Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our day
Speaker 1: Break anchors all around the world and straight ahead on
Speaker 1: the program. Tech earnings continued this week, and we'll get
Speaker 1: a preview. I'm Tom Busby in New York.
Speaker 2: I'm Stephen carl and London, who are looking ahead to
Speaker 2: the options facing the Bank of England as an inflation
Speaker 2: in the UK remains the highest in the G seven.
Speaker 3: I'm Deck Prisner. How close is the aviation industry in
Speaker 3: the APAC to pre pandemic levels.
Speaker 4: I'm Gaylei Lynes in Washington, where we're looking ahead to
Speaker 4: Florida Governor Ronda Santis getting set to make a big
Speaker 4: economic speech.
Speaker 5: That's all straight ahead on Bloomberg day Break Weekend on
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Speaker 6: You.
Speaker 1: I'm Tom Busby, and we begin today's program with two
Speaker 1: of the biggest names in tech, Apple and Amazon, posting
Speaker 1: their latest earnings this coming week and joining us to
Speaker 1: talk about what to expect. Ed Ludlow, co host of
Speaker 1: Bloomberg Technology, ed, thank you for being here.
Speaker 7: Thank you for having me. Happy weekend.
Speaker 1: Yes it is well. Now, before we jump into Apple
Speaker 1: and Amazon, let's talk about takeaways from the other megacap
Speaker 1: tech names that have already posted earnings for last quarter.
Speaker 1: And there's a lot to digest here. So why don't
Speaker 1: I let you talk about and we can go one
Speaker 1: by one, starting with maybe meta platforms.
Speaker 7: Yeah, I think there is a commonality between all of
Speaker 7: them that we've all been so hyped up over artificial
Speaker 7: intelligence AI, and we go into earnings hoping that we
Speaker 7: hear some big piece of breaking news about what the
Speaker 7: big tech names doing in AI. But interestingly, the real
Speaker 7: theme of this earning season had been that the core
Speaker 7: legacy businesses for each of these big tech names have
Speaker 7: done really well, prizingly well, and that outperformance against expectations
Speaker 7: has seen the shares rise after earnings print indicate of
Speaker 7: meta alphabet Microsoft, And even though you know there's a
Speaker 7: lot of talk on the call about AI, you know
Speaker 7: that's what investors have been looking at. So Meta's a
Speaker 7: really interesting one. It's been an interesting quarter because Meta
Speaker 7: also launched Threads right, and they stopped telling us how
Speaker 7: that was going after it reached one hundred million users.
Speaker 7: But again the messaging from Mark Zuckerberg the CEO, and
Speaker 7: Susan Lee the CFO, is we're we're playing it slow,
Speaker 7: we're playing it safe with Threads. But Zuckerberg did say
Speaker 7: that if cloud providers, for example, want access to their
Speaker 7: generative AI technology and they're going to make money off it,
Speaker 7: it's only fair the Meta makes money off it too,
Speaker 7: So that was a really interesting U turn.
Speaker 1: Now, speaking of cloud, Microsoft had a bit of a
Speaker 1: surprise in its earnings last week about yeah, a bit
Speaker 1: of a slump and growth in its cloud computing unit,
Speaker 1: which is a big money maker for them.
Speaker 7: Two ways of looking at it. It was a milestone
Speaker 7: because Azure, which is the cloud unit, hit a milestone
Speaker 7: where for the first time it represented more than fifty
Speaker 7: percent of the overall share of cloud revenue. Like they
Speaker 7: make one hundred and ten billion dollars a year in
Speaker 7: collaborated revenues. Sales growth is slipping, but you know it's
Speaker 7: still when you look at the azual unit becoming increasingly
Speaker 7: important to them. And there's an interesting parallel which we
Speaker 7: can talk about with Amazon, which is going to report
Speaker 7: next week. Because we all know Amazon has an e
Speaker 7: commerce platform, right Amazon dot Com, Amazon Prime Video, but
Speaker 7: the cash cow for them is cloud. That's why we
Speaker 7: look so closely at how all of these guys perform,
Speaker 7: because it's a competitive market between the three of them.
Speaker 7: You know, there is some life there.
Speaker 1: And another encouraging sign we got from Intel, and that
Speaker 1: is about PC sales. They're saying things are looking up again.
Speaker 6: Yeah.
Speaker 7: Intel's a really interesting story because every earning season and
Speaker 7: executive will say we think things will get better. You're
Speaker 7: going to have to take our word for it, but
Speaker 7: they'll get better at some point. And the messaging from
Speaker 7: Intel in the last couple of quarters is that the
Speaker 7: demand will recover in the second half of twenty twenty three. Well,
Speaker 7: what Intel did this week is demonstrate that that is
Speaker 7: actually true. We got some evidence. So they had a
Speaker 7: surprise profit in the quarter just gone, and in the
Speaker 7: current quarter they forecast sales of thirteen point eight billion dollars,
Speaker 7: which was ahead of what the street thinks they were
Speaker 7: going to make thirteen point three billion dollars, and it
Speaker 7: all comes down to PC. The story is that there
Speaker 7: was just a surplus of chips that go into personal computers.
