1 00:00:01,840 --> 00:00:04,120 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,160 --> 00:00:06,200 Speaker 1: the top stories in the coming week from our day 3 00:00:06,200 --> 00:00:08,479 Speaker 1: Break anchors all around the world, and straight ahead on 4 00:00:08,520 --> 00:00:12,000 Speaker 1: the program. After a dismal August jobs report, is a 5 00:00:12,000 --> 00:00:14,520 Speaker 1: FED rate cut looking like a sure thing? I'm Tom 6 00:00:14,560 --> 00:00:15,520 Speaker 1: Busby in New York. 7 00:00:15,680 --> 00:00:18,520 Speaker 2: I'm Caroline Headkitt in London, where we're shining a spotlight 8 00:00:18,640 --> 00:00:21,239 Speaker 2: on the UK's defense industry ambitions. 9 00:00:21,560 --> 00:00:24,480 Speaker 3: I'm Charlie Pelop with a look at the Chinese economy 10 00:00:24,560 --> 00:00:28,800 Speaker 3: ahead of next week's readings on consumer and producer prices. 11 00:00:29,160 --> 00:00:33,200 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:33,240 --> 00:00:36,920 Speaker 4: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:37,440 --> 00:00:42,559 Speaker 4: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 14 00:00:42,720 --> 00:00:46,240 Speaker 4: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:46,320 --> 00:00:48,560 Speaker 4: dot Com and the Bloomberg Business App. 16 00:00:52,720 --> 00:00:54,520 Speaker 1: Good day to you. I'm Tom Busby, and we begin 17 00:00:54,560 --> 00:00:57,120 Speaker 1: today's program with what a sharp cool down in the 18 00:00:57,200 --> 00:01:00,640 Speaker 1: US labor market last month and some key US inflation 19 00:01:00,760 --> 00:01:03,640 Speaker 1: data out this week will mean for FED policymakers and 20 00:01:03,640 --> 00:01:07,160 Speaker 1: for more. We're joined by Stuart paul Us economists with 21 00:01:07,200 --> 00:01:11,120 Speaker 1: Bloomberg Economics. Well, Stuart, thank you so much for joining us. Now, 22 00:01:11,200 --> 00:01:14,120 Speaker 1: before we talk about the Fed's next move, I really 23 00:01:14,160 --> 00:01:16,039 Speaker 1: want to dissect what we saw on Friday with that 24 00:01:16,120 --> 00:01:19,000 Speaker 1: August jobs report. I mean, what did it mean to you? 25 00:01:20,800 --> 00:01:23,560 Speaker 5: Well, the pace of hiring is just too slow to 26 00:01:23,600 --> 00:01:26,640 Speaker 5: maintain a steady unemployment rate. We heard earlier in the 27 00:01:26,640 --> 00:01:32,280 Speaker 5: week that Minneapolis Fed Branch President Neil Kashkari thinks that 28 00:01:32,360 --> 00:01:34,800 Speaker 5: the break even pace of hiring it's about seventy five 29 00:01:34,880 --> 00:01:39,200 Speaker 5: thousand workers. That's what the consensus was expecting for the month. Alas, 30 00:01:39,240 --> 00:01:43,080 Speaker 5: we only saw about twenty two thousand additional jobs added 31 00:01:43,319 --> 00:01:46,200 Speaker 5: during the month. If you really break it down, most 32 00:01:46,280 --> 00:01:49,360 Speaker 5: of the hiring, most of the net hiring is in 33 00:01:49,720 --> 00:01:57,120 Speaker 5: the lowest skill human facing services industries, things like retail, trade, leisure, 34 00:01:57,120 --> 00:02:00,760 Speaker 5: and hospitality. While there is still higher in things like 35 00:02:00,920 --> 00:02:04,639 Speaker 5: education and healthcare. The pace of hiring in that higher 36 00:02:04,680 --> 00:02:11,000 Speaker 5: skill industry has slowed dramatically, and with that, with slowing 37 00:02:11,080 --> 00:02:15,120 Speaker 5: in demand for workers, we've also seen essentially a slowing 38 00:02:15,160 --> 00:02:18,720 Speaker 5: in income growth. By our estimates, income growth in the 39 00:02:18,720 --> 00:02:21,480 Speaker 5: month of August right now is looking like it's going 40 00:02:21,560 --> 00:02:24,760 Speaker 5: to register just a touch above zero point three percent. 41 00:02:25,760 --> 00:02:30,200 Speaker 5: And when that's the case, the outlook for consumer spending 42 00:02:30,840 --> 00:02:33,560 Speaker 5: starts materially softening. We had a pretty good July, it 43 00:02:33,560 --> 00:02:35,520 Speaker 5: looks like August might be a little bit slower. 44 00:02:36,040 --> 00:02:39,880 Speaker 1: And let's talk about that shocker from June, that revision 45 00:02:39,960 --> 00:02:43,400 Speaker 1: showing a contraction thirteen thousand job losses. 46 00:02:44,800 --> 00:02:48,239 Speaker 5: That's right. It seems like revisions have been one of 47 00:02:48,240 --> 00:02:52,000 Speaker 5: the more interesting factors with each of these payroll releases. 48 00:02:52,040 --> 00:02:54,720 Speaker 5: You'll remember in July it was also the revisions that 49 00:02:54,760 --> 00:02:59,840 Speaker 5: were so shocking. Yeah, what's really what's really most relevant 50 00:03:00,040 --> 00:03:04,160 Speaker 5: where the FED is that their understanding of the labor 51 00:03:04,200 --> 00:03:10,200 Speaker 5: market is now updating, and as they get these revisions, 52 00:03:10,600 --> 00:03:15,840 Speaker 5: the resilience of the labor market that they believe was 53 00:03:15,880 --> 00:03:21,240 Speaker 5: so profound seems to be dissipating. What they thought was 54 00:03:21,240 --> 00:03:24,440 Speaker 5: a strong labor market is actually being revealed upon revision 55 00:03:24,480 --> 00:03:27,440 Speaker 5: to be a relatively weak labor market. We've seen all 56 00:03:27,480 --> 00:03:31,960 Speaker 5: these alternative data sets pointing to cooling hiring, slowing labor demand. 57 00:03:32,320 --> 00:03:35,680 Speaker 5: It seems like finally the official statistics are catching up 58 00:03:35,680 --> 00:03:35,960 Speaker 5: to it. 59 00:03:36,560 --> 00:03:36,720 Speaker 3: Now. 60 00:03:36,720 --> 00:03:40,600 Speaker 1: Do you see any indication that the Trump crackdown on 61 00:03:40,680 --> 00:03:45,280 Speaker 1: immigration and deportations may have played a role, especially in construction, 62 00:03:45,400 --> 00:03:47,880 Speaker 1: which saw a pretty sizable decline in jobs. 63 00:03:48,960 --> 00:03:52,520 Speaker 5: It's possible. It's really difficult to go from the more 64 00:03:52,680 --> 00:03:56,120 Speaker 5: human element, things that we would capture in the household survey, 65 00:03:56,240 --> 00:03:59,560 Speaker 5: things like the composition of the workforce, and then map 66 00:03:59,640 --> 00:04:02,480 Speaker 5: that to pay roll. So, for example, yes, as you 67 00:04:02,560 --> 00:04:07,520 Speaker 5: mentioned weak hiring and construction, but there was relatively strong 68 00:04:07,600 --> 00:04:11,800 Speaker 5: hiring in leisure and hospitality, which one also might think 69 00:04:11,960 --> 00:04:18,120 Speaker 5: has a relatively high representation of immigrant workers. So it's 70 00:04:18,200 --> 00:04:21,960 Speaker 5: difficult to fully map the consequences of the inflation of 71 00:04:22,000 --> 00:04:27,000 Speaker 5: the immigration crackdown. What is clearer, though, is that the 72 00:04:27,040 --> 00:04:30,360 Speaker 5: break even pace of hiring needed to maintain a steady 73 00:04:30,400 --> 00:04:34,159 Speaker 5: unemployment rate is now lower than previously believed. It was 74 00:04:34,240 --> 00:04:36,960 Speaker 5: thought that the break even pace of hiring needed to 75 00:04:37,000 --> 00:04:40,599 Speaker 5: maintain steady unemployment was a bit over one hundred thousand. 