Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world, and straight ahead on the program,
Speaker 1: tech stocks and focus again because of Apple's Worldwide Developers Conference.
Speaker 1: I'm Tom Busby in New York.
Speaker 2: I'm Caroline Hepkee here in London, where we're looking ahead
Speaker 2: to Rishisu Nak's first White House visit as Prime Minister.
Speaker 3: I'm Brian Curtis in Hong Kong. Capex is jumping in Japan.
Speaker 3: The tourists are coming in, but all is not well.
Speaker 4: I'm Kaylee Lyons in Washington, where we're gearing up for
Speaker 4: two new entrants in the race for the Republican nomination
Speaker 4: in twenty twenty four.
Speaker 5: That's all straight ahead on Bloomberg day Break Weekend on
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Speaker 1: Good day to you. I'm Tom Busby, and we begin
Speaker 1: today's program with Apple's upcoming Worldwide Developers Conference at it's
Speaker 1: Cooper Tino, California headquarters. And this one could be a
Speaker 1: very important one for Apple executives and Apple investors. And
Speaker 1: joining me to talk about why is Bloomberg's Mark German
Speaker 1: our report around all things Apple. Mark, Thanks for joining us, Thanks.
Speaker 6: For having me. Yeah, this is certainly probably going to
Speaker 6: be Apple's biggest launch event in the last decade, certainly
Speaker 6: since the Apple Watch was announced in twenty fourteen. This
Speaker 6: is their annual developer conference, typically software focused, this time
Speaker 6: first major new products in a decade, major software updates
Speaker 6: across the board, as well as new max Well.
Speaker 1: It's a laundry list of new things, but let's start
Speaker 1: with what I think will garner the biggest headlines. That
Speaker 1: mixed reality headset, the first major new product category since
Speaker 1: the Watch right almost a decade.
Speaker 6: Right, that's certainly going to be the entree, so to speak,
Speaker 6: of the launch and the focus of Apple for the
Speaker 6: foreseeable future. This is Apple trying to create an XR
Speaker 6: or a mixed reality market. The device is going to
Speaker 6: be the most premium, high end and powerful headset on
Speaker 6: the market. It's going to cost roughly three thousand dollars.
Speaker 6: Apple is not going to be profiting off this thing.
Speaker 6: That's how expensive the technologies that go into it are.
Speaker 6: It's going to use metal, carbon, fiber, and glass. You're
Speaker 6: going to be able to do everything you would do
Speaker 6: in a Mac but in a virtual three D space.
Speaker 6: You're going to be able to move in between a
Speaker 6: virtual reality world in an augmented reality world, which means
Speaker 6: at one point you could be fully enclosed you see
Speaker 6: nothing but the content in front of you. At other points,
Speaker 6: you'll flick a dial on the top right of the headset,
Speaker 6: similar to the dial on the side of the Apple Watch.
Speaker 6: It'll turn on these powerful cameras. There's about a dozen
Speaker 6: of them outside, and you'll essentially see what's in front
Speaker 6: of you, just like you're wearing normal glasses or wearing
Speaker 6: nothing on your face. You'll be able to do productivity, messaging, gaming,
Speaker 6: a virtual reac version of FaceTime. So it's going to
Speaker 6: be pretty wide ranging, and this is Apple's big entry
Speaker 6: into the space.
Speaker 1: Now, a sidebar before we continue on Apple is just
Speaker 1: this past week Meta announcing a five hundred dollars mixed
Speaker 1: reality headset. So trying to take some thunder away from.
Speaker 7: Apple, do you think certainly?
Speaker 6: I've used the Quest three, and at five hundred dollars,
Speaker 6: it's going to be about a fifth at the price
Speaker 6: of Apple's product, but I think it's more than a
Speaker 6: fifth as good. I think it's quite impressive. The video
Speaker 6: pass through mode they're going to be using on this device.
Speaker 6: It's not going to be as good as Apples, but
Speaker 6: it's much better than the existing Meta headset, the Quest
Speaker 6: two in the market that launched a couple of years ago.
Speaker 6: So I certainly think what you're seeing here is a
Speaker 6: potential rematch between Apple and another player instead of Google.
Speaker 6: This time it's Meta in terms of Apple wanting to
Speaker 6: own the high end of the market and Meta owning
Speaker 6: the loan in the market, just like Apple owns high
Speaker 6: end of the phone market and Google owns the low end.
Speaker 6: Apple and the high end of the XR market Metal
Speaker 6: on the low end, and so Meta's really replaced Google
Speaker 6: as the one at the frontier here.
