WEBVTT - Daybreak Weekend: US CPI, Reeves Speech, Tencent Earnings 0:00:02.920 --> 0:00:08.320 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.560 --> 0:00:13.000 This is Bloomberg day Break Weekend, our global look at 0:00:13.039 --> 0:00:14.960 the top stories in the coming week from our day 0:00:15.000 --> 0:00:17.119 Break anchors all around the world, and straight ahead on 0:00:17.160 --> 0:00:19.840 the program, a look at key inflation data in the 0:00:19.920 --> 0:00:23.600 US and earnings from media and entertainment giant Walt Disney. 0:00:23.880 --> 0:00:25.440 I'm Tom Busby in New York. 0:00:25.640 --> 0:00:28.400 I'm callin hetger Hair in London, where we're thinking about 0:00:28.440 --> 0:00:32.120 the Chancellor's Mansion House speech as she tries to moove 0:00:32.120 --> 0:00:32.560 a city. 0:00:32.920 --> 0:00:35.800 I'm Doug Krisner looking at bay Chain's reaction to the 0:00:35.800 --> 0:00:38.720 reelection of Donald Trump. Will also take a look at 0:00:38.760 --> 0:00:41.160 what to expect in the week ahead from ten Cent 0:00:41.280 --> 0:00:42.680 as it reports earnings. 0:00:43.880 --> 0:00:47.360 That's all e struly head on Bloomberg Daybreak Weekend on 0:00:47.520 --> 0:00:52.000 Bloomberg eleven Trio, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:52.440 --> 0:00:57.320 Bloomberg ninety two nine Boston, DAB Digital Radio, London, Sirius 0:00:57.480 --> 0:01:00.840 XM one twenty one, and around the world Bloomberg Radio 0:01:00.920 --> 0:01:03.160 dot Com and the Bloomberg Business app. 0:01:08.200 --> 0:01:08.760 Good day to you. 0:01:08.840 --> 0:01:11.120 I'm Tom Busby, and we begin today's program with some 0:01:11.240 --> 0:01:14.560 key inflation data in the US. The Consumer Price Index 0:01:14.600 --> 0:01:18.280 the CPI out on Wednesday eight thirty am Wall Street Time, 0:01:18.760 --> 0:01:21.760 with the Federal Reserve lowering its benchmark lending rate two 0:01:21.800 --> 0:01:24.319 meetings in a row, what could this mean for Fed 0:01:24.440 --> 0:01:27.800 policy moving forward? For more, we're joined by Michael McKee, 0:01:27.800 --> 0:01:32.319 Bloomberg International Economics and Policy correspondent. Michael Well, let's start 0:01:32.319 --> 0:01:35.200 with where inflation is right now. It's come a long way. 0:01:35.880 --> 0:01:37.760 It's come a long way, but it seems to have 0:01:37.800 --> 0:01:40.959 stalled out a little bit progress. We have not seen 0:01:41.120 --> 0:01:46.839 major movements in the indexes in recent months. Now, the CPI, 0:01:47.000 --> 0:01:50.920 which comes up this week is expected to show basically 0:01:51.080 --> 0:01:53.800 no change on a month over month basis, but that 0:01:53.800 --> 0:01:57.040 would mean, because of what we call base effects, that 0:01:57.360 --> 0:02:00.280 the year over year headline CPI actually goes up up. 0:02:00.640 --> 0:02:03.080 The forecast is for two point six percent from two 0:02:03.120 --> 0:02:07.400 point four percent in September, and the core will stay 0:02:07.520 --> 0:02:11.359 unchanged at three point three percent, which is not going 0:02:11.400 --> 0:02:15.360 to make for a great headline for people. But and 0:02:15.480 --> 0:02:16.720 Jay Powell talked about. 0:02:16.520 --> 0:02:19.000 That that we have. 0:02:19.320 --> 0:02:22.120 Not seen a lot of progress, but he said it 0:02:22.200 --> 0:02:24.799 wasn't a bad situation because it's still pretty low. 0:02:25.200 --> 0:02:28.480 So the latest personal consumption expenditure though look like a 0:02:28.680 --> 0:02:30.359 two point one percent year over year. 0:02:30.800 --> 0:02:34.720 Yeah, And the problem for the FED is people tend 0:02:34.720 --> 0:02:35.840 to focus on the CPI. 0:02:36.000 --> 0:02:38.000 The average American focuses on the CPI. 0:02:38.080 --> 0:02:40.200 It's the one that gets the headlines on the front 0:02:40.240 --> 0:02:42.560 page of the paper when it comes out. The PCE 0:02:42.880 --> 0:02:47.919 numbers are something that economics nerds and FED and Wall 0:02:47.960 --> 0:02:52.840 Street people follow it. It's constructed differently, and the FED 0:02:52.919 --> 0:02:56.680 feels that it is a more accurate measure of what's 0:02:56.720 --> 0:03:00.600 actually happening happening with inflation, particularly since doesn't put as 0:03:00.680 --> 0:03:02.040 much weight on home. 0:03:01.919 --> 0:03:03.280 Prices as the CPI. 0:03:03.360 --> 0:03:07.560 But the CPI is what they have to deal with psychologically. 