Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 1: top stories in the coming week from our Daybreak anchors
Speaker 1: all around the world. Straight ahead on the program, more
Speaker 1: bank earnings and there could be some surprises.
Speaker 2: I'm deg Chrisner. After three decades of deflation in Japan,
Speaker 2: we look at the flip side inflation.
Speaker 3: I'm Kaylee Lines in Washington, where the Senate Judiciary Committee
Speaker 3: is getting such a vote on a Supreme Court ethics bill.
Speaker 4: I'm Stephen Carolyn London. We're looking ahead to the general
Speaker 4: election in Spain and the challenges facing Prime Minister Pedro Sanchez.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
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Speaker 4: You.
Speaker 1: I'm Amy Morris in Washington. We spent most of the
Speaker 1: past week focusing on inflation and the economy, but now
Speaker 1: we're turning our attention to bank earnings with a kickoff
Speaker 1: of the second quarter reporting season. Joining me now to
Speaker 1: talk about all of this is Alison Williams. She's our
Speaker 1: global senior bank analyst for Bloomberg Intelligence and Alison, it
Speaker 1: has been quite a week. We had JP Morgan, Chase,
Speaker 1: Wells Fargo, City Group reporting, as we've been talking about,
Speaker 1: and there's a we have been waiting now on the
Speaker 1: next wave. Bank of America, Morgan Stanley, Charles Schwab will
Speaker 1: be reporting on Tuesday, Goldman Sachs, m and T Bank,
Speaker 1: US Bank Corporate others on Wednesday. Let's start with JP Morgan.
Speaker 1: That was some record revenue, just your initial reaction.
Speaker 6: So it was a very strong quarter at JP Morgan,
Speaker 6: especially the return on tangible equity of twenty five percent
Speaker 6: very impressive, and a few things happening there. First of all,
Speaker 6: the net interest income coming in much better than expected
Speaker 6: and the bank increasing their guidance for the year that
Speaker 6: we think that's going to fuel higher revenue and EPs estimates,
Speaker 6: and in fact we did get relatively resilient net interest
Speaker 6: income across JP Morgan, Wells Fargo and City Group. Wells
Speaker 6: Fargo also raising their net interest income guidance whereas City
Speaker 6: Group has some offsets from weaker fee income. But again
Speaker 6: focusing on JP Morgan, they are they have better than
Speaker 6: expected revenue they're trading and fees coming in a little
Speaker 6: bit better than expected, and also on the costs stable. Lastly,
Speaker 6: on the provision side of things, they are taking reserves.
Speaker 6: A lot of that has to do with car growth
Speaker 6: that's been a contributor to the net interest income line,
Speaker 6: and I get that's something that we're seeing across the bank.
Speaker 1: How much of this is impacted by those regional bank failures,
Speaker 1: and what I mean is the absorption or being able
Speaker 1: to merge with them. Has that proven to be a
Speaker 1: good deal, particularly I'm thinking with First Republic.
Speaker 6: So JP Morgan you certainly is seeing the benefit of
Speaker 6: that deal. But I would say that some of the
Speaker 6: industry dynamics that came into play in March and perhaps
Speaker 6: early April have really stabilized in terms of we are
Speaker 6: seeing deposits migrate into higher yielding alternatives, but I think
Speaker 6: not at a pace that investors had fears. So a
Speaker 6: migration and not a flight, I would say with regard
Speaker 6: to deposits, and so as the cost of those deposits
Speaker 6: are rising, but perhaps not as great as feirit. That's
Speaker 6: also aiding the interesting income line for these banks.
Speaker 1: Now, I was reading on the Bloomberg terminal about trading
Speaker 1: and investment banking had actually been down from a year go,
Speaker 1: but still came in ahead of analysts expectations. What would
Speaker 1: be driving all of this or is there any one
Speaker 1: thing driving it?
Speaker 6: So when you look at the trading and fees, they
Speaker 6: are both down, but it is a little bit of
Speaker 6: a tale of two cities because trading is normalizing in
Speaker 6: a historically higher range, whereas investment banking fees are normalizing
Speaker 6: in a weaker range, similar to pre pandemic levels. On
Speaker 6: the trading side of things, fixed income trading is really
Speaker 6: the story this year, but also last year as well.