Speaker 1: Yeah, and when worlds collide, Well, let's go back to
Speaker 1: some of the other exciting new products and updates that
Speaker 1: Apple we think Apple is going to have, And let's
Speaker 1: start with the new XROS operating system, so.
Speaker 6: That XROS operating system is a version of iOS that
Speaker 6: is going to run on this mixed reality headset. So
Speaker 6: they've created a whole new operating system. They're pushing for
Speaker 6: a whole new app store and an app ecosystem to
Speaker 6: run on the setset.
Speaker 1: And continuing on operating systems, there's a new iOS seventeen,
Speaker 1: an iPad OS seventeen, and a macOS fourteen.
Speaker 6: So macOS fourteen that's going to be the new software
Speaker 6: update that runs on the Mac. Right not expecting major
Speaker 6: changes there. iPad OS seventeen you'll see some minor improvements
Speaker 6: the multitasking. You'll also see the health app on the
Speaker 6: iPad for the first time. iOS seventeen you'll see a
Speaker 6: new journaling app so you can journal different locations you're
Speaker 6: at or different activities are doing and share it with friends.
Speaker 6: There'll be updates to the wallet app on the device
Speaker 6: as well, in a new smart home feature that can
Speaker 6: turn the iPhone if you rotate it and put it
Speaker 6: in lock mode, into a smart home display so to speak.
Speaker 6: So quite a few little enhancements across the board on
Speaker 6: the iPhone and the iPad and the Mac as well,
Speaker 6: and then you'll also see Watch OS ten that's going
Speaker 6: to be a pretty big update to the Apple Watch software,
Speaker 6: will bring widgets to the forefront of the operating system.
Speaker 6: I think that will be pretty interesting to consumers as well.
Speaker 1: And as for hardware, not just the mixed reality headset,
Speaker 1: but also new MacBooks.
Speaker 6: There's going to be multiple new Macs. I'm expecting a
Speaker 6: new version of the MacBook Air, a fifteen inch MacBook
Speaker 6: Air with an M two chip, so it'll operate similarly
Speaker 6: and look the same as the thirteen inch Air introduced
Speaker 6: last year at WWDC, but obviously it'll be bigger with
Speaker 6: that bigger fifteen inch panel. That's something that people have
Speaker 6: been clamoring for for over a decade, and so Apple
Speaker 6: is going to be delivering there. They'll also see the
Speaker 6: company's first M two Ultra chip. That's an extremely high
Speaker 6: end chip with up to seventy six graphics scores, essentially
Speaker 6: ten x what you're getting on a low end Mac
Speaker 6: right a low in MacBook Air, and that machine will
Speaker 6: be its highest performing chip for machines like the Mac
Speaker 6: Studio and potentially the Mac Pro. So really something for
Speaker 6: everyone across the board at this launch.
Speaker 5: Wow. Wow.
Speaker 1: Now, and preceding this week's upcoming conference, last week, Apple
Speaker 1: announced the plans for its retail stores and a big expansion.
Speaker 1: What did you tell us more about that?
Speaker 6: Yes, so Apple actually didn't announce these stores. We're reporting
Speaker 6: on these stores based on my insight sources. Apple is
Speaker 6: proposing or working on or developing over fifty new stores
Speaker 6: for opening across the next four years, including new stores
Speaker 6: in China, India, stores in Detroit and Miami, new store
Speaker 6: in southern California and Orange County, and upgrade to its
Speaker 6: Opera store in Paris that's a very famous shopping district.
Speaker 6: New stores in Canada, across Europe, a new store in
Speaker 6: Abu Dhabi, a relocated store in Perth, Australia. So really
Speaker 6: an across the board expansion on the retail segment.
Speaker 5: Got it? Got it? Wow?
Speaker 1: Now let's talk a little bit. Let's shift gears talk
Speaker 1: about artificial intelligence chat GPT, the latest technological tool for
Speaker 1: so many companies, so many consumers. AI getting Wall Street
Speaker 1: excited too, and Apple CEO Tim Cook says it has
Speaker 1: its risks, but Apple is all in on artificial intelligence.
Speaker 1: Let's go a listen.
Speaker 8: I do think it's very important to be delivered and
Speaker 8: thoughtful in how you approach these things. And there's a
Speaker 8: number of issues that need to be sorted, as is
Speaker 8: being talked about in a number of different places. But
Speaker 8: the potential is certainly very interesting. And we've obviously made
Speaker 8: enormous progress integrating AI and machine learning throughout our ecosystem,
Speaker 8: and we've weaved it into products and features for many years.
Speaker 5: Well.