0:03:08.120 --> 0:03:10.239 So what are the big drivers then for this? I mean, 0:03:10.600 --> 0:03:13.200 we've all felt a low gas prices, that's great. You 0:03:13.280 --> 0:03:16.480 brought up housing prices which go nowhere, but up it seems. 0:03:16.919 --> 0:03:19.440 I mean, what are the drivers for the inflation that 0:03:19.480 --> 0:03:21.600 we're seeing now? The two point one percent in the PCE, 0:03:22.120 --> 0:03:24.280 maybe a three point three percent in the CPI. 0:03:24.560 --> 0:03:27.080 Well, we still have housing as a problem. It's not 0:03:27.120 --> 0:03:29.960 coming down as fast as the FED thought. Chairman Powell 0:03:30.040 --> 0:03:33.480 last week pointed out that when you look at new 0:03:33.600 --> 0:03:37.000 costs for rents, which is what the housing costs numbers 0:03:37.040 --> 0:03:40.160 are based on. They have gone down or they have 0:03:40.280 --> 0:03:43.440 stopped rising, and that should be reflected in the numbers, 0:03:43.560 --> 0:03:47.560 and it's not yet. There are other things that are 0:03:47.840 --> 0:03:53.160 sort of quirky and change with the timing of the year. 0:03:53.800 --> 0:03:58.440 One of them is airfares, another is hotel prices. And 0:03:58.480 --> 0:04:01.520 you know we've talked about used and new cars quite 0:04:01.520 --> 0:04:06.440 a bit. Those all go into the question about what 0:04:06.520 --> 0:04:10.960 is going to happen with inflation, and they're all sort 0:04:10.960 --> 0:04:14.600 of separate, different reasons why they're going up. For example, 0:04:14.640 --> 0:04:19.080 we are expecting maybe used car prices to rise in 0:04:19.120 --> 0:04:21.200 October because a lot of people who were in the 0:04:21.279 --> 0:04:24.960 hurricane damaged areas, they still had to get to work 0:04:25.000 --> 0:04:26.719 and their cars were destroyed, the. 0:04:27.320 --> 0:04:29.080 New cars, and the first thing they do is they. 0:04:28.960 --> 0:04:32.599 Go get the cheapest car they can get, and so 0:04:32.960 --> 0:04:36.200 we should expect to see some rise in used car 0:04:36.279 --> 0:04:38.640 prices and the next month maybe the new car prices 0:04:38.680 --> 0:04:39.040 go up. 0:04:39.520 --> 0:04:42.000 And another thing we've seen in some of these job 0:04:42.080 --> 0:04:46.359 numbers higher wages is that impacting inflation as well. The 0:04:46.360 --> 0:04:50.000 more people have, the more they can raise the price tags, 0:04:50.040 --> 0:04:50.680 the more. 0:04:51.240 --> 0:04:54.839 It's an interesting question. So far that doesn't seem to 0:04:54.920 --> 0:04:58.000 have been happening. It may have been in the last 0:04:58.040 --> 0:05:01.440 couple of years, given that we saw a big wage 0:05:01.480 --> 0:05:05.679 increases as there was a shortage of workers, and whether 0:05:05.760 --> 0:05:09.760 that fed into inflation expectations doesn't really look like it did. 0:05:10.279 --> 0:05:15.000 But we had just last week got a revision to 0:05:15.640 --> 0:05:18.960 unit labor costs that showed a big rise in compensation 0:05:19.160 --> 0:05:21.919 for employees, much bigger over the last couple of years 0:05:21.960 --> 0:05:24.600 than had been recorded. The fact that it was a 0:05:24.680 --> 0:05:26.760 revised number doesn't mean all of a sudden we're going 0:05:26.800 --> 0:05:30.160 to see inflation expectations rise, but it does suggest that 0:05:30.200 --> 0:05:34.679 people have more money, and so as long as demand 0:05:34.800 --> 0:05:36.560 is high, then it becomes. 