1 00:00:02,759 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,240 --> 00:00:12,680 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,680 --> 00:00:15,080 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:15,080 --> 00:00:17,720 Speaker 2: anchors all around the world. Straight ahead on the program, 5 00:00:17,760 --> 00:00:21,480 Speaker 2: what this week's September jobs report could tell the Federal Reserve. 6 00:00:21,760 --> 00:00:23,319 Speaker 2: I'm Tom Busby in New York. 7 00:00:23,600 --> 00:00:26,279 Speaker 3: I'm Caline Hecker here in London, where we're shining a 8 00:00:26,320 --> 00:00:30,200 Speaker 3: spotlight on the women's shaping our global economic future. 9 00:00:30,560 --> 00:00:33,720 Speaker 4: I'm dek Prisner looking at whether China's pro growth pivot 10 00:00:34,000 --> 00:00:34,760 Speaker 4: is succeeding. 11 00:00:36,159 --> 00:00:40,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:40,240 --> 00:00:43,920 Speaker 1: eleven three h New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:44,440 --> 00:00:49,440 Speaker 1: Bloomberg ninety two nine Boston, DAB Digital Radio, London, Syria 14 00:00:49,720 --> 00:00:53,200 Speaker 1: XM one T one, and around the world on Bloomberg Radio, 15 00:00:53,280 --> 00:00:55,480 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:00,600 --> 00:01:02,440 Speaker 2: Good day to you. I'm Tom Busby, and we begin 17 00:01:02,480 --> 00:01:05,680 Speaker 2: today's program with the September jobs report out this Friday. 18 00:01:06,120 --> 00:01:09,520 Speaker 2: What might another anemic report mean just weeks ahead of 19 00:01:09,560 --> 00:01:13,440 Speaker 2: another Federal Reserve rate decision? And for more, we welcome 20 00:01:13,560 --> 00:01:17,959 Speaker 2: Stuart paul Us, Economists with Bloomberg Economics. Stuart, thank you 21 00:01:18,000 --> 00:01:19,800 Speaker 2: so much for being here. Now let's start with some 22 00:01:19,840 --> 00:01:22,440 Speaker 2: good news, and there was good news. Q two economic 23 00:01:22,440 --> 00:01:25,040 Speaker 2: growth a lot better than forecasts three point eight percent, 24 00:01:25,560 --> 00:01:29,040 Speaker 2: consumer spending strong in August, even if inflation was still 25 00:01:29,040 --> 00:01:31,800 Speaker 2: a little sticky, and Wall Street up until this past week, 26 00:01:32,160 --> 00:01:35,160 Speaker 2: had been hitting one all time high after another. All 27 00:01:35,160 --> 00:01:37,840 Speaker 2: good news. But it's not all good news, is it. 28 00:01:37,840 --> 00:01:39,280 Speaker 2: There's a lot of worries out there. 29 00:01:39,560 --> 00:01:39,880 Speaker 5: Well. 30 00:01:40,440 --> 00:01:42,680 Speaker 6: The thing that everybody seems to be anchoring on with 31 00:01:42,920 --> 00:01:46,759 Speaker 6: the Q two GDP data was this major upward revision 32 00:01:46,800 --> 00:01:51,680 Speaker 6: to headline GDP growth and to household spending, and household 33 00:01:51,720 --> 00:01:54,360 Speaker 6: spending ended up growing at an annualized rate of about 34 00:01:54,400 --> 00:01:57,680 Speaker 6: two and a half percent in the second quarter. As 35 00:01:57,720 --> 00:02:01,640 Speaker 6: you mentioned when we finally got the August personal consumption 36 00:02:01,840 --> 00:02:05,760 Speaker 6: expenditures report. It even looks like household spending continued growing 37 00:02:05,880 --> 00:02:08,600 Speaker 6: into the third quarter. So that's all good news there. 38 00:02:08,919 --> 00:02:11,560 Speaker 6: What I'm thinking most about, though, from the last week, 39 00:02:11,919 --> 00:02:15,720 Speaker 6: is that corporate profits for the second quarter were revised 40 00:02:15,760 --> 00:02:20,800 Speaker 6: down pretty significantly. Corporate profits only grew about seven billion 41 00:02:20,840 --> 00:02:24,200 Speaker 6: dollars in the second quarter. That's down from an initial 42 00:02:24,280 --> 00:02:28,960 Speaker 6: estimate of nearly seventy billion dollars, and if that's the case, 43 00:02:29,000 --> 00:02:31,200 Speaker 6: that's a big revision. If that's the case, you would 44 00:02:31,240 --> 00:02:35,079 Speaker 6: have to think that expansion, investment and hiring plans are 45 00:02:35,120 --> 00:02:37,800 Speaker 6: going to start to simmer. And when we look at 46 00:02:37,880 --> 00:02:42,560 Speaker 6: let's say small business surveys, capital expenditure plans have never 47 00:02:42,600 --> 00:02:46,760 Speaker 6: been this low outside of a recession. Capex plans are low, 48 00:02:46,960 --> 00:02:51,640 Speaker 6: investment and expansion plans are low. Hiring plans are also low. 49 00:02:51,960 --> 00:02:55,280 Speaker 6: So the thing that I'm thinking most about in the 50 00:02:55,320 --> 00:03:00,960 Speaker 6: outlook is the currently tenuous labor market balance between supply 51 00:03:01,200 --> 00:03:03,519 Speaker 6: and demand for labor and what that means for the 52 00:03:03,560 --> 00:03:06,840 Speaker 6: pace of hiring going forward. Now, when we think about 53 00:03:07,200 --> 00:03:10,480 Speaker 6: the September jobs report coming out this coming Friday, we 54 00:03:10,639 --> 00:03:13,919 Speaker 6: think there is going to be about fifty five thousand 55 00:03:13,960 --> 00:03:17,520 Speaker 6: jobs added during the month. But one thing that we 56 00:03:17,600 --> 00:03:20,280 Speaker 6: need to continue keeping in mind is that a lot 57 00:03:20,320 --> 00:03:23,280 Speaker 6: of workers are going to be rolling off government payrolls. 58 00:03:23,360 --> 00:03:25,400 Speaker 6: These are the folks who took the buy out earlier 59 00:03:25,400 --> 00:03:27,800 Speaker 6: in the year because of DOGE cuts. And when that's 60 00:03:27,840 --> 00:03:30,880 Speaker 6: the case, the pace of hiring could resume slowing to 61 00:03:30,919 --> 00:03:33,280 Speaker 6: the pace that we saw earlier this summer. This is 62 00:03:33,320 --> 00:03:37,560 Speaker 6: a very tenuous balance between labor supply and labor demand, 63 00:03:37,920 --> 00:03:41,280 Speaker 6: which makes us very cautious about the growth and spending 64 00:03:41,280 --> 00:03:43,480 Speaker 6: outlook as we head into year end. 65 00:03:43,680 --> 00:03:46,560 Speaker 2: And just those federal workers, you're talking thousands or tens 66 00:03:46,600 --> 00:03:50,560 Speaker 2: of thousands, not just in Washington and Baltimore, but in 67 00:03:51,160 --> 00:03:55,480 Speaker 2: National Park services across the US, and adjuncts of the 68 00:03:55,480 --> 00:03:57,160 Speaker 2: Social Security Administration all over. 69 00:03:57,360 --> 00:03:59,680 Speaker 6: That's right. This is not the sort of thing that's regionally. 70 00:03:59,760 --> 00:04:02,320 Speaker 6: I this is the sort of thing that affects workers 71 00:04:02,360 --> 00:04:05,080 Speaker 6: around the country. And so I think that when we 72 00:04:05,240 --> 00:04:08,320 Speaker 6: think about consumer spending, this is not something that just 73 00:04:08,440 --> 00:04:12,320 Speaker 6: affects businesses locally in Washington. This is something that materially 74 00:04:12,320 --> 00:04:14,360 Speaker 6: affects or outlook for spending growth. 75 00:04:14,600 --> 00:04:17,000 Speaker 2: Now, let's talk more about the jobs, not just those 76 00:04:17,000 --> 00:04:21,120 Speaker 2: federal jobs, because we know about those, but we've seen manufacturing, 77 00:04:21,360 --> 00:04:25,240 Speaker 2: despite the Trump administrations, you know, promoting and touting of 78 00:04:25,520 --> 00:04:30,080 Speaker 2: more manufacturing jobs coming back here, Manufacturing, construction, energy, especially 79 00:04:30,080 --> 00:04:33,880 Speaker 2: in oil, all seeing declines. And that's not good. 80 00:04:34,400 --> 00:04:38,440 Speaker 6: It's not It's basically every month since April, the manufacturing 81 00:04:38,440 --> 00:04:42,919 Speaker 6: industry has been shedding jobs. And look, Tom, that's the 82 00:04:42,960 --> 00:04:48,160 Speaker 6: normal state of affairs in an economy that's increasingly services oriented. 