Speaker 1: Based on what we heard Tim Cook say last week,
Speaker 1: how does AI fit into Apple's future?
Speaker 3: Mark?
Speaker 6: You know, I think AI or applied AI as a
Speaker 6: call it is very key to the company's future. I
Speaker 6: think this is certainly something that they're trying to implement
Speaker 6: across their product lines, from taking a picture to using
Speaker 6: handwa washed detection on the watch, to using some of
Speaker 6: the health features on the iPhone and the iPad. Right,
Speaker 6: But I don't think that we're to expect a major
Speaker 6: chat GPT like product from Apple or an overhaul of
Speaker 6: Siri this year. I think that's something that's probably going
Speaker 6: to come next year or the year after at the earliest.
Speaker 1: Now, all the things we talked about today that looking
Speaker 1: forward to this coming week, let's talk about Apple's big
Speaker 1: money maker, the iPhone, and what does all this mean
Speaker 1: for the iPhone? Is it you know? Is it moving
Speaker 1: it forward? Are we expecting more from the iPhone this
Speaker 1: year or soon?
Speaker 6: So there'll be a pretty big iPhone hardware update in
Speaker 6: the fall. That's the iPhone fifteen line one. Big change there.
Speaker 6: On the pro models, they're going to be moving from
Speaker 6: a stainless steel and glass frame to more of a
Speaker 6: titanium frame, which I think is going to be quite interesting,
Speaker 6: make the phone a little bit more durable, potentially make
Speaker 6: it lighter as well, and so I think that new
Speaker 6: design is something people are going to be looking forward to.
Speaker 6: On the highest end model with the biggest screen, you're
Speaker 6: going to have what is known as a periscope camera.
Speaker 6: What that is going to do is allow the camera
Speaker 6: to have a wider range of zoom, but optical zoom,
Speaker 6: which means that the camera itself, the scope is actually
Speaker 6: longer and twisted in the frame, and that actually can
Speaker 6: get a much more detailed picture than the digital zoom
Speaker 6: that the iPhone on other phones today really rely on
Speaker 6: for that wide range of zoom. So big change is there.
Speaker 6: And then on the lower end iPhones, they're going to
Speaker 6: add the dynamic island, which is that new pill shape
Speaker 6: at the top where you can control some of your alerts, identifications,
Speaker 6: and your music and maps. On the high end iPhones today,
Speaker 6: that'll be coming down the line, as well as some
Speaker 6: of the camera upgrades that you saw on the high
Speaker 6: end iPhones last year coming down the range as well.
Speaker 6: And also on the high end phones, you'll see a
Speaker 6: faster processor that'll be like the A seventeen processor, whereas
Speaker 6: the lower niphones will get last year's pro processor. So
Speaker 6: that's going to be a year of a year upgrade
Speaker 6: as well.
Speaker 5: Well.
Speaker 1: There is a lot to look forward to this week
Speaker 1: and in the near future. And thank you Mark. That
Speaker 1: was Bloomberg's Apple reporter Mark German. And coming up on
Speaker 1: Bloomberg day Break weekend, British Prime Minister Rishi Sunak's big visit.
Speaker 7: To the US.
Speaker 1: I'm Tom buzby you and this is Bloomberg. This is
Speaker 1: Bloomberg day Break weekend, our globalk ahead of the top
Speaker 1: stories for investors in the coming week. I'm Tom Busby
Speaker 1: in New York. Up later in our program, a growing
Speaker 1: number of Republicans challenging former President Trump's reelection efforts. But first,
Speaker 1: the British Prime Minister gets his first White House meeting
Speaker 1: with President Biden in the coming week, and for more,
Speaker 1: let's head to London and bring in Bloomberg Daybreak europe
Speaker 1: Banker Caroline Hepger Tom Rischie.
Speaker 2: Sunak will travel to Washington for talks aimed at enhancing
Speaker 2: cooperation and coordination between the UK and US on the
Speaker 2: economic challenges that will define our future, so we're told,
Speaker 2: and Bloomberg's UK Government editor Alex Morales will be on
Speaker 2: the plane with the PM.
Speaker 9: He joins me. Now, so Sunak's.
Speaker 2: Visit to the States, I mean it's not going to
Speaker 2: deliver this long touted, hope for but unlikely trade deal
Speaker 2: between the UK and US.
