Speaker 1: This is Bloomberg Daybreak Weekend or Global look ahead of
Speaker 1: the top stories of the coming week from our day
Speaker 1: brank angers all around the world. You're just to hand
Speaker 1: of the program. More inflation data coming our way, and
Speaker 1: what is the Fed thinking. I'm John Tucker in New York.
Speaker 1: I'm Carolin Hedge in London, where we're looking at European
Speaker 1: companies to watch this quarter. I'm Deck Prisoner with a
Speaker 1: look at the Chinese clean energy companies focused on coming
Speaker 1: to the US. I'm Joe Matthew in Washington. The IMF
Speaker 1: meets in the nation's capital. Get a take on what
Speaker 1: you expect. That's all straight ahead on Bloomberg Daybreak Weekend
Speaker 1: on Bloomberg eleven Free O New York, Bloomberg ninety nine one, Washington, DC,
Speaker 1: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco,
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Speaker 1: Bloomberg Business Apphi, everybody, I'm on Tucker, and let's start
Speaker 1: today's program with the feder reserved and the economy. We're
Speaker 1: going to be getting a report on the consumer prices
Speaker 1: and also getting the minutes from the feds last FOEMC meeting.
Speaker 1: Joining me to raise the curtain on all this, Bloomberg
Speaker 1: Global Economic and Policy Editor Michael McKee. As always, Michael,
Speaker 1: thank you very much for being with us. What should
Speaker 1: we be looking for? You've told us we're all data dependent.
Speaker 1: It's going to be interesting to see if the data
Speaker 1: the consumer pricing decks actually moves the needle for anyone
Speaker 1: at the FED as far as their May third meeting,
Speaker 1: the next meeting that's coming up. At their last meeting,
Speaker 1: they put out a new summary of Economic Projections and
Speaker 1: dot Plott and basically said we still think that rates
Speaker 1: need to go above five percent. Five percent is the
Speaker 1: top of the range right now. So they seem pretty
Speaker 1: married to that idea. It would probably take a lot
Speaker 1: of change in the CPI for them to back away from,
Speaker 1: but we are expecting a bit of a decline on
Speaker 1: the headline rate that would take us well, actually it's
Speaker 1: more than a bit, because you go from six percent
Speaker 1: to five point two percent. A lot of that is
Speaker 1: base effects, but it's it's going to be a major
Speaker 1: headline number. Okay, remind everybody what they're aiming for a
Speaker 1: rate of inflation of two percent, and then we're still
Speaker 1: a long way. Yeah. Can they at some point just say, okay,
Speaker 1: maybe it's three percent? Uh No. And the reason they
Speaker 1: don't want to do that is because then nobody will
Speaker 1: believe them that it's three percent. They'll think, well, oh,
Speaker 1: they'll have a credibility. You could change it to four percent.
Speaker 1: But the headline that will grab people's attention is obviously
Speaker 1: a big drop in the year over year number if
Speaker 1: it goes to five point two percent. But according to
Speaker 1: economists surveyed by Bloomberg, we're going to see core inflation
Speaker 1: rise to five point six percent from five point five.
Speaker 1: So core inflation that you've got to remind everybody it's
Speaker 1: the weekend and you know we're preparing to eat food
Speaker 1: and stuff like that. Core inflation is inflation that really
Speaker 1: matters because the other stuff like gasoline and fuel energy
Speaker 1: qualits that goes up and down, all goes up and down.
Speaker 1: And obviously we saw in the last week big movements
Speaker 1: in oil prices after OPEC announced a production cut, and
Speaker 1: you know, FED officials tend to look through those things
Speaker 1: because they do go up and down. But the average
Speaker 1: American does not because they have to fill their tank.
Speaker 1: So if we do see gasoline prices going up, I mean,
Speaker 1: that's that's going to be a worry for the FED
Speaker 1: because they can't do anything about it. You can raise
Speaker 1: interest rates all you want, it isn't going to produce
Speaker 1: more and gasoline. So they do look at the core,
Speaker 1: and they're looking at core services without housing. They do
Speaker 1: x housing because we know that housing has taken a
Speaker 1: long time to incorporate the idea of lower rents. Rent
Speaker 1: increases have been fading, but takes about a year to
Speaker 1: get into the data. So that's going to start hitting.
Speaker 1: And they're they're looking at services because services is the
Speaker 1: biggest part of the economy and it includes things like
Speaker 1: you know, going out the restaurant, the waiter or the
Speaker 1: wais bars, stuff, and a lot of people in you know,
Speaker 1: accounting or radio. Things like that would be service industry jobs,
Speaker 1: um and for many of those categories it's still been
Speaker 1: hard to find workers. We've seen strong hiring and labor
Speaker 1: costs are the biggest part of a service industry budgets Okay,
Speaker 1: So if they can't find people, they've got to attract
Speaker 1: people by paying more and that's and that's inflation concern.