76 00:04:40,600 --> 00:04:43,080 Speaker 5: Now it looks like it's you know, seventy five thousand 77 00:04:43,160 --> 00:04:47,159 Speaker 5: workers per month or lower. And again we're now running 78 00:04:47,560 --> 00:04:50,360 Speaker 5: just about one third that pace right now. And that's 79 00:04:50,360 --> 00:04:52,160 Speaker 5: why we saw the uptick and the unemployment rate. 80 00:04:52,600 --> 00:04:56,560 Speaker 1: Wow, and the unemployment rate though four point three percent historically, Yes, 81 00:04:56,600 --> 00:04:59,800 Speaker 1: it went up, but historically not a something to get 82 00:05:00,200 --> 00:05:03,119 Speaker 1: scared about. But I guess the question is what does 83 00:05:03,200 --> 00:05:07,040 Speaker 1: all this mean for the FED? I mean, we're about 84 00:05:07,080 --> 00:05:10,400 Speaker 1: ten days away from another meeting. We've seen the signals 85 00:05:10,440 --> 00:05:14,120 Speaker 1: from Jackson hole from Chairman Powell. Is a twenty five 86 00:05:14,120 --> 00:05:16,520 Speaker 1: basis point rate cut baked in at this point. 87 00:05:18,040 --> 00:05:21,000 Speaker 5: I think a twenty five basis point rate cut is 88 00:05:21,560 --> 00:05:26,760 Speaker 5: almost a certainty at this point. As you say, a 89 00:05:27,120 --> 00:05:31,160 Speaker 5: four point three percent unemployment rate is not exactly high, 90 00:05:31,320 --> 00:05:34,880 Speaker 5: and so it's difficult for the FED to rationalize taking 91 00:05:34,920 --> 00:05:39,119 Speaker 5: the elevator down on rates and cutting rates by fifty 92 00:05:39,120 --> 00:05:41,960 Speaker 5: basis points or more. That's going to be very difficult 93 00:05:41,960 --> 00:05:44,680 Speaker 5: to rationalize with a four point three percent unemployment rate. 94 00:05:44,960 --> 00:05:48,279 Speaker 5: But still, when the FED is expecting to end the 95 00:05:48,400 --> 00:05:52,880 Speaker 5: year around four point three to four point four percent unemployment, 96 00:05:53,360 --> 00:05:57,719 Speaker 5: each incremental uptick, including in this August payroll report, is 97 00:05:57,760 --> 00:05:59,760 Speaker 5: going to be enough to get their attention, and for 98 00:05:59,800 --> 00:06:02,320 Speaker 5: that reason, I think we will get that quarter point 99 00:06:02,360 --> 00:06:03,480 Speaker 5: cut in September. 100 00:06:03,720 --> 00:06:06,640 Speaker 1: Oh boy, Well, the August producer price index out Wednesday, 101 00:06:06,680 --> 00:06:09,760 Speaker 1: the consumer price index for August on Thursday, and that 102 00:06:09,800 --> 00:06:12,839 Speaker 1: FED decision on rates just about ten days away our 103 00:06:12,880 --> 00:06:17,120 Speaker 1: thanks to Stuart Paul, Us, economist with Bloomberg Economics. We 104 00:06:17,160 --> 00:06:19,720 Speaker 1: move next to tech giant Apple, which will hold its 105 00:06:19,760 --> 00:06:23,120 Speaker 1: fall product launch this Tuesday, September ninth, where it's expected 106 00:06:23,120 --> 00:06:26,680 Speaker 1: to introduce a new iPhone seventeen lineup, and it comes 107 00:06:26,720 --> 00:06:31,240 Speaker 1: as the company explores using outside AI technology in its products. 108 00:06:31,600 --> 00:06:33,839 Speaker 1: For more on this and all things Apple, were joined 109 00:06:33,839 --> 00:06:39,320 Speaker 1: by Mark German, Bloomberg News Managing editor for Global Consumer Tech. Well, Mark, 110 00:06:39,360 --> 00:06:41,440 Speaker 1: thanks so much for joining us. I want to start 111 00:06:41,480 --> 00:06:44,120 Speaker 1: with all the excitement around this week's product launch, which 112 00:06:44,120 --> 00:06:47,480 Speaker 1: will include an ultra thin version of the iPhone. So 113 00:06:47,600 --> 00:06:49,440 Speaker 1: what do you expect to see this week? 114 00:06:50,120 --> 00:06:53,080 Speaker 6: Yeah, thank you for having me. The iPhone redesign Era 115 00:06:53,720 --> 00:06:58,000 Speaker 6: begins on Tuesday at Apple's next launch event. Right over 116 00:06:58,040 --> 00:07:01,000 Speaker 6: the past half decade or so, the iPhone design really 117 00:07:01,040 --> 00:07:03,880 Speaker 6: hasn't changed much. But over the next three years it's 118 00:07:03,880 --> 00:07:06,800 Speaker 6: going to change significantly. And that starts Tuesday, and you're 119 00:07:06,839 --> 00:07:09,400 Speaker 6: going to see that in two ways. One, they're releasing 120 00:07:09,440 --> 00:07:13,000 Speaker 6: the iPhone seventeen Pro in seventeen Pro Max, and for 121 00:07:13,040 --> 00:07:14,920 Speaker 6: the first time in a while, they're going to be 122 00:07:14,960 --> 00:07:18,560 Speaker 6: redesigning the device. The back is going to look entirely new. 123 00:07:18,760 --> 00:07:21,080 Speaker 6: It's going to have a new wireless charging area on 124 00:07:21,120 --> 00:07:22,960 Speaker 6: the bottom half, and it's going to have a brand 125 00:07:22,960 --> 00:07:25,920 Speaker 6: new camera area, a camera bar, so to speak, on 126 00:07:25,960 --> 00:07:29,400 Speaker 6: the top part, which extends that camera region right now, 127 00:07:29,480 --> 00:07:32,640 Speaker 6: right now, it's in the top left quadrant. Now it's 128 00:07:32,680 --> 00:07:35,400 Speaker 6: going to really take up about the top third of 129 00:07:35,440 --> 00:07:38,080 Speaker 6: the whole phone. And that's going to allow some new 130 00:07:38,120 --> 00:07:42,120 Speaker 6: tricks related to the aperture and optical zoom in some 131 00:07:42,160 --> 00:07:45,040 Speaker 6: such so big improvements to the camera on the seventeen 132 00:07:45,080 --> 00:07:47,960 Speaker 6: Pro and seventeen Pro Max, and it's going to visually 133 00:07:48,400 --> 00:07:50,880 Speaker 6: look different. The other phone is going to be what 134 00:07:50,920 --> 00:07:54,200 Speaker 6: I'm calling the iPhone seventeen Air. This phone is going 135 00:07:54,240 --> 00:07:57,440 Speaker 6: to be about two millimeters thinner than any iPhone sold 136 00:07:57,480 --> 00:08:00,160 Speaker 6: to date. Now two millimeters might not sound a lot 137 00:08:00,400 --> 00:08:03,119 Speaker 6: on paper or when I say it, but in your hand, 138 00:08:03,160 --> 00:08:06,000 Speaker 6: you're going to notice a gigantic difference. And this is 139 00:08:06,040 --> 00:08:08,880 Speaker 6: Apple taking the same strategy as the mac BLAGUEIR that 140 00:08:08,960 --> 00:08:12,960 Speaker 6: it introduced almost twenty years ago. Something that's thinner, lighter, 141 00:08:13,000 --> 00:08:16,320 Speaker 6: and more marketable, but has some drawbacks on key features 142 00:08:16,400 --> 00:08:20,720 Speaker 6: like battery life and in some cases processing power, camera 143 00:08:20,840 --> 00:08:23,239 Speaker 6: and overall performance, so you're going to get some trade offs, 144 00:08:23,360 --> 00:08:25,600 Speaker 6: but it's going to be a really cool looking phone 145 00:08:25,880 --> 00:08:28,080 Speaker 6: and it's probably going to sell far better than the 146 00:08:28,120 --> 00:08:31,280 Speaker 6: prior fourth iPhone models before they had the Mini and 147 00:08:31,320 --> 00:08:34,320 Speaker 6: the Plus phones of the regular variation. This is something 148 00:08:34,360 --> 00:08:37,079 Speaker 6: sandwiched in the middle between the Base and the profone, 149 00:08:37,120 --> 00:08:38,920 Speaker 6: so that's very exciting. 