1 00:00:00,240 --> 00:00:03,760 Speaker 1: Bloomberg Radio on demand and in your podcast feed. 2 00:00:04,040 --> 00:00:06,520 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:06,519 --> 00:00:09,040 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:09,039 --> 00:00:12,160 Speaker 2: anchors all around the world. I'm Tom Busby in New York. 5 00:00:12,400 --> 00:00:14,440 Speaker 2: We begin today's program with a look ahead to the 6 00:00:14,560 --> 00:00:18,360 Speaker 2: latest inflation data in the wake of that September jobs 7 00:00:18,400 --> 00:00:21,760 Speaker 2: report out last week. For more, we're joined by Bloomberg 8 00:00:21,800 --> 00:00:25,440 Speaker 2: International Economic and Policy correspondent Michael McKee. Michael, thanks for 9 00:00:25,480 --> 00:00:27,000 Speaker 2: being here again, Always. 10 00:00:26,680 --> 00:00:27,440 Speaker 3: Happy to be here. 11 00:00:28,040 --> 00:00:31,440 Speaker 2: Well, let's talk first about this past Friday September jobs report. 12 00:00:31,480 --> 00:00:34,960 Speaker 2: Would you I've described as quote the mother of all 13 00:00:35,120 --> 00:00:36,360 Speaker 2: upside surprises. 14 00:00:36,479 --> 00:00:40,640 Speaker 3: Not bad, you know, we had a kind of unusually 15 00:00:40,800 --> 00:00:45,279 Speaker 3: high jobs report with for the month three hundred and 16 00:00:45,320 --> 00:00:47,960 Speaker 3: thirty six thousand jobs being created. Were also one hundred 17 00:00:47,960 --> 00:00:51,920 Speaker 3: and nineteen thousand added for July and August, so you're 18 00:00:52,000 --> 00:00:55,360 Speaker 3: well over four hundred thousand. The labor market has not 19 00:00:55,680 --> 00:00:59,320 Speaker 3: gone away, at least not through September. Now, there's a 20 00:00:59,320 --> 00:01:02,360 Speaker 3: lot of caveat to this, but it just tells you 21 00:01:02,440 --> 00:01:07,200 Speaker 3: that the economy still remained strong or remained strong through September. 22 00:01:07,600 --> 00:01:12,080 Speaker 3: And so the question is now, is that inflationary. See, 23 00:01:12,080 --> 00:01:13,080 Speaker 3: I'm setting you up for. 24 00:01:13,040 --> 00:01:15,640 Speaker 2: Your next question. For the next question, well, well we 25 00:01:15,680 --> 00:01:21,480 Speaker 2: did see wages rose again. That is inflationary, you know, 26 00:01:21,600 --> 00:01:24,880 Speaker 2: So that is the question. This is a good news 27 00:01:24,959 --> 00:01:25,800 Speaker 2: bad news situation. 28 00:01:26,040 --> 00:01:28,640 Speaker 3: But well, let's talk about the wages. They rose two 29 00:01:28,720 --> 00:01:31,520 Speaker 3: tenths of a percent. The forecast was for a three 30 00:01:31,600 --> 00:01:36,440 Speaker 3: tenths rise, and some economists had forecast a four tenths rise. 31 00:01:36,560 --> 00:01:41,039 Speaker 3: Because this all relates to the survey week, the week 32 00:01:41,040 --> 00:01:44,720 Speaker 3: that includes the twelfth and then the day. The months 33 00:01:44,760 --> 00:01:48,120 Speaker 3: and weeks between the two surveys, and there was a 34 00:01:48,160 --> 00:01:50,640 Speaker 3: longer time between the surveys, so people thought maybe we 35 00:01:50,680 --> 00:01:54,440 Speaker 3: would see higher wages this time. Instead, we saw a 36 00:01:54,480 --> 00:01:56,840 Speaker 3: lower than expected wage gain and that pushed the year 37 00:01:56,960 --> 00:01:59,760 Speaker 3: a year number down to four point two percent. That 38 00:01:59,880 --> 00:02:03,320 Speaker 3: is still higher than the feds three to three and 39 00:02:03,320 --> 00:02:07,120 Speaker 3: a half percent they'd like to see, but it is progress. 40 00:02:07,360 --> 00:02:11,360 Speaker 3: So it's hard to argue that the three hundred and 41 00:02:11,480 --> 00:02:18,080 Speaker 3: thirty six thousand jobs created was a inflationary event in 42 00:02:18,120 --> 00:02:19,400 Speaker 3: and of itself. 43 00:02:19,440 --> 00:02:22,280 Speaker 2: But it was a surprise, and we also saw a 44 00:02:22,320 --> 00:02:25,520 Speaker 2: revision one hundred and nineteen thousand jobs added July. In August, 45 00:02:26,800 --> 00:02:30,640 Speaker 2: ADP predicted just eighty nine thousand private sector jobs. Boy 46 00:02:30,680 --> 00:02:31,280 Speaker 2: were they wrong. 47 00:02:32,120 --> 00:02:35,960 Speaker 3: Yeah, they were quite different. They would argue they're not 48 00:02:36,000 --> 00:02:40,480 Speaker 3: wrong because they they're not predicting, but the economists were 49 00:02:40,520 --> 00:02:43,320 Speaker 3: wrong too, in the sense that the change in private 50 00:02:43,360 --> 00:02:46,120 Speaker 3: payrolls forecast was one hundred and sixty thousand and we 51 00:02:46,200 --> 00:02:50,600 Speaker 3: got two hundred and sixty three thousand. So nobody has 52 00:02:50,639 --> 00:02:53,799 Speaker 3: covered in glory with the forecast this time. 53 00:02:53,960 --> 00:02:57,440 Speaker 2: Yeah, real surprise. Now you brought up inflation this week. 54 00:02:57,480 --> 00:03:00,560 Speaker 2: We'll be looking at inflation PPI for some Tember out 55 00:03:00,560 --> 00:03:04,320 Speaker 2: on Wednesday, CPI for the same month out on Thursday. 56 00:03:04,840 --> 00:03:07,640 Speaker 3: What do you expect to see, Well, the forecasts are 57 00:03:07,720 --> 00:03:10,000 Speaker 3: we're going to see a real slowing in inflation. With 58 00:03:10,080 --> 00:03:12,919 Speaker 3: the PPI for final demand that's kind of the main 59 00:03:12,960 --> 00:03:15,880 Speaker 3: figure that people look at up just three tenths that's 60 00:03:15,960 --> 00:03:17,920 Speaker 3: less than half of what it was the prior month 61 00:03:18,160 --> 00:03:22,120 Speaker 3: because we saw energy prices sort of flatten out. Oil 62 00:03:22,160 --> 00:03:25,239 Speaker 3: prices didn't start to go down until October. But we're 63 00:03:25,240 --> 00:03:27,400 Speaker 3: not going to get the same upward pressure that we did. 64 00:03:27,600 --> 00:03:30,079 Speaker 3: If you look at the core PPI just up two 65 00:03:30,160 --> 00:03:33,040 Speaker 3: tenths of eight percent, which is also lower than the 66 00:03:33,080 --> 00:03:36,880 Speaker 3: previous month, so it would suggest that progress is still 67 00:03:36,920 --> 00:03:42,840 Speaker 3: being made in the pipeline. CPI is also expected to 68 00:03:42,840 --> 00:03:46,000 Speaker 3: be good news. The headline up only three tenths. It 69 00:03:46,040 --> 00:03:49,160 Speaker 3: was up six tenths in August and that was largely 70 00:03:49,200 --> 00:03:52,840 Speaker 3: because of energy, so hopefully the drop in energy is 71 00:03:52,880 --> 00:03:55,200 Speaker 3: going to be good news. The core rate up is 72 00:03:55,240 --> 00:03:58,600 Speaker 3: expected to be up three tenths, which is unchanged from 73 00:03:58,720 --> 00:04:03,040 Speaker 3: the prior but both the year over year CPI and 74 00:04:03,160 --> 00:04:07,120 Speaker 3: the CPI core will go down and they keep moving 75 00:04:07,200 --> 00:04:11,800 Speaker 3: towards two percent, not at an enormously fast pace, but 76 00:04:12,000 --> 00:04:17,200 Speaker 3: fast enough that it suggests we are still seeing progress. 77 00:04:16,920 --> 00:04:18,919 Speaker 2: And we could see more. As you said, in October, 78 00:04:19,000 --> 00:04:22,279 Speaker 2: just the first week, oil down ten percent West Texas. 79 00:04:21,960 --> 00:04:25,920 Speaker 3: And gasoline prices never really went up when oil went up, 80 00:04:25,960 --> 00:04:29,479 Speaker 3: and they're going down still, so that will really register 81 00:04:29,560 --> 00:04:32,320 Speaker 3: in the October CPI if that trend continues. 