WEBVTT - (Radio) 0:00:01.920 --> 0:00:04.720 This is Bloomberg day Break Weekend, our global look at 0:00:04.720 --> 0:00:06.720 the top stories in the coming week from our Daybreak 0:00:06.760 --> 0:00:09.920 anchors all around the world. Answers Dan on the program, 0:00:09.960 --> 0:00:13.160 Here comes the FED meeting and the US jobs reporting. 0:00:13.280 --> 0:00:16.000 I'm John Tucker in New York. I'm Stephen Karen in London. 0:00:16.040 --> 0:00:18.960 With a new government just pushed back announcing its fiscal plan, 0:00:19.200 --> 0:00:21.119 leaving the Bank of England to go it alone with 0:00:21.200 --> 0:00:24.800 its interest rate decision. I'm Ryan Curtis Hong Kong opens 0:00:24.880 --> 0:00:27.920 up with a big financial forum next week. What is 0:00:27.920 --> 0:00:30.960 it hope to achieve? I'm Maybe Morris in Washington. We'll 0:00:31.000 --> 0:00:32.920 look at the final run up to the mid terms 0:00:32.960 --> 0:00:35.680 and why so many races are neck and neck. That's 0:00:35.680 --> 0:00:39.479 all straight ahead on Bloomberg Daybreak Weekend on Bloomberg E 0:00:39.560 --> 0:00:43.280 lovel Me three on New York, Bloomberg one, Washington, d C, 0:00:43.680 --> 0:00:47.200 Bloomberg one oh six one, Boston, Bloomberg nine sixties, San 0:00:47.240 --> 0:00:51.159 Francisco d A B, Digital Radio, London, Sirius XM one 0:00:51.240 --> 0:00:54.560 nineteen and around the world on Bloomberg Radio dot Com 0:00:54.640 --> 0:01:00.760 and via the Bloomberg Business at By. You'm John Tucker. 0:01:00.840 --> 0:01:03.920 Let's start today's program with a coming FED policy meeting 0:01:04.040 --> 0:01:06.880 and the US jobs report joining me to talk about 0:01:06.920 --> 0:01:12.080 these things, Bloomberg Global Economics and Policy editor Mike McKee 0:01:12.200 --> 0:01:14.760 As usual, So the FED first meets and then the 0:01:14.840 --> 0:01:18.840 job report comes a couple of days later. Uh, we 0:01:18.920 --> 0:01:21.319 know what the Fed's gonna do pretty much in the 0:01:21.360 --> 0:01:23.680 coming week, right, we do. We don't know what they're 0:01:23.680 --> 0:01:26.760 gonna do after that. And answer the question you didn't 0:01:26.800 --> 0:01:30.039 ask yet that everybody will ask me before that is 0:01:30.080 --> 0:01:33.319 will the Fed see the jobs numbers before they meet? 0:01:33.400 --> 0:01:36.360 And know they will not? So they'll be as surprised 0:01:36.400 --> 0:01:39.479 as all of us on Friday when the jobs numbers 0:01:39.520 --> 0:01:43.200 come out. And that's gonna be the interesting dynamic here. 0:01:43.560 --> 0:01:47.480 What does j Paull say about the future path of 0:01:47.560 --> 0:01:51.000 interest rates two days before a report that could influence 0:01:51.160 --> 0:01:54.520 the future path of interest rates? So it's gonna be 0:01:54.560 --> 0:01:58.560 an interesting, interesting news conference from him. Okay, So remind 0:01:58.600 --> 0:02:02.840 to everybody the linkage between FED policy and jobs keeping. 0:02:02.880 --> 0:02:06.240 Full employment is one of their mandates. The other mandate 0:02:06.360 --> 0:02:10.920 is you know, price keeping, price stability, price stability, and 0:02:10.960 --> 0:02:15.720 those are pretty uh closely linked. Well, the price stability 0:02:15.760 --> 0:02:18.840 target is, as everybody knows, two percent, as measured by 0:02:18.880 --> 0:02:24.080 the Personal Consumption Expenditures indicator. The full employment mandate is 0:02:24.600 --> 0:02:28.280 not defined. Um, it's kind of know when you see it. 0:02:28.400 --> 0:02:32.080 The FED tends to think it's around four percent. So 0:02:32.280 --> 0:02:35.240 at three point five percent right now, we're below that. 0:02:36.520 --> 0:02:41.399 The forecast from economist Survey by Bloomberg for the October 0:02:41.440 --> 0:02:43.720 payrolls as it will take up to three point six percent, 0:02:44.040 --> 0:02:48.280 but still very low. Still very strong labor market. That 0:02:48.360 --> 0:02:51.480 suggests people have money to spend and they're spending it, 0:02:51.880 --> 0:02:56.120 and the Feds trying to bring demand down in order 0:02:56.160 --> 0:02:59.480 