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Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the

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Speaker 1: top stories in the coming week from our Daybreak anchors

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Speaker 1: all around the world. Straight Ahead on the program, we

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Speaker 1: preview the August jobs Report. I'm Nathan Hager. I'm callin

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Speaker 1: header him in London, where we're looking at snowballing strike

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Speaker 1: action in Britain. I'm Brian Curtis in Hong Kong. We

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Speaker 1: look at fallout from China's property crisis on the Big

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Speaker 1: four banks. Hi'm Amy Morris in Washington. The global food

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Speaker 1: shortage is getting worse thanks to a series of droughts

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Speaker 1: across the globe. That's all straight ahead on Bloomberg Daybreak

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Speaker 1: Weekend on Bloomberg Eliham Free on New York, Bloomberge Washington,

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Speaker 1: d C, Bloomberg one oh six one Boston, Bloomberg nine sixties,

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Speaker 1: San Francisco, d A B Digital Radio London, Sirius XM

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Speaker 1: one nine ten, and around the world on Bloomberg Radio

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Speaker 1: dot Com and via the Bloomberg Business App. Good day

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Speaker 1: to you. I'm Nathan Hagar, and we begin today's program

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Speaker 1: with a look at the upcoming jobs report. I mean,

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Speaker 1: how to talk more about it is Ira Jersey US

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Speaker 1: interest rate strategists at Bloomberg Intelligence. Of course, Ira, we're

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Speaker 1: coming off that big jobs report from July, where I

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Speaker 1: think just about no economists expected just how many jobs

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Speaker 1: we're going to be created, was like twice as many

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Speaker 1: as estimates. Are you thinking that this is the kind

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Speaker 1: of strength that we're going to continue to see in

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Speaker 1: the August report? Yeah, I don't know if we'll necessarily

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Speaker 1: be able to replicate what happened in July, but but

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Speaker 1: I think the idea that we're going to continue to

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Speaker 1: have relatively strong job growth, And in particular, I have

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Speaker 1: really been focusing on the wage data because when we

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Speaker 1: think about inflation and the inflationary environment, the thing that's

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Speaker 1: going to allow inflation to stay much higher than we're

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Speaker 1: comfortable with, and certainly the Federal Reserve in the Central

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Speaker 1: Bank is comfortable with, is if wages continue to grow

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Speaker 1: very rapidly. And so so when so I look at

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Speaker 1: aggregate labor income, which is the number of jobs created

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Speaker 1: times the number of hours worked times the actual hourly wage,

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Speaker 1: and and that is rising still at nine percent year

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Speaker 1: on year as of the end of July. And that's

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Speaker 1: you know, as faster faster than inflation. So that's that's

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Speaker 1: a sign that you know, the consumer as a whole

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Speaker 1: is still doing okay when it comes to two incomes.

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Speaker 1: Might not feel like it in some sectors. But um,

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Speaker 1: But but those are what the facts show. Of course,

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Speaker 1: we're in the middle of a pretty aggressive rate cycle

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Speaker 1: at this point, and we've continued to see this pretty

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Speaker 1: robust strength in the labor market. Why do you think

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Speaker 1: we haven't really seen the kind of erosion that you

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Speaker 1: might expect when you get you know, seventy five basis

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Speaker 1: point moves from meeting to meetings. Well, I think there's

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Speaker 1: a couple of things. One is, because prices have been

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Speaker 1: able to be raised by a lot of companies, and

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Speaker 1: in particular in the services sector, that they still have

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Speaker 1: decent cash flow where they're able to continue to hire

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Speaker 1: people and end or give raises. Um. And you're at

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Speaker 1: a point to where the labor market is so tight,

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Speaker 1: where we just don't have the workforce expanding as significantly, where,

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Speaker 1: believe it or not, labor has actually some pricing power.

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Speaker 1: So um. Even though like back in the nineteen seventies

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Speaker 1: you had a lot of union activity, you had wages

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Speaker 1: that would go up automatically when the consumer price index

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Speaker 1: went up. You don't have that today. But what you

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Speaker 1: have today instead is people have the ability to go

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Speaker 1: out to find a new job, so their existing employers

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Speaker 1: are going to give them raises to keep them, or

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Speaker 1: workers are gonna leave for higher paying jobs. So um,

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Speaker 1: so you do have the beginnings of what looks like

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Speaker 1: a price wage spiral or wage price viral, I should say,

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Speaker 1: and uh, and that is something that that we have

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Speaker 1: to keep, you know, very keen tabs on. And one

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Speaker 1: of the reasons why the employment report for August is

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Speaker 1: going to be so important. And at the same time, IRA,

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Speaker 1: we have seen a number of companies, both big and small,

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Speaker 1: come out with a number of layoffs. Do you think

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Speaker 1: that's going to be reflected in the report as well?

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Speaker 1: It doesn't seem that way when you look at initial

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Speaker 1: jobless claims and what they did for for the survey

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Speaker 1: week and most of the uh, most of the month

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Speaker 1: of August um, you saw them very stable. So you

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Speaker 1: haven't seen a large increase in the number of of

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Speaker 1: people applying for unemployment insurance. So it doesn't seem like

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Speaker 1: even though there's been some high profile layoffs, people are

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Speaker 1: still getting jobs. Right, Remember, layoffs are only one part

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Speaker 1: of the equation. That's how many people are getting how

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Speaker 1: many people are getting fired. Um And and obviously you

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Speaker 1: know sometimes you see chunky numbers ten thousand, eight thousand people.

