,400 Speaker 3: ism numbers, stronger than expected hiring, is are you tight enough? 95 00:05:16,360 --> 00:05:19,080 Speaker 3: Does the Fed have enough restraint on the economy to 96 00:05:19,200 --> 00:05:22,960 Speaker 3: bring inflation down? And we'll get a partial answer to 97 00:05:23,000 --> 00:05:27,120 Speaker 3: that from the CPI numbers, But there have been questions 98 00:05:27,120 --> 00:05:30,080 Speaker 3: about whether the Fed is restrictive enough and if we're 99 00:05:30,080 --> 00:05:33,680 Speaker 3: still getting jobs reports like this, one could argue maybe 100 00:05:33,680 --> 00:05:36,240 Speaker 3: they're not. Their argument has been we just haven't waited 101 00:05:36,279 --> 00:05:36,839 Speaker 3: long enough. 102 00:05:37,200 --> 00:05:41,039 Speaker 2: Is our international economics and policy correspondent, Michael. Thank you 103 00:05:41,120 --> 00:05:44,640 Speaker 2: so much, and now we dash to big tech. Of course, 104 00:05:45,279 --> 00:05:49,760 Speaker 2: to Apple, Tom Busby, I'll look at the Worldwide Developers 105 00:05:49,800 --> 00:05:51,520 Speaker 2: Conference in Cooper. 106 00:05:51,279 --> 00:05:54,919 Speaker 6: Tino on Monday. Apple kicks off it's week long Worldwide 107 00:05:54,920 --> 00:05:57,800 Speaker 6: Developers Conference event for twenty twenty four, but this year 108 00:05:57,839 --> 00:06:01,039 Speaker 6: is different. It is all about a for more on 109 00:06:01,120 --> 00:06:03,720 Speaker 6: the event and what to expect. We're joined by Mark German, 110 00:06:04,040 --> 00:06:08,160 Speaker 6: Bloomberg's chief correspondent on Global Technology Now Mark, there may 111 00:06:08,200 --> 00:06:11,080 Speaker 6: be a lot going on at Apple's Worldwide Developers Conference, 112 00:06:11,080 --> 00:06:13,720 Speaker 6: but it looks like it's AI strategy and a rather 113 00:06:13,920 --> 00:06:17,160 Speaker 6: unlikely AI partnership will be the big focus. So what 114 00:06:17,200 --> 00:06:18,360 Speaker 6: do you expect to see. 115 00:06:18,520 --> 00:06:21,720 Speaker 7: It's all going to be about artificial intelligence at Apple 116 00:06:21,800 --> 00:06:24,920 Speaker 7: for the foreseeable future, and at the conference on Monday, 117 00:06:24,960 --> 00:06:29,440 Speaker 7: they're going to introduce new versions of iOS, macOS, Ipedos 118 00:06:29,440 --> 00:06:32,520 Speaker 7: with AI at the very forefront, and the big idea 119 00:06:32,680 --> 00:06:35,800 Speaker 7: is to integrate artificial intelligence in a way that syncs 120 00:06:35,880 --> 00:06:39,520 Speaker 7: with your day to day capabilities in your applications, with 121 00:06:39,920 --> 00:06:42,640 Speaker 7: a strong privacy focus, So you're not going to see 122 00:06:42,680 --> 00:06:47,159 Speaker 7: whizbang features like image generation. Things like open AI and 123 00:06:47,200 --> 00:06:49,520 Speaker 7: Google gem and I have shown and they're really intricate 124 00:06:49,560 --> 00:06:54,120 Speaker 7: demos recently. You're going to see things like summarizing incoming notifications, 125 00:06:54,560 --> 00:06:58,520 Speaker 7: automatically replying to text messages and emails, the ability to 126 00:06:58,600 --> 00:07:02,400 Speaker 7: quickly edit photos using AI. But there's also going to 127 00:07:02,440 --> 00:07:06,479 Speaker 7: be an interesting partnership with OpenAI for an integrated chatbot 128 00:07:06,640 --> 00:07:10,040 Speaker 7: because Apple knows that some consumers want that functionality as well. 129 00:07:10,120 --> 00:07:13,280 Speaker 7: So it's going to be a very broad AI strategy 130 00:07:13,360 --> 00:07:15,720 Speaker 7: here for Apple to set the stage for the next 131 00:07:15,720 --> 00:07:16,880 Speaker 7: three years at the company. 132 00:07:17,040 --> 00:07:20,200 Speaker 6: Now, Apple a little late maybe to the AI boom, 133 00:07:20,240 --> 00:07:25,360 Speaker 6: Microsoft Alpha Bit, even Amazon way ahead. Is this partnership 134 00:07:25,440 --> 00:07:28,200 Speaker 6: with open ai. Do you see it as temporary? How 135 00:07:28,240 --> 00:07:30,640 Speaker 6: soon will Apple have its own AI chatbot? 136 00:07:30,920 --> 00:07:34,120 Speaker 7: Apple certainly is very late to the game here regarding 137 00:07:34,200 --> 00:07:39,000 Speaker 7: generatord AI or these modern sets of artificial intelligence based 138 00:07:39,000 --> 00:07:42,320 Speaker 7: on technology known as a large language model. It's so interesting. 139 00:07:42,360 --> 00:07:45,120 Speaker 7: Apple was ahead of the game for many years with Siri, 140 00:07:45,360 --> 00:07:47,920 Speaker 7: which was introduced at the end of twenty eleven, but 141 00:07:48,000 --> 00:07:52,000 Speaker 7: they got lapped very quickly by Amazon Alexa and Google Assistant, 142 00:07:52,160 --> 00:07:54,360 Speaker 7: and then they got lapped again with the introduction of 143 00:07:54,400 --> 00:07:58,000 Speaker 7: open AI's chat GPT in November of twenty twenty two. 144 00:07:58,160 --> 00:08:00,400 Speaker 7: So it's fair to say they were caught absolutely flat 145 00:08:00,400 --> 00:08:02,920 Speaker 7: put it. They spent the last year and change trying 146 00:08:02,960 --> 00:08:06,520 Speaker 7: to reverse that and integrate as much AI as possible 147 00:08:06,800 --> 00:08:10,040 Speaker 7: through a program known internally as Project gray Matter. Now, 148 00:08:10,120 --> 00:08:13,720 Speaker 7: the OpenAI partnership is interesting because this is specifically for 149 00:08:13,800 --> 00:08:18,320 Speaker 7: a chatbot component and the generation of text messages and 150 00:08:18,560 --> 00:08:20,880 Speaker 7: different things that you can use check GPT for, such 151 00:08:20,880 --> 00:08:24,680 Speaker 7: as writing email. Now. I anticipate this partnership to be 152 00:08:25,200 --> 00:08:27,280 Speaker 7: long term in the sense that it will exist for 153 00:08:27,320 --> 00:08:29,640 Speaker 7: the next few years or so. But in an even 154 00:08:29,720 --> 00:08:32,760 Speaker 7: longer term, maybe five to ten years, you're going to 155 00:08:32,800 --> 00:08:35,520 Speaker 7: see Apple shift to its own chatbot, but it's going 156 00:08:35,559 --> 00:08:37,520 Speaker 7: to take a while for Apple to get there. There 157 00:08:37,559 --> 00:08:40,800 Speaker 7: are still concerns with chatbots and generative AI. There's the 158 00:08:40,840 --> 00:08:43,800 Speaker 7: idea of what's known as a hallucination, which is AI 159 00:08:44,000 --> 00:08:48,880 Speaker 7: and generative AI reporting incorrect information, to taking information from 160 00:08:48,920 --> 00:08:51,960 Speaker 7: the Internet and presenting it in an incorrect way. And 161 00:08:52,000 --> 00:08:55,200 Speaker 7: that's what Apple's trying to avoid, and by using open AI, 162 00:08:55,400 --> 00:08:58,920 Speaker 7: they're pushing the onus on them rather than taking responsibility 163 00:08:59,520 --> 00:09:01,920 Speaker 7: for those incorrect information suggestions. 164 00:09:02,160 --> 00:09:06,920 Speaker 6: Now, aside from those incorrect incorrect information, those hallucinizations, is 165 00:09:06,960 --> 00:09:10,199 Speaker 6: there is there a danger of outsourcing It's AI to 166 00:09:10,240 --> 00:09:13,160 Speaker 6: Open Eye right now? I mean that CEO Sam Altman, 167 00:09:13,240 --> 00:09:16,120 Speaker 6: controversial figure, ousted from the company for a short time 168 00:09:16,200 --> 00:09:19,560 Speaker 6: last year. Reasons not quite clear. Are you getting into 169 00:09:19,559 --> 00:09:21,080 Speaker 6: bed with someone maybe you shouldn't. 170 00:09:21,280 --> 00:09:24,320 Speaker 7: I think the only concern with partnering with open ai 171 00:09:24,600 --> 00:09:29,240 Speaker 7: is actually its corporate structure, right who owns the company? 