83 00:04:48,600 --> 00:04:51,800 Speaker 6: That's not the state of affairs that policymakers want when 84 00:04:51,800 --> 00:04:56,040 Speaker 6: they are pursuing industrial policy and protectionism. So there is 85 00:04:56,080 --> 00:04:59,400 Speaker 6: a part of me that thinks, look, the effect of towers, 86 00:04:59,400 --> 00:05:02,640 Speaker 6: the effect of industrial policy. We're just not quite feeling 87 00:05:02,680 --> 00:05:05,360 Speaker 6: it yet. We're not seeing any sort of boost to 88 00:05:05,440 --> 00:05:09,039 Speaker 6: manufacturing and construction yet. We should wait to see the 89 00:05:09,080 --> 00:05:12,680 Speaker 6: effects of the policies that the administration is rolling out. 90 00:05:12,360 --> 00:05:16,200 Speaker 6: But right now, yes, the manufacturing industry is shedding jobs. 91 00:05:16,520 --> 00:05:20,240 Speaker 6: Thinking back to the August industrial production report, and this 92 00:05:20,440 --> 00:05:24,839 Speaker 6: is a win for the administration. There is accelerating auto production, 93 00:05:25,040 --> 00:05:30,480 Speaker 6: there's accelerating steel production, there's accelerating pharmaceutical production, and accelerating 94 00:05:30,520 --> 00:05:34,160 Speaker 6: textile production. Those are all winds, but those are very recent. 95 00:05:34,279 --> 00:05:38,600 Speaker 6: It's too early to say that there's been material progress 96 00:05:38,680 --> 00:05:44,320 Speaker 6: shown in domestic production as a consequence of tariffs. Instead, 97 00:05:44,520 --> 00:05:49,920 Speaker 6: it looks like the growth negative consequences of uncertainty are 98 00:05:50,000 --> 00:05:54,720 Speaker 6: weighing on aggregate economic activity and aggregate hiring. Until we 99 00:05:54,760 --> 00:06:00,560 Speaker 6: see those isolated benefits booying domestic production, it's really it's 100 00:06:00,600 --> 00:06:03,080 Speaker 6: really just a growth negative story right now, and. 101 00:06:03,000 --> 00:06:06,080 Speaker 2: We won't know if the latest tariffs that the President 102 00:06:06,120 --> 00:06:08,919 Speaker 2: announced on pharmaceutic was one hundred percent, twenty five percent 103 00:06:08,960 --> 00:06:13,400 Speaker 2: on heavy duty trucks, thirty percent on sofas and upholstered furniture. 104 00:06:13,920 --> 00:06:15,760 Speaker 2: It's just too soon to tell. That could be months 105 00:06:15,760 --> 00:06:19,120 Speaker 2: down the road before we see any impact of that domestically, right. 106 00:06:19,120 --> 00:06:22,719 Speaker 6: That's right. So again August, from an industrial production perspective, 107 00:06:22,720 --> 00:06:25,760 Speaker 6: it looks like those favorite industries were doing relatively well. 108 00:06:26,080 --> 00:06:27,800 Speaker 6: But I'm not going to read too much into one 109 00:06:27,880 --> 00:06:30,080 Speaker 6: month's data. It's going to take some time to see 110 00:06:30,160 --> 00:06:34,800 Speaker 6: the full effects of those specific those industry specific tariffs. 111 00:06:35,120 --> 00:06:37,400 Speaker 2: Now, this past week, FED Chairman Jerome Powell, he said 112 00:06:37,440 --> 00:06:42,360 Speaker 2: there are serious risks to the economy involving inflation, which 113 00:06:42,400 --> 00:06:45,440 Speaker 2: we know is well above the target two point nine percent, 114 00:06:45,440 --> 00:06:48,080 Speaker 2: but it hasn't gotten any worse, but also the weakening 115 00:06:48,120 --> 00:06:51,560 Speaker 2: labor market. What does he see? Did he see all 116 00:06:51,600 --> 00:06:54,200 Speaker 2: these things? Is he seeing months out that I'm not seeing? 117 00:06:54,240 --> 00:06:57,039 Speaker 2: Maybe even you're not seeing that. We are going to 118 00:06:57,040 --> 00:07:00,760 Speaker 2: see things continue to digress in the labor market. 119 00:07:00,960 --> 00:07:03,560 Speaker 6: Which is really difficult right now, is that labor supply 120 00:07:03,680 --> 00:07:07,520 Speaker 6: and labor demand have this really treacherous balancing acts right now, 121 00:07:07,560 --> 00:07:11,920 Speaker 6: where growth in labor supply is very slow and labor 122 00:07:11,960 --> 00:07:15,320 Speaker 6: demand is waning. If we rewind the clock, let's say 123 00:07:15,320 --> 00:07:18,040 Speaker 6: a year ago, there were about ten percent more job 124 00:07:18,120 --> 00:07:22,440 Speaker 6: openings than there were unemployed or available workers. Now there 125 00:07:22,440 --> 00:07:26,720 Speaker 6: are just slightly fewer job openings than there are available workers. 126 00:07:27,080 --> 00:07:30,200 Speaker 6: We expect looking ahead to next week when we get 127 00:07:30,280 --> 00:07:34,120 Speaker 6: the job openings and labor turnover survey data, we expect 128 00:07:34,120 --> 00:07:36,200 Speaker 6: the number of job openings to fall further. It's about 129 00:07:36,200 --> 00:07:39,120 Speaker 6: seven point one five million, So again, now we're going 130 00:07:39,200 --> 00:07:42,800 Speaker 6: to have almost five percent fewer job openings. 131 00:07:43,040 --> 00:07:45,840 Speaker 2: The September Jobs report out this Friday, eight thirty am 132 00:07:45,880 --> 00:07:49,240 Speaker 2: Wall Street Time. Our thanks to Stuart Paul, us economists 133 00:07:49,280 --> 00:07:52,240 Speaker 2: with Bloomberg Economics. Well, next, we turn to a big 134 00:07:52,360 --> 00:07:55,080 Speaker 2: change coming this week to the US auto industry, the 135 00:07:55,200 --> 00:07:58,120 Speaker 2: end of the seventy five hundred dollars federal tax credit 136 00:07:58,400 --> 00:08:01,480 Speaker 2: for EV buyers. What will for EV makers and for 137 00:08:01,560 --> 00:08:05,480 Speaker 2: EV prices? What about Detroit's Big Three who spent billions 138 00:08:05,520 --> 00:08:08,720 Speaker 2: preparing for an electric engine future? For more, and on 139 00:08:08,760 --> 00:08:11,160 Speaker 2: who wins and who loses? We're joined by Steve Man, 140 00:08:11,360 --> 00:08:16,600 Speaker 2: Bloomberg Intelligence, Global Autos and Industrials Research analysts. Well, Steve, 141 00:08:16,640 --> 00:08:18,960 Speaker 2: thank you so much for being here. Can you tell us, 142 00:08:18,960 --> 00:08:20,880 Speaker 2: can you just set it up what happens this week 143 00:08:20,880 --> 00:08:24,040 Speaker 2: with that Biden era tax credit and what that program? 144 00:08:24,120 --> 00:08:26,200 Speaker 2: What has it meant to the EV industry. 145 00:08:26,840 --> 00:08:30,880 Speaker 5: Yeah, the seventy five hundred dollars Biden tax credit is 146 00:08:30,920 --> 00:08:34,440 Speaker 5: set to expire at the end of September, and the 147 00:08:34,480 --> 00:08:38,040 Speaker 5: tax credit has been very helpful to the industry. It 148 00:08:38,440 --> 00:08:43,000 Speaker 5: helpful to the automakers, helpful to the consumers, and sales 149 00:08:43,080 --> 00:08:45,880 Speaker 5: of EV's have been growing until you know, recent on 150 00:08:45,920 --> 00:08:50,080 Speaker 5: the last couple of years, and you know, when it falls, 151 00:08:50,600 --> 00:08:53,040 Speaker 5: I think EV sales is going to fall off the cliff. 152 00:08:53,240 --> 00:08:56,080 Speaker 5: And a lot of automakers are actually preparing for that 153 00:08:57,320 --> 00:08:59,640 Speaker 5: drop off after September thirtieth. 154 00:08:59,679 --> 00:09:02,080 Speaker 2: And how are they preparing for that drop off and 155 00:09:02,440 --> 00:09:04,040 Speaker 2: expected drop off in sales? 156 00:09:04,320 --> 00:09:07,520 Speaker 5: You know a few examples. You know, GM have already 157 00:09:07,520 --> 00:09:10,760 Speaker 5: announced that you know, they're probably gonna stop EV production 158 00:09:11,040 --> 00:09:14,360 Speaker 5: for the month of December. Uh, and then they're also 159 00:09:14,480 --> 00:09:17,360 Speaker 5: rolling out they do have plans to roll out a 160 00:09:17,520 --> 00:09:24,080 Speaker 5: very popular subcompact compact EV called a Bolt, which sold 161 00:09:24,120 --> 00:09:27,319 Speaker 5: really well for them in the past. But instead of 162 00:09:27,840 --> 00:09:30,760 Speaker 5: you know, going full on production for for that new EV. 163 00:09:31,240 --> 00:09:33,600 Speaker 5: This is going to start with one shift and then 164 00:09:33,640 --> 00:09:36,560 Speaker 5: maybe ramp it up to two shifts in the new year, 165 00:09:36,640 --> 00:09:40,800 Speaker 5: depending on demand. And then the couple others, the Japanese 166 00:09:40,840 --> 00:09:46,079 Speaker 5: automakers are actually discontinuing, Acuras discontinuing their one of their 167 00:09:46,120 --> 00:09:50,480 Speaker 5: evs as well as Nissan in the North American market. 