Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 2: top stories in the coming week from our Daybreak anchors
Speaker 2: all around the world. Straight Ahead on the program, we
Speaker 2: look to some key inflation data in the US. I'm
Speaker 2: Nathan Hager in Washington.
Speaker 3: I'm Caroline Hebgin London, where we discuss whether the Can
Speaker 3: Film Festival can galvanize the business of cinema.
Speaker 4: I'm Doug Prisner, looking ahead to US Treasury Secretary Scott
Speaker 4: Besson's visit to Japan.
Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
Speaker 1: eleven three yeh New York, Bloomberg ninety nine to one, Washington, DC,
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Speaker 2: Good day to you. I'm Nathan Hager. We begin today's
Speaker 2: program with some key economic data in the US. The
Speaker 2: April reading on consumer prices comes out on Tuesday. Then
Speaker 2: we'll get a look at inflation pressures on business in
Speaker 2: the Producer Price Index Wednesday and then we'll see how
Speaker 2: the consumer is holding up when April retail sales come
Speaker 2: out Thursday, a busy week for Edward Harrison, senior editor
Speaker 2: for Bloomberg News and author of the Everything Risk newsletter.
Speaker 2: Really pleased that Ed's got some time to join us here.
Speaker 5: Now.
Speaker 2: I'm sure I'm not the only one who sees inflation
Speaker 2: pressure just driving by the gas station every day. Ed,
Speaker 2: Is this the month we're going to see Iran war
Speaker 2: impacts show up in the data?
Speaker 6: Hey, Nathan, Yes, I think this is the month. The
Speaker 6: real question is is whether or not it shows up
Speaker 6: less or more than is expected. Because you know, if
Speaker 6: you look at the numbers on the Bloomberg terminal, we
Speaker 6: had three point three last month. Expected for this month
Speaker 6: year over year for cpis three point seven percent, and
Speaker 6: they also expect a two point six percent core number
Speaker 6: to go up to two point seven percent. So it's
Speaker 6: definitely baked into the cake, not only that gas prices
Speaker 6: will cause a big jump in the CPI year or
Speaker 6: a year, but that it will translate into something overall
Speaker 6: in terms of the core CPI. And so ultimately the
Speaker 6: question is do we get more or do we get
Speaker 6: less than what's expected?
Speaker 2: How much would you expect that something like energy prices
Speaker 2: would feed into the core. It is something that can
Speaker 2: have an overall impact, can it when you think about
Speaker 2: diesel prices and the effect on shipping as.
Speaker 6: Well, right, definitely. And you know, we see all sorts
Speaker 6: of different effects of helium prices having an effect on
Speaker 6: electronics because of the use of helium in large disk
Speaker 6: drives that drive the AI build out. You know that
Speaker 6: they use these disk drives potentially for AI and all
Speaker 6: sorts of other things. What I would say is is
Speaker 6: that if you look at PCE, which is based off
Speaker 6: of personal consumption, the price increase there that index was
Speaker 6: three point two percent year over year. We got that
Speaker 6: a couple of weeks ago, and that's the number that
Speaker 6: the FED looks at. Three point two percent is really high.
Speaker 6: And so what it says is is that we're already
Speaker 6: at a high level. If the increase in energy prices
Speaker 6: adds to that, then it's going to be a very
Speaker 6: tough road for the for the Federal Reserve ahead and
Speaker 6: for interest rates overall.
Speaker 2: And how do you expect that to feed into what
Speaker 2: we could get from the producer price side as well?
Speaker 2: When those numbers come out.
Speaker 6: That's where where I think the market and I both
Speaker 6: expect to see the big jumps. So the numbers were
Speaker 6: pretty large already. You had three point eight percent in March.
Speaker 6: They're expecting four point three percent core. This is not
Speaker 6: including food and energy, so you can see those are
Speaker 6: huge numbers even if you don't include food and energy,
Speaker 6: and if you did include food and energy, then you've
Speaker 6: got a four point zero going up to four point
Speaker 6: eight percent to be expected. So almost five percent increase
Speaker 6: in producer prices in the month of April.
Speaker 2: So potentially even bigger price increases on the producer side
Speaker 2: than on the consumer. Do you expect to see some
Speaker 2: of that feeding in to what consumers see the idea
Speaker 2: that producers might be able to pass along some of
Speaker 2: their price pressures onto the consumer.
Speaker 6: Yeah, I think. You know it's with the tariffs. It
Speaker 6: was unknown whether or not they would be legal, and
Speaker 6: we've seen that they've been struck down by various courts
Speaker 6: now here. You you know that these even though it's temporary,
Speaker 6: you know that the price pressures are for real and
Speaker 6: you must pass them through. And so to the degree
Speaker 6: that companies can pass them through, they're definitely going to
Speaker 6: do that, and then the question becomes, you know, how
Speaker 6: much can the consumer handle?
Speaker 2: And I guess we'll get some answers on that potentially
Speaker 2: in the Thursday retail sales print for the month of April.
