1 00:00:02,960 --> 00:00:13,240 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Daybreak Weekend, 2 00:00:13,320 --> 00:00:15,280 Speaker 1: our global look at the top stories in the coming 3 00:00:15,320 --> 00:00:17,919 Speaker 1: week from our Daybreak anchors all around the world, and 4 00:00:18,000 --> 00:00:19,959 Speaker 1: straight ahead on the program, we look ahead to some 5 00:00:20,079 --> 00:00:23,480 Speaker 1: key inflation and retail sales data here in the US. 6 00:00:23,840 --> 00:00:25,599 Speaker 1: I'm Tom Busby in New York. 7 00:00:25,840 --> 00:00:28,560 Speaker 2: I'm Stephen Carolyn London for We're digging into the challenges 8 00:00:28,600 --> 00:00:32,120 Speaker 2: facing commercial and residential real estate out of a major 9 00:00:32,200 --> 00:00:34,600 Speaker 2: conference in the French Riviera. 10 00:00:34,000 --> 00:00:36,519 Speaker 3: And I'm Brian Curtis in Hong Kong. We look ahead 11 00:00:36,520 --> 00:00:40,640 Speaker 3: to earnings from China's contemporarate Apparax technology, number one in 12 00:00:40,680 --> 00:00:44,000 Speaker 3: its industry. How is it doing in navigating China? 13 00:00:45,680 --> 00:00:49,680 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg. 14 00:00:49,720 --> 00:00:52,199 Speaker 4: He Love on Free Own, New York, Bloomberg ninety nine 15 00:00:52,200 --> 00:00:55,600 Speaker 4: to one, Washington, d C, Bloomberg one O six one, Boston, 16 00:00:55,680 --> 00:01:00,520 Speaker 4: Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Serrius 17 00:01:00,600 --> 00:01:03,840 Speaker 4: XM one nineteen and around the world on Bloomberg Radio 18 00:01:03,960 --> 00:01:06,280 Speaker 4: dot com and via the Bloomberg Business App. 19 00:01:09,520 --> 00:01:11,280 Speaker 1: Good day to you. I'm Tom Busby, and we begin 20 00:01:11,319 --> 00:01:15,440 Speaker 1: today's program with inflation. We get key CPI data for 21 00:01:15,480 --> 00:01:18,920 Speaker 1: the month of February this coming week, which could potentially 22 00:01:19,200 --> 00:01:22,399 Speaker 1: influence what the FED does at its March meeting. Joining 23 00:01:22,520 --> 00:01:26,240 Speaker 1: us now is Stuart Paul, Us, economist with Bloomberg Economics. 24 00:01:26,360 --> 00:01:27,280 Speaker 1: Thank you for joining us. 25 00:01:27,400 --> 00:01:29,520 Speaker 5: Thank you for having me. Tom. Yes, we are looking 26 00:01:29,520 --> 00:01:32,600 Speaker 5: forward to getting our February CPI data, and we are 27 00:01:32,640 --> 00:01:34,679 Speaker 5: also going to end up getting retail sales data for 28 00:01:34,680 --> 00:01:37,600 Speaker 5: the month of February in this coming week. And our 29 00:01:37,680 --> 00:01:40,720 Speaker 5: basic view is that bit of a resurgence in spending 30 00:01:41,080 --> 00:01:43,480 Speaker 5: helped to create a bit of an inflationary impulse. We 31 00:01:43,560 --> 00:01:47,880 Speaker 5: are expecting to see the headline CPI index increase zero 32 00:01:47,920 --> 00:01:50,480 Speaker 5: point four percent month on month for the month of February. 33 00:01:50,800 --> 00:01:53,320 Speaker 5: That's the same as what we saw in January, and 34 00:01:53,360 --> 00:01:57,560 Speaker 5: that is a very hot print and definitely inconsistent with 35 00:01:57,560 --> 00:02:00,000 Speaker 5: the Fed's two percent target. That's going to hold annual 36 00:02:00,240 --> 00:02:02,840 Speaker 5: inflation at three point one percent. It's year over year 37 00:02:03,240 --> 00:02:06,480 Speaker 5: core inflation. We're expecting to register zero point three percent 38 00:02:06,560 --> 00:02:09,560 Speaker 5: month on month, allowing headline inflation to fall to three 39 00:02:09,600 --> 00:02:12,720 Speaker 5: point seven percent year over year. We are expecting to 40 00:02:12,720 --> 00:02:16,480 Speaker 5: see some disinflation and core goods, with use auto prices 41 00:02:16,520 --> 00:02:20,400 Speaker 5: declining about two percent during the month, but consumers are 42 00:02:20,440 --> 00:02:23,600 Speaker 5: still spending and that will support nominal retail sales growth 43 00:02:23,680 --> 00:02:24,240 Speaker 5: during the month. 44 00:02:24,360 --> 00:02:27,320 Speaker 1: All right, So one bright spot you mentioned was use 45 00:02:27,400 --> 00:02:32,720 Speaker 1: cars a little lower. However, housing gasoline and food, I 46 00:02:32,760 --> 00:02:34,720 Speaker 1: know they fluctuate, but they have been a little higher 47 00:02:34,720 --> 00:02:36,840 Speaker 1: than usual. Is that kind of driving a lot of 48 00:02:36,840 --> 00:02:38,720 Speaker 1: that inflationary pressure. 49 00:02:38,560 --> 00:02:41,720 Speaker 5: That's right, So driving the headline really is gasoline prices. 50 00:02:41,840 --> 00:02:44,919 Speaker 5: On a seasonally adjusted basis. We have gasoline prices rising 51 00:02:44,919 --> 00:02:48,160 Speaker 5: about four percent during the month, so that's after accounting 52 00:02:48,240 --> 00:02:52,840 Speaker 5: for the seasonal adjustment factor. Is that typically would account 53 00:02:53,040 --> 00:02:56,000 Speaker 5: for the increase in gasoline prices In februaries people start 54 00:02:56,080 --> 00:02:58,320 Speaker 5: driving once again as they clear snow off the streets, 55 00:02:58,320 --> 00:03:02,280 Speaker 5: for example, so in some places, so not only is 56 00:03:02,400 --> 00:03:06,800 Speaker 5: gasoline driving headline, inflation is also driving nominal retail sales. 57 00:03:07,000 --> 00:03:09,839 Speaker 5: We are expecting to see retail sales growth about zero 58 00:03:09,919 --> 00:03:12,320 Speaker 5: point eight percent month on month. A big part of 59 00:03:12,320 --> 00:03:14,320 Speaker 5: that is gasoline, and we need to account for that. 60 00:03:14,639 --> 00:03:17,960 Speaker 5: If we look at a narrower control group, however, which 61 00:03:18,000 --> 00:03:21,440 Speaker 5: strips out autos, strips out gasoline, strips out building, materials 62 00:03:21,680 --> 00:03:24,880 Speaker 5: and food services, which is very heavily influenced by foot traffic, 63 00:03:25,120 --> 00:03:28,280 Speaker 5: which can be affected by weather, for example, as we 64 00:03:28,320 --> 00:03:31,000 Speaker 5: saw in January, very affected by weather. If we focus 65 00:03:31,040 --> 00:03:33,480 Speaker 5: on that control group, we have a much more modest 66 00:03:33,480 --> 00:03:36,280 Speaker 5: growth of zero point two percent month on month in February. 67 00:03:36,400 --> 00:03:39,320 Speaker 1: Well, are some of the retailers doing better? But then 68 00:03:39,680 --> 00:03:42,280 Speaker 1: now January, we know that was a very rough month 69 00:03:42,320 --> 00:03:44,600 Speaker 1: for retail sales. Could have been a hangover from the 70 00:03:44,680 --> 00:03:48,720 Speaker 1: holiday season. But February you're expecting a little bump ahead, 71 00:03:48,840 --> 00:03:51,320 Speaker 1: a little bump up, not a decline like we saw 72 00:03:51,320 --> 00:03:54,920 Speaker 1: in January. Who are the winners in that besides gas stations. 73 00:03:55,400 --> 00:03:58,240 Speaker 5: So if we look at credit card transaction data and 74 00:03:58,240 --> 00:04:01,080 Speaker 5: we look at debit card transactions and just strictly count 75 00:04:01,120 --> 00:04:04,680 Speaker 5: the number of swipes at credit card processing terminals at 76 00:04:04,720 --> 00:04:08,320 Speaker 5: the point of sale, we do see big box retailers, 77 00:04:08,720 --> 00:04:12,440 Speaker 5: We do see some just general merchandisers showing some of 78 00:04:12,480 --> 00:04:16,200 Speaker 5: the most impressive growth month over month. But we need 79 00:04:16,240 --> 00:04:18,520 Speaker 5: to be a bit cautious in how we read through 80 00:04:18,560 --> 00:04:22,080 Speaker 5: from that one month of improved credit card transactions data 81 00:04:22,400 --> 00:04:24,680 Speaker 5: and what that means for the broader economy. We are 82 00:04:24,760 --> 00:04:29,120 Speaker 5: seeing some headcount reductions at retailers. That typically was something 83 00:04:29,120 --> 00:04:33,000 Speaker 5: that was concentrated just in more high skilled services. But 84 00:04:33,080 --> 00:04:35,640 Speaker 5: if it's making its way to retailers, that could be 85 00:04:35,760 --> 00:04:38,039 Speaker 5: a signal of retailers feeling a little bit of the 86 00:04:38,040 --> 00:04:41,200 Speaker 5: pain or anticipating a slow down and spending, which is 87 00:04:41,200 --> 00:04:43,120 Speaker 5: actually what we expect throughout twenty twenty four. 88 00:04:43,279 --> 00:04:46,600 Speaker 1: Well, let's go back to inflation. Just not even two 89 00:04:46,680 --> 00:04:49,520 Speaker 1: years ago, the inflation rate was nine point one percent. 90 00:04:49,839 --> 00:04:52,160 Speaker 1: Right now we're expecting a year of a year rate 91 00:04:52,200 --> 00:04:54,159 Speaker 1: of about three point one percent. 