1 00:00:02,080 --> 00:00:05,080 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:05,080 --> 00:00:07,720 Speaker 1: top stories in the coming week from our Daybreak anchors 3 00:00:07,760 --> 00:00:10,399 Speaker 1: all around the world. Straight Ahead on the program, we'll 4 00:00:10,400 --> 00:00:13,000 Speaker 1: look to the January jobs report and how that could 5 00:00:13,039 --> 00:00:16,040 Speaker 1: affect fed policy. I'm Nathan Hager in Washington. 6 00:00:16,160 --> 00:00:19,640 Speaker 2: I'm callin Hepga in London, where we're discussing snow, ice 7 00:00:19,760 --> 00:00:23,880 Speaker 2: and geopolitics the twenty twenty six Winter Olympics in Italy. 8 00:00:24,000 --> 00:00:26,560 Speaker 3: I'm Doug Prisner looking ahead to the snap election in 9 00:00:26,640 --> 00:00:30,000 Speaker 3: Japan and what the outcome means for the Japanese economy. 10 00:00:30,400 --> 00:00:34,400 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend. I'm Bloomberg 11 00:00:34,440 --> 00:00:38,160 Speaker 4: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 12 00:00:38,640 --> 00:00:43,800 Speaker 4: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias 13 00:00:43,960 --> 00:00:47,480 Speaker 4: XM one twenty one, and around the world on Bloomberg Radio, 14 00:00:47,520 --> 00:00:53,680 Speaker 4: dot Com and the Bloomberg Business Appo. 15 00:00:54,560 --> 00:00:57,080 Speaker 1: Good day to you. I'm Nathan Hager. Let's take a 16 00:00:57,080 --> 00:00:59,440 Speaker 1: look now at some stocks making news in the week ahead. 17 00:00:59,520 --> 00:01:02,360 Speaker 1: I'm Nathan Hagar with Mandeep Saying, Global head of Tech 18 00:01:02,400 --> 00:01:05,800 Speaker 1: Research at Bloomberg Intelligence. Great to have you on is 19 00:01:05,840 --> 00:01:07,640 Speaker 1: we're going to be looking ahead to a lot more 20 00:01:07,720 --> 00:01:11,000 Speaker 1: big tech stocks in the week ahead. What are we 21 00:01:11,040 --> 00:01:15,080 Speaker 1: expecting when it comes to earnings from Google parent Alphabet? Mandy? 22 00:01:15,920 --> 00:01:19,760 Speaker 5: Look, I mean what we saw with Meta was you know, 23 00:01:20,120 --> 00:01:24,600 Speaker 5: accelerating top line growth, and in the case of Google, 24 00:01:24,760 --> 00:01:27,959 Speaker 5: both the search business as well as the YouTube business 25 00:01:28,200 --> 00:01:31,840 Speaker 5: have I would say modest expectations going in the quarter, 26 00:01:32,160 --> 00:01:35,960 Speaker 5: you know, low to mid teens growth. So, I mean 27 00:01:36,000 --> 00:01:39,959 Speaker 5: we've felt double digit growth for Alphabet over the last 28 00:01:39,959 --> 00:01:43,000 Speaker 5: few quarters, what was very impressive given you know, the 29 00:01:43,120 --> 00:01:47,200 Speaker 5: threat from Chat GPT, But I think Meta has really 30 00:01:47,319 --> 00:01:51,920 Speaker 5: raised the bar in terms of digital ad growth in 31 00:01:52,000 --> 00:01:56,080 Speaker 5: the fourth quarter. So I would be looking for accelerating 32 00:01:56,160 --> 00:01:59,120 Speaker 5: top line growth at least high teens growth for YouTube 33 00:01:59,200 --> 00:02:02,640 Speaker 5: and you know, low to maintains growth for the core 34 00:02:02,680 --> 00:02:04,360 Speaker 5: search business of Alphabet. 35 00:02:04,560 --> 00:02:08,120 Speaker 1: Since you mentioned meta platforms, we should say that the 36 00:02:08,400 --> 00:02:11,880 Speaker 1: AI spend from Microsoft seemed to spook a lot of 37 00:02:11,960 --> 00:02:17,720 Speaker 1: investors last week. Given that Alphabet has its Google Cloud business, 38 00:02:17,800 --> 00:02:20,320 Speaker 1: could that be a concern for investors there when it 39 00:02:20,360 --> 00:02:22,400 Speaker 1: comes to AI spend in the cloud? 40 00:02:23,280 --> 00:02:26,720 Speaker 5: You're right, I mean what Microsoft Sprint has shown is 41 00:02:26,840 --> 00:02:30,240 Speaker 5: you can't really miss the cloud growth numbers. So in 42 00:02:30,280 --> 00:02:34,360 Speaker 5: the case of alphabet expectations, our Google Cloud will have 43 00:02:34,440 --> 00:02:37,360 Speaker 5: at least thirty five percent growth. And based on the 44 00:02:37,360 --> 00:02:40,560 Speaker 5: work that we have done, I mean, Google really has 45 00:02:40,680 --> 00:02:46,160 Speaker 5: had some very impressive, impressive deal wins this quarter in 46 00:02:46,240 --> 00:02:49,960 Speaker 5: their cloud segments, so chances are they should do better. 47 00:02:50,040 --> 00:02:53,840 Speaker 5: And remember Google has their TPUs, so they shouldn't be 48 00:02:54,080 --> 00:02:58,640 Speaker 5: as supply constrained as Microsoft probably was in the quarter 49 00:02:58,880 --> 00:03:03,400 Speaker 5: with the GPU situation. So my guess is Google Cloud 50 00:03:03,440 --> 00:03:07,440 Speaker 5: segment would see sequential acceleration and they should be the 51 00:03:08,000 --> 00:03:09,760 Speaker 5: consensus number handedly And. 52 00:03:09,840 --> 00:03:14,280 Speaker 1: How do you see Google's TPU processors fairing compared to 53 00:03:14,360 --> 00:03:16,680 Speaker 1: the GPUs that we get from Nvidia. 54 00:03:17,280 --> 00:03:19,840 Speaker 5: I mean, if there's one theme that we have heard 55 00:03:19,880 --> 00:03:24,200 Speaker 5: so far this earning season is AI infrastructure demand remains 56 00:03:24,400 --> 00:03:28,239 Speaker 5: insatiable and all these companies are wanting to get as 57 00:03:28,400 --> 00:03:33,720 Speaker 5: much you know, compute capacity as they can. So Google's TPUs, 58 00:03:34,360 --> 00:03:38,480 Speaker 5: you know, are used both internally for Google overviews and 59 00:03:38,560 --> 00:03:42,400 Speaker 5: across their family off apps as well as they're used 60 00:03:42,400 --> 00:03:46,000 Speaker 5: on Google Cloud. And so from that perspective, I do think, 61 00:03:46,480 --> 00:03:49,440 Speaker 5: you know, Google should be able to show the most 62 00:03:49,760 --> 00:03:53,160 Speaker 5: efficiency when it comes to AI infrastructure and that should 63 00:03:53,200 --> 00:03:56,240 Speaker 5: get reflected in their growth margins, which I expect to 64 00:03:56,280 --> 00:03:58,920 Speaker 5: be better than the rest of the hyperscalers. 65 00:03:59,200 --> 00:04:01,600 Speaker 1: We're also going to hear from Amazon this week they 66 00:04:01,640 --> 00:04:05,120 Speaker 1: report their earnings. What are you expecting from their cloud 67 00:04:05,280 --> 00:04:06,680 Speaker 1: unit aws? 68 00:04:07,040 --> 00:04:10,880 Speaker 5: Yeah, I mean you want to see all these cloud 69 00:04:10,920 --> 00:04:16,000 Speaker 5: companies show sequential acceleration. It didn't happen with Microsoft, hence 70 00:04:16,040 --> 00:04:19,839 Speaker 5: we saw that negative reaction, and in the case of Atablus, 71 00:04:19,920 --> 00:04:23,120 Speaker 5: I would say expectations again are like for low twenty 72 00:04:23,120 --> 00:04:27,200 Speaker 5: percent growth. So given they are the largest cloud provider, 73 00:04:28,120 --> 00:04:32,000 Speaker 5: I mean they should be able to beat those numbers. 74 00:04:32,120 --> 00:04:35,840 Speaker 5: But look what we have heard so far is supply 75 00:04:36,000 --> 00:04:39,600 Speaker 5: constraints are real when it comes to AI compute capacity 76 00:04:39,680 --> 00:04:43,400 Speaker 5: and that may have a bearing on whether ada BLUs 77 00:04:43,520 --> 00:04:46,360 Speaker 5: ends up beating those consensus numbers or not. 78 00:04:46,760 --> 00:04:50,080 Speaker 1: Is low twenty percent enough to wow investors? 