Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Daybreak Weekend,
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Speaker 1: week from our Daybreak anchors all around the world. Straight
Speaker 1: ahead on the program, and look at what some of
Speaker 1: the top fed officials may have to say at this
Speaker 1: year's Jackson Hole Symposium. I'm Tom Busby in New York.
Speaker 2: I'm Karlin Hepburn London, where we're dissecting the UK's immigration dilemma.
Speaker 3: I'm Doug Prisoner looking at Tim Walls's relationship with China
Speaker 3: as he prepares to take the stage at the Democratic
Speaker 3: National Convention.
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Speaker 1: Good day to you. I'm Tom Busby. We begin today's
Speaker 1: program with a look at the Annual Economic Policy Symposium
Speaker 1: in Jackson Hall, Wyoming this week the Federal Reserve Bank
Speaker 1: of Kansas City will host dozens of central bankers, policymakers, academics, economists.
Speaker 5: From all over the world.
Speaker 1: FED Chair J Powell expected to give remarks on Friday,
Speaker 1: and the big questions will he set the table for
Speaker 1: a September interest rate cut and how big a cut
Speaker 1: could we see? For more, we're joined by Michael McKee,
Speaker 1: Bloomberg International Economics and Policy correspondent. Well, Michael Powell has
Speaker 1: said all along any change in rates will be a
Speaker 1: data driven decision. Let's talk about the data and what
Speaker 1: you're expecting this week.
Speaker 6: Well, we've got data driving the economy towards a rate
Speaker 6: cut in September. This past week, we saw inflation come
Speaker 6: down significantly and also symbolically as the headline CPI number
Speaker 6: comes in two point nine percent, the first time it's
Speaker 6: been below three percent since the beginning of the pandemic.
Speaker 6: So good news on the inflation front. And then we
Speaker 6: saw late in the week the retail sales numbers come
Speaker 6: in strong, stronger than expected certainly, and Americans are still spending.
Speaker 6: So the idea of a recession is kind of off
Speaker 6: the table, but this kind of lines everything up for
Speaker 6: a rate cut in September. Now there's more data to
Speaker 6: come in September, but no significant data before Jay Powell speaks.
Speaker 1: Let me take a step back. Two weeks ago, we
Speaker 1: saw the Dow tumble one thousand points. Some people on
Speaker 1: Wall Street, yes, there was the carry trade in Japan,
Speaker 1: which was a big part of that. But also some
Speaker 1: people on Wall Street said it's because the Fed missed
Speaker 1: the boat on just prior to that, leaving rates unchanged
Speaker 1: for I think the eighth meeting in a row. But
Speaker 1: the Fed didn't budge, no emergency cut, no panicking. What
Speaker 1: does this tell you about Jay Powell and the Fed
Speaker 1: that they just ignore the noise and carry on.
Speaker 6: How did you survive the great recession of August date?
Speaker 6: It tells you that the Fed is not the market.
Speaker 6: The market is trying to adjust on a day by
Speaker 6: day basis, and people get into herd behavior or panic behavior,
Speaker 6: and we see that all the time. The Fed is
Speaker 6: going to be much slower to react. First of all,
Speaker 6: they don't really care whether the market goes up or
Speaker 6: down as long as you can still trade. If the
Speaker 6: market is functioning, then the Fed tends to leave it alone.
Speaker 6: The only time they really jump in with any kind
Speaker 6: of emergency help is when the market sees up because
Speaker 6: people won't trade, and that's not the case. It wasn't
Speaker 6: the case that week either. It was just that those
Speaker 6: who were trading were losing money, and that's not the
Speaker 6: Fed's job to keep them to keep them there. And
Speaker 6: what's funny is you see we saw this at the
Speaker 6: beginning of the year, six rate cuts, price did and
Speaker 6: then we got down to like one, and then we
Speaker 6: got down to is the Fed going to cut it all?
Speaker 6: And then all of a sudden we had people panicking
Speaker 6: and saying we're going to get four or five rate cuts,
Speaker 6: and the Fed through all this hasn't changed anything. The
Speaker 6: interest rate has stayed the same.
Speaker 4: Now.
Speaker 1: I know you mentioned the jobs report though, or what
Speaker 1: we're going to get before the next meeting September sixth.
Speaker 1: We're going to get the August jobs report. I know
Speaker 1: it's far off, but we have seen what the FED
Speaker 1: was expecting, a little slow down in job creation. Are
Speaker 1: you expecting more of the same for the month of August.
Speaker 7: We are.
Speaker 6: I've talked to a number of economists. It's too early
Speaker 6: for them to make forecasts, but basically they're thinking that
Speaker 6: we are going to rebound from the July numbers and
Speaker 6: go back up in terms of job creation and maybe
Speaker 6: even go down in terms of the unemployment rate. But
Speaker 6: they don't have a great firm grasp on number. But
Speaker 6: they do think that we may not go above job
Speaker 6: creation as we saw it for much of this year,
Speaker 6: but that it will be higher than the number we
Speaker 6: saw in July.