168 00:09:50,640 --> 00:09:52,480 Speaker 2: And how about Ford, I mean, Ford made a big 169 00:09:52,480 --> 00:09:55,760 Speaker 2: splash with the F one fifty lightning the Mustang Mocky, 170 00:09:55,960 --> 00:09:59,959 Speaker 2: but have things uh you know, have things really dialed back? 171 00:10:00,400 --> 00:10:00,520 Speaker 7: Uh? 172 00:10:01,520 --> 00:10:04,600 Speaker 5: Yeah, I mean Ford, Ford continues to lose a lot 173 00:10:04,640 --> 00:10:08,240 Speaker 5: of money on their EV business. They do sell the Mocky. 174 00:10:09,160 --> 00:10:13,200 Speaker 5: You know, electric pickup truck is not resonating with the 175 00:10:13,320 --> 00:10:18,040 Speaker 5: US consumer at all. So but you know, they are 176 00:10:18,120 --> 00:10:23,520 Speaker 5: still planning to launch a more affordable pickup truck, but 177 00:10:23,559 --> 00:10:27,000 Speaker 5: that's not until twenty twenty seven. So they've delayed those 178 00:10:27,040 --> 00:10:30,160 Speaker 5: plants a number of times already. So now it's twenty 179 00:10:30,240 --> 00:10:32,640 Speaker 5: twenty seven, we'll have to go. We'll have to see 180 00:10:32,640 --> 00:10:35,040 Speaker 5: what the demand is like in twenty twenty six. You know, 181 00:10:35,040 --> 00:10:37,720 Speaker 5: wouldn't be surprised if they pushed that out even further. 182 00:10:38,080 --> 00:10:41,559 Speaker 2: And Stilantis they have, you know, earmarked a jeep that'll 183 00:10:41,559 --> 00:10:44,040 Speaker 2: be all electric. Is that still in the pipeline or 184 00:10:44,080 --> 00:10:45,120 Speaker 2: is that being pushed back? 185 00:10:45,559 --> 00:10:48,680 Speaker 5: It looks like it's going to be pushed back. Also, Ram, 186 00:10:49,160 --> 00:10:53,080 Speaker 5: which is their pickup truck division, they've they've stopped. They 187 00:10:53,360 --> 00:10:57,760 Speaker 5: basically not going to roll out that electric pickup truck 188 00:10:57,880 --> 00:10:59,360 Speaker 5: that they was slated for next year. 189 00:10:59,480 --> 00:11:01,839 Speaker 2: All right, So that's Detroit's big three. Let's talk about 190 00:11:01,840 --> 00:11:04,960 Speaker 2: the companies that only make EV's. The big one of 191 00:11:04,960 --> 00:11:09,360 Speaker 2: course on everyone's Tesla, but also Rivian, Lucid, we have Faraday, 192 00:11:09,400 --> 00:11:11,800 Speaker 2: There's a whole bunch of smaller ones. What will it 193 00:11:11,880 --> 00:11:15,120 Speaker 2: mean Let's just talk about Tesla, that's the one everybody knows. 194 00:11:15,360 --> 00:11:18,839 Speaker 5: Yeah, Look, I think I think the the seventy five 195 00:11:18,920 --> 00:11:21,520 Speaker 5: hundred dollars EV credit going away is actually a transition 196 00:11:21,720 --> 00:11:25,439 Speaker 5: period for the EV industry in a couple of ways. 197 00:11:25,880 --> 00:11:30,600 Speaker 5: One is definitely consolidation. We've we've talked about some of 198 00:11:30,679 --> 00:11:35,600 Speaker 5: the automaker's discontinuing sale of EV's in the North American market. 199 00:11:35,760 --> 00:11:38,720 Speaker 5: But what it means is, uh, you know, probably more 200 00:11:38,760 --> 00:11:41,440 Speaker 5: business for the likes of Tesla and Rivian. You know, 201 00:11:41,640 --> 00:11:45,720 Speaker 5: their their business is only EV's and uh SO choices 202 00:11:45,760 --> 00:11:50,320 Speaker 5: for consumers are are dwindling and the really the only 203 00:11:50,360 --> 00:11:54,439 Speaker 5: ones that consumer can look to to buy EV's or 204 00:11:54,720 --> 00:11:57,480 Speaker 5: or the likes of these peer plays. The other thing 205 00:11:57,679 --> 00:12:01,760 Speaker 5: with this EV credit going on way is a transition 206 00:12:01,920 --> 00:12:08,199 Speaker 5: period for the EV industry. Now the consumer cannot rely 207 00:12:08,760 --> 00:12:13,360 Speaker 5: or the automaker. The industry cannot rely on monetary incentives 208 00:12:13,400 --> 00:12:16,480 Speaker 5: to drive demand anymore. It really now needs to go 209 00:12:16,600 --> 00:12:19,480 Speaker 5: back to the basic. The industry needs to address a 210 00:12:19,480 --> 00:12:22,679 Speaker 5: lot of the concern that the consumers have with evs, 211 00:12:22,720 --> 00:12:27,000 Speaker 5: which is high costs, high prices, as well as the 212 00:12:27,200 --> 00:12:30,960 Speaker 5: lack of charging infrastructure. We actually put out a deep 213 00:12:31,000 --> 00:12:36,440 Speaker 5: dive report recently looking at the EVE charging industry and 214 00:12:36,480 --> 00:12:39,400 Speaker 5: we actually think there's still continued to be a lot 215 00:12:39,400 --> 00:12:43,640 Speaker 5: of investment in that thirty billion to be exact, between 216 00:12:43,679 --> 00:12:45,040 Speaker 5: now and twenty thirty five. 217 00:12:45,440 --> 00:12:47,520 Speaker 2: Well, the federal tax credit for buyers of new end 218 00:12:47,600 --> 00:12:51,200 Speaker 2: used evs expiring this Tuesday. Our thanks to Steve Mann, 219 00:12:51,240 --> 00:12:55,680 Speaker 2: Bloomberg Intelligence Global Autos and Industrials research analysts and coming 220 00:12:55,720 --> 00:12:58,040 Speaker 2: up on Bloomberg day Break weekend will shine a spotlight 221 00:12:58,120 --> 00:13:01,840 Speaker 2: on the women shaping our global economic future. I'm Tom 222 00:13:01,880 --> 00:13:16,520 Speaker 2: Busby And this is Bloomberg. This is Bloomberg day Break weekend, 223 00:13:16,520 --> 00:13:18,840 Speaker 2: our global look ahead at the top stories for investors 224 00:13:18,840 --> 00:13:21,400 Speaker 2: in the coming week. I'm Tom Busby in New York. 225 00:13:21,840 --> 00:13:23,960 Speaker 2: Up later in our program, we'll try to gauge the 226 00:13:23,960 --> 00:13:27,079 Speaker 2: health of the Chinese economy with the release of official 227 00:13:27,160 --> 00:13:32,280 Speaker 2: PMI data. But first, Bloomberg's Women Money Power Conference returns 228 00:13:32,280 --> 00:13:34,640 Speaker 2: to London this week, bringing together some of the most 229 00:13:34,640 --> 00:13:38,320 Speaker 2: influential names in finance, business, and sport to discuss the 230 00:13:38,320 --> 00:13:42,880 Speaker 2: major issues facing the world, including AI and other new technologies. 231 00:13:43,240 --> 00:13:45,360 Speaker 2: For more, Let's go to London and bring in Bloomberg 232 00:13:45,440 --> 00:13:48,640 Speaker 2: day Break Europe anchor Caroline Hepgar Tom. 233 00:13:48,679 --> 00:13:52,000 Speaker 3: In the midst of a massive reallocation of capital and 234 00:13:52,160 --> 00:13:56,800 Speaker 3: tech driven changes to the global financial system, women are 235 00:13:56,880 --> 00:14:00,640 Speaker 3: controlling a greater share of wealth and making more of 236 00:14:00,679 --> 00:14:04,480 Speaker 3: the key financial decisions now. In the coming days, Bloomberg's 237 00:14:04,559 --> 00:14:09,000 Speaker 3: Women Money and Power Event will convene the most influential 238 00:14:09,040 --> 00:14:12,400 Speaker 3: voices from across the global finance industry for the second 239 00:14:12,480 --> 00:14:15,720 Speaker 3: year to debate and discuss the critical issues facing the 240 00:14:15,720 --> 00:14:20,480 Speaker 3: future of investing, real estate, consumer banking, and private markets, 241 00:14:20,720 --> 00:14:25,680 Speaker 3: as well as philanthropists, owners and CEOs, it's an issue 242 00:14:25,680 --> 00:14:29,320 Speaker 3: that is fast rising up the global agenda. In the UK, 243 00:14:29,440 --> 00:14:33,080 Speaker 3: this year, Bloomberg analysis found that the average woman working 244 00:14:33,160 --> 00:14:36,640 Speaker 3: in the UK financial sector earns about a fifth less 245 00:14:36,680 --> 00:14:40,040 Speaker 3: than their male colleagues, a reflection of how the gender 246 00:14:40,080 --> 00:14:44,320 Speaker 3: pay gap has stubbornly persisted even during a period when 247 00:14:44,400 --> 00:14:49,640 Speaker 3: businesses have pledged to address workplace inequality through diversity, equity 248 00:14:49,640 --> 00:14:54,040 Speaker 3: and inclusion