Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world, and straight ahead on the program,
Speaker 1: Bank earnings, Wall Street's top burn start reporting this week.
Speaker 1: I'm Tom Busby in New York and I'll have that story.
Speaker 2: I'm Stephen Caroll in London, where we're watching it closely
Speaker 2: for signs of whether or not the UK is in recession.
Speaker 3: I'm Doug Prisoner looking at Taiwan's presidential election, one that
Speaker 3: will help shape the course of US China relations for years.
Speaker 4: I'm Keebie Lines in Washington, where we're looking at pulling
Speaker 4: as election. You're twenty twenty four gets under well.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend. The business
Speaker 5: news you need to wrap up your week, Available on Apple, Spotify,
Speaker 5: the Bloomberg Business Appen everywhere you get your podcasts.
Speaker 1: Good day to you. I'm Tom Busby and we begin
Speaker 1: today's program with the kickoff of the latest earning season.
Speaker 1: Four of Wall Street's biggest banks report their latest quarterly
Speaker 1: results this week, wrapping up a year of some mid
Speaker 1: sized bank failures, rising interest rates, and a dearth of
Speaker 1: deal making. At least for most of the year, but
Speaker 1: we also saw the major averages sore higher, the Dow
Speaker 1: reaching an all time high in late December, and there
Speaker 1: was no real recession. For a preview, we welcome Bloomberg
Speaker 1: Intelligence Senior Analyst Alison Williams and Bloomberg Global Finance correspondent
Speaker 1: Shanali Basik. Now, all the action starts on Friday. We
Speaker 1: hear from JP Morgan, Chase, City Group, Wells Fargo, and
Speaker 1: Bank of America, and we're going to start today with Alison. Alison,
Speaker 1: what are you expecting to see from those major lenders.
Speaker 6: The two key things we're going to be looking at
Speaker 6: are net interest income and expenses. So in the fourth quarter,
Speaker 6: we're going to be looking for further evidence that the
Speaker 6: pressure on deposit pricing is easing a bit and those
Speaker 6: costs are easing a bit. And we think that the
Speaker 6: outlook for next year is going to factor in further
Speaker 6: moderation of that pressure. Just given the fact that the
Speaker 6: markets are pricing in an inflection point for federal reserve hikes.
Speaker 6: As those hikes turn to easing, the pressure for banks
Speaker 6: to raise those prices on deposits. Keep in mind that
Speaker 6: that's their cost of goods sold. That pressure eases, and
Speaker 6: so that will be a positive for the biggest banks.
Speaker 6: We think that JP Morgan's net interest income is going
Speaker 6: to be resilient. We think there could be some upside
Speaker 6: to those numbers. But the second thing that we're looking
Speaker 6: at is the cost guidance, and again JP Morgan will
Speaker 6: be a focus in particular because we get a lot
Speaker 6: of macro clues for all the banks during the quarter,
Speaker 6: but expense guidance always includes an element of investment spending.
Speaker 6: JP Morgan has one in the long term by making
Speaker 6: those investments, but if we look at the consensus forecasts,
Speaker 6: those investments are going to cause the bank to have
Speaker 6: negative operating leverage in twenty twenty four. We'll see what
Speaker 6: we hear from management in terms of what the outlook is.
Speaker 6: Because while there is investment spending, and we do think
Speaker 6: that banks need to invest for the future, there's also
Speaker 6: pressure and cost coming from inflation. There's also going to
Speaker 6: be pressure from what we call the cost to compete,
Speaker 6: and we think the compensation costs could be a little
Speaker 6: bit sticky across the global banks.
Speaker 7: Sonali, Yeah, there's definitely expenses, But to Allison's point, one
Speaker 7: big question is if interest rates start to cool, at
Speaker 7: what point does that not only flow into the notion
Speaker 7: of deposit pricing, but also loan demand. Does loan demand
Speaker 7: start to pick up if interest rates start to cool.
Speaker 7: Now what's interesting too is in recent months you've start
Speaker 7: to see different credit markets open up meaningfully, including leverage finance.
Speaker 7: So we're not just talking about lending for the consumer.
Speaker 7: We're even talking about risky parts of debt markets for
Speaker 7: big corporations, buyouts, things that could start to fuel activity again.
Speaker 7: So you will see a we all need to look
Speaker 7: at the outlook from these bankers because they have come
Speaker 7: in to the prior quarters with so much caution, and
Speaker 7: you really are seeing that caution starting to wane. Jamie Diamond,
Speaker 7: who has been warning that rates could move higher than
Speaker 7: expected for many many months, if he starts to change
Speaker 7: his tone there, it would be a massive bell weather
Speaker 7: for the rest of the industry. Whereas you already had
Speaker 7: James Gorman, who just stepped down as the CEO of
Speaker 7: Morgan Stanley. He had definitely been very sanguine in terms
Speaker 7: of the outlook for interest rates this year, and remember
Speaker 7: he was still leading Morgan Stanley through the end of
Speaker 7: the last quarter.