79 00:04:50,520 --> 00:04:53,960 Speaker 5: No, but you want to see that sequential acceleration. So 80 00:04:54,600 --> 00:04:58,240 Speaker 5: I mentioned about the size of Atablus, So that's almost 81 00:04:58,279 --> 00:05:01,080 Speaker 5: one hundred and thirty five billion dollar dollar rundrate business 82 00:05:01,240 --> 00:05:05,680 Speaker 5: for Amazon. Contrast that with Microsoft, which is more one 83 00:05:05,760 --> 00:05:09,200 Speaker 5: hundred billion, and Google Cloud is like sixty billion rund 84 00:05:09,240 --> 00:05:12,840 Speaker 5: rates so given their size, I mean, low twenty percent 85 00:05:13,480 --> 00:05:16,080 Speaker 5: would be in line, but anything more than that would 86 00:05:16,279 --> 00:05:19,799 Speaker 5: be impressive, and I think that would help those dock. 87 00:05:20,040 --> 00:05:24,960 Speaker 1: And along with Amazon and Alphabet. Another a in big 88 00:05:25,040 --> 00:05:29,120 Speaker 1: tech reports this week advanced micro devices. How's the computer 89 00:05:29,279 --> 00:05:31,119 Speaker 1: chip business looking right now? Mandy? 90 00:05:31,480 --> 00:05:34,800 Speaker 5: I mean, look, Meta just told us they plan to 91 00:05:34,880 --> 00:05:37,920 Speaker 5: spend up to one hundred and thirty five billion dollars 92 00:05:37,960 --> 00:05:42,320 Speaker 5: in CAPEX, which is a seventy percent increase from what 93 00:05:42,360 --> 00:05:46,760 Speaker 5: they spent in twenty twenty five. So we were modeling 94 00:05:46,880 --> 00:05:51,040 Speaker 5: like fifty percent increase in CAPEX from hyperscalers going into 95 00:05:51,080 --> 00:05:55,760 Speaker 5: twenty twenty six. Chances are that number will be revised upward, 96 00:05:56,240 --> 00:05:59,440 Speaker 5: and so it will trickle down to the likes of AMD, 97 00:05:59,600 --> 00:06:04,040 Speaker 5: which is is the you know, the second biggest GPU 98 00:06:04,360 --> 00:06:09,000 Speaker 5: provider after Nvidia, and so to my mind, AMDs deal 99 00:06:09,080 --> 00:06:11,680 Speaker 5: with open ai and some of the other business that 100 00:06:11,720 --> 00:06:16,320 Speaker 5: they have won over the last few months should help, 101 00:06:16,440 --> 00:06:21,080 Speaker 5: you know, exceed expectations when they print their results. 102 00:06:21,520 --> 00:06:24,719 Speaker 1: Does a m D need to show more market share 103 00:06:24,960 --> 00:06:26,120 Speaker 1: compared to Nvidia. 104 00:06:27,000 --> 00:06:30,039 Speaker 5: I think this is such a big market that everyone 105 00:06:30,160 --> 00:06:33,880 Speaker 5: is realizing that you don't need to, you know, win 106 00:06:34,000 --> 00:06:37,120 Speaker 5: market share from Nvidia as long as you have a 107 00:06:37,160 --> 00:06:41,159 Speaker 5: good product that you know companies are interested in buying, 108 00:06:41,200 --> 00:06:44,480 Speaker 5: and open Ai has that deal with a m D. 109 00:06:44,680 --> 00:06:48,520 Speaker 5: Now that is a big leap of faith in terms 110 00:06:48,560 --> 00:06:53,000 Speaker 5: of MD's capabilities to supply you know, six gigawatts of 111 00:06:53,160 --> 00:06:56,960 Speaker 5: power that has all a m D chips, and I 112 00:06:57,320 --> 00:07:01,360 Speaker 5: think that should help them win more prize business over time. 113 00:07:01,839 --> 00:07:05,320 Speaker 1: Appreciate this man deep as always. That's Mandeep Saying, Global 114 00:07:05,320 --> 00:07:08,919 Speaker 1: head of Tech Research at Bloomberg Intelligence. We move next 115 00:07:08,960 --> 00:07:12,000 Speaker 1: to some key economic data in the US. Our first 116 00:07:12,080 --> 00:07:14,720 Speaker 1: full look at the labor market for twenty twenty six 117 00:07:14,800 --> 00:07:17,680 Speaker 1: so far comes out this Friday at eight thirty Wall 118 00:07:17,720 --> 00:07:21,000 Speaker 1: Street time, and we get non farm payrolls for January. 119 00:07:21,360 --> 00:07:24,640 Speaker 1: Ahead of that. We're joined by Michael McKee, our international 120 00:07:24,680 --> 00:07:28,240 Speaker 1: economics and policy correspondent for Bloomberg Radio and Television. 121 00:07:28,640 --> 00:07:28,840 Speaker 6: Mike. 122 00:07:28,880 --> 00:07:31,240 Speaker 1: The theme we keep hearing from the data leading up 123 00:07:31,280 --> 00:07:33,600 Speaker 1: to this report is this is a low, higher, low 124 00:07:33,680 --> 00:07:36,840 Speaker 1: fire labor market. So are we expecting to see that 125 00:07:36,920 --> 00:07:39,640 Speaker 1: reflected in the Big Daddy report coming out this week? 126 00:07:40,320 --> 00:07:44,320 Speaker 7: That is what we are expecting to see. The interesting 127 00:07:44,400 --> 00:07:46,320 Speaker 7: thing about this report, of course, is it's the first 128 00:07:46,360 --> 00:07:49,480 Speaker 7: one since the government shutdown ended. That isn't going to 129 00:07:49,520 --> 00:07:52,360 Speaker 7: be distorted by the government shutdown. It's a full month 130 00:07:52,360 --> 00:07:57,600 Speaker 7: of data collected and the normal processing time. So to 131 00:07:57,640 --> 00:08:00,480 Speaker 7: the extent that it tells us something about where the 132 00:08:00,520 --> 00:08:05,080 Speaker 7: labor market is, it should be relatively accurate. The Fed 133 00:08:05,440 --> 00:08:08,560 Speaker 7: last week, in their assessment of the economy at their 134 00:08:08,600 --> 00:08:13,080 Speaker 7: meeting said that while we were still seeing low hiring, 135 00:08:13,240 --> 00:08:17,000 Speaker 7: the unemployment rate seems to have stabilized, so they seem 136 00:08:17,040 --> 00:08:19,440 Speaker 7: to think that things are getting a little bit better. 137 00:08:19,720 --> 00:08:22,760 Speaker 1: Okay, so how could we see that reflected in the 138 00:08:22,840 --> 00:08:27,120 Speaker 1: data itself. Where are we seeing signs of studying in 139 00:08:27,160 --> 00:08:27,840 Speaker 1: the labor market. 140 00:08:28,560 --> 00:08:30,640 Speaker 7: Well, the biggest is in the unemployment rate. It fell 141 00:08:30,920 --> 00:08:35,040 Speaker 7: last time last month for the December number to four 142 00:08:35,040 --> 00:08:37,640 Speaker 7: point four percent, and we're not expecting that to change. 143 00:08:37,640 --> 00:08:40,480 Speaker 7: According to the economists survey by Bloomberg stays at four 144 00:08:40,520 --> 00:08:43,840 Speaker 7: point four percent, so a sign of stability there. And 145 00:08:43,880 --> 00:08:47,160 Speaker 7: the interesting thing is the December payrolls report was only 146 00:08:47,160 --> 00:08:50,920 Speaker 7: fifty thousand. Obviously we will get some sort of revision, 147 00:08:51,440 --> 00:08:55,280 Speaker 7: but right now we're looking at seventy thousand is the 148 00:08:55,320 --> 00:08:58,719 Speaker 7: forecast by economists for January, so that would be a 149 00:08:58,760 --> 00:09:02,040 Speaker 7: little bit stronger and we saw in the month before. 150 00:09:01,760 --> 00:09:05,640 Speaker 1: But still pretty subdued compared to where we've been historically. 151 00:09:05,760 --> 00:09:10,359 Speaker 1: So what could this mean for the Federal Reserve going forward? 152 00:09:10,720 --> 00:09:13,280 Speaker 7: Well, the FAT doesn't know, and that's one of the 153 00:09:13,280 --> 00:09:16,280 Speaker 7: things that they're going to be looking at. The whole 154 00:09:16,360 --> 00:09:20,120 Speaker 7: question surrounds all of these low numbers. Is it because 155 00:09:20,240 --> 00:09:23,240 Speaker 7: companies don't want to hire right now? Or is it 156 00:09:23,240 --> 00:09:25,880 Speaker 7: because they don't have people to hire? In other words, 157 00:09:25,960 --> 00:09:32,000 Speaker 7: has the administration's cracked down on immigration and the ejection 158 00:09:32,160 --> 00:09:37,439 Speaker 7: of people from the economy and scaring people into staying 159 00:09:37,520 --> 00:09:40,520 Speaker 7: home from work. Does that mean that there are fewer 160 00:09:40,559 --> 00:09:42,760 Speaker 7: people to hire? And that's one of the big reasons 161 00:09:42,800 --> 00:09:46,200 Speaker 7: that we're not seeing the same kind of payroll growth, 162 00:09:46,240 --> 00:09:48,199 Speaker 7: and it's going to take a while to figure that out. 163 00:09:48,520 --> 00:09:54,559 Speaker 7: We do, however, Nathan, get an update on the population estimates. 