Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is Bloomberg day Break Weekend, our global look at
Speaker 2: the top stories in the coming week from our Daybreak
Speaker 2: anchors all around the world. Straight Ahead on the program,
Speaker 2: a look ahead to the November jobs report here in
Speaker 2: the US how that may impact FED policy moving forward.
Speaker 2: Plus a look at where oil prices may be heading
Speaker 2: in an upcoming Trump administration. I'm Tom Busby in New York.
Speaker 1: I'm Caroline Hepge here in London, where we're shining a
Speaker 1: spotlight on Poland ahead of the country's presidential election in
Speaker 1: twenty twenty five.
Speaker 3: I'm Derek Prisner, looking at President elect Trump's announcement of
Speaker 3: new tariffs on Chinese goods.
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Speaker 2: The Day to You, I'm Tom Busby. We begin today's
Speaker 2: program with the November Jobs Report, Non farm payroll numbers
Speaker 2: out this coming Friday, eight thirty am Wall Street Time
Speaker 2: for more on what to expect and what that data
Speaker 2: could mean for the FED, we're joined by Michael McKee,
Speaker 2: Bloomberg International Economics and Policy correspondent. Well, Michael, let's begin
Speaker 2: with a look back back at October's dismal jobs report
Speaker 2: and the reasons behind that. Before we look at November.
Speaker 5: Well, twelve thousand jobs according to the Bureau of Labor
Speaker 5: Statistics during the month of November, and that was largely
Speaker 5: influenced by what we saw in terms of the potential
Speaker 5: port strike, the Boeing strike, and the hurricanes that hit
Speaker 5: during the month, and so largely dismissed by most people.
Speaker 5: What we'll have to see is whether we get the
Speaker 5: rebound that one might expect, and if so, how strong
Speaker 5: that is, because at the same time that we saw
Speaker 5: this extraordinarily low number, we've been in the middle of
Speaker 5: a decline in the number of jobs created each month,
Speaker 5: simply because the economy is sort of plateauing at this point.
Speaker 5: Strong growth, but most of the job gains have been made,
Speaker 5: but it.
Speaker 2: Is shaping up to be a very different number for
Speaker 2: job creation in November. I mean we have had some
Speaker 2: good news some mixed news. Jobless claims, initial claims low,
Speaker 2: but continuing claims a sign of long term unemployment. That's
Speaker 2: in a two year high, So a little troublesome there.
Speaker 5: Yeah, we'll have to watch that. It isn't clear why
Speaker 5: that is. It would suggest that people are having a
Speaker 5: harder time finding a job, but that may also be
Speaker 5: hurricane related. The people who initially filed claims have done so,
Speaker 5: so we don't see the initial claims keep going up.
Speaker 5: But the people who lost their jobs because their jobs
Speaker 5: sort of disappeared, they have had a hard time finding
Speaker 5: jobs because so many jobs disappeared in those hurricane areas.
Speaker 5: We're just going to have to wait and see.
Speaker 2: Now, the unemployment rate still just four point one percent.
Speaker 2: You know, you talked about strike settles and that's good news.
Speaker 2: But we've also had retailers gearing up for the big holidays, right.
Speaker 2: Travel still strong coming into Thanksgiving, consumer spending still up,
Speaker 2: So there is good news pointing to November's numbers.
Speaker 5: I was traveling at the beginning of the month and
Speaker 5: a lot of people were traveling the our beginning of
Speaker 5: the week last week and a lot of people traveling
Speaker 5: airports and everything kind of crowded, and that just suggests
Speaker 5: that people still have money and they're still willing to
Speaker 5: go out and spend it on things that are not necessities.
Speaker 5: And so if that's the case, we're likely to see
Speaker 5: continued strength in growth and that will continue to incent
Speaker 5: companies who need people to hire people. The hard part
Speaker 5: is when you get to a point in the economy now,
Speaker 5: is projecting what growth is going to be like and
Speaker 5: whether you're going to need more people. It seems fairly
Speaker 5: obvious that we're going to need more help part time
Speaker 5: help for the Christmas season, and we're going to probably
Speaker 5: need more help in the leisure and hospitality space. So
Speaker 5: at least those two areas are someplace we can look
Speaker 5: for some kind of gains.
Speaker 2: So the big questions and what right now is Bloomberg
Speaker 2: expecting to see in the November numbers and what'll it
Speaker 2: all mean when the Fed meets again for the last
Speaker 2: time this year December seventeenth and eighteenth.
Speaker 5: Well, the forecast is for around two hundred thousand, which
Speaker 5: would be a significant snap back and stronger than we
Speaker 5: had seen in previous months. The general feeling is that
Speaker 5: the risk is even to the upside on that. The
Speaker 5: question is does the data between now and Friday continue
Speaker 5: to support that. The ism numbers we're going to get,
Speaker 5: the jobless aims numbers, we're going to get it, and
Speaker 5: the ADP numbers, if those are also strong, we'll maybe
Speaker 5: see that even revised up. The biggest question is at
Speaker 5: this point what happens with unemployment. The forecast is for
Speaker 5: a four point two percent rate, up from four point one.