172 00:09:29,480 --> 00:09:33,360 Speaker 7: How's the company operated. Can that board take out their 173 00:09:33,400 --> 00:09:35,800 Speaker 7: executive team again like they did at the end of 174 00:09:35,880 --> 00:09:39,559 Speaker 7: last year, right? Can that company fall flat on its face? 175 00:09:39,640 --> 00:09:43,160 Speaker 7: Can it fall apart? Does it have the necessary agreements 176 00:09:43,200 --> 00:09:47,160 Speaker 7: in place to keep that chat GPT server infrastructure up 177 00:09:47,320 --> 00:09:50,320 Speaker 7: for the hundreds of millions of Apple customers? So those 178 00:09:50,360 --> 00:09:53,360 Speaker 7: are my real concerns with the Open Ai partnership. Right, 179 00:09:53,720 --> 00:09:56,640 Speaker 7: I'm not concerned with how controversial Sam Altman has become. 180 00:09:57,080 --> 00:09:59,000 Speaker 7: I think that you and I care about it. I 181 00:09:59,040 --> 00:10:00,760 Speaker 7: think a lot of our readers care about it. I 182 00:10:00,760 --> 00:10:03,160 Speaker 7: think Wall Street cares about it, and tech fans care 183 00:10:03,160 --> 00:10:06,320 Speaker 7: about it. But don't forget there's over two billion Apple 184 00:10:06,360 --> 00:10:09,280 Speaker 7: devices in use. Right, I would venture to say that 185 00:10:09,400 --> 00:10:12,400 Speaker 7: ninety nine percent of people who use an iPhone don't 186 00:10:12,440 --> 00:10:15,200 Speaker 7: know or care who Sam Altman is, and they certainly 187 00:10:15,280 --> 00:10:19,840 Speaker 7: don't care about his controversies, his arguments with Scarlett Johansson, 188 00:10:20,200 --> 00:10:22,560 Speaker 7: or any of those issues. But Apple wants is a 189 00:10:22,559 --> 00:10:25,360 Speaker 7: product that functions, and Open AI at this point offers 190 00:10:25,400 --> 00:10:28,200 Speaker 7: the best technology in terms of a chatbot, in terms 191 00:10:28,240 --> 00:10:31,559 Speaker 7: of providing generative AI technology, So that's why they went 192 00:10:31,600 --> 00:10:35,160 Speaker 7: with them. Now, the good news here is that Microsoft 193 00:10:35,280 --> 00:10:38,120 Speaker 7: is a big backer of Open Ai, and obviously Apple 194 00:10:38,160 --> 00:10:41,120 Speaker 7: can trust Microsoft. They've been partners on many different initiatives 195 00:10:41,320 --> 00:10:43,800 Speaker 7: for a number of years. In addition to rivals and 196 00:10:44,120 --> 00:10:47,000 Speaker 7: chat GPT runs on Azure. Do you do have sort 197 00:10:47,000 --> 00:10:49,599 Speaker 7: of that adult in the room perspective there of Microsoft 198 00:10:49,640 --> 00:10:51,320 Speaker 7: to make sure this thing remains up and running. 199 00:10:51,600 --> 00:10:54,720 Speaker 6: So you have these billions of devices, what changes will 200 00:10:54,720 --> 00:10:58,160 Speaker 6: the iPhone user or iPad user expectancy and when will 201 00:10:58,200 --> 00:11:02,599 Speaker 6: they see them? This new leap in AI with Chad GPT, 202 00:11:02,840 --> 00:11:03,280 Speaker 6: So the. 203 00:11:03,200 --> 00:11:05,079 Speaker 7: Big changes you're going to see are going to begin 204 00:11:05,280 --> 00:11:07,760 Speaker 7: rolling out in September, right, that's going to be as 205 00:11:07,800 --> 00:11:12,559 Speaker 7: part of iosaighteen, iPadOS eighteen, and Macros fifteen. And you're 206 00:11:12,600 --> 00:11:14,480 Speaker 7: going to see things like, if you missed a bunch 207 00:11:14,480 --> 00:11:17,480 Speaker 7: of notifications, you'll get a summary of everything you missed. 208 00:11:17,800 --> 00:11:20,559 Speaker 7: If you record a voice memo, you'll get an instant transcription. 209 00:11:21,040 --> 00:11:23,360 Speaker 7: If you're using the notes app to record a meeting, 210 00:11:23,679 --> 00:11:25,800 Speaker 7: you'll get a summary of what happened in that meeting. 211 00:11:26,440 --> 00:11:29,040 Speaker 7: If you want to reply to your text message or emails, 212 00:11:29,120 --> 00:11:32,480 Speaker 7: you'll get suggested full length applies that are based on 213 00:11:32,720 --> 00:11:35,800 Speaker 7: what the incoming email or text message was. If you 214 00:11:35,800 --> 00:11:38,280 Speaker 7: get a bunch of emails coming in. You'll get Gmail 215 00:11:38,520 --> 00:11:41,560 Speaker 7: AI like classification, putting your emails in folders for you 216 00:11:41,920 --> 00:11:45,600 Speaker 7: based on if something's important, work related, personal, or maybe 217 00:11:45,600 --> 00:11:49,360 Speaker 7: it's spam right, you'll get a higher level of email classification. 218 00:11:49,559 --> 00:11:52,280 Speaker 7: So there's a lot of AI coming in a deeply 219 00:11:52,320 --> 00:11:55,760 Speaker 7: integrated fashion across all of Apples apps. Not only a 220 00:11:55,760 --> 00:11:58,320 Speaker 7: partnership with open Ai to power some of this, but 221 00:11:58,400 --> 00:12:01,200 Speaker 7: it's an in house on device large language model from 222 00:12:01,240 --> 00:12:03,920 Speaker 7: Apple as well as an in house large language model 223 00:12:03,960 --> 00:12:06,800 Speaker 7: that runs on Apple Cloud servers. So a ton of 224 00:12:06,840 --> 00:12:10,680 Speaker 7: AI based functionality coming here. This is AI everywhere for Apple. 225 00:12:11,280 --> 00:12:13,680 Speaker 7: It's code named Project gray Matter. That's the part of 226 00:12:13,679 --> 00:12:16,440 Speaker 7: a brain that there's a lot of the processing. So 227 00:12:16,640 --> 00:12:18,360 Speaker 7: this is going to be a very big initiative for 228 00:12:18,400 --> 00:12:18,880 Speaker 7: the company. 229 00:12:19,160 --> 00:12:21,599 Speaker 6: Well, a lot to look forward to at Apple's Worldwide 230 00:12:21,679 --> 00:12:24,400 Speaker 6: Developers Conference. It kicks off on Monday, and our thanks 231 00:12:24,440 --> 00:12:29,000 Speaker 6: to Mark German, Bloomberg chief correspondent on global technology, coming 232 00:12:29,040 --> 00:12:31,160 Speaker 6: up on Bloomberg day Break weekend to look ahead to 233 00:12:31,360 --> 00:12:35,439 Speaker 6: London Tech Week. I'm Tom Busby and this is Bloomberg. 234 00:12:45,080 --> 00:12:47,400 Speaker 6: This is Bloomberg day Break Weekend, our global look ahead 235 00:12:47,440 --> 00:12:49,680 Speaker 6: at the top stories for investors in the coming week. 236 00:12:49,960 --> 00:12:52,720 Speaker 6: I'm Tom Busby in New York. Up later in our 237 00:12:52,760 --> 00:12:55,760 Speaker 6: program to look ahead to India's inflation and trade data 238 00:12:55,840 --> 00:12:59,880 Speaker 6: following its faithful elections. First, the tech sector is booming, 239 00:13:00,080 --> 00:13:04,280 Speaker 6: fueling all time highs on Wall Street thanks to artificial intelligence. 240 00:13:04,320 --> 00:13:07,160 Speaker 6: Giants like Nvidia and the rise of AI will be 241 00:13:07,240 --> 00:13:10,520 Speaker 6: front and center at the upcoming London Tech Week conference, 242 00:13:10,880 --> 00:13:13,720 Speaker 6: bringing together industry leaders from all over the world. And 243 00:13:13,760 --> 00:13:16,160 Speaker 6: for more, Let's go to London and bring in Bloomberg 244 00:13:16,200 --> 00:13:19,000 Speaker 6: Daybreak eurobanker Caroline hepgar Tom. 245 00:13:19,040 --> 00:13:23,640 Speaker 1: As the world contemplates the tech sectors phenomenal growth and transformation, 246 00:13:24,080 --> 00:13:27,480 Speaker 1: many will be asking questions about the future. Are the 247 00:13:27,520 --> 00:13:32,359 Speaker 1: gains sustainable, is the progress ethical? And perhaps more crucially, 248 00:13:32,679 --> 00:13:37,160 Speaker 1: what comes next? Not everyone is convinced. Recently, economics professor 249 00:13:37,160 --> 00:13:41,200 Speaker 1: and Nobel laureate Paul Romer told Bloomberg that confidence in 250 00:13:41,360 --> 00:13:46,560 Speaker 1: artificial intelligence risks repeating the mistakes of the crypto bubble 251 00:13:46,800 --> 00:13:50,520 Speaker 1: of only two years ago. A tech sector bubble popping 252 00:13:50,880 --> 00:13:53,640 Speaker 1: moment is certainly a fear shared by others in the industry. 