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, A
Speaker 1: big parade of retail earnings on the way. I'm Tom
Speaker 1: Busby in New York. I'm Caroline Hetkee here in London.
Speaker 1: Where we're asking where are all the women money manages?
Speaker 1: Speaking to Fames investor Helena Marcy. I'm Brand Curtis in
Speaker 1: Hong Kong. More than nine out of ten people in
Speaker 1: China are planning to travel in the coming weeks. Where
Speaker 1: are they going and who stands to benefit? That's all
Speaker 1: straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven, FREEO
Speaker 1: New York, Bloomberg ninety nine one, Washington, DC, Bloomberg one
Speaker 1: oh six one, Boston, Bloomberg nine sixty, San Francisco, DAB
Speaker 1: Digital Radio London, Sirius XM one nineteen and around the
Speaker 1: world on Bloomberg Radio dot com and via the Bloomberg
Speaker 1: Business App. A day to you. I'm Tom Buzzby, and
Speaker 1: we begin today's program with a flood of earnings reports
Speaker 1: about to come out from some of the nation's biggest retailers.
Speaker 1: And joining me now to give us some insight into
Speaker 1: what to expect and what it all means for the economy.
Speaker 1: Bloomberg retail reporter Brendan Case. Brendan, thank you so much
Speaker 1: for joining us, Hey, thanks for having me on well.
Speaker 1: With inflation still rising, borrowing rates high and expected to
Speaker 1: move even higher, it has been a tough time for
Speaker 1: consumers and for retailers. And last week, boy, we got
Speaker 1: some pretty disappointing outlooks for the year ahead from two
Speaker 1: retail giants, both Dow components. So, Brendon, let's start with Walmart,
Speaker 1: the world's largest retailer. In Brendan, Walmart's CFO John Rainey
Speaker 1: told us this past week that value, proposition and convenience,
Speaker 1: as he calls it, is something consumers are liking. But
Speaker 1: and it's a big butt. There's a lot of macro
Speaker 1: uncertainty as as we look across the consumers across the globe,
Speaker 1: but certainly here in the US, balance sheets are getting thinner.
Speaker 1: You're seeing saving rates decline, and we really haven't been
Speaker 1: in a position where we've seen the fed titan at
Speaker 1: this rate. And so as we look forward and give
Speaker 1: guidance for the full year, we're adopting a cautious outlook,
Speaker 1: and we want to make sure that we're responsive to
Speaker 1: whatever environment that we're going to find ourselves. So Brended
Speaker 1: of Walmart is being cautious, as is Home Depot, the
Speaker 1: other big retailer that reported last week. Do other retailers
Speaker 1: share this caution and broader concerns about the economy right now?
Speaker 1: The ones that Rainy is talking about, Yes, they really do,
Speaker 1: Tom And just to hear that from Walmart, you know,
Speaker 1: if you think about the broad trends, the big picture
Speaker 1: out there is that if you're in retail, you want
Speaker 1: to be selling at very you know, the lowest possible
Speaker 1: prices and selling basic goods. Right now, Walmart has a
Speaker 1: reputation for doing both, and even it's taking such a
Speaker 1: cautious tone. When you think about some of the companies
Speaker 1: about to report, Target, Coal's, Macy's, you're talking a lot
Speaker 1: more about discretionary items, and I think we'll probably hear
Speaker 1: a similar tone of caution for their outlooks this year. Now.
Speaker 1: On another note, Millard Drexler, he's own proprietor of clothing
Speaker 1: retailer Alex mill told us consumers are stressed by inflation
Speaker 1: and higher prices. And despite the unemployment rate at more
Speaker 1: than fifty year low, right now, people should worry that
Speaker 1: the robust labor market is starting to change. Here's another
Speaker 1: monkey ranch. A lot more jobs may be at risk.
Speaker 1: Let's hear from Drexler. Now, they have jobs, but I
Speaker 1: think the huge amount of layoffs and the publicity and
Speaker 1: they get has to have people worried about their job security.
Speaker 1: And there's so many unknowns going on in the world today,
Speaker 1: you know, internationally in America. All right, So, Brendan, is
Speaker 1: this another big problem that's going to weigh on retailers?
Speaker 1: The ones you know that we're expecting to hear from
Speaker 1: this coming week time will tell. I think from the
Speaker 1: retailer's perspective, that's more of kind of a good news
Speaker 1: bad news kind of thing. You know. The bad news
Speaker 1: is that, certainly we've heard a lot of layoff announcements
Speaker 1: from tech companies, bang, some of the most powerful companies
Speaker 1: in the economy. It looks a little different from the
Speaker 1: retailer's perspective because you know, employment is still very high.
Speaker 1: You know, people have jobs and wages are going up.
