1 00:00:00,240 --> 00:00:07,680 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,520 --> 00:00:13,680 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,680 --> 00:00:16,400 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,440 --> 00:00:19,040 Speaker 2: all around the world. Straight Ahead on the program, we 5 00:00:19,079 --> 00:00:22,040 Speaker 2: look to some key inflation data in the US. I'm 6 00:00:22,120 --> 00:00:23,640 Speaker 2: Nathan Hager in Washington. 7 00:00:23,880 --> 00:00:26,920 Speaker 3: I'm Caroline Hebgin London, where we discuss whether the Can 8 00:00:27,040 --> 00:00:31,120 Speaker 3: Film Festival can galvanize the business of cinema. 9 00:00:31,160 --> 00:00:34,479 Speaker 4: I'm Doug Prisner, looking ahead to US Treasury Secretary Scott 10 00:00:34,560 --> 00:00:36,200 Speaker 4: Besson's visit to Japan. 11 00:00:38,159 --> 00:00:42,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,240 --> 00:00:45,920 Speaker 1: eleven three yeh New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,440 --> 00:00:51,559 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 14 00:00:51,720 --> 00:00:55,240 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,280 --> 00:00:57,520 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:02,880 --> 00:01:05,800 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 17 00:01:05,800 --> 00:01:08,880 Speaker 2: program with some key economic data in the US. The 18 00:01:08,920 --> 00:01:12,679 Speaker 2: April reading on consumer prices comes out on Tuesday. Then 19 00:01:12,680 --> 00:01:15,120 Speaker 2: we'll get a look at inflation pressures on business in 20 00:01:15,240 --> 00:01:18,640 Speaker 2: the Producer Price Index Wednesday and then we'll see how 21 00:01:18,680 --> 00:01:21,520 Speaker 2: the consumer is holding up when April retail sales come 22 00:01:21,520 --> 00:01:26,199 Speaker 2: out Thursday, a busy week for Edward Harrison, senior editor 23 00:01:26,200 --> 00:01:29,600 Speaker 2: for Bloomberg News and author of the Everything Risk newsletter. 24 00:01:29,720 --> 00:01:33,280 Speaker 2: Really pleased that Ed's got some time to join us here. 25 00:01:33,480 --> 00:01:33,760 Speaker 5: Now. 26 00:01:34,240 --> 00:01:36,959 Speaker 2: I'm sure I'm not the only one who sees inflation 27 00:01:37,080 --> 00:01:41,200 Speaker 2: pressure just driving by the gas station every day. Ed, 28 00:01:41,360 --> 00:01:43,520 Speaker 2: Is this the month we're going to see Iran war 29 00:01:43,640 --> 00:01:45,759 Speaker 2: impacts show up in the data? 30 00:01:46,319 --> 00:01:49,880 Speaker 6: Hey, Nathan, Yes, I think this is the month. The 31 00:01:49,920 --> 00:01:52,000 Speaker 6: real question is is whether or not it shows up 32 00:01:52,120 --> 00:01:55,080 Speaker 6: less or more than is expected. Because you know, if 33 00:01:55,080 --> 00:01:58,640 Speaker 6: you look at the numbers on the Bloomberg terminal, we 34 00:01:58,720 --> 00:02:02,480 Speaker 6: had three point three last month. Expected for this month 35 00:02:02,560 --> 00:02:06,200 Speaker 6: year over year for cpis three point seven percent, and 36 00:02:06,240 --> 00:02:09,680 Speaker 6: they also expect a two point six percent core number 37 00:02:09,720 --> 00:02:12,000 Speaker 6: to go up to two point seven percent. So it's 38 00:02:12,000 --> 00:02:15,600 Speaker 6: definitely baked into the cake, not only that gas prices 39 00:02:15,639 --> 00:02:18,040 Speaker 6: will cause a big jump in the CPI year or 40 00:02:18,040 --> 00:02:22,120 Speaker 6: a year, but that it will translate into something overall 41 00:02:22,560 --> 00:02:28,560 Speaker 6: in terms of the core CPI. And so ultimately the 42 00:02:28,639 --> 00:02:30,520 Speaker 6: question is do we get more or do we get 43 00:02:30,639 --> 00:02:31,760 Speaker 6: less than what's expected? 44 00:02:32,000 --> 00:02:35,799 Speaker 2: How much would you expect that something like energy prices 45 00:02:35,840 --> 00:02:39,280 Speaker 2: would feed into the core. It is something that can 46 00:02:39,560 --> 00:02:42,040 Speaker 2: have an overall impact, can it when you think about 47 00:02:42,320 --> 00:02:44,400 Speaker 2: diesel prices and the effect on shipping as. 48 00:02:44,320 --> 00:02:48,640 Speaker 6: Well, right, definitely. And you know, we see all sorts 49 00:02:48,680 --> 00:02:52,520 Speaker 6: of different effects of helium prices having an effect on 50 00:02:53,080 --> 00:02:57,920 Speaker 6: electronics because of the use of helium in large disk 51 00:02:58,040 --> 00:03:03,399 Speaker 6: drives that drive the AI build out. You know that 52 00:03:03,440 --> 00:03:07,200 Speaker 6: they use these disk drives potentially for AI and all 53 00:03:07,280 --> 00:03:10,480 Speaker 6: sorts of other things. What I would say is is 54 00:03:10,560 --> 00:03:13,959 Speaker 6: that if you look at PCE, which is based off 55 00:03:13,960 --> 00:03:18,600 Speaker 6: of personal consumption, the price increase there that index was 56 00:03:18,680 --> 00:03:22,320 Speaker 6: three point two percent year over year. We got that 57 00:03:22,560 --> 00:03:25,400 Speaker 6: a couple of weeks ago, and that's the number that 58 00:03:25,440 --> 00:03:29,160 Speaker 6: the FED looks at. Three point two percent is really high. 59 00:03:29,480 --> 00:03:31,920 Speaker 6: And so what it says is is that we're already 60 00:03:31,919 --> 00:03:36,560 Speaker 6: at a high level. If the increase in energy prices 61 00:03:36,600 --> 00:03:39,040 Speaker 6: adds to that, then it's going to be a very 62 00:03:39,080 --> 00:03:41,840 Speaker 6: tough road for the for the Federal Reserve ahead and 63 00:03:41,920 --> 00:03:43,040 Speaker 6: for interest rates overall. 64 00:03:43,200 --> 00:03:44,960 Speaker 2: And how do you expect that to feed into what 65 00:03:45,040 --> 00:03:48,440 Speaker 2: we could get from the producer price side as well? 66 00:03:48,480 --> 00:03:49,760 Speaker 2: When those numbers come out. 67 00:03:51,160 --> 00:03:54,520 Speaker 6: That's where where I think the market and I both 68 00:03:54,680 --> 00:03:58,840 Speaker 6: expect to see the big jumps. So the numbers were 69 00:03:58,840 --> 00:04:02,960 Speaker 6: pretty large already. You had three point eight percent in March. 70 00:04:03,360 --> 00:04:07,880 Speaker 6: They're expecting four point three percent core. This is not 71 00:04:08,000 --> 00:04:10,880 Speaker 6: including food and energy, so you can see those are 72 00:04:10,960 --> 00:04:13,600 Speaker 6: huge numbers even if you don't include food and energy, 73 00:04:13,640 --> 00:04:16,920 Speaker 6: and if you did include food and energy, then you've 74 00:04:16,960 --> 00:04:19,800 Speaker 6: got a four point zero going up to four point 75 00:04:19,839 --> 00:04:25,520 Speaker 6: eight percent to be expected. So almost five percent increase 76 00:04:25,720 --> 00:04:28,440 Speaker 6: in producer prices in the month of April. 77 00:04:28,120 --> 00:04:32,040 Speaker 2: So potentially even bigger price increases on the producer side 78 00:04:32,080 --> 00:04:35,360 Speaker 2: than on the consumer. Do you expect to see some 79 00:04:35,440 --> 00:04:39,040 Speaker 2: of that feeding in to what consumers see the idea 80 00:04:39,120 --> 00:04:42,320 Speaker 2: that producers might be able to pass along some of 81 00:04:42,320 --> 00:04:44,640 Speaker 2: their price pressures onto the consumer. 82 00:04:45,880 --> 00:04:49,800 Speaker 6: Yeah, I think. You know it's with the tariffs. It 83 00:04:49,839 --> 00:04:54,680 Speaker 6: was unknown whether or not they would be legal, and 84 00:04:54,760 --> 00:04:57,640 Speaker 6: we've seen that they've been struck down by various courts 85 00:04:57,680 --> 00:05:02,400 Speaker 6: now here. You you know that these even though it's temporary, 86 00:05:02,440 --> 00:05:06,280 Speaker 6: you know that the price pressures are for real and 87 00:05:06,320 --> 00:05:08,880 Speaker 6: you must pass them through. And so to the degree 88 00:05:08,920 --> 00:05:11,600 Speaker 6: that companies can pass them through, they're definitely going to 89 00:05:11,680 --> 00:05:14,719 Speaker 6: do that, and then the question becomes, you know, how 90 00:05:14,800 --> 00:05:16,560 Speaker 6: much can the consumer handle? 