schemes. At the same time, women a rising 249 00:14:54,120 --> 00:14:56,720 Speaker 3: in terms of the world of wealth. A little more 250 00:14:56,720 --> 00:14:59,640 Speaker 3: than a decade ago, think that they controlled less than 251 00:14:59,680 --> 00:15:03,480 Speaker 3: a third of total US assets. Now by twenty thirty, 252 00:15:03,680 --> 00:15:07,960 Speaker 3: that's expected to jump to thirty eight percent, reaching an 253 00:15:08,040 --> 00:15:13,440 Speaker 3: estimated thirty four trillion dollars. That disparity is likely to 254 00:15:13,480 --> 00:15:18,440 Speaker 3: feature heavily in discussions at the upcoming Bloomberg Women, Money 255 00:15:18,480 --> 00:15:23,680 Speaker 3: and Power Conference. At last year's gathering, participants anticipated a 256 00:15:23,800 --> 00:15:27,600 Speaker 3: bumper m and a year in twenty twenty five, optimistic 257 00:15:27,640 --> 00:15:31,040 Speaker 3: that deal making would pick up due to an anticipated 258 00:15:31,160 --> 00:15:36,520 Speaker 3: loosening of regulations under President Trump's administration. While those hopes 259 00:15:36,520 --> 00:15:40,680 Speaker 3: have only partially materialized, there is perhaps more uncertainty in 260 00:15:40,720 --> 00:15:44,760 Speaker 3: the market now than was expected. Either way, women remain 261 00:15:44,960 --> 00:15:48,680 Speaker 3: at the forefront of change. Just this month, Citygroup CEO 262 00:15:48,800 --> 00:15:52,720 Speaker 3: Jane Fraser told Bloomberg her clients have been much more 263 00:15:52,800 --> 00:15:57,400 Speaker 3: active in cattle markets, investing, and deal making after getting 264 00:15:57,440 --> 00:16:02,480 Speaker 3: greater clarity on taxes, tariffs, and deregulation. Here is Jane 265 00:16:02,560 --> 00:16:05,280 Speaker 3: Fraser speaking to Bloomberg's Jimana Bissetci. 266 00:16:05,960 --> 00:16:08,120 Speaker 7: You've got to look at the collective impact of the 267 00:16:08,160 --> 00:16:12,080 Speaker 7: tax policy, what's been happening with tariffs, and indeed the 268 00:16:12,120 --> 00:16:15,760 Speaker 7: increasing deregulation that we're seeing, and they work together as 269 00:16:15,800 --> 00:16:19,000 Speaker 7: a package, I think the most important piece for a 270 00:16:19,080 --> 00:16:24,920 Speaker 7: corporate clarity. We hate uncertainty, We like clarity. And our 271 00:16:24,960 --> 00:16:28,200 Speaker 7: client base now is really starting to act with more 272 00:16:28,200 --> 00:16:31,800 Speaker 7: confidence now that we've got clarity on those three fronts. 273 00:16:31,840 --> 00:16:35,920 Speaker 7: So active in the capital market, arena in financing, active 274 00:16:35,960 --> 00:16:39,760 Speaker 7: in much more active in investing, less sitting on the sidelines. 275 00:16:39,800 --> 00:16:42,360 Speaker 7: And M and A has been very very active indeed, 276 00:16:42,360 --> 00:16:47,360 Speaker 7: as we talked about, and on the consumer side, pretty 277 00:16:47,440 --> 00:16:50,600 Speaker 7: robust spending through the summer, and we saw that really 278 00:16:50,600 --> 00:16:55,000 Speaker 7: across all categories. Helped a bit by lower gas prices, 279 00:16:56,040 --> 00:17:01,360 Speaker 7: but the consumers being fiscally responsible, being more mindful around 280 00:17:01,400 --> 00:17:05,240 Speaker 7: some spend, but still the spending levels were very pleasing. 281 00:17:05,320 --> 00:17:07,800 Speaker 8: So the momentum was pretty strong across all lines of 282 00:17:07,840 --> 00:17:09,720 Speaker 8: your business in the second quarter. And of course, you know, 283 00:17:09,760 --> 00:17:14,159 Speaker 8: I don't want to precipitate upcoming earnings, but can that 284 00:17:14,200 --> 00:17:16,520 Speaker 8: momentum continue into the end of the year, just in 285 00:17:16,600 --> 00:17:19,040 Speaker 8: terms of you know what you're seeing an advisory in 286 00:17:19,080 --> 00:17:22,040 Speaker 8: deal making and in trading because there was a very 287 00:17:22,080 --> 00:17:23,600 Speaker 8: strong quarter for trading as well. 288 00:17:23,600 --> 00:17:28,520 Speaker 7: It was exceptional for us on all fronts. I still 289 00:17:28,560 --> 00:17:32,119 Speaker 7: see very strong pipelines, I see high level of engagement 290 00:17:32,160 --> 00:17:35,240 Speaker 7: from clients. I see a sense of urgency as well. 291 00:17:35,240 --> 00:17:39,520 Speaker 7: Given the speed with which industry structures are changing and 292 00:17:39,600 --> 00:17:42,480 Speaker 7: there is still growth opportunity. I think growth will be 293 00:17:42,520 --> 00:17:45,320 Speaker 7: a notch lower. We're keeping an eye on the labor market. 294 00:17:45,440 --> 00:17:49,359 Speaker 7: It's a low churn market, so not everything is rosy, 295 00:17:50,040 --> 00:17:52,400 Speaker 7: but we don't see a recession on the horizon. 296 00:17:52,760 --> 00:17:56,080 Speaker 8: The city increasing in a global bank, obviously establishing here, 297 00:17:56,160 --> 00:17:59,240 Speaker 8: your presence over here as well. But at the same time, 298 00:17:59,240 --> 00:18:02,359 Speaker 8: we talk about ultiple geopolitical shocks that we were speaking 299 00:18:02,400 --> 00:18:06,000 Speaker 8: about the latest Russian incursion into Poland's We talk about 300 00:18:06,040 --> 00:18:09,840 Speaker 8: geopolitical of here, we talk about tensions between US and China. 301 00:18:10,000 --> 00:18:13,240 Speaker 8: As a bank, how do you navigate all of those 302 00:18:13,640 --> 00:18:17,000 Speaker 8: potential geopolitical sensitivities and the barriers that are going up 303 00:18:17,040 --> 00:18:17,680 Speaker 8: around the world. 304 00:18:18,200 --> 00:18:21,800 Speaker 7: We were in doing business in about one hundred and 305 00:18:21,840 --> 00:18:25,200 Speaker 7: sixty countries around the world. We have local banking license 306 00:18:25,280 --> 00:18:27,960 Speaker 7: people on the ground in almost one hundred and we've 307 00:18:28,000 --> 00:18:30,720 Speaker 7: been in many of these countries for a very very 308 00:18:30,800 --> 00:18:34,080 Speaker 7: long time. So this isn't classic suitcase bankers fly and 309 00:18:34,160 --> 00:18:36,920 Speaker 7: fly out, and there's a really deep knowledge of what's 310 00:18:36,960 --> 00:18:39,879 Speaker 7: going on and a lot of the kit services we 311 00:18:40,000 --> 00:18:43,879 Speaker 7: provide are what helped the economies and the companies do 312 00:18:44,000 --> 00:18:48,000 Speaker 7: business every single day. So for us, there is a 313 00:18:48,080 --> 00:18:51,840 Speaker 7: mission to make sure that we are operating with resiliency 314 00:18:51,880 --> 00:18:55,920 Speaker 7: and with rigor to support our clients. And we tend 315 00:18:55,960 --> 00:18:59,360 Speaker 7: to move activity around the world as clients ebb and 316 00:18:59,400 --> 00:19:03,840 Speaker 7: flow in fring geographies. So the Middle East is probably 317 00:19:03,880 --> 00:19:06,479 Speaker 7: on a rip for the next decade or so in 318 00:19:06,560 --> 00:19:10,160 Speaker 7: terms of how much investment and new industries new clients 319 00:19:10,200 --> 00:19:14,680 Speaker 7: coming in. Other areas will probably see some more diminishment 320 00:19:14,800 --> 00:19:18,360 Speaker 7: in so we just we flex where it is. Our 321 00:19:18,400 --> 00:19:22,560 Speaker 7: people were globally minded. They move around the world as 322 00:19:22,560 --> 00:19:26,160 Speaker 7: to where opportunities are and it's a moment where City shines, 323 00:19:26,240 --> 00:19:28,520 Speaker 7: where there is volatility, the clients need us. 324 00:19:28,560 --> 00:19:31,840 Speaker 3: That was City Group's Jane Fraser there. She's one of 325 00:19:31,960 --> 00:19:35,600 Speaker 3: a host of senior women leading teams who are at 326 00:19:35,600 --> 00:19:38,960 Speaker 3: the forefront of the global economy this year, many of 327 00:19:39,000 --> 00:19:42,040 Speaker 3: whom will be in London for Bluemberg's Women Money and 328 00:19:42,119 --> 00:19:46,160 Speaker 3: Power Conference. Also taking part is Blueberg's Lizzie Burden. We've 329 00:19:46,200 --> 00:19:49,439 Speaker 3: been speaking about the key themes on the agenda, what 330 00:19:49,560 --> 00:19:52,600 Speaker 3: she's most looking forward to at the event, who the 331 00:19:52,640 --> 00:19:55,880 Speaker 3: big players are going to be in attendance. 