1 00:00:02,440 --> 00:00:04,920 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,920 --> 00:00:07,240 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,280 --> 00:00:10,160 Speaker 1: anchors all around the world, and straight ahead on the program, 4 00:00:10,360 --> 00:00:13,800 Speaker 1: Bank earnings, Wall Street's top burn start reporting this week. 5 00:00:14,000 --> 00:00:16,360 Speaker 1: I'm Tom Busby in New York and I'll have that story. 6 00:00:16,560 --> 00:00:19,000 Speaker 2: I'm Stephen Caroll in London, where we're watching it closely 7 00:00:19,079 --> 00:00:22,360 Speaker 2: for signs of whether or not the UK is in recession. 8 00:00:22,520 --> 00:00:26,040 Speaker 3: I'm Doug Prisoner looking at Taiwan's presidential election, one that 9 00:00:26,160 --> 00:00:29,760 Speaker 3: will help shape the course of US China relations for years. 10 00:00:29,920 --> 00:00:32,839 Speaker 4: I'm Keebie Lines in Washington, where we're looking at pulling 11 00:00:32,960 --> 00:00:36,000 Speaker 4: as election. You're twenty twenty four gets under well. 12 00:00:37,159 --> 00:00:41,239 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend. The business 13 00:00:41,280 --> 00:00:45,240 Speaker 5: news you need to wrap up your week, Available on Apple, Spotify, 14 00:00:45,400 --> 00:00:48,720 Speaker 5: the Bloomberg Business Appen everywhere you get your podcasts. 15 00:00:53,040 --> 00:00:55,000 Speaker 1: Good day to you. I'm Tom Busby and we begin 16 00:00:55,000 --> 00:00:57,840 Speaker 1: today's program with the kickoff of the latest earning season. 17 00:00:58,000 --> 00:01:01,560 Speaker 1: Four of Wall Street's biggest banks report their latest quarterly 18 00:01:01,600 --> 00:01:03,959 Speaker 1: results this week, wrapping up a year of some mid 19 00:01:04,040 --> 00:01:07,160 Speaker 1: sized bank failures, rising interest rates, and a dearth of 20 00:01:07,280 --> 00:01:09,640 Speaker 1: deal making. At least for most of the year, but 21 00:01:09,800 --> 00:01:12,320 Speaker 1: we also saw the major averages sore higher, the Dow 22 00:01:12,480 --> 00:01:14,959 Speaker 1: reaching an all time high in late December, and there 23 00:01:15,080 --> 00:01:19,000 Speaker 1: was no real recession. For a preview, we welcome Bloomberg 24 00:01:19,040 --> 00:01:23,200 Speaker 1: Intelligence Senior Analyst Alison Williams and Bloomberg Global Finance correspondent 25 00:01:23,280 --> 00:01:26,520 Speaker 1: Shanali Basik. Now, all the action starts on Friday. We 26 00:01:26,560 --> 00:01:29,880 Speaker 1: hear from JP Morgan, Chase, City Group, Wells Fargo, and 27 00:01:30,000 --> 00:01:33,280 Speaker 1: Bank of America, and we're going to start today with Alison. Alison, 28 00:01:33,440 --> 00:01:36,520 Speaker 1: what are you expecting to see from those major lenders. 29 00:01:36,720 --> 00:01:38,920 Speaker 6: The two key things we're going to be looking at 30 00:01:39,040 --> 00:01:44,240 Speaker 6: are net interest income and expenses. So in the fourth quarter, 31 00:01:44,800 --> 00:01:47,680 Speaker 6: we're going to be looking for further evidence that the 32 00:01:47,960 --> 00:01:51,840 Speaker 6: pressure on deposit pricing is easing a bit and those 33 00:01:51,840 --> 00:01:53,760 Speaker 6: costs are easing a bit. And we think that the 34 00:01:53,800 --> 00:01:57,360 Speaker 6: outlook for next year is going to factor in further 35 00:01:57,680 --> 00:02:00,760 Speaker 6: moderation of that pressure. Just given the fact that the 36 00:02:00,800 --> 00:02:05,200 Speaker 6: markets are pricing in an inflection point for federal reserve hikes. 37 00:02:05,440 --> 00:02:10,320 Speaker 6: As those hikes turn to easing, the pressure for banks 38 00:02:10,360 --> 00:02:13,040 Speaker 6: to raise those prices on deposits. Keep in mind that 39 00:02:13,040 --> 00:02:17,120 Speaker 6: that's their cost of goods sold. That pressure eases, and 40 00:02:17,160 --> 00:02:19,680 Speaker 6: so that will be a positive for the biggest banks. 41 00:02:19,680 --> 00:02:23,239 Speaker 6: We think that JP Morgan's net interest income is going 42 00:02:23,320 --> 00:02:26,160 Speaker 6: to be resilient. We think there could be some upside 43 00:02:26,160 --> 00:02:29,400 Speaker 6: to those numbers. But the second thing that we're looking 44 00:02:29,440 --> 00:02:32,840 Speaker 6: at is the cost guidance, and again JP Morgan will 45 00:02:32,880 --> 00:02:37,680 Speaker 6: be a focus in particular because we get a lot 46 00:02:37,760 --> 00:02:40,639 Speaker 6: of macro clues for all the banks during the quarter, 47 00:02:41,040 --> 00:02:45,639 Speaker 6: but expense guidance always includes an element of investment spending. 48 00:02:46,440 --> 00:02:50,320 Speaker 6: JP Morgan has one in the long term by making 49 00:02:50,360 --> 00:02:54,679 Speaker 6: those investments, but if we look at the consensus forecasts, 50 00:02:55,080 --> 00:02:56,960 Speaker 6: those investments are going to cause the bank to have 51 00:02:57,080 --> 00:03:01,080 Speaker 6: negative operating leverage in twenty twenty four. We'll see what 52 00:03:01,120 --> 00:03:05,640 Speaker 6: we hear from management in terms of what the outlook is. 53 00:03:05,720 --> 00:03:08,720 Speaker 6: Because while there is investment spending, and we do think 54 00:03:08,720 --> 00:03:11,440 Speaker 6: that banks need to invest for the future, there's also 55 00:03:11,520 --> 00:03:14,519 Speaker 6: pressure and cost coming from inflation. There's also going to 56 00:03:14,560 --> 00:03:17,680 Speaker 6: be pressure from what we call the cost to compete, 57 00:03:17,919 --> 00:03:20,800 Speaker 6: and we think the compensation costs could be a little 58 00:03:20,800 --> 00:03:22,560 Speaker 6: bit sticky across the global banks. 59 00:03:22,720 --> 00:03:26,399 Speaker 7: Sonali, Yeah, there's definitely expenses, But to Allison's point, one 60 00:03:26,400 --> 00:03:30,000 Speaker 7: big question is if interest rates start to cool, at 61 00:03:30,040 --> 00:03:32,960 Speaker 7: what point does that not only flow into the notion 62 00:03:33,320 --> 00:03:37,280 Speaker 7: of deposit pricing, but also loan demand. Does loan demand 63 00:03:37,320 --> 00:03:39,520 Speaker 7: start to pick up if interest rates start to cool. 64 00:03:39,600 --> 00:03:43,160 Speaker 7: Now what's interesting too is in recent months you've start 65 00:03:43,440 --> 00:03:47,640 Speaker 7: to see different credit markets open up meaningfully, including leverage finance. 66 00:03:47,760 --> 00:03:49,720 Speaker 7: So we're not just talking about lending for the consumer. 67 00:03:49,760 --> 00:03:52,720 Speaker 7: We're even talking about risky parts of debt markets for 68 00:03:52,760 --> 00:03:56,960 Speaker 7: big corporations, buyouts, things that could start to fuel activity again. 69 00:03:57,280 --> 00:04:00,880 Speaker 7: So you will see a we all need to look 70 00:04:00,880 --> 00:04:03,680 Speaker 7: at the outlook from these bankers because they have come 71 00:04:03,720 --> 00:04:07,120 Speaker 7: in to the prior quarters with so much caution, and 72 00:04:07,160 --> 00:04:11,680 Speaker 7: you really are seeing that caution starting to wane. Jamie Diamond, 73 00:04:11,880 --> 00:04:14,280 Speaker 7: who has been warning that rates could move higher than 74 00:04:14,320 --> 00:04:17,279 Speaker 7: expected for many many months, if he starts to change 75 00:04:17,279 --> 00:04:19,720 Speaker 7: his tone there, it would be a massive bell weather 76 00:04:19,760 --> 00:04:22,200 Speaker 7: for the rest of the industry. Whereas you already had 77 00:04:22,279 --> 00:04:24,760 Speaker 7: James Gorman, who just stepped down as the CEO of 78 00:04:24,800 --> 00:04:30,680 Speaker 7: Morgan Stanley. He had definitely been very sanguine in terms 79 00:04:30,680 --> 00:04:33,440 Speaker 7: of the outlook for interest rates this year, and remember 80 00:04:33,480 --> 00:04:36,039 Speaker 7: he was still leading Morgan Stanley through the end of 81 00:04:36,080 --> 00:04:36,839 Speaker 7: the last quarter. 