Speaker 10: Well in a short answer, No, I mean, first of all,
Speaker 10: it's important to say it's his first visit to the
Speaker 10: White House as Prime Minister. I mean he's met Joe
Speaker 10: Biden a number of times already. I think the first
Speaker 10: time was back in Bali at the G twenty, but
Speaker 10: he also met in San Diego earlier in this year
Speaker 10: for the Big Orchest deal, and then more recently in
Speaker 10: Northern Ireland. And I guess they would have also spoken
Speaker 10: at Hiroshima, but there was no official Bilab that's the
Speaker 10: g Sevon meeting in May. But yes, he's visiting to
Speaker 10: the White House. Number ten have been pretty clear they're
Speaker 10: not going to bring up the topic of a trade deal,
Speaker 10: and that's largely because the Biden administration has really made
Speaker 10: it pretty clear that it's not a priority for them. No.
Speaker 2: Indeed, I mean the UK has tried to secure these
Speaker 2: deals with individual states which have you know, sort of
Speaker 2: tried to ramp up ties between the UK and the
Speaker 2: US on that basis. I mean, it's interesting, isn't it
Speaker 2: that this will be the first White House visit And
Speaker 2: you mentioned north in Ireland. I mean, that was the
Speaker 2: last time that we saw President Biden here. He was
Speaker 2: in northern Ireland and in the Republic of Ireland. Is
Speaker 2: there still friction do you think on that issue?
Speaker 10: Well, the White House pushed back against the notion that
Speaker 10: Biden doesn't really like Britain. But what was fairly clear
Speaker 10: from his visit is that when it comes to there's
Speaker 10: a lot of warmth towards Ireland and much less warmth
Speaker 10: towards the United Kingdom from the President. And that even
Speaker 10: became clearer when he returned and he gave a briefing
Speaker 10: and it sort of surfaced in the transcript. He'd said
Speaker 10: he'd had to come over here to make sure the
Speaker 10: Brits didn't screw around in Northern Ireland. So really, you know,
Speaker 10: he likes to pick up his Irish heritage, and he
Speaker 10: tried to flick a bit at his British heritage when
Speaker 10: he was in Northern Ireland, and he had some English
Speaker 10: heritage as well that he sort of emphasized, and that
Speaker 10: was sort of a bone to the Brits who think
Speaker 10: that maybe he doesn't quite like us very much. But yeah,
Speaker 10: there seems to be a little bit of friction.
Speaker 2: Okay, So that kind of point perhaps still of some contention.
Speaker 2: How does the UK then respond to the Inflation Reduction Act?
Speaker 2: Do you think that that is something that is going
Speaker 2: to come up in these talks that are going to
Speaker 2: be about kind of economics and about policy and about
Speaker 2: you know, the relationship between the US and the UK.
Speaker 2: The Inflation Reduction Act is simply huge in terms of
Speaker 2: the subsidies that gives businesses to move, you know, towards
Speaker 2: that energy and green transition. What do you think Sunac's
Speaker 2: message is going to be on that?
Speaker 10: Well, I'm sure so what wants to make sure that
Speaker 10: I mean, as you said, it's a huge package, is
Speaker 10: what three hundred and sixty nine billion dollars of subsidies
Speaker 10: and tax breaks and just to sort of wind back.
Speaker 10: The big concern amongst British companies is that it's just
Speaker 10: it attracts investment to the United States that would otherwise
Speaker 10: have gone to Britain. So you know there's been some
Speaker 10: concern amongst ministers. When he was Business actually back in January,
Speaker 10: Grant Shapps called it dangerous and Jeremy Hunt has said
Speaker 10: that while he doesn't who's the chancellor obviously has said
Speaker 10: that while he doesn't want to a subsidy race, he's
Speaker 10: sort of hinted in recent weeks that the UK is
Speaker 10: actually looking at some sort of subsidy response. I think
Speaker 10: his exact words with subsidies have a role and that
Speaker 10: Britain will make sure that we remain competitive. And he's
Speaker 10: promised the UK response to both the US measures and
Speaker 10: let's not forget that the EU launched a package of
Speaker 10: messages sort of to counter the US effect. He's promised
Speaker 10: a response by the full because obviously the danger is
Speaker 10: that the UK ends up getting squeezed between these two
Speaker 10: big powers and losing out on investment in both directions.
Speaker 2: Yeah, on the foreign policy points, then Ukraine, Russia, China,
Speaker 2: and the UK has been close to the US in
Speaker 2: the support for Ukraine in terms of, you know, giving
Speaker 2: weapons to Vladimir Zelenski. How do you think that the
Speaker 2: discussions will be handled in terms of moving forwards when
Speaker 2: it comes to the war in Europe? But also the
Speaker 2: US is rhetoric increasingly tough rhetoric and actions against China.