Speaker 7: That meant that people that make personal computers had an
Speaker 7: inventory they had to work through. They had a surplus
Speaker 7: of chips. The messaging from Intel is that they've worked
Speaker 7: through that inventory and they're now ordering again for the future.
Speaker 1: Very encouraging. All right, now, let's look ahead what's coming
Speaker 1: up this week, and let's start with what you see
Speaker 1: Apple reporting.
Speaker 7: Yeah, so the quarter that we've already reported this year
Speaker 7: for Apple, the calendar second quarter, a lot of evidence
Speaker 7: that iPhone shipped me to rebounding. Everyone is so stoked
Speaker 7: about the vision pro everything. One's talking about the arvii headself.
Speaker 7: But the thing is, it's just like AI. It's such
Speaker 7: a distant technology. It's so distant from being a meaningful
Speaker 7: revenue contributor that we just look at the iPhone and
Speaker 7: the latest generations of hardware that they're actually shipping. That
Speaker 7: is going to be the story for Apple. It always is,
Speaker 7: and it's important because the more devices that they sell
Speaker 7: around the world, and the more surprised to the upside
Speaker 7: that there is for things like Mac. In markets like China,
Speaker 7: it also usually translates to an improvement in their services revenue.
Speaker 7: What Apple wants to do is build an ecosystem. They
Speaker 7: want people to have multiple types of their devices in
Speaker 7: their hand or in their home and then be lured
Speaker 7: in to spend more on the software and services side.
Speaker 7: And so that's why we pay such close attention to
Speaker 7: Apple and iPhone.
Speaker 1: And let's talk about that thirty five hundred dollars price
Speaker 1: tag on that vision one.
Speaker 7: Thirty five hundred dollars is very expensive. By comparison, the
Speaker 7: premium meta Quest headset is about one thousand dollars and
Speaker 7: its latest generation is about five hundred dollars. So thirty
Speaker 7: five hundred dollars is absolute premium. Now, Bloomberger reported that
Speaker 7: in its first year, applew had hoped to ship around
Speaker 7: nine hundred thousand units. But if you do the math,
Speaker 7: this is what I'm talking about. Nine hundred thousand units
Speaker 7: at thirty five hundred dollars still does not translate to
Speaker 7: three point five billion dollars of sales. That's nothing in
Speaker 7: the scheme of what they do on iPhone and Mac.
Speaker 7: Then The Financial Times reported that they're actually cutting expectations
Speaker 7: and telling suppliers, you know what, we're going to build
Speaker 7: nearer to half of those units. So they've kind of
Speaker 7: scaled back what they hope to do. It's going to
Speaker 7: be a really long time until this is mainstream. But
Speaker 7: the price point also makes you realize that the vision
Speaker 7: Pro it's four developers. It is four people who are
Speaker 7: early adopters at the cutting edge. Bigger question earnings, do
Speaker 7: we get a carrot dangle that has some information about
Speaker 7: future generations of the vision Pro at a lower price point,
Speaker 7: a more mass market product. Apple is usually self restrained.
Speaker 7: They usually don't do that at earnings, but you can
Speaker 7: always be surprised.
Speaker 5: Yeah they are.
Speaker 1: That just one more thing so you never know. Let's
Speaker 1: switch now to Amazon dot Com and you know, we
Speaker 1: talked very much about the cloud computing, their Amazon Web services.
Speaker 1: What that means, what are you looking for?
Speaker 7: And that report it's really interesting. Amazon is still unraveling
Speaker 7: its COVID era investments where they just threw billions of
Speaker 7: dollars at fulfillment, getting packages to you as quickly as
Speaker 7: you could because during the pandemic we were all at home.
Speaker 7: It drove a lot of business for them, but they
Speaker 7: were left with head count and infrastructure that they just
Speaker 7: don't need. Andy Jasse replaced Jeff Bezos's CEO and discipline
Speaker 7: and kind of unraveling that investment in the panemic era
Speaker 7: has been the story. AWS revenue rows around sixteen percent,
Speaker 7: twenty one billion dollars of sales in the court are
Speaker 7: just gone, so those stories continue. We know Amazon as
Speaker 7: consumers is Amazon dot Com where we buy things and
Speaker 7: they're delivered to our doorstep, but the cash cow is
Speaker 7: its cloud business. Now throw artificial intelligence into the mix,
Speaker 7: we might get some early signs about their strategy, which
Speaker 7: has been less about a consumer facing generative AI tool
Speaker 7: like chat GPT and more about providing the infrastructure, cloud
Speaker 7: based infrastructure for companies to work on their own AI tools.
Speaker 7: And once we have a sense that they're going to
Speaker 7: make some money on that in the timeline for that,
Speaker 7: you add this in as another revenue stream alongside AWS.
Speaker 7: Advertising has also been a surprise because it's a higher
Speaker 7: margin revenue that they make hand in hand with their
Speaker 7: e commerce platform. So a lot to focus on there.