82 00:04:37,240 --> 00:04:40,920 Speaker 1: Well, Shanali, you mentioned James Gorman. You had a one 83 00:04:40,960 --> 00:04:43,440 Speaker 1: on one interview with him last week about his fourteen 84 00:04:43,520 --> 00:04:46,560 Speaker 1: year tenure a CEO of Morgan Stanley. Now he is 85 00:04:46,640 --> 00:04:50,240 Speaker 1: executive chairman. He also spoke about some proposed banking rules 86 00:04:50,240 --> 00:04:53,080 Speaker 1: that would require the biggest lenders to increase to twenty 87 00:04:53,120 --> 00:04:57,080 Speaker 1: percent their capital cushion. Now it's proposed, but let's hear 88 00:04:57,120 --> 00:04:58,560 Speaker 1: a bite from that interview right now. 89 00:04:58,880 --> 00:05:03,280 Speaker 8: It was a proposal that I would say was extremely 90 00:05:03,320 --> 00:05:07,440 Speaker 8: aggressive and set a MARKA. It will not go through 91 00:05:07,520 --> 00:05:10,240 Speaker 8: in that form. If it did, I think it would 92 00:05:10,279 --> 00:05:14,040 Speaker 8: have very very negative consequences for corporate lending across this country, 93 00:05:14,080 --> 00:05:15,719 Speaker 8: which is not what you want. It's not going to 94 00:05:15,720 --> 00:05:16,719 Speaker 8: help the economy growth. 95 00:05:16,760 --> 00:05:19,919 Speaker 7: Well, you've also spoken about the treasury market potential impacts 96 00:05:19,920 --> 00:05:23,039 Speaker 7: from these regulations. We've already seen stresses of late in 97 00:05:23,080 --> 00:05:25,679 Speaker 7: the treasury market. Do you have fears that those stresses 98 00:05:25,680 --> 00:05:26,680 Speaker 7: will be exacerbated? 99 00:05:27,000 --> 00:05:29,080 Speaker 8: I can't tell until I see the actual rules, but 100 00:05:29,200 --> 00:05:32,960 Speaker 8: all I know is what was put out is highly 101 00:05:33,080 --> 00:05:36,279 Speaker 8: highly highly unlikely to be what is ultimately regulated. 102 00:05:36,440 --> 00:05:39,440 Speaker 1: Now, is he right, and what are those proposals and 103 00:05:39,480 --> 00:05:40,760 Speaker 1: what would have to change. 104 00:05:40,880 --> 00:05:43,480 Speaker 7: You saw James Gorman and many of his peers take 105 00:05:43,520 --> 00:05:46,960 Speaker 7: to Washington, DC and address lawmakers about this fact. And 106 00:05:47,040 --> 00:05:49,040 Speaker 7: what they were trying to do is get the lawmakers 107 00:05:49,040 --> 00:05:53,839 Speaker 7: to put pressure on regulatory officials to start to rethink 108 00:05:54,000 --> 00:05:57,200 Speaker 7: the strictness of these capital rules. They were warning that 109 00:05:57,240 --> 00:06:00,000 Speaker 7: it would really restrict lending across different parts of the economy. 110 00:06:00,000 --> 00:06:03,080 Speaker 7: I mean, it would restrict trading activities in certain key 111 00:06:03,120 --> 00:06:06,400 Speaker 7: markets like commodities. It would increase the cost of hedging 112 00:06:07,120 --> 00:06:11,240 Speaker 7: for many big players in commodity markets and farming markets. 113 00:06:11,600 --> 00:06:15,200 Speaker 7: Rural America would be impacted, they warned. Now, what's interesting 114 00:06:15,279 --> 00:06:18,360 Speaker 7: here is we know from a Wall Street perspective that 115 00:06:18,400 --> 00:06:21,320 Speaker 7: those increase in capital rules would be very expensive for 116 00:06:21,360 --> 00:06:24,960 Speaker 7: the banks, and for him to say they're likely to 117 00:06:25,000 --> 00:06:29,320 Speaker 7: be less really starts to draw a question of how 118 00:06:29,400 --> 00:06:32,560 Speaker 7: much these banks can start to recalibrate their expectations on 119 00:06:32,600 --> 00:06:36,720 Speaker 7: how costly it would be, maybe less costly than investors 120 00:06:36,800 --> 00:06:40,840 Speaker 7: initially expected. If James Gorman is right, Alison, what's your 121 00:06:40,839 --> 00:06:41,320 Speaker 7: thoughts on that? 122 00:06:42,680 --> 00:06:47,280 Speaker 6: So if you look at some of these regulations, you 123 00:06:47,320 --> 00:06:50,479 Speaker 6: know two things. First of all, as you said, it 124 00:06:50,520 --> 00:06:55,440 Speaker 6: does require relatively large increases in capital to be held 125 00:06:55,920 --> 00:06:58,920 Speaker 6: across the largest banks, and actually Morgan, Stanley and Gold 126 00:06:59,000 --> 00:07:01,800 Speaker 6: and Sachs are some of the hardest hit because two 127 00:07:01,839 --> 00:07:05,839 Speaker 6: of the key you know, two of the key risk 128 00:07:05,880 --> 00:07:09,080 Speaker 6: factors that the rule aims to address are market risk 129 00:07:09,480 --> 00:07:15,680 Speaker 6: and operational risk. But if you analyze the rules, and 130 00:07:15,760 --> 00:07:18,960 Speaker 6: again we've heard you know, perhaps Jamie Diamond has been 131 00:07:19,280 --> 00:07:21,480 Speaker 6: one of the most vocal about some of the double 132 00:07:21,520 --> 00:07:27,640 Speaker 6: counting of operational risk inherent in this proposal. If we 133 00:07:27,680 --> 00:07:30,160 Speaker 6: look across some of the other regulations, such as the 134 00:07:30,200 --> 00:07:35,160 Speaker 6: Stress capital Buffer, which already penalizes banks for this type 135 00:07:35,160 --> 00:07:38,120 Speaker 6: of risk, and so there is sort of an element 136 00:07:38,160 --> 00:07:41,160 Speaker 6: of double counting. Also, if we look at the rules 137 00:07:41,280 --> 00:07:44,080 Speaker 6: versus some of the other jurisdictions, it does seem that 138 00:07:44,120 --> 00:07:46,920 Speaker 6: there is a fair amount of gold plating, meaning that 139 00:07:46,960 --> 00:07:49,800 Speaker 6: the rules do look a little bit tougher in the 140 00:07:49,800 --> 00:07:53,520 Speaker 6: way that they've been implemented in the US versus jurisdictions 141 00:07:53,560 --> 00:07:56,560 Speaker 6: such as the UK and Europe. 142 00:07:56,600 --> 00:07:58,200 Speaker 1: Well, until we get to that, I want to just 143 00:07:58,280 --> 00:08:00,560 Speaker 1: dial back on what we can look look forward to 144 00:08:00,560 --> 00:08:03,640 Speaker 1: this week and which of those big banks Shanali, I'm 145 00:08:03,680 --> 00:08:05,720 Speaker 1: going to ask you, we have JP Morgan Chase, City Group, 146 00:08:05,760 --> 00:08:08,520 Speaker 1: Wells Fargo, Bank of America. Which ones do you think 147 00:08:08,560 --> 00:08:11,200 Speaker 1: are going to have the results that Wall Street is 148 00:08:11,200 --> 00:08:11,640 Speaker 1: looking for? 149 00:08:11,720 --> 00:08:13,120 Speaker 7: Now? You have to remember that a lot of these 150 00:08:13,160 --> 00:08:16,360 Speaker 7: banks really either sold off or had very weak performance 151 00:08:16,400 --> 00:08:18,800 Speaker 7: last year, except for JP Morgan, which rose more than 152 00:08:18,800 --> 00:08:21,640 Speaker 7: the pack and actually hit a new record high early 153 00:08:21,720 --> 00:08:24,400 Speaker 7: this year in its stock price. But you'd think about 154 00:08:24,400 --> 00:08:27,360 Speaker 7: Goldman for example, and Goldman's analyst that covers the banking 155 00:08:27,360 --> 00:08:30,560 Speaker 7: sector has recently said that JP Morgan and Wells Fargo 156 00:08:30,800 --> 00:08:34,000 Speaker 7: could see more higher could even higher net interest income 157 00:08:34,080 --> 00:08:36,680 Speaker 7: like we've been talking about. It's two of their big 158 00:08:36,720 --> 00:08:41,200 Speaker 7: picks we know. Wells Fargo's Mike Mayo has also pointed 159 00:08:41,240 --> 00:08:43,640 Speaker 7: out that City Group has a lot of growth potential. 