82 00:04:33,000 --> 00:04:35,920 Speaker 2: Now, also on Wednesday, we get minutes from the fed's 83 00:04:35,960 --> 00:04:39,800 Speaker 2: latest meeting, and obviously this is leading into the next 84 00:04:40,040 --> 00:04:43,520 Speaker 2: meeting October thirty first, November first, so let's talk about 85 00:04:43,520 --> 00:04:46,200 Speaker 2: the minutes, what we should expect, what we should look for, 86 00:04:46,400 --> 00:04:48,960 Speaker 2: what the FED was thinking, because I'm sure they're all 87 00:04:49,000 --> 00:04:52,159 Speaker 2: as surprised as anybody else about that September jobs report. 88 00:04:52,360 --> 00:04:56,240 Speaker 3: Well, most of the fedspeak that we've had since their 89 00:04:56,360 --> 00:04:58,839 Speaker 3: last meeting has been on the order of, we could 90 00:04:58,920 --> 00:05:02,240 Speaker 3: do one more if we need to. So how do 91 00:05:02,279 --> 00:05:04,360 Speaker 3: you define if we need to? And that's what people 92 00:05:04,400 --> 00:05:06,360 Speaker 3: are going to be looking to in the minutes is 93 00:05:06,760 --> 00:05:10,599 Speaker 3: what kind of economy would cause them to raise rates 94 00:05:10,640 --> 00:05:13,960 Speaker 3: another time? Is it the three hundred and thirty six 95 00:05:14,000 --> 00:05:19,599 Speaker 3: thousand jobs created in September or does the average hourly 96 00:05:19,680 --> 00:05:23,800 Speaker 3: earnings take some of the edge off of that. Is 97 00:05:23,839 --> 00:05:28,560 Speaker 3: it something to do with retail sales or the outlook 98 00:05:28,720 --> 00:05:33,600 Speaker 3: for GDP growth which in the third quarter is very 99 00:05:33,680 --> 00:05:38,160 Speaker 3: very strong, somewhere between three and five percent. So that's 100 00:05:38,200 --> 00:05:41,760 Speaker 3: I think what people in the bond market especially, and 101 00:05:41,839 --> 00:05:43,480 Speaker 3: in the stock market are going to want to look 102 00:05:43,520 --> 00:05:46,800 Speaker 3: at is what would be the trigger for the Fed. 103 00:05:48,080 --> 00:05:50,440 Speaker 2: And we still have a couple of weeks before the 104 00:05:50,480 --> 00:05:53,240 Speaker 2: Fed had to make this decision. But what is it 105 00:05:53,279 --> 00:05:56,200 Speaker 2: looking like all these You know, as far as I 106 00:05:56,200 --> 00:05:58,760 Speaker 2: can remember that past year, we've been calling for a recession. 107 00:05:58,960 --> 00:06:02,400 Speaker 2: Before now we've been calling for There were economists saying 108 00:06:02,480 --> 00:06:05,000 Speaker 2: this will be the last good Jobs report before things, 109 00:06:05,080 --> 00:06:06,240 Speaker 2: you know, take a nose dive. 110 00:06:07,200 --> 00:06:09,440 Speaker 3: I think what we're likely to see in terms of 111 00:06:09,440 --> 00:06:13,480 Speaker 3: the recession forecasts is keep the forecast, just push the 112 00:06:13,560 --> 00:06:18,320 Speaker 3: date out. Because the feeling is, with rates where they 113 00:06:18,320 --> 00:06:21,520 Speaker 3: are and the economy as hot as it is, that 114 00:06:21,760 --> 00:06:25,880 Speaker 3: this can't continue. They call that Stein's law after Herbstein, 115 00:06:26,000 --> 00:06:30,560 Speaker 3: is that which cannot continue will stop. And there's a 116 00:06:30,600 --> 00:06:33,279 Speaker 3: feeling and maybe that has to happen, but a growing 117 00:06:33,320 --> 00:06:36,960 Speaker 3: feeling that maybe not. This is not what you would 118 00:06:36,960 --> 00:06:40,080 Speaker 3: call a sustainable level of hiring that we saw this 119 00:06:40,160 --> 00:06:44,279 Speaker 3: past week. But if we can continue to see job 120 00:06:44,360 --> 00:06:48,960 Speaker 3: growth that will continue to power consumer spending, if prices 121 00:06:49,000 --> 00:06:52,880 Speaker 3: are coming down, then the G word comes into play goldilocks, 122 00:06:53,400 --> 00:06:57,799 Speaker 3: and so we'll see. And you saw in the reaction 123 00:06:58,120 --> 00:07:02,880 Speaker 3: to this the jobs report on Friday, we saw the 124 00:07:03,000 --> 00:07:07,880 Speaker 3: Fed Funds futures only price in a thirty two percent 125 00:07:07,960 --> 00:07:10,840 Speaker 3: chance of a rate increase on November first. Now that's 126 00:07:10,920 --> 00:07:13,720 Speaker 3: up from twenty two percent, but it's still only you know, 127 00:07:13,760 --> 00:07:16,760 Speaker 3: a one third chance that the Fed will raise rates again. 128 00:07:17,240 --> 00:07:20,600 Speaker 3: So the markets are waiting for additional data as well. 129 00:07:20,640 --> 00:07:21,840 Speaker 3: Everybody's data dependent. 130 00:07:22,000 --> 00:07:25,040 Speaker 2: Yeah, yeah, Now, speaking of data, let's talk more about 131 00:07:25,040 --> 00:07:28,720 Speaker 2: the rates, because in housing now we have a seven 132 00:07:28,760 --> 00:07:33,520 Speaker 2: point five percent rate, and even that is not affecting 133 00:07:33,920 --> 00:07:36,280 Speaker 2: housing like it should. It's more that there are not 134 00:07:36,440 --> 00:07:39,440 Speaker 2: enough houses for sale. So you're right, the consumer is 135 00:07:39,440 --> 00:07:42,239 Speaker 2: still strong, Consumers still spending. People still have this demand. 136 00:07:42,720 --> 00:07:45,600 Speaker 2: We saw autos and we know those auto loan rates 137 00:07:45,640 --> 00:07:50,440 Speaker 2: have gone up Toyota and GM fifteen percent increase in 138 00:07:50,440 --> 00:07:53,280 Speaker 2: the last three years in auto sales leading up to 139 00:07:53,360 --> 00:07:57,480 Speaker 2: last month. So you're right. The consumer keeps spending, keep 140 00:07:57,560 --> 00:08:00,760 Speaker 2: making more money. Who knows when it could end? 141 00:08:01,320 --> 00:08:04,840 Speaker 3: Well, you know, the old saying is it doesn't have to. 142 00:08:04,880 --> 00:08:08,000 Speaker 3: And the expansions don't die of natural causes. The FED 143 00:08:08,080 --> 00:08:12,040 Speaker 3: kills them. And so that's kind of the playbook people 144 00:08:12,080 --> 00:08:14,200 Speaker 3: are working from that. If the FED gets rates up 145 00:08:14,200 --> 00:08:16,920 Speaker 3: too high, it will kill the economy. But we don't 146 00:08:16,960 --> 00:08:21,200 Speaker 3: see signs of that happening necessarily right now. The neutral rate, 147 00:08:21,880 --> 00:08:24,800 Speaker 3: the rate the Fed funds rate would be at that 148 00:08:24,960 --> 00:08:29,120 Speaker 3: doesn't stimulate or hold back the economy is obviously higher 149 00:08:29,520 --> 00:08:32,760 Speaker 3: than the Fed or anybody thought at this point. For 150 00:08:32,840 --> 00:08:36,240 Speaker 3: a year, I think, yeah, if you're looking at housing, 151 00:08:36,800 --> 00:08:38,960 Speaker 3: they are having an impact because there's no houses for 152 00:08:39,000 --> 00:08:40,920 Speaker 3: sale because people don't want to trade in their three 153 00:08:40,960 --> 00:08:43,959 Speaker 3: percent mortgages for seven percent mortgages, and that's going to 154 00:08:44,000 --> 00:08:45,840 Speaker 3: be a problem down the road. It is going to 155 00:08:45,840 --> 00:08:46,319 Speaker 3: be an issue. 156 00:08:46,320 --> 00:08:46,839 Speaker 2: And how's the. 157 00:08:46,760 --> 00:08:49,720 Speaker 3: FED get out of that? Because if they don't bring 158 00:08:50,080 --> 00:08:53,480 Speaker 3: mortgage rates down significantly, people won't go back into the market. 