Speaker 1: Both Walmart and home Depot over the last few weeks
Speaker 1: have said they're going to be raising wages, which are
Speaker 1: sort of a signal that they're having trouble hiring people
Speaker 1: at their at their current wages, and that they need
Speaker 1: to be boosting them just to be able to fill
Speaker 1: the jobs they have. Now, you know, if the Fed
Speaker 1: keeps tightening, is the economy going to get to a
Speaker 1: situation where overall unemployment starts to rise, people start losing jobs,
Speaker 1: you know, in across different industries. Time will tell if
Speaker 1: that happens, that's going to be a whole new ballgame
Speaker 1: for the retailers, all right, Brendon. Now, there's also the
Speaker 1: post pandemic reopening, a lot of pent ump demand for travel,
Speaker 1: for dining out, for experience, ential spending on concert, sporting events,
Speaker 1: the like. None of that comes cheaply. That means all
Speaker 1: those things are also competing with retailers for our money.
Speaker 1: Now at the same time, of course, you need to
Speaker 1: buy clothes, you have to eat, you have to go
Speaker 1: out every now and again. So where does this leave
Speaker 1: retailers right now? Given that, like we just heard Drexler say,
Speaker 1: people are worried. You know, the retailers last year they
Speaker 1: started struggling with this shift that you're talking about last year,
Speaker 1: and in fact, it happened a lot more quickly than
Speaker 1: they were expecting. The effect was that companies like Walmart, Target,
Speaker 1: they ended up with a whole lot more inventory than
Speaker 1: they thought they were going to need. You know, you're
Speaker 1: talking about home goods, you're talking about kitchen appliances. That
Speaker 1: stuff was just you know, stacking up in their warehouses
Speaker 1: and they ended up having to liquidate it market down,
Speaker 1: you know, pretty heavy discounts that took a big toll
Speaker 1: on profits last year, and this year it's a pretty
Speaker 1: similar outlook. Now, well, let's dig a little deeper into
Speaker 1: some of the names that are reporting, and some of
Speaker 1: them have navigated the pandemic better than others, some of
Speaker 1: them have bounced back better than others. But let's talk
Speaker 1: about some of the big use. We'll start with the
Speaker 1: discounters Dollar Tree, Dollar General. I mean, these stores have
Speaker 1: seen tremendous ups, tremendous downs. Where do they stand right now? Yeah,
Speaker 1: So Dollar Tree is going to be reporting next week,
Speaker 1: and that's going to be an interesting test because just
Speaker 1: on February twenty third, Dollar General issued a profit warning.
Speaker 1: It said it got hit pretty bad from the impact
Speaker 1: of the winter storms that we had right before Christmas.
Speaker 1: It also came out with a pretty underwhelming outlook for
Speaker 1: this year, and you know, one thing that they flagged
Speaker 1: was increased interest expense. But kind of lurking in the background,
Speaker 1: there is the concern that maybe lower income consumers, which
Speaker 1: is kind of their bread and butter, you know, maybe
Speaker 1: those people are really starting to you know, run out
Speaker 1: of gas in terms of their spending ability. They're getting
Speaker 1: squeezed by whole range of costs, and you know, are
Speaker 1: they going to be able to keep spending the way
Speaker 1: they've been spending For companies like Dollar Tree and Dollar
Speaker 1: General to you know, continue making the gains that they
Speaker 1: have been in terms of sales, that's a that's a
Speaker 1: big question going into these earnings reports. Let's talk about
Speaker 1: now the middle income, the targets, the coals, how do
Speaker 1: they stand. So Target is going to be the first
Speaker 1: one to report. They go on on Tuesday, and they
Speaker 1: actually have a whole investor day planned as well, so
Speaker 1: they're going to be getting into the details of their
Speaker 1: other outlook for this year, and that's going to be
Speaker 1: really interesting. You know, Target does sell a lot of
Speaker 1: food and basic goods, but the proportion of those goods
Speaker 1: as in terms of their total sales, it's much smaller
Speaker 1: than Walmart, and Target, you know, by contrast, is quite
Speaker 1: a bit stronger than Walmart in terms of the percentage
Speaker 1: of discretionary items itselves. And so its outlook is going
Speaker 1: to tell us a lot about what, by all accounts,
Speaker 1: is a very well managed retailer. What does a company
Speaker 1: like that see in terms of their demand trends for
Speaker 1: this year after being kind of upended last year and
Speaker 1: speaking of upended Cole's competitor in a lot of ways
Speaker 1: to Target, how does it look for Coals? Yeah? See,
Speaker 1: and there again with Coals, with Macy's, you're talking about
Speaker 1: all of the discretionary exposure that Target has, but with
Speaker 1: much less of the kind of basic essentials that Target
Speaker 1: also sells. So I think if you're looking at a
Speaker 1: company like Coals, you're looking at Macy's, you're talking about
Speaker 1: a company that is trying to convince customers that, you know,
Speaker 1: they should buy stuff. Do they really need it? You know,
Speaker 1: people's definition varies. You can't put off buy and clothes forever.
Speaker 1: But that's a real question mark, and I think there's
Speaker 1: a lot of concern about whether the outlook for those
Speaker 1: companies is going to be quite weak this year as
Speaker 1: consumers continue to struggle with inflation and just try to
Speaker 1: cut back on all of their non essential spending. And
Speaker 1: speaking of non essential, let's talk warehouse clubs. Now, we
Speaker 1: heard from Walmart and of course they own Sam's. But
Speaker 1: this week we hear from Costco the Biggie and after
Speaker 1: that BJ's. They have really had to be nimble and
Speaker 1: navigate through the pandemic. What's the outlook on Costco the Biggie?