Speaker 6: There's a benefit from interest rate volatility. What we're also
Speaker 6: seeing in this year is credit trading improving. Credit trading
Speaker 6: was very weak last year, so to some extent, you know,
Speaker 6: when we look at the comparisons, they are easier, but
Speaker 6: we also did have some pretty good high yield issuance
Speaker 6: growth that helps the secondary volumes a little bit. The
Speaker 6: other thing that we're seeing on the just moving to
Speaker 6: the f side of things, so high yield issuance growth
Speaker 6: is helpful. Equity undwriting also seeing some green shoots there,
Speaker 6: so some good growth off very weak levels, but the
Speaker 6: M and A headwind is really overwhelming there. M and
Speaker 6: A continue to be very strong last year, and now
Speaker 6: we're seeing that weakness and that turning to a headwind.
Speaker 6: And so the other trend we're seeing at banks is
Speaker 6: that they're starting to right size, they're staffing to these
Speaker 6: weaker levels.
Speaker 1: Yeah, I wanted to talk about that a little bit
Speaker 1: because when you talk about them right sizing their staffing,
Speaker 1: the flip side of that coin. Another way of interpreting
Speaker 1: that is they're letting people go, and maybe that bodes
Speaker 1: poorly for the future. But it sounds like just from
Speaker 1: what you've said, this is a trend that's a very
Speaker 1: strong trend and that we can expect more growth.
Speaker 6: Well, the strength is really on the trading side of things,
Speaker 6: and again we're just looking at sort of historically high things,
Speaker 6: you know, normalizing in a historically high range there. So
Speaker 6: it is a little bit soft and down compared to
Speaker 6: last year, but it's not the same weakness that we're
Speaker 6: seeing on the investment banking fee side, and it perhaps
Speaker 6: isn't so much a statement about things getting worse on
Speaker 6: investment banking fees, but more that staffing levels are kind
Speaker 6: of coming to the reality that we've seen over the
Speaker 6: last several quarters. Keep in mind that twenty twenty one
Speaker 6: was a record year for equities for M and A.
Speaker 6: It was very strong. The banks were scrambling for headcount,
Speaker 6: especially the hiring of junior bankers, and you recall the
Speaker 6: stories about pay for junior bankers happening at that time.
Speaker 6: So when we saw fees basically get cut in half
Speaker 6: last year, the banks were really hesitant to reduce their
Speaker 6: staffing to meet those lower levels. They were holding out
Speaker 6: hope that things would really pick up in twenty twenty three,
Speaker 6: and as of the first half, that really has not happened.
Speaker 6: As I said, we saw some we've seen some green shoots,
Speaker 6: but not to the level of optimism that the banks
Speaker 6: have expected. And so it's really kind of coming to,
Speaker 6: as I said, the reality of those lower levels. And
Speaker 6: you know, there's some hope for the second half, but
Speaker 6: really banks and the M and A boutiques are really
Speaker 6: talking more about twenty twenty four at this point.
Speaker 1: And we are talking with Alison Williams with Bloomberg Intelligence
Speaker 1: about bank earnings. I want to shift gears just a
Speaker 1: little bit talking about Bank of America often seen as
Speaker 1: a bell Weather, partly because of who its clients are,
Speaker 1: small business accounts making up the backbone of the US
Speaker 1: economy and so many consumer clients as well. As we
Speaker 1: watch what that bank says, what should we be looking
Speaker 1: for if we are trying to gauge the direction of
Speaker 1: the economy or the health or the trends of the
Speaker 1: banking industry.
Speaker 6: So, as you said, they are Bellweather, and we will
Speaker 6: be looking across their businesses and their client base. But
Speaker 6: I think the commercial and industrial lending side we may
Speaker 6: see some weakness there. The bank has talked about the
Speaker 6: fact that utilization rates of their commercial lines had been improving.
Speaker 6: That means that companies are drawing down on those lines,
Speaker 6: but that has sort of stabilized. And if we look
Speaker 6: at the industry data, we did see that commercial industrial
Speaker 6: loans was the area of weakness, sort of flatish leans overall.
Speaker 6: So Bank of America will also benefit from the credit
Speaker 6: card side of things that we're seeing from JPMorgan City
Speaker 6: Group and Walls Bargo, but they will see that offset
Speaker 6: in terms of the commercial industrial loans. Will also be
Speaker 6: looking at the wealth business for Bank of America. That's
Speaker 6: a very significant business for them, and we're going to
Speaker 6: be watching for the deposit costs. The wealth business is
Speaker 6: one of the more sensitive businesses in terms of the
Speaker 6: rising cost of deposits. But there is a potential that
Speaker 6: we could see things again leveling out and perhaps those
Speaker 6: costs rising a little bit less than feared after some
Speaker 6: of the increases that we saw last quarter.
Speaker 1: Let's shift gears again. Morgan Stanley, Goldman Sachs. Those are
Speaker 1: going to be coming up deal making important for them.