Speaker 1: So the FED is going to be looking at that.
Speaker 1: They'll be looking at all this data for signs of
Speaker 1: a slowdown. They want to see that they're making incremental progress. Okay,
Speaker 1: they're going to be looking for signs of a slowdown there.
Speaker 1: But I'm told that's stickier inflation. Whether they're they're two
Speaker 1: kinds of inflation, well, many kinds, but one that would
Speaker 1: one responds to FED tightening. Like we know that people
Speaker 1: buy fewer cars when infrastrates go up, and housing prices
Speaker 1: generally start to flatten out, if not go down, when
Speaker 1: mortgage rates go up. But there are other things that
Speaker 1: are called sticky prices that take longer to adjust. And
Speaker 1: anything to do with labor takes longer to adjust because
Speaker 1: it's you don't basically go into your office and say, well,
Speaker 1: we need to save money, so we're going to cut
Speaker 1: your salary. I mean you're either going to be laying
Speaker 1: off workers, which we haven't really seen any huge numbers yet,
Speaker 1: or you know you're going to have to find other
Speaker 1: places to get those savings from. Yeah, we do see
Speaker 1: those headlines crossing almost on a daily basis. This big
Speaker 1: company or that big company that you've heard of cutting
Speaker 1: workers that you're telling me hasn't filtered through or really
Speaker 1: is enough to make a difference. A lot of people
Speaker 1: who are being laid off are either in jobs that
Speaker 1: are in demand. You get laid off at one tech company,
Speaker 1: you might get hired at another reasonably quickly. Or people
Speaker 1: are getting severance, and when you get severance, basically you're
Speaker 1: not eligible for jobless benefits until your severance runs out.
Speaker 1: And so you're seeing people who may move into the
Speaker 1: doubless claims area and show up as unemployed still off
Speaker 1: those books. So it's been hard to tell the impact
Speaker 1: of all these layoff announcements. Also the layoff announcements, if
Speaker 1: you're laying off a lot of people, there's a law
Speaker 1: that says you have to give them sixty days notice,
Speaker 1: and also it may take you longer than that to
Speaker 1: do your layoffs. So the general view of economists is
Speaker 1: we're going to see the impact of all this later
Speaker 1: in the year. Okay, I'll remind everybody that the to Reserve,
Speaker 1: the Central Bank of the United States, has a couple
Speaker 1: of mandates. One is price stability, keeping the rate of
Speaker 1: inflation at you know, something reasonable like you said two
Speaker 1: percent and also full employment, but those two things are
Speaker 1: kind of contradictory. It sounds like you just told me, Well,
Speaker 1: there are times when they're in opposition in the sense
Speaker 1: that to bring inflation down, the FED has to slow
Speaker 1: the economy, and to slow the economy, the FED has
Speaker 1: to basically put up with the idea that you're going
Speaker 1: to see people laid off and unemployment is going to rise. Now,
Speaker 1: their thought at the moment is that right now, because
Speaker 1: labor is so tight, that we are below what the
Speaker 1: normal level of unemployment is because there are always people
Speaker 1: switching jobs in between jobs, and there are people that
Speaker 1: come out of college and they haven't found a job yet,
Speaker 1: and they think that number is around to four and
Speaker 1: a half percent, and we're at three point six percent.
Speaker 1: So at this point they're thinking they have some room
Speaker 1: that won't bring the economy down if that unemployment rate rises.
Speaker 1: So are things different this time because we had the pandemic.
Speaker 1: Everything's different this time in the sense that we're not
Speaker 1: sure how everybody's going to react, and all of the
Speaker 1: dynamics that normally come into play in a recessionary time
Speaker 1: haven't this time. We don't have an inventory overhang or
Speaker 1: something like that. What we have is is consumers who
Speaker 1: are still spending because they got a lot of money
Speaker 1: from the government during the pandemic, and there was nothing
Speaker 1: basically wrong with the economy going into the pandemic. So
Speaker 1: it's hard to know exactly what the cure is going
Speaker 1: to be for all this. And the FED is doing
Speaker 1: its best to try to bring inflation down, but as
Speaker 1: long as people and the economy feels good, it's harder
Speaker 1: to do and the models don't work because we've not
Speaker 1: had a pandemic like this since nineteen eighteen. All Right,
Speaker 1: you've been speaking to the people at the Central Bank
Speaker 1: who make all these decisions. What have the FED officials
Speaker 1: been telling you that could possibly move the needle. Well,
Speaker 1: the needle is an interesting question, because the needle right
Speaker 1: now points on Wall Street to four rate cuts or
Speaker 1: three to four rate cuts this year because they think
Speaker 1: that we're going to go into recession and inflation is
Speaker 1: going to fall fast and the FED is going to
Speaker 1: have to rescue the economy. Fed officials don't think that
Speaker 1: at all. They've been repeating the mantra to me all
Speaker 1: week that they need to keep interest rates high and
Speaker 1: we spoke with Susan Collins and of Boston, and Jim
Speaker 1: Bullard of Saint Louis and Lorettamester of Cleveland. They all
Speaker 1: make the case that we need to raise rates at
Speaker 1: least one more time and then leave them there for
Speaker 1: the rest of the year. So it's going to set
Speaker 1: up a clash between the markets and the Fed. We
Speaker 1: will probably see rates rise at their next meeting May third,
Speaker 1: and then if the Fed wants to go on hold,
Speaker 1: the market's going to be pushing them to start cutting.