Speaker 1: So Costco has been a big winner during the pandemic.
Speaker 1: This is a company with a clientele that skews higher
Speaker 1: income and it's a company with a reputation for selling
Speaker 1: very competitively priced goods. It also sells a lot of food,
Speaker 1: and so it's getting people in the door with food sales.
Speaker 1: And once they're in the door, you know, a lot
Speaker 1: of them, especially those higher income levels, maybe have a
Speaker 1: little more money to spend. They're finding a lot more
Speaker 1: to buy in Costco than they did before. And so
Speaker 1: Costco's comparable sales had a little gip in November. There
Speaker 1: was a lot of concern that that was that was
Speaker 1: a signal of a big slowdown, but since then December
Speaker 1: January have been quite good for Costco. We'll find out
Speaker 1: more about their outlook when they report earnings, but by
Speaker 1: all accounts, they've been a big winner from the pandemic
Speaker 1: and it would be a surprise if they come in
Speaker 1: with a particularly weak outlook. So that'll be a big
Speaker 1: watch item. Well, Brendon, that is a lot to digest,
Speaker 1: and I want to thank you. That's Bloomberg retail reporter
Speaker 1: Brendan Case. And coming up on Bloomberg Daybreak Weekend, we
Speaker 1: go to London to learn about veteran investor Helena Morrissey
Speaker 1: and how she is setting out to tackle the lack
Speaker 1: of female fund managers in the UK. I'm Tom Busby,
Speaker 1: and this is Bloomberg. This is Bloomberg Daybreak Weekend, our
Speaker 1: global look ahead at the top story for investors in
Speaker 1: the coming week. I'm Tom Busby in New York. Up
Speaker 1: later in our program and look at some of the
Speaker 1: challenges the Biden administration is facing right now. But first
Speaker 1: we go to London and Bloomberg daybreakhost Caroline Hepger to
Speaker 1: learn more about veteran investor Helena Morrissey and how she's
Speaker 1: setting out to tackle the lack of female fund managers
Speaker 1: in the UK Caroline Gender diversity efforts here in the
Speaker 1: UK have stalled. The proportion of female money managers is
Speaker 1: stuck at twelve percent that according to City was Alpha
Speaker 1: Female Report for twenty twenty two. Helena Morrissey is the
Speaker 1: chair of the diversity projects. She is hoping to change
Speaker 1: that with a new Pathway program training sixty women from
Speaker 1: thirty three companies to take their top jobs in money management. Now.
Speaker 1: I sat down with Morrissey to discuss the issue and firstly,
Speaker 1: just why the numbers are still so low for women
Speaker 1: at the top of finance is quite a mystery, to
Speaker 1: be honest, because as my own career suggests, you know,
Speaker 1: it's a great career for anybody who wants to be
Speaker 1: measured on results. I just spoke at a law firm
Speaker 1: where the women were saying, you know why they're so
Speaker 1: few female fum managers, and I said, it's it's particularly
Speaker 1: mystery when I'm talking to you where you've got fifty
Speaker 1: percent plus lawyers at the intake level anyway, and fund managers.
Speaker 1: You know, we've stayed very very though it's not really
Speaker 1: moved for the seven or eight years since people collected
Speaker 1: the data. I do think there's an image problem that
Speaker 1: people look and they think, oh, fun management, it's not
Speaker 1: for me. It would be very isolated to be a woman.
Speaker 1: It's kind of macho environment. And some of this is
Speaker 1: not really true. And we've got to get out more
Speaker 1: and explain that actually, fun management it's great career, you know,
Speaker 1: if you want to be judged on your ultimate results.
Speaker 1: If you like an analyst, you know, analysis, that's great
Speaker 1: for lots of women love analyzing companies and things. So
Speaker 1: we've got to just get out and tell the story.
Speaker 1: I think that's really interesting because I mean, surely, if
Speaker 1: all the industries, the finance industry, with all of its metrics,
Speaker 1: would be the most merited crack it. One might think
Speaker 1: that you would actually find the industry very obsessed with
Speaker 1: facts and figures and data that they we would promote
Speaker 1: beautiful performance. Well exactly. I mean I remember when I
Speaker 1: was you know, I have a lot of children, and
Speaker 1: when i'd come back from return to leave, you know,
Speaker 1: if I still had great performance numbers, then no one
Speaker 1: really could criticize. I mean, obviously I was investing for
Speaker 1: the long term as well. I didn't always have great numbers,
Speaker 1: of course, but that's not possible if you run Monday
Speaker 1: for many years. But it was a great testament to
Speaker 1: one's ability to have performance data that was completely indisputable,
Speaker 1: just completely objective. Do you still meet men, I know
Speaker 1: that you must meet so many people in the city
Speaker 1: of London. Do you still meet men in the city
Speaker 1: of London who don't believe that, who question whether women
Speaker 1: are as good at managing money as men? Well, I
Speaker 1: don't think anyone would ever admit at these days. And
Speaker 1: I think there is still though a bit of a
Speaker 1: sort of cultural impediment as well. I think men, many
Speaker 1: men now and especially in our industry, really are just
Speaker 1: as frustrated as the women that we're not seeing more
Speaker 1: progress on this. So there are great allies. But I
Speaker 1: do also know that some people think this is, you know, irrelevant,
Speaker 1: you know, it's all about you know, they just don't
Speaker 1: see it that actually women might actually bring something new
Speaker 1: to the table, that we might add something, And in
Speaker 1: fact the data does suggest that mixed gender teams are
Speaker 1: the best performing. I don't think that's any great shock
Speaker 1: to anybody. Really, we bring different things to the table.