Speaker 1: Now, ed I want to talk about the impact of
Speaker 1: a couple of strikes in Hollywood on not big revenue
Speaker 1: generators for both companies Apple and Amazon, but they're streaming services.
Speaker 1: What's the thinking on how this is impacting Apple TV
Speaker 1: Plus and Amazon Prime.
Speaker 7: There is two competing forces happening in the world of
Speaker 7: content and streaming, and it applies pretty uniformly to all
Speaker 7: of the names that are involved. The writers and actors
Speaker 7: strike gives everybody a lot of concern that the content
Speaker 7: timeline and content slate's going to be impacted. Simply put,
Speaker 7: if the actors and writers are on strike, new shows
Speaker 7: and films are not being written, and they're certainly not
Speaker 7: being produced, which means there's a delay in putting them
Speaker 7: out and in some cases projects get canceled altogether. The
Speaker 7: competing force is that, if you're taking the case of Amazon,
Speaker 7: Andy Jasse is looking very very closely about how much
Speaker 7: money the Prime video unit is spending on producing content,
Speaker 7: because it is not a money maker for them. He
Speaker 7: wants to rein in that spending. So you can understand
Speaker 7: right why these are competing forces. We're concerned that not
Speaker 7: enough content's being made, and yet at the same time
Speaker 7: executives are saying, we've really got to scale back what
Speaker 7: we're spending because otherwise we're not going to reach profitability,
Speaker 7: and the long term profitability of streaming platforms is certainly
Speaker 7: a big question. Let's be honest, guys, Like no one
Speaker 7: wants their favorite show to be canceled or indeed like
Speaker 7: wait a whole year and a half for the next
Speaker 7: season to come out. But that is the prospect we face.
Speaker 7: So that's basically the equation the industry's facing.
Speaker 1: Well, a lot to look forward to. Ed, thank you
Speaker 1: so much. That's Bloomberg Technology, host ed Ludlow. Watch the
Speaker 1: show weekdays at twelve pm Wall Street Time, or download
Speaker 1: the b Tech podcast wherever you get your podcasts. Coming
Speaker 1: up on Bloomberg day Break Weekend, we're looking ahead to
Speaker 1: the options facing the Bank of England. I'm Tom Busby
Speaker 1: and this is Bloomberg. This is Bloomberg Daybreak Weekend, our
Speaker 1: global look ahead at the top stories for investors in
Speaker 1: the coming week. I'm Tom Busby in New York. Now
Speaker 1: up later in our program we take a look at
Speaker 1: the aviation sector in Asia. But first, after the reft
Speaker 1: of Central Bank decisions last week, attention now shifts to
Speaker 1: London in the coming days, where the Bank of England
Speaker 1: will announce its latest rate move. Unlike their colleagues in
Speaker 1: Washington or Frankfurt, policymakers in the UK are some way
Speaker 1: off from the end of their hiking cycle. For more,
Speaker 1: let's head to London and bring in Bloomberg Daybreak europe
Speaker 1: banker Stephen Carroll.
Speaker 2: Tom The UK has been an outlier in the G
Speaker 2: seven for its inflation path, which saw the pasive price
Speaker 2: rises remaining higher and stickier in recent months, which had
Speaker 2: the Bank of England to hike by fifty basis points
Speaker 2: the last time around. The most recent inflation print did
Speaker 2: finally show a slowdown, but the headline figure was still
Speaker 2: at seven point nine percent. For more, let's bring in
Speaker 2: Bloomberg senior UK economist Dan Hansen. Dan, what is your
Speaker 2: expectation then for this Bank of England meeting? The last
Speaker 2: time around the bank gave it's a bit of a surprise.
Speaker 8: Yeah, they did, and I think looking at this meeting,
Speaker 8: there is I think, at least to my mind a
Speaker 8: fifty to fifty split, fifty to fifty chance if you like,
Speaker 8: between a twenty five and a fifty basis point hike.
Speaker 8: You mentioned, they're the inflation data for us that probably
Speaker 8: tips the balance towards a twenty five, but it's certainly
Speaker 8: going to be a very close call. I think what
Speaker 8: you have to look at is, of course there's been
Speaker 8: some good news on inflation, and you've just mentioned it there,
Speaker 8: But I think the underlying picture goes to your first
Speaker 8: point about stickiness. So the composition of inflation is actually
Speaker 8: looking stickier now than the bank was expecting back in
Speaker 8: its May forecast. And it might be the case that
Speaker 8: looking at that, that's the thing that dominates and pushes
Speaker 8: them towards a fifty basis point hike. As I say,
Speaker 8: we think probably on balance that the good news on
Speaker 8: the headline figure is enough to push them back towards
Speaker 8: twenty five. They've done a lot already and doing another
Speaker 8: fifty again would be quite a would be quite a
Speaker 8: message to send. But I think on balance they'll they'll
Speaker 8: up for a smaller move.
Speaker 2: Where is the stickiness coming from now and the inflation data?
Speaker 8: Yeah, so it's if you look at it, it is
Speaker 8: services that's running it probably twice a little bit above that.