Speaker 10: Well. On Ukraine, I mean, it's almost arguable that the
Speaker 10: UK has been ahead of the US and we were
Speaker 10: the first country to provide main battle tanks to Ukraine,
Speaker 10: and I think when now the country that's provided the
Speaker 10: longest range missiles.
Speaker 5: To the US.
Speaker 10: But I think largely the two countries are in lockstep
Speaker 10: on that, and certainly Biden's been very supportive of Ukraine
Speaker 10: in a way that perhaps this publican predecessor might not
Speaker 10: have been. And on China again, I think I think
Speaker 10: there's a sort of similarity in the language. Both both
Speaker 10: countries are wary that China is a very important economic
Speaker 10: character and that they need to maintain an economic relationship
Speaker 10: with China, but they're also wary of China's growing sort
Speaker 10: of nationalism and the danger it poses in the Indo Pacific,
Speaker 10: and perhaps the visit that Sunak made to the US
Speaker 10: earlier this year to San Diego, where the US, the
Speaker 10: UK and Australia sort of fleshed out the details behind
Speaker 10: their orchest packs. That's that's an indication of how seriously
Speaker 10: they hit the China threat. It's sort of a big,
Speaker 10: multi billion dollar plan for a new feat feet of
Speaker 10: nuclear powered submarines to patrol that that region.
Speaker 2: Yeah, absolutely, and the White House has pointed to this
Speaker 2: as an area for discussion, you know, reviewing a range
Speaker 2: of global issues, is how they put it.
Speaker 9: I wonder whether.
Speaker 2: There are areas for photo ops but also slip ups.
Speaker 2: That's always something that we are kind of keenly aware of.
Speaker 2: I mean, it is a big, big moment, isn't it.
Speaker 2: He's gonna arrive on the seventh of June, then he'll
Speaker 2: be in the White House the following day, and then
Speaker 2: he's meant to also be meeting congressional leaders.
Speaker 9: You're going to be on the plane with him.
Speaker 2: Do you think there'll be a chance to ask him
Speaker 2: some questions, to pose some questions to Rishie Sunak. Are
Speaker 2: there any kind of he's under pressure politically at home? Surely,
Speaker 2: isn't he on quite a number of fronts?
Speaker 10: Yeah, I mean certainly. I mean what we don't know
Speaker 10: is if there's going to be a press converty yet.
Speaker 10: But on the plane the Prime Minister will normally come
Speaker 10: back and speaking what's called a huddle. I think the
Speaker 10: photos and our legendary, so you know, each reporter will
Speaker 10: get probably one question to the Prime Minister and then
Speaker 10: you know we'll ask him about a range of issues
Speaker 10: and it won't just be about the US visit. So
Speaker 10: I guess there's the chance that he says something on
Speaker 10: the plane referring to its domestic issues that you know
Speaker 10: that are that are preoccupying the British media at the moment.
Speaker 10: In terms of in terms of potential for embarrassment, I mean,
Speaker 10: Richie sec is a pretty assured operator. It's it would
Speaker 10: be unusual for him to misspeak. But you know, on
Speaker 10: on on any international trip, there's the potential for something.
Speaker 2: To get wrong, yeah, or something to peque our interests.
Speaker 2: I know you'll be there with your question for the PM.
Speaker 2: Uh and Alex thank you so much for being with us.
Speaker 2: Bloomberg's UK Government editor Alex Morales, of course, who will
Speaker 2: be in Washington, DC and following the movements of the
Speaker 2: British Prime Minister Richie Sunac on his visit at State Side.
Speaker 2: I'm Caroline Hepgar here in London. You can catch us
Speaker 2: every weekday morning here for Bloomberg Daybreak you're at beginning
Speaker 2: at six am in London.
Speaker 9: That's one am on Wall Street.
Speaker 1: Tom beg you, Caroline. That was Bloomberg Daybreak Europe Post
Speaker 1: Caroline Hepgar and coming up on Bloomberg day Break weekend,
Speaker 1: we talk about Japan's economic recovery and preview this week's
Speaker 1: GDP report. I'm Tom Busby and this is Bloomberg.
Speaker 11: Broadcasting live from the Bloomberg it a active Brokers studio
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Speaker 11: Bloomberg Radio dot Com. This is Bloomberg Daybreak 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: And this week we get some important economic data coming
Speaker 1: out of Japan, including the latest GDP report. For more,
Speaker 1: let's go to Hong Kong and Bloomberg day Break Asia
Speaker 1: host Brian Curtis.
Speaker 3: Tom, we look at some of the cross currents in
Speaker 3: the Japanese economy as we look forward to the next
Speaker 3: reading on GDP. Good time to talk about the Japanese
Speaker 3: economy now. Japan's businesses increased spending for the fourth straight quarter.
