1 00:00:03,520 --> 00:00:06,240 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:06,280 --> 00:00:08,280 Speaker 1: the top stories in the coming week from our day 3 00:00:08,280 --> 00:00:11,400 Speaker 1: Break anchors all around the world. And just to handle 4 00:00:11,400 --> 00:00:14,960 Speaker 1: the program, Earnings, earnings and more earnings, big Tech highlights 5 00:00:14,960 --> 00:00:17,760 Speaker 1: the week, plus Chair Jay Cowell, the Fawn's the Fed's 6 00:00:17,800 --> 00:00:21,480 Speaker 1: plan to continue fighting inflation. I'm John Tucker in New York. 7 00:00:21,920 --> 00:00:24,799 Speaker 2: I'm Brian Curtis in Hong Kong. We look at China's 8 00:00:24,800 --> 00:00:27,280 Speaker 2: efforts to do more on the global stage. 9 00:00:28,000 --> 00:00:30,240 Speaker 3: I'm Caroline Hedker Hair in London, where we're looking at 10 00:00:30,280 --> 00:00:33,160 Speaker 3: the European response to the Israel Hamas Wool. 11 00:00:35,159 --> 00:00:39,159 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend, the business 12 00:00:39,240 --> 00:00:41,560 Speaker 4: news You need to wrap up your week in just 13 00:00:41,720 --> 00:00:46,239 Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg 14 00:00:46,320 --> 00:00:48,920 Speaker 4: Business App, and everywhere you get your podcasts. 15 00:00:52,600 --> 00:00:55,600 Speaker 1: Hi everybody, I'm John Tucker, and we begin today's program 16 00:00:55,720 --> 00:00:59,240 Speaker 1: with companies opening their books. A big week for earnings 17 00:00:59,320 --> 00:01:01,080 Speaker 1: with about a third of the S and P five 18 00:01:01,160 --> 00:01:04,840 Speaker 1: head at reporting this coming week. Among the highlights, Google, 19 00:01:05,160 --> 00:01:10,000 Speaker 1: Meta and Amazon. And let's start right now with Bloomberg 20 00:01:10,080 --> 00:01:15,120 Speaker 1: Intelligence Senior US retail analyst Punamgoyle as she covers Amazon 21 00:01:15,280 --> 00:01:18,200 Speaker 1: for us put them good to talk to Amazon reporting 22 00:01:18,319 --> 00:01:21,639 Speaker 1: third quarter earnings in the coming week, can you break 23 00:01:21,760 --> 00:01:25,640 Speaker 1: down for us the part the important parts of Amazon. 24 00:01:26,360 --> 00:01:29,280 Speaker 1: They're not just selling stuff online that then gets delivered 25 00:01:29,319 --> 00:01:30,280 Speaker 1: to my front porridge. 26 00:01:30,520 --> 00:01:32,400 Speaker 5: No they're not. They're doing a lot more than that. 27 00:01:32,600 --> 00:01:36,160 Speaker 5: So when you think about Amazon, you clearly have their marketplace, 28 00:01:36,200 --> 00:01:38,760 Speaker 5: which is Amazon dot Com. But they also have a 29 00:01:38,800 --> 00:01:41,800 Speaker 5: big business known as awus, which is their cloud business, 30 00:01:42,319 --> 00:01:46,000 Speaker 5: which not only is a growing business, it's also Amazon's 31 00:01:46,080 --> 00:01:50,720 Speaker 5: most profitable business, contributing to largely all its profit are 32 00:01:50,800 --> 00:01:53,400 Speaker 5: most of its profits today. Those are the two big 33 00:01:53,480 --> 00:01:56,880 Speaker 5: businesses inside Amazon. But within that there's also a third 34 00:01:56,920 --> 00:01:59,960 Speaker 5: business which is now a forty plus billion dollar busin 35 00:02:00,560 --> 00:02:04,040 Speaker 5: it is their advertising business, and that business continues to 36 00:02:04,160 --> 00:02:07,960 Speaker 5: grow at a twenty percent plush clip. It also boasts 37 00:02:08,240 --> 00:02:11,560 Speaker 5: high profit margins, which we think will be the third 38 00:02:12,120 --> 00:02:15,320 Speaker 5: growth river to the Amazon story and a key one, 39 00:02:15,480 --> 00:02:18,680 Speaker 5: especially in the coming years of the scales app business. 40 00:02:18,800 --> 00:02:21,840 Speaker 1: Even further, Yeah, you know, when I signed up for Prime, 41 00:02:21,919 --> 00:02:27,640 Speaker 1: I got Prime Video, and only because I can't share 42 00:02:27,720 --> 00:02:31,520 Speaker 1: somebody's Netflix account anymore. I think I've switched to commercials 43 00:02:31,560 --> 00:02:35,040 Speaker 1: on that and is that really a driving force for them? 44 00:02:35,160 --> 00:02:37,799 Speaker 5: Well, it is so right now, their advertising business, the 45 00:02:37,880 --> 00:02:40,560 Speaker 5: forty billion dollars roughly business that I talked about, is 46 00:02:40,680 --> 00:02:44,280 Speaker 5: primarily driven by their retail business. So the add on 47 00:02:44,639 --> 00:02:49,120 Speaker 5: of these ads onto Prime video is incremental. And remember 48 00:02:49,200 --> 00:02:51,720 Speaker 5: you have the option right you can choose the ad 49 00:02:51,800 --> 00:02:54,480 Speaker 5: free version and pay for that, or you can take 50 00:02:54,520 --> 00:02:57,880 Speaker 5: the adversion, So the clients will have an opportunity to 51 00:02:58,000 --> 00:03:01,200 Speaker 5: decide what works for them. Given that they've added this 52 00:03:01,320 --> 00:03:04,040 Speaker 5: new revenue stream for advertising, it's only going to help 53 00:03:04,360 --> 00:03:08,400 Speaker 5: growth even faster for the advertising segment of their business. 54 00:03:08,880 --> 00:03:14,560 Speaker 1: You mentioned AWS, How does generative AI everybody's latching on 55 00:03:14,680 --> 00:03:16,040 Speaker 1: to that. How does that figure into it? 56 00:03:16,240 --> 00:03:19,240 Speaker 5: Yeah, Generative AI is really something that Amazon is investing 57 00:03:19,280 --> 00:03:21,760 Speaker 5: heavily in, just like the rest of the world, including 58 00:03:21,840 --> 00:03:25,320 Speaker 5: tech companies and even retail companies. You know, it's all 59 00:03:25,360 --> 00:03:28,000 Speaker 5: about making sure that you can really use the data 60 00:03:28,040 --> 00:03:31,079 Speaker 5: that you've have hand at hand, and you can implement 61 00:03:31,240 --> 00:03:35,080 Speaker 5: solutions to make it plus frictionless for the consumer and 62 00:03:35,200 --> 00:03:38,600 Speaker 5: also provide capabilities to businesses. For Amazon, which is for 63 00:03:38,640 --> 00:03:42,600 Speaker 5: AWS to really grow their business in a way that 64 00:03:42,800 --> 00:03:44,040 Speaker 5: they couldn't do it before. 65 00:03:44,160 --> 00:03:44,240 Speaker 6: Right. 66 00:03:44,320 --> 00:03:46,960 Speaker 5: We've heard of AI for a very long time, for decades, 67 00:03:47,000 --> 00:03:50,040 Speaker 5: it's been around, but generative AI is truly game it's 68 00:03:50,080 --> 00:03:52,680 Speaker 5: a game changer. And our colleague wandsays, we're in a 69 00:03:52,840 --> 00:03:55,640 Speaker 5: whole piece on generative AI where you know, they talk 70 00:03:55,680 --> 00:03:58,920 Speaker 5: about just the growth in that industry and the investments 71 00:03:58,960 --> 00:04:01,360 Speaker 5: that are going to come and I have already started 72 00:04:01,360 --> 00:04:05,880 Speaker 5: to begin. That's really going to help improve ROI across 73 00:04:06,000 --> 00:04:08,800 Speaker 5: every facet of the organization, whether it's on the e 74 00:04:08,920 --> 00:04:11,840 Speaker 5: commerce side, whether it's in the back office, whether it's 75 00:04:11,880 --> 00:04:14,960 Speaker 5: in marketing and advertising. I mean, you name it. It's 76 00:04:15,000 --> 00:04:17,599 Speaker 5: going to implement every it's going to have an impact 77 00:04:17,680 --> 00:04:19,000 Speaker 5: on every part of your business. 