Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 1: top stories in the coming week from our Daybreak anchors
Speaker 1: all around the world, and straight ahead on the program.
Speaker 1: Another big week coming for bank earnings. I'm Tom Busby
Speaker 1: in New York. I'm Stephen Carlin London with a Prime Minister,
Speaker 1: and the Bank of England will be hoping there won't
Speaker 1: be another unpleasant inflation surprise in store. I'm Brian Curtis
Speaker 1: in Hong Kong. We look ahead at Tesla's earnings by
Speaker 1: the company's progress in China. I'm Kaylee Lines in Washington,
Speaker 1: where we're getting ready for Congress to come back to
Speaker 1: the Capitol after two week recess. Watch for fireworks when
Speaker 1: they return. That's all straight ahead on Bloomberg Daybreak Weekend
Speaker 1: on Bloomberg eleven three on New York, Bloomberg ninety nine one, Washington, DC,
Speaker 1: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco,
Speaker 1: DAB Digital Radio, London, Sirius XM one nineteen and around
Speaker 1: the world on Bloomberg Radio dot Com and via the
Speaker 1: Bloomberg Business App. Good day to you. I'm Tom Busby,
Speaker 1: and we begin today's program with all the first quarterbank
Speaker 1: earnings that began this past Friday and continue in the
Speaker 1: coming week. Bloomberg Wall Street reporter Shanali Bassett joining me
Speaker 1: now for some insight. He s, all right, well, let's
Speaker 1: start with some of the good news that we heard
Speaker 1: on Friday, particularly upside earning surprises from the biggest JP
Speaker 1: Morgan Chase and Citygroup. Yeah, there are a few things.
Speaker 1: For JP Morgan in particular, not only did they beat
Speaker 1: on revenue, they also had some really interesting items within
Speaker 1: different lines of the banks. So, for example, they said
Speaker 1: they're going to make billions of dollars more in net
Speaker 1: interest income than was initially expected. Another thing that happened though,
Speaker 1: was that they beat on fixed income trading, and so
Speaker 1: you also saw an institutional business do very well here
Speaker 1: relative to what was expected. That was similar for Citygroup
Speaker 1: as well. Remember, the markets are still very volatile, so
Speaker 1: the fact that they're still making money from institutional clients
Speaker 1: are a big deal as we watch some of the
Speaker 1: cracks in the market and how they affect both the
Speaker 1: consumer and institutional clients. Now, speaking of those cracks, JP
Speaker 1: Morgan Chase CEO Jamie Diamond told investors, you can count
Speaker 1: the number of troubled banks on your hands. What does
Speaker 1: that tell us? You know, nobody wants to be in
Speaker 1: a banking crisis. Or you can use what Muhammadalarian would say,
Speaker 1: and he says it's a banking tremor, not a banking crisis.
Speaker 1: And even with the struggles we're seeing with the likes
Speaker 1: of Silicon Valley Bank, a lot of questions still around
Speaker 1: First Republic. What JP Morgan and City Group are telling
Speaker 1: you that this is fairly contained now? JP Morgan banks
Speaker 1: hundreds of banks in America as well. There are more
Speaker 1: than four thousand of them, and there's a consensus here
Speaker 1: among even the largest banks which have benefited a lot
Speaker 1: from this kind of banking tremor crisis, whatever you want
Speaker 1: to call it. The thing here is those regional banks
Speaker 1: are really what touches a lot of America. They have
Speaker 1: a lot of exposure to commercial real estate, for example,
Speaker 1: small businesses which employ a lot of the American economy.
Speaker 1: So if those regional banks face a lot of pressure,
Speaker 1: which is really what we're going to see the bulk
Speaker 1: of in terms of the earning cycle the next couple
Speaker 1: of weeks, there could be ripple effects to any pains
Speaker 1: those banks, the smaller banks would feel and in the
Speaker 1: earnings that we just had on Friday, do we see
Speaker 1: the movement of a lot of money, a lot of
Speaker 1: deposits coming out of those regional banks and into the
Speaker 1: big East. It was most notable at JP Morgan, where
Speaker 1: they posted a surprise increase in deposits. They had been
Speaker 1: drawing down for the last couple of quarters here because
Speaker 1: interest rates are still very high, people moving into money
Speaker 1: market funds instead. JP Morgan is telling you that don't
Speaker 1: expect this kind of increase in deposits to continue, even
Speaker 1: what they took in in the wake of kind of
Speaker 1: the Silicon Valley bank issue. They say that these are
Speaker 1: not necessarily sticky deposits. They can go out the door
Speaker 1: just as easily as they've come in. Of course, we
Speaker 1: don't worry about deposits at JP Morgan. You know, I
Speaker 1: want to say that their deposit base is probably bigger
Speaker 1: here than the GDP of France. It's two point three
Speaker 1: seven trillion dollars we're talking about in deposits at JP Morgan.