92 00:04:53,960 --> 00:04:56,839 Speaker 5: Or three c three point one percent for the headline 93 00:04:56,839 --> 00:04:58,080 Speaker 5: three point seven for core. 94 00:04:58,080 --> 00:05:00,880 Speaker 1: So we're moving in the right direction. Last week, FED 95 00:05:00,960 --> 00:05:03,520 Speaker 1: Chair Jerome pal and his semi annual testimony to Congress. 96 00:05:03,560 --> 00:05:06,240 Speaker 1: He said that central bank no rush to start lowering rates, 97 00:05:06,440 --> 00:05:10,800 Speaker 1: but he hinted that when policymakers feel inflation is under control, 98 00:05:11,160 --> 00:05:14,440 Speaker 1: could happen later this year with no firm timetable. Is 99 00:05:14,480 --> 00:05:17,120 Speaker 1: he being optimistic? Is he looking at the data? It's 100 00:05:17,120 --> 00:05:19,640 Speaker 1: all data driven according to the Fed. Are we heading 101 00:05:19,640 --> 00:05:20,440 Speaker 1: toward that now? 102 00:05:20,640 --> 00:05:24,200 Speaker 5: I think we are. We're anticipating seeing headline inflation reaching 103 00:05:24,240 --> 00:05:27,039 Speaker 5: about two point five percent year over year at the 104 00:05:27,160 --> 00:05:30,640 Speaker 5: end of twenty twenty four, As headline inflation comes down, 105 00:05:31,240 --> 00:05:33,799 Speaker 5: the balance of risks that the Fed has to weigh 106 00:05:33,880 --> 00:05:37,760 Speaker 5: between achieving its maximum employment mandate and its price stability 107 00:05:37,839 --> 00:05:41,080 Speaker 5: mandate come into better alignment. And so as we see 108 00:05:41,080 --> 00:05:44,360 Speaker 5: the pace of hiring cooling, as we see the pace 109 00:05:44,360 --> 00:05:47,560 Speaker 5: of inflation cooling, the Fed has to take its employment 110 00:05:47,720 --> 00:05:50,200 Speaker 5: mandate a bit more seriously, has to put a bit 111 00:05:50,240 --> 00:05:52,520 Speaker 5: more weight on it. And so we do expect the 112 00:05:52,560 --> 00:05:56,760 Speaker 5: Fed to begin cutting rates this summer. Again, economic activity cooling, 113 00:05:57,040 --> 00:05:59,840 Speaker 5: inflation cooling, and the labor market at cooling would allow 114 00:05:59,880 --> 00:06:01,200 Speaker 5: for that pivot in policy. 115 00:06:01,560 --> 00:06:04,000 Speaker 1: And the next FED meeting the nineteenth and twentieth of 116 00:06:04,040 --> 00:06:07,680 Speaker 1: this month, So we should not expect any rate cut. 117 00:06:07,760 --> 00:06:10,440 Speaker 1: But you think we'll get a little more clarity from 118 00:06:10,480 --> 00:06:12,000 Speaker 1: the Fed about what they're thinking. 119 00:06:12,400 --> 00:06:14,200 Speaker 5: I think that we'll get a little bit more clarity 120 00:06:14,279 --> 00:06:17,599 Speaker 5: on the pace of quantitative tightening, for example. But I 121 00:06:17,640 --> 00:06:19,800 Speaker 5: expect the Fed to actually maintain a bit of a 122 00:06:19,839 --> 00:06:23,480 Speaker 5: hawkish tone in its policy statement. It did remove its 123 00:06:23,520 --> 00:06:28,080 Speaker 5: quote unquote hawkish bias in its January policy statement, but 124 00:06:28,200 --> 00:06:31,440 Speaker 5: I expect the Fed to use language that would prevent 125 00:06:31,520 --> 00:06:34,000 Speaker 5: people from reading too deeply into the idea that rate 126 00:06:34,040 --> 00:06:36,719 Speaker 5: cuts are imminent, or from expecting rate cuts to be 127 00:06:36,800 --> 00:06:41,159 Speaker 5: imminent less financial market conditions start easing too swiftly, and 128 00:06:41,200 --> 00:06:44,680 Speaker 5: the Fed would have to then treat loosening financial conditions, 129 00:06:45,120 --> 00:06:49,040 Speaker 5: perhaps with more restricted policy or higher for longer policy. 130 00:06:49,120 --> 00:06:51,320 Speaker 1: Oh boy, well we'll get ready for that. Well, our 131 00:06:51,320 --> 00:06:55,520 Speaker 1: thanks to Stuart paul Us economists with Bloomberg Economics, turning 132 00:06:55,560 --> 00:06:58,280 Speaker 1: now to too closely watched earnings reports that are out 133 00:06:58,279 --> 00:07:00,480 Speaker 1: this week, which will offer investors a glie limps into 134 00:07:00,520 --> 00:07:04,560 Speaker 1: the mania surrounding artificial intelligence technology and for more on 135 00:07:04,600 --> 00:07:07,920 Speaker 1: what to expect from Oracle and Adobe. We welcome Bloomberg 136 00:07:07,960 --> 00:07:12,680 Speaker 1: Intelligence technology analyst anarag Rana. Thank you for being here at. 137 00:07:12,800 --> 00:07:14,280 Speaker 6: RAG Oh I'm happy to be here. 138 00:07:14,400 --> 00:07:17,360 Speaker 1: Oh good. Well let's start with Adobe, which may be 139 00:07:17,360 --> 00:07:21,160 Speaker 1: best known for its Photoshop editing software Acrobat Reader and 140 00:07:21,200 --> 00:07:23,960 Speaker 1: its PDF but boy as it transformed itself into a 141 00:07:23,960 --> 00:07:28,720 Speaker 1: cloud computing giant with its generative AI product Firefly. So 142 00:07:28,840 --> 00:07:31,280 Speaker 1: what are you expecting to see in the first quarter 143 00:07:31,280 --> 00:07:33,600 Speaker 1: earnings out on Wednesday? And why Yeah? 144 00:07:33,640 --> 00:07:35,840 Speaker 6: So you know, when you look at somebody like Adobe 145 00:07:35,840 --> 00:07:40,280 Speaker 6: that dominate the creative space with the Photoshop and other 146 00:07:40,360 --> 00:07:43,840 Speaker 6: products that go into it. They also dominate the document 147 00:07:44,200 --> 00:07:48,120 Speaker 6: cloud business or digital documents with PDF. So those are 148 00:07:48,160 --> 00:07:51,360 Speaker 6: the two areas where we see strength going into the QUOTO. 149 00:07:51,440 --> 00:07:55,040 Speaker 6: So document cloud, I think that's done very well. We 150 00:07:55,120 --> 00:07:59,040 Speaker 6: continue to expect strong results on that segment. The big 151 00:07:59,080 --> 00:08:02,040 Speaker 6: discussion is going to be on the creative part of 152 00:08:02,080 --> 00:08:05,800 Speaker 6: it because there is a lot of chatter around what's 153 00:08:05,840 --> 00:08:09,320 Speaker 6: going to happen to companies like Adobe when you have 154 00:08:09,440 --> 00:08:13,280 Speaker 6: products that are you know, launched by companies like open Ai. 155 00:08:13,760 --> 00:08:17,559 Speaker 6: So I would recommend if anybody hasn't seen the Open 156 00:08:17,600 --> 00:08:22,400 Speaker 6: Eye's latest demo of their product called Sora, I would 157 00:08:22,400 --> 00:08:24,840 Speaker 6: would recommend go to YouTube and check that out. It's 158 00:08:24,880 --> 00:08:29,560 Speaker 6: a phenomenal product where you just write down the tex stuff. 159 00:08:29,920 --> 00:08:32,360 Speaker 6: Let's say, you know, two armies fighting in a in 160 00:08:32,440 --> 00:08:35,520 Speaker 6: a battlefield, it will create a video for you and 161 00:08:35,679 --> 00:08:37,760 Speaker 6: that's done. I mean, you can use that. Now. There 162 00:08:37,800 --> 00:08:40,320 Speaker 6: are a lot of concerns about privacy and copyright and 163 00:08:40,320 --> 00:08:42,280 Speaker 6: other things, but we can you know, that's that could 164 00:08:42,280 --> 00:08:45,560 Speaker 6: be settled later. But since that video was released, Adobe 165 00:08:45,640 --> 00:08:48,360 Speaker 6: has been a lot under pressure. So I think on 166 00:08:48,400 --> 00:08:51,480 Speaker 6: the conference call, we do expect management to talk a 167 00:08:51,520 --> 00:08:55,440 Speaker 6: lot about what they're doing with their AI capabilities, et cetera. 168 00:08:55,960 --> 00:08:59,080 Speaker 6: You mentioned Firefly. Firefly is an interesting product, but it's 169 00:08:59,160 --> 00:09:03,240 Speaker 6: mostly to pictures, which is text to you can write 170 00:09:03,280 --> 00:09:05,480 Speaker 6: down a text to say, you know, create a picture 171 00:09:05,520 --> 00:09:08,559 Speaker 6: of a dog playing piano in the in a forest, 172 00:09:08,800 --> 00:09:11,280 Speaker 6: and it'll create that for you. They have done a 173 00:09:11,280 --> 00:09:14,280 Speaker 6: good job of, you know, rink fencing that issue by 174 00:09:14,360 --> 00:09:17,600 Speaker 6: launching their own product, Firefly, And on top of that, 175 00:09:17,640 --> 00:09:22,200 Speaker 6: they actually have agreements with the creative professionals who own 176 00:09:22,280 --> 00:09:25,440 Speaker 6: a lot of those underlying pictures on which these models 177 00:09:25,480 --> 00:09:28,920 Speaker 6: are trained. So they're basically telling companies you can use 178 00:09:28,960 --> 00:09:32,400 Speaker 6: the pictures generated from our system and nobody's going to 179 00:09:32,440 --> 00:09:34,880 Speaker 6: sue you for it because we have rink fenced it 180 00:09:34,920 --> 00:09:37,000 Speaker 6: with copyright issues. So I think is going to be 181 00:09:37,040 --> 00:09:40,280 Speaker 6: a lot of discussion on that topic. But i Adobe, 182 00:09:40,360 --> 00:09:42,800 Speaker 6: in our view is on the right path of jen 183 00:09:42,880 --> 00:09:45,680 Speaker 6: ai and over the next few years we should see 184 00:09:46,120 --> 00:09:48,000 Speaker 6: significant improvement in their products. 