1 00:00:00,240 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,720 --> 00:00:13,200 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,200 --> 00:00:15,840 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:15,840 --> 00:00:18,119 Speaker 2: all around the world. Straight ahead on the program, and 5 00:00:18,160 --> 00:00:20,680 Speaker 2: look ahead to the latest on the US labor market 6 00:00:20,720 --> 00:00:24,159 Speaker 2: how that could impact FED policy. I'm Tom Busby in 7 00:00:24,239 --> 00:00:24,720 Speaker 2: New York. 8 00:00:25,040 --> 00:00:27,320 Speaker 3: I'm Caroline Heatcer in London, where we're bringing you the 9 00:00:27,440 --> 00:00:29,840 Speaker 3: latest on Europe's defining moments. 10 00:00:30,360 --> 00:00:33,760 Speaker 4: I'm deg Prisner looking at Australia's economy ahead of some 11 00:00:33,880 --> 00:00:35,640 Speaker 4: key data points in the week ahead. 12 00:00:38,440 --> 00:00:42,480 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,520 --> 00:00:46,200 Speaker 1: eleven three to zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,720 --> 00:00:51,839 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 15 00:00:52,000 --> 00:00:55,520 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:55,560 --> 00:00:57,800 Speaker 1: dot Com and the Bloomberg Business App. 17 00:01:02,480 --> 00:01:04,479 Speaker 2: Good day to you. I'm Tom Busby, and we begin 18 00:01:04,520 --> 00:01:08,200 Speaker 2: today's program with the February jobs report. Here in the US, 19 00:01:08,480 --> 00:01:12,160 Speaker 2: we'll get non farm payroll numbers Friday, eight thirty am 20 00:01:12,200 --> 00:01:14,640 Speaker 2: Wall Street Time, and for more on this and how 21 00:01:14,680 --> 00:01:18,240 Speaker 2: it could possibly impact FED policy moving forward. We're joined 22 00:01:18,240 --> 00:01:23,759 Speaker 2: by Michael McKee, Bloomberg International Economics and Policy correspondent. Well, Michael, 23 00:01:23,840 --> 00:01:25,880 Speaker 2: let's start with what you expect to see in these 24 00:01:25,959 --> 00:01:27,280 Speaker 2: numbers for February. 25 00:01:27,840 --> 00:01:30,440 Speaker 5: Well, we're going to get a lot more data before 26 00:01:30,560 --> 00:01:34,560 Speaker 5: Friday that will maybe lead economists to adjust some of 27 00:01:34,600 --> 00:01:37,720 Speaker 5: these numbers. But basically, what we've seen is what we'll 28 00:01:37,760 --> 00:01:41,319 Speaker 5: get is what they're saying. Last month, we had one 29 00:01:41,400 --> 00:01:43,880 Speaker 5: hundred and forty three thousand jobs. This month, they're looking 30 00:01:43,880 --> 00:01:47,480 Speaker 5: for about one hundred and fifty eight thousand, no change 31 00:01:47,520 --> 00:01:50,200 Speaker 5: in the unemployment rate, expected to stick at four percent. 32 00:01:51,040 --> 00:01:54,200 Speaker 5: Average hourly earnings will be a little bit lower on 33 00:01:54,360 --> 00:01:56,640 Speaker 5: a month over month basis, a little bit higher on 34 00:01:56,680 --> 00:01:59,080 Speaker 5: a year over year basis, just because of the number 35 00:01:59,080 --> 00:02:01,000 Speaker 5: of weeks in the month and that sort of thing. 36 00:02:01,880 --> 00:02:05,680 Speaker 5: The biggest thing is there is no confidence around any 37 00:02:05,720 --> 00:02:09,679 Speaker 5: of these numbers because we don't know what's the impact 38 00:02:09,800 --> 00:02:16,600 Speaker 5: of the new administration has actually been on all the numbers. 39 00:02:15,840 --> 00:02:19,560 Speaker 6: Not just jobs, but everything else, everything else, well jobs, 40 00:02:20,240 --> 00:02:22,600 Speaker 6: Speaking of jobs in this administration, we're not going to 41 00:02:22,639 --> 00:02:26,040 Speaker 6: see all these massive layoffs till March. 42 00:02:26,200 --> 00:02:28,040 Speaker 2: Numbers maybe April, maybe even later. 43 00:02:28,160 --> 00:02:32,400 Speaker 5: Right, Yes, first thing is that they didn't really start 44 00:02:32,480 --> 00:02:35,280 Speaker 5: all the layoffs till February fourteenth, and that was the 45 00:02:35,360 --> 00:02:37,080 Speaker 5: last day of the survey period. And if you work 46 00:02:37,160 --> 00:02:40,360 Speaker 5: for just an hour during the two week survey period, 47 00:02:41,120 --> 00:02:44,520 Speaker 5: you're counted as employed. So that won't have an impact 48 00:02:45,440 --> 00:02:49,240 Speaker 5: unless there was some changes the administration made really early on, 49 00:02:49,280 --> 00:02:52,880 Speaker 5: but they would be small. We still aren't seeing it 50 00:02:52,919 --> 00:02:56,920 Speaker 5: in the jobless claims numbers. What we might see is 51 00:02:58,000 --> 00:03:04,320 Speaker 5: something in average hours, because we've seen these surveys that 52 00:03:04,400 --> 00:03:08,000 Speaker 5: show a bit of a decline in enthusiasm. So if 53 00:03:08,000 --> 00:03:11,440 Speaker 5: companies are being careful about putting people to work or 54 00:03:12,200 --> 00:03:14,840 Speaker 5: working any overtime, they might cut back a little bit 55 00:03:14,840 --> 00:03:15,080 Speaker 5: on that. 56 00:03:16,600 --> 00:03:19,200 Speaker 2: Before we talk about some of the data that's coming 57 00:03:19,280 --> 00:03:21,320 Speaker 2: up next week, let's talk about what we learned about 58 00:03:21,440 --> 00:03:25,840 Speaker 2: this past week, because some very telling and again you 59 00:03:25,919 --> 00:03:28,959 Speaker 2: mentioned the Trump administration, the great unknowns ahead of the 60 00:03:28,960 --> 00:03:33,400 Speaker 2: Trump administration coming in like this. The merchandise trade deficit that. 61 00:03:33,360 --> 00:03:37,920 Speaker 5: We got, Yeah, it was the biggest trade deficit ever, 62 00:03:38,000 --> 00:03:42,360 Speaker 5: one hundred and fifty three billion dollar deficit, largely because 63 00:03:42,800 --> 00:03:45,800 Speaker 5: companies were afraid of tariffs and they were importing a 64 00:03:45,840 --> 00:03:49,520 Speaker 5: lot of supplies ahead of time industrial supply imports went 65 00:03:49,600 --> 00:03:54,400 Speaker 5: up thirty three percent. People were stockpiling because they don't 66 00:03:54,440 --> 00:03:58,560 Speaker 5: know exactly what's coming, which leads us to Tuesday and 67 00:03:58,760 --> 00:04:03,280 Speaker 5: the administration's theoretical announcement of tariffs. Because we don't know 68 00:04:03,320 --> 00:04:06,160 Speaker 5: whether the President will pull back or not. I think 69 00:04:06,200 --> 00:04:10,080 Speaker 5: a lot of people are hoping he doesn't postpone them, 70 00:04:10,280 --> 00:04:13,440 Speaker 5: in the sense that at least if you get a number, 71 00:04:13,800 --> 00:04:17,080 Speaker 5: then you can start planning around it. And that's what 72 00:04:17,200 --> 00:04:20,320 Speaker 5: the FED would like to see, and I'm sure a 73 00:04:20,360 --> 00:04:23,080 Speaker 5: lot of companies would like to see to have an 74 00:04:23,080 --> 00:04:25,560 Speaker 5: idea of exactly what's going to happen. Otherwise you're going 75 00:04:25,640 --> 00:04:27,200 Speaker 5: to keep importing a lot of stuff. 76 00:04:27,400 --> 00:04:29,880 Speaker 2: Yeah, yeah, yeah, you push it back, push it back, 77 00:04:29,920 --> 00:04:32,360 Speaker 2: and it will be stockpiled here in the US. Now, 78 00:04:32,360 --> 00:04:35,680 Speaker 2: we also got PCE numbers just on Friday, and what 79 00:04:35,720 --> 00:04:37,200 Speaker 2: does that tell us about inflation? 80 00:04:37,680 --> 00:04:40,880 Speaker 5: Tells us we're still making some progress. They came in 81 00:04:41,040 --> 00:04:45,479 Speaker 5: as expected. It's pretty easy for economists to anticipate what 82 00:04:45,520 --> 00:04:47,880 Speaker 5: the numbers will be because a lot of it comes 83 00:04:48,040 --> 00:04:50,320 Speaker 5: out of the CPI and PPI reports, which we got 84 00:04:50,320 --> 00:04:53,200 Speaker 5: a couple of weeks ago. So there was still some 85 00:04:53,240 --> 00:04:55,800 Speaker 5: progress that is not a bad news story like the 86 00:04:55,839 --> 00:04:59,159 Speaker 5: CPI was, and so it keeps the Fed on track 87 00:04:59,320 --> 00:05:02,919 Speaker 5: to maybe at some point resumed lowering interest rates. But 88 00:05:03,040 --> 00:05:07,280 Speaker 5: all this again depends on the President and what he's 89 00:05:07,360 --> 00:05:10,640 Speaker 5: going to do. We saw a big decline in spending. 