78 00:04:19,279 --> 00:04:21,479 Speaker 1: Oh, the Prime Day events was so what do they 79 00:04:21,560 --> 00:04:22,920 Speaker 1: tell us? How did they go so far? 80 00:04:23,160 --> 00:04:25,640 Speaker 5: They actually went really well. You know what we noticed 81 00:04:25,680 --> 00:04:29,679 Speaker 5: over the Prime Day that just happened recently is according 82 00:04:29,720 --> 00:04:32,599 Speaker 5: to numbers that we've seen, sales were up about six percent. 83 00:04:33,120 --> 00:04:36,480 Speaker 5: And that's pretty impressive just given that we're in a 84 00:04:36,560 --> 00:04:39,200 Speaker 5: period of time where the consumer, you know, could be 85 00:04:39,320 --> 00:04:42,520 Speaker 5: stretched a little in terms of their pocketbook because of 86 00:04:42,600 --> 00:04:45,760 Speaker 5: the growing interest rates, the rising debt levels that we're seeing. 87 00:04:45,800 --> 00:04:49,720 Speaker 5: Consumer confidence is clearly you know, not where we'd like 88 00:04:49,800 --> 00:04:52,480 Speaker 5: it to be. So we do think that having a 89 00:04:52,560 --> 00:04:56,560 Speaker 5: respectable mid single digit game based on numerator numbers is 90 00:04:56,960 --> 00:05:00,800 Speaker 5: a good number, and it's actually bodes for the holiday 91 00:05:00,839 --> 00:05:05,520 Speaker 5: season for Amazon. The desire for value is clearly fun 92 00:05:05,640 --> 00:05:07,720 Speaker 5: and center in the consumer's mind and we saw that 93 00:05:07,839 --> 00:05:08,560 Speaker 5: over Prime Day. 94 00:05:08,720 --> 00:05:11,839 Speaker 1: Okay, so real quick, what do you expect from Amazon's results? 95 00:05:12,080 --> 00:05:14,360 Speaker 5: I think the results will be good. On the online side. 96 00:05:14,440 --> 00:05:16,760 Speaker 5: We'll start to see mid single digit game, which is 97 00:05:16,800 --> 00:05:20,360 Speaker 5: an improvement from earlier this year when salesware down. I 98 00:05:20,480 --> 00:05:23,960 Speaker 5: also think the cloud business will hold study. Our analysts 99 00:05:23,960 --> 00:05:26,400 Speaker 5: who covers the cloud business you know, thinks that the 100 00:05:26,720 --> 00:05:29,320 Speaker 5: uptick that we wanted to see later this year won't 101 00:05:29,360 --> 00:05:31,479 Speaker 5: come as soon as we expected, but the business will 102 00:05:31,520 --> 00:05:34,560 Speaker 5: still hold study at around a twelve percent clip. And 103 00:05:35,360 --> 00:05:37,880 Speaker 5: next year is really when we'll start to see improvement 104 00:05:37,960 --> 00:05:39,960 Speaker 5: in the cloud business of growth rates will begin to 105 00:05:40,040 --> 00:05:43,440 Speaker 5: pick up. The longer term opportunity for aw rest remains 106 00:05:43,600 --> 00:05:47,720 Speaker 5: very much impact with margins increasing and growth also increasing. 107 00:05:48,400 --> 00:05:52,000 Speaker 1: That's the preview of the Amazon from Bloomberg Intelligence. Senior 108 00:05:52,240 --> 00:05:55,600 Speaker 1: US retail analyst Punham Goil put them, Thanks very much, 109 00:05:55,720 --> 00:05:58,760 Speaker 1: appreciate it and the other earnings we're keeping track of 110 00:05:58,920 --> 00:06:03,520 Speaker 1: and previewing Amazon and Meta platforms. And to take a 111 00:06:03,560 --> 00:06:07,760 Speaker 1: deeper dive into that, Bloomberg Intelligence Senior technology analyst man 112 00:06:07,960 --> 00:06:11,840 Speaker 1: Deep Sing joints us, what's the overarching themes for all 113 00:06:11,920 --> 00:06:12,640 Speaker 1: these companies? 114 00:06:13,200 --> 00:06:16,760 Speaker 6: Well, so, for Alphabet and Meta, clearly there is a 115 00:06:16,880 --> 00:06:20,520 Speaker 6: read through on ad spending and it is tied to Macro. 116 00:06:20,880 --> 00:06:25,000 Speaker 6: So if Tesla is saying macro is not looking good, 117 00:06:25,560 --> 00:06:28,800 Speaker 6: that doesn't bode very well for ad spending. At the 118 00:06:28,880 --> 00:06:34,440 Speaker 6: same time, these companies have much easier comps going into 119 00:06:34,520 --> 00:06:37,800 Speaker 6: this quarter because the last four quarters weren't that great either. 120 00:06:38,440 --> 00:06:42,320 Speaker 6: So my sense is, given what we have heard so far, 121 00:06:42,560 --> 00:06:45,520 Speaker 6: they should at least have an inline quota or at 122 00:06:45,640 --> 00:06:49,320 Speaker 6: least better than expected given the easier comps I alluded to, 123 00:06:49,520 --> 00:06:52,640 Speaker 6: and the ad pricing has gotten better from the data 124 00:06:52,680 --> 00:06:54,200 Speaker 6: points that we've gutted so far. 125 00:06:54,400 --> 00:06:57,640 Speaker 1: Yeah, we had those bang up results from Netflix. Does 126 00:06:57,680 --> 00:07:01,080 Speaker 1: that give us any indication what we can expect here? 127 00:07:01,520 --> 00:07:01,719 Speaker 3: Yeah? 128 00:07:01,880 --> 00:07:09,120 Speaker 6: So, Actually Alphabet has exposure to YouTube where which is 129 00:07:09,320 --> 00:07:12,520 Speaker 6: very similar to Netflix in terms of the subscription side 130 00:07:12,560 --> 00:07:15,120 Speaker 6: of the business as well as ads, is much bigger 131 00:07:15,320 --> 00:07:19,400 Speaker 6: and what Netflix said last night was they were able 132 00:07:19,440 --> 00:07:23,360 Speaker 6: to raise prices without really causing churn as well as 133 00:07:23,440 --> 00:07:26,360 Speaker 6: they saw some lift in their ads business. Albeit it's 134 00:07:26,520 --> 00:07:29,720 Speaker 6: very small for Netflix, but clearly the read through is 135 00:07:30,440 --> 00:07:34,360 Speaker 6: YouTube numbers should look solid when Alphabet reports. And now 136 00:07:34,440 --> 00:07:38,520 Speaker 6: on the cloud side, another of alphabet segments, the tailwinds 137 00:07:38,520 --> 00:07:42,440 Speaker 6: are their generative AI investments should help Alphabet Cloud segment 138 00:07:42,520 --> 00:07:45,920 Speaker 6: actually to post better than expected print. 139 00:07:45,840 --> 00:07:50,600 Speaker 1: All right with Punam we discussed generitive AI. How does 140 00:07:50,680 --> 00:07:53,520 Speaker 1: it apply here? I mean specifically, give me a good example. 141 00:07:53,760 --> 00:07:59,200 Speaker 6: So Alphabet has launched their own copilots for their productivity suite, 142 00:07:59,320 --> 00:08:02,880 Speaker 6: so these are subscription based offerings as well as the 143 00:08:03,120 --> 00:08:06,360 Speaker 6: entire training of these large aguage models is done on 144 00:08:06,520 --> 00:08:09,400 Speaker 6: the cloud and Alphabet we know Google Cloud is one 145 00:08:09,440 --> 00:08:12,480 Speaker 6: of the most formidable players when it comes to generative 146 00:08:12,480 --> 00:08:13,160 Speaker 6: AI training. 147 00:08:13,400 --> 00:08:15,360 Speaker 1: What are large language models? 