0:05:36.279 --> 0:05:39.559 A question of supply keeping up or prices will rise. 0:05:39.760 --> 0:05:42.360 Yeah. Yeah, Let's go back to what the Fed did 0:05:42.400 --> 0:05:46.400 this past week, and you know, this quarter point twenty 0:05:46.400 --> 0:05:49.280 five basis point cut. And more importantly, I want to 0:05:49.320 --> 0:05:51.640 talk about Chairman Powell and what he said in his 0:05:51.680 --> 0:05:56.679 press conference talking about the new administration coming in, talking 0:05:56.760 --> 0:06:00.400 about all the factors and data points that led to 0:06:00.440 --> 0:06:01.800 his decision this past week. 0:06:02.279 --> 0:06:07.880 Basically because the economy continues to be relatively strong, but 0:06:08.480 --> 0:06:15.320 slow down in inflation and missed the confusing jobs reports 0:06:15.360 --> 0:06:18.680 from September and October, where September was really really strong 0:06:18.680 --> 0:06:22.440 in October was really really weak, which they figure probably 0:06:22.520 --> 0:06:26.560 as hurricane related, but at this point they don't know, 0:06:26.920 --> 0:06:29.080 so they just went ahead with kind of the plan. 0:06:29.160 --> 0:06:32.239 They had to reduce rates by twenty five basis points 0:06:32.279 --> 0:06:36.560 because they said, no matter what you think of all 0:06:36.600 --> 0:06:42.280 these possible explanations for stuff, that inflation was under control 0:06:42.360 --> 0:06:44.359 and that interest rates are still restrictive. 0:06:44.400 --> 0:06:46.320 That's their story. 0:06:46.240 --> 0:06:49.559 And they're sticking to it. A lot to look forward 0:06:49.600 --> 0:06:53.000 to our thanks to Michael McKee, Bloomberg International Economics and 0:06:53.080 --> 0:06:56.719 Policy correspondent. We moved next to corporate earnings from the 0:06:56.720 --> 0:07:00.640 world's biggest entertainment company, Walt Disney, reporting fourth order results 0:07:00.640 --> 0:07:03.200 on Thursday, on the heels of finally turning a profit 0:07:03.240 --> 0:07:05.920 and its streaming video unit in the previous quarter, and 0:07:06.120 --> 0:07:10.680 after announcing another timeline to replace its CEO. For more 0:07:10.800 --> 0:07:13.200 on what to look for, we're joined by Getha raghanoffin 0:07:13.560 --> 0:07:18.200 Bloomberg Intelligence analyst on US media. Well that is a 0:07:18.240 --> 0:07:21.800 Biggie Disney appointing a new chairman last month. James P. 0:07:22.000 --> 0:07:25.360 Gorman of Wall Street banking giant Morgan Stanley, and announced 0:07:25.720 --> 0:07:29.840 another time frame to replace Bob Eiger in early twenty 0:07:29.920 --> 0:07:33.080 twenty six. What does this mean for Disney, Gita. 0:07:33.160 --> 0:07:35.720 Thank you so much, Tom So. Obviously, succession has been 0:07:35.760 --> 0:07:39.600 one of the biggest issues for Disney in recent times, 0:07:39.640 --> 0:07:42.160 and you know, the lack of a proper strategy has 0:07:42.280 --> 0:07:47.320 really kind of troubled investors and kind of industry watchers alike. 0:07:48.200 --> 0:07:50.080 So it's really good that they're coming up with this plan. 0:07:50.120 --> 0:07:54.520 They're obviously taking succession extremely seriously. They have a person 0:07:54.560 --> 0:07:58.400 there who's kind of overseen, you know, his own succession 0:07:58.440 --> 0:08:01.400 at at Morgan Stanley really really smoothly, so he's obviously 0:08:01.480 --> 0:08:06.000 very familiar with the process. That said, Tom, the appointment 0:08:06.000 --> 0:08:08.720 of a new CEO has actually been pushed a little bit. 0:08:08.800 --> 0:08:11.560 So we were expecting an announcement sometime next year, in 0:08:11.600 --> 0:08:14.600 twenty twenty five. It looks like that's going to be 0:08:14.680 --> 0:08:17.440 pushed at least you know, six months, or maybe even 0:08:17.520 --> 0:08:20.960 more to sometime in twenty twenty six. And it obviously 0:08:20.960 --> 0:08:23.560 tells us how critical of an issue this is and 0:08:23.600 --> 0:08:26.360 also how complicated it is. And that's just because of 0:08:26.400 --> 0:08:29.080 the nature of Disney's business. I mean, they have so many, 0:08:29.320 --> 0:08:33.280 very many disparate businesses. Whether it's theme parks or studios, 0:08:33.400 --> 0:08:36.720 or the television networks or ESPN, they all require kind 0:08:36.720 --> 0:08:39.560 of different expertise and a different skill set, and so 0:08:39.559 --> 0:08:41.600 it's going to be hard to kind of it's obviously 0:08:41.720 --> 0:08:42.760 very big shoes to fill. 0:08:42.960 --> 0:08:43.160 Well. 0:08:43.280 --> 0:08:45.840 Also, the last one did not work out so well 0:08:45.840 --> 0:08:46.679 with Bob Chappick. 