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Speaker 1: But if a lot of those people are able to

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Speaker 1: find a job very quickly, they don't apply for insurance

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Speaker 1: for unemployment insurance and and so so they because they

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Speaker 1: wind up going to get jobs almost right away because

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Speaker 1: jobs are so plentiful right now. Um and I think

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Speaker 1: so so so I don't think that you're going to

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Speaker 1: see a significant, uh, you know, downtick in in um

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Speaker 1: the number of jobs created in August because um, just

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Speaker 1: because of some of the high profile layoffs we've seen.

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Speaker 1: How do you look at a strong labor market like

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Speaker 1: we've seen over the last few months from a rate

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Speaker 1: strategy perspective, How do pay rolls reports factor into what

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Speaker 1: you do in your world? Yeah, so we actually look

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Speaker 1: look at payrolls very closely. And when you empirically look

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Speaker 1: at how much the treasury market moves, like the Tenure

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Speaker 1: Treasury Guild moves when you get mrs or beats and payrolls.

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Speaker 1: It's still the granddaddy of all the economic reports. Um

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Speaker 1: C p I, even though it's gotten a lot of headlines,

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Speaker 1: is a pretty close number two. Now. It used to

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Speaker 1: be a very far number three, but now it's a

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Speaker 1: it's it's number two. But but still the Job's report

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Speaker 1: is still number one on the market's minds when it

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Speaker 1: comes to market reaction and what investors care about. We

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Speaker 1: have heard a number of Fed speakers lately say that

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Speaker 1: they are determined to fight inflation. Are you thinking that

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Speaker 1: means there's less of a fear among some policymakers about

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Speaker 1: the risk of recession. I don't think so. I think

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Speaker 1: that they still all worry about it. You know, you

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Speaker 1: keep on hearing about there trying to generate a soft

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Speaker 1: landing and the like. And you know, at five of

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Speaker 1: the last six hiking cycles you've seen recessions after the

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Speaker 1: Federal Reserve is increased interest rates significantly, and in doing so,

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Speaker 1: um and and one of the almost tacit goals, although

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Speaker 1: they'll never admit it, in raising interest rates is to

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Speaker 1: generate some form of economic slowdown and so so, you know,

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Speaker 1: it depends on what you consider a soft landing. You know,

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Speaker 1: a mild recession is a possible outcome where you see

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Speaker 1: modest increases in the unemployment rate, for example, and some

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Speaker 1: other measures of economic activity. UM. But but nonetheless, you're

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Speaker 1: you're very likely to see a recession at some point

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Speaker 1: in either late twenty three or four UM. And because

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Speaker 1: the Federal Reserve, in order to get interest rates down,

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Speaker 1: has to generate one, it's going to be the only

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Speaker 1: way realistically to decrease inflation. Thanks for this, I were

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Speaker 1: great having you with us. Thanks very much. That's Ira Jersey,

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Speaker 1: us interest rate strategist at Bloomberg Intelligence, and coming up

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Speaker 1: on Bloomberg Daybreak weekend, we take a look at inflation

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Speaker 1: pressures and labor unrest in the UK. I'm Nathan Hagar,

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Speaker 1: and this is Bloomberg. This is Bloomberg Daybreak weekend, our

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Speaker 1: global look ahead at the top stories for investors in

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Speaker 1: the coming week. I'm Nathan Hager. Up later in our program,

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Speaker 1: Banks in China in the spotlight as we head into

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Speaker 1: the coming trading week. But first, soaring inflation and bills

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Speaker 1: have workers demanding higher pay and out on strike to

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Speaker 1: get it in In the UK for more, let's head

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Speaker 1: to London and bring in Bloomberg Daybreak. You're a banker,

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Speaker 1: Caroline Hepgert, Nathan Bareley. A day has passed this summer

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Speaker 1: in Britain without a picket line or the announcement of

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Speaker 1: another strike. Train drivers, bus drivers, bin men, engineers, even barristers.

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Speaker 1: Next week, beat and open Reach workers are striking, and

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Speaker 1: criminal barristers in England and Wales have now voted for

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Speaker 1: indefinite strike action from September. For more, I'm joined by

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Speaker 1: Bloomberg's legal reporter Jonathan Browning and Thomas Seal, our tech

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Speaker 1: me dear and telecoms reporter. Welcome to both of you.

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Speaker 1: Thank you so much for joining me. Firstly on the

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Speaker 1: telecoms engineers issue. That's the most immediate strike. It's happening

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Speaker 1: in the next few days. Why are they going out

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Speaker 1: on strike. They're not being paid enough. In their view,

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Speaker 1: Inflation continues to increase, and they were offered a unilateral

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Speaker 1: pay increase of fifteen pounds, so no matter what you

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Speaker 1: were paid, about fifty eight thousand workers were given that

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Speaker 1: there's already in their bank accounts. But that comes out

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Speaker 1: at sort of five percent inflation on average for many

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Speaker 1: of those workers compared to you know, we're now seeing

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Speaker 1: a potential eighteen point six percent later in in the

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Speaker 1: next twelve months, so they want more. It's not clear

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Speaker 1: exactly how much more they want. And this is the

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Speaker 1: second strike, so we're in a sort of rolling strike

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Speaker 1: situation with them. Now. Okay, so this is the common cry,

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Speaker 1: isn't it? And that city forecast for inflation in the

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Speaker 1: UK certainly even harder than that. You know what the

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Speaker 1: Bank of England is expecting, which is thirteen percent inflation.