164 00:09:54,600 --> 00:09:58,400 Speaker 7: This comes once a year in January, and that should 165 00:09:58,520 --> 00:10:01,760 Speaker 7: change that should that will make December and January numbers 166 00:10:01,840 --> 00:10:05,280 Speaker 7: not quite comparable, and it does figure to change the 167 00:10:05,400 --> 00:10:11,120 Speaker 7: labor force participation rate perhaps a little bit. So we'll 168 00:10:11,160 --> 00:10:14,880 Speaker 7: be starting fresh, but also having some sort of idea 169 00:10:14,880 --> 00:10:15,840 Speaker 7: of what's going on. 170 00:10:16,040 --> 00:10:19,319 Speaker 1: Yeah, there's also the big question about whether artificial intelligence 171 00:10:19,400 --> 00:10:22,360 Speaker 1: is playing a role in labor market dynamics as well. 172 00:10:22,400 --> 00:10:25,800 Speaker 1: We've heard that from a number of Federal Reserve speakers. 173 00:10:25,960 --> 00:10:28,000 Speaker 1: Where's the thinking on that right now? 174 00:10:28,240 --> 00:10:31,280 Speaker 7: Well, the thinking is is that artificial intelligence will take 175 00:10:31,320 --> 00:10:34,000 Speaker 7: a larger and larger share of the labor force, but 176 00:10:34,960 --> 00:10:38,160 Speaker 7: we're not completely clear on where it is. The logical 177 00:10:38,200 --> 00:10:42,000 Speaker 7: answer is that we'll see lower paid, lower skilled people 178 00:10:42,120 --> 00:10:45,400 Speaker 7: lose their jobs to computers. But of course people are 179 00:10:45,440 --> 00:10:50,040 Speaker 7: talking about folks in the finance industry or folks in law, 180 00:10:50,760 --> 00:10:55,679 Speaker 7: especially at the lower ends, the beginning, the interns, they 181 00:10:55,720 --> 00:10:58,800 Speaker 7: would lose their jobs because then the computer can do 182 00:10:58,920 --> 00:11:02,960 Speaker 7: it all. So we are expecting some sort of change, 183 00:11:03,480 --> 00:11:07,360 Speaker 7: but the question is how fast. And that's where some 184 00:11:07,400 --> 00:11:10,240 Speaker 7: people at the Fed are concerned that maybe we're getting 185 00:11:10,280 --> 00:11:15,959 Speaker 7: ahead of ourselves in terms of the in terms of 186 00:11:16,000 --> 00:11:21,160 Speaker 7: the impact on today's jobs reports, because companies are starting 187 00:11:21,200 --> 00:11:24,360 Speaker 7: to adopt this stuff, but they haven't had a lot 188 00:11:24,400 --> 00:11:27,000 Speaker 7: of time to figure out who they don't need anymore. 189 00:11:27,440 --> 00:11:29,880 Speaker 1: And of course there's a lot of question, a lot 190 00:11:29,880 --> 00:11:33,760 Speaker 1: of focus at the White House on job growth, the 191 00:11:34,120 --> 00:11:37,480 Speaker 1: whole idea of trade policy coming out of the Trump 192 00:11:37,520 --> 00:11:41,120 Speaker 1: administration is that it's going to boost manufacturing jobs. Are 193 00:11:41,120 --> 00:11:43,720 Speaker 1: we seeing any signs that that is starting to take hold? 194 00:11:44,400 --> 00:11:44,480 Speaker 5: No. 195 00:11:45,160 --> 00:11:48,400 Speaker 7: Since the president came to office, we've lost manufacturing jobs, 196 00:11:48,440 --> 00:11:51,080 Speaker 7: and that's been one of the flaws in their whole argument. 197 00:11:51,720 --> 00:11:54,360 Speaker 7: We are not seeing manufacturing payrolls go up. Now, we 198 00:11:54,400 --> 00:11:58,199 Speaker 7: don't have an estimate yet for the change in manufacturing payrolls. 199 00:11:58,200 --> 00:11:59,960 Speaker 7: That'll come later in the week as we get close 200 00:12:00,240 --> 00:12:03,960 Speaker 7: to the release. But in December we lost eight thousand 201 00:12:04,600 --> 00:12:09,240 Speaker 7: manufacturing jobs. So there's still a lot of concern about 202 00:12:09,320 --> 00:12:13,760 Speaker 7: where this all goes and whether or not we're going 203 00:12:13,800 --> 00:12:17,320 Speaker 7: to see an increase in manufacturing jobs, because what tends 204 00:12:17,360 --> 00:12:21,079 Speaker 7: to happen is that if a company builds a new factory, 205 00:12:21,120 --> 00:12:23,160 Speaker 7: they put a lot of machines and robots and things 206 00:12:23,240 --> 00:12:25,880 Speaker 7: in there, and so you don't get the additional jobs 207 00:12:26,200 --> 00:12:27,120 Speaker 7: that you thought you might. 208 00:12:27,600 --> 00:12:30,520 Speaker 1: Thanks for this, Mike, As always, that's Michael McKee, Bloomberg 209 00:12:30,559 --> 00:12:34,040 Speaker 1: International Economics and Policy correspondent, head of the non farm 210 00:12:34,040 --> 00:12:37,000 Speaker 1: Payrolls Report for January. This Friday at eight thirty Wall 211 00:12:37,040 --> 00:12:40,000 Speaker 1: Street Time, and coming up on Bloomberg Day Break weekend, 212 00:12:40,000 --> 00:12:43,040 Speaker 1: we'll look ahead to the twenty fifth Winter Olympic Games 213 00:12:43,160 --> 00:12:58,640 Speaker 1: in Italy. I'm Nathan Hagert, and this is Bloomberg. This 214 00:12:58,679 --> 00:13:01,240 Speaker 1: is Bloomberg day Break weekend, our global look ahead at 215 00:13:01,280 --> 00:13:03,720 Speaker 1: the top stories for investors in the coming week. I'm 216 00:13:03,800 --> 00:13:06,760 Speaker 1: Nathan hager in Washington. Up later in our program, we'll 217 00:13:06,760 --> 00:13:09,720 Speaker 1: look ahead to a general election in Japan and we'll 218 00:13:09,720 --> 00:13:13,280 Speaker 1: focus on a policy decision from the Reserve Bank of Australia. 219 00:13:13,360 --> 00:13:16,840 Speaker 1: But first, the twenty fifth Winter Olympic Games kickoff in 220 00:13:17,000 --> 00:13:19,960 Speaker 1: Italy in the next few days. Though the event promises 221 00:13:20,000 --> 00:13:23,679 Speaker 1: fireworks on the sporting stage, could diplomatic tensions between the 222 00:13:23,800 --> 00:13:27,480 Speaker 1: US and Europe threaten to upstage the proceedings for more. 223 00:13:27,679 --> 00:13:30,079 Speaker 1: Let's go to London and bring in Bloomberg Daybreak europe 224 00:13:30,080 --> 00:13:31,280 Speaker 1: Banker Caroline Hepger. 225 00:13:31,640 --> 00:13:34,840 Speaker 2: Nathan, I'm tempted to say that delivering the Milano Cortina 226 00:13:34,960 --> 00:13:38,880 Speaker 2: twenty twenty six Winter Olympics maybe as tricky as pulling 227 00:13:38,880 --> 00:13:42,080 Speaker 2: off one of those wild stunts in the freestyle big 228 00:13:42,120 --> 00:13:46,200 Speaker 2: air competition. The Olympics is meant to be unifying, of course, 229 00:13:46,320 --> 00:13:50,440 Speaker 2: but it can also serve to highlight geopolitical tensions between 230 00:13:50,600 --> 00:13:55,520 Speaker 2: countries with concerns often about sportswashing. Then there's the issue 231 00:13:55,520 --> 00:13:59,000 Speaker 2: of delivering the event, including all the venues in the Alps, 232 00:13:59,080 --> 00:14:03,400 Speaker 2: on time and in some ways sustainably. For this Olympics, 233 00:14:03,440 --> 00:14:06,720 Speaker 2: which begins on the sixth of February, followed by the 234 00:14:06,760 --> 00:14:11,239 Speaker 2: Paralympics a month later in March, there has been considerable 235 00:14:11,240 --> 00:14:15,000 Speaker 2: attention and protests by Italian officials over US plans to 236 00:14:15,080 --> 00:14:19,720 Speaker 2: deployed some ICE staff to this year's event. Bloomberg understands 237 00:14:19,880 --> 00:14:22,240 Speaker 2: that ICE agents will be in Italy as part of 238 00:14:22,280 --> 00:14:25,840 Speaker 2: the security details for the Vice President JD Vance and 239 00:14:25,880 --> 00:14:29,720 Speaker 2: Secuy of State Marco Rubio, according to an official from 240 00:14:29,760 --> 00:14:33,760 Speaker 2: the US Secret Service, but the agency's role in an 241 00:14:33,800 --> 00:14:37,479 Speaker 2: immigration crackdown at home is stirring opposition overseas. 