to bring prices down, and that generally means you end 0:02:59.520 --> 0:03:02.880 up with high or unemployment. As companies produce less stuff, 0:03:02.919 --> 0:03:05.800 they need fewer people, and that dynamic hasn't kicked in 0:03:05.880 --> 0:03:09.440 yet except perhaps in the real estate industry. Okay, but 0:03:09.520 --> 0:03:11.960 they also have to pay them when all those people 0:03:12.080 --> 0:03:17.640 are working and paying people money. Uh, that's inflationary, right, 0:03:17.800 --> 0:03:20.200 I forgot that. I mean those high higher wages. Well, 0:03:20.200 --> 0:03:22.480 it's the higher wages, it's the fact. It's it's when 0:03:23.120 --> 0:03:27.040 employees start to ask for more money because inflation is 0:03:27.120 --> 0:03:30.040 high that the FED gets worried because then it's it 0:03:30.200 --> 0:03:35.040 starts a circular problem for them, and so they want 0:03:35.080 --> 0:03:38.480 to get ahead of that. Surveys show that people think 0:03:38.600 --> 0:03:44.440 that UH inflation is still mostly contained. Their their views 0:03:44.440 --> 0:03:47.400 are it's risen a little bit UH. And so the 0:03:47.440 --> 0:03:51.280 Fed is pretty much certain that it wants to do 0:03:51.360 --> 0:03:53.960 at least one more seventy five basis point move because 0:03:54.000 --> 0:03:55.760 they want to try to get ahead of that. They 0:03:55.760 --> 0:03:58.640 want to by the way, it's three quarters. They want 0:03:58.640 --> 0:04:02.320 to get ahead of that any kind of wage price 0:04:02.400 --> 0:04:05.120 spiral and let people know that they are on the 0:04:05.160 --> 0:04:08.400 gento model. Okay, is there evidence of UH? Is there 0:04:08.400 --> 0:04:11.680 a threat of a wage price spiral that we like 0:04:11.760 --> 0:04:14.600 we saw in the seventies. We haven't seen anything like 0:04:14.760 --> 0:04:19.240 that yet. And the best guess is we won't have 0:04:19.320 --> 0:04:22.000 anything like the nine seventies. For one thing, you don't 0:04:22.000 --> 0:04:26.119 have large pattern union contracts as you did then, where 0:04:26.120 --> 0:04:29.119 one union and industry gets a new contract with higher 0:04:29.120 --> 0:04:32.120 wages than everybody else has to match it. So that 0:04:32.160 --> 0:04:35.680 will help hold down that whole issue. But even UH 0:04:35.839 --> 0:04:40.960 now we're seeing UH five six seven percent raises over 0:04:41.000 --> 0:04:45.160 the last two years, earnings rising by that much, and UM, 0:04:45.760 --> 0:04:48.560 while that's great for workers, then companies have to make 0:04:48.600 --> 0:04:53.359 that up somehow. So they raise their their prices and 0:04:53.440 --> 0:04:55.480 the problem is is that they haven't been able to 0:04:55.560 --> 0:05:00.159 find workers. There is a supply problem of labor and 0:05:00.279 --> 0:05:03.919 so that means that A there much less interested in 0:05:04.000 --> 0:05:06.240 letting people go, which relates to the JABS report and 0:05:06.279 --> 0:05:08.760 be uh they've had to pay up to get them. 0:05:08.839 --> 0:05:11.400 And now the question is does the labor market stabilize. 0:05:11.440 --> 0:05:14.800 Do they find enough people that they can that they 0:05:14.839 --> 0:05:17.279 don't have to keep paying more? And the only way 0:05:17.279 --> 0:05:20.039 they can the FED can effect that is by reducing demand. 0:05:20.560 --> 0:05:23.440 The higher rates they are having an impact and slowing 0:05:23.480 --> 0:05:28.239 things down, certainly in housing. Certainly in housing housing basically 0:05:28.279 --> 0:05:31.920 kind of in a recession. Residential investment in the third 0:05:32.000 --> 0:05:37.000 quarter according to the GDP report from last week fell uh. 0:05:37.160 --> 0:05:39.359 That is the kind of numbers we saw in the 0:05:39.400 --> 0:05:42.719 Great Financial Crisis when housing all collapsed and back in 0:05:42.760 --> 0:05:48.120 the early nineties. It's uh. It's a sector that is 0:05:48.160 --> 0:05:53.280 in deep trouble for right now. Um, it's cyclical, though 0:05:53.480 --> 0:05:56.480 we know that it comes and it's worse perhaps right 0:05:56.520 --> 0:06:00.080 now