Speaker 8: In fact twice it's long run average, So it's sup
Speaker 8: at seven point two percent long run average about three
Speaker 8: point three percent, so it's more than twice it's long
Speaker 8: run average, and of course that's a reflection of I
Speaker 8: think it's a reflection of two things. Actually, one is
Speaker 8: the obvious thing is the labor market, because a lot
Speaker 8: of services firms their biggest cost is labor. But I
Speaker 8: also think there's an element of the lagged impact of
Speaker 8: high energy prices. So if you think back to last year,
Speaker 8: you've got a lot of firms who rightly would have
Speaker 8: looked at the outlook for energy price has been extremely worried,
Speaker 8: and I think a lot of them have locked in
Speaker 8: higher energy prices into their tariffs, and it's going to
Speaker 8: take a bit of time for them to roll off
Speaker 8: onto the new lower tariffs, because obviously wholesale energy costs
Speaker 8: have fallen and households have started to feel the effect
Speaker 8: of that, and we'll see that in fact in the
Speaker 8: July data, the July inflation data. But I think that's
Speaker 8: one reason why it serves as inflation as well as
Speaker 8: the labor market has been sticky, there's been a little
Speaker 8: bit better news on the good side. As I've said
Speaker 8: many times to before, there are reasons thinks that think
Speaker 8: that goods prices will continue to or goods inflation. I
Speaker 8: should say we'll continue to ease off, but the stickiness,
Speaker 8: to answer your question, is really in services.
Speaker 2: Yeah, and that's interesting because of the changeus what we've
Speaker 2: been talking about over the past couple of months of
Speaker 2: inflation prints, where really the energy picture was the part
Speaker 2: that was kind of helping to bring things down. As
Speaker 2: you say, the fact that getting getting baked into the
Speaker 2: service's side of the picture if we think about the
Speaker 2: broader economic picture and all this, because this is the
Speaker 2: dilemma the Bank of England is having, is that, you know,
Speaker 2: the more at hikes obviously, the greater the risk of recession.
Speaker 2: The latest PMI data for the UK showed, you know,
Speaker 2: the flash number of fifty point seven, down from fifty
Speaker 2: two point eight in June. Does that kind of tell
Speaker 2: us that the Bank of England's rate hikes so far
Speaker 2: at least are working.
Speaker 8: Well, they're beginning to Yeah. I mean we've seen up
Speaker 8: until this point that actually the response of the economy
Speaker 8: to everything it's been done and the high inflation, there's
Speaker 8: not been much change in the direction of the economy.
Speaker 8: We've had sort of broadly say stagnation over the past year,
Speaker 8: but we haven't had anywhere near the level of weakness
Speaker 8: that we and almost all other forecasters had been expecting.
Speaker 8: I mean, I think just on the PMI itself. I
Speaker 8: didn't mention it in the answer to the first question,
Speaker 8: but I think that's another reason to think that twenty
Speaker 8: five might be a better bet than a fifty, just
Speaker 8: because there is now a little bit more evidence that
Speaker 8: this very rapid tightening cycle is beginning to take hold
Speaker 8: on the economy. And I think what we'll get as
Speaker 8: well as as a policy decision, of course, is a
Speaker 8: forecast from the banking and this time around, and we'll
Speaker 8: see what they're thinking in terms of where the economy
Speaker 8: is heading. They'll have to take in the rising yields
Speaker 8: that we've seen to the higher path of interest rates.
Speaker 8: So it'll be really interesting to see how they put
Speaker 8: that in and where it ends up. Because of course,
Speaker 8: remember back in May they took the recession out of forecast.
Speaker 8: You know, there's a question this time exactly that is
Speaker 8: it going to go back in. And just for sort
Speaker 8: of people that don't know the ins and outs of
Speaker 8: the Bank of England's forecasting process, what the bank does
Speaker 8: is it takes the market curve as given and it
Speaker 8: puts that into its forecast. So and then the forecast
Speaker 8: gets spat out based on that market curve, so it
Speaker 8: gives it. The point of doing it is to give
Speaker 8: a sense of whether the market is right or wrong
Speaker 8: in terms of the path of interest rates, whether that's
Speaker 8: consistent with two percent inflation in the medium term. So
Speaker 8: it's sort of the the bank is sort of hostage
Speaker 8: to that yeal curve, so it goes in and then
Speaker 8: the forecast gets spat out back to it, and you
Speaker 8: sort of see whether that path of rates is consistent
Speaker 8: with one two percent inflation in the medium term, and second,
Speaker 8: whether it's consistent with and the economy going through a
Speaker 8: downturn to get there.
Speaker 2: So of course the forecast is going to be very
Speaker 2: closely watched in Westminster as well, because the Prime Minister
Speaker 2: has made his number one priority having inflation by the
Speaker 2: end of the year. After the most recent inflation figures,
Speaker 2: bloombergerre speaking to John glenn as a minister in the
Speaker 2: Trousury Department, and here's his take on where the inflation
Speaker 2: challenges lie.
Speaker 9: Now, what I'm doing is controlling public spending to make
Speaker 9: sure that we don't do anything that adds fuel to inflation.