Speaker 1: And we're going to be all watching the data for
Speaker 1: signs of who's right. Do they know something we don't? Well,
Speaker 1: I not know something, but they're probably focused on things
Speaker 1: a lot more than we are in terms of what
Speaker 1: are the possibilities for this economy, because, as I said,
Speaker 1: the models don't work, so they're trying to figure out
Speaker 1: what's the most likely path for the economy. They will
Speaker 1: tell you, and it makes no sense that they will
Speaker 1: react to whatever happens in the economy. But at the moment,
Speaker 1: from what they can see, they need to leave interest
Speaker 1: rates up high until they get a much clearer signal
Speaker 1: that inflation is going to continue falling. Mike, Thanks a lot.
Speaker 1: That's always a pleasure. Bloomberg's Global Economics and Policy editor
Speaker 1: Michael McKee just ahead on Bloomberg Daybreak weekend, which Europeans
Speaker 1: you should have your eye on this new quarter? And
Speaker 1: why John Tucker, This is Bob. This is Bloomberg Daybreak weekend,
Speaker 1: our global look at healthy time stories for investors in
Speaker 1: the coming week. I'm John Tucker in New York. Up
Speaker 1: later in the program, Why Chinese solar panel makers think
Speaker 1: the industry is about to shine the first European stocks
Speaker 1: had their worst March since twenty twenty. A lot of
Speaker 1: stocks and key valuations to watch in the second quarter
Speaker 1: for more, or lets into London and bring in Bloomberg
Speaker 1: Daybreak Europe anchor Caroline Hepger. John, defensive and growth stocks
Speaker 1: have benefited from my rotation in European equities. Recently, recession
Speaker 1: warriors have resurfaced. For more, I'm joined by Bloomberg Intelligence.
Speaker 1: Is Tim craighead. Tim, great to have you on the program.
Speaker 1: So you've picked out then for the quarter to come,
Speaker 1: ten stocks to watch, and a number are European companies,
Speaker 1: So this really piqued my interest. One is a bank,
Speaker 1: but that's a bit surprising BBVA. Yeah, so BBBA, you
Speaker 1: would think it's a little crazy picking a bank in
Speaker 1: the midst of a banking crisis or a perceived banking crisis.
Speaker 1: But this is in line with a number of the
Speaker 1: ten ideas where the market seems to be focused on
Speaker 1: the wrong thing. And with BBBA, the focus is on Turkey,
Speaker 1: which you know it has had a big exposure to
Speaker 1: over time, but it's only down to seven percent or
Speaker 1: so of the business. We think that they're well funded
Speaker 1: on that front, and it's it's overblown. At the same time,
Speaker 1: they've got a big Mexican business where loan growth is
Speaker 1: quite robust. They've got clearly a big Spanish business that
Speaker 1: is benefiting from higher rates driving higher net interest margins
Speaker 1: and profitability. Bottom line is we think they're going to
Speaker 1: be positively surprising on earnings and in ongoing other fundamental metrics. Okay,
Speaker 1: so that on BBVA. Eupe is also really trying to
Speaker 1: balance out the huge US inflation reduction acts thinking about
Speaker 1: the energy transition of course, and so you pick vest
Speaker 1: us is that the reason indeed that is absolutely behind it.
Speaker 1: Both Europeans spending on energy transition as well as the
Speaker 1: US and you take those two combined and we think
Speaker 1: there is shall we say, a tailwind sorry, that that
Speaker 1: is behind vest Us. And yet if you look at
Speaker 1: consensus expectations, order growth and revenue growth aren't particularly robust.
Speaker 1: There's been a bit of a lull in the wind
Speaker 1: and we think it will pick up and there's positive
Speaker 1: surprises in top line and earnings growth going ahead. Okay.