Speaker 2: Are you expecting to see any shifts in consumer behavior
Speaker 2: reflected in those numbers?
Speaker 6: Yes, I think that you know the expectation from the market.
Speaker 6: In particular, the ultimate number to look for is the
Speaker 6: control group. That's the number for retail sales that the
Speaker 6: market uses to say this is the best number to
Speaker 6: look at in terms of the go forward approach, and
Speaker 6: that number is expected to decline to zero point four
Speaker 6: percent from zero point seven percent. If you take out autos,
Speaker 6: you go from zero point six percent also to zero
Speaker 6: point four percent. Those are decent numbers, but when you
Speaker 6: take away inflation, it really adds up on a year
Speaker 6: of a year basis to you know, a mid lean economy.
Speaker 6: Anything lower starts to become very difficult, and then you
Speaker 6: start worrying about economic growth.
Speaker 2: Well, again, really appreciate your insights ahead of all this data.
Speaker 2: That is Edward Harrison, senior editor for Bloomberg News. Check
Speaker 2: out all his work on the Everything Risk newsletter. You
Speaker 2: can find it at Bloomberg dot com Slash newsletters. Let's
Speaker 2: take a look now add some stocks making news in
Speaker 2: the week ahead. I'm Nathan Hager, joined by Bloomberg Markets
Speaker 2: Live Managing Editor Christine Aquino with more earnings on TEP
Speaker 2: this week starting Monday with Hymns and Hers Health. Weren't
Speaker 2: they going to beef with Nova Nordisk recently, Christine? How
Speaker 2: are things in telehealth these days?
Speaker 7: That beef though, is a thing of the past, because
Speaker 7: they're cooperating with each other now, right, And so that
Speaker 7: is one of the reasons why the likes of JP
Speaker 7: Morgan initiated to stock with an overweight rating because of
Speaker 7: that deal. So now before they had a beef, now
Speaker 7: they have a partnership, and so Hyms and Hers will
Speaker 7: be selling we govy on its platform, and JP Morgan
Speaker 7: is saying that that deal could mark a turning point
Speaker 7: and remove a significant legal overhang. So that bothes well
Speaker 7: for its earnings potentially, and you know, we have options
Speaker 7: of course, starting to price that potential move there, we
Speaker 7: could see it potentially a thirteen percent move in the
Speaker 7: share after the company reports earnings. And so if that
Speaker 7: is all fine and dandy, they meet or beat estimates,
Speaker 7: then that could be a thirteen percent share move higher,
Speaker 7: but otherwise it could be a thirteen percent share move lower.
Speaker 7: So we'll see about that.
Speaker 8: Yeah.
Speaker 2: Well, I mean this stock has already been doing pretty
Speaker 2: well so far this year, hasn't it. I mean, where
Speaker 2: is the bar when it comes to what investors want
Speaker 2: to see from Hymns this time around?
Speaker 7: Yeah? I mean, of course, the demand for the GLP
Speaker 7: ones very much still sustaining the business model here. And
Speaker 7: I think the fact that you know, they are able
Speaker 7: to pivot because potentially, you know, they're now in cooperation
Speaker 7: with Novo and so they're kind of turning themselves from
Speaker 7: a competitor into a retailer in that space, and so,
Speaker 7: you know, I think investors will want to see is
Speaker 7: that business model working, how much kind of gains could
Speaker 7: they expect from that sort of partnership. Is it something
Speaker 7: that could potentially also open up opportunities with other GLP
Speaker 7: one manufacturers and sellers in the market, Right, And so yeah,
Speaker 7: for Hymns and Hers, it's going to be a question
Speaker 7: of how well are they able to pivot after this
Speaker 7: initial legal setback.
Speaker 2: I guess we could call Hymns and Her sort of
Speaker 2: tech adjacent, right, because this is going to be kind
Speaker 2: of a busy week for tech earnings overall. We're going
Speaker 2: to hear from Applied Materials on Thursday. This has been
Speaker 2: a pretty crazy quarter for chip makers. Where are we
Speaker 2: expecting chip equipment makers.
Speaker 6: To stack well?
Speaker 7: Based on the movement in the semicondaractor is index that
Speaker 7: we've seen, I mean, I think it's all going to
Speaker 7: be positive, So potentially high expectations for the earnings for
Speaker 7: Applied Materials here, and you know the options data that
Speaker 7: we're seeing at the moment implying about a six percent
Speaker 7: move After those results, we have seen a spate of
Speaker 7: analyst moves for the stock, ubs raising its price target
Speaker 7: to four hundred and eighty from four hundred and thirty previously,
Speaker 7: Seaport Global Securities giving Applied Materials a new by rating
Speaker 7: and a five hundred dollars price target. So it looks
Speaker 7: like a lot of expectations very positive, especially because of
Speaker 7: all the optimism that we've seen in the chip space
Speaker 7: and our own bloomering intelligence analysts weighing in as well,
Speaker 7: and they're looking for sales and fiscal second quarter finishing
Speaker 7: higher and also similar gains for operating profits. So it
Speaker 7: looks like there's going to be a lot of positivity
Speaker 7: baked in. We'll see if they can deliver on that.