185 00:09:48,160 --> 00:09:51,360 Speaker 1: And over those next few years is their main competition 186 00:09:51,520 --> 00:09:54,760 Speaker 1: going to be the open ais and other AI startups 187 00:09:54,800 --> 00:09:55,319 Speaker 1: of the world. 188 00:09:55,520 --> 00:09:57,960 Speaker 6: It is a mix of open ai and other startups 189 00:09:57,960 --> 00:10:00,120 Speaker 6: of the world. There is another startup in Australia that 190 00:10:00,200 --> 00:10:03,640 Speaker 6: has been behind them called Canva. We just had their 191 00:10:03,679 --> 00:10:07,480 Speaker 6: co founder on our podcast. That's a good product and 192 00:10:07,520 --> 00:10:10,080 Speaker 6: also it's a slightly cheaper product. So it's going to 193 00:10:10,080 --> 00:10:12,040 Speaker 6: be hard for Adobe over the next few years to 194 00:10:12,200 --> 00:10:16,080 Speaker 6: put in new price increases through their ecosystem. They have 195 00:10:16,280 --> 00:10:19,120 Speaker 6: been growing well with price increases over the last I 196 00:10:19,160 --> 00:10:21,040 Speaker 6: would say, a couple of years, but I think it's 197 00:10:21,080 --> 00:10:22,520 Speaker 6: going to be challenging going forward. 198 00:10:22,720 --> 00:10:22,960 Speaker 4: Wow. 199 00:10:23,120 --> 00:10:26,240 Speaker 1: Okay, Well, on Thursday we hear from the enterprise software 200 00:10:26,280 --> 00:10:29,360 Speaker 1: giant Oracle what are you looking for in its Q 201 00:10:29,559 --> 00:10:30,200 Speaker 1: three report. 202 00:10:31,120 --> 00:10:31,320 Speaker 3: Yeah. 203 00:10:31,400 --> 00:10:34,440 Speaker 6: Oracles actually a very interesting story because it has two 204 00:10:34,480 --> 00:10:38,800 Speaker 6: big businesses. One is the application portfolio of software company 205 00:10:38,880 --> 00:10:42,560 Speaker 6: or software products such as HR software, or customer relationship 206 00:10:42,640 --> 00:10:46,439 Speaker 6: software or finance software. And the other part is the 207 00:10:46,480 --> 00:10:50,319 Speaker 6: infrastructure business, which is their database business as well as 208 00:10:50,360 --> 00:10:53,040 Speaker 6: they also do a bit of cloud computing. I think 209 00:10:53,080 --> 00:10:57,320 Speaker 6: they given such strong demand for a cloud infrastructure to 210 00:10:57,440 --> 00:11:01,840 Speaker 6: run these large language models, the biggest focus for everybody 211 00:11:01,920 --> 00:11:04,920 Speaker 6: is going to be what happens in their Oracle cloud 212 00:11:04,960 --> 00:11:09,400 Speaker 6: infrastructure numbers. I think last quarter investors were a little 213 00:11:09,440 --> 00:11:12,319 Speaker 6: disappointed by the growth rata that and the company came 214 00:11:12,320 --> 00:11:14,320 Speaker 6: out and said, well, listen, we don't have a problem 215 00:11:14,400 --> 00:11:17,439 Speaker 6: with demand. The issue we are having is we don't 216 00:11:17,480 --> 00:11:20,839 Speaker 6: have that much capacity to run that demand. Whether it's 217 00:11:20,880 --> 00:11:24,560 Speaker 6: in the reason, could be the data center expansion is 218 00:11:24,559 --> 00:11:27,719 Speaker 6: a bit slow, or they don't have enough chips from 219 00:11:27,800 --> 00:11:32,480 Speaker 6: Nvidia to run those workloads. So I think then everything 220 00:11:32,559 --> 00:11:35,880 Speaker 6: is going to rotate around what's the capacity right now 221 00:11:35,920 --> 00:11:38,880 Speaker 6: for them to run that work But other than that, 222 00:11:38,960 --> 00:11:41,040 Speaker 6: I think it should be a normal quarter for them. 223 00:11:41,559 --> 00:11:44,319 Speaker 6: I'm not expecting any major surprises other than the topic 224 00:11:44,360 --> 00:11:44,960 Speaker 6: we discussed. 225 00:11:45,320 --> 00:11:48,280 Speaker 1: Well, you said that supply not demand may be an issue. 226 00:11:48,320 --> 00:11:52,320 Speaker 1: Does that mean also businesses are still spending, still growing. 227 00:11:52,679 --> 00:11:55,440 Speaker 6: Yeah, it's a very good question. I think by and large, 228 00:11:55,480 --> 00:11:59,360 Speaker 6: businesses are stabilized in the downdraft of it spending that 229 00:11:59,400 --> 00:12:02,280 Speaker 6: has been going on for two years, which means it's 230 00:12:02,280 --> 00:12:05,920 Speaker 6: not getting worse, but it's also not getting faster at 231 00:12:05,960 --> 00:12:09,679 Speaker 6: a quicker rate. The one area that's not you know, 232 00:12:09,720 --> 00:12:12,640 Speaker 6: in that bucket is anything that's spent on AI. So 233 00:12:12,679 --> 00:12:15,160 Speaker 6: they are spending a lot on AI, but they may 234 00:12:15,160 --> 00:12:17,360 Speaker 6: not be spending on other areas such as you know, 235 00:12:17,480 --> 00:12:23,080 Speaker 6: sales automation or marketing, advertising, et cetera. Those software products, 236 00:12:23,120 --> 00:12:25,520 Speaker 6: but as far as AI products are concerned, there is 237 00:12:25,559 --> 00:12:26,920 Speaker 6: a pickup and spending. 238 00:12:26,679 --> 00:12:28,559 Speaker 1: Well, a lot to look forward to and our thanks 239 00:12:28,559 --> 00:12:32,559 Speaker 1: to Bloomberg Intelligence technology analyst anurag Rana, and coming up 240 00:12:32,559 --> 00:12:35,280 Speaker 1: on Bloomberg day Break weekend, we'll dig into the challenges 241 00:12:35,360 --> 00:12:39,160 Speaker 1: facing commercial and residential real estate ahead of a major 242 00:12:39,240 --> 00:12:42,840 Speaker 1: conference on the French Riviera. I'm Tom Busby and this 243 00:12:43,160 --> 00:12:56,800 Speaker 1: is Bloomberg. This is Bloomberg day Break weekend, our global 244 00:12:56,840 --> 00:12:58,920 Speaker 1: look ahead at the top stories for investors in the 245 00:12:58,920 --> 00:13:02,160 Speaker 1: coming week. Tom Busby in New York. Up later in 246 00:13:02,200 --> 00:13:04,480 Speaker 1: the program will look ahead to earnings from a couple 247 00:13:04,480 --> 00:13:08,160 Speaker 1: of key tech manufacturers in Asia. But first, the real 248 00:13:08,280 --> 00:13:12,280 Speaker 1: estate world, both commercial and residential, has been struggling under 249 00:13:12,320 --> 00:13:15,000 Speaker 1: the weight of high interest rates, and the cracks are 250 00:13:15,040 --> 00:13:18,360 Speaker 1: seeping into the financial world as well. Flexible working has 251 00:13:18,440 --> 00:13:21,760 Speaker 1: changed demand for offices, while many European countries are struggling 252 00:13:22,080 --> 00:13:25,080 Speaker 1: with a shortage of housing. All these issues and more 253 00:13:25,120 --> 00:13:27,280 Speaker 1: will be in focus at a major real estate conference 254 00:13:27,280 --> 00:13:29,960 Speaker 1: on the French Riviera in the coming days. For more, 255 00:13:30,080 --> 00:13:32,520 Speaker 1: let's go to London and bring in Bloomberg Daybreak Europe 256 00:13:32,520 --> 00:13:35,040 Speaker 1: anchor Stephen Carroll tom. 257 00:13:34,760 --> 00:13:38,280 Speaker 2: It's a subject that has huge political and economic importance 258 00:13:38,440 --> 00:13:41,360 Speaker 2: real estate. High interest rates have created cracks in the 259 00:13:41,360 --> 00:13:44,560 Speaker 2: commercial property market that are now rippling into the financial world. 260 00:13:44,920 --> 00:13:48,120 Speaker 2: Home Buyers are also dealing with higher borrowing costs, while 261 00:13:48,200 --> 00:13:50,840 Speaker 2: at the same time facing a shortage of housing In 262 00:13:50,920 --> 00:13:53,880 Speaker 2: many major cities in the UK. The latest data from 263 00:13:53,920 --> 00:13:57,559 Speaker 2: morgus Lander Halifax shows a continuing small rebound in house 264 00:13:57,600 --> 00:14:00,439 Speaker 2: prices despite higher rates. We spoke to Kim Kenny heard 265 00:14:00,440 --> 00:14:03,240 Speaker 2: from Halifax about the risks that she sees in the 266 00:14:03,280 --> 00:14:04,199 Speaker 2: market this year. 267 00:14:04,800 --> 00:14:08,440 Speaker 7: I think mortgage rates clearly are focusing everybody's minds. We've 268 00:14:08,440 --> 00:14:12,560 Speaker 7: seen real volatility in them, and we saw significant rate 269 00:14:12,679 --> 00:14:15,760 Speaker 7: increases over the course of last year. We're starting to 270 00:14:15,760 --> 00:14:18,319 Speaker 7: see that ease now and as we've said, there's bier 271 00:14:18,360 --> 00:14:21,960 Speaker 7: confidence beginning to return. I think I would say, you know, 272 00:14:22,280 --> 00:14:25,720 Speaker 7: more broadly, it's just we still remain in a fairly 273 00:14:25,960 --> 00:14:29,720 Speaker 7: uncertain economic climate, so I think there are lots of 274 00:14:29,760 --> 00:14:31,920 Speaker 7: things that we need to be thoughtful about. At the moment, 275 00:14:31,960 --> 00:14:37,160 Speaker 7: we're seeing really good wage inflation, we're seeing low unemployment rates, 276 00:14:37,160 --> 00:14:39,320 Speaker 7: and those are good indicators for us in terms of 277 00:14:39,360 --> 00:14:42,280 Speaker 7: the long term performance of the market. But I think 278 00:14:42,360 --> 00:14:45,760 Speaker 7: we've learnt over the last eighteen months or so that 279 00:14:45,800 --> 00:14:48,680 Speaker 7: there is still uncertainty in the marketplace. So do you 280 00:14:48,720 --> 00:14:51,240 Speaker 7: see the instability for the housing market in the next 281 00:14:51,240 --> 00:14:51,720 Speaker 7: few months? 