Speaker 5: The FED is watching that more closely because that isn't
Speaker 5: affected by the same things that the headline numbers are.
Speaker 5: The strikes and the hurricanes don't really impact that, and
Speaker 5: so if that goes up, then it pushes the FED
Speaker 5: to maybe stay on hold. Right now, the general feeling
Speaker 5: is that the FED knows what's happening with inflation, and
Speaker 5: they have a pretty good idea of what's happening with jobs,
Speaker 5: and if that's confirmed by the payrolls report on Friday,
Speaker 5: then they will probably go ahead and cut once more.
Speaker 5: And then, of course, with the new administration coming in,
Speaker 5: all bets are off for twenty twenty five.
Speaker 2: Yeah, I'll say well. Also, Powell has said in the
Speaker 2: last couple of weeks he's in no rush it's all
Speaker 2: as always data driven, but he's in no rush to
Speaker 2: cut again right away. So kind of playing it both
Speaker 2: ways or is it really just data dependent.
Speaker 5: It's data dependent, but he is playing it both ways.
Speaker 5: What he wants is the option to have the markets
Speaker 5: price in a given at the moment until the FED
Speaker 5: sees the data that they have to work with. If
Speaker 5: the markets were to price in a cut and believe
Speaker 5: that they are going to continue that and you get
Speaker 5: this whip saw this volatility in the markets that the
Speaker 5: Fed doesn't want to see. They would prefer that everybody
Speaker 5: stays sort of half and half until all the data
Speaker 5: are in, until they're ready to look at it and
Speaker 5: make a decision.
Speaker 2: Well, the November jobs report from the Bureau of Labor
Speaker 2: Statistics out this coming Friday, our thanks to Michael McKee,
Speaker 2: Bloomberg International Economics and Policy Correspondent. We move next to
Speaker 2: the energy market and what plans from the incoming Trump administration.
Speaker 2: Lower demand out of China and continued geopolitical tensions may
Speaker 2: need for oil prices in the New Yar term and
Speaker 2: in the year ahead. It's a lot to consider and
Speaker 2: for more. We're joined by Alex Longley Bloomberg Oil trading
Speaker 2: reporter Alex thank you for joining us. I want to
Speaker 2: start with you where oil prices are right now?
Speaker 6: Well, and it's a good question in the context of
Speaker 6: when people normally hear about oil prices right and the pandemic.
Speaker 6: In twenty twenty, the main thing you'd have heard, if
Speaker 6: you're not in a day to day follower of the
Speaker 6: oil market, is negative prices. Then in twenty twenty two,
Speaker 6: the next thing you hear is one hundred and forty
Speaker 6: dollars a barrel. You've gone from being paid to take
Speaker 6: oil to pay one hundred and forty dollars a barrel.
Speaker 6: The last few months have been a remarkably stable period.
Speaker 6: In fact, most of twenty twenty four has been a
Speaker 6: remarkably stable period for oil prices. We find ourselves now
Speaker 6: sort of somewhere in the kind of seventy to seventy
Speaker 6: five region, and that's where oil prices have been trading
Speaker 6: pretty much since the middle of October. And if you
Speaker 6: exclude the period where we sort of heightened volatility with
Speaker 6: Iran firing missiles it Israel. Actually oil has been trading
Speaker 6: kind of in there's seventy to seventy five or sixty
Speaker 6: five to seventy range, depending on what benchmark you look at.
Speaker 6: Since pretty much the end of September, that's a remarkably
Speaker 6: stable period for what is one of the most volatile
Speaker 6: commodity markets in the world.
Speaker 2: And here in the US we are certainly reaping the benefits.
Speaker 2: Gasoline averaging three zero five a gallon a year ago
Speaker 2: it was three twenty six a gallon. So this stability
Speaker 2: is exactly what everyone here was hoping to see.
Speaker 6: Yes, exactly. I think we've already heard that sort of
Speaker 6: Prior to the holiday period, the Department for Transportation was
Speaker 6: expecting a record travel season. I think one of the
Speaker 6: interesting things more broadly about demand is that in the
Speaker 6: oil market, it has generally surprised to the upside. People
Speaker 6: have been consuming more oil than generally was expected to
Speaker 6: be the case.
Speaker 5: Now.
Speaker 6: Obviously, so far this year, global economic slowdown has hindered
Speaker 6: demand growth to a degree. But the point is oil
Speaker 6: demand is still growing, and as much as we invest
Speaker 6: in the energy transition, the fact of the matter is
Speaker 6: in various parts of the oil market, demand is here
Speaker 6: to stay. Another thing that's hugely important when we look
Speaker 6: at the price of gasoline price at the pump, particularly
Speaker 6: in the US, but actually across the world is there's
Speaker 6: been a transformation in the number of plants that are
Speaker 6: converting crude into refined products, and that includes gasoline and diesel,
Speaker 6: the fuels that keep the world ticking along. And that
Speaker 6: twenty twenty two period I mentioned before, when prices were
Speaker 6: exceptionally high, the world didn't have enough oil refineries really
Speaker 6: to produce the fuel that needed and that's why you
Speaker 6: saw crazy high gasoline prices, crazy high diesel and heating
Speaker 6: oil prices. And what we've seen over the last twelve
Speaker 6: to eighteen months is a series of giant new plants
Speaker 6: come online in other parts of the world, and that
Speaker 6: means lower prices for everyone because there's more ability to
Speaker 6: produce gasoline in the global system.