Speaker 1: But again, you know, does that deposit movement cause fragilities
Speaker 1: in the smaller banks. That's where it becomes more of
Speaker 1: a question. Now, I want to touch on something you
Speaker 1: spoke about, and that is higher interest rates and how
Speaker 1: these banks benefited from the What's it been nine in
Speaker 1: a row of increases from the Federal Reserve and maybe
Speaker 1: one or two more to come. The interesting thing about
Speaker 1: this is that if you look at City Group and
Speaker 1: if you look at JP Morgan, a lot of this
Speaker 1: is coming from their credit card portfolios. So they're really
Speaker 1: getting more because people are borrowing more from on their
Speaker 1: credit card debt. That's not the same by the way,
Speaker 1: as we know for a lot of the regionals and
Speaker 1: for Wells Fargo, which is more heavily tilted towards, for example,
Speaker 1: the mortgage market, which has been facing a lot of
Speaker 1: pressures in this higher interest rate environment. Oh yeah, and
Speaker 1: we just saw, speaking of credit cards, retail sales dipping
Speaker 1: last last month. But still it's it's a big pot
Speaker 1: that you know, we're spending a lot of money Americans,
Speaker 1: and it makes total sense. You see them the bank numbers.
Speaker 1: Also you see card spending up at these banks. How
Speaker 1: long that continues for remember a couple of times this
Speaker 1: year Jamie Diamond has said that the consumer will start
Speaker 1: to hit a cliff at the end of this year.
Speaker 1: So you have city groups saying that you can expect
Speaker 1: kind of a soft or shallow recession, if you will,
Speaker 1: maybe in the second half of this year. But then
Speaker 1: you also have to take into account what Jamie Diamond
Speaker 1: and JP Morgan has said about the uncertainties that bake
Speaker 1: into twenty twenty four into next year. So we're talking
Speaker 1: about a long horizon of uncertainty here. So that so
Speaker 1: despite you know, the upbeat earnings, they are very cautious.
Speaker 1: They are being cautious. They're telling investors it's not over yet,
Speaker 1: certainly not. And even in their numbers alone, you see
Speaker 1: them really preparing with higher provisions for credit losses, even
Speaker 1: higher charge offs. The ninety data linguency rate on for example,
Speaker 1: JP Morgan's credit card book has ticked a little higher.
Speaker 1: They're well bull you know levels we've seen that would
Speaker 1: be considered alarming. They're well below that. JP Morgan calls
Speaker 1: it a normalization. We're getting it back to more normal levels.
Speaker 1: You're going to get more losses as you're lending more.
Speaker 1: But all in all, I mean, JP Morgan is very profitable.
Speaker 1: In fact, in terms of revenue. They just had a
Speaker 1: record corridor. So that is a pretty incredible considering all
Speaker 1: the worries that we had gone into the quarter with. Right,
Speaker 1: and now the cavalcade of earnings continues this coming week
Speaker 1: and we hear from some the rest of the biggies,
Speaker 1: a lot of the regional banks, even the small ones.
Speaker 1: So what are we expecting to hear from Bank of America,
Speaker 1: from Golden Sex, from Morgan Stanley on the Bank of
Speaker 1: of America front. I think it'll be interesting to see
Speaker 1: what they say on that interest income, given that they're
Speaker 1: such a big lender to the American economy. Do they
Speaker 1: say the same things as JP Morgan that they expect more?
Speaker 1: Remember City Group didn't really change their outlook for the year,
Speaker 1: and also JP Morgan City Group in particular, their head
Speaker 1: count has risen over the past year. How about Bank
Speaker 1: of America Wages have risen also, so we know that
Speaker 1: expenses tied to pay are rising, but how much can
Speaker 1: banks really take on with that much uncertainty ahead? There's
Speaker 1: also Schwab on Monday. Remember Schwab will be very interesting
Speaker 1: because they've had a large sell off. They are very concerned,
Speaker 1: or their investors rather are concerned about people moving from
Speaker 1: deposits to money market funds. It's not a question of
Speaker 1: viability of the firm necessarily, it's a question of profitability
Speaker 1: and what will cause more pressures at a place like Schwab.
Speaker 1: You also have Goldman, Saxe and Morgan Stanley in the
Speaker 1: coming days after that. Like I said, the institutions investment
Speaker 1: banking fees are way down, but Goldman in particular, if
Speaker 1: they find the same fixed income trading figures or beats
Speaker 1: that JP Morgan and City Group had, you know, and
Speaker 1: their bankers are just fine. Let's put it that way. Now.
Speaker 1: Some of the others that have truest is one that
Speaker 1: we just heard news from them last week, Fifth third
Speaker 1: Key Corps, some of the second level or third level
Speaker 1: of banks, and are we seeing a similar thing. That's
Speaker 1: what you talked about. The ones that are the regional
Speaker 1: banks that are really vital to smaller communities. This is
Speaker 1: where it gets so stressful. The big banks this quarter,
Speaker 1: they're very easy stories more or less, but the regional banks,
Speaker 1: line by line, number my number. If I take a
Speaker 1: look at P and C all through Friday had been
Speaker 1: kind of up and down in the stock market. They
Speaker 1: were up, they were down, and remember they were stable
Speaker 1: in their actual numbers. When you looked at the deposit flows,
Speaker 1: they actually did better than what Wall Street had expected.
Speaker 1: So do we see the same from M ANDT and
Speaker 1: Fifth Third and all of these other regionals or did
Speaker 1: they for whatever reason face stiffer outputs and deposits from
Speaker 1: their clients? You know, PNC is based in Pittsburgh, some
Speaker 1: of them. Some people say that these are regional differences.
Speaker 1: It tended to be a lot of the California banks.