Speaker 1: There have been those job cuts that we've already touched
Speaker 1: on anything particular that you're going to be watching for
Speaker 1: what we may be expecting from them.
Speaker 6: So for Goldman Sacks, they as you point out that
Speaker 6: the fees are weak M and A fees on the
Speaker 6: M and A side of things, they are always by
Speaker 6: far the revenue leader, and so that represents not just
Speaker 6: their ranking within the M and A league tables, but
Speaker 6: also the fact that they tend to be the lead
Speaker 6: advisor and more profitable deals. As I said, that's a headwind.
Speaker 6: So they will be feeling that headwind they are also
Speaker 6: likely to see some of the some of the benefit
Speaker 6: of the green shoots on the equity side of things.
Speaker 6: But I think that the bank has definitely flagged a
Speaker 6: few things to watch out for. We are going to
Speaker 6: likely see more impairments on some of their real estate.
Speaker 6: That was that was a drag last quarter. We're going
Speaker 6: to continue to see that a drag this quarter.
Speaker 1: We're going to watch it with you. Alison, Thank you
Speaker 1: so much for this insight. We are looking forward to
Speaker 1: those earnings coming up in the week ahead. Alison Williams
Speaker 1: a Global senior bank analyst for Bloomberg Intelligence. Now coming
Speaker 1: up on Bloomberg day Break weekend, we are on inflation
Speaker 1: watch when it comes to Japan. I'm Amy Morris and
Speaker 1: this is Bloomberg. This is Bloomberg Daybreak weekend, our global
Speaker 1: look ahead at the top stories for investors in the
Speaker 1: coming week. I'm Amy Morris in Washington. Up later in
Speaker 1: our program, lawmakers are considering new ethics rules for the
Speaker 1: Supreme Court. But how much authority does Congress have? But first,
Speaker 1: investors are watching for more signs of inflation in Asia.
Speaker 1: We're watching for key data from Japan this coming week
Speaker 1: and for more we go to Bloomberg Daybreak Asia host
Speaker 1: Doug Krisner Doug Amy.
Speaker 2: Perhaps no other major economy in the world has had
Speaker 2: to deal with the deflation problem like Japan. It's persisted
Speaker 2: for three decades, but within the last year, price pressures
Speaker 2: have been building and it's creating a unique challenge for
Speaker 2: the Bank of Japan. Joining me now for a closer
Speaker 2: look is Bloomberg's Paul Jackson. He is based in Tokyo
Speaker 2: and he covers the governments and economies of both Japan
Speaker 2: and South Korea. Paul, it's a pleasure to have you here,
Speaker 2: and I'm going to begin with the inflation data that
Speaker 2: we are expecting in the coming week. Just fill us
Speaker 2: in on what the markets are forecasting right now and
Speaker 2: what economist's saying.
Speaker 7: Well, I think we're expecting CPI to stay firm around
Speaker 7: three point two percent for June. Now, that might not
Speaker 7: sound that high by international standards, but for Japan, after
Speaker 7: all these decades of deflation, that is high. And it's
Speaker 7: been above two percent since April twenty twenty two. So
Speaker 7: people are asking, you know, just when is the BOCHA
Speaker 7: going to change policy? You know, we see a lot
Speaker 7: of data that suggests that finally we are close to
Speaker 7: some kind of movement in this price trend that has
Speaker 7: been so sluggish over the years. We've seen, you know
Speaker 7: BOJ survey on household expectations, that households are expecting prices
Speaker 7: to go up at a faster rate. We saw wage growth,
Speaker 7: which the Bank of Japan has been saying is the
Speaker 7: very important to ensure that price is continueizing. We saw
Speaker 7: gains of two point five percent in the most recent data.
Speaker 7: Although you know, there's lots of complications to unpick that
Speaker 7: data and suggest it's volatile and can't be totally relied upon,
Speaker 7: but still it's a sign that things are bubbling up
Speaker 7: and that the time for the BOJ to consider policy
Speaker 7: change is coming upon us. And we do have a
Speaker 7: meeting coming up later this month, which economists surveyed by
Speaker 7: Bloomberg last month said was the most likely meeting for
Speaker 7: any near term tweaks to BOJ policy.
Speaker 2: I'm wondering whether there is anyone that is concerned about
Speaker 2: the time that the BOJ is taking. I mean, you
Speaker 2: can understand from Uwaita's point of view or any other
Speaker 2: BOJ governor, if you've been in a deflationary environment for
Speaker 2: three decades. You want to be very confident that inflation
Speaker 2: has re emerged. But I'm wondering whether or not anyone
Speaker 2: is saying this is a dangerous exercise to keep monetary
Speaker 2: policy so accommodated for so long.