253 00:13:53,920 --> 00:13:57,760 Speaker 1: Some investors are wary that AI in particular has been overhyped, 254 00:13:58,040 --> 00:14:03,120 Speaker 1: and regulators are fearful of abuse of the technology concerns 255 00:14:03,160 --> 00:14:06,200 Speaker 1: about the future aside, though, tech is also a sector 256 00:14:06,240 --> 00:14:10,520 Speaker 1: that presents enormous opportunities right now for market players who 257 00:14:10,559 --> 00:14:13,360 Speaker 1: are willing to take on risk. It's one of the 258 00:14:13,360 --> 00:14:16,560 Speaker 1: reasons that Apollo Asset Management is so keen to do 259 00:14:16,720 --> 00:14:20,120 Speaker 1: even more deals in the space. After an eleven billion 260 00:14:20,160 --> 00:14:24,960 Speaker 1: dollar collaboration with Intel, the firms co president Scott Kleinman 261 00:14:25,200 --> 00:14:29,520 Speaker 1: told Bloomberg to expect more ventures like it in the future. 262 00:14:29,880 --> 00:14:31,400 Speaker 8: I think you're going to see more and more of 263 00:14:31,400 --> 00:14:35,920 Speaker 8: this coming because absolutely more from a follow but in 264 00:14:35,960 --> 00:14:39,200 Speaker 8: general just the need for this type of capital is insatiable, 265 00:14:39,200 --> 00:14:39,920 Speaker 8: which really, I mean. 266 00:14:39,800 --> 00:14:41,560 Speaker 9: We saw on the earnings report right all these tech 267 00:14:41,600 --> 00:14:44,320 Speaker 9: giants having an insane amount of capex to try to 268 00:14:44,320 --> 00:14:45,560 Speaker 9: get their AI capacity up. 269 00:14:45,560 --> 00:14:46,920 Speaker 10: Intel obviously is one of them. 270 00:14:47,160 --> 00:14:49,600 Speaker 9: They did, though, say that their manufacturing won't be profitable 271 00:14:49,720 --> 00:14:52,400 Speaker 9: until twenty twenty seven, So how much of this also 272 00:14:52,480 --> 00:14:56,400 Speaker 9: is not just apollow backing AI, but apollow backing Intel 273 00:14:56,440 --> 00:14:57,320 Speaker 9: for the long term. 274 00:14:57,360 --> 00:15:02,400 Speaker 8: Absolutely, this is all about partner select structuring. Every situation 275 00:15:02,480 --> 00:15:04,560 Speaker 8: is going to be different. That's the beauty of private capital. 276 00:15:04,600 --> 00:15:07,400 Speaker 8: It doesn't have to fit one single box. You can 277 00:15:07,440 --> 00:15:09,840 Speaker 8: really be creative to meet the needs of the project, 278 00:15:09,920 --> 00:15:13,080 Speaker 8: the needs of the counterparty. And this is just a 279 00:15:13,120 --> 00:15:15,720 Speaker 8: great example of how you're going to see more and 280 00:15:15,760 --> 00:15:16,040 Speaker 8: more of this. 281 00:15:16,360 --> 00:15:17,720 Speaker 9: If you're going to see more of it, I mean, 282 00:15:17,720 --> 00:15:19,560 Speaker 9: does Intel need more They're trying to take a crack 283 00:15:19,600 --> 00:15:21,680 Speaker 9: at video that is no easy feed, right. 284 00:15:21,720 --> 00:15:23,880 Speaker 8: Well, I think Intel's announced over one hundred and fifty 285 00:15:23,880 --> 00:15:27,120 Speaker 8: billion dollars a project, So that's just one of I 286 00:15:27,160 --> 00:15:30,880 Speaker 8: think many companies across lots of different industries that really 287 00:15:31,000 --> 00:15:31,960 Speaker 8: need this type of capital. 288 00:15:32,000 --> 00:15:33,760 Speaker 10: We're talking to other companies to besides Intel for this 289 00:15:33,800 --> 00:15:34,200 Speaker 10: type of thing. 290 00:15:34,280 --> 00:15:37,120 Speaker 8: Well, no comment, but you can probably assume, well is 291 00:15:37,120 --> 00:15:37,640 Speaker 8: the last. 292 00:15:37,440 --> 00:15:39,040 Speaker 9: Thing on this, Scott, because I mean, we are here 293 00:15:39,080 --> 00:15:41,240 Speaker 9: in Europe, this is a europe deal. It's a plant 294 00:15:41,480 --> 00:15:45,160 Speaker 9: in Ireland and Europe has been behind on manufacturing. 295 00:15:45,200 --> 00:15:47,200 Speaker 10: Is there some way that this is almost. 296 00:15:47,120 --> 00:15:49,840 Speaker 9: A test tube, that's a test trial and if this works, 297 00:15:49,880 --> 00:15:51,200 Speaker 9: maybe you do more in Europe like this? 298 00:15:51,560 --> 00:15:53,840 Speaker 8: Well, I think just zooming out a little bit. I 299 00:15:53,880 --> 00:15:56,240 Speaker 8: do think you touch on an important point, which is 300 00:15:57,120 --> 00:15:59,520 Speaker 8: if you compare the growth rates in hero versus the 301 00:15:59,520 --> 00:16:02,320 Speaker 8: growth rates in the US, obviously, it's undeniable. 302 00:16:02,360 --> 00:16:02,960 Speaker 11: What's happening. 303 00:16:03,440 --> 00:16:07,200 Speaker 8: A big part of that is companies access to capital. 304 00:16:07,600 --> 00:16:10,120 Speaker 8: Right in the US, in addition to the banking system, 305 00:16:10,160 --> 00:16:13,760 Speaker 8: you have a very robust capital markets, a securitization market, 306 00:16:13,960 --> 00:16:16,920 Speaker 8: a very deep private capital market. In Europe, all of 307 00:16:16,960 --> 00:16:19,640 Speaker 8: those things either don't exist or are very very small, 308 00:16:19,760 --> 00:16:23,000 Speaker 8: very fragmented, very nascent, And I think you need to 309 00:16:23,000 --> 00:16:25,360 Speaker 8: see more and more of this and you will start 310 00:16:25,360 --> 00:16:28,360 Speaker 8: to see private capital play a bigger role here in Europe. 311 00:16:28,880 --> 00:16:30,960 Speaker 9: Yeah, it's a tougher environment though, because there does feel 312 00:16:31,000 --> 00:16:32,080 Speaker 9: to be more regulation here. 313 00:16:32,120 --> 00:16:33,920 Speaker 10: So how does that impact your global. 314 00:16:33,640 --> 00:16:36,920 Speaker 9: Allocation That there's opportunities here, but they're a little bit 315 00:16:36,920 --> 00:16:37,720 Speaker 9: harder to execute. 316 00:16:37,840 --> 00:16:40,760 Speaker 11: Well, it just makes it more complicated. But you're seeing it. 317 00:16:41,080 --> 00:16:45,600 Speaker 8: I think European leaders are starting to recognize that Europe 318 00:16:45,680 --> 00:16:49,240 Speaker 8: is choked for capital, that that is limiting the amount 319 00:16:49,280 --> 00:16:51,760 Speaker 8: of growth that Europe is falling behind, and it. 320 00:16:51,760 --> 00:16:53,080 Speaker 11: Needs this type of capital. 321 00:16:53,120 --> 00:16:55,960 Speaker 8: It needs to encourage private capital, it needs to encourage 322 00:16:56,000 --> 00:16:57,760 Speaker 8: securitization in order. 323 00:16:57,600 --> 00:16:58,400 Speaker 11: To make that happen. 324 00:16:58,760 --> 00:17:00,880 Speaker 8: And you know, I know you're been talking about it 325 00:17:00,920 --> 00:17:03,080 Speaker 8: for a while, but you know, hopefully this is a 326 00:17:03,080 --> 00:17:04,760 Speaker 8: bit of the wake up call it needs to get going. 