Speaker 1: People were concerned about the concentration and some of those
Speaker 1: you know, First Republic and Silicon Valley Bank kind of
Speaker 1: stories and their balance sheets. But do you see those
Speaker 1: same pressures really start to come across from the client
Speaker 1: base at least from a lot of these regionals. And
Speaker 1: then you have to add the other question of what
Speaker 1: did their loan books look like? Which is another question
Speaker 1: that will continue to be a worry throughout the year.
Speaker 1: Is if you're worried about credit quality deteriorating, and some
Speaker 1: of those regional banks obviously maybe on Jamie Diamond's list.
Speaker 1: You know, we saw wild fluctuations at PacWest, a big
Speaker 1: lender in the Los Angeles area, you know, which it
Speaker 1: could be spillover from Silicon Valley Bank. But do we
Speaker 1: have any idea what some of these where some of
Speaker 1: these banks are or which banks he may be referring
Speaker 1: to which ones? No, And you don't want to say
Speaker 1: them either, because you don't want to cause any alarm.
Speaker 1: But you know it's interesting you name PacWest. Something interesting
Speaker 1: about PacWest was one thing they did to kind of
Speaker 1: cooled down the market was they said that they instead
Speaker 1: of going out to the market and raising money, they
Speaker 1: got essentially, you know, credit facility from a private firm
Speaker 1: named Atlas sp This is a firm those started by
Speaker 1: Apollo in the wake of Credit Suite, and they basically
Speaker 1: lent the money against a series of assets to weather
Speaker 1: the storm. And so you know, we could see more
Speaker 1: deals like that. It was a very interesting deal that
Speaker 1: I know that a lot of investors wanted to model.
Speaker 1: And it also showed you another thing that if these
Speaker 1: banks want to tap the capital markets, if they want
Speaker 1: to raise money. You know, when Silicon Valley Bank happened,
Speaker 1: that wasn't possible. The market was closed to these banks.
Speaker 1: But now they're finding other folks. Comes at a cost,
Speaker 1: but they could raise money to make it through this
Speaker 1: difficult environment if they need to an alternative means of
Speaker 1: raising money from the past. Thank you, Shinali. That was
Speaker 1: Bloomberg Wall Street reporter Shanali bask And coming up on
Speaker 1: Bloomberg Daybreak weekend in the UK, some key data coming
Speaker 1: our way ahead of the Bank of England's next interest
Speaker 1: rate decision. I'm Tom Busby. This is Bloomberg. This is
Speaker 1: Bloomberg Daybreak weekend, our global look ahead at the top
Speaker 1: stories for investors in the coming week. I'm Tom Busby
Speaker 1: in New York. Up later in our program, watch for
Speaker 1: a lot of drama as members of Congress get ready
Speaker 1: to return to Capitol Hill. But first in the UK,
Speaker 1: we'll get some key data in the coming days which
Speaker 1: will factor into the Bank of England's next interest rate decision.
Speaker 1: Like the FED, the UK Central Bank is thought to
Speaker 1: be close to ending its hiking cycle, although the economic
Speaker 1: situation in Britain does look quite different. Downple Moore or
Speaker 1: let's head to London and bringing Bloomberg Daybreak Europe Banker
Speaker 1: Stephen Carroll, Stephen Tom the Prime Minister is she seen
Speaker 1: not named Halfing the race of inflation is one of
Speaker 1: his five key priorities for this year. He'll be hoping
Speaker 1: about the CPI print from March. It starts to show
Speaker 1: that trans after we had a surprise uptake to ten
Speaker 1: point four scent in February. To discuss this and some
Speaker 1: more of the data points will be unpacking from the
Speaker 1: UK in the coming days. I'm joined by Bloomberg's senior
Speaker 1: UK economist, Dan Hanson, and our UK correspondent Lizzie Burden
Speaker 1: is in the studio with us as well. Dan, this
Speaker 1: February ECPI number was a shucker. Remind us what drove that. Yeah,
Speaker 1: so we had we had a pick up in a
Speaker 1: little well quite a big pick up actually. The surprises
Speaker 1: and core goods inflation, so clothing and footwear and also
Speaker 1: in food inflation as well. They were the sources of surprises,
Speaker 1: and we were expecting a reading of nine point nine percent.
Speaker 1: It came in ten point four percent. The Bank of
Speaker 1: England was expecting a reading of nine point nine percent.
Speaker 1: So you're ride it was a big surprise. Looking ahead,
Speaker 1: I think it will probably be seen as a blip.
Speaker 1: And there are sort of two parts of this. One
Speaker 1: part is you're just going to get these what economists
Speaker 1: called base effects, So these these effect these big price
Speaker 1: rises last year, falling out of the annual comparison, and
Speaker 1: that's going to be part of the story in March.
Speaker 1: It's going to become a more significant story in April
Speaker 1: and later in the year when we get the falls
Speaker 1: the rises in gas prices falling out of the annual comparison.