Speaker 2: And we've also seen more countries come back online like Libya,
Speaker 2: you know, i Ran, I know has had you know,
Speaker 2: pretty much a back and forth there. But also you
Speaker 2: know with the Opek plus countries, you know they've increased production,
Speaker 2: they've rolled back production, so a lot of volatility there,
Speaker 2: but bottom line, there's no demand destruction.
Speaker 6: We are flush with oil, yes, exactly. And this comes
Speaker 6: against the backdrop of the OPEC plus countries already kind
Speaker 6: of having for several months delayed their production increases that
Speaker 6: they were planning because they want to bring barrels back
Speaker 6: to the market for precisely the reasons you say, lots
Speaker 6: of countries outside the grouping have been lifting their output.
Speaker 6: That includes the US, where production is that are close
Speaker 6: to a record, but also a handful of others Canada, Brazil, Guyana,
Speaker 6: and lots of these countries have been able to lift
Speaker 6: output because oil prices have been so relatively high for
Speaker 6: several years now that's incentivized higher volumes of production. You
Speaker 6: reference to Iran. That's another country where, particularly under the
Speaker 6: Biden administration, we've seen a perhaps looser approach to the
Speaker 6: enforcement of sanctions and that's meant more Iranian oil flowing
Speaker 6: to the markets. That's kept the markets well supplied. You
Speaker 6: could make a similar argument about Venezuela over recent years
Speaker 6: as well. That combination of what we would call non
Speaker 6: OPEC supplier supply from outside the groups that are the
Speaker 6: countries that are signed up to the output cuts is
Speaker 6: partly what has helped depress prices relatively in recent years.
Speaker 6: And then the final thing is within OPEC itself, yes,
Speaker 6: that producer group has been reducing output, but not everyone
Speaker 6: has been at the same pace. And there are a
Speaker 6: handful of cheetahs within that producer group which have been
Speaker 6: promising to return their cuts to where they should be.
Speaker 6: But that sort of holistic picture is why there's so
Speaker 6: much supply on global markets at the moment.
Speaker 2: And OPEK has another decision later in December right on
Speaker 2: whether to gradually increase output.
Speaker 6: Again, yes, exactly, we're expecting that decision. We'll see what
Speaker 6: comes of that. They have already begun, we've reported discussing
Speaker 6: another plan to extend to the delay to resuming output increases.
Speaker 6: I think what the market has been looking for in
Speaker 6: advance of that decision has been any suggestion that those
Speaker 6: curbs will be delayed for several months. And this comes
Speaker 6: back to a view from the International Energy Agency, which
Speaker 6: pretty much everyone in the market is talking about, which
Speaker 6: is that twenty twenty five is going to be a
Speaker 6: story of lots of oil on the market. And again
Speaker 6: that's not because demand growth is particularly slow, but it's
Speaker 6: because supply growth is so high. Again, we come back
Speaker 6: to Brazil, Guyana, the US, the IEA say lots of
Speaker 6: barrels are going to come onto the market, and that's
Speaker 6: giving Opek a slight headache. I think the real question
Speaker 6: for next year is how big that oversupply will be.
Speaker 2: Okay, well, a lot to look forward to, boy our
Speaker 2: thanks to Alex Longley, Bloomberg Oil Trading Reporter, and coming
Speaker 2: up on Bloomberg day Break weekend, we'll shine a spotlight
Speaker 2: on Poland ahead of that country's presidential election next year.
Speaker 2: I'm Tom Busby, and this is Bloomberg. This is Bloomberg
Speaker 2: day Break Weekend, our global look ahead at the top
Speaker 2: stories for investors in the coming week. I'm Tom Busby
Speaker 2: in New York. Up later in our program, we'll look
Speaker 2: at how Donald Trump is already making good on campaign
Speaker 2: val to slap punishing tariffs on goods coming into the US.
Speaker 2: But first a closer look at Poland. Its thriving IT
Speaker 2: sector has made it quote the new Silicon Valley of
Speaker 2: Eastern Europe, but it's grappling with questions about its political future.
Speaker 2: Its ruling party has chosen Warsaw's mayor to run for
Speaker 2: president the next year's election, an ally to Prime Minister
Speaker 2: Donald Tusk and his current legislative agenda, and it comes
Speaker 2: as Poland prepares to take over the EU's rotating presidency.
Speaker 2: So what lies ahead for more, Let's go to London
Speaker 2: and bring in Bloomberg Daybreak Europe anchor Caroline hepgar Tom.