242 00:14:38,240 --> 00:14:38,440 Speaker 7: Now. 243 00:14:38,480 --> 00:14:41,600 Speaker 2: This year's Olympics is also said against the backdrop of 244 00:14:41,680 --> 00:14:45,800 Speaker 2: increasing division between the United States and Europe. Recently, the 245 00:14:45,920 --> 00:14:50,760 Speaker 2: NATO Secretary General Mark Rutter told the European Parliament that 246 00:14:50,800 --> 00:14:55,160 Speaker 2: the Transatlantic Alliance is vital to the region's survival. 247 00:14:55,800 --> 00:14:58,120 Speaker 6: So when President Trump is doing good stuff IV operation, 248 00:14:59,240 --> 00:15:02,840 Speaker 6: and I don't mind him publishing text messages, and if 249 00:15:02,880 --> 00:15:06,400 Speaker 6: anyone thinks here again that the European Union or europerson 250 00:15:06,440 --> 00:15:09,680 Speaker 6: Hall can dissent itself as out to us, keep on dreaming. 251 00:15:09,960 --> 00:15:12,480 Speaker 6: You count, we count, We need each other. 252 00:15:12,800 --> 00:15:16,880 Speaker 2: That was NATO's Mark Rutter speaking there so well. Italy's 253 00:15:16,920 --> 00:15:21,720 Speaker 2: Winter Olympics feature more ice than they bargained for. Joining 254 00:15:21,760 --> 00:15:25,040 Speaker 2: me now to discuss is Bloomberg's Milan bureau chief Tomaso 255 00:15:25,240 --> 00:15:29,080 Speaker 2: eb Haarts. Tomaso, let's start by thinking about these Winter 256 00:15:29,200 --> 00:15:32,840 Speaker 2: Olympics taking place in the Alps in the next few days. 257 00:15:33,040 --> 00:15:35,880 Speaker 2: I suppose the first big question, and maybe it's always 258 00:15:35,960 --> 00:15:40,240 Speaker 2: the case for the Olympics, are all the venues going 259 00:15:40,320 --> 00:15:41,040 Speaker 2: to be ready? 260 00:15:41,640 --> 00:15:45,440 Speaker 8: So those games will be spread all over the north 261 00:15:45,520 --> 00:15:49,400 Speaker 8: of Italy, not just on the Alpso the main city 262 00:15:49,440 --> 00:15:53,440 Speaker 8: where the opening ceremony will be Friday is Milana. And 263 00:15:53,480 --> 00:15:56,920 Speaker 8: then you're going to have the different sports to be 264 00:15:57,000 --> 00:16:00,320 Speaker 8: held in different locations. Fortina where you're going to have 265 00:16:00,760 --> 00:16:05,479 Speaker 8: the women's ski races, You're going to have in Lombardy, Bormeo, 266 00:16:06,040 --> 00:16:10,560 Speaker 8: You're going to have games also in the Suti Role region. 267 00:16:10,920 --> 00:16:15,080 Speaker 8: So what is interesting is that somehow to reduce the 268 00:16:15,160 --> 00:16:18,680 Speaker 8: cost of the Olympics, they have been spread ref location 269 00:16:18,840 --> 00:16:23,040 Speaker 8: where essentially most of the venues were already built and ready. 270 00:16:23,760 --> 00:16:28,480 Speaker 8: For example, the Vietnam will be held in anter Holz, 271 00:16:28,640 --> 00:16:31,880 Speaker 8: which is already one of the most famous locations in 272 00:16:31,920 --> 00:16:33,920 Speaker 8: the Alps for this kind of sport. There are some 273 00:16:34,000 --> 00:16:37,040 Speaker 8: new venues, especially one Milan for highs hockey, which was 274 00:16:37,200 --> 00:16:41,480 Speaker 8: just completed. There were just some criticism about how is 275 00:16:41,520 --> 00:16:43,720 Speaker 8: it built, about the quality of the eyes, but it 276 00:16:43,800 --> 00:16:47,200 Speaker 8: looks like it's almost ready. If you walk around the 277 00:16:47,240 --> 00:16:50,800 Speaker 8: city in Milan, you see a lot of temporary building 278 00:16:50,880 --> 00:16:53,760 Speaker 8: that will be used for the Olympics. While what I'm hearing, 279 00:16:53,800 --> 00:16:57,800 Speaker 8: for example that in Cortina Adam Pazza on the Alps, 280 00:16:57,840 --> 00:17:00,920 Speaker 8: not all everything that was meant to be built for 281 00:17:01,000 --> 00:17:05,600 Speaker 8: the Olympic is rady, but for sure the infrastructure there 282 00:17:05,680 --> 00:17:08,480 Speaker 8: was a huge investment in infrastructure. This is what probably 283 00:17:09,000 --> 00:17:12,400 Speaker 8: was the most important investment for those Olympics. 284 00:17:12,440 --> 00:17:15,960 Speaker 2: It's also really interesting Olympics because it's one of the 285 00:17:15,960 --> 00:17:18,880 Speaker 2: first times in a long time that a Winter Olympics 286 00:17:19,000 --> 00:17:22,919 Speaker 2: is going to be sort of within easy reach of 287 00:17:23,200 --> 00:17:27,760 Speaker 2: US scheduling. And yet maybe a lot of the build 288 00:17:27,880 --> 00:17:30,960 Speaker 2: up to the Winter Olympics is going to have been 289 00:17:30,960 --> 00:17:40,240 Speaker 2: dominated by this spat, this disagreement around ice agents maybe 290 00:17:40,560 --> 00:17:44,959 Speaker 2: or staff being involved in the Winter Olympics somehow, maybe 291 00:17:45,040 --> 00:17:47,879 Speaker 2: just to protect high ranking US officials who are going 292 00:17:47,920 --> 00:17:50,320 Speaker 2: to be visiting. But there's been quite a lot of 293 00:17:50,520 --> 00:17:54,200 Speaker 2: pushback about it. Can you describe how the Italian government's 294 00:17:54,200 --> 00:17:55,080 Speaker 2: been handling it? 295 00:17:55,560 --> 00:17:57,960 Speaker 8: In the last week was a high hab on the 296 00:17:58,000 --> 00:18:02,760 Speaker 8: debate in Italy the involvement of ICE in the Olympics. 297 00:18:03,280 --> 00:18:07,440 Speaker 8: There were some Italian official or protested but vigorously, including 298 00:18:07,520 --> 00:18:12,760 Speaker 8: Milian Mayor Giusepe Sala who, following the latest involvement of 299 00:18:12,840 --> 00:18:16,600 Speaker 8: ICE in the US I, said they're not welcome in Milan. 300 00:18:16,920 --> 00:18:22,439 Speaker 8: Then for days Italian official somehow tried to keep the 301 00:18:22,480 --> 00:18:26,480 Speaker 8: situation under control until there was a meeting between the 302 00:18:26,520 --> 00:18:30,560 Speaker 8: Italian Interior Minister and the US embassy in Rome. After 303 00:18:30,600 --> 00:18:35,280 Speaker 8: that it was clear that ICE agents will be involved 304 00:18:35,920 --> 00:18:40,280 Speaker 8: just within their domestic offices, so that means they will 305 00:18:40,320 --> 00:18:44,800 Speaker 8: be deployed in the US consulate and this somehow as 306 00:18:44,920 --> 00:18:45,760 Speaker 8: a calme a. 307 00:18:45,760 --> 00:18:46,560 Speaker 5: Little bit attention. 308 00:18:47,680 --> 00:18:52,040 Speaker 8: Some Italians are protesting clearly, and the Italian government had 309 00:18:52,200 --> 00:18:55,960 Speaker 8: larified which will be the involvement of ice in the 310 00:18:56,119 --> 00:18:58,879 Speaker 8: in the Olympics, And I have to say that clearly. 311 00:18:59,200 --> 00:19:02,840 Speaker 8: The news great a lot of attention. 312 00:19:03,560 --> 00:19:06,560 Speaker 2: Yeah, and Georgia Maloney of course, that the Prime Minister 313 00:19:07,000 --> 00:19:12,120 Speaker 2: is often seen as a Trump ally. I suppose there's 314 00:19:12,160 --> 00:19:16,920 Speaker 2: also maybe a question that whilst the Olympic officials want 315 00:19:17,040 --> 00:19:20,119 Speaker 2: to present this, want to present sports, as is so 316 00:19:20,200 --> 00:19:23,640 Speaker 2: often the case, as a kind of unifying message, there's 317 00:19:23,680 --> 00:19:27,479 Speaker 2: a danger that it will highlight the divisions between Europe 318 00:19:27,520 --> 00:19:31,480 Speaker 2: and the US that we've seen, you know, geopolitically. That's 319 00:19:31,560 --> 00:19:34,160 Speaker 2: going to be surely quite hard to handle. 