90 00:05:11,640 --> 00:05:14,960 Speaker 5: After an eight tenths increase in December, we saw spending 91 00:05:15,120 --> 00:05:19,760 Speaker 5: fall by two tenths of a percent, which is not 92 00:05:19,880 --> 00:05:24,520 Speaker 5: good news. And it also parallels those bad consumer sentiment 93 00:05:24,680 --> 00:05:28,599 Speaker 5: reports that we got. So the question for the Fed 94 00:05:29,080 --> 00:05:31,080 Speaker 5: or for Wall Street about the Fed is are they 95 00:05:31,120 --> 00:05:35,680 Speaker 5: going to cut rates anytime soon because inflation has behaved 96 00:05:35,720 --> 00:05:39,120 Speaker 5: and they can as they were, or because the economy 97 00:05:39,160 --> 00:05:41,320 Speaker 5: is slowing down and it's an emergency and we have 98 00:05:41,400 --> 00:05:42,320 Speaker 5: to cut interest rates. 99 00:05:42,440 --> 00:05:44,919 Speaker 2: Well, a lot to look forward to the February jobs 100 00:05:44,920 --> 00:05:47,839 Speaker 2: report out this coming Friday. Our thanks to Michael McKee, 101 00:05:47,880 --> 00:05:52,359 Speaker 2: Bloomberg International Economics and Policy correspondent. We moved next to 102 00:05:52,400 --> 00:05:55,760 Speaker 2: some fourth quarter retail earnings in the US from Macy Easter, 103 00:05:55,760 --> 00:05:59,360 Speaker 2: the nation's largest apartment store operator, and the clothing chain Gap. 104 00:05:59,360 --> 00:06:02,000 Speaker 2: They're both out on Thursday. Now for more on what 105 00:06:02,120 --> 00:06:04,799 Speaker 2: to look for in those Q four results, their outlooks 106 00:06:04,800 --> 00:06:07,240 Speaker 2: for the year ahead, the impact of stubbornly high inflation, 107 00:06:07,360 --> 00:06:10,320 Speaker 2: the threat of more US tariffs. What all that tells 108 00:06:10,400 --> 00:06:12,640 Speaker 2: us about consumer spending? I know it's a lot, But 109 00:06:12,760 --> 00:06:16,600 Speaker 2: we're joined by Mary Ross Gilbert Bloomberg Intelligence, senior equity 110 00:06:16,600 --> 00:06:20,440 Speaker 2: analysts covering retail. Well, Mary, thank you for joining us. 111 00:06:20,720 --> 00:06:22,880 Speaker 2: Let's start with what you expect to see in those 112 00:06:22,920 --> 00:06:25,680 Speaker 2: earnings reports from Macy's and Gap, and this includes the 113 00:06:25,720 --> 00:06:27,279 Speaker 2: all important holiday quarter. 114 00:06:28,000 --> 00:06:31,120 Speaker 7: Yes, tom, so when we look at Macy's, Macy's already 115 00:06:31,160 --> 00:06:33,240 Speaker 7: came out and gave us a little preview of what 116 00:06:33,279 --> 00:06:37,680 Speaker 7: they saw quarter to date, and at that time they said, Okay, 117 00:06:37,760 --> 00:06:40,240 Speaker 7: we're going to be at the lower end of their 118 00:06:40,279 --> 00:06:44,120 Speaker 7: seven eight billion in revenues for the quarter, so it 119 00:06:44,160 --> 00:06:45,960 Speaker 7: was going to be seven point eight to eight billion. 120 00:06:46,440 --> 00:06:49,680 Speaker 7: Analysts are right around that low end at seven point 121 00:06:49,760 --> 00:06:53,600 Speaker 7: eight billion, and based on consumer transaction data, we think 122 00:06:53,680 --> 00:06:57,039 Speaker 7: they come in near that estimate, maybe even slightly beat. 123 00:06:57,680 --> 00:07:01,960 Speaker 7: On the earnings per share side, analysts are at about 124 00:07:02,000 --> 00:07:05,560 Speaker 7: a buck fifty four. We think they likely beat that estimate, 125 00:07:05,680 --> 00:07:08,720 Speaker 7: as they have in the past eight quarters. But the 126 00:07:08,760 --> 00:07:11,960 Speaker 7: real focus here is going to be on the go 127 00:07:12,120 --> 00:07:17,280 Speaker 7: forward business for Macy's and also as you pointed out 128 00:07:17,600 --> 00:07:19,840 Speaker 7: there's going to be a little discussion on tariffs. They 129 00:07:19,840 --> 00:07:23,080 Speaker 7: don't have a huge exposure. Their private label business is 130 00:07:23,120 --> 00:07:27,120 Speaker 7: probably around fifteen percent of sales, and then the portion 131 00:07:27,280 --> 00:07:31,160 Speaker 7: that they source from China is less than that. They 132 00:07:31,200 --> 00:07:36,000 Speaker 7: haven't disclosed specifically, but we estimate they're probably somewhere around 133 00:07:36,160 --> 00:07:39,480 Speaker 7: under five percent of revenues in terms of exposure there. 134 00:07:40,160 --> 00:07:44,440 Speaker 7: But we will get a little update with GAP. We 135 00:07:44,560 --> 00:07:49,000 Speaker 7: think the company beats analyst estimates. So analysts are estimating 136 00:07:49,040 --> 00:07:51,920 Speaker 7: revenue to fall five point three percent. We think sales 137 00:07:51,920 --> 00:07:54,680 Speaker 7: may decline just one to two percent, and this is 138 00:07:54,760 --> 00:07:58,320 Speaker 7: based on Bloomberg second measure transaction data as I mentioned 139 00:07:58,360 --> 00:08:01,760 Speaker 7: earlier with Macy's, and also on the earnings per share side, 140 00:08:01,760 --> 00:08:04,320 Speaker 7: we see them beating analysts are looking for just thirty 141 00:08:04,360 --> 00:08:08,800 Speaker 7: seven cents a share. That company is really executing Old Navy, 142 00:08:08,840 --> 00:08:11,200 Speaker 7: which is just over half of the business, just to 143 00:08:11,440 --> 00:08:15,080 Speaker 7: debuted a new performance fabric for its activewear line called 144 00:08:15,120 --> 00:08:19,880 Speaker 7: Studio Smooth. So think Viory and Lulu Lemon and the 145 00:08:19,920 --> 00:08:23,160 Speaker 7: really buttery soft leggings that they have and they retail 146 00:08:23,200 --> 00:08:27,000 Speaker 7: for ninety eight dollars. Old Navies is just twenty eight 147 00:08:27,040 --> 00:08:30,280 Speaker 7: dollars and it's already selling very well, so I think 148 00:08:30,320 --> 00:08:34,440 Speaker 7: that very very strong execution. Their Gap has just been doing. 149 00:08:34,600 --> 00:08:37,000 Speaker 7: The Gap brand itself has been doing very well and 150 00:08:37,120 --> 00:08:43,720 Speaker 7: just debuted a new video campaign featuring Parker Posey and 151 00:08:44,000 --> 00:08:48,439 Speaker 7: talking about living Gap and gaps feel like Gap. 152 00:08:48,679 --> 00:08:51,839 Speaker 2: Well well, and she's now on that hit HBO show, 153 00:08:52,280 --> 00:08:56,280 Speaker 2: a White Lotus, So good timing there. Gap exactly not 154 00:08:56,559 --> 00:08:59,959 Speaker 2: the same though at its two other brands, Banana Republic 155 00:09:00,080 --> 00:09:01,640 Speaker 2: and Athleta, still lagging. 156 00:09:02,800 --> 00:09:05,880 Speaker 7: Actually no, I think I think you're seeing both of 157 00:09:05,920 --> 00:09:09,760 Speaker 7: those pick up. I'm more confident in Athleta in terms 158 00:09:09,800 --> 00:09:13,400 Speaker 7: of where they are. With Banana Republic, I think they're 159 00:09:13,440 --> 00:09:16,640 Speaker 7: doing fine according to the transaction data. I think those 160 00:09:16,840 --> 00:09:21,960 Speaker 7: also are probably tracking a little bit better than analyst estimates. 161 00:09:22,440 --> 00:09:25,840 Speaker 7: They're smaller because the two biggest pieces of the business 162 00:09:25,840 --> 00:09:29,560 Speaker 7: are really Old Navy and Gap. But we're really looking 163 00:09:29,600 --> 00:09:33,559 Speaker 7: for new leadership at Banana Republic to really set directions, 164 00:09:33,600 --> 00:09:36,720 Speaker 7: so it doesn't it doesn't seem as exciting to me 165 00:09:36,800 --> 00:09:40,800 Speaker 7: as it was before. But I think you know that 166 00:09:40,840 --> 00:09:43,319 Speaker 7: could change once they bring in new leadership. But they 167 00:09:43,360 --> 00:09:47,680 Speaker 7: do have a new speaking of White Lotus, Banana Republic 168 00:09:47,760 --> 00:09:51,800 Speaker 7: is going to do a collaboration, so it's going to 169 00:09:51,840 --> 00:09:55,520 Speaker 7: be you know, Banana Republic x White Lotus and that's 170 00:09:55,600 --> 00:09:59,040 Speaker 7: going to be dropping next Wednesday. I know that in 171 00:09:59,080 --> 00:10:01,280 Speaker 7: the store here and sen City. They just sent me 172 00:10:01,280 --> 00:10:04,000 Speaker 7: an invite to come attend that, so I think that 173 00:10:04,040 --> 00:10:05,080 Speaker 7: could be really exciting. 