Speaker 2: I mean you could say that there's a lot of
Speaker 2: positivity baked in already. I mean, this stock is serious
Speaker 2: double digits on the year so far. Is it priced
Speaker 2: to perfection?
Speaker 7: I mean, that is definitely the worry every time we
Speaker 7: see such big gains like these, Nathan, I mean, you
Speaker 7: always have the naysayers in the market right saying that
Speaker 7: this can possibly keep going at nauseum. But just you know,
Speaker 7: if you look at kind of the plans of the
Speaker 7: biggest hyper scalers when it comes to their cap x, right,
Speaker 7: the likes of your alphabets, your Amazon's, your Apples, it
Speaker 7: seems like there is never ending demand at the moment
Speaker 7: for any equipment, any infrastructure related to AI and the
Speaker 7: data center buildout, and so you know, in some ways
Speaker 7: it could be priced perfection, but it may be a
Speaker 7: while yet before we actually see that pullback in stock.
Speaker 2: Speaking of the AI build out, we are going to
Speaker 2: hear from another beneficiary of that phenomenon on Wednesday when
Speaker 2: Cisco Systems reports. What are we expecting from Cisco.
Speaker 7: Absolutely, Nathan, Well, you know, a similarly positive thing our
Speaker 7: blooming intelligence analysts saying that they're focusing primarily on Cisco's
Speaker 7: optical and high capacity networking products and that has benefited
Speaker 7: from the AI infrastructure ramp up. As you've mentioned, the
Speaker 7: expectation is for that to keep benefiting from that, and
Speaker 7: specifically for Cisco, that could result in an increase to
Speaker 7: about five billion dollars and its AI order outlooks so
Speaker 7: not too shabby for the stock, and that's really helped
Speaker 7: shield it as well from the software pessimism that we've
Speaker 7: seen in the start of the year, right because they're
Speaker 7: very much levered to that build out that we've seen
Speaker 7: in Given the demand for anything related to that, both
Speaker 7: hardware and software, seems like it could be a positive
Speaker 7: season for Cisco once again.
Speaker 2: I guess one other question is whether Cisco is shielded
Speaker 2: from the hit we've seen from memory costs from so
Speaker 2: many of these companies that have reported so far.
Speaker 7: Yeah, absolutely, definitely something that investors are going to be
Speaker 7: watching out for. You know, how much of their margins
Speaker 7: are they going to be able to protect as costs
Speaker 7: rise in whether that a shortage is set to continue.
Speaker 7: Is there supply chain something that is relatively insulated from
Speaker 7: that dynamic, or is it something that they're going to
Speaker 7: have to contend with as well. So I'm sure that
Speaker 7: investors going to be looking out for any comments from
Speaker 7: the company from their CEO during the analysts call. For sure, the.
Speaker 2: Tech earning story continues. Thanks Christine, great having you on
Speaker 2: with us. That's Bloomberg Markets Live, Managing Editor Christine Aquino,
Speaker 2: and coming up on Bloomberg Daybreak weekend, we'll look to
Speaker 2: the con Film Festival whether it can galvanize the new
Speaker 2: cinema business. I'm Nathan Hager. This is Bloomberg. This is
Speaker 2: Bloomberg Daybreak. We ad our global look ahead at the
Speaker 2: top stories for investors in the coming week. I'm Nathan
Speaker 2: Hager in Washington. Up later in our program, we'll look
Speaker 2: ahead to Treasury Secretary Scott Besson's visit to Japan. But first,
Speaker 2: in the coming days, the great and good of the
Speaker 2: entertainment world will descend on the south of France for
Speaker 2: the annual Cahn Film Festival. It's a well established hallmark
Speaker 2: of the industry calendar, but in an AI driven landscape,
Speaker 2: is the business of film still lucrative for more, Let's
Speaker 2: go to London and bring in Bloomberg Daybreak europe anker
Speaker 2: Caroline hepger Nathan.
Speaker 3: The Can Film Festival is known for glitz and glamour
Speaker 3: amid the palm trees of the south of France. The
Speaker 3: nearly two week long event features beach parties, black tie affairs,
Speaker 3: and plenty of celebrities, but outside of those trappings, the
Speaker 3: movies shown behind closed doors are typically quite intense. The
Speaker 3: Can lineup favors challenging works from important oteurs, and for
Speaker 3: the critics and journalists working at the festival, that means
Speaker 3: wrestling with those efforts, often on sometimes very little sleep.