320 00:19:34,720 --> 00:19:38,439 Speaker 8: Clearly, Maloney is seen as one of the European leader 321 00:19:38,520 --> 00:19:42,480 Speaker 8: closer to Trump. She is a key figure at the 322 00:19:42,520 --> 00:19:49,439 Speaker 8: moment in europea also because of the hair closer ties 323 00:19:49,480 --> 00:19:52,520 Speaker 8: and other with the Trump. That doesn't mean that they 324 00:19:52,560 --> 00:19:55,840 Speaker 8: are always on the same bench. For example, on Greenland, 325 00:19:56,320 --> 00:19:59,560 Speaker 8: Maloney was aligned with the rest of the European leaders 326 00:20:00,760 --> 00:20:04,000 Speaker 8: while answering to Trump's request. I think that what you 327 00:20:04,040 --> 00:20:08,360 Speaker 8: said is clearly an interesting aspect during Olympics, not only 328 00:20:08,400 --> 00:20:10,720 Speaker 8: the Olympic committee, but you know, the buzz should be 329 00:20:10,800 --> 00:20:14,720 Speaker 8: on sport and not on a geopolitical tension. But you know, 330 00:20:14,760 --> 00:20:19,160 Speaker 8: we're living quite i would say, a very interesting time 331 00:20:19,200 --> 00:20:21,720 Speaker 8: in terms of geopolitical news. If you want to call 332 00:20:21,760 --> 00:20:24,760 Speaker 8: them interesting and so clearly this is part of the 333 00:20:24,800 --> 00:20:27,440 Speaker 8: public debate and will be also during the Olympics. For sure, 334 00:20:27,560 --> 00:20:31,080 Speaker 8: the eyes of the world will be on Milan for 335 00:20:31,320 --> 00:20:35,040 Speaker 8: the opening ceremony and then on the out for the Olympics. 336 00:20:34,840 --> 00:20:37,200 Speaker 2: No doubt, I'm sure people are also getting very excited 337 00:20:37,240 --> 00:20:40,800 Speaker 2: about it to watch. I mean, what are usually just 338 00:20:40,880 --> 00:20:45,240 Speaker 2: spectacular events, aren't they The acrobatics and the kind of 339 00:20:45,320 --> 00:20:48,600 Speaker 2: area display snowboarding and skiing and so on, which sort 340 00:20:48,640 --> 00:20:53,840 Speaker 2: of brings me to snow. The other aspect of this 341 00:20:54,400 --> 00:20:58,640 Speaker 2: is that climate change is affecting the Alps so deeply, 342 00:20:58,800 --> 00:21:01,680 Speaker 2: and there's been a lot of anticipation about how much 343 00:21:01,720 --> 00:21:06,080 Speaker 2: snowfall has been arriving. You know that there's been in 344 00:21:06,119 --> 00:21:09,120 Speaker 2: the days leading up to this, and the creation obviously 345 00:21:09,119 --> 00:21:12,440 Speaker 2: of fake snow you know where you kind of generate 346 00:21:12,480 --> 00:21:15,479 Speaker 2: it for the ski slopes. Climate change is also huge 347 00:21:16,080 --> 00:21:16,760 Speaker 2: good news. 348 00:21:16,840 --> 00:21:20,800 Speaker 8: In the last couple of week there has been heavy 349 00:21:21,440 --> 00:21:24,680 Speaker 8: snow falls on the Alps and on the Dolomites that 350 00:21:24,800 --> 00:21:30,200 Speaker 8: were still start in summer mood until a few days ago, 351 00:21:30,440 --> 00:21:33,199 Speaker 8: So there will be white Olympics. It's quite happy, but 352 00:21:33,320 --> 00:21:37,720 Speaker 8: for sure, as it happens nowadays quite often in the 353 00:21:37,760 --> 00:21:41,800 Speaker 8: Alps that most of the snow which was prepared for 354 00:21:41,880 --> 00:21:46,920 Speaker 8: the Olympics was the snow that is also been prepared 355 00:21:47,200 --> 00:21:50,280 Speaker 8: for tourists, because you know, the ski industry and the 356 00:21:50,320 --> 00:21:55,720 Speaker 8: tourist industry is crucial. The atmosphere is changing, the altitude, 357 00:21:56,160 --> 00:21:59,800 Speaker 8: snow is usually expected and it has some costs because 358 00:21:59,800 --> 00:22:01,960 Speaker 8: if you want to ski and the reason not no, 359 00:22:02,200 --> 00:22:04,359 Speaker 8: then you have to make the investment. And this is 360 00:22:04,400 --> 00:22:08,399 Speaker 8: clearly a consequence of the higher temperatures we are seeing 361 00:22:08,800 --> 00:22:09,840 Speaker 8: lastly Tomas. 362 00:22:09,840 --> 00:22:13,120 Speaker 2: So what do you expect in terms of the economic 363 00:22:13,280 --> 00:22:19,159 Speaker 2: impact of the games. There's also been this idea of sustainability. 364 00:22:19,200 --> 00:22:21,960 Speaker 2: How do you make the Olympics every four years, whether 365 00:22:22,040 --> 00:22:25,479 Speaker 2: it's frankly winter all summer, a bit more sustainable. You've 366 00:22:25,520 --> 00:22:28,080 Speaker 2: sort of talked about that with the reuse or the 367 00:22:28,240 --> 00:22:31,960 Speaker 2: using of current venues, but the economic impacts, what do 368 00:22:32,000 --> 00:22:32,479 Speaker 2: you think? 369 00:22:33,440 --> 00:22:36,719 Speaker 8: So one of the main aspects of these Olympic Games, 370 00:22:37,200 --> 00:22:42,920 Speaker 8: this winter edition is that to avoid building new venues 371 00:22:43,040 --> 00:22:46,240 Speaker 8: just for the Olympics that you won't be used anymore. 372 00:22:46,400 --> 00:22:51,600 Speaker 8: That's why the games will be held in almost ten 373 00:22:51,640 --> 00:22:56,639 Speaker 8: different locations where you already had the infrastructure ready in Italy. 374 00:22:56,680 --> 00:22:59,080 Speaker 8: We headed the Olympics, the Winter Olympics in two thousand 375 00:22:59,119 --> 00:23:03,080 Speaker 8: and six in a Turin and the Piedmont region, and 376 00:23:03,119 --> 00:23:06,320 Speaker 8: there are some venues, especially one for the bob was 377 00:23:06,680 --> 00:23:11,280 Speaker 8: not being used since those Olympics. So the plan has 378 00:23:11,359 --> 00:23:14,480 Speaker 8: been since the beginning to avoid this reason. That's why 379 00:23:14,840 --> 00:23:17,520 Speaker 8: you're going to have the games in very different locations, 380 00:23:17,520 --> 00:23:19,960 Speaker 8: so the cost will go down, and there is also 381 00:23:19,960 --> 00:23:22,640 Speaker 8: a matter of sustainability. The impact of the games. We're 382 00:23:22,640 --> 00:23:26,679 Speaker 8: talking about five billion euros revenue and investment for the Games. 383 00:23:26,760 --> 00:23:31,040 Speaker 8: The impact in this country is that essentially the Games 384 00:23:31,320 --> 00:23:35,720 Speaker 8: were used to create new infrastructure, for example, road infrastructure 385 00:23:35,760 --> 00:23:38,479 Speaker 8: to go to Cortinada and pets. A couple of new 386 00:23:38,520 --> 00:23:41,080 Speaker 8: chunnels were just in agreat a few days before the 387 00:23:41,119 --> 00:23:46,080 Speaker 8: Olympics are starting. So it's a way somehow to boost 388 00:23:46,119 --> 00:23:48,760 Speaker 8: infrastructure in Italy, which is one of the main issues 389 00:23:48,800 --> 00:23:49,600 Speaker 8: of the country. 390 00:23:50,840 --> 00:23:55,119 Speaker 2: Yeah, absolutely great. Britain sending fifty three athletes the United 391 00:23:55,160 --> 00:23:58,080 Speaker 2: States more than two hundred. Italy has actually got close 392 00:23:58,160 --> 00:24:00,000 Speaker 2: to two hundred athletes are going to be going there. 