148 00:08:16,480 --> 00:08:20,760 Speaker 6: So in a nutshell, these are you know, models that 149 00:08:20,960 --> 00:08:24,880 Speaker 6: can do a lot of things, you know, from being 150 00:08:24,960 --> 00:08:30,040 Speaker 6: a chat bot to doing language translations, to helping you 151 00:08:30,120 --> 00:08:33,600 Speaker 6: with your searches and really you know, with the chat 152 00:08:33,679 --> 00:08:38,319 Speaker 6: gipt wave catching on this year, this has become a 153 00:08:38,400 --> 00:08:40,319 Speaker 6: big market. In fact, we think it's going to be 154 00:08:40,360 --> 00:08:42,679 Speaker 6: a trillion dollar market over the next ten years. In 155 00:08:42,800 --> 00:08:46,160 Speaker 6: terms of influencing how we use our software, this will 156 00:08:46,200 --> 00:08:50,120 Speaker 6: be a feature in everything we interact with around us 157 00:08:50,160 --> 00:08:52,600 Speaker 6: with a software, websites, apps. 158 00:08:53,200 --> 00:08:56,840 Speaker 1: Yeah, every time I use my free YouTube looking at 159 00:08:56,920 --> 00:08:59,280 Speaker 1: videos on that, it asked me if I want to 160 00:08:59,320 --> 00:09:02,960 Speaker 1: sign up or the paid subscription service? Is that really 161 00:09:03,000 --> 00:09:05,120 Speaker 1: a driver a lot of people going to that? I 162 00:09:05,240 --> 00:09:05,520 Speaker 1: think so. 163 00:09:06,200 --> 00:09:08,600 Speaker 6: YouTube, just to give you some numbers, has a two 164 00:09:08,679 --> 00:09:12,480 Speaker 6: point seven billion monthly active user base. Compare that to Netflix, 165 00:09:12,520 --> 00:09:15,640 Speaker 6: they reported two hundred and fifty million subscribers and out 166 00:09:15,679 --> 00:09:18,120 Speaker 6: of that two point seven billion for YouTube they have 167 00:09:18,280 --> 00:09:22,720 Speaker 6: about eighty to ninety million paid subscribers. And now they 168 00:09:22,760 --> 00:09:25,920 Speaker 6: have launched YouTube TV, they're showing live sports content the 169 00:09:26,040 --> 00:09:29,959 Speaker 6: NFL Sunday Ticket So clearly things are moving in their 170 00:09:30,040 --> 00:09:33,880 Speaker 6: direction and the subscription revenue should come out pretty strong. 171 00:09:34,240 --> 00:09:36,840 Speaker 1: What's specific to meta platforms earnings? 172 00:09:36,840 --> 00:09:40,120 Speaker 6: Are you looking at the reality lab losses? They keep 173 00:09:40,200 --> 00:09:44,120 Speaker 6: saying every time the street models lower losses, they say, 174 00:09:44,320 --> 00:09:46,120 Speaker 6: we are still spending on metaverse and. 175 00:09:46,240 --> 00:09:48,880 Speaker 1: Clearly that they still don't know what metaverse is. 176 00:09:49,040 --> 00:09:52,720 Speaker 6: Yes, so they are. They've just released a third version 177 00:09:52,800 --> 00:09:57,480 Speaker 6: of their Quest headset and they're still investing heavily in it. 178 00:09:57,679 --> 00:10:00,360 Speaker 6: At the same time, I think Meta has turned around 179 00:10:00,440 --> 00:10:04,480 Speaker 6: in the sense they've done some effective cost cutting as 180 00:10:04,520 --> 00:10:08,480 Speaker 6: well as the ad site has rebounded. And look, they 181 00:10:08,559 --> 00:10:11,199 Speaker 6: are a formidable player in the large anguid models and 182 00:10:11,280 --> 00:10:12,679 Speaker 6: generateor AI space as well. 183 00:10:13,040 --> 00:10:17,040 Speaker 1: Bloomberg Intelligence Senior Technology analyst man Deep sing Man Deep 184 00:10:17,080 --> 00:10:18,959 Speaker 1: thanks a lot for stop off. I appreciate it. And 185 00:10:19,200 --> 00:10:21,560 Speaker 1: just to head on Bloomberg day Break Weekend the future 186 00:10:21,640 --> 00:10:24,679 Speaker 1: of the interest rates, we bring you a conversation with 187 00:10:24,840 --> 00:10:28,400 Speaker 1: Federal Reserve Chair J. Pllell. I'm John Tucker, and this 188 00:10:28,800 --> 00:10:43,280 Speaker 1: is Bloomberg. This is Bloomberg day Break Weekend, our global 189 00:10:43,320 --> 00:10:45,319 Speaker 1: look a heap of the top stories for investors in 190 00:10:45,360 --> 00:10:47,640 Speaker 1: the coming week. I'm John Tucker in New York. Up 191 00:10:47,720 --> 00:10:51,280 Speaker 1: later in the program reaction from Europe involving the conflict 192 00:10:51,360 --> 00:10:53,480 Speaker 1: in the Middle East. But first we're going to turn 193 00:10:53,520 --> 00:10:56,040 Speaker 1: our attention to the economy. The Federal Reserve currently in 194 00:10:56,160 --> 00:10:59,920 Speaker 1: its quiet period until November three, but our David Weston 195 00:11:00,080 --> 00:11:02,360 Speaker 1: going up with the fedshere J Powell right before that 196 00:11:02,480 --> 00:11:05,719 Speaker 1: quiet period began and got his thoughts on the economy 197 00:11:05,880 --> 00:11:07,000 Speaker 1: and the interest rates. 198 00:11:07,320 --> 00:11:09,559 Speaker 7: We all write down our estimates of the longer run 199 00:11:09,760 --> 00:11:12,679 Speaker 7: neutral rate every quarter in the Summary of Economic Projections, 200 00:11:12,760 --> 00:11:16,439 Speaker 7: and that's based on models. It's based on also looking 201 00:11:16,520 --> 00:11:20,000 Speaker 7: out the window and including lags, thinking how are our 202 00:11:20,040 --> 00:11:23,040 Speaker 7: current rates affecting the economy. So the evidence of your 203 00:11:23,080 --> 00:11:26,680 Speaker 7: eyes is that the economy is handling much higher rates 204 00:11:26,760 --> 00:11:31,360 Speaker 7: at least for now, without difficulties. So notionally, that might 205 00:11:31,480 --> 00:11:33,760 Speaker 7: tell you that the neutral rate has risen, or it 206 00:11:33,840 --> 00:11:36,200 Speaker 7: may just tell you that we haven't had rates high 207 00:11:36,280 --> 00:11:39,199 Speaker 7: enough for long enough. You're right, though, but you know, 208 00:11:40,160 --> 00:11:43,240 Speaker 7: we have models for everything, we have formulas for everything. Ultimately, 209 00:11:43,280 --> 00:11:46,760 Speaker 7: as a practitioner, we have to, you know, focused on 210 00:11:46,880 --> 00:11:49,960 Speaker 7: what the economy is telling us, even taking lags into account. 211 00:11:50,200 --> 00:11:53,160 Speaker 7: What's it telling us. Does it feel like policy is 212 00:11:53,200 --> 00:11:54,080 Speaker 7: too tight right now? 213 00:11:54,280 --> 00:11:55,160 Speaker 1: I would have to say no. 214 00:11:55,760 --> 00:11:57,720 Speaker 7: I think the evidence is not that policy is too 215 00:11:57,800 --> 00:12:01,680 Speaker 7: tight right now. And word five five and a quarter 216 00:12:01,679 --> 00:12:02,520 Speaker 7: to five and a half percent. 217 00:12:02,800 --> 00:12:06,079 Speaker 1: That was Jay Powell speaking with Bloomberg's David Weston late 218 00:12:06,160 --> 00:12:08,280 Speaker 1: last week, and we're pleased to welcome David right now 219 00:12:08,320 --> 00:12:11,800 Speaker 1: in the studio for more on his interview with a chairman. 220 00:12:12,320 --> 00:12:16,439 Speaker 1: My impression with Palell's speech preceding you to the Economic 221 00:12:16,520 --> 00:12:18,800 Speaker 1: Club of New York was that it was, And I'll 222 00:12:18,880 --> 00:12:22,360 Speaker 1: use the phrase that our interest rates strategist Tira Jersey 223 00:12:22,440 --> 00:12:25,920 Speaker 1: used kind of wishy washy, see a wishy washy kind 224 00:12:25,960 --> 00:12:26,199 Speaker 1: of guy. 225 00:12:26,320 --> 00:12:28,679 Speaker 8: Well, I'm not sure he would embrace that description. But 226 00:12:28,880 --> 00:12:32,880 Speaker 8: one man's wishy washy may be another man's optionality and saying, 227 00:12:32,960 --> 00:12:34,800 Speaker 8: we don't know a lot of things right now. We 228 00:12:34,960 --> 00:12:37,040 Speaker 8: have to be able to move in different directions. And 229 00:12:37,160 --> 00:12:40,480 Speaker 8: he clearly is incremental. He wants to take it data 230 00:12:40,520 --> 00:12:43,199 Speaker 8: point by data points, see what comes in. Doesn't want 231 00:12:43,200 --> 00:12:46,520 Speaker 8: to commit to early. He's not a grand theorist. I 232 00:12:46,600 --> 00:12:47,559 Speaker 8: think he would admit to that. 233 00:12:49,040 --> 00:12:51,160 Speaker 1: You know, I'm more than happy to have other people 234 00:12:51,280 --> 00:12:53,240 Speaker 1: do my work for me and kick up my feet 235 00:12:53,360 --> 00:12:53,880 Speaker 1: on the desk. 236 00:12:54,360 --> 00:12:54,559 Speaker 6: Is J. 237 00:12:54,800 --> 00:12:57,680 Speaker 1: Powell able to kick up his feet on his desk 238 00:12:57,760 --> 00:13:01,520 Speaker 1: at the Federal Reserve in Washington as interest rates rise 239 00:13:01,640 --> 00:13:04,240 Speaker 1: and the bond market might be doing some of the 240 00:13:04,320 --> 00:13:05,720 Speaker 1: work for the Federal Reserve. 