Speaker 3: Throughout the festival, the focus is on who might win
Speaker 3: the palmdor the top prize given by the jury, an
Speaker 3: impossible award to predict, but one that often contains clues
Speaker 3: about the upcoming Oscars race at this point relatively far
Speaker 3: away on the calendar, but it is true that the
Speaker 3: whole event gets you excited about what's on the horizon. However,
Speaker 3: outside the sparkling world of the stars and the premieres,
Speaker 3: audience interest in traditional cinema going has generally declined compared
Speaker 3: to pre pandemic levels, with many blaming the cost and
Speaker 3: the dominance of home streaming preserving the industry as a
Speaker 3: key concern for insiders View CEO Timothy Richards has been
Speaker 3: discussing that issue on Bloomberg Television recently, saying that demand
Speaker 3: is returning.
Speaker 9: The good news is business is back. The demand. Our
Speaker 9: customer has never left us, but business is back right now.
Speaker 9: And if you look at what happened with Michael opening
Speaker 9: weekend two hundred and seventeen million dollars, Devilware's product is
Speaker 9: going to be very, very similar in terms of how
Speaker 9: for consolidation. It is fragmented, and it has been fragmented
Speaker 9: for quite a while. And I think everyone's been waiting
Speaker 9: for business to return before they actually took that first step.
Speaker 9: The contrarian investors are too late. We're back, But.
Speaker 10: Tim, I mean, you need content first and foremost. So
Speaker 10: we'll talk about ticket pricing and AI and how you
Speaker 10: manage cues and staff, but you need content. Do you
Speaker 10: worry there's going to be less content out there, less
Speaker 10: films being made because of the merger.
Speaker 9: Yeah. Look, I think my biggest concern is demand, and
Speaker 9: I think we've proven certainly in the last few years
Speaker 9: that there is a massive demand for all movies of
Speaker 9: all genres, for all demographics. We've broken records for all
Speaker 9: kinds of movies. And if you look at Hamnet, Hannah
Speaker 9: is going to do twenty million pounds in the UK.
Speaker 9: So I worry about a man. Where there's a demand,
Speaker 9: there's normally a supply will follow. If you look at
Speaker 9: what's happened. And I'm fresh back from Las Vegas and
Speaker 9: Cinema Coon and from meeting the studios in Los Angeles
Speaker 9: after that, and the commitment to future filmmaking right now
Speaker 9: with the Legacy studios is unprecedented. Then when you actually
Speaker 9: look at the three biggest names in tech, Tim Cook,
Speaker 9: Jeff Bezos, and David and Lariy Ellison, they've all now
Speaker 9: embraced theatrical releases and film production. They're coming into our industry.
Speaker 3: That was the view founder and CEO Timothy Richard speaking
Speaker 3: there to Boomberg's frost sine laqua. So how are we
Speaker 3: looking ahead to the upcoming can Film Festival? How can
Speaker 3: the sector's leaders ensure the magic of La Croisette is
Speaker 3: translated into the box office. Joining me now for more
Speaker 3: is Bloomberg's Bunoir Bertolo, who is covering the festival this year, Well,
Speaker 3: lucky you, Bunoir to be going to this big efferent
Speaker 3: lots going on what normally happens at the can Film Festival.
Speaker 11: So I guess the public facing side of the festival
Speaker 11: is really the competition, So about twenty films that are
Speaker 11: competing against each other to win the palmedor that's what
Speaker 11: at the end of the festival. So it's really what
Speaker 11: gets the attention because these are films that are carefully
Speaker 11: selected that are going to be basically some of the
Speaker 11: bigger films in the year to come when it comes
Speaker 11: to release cinema, let's say, as an aard form. But
Speaker 11: these are the most popular of the films that are
Speaker 11: going to come out in the year to come. Yeah,
Speaker 11: if we can sites blogbusters that are not typically shown
Speaker 11: in gan So this is really the celebration of cinema
Speaker 11: independent cinema as an aard form, and that's really the
Speaker 11: main focus, let's say. But there is also a less
Speaker 11: known side of the festival that's really the business side
Speaker 11: really and it's to film market and it's happening underneath
Speaker 11: the Pallete Festival in sort of an underground, very unglamorous
Speaker 11: area where films are shown to movie professional distributors from
Speaker 11: all over the world that are going to see films
Speaker 11: yet to be released and decided they want to buy
Speaker 11: it and show them in their countries. So it's really
Speaker 11: the heart of the festival business wise, and it's also
Speaker 11: a major thread of the festival because it's bringing tens
Speaker 11: of thousands of film professionals to can every year.
Speaker 1: Yeah.
Speaker 3: Absolutely so in terms of the more glamorous side of things,
Speaker 3: what are the big releases that perhaps we'll hear more
Speaker 3: about for this year.