Speaker 1: Prime Minister Donald Tusk has begun his government's bid to
Speaker 1: secure the Polish presidency in Ernest. Rafal Schaskowsky is a
Speaker 1: former member of the European Parliament and has been mayor
Speaker 1: of Warsaw since twenty eighteen. He's won the approval of
Speaker 1: seventy five percent of the centrist coalition the Civic Platform
Speaker 1: to become the party's presidential nominee, beating out opponent Foreign
Speaker 1: Minister Radasla Sikorski in the process. Now, winning the presidency
Speaker 1: with responsibility for foreign affairs is crucially important for Tusk's administration,
Speaker 1: which has vowed to restore the rule of law and
Speaker 1: bring Poland back towards the European mainstream. Incumbent President Andre
Speaker 1: Duda is an ally of the former nationalist Law and
Speaker 1: Justice administration and has clashed with Tusk in his first
Speaker 1: year in office. The Law and Justice Party have nominated
Speaker 1: Karl Novrodsky, the president of the Institute of National Remembrance,
Speaker 1: a head of the ballot, which is expected in May
Speaker 1: next year. Current President Duda's second and final term ends
Speaker 1: in August, but he has cultivated close ties with President
Speaker 1: eelect Donald Trump and visited him in New York in April.
Speaker 1: Trump's return to the White House raises many considerations for
Speaker 1: European leaders, particularly when it comes to ongoing support for
Speaker 1: Ukraine in the conflict, where the Russia, Poland and NATO
Speaker 1: member is a staunch back of neighboring Ukraine. So what
Speaker 1: lies ahead for Poland as the country seeks to determine
Speaker 1: its next political chapter, and will the country's decision bring
Speaker 1: it closer or further away from an alliance with Trump's
Speaker 1: United States is something I've been discussing with Bloomberg's Warsaw
Speaker 1: Bureau chief Pyotr Skolimowski Hi.
Speaker 7: Indeed, so the role of the president in Poland is
Speaker 7: very often or has been very often underestimated. It's generally
Speaker 7: believed it's just ceremonial. But as we've seen over the
Speaker 7: past few years, and especially since Donald Tusk and his
Speaker 7: party took over after winning the election last year, we've
Speaker 7: seen that the president plays a very important role. He
Speaker 7: can veto legislation, he can appoint judges. He also sits
Speaker 7: on or represents Poland at NATO meetings in relations with
Speaker 7: the UN, for example. So what we've seen over the
Speaker 7: past year is that whenever Donald Tusk tried to introduce
Speaker 7: his legislative agenda, which was basically to reverse some of
Speaker 7: the changes in the judiciary that previous government has has introduced,
Speaker 7: the current the current president, who is very close to
Speaker 7: the opposition, wielded his veto power and that was the
Speaker 7: issue where could not really introduce his legislative agenda. And
Speaker 7: obviously he's now trying to get someone in place who
Speaker 7: could help him win.
Speaker 1: That case, and that might be Warsaw's mayor, who himself
Speaker 1: was a European politician previously in the EU. How lightly
Speaker 1: is it that Raphael Chalskowski is going to win? Does
Speaker 1: the ruling party normally manage to retain the presidency?
Speaker 7: Normally they do. Obviously, it all depends when, when, when
Speaker 7: the when the the elections are scheduled. But in this
Speaker 7: case Rafl Saskowski is already an experienced campaigner. We have
Speaker 7: to remember that a few years ago he also he
Speaker 7: already ran for the president and he lost very marginally
Speaker 7: to the incumbent Andre Duda, the current president, who comes
Speaker 7: from the Nationalist launch Justice opposition. Shaskowski is very experienced. Obviously,
Speaker 7: some say he may not be as experienced as necessary
Speaker 7: when it comes to security policy, defense policy or international relations.
Speaker 7: We have to remember that he's a mayor of war
Speaker 7: So and he's been running the city for for a
Speaker 7: very long time now. But at the same time he's
Speaker 7: also a previous you minister into his government in the
Speaker 7: previous one. He also is used to be a lawmaker
Speaker 7: at the European Parliament, so he definitely has a lot
Speaker 7: of experience in this respect and the polls show that
Speaker 7: he is definitely in a popposition to to actually make
Speaker 7: it this time around.
Speaker 1: In terms of Donald Tusk and his policy agenda, he
Speaker 1: wants to bring Poland closer to the European mainstream. Obviously
Speaker 1: the Law and Justice opposition would disagree with that. What
Speaker 1: is what is the thrust of what Tusk wants to do?
