1 00:00:02,560 --> 00:00:05,440 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:05,480 --> 00:00:08,119 Speaker 1: top stories in the coming week from our daybreak anchors 3 00:00:08,160 --> 00:00:10,600 Speaker 1: all around the world. Straight ahead on the program, A 4 00:00:10,720 --> 00:00:13,120 Speaker 1: look at what we can expect for US mortgage rates 5 00:00:13,160 --> 00:00:16,360 Speaker 1: in twenty twenty six. I'm Alexis Christophers in New York. 6 00:00:16,400 --> 00:00:19,160 Speaker 2: I'm Calain Hepkeahey in London, where we discussed the snap 7 00:00:19,239 --> 00:00:23,000 Speaker 2: election in Denmark shaped by the standoff with President Trump 8 00:00:23,120 --> 00:00:23,919 Speaker 2: over Greenland. 9 00:00:24,120 --> 00:00:26,760 Speaker 3: I'm Doug Krisner looking at earnings in the coming week 10 00:00:26,920 --> 00:00:29,480 Speaker 3: for the Chinese ev Maker byd. 11 00:00:30,600 --> 00:00:34,440 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:34,479 --> 00:00:38,440 Speaker 4: eleven three to zero, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:38,920 --> 00:00:44,000 Speaker 4: Bloomberg ninety two nine, Boston, dav Digital Radio, London, Sirius 14 00:00:44,159 --> 00:00:47,840 Speaker 4: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:47,920 --> 00:00:50,080 Speaker 4: dot Com and the Bloomberg Business app. 16 00:00:54,960 --> 00:00:57,840 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 17 00:00:57,840 --> 00:00:59,920 Speaker 1: top stories in the coming week from our day break 18 00:01:00,080 --> 00:01:02,880 Speaker 1: anchors all around the world. Straight ahead on the program, 19 00:01:02,920 --> 00:01:05,200 Speaker 1: A look at what we can expect for US mortgage 20 00:01:05,240 --> 00:01:08,759 Speaker 1: rates in twenty twenty six. I'm Alexis Christophers in New York. 21 00:01:09,160 --> 00:01:12,200 Speaker 1: Good day to you. I'm Alexis Christophers. We begin today's 22 00:01:12,240 --> 00:01:15,120 Speaker 1: program with a look at US mortgage rates for more 23 00:01:15,160 --> 00:01:17,080 Speaker 1: on what we can expect this year. We're joined by 24 00:01:17,160 --> 00:01:21,160 Speaker 1: Erica Aidelberg, Bloomberg Intelligence Chief mortgage backed securities strategist. 25 00:01:21,680 --> 00:01:21,880 Speaker 5: Erica. 26 00:01:21,959 --> 00:01:23,760 Speaker 1: Great to have you here, So glad you're on the 27 00:01:23,760 --> 00:01:27,360 Speaker 1: show because this is a hot topic right now. Mortgage rates. 28 00:01:27,560 --> 00:01:30,679 Speaker 1: We saw them rise last week to the highest level 29 00:01:30,920 --> 00:01:35,360 Speaker 1: so far this year. Big drop in refinancings as well. 30 00:01:35,680 --> 00:01:37,160 Speaker 1: What's going on in the mortgage market. 31 00:01:37,440 --> 00:01:39,480 Speaker 6: Hi, thank you for having me on. A Good morning 32 00:01:39,520 --> 00:01:44,120 Speaker 6: to you. Yeah, mortgages, mortgage rates in particular, are right 33 00:01:44,160 --> 00:01:47,840 Speaker 6: at that interesting cusp where there's been so many barbers 34 00:01:47,840 --> 00:01:50,080 Speaker 6: who had to take out mortgage at a higher rates 35 00:01:50,120 --> 00:01:54,960 Speaker 6: over the past four years that we're told to we 36 00:01:55,120 --> 00:01:57,880 Speaker 6: like to say, date the rate, marry the house. So 37 00:01:57,960 --> 00:02:00,520 Speaker 6: a lot of these borrowers really had to stretched to 38 00:02:00,520 --> 00:02:03,120 Speaker 6: take out these mortgage rates. And at the same time, 39 00:02:03,240 --> 00:02:06,200 Speaker 6: since these were the highest mortgage rates in about twenty years, 40 00:02:06,520 --> 00:02:09,720 Speaker 6: they were acutely aware that they were locking in relatively 41 00:02:09,760 --> 00:02:12,560 Speaker 6: high mortgage rates, were hoping to be able to refinance, 42 00:02:13,360 --> 00:02:15,160 Speaker 6: and in fact, some of them were really hoping because 43 00:02:15,160 --> 00:02:18,000 Speaker 6: they'd really stretch to take out these mortgage rates. We 44 00:02:18,040 --> 00:02:22,280 Speaker 6: saw a thirty percent drop in refinancing applications just based 45 00:02:22,320 --> 00:02:25,440 Speaker 6: on this very small shift back upwards and rates, and 46 00:02:25,480 --> 00:02:28,160 Speaker 6: we could talk about what caused that as well, and 47 00:02:28,200 --> 00:02:31,480 Speaker 6: that what that really highlights is just the huge percentage 48 00:02:31,520 --> 00:02:35,840 Speaker 6: of borrowers who are right on that cuspoer refinancing, and 49 00:02:35,880 --> 00:02:38,400 Speaker 6: a thirty percent drop one way or or increase one 50 00:02:38,400 --> 00:02:40,239 Speaker 6: way or the other could really make or break a 51 00:02:40,360 --> 00:02:42,040 Speaker 6: year for like a mortgage banker. 52 00:02:41,720 --> 00:02:42,280 Speaker 7: For instance. 53 00:02:42,320 --> 00:02:46,360 Speaker 6: Sure, so what we're also saying is that mortgage bankers 54 00:02:46,400 --> 00:02:50,839 Speaker 6: themselves are really intent in getting as many of these 55 00:02:50,880 --> 00:02:55,600 Speaker 6: refinancings through the pipeline as quickly as possible as they can. 56 00:02:55,840 --> 00:02:59,720 Speaker 1: Before rates going before rates go higher for us, what 57 00:02:59,720 --> 00:03:01,880 Speaker 1: about fifteen year? Where is that sitting at the moment? 58 00:03:01,880 --> 00:03:05,200 Speaker 1: Which I know that's more popular with refinancers. 59 00:03:05,480 --> 00:03:10,000 Speaker 6: Yeah, it is more popular with a lot of refinancers. However, 60 00:03:10,200 --> 00:03:13,000 Speaker 6: it encurs quite a bit of higher payment. You know, 61 00:03:13,040 --> 00:03:16,960 Speaker 6: a lot of times when that is in fact a 62 00:03:17,000 --> 00:03:20,000 Speaker 6: popular item, it's because there's been enough home price appreciation 63 00:03:20,200 --> 00:03:23,640 Speaker 6: or enough seasoning in the mortgage loans that it makes 64 00:03:23,880 --> 00:03:26,080 Speaker 6: that it makes sense. You know. For instance, I even 65 00:03:26,120 --> 00:03:30,120 Speaker 6: refinanced into a fifteen year a few years ago because 66 00:03:30,200 --> 00:03:33,760 Speaker 6: we had a thirty year mortgage and if we'd refinanced 67 00:03:33,840 --> 00:03:37,040 Speaker 6: into another thirty year mortgage, our whole stream, but our 68 00:03:37,040 --> 00:03:38,920 Speaker 6: whole interest stream, would have been higher. 69 00:03:38,960 --> 00:03:42,560 Speaker 1: Sure, is this really all about the war with Iran, 70 00:03:43,000 --> 00:03:45,320 Speaker 1: what it's doing to the oil markets and how that 71 00:03:45,360 --> 00:03:48,720 Speaker 1: can be inflationary And we've seen how that has impacted 72 00:03:48,720 --> 00:03:51,520 Speaker 1: the ten year treasury, and the thirty year is very 73 00:03:51,560 --> 00:03:53,480 Speaker 1: closely tied to the ten year treasury, more so than 74 00:03:53,480 --> 00:03:55,760 Speaker 1: what the Federal Reserve does, of course with its overnight 75 00:03:56,080 --> 00:03:59,600 Speaker 1: interest rate. So is that what's behind this this rise, 76 00:03:59,640 --> 00:04:01,200 Speaker 1: this re rise in mortgage rates. 