241 00:13:06,000 --> 00:13:08,880 Speaker 8: Well, we talked to you about that specifically, whether, in fact, 242 00:13:09,000 --> 00:13:11,920 Speaker 8: particularly raising the yields in the longer end of the curve, 243 00:13:12,080 --> 00:13:14,040 Speaker 8: we're really doing some of his work for him. And 244 00:13:14,280 --> 00:13:16,640 Speaker 8: when pressed, he allowed as how, on the margin, as 245 00:13:16,720 --> 00:13:18,920 Speaker 8: he put it, on the margin, it reduces some of 246 00:13:18,960 --> 00:13:21,959 Speaker 8: the pressure to keep interest rates going up. At the 247 00:13:22,000 --> 00:13:24,959 Speaker 8: same time, he thinks inflation is coming down, perhaps a 248 00:13:25,000 --> 00:13:26,959 Speaker 8: little more slowly than he would have thought it is 249 00:13:27,000 --> 00:13:29,120 Speaker 8: coming down. At the same time, the economy, as you know, John, 250 00:13:29,240 --> 00:13:32,880 Speaker 8: is just really charging ahead, which is I think a conundrum. 251 00:13:32,920 --> 00:13:35,160 Speaker 8: But he says, look, it's good news at least so far. 252 00:13:35,480 --> 00:13:38,040 Speaker 1: Yeah, you know, it's just I just can't believe the figures, 253 00:13:38,120 --> 00:13:41,520 Speaker 1: especially when it comes to consumer spending. I suppose a 254 00:13:41,600 --> 00:13:44,800 Speaker 1: lot of this is left over from the pandemic that 255 00:13:45,240 --> 00:13:48,360 Speaker 1: we have pent up spending. Did he address that at 256 00:13:48,400 --> 00:13:51,640 Speaker 1: all the reasons behind why the economy and especially the 257 00:13:51,760 --> 00:13:54,560 Speaker 1: US consumer is just so darn strong at this point. 258 00:13:54,760 --> 00:13:57,560 Speaker 8: He certainly said that there were more savings than they 259 00:13:57,600 --> 00:13:58,320 Speaker 8: had understood. 260 00:13:58,640 --> 00:13:59,360 Speaker 1: That was his prize. 261 00:13:59,400 --> 00:14:01,600 Speaker 8: They had more dry powder, if you will, to spend 262 00:14:01,679 --> 00:14:03,839 Speaker 8: down for the consumer that they've really kicked in. He 263 00:14:03,920 --> 00:14:05,959 Speaker 8: also suggested that perhaps part of it is just a 264 00:14:06,040 --> 00:14:08,400 Speaker 8: pent up demand because we were cooped up for so long, 265 00:14:08,720 --> 00:14:10,679 Speaker 8: and so we're coming out, whether it's travel or its 266 00:14:10,760 --> 00:14:14,920 Speaker 8: other experiences, to really spend money. He also suggested that 267 00:14:15,120 --> 00:14:17,439 Speaker 8: in fact, we will see some slowdown and that's not 268 00:14:17,559 --> 00:14:20,120 Speaker 8: necessarily a recession. I'm not saying that, but we will 269 00:14:20,160 --> 00:14:21,960 Speaker 8: see some slow down and probably as we get into 270 00:14:21,960 --> 00:14:22,640 Speaker 8: twenty twenty four. 271 00:14:22,920 --> 00:14:26,960 Speaker 1: A credibility is so important at this juncture. And just 272 00:14:27,040 --> 00:14:29,040 Speaker 1: to tell everybody just to go back in time just 273 00:14:29,120 --> 00:14:31,920 Speaker 1: a bit. It was a time when the United States 274 00:14:32,000 --> 00:14:35,480 Speaker 1: dollar was backed up by gold, something really credible you 275 00:14:35,520 --> 00:14:38,160 Speaker 1: could put your hands on. Then along came the Nixon 276 00:14:38,200 --> 00:14:41,400 Speaker 1: administration and they sort of gutted the Breton Woods Agreement 277 00:14:41,800 --> 00:14:44,520 Speaker 1: where there was a gold standard, and then you had 278 00:14:44,720 --> 00:14:47,480 Speaker 1: the US Central Bank had to come in and that 279 00:14:47,760 --> 00:14:50,640 Speaker 1: had to be the credible source to back everything up. 280 00:14:51,040 --> 00:14:53,520 Speaker 1: That's kind of the history of why it's so important. 281 00:14:54,280 --> 00:14:57,520 Speaker 1: Is j Pal in your sense, a credible guy? And 282 00:14:57,680 --> 00:15:01,040 Speaker 1: is the institution as we know it today credible institution? 283 00:15:01,600 --> 00:15:03,840 Speaker 8: Probably one of the most important questions there is in 284 00:15:03,880 --> 00:15:06,480 Speaker 8: the economy today, John and I guess I would say 285 00:15:06,600 --> 00:15:09,760 Speaker 8: time will tell. Thus far, I think he's been fine. 286 00:15:10,000 --> 00:15:11,520 Speaker 8: One of the issues though, I think John and I 287 00:15:11,680 --> 00:15:13,800 Speaker 8: did ask him about this is do you have as 288 00:15:13,880 --> 00:15:16,280 Speaker 8: much control over the economy as we thought you did. 289 00:15:16,800 --> 00:15:19,200 Speaker 8: There are some people who indicate. Larrie Summers has said 290 00:15:19,200 --> 00:15:21,400 Speaker 8: this to us that because of the so called terming 291 00:15:21,480 --> 00:15:23,880 Speaker 8: out of the debt, both corporate and household, that is 292 00:15:23,920 --> 00:15:26,200 Speaker 8: to say, when interest rates were zero or close to it, 293 00:15:26,320 --> 00:15:29,360 Speaker 8: people took a lot longer term debt and as a result, 294 00:15:29,480 --> 00:15:31,960 Speaker 8: when they raise intertrace now a lot of people and 295 00:15:32,000 --> 00:15:35,040 Speaker 8: corporations are not directly affected because they got their money 296 00:15:35,080 --> 00:15:37,480 Speaker 8: locked up for a while. And I asked, is that 297 00:15:37,680 --> 00:15:40,280 Speaker 8: a real issue. He said he thinks they still have 298 00:15:40,680 --> 00:15:43,520 Speaker 8: effect with respect to interest rates, but he allowed, as 299 00:15:43,600 --> 00:15:45,680 Speaker 8: how that is something of a change in the economy. 300 00:15:45,880 --> 00:15:49,600 Speaker 1: They've got this target of two percent inflation in the 301 00:15:49,720 --> 00:15:53,960 Speaker 1: US economy. David, I have no idea where that number 302 00:15:54,160 --> 00:15:57,720 Speaker 1: came from. Are they really sticking to that or can 303 00:15:58,080 --> 00:15:59,680 Speaker 1: that sort of fluctuate? 304 00:16:00,360 --> 00:16:02,280 Speaker 8: If memory is serious. I think it came from New Zealand. 305 00:16:02,360 --> 00:16:04,440 Speaker 8: Originally New Zealand said the band came up with that, 306 00:16:04,520 --> 00:16:07,040 Speaker 8: as I recall, And that's a good question. But I 307 00:16:07,120 --> 00:16:10,240 Speaker 8: think important question is not should it be two percent? 308 00:16:10,720 --> 00:16:12,800 Speaker 8: But if they change it at this point, does it 309 00:16:13,000 --> 00:16:14,360 Speaker 8: do more damage than good. 310 00:16:14,600 --> 00:16:18,120 Speaker 1: There's this thing we call the neutral rate, the rate 311 00:16:18,240 --> 00:16:21,040 Speaker 1: that the failed reserve wants. That would no longer be 312 00:16:21,600 --> 00:16:25,760 Speaker 1: contractionary for the economy and would no longer stimulate the economy. 