332 00:19:56,040 --> 00:19:56,359 Speaker 5: Sol I. 333 00:19:56,359 --> 00:19:59,320 Speaker 9: We've rustled up some of the most influential voices from 334 00:19:59,320 --> 00:20:02,520 Speaker 9: across global finance. We're going to hear from Julia Hoggett, 335 00:20:02,560 --> 00:20:04,480 Speaker 9: the CEO of the London Stock Exchange. I'll be sitting 336 00:20:04,520 --> 00:20:07,480 Speaker 9: down with her. We've got Emma Walmsley, the CEO of GSK, 337 00:20:07,640 --> 00:20:11,240 Speaker 9: the Bank of England's Catherine Mann, Maggie Murphy, managing director 338 00:20:11,280 --> 00:20:15,160 Speaker 9: of aston Villa Women's Football Club, and Victoria Bateman, who 339 00:20:15,200 --> 00:20:18,360 Speaker 9: you might know just wrote this book Economica, a Global 340 00:20:18,480 --> 00:20:21,280 Speaker 9: History of Women, Wealth and Power. It's almost as if 341 00:20:21,280 --> 00:20:23,159 Speaker 9: she knew that we were going to have this event again, 342 00:20:23,520 --> 00:20:25,840 Speaker 9: but hosting these conversations, we're also going to have the 343 00:20:25,880 --> 00:20:28,840 Speaker 9: best of our Bloomberg journalists. We've got Stephanie Flanders, head 344 00:20:28,840 --> 00:20:31,960 Speaker 9: of Economics and Government, Michelle Hussein, our new editor at 345 00:20:32,040 --> 00:20:35,840 Speaker 9: large of Bloomberg Weekend, Ruth David Arlunda bureau chief. Danny 346 00:20:35,840 --> 00:20:38,480 Speaker 9: Berger is in from New York. Shamanamaset she's in from Dubai. 347 00:20:38,600 --> 00:20:41,040 Speaker 9: So it's a global affair this one. And then in 348 00:20:41,080 --> 00:20:45,440 Speaker 9: the audience we'll have hundreds of senior finance professionals who've 349 00:20:45,480 --> 00:20:47,560 Speaker 9: taken part in our New Voices program, which, if you 350 00:20:47,560 --> 00:20:50,959 Speaker 9: haven't heard of, it is a Bloomberg initiative that funds 351 00:20:51,000 --> 00:20:54,800 Speaker 9: all this intensive media training around the world to amplify 352 00:20:55,000 --> 00:20:57,719 Speaker 9: expert views. I'm really proud of that. And they'll be 353 00:20:57,760 --> 00:21:00,360 Speaker 9: in amongst all the C suite executives as well. 354 00:21:00,600 --> 00:21:04,720 Speaker 3: Yeah, so, then of all of these leading women, what 355 00:21:04,880 --> 00:21:07,280 Speaker 3: do you think the topics for conversation are going to 356 00:21:07,280 --> 00:21:07,760 Speaker 3: be all about? 357 00:21:07,920 --> 00:21:09,960 Speaker 9: Well, let me say this clearly. What this is not 358 00:21:10,440 --> 00:21:14,080 Speaker 9: is a conference about women in leadership or gender focus issues. 359 00:21:14,119 --> 00:21:17,480 Speaker 9: They're really important issues. But what this is is a 360 00:21:17,520 --> 00:21:21,119 Speaker 9: global finance conference that just happens to have all female 361 00:21:21,200 --> 00:21:24,440 Speaker 9: panelists and moderators. So we're going to tackle the critical 362 00:21:24,440 --> 00:21:26,760 Speaker 9: issues that are facing the finance industry at the moment, 363 00:21:27,000 --> 00:21:31,400 Speaker 9: whether that's real estate, consumer banking, private markets, investing. Are 364 00:21:31,440 --> 00:21:35,639 Speaker 9: also going to be hearing the future for philanthropists, owners 365 00:21:35,640 --> 00:21:36,560 Speaker 9: and CEOs as well. 366 00:21:37,320 --> 00:21:41,879 Speaker 3: And in terms of major developments since last year's conference. 367 00:21:41,640 --> 00:21:43,680 Speaker 9: There's a small matter of the man in the White House. 368 00:21:43,720 --> 00:21:46,239 Speaker 9: Of course, he's changed all of everything that I've just 369 00:21:46,280 --> 00:21:48,439 Speaker 9: talked about. We are in the middle of a stock 370 00:21:48,480 --> 00:21:51,560 Speaker 9: market rally. Views on whether that can continue, whether this 371 00:21:51,680 --> 00:21:54,000 Speaker 9: is the new normal, whether it's a bubble, and look, 372 00:21:54,040 --> 00:21:57,000 Speaker 9: we have the wars in Gaza and Ukraine rumbling on, 373 00:21:57,200 --> 00:21:59,520 Speaker 9: while at the same time private markets are on a 374 00:21:59,560 --> 00:22:01,240 Speaker 9: tare bringing together those themes. 375 00:22:02,320 --> 00:22:05,640 Speaker 3: And when it comes to central banking around the world, 376 00:22:05,720 --> 00:22:08,560 Speaker 3: there are more women than ever who are making global 377 00:22:08,560 --> 00:22:13,960 Speaker 3: monetary policy decisions and some under pressure. What's the significance 378 00:22:14,000 --> 00:22:14,320 Speaker 3: of that. 379 00:22:14,400 --> 00:22:15,680 Speaker 9: Yeah, well, let me take you through some of those, 380 00:22:15,680 --> 00:22:19,480 Speaker 9: because we've got Christine Lagarde often pointing out the underrepresentation 381 00:22:19,520 --> 00:22:23,439 Speaker 9: of women in senior roles in economics, finance and central banks. 382 00:22:23,520 --> 00:22:25,919 Speaker 9: In fact, her and Isabelle Schnabel at the ECB, as 383 00:22:25,960 --> 00:22:28,720 Speaker 9: seen as real thought leaders on the Governing Council, and 384 00:22:28,960 --> 00:22:31,959 Speaker 9: you especially watch what they say. Even if Schnarbile is 385 00:22:32,040 --> 00:22:35,720 Speaker 9: a known hawk, she's especially respected as an influential voice 386 00:22:35,720 --> 00:22:37,920 Speaker 9: on the Governing Council. Here at the Bank of England 387 00:22:37,920 --> 00:22:40,480 Speaker 9: across the road we have Claire Lombardelli, a Deputy governor. 388 00:22:40,640 --> 00:22:43,960 Speaker 9: Remember she dissented in that last but one vote when 389 00:22:43,960 --> 00:22:47,840 Speaker 9: they had to vote again. She's particularly worried about food inflation. 390 00:22:48,440 --> 00:22:50,639 Speaker 9: And we're also, as I say, talking to Catherine Mann 391 00:22:50,840 --> 00:22:52,520 Speaker 9: at this event, she's seen as a bit of a 392 00:22:52,520 --> 00:22:55,560 Speaker 9: maverick on the monetary policy. She went from hawk to 393 00:22:55,720 --> 00:22:59,000 Speaker 9: dove and then kind of back again. So we look 394 00:22:59,040 --> 00:23:01,800 Speaker 9: forward to hearing what she has been thinking about the 395 00:23:01,880 --> 00:23:06,320 Speaker 9: UK economy recently. She's definitely bold in her opinions and 396 00:23:06,359 --> 00:23:10,119 Speaker 9: she's kind of at the end of the spectrum a 397 00:23:10,200 --> 00:23:13,480 Speaker 9: thought leader again. Finally at the Fed, of course, we 398 00:23:13,560 --> 00:23:17,280 Speaker 9: lost Adriana Cougler, we don't really know why, and Lisa 399 00:23:17,359 --> 00:23:20,840 Speaker 9: Cook remains under threat from President Trump. So, as you say, Caroline, 400 00:23:20,880 --> 00:23:25,119 Speaker 9: women on global monetary policy committees really significant in the 401 00:23:25,200 --> 00:23:28,399 Speaker 9: news right now, So looking forward to hearing particularly from 402 00:23:28,480 --> 00:23:29,080 Speaker 9: Catherine Mann. 403 00:23:29,600 --> 00:23:31,600 Speaker 3: And then you mentioned that you're going to be speaking 404 00:23:31,640 --> 00:23:34,680 Speaker 3: to Julia Hoggart at the London Stock Exchange. Of course 405 00:23:34,680 --> 00:23:38,119 Speaker 3: at this event now, delistings are surely going to be 406 00:23:38,800 --> 00:23:41,479 Speaker 3: something that you'll mention a primary concern for her. 407 00:23:41,640 --> 00:23:43,680 Speaker 9: Yeah, just in the past few days we've had Peters 408 00:23:43,720 --> 00:23:46,320 Speaker 9: Hill looking to delist from the London Stock Exchange, so 409 00:23:46,600 --> 00:23:49,760 Speaker 9: bad news there for Julia. Hoggart will be discussing how 410 00:23:49,800 --> 00:23:52,880 Speaker 9: to prevent delistings, more of them from happening, but also 411 00:23:52,880 --> 00:23:56,199 Speaker 9: how to encourage more companies to list in London. And 412 00:23:56,240 --> 00:23:58,400 Speaker 9: I know that's something that she's got lots of views about, 413 00:23:58,440 --> 00:24:01,720 Speaker 9: something that she's already working to wards. We've got the 414 00:24:01,840 --> 00:24:05,280 Speaker 9: UK government forming a Listing's task Force, so I'm really 415 00:24:05,320 --> 00:24:08,600 Speaker 9: interested to hear how the Capital Markets Industry task Force 416 00:24:08,640 --> 00:24:11,720 Speaker 9: that she's on is going to join up with this 417 00:24:11,920 --> 00:24:16,680 Speaker 9: new body from Rachel Reeves. And you've got the PISCES, 418 00:24:16,760 --> 00:24:20,399 Speaker 9: the Private Intermittent Securities and Capital Exchange System bit of 419 00:24:20,400 --> 00:24:23,000 Speaker 9: a mouthful that came in earlier this year. I'm interested 420 00:24:23,000 --> 00:24:25,440 Speaker 9: to hear what kind of companies want to take part 421 00:24:25,640 --> 00:24:27,520 Speaker 9: in that. Also what she wants to see out of 422 00:24:27,600 --> 00:24:31,119 Speaker 9: Rachel Reeves's budget when it comes at the end of November. 