Speaker 1: Well, Shanali, you mentioned James Gorman. You had a one
Speaker 1: on one interview with him last week about his fourteen
Speaker 1: year tenure a CEO of Morgan Stanley. Now he is
Speaker 1: executive chairman. He also spoke about some proposed banking rules
Speaker 1: that would require the biggest lenders to increase to twenty
Speaker 1: percent their capital cushion. Now it's proposed, but let's hear
Speaker 1: a bite from that interview right now.
Speaker 8: It was a proposal that I would say was extremely
Speaker 8: aggressive and set a MARKA. It will not go through
Speaker 8: in that form. If it did, I think it would
Speaker 8: have very very negative consequences for corporate lending across this country,
Speaker 8: which is not what you want. It's not going to
Speaker 8: help the economy growth.
Speaker 7: Well, you've also spoken about the treasury market potential impacts
Speaker 7: from these regulations. We've already seen stresses of late in
Speaker 7: the treasury market. Do you have fears that those stresses
Speaker 7: will be exacerbated?
Speaker 8: I can't tell until I see the actual rules, but
Speaker 8: all I know is what was put out is highly
Speaker 8: highly highly unlikely to be what is ultimately regulated.
Speaker 1: Now, is he right, and what are those proposals and
Speaker 1: what would have to change.
Speaker 7: You saw James Gorman and many of his peers take
Speaker 7: to Washington, DC and address lawmakers about this fact. And
Speaker 7: what they were trying to do is get the lawmakers
Speaker 7: to put pressure on regulatory officials to start to rethink
Speaker 7: the strictness of these capital rules. They were warning that
Speaker 7: it would really restrict lending across different parts of the economy.
Speaker 7: I mean, it would restrict trading activities in certain key
Speaker 7: markets like commodities. It would increase the cost of hedging
Speaker 7: for many big players in commodity markets and farming markets.
Speaker 7: Rural America would be impacted, they warned. Now, what's interesting
Speaker 7: here is we know from a Wall Street perspective that
Speaker 7: those increase in capital rules would be very expensive for
Speaker 7: the banks, and for him to say they're likely to
Speaker 7: be less really starts to draw a question of how
Speaker 7: much these banks can start to recalibrate their expectations on
Speaker 7: how costly it would be, maybe less costly than investors
Speaker 7: initially expected. If James Gorman is right, Alison, what's your
Speaker 7: thoughts on that?
Speaker 6: So if you look at some of these regulations, you
Speaker 6: know two things. First of all, as you said, it
Speaker 6: does require relatively large increases in capital to be held
Speaker 6: across the largest banks, and actually Morgan, Stanley and Gold
Speaker 6: and Sachs are some of the hardest hit because two
Speaker 6: of the key you know, two of the key risk
Speaker 6: factors that the rule aims to address are market risk
Speaker 6: and operational risk. But if you analyze the rules, and
Speaker 6: again we've heard you know, perhaps Jamie Diamond has been
Speaker 6: one of the most vocal about some of the double
Speaker 6: counting of operational risk inherent in this proposal. If we
Speaker 6: look across some of the other regulations, such as the
Speaker 6: Stress capital Buffer, which already penalizes banks for this type
Speaker 6: of risk, and so there is sort of an element
Speaker 6: of double counting. Also, if we look at the rules
Speaker 6: versus some of the other jurisdictions, it does seem that
Speaker 6: there is a fair amount of gold plating, meaning that
Speaker 6: the rules do look a little bit tougher in the
Speaker 6: way that they've been implemented in the US versus jurisdictions
Speaker 6: such as the UK and Europe.
Speaker 1: Well, until we get to that, I want to just
Speaker 1: dial back on what we can look look forward to
Speaker 1: this week and which of those big banks Shanali, I'm
Speaker 1: going to ask you, we have JP Morgan Chase, City Group,
Speaker 1: Wells Fargo, Bank of America. Which ones do you think
Speaker 1: are going to have the results that Wall Street is
Speaker 1: looking for?
Speaker 7: Now? You have to remember that a lot of these
Speaker 7: banks really either sold off or had very weak performance
Speaker 7: last year, except for JP Morgan, which rose more than
Speaker 7: the pack and actually hit a new record high early
Speaker 7: this year in its stock price. But you'd think about
Speaker 7: Goldman for example, and Goldman's analyst that covers the banking
Speaker 7: sector has recently said that JP Morgan and Wells Fargo
Speaker 7: could see more higher could even higher net interest income
Speaker 7: like we've been talking about. It's two of their big
Speaker 7: picks we know. Wells Fargo's Mike Mayo has also pointed
Speaker 7: out that City Group has a lot of growth potential.