91 00:05:17,520 --> 00:05:20,000 Speaker 2: And I guess we'll get some answers on that potentially 92 00:05:20,600 --> 00:05:24,799 Speaker 2: in the Thursday retail sales print for the month of April. 93 00:05:24,960 --> 00:05:28,760 Speaker 2: Are you expecting to see any shifts in consumer behavior 94 00:05:28,800 --> 00:05:30,039 Speaker 2: reflected in those numbers? 95 00:05:31,440 --> 00:05:36,280 Speaker 6: Yes, I think that you know the expectation from the market. 96 00:05:36,320 --> 00:05:39,680 Speaker 6: In particular, the ultimate number to look for is the 97 00:05:39,680 --> 00:05:43,200 Speaker 6: control group. That's the number for retail sales that the 98 00:05:43,240 --> 00:05:45,760 Speaker 6: market uses to say this is the best number to 99 00:05:45,760 --> 00:05:48,640 Speaker 6: look at in terms of the go forward approach, and 100 00:05:48,680 --> 00:05:51,240 Speaker 6: that number is expected to decline to zero point four 101 00:05:51,240 --> 00:05:56,000 Speaker 6: percent from zero point seven percent. If you take out autos, 102 00:05:56,279 --> 00:05:58,760 Speaker 6: you go from zero point six percent also to zero 103 00:05:58,760 --> 00:06:02,960 Speaker 6: point four percent. Those are decent numbers, but when you 104 00:06:03,560 --> 00:06:06,920 Speaker 6: take away inflation, it really adds up on a year 105 00:06:06,960 --> 00:06:11,720 Speaker 6: of a year basis to you know, a mid lean economy. 106 00:06:12,839 --> 00:06:16,640 Speaker 6: Anything lower starts to become very difficult, and then you 107 00:06:16,680 --> 00:06:18,719 Speaker 6: start worrying about economic growth. 108 00:06:19,080 --> 00:06:22,279 Speaker 2: Well, again, really appreciate your insights ahead of all this data. 109 00:06:22,400 --> 00:06:25,800 Speaker 2: That is Edward Harrison, senior editor for Bloomberg News. Check 110 00:06:25,839 --> 00:06:28,560 Speaker 2: out all his work on the Everything Risk newsletter. You 111 00:06:28,560 --> 00:06:32,400 Speaker 2: can find it at Bloomberg dot com Slash newsletters. Let's 112 00:06:32,400 --> 00:06:34,440 Speaker 2: take a look now add some stocks making news in 113 00:06:34,480 --> 00:06:37,240 Speaker 2: the week ahead. I'm Nathan Hager, joined by Bloomberg Markets 114 00:06:37,279 --> 00:06:40,960 Speaker 2: Live Managing Editor Christine Aquino with more earnings on TEP 115 00:06:41,040 --> 00:06:44,520 Speaker 2: this week starting Monday with Hymns and Hers Health. Weren't 116 00:06:44,520 --> 00:06:48,080 Speaker 2: they going to beef with Nova Nordisk recently, Christine? How 117 00:06:48,160 --> 00:06:50,279 Speaker 2: are things in telehealth these days? 118 00:06:50,720 --> 00:06:52,840 Speaker 7: That beef though, is a thing of the past, because 119 00:06:52,880 --> 00:06:56,160 Speaker 7: they're cooperating with each other now, right, And so that 120 00:06:56,320 --> 00:06:58,680 Speaker 7: is one of the reasons why the likes of JP 121 00:06:58,839 --> 00:07:02,960 Speaker 7: Morgan initiated to stock with an overweight rating because of 122 00:07:03,000 --> 00:07:05,560 Speaker 7: that deal. So now before they had a beef, now 123 00:07:05,560 --> 00:07:08,600 Speaker 7: they have a partnership, and so Hyms and Hers will 124 00:07:08,640 --> 00:07:12,400 Speaker 7: be selling we govy on its platform, and JP Morgan 125 00:07:12,480 --> 00:07:14,679 Speaker 7: is saying that that deal could mark a turning point 126 00:07:15,000 --> 00:07:18,720 Speaker 7: and remove a significant legal overhang. So that bothes well 127 00:07:18,800 --> 00:07:22,720 Speaker 7: for its earnings potentially, and you know, we have options 128 00:07:22,760 --> 00:07:26,040 Speaker 7: of course, starting to price that potential move there, we 129 00:07:26,040 --> 00:07:29,320 Speaker 7: could see it potentially a thirteen percent move in the 130 00:07:29,440 --> 00:07:32,920 Speaker 7: share after the company reports earnings. And so if that 131 00:07:33,320 --> 00:07:36,600 Speaker 7: is all fine and dandy, they meet or beat estimates, 132 00:07:36,640 --> 00:07:39,240 Speaker 7: then that could be a thirteen percent share move higher, 133 00:07:39,440 --> 00:07:41,880 Speaker 7: but otherwise it could be a thirteen percent share move lower. 134 00:07:41,920 --> 00:07:42,760 Speaker 7: So we'll see about that. 135 00:07:43,000 --> 00:07:43,240 Speaker 8: Yeah. 136 00:07:43,280 --> 00:07:45,440 Speaker 2: Well, I mean this stock has already been doing pretty 137 00:07:45,440 --> 00:07:48,280 Speaker 2: well so far this year, hasn't it. I mean, where 138 00:07:48,440 --> 00:07:51,680 Speaker 2: is the bar when it comes to what investors want 139 00:07:51,680 --> 00:07:53,240 Speaker 2: to see from Hymns this time around? 140 00:07:53,560 --> 00:07:56,840 Speaker 7: Yeah? I mean, of course, the demand for the GLP 141 00:07:57,120 --> 00:08:02,400 Speaker 7: ones very much still sustaining the business model here. And 142 00:08:02,440 --> 00:08:04,840 Speaker 7: I think the fact that you know, they are able 143 00:08:04,920 --> 00:08:08,240 Speaker 7: to pivot because potentially, you know, they're now in cooperation 144 00:08:08,400 --> 00:08:12,160 Speaker 7: with Novo and so they're kind of turning themselves from 145 00:08:12,480 --> 00:08:16,880 Speaker 7: a competitor into a retailer in that space, and so, 146 00:08:17,320 --> 00:08:19,880 Speaker 7: you know, I think investors will want to see is 147 00:08:19,920 --> 00:08:23,520 Speaker 7: that business model working, how much kind of gains could 148 00:08:23,560 --> 00:08:26,440 Speaker 7: they expect from that sort of partnership. Is it something 149 00:08:26,480 --> 00:08:31,200 Speaker 7: that could potentially also open up opportunities with other GLP 150 00:08:31,320 --> 00:08:35,000 Speaker 7: one manufacturers and sellers in the market, Right, And so yeah, 151 00:08:35,040 --> 00:08:37,680 Speaker 7: for Hymns and Hers, it's going to be a question 152 00:08:37,760 --> 00:08:40,520 Speaker 7: of how well are they able to pivot after this 153 00:08:40,600 --> 00:08:41,720 Speaker 7: initial legal setback. 154 00:08:41,960 --> 00:08:43,960 Speaker 2: I guess we could call Hymns and Her sort of 155 00:08:44,120 --> 00:08:46,520 Speaker 2: tech adjacent, right, because this is going to be kind 156 00:08:46,559 --> 00:08:49,240 Speaker 2: of a busy week for tech earnings overall. We're going 157 00:08:49,320 --> 00:08:53,400 Speaker 2: to hear from Applied Materials on Thursday. This has been 158 00:08:53,440 --> 00:08:56,720 Speaker 2: a pretty crazy quarter for chip makers. Where are we 159 00:08:56,800 --> 00:08:59,600 Speaker 2: expecting chip equipment makers. 160 00:08:59,160 --> 00:09:00,600 Speaker 6: To stack well? 161 00:09:00,800 --> 00:09:03,840 Speaker 7: Based on the movement in the semicondaractor is index that 162 00:09:03,880 --> 00:09:07,240 Speaker 7: we've seen, I mean, I think it's all going to 163 00:09:07,280 --> 00:09:11,000 Speaker 7: be positive, So potentially high expectations for the earnings for 164 00:09:11,240 --> 00:09:15,160 Speaker 7: Applied Materials here, and you know the options data that 165 00:09:15,160 --> 00:09:17,480 Speaker 7: we're seeing at the moment implying about a six percent 166 00:09:17,559 --> 00:09:21,160 Speaker 7: move After those results, we have seen a spate of 167 00:09:21,440 --> 00:09:25,160 Speaker 7: analyst moves for the stock, ubs raising its price target 168 00:09:25,240 --> 00:09:28,359 Speaker 7: to four hundred and eighty from four hundred and thirty previously, 169 00:09:28,520 --> 00:09:32,120 Speaker 7: Seaport Global Securities giving Applied Materials a new by rating 170 00:09:32,160 --> 00:09:34,760 Speaker 7: and a five hundred dollars price target. So it looks 171 00:09:34,800 --> 00:09:38,360 Speaker 7: like a lot of expectations very positive, especially because of 172 00:09:38,440 --> 00:09:41,160 Speaker 7: all the optimism that we've seen in the chip space 173 00:09:41,240 --> 00:09:44,800 Speaker 7: and our own bloomering intelligence analysts weighing in as well, 174 00:09:44,920 --> 00:09:48,560 Speaker 7: and they're looking for sales and fiscal second quarter finishing 175 00:09:48,640 --> 00:09:51,880 Speaker 7: higher and also similar gains for operating profits. So it 176 00:09:51,920 --> 00:09:54,120 Speaker 7: looks like there's going to be a lot of positivity 177 00:09:54,120 --> 00:09:56,040 Speaker 7: baked in. We'll see if they can deliver on that. 178 00:09:56,360 --> 00:09:57,880 Speaker 2: I mean you could say that there's a lot of 179 00:09:57,880 --> 00:10:02,040 Speaker 2: positivity baked in already. I mean, this stock is serious 180 00:10:02,160 --> 00:10:05,280 Speaker 2: double digits on the year so far. Is it priced 181 00:10:05,320 --> 00:10:05,840 Speaker 2: to perfection? 