282 00:14:51,760 --> 00:14:53,720 Speaker 8: Is that the prediction to the end of the year. 283 00:14:53,880 --> 00:14:56,280 Speaker 7: As we're kind of facing into this year, I think, 284 00:14:56,280 --> 00:15:00,520 Speaker 7: as we said, we think that house prices could by 285 00:15:00,600 --> 00:15:03,120 Speaker 7: up to two percent. But clearly what we have seen 286 00:15:03,640 --> 00:15:07,600 Speaker 7: in the last five months is consecutive growth, so that 287 00:15:07,680 --> 00:15:10,960 Speaker 7: should be seen as a real positive and we hope 288 00:15:10,960 --> 00:15:13,600 Speaker 7: that continues to grow and also that we can teach 289 00:15:13,640 --> 00:15:14,480 Speaker 7: to see stability. 290 00:15:14,800 --> 00:15:17,320 Speaker 2: So that's Kim Kennyhard from Halifax on the situation in 291 00:15:17,360 --> 00:15:19,960 Speaker 2: the UK for home buyers from an investor's point of view. 292 00:15:19,960 --> 00:15:22,760 Speaker 2: We've also been speaking to Michelle Scriminger, who is CEO 293 00:15:22,920 --> 00:15:26,080 Speaker 2: of Legal and General Investment Management. She's been talking to 294 00:15:26,160 --> 00:15:29,160 Speaker 2: us about the opportunities in the drive to build more 295 00:15:29,200 --> 00:15:32,080 Speaker 2: homes in the UK, particularly affordable homes. 296 00:15:32,480 --> 00:15:35,440 Speaker 8: We operate in different sectors of the market, so we 297 00:15:35,760 --> 00:15:39,000 Speaker 8: are a house builder. We operate in the build to 298 00:15:39,040 --> 00:15:44,040 Speaker 8: rent sector, we operate in the affordable homes sector. We 299 00:15:44,200 --> 00:15:49,840 Speaker 8: also invest into commercial real estates on behalf of multiple investors. 300 00:15:50,240 --> 00:15:52,200 Speaker 8: We also learned as part of what we do here 301 00:15:52,240 --> 00:15:54,640 Speaker 8: in the UK. We're not just doing it in the UK. 302 00:15:55,320 --> 00:15:58,720 Speaker 8: But I think what we definitely see is continuing to 303 00:15:58,720 --> 00:16:03,240 Speaker 8: see opportunity and that for us is super important. And 304 00:16:03,320 --> 00:16:06,640 Speaker 8: as the regulations are changing, so Solignty two is a 305 00:16:06,720 --> 00:16:09,720 Speaker 8: very big thing for Legal in general, and the ability 306 00:16:09,760 --> 00:16:12,120 Speaker 8: for us to be able to deploy more capital we 307 00:16:12,160 --> 00:16:15,240 Speaker 8: want to unlock the capital to invest means that we're 308 00:16:15,280 --> 00:16:18,200 Speaker 8: going to be continuing to do that around the UK. 309 00:16:18,840 --> 00:16:22,000 Speaker 8: So we think there is opportunity. Of course, the rates 310 00:16:22,120 --> 00:16:24,480 Speaker 8: environment is it part of that. So you know, as 311 00:16:24,600 --> 00:16:28,000 Speaker 8: rates become more stable then I think that does start 312 00:16:28,040 --> 00:16:31,080 Speaker 8: to make people more confident and let's point to that 313 00:16:31,120 --> 00:16:34,560 Speaker 8: as a point of resilience here for the UK on 314 00:16:34,640 --> 00:16:38,480 Speaker 8: which we can leverage. But individuals are still being impacted 315 00:16:38,480 --> 00:16:41,040 Speaker 8: by those high rates in terms of mortgages and fixed 316 00:16:41,120 --> 00:16:44,240 Speaker 8: rate mortgages are a challenge, so that there is a balance, 317 00:16:44,680 --> 00:16:48,320 Speaker 8: but longer term we do see a lot of potential here. 318 00:16:48,800 --> 00:16:52,000 Speaker 2: That was Michelle Scomjo, CEO of Legal and General Investment Management, 319 00:16:52,000 --> 00:16:54,880 Speaker 2: speaking to Bloomberg's Caroline Hepger that all of these issues 320 00:16:54,920 --> 00:16:57,200 Speaker 2: are in focus at the MIP and real Estate conference 321 00:16:57,200 --> 00:16:59,320 Speaker 2: that's happening in can on the French Riviera in the 322 00:16:59,360 --> 00:17:01,800 Speaker 2: coming days. Our real estate reporter Jack Sitters will be 323 00:17:01,840 --> 00:17:04,400 Speaker 2: there and he's been telling us about the big subjects 324 00:17:04,480 --> 00:17:05,359 Speaker 2: up for a discussion. 325 00:17:05,520 --> 00:17:08,520 Speaker 9: I'm fascinated to get out there because I guess if 326 00:17:08,560 --> 00:17:11,159 Speaker 9: we wind back twelve months, I was there in can 327 00:17:11,800 --> 00:17:14,240 Speaker 9: and at the start of the week, Silicon Valley Bank 328 00:17:14,280 --> 00:17:17,040 Speaker 9: had just gone, and I was anticipating, you know, talking 329 00:17:17,040 --> 00:17:18,439 Speaker 9: to investors about that all week, And by the end 330 00:17:18,480 --> 00:17:20,399 Speaker 9: of the week, Credits Fist has gone as well, and 331 00:17:20,480 --> 00:17:22,920 Speaker 9: so it was just it was incredibly chaotic, but also 332 00:17:23,000 --> 00:17:26,200 Speaker 9: incredibly interesting revealing to be there with all those investors 333 00:17:26,240 --> 00:17:27,639 Speaker 9: and get to see the wides of people's eyes and 334 00:17:27,680 --> 00:17:30,480 Speaker 9: sit down with them as this madness was unfolding. Here 335 00:17:30,520 --> 00:17:33,560 Speaker 9: we are twelve months later, and although that US regional 336 00:17:33,600 --> 00:17:36,080 Speaker 9: banking situation has maybe calmed down somewhat or bit we'll 337 00:17:36,080 --> 00:17:38,600 Speaker 9: see what happens with New York Community Bank or but 338 00:17:39,080 --> 00:17:41,359 Speaker 9: the issues haven't gone away for real estate, and if anything, 339 00:17:41,640 --> 00:17:43,760 Speaker 9: they'd come to the form more. It's such a slow 340 00:17:43,920 --> 00:17:46,840 Speaker 9: moving asset class. Prices take a long time to correct. 341 00:17:47,240 --> 00:17:49,800 Speaker 9: That means issues with over indebtedness take a long time 342 00:17:49,840 --> 00:17:51,800 Speaker 9: to emerge, and then banks maybe take even longer to 343 00:17:51,840 --> 00:17:54,040 Speaker 9: actually do something about it. What are the issues, Well, 344 00:17:54,640 --> 00:17:57,639 Speaker 9: it's how much distress is really out there, how a 345 00:17:57,760 --> 00:17:59,879 Speaker 9: lender's going to respond, how tough are they going to 346 00:18:00,080 --> 00:18:02,720 Speaker 9: get with borrowers? What's that going to mean in terms 347 00:18:02,760 --> 00:18:05,840 Speaker 9: of forced asset sales? You know, are we seeing funds 348 00:18:05,880 --> 00:18:07,560 Speaker 9: that are under pressure with people trying to pull their 349 00:18:07,600 --> 00:18:10,800 Speaker 9: money out. So I'm anticipating, you know, the mood is 350 00:18:11,000 --> 00:18:13,840 Speaker 9: likely to be as dour as real estate ever gets 351 00:18:13,960 --> 00:18:17,199 Speaker 9: because I'm yet to meet anyone who property yeah, who 352 00:18:17,320 --> 00:18:20,680 Speaker 9: isn't an internal optimist. So I'm definitely sure every broker 353 00:18:20,720 --> 00:18:22,639 Speaker 9: I meet will tell me that we're right around the 354 00:18:22,680 --> 00:18:24,639 Speaker 9: corner for good times and that you know, the market's 355 00:18:24,680 --> 00:18:26,480 Speaker 9: going to bounce back, And to be fair to them, 356 00:18:26,880 --> 00:18:29,240 Speaker 9: there is a good argument that maybe people like me 357 00:18:29,359 --> 00:18:32,720 Speaker 9: will be focusing on some of the more painful distressed elements. 358 00:18:33,160 --> 00:18:36,600 Speaker 9: That there's definitely this sense that with interest rates having 359 00:18:36,680 --> 00:18:39,320 Speaker 9: peaked and cuts on the way, that there could be 360 00:18:39,440 --> 00:18:41,479 Speaker 9: quite a big bounce back. So for those with capital 361 00:18:41,520 --> 00:18:43,359 Speaker 9: to deploy, you know, they'll be out there looking to 362 00:18:43,440 --> 00:18:46,800 Speaker 9: do deals they'll be excited to start deploying that capital. 363 00:18:46,600 --> 00:18:49,240 Speaker 2: Because prices have come When you think about commercial estate, 364 00:18:49,320 --> 00:18:52,959 Speaker 2: prices have come down significantly. I mean, where where are 365 00:18:53,040 --> 00:18:54,600 Speaker 2: the bargains to be found for those. 366 00:18:54,480 --> 00:18:55,240 Speaker 9: That do have the money? 