174 00:10:05,360 --> 00:10:05,640 Speaker 5: Wow. 175 00:10:06,080 --> 00:10:08,400 Speaker 2: Yeah, they're forward thinking by the gap. 176 00:10:08,480 --> 00:10:09,400 Speaker 5: Huh. 177 00:10:09,480 --> 00:10:12,480 Speaker 2: Well, let's go back to Macy's because Macy's and they 178 00:10:12,480 --> 00:10:15,400 Speaker 2: also have some other brands that have been doing very well, 179 00:10:15,480 --> 00:10:19,560 Speaker 2: right Blue Mercury, Bloomingdale's. But Macy's and it's addressed some 180 00:10:19,640 --> 00:10:22,360 Speaker 2: challenges it has had, closing stores over the last year, 181 00:10:22,559 --> 00:10:25,240 Speaker 2: investing more money and successful ones. So what's what's the 182 00:10:25,280 --> 00:10:28,120 Speaker 2: strategy there and is it working for Macy's. 183 00:10:28,600 --> 00:10:32,040 Speaker 7: Yes, Tom, So you're absolutely right. This new strategy which 184 00:10:32,080 --> 00:10:35,040 Speaker 7: is where they're guess what, they're going back to their 185 00:10:35,080 --> 00:10:38,680 Speaker 7: basics and that is adding more service in their stores. 186 00:10:38,720 --> 00:10:41,920 Speaker 7: They've also really improved the store so when you go in, 187 00:10:41,960 --> 00:10:46,480 Speaker 7: they're a lot more open, there's no clutter there, and 188 00:10:46,520 --> 00:10:49,880 Speaker 7: they're bringing in more relevant brands. So a brand that 189 00:10:49,960 --> 00:10:55,360 Speaker 7: they brought in its the a VC Luffy and this 190 00:10:55,559 --> 00:10:58,280 Speaker 7: was a brand that was started in twenty seventeen by 191 00:10:58,320 --> 00:11:04,800 Speaker 7: Max Azria's daughter Joyce Asria, and it's wonderful, beautiful, stylish 192 00:11:04,920 --> 00:11:09,079 Speaker 7: clothes that really appeals to the millennial. They've Macy's had 193 00:11:09,120 --> 00:11:11,880 Speaker 7: it since twenty seventeen, but it was just in a few, 194 00:11:11,960 --> 00:11:14,640 Speaker 7: you know, in a limited amount of doors, and now 195 00:11:14,679 --> 00:11:17,400 Speaker 7: that's been expanded and I just saw it in our 196 00:11:17,480 --> 00:11:19,960 Speaker 7: store here in Century City, So that's brand new for 197 00:11:20,040 --> 00:11:24,080 Speaker 7: this store. But I think it's absolutely on trend and 198 00:11:24,200 --> 00:11:26,320 Speaker 7: relevant and should do really well. So they need to 199 00:11:26,320 --> 00:11:29,520 Speaker 7: do more of that. And so in these stores that 200 00:11:29,559 --> 00:11:32,800 Speaker 7: they are revitalizing, they did see a lift in positive 201 00:11:32,840 --> 00:11:36,640 Speaker 7: comp sales, but it's small, right, because they did fifty stores. 202 00:11:37,080 --> 00:11:40,200 Speaker 7: They're now adding another seventy five stores, including the one 203 00:11:40,240 --> 00:11:43,960 Speaker 7: next door to me, and I've already seen the improvement there. 204 00:11:44,160 --> 00:11:46,800 Speaker 7: But still when you look at Nordstrom, I mean the 205 00:11:46,800 --> 00:11:50,040 Speaker 7: traffic there is always busier, and I think, you know, 206 00:11:50,240 --> 00:11:52,920 Speaker 7: we'll see good numbers coming out of Nordstrom. So I 207 00:11:52,920 --> 00:11:55,720 Speaker 7: think they have a ways to go with the mainline Macy's. 208 00:11:55,720 --> 00:11:58,920 Speaker 7: But as you pointed out, Bloomingdale's and bloom Mercury are 209 00:11:59,000 --> 00:12:02,040 Speaker 7: really doing well. Those are comping positive and we think 210 00:12:02,080 --> 00:12:05,559 Speaker 7: they get a lift with the sax Nieman merger because 211 00:12:05,600 --> 00:12:08,520 Speaker 7: they're having issues with vendors and customer service, and that 212 00:12:08,559 --> 00:12:12,679 Speaker 7: could shift more luxury sales to Nordstrom and Bloomingdale's. 213 00:12:12,880 --> 00:12:15,040 Speaker 2: Well, a lot to look forward to our thanks to 214 00:12:15,160 --> 00:12:19,840 Speaker 2: Mary Ross, Gilbert Bloomberg Intelligence senior equity analyst covering retail. 215 00:12:20,360 --> 00:12:22,600 Speaker 2: Coming up on Bloomberg day Break weekend, we'll look ahead 216 00:12:22,600 --> 00:12:26,040 Speaker 2: to a special European Council summit how that may impact 217 00:12:26,080 --> 00:12:30,199 Speaker 2: the war in Ukraine. I'm Tom Busby, and this is Bloomberg. 218 00:12:41,920 --> 00:12:44,440 Speaker 2: This is Bloomberg day Break Weekend, our global look ahead 219 00:12:44,440 --> 00:12:46,760 Speaker 2: at the top stories for investors in the coming week. 220 00:12:46,920 --> 00:12:50,080 Speaker 2: I'm Tom Busby in New York. Up later in our program, 221 00:12:50,160 --> 00:12:52,840 Speaker 2: we'll look ahead to the first reading of Australia's economy 222 00:12:53,160 --> 00:12:56,880 Speaker 2: following the RBA's first rate cut since November of twenty twenty. 223 00:12:57,200 --> 00:12:59,160 Speaker 2: But first, the path to peace in the war in 224 00:12:59,280 --> 00:13:02,360 Speaker 2: Ukraine took our radical turn this week as a meeting 225 00:13:02,400 --> 00:13:06,520 Speaker 2: between US President Donald Trump, Ukraine President Volodimir Zelensky, and 226 00:13:06,600 --> 00:13:10,560 Speaker 2: US Vice President JD Vance devolved into an argument right 227 00:13:10,559 --> 00:13:12,679 Speaker 2: in front of the White House Press. Here's what that 228 00:13:12,800 --> 00:13:15,480 Speaker 2: sounded like when they met in the Oval Office on Friday. 229 00:13:15,960 --> 00:13:18,400 Speaker 8: We're trying to solve a problem. Don't tell us what 230 00:13:18,400 --> 00:13:21,200 Speaker 8: we're going to feel. I'm because you're in no position 231 00:13:21,280 --> 00:13:22,000 Speaker 8: to dictate that. 232 00:13:22,240 --> 00:13:26,720 Speaker 9: Remember this, you're in no position to dictate what we're 233 00:13:26,720 --> 00:13:29,120 Speaker 9: going to feel. We're going to feel very good. 234 00:13:29,240 --> 00:13:33,520 Speaker 8: Feel We're gonna feel very good and very strong influence. 235 00:13:33,600 --> 00:13:36,320 Speaker 8: You're right now, not in a very good position. You've 236 00:13:36,320 --> 00:13:39,640 Speaker 8: allowed you be in a very bad position to be 237 00:13:39,720 --> 00:13:40,400 Speaker 8: right about from. 238 00:13:40,320 --> 00:13:41,760 Speaker 9: The very beginning of the war. 239 00:13:41,960 --> 00:13:44,640 Speaker 8: Not in a good position. You don't have the cards 240 00:13:44,720 --> 00:13:49,080 Speaker 8: right now with us. You start having right now, you pay. 241 00:13:51,240 --> 00:13:54,400 Speaker 8: You're gambling with the lives from millions of people. You're 242 00:13:54,440 --> 00:13:59,079 Speaker 8: gambling with world War three. You're gambling with World War three. 243 00:13:59,720 --> 00:14:03,720 Speaker 8: And what you're doing is very disrespectful to the country. 244 00:14:03,760 --> 00:14:07,200 Speaker 8: This country. It's back to you far more than a 245 00:14:07,240 --> 00:14:09,240 Speaker 8: lot of people said they should have have. 246 00:14:09,280 --> 00:14:12,160 Speaker 9: You said thank you once this entire meeting. No, in 247 00:14:12,240 --> 00:14:14,480 Speaker 9: this entire meeting, you said thank you. 248 00:14:14,480 --> 00:14:18,199 Speaker 10: You went to Pennsylvania and campaigned for the opposition in October. 249 00:14:18,520 --> 00:14:21,480 Speaker 10: Offer some words of appreciation for the United States of 250 00:14:21,520 --> 00:14:25,680 Speaker 10: America and the president who's trying to save your country. 