327 00:17:04,880 --> 00:17:07,440 Speaker 9: There's also a rate divergent story happening in the first 328 00:17:07,440 --> 00:17:09,679 Speaker 9: cut of this cycle from the ECB. Does that make 329 00:17:09,680 --> 00:17:12,160 Speaker 9: a difference to it all that maybe there's easier policy here. 330 00:17:13,359 --> 00:17:16,520 Speaker 8: No, I think that's more indicative of the need of 331 00:17:16,560 --> 00:17:20,120 Speaker 8: the economy needs to get boosted by i'd say artificial 332 00:17:20,160 --> 00:17:22,920 Speaker 8: lowering of rates, as opposed to the US, where we've 333 00:17:22,960 --> 00:17:25,479 Speaker 8: been saying for some time the economy is so strong 334 00:17:25,800 --> 00:17:27,719 Speaker 8: rate cuts probably don't make sense yet, right. 335 00:17:27,800 --> 00:17:29,320 Speaker 9: Do you think that there's some people in the US 336 00:17:29,359 --> 00:17:31,440 Speaker 9: then that just have been doing the extend and pretend 337 00:17:31,800 --> 00:17:34,040 Speaker 9: that they bought deals at high valuations and have just 338 00:17:34,040 --> 00:17:36,280 Speaker 9: been hoping for a rate cut. So what happens if 339 00:17:36,320 --> 00:17:38,280 Speaker 9: we don't get one this year and maybe only a 340 00:17:38,280 --> 00:17:38,960 Speaker 9: few next year? 341 00:17:39,520 --> 00:17:41,040 Speaker 11: Oh? I think that's absolutely right. 342 00:17:41,200 --> 00:17:44,600 Speaker 8: I think you're going to see a lot of gps 343 00:17:44,640 --> 00:17:47,560 Speaker 8: and LPs coming to the recognition that it's going to 344 00:17:47,560 --> 00:17:49,520 Speaker 8: be a pretty dry spell for the next few years. 345 00:17:49,760 --> 00:17:53,920 Speaker 11: Visa VIV the old portfolio of private equity companies. 346 00:17:53,920 --> 00:17:57,320 Speaker 8: It's going to take longer to monetize valuation gap between 347 00:17:57,359 --> 00:18:00,479 Speaker 8: where folks loaded up on deals versus where where the 348 00:18:00,520 --> 00:18:03,440 Speaker 8: market is today is just there's a big gap and 349 00:18:04,080 --> 00:18:06,840 Speaker 8: it's going to be I think a little bit tougher 350 00:18:07,080 --> 00:18:10,280 Speaker 8: for private equity firms to see the type of returns 351 00:18:10,280 --> 00:18:12,040 Speaker 8: that they were looking for versus years past. 352 00:18:12,080 --> 00:18:14,679 Speaker 10: What does that actually look like or what causes that 353 00:18:14,760 --> 00:18:16,199 Speaker 10: dam to break? And then what does it look like 354 00:18:16,240 --> 00:18:16,840 Speaker 10: when it does. 355 00:18:17,240 --> 00:18:19,119 Speaker 11: Yeah, I don't know that it's so much a dam. 356 00:18:19,520 --> 00:18:22,480 Speaker 8: I think the reality is private equity loaded up at 357 00:18:22,520 --> 00:18:23,000 Speaker 8: the top. 358 00:18:22,840 --> 00:18:25,400 Speaker 11: Of the market using very inexpensive debt. 359 00:18:25,800 --> 00:18:29,840 Speaker 8: Valuation environment has fundamentally changed, and as a result, private 360 00:18:29,840 --> 00:18:32,280 Speaker 8: equity sponsors are just going to have to hold companies longer, 361 00:18:32,359 --> 00:18:35,480 Speaker 8: have to grow into those capital structures, are going to 362 00:18:35,480 --> 00:18:38,400 Speaker 8: need to take on equity to get some refinancings done, 363 00:18:38,640 --> 00:18:41,959 Speaker 8: and all that means it's just math that returns are 364 00:18:41,960 --> 00:18:43,280 Speaker 8: going to be lower over the next few years. 365 00:18:43,359 --> 00:18:45,639 Speaker 9: Well, I'm sure LP's investors who hear the idea that 366 00:18:45,680 --> 00:18:47,320 Speaker 9: they need to hold on for companies longer are not 367 00:18:47,359 --> 00:18:49,280 Speaker 9: going to be happy with that. They've been clamoring to 368 00:18:49,280 --> 00:18:51,760 Speaker 9: get their cash back. So how do they do both 369 00:18:51,760 --> 00:18:52,520 Speaker 9: at the same time. 370 00:18:53,640 --> 00:18:56,240 Speaker 11: They generally don't. They generally don't. 371 00:18:56,880 --> 00:18:59,200 Speaker 8: I think you're going to see sponsors looking for creative 372 00:18:59,200 --> 00:19:03,600 Speaker 8: ways to return and capital, whether that's through structured equity 373 00:19:03,640 --> 00:19:07,560 Speaker 8: investments or other things into these portfolio companies. But eventually 374 00:19:07,640 --> 00:19:10,040 Speaker 8: sponsors are just going to have to accept the valuation 375 00:19:10,200 --> 00:19:11,480 Speaker 8: environment is lower. 376 00:19:11,359 --> 00:19:12,560 Speaker 11: And start selling companies. 377 00:19:12,680 --> 00:19:14,280 Speaker 9: So you're getting ready to buy some deals so you 378 00:19:14,280 --> 00:19:16,280 Speaker 9: get absolutely absolutely. 379 00:19:15,720 --> 00:19:16,919 Speaker 10: Are you hiring to match that? 380 00:19:17,720 --> 00:19:19,600 Speaker 8: No, we have a pretty robust We have you know, 381 00:19:19,640 --> 00:19:22,679 Speaker 8: several hundred people already here in Europe and feel like 382 00:19:22,720 --> 00:19:24,040 Speaker 8: we have a good footprint down. 383 00:19:24,119 --> 00:19:25,879 Speaker 9: Okay, so you're ready, You're ready for the deals of 384 00:19:25,880 --> 00:19:28,280 Speaker 9: what they come. Absolutely, Look what kind of valuation. 385 00:19:27,920 --> 00:19:30,080 Speaker 10: Discounts do you think we're talking? How hefty could they get? 386 00:19:30,280 --> 00:19:32,800 Speaker 8: Well, I don't think it's so much discounts as it is. 387 00:19:32,880 --> 00:19:36,240 Speaker 8: The current environment is just you know, repriced. When deals 388 00:19:36,240 --> 00:19:38,639 Speaker 8: are purchased at a zero percent rate, that implied a 389 00:19:38,720 --> 00:19:43,119 Speaker 8: valuation environment of x at a five percent rate, you know, 390 00:19:43,240 --> 00:19:45,800 Speaker 8: rich free rate. You know that valuation environment is lower. 391 00:19:45,840 --> 00:19:49,639 Speaker 8: And whether marks reflect that or not tbd. But the 392 00:19:49,720 --> 00:19:51,000 Speaker 8: reality is it's coming. 393 00:19:51,359 --> 00:19:55,040 Speaker 1: That was Apollo Asset Management's co president Scott Kleinman speaking 394 00:19:55,080 --> 00:19:58,840 Speaker 1: to Boombak's Danny Berger at the Super Return International Conference 395 00:19:58,880 --> 00:20:02,000 Speaker 1: in Berlin. Well, the future of tech is just one 396 00:20:02,040 --> 00:20:05,600 Speaker 1: of the many issues that will be discussed at London 397 00:20:05,680 --> 00:20:08,760 Speaker 1: Tech Week in the next few days, and I've been 398 00:20:08,840 --> 00:20:13,440 Speaker 1: looking ahead to the conference with Bloomberg's EMEA technology reporter 399 00:20:13,840 --> 00:20:14,800 Speaker 1: Amy Thompson. 400 00:20:15,400 --> 00:20:17,240 Speaker 12: If you look at the lineup so far this year, 401 00:20:17,680 --> 00:20:20,959 Speaker 12: we're seeing a lot of discussion in the industry about 402 00:20:21,320 --> 00:20:24,280 Speaker 12: the ethics around how AI is being developed and used, 403 00:20:24,800 --> 00:20:28,360 Speaker 12: but also how it's already reshaping entire industries. There's keynotes 404 00:20:28,400 --> 00:20:32,080 Speaker 12: and discussions set up around healthcare and the creative industries 405 00:20:32,119 --> 00:20:35,920 Speaker 12: for example. You know, there's also a big election year globally, 406 00:20:35,920 --> 00:20:38,119 Speaker 12: and with our own election in the UK just weeks away, 407 00:20:39,240 --> 00:20:42,040 Speaker 12: kind of the question of where we stand here on 408 00:20:42,080 --> 00:20:44,960 Speaker 12: the global stage and what needs to be done to 409 00:20:44,960 --> 00:20:46,360 Speaker 12: support the tech ecosystem. 