WEBVTT - Daybreak Weekend: Fed Meeting, UK Election, BOJ Decision 0:00:00.240 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.240 --> 0:00:13.160 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.160 --> 0:00:15.720 top stories in the coming week from our Daybreak anchors 0:00:15.760 --> 0:00:18.400 all around the world. Straight Ahead on the program, we'll 0:00:18.400 --> 0:00:21.040 look to the next policy decision from the FET. I'm 0:00:21.120 --> 0:00:22.640 Nathan Hager in Washington. 0:00:22.840 --> 0:00:26.040 I'm Caroline Hepkeit in London, where we're asking what's next 0:00:26.040 --> 0:00:28.319 for the UK as it sits on the precipice of 0:00:28.360 --> 0:00:31.200 two big economic and political decisions. 0:00:31.480 --> 0:00:34.480 I'm Doug Christner looking ahead at what's expected to be 0:00:34.800 --> 0:00:37.200 a rate hike next week from the Bank of Japan. 0:00:38.159 --> 0:00:42.200 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.240 --> 0:00:45.920 eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.440 --> 0:00:51.559 Bloomberg ninety two nine Boston, DAB Digital Radio, London, Syrias, 0:00:51.720 --> 0:00:55.240 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.280 --> 0:00:57.520 dot Com and the Bloomberg Business App. 0:01:02.360 --> 0:01:05.360 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.360 --> 0:01:08.520 program with the Federal Reserve. All eyes will be on 0:01:08.560 --> 0:01:11.160 the world's most important central bank when it begins its 0:01:11.240 --> 0:01:15.399 June policy meeting on Tuesday and issues its decision Wednesday, 0:01:15.560 --> 0:01:18.759 the first decision and news conference for new FED chair 0:01:19.000 --> 0:01:22.000 Kevin worsh For more and what to expect, we are 0:01:22.080 --> 0:01:23.720 joined by the man who will be in the room 0:01:23.760 --> 0:01:27.679 when the decision comes down, Michael McKee, International economics and 0:01:27.720 --> 0:01:32.559 policy correspondent for Bloomberg Radio and Television. No pressure, right, Mike, 0:01:33.840 --> 0:01:36.959 I mean how much pressure is Warsh facing? Is he 0:01:37.080 --> 0:01:38.360 under pressure right now? 0:01:39.360 --> 0:01:43.120 Yes, he's under pressure, maybe a little bit different than 0:01:43.120 --> 0:01:47.880 people anticipated. When the President was first nominating him, there 0:01:47.920 --> 0:01:50.160 was a feeling that, of course Trump would be on 0:01:50.320 --> 0:01:54.440 his case immediately to start lowering interest rates. The President 0:01:54.480 --> 0:01:56.600 said at one point, I'm not going to pick anybody 0:01:56.600 --> 0:01:59.320 who won't cut interest rates. But since then we've seen 0:01:59.360 --> 0:02:02.800 inflation flow up quite a bit because of the war 0:02:02.920 --> 0:02:06.080 that Donald Trump started. So Trump seems to be willing 0:02:06.120 --> 0:02:08.080 to give him the benefit of the doubt still as 0:02:08.120 --> 0:02:12.240 a cloud hanging over Warsh and his nomination and his 0:02:12.360 --> 0:02:16.280 ascension to the chair, and so people will be watching 0:02:16.320 --> 0:02:19.880 to see what he does to try to demonstrate his independence. 0:02:19.960 --> 0:02:21.880 He doesn't have to make a decision, he doesn't have 0:02:21.919 --> 0:02:24.640 to cut rates, he doesn't have to raise rates. They 0:02:24.639 --> 0:02:26.919 can just leave them where they are. But does he 0:02:27.040 --> 0:02:30.440 say the right things that the market wants to hear 0:02:30.560 --> 0:02:34.000 about the FED caring about inflation and making sure that 0:02:34.080 --> 0:02:36.000 they will do the right thing as opposed to just 0:02:36.040 --> 0:02:37.880 automatically wanting to cut rates. 0:02:38.120 --> 0:02:40.959 Well, let's talk about what the market is looking for 0:02:41.160 --> 0:02:44.760 in terms of how the Fed could react to the data. 0:02:44.960 --> 0:02:49.880 We are still seeing elevated price pressures, a little bit 0:02:49.960 --> 0:02:52.880 of shakiness, I think you could say in the labor 0:02:52.919 --> 0:02:55.440 market right now. How does the FED react to that 0:02:55.520 --> 0:02:56.440 in this meaning. 