1 00:00:00,240 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,880 --> 00:00:13,800 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,840 --> 00:00:16,440 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,560 --> 00:00:19,320 Speaker 2: all around the world. Straight Ahead on the program, we'll 5 00:00:19,320 --> 00:00:22,960 Speaker 2: look to earnings from streaming and chip giants Netflix and Intel. 6 00:00:23,079 --> 00:00:24,960 Speaker 2: I'm Nathan Hager in Washington. 7 00:00:25,040 --> 00:00:27,400 Speaker 3: I'm Caroline hepkehim in London, where we're looking at the 8 00:00:27,480 --> 00:00:30,640 Speaker 3: annual gathering of the Powerful, the rich, and the famous. 9 00:00:30,640 --> 00:00:34,040 Speaker 4: In Davos, Switzerland, I'm Doug Prisner, looking at how Beijing 10 00:00:34,159 --> 00:00:36,920 Speaker 4: will report the performance of the Chinese economy. 11 00:00:38,360 --> 00:00:42,360 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,400 --> 00:00:46,120 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,640 --> 00:00:51,760 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 14 00:00:51,920 --> 00:00:55,400 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,480 --> 00:00:57,640 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:02,720 --> 00:01:05,440 Speaker 2: Good day to you. I'm Nathan Hager. Investors will be 17 00:01:05,480 --> 00:01:09,240 Speaker 2: watching earnings from Intel and Netflix this week for signals 18 00:01:09,280 --> 00:01:12,840 Speaker 2: on two very different corners of the tech landscape. Well 19 00:01:12,880 --> 00:01:15,920 Speaker 2: here from Netflix first on Tuesday, man for more and 20 00:01:15,959 --> 00:01:18,759 Speaker 2: what to expect from the streaming giant. I'm joined now 21 00:01:18,760 --> 00:01:23,440 Speaker 2: by Bloomberg Intelligence Senior media analyst Githa Ranganathan and Geitha. 22 00:01:23,600 --> 00:01:26,400 Speaker 2: I feel like there's been so much talk about Netflix's 23 00:01:26,520 --> 00:01:29,119 Speaker 2: bidding war for Warner Brothers Discovery that it's been kind 24 00:01:29,120 --> 00:01:31,600 Speaker 2: of easy to lose sight of the fundamental. So this 25 00:01:31,640 --> 00:01:33,720 Speaker 2: will be kind of refreshing. What are you expecting. 26 00:01:34,319 --> 00:01:37,080 Speaker 5: Yeah, I'm really hoping we get a rispite from this 27 00:01:37,200 --> 00:01:39,880 Speaker 5: three ring circus, Nathan. I mean, it's been going on 28 00:01:39,959 --> 00:01:43,800 Speaker 5: for quite a while now. I hope the focus really 29 00:01:43,880 --> 00:01:46,160 Speaker 5: turns and this is a distraction, you know, from this 30 00:01:46,280 --> 00:01:50,280 Speaker 5: whole drama that we've seen. But fundamentals wise, you're absolutely right. 31 00:01:50,560 --> 00:01:54,160 Speaker 5: The company has never been in a stronger situation. We 32 00:01:54,240 --> 00:01:58,400 Speaker 5: think they will absolutely deliver on their revenue growth expectations 33 00:01:58,400 --> 00:02:03,880 Speaker 5: of about seventeen percent, strong operating margin, strong free cash flow. 34 00:02:03,880 --> 00:02:07,240 Speaker 5: They're expecting about nine billion dollars for the full year. 35 00:02:07,800 --> 00:02:10,600 Speaker 5: And really, I mean many many times, Nathan, the company 36 00:02:10,680 --> 00:02:13,440 Speaker 5: has said that, you know, twenty twenty five as well 37 00:02:13,520 --> 00:02:17,160 Speaker 5: as the fourth quarter. The slate really is absolutely a 38 00:02:17,200 --> 00:02:20,720 Speaker 5: blockbuster slate. I mean, you think about it, stranger things, 39 00:02:21,200 --> 00:02:25,040 Speaker 5: you know, the finale, you had so many other titles. 40 00:02:25,080 --> 00:02:27,520 Speaker 5: I mean, whether you're thinking about Knives Out or Emily 41 00:02:27,560 --> 00:02:31,520 Speaker 5: in Paris or you know, My Secret Santa or Frankenstein, 42 00:02:31,639 --> 00:02:33,600 Speaker 5: nobody wants this. I mean, the list just goes on 43 00:02:33,760 --> 00:02:37,400 Speaker 5: and on. But I think more importantly, Nathan, I mean, 44 00:02:37,760 --> 00:02:40,280 Speaker 5: it was really their sports strategy. So if you look 45 00:02:40,320 --> 00:02:44,600 Speaker 5: at the Lions Vikings game on Christmas date, that was 46 00:02:45,160 --> 00:02:50,000 Speaker 5: the most streamed NFL game in US history, So really 47 00:02:50,040 --> 00:02:53,520 Speaker 5: a huge achievement and kind of really speaks to you know, 48 00:02:53,560 --> 00:02:55,680 Speaker 5: what Netflix has been able to achieve. So I think 49 00:02:55,800 --> 00:02:57,760 Speaker 5: there's obviously going to be a lot of attention on 50 00:02:57,840 --> 00:03:00,160 Speaker 5: all of those metrics, how that kind of plays out 51 00:03:00,200 --> 00:03:02,880 Speaker 5: into advertising, which is a big focus for them. But 52 00:03:02,960 --> 00:03:06,200 Speaker 5: I think still, you know, this overhang from the Warner 53 00:03:06,280 --> 00:03:08,520 Speaker 5: drama is not going away anytime soon. 54 00:03:08,680 --> 00:03:11,640 Speaker 2: In full disclosure, I too watch Stranger Things five and 55 00:03:11,680 --> 00:03:14,560 Speaker 2: the Knives Out sequel. But when you think about that 56 00:03:14,680 --> 00:03:17,480 Speaker 2: content slate and what I would have to think is 57 00:03:17,600 --> 00:03:21,560 Speaker 2: a strategy for even more content to come into this year, 58 00:03:22,000 --> 00:03:24,600 Speaker 2: doesn't it raise the question about what the strategy is 59 00:03:24,639 --> 00:03:28,239 Speaker 2: for Netflix to buy Warner Brothers Discovery. Does it need 60 00:03:28,400 --> 00:03:29,760 Speaker 2: that Warner Brothers ip. 61 00:03:30,440 --> 00:03:33,680 Speaker 5: So that has really been the head scratcher, right, People 62 00:03:33,840 --> 00:03:36,720 Speaker 5: really kind of wondering is Netflix just playing the long 63 00:03:36,760 --> 00:03:38,920 Speaker 5: game here? Do they just want to beef up their 64 00:03:38,960 --> 00:03:44,040 Speaker 5: content portfolio, make more of an defensive play for Warner, 65 00:03:44,120 --> 00:03:47,240 Speaker 5: keep it out of everybody else's hands, or are they 66 00:03:47,440 --> 00:03:50,840 Speaker 5: really seeing some kind of slow down in their own 67 00:03:50,960 --> 00:03:53,400 Speaker 5: core engagement? And I mean, this is what has kind 68 00:03:53,440 --> 00:03:56,560 Speaker 5: of fueled so much of concern here, because you know, 69 00:03:56,600 --> 00:03:59,720 Speaker 5: people really wondering why they're going after the Warner portfolio. 70 00:03:59,760 --> 00:04:02,400 Speaker 5: Is it because we're seeing, you know, some kind of 71 00:04:02,400 --> 00:04:05,560 Speaker 5: a slow down and engagement metrics. I don't necessarily think 72 00:04:05,600 --> 00:04:08,040 Speaker 5: that will be the case. But regardless of how this 73 00:04:08,080 --> 00:04:11,560 Speaker 5: whole drama plays out, we know that fundamentals will continue 74 00:04:11,560 --> 00:04:13,800 Speaker 5: to be very strong. They have, you know, their own 75 00:04:13,880 --> 00:04:18,000 Speaker 5: original titles, even without Warner, have really performed very very well. 76 00:04:18,080 --> 00:04:21,359 Speaker 5: We've seen over the past, you know, so many years. 77 00:04:21,520 --> 00:04:24,599 Speaker 5: But I do think that Netflix is prepping for the future, Nathan, 78 00:04:24,680 --> 00:04:26,880 Speaker 5: as we kind of look at AI and how AI 79 00:04:27,000 --> 00:04:30,600 Speaker 5: can democratize content, I think it really becomes key for 80 00:04:30,800 --> 00:04:34,080 Speaker 5: many of these big streamers to have access to more 81 00:04:34,560 --> 00:04:37,920 Speaker 5: top tier franchises and properties, and really Warner brings them 82 00:04:38,720 --> 00:04:41,800 Speaker 5: a huge treasure trobe of titles that they can mine 83 00:04:42,680 --> 00:04:43,920 Speaker 5: very nicely into the future. 84 00:04:44,000 --> 00:04:45,880 Speaker 2: We'll talk a little bit more about what's driving your 85 00:04:45,960 --> 00:04:50,160 Speaker 2: view that Netflix still has that engagement compared to some 86 00:04:50,200 --> 00:04:52,200 Speaker 2: of its competitors as well. What are some of the 87 00:04:52,240 --> 00:04:54,520 Speaker 2: metrics you're looking at now that they don't break out, 88 00:04:54,880 --> 00:04:56,960 Speaker 2: you know, subscriber accounts anymore. 