Speaker 1: Well that's good. Now, eight meetings in a row, rates
Speaker 1: have been left unchanged. The last change in rates a
Speaker 1: hike in July of last year. The last cut was
Speaker 1: over four years ago, at the start of the pandemic,
Speaker 1: so historically there hasn't been much movement since then, you know,
Speaker 1: little incremental certainly the past year. What do you hear
Speaker 1: from not just Jerome Powell, but other FED governors and
Speaker 1: presidents about what's coming up in September and what are
Speaker 1: the hints allegations of what we can expect to see.
Speaker 6: Well, they basically are kind of united around the idea
Speaker 6: that it is almost time to cut interest rates. There's
Speaker 6: some difference between them in terms of whether they really
Speaker 6: think they need to go in September or whether they
Speaker 6: could wait. But I think when you get to the
Speaker 6: September eighteenth meeting. If we don't see any big data
Speaker 6: surprises between now and then, you'll get another unanimous decision,
Speaker 6: because there isn't a real argument for keeping rates as
Speaker 6: high as they are right now. The housing industry would
Speaker 6: certainly love to see rates go down. That's the one
Speaker 6: lagging part of the economy. And so if they get
Speaker 6: December September eighteenth, I think they start the process, and
Speaker 6: probably not with a fifty basis point cut, but they
Speaker 6: may cut two more times this year and into next
Speaker 6: year as they feel their way toward what a neutral
Speaker 6: level will be.
Speaker 1: Now a little plug here, Michael, you're going to be
Speaker 1: in Jackson hole. Who are you going to speak with
Speaker 1: this coming week?
Speaker 6: I'm Tom Keen. He's welcome, He's welcome. We're going to
Speaker 6: speak with raphae Albostik from Atlanta, who justice last week
Speaker 6: said he's open to a September rate cut. We'll talk
Speaker 6: to Austin Goolsby from Chicago, who's been one of the
Speaker 6: more dubbish and interested in seeing a rate cut. And
Speaker 6: we'll talk to Patrick Harker from Philadelphia, who has been
Speaker 6: somewhat quiet about his views, but I think he's going
Speaker 6: to be on board with the idea of a rate
Speaker 6: cut as well. We're also going to talk to Est
Speaker 6: George and lare Mester, two familiar names who are no
Speaker 6: longer at the FED, but are still invited to the conference,
Speaker 6: so they'll give us their views from the outside of
Speaker 6: what the FED could be doing.
Speaker 8: Well.
Speaker 1: It's always nice to be invited.
Speaker 8: Well.
Speaker 1: Our thanks to Michael McKee, Bloomberg International Economics and Policy correspondent.
Speaker 1: While we wait for that Jackson Hole summit, we focus
Speaker 1: now a bit more on the US consumer now. Last week,
Speaker 1: after a strong Q two earnings report, Walmart raised its
Speaker 1: sales guidance for the full year, expecting even more bargain
Speaker 1: hunting shoppers to head to its stores and its website.
Speaker 1: This week. A top discount competitor, Target Stores, reporting second
Speaker 1: quarter earnings on Wednesday. That follows a disappointing first quarter.
Speaker 1: The question though, how is the chain holding up in
Speaker 1: this high inflation environment? What will its results tell us
Speaker 1: about the health of the US consumer? And for more
Speaker 1: on that and what to expect, Joined by Jennifer Bartasha's
Speaker 1: Bloomberg Intelligence Senior analyst Retail, Staples and packaged Foods. So
Speaker 1: Jennifer A. Lot of consumers. Well, they are spending money,
Speaker 1: but they want bargains. My question to you are they
Speaker 1: finding them at Target? And what do you expect to
Speaker 1: see in its earnings report.
Speaker 8: It's a question at the top of everyone's minds. So
Speaker 8: with regards to Target, one of the things to remember
Speaker 8: is that they have a much easier comparison in second
Speaker 8: quarter than they did a year ago because last year
Speaker 8: at this time, it was the quarter where they had
Speaker 8: the backlash from all the consumer boycotts with regards to
Speaker 8: their Pride assortment. So they had a very poor quarter
Speaker 8: a year ago, So the comparisons are a lot easier
Speaker 8: now that said, consumers are still seeking value. One of
Speaker 8: the things that Target has done is they made an
Speaker 8: announcement in July about rolling back prices, especially on food
Speaker 8: and essentials, and that seemed to resonate with people. So
Speaker 8: hopefully we'll see some stronger traffic into stores for the
Speaker 8: second quarter.
Speaker 1: Now, I think the of the Target customer for many
Speaker 1: people a little bit of a higher earner than your
Speaker 1: typical Walmart customer. How do you think Target compares to Walmart?
Speaker 1: It's customer, it's offerings, its prices, price points.
Speaker 8: Historically there was a gap between the typical Target consumer,
Speaker 8: which was a little bit higher income versus the Walmart consumer,
Speaker 8: and their core consumer was usually associated with the lower
Speaker 8: to middle lower income bands. But we've heard Walmart talk
Speaker 8: about the last two quarters that reported earnings that they're
Speaker 8: pulling more higher income households into its sphere and that
Speaker 8: more higher income households are shopping at Walmart. That is
Speaker 8: a bit of a concern for Target because that's kind
Speaker 8: of creeping into what has traditionally been their core consumer.