Speaker 7: There's a lot of divergence here, but what we've seen
Speaker 7: in the trends is that the bigger get bigger. What's
Speaker 7: going to get interesting after the biggest banks report is
Speaker 7: the regional banks, and the week after also is the
Speaker 7: big investment banks. You were talking about the weak deal volumes,
Speaker 7: right stinct thing here is in the third the fourth
Speaker 7: quarter of last year, you saw deal volumes jump by
Speaker 7: one hundred and sixty billion dollars just from the third
Speaker 7: to the fourth quarter after.
Speaker 1: Being stagnant all year pretty.
Speaker 7: Much, it's been the worst year in a decade for deals.
Speaker 7: And so what happens is the bankers get paid when
Speaker 7: those deals close, not upon announcement typically, So those deals
Speaker 7: that are announced lead to fees tomorrow. And so those
Speaker 7: banks Morgan Stanley, Goldman, Sachs and JP Morgan, which can
Speaker 7: start to also see those deal fees start to impact
Speaker 7: their bottom line, they could become very interesting this year
Speaker 7: if their predictions come true and they finally see deals
Speaker 7: pick up like they've been expecting for so long.
Speaker 1: Alison, the final word.
Speaker 6: I would say that on Friday, well, we'll see JP
Speaker 6: Morgan and Bank of America continuing to execute despite some
Speaker 6: challenges in the environment. Wells Fargo and City Group are
Speaker 6: more longer term stories where they're restructuring, and I think
Speaker 6: investors are going to want to hear from, you know,
Speaker 6: City Groups sort of where they are are in the
Speaker 6: path of that restructuring somewhere. Wells Fargo, what is going
Speaker 6: to be the outlook for costs, Are we getting closer
Speaker 6: any kind of news related to some of their regulatory challenges.
Speaker 6: We'll also be looking for any big legal costs, because
Speaker 6: we do tend to get those kitchen thinks for some
Speaker 6: of the banks in the quarter. But again it is
Speaker 6: all about the expectations and what is in the stock.
Speaker 6: JP Morgan is likely to generate the highest return we expect,
Speaker 6: but that's no secret.
Speaker 1: Well, a lot to look forward to our thanks to
Speaker 1: Bloomberg Intelligence Senior Analyst Alison Williams and Bloomberg Global Finance
Speaker 1: Correspondent Shanali Bossic, and coming up on Bloomberg day Break weekend,
Speaker 1: we take you to London and a look ahead to
Speaker 1: a busy week on the economic calendar. I'm Tom Busby
Speaker 1: and bloom This is Bloomberg day Break Weekend, our global
Speaker 1: look ahead at the top stories for investors in the
Speaker 1: coming week. I'm Tom Busby in New York. Hey's economic
Speaker 1: trajectory back in focus in the coming days as a
Speaker 1: batch of data will help tell us whether Britain could
Speaker 1: avoid a recession. A recent survey of company executives highlighted
Speaker 1: their pessimism about the outlook, despite encouraging science from some quarters.
Speaker 1: Now for more, let's go to London and bring in
Speaker 1: Bloomberg Daybreak. Europanker Stephen Carroll.
Speaker 2: Tom, it's twenty twenty four and we're still asking questions
Speaker 2: about whether or not the UK will fall into recession,
Speaker 2: when it might happen, and how bad it could be.
Speaker 2: We'll get an update on the monthly GDP numbers in
Speaker 2: the coming days. It'll give us some more clues, along
Speaker 2: with other indicators we're watching too. There have been some
Speaker 2: positive signals, the latest Composite PMI survey showing an uptake
Speaker 2: and activity to a reading a fifty two point one
Speaker 2: in December. Thinking more long term, a recent forecast from
Speaker 2: the Center for Economics and Business Research predicted the UK's
Speaker 2: growth trajectory over the next decade or so will help
Speaker 2: it retain its position as the world's sixth largest economy.
Speaker 2: There's gloom in other quarters, though. The Institute of Directors
Speaker 2: Economic Confidence survey fell into too close to its lowest
Speaker 2: point in the year. So are we hurtling towards a
Speaker 2: recession or is growth getting back on track? To discuss,
Speaker 2: we've got our UK Economy reporter Tom Reese, and for
Speaker 2: a look at how the consumer is faring, our UK
Speaker 2: retail reporter Katie Lindsell. Tom, I'd like to start with
Speaker 2: you were due to receive some economic date in the
Speaker 2: coming days, including figures on UK manufacturing and the monthly
Speaker 2: GDP figures. I mentioned what might they tell.
Speaker 9: Us, So while it's quite hard to read signals from
Speaker 9: one month's data, November's GDP figures could be a bit
Speaker 9: more significant than the usually just because it may show
Speaker 9: that the UK was on track for technical recession in
Speaker 9: the second half of last year. We had some revised
Speaker 9: data from just before Christmas that show GDP contracted zero
Speaker 9: point one percent in the third quarter, and then that
Speaker 9: was followed by a zero point three percent falling GDP
Speaker 9: in October, so that that leaves some catching up to
Speaker 9: do in November December if we're going to avoid a
Speaker 9: technical recession I two straight quarters of fall output. I
Speaker 9: think the main thing to take away from the second
Speaker 9: half of last year it was a real diverging picture
Speaker 9: between the sectors. You know, we have services that have
Speaker 9: been relatively resilient despite you know the extreme pressure on
Speaker 9: consumers from the cost of living crisis and you know,
Speaker 9: higher mortgage paints to everything, but the manufacturing sector is struggling.