150 00:08:38,640 --> 00:08:41,080 Speaker 1: And any other new devices you expect to see. 151 00:08:42,240 --> 00:08:44,960 Speaker 6: I expect to see new versions of all the Apple 152 00:08:44,960 --> 00:08:48,360 Speaker 6: Watch models, So a pretty significant update to the Apple 153 00:08:48,400 --> 00:08:51,600 Speaker 6: Watch Ultra, theough Ultra three in order to better compete 154 00:08:51,640 --> 00:08:54,760 Speaker 6: with Garmin. That high end sports watch market is something 155 00:08:54,840 --> 00:08:57,360 Speaker 6: that Apple wants to make a big vent into. And 156 00:08:57,400 --> 00:08:59,240 Speaker 6: then you're going to see a minor update to the 157 00:08:59,280 --> 00:09:01,840 Speaker 6: Series eleven Watch last year was more of a significant 158 00:09:01,840 --> 00:09:05,120 Speaker 6: engineering upgrade. And then you're also going to see upgrades 159 00:09:05,120 --> 00:09:08,360 Speaker 6: to the Apple Watch se which is Apple's entry level watch. 160 00:09:08,400 --> 00:09:10,920 Speaker 6: This is something they're trying to position for kids, a 161 00:09:11,080 --> 00:09:14,120 Speaker 6: pre smartphone age. And then we're also likely to see 162 00:09:14,480 --> 00:09:16,280 Speaker 6: upgrades to the AirPods. 163 00:09:16,760 --> 00:09:19,000 Speaker 1: All right, a lot to look forward to. There was 164 00:09:19,040 --> 00:09:21,400 Speaker 1: also some good news for Apple last week now a 165 00:09:21,440 --> 00:09:24,079 Speaker 1: federal judge ruled that Apple can maintain its deal with 166 00:09:24,120 --> 00:09:28,000 Speaker 1: Apple Bit making Google the default search engine on all 167 00:09:28,040 --> 00:09:31,800 Speaker 1: its devices, and that means that's good news for shareholders certainly. 168 00:09:32,120 --> 00:09:34,040 Speaker 1: What kind of money were talking about in that deal. 169 00:09:34,920 --> 00:09:38,079 Speaker 6: Well, Apple is generating north of twenty billion dollars a 170 00:09:38,160 --> 00:09:41,319 Speaker 6: year roughly from this deal. And basically what this is 171 00:09:41,320 --> 00:09:44,360 Speaker 6: is when you make a Google search, Google makes money 172 00:09:44,440 --> 00:09:47,880 Speaker 6: from the advertising or the search placement fees that companies 173 00:09:47,960 --> 00:09:51,240 Speaker 6: pay to have their website result go higher in the 174 00:09:51,280 --> 00:09:54,880 Speaker 6: search results. Right, if you do that on an Apple device, 175 00:09:54,920 --> 00:09:58,840 Speaker 6: an iPhone, an iPad, a math, you name it, Apple 176 00:09:58,880 --> 00:10:01,040 Speaker 6: get to Cut, it's a rev you share deals similar 177 00:10:01,040 --> 00:10:02,959 Speaker 6: to the revenue share deals they have on the App Store. 178 00:10:03,160 --> 00:10:06,000 Speaker 6: In this case it's a little bit more lucrative. Like 179 00:10:06,040 --> 00:10:08,160 Speaker 6: I said, more than twenty billion a year is the 180 00:10:08,240 --> 00:10:08,920 Speaker 6: value here. 181 00:10:09,280 --> 00:10:10,000 Speaker 1: And there was a. 182 00:10:09,920 --> 00:10:14,480 Speaker 6: Real scenario where Apple was going to lose out on 183 00:10:14,520 --> 00:10:17,480 Speaker 6: that deal because the judge was going to prevent Google 184 00:10:17,480 --> 00:10:19,760 Speaker 6: from having default search arrangements, not only with Apple, but 185 00:10:19,840 --> 00:10:22,839 Speaker 6: any companies they had default search arrangements. So this is 186 00:10:23,000 --> 00:10:25,480 Speaker 6: quite significant development not only for Apple and Google, but 187 00:10:25,559 --> 00:10:28,640 Speaker 6: the whole tech industry, which now breathes a sigh of 188 00:10:28,679 --> 00:10:32,920 Speaker 6: relief because the precedent has been set that the current 189 00:10:33,480 --> 00:10:35,440 Speaker 6: government is not breaking up these companies. 190 00:10:35,840 --> 00:10:38,760 Speaker 1: Wow, big, big, Well, I want to pivot to something else, 191 00:10:38,760 --> 00:10:42,960 Speaker 1: the story that you broke Apple's Elvis in Vegas. AI comeback. 192 00:10:43,040 --> 00:10:45,880 Speaker 1: That's what I want to call it. Overhauling. It's Sirie 193 00:10:46,000 --> 00:10:49,920 Speaker 1: Voice Assistant and you know it's worked with Google and 194 00:10:50,640 --> 00:10:54,480 Speaker 1: it's worked with Open Ai. Apple tell me about this 195 00:10:54,600 --> 00:10:57,680 Speaker 1: AI powered web search tool for Siri that they're working 196 00:10:57,720 --> 00:11:00,360 Speaker 1: on right now, who they're working with, and what it 197 00:11:00,440 --> 00:11:01,640 Speaker 1: means to the consumer. 198 00:11:02,640 --> 00:11:05,120 Speaker 6: March, Apple is going to finally overhaul Serrie. This was 199 00:11:05,120 --> 00:11:07,480 Speaker 6: supposed to come out several months ago, but it was delayed. 200 00:11:08,160 --> 00:11:10,439 Speaker 6: At the core of the new series, as I broke, 201 00:11:10,600 --> 00:11:13,600 Speaker 6: is going to be an AI web search tool. So 202 00:11:13,640 --> 00:11:15,839 Speaker 6: this is going to allow people in Siri and other 203 00:11:15,880 --> 00:11:19,600 Speaker 6: parts of iOS and Apple's operating systems to get better 204 00:11:19,720 --> 00:11:22,080 Speaker 6: data from the Internet. You know, Series good at doing 205 00:11:22,120 --> 00:11:24,640 Speaker 6: things on your devices, but it really can't get information 206 00:11:24,720 --> 00:11:27,480 Speaker 6: reliably from the open web, and so this is going 207 00:11:27,559 --> 00:11:30,240 Speaker 6: to do that with what is known as World Knowledge Answers. 208 00:11:30,280 --> 00:11:33,640 Speaker 6: That's the internal code name for this feature. Others call 209 00:11:33,679 --> 00:11:37,200 Speaker 6: it an answer engine internally. So this is a pretty 210 00:11:37,240 --> 00:11:41,640 Speaker 6: significant deal. This is Apple competing with perplexity and search 211 00:11:41,760 --> 00:11:44,760 Speaker 6: on Chat GPT to a large extent rather than competing 212 00:11:44,760 --> 00:11:47,040 Speaker 6: with Google. And in terms of who they're working with 213 00:11:47,080 --> 00:11:49,640 Speaker 6: on this, I've been talking for months that Apple is 214 00:11:49,640 --> 00:11:53,440 Speaker 6: seeking major AI partnerships. They've talked to Open Ai, They've 215 00:11:53,640 --> 00:11:57,640 Speaker 6: went very deep in discussions and negotiations with Anthropic, but 216 00:11:57,800 --> 00:11:59,960 Speaker 6: it sounds like they're going to land with Google. Google 217 00:12:00,200 --> 00:12:03,240 Speaker 6: has created a custom model for Apple to help power Siri, 218 00:12:03,559 --> 00:12:06,640 Speaker 6: to really make serie work more effectively, like a Gemini 219 00:12:06,679 --> 00:12:09,880 Speaker 6: or Chat GPT, And right now all signs are pointing 220 00:12:09,920 --> 00:12:13,480 Speaker 6: towards Apple seriously considering taking this agreement with Google. 221 00:12:13,760 --> 00:12:17,920 Speaker 1: Well. Apple's awe dropping iPhone seventeen launch event is this Tuesday. 222 00:12:17,920 --> 00:12:20,520 Speaker 1: Amid all that talk about AI and our thanks to 223 00:12:20,520 --> 00:12:24,600 Speaker 1: Mark Erman, Bloomberg News Managing editor for Global Consumer Tech 224 00:12:25,120 --> 00:12:27,160 Speaker 1: and coming up on Bloomberg day Break weekend to look 225 00:12:27,160 --> 00:12:29,920 Speaker 1: ahead as the global defense industry is about to gather 226 00:12:29,960 --> 00:12:33,880 Speaker 1: in London for the UK's flagship sector event. I'm Tom Busby, 227 00:12:34,040 --> 00:12:46,800 Speaker 1: and this is Bloomberg. This is Bloomberg Day Break Weekend, 228 00:12:46,880 --> 00:12:49,240 Speaker 1: our global look ahead at the top stories for investors 229 00:12:49,280 --> 00:12:51,800 Speaker 1: in the coming week. I'm Tom Busby in New York 230 00:12:52,280 --> 00:12:54,320 Speaker 1: up later in our program and look at some key 231 00:12:54,480 --> 00:12:58,720 Speaker 1: economic data in China amid lingering questions about tariffs and housing. 