Speaker 8: So in order to combat that, it really comes down
Speaker 8: to things that Target is good at but just needs
Speaker 8: to continue to execute well. Private label and their fashion,
Speaker 8: you know, being fashion forward, being exactly what consumers want
Speaker 8: before they realize they need it. Those are the things
Speaker 8: that historically have made Target it really stand out from Walmart.
Speaker 8: And you know, it's a little bit hard when discretionary
Speaker 8: spending is still a bit soft, but that's really where
Speaker 8: they differentiate and can continue to differentiate from Walmart.
Speaker 1: Yeah, and I think their brands is Market, Pantry, Good
Speaker 1: and Gather. Then they have home furnishings like deal Worthy,
Speaker 1: really a big draw I think for a lot of.
Speaker 8: Consumers it really is. And you know, part of what
Speaker 8: what Target is very good at is being fashion forward,
Speaker 8: whether that's in a parallel whether that's in home decor
Speaker 8: whether that's in food and finding things that are you know,
Speaker 8: the developing trends, I think is the way you want
Speaker 8: to say it. And so as long as they can
Speaker 8: stay agile and continue to meet those that is a
Speaker 8: draw for their consumers. One of the things that could
Speaker 8: be in an area of concern for this quarter is
Speaker 8: that in the last three quarters, beauty has been sort
Speaker 8: of something that Target has highlighted. We ran a Bloomberg
Speaker 8: Intelligence Survey consumer survey on beauty and for the first
Speaker 8: time in multiple years, we've seen softening in demand and
Speaker 8: for beauty. So it will be interesting to see if
Speaker 8: that translates through to Target as well. But it is
Speaker 8: kind of a broader indicator that that category, which has
Speaker 8: been pretty strong for Target, is starting to show a
Speaker 8: little bit of weakness.
Speaker 1: Yeah, the lipstick indicator in the economy, that's not that scary. Well,
Speaker 1: I have another question about Target, and it's about e commerce.
Speaker 1: You know, obviously Amazon is the king, but are they
Speaker 1: in the same league as some of their competitors. Are
Speaker 1: they a little behind?
Speaker 8: Well, Target executes very well on e commerce, but they
Speaker 8: have a different strategy. They're not trying to conquer the
Speaker 8: world with regards to e commerce. So Target traditionally has
Speaker 8: been very has taken an approach it's more curated. So
Speaker 8: it's a curated a selection that's on their website. So
Speaker 8: although they have third party sellers, it's only items that
Speaker 8: they think their consumers will want, versus kind of those
Speaker 8: endless aisles that you expect from Amazon or even from Walmart.
Speaker 8: And so by kind of keeping that that tailored environment,
Speaker 8: it's easier for them to dish up results when people
Speaker 8: are searching for things that are relevant to them. So
Speaker 8: that has helped make targets e commerce platform pretty successful.
Speaker 8: And the other thing that is a strength for them
Speaker 8: is that a lot of those orders that they get
Speaker 8: are fulfilled in stores. When they fulfill orders from stores,
Speaker 8: it means that the product is actually closer to the customer,
Speaker 8: which means it's cheaper to deliver it to the customer,
Speaker 8: and that helps make the profitability of e commerce a
Speaker 8: lot better. And so those are sort of the strengths
Speaker 8: that Target has and I think that investors appreciate that
Speaker 8: they're doing it. Their own way and not just trying
Speaker 8: to chase any sale at the cost of the profitability
Speaker 8: of the business.
Speaker 1: Well a lot to look forward to. Second quarter earnings
Speaker 1: from Target out this Wednesday are thanks to Jennifer bartashis
Speaker 1: Bloomberg Intelligence Senior Analyst, Retail, Staples and packaged Food. Coming
Speaker 1: up on Bloomberg day Break weekend, we'll dissect the UK's
Speaker 1: immigration dilemma. I'm Tom Busby and this is Bloomberg. This
Speaker 1: is Bloomberg Daybreak Weekend, our global look ahead at the
Speaker 1: top stories for investors in the coming week. I'm Tom
Speaker 1: Busby in New York. Up later on our program, we'll
Speaker 1: look at vice presidential candidate Tim Waltz's relationship with China
Speaker 1: as he prepares to take the stage at the Democratic
Speaker 1: National Convention. But first, the UK still reeling from its
Speaker 1: worst rioting in over a decade, fueled by anti immigrant sentiment.
Speaker 1: As even more arrivals are expected, it's become a major
Speaker 1: flashpoint for Prime Minister Keir Starmer's new government, which has
Speaker 1: promised to limit the number of new entrants to the country.
Speaker 1: For more, Let's go to London and bring in Bloomberg Daybreak.
Speaker 1: Europe banker Caroline hepger Tom.
Speaker 2: More than a thousand people have now been arrested following
Speaker 2: several days of anti immigrant disorder across the UK at
Speaker 2: the end of July and beginning of August. The rioting
Speaker 2: was sparked by the fatal stabbings of three young girls
Speaker 2: attending a Taylor Swift themed dance class in Southport, in
Speaker 2: the northwest of England on the twenty ninth of July.
Speaker 2: Misinformation about the attacker being a Muslim asylum seeker spread
Speaker 2: swiftly online and encouraged by far right activists and protesters.