367 00:18:55,640 --> 00:18:55,840 Speaker 3: Yeah? 368 00:18:55,880 --> 00:18:58,879 Speaker 9: Absolutely, Well, I guess it's a global event, but I 369 00:18:58,920 --> 00:19:01,240 Speaker 9: guess it's dominated by by European investors. So if we 370 00:19:01,359 --> 00:19:04,359 Speaker 9: if talking about Europe, the UK is probably corrected the 371 00:19:04,440 --> 00:19:07,240 Speaker 9: most and the most quickly, which is what we normally see, 372 00:19:07,280 --> 00:19:09,480 Speaker 9: and it's to do with sort of nuances around valuation 373 00:19:09,560 --> 00:19:13,800 Speaker 9: approaches and whatnot. So you know, London, for example, prices 374 00:19:13,840 --> 00:19:17,480 Speaker 9: have come down sharply and the issue really is about 375 00:19:17,560 --> 00:19:20,960 Speaker 9: availability that that bid ask spread has narrowed. What what 376 00:19:21,119 --> 00:19:23,000 Speaker 9: often happens at the start of a correction as you 377 00:19:23,160 --> 00:19:25,040 Speaker 9: just get this huge bid ask spread. As you know, 378 00:19:25,160 --> 00:19:27,879 Speaker 9: nobody wants to sell at a discount. They've got their 379 00:19:27,920 --> 00:19:30,320 Speaker 9: sort of backward looking book valuations, but buyers want to 380 00:19:30,320 --> 00:19:32,520 Speaker 9: pay a price that reflects where the risk free rate 381 00:19:32,680 --> 00:19:35,600 Speaker 9: is now. Anyway, that process has sort of been unfolding 382 00:19:35,640 --> 00:19:37,840 Speaker 9: in the UK for the last well almost two years now. 383 00:19:38,480 --> 00:19:40,879 Speaker 9: So yeah, so the conditions are there potentially for a 384 00:19:40,920 --> 00:19:43,000 Speaker 9: bit of a bounce back in terms of activity. Debts 385 00:19:43,000 --> 00:19:44,600 Speaker 9: may be a little bit more available than it was, 386 00:19:44,640 --> 00:19:46,440 Speaker 9: it's a little bit less costly than it was, so 387 00:19:46,520 --> 00:19:48,320 Speaker 9: it can be a creative for some buyers. And that's 388 00:19:48,320 --> 00:19:50,600 Speaker 9: you know, that's so important in real estate. If we 389 00:19:50,640 --> 00:19:53,200 Speaker 9: look across other markets, I'd say Germany is probably the 390 00:19:53,280 --> 00:19:55,960 Speaker 9: other end, and that's the other really big market in 391 00:19:56,080 --> 00:19:58,360 Speaker 9: Europe that is at the other end of the spectrum. 392 00:19:58,440 --> 00:20:01,360 Speaker 9: It things are still really great, see their huge gap 393 00:20:01,440 --> 00:20:04,920 Speaker 9: between buyers and sellers. But we are seeing you know, 394 00:20:05,080 --> 00:20:09,640 Speaker 9: more insolvencies, there more administrations and that will inevitably force transactions. 395 00:20:10,000 --> 00:20:12,440 Speaker 2: Does that mean that we will actually see more deals activity? 396 00:20:12,480 --> 00:20:14,080 Speaker 2: Are we picking up off a base there? 397 00:20:14,480 --> 00:20:14,680 Speaker 10: Yeah? 398 00:20:15,119 --> 00:20:16,480 Speaker 9: Off a base is the phrase. 399 00:20:16,760 --> 00:20:18,280 Speaker 2: It's the space if you keep looking down. 400 00:20:18,920 --> 00:20:19,120 Speaker 3: Yeah. 401 00:20:19,160 --> 00:20:22,000 Speaker 9: I mean we're talking about in almost every market at 402 00:20:22,080 --> 00:20:25,520 Speaker 9: least the lowest transaction volumes since the global financial crisis. 403 00:20:25,560 --> 00:20:27,960 Speaker 9: I mean, I think actually London recorded one quarter that 404 00:20:28,080 --> 00:20:30,920 Speaker 9: was the lowest since about two thousand, So you know, 405 00:20:31,200 --> 00:20:33,000 Speaker 9: it did get really quite extreme in the sort of 406 00:20:33,040 --> 00:20:35,639 Speaker 9: aftermath of Russia Ukraine and as they say that bit 407 00:20:35,720 --> 00:20:38,400 Speaker 9: are spread opening. But yes, it is coming back. We've 408 00:20:38,400 --> 00:20:41,080 Speaker 9: seen volumes increase sort of quarter on quarter over the 409 00:20:41,160 --> 00:20:44,480 Speaker 9: last few quarters. And again, you know, it's you always 410 00:20:44,520 --> 00:20:46,880 Speaker 9: have to take a pinch of salt with the brokers 411 00:20:46,920 --> 00:20:49,040 Speaker 9: who you know, whose bread and butter is transactions. They 412 00:20:49,119 --> 00:20:51,320 Speaker 9: need those deals to make their fees. But if you 413 00:20:51,440 --> 00:20:53,440 Speaker 9: talk to them, they and they are the closest to 414 00:20:53,520 --> 00:20:56,119 Speaker 9: the market, they will tell you that, yes, it's going 415 00:20:56,200 --> 00:20:58,240 Speaker 9: to be a quiet first half, but they can see 416 00:20:58,280 --> 00:21:01,480 Speaker 9: the conditions there and their report boughting on potential sales. 417 00:21:01,520 --> 00:21:03,879 Speaker 9: They try to persuade investors to come to market for 418 00:21:04,000 --> 00:21:05,879 Speaker 9: the second half of the year and they see a 419 00:21:05,920 --> 00:21:06,520 Speaker 9: bounce back there. 420 00:21:06,560 --> 00:21:08,879 Speaker 2: Okay, so you're expecting a strong sales pitch at this 421 00:21:09,400 --> 00:21:12,320 Speaker 2: event as ever. Yeah, and what about the question of 422 00:21:12,400 --> 00:21:15,359 Speaker 2: demand post pandemic. We're shifting into sort of what looks 423 00:21:15,400 --> 00:21:17,600 Speaker 2: like a more stable dynamic in terms of flexible working. 424 00:21:17,640 --> 00:21:20,399 Speaker 2: When we think about demand for officers, how much is 425 00:21:20,440 --> 00:21:22,720 Speaker 2: that playing into the picture given the kind of weak 426 00:21:22,760 --> 00:21:23,640 Speaker 2: financial backdrop. 427 00:21:23,880 --> 00:21:26,480 Speaker 9: It's a huge question for real estate, you know, offices 428 00:21:26,760 --> 00:21:30,040 Speaker 9: being the biggest sort of asset class within commercial real estate. 429 00:21:30,560 --> 00:21:32,600 Speaker 9: If you look at what happened to retail, which you know, 430 00:21:32,720 --> 00:21:34,720 Speaker 9: probably twenty years ago, used to be the sort of 431 00:21:34,760 --> 00:21:37,720 Speaker 9: glamour sector within commercial real estate, these huge shopping centers 432 00:21:37,800 --> 00:21:41,320 Speaker 9: worth you know, potentially multi billions, totally upended by e commerce, 433 00:21:41,800 --> 00:21:44,960 Speaker 9: huge amount of value destruction that's actually now finally found 434 00:21:45,000 --> 00:21:47,359 Speaker 9: a floor, and you know, these those things as trading 435 00:21:47,480 --> 00:21:49,080 Speaker 9: very cheaply, but at least the rents have kind of 436 00:21:49,160 --> 00:21:51,640 Speaker 9: hit a bottom and they're starting to grow again. All 437 00:21:51,720 --> 00:21:53,480 Speaker 9: sorts of concern about you know, we are we on 438 00:21:53,600 --> 00:21:55,879 Speaker 9: the same journey now with office having been sort of 439 00:21:56,000 --> 00:21:59,360 Speaker 9: disrupted by well, initially by we working before the pandemic 440 00:22:00,240 --> 00:22:01,879 Speaker 9: in the way that we work and what people expect 441 00:22:01,920 --> 00:22:04,920 Speaker 9: from an office, and then accelerated by the pandemic. I think, 442 00:22:05,240 --> 00:22:07,520 Speaker 9: as ever, with these things, there's a lot of nuance required, 443 00:22:07,960 --> 00:22:09,960 Speaker 9: the sense that you know, the good quality stuff in 444 00:22:10,000 --> 00:22:13,159 Speaker 9: the best locations, the greenest stuff. There's still going to 445 00:22:13,160 --> 00:22:14,560 Speaker 9: be a lot of demand for that, and actually there's 446 00:22:14,600 --> 00:22:17,439 Speaker 9: more demand than there is availability because there hasn't been 447 00:22:17,520 --> 00:22:19,240 Speaker 9: enough of it built. And I think that'll be another 448 00:22:19,280 --> 00:22:21,000 Speaker 9: big theme at miip HIM, like the lack of construction 449 00:22:21,080 --> 00:22:23,879 Speaker 9: that's been going on. But yeah, the older stuff, you know, 450 00:22:24,000 --> 00:22:27,240 Speaker 9: your regional office buildings, your suburban office buildings, especially those 451 00:22:27,320 --> 00:22:29,960 Speaker 9: that you know, maybe aren't the greenest, they probably don't 452 00:22:30,000 --> 00:22:31,840 Speaker 9: have a viable future as an office, and then you're 453 00:22:31,840 --> 00:22:33,960 Speaker 9: starting to think about, well do the economics actually work 454 00:22:34,040 --> 00:22:35,520 Speaker 9: to turn them into something else? So these things just 455 00:22:35,600 --> 00:22:36,480 Speaker 9: need to get bulldozed. 456 00:22:36,680 --> 00:22:38,800 Speaker 2: Yeah, the couple of interesting points there. I mean that 457 00:22:39,119 --> 00:22:43,080 Speaker 2: idea of making buildings greener essentially more energy Fishing is 458 00:22:43,200 --> 00:22:45,639 Speaker 2: another big challenge facing the sector too, because there are 459 00:22:45,680 --> 00:22:48,520 Speaker 2: building regulations that are affecting how the future life and 460 00:22:48,600 --> 00:22:50,359 Speaker 2: also how the new projects are going to be shaped. 