0:02:56.639 --> 0:03:01.560 Well, the interesting question and probably not going to be 0:03:01.800 --> 0:03:05.760 too controversial, is whether they drop the guidance that they've 0:03:05.800 --> 0:03:09.600 had in there by saying that, you know, in considering 0:03:09.680 --> 0:03:13.760 any further rate moves, which everybody reads as a sign 0:03:13.800 --> 0:03:18.200 of in considering further rate cuts. That was the phrase 0:03:18.280 --> 0:03:23.640 that led to the three descents last time. And so 0:03:23.680 --> 0:03:26.520 they'll probably take that out and leave the statement fairly 0:03:26.560 --> 0:03:29.480 and and I and leave it open as neutral as 0:03:29.760 --> 0:03:34.320 they can be, which will then lead us into the 0:03:34.360 --> 0:03:37.680 summary of economic projections and the dot plot. Do they 0:03:37.840 --> 0:03:40.760 still foresee rate cuts in the dot plot either this 0:03:40.840 --> 0:03:43.640 year or next, or do we start seeing people think 0:03:43.720 --> 0:03:45.960 that they need to move rates up? Are there going 0:03:46.000 --> 0:03:49.120 to be any higher dots? And then we get Kevin 0:03:49.160 --> 0:03:51.880 Warsh and we'll see what he says about all of that. 0:03:52.440 --> 0:03:56.000 And we'll see what he says about the dot plot itself. Right, 0:03:56.040 --> 0:03:58.840 I mean, even before he became chair, he has been 0:03:58.960 --> 0:04:02.680 critical of a lot of the communication that the FED 0:04:03.120 --> 0:04:06.920 puts out there. Do you expect him to say anything 0:04:07.000 --> 0:04:09.720 more about FED communication? 0:04:10.800 --> 0:04:12.600 Well, I'm sure he's going to be asked. I don't 0:04:12.640 --> 0:04:15.760 know if he's ready yet to say exactly what he 0:04:15.800 --> 0:04:17.240 wants to do, but he has made it clear he 0:04:17.279 --> 0:04:21.560 thinks a that federal Federal Reserve officials talk too much, 0:04:21.960 --> 0:04:24.719 that it becomes a cacaphany and it doesn't help the markets. 0:04:25.000 --> 0:04:27.520 And he's also been an opponent of the dot plot, 0:04:27.560 --> 0:04:31.840 feeling it locks members into their positions longer than they 0:04:31.839 --> 0:04:36.360 should be if the circumstances change. It's very early. He's 0:04:36.400 --> 0:04:38.680 only been in the job for about two weeks, given 0:04:38.720 --> 0:04:41.160 the length of time it took to get him confirmed. 0:04:41.560 --> 0:04:45.159 So he may just let the process go forward this month, 0:04:45.200 --> 0:04:47.479 but he'll be asked about it, and so it'll be 0:04:47.520 --> 0:04:49.520 interesting to see whether he says, I want to get 0:04:49.600 --> 0:04:51.440 rid of it or I'm going to talk to my 0:04:51.560 --> 0:04:55.160 colleagues about it, or I haven't thought about it yet. 0:04:55.600 --> 0:04:57.360 I don't know if we could call this an elephant 0:04:57.360 --> 0:04:59.480 in the room, Mike, but we do know that a 0:04:59.520 --> 0:05:02.920 former chair is going to be in the room in 0:05:03.040 --> 0:05:07.039 Jay Powell. Does Powell fade away in this meeting or 0:05:07.480 --> 0:05:10.159 what's it going to mean for the Central Bank to 0:05:10.240 --> 0:05:13.320 have two chairs at the same meeting. 0:05:14.200 --> 0:05:18.200 I suspect that Jay powellill do his best to fade away, 0:05:18.680 --> 0:05:21.960 to fade into the background. It would probably be some 0:05:22.000 --> 0:05:28.040 sort of really strange decision that would lead him to dissent, 0:05:28.120 --> 0:05:29.920 and that would be the only news he would make 0:05:29.960 --> 0:05:32.719 out of it. He's not going to be talking to us. 0:05:33.480 --> 0:05:38.040 We won't know from the transcripts what he said, what 0:05:38.120 --> 0:05:40.480 positions he took, and I don't think we're going to 0:05:40.560 --> 0:05:43.279 hear from him a lot Outside of all of this. 0:05:43.440 --> 0:05:47.000 He's remaining on the Fed, obviously