Speaker 9: We've seen that in the survey data, seen lower demand
Speaker 9: from overseas and domestically, factories are feeling, you know, the
Speaker 9: pain from higher interest rates and they're starting to cut
Speaker 9: employment and so it's it's it's quite it's quite a
Speaker 9: complicated picture, but it's all it all looks quite stagnant
Speaker 9: from from from the second half of you.
Speaker 2: Yeah, and as you say, it's it's that question of
Speaker 2: where we are in that last quarter GDPs and we
Speaker 2: get the monthly figures just giving us a piece of
Speaker 2: that picture and whether or not that we will have
Speaker 2: for those two quarters of negative growth. Katie. I wanted
Speaker 2: to bring you in here because one of the figures
Speaker 2: we're going to be getting is one of the retail
Speaker 2: sales measures and the British Retail Consortium. This is going
Speaker 2: to for a period which is very important for retailers,
Speaker 2: towards the end of the year, that pre Christmas shopping period.
Speaker 2: What are you expecting?
Speaker 10: Absolutely, you're right, I mean that Christmas period is so important,
Speaker 10: so crucial for many retailers. If we look at the
Speaker 10: figures that we saw in November from the British Retail Consortium,
Speaker 10: they were actually quite weak. They did show growth, but
Speaker 10: much weaker growth compared to a year earlier. So what
Speaker 10: we have to be hoping is that many consumers pushed
Speaker 10: their Christmas spend into December rather than relying on that
Speaker 10: earlier November shopping period. But I think it's really yet
Speaker 10: to be seen. From what we hear so far, online
Speaker 10: has had a better performance the Christmas just gone compared
Speaker 10: to twenty twenty two. Many shoppers were put off by
Speaker 10: career delays and postal strikes in that earlier Christmas season,
Speaker 10: which meant they visited more stores to be sure they
Speaker 10: could get hold of items. I think online will have
Speaker 10: had a much better time in Christmas twenty three, but
Speaker 10: really it's still it's still to be seen how this goes.
Speaker 10: From what we've seen from retailers, it's a mixed bag,
Speaker 10: you know, some performing better than the Christmas before, others
Speaker 10: having a bit of a difficult time, So it's still
Speaker 10: to be seen how it will go.
Speaker 2: Yeah, Katie, I'm always very interested to see when we
Speaker 2: get the split from grocers on this, because I mean
Speaker 2: grocers are very competitive. Marcus in the UK and seeing
Speaker 2: the discounters coming out and talking about having their best
Speaker 2: Christmas as ever, is that something that we've heard from
Speaker 2: many retailers In what we've heard so far from them
Speaker 2: about their pre Christmas period.
Speaker 6: Yeah.
Speaker 10: Absolutely. So as you say, we've had Aldi and Liddle
Speaker 10: come out very quickly in the new year saying they
Speaker 10: had record Christmas sales, and Cantar, which actually tracks sales
Speaker 10: figures across supermarkets, so that there was a record thirteen
Speaker 10: point seven billion pounds spent in the run up to Christmas.
Speaker 10: I think it's fair to say that most supermarkets did well.
Speaker 10: We're going to be getting both Sainsbury and Tesco reporting
Speaker 10: next week and I think both those have probably done
Speaker 10: pretty well over that Christmas season. I mean, food inflation
Speaker 10: has come down a bit, it's still at nearly seven percent,
Speaker 10: so I think that that the higher prices do have
Speaker 10: a role to play in these big, chunky sales figures
Speaker 10: we're seeing. But at the same time, hopefully shoppers are
Speaker 10: feeling more encouraged to spend all food than they did,
Speaker 10: say a year ago. So yeah, supermarkets have been a
Speaker 10: very very comfortable part of retail these past few weeks.
Speaker 2: Tom and we think to looking back at the data
Speaker 2: we have already and thinking about where the trajectory we're
Speaker 2: going in.
Speaker 1: Yet, it feels like we've.
Speaker 2: Been hearing about warnings of a recession in the UK
Speaker 2: for I mean at least a year now at this day,
Speaker 2: Let's be honest, are we overdue a recession here?