232 00:12:58,960 --> 00:13:01,960 Speaker 1: But first, the US defense companies have won some major 233 00:13:02,080 --> 00:13:06,080 Speaker 1: contracts in recent days, including one to build warships for Norway. 234 00:13:06,480 --> 00:13:09,000 Speaker 1: Now this comes as the global defense industry is about 235 00:13:09,040 --> 00:13:12,320 Speaker 1: to gather in London for the UK's Flagship Sector event. 236 00:13:12,400 --> 00:13:16,079 Speaker 1: But as pressure mounts on Britain's fiscal situation, will domestic 237 00:13:16,160 --> 00:13:19,800 Speaker 1: government spending on security be a priority for more? Let's 238 00:13:19,840 --> 00:13:22,320 Speaker 1: go to London and bring in Bloomberg daybreak. Euro banker 239 00:13:22,600 --> 00:13:23,840 Speaker 1: Caroline Hepgar. 240 00:13:24,080 --> 00:13:28,160 Speaker 2: Tom Bae Systems won a high profile ten billion pound 241 00:13:28,200 --> 00:13:32,040 Speaker 2: deal to supply navy frigates to the Norwegians recently, in 242 00:13:32,080 --> 00:13:35,040 Speaker 2: a sign that the UK may be reviving the shipbuilding 243 00:13:35,040 --> 00:13:39,040 Speaker 2: industry at once dominated. And there's reason the world is 244 00:13:39,080 --> 00:13:43,840 Speaker 2: a more uncertain and perhaps dangerous place despite an entrenched 245 00:13:43,840 --> 00:13:47,600 Speaker 2: conflict in Ukraine. Russia's Vladimir Putin has brushed off European 246 00:13:47,640 --> 00:13:52,079 Speaker 2: concerns about a Russian threat to the continent as hysteria. 247 00:13:52,640 --> 00:13:57,600 Speaker 2: And consider China's massive choreographed military parade in the last 248 00:13:57,600 --> 00:14:01,160 Speaker 2: few days that prompted US President Donald to dismiss the 249 00:14:01,240 --> 00:14:06,079 Speaker 2: idea that China would ever quote use their military on us. 250 00:14:07,000 --> 00:14:09,480 Speaker 2: So with that in mind, it seems grimly apt that 251 00:14:09,559 --> 00:14:13,199 Speaker 2: the theme for this year's Defense and Security Equipment International 252 00:14:13,240 --> 00:14:17,800 Speaker 2: Exhibition here in London is preparing the future force. European 253 00:14:17,840 --> 00:14:21,040 Speaker 2: allies have promised to plow billions of euros into domestic 254 00:14:21,120 --> 00:14:25,280 Speaker 2: defense manufacturing. How quickly that happens and what is bought 255 00:14:25,360 --> 00:14:29,600 Speaker 2: is vital. Norway picked the UK as the supplier of 256 00:14:29,680 --> 00:14:33,480 Speaker 2: frigates to help it deter Russian submarines in the High 257 00:14:33,520 --> 00:14:36,760 Speaker 2: North in what is the biggest ever investment in the 258 00:14:36,800 --> 00:14:41,440 Speaker 2: Nordic country's defense history. Here is Norway's Defense Minister tore 259 00:14:41,600 --> 00:14:44,200 Speaker 2: O Sandvik discussing that decision. 260 00:14:44,560 --> 00:14:46,880 Speaker 7: It was a very difficult choice and we had the 261 00:14:47,080 --> 00:14:51,680 Speaker 7: four very good contenders, both the Germany, France, UK and 262 00:14:52,000 --> 00:14:55,960 Speaker 7: the Americans, close allies to Norway all four, but it 263 00:14:56,160 --> 00:14:59,080 Speaker 7: was a decision with a lot of factories. So we 264 00:14:59,160 --> 00:15:03,480 Speaker 7: decided to go were with the Brits because in the 265 00:15:03,600 --> 00:15:05,840 Speaker 7: end it was a lot of factors who decided it. 266 00:15:06,720 --> 00:15:10,600 Speaker 8: So are you worried at all about Norway's navy needing 267 00:15:10,640 --> 00:15:14,640 Speaker 8: the capabilities before twenty thirty which is when deliveries are 268 00:15:14,720 --> 00:15:15,280 Speaker 8: due to start. 269 00:15:16,400 --> 00:15:19,480 Speaker 7: No, we all already have frigates, but we'll want to 270 00:15:19,640 --> 00:15:22,760 Speaker 7: exchansion with the new frigates. So this is completely in 271 00:15:22,760 --> 00:15:26,120 Speaker 7: line with our plans in the long term defense plan. 272 00:15:26,400 --> 00:15:29,880 Speaker 2: That was the Norwegian Defense Minister tore O Sandovic speaking 273 00:15:29,920 --> 00:15:33,560 Speaker 2: that to Blomberg's Francine Laqua. So as the Norway deal 274 00:15:33,560 --> 00:15:36,760 Speaker 2: a flash in the pan or the start of a revival, 275 00:15:37,160 --> 00:15:40,120 Speaker 2: the government here sees defense as a sector ripe to 276 00:15:40,280 --> 00:15:45,160 Speaker 2: drive economic growth. As for Britain's own defense, security experts 277 00:15:45,160 --> 00:15:49,360 Speaker 2: have judge Britain currently incapable of defending itself against a 278 00:15:49,440 --> 00:15:54,440 Speaker 2: ballistic missile attack given a combination of long term under investment, 279 00:15:54,840 --> 00:15:58,760 Speaker 2: botch contracts and poor recruitment. So joining me now to 280 00:15:58,920 --> 00:16:01,880 Speaker 2: discuss all of this, what's happening here in Britain and 281 00:16:01,920 --> 00:16:06,680 Speaker 2: the global contexts Boomberg's Roslyn Matheson and Tony Halpin, who 282 00:16:06,760 --> 00:16:10,640 Speaker 2: leads our team covering the Russian government and economy, Welcome 283 00:16:10,680 --> 00:16:15,200 Speaker 2: to both of you. Thank you, Roz. How acute is 284 00:16:15,320 --> 00:16:19,120 Speaker 2: the security threat in your view facing the UK? Perhaps 285 00:16:19,200 --> 00:16:20,320 Speaker 2: we should start there. 286 00:16:21,040 --> 00:16:23,400 Speaker 9: Well, you were just laying some of it out because 287 00:16:23,640 --> 00:16:26,240 Speaker 9: like a lot of countries. The UK arguably took their 288 00:16:26,240 --> 00:16:28,360 Speaker 9: foot of the gas for many years when it came 289 00:16:28,400 --> 00:16:31,600 Speaker 9: to its own security and spending to keep up with 290 00:16:32,760 --> 00:16:37,200 Speaker 9: security threats, and perhaps a sense of complacency because the UK, 291 00:16:37,320 --> 00:16:41,000 Speaker 9: like others, falls under the NATO umbrella that somehow, you know, 292 00:16:41,080 --> 00:16:45,200 Speaker 9: NATO would magically come to the rescue if needed. And 293 00:16:45,240 --> 00:16:48,200 Speaker 9: there's been a realization across the board on that, particularly 294 00:16:48,240 --> 00:16:50,400 Speaker 9: over the last year or two. I mean, there are 295 00:16:50,440 --> 00:16:53,720 Speaker 9: two wars still going on. There's a war obviously in 296 00:16:53,760 --> 00:16:57,520 Speaker 9: Gaza and the war in Ukraine, and other potential threats 297 00:16:57,600 --> 00:17:01,800 Speaker 9: on the horizon Nonstate act is, particularly cyber attacks. So 298 00:17:01,840 --> 00:17:05,399 Speaker 9: the threat has grown more complex as we go on, 299 00:17:05,680 --> 00:17:08,560 Speaker 9: and really the renewed questionals of a nuclear threat, given 300 00:17:08,600 --> 00:17:12,959 Speaker 9: all the international guard rails, the architecture around nuclear weapons 301 00:17:13,000 --> 00:17:16,479 Speaker 9: seems to be falling apart those understandings about how to 302 00:17:16,520 --> 00:17:20,080 Speaker 9: manage arsenals and behavior. I mean, is there an immediate 303 00:17:20,119 --> 