Speaker 3: That was a sign of the country's recovery from the pandemic. However,
Speaker 3: a surprise drop in industrial production does suggest a week's
Speaker 3: start to the second quarter, and it raises the risk
Speaker 3: that the bounce in GDP that we saw in the
Speaker 3: first quarter could lose some vigor in the second quarter.
Speaker 3: Paul Jackson, Bloomberg's Japan, Korea Economy and Government editor for Asia,
Speaker 3: joins us So.
Speaker 9: Paul.
Speaker 3: We note that the capex number was pretty strong, up
Speaker 3: eleven percent year on year, but the factory output number disappointing.
Speaker 3: What are we expecting for this next reading on GDP
Speaker 3: in the coming week.
Speaker 12: First of all, we've the reading all first quarter GDP
Speaker 12: should still be a positive. I think we should see
Speaker 12: signs that there is this moderate recovery coming through, helped
Speaker 12: and driven by this influx of foreign tourists coming in
Speaker 12: and continued consumer spending, lifting of more pandemic measures. And
Speaker 12: this capex figure shows that companies are still optimistic and
Speaker 12: buoyant that the recovery will continue for now. And of
Speaker 12: course they need to invest in more equipment because they've
Speaker 12: got this labor shortage within the country and now with
Speaker 12: all these people you know, flooding back to visit Japan,
Speaker 12: especially in the service sector, they need to ramp up
Speaker 12: investment so that they can deal with more people. So
Speaker 12: I think that when we get the revised GDP figures
Speaker 12: through next week, they should still be positive and appointing
Speaker 12: to the moderate recovery. Now where we go from here,
Speaker 12: As you've noticed those production figures for the start of
Speaker 12: the second quarter were disappointing. We do have some dark
Speaker 12: clouds on the horizon. And another thing to look at
Speaker 12: is those poor figures that came out of China yesterday
Speaker 12: showing that the recovery there isn't panning out in the
Speaker 12: way people had hoped. So there are dark clouds, but
Speaker 12: it's still a pretty good environment for Prime Minister Forumyo
Speaker 12: Kishida to even consider an early election.
Speaker 3: Yeah, I was curious about to what degree Japan could
Speaker 3: be benefiting from some of the weakness that we've seen
Speaker 3: in China. I mean, on the one hand, obviously a
Speaker 3: week China is not good for Japanese exports to the country. However,
Speaker 3: in terms of attracting investment and travelers, and you already
Speaker 3: mentioned that inbound tourism is doing pretty well. In a sense,
Speaker 3: is Japan benefiting from some of China's troubles, I think.
Speaker 12: On the whole, if you look at it, net, I
Speaker 12: think it is a minus because, like most of the world,
Speaker 12: were very dependent on China as a market and as
Speaker 12: a producer in terms of the inbound actually the biggest
Speaker 12: spenders in Japan are from China. So some economists are saying, hey, look,
Speaker 12: you know the moment, we've got a great boost to
Speaker 12: Japan's economy from the inbound spending, and we still don't
Speaker 12: have the Chinese tourists coming back yet. They will eventually
Speaker 12: start coming, and that will be another driver for Japan.
Speaker 12: So in that sense, some of the positives from China's
Speaker 12: situation have yet to feed in.
Speaker 3: So China's a big challenge, and you mentioned that there
Speaker 3: are plenty of challenges. What else.
Speaker 12: Inflation is by international standards not that high, just above
Speaker 12: three percent in Japan, but that's kind of historically high
Speaker 12: for Japan, the post abode of deflation and falling prices,
Speaker 12: so you know, at some point economists are expecting the
Speaker 12: kind of post pandemic spending splurge. To then segue into
Speaker 12: wait a minute, you know, real wages are falling, prices
Speaker 12: are going up, We've actually got less spending power, and
Speaker 12: that you know, spending, consumer spending in real terms might
Speaker 12: start to fall and then weigh on the economy. That's
Speaker 12: obviously a concern for both the Prime Minister and for
Speaker 12: the Bank of Japan. Bank of Japan has been trying
Speaker 12: to generate stable inflation for more than a decade. You
Speaker 12: would think they've achieved the mission over three percent, right,
Speaker 12: because their targets two percent, But they're still sticking to
Speaker 12: this view that what we've got here is a cost
Speaker 12: push kind of transitory inflation phenomenon. The rest of the
Speaker 12: world thinks otherwise. But in Japan, they're looking for more
Speaker 12: sign of stronger wage growth that could support some kind
Speaker 12: of demand driven inflation over a longer period of time,
Speaker 12: and that has been the long term goal of Japanese policymakers.