Speaker 7: So over the last eight years, when when the Law
Speaker 7: and Justice was in power, Poland was in constant conflict
Speaker 7: with the EU. The main the main accusations they were
Speaker 7: leveled at Poland. That's time was that it's trying, it's
Speaker 7: it's it's started. We are seeing certain democratic backsliding, meaning
Speaker 7: there are changes in the judiciary that are being introduced
Speaker 7: by the by the previous ruling party that that sort
Speaker 7: of remove certain checks and balances on on how the
Speaker 7: nation is or how the administration is run. Now, Tusca's
Speaker 7: promised to to reverse those changes to make Poland again
Speaker 7: the place where rolla law is being respected, and obviously
Speaker 7: he needs the president to do that. I mean that
Speaker 7: the changes have have gone so far under the previous
Speaker 7: administration that he really needs the president to sign off
Speaker 7: on reversal of those changes. There are also issues that
Speaker 7: he has also promised. These are, for example, changes in
Speaker 7: Poland's very strict abortion laws. He also wants his government,
Speaker 7: his coalition that he runs, to make changes there and
Speaker 7: to loosen up those laws. And the current president, who
Speaker 7: is very conservative, is definitely against that.
Speaker 1: Yeah, and that caused a lot of protests at the
Speaker 1: time in Poland. In terms of Poland's economy, why I
Speaker 1: mentioned this is becoming an attractive destination for investors. Why
Speaker 1: is that and what's the economic backdrop to this?
Speaker 5: Yeah?
Speaker 7: So, so Polish economy has been growing very very fast,
Speaker 7: and apart from the the period of the pandemic which
Speaker 7: hit all the economies across the world, it's been expanding
Speaker 7: very very quickly. We're seeing a lot of investment coming
Speaker 7: in from from across the board, but it also has
Speaker 7: a very well established and home grown sec it sector
Speaker 7: here and it also attracted a lot of investment from
Speaker 7: abroad from big corporations, it corporations that set up their
Speaker 7: backroom operations. This has been a sector that's been growing
Speaker 7: here in Poland. Poland is also has been a very
Speaker 7: attractive destination when it comes to batteries. It also attracted
Speaker 7: investor investors from for example, South Korea from the US.
Speaker 7: It's also building a nuclear power plant quite or starting
Speaker 7: to build it. It has a lot of spending when
Speaker 7: it comes to defense that are being planned. It's now
Speaker 7: the biggest spender as part of as a share of
Speaker 7: GDP on defense, which is also again another place where
Speaker 7: the economy could grow and where a lot of the
Speaker 7: destment are coming in for example from South Korea from
Speaker 7: the US. So there's a lot of pentap demanders. The
Speaker 7: society is still catching up with with Western standards, so
Speaker 7: it's a very attractive investment, destination and and economy is
Speaker 7: growing very very fast.
Speaker 1: In terms of the EU rotating presidency, what might that
Speaker 1: mean for Poland? I mean, you know, it's only six months,
Speaker 1: but often the country that holds that does get some
Speaker 1: sway perhaps over the over the EU policy agenda. What
Speaker 1: do you think Poland might bring to that role.
Speaker 7: Yes, so indeed the country that holds rotating presidency sets
Speaker 7: the agenda or helps to set the agenda.
Speaker 4: For the EU.
Speaker 7: Obviously it's going to be an important element time. At
Speaker 7: this point, we have Hunger, which is which is the
Speaker 7: rotating president of the of the EU, and it hasn't
Speaker 7: gone very well to to to say the least. Now
Speaker 7: Poland wants to change that. It wants to sort of
Speaker 7: present that as an opportunity to showcase it's it's its strength. Obviously,
Speaker 7: it will be a time when President Trump is going
Speaker 7: to come in, so it will need to to build
Speaker 7: relations there. There are certain certain areas where Poland needs
Speaker 7: to wants to focus. He wants Poland wants more focused
Speaker 7: on defense and security, so it wants to make some
Speaker 7: headways in terms of where EU spends more on defense
Speaker 7: and tries to pull more of the resources to to
Speaker 7: to for investments there. It also wants to move ahead
Speaker 7: with with enlargement. So Poland has been a huge supporter
Speaker 7: of Ukraine. And we've already heard with from one of
Speaker 7: the ministers except one of the priorities for our presidency
Speaker 7: is actually to open negotiating chapters with those countries don't
Speaker 7: want to join in, which are Ukraine and Moldova. So
Speaker 7: quite a packed agenda, but you know, sort of hovering
Speaker 7: over all of this is a US presidency of Donald
Speaker 7: Trump and that will be probably a key focus.
Speaker 1: Yeah. Absolutely, And just in terms of thinking about the
Speaker 1: presidential candidate for election next year, there's still a process,
Speaker 1: isn't there. I mean, Donald Tusk and his Civic coalition
Speaker 1: have held their primary for their candidate, but then Law
Speaker 1: and Justice will have a candidate. To just what's the
Speaker 1: next process in terms of picking the presidential candidate and
Speaker 1: then the vote and so on.
Speaker 7: Indeed, so at this point it seems like we over
Speaker 7: the last weekend the campaign effectively started. So we know
Speaker 7: the Law the Civic Platforms candidate, and we know the
Speaker 7: laun Justice candidate. So the laund Justice picked a fairly
Speaker 7: unknown figure Carolin Navrewski, who's a historian and he was
Speaker 7: previously or he's currently the head of National Remembrance Institute.