251 00:14:26,800 --> 00:14:30,720 Speaker 11: Please, you're saying that if you will speak very loudly 252 00:14:30,760 --> 00:14:31,320 Speaker 11: about the war. 253 00:14:31,600 --> 00:14:34,680 Speaker 9: He's not speaking loudly. He's not speaking loudly. Your country 254 00:14:34,720 --> 00:14:37,360 Speaker 9: is in big trouble. No, No, you've done a. 255 00:14:37,360 --> 00:14:40,320 Speaker 8: Lot of talking. Your country is in big trouble. I 256 00:14:40,400 --> 00:14:42,600 Speaker 8: know you're not winning. You're not winning this. 257 00:14:43,400 --> 00:14:45,920 Speaker 9: You have a damn good chance of coming out okay, 258 00:14:45,960 --> 00:14:47,200 Speaker 9: because of the President. 259 00:14:47,240 --> 00:14:50,800 Speaker 11: We're staying Yawa country staying strong. From the very beginning 260 00:14:50,800 --> 00:14:53,320 Speaker 11: of the war, we've been alone, and we are thankful. 261 00:14:53,360 --> 00:14:54,080 Speaker 9: I said, thanks. 262 00:14:56,600 --> 00:14:59,640 Speaker 8: We gave you, through this stupid president, three hundred and 263 00:14:59,680 --> 00:15:01,040 Speaker 8: fifty billion dollars. 264 00:15:01,520 --> 00:15:03,240 Speaker 9: We gave your military equipment. 265 00:15:03,320 --> 00:15:05,200 Speaker 8: You and your men are brave, but they had to 266 00:15:05,280 --> 00:15:09,240 Speaker 8: use our military If you didn't have our military equipment, 267 00:15:09,840 --> 00:15:13,080 Speaker 8: If you didn't have our military equipment, this war would 268 00:15:13,120 --> 00:15:14,880 Speaker 8: have been over in two weeks. 269 00:15:14,920 --> 00:15:17,800 Speaker 11: In three days, I heard it from Putin in three days. 270 00:15:18,080 --> 00:15:20,120 Speaker 11: This is how maybe less in two weeks. 271 00:15:20,120 --> 00:15:22,120 Speaker 9: Of course, Yes, it's gonna be a very hard thing 272 00:15:22,160 --> 00:15:24,920 Speaker 9: to do business like this. I tell you this. They 273 00:15:24,960 --> 00:15:25,560 Speaker 9: thank you. 274 00:15:25,880 --> 00:15:29,560 Speaker 11: I accept, except that they're accept the American except that. 275 00:15:29,560 --> 00:15:33,360 Speaker 10: There are disagreements, and let's go litigate those disagreements rather 276 00:15:33,440 --> 00:15:35,920 Speaker 10: than trying to fight it out in the American media. 277 00:15:35,840 --> 00:15:36,520 Speaker 9: When you're wrong. 278 00:15:37,080 --> 00:15:38,560 Speaker 8: We know that you're wrong, but you see, I think 279 00:15:38,600 --> 00:15:41,240 Speaker 8: it's good for the American people to see what's going on. 280 00:15:41,880 --> 00:15:43,480 Speaker 8: I think it's very important. That's why I kept this 281 00:15:43,560 --> 00:15:47,600 Speaker 8: going so long. You have to be thankful. You don't 282 00:15:47,640 --> 00:15:51,640 Speaker 8: have the cards. You're buried there, your people had died. 283 00:15:52,000 --> 00:15:56,360 Speaker 8: You're running low on soldiers. Listen, you're running slow on soldiers. 284 00:15:56,680 --> 00:15:57,920 Speaker 8: It would be a damn good thing. 285 00:15:58,120 --> 00:16:00,200 Speaker 9: And then you then you tell us I don't want 286 00:16:00,200 --> 00:16:02,400 Speaker 9: to cease fire. I don't want to cease fire. I 287 00:16:02,440 --> 00:16:03,760 Speaker 9: want to go and I wanted this. 288 00:16:04,440 --> 00:16:07,560 Speaker 8: Look, if you could get a ceasefire right now, I 289 00:16:07,640 --> 00:16:09,920 Speaker 8: tell you you take it. So the bullets stopped flying, 290 00:16:09,920 --> 00:16:11,840 Speaker 8: and your ment stuff courting kills. 291 00:16:11,960 --> 00:16:13,720 Speaker 9: Want to stop the war. But I'm saying, you don't 292 00:16:13,720 --> 00:16:14,840 Speaker 9: want to see you. 293 00:16:15,000 --> 00:16:17,720 Speaker 8: I want to see guarantee because you'll get a ceasefire 294 00:16:17,760 --> 00:16:19,160 Speaker 8: faster than any Greelet's cow. 295 00:16:19,240 --> 00:16:22,760 Speaker 9: Are people about fire? What they see? That wasn't with me. 296 00:16:23,440 --> 00:16:27,120 Speaker 9: That wasn't with me. That was with a guy named Biden, 297 00:16:27,160 --> 00:16:29,960 Speaker 9: who was not a smart person. That was your That 298 00:16:30,040 --> 00:16:32,200 Speaker 9: was with Obama. Excuse me. 299 00:16:32,360 --> 00:16:34,680 Speaker 8: That was with Obama who gave you sheets, and I 300 00:16:34,760 --> 00:16:38,040 Speaker 8: gave you javelins. I gave you the javelins to take 301 00:16:38,080 --> 00:16:42,400 Speaker 8: out all those tanks. Obama gave you sheets. In fact, 302 00:16:42,440 --> 00:16:46,200 Speaker 8: the statement is Obama gave sheets, and Trump gave javelins. 303 00:16:47,480 --> 00:16:50,520 Speaker 8: You got to be more thankful, because let me tell you, 304 00:16:50,520 --> 00:16:53,440 Speaker 8: you don't have the cards. With us, you have the cards, 305 00:16:53,920 --> 00:16:56,600 Speaker 8: but without us, you don't have any cards. 306 00:16:56,600 --> 00:17:00,320 Speaker 2: The sharp encounter between Presidents Trump and Zelensky plus Vice A. 307 00:17:00,400 --> 00:17:00,600 Speaker 10: JD. 308 00:17:00,760 --> 00:17:03,680 Speaker 2: Vans overshadowed what was supposed to be a moment of 309 00:17:03,760 --> 00:17:06,760 Speaker 2: unity between the leaders and put any possibility of a 310 00:17:06,760 --> 00:17:10,720 Speaker 2: peace deal between Russia and Ukraine in question. Now does 311 00:17:10,760 --> 00:17:13,520 Speaker 2: it fall to Europe to form a resolution for more 312 00:17:13,600 --> 00:17:15,960 Speaker 2: Let's go to London and bring in Bloomberg Daybreak Europe 313 00:17:15,960 --> 00:17:18,199 Speaker 2: anchor Caroline hepgar Tom. 314 00:17:18,400 --> 00:17:22,840 Speaker 3: This week, Vladimir Putin's new Envoy for Foreign Economic Cooperation 315 00:17:23,080 --> 00:17:26,360 Speaker 3: took to X for the first time since twenty twelve. 316 00:17:26,920 --> 00:17:30,680 Speaker 3: Kiril Dimitriyev used the platform to declare the importance of 317 00:17:30,920 --> 00:17:35,800 Speaker 3: US Russia cooperation to address what he's described as world challenges. 318 00:17:36,280 --> 00:17:39,240 Speaker 3: His sudden re emergence on the site after years of 319 00:17:39,320 --> 00:17:44,159 Speaker 3: silence highlights the rapid rehabilitation of Russia by President Trump 320 00:17:44,600 --> 00:17:50,480 Speaker 3: and the new challenge now facing the international community. European leaders, meanwhile, 321 00:17:50,520 --> 00:17:54,200 Speaker 3: are holding a special European Council in the coming days, 322 00:17:54,560 --> 00:17:58,520 Speaker 3: taking place just two weeks before a planned quarterly summit. 323 00:17:58,920 --> 00:18:02,320 Speaker 3: They're going to discuss defense spending and Russia's war on 324 00:18:02,480 --> 00:18:08,760 Speaker 3: Ukraine in a world without the historically assured US security guarantee. 325 00:18:08,800 --> 00:18:12,080 Speaker 3: The emergency summit will aim to take stock of US 326 00:18:12,200 --> 00:18:16,280 Speaker 3: EU relations after various leaders have held meetings at the 327 00:18:16,320 --> 00:18:20,080 Speaker 3: White House to get FaceTime with the US President. So 328 00:18:20,080 --> 00:18:23,240 Speaker 3: what will happen next in this extraordinary few weeks for 329 00:18:23,440 --> 00:18:27,760 Speaker 3: global politics, and who, if anyone, will succeed in winning 330 00:18:27,840 --> 00:18:31,600 Speaker 3: the favor of President Trump. I've been speaking to Bloomberg's 331 00:18:31,640 --> 00:18:34,200 Speaker 3: EMEA News director of Roslyn Matheson. 