Speaker 1: And then just lastly, out of these three European businesses
Speaker 1: that were focused on this, cap Gemini indeed, so I
Speaker 1: think again, similar to the BBBA, what's the market focused on. Well,
Speaker 1: in technology, it's there's a tech downturn. You know, there's
Speaker 1: been pressure on semiconductors, there's thoughts of cutbacks across a
Speaker 1: number of elements of technology. There's concerned about economic risk.
Speaker 1: But companies are strategically transforming into things like cloud computing
Speaker 1: and digitization. That's across all industries and it's strategic. It
Speaker 1: has to happen, and cap Gemini is one of those
Speaker 1: IT service companies that's very exposed to these strategic transformations,
Speaker 1: not so much the cyclical, more cyclical implementation of sort
Speaker 1: of basic technology. And we think again the market's underestimating
Speaker 1: the opportunity here for cap Gemini. Yeah, and I mean
Speaker 1: when you look at tech it's flipped from being losses
Speaker 1: lagot in Europe to actually being the kind of market
Speaker 1: leader in twenty twenty three. We don't think of there
Speaker 1: being many tech, big tech companies in the UK, but
Speaker 1: interesting that you put cap Gemini in that kind of basket.
Speaker 1: So is tech in Europe something to watch in the
Speaker 1: next quarter? Yeah, Well, I think there are a couple
Speaker 1: of parts to this UM and it's a very different story,
Speaker 1: I would say than say tech broadly if you think
Speaker 1: about it from a US perspective. You know, in Europe
Speaker 1: we've got essentially cap Gemini and SAP and software and services,
Speaker 1: and you've got some big semiconductor companies ASML and Finnian
Speaker 1: st Micro. The semi has a semi business has its
Speaker 1: own cyclicality to it in Finnian and st Micro are
Speaker 1: very well positioned into China UM thinking about what's going
Speaker 1: on with with you know, the tipification of autos and
Speaker 1: everything else ASNL is absolutely the core of next generation
Speaker 1: semiconductor manufacturing up you have to have it, and all
Speaker 1: of this we think has fed into this last year's
Speaker 1: story of higher interest rates, putting pressure on multiples. This year,
Speaker 1: there's now increasing talk about FED and ECB pivot at
Speaker 1: some point that brings the pressure off on multiples and
Speaker 1: these things can move back up. So that's an element
Speaker 1: of that exposure to Europe that's positive. In the US,
Speaker 1: it's far different. It's more Internet, very high multiple stocks,
Speaker 1: and yes, those two have had a reprieve on the
Speaker 1: multiple pressure because the change in FED thoughts. Frankly, we're
Speaker 1: a bit more suspect on how quickly the fed's going
Speaker 1: to pivot. And it's a different business from the standpoint
Speaker 1: of the Internet oriented businesses in the US, so more
Speaker 1: interested in Europe, maybe still a little less interested in
Speaker 1: the US. Well, I wanted to ask you that why
Speaker 1: do you think that sentiment has tilted more towards you
Speaker 1: if it does seem that way since the start of
Speaker 1: the year, that there's a bit more favorability versus for
Speaker 1: European shares and perhaps for the US. Is that because
Speaker 1: recession seems more imminent in the US, or how would
Speaker 1: you read it? It's it's it's it's an interesting question.
Speaker 1: Part of it is valuation, there's no doubt. Part of
Speaker 1: it is that the idea of where we are at
Speaker 1: from an economic cycle. Last year, there was a lot
Speaker 1: of concern about energy. There was a lot of concern
Speaker 1: about Russia impact on Ukraine right at our doorsteps here
Speaker 1: in Europe. And not that that's gone away yet, clearly
Speaker 1: it hasn't. But we suffered so much on energy last
Speaker 1: year that is now cycling through with lower energy prices,
Speaker 1: notwithstanding OPEC's recent announcement. But that I think that's a
Speaker 1: little bit of yesterday's story. In the US, I think
Speaker 1: there is still ongoing concern of how much do we
Speaker 1: see wages play through? Where is the economy going, and
Speaker 1: it creates a different cycle. Yeah, absolutely so just less
Speaker 1: maybe less bad news than we had for Europe last year.