for the reasons that 0:05:47.040 --> 0:05:49.560 we all know about with his dispute with the administration, 0:05:50.080 --> 0:05:51.880 but he has made it clear he doesn't want to 0:05:51.920 --> 0:05:55.120 be the shadow FED chair. He doesn't want to interrupt 0:05:55.200 --> 0:05:58.960 or interfere with what Kevin Warsh is doing. So while 0:05:58.960 --> 0:06:01.760 he will play a role. He'll get his speaking moments 0:06:01.880 --> 0:06:04.920 during the meeting. We won't know about it, and that'll 0:06:04.960 --> 0:06:05.880 be the way he likes it. 0:06:06.120 --> 0:06:08.520 Thanks for this, Mike, really looking forward to your coverage 0:06:08.520 --> 0:06:11.760 this week. That is Michael McKee, international economics and Policy 0:06:11.800 --> 0:06:16.039 correspondent for Bloomberg Radio and Television. Ahead of Kevin Warsh's 0:06:16.040 --> 0:06:19.240 first policy decision this Wednesday, we will of course have 0:06:19.400 --> 0:06:23.520 full coverage for you right here on Bloomberg Radio. Let's 0:06:23.520 --> 0:06:25.520 take a look now at some stocks making news in 0:06:25.560 --> 0:06:29.039 the week ahead. I'm Nathan Hager, joined by Bloomberg's Judy LaGrue, 0:06:29.240 --> 0:06:32.279 and we're looking forward to some more earnings this week. 0:06:32.279 --> 0:06:35.640 We're going to hear from Kroger Thursday. Look at what 0:06:35.680 --> 0:06:39.679 Bloomberg Intelligence has to say about the grocery chain. Expectations 0:06:39.680 --> 0:06:42.120 here don't look too great, Judy. 0:06:42.279 --> 0:06:45.640 That's right. Bloomberg Intelligence analysts are seeing that Kroger is 0:06:45.680 --> 0:06:49.200 set for its weakest sales and profit growth of the year. 0:06:50.040 --> 0:06:53.000 So I think for them it's really like the focus 0:06:53.000 --> 0:06:56.440 on that is the seam source sales growth, which is 0:06:56.520 --> 0:06:59.440 expected to be the lowest since August twenty twenty four. 0:06:59.480 --> 0:07:02.520 But Nathan, I have a question for you. Yeah, talk 0:07:02.520 --> 0:07:04.920 to me a little bit about how you think about 0:07:04.960 --> 0:07:08.080 grocery shopping. Do you prefer to go in person? Do 0:07:08.120 --> 0:07:10.520 you prefer to go through an app to get your 0:07:10.560 --> 0:07:11.360 groceries delivery? 0:07:11.440 --> 0:07:14.120 I go to the grocery store almost every day just 0:07:14.160 --> 0:07:16.120 to fill up on like the one recipe that I 0:07:16.160 --> 0:07:18.560 have to do every day. So yeah, I'm an in 0:07:18.600 --> 0:07:19.080 store person. 0:07:19.120 --> 0:07:21.960 Kind of okay, interesting, you know, I am here in 0:07:21.960 --> 0:07:24.720 Manhattan and I miss going to the grocery store in person. 0:07:24.760 --> 0:07:27.320 I am a transplant, and so I've had to adjust 0:07:27.320 --> 0:07:31.680 to you getting delivery over going into the grocery store. 0:07:31.720 --> 0:07:34.280 But it is an experience and I do like and 0:07:34.520 --> 0:07:35.960 miss that experience greatly. 0:07:36.480 --> 0:07:36.680 Yeah. 0:07:36.720 --> 0:07:40.360 Well, I mean these grocery stores they still get the business, 0:07:40.480 --> 0:07:43.960 you know, whether whether they're getting it delivered or not. Right, 0:07:44.040 --> 0:07:46.640 But I mean, is it just same store sales alone 0:07:46.760 --> 0:07:51.080 that are potentially going to be dragging Kroger's results down? 0:07:51.280 --> 0:07:53.920 I mean, truly, for Kroger, it's a story of trying 0:07:53.920 --> 0:07:57.240 to catch up to where the business is. And so 0:07:57.520 --> 0:08:01.240 Kroger primarily is trying to spur growth than their grocery 0:08:01.280 --> 0:08:05.520 business through their e commerce fulfillment. So that's through partnerships 0:08:05.560 --> 0:08:09.200 with Instacart, with door Dash, with Uber Eats, and right 0:08:09.240 --> 0:08:12.360 now they're really seeing that basically a lot of their 0:08:12.400 --> 0:08:15.760 business is coming from people who are ordering delivery on 0:08:15.800 --> 0:08:19.720 an increasing basis, and so in tandem with that, there 0:08:19.840 --> 0:08:23.280 is for Kroger a lot of thought into price cuts 0:08:23.840 --> 0:08:26.240 and what that looks like for them as they compete 0:08:26.280 --> 0:08:31.800 with other grocery store providers who deliver like Amazon, like Walmart. 