Speaker 2: It resulted in days of anti immigration demonstrations that turned violent,
Speaker 2: targeting the police, migrant support facilities and mosques. Prime Minister
Speaker 2: Kirs Starmer has now placed an emphasis on speedy and
Speaker 2: tough punishment in a bid to restore calm That seems
Speaker 2: to have largely worked, but it remains to be seen
Speaker 2: how his Labor Party will approach the issue of migration,
Speaker 2: a political flashpoint over the last few years that successive
Speaker 2: governments have been forced to reckon with Bloomberg's EMEA Equalities
Speaker 2: editor Syrage Datu says that the recent disorder fueled by
Speaker 2: that online misinformation lay is bare the scale of the challenge.
Speaker 9: And very very quickly things online turned quite violent. And
Speaker 9: so you had that misinformation right from the start that
Speaker 9: largely at the beginning happened on X and then you
Speaker 9: started having groups organizing on different platforms, places like Telegram,
Speaker 9: places like discord where they're not necessarily available to their public.
Speaker 9: You really had a very quick virality of this misinformation
Speaker 9: that the key thing that happened in this time was
Speaker 9: that it played on the fears that people have, and
Speaker 9: very quickly y had that they're escalated into violence.
Speaker 10: How much do you think that foreign states have been
Speaker 10: interfering in this in this business, the.
Speaker 9: Government is very much looking into the idea of foreign
Speaker 9: interference and foreign involvement, and this is you know, this
Speaker 9: is not necessarily new. We know that our style states
Speaker 9: have been involved in missing and spreading sharing misinformation for
Speaker 9: some time. But what I will say is I spoke
Speaker 9: to a called Logically, a group that counters disinformation, and
Speaker 9: they spoke to me about a group called Channel three now,
Speaker 9: which is a fake news channel, and they were one
Speaker 9: of the first accounts on x to share this fake name.
Speaker 9: And it started out as a YouTube channel that was
Speaker 9: sharing Russian home videos. It then made the shift to
Speaker 9: Pakistani content. It went through a cycle of different branding,
Speaker 9: different fake news organization names, and then now it's registered
Speaker 9: in Lithuania. And what they said to me is it
Speaker 9: mirrors the tactics of a Russian disinformation campaign. But then
Speaker 9: cautioned and added, but the problem is that real people,
Speaker 9: especially in their ways, people who are extremely online people
Speaker 9: tend to post online in a way that mirrors bots.
Speaker 9: That's why it's so hard to retell who's behind some
Speaker 9: of this.
Speaker 2: What about Elon Musk and his role you mentioned x
Speaker 2: he has found the flames one can argue of extremism
Speaker 2: in the UK. What's his involvement here?
Speaker 9: This is a really interesting one. So obviously, even masked
Speaker 9: the owner effects, he's made really provocative posts on his
Speaker 9: own platform saying that civil war is inevitable. Henry Parker
Speaker 9: from Logically told me that actually he's really going against
Speaker 9: the terms and conditions off his own platform. This, you know,
Speaker 9: this isn't really this sort of language isn't acceptable. But
Speaker 9: of course he has the owners. I don't think they're
Speaker 9: going to delete his account. But what we have seen recently,
Speaker 9: people like Tommy Robinson whose real name is Stephen Yaxley Lennon,
Speaker 9: who's been inspiring a lot of the protests in person,
Speaker 9: but while he's been abroad reportedly in Cypress on holiday,
Speaker 9: he wasn't allowed on Twitter. Just a few years ago
Speaker 9: he was banned and he's been allowed back on x
Speaker 9: so I think Mask's role has been twofold. It's not
Speaker 9: just potentially, you know, getting into clashes with Prime Minie,
Speaker 9: but also the way that he has led his company.
Speaker 10: Something that you must posted about people being arrested for
Speaker 10: social media posts, people being arrested on the Communications Act
Speaker 10: for posting on social media. But this is a controversial error,
Speaker 10: isn't it. Can the UK really police the Internet in
Speaker 10: this way?
Speaker 9: Yeah? Again, this is a of course it's going to
Speaker 9: be controversial. I guess it comes down to the idea
Speaker 9: that should incitement of hatred only apply in person or
Speaker 9: should you be charged for incitement of hatred wherever it happens.
Speaker 9: And obviously the Communications Act means that you know, and
Speaker 9: the government decided that it should be so that it's
Speaker 9: not necessarily it's not really new, something that's been happening
Speaker 9: for quite a while, but obviously in situations like this,
Speaker 9: where there are inflamed tensions where we do have violence.
Speaker 9: Perhaps we're hearing about these charges being made more whereas
Speaker 9: in normal circumstances it just happens behind the scenes. I
Speaker 9: should terrify you know that the people who have been
Speaker 9: charged on this, who have been saying things like go
Speaker 9: and burn hotels that have asylums because in them it's
Speaker 9: not language that is it's not tempered language. Obviously you
Speaker 9: know that it is quite a violent language.
Speaker 2: That was Sirage Datu speaking to me on the Bloomberg
Speaker 2: UK Politics program. Well aside from questions about social integration,
Speaker 2: immigration is also heavily tied to the UK's economic performance.