Speaker 7: And the next steps at this point are obviously campaign
Speaker 7: will kick off. We're going to see a lot of campaigning,
Speaker 7: and it's quite a long campaign by published standards, because
Speaker 7: the elections are not expected until May. And obviously the
Speaker 7: key question is whether it's going to be resolved in
Speaker 7: the first round. For that, the main candidate will have
Speaker 7: to gather at least fifty percent of the vote probably unlikely,
Speaker 7: but then we're going to go into second round. At
Speaker 7: this point, these are the two main candidates on Narreotsky,
Speaker 7: the Lawn Justice candidate and Shoskovsky, but there's also sort
Speaker 7: of a dark horse of the whole campaign, the current
Speaker 7: Parliamentary speaker, who is also very keen together the vote.
Speaker 7: So it's going to get excited definitely.
Speaker 1: My thanks to Bloomberg's also bureau chief Pyoto Skolimowski. So
Speaker 1: where Next for Poland will be following that story as
Speaker 1: the country considers who to pick as its next president
Speaker 1: in twenty twenty five. I'm Caroline hepget here in London.
Speaker 1: You can catch us every weekday morning for Bloomberg Daybreak.
Speaker 1: Europe beginning at six am in London. That's one am
Speaker 1: on Wall Street.
Speaker 2: Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend,
Speaker 2: we'll look at how campaign threats by Donald Trump over
Speaker 2: tariffs may soon become a reality. I'm Tom Busby, and
Speaker 2: this is Bloomberg. This is Bloomberg day Break Weekend, our
Speaker 2: global look ahead at the top stories for investors in
Speaker 2: the coming week. I'm Tom Busby in New York. Donald
Speaker 2: Trump's inauguration nearly two months away, but he's already making
Speaker 2: good on his vow of tariffs on goods being imported
Speaker 2: into the US. We turned out at Doug Prisner, host
Speaker 2: of the Daybreak Asia podcast, for more on what it
Speaker 2: could mean for big exporting economies.
Speaker 3: Tom. In the past week, President electromp announced a new
Speaker 3: additional tarraff of ten percent on Chinese goods, beyond what's
Speaker 3: already been put in place, and Trump went on to
Speaker 3: say that his administration would impose a new twenty five
Speaker 3: percent tariff on goods from Canada and Mexico. Now, many
Speaker 3: market watchers have been of the view that any proposed
Speaker 3: tariffs were simply a part of a negotiating strategy joining
Speaker 3: US now for a closer look as John Leu, Bloomberg
Speaker 3: News Executive Editor for Greater China, John joins us from
Speaker 3: our studios in Beijing. John, thank you so much. It's
Speaker 3: always a pleasure. I appreciate you taking time. The announcement
Speaker 3: of these tariffs came very soon after Trump selected Scott
Speaker 3: Bessant as US Treasury Secretary. Now Bessent, we know has
Speaker 3: called for a gradual approach when it comes to implementation
Speaker 3: of trade restrictions, and he also appears to be open
Speaker 3: to the process of negotiation. How are these new tariffs
Speaker 3: being read right now in Beijing.
Speaker 8: We don't have a clear sense at the moment, but
Speaker 8: all of the expectations that we've heard from analysis are
Speaker 8: the bees will be very careful and measured in how
Speaker 8: they respond to this tweet that we've gotten this post
Speaker 8: on truth social again. President Trump has yet to take office,
Speaker 8: and so he's not able to actually enact these tariffs,
Speaker 8: and so I think in the meantime, the Chinese government
Speaker 8: will be trying to communicate with his administration, with officials
Speaker 8: around him, trying to find what a negotiating room there
Speaker 8: may be, and looking not to overreact and make things worse.
Speaker 3: One of the things that was a part of that
Speaker 3: post Trump's concern about the transmission of illegal drugs out
Speaker 3: of China entering the US. He cited fentanyl in particular.
Speaker 3: So it looks as though we're in a realm now
Speaker 3: that's almost separate from economic issues, right.
Speaker 8: It's true. I think tariffs are a tool that President
Speaker 8: Trump will use to achieve various differing objectives. Fentanyl has
Speaker 8: been an issue that's he's been very focused on. He
Speaker 8: was in his first administration. This was an issue that
Speaker 8: he brought up with Hijing Ping Again, President Biden has
Speaker 8: brought this up with the Chinese government as well, and
Speaker 8: so it's not surprising that President and Trump would be
Speaker 8: harping on this now that he's getting ready to get
Speaker 8: back into office.
Speaker 3: So if we look at the idea of negotiation, as
Speaker 3: you understand what leverage does China have over the US
Speaker 3: at this point.
Speaker 8: Well, the trade relationship is one that gives the US
Speaker 8: the more powerful hand as it was because China is
Speaker 8: by far exporting much much more to the United States
Speaker 8: than it is importing from the US. Well, one thing
Speaker 8: that we've seen Beijing do is take measures that would
Speaker 8: it seems allow the government to put restrictions on the
Speaker 8: export of some strategic medals to the US, to Europe,
Speaker 8: to other countries, and so that potentially could be one
Speaker 8: lever that Beijing pulls to try to gain some leverage
Speaker 8: in that negotiation.
