WEBVTT - (Radio) 0:00:02.560 --> 0:00:05.360 This is Bloomberg Daybreak Weekend, our global look a hand 0:00:05.400 --> 0:00:07.160 of the top stories in the coming week from our 0:00:07.200 --> 0:00:10.400 day Break anchors all around the world. Hand just ahead 0:00:10.440 --> 0:00:14.200 on the program. It's the mother of all economic reports, 0:00:14.200 --> 0:00:17.560 the unemployment report coming out on John Tucker in New York. 0:00:17.640 --> 0:00:20.959 I'm Ryan Turtis in Hong Kong. Two interesting chapters of 0:00:21.120 --> 0:00:25.079 China's upcoming Communist Party Congress. I'm Caroline him in London 0:00:25.120 --> 0:00:28.680 for the World Aviation Festival in Amsterdam. The CEO is 0:00:28.680 --> 0:00:31.639 what we're speaking to Bloomberg. I'm Any Morris in Washington. 0:00:31.880 --> 0:00:35.880 This midterm election is unusually hard to hold. That's all 0:00:35.960 --> 0:00:40.120 straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three, 0:00:40.120 --> 0:00:44.440 on New York, Bloomberg one, Washington d C, Bloomberg one 0:00:44.440 --> 0:00:48.199 oh six one Boston, Bloomberg nine sixties, San Francisco, d 0:00:48.320 --> 0:00:52.040 A B Digital Radio, London, Sirius XM one nine and 0:00:52.120 --> 0:00:55.000 around the world on Bloomberg Radio dot com and via 0:00:55.080 --> 0:01:02.320 the Bloomberg Business App. Hi, everybody, I'm John Tucker, and 0:01:02.440 --> 0:01:04.560 let's try today's program with a look ahead to the 0:01:04.720 --> 0:01:09.199 coming jobs report. Joining me for more, Bloomberg reporter Matt 0:01:09.200 --> 0:01:12.240 Bosler Matt in the introduction, I called it the mother 0:01:12.319 --> 0:01:15.200 of all economic reports? Is it still or we are 0:01:15.560 --> 0:01:19.279 firmly focused on inflation reports instead of the job's report 0:01:19.319 --> 0:01:22.800 these days? Well, it's definitely competing a lot more with 0:01:22.920 --> 0:01:25.679 inflation these days, but I would say it probably still 0:01:25.800 --> 0:01:28.480 is the mother of all economic reports. It's pretty critical 0:01:28.680 --> 0:01:31.640 over the next several months and into the next year 0:01:32.160 --> 0:01:35.520 for determining the trajectory for the Federal Reserve and therefore 0:01:35.600 --> 0:01:38.680 for financial markets more broadly. Yeah, And a big component 0:01:38.720 --> 0:01:41.600 of that is if the job's market is strong, the 0:01:41.640 --> 0:01:45.000 wages companies are paying their workers more, and that feeds 0:01:45.000 --> 0:01:47.960 into the whole inflation picture. Right. That's the thing. We 0:01:48.040 --> 0:01:50.840 have very high inflation right now. It's it's north of 0:01:50.920 --> 0:01:53.520 eight percent, it's the highest in four decades. But a 0:01:53.520 --> 0:01:56.880 lot of that is presumed to be due to supply 0:01:56.960 --> 0:02:00.720 chain problems, supply side factors that are expected to dissipate 0:02:00.840 --> 0:02:04.080 and resolve over the next several months and into next year. 0:02:04.120 --> 0:02:06.600 So the big question is, once all of that stuff 0:02:06.600 --> 0:02:09.559 goes away, what is sort of the underlying rate of inflation? 0:02:09.960 --> 0:02:15.120 Setting all of that aside, economists and forecasters, policymakers at 0:02:15.160 --> 0:02:18.239 the Federal Reserve, for example, tend to think that wage 0:02:18.240 --> 0:02:23.160 growth is really the underlying factor, uh that determines where 0:02:23.200 --> 0:02:25.960 inflation is headed. And so wage growth is still very 0:02:26.040 --> 0:02:29.840 high right now at around six and so set officials 0:02:29.840 --> 0:02:33.120 are really looking for, you know, that to moderate in 0:02:33.200 --> 0:02:36.280 order to feel more confident that inflation is going to 0:02:36.320 --> 0:02:39.200 come all the way back down to two once those 0:02:39.240 --> 0:02:42.919 supply side facts take care of themselves. Okay, So, how 0:02:43.160 --> 0:02:46.560 strong is the labor market in the US and are 0:02:46.720 --> 0:02:50.040 there going to be signs of some cracks in the 0:02:50.120 --> 0:02:53.920 labor market going forward, especially with this coming report. You know, 0:02:54.000 --> 0:02:57.200 