159 00:08:53,920 --> 00:08:58,080 Speaker 3: The new homes are selling like hotcakes because you don't 160 00:08:58,080 --> 00:09:00,520 Speaker 3: have anybody in them, so you don't have to worry 161 00:09:00,520 --> 00:09:02,760 Speaker 3: about selling it, and a lot of the all builders 162 00:09:02,880 --> 00:09:06,559 Speaker 3: are offering credits or financing that brings that mortgage rate 163 00:09:06,600 --> 00:09:10,520 Speaker 3: down some. So we're still seeing strong growth in that, 164 00:09:10,679 --> 00:09:15,080 Speaker 3: which actually has They both have a big Existing homes 165 00:09:15,080 --> 00:09:16,880 Speaker 3: and new home sales have a big impact on the 166 00:09:16,920 --> 00:09:20,640 Speaker 3: economy in different ways. The new home sales a lot 167 00:09:20,720 --> 00:09:25,120 Speaker 3: of construction materials obviously, and new appliances things like that, 168 00:09:25,400 --> 00:09:28,720 Speaker 3: whereas the new homes the existing homes, people tend to 169 00:09:28,720 --> 00:09:32,160 Speaker 3: replace the carpets and buy furniture, and that's our thing. 170 00:09:32,240 --> 00:09:36,679 Speaker 3: So we lose one, we gain the other. 171 00:09:37,320 --> 00:09:39,559 Speaker 2: And you build it, someone will buy it no matter 172 00:09:39,640 --> 00:09:42,280 Speaker 2: where it is, where you put it, how big, how small, 173 00:09:42,600 --> 00:09:46,360 Speaker 2: someone's going to buy that house. Bloomberg's International Economic and 174 00:09:46,400 --> 00:09:50,000 Speaker 2: Policy correspondent Michael McKee. Coming up on Bloomberg day Break weekend, 175 00:09:50,000 --> 00:09:52,679 Speaker 2: we head across the Pond and look at Ireland's upcoming 176 00:09:52,720 --> 00:09:56,640 Speaker 2: budget with the country's Financial Services Minister. I'm Tom Busby, 177 00:09:56,760 --> 00:10:03,560 Speaker 2: and this is Bloomberg. This is Bloomberg Daybreak weekend, our 178 00:10:03,559 --> 00:10:06,080 Speaker 2: global look ahead at the top stories for investors in 179 00:10:06,120 --> 00:10:09,200 Speaker 2: the coming week. I'm Tom Busby in New York. Up 180 00:10:09,280 --> 00:10:12,280 Speaker 2: later in our program, the race for House speakers heating up. 181 00:10:12,600 --> 00:10:15,280 Speaker 2: But first, while many countries in Europe are struggling with 182 00:10:15,480 --> 00:10:20,240 Speaker 2: large budget deficits, Ireland is forecasting a run of big surpluses. 183 00:10:20,600 --> 00:10:24,000 Speaker 2: That's thanks to buoyant corporate tax revenues. The Irish government 184 00:10:24,040 --> 00:10:26,240 Speaker 2: unveiling its budget for next year in the coming days 185 00:10:26,240 --> 00:10:28,520 Speaker 2: and for more, let's go to London and bring in 186 00:10:28,520 --> 00:10:32,040 Speaker 2: Bloomberg Daybreak Europe Banker Stephen Carroll, Tom. 187 00:10:31,760 --> 00:10:34,560 Speaker 4: It's an enviable position for any government to be and 188 00:10:34,640 --> 00:10:37,160 Speaker 4: to have a surplus of income to spend on tax 189 00:10:37,200 --> 00:10:40,720 Speaker 4: cuts or increased public spending. Across Europe, It's a pretty 190 00:10:40,800 --> 00:10:45,040 Speaker 4: unusual occurrence. In Ireland. It's sparked massive political debate about 191 00:10:45,080 --> 00:10:47,960 Speaker 4: how the money should be spent, especially as the country 192 00:10:48,000 --> 00:10:52,440 Speaker 4: faces issues including an acute shortage of housing. The Finance 193 00:10:52,480 --> 00:10:54,839 Speaker 4: Ministry in Dublin is expected to see a surplus of 194 00:10:54,880 --> 00:10:57,200 Speaker 4: billions of euros this year and as much as sixty 195 00:10:57,280 --> 00:11:01,040 Speaker 4: five billion by twenty twenty seven. The government, though, is 196 00:11:01,160 --> 00:11:04,400 Speaker 4: conscious that the boom in corporate tax receipts, a big 197 00:11:04,480 --> 00:11:08,439 Speaker 4: driver of that extra income, won't last. In fact, figures 198 00:11:08,480 --> 00:11:11,400 Speaker 4: released in recent days showed the tax take from companies 199 00:11:11,679 --> 00:11:14,760 Speaker 4: was twenty three percent lower in the first nine months 200 00:11:14,760 --> 00:11:17,800 Speaker 4: of this year compared to last year. Add to that 201 00:11:17,920 --> 00:11:20,720 Speaker 4: a warning from the ESRI think tank that the Irish 202 00:11:20,760 --> 00:11:23,840 Speaker 4: economy will contract for the first time this year since 203 00:11:23,880 --> 00:11:27,760 Speaker 4: twenty twelve. Now, while the domestic economy is growing, Ireland's 204 00:11:27,800 --> 00:11:31,520 Speaker 4: headline GDP figures are distorted by the outsized nature of 205 00:11:31,640 --> 00:11:34,240 Speaker 4: major international companies that operate there. 206 00:11:34,679 --> 00:11:34,800 Speaker 5: Now. 207 00:11:34,800 --> 00:11:37,280 Speaker 4: I've been discussing all of these issues with Ireland's Financial 208 00:11:37,320 --> 00:11:41,240 Speaker 4: Services Minister Jennifer Carroll McNeil. We started by talking about 209 00:11:41,280 --> 00:11:44,760 Speaker 4: the much debated choices the government is making in its 210 00:11:44,840 --> 00:11:45,720 Speaker 4: upcoming budget. 211 00:11:46,040 --> 00:11:48,559 Speaker 5: We're very curful about managing the projections there. We're very 212 00:11:48,559 --> 00:11:50,920 Speaker 5: careful about how we may use that. We've obviously a 213 00:11:50,920 --> 00:11:53,079 Speaker 5: commitment to put quite a bit of that aside for 214 00:11:53,360 --> 00:11:56,760 Speaker 5: a pension reserve fund, for sovereign Wealth fund, different types 215 00:11:56,800 --> 00:11:59,280 Speaker 5: of longer term investment in infrastructure, which is a really 216 00:11:59,320 --> 00:12:02,240 Speaker 5: important piece for Ireland. At the same time, recognizing that 217 00:12:02,320 --> 00:12:05,839 Speaker 5: our construction unemployment is two percent, our unemployment generally is 218 00:12:06,080 --> 00:12:08,600 Speaker 5: four percent, we're absolutely at full employment. We've never had 219 00:12:08,640 --> 00:12:11,160 Speaker 5: more people working in Ireland. So we have this very 220 00:12:11,160 --> 00:12:13,360 Speaker 5: strong domestic economy from which a lot of our tax 221 00:12:13,400 --> 00:12:17,400 Speaker 5: receipts are being generated, also corporation tax. But we're mindful 222 00:12:17,480 --> 00:12:20,200 Speaker 5: that you look, Ireland has been through the mill in 223 00:12:20,280 --> 00:12:22,160 Speaker 5: fifteen years. We've been up and we've been down, and 224 00:12:22,200 --> 00:12:25,319 Speaker 5: we've worked very very hard to recover our economy make 225 00:12:25,360 --> 00:12:30,319 Speaker 5: it resilient and strong. Yes, we're benefiting from significant surpluses 226 00:12:30,360 --> 00:12:31,880 Speaker 5: at the moment, but I think we take a very 227 00:12:31,880 --> 00:12:34,560 Speaker 5: curful view about how we may invest that we don't 228 00:12:34,559 --> 00:12:37,040 Speaker 5: want to do anything that's inflationary, and we're very careful 229 00:12:37,040 --> 00:12:39,920 Speaker 5: about protecting ourselves for the future. So we feel that 230 00:12:39,960 --> 00:12:41,800 Speaker 5: it's the product of a lot of hard work, but 231 00:12:41,840 --> 00:12:44,040 Speaker 5: we're very careful to try to manage that for the future. 