Speaker 3: Now, you and I in the past have talked about
Speaker 3: the vulnerability of the Chinese economy right now, given how
Speaker 3: weak it is, and you just mentioned that the US
Speaker 3: essentially has the upper hand. Should Beijing be particularly concerned
Speaker 3: given the set of given circumstances that we're talking about.
Speaker 8: I think Beijing is very concerned, given how much reliance
Speaker 8: the economy has on exports and how big of an
Speaker 8: end market the United States is. I think that Beijing
Speaker 8: actually probably has a little bit more time than it
Speaker 8: might first seem that's because before President Trump takes office,
Speaker 8: I think we're going to see a lot of frontloading
Speaker 8: of imports from buyers in the United States trying to
Speaker 8: get their goods out of China before those Trump tariffs
Speaker 8: come into effect. And so I think in the last
Speaker 8: couple of months of twenty twenty four you might see
Speaker 8: a real jump in Chinese exports, in turn a lot
Speaker 8: of for the economy. In the last quarter.
Speaker 3: Is there a way that companies based in China can
Speaker 3: create a bit of a work around maybe loopholes that
Speaker 3: some of these tariffs inadvertently create. Maybe you do a
Speaker 3: percentage of production on the mainland, but then transfer to
Speaker 3: a country to finish the production process that may not
Speaker 3: be in the crosshairs of some of these tariffs.
Speaker 8: So this is what makes the twenty five percent tariff
Speaker 8: that President Trump announced on Mexico very interesting, because we
Speaker 8: have seen quite a number of Chinese companies setting up
Speaker 8: operations in Mexico doing what you said, essentially doing some
Speaker 8: last bit of the manufacturing process in Mexico and then
Speaker 8: exporting that good into the United States, thereby avoiding the
Speaker 8: tariffs that are in place on Chinese products. We've seen
Speaker 8: factories set up in Southeast Asia and other countries to
Speaker 8: take advantage of the same loophole in the tariffs. And
Speaker 8: so it would not surprise me if we see President
Speaker 8: Trump going after these difer channels by which Chinese exports
Speaker 8: have been getting into the US.
Speaker 3: John, you and I have talked about the export controls
Speaker 3: imposed by the Bided administration on certain parts of the
Speaker 3: Chinese economy, especially where high technology was concerned. When you
Speaker 3: look at the choices that the incoming administration has export
Speaker 3: controls versus tariffs, let's say, how do they compare.
Speaker 8: I think tariffs are a very blunt instrument because they
Speaker 8: have the ability to impact lots and lots of different
Speaker 8: products all at once, especially in the way that President
Speaker 8: Trump has talked about imposing them sixty percent tariffs on
Speaker 8: all Chinese goods. That would hit everything all at once.
Speaker 8: I think the difference the question is how much priority
Speaker 8: does President Trump put on denying Chinese access to advanced technology.
Speaker 8: That is something that was front and center for the
Speaker 8: Biden administration. President Trump during the campaign at talked more
Speaker 8: about shrinking the trade deficit that he did talk about
Speaker 8: limiting Chinese access to chips, for example. So then when
Speaker 8: there is ultimately a negotiation, I think we will find
Speaker 8: out then how much value President Trump places on denying
Speaker 8: Chinese access to technology.
Speaker 3: So obviously this is Trump's second term. He has somewhat
Speaker 3: of a relationship already formed with Chinese President Chi Jinping.
Speaker 3: Is that a good thing or a bad thing?
Speaker 8: I think President Trump feels like those personal relationships are
Speaker 8: going to help him get a better deal, and the
Speaker 8: way that he speaks about President Xi Jinping in very
Speaker 8: respectful terms, talking about their friendship. It would seem that
Speaker 8: he wants to have a personal relationship that he can
Speaker 8: rely on to try and get a deal through. Whether
Speaker 8: or not that actually is fact in case on the ground,
Speaker 8: I think we have to wait and find out.
Speaker 3: And this is just the beginning of the process. John,
Speaker 3: thanks for joining us. John lou There, Bloomberg News Executive
Speaker 3: Editor for Greater China, joining us from our studios in Beijing.
Speaker 3: We moved next to crypto recently. As I'm sure you're
Speaker 3: well aware, Bitcoin reached all time highs as the market
Speaker 3: embraced the support for crypto from the incoming Trump administration. Now,
Speaker 3: the overall value of the digital asset market has surged
Speaker 3: by about a trillion dollars since the election on November fifth.
Speaker 3: A closer look now at the crypto landscape with our
Speaker 3: guest Peter Chung. He is head of research at Presto Research.
Speaker 3: He joins us from Hong Kong. Peter, thanks for making
Speaker 3: time to chat with us. Let me get your reaction
Speaker 3: to the fundamentals that have been driving the price action
Speaker 3: in a bitcoin lately. Give me your assessment on what's
Speaker 3: driving this rally?
Speaker 9: Yeah, I think this rally has been happening in two parts.