89 00:04:57,320 --> 00:05:02,160 Speaker 5: Yeah, absolutely, so. You know, they do disclose a periodically, 90 00:05:02,960 --> 00:05:05,640 Speaker 5: you know, a report called what we watched, and they 91 00:05:05,680 --> 00:05:08,159 Speaker 5: released this every six months, and we do get some 92 00:05:08,360 --> 00:05:11,560 Speaker 5: insight into really one of the biggest titles on Netflix, 93 00:05:11,880 --> 00:05:15,400 Speaker 5: how many minutes are spent watching those titles, And on 94 00:05:15,480 --> 00:05:18,440 Speaker 5: average you'll see that a Netflix member spends about two 95 00:05:18,480 --> 00:05:21,000 Speaker 5: to two and a half hours per day engaging with 96 00:05:21,120 --> 00:05:24,760 Speaker 5: their content, which is really a staggering number. And then 97 00:05:24,800 --> 00:05:26,480 Speaker 5: if you just kind of put that in the context 98 00:05:26,560 --> 00:05:28,800 Speaker 5: of all of the streaming players, they're way ahead of 99 00:05:28,880 --> 00:05:31,800 Speaker 5: most of their rivals, but they constantly bring up this 100 00:05:31,920 --> 00:05:36,760 Speaker 5: comparison with YouTube, whom they actually trail, and so their 101 00:05:36,800 --> 00:05:39,479 Speaker 5: whole argument has been, you know, we really need to 102 00:05:39,560 --> 00:05:43,600 Speaker 5: catch up to YouTube, and that threat only gets bigger, 103 00:05:43,680 --> 00:05:47,600 Speaker 5: I think with you know, the advent of AI and 104 00:05:47,720 --> 00:05:50,719 Speaker 5: people like wanting to create more content, more user generated 105 00:05:50,720 --> 00:05:53,880 Speaker 5: content with all of these AI tools like Sora, and 106 00:05:53,960 --> 00:05:57,240 Speaker 5: so while Netflix really is in a strong and you know, 107 00:05:57,279 --> 00:06:01,040 Speaker 5: an enviable position, they always kind of have to watch 108 00:06:01,080 --> 00:06:01,839 Speaker 5: over their shoulder. 109 00:06:01,880 --> 00:06:06,160 Speaker 2: I would say, so given that position, should subscribers be 110 00:06:06,279 --> 00:06:09,240 Speaker 2: on the lookout for things like higher rates? We keep 111 00:06:09,279 --> 00:06:11,719 Speaker 2: seeing those creep up here and there as well. 112 00:06:12,320 --> 00:06:16,600 Speaker 5: Yes, they definitely have pricing power. We've kind of seen 113 00:06:16,600 --> 00:06:20,640 Speaker 5: a steady cadence of price increases every twelve to eighteen months. 114 00:06:20,800 --> 00:06:24,720 Speaker 5: So I absolutely think that a price increase is you know, 115 00:06:24,760 --> 00:06:27,920 Speaker 5: on the books sometime in twenty twenty six, and that's 116 00:06:27,960 --> 00:06:29,680 Speaker 5: just kind of become the name of the game here 117 00:06:29,720 --> 00:06:31,960 Speaker 5: in streaming. We've seen all of these streaming services, I mean, 118 00:06:31,960 --> 00:06:35,159 Speaker 5: whether it's Netflix, Disney Plus, HBO Max, all of them, 119 00:06:35,440 --> 00:06:39,359 Speaker 5: you know, really kind of using that pricing lever as 120 00:06:39,839 --> 00:06:42,479 Speaker 5: you know, the subscriber number does it become is not 121 00:06:42,600 --> 00:06:45,520 Speaker 5: important anymore and it's really more our pooh and pricing 122 00:06:45,600 --> 00:06:48,320 Speaker 5: power and revenue growth. So all of the streamers are 123 00:06:48,400 --> 00:06:50,679 Speaker 5: kind of flexing their muscle when it comes to pricing. 124 00:06:51,040 --> 00:06:52,760 Speaker 2: All right, Well, we're going to be focused on the 125 00:06:52,760 --> 00:06:55,960 Speaker 2: fundamentals in just the next few days when Netflix opens 126 00:06:55,960 --> 00:06:58,000 Speaker 2: those fourth quarter books. Thank you for this, Keith the 127 00:06:58,080 --> 00:07:00,360 Speaker 2: Great having you on with us. That's Keith the wrong nothing, 128 00:07:00,760 --> 00:07:04,880 Speaker 2: senior US media analysts for Bloomberg Intelligence. Now let's turn 129 00:07:04,960 --> 00:07:08,640 Speaker 2: to Intel, the biggest maker of personal computer processors, opens 130 00:07:08,680 --> 00:07:13,080 Speaker 2: its fourth quarterbooks on Thursday. Is the turnaround intact? Let's 131 00:07:13,080 --> 00:07:17,160 Speaker 2: bring in Bloomberg Technology reporter Ian King for insights on that. 132 00:07:17,920 --> 00:07:18,160 Speaker 4: Ian. 133 00:07:18,200 --> 00:07:20,320 Speaker 2: We know the US government is working on building a 134 00:07:20,360 --> 00:07:22,840 Speaker 2: ten percent stake in Intel, so it's sure to be 135 00:07:23,000 --> 00:07:26,840 Speaker 2: watching these earnings. What should we expect from the chip maker? 136 00:07:27,720 --> 00:07:29,600 Speaker 6: Yeah, I mean this company has very much had a 137 00:07:29,760 --> 00:07:34,400 Speaker 6: transitional point last year. You mentioned obviously the government investment 138 00:07:34,960 --> 00:07:37,520 Speaker 6: was also an investment by Nvidia and also an investment 139 00:07:37,560 --> 00:07:40,520 Speaker 6: by SoftBank. What those did was really shore up the 140 00:07:40,560 --> 00:07:43,720 Speaker 6: balance sheet. So on that side of the house, kind 141 00:07:43,760 --> 00:07:47,800 Speaker 6: of task completed. Things are better than they were. There's 142 00:07:47,840 --> 00:07:51,000 Speaker 6: no kind of existential risk, at least in people's minds 143 00:07:51,040 --> 00:07:54,040 Speaker 6: for the time being. But what we're really looking at 144 00:07:54,040 --> 00:07:57,680 Speaker 6: now is the operational side. You're a chip company. You 145 00:07:57,720 --> 00:07:59,800 Speaker 6: have to sell more chips. You have to sell more chips, 146 00:08:00,080 --> 00:08:01,920 Speaker 6: cost more money and get more profit. 147 00:08:02,680 --> 00:08:06,400 Speaker 2: Now to that point. Where do things stand for Intel 148 00:08:06,680 --> 00:08:11,040 Speaker 2: right now? Getting that operational side in a turnaround in 149 00:08:11,080 --> 00:08:13,440 Speaker 2: the short term, Yeah, I mean we're. 150 00:08:13,280 --> 00:08:16,160 Speaker 6: In the very early stages of that. At the beginning 151 00:08:16,200 --> 00:08:20,000 Speaker 6: of this year, Intel was at the CES conference in 152 00:08:20,080 --> 00:08:23,400 Speaker 6: Las Vegas and they unveiled a new range of chips 153 00:08:23,880 --> 00:08:27,240 Speaker 6: based on a new production technology, and what they said was, look, 154 00:08:27,360 --> 00:08:30,040 Speaker 6: this gets us back in the game. This makes us 155 00:08:30,240 --> 00:08:33,560 Speaker 6: competitive again, and this is very much, you know, the 156 00:08:33,640 --> 00:08:36,880 Speaker 6: proof point that our technology is irrelevant in this industry. Again, 157 00:08:37,200 --> 00:08:39,679 Speaker 6: obviously we're only a couple of weeks away from that, 158 00:08:39,880 --> 00:08:42,400 Speaker 6: so you know, too early to see whether they're selling 159 00:08:42,520 --> 00:08:46,080 Speaker 6: like hotcakes or whether you know, that's hype from the company. 160 00:08:46,120 --> 00:08:49,480 Speaker 6: But obviously the company's forecast this quarter will be really 161 00:08:49,520 --> 00:08:51,600 Speaker 6: important as a guide to their confidence in that. 162 00:08:51,880 --> 00:08:54,480 Speaker 2: Talk a little bit more about what the CEO had 163 00:08:54,480 --> 00:08:57,440 Speaker 2: to say about those new chips and how they stack 164 00:08:57,559 --> 00:09:00,760 Speaker 2: up to some of the competition around, you know, names 165 00:09:00,800 --> 00:09:02,959 Speaker 2: that we're familiar with, like Nvidia, like AMD. 166 00:09:03,880 --> 00:09:06,880 Speaker 6: Yeah, I mean we're talking about PC processes at this point. 167 00:09:06,960 --> 00:09:10,640 Speaker 6: So that's a high volume market for Intel. So that's 168 00:09:10,679 --> 00:09:15,000 Speaker 6: important in terms of cash flows, that's important in terms 169 00:09:15,080 --> 00:09:18,800 Speaker 6: of filling those factories, but it's not the sort of 170 00:09:18,840 --> 00:09:22,280 Speaker 6: down of profitability, you know that the core profitability that'll 171 00:09:22,320 --> 00:09:24,880 Speaker 6: come later when we see what it's doing in serverships. 