Speaker 11: So it's an interesting year for the festival because for
Speaker 11: while there was no US films selected in competing. Meanwhile,
Speaker 11: one film has been added by James Gray, so that's
Speaker 11: going to be a film that's going to be very expected,
Speaker 11: I think, with Scarlett Johnson and Adam Driver featuring in
Speaker 11: the film. We don't know a lot about it yet,
Speaker 11: but that's going to be a point of attention. And
Speaker 11: then there is this mix of filmmakers from all over
Speaker 11: the world. Three films from Spain that I'm especially looking
Speaker 11: forward to went by Rodegoyen, another one about the civil
Speaker 11: war in Spain. It's a lot of films inspired by
Speaker 11: the wars. Actually, the Second World War theme is going
Speaker 11: to be very strong films from friends as well Asian
Speaker 11: films like it. It's really a mix. And there are
Speaker 11: some favorites of CAN that are coming every time the
Speaker 11: selector film basically, and that's one of the criticism of
Speaker 11: the fistival is you know they've got their favorites and
Speaker 11: they would come whatever film the release. But truth is,
Speaker 11: you know that they are carefully selected. And what's really
Speaker 11: interesting is we don't know yet because these has not
Speaker 11: been seen by anyone. We don't know yet which film
Speaker 11: is going to create the buzz and which film is
Speaker 11: going to come out with the big O L.
Speaker 3: Yeah, that's the excitement, isn't it. And the paland'ah, as
Speaker 3: you say, is the crown jewel of the proceedings and
Speaker 3: who might clinch that? I mean, I noticed that it's
Speaker 3: the old boy director Park Chan Wook, who is leading
Speaker 3: the jury that makes the selection for who is awarded
Speaker 3: the pandor what's it like then to win that accolade?
Speaker 6: You know?
Speaker 3: How important is it? I mean you say the criticism
Speaker 3: is that there are sometimes favorites that CAN, but how
Speaker 3: important is it to win the Panda.
Speaker 11: It's absolutely major for a film because it's going to
Speaker 11: launch that film into this season that's coming. Basically, Ken
Speaker 11: is always seen at the first event of the year
Speaker 11: in terms of awards and in terms of films that
Speaker 11: are going to be seen for the full years. So
Speaker 11: very often the films that are selected for the palmudor
Speaker 11: but also the major top prices, right the best scenario,
Speaker 11: best director or best actor. These films they are going
Speaker 11: to be every year we see that they're going to
Speaker 11: be launched into the award season and they can make
Speaker 11: it to the Oscars in the end. And that's what
Speaker 11: happened with The Substance, for example, that was a very
Speaker 11: small film that made it to the Oscars and got
Speaker 11: five nominations. I think with Demi Moore, comeback of Demi Moore,
Speaker 11: I think that was extremely interesting and she's going to
Speaker 11: be part of the jury this year.
Speaker 3: Interestingly, I think that's really interesting. Also that I mean
Speaker 3: Can is also the big you know, film festival in Europe,
Speaker 3: even kind of bigger than Berlin and Venice. So interesting
Speaker 3: that you say it's such a launch pad then maybe
Speaker 3: into a bigger market into the US. But I have
Speaker 3: to say that in the backdrop of this, you know,
Speaker 3: talking about these individual movies, these small budget movies, maybe
Speaker 3: that get bigger. The backdrop in the industry is surely
Speaker 3: artificial intelligence and maybe movies that are emerging in that space.
Speaker 3: Do you think CAN is going to be a buzz
Speaker 3: with chatter about AI films?
Speaker 11: It is every year and increasingly a topic in CAN,
Speaker 11: of course, as it is across the industry. Really interestingly, interestingly,
Speaker 11: there is one film that's that's using open eyes technology
Speaker 11: that's going to be shown to bios in CAN this year.
Speaker 11: It's called The Critters and it's an animation film that
Speaker 11: we're not going to see yet, it's not finished yet,
Speaker 11: but it's going to be shown to potential bios. So
Speaker 11: that's one example of one film, a feature film that's
Speaker 11: going to use AI a lot that we're going to
Speaker 11: see in the coming months probably, And and of course
Speaker 11: it's it's always a chatter in CAN. You would see
Speaker 11: panels this year about what AI means for cinema as
Speaker 11: a creative tool, what it means for the ip of
Speaker 11: the actors and directors that are sort of prompted and
Speaker 11: that are sort of used in AI prompts. So what
Speaker 11: does it mean in terms of rights for them, So
Speaker 11: it touches on the creative side, on the business side,
Speaker 11: and all this also happening on the backdrop of the
Speaker 11: sort of difficult moment, a moment of crisis really for
Speaker 11: the cinema industry since COVID, the theaters have not seen
Speaker 11: the same level of of tickets sold really doing during
Speaker 11: the pandemic. People have grown us to see films on
Speaker 11: their home screen a hole and so it's ataly also
Speaker 11: one of the big thread every year. You can it's
Speaker 11: really how well the industry is doing. We are talking
Speaker 11: about these very art, outhouse films that can make it
Speaker 11: two bigger markets sometimes. But there is also the huge
Speaker 11: category is blockbusters. These are really carrying the cinema industry worldwide,
Speaker 11: the big Hollywood blockbusters. Before the pandemic, you could see
Speaker 11: one or two of these every month. It's really not
Speaker 11: the case anymore. The studios are making less bets on
Speaker 11: big films and we can see Devil were two currently
Speaker 11: making big numbers, for example, But there are few words
Speaker 11: of these films every year, and interestingly, no big blockbuster
Speaker 11: will have a premiere in can this year. Last year
Speaker 11: we saw Mission impossible premiering and it was a bigger
Speaker 11: than than a big bus and this way this year,
Speaker 11: it's kind of a snub for the big US studios
Speaker 11: and none of these are going to show it. Befeling Kenn.