Speaker 9: But of course we welcome these figures. There's no complacency
Speaker 9: though here in the Treasury. We work very closely with
Speaker 9: the Bank. As you say, they do interest rates, we
Speaker 9: do government spending. But these are tough times for families
Speaker 9: in the UK. But we going be relentless in our
Speaker 9: commitment to have inflation and get it down to the
Speaker 9: long term trend two percent.
Speaker 10: That Johnnie, you're going to do anything actively to reach
Speaker 10: your number one target of halving inflation by the end
Speaker 10: of the year. For example, X Banking and policymaker Kate
Speaker 10: Barker suggested you should raise taxes.
Speaker 9: Well, look, we don't want to raise taxes. What we're
Speaker 9: trying to do is make sure that we spend money wisely.
Speaker 9: We had a spending review a few years ago. Obviously
Speaker 9: meeting those numbers is now really hard in a high
Speaker 9: inflation rey or higher inflationary environment. So my job is
Speaker 9: to make sure that we spend wisely, that we accommodated
Speaker 9: the pay Review Body announcements last week for public sector
Speaker 9: pay that increased between six six and a half seven
Speaker 9: percent for one of the workforces. We did that by
Speaker 9: not by taxing more, not by borrowing more, by asking
Speaker 9: government departments by asking cabinet ministers to absorb that additional
Speaker 9: pay requirement. So we're being relentless in focusing on making
Speaker 9: sure that we manage public spending and don't add to
Speaker 9: the inflatory pressure which the IMF and others have warned
Speaker 9: us we would do if we borrowed more.
Speaker 2: That was traguriy Minister John Glenn speaking to Bloomberg, Zazie
Speaker 2: Brayden and Anna Edwards Dan. There'll also be a question
Speaker 2: too about where we are in terms of the pain
Speaker 2: the Bank of England is inflicting and the likelihood of
Speaker 2: a recession. Remind us what the expectations around recession are
Speaker 2: in the UK.
Speaker 8: So I think the consensus is that it's certainly this
Speaker 8: year it's going to be avoided, and I think if
Speaker 8: you look at consensus forecast it's that it will be
Speaker 8: avoided as well next year. We're a little bit more
Speaker 8: pessimistic about it, we do, you know me, but we're
Speaker 8: a little bit so we're a bit more pessimistic. We
Speaker 8: do think there'll be a modest downturn in the economy.
Speaker 8: But I think you know, people jump on this idea
Speaker 8: of recession when you when you sort of ride it
Speaker 8: on a piece of paper. But I think the context
Speaker 8: here is that, as I've said before, the economy has
Speaker 8: been stagnating, so it doesn't take much for a negative
Speaker 8: quarter of growth, and we're what we've penciled in the
Speaker 8: peak trough fall in GDP of only one percent. That
Speaker 8: is not particularly significant. Compare it to the nineties. It
Speaker 8: was a three percent full of the eighties, it's four
Speaker 8: and a half percent full. Of the financial crisis, it
Speaker 8: was over six percent fall in GDP, So you know,
Speaker 8: they're far deeper recessions in history.
Speaker 2: Okay, are the more interested in those forecasts will get
Speaker 2: from the wank of England with They're just sais And
Speaker 2: thanks to Bloomberg Senior UK economist Dan Hansen. I'm Stephen
Speaker 2: Carroll in London. You can catch us every weekday morning
Speaker 2: here for Bloomberg Daybreak Europe, beginning at six am in
Speaker 2: London and one am on Wall Streets.
Speaker 1: Tom, Thanks Steven, and coming up on Bloomberg day Break weekend,
Speaker 1: Governor Ron DeSantis has a big economic speech this week.
Speaker 1: We'll get a preview. I'm Tom Busby and this is.
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Speaker 5: Break Weekend.
Speaker 1: I'm Tom Busby in New York with your global look
Speaker 1: ahead at the top stories for investors in the coming week.
Speaker 1: Governor Ron DeSantis is in the middle of a campaign
Speaker 1: reset and has a big economic speech planned for later
Speaker 1: this week. For more, let's add to our Bloomberg ninety
Speaker 1: nine one newsroom in Washington and Bloomberg sound On co
Speaker 1: host Kaylee Lines.
Speaker 4: Yeah, Tom. Florida Governor Ron DeSantis is seeking to reset
Speaker 4: his twenty twenty four presidential campaign, which admittedly isn't in
Speaker 4: the best shape right now. It's bleeding a lot of cash,
Speaker 4: he's languishing in the polls behind front runner former President
Speaker 4: Donald Trump, and he's trying to turn things around. So
Speaker 4: this coming week, as part of his revival efforts, he's
Speaker 4: preparing to give a major economic address. Bloomberg's Nancy Cook
Speaker 4: has been covering his campaign and was actually just in
Speaker 4: Iowa and she's joining us now. So Nancy, talk to
Speaker 4: us about this address he's going to give. What are
Speaker 4: the details, what is he going to talk about, and
Speaker 4: what does he hope this achieves.