the labor market is just looking incredibly strong right now, 0:02:57.240 --> 0:02:59.600 and it's a bit of a puzzle for economists who 0:02:59.600 --> 0:03:02.880 would have expected to see more softening there as the 0:03:02.919 --> 0:03:06.920 Fed has raised rates over the last six months. You know, 0:03:06.960 --> 0:03:10.480 we just got the latest reading on initial jobless claims 0:03:10.560 --> 0:03:14.880 on Thursday. For last week it fell, uh, you know, 0:03:14.960 --> 0:03:18.560 weekly initial claims fell below two hundred thousand again for 0:03:18.600 --> 0:03:20.800 the first time in several months. Are now near the 0:03:20.840 --> 0:03:24.600 lowest levels of this expansion. Yeah, that was you know, 0:03:24.680 --> 0:03:27.799 that's that's one of these good news bad news scenarios. 0:03:28.360 --> 0:03:31.680 You get a really good labor market report and then 0:03:31.840 --> 0:03:34.519 stocks you know, sort of go off a cliff. So 0:03:34.720 --> 0:03:38.119 it's that's what we're contending with. Explain that to everybody 0:03:38.160 --> 0:03:41.040 why that happens, Well, I mean, that really speaks to 0:03:41.080 --> 0:03:43.600 where we're at right now with Federal Reserve policy. You know, 0:03:43.680 --> 0:03:47.240 the Fed is looking for the economy to soften. It's 0:03:47.280 --> 0:03:50.480 not softening, which means they're probably going to be inclined 0:03:50.520 --> 0:03:53.360 to raise interest rates even higher than they're already saying, 0:03:53.400 --> 0:03:57.440 which is you know, quite high already. So the question 0:03:57.640 --> 0:04:00.520 is does the Federal Reserve it has a dual mandate, 0:04:00.560 --> 0:04:05.480 by the way, as everybody knows, uh, price control, price pressures, 0:04:05.640 --> 0:04:10.600 easing price pressures, lowering the rate of inflation, and full employment. 0:04:10.920 --> 0:04:14.120 So do they have with that dual mandate, do they 0:04:14.120 --> 0:04:17.760 have to torpedo the labor market to bring prices down? 0:04:18.800 --> 0:04:20.800 This is a really interesting thing because you know, they're 0:04:20.839 --> 0:04:24.120 projecting a higher unemployment right next year. They see it 0:04:24.200 --> 0:04:26.640 rising a four point four at the end of next 0:04:26.760 --> 0:04:29.520 year from the current levels around three point seven percent, 0:04:29.600 --> 0:04:32.480 and they think that's necessary to bring inflation down. They 0:04:32.520 --> 0:04:34.839 need to see some softening in the labor market to 0:04:34.880 --> 0:04:37.599 moderate that wage growth, and then to bring inflation down, So, 0:04:37.960 --> 0:04:39.479 you know, you kind of scratch your head, is that 0:04:39.520 --> 0:04:42.880 really consistent with their full employment mandate. What they say 0:04:43.080 --> 0:04:46.320 is that price stability is a precursor to full employment, 0:04:46.360 --> 0:04:48.799 and so that's kind of how they swear that circle 0:04:48.920 --> 0:04:51.039 that you know, we need to get inflation down because 0:04:51.080 --> 0:04:54.159 that will set the stage for a healthy labor market 0:04:54.200 --> 0:04:56.919 over the longer run. Now that's a contexted notion, but 0:04:57.080 --> 0:04:59.520 that's what they're saying at the moment. So what's the 0:04:59.520 --> 0:05:02.520 prediction right now from economist ahead of the release of 0:05:02.560 --> 0:05:06.920 the report. So economists expect the unemployment rate to stay 0:05:07.000 --> 0:05:12.360 unchanged at three point seven in September from last month. 0:05:12.680 --> 0:05:15.560 The other big number to watch is labor force participation. 