Speaker 9: It has felt like we've been on the brink of
Speaker 9: recession basically since that post lockdown Surgeon GDP wharf and
Speaker 9: the cost of living crisis began. But I mean, this
Speaker 9: economy has shown incredible ability to muddle through, to be
Speaker 9: stagnant but resilient against some pretty massive headwinds and double
Speaker 9: digit inflation and the Surgeon interest rates you said that
Speaker 9: date we got just before Christmas. It did show that
Speaker 9: we may have suffered a technical recession, but I mean,
Speaker 9: the difference between the technical recession and very slight growth
Speaker 9: at the moment is pretty tiny. But it also showed,
Speaker 9: and I think this is crucial for the outlook, it
Speaker 9: showed that inflation came down a lot more than the
Speaker 9: Bank of England was expecting, down to below four percent.
Speaker 9: And I think for the outlook that is the key
Speaker 9: really because that not only affects you know, you know,
Speaker 9: real wages for consumers, but also what we might see
Speaker 9: on interest rates.
Speaker 2: Yeah, and of course the fact that we had the
Speaker 2: run of fourteenth strake hights in the Bank of England
Speaker 2: still feeling acrourse the effects of that feeding into the market,
Speaker 2: partly due to the way that the mortgage market structured. Here,
Speaker 2: not everyone has actually had the interest rate increase, although
Speaker 2: we're getting closer to that position now. What should we
Speaker 2: be thinking about when it comes to where the Bank
Speaker 2: of England goes from here? Of course, speculation abound about
Speaker 2: central banks around the world and when they're going to
Speaker 2: cut interest rates. What sort of scenario is the Bank
Speaker 2: of England facing when we look into twenty twenty four.
Speaker 9: Stressing because after that inflation print just before Christmas that
Speaker 9: showed inflation coming down much faster than we expecting. Obviously,
Speaker 9: markets took that as the green light for early interest
Speaker 9: rate cuts and they're are currently they're pricing in the
Speaker 9: first cut from May and then a further four or
Speaker 9: five after that over the by the end of the year.
Speaker 9: But the Bank of England, you know, it had its
Speaker 9: latest policy meeting just after that those inflation figures and
Speaker 9: it was it was still holding this high for longer message.
Speaker 9: It's still trying to tell markets that you know, don't
Speaker 9: expect us to pivot to cuts anytime soon, which was
Speaker 9: quite in quite sharp contrast with what we're hearing from
Speaker 9: the Fed around that time as well. So although you
Speaker 9: know the Bank of England's trying to you know, ward
Speaker 9: off markets and tell them to you know that they're
Speaker 9: going to hold path for quite quite some time, that
Speaker 9: markets are running away with it now, and that they
Speaker 9: are expecting cuts to come sometime in the first half
Speaker 9: of this year.
Speaker 2: Yeah, I'm just looking at the market pricing for that
Speaker 2: as well. Market's currently pricing in a first rate cut
Speaker 2: from the Bank of England in around May of this year,
Speaker 2: and around one hundred and just over one hundred and
Speaker 2: thirty five basis points of cuts by the end of
Speaker 2: twenty twenty four as well. So it's certainly a very
Speaker 2: interesting year for the Bank of England. Okay, Katie Linsel,
Speaker 2: our UK Retail reporter and our UK Economy reporter, Tom Reese,
Speaker 2: thank you so much for joining us and giving us
Speaker 2: your analysis on that subject. We will of course have
Speaker 2: coverage of those GDP and other economic indicators on the
Speaker 2: program in the coming days. I'm Stephen Carroll in London.
Speaker 2: You can catch us every weekday morning here for Bloomberg Daybreak.
Speaker 2: You're at beginning at six am in London and one
Speaker 2: am on Wall Street, Tom.
Speaker 1: Our thanks to Bloomberg Daybreak. You're a banker, Stephen Carroll,
Speaker 1: And coming up on Bloomberg day Break weekend, we head
Speaker 1: to Asia and preview a key presidential election in Taiwan.
Speaker 1: I'm Tom Busby, and this is Bloomberg. I'm Tom Busby
Speaker 1: in New York with your global look ahead at the
Speaker 1: top stories for investors in the coming week. Taiwan's presidential
Speaker 1: election is set for January thirteenth, and the results will
Speaker 1: help shape the course of US China relations for years
Speaker 1: to come. Bloomberg Daybreak Asia anchor Doug Krisner looks ahead Tom.
Speaker 3: The election is a competitive three way race, and the
Speaker 3: ruling Democratic Progressive Party is seeking to maintain Taiwan's de
Speaker 3: facto political independence. Now to help us set up the contest,
Speaker 3: we have Bloomberg Samson. Elyssy is our Taipei bureau chief. Samson,
Speaker 3: thank you for being with us. As I mentioned, it's
Speaker 3: a three way race. Can you quickly kind of help
Speaker 3: sketch out who the candidates are, what their perspective parties
Speaker 3: stand for, particularly in relation to the government in Beijing.
Speaker 11: Well, first of all, you have the current Vice President Laichinda.