Speaker 11: So it's also signed that there's no film that's ready
Speaker 11: to be shown in ghen this year. So it's really
Speaker 11: also the business backdrop of the festival, and it's how
Speaker 11: well the industry is doing.
Speaker 3: Yeah, it's going to be very interesting, isn't it. Have
Speaker 3: a wonderful time. I'm looking forward to reading some of
Speaker 3: your reporting and your insights into the movie industry. Bloomberg's
Speaker 3: Bernoit Bertolo. We will have full coverage of the can
Speaker 3: film festivals, twists and turns on Bloomberg platforms in the
Speaker 3: coming days. I'm Caroline Hebgar here in London and you
Speaker 3: can catch us every weekday morning for Bloomberg Daybreak. You
Speaker 3: at beginning at six am in London, that's one am
Speaker 3: on Wall Street.
Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend,
Speaker 2: look at what you expect from Treasury Secretary Scott Besson's
Speaker 2: visit to Japan. I'm Nathan Hagard and this is Bloomberg.
Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead at
Speaker 2: the top stories for investors in the coming week. I'm
Speaker 2: Nathan Hager in Washington. Treasury Secretary Scott Bessant will spend
Speaker 2: three days in Japan starting Monday. For a preview, Let's
Speaker 2: get to Doug Krisner, host of the Bloomberg Daybreak Asia podcast.
Speaker 4: Thanks. Nathan. Besant is reportedly expected to meet with Prime
Speaker 4: Minister Sona etake Ichi, as well as Finance Minister Satsuki
Speaker 4: Katayama and Bank of Japan Governor Kazu Awaita. Now the
Speaker 4: NIKE is reporting these meetings will be held separately. For
Speaker 4: a closer look at what Besant wants to address on
Speaker 4: this trip, let's bring in Bloomberg's Molly Smith, who joins
Speaker 4: us from our studio in the Japanese capital. Thank you
Speaker 4: so much for making time. I understand that you're on
Speaker 4: temporary assignment now as part of a Bloomberg News job swap,
Speaker 4: and I know you're in the capital city. Before we
Speaker 4: get into the stuff regarding the Treasury Secretary, I'm curious
Speaker 4: to get your take on the overall economy right now
Speaker 4: in Japan. I know inflation is a big issue. What's
Speaker 4: the feeling right now?
Speaker 8: You know, it's very interesting, Doug, coming from the US,
Speaker 8: where I've been covering the economy for the last five
Speaker 8: years to now being in Japan for a few months,
Speaker 8: and as we know, inflation is, you know, really such
Speaker 8: a deeply psychological phenomenon as much as it is a
Speaker 8: financial one. And even though in the US, you know,
Speaker 8: inflation was much more severe and long term than it
Speaker 8: has been in Japan, I think it's still very much,
Speaker 8: you know, it's very real here, and especially because the
Speaker 8: country is coming off of really deflation for the last
Speaker 8: thirty years, so to even have inflation of you know,
Speaker 8: something in the one to two percent area like it
Speaker 8: is now is still very meaningful after prices have been
Speaker 8: falling for so long.
Speaker 4: The three day Golden Week holiday just wrapped, and I'm
Speaker 4: curious to get your take on how Japanese consumers responded,
Speaker 4: whether they were engaged maybe doing a little bit of traveling,
Speaker 4: spending a little bit at shops and restaurants, where they
Speaker 4: engaged in activity at all.
Speaker 8: I would say, anecdotally, from my perspective, it seemed that way.
Speaker 8: You know, I'm fairly new to the country, so I
Speaker 8: was trying to travel a bit in and around Tokyo
Speaker 8: during that period where we had most of this past
Speaker 8: week was a holiday as well as a day in
Speaker 8: the previous week, so it definitely seems like people were
Speaker 8: out and about and spending and engaging with shops and restaurants.
Speaker 8: I haven't personally seen any high frequency data on it,
Speaker 8: but definitely we'll be looking to when we get some
Speaker 8: household spending figures in the next few months to confirm
Speaker 8: that in the hard data for sure.
Speaker 4: So let's get to Treasury Secretary Beson's visit in the
Speaker 4: week ahead. Can you give me a sense of what
Speaker 4: he is attempting to address here?