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Speaker 1: Barristers though, Jonathan, the issue there again, it's been ongoing

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Speaker 1: since April, but they're stepping it up. Yeah, it's a

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Speaker 1: huge escalation. And the Criminal bar Association, the advocates that

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Speaker 1: prosecute and defend in court have been gradually increasing there

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Speaker 1: and their action and it started a bit kind of

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Speaker 1: on off, on off, but from September we go to

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Speaker 1: an all outstrike. The courts and the court rooms will

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Speaker 1: be empty. Yeah, effectively sort of grinding justice to a halt,

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Speaker 1: as it were. I mean, ministers Jonathan of perhaps on

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Speaker 1: wisely been extremely critical of of lawyers, you know, using

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Speaker 1: this sort of, as one lawyer put its sound bites,

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Speaker 1: holding justice hostage as it were, to to ransom that

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Speaker 1: sort of language. Um, is that justified? I suppose? Well,

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Speaker 1: what they do is they play up the fact that

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Speaker 1: they're in their gets, their wigs and their gowns. It's

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Speaker 1: a very rarefied it looks like a very rarefied profession.

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Speaker 1: But the reality is that the junior barristers, the barristers

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Speaker 1: just starting out, can be earning less than the minimum wage.

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Speaker 1: They're self employed, they don't get sick pay, they don't

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Speaker 1: have a pension, and they're putting in hours of work

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Speaker 1: before a actual hearing takes place, and the take home

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Speaker 1: pay can be less than the minimum wage. Has anybody

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Speaker 1: Thomas noticed that the BAT and Open Reach engineers are

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Speaker 1: on strike. I mean this is broadband and and Telecom's

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Speaker 1: access across the country, right, This is the dilemma facing them.

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Speaker 1: They can't withdraw services for the really important things that

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Speaker 1: BAT does, for instance, calls. They've carved that out, so

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Speaker 1: what we're seeing is some kind of minimal impact on

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Speaker 1: repairing broken cabinets or installed in new lines. But ultimately

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Speaker 1: they're striking for two days at a time. This is

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Speaker 1: the second two day strike coming up, and maybe you

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Speaker 1: have to wait a bit longer. It's possible something bigger

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Speaker 1: goes down and we all have to wait for London

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Speaker 1: to come back and running, but so far we've not

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Speaker 1: seen anything like that. Yeah, I wonder whether we take

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Speaker 1: a step back then, because it has been this kind

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Speaker 1: of dub this summer of discontent, and there are just

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Speaker 1: so many professions involved, aren't there in the sort of

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Speaker 1: strike action? Um I suppose how much are the unions?

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Speaker 1: Are government going to cave in terms of the wage

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Speaker 1: demand embarrasses. It seems like they really do have a

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Speaker 1: very strong case. They've argued that they've faced a lot

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Speaker 1: of cuts for a long time. The government is going

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Speaker 1: to end up being under a new Prime minister under

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Speaker 1: a lot of pressure here, and there will be a

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Speaker 1: new Justice Minister by the time that we get to

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Speaker 1: By the time we get too early September. Dominic rub

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Speaker 1: has has essentially pulled down the shutters, I think, but

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Speaker 1: there will likely be a new a new Justice Minister,

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Speaker 1: and there they're at there to these these conversations if

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Speaker 1: they are even taking place, of taking place against the

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Speaker 1: back a backdrop of entirely broken courts. Anyway, there is

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Speaker 1: a backlog of criminal cases that now now numbers fifty

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Speaker 1: eight more than fifty eight thousand. That's a staggering figure,

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Speaker 1: and that was built touching the pandemic. We know the

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Speaker 1: difficulties of kind of zoom court cases. Um, yeah, how

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Speaker 1: is there a plan to catch up? Well, the plan

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Speaker 1: was to open the nightingale courts, courts in theaters and

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Speaker 1: in in in other kind of public buildings to to

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Speaker 1: to put more to put more cases on um and

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Speaker 1: the number was just beginning to come down. But it's

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Speaker 1: with the fact is there have now been at least

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Speaker 1: six thousand court hearings disrupted. That number is is is

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Speaker 1: going to soar again, and I mean it may be.

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Speaker 1: We're sort of pointing out that it will be those

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Speaker 1: same criminal barristers who will have to clear that backlog.

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Speaker 1: They are taking the hit and as I said that

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Speaker 1: they're self employed, so they will be losing those endings,

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Speaker 1: but their their job will also be to clear that

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Speaker 1: backlog when it's when, when when any strike is over? Okay,

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Speaker 1: So that perhaps you can sense the frustration there, Thomas,

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Speaker 1: I don't think I've ever spoken to as many unions

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Speaker 1: as I have in the last few weeks. On Bloomberg

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Speaker 1: reg Reggio. We spoke to the head of Unite Union

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Speaker 1: very very strong on the Felix dough strike, which is

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Speaker 1: doc workers. You know saying that this was a profitable

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Speaker 1: business and they've made more money than they had done

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Speaker 1: in many years, and that if they could pay, they

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Speaker 1: should pay. But this is a real test of the unions,

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Speaker 1: isn't it when it comes to the engineers to beat

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Speaker 1: an open reach? How profitable is that business? How you know,

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Speaker 1: how willing enable is the company to what can the

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Speaker 1: union's really extract? Yes, this is the Communication Workers Union,

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Speaker 1: and they are extremely busy because they are also post workers,

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Speaker 1: so they're also striking, so it might be the most

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Speaker 1: busy short period they've ever faced. As as the CWU,

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Speaker 1: they represent a majority of BT workers, and they argue

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Speaker 1: that BAT can afford it. BAT is profitable, BATS rejoinder,

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Speaker 1: and we were able to see internal town hall meetings

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Speaker 1: where BT its point of view across sort of more candidly,

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Speaker 1: they argue they can't afford it. Thank you so much

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Speaker 1: for joining me here on Bloomberg Radio. Bluembog's legal reporter

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Speaker 1: Jonathan Browning and Thomas cele tech Media and Telecoms reporter

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Speaker 1: read all of their reports on the Bloomberg terminal, of course,

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Speaker 1: and do join us here on Bloomberg Radio for more.