Speaker 3: And the week end is a double edged sword. It's
Speaker 3: good for Japanese businesses and I'm sure they are quite
Speaker 3: comfortable with the yen at one thirty nine. However, it
Speaker 3: does make imports and prices for the average Japanese consumer
Speaker 3: very difficult. How does that weigh up when you talk
Speaker 3: to people.
Speaker 12: In Japan, Well, I think if you go back to
Speaker 12: last year when we had the very quick slide in
Speaker 12: the end down to as tho as one five to
Speaker 12: two against the dollar, I think there was kind of
Speaker 12: sense of panic, and combined with the sudden surge in
Speaker 12: prices and import prices, there was a lot of concern.
Speaker 12: And obviously for those you know, globally orientated companies or
Speaker 12: the exporters, this is great. This is a kind of
Speaker 12: instant profit margin boost if the currency is week so
Speaker 12: at the moment where the currency is, those global companies
Speaker 12: and outward facing companies are in a good position. The
Speaker 12: domestic companies especially those that import materials and produce for
Speaker 12: a domestic market. It's more of a squeeze for them.
Speaker 12: But hey, look at the stock market. We are at
Speaker 12: the highs highest level since since nineteen ninety, and that
Speaker 12: suggests that company profits are benefiting.
Speaker 3: I'm curious about the third arrow of abinomics reform, and
Speaker 3: I want to know, you know, across the economy, women
Speaker 3: in more powerful positions and playing a bigger role in
Speaker 3: the economy, and so many of the aspects of reform,
Speaker 3: corporate reform, how much progress has been made.
Speaker 5: Well.
Speaker 12: I think this is kind of one of the unfin
Speaker 12: unfinished targets of abinomics. The growth program that was launched
Speaker 12: in twenty thirteen, so a decade ago. We had flexible
Speaker 12: fiscal spending, aggressive monetary policy. All helped to give a
Speaker 12: new burst of life into Japan's economy some time. But
Speaker 12: this third arrow in the quiver of that growth strategy
Speaker 12: didn't really get a great deal of traction. We have
Speaker 12: seen some reforms on corporate governance, We have seen some
Speaker 12: progress there. The thing is is obviously Sins. The former
Speaker 12: Prime minister who stepped down and was then assassinated, is
Speaker 12: no longer in power, and his faction has less sway
Speaker 12: over what might be the primeister might be doing. Under
Speaker 12: from Kishida, he's been emphasizing the idea of new capitalism.
Speaker 12: It's kind of like a new deal for how we
Speaker 12: run things and what is acceptable for companies. One of
Speaker 12: the key things he's been focusing on is the idea
Speaker 12: that needs to be kind of rethink of the distribution
Speaker 12: of income. Maybe shareholders should get a little bit less
Speaker 12: focus after under Abbe premise to Abbe getting a lot
Speaker 12: of attention. Maybe your average worker should get a bit
Speaker 12: more in their pay packet. That's the kind of message
Speaker 12: that would feeding well to an electorate that is struggling
Speaker 12: with inflation at the moment.
Speaker 3: Paul, thank you very much for joining us. Paul Jackson,
Speaker 3: Bloomberg Japan Economy and Government Editor for Asia. I'm Brian Curtis,
Speaker 3: along with Doug Krisner. You can catch us every weekday
Speaker 3: here for Bloomberg Daybreak Asia, beginning at six am in
Speaker 3: Hong Kong and six pm on Wall Street.
Speaker 1: Tom, thank you, Brian, and coming up here on Bloomberg
Speaker 1: day Break weekend. More Republicans are challenging former President Trump's
Speaker 1: re election dreams. I'm Tom Busby And this is Bloomberg.
Speaker 1: This is Bloomberg day Break weekend, our global look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Some big announcements expected
Speaker 1: this week in the Republican race to be the party's
Speaker 1: nominee in twenty twenty four. And for more, let's head
Speaker 1: to our Bloomberg ninety nine to one newsroom in Washington
Speaker 1: and Bloomberg Sound On co host Kaylee Lines.
Speaker 4: Yeah, Tom, the Republican primary field is about to get
Speaker 4: even bigger week. At least two more candidates are set
Speaker 4: to formally throw their hats in the ring for the
Speaker 4: twenty twenty four GOP nomination. The first we'll come on Tuesday,
Speaker 4: when former New Jersey Governor Chris Christy is set to
Speaker 4: announce at a town hall in New Hampshire. And then
Speaker 4: just one day after, on Wednesday, the announcement will come
Speaker 4: from former Vice President Mike Pence, who will do it
Speaker 4: from Iowa. Joining me now to look ahead to both
Speaker 4: of these events is Gregory Cordy, who covers US politics
Speaker 4: for US here at Bloomberg. So, Gregory, if we could
Speaker 4: just start with Chris Christy, because he goes first. He's
Speaker 4: tried this before in twenty sixteen, and that was unsuccessful,
Speaker 4: as we know, why does he think he could beat
Speaker 4: Trump this time around?