160 00:08:43,880 --> 00:08:46,280 Speaker 7: There's a lot of divergence here, but what we've seen 161 00:08:46,440 --> 00:08:48,520 Speaker 7: in the trends is that the bigger get bigger. What's 162 00:08:48,520 --> 00:08:51,960 Speaker 7: going to get interesting after the biggest banks report is 163 00:08:52,160 --> 00:08:55,040 Speaker 7: the regional banks, and the week after also is the 164 00:08:55,320 --> 00:08:58,880 Speaker 7: big investment banks. You were talking about the weak deal volumes, 165 00:08:59,080 --> 00:09:02,319 Speaker 7: right stinct thing here is in the third the fourth 166 00:09:02,360 --> 00:09:05,160 Speaker 7: quarter of last year, you saw deal volumes jump by 167 00:09:05,200 --> 00:09:07,840 Speaker 7: one hundred and sixty billion dollars just from the third 168 00:09:07,880 --> 00:09:09,200 Speaker 7: to the fourth quarter after. 169 00:09:09,000 --> 00:09:10,599 Speaker 1: Being stagnant all year pretty. 170 00:09:10,360 --> 00:09:12,720 Speaker 7: Much, it's been the worst year in a decade for deals. 171 00:09:12,800 --> 00:09:14,640 Speaker 7: And so what happens is the bankers get paid when 172 00:09:14,640 --> 00:09:18,320 Speaker 7: those deals close, not upon announcement typically, So those deals 173 00:09:18,320 --> 00:09:22,000 Speaker 7: that are announced lead to fees tomorrow. And so those 174 00:09:22,080 --> 00:09:25,559 Speaker 7: banks Morgan Stanley, Goldman, Sachs and JP Morgan, which can 175 00:09:25,600 --> 00:09:29,400 Speaker 7: start to also see those deal fees start to impact 176 00:09:29,440 --> 00:09:32,400 Speaker 7: their bottom line, they could become very interesting this year 177 00:09:32,760 --> 00:09:36,760 Speaker 7: if their predictions come true and they finally see deals 178 00:09:36,800 --> 00:09:38,720 Speaker 7: pick up like they've been expecting for so long. 179 00:09:39,160 --> 00:09:40,599 Speaker 1: Alison, the final word. 180 00:09:40,440 --> 00:09:43,760 Speaker 6: I would say that on Friday, well, we'll see JP 181 00:09:43,840 --> 00:09:48,160 Speaker 6: Morgan and Bank of America continuing to execute despite some 182 00:09:48,240 --> 00:09:52,280 Speaker 6: challenges in the environment. Wells Fargo and City Group are 183 00:09:52,960 --> 00:09:56,559 Speaker 6: more longer term stories where they're restructuring, and I think 184 00:09:56,600 --> 00:09:58,640 Speaker 6: investors are going to want to hear from, you know, 185 00:09:58,720 --> 00:10:00,960 Speaker 6: City Groups sort of where they are are in the 186 00:10:01,000 --> 00:10:04,360 Speaker 6: path of that restructuring somewhere. Wells Fargo, what is going 187 00:10:04,400 --> 00:10:07,720 Speaker 6: to be the outlook for costs, Are we getting closer 188 00:10:07,920 --> 00:10:12,199 Speaker 6: any kind of news related to some of their regulatory challenges. 189 00:10:12,640 --> 00:10:16,440 Speaker 6: We'll also be looking for any big legal costs, because 190 00:10:16,480 --> 00:10:19,080 Speaker 6: we do tend to get those kitchen thinks for some 191 00:10:19,160 --> 00:10:22,400 Speaker 6: of the banks in the quarter. But again it is 192 00:10:22,480 --> 00:10:25,839 Speaker 6: all about the expectations and what is in the stock. 193 00:10:26,000 --> 00:10:30,000 Speaker 6: JP Morgan is likely to generate the highest return we expect, 194 00:10:30,760 --> 00:10:31,840 Speaker 6: but that's no secret. 195 00:10:32,280 --> 00:10:34,599 Speaker 1: Well, a lot to look forward to our thanks to 196 00:10:34,600 --> 00:10:38,920 Speaker 1: Bloomberg Intelligence Senior Analyst Alison Williams and Bloomberg Global Finance 197 00:10:38,920 --> 00:10:42,760 Speaker 1: Correspondent Shanali Bossic, and coming up on Bloomberg day Break weekend, 198 00:10:42,760 --> 00:10:44,679 Speaker 1: we take you to London and a look ahead to 199 00:10:44,760 --> 00:10:48,199 Speaker 1: a busy week on the economic calendar. I'm Tom Busby 200 00:10:48,320 --> 00:10:54,840 Speaker 1: and bloom This is Bloomberg day Break Weekend, our global 201 00:10:54,840 --> 00:10:56,960 Speaker 1: look ahead at the top stories for investors in the 202 00:10:56,960 --> 00:11:00,679 Speaker 1: coming week. I'm Tom Busby in New York. Hey's economic 203 00:11:00,720 --> 00:11:03,760 Speaker 1: trajectory back in focus in the coming days as a 204 00:11:03,760 --> 00:11:06,680 Speaker 1: batch of data will help tell us whether Britain could 205 00:11:06,800 --> 00:11:10,720 Speaker 1: avoid a recession. A recent survey of company executives highlighted 206 00:11:10,720 --> 00:11:15,240 Speaker 1: their pessimism about the outlook, despite encouraging science from some quarters. 207 00:11:15,280 --> 00:11:17,240 Speaker 1: Now for more, let's go to London and bring in 208 00:11:17,240 --> 00:11:19,600 Speaker 1: Bloomberg Daybreak. Europanker Stephen Carroll. 209 00:11:20,040 --> 00:11:23,600 Speaker 2: Tom, it's twenty twenty four and we're still asking questions 210 00:11:23,600 --> 00:11:26,280 Speaker 2: about whether or not the UK will fall into recession, 211 00:11:26,400 --> 00:11:29,120 Speaker 2: when it might happen, and how bad it could be. 212 00:11:29,240 --> 00:11:31,559 Speaker 2: We'll get an update on the monthly GDP numbers in 213 00:11:31,600 --> 00:11:33,520 Speaker 2: the coming days. It'll give us some more clues, along 214 00:11:33,559 --> 00:11:36,480 Speaker 2: with other indicators we're watching too. There have been some 215 00:11:36,640 --> 00:11:40,200 Speaker 2: positive signals, the latest Composite PMI survey showing an uptake 216 00:11:40,240 --> 00:11:42,440 Speaker 2: and activity to a reading a fifty two point one 217 00:11:42,559 --> 00:11:46,040 Speaker 2: in December. Thinking more long term, a recent forecast from 218 00:11:46,080 --> 00:11:49,080 Speaker 2: the Center for Economics and Business Research predicted the UK's 219 00:11:49,080 --> 00:11:51,880 Speaker 2: growth trajectory over the next decade or so will help 220 00:11:51,920 --> 00:11:55,120 Speaker 2: it retain its position as the world's sixth largest economy. 221 00:11:55,400 --> 00:11:57,920 Speaker 2: There's gloom in other quarters, though. The Institute of Directors 222 00:11:58,000 --> 00:12:01,320 Speaker 2: Economic Confidence survey fell into too close to its lowest 223 00:12:01,559 --> 00:12:04,080 Speaker 2: point in the year. So are we hurtling towards a 224 00:12:04,080 --> 00:12:06,880 Speaker 2: recession or is growth getting back on track? To discuss, 225 00:12:06,920 --> 00:12:09,280 Speaker 2: we've got our UK Economy reporter Tom Reese, and for 226 00:12:09,320 --> 00:12:11,000 Speaker 2: a look at how the consumer is faring, our UK 227 00:12:11,120 --> 00:12:13,920 Speaker 2: retail reporter Katie Lindsell. Tom, I'd like to start with 228 00:12:14,000 --> 00:12:16,480 Speaker 2: you were due to receive some economic date in the 229 00:12:16,480 --> 00:12:19,360 Speaker 2: coming days, including figures on UK manufacturing and the monthly 230 00:12:19,400 --> 00:12:21,959 Speaker 2: GDP figures. I mentioned what might they tell. 231 00:12:21,840 --> 00:12:25,240 Speaker 9: Us, So while it's quite hard to read signals from 232 00:12:25,240 --> 00:12:29,120 Speaker 9: one month's data, November's GDP figures could be a bit 233 00:12:29,160 --> 00:12:32,360 Speaker 9: more significant than the usually just because it may show 234 00:12:32,440 --> 00:12:37,160 Speaker 9: that the UK was on track for technical recession in 235 00:12:37,200 --> 00:12:40,959 Speaker 9: the second half of last year. We had some revised 236 00:12:41,000 --> 00:12:44,640 Speaker 9: data from just before Christmas that show GDP contracted zero 237 00:12:44,640 --> 00:12:48,560 Speaker 9: point one percent in the third quarter, and then that 238 00:12:48,679 --> 00:12:51,160 Speaker 9: was followed by a zero point three percent falling GDP 239 00:12:51,240 --> 00:12:54,400 Speaker 9: in October, so that that leaves some catching up to 240 00:12:54,400 --> 00:12:56,319 Speaker 9: do in November December if we're going to avoid a 241 00:12:56,360 --> 00:13:00,559 Speaker 9: technical recession I two straight quarters of fall output. I 242 00:13:00,760 --> 00:13:03,160 Speaker 9: think the main thing to take away from the second 243 00:13:03,160 --> 00:13:06,240 Speaker 9: half of last year it was a real diverging picture 244 00:13:07,040 --> 00:13:09,800 Speaker 9: between the sectors. You know, we have services that have 245 00:13:09,880 --> 00:13:13,600 Speaker 9: been relatively resilient despite you know the extreme pressure on 246 00:13:14,160 --> 00:13:16,480 Speaker 9: consumers from the cost of living crisis and you know, 247 00:13:16,559 --> 00:13:20,719 Speaker 9: higher mortgage paints to everything, but the manufacturing sector is struggling. 