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Speaker 1: I'm Caroline Hepke in London. You can catch us every

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Speaker 1: weekday morning for Bloomberg Daybreak. You're beginning at six am

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Speaker 1: in London. That's one am on Wall Street. Nathan, all right,

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Speaker 1: thank you, Caroline, and coming up on Bloomberg Daybreak weekend.

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Speaker 1: How much your China's economic woes hurting the banking industry.

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Speaker 1: I'm Nathan Hager, and this is Bloomberg broadcasting live from

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Speaker 1: the Bloomberg Interactive Broker Studio in New York. Bloomberg eleven

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Speaker 1: Frio to Washington, d C, Bloomberg to Boston, Bloomberg one

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Speaker 1: O six one to San Francisco, Bloomberg nine six to

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Speaker 1: the country, Sirius XM Channel one to London, d A

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Speaker 1: B digital radio, and around the globe the Bloomberg Business

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Speaker 1: app and Bloomberg Radio dot Com. This is Bloomberg day

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Speaker 1: Break Weekend. I'm Nathan Hager with your global look ahead

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Speaker 1: at the top stories for investors in the coming week.

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Speaker 1: China's massive real estate crisis continues to unfold, and their

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Speaker 1: spill over now in the banking industry. For more, Let's

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Speaker 1: go to Hong Kong and Bloomberg day Break Asia host

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Speaker 1: Brian Curtis, Nathan we look at China's property crisis through

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Speaker 1: the prism of China's massive banks, what will the impact

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Speaker 1: be on earnings from mortgage boycotts, from falling prices and

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Speaker 1: problem loans? Big bank earnings are coming and joining us

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Speaker 1: to break it all down is Francis Chant, who covers

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Speaker 1: banks and brokerages for Bloomberg Intelligence. So Francis is China

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Speaker 1: Construction Bank the most exposed in what might we expect

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Speaker 1: from those earnings? Obviously, China construction banks have closed tot

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Speaker 1: of the total loans properly related and their mortgage book

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Speaker 1: is the biggest in the country. But based on the

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Speaker 1: fair reason set of recorded do it data, UH they

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Speaker 1: talk about the state bank segment, which includes the biggest

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Speaker 1: banks in the country i CBC, China Construction Bank, Agricultural Bank,

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Speaker 1: and Bank of China. In fact, their earnings are still

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Speaker 1: residents on the your need basis, and the NPR ratios

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Speaker 1: has been trending down from the beginning of the year

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Speaker 1: to tune or the end of second quarter, So at

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Speaker 1: the fair at least, we haven't seen that much of

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Speaker 1: the impact from UM the earlier COVID lockdown, which is

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Speaker 1: really eye catching. The Shanghai UH and and they have

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Speaker 1: been actively disposing any of the newly formed bad depths.

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Speaker 1: And UH they themselves have also got the first strong

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Speaker 1: buffer against the problem loans new problem loans they see

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Speaker 1: this year, as represented by NPR coverage, and all those

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Speaker 1: will support that resilient earnings. I believe in tradition the two.

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Speaker 1: So how big would the impact be from the loan

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Speaker 1: boycotts that we've heard so much about so far? This

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Speaker 1: may still be a black box. UH. If you look

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Speaker 1: at our own research proving intelligence research we have been making,

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Speaker 1: some of some are based on the stalled or halted

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Speaker 1: residential projects by the trouble to developers and the amount

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Speaker 1: UH to be affected. Amount of mortgages to be affected

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Speaker 1: by these projects could be up to two point four

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Speaker 1: trading yarn um or six five percent of the total

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Speaker 1: mortgage book in the country in the worst case scenario

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Speaker 1: and in our base case scenarios like one point three trading. However, UM,

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Speaker 1: you know, UH, those projects UH could be still UH

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Speaker 1: in the common situation. It doesn't mean the mortgages with

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Speaker 1: all declined to pay back their UH mortgages. And if

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Speaker 1: we take reference to what happened or what the banks

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Speaker 1: have disclosed in mid July. I think what they have

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Speaker 1: afflected as the amount of home rooms affected by those

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Speaker 1: boy courts have been really really minimal, like only sealupt

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Speaker 1: seal one percent of their total mortgage books is insignificant

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Speaker 1: to a way that we cannot believe. That's why it

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Speaker 1: is that you may still see that as a black box.

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Speaker 1: Maybe more to come, but the fairly is too as

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Speaker 1: offer meet to line, we really didn't see that bigger

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Speaker 1: problem according the banks disclosure. So you mentioned big four

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Speaker 1: China Construction Bank, EGG Bank, I, CBC and Bank of

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Speaker 1: China among them, which looks the most profitable from your analysis,

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Speaker 1: I believe a China Construction Bank and Agricultural Bank BAY

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Speaker 1: is still send a better chance to deliver better than

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Speaker 1: peace profess if you talk about the comparison would be

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Speaker 1: among the four the two banks historically they've got the

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Speaker 1: higher ninngines margins and at the same time the loan

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Speaker 1: growth are more resilient as they are supporting the country's

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Speaker 1: policies and making more inclusive loan screen loans such as

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Speaker 1: such as ABC is the biggest in the country. But

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Speaker 1: this basis also a little bit bigger than the others

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Speaker 1: and it mixes growth a little bit slower. Nothing wrong

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Speaker 1: with them, is just because of the base effect, and

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Speaker 1: a Bank of China has been in a bit more

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Speaker 1: slowing growth mode. It's a fairwere managed bank, don't take

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Speaker 1: me wrong. It's just that that they also have a

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Speaker 1: sizeable overseas business which is wanting a bit different from

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Speaker 1: the manteled uh, you know, prospects against the other three.