182 00:10:06,559 --> 00:10:09,400 Speaker 7: I mean, that is definitely the worry every time we 183 00:10:09,480 --> 00:10:12,600 Speaker 7: see such big gains like these, Nathan, I mean, you 184 00:10:12,640 --> 00:10:15,640 Speaker 7: always have the naysayers in the market right saying that 185 00:10:15,920 --> 00:10:20,000 Speaker 7: this can possibly keep going at nauseum. But just you know, 186 00:10:20,040 --> 00:10:21,439 Speaker 7: if you look at kind of the plans of the 187 00:10:21,480 --> 00:10:24,559 Speaker 7: biggest hyper scalers when it comes to their cap x, right, 188 00:10:24,600 --> 00:10:28,600 Speaker 7: the likes of your alphabets, your Amazon's, your Apples, it 189 00:10:28,679 --> 00:10:32,000 Speaker 7: seems like there is never ending demand at the moment 190 00:10:32,200 --> 00:10:37,000 Speaker 7: for any equipment, any infrastructure related to AI and the 191 00:10:37,080 --> 00:10:39,720 Speaker 7: data center buildout, and so you know, in some ways 192 00:10:39,720 --> 00:10:42,440 Speaker 7: it could be priced perfection, but it may be a 193 00:10:42,520 --> 00:10:45,240 Speaker 7: while yet before we actually see that pullback in stock. 194 00:10:45,720 --> 00:10:48,160 Speaker 2: Speaking of the AI build out, we are going to 195 00:10:48,240 --> 00:10:53,200 Speaker 2: hear from another beneficiary of that phenomenon on Wednesday when 196 00:10:53,240 --> 00:10:56,960 Speaker 2: Cisco Systems reports. What are we expecting from Cisco. 197 00:10:57,080 --> 00:11:00,520 Speaker 7: Absolutely, Nathan, Well, you know, a similarly positive thing our 198 00:11:00,559 --> 00:11:05,360 Speaker 7: blooming intelligence analysts saying that they're focusing primarily on Cisco's 199 00:11:05,400 --> 00:11:09,880 Speaker 7: optical and high capacity networking products and that has benefited 200 00:11:09,880 --> 00:11:12,680 Speaker 7: from the AI infrastructure ramp up. As you've mentioned, the 201 00:11:12,760 --> 00:11:16,160 Speaker 7: expectation is for that to keep benefiting from that, and 202 00:11:16,960 --> 00:11:20,640 Speaker 7: specifically for Cisco, that could result in an increase to 203 00:11:20,720 --> 00:11:24,160 Speaker 7: about five billion dollars and its AI order outlooks so 204 00:11:24,240 --> 00:11:27,880 Speaker 7: not too shabby for the stock, and that's really helped 205 00:11:27,880 --> 00:11:32,280 Speaker 7: shield it as well from the software pessimism that we've 206 00:11:32,280 --> 00:11:36,240 Speaker 7: seen in the start of the year, right because they're 207 00:11:36,320 --> 00:11:39,400 Speaker 7: very much levered to that build out that we've seen 208 00:11:39,559 --> 00:11:43,080 Speaker 7: in Given the demand for anything related to that, both 209 00:11:43,120 --> 00:11:47,120 Speaker 7: hardware and software, seems like it could be a positive 210 00:11:47,559 --> 00:11:49,000 Speaker 7: season for Cisco once again. 211 00:11:49,240 --> 00:11:52,560 Speaker 2: I guess one other question is whether Cisco is shielded 212 00:11:52,640 --> 00:11:56,560 Speaker 2: from the hit we've seen from memory costs from so 213 00:11:56,640 --> 00:11:58,520 Speaker 2: many of these companies that have reported so far. 214 00:11:58,920 --> 00:12:01,719 Speaker 7: Yeah, absolutely, definitely something that investors are going to be 215 00:12:01,800 --> 00:12:05,320 Speaker 7: watching out for. You know, how much of their margins 216 00:12:05,360 --> 00:12:07,720 Speaker 7: are they going to be able to protect as costs 217 00:12:08,440 --> 00:12:12,040 Speaker 7: rise in whether that a shortage is set to continue. 218 00:12:12,760 --> 00:12:17,000 Speaker 7: Is there supply chain something that is relatively insulated from 219 00:12:17,640 --> 00:12:20,199 Speaker 7: that dynamic, or is it something that they're going to 220 00:12:20,280 --> 00:12:21,920 Speaker 7: have to contend with as well. So I'm sure that 221 00:12:22,000 --> 00:12:25,079 Speaker 7: investors going to be looking out for any comments from 222 00:12:25,200 --> 00:12:29,120 Speaker 7: the company from their CEO during the analysts call. For sure, the. 223 00:12:29,040 --> 00:12:32,960 Speaker 2: Tech earning story continues. Thanks Christine, great having you on 224 00:12:33,000 --> 00:12:37,040 Speaker 2: with us. That's Bloomberg Markets Live, Managing Editor Christine Aquino, 225 00:12:37,320 --> 00:12:40,080 Speaker 2: and coming up on Bloomberg Daybreak weekend, we'll look to 226 00:12:40,160 --> 00:12:43,679 Speaker 2: the con Film Festival whether it can galvanize the new 227 00:12:43,840 --> 00:12:58,800 Speaker 2: cinema business. I'm Nathan Hager. This is Bloomberg. This is 228 00:12:58,800 --> 00:13:01,640 Speaker 2: Bloomberg Daybreak. We ad our global look ahead at the 229 00:13:01,640 --> 00:13:04,319 Speaker 2: top stories for investors in the coming week. I'm Nathan 230 00:13:04,320 --> 00:13:07,079 Speaker 2: Hager in Washington. Up later in our program, we'll look 231 00:13:07,120 --> 00:13:11,560 Speaker 2: ahead to Treasury Secretary Scott Besson's visit to Japan. But first, 232 00:13:11,600 --> 00:13:14,000 Speaker 2: in the coming days, the great and good of the 233 00:13:14,120 --> 00:13:16,840 Speaker 2: entertainment world will descend on the south of France for 234 00:13:16,920 --> 00:13:20,559 Speaker 2: the annual Cahn Film Festival. It's a well established hallmark 235 00:13:20,559 --> 00:13:23,959 Speaker 2: of the industry calendar, but in an AI driven landscape, 236 00:13:24,120 --> 00:13:27,480 Speaker 2: is the business of film still lucrative for more, Let's 237 00:13:27,480 --> 00:13:30,199 Speaker 2: go to London and bring in Bloomberg Daybreak europe anker 238 00:13:30,240 --> 00:13:32,040 Speaker 2: Caroline hepger Nathan. 239 00:13:32,080 --> 00:13:35,240 Speaker 3: The Can Film Festival is known for glitz and glamour 240 00:13:35,280 --> 00:13:38,320 Speaker 3: amid the palm trees of the south of France. The 241 00:13:38,400 --> 00:13:42,559 Speaker 3: nearly two week long event features beach parties, black tie affairs, 242 00:13:42,600 --> 00:13:46,400 Speaker 3: and plenty of celebrities, but outside of those trappings, the 243 00:13:46,559 --> 00:13:50,760 Speaker 3: movies shown behind closed doors are typically quite intense. The 244 00:13:50,880 --> 00:13:55,920 Speaker 3: Can lineup favors challenging works from important oteurs, and for 245 00:13:55,960 --> 00:13:59,160 Speaker 3: the critics and journalists working at the festival, that means 246 00:13:59,280 --> 00:14:04,120 Speaker 3: wrestling with those efforts, often on sometimes very little sleep. 