232 00:12:44,120 --> 00:12:46,240 Speaker 4: So when the conversations running up to the budget, then 233 00:12:46,320 --> 00:12:48,760 Speaker 4: how much of the surplus is going to go to 234 00:12:48,840 --> 00:12:51,280 Speaker 4: those sort of precautionary measures, or how much we'll go 235 00:12:51,320 --> 00:12:52,640 Speaker 4: to other measures like tax cuts. 236 00:12:52,800 --> 00:12:55,240 Speaker 5: It has been very significant already. We've put four billion 237 00:12:55,280 --> 00:12:57,440 Speaker 5: across into one fund. We may very well put it 238 00:12:57,480 --> 00:13:00,640 Speaker 5: put a great deal more. We've identified a billion for 239 00:13:00,720 --> 00:13:02,800 Speaker 5: tax cuts, and I think at a time of full 240 00:13:02,840 --> 00:13:06,079 Speaker 5: employment that's particularly important. I think in Ireland we hit 241 00:13:06,080 --> 00:13:08,200 Speaker 5: the higher rate of tax too soon and I think 242 00:13:08,200 --> 00:13:10,120 Speaker 5: we're a bit of an outlier on that. And when 243 00:13:10,120 --> 00:13:12,680 Speaker 5: you're looking at marginal decisions in relation to going back 244 00:13:12,720 --> 00:13:15,520 Speaker 5: to work or perhaps working more in a very tight 245 00:13:15,600 --> 00:13:19,559 Speaker 5: labor market, those sorts of decisions around tax policies, they 246 00:13:19,559 --> 00:13:22,080 Speaker 5: become quite important. And so we are trying to make 247 00:13:22,160 --> 00:13:24,440 Speaker 5: sure that our very very skilled workforce is able to 248 00:13:24,480 --> 00:13:26,640 Speaker 5: work as much as it can, as much as it 249 00:13:26,679 --> 00:13:28,480 Speaker 5: wants to. You might recognize that there's a lot of 250 00:13:28,480 --> 00:13:31,120 Speaker 5: people taking a step back from work for a period, 251 00:13:31,120 --> 00:13:34,080 Speaker 5: potentially with childcare costs, and so we're trying to adopt 252 00:13:34,120 --> 00:13:36,480 Speaker 5: an approach of putting money back in people's pockets through 253 00:13:36,520 --> 00:13:39,440 Speaker 5: tax cuts, but reducing a lot of structural costs in Ireland, 254 00:13:39,600 --> 00:13:42,160 Speaker 5: So reducing the cost of childcare by twenty five percent 255 00:13:42,240 --> 00:13:44,880 Speaker 5: last year and hopefully more this year. Reducing the cost 256 00:13:44,880 --> 00:13:48,160 Speaker 5: of a child going to college, reducing upfront structural costs 257 00:13:48,160 --> 00:13:51,320 Speaker 5: and health and making it easier to access services more 258 00:13:51,400 --> 00:13:54,040 Speaker 5: cheaply transport costs. What can you do at a time 259 00:13:54,040 --> 00:13:56,480 Speaker 5: of inflation. You can cut the costs that you can control, 260 00:13:56,679 --> 00:13:58,840 Speaker 5: and you can give people back money back to a 261 00:13:59,000 --> 00:14:01,640 Speaker 5: point with at being inflationary, and so we're trying to 262 00:14:01,640 --> 00:14:04,000 Speaker 5: approach it from those perspectives. We also have a very 263 00:14:04,040 --> 00:14:06,440 Speaker 5: significant capital and you know, investment project. We have a 264 00:14:06,440 --> 00:14:10,559 Speaker 5: lot of infrastructure that needs upgrading. But we do face constraints, 265 00:14:10,600 --> 00:14:13,240 Speaker 5: employment constraints, particularly in the construction sector, which I think 266 00:14:13,400 --> 00:14:16,120 Speaker 5: are reflected right across Western Europe. But are you know 267 00:14:16,160 --> 00:14:18,400 Speaker 5: they are as acute in Ireland as anywhere else. 268 00:14:18,520 --> 00:14:20,720 Speaker 4: What is the concern about what the drop off and 269 00:14:20,760 --> 00:14:23,360 Speaker 4: the tax receipts could be given that so much of 270 00:14:23,400 --> 00:14:26,000 Speaker 4: that corporate tax money comes from a very limited number 271 00:14:26,040 --> 00:14:27,000 Speaker 4: of companies in Ireland. 272 00:14:27,040 --> 00:14:28,840 Speaker 5: Well, look, I think it's fair to say that any 273 00:14:28,880 --> 00:14:32,840 Speaker 5: sort of sexual specific challenge could have a very significant yeah, 274 00:14:32,960 --> 00:14:36,040 Speaker 5: tech or even an individual company. And of course you 275 00:14:36,080 --> 00:14:39,600 Speaker 5: know there are different intellectual property issues. You know about 276 00:14:39,640 --> 00:14:42,600 Speaker 5: about derogations running out and so on, and so we 277 00:14:42,680 --> 00:14:45,320 Speaker 5: are very fortunate to have this position, but we are 278 00:14:45,440 --> 00:14:48,160 Speaker 5: very careful to manage it. Obviously, Ireland is part of 279 00:14:48,160 --> 00:14:50,760 Speaker 5: the OECD, the new tax framework. Ate please to be 280 00:14:50,840 --> 00:14:52,840 Speaker 5: part of that looking forward to that, and we have 281 00:14:52,920 --> 00:14:55,160 Speaker 5: to manage that transition now over the next period. But 282 00:14:55,360 --> 00:14:57,360 Speaker 5: you know, I'm looking at my tax tax receipts just 283 00:14:57,400 --> 00:15:00,840 Speaker 5: this year. You know, income taxes up, the at receipts 284 00:15:00,880 --> 00:15:02,840 Speaker 5: are up all of your domestic you know, all of 285 00:15:02,840 --> 00:15:05,160 Speaker 5: the indicators of a really strong domestic economy. So we're 286 00:15:05,200 --> 00:15:07,880 Speaker 5: generating very significant receipts from that as well. It's not 287 00:15:07,960 --> 00:15:11,400 Speaker 5: just corporation tax, it's income tax, it's that it's activity 288 00:15:11,440 --> 00:15:13,720 Speaker 5: in the employment sector. We have never had more people 289 00:15:13,720 --> 00:15:15,680 Speaker 5: at work in Ireland and we have a very highly 290 00:15:15,680 --> 00:15:18,000 Speaker 5: skilled labor force. So it's a good time for us 291 00:15:18,040 --> 00:15:20,480 Speaker 5: considering where we were ten years ago. We're very excited 292 00:15:20,480 --> 00:15:23,120 Speaker 5: to be here, but we take a careful pause in 293 00:15:23,120 --> 00:15:25,520 Speaker 5: our approach to it. You know, we recognize that we 294 00:15:25,560 --> 00:15:28,120 Speaker 5: want to be in as resilient a position ten years 295 00:15:28,160 --> 00:15:30,360 Speaker 5: from now, and of course there's going to be ups 296 00:15:30,360 --> 00:15:32,200 Speaker 5: and downs. Of course, there's going to be retrenchments in 297 00:15:32,200 --> 00:15:34,920 Speaker 5: different sectors. Earlier this year, for example, there was a 298 00:15:34,960 --> 00:15:38,040 Speaker 5: slight retrenchment in tech in employment. We have a very 299 00:15:38,080 --> 00:15:41,000 Speaker 5: strong financial services sector, as you're aware, and we found 300 00:15:41,000 --> 00:15:44,280 Speaker 5: that a lot of that skill was absorbed immediately by 301 00:15:44,280 --> 00:15:48,040 Speaker 5: financial services in fintech, in sure tech. Great innovation that's 302 00:15:48,080 --> 00:15:50,880 Speaker 5: coming out of Ireland because we have this juxtaposition of 303 00:15:50,920 --> 00:15:53,920 Speaker 5: tech and financial services right beside each other. We're doing 304 00:15:53,920 --> 00:15:56,640 Speaker 5: a lot of very interesting, exciting things there. So I 305 00:15:56,640 --> 00:15:58,680 Speaker 5: think it's a good moment. But I think in Ireland 306 00:15:58,720 --> 00:16:00,960 Speaker 5: we will always adopt a sort of curfl pause. We've 307 00:16:00,960 --> 00:16:04,440 Speaker 5: come back from a really disastrous financial crash to a 308 00:16:04,480 --> 00:16:06,880 Speaker 5: balanced budget to an interesting surplus. 309 00:16:07,120 --> 00:16:08,960 Speaker 4: Some of the changes that we've seen post Brexit in 310 00:16:09,000 --> 00:16:11,440 Speaker 4: the UK has been to move away from some of 311 00:16:11,480 --> 00:16:15,480 Speaker 4: the mifit to regulations, particularly around funding for research. Is 312 00:16:15,520 --> 00:16:18,640 Speaker 4: that giving the UK a competitive edge when it comes 313 00:16:18,680 --> 00:16:21,600 Speaker 4: to attracting financial services companies versus Ireland. 