410 00:20:46,840 --> 00:20:48,879 Speaker 1: Yeah, absolutely, So how important do you think then this 411 00:20:49,000 --> 00:20:51,640 Speaker 1: event will be for that to think about that as 412 00:20:51,680 --> 00:20:54,160 Speaker 1: we are, I mean we're fully in kind of election mode, 413 00:20:54,160 --> 00:20:54,840 Speaker 1: election fever. 414 00:20:55,359 --> 00:20:59,680 Speaker 12: Yeah, And so the pace of technological developments moving really fast, 415 00:20:59,720 --> 00:21:03,760 Speaker 12: fast than lawmakers can write regulations or legal cases can 416 00:21:03,760 --> 00:21:06,359 Speaker 12: make their way through the courts. So are there were 417 00:21:06,480 --> 00:21:08,840 Speaker 12: in this period with things like AI where there's a 418 00:21:08,880 --> 00:21:11,080 Speaker 12: lot of gray areas and industry meetings can be a 419 00:21:11,160 --> 00:21:14,119 Speaker 12: really good place for companies and investors to get together, 420 00:21:14,720 --> 00:21:17,440 Speaker 12: to come to some you know, mutual understandings where hard 421 00:21:17,520 --> 00:21:20,760 Speaker 12: rules don't exist. And you know, right now we've got 422 00:21:20,880 --> 00:21:23,520 Speaker 12: super Return going on in Germany, the big financial show 423 00:21:23,600 --> 00:21:26,240 Speaker 12: we had Viva Tech in Paris a couple of weeks ago, 424 00:21:26,359 --> 00:21:30,000 Speaker 12: the can Advertising Conferences a few weeks from now. Founders 425 00:21:30,080 --> 00:21:32,960 Speaker 12: Form is another really interesting UK event coming up this month, 426 00:21:33,160 --> 00:21:35,640 Speaker 12: So you know, before everybody breaks for the summer, there's 427 00:21:35,680 --> 00:21:38,560 Speaker 12: this real push to get together and it'll be interesting 428 00:21:38,560 --> 00:21:41,040 Speaker 12: to see how these different discussions inform each other as 429 00:21:41,040 --> 00:21:41,639 Speaker 12: the year goes on. 430 00:21:42,480 --> 00:21:45,920 Speaker 1: Okay, so then I mean that there's a lot of interest, 431 00:21:46,000 --> 00:21:49,240 Speaker 1: as you say, but there's also a lot of hype, 432 00:21:49,480 --> 00:21:53,800 Speaker 1: there is opportunity. Where do you think the balance is 433 00:21:53,840 --> 00:21:55,959 Speaker 1: between those which one is kind of winning out at 434 00:21:55,960 --> 00:21:58,879 Speaker 1: the moment? Do you think amongst investors like hype around 435 00:21:58,920 --> 00:22:02,440 Speaker 1: AI versus real tangible opportunity for my AI. 436 00:22:03,000 --> 00:22:05,280 Speaker 12: We had just come out of this big pullback and 437 00:22:05,400 --> 00:22:08,640 Speaker 12: investment in the tech industry where we had maybe five 438 00:22:08,760 --> 00:22:12,320 Speaker 12: or six years of record breaking VC investment growth in 439 00:22:12,359 --> 00:22:14,600 Speaker 12: the UK every year. Then we came out of the 440 00:22:14,600 --> 00:22:18,200 Speaker 12: COVID nineteen lockdowns and growth and digital services and platforms 441 00:22:18,520 --> 00:22:21,120 Speaker 12: that we'd seen during the pandemic just weren't holding up. 442 00:22:21,440 --> 00:22:24,520 Speaker 12: The economy suddenly looked really shaky. Investors hit the brakes 443 00:22:24,560 --> 00:22:27,199 Speaker 12: and then came opening I and chat GPT, and it 444 00:22:27,280 --> 00:22:31,600 Speaker 12: ignited this, you know, absolute fire for AI investment and 445 00:22:31,840 --> 00:22:35,560 Speaker 12: all of the infrastructure around it, data centers, chip manufacturing plants, 446 00:22:36,200 --> 00:22:38,879 Speaker 12: anything with AI and the name pretty much you mentioned 447 00:22:38,920 --> 00:22:41,800 Speaker 12: in video's market value at the beginning of the of 448 00:22:41,840 --> 00:22:45,760 Speaker 12: the segment hitting three trillion this week. Startups are raising 449 00:22:45,800 --> 00:22:47,879 Speaker 12: tens of millions or hundreds of millions of dollars when 450 00:22:47,880 --> 00:22:49,960 Speaker 12: they're just a few months old. So it's really tempting 451 00:22:50,000 --> 00:22:53,040 Speaker 12: to look at this and see potentially the makings of 452 00:22:53,040 --> 00:22:56,080 Speaker 12: a bubble. But you know, I guess the two main 453 00:22:56,160 --> 00:22:58,800 Speaker 12: questions for tech though, are, you know, will all the 454 00:22:58,840 --> 00:23:02,479 Speaker 12: investment that we're seeing companies and the backbone to support them, 455 00:23:02,480 --> 00:23:06,199 Speaker 12: which is enormous, will the demand materialize to support that? 456 00:23:06,240 --> 00:23:08,080 Speaker 12: And will people be willing to pay for these new 457 00:23:08,119 --> 00:23:10,560 Speaker 12: services to the extent that you can actually get a return? 458 00:23:11,280 --> 00:23:14,399 Speaker 12: And are the valuations more established tech companies that had 459 00:23:14,400 --> 00:23:17,200 Speaker 12: big run ups during the pandemic, are they actually realistic? 460 00:23:17,240 --> 00:23:17,480 Speaker 13: Now? 461 00:23:18,480 --> 00:23:21,400 Speaker 1: Having said that, what about regulation? I mean you mentioned, 462 00:23:21,800 --> 00:23:23,840 Speaker 1: you know, the particular focus here in the UK. We 463 00:23:23,880 --> 00:23:28,800 Speaker 1: obviously had the Safety AI Safety Summit last year. How 464 00:23:28,920 --> 00:23:32,080 Speaker 1: quickly is regulation keeping up? You know, talk us through 465 00:23:32,080 --> 00:23:35,320 Speaker 1: some of the issues that companies in this space are 466 00:23:35,440 --> 00:23:36,800 Speaker 1: actually facing now. 467 00:23:37,119 --> 00:23:39,520 Speaker 12: Yeah, I mean there's a few big themes there. When 468 00:23:39,560 --> 00:23:43,000 Speaker 12: we just saw the Dada scrutiny around Microsoft's the ord 469 00:23:43,000 --> 00:23:46,160 Speaker 12: ANAI company called Inflection, regulators have also had a look 470 00:23:46,240 --> 00:23:49,280 Speaker 12: at Microsoft's relationship with open Ei, though I think it's 471 00:23:49,280 --> 00:23:51,160 Speaker 12: probably important to say that you ruled out a merger 472 00:23:51,240 --> 00:23:53,639 Speaker 12: probe recently on that one. But in this sort of 473 00:23:53,760 --> 00:23:58,160 Speaker 12: race to dominate bleeding EDGEAI tech, how do you make 474 00:23:58,200 --> 00:24:01,840 Speaker 12: sure that you're maintaining competition? And you mentioned the AI 475 00:24:01,880 --> 00:24:04,800 Speaker 12: Safety Summit. There's also the question of laws regulating AI 476 00:24:04,840 --> 00:24:07,320 Speaker 12: in its uses. A few governments have kind of taken 477 00:24:07,359 --> 00:24:09,800 Speaker 12: a swing at it. That you use AI Act from 478 00:24:09,880 --> 00:24:12,320 Speaker 12: last year is probably considered the standard, But we don't 479 00:24:12,359 --> 00:24:16,119 Speaker 12: really have a comprehensive global framework in the industry, and 480 00:24:16,160 --> 00:24:18,440 Speaker 12: everyone's sort of picking their way through how to prevent 481 00:24:18,480 --> 00:24:21,560 Speaker 12: the worst case scenarios or misuse the technology while you know, 482 00:24:21,600 --> 00:24:24,880 Speaker 12: supporting innovation. And then sort of finally, there's a question 483 00:24:24,920 --> 00:24:28,040 Speaker 12: of who owns the data. Media companies, for example, are 484 00:24:28,040 --> 00:24:30,600 Speaker 12: deciding whether or not to strike deals with companies like 485 00:24:30,600 --> 00:24:33,000 Speaker 12: Opening Eye and share their data. But there's also some 486 00:24:33,000 --> 00:24:35,200 Speaker 12: pretty high profile lawsuits happening. 