than it has been in a while. But um, 0:06:00.120 --> 0:06:02.360 at some point there will be more demand for housing 0:06:02.400 --> 0:06:04.480 and it will pick back up again. But right now 0:06:04.480 --> 0:06:07.560 it's leading the way down. Okay, so I keep asking 0:06:07.640 --> 0:06:11.200 this question, but do they have to torpedo employment to 0:06:11.320 --> 0:06:15.360 get to their goal off breaking inflation down? Well, at 0:06:15.400 --> 0:06:18.120 the same time, I don't know, you know, with that 0:06:18.160 --> 0:06:21.320 employment full employment goal too. To stick with your metaphor, 0:06:21.520 --> 0:06:26.080 they don't need, they don't necessarily need to torpedo employment. 0:06:26.279 --> 0:06:28.040 They can just let a little air out of the boat. 0:06:28.440 --> 0:06:33.000 But the problem is you don't know when that's when 0:06:33.040 --> 0:06:36.880 when you've actually successfully done that. Bloomberg Global Economics and 0:06:36.960 --> 0:06:41.000 Policy Editor Michael McKee. Just ahead on Bloomberg Daybreak weekend, 0:06:41.400 --> 0:06:45.600 it's also interest rate decision time for the Bank of England. 0:06:45.680 --> 0:06:59.480 I'm John Tucker, and this is Bloomberg. This is Bloomberg 0:06:59.520 --> 0:07:01.640 day Break weekend. Are glob to look ahead of the 0:07:01.680 --> 0:07:04.120 top stories for investors in the coming week. I'm John 0:07:04.120 --> 0:07:07.240 Tucker in New York. Up later in the program, big 0:07:07.320 --> 0:07:11.120 high profile gathering in Hong Kong, but first in the UK. 0:07:11.840 --> 0:07:14.840 After the political upheaval of the past few weeks, focus 0:07:15.040 --> 0:07:17.960 is shifting back to the Bank of England, which announces 0:07:18.160 --> 0:07:22.320 its next rate decision on Thursday. The UK bond markets 0:07:22.320 --> 0:07:25.000 have settled down since the so called mini budget that 0:07:25.120 --> 0:07:27.840 led to the resignation of the Prime Minister. Let's trust, 0:07:28.320 --> 0:07:31.560 but the bank still trying to reign in inflation running 0:07:31.560 --> 0:07:34.480 at ten point one and for more, Let's hit to 0:07:34.520 --> 0:07:38.160 London and bringing Bloomberg Daybreak Europe anchor Stephen Carroll John 0:07:38.360 --> 0:07:40.400 It's a big week for the UK economy, but it 0:07:40.440 --> 0:07:43.000 was meant to be even bigger. Monday the thirty first 0:07:43.040 --> 0:07:45.560 had been chosen as the date for a fiscal statement 0:07:45.600 --> 0:07:48.640 from the new Finance Minister Jeremy Hunt, aimed at steadying 0:07:48.640 --> 0:07:51.440 the shape after the disastrous tax and spending plans of 0:07:51.480 --> 0:07:54.120 the last government that caused turmoil on the markets and 0:07:54.160 --> 0:07:57.120 sent the pound plunging to a record low against the dollar. 0:07:57.320 --> 0:08:01.559 But that's now been pushed back until novun sevente. Here's 0:08:01.560 --> 0:08:05.200 the Chancellor, Jeremy Hunt, explaining why the medium fiscal plan 0:08:05.480 --> 0:08:09.840 is extremely important and I want to confirm that it 0:08:09.880 --> 0:08:14.960 will demonstrate debt falling over the medium term, which is 0:08:15.160 --> 0:08:18.240 very important for people to understand. As it stands, the 0:08:18.240 --> 0:08:19.960 Bank of England will now have to make its right 0:08:20.000 --> 0:08:23.200 decision on Thursday without those details. To talk about this, 0:08:23.280 --> 0:08:26.280 I'm joined by Bloomberg Senior UK economist Dan Hansen and 0:08:26.360 --> 0:08:29.160 our markets reporter Valerie title as well, Valory, I'm gonna 0:08:29.200 --> 0:08:31.520 start with you. So, just a couple of weeks ago 0:08:31.560 --> 0:08:33.679 we were talking about the potential for a meltdown and 0:08:33.760 --> 0:08:37.720 guilt markets. It seems everything's calmed down now, even the 0:08:37.720 --> 0:08:40.680 delay of the fiscal statement not causing too many ripples 0:08:40.679 --> 0:08:42.920 on the markets. Yeah, a lot has changed, a lot 0:08:42.960 --> 0:08:46.200 has changed the volatility, and the guilt market has definitely 0:08:46.280 --> 0:08:48.840 calmed down. Yields have retrace