0:05:15.640 --> 0:05:18.800 That was sixty two point four percent last month, but 0:05:18.960 --> 0:05:21.080 it picked up quite a bit from the month before, 0:05:21.120 --> 0:05:23.320 and that's something that we've really been waiting to see 0:05:23.320 --> 0:05:26.680 and hadn't really seen until just last month. If that continues, 0:05:27.120 --> 0:05:29.359 that's going to be really important because that's one way 0:05:29.400 --> 0:05:32.239 that um, you know, some of that labor supply could 0:05:32.279 --> 0:05:36.400 return and take some pressure off of wages and prices 0:05:36.400 --> 0:05:41.560 without necessarily having to see um, you know, weaker labor demand. Uh, 0:05:41.720 --> 0:05:44.040 so that's a big one to watch for sure. Okay, 0:05:44.080 --> 0:05:46.919 the Federalserve officials have been tightening, and we have to 0:05:46.960 --> 0:05:51.200 remind everybody that their policy acts with a lag. So 0:05:51.600 --> 0:05:56.680 is it possible we've already passed the point of where 0:05:56.680 --> 0:06:00.160 the policy starts to take effect. And maybe there's an 0:06:00.160 --> 0:06:02.880 indication that the Federal Reserve officials have gone too far 0:06:03.480 --> 0:06:06.320 given how long they've been raising rates. Now, they started 0:06:06.320 --> 0:06:09.640 in March, but they were obviously signaling rate hikes even 0:06:09.680 --> 0:06:13.440 before then, which worked its way into longer term interest rates. 0:06:14.160 --> 0:06:17.280 We haven't really seen that showing up in the economic 0:06:17.360 --> 0:06:20.800 data yet. Economists would expect it to start showing up 0:06:20.839 --> 0:06:23.479 around now. And so the big question going forward is 0:06:23.560 --> 0:06:26.440 do we start to see that having a fact or 0:06:26.520 --> 0:06:29.039 is it possible that the economy is just, for whatever 0:06:29.120 --> 0:06:32.520 reason less sensitive to interest rates then it used to be. 0:06:32.680 --> 0:06:35.600 One big thing that did happen during the pandemic is 0:06:36.000 --> 0:06:38.240 all of the money that the government pumped into the 0:06:38.279 --> 0:06:41.159 economy allowed a lot of people to pay down debt. 0:06:41.240 --> 0:06:44.600 And so maybe, uh, you know, consumers and businesses are 0:06:44.640 --> 0:06:47.320 just not as interest sensitive as they used to be. 0:06:47.480 --> 0:06:49.960 In that case, the Fed may have to raise rates 0:06:50.040 --> 0:06:53.360 higher in order to gain traction and and really starts 0:06:53.440 --> 0:06:57.120 closing down. Matt. Always a pleasure. Thanks for explaining things 0:06:57.160 --> 0:06:59.720 to Bloomberg reporter Matt Bosler. And just to hit on 0:06:59.720 --> 0:07:03.240 bloom Break Daybreak Weekend, some big weeks coming for China's 0:07:03.240 --> 0:07:06.480 economy and the political scene. There, I'm John Tucker and 0:07:06.640 --> 0:07:17.280 busm This is Bloomberg Daybreak Weekend, a global look ahead 0:07:17.320 --> 0:07:19.280 of the top stories from investors in the coming week. 0:07:19.320 --> 0:07:21.760 I'm John Tucker in New York. Up later in the 0:07:21.800 --> 0:07:27.240 program here comes the World Aviation Festival in Amsterdam. But 0:07:27.360 --> 0:07:30.800 first China's economy and political leadership and focus this coming 0:07:30.840 --> 0:07:33.080 week and for more, let's head to Hong Kong and 0:07:33.120 --> 0:07:37.200 Bloomberg Daybreak Asia host Brian Curtis John. Over the next 0:07:37.240 --> 0:07:39.480 couple of weeks, we'll be taking a close look at 0:07:39.480 --> 0:07:42.680 the Communist Party Congress in China coming up later this month. 0:07:43.200 --> 0:07:47.120 In this segment, we'll focus on two specific areas. One 0:07:47.160 --> 0:07:52.080 a possible overhaul of the Chinese economy and secondly, future leaders, 0:07:52.120 --> 0:07:56.800 including who might eventually succeed Shijin Ping as Secretary General. 0:07:57.720 --> 0:08:00.440 We have Premier Lika Chong as well as the economics 0:08:00.440 --> 0:08:04.280 are Leo Hu PBOC Governor Ye Young and others likely 0:08:04.400 --> 0:08:07.120 to step down early next year. Now that's based on 0:08:07.480 --> 0:08:12.760 retirement age and term limits for senior officials. New leadership 0:08:12.920 --> 0:08:16.280 might lead to new direction, though President She himself is 0:08:16.320 --> 0:08:20.400 expected to secure a third term as party chief. Joining 0:08:20.440 --> 0:08:23.239 us for discussion is Marvin Chen, China and North Asia 0:08:23.280 --> 0:08:27.640 equity strategist at Bloomberg Intelligence, and Crystal chap who's China 0:08:27.680 --> 0:08:32.640 assignment reporter on finance at Bloomberg News. So Marvin, let's 0:08:32.640 --> 0:08:35.960 go to you first. Plenty of big issues to be 0:08:36.000 --> 0:08:41.120 discussed