248 00:13:21,559 --> 00:13:24,160 Speaker 9: We've seen that in the survey data, seen lower demand 249 00:13:24,160 --> 00:13:27,600 Speaker 9: from overseas and domestically, factories are feeling, you know, the 250 00:13:27,640 --> 00:13:31,000 Speaker 9: pain from higher interest rates and they're starting to cut 251 00:13:31,080 --> 00:13:33,720 Speaker 9: employment and so it's it's it's quite it's quite a 252 00:13:33,720 --> 00:13:37,720 Speaker 9: complicated picture, but it's all it all looks quite stagnant 253 00:13:37,760 --> 00:13:40,880 Speaker 9: from from from the second half of you. 254 00:13:41,240 --> 00:13:42,880 Speaker 2: Yeah, and as you say, it's it's that question of 255 00:13:43,200 --> 00:13:45,880 Speaker 2: where we are in that last quarter GDPs and we 256 00:13:45,880 --> 00:13:47,880 Speaker 2: get the monthly figures just giving us a piece of 257 00:13:47,920 --> 00:13:50,679 Speaker 2: that picture and whether or not that we will have 258 00:13:50,800 --> 00:13:53,800 Speaker 2: for those two quarters of negative growth. Katie. I wanted 259 00:13:53,800 --> 00:13:55,079 Speaker 2: to bring you in here because one of the figures 260 00:13:55,080 --> 00:13:56,480 Speaker 2: we're going to be getting is one of the retail 261 00:13:56,480 --> 00:13:59,600 Speaker 2: sales measures and the British Retail Consortium. This is going 262 00:13:59,640 --> 00:14:02,640 Speaker 2: to for a period which is very important for retailers, 263 00:14:02,640 --> 00:14:05,040 Speaker 2: towards the end of the year, that pre Christmas shopping period. 264 00:14:05,040 --> 00:14:06,320 Speaker 2: What are you expecting? 265 00:14:06,480 --> 00:14:09,840 Speaker 10: Absolutely, you're right, I mean that Christmas period is so important, 266 00:14:09,920 --> 00:14:12,680 Speaker 10: so crucial for many retailers. If we look at the 267 00:14:12,679 --> 00:14:15,720 Speaker 10: figures that we saw in November from the British Retail Consortium, 268 00:14:15,960 --> 00:14:18,480 Speaker 10: they were actually quite weak. They did show growth, but 269 00:14:18,559 --> 00:14:22,400 Speaker 10: much weaker growth compared to a year earlier. So what 270 00:14:22,440 --> 00:14:24,800 Speaker 10: we have to be hoping is that many consumers pushed 271 00:14:24,800 --> 00:14:28,360 Speaker 10: their Christmas spend into December rather than relying on that 272 00:14:28,400 --> 00:14:32,920 Speaker 10: earlier November shopping period. But I think it's really yet 273 00:14:32,960 --> 00:14:36,160 Speaker 10: to be seen. From what we hear so far, online 274 00:14:36,280 --> 00:14:39,560 Speaker 10: has had a better performance the Christmas just gone compared 275 00:14:39,600 --> 00:14:43,440 Speaker 10: to twenty twenty two. Many shoppers were put off by 276 00:14:43,640 --> 00:14:47,400 Speaker 10: career delays and postal strikes in that earlier Christmas season, 277 00:14:47,920 --> 00:14:50,160 Speaker 10: which meant they visited more stores to be sure they 278 00:14:50,200 --> 00:14:52,560 Speaker 10: could get hold of items. I think online will have 279 00:14:52,600 --> 00:14:56,080 Speaker 10: had a much better time in Christmas twenty three, but 280 00:14:56,160 --> 00:14:59,760 Speaker 10: really it's still it's still to be seen how this goes. 281 00:15:00,080 --> 00:15:02,360 Speaker 10: From what we've seen from retailers, it's a mixed bag, 282 00:15:02,480 --> 00:15:05,440 Speaker 10: you know, some performing better than the Christmas before, others 283 00:15:05,480 --> 00:15:07,960 Speaker 10: having a bit of a difficult time, So it's still 284 00:15:07,960 --> 00:15:09,000 Speaker 10: to be seen how it will go. 285 00:15:09,440 --> 00:15:11,480 Speaker 2: Yeah, Katie, I'm always very interested to see when we 286 00:15:11,520 --> 00:15:14,320 Speaker 2: get the split from grocers on this, because I mean 287 00:15:14,320 --> 00:15:17,960 Speaker 2: grocers are very competitive. Marcus in the UK and seeing 288 00:15:18,000 --> 00:15:21,120 Speaker 2: the discounters coming out and talking about having their best 289 00:15:21,240 --> 00:15:23,440 Speaker 2: Christmas as ever, is that something that we've heard from 290 00:15:23,440 --> 00:15:26,320 Speaker 2: many retailers In what we've heard so far from them 291 00:15:26,320 --> 00:15:27,640 Speaker 2: about their pre Christmas period. 292 00:15:27,880 --> 00:15:28,080 Speaker 6: Yeah. 293 00:15:28,080 --> 00:15:30,440 Speaker 10: Absolutely. So as you say, we've had Aldi and Liddle 294 00:15:30,520 --> 00:15:32,440 Speaker 10: come out very quickly in the new year saying they 295 00:15:32,480 --> 00:15:37,040 Speaker 10: had record Christmas sales, and Cantar, which actually tracks sales 296 00:15:37,040 --> 00:15:40,440 Speaker 10: figures across supermarkets, so that there was a record thirteen 297 00:15:40,480 --> 00:15:43,760 Speaker 10: point seven billion pounds spent in the run up to Christmas. 298 00:15:44,120 --> 00:15:46,920 Speaker 10: I think it's fair to say that most supermarkets did well. 299 00:15:47,640 --> 00:15:51,479 Speaker 10: We're going to be getting both Sainsbury and Tesco reporting 300 00:15:52,080 --> 00:15:55,440 Speaker 10: next week and I think both those have probably done 301 00:15:55,480 --> 00:15:59,000 Speaker 10: pretty well over that Christmas season. I mean, food inflation 302 00:15:59,160 --> 00:16:03,320 Speaker 10: has come down a bit, it's still at nearly seven percent, 303 00:16:04,520 --> 00:16:07,640 Speaker 10: so I think that that the higher prices do have 304 00:16:07,680 --> 00:16:10,160 Speaker 10: a role to play in these big, chunky sales figures 305 00:16:10,160 --> 00:16:13,840 Speaker 10: we're seeing. But at the same time, hopefully shoppers are 306 00:16:13,840 --> 00:16:16,040 Speaker 10: feeling more encouraged to spend all food than they did, 307 00:16:16,080 --> 00:16:19,240 Speaker 10: say a year ago. So yeah, supermarkets have been a 308 00:16:19,360 --> 00:16:23,359 Speaker 10: very very comfortable part of retail these past few weeks. 309 00:16:23,760 --> 00:16:26,240 Speaker 2: Tom and we think to looking back at the data 310 00:16:26,280 --> 00:16:28,760 Speaker 2: we have already and thinking about where the trajectory we're 311 00:16:28,840 --> 00:16:29,200 Speaker 2: going in. 312 00:16:29,280 --> 00:16:30,880 Speaker 1: Yet, it feels like we've. 313 00:16:30,720 --> 00:16:33,320 Speaker 2: Been hearing about warnings of a recession in the UK 314 00:16:33,520 --> 00:16:35,720 Speaker 2: for I mean at least a year now at this day, 315 00:16:36,000 --> 00:16:38,600 Speaker 2: Let's be honest, are we overdue a recession here? 316 00:16:39,320 --> 00:16:41,000 Speaker 9: It has felt like we've been on the brink of 317 00:16:41,080 --> 00:16:45,360 Speaker 9: recession basically since that post lockdown Surgeon GDP wharf and 318 00:16:45,440 --> 00:16:48,320 Speaker 9: the cost of living crisis began. But I mean, this 319 00:16:48,440 --> 00:16:52,200 Speaker 9: economy has shown incredible ability to muddle through, to be 320 00:16:52,240 --> 00:16:56,720 Speaker 9: stagnant but resilient against some pretty massive headwinds and double 321 00:16:56,760 --> 00:17:00,400 Speaker 9: digit inflation and the Surgeon interest rates you said that 322 00:17:00,480 --> 00:17:02,840 Speaker 9: date we got just before Christmas. It did show that 323 00:17:02,880 --> 00:17:06,040 Speaker 9: we may have suffered a technical recession, but I mean, 324 00:17:06,359 --> 00:17:09,200 Speaker 9: the difference between the technical recession and very slight growth 325 00:17:09,240 --> 00:17:11,359 Speaker 9: at the moment is pretty tiny. But it also showed, 326 00:17:11,400 --> 00:17:13,920 Speaker 9: and I think this is crucial for the outlook, it 327 00:17:14,000 --> 00:17:16,399 Speaker 9: showed that inflation came down a lot more than the 328 00:17:16,440 --> 00:17:19,560 Speaker 9: Bank of England was expecting, down to below four percent. 