Speaker 11: So thanks for having me. I've been in Iowa with
Speaker 11: Governor Ron Stansis where he's starting to preview some of
Speaker 11: the themes economic themes that he's going to talk about
Speaker 11: in this major economic address in New Hampshire. And part
Speaker 11: of the reason that he wants to give this address
Speaker 11: is a lot of his donors and advisors have really
Speaker 11: wanted him in recent weeks to stop talking so much
Speaker 11: about Florida and really to start to talk about broader themes,
Speaker 11: and they feel like the economy and talking about what
Speaker 11: he would do there is a nice pivot away from
Speaker 11: some of the Florida specific things and some of the
Speaker 11: culture wars that his campaign has really been known for.
Speaker 11: So some of the things that we're expecting him to
Speaker 11: talk about with how he's going to tackle inflation, he
Speaker 11: really also wants to make the pitch that he thinks
Speaker 11: that the US should totally open up all domestic energy production.
Speaker 11: He really wants to decouple the US economy from China's.
Speaker 11: And he interestingly sort of waded into the student debt
Speaker 11: cancelation question and talking about how is people take out
Speaker 11: tons of what he called bad debts, you know, for
Speaker 11: majors or things that don't really end up paying off
Speaker 11: at the end. Feels like schools should be stuck with that,
Speaker 11: not the students. And so he's really sort of giving this,
Speaker 11: in some ways a classic Republican message of you know,
Speaker 11: less regulation, particularly on things like energy, but also trying
Speaker 11: to really appeal to blue collar and middle class people
Speaker 11: with some messages on sort of jobs, wages, and student debts.
Speaker 4: So you said he's trying to focus not so much
Speaker 4: on Florida and his governing there when it relates to
Speaker 4: some of the culture wars and fights with Disney, et cetera.
Speaker 4: That doesn't seem to be resonating. But does he have
Speaker 4: an economic track record in Florida that he can tout
Speaker 4: here when he talks about his management of the state's economy,
Speaker 4: because it's a fairly big one.
Speaker 11: It is, Florida is a major state, and he is
Speaker 11: the governor there, and he has been a popular governor
Speaker 11: so far. So on the campaign trail, heat tells things
Speaker 11: like Florida's low unemployment rate. There have also been a
Speaker 11: number of businesses and business people that have moved to Florida,
Speaker 11: particularly during COVID, because they had a less restrictive environment.
Speaker 11: So he talks about that the migration. What he doesn't
Speaker 11: necessarily talk about is that, you know, Florida also has
Speaker 11: a lack of a floridable housing. There's been a real
Speaker 11: housing punch there. And also, and this is a thing
Speaker 11: very unique to Florida, but people there are really suffering
Speaker 11: under very skyrocketing prices for flood insurance, which again sounds
Speaker 11: like the most Florida thing, But if you live there
Speaker 11: and you own a house and your flood insurance sort
Speaker 11: of goes through the roof, it's causing a lot of
Speaker 11: economic pain for people there. So I would say the
Speaker 11: economic picture in Florida is a bit more mixed than
Speaker 11: what he presents on the campaign trail.
Speaker 4: Okay, so we're going to see what he presents this
Speaker 4: coming Monday. But Nancy is I mentioned at the top here,
Speaker 4: this speech is really just part of a wider effort, right,
Speaker 4: he's trying to turn things around, but he is also
Speaker 4: having to penny pinch a little bit more to do that.
Speaker 4: He's laying off staff. What else is happening inside the
Speaker 4: campaign as he tries to you know, reinvigorate this effort.
Speaker 11: So this reset has really been happening for the past
Speaker 11: two weeks, and they've laid off a total of thirty
Speaker 11: eight people, so that's you know, they had about a
Speaker 11: ninety person staff, so that's a huge chunk of people
Speaker 11: that's gone. They have raised a lot of money, but
Speaker 11: they have burned through that money at a very high
Speaker 11: rate given the size of the staff. And also DeSantis
Speaker 11: always likes to travel on private planes. That's expensive, and
Speaker 11: so they're really trying to He's not necessarily cutting back
Speaker 11: in the private travel, but they're trying to cut back
Speaker 11: on staff. And they're also trying to curb his travels.
Speaker 11: So he's not going to states, you know, unnecessarily. Really,
Speaker 11: he's just only going to places to do fundraising and
Speaker 11: then he's going to places early primary voting in states
Speaker 11: like Iowa, New Hampshire, South Carolina, and Nevada. And they're
Speaker 11: really trying to stick to that.
Speaker 4: Yeah, Iowa where you just were. I'm guessing you didn't
Speaker 4: have the privilege of a flying private there, Nancy, Am
Speaker 4: I right?
Speaker 11: Nope, just done a good old American airline site.
Speaker 4: The Life of journal. But on the subject of Iowa
Speaker 4: and New Hampshire, which you just mentioned, if he can't
Speaker 4: pull it off or get close to pulling it off
Speaker 4: in those states, is that it for him? Is it Iowa,
Speaker 4: New Hampshire or bust?
Speaker 11: I think that Iowa New Hampshire will be incredibly important
Speaker 11: because and his campaign is putting a ton of resources
Speaker 11: in Iowa right now, or not his campaign the superpack
Speaker 11: that's supporting them or putting in a ton of resources.