247 00:14:04,480 --> 00:14:07,240 Speaker 3: Throughout the festival, the focus is on who might win 248 00:14:07,400 --> 00:14:11,200 Speaker 3: the palmdor the top prize given by the jury, an 249 00:14:11,280 --> 00:14:15,360 Speaker 3: impossible award to predict, but one that often contains clues 250 00:14:15,679 --> 00:14:19,920 Speaker 3: about the upcoming Oscars race at this point relatively far 251 00:14:20,040 --> 00:14:23,160 Speaker 3: away on the calendar, but it is true that the 252 00:14:23,200 --> 00:14:27,560 Speaker 3: whole event gets you excited about what's on the horizon. However, 253 00:14:27,680 --> 00:14:31,800 Speaker 3: outside the sparkling world of the stars and the premieres, 254 00:14:32,320 --> 00:14:37,440 Speaker 3: audience interest in traditional cinema going has generally declined compared 255 00:14:37,480 --> 00:14:41,400 Speaker 3: to pre pandemic levels, with many blaming the cost and 256 00:14:41,480 --> 00:14:45,360 Speaker 3: the dominance of home streaming preserving the industry as a 257 00:14:45,440 --> 00:14:50,360 Speaker 3: key concern for insiders View CEO Timothy Richards has been 258 00:14:50,400 --> 00:14:55,280 Speaker 3: discussing that issue on Bloomberg Television recently, saying that demand 259 00:14:55,560 --> 00:14:56,440 Speaker 3: is returning. 260 00:14:56,960 --> 00:15:01,040 Speaker 9: The good news is business is back. The demand. Our 261 00:15:01,040 --> 00:15:04,160 Speaker 9: customer has never left us, but business is back right now. 262 00:15:04,320 --> 00:15:06,440 Speaker 9: And if you look at what happened with Michael opening 263 00:15:06,440 --> 00:15:10,160 Speaker 9: weekend two hundred and seventeen million dollars, Devilware's product is 264 00:15:10,200 --> 00:15:13,760 Speaker 9: going to be very, very similar in terms of how 265 00:15:14,040 --> 00:15:17,760 Speaker 9: for consolidation. It is fragmented, and it has been fragmented 266 00:15:17,760 --> 00:15:20,600 Speaker 9: for quite a while. And I think everyone's been waiting 267 00:15:20,600 --> 00:15:23,840 Speaker 9: for business to return before they actually took that first step. 268 00:15:24,240 --> 00:15:28,000 Speaker 9: The contrarian investors are too late. We're back, But. 269 00:15:28,040 --> 00:15:30,600 Speaker 10: Tim, I mean, you need content first and foremost. So 270 00:15:30,600 --> 00:15:33,520 Speaker 10: we'll talk about ticket pricing and AI and how you 271 00:15:33,560 --> 00:15:35,760 Speaker 10: manage cues and staff, but you need content. Do you 272 00:15:35,800 --> 00:15:38,040 Speaker 10: worry there's going to be less content out there, less 273 00:15:38,080 --> 00:15:39,720 Speaker 10: films being made because of the merger. 274 00:15:39,960 --> 00:15:42,920 Speaker 9: Yeah. Look, I think my biggest concern is demand, and 275 00:15:43,000 --> 00:15:45,360 Speaker 9: I think we've proven certainly in the last few years 276 00:15:45,440 --> 00:15:48,240 Speaker 9: that there is a massive demand for all movies of 277 00:15:48,280 --> 00:15:52,680 Speaker 9: all genres, for all demographics. We've broken records for all 278 00:15:52,760 --> 00:15:56,280 Speaker 9: kinds of movies. And if you look at Hamnet, Hannah 279 00:15:56,320 --> 00:15:58,280 Speaker 9: is going to do twenty million pounds in the UK. 280 00:15:59,040 --> 00:16:00,960 Speaker 9: So I worry about a man. Where there's a demand, 281 00:16:00,960 --> 00:16:03,400 Speaker 9: there's normally a supply will follow. If you look at 282 00:16:03,440 --> 00:16:06,000 Speaker 9: what's happened. And I'm fresh back from Las Vegas and 283 00:16:06,080 --> 00:16:09,200 Speaker 9: Cinema Coon and from meeting the studios in Los Angeles 284 00:16:09,240 --> 00:16:13,760 Speaker 9: after that, and the commitment to future filmmaking right now 285 00:16:14,520 --> 00:16:18,440 Speaker 9: with the Legacy studios is unprecedented. Then when you actually 286 00:16:18,560 --> 00:16:22,520 Speaker 9: look at the three biggest names in tech, Tim Cook, 287 00:16:22,600 --> 00:16:26,360 Speaker 9: Jeff Bezos, and David and Lariy Ellison, they've all now 288 00:16:26,400 --> 00:16:31,920 Speaker 9: embraced theatrical releases and film production. They're coming into our industry. 289 00:16:32,600 --> 00:16:36,320 Speaker 3: That was the view founder and CEO Timothy Richard speaking 290 00:16:36,320 --> 00:16:39,360 Speaker 3: there to Boomberg's frost sine laqua. So how are we 291 00:16:39,480 --> 00:16:43,120 Speaker 3: looking ahead to the upcoming can Film Festival? How can 292 00:16:43,160 --> 00:16:47,040 Speaker 3: the sector's leaders ensure the magic of La Croisette is 293 00:16:47,080 --> 00:16:51,720 Speaker 3: translated into the box office. Joining me now for more 294 00:16:51,920 --> 00:16:56,320 Speaker 3: is Bloomberg's Bunoir Bertolo, who is covering the festival this year, Well, 295 00:16:56,400 --> 00:16:59,720 Speaker 3: lucky you, Bunoir to be going to this big efferent 296 00:17:00,120 --> 00:17:04,480 Speaker 3: lots going on what normally happens at the can Film Festival. 297 00:17:05,720 --> 00:17:10,000 Speaker 11: So I guess the public facing side of the festival 298 00:17:10,119 --> 00:17:14,399 Speaker 11: is really the competition, So about twenty films that are 299 00:17:14,440 --> 00:17:18,080 Speaker 11: competing against each other to win the palmedor that's what 300 00:17:18,400 --> 00:17:21,639 Speaker 11: at the end of the festival. So it's really what 301 00:17:21,760 --> 00:17:26,400 Speaker 11: gets the attention because these are films that are carefully 302 00:17:26,400 --> 00:17:28,560 Speaker 11: selected that are going to be basically some of the 303 00:17:28,600 --> 00:17:32,280 Speaker 11: bigger films in the year to come when it comes 304 00:17:32,320 --> 00:17:37,159 Speaker 11: to release cinema, let's say, as an aard form. But 305 00:17:37,240 --> 00:17:39,680 Speaker 11: these are the most popular of the films that are 306 00:17:40,000 --> 00:17:43,080 Speaker 11: going to come out in the year to come. Yeah, 307 00:17:43,160 --> 00:17:46,359 Speaker 11: if we can sites blogbusters that are not typically shown 308 00:17:46,400 --> 00:17:50,720 Speaker 11: in gan So this is really the celebration of cinema 309 00:17:51,320 --> 00:17:55,480 Speaker 11: independent cinema as an aard form, and that's really the 310 00:17:55,560 --> 00:17:58,760 Speaker 11: main focus, let's say. But there is also a less 311 00:17:58,800 --> 00:18:02,480 Speaker 11: known side of the festival that's really the business side 312 00:18:03,000 --> 00:18:08,160 Speaker 11: really and it's to film market and it's happening underneath 313 00:18:08,480 --> 00:18:12,959 Speaker 11: the Pallete Festival in sort of an underground, very unglamorous 314 00:18:13,280 --> 00:18:18,880 Speaker 11: area where films are shown to movie professional distributors from 315 00:18:18,960 --> 00:18:21,200 Speaker 11: all over the world that are going to see films 316 00:18:21,920 --> 00:18:24,000 Speaker 11: yet to be released and decided they want to buy 317 00:18:24,040 --> 00:18:27,639 Speaker 11: it and show them in their countries. So it's really 318 00:18:27,680 --> 00:18:32,080 Speaker 11: the heart of the festival business wise, and it's also 319 00:18:32,119 --> 00:18:35,200 Speaker 11: a major thread of the festival because it's bringing tens 320 00:18:35,200 --> 00:18:38,720 Speaker 11: of thousands of film professionals to can every year. 321 00:18:39,240 --> 00:18:39,520 Speaker 1: Yeah. 322 00:18:39,640 --> 00:18:44,480 Speaker 3: Absolutely so in terms of the more glamorous side of things, 323 00:18:44,640 --> 00:18:47,720 Speaker 3: what are the big releases that perhaps we'll hear more 324 00:18:47,760 --> 00:18:48,840 Speaker 3: about for this year. 325 00:18:50,400 --> 00:18:55,600 Speaker 11: So it's an interesting year for the festival because for 326 00:18:55,760 --> 00:19:01,639 Speaker 11: while there was no US films selected in competing. Meanwhile, 327 00:19:01,840 --> 00:19:05,840 Speaker 11: one film has been added by James Gray, so that's 328 00:19:05,880 --> 00:19:09,480 Speaker 11: going to be a film that's going to be very expected, 329 00:19:09,600 --> 00:19:16,000 Speaker 11: I think, with Scarlett Johnson and Adam Driver featuring in 330 00:19:16,080 --> 00:19:18,000 Speaker 11: the film. We don't know a lot about it yet, 331 00:19:19,000 --> 00:19:21,040 Speaker 11: but that's going to be a point of attention. And 332 00:19:21,080 --> 00:19:24,280 Speaker 11: then there is this mix of filmmakers from all over 333 00:19:24,320 --> 00:19:29,600 Speaker 11: the world. Three films from Spain that I'm especially looking 334 00:19:29,640 --> 00:19:35,879 Speaker 11: forward to went by Rodegoyen, another one about the civil 335 00:19:35,920 --> 00:19:38,960 Speaker 11: war in Spain. It's a lot of films inspired by 336 00:19:39,000 --> 00:19:41,760 Speaker 11: the wars. Actually, the Second World War theme is going 337 00:19:41,840 --> 00:19:48,520 Speaker 11: to be very strong films from friends as well Asian 338 00:19:48,560 --> 00:19:51,120 Speaker 11: films like it. It's really a mix. And there are 339 00:19:51,520 --> 00:19:56,240 Speaker 11: some favorites of CAN that are coming every time the 340 00:19:56,400 --> 00:19:59,280 Speaker 11: selector film basically, and that's one of the criticism of 341 00:19:59,280 --> 00:20:03,760 Speaker 11: the fistival is you know they've got their favorites and 342 00:20:04,080 --> 00:20:08,000 Speaker 11: they would come whatever film the release. But truth is, 343 00:20:08,040 --> 00:20:11,920 Speaker 11: you know that they are carefully selected. And what's really 344 00:20:11,920 --> 00:20:14,560 Speaker 11: interesting is we don't know yet because these has not 345 00:20:14,680 --> 00:20:18,000 Speaker 11: been seen by anyone. We don't know yet which film 346 00:20:18,080 --> 00:20:19,879 Speaker 11: is going to create the buzz and which film is 347 00:20:19,880 --> 00:20:21,639 Speaker 11: going to come out with the big O L. 348 00:20:22,280 --> 00:20:25,360 Speaker 3: Yeah, that's the excitement, isn't it. And the paland'ah, as 349 00:20:25,359 --> 00:20:28,359 Speaker 3: you say, is the crown jewel of the proceedings and 350 00:20:28,400 --> 00:20:30,520 Speaker 3: who might clinch that? I mean, I noticed that it's 351 00:20:30,560 --> 00:20:34,160 Speaker 3: the old boy director Park Chan Wook, who is leading 352 00:20:34,240 --> 00:20:37,400 Speaker 3: the jury that makes the selection for who is awarded 353 00:20:37,440 --> 00:20:41,800 Speaker 3: the pandor what's it like then to win that accolade? 354 00:20:41,920 --> 00:20:42,080 Speaker 6: You know? 355 00:20:42,119 --> 00:20:45,320 Speaker 3: How important is it? I mean you say the criticism 356 00:20:45,400 --> 00:20:48,440 Speaker 3: is that there are sometimes favorites that CAN, but how 357 00:20:48,480 --> 00:20:50,000 Speaker 3: important is it to win the Panda. 358 00:20:51,119 --> 00:20:54,399 Speaker 11: It's absolutely major for a film because it's going to 359 00:20:54,560 --> 00:21:00,560 Speaker 11: launch that film into this season that's coming. Basically, Ken 360 00:21:00,640 --> 00:21:02,640 Speaker 11: is always seen at the first event of the year 361 00:21:02,680 --> 00:21:05,320 Speaker 11: in terms of awards and in terms of films that 362 00:21:05,359 --> 00:21:07,479 Speaker 11: are going to be seen for the full years. So 363 00:21:08,240 --> 00:21:11,520 Speaker 11: very often the films that are selected for the palmudor 364 00:21:11,680 --> 00:21:14,840 Speaker 11: but also the major top prices, right the best scenario, 365 00:21:15,119 --> 00:21:18,840 Speaker 11: best director or best actor. These films they are going 366 00:21:18,920 --> 00:21:22,440 Speaker 11: to be every year we see that they're going to 367 00:21:22,560 --> 00:21:26,280 Speaker 11: be launched into the award season and they can make 368 00:21:26,320 --> 00:21:28,679 Speaker 11: it to the Oscars in the end. And that's what 369 00:21:28,760 --> 00:21:32,720 Speaker 11: happened with The Substance, for example, that was a very 370 00:21:32,760 --> 00:21:36,600 Speaker 11: small film that made it to the Oscars and got 371 00:21:36,680 --> 00:21:40,200 Speaker 11: five nominations. I think with Demi Moore, comeback of Demi Moore, 372 00:21:40,800 --> 00:21:43,159 Speaker 11: I think that was extremely interesting and she's going to 373 00:21:43,160 --> 00:21:44,760 Speaker 11: be part of the jury this year. 374 00:21:44,880 --> 00:21:48,760 Speaker 3: Interestingly, I think that's really interesting. Also that I mean 375 00:21:48,880 --> 00:21:53,199 Speaker 3: Can is also the big you know, film festival in Europe, 376 00:21:53,240 --> 00:21:56,520 Speaker 3: even kind of bigger than Berlin and Venice. So interesting 377 00:21:56,560 --> 00:21:58,600 Speaker 3: that you say it's such a launch pad then maybe 378 00:21:58,680 --> 00:22:02,119 Speaker 3: into a bigger market into the US. But I have 379 00:22:02,200 --> 00:22:04,480 Speaker 3: to say that in the backdrop of this, you know, 380 00:22:04,560 --> 00:22:10,359 Speaker 3: talking about these individual movies, these small budget movies, maybe 381 00:22:10,400 --> 00:22:14,200 Speaker 3: that get bigger. The backdrop in the industry is surely 382 00:22:14,520 --> 00:22:18,880 Speaker 3: artificial intelligence and maybe movies that are emerging in that space. 383 00:22:18,920 --> 00:22:20,680 Speaker 3: Do you think CAN is going to be a buzz 384 00:22:21,040 --> 00:22:22,960 Speaker 3: with chatter about AI films? 385 00:22:24,280 --> 00:22:27,680 Speaker 11: It is every year and increasingly a topic in CAN, 386 00:22:27,800 --> 00:22:35,240 Speaker 11: of course, as it is across the industry. Really interestingly, interestingly, 387 00:22:35,320 --> 00:22:40,439 Speaker 11: there is one film that's that's using open eyes technology 388 00:22:40,680 --> 00:22:44,080 Speaker 11: that's going to be shown to bios in CAN this year. 389 00:22:44,200 --> 00:22:47,240 Speaker 11: It's called The Critters and it's an animation film that 390 00:22:47,320 --> 00:22:49,520 Speaker 11: we're not going to see yet, it's not finished yet, 391 00:22:49,640 --> 00:22:53,280 Speaker 11: but it's going to be shown to potential bios. So 392 00:22:53,320 --> 00:22:56,560 Speaker 11: that's one example of one film, a feature film that's 393 00:22:56,560 --> 00:22:59,480 Speaker 11: going to use AI a lot that we're going to 394 00:22:59,480 --> 00:23:03,240 Speaker 11: see in the coming months probably, And and of course 395 00:23:03,520 --> 00:23:07,280 Speaker 11: it's it's always a chatter in CAN. You would see 396 00:23:07,280 --> 00:23:12,480 Speaker 11: panels this year about what AI means for cinema as 397 00:23:12,520 --> 00:23:16,440 Speaker 11: a creative tool, what it means for the ip of 398 00:23:16,800 --> 00:23:22,520 Speaker 11: the actors and directors that are sort of prompted and 399 00:23:22,960 --> 00:23:26,240 Speaker 11: that are sort of used in AI prompts. So what 400 00:23:26,320 --> 00:23:30,080 Speaker 11: does it mean in terms of rights for them, So 401 00:23:30,119 --> 00:23:32,960 Speaker 11: it touches on the creative side, on the business side, 402 00:23:33,640 --> 00:23:38,040 Speaker 11: and all this also happening on the backdrop of the 403 00:23:38,040 --> 00:23:41,639 Speaker 11: sort of difficult moment, a moment of crisis really for 404 00:23:41,720 --> 00:23:46,160 Speaker 11: the cinema industry since COVID, the theaters have not seen 405 00:23:46,760 --> 00:23:52,640 Speaker 11: the same level of of tickets sold really doing during 406 00:23:52,720 --> 00:23:57,119 Speaker 11: the pandemic. People have grown us to see films on 407 00:23:58,000 --> 00:24:02,160 Speaker 11: their home screen a hole and so it's ataly also 408 00:24:02,240 --> 00:24:05,840 Speaker 11: one of the big thread every year. You can it's 409 00:24:05,880 --> 00:24:10,760 Speaker 11: really how well the industry is doing. We are talking 410 00:24:10,800 --> 00:24:16,080 Speaker 11: about these very art, outhouse films that can make it 411 00:24:16,320 --> 00:24:20,800 Speaker 11: two bigger markets sometimes. But there is also the huge 412 00:24:20,840 --> 00:24:25,639 Speaker 11: category is blockbusters. These are really carrying the cinema industry worldwide, 413 00:24:25,760 --> 00:24:29,520 Speaker 11: the big Hollywood blockbusters. Before the pandemic, you could see 414 00:24:29,520 --> 00:24:32,400 Speaker 11: one or two of these every month. It's really not 415 00:24:32,440 --> 00:24:36,439 Speaker 11: the case anymore. The studios are making less bets on 416 00:24:36,880 --> 00:24:41,400 Speaker 11: big films and we can see Devil were two currently 417 00:24:41,480 --> 00:24:44,040 Speaker 11: making big numbers, for example, But there are few words 418 00:24:44,040 --> 00:24:47,840 Speaker 11: of these films every year, and interestingly, no big blockbuster 419 00:24:47,960 --> 00:24:50,720 Speaker 11: will have a premiere in can this year. Last year 420 00:24:51,400 --> 00:24:55,399 Speaker 11: we saw Mission impossible premiering and it was a bigger 421 00:24:55,440 --> 00:24:58,520 Speaker 11: than than a big bus and this way this year, 422 00:24:58,640 --> 00:25:01,840 Speaker 11: it's kind of a snub for the big US studios 423 00:25:01,880 --> 00:25:04,400 Speaker 11: and none of these are going to show it. Befeling Kenn. 424 00:25:04,480 --> 00:25:07,760 Speaker 11: So it's also signed that there's no film that's ready 425 00:25:08,040 --> 00:25:12,760 Speaker 11: to be shown in ghen this year. So it's really 426 00:25:13,359 --> 00:25:15,600 Speaker 11: also the business backdrop of the festival, and it's how 427 00:25:15,600 --> 00:25:17,240 Speaker 11: well the industry is doing. 