Speaker 1: Having said that, stocks do look now in Europe actually
Speaker 1: pretty close to a lot of year end targets. So
Speaker 1: I guess my other question is do we just end
Speaker 1: up treading water in yet? I think we could be
Speaker 1: having this conversation in another three months and we could
Speaker 1: have gone up five to ten percent in down five
Speaker 1: to ten percent between now and then. Okay, our last
Speaker 1: word for luxury stocks, because they're so dominant in terms
Speaker 1: of the European market as well, I think you can't
Speaker 1: avoid talking about them. And also just because but how
Speaker 1: now has now joined this tiny handful of billionaires worth
Speaker 1: more than two hundred billion US dollars in the last
Speaker 1: few days. I mean, the luxury space in Europe still
Speaker 1: seems to be a big, big strength in look. I
Speaker 1: think this plays into China reopening. You know, go back
Speaker 1: to those ten ideas. Two of the Asian ideas where
Speaker 1: to want belabor here are China reopening stories and I
Speaker 1: think luxury goods here is as well. And you know,
Speaker 1: if you think about big themes of this year, you've
Speaker 1: got the interest rate cycle, You've got the economic cycle,
Speaker 1: you have geopolitics between Russia, Ukraine, now the US with
Speaker 1: their own internal politics China US tensions. But a big
Speaker 1: item that's just sort of unadulterated positive is China opening
Speaker 1: back up from an economic perspective. And part of that
Speaker 1: is unleashing consumer spending and the Chinese, whether it's domestically
Speaker 1: or when they travel by luxury and you know, the
Speaker 1: European luxury goods names are in the sweet spot of
Speaker 1: that cycle. Okay, so we end on a positive note
Speaker 1: then thinking about European stocks for this quarter. Thank you
Speaker 1: so much Tim for being with us Spinbag Intelligences Directive Research.
Speaker 1: Tim Craighead with a few of his ideas around the
Speaker 1: stocks to watch here in Europe over the next few
Speaker 1: weeks this quarter. I'm Caroline Heppgeher in London. You can
Speaker 1: catch us every weekday morning for Bloomberg Daybreak Europe. That's
Speaker 1: beginning six am in London, one am on Wall Street. John,
Speaker 1: Thanks Caroline. Just ahead on Bloomberg Daybreak weekend, so major
Speaker 1: activity of the Chinese solar panel industry. I'm John Tucker.
Speaker 1: This is Bloomberg broadcasting live from the Bloomberg Interactive Broker
Speaker 1: Studio in New York. Bloomberg eleven FREEO to Washington, DC,
Speaker 1: Bloomberg ninety nine one to Boston, Bloomberg one O six
Speaker 1: one to San Francisco, Bloomberg nine sixty to the country,
Speaker 1: Sirius XM Channel one nineteen to London DAB Digital Radio,
Speaker 1: and around the globe the Bloomberg Business app and Bloomberg
Speaker 1: Radio dot Com. This is Bloomberg Daybreak Weekend, John Tucker
Speaker 1: in New York with your globe look ahead of the
Speaker 1: top stories for investors in the coming week. Just a
Speaker 1: hit on Bloomberg Daybreak weekend a look at why the
Speaker 1: International Monetary Fund meeting is being so closely watched. But first,
Speaker 1: after the US passed a landmark climate bill that supports
Speaker 1: local clean energy manufacturing, some of China's top solar panel
Speaker 1: makers are rushing to tap into the industry. For more
Speaker 1: on what's happening, let's go to Bloomberg Daybreak Asia host
Speaker 1: Doug Krisner John. It's not just solar panel makers. Several
Speaker 1: of China's leading renewable firms are joining the rush to
Speaker 1: open factories in the US. As an example, the Chinese
Speaker 1: company that makes the world's largest wind turbine, Ming Young's
Speaker 1: Smart Energy Group, is exploring whether to establish production and
Speaker 1: research facilities here in the US. Now. The driver of
Speaker 1: this movement is last year's Inflation Reduction Act, championed by
Speaker 1: the Biden administration. It includes three hundred and seventy four
Speaker 1: billion dollars in new climate related spending, and it is drawn,
Speaker 1: needless to say, the attention of China's world leading renewables companies.
Speaker 1: Let's take it closer to look now with Bloomberg's Dan Murtaugh.
Speaker 1: He is a Bloomberg Asia Energy reporter. Dan joins from
Speaker 1: our studios in Beijing. There's a lot to talk about.
Speaker 1: It seems a little ironic right out of the gate
Speaker 1: that the Inflation Reduction Act really has a goal of
Speaker 1: cultivating a boom for US clean tech. But at this
Speaker 1: point China seems to be the world's number one supplier
Speaker 1: of clean technology. Let me begin by asking where Beijing
Speaker 1: may be in allowing these companies to develop some of
Speaker 1: their operations here in the US. It's a good question.