172 00:09:25,440 --> 00:09:28,000 Speaker 6: What the company has said is, look, hey, this new 173 00:09:28,120 --> 00:09:31,040 Speaker 6: range really kind of repairs the issues of the last 174 00:09:31,080 --> 00:09:33,959 Speaker 6: couple of ranges of chips that we've had out there. 175 00:09:34,000 --> 00:09:37,400 Speaker 6: You know, it's the most power efficient and they're good 176 00:09:37,400 --> 00:09:40,560 Speaker 6: at performance as well, so that that really helps position 177 00:09:40,640 --> 00:09:43,400 Speaker 6: as well against our competitors. And you know, they're talking 178 00:09:43,440 --> 00:09:46,200 Speaker 6: about their confidence again, and that's really been the first 179 00:09:46,240 --> 00:09:48,520 Speaker 6: time in a long time that we've seen Intel really 180 00:09:48,600 --> 00:09:50,920 Speaker 6: kind of beat their fist against their chest and say, hey, 181 00:09:51,000 --> 00:09:51,800 Speaker 6: look at our chips. 182 00:09:52,960 --> 00:09:57,040 Speaker 2: Do those chips the cost of putting them together? Does 183 00:09:57,080 --> 00:10:00,880 Speaker 2: that pose a potential risk for Intel go going forward? 184 00:10:01,240 --> 00:10:04,640 Speaker 6: Well, the risk is how many they can sell. They've 185 00:10:04,679 --> 00:10:08,800 Speaker 6: already built, you know, a brand new factory Fab fifty 186 00:10:08,800 --> 00:10:11,240 Speaker 6: two in Arizona. They're trying to convert some of their 187 00:10:11,280 --> 00:10:15,960 Speaker 6: other production lines over to this new production technique. That 188 00:10:16,080 --> 00:10:18,440 Speaker 6: shift and that cost makes sense if you sell a 189 00:10:18,440 --> 00:10:21,000 Speaker 6: lot of these things. If you don't, then that's where 190 00:10:21,000 --> 00:10:21,679 Speaker 6: the problem is. 191 00:10:22,120 --> 00:10:23,760 Speaker 2: There's got to be a lot of focus as well, 192 00:10:23,800 --> 00:10:27,079 Speaker 2: like you mentioned about the foundry plans for Intel. Given 193 00:10:27,120 --> 00:10:31,880 Speaker 2: the US governments focus on boosting that business with its stake, 194 00:10:32,000 --> 00:10:35,280 Speaker 2: what kind of color could we expect around you know, 195 00:10:35,360 --> 00:10:39,640 Speaker 2: Intel's factory plans, you know, boosting manufacturing in the United States. 196 00:10:40,600 --> 00:10:43,839 Speaker 6: If you if you own Intel stock, and as taxpayers 197 00:10:43,840 --> 00:10:46,920 Speaker 6: in the US we do. All you care about is 198 00:10:47,480 --> 00:10:50,320 Speaker 6: Intel going out on stage somewhere or in some forum 199 00:10:50,400 --> 00:10:52,800 Speaker 6: and saying, hey, this is a big customer we have 200 00:10:53,000 --> 00:10:55,640 Speaker 6: other than ourselves. You know, in video is going to 201 00:10:55,720 --> 00:10:58,120 Speaker 6: use our plans. Amb is going to use our plans. 202 00:10:58,640 --> 00:11:02,479 Speaker 6: That has not happened yet, and you know, the prospects 203 00:11:02,480 --> 00:11:04,880 Speaker 6: for that at the moment are kind of murky. We 204 00:11:04,960 --> 00:11:07,800 Speaker 6: don't know. It's difficult for Intel to sort of do 205 00:11:07,840 --> 00:11:10,120 Speaker 6: that because you don't want to be talking about what 206 00:11:10,200 --> 00:11:14,600 Speaker 6: your customers are up to. But frankly, the eighteen A node, 207 00:11:14,679 --> 00:11:16,920 Speaker 6: the one that these new chips are built on, that 208 00:11:17,040 --> 00:11:20,360 Speaker 6: node has not delivered on the promises of external customers 209 00:11:20,360 --> 00:11:23,640 Speaker 6: that we got from previous management. And it might be 210 00:11:23,800 --> 00:11:26,320 Speaker 6: that the next node is so called fourteen A, which 211 00:11:26,360 --> 00:11:28,240 Speaker 6: is going to come in the next couple of years, 212 00:11:28,520 --> 00:11:30,360 Speaker 6: that might be the one where we start to see 213 00:11:30,360 --> 00:11:33,480 Speaker 6: external customers, so probably a longer term story. 214 00:11:33,520 --> 00:11:36,080 Speaker 2: There are you seeing just reading the tea leaves of 215 00:11:36,200 --> 00:11:39,079 Speaker 2: much interest at least in the short term from potential 216 00:11:39,120 --> 00:11:42,000 Speaker 2: customers for Intel in some of these chips and the 217 00:11:42,000 --> 00:11:42,840 Speaker 2: foundery business. 218 00:11:44,200 --> 00:11:46,439 Speaker 6: If you're one of those companies I just mentioned, you're 219 00:11:46,480 --> 00:11:48,360 Speaker 6: going to look at Intel. Of course you are. We're 220 00:11:48,360 --> 00:11:51,960 Speaker 6: in a world where we should have capacity, where TSMC 221 00:11:52,400 --> 00:11:55,400 Speaker 6: is basically filling all of the others it possibly can, 222 00:11:55,480 --> 00:11:58,880 Speaker 6: and is likely getting more than it can fill. So 223 00:11:59,000 --> 00:12:01,000 Speaker 6: of course you're going to look at Intel, but you're 224 00:12:01,000 --> 00:12:03,960 Speaker 6: also going to look at Samsung. Samsung is arguably a 225 00:12:04,000 --> 00:12:07,720 Speaker 6: more established kind of second source to TSMC in the 226 00:12:07,720 --> 00:12:11,040 Speaker 6: so called boundary world. So yeah, everybody's gonna look. But 227 00:12:11,240 --> 00:12:14,960 Speaker 6: Intel has to prove that this technology it has is 228 00:12:15,240 --> 00:12:18,920 Speaker 6: a good enough to compete with TSMC and be offers 229 00:12:18,920 --> 00:12:21,920 Speaker 6: an advantage because it costs money to switch over as well. 230 00:12:22,080 --> 00:12:24,480 Speaker 2: Appreciate this. Ian, thanks for coming on with us ahead 231 00:12:24,480 --> 00:12:29,240 Speaker 2: of Intel's earnings. That's Ian King, technology reporter for Bloomberg News, 232 00:12:29,360 --> 00:12:32,000 Speaker 2: and coming up on Bloomberg Daybreak weekend, we'll look ahead 233 00:12:32,040 --> 00:12:34,920 Speaker 2: to the annual gathering of the rich, famous and powerful 234 00:12:35,200 --> 00:12:50,559 Speaker 2: in Davos I'm Nathan Hager, and this is Bloomberg. This 235 00:12:50,640 --> 00:12:53,720 Speaker 2: is Bloomberg Daybreak, Weekend, our global book ahead, the top 236 00:12:53,760 --> 00:12:56,680 Speaker 2: stories for investors in the coming week. I'm Nathan Hager 237 00:12:56,720 --> 00:12:59,199 Speaker 2: in Washington. Up Later in the program will turn to 238 00:12:59,320 --> 00:13:02,040 Speaker 2: China and look at whether economic expansion there met the 239 00:13:02,040 --> 00:13:05,800 Speaker 2: government's target. But first, the international business'll eite to send 240 00:13:05,800 --> 00:13:09,439 Speaker 2: on Switzerland next week for the World Economic Forum in Davos. 241 00:13:09,720 --> 00:13:14,400 Speaker 2: The annual gathering is traditionally about multilateral goals promoting peace, prosperity, 242 00:13:14,440 --> 00:13:17,600 Speaker 2: and social progress, but this year has begun with fundamental 243 00:13:17,679 --> 00:13:21,280 Speaker 2: questions about international law, America's role in the global order, 244 00:13:21,400 --> 00:13:23,800 Speaker 2: and if global business is on the same page on 245 00:13:23,920 --> 00:13:27,760 Speaker 2: issues like diversity, climate change, and politics. For more, let's 246 00:13:27,760 --> 00:13:29,959 Speaker 2: head to London and check in with Bloomberg Daybreak. You're 247 00:13:29,960 --> 00:13:32,200 Speaker 2: a banker, Caroline Hepger Nathan. 248 00:13:32,280 --> 00:13:35,840 Speaker 3: The organization that Ron's Davos has set its theme for 249 00:13:35,920 --> 00:13:40,079 Speaker 3: this year as a spirit of dialogue, with world leaders 250 00:13:40,080 --> 00:13:43,800 Speaker 3: including US President Donald Trump set to attend. Who're quite 251 00:13:43,840 --> 00:13:47,520 Speaker 3: curious to know what conversations they will be having. It's 252 00:13:47,640 --> 00:13:51,360 Speaker 3: Trump's first in person appearance at Davos in six years. 