Speaker 9: First is you know, right after the election, when bitcoin
Speaker 9: was at around sixty seven sixty seven thousand dollars, it
Speaker 9: was in reaction to the election result, and it is
Speaker 9: part of a broad macro reflation trade, so that raised
Speaker 9: the big coeen price from sixty seven thousand to around
Speaker 9: ninety thousand. And the second part is also related to Trump,
Speaker 9: but more crypto specific. I think the market is becoming
Speaker 9: more confident on Trump delivering on his pre crypto campaign
Speaker 9: promises based on the chatters around the key cabinet nominations,
Speaker 9: so I think they gave the market a confidence that
Speaker 9: the Trump has every intention to deliver on his campaign promises.
Speaker 3: There seems to be two parts to that story. One
Speaker 3: the idea of friendlier regulation, and the other seems to
Speaker 3: be this pledge to set up a national bitcoin stockpile.
Speaker 3: Which do you think is having a greater influence.
Speaker 9: I think more lately it's the idea of bigcoin strategic
Speaker 9: reservoir stockpile. I think the recent cabinet nominations and especially
Speaker 9: the Scott Besson who just got nominated, I think he
Speaker 9: mentioned that everything is on the table with regard to
Speaker 9: big coin strategic reserve or stockpile. So the market is
Speaker 9: increasingly more confident that it could happen. I think the
Speaker 9: Polly market is assigning something like a sixty percent probability
Speaker 9: to that.
Speaker 4: Yeah.
Speaker 3: The other thing that we're hearing is that the transition
Speaker 3: team has been talking about the possibility of creating the
Speaker 3: first ever White House post dedicated to digital asset policy.
Speaker 3: It's kind of stunning. You were talking about everything that's
Speaker 3: happened since the election. I think that a lot of
Speaker 3: the US ETFs that invest directly in bitcoin have amassed
Speaker 3: about more than one hundred billion dollars in assets since
Speaker 3: launching back in January. Is this a trend that you
Speaker 3: expect to continue now?
Speaker 9: Yeah, I mean I think so. I think with the ETF,
Speaker 9: it basically has paved a way much easier access for
Speaker 9: the institutional investors to come in and make a long
Speaker 9: term investment. I mean, big COUNTF has been around for
Speaker 9: actually two years, but before it was a futures based ETF,
Speaker 9: which isn't really included for the long term investors. With
Speaker 9: the introduction of a spot ETF at the beginning of
Speaker 9: the year, which is far more efficient in terms of
Speaker 9: attracking the underlying asset. You know, that removes a lot
Speaker 9: of kind of entry barriers for many of the long
Speaker 9: term institutional investors. And now that you know the new
Speaker 9: president elect is giving far more credits to this asset
Speaker 9: class with his pro crypto policies, I think many of
Speaker 9: the long term institutional investors who were a bit heads
Speaker 9: stunted prior to this event, I think is more willing
Speaker 9: to take a look at this new emerging asset class.
Speaker 3: So pro crypto policies in the US, maybe we understand
Speaker 3: that to mean less regulation. Is that what is happening
Speaker 3: where you are in the Asia Pacific? I'm thinking, whether
Speaker 3: it's Hong Kong or Singapore, are you seeing a move
Speaker 3: to deregulate the crypto market A bit?
Speaker 9: Yeah, I'm a little heads stunted in using the word
Speaker 9: deregulation to describe what's happening right now. It's more I
Speaker 9: think the more accurate way of describing is a regulatory clarity,
Speaker 9: because I think previously what was happening was it was
Speaker 9: more policy driven approached by the SEC through enforcement actions,
Speaker 9: and some of them were you know, Ukraargia was not
Speaker 9: very lawful and also very vague guidance from the regulatory agency.
Speaker 9: Going forward, you know, I think there's going to be
Speaker 9: more clear rulemaking by these regulatory bodies in the US,
Speaker 9: and I think that's going to have an impact on
Speaker 9: the jurisdictions in Asia as well. I think many of
Speaker 9: the governments in Asia has been kind of looking at
Speaker 9: the US and using that as a benchmark for their
Speaker 9: own regulatory framework. And now that the US is more
Speaker 9: in a position where they are willing to provide further
Speaker 9: regulatory clarity through legislative process as well as, you know,
Speaker 9: by having SEC who's more willing to work with the
Speaker 9: crypto industry, I think that's going to have an impact
Speaker 9: on the many of the governments in this part of
Speaker 9: the world.
Speaker 3: That's Peter Chung, head of research at Presto Research, and
Speaker 3: I'm Doug Krisner. You can catch us weekdays here for
Speaker 3: the Daybreak Asia podcast. It's available on Apple, Spotify, or
Speaker 3: wherever you get your podcast. Tom.
Speaker 2: Thank you, Doug, and that does it for this edition
Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning
Speaker 2: at five am Wall Street Time for the latest on
Speaker 2: markets overseas and the news you need to start your day.
Speaker 2: I'm Tom Buzzby. Stay with us. Top stories and global
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