393 00:24:00,080 --> 00:24:02,800 Speaker 2: But as you say, tourism numbers will be something that 394 00:24:02,840 --> 00:24:06,639 Speaker 2: will be watched closely. It's a huge platform, isn't it 395 00:24:06,680 --> 00:24:09,040 Speaker 2: for Italy. Tomaso, thank you so much for being with 396 00:24:09,119 --> 00:24:13,320 Speaker 2: me being interesting few weeks. Thank you, Jow Bloomberg's Milan 397 00:24:13,359 --> 00:24:16,960 Speaker 2: Buia chief Tamaso Ebhart, and we'll be bringing you any 398 00:24:17,080 --> 00:24:20,399 Speaker 2: interesting news stories from the Olympics sixth of February to 399 00:24:20,440 --> 00:24:23,479 Speaker 2: the twenty second of February, of course, in the coming 400 00:24:23,640 --> 00:24:26,479 Speaker 2: few days. I'm Caroline Hepka here in London. You can 401 00:24:26,520 --> 00:24:29,560 Speaker 2: catch us every weekday morning for Bloomberg Daybreak. You at 402 00:24:29,600 --> 00:24:32,320 Speaker 2: beginning at six am in London. That's one am on 403 00:24:32,440 --> 00:24:32,960 Speaker 2: Wall Street. 404 00:24:33,080 --> 00:24:36,840 Speaker 1: Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend, 405 00:24:36,880 --> 00:24:39,639 Speaker 1: we'll look to Japan, where a general election is set 406 00:24:39,720 --> 00:24:43,800 Speaker 1: for February eighth. I'm Nathan Hager, and this is Bloomberg. 407 00:24:54,800 --> 00:24:57,440 Speaker 1: This is Bloomberg day Break weekend. Our glob will look 408 00:24:57,480 --> 00:25:00,359 Speaker 1: ahead at the top stories for investors in the coming week. 409 00:25:00,560 --> 00:25:03,720 Speaker 1: I'm Nathan Hager in Washington. We go to Japan next, 410 00:25:03,720 --> 00:25:06,760 Speaker 1: where a general election is set for February eighth. Prime 411 00:25:06,760 --> 00:25:10,760 Speaker 1: Minister Takaichi's Liberal Democratic Party is likely to increase seats 412 00:25:10,800 --> 00:25:13,399 Speaker 1: and gain a majority in the lower House. For a 413 00:25:13,440 --> 00:25:16,000 Speaker 1: look at what the outcome could mean for the Japanese economy. 414 00:25:16,200 --> 00:25:18,680 Speaker 1: Let's go to Bloomberg's Doug Krisner, host of the Daybreak 415 00:25:18,680 --> 00:25:20,680 Speaker 1: Asia podcast Nathan. 416 00:25:20,800 --> 00:25:25,040 Speaker 3: In late January, Japanese Prime Minister take Ichi dissolved parliament 417 00:25:25,119 --> 00:25:28,080 Speaker 3: and called for a lower house election. It is now 418 00:25:28,160 --> 00:25:31,720 Speaker 3: set for February eighth. Now, markets have already expressed a 419 00:25:31,760 --> 00:25:34,560 Speaker 3: bit of unease. To help us understand what's at play, 420 00:25:34,880 --> 00:25:37,399 Speaker 3: let's bring in Bloomberg's Paul Jackson. Paul as a member 421 00:25:37,440 --> 00:25:40,240 Speaker 3: of the Eco gov team looking at Japan in South Korea. 422 00:25:40,640 --> 00:25:42,520 Speaker 3: Thank you for being here. Can we begin with a 423 00:25:42,560 --> 00:25:46,200 Speaker 3: backstory on how we got here and why take Ichi 424 00:25:46,280 --> 00:25:47,399 Speaker 3: called for this snap election. 425 00:25:48,280 --> 00:25:51,960 Speaker 9: The ruling party in Japan, the Liberal Democratic Party, has 426 00:25:52,000 --> 00:25:56,160 Speaker 9: been struggling to hold on to power in recent elections. 427 00:25:56,680 --> 00:26:01,200 Speaker 9: Votess are very unhappy about inflation. It's the first time 428 00:26:01,240 --> 00:26:04,800 Speaker 9: they've been experiencing inflation in a generation. It's putting a 429 00:26:04,800 --> 00:26:09,119 Speaker 9: lot of pressure on households and they're wanting the government 430 00:26:09,200 --> 00:26:12,199 Speaker 9: to kind of take control of this. Also, we have 431 00:26:12,280 --> 00:26:18,320 Speaker 9: a country that's surrounded in Asia by various security concerns, 432 00:26:18,720 --> 00:26:22,360 Speaker 9: and since she became prime minister just three months ago, 433 00:26:22,840 --> 00:26:26,080 Speaker 9: she's been riding high in the opinion polls. Now you 434 00:26:26,119 --> 00:26:28,359 Speaker 9: could think it's a bit cheeky to go straight to 435 00:26:28,400 --> 00:26:33,719 Speaker 9: the electorate when less than a quarter through your leadership, 436 00:26:34,000 --> 00:26:38,080 Speaker 9: but she's clearly trying to take advantage of those high 437 00:26:38,080 --> 00:26:42,160 Speaker 9: opinion poll ratings and the idea that look, I am 438 00:26:42,200 --> 00:26:46,439 Speaker 9: a leader with identity. I can be more assertive as 439 00:26:46,480 --> 00:26:50,000 Speaker 9: a leader in Japan, and I can make Japan more assertive, 440 00:26:50,080 --> 00:26:54,879 Speaker 9: give more identity to Japan, and really Takeichi is gambling 441 00:26:55,320 --> 00:26:59,000 Speaker 9: on this personal appeal to the electorate in the style 442 00:26:59,080 --> 00:27:04,600 Speaker 9: of formerly like Shinzo Abbe and Junicio Koizumi, to appeal 443 00:27:04,720 --> 00:27:09,000 Speaker 9: directly to the electric rather than through the party and 444 00:27:09,119 --> 00:27:13,280 Speaker 9: get people to vote for her. And she's put her 445 00:27:13,359 --> 00:27:17,159 Speaker 9: career on the line because imagine if she doesn't extend 446 00:27:17,640 --> 00:27:19,919 Speaker 9: a razor thin majority that she's got at the moment. 447 00:27:20,240 --> 00:27:23,679 Speaker 9: I mean, she's she's literally one seat majority at the 448 00:27:23,680 --> 00:27:27,000 Speaker 9: moment on two three three in the more powerful lower house, 449 00:27:27,320 --> 00:27:30,520 Speaker 9: and she said that the goal is to extend that majority, 450 00:27:30,840 --> 00:27:33,560 Speaker 9: and if she doesn't, then she's likely to step down. 451 00:27:33,640 --> 00:27:37,880 Speaker 3: So among her objectives you mentioned how inflation is affecting 452 00:27:37,920 --> 00:27:41,639 Speaker 3: the average consumer in Japan. She has proposed a tax 453 00:27:41,720 --> 00:27:43,920 Speaker 3: cut on food. Is that right? Is that a part 454 00:27:43,920 --> 00:27:44,719 Speaker 3: of the strategy? 455 00:27:45,400 --> 00:27:47,439 Speaker 9: That is a part of the strategy. And the ruling 456 00:27:47,560 --> 00:27:52,040 Speaker 9: party has been very reluctant to go down this path 457 00:27:52,240 --> 00:27:55,960 Speaker 9: in previous elections, even though pretty much all the opposition 458 00:27:56,119 --> 00:27:59,919 Speaker 9: parties have been calling for this or something similar related 459 00:27:59,880 --> 00:28:04,280 Speaker 9: to the sales tax. Instead, she's embracing it and saying no, no, 460 00:28:04,400 --> 00:28:07,000 Speaker 9: let's do this. We'll do it temporarily, We'll do it 461 00:28:07,040 --> 00:28:09,640 Speaker 9: for two years, and it's to reduce an eight percent 462 00:28:09,720 --> 00:28:13,119 Speaker 9: tax on food down to zero during that time. Now 463 00:28:13,280 --> 00:28:15,879 Speaker 9: that sounds okay so far. There's going to be a 464 00:28:15,880 --> 00:28:18,719 Speaker 9: loss of revenue. This is not on the scale of 465 00:28:18,760 --> 00:28:21,800 Speaker 9: some kind of like the former UK Prime Minister Liz Trust. 466 00:28:22,200 --> 00:28:25,440 Speaker 9: It's not that kind of scale of loss of revenue 467 00:28:25,680 --> 00:28:28,399 Speaker 9: or tax breaks, but it is a significant amount of 468 00:28:28,400 --> 00:28:30,159 Speaker 9: It's five trillion. How are you going to pay for that? 469 00:28:30,440 --> 00:28:30,640 Speaker 6: Now? 470 00:28:30,680 --> 00:28:33,680 Speaker 9: The problem is for two years that doesn't sound too bad. 471 00:28:34,040 --> 00:28:38,600 Speaker 9: But can you then politically raise or return the tax 472 00:28:38,720 --> 00:28:42,320 Speaker 9: back to eight percent? Now that's something policymakers have had 473 00:28:42,360 --> 00:28:44,840 Speaker 9: difficulty doing in the past, and I think that's why 474 00:28:44,920 --> 00:28:48,280 Speaker 9: markets have been on edge about the outcome of this. 475 00:28:48,360 --> 00:28:50,920 Speaker 3: Election, So you alluded to a little bit of the 476 00:28:51,080 --> 00:28:54,360 Speaker 3: geopolitical tension in the neighborhood. Right now, I'm thinking of 477 00:28:54,400 --> 00:29:00,800 Speaker 3: Takiichi's comments regarding Taiwan and how that offended Beijing. When 478 00:29:00,800 --> 00:29:03,760 Speaker 3: it comes to the issue of military spending, I know 479 00:29:03,840 --> 00:29:07,400 Speaker 3: that Japan has a passivist constitution. Is this something that 480 00:29:07,440 --> 00:29:09,960 Speaker 3: we should look for that there may be a little 481 00:29:09,960 --> 00:29:12,160 Speaker 3: bit more money allocated to defense. 