Speaker 7: Well, of course, there's been a lot of criticism of
Speaker 7: Japan's addiction to keeping stimulus rolling when the rest of
Speaker 7: the world is raising rates and trying to really tackle inflation.
Speaker 7: But I think, Doug Ive, you've honed in on the point.
Speaker 7: You know, Japan has been in deflation for decades, so
Speaker 7: you know Japan doesn't want to stuff it up under
Speaker 7: the new governor Huada. Remember that Huaida was on the
Speaker 7: board back in the early two thousands when Japan prematurely
Speaker 7: raised interest rates and then fell back into deflation shortly afterwards,
Speaker 7: And at that time Uada dissented from that decision. He said,
Speaker 7: we are moving too early. So this is a guy
Speaker 7: who does not want to see that happen again under
Speaker 7: his watch. So he's turned out to be a little
Speaker 7: bit more cautious than we expected. So that points to
Speaker 7: a big change in BOJ policy coming later. The question
Speaker 7: is will the BOJ do some kind of stop gap
Speaker 7: measure to make its stimulus more sustainable in the meantime,
Speaker 7: and that takes us to its control of the yield
Speaker 7: curve and potential change for that in July.
Speaker 2: What about changing the inflation forecast? Is that something that
Speaker 2: the BOJ could use also to kind of help the
Speaker 2: market understand what its intentions are.
Speaker 7: Well, that's a very good point because Casuwdo is an economist,
Speaker 7: spent all his career as an economist, so he wants
Speaker 7: to have you know, data evidence to draw upon for change. Now,
Speaker 7: I think everyone is expecting the BOJ to raise its
Speaker 7: inflation forecast for this year because currently it says it's
Speaker 7: only going to average one point eight percent. Now, how
Speaker 7: is that possible when we're already you know, we're still
Speaker 7: at three point two percent. So I think everyone thinks
Speaker 7: he's going to go above two percent for this year.
Speaker 7: But the thing is is the BOJ needs to see
Speaker 7: inflation staying above two percent for a period of time,
Speaker 7: like you know, the next two or three years. That's
Speaker 7: when the stars are aligned for big change.
Speaker 2: The other thing that I'm wondering about is I look
Speaker 2: at the yen over the last week strengthened tremendously against
Speaker 2: the dollar. How this would affect the boj's thinking, What
Speaker 2: do you what do you think about that?
Speaker 7: Well, of course there's been a lot of you know,
Speaker 7: worrying concern about the end going two week and the
Speaker 7: possibility of intervention, and then since we've seen this strengthening.
Speaker 7: Obviously the us CPI figures, cooling has helped that. But
Speaker 7: if you look at the differentials between ten year yields
Speaker 7: and put that against whether dollar yen is that the
Speaker 7: yen is definitely out of sync with where it should
Speaker 7: be on that chart. It is a little bit stronger
Speaker 7: than it should be. So that suggests in markets there's
Speaker 7: a little bit of uneasiness about this July meeting, and
Speaker 7: they're not wanting to bet that the BOJ will just
Speaker 7: do nothing. They want to be in a better position
Speaker 7: in case there is change. I would just caution that
Speaker 7: if we really had people betting on change happening, we
Speaker 7: would be seeing the BOJ having to buy bonds at
Speaker 7: its fixed rate operations each day. We're still not quite
Speaker 7: there yet. Although yields are very close to its zero
Speaker 7: point five percent cap.
Speaker 2: Isn't the BOJ somewhat trapped by the current structure of
Speaker 2: the economy in Japan, and I'm kind of opening up
Speaker 2: the conversation to include declining birth rates and aging populations.
Speaker 2: So there are certain structural variables that really have not
Speaker 2: shifted and that's only made the job a lot more difficult.
Speaker 7: Well, it's true, I mean, in terms of the demographics
Speaker 7: of Japan, things are not working in favor of like
Speaker 7: a very vigorous, aggressively growing economy. Maybe at some point
Speaker 7: Japanese policymakers just have to understand and accept that Japan's economy,
Speaker 7: like you know, mature economies across the world, has to
Speaker 7: accept lower levels of growth, and that Japan's levels of
Speaker 7: growth maybe need to be at the lower end of
Speaker 7: the scale.
Speaker 2: In the G seven, one of the things that I
Speaker 2: think has been critical for igniting or let's say reigniting
Speaker 2: inflation in Japan has been the wage component that was
Speaker 2: a long time coming. Is this being celebrated now as
Speaker 2: a major pivotal point.