Speaker 8: So so much has lately been about the yen weakness,
Speaker 8: which authorities here are really trying to keep at bay
Speaker 8: as much as they can. A lot of the speculative
Speaker 8: trading in the currency market, and it seems like the
Speaker 8: one sixty yen per dollar mark is really that unofficial
Speaker 8: line in the sand of what they're trying to prevent
Speaker 8: against it. That is really the test threshold of how
Speaker 8: weak they're willing to let the end get or ideally
Speaker 8: not to go beyond that. So we've had a few
Speaker 8: suspected interventions in recent in about the past week here,
Speaker 8: and it seems like that will definitely be a key
Speaker 8: topic for Bessett to discuss, especially with the Finance minister
Speaker 8: that they've been in very close contact because there are
Speaker 8: these G seven agreements to keep your contacts abreast of
Speaker 8: what is happening with your currencies so that you're not
Speaker 8: labeled a currency manipulator. And also when a lot of
Speaker 8: these interventions are carried out, it's usually done by selling
Speaker 8: US treasuries in order to buy yet, so that's where
Speaker 8: of course the US would have a vested interest in
Speaker 8: how Japan is carrying out these moves.
Speaker 4: So the other part of a stronger yen story would
Speaker 4: obviously be a change in monetary policy. We were talking
Speaker 4: a moment ago about inflation, and from what I understand,
Speaker 4: real wages for Japanese workers in the month of March
Speaker 4: rows for a third consecutive month, and I think the
Speaker 4: numbers kind of would support the case for the BOJ
Speaker 4: raising interest rates at the June meeting. Is that widely
Speaker 4: expected and if we get a rate hike, is it
Speaker 4: expected to have a meaningful impact on the currency.
Speaker 8: So we are right now definitely expecting a hike at
Speaker 8: the June meeting. Wouldn't say that that's because of the
Speaker 8: wage data alone, though that definitely is a supporting factor
Speaker 8: for it. And this is something that Uweita has you know,
Speaker 8: at the meet that the BOJ meeting that policymakers just
Speaker 8: wrapped up, he was a bit hesitant to send a
Speaker 8: firmer signal that the June hike is coming. You know,
Speaker 8: there were certainly some ways we could read into it.
Speaker 8: You saw that the split in the vote. You know
Speaker 8: that there were six policymakers who voted with the consensus
Speaker 8: to hold rates steady, but there were three who dissented
Speaker 8: in favor of raising interest rates. And also when the
Speaker 8: bank laid out its projections for their outlook, a meaningful
Speaker 8: increase in inflation expectations. So those two together would definitely
Speaker 8: have signaled that there is reasonable belief that a hike
Speaker 8: could be coming at the next meeting in June. And yes,
Speaker 8: as you mentioned, the positive trend in real wages would
Speaker 8: also be supportive of that.
Speaker 4: So the elephant in the room, so to speak, when
Speaker 4: Treasury Secretary Besant is in Tokyo is going to be
Speaker 4: war in Iran. We know that Japan is a heavy
Speaker 4: importer of crude oil and LNG, especially from the Middle East.
Speaker 4: What's the feeling right now, what is the view that
Speaker 4: people have in Japan on this conflict and what are
Speaker 4: they having to deal with as a result of higher energy.
Speaker 8: Cost Well, this is really one of the big reasons
Speaker 8: why the yen is as weak as it is right now.
Speaker 8: I mean, the other reason that you know, predated the
Speaker 8: war and Iran is the interest rate differential, that that
Speaker 8: US treasury yields are so much higher than Japanese government
Speaker 8: bond yields are here, and that's also been contributing to
Speaker 8: weakness in the end for a bit longer. But now
Speaker 8: since Japan is such a heavy importer of crude oil
Speaker 8: from the Middle East, that's also been weighing on the currency.
Speaker 8: So it's really been just you know, more difficult adding
Speaker 8: to like what's been you know, a real cost of
Speaker 8: living increase here for the people of Japan, and that
Speaker 8: there doesn't really seem to be much relief coming anytime
Speaker 8: soon in that way, because the US hasn't really signaled
Speaker 8: any interest in cutting interest rates anytime soon. If anything,
Speaker 8: there seems to be more of a consensus growing out
Speaker 8: of the Fed of policy makers who might be inclined
Speaker 8: to raise interest rates as a next move. So we're
Speaker 8: not going to get any help on the rate differential.
Speaker 8: And even if the Bank of Japan does hike interest
Speaker 8: rates here, there is still quite a meaningful gap to
Speaker 8: claw that back and to help the end offset some
Speaker 8: of this weakness.
Speaker 4: So it's not just energy products that are imported. A
Speaker 4: number of other resources. Is that showing up, particularly when
Speaker 4: you look at certain areas like food that these costs
Speaker 4: have also appreciated.
Speaker 8: That's where, yeah, it's you know, interesting looking at different
Speaker 8: measures of inflation here compared to what we look at
Speaker 8: in the US, and one of them is, you know,
Speaker 8: particularly for food prices for foods that are made with rice,
Speaker 8: and that's really been one of the real sticking points
Speaker 8: of where inflation has really been meaningful here.