Speaker 1: But I think, looking looking to the March number, we're
Speaker 1: going to we think we're going to see a drop
Speaker 1: back from ten point four percent. We actually think we're
Speaker 1: going to fall a little bit beneath ten percent. So
Speaker 1: it looks like it's going to be a temporary blit
Speaker 1: February figure. Okay, and you mentioned energy prices there, of
Speaker 1: course one of the big drivers that pushed inflation up
Speaker 1: to these levels in the end towards the end of
Speaker 1: last year. Where is inflation looking stickier now or where
Speaker 1: within the detail the number should we be thinking about? Yeah,
Speaker 1: I mean this is this is I mean it goes
Speaker 1: to the Bank of England's thinking as well. So you've
Speaker 1: got you've got this. You're right, you've got this energy
Speaker 1: components and over the course of this year, if wholesale
Speaker 1: energy prices stay where they are at the moment, over
Speaker 1: the course of this year, you're going to get about
Speaker 1: four and a half percentage points off the headline rate
Speaker 1: of inflation, so you're at ten point four at the moment.
Speaker 1: That's going to get you to six, partly mechanically through
Speaker 1: base effects, partly because we've had this fall in gas
Speaker 1: price wholesale gas prices since the start of the year.
Speaker 1: Where the stickiness then comes. I think there are actually
Speaker 1: two bits of it. One is services inflation, and that's
Speaker 1: what the Bank has said it's very focused on. But
Speaker 1: actually what has probably been a bit stickier than most
Speaker 1: including us, that have expected is the good side of
Speaker 1: the basket and where the supply chain disruption really was
Speaker 1: the source of that inflation. But actually it hasn't come
Speaker 1: down as quickly as we'd been expecting all the Bank
Speaker 1: of England has been expecting. So there is some stickiness
Speaker 1: there which is cause for concern. But I think the
Speaker 1: really key area to watch in terms of persistence, and
Speaker 1: going to your question, is services and services inflation, which
Speaker 1: again jump back up in February. We think it's going
Speaker 1: to ease slightly in March. I mentioned as you see
Speaker 1: acts promise of having inflation by the end of the year.
Speaker 1: Your colleague Jamie Rush has the thinkly put it that
Speaker 1: you could put a cutling pig in charge of the
Speaker 1: economy and inflation was still fall by half by the
Speaker 1: end of the year. How does the pick look a
Speaker 1: little bit further out in terms of inflation will Jamie's
Speaker 1: got a much better way of words. I think he
Speaker 1: was a bit embarrassed after he said, of actually he
Speaker 1: should be it's not very becoming. But look, I think
Speaker 1: I think he's going to get He's going to meet
Speaker 1: his target. So I think Jamie's right, You're going to
Speaker 1: get there predominantly through these base effects as we've as
Speaker 1: we've mentioned, but I think there's going to be there
Speaker 1: is going to be somewhat of a slowdown in other components.
Speaker 1: So I think core goods will continue to ease in
Speaker 1: terms of inflation. There. Food inflation I think will come
Speaker 1: off a little bit. It's it's extremely high at the
Speaker 1: moment and it's probably going to pick up again in
Speaker 1: the March report. But I think it's going to come
Speaker 1: off and on our forecast you get to three percent
Speaker 1: by the end of the year headline inflation. But I
Speaker 1: think what that masks is core inflation, which we think
Speaker 1: is going to end the year about four and a
Speaker 1: half percent, so significantly higher, and that again reflects this
Speaker 1: mainly reflects services inflation, but also what I've mentioned on
Speaker 1: the good side as well. Another piece of the economic
Speaker 1: puzzle that we're going to learn more about next week
Speaker 1: is the labor markets. We've got jobs data out the
Speaker 1: UK's had a particular problem with participation post the pandemic
Speaker 1: as well. Are we likely to see any improvement on
Speaker 1: that front? So I think what you're going to see
Speaker 1: from the jobs the job's data is a steady unemployment rate.
Speaker 1: So this has been a bit of a theme this
Speaker 1: year of the economy doing a little bit better, the
Speaker 1: labor markets staying a little bit tighter than people thoward
Speaker 1: and not calling as quickly. But the sort of the
Speaker 1: interesting side of this is how quickly wage growth seems
Speaker 1: to be cooling. So if you look on if you
Speaker 1: look at the headline measures of wage growth, we think
Speaker 1: private sector regular pay is going to fall from seven
Speaker 1: percent to six and a half percent, which is a big,
Speaker 1: big drop down. But actually if you look on an
Speaker 1: underlying basis, so that the headline measures a year on
Speaker 1: year three months moving average, it takes a long time
Speaker 1: for the numbers to sort of cool and fall off.
Speaker 1: But if you look at sort of more timely, more
Speaker 1: timely picture of the underlying wage picture, it's actually it's
Speaker 1: actually calling very quickly. Now. That's obviously not consistent with
Speaker 1: a title what you would expect and a tight labor
Speaker 1: market and with expectations inflation expectations, pay expectations up at
Speaker 1: sort of five percent mark at least in the near term.
Speaker 1: But there is a story there that is really important,
Speaker 1: particularly for the for the Bank of England, and that's
Speaker 1: something that we're going to be really focused on in
Speaker 1: the in the next job's release. Yeah, Lizzie Breddon, you've
Speaker 1: been waiting patiently to listening into this conversation as well.
Speaker 1: But I know the story that you've been following is
Speaker 1: the change in the makeup of the Bank Aving's Monetary
Speaker 1: Policy Committee won't affect the next meeting, But tell us
Speaker 1: about Megan Green who's joining the MPC. Yeah, not the
Speaker 1: meeting after that. It's the replacement for Sylvana turn Railroad.