a lot of their move 0:08:48.920 --> 0:08:53.679 that happened after the mini budget back in September. But 0:08:54.080 --> 0:08:57.920 the key thing for me looking at the markets is 0:08:57.960 --> 0:09:02.440 just the the inflationary imp else from the fiscal measures 0:09:02.559 --> 0:09:04.520 is going to be way smaller. We know that this 0:09:04.640 --> 0:09:08.600 energy plan is paired back. Yes, we don't have the 0:09:08.640 --> 0:09:13.240 announcement on Monday, but it looks like fiscal restraint is 0:09:13.240 --> 0:09:16.040 definitely on the pipeline down. Where does all of this 0:09:16.200 --> 0:09:19.559 leave the Bank of England their decision on Thursdays. It's 0:09:19.559 --> 0:09:21.720 going to change their calculations if they don't have the 0:09:21.720 --> 0:09:25.040 fiscal statement. I'm not sure it does. To be honest, 0:09:25.040 --> 0:09:26.679 and it goes to a Valerie just said, I mean, 0:09:26.679 --> 0:09:29.760 they know this consolidation is coming I mean it won't 0:09:29.800 --> 0:09:32.240 be in their forecast because the way it works, as 0:09:32.280 --> 0:09:34.880 the bank isn't allowed to assume anything about fiscal policy. 0:09:34.920 --> 0:09:37.679 It has to just take government announcements as given, so 0:09:37.720 --> 0:09:39.959 it won't have any of the consolidation in the forecast. 0:09:40.040 --> 0:09:42.840 So all else equal, inflation will be a little bit 0:09:42.960 --> 0:09:45.680 higher than it otherwise would be once the consolidation is 0:09:45.720 --> 0:09:48.440 taken into account. But I think the important thing we 0:09:48.520 --> 0:09:51.840 know now is that Chancellor and the Governor are talking. 0:09:52.440 --> 0:09:55.600 The Governor will know the rough outline of what the 0:09:55.600 --> 0:09:59.120 Treasury is thinking. And as you said at the start there, 0:09:59.160 --> 0:10:01.320 that the market has a been spooked by this delay. 0:10:01.440 --> 0:10:04.280 So there isn't really any pressure on the bank to 0:10:04.920 --> 0:10:07.320 go over and above what it thinks is necessary to 0:10:07.440 --> 0:10:10.400 just fight inflation. There isn't this need to sort of 0:10:10.440 --> 0:10:13.800 restore confidence in UK assets, So it's it's really just 0:10:13.880 --> 0:10:16.240 about focusing on what they think is necessary to bring 0:10:16.280 --> 0:10:19.160 inflation back down. Where does that leave your forecast for 0:10:19.240 --> 0:10:21.679 what the Bank of England's going to do? Yeah, so 0:10:21.720 --> 0:10:23.200 we've been on a bit of a roller coaster, to 0:10:23.200 --> 0:10:25.600 be honest. I mean I think it's on the September 0:10:25.679 --> 0:10:28.199 we saw the market price in two hundred basis points. 0:10:28.200 --> 0:10:30.760 For this meeting, we've come all the way back down 0:10:30.800 --> 0:10:33.840 to just about seventy five basis points. I mean, our 0:10:33.920 --> 0:10:37.120 view is the committee is going to be torn between 0:10:37.160 --> 0:10:40.400 fifty and seventy five, and I think they'll they'll go 0:10:40.480 --> 0:10:42.960 for seventy five, They'll go for the slightly bigger option. 0:10:43.040 --> 0:10:45.240 But I think that the idea of a three digit 0:10:45.360 --> 0:10:48.640 rate rise now is completely out the window. It's between 0:10:49.040 --> 0:10:50.840 is between fifty and seventy five, and I think there 0:10:50.960 --> 0:10:54.080 is probably enough news on the fiscal side to warrant 0:10:54.360 --> 0:10:57.440 a slightly bigger move, particularly when you take into account 0:10:57.679 --> 0:11:00.120 sterling is still down relative to their last four all 0:11:00.200 --> 0:11:03.040 cost and we still got inflation in double digits and 0:11:03.080 --> 0:11:06.000 the late markets still very very hot. Okay, wal you've 0:11:06.040 --> 0:11:08.520 been riding that market Royler coaster with us over the 0:11:08.520 --> 0:11:11.480 past couple of weeks. How how are the markets feeling 0:11:11.480 --> 0:11:13.640 about the Bank of England? Yeah? There, you know, we're 0:11:14.240 --> 0:11:16.400 the markets really reading this is that we're less likely 0:11:16.480 --> 0:11:18.800 to have a monster