Speaker 2: Just last month, the Confederation for British Industry, the main
Speaker 2: business lobby here, one that curves on migration could hinder
Speaker 2: the country's economic outlook. So what will the government's approach
Speaker 2: be to this issue. Kirs Starmer has talked about wanting
Speaker 2: to quote smash the gangs, quite similar really to Rishi
Speaker 2: Sunac's stop the boat's message when it comes to people
Speaker 2: who are coming illegally to Britain. But the new government
Speaker 2: has yet to settle on its overall migration policy. Since
Speaker 2: the landslide elect victory of July. Join me now to
Speaker 2: discuss this in greater depth is Bloomberg's UK economics reporter
Speaker 2: Lucy White, Lucy Fogods, have you on the program. There
Speaker 2: are various different kinds of migration statistics and that can
Speaker 2: get a lot of people into a lot of trouble
Speaker 2: very quickly. What do you think though, that the migration
Speaker 2: numbers overall are looking like for the UK and the
Speaker 2: debate in Britain at the moment.
Speaker 11: So we had the last time we had migration data
Speaker 11: out that was from the Office for National Statistics, a
Speaker 11: big set of migration data, and that was around long
Speaker 11: term migration to the UK, and that showed migration falling
Speaker 11: to six hundred and eighty five thousand net migration, so
Speaker 11: that the total number of people coming in compared to
Speaker 11: those going out falling to six hundred and eighty five
Speaker 11: thousand in twenty twenty three from seven hundred and sixty
Speaker 11: four thousand a year earlier. That's obviously quite a big drop,
Speaker 11: but it's still showing migration at very high levels and
Speaker 11: away off the tens of thousands that David Cameron spoke
Speaker 11: about when he was trying to get elected back in
Speaker 11: twenty ten. Brexit has changed the type of migration coming
Speaker 11: into the UK. So before we tended to have a
Speaker 11: lot of European migrants coming to the UK, many of
Speaker 11: whom would fill you know, kind of more casual roles
Speaker 11: bar work and you know, hospitality as well as other roles.
Speaker 11: But while there's a huge focus on the small boats elements,
Speaker 11: as you just mentioned, they only constitute a tiny proportion
Speaker 11: of the people coming in to the UK. The vast
Speaker 11: majority of people who are now coming into the UK
Speaker 11: are through government approved routes, So that's work visas, that's
Speaker 11: through humanitarian routes, although that is falling off now. So
Speaker 11: that was such as you know, the people coming in
Speaker 11: due to conflict in Ukraine and conflict in Hong Kong.
Speaker 2: So what does the relationship then look like between immigration
Speaker 2: and economic performance in the UK.
Speaker 11: I mean, there's varying takes on this, depending on whose
Speaker 11: research you look at, and what data they are looking at,
Speaker 11: how they interpret it, what other factors they're taking into account.
Speaker 12: But it is.
Speaker 11: Widely accepted that migration does generally boost productivity in developed countries,
Speaker 11: so the value of work done per hour. Essentially it
Speaker 11: gives employers more choice over who they employ. You know,
Speaker 11: you've got you've got a bigger labor pool to look at,
Speaker 11: so you can you can pick and choose a little more.
Speaker 11: There is some worry that among some people, and you know,
Speaker 11: this is possibly what we saw inflaming some of those
Speaker 11: riots that you were talking about earlier, that this can
Speaker 11: lead to fewer job opportunities for people in the country
Speaker 11: and lower wages for people in the country. But according
Speaker 11: to the government's Migration Advisory Committee, who've looked at a
Speaker 11: lot of evidence on this historically, there's actually been very
Speaker 11: little evidence that migration does have a huge impact on wages.
Speaker 2: So what do you think it means then, for this
Speaker 2: still quite new Prime minister, I mean only about six
Speaker 2: weeks into his term of office, Kirs Starmer. I mean
Speaker 2: he's got to balance then the warnings that I mentioned
Speaker 2: from the CBI about curbs on migration hurting or stunting
Speaker 2: economic growth and then at the same time public services
Speaker 2: being very very stretched.
Speaker 11: I think Britain does have to face a reckoning at
Speaker 11: the moment. I mean, the truth is that we are
Speaker 11: hugely reliant on migrant workers in many sectors. I mean
Speaker 11: I spoke about the increase in the number of people
Speaker 11: coming for work. A huge number of those are coming
Speaker 11: on health and social care visas. These tend to be
Speaker 11: lower wages, lower paid jobs, you know, in the care sector,
Speaker 11: and we are hugely reliant on these people. If we're
Speaker 11: to raise wages and you know, encourage more British workers
Speaker 11: to work in this sector, that's going to take a
Speaker 11: huge amount of public funding and possibly a whole rejig
Speaker 11: of the social care system. So, I mean, Kirs Darma
Speaker 11: really does have a balancing act here. And I obviously
Speaker 11: migration does pose worries about pressure on public services. You know,
Speaker 11: there are more people who'll be wanting houses, more people
Speaker 11: who'll be wanting to use education, to use hospitals. But
Speaker 11: at the same time, you know, we do have to
Speaker 11: remember that migrants do also you know, kind of add
Speaker 11: to the demand in the economy, so will also be
Speaker 11: you know, kind of paying their taxes as well. So
Speaker 11: we do have to balance at the end of the day,
Speaker 11: whether we can afford to be less reliant on migrants.