00:17:24,199 Speaker 9: threat to the UK from say Russia. Unlikely, But we 304 00:17:24,320 --> 00:17:29,120 Speaker 9: are an increasingly multipolar, complex world and that's a lot 305 00:17:29,119 --> 00:17:32,000 Speaker 9: for the UK, especially as you were noting, with limited 306 00:17:32,280 --> 00:17:33,640 Speaker 9: air defenses of its own. 307 00:17:33,880 --> 00:17:37,480 Speaker 2: Yeah, Tony, more dangerous world. Perhaps we should think about 308 00:17:37,560 --> 00:17:42,200 Speaker 2: Vladimir Putin the war in Ukraine. Is it going to end? 309 00:17:42,320 --> 00:17:43,399 Speaker 2: What's your view now? 310 00:17:44,840 --> 00:17:46,879 Speaker 10: Well, eventually, of course, you know it will come to 311 00:17:46,920 --> 00:17:50,119 Speaker 10: a conclusion. But I think there's a great deal of concern, 312 00:17:50,520 --> 00:17:53,440 Speaker 10: particularly in Europe, that they don't see a near term 313 00:17:53,480 --> 00:17:55,760 Speaker 10: horizon in which the war does come to an end. 314 00:17:56,000 --> 00:17:57,840 Speaker 10: And even if it did, even if we got to 315 00:17:57,880 --> 00:18:01,960 Speaker 10: a point where the active fighting stopped, that doesn't resolve 316 00:18:02,000 --> 00:18:05,760 Speaker 10: the crisis because you have this enormous front line something 317 00:18:05,840 --> 00:18:08,680 Speaker 10: like a thousand kilometers long in eastern Ukraine, which if 318 00:18:08,680 --> 00:18:11,640 Speaker 10: there is a peace agreement, will require policing that will 319 00:18:11,640 --> 00:18:14,040 Speaker 10: require troops on the ground from other countries to make 320 00:18:14,080 --> 00:18:18,560 Speaker 10: sure that Putin doesn't in fact initiate another conflict. That's 321 00:18:18,600 --> 00:18:21,320 Speaker 10: going to require commitments from Europe, which are very difficult 322 00:18:21,320 --> 00:18:23,560 Speaker 10: at the moment to see the meeting over the long term, 323 00:18:23,600 --> 00:18:26,280 Speaker 10: because it's large numbers of troops, it's large numbers of 324 00:18:26,280 --> 00:18:29,280 Speaker 10: military commitments, and it's going to go on for years 325 00:18:29,400 --> 00:18:33,280 Speaker 10: unless tensions abate somehow, And it's difficult to see how 326 00:18:33,320 --> 00:18:37,720 Speaker 10: tensions do abate when Vladimir Putin's in the Kremlin and 327 00:18:38,080 --> 00:18:41,600 Speaker 10: they basically have ripped up relations with Europe. So even 328 00:18:41,640 --> 00:18:44,640 Speaker 10: if the fighting stops, which is a big question mark 329 00:18:44,680 --> 00:18:48,800 Speaker 10: at this point, Once that happens, the crisis continues for 330 00:18:48,880 --> 00:18:50,120 Speaker 10: years and potentially decades. 331 00:18:50,480 --> 00:18:51,200 Speaker 5: Wow. 332 00:18:51,960 --> 00:18:55,240 Speaker 2: In terms of the UK, to what extent is defense 333 00:18:55,240 --> 00:18:57,880 Speaker 2: spending then for the British government of priority? I mean, 334 00:18:57,880 --> 00:18:59,920 Speaker 2: we know that they've talked about it a great deal 335 00:19:00,160 --> 00:19:03,359 Speaker 2: Defense Minister John Healey, the Prime Minister, the new NATA 336 00:19:03,480 --> 00:19:06,960 Speaker 2: defense spending commitments. But it's a difficult time fiscally for 337 00:19:07,000 --> 00:19:08,920 Speaker 2: Britain too well. 338 00:19:08,960 --> 00:19:11,439 Speaker 9: It is min Kirs Starmer, the Prime Minister. Back at 339 00:19:11,480 --> 00:19:13,760 Speaker 9: the time of the NATO summer he said the first 340 00:19:13,880 --> 00:19:16,240 Speaker 9: duty for prime minister is to keep the country safe 341 00:19:16,280 --> 00:19:19,639 Speaker 9: and that sits above all other duties. And so you 342 00:19:19,680 --> 00:19:22,880 Speaker 9: know it is a priority for the government. We've got 343 00:19:22,880 --> 00:19:24,719 Speaker 9: the recent news that the UK is going to buy 344 00:19:24,800 --> 00:19:27,440 Speaker 9: at least a dozen new US made F thirty five 345 00:19:27,480 --> 00:19:30,119 Speaker 9: fighter jets, for example. It is part of the NATO 346 00:19:30,200 --> 00:19:34,920 Speaker 9: pledge to increase spending on defense as a proportion of GDP. 347 00:19:35,119 --> 00:19:36,800 Speaker 9: It's going to have to commit to getting there. The 348 00:19:36,880 --> 00:19:39,360 Speaker 9: question is like, at what point does it get there? 349 00:19:39,400 --> 00:19:41,560 Speaker 9: Is it closer to twenty thirty five? 350 00:19:42,280 --> 00:19:43,760 Speaker 11: But the but the big bart. 351 00:19:43,600 --> 00:19:46,320 Speaker 9: As you were saying, is Chancellor Rachel Reeves has some 352 00:19:46,560 --> 00:19:50,199 Speaker 9: very delicate fiscal waters to navigate, and she's got her 353 00:19:50,240 --> 00:19:53,480 Speaker 9: budget in late November. There's a lot of chatter that 354 00:19:53,520 --> 00:19:56,239 Speaker 9: she will need to raise taxes or cut spending. I mean, 355 00:19:56,280 --> 00:19:59,960 Speaker 9: some estimates are up to what fifty one billion power 356 00:20:00,400 --> 00:20:04,160 Speaker 9: to fill a hole in public finances. And so where 357 00:20:04,160 --> 00:20:06,080 Speaker 9: do you find that money? How can you show that 358 00:20:06,080 --> 00:20:10,040 Speaker 9: you're still spending money towards defense in those environments? And 359 00:20:10,080 --> 00:20:13,320 Speaker 9: do you face potentially a backlash at home if you're 360 00:20:13,359 --> 00:20:16,440 Speaker 9: cutting welfare in order to devot money into into defense spending. 361 00:20:16,960 --> 00:20:18,720 Speaker 2: And yet the UK has been at the forefront of 362 00:20:18,760 --> 00:20:21,240 Speaker 2: trying to support Ukraine, being at the heart of the 363 00:20:21,280 --> 00:20:26,600 Speaker 2: so called Coalition of the willing Tony. President Putin doesn't 364 00:20:26,640 --> 00:20:30,480 Speaker 2: obviously want NATO troops in Ukraine. I mean, how likely 365 00:20:30,640 --> 00:20:33,080 Speaker 2: do you think that might be? 366 00:20:34,960 --> 00:20:36,639 Speaker 10: Well, this is one of the big un answered questions 367 00:20:36,680 --> 00:20:39,399 Speaker 10: I think the Russia says consistently. Putin says that he 368 00:20:39,440 --> 00:20:44,280 Speaker 10: will not tolerate the presence of NATO countries' troops in Ukraine. 369 00:20:44,280 --> 00:20:46,560 Speaker 10: They've said all on that they can't allow Ukraine into NATO, 370 00:20:46,640 --> 00:20:49,560 Speaker 10: But they don't even want NATO troops present in Ukraine. 