487 00:24:35,680 --> 00:24:39,159 Speaker 1: So that was our EMEA tech reporter Amy Thompson. My 488 00:24:39,280 --> 00:24:41,600 Speaker 1: thanks to her for joining me. I'm Caroline Hepger here 489 00:24:41,600 --> 00:24:44,040 Speaker 1: in London. You can catch us every weekday morning for 490 00:24:44,080 --> 00:24:46,800 Speaker 1: Blueberg Daybreak. Youre at the beginning at six am in London. 491 00:24:46,840 --> 00:24:48,600 Speaker 1: That's one am of woll Street. 492 00:24:48,680 --> 00:24:51,840 Speaker 6: Tom, thank you, Caroline, and coming up on Bloomberg day 493 00:24:51,840 --> 00:24:54,639 Speaker 6: Break weekend to look ahead to inflation and trade data 494 00:24:54,720 --> 00:24:58,399 Speaker 6: out of India. I'm Tom Busby and this is Bloomberg. 495 00:25:09,240 --> 00:25:11,280 Speaker 6: I'm Tom Busby in New York with your global look 496 00:25:11,280 --> 00:25:13,680 Speaker 6: ahead at the top stories for investors in the coming week. 497 00:25:14,240 --> 00:25:17,240 Speaker 6: This week, investors will get the latest inflation and trade 498 00:25:17,320 --> 00:25:20,119 Speaker 6: data coming out of India, and it comes after that 499 00:25:20,240 --> 00:25:23,720 Speaker 6: country's national elections. Let's get to Bloomberg Daybreak Asia co 500 00:25:23,800 --> 00:25:26,719 Speaker 6: host Brian Curtis for more on what it all means. 501 00:25:27,320 --> 00:25:30,719 Speaker 13: Tom, India's inflation has come down to a four percent 502 00:25:30,760 --> 00:25:33,359 Speaker 13: handle from around seven and a half percent last year, 503 00:25:33,520 --> 00:25:36,680 Speaker 13: but it's still too high. Certainly, high levels of inflation 504 00:25:36,840 --> 00:25:39,400 Speaker 13: were a part of the election story that saw Prime 505 00:25:39,400 --> 00:25:43,119 Speaker 13: Minister or Under Mody lose a majority in Parliament. Modi's 506 00:25:43,160 --> 00:25:46,000 Speaker 13: still Prime Minister and still wields a lot of power, 507 00:25:46,320 --> 00:25:49,520 Speaker 13: but his mandate has been weakened. We look ahead to 508 00:25:49,680 --> 00:25:52,919 Speaker 13: India's May inflation report in the coming week and what 509 00:25:53,040 --> 00:25:56,640 Speaker 13: policymakers can do to help people who are missing out 510 00:25:56,720 --> 00:26:00,960 Speaker 13: on India's incredible growth story. Mody has just one backing 511 00:26:01,000 --> 00:26:04,399 Speaker 13: from two key allies in his coalition, allowing him to 512 00:26:04,480 --> 00:26:08,399 Speaker 13: form a government. Earlier, we asked Tanvi Madon, senior fellow 513 00:26:08,440 --> 00:26:11,080 Speaker 13: at the Brookings Institution, what's next for Modi? 514 00:26:11,320 --> 00:26:14,400 Speaker 14: You will need to think about how to ensure more 515 00:26:14,440 --> 00:26:18,800 Speaker 14: inclusive growth. The message from voter seems to be that 516 00:26:18,880 --> 00:26:22,359 Speaker 14: India is shining for some but not for many. It 517 00:26:22,359 --> 00:26:25,240 Speaker 14: doesn't mean that you won't see the same direction. But 518 00:26:25,320 --> 00:26:28,639 Speaker 14: I think there will have to be some tweaks and adaptations. 519 00:26:28,680 --> 00:26:31,360 Speaker 14: But I don't think this is necessarily a bad thing. 520 00:26:32,000 --> 00:26:34,040 Speaker 14: It shows that at the end of the day, the 521 00:26:34,160 --> 00:26:37,840 Speaker 14: ultimate guarant of Indian democracy are Indian voters and they 522 00:26:37,880 --> 00:26:40,000 Speaker 14: want choice and the exercise choice. 523 00:26:40,000 --> 00:26:43,879 Speaker 13: Well, joining us now is Rucci Batiya Bloomberg South Asia 524 00:26:43,960 --> 00:26:48,679 Speaker 13: Economy Editor for more insights somewhat comes next. So just 525 00:26:48,720 --> 00:26:52,600 Speaker 13: out of curiosity, Rucci, how can the Prime Minister provide 526 00:26:52,640 --> 00:26:53,760 Speaker 13: more inclusive growth? 527 00:26:53,840 --> 00:26:55,879 Speaker 5: Well, that's going to be his big challenge as he 528 00:26:55,960 --> 00:26:58,520 Speaker 5: takes on the next term because India is a country 529 00:26:58,560 --> 00:27:01,320 Speaker 5: we'll be seeing almost an eight percent growth, but this 530 00:27:01,400 --> 00:27:05,440 Speaker 5: eight percent growth is leaving out many. There's wide inequality 531 00:27:05,600 --> 00:27:09,399 Speaker 5: in the country. Prime Minister Inari movie talks about making 532 00:27:09,440 --> 00:27:13,040 Speaker 5: India a developed economy by twenty forty seven, but that 533 00:27:13,160 --> 00:27:16,560 Speaker 5: is not going to be easy. While India will be 534 00:27:16,800 --> 00:27:19,320 Speaker 5: on a six and a half to seven percent growth 535 00:27:19,359 --> 00:27:22,440 Speaker 5: path over the next decade, for it to really punch 536 00:27:22,480 --> 00:27:25,040 Speaker 5: above its way to all get to a developed country 537 00:27:25,040 --> 00:27:27,880 Speaker 5: status by twenty forty seven, it will have to grow 538 00:27:27,960 --> 00:27:32,640 Speaker 5: consistently at about an eight percent growth level for the 539 00:27:32,680 --> 00:27:36,439 Speaker 5: next quarter of a century and that will not be easy. 540 00:27:36,880 --> 00:27:42,040 Speaker 5: That will need structural reforms, reforms in the farm sector, 541 00:27:42,480 --> 00:27:46,280 Speaker 5: reforms with respect to land and labor, and it will 542 00:27:46,320 --> 00:27:49,439 Speaker 5: need more countries to come into India to set up 543 00:27:49,440 --> 00:27:52,720 Speaker 5: a manufacturing base. To do all of that, to be 544 00:27:52,760 --> 00:27:57,320 Speaker 5: able to provide jobs for its vast young population is 545 00:27:57,400 --> 00:27:59,440 Speaker 5: going to be a tall order. It's a task cut 546 00:27:59,440 --> 00:28:00,879 Speaker 5: out for private misternary in Remo, the. 547 00:28:00,920 --> 00:28:03,800 Speaker 13: Already richie so much to talk about there. I note 548 00:28:03,880 --> 00:28:06,560 Speaker 13: from Moodies that they said the slim margin of victory 549 00:28:07,040 --> 00:28:10,919 Speaker 13: might actually delay some of these far reaching economic reforms. 550 00:28:11,480 --> 00:28:12,560 Speaker 13: Will people see it that way? 551 00:28:13,160 --> 00:28:13,640 Speaker 15: Oh? 552 00:28:13,680 --> 00:28:17,639 Speaker 5: Well, yes and no, because you know, coalition government comes 553 00:28:17,680 --> 00:28:21,520 Speaker 5: with its own set of challenges. The remember, in the 554 00:28:21,600 --> 00:28:24,240 Speaker 5: last one decade, Prime Minister Inner in Remoti has never 555 00:28:24,280 --> 00:28:27,640 Speaker 5: had to rely on allies, and relying on allies now 556 00:28:27,720 --> 00:28:30,080 Speaker 5: would also mean that they would also seek a pound 557 00:28:30,119 --> 00:28:33,960 Speaker 5: of flesh from him. They would ask for chunkyre portfolios. 558 00:28:34,240 --> 00:28:36,560 Speaker 5: On the other hand, I must not forget that some 559 00:28:36,640 --> 00:28:39,920 Speaker 5: of the biggest reforms that have happened in India, case 560 00:28:39,960 --> 00:28:43,880 Speaker 5: in point being the nineteen ninety one liberalization reforms, happen 561 00:28:44,000 --> 00:28:46,760 Speaker 5: under a coalition government. So it will be a ti 562 00:28:46,880 --> 00:28:49,720 Speaker 5: trope walk, certainly for Prime Minister in a Range Remodi. 