0:08:32.360 --> 0:08:35.600 And so one thing I was looking at was City 0:08:35.840 --> 0:08:40.560 researchers really noting how vocal the CEO, Greg Foreman, what 0:08:40.679 --> 0:08:44.319 foreign was in the press about price cuts on the 0:08:44.440 --> 0:08:48.520 day that Walmart reported their earnings, and City analy is 0:08:48.559 --> 0:08:53.320 called that quote strange timing and not coincidental, which I liked, 0:08:53.480 --> 0:08:55.240 you know, I thought that was really interesting and good 0:08:55.320 --> 0:08:59.120 language to use. But they certainly perceived the talk about 0:08:59.200 --> 0:09:01.400 price cuts as quote poking the bear. 0:09:01.960 --> 0:09:06.440 Seriously, when you think about, you know, just how expensive 0:09:06.640 --> 0:09:11.800 everything is right now, it's very top of mind for anybody, 0:09:11.800 --> 0:09:15.599 whether they're going into the store or getting it by delivery. 0:09:15.679 --> 0:09:18.520 But before we hear from Kroger on Thursday, we're going 0:09:18.559 --> 0:09:23.400 to get some more earnings from Carmas on Wednesday. How's 0:09:23.520 --> 0:09:25.400 the car market looking right? 0:09:25.440 --> 0:09:28.000 Now, Judy, I mean, look, I think that there's a 0:09:28.040 --> 0:09:31.679 lot going on and the car market is a reflection 0:09:32.040 --> 0:09:34.920 of what we're seeing in the economy. I think, really 0:09:34.960 --> 0:09:40.120 Carmas is an interesting company stock earning result to watch 0:09:40.200 --> 0:09:43.160 because used car sales are certainly on top of mind 0:09:43.200 --> 0:09:45.280 for a lot of us in terms of it's read 0:09:45.320 --> 0:09:48.640 on the consumer, it's read on affordability for used cars, 0:09:48.920 --> 0:09:52.960 auto credit, whether the retail turnaround is actually working. I mean, 0:09:53.000 --> 0:09:56.719 there's so many roads that lead to use car purchasing. 0:09:56.840 --> 0:10:00.760 So at least for Carmas, what we're looking at in 0:10:00.840 --> 0:10:03.760 terms of the street and analysts, they're looking at and 0:10:03.840 --> 0:10:06.559 adjusted earnings per share of about ninety seven cents, which 0:10:06.600 --> 0:10:09.880 is down thirty percent from this time last year, and 0:10:10.040 --> 0:10:13.720 revenue was also expected to be slightly lower year over year. 0:10:13.760 --> 0:10:16.199 And so I think that is really sort of reflective 0:10:16.200 --> 0:10:19.160 of where we're seeing used car sales just as an economy, 0:10:19.200 --> 0:10:22.800 as a country, there's just strain there. And so as 0:10:22.840 --> 0:10:26.320 a result, investors aren't really looking for a blowout growth 0:10:26.440 --> 0:10:30.240 story here. They're looking for evidence that the worst of 0:10:30.320 --> 0:10:34.960 this storm, in terms of really wavering and dropping used 0:10:35.000 --> 0:10:39.240 car interest in sales, is starting to stabilize and sort 0:10:39.240 --> 0:10:43.000 of steady out as far as CarMax. 0:10:42.840 --> 0:10:44.520 And what more stock we're going to watch maybe for 0:10:44.520 --> 0:10:46.640 the next few weeks here with the World Cup on 0:10:46.960 --> 0:10:49.600 is Draft Kings do you think we're going to see 0:10:49.600 --> 0:10:52.040 investors get a payoff from the tournament? 