Speaker 1: So I'm afraid yes, one or two, I don't think
Speaker 1: dinosaurs anymore, but certainly pockets where you're like, oh, I
Speaker 1: don't really think they're on board with this idea. Yeah,
Speaker 1: because certainly the story in private equity, for example, is
Speaker 1: that the case is still very much having to be
Speaker 1: made either to invest in women lead businesses. You know
Speaker 1: that the decision makers about where the money is allocated
Speaker 1: is often very skewed, and so you know that cases. Yeah,
Speaker 1: we think of it as being all fashioned, but it
Speaker 1: might not be. And I'm at this stage thinking, let's
Speaker 1: not put a business case because obviously we've had business
Speaker 1: cases going back decades now. You know, McKinsey did a
Speaker 1: great business case on why it would better to have
Speaker 1: more women on boards than not to have any, showing
Speaker 1: the financial impact. I think we now have to make
Speaker 1: a personal case, you know, actually say your team will
Speaker 1: be better, your business will be better, You'll have more
Speaker 1: connection with your clients. You know. It's it's more of
Speaker 1: a motive case. I'm actually want to win over hearts
Speaker 1: and minds now, because I see again I see people saying, oh,
Speaker 1: sure we'd love to have more women, but not actually
Speaker 1: doing things, for example, managing people inclusively, sort of assuming
Speaker 1: everybody's got the same sort of lives and we need
Speaker 1: to just shake that up completely, I think, and say
Speaker 1: as she's in your interest to encourage more women into
Speaker 1: the industry and to stay. I think that's really interesting
Speaker 1: to talk about winning over hearts and minds, because this
Speaker 1: project to me feels much more muscular. This feels like
Speaker 1: getting results on the ground. It feels like a more
Speaker 1: muscular diversity project than we've seen before, which has been
Speaker 1: talk maybe topped down. This is very much bottom up.
Speaker 1: It is. I mean, we have a great advisory council
Speaker 1: which is CEO level, and you know we need their
Speaker 1: leadership as well. We need them to say, actually, this
Speaker 1: is more than peripheral to our business. This is important.
Speaker 1: We need the regulators to be really pushing this agenda
Speaker 1: as well and saying actually it's important around conduct, around
Speaker 1: what it means to be a great person in the
Speaker 1: finance industry, about making sure our reputation sell that. But
Speaker 1: we do need bottom up and what we've seen at
Speaker 1: the Diversity Project and we now have fifteen different work streams.
Speaker 1: Our most recent is the fifty plus group. Not that
Speaker 1: I'm behind that even though it asson see to have that,
Speaker 1: but we have these groups that are really led by
Speaker 1: the underrepresented people. So you know, the talk about black
Speaker 1: group is led mainly by black people. Now, I think
Speaker 1: then you get the passion, you get the absolute drive,
Speaker 1: you get absolute determination. But we can't do it alone people.
Speaker 1: You know, I learned from the thirty percent Club experience
Speaker 1: that was an initiative to create better gender balance on
Speaker 1: boards at least thirty percent women. We only made headway
Speaker 1: when we involved men in that, and so we do
Speaker 1: need to be I love your expression, Karlin muscular, because
Speaker 1: you know, it should feel very robust. It should be
Speaker 1: like a You've got a business objective here, Let's improve
Speaker 1: diversity of talent. Let's make sure that people are included
Speaker 1: when they join if they're diverse, and let's achieve better
Speaker 1: results for our clients. That's a very business oriented approach,
Speaker 1: but yeah, it needs a bit of everybody involvement, nuts
Speaker 1: and bolts. You mentioned differing reports, so I'll clarify. It's
Speaker 1: either thirty two or thirty three or thirty four companies
Speaker 1: that are taking apart thirty three this year in the
Speaker 1: year thirty three? Got it clear? Is it the biggest
Speaker 1: fund managers? Is it the big players? Or are they
Speaker 1: smaller companies. It's actually at all sizes and there isn't
Speaker 1: really a theme. So first out the gates, I want
Speaker 1: to give them credit where it's due were Schroeder's. So
Speaker 1: Peter Harrison, CEO of Shrona, has gone in touch with
Speaker 1: me the day I just dropped an email to the
Speaker 1: Advisor Council saying we've got this idea of a pathway
Speaker 1: program female fund managers, just a very targeted intervention, he wrote.