371 00:20:50,160 --> 00:20:52,880 Speaker 10: Given that the Coalition of the Willing is basically comprised 372 00:20:52,880 --> 00:20:55,760 Speaker 10: of countries that are in NATO, it's very difficult to 373 00:20:55,800 --> 00:20:59,320 Speaker 10: see how square that circle. Ukraine, of course, is very 374 00:20:59,359 --> 00:21:02,920 Speaker 10: concerned to sure that it has security guarantees that mean 375 00:21:03,000 --> 00:21:05,200 Speaker 10: something and aren't just on paper, So they will want 376 00:21:05,240 --> 00:21:08,760 Speaker 10: to know very concrete answers to very concrete questions. Who 377 00:21:08,880 --> 00:21:11,359 Speaker 10: comes if the war starts again, what do they sayd 378 00:21:11,560 --> 00:21:14,080 Speaker 10: when do they send it? How can we expect to 379 00:21:14,119 --> 00:21:18,320 Speaker 10: defend ourselves in these different scenarios? And at the moment 380 00:21:19,000 --> 00:21:21,800 Speaker 10: the Coalition of the Willing isn't really sketching out the 381 00:21:21,840 --> 00:21:25,600 Speaker 10: answers to that question that would allow them then to say, okay, well, 382 00:21:25,640 --> 00:21:28,160 Speaker 10: we feel fairly secure in the event that the war 383 00:21:28,200 --> 00:21:31,560 Speaker 10: stops and Putin continues to present a threat to us. 384 00:21:32,440 --> 00:21:39,320 Speaker 2: Meanwhile, the uses of technology within Ukraine are being rapidly 385 00:21:39,359 --> 00:21:43,119 Speaker 2: integrated within the defense space across Europe and here in 386 00:21:43,160 --> 00:21:45,359 Speaker 2: the UK. In the next few days we're highly likely 387 00:21:45,400 --> 00:21:48,439 Speaker 2: to see a lot of that. In terms of the 388 00:21:48,480 --> 00:21:51,640 Speaker 2: frigate deal for the UK and that ten billion pounds 389 00:21:51,640 --> 00:21:55,240 Speaker 2: that I mentioned, the idea of reviving ship building in Britain. 390 00:21:55,240 --> 00:21:58,600 Speaker 2: It does look like the Nordics are looking to the UK. 391 00:21:58,680 --> 00:22:01,159 Speaker 2: And there was also big question mark about that wasn't there. 392 00:22:01,160 --> 00:22:05,320 Speaker 2: It was about actually whether Britain this defense spending sort 393 00:22:05,359 --> 00:22:09,080 Speaker 2: of gosh that we're expecting was going to come to Britain. 394 00:22:09,520 --> 00:22:11,720 Speaker 9: And the UK did beat out other countries, you know, 395 00:22:11,760 --> 00:22:13,800 Speaker 9: it was looking like France, Germany and the US. We're 396 00:22:13,840 --> 00:22:17,320 Speaker 9: also competing for that. For the Norway frigate deal, and 397 00:22:17,359 --> 00:22:21,120 Speaker 9: a big selling point for the UK was that interoperability 398 00:22:21,600 --> 00:22:24,479 Speaker 9: of their vessels, right, which is they work well together, 399 00:22:24,640 --> 00:22:27,720 Speaker 9: that's much more efficient, it reduces costs, and that's increasingly 400 00:22:27,760 --> 00:22:30,040 Speaker 9: something that's going to be on the table with defense 401 00:22:30,119 --> 00:22:32,080 Speaker 9: deals and that's possibly a selling point for the UK. 402 00:22:32,280 --> 00:22:35,520 Speaker 9: KIT that talks to kit and systems and equipment that 403 00:22:35,640 --> 00:22:38,359 Speaker 9: work together, and a lot of that is what can BAE, 404 00:22:38,880 --> 00:22:41,320 Speaker 9: for example, get out of the pie right The frigate 405 00:22:41,359 --> 00:22:45,640 Speaker 9: steel will create some jobs in Glasgow. Interestingly, BAE Systems 406 00:22:45,680 --> 00:22:49,440 Speaker 9: recently raised its earnings outlook for the for the full 407 00:22:49,520 --> 00:22:52,640 Speaker 9: year and it talked about being positioned particularly to contribute 408 00:22:52,920 --> 00:22:56,560 Speaker 9: to the US Golden Dome homeland defense projects. So certainly, 409 00:22:57,040 --> 00:23:00,280 Speaker 9: you know BAE is optimistic about what it can get, 410 00:23:00,280 --> 00:23:03,280 Speaker 9: but it's also a lot of competitors for this increasing 411 00:23:03,880 --> 00:23:07,200 Speaker 9: pie in the US is pushing very hard for its 412 00:23:07,240 --> 00:23:09,960 Speaker 9: companies to be involved in to get deals. It's a 413 00:23:09,960 --> 00:23:12,399 Speaker 9: bit of a crowded field and so the UK is 414 00:23:12,400 --> 00:23:14,520 Speaker 9: going to have to show that it's bringing something special 415 00:23:14,640 --> 00:23:16,400 Speaker 9: to these deals in order to keep winning them. 416 00:23:16,960 --> 00:23:21,360 Speaker 2: Tony, what do you think about the European defense spending budgets, commitments, 417 00:23:21,720 --> 00:23:24,440 Speaker 2: what it means for the industry, the speed of developments. 418 00:23:25,280 --> 00:23:27,680 Speaker 10: Yeah, so, I mean it's boom times for defense industries 419 00:23:27,680 --> 00:23:31,560 Speaker 10: across Europe. Of course, because nervous Europeans worried that Trump 420 00:23:31,640 --> 00:23:34,520 Speaker 10: might want to walk away from NATO, committed to enormous 421 00:23:34,520 --> 00:23:38,840 Speaker 10: increases in defense spending in line with his demand to 422 00:23:38,840 --> 00:23:42,600 Speaker 10: spend something like five percent of GDP on defense. But 423 00:23:42,720 --> 00:23:46,280 Speaker 10: one of the lessons from the Ukrainian War is indeed 424 00:23:46,359 --> 00:23:50,600 Speaker 10: that there's this great imbalance between spending on systems that 425 00:23:50,640 --> 00:23:54,480 Speaker 10: countries might be interested in tanks, missiles, warships, you know, 426 00:23:54,480 --> 00:23:58,359 Speaker 10: which costs millions, sometimes hundreds of millions of dollars to build, 427 00:23:59,000 --> 00:24:02,639 Speaker 10: and the effectiveness of those systems on the battlefield. Ukraine 428 00:24:02,680 --> 00:24:06,879 Speaker 10: has been very successful in repelling Russian attacks using drones 429 00:24:06,960 --> 00:24:09,080 Speaker 10: that you can take out a two million dollar tank 430 00:24:09,480 --> 00:24:11,840 Speaker 10: with a two hundred dollar drone. So there's a great 431 00:24:11,880 --> 00:24:14,520 Speaker 10: imbalance and effectiveness here, and some of the spending I 432 00:24:14,560 --> 00:24:17,680 Speaker 10: think in these countries isn't yet reflecting the changes on 433 00:24:17,680 --> 00:24:18,919 Speaker 10: the battlefield that we're seeing. 434 00:24:19,400 --> 00:24:23,560 Speaker 2: Okay, let's see whether that is addressed at this industry 435 00:24:23,600 --> 00:24:25,919 Speaker 2: gathering in London in the coming days. My thanks to 436 00:24:26,000 --> 00:24:29,520 Speaker 2: Bloomberg's Chief Asia correspondent rosl In Matheson and to our 437 00:24:29,600 --> 00:24:33,440 Speaker 2: Russia Government and Economy team leader Tony Happin for speaking 438 00:24:33,480 --> 00:24:37,720 Speaker 2: to me looking ahead to the Defense Industry's DSi exhibition 439 00:24:38,080 --> 00:24:40,520 Speaker 2: in London in the next few days. And you can 440 00:24:40,560 --> 00:24:43,960 Speaker 2: find details about new defense industry deals on the Bloomberg 441 00:24:44,040 --> 00:24:47,480 Speaker 2: terminal and our website. I'm Caroline Hepkea in London. You 442 00:24:47,480 --> 00:24:50,439 Speaker 2: can catch us every weekday morning for Bloomberg Daybreak you 443 00:24:50,480 --> 00:24:52,919 Speaker 2: at beginning at six am in London. That's one am 444 00:24:52,960 --> 00:24:53,679 Speaker 2: on Wall Street. 445 00:24:53,840 --> 00:24:57,320 Speaker 1: Tom, Thanks Caroline, and coming up on Bloomberg day Break 446 00:24:57,320 --> 00:24:59,399 Speaker 1: weekend to look ahead to some key economic data in 447 00:24:59,480 --> 00:25:02,440 Speaker 1: China and what it means for the world's second largest economy. 448 00:25:02,800 --> 00:25:17,000 Speaker 1: I'm Tom Busby. And this is Bloomberg. This is Bloomberg 449 00:25:17,040 --> 00:25:19,240 Speaker 1: Day Break weekend, our global look ahead at the top 450 00:25:19,280 --> 00:25:22,200 Speaker 1: stories for investors in the coming week. I'm Tom Busby 451 00:25:22,240 --> 00:25:26,200 Speaker 1: in New York. China's private manufacturing gage just flipped back 452 00:25:26,400 --> 00:25:30,639 Speaker 1: to expansion rating dogs PMI hit fifty point five at August, 453 00:25:30,720 --> 00:25:35,440 Speaker 1: beating all forecasts, but questions linger with tariffs, weak confidence, 454 00:25:35,480 --> 00:25:38,560 Speaker 1: and housing still a drag on the world's second biggest economy. 