Speaker 1: There's obviously been a lot of tension between Beijing and
Speaker 1: Washington in recent years. But at the same time, Beijing
Speaker 1: once it's clean tech energy industries to grow, they see
Speaker 1: them as one of their proudest achievements, developing these massive
Speaker 1: supply chains that can produce power generation to sort of
Speaker 1: wean the world off of car. So at the same
Speaker 1: time that that Beijing is nervous about Washington's intentions, they
Speaker 1: want to see this industry grow and prosper, and so
Speaker 1: you know that they're in constant communications with the heads
Speaker 1: of these massive companies about you know, what opportunities are
Speaker 1: there to to go overseas, you know what technology they
Speaker 1: can bring with them, you know, to how to sort
Speaker 1: of maintain their China's role as a dominant supplier of
Speaker 1: this clean tech industry while also allowing the firms to
Speaker 1: sort of broaden and diversify their own supply chains. Yeah,
Speaker 1: talk about domination when it comes to solar panels. I
Speaker 1: think we can agree that China really dominates production globally,
Speaker 1: but there have been cases where that production has been
Speaker 1: stymied from shipping to the US because of a series
Speaker 1: of trade disputes. There have also been there have also
Speaker 1: been allegations of human rights abuses. Is it necessary that
Speaker 1: the US has to do business with China when it
Speaker 1: comes to solar panels? How long does it take to
Speaker 1: build out a man manufacturing process for these devices? If
Speaker 1: you were going to just on the technicalities of it,
Speaker 1: it would probably be about a year and a half
Speaker 1: to two years to build a full supply chain. You know,
Speaker 1: most of these factories Chinese companies get up and running
Speaker 1: when about nine months UM. The key sort of raw
Speaker 1: material for all of this an ultra refined form of
Speaker 1: silicon known as polysilicon. Those plants take about eighteen months.
Speaker 1: So if you know you had unlimited resources and were
Speaker 1: able to sort and you know, access to the best technology,
Speaker 1: you could put a supply chain together relatively quickly, but
Speaker 1: of course these are very complicated supply chains. There's there's
Speaker 1: multiple steps that go into it. You take sand, you
Speaker 1: heat it into into silicon, You refine it with with
Speaker 1: nasty chemicals into the polysilicon you melted into these like
Speaker 1: long bricks, and then slice those into ultra thin squares
Speaker 1: that you then wire up into solar cells that you
Speaker 1: then paste together into into the solar panels you see,
Speaker 1: you know, out in these giant desert farms and on
Speaker 1: your rooftops. And you need a different factory for each
Speaker 1: one of those steps. And you know what China was
Speaker 1: excellent at is in putting it together in industrial policy
Speaker 1: that sort of made sure that those steps all went
Speaker 1: together so that there was supply and demand matched. And
Speaker 1: so what the US is going to struggle with is,
Speaker 1: you know how if you build a plant to sort
Speaker 1: of slice those squares, are you sure you're going to
Speaker 1: get their raw materials to be able to build them
Speaker 1: and stuff like that. And so that's going to be
Speaker 1: the trick for the US to build a supply chain
Speaker 1: that will be able to compete with China. I mentioned
Speaker 1: wind turbine technology that's another part of this story, where
Speaker 1: is China in wind turbine production. China is the world's
Speaker 1: leader now if you look Bloomberg and you have just
Speaker 1: reported it's twenty twenty two production numbers and Goldwind, China's
Speaker 1: biggest company, overtook vest Us to be the world's biggest
Speaker 1: wind turbine manufacturer last year for the first time ever.
Speaker 1: For the top seven turbine manufacturers are in China. And
Speaker 1: up until recently, you know, China as a very big
Speaker 1: domestic wind market, and so these companies just sort of
Speaker 1: built turbines for Chinese demand and didn't really mess with
Speaker 1: the outside world. And you know, invest us in ge
Speaker 1: and Siemens, they were seen as the sort of world
Speaker 1: technology leaders. But now ming Yang has has launched the
Speaker 1: world's biggest offshore wind turbine. Uh, you know, the quality
Speaker 1: about gap has has narrowed. And now these Chinese companies
Speaker 1: are looking to take market share away from the European
Speaker 1: and US giants. So whether it's solar panels or wind turbines,
Speaker 1: are they looking to really penetrate beyond the US you mentioned,
Speaker 1: you know, Europe and other parts of Asia. I mean,
Speaker 1: it sounds to me like it's a pretty aggressive strategy
Speaker 1: of moving offshore. Absolutely, you know, you know these industries.
Speaker 1: Not only is there room for these Chinese companies to
Speaker 1: grow and become bigger and bigger, but you know, China
Speaker 1: sees this as also sort of you know, the maybe
Speaker 1: the next step in their Belt and Road initiative or
Speaker 1: their global development initiative to be able to bring infrastructure
Speaker 1: and energy to the world and in this time, as
Speaker 1: opposed to the last Belton Road, which was quite coal
Speaker 1: and oil intensive, this time would be a little bit cleaner.