hike. You know, as we just mentioned, 0:11:18.840 --> 0:11:21.680 seventy five basis points is now priced. It's even dropped 0:11:21.679 --> 0:11:25.040 a teeny bit below seventy five. But but I think 0:11:25.080 --> 0:11:29.200 I'll be focused on the division within the MPC. Last meeting, 0:11:29.320 --> 0:11:33.440 we had a huge array of choices. We had some 0:11:33.520 --> 0:11:36.480 members calling for seventy five, some for fifty, some for 0:11:36.559 --> 0:11:41.040 twenty five. So is that division repeated um? As we 0:11:41.080 --> 0:11:44.440 know when they met previously, again was on the eve 0:11:44.480 --> 0:11:46.800 of a big fiscal announcement, and they passed up the 0:11:46.800 --> 0:11:49.840 opportunity to speed up the pace and stuck with fifty. So, 0:11:50.200 --> 0:11:52.640 you know, as Dan mentioned, I think they're probably very eager, 0:11:52.840 --> 0:11:55.240 eager to step up the pace. Given that the market 0:11:55.280 --> 0:11:57.839 is pricing seventy five. It's giving them a good opportunity 0:11:57.840 --> 0:12:00.960 to step it up to seventy five UM. And then 0:12:01.920 --> 0:12:05.679 the other side of the of the coin is QT, 0:12:06.040 --> 0:12:08.200 you know, is due to start next Tuesday, on the 0:12:08.200 --> 0:12:11.079 first of November. Now, remember when the Bank of England 0:12:11.160 --> 0:12:13.880 met last time, they were not divided on QT. It 0:12:13.920 --> 0:12:16.920 was unanimous unanimous decisions. So I don't expect that to 0:12:17.040 --> 0:12:21.760 rock the boat anymore next Thursday. Okay, Don what about 0:12:21.800 --> 0:12:24.680 the cleanup job the government has to do? Of course, 0:12:24.679 --> 0:12:26.920 they have this extra time now to put this fiscal 0:12:27.000 --> 0:12:30.439 statement together with the full o b R forecast you've 0:12:30.440 --> 0:12:32.680 predicted that are projected that the clean up from trust 0:12:32.679 --> 0:12:34.360 anomics will not one and a half percent off the 0:12:34.440 --> 0:12:38.480 UK's GDP. How will the bank have to balance that 0:12:38.760 --> 0:12:42.839 hit to growth with red heart inflation. Yeah, I mean 0:12:42.840 --> 0:12:45.400 that it's a really start trade off that the Bank 0:12:45.400 --> 0:12:48.360 of England is facing and and I think actually it'll 0:12:48.800 --> 0:12:51.320 it will potentially be even worse than their forecast when 0:12:51.320 --> 0:12:54.720 we when we see them forecast, I think would be 0:12:54.840 --> 0:12:59.160 very very weak. Um. I think in reality what that 0:12:59.200 --> 0:13:04.520 means is the it we might get in November, but 0:13:04.640 --> 0:13:07.520 I think going ahead to flank would probably be a 0:13:07.559 --> 0:13:11.240 little bit more cautious, particularly known as consolidations coming and 0:13:11.320 --> 0:13:14.400 the fact that we know the economy has weakened significantly, 0:13:14.840 --> 0:13:17.520 particularly since it last put the Bank last put together 0:13:17.559 --> 0:13:20.520 it's forecast in August and looking at the stay in 0:13:21.559 --> 0:13:23.679 the picture is the picture is pretty bleak. I mean, 0:13:23.679 --> 0:13:25.920 we've got this energy cap coming in that's going to help, 0:13:26.440 --> 0:13:27.880 but I don't think it's going to prevent the UK 0:13:28.360 --> 0:13:31.160 falling into recession over the winter and in the first 0:13:31.160 --> 0:13:34.600 half of three So it's going to be it's going 0:13:34.640 --> 0:13:36.000 to be a trade off. And as that as the 0:13:36.080 --> 0:13:39.400 activity data sours, I think the pressure will come off 0:13:39.440 --> 0:13:42.079 a little bit on the Bank that keeping the pace 0:13:42.120 --> 0:13:44.800 of rate hikes high, sort of in the seventy fifty range. 