482 00:29:12,640 --> 00:29:17,240 Speaker 9: I think it's certain that Takeichi, she wins, will continue 483 00:29:17,280 --> 00:29:20,800 Speaker 9: to ramp up defense spending in Japan. One of the 484 00:29:20,840 --> 00:29:24,120 Speaker 9: first things she did when she became Prime Minister was 485 00:29:24,160 --> 00:29:28,120 Speaker 9: to bring forward a target of making defense spending a 486 00:29:28,240 --> 00:29:31,880 Speaker 9: two percent of annual GDP. Now that figure is based 487 00:29:31,880 --> 00:29:34,800 Speaker 9: on twenty twenty two GDP, so it's a little bit 488 00:29:34,800 --> 00:29:37,240 Speaker 9: out of date, but she brought forward that target by 489 00:29:37,280 --> 00:29:41,280 Speaker 9: two years, so she's already ramped up defense spending and 490 00:29:41,440 --> 00:29:46,840 Speaker 9: is essentially promising more. We've just had elbertge Colby in town, 491 00:29:47,400 --> 00:29:51,640 Speaker 9: and obviously he's one of the main advocates for US 492 00:29:51,760 --> 00:29:55,720 Speaker 9: allies ramping up their spending, and the kind of message 493 00:29:55,760 --> 00:29:59,280 Speaker 9: that Takaichi has been delivering is kind of music to 494 00:29:59,360 --> 00:30:02,760 Speaker 9: the ears to the current US administration. I'd say, what. 495 00:30:02,800 --> 00:30:07,040 Speaker 3: About the issue of immigration and the growing presence in 496 00:30:07,160 --> 00:30:09,160 Speaker 3: Japan of non Japanese. 497 00:30:09,800 --> 00:30:14,320 Speaker 9: Well, we have a record number of foreigners now working 498 00:30:14,600 --> 00:30:17,680 Speaker 9: in Japan. The numbers have gone up again, and this 499 00:30:17,880 --> 00:30:20,600 Speaker 9: is a concern for those pockets of Japan where you 500 00:30:20,680 --> 00:30:25,800 Speaker 9: have large concentration of foreigners working either in manufacturing as 501 00:30:25,840 --> 00:30:30,200 Speaker 9: also much wider use of foreign workers in retail as well. 502 00:30:30,640 --> 00:30:33,800 Speaker 9: And for some voters this has put them in a 503 00:30:33,840 --> 00:30:37,760 Speaker 9: position of uncomfortableness. The sudden influx of people from other 504 00:30:37,840 --> 00:30:42,400 Speaker 9: countries while they're feeling that their kind of take home 505 00:30:42,480 --> 00:30:45,400 Speaker 9: pay with the inflation, and that the costs of that 506 00:30:45,600 --> 00:30:49,320 Speaker 9: are running the households each month is getting tougher and tougher, 507 00:30:49,640 --> 00:30:52,560 Speaker 9: and yet people are coming in from abroad and getting work. 508 00:30:52,880 --> 00:30:56,760 Speaker 9: So for a certain segment of Japan's population is making 509 00:30:56,760 --> 00:31:00,600 Speaker 9: them feel very uncomfortable and beleaguered and like, hey, wait 510 00:31:00,640 --> 00:31:02,960 Speaker 9: a minute, what's going on. Don't forget We've also got 511 00:31:03,040 --> 00:31:07,880 Speaker 9: forty two million people visiting Japan last year, a record 512 00:31:08,040 --> 00:31:10,600 Speaker 9: number of foreigners entering the country and go to all 513 00:31:10,640 --> 00:31:13,040 Speaker 9: the tourist sites and clogging up some of the main cities. 514 00:31:13,440 --> 00:31:16,760 Speaker 9: For some Japanese, this make them feel really awkward, and 515 00:31:16,840 --> 00:31:20,240 Speaker 9: they've been voting for some other parties, including the far 516 00:31:20,360 --> 00:31:25,400 Speaker 9: right Sanseto on that specific issue. So TAKH has been 517 00:31:25,440 --> 00:31:29,240 Speaker 9: giving some more robust kind of policy views on what 518 00:31:29,360 --> 00:31:33,880 Speaker 9: to do in terms of regulations and rules concerning entry 519 00:31:34,080 --> 00:31:38,280 Speaker 9: and foreigners in Japan and also the key element of 520 00:31:38,840 --> 00:31:41,800 Speaker 9: regulations on buying property by foreigners in Japan. 521 00:31:42,040 --> 00:31:44,680 Speaker 3: Is there a robust debate when it comes to how 522 00:31:44,760 --> 00:31:46,840 Speaker 3: tourism can benefit the economy. 523 00:31:47,480 --> 00:31:50,920 Speaker 9: I think that since both the time of Koizumi and Abbe, 524 00:31:51,160 --> 00:31:55,080 Speaker 9: the idea that an increase in tourism Japan can help 525 00:31:55,120 --> 00:31:58,400 Speaker 9: the economy has been one of the key kind of 526 00:31:58,440 --> 00:32:02,120 Speaker 9: elements as a growth, not the main one, but certainly 527 00:32:02,120 --> 00:32:06,600 Speaker 9: a significant one, and we've seen that really escalate in 528 00:32:06,680 --> 00:32:07,560 Speaker 9: recent years. 529 00:32:07,720 --> 00:32:09,680 Speaker 3: Paul will leave it there. Thank you so very much 530 00:32:09,920 --> 00:32:14,000 Speaker 3: for helping us preview the election in Japan. Bloomberg's Paul Jackson. 531 00:32:14,040 --> 00:32:16,200 Speaker 3: He is a member of the ECOGUV team looking at 532 00:32:16,240 --> 00:32:19,480 Speaker 3: Japan in South Korea. So the other event on our 533 00:32:19,560 --> 00:32:22,480 Speaker 3: radar for the week ahead is the policy decision for 534 00:32:22,600 --> 00:32:26,400 Speaker 3: the Reserve Bank of Australia. To provide some insights, let's 535 00:32:26,440 --> 00:32:29,800 Speaker 3: bring in Bloomberg's James McIntyre James as an economist for 536 00:32:29,880 --> 00:32:34,280 Speaker 3: Australia and New Zealand at Bloomberg Economics. Thanks for being here. 537 00:32:34,720 --> 00:32:37,120 Speaker 3: Can we set the stage by looking at the story 538 00:32:37,160 --> 00:32:40,760 Speaker 3: on inflation down Under in the last week, the market's 539 00:32:40,760 --> 00:32:42,960 Speaker 3: got a very hot reading on CPI. Do you think 540 00:32:42,960 --> 00:32:45,400 Speaker 3: that's going to impact the thinking of the RBA. 541 00:32:45,680 --> 00:32:48,680 Speaker 10: We've got a very very strong CPI outcome that came 542 00:32:48,720 --> 00:32:53,240 Speaker 10: through for the final quarter of twenty twenty five. What's 543 00:32:53,240 --> 00:32:57,080 Speaker 10: been happening in Australia is that the Statistics Bureau was finally, 544 00:32:57,360 --> 00:33:01,280 Speaker 10: after many many years of effort, moved to a monthly CPI. 545 00:33:01,640 --> 00:33:05,000 Speaker 10: But we've got a transition going on in this data 546 00:33:05,040 --> 00:33:08,200 Speaker 10: and it's resulting in a lot of very volatility and 547 00:33:08,240 --> 00:33:10,000 Speaker 10: sticky moves. So it's going to be a tough one 548 00:33:10,240 --> 00:33:13,400 Speaker 10: for the RBA to analyze and take on board. But 549 00:33:13,480 --> 00:33:15,360 Speaker 10: what they do if we look at the headline figures 550 00:33:15,360 --> 00:33:18,400 Speaker 10: out of it, especially this trimmed mean measure, which is 551 00:33:18,800 --> 00:33:21,360 Speaker 10: taking out some of the volatility out of the data, 552 00:33:21,360 --> 00:33:24,560 Speaker 10: and it's the measure that the RBA has reinforced that 553 00:33:24,560 --> 00:33:26,760 Speaker 10: they will be looking at the quarterly trimmed mean measure 554 00:33:26,760 --> 00:33:29,920 Speaker 10: for the RBA came in at zero point nine quarter 555 00:33:29,960 --> 00:33:32,560 Speaker 10: on quarter in three point four year on year, and 556 00:33:32,600 --> 00:33:36,600 Speaker 10: that's above the top of the RBA's target band. Two 557 00:33:36,600 --> 00:33:39,960 Speaker 10: to three percent is inflation angling for two and a 558 00:33:40,000 --> 00:33:43,680 Speaker 10: half percent midpoint is what the RBA is targeting, and 559 00:33:43,720 --> 00:33:46,560 Speaker 10: inflation has come in at three point four percent. Instead 560 00:33:46,560 --> 00:33:50,920 Speaker 10: of gradually moving back, it's ticked up. It's resulted in 561 00:33:50,960 --> 00:33:55,360 Speaker 10: market pricing and expectations shifting from maybe the RBA entertaining 562 00:33:55,360 --> 00:33:58,880 Speaker 10: a hike. At this meeting, we're a little bit more cautious, 563 00:33:59,080 --> 00:34:01,680 Speaker 10: but that's really set the scene for what the decision 564 00:34:01,720 --> 00:34:04,160 Speaker 10: is going to be at the RBAS for every meeting. 