455 00:25:38,880 --> 00:25:41,920 Speaker 1: For a closer look, let's get to Bloomberg's Charlie Pellett. 456 00:25:42,280 --> 00:25:46,760 Speaker 3: Tom China's economic momentum is weakening after solid growth in 457 00:25:46,840 --> 00:25:49,919 Speaker 3: the first half of the year. Bloomberg Economics says a 458 00:25:50,000 --> 00:25:54,399 Speaker 3: government crackdown on price wars is holding back production, with 459 00:25:54,520 --> 00:25:58,040 Speaker 3: a worsening downturn in the housing market, putting an additional 460 00:25:58,160 --> 00:26:01,840 Speaker 3: drag on activity. So what should we expect when we 461 00:26:01,920 --> 00:26:06,760 Speaker 3: get fresh readings on Chinese consumer and producer prices. We 462 00:26:06,800 --> 00:26:11,159 Speaker 3: bring in Bloomberg Markets Lives strategist Mary Nicola. She is 463 00:26:11,200 --> 00:26:15,040 Speaker 3: in our Singapore radio studio. Mary, thank you so much 464 00:26:15,080 --> 00:26:17,879 Speaker 3: for joining us. The place I'd like to begin with is, 465 00:26:18,080 --> 00:26:21,520 Speaker 3: first of all, your expectations for both headline and core 466 00:26:21,640 --> 00:26:22,960 Speaker 3: CPI next. 467 00:26:22,680 --> 00:26:25,800 Speaker 11: Week so China, I think one of the big things 468 00:26:25,960 --> 00:26:28,919 Speaker 11: is that it's been struggling with is deflation. So I 469 00:26:28,960 --> 00:26:32,119 Speaker 11: think we're going to probably see more of those disinflationary 470 00:26:32,160 --> 00:26:35,720 Speaker 11: pressures coming through because of the fact that we're not 471 00:26:35,880 --> 00:26:40,280 Speaker 11: seeing a particular uptick in consumption. We've seen retail sales 472 00:26:40,359 --> 00:26:44,440 Speaker 11: data from the previous month that was quite weak, so overall, 473 00:26:44,560 --> 00:26:47,560 Speaker 11: it doesn't look like there are any significant price pressures 474 00:26:47,560 --> 00:26:51,919 Speaker 11: really coming through just yet. Obviously there's some upside in 475 00:26:52,000 --> 00:26:54,800 Speaker 11: terms of the initiatives that the government is pulling through 476 00:26:55,000 --> 00:27:00,320 Speaker 11: on the consumption initiatives to stimulate it, but it's still 477 00:27:00,320 --> 00:27:03,040 Speaker 11: in early stages and it's in early days, so I 478 00:27:03,080 --> 00:27:06,000 Speaker 11: think what we're going to see is just more disinflation, 479 00:27:06,119 --> 00:27:09,760 Speaker 11: and that trend is likely to continue, so we'll see 480 00:27:09,800 --> 00:27:10,720 Speaker 11: just more of the same. 481 00:27:10,920 --> 00:27:11,120 Speaker 1: Yeah. 482 00:27:11,200 --> 00:27:15,320 Speaker 3: Specifically, then on PPI, are we looking at less deflation 483 00:27:15,640 --> 00:27:18,280 Speaker 3: or an outright turn into positive territory? 484 00:27:18,960 --> 00:27:21,960 Speaker 11: Oh, it's definitely early days on that one too, because 485 00:27:22,320 --> 00:27:27,199 Speaker 11: we've had consistent and several months of deflation on the 486 00:27:27,240 --> 00:27:31,840 Speaker 11: producer price Index. The government has launched this anti involution campaign, 487 00:27:31,960 --> 00:27:36,720 Speaker 11: which is to try and limit this excessive competition, but 488 00:27:37,080 --> 00:27:41,280 Speaker 11: we still haven't seen a true turnaround there in terms 489 00:27:41,280 --> 00:27:44,640 Speaker 11: of what's coming through in terms we've seen in earnings 490 00:27:44,920 --> 00:27:48,840 Speaker 11: that the competition is really fierce among many of the 491 00:27:49,040 --> 00:27:53,600 Speaker 11: commerce platforms. So in terms of PPI, you're likely still 492 00:27:53,600 --> 00:27:55,720 Speaker 11: to see a deflationary pattern. 493 00:27:56,119 --> 00:28:00,680 Speaker 3: Now, PMI surveys have shown input costs are up, prices 494 00:28:00,760 --> 00:28:03,760 Speaker 3: are capped. How much passed through should we expect from 495 00:28:03,800 --> 00:28:06,000 Speaker 3: factories to consumer prices? 496 00:28:06,600 --> 00:28:08,880 Speaker 11: Well, I think this what we're seeing is the fact 497 00:28:08,960 --> 00:28:13,120 Speaker 11: that consumption is still very tepid, and because of that, 498 00:28:13,280 --> 00:28:16,280 Speaker 11: it looks like there is not as much passed through 499 00:28:16,680 --> 00:28:19,320 Speaker 11: coming through. Retail sales is still weak. 500 00:28:20,000 --> 00:28:20,480 Speaker 6: We have to. 501 00:28:20,440 --> 00:28:23,919 Speaker 11: Remember that that Chinese household is still recovering and trying 502 00:28:23,960 --> 00:28:27,199 Speaker 11: to recover from what is happening in the property sector. 503 00:28:27,240 --> 00:28:31,040 Speaker 11: There's still that property sector malaise. We've seen lots of 504 00:28:31,080 --> 00:28:35,520 Speaker 11: households come back and try to pay back their mortgages 505 00:28:35,920 --> 00:28:38,320 Speaker 11: where they're not taking out as many new loans. We've 506 00:28:38,320 --> 00:28:42,400 Speaker 11: seen that in last month's data, and again we could 507 00:28:42,400 --> 00:28:45,600 Speaker 11: see that in this month's data where that is still 508 00:28:45,720 --> 00:28:49,400 Speaker 11: that trend continues where they're trying to pay back their debts. 509 00:28:49,840 --> 00:28:53,480 Speaker 11: So if we're seeing consumption not pick up and still 510 00:28:53,520 --> 00:28:56,920 Speaker 11: that the policy stimulus hasn't come through. It looks like 511 00:28:57,160 --> 00:29:00,520 Speaker 11: the pass through in terms of getting to the consumer 512 00:29:00,640 --> 00:29:01,880 Speaker 11: is going to remain limited. 513 00:29:02,440 --> 00:29:06,520 Speaker 3: How likely are we to see any indication that energy 514 00:29:06,600 --> 00:29:10,080 Speaker 3: is playing a role in PBIB at oil refined products 515 00:29:10,240 --> 00:29:12,320 Speaker 3: or electricity tariffs. Oh? 516 00:29:12,360 --> 00:29:15,240 Speaker 11: I think more broadly, that's one of the catalysts driving 517 00:29:15,240 --> 00:29:19,520 Speaker 11: inflation lower, not only in China but more broadly throughout Asia. 518 00:29:19,840 --> 00:29:23,640 Speaker 11: So if we look at CPI in countries like Indonesia 519 00:29:23,840 --> 00:29:28,640 Speaker 11: India for example, we're seeing significant declines in inflation. A 520 00:29:28,680 --> 00:29:30,360 Speaker 11: lot of it has to do if we look at 521 00:29:30,440 --> 00:29:33,520 Speaker 11: just how oil prices have declined since the start of 522 00:29:33,560 --> 00:29:38,320 Speaker 11: the year. That has become a clear catalyst for lower 523 00:29:38,360 --> 00:29:41,840 Speaker 11: prices everywhere in the region. And of course if we 524 00:29:41,920 --> 00:29:45,000 Speaker 11: continue to see that trend in oil prices, that's obviously 525 00:29:45,040 --> 00:29:50,920 Speaker 11: going to filter through to headline inflation in Asia and 526 00:29:51,000 --> 00:29:54,680 Speaker 11: of course more broadly globally, from. 527 00:29:54,640 --> 00:29:58,480 Speaker 3: Energy to property weakness. How are rents and housing related 528 00:29:58,520 --> 00:29:59,800 Speaker 3: services feeding. 