0:13:44.840 --> 0:13:46.400 I think it will give them room to drop down. 0:13:46.480 --> 0:13:47.599 I mean, I mean, I don't think they're going to 0:13:47.640 --> 0:13:49.560 be able to stop until inflation is clearly on a 0:13:49.559 --> 0:13:53.680 downward trajectory, but the pressure to go big meeting after 0:13:53.720 --> 0:13:58.440 meeting will drop significantly. What about the mortgage market and 0:13:58.440 --> 0:14:00.240 all of this because it's you know, it's been because 0:14:00.240 --> 0:14:02.280 there's the simplest read through that people have had from 0:14:02.320 --> 0:14:05.600 the market turmoil. Anyway, how much does that factor into 0:14:05.679 --> 0:14:07.920 a Bank of England decision of what's happening in terms 0:14:07.960 --> 0:14:10.880 of the housing market. Well, I think it will factoring 0:14:10.960 --> 0:14:13.920 quite significantly, and particularly will give them reason to think 0:14:13.920 --> 0:14:17.720 that the near term outlook will be potentially weaker than 0:14:17.760 --> 0:14:20.640 they were expecting in August, and I think it will 0:14:20.680 --> 0:14:23.000 be reason for them to be a little bit more 0:14:23.040 --> 0:14:26.160 pessimistic about demand outlook in the near term. That's something 0:14:26.160 --> 0:14:28.720 that will be interesting to see how they characterize what 0:14:28.760 --> 0:14:30.440 they think will go on with the housing market in 0:14:30.480 --> 0:14:33.800 the near term. Okay, Valerie title, our Markets reporter and 0:14:33.840 --> 0:14:36.680 Dan Hanson, Senior UK economist at Bloomberg Economics. Thank you 0:14:36.680 --> 0:14:39.560 to you both for your insights. Stephen, thanks a lot. 0:14:39.760 --> 0:14:42.840 Just to hit on Bloomberg Deybreak weekend. Why so many 0:14:42.840 --> 0:14:45.600 are keeping a close eye on a big financial meeting 0:14:45.640 --> 0:14:59.960 in Hong Kong. I'm John Tucker. This is Bloomberg Broadcasting 0:15:00.120 --> 0:15:03.800 live from the Bloomberg Interactive Broker Studio in New York. 0:15:03.880 --> 0:15:08.600 Bloomberg eleven three oh to Washington, d C. Bloomberg to Boston, 0:15:08.640 --> 0:15:12.120 Bloomberg one oh six, one to San Francisco, Bloomberg nine 0:15:12.160 --> 0:15:15.960 sixty to the country, Sirius XM Chando one nineteen to London, 0:15:16.120 --> 0:15:18.880 d A B. Digital Radio and around the globe the 0:15:18.920 --> 0:15:22.800 Bloomberg Business app in Bloomberg Radio dot Com. This is 0:15:22.840 --> 0:15:31.440 Bloomberg day Break Weekend. I'm John Tucker in New York 0:15:31.520 --> 0:15:33.560 with your global look ahead of the top stories for 0:15:33.640 --> 0:15:36.600 investors in the coming week. Big finance gathering coming in 0:15:36.760 --> 0:15:39.120 Hong Kong and for more. Let's go to Hong Kong 0:15:39.160 --> 0:15:42.360 and Bloomberg day Break Asia host Brian Curtis and his 0:15:42.440 --> 0:15:45.760 colleague Doug Krisner. John coming up in Hong Kong. The 0:15:45.800 --> 0:15:50.400 Global Financial Leader's Investment Summit. Not as snappy a title 0:15:50.440 --> 0:15:54.200 as a vision quest or burning man. But this summit 0:15:54.480 --> 0:15:57.320 is meant to get Hong kong It's financial mojo back 0:15:57.800 --> 0:16:00.440 after a period of hibernation, and a number of financial 0:16:00.440 --> 0:16:04.000 heavyweights will certainly be there, among them Goldman Sachs CEO 0:16:04.200 --> 0:16:08.280 David Solomon and Morgan Stanley boss James Gorman. Why are 0:16:08.280 --> 0:16:11.840 they attending and what is Hong Kong hoping to achieve 0:16:12.360 --> 0:16:15.160 and what role will U S sanctions play? Some Hong 0:16:15.200 --> 0:16:18.600 Kong leaders, like the Chief Executive John Lee, are covered 0:16:18.640 --> 0:16:21.960 by U S sanctions against Hong Kong and Chinese officials 0:16:22.000 --> 0:16:25.680 for the crackdown here on political freedoms. Lee has said 0:16:25.680 --> 0:16:29.160 he laughs off those u S sanctions. Joining us now 0:16:29.200 --> 0:16:32.440 for some insight on the forum is Bloomberg Senior editor 0:16:32.760 --> 0:16:35.760 Richard Frost. Richard, thanks very much for being with us. 0:16:36.360 --> 0:16:42.880 So the panels are themed on three areas, navigating through uncertainty, technology, innovation, 0:16:43.040 --> 0:16:47.480 and the future of finance and sustainable finance. All these 0:16:47.480 --> 0:16:50.240 are quite interesting, but as mentioned at the top there, 0:16:50.280 --> 0:16:53.960 the real story is Hong Kong getting back on its feet. 0:16:54.600 --> 0:16:56.360 How big is the buy in