77 00:04:01,360 --> 00:04:04,440 Speaker 6: That's an excellent question. And just for the fun of it, 78 00:04:04,480 --> 00:04:06,080 Speaker 6: recently I was working on a note where I was 79 00:04:06,120 --> 00:04:09,520 Speaker 6: looking at the correlation between say, mortgage rates or mortgage 80 00:04:09,520 --> 00:04:13,920 Speaker 6: spreads and oil rates. Pretty much no correlation, ok, you know, 81 00:04:14,000 --> 00:04:15,840 Speaker 6: I mean, you know, you can see times, but what 82 00:04:15,920 --> 00:04:18,799 Speaker 6: really is driving this? As you said, the key here 83 00:04:19,120 --> 00:04:24,440 Speaker 6: is what it's doing to inflation expectations, and more importantly, 84 00:04:24,839 --> 00:04:27,560 Speaker 6: it's also creating a lot of uncertainty about what the 85 00:04:27,640 --> 00:04:30,040 Speaker 6: fen's going to be able to do, what direction rates 86 00:04:30,040 --> 00:04:32,440 Speaker 6: are going to be able to go. What does uncertainty mean. 87 00:04:32,640 --> 00:04:39,440 Speaker 6: Uncertainty means increases in volatility, both implied in actual rate volatility. Now, 88 00:04:39,560 --> 00:04:44,599 Speaker 6: volatility is a huge driver of mortgage spreads because mortgage 89 00:04:44,880 --> 00:04:48,520 Speaker 6: borrowers have the option is what it's called an option 90 00:04:48,800 --> 00:04:51,600 Speaker 6: to refinance or just not move any time they want. 91 00:04:52,120 --> 00:04:56,560 Speaker 6: So as a result, the higher volatility is, the harder 92 00:04:56,600 --> 00:04:59,760 Speaker 6: it is to hedge that borrower option, and the more 93 00:05:00,000 --> 00:05:02,920 Speaker 6: expense of the wider spreads need to be to both 94 00:05:02,920 --> 00:05:07,200 Speaker 6: in tract investors, but also for the rate the lenders 95 00:05:07,240 --> 00:05:11,120 Speaker 6: are willing to offer the primary rate. And on top 96 00:05:11,200 --> 00:05:13,800 Speaker 6: of that, you have added to that the fact that 97 00:05:14,000 --> 00:05:17,719 Speaker 6: if inflation is expected to increase, mortgage rates are probably 98 00:05:17,720 --> 00:05:20,719 Speaker 6: going to follow as quickly, which means long term rates 99 00:05:20,880 --> 00:05:24,160 Speaker 6: have also risen, as you pointed out, which includes ten 100 00:05:24,200 --> 00:05:26,680 Speaker 6: your treasury. So you have the actual base case rate, 101 00:05:26,720 --> 00:05:29,400 Speaker 6: the ten your Treasury rate rising, and you have mortgage 102 00:05:29,400 --> 00:05:33,200 Speaker 6: spreads widening because of this increase in volatility generated by 103 00:05:33,200 --> 00:05:35,120 Speaker 6: the uncertainty of what's going to have with oil and 104 00:05:35,160 --> 00:05:36,080 Speaker 6: the war in general. 105 00:05:36,320 --> 00:05:38,680 Speaker 1: Are you thinking we might see a thirty year back 106 00:05:38,720 --> 00:05:41,480 Speaker 1: at seven percent again sometime soon, especially if the war 107 00:05:41,560 --> 00:05:42,000 Speaker 1: drags on. 108 00:05:43,920 --> 00:05:46,000 Speaker 6: You know that that would be a really tough question. 109 00:05:46,640 --> 00:05:49,320 Speaker 6: I actually didn't see the beginning above seven percent in 110 00:05:49,360 --> 00:05:52,160 Speaker 6: the first place. You know, I don't think that's certainly 111 00:05:52,160 --> 00:05:55,880 Speaker 6: the long term equilibrium. I don't have a crystal ball, 112 00:05:56,680 --> 00:06:01,320 Speaker 6: but it does seem to me that the widening of 113 00:06:01,320 --> 00:06:03,920 Speaker 6: mortgage breads that we saw that contributed to how high 114 00:06:03,960 --> 00:06:09,080 Speaker 6: mortgage rates got in twenty two twenty three was mostly 115 00:06:09,200 --> 00:06:12,240 Speaker 6: because the Fed had just started running off its portfolio. 116 00:06:12,640 --> 00:06:15,200 Speaker 6: It was still in tightening mode, which is certainly not 117 00:06:15,320 --> 00:06:16,760 Speaker 6: my base case expectation. 118 00:06:17,000 --> 00:06:20,200 Speaker 1: Oh thanks to Erica Aidelberg, Bloomberg Intelligence Chief Mortgage backed 119 00:06:20,200 --> 00:06:23,200 Speaker 1: security strategist. Let's take a look now at some stocks 120 00:06:23,200 --> 00:06:26,159 Speaker 1: making news in the week ahead. I'm Alexis Christoffers with 121 00:06:26,200 --> 00:06:30,280 Speaker 1: Tatiana dari a Bloomberg strategist for Markets Live. Tatiana, you 122 00:06:30,279 --> 00:06:34,080 Speaker 1: brought three names with you. Let's begin with if you're 123 00:06:34,120 --> 00:06:35,479 Speaker 1: a pet owner, you know them well. 124 00:06:35,640 --> 00:06:40,760 Speaker 5: Chewy Chewey exactly. Chewey will report fourth quarter earnings and 125 00:06:40,839 --> 00:06:44,919 Speaker 5: next week, and analysts are expecting a solid profit increase 126 00:06:45,080 --> 00:06:48,240 Speaker 5: versus the year ahead. And that may come to how 127 00:06:48,360 --> 00:06:52,440 Speaker 5: the stock revive some of that momentum because it has 128 00:06:52,520 --> 00:06:56,320 Speaker 5: come under pressure this year on concerns over growth and 129 00:06:56,360 --> 00:07:00,160 Speaker 5: the profitability outlook for this year and next year. And 130 00:07:00,279 --> 00:07:03,560 Speaker 5: analysted Morgan Stanley expect this print to set the tone 131 00:07:03,640 --> 00:07:06,520 Speaker 5: for the year ahead, and they expect full year guidance 132 00:07:06,680 --> 00:07:10,000 Speaker 5: of about seven to seven and a half of revenue growth. 133 00:07:10,320 --> 00:07:14,240 Speaker 5: So remember that number because anything less than that could 134 00:07:15,040 --> 00:07:18,880 Speaker 5: come to pressure the stock again. The company you know 135 00:07:19,040 --> 00:07:23,440 Speaker 5: has named the new CFO in February reaffirmed its financial outlook, 136 00:07:23,520 --> 00:07:26,640 Speaker 5: so it has tailwinds in place. Its revenue has been 137 00:07:26,680 --> 00:07:31,320 Speaker 5: steadily climbing through the years, even as we've seen consumers 138 00:07:31,600 --> 00:07:36,920 Speaker 5: come under pressure from all prices rising elsewhere. Basically, so 139 00:07:37,320 --> 00:07:39,880 Speaker 5: it has it has a momentum there. It's just that 140 00:07:40,360 --> 00:07:43,760 Speaker 5: when people are looking ahead, they're concerned about consumers pulling 141 00:07:43,800 --> 00:07:46,880 Speaker 5: back now with high oil prices, So we sort of 142 00:07:46,880 --> 00:07:53,880 Speaker 5: need to see revenue outlook and that guidance be lifted 143 00:07:54,120 --> 00:07:57,760 Speaker 5: so that the stock investors feel more reassured. 144 00:07:57,920 --> 00:08:00,000 Speaker 1: That was interesting when you talk about consumer spending, because 145 00:08:00,040 --> 00:08:02,840 Speaker 1: sometimes we'll pull back on things for ourselves, but I 146 00:08:02,840 --> 00:08:05,800 Speaker 1: think history has shown people don't necessarily pull back for 147 00:08:05,840 --> 00:08:10,200 Speaker 1: their pets. They're still going to pay for their pets. Also, 148 00:08:10,560 --> 00:08:14,400 Speaker 1: they have their Chewy Vet clinics that I guess are 149 00:08:14,480 --> 00:08:17,720 Speaker 1: in stores. I understand that's going to be a bigger 150 00:08:18,080 --> 00:08:21,000 Speaker 1: part of the Chewy story, I guess in twenty twenty six. 151 00:08:21,520 --> 00:08:24,680 Speaker 5: Yes, exactly a push there. And they also have their 152 00:08:25,080 --> 00:08:28,600 Speaker 5: sort of revenue or their online platform or you can 153 00:08:28,600 --> 00:08:33,000 Speaker 5: schedule deliveries, and that's also been a big focus for 154 00:08:33,440 --> 00:08:36,839 Speaker 5: the company and for the stock. But yet again, as 155 00:08:36,920 --> 00:08:39,439 Speaker 5: those growth concerns have been battering the stock, it will 156 00:08:39,480 --> 00:08:42,480 Speaker 5: be very important for them to go back to what 157 00:08:42,600 --> 00:08:46,200 Speaker 5: analysts have been saying to a beat and raise cadence right, 158 00:08:46,400 --> 00:08:50,199 Speaker 5: which they have not had in recent quarters. We have 159 00:08:50,240 --> 00:08:52,840 Speaker 5: a great function on the terminal where you could see 160 00:08:53,120 --> 00:08:57,720 Speaker 5: how results have been coming in pitted against expectations, and 161 00:08:58,120 --> 00:09:00,720 Speaker 5: five or four of the past five have not really 162 00:09:00,760 --> 00:09:03,679 Speaker 5: been great. The last one was better, which sets up 163 00:09:03,840 --> 00:09:07,640 Speaker 5: hopes that this one will come in also better than expiring. 