Speaker 1: So when I think of solar panels, when I think
Speaker 1: of weren't wind turbines, I think of storage technology. Whereas
Speaker 1: China right now in terms of battery technology, and is
Speaker 1: this also an area that they are looking to export. Yeah,
Speaker 1: China once again leads the world in battery manufacturing. It
Speaker 1: leads the world in lithium processing to create the battery materials,
Speaker 1: and it's definitely looking to expand globally. Catl the biggest
Speaker 1: battery maker here in China, has been involved in this
Speaker 1: tie up with Ford to make lithium iron phosphate batteries,
Speaker 1: which are a sort of cheaper, less energy intensive but
Speaker 1: also less sort of environmentally problematic technology, and they want
Speaker 1: to build a huge battery factory in the US, and
Speaker 1: that's obviously created some political stir. Virginia's governor sort of
Speaker 1: nixed a deal earlier because he thought it was too
Speaker 1: generous to the Chinese side. Or look, they're looking into
Speaker 1: Michigan right now. But yeah, the battery companies are also
Speaker 1: looking to sort of diversify their manufacturing bases around the
Speaker 1: world and to go back to the Inflation Reduction Act
Speaker 1: and the money that's at stake right now. There are
Speaker 1: a number of people in Congress that are a little
Speaker 1: concerned here that essentially the US would be giving support
Speaker 1: to Chinese companies. Is it possible to say that we
Speaker 1: could be at a point where there's so much pushback
Speaker 1: from members of Congress when it comes to allowing these
Speaker 1: Chinese companies to do business in the United States that
Speaker 1: whatever ambitions Beijing may have at the moment, those become stymied.
Speaker 1: You know, that's the big fear for these Chinese companies
Speaker 1: is that, you know, the IRA has passed. Frankly, all
Speaker 1: companies anywhere in the world are still trying to figure
Speaker 1: out the Tea Crossings and I Dottings of the IRA,
Speaker 1: But the Chinese companies are looking at it. Their fear
Speaker 1: is that they come to America, they invest capital, they
Speaker 1: bring their own technology, and then you know, you have
Speaker 1: someone like Marco Rubio, who's voiced opposition to Chinese clean
Speaker 1: energy firms before, pushed to to sort of change the
Speaker 1: rules midway through to make sure Chinese companies can't benefit
Speaker 1: so that they're they're worried about the rug being pulled
Speaker 1: out from under them. You know, right now there's no
Speaker 1: indication that that will happen, but that's the sort of
Speaker 1: constant fear that they're dealing with. But you know, I
Speaker 1: think about this in in you know, being here in China.
Speaker 1: A lot of the way that China has developed these
Speaker 1: industries is by letting foreign companies come in and build
Speaker 1: stuff here, benefiting these foreign companies. My dad twenty five
Speaker 1: years ago worked for General Motors when they opened their
Speaker 1: first car plant in Shanghai. General Motors benefited hugely in
Speaker 1: the first several years of that deal. But you know,
Speaker 1: the they General Motors hired locally. They taught you know,
Speaker 1: Chinese workers and executives how to run a world class
Speaker 1: car operation. And now you know, you look at China's
Speaker 1: car industry, and it's right up there, you know, neck
Speaker 1: and neck with the US in terms of one of
Speaker 1: the biggest in the world. Dan, thank you so much
Speaker 1: for spending time to chat with us. Dan Mrtile there,
Speaker 1: Bloomberg Asia Energy Reporter joining from Beijing. I'm Bug Prisoner.
Speaker 1: You can join Brian Curtis and myself weekdays for Bloomberg
Speaker 1: Daybreak Asia, beginning at six am in Hong Kong, six
Speaker 1: pm on Wall Street. John Doug thanks very much. Just
Speaker 1: ahead on Bloomberg Daybreak weekend, a sneak peak at the
Speaker 1: IMF meeting in Washington. I'm John Tucker. This is Bloomberg.
Speaker 1: This is Bloomberg Daybreak weekend, our global look ahead of
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: John Tucker in New York. Here come the big annual
Speaker 1: meetings or the International Monetary Fund and the World Bank.
Speaker 1: And for a look at why we're watching these meetings
Speaker 1: especially closely, let's head to our Bloomberg ninety nine one
Speaker 1: newsroom in Washington and sound on host Joe Matthew. John.