from some of the 0:16:56.360 --> 0:16:59.840 big financial institutions. As you mentioned at the star, it's 0:17:00.120 --> 0:17:02.960 it's a sort of all star lineup really for this 0:17:03.440 --> 0:17:06.640 it's been very heavily pushed by Hong Kong. I'm sure 0:17:06.680 --> 0:17:09.520 there's been quite a lot of strong arming um from 0:17:09.560 --> 0:17:14.000 authorities here. It was first announced by the Finance Secretary 0:17:14.080 --> 0:17:18.280 in his budget earlier this year, and Hong Kong has 0:17:18.520 --> 0:17:22.639 done a lot to try and ensure that um it 0:17:23.240 --> 0:17:27.359 got as many attendees as possible. When it was announced, 0:17:27.440 --> 0:17:32.439 there was still mandatory hotel quarantine, and in recent months 0:17:32.480 --> 0:17:37.280 it's removed that. It's made a number of concessions two attendees, 0:17:37.920 --> 0:17:41.040 including allowing them to fly out if they if they 0:17:41.080 --> 0:17:44.280 get COVID, if necessary, to leave the city by private jet, 0:17:44.720 --> 0:17:48.440 because Hong Kong really wants to show that after more 0:17:48.480 --> 0:17:52.199 than two years in self imposed isolation, it's back on 0:17:52.400 --> 0:17:56.400 the global stage, and so having all these heavyweights come 0:17:56.440 --> 0:18:00.640 in it really underlines that point. How has the pandemic 0:18:00.720 --> 0:18:03.560 change the banking and financial services industry in Hong Kong. 0:18:03.640 --> 0:18:07.000 We've heard stories about flight of talent in some pockets 0:18:07.040 --> 0:18:09.639 of the industry. I mean, it's been described as a 0:18:09.680 --> 0:18:13.000 significant amount of brain drainage. How does it stack up? 0:18:13.200 --> 0:18:17.680 There has been a notable exodus of residents and bankers 0:18:17.720 --> 0:18:20.560 and lawyers, etcetera among them. I mean, Hong Kong had 0:18:21.080 --> 0:18:24.119 is population dropped by a record one point six percent 0:18:24.280 --> 0:18:28.480 in the in the twelve months through June. Banks retain 0:18:28.560 --> 0:18:34.679 a very significant presence here. Nonetheless, UM and their regional 0:18:34.680 --> 0:18:39.320 headquarters remain remain in Hong Kong, so in in some 0:18:39.400 --> 0:18:43.160 ways UM it's not UM. It's not affected the presence 0:18:43.200 --> 0:18:46.440 of banks, but it's certainly made the city a much 0:18:46.520 --> 0:18:52.040 less appealing place to live in. UM and Singapore in particular, 0:18:52.640 --> 0:18:55.920 has stolen a march on Hong Kong by trying to 0:18:55.960 --> 0:19:02.200 attract the wealthier, wealthier workers. It rolled out new visas 0:19:02.720 --> 0:19:05.200 UH and and it's It's also been hosting a number 0:19:05.240 --> 0:19:08.919 of high profile events prior to Hong Kong to to 0:19:09.040 --> 0:19:13.320 really show that UM that to show how it could 0:19:13.440 --> 0:19:17.640 rival Hong Kong in terms of being an international finance center. Yeah, 0:19:17.720 --> 0:19:19.920 and on that point, we just had the Party Congress 0:19:19.960 --> 0:19:22.640 wrap up in in China. It was seen as disappointing, 0:19:23.080 --> 0:19:26.919 partially because it seemed national security issues came to the 0:19:27.040 --> 0:19:31.240 form over UM say the economy. I'm curious, though, does 0:19:31.280 --> 0:19:35.800 that work for or against Hong Kong's future it's I 0:19:35.800 --> 0:19:38.600 mean that that remains to be seen. It's certainly interesting 0:19:38.720 --> 0:19:42.440 timing for for all the attendees coming to Hong Kong 0:19:42.520 --> 0:19:48.240 for this summit. It's against the landscape of blasted, blasted 0:19:48.480 --> 0:19:52.680 kind of market for Chinese assets. We saw huge sell 0:19:52.720 --> 0:19:55.200 off on Monday in the wake of the National Congress 0:19:56.080 --> 0:20:00.040 on concern overseas increased control over the nation's top a 0:20:00.200 --> 0:20:04.399 cool bodies and Hong Kong is going to the scene. 0:20:04.480 --> 0:20:06.879 Is going to be remaining as a gateway to China. 