563 00:28:50,360 --> 00:28:52,840 Speaker 5: While in the last couple of years we have seen 564 00:28:52,880 --> 00:28:56,080 Speaker 5: that India has been able to reduce it's a fiscal 565 00:28:56,080 --> 00:28:59,239 Speaker 5: deficit quite a lot from the pandemic heights of nine 566 00:28:59,280 --> 00:29:02,440 Speaker 5: point two percent to about five point six percent in 567 00:29:02,480 --> 00:29:05,720 Speaker 5: the last fiscal yer. Away from here is the big question, 568 00:29:06,000 --> 00:29:08,640 Speaker 5: and that is something that rating agencies from Moodies to 569 00:29:08,800 --> 00:29:10,960 Speaker 5: S and B will be watching out. Remember S and 570 00:29:11,040 --> 00:29:13,960 Speaker 5: B recently has put India on a path for a 571 00:29:14,080 --> 00:29:16,920 Speaker 5: ratings upgrade. So what really has to watch out as 572 00:29:16,960 --> 00:29:19,880 Speaker 5: to how this is going to play out. Having said that, 573 00:29:20,440 --> 00:29:23,720 Speaker 5: I must also caution our viewers and tell them that 574 00:29:22,960 --> 00:29:27,520 Speaker 5: that India's debt to GDP ratio is a point of 575 00:29:27,640 --> 00:29:33,520 Speaker 5: concern that various rating agencies and also the multinational Multilateral 576 00:29:33,600 --> 00:29:37,200 Speaker 5: Lender IMF keeps talking about. So that's something that India 577 00:29:37,200 --> 00:29:38,040 Speaker 5: still needs to fix. 578 00:29:38,280 --> 00:29:41,800 Speaker 13: So for some of the policies like Hindu first for 579 00:29:42,480 --> 00:29:45,760 Speaker 13: Prime Minister Modi, I've heard people say that that's not 580 00:29:45,960 --> 00:29:48,960 Speaker 13: really going to be in question here, But then they've 581 00:29:48,960 --> 00:29:51,640 Speaker 13: also said Hindu first is fine, but it doesn't put 582 00:29:51,640 --> 00:29:52,480 Speaker 13: food on the table. 583 00:29:53,320 --> 00:29:55,800 Speaker 5: And you know that's quite visible this time around in 584 00:29:55,840 --> 00:29:59,880 Speaker 5: the Indian election results as well, because a Prime Minister 585 00:30:00,480 --> 00:30:05,600 Speaker 5: Modi in the month of January inaugurated the Ram Temple 586 00:30:06,080 --> 00:30:12,040 Speaker 5: and quite interestingly his candidate has lost from that constituency. 587 00:30:12,080 --> 00:30:15,040 Speaker 5: So yes, you know, the Hindu first policy or the 588 00:30:15,080 --> 00:30:18,600 Speaker 5: Hindu nationalist policies does not put food on the table. 589 00:30:18,840 --> 00:30:21,760 Speaker 5: The ground reality is very different. People are concerned about 590 00:30:21,800 --> 00:30:26,600 Speaker 5: high unemployment, people are concerned about high inflation in the country, 591 00:30:26,960 --> 00:30:29,240 Speaker 5: which are some of the things that he will have 592 00:30:29,320 --> 00:30:32,320 Speaker 5: to focus on in his text term. Having said that, 593 00:30:32,400 --> 00:30:34,480 Speaker 5: given the fact that now he's going to be in 594 00:30:34,560 --> 00:30:38,840 Speaker 5: a coalation, you will have to walk a very fine 595 00:30:38,960 --> 00:30:43,440 Speaker 5: line between pushing economic growth and also pushing his Hindu 596 00:30:43,520 --> 00:30:46,320 Speaker 5: First agendas. Some of the things that he talked about 597 00:30:46,400 --> 00:30:50,880 Speaker 5: out in the VJP manifesto, including a uniform civil code, 598 00:30:51,040 --> 00:30:54,480 Speaker 5: it doesn't look like that the coalation partners would be 599 00:30:54,560 --> 00:30:58,560 Speaker 5: okay in pushing such controversial and contentious ideas. 600 00:30:58,760 --> 00:31:01,360 Speaker 13: Rouchie, thanks so much for joining as we do appreciate 601 00:31:01,400 --> 00:31:05,200 Speaker 13: it and sharing your insights with us. Ruchi Bantia, Bloomberg 602 00:31:05,320 --> 00:31:09,440 Speaker 13: South Asia Economy Editor. Next up, we turned to Japan. 603 00:31:09,680 --> 00:31:11,440 Speaker 13: We get more from Doug Grisner. 604 00:31:11,560 --> 00:31:14,280 Speaker 16: Thanks Brian. The Bank of Japan has a policy meeting 605 00:31:14,280 --> 00:31:17,160 Speaker 16: in the week ahead, and the most favored view among 606 00:31:17,280 --> 00:31:20,920 Speaker 16: economists we polled in April was that the boj would 607 00:31:20,960 --> 00:31:24,720 Speaker 16: wait until October before raising rates. However, since that polling 608 00:31:25,200 --> 00:31:28,400 Speaker 16: expectations for an earlier move have risen, and that is 609 00:31:28,440 --> 00:31:31,840 Speaker 16: partly due to continued weakness in the Japanese end, which 610 00:31:31,960 --> 00:31:36,400 Speaker 16: threatens to stoke import price growth. Here so Yuri Sharai, 611 00:31:36,440 --> 00:31:40,400 Speaker 16: professor of economics at Ko University in Tokyo. She's addressing 612 00:31:40,480 --> 00:31:42,280 Speaker 16: the YenS level against the dollar. 613 00:31:42,360 --> 00:31:45,920 Speaker 15: Mohney fifty five. One fifty six is a too chi way. 614 00:31:46,080 --> 00:31:49,240 Speaker 15: A too chi compares to Japan's fundamental So that's why 615 00:31:49,320 --> 00:31:52,400 Speaker 15: Ministeria Financing tad in a forign exchange market at end 616 00:31:52,440 --> 00:31:55,000 Speaker 15: of April and the beginning May. So I think there 617 00:31:55,040 --> 00:31:58,080 Speaker 15: is some kind of consulted action between a Ministry of 618 00:31:58,160 --> 00:32:02,920 Speaker 15: Finance and Banko Japan to present the assurance about further 619 00:32:03,080 --> 00:32:05,000 Speaker 15: recreation to one sixty. 620 00:32:05,160 --> 00:32:08,920 Speaker 16: She is so Yurisarai, professor of economics at Ko University. 621 00:32:09,000 --> 00:32:12,880 Speaker 16: So the question becomes whether the boj mindful of that 622 00:32:13,000 --> 00:32:17,640 Speaker 16: weakness in the Japanese currency, will adjust monetary policy. Joining 623 00:32:17,680 --> 00:32:20,760 Speaker 16: me now from our bureau in Tokyo is Paul Jackson. 624 00:32:20,800 --> 00:32:22,520 Speaker 16: He is Bloomberg Economy Editor. 625 00:32:22,560 --> 00:32:22,760 Speaker 3: Paul. 626 00:32:22,800 --> 00:32:24,680 Speaker 16: It's always a pleasure. I got to ask you right 627 00:32:24,680 --> 00:32:27,040 Speaker 16: out of the gate. I mean, she has a point 628 00:32:27,120 --> 00:32:29,080 Speaker 16: about the weakness in the end, the degree to which 629 00:32:29,120 --> 00:32:32,080 Speaker 16: we've already seen intervention. Do you think this is adding 630 00:32:32,080 --> 00:32:33,800 Speaker 16: a bit of pressure to the BOJ. 631 00:32:33,680 --> 00:32:37,520 Speaker 4: I think it most certainly is. We saw governor who 632 00:32:37,600 --> 00:32:41,240 Speaker 4: had pulled into the Prime Minister's office earlier where he 633 00:32:41,360 --> 00:32:45,320 Speaker 4: had a chat with Promister Fumyo Kishida, and we think 634 00:32:45,600 --> 00:32:48,440 Speaker 4: it was highly likely that they touched on the yen 635 00:32:48,520 --> 00:32:52,880 Speaker 4: weakness and a government who waders comments which clearly we're 636 00:32:52,960 --> 00:32:59,080 Speaker 4: fueling further weakness as he kept underscoring his cautious approach 637 00:32:59,200 --> 00:33:04,400 Speaker 4: to interest rates. So since that meeting with the Prime Minister, 638 00:33:05,000 --> 00:33:08,280 Speaker 4: mister Huida has been far more cautious in his comments 639 00:33:08,640 --> 00:33:12,120 Speaker 4: on the end, and we are expecting them to do 640 00:33:12,320 --> 00:33:16,680 Speaker 4: something at this meeting in June. However, I think it's 641 00:33:16,840 --> 00:33:20,080 Speaker 4: more likely that it will come in the form of 642 00:33:20,600 --> 00:33:24,920 Speaker 4: cutting back on bon buying rather than the actual short 643 00:33:25,040 --> 00:33:26,120 Speaker 4: term interest rate. 644 00:33:26,360 --> 00:33:28,800 Speaker 16: So we talked about the intervention on the part of 645 00:33:28,920 --> 00:33:32,000 Speaker 16: the Ministry of Finance separate from the BOJ. Perhaps they 646 00:33:32,080 --> 00:33:34,120 Speaker 16: work a little hand in glove, and I think the 647 00:33:34,240 --> 00:33:39,520 Speaker 16: mof spent something greater than sixty billion US to intervene 648 00:33:39,600 --> 00:33:43,360 Speaker 16: in support of the currency. But what would allowing bond 649 00:33:43,480 --> 00:33:45,800 Speaker 16: yields to drift higher mean for the EN? Are we 650 00:33:45,920 --> 00:33:48,560 Speaker 16: to understand it? Even that speculation in the market is 651 00:33:48,640 --> 00:33:51,040 Speaker 16: one reason the END has come off its lows against 652 00:33:51,080 --> 00:33:51,440 Speaker 16: the dollar. 