565 00:34:04,320 --> 00:34:07,680 Speaker 3: So, James, what was driving the increase in inflation in 566 00:34:07,800 --> 00:34:10,640 Speaker 3: terms of the factors here involved? Can you kind of 567 00:34:10,640 --> 00:34:12,840 Speaker 3: pinpoint a couple of the key problem areas. 568 00:34:13,800 --> 00:34:16,920 Speaker 10: One bucket of problem areas within the inflation basket is 569 00:34:16,920 --> 00:34:22,000 Speaker 10: the thing that local Australian economists refer to as administered prices. 570 00:34:22,480 --> 00:34:23,200 Speaker 1: So what is that. 571 00:34:23,320 --> 00:34:26,719 Speaker 10: Well, it's prices within the economy that are influenced by 572 00:34:26,760 --> 00:34:31,120 Speaker 10: government decisions and regulatory dictates and the like, So things 573 00:34:31,200 --> 00:34:35,759 Speaker 10: like electricity prices, school fees, these sorts of things are 574 00:34:35,800 --> 00:34:39,359 Speaker 10: sort of set either quarterly or annually. You know, the 575 00:34:39,400 --> 00:34:42,360 Speaker 10: cost of a posted stamp. They're regulated by the government. 576 00:34:42,400 --> 00:34:44,680 Speaker 10: And what we're seeing here is that we're seeing market 577 00:34:44,719 --> 00:34:48,080 Speaker 10: driven inflation, the parts of the inflation basket that are 578 00:34:48,200 --> 00:34:51,120 Speaker 10: a bit more responsive to private decisions and supply and 579 00:34:51,160 --> 00:34:54,960 Speaker 10: demand within the economy that's continuing to edge downward, but 580 00:34:55,160 --> 00:34:59,000 Speaker 10: a lot of these government related or administered prices really 581 00:34:59,080 --> 00:35:01,760 Speaker 10: spiking up. And so what's happened in the third quarter 582 00:35:02,040 --> 00:35:04,000 Speaker 10: and in the fourth quarter is that we've seen a 583 00:35:04,040 --> 00:35:07,319 Speaker 10: bit of a bump. The RBA referred to it as transitory, 584 00:35:07,400 --> 00:35:09,560 Speaker 10: but it's going to test their patients. We've seen a 585 00:35:09,560 --> 00:35:12,600 Speaker 10: bump in electricity prices, We've seen a bump in property rates, 586 00:35:12,880 --> 00:35:15,200 Speaker 10: and a couple of other things that have really pushed 587 00:35:15,200 --> 00:35:17,960 Speaker 10: that administraive prices basket way up. 588 00:35:18,200 --> 00:35:21,439 Speaker 3: So if there is now greater risk of perhaps a move, 589 00:35:21,640 --> 00:35:24,680 Speaker 3: maybe not next week, but at some point in the 590 00:35:24,719 --> 00:35:27,520 Speaker 3: near future, that we could see a rate hike from 591 00:35:27,560 --> 00:35:31,279 Speaker 3: the RBA, what might that do to the overall performance 592 00:35:31,320 --> 00:35:32,640 Speaker 3: of the Australian economy. 593 00:35:33,600 --> 00:35:35,840 Speaker 10: Well, if the RBA does decide that they want to 594 00:35:35,880 --> 00:35:38,760 Speaker 10: react to this and take out what could be described 595 00:35:38,760 --> 00:35:41,640 Speaker 10: as an insurance hike to make sure that the inflation 596 00:35:42,320 --> 00:35:45,399 Speaker 10: genie does sort of go back into the bottle, because 597 00:35:45,440 --> 00:35:47,080 Speaker 10: it looks like it's poking its head out just a 598 00:35:47,120 --> 00:35:49,400 Speaker 10: tiny bit. What it would mean is it would see 599 00:35:49,680 --> 00:35:53,759 Speaker 10: a renewed, I guess, suppression of the recovery on the 600 00:35:53,760 --> 00:35:56,520 Speaker 10: private sector side of the economy. But what an RBA 601 00:35:56,640 --> 00:35:58,439 Speaker 10: hike would do is it would just put a little 602 00:35:58,440 --> 00:36:01,080 Speaker 10: bit of a wet blanket on that another thing that's 603 00:36:01,080 --> 00:36:04,399 Speaker 10: potentially weighing a bit or dampening the economy. It might 604 00:36:04,440 --> 00:36:06,400 Speaker 10: be one of the reasons the RBA might be a 605 00:36:06,440 --> 00:36:09,279 Speaker 10: little bit circumspect and be prepared to look through what 606 00:36:09,320 --> 00:36:13,080 Speaker 10: it sees as this transitory inflation spike is the currency. 607 00:36:13,480 --> 00:36:15,799 Speaker 10: It's the Aussie dollar has shot up quite a bit 608 00:36:16,200 --> 00:36:18,400 Speaker 10: some of it. You know, there is this big divergence 609 00:36:18,400 --> 00:36:21,480 Speaker 10: between market pricing for the RBA and market pricing for 610 00:36:21,520 --> 00:36:25,520 Speaker 10: the FED, and the currency is responding to that along 611 00:36:25,640 --> 00:36:30,360 Speaker 10: with the general US dollar story underway. Commodity price is 612 00:36:30,360 --> 00:36:32,760 Speaker 10: a little bit firm. Gold price Australia is the largest 613 00:36:33,040 --> 00:36:36,959 Speaker 10: third largest i should say, gold exporter. You know, these 614 00:36:36,960 --> 00:36:39,759 Speaker 10: things are all a bit supportive, whether it's interest rate 615 00:36:39,760 --> 00:36:43,960 Speaker 10: toferential commodity prices or the overall tone within global markets 616 00:36:43,960 --> 00:36:46,560 Speaker 10: when it comes to the US dollar and all of 617 00:36:46,600 --> 00:36:48,560 Speaker 10: that's going to put some you know, a bit of 618 00:36:48,560 --> 00:36:50,719 Speaker 10: a dampener on demand in the economy, but also a 619 00:36:50,760 --> 00:36:55,120 Speaker 10: dampener on inflation imported prices. Australia does import a lot 620 00:36:55,160 --> 00:36:58,799 Speaker 10: of goods. A stronger Australian dollar is going to put 621 00:36:58,840 --> 00:37:00,960 Speaker 10: some downward pressure on those and so it really is 622 00:37:01,000 --> 00:37:03,400 Speaker 10: adding to the story here that this could be something 623 00:37:03,440 --> 00:37:05,080 Speaker 10: that the ABA does look through. 624 00:37:05,520 --> 00:37:07,879 Speaker 3: Okay, James, we'll leave it there. Thank you so very much. 625 00:37:08,000 --> 00:37:13,160 Speaker 3: James McIntyre, economist for Australia and New Zealand for Bloomberg Economics, 626 00:37:13,320 --> 00:37:15,520 Speaker 3: and I'm Doug Chrisner. You can catch us weekdays for 627 00:37:15,560 --> 00:37:19,640 Speaker 3: the Daybreak Asia podcast. It's available wherever you get your podcast. 628 00:37:19,840 --> 00:37:22,920 Speaker 1: Nathan, Thanks Doug, and that does it for this edition 629 00:37:22,960 --> 00:37:26,120 Speaker 1: of Bloomberg Daybreak Weekend. Join us again Monday morning at 630 00:37:26,120 --> 00:37:28,800 Speaker 1: five am Wall Street Time for the latest don markets, 631 00:37:28,800 --> 00:37:31,520 Speaker 1: overseas and the news you need to start your day. 632 00:37:31,800 --> 00:37:35,000 Speaker 1: I'm Nathan Hager. Stay with us. Top stories and global 633 00:37:35,040 --> 00:37:38,040 Speaker 1: business headlines are coming out right now.