Speaker 1: Within a minute, I think back saying that yes we
Speaker 1: need this, and the numbers are quite quite remarkable. I mean,
Speaker 1: currently in the UK's estimated fewer than two hundred women
Speaker 1: female fund managers in Britain as a whole. If you've
Speaker 1: got sixty people on the program, you know that's very
Speaker 1: very sizeable. Do you have targets specifically for the number
Speaker 1: of women that you would like to see become senior
Speaker 1: fund managers as a result of this? So yes, I'm
Speaker 1: going to take the word senior to mean you're a
Speaker 1: named fund manager on an account. And that's sometimes where
Speaker 1: the confusion lies because people think, oh, I'm part of
Speaker 1: a fund management team. I've got the job description fund manager,
Speaker 1: but I'm not named on an account, and that's the
Speaker 1: prestigious role. You've just summarized it, Karen. I mean, sixty women.
Speaker 1: They're not all going to make it, presumably, but if
Speaker 1: we run this program three or four years, we could
Speaker 1: double the proportion of female fund managers. I mean that's
Speaker 1: assuming we take all the jobs, which might not be
Speaker 1: quite plausible. But you know, if you add sixty to
Speaker 1: the numerator and the denominators, roughly three and a half
Speaker 1: percent increasing. So this is where I'm really excited about
Speaker 1: what the Pathway program can do. This is not just
Speaker 1: sort of you know, whistling in the dark or having
Speaker 1: some sort of vague hope. This is saying we'll put
Speaker 1: this number of women through it and we'll make sure
Speaker 1: that they get fund management roles. So Helena Morrissey Fair
Speaker 1: speaking to me at Bloomberg headquarters here in London. She's
Speaker 1: the chair of the Diversity Project, talking about her Pathway
Speaker 1: program initiative. If it is successful, it could in just
Speaker 1: three years double the number of female fund managers in Britain.
Speaker 1: I'm Carolyn Hebger here in London. You can catch us
Speaker 1: every weekday morning for Bloomberg Daybreak. You're at beginning at
Speaker 1: six am in London. That's one am on Wall Street. Tom,
Speaker 1: there you Carolina, coming up on Bloomberg Daybreak weekend. Are
Speaker 1: things getting even dicier for President Biden? Internationally? I'm Tom
Speaker 1: Busby and this is Bloomberg broadcasting live from the Bloomberg
Speaker 1: Interactive Broker Studio in New York. Bloomberg eleven three oh
Speaker 1: to Washington, DC, Bloomberg ninety nine one to Boston, Bloomberg
Speaker 1: one oh six one to San Francisco, Bloomberg nine sixteen
Speaker 1: to the country, Sirius XM Channel one nineteen to London
Speaker 1: DAB Digital Radio, and around the globe the Bloomberg Business
Speaker 1: app and Bloomberg Radio dot Com. This is Bloomberg day
Speaker 1: Break Weekend, hight Tom Busby in New York with your
Speaker 1: global look ahead at the top stories for investors in
Speaker 1: the coming week. Russia's invasion of Ukraine will continue to
Speaker 1: be in sharp focus this coming week with a state
Speaker 1: visit to the White House by Germany's Chancellor. For more,
Speaker 1: let's to our Bloomberg ninety nine one newsroom in Washington,
Speaker 1: our sound on host Joe Matthew. Tom. Thanks, it's a
Speaker 1: very high profile visit and the timing of Oloff Schultzon's
Speaker 1: trip is particularly important. Joining us now to talk about
Speaker 1: a Bloomberg Whitehouse reporter Josh Wingrove, Josh, it's great to
Speaker 1: see you. Thanks for joining us. Thank you. This is
Speaker 1: an important visit. But I want to back up to
Speaker 1: kind of set the foundation for why it's even happening.
Speaker 1: As President Biden returns from his trip to Ukraine marking
Speaker 1: the one year anniversary, the first anniversary of this war effort,
Speaker 1: how important was it for him to actually show up
Speaker 1: in person for this occasion, a big surprise trip. You know,
Speaker 1: they've sort of been suggesting he might not even be
Speaker 1: able to go, the security be too brutal. So he
Speaker 1: sort of popped up there out of nowhere, you know,
Speaker 1: a big show of support for Ukraine as well as
Speaker 1: for the president, mister Zelinski. And you know, Biden seemed
Speaker 1: we had a thrilled, candidly to be able to get there.
Speaker 1: And then he went for his previously planned trip to Poland,
Speaker 1: where he gave a speech trying to hold together solidarity.
Speaker 1: You know, what is clear is that Joe Biden is
Speaker 1: trying to head off sort of weakening knees or fatigue
Speaker 1: among NATO in the West more broadly when it comes
Speaker 1: to supporting Ukraine in this fight, and he's sort of
Speaker 1: warned in that Poland speech like, Hey, this is not
Speaker 1: going to be over tomorrow. You know, we are going
Speaker 1: to have to dig in here for the long haul.
Speaker 1: Because it looks like Vladimir Putin is digging in for
Speaker 1: the long haul. So he's just trying to sort of
Speaker 1: hold it together. And it was sort of a very
Speaker 1: momentous occasion, and you know, the G seven on Friday
Speaker 1: spoke about this as well. So the big question will
Speaker 1: be sort of like what next will come in terms
Speaker 1: of support, And I think that's the context for Chancellor
Speaker 1: Schultz is a visit to Washington in the coming week. Here.