313 00:16:26,040 --> 00:16:29,280 Speaker 1: Does he give any indication of does he have any 314 00:16:29,360 --> 00:16:30,280 Speaker 1: idea where that should be? 315 00:16:30,480 --> 00:16:33,200 Speaker 8: He calls it the long term equilibrium rate. That's what 316 00:16:33,240 --> 00:16:35,320 Speaker 8: you're talking about, and some people call it our star, right, 317 00:16:35,520 --> 00:16:38,760 Speaker 8: that sort of number. And I asked him that flat out, 318 00:16:38,840 --> 00:16:41,600 Speaker 8: because back in twenty twenty, you remember, they changed their framework, 319 00:16:41,920 --> 00:16:45,320 Speaker 8: and he said he thought that that equilibrium rate had 320 00:16:45,400 --> 00:16:47,560 Speaker 8: come down to about one point eight from about two 321 00:16:47,560 --> 00:16:49,840 Speaker 8: point five. I asked him where he thought it was today. 322 00:16:50,160 --> 00:16:53,080 Speaker 8: He said he thought most people thought it was a 323 00:16:53,120 --> 00:16:56,240 Speaker 8: little under two. He's around two percent, he thinks, is 324 00:16:56,320 --> 00:16:56,680 Speaker 8: what it is? 325 00:16:56,880 --> 00:16:59,200 Speaker 1: What kind of a time frame? Does he have a 326 00:16:59,320 --> 00:17:02,880 Speaker 1: time frame or when we can see number one, the 327 00:17:03,600 --> 00:17:07,520 Speaker 1: true effects of the previous policy tightening taking effect. I 328 00:17:07,560 --> 00:17:11,040 Speaker 1: think it was Milton Friedman the University of Chicago who 329 00:17:11,119 --> 00:17:13,800 Speaker 1: came up with the phrase long and variable lags for 330 00:17:14,240 --> 00:17:16,560 Speaker 1: monetary policy, I eat the tightening. 331 00:17:16,920 --> 00:17:19,200 Speaker 8: I brought that up with him quite specifically. I said, Okay, 332 00:17:19,359 --> 00:17:21,480 Speaker 8: long and variable we understand that how far are we 333 00:17:21,640 --> 00:17:23,960 Speaker 8: through those long and variable laves? Are we twenty five percent? 334 00:17:24,000 --> 00:17:26,720 Speaker 8: Are we fifty percent? He said, nobody can know. He 335 00:17:26,880 --> 00:17:29,840 Speaker 8: also said he thinks it's different than when Milton Friedman 336 00:17:29,920 --> 00:17:32,840 Speaker 8: came up with that phrase because Center Bank's now telegraph 337 00:17:32,920 --> 00:17:36,280 Speaker 8: so much more, and so it affects my financial conditions, 338 00:17:36,520 --> 00:17:38,960 Speaker 8: which is a way of tightening policy without actually raising rates. 339 00:17:39,000 --> 00:17:41,200 Speaker 8: So he said it may be different how long and 340 00:17:41,280 --> 00:17:44,439 Speaker 8: variable they are, but he refused to commit. And basically, 341 00:17:44,600 --> 00:17:46,240 Speaker 8: by the way, John I said, how can you set 342 00:17:46,320 --> 00:17:48,240 Speaker 8: monetary policy going forward if you do have a sense 343 00:17:48,280 --> 00:17:50,680 Speaker 8: of with your twenty five fifty seventy five percent way through? 344 00:17:50,840 --> 00:17:51,880 Speaker 8: He said, no, we'll wait and see. 345 00:17:52,119 --> 00:17:54,280 Speaker 1: Yeah, it used to be in the past where you 346 00:17:54,480 --> 00:17:58,480 Speaker 1: wouldn't see an immediate reaction in the markets at least, 347 00:17:59,400 --> 00:18:03,560 Speaker 1: but with the added transparency from the Federal Reserve, you 348 00:18:03,600 --> 00:18:07,159 Speaker 1: almost see it instantaneously in the markets. He addressed that 349 00:18:07,200 --> 00:18:07,760 Speaker 1: as well well. 350 00:18:07,760 --> 00:18:10,680 Speaker 8: The financial conditions clearly are doing part of the work 351 00:18:10,800 --> 00:18:13,679 Speaker 8: for him, and they very much are focused on financial 352 00:18:13,680 --> 00:18:15,919 Speaker 8: conditions in the extent of tightening. And certainly John obviously 353 00:18:16,040 --> 00:18:18,280 Speaker 8: came up with what's going on with bond yields because 354 00:18:18,320 --> 00:18:20,280 Speaker 8: we've had real tightening with the ten and the thirty. 355 00:18:20,400 --> 00:18:23,720 Speaker 8: What's happened with it? So and he recognizes that's an 356 00:18:23,720 --> 00:18:27,960 Speaker 8: important part of how they try to influence monetary policy is. 357 00:18:28,160 --> 00:18:30,879 Speaker 1: The transparency working for the Federal Reserve. I mean, you 358 00:18:31,000 --> 00:18:34,680 Speaker 1: remember from previous Fed chairman, you didn't know what the 359 00:18:34,720 --> 00:18:36,359 Speaker 1: hell they were talking about at times. 360 00:18:36,760 --> 00:18:38,040 Speaker 8: But he's come back a little bit from that. 361 00:18:38,160 --> 00:18:38,320 Speaker 1: Right. 362 00:18:39,200 --> 00:18:41,600 Speaker 8: At one point it was all about forward guidance, and 363 00:18:41,640 --> 00:18:43,520 Speaker 8: now he's a little more reluctant to give foreign guides. 364 00:18:43,640 --> 00:18:46,600 Speaker 8: It's not like the Greenspan opacity where you really, as 365 00:18:46,640 --> 00:18:48,359 Speaker 8: you say, he'd go up to Congress and you had 366 00:18:48,400 --> 00:18:50,800 Speaker 8: no idea what the man was saying. He certainly is 367 00:18:50,840 --> 00:18:53,359 Speaker 8: much more transparent than that. You have to put that together, 368 00:18:53,480 --> 00:18:55,680 Speaker 8: John once again with what you called wishy washy I 369 00:18:55,760 --> 00:18:58,520 Speaker 8: said optionality. He's taking it one step at a time. 370 00:18:58,880 --> 00:19:00,960 Speaker 8: We have to remember he is a lawyer like I'm 371 00:19:00,960 --> 00:19:03,160 Speaker 8: a lawyer, and listening to him talking to him, he's 372 00:19:03,160 --> 00:19:05,640 Speaker 8: a very smart man and you know, learn in hand. 373 00:19:05,720 --> 00:19:07,920 Speaker 8: The famous judge once said, if I get to write 374 00:19:07,920 --> 00:19:09,560 Speaker 8: the facts in the opinion, you can write anything you 375 00:19:09,600 --> 00:19:11,320 Speaker 8: want in the law because the facts are determined. I 376 00:19:11,400 --> 00:19:13,320 Speaker 8: think my impression of j. Powal, this is just me 377 00:19:13,440 --> 00:19:15,920 Speaker 8: talking now, is that he is that kind of lawyer 378 00:19:15,960 --> 00:19:18,359 Speaker 8: that he wants to take it fact by fact and 379 00:19:18,520 --> 00:19:20,679 Speaker 8: that will tell us where we're going. He doesn't come 380 00:19:20,760 --> 00:19:23,960 Speaker 8: in with a Cartesian theory like Descartes, a theory of 381 00:19:24,040 --> 00:19:25,080 Speaker 8: the case in advance. 382 00:19:25,840 --> 00:19:28,600 Speaker 1: Well, that wasn't wishy washy at all and very transparent. 383 00:19:28,800 --> 00:19:31,040 Speaker 1: David Weston, thanks a lot. I we appreciate it. Just 384 00:19:31,080 --> 00:19:34,000 Speaker 1: ahead on Bloomberg Daybreak weekend, we take you to Asia 385 00:19:34,119 --> 00:19:36,800 Speaker 1: and look at how China is trying to reinvigorate its 386 00:19:36,880 --> 00:19:40,639 Speaker 1: role on the global stage. I'm John Tucker. This is Bloomberg. 387 00:19:51,200 --> 00:19:53,280 Speaker 1: I'm John Tucker in New York with your global look 388 00:19:53,280 --> 00:19:55,680 Speaker 1: ahead of the top stories for investors in the coming week. 389 00:19:56,000 --> 00:19:58,920 Speaker 1: At the height of the Israel Gaza conflict and China's 390 00:19:59,040 --> 00:20:03,280 Speaker 1: economic slow to how is China trying to reinvigorate its 391 00:20:03,440 --> 00:20:06,400 Speaker 1: role on the global stage. To find out more, Let's 392 00:20:06,400 --> 00:20:09,200 Speaker 1: go to Bloomberg Daybreak Asia co host Brian Curtis. 