314 00:16:21,760 --> 00:16:23,520 Speaker 5: It's not what I'm hearing. I think what I would 315 00:16:23,600 --> 00:16:26,600 Speaker 5: reflect is that I think we're at a point where, 316 00:16:26,920 --> 00:16:29,360 Speaker 5: you know, I became Minister for Financial Services in December 317 00:16:29,560 --> 00:16:31,840 Speaker 5: when we hadn't the Windsor Framework agreed and we were 318 00:16:31,840 --> 00:16:34,640 Speaker 5: in a very different place in terms of our conversations 319 00:16:34,640 --> 00:16:36,960 Speaker 5: in our dialogue. It's now the beginning of October, and 320 00:16:37,000 --> 00:16:38,760 Speaker 5: I'm so pleased that that has been agreed and that 321 00:16:38,800 --> 00:16:42,680 Speaker 5: we can have really constructive conversations about what we do 322 00:16:42,760 --> 00:16:44,800 Speaker 5: together in the future. And I don't think that we 323 00:16:44,840 --> 00:16:48,520 Speaker 5: need to approach it in an overly competitive sort of way. Obviously, 324 00:16:48,560 --> 00:16:50,320 Speaker 5: Ireland is at the center of Europe is going to 325 00:16:50,360 --> 00:16:52,720 Speaker 5: continue to do everything it can to protect and develop 326 00:16:52,960 --> 00:16:56,040 Speaker 5: the Single Market and the opportunities within that. But we're 327 00:16:56,080 --> 00:16:58,360 Speaker 5: so very pleased to have this closural close relationship with 328 00:16:58,400 --> 00:17:01,720 Speaker 5: London as financials are services. You know, Okay, find. 329 00:17:01,520 --> 00:17:03,480 Speaker 4: There's some frantation competitors, friendly. 330 00:17:03,160 --> 00:17:04,960 Speaker 5: Competitors, and do you know what, there's nothing wrong with that. 331 00:17:05,040 --> 00:17:07,159 Speaker 5: It does both of us well. London has been and 332 00:17:07,240 --> 00:17:10,159 Speaker 5: always will be a major financial center of for the world, 333 00:17:10,440 --> 00:17:13,120 Speaker 5: and you know, we benefit very strongly by London doing 334 00:17:13,119 --> 00:17:15,280 Speaker 5: well and we will do well from that. So I 335 00:17:15,320 --> 00:17:16,680 Speaker 5: approach it in a very collaborative way. 336 00:17:16,840 --> 00:17:19,400 Speaker 4: You mentioned the Windsor framework. Are you disappointed there hasn't 337 00:17:19,400 --> 00:17:22,359 Speaker 4: been restoration of the executive since the winds Are Framework agreed? 338 00:17:22,359 --> 00:17:24,359 Speaker 4: I should point out you also used to be a 339 00:17:24,359 --> 00:17:26,480 Speaker 4: member of the Parliamentary committee that looked at the implementation 340 00:17:26,520 --> 00:17:27,480 Speaker 4: of the Good Variety Agreement. 341 00:17:27,480 --> 00:17:31,080 Speaker 5: I am really disappointed. I am really disappointed because, you know, 342 00:17:31,160 --> 00:17:34,080 Speaker 5: for so many reasons, it's a major democratic gap to 343 00:17:34,240 --> 00:17:37,080 Speaker 5: have political institutions that were voted in by the people, 344 00:17:37,359 --> 00:17:39,960 Speaker 5: where you have free and fair elections, which is, you know, 345 00:17:40,240 --> 00:17:42,440 Speaker 5: a privilege and a luxury that most people around the world, 346 00:17:42,560 --> 00:17:44,440 Speaker 5: you know, do not. In fact, have you free and 347 00:17:44,480 --> 00:17:47,440 Speaker 5: fair elections in the opportunity to represent your community and government, 348 00:17:47,640 --> 00:17:50,600 Speaker 5: it's an extraordinary privilege and an extraordinary opportunity. And nowhere 349 00:17:50,640 --> 00:17:53,600 Speaker 5: is that more important than trying to build a reconciled 350 00:17:54,000 --> 00:17:57,440 Speaker 5: society in Northern Ireland. Northern Ireland has the most exceptional 351 00:17:57,440 --> 00:18:00,400 Speaker 5: opportunity being both part of the UK and in many 352 00:18:00,440 --> 00:18:03,040 Speaker 5: ways the access to the Single Market. Also, we want 353 00:18:03,040 --> 00:18:05,200 Speaker 5: to see Northern Ireland doing well. We want to see 354 00:18:05,359 --> 00:18:08,200 Speaker 5: the ministers in place making decisions. We want to see 355 00:18:08,240 --> 00:18:10,960 Speaker 5: collaboration in the way that we can between Dublin and Belfast. 356 00:18:11,080 --> 00:18:13,480 Speaker 5: We want nothing but good things for Northern Ireland. But 357 00:18:13,640 --> 00:18:15,560 Speaker 5: you know, the political institutions have to run. And I 358 00:18:15,600 --> 00:18:17,480 Speaker 5: would say that of the twenty five years of the 359 00:18:17,480 --> 00:18:20,840 Speaker 5: Good Friday Agreement, Stormant hasn't been an operation for I 360 00:18:20,880 --> 00:18:23,320 Speaker 5: think close to ten of those, if not slightly more, 361 00:18:23,560 --> 00:18:25,400 Speaker 5: and that's a major gap and I think that that's 362 00:18:25,440 --> 00:18:28,280 Speaker 5: going to require reflection over the next period. 363 00:18:28,440 --> 00:18:32,120 Speaker 4: That was Ireland's Financial Services Minister Jennifer Carol McNeil speaking 364 00:18:32,119 --> 00:18:35,840 Speaker 4: to me here on Bloomberg Radio ahead of the budget 365 00:18:35,840 --> 00:18:38,679 Speaker 4: announcement coming in the coming days. Also very interesting to 366 00:18:38,680 --> 00:18:42,119 Speaker 4: get her views on the political stalemate in Northern Ireland, 367 00:18:42,200 --> 00:18:45,240 Speaker 4: where an executive hasn't functioned for well over a year 368 00:18:45,280 --> 00:18:48,320 Speaker 4: and a half at this stage due to political disagreements 369 00:18:48,640 --> 00:18:52,960 Speaker 4: over Northern Ireland's post Brexit trade rules, so good to 370 00:18:53,000 --> 00:18:56,679 Speaker 4: get her perspective on those issues too. I'm Stephen Carroll 371 00:18:56,800 --> 00:18:59,440 Speaker 4: in London. You can catch us every weekday morning here 372 00:18:59,440 --> 00:19:02,720 Speaker 4: for Bloomberg Daybreak. You're beginning at six am in London 373 00:19:02,800 --> 00:19:04,560 Speaker 4: and one am on Wall Streets. 374 00:19:04,760 --> 00:19:07,439 Speaker 2: Tom, thank you, Steven. And coming up on Bloomberg day 375 00:19:07,440 --> 00:19:09,600 Speaker 2: Break weekend, we head to the nation's capital and look 376 00:19:09,600 --> 00:19:12,960 Speaker 2: at the race for Speaker of the House. I'm Tom Busby. 377 00:19:13,320 --> 00:19:25,800 Speaker 2: This is Bloomberg Bloomberg Radio on demand and in your 378 00:19:25,840 --> 00:19:28,480 Speaker 2: podcast feed. I'm Tom Busby in New York with your 379 00:19:28,520 --> 00:19:30,840 Speaker 2: global look ahead at the top stories for investors in 380 00:19:30,880 --> 00:19:33,480 Speaker 2: the coming week. One of the biggest political stories we're 381 00:19:33,520 --> 00:19:36,359 Speaker 2: watching this week is the race for Speaker of the House. 382 00:19:36,520 --> 00:19:40,080 Speaker 2: Republicans will host a candidate forum on Tuesday, and the 383 00:19:40,160 --> 00:19:43,040 Speaker 2: closed party election will take place on Wednesday. There's no 384 00:19:43,200 --> 00:19:46,240 Speaker 2: timeline for electing a speaker on the House floor. Now 385 00:19:46,240 --> 00:19:48,199 Speaker 2: for more, let's head to our Bloomberg ninety nine one 386 00:19:48,280 --> 00:19:51,200 Speaker 2: News from in Washington and Bloomberg Sound On co host 387 00:19:51,480 --> 00:19:52,720 Speaker 2: Kaylee Lines. 