Speaker 7: Yeah, Chris Christy is the first of Donald Trump's twenty
Speaker 7: sixteen rivals to re enter the fray, and he kind
Speaker 7: of harkens back to a Republican party that's pre Trump,
Speaker 7: a little bit more establishment. But as you point out,
Speaker 7: the party has changed quite a bit. It's become Trump's
Speaker 7: Republican Party. And so that's going to be the challenge
Speaker 7: for Chris Christy to appeal to those voters as someone
Speaker 7: who is anti Trump. He would be quick to point
Speaker 7: out that he's not never Trump. He was on board
Speaker 7: with Trump in twenty sixteen. He dropped out of the
Speaker 7: race after New Hampshire endorsed Trump. Was chairman of Trump's
Speaker 7: Transition Committee, helped Trump with debates, chaired his Opioid Commission,
Speaker 7: and was pretty much on board through almost all of
Speaker 7: the Trump administration until after Trump refused to concede. So
Speaker 7: Chris Christie's theory of the case is that he's the
Speaker 7: one guy who can debate Trump. He prepared Trump for
Speaker 7: debates against Hillary Clinton and Joe Biden, he's debated Trump
Speaker 7: in the twenty sixteen debates. He knows Trump as a
Speaker 7: debater better than anybody else who will get on that
Speaker 7: stage when the Republicans have their first debate in August
Speaker 7: and Milwaukee, and so he's counting on being able to
Speaker 7: deliver some kind of knockout punch, he says. The other
Speaker 7: opponents in the race, the other challengers to Trump, have
Speaker 7: been sort of a little bit too delicate in how
Speaker 7: they deal with Trump. He he says, he can engage
Speaker 7: Trump head on and maybe knock him off his perch.
Speaker 7: But yeah, it's gonna be a big challenge because the
Speaker 7: lead that Trump has right now is just so far
Speaker 7: ahead of all the competition. It's going to take some
Speaker 7: doing to get Trump down off that perch.
Speaker 4: Well, and of course, another person who is going to
Speaker 4: run against Trump is a man who served him as
Speaker 4: Vice president, Mike Pence. Does that just make him a
Speaker 4: villain to Trump's base that he has such a tight
Speaker 4: hold on.
Speaker 7: Still, Yeah, that's the problem that a lot of Republicans
Speaker 7: have is how to go after Trump without alienating Trump's base,
Speaker 7: And Mike Pence has a particular problem with that since
Speaker 7: to the more extreme members of the Trump base. The
Speaker 7: people who marched on the Capitol on January sixth, they
Speaker 7: were chanting, hang Mike Pence, and former President Trump has
Speaker 7: done very little to disabuse people of the notion that
Speaker 7: Mike Pence is a traitor to their cause. So that's
Speaker 7: a challenge that I think Mike Pen's acknowlogist that he's
Speaker 7: going to have to appeal to that part of the
Speaker 7: Republican Party on these constitutional principles. He was bound by
Speaker 7: the Constitution to do what he did in helping to
Speaker 7: certify Joe Biden's win in the electoral College. But yeah,
Speaker 7: that's the challenge that not just Pence and Christy, but
Speaker 7: every Republican has, is how to deal with that Trump problem.
Speaker 4: It's going to be a long primary season, and I
Speaker 4: trust you'll have it covered for us. Thank you so
Speaker 4: much to Gregory Cordy, who covers US politics for us
Speaker 4: here at Bloomberg and Tom I'll send it back to you.
Speaker 5: Thank you.
Speaker 1: Kaylee. That was Bloomberg Sound On co host Kaylee Lines
Speaker 1: reporting from our Bloomberg ninety nine one newsroom in Washington,
Speaker 1: and you can hear sound on weekdays one to three
Speaker 1: pm on Bloomberg Radio and that does it for this
Speaker 1: edition of Bloomberg day Break Weekend. Join us again Monday
Speaker 1: morning at five am Wall Street Time for the latest
Speaker 1: on markets overseas and the news you need to start
Speaker 1: your day. I'm Tom Buzzby. Stay with us. Top stories
Speaker 1: and global business headlines are coming up right now.