428 00:25:18,000 --> 00:25:20,320 Speaker 3: Yeah, it's going to be very interesting, isn't it. Have 429 00:25:20,480 --> 00:25:23,280 Speaker 3: a wonderful time. I'm looking forward to reading some of 430 00:25:23,320 --> 00:25:27,240 Speaker 3: your reporting and your insights into the movie industry. Bloomberg's 431 00:25:27,240 --> 00:25:30,480 Speaker 3: Bernoit Bertolo. We will have full coverage of the can 432 00:25:30,600 --> 00:25:34,679 Speaker 3: film festivals, twists and turns on Bloomberg platforms in the 433 00:25:34,720 --> 00:25:37,840 Speaker 3: coming days. I'm Caroline Hebgar here in London and you 434 00:25:37,880 --> 00:25:41,040 Speaker 3: can catch us every weekday morning for Bloomberg Daybreak. You 435 00:25:41,080 --> 00:25:43,800 Speaker 3: at beginning at six am in London, that's one am 436 00:25:43,920 --> 00:25:44,720 Speaker 3: on Wall Street. 437 00:25:44,880 --> 00:25:48,879 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend, 438 00:25:49,040 --> 00:25:51,960 Speaker 2: look at what you expect from Treasury Secretary Scott Besson's 439 00:25:52,000 --> 00:25:56,200 Speaker 2: visit to Japan. I'm Nathan Hagard and this is Bloomberg. 440 00:26:07,520 --> 00:26:10,480 Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead at 441 00:26:10,560 --> 00:26:13,320 Speaker 2: the top stories for investors in the coming week. I'm 442 00:26:13,359 --> 00:26:17,280 Speaker 2: Nathan Hager in Washington. Treasury Secretary Scott Bessant will spend 443 00:26:17,320 --> 00:26:20,800 Speaker 2: three days in Japan starting Monday. For a preview, Let's 444 00:26:20,800 --> 00:26:24,280 Speaker 2: get to Doug Krisner, host of the Bloomberg Daybreak Asia podcast. 445 00:26:24,840 --> 00:26:28,760 Speaker 4: Thanks. Nathan. Besant is reportedly expected to meet with Prime 446 00:26:28,800 --> 00:26:33,240 Speaker 4: Minister Sona etake Ichi, as well as Finance Minister Satsuki 447 00:26:33,280 --> 00:26:37,119 Speaker 4: Katayama and Bank of Japan Governor Kazu Awaita. Now the 448 00:26:37,200 --> 00:26:40,119 Speaker 4: NIKE is reporting these meetings will be held separately. For 449 00:26:40,200 --> 00:26:42,760 Speaker 4: a closer look at what Besant wants to address on 450 00:26:42,800 --> 00:26:46,119 Speaker 4: this trip, let's bring in Bloomberg's Molly Smith, who joins 451 00:26:46,200 --> 00:26:48,959 Speaker 4: us from our studio in the Japanese capital. Thank you 452 00:26:49,160 --> 00:26:51,879 Speaker 4: so much for making time. I understand that you're on 453 00:26:51,960 --> 00:26:55,800 Speaker 4: temporary assignment now as part of a Bloomberg News job swap, 454 00:26:56,440 --> 00:26:58,680 Speaker 4: and I know you're in the capital city. Before we 455 00:26:58,720 --> 00:27:02,560 Speaker 4: get into the stuff regarding the Treasury Secretary, I'm curious 456 00:27:02,560 --> 00:27:04,760 Speaker 4: to get your take on the overall economy right now 457 00:27:04,800 --> 00:27:07,800 Speaker 4: in Japan. I know inflation is a big issue. What's 458 00:27:07,840 --> 00:27:08,800 Speaker 4: the feeling right now? 459 00:27:09,520 --> 00:27:12,840 Speaker 8: You know, it's very interesting, Doug, coming from the US, 460 00:27:13,040 --> 00:27:15,680 Speaker 8: where I've been covering the economy for the last five 461 00:27:15,760 --> 00:27:19,160 Speaker 8: years to now being in Japan for a few months, 462 00:27:19,280 --> 00:27:23,080 Speaker 8: and as we know, inflation is, you know, really such 463 00:27:23,119 --> 00:27:25,960 Speaker 8: a deeply psychological phenomenon as much as it is a 464 00:27:26,000 --> 00:27:30,320 Speaker 8: financial one. And even though in the US, you know, 465 00:27:30,359 --> 00:27:34,919 Speaker 8: inflation was much more severe and long term than it 466 00:27:35,000 --> 00:27:38,240 Speaker 8: has been in Japan, I think it's still very much, 467 00:27:39,200 --> 00:27:42,520 Speaker 8: you know, it's very real here, and especially because the 468 00:27:42,600 --> 00:27:45,760 Speaker 8: country is coming off of really deflation for the last 469 00:27:45,800 --> 00:27:49,359 Speaker 8: thirty years, so to even have inflation of you know, 470 00:27:49,400 --> 00:27:51,600 Speaker 8: something in the one to two percent area like it 471 00:27:51,680 --> 00:27:56,240 Speaker 8: is now is still very meaningful after prices have been 472 00:27:56,280 --> 00:27:57,440 Speaker 8: falling for so long. 473 00:27:57,800 --> 00:28:00,440 Speaker 4: The three day Golden Week holiday just wrapped, and I'm 474 00:28:00,480 --> 00:28:05,320 Speaker 4: curious to get your take on how Japanese consumers responded, 475 00:28:05,320 --> 00:28:08,200 Speaker 4: whether they were engaged maybe doing a little bit of traveling, 476 00:28:08,720 --> 00:28:11,239 Speaker 4: spending a little bit at shops and restaurants, where they 477 00:28:11,320 --> 00:28:12,720 Speaker 4: engaged in activity at all. 478 00:28:13,240 --> 00:28:16,520 Speaker 8: I would say, anecdotally, from my perspective, it seemed that way. 479 00:28:17,080 --> 00:28:19,280 Speaker 8: You know, I'm fairly new to the country, so I 480 00:28:19,320 --> 00:28:22,360 Speaker 8: was trying to travel a bit in and around Tokyo 481 00:28:22,480 --> 00:28:27,280 Speaker 8: during that period where we had most of this past 482 00:28:27,320 --> 00:28:29,399 Speaker 8: week was a holiday as well as a day in 483 00:28:29,440 --> 00:28:33,520 Speaker 8: the previous week, so it definitely seems like people were 484 00:28:33,520 --> 00:28:38,120 Speaker 8: out and about and spending and engaging with shops and restaurants. 485 00:28:38,800 --> 00:28:42,480 Speaker 8: I haven't personally seen any high frequency data on it, 486 00:28:42,520 --> 00:28:45,080 Speaker 8: but definitely we'll be looking to when we get some 487 00:28:45,440 --> 00:28:50,120 Speaker 8: household spending figures in the next few months to confirm 488 00:28:50,160 --> 00:28:51,880 Speaker 8: that in the hard data for sure. 489 00:28:52,200 --> 00:28:55,240 Speaker 4: So let's get to Treasury Secretary Beson's visit in the 490 00:28:55,280 --> 00:28:58,080 Speaker 4: week ahead. Can you give me a sense of what 491 00:28:58,120 --> 00:29:00,000 Speaker 4: he is attempting to address here? 492 00:29:00,960 --> 00:29:04,400 Speaker 8: So so much has lately been about the yen weakness, 493 00:29:04,920 --> 00:29:09,360 Speaker 8: which authorities here are really trying to keep at bay 494 00:29:09,440 --> 00:29:11,600 Speaker 8: as much as they can. A lot of the speculative 495 00:29:11,640 --> 00:29:14,840 Speaker 8: trading in the currency market, and it seems like the 496 00:29:14,880 --> 00:29:19,680 Speaker 8: one sixty yen per dollar mark is really that unofficial 497 00:29:19,720 --> 00:29:22,760 Speaker 8: line in the sand of what they're trying to prevent 498 00:29:22,920 --> 00:29:25,800 Speaker 8: against it. That is really the test