253 00:13:51,840 --> 00:13:55,479 Speaker 3: Last year in a virtual address, the US president criticized 254 00:13:55,640 --> 00:13:59,760 Speaker 3: the Paris Climate Accord and promised to unlock the liquid 255 00:13:59,800 --> 00:14:04,959 Speaker 3: gold of fossil fuels. As well as his geopolitical interventions 256 00:14:05,000 --> 00:14:08,800 Speaker 3: in the Middle East, Venezuela, and Greenland, Trump has also 257 00:14:08,880 --> 00:14:13,000 Speaker 3: shown his administration is prompt to impose its demands on 258 00:14:13,080 --> 00:14:18,440 Speaker 3: global businesses, from reassuring to pricing executive pay and shareholder 259 00:14:18,520 --> 00:14:22,840 Speaker 3: dividends across a wide array of sectors. What message will 260 00:14:22,880 --> 00:14:26,760 Speaker 3: he world leaders and the leading light of global business 261 00:14:27,080 --> 00:14:30,760 Speaker 3: be bringing to this international forum. Joining me now is 262 00:14:30,800 --> 00:14:33,680 Speaker 3: our editor at large, Francine Laqua, who will be leading 263 00:14:33,680 --> 00:14:38,120 Speaker 3: Bloomberg's coverage at Davos as every year. Francine, of course, 264 00:14:38,520 --> 00:14:41,000 Speaker 3: what do you think are the big questions that you're 265 00:14:41,040 --> 00:14:44,520 Speaker 3: going to be asking this year at Davos? Not asking 266 00:14:44,560 --> 00:14:48,440 Speaker 3: you to reveal your trade secrets, but give us an insight. 267 00:14:48,880 --> 00:14:51,400 Speaker 7: I mean, there's this idea girling that twenty twenty five 268 00:14:51,680 --> 00:14:54,600 Speaker 7: was really the year where Prisoner Trump shaped his agenda 269 00:14:54,640 --> 00:14:58,040 Speaker 7: about how he sees the world economic times trade, and 270 00:14:58,080 --> 00:14:59,920 Speaker 7: I think we're trying to find out whether twenty twenty 271 00:15:00,120 --> 00:15:04,360 Speaker 7: six is maybe the year where countries or companies push back. Now, 272 00:15:04,560 --> 00:15:07,280 Speaker 7: we definitely started you know, the first couple of weeks 273 00:15:07,280 --> 00:15:10,560 Speaker 7: of this year with a terrific news flow, much much 274 00:15:10,640 --> 00:15:14,440 Speaker 7: newsflow that we weren't expecting. And look, it's going to be, 275 00:15:14,560 --> 00:15:17,320 Speaker 7: you know, part of the Donald Trump Show. He shows 276 00:15:17,400 --> 00:15:20,160 Speaker 7: up in Davols. It's the third time that he arrives. 277 00:15:20,240 --> 00:15:23,600 Speaker 7: We believe that he'll be there towards the middle of 278 00:15:23,640 --> 00:15:26,520 Speaker 7: the week. In his first appearance in twenty eighteen, I 279 00:15:26,600 --> 00:15:29,240 Speaker 7: remember it like it was yesterday. He delivered a surprisingly 280 00:15:29,280 --> 00:15:32,800 Speaker 7: opened armed message declaring that America First does not mean 281 00:15:32,920 --> 00:15:36,960 Speaker 7: America alone. Then he was pretty defiant in twenty twenty 282 00:15:37,000 --> 00:15:40,080 Speaker 7: as his impeachment trial was getting underway in Washington. And 283 00:15:40,120 --> 00:15:42,680 Speaker 7: then last year, this was like two days after he 284 00:15:42,720 --> 00:15:46,640 Speaker 7: got inaugurated. After shortly after being reelected, he delivered a 285 00:15:46,680 --> 00:15:50,040 Speaker 7: speech at the Annual Meeting via video, and there he 286 00:15:50,080 --> 00:15:53,240 Speaker 7: focused on oil prices, interest rates, in European regulations. So 287 00:15:53,280 --> 00:15:55,480 Speaker 7: a lot of the questions will really be trying to 288 00:15:55,480 --> 00:15:58,840 Speaker 7: figure out how to deal with the President of the US, 289 00:15:58,960 --> 00:16:01,720 Speaker 7: how to deal with the administray if there's tariffs and trade. 290 00:16:02,320 --> 00:16:05,200 Speaker 7: And then there's more like the softball questions, you know 291 00:16:05,400 --> 00:16:09,240 Speaker 7: about the spurt of dialogue, how can we invest in people. 292 00:16:09,320 --> 00:16:13,400 Speaker 7: Some of the conferences were probably or some of the 293 00:16:13,480 --> 00:16:16,160 Speaker 7: panels were probably distilled just to make sure that they 294 00:16:16,200 --> 00:16:20,080 Speaker 7: would appeal to the Trump administration. But you have great speakers, 295 00:16:20,120 --> 00:16:21,800 Speaker 7: you have Jamie Diamond, you have all of Wall Street 296 00:16:21,840 --> 00:16:23,680 Speaker 7: showing up. But it's a little bit of a mix 297 00:16:23,720 --> 00:16:25,360 Speaker 7: and match. I mean, you want to know what you 298 00:16:25,400 --> 00:16:27,840 Speaker 7: know President Trump does and what AI becomes in terms 299 00:16:27,840 --> 00:16:29,600 Speaker 7: of valuation and impact on the economy. 300 00:16:30,520 --> 00:16:35,160 Speaker 3: Interesting. So then who are you hoping most to speak to, 301 00:16:35,160 --> 00:16:38,080 Speaker 3: to hear from, because it really is is everyone. It's 302 00:16:38,120 --> 00:16:41,280 Speaker 3: those global world leaders, business leaders who are going to 303 00:16:41,320 --> 00:16:41,720 Speaker 3: be there. 304 00:16:42,160 --> 00:16:44,240 Speaker 7: So I think this year is a little bit different 305 00:16:44,280 --> 00:16:46,880 Speaker 7: again because it'll be really interesting to hear a reaction, 306 00:16:47,560 --> 00:16:52,040 Speaker 7: right to see if there's anyone that speaks up against 307 00:16:52,320 --> 00:16:54,800 Speaker 7: some of the things that the Trump administration are putting 308 00:16:54,840 --> 00:16:59,360 Speaker 7: in place. We'll have good conversations on inflation. And I 309 00:16:59,480 --> 00:17:03,800 Speaker 7: keep on getting reminded that why inflation hasn't really taken 310 00:17:03,840 --> 00:17:07,080 Speaker 7: off is because when President Trump, on Liberation Day last 311 00:17:07,160 --> 00:17:10,760 Speaker 7: year put these tariffs, the rest of the world stayed quiet. 312 00:17:11,680 --> 00:17:14,240 Speaker 7: This year could be different. I don't know whether Davos 313 00:17:14,320 --> 00:17:17,080 Speaker 7: is the right time. We also really want to know 314 00:17:17,160 --> 00:17:20,160 Speaker 7: what is and will be in President Trump's speech. Does 315 00:17:20,200 --> 00:17:23,760 Speaker 7: he go after Europe? We know that he's been talking 316 00:17:23,800 --> 00:17:26,760 Speaker 7: about financials and the fact that, for example, he wants 317 00:17:26,760 --> 00:17:29,720 Speaker 7: to go after some of the private equity because domestically 318 00:17:29,920 --> 00:17:33,959 Speaker 7: has this huge, huge concern about affordability. So does that 319 00:17:34,000 --> 00:17:36,320 Speaker 7: spill over into the messaging for the rest of the world. 320 00:17:36,680 --> 00:17:39,199 Speaker 7: I mean, I can rememberly maybe two three big policy 321 00:17:39,240 --> 00:17:42,160 Speaker 7: speeches this year when you know, it wasn't even the president, 322 00:17:42,160 --> 00:17:44,440 Speaker 7: it was the Vice president's and people around him came 323 00:17:44,480 --> 00:17:48,200 Speaker 7: to Europe. Frankly, it was shocking, right we had JD. 324 00:17:48,320 --> 00:17:51,600 Speaker 7: Vans and the people in the room were wondering whether 325 00:17:51,640 --> 00:17:53,680 Speaker 7: it was still an ally or not, whether the US 326 00:17:53,960 --> 00:17:56,840 Speaker 7: was And so I'm looking for tone. And then on 327 00:17:56,880 --> 00:17:58,720 Speaker 7: the back of that, you know what some of the 328 00:17:58,720 --> 00:18:02,920 Speaker 7: big Titans think that means for their business and world economy. 329 00:18:04,119 --> 00:18:07,320 Speaker 3: WEF which is the organization obviously behind Devils in their 330 00:18:07,359 --> 00:18:11,000 Speaker 3: mission statement, had to thumb through the book to find it. 331 00:18:11,640 --> 00:18:14,879 Speaker 3: Improving the state of the world that is part of 332 00:18:14,920 --> 00:18:18,800 Speaker 3: their mission statement, the emphasis being on dialogue, on collaboration, 333 00:18:18,960 --> 00:18:22,240 Speaker 3: on cooperation, and as you've very much alluded to, President 334 00:18:22,800 --> 00:18:26,119 Speaker 3: Trump being there in many ways the kind of aggressive 335 00:18:26,119 --> 00:18:30,240 Speaker 3: expansionist America first policies of really a kind of direct 336 00:18:30,600 --> 00:18:35,280 Speaker 3: in direct conflict with that aim, So it could get uncomfortable. 