Speaker 2: I suppose yeah, Well, especially with an aging population within
Speaker 2: the UK. I mean, the other big theme has been
Speaker 2: about kind of talent UK universities could be at risk
Speaker 2: from have been at risk from immigration and crackdowns that
Speaker 2: then deter foreign students. You know, that's long been the
Speaker 2: kind of golden goose for universities and colleges in the UK,
Speaker 2: you know, for an advanced economy like ohs tell us
Speaker 2: about that.
Speaker 11: Yeah, I mean, I've heard a lot of concerns from
Speaker 11: academics in universities. They are becoming more and more reliant
Speaker 11: as we've seen you know, kind of pressures on domestic
Speaker 11: funding for universities. They are becoming more and more reliant
Speaker 11: on the international students who are paying higher fees. And
Speaker 11: we're seeing a huge reduction in the number of students
Speaker 11: who are coming to use UK universities at the moment,
Speaker 11: since the government imposed a ban on most students bring
Speaker 11: their dependence into the country. That has for some people
Speaker 11: made it less attractive to come to a UK university
Speaker 11: when you're comparing that with you know, very good institutions
Speaker 11: in Europe, in the US where they might otherwise go.
Speaker 11: So there is a lot of concern within universities that
Speaker 11: on a global stage, we are becoming less competitive.
Speaker 2: It remains a potent topic, a huge you know, economic
Speaker 2: issue for Britain. As well many thanks to Bloomberg's UK
Speaker 2: economics reporter Lucy White. I'm Caroline Hepge here in London.
Speaker 2: You can catch us every weekday morning for Bloomberg Daybreak.
Speaker 2: You up beginning at six am in London. That's one.
Speaker 2: I am on Wall Street, Tom.
Speaker 1: Thank you, Caroline. And coming up on Bloomberg day Break Weekend,
Speaker 1: we'll look at Democratic vice presidential candidate Tim Waltz's relationship
Speaker 1: with China. I'm Tom Busby and this is Bloomberg. This
Speaker 1: is Bloomberg day Break Weekend, our global look ahead at
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: Tom Busby in New York. The Democratic National Convention will
Speaker 1: take place in the week ahead. Democrats rallying around Kamala
Speaker 1: Harris and her running mate, Governor Tim Walts of Minnesota,
Speaker 1: who has a long history with China. Let's look now
Speaker 1: at how that relationship might play out during the campaign.
Speaker 1: Here's Bloomberg Daybreak Asia co host Doug Krisner.
Speaker 3: Tom. This connection goes back decades. Walls taught English in Foshan, China,
Speaker 3: in nineteen eighty nine and nineteen ninety. That city is
Speaker 3: in the southern Guangdong province and Walts was in China
Speaker 3: after the Ken Men's Square massacre in nineteen eighty nine.
Speaker 3: You know, he is the first person on a presidential
Speaker 3: ticket with experience of living in China since George H. W. Bush,
Speaker 3: who served as US ambassador to Beijing in the nineteen
Speaker 3: seventies and as a Minnesota congressman in two thousand and seven.
Speaker 3: Walls aligned with politicians on both sides of the aisle
Speaker 3: focused on China's weak human rights record. He often spoke
Speaker 3: affectionately about the Chinese people. As a member of the
Speaker 3: House Agriculture Committee, Walls was interviewed for Agripol's Communications in
Speaker 3: twenty sixteen.
Speaker 13: I lived in China, and as I said, I've been
Speaker 13: there about thirty times. But if someone tells you and
Speaker 13: they're an expert on China, they're probably not telling you
Speaker 13: the truth because it's complex country, but it's critically important
Speaker 13: for us. I don't fall into the category that China
Speaker 13: necessarily needs to be an adversarial relationship. I totally disagree,
Speaker 13: and I think we need to stand firm on what
Speaker 13: they're doing in the South China Sea, but there's many
Speaker 13: areas of cooperation that we can work on.
Speaker 3: That's Tim Walls speaking in twenty sixteen, and after he
Speaker 3: returned from China in nineteen ninety, he described the Chinese
Speaker 3: people to a local newspaper in Nebraska. He said, if
Speaker 3: they had proper leadership, there are no limits on what
Speaker 3: they could accomplish. He went on to say, they are
Speaker 3: such a kind, generous, capable people. I got reaction earlier
Speaker 3: from Michael Sobolik, he is senior fellow at the American
Speaker 3: Foreign Policy Council.
Speaker 7: Governor Walls tapped into something that is still true today
Speaker 7: in twenty twenty four, which is, the Chinese people are
Speaker 7: not the enemies of the American people at all, nor
Speaker 7: should they be. I've been to China as well, and
Speaker 7: I've experienced that same hospitality and generosity that Walls experienced
Speaker 7: when he was there too, and I think many Americans
Speaker 7: would attest to the same thing. The problem for Washington
Speaker 7: policymakers is not the Chinese people, it's the Chinese Communist Party.
Speaker 7: And that distinction is quite meaningful, and I am gratified
Speaker 7: greatly that Governor Walls recognizes that difference.
Speaker 3: That's an important distinction to make. But in terms of
Speaker 3: influencing policy, imagine a world where Kamala Harris is the
Speaker 3: next president. Is it the role of the vice president
Speaker 3: at all to kind of get involved with setting the agenda?