461 00:22:50,600 --> 00:22:50,800 Speaker 3: Yeah. 462 00:22:50,840 --> 00:22:53,240 Speaker 9: Absolutely, and and again that'll be a big theme at 463 00:22:53,280 --> 00:22:55,880 Speaker 9: mip HIM. It's an interesting event because it always attracts 464 00:22:55,920 --> 00:22:58,760 Speaker 9: a lot of politicians, a lot of policymakers, and to 465 00:22:58,880 --> 00:23:02,000 Speaker 9: some degree they are not necessarily the main event. The 466 00:23:02,080 --> 00:23:05,080 Speaker 9: reason everybody goes there isn't the thing works, is because 467 00:23:05,080 --> 00:23:07,600 Speaker 9: it attracts the investors. So you've got all the biggest 468 00:23:07,640 --> 00:23:10,040 Speaker 9: sovereigns will be there, all the biggest private equity firms, 469 00:23:10,400 --> 00:23:13,160 Speaker 9: and if they're there, then their brokers are there, their 470 00:23:13,200 --> 00:23:15,560 Speaker 9: bankers are there, and then the developers are there, and 471 00:23:15,960 --> 00:23:20,399 Speaker 9: you know there's this ecosystem, this chain, and the politicians 472 00:23:20,440 --> 00:23:22,280 Speaker 9: as well. They're there because they want to attract these 473 00:23:22,320 --> 00:23:24,400 Speaker 9: people to come and invest in their cities. This time 474 00:23:24,480 --> 00:23:27,280 Speaker 9: there may be to a greater extent some of the 475 00:23:27,600 --> 00:23:31,000 Speaker 9: investors listening quite carefully to what the policymakers have got 476 00:23:31,040 --> 00:23:33,200 Speaker 9: to say around some of these sustainability issues, because it 477 00:23:33,280 --> 00:23:36,879 Speaker 9: is going to be potentially a huge influence on you know, 478 00:23:37,040 --> 00:23:40,280 Speaker 9: things like that office market. How stringent are these rules 479 00:23:40,359 --> 00:23:42,000 Speaker 9: going to be in you know, in the UK they 480 00:23:42,280 --> 00:23:44,720 Speaker 9: just talk of offices not being allowed to be rented 481 00:23:44,760 --> 00:23:47,560 Speaker 9: out unless they're what's called EPC A or B by 482 00:23:47,640 --> 00:23:50,000 Speaker 9: twenty thirty. You know, you're talking about the majority of 483 00:23:50,080 --> 00:23:53,000 Speaker 9: the office market being illegal to rent in six years 484 00:23:53,080 --> 00:23:55,280 Speaker 9: time if that were to actually come in, So they 485 00:23:55,320 --> 00:23:57,560 Speaker 9: will have a huge impact on the market. So I 486 00:23:57,680 --> 00:23:59,360 Speaker 9: think there'll be maybe a bit more of a two 487 00:23:59,359 --> 00:24:00,720 Speaker 9: way dialogue. It sometimes is. 488 00:24:00,920 --> 00:24:03,199 Speaker 2: What about the question of housing? Of course, not as 489 00:24:03,359 --> 00:24:06,560 Speaker 2: much of concern around building as there is around commercial 490 00:24:06,640 --> 00:24:09,760 Speaker 2: real estate, but still a sector that there's a lot 491 00:24:09,800 --> 00:24:12,760 Speaker 2: of political and policy kind of perspectives We had. 492 00:24:12,720 --> 00:24:15,000 Speaker 9: On Yeah, absolutely, and you know, someone who's been going 493 00:24:15,040 --> 00:24:18,600 Speaker 9: to mip him for ten fifteen years now, it's interesting 494 00:24:18,720 --> 00:24:23,040 Speaker 9: how much more prominent housing is at the event. It's 495 00:24:23,080 --> 00:24:24,920 Speaker 9: a huge part of it now, and I guess there's 496 00:24:24,920 --> 00:24:27,480 Speaker 9: a couple of dynamics there. One, you've got the fact 497 00:24:27,520 --> 00:24:31,359 Speaker 9: that really across Europe there's almost no city that doesn't 498 00:24:31,400 --> 00:24:34,439 Speaker 9: have a shortage of good quality housing, and they're all 499 00:24:34,480 --> 00:24:37,359 Speaker 9: grappling with it in different ways. Some places it's planning, 500 00:24:37,480 --> 00:24:39,840 Speaker 9: some places it's rent control that are barriers, and so 501 00:24:40,000 --> 00:24:42,560 Speaker 9: that's lots of issues there to be grappled with by 502 00:24:42,600 --> 00:24:45,399 Speaker 9: policymakers and by potential investors. The other thing is that 503 00:24:45,760 --> 00:24:47,920 Speaker 9: you know, we talked about the kind of obsolescence in 504 00:24:48,040 --> 00:24:50,879 Speaker 9: shopping centers and maybe what's happening now to offices. What 505 00:24:51,000 --> 00:24:53,840 Speaker 9: you've seen investors do is that money that maybe they 506 00:24:53,920 --> 00:24:56,120 Speaker 9: used to invest in retail or they used to invest 507 00:24:56,160 --> 00:24:58,200 Speaker 9: in offices, and now increasingly they want to invest it 508 00:24:58,280 --> 00:25:02,240 Speaker 9: in living very broad so that can be rental apartments, 509 00:25:02,280 --> 00:25:04,600 Speaker 9: it can be senior housing, nursing homes, whatever you like, 510 00:25:04,720 --> 00:25:08,399 Speaker 9: but living broadly. The difficulty that they have is actually 511 00:25:08,440 --> 00:25:11,200 Speaker 9: deploying that capital because there isn't the existing stock to 512 00:25:11,240 --> 00:25:13,840 Speaker 9: go and buy it and building it is very difficult 513 00:25:13,840 --> 00:25:16,679 Speaker 9: because the rules wherever you look in Europe are complicated 514 00:25:16,720 --> 00:25:19,760 Speaker 9: and they make it hard. So again that's a huge focus. 515 00:25:19,920 --> 00:25:22,119 Speaker 9: All this money that wants to get into European housing 516 00:25:22,200 --> 00:25:24,800 Speaker 9: of various forms, but so many barriers to it. 517 00:25:25,200 --> 00:25:28,560 Speaker 2: Thanks to Bloomberg's real estate reporter jacket sitters. I'm Stephen 518 00:25:28,600 --> 00:25:30,960 Speaker 2: Caroll in London. You can catch us every weekday morning 519 00:25:31,000 --> 00:25:33,440 Speaker 2: here for Bloomberg Daybreak Europe, but getting at six am 520 00:25:33,560 --> 00:25:34,359 Speaker 2: in London and. 521 00:25:34,560 --> 00:25:37,520 Speaker 1: One am on Wall Streets. Tom, Thank you, Steven. And 522 00:25:37,600 --> 00:25:39,879 Speaker 1: coming up on Bloomberg day Break weekend and look ahead 523 00:25:39,920 --> 00:25:43,680 Speaker 1: to earnings from a couple of key technology manufacturers in 524 00:25:43,800 --> 00:25:58,720 Speaker 1: Asian I'm Tom Busby, and this is Bloomberg. I'm Tom 525 00:25:58,800 --> 00:26:00,800 Speaker 1: Busby in New York with your global look ahead at 526 00:26:00,800 --> 00:26:03,720 Speaker 1: the top stories for investors in the coming week. This week, 527 00:26:03,840 --> 00:26:06,840 Speaker 1: two big companies will be reporting earnings. We'll take a 528 00:26:06,880 --> 00:26:09,359 Speaker 1: look at how the EV market is performing through the 529 00:26:09,440 --> 00:26:13,920 Speaker 1: lens of previewing battery maker Catl's earnings. But first we'll 530 00:26:13,960 --> 00:26:16,600 Speaker 1: talk about one of the major Apple suppliers, Han Hi, 531 00:26:17,119 --> 00:26:20,000 Speaker 1: also known as Fox KHN. For more, let's get to 532 00:26:20,040 --> 00:26:22,600 Speaker 1: Bloomberg day Break Asia co host Doug Krisner. 533 00:26:23,040 --> 00:26:23,240 Speaker 4: Tom. 534 00:26:23,320 --> 00:26:25,760 Speaker 11: In the coming week, we'll get fourth quarter earnings from 535 00:26:25,800 --> 00:26:30,240 Speaker 11: the world's largest contract electronics maker, Han high precision industry. 536 00:26:30,520 --> 00:26:33,320 Speaker 11: This company is known internationally as fox KHN. It's a 537 00:26:33,480 --> 00:26:37,680 Speaker 11: major assembler of iPhones and other Apple devices. In fact, 538 00:26:38,000 --> 00:26:40,520 Speaker 11: Fox Cohn gets more than half its revenue from Apple. 539 00:26:40,920 --> 00:26:43,879 Speaker 11: To help us preview the Fox Cohn earnings, I'm joined 540 00:26:44,200 --> 00:26:48,480 Speaker 11: from Taipei by Jane Lanhi Lee, Bloomberg Tech reporter. Jane, 541 00:26:48,520 --> 00:26:51,200 Speaker 11: thanks for being with us. So we know already that 542 00:26:51,440 --> 00:26:53,639 Speaker 11: fourth quarter revenue was down by nearly five and a 543 00:26:53,680 --> 00:26:56,960 Speaker 11: half percent. And I saw that figure and I'm wondering 544 00:26:57,240 --> 00:27:00,000 Speaker 11: how much of it reflects the challenges that Apple is faced. 