329 00:17:19,600 --> 00:17:21,840 Speaker 9: And I think for the outlook that is the key 330 00:17:21,880 --> 00:17:24,760 Speaker 9: really because that not only affects you know, you know, 331 00:17:24,880 --> 00:17:28,040 Speaker 9: real wages for consumers, but also what we might see 332 00:17:28,040 --> 00:17:29,159 Speaker 9: on interest rates. 333 00:17:29,280 --> 00:17:31,680 Speaker 2: Yeah, and of course the fact that we had the 334 00:17:31,760 --> 00:17:34,080 Speaker 2: run of fourteenth strake hights in the Bank of England 335 00:17:34,440 --> 00:17:36,960 Speaker 2: still feeling acrourse the effects of that feeding into the market, 336 00:17:37,000 --> 00:17:39,119 Speaker 2: partly due to the way that the mortgage market structured. Here, 337 00:17:39,240 --> 00:17:41,600 Speaker 2: not everyone has actually had the interest rate increase, although 338 00:17:41,880 --> 00:17:45,480 Speaker 2: we're getting closer to that position now. What should we 339 00:17:45,520 --> 00:17:47,720 Speaker 2: be thinking about when it comes to where the Bank 340 00:17:47,720 --> 00:17:50,520 Speaker 2: of England goes from here? Of course, speculation abound about 341 00:17:50,760 --> 00:17:53,239 Speaker 2: central banks around the world and when they're going to 342 00:17:53,280 --> 00:17:56,840 Speaker 2: cut interest rates. What sort of scenario is the Bank 343 00:17:56,840 --> 00:17:59,520 Speaker 2: of England facing when we look into twenty twenty four. 344 00:18:00,040 --> 00:18:04,920 Speaker 9: Stressing because after that inflation print just before Christmas that 345 00:18:05,440 --> 00:18:09,360 Speaker 9: showed inflation coming down much faster than we expecting. Obviously, 346 00:18:09,400 --> 00:18:12,719 Speaker 9: markets took that as the green light for early interest 347 00:18:12,760 --> 00:18:15,159 Speaker 9: rate cuts and they're are currently they're pricing in the 348 00:18:15,200 --> 00:18:18,679 Speaker 9: first cut from May and then a further four or 349 00:18:18,720 --> 00:18:22,760 Speaker 9: five after that over the by the end of the year. 350 00:18:23,320 --> 00:18:25,479 Speaker 9: But the Bank of England, you know, it had its 351 00:18:25,560 --> 00:18:29,280 Speaker 9: latest policy meeting just after that those inflation figures and 352 00:18:29,480 --> 00:18:32,920 Speaker 9: it was it was still holding this high for longer message. 353 00:18:32,920 --> 00:18:35,320 Speaker 9: It's still trying to tell markets that you know, don't 354 00:18:35,359 --> 00:18:38,080 Speaker 9: expect us to pivot to cuts anytime soon, which was 355 00:18:38,200 --> 00:18:41,120 Speaker 9: quite in quite sharp contrast with what we're hearing from 356 00:18:41,200 --> 00:18:45,639 Speaker 9: the Fed around that time as well. So although you 357 00:18:45,680 --> 00:18:48,440 Speaker 9: know the Bank of England's trying to you know, ward 358 00:18:48,480 --> 00:18:51,480 Speaker 9: off markets and tell them to you know that they're 359 00:18:51,480 --> 00:18:53,840 Speaker 9: going to hold path for quite quite some time, that 360 00:18:54,040 --> 00:18:56,040 Speaker 9: markets are running away with it now, and that they 361 00:18:56,080 --> 00:18:59,480 Speaker 9: are expecting cuts to come sometime in the first half 362 00:18:59,520 --> 00:18:59,960 Speaker 9: of this year. 363 00:19:00,320 --> 00:19:02,119 Speaker 2: Yeah, I'm just looking at the market pricing for that 364 00:19:02,160 --> 00:19:04,240 Speaker 2: as well. Market's currently pricing in a first rate cut 365 00:19:04,240 --> 00:19:07,280 Speaker 2: from the Bank of England in around May of this year, 366 00:19:07,320 --> 00:19:09,679 Speaker 2: and around one hundred and just over one hundred and 367 00:19:09,680 --> 00:19:12,280 Speaker 2: thirty five basis points of cuts by the end of 368 00:19:12,320 --> 00:19:14,320 Speaker 2: twenty twenty four as well. So it's certainly a very 369 00:19:14,320 --> 00:19:17,280 Speaker 2: interesting year for the Bank of England. Okay, Katie Linsel, 370 00:19:17,320 --> 00:19:20,639 Speaker 2: our UK Retail reporter and our UK Economy reporter, Tom Reese, 371 00:19:20,640 --> 00:19:22,480 Speaker 2: thank you so much for joining us and giving us 372 00:19:22,520 --> 00:19:24,600 Speaker 2: your analysis on that subject. We will of course have 373 00:19:24,680 --> 00:19:28,280 Speaker 2: coverage of those GDP and other economic indicators on the 374 00:19:28,320 --> 00:19:31,359 Speaker 2: program in the coming days. I'm Stephen Carroll in London. 375 00:19:31,400 --> 00:19:34,720 Speaker 2: You can catch us every weekday morning here for Bloomberg Daybreak. 376 00:19:34,760 --> 00:19:37,200 Speaker 2: You're at beginning at six am in London and one 377 00:19:37,240 --> 00:19:39,160 Speaker 2: am on Wall Street, Tom. 378 00:19:39,200 --> 00:19:41,919 Speaker 1: Our thanks to Bloomberg Daybreak. You're a banker, Stephen Carroll, 379 00:19:42,040 --> 00:19:44,360 Speaker 1: And coming up on Bloomberg day Break weekend, we head 380 00:19:44,359 --> 00:19:48,320 Speaker 1: to Asia and preview a key presidential election in Taiwan. 381 00:19:48,960 --> 00:20:02,359 Speaker 1: I'm Tom Busby, and this is Bloomberg. I'm Tom Busby 382 00:20:02,359 --> 00:20:04,040 Speaker 1: in New York with your global look ahead at the 383 00:20:04,040 --> 00:20:07,720 Speaker 1: top stories for investors in the coming week. Taiwan's presidential 384 00:20:07,760 --> 00:20:11,320 Speaker 1: election is set for January thirteenth, and the results will 385 00:20:11,320 --> 00:20:13,879 Speaker 1: help shape the course of US China relations for years 386 00:20:13,920 --> 00:20:18,639 Speaker 1: to come. Bloomberg Daybreak Asia anchor Doug Krisner looks ahead Tom. 387 00:20:18,640 --> 00:20:21,879 Speaker 3: The election is a competitive three way race, and the 388 00:20:22,000 --> 00:20:26,080 Speaker 3: ruling Democratic Progressive Party is seeking to maintain Taiwan's de 389 00:20:26,200 --> 00:20:29,840 Speaker 3: facto political independence. Now to help us set up the contest, 390 00:20:29,880 --> 00:20:34,800 Speaker 3: we have Bloomberg Samson. Elyssy is our Taipei bureau chief. Samson, 391 00:20:35,200 --> 00:20:37,240 Speaker 3: thank you for being with us. As I mentioned, it's 392 00:20:37,240 --> 00:20:39,960 Speaker 3: a three way race. Can you quickly kind of help 393 00:20:40,040 --> 00:20:44,240 Speaker 3: sketch out who the candidates are, what their perspective parties 394 00:20:44,320 --> 00:20:47,639 Speaker 3: stand for, particularly in relation to the government in Beijing. 395 00:20:47,800 --> 00:20:51,840 Speaker 11: Well, first of all, you have the current Vice President Laichinda. 