Speaker 11: So he is the candidate for the as you said,
Speaker 11: the Democratic Progressive Party the DPP. So this is a
Speaker 11: party that holds as one of its foundational tenets that
Speaker 11: Taiwan is a sovereign, independent nation. The only problem is
Speaker 11: is that it's not widely recognized by the rest of
Speaker 11: the world. So they are pushing for a permanent separate
Speaker 11: status for Taiwan, separate from China. Obviously, So right now
Speaker 11: he's the current vice president and he is looking to
Speaker 11: succeed his current boss president signing one then running against him.
Speaker 11: You have the largest opposition party in Taiwan, the gormin
Speaker 11: dang or the KMT, and this is a party that
Speaker 11: holds that Taiwan is actually a part of a China
Speaker 11: of slightly more vaguely defined China, not necessarily the People's
Speaker 11: Republic of China, but a some kind of China, and
Speaker 11: that Taiwan's eventual future lies with China and in some
Speaker 11: form of unification with the mainland. And their candidate is
Speaker 11: former policeman, Taiwan's former top policeman Ho Yoi, who is
Speaker 11: running against Lie. And then this year, which makes this
Speaker 11: election slightly unique, as you have a third competitive candidate,
Speaker 11: and this is a Kerwanza from the new relatively young
Speaker 11: at Taiwan's People's Party. So Kerr is something of a
Speaker 11: left field candidate, a very non traditional politician. So he
Speaker 11: was a surgeon in one of Taiwan's top hospitals for
Speaker 11: a long time until one day he decided that he
Speaker 11: couldn't stand the state of politics in Taiwan and ran
Speaker 11: for mayor of Taipei as an independent and surprisingly won
Speaker 11: around ten years ago. He was then a mayor for
Speaker 11: eight years, and then after he stepped down, he set
Speaker 11: up his own party and since then he's been teasing
Speaker 11: that he could run for president, and this year he
Speaker 11: actually did it, and so he has proved to be
Speaker 11: quite popular with voters who were are tired of the
Speaker 11: duopoly of Taiwan politics, the traditional either the the DPP
Speaker 11: or the KMT, and now a KA has given this
Speaker 11: effective vote as something of an option.
Speaker 3: Recently, we had a President chi with his New Year address,
Speaker 3: and one of the things he reiterated was that China
Speaker 3: will be surely unified, maybe a reference to the aim
Speaker 3: here of eventually bringing Taiwan back under the control of
Speaker 3: the mainland if forced by necessary, and I'm based on
Speaker 3: what you just said, I'm imagining that the KMT candidate
Speaker 3: would be Beijing's preferred choice.
Speaker 1: Is that fair?
Speaker 11: Yes? Absolutely so. They do share this one overarching goal
Speaker 11: that eventually Taiwan should be formally unified as part of China.
Speaker 11: What they do disagree on is what that China should be.
Speaker 11: So obviously, from Sijinping's perspective, it's the People's Republic of China,
Speaker 11: the China that we all know now. But for the
Speaker 11: KMT in Taiwan, really important part of their history was
Speaker 11: there fighting the Tiny Civil War against the Communist Party,
Speaker 11: and so theoretically they many people in the party still
Speaker 11: view the Chinese Communist Party as an enemy, and if
Speaker 11: you meet them, you know, privately, they'll quite happily tell
Speaker 11: you that, you know, the Communists in Beijing are still
Speaker 11: their mortal enemy. But at least they do have one
Speaker 11: thing in common is that they feel Taiwan would be
Speaker 11: better off eventually being part of China.
Speaker 3: I think the US probably is going to be watching
Speaker 3: this race very closely. I think that's fair to say.
Speaker 3: At the end of last year, near the end, I
Speaker 3: think it was in November that presidents Biden and she
Speaker 3: were at the APEX summit in San Francisco, and it
Speaker 3: was then that she told Biden that the issue of
Speaker 3: Taiwan was the most important and dangerous issue for the
Speaker 3: US and China and their relationship. How do you think,
Speaker 3: and I'm not asking you to speculate, but based on
Speaker 3: what you know of US Taiwan relations, how might the
Speaker 3: US kind of be watching this contest? And not that
Speaker 3: it would put its finger on the scale in any way,
Speaker 3: but is there something that the US would kind of
Speaker 3: communicate to Beijing to make sure that there is no
Speaker 3: interference or let's say, a reduction in the degree of
Speaker 3: influence Beijing may like to have over these elections.
Speaker 11: Well, there's no doubt that the US is watching this
Speaker 11: election very very closely. Taiwan has become this pivotal point
Speaker 11: in the geopolitical standoff between the United States and China,
Speaker 11: and as Hujinping said there, as you mentioned, you know,
Speaker 11: it is one of the most important issues in relations
Speaker 11: between Washington and Beijing. And so one of the things
Speaker 11: the US has repeatedly reiterated so that number one, they
Speaker 11: have no preferred winner of the Taiwanese election. They've been
Speaker 11: very clear that, you know, they respect the choice of
Speaker 11: Taiwanese voters, and they have also urged other parties. I
Speaker 11: think we can further largely talking to Beijing here. The
Speaker 11: other parties should stay out of the race. They should
Speaker 11: not meddle in this election. Beijing, for its part, it
Speaker 11: has made it absolutely clear that they would prefer the
Speaker 11: KMT candidate to win this election. To be honest, there's
Speaker 11: a bit of a you know, who would the US
Speaker 11: prefer to win? You hear different voices out of the
Speaker 11: United States on this. On the one hand, if the
Speaker 11: DPP stays in power, the US can be fairly sure
Speaker 11: they have a reliable, steady partner who is on board
Speaker 11: with the United States and their more broader regional goals
Speaker 11: when it comes to standing up against China, and also
Speaker 11: they have a more willing recipient for US arms sales.