164 00:09:07,480 --> 00:09:09,480 Speaker 1: And just want to add Morgan Stanley kept its overweight 165 00:09:09,559 --> 00:09:12,360 Speaker 1: rating on Chewy, trimming its price target to fifty dollars 166 00:09:12,400 --> 00:09:15,000 Speaker 1: from fifty one, saying the stock is offering a quote 167 00:09:15,000 --> 00:09:19,240 Speaker 1: compelling entry point following its recent decline, So Chewy on 168 00:09:19,280 --> 00:09:22,280 Speaker 1: the move here in the coming week. Also beyond Meat, 169 00:09:22,320 --> 00:09:25,760 Speaker 1: which I know is dropping the name meat from its 170 00:09:25,800 --> 00:09:28,079 Speaker 1: from its official title, right, tell us what we can 171 00:09:28,080 --> 00:09:28,720 Speaker 1: expect there. 172 00:09:28,960 --> 00:09:32,480 Speaker 5: Well, the maker of alternative meat product is also did 173 00:09:32,480 --> 00:09:35,840 Speaker 5: to report, but expectations here are much lower because they've 174 00:09:35,880 --> 00:09:42,040 Speaker 5: already reported preliminary revenue and it came below expectations. With that, 175 00:09:42,120 --> 00:09:45,000 Speaker 5: they also said that they will delay the filing of 176 00:09:45,080 --> 00:09:48,960 Speaker 5: their ten K annual report because the company requires additional 177 00:09:48,960 --> 00:09:52,320 Speaker 5: time to complete a review and analysis related to its 178 00:09:52,400 --> 00:09:57,119 Speaker 5: inventory balances. And you know when you get messages like that, 179 00:09:57,120 --> 00:09:59,840 Speaker 5: that always books the market. And this is something that 180 00:10:00,000 --> 00:10:03,360 Speaker 5: this company did not need because if you look at 181 00:10:03,400 --> 00:10:08,320 Speaker 5: the long term chart, the stock has fallen dramatically since 182 00:10:08,360 --> 00:10:12,640 Speaker 5: it's much talked IPO in twenty nineteen. It's lost more 183 00:10:12,679 --> 00:10:16,880 Speaker 5: than ninety percent of its value since then. So it 184 00:10:16,920 --> 00:10:19,560 Speaker 5: really doesn't have a good story. It keeps getting worse, 185 00:10:19,880 --> 00:10:22,200 Speaker 5: and it doesn't have a good track record when it 186 00:10:22,200 --> 00:10:25,640 Speaker 5: comes to earnings either. Four of the past five quarters 187 00:10:25,679 --> 00:10:29,480 Speaker 5: have seen earnings really disappoint expectations and shares fall as 188 00:10:29,520 --> 00:10:33,000 Speaker 5: a result. So the bar is pretty high here for 189 00:10:33,400 --> 00:10:34,040 Speaker 5: a surprise. 190 00:10:34,360 --> 00:10:36,240 Speaker 1: Yeah, and you know, I know they're trying to expand 191 00:10:36,280 --> 00:10:40,560 Speaker 1: beyond fake meat. They're rebranding as Beyond the Plant Protein Company. 192 00:10:40,600 --> 00:10:43,800 Speaker 1: They're introducing these new products like high protein sparkling drinks 193 00:10:44,440 --> 00:10:47,439 Speaker 1: and what they call simplified plant protein foods. We'll see 194 00:10:47,440 --> 00:10:49,200 Speaker 1: if it's you know, that's what it takes to turn 195 00:10:49,240 --> 00:10:52,360 Speaker 1: things around. All right, let's squeeze Carnival in here, the 196 00:10:52,400 --> 00:10:53,880 Speaker 1: cruise line. How are they doing or how are they 197 00:10:53,920 --> 00:10:54,600 Speaker 1: expected to do? 198 00:10:54,920 --> 00:10:58,240 Speaker 5: Carnival of reports before the ball in March twenty seven. 199 00:10:58,559 --> 00:11:01,360 Speaker 5: What the street wants to know here is how much 200 00:11:01,400 --> 00:11:05,120 Speaker 5: will higher oil prices impact it's your head outlook. This 201 00:11:05,200 --> 00:11:07,280 Speaker 5: is sort of the big question when it comes to 202 00:11:07,360 --> 00:11:11,280 Speaker 5: earning forecasts just overall. In the S and P. Five hundred, 203 00:11:11,520 --> 00:11:15,240 Speaker 5: but specifically to Carnival, Morgan Stanley identified the name as 204 00:11:15,240 --> 00:11:19,520 Speaker 5: the most exposed among cruise liners to oil prices because 205 00:11:19,520 --> 00:11:23,080 Speaker 5: it does not hedge, which they reckon that this would 206 00:11:23,080 --> 00:11:27,520 Speaker 5: translate into about a forty five hit hit to its 207 00:11:27,600 --> 00:11:31,000 Speaker 5: EPs outlook, or that's about a twenty percent hit to 208 00:11:31,040 --> 00:11:34,439 Speaker 5: its overall guidance if you want to think in percentage terms. Okay, well, 209 00:11:34,480 --> 00:11:36,480 Speaker 5: if you look at the stock, that's about how much 210 00:11:36,520 --> 00:11:39,599 Speaker 5: it has fallen since the war has started. So basically 211 00:11:39,679 --> 00:11:43,320 Speaker 5: you could argue that the market has baked that in already. Okay, 212 00:11:43,480 --> 00:11:47,040 Speaker 5: But although this is an estimate, not a confirmation from 213 00:11:47,040 --> 00:11:49,199 Speaker 5: the company, so we'll have to see if that comes 214 00:11:49,240 --> 00:11:52,080 Speaker 5: in a sort of a higher or lower than expected. 215 00:11:52,160 --> 00:11:54,720 Speaker 5: But the point is that the market has already baked 216 00:11:54,720 --> 00:11:57,120 Speaker 5: in some bad news. Now we have to see how 217 00:11:57,200 --> 00:11:58,880 Speaker 5: bad will the news actually be. 218 00:11:59,000 --> 00:12:00,880 Speaker 1: And Carnival will have to see whether or not they 219 00:12:00,920 --> 00:12:03,800 Speaker 1: pass those higher fuel costs on to consumers in the 220 00:12:03,840 --> 00:12:06,240 Speaker 1: way that some of the airlines are doing that. I 221 00:12:06,240 --> 00:12:09,880 Speaker 1: know some international airlines are charging fuel surcharges, but some 222 00:12:10,040 --> 00:12:14,320 Speaker 1: American airlines, US based airlines, i should say, are adding 223 00:12:14,320 --> 00:12:16,200 Speaker 1: it to the ticket price, to higher ticket prices. And 224 00:12:16,200 --> 00:12:18,400 Speaker 1: whether or not that's going to i mean, a slower 225 00:12:18,440 --> 00:12:20,560 Speaker 1: summer travel season. Right now, it doesn't look like it's 226 00:12:20,600 --> 00:12:22,880 Speaker 1: going to be lots to look forward to on the 227 00:12:22,880 --> 00:12:24,720 Speaker 1: earnings front in the weeks ahead. We're going to leave 228 00:12:24,760 --> 00:12:27,640 Speaker 1: it there are thanks to Tatiana Darier, Bloomberg strategist for 229 00:12:27,760 --> 00:12:31,000 Speaker 1: Markets Live. Coming up on Bloomberg Daybreak weekend, there is 230 00:12:31,000 --> 00:12:34,160 Speaker 1: an election in Denmark. This week we bring you a preview. 231 00:12:34,280 --> 00:12:47,760 Speaker 1: I'm Alexis CHRISTOPHERUS and this is Bloomberg. This is Bloomberg 232 00:12:47,840 --> 00:12:50,720 Speaker 1: Daybreak weekend, our global look ahead at the top stories 233 00:12:50,720 --> 00:12:53,960 Speaker 1: for investors in the coming week. I'm Alexis CHRISTOPHERUS. This 234 00:12:54,000 --> 00:12:57,400 Speaker 1: week brings us an election in Denmark, and Daybreak Europe 235 00:12:57,440 --> 00:12:59,600 Speaker 1: anchor Caroline Hepger is here with a preview. 