545 00:27:00,400 --> 00:27:04,960 Speaker 10: Oh, it absolutely reflects Apple's challenges. Fox Con makes about 546 00:27:05,119 --> 00:27:09,399 Speaker 10: seventy percent of the iPhones for Apple. A lot of 547 00:27:09,480 --> 00:27:13,600 Speaker 10: that is manufactured in China, and if China sales aren't 548 00:27:13,600 --> 00:27:18,160 Speaker 10: doing well for Apple, then that'll reflect immediately for fox 549 00:27:18,240 --> 00:27:21,800 Speaker 10: Con as well. And the problem we're going to see 550 00:27:21,920 --> 00:27:26,440 Speaker 10: going forward is that Apple iPhone sales we reported last 551 00:27:26,520 --> 00:27:30,760 Speaker 10: week dropped twenty four percent in the first six weeks 552 00:27:30,880 --> 00:27:34,399 Speaker 10: of this year, and that's according to Counterpoint Research, and 553 00:27:34,520 --> 00:27:38,840 Speaker 10: that already puts Apple behind Vivo, that's the number one 554 00:27:39,000 --> 00:27:42,280 Speaker 10: selling brand in the first six weeks of this year. Huawei, 555 00:27:42,720 --> 00:27:45,880 Speaker 10: which is considered China's tech champion, and they came out 556 00:27:45,920 --> 00:27:49,560 Speaker 10: with a new phone, the May sixty pro late last year, 557 00:27:49,920 --> 00:27:55,879 Speaker 10: and that has been selling gangbusters because there's a wave 558 00:27:56,000 --> 00:28:01,480 Speaker 10: of patriotic buying. And then Honor, which is Huawei's previous brand, 559 00:28:01,480 --> 00:28:04,320 Speaker 10: which kind of split off, and then Apple now which 560 00:28:04,440 --> 00:28:07,159 Speaker 10: used to be the top selling brand in China is 561 00:28:07,320 --> 00:28:10,640 Speaker 10: in fourth place. That will have an impact on fox 562 00:28:10,760 --> 00:28:14,720 Speaker 10: con sales. And during the earnings call on the fourteenth, 563 00:28:15,119 --> 00:28:18,600 Speaker 10: investors and analysts are going to be focusing on outlook 564 00:28:18,680 --> 00:28:22,080 Speaker 10: figures and outlooks or a color coming from the company 565 00:28:22,280 --> 00:28:24,200 Speaker 10: on how much of an impact that's going to have. 566 00:28:24,480 --> 00:28:26,320 Speaker 11: So we know that Apple is facing a lot of 567 00:28:26,440 --> 00:28:29,200 Speaker 11: challenges as you just said, in terms of the China market, 568 00:28:29,240 --> 00:28:31,000 Speaker 11: and we know at the same time that the company 569 00:28:31,080 --> 00:28:34,639 Speaker 11: is moving to try to set up manufacturing operations in India. 570 00:28:35,000 --> 00:28:38,440 Speaker 11: Is this something that fox Con is involved with the 571 00:28:38,680 --> 00:28:39,680 Speaker 11: Indian facilities? 572 00:28:40,000 --> 00:28:40,120 Speaker 12: Oh? 573 00:28:40,240 --> 00:28:45,480 Speaker 10: Absolutely. Fox Con has been announcing almost every week or 574 00:28:45,560 --> 00:28:49,120 Speaker 10: every other week. I'm sitting here picking up announcements on 575 00:28:49,280 --> 00:28:54,160 Speaker 10: the Taiwan Stock Exchange about hundreds of millions of dollars 576 00:28:54,240 --> 00:28:58,080 Speaker 10: that fox Con is moving to India to get those facilities. 577 00:28:58,200 --> 00:28:58,440 Speaker 3: Going. 578 00:28:58,960 --> 00:29:03,440 Speaker 10: Bloomberg report did late last year that fox Cohn has 579 00:29:03,520 --> 00:29:08,040 Speaker 10: won approval to invest up to two point six billion 580 00:29:08,240 --> 00:29:14,120 Speaker 10: dollars in India. That hasn't yet shown up in a 581 00:29:14,200 --> 00:29:19,440 Speaker 10: reduction of investments in China, but going forward, the percentage 582 00:29:19,680 --> 00:29:24,160 Speaker 10: of Apple products that fox Con manufacturers outside of China 583 00:29:24,640 --> 00:29:25,640 Speaker 10: will grow for sure. 584 00:29:25,920 --> 00:29:27,960 Speaker 11: Do you think fox Con right now is beginning to 585 00:29:28,040 --> 00:29:31,400 Speaker 11: sense the need for greater diversification. I know they're involved 586 00:29:31,440 --> 00:29:35,880 Speaker 11: in the production of other electronic components and the networking 587 00:29:35,960 --> 00:29:38,960 Speaker 11: equipment as well. Are they moving more aggressively to try 588 00:29:39,000 --> 00:29:43,200 Speaker 11: to diversify away from being so reliant on Apple? 589 00:29:43,440 --> 00:29:43,600 Speaker 12: Well? 590 00:29:43,640 --> 00:29:47,080 Speaker 10: I mean that two point six billion dollar India investment 591 00:29:47,200 --> 00:29:51,040 Speaker 10: is already a clear signal that it is diversifying. Fox 592 00:29:51,160 --> 00:29:56,680 Speaker 10: Con is the top electronics company in Taiwan. There are 593 00:29:56,760 --> 00:30:01,959 Speaker 10: other major Taiwanese contract MANUFAC, and all of them are 594 00:30:02,040 --> 00:30:06,760 Speaker 10: in fact diversifying away from China. The Taiwanese government is 595 00:30:06,880 --> 00:30:10,720 Speaker 10: supporting that as well. So there are places like in 596 00:30:10,800 --> 00:30:16,920 Speaker 10: addition to India, Thailand and Vietnam, other Southeast Asian countries 597 00:30:17,080 --> 00:30:22,960 Speaker 10: are seeing an influx of investments, and Bloomberg last year 598 00:30:23,080 --> 00:30:26,680 Speaker 10: also sort of graft out the move of suppliers, and 599 00:30:26,800 --> 00:30:31,200 Speaker 10: there's a clear increase in Apple suppliers in Southeast Asia. 600 00:30:31,480 --> 00:30:35,000 Speaker 11: Well, wasn't Fox Cohn involved in developing electric vehicles? If 601 00:30:35,040 --> 00:30:37,160 Speaker 11: that's the case, are we likely to get an update 602 00:30:37,720 --> 00:30:42,480 Speaker 11: on that movement sometime during the course of this analyst 603 00:30:42,560 --> 00:30:43,480 Speaker 11: call on the fourteenth. 604 00:30:43,720 --> 00:30:47,120 Speaker 10: It's possible. There's a lot of interest in Fox Cohn's 605 00:30:47,440 --> 00:30:52,120 Speaker 10: electric vehicle business. In fact, some analysts say Fox Cohn 606 00:30:52,640 --> 00:30:55,600 Speaker 10: is trying to reposition itself as an EV company going 607 00:30:55,760 --> 00:31:00,760 Speaker 10: forward as it diversifies away from just being the iPhone maker. 608 00:31:00,880 --> 00:31:02,920 Speaker 10: But you know, the iPhone still make up for a 609 00:31:03,000 --> 00:31:06,280 Speaker 10: big chunk of its sales and EV really it's in 610 00:31:06,360 --> 00:31:10,960 Speaker 10: its infancy and there have been several missteps in the 611 00:31:11,080 --> 00:31:15,280 Speaker 10: last year or two as it tried to get its 612 00:31:15,320 --> 00:31:19,040 Speaker 10: EV business going. So that's still a big question mark 613 00:31:19,320 --> 00:31:23,280 Speaker 10: and we'll have to see this year if it gets 614 00:31:23,320 --> 00:31:25,920 Speaker 10: any big business. I'm keeping an eye on the US 615 00:31:26,000 --> 00:31:28,160 Speaker 10: to see if there are any US brands that might 616 00:31:28,280 --> 00:31:32,360 Speaker 10: decide to manufacture evs with fox Conn. Investors will definitely 617 00:31:32,400 --> 00:31:33,200 Speaker 10: be looking out for that. 618 00:31:33,600 --> 00:31:35,840 Speaker 11: Jane, thank you so much for helping us preview their 619 00:31:35,840 --> 00:31:39,320 Speaker 11: earnings from Fox Cohn. Jane Lonhie Lee is Bloomberg Tech 620 00:31:39,360 --> 00:31:42,360 Speaker 11: reporter joining from TYPEI. Now let's get to the other 621 00:31:42,600 --> 00:31:45,160 Speaker 11: co host of Daybreak Asia, Brian Curtis. 622 00:31:45,360 --> 00:31:49,680 Speaker 3: Doug Contemporary Amparex Technology or CATL, is set to deliver 623 00:31:49,840 --> 00:31:53,360 Speaker 3: fourth quarter results in the coming week. Bloomberg Intelligence expects 624 00:31:53,440 --> 00:31:57,120 Speaker 3: to see solid revenues and cost control at the battery maker, 625 00:31:57,520 --> 00:32:00,520 Speaker 3: and it says that will offset lower battery price and 626 00:32:00,720 --> 00:32:04,680 Speaker 3: the slowing Chinese economy. Putting it all together, BI suggests 627 00:32:04,720 --> 00:32:08,600 Speaker 3: that the company will deliver resilient results. Now, of course, 628 00:32:08,680 --> 00:32:11,520 Speaker 3: when we look at catl's business, a lot of other 629 00:32:11,640 --> 00:32:15,080 Speaker 3: issues come to mind. The health of the EV industry 630 00:32:15,320 --> 00:32:20,240 Speaker 3: in China, stiff competition among EV makers, there US China relations, 631 00:32:20,400 --> 00:32:25,480 Speaker 3: EU China relations, carbon reduction targets, as well as industrial 632 00:32:25,640 --> 00:32:29,400 Speaker 3: overcapacity in China, and even mandates for the use of 633 00:32:29,480 --> 00:32:32,920 Speaker 3: electric heavy duty trucks. Well, to unpack all of this, 634 00:32:33,240 --> 00:32:36,560 Speaker 3: we have Bloomberg's transport reporter Danny Lee with us here 635 00:32:37,040 --> 00:32:40,120 Speaker 3: in our studios in Hong Kong. So, Danny, how is 636 00:32:40,200 --> 00:32:43,800 Speaker 3: CATL managing through these many crosswinds that we have at 637 00:32:43,800 --> 00:32:44,680 Speaker 3: the moment in China. 638 00:32:45,080 --> 00:32:47,440 Speaker 12: Well, what we're going to see in its upcoming fourth 639 00:32:47,560 --> 00:32:51,160 Speaker 12: quarter full year results is not just resilient sets of results, 640 00:32:51,320 --> 00:32:53,800 Speaker 12: but one that could also be a record on the 641 00:32:53,960 --> 00:32:57,200 Speaker 12: net income line. Particularly when it comes to the full year, 642 00:32:57,320 --> 00:33:01,680 Speaker 12: it's very robust, as they have before the gain from 643 00:33:01,720 --> 00:33:04,720 Speaker 12: the benefits of the past three quarters, but even on 644 00:33:04,880 --> 00:33:07,520 Speaker 12: the fourth quarter, at the final quarter of the it's 645 00:33:07,560 --> 00:33:10,160 Speaker 12: looking very very strong and they've given a wide margin 646 00:33:10,280 --> 00:33:13,920 Speaker 12: for potentially what could be a record quarter ultimately. And 647 00:33:14,080 --> 00:33:19,560 Speaker 12: so despite the falling prices of lithium and nickel, for example, 648 00:33:19,680 --> 00:33:23,240 Speaker 12: these raw material prices actually are a good thing for 649 00:33:23,480 --> 00:33:27,320 Speaker 12: someone like CATL as they can become even more price 650 00:33:27,400 --> 00:33:30,840 Speaker 12: competitive on its batteries and also just to sell at 651 00:33:31,040 --> 00:33:32,520 Speaker 12: much lower price and. 652 00:33:32,560 --> 00:33:35,440 Speaker 3: Not only a leader in China, but maintaining a top 653 00:33:35,520 --> 00:33:38,920 Speaker 3: position really in the global market. In the month of January. 