332 00:18:34,520 --> 00:18:36,119 Speaker 12: If you're a leader in Europe at the moment, you 333 00:18:36,160 --> 00:18:38,399 Speaker 12: spend a lot of time saying very much out loud, 334 00:18:38,680 --> 00:18:41,480 Speaker 12: We're going to spend more on defense, that's very clear, 335 00:18:41,840 --> 00:18:44,840 Speaker 12: and we are starting to see some numbers come around then, 336 00:18:44,920 --> 00:18:48,240 Speaker 12: including in the UK of course obviously as well. But 337 00:18:48,320 --> 00:18:50,960 Speaker 12: what we're understanding in Europe is that the EU is 338 00:18:51,040 --> 00:18:54,840 Speaker 12: basically trying to find a way to unlock hundreds of 339 00:18:54,840 --> 00:18:59,199 Speaker 12: billions of euros in extra funding for defense, and that 340 00:18:59,240 --> 00:19:02,639 Speaker 12: could come in a bunch of different ways, including potentially 341 00:19:02,680 --> 00:19:07,560 Speaker 12: the joint issuance of bonds for example, repurposing existing funds, 342 00:19:07,600 --> 00:19:11,679 Speaker 12: as well shifting spending from other places. But that's going 343 00:19:11,760 --> 00:19:14,360 Speaker 12: to be part of the conversation when EU leaders meet, 344 00:19:14,480 --> 00:19:17,679 Speaker 12: is how practically they can all start to increase the 345 00:19:17,760 --> 00:19:20,760 Speaker 12: defense spending, both at a national level and also at 346 00:19:20,760 --> 00:19:23,960 Speaker 12: a European level, and how they can show that very clearly, 347 00:19:24,000 --> 00:19:27,080 Speaker 12: in particular to the US President Donald Trump, that they're 348 00:19:27,119 --> 00:19:30,520 Speaker 12: meeting their words with action. The question is will there'll 349 00:19:30,560 --> 00:19:34,080 Speaker 12: be agreement across the EU and the leaders meet about 350 00:19:34,119 --> 00:19:36,560 Speaker 12: a doing that and then b how to do it 351 00:19:36,600 --> 00:19:39,840 Speaker 12: and what's the best mechanism to do so, because of 352 00:19:39,920 --> 00:19:42,880 Speaker 12: course these all come with costs at home, and if 353 00:19:42,880 --> 00:19:47,720 Speaker 12: you're talking about potentially ramping up joint issuance about shifting spending, 354 00:19:48,119 --> 00:19:50,959 Speaker 12: that may come at the expense of other programs that 355 00:19:51,040 --> 00:19:54,600 Speaker 12: Europeans want, and so you could see some domestic comparatives 356 00:19:55,040 --> 00:19:57,000 Speaker 12: feed in their way. People say, well, hang on, my 357 00:19:57,080 --> 00:19:59,119 Speaker 12: voters don't want that to happen, and they could be 358 00:19:59,720 --> 00:20:02,840 Speaker 12: a backlash for me. So we're expecting there to be 359 00:20:02,880 --> 00:20:06,400 Speaker 12: a proper conversation about the mechanism to increase defense spending. 360 00:20:07,040 --> 00:20:09,040 Speaker 12: Are we going to see an actual agreement come from 361 00:20:09,080 --> 00:20:10,920 Speaker 12: this meeting? That's really up in the air. 362 00:20:11,400 --> 00:20:15,760 Speaker 3: There is European leaders are speaking to president from making 363 00:20:15,840 --> 00:20:21,000 Speaker 3: visits to Washington, took us through their communication priorities with 364 00:20:21,240 --> 00:20:22,040 Speaker 3: the presidents. 365 00:20:22,880 --> 00:20:25,560 Speaker 12: Well, we had Emmanuel mccron obviously from France there, and 366 00:20:25,600 --> 00:20:29,960 Speaker 12: we've also got the UK Prime Minister Kirstarma meeting with 367 00:20:30,080 --> 00:20:32,480 Speaker 12: Donald Trump. And the message from that is really that 368 00:20:32,760 --> 00:20:36,159 Speaker 12: the US cannot afford to go it alone when it 369 00:20:36,200 --> 00:20:39,199 Speaker 12: comes to things like Ukraine and Russia, that really Europe 370 00:20:39,200 --> 00:20:43,119 Speaker 12: does need to be very much in the conversation. So 371 00:20:43,200 --> 00:20:45,560 Speaker 12: it was the UK when it comes to things like 372 00:20:46,000 --> 00:20:50,440 Speaker 12: conversations around future security guarantees for Ukraine for example, when 373 00:20:50,440 --> 00:20:54,600 Speaker 12: it comes to conversations around mutual defense for example. So 374 00:20:54,680 --> 00:20:57,439 Speaker 12: there'd be a message about how yes, Europe and the 375 00:20:57,520 --> 00:21:00,520 Speaker 12: UK have gotten the message and they're going to increase 376 00:21:00,560 --> 00:21:03,879 Speaker 12: their own defense spending and their own security. But also 377 00:21:04,040 --> 00:21:07,920 Speaker 12: that when Donald Trump talks about resolving things like Ukraine 378 00:21:07,960 --> 00:21:11,280 Speaker 12: for example, that he really does need Europe in the conversation. 379 00:21:12,920 --> 00:21:16,119 Speaker 3: What do you think the attitude of the newly elected 380 00:21:16,480 --> 00:21:21,040 Speaker 3: chancellor and waiting Fred Mertz might be as he looks 381 00:21:21,040 --> 00:21:25,760 Speaker 3: to form a government. And whilst President Trump has used 382 00:21:25,800 --> 00:21:31,440 Speaker 3: his strongest language yet in recent days about the EU 383 00:21:31,520 --> 00:21:35,159 Speaker 3: I either the European Union set up to screw the 384 00:21:35,280 --> 00:21:38,560 Speaker 3: US in his words, what do you think the attitude 385 00:21:38,600 --> 00:21:41,840 Speaker 3: of Germany is going to be to this obviously central 386 00:21:41,960 --> 00:21:44,320 Speaker 3: to policy making in Europe, will. 387 00:21:44,200 --> 00:21:47,520 Speaker 12: Be very interesting because in fact Friedrich Merz is obviously 388 00:21:47,560 --> 00:21:49,480 Speaker 12: not chantilly yet and he has got to work out 389 00:21:49,480 --> 00:21:52,320 Speaker 12: how to form a government. But he's already met with 390 00:21:52,359 --> 00:21:55,440 Speaker 12: the French President Emanuel Macron. So he's getting his ear 391 00:21:55,960 --> 00:21:58,960 Speaker 12: to the door there at least in the conversations as 392 00:21:59,000 --> 00:22:02,200 Speaker 12: things are moving so quickly these days when it comes 393 00:22:02,240 --> 00:22:06,200 Speaker 12: to the political landscape and the geopolitical landscape, and so 394 00:22:06,280 --> 00:22:10,160 Speaker 12: he's obviously part of the conversation already, which is very important. 395 00:22:10,560 --> 00:22:12,879 Speaker 12: Frederick Motz actually might have a bit of a rapport 396 00:22:13,480 --> 00:22:17,480 Speaker 12: with Donald Trump. They are both conservative of though conservative 397 00:22:17,920 --> 00:22:21,439 Speaker 12: in different ways. And Donald Trump did congratulate Fredrick Matz 398 00:22:21,520 --> 00:22:25,879 Speaker 12: on his election win in Germany quite quickly, and you know, 399 00:22:25,920 --> 00:22:29,560 Speaker 12: welcoming a conversation with him sometime soon, and so there 400 00:22:29,600 --> 00:22:31,520 Speaker 12: might be a little bit of common ground just in 401 00:22:31,600 --> 00:22:34,440 Speaker 12: terms of how they talk to each other and really 402 00:22:34,520 --> 00:22:37,760 Speaker 12: having a rapport is probably the very first and most 403 00:22:37,800 --> 00:22:41,160 Speaker 12: important step these days in dealing with the US under 404 00:22:41,200 --> 00:22:43,800 Speaker 12: Donald Trump. So it's possible he might actually gel a 405 00:22:43,800 --> 00:22:47,800 Speaker 12: bit with Donald Trump. That said, Frederick Mots has also 406 00:22:47,840 --> 00:22:51,080 Speaker 12: been a fierce advocate for Ukraine and for the need 407 00:22:51,080 --> 00:22:53,760 Speaker 12: for Ukraine to be supported, and so there might be 408 00:22:53,800 --> 00:22:56,200 Speaker 12: some points of difference around that. And obviously, of course 409 00:22:56,560 --> 00:23:00,560 Speaker 12: if there are to be tariffs on European goods as well, it's. 410 00:23:00,400 --> 00:23:04,760 Speaker 3: Not just about hot wars, about military wars, it's also 411 00:23:05,080 --> 00:23:09,919 Speaker 3: possibly about economic war, certainly about trade tariffs. How do 412 00:23:09,960 --> 00:23:14,280 Speaker 3: you think Europe is thinking about this? The tit for 413 00:23:14,359 --> 00:23:18,399 Speaker 3: tat idea that there could be retaliation from the EU 414 00:23:18,800 --> 00:23:21,480 Speaker 3: if President Trump does impose, as he has said he 415 00:23:21,560 --> 00:23:26,000 Speaker 3: wants to twenty five percent tariffs. It's very murky, actually, 416 00:23:26,760 --> 00:23:30,040 Speaker 3: the rhetoric versus the reality of tariffs out. 417 00:23:29,840 --> 00:23:33,040 Speaker 12: Of the Trump White House currently, and we don't know 418 00:23:33,080 --> 00:23:35,879 Speaker 12: exactly what a twenty five percent tariff on the EU 419 00:23:36,600 --> 00:23:38,600 Speaker 12: would look like. We don't know whether that would be 420 00:23:39,080 --> 00:23:43,359 Speaker 12: all exports that are sent from the EU into the US, 421 00:23:43,520 --> 00:23:47,320 Speaker 12: or only certain sectors or certain products. It's very unclear 422 00:23:47,359 --> 00:23:49,440 Speaker 12: what exactly we're looking at. And that's why you can 423 00:23:49,480 --> 00:23:53,000 Speaker 12: see for now that while European leaders and the European 424 00:23:53,119 --> 00:23:57,679 Speaker 12: Union are saying they will very firmly retaliate if needed, 425 00:23:57,880 --> 00:24:00,280 Speaker 12: and they are drawing out plans indeed to do so, 426 00:24:00,320 --> 00:24:03,000 Speaker 12: and they have lists indeed to do so, that they're 427 00:24:03,000 --> 00:24:06,159 Speaker 12: holding their fire a little bit because it's very unclear 428 00:24:06,200 --> 00:24:09,680 Speaker 12: exactly what they're dealing with. We can see, for example, 429 00:24:09,680 --> 00:24:15,080 Speaker 12: with Canderine Mexico that tariffs are not being implemented immediately. 