Speaker 4: Molly, we'll leave it there, thank you so very much,
Speaker 4: and enjoy that temporary assignment for Bloomberg News in Tokyo,
Speaker 4: Bloomberg's Molly Smith. We moved to China next, where the
Speaker 4: government recently reported a surge in both the value and
Speaker 4: the number of payment transactions from overseas visitors during the
Speaker 4: recent five day Labor Day holiday, and that's where we
Speaker 4: began our conversation with Kent Ju. Kent is CEO of
Speaker 4: a Core Greater China, and he spoke with Bloomberg TV
Speaker 4: host David Inglase and Ivon Mann.
Speaker 5: Let me just get started if I could, with the
Speaker 5: recent long weekend, could you give us maybe what were
Speaker 5: the highlights for your group? What stood out to you
Speaker 5: and equally what were the challenges?
Speaker 12: Good morning. Indeed, the China hotels record a very strong
Speaker 12: redpad growth over this past May holiday. While it is
Speaker 12: that did experience the slightly softer demand in comparison with
Speaker 12: Chinese New Year and the timming holidays. Uh, these I
Speaker 12: would say attributed two main factors. One is this Chinese
Speaker 12: New Year, we had a longer holiday and also a
Speaker 12: later holiday, and this shifted the travel pattern slightly. And
Speaker 12: number two, the air fare rise as a result of
Speaker 12: the recent oil price increase. But nevertheless, the hotels generally
Speaker 12: did very well as reported in other various different sources.
Speaker 12: We are waiting for the official data in the next
Speaker 12: couple of days, but I'm sure the picture will be
Speaker 12: very robust.
Speaker 13: You mentioned about the increase in jet fuel prices and
Speaker 13: really obviously airfares have have really skyrocketed since this around
Speaker 13: situation began. Can has it impacted anywhere your occupancy across
Speaker 13: your hotels? Can you tell a little bit more the
Speaker 13: impact that around more may have on the industry.
Speaker 12: The Mini East crisis didn't really impact a Greater China
Speaker 12: hotels performance that much, simply because Middle East is a
Speaker 12: very small market for us. It's not on the top
Speaker 12: ten list. It takes up a three percent of Greater
Speaker 12: Chinese hotel revenue number two Q one and Q two
Speaker 12: are not their traditional high travel season, so the hotel's
Speaker 12: impact is quite a minimum.
Speaker 6: Okay, I guess.
Speaker 5: Can't just maybe including what we've seen so far in
Speaker 5: the first few months of twenty twenty six, before of course,
Speaker 5: but the war started in Iran and maybe also encapsulating
Speaker 5: the recent weekend. Could you tell us more about where
Speaker 5: you're seeing the growth in as far as is it
Speaker 5: domestic travel that seems to be picking up if you
Speaker 5: have the data on that, or are we seeing a
Speaker 5: faster pickup in inbound travel into mainland China? Well?
Speaker 12: Inbound extremely robust. In twenty twenty five, we saw a
Speaker 12: thirty six percent increase for our Co hotels in Greater China,
Speaker 12: and the first quarter of this year up until actually
Speaker 12: end of March, we saw another increase of twenty five percent.
Speaker 12: So this is this is a very strong sign that
Speaker 12: China's visa free forest policy is is helping the industry
Speaker 12: in Greater China. Number two, the leisure demound in domestic
Speaker 12: markets is also very robust, particularly in markets in Greater China,
Speaker 12: uh sorry, great Greater Bay Area, Sanya Yinland and also
Speaker 12: great to for example Hong Kong and h and Going.
Speaker 12: So these two cities literally ran full house for the
Speaker 12: last ten ten days.
Speaker 13: You mentioned rev PARW was actually pretty good during during
Speaker 13: the holiday Candra, I think up until the end of
Speaker 13: last year, rev part in China was still a negative
Speaker 13: territory here and really, you know, underperforming a lot of
Speaker 13: parts of the region. Do you have a sense of
Speaker 13: demand picking up a bit more there and when you
Speaker 13: think red Park can actually turn positive in China.
Speaker 12: I think the love part negative rep part really was
Speaker 12: in the mid scale and the economy scale hotels last year.
Speaker 12: But if you look at the premium and luxury segments
Speaker 12: actually outperformed two d twenty five. There was a five
Speaker 12: percent to six percent of repil growth in the premium
Speaker 12: and luxury segment. So in the Nashelle we see this
Speaker 12: trend starting actually from Q three last year until year
Speaker 12: to day this year. Luxury segment in particular has recorded
Speaker 12: more than eight percent increase on you.
Speaker 4: That was Kent ju CEO of a Core Greater China,
Speaker 4: speaking with Bloomberg TV host David and Glaze and Vonne Mann.
Speaker 4: I'm Derek Kristner. You can catch us weekdays for the
Speaker 4: Daybreak Asia podcast. It's available wherever you get your podcast.
Speaker 2: Nathan, Thanks Doug, and that does it for this edition
Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at
Speaker 2: five am Wall Street Time for the latest on markets
Speaker 2: overseas and the news you need to start your day.
Speaker 2: I'm Nathan Hager. Stay with us, stop store worries and
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