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Speaker 1: So we've seen the PBOC easing and I wonder what

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Speaker 1: that means for margin pressures for the banks. Yeah, that

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Speaker 1: would be a problem in Nio. Yeah, all right, Francis,

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Speaker 1: thanks so much for joining us and sharing your insights

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Speaker 1: with this. Francis Chan who covers banks and brokerages for

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Speaker 1: Bloomberg Intelligence. I'm Brian Curtis along with Christener. You can

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Speaker 1: catch us every weekday for Bloomberg Daybreak Asia beginning at

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Speaker 1: six am in Hong Kong and six pm on Wall Street. Nathan,

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Speaker 1: thank you, Brian, And coming up on Bloomberg Daybreak weekend,

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Speaker 1: drought is drawing up prospects for dealing with the global

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Speaker 1: food shortage. How bad is it and how bad can

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Speaker 1: it gets? I'm Nathan Hagar and this is Bloomberg. This

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Speaker 1: is Bloomberg Daybreak weekend, our global look ahead at the

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Speaker 1: top stories for investors in the coming week. I'm Nathan Hagar.

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Speaker 1: The US is in the middle of a nasty and

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Speaker 1: painful drought, and it's even worse in many other countries.

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Speaker 1: For more, let's head to our Bloomberg newsroom in Washington

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Speaker 1: and Amy Morris. Amy, all right, thank you, Nathan. A

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Speaker 1: global food shortage was already getting really painful because of

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Speaker 1: the war in Ukraine and supply chain issues. Now there's

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Speaker 1: a drought and it's adding a whole new dimension to

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Speaker 1: this crisis. We go now to Bloomberg News editor at

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Speaker 1: Millie Munchy. She's been following this and she's going to

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Speaker 1: bring us up to speed. Milly, it is always a

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Speaker 1: pleasure to talk to you. Thanks so much for taking

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Speaker 1: the time. Thank you so much for having me at

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Speaker 1: Now let's start with the basics. Corn it is what

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Speaker 1: we're seeing in places like Nebraska, crop scouts going out

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Speaker 1: last week to measure the size of the ears. This

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Speaker 1: really struck me because this year they couldn't find any

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Speaker 1: ears to measure. Uh. Put this in perspective for those

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Speaker 1: of us who don't live in the Nebraska area who

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Speaker 1: don't live in the corn belt exactly how bad this is.

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Speaker 1: This year has been pretty extreme when it comes to drought. So,

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Speaker 1: as you probably know, the the US West has been

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Speaker 1: mired in this drought that's been going on for years.

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Speaker 1: It's not decades, um. You know, in some reasons, it's

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Speaker 1: it's the worst route in more than a thousand years. UM.

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Speaker 1: So the western half of the US has really dried out,

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Speaker 1: and that impacts western corn growing states like Nebraska and

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Speaker 1: South Dakota. Um. If you go through areas of Nebraska

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Speaker 1: right now and you look at the Platte River, you

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Speaker 1: would be surprised. It looks like a puddle or a trickle.

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Speaker 1: To call that a river right now is kind of

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Speaker 1: a shocking thing. Uh. And so that really really impacts

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Speaker 1: these corn fields. Uh. A lot of these tour scouts

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Speaker 1: went out. UM. What they do is they measure corn plants.

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Speaker 1: They try to see how tall they are. They look

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Speaker 1: at the corn ears and see how many kernels are filled.

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Speaker 1: Some of the fields they went to, they couldn't even

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Speaker 1: find ears. Because what happens is these these plants when

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Speaker 1: they grow, if there's not enough water, they can't pollinate,

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Speaker 1: they can't produce those ears. It's not that it was

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Speaker 1: a super widespread phenomena, you know, it was a few

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Speaker 1: isolated fields, but it just really points to how bad

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Speaker 1: this drought is and what an impact is having on

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Speaker 1: the corn crops. I see. It's not that all of

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Speaker 1: the ears are gone. It's not that there isn't any corn.

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Speaker 1: It's that when there are areas where they couldn't even

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Speaker 1: find ears to measure on the cornstalks, that may be

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Speaker 1: a sign that something bad maybe to come. On a

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Speaker 1: typical corn tour, you walk in. These plants are green,

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Speaker 1: their lush, they're very tall, um and just hear these

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Speaker 1: plants were browning, they were stunted, they were short, and

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Speaker 1: then some of them were not producing these ears, meaning

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Speaker 1: that the you know, the actual cobs of grain just

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Speaker 1: did not we're not on the plant. And then in

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Speaker 1: the fields where there were ears, which was typically the case,

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Speaker 1: a lot of those corn ears were not filled with kernels. Um.