Speaker 11: But really the thing is is that he has fallen
Speaker 11: in the polls. There was so much hope around his
Speaker 11: candidacy and the Republican Party, let's say, in January and February.
Speaker 11: But as he voters have gotten to know him. I
Speaker 11: think that a lot of voters I have to stolely
Speaker 11: like Trump. They haven't totally been won over by DeSantis.
Speaker 11: He's not known for his retail political skills. And I
Speaker 11: think that we've just seen a big drop in the
Speaker 11: polls for him, And so I think Iowa, New Hampshire
Speaker 11: are going to be really crucial because if he can't
Speaker 11: win or do well in both or either state, I
Speaker 11: think he's going to lose even more momentum. And we've
Speaker 11: already seen him really drop in the polls in the
Speaker 11: last week. There's new polling that shows that, you know,
Speaker 11: he Tim Scott is gaining ground on him in Iowa,
Speaker 11: Chris Christy is gaining ground on him in New Hampshire.
Speaker 11: So he has managed to stay stay as like the
Speaker 11: number two front runner or the number two behind Trump
Speaker 11: in the GOP field in polling in early voting states.
Speaker 11: But if other people start to gain on him, I
Speaker 11: think that that will, you know, sort of fell some
Speaker 11: problems for the campaign.
Speaker 4: Well, let's just focus on the front runner, Trump in particular,
Speaker 4: who you just mentioned. Obviously, the legal woes for the
Speaker 4: former president are mounting. Is DeSantis hurt by Trump's legal
Speaker 4: woes growing or does it help him? And I say
Speaker 4: this in that we've seen this pattern where President Trump
Speaker 4: runs into legal trouble and he raises a ton of
Speaker 4: money on it, and his poll numbers actually go up,
Speaker 4: and it's very hard for rondasantists to answer questions about it.
Speaker 4: Without alienating the Trump base. Right, So how hard is
Speaker 4: this entire equation for Rond DeSantis.
Speaker 11: This equation is so much harder than I think any
Speaker 11: of the Disantis team anticipated, because what has happened with
Speaker 11: each of these indictments is it has mobilized and energized
Speaker 11: Republican primary voters to coalesce around former President Donald Trump.
Speaker 11: And the Trump campaign also has developed almost this playbook
Speaker 11: of how they approach indictments, and what they do is
Speaker 11: they really try to use them to their political advantage.
Speaker 11: Former President Trump gets out ahead of them, sort of
Speaker 11: announces them himself, They fundraise when the indictments come out,
Speaker 11: and a lot of Republican primary voters when I talk
Speaker 11: to them on the campaign trail, really feel like a
Speaker 11: lot of these indictments. They don't always like tell the
Speaker 11: difference between them. They kind of mash them together in
Speaker 11: their minds. But Trump has successfully convinced a swath of
Speaker 11: the Republican Party that these indictments are politically motivated. He
Speaker 11: has turned them to his political advantage, and it just
Speaker 11: means that it's very hard for Desantas to break these
Speaker 11: people away from Trump.
Speaker 4: And finally, Nancy, when we talk about the discussions that
Speaker 4: DeSantis is having with his team, with advisors, with the campaign,
Speaker 4: how much of that is just conversation with his wife,
Speaker 4: Casey DeSantis.
Speaker 11: I think a lot of it is. I Mean, the
Speaker 11: interesting thing I'm reporting on DeSantis these last several months
Speaker 11: is that he keeps a very insular, tight world. And
Speaker 11: so there's a campaign manager. They just elevated someone to
Speaker 11: be deputy campaign manager, but they really, you know, he
Speaker 11: and his wife really are their own political advisors and
Speaker 11: their tight knit team. He does not have like a
Speaker 11: kitchen cabinet of policy advisors, you know, sort of none
Speaker 11: of that traditional kind of friends or allies operation that
Speaker 11: a lot of other candidates have or presidents have. It's
Speaker 11: really him in his life, all right.
Speaker 4: Bloomberg's Nancy Cook looking forward to your continued coverage of
Speaker 4: this campaign and the governor's economic address this coming Monday.
Speaker 4: Thank you very much. Tom. We'll send it.
Speaker 10: Back to you.
Speaker 1: Thank you, Gaylee. That was Bloomber Sound on co host
Speaker 1: Kaylee Lines reporting from our Bloomberg ninety nine one newsroom
Speaker 1: in Washington, and you can hear sound on weekdays one
Speaker 1: to three pm Wall Street Time on Bloomberg Radio and
Speaker 1: coming up, here on Bloomberg day Break Weekend. Aviation Day
Speaker 1: is fast approaching in Hong Kong and we'll look at
Speaker 1: the aviation sector in the APAC region. I'm Tom Busby
Speaker 1: and this is Bloomberg. This is Bloomberg day Break Weekend,
Speaker 1: our global look ahead at the top stories for investors
Speaker 1: in the coming week. I'm Tom Busby in New York.