0:20:07.200 --> 0:20:11.800 But with China changing itself and increasingly closing off it 0:20:11.840 --> 0:20:14.960 remains We've seen how much business um that banks and 0:20:15.000 --> 0:20:18.840 others can access. Will China continue to put up walls 0:20:19.000 --> 0:20:21.399 or that continued opening up? All right, Richard, thanks so 0:20:21.480 --> 0:20:26.080 much for joining us. Interesting inside Bloomberg Senior Editor Richard Frost, 0:20:26.840 --> 0:20:29.480 and I'm Brian Curtis here in Hong Kong along with 0:20:29.600 --> 0:20:32.200 Doug Krisner. By the way, you can catch us every 0:20:32.240 --> 0:20:35.199 weekday for Bloomberg Daybreak Asia, beginning at six am in 0:20:35.240 --> 0:20:38.520 Hong Kong and six pm on Wall Street. John, Brian 0:20:38.520 --> 0:20:40.159 and Doug thanks a lot and just a head on 0:20:40.160 --> 0:20:43.040 Bloomberg Daybreak weekend. A lot of twists and turns in 0:20:43.200 --> 0:20:46.879 US politics as the mid terms approach. I'm John Tucker. 0:20:47.200 --> 0:21:01.520 This is Bloomberg. This is Bloomberg Daybreak weekend, our global 0:21:01.560 --> 0:21:03.600 look ahead at the top stories for investors in the 0:21:03.600 --> 0:21:06.720 coming week. I'm John Tucker in New York. Clark is 0:21:06.760 --> 0:21:09.560 taking on the mid terms, and it's a fast moving 0:21:09.600 --> 0:21:13.320 and rapidly shifting dynamic. For more. Lets into our Bloomberg 0:21:13.400 --> 0:21:17.720 ninety on one newsroom at Washington and Amy Morris Amy, 0:21:17.840 --> 0:21:20.200 that's right, John, We are approaching what some may be 0:21:20.320 --> 0:21:23.720 calling the height of the political silly season. It's kind 0:21:23.720 --> 0:21:26.119 of an anything goes sort of atmosphere. Joining me now 0:21:26.160 --> 0:21:29.320 to talk about it, Bloomberg political reporter Ryan Teague Beck 0:21:29.359 --> 0:21:31.639 with Ryan, it's great to see. Thanks so much for 0:21:31.720 --> 0:21:35.480 joining us anytime. Let's talk about the polls. There was 0:21:35.520 --> 0:21:38.640 a poll out this past week with President Biden's approval 0:21:38.760 --> 0:21:41.600 ratings dipping down to thirty nine percent. It's a Reuters 0:21:41.640 --> 0:21:46.040 Ipsos poll that puts the president's writing almost the lowest 0:21:46.160 --> 0:21:49.080 of his presidency. Um and we're getting closer and closer 0:21:49.080 --> 0:21:52.439 in November eight. So how bad does this bode for 0:21:52.680 --> 0:21:56.439 Democratic midterm candidates, especially the ones he's been campaigning for 0:21:56.640 --> 0:21:59.520 or does it do people pay attention anymore? You know, 0:21:59.640 --> 0:22:03.440 it's a weird um phenomenon, But it does seem that 0:22:03.600 --> 0:22:06.639 the presidential approval rating is not as closely tied to 0:22:06.680 --> 0:22:11.080 the generic congressional ballot. Uh. It's certainly not good for 0:22:11.160 --> 0:22:16.040 Democrats for Biden to not be more popular than he is. Um, 0:22:16.119 --> 0:22:17.879 it remains to be seen how much of a drag 0:22:18.080 --> 0:22:20.840 it will actually be. I don't know, it feels it 0:22:20.880 --> 0:22:23.520 feels a little bit disconnected, and I'm not sure why 0:22:23.560 --> 0:22:26.359 that is. Have you seen that before? I mean, we 0:22:26.400 --> 0:22:28.760 saw that a little bit with Trump. Obviously, like Trump 0:22:28.920 --> 0:22:31.760 lost re election even as people voted for a lot 0:22:31.760 --> 0:22:33.600 of Republicans down ballot, So there were a lot of 0:22:33.600 --> 0:22:36.120 people who are able to make that separation. And it's 0:22:36.200 --> 0:22:38.280 kind of a shift too, I think. And some of 0:22:38.320 --> 0:22:42.400 these we're seeing some potential for crossover voting in governor 0:22:42.520 --> 0:22:45.320 states with governor and senate races at the same time, 0:22:45.400 --> 0:22:49.040 where like they there seems to be a significant number 0:22:49.040 --> 0:22:51.040 of people who are willing to vote for Republican for 0:22:51.119 --> 0:22:54.160 governor and then for a Democrat for senator or vice versa, 0:22:54.600 --> 0:22:57.600 which is unusual because we had been moving more in 0:22:57.640 --> 0:23:01.800 this direction, a kind of lockstep partisanship, and that there 0:23:01.840 --> 0:23:04.560