0:10:52.080 --> 0:10:54.320 Judy, Oh goodness, this is a really this is the 0:10:54.320 --> 0:10:57.400 crux of the question here. I think it depends on 0:10:57.400 --> 0:11:00.240 a number of things. It depends on whether the World 0:11:00.280 --> 0:11:04.439 Cup will bring in more betters, more dollars waged, or 0:11:04.559 --> 0:11:09.840 more repeat customers, and that is something that in my view, 0:11:09.880 --> 0:11:12.680 remains to be seen. I think we'll have to sort 0:11:12.679 --> 0:11:16.400 of understand what the handle or the total amount bet 0:11:16.480 --> 0:11:21.559 looks like as the World Cup gets underway, and whether 0:11:21.640 --> 0:11:26.040 or not Draft Kings can turn this big event into 0:11:26.120 --> 0:11:29.400 new users without spending too much on promotions, which I 0:11:29.440 --> 0:11:33.680 think is really they're set up for that. Analyst Ian 0:11:33.800 --> 0:11:39.480 Moore at Bernstein really pointed out Draft Kings as being 0:11:39.559 --> 0:11:43.480 the clearest prediction market sports betting winner of the World Cup, 0:11:43.520 --> 0:11:47.200 and I think those are really really strong words, and 0:11:47.600 --> 0:11:50.480 for that, I think it's certainly something to watch from 0:11:50.480 --> 0:11:53.440 a perspective of stock movement as it pertains to the 0:11:53.480 --> 0:11:55.959 perception of the amount of betters who are jumping in 0:11:56.160 --> 0:11:58.520 or even increasing their wagers as a result of the 0:11:58.520 --> 0:11:59.000 World Cup. 0:11:59.200 --> 0:12:01.160 Yeah, we'll be keeping an eye on it as the 0:12:01.240 --> 0:12:04.120 tournament goes on. Thanks for this, Judy, great having you 0:12:04.160 --> 0:12:04.560 on with us. 0:12:04.760 --> 0:12:05.200 Thanks guy. 0:12:05.760 --> 0:12:10.000 That's Judy LaGrue, reporter for Bloomberg News and coming up 0:12:10.040 --> 0:12:12.400 on Bloomberg day Break weekend, we'll look at what's next 0:12:12.400 --> 0:12:15.440 for the UK as it's on the precipice of two 0:12:15.480 --> 0:12:19.760 big economic and political decisions. I'm Nathan Hager and this 0:12:20.160 --> 0:12:34.679 is Bloomberg. This is Bloomberg Daybreak Weekend, our global look 0:12:34.679 --> 0:12:37.160 ahead at the top stories for investors in the coming week. 0:12:37.240 --> 0:12:40.120 I'm Nathan Hager in Washington. Up later in the program, 0:12:40.120 --> 0:12:42.480 we'll look to a monetary policy decision from the Bank 0:12:42.520 --> 0:12:45.440 of Japan. But in the coming days, a high stakes 0:12:45.480 --> 0:12:48.360 election takes place in the UK on the same day 0:12:48.400 --> 0:12:51.280 as the Bank of England's Monetary Policy Committee meets to 0:12:51.280 --> 0:12:54.640 make its latest interest rate decision. With both economics and 0:12:54.760 --> 0:12:58.160 politics at a crucial juncture, how will the two interact 0:12:58.320 --> 0:13:01.080 in the UK? For more, Let's go to London and 0:13:01.080 --> 0:13:04.679 bring in Bloomberg day Break. You're a banker, Caroline Hepger Nathan. 0:13:04.679 --> 0:13:08.040 The by election in Makerfield in the coming days will 0:13:08.080 --> 0:13:12.240 take place in a constituency of former mining towns, some 0:13:12.440 --> 0:13:18.520 leafy villages and commuter suburbs between Liverpool and Manchester in 0:13:18.559 --> 0:13:22.760 the north of England. It could have very significant consequences 0:13:22.800 --> 0:13:26.559 for the future of Britain. Just about seventy seven thousand 0:13:26.679 --> 0:13:30.760 voters will potentially decide the next UK leader, who will 0:13:30.760 --> 0:13:35.400 govern over a population of some seventy million. Its Member 0:13:35.480 --> 0:13:39.200 of Parliament, Josh Simmons, resigned to give former Greater Manchester 0:13:39.280 --> 0:13:43.400 mayor Andy Burnham a route back into Parliament, a prerequisite 0:13:43.760 --> 0:13:47.880 for an expected leadership challenge against Prime Minister Kirs Starmer, 0:13:48.520 --> 0:13:52.319 but the competition is far from a foregone conclusion. Once 0:13:52.520 --> 0:13:55.920 a safe Labour seat due to the area's historic ties 0:13:55.960 --> 0:13:59.800 to mining and trade unions, is yet another place where 0:13:59.840 --> 0:14:03.320 the governing party has sheared support to the populist and 0:14:03.480 --> 0:14:08.200 anti immigrant Reform UK Party led by Nigel Farage. The 0:14:08.320 --> 0:14:12.160 constituency is a deliberate choice though for Burnham, say his 0:14:12.280 --> 0:14:15.360 backers to fight a tight contest where there is a 0:14:15.440 --> 0:14:18.520 direct threat from Reform so he can show how he 0:14:18.559 --> 0:14:21.840 would beat them in the next general election, which must 0:14:21.920 --> 0:14:26.040 be called before August twenty twenty nine. Burnham is not 0:14:26.080 --> 0:14:29.240 the only would be challenger, though to Starmer, former Health Sexuary, 0:14:29.240 --> 0:14:31.840 where Streeting is also expected to mount a bid for 0:14:31.960 --> 0:14:35.440 the Labor leadership should a contest take place now. He 0:14:35.520 --> 0:14:37.720 recently spoke to Bloomberg's Francin in Laqua. 