Speaker 1: In Hong Kong. On Tuesday, It's Aviation Day. For a
Speaker 1: look at the aviation sector and the latest developments. Let's
Speaker 1: get to Doug Krisner, co host of Bloomberg day Break Asia, Doug.
Speaker 3: Tom and the week ahead. Hong Kong will hold its
Speaker 3: Aviation Day now. This event is sponsored by the International
Speaker 3: Air Transport Association and the Airport Authority Hong Kong. IADA
Speaker 3: represents over three hundred airlines and nearly eighty five percent
Speaker 3: of global air traffic, and recently the Association upgraded its
Speaker 3: projections for passenger traffic. With that in mind, we thought
Speaker 3: it would be a good time to check in on
Speaker 3: the aviation industry across the Asia Pacific. I'm joined now
Speaker 3: by Danny Lee, Bloomberg Asia Transport Reporter. Danny, thanks so
Speaker 3: much for making the time to chat with me. So
Speaker 3: much of what drives this industry in the APEC is
Speaker 3: of course tied to China, and we have witnessed the
Speaker 3: contraction caused by the pandemic, of course, and the policy
Speaker 3: that Beijing put in place with those severe lockdowns. So
Speaker 3: let's begin with a big picture here. How well has
Speaker 3: the aviation industry in Asia been able to recover?
Speaker 6: The aviation industry in Asia has been able to rebound
Speaker 6: only as soon as the borders have reopened, so we've
Speaker 6: seen a bit of Asia being a bit of a
Speaker 6: lagger to the rest of the wide world. However, we
Speaker 6: are seeing travel demand pick up very very quickly, and
Speaker 6: many many markets are getting ever closer to that magical
Speaker 6: of exceeding their pre COVID levels. We see China and
Speaker 6: particularly the Wonder the world's biggest travel markets very much
Speaker 6: see brisk business onto domestic front, but on the international
Speaker 6: side of things, flight activities less than half of pre
Speaker 6: COVID levels, so that's still very much struggle. When you
Speaker 6: think about Chinese outbound travel being a huge driver of
Speaker 6: tourism and spend for many many markets, including Southeast Asia
Speaker 6: and wider parts of Asia in general, that's a real
Speaker 6: problem where many countries are banking on Chinese travel and
Speaker 6: spend to help their economic recovery.
Speaker 3: Even a regional trip I'd say from Shanghai to Tokyo,
Speaker 3: how is that route performing.
Speaker 6: In good times it would be very very brisk. But
Speaker 6: geopolitical tensions, general strife between the likes of China, Career,
Speaker 6: Japan and other certain markets means flight levels are really
Speaker 6: back nowhere near to the levels it's saw during pre COVID.
Speaker 6: And also as a result, visa access for travel is
Speaker 6: also a huge hurdle. So it's a really problematic part
Speaker 6: of the picture where you don't have as many flights
Speaker 6: and you find it very hard if you're looking to
Speaker 6: travel to outbound into the likes of North Asia that
Speaker 6: you can't really get hold of a visa. So it's
Speaker 6: a problem holding holding things back.
Speaker 3: What do we know about how well these airlines are
Speaker 3: equipped to handle any sort of volume. Are the staffing
Speaker 3: level sufficient right now?
Speaker 6: Staffing levels in Asia have been okay compared to Europe
Speaker 6: the US, where they laid off so many more workers.
Speaker 6: Asia hasn't fared as badly, and we saw quite a
Speaker 6: few airlines who needed to keep all of their staff
Speaker 6: for whatever reason, they had better support from the government
Speaker 6: or like in the case, we saw cargo really propping
Speaker 6: up the airline industry and a lot of the cargo
Speaker 6: cargo activity been driven out of Asia and that very
Speaker 6: much saved a lot of the airlines here in Asia,
Speaker 6: so they didn't have to cut as much and therefore
Speaker 6: they've got a slightly better picture in terms of staffing,
Speaker 6: although by no means it's out of the woods per se.
Speaker 6: You you still see some markets, particularly Hong Kong, which
Speaker 6: had been closed for over three years, they still find
Speaker 6: out a struggle to hire and revive its aviation industry.
Speaker 3: Danny, thank you so much for being with us and
Speaker 3: helping set up Hong Kong Aviation Day and really a
Speaker 3: good discussion about a lot of the trends that were
Speaker 3: seeing unfold across the aviation industry in the Asia Pacific.
Speaker 3: Danny Lee, Bloomberg Asia Transport Reporter. Joining from Hong Kong.
Speaker 3: I'm Doug Prisner. You can join Brian Curtison myself weekdays
Speaker 3: here for Bloomberg Day Break Asia, beginning at six am
Speaker 3: in Hong Kong six pm on Wall Street. Tom.
Speaker 1: Thanks Doug, and that does it for this edition of
Speaker 1: Bloomberg Daybreak weekend. Join us again Monday morning at five
Speaker 1: am Wall Street Time for the latest on markets overseas,
Speaker 1: the news you need to start your day. I'm Tom Busby.
Speaker 1: Stay with us. Top stories and global business headlines are
Speaker 1: coming up right now.