236 00:12:59,640 --> 00:13:05,400 Speaker 2: Caroline Alexis Metafriedrickson's party was polling at historically low numbers, 237 00:13:05,440 --> 00:13:08,439 Speaker 2: but barely a month ago the Danish Prime Minister called 238 00:13:08,440 --> 00:13:09,520 Speaker 2: a general election. 239 00:13:10,080 --> 00:13:10,280 Speaker 7: Now. 240 00:13:10,320 --> 00:13:13,520 Speaker 2: Proportional representation means that there are more than a dozen 241 00:13:13,640 --> 00:13:17,880 Speaker 2: political parties running in this vote, with governments in Denmark 242 00:13:18,120 --> 00:13:21,920 Speaker 2: usually formed from parties within two main blocks, either the 243 00:13:21,960 --> 00:13:24,800 Speaker 2: blue block on the right or the red block on 244 00:13:24,840 --> 00:13:28,520 Speaker 2: the left. Denmark also faces many of the same issues 245 00:13:28,520 --> 00:13:32,360 Speaker 2: in this election as in many other European countries, from 246 00:13:32,440 --> 00:13:38,280 Speaker 2: housing costs to food prices, welfare inequality and immigration. But 247 00:13:38,760 --> 00:13:42,720 Speaker 2: it is President Trump's efforts to control Greenland that have 248 00:13:42,840 --> 00:13:46,920 Speaker 2: created a major foreign polity crisis. As we head into 249 00:13:47,000 --> 00:13:50,960 Speaker 2: Denmark's twenty twenty six election, and joining me now to 250 00:13:51,040 --> 00:13:55,280 Speaker 2: discuss is our reporter in Copenhagen, sanah Vas great to 251 00:13:55,320 --> 00:13:58,560 Speaker 2: speak to you, Sanna. I just want to ask you 252 00:13:58,679 --> 00:14:02,520 Speaker 2: how important you think these elections are now for Denmark. 253 00:14:03,080 --> 00:14:06,880 Speaker 8: They're very important. Denmark is in the middle. 254 00:14:06,640 --> 00:14:11,480 Speaker 7: Of a diplomatic conflict with Donald Trump over Greenland, which 255 00:14:11,520 --> 00:14:15,960 Speaker 7: is part of the Danish Kingdom. Denmark is currently negotiating 256 00:14:16,000 --> 00:14:19,320 Speaker 7: with the US to find a solution to Trump's desire 257 00:14:19,360 --> 00:14:22,800 Speaker 7: for more control over this island, and the next government 258 00:14:22,800 --> 00:14:25,480 Speaker 7: in Denmark will have to deal with the next steps. 259 00:14:25,880 --> 00:14:28,880 Speaker 8: So our Prime Minister Matiflis and she's framed. 260 00:14:28,560 --> 00:14:32,280 Speaker 7: This vote as a decisive election because Danes in the 261 00:14:32,360 --> 00:14:36,360 Speaker 7: next election term will have to define the relationship with 262 00:14:36,480 --> 00:14:38,960 Speaker 7: the US but also the future of. 263 00:14:39,360 --> 00:14:42,280 Speaker 8: The Danish Kingdom. So it's a very important election. 264 00:14:42,640 --> 00:14:47,040 Speaker 2: Yes indeed. But then why was the election called quite 265 00:14:47,080 --> 00:14:47,960 Speaker 2: a few months early? 266 00:14:49,480 --> 00:14:50,200 Speaker 8: Yes, that's right. 267 00:14:50,240 --> 00:14:53,560 Speaker 7: I mean in Denmark it's the prime minister who decides 268 00:14:53,600 --> 00:14:57,120 Speaker 7: when to call an election. There is a four year 269 00:14:57,400 --> 00:15:01,240 Speaker 7: constitutional deadline, but it is quite comment to call the 270 00:15:01,280 --> 00:15:03,120 Speaker 7: election early when the. 271 00:15:03,040 --> 00:15:06,000 Speaker 8: Prime minister sees that the timing. 272 00:15:05,560 --> 00:15:09,680 Speaker 7: Looks politically favorable. And that is the case right now 273 00:15:09,800 --> 00:15:13,160 Speaker 7: for metaphy X now Prime Minister, and it's all tied 274 00:15:13,200 --> 00:15:16,400 Speaker 7: to Trump, and she performed very poorly in the polls 275 00:15:16,400 --> 00:15:20,520 Speaker 7: in December, and then she got this massive boost when 276 00:15:20,640 --> 00:15:23,960 Speaker 7: Trump he started making new threats over Greenland in early January, 277 00:15:24,480 --> 00:15:27,680 Speaker 7: and this spat it just really reinforced her image as 278 00:15:27,800 --> 00:15:32,640 Speaker 7: a disciplined and steady leader during periods of national crisis, 279 00:15:32,360 --> 00:15:37,120 Speaker 7: and that is something that she's hoping to capsulize on 280 00:15:37,640 --> 00:15:39,000 Speaker 7: with this vote. 281 00:15:39,440 --> 00:15:43,280 Speaker 2: So then the US and President Trump looming over this election. 282 00:15:43,600 --> 00:15:47,720 Speaker 2: What are people saying in Denmark and also in Greenland? 283 00:15:47,800 --> 00:15:50,680 Speaker 2: And you might explain also that there are some seats 284 00:15:50,720 --> 00:15:55,160 Speaker 2: in the parliament in Denmark, correct for Greenlandic representatives. 285 00:15:56,400 --> 00:16:00,880 Speaker 7: Yeah, Greenland elects two representatives for the Danish parliament and 286 00:16:00,880 --> 00:16:04,240 Speaker 7: and and they could definitely play a very important role 287 00:16:04,440 --> 00:16:09,480 Speaker 7: in defining uh the future Danish government and and. 288 00:16:09,440 --> 00:16:13,000 Speaker 8: For sure the future relationship with the US. 289 00:16:12,720 --> 00:16:15,640 Speaker 7: And and the future of Greenland will play it an 290 00:16:15,680 --> 00:16:20,040 Speaker 7: important will be an important question in those negotiations generally 291 00:16:20,120 --> 00:16:23,680 Speaker 7: for for both Denmark and Greenland, it's the first time 292 00:16:23,760 --> 00:16:27,800 Speaker 7: and in their modern history where geopolitics, geopolitics is really 293 00:16:28,240 --> 00:16:32,080 Speaker 7: top of mind for voters. And we've seen the topic 294 00:16:32,120 --> 00:16:33,640 Speaker 7: feature and national party. 295 00:16:33,400 --> 00:16:36,040 Speaker 8: Leader debates and and that's quite unusual. 296 00:16:37,040 --> 00:16:40,120 Speaker 7: We also saw a poll earlier in the campaign that 297 00:16:40,280 --> 00:16:43,680 Speaker 7: found that foreign and defense policy that was the number 298 00:16:43,680 --> 00:16:47,360 Speaker 7: one concern for Danes and and and and so in 299 00:16:47,400 --> 00:16:49,280 Speaker 7: a way, Trump, he really turned. 300 00:16:48,960 --> 00:16:51,400 Speaker 8: Foreign policy into a domestic issue. 301 00:16:51,480 --> 00:16:55,720 Speaker 7: And and voters are they're likely to assess politicians on 302 00:16:56,280 --> 00:17:00,600 Speaker 7: their leadership skills and and their capacity to handle the areknown, 303 00:17:00,760 --> 00:17:05,320 Speaker 7: and that is favoring especially the governing parties and the 304 00:17:05,359 --> 00:17:05,959 Speaker 7: Prime minister. 305 00:17:07,200 --> 00:17:09,199 Speaker 2: So then tell me a bit more about who is 306 00:17:09,280 --> 00:17:14,359 Speaker 2: favored to win. According to the polls. 307 00:17:13,840 --> 00:17:16,399 Speaker 8: The Prime Minister Medphals and. 308 00:17:16,119 --> 00:17:20,320 Speaker 7: Her Social Democratic Party looks set to become the biggest 309 00:17:20,400 --> 00:17:25,200 Speaker 7: party by far and that will give her the first 310 00:17:25,240 --> 00:17:29,440 Speaker 7: shot at forming at government. And looking at the polls, 311 00:17:29,520 --> 00:17:32,879 Speaker 7: she is the most likely candidate to secure my majority 312 00:17:32,920 --> 00:17:38,800 Speaker 7: backing to make her Prime Minister again. The biggest outstanding question, 313 00:17:38,840 --> 00:17:43,080 Speaker 7: I'd say is whether she will return to a traditional 314 00:17:43,320 --> 00:17:47,760 Speaker 7: left leaning red block government or look to renew the 315 00:17:48,320 --> 00:17:52,359 Speaker 7: or expand the quite unusual centrist kind of cross block 316 00:17:52,400 --> 00:17:53,800 Speaker 7: coalition that we have. 317 00:17:53,800 --> 00:17:54,359 Speaker 8: At the moment. 