423 00:24:31,440 --> 00:24:35,399 Speaker 9: But there's the question of what pension funds do in 424 00:24:35,480 --> 00:24:38,480 Speaker 9: terms of investing, and then there's the question of retail investing. 425 00:24:38,560 --> 00:24:41,240 Speaker 9: How do you get that going When the latest research 426 00:24:41,240 --> 00:24:44,640 Speaker 9: from Hargreave's Landsdowne shows that the number of Brits investing 427 00:24:44,680 --> 00:24:47,320 Speaker 9: in the stock market is twenty three percent. In the 428 00:24:47,440 --> 00:24:50,359 Speaker 9: US that's sixty one percent. How do you bridge that gap? 429 00:24:50,880 --> 00:24:55,960 Speaker 3: Yeah, that's really significant, isn't it. How to make investing 430 00:24:56,280 --> 00:25:00,359 Speaker 3: just more attractive? My thanks there to Bloomberg TV and 431 00:25:00,520 --> 00:25:04,040 Speaker 3: UK correspondent Lizzie Burden. We will of course have full 432 00:25:04,119 --> 00:25:09,080 Speaker 3: coverage of Bloomberg's second annual Women Money Power Conference. I'll 433 00:25:09,119 --> 00:25:12,240 Speaker 3: be there, hope you'll be there too. I'm Caroline Hepga 434 00:25:12,320 --> 00:25:15,000 Speaker 3: in London. You can catch us every weekday morning for 435 00:25:15,040 --> 00:25:18,040 Speaker 3: Bloomberg Daybreak here at beginning at six am in London. 436 00:25:18,320 --> 00:25:19,879 Speaker 3: That's one am on Wall Street. 437 00:25:19,960 --> 00:25:23,600 Speaker 2: Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend. 438 00:25:23,600 --> 00:25:26,960 Speaker 2: Some key economic data out this week in China. I'm 439 00:25:27,000 --> 00:25:41,359 Speaker 2: Tom Busby and this is Bloomberg. This is Bloomberg day 440 00:25:41,359 --> 00:25:43,520 Speaker 2: Break weekend, our global look ahead at the top stories 441 00:25:43,520 --> 00:25:46,159 Speaker 2: for investors in the coming week. I'm Tom Busby in 442 00:25:46,240 --> 00:25:49,440 Speaker 2: New York. We'll be getting a closer look at China's 443 00:25:49,480 --> 00:25:54,040 Speaker 2: economy this week is Beijing releases fresh PMI data. We 444 00:25:54,119 --> 00:25:57,679 Speaker 2: get more from Doug Krisner, host of the Daybreak Asia podcast. 445 00:25:58,280 --> 00:26:01,479 Speaker 4: Tom, it's been one year since the Chinese government changed 446 00:26:01,520 --> 00:26:05,240 Speaker 4: course on economic policy. A clear pro growth plan was 447 00:26:05,320 --> 00:26:08,960 Speaker 4: unveiled back in September twenty twenty four. This was shock 448 00:26:09,040 --> 00:26:14,119 Speaker 4: and awe a package of monetary, fiscal, stock and housing policies. 449 00:26:14,600 --> 00:26:17,160 Speaker 4: So we're a little curious about whether the plan produced 450 00:26:17,160 --> 00:26:20,080 Speaker 4: the desired results. For a closer look, I'm joined by 451 00:26:20,119 --> 00:26:24,320 Speaker 4: Bloomberg's John lu He is our Greater China correspondent based 452 00:26:24,440 --> 00:26:27,480 Speaker 4: in Beijing. John, thank you so much for making time 453 00:26:27,480 --> 00:26:29,680 Speaker 4: to chat with me about this. So what do you think? 454 00:26:29,720 --> 00:26:32,879 Speaker 4: How have things been performing over the last twelve months. 455 00:26:33,920 --> 00:26:36,760 Speaker 10: I would say the results, Doug, have been mixed, and 456 00:26:36,800 --> 00:26:38,680 Speaker 10: they've been mixed in the sense that if you look 457 00:26:38,720 --> 00:26:43,840 Speaker 10: at Chinese markets, I think Chinese stocks are up tremendously 458 00:26:44,040 --> 00:26:48,320 Speaker 10: over the last year. We've seen a big pop, especially 459 00:26:48,359 --> 00:26:51,959 Speaker 10: for tech names like Ali Baba, like Tencent, But if 460 00:26:52,000 --> 00:26:56,040 Speaker 10: you look at the fundamental economic data, what we see 461 00:26:56,280 --> 00:27:01,480 Speaker 10: is continued weakness and in some ways the economy actually 462 00:27:01,520 --> 00:27:05,360 Speaker 10: getting even more weak and signs that potentially the government 463 00:27:05,600 --> 00:27:07,119 Speaker 10: is even more alarmed. 464 00:27:07,320 --> 00:27:09,520 Speaker 4: I mentioned the fact that we have the official PMI 465 00:27:09,840 --> 00:27:12,120 Speaker 4: figures in the week ahead. How do you think we're 466 00:27:12,160 --> 00:27:15,240 Speaker 4: going to understand sentiment on the part of businesses in 467 00:27:15,320 --> 00:27:16,840 Speaker 4: China as a result of these numbers. 468 00:27:17,320 --> 00:27:19,919 Speaker 10: I would expect the data that we will get coming 469 00:27:20,000 --> 00:27:24,840 Speaker 10: up to show a continued weakness. So the PMI has 470 00:27:24,920 --> 00:27:28,000 Speaker 10: been in contraction territory for the last five months in 471 00:27:28,040 --> 00:27:31,119 Speaker 10: a row, and I would expect it will continue to 472 00:27:31,119 --> 00:27:37,320 Speaker 10: be in contraction. That ultimately goes back to a new 473 00:27:37,359 --> 00:27:40,119 Speaker 10: campaign that the Chinese government has undertaken. I don't know 474 00:27:40,160 --> 00:27:45,520 Speaker 10: if you've heard about this anti evolution campaign, which it's 475 00:27:45,560 --> 00:27:48,000 Speaker 10: a big word, it's hard to define, but essentially it 476 00:27:48,080 --> 00:27:52,600 Speaker 10: means that Beijing is trying to rein in excessive competition 477 00:27:53,240 --> 00:27:57,120 Speaker 10: and by doing that ultimately tackled the question of over 478 00:27:57,240 --> 00:28:01,480 Speaker 10: capacity and then in turn the issue of deflation. 479 00:28:01,880 --> 00:28:05,360 Speaker 4: So when I hear that, I'm reminded of the electric 480 00:28:05,440 --> 00:28:08,200 Speaker 4: vehicle industry in China, and we know there's been tremendous 481 00:28:08,240 --> 00:28:10,720 Speaker 4: overcapacity in that area. It's something that I think the 482 00:28:10,760 --> 00:28:15,800 Speaker 4: government was concerned about, and many trading partners were very critical. 483 00:28:15,840 --> 00:28:17,760 Speaker 4: But because for a while there it seemed as though 484 00:28:17,800 --> 00:28:21,040 Speaker 4: Beijing was trying to export its way out of that 485 00:28:21,200 --> 00:28:24,320 Speaker 4: overcapacity problem. Has that been addressed well. 486 00:28:24,359 --> 00:28:29,159 Speaker 10: Exports have been growing continuously. China's on pace for a 487 00:28:29,320 --> 00:28:32,159 Speaker 10: record trade surplus this year, somewhere in excess of a 488 00:28:32,240 --> 00:28:35,640 Speaker 10: trillion US dollars. And so I think that is an 489 00:28:35,680 --> 00:28:38,800 Speaker 10: ongoing issue that's not going to be resolved anytime shortly. 490 00:28:38,880 --> 00:28:43,240 Speaker 10: But the underlying issue, the underlying problem is that the 491 00:28:43,560 --> 00:28:49,280 Speaker 10: production capacity within China far exceeds its domestic consumption needs. 492 00:28:49,560 --> 00:28:52,920 Speaker 10: And so all of this excess stuff, be it electric cars, 493 00:28:53,440 --> 00:28:57,120 Speaker 10: be it solar panels, be it consumer electronics, that all 494 00:28:57,120 --> 00:28:59,640 Speaker 10: has to go somewhere, and it is going overseas. 