393 00:20:09,600 --> 00:20:12,560 Speaker 2: John. If last week's Belton Road Forum told us anything, 394 00:20:13,000 --> 00:20:16,440 Speaker 2: it's that despite recent issues, China still wants to play 395 00:20:16,480 --> 00:20:19,600 Speaker 2: a role on the global stage, the leading role, in fact, 396 00:20:19,720 --> 00:20:22,680 Speaker 2: of an alternative block to the West. Never mind that 397 00:20:22,760 --> 00:20:25,399 Speaker 2: its hands are full with a property crisis with a 398 00:20:25,400 --> 00:20:28,679 Speaker 2: stumbling economy, or that his Belt and Road initiative has 399 00:20:28,760 --> 00:20:32,960 Speaker 2: garnered some charges of China being labeled an irresponsible lender. 400 00:20:33,480 --> 00:20:36,959 Speaker 2: China sees the Big Infrastructure project as a big success, 401 00:20:37,400 --> 00:20:40,879 Speaker 2: and Russian President Vladimir Putin degrees. I caught up with 402 00:20:41,040 --> 00:20:45,760 Speaker 2: Daniel ten Kate Bloomberg Asia Ekogov Executive editor and asked 403 00:20:45,840 --> 00:20:49,920 Speaker 2: him how she and Putin used the bri to move forward. First, 404 00:20:50,400 --> 00:20:52,680 Speaker 2: from the perspective of Vladimir Putin. 405 00:20:52,560 --> 00:20:55,800 Speaker 9: China is a safe space for him to show that 406 00:20:55,960 --> 00:20:59,600 Speaker 9: he's still embraced by countries, particularly in the Global South. 407 00:21:00,040 --> 00:21:03,320 Speaker 9: He needs that diplomatic support to fight the isolation that 408 00:21:03,480 --> 00:21:07,760 Speaker 9: the US and its allies are trying to impose on Putsin. 409 00:21:08,520 --> 00:21:12,040 Speaker 9: For she, he sees Russia as a key diplomatic partner, 410 00:21:12,200 --> 00:21:16,359 Speaker 9: a way to fight back against the US worldview and 411 00:21:16,560 --> 00:21:20,480 Speaker 9: US rules. And this is particularly in the context of Taiwan. 412 00:21:21,359 --> 00:21:25,800 Speaker 2: Bloomberg's Dan ten kid Well Alan Wong Bloomberg, China Eco 413 00:21:25,880 --> 00:21:28,480 Speaker 2: guv Editor joins us for a little bit more in 414 00:21:28,520 --> 00:21:31,720 Speaker 2: the way of insights on where China goes next. Alan, 415 00:21:31,760 --> 00:21:34,639 Speaker 2: thanks very much for being with us. So I'm wondering 416 00:21:34,920 --> 00:21:38,760 Speaker 2: in the coming week, might we see more efforts by 417 00:21:38,960 --> 00:21:43,080 Speaker 2: China to mediate in some way in the Israel Hamas conflict. 418 00:21:43,480 --> 00:21:45,399 Speaker 10: China has always been trying to play it a role 419 00:21:45,480 --> 00:21:48,040 Speaker 10: of the peacemaker. It has proposed some sort of pre 420 00:21:48,160 --> 00:21:52,800 Speaker 10: peace conference between Palestine and Israel for many decades without 421 00:21:52,840 --> 00:21:57,040 Speaker 10: great success, and it will try to say things that 422 00:21:57,960 --> 00:22:02,760 Speaker 10: signal its intention to be mediator, but based on our experience, 423 00:22:03,200 --> 00:22:06,399 Speaker 10: that's unlikely to go very far. But China wants to 424 00:22:06,480 --> 00:22:10,439 Speaker 10: position itself as a country that could bring rivals together, 425 00:22:10,640 --> 00:22:15,680 Speaker 10: unlike the US. Yet, one of China's greatest diplomatic achievements 426 00:22:15,720 --> 00:22:19,480 Speaker 10: in recent years is helping broker a deton between Saudi 427 00:22:19,480 --> 00:22:23,359 Speaker 10: Arabia and Iran. And it's definitely going to try to 428 00:22:23,440 --> 00:22:25,680 Speaker 10: do the same thing again if it can between the 429 00:22:25,800 --> 00:22:29,840 Speaker 10: Palestinians and Israelis. But then that's extremely unlikely because it 430 00:22:29,920 --> 00:22:32,480 Speaker 10: has tried to do the same over the last couple 431 00:22:32,520 --> 00:22:33,879 Speaker 10: of decades with no success. 432 00:22:34,680 --> 00:22:36,639 Speaker 2: We know that the two heads of state had in 433 00:22:36,760 --> 00:22:40,880 Speaker 2: depth discussions, some of which was very private, and obviously 434 00:22:41,119 --> 00:22:44,879 Speaker 2: they both made speeches. Do we know how they are 435 00:22:44,960 --> 00:22:48,720 Speaker 2: approaching the idea of anything together in the Middle East? 436 00:22:48,840 --> 00:22:51,960 Speaker 10: I mean, China has for decades framed itself as an 437 00:22:52,000 --> 00:22:55,480 Speaker 10: ally of the Palestinian people. These ties go back many 438 00:22:55,560 --> 00:23:00,760 Speaker 10: decades and back to the mal Era. Though has moderated 439 00:23:00,880 --> 00:23:03,720 Speaker 10: somewhat in the recent years, it will not change his 440 00:23:03,800 --> 00:23:09,280 Speaker 10: position on this sympathy. But in terms of what she 441 00:23:09,520 --> 00:23:11,720 Speaker 10: and Putin can really do on the ground, I don't 442 00:23:11,760 --> 00:23:15,080 Speaker 10: think there's much they can beyond rhetoric, and the most 443 00:23:15,200 --> 00:23:17,159 Speaker 10: that China would say right now at this stage is 444 00:23:17,240 --> 00:23:20,159 Speaker 10: that they want both parties to come to the negotiating 445 00:23:20,240 --> 00:23:24,080 Speaker 10: table and stop any hostilities. But realistic there really isn't 446 00:23:24,160 --> 00:23:26,879 Speaker 10: much that China would do or I mean, there's no 447 00:23:27,200 --> 00:23:30,840 Speaker 10: reason for China to pressure Putin to persuade its proxies, 448 00:23:31,520 --> 00:23:35,960 Speaker 10: or Iran to pressure has Bola to reduce his support 449 00:23:36,040 --> 00:23:39,800 Speaker 10: for hamas this is unlikely and this will also undercut 450 00:23:40,280 --> 00:23:41,680 Speaker 10: the China Russia partnership. 451 00:23:41,800 --> 00:23:43,440 Speaker 2: We talked a little bit about the Built and Road 452 00:23:43,520 --> 00:23:48,600 Speaker 2: Initiative as part of China setting up institutions to stand 453 00:23:48,720 --> 00:23:52,000 Speaker 2: up to the West, primarily to the United States. In 454 00:23:52,119 --> 00:23:55,639 Speaker 2: your view, how successful has China been in building up 455 00:23:55,680 --> 00:24:00,600 Speaker 2: some of these institutions, including BLI and including BRICK and others. 456 00:24:02,119 --> 00:24:06,080 Speaker 10: The b o I is a loose network of bilateral 457 00:24:06,160 --> 00:24:10,280 Speaker 10: trade agreement and infrastructure projects, and it's never been formalized 458 00:24:10,359 --> 00:24:14,320 Speaker 10: as like a centralized institution. In fact, people dispute over 459 00:24:15,119 --> 00:24:18,040 Speaker 10: what really counts as the BI projects, and then there 460 00:24:18,080 --> 00:24:21,480 Speaker 10: are projects that predate the br that are now counted 461 00:24:21,520 --> 00:24:24,640 Speaker 10: as br projects. So that goes to show that it's 462 00:24:24,720 --> 00:24:28,119 Speaker 10: not a very organized investment scheme. But then there are 463 00:24:28,160 --> 00:24:30,640 Speaker 10: attempts by China or it's part to try to turn 464 00:24:30,680 --> 00:24:34,520 Speaker 10: it into something more institutionalized. For example, in the summit 465 00:24:34,600 --> 00:24:38,760 Speaker 10: this week, Csinking announced the launch of a secretariat. We 466 00:24:38,880 --> 00:24:41,399 Speaker 10: don't have any details about what it's going to do, 467 00:24:41,560 --> 00:24:45,760 Speaker 10: but it sounds like one step in formalizing the br 468 00:24:45,840 --> 00:24:48,439 Speaker 10: I initiative going forward. 