Speaker 7: So that's going to vary from administration to administration to
Speaker 7: be sure, but ultimately, if she wins, she is going
Speaker 7: to face this million dollar question in American foreign policy?
Speaker 7: Is China the Chinese Communist Party a potential competitor or
Speaker 7: an adversary? And Hijinping, the leader of China, is not
Speaker 7: really leaving America with much of a choice. We're going
Speaker 7: to have to choose one or the other.
Speaker 3: How do you imagine Beijing would react to this type
Speaker 3: of situation where you have someone in the administration who
Speaker 3: knows so much about China.
Speaker 12: I think they'll probably try to play this much like
Speaker 12: they have attempted to work with President Joe Biden and
Speaker 12: what not, just she at the most highest levels.
Speaker 7: But what Chinese diplomats will often do is try to
Speaker 7: fall back on mutual feelings of friendship and cooperation and
Speaker 7: shared cultural experiences to try to get American politicians to
Speaker 7: give a little bit on the competitive agenda. I am
Speaker 7: certain they will try to do the same thing with
Speaker 7: Walls if he assumes the Vice Presidency. In fact, as
Speaker 7: governor of Minnesota, he's already received some of those diplomatic overtures.
Speaker 3: How do you think he's going to frame the conversation
Speaker 3: around the South China Sea.
Speaker 7: So he's on record as a member of Congress saying
Speaker 7: that the United States needs to stand up to China
Speaker 7: and call out their illegal territorial claims in the South
Speaker 7: China see And listen, that's great. We need to hold
Speaker 7: the Chinese Communist Party accountable for their illegal actions with
Speaker 7: our rhetoric, but we are at a point in our
Speaker 7: security situation where we need to move beyond words. We
Speaker 7: need to start making the Chinese Communist Party pay for
Speaker 7: endangering the security of our allies and our partners and
Speaker 7: frankly American interests in the South China see. And this
Speaker 7: is the big question with Governor Wallas.
Speaker 12: He has a.
Speaker 7: Strong rhetorical record on human rights with China, but he hasn't,
Speaker 7: in the position of a representative, really been in a
Speaker 7: position to make those hard executive level decisions on how
Speaker 7: do you assess those tradeoffs, because if you want to
Speaker 7: hold them accountable, you're probably going to have to give
Speaker 7: a bit on the cooperative agenda with Beijing, and it's
Speaker 7: really unclear how he's going to make that calculation if
Speaker 7: he wins the selection.
Speaker 3: With Kamala Harris, he is Michael Soberlik, Senior Fellow at
Speaker 3: the American Foreign Policy Council. Joining me now for some
Speaker 3: discussion is Nick Waddams. He is Bloomberg US National Security
Speaker 3: Team leader. Nick is based in Washington, d C. Thanks
Speaker 3: for making time to chat with us, Nick, So I
Speaker 3: laid out a bit of the Walls backstory as it
Speaker 3: relates to China. Is there anything that you would like
Speaker 3: to add for context?
Speaker 5: A couple interesting things there. One, it is notable, amid
Speaker 5: all the questions about Tim Walls's attitude towards China, he
Speaker 5: got married on the anniversary of the Tieneman Square crackdown
Speaker 5: because he said he wanted to have a memorable anniversary date.
Speaker 5: But also I think that was meant as a sort
Speaker 5: of signal for himself that he did really side with
Speaker 5: the Chinese people and he really believes quite strongly in
Speaker 5: human rights. The other thing to point out is that
Speaker 5: we have heard a fair amount from Tim Walls, but
Speaker 5: only as you indicated, from around twenty sixteen, that's eight
Speaker 5: years ago, and in the time. Since then, both parties,
Speaker 5: Democrats as much as Republicans, have really undergone this fundamental
Speaker 5: shift in how they view China. Generally, the policy is
Speaker 5: much more adversarial, and Democrats as well as Republicans have
Speaker 5: really shed this idea that it is possible to have
Speaker 5: a really strong cooperative relationship with China. And in twenty
Speaker 5: sixteen you really did see still some of the sort
Speaker 5: of vestigial belief that it wasn't quite clear where Shi
Speaker 5: Jinping was going with China and that it would be
Speaker 5: possible to have a relationship. I mean, I remember living
Speaker 5: in China for five years myself, seeing John Kerry and
Speaker 5: Hillary Clinton go to Beijing, and the line they often
Speaker 5: repeated was, you know, there's room enough in the world
Speaker 5: for an established power and a rising power, saying essentially
Speaker 5: there was room for China and the US, and that
Speaker 5: is an idea that's very definitively been put aside.
Speaker 3: What do we know about GOP criticism of Walls, his
Speaker 3: history in China, and particularly in the context of being
Speaker 3: on the Democratic ticket.