at the Congress. Confidence is low among both households 0:08:41.160 --> 0:08:44.520 and businesses, and of course there's a certain degree of 0:08:44.559 --> 0:08:48.920 external attention with with the West. We spoke earlier with 0:08:49.000 --> 0:08:52.400 Leland Miller, CEO at China Beije Book, and he told 0:08:52.480 --> 0:08:57.000 us China is actually facing increasing risks from deflation. We're 0:08:57.040 --> 0:08:59.400 not in deflation yet, but you know, we're heading into 0:08:59.400 --> 0:09:01.120 the winter. And a lot of people say, oh, this 0:09:01.160 --> 0:09:03.679 will bring economic stimulus after the Party Congress, it will 0:09:03.720 --> 0:09:06.600 bring an end to COVID zero lockdowns. I don't think 0:09:06.640 --> 0:09:09.400 that's the case. And moreover, if you have more COVID 0:09:09.440 --> 0:09:12.200 and more COVID zero lockdowns, You're really going to have 0:09:12.480 --> 0:09:15.560 a problem with the threat of deflation looming. So again 0:09:15.640 --> 0:09:18.840 Leland Miller there China base book. So Marvin, what might 0:09:18.880 --> 0:09:22.640 we expect on COVID policy out of the Congress? Yeah, 0:09:22.640 --> 0:09:25.480 thank you, Brian. Well, first I just want to emphasize 0:09:25.480 --> 0:09:29.640 that the Party Congress is largely a political event, so 0:09:29.679 --> 0:09:33.480 we shouldn't expect any immediately policy changes coming from the Congress, 0:09:33.480 --> 0:09:35.960 but we can get signals on the policy direction in 0:09:36.000 --> 0:09:39.559 the coming months once the leadership transition is in place. 0:09:40.240 --> 0:09:42.840 For COVID um, you know, cases have been coming down 0:09:42.880 --> 0:09:45.480 in recent weeks and the last major city, chanin Do 0:09:45.960 --> 0:09:48.960 that was under lockdown is now reopening. So the Congress 0:09:49.000 --> 0:09:52.040 could be an opportune time for the Party to declare 0:09:52.120 --> 0:09:56.400 small victory and the effectiveness of the current COVID policies. 0:09:56.840 --> 0:09:59.280 But we think the changes will be gradual, perhaps another 0:09:59.280 --> 0:10:02.120 reduction in the in bound quarantine requirements, and the gradual 0:10:02.400 --> 0:10:04.839 reduction may be similar to what we saw in Hong Kong, 0:10:05.120 --> 0:10:08.040 but the semi lockdowns when cases rise may still be 0:10:08.120 --> 0:10:11.600 looming and lasting into two thousand three. Is there a 0:10:11.640 --> 0:10:14.440 sense that Hong Kong might be an experiment that they're 0:10:14.480 --> 0:10:18.800 watching to see how it might be applied to China. Yeah, definitely. 0:10:19.160 --> 0:10:23.360 You know, Hong Kong will be closely watched how the 0:10:23.400 --> 0:10:27.960 reopening of Hong Kong affects cases. But you know, we 0:10:27.960 --> 0:10:31.000 we think that the Hong Kong reopening is uh more 0:10:31.080 --> 0:10:34.520 significant because they want to keep Hong Kong as a 0:10:34.880 --> 0:10:38.920 international finance hub. As you mentioned, the party Congress will 0:10:38.960 --> 0:10:41.920 deal with leadership issues. So I'm just curious. So who 0:10:42.000 --> 0:10:46.440 might be tapped to become the next premier? Um, well, 0:10:46.720 --> 0:10:48.679 I mean we we do know that the Ka Chang 0:10:48.760 --> 0:10:51.760 is going to retire, but you know there's a speculation 0:10:51.920 --> 0:10:55.360 on a few names. Um, you know, I don't want 0:10:55.360 --> 0:10:58.040 to uh go, and I mean it's hard to speculating guests, 0:10:58.120 --> 0:11:01.160 but it's Leo Hu's name. Per ups in that circle. 0:11:01.920 --> 0:11:04.880 We think Leo ja is reaching the retirement age and 0:11:04.920 --> 0:11:07.680 he may be may be stepping down, and so no 0:11:07.760 --> 0:11:10.280 exception made on that. Okay, let's talk a little bit 0:11:10.280 --> 0:11:13.320 about housing. I know that it's not so much economic policy, 0:11:13.360 --> 0:11:15.400 but this is a this is a story that runs 0:11:15.480 --> 0:11:19.640 right through society in China. Are we expected to see 0:11:19.760 --> 0:11:22.520 some measures at least in the next month or two 0:11:22.760 --> 0:11:25.760 to shore up housing. Yeah, there's not going to be 0:11:25.800 --> 0:11:28.560 a quick fix to China's property issues at the moment, 0:11:28.679 --> 0:11:31.760 and it'll take some time to restore the market sentiment. 