337 00:18:35,600 --> 00:18:38,919 Speaker 7: It probably will get uncomfortable at times unless everybody plays 338 00:18:38,920 --> 00:18:42,399 Speaker 7: ball and you know, tries to say that they get along. 339 00:18:43,200 --> 00:18:45,919 Speaker 7: The WEFT mission statement is always a little bit complicated 340 00:18:45,920 --> 00:18:48,040 Speaker 7: because they try and invite bigs head of state that 341 00:18:48,080 --> 00:18:51,359 Speaker 7: can be controversial. You know, there was a Chinese president 342 00:18:51,400 --> 00:18:54,720 Speaker 7: a couple of years ago. We've had other presidents that 343 00:18:55,000 --> 00:18:58,520 Speaker 7: were they had to make sure that they felt welcome 344 00:18:58,560 --> 00:19:01,960 Speaker 7: most the same time not being seen as a pushover. 345 00:19:02,520 --> 00:19:05,760 Speaker 7: But I think what the World Economic Forum is is 346 00:19:05,800 --> 00:19:09,280 Speaker 7: a great platform right for again companies or heads of 347 00:19:09,320 --> 00:19:12,520 Speaker 7: state to try and push their message. So we're expecting, 348 00:19:12,560 --> 00:19:15,720 Speaker 7: for example, the UK Prime Minister with the Chancellor to 349 00:19:15,760 --> 00:19:18,399 Speaker 7: try and push the UK in saying look, you know 350 00:19:18,680 --> 00:19:22,680 Speaker 7: this is what we're planning on growth, maybe to put 351 00:19:22,760 --> 00:19:25,640 Speaker 7: the direction in a better footing for the UK after 352 00:19:25,680 --> 00:19:27,280 Speaker 7: some of the mishaps that we saw in the budget 353 00:19:27,320 --> 00:19:31,080 Speaker 7: and non doms. So it is a platform where you 354 00:19:31,160 --> 00:19:35,119 Speaker 7: speak to worldwide investors where it gets picked up. But 355 00:19:35,240 --> 00:19:38,000 Speaker 7: a lot of the business goes outside of the World 356 00:19:38,119 --> 00:19:40,879 Speaker 7: Economics Forum. Remit right, it's not in the Congress Center. 357 00:19:41,000 --> 00:19:43,119 Speaker 7: So I guess what we'll see in the Congress Center 358 00:19:43,640 --> 00:19:46,359 Speaker 7: apart from these big policies, speatures maybe a little bit softer, 359 00:19:47,119 --> 00:19:52,720 Speaker 7: and then we're also expecting deals outside. It's quite a circus, yes, 360 00:19:53,080 --> 00:19:54,280 Speaker 7: with a lot of snow this. 361 00:19:54,280 --> 00:19:57,879 Speaker 3: Year, and of course with bag Devil's House, you know, 362 00:19:57,960 --> 00:20:00,600 Speaker 3: with lots of lots of speakers who actually come and 363 00:20:00,640 --> 00:20:03,440 Speaker 3: talk to you and all of our other reporters there. 364 00:20:04,359 --> 00:20:07,000 Speaker 3: Stock markets also are at a high, so I mean 365 00:20:07,040 --> 00:20:09,280 Speaker 3: it comes at a very interesting moment. Are your pit 366 00:20:09,359 --> 00:20:12,840 Speaker 3: stalks of ton incredibly well? Lots of focus on defense 367 00:20:12,960 --> 00:20:16,879 Speaker 3: stocks as well. Geopolitical risks are very high, stock markets 368 00:20:16,880 --> 00:20:19,720 Speaker 3: are very high. So it's kind of quite an interesting moment, 369 00:20:19,760 --> 00:20:20,200 Speaker 3: isn't it. 370 00:20:20,320 --> 00:20:23,119 Speaker 7: Yeah, I'm excited about Bloomberg House because we have a 371 00:20:23,160 --> 00:20:27,639 Speaker 7: lot of the AI tech giants, and so if you 372 00:20:27,720 --> 00:20:30,280 Speaker 7: look at AI, I think there are three main questions 373 00:20:30,600 --> 00:20:33,399 Speaker 7: which we'll try to address. Is first, you know, if 374 00:20:33,440 --> 00:20:38,000 Speaker 7: you look at AGI artificial general intelligence, how far away 375 00:20:38,040 --> 00:20:40,000 Speaker 7: are we from it? How do you actually define it? 376 00:20:40,040 --> 00:20:43,399 Speaker 7: Because it changes depending on who you are. There's of 377 00:20:43,400 --> 00:20:47,800 Speaker 7: course the question about valuations. So if you're a Google 378 00:20:48,080 --> 00:20:50,800 Speaker 7: or an open AI will speak to actually a Daria 379 00:20:50,880 --> 00:20:53,680 Speaker 7: Muday of open AI. I mean, the valuations of these 380 00:20:53,680 --> 00:20:58,480 Speaker 7: companies that the IPO are, They're just massive, and so 381 00:20:58,520 --> 00:21:01,560 Speaker 7: there's a real question on this is all expectations, but 382 00:21:01,640 --> 00:21:04,440 Speaker 7: when do they actually start making money? When do they 383 00:21:04,480 --> 00:21:08,200 Speaker 7: start showing in revenue? And then the other question, which 384 00:21:08,200 --> 00:21:10,760 Speaker 7: I think really filters through the economy, which we haven't 385 00:21:10,760 --> 00:21:13,359 Speaker 7: spent that much time on, is we're hearing the labor 386 00:21:13,400 --> 00:21:16,120 Speaker 7: markets are fine, but I hear more and more chief 387 00:21:16,160 --> 00:21:18,800 Speaker 7: executives saying, look, I'm going to hire a little bit 388 00:21:18,880 --> 00:21:22,879 Speaker 7: less because I have to spend on AI, and AI 389 00:21:23,000 --> 00:21:26,800 Speaker 7: gives me the promise of productivity. So actually trying to 390 00:21:26,880 --> 00:21:30,840 Speaker 7: understand what this means, you know, in six months, ten months, 391 00:21:30,920 --> 00:21:33,679 Speaker 7: but even then two three years for our economies and 392 00:21:33,760 --> 00:21:36,600 Speaker 7: job displacements is something that we would like to put 393 00:21:36,600 --> 00:21:37,240 Speaker 7: the focus on. 394 00:21:37,680 --> 00:21:40,960 Speaker 3: Yeah, interesting, isn't it is that big debate about globalization 395 00:21:41,160 --> 00:21:44,879 Speaker 3: is this and change the end of globalizations as trade 396 00:21:44,880 --> 00:21:48,240 Speaker 3: to trade flows continue versus as you say that maybe 397 00:21:48,320 --> 00:21:52,199 Speaker 3: domestic productivity push and gain from AI. I mean in 398 00:21:52,240 --> 00:21:55,640 Speaker 3: the past, again you slightly alluded to it, but climate 399 00:21:55,720 --> 00:21:59,560 Speaker 3: change and green finance have featured very heavily at divos. 400 00:22:00,000 --> 00:22:01,760 Speaker 3: Do you think that still holds. 401 00:22:02,119 --> 00:22:05,240 Speaker 7: I can't see anything green on their green financing. There's 402 00:22:05,280 --> 00:22:08,240 Speaker 7: a little bit on renewable energy, which is under the 403 00:22:08,359 --> 00:22:12,160 Speaker 7: umbrella of the energy complex. I think there are still 404 00:22:12,520 --> 00:22:16,840 Speaker 7: quite a lot of panels outside to the World Economic Forum. 405 00:22:16,920 --> 00:22:17,080 Speaker 3: Now. 406 00:22:17,119 --> 00:22:18,879 Speaker 7: There are, of course rumors that this is because the 407 00:22:18,880 --> 00:22:22,040 Speaker 7: Trump administration said, look, we don't want anything really woke 408 00:22:22,119 --> 00:22:25,480 Speaker 7: on the agenda if we show up again. If you 409 00:22:25,520 --> 00:22:27,800 Speaker 7: look at an energy panel, it's difficult to do an 410 00:22:27,880 --> 00:22:31,840 Speaker 7: energy panel without touching on renewables and green and how 411 00:22:31,880 --> 00:22:35,160 Speaker 7: you finance that. But it's really not as prominent as 412 00:22:35,200 --> 00:22:36,640 Speaker 7: it used to be. I think a lot of those 413 00:22:36,680 --> 00:22:40,520 Speaker 7: conversations will still be happening, but maybe outside again, there 414 00:22:40,520 --> 00:22:42,480 Speaker 7: are a lot of houses. There's also a USA House. 415 00:22:42,760 --> 00:22:45,840 Speaker 7: There's a lot of houses just outside the Congress Center 416 00:22:45,880 --> 00:22:49,720 Speaker 7: which people are taking over, and that comes up more 417 00:22:49,960 --> 00:22:52,960 Speaker 7: outside the Congress Center than inside where it's managed by 418 00:22:53,000 --> 00:22:53,960 Speaker 7: the World Economic Forum. 