318 00:17:54,840 --> 00:17:58,280 Speaker 7: And one of the biggest challenges for going with renewal 319 00:17:58,320 --> 00:18:02,040 Speaker 7: of this government is that if midflex And has proposed 320 00:18:02,040 --> 00:18:05,879 Speaker 7: to introduce a wealth tax, and it's something that's drawn 321 00:18:05,960 --> 00:18:09,560 Speaker 7: sharp criticism and especially from wealthy people in Denmark. 322 00:18:09,880 --> 00:18:11,919 Speaker 8: Some are threatening to leave the country. 323 00:18:12,520 --> 00:18:15,320 Speaker 7: But also from the liberal parties who will really struggle 324 00:18:15,359 --> 00:18:18,720 Speaker 7: to enter a coalition on those terms. 325 00:18:19,320 --> 00:18:20,760 Speaker 8: But remember Denmark has. 326 00:18:20,600 --> 00:18:26,600 Speaker 7: A very fragmented political system or political landscape, and there's 327 00:18:26,840 --> 00:18:28,200 Speaker 7: twelve parties. 328 00:18:27,760 --> 00:18:28,399 Speaker 8: In the running. 329 00:18:28,760 --> 00:18:31,240 Speaker 7: That leaves the outcome very open to kind of late 330 00:18:31,280 --> 00:18:36,520 Speaker 7: shifts and alliances and policies once coalition negotiations start, and 331 00:18:36,840 --> 00:18:40,480 Speaker 7: that could really reshape the balance of power. So we 332 00:18:40,520 --> 00:18:44,400 Speaker 7: are preparing ourselves for potential surprises once talks begin. 333 00:18:45,280 --> 00:18:45,399 Speaker 8: Hm. 334 00:18:45,480 --> 00:18:49,280 Speaker 2: Hm, that'll be interesting. What about other issues? Though the 335 00:18:49,600 --> 00:18:53,240 Speaker 2: Danish Prime Minister is known for her tough stance on immigration, 336 00:18:53,960 --> 00:18:57,680 Speaker 2: how could the outcome of this election shape Denmark's directional 337 00:18:57,760 --> 00:18:58,480 Speaker 2: mats front? 338 00:18:59,760 --> 00:19:04,920 Speaker 7: Yeah, that's right if Felexon she originally in twenty nineteen 339 00:19:05,040 --> 00:19:08,760 Speaker 7: rose to power in Denmark because she managed to steer 340 00:19:08,840 --> 00:19:13,879 Speaker 7: her Social Democratic Party towards a tougher stance on immigration, 341 00:19:14,000 --> 00:19:17,800 Speaker 7: and she in that way reclaimed working class voters who 342 00:19:17,840 --> 00:19:19,000 Speaker 7: had drifted to the right. 343 00:19:19,840 --> 00:19:22,320 Speaker 8: She's also been very outspoken. 344 00:19:22,400 --> 00:19:27,240 Speaker 7: In the EU pushing for stricter border controls and tougher 345 00:19:27,359 --> 00:19:32,719 Speaker 7: immigration policies, and the election could really shape Denmark's direction 346 00:19:33,000 --> 00:19:37,640 Speaker 7: on this topic in the future, especially if Felexon were 347 00:19:37,720 --> 00:19:40,560 Speaker 7: to pivot to the left to create a more kind 348 00:19:40,560 --> 00:19:45,480 Speaker 7: of left leaning majority, it could complicate her ability to 349 00:19:45,640 --> 00:19:49,720 Speaker 7: maintain this stract approach to immigration. So that's definitely something 350 00:19:49,880 --> 00:19:52,480 Speaker 7: that not just the Danes of following, but for sure 351 00:19:52,560 --> 00:19:54,240 Speaker 7: also across Europe. 352 00:19:55,800 --> 00:19:58,879 Speaker 2: So then what role do you think that Denmark wants 353 00:19:58,920 --> 00:20:01,680 Speaker 2: to play then or will all want to play in 354 00:20:01,800 --> 00:20:06,000 Speaker 2: conversations around the EU and the US. 355 00:20:06,800 --> 00:20:10,520 Speaker 7: I think it striking comment that Prime Minister Metaphlags made 356 00:20:10,760 --> 00:20:13,439 Speaker 7: in a debate on TV quite recently was that the 357 00:20:13,600 --> 00:20:19,280 Speaker 7: US is no longer Denmark's closest ally. Instead, she's called 358 00:20:19,320 --> 00:20:22,880 Speaker 7: for closer collaboration in the EU but also with other 359 00:20:23,240 --> 00:20:27,439 Speaker 7: like minded nations such as Canada for example. And we 360 00:20:27,480 --> 00:20:33,160 Speaker 7: are seeing also various ways in which sentiment in Denmark, 361 00:20:33,320 --> 00:20:38,840 Speaker 7: especially on defense and EU collaboration, it's really changing as 362 00:20:39,440 --> 00:20:43,360 Speaker 7: Denmark is adapting to new global order, I mean Denmark. 363 00:20:43,720 --> 00:20:46,879 Speaker 7: It's a very good example is the Denmark earlier this 364 00:20:46,960 --> 00:20:51,720 Speaker 7: month entered into an agreement with France and nuclear deterrence, 365 00:20:51,760 --> 00:20:55,000 Speaker 7: and that is quite a dramatic move for a country 366 00:20:55,040 --> 00:20:59,040 Speaker 7: that has long been opposed to atomic weapons. But it's 367 00:20:59,080 --> 00:21:01,840 Speaker 7: also an example of the changes that Denmark is now 368 00:21:01,880 --> 00:21:05,320 Speaker 7: seeing necessary as it realizes it can't rely on the 369 00:21:05,400 --> 00:21:09,960 Speaker 7: US for security and it needs to build deeper alliances elsewhere. 370 00:21:10,320 --> 00:21:13,920 Speaker 2: Whoever leads Denmark next though, yes they'll be thinking about 371 00:21:13,920 --> 00:21:17,680 Speaker 2: the EU, but surely front and center will be any 372 00:21:17,720 --> 00:21:20,960 Speaker 2: possibility of a clash with the US. You've been reporting 373 00:21:21,000 --> 00:21:24,800 Speaker 2: about the idea that there were actually deeper preparations by 374 00:21:24,840 --> 00:21:29,239 Speaker 2: Copenhagen for some kind of the possibility of some kind 375 00:21:29,280 --> 00:21:31,160 Speaker 2: of military confrontation with America. 376 00:21:32,000 --> 00:21:36,520 Speaker 7: We've seen new information come out this week. A Danish 377 00:21:36,760 --> 00:21:40,480 Speaker 7: broadcast that R reported quite extensively on some of the 378 00:21:40,520 --> 00:21:45,800 Speaker 7: preparations that Copenhagen had been undertaking earlier this year. In 379 00:21:45,840 --> 00:21:51,000 Speaker 7: the event of a potential US attack on Greenland, for example, 380 00:21:51,640 --> 00:21:56,320 Speaker 7: Denmark deployed troops with live and ammunition. They were prepared 381 00:21:56,400 --> 00:22:00,560 Speaker 7: to blow up airport runways in Greenland to prevent US 382 00:22:00,560 --> 00:22:04,119 Speaker 7: forces from landing if Trump chose to take the island 383 00:22:04,160 --> 00:22:08,679 Speaker 7: by force. Dr also reported that Denmark dispatched blood supplies 384 00:22:08,800 --> 00:22:13,359 Speaker 7: to treat the wounded if if fighting were to break out. 385 00:22:14,520 --> 00:22:20,960 Speaker 7: It really shows how worried Copenhagen were back in January, 386 00:22:21,040 --> 00:22:26,399 Speaker 7: when Trump was most vocal in his threats. Denmark was 387 00:22:26,480 --> 00:22:31,960 Speaker 7: extremely worried, and as Danish Prime Minister made flags and 388 00:22:31,960 --> 00:22:36,240 Speaker 7: said just this week, negotiations underway. We hope for an agreement. 389 00:22:36,320 --> 00:22:41,480 Speaker 7: But Trump's desire to take over Greenland remains intact, so 390 00:22:42,200 --> 00:22:46,200 Speaker 7: clearly that nervousness has not gone away, and a future 391 00:22:46,280 --> 00:22:50,520 Speaker 7: government may well have to have to deal with the 392 00:22:50,560 --> 00:22:54,520 Speaker 7: outcome of no deal or potential deal with Trump. 