654 00:33:39,080 --> 00:33:42,080 Speaker 3: Just looking over some research from sn Research out of 655 00:33:42,160 --> 00:33:46,360 Speaker 3: South Korea, CATL with roughly forty percent share of the 656 00:33:46,440 --> 00:33:52,320 Speaker 3: worldwide battery market in January. It supplies automakers like Tesla, BMW, Mercedes, 657 00:33:52,400 --> 00:33:57,160 Speaker 3: Benz and Volkswagen. The number two is BYD. It's a 658 00:33:57,320 --> 00:34:01,480 Speaker 3: big competitor and obviously a big make of evs. But 659 00:34:01,600 --> 00:34:05,280 Speaker 3: let's talk about catl's position vis a v competitors and 660 00:34:05,320 --> 00:34:08,040 Speaker 3: whether or not we might seach some sort of consolidation coming. 661 00:34:08,320 --> 00:34:11,040 Speaker 12: There is a question and that always has been in 662 00:34:11,120 --> 00:34:14,719 Speaker 12: the recent years over consolidation not just amongst battery makers, 663 00:34:14,760 --> 00:34:18,520 Speaker 12: but even across the auto space, across the whole brands 664 00:34:18,560 --> 00:34:21,800 Speaker 12: which have launched running out of money. But when it 665 00:34:21,840 --> 00:34:25,399 Speaker 12: comes to the battery space, you see this concentration even 666 00:34:25,440 --> 00:34:29,000 Speaker 12: amongst the top two c ATO and BYD, and therefore 667 00:34:29,440 --> 00:34:33,200 Speaker 12: it's very hard for other suppliers to really gain ground, 668 00:34:33,320 --> 00:34:36,080 Speaker 12: gain market share. And so when you have someone who's 669 00:34:36,280 --> 00:34:40,239 Speaker 12: financially strong and as robust as c ATO in particular, 670 00:34:40,560 --> 00:34:44,200 Speaker 12: they can use their financial muscle to squeeze margins and 671 00:34:44,360 --> 00:34:48,239 Speaker 12: squeeze suppliers on costs and also just to get that 672 00:34:48,520 --> 00:34:52,000 Speaker 12: edge over other smaller supplies who cannot be as financially 673 00:34:52,520 --> 00:34:53,800 Speaker 12: flex as c ATL. 674 00:34:54,280 --> 00:34:57,320 Speaker 3: Is it generally considered to be a really well managed company. 675 00:34:57,640 --> 00:35:00,440 Speaker 12: It is, indeed, and when you look at what it 676 00:35:00,520 --> 00:35:02,960 Speaker 12: has been doing to lay the groundwork, it has made 677 00:35:03,080 --> 00:35:07,440 Speaker 12: long term bets, even during this period of instability and 678 00:35:07,480 --> 00:35:11,239 Speaker 12: weakness in the EV market where clearly not many people 679 00:35:11,600 --> 00:35:15,280 Speaker 12: are confident about the near term demand. But Ultimately, they've 680 00:35:15,320 --> 00:35:18,560 Speaker 12: made bets, they've invested, and they've put themselves in a 681 00:35:18,600 --> 00:35:23,040 Speaker 12: position where they've conquered China, just like byd has in 682 00:35:23,120 --> 00:35:26,719 Speaker 12: the battery space for cars. They are now pushing very 683 00:35:26,800 --> 00:35:29,239 Speaker 12: much abroad. But clearly there are headwinds when it comes 684 00:35:29,280 --> 00:35:32,600 Speaker 12: to its reputation and how it's perceived and how it 685 00:35:32,760 --> 00:35:35,359 Speaker 12: wants to be a supplier across the world. 686 00:35:36,080 --> 00:35:39,239 Speaker 3: It does actually seem Danny that the glide path for 687 00:35:39,520 --> 00:35:42,560 Speaker 3: c ATL globally, while as you said, fraught with some 688 00:35:42,640 --> 00:35:47,440 Speaker 3: difficulties over geopolitics, so it's pretty good because the pricing 689 00:35:47,560 --> 00:35:50,839 Speaker 3: is not quite so competitive elsewhere as. 690 00:35:50,760 --> 00:35:53,400 Speaker 12: It is in China, right, Yeah, absolutely, I mean with 691 00:35:54,000 --> 00:35:57,120 Speaker 12: China and with someone like c ATL, they really have 692 00:35:57,600 --> 00:35:59,920 Speaker 12: a lot of advantages when it comes to being able 693 00:36:00,080 --> 00:36:03,840 Speaker 12: to sell batteries at much lower prices, and thanks to 694 00:36:04,040 --> 00:36:07,480 Speaker 12: the falling prices of raw materials, they can continue to 695 00:36:07,640 --> 00:36:10,920 Speaker 12: lower its prices. And when you do have other battery 696 00:36:10,960 --> 00:36:14,120 Speaker 12: players around the world who are still just starting up 697 00:36:14,280 --> 00:36:17,120 Speaker 12: or they've still got higher costs that they need to 698 00:36:17,280 --> 00:36:19,239 Speaker 12: factor in, so there's not a lot of room to 699 00:36:19,320 --> 00:36:21,719 Speaker 12: maneuver for competitors, and for someone like c ATL, this 700 00:36:22,000 --> 00:36:24,480 Speaker 12: is their moment to say going for the kill rather, 701 00:36:24,680 --> 00:36:28,400 Speaker 12: but they really are able to show their dominance and 702 00:36:28,520 --> 00:36:31,880 Speaker 12: show not just their dominance, but how good their products are, 703 00:36:31,960 --> 00:36:34,200 Speaker 12: because what we have seen over the past couple of 704 00:36:34,320 --> 00:36:38,479 Speaker 12: years is then putting out even better performing products, which 705 00:36:38,760 --> 00:36:42,879 Speaker 12: whether they be faster charging or have longer range, these 706 00:36:42,960 --> 00:36:45,600 Speaker 12: are things which gives them an edge on all fronts 707 00:36:45,719 --> 00:36:47,160 Speaker 12: frankly compared to its piers. 708 00:36:47,640 --> 00:36:50,600 Speaker 3: So you talked about the input materials being down and 709 00:36:50,680 --> 00:36:54,840 Speaker 3: that leads to the ability to lower battery prices. What 710 00:36:54,920 --> 00:36:57,680 Speaker 3: are some of the key factors behind this fall in 711 00:36:58,040 --> 00:36:58,759 Speaker 3: battery price? 712 00:36:59,120 --> 00:37:01,120 Speaker 12: It is a good question, and I think it's just 713 00:37:01,600 --> 00:37:06,080 Speaker 12: we've seen with the speculation and the rush for these 714 00:37:06,200 --> 00:37:09,680 Speaker 12: raw materials over the years, it has really helped push 715 00:37:09,800 --> 00:37:13,320 Speaker 12: up prices. And again when you see the concern about 716 00:37:13,440 --> 00:37:16,879 Speaker 12: the long term supply that's all being locked into over 717 00:37:16,960 --> 00:37:20,040 Speaker 12: recent years, that has helped push up prices. And we've 718 00:37:20,080 --> 00:37:24,200 Speaker 12: seen the general demand for electric vehicles come down and 719 00:37:24,280 --> 00:37:28,279 Speaker 12: so therefore naturally prices for the raw materials that also 720 00:37:28,440 --> 00:37:31,759 Speaker 12: coming down. But we haven't really seen a flaw yet 721 00:37:31,960 --> 00:37:35,520 Speaker 12: in the price, you know, pulling back from near record levels. 722 00:37:35,640 --> 00:37:39,040 Speaker 12: But ultimately what we are seeing is the supply chain 723 00:37:39,160 --> 00:37:42,280 Speaker 12: for evs being laid out nicely, and we are seeing 724 00:37:42,600 --> 00:37:46,000 Speaker 12: more sales. Still growth, but maybe not as good as 725 00:37:46,040 --> 00:37:48,160 Speaker 12: it once was, but we are least seeing a normalization, 726 00:37:48,280 --> 00:37:52,160 Speaker 12: which is I guess good for everyone from companies to consumers. 727 00:37:52,520 --> 00:37:55,000 Speaker 3: All Right, Danny, thanks so much for joining us. Bloomberg's 728 00:37:55,040 --> 00:37:58,120 Speaker 3: transport reporter Danny Lee with us here in our Hong 729 00:37:58,200 --> 00:38:01,279 Speaker 3: Kong studios. I'm Brian Curtis along with Doug Krisner. You 730 00:38:01,360 --> 00:38:04,680 Speaker 3: can catch us every weekday here for Bloomberg day Break Asia, 731 00:38:05,000 --> 00:38:07,600 Speaker 3: beginning at eight am in Hong Kong and eight pm 732 00:38:07,840 --> 00:38:08,560 Speaker 3: on Wall Street. 733 00:38:09,040 --> 00:38:11,920 Speaker 1: Tom, thank you, Brian. That does it for this edition 734 00:38:11,960 --> 00:38:14,719 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 735 00:38:14,760 --> 00:38:16,600 Speaker 1: at five am Wall Street time for the latest on 736 00:38:16,719 --> 00:38:19,680 Speaker 1: markets overseas and the news you need to start your day. 737 00:38:20,239 --> 00:38:22,920 Speaker 1: I'm Tom Buzzby. Stay with us. Top stories and global 738 00:38:22,960 --> 00:38:25,000 Speaker 1: business headlines are coming up right now.