threshold of how 499 00:29:25,920 --> 00:29:29,160 Speaker 8: weak they're willing to let the end get or ideally 500 00:29:29,200 --> 00:29:32,760 Speaker 8: not to go beyond that. So we've had a few 501 00:29:33,920 --> 00:29:39,560 Speaker 8: suspected interventions in recent in about the past week here, 502 00:29:40,080 --> 00:29:43,480 Speaker 8: and it seems like that will definitely be a key 503 00:29:43,520 --> 00:29:48,480 Speaker 8: topic for Bessett to discuss, especially with the Finance minister 504 00:29:49,200 --> 00:29:52,480 Speaker 8: that they've been in very close contact because there are 505 00:29:52,800 --> 00:29:58,160 Speaker 8: these G seven agreements to keep your contacts abreast of 506 00:29:58,200 --> 00:30:00,600 Speaker 8: what is happening with your currencies so that you're not 507 00:30:00,800 --> 00:30:04,760 Speaker 8: labeled a currency manipulator. And also when a lot of 508 00:30:04,800 --> 00:30:09,120 Speaker 8: these interventions are carried out, it's usually done by selling 509 00:30:09,240 --> 00:30:13,719 Speaker 8: US treasuries in order to buy yet, so that's where 510 00:30:13,920 --> 00:30:16,479 Speaker 8: of course the US would have a vested interest in 511 00:30:17,120 --> 00:30:19,400 Speaker 8: how Japan is carrying out these moves. 512 00:30:19,640 --> 00:30:22,360 Speaker 4: So the other part of a stronger yen story would 513 00:30:22,400 --> 00:30:26,800 Speaker 4: obviously be a change in monetary policy. We were talking 514 00:30:26,800 --> 00:30:29,520 Speaker 4: a moment ago about inflation, and from what I understand, 515 00:30:30,440 --> 00:30:33,800 Speaker 4: real wages for Japanese workers in the month of March 516 00:30:33,880 --> 00:30:36,240 Speaker 4: rows for a third consecutive month, and I think the 517 00:30:36,320 --> 00:30:39,840 Speaker 4: numbers kind of would support the case for the BOJ 518 00:30:40,080 --> 00:30:42,680 Speaker 4: raising interest rates at the June meeting. Is that widely 519 00:30:42,760 --> 00:30:46,000 Speaker 4: expected and if we get a rate hike, is it 520 00:30:46,040 --> 00:30:48,720 Speaker 4: expected to have a meaningful impact on the currency. 521 00:30:49,680 --> 00:30:53,200 Speaker 8: So we are right now definitely expecting a hike at 522 00:30:53,200 --> 00:30:55,760 Speaker 8: the June meeting. Wouldn't say that that's because of the 523 00:30:55,800 --> 00:30:59,760 Speaker 8: wage data alone, though that definitely is a supporting factor 524 00:31:00,080 --> 00:31:04,280 Speaker 8: for it. And this is something that Uweita has you know, 525 00:31:04,360 --> 00:31:08,200 Speaker 8: at the meet that the BOJ meeting that policymakers just 526 00:31:08,280 --> 00:31:11,320 Speaker 8: wrapped up, he was a bit hesitant to send a 527 00:31:11,320 --> 00:31:15,280 Speaker 8: firmer signal that the June hike is coming. You know, 528 00:31:15,320 --> 00:31:17,800 Speaker 8: there were certainly some ways we could read into it. 529 00:31:18,160 --> 00:31:20,680 Speaker 8: You saw that the split in the vote. You know 530 00:31:20,720 --> 00:31:25,000 Speaker 8: that there were six policymakers who voted with the consensus 531 00:31:25,040 --> 00:31:28,360 Speaker 8: to hold rates steady, but there were three who dissented 532 00:31:28,480 --> 00:31:31,760 Speaker 8: in favor of raising interest rates. And also when the 533 00:31:31,800 --> 00:31:35,960 Speaker 8: bank laid out its projections for their outlook, a meaningful 534 00:31:36,160 --> 00:31:41,000 Speaker 8: increase in inflation expectations. So those two together would definitely 535 00:31:41,080 --> 00:31:45,480 Speaker 8: have signaled that there is reasonable belief that a hike 536 00:31:45,560 --> 00:31:48,040 Speaker 8: could be coming at the next meeting in June. And yes, 537 00:31:48,160 --> 00:31:51,080 Speaker 8: as you mentioned, the positive trend in real wages would 538 00:31:51,120 --> 00:31:52,280 Speaker 8: also be supportive of that. 539 00:31:52,720 --> 00:31:55,080 Speaker 4: So the elephant in the room, so to speak, when 540 00:31:55,200 --> 00:31:58,280 Speaker 4: Treasury Secretary Besant is in Tokyo is going to be 541 00:31:59,080 --> 00:32:02,719 Speaker 4: war in Iran. We know that Japan is a heavy 542 00:32:02,840 --> 00:32:08,600 Speaker 4: importer of crude oil and LNG, especially from the Middle East. 543 00:32:08,960 --> 00:32:12,120 Speaker 4: What's the feeling right now, what is the view that 544 00:32:12,160 --> 00:32:15,680 Speaker 4: people have in Japan on this conflict and what are 545 00:32:15,720 --> 00:32:18,640 Speaker 4: they having to deal with as a result of higher energy. 546 00:32:18,360 --> 00:32:21,360 Speaker 8: Cost Well, this is really one of the big reasons 547 00:32:21,360 --> 00:32:24,400 Speaker 8: why the yen is as weak as it is right now. 548 00:32:24,640 --> 00:32:27,160 Speaker 8: I mean, the other reason that you know, predated the 549 00:32:27,200 --> 00:32:31,000 Speaker 8: war and Iran is the interest rate differential, that that 550 00:32:31,320 --> 00:32:36,160 Speaker 8: US treasury yields are so much higher than Japanese government 551 00:32:36,200 --> 00:32:39,840 Speaker 8: bond yields are here, and that's also been contributing to 552 00:32:39,880 --> 00:32:42,440 Speaker 8: weakness in the end for a bit longer. But now 553 00:32:42,480 --> 00:32:46,080 Speaker 8: since Japan is such a heavy importer of crude oil 554 00:32:46,120 --> 00:32:49,880 Speaker 8: from the Middle East, that's also been weighing on the currency. 555 00:32:50,080 --> 00:32:54,360 Speaker 8: So it's really been just you know, more difficult adding 556 00:32:54,400 --> 00:32:57,120 Speaker 8: to like what's been you know, a real cost of 557 00:32:57,160 --> 00:33:02,120 Speaker 8: living increase here for the people of Japan, and that 558 00:33:02,400 --> 00:33:05,840 Speaker 8: there doesn't really seem to be much relief coming anytime 559 00:33:05,960 --> 00:33:08,920 Speaker 8: soon in that way, because the US hasn't really signaled 560 00:33:08,960 --> 00:33:13,320 Speaker 8: any interest in cutting interest rates anytime soon. If anything, 561 00:33:13,360 --> 00:33:16,080 Speaker 8: there seems to be more of a consensus growing out 562 00:33:16,080 --> 00:33:19,120 Speaker 8: of the Fed of policy makers who might be inclined 563 00:33:19,120 --> 00:33:22,600 Speaker 8: to raise interest rates as a next move. So we're 564 00:33:22,640 --> 00:33:24,960 Speaker 8: not going to get any help on the rate differential. 565 00:33:26,080 --> 00:33:29,040 Speaker 8: And even if the Bank of Japan does hike interest 566 00:33:29,120 --> 00:33:32,040 Speaker 8: rates here, there is still quite a meaningful gap to 567 00:33:32,160 --> 00:33:35,760 Speaker 8: claw that back and to help the end offset some 568 00:33:35,840 --> 00:33:36,560 Speaker 8: of this weakness. 569 00:33:36,760 --> 00:33:39,880 Speaker 4: So it's not just energy products that are imported. A 570 00:33:39,960 --> 00:33:43,920 Speaker 4: number of other resources. Is that showing up, particularly when 571 00:33:43,960 --> 00:33:47,040 Speaker 4: you look at certain areas like food that these costs 572 00:33:47,080 --> 00:33:48,240 Speaker 4: have also appreciated. 