393 00:22:55,880 --> 00:22:59,280 Speaker 2: So then finally, this vote is also going to be 394 00:22:59,480 --> 00:23:04,359 Speaker 2: very into seeing tests about whether campaigning on an anti 395 00:23:04,480 --> 00:23:08,080 Speaker 2: TARP message can work. Perhaps a lot of other countries 396 00:23:08,119 --> 00:23:10,680 Speaker 2: will be watching this. What do you think that they're 397 00:23:10,720 --> 00:23:12,879 Speaker 2: going to be thinking about and looking at when it 398 00:23:12,880 --> 00:23:15,480 Speaker 2: comes to the Danish example, Yeah. 399 00:23:15,520 --> 00:23:19,359 Speaker 7: I think the Danish example is very interesting because even 400 00:23:19,400 --> 00:23:24,200 Speaker 7: though foreign security policy has taken on greater urgency, it's 401 00:23:24,320 --> 00:23:28,800 Speaker 7: unclear whether it will move votes really to swing the election. 402 00:23:29,720 --> 00:23:33,960 Speaker 7: I think in Denmark generally parties are very aligned on 403 00:23:34,359 --> 00:23:38,360 Speaker 7: foreign policy, and so it leaves little opportunity for candidates 404 00:23:38,400 --> 00:23:42,840 Speaker 7: to differentiate themselves. So parties are still they are instead 405 00:23:43,000 --> 00:23:48,119 Speaker 7: directing their energy towards more domestic issues like taxes and 406 00:23:48,200 --> 00:23:52,800 Speaker 7: pension reform and agriculture. That's where party device are clearer. 407 00:23:53,560 --> 00:23:56,399 Speaker 7: But so far Pole suggests the vote preferences have not 408 00:23:56,520 --> 00:24:00,679 Speaker 7: shifted very much during the campaign. Of course, there is 409 00:24:00,760 --> 00:24:05,639 Speaker 7: also another element of unpredictability still, and that is that 410 00:24:05,720 --> 00:24:09,640 Speaker 7: the election is very vulnerable to outside attempts to influence it. 411 00:24:10,280 --> 00:24:15,440 Speaker 7: Denmark's intelligence service warn recently that foreign powers, including Russia 412 00:24:15,520 --> 00:24:19,159 Speaker 7: but even also the US, may seek to interfere in 413 00:24:19,720 --> 00:24:25,560 Speaker 7: the vote. And there is especially a worry amongst lawmakers 414 00:24:25,640 --> 00:24:28,639 Speaker 7: running for election in Denmark that Donald Trump at any 415 00:24:28,680 --> 00:24:32,040 Speaker 7: time could post something on social media and that could 416 00:24:32,040 --> 00:24:36,520 Speaker 7: really shape the election more than he already has. So 417 00:24:36,760 --> 00:24:39,600 Speaker 7: that's for sure something that we are watching for and 418 00:24:40,119 --> 00:24:43,600 Speaker 7: that across Europe will be looking at. 419 00:24:43,960 --> 00:24:47,000 Speaker 2: Okay, Sanah, thank you so much for being with us. Yes, well, 420 00:24:47,080 --> 00:24:50,040 Speaker 2: we look forward to hearing more from you and understanding 421 00:24:50,040 --> 00:24:53,920 Speaker 2: the outcome of the Danish vote in the next few days. 422 00:24:54,240 --> 00:24:57,840 Speaker 2: That is Sannah vas Our, reporter in Copenhagen. My thanks. 423 00:24:58,040 --> 00:25:01,320 Speaker 2: I'm Kline Hebger here in London. Catch us every weekday 424 00:25:01,359 --> 00:25:03,920 Speaker 2: morning for BlueBag Daybreak Cube. That's beginning at six Am 425 00:25:03,960 --> 00:25:07,840 Speaker 2: in London. That's one Am or Wall Street Alexis. 426 00:25:07,359 --> 00:25:10,520 Speaker 1: Thanks Caroline, and coming up on Bloomberg Daybreak weekend, we 427 00:25:10,600 --> 00:25:15,080 Speaker 1: preview Chinese ev maker BYD's earnings. I'm Alexis Christophers and 428 00:25:15,160 --> 00:25:28,360 Speaker 1: this is Bloomberg. I'm Alexis Kristophers with your global look 429 00:25:28,359 --> 00:25:31,160 Speaker 1: ahead at the top stories for investors. In the coming week, 430 00:25:31,480 --> 00:25:34,960 Speaker 1: Chinese ev maker BYD will report earnings. For a preview, 431 00:25:35,080 --> 00:25:37,720 Speaker 1: let's go to Bloomberg's Doug Chrisner, host of the Daybreak 432 00:25:37,760 --> 00:25:38,760 Speaker 1: Asia podcast. 433 00:25:39,000 --> 00:25:42,639 Speaker 3: Thanks Alexis. Last month mark the first time BYD sold 434 00:25:42,680 --> 00:25:45,520 Speaker 3: more cars abroad than in China, and the company is 435 00:25:45,560 --> 00:25:49,640 Speaker 3: now the world's top seller of evs. Its manufacturing operations 436 00:25:49,640 --> 00:25:53,280 Speaker 3: have expanded outside of China. BYD has a new facility 437 00:25:53,520 --> 00:25:57,000 Speaker 3: in Brazil and a joint venture in Uzbekistan. For a 438 00:25:57,040 --> 00:25:59,640 Speaker 3: closer look at BYD and what we're likely to see 439 00:25:59,640 --> 00:26:02,840 Speaker 3: when the company delivers earnings, I'm joined by Bloomberg's Linda Liu. 440 00:26:03,280 --> 00:26:06,080 Speaker 3: Linda is China Car's reporter. She joins us from our 441 00:26:06,119 --> 00:26:08,800 Speaker 3: studios in Hong Kong. Thank you for being here. Can 442 00:26:08,840 --> 00:26:12,119 Speaker 3: we start with the domestic side of BYD's business. Most 443 00:26:12,200 --> 00:26:15,520 Speaker 3: brands in China have been facing struggles, and I know 444 00:26:16,080 --> 00:26:18,919 Speaker 3: weak domestic demand on the mainland has obviously been a 445 00:26:18,960 --> 00:26:21,960 Speaker 3: major factor for quite some time. Give me your sense 446 00:26:22,040 --> 00:26:24,000 Speaker 3: of BYD's business in China. 447 00:26:25,040 --> 00:26:29,360 Speaker 9: BYD and other Chinese EV brands in China have been 448 00:26:29,480 --> 00:26:34,119 Speaker 9: facing a number of challenges. To start with, the Chinese 449 00:26:34,520 --> 00:26:37,560 Speaker 9: economy has been slowing, so you have a weak demand. 450 00:26:38,200 --> 00:26:42,359 Speaker 9: The government has been trying to stimulate retail sales in 451 00:26:42,400 --> 00:26:46,040 Speaker 9: the form of subsidies and cars had a trade in 452 00:26:46,119 --> 00:26:51,520 Speaker 9: subsidy that really promoted EV purchases, but that has started 453 00:26:51,560 --> 00:26:54,960 Speaker 9: to be scale back starting from this year. A tax 454 00:26:55,040 --> 00:26:58,640 Speaker 9: break that previously exempted about ten percent in sales taxes 455 00:26:58,720 --> 00:27:02,000 Speaker 9: has slowly to come back, starting with five percent this year. 456 00:27:02,680 --> 00:27:06,560 Speaker 9: And subsidies that had previously gone to a lot of 457 00:27:06,960 --> 00:27:10,960 Speaker 9: mass market models affordable models that which BID is really 458 00:27:10,960 --> 00:27:15,359 Speaker 9: strong and has also been reduced. So demand has really 459 00:27:15,400 --> 00:27:18,840 Speaker 9: been hard hits. In the first two months of this 460 00:27:18,960 --> 00:27:23,240 Speaker 9: year in China, you're seeing sales falling compared to last year, 461 00:27:23,800 --> 00:27:27,480 Speaker 9: so BID has a really tough time. Not to mention competition, 462 00:27:28,040 --> 00:27:32,040 Speaker 9: You've got rivals like Jili that is really chasing its tail, 463 00:27:32,280 --> 00:27:37,159 Speaker 9: essentially coming up with models that's exactly targeted at the 464 00:27:37,200 --> 00:27:40,480 Speaker 9: models that BID has offered. So I think BID is 465 00:27:40,520 --> 00:27:44,480 Speaker 9: really trying to shake off this stalemate with a launch 466 00:27:44,560 --> 00:27:48,960 Speaker 9: of new technologies such as innovations and charging as well 467 00:27:49,000 --> 00:27:50,440 Speaker 9: as battery technology. 