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Speaker 1: There's a phenomenon that farmers called tip back where you

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Speaker 1: get an ear of corn. If you imagine like feeling

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Speaker 1: the husk off and then you look at that ear

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Speaker 1: of corn. Typically it's yellow from tip to top, you know,

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Speaker 1: from top to bottom, because it's filled with kernels. This year,

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Speaker 1: some of those corn ears were only half yellow or

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Speaker 1: three quarters yellow. UM. That typically happens, you see that

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Speaker 1: a little bit, but it was much more widespread this year,

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Speaker 1: much more common than usual. And all of that points

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Speaker 1: to yield that are going to be way off what

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Speaker 1: farmers were hoping to get. UM. And virtually every state

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Speaker 1: that these tour scouts went to, UH, yields are worse

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Speaker 1: than last year. UH. Really only in Minnesota are they

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00:25:00,960 --> 00:25:04,000
Speaker 1: doing a little bit better UM, But most of the

430
00:25:04,040 --> 00:25:06,280
Speaker 1: state's fields are worse than last year. And in a

431
00:25:06,280 --> 00:25:08,240
Speaker 1: lot of the fields, the fields are worse than the

432
00:25:08,280 --> 00:25:12,080
Speaker 1: three year average as well. And that's bad because you know,

433
00:25:12,119 --> 00:25:15,639
Speaker 1: if you're not even getting average corn, you're you're seeing

434
00:25:15,640 --> 00:25:18,520
Speaker 1: a national harvest that's going to be really lagging. And

435
00:25:18,560 --> 00:25:21,240
Speaker 1: of course, we're in a year right now where food

436
00:25:21,240 --> 00:25:25,000
Speaker 1: supplies have been extremely tight, and so to not make

437
00:25:25,080 --> 00:25:28,080
Speaker 1: that average means that the global food situation is going

438
00:25:28,119 --> 00:25:31,920
Speaker 1: to get even tighter. What are farmers doing, I mean,

439
00:25:31,960 --> 00:25:35,919
Speaker 1: are they able to somehow salvage those damaged crops at all?

440
00:25:36,040 --> 00:25:38,320
Speaker 1: Right now? I think the main thing that farmers are

441
00:25:38,320 --> 00:25:41,280
Speaker 1: hoping for is some more rains from now through the

442
00:25:41,359 --> 00:25:44,440
Speaker 1: end of the growing season. UH. Harvests for the corn

443
00:25:44,440 --> 00:25:47,200
Speaker 1: crop typically starts in a couple of weeks. Soybeans will

444
00:25:47,200 --> 00:25:50,439
Speaker 1: start a little bit later in the year UM and

445
00:25:50,960 --> 00:25:54,560
Speaker 1: you know, more like September sometime in October sometime for

446
00:25:54,600 --> 00:25:57,159
Speaker 1: the soybeans. And so from now through the end of

447
00:25:57,160 --> 00:26:00,560
Speaker 1: that growing season, if we can get some better rains

448
00:26:00,560 --> 00:26:03,240
Speaker 1: than some of these regions, we could see the eels

449
00:26:03,280 --> 00:26:05,240
Speaker 1: bump up a little bit from where they are now.

450
00:26:06,040 --> 00:26:09,560
Speaker 1: Corn is is basically baked in um, but soybeans have

451
00:26:09,640 --> 00:26:12,560
Speaker 1: more potential because they grow later into the season. Some

452
00:26:12,640 --> 00:26:15,160
Speaker 1: good rains for the next few weeks can really bump

453
00:26:15,240 --> 00:26:18,040
Speaker 1: up the soybean crop. So that's what farmers are hoping

454
00:26:18,080 --> 00:26:20,160
Speaker 1: for in the next few weeks. Yeah, let's talk about

455
00:26:20,200 --> 00:26:22,679
Speaker 1: that a little bit, just to give perspective for our

456
00:26:22,720 --> 00:26:25,920
Speaker 1: audience about how important corn is in the food chain,

457
00:26:26,080 --> 00:26:29,520
Speaker 1: especially just in the US. UM the importance of corn

458
00:26:29,520 --> 00:26:32,200
Speaker 1: in the food chain and what this could mean down

459
00:26:32,280 --> 00:26:35,560
Speaker 1: the road, and then compare that with soy You mentioned

460
00:26:35,560 --> 00:26:38,560
Speaker 1: how soy is later in the season so it has

461
00:26:38,600 --> 00:26:41,359
Speaker 1: a fighting chance. So corn is one of the world's

462
00:26:41,400 --> 00:26:44,440
Speaker 1: most important crops um. Now, when we talk about corn,

463
00:26:44,560 --> 00:26:47,080
Speaker 1: that's you know that these scouts are looking at or

464
00:26:47,119 --> 00:26:49,760
Speaker 1: the corn futures that are treated in Chicago. Just to

465
00:26:49,840 --> 00:26:52,080
Speaker 1: be clear, that's not the you know corn on the

466
00:26:52,119 --> 00:26:54,760
Speaker 1: cob that we like to eat at a barbecue. Um.

467
00:26:54,840 --> 00:26:57,000
Speaker 1: That corn on the cob at the barbecue, that's called

468
00:26:57,119 --> 00:27:00,399
Speaker 1: sweet corn. What's grown um in these fields and you

469
00:27:00,440 --> 00:27:03,280
Speaker 1: know that the US is a huge producer of um.