0:08:46.880 --> 0:08:49.360 Yes, and again this is where, you know, we come 0:08:49.400 --> 0:08:51.000 back to this age old question. I mean, do you 0:08:51.120 --> 0:08:55.040 have somebody who is really good in terms of relationships 0:08:55.040 --> 0:08:57.640 with you know, the creatives, with Hollywood executives, or do 0:08:57.720 --> 0:09:01.160 you have a more hands on person who has tremendous 0:09:01.200 --> 0:09:04.360 experience with the parks. And so even as they kind 0:09:04.360 --> 0:09:08.320 of go about trying to determine who their new CEO 0:09:08.400 --> 0:09:10.319 will be, I think that kind of really will give 0:09:10.400 --> 0:09:13.160 us a glimpse into what their future strategy is going 0:09:13.200 --> 0:09:15.320 to be. Is it going to be more a theme 0:09:15.480 --> 0:09:18.200 park kind of focused company. We do have to remember 0:09:18.200 --> 0:09:19.880 that this is the bread and butter of the company, 0:09:19.920 --> 0:09:24.480 brings in almost sixty five percent of profits, so definitely 0:09:24.640 --> 0:09:27.160 very very critical to both the top and the bottom line. 0:09:27.240 --> 0:09:30.480 But at the same time, you know, Hollywood relationship with 0:09:30.679 --> 0:09:33.720 you know, Hollywood talent with creatives is also important because 0:09:33.800 --> 0:09:36.640 it's the movies and it's it's the studio content that 0:09:36.760 --> 0:09:40.120 ultimately is the flywheel and is so important for kind 0:09:40.160 --> 0:09:42.960 of feeding all of the other businesses, including the theme 0:09:43.000 --> 0:09:43.640 park business. 0:09:43.920 --> 0:09:47.280 Oh yeah, and they have actually some of those other businesses, 0:09:47.320 --> 0:09:50.440 not the theme parks, which is almost an autopilot. They've 0:09:50.440 --> 0:09:52.680 had some of the biggest blockbusters of this year, and 0:09:52.720 --> 0:09:55.920 the movie theaters, the streaming unit, as I said earlier, 0:09:56.160 --> 0:10:00.000 finally turning a profit, the Disney plus Hulu, ESPN plus. 0:10:00.480 --> 0:10:03.200 I mean, it looks like all of the investing they've 0:10:03.240 --> 0:10:05.880 done in the directing consumer the streaming operations has really 0:10:05.920 --> 0:10:06.400 paid off. 0:10:06.600 --> 0:10:09.880 Yeah, it absolutely has. And you spoke about the studio, 0:10:09.920 --> 0:10:13.720 which is really important because they had definitely a whole 0:10:13.800 --> 0:10:17.480 string of missus, you know, at the studio division, but 0:10:17.559 --> 0:10:21.840 that obviously changed this year with the outperformance both of 0:10:21.920 --> 0:10:25.720 Inside Out Too as well as you know, Deadpool and Wolverine, 0:10:25.720 --> 0:10:29.320 which are some of the biggest releases for this year. Definitely, 0:10:29.920 --> 0:10:32.080 and as we look forward as well, you know, it 0:10:32.120 --> 0:10:34.640 looks like they're finally kind of turned the corner. On 0:10:35.400 --> 0:10:38.079 you know, the content pipeline, and so as we look 0:10:38.120 --> 0:10:40.440 forward to both twenty twenty five and twenty twenty six, 0:10:41.080 --> 0:10:44.160 that's late is definitely strengthening. So there's definitely a lot 0:10:44.160 --> 0:10:47.040 of positive momentum on in the studio side of things. 0:10:47.520 --> 0:10:50.120 But then as we kind of think about streaming, yes, 0:10:50.200 --> 0:10:53.640 that's where all of the profitability delta is kind of 0:10:53.679 --> 0:10:55.960 really going to come over the next few years. 