Speaker 1: She is currently global chief Economist at the Crawl Institute.
Speaker 1: She's got a background in financial services, also in academia,
Speaker 1: and you know it's a difficult, delicate moment to be
Speaker 1: joining the MPC because we're nearing the end of the
Speaker 1: tightening cycle. You've had eleven straight hikes so far, and
Speaker 1: this debate currently is between Sylvana ten Rairoa who Green's replacing,
Speaker 1: and Swatty Dingra at the dovish end and then at
Speaker 1: the hawkish end of the spectrum Katherine Mann about whether
Speaker 1: it's time to pause. As Dan says, I noted putting
Speaker 1: a foot in both camps, whether it's going to be
Speaker 1: a hold or a hike. But fortunately Megan Green is
Speaker 1: a regular on Bloomberg TV and radio, so we've had
Speaker 1: a bit of an insight into her thoughts already. Recently
Speaker 1: she's said that she's concerned about the impact of tightening
Speaker 1: monetary policy on the banking system, and she said it
Speaker 1: more in the context of the US, but it's very
Speaker 1: applicable in the UK as well, because of course we've
Speaker 1: had the fallout of Credit Sweets and Silicon Valley Bank.
Speaker 1: This was a question that was raised around the last
Speaker 1: night meeting at the Bank of England. Have financial conditions
Speaker 1: tightened so much that the work of the Bank of
Speaker 1: England has been done for it, and so it's interesting
Speaker 1: that she has already had this view out there, and
Speaker 1: given her financial services background, we know that she's very
Speaker 1: aware of it. How will her appointment affect the balance
Speaker 1: then on the committee? I mean it's hard. I think
Speaker 1: as Dan's colleague Anna noted to be more dovish than
Speaker 1: Sylvana ten Rairo, She's voted to hold at the past
Speaker 1: three meetings. She's even been talking about cutting rates before
Speaker 1: she leaves the committee. So it seems that this appointment
Speaker 1: can be nothing but a tilt to the hawkish side,
Speaker 1: no matter how dovish Meghan Green may be. But the
Speaker 1: reality is she isn't going to take her seat until
Speaker 1: two meetings time. As I say, the hiking cycle could
Speaker 1: be over by then. More interesting perhaps for our UK
Speaker 1: listeners then, is her open criticism of Brexit on Twitter.
Speaker 1: She might have to rein that in her if she
Speaker 1: joins the now that she's joining the MPC. Okay, Lizzie Burden,
Speaker 1: thank you very much, a UK correspondent on our senior
Speaker 1: UK economist at Dan Hansen as well. I'm Stephen in London.
Speaker 1: You can catch us every weekday morning here for Bloomberg
Speaker 1: Daybreak Europe, beginning at six am in London and one
Speaker 1: am on Wall Streets. Tom, thank you, Stephen, And coming
Speaker 1: up on Bloomberg Daybreak weekend. Could be a contentious week
Speaker 1: on Capitol Hill, and we'll tell you why. I'm Tom
Speaker 1: Busby and this is Bloomberg Broadcasting live from the Bloomberg
Speaker 1: Interactive Broker Studio in New York. Bloomberg elvon Freo to Washington, DC,
Speaker 1: Bloomberg ninety nine one to Boston, Bloomberg one O six
Speaker 1: one to San Francisco, Bloomberg nine sixty to the country,
Speaker 1: Sirius XM Channel one nineteen to London, DAB Digital Radio,
Speaker 1: and around the globe the Bloomberg Business app and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Daybreak Weekend. I'm Tom
Speaker 1: Busby in New York with your global look ahead at
Speaker 1: the top stories for investors in the coming week. A
Speaker 1: lot of travel this weekend for many Senators and representatives
Speaker 1: as they make their way back to Capitol Hill after
Speaker 1: more than two weeks of spring and Easter break. The
Speaker 1: House and Senate will be back this week for what
Speaker 1: could be a tense session. Now for more, let's head
Speaker 1: to our Bloomberg ninety nine one newsroom in Washington, and
Speaker 1: Bloomberg sound on host Kaylee Lines. Kaylee, thanks Tom. That's right, guests,
Speaker 1: who's back back again. Almost Congress is going to get
Speaker 1: back to work here in Washington next week after a
Speaker 1: two week hiatus around the Easter and Passover holidays. But
Speaker 1: as we well know, there are a lot of issues
Speaker 1: that Republicans and Democrats don't agree on, so there remains
Speaker 1: a question of how much work really can get done
Speaker 1: or joined Now by Bloomberg Government reporter Emily Wilkins for
Speaker 1: a look at the top priorities as we get back
Speaker 1: to business on the Hill. And Emily, I say the Hill,
Speaker 1: and I'm talking about lawmakers being back in DC, but
Speaker 1: actually we're going to start the week with one key
Speaker 1: lawmaker in New York, how Speaker Kevin McCarthy getting set
Speaker 1: to give a speech to the New York Stock Exchange
Speaker 1: at ten am on Monday. Why so, I think with
Speaker 1: the debt limit coming up, it is certainly the biggest
Speaker 1: news in Washington, and I think McCarthy is really trying
Speaker 1: to make that clear connection to Wall Street and to
Speaker 1: Washington to say, hey, look, this thing's coming up. Republicans
Speaker 1: are going to hold firm. We absolutely demand that spending
Speaker 1: be cut and that's the only way that we're going
Speaker 1: to move a deal forward. So this is him kind
Speaker 1: of doing a little bit of expectations setting really kind
Speaker 1: of think going up to Wall Street, because sometimes I
Speaker 1: think Wall Street and DC don't always communicate as well
Speaker 1: as they could with each other, and I think McCarthy
Speaker 1: is really trying to make a statement here by delivering
Speaker 1: this speech up in New York. At the same point.