468 00:27:50,520 --> 00:27:52,480 Speaker 3: Over the last few years, I know there have been 469 00:27:52,520 --> 00:27:55,960 Speaker 3: some pretty intense price wars among the ev makers on 470 00:27:55,960 --> 00:27:58,440 Speaker 3: the mainland. What is the situation with that right now? 471 00:27:59,280 --> 00:28:02,760 Speaker 9: The price will has been raging now for a number 472 00:28:02,760 --> 00:28:07,080 Speaker 9: of years, coming into its third year. It's a really 473 00:28:07,119 --> 00:28:11,600 Speaker 9: tough situation in China because there's an over capacity. Essentially, 474 00:28:12,200 --> 00:28:16,680 Speaker 9: the country's carmakers are producing more cost than customers can buy, 475 00:28:17,440 --> 00:28:21,000 Speaker 9: so they really need to get sales rolling by slashing 476 00:28:21,119 --> 00:28:26,119 Speaker 9: prices keep the factories operating. But in the long term 477 00:28:26,119 --> 00:28:30,720 Speaker 9: they are really hurting themselves in margins and revenues, so 478 00:28:30,880 --> 00:28:36,240 Speaker 9: financially it's not sustainable. And actually you've seen a number 479 00:28:36,240 --> 00:28:40,280 Speaker 9: of effects on China's auto supply chain where carmakers demand 480 00:28:40,440 --> 00:28:47,200 Speaker 9: really heavy price cuts, essentially slashing prices of components from 481 00:28:47,200 --> 00:28:51,120 Speaker 9: its suppliers, so in turn they can pass some of 482 00:28:51,160 --> 00:28:54,920 Speaker 9: that price cuts onto customers. But that really is just 483 00:28:55,200 --> 00:28:58,520 Speaker 9: a lot of pressure on the entire supply chain. So 484 00:28:58,640 --> 00:29:01,680 Speaker 9: the government really is trying to reign in the price war. 485 00:29:02,240 --> 00:29:05,400 Speaker 9: They've told carmakers they need to pay their suppliers on time. 486 00:29:05,520 --> 00:29:09,400 Speaker 9: They really shouldn't be selling vehicles at a price that's 487 00:29:09,560 --> 00:29:12,960 Speaker 9: below the cost to make them, and we're starting to 488 00:29:13,000 --> 00:29:18,680 Speaker 9: see some of the carmakers start to raise prices. But 489 00:29:18,760 --> 00:29:22,680 Speaker 9: I think we're still waiting to see exactly how that's 490 00:29:22,720 --> 00:29:26,880 Speaker 9: going to play out, because the overcapacity situation hasn't changed. 491 00:29:26,840 --> 00:29:29,400 Speaker 3: And BYD has been using foreign markets as a way 492 00:29:29,440 --> 00:29:33,080 Speaker 3: to deal with that excess inventory stemming obviously from the 493 00:29:33,120 --> 00:29:36,720 Speaker 3: over capacity issue. I'm thinking of Europe in particular. Is 494 00:29:36,760 --> 00:29:37,760 Speaker 3: that still the case? 495 00:29:38,480 --> 00:29:41,760 Speaker 9: Yes, and Europe is a very attractive market for BID 496 00:29:42,000 --> 00:29:46,680 Speaker 9: as well as Chinese EV makers because the European market, 497 00:29:46,840 --> 00:29:50,480 Speaker 9: they will be able to afford more expensive Emmy models, 498 00:29:51,120 --> 00:29:54,560 Speaker 9: and the EV adoption rates in Europe, especially when you 499 00:29:54,640 --> 00:29:58,040 Speaker 9: look at countries like Norway, is very high. So Europe 500 00:29:58,120 --> 00:30:02,520 Speaker 9: is a very to market for Chinese evs. But at 501 00:30:02,520 --> 00:30:06,040 Speaker 9: the same time, Europe has its own domestic industries that 502 00:30:06,120 --> 00:30:09,760 Speaker 9: it needs to protect. So that's why you see the 503 00:30:09,840 --> 00:30:15,600 Speaker 9: European Union levying this tariff against Chinese evs to try 504 00:30:15,600 --> 00:30:20,400 Speaker 9: to slow this wave of EV exports to Europe so far, 505 00:30:20,720 --> 00:30:26,680 Speaker 9: actually it hasn't really slowed down the Chinese EV exports 506 00:30:26,720 --> 00:30:29,440 Speaker 9: that much because we're still seeing a very healthy growth. 507 00:30:30,360 --> 00:30:33,560 Speaker 9: But I think the thinking for the European Union is 508 00:30:33,560 --> 00:30:37,920 Speaker 9: that they hope the Chinese companies will consider investing and 509 00:30:38,040 --> 00:30:42,240 Speaker 9: forming joint ventures with local European partners. So the jobs 510 00:30:42,360 --> 00:30:45,280 Speaker 9: at least will you remain in Europe and maybe there'll 511 00:30:45,320 --> 00:30:49,840 Speaker 9: be job creation and technology know how transfer to really 512 00:30:49,960 --> 00:30:53,280 Speaker 9: help Europe's domestic EV making industry. 513 00:30:53,400 --> 00:30:56,160 Speaker 3: So speaking of joint ventures, as I mentioned earlier, there 514 00:30:56,240 --> 00:30:59,920 Speaker 3: is a JV in Uzbekistan, and we know that by 515 00:31:00,000 --> 00:31:04,360 Speaker 3: ideas expanding manufacturing to include Brazil. What's it work here 516 00:31:04,400 --> 00:31:06,240 Speaker 3: in terms of the strategy. 517 00:31:06,400 --> 00:31:12,160 Speaker 9: Localizing production is quite an important step for automakers as 518 00:31:12,240 --> 00:31:17,000 Speaker 9: they expand globally. We've seen that with the Japanese automakers 519 00:31:17,320 --> 00:31:20,959 Speaker 9: like Toyota, Honda, Nissan, as well as the Korean So 520 00:31:21,240 --> 00:31:24,520 Speaker 9: I think it's very natural for the Chinese automakers like 521 00:31:24,640 --> 00:31:30,880 Speaker 9: BID to start bringing production overseas to markets where they 522 00:31:30,880 --> 00:31:34,720 Speaker 9: can see a very sizeable volumes. That would make sense 523 00:31:35,240 --> 00:31:40,080 Speaker 9: to have localized production, And in a sense it's also 524 00:31:40,440 --> 00:31:44,240 Speaker 9: one way for these brands to really build local recognition 525 00:31:44,440 --> 00:31:48,040 Speaker 9: and goodwill. You know, if you're bringing a lot of 526 00:31:48,120 --> 00:31:51,040 Speaker 9: jobs with the factory you're building in the new market, 527 00:31:51,200 --> 00:31:53,800 Speaker 9: I think that will build you know, that would really 528 00:31:53,840 --> 00:31:57,040 Speaker 9: help propel your brand, not just among the local consumers, 529 00:31:57,080 --> 00:31:58,880 Speaker 9: but with the local governments. 530 00:31:59,080 --> 00:32:02,440 Speaker 3: Whereas b ID when it comes to autonomous driving. 531 00:32:03,120 --> 00:32:08,200 Speaker 9: Autonomous driving is a technology that automakers are really trying 532 00:32:08,240 --> 00:32:12,320 Speaker 9: to stay on top of, especially when you look at 533 00:32:12,680 --> 00:32:17,840 Speaker 9: Tesla and Elon Musk's vision for robotaxis and autonomous driving, 534 00:32:18,400 --> 00:32:23,320 Speaker 9: because if this technology manages to reach a mass adoption stage, 535 00:32:23,400 --> 00:32:27,040 Speaker 9: that's going to change the entire consumption pattern when it 536 00:32:27,120 --> 00:32:31,600 Speaker 9: comes to cars. You know, if the vehicles can drive themselves, 537 00:32:32,040 --> 00:32:35,040 Speaker 9: does it even still make sense for an individual to 538 00:32:35,080 --> 00:32:39,400 Speaker 9: own cars anymore? Maybe you can just have a robotaxi 539 00:32:39,400 --> 00:32:42,720 Speaker 9: fleet that serves the community or that serves a city. 540 00:32:43,200 --> 00:32:46,600 Speaker 9: So the automakers, I think are also you know, trying 541 00:32:46,640 --> 00:32:51,840 Speaker 9: to have their own autonomous driving technology and thinking about 542 00:32:51,880 --> 00:32:54,120 Speaker 9: what the business model is going to look like in 543 00:32:54,120 --> 00:32:57,520 Speaker 9: the future. And now they're doing a lot of exploration. 544 00:32:58,040 --> 00:33:04,040 Speaker 9: BID is the valid ping its own smart driving technology 545 00:33:04,120 --> 00:33:07,720 Speaker 9: in house, but it's also working with external suppliers such 546 00:33:07,760 --> 00:33:12,360 Speaker 9: as Momenta. This week, we've also seen a number of 547 00:33:12,640 --> 00:33:17,960 Speaker 9: Chinese EV makers join up with Nvidia onto Invidia's latest 548 00:33:18,440 --> 00:33:24,080 Speaker 9: smart driving platform. So they trying different routes and hoping 549 00:33:24,200 --> 00:33:26,880 Speaker 9: that in the future that they will be part of 550 00:33:26,920 --> 00:33:30,920 Speaker 9: this transport disruption and won't be left behind. 