0:11:32.080 --> 0:11:35.080 Many of these measures will be uh will vary from 0:11:35.080 --> 0:11:38.240 city to city and left up to local government discrestion. Okay, 0:11:38.240 --> 0:11:40.480 for part two in our discussion, we wanted to talk 0:11:40.520 --> 0:11:43.280 a little bit about future leadership. You're we mentioned that 0:11:43.559 --> 0:11:47.040 we know that elites will take up the key leadership positions, 0:11:47.080 --> 0:11:50.959 but there's another group that will also advance, and these 0:11:50.960 --> 0:11:54.120 are being called the luckiest generation. They were born back 0:11:54.120 --> 0:11:57.720 in the nineteen seventies. They missed both the chaotic era 0:11:58.040 --> 0:12:01.120 of Mount ze Dong, particularly towards the end. They got 0:12:01.120 --> 0:12:04.360 their education and grounding before the troubles of this most 0:12:04.400 --> 0:12:08.520 recent period. They had a brief window of Internet freedom 0:12:08.679 --> 0:12:12.280 wto membership and all that that meant, as well as 0:12:12.600 --> 0:12:16.680 global mobility, and those freedoms have now been somewhat restricted 0:12:16.679 --> 0:12:20.680 by censorship, trade actions and COVID border closure. Let's bring 0:12:20.720 --> 0:12:23.360 in Crystal for a little bit of insight on this 0:12:23.440 --> 0:12:27.440 wonderful story. So give us one name, Crystal, that you 0:12:27.480 --> 0:12:29.679 think kind of stands out as the future high flyer. 0:12:30.760 --> 0:12:33.680 So I think arguably the most high profile leader in 0:12:33.720 --> 0:12:37.320 this cohort of politicians born in the nineteen seventies. Um 0:12:37.320 --> 0:12:41.320 It's step the deputy party secretary in Shanghaim. His name 0:12:41.360 --> 0:12:44.839 is to So he's been known as a right hand 0:12:44.920 --> 0:12:48.040 man to the current Shanghai Party chief Letia, who is 0:12:48.080 --> 0:12:52.680 a longtime associate of presidency and the financial hub of 0:12:52.800 --> 0:12:56.800 Shanghai is traditionally a springboard to higher office. Seizing pay 0:12:56.920 --> 0:13:00.640 himself as a former Shaghai party secretary. Many probably the 0:13:00.880 --> 0:13:04.120 observers have noticed Jugo is one of the most promising 0:13:04.400 --> 0:13:08.080 younger politicians to sporn in the nineteen seventies. And broadly speaking, 0:13:08.160 --> 0:13:12.360 why is this generation important? So it's likely that Seizing 0:13:12.400 --> 0:13:15.120 things success so will emerge from this generation. They will 0:13:15.200 --> 0:13:18.400 rise to power just as he gets very very old. 0:13:18.800 --> 0:13:22.320 So current age limits and norms meant that those born 0:13:22.360 --> 0:13:24.920 in the nineteen sixties will have to retire over the 0:13:24.960 --> 0:13:27.960 next decade. So that would clear a path for those 0:13:28.040 --> 0:13:31.920 born in the nineteen seventies to join the Politburo. So 0:13:31.960 --> 0:13:34.079 the idea and the logic is that they will first 0:13:34.160 --> 0:13:39.040 join UM the Central Committee this month as alternate members 0:13:39.400 --> 0:13:42.040 become full members in the next Congress and then right 0:13:42.120 --> 0:13:45.760 to the Politburo in the Congress. I'm also curious about 0:13:45.760 --> 0:13:49.680 whether or not these leaders will be more globalist in nature. 0:13:49.800 --> 0:13:53.040 I mean, might they be looking externally as much as 0:13:53.160 --> 0:13:56.880 internally for the development of China. One thing that stands 0:13:56.880 --> 0:13:59.960 out from the shared experience of this cohort of positition 0:14:00.120 --> 0:14:02.560 s born in the nineteen seventies is that they have 0:14:02.840 --> 0:14:07.800 witnessed and in fact experienced the benefits of China's startling 0:14:07.880 --> 0:14:11.600 economic rights. So that gives rise to two arguments. One 0:14:11.760 --> 0:14:14.120 is that because that they have enjoyed the benefits and 0:14:14.120 --> 0:14:17.920 they have had possibly a more international education, so they 0:14:17.960 --> 0:14:21.120 will