430 00:24:15,160 --> 00:24:18,639 Speaker 12: There's further talk potentially about them being pushed back again. 431 00:24:18,720 --> 00:24:21,159 Speaker 12: So if you come out too strongly there, you know, 432 00:24:21,240 --> 00:24:23,800 Speaker 12: do you risk Donald Trump's iron does he then pushed 433 00:24:23,800 --> 00:24:26,600 Speaker 12: her head quickly on tariffs that he didn't intend to 434 00:24:26,640 --> 00:24:29,960 Speaker 12: move so fast on, for example, And so it's really 435 00:24:30,040 --> 00:24:32,959 Speaker 12: about the game of trying to work out how to 436 00:24:33,040 --> 00:24:36,720 Speaker 12: manage the situation with Donald Trump in a theoretical sense 437 00:24:36,760 --> 00:24:40,199 Speaker 12: when tariff's not yet real but are possibly coming and 438 00:24:40,240 --> 00:24:43,000 Speaker 12: we don't know what those tariffs might look like, but 439 00:24:43,119 --> 00:24:46,600 Speaker 12: certainly we do know that European Commission has drawn up 440 00:24:46,640 --> 00:24:50,159 Speaker 12: list of goods for potential retaliation and have said very 441 00:24:50,200 --> 00:24:52,040 Speaker 12: clearly they're willing to use them if needed. 442 00:24:52,440 --> 00:24:55,960 Speaker 3: My thanks to Bloomberg's EMEA News director Roslyn Matheson for 443 00:24:56,000 --> 00:24:58,840 Speaker 3: speaking to me and will continue to bring you full 444 00:24:58,920 --> 00:25:02,960 Speaker 3: coverage of the special European Council planned for Thursday, the 445 00:25:03,040 --> 00:25:05,639 Speaker 3: sixth of March. I'm Caline Hepge here in London. You 446 00:25:05,640 --> 00:25:08,600 Speaker 3: can catch us every weekday morning for Bloomberg Daybreak Europe, 447 00:25:08,600 --> 00:25:11,119 Speaker 3: beginning at six am in London. That's one am on 448 00:25:11,200 --> 00:25:11,720 Speaker 3: Wall Street. 449 00:25:11,800 --> 00:25:14,760 Speaker 2: Tom, Thank you, Caroline. And coming up on Bloomberg day 450 00:25:14,760 --> 00:25:16,920 Speaker 2: Break Weekend, we'll look ahead to a slew of economic 451 00:25:16,960 --> 00:25:20,720 Speaker 2: data out of Australia next week. I'm Tom Busby and 452 00:25:20,840 --> 00:25:34,600 Speaker 2: this is Bloomberg. This is Bloomberg day Break Weekend, our 453 00:25:34,640 --> 00:25:36,800 Speaker 2: global look ahead at the top stories for investors in 454 00:25:36,840 --> 00:25:39,760 Speaker 2: the coming week. I'm Tom Busby in New York. A 455 00:25:39,880 --> 00:25:42,720 Speaker 2: ton of economic data coming out of Australia this week, 456 00:25:42,760 --> 00:25:46,439 Speaker 2: including the first reading of the country's economy following the 457 00:25:46,480 --> 00:25:49,560 Speaker 2: Reserve Bank of Australia's first rate cut since November of 458 00:25:49,600 --> 00:25:52,240 Speaker 2: twenty twenty. For more, let's get to the host of 459 00:25:52,280 --> 00:25:54,760 Speaker 2: the Daybreak Asia podcast, Doug Krisner. 460 00:25:55,160 --> 00:25:58,160 Speaker 4: Tom, we're looking ahead to the report on Ozzie GDP, 461 00:25:58,840 --> 00:26:01,480 Speaker 4: along with numbers on Reek hell sales and trade. They're 462 00:26:01,520 --> 00:26:04,359 Speaker 4: all on tap for more on what we can expect. 463 00:26:04,359 --> 00:26:07,800 Speaker 4: I'm joined by Swati Pondi, Asia Eco GUV reporter for 464 00:26:07,880 --> 00:26:11,680 Speaker 4: Bloomberg News. Swati joins us from our radio studio in Sydney. 465 00:26:12,040 --> 00:26:14,160 Speaker 4: Thank you for making time for us. Can we begin 466 00:26:14,240 --> 00:26:16,439 Speaker 4: by taking a step back because it was only a 467 00:26:16,480 --> 00:26:19,640 Speaker 4: few weeks ago that the Reserve Bank of Australia cut 468 00:26:19,680 --> 00:26:21,760 Speaker 4: the policy rate for the first time in more than 469 00:26:21,800 --> 00:26:24,439 Speaker 4: four years. So a lot has been happening with the 470 00:26:24,480 --> 00:26:27,800 Speaker 4: Australian economy. Maybe it's a little complicated. Can you help 471 00:26:27,840 --> 00:26:29,760 Speaker 4: me understand where things stand at the moment. 472 00:26:30,240 --> 00:26:34,040 Speaker 13: Yes, it's all happening in Australia, Doug. We had the 473 00:26:34,200 --> 00:26:38,439 Speaker 13: first rate cut in four years. The Reserve Bank of 474 00:26:38,480 --> 00:26:42,440 Speaker 13: Australia had been a laggard in this easing cycle and 475 00:26:42,640 --> 00:26:46,800 Speaker 13: finally it delivered a cut and that was largely driven 476 00:26:46,880 --> 00:26:53,200 Speaker 13: by inflation report which showed that price pressures are indeed cooling, 477 00:26:53,560 --> 00:26:57,600 Speaker 13: which was one of the RBA's biggest concerns last year 478 00:26:58,359 --> 00:27:03,560 Speaker 13: when it decided to keep rates unchanged, and then come January, 479 00:27:04,680 --> 00:27:10,160 Speaker 13: the data showed that prices are cooling in. Consumer sentiment 480 00:27:10,359 --> 00:27:14,080 Speaker 13: was weak. People weren't spending, and so the Reserve Bank 481 00:27:14,119 --> 00:27:17,439 Speaker 13: thought it's a good time to start easing cycle. But 482 00:27:18,200 --> 00:27:22,520 Speaker 13: it was really cautious as well. It sounded very hawkish 483 00:27:23,480 --> 00:27:26,960 Speaker 13: despite the rate cut and signaled to the market that 484 00:27:27,480 --> 00:27:32,879 Speaker 13: do not expect many more cuts. Maybe it's one and done, 485 00:27:33,040 --> 00:27:33,960 Speaker 13: or maybe one more. 486 00:27:34,119 --> 00:27:35,840 Speaker 4: So I mentioned that we're going to get the retail 487 00:27:35,960 --> 00:27:40,000 Speaker 4: sales data. How are consumers in Australia behaving right now 488 00:27:40,040 --> 00:27:41,000 Speaker 4: in the major cities. 489 00:27:41,480 --> 00:27:46,760 Speaker 13: Look, since pretty much all of twenty twenty four, consumers 490 00:27:46,920 --> 00:27:51,600 Speaker 13: were being very stingy. People weren't spending at all. People 491 00:27:51,640 --> 00:27:56,920 Speaker 13: were waiting for big discounting events like the November Black 492 00:27:56,960 --> 00:28:02,360 Speaker 13: Friday sales and events like that to actually spent. However, 493 00:28:02,840 --> 00:28:06,800 Speaker 13: the government gave everybody tax cuts which kicked in in 494 00:28:06,920 --> 00:28:11,800 Speaker 13: July twenty twenty four. We also got some subsidies on energy, 495 00:28:12,359 --> 00:28:16,720 Speaker 13: we got some subsidies on rents, and that basically gave 496 00:28:16,840 --> 00:28:20,080 Speaker 13: people a little bit more of spending power. And then 497 00:28:20,119 --> 00:28:23,000 Speaker 13: we also, like I said, inflation came down, so the 498 00:28:23,080 --> 00:28:27,760 Speaker 13: real purchasing power of people improved so towards the end 499 00:28:27,760 --> 00:28:31,960 Speaker 13: of last year, so kind of November, December January period, 500 00:28:32,040 --> 00:28:35,640 Speaker 13: we have seen people spending more and if you go 501 00:28:35,760 --> 00:28:41,160 Speaker 13: out in Sydney, it's buzzing. It's crazy buzzing pubs, restaurants, 502 00:28:41,560 --> 00:28:46,200 Speaker 13: shopping centers, everything. People are feeling a little bit more 503 00:28:46,240 --> 00:28:49,920 Speaker 13: confident and I'm sure the rate cut that we got 504 00:28:50,000 --> 00:28:52,600 Speaker 13: in February will further help that too. 505 00:28:52,840 --> 00:28:55,200 Speaker 4: So from what I understand, the labor market is holding 506 00:28:55,280 --> 00:28:56,560 Speaker 4: up very well, right. 