Speaker 11: But on the other hand, if the KMT were to win,
Speaker 11: some in the US do point out that this could
Speaker 11: take a little bit of the temperature out of the
Speaker 11: cross rate relations in this part of the world and
Speaker 11: therefore make US China relations a little bit easier.
Speaker 3: Yeah, I understand the notion of supporting democracies from the
Speaker 3: US side. But I'm understanding also that there is a
Speaker 3: little bit of a national security concern if you consider
Speaker 3: the fact that Taiwan is basically the leader in semiconductor production.
Speaker 3: I'm thinking in particular of Taiwan semi. If that were
Speaker 3: not the case, would the US stance be slightly different?
Speaker 3: Do you think?
Speaker 11: I think it's a question of degrees. I think there's
Speaker 11: no doubt that the United States, as you said, supports
Speaker 11: a fellow democracy, and it's a very bad look for
Speaker 11: the United States if they're seen throwing a democracy to
Speaker 11: the wolves in Asia, so to speak. And also, you know,
Speaker 11: there is the Taiwan Relations Act in the United States.
Speaker 11: You know, the US has committed itself to providing for
Speaker 11: Taiwan's own self defense, and so there is a legal
Speaker 11: basis for the US to continuing to support Taiwan. So
Speaker 11: I don't think that would be something the US could
Speaker 11: easily abandon. Plus, within the United States, I mean, you
Speaker 11: look at Congress, there's an enormous amount of support on
Speaker 11: both sides of the Aisle for Taiwan. There So, even
Speaker 11: if the executive were to decide that supporting Taiwan is
Speaker 11: no longer in America's best interests. I think they'd find
Speaker 11: a lot of pushback from Congress on anything that would
Speaker 11: disadvantage Taiwan.
Speaker 3: It was January first, nineteen seventy nine. I believe that
Speaker 3: Washington officially cut diplomatic ties with Taipei in favor of
Speaker 3: recognizing Beijing. How well do you think the US has
Speaker 3: been doing it? It kind of balancing the situation.
Speaker 11: It's underappreciated exactly how successful the Taiwan's Relations Act and
Speaker 11: strategic ambiguity has worked over the past forty plus years
Speaker 11: forty five years now at maintaining the peace in this
Speaker 11: part of the world.
Speaker 3: Samson's so good of you to stop by and help
Speaker 3: us set up the Taiwan presidential election that will happen
Speaker 3: on January thirteenth. Samson Ellis is Bloomberg's Taipei bureau chief.
Speaker 3: I'm Doug Krisner, and you can join Brian Curtis and
Speaker 3: myself weekdays here for Bloomberg day Break Asia beginning at
Speaker 3: seven am in Hong Kong six pm on Wall Street tom.
Speaker 1: Our thanks to Bloomberg day Break Asia anchor Doug Krisner,
Speaker 1: and coming up here on Bloomberg day Break Weekend, we
Speaker 1: look ahead to the presidential election right here in the
Speaker 1: US with Gallup editor in chief Mohammed Unics. Next, I'm
Speaker 1: Tom Busby, and this is Bloomberg. This is Bloomberg day
Speaker 1: Break weekend, our global look ahead at the top stories
Speaker 1: for investors in the coming week. I'm Tom Busby in
Speaker 1: New York. New polling from Gallup shows President Joe Biden
Speaker 1: finishing twenty twenty three with a job approval rating of
Speaker 1: just thirty nine percent. That's the lowest of recent presidents
Speaker 1: at the same point in their presidency. Gallup Editor in
Speaker 1: chief Mohammed Unis tells Bloomberg's Kaylee Lines and our Bloomberg
Speaker 1: ninety nine one news from in Washington about trends to
Speaker 1: follow heading into the twenty twenty four presidential election.
Speaker 4: I'm not sure that President Biden is feeling particularly happy
Speaker 4: as he comes into this new year, knowing he ended
Speaker 4: last year twenty twenty three, according to Gallups figures, with
Speaker 4: an approval rating of just thirty nine percent. Can you
Speaker 4: give us some context around that number? It's quite low.