Speaker 1: Secretary of State Anthony Blinkoln this week says Ukraine will
Speaker 1: win this. Putin's first objective was to erase Ukraine from
Speaker 1: the map to a racist identity, to absorb it into Russia.
Speaker 1: That has failed and we'll never succeed. Now there's a
Speaker 1: fierce battle going on for the territory that Russia has seized.
Speaker 1: Ukraine's gotten about fifty percent of what Russia has taken
Speaker 1: since last February in order for Ukraine to win the war.
Speaker 1: The US needs Germany's support. This next visit, as we
Speaker 1: mentioned olof Schultz this week will be critically important. Is
Speaker 1: it Is it all about Ukraine? It seems to be
Speaker 1: pretty heavily about Ukraine. White House hasn't given us full
Speaker 1: rundown yet, but you know, the Germany and the US
Speaker 1: have been sort of the two pronged head of the
Speaker 1: question of what arms and what types of arms you
Speaker 1: give to Ukraine. And remember go back a year or
Speaker 1: even a little less in a year, and there were
Speaker 1: a lot of nerves in the West about if we
Speaker 1: give this type of tank, for instance, or this type
Speaker 1: of weapon or this type of missile, will that be
Speaker 1: seen as escalatory and necessarily will putin seize on that
Speaker 1: and use it as cover fire to escalate even further.
Speaker 1: So instead they've tried to just do a slow boil,
Speaker 1: you know, slowly adding different types of stuff. And now
Speaker 1: the crossroads that they're at is the question of fighter jets.
Speaker 1: Where President Hyden was in Europe, you know, face calls
Speaker 1: and protests demanding F sixteen jets, are asking for them,
Speaker 1: I guess I should say, and this is a big
Speaker 1: question right now, So I think that'll hang in the air.
Speaker 1: The Germans also have had similar concerns about being too escalatory,
Speaker 1: when when it comes to this stuff, the other stuff
Speaker 1: is just more basic blocking and tackling Joe. Where like
Speaker 1: in terms of ammunition, the US is like concerned that
Speaker 1: they don't want to leave the Ukrainians with weapons that
Speaker 1: don't have anything to shoot out of them. And you know,
Speaker 1: I think we're starting to get to a place where
Speaker 1: the US military, like industrial production lines, are starting to
Speaker 1: raise questions about, you know what, what can we produce,
Speaker 1: what do other allies have in their stocks? Have we
Speaker 1: emptied the cupboard? And if we've emptied the cupboard, are
Speaker 1: we making enough stuff, you know, to start rolling off
Speaker 1: lines to keep keep the Ukrainians armed. So I think
Speaker 1: we're getting into a little bit of that sphere. It
Speaker 1: is less flashy than Okay, we're going to give tanks
Speaker 1: for the first time, which of course the US and
Speaker 1: Germany agreed to do recently, or we may or may
Speaker 1: not give fighter for the first time, but it's just
Speaker 1: as important, and I think I think it's fair to
Speaker 1: expect that that's going to be a big part of
Speaker 1: that conversation between the President and Chancellor dedmtro Kalaba, the
Speaker 1: Ukrainian Minister of Foreign Affairs, talked about the list, the
Speaker 1: wish list that you're referring to, communition tanks, the long
Speaker 1: range Masal's plans. They are the most wanted weapons on
Speaker 1: the list, the most wanted weapons on the list. Of course,
Speaker 1: they're going to take whatever they can get. And by
Speaker 1: the way, they've been asking for fighter jets for the
Speaker 1: better part of a year, right, we were talking about
Speaker 1: mid twenty nine. Potentially at the beginning of this they
Speaker 1: haven't gotten them. Tanks may be rolling, but you wonder
Speaker 1: at this point if that's ever going to happen or
Speaker 1: is it inevitable, And that we've seen this conversation where
Speaker 1: we kind of first start by saying no, then we say, well,
Speaker 1: that wouldn't be effective, and then we end up giving
Speaker 1: them exactly what they're asking for. Right. Right, It's like
Speaker 1: a parent who doesn't want to give a place to
Speaker 1: another kid. Right, It's like no, no, may wait till
Speaker 1: you're eight, wish you no. It does feel like the
Speaker 1: dial has moved steadily, So the question is will Joe
Speaker 1: Biden stop moving the dial? And he's been pretty categorical
Speaker 1: he's not been saying, I don't know, but F sixteens
Speaker 1: maybe you know, we're gonna have conversations with their allies.
Speaker 1: He's been saying, no, we're not going to give F sixteens.
Speaker 1: So he has not softened his position or left himself
Speaker 1: elbow room to do a quick one eighty here. So
Speaker 1: if planes do arrive, the signals are that it won't
Speaker 1: be soon. Now that said, there are lots of people
Speaker 1: calling for it. Allies might change their mind, other countries
Speaker 1: might change and calling for training. You know, if you
Speaker 1: don't want to give them the jets, at least train
Speaker 1: them in case they get the jets right, which is
Speaker 1: a big part of the equation as well, and in
Speaker 1: particular will that training be done likely outside of Ukraine.