Speaker 7: Well, I think there's still a little bit of doubt
Speaker 7: and suspicion as to whether this will continue now. Obviously,
Speaker 7: if you've got prices going up, it's a lot easier
Speaker 7: for unions and workers to demand more pay and a
Speaker 7: lot easier for executives to offer more pay and explain
Speaker 7: it to their shareholders. So we've got a bit of
Speaker 7: a chicken and an egg thing here. We need the
Speaker 7: prices to go up to justify the wages, but then
Speaker 7: the Bank of Japan saying you need the wages going
Speaker 7: up to push up the prices.
Speaker 2: So we've talked a lot about the macro in Japan.
Speaker 2: Tell me how this intersects with the current political environment.
Speaker 7: Well, in terms of the current political environment, we were
Speaker 7: expecting an early election, with Prime Minister Fum taking advantage
Speaker 7: of up to in popularity ratings. However, things have turned
Speaker 7: in the other direction in the last few weeks. He's
Speaker 7: got a problem with an identification number scheme that the
Speaker 7: government's been trying to roll out. It's got all kinds
Speaker 7: of technical problems and this has led to a in
Speaker 7: his popularity. And so this means the likelihood of an
Speaker 7: early election, certainly over the summer, has totally gone. Even
Speaker 7: in the autumn it's looking far more doubtful. And what
Speaker 7: this means is the boj doesn't have to worry about
Speaker 7: getting in the way of election or ruffling markets, because
Speaker 7: as an election going away, that factor is now taken
Speaker 7: out of the equation, and so investors I think should
Speaker 7: be a little bit more on guard for some kind
Speaker 7: of stopgap measure for the boj at this coming meeting.
Speaker 2: Paul, thank you so much for being with us. Bloomberg's
Speaker 2: Paul Jackson. He covers the government's and economies of Japan
Speaker 2: and South Korea. I'm Doug Prisoner. You can join Brian
Speaker 2: Curtison and myself weekdays from Bloomberg Daybreak Asia beginning at
Speaker 2: six am in Hong Kong, six pm on Wall Street Amy.
Speaker 1: Thank you, Doug, and coming up on Bloomberg day Break weekend.
Speaker 1: Senate Democrats are pushing for a set of ethics rules
Speaker 1: for Supreme Court justices. Morris. This is Bloomberg.
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Speaker 1: I'm Ammy Morris in Washington with your global look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: Senate Democrats are pushing for a law that would essentially
Speaker 1: set a new code of conduct for the Supreme Court.
Speaker 1: That's after a string of controversies related to the High Court.
Speaker 1: For more, let's head to our Bloomberg ninety nine to
Speaker 1: one newsroom in Washington and Bloomberg Sound On co host
Speaker 1: Kaylee Lines, Kaylee.
Speaker 3: That's right, Amy. The Senate Judiciary Committee, led by Democratic
Speaker 3: chairman Senator Dick Durbin, will vote this coming Thursday on
Speaker 3: a bill that would require Supreme Court justices to adopt
Speaker 3: a code of conduct. Let's first remind ourselves of the
Speaker 3: reason why this push is happening, or reasons. Perhaps. Joining
Speaker 3: me now is Greg Store, who covers the High Court
Speaker 3: for us here at Bloomberg. So, Greg, just to start,
Speaker 3: can you just give us a brief recap about all
Speaker 3: of the perhaps ethically questionable information that has come to
Speaker 3: light about certain justices in recent months.
Speaker 8: Yeah, there's a growing list, and for all we know,
Speaker 8: the let's make get longer by the time that they
Speaker 8: hold this vote. The biggest stories had to do with
Speaker 8: Justice Clarence Thomas accepting luxury travel over the course of
Speaker 8: a couple decades from a Republican mega donor, a guy
Speaker 8: named Harlan Crowe. There's been another revelation that Justice sam
Speaker 8: Alito took a trip that was also funded by Republican donors.
Speaker 8: A new story out by the Associated Press involving Justice
Speaker 8: Sonya Sodomayor using her staff members to when she would
Speaker 8: go out on speeches to encourage the venues to acquire
Speaker 8: her book books so that people she could sign them
Speaker 8: for people. So there's a kind of a panoply of
Speaker 8: things and I'm really just kind of scraping the surface here.
Speaker 3: Well, and that of course is on both sides, right
Speaker 3: conservative leaning justices as well as those on the other end,
Speaker 3: which raises the question about what ethics checks really exist
Speaker 3: for the court. Now we've kind of learned that there
Speaker 3: aren't many, right.