419 00:22:54,520 --> 00:22:56,399 Speaker 3: N I'm not going to ask you how many years 420 00:22:56,440 --> 00:23:00,320 Speaker 3: you've covered devils. I know it's a long time, but 421 00:23:00,400 --> 00:23:04,320 Speaker 3: it's very important because it anchors a lot of our thinking, 422 00:23:04,400 --> 00:23:06,119 Speaker 3: doesn't it Because it comes right at the start of 423 00:23:06,119 --> 00:23:08,359 Speaker 3: the year. But I do want to ask you what 424 00:23:08,440 --> 00:23:11,120 Speaker 3: I think listeners will be interested in, which is, how 425 00:23:11,160 --> 00:23:14,080 Speaker 3: do you have the stamina to go from conversations to 426 00:23:14,080 --> 00:23:18,320 Speaker 3: conversations conversation with all of these people on very different topics. 427 00:23:18,359 --> 00:23:21,440 Speaker 3: How do you think and plan about your engagement when 428 00:23:21,440 --> 00:23:23,280 Speaker 3: you're there? What do you think about getting out of 429 00:23:24,040 --> 00:23:26,480 Speaker 3: Stavos as if event as a journalist. 430 00:23:26,920 --> 00:23:30,240 Speaker 7: First of all, that the networking is actually tiring, but 431 00:23:30,320 --> 00:23:32,560 Speaker 7: I think you have to enjoy it otherwise you don't 432 00:23:32,600 --> 00:23:35,560 Speaker 7: show up at a night cab at eleven pm, especially 433 00:23:35,600 --> 00:23:37,479 Speaker 7: if you're on air at five am, but it's worth it. 434 00:23:37,840 --> 00:23:39,560 Speaker 7: There are a lot of people that are going to 435 00:23:39,600 --> 00:23:41,600 Speaker 7: Davis for the first time, and so some of them 436 00:23:41,640 --> 00:23:44,320 Speaker 7: are reached out. And I always said, look, just prepared 437 00:23:44,359 --> 00:23:46,200 Speaker 7: to leave early in the morning. So for us it's 438 00:23:46,200 --> 00:23:47,760 Speaker 7: five am, but it could be six or seven if 439 00:23:47,760 --> 00:23:50,320 Speaker 7: you're a chief executive, and just plan your day like 440 00:23:50,320 --> 00:23:52,119 Speaker 7: you're not going back to the hotel. So I actually 441 00:23:52,119 --> 00:23:55,160 Speaker 7: have a little bag and I have like various slate 442 00:23:55,240 --> 00:23:58,399 Speaker 7: layers if I'm outside for three hours, or a different 443 00:23:58,400 --> 00:24:01,480 Speaker 7: pair of shoes if I'm moderating. And it's so you know, 444 00:24:01,800 --> 00:24:06,560 Speaker 7: prepare logistically and then just read read reads that you're 445 00:24:06,600 --> 00:24:09,880 Speaker 7: prepared for anything and listen out because sometimes there'll be big, 446 00:24:10,359 --> 00:24:12,280 Speaker 7: big people that we're not expecting that show up. 447 00:24:12,480 --> 00:24:15,800 Speaker 3: Okay, Fan, we'll watch you with the Wheely back around Davos. 448 00:24:16,280 --> 00:24:18,919 Speaker 3: I'm preparing for those big conversations. Thank you for talking 449 00:24:18,920 --> 00:24:21,960 Speaker 3: to us about it. We really appreciate it. Well. You've 450 00:24:22,000 --> 00:24:24,840 Speaker 3: been hearing from Bloomberg's fancce Ine Laqua. Of course, ahead 451 00:24:24,840 --> 00:24:28,520 Speaker 3: of the World Economic Forums annual meeting in Davos, we 452 00:24:28,560 --> 00:24:31,840 Speaker 3: will have full coverage as that takes place on the 453 00:24:31,920 --> 00:24:35,639 Speaker 3: nineteenth to the twenty sixth of January. I'm Caroline Hebge 454 00:24:35,720 --> 00:24:37,919 Speaker 3: here in London. You can catch us every weekday morning 455 00:24:38,119 --> 00:24:41,040 Speaker 3: for Blueberg Daybreak you at beginning at six am in London. 456 00:24:41,240 --> 00:24:42,640 Speaker 3: That's one am on Wall Street. 457 00:24:42,760 --> 00:24:46,479 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend, 458 00:24:46,480 --> 00:24:48,960 Speaker 2: we'll look at how Beijing will report the performance of 459 00:24:49,000 --> 00:24:53,119 Speaker 2: the Chinese economy. I'm Nathan Hager, and this is Bloomberg. 460 00:25:04,280 --> 00:25:07,320 Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead, the 461 00:25:07,359 --> 00:25:10,119 Speaker 2: top stories for investors in the coming week. I'm Nathan 462 00:25:10,160 --> 00:25:13,080 Speaker 2: Hager and Washington. Let's turn to the growth story in 463 00:25:13,240 --> 00:25:17,439 Speaker 2: China and whether economic expansion met the government's target. Bloomberg's 464 00:25:17,440 --> 00:25:21,399 Speaker 2: Doug Krisnerius, host of the Daybreak Asia podcast Nathan. 465 00:25:21,480 --> 00:25:24,400 Speaker 4: In the coming week, we'll get readings on Chinese economic 466 00:25:24,440 --> 00:25:27,760 Speaker 4: growth for both the fourth quarter and the full year. Now, 467 00:25:27,760 --> 00:25:30,160 Speaker 4: we already know the government has set a growth target 468 00:25:30,320 --> 00:25:33,840 Speaker 4: for twenty twenty five of five percent, and there are 469 00:25:34,000 --> 00:25:37,280 Speaker 4: few reasons to suspect this will not be met, especially 470 00:25:37,280 --> 00:25:40,160 Speaker 4: when you look at the collapse of fixed asset investment 471 00:25:40,200 --> 00:25:43,119 Speaker 4: over the second half of twenty twenty five. Now, the 472 00:25:43,160 --> 00:25:45,919 Speaker 4: growth target will be a main focal point in March, 473 00:25:46,240 --> 00:25:49,840 Speaker 4: when top Chinese leaders gather for their annual parliamentary session 474 00:25:49,880 --> 00:25:53,199 Speaker 4: and unveil the next five year plan and set a 475 00:25:53,280 --> 00:25:57,080 Speaker 4: new growth target. They will likely emphasize the durability of 476 00:25:57,160 --> 00:26:00,159 Speaker 4: China's export economy in the face of a teraro for 477 00:26:00,359 --> 00:26:03,080 Speaker 4: with the United States. For a closer look, I'm joined 478 00:26:03,119 --> 00:26:07,520 Speaker 4: by Bloomberg's Alan Wong. Alan is Bloomberg ecogov editor for China. 479 00:26:07,800 --> 00:26:10,919 Speaker 4: Alan joins from our studios in Hong Kong. Thank you 480 00:26:10,960 --> 00:26:14,000 Speaker 4: so much for being here. I have to begin by 481 00:26:14,080 --> 00:26:16,520 Speaker 4: asking for your take on what we will learn from 482 00:26:16,520 --> 00:26:18,840 Speaker 4: these GDP figures in the coming week. 483 00:26:21,200 --> 00:26:24,800 Speaker 8: China set out to achieve around five percent growth target 484 00:26:24,880 --> 00:26:27,840 Speaker 8: for twenty twenty five, and it's looking very likely that 485 00:26:28,000 --> 00:26:31,600 Speaker 8: it's going to hit that, but that's the consensus anyway, 486 00:26:31,720 --> 00:26:35,640 Speaker 8: and there's actually no surprises that even in the last 487 00:26:35,680 --> 00:26:39,200 Speaker 8: quarter that China was well on track to hit that goal. 488 00:26:39,800 --> 00:26:43,080 Speaker 8: So a lot of economists and investors they have moved 489 00:26:43,119 --> 00:26:46,400 Speaker 8: on to the next question and to look at what 490 00:26:46,960 --> 00:26:48,720 Speaker 8: the Chinese economy is going to look like in the 491 00:26:48,800 --> 00:26:51,480 Speaker 8: coming year, because a lot of the factors that helped 492 00:26:51,560 --> 00:26:54,840 Speaker 8: China last year may not be around anymore and have 493 00:26:55,000 --> 00:26:58,840 Speaker 8: changed in material ways. So one thing that I'd be 494 00:26:58,880 --> 00:27:02,159 Speaker 8: looking at is what Trey looks like with China in 495 00:27:02,160 --> 00:27:05,320 Speaker 8: a coming year. And obviously there's a lot of external 496 00:27:05,359 --> 00:27:08,640 Speaker 8: factors affecting what on not China China's factories could sell 497 00:27:08,640 --> 00:27:09,879 Speaker 8: abroad and how much they can do that. 498 00:27:10,240 --> 00:27:13,080 Speaker 4: Alan, I'm curious to get your take on how high 499 00:27:13,119 --> 00:27:16,640 Speaker 4: tech industries in China have been contributing to the overall 500 00:27:16,680 --> 00:27:20,080 Speaker 4: growth story, and I'm thinking of electric vehicles in particular. 501 00:27:20,880 --> 00:27:23,320 Speaker 4: It's hard to believe that it's been two decades now 502 00:27:23,400 --> 00:27:28,960 Speaker 4: since policymakers in Beijing decided to overtake Western carmakers by 503 00:27:28,960 --> 00:27:32,159 Speaker 4: betting on evs, and now it's clear that China is 504 00:27:32,200 --> 00:27:37,000 Speaker 4: the undisputed world leader. There's also this story on artificial intelligence, 505 00:27:37,040 --> 00:27:40,159 Speaker 4: and I'm thinking of last year's so called deep seek moment. 