Speaker 1: You know, we learned last week that Republicans are planning
Speaker 1: on putting out a more detailed debt limit proposal. It'll
Speaker 1: be packed with conservative priorities. We certainly don't think that
Speaker 1: this is going to be the thing that actually winds
Speaker 1: up raising the debt limit, but Republicans say, hey, we're
Speaker 1: going to put something together. We'll put it out there,
Speaker 1: and then the ball is in the White House's court.
Speaker 1: They really want Biden and Kevin McCarthy to sit down
Speaker 1: again and begin negotiating, and the White House said, hey,
Speaker 1: if you want to negotiate, we need an actual plan.
Speaker 1: And so this is a Republicans working to deliver on that. Okay,
Speaker 1: so maybe maybe a first step forward, I will bring
Speaker 1: the focus to Washington specifically Emily, I promise, but we
Speaker 1: have to talk about the other thing that's going to
Speaker 1: happen in New York. Also at the beginning of the week,
Speaker 1: Jim Jordan and House Judiciary Republicans holding a field hearing
Speaker 1: in Manhattan, talking in theory about the crime policies of
Speaker 1: District Attorney Alvin Bragg. But this is basically about the
Speaker 1: Trump indictment, right, This is absolutely about the Trump indictment.
Speaker 1: Alvin Bragg was not something that Jim Jordan was interested
Speaker 1: in before the indictment came down. And this is really
Speaker 1: what Republicans strategy has been in terms of how they
Speaker 1: are addressing the fact that one of the leading nominees
Speaker 1: for their party's presidential can it is currently under the
Speaker 1: process of being indicted. And so with that, they've really
Speaker 1: honed in on Alvin Bragg. They've really honed in on
Speaker 1: his policies. And it's also interesting to know, Kayley, the
Speaker 1: strategy that Republicans have taken up of doing these field hearings.
Speaker 1: This is a thought that Republicans have had sort of
Speaker 1: making sure that they are going out to various communities
Speaker 1: and places around the country that they're kind of getting
Speaker 1: face time with voters that they're able to have these offens.
Speaker 1: This is kind of a way that, you know, Republicans,
Speaker 1: they're not going to be able to move a lot
Speaker 1: of their priorities through with a Democratic Senate and of
Speaker 1: course Biden in the White House, and so this is
Speaker 1: a way for them to kind of almost in a way,
Speaker 1: hit the campaign trail early. And of course New York
Speaker 1: is absolutely key for Republicans. Republicans would not have the
Speaker 1: majority that they have right now if a number of
Speaker 1: Republicans representing New York had flipped seats, and so it's
Speaker 1: really a key state for them. It's not surprising that
Speaker 1: they picked to go there, and certainly with Alvin Bragg,
Speaker 1: that plays right into the narrative that Republicans are trying
Speaker 1: to put, which is kind of lets of a focus
Speaker 1: on what Trump did and more of a focus on
Speaker 1: what Alvin Bragg has done and whether or not he
Speaker 1: should have pressed those charges to be in with. Okay,
Speaker 1: so if the House Judiciary Committee is focused on Alvin
Speaker 1: Bragg and the Trump issue, let's talk about what the
Speaker 1: Senate Judiciary Committee may be focused on as well, and
Speaker 1: whether or not that really translates to the House. While
Speaker 1: Congress was away the pro publica piece on Supreme Court
Speaker 1: Justice Clarence toomic ethics around him and his dealings with
Speaker 1: a billionaire. We know that the Senate Judiciary is saying
Speaker 1: they want to hold hearings about it. They are highly
Speaker 1: engaged with this, it seems, but the House is under
Speaker 1: different leaderships, so could anything really happen there. I'm not
Speaker 1: really sure we're going to see a big focus on this,
Speaker 1: and the House Republicans have plenty of other things that
Speaker 1: they'd like to focus on at this point in time,
Speaker 1: and I just don't really see what motivation, if any,
Speaker 1: they would have now. Certainly that kind of when we're
Speaker 1: talking into of hearings an official legislation moving on the floor,
Speaker 1: I would not be surprised at all if Democrats tried
Speaker 1: to make this a talking point. If you saw them
Speaker 1: reintroduce legislation that deals with transparency and reporting for judges
Speaker 1: in terms of what donations they're getting, you know, kind
Speaker 1: of trying to bring some more transparency there. There was
Speaker 1: something that was discussed in the previous Congress. It didn't
Speaker 1: wind up moving through, partly because there are just so
Speaker 1: many other priorities at this point, but it certainly could
Speaker 1: be something that we wind up hearing more about. I
Speaker 1: just think at this time, between the debt limit, between
Speaker 1: border security, between nominees that need to go through the Senate,
Speaker 1: between just other issues in general, this is one that
Speaker 1: I can easily see falling through the cracks. Yeah, it's
Speaker 1: a very good point on how there's all these competing
Speaker 1: priorities here potentially, But it strikes me as well, Emily,
Speaker 1: that the piece about Clarence Thomas was just one of
Speaker 1: the real kind of newsmaking events that happened while we
Speaker 1: While Congress was on recess, you also had a meeting
Speaker 1: between McCarthy and Taiwan's president siying Wang. You had another
Speaker 1: mass shooting in Louisville, Kentucky. You had the expelling of
Speaker 1: lawmakers in the Tennessee House, who of course now have returned.