495 00:29:00,040 --> 00:29:02,840 Speaker 4: John, Let's talk a little bit about trade tensions between 496 00:29:03,080 --> 00:29:07,560 Speaker 4: Washington and Beijing. In the last week, President Trump formalized 497 00:29:07,600 --> 00:29:10,280 Speaker 4: and agreement for a group of American investors to take 498 00:29:10,320 --> 00:29:14,320 Speaker 4: control of the US operations of TikTok. I'm curious as 499 00:29:14,360 --> 00:29:17,640 Speaker 4: to how this story fits into the broader narrative in 500 00:29:17,760 --> 00:29:20,040 Speaker 4: terms of trade between these two countries. 501 00:29:20,880 --> 00:29:23,800 Speaker 10: The negotiations between the United States and China have been 502 00:29:24,160 --> 00:29:27,960 Speaker 10: sort of an ongoing, step by step process. I think 503 00:29:28,160 --> 00:29:30,640 Speaker 10: when it comes to TikTok, I do get the sense 504 00:29:30,720 --> 00:29:34,680 Speaker 10: that the US administration puts a lot more value on 505 00:29:35,520 --> 00:29:38,680 Speaker 10: that as an issue than Beijing does. I think for 506 00:29:38,760 --> 00:29:42,120 Speaker 10: Beijing it is the most important things when it comes 507 00:29:42,120 --> 00:29:45,960 Speaker 10: to TikTok are that it shows a domestic audience that 508 00:29:46,040 --> 00:29:49,080 Speaker 10: it is standing up for the rights of Chinese companies, 509 00:29:49,160 --> 00:29:53,040 Speaker 10: that it's protecting Chinese interests, that it's not being cowed 510 00:29:53,160 --> 00:29:58,320 Speaker 10: by threats from Washington DC. Ultimately, whether or not TikTok 511 00:29:58,480 --> 00:30:01,960 Speaker 10: or Byte downs the company has a thriving business in 512 00:30:02,000 --> 00:30:04,360 Speaker 10: the United States, I think is less important to Beijing, 513 00:30:04,760 --> 00:30:08,960 Speaker 10: although I would say within that the ability of Bite 514 00:30:09,040 --> 00:30:11,480 Speaker 10: Dance to hold on to that algorithm I think is 515 00:30:11,600 --> 00:30:15,240 Speaker 10: very important to Beijing, because again it shows that Beijing 516 00:30:15,280 --> 00:30:20,720 Speaker 10: is able to protect these assets of Chinese companies technologies 517 00:30:20,760 --> 00:30:23,840 Speaker 10: owned by Chinese interests, and that I think is ultimately 518 00:30:23,960 --> 00:30:25,960 Speaker 10: what Beijing wants to show coming out of this deal. 519 00:30:26,120 --> 00:30:29,240 Speaker 4: But might not that be required to get some terra 520 00:30:29,400 --> 00:30:30,880 Speaker 4: for relief from the United States. 521 00:30:31,240 --> 00:30:35,240 Speaker 10: I'm sure that Beijing would have asked for some concession 522 00:30:35,800 --> 00:30:42,160 Speaker 10: in return for helping close a TikTok deal. We don't 523 00:30:42,160 --> 00:30:46,280 Speaker 10: have a great sense of what exactly that concession might be, 524 00:30:47,080 --> 00:30:49,640 Speaker 10: and indeed, I think it's also possible that you know, 525 00:30:49,760 --> 00:30:53,560 Speaker 10: Beijing is often playing the long game, and so maybe 526 00:30:53,720 --> 00:30:57,800 Speaker 10: the concession is not something that's immediate. It might be 527 00:30:57,840 --> 00:31:00,400 Speaker 10: something a bit further off, and we just don't have 528 00:31:00,440 --> 00:31:01,880 Speaker 10: a great view of that at the moment. 529 00:31:02,040 --> 00:31:04,840 Speaker 4: You mentioned domestic demand in China being as weak as 530 00:31:04,880 --> 00:31:07,400 Speaker 4: it is right now, and obviously deflation is a big 531 00:31:07,440 --> 00:31:10,280 Speaker 4: part of that story, whether you're looking at the wholesale 532 00:31:10,400 --> 00:31:15,400 Speaker 4: or retail level. Any signs these days that things are improving. 533 00:31:15,640 --> 00:31:18,400 Speaker 10: Unfortunately, Doug, I think the signs all point to things 534 00:31:18,480 --> 00:31:23,800 Speaker 10: getting more severe, if anything. So we have had negative CPI, 535 00:31:23,880 --> 00:31:29,360 Speaker 10: so deflationary consumer prices for five of the eight months 536 00:31:29,600 --> 00:31:32,040 Speaker 10: that we've had data for in twenty twenty five. That 537 00:31:32,200 --> 00:31:35,160 Speaker 10: is a big increase from last year when we only 538 00:31:35,160 --> 00:31:38,160 Speaker 10: had one month where CPI came in negative. And so 539 00:31:38,280 --> 00:31:41,960 Speaker 10: I think as policymakers in Beijing are looking across the economy, 540 00:31:42,280 --> 00:31:45,840 Speaker 10: that is a real concern because everyone knows what happened 541 00:31:45,840 --> 00:31:51,920 Speaker 10: in Japan. Everyone understands that as deflation gets more embedded 542 00:31:51,920 --> 00:31:55,200 Speaker 10: into an economy. As people start to change their behavior 543 00:31:55,280 --> 00:31:58,960 Speaker 10: because they expect prices to go down, it becomes really hard, 544 00:31:59,520 --> 00:32:01,000 Speaker 10: much much harder to undo. 545 00:32:01,200 --> 00:32:04,520 Speaker 4: So what's operating in the psychology here, I'm curious about that. 546 00:32:04,680 --> 00:32:06,760 Speaker 4: We know that the housing market has been a big 547 00:32:06,800 --> 00:32:10,160 Speaker 4: negative overhang. You mentioned the fact that the equity market 548 00:32:10,200 --> 00:32:15,200 Speaker 4: has been performing reasonably well lately, and I'm thinking that 549 00:32:15,280 --> 00:32:19,920 Speaker 4: maybe encouraged some animal spirits. But I'm trying to understand 550 00:32:19,920 --> 00:32:24,239 Speaker 4: what's overhanging this negativity, where this is coming from, and 551 00:32:24,440 --> 00:32:28,480 Speaker 4: how people's sentiment toward economic activity is so weak. 552 00:32:29,280 --> 00:32:32,520 Speaker 10: So I would split up the question of deflation into 553 00:32:32,560 --> 00:32:36,000 Speaker 10: a demand side issue and a supply side issue. Right, So, 554 00:32:36,120 --> 00:32:39,320 Speaker 10: I think on the demand side, what you mentioned about 555 00:32:39,360 --> 00:32:42,920 Speaker 10: real estate, that is the fundamental issue because so much 556 00:32:42,960 --> 00:32:46,640 Speaker 10: of the population in China, so much of household wealth 557 00:32:46,880 --> 00:32:51,600 Speaker 10: was saved in property in a family's home, that when 558 00:32:51,640 --> 00:32:54,240 Speaker 10: the price of those homes, and I would say broadly 559 00:32:54,280 --> 00:32:57,200 Speaker 10: across China, people have seen the price of their homes 560 00:32:57,280 --> 00:33:00,280 Speaker 10: fall thirty or more percent from the peak in twenty 561 00:33:00,320 --> 00:33:04,400 Speaker 10: twenty one or so everywhere, and so when people's biggest 562 00:33:04,440 --> 00:33:08,080 Speaker 10: asset becomes worth a lot less money, everybody feels poorer, 563 00:33:08,360 --> 00:33:10,840 Speaker 10: they feel like they need to save more for retirement, 564 00:33:10,920 --> 00:33:14,800 Speaker 10: and so that really hits demand. At the same time, 565 00:33:14,800 --> 00:33:17,960 Speaker 10: we've had a supply issue where we've had this overcapacity 566 00:33:18,000 --> 00:33:21,160 Speaker 10: that we've talked about, and so people are churning out 567 00:33:21,200 --> 00:33:23,160 Speaker 10: lots and lots of product and they're trying to sell 568 00:33:23,160 --> 00:33:25,240 Speaker 10: all that product, and the way that they've been competing 569 00:33:25,320 --> 00:33:27,640 Speaker 10: is they've been cutting prices, and so that's also fueled 570 00:33:27,680 --> 00:33:30,000 Speaker 10: this expectation that prices are going to go down, and 571 00:33:30,040 --> 00:33:34,719 Speaker 10: so Beijing has actually started this campaign anti involution to 572 00:33:34,840 --> 00:33:37,440 Speaker 10: try and address the supply side in a way that 573 00:33:37,440 --> 00:33:42,040 Speaker 10: they've never done before. They are going out to a 574 00:33:42,200 --> 00:33:46,680 Speaker 10: provincial level, local level governments telling them not to provide 575 00:33:46,720 --> 00:33:50,280 Speaker 10: the sort of subsidies that have helped these manufacturers churn 576 00:33:50,320 --> 00:33:54,640 Speaker 10: out their goods. They've gone to companies themselves to say, hey, 577 00:33:54,960 --> 00:33:59,240 Speaker 10: let's not do