0:14:38.280 --> 0:14:40.520 I think Andy will win and make a field when 0:14:40.520 --> 0:14:42.840 none of us and the included taking it for granted. 0:14:43.800 --> 0:14:46.000 It comes back to this fundamental point, though, which is 0:14:46.760 --> 0:14:50.720 I can see Andy's strengths. I think he needs to 0:14:50.720 --> 0:14:53.680 be tested. I think his ideas need to be tested, 0:14:53.720 --> 0:14:57.320 and so do mine. And I'm probably a rare thing 0:14:57.320 --> 0:15:01.080 in the Labor Party. I'm a monarchist, but this is 0:15:01.120 --> 0:15:05.880 one coronation that I I'm not enthusiastic about. I think 0:15:05.920 --> 0:15:07.880 you need a debate. I think you need a battle 0:15:07.880 --> 0:15:09.920 of ideas. He needs to set out his store, I 0:15:09.960 --> 0:15:10.760 need to set out mine. 0:15:11.280 --> 0:15:14.720 That was Labor politician West Treating, speaking to Bloomberg's Farcy 0:15:14.760 --> 0:15:18.840 and Lacqua at the London south By Southwest Festival. The 0:15:18.960 --> 0:15:22.960 UK stands at the precipice in no small part due 0:15:23.000 --> 0:15:27.000 to the state of the economy and voters who don't 0:15:27.080 --> 0:15:30.520 usually turn out in enormous numbers for by elections. We'll 0:15:30.560 --> 0:15:32.920 be going to the polls on the very same day 0:15:32.960 --> 0:15:35.800 as the Bank of England's Monetary Policy Committee makes its 0:15:35.840 --> 0:15:39.840 decision on interest rates as it assesses the extent to 0:15:39.880 --> 0:15:44.320 which higher energy costs are affecting domestic prices. We're going 0:15:44.360 --> 0:15:47.800 to dig into both topics now with Bloomberg's Politics reported, 0:15:47.880 --> 0:15:51.120 Jacob Reid and our economists covering the UK and the 0:15:51.160 --> 0:15:55.080 euro Area, Ana Andrede. Welcome to both of you. So 0:15:55.480 --> 0:15:59.800 i'll call it the two Andy's Andy Burnham and Andrew Bailey. 0:16:00.200 --> 0:16:02.520 Lots of candidates of course running in the by election, 0:16:02.960 --> 0:16:05.640 and lots of policymakers at Bank of England too. But 0:16:05.680 --> 0:16:10.520 that's just my shorthand for really thinking about next Thursday. Jacob, 0:16:10.520 --> 0:16:13.040 why do you think, though, that the vote in make 0:16:13.080 --> 0:16:14.640 a Field is so important? 0:16:14.800 --> 0:16:18.720 Oh my goodness. I mean it's completely bizarrest by election 0:16:18.920 --> 0:16:21.280 in a you know, we're going to be seventy thousand 0:16:21.360 --> 0:16:25.600 voters or something like that, and it could reshape British politics. 0:16:25.640 --> 0:16:29.360 We've got a Prime Minister, Keir Starmer, who's historically unpopular. 0:16:29.800 --> 0:16:32.960 The Labor Party is seeing those polls we're very worried. 0:16:33.360 --> 0:16:36.880 And Andy Burnham, the Mayor of Manchester of Greater Manchester, 0:16:37.280 --> 0:16:40.680 is the most popular politician in the country. The issue 0:16:40.800 --> 0:16:44.560 is he can't become Labor Leader and Prime Minister without 0:16:44.640 --> 0:16:47.560 being in Parliament. So one of the Labor MPs stood 0:16:47.600 --> 0:16:50.040 down and said, go on, Andy, running this by election 0:16:50.560 --> 0:16:52.560 and if you win, you'll be able to challenge for 0:16:52.560 --> 0:16:55.120 the leadership. And it's a big if. It's a big if, 0:16:55.160 --> 0:16:56.080 it's not a done deal. 0:16:56.360 --> 0:16:59.240 No, So what does the polling look like? What have 0:16:59.360 --> 0:17:04.800 candidates actually been campaigning on in quite an unusual contest obviously. 