Speaker 1: The IMF meets in Washington this weekend, while the cherry
Speaker 1: blossoms are in bloom the forecast is not great, as
Speaker 1: the IMF warrens, it's five year global growth outlook is
Speaker 1: now at its weakest since nineteen ninety, and it's thanks
Speaker 1: to a confluence of factors. As Managing Director Chrystallina Gorgieva
Speaker 1: described an interview with Bloomberg's Tom King, countries that we
Speaker 1: would expect to add to growth from TM markets. Low
Speaker 1: income countries are in particularly difficult place because they have
Speaker 1: been innocent bystanders, repetitive shocks that COVID Russia's invasion, the
Speaker 1: fact that the word economy as a whole is now
Speaker 1: less able to support the weakest members. Let's talk about
Speaker 1: it now with Bloomberg's US economic policies are How would
Speaker 1: you like that business card? Ramsey, Al Racabby, It's great
Speaker 1: to see Ramsey, Thanks for joining us. Do these meetings
Speaker 1: begin with real concerns about geopolitics when you cansider the
Speaker 1: weakest forecasts since nineteen ninety, that's right, Joe. The IMF's
Speaker 1: managing director, Christelina Goorjeva, on Thursday came out with a
Speaker 1: little intro speech heading into the meetings, talking about how
Speaker 1: their outlook for the next five years is the weakest
Speaker 1: since nineteen ninety. One of the things they mentioned at
Speaker 1: the top was a global fragmentation, which is sort of
Speaker 1: a thinly veiled comment about US and China at tensions
Speaker 1: and worries around economic decoupling between the two. That comes
Speaker 1: on top of UH these this global tightening and interest
Speaker 1: rates that has been trying to fight inflation, and so
Speaker 1: the impacts that that that's saying, that's a stronger dollar
Speaker 1: which has made debt issues much more intense, and emerging markets,
Speaker 1: and as we saw quite recently, it's set off some
Speaker 1: financial stability issues with banking banking collapses in the US
Speaker 1: and in Europe. That is sort of sending fears of
Speaker 1: of of how a financial crisis might bleed into an
Speaker 1: economic crisis. Give us a sense of what's going to
Speaker 1: happen to Washington next week. It's gonna be an absolute
Speaker 1: festival of policymakers and finance ministers and central banks. Despite
Speaker 1: the paul cast by the Sport, Yeah it's not it's
Speaker 1: not looking good, but at least the weather's nice. Everyone's
Speaker 1: everyone's showing up for the for the IMF hosted spring meetings.
Speaker 1: At the same time, there'll be a G twenty finance
Speaker 1: ministers meeting within that. So the city is going to
Speaker 1: be locked down with with parties shuttling back and forth,
Speaker 1: and somehow you have to cover it all. There's going
Speaker 1: to be you know, a lot of a lot of
Speaker 1: motorcades and a lot of closed streets and then a
Speaker 1: lot of I'm sure cocktail parties with I believe all
Speaker 1: of the smart folks. Yeah, well they're being I mean
Speaker 1: beyond the photo ops and the cocktail parties, will there
Speaker 1: be progress? I suspect there's gonna be Uh, there's gonna
Speaker 1: be a theme and a mission statement. But what happens
Speaker 1: after that, Well, one of the there's there's two there's
Speaker 1: two main things that would come out of something like this. Well,
Speaker 1: there's one main thing that would come out something like
Speaker 1: this would be at the G twenty these communications where
Speaker 1: from where these you know, these guardians of the global economy,
Speaker 1: you get together and say these are the challenges that
Speaker 1: we face and the way forward. Russia's invasion of Ukraine
Speaker 1: has really thrown a wrench into that, and the last
Speaker 1: couple times they've gotten together, the best they can do
Speaker 1: is say that some of us disagree on what's going
Speaker 1: on in the world and what the causes of it are,
Speaker 1: because you know, someone like the IMF or the US
Speaker 1: Rategy Department, Jenny Yellen and even Biden would say Russia's
Speaker 1: invasion of Ukraine is the biggest threat and the biggest
Speaker 1: impact furable economy. So there will be some sort of
Speaker 1: debate again around that. Hoping for progress along with big
Speaker 1: thoughts next week here in Washington, DC. Ramsey, I'll ricaby
Speaker 1: many thanks for talking with us today on bloom Thanks Jo, John,
Speaker 1: back to you, Helly, Thank you Joe. That was Bloomberg's
Speaker 1: sound on host Joe Matthew reporting from our Bloomberg ninety
Speaker 1: nine one news room at Washington, and you can hear
Speaker 1: Joe on sound on weekdays one to three pm right
Speaker 1: here on Bloomberg Radio. Also, stay tuned for a special
Speaker 1: live coverage of key movers and shakers at the IMF
Speaker 1: and World Bank meetings this coming week. And that does
Speaker 1: it for this edition of Bloomberg Daybreak Weekend. Join us
Speaker 1: and Monday morning at five am Wall Street Time for
Speaker 1: the latest on markets overseas and the news you need
Speaker 1: to start your day. I'm John Tucker. Stay with us
Speaker 1: top stories and global business headlines coming up. Right now,