396 00:20:52,359 --> 00:20:55,400 Speaker 11: So he is the candidate for the as you said, 397 00:20:55,480 --> 00:20:58,560 Speaker 11: the Democratic Progressive Party the DPP. So this is a 398 00:20:58,560 --> 00:21:03,320 Speaker 11: party that holds as one of its foundational tenets that 399 00:21:03,920 --> 00:21:08,640 Speaker 11: Taiwan is a sovereign, independent nation. The only problem is 400 00:21:08,640 --> 00:21:11,119 Speaker 11: is that it's not widely recognized by the rest of 401 00:21:11,160 --> 00:21:15,920 Speaker 11: the world. So they are pushing for a permanent separate 402 00:21:16,000 --> 00:21:21,160 Speaker 11: status for Taiwan, separate from China. Obviously, So right now 403 00:21:21,160 --> 00:21:24,720 Speaker 11: he's the current vice president and he is looking to 404 00:21:24,760 --> 00:21:30,200 Speaker 11: succeed his current boss president signing one then running against him. 405 00:21:30,400 --> 00:21:33,840 Speaker 11: You have the largest opposition party in Taiwan, the gormin 406 00:21:33,880 --> 00:21:37,600 Speaker 11: dang or the KMT, and this is a party that 407 00:21:38,160 --> 00:21:43,199 Speaker 11: holds that Taiwan is actually a part of a China 408 00:21:43,320 --> 00:21:46,119 Speaker 11: of slightly more vaguely defined China, not necessarily the People's 409 00:21:46,160 --> 00:21:49,760 Speaker 11: Republic of China, but a some kind of China, and 410 00:21:49,800 --> 00:21:54,920 Speaker 11: that Taiwan's eventual future lies with China and in some 411 00:21:55,000 --> 00:21:59,679 Speaker 11: form of unification with the mainland. And their candidate is 412 00:22:00,160 --> 00:22:04,720 Speaker 11: former policeman, Taiwan's former top policeman Ho Yoi, who is 413 00:22:04,800 --> 00:22:08,040 Speaker 11: running against Lie. And then this year, which makes this 414 00:22:08,160 --> 00:22:14,040 Speaker 11: election slightly unique, as you have a third competitive candidate, 415 00:22:14,320 --> 00:22:19,680 Speaker 11: and this is a Kerwanza from the new relatively young 416 00:22:20,040 --> 00:22:24,360 Speaker 11: at Taiwan's People's Party. So Kerr is something of a 417 00:22:24,520 --> 00:22:27,840 Speaker 11: left field candidate, a very non traditional politician. So he 418 00:22:27,960 --> 00:22:31,680 Speaker 11: was a surgeon in one of Taiwan's top hospitals for 419 00:22:31,720 --> 00:22:35,119 Speaker 11: a long time until one day he decided that he 420 00:22:35,119 --> 00:22:37,480 Speaker 11: couldn't stand the state of politics in Taiwan and ran 421 00:22:37,520 --> 00:22:40,840 Speaker 11: for mayor of Taipei as an independent and surprisingly won 422 00:22:41,800 --> 00:22:44,919 Speaker 11: around ten years ago. He was then a mayor for 423 00:22:44,960 --> 00:22:48,440 Speaker 11: eight years, and then after he stepped down, he set 424 00:22:48,520 --> 00:22:51,000 Speaker 11: up his own party and since then he's been teasing 425 00:22:51,080 --> 00:22:52,919 Speaker 11: that he could run for president, and this year he 426 00:22:52,960 --> 00:22:57,080 Speaker 11: actually did it, and so he has proved to be 427 00:22:57,359 --> 00:23:01,480 Speaker 11: quite popular with voters who were are tired of the 428 00:23:01,560 --> 00:23:05,000 Speaker 11: duopoly of Taiwan politics, the traditional either the the DPP 429 00:23:05,200 --> 00:23:08,080 Speaker 11: or the KMT, and now a KA has given this 430 00:23:08,200 --> 00:23:09,800 Speaker 11: effective vote as something of an option. 431 00:23:10,040 --> 00:23:13,480 Speaker 3: Recently, we had a President chi with his New Year address, 432 00:23:13,560 --> 00:23:15,919 Speaker 3: and one of the things he reiterated was that China 433 00:23:15,960 --> 00:23:19,720 Speaker 3: will be surely unified, maybe a reference to the aim 434 00:23:19,800 --> 00:23:22,760 Speaker 3: here of eventually bringing Taiwan back under the control of 435 00:23:22,800 --> 00:23:26,119 Speaker 3: the mainland if forced by necessary, and I'm based on 436 00:23:26,160 --> 00:23:29,880 Speaker 3: what you just said, I'm imagining that the KMT candidate 437 00:23:29,960 --> 00:23:31,840 Speaker 3: would be Beijing's preferred choice. 438 00:23:32,080 --> 00:23:32,600 Speaker 1: Is that fair? 439 00:23:33,320 --> 00:23:38,960 Speaker 11: Yes? Absolutely so. They do share this one overarching goal 440 00:23:39,160 --> 00:23:45,720 Speaker 11: that eventually Taiwan should be formally unified as part of China. 441 00:23:45,840 --> 00:23:48,600 Speaker 11: What they do disagree on is what that China should be. 442 00:23:48,680 --> 00:23:52,560 Speaker 11: So obviously, from Sijinping's perspective, it's the People's Republic of China, 443 00:23:52,600 --> 00:23:55,879 Speaker 11: the China that we all know now. But for the 444 00:23:55,960 --> 00:23:59,080 Speaker 11: KMT in Taiwan, really important part of their history was 445 00:23:59,119 --> 00:24:02,960 Speaker 11: there fighting the Tiny Civil War against the Communist Party, 446 00:24:03,800 --> 00:24:07,040 Speaker 11: and so theoretically they many people in the party still 447 00:24:07,119 --> 00:24:09,719 Speaker 11: view the Chinese Communist Party as an enemy, and if 448 00:24:09,960 --> 00:24:12,400 Speaker 11: you meet them, you know, privately, they'll quite happily tell 449 00:24:12,440 --> 00:24:16,119 Speaker 11: you that, you know, the Communists in Beijing are still 450 00:24:16,160 --> 00:24:22,080 Speaker 11: their mortal enemy. But at least they do have one 451 00:24:22,080 --> 00:24:24,959 Speaker 11: thing in common is that they feel Taiwan would be 452 00:24:24,960 --> 00:24:26,960 Speaker 11: better off eventually being part of China. 453 00:24:27,520 --> 00:24:29,480 Speaker 3: I think the US probably is going to be watching 454 00:24:29,560 --> 00:24:31,800 Speaker 3: this race very closely. I think that's fair to say. 455 00:24:31,920 --> 00:24:33,920 Speaker 3: At the end of last year, near the end, I 456 00:24:33,960 --> 00:24:36,480 Speaker 3: think it was in November that presidents Biden and she 457 00:24:36,640 --> 00:24:39,000 Speaker 3: were at the APEX summit in San Francisco, and it 458 00:24:39,040 --> 00:24:42,399 Speaker 3: was then that she told Biden that the issue of 459 00:24:42,440 --> 00:24:45,240 Speaker 3: Taiwan was the most important and dangerous issue for the 460 00:24:45,359 --> 00:24:49,040 Speaker 3: US and China and their relationship. How do you think, 461 00:24:49,600 --> 00:24:52,359 Speaker 3: and I'm not asking you to speculate, but based on 462 00:24:52,400 --> 00:24:56,199 Speaker 3: what you know of US Taiwan relations, how might the 463 00:24:56,320 --> 00:24:59,879 Speaker 3: US kind of be watching this contest? And not that 464 00:25:00,080 --> 00:25:03,080 Speaker 3: it would put its finger on the scale in any way, 465 00:25:03,200 --> 00:25:05,480 Speaker 3: but is there something that the US would kind of 466 00:25:05,520 --> 00:25:08,760 Speaker 3: communicate to Beijing to make sure that there is no 467 00:25:09,080 --> 00:25:13,280 Speaker 3: interference or let's say, a reduction in the degree of 468 00:25:13,400 --> 00:25:16,320 Speaker 3: influence Beijing may like to have over these elections. 