507 00:28:56,880 --> 00:29:01,520 Speaker 13: That's true, So like the Usustralia's labor market is pretty 508 00:29:01,560 --> 00:29:05,400 Speaker 13: strong as well. Our unemployment rate is hovering in that 509 00:29:05,520 --> 00:29:09,600 Speaker 13: four to four point one territory, which is really low 510 00:29:09,680 --> 00:29:14,240 Speaker 13: by Australian standards, also very low by historical standards. That 511 00:29:14,560 --> 00:29:18,840 Speaker 13: is driven by really strong employment growth. It has surpassed 512 00:29:18,840 --> 00:29:24,120 Speaker 13: all expectations, and that is because government demand has been 513 00:29:24,120 --> 00:29:27,120 Speaker 13: really strong. Government has been spending left, right and center 514 00:29:27,600 --> 00:29:32,200 Speaker 13: and that has supported GDP as well as the labor market. 515 00:29:32,400 --> 00:29:35,520 Speaker 4: So I mentioned we will also get figures on trade 516 00:29:35,640 --> 00:29:38,080 Speaker 4: in the coming week. Can we talk a little bit 517 00:29:38,120 --> 00:29:41,960 Speaker 4: about the potential impact on these US tariffs on Australia. 518 00:29:42,240 --> 00:29:45,840 Speaker 4: Is it likely that there will be any impact at all? 519 00:29:46,640 --> 00:29:51,160 Speaker 13: Trade is an interesting topic right now, so quite topical 520 00:29:51,200 --> 00:29:55,240 Speaker 13: as well. And Australia is a small, open economy. One 521 00:29:55,400 --> 00:29:59,960 Speaker 13: fourth of Australia's GDP comes from trade and thirty per 522 00:30:00,080 --> 00:30:03,040 Speaker 13: cent of our exports go to China, so you can 523 00:30:03,120 --> 00:30:08,360 Speaker 13: see how vulnerable we are to anything that happens in 524 00:30:08,480 --> 00:30:13,040 Speaker 13: the trade side of things. We have had seven years 525 00:30:13,080 --> 00:30:17,960 Speaker 13: of trade surplus, so pretty much from twenty eighteen through 526 00:30:18,160 --> 00:30:21,440 Speaker 13: til the end of twenty twenty four, every single month 527 00:30:21,600 --> 00:30:26,440 Speaker 13: we have had trade surplus. Is that at risk? Not really, 528 00:30:26,960 --> 00:30:31,920 Speaker 13: because China's demand still seems really strong. We've had a 529 00:30:32,000 --> 00:30:37,200 Speaker 13: period where China puts some embargo on Australian products and 530 00:30:37,240 --> 00:30:42,120 Speaker 13: Australia was able to still sell to other markets. Now, 531 00:30:42,280 --> 00:30:47,400 Speaker 13: as far as Donald Trump's policies are concerned, Australia does 532 00:30:47,440 --> 00:30:52,280 Speaker 13: not export too much to the US. We import a lot, 533 00:30:53,160 --> 00:30:55,520 Speaker 13: which is good from Donald Trump's perspective. 534 00:30:55,680 --> 00:30:59,200 Speaker 4: Yeah, but I'm wondering about something like steel and aluminum. 535 00:30:59,320 --> 00:31:02,280 Speaker 4: I know that a lot of the ores and minerals 536 00:31:02,320 --> 00:31:06,320 Speaker 4: are exported from Australia to China for processing, and if 537 00:31:06,400 --> 00:31:10,200 Speaker 4: Chinese demand in those areas were to contract a little bit, 538 00:31:10,240 --> 00:31:12,920 Speaker 4: couldn't that have a knock on effect in Australia. 539 00:31:13,440 --> 00:31:17,560 Speaker 13: Yeah, so there is a risk from the cascading effects 540 00:31:17,640 --> 00:31:21,000 Speaker 13: or reciprocal effects, and you know, there are a lot 541 00:31:21,000 --> 00:31:25,280 Speaker 13: of permutations and combinations that people have been talking about. 542 00:31:25,600 --> 00:31:28,960 Speaker 13: The direct impact so far from people I have spoken to, 543 00:31:29,080 --> 00:31:33,360 Speaker 13: from economists, and also the responses we have seen from 544 00:31:34,400 --> 00:31:38,680 Speaker 13: trade bodies and stuff, seems like from a macro perspective, 545 00:31:38,760 --> 00:31:43,000 Speaker 13: Australia will be fine. Obviously, individual companies who are at 546 00:31:43,040 --> 00:31:46,840 Speaker 13: the receiving end of these tariffs will be affected, and 547 00:31:47,000 --> 00:31:50,600 Speaker 13: they have been lobbying as well, and Australia's Prime Minister 548 00:31:50,760 --> 00:31:54,480 Speaker 13: and Trade Minister have been lobbying too to get some 549 00:31:54,640 --> 00:31:57,960 Speaker 13: relief from the US. The last time that Donald Trump 550 00:31:58,200 --> 00:32:02,120 Speaker 13: was in office, Australia did win no reprieve, so we're 551 00:32:02,200 --> 00:32:04,640 Speaker 13: keeping our fingers crossed that happens again. 552 00:32:04,840 --> 00:32:07,760 Speaker 4: I mentioned the GDP report that we're also expecting in 553 00:32:07,800 --> 00:32:09,800 Speaker 4: the week ahead. Give me a sense of what the 554 00:32:09,840 --> 00:32:13,040 Speaker 4: market is expecting in terms of overall economic growth. 555 00:32:13,320 --> 00:32:17,160 Speaker 13: So, like I mentioned earlier, Australia's economy has been pretty 556 00:32:17,200 --> 00:32:20,440 Speaker 13: weak pretty much since the middle of twenty twenty three. 557 00:32:20,720 --> 00:32:24,400 Speaker 13: All of twenty twenty four was very tepid. We are 558 00:32:24,560 --> 00:32:29,080 Speaker 13: in the deepest per capita slump since nineteen ninety one 559 00:32:29,640 --> 00:32:32,760 Speaker 13: excluding the pandemic, which means people have been feeling like 560 00:32:32,800 --> 00:32:35,720 Speaker 13: they are going backwards even though the economy has been growing. 561 00:32:35,760 --> 00:32:38,840 Speaker 13: So we have not had a recession as such, but 562 00:32:39,080 --> 00:32:45,400 Speaker 13: individually people have gone back so that is unlikely to change. 563 00:32:45,440 --> 00:32:49,040 Speaker 13: That per capita recession probably is unlikely to change. But 564 00:32:49,600 --> 00:32:53,280 Speaker 13: this data that we are expecting is for the last 565 00:32:53,320 --> 00:32:56,840 Speaker 13: three months of twenty twenty four. It does look like 566 00:32:56,960 --> 00:33:00,840 Speaker 13: the economy did pick up and that was by consumer 567 00:33:00,920 --> 00:33:06,320 Speaker 13: spending people feeling more confident about their finances. Public demand 568 00:33:06,440 --> 00:33:10,520 Speaker 13: has been strong as well government spending. We have election 569 00:33:10,640 --> 00:33:13,280 Speaker 13: this year or two, so some of the spending is 570 00:33:13,560 --> 00:33:18,760 Speaker 13: driven by that. So together with consumer spending, trade and 571 00:33:19,160 --> 00:33:22,440 Speaker 13: public demand, it looks like the last three months of 572 00:33:22,440 --> 00:33:25,680 Speaker 13: twenty twenty four were good and so far the momentum 573 00:33:25,720 --> 00:33:28,320 Speaker 13: it's only been like two months of the year, it 574 00:33:28,400 --> 00:33:29,600 Speaker 13: looks good as well. 575 00:33:29,800 --> 00:33:32,240 Speaker 4: Swati, thank you so much for helping us understand the 576 00:33:32,320 --> 00:33:35,960 Speaker 4: nuances of what's been happening these days in the Australian 577 00:33:36,000 --> 00:33:38,720 Speaker 4: economy as we look ahead to this week's ECO data. 578 00:33:38,960 --> 00:33:42,720 Speaker 4: Swati Pondi Asia Eco GUV reporter for Bloomberg News, joining 579 00:33:42,800 --> 00:33:45,760 Speaker 4: us from our studios in Sydney. Let's turn next to 580 00:33:45,880 --> 00:33:48,800 Speaker 4: China and the rally that we have seen lately in 581 00:33:48,920 --> 00:33:52,800 Speaker 4: tech talks. So far, these gains have far surpassed those 582 00:33:52,800 --> 00:33:57,000 Speaker 4: of their American counterparts. Bloomberg opinion columnist July Wren has 583 00:33:57,040 --> 00:34:00,680 Speaker 4: been writing about the Chinese alternative to the MagX. She's 584 00:34:00,760 --> 00:34:03,959 Speaker 4: in our Hong Kong radio studio. Truly, it's always a pleasure, 585 00:34:04,040 --> 00:34:07,160 Speaker 4: Thank you so much. How would you describe what's been 586 00:34:07,240 --> 00:34:09,319 Speaker 4: happening with Chinese tech right now? 587 00:34:09,600 --> 00:34:14,040 Speaker 14: Well, deep Seak really has changed the perception of Chinese investors. 