Speaker 12: The real context is compared to every other president in
Speaker 12: modern history who has sought reelection, he's far behind where
Speaker 12: they were traditionally speaking what we've seen in our numbers
Speaker 12: is that a president going into a reelection campaign at
Speaker 12: that fifty point mark is a really critical number to
Speaker 12: be at. And obviously President Biden is far behind that,
Speaker 12: but he's also significantly behind where Barack Obama was and
Speaker 12: where Donald Trump was, which is pretty important to note.
Speaker 12: I think during the Trump campaign there was so much
Speaker 12: focus on how low and steady the number stayed, and
Speaker 12: President Biden right now is behind where President Trump was.
Speaker 4: Well, and you talk about the number staying low and
Speaker 4: being pretty steady, isn't that the case with Biden? I mean,
Speaker 4: he's been in and around that kind of forty percent
Speaker 4: figure or below for some time now, and it doesn't
Speaker 4: seem like that that needle has moved to any real
Speaker 4: degree at all.
Speaker 1: It hasn't.
Speaker 12: He started off like most presidents do in a honeymoon phase.
Speaker 12: He has that fifty seven percent approval, which is pretty
Speaker 12: high in our era. Another thing Kaylee, to always keep
Speaker 12: in mind with these numbers specifically, is we are in
Speaker 12: what it truly is a hyperpartisan era. So since President Obama,
Speaker 12: the difference between people's views on the president and how
Speaker 12: closely it's tied to their party ID is stronger than ever.
Speaker 12: So presidents have had flatter sort of frequencies on their
Speaker 12: approval ratings. But I think what's concerning about President Biden's
Speaker 12: situation is that even compared to Obama and Trump, who
Speaker 12: also face that reality, he's significantly behind. Right now.
Speaker 4: Okay, well, let's talk about the options. I mentioned that
Speaker 4: we're seeing in pretty consistently in polls that the majority
Speaker 4: of voters would prefer it not to be a Biden
Speaker 4: Trump rematched like twenty twenty all over again. And yet
Speaker 4: that's likely what they're going to get unless there is
Speaker 4: a viable alternative. What are you say seeing a round
Speaker 4: support for a third party candidate, whoever that is?
Speaker 12: Well, I can tell you who we see in terms
Speaker 12: of favorables. Of all the folks that are out there
Speaker 12: right now, President Biden and Trump are basically tied at
Speaker 12: forty one percent of a favorable rating. And this is
Speaker 12: do you have a favorable or unfavorable view of the
Speaker 12: following person? Desantus Haley in specific Sarty are at their
Speaker 12: thirty so really low thirty percent favorable rating. It's important
Speaker 12: to note that this tends to happen with new names.
Speaker 12: People don't know who they are. Kennedy, on the other hand,
Speaker 12: is already breaking the fifty point mark, but that's probably
Speaker 12: because of that name recognition factor that he has in
Speaker 12: his favor. So looking at the favorable ratings, which is
Speaker 12: really a really good proxy, I think at this point
Speaker 12: of the contest to see who's graining traction with the public,
Speaker 12: really none of them are. Nobody's really shot through the
Speaker 12: roof and impressed or wowed. Of course, January fifteenth is
Speaker 12: just down the street. A lot can change, particularly when
Speaker 12: those first results start coming out from the caucuses, But
Speaker 12: right now, nobody's dominating.
Speaker 4: All right, we only have about a minute left, Muhammad,
Speaker 4: But we've discussed we've covered a lot of ground here
Speaker 4: in what twenty twenty four may bring, how people are feeling.
Speaker 4: What is one other trend or something that you'll be
Speaker 4: focusing on in twenty twenty four.
Speaker 12: I think for us it'll be the election. It'll be
Speaker 12: what people are really tuning into for making that decision
Speaker 12: to cast their vote. One thing we really know right
Speaker 12: now is most Americans are still totally checked out. They're
Speaker 12: not focused on political news as unlike you and I
Speaker 12: night and day. I know it hurts my feelings too,
Speaker 12: but as it gets closer to November, that number is
Speaker 12: going to rise, and we're going to start asking people
Speaker 12: what do you bring into mind when you cast that vote.
Speaker 4: It's a good point. I feel like we've been living
Speaker 4: and breathing this for a year now, but really it's
Speaker 4: still early days. Mohammed Unis joining us. Gallups editor in chief.
Speaker 4: Thank you so much as always for being here. It's
Speaker 4: going to be a doozy of the year, guys.
Speaker 1: Thank you, Kaylee. That was Bloomberg sound On co host
Speaker 1: Kaylee Lines reporting from our Bloomberg ninety nine one newsroom
Speaker 1: in Washington, and you can hear sound on weekdays one
Speaker 1: to three pm on Bloomberg Radio. And that does it
Speaker 1: for this edition of Bloomberg day Break Weekend. Join us
Speaker 1: again Monday morning, five am Wall Street Time for the
Speaker 1: latest on markets overseas and the news you need to
Speaker 1: start your day. I'm Tom Busby. Stay with us. Top
Speaker 1: stories and global business headlines are coming up right now.