open up China at just potentially the right time. 0:14:22.000 --> 0:14:24.880 On the other hand, we could also argue that because 0:14:24.920 --> 0:14:27.760 you have only experienced the so called good times, it 0:14:27.880 --> 0:14:30.920 is much easier for them to internalize the idea that 0:14:31.040 --> 0:14:35.560 the party enrich our society, and that would um help 0:14:35.640 --> 0:14:39.920 them to enforce the seaters co. Yeah, so a lot 0:14:40.000 --> 0:14:43.080 needs to unfold over the next many years. Crystal, thanks 0:14:43.080 --> 0:14:46.440 so much for joining us. Chrystal China assignment reporter on 0:14:46.480 --> 0:14:49.480 finance at Bloomberg News, and Marvin Chen thank you as well. 0:14:49.880 --> 0:14:53.920 China and North Asia, equity strategist at Bloomberg Intelligence. I'm 0:14:53.960 --> 0:14:56.920 Brian Curtis along with Doug Chrisner. You can catch us 0:14:57.000 --> 0:15:00.680 every weekday here for Bloomberg Daybreak Asia, beginning at six 0:15:00.720 --> 0:15:04.040 am in Hong Kong and six pm on Wall Street. 0:15:04.360 --> 0:15:07.160 John Brian, thanks a lot. Just ahead on Bloomberg day 0:15:07.160 --> 0:15:11.920 Break Weekend, the High Flying World Aviation Festival in Amsterdam. 0:15:11.960 --> 0:15:28.240 I'm John Tucker On. This is Bloomberg broadcasting live from 0:15:28.240 --> 0:15:32.320 the Bloomberg Interactive Broker Studio in New York. Bloomberg evon 0:15:32.360 --> 0:15:36.960 Freo to Washington, d C, Bloomberg to Boston, Bloomberg one 0:15:37.000 --> 0:15:40.360 oh six one to San Francisco, Bloomberg NIXT to the 0:15:40.400 --> 0:15:43.880 country Sirius XM Channel one nine to London d A 0:15:44.000 --> 0:15:47.360 B Digital Radio, and around the globe the Bloomberg Business 0:15:47.360 --> 0:15:52.000 app and Bloomberg Radio dot Com. This is Bloomberg Daybreak Weekend. 0:15:58.160 --> 0:16:01.520 I'm John Tuckery New York with your love log stories 0:16:01.520 --> 0:16:04.320 for investors in the coming week. The World that Idiot 0:16:04.480 --> 0:16:07.840 and festival happens next week in Amsterdam. For more Land, 0:16:07.880 --> 0:16:12.080 Said to London, bringing Bloomberg Daybreak Europe anchor Caroline Hepger, 0:16:12.320 --> 0:16:16.320 John sawing dollar denominated fuel costs, a chaotic post COVID 0:16:16.360 --> 0:16:20.920 summer travel season, and sustainable aviation. The airline industry certainly 0:16:20.920 --> 0:16:23.400 has some challenges. Jo, what I mean now is Bloomberg 0:16:23.400 --> 0:16:26.400 anchor Guy Johnson, who is off to Amsterdam. Then in 0:16:26.440 --> 0:16:29.400 the coming few days, Well, we hope you're going to 0:16:29.480 --> 0:16:33.640 be off term. What is the biggest issue then in 0:16:33.680 --> 0:16:36.240 your view for the industry? Is it production? Is it 0:16:36.280 --> 0:16:39.000 the passenger fuel costs? What do you think? It's all 0:16:39.040 --> 0:16:41.280 of the current It's all of the above. This is 0:16:41.280 --> 0:16:44.800 an industry that shut down during the pandemic, which was unprecedented. 0:16:44.960 --> 0:16:49.800 It has then had to completely readjust to a summer 0:16:50.160 --> 0:16:53.480 that has been much stronger than anticipated. The capacity has 0:16:53.520 --> 0:16:55.640 not been there. We've all read the stories about the 0:16:55.680 --> 0:16:58.120 chaos that has ensued as a result of that. It 0:16:58.160 --> 0:17:00.960 has been a European problem, it's been a problem over 0:17:01.000 --> 0:17:03.080 in the United States, it's been a problem down in Australia. 0:17:03.200 --> 0:17:06.359 All of the airlines have been suffering from the same issue. 