506 00:27:40,840 --> 00:27:44,560 Speaker 4: So when you consider EVS and AI, are these industries 507 00:27:44,640 --> 00:27:47,320 Speaker 4: having a significant impact when it comes to growth? 508 00:27:48,680 --> 00:27:52,960 Speaker 8: I think the EV sectors certainly contributed to China's economic 509 00:27:52,960 --> 00:27:56,720 Speaker 8: growth materially AI. I think we're not quite seeing that 510 00:27:56,920 --> 00:28:00,439 Speaker 8: just yet, but just and also it's much harder to 511 00:28:00,480 --> 00:28:04,080 Speaker 8: measure than the value of goods flowing out of China's border. 512 00:28:04,440 --> 00:28:06,359 Speaker 8: So if you just take a moment look at the 513 00:28:06,960 --> 00:28:12,360 Speaker 8: EV exports, and just one of the posted children of 514 00:28:12,520 --> 00:28:17,560 Speaker 8: China's industrial might is that EV growth. EV sales growth 515 00:28:17,600 --> 00:28:20,440 Speaker 8: has been in a double digits for many many months 516 00:28:20,520 --> 00:28:24,640 Speaker 8: in a row, and that really helped China export to markets, 517 00:28:24,720 --> 00:28:28,200 Speaker 8: especially outside the US, because in the US, Chinese imports 518 00:28:28,200 --> 00:28:32,320 Speaker 8: of EV's face a lot very high terriffs as basically prohibitive, 519 00:28:32,600 --> 00:28:36,200 Speaker 8: But elsewhere China has been doing much better. But it's 520 00:28:36,840 --> 00:28:40,960 Speaker 8: quite interesting that too, if you compare the production of 521 00:28:41,040 --> 00:28:46,840 Speaker 8: EV's with traditional gasoline vehicles. One thing that people might 522 00:28:46,960 --> 00:28:51,960 Speaker 8: overlook is that actually China's still producing mostly conventional vehicles, 523 00:28:52,040 --> 00:28:55,160 Speaker 8: and that is part of China's economic story, is that 524 00:28:55,200 --> 00:28:59,480 Speaker 8: the bright cand of bright spots outshine the decline in 525 00:28:59,520 --> 00:29:02,360 Speaker 8: traditional industries. And I think in EV is one such 526 00:29:02,440 --> 00:29:08,560 Speaker 8: example where the growth is not really offsetting the slum 527 00:29:08,680 --> 00:29:10,680 Speaker 8: in the rest of the industry. And if you look 528 00:29:10,680 --> 00:29:12,800 Speaker 8: at a broad economy, that might be happening at a 529 00:29:12,840 --> 00:29:13,960 Speaker 8: bar scale as well. 530 00:29:14,080 --> 00:29:15,840 Speaker 4: Maybe we can talk just a bit about the big 531 00:29:15,840 --> 00:29:18,760 Speaker 4: news from the last week. China's trade surplus set a 532 00:29:18,920 --> 00:29:22,400 Speaker 4: record last year of one point two trillion dollars. We've 533 00:29:22,440 --> 00:29:25,640 Speaker 4: talked a lot about evidence that Chinese goods had been 534 00:29:25,680 --> 00:29:29,320 Speaker 4: flooding markets around the world last year. So I'm wondering 535 00:29:29,520 --> 00:29:33,280 Speaker 4: about the degree to which the Chinese export economy fits 536 00:29:33,280 --> 00:29:36,080 Speaker 4: into the story on the trade surplus. 537 00:29:38,680 --> 00:29:41,800 Speaker 8: EV exports are just part of that picture. China's explus 538 00:29:41,800 --> 00:29:45,840 Speaker 8: have been strong outside the US. We're talking about selling 539 00:29:45,880 --> 00:29:51,080 Speaker 8: to the African continent, to Southeast Asia, to the EU, 540 00:29:51,240 --> 00:29:55,520 Speaker 8: and it's a wide variety of products and the growth 541 00:29:55,880 --> 00:29:59,440 Speaker 8: has been stunning. And then one reason is that a 542 00:29:59,480 --> 00:30:03,440 Speaker 8: lot of the meant for the US have been routed 543 00:30:03,480 --> 00:30:09,680 Speaker 8: through those third markets. Either it's by China exporting input 544 00:30:09,760 --> 00:30:12,719 Speaker 8: materials to factories in those places where they assembled and 545 00:30:12,760 --> 00:30:16,960 Speaker 8: then shipped onward to the US, or through some tray 546 00:30:17,080 --> 00:30:20,160 Speaker 8: rerouting that may or may not be above board that 547 00:30:20,840 --> 00:30:23,720 Speaker 8: to meet the final demand in the US. But overall 548 00:30:23,840 --> 00:30:27,640 Speaker 8: that the big the overarching story is that China managed 549 00:30:27,680 --> 00:30:31,920 Speaker 8: to survive Trump's tariff assaults and came out with the 550 00:30:31,960 --> 00:30:36,240 Speaker 8: biggest tray surplus ever one point two trillion dollars. 551 00:30:36,600 --> 00:30:39,560 Speaker 4: So when we talk about China, there is no escaping 552 00:30:39,640 --> 00:30:41,040 Speaker 4: the story on deflation. 553 00:30:41,840 --> 00:30:42,040 Speaker 1: Now. 554 00:30:42,080 --> 00:30:44,680 Speaker 4: To be fair, the latest reading on consumer prices did 555 00:30:44,720 --> 00:30:47,560 Speaker 4: show a pickup in December, but that was mainly due 556 00:30:47,600 --> 00:30:51,480 Speaker 4: to higher food costs. The problem is with wholesale inflation. 557 00:30:51,720 --> 00:30:54,400 Speaker 4: Producer prices in the month of December were down by 558 00:30:54,520 --> 00:30:57,960 Speaker 4: one point nine percent that's an annualized rate, and this 559 00:30:58,160 --> 00:31:02,160 Speaker 4: made for the thirty ninth straight month of weakness in PPI. 560 00:31:03,080 --> 00:31:06,320 Speaker 4: So the question becomes, will twenty twenty six be the 561 00:31:06,400 --> 00:31:10,000 Speaker 4: year when we're going to see some type of reflation 562 00:31:10,240 --> 00:31:11,920 Speaker 4: in China? Do you think that's possible? 563 00:31:13,800 --> 00:31:21,040 Speaker 8: Economists do expect reflation this year, but then there's no 564 00:31:21,080 --> 00:31:24,960 Speaker 8: consensus on just how much prices will jump, and this 565 00:31:25,000 --> 00:31:27,760 Speaker 8: is something that's on Chinese official's mind because they want 566 00:31:27,800 --> 00:31:30,680 Speaker 8: to fight what they call involution. They want to fight 567 00:31:30,720 --> 00:31:33,680 Speaker 8: the endless prize wars that are dragging prices down and 568 00:31:33,720 --> 00:31:38,240 Speaker 8: really squeezing companies profit margins. Even the ev sector of 569 00:31:38,320 --> 00:31:43,120 Speaker 8: such a shining example of China's industrial success, is suffering 570 00:31:43,160 --> 00:31:46,760 Speaker 8: from over competition. And then the carmakers, they're not really 571 00:31:46,760 --> 00:31:50,080 Speaker 8: making that much profit from selling a lot more cars, 572 00:31:50,440 --> 00:31:54,200 Speaker 8: so that has many implications for the economy. If companies 573 00:31:54,200 --> 00:31:58,440 Speaker 8: aren't making enough profits, then that means that there's limited 574 00:31:58,520 --> 00:32:01,760 Speaker 8: room for them to raise wage is which is very 575 00:32:01,800 --> 00:32:04,920 Speaker 8: important for domestic consumption. Right this is the part of 576 00:32:04,920 --> 00:32:07,120 Speaker 8: the stories that we haven't talked about yet. When the 577 00:32:07,240 --> 00:32:10,040 Speaker 8: export to the rest of the world have been so 578 00:32:10,200 --> 00:32:14,960 Speaker 8: strong domestically, and perhaps because domestically consumption has been so 579 00:32:15,680 --> 00:32:20,120 Speaker 8: weak that exporters have nowhere to turn to except outward, 580 00:32:20,520 --> 00:32:22,960 Speaker 8: and that is creating also of the problems right with 581 00:32:23,280 --> 00:32:28,440 Speaker 8: even if explicitly EU jumped, we're seeing pushback from EU 582 00:32:28,480 --> 00:32:33,640 Speaker 8: officials to those what they call state subsidized exports, and 583 00:32:33,680 --> 00:32:36,800 Speaker 8: that's destroying competition locally, and they don't like it. That's 584 00:32:36,800 --> 00:32:39,480 Speaker 8: why they also put up their trade barriers. And now 585 00:32:39,600 --> 00:32:41,720 Speaker 8: the politics is coming in and then you know, there's 586 00:32:41,760 --> 00:32:45,200 Speaker 8: a negotiation between all different parties and we're still waiting 587 00:32:45,200 --> 00:32:48,120 Speaker 8: to see just what kind of deal that they could 588 00:32:48,160 --> 00:32:50,880 Speaker 8: they could reach to end this standoff. 