469 00:25:16,920 --> 00:25:19,000 Speaker 11: Well, there's no doubt that the US is watching this 470 00:25:19,040 --> 00:25:24,680 Speaker 11: election very very closely. Taiwan has become this pivotal point 471 00:25:24,760 --> 00:25:29,560 Speaker 11: in the geopolitical standoff between the United States and China, 472 00:25:29,600 --> 00:25:33,280 Speaker 11: and as Hujinping said there, as you mentioned, you know, 473 00:25:33,359 --> 00:25:36,440 Speaker 11: it is one of the most important issues in relations 474 00:25:36,440 --> 00:25:39,480 Speaker 11: between Washington and Beijing. And so one of the things 475 00:25:39,480 --> 00:25:43,680 Speaker 11: the US has repeatedly reiterated so that number one, they 476 00:25:43,720 --> 00:25:47,520 Speaker 11: have no preferred winner of the Taiwanese election. They've been 477 00:25:47,600 --> 00:25:51,240 Speaker 11: very clear that, you know, they respect the choice of 478 00:25:51,560 --> 00:25:56,440 Speaker 11: Taiwanese voters, and they have also urged other parties. I 479 00:25:56,520 --> 00:25:59,720 Speaker 11: think we can further largely talking to Beijing here. The 480 00:25:59,760 --> 00:26:01,919 Speaker 11: other parties should stay out of the race. They should 481 00:26:01,920 --> 00:26:05,280 Speaker 11: not meddle in this election. Beijing, for its part, it 482 00:26:05,280 --> 00:26:07,720 Speaker 11: has made it absolutely clear that they would prefer the 483 00:26:07,800 --> 00:26:11,560 Speaker 11: KMT candidate to win this election. To be honest, there's 484 00:26:11,560 --> 00:26:14,240 Speaker 11: a bit of a you know, who would the US 485 00:26:14,320 --> 00:26:18,639 Speaker 11: prefer to win? You hear different voices out of the 486 00:26:18,760 --> 00:26:21,359 Speaker 11: United States on this. On the one hand, if the 487 00:26:21,440 --> 00:26:24,440 Speaker 11: DPP stays in power, the US can be fairly sure 488 00:26:24,480 --> 00:26:28,200 Speaker 11: they have a reliable, steady partner who is on board 489 00:26:28,240 --> 00:26:33,200 Speaker 11: with the United States and their more broader regional goals 490 00:26:33,200 --> 00:26:36,880 Speaker 11: when it comes to standing up against China, and also 491 00:26:36,920 --> 00:26:40,359 Speaker 11: they have a more willing recipient for US arms sales. 492 00:26:41,480 --> 00:26:43,680 Speaker 11: But on the other hand, if the KMT were to win, 493 00:26:43,800 --> 00:26:46,640 Speaker 11: some in the US do point out that this could 494 00:26:47,119 --> 00:26:49,840 Speaker 11: take a little bit of the temperature out of the 495 00:26:50,800 --> 00:26:53,199 Speaker 11: cross rate relations in this part of the world and 496 00:26:53,240 --> 00:26:57,000 Speaker 11: therefore make US China relations a little bit easier. 497 00:26:57,160 --> 00:26:59,720 Speaker 3: Yeah, I understand the notion of supporting democracies from the 498 00:26:59,800 --> 00:27:02,399 Speaker 3: US side. But I'm understanding also that there is a 499 00:27:02,560 --> 00:27:05,360 Speaker 3: little bit of a national security concern if you consider 500 00:27:05,400 --> 00:27:10,160 Speaker 3: the fact that Taiwan is basically the leader in semiconductor production. 501 00:27:10,240 --> 00:27:13,720 Speaker 3: I'm thinking in particular of Taiwan semi. If that were 502 00:27:13,760 --> 00:27:16,760 Speaker 3: not the case, would the US stance be slightly different? 503 00:27:16,760 --> 00:27:17,240 Speaker 3: Do you think? 504 00:27:17,359 --> 00:27:19,320 Speaker 11: I think it's a question of degrees. I think there's 505 00:27:19,359 --> 00:27:23,879 Speaker 11: no doubt that the United States, as you said, supports 506 00:27:24,520 --> 00:27:27,159 Speaker 11: a fellow democracy, and it's a very bad look for 507 00:27:27,200 --> 00:27:32,399 Speaker 11: the United States if they're seen throwing a democracy to 508 00:27:32,440 --> 00:27:35,320 Speaker 11: the wolves in Asia, so to speak. And also, you know, 509 00:27:35,359 --> 00:27:37,320 Speaker 11: there is the Taiwan Relations Act in the United States. 510 00:27:37,359 --> 00:27:40,600 Speaker 11: You know, the US has committed itself to providing for 511 00:27:40,680 --> 00:27:44,040 Speaker 11: Taiwan's own self defense, and so there is a legal 512 00:27:44,119 --> 00:27:48,199 Speaker 11: basis for the US to continuing to support Taiwan. So 513 00:27:48,200 --> 00:27:51,000 Speaker 11: I don't think that would be something the US could 514 00:27:51,040 --> 00:27:55,359 Speaker 11: easily abandon. Plus, within the United States, I mean, you 515 00:27:55,400 --> 00:28:00,119 Speaker 11: look at Congress, there's an enormous amount of support on 516 00:28:00,160 --> 00:28:02,919 Speaker 11: both sides of the Aisle for Taiwan. There So, even 517 00:28:02,960 --> 00:28:07,760 Speaker 11: if the executive were to decide that supporting Taiwan is 518 00:28:07,760 --> 00:28:11,399 Speaker 11: no longer in America's best interests. I think they'd find 519 00:28:11,440 --> 00:28:16,840 Speaker 11: a lot of pushback from Congress on anything that would 520 00:28:17,080 --> 00:28:18,200 Speaker 11: disadvantage Taiwan. 521 00:28:18,520 --> 00:28:21,640 Speaker 3: It was January first, nineteen seventy nine. I believe that 522 00:28:21,800 --> 00:28:25,439 Speaker 3: Washington officially cut diplomatic ties with Taipei in favor of 523 00:28:25,480 --> 00:28:28,959 Speaker 3: recognizing Beijing. How well do you think the US has 524 00:28:29,000 --> 00:28:31,919 Speaker 3: been doing it? It kind of balancing the situation. 525 00:28:32,080 --> 00:28:38,520 Speaker 11: It's underappreciated exactly how successful the Taiwan's Relations Act and 526 00:28:39,160 --> 00:28:44,320 Speaker 11: strategic ambiguity has worked over the past forty plus years 527 00:28:44,320 --> 00:28:48,080 Speaker 11: forty five years now at maintaining the peace in this 528 00:28:48,160 --> 00:28:48,840 Speaker 11: part of the world. 529 00:28:48,880 --> 00:28:50,880 Speaker 3: Samson's so good of you to stop by and help 530 00:28:50,960 --> 00:28:54,600 Speaker 3: us set up the Taiwan presidential election that will happen 531 00:28:54,640 --> 00:28:58,520 Speaker 3: on January thirteenth. Samson Ellis is Bloomberg's Taipei bureau chief. 532 00:28:58,960 --> 00:29:01,280 Speaker 3: I'm Doug Krisner, and you can join Brian Curtis and 533 00:29:01,360 --> 00:29:04,320 Speaker 3: myself weekdays here for Bloomberg day Break Asia beginning at 534 00:29:04,360 --> 00:29:08,600 Speaker 3: seven am in Hong Kong six pm on Wall Street tom. 535 00:29:08,240 --> 00:29:10,920 Speaker 1: Our thanks to Bloomberg day Break Asia anchor Doug Krisner, 536 00:29:10,920 --> 00:29:13,640 Speaker 1: and coming up here on Bloomberg day Break Weekend, we 537 00:29:13,680 --> 00:29:16,440 Speaker 1: look ahead to the presidential election right here in the 538 00:29:16,520 --> 00:29:21,040 Speaker 1: US with Gallup editor in chief Mohammed Unics. Next, I'm 539 00:29:21,080 --> 00:29:27,520 Speaker 1: Tom Busby, and this is Bloomberg. This is Bloomberg day 540 00:29:27,560 --> 00:29:29,800 Speaker 1: Break weekend, our global look ahead at the top stories 541 00:29:29,800 --> 00:29:32,640 Speaker 1: for investors in the coming week. I'm Tom Busby in 542 00:29:32,680 --> 00:29:36,480 Speaker 1: New York. New polling from Gallup shows President Joe Biden 543 00:29:36,520 --> 00:29:39,800 Speaker 1: finishing twenty twenty three with a job approval rating of 544 00:29:40,000 --> 00:29:43,400 Speaker 1: just thirty nine percent. That's the lowest of recent presidents 545 00:29:43,720 --> 00:29:47,360 Speaker 1: at the same point in their presidency. Gallup Editor in 546 00:29:47,400 --> 00:29:50,680 Speaker 1: chief Mohammed Unis tells Bloomberg's Kaylee Lines and our Bloomberg 547 00:29:50,760 --> 00:29:53,840 Speaker 1: ninety nine one news from in Washington about trends to 548 00:29:53,960 --> 00:29:57,479 Speaker 1: follow heading into the twenty twenty four presidential election. 