469 00:24:48,840 --> 00:24:52,119 Speaker 2: Something that is, i suppose not exactly part of br I, 470 00:24:52,280 --> 00:24:56,560 Speaker 2: but the power of Siberia to the gas pipeline that 471 00:24:56,720 --> 00:25:00,800 Speaker 2: is supposed to bring gas from from Russia in to China. 472 00:25:01,359 --> 00:25:02,760 Speaker 2: A little bit of progress. 473 00:25:02,400 --> 00:25:04,840 Speaker 10: There probably we know that Putting and she spoke on 474 00:25:04,880 --> 00:25:06,879 Speaker 10: a sideline, and then this is a great opportunity for 475 00:25:07,000 --> 00:25:10,040 Speaker 10: them to talk to hash out the details of those deals. 476 00:25:10,160 --> 00:25:14,520 Speaker 10: And the pipeline itself is a win win solution for 477 00:25:14,680 --> 00:25:17,840 Speaker 10: both China, which is in need of energy and for Putin, 478 00:25:17,880 --> 00:25:20,240 Speaker 10: which is in need of someone to buy the oil 479 00:25:20,400 --> 00:25:23,720 Speaker 10: and gas. So I can't see why it wouldn't move 480 00:25:23,800 --> 00:25:25,720 Speaker 10: forward more briskly after this. 481 00:25:26,000 --> 00:25:28,600 Speaker 2: Earlier I asked Dan ten Kate about what he saw 482 00:25:28,800 --> 00:25:31,679 Speaker 2: as the main issues in the China Russia partnership. 483 00:25:32,080 --> 00:25:35,840 Speaker 9: Fundamentally, they have different views on the world. Putin has 484 00:25:35,920 --> 00:25:38,760 Speaker 9: been known as sort of a rule breaker, someone who's 485 00:25:38,840 --> 00:25:42,399 Speaker 9: not scared to militarily get involved in Syria. You know, 486 00:25:42,520 --> 00:25:45,159 Speaker 9: we saw what happened in Ukraine that put China in 487 00:25:45,160 --> 00:25:49,000 Speaker 9: a very awkward position. China, and she in particular still 488 00:25:49,440 --> 00:25:52,159 Speaker 9: very much wants to be part of the global system 489 00:25:52,320 --> 00:25:55,000 Speaker 9: and see itself as one of the leaders of the 490 00:25:55,080 --> 00:25:57,120 Speaker 9: world that has some respect. 491 00:25:57,040 --> 00:25:59,000 Speaker 2: And alan your thoughts on those issues. 492 00:25:59,440 --> 00:26:04,719 Speaker 10: There's extra pressure on China to distance itself from Russia, 493 00:26:04,960 --> 00:26:08,040 Speaker 10: which is unlikely because China has declared a no limits 494 00:26:08,160 --> 00:26:12,760 Speaker 10: friendship a partnership with Russia and has reaffirmed it over 495 00:26:12,880 --> 00:26:16,440 Speaker 10: time despite the Ukraine invasion. We know that lots of 496 00:26:16,560 --> 00:26:21,600 Speaker 10: EU leaders shunned the Beltan Row Forum this week because 497 00:26:21,680 --> 00:26:25,960 Speaker 10: of this position that Beijing has taken. But China knows 498 00:26:26,040 --> 00:26:29,080 Speaker 10: this cost well and it deliberately went ahead with it 499 00:26:29,240 --> 00:26:32,000 Speaker 10: and giving putting the platform in the Great Hall of 500 00:26:32,080 --> 00:26:35,440 Speaker 10: the People, so it knows what he's doing and for 501 00:26:35,560 --> 00:26:38,480 Speaker 10: the time being, there's no reason for China to change. 502 00:26:38,800 --> 00:26:41,399 Speaker 10: It's a friendship or partnership with Russia. 503 00:26:41,520 --> 00:26:42,360 Speaker 1: In fact, she's. 504 00:26:42,160 --> 00:26:47,840 Speaker 10: Thinping hailed the profound friendship between China and Russia and 505 00:26:47,960 --> 00:26:51,800 Speaker 10: his personal friendship with Putin, whom he has met dozens 506 00:26:51,840 --> 00:26:54,640 Speaker 10: of times in the last ten years, and that's not going. 507 00:26:54,640 --> 00:26:58,120 Speaker 2: To change now. China would say that it's the US 508 00:26:58,320 --> 00:27:02,119 Speaker 2: that is the aggressor, and that the military, the size, 509 00:27:02,200 --> 00:27:04,879 Speaker 2: and the fact that the United States has kind of 510 00:27:05,320 --> 00:27:07,600 Speaker 2: helped design the world order for so many years since 511 00:27:07,640 --> 00:27:10,560 Speaker 2: the Second World War, that that is one of the 512 00:27:10,640 --> 00:27:13,960 Speaker 2: reasons why this kind of loose grouping of a block 513 00:27:14,080 --> 00:27:17,240 Speaker 2: to stand up against the West exists. But you know, 514 00:27:17,320 --> 00:27:19,440 Speaker 2: we look back at the block that used to be 515 00:27:19,560 --> 00:27:23,840 Speaker 2: the Soviet Union and in essence it bankrupted itself trying 516 00:27:23,880 --> 00:27:26,200 Speaker 2: to stand up to the West. Is there any danger 517 00:27:26,280 --> 00:27:28,080 Speaker 2: that China is going down that road as well? 518 00:27:29,560 --> 00:27:33,239 Speaker 10: The pandemic and the economics slowed down in China are 519 00:27:33,400 --> 00:27:38,400 Speaker 10: hurting China's ability to find money to land to its 520 00:27:38,840 --> 00:27:43,000 Speaker 10: developing country partners but the bigger problem here is that 521 00:27:43,400 --> 00:27:46,960 Speaker 10: those partners are finally harder to borrow money because of 522 00:27:47,359 --> 00:27:50,600 Speaker 10: the interest rate environment and also because of the impact 523 00:27:50,640 --> 00:27:54,960 Speaker 10: of the pandemic on their domestic economies. The greatest threat 524 00:27:55,119 --> 00:27:59,119 Speaker 10: I think will come from the developing world inability to 525 00:27:59,640 --> 00:28:05,440 Speaker 10: continue to grow economically, not on China's ability to land money. Really, 526 00:28:06,119 --> 00:28:10,119 Speaker 10: and China also is smart enough that it's no longer 527 00:28:10,280 --> 00:28:14,240 Speaker 10: pursuing the kind of big infrastructure projects that Belton Road 528 00:28:14,440 --> 00:28:17,840 Speaker 10: Initiative was initially known for, and it is kind of 529 00:28:18,240 --> 00:28:22,720 Speaker 10: pivoting to a small is Beautiful strategy this year, focusing 530 00:28:22,960 --> 00:28:27,880 Speaker 10: on smaller projects that are more efficient, that are better, 531 00:28:28,440 --> 00:28:33,520 Speaker 10: you know, investments, instead of flashy new airport, railroads. 532 00:28:33,960 --> 00:28:37,520 Speaker 2: Alan, thank you for joining us, Alan Wong, Bloomberg China 533 00:28:37,720 --> 00:28:41,520 Speaker 2: ecogov editor. I'm Brian Curtis, along with Doug Prisner. You 534 00:28:41,600 --> 00:28:45,040 Speaker 2: can catch us every weekday here for Bloomberg Daybreak Asia, 535 00:28:45,320 --> 00:28:48,320 Speaker 2: beginning at six am in Hong Kong and six pm 536 00:28:48,640 --> 00:28:49,440 Speaker 2: on Wall Street. 537 00:28:49,720 --> 00:28:52,680 Speaker 1: John all right, thanks to Bloomberg Daybreak Asia co host 538 00:28:52,760 --> 00:28:56,280 Speaker 1: Brian Curtis, and just ahead here on Bloomberg Daybreak weekend, 539 00:28:56,560 --> 00:28:59,600 Speaker 1: we'll head to London and get a European perspective on 540 00:28:59,720 --> 00:29:03,640 Speaker 1: the Italy's conflict. I'm John Tucker, and this is Bloomberg. 541 00:29:14,200 --> 00:29:16,880 Speaker 1: This is Bloomberg Daybreak Weekend or Global look ahead of 542 00:29:16,920 --> 00:29:19,320 Speaker 1: the top stories for investors in the coming week. I'm 543 00:29:19,400 --> 00:29:22,120 Speaker 1: John Tucker in New York. There are fresh concerns that 544 00:29:22,280 --> 00:29:25,240 Speaker 1: is whereas war with Hermas will spark a bigger conflict 545 00:29:25,320 --> 00:29:28,760 Speaker 1: in the Middle East. European leaders, including UK's Richie Schunek 546 00:29:28,840 --> 00:29:32,160 Speaker 1: and Jeremany's all off Shaws, have tried to exert influence 547 00:29:32,200 --> 00:29:34,960 Speaker 1: of the region to contain the conflict. For more, Let's 548 00:29:35,000 --> 00:29:37,600 Speaker 1: hit to London and bring in Bloomberg Daybreak Europe anchor 549 00:29:37,840 --> 00:29:38,680 Speaker 1: Caroline Hepger. 