589 00:32:51,120 --> 00:32:53,320 Speaker 4: So from what I understand, and you can confirm this 590 00:32:53,440 --> 00:32:56,600 Speaker 4: or deny it if you'd like. The property market, the 591 00:32:56,600 --> 00:32:59,200 Speaker 4: weakness that we have seen in the housing sector in 592 00:32:59,280 --> 00:33:02,760 Speaker 4: China continue used to cast a Paul weak confidence is 593 00:33:02,800 --> 00:33:05,080 Speaker 4: something that we talk a lot about, more so on 594 00:33:05,160 --> 00:33:08,560 Speaker 4: the side of the consumer perhaps than the business community. 595 00:33:09,240 --> 00:33:12,040 Speaker 4: Where does this leave the Central Bank when it comes 596 00:33:12,080 --> 00:33:14,920 Speaker 4: to adjusting policy in the new year. Do you think. 597 00:33:16,760 --> 00:33:23,720 Speaker 8: The reason that the Central Bank hasn't done more easing 598 00:33:24,360 --> 00:33:28,440 Speaker 8: last year than many economists expected was probably due to 599 00:33:28,480 --> 00:33:33,680 Speaker 8: just how well the economy fared under tariff pressure. They 600 00:33:33,720 --> 00:33:38,000 Speaker 8: just saw no urgent need to release more easing and 601 00:33:38,560 --> 00:33:42,200 Speaker 8: to support the economy. And the outlook for this year 602 00:33:42,640 --> 00:33:47,960 Speaker 8: is somewhat similar. It's reactive, like based on how the 603 00:33:48,000 --> 00:33:53,959 Speaker 8: economy is doing against the external pressures. If it's doing well, 604 00:33:54,000 --> 00:33:58,200 Speaker 8: then then once again PBOC may have less reason to 605 00:33:58,240 --> 00:34:02,920 Speaker 8: support the economy to the amount of cash that banks 606 00:34:03,080 --> 00:34:07,200 Speaker 8: must keep in reserve and release more money to the 607 00:34:07,240 --> 00:34:10,600 Speaker 8: economy for lending. That is to say that we I 608 00:34:10,600 --> 00:34:14,000 Speaker 8: think most economists don't expect massive stimulus to come. And 609 00:34:14,040 --> 00:34:16,400 Speaker 8: you mentioned the property market. It sounds like beating a 610 00:34:16,440 --> 00:34:19,600 Speaker 8: dead horse now, but we haven't seen the bottom yet 611 00:34:19,680 --> 00:34:23,360 Speaker 8: in the property market, and it's a matter of whether 612 00:34:23,480 --> 00:34:29,600 Speaker 8: the government sees is as necessary to restore confidence in 613 00:34:29,640 --> 00:34:33,040 Speaker 8: a property market to in order to increase people's mood 614 00:34:33,080 --> 00:34:36,359 Speaker 8: to consume like that is a like. The government has 615 00:34:36,360 --> 00:34:39,759 Speaker 8: said that they want prices to stop falling, but so 616 00:34:39,840 --> 00:34:42,560 Speaker 8: far the measures that they have rolled out so far 617 00:34:42,960 --> 00:34:47,560 Speaker 8: have been incremental and haven't had a major impact on 618 00:34:48,040 --> 00:34:49,200 Speaker 8: getting prices up. 619 00:34:49,320 --> 00:34:52,360 Speaker 4: And higher equity prices really haven't solved that problem. It 620 00:34:52,400 --> 00:34:56,160 Speaker 4: would appear at any rate. So Chinese presidenci we know, 621 00:34:56,320 --> 00:35:00,480 Speaker 4: has recently welcomed a host of leaders maybe can say 622 00:35:00,480 --> 00:35:02,960 Speaker 4: that they are looking to mend fences. And I'm thinking 623 00:35:03,000 --> 00:35:06,560 Speaker 4: of South Korea as Leeb Jamjung along with Canadian Prime 624 00:35:06,560 --> 00:35:10,560 Speaker 4: Minister Mark Carney and Britain's Cure Starmer. How do you 625 00:35:10,640 --> 00:35:13,839 Speaker 4: think she is orchestrating this. We talked a moment ago 626 00:35:13,880 --> 00:35:17,120 Speaker 4: about the fact that China maybe as a result of 627 00:35:17,120 --> 00:35:20,200 Speaker 4: the tariff policy from the US has been working for 628 00:35:20,239 --> 00:35:23,280 Speaker 4: a while now become less dependent on the United States. 629 00:35:23,880 --> 00:35:27,680 Speaker 4: Is there a success now in trying to negotiate greater 630 00:35:27,800 --> 00:35:32,120 Speaker 4: access to markets outside of China other than the United States. 631 00:35:33,920 --> 00:35:37,640 Speaker 8: I think the fact that these leaders are visiting China 632 00:35:37,800 --> 00:35:40,040 Speaker 8: over such a short period of time, and for many 633 00:35:40,040 --> 00:35:43,960 Speaker 8: of those leaders is their first visits in many years, 634 00:35:45,040 --> 00:35:47,960 Speaker 8: shows that there's some modest success on China's part in 635 00:35:48,200 --> 00:35:53,719 Speaker 8: trying to get the West to re engage with it. 636 00:35:54,840 --> 00:35:57,520 Speaker 8: But there are lots of nuances here because while those 637 00:35:57,560 --> 00:36:00,960 Speaker 8: countries want to re engage China, manage their ties with 638 00:36:01,040 --> 00:36:05,239 Speaker 8: China economically, in terms of national security, there's still very 639 00:36:05,320 --> 00:36:08,440 Speaker 8: much part of the Western Bloc. There's still very much 640 00:36:09,280 --> 00:36:11,799 Speaker 8: in bed with the US. There is not It's very 641 00:36:12,200 --> 00:36:15,440 Speaker 8: hard to imagine a world where because of economic interest, 642 00:36:15,560 --> 00:36:19,160 Speaker 8: these countries would choose China over the US. So what 643 00:36:19,200 --> 00:36:22,239 Speaker 8: we're seeing is mostly these countries trying to manage their 644 00:36:22,280 --> 00:36:26,400 Speaker 8: ties with China, try to get as good an economic 645 00:36:26,440 --> 00:36:29,760 Speaker 8: deal with China as possible, and also because of worries 646 00:36:29,840 --> 00:36:35,120 Speaker 8: that China's exports are hurting their local competition, So there's 647 00:36:35,120 --> 00:36:38,200 Speaker 8: a lot of incentive for them to talk to China 648 00:36:38,320 --> 00:36:41,120 Speaker 8: to begin with. And also what the elephant in the 649 00:36:41,160 --> 00:36:44,280 Speaker 8: room is that China showed that it has massive leverage 650 00:36:44,360 --> 00:36:48,319 Speaker 8: over rare earth materials that a lot of countries rely 651 00:36:48,440 --> 00:36:52,200 Speaker 8: on to make stuff to in the high tech sector. 652 00:36:53,080 --> 00:36:57,239 Speaker 8: So if China threatened, I mean successfully used rare earths 653 00:36:57,280 --> 00:37:02,080 Speaker 8: to to get concessions from the Trump administration doing the 654 00:37:02,120 --> 00:37:08,919 Speaker 8: train negotiation, and they have used the same dominance as 655 00:37:08,960 --> 00:37:12,279 Speaker 8: a form of punishment on Japan. So it's also in 656 00:37:12,280 --> 00:37:15,600 Speaker 8: those countries trying to engage with China's interest to make 657 00:37:15,640 --> 00:37:19,640 Speaker 8: sure that they can manage to maintain that access to 658 00:37:19,680 --> 00:37:20,160 Speaker 8: the eras. 659 00:37:20,400 --> 00:37:22,239 Speaker 4: Alan will leave it there. Thank you so very much, 660 00:37:22,280 --> 00:37:26,759 Speaker 4: Bloomberg's Alan Wong Alan is Bloomberg's ecogov editor for China. 661 00:37:26,880 --> 00:37:30,040 Speaker 4: Joining today from our studios in Hong Kong, and I'm 662 00:37:30,080 --> 00:37:32,640 Speaker 4: Doug Krisner. You can catch us weekdays for the Daybreak 663 00:37:32,719 --> 00:37:37,359 Speaker 4: Asia podcast. It's available wherever you get your podcast Nathan. 664 00:37:37,560 --> 00:37:38,120 Speaker 2: Thanks Doug. 665 00:37:38,280 --> 00:37:38,480 Speaker 5: Man. 666 00:37:38,520 --> 00:37:41,200 Speaker 2: That does it for this edition of Bloomberg day Break Weekend. 667 00:37:41,280 --> 00:37:44,240 Speaker 2: Join us again Tuesday morning at five am Wall Street 668 00:37:44,239 --> 00:37:46,880 Speaker 2: Time for the latest non markets overseas and the news 669 00:37:46,920 --> 00:37:49,760 Speaker 2: you need to start your day, I'm Nathan Hager. Stay 670 00:37:49,760 --> 00:37:52,680 Speaker 2: with US. Top stories and global business headlines are coming 671 00:37:52,760 --> 00:37:56,960 Speaker 2: up right now