Speaker 1: There has been so many things, including competing court rulings
Speaker 1: on abortion pills as well. Is any of that likely
Speaker 1: to get immediate attention in Congress or are these bigger,
Speaker 1: overarching issues that have been hanging over their heads for
Speaker 1: a while going to take priority. I think at this point,
Speaker 1: when we look at what we know that the House had,
Speaker 1: Senate are going to be handling next week. They're kind
Speaker 1: of almost picking up where they left off several weeks ago.
Speaker 1: So these are things where even the House, they're planning
Speaker 1: on doing a vote on a bill about transgender student athletes,
Speaker 1: trying to ban them from playing sports and schools that
Speaker 1: receive federal funding, or at least, you know, not it
Speaker 1: would have to be to the team to the gender
Speaker 1: that they were born born rather than the gender that
Speaker 1: they IDENTI fias, and you know, that's something that you know,
Speaker 1: isn't really you know, one of the big things that
Speaker 1: happened over the last two weeks. I mean, we know
Speaker 1: that the Senate is going to be holding some hearings
Speaker 1: on trained railment bills. They still have to deal with
Speaker 1: that from a couple months ago. And we know that
Speaker 1: they're taking a look at authorization for military funding. So
Speaker 1: a lot of the stuff I think sometimes with the
Speaker 1: House and the Senate and just Congress in general, it
Speaker 1: takes a while to get up and running, especially since
Speaker 1: everyone wants to go through regular orders. So they hold
Speaker 1: the hearings and the bills go through committee and then
Speaker 1: they come to the floor. It just takes a little
Speaker 1: bit of time. So I don't think we can count
Speaker 1: out that we're not going to be seen or hearing
Speaker 1: anything about some of these issues. I think, particularly in
Speaker 1: terms of the pristone pill, the pill that is used
Speaker 1: in some medically induced A portions, that might be something
Speaker 1: that we well see taken up by Democrats in the
Speaker 1: Senate and potentially becomes a rallying point for Democrats and
Speaker 1: the how as well. But just in terms of what
Speaker 1: we're going to see with the next couple of weeks,
Speaker 1: I think, you know, the priorities that we're already on
Speaker 1: the play are going to be big. And I think
Speaker 1: of course the dead limit too. You know, if Republicans
Speaker 1: are serious that they want to move something within the
Speaker 1: coming month, they have vowed to do so via regular order,
Speaker 1: that's going to take a couple of weeks to get
Speaker 1: legislation together, move it through the process, get it to
Speaker 1: the floor, do the amendments. Like that, that's really going
Speaker 1: to have to be their main focus rather than a
Speaker 1: number of the news the events that we've seen. But
Speaker 1: on the subject of the dead limit, EMILYA, I mean,
Speaker 1: really we're not quite at crunch time in theory right
Speaker 1: If we're talking about an X state in the summer.
Speaker 1: So does that take some of the pressure off or
Speaker 1: is this just self inflicted pressure Now? I think to
Speaker 1: a certain extent, some of the pressure is not on yet,
Speaker 1: And I wonder if that's kind of why McCarthy is
Speaker 1: headed up to New York when he is. Because in Congress,
Speaker 1: they love to move at the last minute, they love
Speaker 1: to move on a deadline. But McCarthy knows, and I
Speaker 1: think Biden knows that that's not great. That when we've
Speaker 1: moved too close to the deadline in the past on
Speaker 1: raising the debt limit, that's when the US credit sort
Speaker 1: of gets hit and gets impacted. All right, Emily Wilkins
Speaker 1: of Bloomberg Government, thank you so much. We're excited for
Speaker 1: the next week coming up here in Washington, Tom, and
Speaker 1: I'll send it back over to you. Kaylee Lines, reporting
Speaker 1: from our Bloomberg newsroom in Washington. Thanks Kaylee. Coming up
Speaker 1: on Bloomberg Daybreak weekend, Tesla's coming earnings and how Elon
Speaker 1: Musk's company is sparing in China. I'm Tom Busby, and
Speaker 1: this is Bloomberg. This is Bloomberg Daybreak weekend, our global
Speaker 1: look ahead at the top stories for investors in the
Speaker 1: coming week. I'm Tom Busby in New York. Some of
Speaker 1: the focus is going to be on Tesla's earnings and
Speaker 1: the company's big opportunities and challenges in China. For more,
Speaker 1: let's go to Hong Kong and Bloomberg Daybreak Asia host
Speaker 1: Brian Curtis and his colleague Doug Tom. We look forward
Speaker 1: to Tesla's earnings in the coming week, with at least
Speaker 1: part of the focus on China. The numbers of the
Speaker 1: commentary from executives will be coming after a slew of
Speaker 1: recent developments involving the company. Yes, we've seen big price
Speaker 1: cuts by Tesla and its competitors. We've also seen relentless
Speaker 1: gains in the share price of Tesla and recently the
Speaker 1: announcement of a new megapac battery plant in Shanghai. Now
Speaker 1: this will build cells for grid scale energy storage. In addition,
Speaker 1: the Biden administration is in the process of rolling out
Speaker 1: the toughest ever curbs in the United States on car pollution.