Speaker 1: So it gets a little logistically tricky. What's the real
Speaker 1: worry though, that putin says fighter jets, how dare you
Speaker 1: let's start attacking Americans? Or the potential for creep that
Speaker 1: you know, hey, once we go in the air, borders
Speaker 1: start to mean less. What happens if somebody gets shot
Speaker 1: down over Poland or god forbid, missiles go in the
Speaker 1: wrong direction. Is that more of the concern which we
Speaker 1: almost had a case of fall, which was turned out
Speaker 1: to be a defensive missile that had landed in Poland.
Speaker 1: But thought everyone's hackles up there, you know, I think
Speaker 1: that they're just worried that Putin would seize on it
Speaker 1: as like rhetorically, you know, as Biden has been very
Speaker 1: very clear and left no wiggle room on US boots
Speaker 1: on the ground in Ukraine. No one is talking about
Speaker 1: that right now, But the US equipment being provided to
Speaker 1: the Ukrainians for the Ukrainians to fly, it's you know,
Speaker 1: if that is shot down, you lose the plane. The
Speaker 1: Ukrainian pile would die, but it wouldn't necessarily trigger crisis
Speaker 1: where American soldiers are dying, and now Biden is in
Speaker 1: a politically tricky position, it would they'll trigger crisis if if,
Speaker 1: if Joe Biden faces a situation where Vladimir Putin says, okay,
Speaker 1: this is now a bridge too far. Now they're flying
Speaker 1: your fighter jets, they're firing your missiles, they're firing your
Speaker 1: not so much in your tanks. I mean, how far
Speaker 1: are you willing to go here? I now consider this
Speaker 1: US involvement. So that is why they're sort of tiptoeing
Speaker 1: down the hallway trying to find the board that doesn't creak. Wow,
Speaker 1: great line when Olaf Schultz is here. Is it Is
Speaker 1: this a thank you for cooperating or actually, mister Chancellor,
Speaker 1: we need a lot more from you. What's the conversation.
Speaker 1: I think it's a thank you. Joe Biden has been
Speaker 1: pretty quick to defend Germany. There've been other countries that
Speaker 1: think that Germany has been a little soft on the
Speaker 1: hard military support. They've been more in this sort of
Speaker 1: sphere of financial support and that kind of stuff. Biden
Speaker 1: has really headed that off. He's really frankly moved to
Speaker 1: save face for Germany because I think Biden is of
Speaker 1: the mind that every country is going to be able
Speaker 1: to do what they're going to be able to do,
Speaker 1: subject to their own domestic political concerns. Right, So just
Speaker 1: like he doesn't want Germany finger wagging America about what
Speaker 1: it or will not do, Biden has really stopped short
Speaker 1: of doing that. So I think it'll be a love
Speaker 1: in more or less. I mean, they are really in
Speaker 1: lockstep on a lot of these issues, to the extent
Speaker 1: that there are disagreements there. You know, show of solidarity, right,
Speaker 1: full show solidarity. So we'll see more and more and
Speaker 1: more and more of that. Remember, in the background of
Speaker 1: this wasn't too long ago we were talking about few
Speaker 1: crises in Europe and they still have lots of pressures
Speaker 1: in that regard. We could hear talk about that as well.
Speaker 1: There's questions about whether the US can continue to sort
Speaker 1: of backfill Russian fossil fuels for Europe and for Germany
Speaker 1: in particular, in the infrastructure needed to do that. It's
Speaker 1: so complicated because of course the US doesn't build you know,
Speaker 1: LNG terminals or for terminals for instance, because Joe Biden
Speaker 1: tells them to, you know. So it's very complicated. But
Speaker 1: that that energy side of it is going to be
Speaker 1: a big one as well, in part because Republicans will
Speaker 1: raise it. They want America to be sort of an
Speaker 1: energy superpower for Europe. Biden has been sort of trapped
Speaker 1: within his coalition to the Democratic Party where he kind
Speaker 1: of wants to keep gas prices low and help Europe
Speaker 1: keep the lights on, but also not be looking to
Speaker 1: go drill, baby, drill, you know. Bloomberg White House reporter
Speaker 1: Josh wind Grove with US on Daybreak weekend. I'm Joe
Speaker 1: Matthew and Washington. Tom back to you. Thanks Joe Bloomberg.
Speaker 1: Joe Matthew, host of Sound On, reporting from our Bloomberg
Speaker 1: ninety nine one newsroom in Washington, and you can hear
Speaker 1: sound on live weekdays five to six pm right here
Speaker 1: on Bloomberg Radio. Coming up on Bloomberg Daybreak Weekend. Travel
Speaker 1: and leisure picking up in Asia as people in China
Speaker 1: start to get out of the house again as pandemic
Speaker 1: measures ease up, and that means opportunities for the airlines,
Speaker 1: but also some headaches. I'm Tom Busby, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Weekend, our global look ahead at
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: Tom Busby in New York. The lust for travel is
Speaker 1: picking up as pandemic measures ease in Asia, but there
Speaker 1: are still some hurdles and some regions in Asia will
Speaker 1: benefit more than others. For more, Let's go to Hong
Speaker 1: Kong and Bloomberg Daybreak Asia host Brian Curtis and his
Speaker 1: colleague Doug Chrisner. Tom Asian Airport so starting to see
Speaker 1: a big lift in traffic. That's partly because Chinese travelers
Speaker 1: are now on the move with a country having finally
Speaker 1: opened up, but travel from many other countries in the
Speaker 1: region is also on the rise. And to break it
Speaker 1: down a little, a survey by Bloomberg Intelligence shows Japan
Speaker 1: Airport Terminal likely to benefit the most, especially Kansai. South
Speaker 1: Korea's Incheon Airport is also expected to be very busy.