551 00:33:31,120 --> 00:33:33,280 Speaker 3: You mentioned Tesla. I'm curious when you look at the 552 00:33:33,400 --> 00:33:37,280 Speaker 3: rivalry between Tesla and BYD and China, how do they compare. 553 00:33:38,120 --> 00:33:41,840 Speaker 9: The dynamics just keep changing all the time. Tesla, for 554 00:33:41,880 --> 00:33:44,960 Speaker 9: a very long time was seen as the pioneer for 555 00:33:45,080 --> 00:33:48,640 Speaker 9: the EV industry. It was really the brand that kick started, 556 00:33:49,360 --> 00:33:53,880 Speaker 9: you know, everyday consumers kind of acceptance of EV's with 557 00:33:54,040 --> 00:34:01,280 Speaker 9: these really technological Leyden evs, you know that actually drive 558 00:34:01,520 --> 00:34:05,440 Speaker 9: for arrange without charging. You know, that's more useful for 559 00:34:05,760 --> 00:34:10,640 Speaker 9: daily lives. BYD for quite a what, for quite a 560 00:34:10,840 --> 00:34:14,360 Speaker 9: number of years was playing catch up to Tesla, but 561 00:34:14,480 --> 00:34:18,160 Speaker 9: last year it finally became the world's biggest brand in 562 00:34:18,320 --> 00:34:22,719 Speaker 9: selling EV's and Tesla, as we know, was hit by 563 00:34:22,880 --> 00:34:27,360 Speaker 9: a backlash against Elon Musk's uh you know, political views 564 00:34:27,400 --> 00:34:31,920 Speaker 9: and activities. And now I think going forward, the competition 565 00:34:32,040 --> 00:34:35,640 Speaker 9: dynamics is going to change again. Because we're seeing by 566 00:34:35,760 --> 00:34:39,440 Speaker 9: D bringing out all of these new EV charging and 567 00:34:39,520 --> 00:34:43,320 Speaker 9: EV battery technology that we I have to be honest, 568 00:34:43,400 --> 00:34:47,640 Speaker 9: I haven't really seen from Tesla so far. It seems 569 00:34:47,680 --> 00:34:51,839 Speaker 9: like Tesla and Elon Musk's priorities have shifted to robotics. 570 00:34:52,440 --> 00:34:56,520 Speaker 9: They're trying to really get their humanoid robot off the 571 00:34:56,560 --> 00:35:00,440 Speaker 9: ground as well as robot taxis. Uh So, the focus 572 00:35:00,440 --> 00:35:03,760 Speaker 9: has changed so much for Tesla that I'm not sure 573 00:35:03,960 --> 00:35:06,400 Speaker 9: if their heart is really in the game anymore. Just 574 00:35:06,480 --> 00:35:08,000 Speaker 9: to be an EV company. 575 00:35:07,719 --> 00:35:10,160 Speaker 3: It seems like you're describing the rate at which you 576 00:35:10,239 --> 00:35:13,120 Speaker 3: can charge a Chinese EV and how that compares with 577 00:35:13,160 --> 00:35:14,200 Speaker 3: other manufacturers. 578 00:35:14,280 --> 00:35:14,520 Speaker 8: Right. 579 00:35:15,360 --> 00:35:21,520 Speaker 9: Yes, So BYD had a product launch recently in which 580 00:35:21,560 --> 00:35:25,680 Speaker 9: they claim the latest generation of their EV platform and 581 00:35:25,800 --> 00:35:29,560 Speaker 9: EV batteries allows you to charge from ten percent to 582 00:35:29,840 --> 00:35:34,839 Speaker 9: seventy percent, from ten percent to seventy percent in five 583 00:35:34,920 --> 00:35:40,400 Speaker 9: minutes and nearly full charge in just under ten minutes. Now, 584 00:35:40,440 --> 00:35:43,879 Speaker 9: with a charging time like that, it really changes the 585 00:35:43,920 --> 00:35:48,560 Speaker 9: whole paradigm when you come when you're thinking about EV's 586 00:35:48,760 --> 00:35:53,680 Speaker 9: as well as petrol powered cars. Essentially, now you probably 587 00:35:54,280 --> 00:35:57,120 Speaker 9: will be able to get get rid of range anxiety 588 00:35:57,200 --> 00:35:59,600 Speaker 9: if you can power up in ev in the same 589 00:35:59,600 --> 00:36:02,080 Speaker 9: amount of time you would have been able to fill 590 00:36:02,160 --> 00:36:06,040 Speaker 9: up your car with petrol. So that's BYD's goal is 591 00:36:06,080 --> 00:36:10,879 Speaker 9: to essentially make evs as easy and convenient to use 592 00:36:11,080 --> 00:36:12,440 Speaker 9: as petrol cars. 593 00:36:12,680 --> 00:36:15,280 Speaker 3: So we have earnings from BYD in the week ahead. 594 00:36:15,920 --> 00:36:19,080 Speaker 3: Give me your sense of what the market is expecting, 595 00:36:19,480 --> 00:36:23,440 Speaker 3: what to look for and when we view the stock, 596 00:36:23,560 --> 00:36:26,239 Speaker 3: how has the stock been performing and what is it 597 00:36:26,280 --> 00:36:27,319 Speaker 3: reflecting right now? 598 00:36:29,200 --> 00:36:33,280 Speaker 9: Earnings is going to be tough for BYD. They've had 599 00:36:33,800 --> 00:36:39,320 Speaker 9: a couple of quarters of falls in their net income, 600 00:36:39,960 --> 00:36:44,160 Speaker 9: so looking forward to the four year results, they may 601 00:36:44,560 --> 00:36:51,520 Speaker 9: actually have a first annual decline in profits, probably since 602 00:36:52,320 --> 00:36:57,720 Speaker 9: the pandemic days. This is largely due to this whole 603 00:36:57,760 --> 00:37:03,800 Speaker 9: erosion of margins and profits in China's ultra competitive market 604 00:37:03,800 --> 00:37:05,920 Speaker 9: where you've had this price will go on, as well 605 00:37:05,920 --> 00:37:12,920 Speaker 9: as regularly scrutiny that basically forced BYD to really clean 606 00:37:13,040 --> 00:37:18,880 Speaker 9: up its balance sheets. These sales growth has also slowed 607 00:37:18,920 --> 00:37:22,759 Speaker 9: a lot, so it's facing all of these pressures for 608 00:37:22,840 --> 00:37:27,160 Speaker 9: its upcoming earnings, and in terms of stock price, it's 609 00:37:27,239 --> 00:37:32,040 Speaker 9: come down from a high, but it's still actually doing 610 00:37:32,160 --> 00:37:36,279 Speaker 9: a lot better than its rivals. Such as Julie. I 611 00:37:36,320 --> 00:37:40,160 Speaker 9: think people still see BYD as the technology pioneer in 612 00:37:40,400 --> 00:37:45,719 Speaker 9: the EV industry. But in the short term, I think 613 00:37:45,840 --> 00:37:48,919 Speaker 9: there's going to be pressures on the stock price as 614 00:37:48,960 --> 00:37:53,080 Speaker 9: the whole autos and EV industry in China is facing 615 00:37:53,120 --> 00:37:56,120 Speaker 9: a lot of challenges with demand in the near future. 616 00:37:56,760 --> 00:37:59,080 Speaker 3: Linda, thank you so very much for helping us preview 617 00:37:59,440 --> 00:38:02,720 Speaker 3: earnings in the week ahead from Chinese EV Maker byd 618 00:38:03,000 --> 00:38:06,520 Speaker 3: Bloomberg's Linda lu. She is China Carr's reporter, joining from 619 00:38:06,520 --> 00:38:09,200 Speaker 3: our studios in Hong Kong. I'm Doug Krisner. You can 620 00:38:09,239 --> 00:38:12,680 Speaker 3: catch us weekdays for the Daybreak Asia podcast. It's available 621 00:38:12,719 --> 00:38:15,040 Speaker 3: wherever you get your podcast. Alexis. 622 00:38:15,120 --> 00:38:17,360 Speaker 1: Thanks Doug, and that does it for this edition of 623 00:38:17,400 --> 00:38:20,719 Speaker 1: Bloomberg Daybreak Weekend. Join us again Monday morning at five 624 00:38:20,760 --> 00:38:24,000 Speaker 1: am Wall Street Time for the latest on markets overseas 625 00:38:24,120 --> 00:38:26,719 Speaker 1: and the news you need to start your day. I'm 626 00:38:26,760 --> 00:38:30,400 Speaker 1: Alexis Kristoffers. Stay with us. Top stories and global business 627 00:38:30,440 --> 00:38:32,280 Speaker 1: headlines are coming up right now.