0:10:56.160 --> 0:10:59.760 And also just to mention Moanatu and Move Fast of 0:10:59.760 --> 0:11:02.959 the King both out in the next couple of weeks really, 0:11:03.000 --> 0:11:04.640 so that could also add to. 0:11:04.640 --> 0:11:08.520 Things absolutely absolutely that just goes to speak to you know, 0:11:08.559 --> 0:11:13.160 their content slate strengthening tremendously. This is the whole studio 0:11:13.200 --> 0:11:16.600 turnaround that we're seeing in progress. Ultimately, remember Tom, all 0:11:16.640 --> 0:11:19.240 of those movies are going to come to the Disney 0:11:19.240 --> 0:11:22.560 Plus streaming platform, so again it's going to have you know, 0:11:22.600 --> 0:11:26.040 that nice tailwind effects in terms of boosting subscriber numbers. 0:11:26.240 --> 0:11:28.160 Now, I want to bring up something at the parks, 0:11:28.400 --> 0:11:31.559 as you said, sixty five percent of its profits. It 0:11:31.720 --> 0:11:34.000 seems to always be a winner for them, but they 0:11:34.000 --> 0:11:37.000 did something a little controversial in the last couple of months. 0:11:37.000 --> 0:11:40.559 That is the Lightning Lane premiere pass a nearly five 0:11:40.679 --> 0:11:45.439 hundred dollars extra fee to skip lines. Was this a miscalculation? 0:11:45.920 --> 0:11:48.760 Was it wrong to do this? And how is it 0:11:48.800 --> 0:11:49.760 fared for the company. 0:11:49.920 --> 0:11:51.880 I don't think it was wrong. I mean, one of 0:11:51.880 --> 0:11:54.720 the things that we've seen overall is that theme park 0:11:54.760 --> 0:11:59.439 demand has moderated. And as theme park demand is moderating, 0:11:59.520 --> 0:12:02.480 we also know that visibility is kind of limited on 0:12:02.559 --> 0:12:05.600 when trends will improve. So obviously they do, you know, 0:12:05.679 --> 0:12:08.240 if this is always going to be a volume and 0:12:08.280 --> 0:12:11.400 a pricing game, So as they kind of see volume 0:12:11.480 --> 0:12:14.120 going down, they obviously have to come up with more 0:12:14.120 --> 0:12:17.880 innovative ways of kind of you know, raising prices and 0:12:18.840 --> 0:12:23.200 boosting and preserving their top line. That of course said, 0:12:23.320 --> 0:12:24.960 I mean, they also have to be careful not to 0:12:25.040 --> 0:12:28.200 overplay their hand, and so it is a very careful 0:12:28.240 --> 0:12:31.360 balancing act. I do agree, But you know, I think 0:12:30.600 --> 0:12:36.120 the Lightning Lane price increase obviously came after a lot 0:12:36.160 --> 0:12:38.960 of deliberation and a lot of careful thought. I mean, 0:12:39.000 --> 0:12:42.520 they obviously have tremendous demand at a lot of these attractions, 0:12:42.559 --> 0:12:44.520 and I think that is kind of what prompted it. 0:12:44.720 --> 0:12:47.520 So I don't think it's a miscalculation. But again we'll 0:12:47.520 --> 0:12:49.280 have to wait and watch. We have to wait for 0:12:49.320 --> 0:12:52.280 their earnings call to see exactly how it's played out 0:12:52.280 --> 0:12:52.600 so far. 0:12:52.840 --> 0:12:55.520 All right, and those Disney Q four earnings out this 0:12:55.640 --> 0:12:59.200 Thursday are thanks to Geet the Raganathan Bloomberg Intelligence analysts 0:12:59.360 --> 0:13:02.400 on us ME and coming up on Bloomberg day Break weekend, 0:13:02.400 --> 0:13:05.200 we'll discuss whether the UK Chancellor can bring growth back 0:13:05.360 --> 0:13:08.120 to the City of London. I'm Tom Busby and this 0:13:08.400 --> 0:13:21.960 is Bloomberg. This is Bloomberg day Break weekend, our global 0:13:21.960 --> 0:13:23.960 look ahead at the top stories for investors in the 0:13:23.960 --> 0:13:27.200 coming week. I'm Tom Busby in New York. Up later 0:13:27.240 --> 0:13:30.520 in the program, Beijing confronts the threat of punishing US 0:13:30.640 --> 0:13:34.720 tariffs on its exports. But first, fresh from her autumn budget, 0:13:34.800 --> 0:13:38.440 UK Chancellor Rachel Reeves delivers her biggest City of London 0:13:38.520 --> 0:13:41.720 speech to date this week. Her plan for growth relies 0:13:41.720 --> 0:13:44.800 heavily on the business sector, but will she impress