Speaker 1: Joining US now is Dana Hall, senior reporter in San Francisco,
Speaker 1: covering Tesla and its chief Elon musk So. Danna Doug
Speaker 1: mentioned the price cuts and the stock price gains. There
Speaker 1: are trying to put those two together. On the one hand,
Speaker 1: the cuts make the cars more competitive and more affordable,
Speaker 1: particularly in places like China, But then on the other hand,
Speaker 1: it speaks to perhaps weaker demand. How badly will these
Speaker 1: price cuts hit margins. The fact that they've cut prices,
Speaker 1: you know, so much in the first quarter and then
Speaker 1: again just last Thursday, does kind of spook people about
Speaker 1: the demand question, like how much farther are they going
Speaker 1: to go down? And if you're a consumer thinking of
Speaker 1: buying a Tesla, I mean, are you going to buy
Speaker 1: one now or are you going to wait to see
Speaker 1: if they lop off another one or five thousand dollars?
Speaker 1: I mean, that's that's sort of a big question for
Speaker 1: the consumer, like why, you know, I don't want to
Speaker 1: buy a car if if Elon Musk is going to
Speaker 1: turn around and cut the prices again next week. One
Speaker 1: of the things that was also interesting in this note
Speaker 1: that I read is that the move here on the
Speaker 1: part of Tesla maybe about expediting the demise of gasoline vehicles.
Speaker 1: And when I read that, I was reminded of what
Speaker 1: happened with some of these ride sharing companies where they
Speaker 1: were purposely undercutting the market for taxis as a way
Speaker 1: of pushing them out of business. Yeah. I mean, when
Speaker 1: you're when you're aggressively chasing volume, you will pull out
Speaker 1: all the stops to kind of gain as many customers
Speaker 1: as you can. And you know, policy incentives are on
Speaker 1: Tesla side. I mean, the world is transitioning away from
Speaker 1: gas powered cars. Tesla doesn't make a gas powered car,
Speaker 1: so there's only sort of upside from for them. And
Speaker 1: you know, at their investor day in March, they made
Speaker 1: a huge show of how they're going to relentlessly focus
Speaker 1: on costs across their supply chain in their operations, and
Speaker 1: you know, their average transaction price has been kind of
Speaker 1: you know, coming down over the years, and they and
Speaker 1: they really feel like that's the path that they're on
Speaker 1: and it's a part of their whole mission. I mentioned
Speaker 1: China in the intro. Byd is out selling a Tesla
Speaker 1: in China, how's that competition going. Certainly BYD is a
Speaker 1: formidable competitor in China, and you're seeing Tesla cut prices
Speaker 1: in China as well. I mean, Tesla does have kind
Speaker 1: of this aspirational brand lure in the country, and the
Speaker 1: fact that they just announced that they're building this megapac
Speaker 1: facility in Shanghai. Is there's a sign that they're really
Speaker 1: kind of doubling down on their investment. We did see
Speaker 1: some political pressure coming from Mike Gallagher, the congressman, on
Speaker 1: Tesla and its commitment to China. You mentioned that commitment
Speaker 1: earlier with this megapac factory. Is that something that investors
Speaker 1: will be paying close attention to or not so much? Yeah,
Speaker 1: I mean the Gallagher's comment was that he was concerned.
Speaker 1: I don't know how much pressure that really, you know, holds.
Speaker 1: But China has always been a big part of Tesla's
Speaker 1: business model, and they just announced that Tom Jou, who
Speaker 1: kind of led operations in China, is now an executive officer. Danna,
Speaker 1: we mentioned the pollution curbs coming from the Biden administration.
Speaker 1: What can you tell us on that front. It's great
Speaker 1: for Tesla. I mean, you have a Biden administration that
Speaker 1: is trying to accelerate ev adoption. Then you have Tesla,
Speaker 1: which is like the pure player EV carmakers. There's a
Speaker 1: sort of only there's only upside from policies kind of
Speaker 1: designed to accelerate this. Danna, thanks for helping us look
Speaker 1: at Tesla as we prepare for the earnings in the
Speaker 1: coming week. Dana Hall is senior reporter in San Francisco
Speaker 1: covering Tesla and Elon Musk. I'm prisoner along with Brian Curtis.
Speaker 1: He's in Hong Kong and you can catch us weekdays
Speaker 1: here from Bloomberg Daybreak Asia beginning at six am in
Speaker 1: Hong Kong six pm on Wall Street. Tom, thank you,
Speaker 1: Brian and Doug. And that does it for this edition
Speaker 1: of Bloomberg Daybreak Weekend. Join us again Monday morning at
Speaker 1: five am Wall Street time for the latest on markets
Speaker 1: overseas and the news you need to start your day.
Speaker 1: I'm Tom Buzzby. Stay with us stop stories and global
Speaker 1: business headlines coming up right now.