388 00:19:52,640 --> 00:19:55,119 Speaker 6: Yeah, Tom, that's right. After an historic week in the 389 00:19:55,119 --> 00:19:58,360 Speaker 6: House of Representatives that saw the ousting of Kevin McCarthy 390 00:19:58,359 --> 00:20:01,880 Speaker 6: as speaker through a motion to brought by Republican Congressman 391 00:20:01,920 --> 00:20:05,320 Speaker 6: from Florida Matt Gates, this coming week promises to bring 392 00:20:05,400 --> 00:20:08,320 Speaker 6: drama all its own as the House attempts to decide 393 00:20:08,359 --> 00:20:11,320 Speaker 6: on who the next speaker will be. Here with me 394 00:20:11,400 --> 00:20:14,399 Speaker 6: for more is Megan's scully, who leads Bloomberg's Congress coverage 395 00:20:14,440 --> 00:20:19,480 Speaker 6: here in Washington. So, Megan, this is promising to be 396 00:20:19,720 --> 00:20:22,199 Speaker 6: kind of chaotic. Chaotics seems to be the status quo 397 00:20:22,320 --> 00:20:24,920 Speaker 6: in the House of Representatives at the moment, and there's 398 00:20:24,920 --> 00:20:26,760 Speaker 6: a lot of individuals to talk about, so I'd like 399 00:20:26,840 --> 00:20:29,440 Speaker 6: to take them kind of just one by one, beginning 400 00:20:29,560 --> 00:20:33,320 Speaker 6: with one individual who this past week got the endorsement 401 00:20:33,680 --> 00:20:37,119 Speaker 6: of former President Trump, Congressman Jim Jordan from Ohio, the 402 00:20:37,200 --> 00:20:40,600 Speaker 6: chair of the Judiciary Committee. What are his strengths and 403 00:20:40,760 --> 00:20:42,600 Speaker 6: weaknesses as a speaker candidate? 404 00:20:42,840 --> 00:20:46,600 Speaker 7: Sure, so, Jim Jordan is probably best known for being 405 00:20:46,680 --> 00:20:49,680 Speaker 7: a bomb thrower within the caucus. He doesn't like to 406 00:20:49,760 --> 00:20:54,800 Speaker 7: wear a jacket. He's very sort of anti establishment, and 407 00:20:55,000 --> 00:20:58,639 Speaker 7: he is one of the lawmakers who's leading the impeachment 408 00:20:58,760 --> 00:21:03,440 Speaker 7: inquiry against President Joe Biden. This all plays very well 409 00:21:03,760 --> 00:21:08,960 Speaker 7: for as does Trump's endorsement for the hardliners in the party, 410 00:21:09,040 --> 00:21:12,640 Speaker 7: many of the same who had issues with Kevin McCarthy 411 00:21:12,760 --> 00:21:17,520 Speaker 7: and really worked against him during his very short term 412 00:21:17,680 --> 00:21:23,640 Speaker 7: as Speaker and ultimately ousted him. So that's all good 413 00:21:23,760 --> 00:21:29,320 Speaker 7: for Jim Jordan. The downside, though, are the moderates, particularly 414 00:21:29,680 --> 00:21:34,160 Speaker 7: the eighteen House Republicans who are from districts that Joe 415 00:21:34,200 --> 00:21:39,240 Speaker 7: Biden carried in twenty twenty. These are very very purple 416 00:21:39,440 --> 00:21:45,840 Speaker 7: areas and they're not terribly supportive of the impeachment inquiry, 417 00:21:46,000 --> 00:21:50,040 Speaker 7: and this makes Jim Jordan a very difficult and problematic 418 00:21:50,160 --> 00:21:54,440 Speaker 7: speaker candidate for folks like Mike Lawler and Mark Malnaro 419 00:21:54,520 --> 00:21:57,400 Speaker 7: from New York. There's several in southern California as well. 420 00:21:57,720 --> 00:22:00,960 Speaker 6: Okay, So knowing that whoever ultimately is going to be 421 00:22:01,000 --> 00:22:03,280 Speaker 6: speaker needs to get the majority of the caucus, be 422 00:22:03,359 --> 00:22:06,160 Speaker 6: that two hundred and seventeen or maybe lower. If there's 423 00:22:06,160 --> 00:22:08,440 Speaker 6: some people that don't show up, the math's going to 424 00:22:08,520 --> 00:22:10,960 Speaker 6: get very hard, especially when also in the mix is 425 00:22:11,000 --> 00:22:14,680 Speaker 6: someone like Steve Scalise, the majority leader, kind of maybe 426 00:22:15,040 --> 00:22:19,400 Speaker 6: the continuity candidate. You could see in that way, he's 427 00:22:19,520 --> 00:22:21,840 Speaker 6: likely to appeal more to some of those moderates, some 428 00:22:21,920 --> 00:22:24,720 Speaker 6: of those more endangered individuals, right, Yes, Steve. 429 00:22:24,560 --> 00:22:28,440 Speaker 7: Scalase is sort of the safer candidate for those individuals. 430 00:22:28,600 --> 00:22:33,520 Speaker 7: He is very conservative, you know, he's definitely not a moderate, 431 00:22:34,080 --> 00:22:39,200 Speaker 7: but he is not one to be particularly polarizing to 432 00:22:39,320 --> 00:22:43,720 Speaker 7: the American public. He's definitely more of the same mold 433 00:22:44,040 --> 00:22:50,680 Speaker 7: as Kevin McCarthy in his well known entity, someone that 434 00:22:50,800 --> 00:22:54,920 Speaker 7: the moderates I think feel like they can trust. He 435 00:22:55,200 --> 00:22:59,159 Speaker 7: is not as problematic as Jim Jordan, for sure, and 436 00:22:59,240 --> 00:23:04,840 Speaker 7: I think you're going to see those folks really rally 437 00:23:04,920 --> 00:23:08,440 Speaker 7: behind him, although it remains to be seen whether he 438 00:23:08,560 --> 00:23:12,639 Speaker 7: can get the hard right who's going to support Jim Jordan? 439 00:23:12,920 --> 00:23:15,119 Speaker 6: Again, it comes down to the math. The math is 440 00:23:15,240 --> 00:23:17,679 Speaker 6: just really tough. And there's other people kind of floating 441 00:23:17,720 --> 00:23:21,440 Speaker 6: out there as well, like Congressman Kevin Hearn from Oklahoma. 442 00:23:21,760 --> 00:23:22,440 Speaker 6: What's his deal? 443 00:23:22,960 --> 00:23:25,760 Speaker 7: So, you know, I'm very curious to see what happens 444 00:23:25,800 --> 00:23:29,960 Speaker 7: with him and whether he emerges as a consensus candidate, 445 00:23:30,240 --> 00:23:35,000 Speaker 7: somebody who the hardliners can begrudgingly get on board with 446 00:23:35,200 --> 00:23:37,440 Speaker 7: and the moderates can sort of hold their nose and 447 00:23:37,600 --> 00:23:41,480 Speaker 7: vote for. He is the chairman of the largest ideological 448 00:23:41,560 --> 00:23:44,840 Speaker 7: group in the House, the Republican Study Committee, and they 449 00:23:44,920 --> 00:23:48,760 Speaker 7: are a conservative group, although they tend to be less 450 00:23:48,960 --> 00:23:54,680 Speaker 7: bombastic than the House Freedom Caucus. So while folks like 451 00:23:54,800 --> 00:23:59,200 Speaker 7: Mike Lawler might not be on board with Kevin Hearn's policies, 452 00:24:00,880 --> 00:24:05,680 Speaker 7: his approach and his strategy is something that they can 453 00:24:06,000 --> 00:24:08,679 Speaker 7: tolerate much more so than a Jim Jordan. 454 00:24:09,160 --> 00:24:12,440 Speaker 6: And of course, the other individual here who is technically 455 00:24:12,480 --> 00:24:15,800 Speaker 6: the one who interim is Speaker Congressman Patrick mckenne of 456 00:24:15,840 --> 00:24:19,800 Speaker 6: North Carolina. He is acting in a pro temporary position 457 00:24:19,960 --> 00:24:22,000 Speaker 6: right now. It kind of our understanding is he doesn't 458 00:24:22,000 --> 00:24:24,880 Speaker 6: really have that much power other than to preside over 459 00:24:25,359 --> 00:24:27,960 Speaker 6: a speaker's vote. And on the idea of when this 460 00:24:28,119 --> 00:24:31,480 Speaker 6: vote's actually going to happen. Are the Republicans going to 461 00:24:31,600 --> 00:24:34,719 Speaker 6: try to sort them out, sort all this out themselves, 462 00:24:35,280 --> 00:24:37,960 Speaker 6: understand that someone is going to get the requisite majority 463 00:24:38,080 --> 00:24:40,719 Speaker 6: vote before they actually take it to the floor, remembering 464 00:24:40,760 --> 00:24:42,800 Speaker 6: it took fifteen rounds over the course of four days 465 00:24:42,800 --> 00:24:45,240 Speaker 6: to get McCarthy the speaker's gavel in the first place 466 00:24:45,280 --> 00:24:45,800 Speaker 6: in January. 