549 00:29:57,800 --> 00:30:01,040 Speaker 4: I'm not sure that President Biden is feeling particularly happy 550 00:30:01,080 --> 00:30:03,320 Speaker 4: as he comes into this new year, knowing he ended 551 00:30:03,400 --> 00:30:06,960 Speaker 4: last year twenty twenty three, according to Gallups figures, with 552 00:30:07,040 --> 00:30:09,960 Speaker 4: an approval rating of just thirty nine percent. Can you 553 00:30:10,000 --> 00:30:12,840 Speaker 4: give us some context around that number? It's quite low. 554 00:30:13,040 --> 00:30:16,520 Speaker 12: The real context is compared to every other president in 555 00:30:16,600 --> 00:30:20,640 Speaker 12: modern history who has sought reelection, he's far behind where 556 00:30:20,680 --> 00:30:24,160 Speaker 12: they were traditionally speaking what we've seen in our numbers 557 00:30:24,200 --> 00:30:27,480 Speaker 12: is that a president going into a reelection campaign at 558 00:30:27,520 --> 00:30:30,640 Speaker 12: that fifty point mark is a really critical number to 559 00:30:30,680 --> 00:30:34,400 Speaker 12: be at. And obviously President Biden is far behind that, 560 00:30:34,520 --> 00:30:38,160 Speaker 12: but he's also significantly behind where Barack Obama was and 561 00:30:38,200 --> 00:30:41,640 Speaker 12: where Donald Trump was, which is pretty important to note. 562 00:30:41,680 --> 00:30:44,120 Speaker 12: I think during the Trump campaign there was so much 563 00:30:44,160 --> 00:30:47,400 Speaker 12: focus on how low and steady the number stayed, and 564 00:30:47,560 --> 00:30:50,640 Speaker 12: President Biden right now is behind where President Trump was. 565 00:30:50,880 --> 00:30:54,000 Speaker 4: Well, and you talk about the number staying low and 566 00:30:54,040 --> 00:30:56,600 Speaker 4: being pretty steady, isn't that the case with Biden? I mean, 567 00:30:56,640 --> 00:30:58,800 Speaker 4: he's been in and around that kind of forty percent 568 00:30:58,840 --> 00:31:01,080 Speaker 4: figure or below for some time now, and it doesn't 569 00:31:01,080 --> 00:31:04,080 Speaker 4: seem like that that needle has moved to any real 570 00:31:04,120 --> 00:31:04,760 Speaker 4: degree at all. 571 00:31:04,920 --> 00:31:05,440 Speaker 1: It hasn't. 572 00:31:05,480 --> 00:31:08,240 Speaker 12: He started off like most presidents do in a honeymoon phase. 573 00:31:08,280 --> 00:31:10,680 Speaker 12: He has that fifty seven percent approval, which is pretty 574 00:31:10,920 --> 00:31:14,520 Speaker 12: high in our era. Another thing Kaylee, to always keep 575 00:31:14,520 --> 00:31:16,720 Speaker 12: in mind with these numbers specifically, is we are in 576 00:31:16,960 --> 00:31:21,240 Speaker 12: what it truly is a hyperpartisan era. So since President Obama, 577 00:31:21,720 --> 00:31:25,400 Speaker 12: the difference between people's views on the president and how 578 00:31:25,480 --> 00:31:29,480 Speaker 12: closely it's tied to their party ID is stronger than ever. 579 00:31:29,840 --> 00:31:34,200 Speaker 12: So presidents have had flatter sort of frequencies on their 580 00:31:34,200 --> 00:31:37,640 Speaker 12: approval ratings. But I think what's concerning about President Biden's 581 00:31:37,680 --> 00:31:40,880 Speaker 12: situation is that even compared to Obama and Trump, who 582 00:31:41,040 --> 00:31:44,560 Speaker 12: also face that reality, he's significantly behind. Right now. 583 00:31:44,680 --> 00:31:46,760 Speaker 4: Okay, well, let's talk about the options. I mentioned that 584 00:31:46,800 --> 00:31:50,120 Speaker 4: we're seeing in pretty consistently in polls that the majority 585 00:31:50,160 --> 00:31:52,160 Speaker 4: of voters would prefer it not to be a Biden 586 00:31:52,240 --> 00:31:55,320 Speaker 4: Trump rematched like twenty twenty all over again. And yet 587 00:31:55,320 --> 00:31:57,920 Speaker 4: that's likely what they're going to get unless there is 588 00:31:58,360 --> 00:32:00,640 Speaker 4: a viable alternative. What are you say seeing a round 589 00:32:00,680 --> 00:32:03,479 Speaker 4: support for a third party candidate, whoever that is? 590 00:32:03,680 --> 00:32:05,560 Speaker 12: Well, I can tell you who we see in terms 591 00:32:05,600 --> 00:32:07,600 Speaker 12: of favorables. Of all the folks that are out there 592 00:32:07,680 --> 00:32:10,680 Speaker 12: right now, President Biden and Trump are basically tied at 593 00:32:10,720 --> 00:32:12,960 Speaker 12: forty one percent of a favorable rating. And this is 594 00:32:12,960 --> 00:32:15,080 Speaker 12: do you have a favorable or unfavorable view of the 595 00:32:15,080 --> 00:32:19,200 Speaker 12: following person? Desantus Haley in specific Sarty are at their 596 00:32:19,240 --> 00:32:23,520 Speaker 12: thirty so really low thirty percent favorable rating. It's important 597 00:32:23,600 --> 00:32:26,160 Speaker 12: to note that this tends to happen with new names. 598 00:32:26,200 --> 00:32:29,440 Speaker 12: People don't know who they are. Kennedy, on the other hand, 599 00:32:29,480 --> 00:32:31,760 Speaker 12: is already breaking the fifty point mark, but that's probably 600 00:32:31,760 --> 00:32:35,080 Speaker 12: because of that name recognition factor that he has in 601 00:32:35,120 --> 00:32:38,440 Speaker 12: his favor. So looking at the favorable ratings, which is 602 00:32:38,480 --> 00:32:40,680 Speaker 12: really a really good proxy, I think at this point 603 00:32:40,760 --> 00:32:43,760 Speaker 12: of the contest to see who's graining traction with the public, 604 00:32:44,200 --> 00:32:46,800 Speaker 12: really none of them are. Nobody's really shot through the 605 00:32:46,920 --> 00:32:51,280 Speaker 12: roof and impressed or wowed. Of course, January fifteenth is 606 00:32:51,400 --> 00:32:55,000 Speaker 12: just down the street. A lot can change, particularly when 607 00:32:55,000 --> 00:32:57,440 Speaker 12: those first results start coming out from the caucuses, But 608 00:32:57,560 --> 00:32:59,160 Speaker 12: right now, nobody's dominating. 609 00:32:59,320 --> 00:33:01,280 Speaker 4: All right, we only have about a minute left, Muhammad, 610 00:33:01,320 --> 00:33:03,120 Speaker 4: But we've discussed we've covered a lot of ground here 611 00:33:03,120 --> 00:33:05,560 Speaker 4: in what twenty twenty four may bring, how people are feeling. 612 00:33:05,600 --> 00:33:08,800 Speaker 4: What is one other trend or something that you'll be 613 00:33:08,880 --> 00:33:10,280 Speaker 4: focusing on in twenty twenty four. 614 00:33:10,720 --> 00:33:12,960 Speaker 12: I think for us it'll be the election. It'll be 615 00:33:13,040 --> 00:33:17,840 Speaker 12: what people are really tuning into for making that decision 616 00:33:17,840 --> 00:33:20,480 Speaker 12: to cast their vote. One thing we really know right 617 00:33:20,480 --> 00:33:23,240 Speaker 12: now is most Americans are still totally checked out. They're 618 00:33:23,280 --> 00:33:26,360 Speaker 12: not focused on political news as unlike you and I 619 00:33:26,600 --> 00:33:28,760 Speaker 12: night and day. I know it hurts my feelings too, 620 00:33:29,200 --> 00:33:32,920 Speaker 12: but as it gets closer to November, that number is 621 00:33:32,960 --> 00:33:34,840 Speaker 12: going to rise, and we're going to start asking people 622 00:33:35,040 --> 00:33:37,320 Speaker 12: what do you bring into mind when you cast that vote. 623 00:33:37,440 --> 00:33:38,960 Speaker 4: It's a good point. I feel like we've been living 624 00:33:39,000 --> 00:33:41,520 Speaker 4: and breathing this for a year now, but really it's 625 00:33:41,560 --> 00:33:44,760 Speaker 4: still early days. Mohammed Unis joining us. Gallups editor in chief. 626 00:33:44,800 --> 00:33:47,200 Speaker 4: Thank you so much as always for being here. It's 627 00:33:47,240 --> 00:33:48,680 Speaker 4: going to be a doozy of the year, guys. 628 00:33:48,880 --> 00:33:51,400 Speaker 1: Thank you, Kaylee. That was Bloomberg sound On co host 629 00:33:51,480 --> 00:33:54,560 Speaker 1: Kaylee Lines reporting from our Bloomberg ninety nine one newsroom 630 00:33:54,560 --> 00:33:57,640 Speaker 1: in Washington, and you can hear sound on weekdays one 631 00:33:57,680 --> 00:34:00,440 Speaker 1: to three pm on Bloomberg Radio. And that does it 632 00:34:00,520 --> 00:34:02,840 Speaker 1: for this edition of Bloomberg day Break Weekend. Join us 633 00:34:02,840 --> 00:34:05,320 Speaker 1: again Monday morning, five am Wall Street Time for the 634 00:34:05,400 --> 00:34:08,319 Speaker 1: latest on markets overseas and the news you need to 635 00:34:08,320 --> 00:34:11,479 Speaker 1: start your day. I'm Tom Busby. Stay with us. Top 636 00:34:11,520 --> 00:34:14,640 Speaker 1: stories and global business headlines are coming up right now.