0:17:04.840 --> 0:17:08.400 Yeah, so there have been two poles. They both put 0:17:08.440 --> 0:17:12.000 Andy Burnham ahead by different amounts. For most recent one 0:17:12.119 --> 0:17:14.800 was ten percentage points ahead, which you would say is 0:17:15.320 --> 0:17:19.680 relatively comfortable. But it's notoriously difficult to do accurate polling 0:17:20.200 --> 0:17:24.960 in small constituencies to get an accurate sample. So while 0:17:25.000 --> 0:17:28.040 people probably do think Andy Burnham will win, there's a 0:17:28.080 --> 0:17:32.800 strong challenge from Robert Kenyan, who's the Reform UK candidate, 0:17:32.880 --> 0:17:37.000 and he's basically saying that Andy Burnham is using this 0:17:37.359 --> 0:17:41.400 constituency as a stepping stone for his personal ambition and 0:17:41.480 --> 0:17:44.520 that you know he's still labor, and Labour's very unpopular. 0:17:45.840 --> 0:17:48.040 Is there anyone in the North of England who doesn't 0:17:48.080 --> 0:17:50.959 know the name Andy Burnham? I doubt it. He's certainly 0:17:50.960 --> 0:17:55.000 playing on home turf in terms of that record. And 0:17:55.040 --> 0:17:58.240 I know you've spent lots of time in the constituency 0:17:58.480 --> 0:18:01.760 and in the North of England thinking about that. So 0:18:02.359 --> 0:18:05.400 what do you kind of extract from his record? 0:18:06.040 --> 0:18:08.560 The big thing is buses. I mean to go to 0:18:08.640 --> 0:18:11.159 make Afield ashually in Makeerfield, the town center and you 0:18:11.200 --> 0:18:14.760 see these big yellow buses going past you. And his 0:18:14.800 --> 0:18:18.080 big policy has been taken them back under public control, 0:18:18.520 --> 0:18:21.919 capping the fairs to two pounds, making sure they do 0:18:22.080 --> 0:18:24.360 roots for the kind of in the middle of nowhere, 0:18:24.400 --> 0:18:28.240 but a bit of a lifeline for those people. That's 0:18:28.280 --> 0:18:31.479 his big thing. And also Greater Manchester is just an 0:18:31.520 --> 0:18:34.080 area of it's doing really well. The UK economy is 0:18:34.160 --> 0:18:37.600 quite gloomy, and this is a city, a city region. 0:18:37.960 --> 0:18:40.840 It's really been outpacing a lot of a lot of 0:18:40.840 --> 0:18:44.280 the country. It feels like things are happening. Buildings are 0:18:44.320 --> 0:18:47.000 going up. So he's kind of trying to capitalize on 0:18:47.080 --> 0:18:48.280 that good vibe. 0:18:48.320 --> 0:18:51.439 Really yeah, absolutely well, Anna, let's bring you in at 0:18:51.440 --> 0:18:54.479 this point, then we know that the UK is facing 0:18:54.480 --> 0:18:57.280 obviously political turmoil with all of this, just walk us 0:18:57.320 --> 0:18:59.840 through then the economic picture right now for. 0:18:59.680 --> 0:19:04.200 The U, Yeah, definitely. So obviously we've had a very 0:19:04.200 --> 0:19:07.800 strong start to the year. We've seen real GDP gaining 0:19:08.000 --> 0:19:11.200 zero point six percent quarter on quarter. That's very unusual. 0:19:12.160 --> 0:19:16.639 There's all these question marks about whether that reflects strong 0:19:16.680 --> 0:19:20.600 momentum in underlying activity or actually it's just a problem 0:19:20.680 --> 0:19:24.280 that the OS is not fully capturing a shift in 0:19:24.320 --> 0:19:29.080 the pattern of economic activity. Regardless, we expect and our 0:19:29.240 --> 0:19:32.080 outlook for the next coming quarters is actually quite gloomy. 0:19:32.160 --> 0:19:35.600 And that's obviously on the Iran war. So as a 0:19:35.640 --> 0:19:39.399 net importer of energy, they run more to rising energy costs, 0:19:39.520 --> 0:19:42.800 means that there'll be a taxflationary shock to the economy. 