Speaker 1: Those two are expected to capture the bigger share of
Speaker 1: China's traffic than pre pandemic levels in terms of demand,
Speaker 1: The BI survey suggests that ninety two percent of residents
Speaker 1: in China plan to take at least one trip over
Speaker 1: the next three months. And what airlines would likely benefit
Speaker 1: the most. China's three biggest airlines are certainly among them,
Speaker 1: along with Korean Air and Ana. They all could receive
Speaker 1: a boost. Joining us now is Danny Lee, a Bloomberg
Speaker 1: reporter on Asia transport. But I want to cover first
Speaker 1: some of the red tape issues like capacity for the
Speaker 1: airlines that's been a big problem, landing rights and even
Speaker 1: things like visas. How much will that set back? This
Speaker 1: whole boom really moved well. Boarders are opening up at
Speaker 1: a whole range of different times. No one really expected
Speaker 1: China to open up, so airlines have to plan and prepare.
Speaker 1: Authorities have to plan and prepare. If you're an airline
Speaker 1: in particular, you need to make sure you have the staff.
Speaker 1: You need to make sure you have the planes ready.
Speaker 1: Nothing's going to go on at a flick of a switch.
Speaker 1: That's a very interesting point because during the pandemic, tens
Speaker 1: of thousands of pilots, flight crewel groundworkers, back office personnel
Speaker 1: they lost their jobs. How easy has it been for
Speaker 1: these major carriers to staff up. It's been a real problem.
Speaker 1: And in Hong Kong, Cathay Pacific, the city's main airline,
Speaker 1: is waiting to two and a quarter years to see
Speaker 1: full recovery. They lost a lot of staff over COVID,
Speaker 1: and they've introduced pay cuts, permanent pay cuts, and that
Speaker 1: has decreased the interest of people willing to rejoin the
Speaker 1: industry overall, because they know they can earn money at
Speaker 1: a much higher price elsewhere, and especially during the cost
Speaker 1: of living. And we've seen airports in Europe in the
Speaker 1: US who've struggled a staff up over the last summer,
Speaker 1: We've seen chaos at immigration, at baggage, and at customs
Speaker 1: because there are just not enough staff. Ultimately, so it's
Speaker 1: the ranking in terms of demand. The ranking for outbound
Speaker 1: trips for Chinese people, is it North Asia first, and
Speaker 1: then Southeast Asia and then Europe and maybe even after
Speaker 1: that the US. Yeah, that's right. It's much easier for
Speaker 1: Chinese tourists to go close to home. North Asia was
Speaker 1: always very popular with Chinese outbound travelers, Southeast Asia equally too.
Speaker 1: But there's also the question of cost. Chinese consumers have
Speaker 1: been really hit hard over the past three years through COVID,
Speaker 1: so if you're wanting to take a trip to Europe
Speaker 1: to the US, it's very expensive right now. And whereas
Speaker 1: there's a lot more capacity, as in more seats available
Speaker 1: for shorter regional flights, so that makes it easier for
Speaker 1: Chinese tourists to plan and book appropriately. But also you
Speaker 1: are having to deal with in the US and Europe
Speaker 1: lots more red tape, shall we say, Visa's documentation, So
Speaker 1: it's not very straightforward for this recovery to be broadspread.
Speaker 1: It's always going to be close to home, North Asia,
Speaker 1: South Asia, Southeast Asia rather. One of our colleagues was
Speaker 1: speaking with June Bailleu of Trabecca Investment Partners, and she
Speaker 1: was quoted as saying Asian airlines are going to go
Speaker 1: through the roof aviation is investable Again, do we have
Speaker 1: a sense of the profits that carriers are going to
Speaker 1: deliver in twenty twenty three, Not yet, but we are
Speaker 1: seeing signs in twenty twenty two that twenty twenty was
Speaker 1: a very good year for airlines. For example Singapore Airlines
Speaker 1: they saw record revenue and that was double the same
Speaker 1: period last year. Danny, thanks so much for joining us
Speaker 1: with your insights. Danny Lee, Bloomberg reporter on Asia Transport.
Speaker 1: I'm Brian Curtis along with Doug Krisner. You can catch
Speaker 1: us every weekday here for Bloomberg Daybreak Asia beginning at
Speaker 1: seven am in Hong Kong and six pm on Wall Street.
Speaker 1: Tom thank you, Brian and Doug. And that does it
Speaker 1: for this edition of Bloomberg Daybreak Weekend. Join us again
Speaker 1: Monday morning at five am Wall Street time for the
Speaker 1: latest on markets overseas and the news you need to
Speaker 1: start your day. I'm Tom Busby. Stay with us. Top
Speaker 1: stories and global business headlines are coming up right now.