Speaker 8: Yeah, they are not bound by any code of conduct.
Speaker 8: They say they follow the code of conduct that applies
Speaker 8: to lower court judges, but there's really no mechanism for
Speaker 8: enforcing it. And that is part of the problem here
Speaker 8: that when there are these stories that come out and
Speaker 8: you know, people are complaining about them. There's no place
Speaker 8: for them really to turn where an independent entity will
Speaker 8: look at them and say either you did or did
Speaker 8: not violate the ethics rules.
Speaker 3: So that brings us to this legislations bill that the
Speaker 3: Judiciary Committee is set to vote on this coming week.
Speaker 3: What is it trying to accomplish.
Speaker 8: It's trying to require the Court, as you said at
Speaker 8: the beginning, to put in place a code. It's not
Speaker 8: imposing one from the outside, because it is the idea
Speaker 8: by the Democratic senators who are pushing it is that
Speaker 8: the court would know best about exactly how to craft it,
Speaker 8: and they don't want to be too intrusive, they say,
Speaker 8: but it would require the court to have clearer disclosure rules,
Speaker 8: clearer rules about conflicts of interests, and it would set
Speaker 8: up an enforcement mechanism involving lower court judges so that
Speaker 8: if there were a complaint, there would be somebody to
Speaker 8: review that.
Speaker 3: So I guess, really this is more about avoiding ethics
Speaker 3: conflicts in the future than the ones of the past
Speaker 3: that we now about, right, is that a fair characterization?
Speaker 8: It mostly is, you know, it remains to be seen
Speaker 8: how exactly this might apply to past things. You know,
Speaker 8: somebody could perhaps you know, file a complaint having to
Speaker 8: do with something that happened in the past. And of
Speaker 8: course this is just legislation, right, awful lot of hurdles,
Speaker 8: including the filibuster in the Senate, than the fact that
Speaker 8: the House is controlled by Republicans.
Speaker 3: Well, that's what I was going to ask. Next, Is
Speaker 3: this something that it seems like it's going to get
Speaker 3: bipartisan support at this point?
Speaker 8: No, you know, Republicans have generally said that these complaints
Speaker 8: about the Supreme Court, which are mostly geared towards the
Speaker 8: more conservative justices, Republicans have generally sort of said this is,
Speaker 8: you know, basically a proxy for complaints about the Court's
Speaker 8: outputs in the Court, of course, has had a number
Speaker 8: both this term and last term, a number of very big,
Speaker 8: very conservative decisions. So it does not at this point
Speaker 8: look as though there's going to be enough Republican support
Speaker 8: to get it over the finish line.
Speaker 3: I want to come back to the perhaps controversial decisions
Speaker 3: that have been made in the last several months and
Speaker 3: what that has done to the Court's standing on the
Speaker 3: part of the American public. But first, if I could
Speaker 3: just ask you one last question, around what's happening on
Speaker 3: the Capitol hillside. It's worth noting that the Judiciary Committee
Speaker 3: isn't just trying to vote on this legislation. They've also
Speaker 3: been seeking information. They asked Harlan Crowe, who you mentioned,
Speaker 3: the billionaire involved with the Clarence Thomas dealings that had
Speaker 3: been spotlighted. They've asked him for information. He has refused
Speaker 3: to cooperate. And I believe they've had outreach toward Chief
Speaker 3: Justice John Roberts as well, and these efforts haven't necessarily
Speaker 3: been fruitful.
Speaker 8: Right, Dick Durbin, who's the chairman of the Senate Judiciary Committee,
Speaker 8: invited John Roberts to testify. The Chief Justice declined in
Speaker 8: a letter that really didn't even sort of acknowledge there
Speaker 8: was an issue here. The Court did put out this
Speaker 8: statement of ethical principles that they say they follow, but
Speaker 8: that didn't go nearly as far as of the Court
Speaker 8: want to. So far, the Court has not not been
Speaker 8: willing to engage much on these issues. And you know,
Speaker 8: one question here is the Court has also never acknowledged
Speaker 8: that Congress has a constitutional right to impose any sorts
Speaker 8: of ethical requirements on them. So even if this legislation
Speaker 8: were to go forward, it's not clear that the Supreme
Speaker 8: Court would necessarily accept it as something that's binding on them.
Speaker 3: So the Court could rule about itself almost.