Speaker 5: I think what you're going to see here is an
Speaker 5: attack line from Republicans, whether or not it's true. You know,
Speaker 5: we still have not heard a really definitive account from
Speaker 5: Tim Walls lately, though I think it's safe to assume
Speaker 5: that his thinking now is very much in line with
Speaker 5: what Kamalah Grris' thinking is, which is also going to
Speaker 5: be very much in line with what Joe Biden's thinking is,
Speaker 5: which in some ways has been even more extreme in
Speaker 5: the desire to sanction and punish and impose terrorists on
Speaker 5: China than even Donald Trump was. So this is really
Speaker 5: a situation where the two parties are in a race
Speaker 5: to the extreme end of the spectrum to beat up
Speaker 5: on China. I mean, there is just no political advantage
Speaker 5: either side sees and suggesting even the little bit of
Speaker 5: sort of softness towards China. So I think you have
Speaker 5: already seen and will see Republicans raise the specter of
Speaker 5: potential softness or sympathy towards China from Tim Walls based
Speaker 5: on the fact that he lived there thirty years ago
Speaker 5: or so. But we are still waiting to hear from him,
Speaker 5: and I think he has already given an indication given
Speaker 5: his strong support for human rights that and given the
Speaker 5: pressure he'll also face within his own party that there's
Speaker 5: not going to be much daylight between him and the
Speaker 5: current position from the Biden administration on China.
Speaker 3: One of the other things that I think of when
Speaker 3: I think about current policy is the export controls for
Speaker 3: the most advanced semiconductor technology that the Biden administration has
Speaker 3: placed on Beijing, and from the China side, the view
Speaker 3: that these export controls are essentially aimed at holding China's
Speaker 3: economic development back. Is there anything that you feel could
Speaker 3: change under a Harris Walls administration or not?
Speaker 5: Well, it's very interesting, you know, the question may not
Speaker 5: necessarily be Tim Wallas. It may be some of the
Speaker 5: other national security folks around her. One in particular is
Speaker 5: a guy named Philip Gordon, who is essentially Kamala Harris's
Speaker 5: top national security advisor. He was the signatory of a
Speaker 5: letter during the Trump administration, one of these letters that
Speaker 5: get circulated and signed by former ambassadors and national security
Speaker 5: people saying hey, listen, yes, we need to compete with China,
Speaker 5: we need to protect our interests, make sure that they
Speaker 5: don't steal our intellectual property, but essentially saying this tit
Speaker 5: for tat the rising rhetoric, the belief of China as
Speaker 5: an enemy is really a race to the bottom. Things
Speaker 5: have moved on even since that letter, and you have,
Speaker 5: as you say, seen the Biden administration really hit China
Speaker 5: with more and more severe export controls and essentially adopted
Speaker 5: a policy where they say, Okay, we're not even going
Speaker 5: to let you get your hands on some of the
Speaker 5: most significant technology, particularly around microshifts. They see that as
Speaker 5: so grave a national security threat that they're going to
Speaker 5: do everything they can to make sure that China can't
Speaker 5: get that technology. And that just sets up this fundamentally
Speaker 5: oppositional relationship that China is not going to be willing
Speaker 5: to see past if there are people within the administration
Speaker 5: who say they want cooperation on things like fentanyl.
Speaker 3: For example, in my conversation we heard a segment of
Speaker 3: with Michael Sobolik from the American Foreign Policy Council. I
Speaker 3: ask him how he might imagine Beijing reacting to a
Speaker 3: situation where you have someone inside an administration who has
Speaker 3: such familiarity with China culturally. Do you have a sense
Speaker 3: of what it may mean for Beijing to have walls
Speaker 3: in an administration.
Speaker 5: Well, at the moment, they're very much keeping in the background.
Speaker 5: This is not something where China, the Communist Party, the
Speaker 5: current leadership want to interject themselves. I mean, particularly with
Speaker 5: all of the talk around foreign interference in the elections
Speaker 5: in twenty sixteen, then twenty twenty then now, this is
Speaker 5: not something where China wants to publicly take a side,
Speaker 5: so they have not really said anything publicly. I think
Speaker 5: there are a couple in interesting things because on the
Speaker 5: one hand, yes, they can say, Okay, this is a
Speaker 5: person who ostensibly could be a better ally or a
Speaker 5: potential conduit. Maybe he understands China a little bit better. However,
Speaker 5: all of the public comments we have from Tim Walls
Speaker 5: in the last many years about China have been very
Speaker 5: much human rights focused and critical of China's human rights records.
Speaker 5: So that's going to make China very uneasy if the
Speaker 5: vice president is willing to be an outspoken critic of
Speaker 5: the Chinese human rights record, and that's going to suggest
Speaker 5: to them that he's going to be very much in
Speaker 5: line with what the Biden administration policy has been thus far.
Speaker 3: And this relationship over the last twenty or thirty years
Speaker 3: between the US and China certainly has become a lot
Speaker 3: more complicated. Thanks for helping us understand it a bit more.
Speaker 3: Nick Wadams there. Bloomberg US National Security Team leader Nick
Speaker 3: joining from Washington, d C. I'm Doug Krisner. You can
Speaker 3: join Brian Curtis and myself weekdays Hereloomberg day Break Asia,
Speaker 3: beginning at eight am in Hong Kong eight pm on
Speaker 3: Wall Street.
Speaker 1: Tom, Thank you, Doug, and that does it for this
Speaker 1: edition of Bloomberg day Break Weekend. Join us again Monday
Speaker 1: morning at five am Wall Street time for the latest
Speaker 1: on markets overseas and the news you need to start
Speaker 1: your day. I'm Tom Busby. Stay with us. Top stories
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