them 0:13:44.880 --> 0:13:47.200 for more. Let's go to London and bring in Bloomberg 0:13:47.240 --> 0:13:50.080 day Break Europe anchor Caroline Hepgar Tom. 0:13:50.160 --> 0:13:53.720 It takes place in the historic surroundings of the Lord 0:13:53.840 --> 0:13:57.880 Mayor's official residence the Mansion House. Speech is billed as 0:13:57.880 --> 0:14:01.560 an opportunity for chancellors to make their case to the 0:14:01.600 --> 0:14:05.880 famously independent city of London, governed by its own laws 0:14:05.920 --> 0:14:09.000 and even featuring a separate police force. The City of 0:14:09.040 --> 0:14:13.400 London has always valued independence, but as home to many 0:14:13.480 --> 0:14:16.920 of the country's financial services giants, it's a region that 0:14:17.000 --> 0:14:20.320 Rachel Reeves will want to bring on board with her agenda. 0:14:20.480 --> 0:14:23.320 She's expected to outline her vision for the Square Mile, 0:14:23.440 --> 0:14:26.920 detailing how the Treasury will support the country's world leading 0:14:26.960 --> 0:14:31.840 financial services sector to grow, innovate and finance growth around 0:14:31.880 --> 0:14:36.040 the country. That's according to a Treasury statement. But will 0:14:36.080 --> 0:14:40.920 Reeves's fiscal policy hold back those business ambitions. I've been 0:14:40.920 --> 0:14:44.320 speaking to Richard Wilson, who's the CEO of the UK's 0:14:44.320 --> 0:14:49.520 biggest flat fee investment platform, Interactive Investor. He says that 0:14:49.600 --> 0:14:54.160 some of the measures introduced in Reeves's recent budget present 0:14:54.280 --> 0:14:56.160 a real challenge for corporates. 0:14:56.840 --> 0:15:01.040 Well, the majority of the changes were very well telegraphed. 0:15:01.520 --> 0:15:08.400 You've got a spend, tax and borrow agenda with numbers 0:15:08.440 --> 0:15:12.480 that are very high, and the ifs came out and 0:15:12.520 --> 0:15:15.600 the OBI can confoundly that that leads to lower growth 0:15:15.640 --> 0:15:19.320 going forward, a higher debt servicing burden, and of course 0:15:19.320 --> 0:15:22.600 the guilt markets have been a little bit ambiguous about 0:15:22.720 --> 0:15:24.560 their view of that because the yields have gone up 0:15:24.600 --> 0:15:28.720 in two and ten years basically makes the UK a 0:15:28.800 --> 0:15:31.680 less attractive market to invest invested others because you've got 0:15:31.680 --> 0:15:35.400 a higher tax burden. And the irritation I think for 0:15:35.520 --> 0:15:38.760 many of us is that, whilst there's clearly as a 0:15:38.800 --> 0:15:43.920 fiscal tightrope to walk going after some what would be 0:15:44.000 --> 0:15:50.160 symbolic or illogical taxes like itt reliefs on agriculture and 0:15:50.280 --> 0:15:54.200 business property do undermine entrepreneurship in the country. We've got 0:15:54.520 --> 0:15:57.080 millions of people where the bedrock of our future is 0:15:57.080 --> 0:16:01.480 on entrepreneurship, which comes from family businesses. That's not a 0:16:01.560 --> 0:16:04.200 sensible way to build growth of that. It flies in 0:16:04.240 --> 0:16:05.640 the face of your growth agenda. 0:16:05.760 --> 0:16:08.240 So to be clear, you think this budget was anti growth? 0:16:08.480 --> 0:16:09.680 Yes, no question. 0:16:10.200 --> 0:16:12.040 As a business just as a CEO, what are you 0:16:12.040 --> 0:16:14.760 doing with that increase in national insurance going to be 0:16:15.400 --> 0:16:17.240 Does that mean lower wages for your team? Are you 0:16:17.240 --> 0:16:18.720 going to pass it up through in terms of high 0:16:18.760 --> 0:16:20.360 cost for your customers? How are you going to manage that. 0:16:20.600 --> 0:16:24.800 I mean, we're in a very competitive environment and the 0:16:24.880 --> 0:16:28.200 option we're we're competing with all the near brokers, the 0:16:28.320 --> 0:16:33.160 US houses, the UK clearing bags, the European houses, everybody, 0:16:33.200 --> 0:16:37.560 the inpension companies. Our option to move price is zero. 0:16:38.160 --> 0:16:43.520 So then