Speaker 8: It could rule, or it could just say, and of
Speaker 8: course these are nine individuals, say I or we are
Speaker 8: not going to abide by this. You know, one of
Speaker 8: the issues that John Roberts has over at the Court is,
Speaker 8: you know, imposing putting in place a code of conduct
Speaker 8: isn't necessarily something that can be done on a five
Speaker 8: to four or six to three vote, like other things
Speaker 8: that the Court does. It's the kind of thing that
Speaker 8: probably requires buy in from everybody since you're going to
Speaker 8: expect everybody to abide by it. So that will be
Speaker 8: a hurdle that that you know, the Court, the Court
Speaker 8: has to deal with.
Speaker 3: Well, especially if some of the justices that would need
Speaker 3: to sign on are the ones that have been in
Speaker 3: the spotlight for some of these ethics issues and could
Speaker 3: fear potential repercussions. So if we could just bring this
Speaker 3: around more broadly to kind of what you were suggesting
Speaker 3: about some of the decisions they've been made, and just
Speaker 3: the issue of trust in the Court or faith in
Speaker 3: the Supreme Court. Where is it standing in America right now?
Speaker 8: Pretty darn lowe ad or near record lows. And that
Speaker 8: is especially among Democrats, because of course Democrats are the
Speaker 8: ones more likely to be unhappy with how the Court
Speaker 8: has been ruling. Yeah, and you know exactly what is
Speaker 8: causing that, and you know, the questions don't always get
Speaker 8: into that. Undoubtedly some of it is because of the
Speaker 8: Court's rulings. Undoubtedly some of it is because of the
Speaker 8: the way Republicans, both in the White House and the
Speaker 8: Senate have managed to get to get their nominees on
Speaker 8: the Court. Of course, the you know, the well documented
Speaker 8: Mitch McConnell's hold open of that seat before the election
Speaker 8: that elected Donald Trump rushed to get Amy Cony Barrett
Speaker 8: co affirmed before the last presidential election. And then we
Speaker 8: have all these ethics issues on top of that, and
Speaker 8: you know, it's a time where more and more people
Speaker 8: are saying, I don't have confidence in this court.
Speaker 3: So aside from you know, just this legislation around the
Speaker 3: Code of Conduct, it raises a question of whether or
Speaker 3: not we're going to have a more serious conversation about
Speaker 3: reform to the Court in some way or another, whether
Speaker 3: or not that means expanding it, which always isn't a
Speaker 3: politically a popular idea or something else.
Speaker 8: We'll continue to have that conversation, I'm sure, but the
Speaker 8: political reality is it's not likely to happen anytime soon,
Speaker 8: even if Democrats, like even if Joe Biden were to wholeheartedly,
Speaker 8: you know, get on board saying I want to expand
Speaker 8: the Supreme Court, or I want to impose term limits.
Speaker 8: These are things that at a minimum would require legislation
Speaker 8: that requires it has all the congressional hurdles that we
Speaker 8: talked about earlier. And to the extent, and I think
Speaker 8: inter large extent, this is happening, and the Supreme Court
Speaker 8: is being looked upon as kind of a zero sum game,
Speaker 8: as an extension of the political process. A lot of
Speaker 8: Republicans are very happy with what the Court's been doing
Speaker 8: on abortion, affirmive action. You know, you go down the list.
Speaker 3: All right, So a lot of cases to look forward to,
Speaker 3: and of course Greg Store is going to have them
Speaker 3: all covered for us, our wonderful Supreme Court reporter here
Speaker 3: at Bloomberg and Amy. We'll send it back to you.
Speaker 1: Thank you, Kaylee. That was Bloomberg sound on co host
Speaker 1: Kaylee lines reporting from our Bloomberg ninety nine to one
Speaker 1: newsroom in Washington, and you can hear sound on weekdays
Speaker 1: from one until three pm on Bloomberg Radio. Coming up
Speaker 1: on Bloomberg Daybreak weekend, some big elections are coming up
Speaker 1: in Spain. We'll tell you why we're watching so closely. Hi,
Speaker 1: Maybe Morris, This is Bloomberg. This is Bloomberg Daybreak weekend.
Speaker 1: Our global look ahead at the top stories for investors
Speaker 1: in the coming week. I Amy Morris in Washington. Spain's
Speaker 1: political parties are heading into the final week of campaigning
Speaker 1: ahead of the general election next weekend. Outgoing Prime Minister
Speaker 1: Pedro Sanchez is seeking reelection for his Socialist Party, but
Speaker 1: he faces strong opposition from the Conservative People's Party. For more,
Speaker 1: let's head to London and bring in Bloomberg Daybreak Europe
Speaker 1: anchor Stephen Carroll.