470
00:27:03,400 --> 00:27:06,240
Speaker 1: Is called dent corn um, and that type of corn

471
00:27:06,480 --> 00:27:09,720
Speaker 1: is used in all kinds of different ways. It's used

472
00:27:09,720 --> 00:27:13,680
Speaker 1: for live stock feed, so it's really critical for producing

473
00:27:13,720 --> 00:27:16,919
Speaker 1: meat and for producing dairy um. It's also used in

474
00:27:17,000 --> 00:27:20,120
Speaker 1: ethanol and that type of thing. And for soybeans. Soybeans

475
00:27:20,119 --> 00:27:23,920
Speaker 1: are also a pretty major crop um. Soybeans are used

476
00:27:23,960 --> 00:27:27,400
Speaker 1: in cooking oil. You get soybean oil out of out

477
00:27:27,400 --> 00:27:30,440
Speaker 1: of soybeans, and they're also used for live stock feed

478
00:27:30,440 --> 00:27:32,800
Speaker 1: as well. In the US is a big producer of

479
00:27:32,800 --> 00:27:35,800
Speaker 1: soybeans UM. So the fact that the soybeans are looking better,

480
00:27:36,240 --> 00:27:37,800
Speaker 1: a lot of that has to do with the growing

481
00:27:38,359 --> 00:27:41,760
Speaker 1: season because corn gets planted a bit earlier and we

482
00:27:41,840 --> 00:27:45,040
Speaker 1: had a lot more dry weather earlier. That's impacted the

483
00:27:45,040 --> 00:27:48,399
Speaker 1: corn crop. Soybeans get planted a little bit later and

484
00:27:48,440 --> 00:27:51,320
Speaker 1: they grow a little bit later, and so we've had

485
00:27:51,359 --> 00:27:54,480
Speaker 1: some late season rains in some parts of the crop

486
00:27:54,520 --> 00:27:58,080
Speaker 1: belt that's helped out the soybeans. We're hoping for more

487
00:27:58,160 --> 00:28:01,320
Speaker 1: rains and that those soybeans will keep looking good. And

488
00:28:01,359 --> 00:28:04,800
Speaker 1: we are talking with Bloomberg editor Milly Munchy. She covers

489
00:28:04,840 --> 00:28:09,119
Speaker 1: agriculture for Bloomberg News. Milly, let's talk a bit about

490
00:28:09,200 --> 00:28:12,480
Speaker 1: why this is happening. We mentioned the drought, and I

491
00:28:12,520 --> 00:28:13,840
Speaker 1: want to talk to you a little bit about the

492
00:28:13,880 --> 00:28:18,199
Speaker 1: drought overseas in Europe and taking a global view. But

493
00:28:18,280 --> 00:28:21,040
Speaker 1: before we do, let's take a much broader view and

494
00:28:21,080 --> 00:28:23,359
Speaker 1: find out why this is happening in the first place.

495
00:28:23,440 --> 00:28:26,240
Speaker 1: There's a variety of factors that caused drought, but the

496
00:28:26,280 --> 00:28:30,520
Speaker 1: biggest thing that's underpinning all of this is climate change. Uh.

497
00:28:30,600 --> 00:28:32,840
Speaker 1: One of the things that climate change has done is

498
00:28:32,880 --> 00:28:36,840
Speaker 1: it's made heat waves much more common and much more

499
00:28:36,880 --> 00:28:40,400
Speaker 1: extreme in the US, but all over the globe. I'm

500
00:28:40,440 --> 00:28:43,120
Speaker 1: sure we've all, you know, at different times, experienced much

501
00:28:43,160 --> 00:28:46,479
Speaker 1: hotter weather than we're used to this summer um and

502
00:28:46,560 --> 00:28:49,520
Speaker 1: that's true of the US. We've seen temperatures, you know,

503
00:28:50,040 --> 00:28:52,360
Speaker 1: hitting hundred and four degrees, hitting a hundred and ten

504
00:28:52,400 --> 00:28:57,160
Speaker 1: degrees in places like Kentucky and Texas. UM, in Colorado,

505
00:28:57,240 --> 00:29:02,200
Speaker 1: we've seen temperature regularly above Greece, and that is that

506
00:29:02,360 --> 00:29:05,360
Speaker 1: is definitely related to climate change and the way that

507
00:29:05,440 --> 00:29:09,360
Speaker 1: the planet is warming. Um, we've seen massive heat waves

508
00:29:09,400 --> 00:29:12,320
Speaker 1: this year also in Europe, We've seen them in China,

509
00:29:12,360 --> 00:29:14,880
Speaker 1: We've seen them in India. So this is really a

510
00:29:14,880 --> 00:29:19,200
Speaker 1: global phenomena and climate change is underpinning this huge shift

511
00:29:19,240 --> 00:29:22,160
Speaker 1: of weather that's happening around the world. I wanted to

512
00:29:22,240 --> 00:29:24,640
Speaker 1: ask about that the worst drought in five hundred years

513
00:29:24,680 --> 00:29:27,400
Speaker 1: in Europe, a huge drought in parts of Africa, the

514
00:29:27,520 --> 00:29:30,040
Speaker 1: drought going on of rather parts of China, and a

515
00:29:30,120 --> 00:29:33,560
Speaker 1: drought going on in the Horn of Africa. Historically have

516
00:29:33,720 --> 00:29:36,640
Speaker 1: we seen anything like this before? Is this just part

517
00:29:36,680 --> 00:29:39,960
Speaker 1: of a cycle? Yeah, this is really outside the norm.

518
00:29:40,360 --> 00:29:44,280
Speaker 1: We have heat waves that are you know, shattering records

519
00:29:44,320 --> 00:29:47,760
Speaker 1: in ways that you know, are happening all around the

520
00:29:47,760 --> 00:29:50,520
Speaker 1: globe and all around at the same time. Part of

521
00:29:50,520 --> 00:29:53,880
Speaker 1: what makes this so unique is that the weather has changed,

522
00:29:54,760 --> 00:29:57,920
Speaker 1: not just slowly over of course of a number of years,

523
00:29:58,240 --> 00:30:02,520
Speaker 1: but it's so it's change very rapidly. And the other

524
00:30:02,520 --> 00:30:06,160
Speaker 1: thing that's very extreme is that we're seeing this changing

525
00:30:06,160 --> 00:30:08,760
Speaker 1: whether in all parts of the gold at the same time,

526
00:30:09,080 --> 00:30:12,200
Speaker 1: So you're seeing um, you know, massive heat waves like

527
00:30:12,200 --> 00:30:15,120
Speaker 1: you said, in Europe, in Asia, in the US, in

528
00:30:15,280 --> 00:30:19,040
Speaker 1: other parts of North America, and it's all happening simultaneously.