653 00:33:51,600 --> 00:33:56,920 Speaker 4: We reported that the likelihood of the Bank of Japan 654 00:33:57,160 --> 00:34:03,880 Speaker 4: cutting back on bond buying this meeting is a distinct possibility, 655 00:34:04,000 --> 00:34:06,200 Speaker 4: and I think the END has responded to that. Just 656 00:34:06,280 --> 00:34:09,439 Speaker 4: to give you some feel for how how much these 657 00:34:09,600 --> 00:34:12,640 Speaker 4: yields impact at the end, if you go back to 658 00:34:12,960 --> 00:34:15,200 Speaker 4: last year when there was still like a zero point 659 00:34:15,320 --> 00:34:19,680 Speaker 4: five percent cap on ten year yields, and since then 660 00:34:19,719 --> 00:34:23,279 Speaker 4: they've been allowed to move more freely and at one 661 00:34:23,320 --> 00:34:27,440 Speaker 4: point reached one point one percent, that movement in the 662 00:34:27,560 --> 00:34:32,680 Speaker 4: ten year yield now means that the differential between securities 663 00:34:32,920 --> 00:34:36,680 Speaker 4: in ten year securities in Japan and the US has narrowed. 664 00:34:37,040 --> 00:34:40,000 Speaker 4: I would say that the effect of that is probably 665 00:34:40,160 --> 00:34:43,600 Speaker 4: about about nine YenS worth in terms of the exchange rate. 666 00:34:43,920 --> 00:34:45,920 Speaker 4: That means instead of it being around one five to 667 00:34:46,040 --> 00:34:49,760 Speaker 4: five now, if the BOJ was still keeping that ceiling 668 00:34:50,160 --> 00:34:52,640 Speaker 4: of zero point five percent on yields, I think the 669 00:34:52,840 --> 00:34:54,879 Speaker 4: END would be closer to one six ' four now. 670 00:34:55,120 --> 00:34:57,560 Speaker 16: I think it's important to point out that a weaker 671 00:34:57,640 --> 00:35:00,600 Speaker 16: currency has helped import inflation, and that's been a welcome 672 00:35:00,680 --> 00:35:04,640 Speaker 16: outcome for the Bank of Japan after decades of being 673 00:35:04,760 --> 00:35:07,759 Speaker 16: in a deflationary trap. And I noticed that for the 674 00:35:07,840 --> 00:35:11,640 Speaker 16: month of April, in terms of other influences on inflation, 675 00:35:12,320 --> 00:35:16,160 Speaker 16: wage data was much stronger than expected. Is that solid now? 676 00:35:16,360 --> 00:35:18,640 Speaker 16: I mean, is a durable the increase that we have 677 00:35:18,719 --> 00:35:20,160 Speaker 16: seen in Japanese wages? 678 00:35:20,320 --> 00:35:23,640 Speaker 4: That is the big question, because the Bank of Japan 679 00:35:23,719 --> 00:35:26,960 Speaker 4: has made very clear that if it wants to move 680 00:35:27,080 --> 00:35:30,359 Speaker 4: forward with the normalization of policy, this is the key 681 00:35:30,520 --> 00:35:34,400 Speaker 4: thing that must emerge. And what it's talking about is 682 00:35:34,520 --> 00:35:39,200 Speaker 4: a positive inflation cycle. Yes, good inflation, that's what it's 683 00:35:39,239 --> 00:35:44,320 Speaker 4: looking for. It's inflation that's driven by rising wages and 684 00:35:44,440 --> 00:35:48,080 Speaker 4: that drives consumption and drive growth. And this has really 685 00:35:48,280 --> 00:35:53,520 Speaker 4: been the national objective of Japanese economic policy for more 686 00:35:53,560 --> 00:35:56,520 Speaker 4: than a decade now, and they seem to be getting 687 00:35:56,840 --> 00:35:59,840 Speaker 4: closer to it. But the fact that the matter is 688 00:36:00,400 --> 00:36:04,480 Speaker 4: is that real wages are still falling. That means that 689 00:36:04,640 --> 00:36:07,240 Speaker 4: the wage gains that we've seen, yes they are bigger, 690 00:36:07,600 --> 00:36:11,960 Speaker 4: but they're still lagging inflation. And for the average voter, 691 00:36:12,400 --> 00:36:16,080 Speaker 4: they're still seeing their pay in real terms falling, and 692 00:36:16,200 --> 00:36:18,000 Speaker 4: they have done for the last two years. 693 00:36:18,239 --> 00:36:21,360 Speaker 16: Away from monetary policy. I'm curious as to whether or 694 00:36:21,360 --> 00:36:24,719 Speaker 16: not there are other programs targeted at trying to deal 695 00:36:24,840 --> 00:36:28,360 Speaker 16: with this pickup in Japanese inflation. Is there anything in 696 00:36:28,440 --> 00:36:30,040 Speaker 16: the pipeline that's working well. 697 00:36:30,120 --> 00:36:33,400 Speaker 4: The government for some time now has been offering subsidies 698 00:36:33,520 --> 00:36:36,399 Speaker 4: on energy prices. At one point that was as much 699 00:36:36,480 --> 00:36:40,120 Speaker 4: as twenty percent of your electricity bill was essentially being 700 00:36:40,280 --> 00:36:43,759 Speaker 4: paid by the government. That is a lot of help 701 00:36:43,960 --> 00:36:47,920 Speaker 4: for the average household. But they are pulling the plug 702 00:36:48,000 --> 00:36:52,080 Speaker 4: on that, so that kind of help is getting removed 703 00:36:52,840 --> 00:36:57,400 Speaker 4: and in place. Prime Minister Kishida has introduced a tax rebate. 704 00:36:57,760 --> 00:36:59,600 Speaker 4: This is going to be a one off thing for 705 00:36:59,680 --> 00:37:02,000 Speaker 4: this year. It's going to be worth about two hundred 706 00:37:02,040 --> 00:37:06,080 Speaker 4: and fifty bucks per person, and he's hoping that there'll 707 00:37:06,120 --> 00:37:09,600 Speaker 4: be a good feel good vibe factor from that and 708 00:37:09,800 --> 00:37:14,000 Speaker 4: that that might leave households purchasing power in positive territory 709 00:37:14,040 --> 00:37:16,560 Speaker 4: in real terms in the month of June, and that 710 00:37:16,800 --> 00:37:22,040 Speaker 4: sets him up nicely for an internal leadership party then 711 00:37:22,160 --> 00:37:24,520 Speaker 4: could even lead to an early election after that. 712 00:37:24,800 --> 00:37:27,120 Speaker 16: Paul, it's always a pleasure thanks for helping us set 713 00:37:27,200 --> 00:37:29,240 Speaker 16: up the Bank of Japan meeting in the week Ahead. 714 00:37:29,280 --> 00:37:33,839 Speaker 16: That is Bloomberg's Paul Jackson, our Economy editor from our 715 00:37:33,960 --> 00:37:37,040 Speaker 16: bureau in Tokyo. I'm Doug Krisner. You can join Brian 716 00:37:37,120 --> 00:37:40,920 Speaker 16: Curtison myself weekdays here from Bloomberg Daybreak Asia, beginning at 717 00:37:41,320 --> 00:37:44,640 Speaker 16: eight am in Hong Kong eight pm on Wall Street. 718 00:37:45,040 --> 00:37:48,560 Speaker 6: Tom, Thank you, Doug, and thank you Brian Again. That 719 00:37:48,680 --> 00:37:50,920 Speaker 6: does it for this edition of Bloomberg day Break Weekend. 720 00:37:51,280 --> 00:37:53,520 Speaker 6: Join us again Monday morning at five am Wall Street 721 00:37:53,560 --> 00:37:55,919 Speaker 6: time for the latest on markets overseas and the news 722 00:37:56,000 --> 00:37:58,959 Speaker 6: you need to start your day. I'm Tom Buzby. Stay 723 00:37:59,000 --> 00:38:01,799 Speaker 6: with us. Top stows and global business headlines are coming 724 00:38:01,880 --> 00:38:02,680 Speaker 6: up right now.