0:19:43.000 --> 0:19:46.720 We're going to see headline inflation increasing faster than we 0:19:46.720 --> 0:19:50.000 were expecting. We've actually revised our forecast compared to the 0:19:50.040 --> 0:19:52.760 pre war We see it higher by one point five 0:19:52.800 --> 0:19:56.480 percentage points by the start of next year. That's obviously 0:19:56.520 --> 0:20:00.199 a squeeze, real income squeeze for households, and and on 0:20:00.240 --> 0:20:03.320 top of that you had tightening and funding conditions because 0:20:03.400 --> 0:20:05.840 markets are no longer pricing in rate cuts from the BOE. 0:20:06.840 --> 0:20:10.359 So our outlook even before sort of all of this 0:20:10.480 --> 0:20:14.640 political thermol was for extreme weak growth over the next 0:20:14.680 --> 0:20:15.480 coming quarters. 0:20:15.800 --> 0:20:16.159 Yeah. 0:20:16.200 --> 0:20:18.800 Absolutely, And you know we don't have a resolution to 0:20:18.880 --> 0:20:22.920 the war in Iran and that is certainly a big, 0:20:22.960 --> 0:20:26.440 big challenge. And I suppose going back to the kind 0:20:26.440 --> 0:20:29.640 of politics, that's one of the big questions, isn't it 0:20:30.359 --> 0:20:35.720 how somebody like Andy Burnham would translate his policies nationally, 0:20:36.480 --> 0:20:41.639 what his bigger economic plans might be when the backdrop 0:20:41.800 --> 0:20:45.640 we know has been massively challenging for Kistoma, the currently leader, 0:20:45.680 --> 0:20:46.680 and even leaders. 0:20:46.400 --> 0:20:50.560 Before that, exactly, it would be difficult for anyone coming in. 0:20:50.760 --> 0:20:54.480 Broadly speaking, Burnham has said he wants to take more 0:20:54.520 --> 0:20:59.359 control of essential industries, so the bus is a key example, 0:21:00.200 --> 0:21:03.600 or some energy water. He stopped short of saying he 0:21:03.600 --> 0:21:07.600 would want to nationalize. It might be more regulation. He's 0:21:07.640 --> 0:21:10.800 also talked a bit about a new way of doing politics, 0:21:10.840 --> 0:21:15.080 devolving more tax and spend powers to local areas and 0:21:15.520 --> 0:21:19.840 maybe even changing the electoral system. And historically he's been 0:21:19.840 --> 0:21:22.879 in favor of rejoining the EU, but he knows he's 0:21:23.040 --> 0:21:26.760 competing in a constituency that voted to leave, so he's 0:21:26.840 --> 0:21:29.680 kind of walked back from those comments. I think basically 0:21:29.760 --> 0:21:32.600 there are two different school of thoughts. One is that 0:21:33.160 --> 0:21:35.880 he's more left wing than Keir Starmer. He's a bit 0:21:35.920 --> 0:21:39.240 more radical. He's talked about MC government shouldn't be in 0:21:39.320 --> 0:21:42.639 hot to the bond markets. That was interpreted by some 0:21:42.880 --> 0:21:46.080 as you know crikee, he's going to borrow more. He 0:21:46.240 --> 0:21:48.720 said that he meant that we need a long term 0:21:48.760 --> 0:21:51.920 plan and not to just follow sort of guilt girations. 0:21:52.520 --> 0:21:55.159 The other school of thought is that he's basically a 0:21:55.200 --> 0:21:57.800 bit more of a charming Kio Starmer. He would have 0:21:57.840 --> 0:22:01.280 similar policies. He's said he's in favor of a lot 0:22:01.320 --> 0:22:05.200 of pretty tough restrictions the government has done on immigration. 0:22:05.720 --> 0:22:07.520 He just sell them a bit better. He's a bit 0:22:07.560 --> 0:22:10.320 more charismatic and it's not clear which Andy Vernon we 0:22:10.400 --> 0:22:10.959 might get. 0:22:11.200 --> 0:22:13.520 So then what do we think that the Bank of 0:22:13.600 --> 0:22:16.040 England amidst all of this is going to do. 0:22:16.480 --> 0:22:19.240 I mean, I think right now the focus is still 0:22:19.280 --> 0:22:21.679 pretty much on the Iran war and the impact that 0:22:21.680 --> 0:22:24.800 it can have on the economy. I think the political 0:22:24.840 --> 0:22:27.880 uncertainty and obviously the question mark of what will happen 0:22:27.960 --> 0:22:30.439 to fiscal policy will be a crucial thing for the 0:22:30.480 --> 0:22:33.639 bo's policy outlook, but it's just not We just know 0:22:33.800 --> 0:22:36.679 very little of what's going to happen there. BOE policy 0:22:36.720 --> 0:22:39.359