529
00:30:19,040 --> 00:30:22,320
Speaker 1: It's all happening to a much greater degree. So we

530
00:30:22,920 --> 00:30:26,160
Speaker 1: because of all those factors, it is very much linked

531
00:30:26,240 --> 00:30:28,959
Speaker 1: to climate change. It's a phenomena that's driven by climate

532
00:30:29,040 --> 00:30:32,680
Speaker 1: change and not just the typical cycles of weather that

533
00:30:32,760 --> 00:30:36,440
Speaker 1: we've been used to in the three climate change era. Now,

534
00:30:36,480 --> 00:30:38,800
Speaker 1: I know the White House Conference on Hunger is coming

535
00:30:38,840 --> 00:30:41,680
Speaker 1: up September one. What are you going to be watching

536
00:30:41,720 --> 00:30:43,680
Speaker 1: for to come out of the White House? What is

537
00:30:43,720 --> 00:30:47,920
Speaker 1: the White House looking at? I think that you know,

538
00:30:47,920 --> 00:30:52,000
Speaker 1: the Biden and administration is really looking to see what

539
00:30:52,040 --> 00:30:54,120
Speaker 1: they can do to curb the hunger that's been in

540
00:30:54,160 --> 00:30:57,600
Speaker 1: the US. There's also a massive hunger across the planet

541
00:30:57,600 --> 00:31:00,160
Speaker 1: at this time as well, as you mentioned, there's a

542
00:31:00,240 --> 00:31:03,840
Speaker 1: huge drought in Africa that's causing you know, huge amounts

543
00:31:03,840 --> 00:31:07,040
Speaker 1: of hunger in that part of the world. Um, the

544
00:31:07,120 --> 00:31:11,280
Speaker 1: world's Food Organize. You know, the the World's Food Program

545
00:31:11,320 --> 00:31:16,280
Speaker 1: has really warned about massive spiking levels of hunger in

546
00:31:16,320 --> 00:31:19,280
Speaker 1: all parts of the world, and this has been happening

547
00:31:19,360 --> 00:31:21,720
Speaker 1: since the onset of the pandemic that it continues to

548
00:31:21,760 --> 00:31:24,440
Speaker 1: get worse. A lot of the worsening is due to

549
00:31:24,560 --> 00:31:27,600
Speaker 1: the extreme the races of food that we've seen in

550
00:31:27,640 --> 00:31:30,880
Speaker 1: the last year. Food insulation has taken off in a

551
00:31:30,920 --> 00:31:33,080
Speaker 1: way that you know, we're not used to seeing in

552
00:31:33,120 --> 00:31:38,200
Speaker 1: our lifetimes, um and because of that, a lot more

553
00:31:38,200 --> 00:31:41,360
Speaker 1: people can't afford to buy food in lots of parts

554
00:31:41,400 --> 00:31:45,560
Speaker 1: of the world, and it's especially hitting places like Africa,

555
00:31:46,040 --> 00:31:48,520
Speaker 1: parts some parts of Asia, some parts of Latin America

556
00:31:49,280 --> 00:31:51,560
Speaker 1: very hard. And the World's Food Program what they've called

557
00:31:51,600 --> 00:31:54,360
Speaker 1: for is you know, extra funding and for people to

558
00:31:54,440 --> 00:31:57,120
Speaker 1: really start being more attention to the fact that these

559
00:31:57,200 --> 00:32:00,920
Speaker 1: hunger rising levels are rising so dramatically, Bloomberg News editor

560
00:32:00,960 --> 00:32:02,920
Speaker 1: Millie Munshi, and that is what is going on in

561
00:32:02,960 --> 00:32:05,800
Speaker 1: the nation's capital. For more of our political news coverage,

562
00:32:05,800 --> 00:32:08,080
Speaker 1: you can tune into Balance of Power with David Weston

563
00:32:08,120 --> 00:32:10,960
Speaker 1: weekdays at noon Wall Street Time, and Sound On with

564
00:32:11,040 --> 00:32:13,840
Speaker 1: Joe Matthew weekdays at five pm. Wall Street time right

565
00:32:13,840 --> 00:32:17,160
Speaker 1: here on Bloomberg Radio. I'm Amy Morris, and this is

566
00:32:17,200 --> 00:32:21,840
Speaker 1: Bloomberg Nathan. Amy Morris reporting from our Bloomberg newsroom in Washington.

567
00:32:21,960 --> 00:32:24,200
Speaker 1: Thank you, Amy, and that does it for this edition

568
00:32:24,240 --> 00:32:27,760
Speaker 1: of Bloomberg Daybreak Weekend. Join us again Monday morning at

569
00:32:27,800 --> 00:32:30,520
Speaker 1: five am Wall Street Time for the latest on markets

570
00:32:30,560 --> 00:32:33,440
Speaker 1: overseas and all the news you need to start your debt.

571
00:32:33,840 --> 00:32:37,000
Speaker 1: I'm Nathan Hager, and this is Bloomberg