0:17:06.560 --> 0:17:08.480 But then, but the challenge now comes in. As much 0:17:08.520 --> 0:17:12.080 as they've they've ramped up capacity once again to meet 0:17:12.080 --> 0:17:14.560 this demand. But when now we're going into a cost 0:17:14.560 --> 0:17:17.240 of living crisis. A lot of people book their summer 0:17:17.320 --> 0:17:20.680 leisure trips as they came out of the pandemic. Let 0:17:20.680 --> 0:17:23.000 me go anywhere. I don't care where, I just want 0:17:23.040 --> 0:17:26.040 to go on holiday. But now energy prices are rising, 0:17:26.080 --> 0:17:29.159 mortgage costs are rising. Are people going to continue to book? 0:17:29.520 --> 0:17:31.560 And if they're not going to book, will business travel 0:17:31.600 --> 0:17:34.119 make up the game? Yeah? I mean I was really 0:17:34.160 --> 0:17:35.840 just the other day. I don't know whether you've seen 0:17:35.880 --> 0:17:37.800 this the October half term here in the UK where 0:17:37.800 --> 0:17:40.760 people might go and grab some summer son. Apparently airline 0:17:40.880 --> 0:17:44.359 ticket prices have gone up something like for travel to 0:17:44.400 --> 0:17:47.560 places like tenor Reef and elsewhere. Look, you cover all 0:17:47.600 --> 0:17:50.639 the kind of global aviation industry Shindix, what do you 0:17:50.640 --> 0:17:52.880 think the atmosphere is actually going to be like? Then 0:17:52.920 --> 0:17:56.240 sort of paints a picture and really importantly, who are 0:17:56.240 --> 0:17:58.120 you going to be speaking to for blue bo TV 0:17:58.160 --> 0:18:00.399 and radio? I think it's going to be called So 0:18:00.440 --> 0:18:03.720 if you're an airline boss, you are, from a d 0:18:03.880 --> 0:18:06.199 N A point of view, an optimistic person you have 0:18:06.320 --> 0:18:07.959 to be. If you want to run an airline, you 0:18:08.000 --> 0:18:10.400 have got to be an optimistic person. But I would 0:18:10.440 --> 0:18:13.480 say even the most optimistic airline CEO at the moment, 0:18:13.480 --> 0:18:16.840 it's probably feeling fairly cautious. Um, there's a lot going on. 0:18:16.880 --> 0:18:19.720 There's a lot of non unknowns that they have to 0:18:19.800 --> 0:18:22.520 deal with, so so I think there will be certainly 0:18:22.520 --> 0:18:24.960 a note of caution. We're going to be speaking to 0:18:25.840 --> 0:18:27.600 a whole range of carriers from around the world, and 0:18:27.600 --> 0:18:30.440 that's what's great about these things. Airline CEOs are actually 0:18:30.440 --> 0:18:32.760 prepared to get on an airplane and come to these 0:18:32.800 --> 0:18:35.720 kinds of events. So we've got Willie Walsh is going 0:18:35.760 --> 0:18:37.240 to be there. He'll give us the sort of top 0:18:37.280 --> 0:18:39.920 down picture from my art. That's the industry body. We're 0:18:39.920 --> 0:18:44.280 being hosted by the new KLM ceo. UM. There are 0:18:44.280 --> 0:18:46.520 many female CEOs in this industry, so it's great that 0:18:46.560 --> 0:18:49.600 she is. She is kind of hosting this event effectively 0:18:49.640 --> 0:18:51.760 for us. She's just been in the job for a 0:18:51.840 --> 0:18:53.439 hundred days. It's gonna be really interesting to get her 0:18:53.480 --> 0:18:57.240 take Marion Riddler of what is happening with the airline. 0:18:57.560 --> 0:19:00.880 Then we've got some of the big kind of global carriers. 0:19:01.000 --> 0:19:03.200 So Tim Clark is going to be there from Emirates, 0:19:03.240 --> 0:19:05.800 be injurged to get his take. He has a pretty 0:19:05.800 --> 0:19:09.000 global picture of what is going on quantas is CEO 0:19:09.080 --> 0:19:11.480 Alan Joyce is going to be there, so you're getting 0:19:11.520 --> 0:19:15.280 you're getting the kind of the whole range um and 0:19:15.320 --> 0:19:17.560 I think actually I'm quite curious to hear from from 0:19:17.720 --> 0:19:20.280 some of the long haul carriers because you mentioned tenn 0:19:20.280 --> 0:19:24.080 a Reef. I think that's quite interesting. People are shortening 0:19:24.119 --> 0:19:26.280 the length they're going to be prepared to fly for 0:19:26.400 --> 0:19:28.320 winter sun and it's going to be interesting. You mentioned 0:19:28.359 --> 0:19:30.240 tenner Reef. Tenner Reef has quite a good winter sun. 0:19:30.560 --> 0:19:33.480 But normally people will be going to Australia, they'd be 0:19:33.480 --> 0:19:36.600 going to the Caribbean, they'd be going to quite far 0:19:36.720 --> 0:19:40.200 flung places to reach that wind sun. My understanding is 0:19:40.240 --> 0:19:42.800 that they're going to be flying shorter distances to get 0:19:42.840 --> 0:19:46.000 that little that little rare. There you go. You can 0:19:46.240 --> 0:19:47.840 you can tell that I was looking it up on 0:19:47.920 --> 0:19:50.720 me on the internet, can't