you're dealing with efficiency and or wages or 0:16:43.600 --> 0:16:46.560 reduced profitability. I think Rachel Reeves and one of our 0:16:46.560 --> 0:16:49.160 interviews said, you know, custom companies will be become more 0:16:49.160 --> 0:16:51.920 efficient as if we're not trying to do that every 0:16:52.000 --> 0:16:54.680 day already. So the reality is it will either be 0:16:54.720 --> 0:16:57.840 lower profits and therefore kind of lower return and lower 0:16:57.880 --> 0:17:01.360 ability to reinvesting technology, or you look at your wage 0:17:01.360 --> 0:17:03.000 bill thinking how the hell do I solve that? 0:17:03.280 --> 0:17:06.439 Okay, So in terms of what comes next from Labor 0:17:07.119 --> 0:17:10.560 mansion House, there has been a push to try to 0:17:11.119 --> 0:17:14.440 and in fact a whole group of insurers and pension 0:17:14.840 --> 0:17:18.360 companies agreed to try to put more money into UK 0:17:18.440 --> 0:17:22.840 listed stocks that wasn't mandatory. Does it become mandatory under labor? 0:17:22.960 --> 0:17:26.440 Do they target something, Do they make it more compulsory 0:17:26.440 --> 0:17:29.920 for people to invest in UK listed or unlisted assets? 0:17:30.040 --> 0:17:30.240 Yeah? 0:17:30.320 --> 0:17:32.600 I think well that there are two. There's a problem 0:17:32.640 --> 0:17:35.520 that the UK has which is compared to some other 0:17:35.560 --> 0:17:39.360 countries in Canada and Australia and a reference quite a lot. 0:17:39.560 --> 0:17:43.440 We have a fragmented pension stock so the actual size 0:17:43.440 --> 0:17:48.120 of the pool that you're allocating is not as large 0:17:48.119 --> 0:17:50.080 as it should be. So there's a task there which 0:17:50.119 --> 0:17:54.679 is to consolidate pension assets with a big opportunity across 0:17:54.720 --> 0:17:59.000 local councils and the public sectors. Has been well documented. 0:17:59.720 --> 0:18:03.880 The fear that we should have is forcing an allocation 0:18:04.320 --> 0:18:09.000 of risk which is disproportionate. That would conflict with your 0:18:09.080 --> 0:18:12.000 kind of risk management and the members of your long 0:18:12.080 --> 0:18:14.760 term pension holders. So that's not a sensible thing to do. 0:18:14.880 --> 0:18:16.560 But label will say how do you get a growth 0:18:16.560 --> 0:18:19.440 and how and people have been complaining about the fact 0:18:19.480 --> 0:18:22.360 that the UK market is undervalued and that we've seen 0:18:22.359 --> 0:18:25.040 a massive decline in investment in UK consul. 0:18:24.920 --> 0:18:26.560 So there are two things there for me. One is 0:18:26.600 --> 0:18:28.840 you've got to create the scaler pension assets so that 0:18:28.920 --> 0:18:31.480 you can make an allocation which is proportionate of a 0:18:31.560 --> 0:18:34.720 much bigger base. And secondly, we have been bleeding out 0:18:34.840 --> 0:18:37.320 the UK stock market with stamp duty for the last 0:18:37.359 --> 0:18:40.159 twenty years. The British government has sorted either I'm not 0:18:40.200 --> 0:18:42.119 sure it's too late. It may be too late to 0:18:42.160 --> 0:18:44.919 save it. We are taxing the thing out of existence. 0:18:45.119 --> 0:18:48.879 Richard Wilson, there CEO of Interactive Investors, speaking to me 0:18:49.080 --> 0:18:53.360 and to Bloomberg's Tom McKenzie, officials say that the imagine 0:18:53.440 --> 0:18:56.720 how speech will drive up investment and showcase what the 0:18:56.800 --> 0:18:59.760 UK has to offer. They'll have their work cut out 0:18:59.760 --> 0:19:03.000 for though, if recent forecast from the Office for Budget 0:19:03.000 --> 0:19:07.160 Responsibility or anything to go by now. According to their predictions, 0:19:07.200 --> 0:19:11.280 the pace of UK economic growth will peak next year 0:19:11.320 --> 0:19:14.520 at two percent before falling back to around one and 0:19:14.520 --> 0:19:18.280 a half percent later in this parliament, and that after 0:19:18.760 --> 0:19:22.880 the budget announcement, so can Rachel Reeves's plans to supercharge 0:19:23.200 --> 0:19:27.160 the city and the UK change that trajectory. Is something 0:19:27.200 --> 0:19:31.400 I've been talking about with Bloomberg City editor Catherine Griffiths. 