550 00:29:38,920 --> 00:29:42,280 Speaker 3: John, there are now not one, but two major wars 551 00:29:42,320 --> 00:29:44,240 Speaker 3: that have broken out in the past two years that 552 00:29:44,440 --> 00:29:48,920 Speaker 3: threatened global stability. For the European perspective, I've been speaking 553 00:29:49,000 --> 00:29:52,880 Speaker 3: to Jane Kinnenmont, Policy and Impact director at the European 554 00:29:53,000 --> 00:29:57,680 Speaker 3: Leadership Network. I began by asking Jane Kinemont about what 555 00:29:58,080 --> 00:30:02,320 Speaker 3: form she thinks the ground more might take between Israel 556 00:30:02,400 --> 00:30:06,880 Speaker 3: and Hamas and what to expect next from the Israeli authorities. 557 00:30:07,440 --> 00:30:09,680 Speaker 11: I mean, Israel's made it clear that it wants to 558 00:30:09,840 --> 00:30:12,960 Speaker 11: launch a ground invasion, and also that there will be 559 00:30:13,040 --> 00:30:16,040 Speaker 11: a high price both for the Palestinians in Gaza and 560 00:30:16,400 --> 00:30:21,800 Speaker 11: for Israel. There's a lot of underground tunnels in Gaza 561 00:30:21,880 --> 00:30:25,160 Speaker 11: where Hamas is likely to fight, so it would be 562 00:30:25,240 --> 00:30:29,360 Speaker 11: a conflict where Israel's military superiority from the air might 563 00:30:29,480 --> 00:30:35,640 Speaker 11: not help it that much. But also lots of uncertainty 564 00:30:35,760 --> 00:30:40,680 Speaker 11: exists because Israel's endgame is not entirely certain, you know, 565 00:30:40,800 --> 00:30:44,560 Speaker 11: it doesn't know. Because this har mass attack, it was 566 00:30:44,680 --> 00:30:48,320 Speaker 11: a complete strategic shock. Many people had warned that there 567 00:30:48,360 --> 00:30:51,280 Speaker 11: would be some kind of explosion of violence as a 568 00:30:51,400 --> 00:30:54,800 Speaker 11: result of the neglect of the Palestinian issue and the 569 00:30:55,000 --> 00:30:59,320 Speaker 11: lack of peaceful avenues for Palestinians to take their cause 570 00:30:59,680 --> 00:31:04,880 Speaker 11: for but the predictions were more centering around escalation in 571 00:31:04,920 --> 00:31:09,600 Speaker 11: the West Bank or in Jerusalem, and Israel and many 572 00:31:09,640 --> 00:31:13,440 Speaker 11: of its partners felt that it had Hamas contained, you know, 573 00:31:13,520 --> 00:31:16,040 Speaker 11: and that it understood that threat and had ways to 574 00:31:16,400 --> 00:31:21,560 Speaker 11: manage it. So now Netanyahu's strategy towards Hamas has been upended, 575 00:31:22,080 --> 00:31:26,800 Speaker 11: and Israel does not have a clear replacement strategy. They 576 00:31:26,920 --> 00:31:30,840 Speaker 11: say that they want to destroy Hamas, but they don't 577 00:31:31,000 --> 00:31:34,040 Speaker 11: necessarily know that they can do it, but the bigger 578 00:31:34,160 --> 00:31:37,400 Speaker 11: question still is what comes after. You know, one option 579 00:31:37,840 --> 00:31:41,840 Speaker 11: might be for Israel to reoccupy Gaza, not that that 580 00:31:41,880 --> 00:31:44,160 Speaker 11: would be legal under international law, but in terms of 581 00:31:44,200 --> 00:31:48,560 Speaker 11: the military and political options, that's something being considered, but 582 00:31:48,680 --> 00:31:51,080 Speaker 11: it's not something they strategically want to do. 583 00:31:51,480 --> 00:31:54,680 Speaker 3: Okay, Well, then give me the European perspective. I mean 584 00:31:54,720 --> 00:31:59,240 Speaker 3: we've had the German Laschel's visit Atala also and she 585 00:32:00,120 --> 00:32:02,880 Speaker 3: medi space yesterday that seemed to have some of the 586 00:32:03,320 --> 00:32:07,320 Speaker 3: similar sorts of lines around democracy and Macon. I mean, 587 00:32:07,960 --> 00:32:11,400 Speaker 3: Europe has so struggled. You know, the traditional view of 588 00:32:11,440 --> 00:32:14,080 Speaker 3: Europe is that it struggles with foreign policy because there 589 00:32:14,120 --> 00:32:16,680 Speaker 3: are so many countries. What is the European perspective? 590 00:32:16,760 --> 00:32:19,920 Speaker 11: Now, that's very much the issue is that European governments 591 00:32:19,960 --> 00:32:23,280 Speaker 11: have got very different perspectives, you know, beyond the fact 592 00:32:23,360 --> 00:32:26,080 Speaker 11: they all agree there should be a two state solution, 593 00:32:26,240 --> 00:32:28,920 Speaker 11: but they don't know how to get there. With Ukraine, 594 00:32:29,080 --> 00:32:32,480 Speaker 11: we've seen Europe being united to an unusual degree and 595 00:32:32,600 --> 00:32:35,640 Speaker 11: that has meant that vonder Lane has emerged as more 596 00:32:35,720 --> 00:32:39,960 Speaker 11: of a foreign policy leader than her position normally warrants, 597 00:32:40,280 --> 00:32:43,840 Speaker 11: but actually in Europe, there has been a backlash against 598 00:32:44,080 --> 00:32:49,520 Speaker 11: her taking the lead over Israel and Palestine because her 599 00:32:50,040 --> 00:32:54,240 Speaker 11: expression of solidarity with Israel has tended to come without 600 00:32:55,200 --> 00:32:57,920 Speaker 11: the kinds of points that President Biden is making about 601 00:32:58,000 --> 00:33:01,440 Speaker 11: the legitimate aspirations of Palestinian to a state and the 602 00:33:01,520 --> 00:33:06,040 Speaker 11: need to respect their rights. And so we've seen really 603 00:33:06,160 --> 00:33:09,400 Speaker 11: different noises coming out from different European governments, with some 604 00:33:09,600 --> 00:33:12,320 Speaker 11: saying we should cut all way to the Palestinians and 605 00:33:12,760 --> 00:33:15,840 Speaker 11: in a far out of the other end example, there's 606 00:33:15,880 --> 00:33:18,080 Speaker 11: been a minister in Spain who has said that Netta 607 00:33:18,160 --> 00:33:21,400 Speaker 11: Yahoo should be tried for war crimes. So getting a 608 00:33:21,480 --> 00:33:24,920 Speaker 11: coherent European position together is an issue. 609 00:33:25,200 --> 00:33:28,000 Speaker 3: So that was Jay and Kinemont, the Policy and Impact 610 00:33:28,080 --> 00:33:31,880 Speaker 3: director of the European Leadership Network for the European perspective 611 00:33:32,240 --> 00:33:35,360 Speaker 3: on the conflict in the Middle East. I'm Caroline Hepkee 612 00:33:35,400 --> 00:33:37,640 Speaker 3: here in London. You can catch us every weekday morning 613 00:33:37,720 --> 00:33:40,560 Speaker 3: for Blueberg Daybreak here at beginning at six am in London. 614 00:33:40,720 --> 00:33:42,800 Speaker 3: That's one am on Wall Street. John. 615 00:33:42,960 --> 00:33:45,600 Speaker 1: Thanks Caroline, and that does it for this edition of 616 00:33:45,640 --> 00:33:48,600 Speaker 1: Bloomberg day Break Weekend. Join us again Monday morning at 617 00:33:48,680 --> 00:33:52,080 Speaker 1: five am Wall Street time for the latest markets overseas 618 00:33:52,320 --> 00:33:54,640 Speaker 1: and the blues you need to start your day. I'm 619 00:33:54,680 --> 00:33:58,120 Speaker 1: John Tucker. Stay with us top stories, Global business headlines 620 00:33:58,160 --> 00:33:59,520 Speaker 1: are coming up right now