you. Well. The October rises 0:19:50.720 --> 0:19:53.280 are looking like look interesting that you mentioned i Ata 0:19:53.320 --> 0:19:55.879 and great stuff. Really excited to hear about all the 0:19:55.920 --> 0:19:57.760 CEOs that you're going to be able to listen to 0:19:57.840 --> 0:20:00.840 on on radio and of course watch on tv UM. 0:20:00.920 --> 0:20:05.040 Iata says that they are optimistic that governments will sign 0:20:05.119 --> 0:20:07.439 up to the target of net zero emissions for the 0:20:07.520 --> 0:20:10.800 sector by twenty fifty. There's a critical meeting coming up 0:20:10.840 --> 0:20:14.480 in Canada de Carbonization, the road to de carbonization for 0:20:14.480 --> 0:20:18.000 these airline industries. It's really challenging, it is. It is 0:20:18.000 --> 0:20:20.040 a huge challenge. It is interesting. Easy Jet has just 0:20:20.200 --> 0:20:23.359 moved away from its offset scheme which didn't work, so 0:20:23.400 --> 0:20:26.120 they're trying all kinds of different things trying to make 0:20:26.160 --> 0:20:28.480 this work. The biggest, the biggest thing that that the 0:20:28.520 --> 0:20:32.040 industry needs from governments is a policy pledge to make 0:20:32.200 --> 0:20:36.480 sustainable aviation fuel in quantities, So that needs that needs 0:20:36.480 --> 0:20:39.840 a tax reset to be able to allow that to happen. 0:20:40.119 --> 0:20:42.760 Joe Biden, just over in the United States has started 0:20:42.760 --> 0:20:44.919 down this down this road. It's going to be intrigued 0:20:44.920 --> 0:20:47.240 to hear from Quantus. They're very keen for the Australian 0:20:47.280 --> 0:20:51.520 government to to actually step in and deliver significant policy 0:20:51.560 --> 0:20:54.080 around this kind of area that will allow the sustainable 0:20:54.119 --> 0:20:56.880 aviation industry to grow. Guy, thanks so much for being 0:20:56.920 --> 0:20:58.640 with us, Wishing you all the best of luck. Will 0:20:58.640 --> 0:21:00.320 be tuning in of course to get all of those 0:21:00.320 --> 0:21:04.520 CEO interviews from the World Aviation Festival that takes place 0:21:04.560 --> 0:21:06.800 in the coming days in Amsterdam. Thanks so much to 0:21:06.880 --> 0:21:09.440 Guy Johnson. I'm Caroline Hedge in London. You can catch 0:21:09.480 --> 0:21:12.560 us every weekday morning for Bloomberg Daybreak, beginning at six 0:21:12.600 --> 0:21:16.000 am in London. That's what I am on More Street, John, Caroline, 0:21:16.000 --> 0:21:19.359 thanks a lot. Just ahead on Bloomberg Daybreak Weekend, watch 0:21:19.440 --> 0:21:22.520 for more mud slinging as the mid term elections near. 0:21:22.800 --> 0:21:31.800 I'm John Tucker, and this is Bloomberg. This is Bloomberg 0:21:31.840 --> 0:21:34.439 Daybreak Weekend Global, looking ahead of the top stories for 0:21:34.520 --> 0:21:37.640 investors in the coming week. I'm John Tucker in New York. 0:21:38.000 --> 0:21:40.480 The mid term election season shifting in the high gear 0:21:40.520 --> 0:21:44.560 this coming week, with the November eighth elections getting closer evermore. 0:21:44.720 --> 0:21:48.000 Let's head to our Bloomberg ninety one newsroom in Washington 0:21:48.160 --> 0:21:51.280 and Amy Morris, Thank you, John. President Biden has been 0:21:51.359 --> 0:21:54.399 ramping up the rhetoric as the mid terms near, and 0:21:54.600 --> 0:21:57.560 he steps up the campaign appearances and other public speeches. 0:21:57.880 --> 0:21:59.680 You can't claim to be a party of law in 0:21:59.840 --> 0:22:02.600 or and call the people to attack the police in 0:22:02.720 --> 0:22:07.080 January six patriots. Now, as President Biden and other Democrats 0:22:07.119 --> 0:22:10.439 continue to try to use issues surrounding January six to 0:22:10.520 --> 0:22:13.479 their advantage. Republicans are trying to use a lot of 0:22:13.480 --> 0:22:16.760 hot button issues as well to their advantage. One of 0:22:16.800 --> 0:22:18.880 the issues they may try to turn to their political 0:22:18.920 --> 0:22:22.399 advantage the January six riots, including some people who are 0:22:22.440 --> 0:22:25.960 actually there. We talk about this now, Bloomberg political reporter 0:22:26.359 --> 0:22:29.680