Speaker 4: This is a Snapsummer election called by Pedro Sanchez after
Speaker 4: a poor showing for the Socialist Party in local and
Speaker 4: region elections in May. The Conservative People's Party won seven
Speaker 4: of the twelve regions that were up for grabs in
Speaker 4: that vote. They're also leading in polls heading into this
Speaker 4: election as well. For more, let's bring in Bloomberg's Madrid
Speaker 4: bureau chief, Rodrigo Uruguelo Rodrigo. What was Pedro Sanchez's strategy
Speaker 4: in calling this election now in the height of summer.
Speaker 9: The strategy was basically that he tried to put an
Speaker 9: end to the momentum the peep he was going to
Speaker 9: get if he waited for six more months. They already
Speaker 9: had the momentum from winning the election in May, and
Speaker 9: his main concern was that if he stayed in power
Speaker 9: for six more months with them celebrating all along those
Speaker 9: six months, he was going to become a bit of
Speaker 9: what Americans would call a lame duck, even though you
Speaker 9: know it's not technically the same, but that was kind
Speaker 9: of the impression. And also in Spain, you have to
Speaker 9: focus on the two main parties, but also on the
Speaker 9: junior parties on each side of what we call the
Speaker 9: right and left blocks. And on the left of Pedro
Speaker 9: Sanchez and the Socialist there is a key partner for him,
Speaker 9: which is his junior partner in government, and they were
Speaker 9: melting down and having a breakdown, and so by basically
Speaker 9: calling a snap election, he was also telling them pull
Speaker 9: your act together and you know, start, start, campaigning because
Speaker 9: the election is around the corner.
Speaker 4: What are the issues that have dominated this campaign so far.
Speaker 9: The one issue that Pedro Sanchez was betting on dominating
Speaker 9: the campaign in his favor was the economy, because the
Speaker 9: Spanish economy has recovered in quite impressive form from the
Speaker 9: COVID crisis. It has right now the lowest inflation rate
Speaker 9: in Europe and probably the highest GDP growth rate. However,
Speaker 9: this has not benefited him in any way. It didn't
Speaker 9: benefit him in the May election and it's not benefiting
Speaker 9: him now. Everybody seems to be focused on other issues.
Speaker 9: The main one is the endless topic of regional nationalisms
Speaker 9: in Spain, so his proximity to Catalan and Basque In
Speaker 9: secessionists has become a big, big point of attack for
Speaker 9: the right. And the other issue that is dominating at
Speaker 9: a little slightly lower level are local cultural wars.
Speaker 4: Well, let's talk about the main challenger then to Pedro Sanchez.
Speaker 4: This is the leader of the People's Party, Alberto Nunez Fejo.
Speaker 4: He's the key figure to watch in this election. What
Speaker 4: do we know about him?
Speaker 9: The PP has traditionally been a broad church for the right.
Speaker 9: They included everything from centrist liberals to extreme right conservatives,
Speaker 9: and Faiho has always been rather ambiguous in where he stands,
Speaker 9: but the general consensus is that he is more towards
Speaker 9: the center than to the extreme right. But he can
Speaker 9: also play to both extremes. That is his strongest strength.
Speaker 9: He ruled his region, which is Galicia in the northwest,
Speaker 9: for twelve years, and as years went by he gained
Speaker 9: more and more power and clout over the region. He
Speaker 9: was quiet. He was rather protected and shielded from some
Speaker 9: of the scrutiny that you get from the national stage.
Speaker 9: There's not much of a critical media establishment in Galicia.
Speaker 9: He didn't have much of a position, and interestingly enough,
Speaker 9: he also managed to put to bed the local nationalist movement,
Speaker 9: regional nationalist movement, which was the pro Galician independence movement.
Speaker 9: He has been quite skillful at keeping them at bay.
Speaker 4: Okay, well, it sounds like a very interesting last week
Speaker 4: of campaigning there in Spain ahead of the vote on
Speaker 4: the twenty third of July. Thank you so much to
Speaker 4: Bloomberg's Rodrigo Aurguela in Madrid.
Speaker 5: There.
Speaker 4: I'm Stephen Carolyn London. You can catch us every weekday
Speaker 4: morning here for Bloomberg Daybreak here at beginning at six
Speaker 4: am in London and one am on Wall Street.
Speaker 1: Thank you, Steven, and that does it for this edition
Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning
Speaker 1: at five am Wall Street time for the latest on
Speaker 1: markets overseas and the news you need to start your day.
Speaker 1: I n Amy Morris stay with us. Top stories and
Speaker 1: global business headlines are coming up right now.