573 00:33:49,000 --> 00:33:52,400 Speaker 8: That's where, yeah, it's you know, interesting looking at different 574 00:33:52,440 --> 00:33:55,720 Speaker 8: measures of inflation here compared to what we look at 575 00:33:55,720 --> 00:33:58,600 Speaker 8: in the US, and one of them is, you know, 576 00:33:58,640 --> 00:34:03,240 Speaker 8: particularly for food prices for foods that are made with rice, 577 00:34:03,360 --> 00:34:06,400 Speaker 8: and that's really been one of the real sticking points 578 00:34:06,440 --> 00:34:09,879 Speaker 8: of where inflation has really been meaningful here. 579 00:34:10,440 --> 00:34:12,560 Speaker 4: Molly, we'll leave it there, thank you so very much, 580 00:34:12,560 --> 00:34:16,240 Speaker 4: and enjoy that temporary assignment for Bloomberg News in Tokyo, 581 00:34:16,520 --> 00:34:19,600 Speaker 4: Bloomberg's Molly Smith. We moved to China next, where the 582 00:34:19,640 --> 00:34:23,239 Speaker 4: government recently reported a surge in both the value and 583 00:34:23,320 --> 00:34:27,440 Speaker 4: the number of payment transactions from overseas visitors during the 584 00:34:27,480 --> 00:34:30,839 Speaker 4: recent five day Labor Day holiday, and that's where we 585 00:34:30,880 --> 00:34:34,359 Speaker 4: began our conversation with Kent Ju. Kent is CEO of 586 00:34:34,480 --> 00:34:37,000 Speaker 4: a Core Greater China, and he spoke with Bloomberg TV 587 00:34:37,080 --> 00:34:39,040 Speaker 4: host David Inglase and Ivon Mann. 588 00:34:39,200 --> 00:34:41,000 Speaker 5: Let me just get started if I could, with the 589 00:34:41,120 --> 00:34:44,640 Speaker 5: recent long weekend, could you give us maybe what were 590 00:34:44,680 --> 00:34:47,200 Speaker 5: the highlights for your group? What stood out to you 591 00:34:47,239 --> 00:34:49,000 Speaker 5: and equally what were the challenges? 592 00:34:49,840 --> 00:34:54,000 Speaker 12: Good morning. Indeed, the China hotels record a very strong 593 00:34:54,160 --> 00:34:58,120 Speaker 12: redpad growth over this past May holiday. While it is 594 00:34:58,440 --> 00:35:03,000 Speaker 12: that did experience the slightly softer demand in comparison with 595 00:35:03,120 --> 00:35:06,680 Speaker 12: Chinese New Year and the timming holidays. Uh, these I 596 00:35:06,680 --> 00:35:10,720 Speaker 12: would say attributed two main factors. One is this Chinese 597 00:35:10,760 --> 00:35:13,880 Speaker 12: New Year, we had a longer holiday and also a 598 00:35:14,719 --> 00:35:20,239 Speaker 12: later holiday, and this shifted the travel pattern slightly. And 599 00:35:20,360 --> 00:35:24,000 Speaker 12: number two, the air fare rise as a result of 600 00:35:24,040 --> 00:35:29,240 Speaker 12: the recent oil price increase. But nevertheless, the hotels generally 601 00:35:29,239 --> 00:35:34,160 Speaker 12: did very well as reported in other various different sources. 602 00:35:34,200 --> 00:35:37,560 Speaker 12: We are waiting for the official data in the next 603 00:35:37,640 --> 00:35:40,840 Speaker 12: couple of days, but I'm sure the picture will be 604 00:35:40,960 --> 00:35:41,759 Speaker 12: very robust. 605 00:35:42,160 --> 00:35:45,640 Speaker 13: You mentioned about the increase in jet fuel prices and 606 00:35:45,960 --> 00:35:51,000 Speaker 13: really obviously airfares have have really skyrocketed since this around 607 00:35:51,040 --> 00:35:55,560 Speaker 13: situation began. Can has it impacted anywhere your occupancy across 608 00:35:55,560 --> 00:35:56,920 Speaker 13: your hotels? Can you tell a little bit more the 609 00:35:56,960 --> 00:35:59,120 Speaker 13: impact that around more may have on the industry. 610 00:36:00,040 --> 00:36:03,720 Speaker 12: The Mini East crisis didn't really impact a Greater China 611 00:36:03,719 --> 00:36:08,680 Speaker 12: hotels performance that much, simply because Middle East is a 612 00:36:08,800 --> 00:36:11,200 Speaker 12: very small market for us. It's not on the top 613 00:36:11,239 --> 00:36:14,320 Speaker 12: ten list. It takes up a three percent of Greater 614 00:36:14,440 --> 00:36:19,239 Speaker 12: Chinese hotel revenue number two Q one and Q two 615 00:36:19,440 --> 00:36:23,560 Speaker 12: are not their traditional high travel season, so the hotel's 616 00:36:23,600 --> 00:36:25,600 Speaker 12: impact is quite a minimum. 617 00:36:26,440 --> 00:36:27,680 Speaker 6: Okay, I guess. 618 00:36:27,560 --> 00:36:31,520 Speaker 5: Can't just maybe including what we've seen so far in 619 00:36:31,560 --> 00:36:34,320 Speaker 5: the first few months of twenty twenty six, before of course, 620 00:36:34,360 --> 00:36:38,279 Speaker 5: but the war started in Iran and maybe also encapsulating 621 00:36:38,320 --> 00:36:41,879 Speaker 5: the recent weekend. Could you tell us more about where 622 00:36:41,920 --> 00:36:43,360 Speaker 5: you're seeing the growth in as far as is it 623 00:36:43,440 --> 00:36:45,799 Speaker 5: domestic travel that seems to be picking up if you 624 00:36:45,840 --> 00:36:48,000 Speaker 5: have the data on that, or are we seeing a 625 00:36:48,440 --> 00:36:51,600 Speaker 5: faster pickup in inbound travel into mainland China? Well? 626 00:36:51,640 --> 00:36:56,040 Speaker 12: Inbound extremely robust. In twenty twenty five, we saw a 627 00:36:56,160 --> 00:36:59,720 Speaker 12: thirty six percent increase for our Co hotels in Greater China, 628 00:37:00,320 --> 00:37:03,240 Speaker 12: and the first quarter of this year up until actually 629 00:37:03,480 --> 00:37:07,960 Speaker 12: end of March, we saw another increase of twenty five percent. 630 00:37:08,560 --> 00:37:11,839 Speaker 12: So this is this is a very strong sign that 631 00:37:12,560 --> 00:37:17,800 Speaker 12: China's visa free forest policy is is helping the industry 632 00:37:18,480 --> 00:37:22,160 Speaker 12: in Greater China. Number two, the leisure demound in domestic 633 00:37:22,360 --> 00:37:27,960 Speaker 12: markets is also very robust, particularly in markets in Greater China, 634 00:37:28,520 --> 00:37:33,640 Speaker 12: uh sorry, great Greater Bay Area, Sanya Yinland and also 635 00:37:33,719 --> 00:37:36,520 Speaker 12: great to for example Hong Kong and h and Going. 636 00:37:36,560 --> 00:37:40,000 Speaker 12: So these two cities literally ran full house for the 637 00:37:40,040 --> 00:37:42,040 Speaker 12: last ten ten days. 638 00:37:42,680 --> 00:37:45,560 Speaker 13: You mentioned rev PARW was actually pretty good during during 639 00:37:45,800 --> 00:37:48,680 Speaker 13: the holiday Candra, I think up until the end of 640 00:37:48,760 --> 00:37:51,920 Speaker 13: last year, rev part in China was still a negative 641 00:37:52,000 --> 00:37:55,080 Speaker 13: territory here and really, you know, underperforming a lot of 642 00:37:55,080 --> 00:37:57,600 Speaker 13: parts of the region. Do you have a sense of 643 00:37:57,960 --> 00:38:00,160 Speaker 13: demand picking up a bit more there and when you 644 00:38:00,160 --> 00:38:03,719 Speaker 13: think red Park can actually turn positive in China. 645 00:38:03,320 --> 00:38:06,080 Speaker 12: I think the love part negative rep part really was 646 00:38:06,200 --> 00:38:10,200 Speaker 12: in the mid scale and the economy scale hotels last year. 647 00:38:10,560 --> 00:38:12,760 Speaker 12: But if you look at the premium and luxury segments 648 00:38:12,920 --> 00:38:16,640 Speaker 12: actually outperformed two d twenty five. There was a five 649 00:38:16,680 --> 00:38:19,640 Speaker 12: percent to six percent of repil growth in the premium 650 00:38:19,680 --> 00:38:22,920 Speaker 12: and luxury segment. So in the Nashelle we see this 651 00:38:23,040 --> 00:38:26,759 Speaker 12: trend starting actually from Q three last year until year 652 00:38:26,760 --> 00:38:30,640 Speaker 12: to day this year. Luxury segment in particular has recorded 653 00:38:30,680 --> 00:38:32,279 Speaker 12: more than eight percent increase on you. 654 00:38:32,640 --> 00:38:35,560 Speaker 4: That was Kent ju CEO of a Core Greater China, 655 00:38:35,600 --> 00:38:39,320 Speaker 4: speaking with Bloomberg TV host David and Glaze and Vonne Mann. 656 00:38:39,600 --> 00:38:41,680 Speaker 4: I'm Derek Kristner. You can catch us weekdays for the 657 00:38:41,719 --> 00:38:45,560 Speaker 4: Daybreak Asia podcast. It's available wherever you get your podcast. 658 00:38:45,920 --> 00:38:49,040 Speaker 2: Nathan, Thanks Doug, and that does it for this edition 659 00:38:49,120 --> 00:38:52,279 Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at 660 00:38:52,280 --> 00:38:54,960 Speaker 2: five am Wall Street Time for the latest on markets 661 00:38:55,000 --> 00:38:57,480 Speaker 2: overseas and the news you need to start your day. 662 00:38:57,760 --> 00:39:00,360 Speaker 2: I'm Nathan Hager. Stay with us, stop store worries and 663 00:39:00,400 --> 00:39:03,200 Speaker 2: global business headlines are coming up right now.