467 00:24:46,320 --> 00:24:50,240 Speaker 7: That is certainly the big question. My money is on 468 00:24:51,000 --> 00:24:53,600 Speaker 7: them not being able to rally behind a candidate. That 469 00:24:54,440 --> 00:24:57,000 Speaker 7: is what party leaders are going to be trying to 470 00:24:57,160 --> 00:25:01,080 Speaker 7: do on Tuesday before this goes to the floor on Wednesday. 471 00:25:01,119 --> 00:25:06,359 Speaker 7: They don't want a whole messy spectacle on the floor 472 00:25:06,520 --> 00:25:11,160 Speaker 7: on Wednesday. But looking at how things went with McCarthy's ouster, 473 00:25:11,240 --> 00:25:15,639 Speaker 7: which was the first in US history, I find it 474 00:25:16,000 --> 00:25:18,920 Speaker 7: very difficult to believe that this is going to be 475 00:25:19,800 --> 00:25:23,920 Speaker 7: clean and short and be a show of unity for 476 00:25:24,040 --> 00:25:28,119 Speaker 7: the GOP. I suspect that when this goes to the floor, 477 00:25:28,359 --> 00:25:33,080 Speaker 7: it is going to be a very divided Republican conference, 478 00:25:33,240 --> 00:25:36,399 Speaker 7: and I think that Democrats, just like they did with 479 00:25:36,600 --> 00:25:39,960 Speaker 7: the vote on McCarthy, are going to watch from the 480 00:25:40,080 --> 00:25:44,440 Speaker 7: sidelines and cast their no votes against whoever it is 481 00:25:44,600 --> 00:25:48,639 Speaker 7: and vote for Remember Jeffries. Actually, how came Jeffreys, the 482 00:25:48,640 --> 00:25:52,880 Speaker 7: Democratic leader, had the most votes of any candidate going 483 00:25:52,960 --> 00:25:56,720 Speaker 7: into that fifteenth round because Democrats really united behind him. 484 00:25:57,119 --> 00:25:59,360 Speaker 7: So we're going to see that, and it's just it's 485 00:25:59,400 --> 00:26:02,360 Speaker 7: going to continue you to be extremely messy. We thought 486 00:26:02,400 --> 00:26:07,359 Speaker 7: that the fifteen rounds that McCarthy went through was long 487 00:26:07,600 --> 00:26:11,320 Speaker 7: and drawn out. It was certainly extraordinary, if not a record, 488 00:26:12,320 --> 00:26:16,440 Speaker 7: I suspect this could go much longer and be far 489 00:26:16,600 --> 00:26:17,760 Speaker 7: more bruising. 490 00:26:18,359 --> 00:26:21,640 Speaker 6: So buckle up everyone, exactly. That's what's going to come 491 00:26:21,960 --> 00:26:24,720 Speaker 6: on the floor potentially this coming week. I also want 492 00:26:24,760 --> 00:26:27,360 Speaker 6: to talk about a letter of that forty five Republican 493 00:26:27,440 --> 00:26:30,760 Speaker 6: members of the House wrote about what happened this past week. 494 00:26:30,840 --> 00:26:33,000 Speaker 6: This includes the likes of Mike Lawler, who you've mentioned 495 00:26:33,000 --> 00:26:35,720 Speaker 6: a few times. He signed this letter along with forty 496 00:26:35,760 --> 00:26:38,240 Speaker 6: four others. Part of what they wrote this is a 497 00:26:38,320 --> 00:26:41,440 Speaker 6: quote ashamed and embarrassed by what happened on the floor 498 00:26:41,520 --> 00:26:43,879 Speaker 6: this week. We refuse to allow the eight members who 499 00:26:43,960 --> 00:26:47,359 Speaker 6: abandoned an undermined or conference to dictate every outcome in 500 00:26:47,440 --> 00:26:51,080 Speaker 6: policy and personnel for the remainder of this Congress, including 501 00:26:51,119 --> 00:26:54,200 Speaker 6: the upcoming selection of the Speaker of the House. They're 502 00:26:54,240 --> 00:26:57,680 Speaker 6: talking about the motion to vacate, Megan, is it going 503 00:26:57,840 --> 00:26:59,359 Speaker 6: to go away? How hard will that be? 504 00:27:00,160 --> 00:27:04,040 Speaker 7: Extremely hard? This motion to vacate was something that Kevin 505 00:27:04,119 --> 00:27:09,240 Speaker 7: McCarthy had to agree to to be elected speaker. And 506 00:27:10,400 --> 00:27:13,080 Speaker 7: what that is essentially, and how we saw that play 507 00:27:13,160 --> 00:27:17,639 Speaker 7: out was it only took one member to bring that 508 00:27:17,840 --> 00:27:21,359 Speaker 7: to the floor and then it required only a simple 509 00:27:21,480 --> 00:27:25,520 Speaker 7: maturity of the House law makers present and voting to 510 00:27:25,960 --> 00:27:29,680 Speaker 7: oust the speaker. That meant that McCarthy threw out his 511 00:27:30,200 --> 00:27:33,119 Speaker 7: again very short term nine months. I think it was 512 00:27:33,240 --> 00:27:37,480 Speaker 7: the third shortest in US history. Throughout his term as speaker, 513 00:27:37,840 --> 00:27:41,160 Speaker 7: essentially had this gun to his head where he was concerned, 514 00:27:41,280 --> 00:27:43,960 Speaker 7: you know, with every twist and turn that he could 515 00:27:44,040 --> 00:27:44,560 Speaker 7: be ousted. 516 00:27:46,880 --> 00:27:47,919 Speaker 3: Getting the. 517 00:27:49,520 --> 00:27:56,520 Speaker 7: Hardliners to relent on that will be extraordinary difficult. Extraordinarily 518 00:27:56,640 --> 00:28:00,119 Speaker 7: difficult because that is what gives them their power. So 519 00:28:00,280 --> 00:28:01,639 Speaker 7: why would they let that go. 520 00:28:02,080 --> 00:28:05,040 Speaker 6: They want to hold on to the leverage absolutely so 521 00:28:05,200 --> 00:28:08,399 Speaker 6: much to look forward to Yes, just more paradise here 522 00:28:08,440 --> 00:28:10,680 Speaker 6: in Washington. Really looking forward to your coverage of this 523 00:28:10,840 --> 00:28:13,840 Speaker 6: over the coming week. Megan Scully, the leader of Bloomberg's 524 00:28:13,840 --> 00:28:16,720 Speaker 6: congressional team here in Washington, thank you very much in 525 00:28:16,800 --> 00:28:18,080 Speaker 6: Tom buckle up. 526 00:28:18,240 --> 00:28:20,800 Speaker 2: Thank you, Kaylee. That was Bloomberg's sound on co host 527 00:28:20,920 --> 00:28:23,520 Speaker 2: Kaylee Lines reporting from our Bloomberg ninety nine to one 528 00:28:23,640 --> 00:28:27,480 Speaker 2: newsroom in Washington. And you can hear sound on weekdays 529 00:28:27,560 --> 00:28:30,919 Speaker 2: one to three pm on Bloomberg Radio and coming up 530 00:28:30,960 --> 00:28:34,320 Speaker 2: here on Bloomberg day Break Weekend. After China's Golden Week, 531 00:28:34,560 --> 00:28:37,520 Speaker 2: we look at the holiday's impact on the country's economy. 