588 00:34:14,200 --> 00:34:16,640 Speaker 14: They do feel, I mean, going back, like we know 589 00:34:16,760 --> 00:34:19,920 Speaker 14: that the Hong Kong listed is mostly Chinese companies, right 590 00:34:20,080 --> 00:34:25,760 Speaker 14: they are deep value traps after the Beijing's regulator crackdown 591 00:34:25,800 --> 00:34:29,880 Speaker 14: some big tech and the whole property bubble bust, like 592 00:34:30,239 --> 00:34:32,920 Speaker 14: the Chinese shares are very cheap. But deep Sea basically 593 00:34:33,000 --> 00:34:36,600 Speaker 14: said that, you know, China is not just a manufacturing powerhouse, 594 00:34:36,760 --> 00:34:39,680 Speaker 14: it's also good with the software and digital stuff, right, 595 00:34:39,760 --> 00:34:44,640 Speaker 14: Like deep Sea does a generative AI and the people 596 00:34:44,719 --> 00:34:49,480 Speaker 14: didn't really expect that the Chin, a small unknown startup 597 00:34:49,960 --> 00:34:52,840 Speaker 14: even to the Chinese until a month ago could do 598 00:34:53,000 --> 00:34:56,359 Speaker 14: so well despite all the export controls, and that really 599 00:34:56,400 --> 00:34:59,200 Speaker 14: fired up. And then what we're seeing is that you know, 600 00:34:59,320 --> 00:35:02,360 Speaker 14: the tech stock, the software companies, they're doing very, very well, 601 00:35:02,560 --> 00:35:04,719 Speaker 14: and there is a sense that the China can be 602 00:35:04,760 --> 00:35:05,480 Speaker 14: a growth market. 603 00:35:05,480 --> 00:35:05,760 Speaker 1: Again. 604 00:35:06,000 --> 00:35:09,040 Speaker 4: In the latest column that you authored for Bloomberg Opinion, 605 00:35:09,080 --> 00:35:13,240 Speaker 4: you write that a Chinese alternative to the Magnificent Seven arrives. 606 00:35:13,280 --> 00:35:15,680 Speaker 4: And I'm wondering whether you're really focused on a lot 607 00:35:15,680 --> 00:35:18,320 Speaker 4: of these e commerce names that we hear so much about, 608 00:35:18,360 --> 00:35:19,960 Speaker 4: like Ali Baba Tencent. 609 00:35:20,520 --> 00:35:24,120 Speaker 14: Yes. One thing though, is like a lot of it 610 00:35:24,160 --> 00:35:28,480 Speaker 14: is about the positioning, like global asset managers positioning. Coming 611 00:35:28,480 --> 00:35:32,680 Speaker 14: into this year, everyone is overweight on basically the big 612 00:35:32,719 --> 00:35:35,480 Speaker 14: seven tax stocks, right the so called the notion of 613 00:35:35,520 --> 00:35:39,879 Speaker 14: a US exceptionalism, and everyone agrees that the US store 614 00:35:39,960 --> 00:35:43,520 Speaker 14: market is overvalued because just simply because so much money 615 00:35:43,560 --> 00:35:46,719 Speaker 14: has been coming in and there is this genuine need 616 00:35:46,800 --> 00:35:49,640 Speaker 14: to diversify, and now the question is where do you 617 00:35:49,680 --> 00:35:53,520 Speaker 14: diversify to? Right, Like China, tex stock is one story. 618 00:35:53,680 --> 00:35:57,040 Speaker 14: Another story is European stocks. They have been doing quite 619 00:35:57,040 --> 00:36:00,800 Speaker 14: well as well, and there is expectation that the Donald 620 00:36:00,840 --> 00:36:04,560 Speaker 14: Trump however you like it politically or not, could propel 621 00:36:04,640 --> 00:36:08,200 Speaker 14: peace over Ukraine, which means that it could be good 622 00:36:08,280 --> 00:36:10,560 Speaker 14: for European economies, especially Germany. 623 00:36:10,920 --> 00:36:13,879 Speaker 4: You know, Beijin seems to have kind of changed its 624 00:36:13,920 --> 00:36:16,440 Speaker 4: attitude where some of the big tech stories in China 625 00:36:16,480 --> 00:36:18,799 Speaker 4: are concerned. I'm thinking back to the meeting a few 626 00:36:18,840 --> 00:36:21,239 Speaker 4: weeks ago that chi Jinping had with some of the 627 00:36:21,320 --> 00:36:23,560 Speaker 4: leaders of these big companies, and I'm thinking of Jack 628 00:36:23,680 --> 00:36:28,120 Speaker 4: Ma in particular, as Chijin Ping changed his attitude when 629 00:36:28,120 --> 00:36:29,120 Speaker 4: it comes to big tech. 630 00:36:29,560 --> 00:36:33,720 Speaker 14: He has to because, believe it or not, just because 631 00:36:34,000 --> 00:36:38,359 Speaker 14: China's economic outlook it's not so good. Right, like the 632 00:36:38,400 --> 00:36:43,080 Speaker 14: big tech, the big e commerce platforms political fortunes actually 633 00:36:43,200 --> 00:36:47,440 Speaker 14: are improving because they actually soak up a lot of employment. 634 00:36:47,600 --> 00:36:51,440 Speaker 14: Right like young people. The unemployment rate for young people 635 00:36:51,440 --> 00:36:54,360 Speaker 14: in China is very high. And if young people have 636 00:36:54,480 --> 00:36:58,400 Speaker 14: no jobs, they could become delivery workers unfortunately, or like 637 00:36:58,600 --> 00:37:01,200 Speaker 14: they could be uber Try in China that would be 638 00:37:01,239 --> 00:37:03,799 Speaker 14: d D. Or they could set up a small e 639 00:37:03,880 --> 00:37:09,319 Speaker 14: commercer shops selling stuff, or they could be influencers. And 640 00:37:10,200 --> 00:37:14,120 Speaker 14: I think Beijing does recognize that these big platforms, they 641 00:37:14,160 --> 00:37:16,800 Speaker 14: are job creators and they need to be nice to them. 642 00:37:16,880 --> 00:37:20,040 Speaker 4: When you look at valuation, you're a financial analyst by training. 643 00:37:20,080 --> 00:37:21,520 Speaker 4: What do you see when you look at some of 644 00:37:21,560 --> 00:37:24,360 Speaker 4: these companies Chinese firms that trade in Hong. 645 00:37:24,320 --> 00:37:28,640 Speaker 14: Kong, everything is relative. I mean Tesla trades at over 646 00:37:28,719 --> 00:37:32,240 Speaker 14: one hundred times forward earnings. Shell me and the Bid 647 00:37:32,440 --> 00:37:36,240 Speaker 14: they both do evs. They trade at the roughly forty 648 00:37:36,280 --> 00:37:40,600 Speaker 14: and twenty five times, and relatively speaking, everyone everyone else 649 00:37:40,760 --> 00:37:43,719 Speaker 14: is cheap compared to Tesla, right, And it's not just 650 00:37:43,840 --> 00:37:47,359 Speaker 14: that a lot of Chinese feel that the Ela Musk 651 00:37:47,400 --> 00:37:50,239 Speaker 14: has been very distracted lately and then that he's not 652 00:37:50,320 --> 00:37:54,040 Speaker 14: paying attention to Tesla's business, and that opens a window 653 00:37:54,080 --> 00:37:57,080 Speaker 14: for Chinese EV makers and in fact, like a lot 654 00:37:57,080 --> 00:37:59,880 Speaker 14: of EV makers, they are adding like a lot of 655 00:38:00,719 --> 00:38:01,879 Speaker 14: advanced technology. 656 00:38:02,120 --> 00:38:04,880 Speaker 4: July, thank you so much. It's always a pleasure. Shuly Ran, 657 00:38:04,920 --> 00:38:08,719 Speaker 4: Bloomberg opinion columnist, Joining us from our studios in Hong Kong, 658 00:38:09,000 --> 00:38:11,319 Speaker 4: and I'm Doug Krisner. You can catch us weekdays for 659 00:38:11,360 --> 00:38:14,919 Speaker 4: the Daybreak as your podcast. It's available wherever you get 660 00:38:14,960 --> 00:38:16,240 Speaker 4: your podcast. Tom. 661 00:38:16,800 --> 00:38:19,160 Speaker 2: Thank you Doug, and that does it for this edition 662 00:38:19,200 --> 00:38:22,080 Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning, 663 00:38:22,120 --> 00:38:24,440 Speaker 2: five am Wall Street Time for the latest on markets 664 00:38:24,440 --> 00:38:26,719 Speaker 2: overseas and the news you need to start your day. 665 00:38:27,160 --> 00:38:30,080 Speaker 2: I'm Tom Busby. Stay with us. Top stories and global 666 00:38:30,080 --> 00:38:32,200 Speaker 2: business headlines are coming up right now