0:19:31.119 --> 0:19:35.120 Over the years the Mansion House speech. Sometimes it kind 0:19:35.119 --> 0:19:38.959 of passes without much notice, and other years it can 0:19:39.000 --> 0:19:43.399 be really key. This year, certainly, probably from both sides, 0:19:43.440 --> 0:19:46.840 the government side and the kind of audience side, it's 0:19:46.880 --> 0:19:50.320 going to be really key. This year's Mansion House Speech 0:19:50.440 --> 0:19:52.960 was due to happen in the summer and it's been 0:19:53.000 --> 0:19:56.560 pushed back until next week because of the election, So 0:19:56.600 --> 0:19:58.639 there's that sense of sort of time as well, this 0:19:58.720 --> 0:20:03.120 sort of highly anticipated event. And then actually the Treasury 0:20:03.119 --> 0:20:07.159 in ratl Reefs have themselves been sort of amping it 0:20:07.240 --> 0:20:09.080 up a bit, making it clear to people in the 0:20:09.080 --> 0:20:11.480 city that this is going to be a big event 0:20:11.560 --> 0:20:15.600 where rail reeves the Chancellor will lay out lots of 0:20:15.640 --> 0:20:19.720 sort of detail and conviction about how this government is 0:20:19.760 --> 0:20:20.760 going to deliver growth. 0:20:21.560 --> 0:20:24.840 Yes, and that has been her promise, kissed Arma's promise, 0:20:24.920 --> 0:20:27.040 but there were doubts after the budget. What do you 0:20:27.080 --> 0:20:30.119 think she's going to try to communicate then about the 0:20:30.160 --> 0:20:31.120 growth ambitions. 0:20:31.840 --> 0:20:34.760 So it seems like we're going to get quite a 0:20:34.800 --> 0:20:40.080 lot on this government's plans for pensions reforms. Of course, 0:20:40.200 --> 0:20:43.000 this is not a new topic. The previous government also 0:20:43.240 --> 0:20:47.160 was trying to push through with reforms to the pension system. 0:20:47.640 --> 0:20:50.520 There's you know, billions and billions and billions of pounds 0:20:50.560 --> 0:20:54.240 in pension pots in the UK. This point that yes, 0:20:54.320 --> 0:20:57.960 we want overseas investors coming into the UK, but actually 0:20:58.119 --> 0:21:00.800 in the UK itself there's a lot of sitting in 0:21:01.160 --> 0:21:04.399 savings funds and how we try to deploy that money 0:21:04.440 --> 0:21:07.119 in a way that's both good for the owners of 0:21:07.119 --> 0:21:09.560 the money, the people who will be pensioners in the future, 0:21:09.600 --> 0:21:13.600 to get higher levels of return so they have better retirements, 0:21:13.840 --> 0:21:16.480 but also of course how that money can be used 0:21:16.520 --> 0:21:19.359 in a more productive way in the British economy. So 0:21:19.400 --> 0:21:24.560 that's the point about pension pots owning British shares, owning 0:21:24.560 --> 0:21:28.560 British assets that are privately held. So there's all of that, 0:21:29.240 --> 0:21:33.840 and then we may also get some reforms about how 0:21:33.840 --> 0:21:38.399 the government the government's relationship with the financial regulators. Again 0:21:38.800 --> 0:21:41.159 a topic that has been going for a very long time, 0:21:41.520 --> 0:21:45.760 but there's a wide consensus that there needs to be 0:21:45.880 --> 0:21:48.800 some sort of change to ensure that the regulators have 0:21:48.840 --> 0:21:52.120 a clearer mandate to pursue growth and competitiveness. 0:21:52.720 --> 0:21:55.719 Having said that, what do you think is going to 0:21:55.760 --> 0:21:59.399 be the feedback from that business audience? Days ago I 0:21:59.440 --> 0:22:02.600 was speaking to the CEO of Interactive Investor, Richard Wilson. 0:22:02.600 --> 0:22:05.720 They've got something like four hundred thousand customers here in 0:22:05.760 --> 0:22:08.760 the UK, and I asked him about that pension reform question. 0:22:08.880 --> 0:22:12.600 For example, trying to encourage businesses to funnel their investor 0:22:12.680 --> 0:22:16.879