532 00:28:38,160 --> 00:28:45,360 Speaker 2: I'm Tom Busby, and this is Bloomberg. This is Bloomberg 533 00:28:45,440 --> 00:28:47,480 Speaker 2: day Break Weekend, our global look ahead at the top 534 00:28:47,560 --> 00:28:50,480 Speaker 2: stories for investors in the coming week. I'm Tom Busby 535 00:28:50,600 --> 00:28:54,800 Speaker 2: in New York. Will China's seven day Golden Week holiday 536 00:28:55,000 --> 00:28:58,360 Speaker 2: be a hope for the country's economy to reset? Let's 537 00:28:58,360 --> 00:29:01,600 Speaker 2: get to Brian Curtis, co host of Bloomberg's Daybreak Asia 538 00:29:01,720 --> 00:29:03,080 Speaker 2: radio show, to find out more. 539 00:29:03,400 --> 00:29:06,440 Speaker 1: Tom, China markets reopen in the coming week after the 540 00:29:06,520 --> 00:29:10,160 Speaker 1: Golden Week holiday, what might we expect? We're joined by 541 00:29:10,200 --> 00:29:15,240 Speaker 1: Rebecca Chong Wilkins, Bloomberg Asia Government and Economics correspondent. So 542 00:29:15,440 --> 00:29:20,000 Speaker 1: I'm curious, Rebecca, what you're hearing from investors now because 543 00:29:20,040 --> 00:29:22,479 Speaker 1: this has been a critical time and do they need 544 00:29:22,560 --> 00:29:23,760 Speaker 1: a catalyst to come back in. 545 00:29:24,400 --> 00:29:27,200 Speaker 8: Well, I think the big story for them is watching 546 00:29:27,480 --> 00:29:30,840 Speaker 8: whether or not the Chinese consumer has come back during 547 00:29:30,880 --> 00:29:34,520 Speaker 8: the Golden Week holiday. So this is a long stretch 548 00:29:34,600 --> 00:29:39,680 Speaker 8: eight days where typically we see Chinese people going out, traveling, 549 00:29:39,960 --> 00:29:44,240 Speaker 8: spending and buying more. Obviously that has been severely dented 550 00:29:44,480 --> 00:29:48,320 Speaker 8: by sort of waning confidence, the property crisis and so on, 551 00:29:49,200 --> 00:29:52,480 Speaker 8: And so that's really where investors are focusing. Are we 552 00:29:52,640 --> 00:29:57,240 Speaker 8: seeing an improvement in sort of services, in consumer spending 553 00:29:57,320 --> 00:30:01,080 Speaker 8: and tourism, And then the other part of this is property. Now, 554 00:30:01,120 --> 00:30:03,720 Speaker 8: I think the prevailing feeling is that for property there's 555 00:30:03,800 --> 00:30:07,080 Speaker 8: still some of that pessimism there. Just looking at the 556 00:30:07,160 --> 00:30:10,320 Speaker 8: first four days of the month in thirty major cities, 557 00:30:10,360 --> 00:30:13,520 Speaker 8: the data looks really weak. We're seeing this big decline 558 00:30:13,600 --> 00:30:16,960 Speaker 8: again year over year. We hardly are their way through 559 00:30:17,000 --> 00:30:19,520 Speaker 8: the month, but you know, even when we compare to September, 560 00:30:19,680 --> 00:30:23,120 Speaker 8: marginal improvement there month over month. But you know, more broadly, 561 00:30:23,440 --> 00:30:26,040 Speaker 8: it doesn't look like we're seeing a bottoming out, so 562 00:30:26,200 --> 00:30:30,480 Speaker 8: that pessimism is prevailing. But in the consumer sectors and 563 00:30:30,560 --> 00:30:33,960 Speaker 8: in the services part, we are maybe seeing these pockets 564 00:30:34,120 --> 00:30:37,160 Speaker 8: of positive signs and that might be enough to start 565 00:30:37,240 --> 00:30:39,400 Speaker 8: bringing some traders back in. 566 00:30:39,720 --> 00:30:41,800 Speaker 1: You cited some numbers from the Golden week holiday, and 567 00:30:41,880 --> 00:30:44,760 Speaker 1: we know that Golden weekend has historically been a key 568 00:30:44,880 --> 00:30:49,320 Speaker 1: test for the property sector. Is there any possible catalysts 569 00:30:49,400 --> 00:30:53,120 Speaker 1: there that investors might seize upon, and if so, what 570 00:30:53,160 --> 00:30:55,600 Speaker 1: would it look like. Would it be like dramatic sales 571 00:30:55,680 --> 00:30:58,080 Speaker 1: in Shanghai or in Beijing, or would be in the 572 00:30:58,200 --> 00:31:00,520 Speaker 1: outlying areas. What would they be feasting on. 573 00:31:01,040 --> 00:31:02,880 Speaker 8: I think there are a couple of elements there. So 574 00:31:03,000 --> 00:31:06,680 Speaker 8: the first is and just say we're not really expecting this, 575 00:31:06,800 --> 00:31:09,520 Speaker 8: But the first would be to see a more comprehensive 576 00:31:09,600 --> 00:31:12,800 Speaker 8: approach from the government to try and support the sector. 577 00:31:12,840 --> 00:31:16,120 Speaker 8: What we've seen so far has been very piecemeal, very localized, 578 00:31:16,400 --> 00:31:20,160 Speaker 8: and pretty focused on specific regions or specific cities. Now, 579 00:31:20,200 --> 00:31:23,800 Speaker 8: if we saw some kind of bigger restructuring program or 580 00:31:23,840 --> 00:31:26,480 Speaker 8: bigger supportive policy program that we saw, for example in 581 00:31:26,600 --> 00:31:29,600 Speaker 8: twenty fifteen, the regeneration of the slums, anything that was 582 00:31:29,680 --> 00:31:32,840 Speaker 8: more comprehensive from the central government. I think that certainly 583 00:31:32,960 --> 00:31:36,080 Speaker 8: would be a sign of a different mo from Beijing 584 00:31:36,360 --> 00:31:39,320 Speaker 8: that would be taken very positively. We haven't seen signs 585 00:31:39,360 --> 00:31:42,760 Speaker 8: that that's coming, but of course it remains an option, 586 00:31:42,960 --> 00:31:45,080 Speaker 8: depending on how long this sort of how much in 587 00:31:45,200 --> 00:31:48,160 Speaker 8: economic pain that Beijing can be willing to endure. 588 00:31:48,280 --> 00:31:51,800 Speaker 1: You had oversupply and you had property developers get in trouble, 589 00:31:52,080 --> 00:31:54,440 Speaker 1: but then you also have a big fall off in demand. 590 00:31:55,160 --> 00:31:58,160 Speaker 1: What is the main cause of the drop in demand. 591 00:31:58,400 --> 00:32:02,840 Speaker 8: Well, it is the crack down that Beijing has rolled 592 00:32:02,880 --> 00:32:06,200 Speaker 8: out into the property market, which is specifically focused on 593 00:32:06,280 --> 00:32:09,600 Speaker 8: this idea of cracking down speculative buying of property market. 594 00:32:09,880 --> 00:32:14,640 Speaker 8: That speculative bet is what has driven the production of oversupply, 595 00:32:14,840 --> 00:32:17,640 Speaker 8: particularly in those smaller cities that you know that if 596 00:32:17,680 --> 00:32:19,400 Speaker 8: you bought a second, third, maybe a fourth or a 597 00:32:19,440 --> 00:32:23,000 Speaker 8: fifth property, it was a guaranteed way to increase your 598 00:32:23,080 --> 00:32:25,480 Speaker 8: wealth because the value of those markets was just going 599 00:32:25,560 --> 00:32:27,959 Speaker 8: up and up and up and up. Now that trend 600 00:32:28,120 --> 00:32:31,200 Speaker 8: has stopped. Not only has it stopped, but the demand 601 00:32:31,280 --> 00:32:34,000 Speaker 8: for buying, the demand for renting has fallen and prices 602 00:32:34,040 --> 00:32:37,480 Speaker 8: have fallen off. This sort of scary part. I think 603 00:32:38,480 --> 00:32:41,080 Speaker 8: for long time watches of the market and for you know, 604 00:32:41,200 --> 00:32:43,600 Speaker 8: investors who are thinking about where they want to be 605 00:32:43,680 --> 00:32:46,240 Speaker 8: in China long term. Two and its economic growth model 606 00:32:46,640 --> 00:32:49,680 Speaker 8: is that some estimates say that we are only about 607 00:32:49,960 --> 00:32:54,200 Speaker 8: seventeen percent of the way through fixing that oversupply product. 608 00:32:54,360 --> 00:32:56,480 Speaker 1: All right, Rebecca, thanks so much for joining us. Great 609 00:32:56,560 --> 00:33:01,400 Speaker 1: insights there, Rebecca Chong Wilkins wlohenbrig Asia Government Economics correspondent. 610 00:33:01,680 --> 00:33:04,160 Speaker 1: I'm Brian Curtis along with Doug Chrisner. You can catch 611 00:33:04,280 --> 00:33:07,760 Speaker 1: us every weekday here for Bloomberg Daybreak Asia, beginning at 612 00:33:07,840 --> 00:33:11,840 Speaker 1: six am in Hong Kong and six pm on Wall Street. Tom. 613 00:33:12,760 --> 00:33:14,960 Speaker 2: Thanks Brian, and that does it for this edition of 614 00:33:15,000 --> 00:33:17,920 Speaker 2: Bloomberg day Break Weekend. Join us again Monday morning at 615 00:33:17,960 --> 00:33:20,400 Speaker 2: five am Wall Street time for the latest on markets 616 00:33:20,440 --> 00:33:22,920 Speaker 2: overseas and the news you need to start your day. 617 00:33:23,400 --> 00:33:26,640 Speaker 2: I'm Tom Buzzby. Stay with us. Top stories and global 618 00:33:26,680 --> 00:33:28,720 Speaker 2: business headlines are coming up right now.