this cutthrough competition, and they've been pushing 578 00:33:59,240 --> 00:34:02,440 Speaker 10: on that. It's partly why we've seen the weakness that 579 00:34:02,440 --> 00:34:05,959 Speaker 10: we've seen in both manufacturing when it comes to PMI 580 00:34:06,120 --> 00:34:08,839 Speaker 10: and also in fixed asset investment over the last couple 581 00:34:08,880 --> 00:34:11,560 Speaker 10: of months. But the fact that Beijing is willing to 582 00:34:11,680 --> 00:34:14,839 Speaker 10: do these things something that they've never done before. That's 583 00:34:14,880 --> 00:34:20,200 Speaker 10: actually giving the stock market and financial markets a sense 584 00:34:20,239 --> 00:34:24,080 Speaker 10: of optimism that we might have reached an inflection point, 585 00:34:24,120 --> 00:34:27,440 Speaker 10: and that's why you've seen asset prices being as brilliant 586 00:34:27,480 --> 00:34:28,120 Speaker 10: as they have been. 587 00:34:28,440 --> 00:34:30,400 Speaker 4: So I'm curious then if you were to take that 588 00:34:30,520 --> 00:34:33,640 Speaker 4: analysis and kind of related to the way in which 589 00:34:33,640 --> 00:34:36,320 Speaker 4: the labor market is holding up right now. Are things 590 00:34:36,640 --> 00:34:40,480 Speaker 4: improving there or is the labor story in China very 591 00:34:40,560 --> 00:34:42,759 Speaker 4: much a story of continued weakness. 592 00:34:42,960 --> 00:34:45,759 Speaker 10: So unfortunately, again this is a point of weakness. And 593 00:34:45,800 --> 00:34:49,000 Speaker 10: so in August, in the data that we got in 594 00:34:49,040 --> 00:34:52,239 Speaker 10: the month of September for August, it actually showed an 595 00:34:52,400 --> 00:34:56,399 Speaker 10: unexpected increase in unemployment in China, so up to five 596 00:34:56,440 --> 00:34:59,960 Speaker 10: point three percent. The economists we're expecting five point two. 597 00:35:00,800 --> 00:35:04,360 Speaker 10: And so it does show that as manufacturing is weakened, 598 00:35:04,760 --> 00:35:07,600 Speaker 10: job prospects have also weakened. And so that again is 599 00:35:07,640 --> 00:35:11,640 Speaker 10: another point of I think concern for the government. But 600 00:35:11,680 --> 00:35:13,319 Speaker 10: when it comes to the stock market, the stock market 601 00:35:13,440 --> 00:35:17,040 Speaker 10: is always looking forward, and I think they're thinking, hey, 602 00:35:18,000 --> 00:35:20,040 Speaker 10: this bad news is good news because it's going to 603 00:35:20,080 --> 00:35:23,160 Speaker 10: force the government to take action, and so that means 604 00:35:23,400 --> 00:35:26,320 Speaker 10: the future prospects for the economy are getting brighter. 605 00:35:26,440 --> 00:35:29,560 Speaker 4: You and I've spoken about the problem with youth unemployment 606 00:35:29,600 --> 00:35:31,759 Speaker 4: in the past, and I'm sure that that continues to 607 00:35:31,800 --> 00:35:35,600 Speaker 4: be a major negative. I'm wanting to find some positivity here, 608 00:35:35,760 --> 00:35:39,759 Speaker 4: and I'm drawn to the artificial intelligence narrative, where we 609 00:35:39,880 --> 00:35:43,959 Speaker 4: know the Deep Seek moment was enormously positive for tech 610 00:35:43,960 --> 00:35:47,240 Speaker 4: in China, and I'm wondering how that's playing out these days. 611 00:35:47,680 --> 00:35:51,200 Speaker 4: Still a lot of positivity as it relates to artificial 612 00:35:51,200 --> 00:35:54,839 Speaker 4: intelligence and the industries maybe that could benefit from AI. 613 00:35:55,239 --> 00:35:59,080 Speaker 10: There is and the most recent iteration of that positivity 614 00:35:59,120 --> 00:36:02,160 Speaker 10: has been in the form of semiconductors, right, And so 615 00:36:02,280 --> 00:36:06,040 Speaker 10: the big issue in the past was could China create 616 00:36:06,080 --> 00:36:10,360 Speaker 10: AI if the US cut off access to Nvidia chips 617 00:36:10,400 --> 00:36:14,759 Speaker 10: to all of these AI processors that would be necessary 618 00:36:14,800 --> 00:36:17,960 Speaker 10: to train these large language models. And what we've seen 619 00:36:18,320 --> 00:36:24,800 Speaker 10: are companies like Ali, Baba, Baidu, Huawei, a smaller startup 620 00:36:24,880 --> 00:36:28,799 Speaker 10: named Cambra Con that have started to introduce chips that 621 00:36:28,960 --> 00:36:32,200 Speaker 10: they say are able to get to a level that 622 00:36:32,320 --> 00:36:35,440 Speaker 10: is getting nearer and nearer what an Nvidia chip can do. 623 00:36:35,880 --> 00:36:39,080 Speaker 10: And so that has actually created a lot of optimism 624 00:36:39,120 --> 00:36:43,800 Speaker 10: about the prospects for technology for AI and innovation in 625 00:36:43,920 --> 00:36:44,960 Speaker 10: China going forward. 626 00:36:45,040 --> 00:36:47,560 Speaker 4: When we talk about AI in the States, one of 627 00:36:47,600 --> 00:36:49,319 Speaker 4: the things that comes up as a part of the 628 00:36:49,320 --> 00:36:53,360 Speaker 4: conversation the demand for power, the demand for electricity to 629 00:36:53,640 --> 00:36:58,720 Speaker 4: drive these data centers. How is China tackling that problem? 630 00:36:58,760 --> 00:37:02,759 Speaker 4: Are they still using is a primary source for generating 631 00:37:02,800 --> 00:37:06,440 Speaker 4: electricity or are they moving in other directions these days? 632 00:37:07,440 --> 00:37:10,719 Speaker 10: Two parts to my answer. One is is there enough 633 00:37:10,760 --> 00:37:13,960 Speaker 10: electricity for AI in China? And this is actually an 634 00:37:14,000 --> 00:37:17,080 Speaker 10: area where China has a huge advantage and so it 635 00:37:17,160 --> 00:37:21,640 Speaker 10: is growing very quickly. There is not the same concern 636 00:37:21,880 --> 00:37:26,280 Speaker 10: about access to electricity that the hyperscalars in the US 637 00:37:26,280 --> 00:37:29,680 Speaker 10: have at the moment. The other question is how is 638 00:37:29,760 --> 00:37:34,439 Speaker 10: China generating that electricity. It is still dependent by far 639 00:37:34,600 --> 00:37:39,200 Speaker 10: on fossil fuels, so coal and oil. It is using 640 00:37:39,239 --> 00:37:42,160 Speaker 10: more natural gas, which is relatively cleaner. But at the 641 00:37:42,200 --> 00:37:45,640 Speaker 10: same time, what China has done that what we've not 642 00:37:45,680 --> 00:37:48,319 Speaker 10: seen in the US, especially under the Trump administration, there's 643 00:37:48,360 --> 00:37:54,400 Speaker 10: been a real push for wind, for solar, for alternative energies. 644 00:37:54,560 --> 00:37:58,160 Speaker 10: China is also building lots and lots of nuclear power plants, 645 00:37:58,719 --> 00:38:03,480 Speaker 10: and so that of energy is moving very quickly towards 646 00:38:03,880 --> 00:38:08,600 Speaker 10: cleaner sources, but still the vast majority today is created 647 00:38:08,640 --> 00:38:11,960 Speaker 10: by burning coal and oil and fossil fuels. 648 00:38:12,400 --> 00:38:14,480 Speaker 4: John will leave it there. Thank you so much for 649 00:38:14,520 --> 00:38:17,400 Speaker 4: helping us understand what's happening these days in the Chinese 650 00:38:17,440 --> 00:38:20,880 Speaker 4: economy as we look ahead to the official PMI figures 651 00:38:20,880 --> 00:38:23,680 Speaker 4: in the week ahead. John lou is our Greater China 652 00:38:23,719 --> 00:38:27,480 Speaker 4: correspondent based in Beijing. I'm Doug Prisner. You can catch 653 00:38:27,560 --> 00:38:30,920 Speaker 4: us weekdays for the Daybreak Asia podcast. It's available wherever 654 00:38:31,000 --> 00:38:32,960 Speaker 4: you get your podcast. Tom. 655 00:38:33,320 --> 00:38:35,560 Speaker 2: Thanks Doug, and that does it for this edition of 656 00:38:35,600 --> 00:38:38,480 Speaker 2: Bloomberg day Break Weekend. Join us again Monday morning at 657 00:38:38,480 --> 00:38:40,720 Speaker 2: five am Wall Street Time for the latest on markets 658 00:38:40,719 --> 00:38:43,080 Speaker 2: overseas and the news you need to start your day. 659 00:38:43,360 --> 00:38:46,360 Speaker 2: I'm Tom Buzby. Stay with us. Top stories and global 660 00:38:46,400 --> 00:38:49,760 Speaker 2: business headlines are coming up right now.