529 00:29:59,440 --> 00:30:03,000 Speaker 11: Into cp Yeah, that's still going to have downward pressure 530 00:30:03,040 --> 00:30:05,880 Speaker 11: on CPI because we haven't seen a strong rebound in 531 00:30:05,960 --> 00:30:09,680 Speaker 11: house prices and house prices still remain very weak. The 532 00:30:09,760 --> 00:30:13,400 Speaker 11: problem with housing in China is there hasn't been a 533 00:30:13,600 --> 00:30:17,640 Speaker 11: broad based recovery, and there hasn't been a broad based 534 00:30:17,840 --> 00:30:21,959 Speaker 11: package in terms of stimulus to really offset and to 535 00:30:22,120 --> 00:30:25,680 Speaker 11: lift the property market. So what we've seen is consistent 536 00:30:25,720 --> 00:30:29,480 Speaker 11: decline in housing prices. We've seen that property sector malaise 537 00:30:29,640 --> 00:30:33,640 Speaker 11: really stay within the economy, and that's been quite a drag. 538 00:30:33,880 --> 00:30:35,960 Speaker 11: But what the government has tried to do with some 539 00:30:36,040 --> 00:30:38,840 Speaker 11: of its stimulus initiatives is to try and offset this 540 00:30:39,320 --> 00:30:44,920 Speaker 11: property drag by supporting consumption or supporting this AI tech drive, 541 00:30:45,120 --> 00:30:46,920 Speaker 11: which has been one of the key things that has 542 00:30:46,960 --> 00:30:50,080 Speaker 11: been supporting the equity markets, and that's one of the 543 00:30:50,200 --> 00:30:53,400 Speaker 11: drivers that's going to continue where the focus has been 544 00:30:53,600 --> 00:30:58,760 Speaker 11: on bringing China up that value chain and bringing AI 545 00:30:59,200 --> 00:31:02,400 Speaker 11: as a key support for the economy. 546 00:31:02,640 --> 00:31:06,320 Speaker 3: Mary with consumer confidence soft and household savings high as 547 00:31:06,400 --> 00:31:09,040 Speaker 3: demands strong enough to lift services inflation. 548 00:31:09,840 --> 00:31:12,680 Speaker 11: You know, it's interesting because one of the key things 549 00:31:12,680 --> 00:31:15,960 Speaker 11: that the government has been focused on is providing subsidies 550 00:31:16,400 --> 00:31:21,280 Speaker 11: and support for specific services, whether it's childcare or other services. 551 00:31:21,840 --> 00:31:24,600 Speaker 11: But at the same time, we've seen households build their 552 00:31:24,600 --> 00:31:28,560 Speaker 11: reserves and build their ammunition and savings for a rainy 553 00:31:28,600 --> 00:31:30,040 Speaker 11: day and that has a lot to do with what 554 00:31:30,080 --> 00:31:32,840 Speaker 11: we've seen in the property sector. Keep in mind, a 555 00:31:32,840 --> 00:31:36,120 Speaker 11: lot of households in China do put much of their 556 00:31:36,160 --> 00:31:39,440 Speaker 11: savings into houses and much of their investment into houses. 557 00:31:39,720 --> 00:31:42,160 Speaker 11: But we're seeing a shift and that shift is coming 558 00:31:42,200 --> 00:31:46,080 Speaker 11: through in terms of shifting into the equity market. So 559 00:31:46,360 --> 00:31:49,720 Speaker 11: we've seen how bond yields have risen as a result 560 00:31:49,960 --> 00:31:54,280 Speaker 11: of that transition for households from the bond market into 561 00:31:54,320 --> 00:31:58,360 Speaker 11: the equity market. And given that household deposits are near 562 00:31:58,480 --> 00:32:02,120 Speaker 11: record highs, could see that shift continue and that actually 563 00:32:02,120 --> 00:32:05,480 Speaker 11: be supportive for the equity markets. So one of the 564 00:32:05,480 --> 00:32:07,880 Speaker 11: things about the equity markets is if you continue to 565 00:32:07,920 --> 00:32:11,480 Speaker 11: see gains, that could improve overall optimism and that could 566 00:32:11,520 --> 00:32:14,840 Speaker 11: actually help consumption. So it's almost a feed through channel 567 00:32:14,840 --> 00:32:18,320 Speaker 11: from what we see from the equity markets down to consumption, 568 00:32:18,960 --> 00:32:21,440 Speaker 11: and so we could see a pickup in services. But 569 00:32:21,520 --> 00:32:23,640 Speaker 11: still it's still in its early stages. 570 00:32:23,920 --> 00:32:27,640 Speaker 3: I have to ask for Chinese consumers and by implication, 571 00:32:27,720 --> 00:32:32,800 Speaker 3: for the Chinese economy. Certainly, tariffs, weak confidence, housing are 572 00:32:32,840 --> 00:32:36,080 Speaker 3: all headwinds. Of those three, Is there one that's being 573 00:32:36,120 --> 00:32:38,080 Speaker 3: more talked about than any of the others. 574 00:32:38,600 --> 00:32:40,840 Speaker 11: I think for a great deal. It's interesting to see 575 00:32:40,880 --> 00:32:43,920 Speaker 11: tariffs have been largely shrugged off, and that's because of 576 00:32:43,960 --> 00:32:48,400 Speaker 11: the fact that we've seen strong exports. The property sector 577 00:32:48,480 --> 00:32:51,560 Speaker 11: has been something that's been trudging along in the background. 578 00:32:51,840 --> 00:32:54,320 Speaker 11: I think what the key focus is for the markets 579 00:32:54,440 --> 00:32:58,080 Speaker 11: is just on consumers and ensuring that there's a pickup 580 00:32:58,120 --> 00:33:01,240 Speaker 11: in consumption, because at the end of the day, if 581 00:33:01,280 --> 00:33:06,680 Speaker 11: you have exports feeding through and supporting the overall economy 582 00:33:06,960 --> 00:33:10,400 Speaker 11: and investment, especially on the property sector side, declining, you 583 00:33:10,480 --> 00:33:13,600 Speaker 11: still need that consumption channel to come through to help 584 00:33:13,640 --> 00:33:16,600 Speaker 11: support growth, and that's going to be actually the key 585 00:33:16,680 --> 00:33:21,040 Speaker 11: trigger that helps growth into this year and into next year. 586 00:33:21,240 --> 00:33:23,960 Speaker 11: So it really will come down to consumption, and I 587 00:33:23,960 --> 00:33:26,520 Speaker 11: think that's going to be the key focus, whether it's 588 00:33:26,720 --> 00:33:30,640 Speaker 11: retail sales or some of the policy initiatives that the 589 00:33:30,640 --> 00:33:31,840 Speaker 11: government focuses on. 590 00:33:32,400 --> 00:33:37,000 Speaker 3: That's Mary Nikolab Bloomberg m Live strategist in Singapore. Let's 591 00:33:37,040 --> 00:33:39,959 Speaker 3: get some more perspective now. Earlier in the week, we 592 00:33:40,000 --> 00:33:44,880 Speaker 3: heard from Kevin Sneider Apak, ex Japan president at Goldman Sachs. 593 00:33:44,920 --> 00:33:49,160 Speaker 3: He struck an optimistic tone on Chinese equities amid resurgon 594 00:33:49,280 --> 00:33:54,440 Speaker 3: flows Sneader spoke exclusively to Bloomberg's April Hong at Goldman's 595 00:33:54,520 --> 00:33:57,240 Speaker 3: Asia Leaders Conference in Hong Kong. 596 00:33:57,920 --> 00:34:01,600 Speaker 12: So, Kevin, let's start with China, because we're seeing in 597 00:34:01,680 --> 00:34:04,880 Speaker 12: terms of the market performance has really been underpinned by 598 00:34:05,160 --> 00:34:09,319 Speaker 12: liquidity even against the backdrop of these macro risks. What 599 00:34:09,360 --> 00:34:12,160 Speaker 12: are you seeing from global investor fields. 600 00:34:12,719 --> 00:34:15,080 Speaker 8: Well, certainly, as you say, this is a very interesting 601 00:34:15,160 --> 00:34:17,160 Speaker 8: time in terms of the rally that's taking place in 602 00:34:17,239 --> 00:34:20,279 Speaker 8: Chinese equities, this is not an overnight rally. It's worth 603 00:34:20,360 --> 00:34:22,880 Speaker 8: noting that it was a year ago that we saw 604 00:34:22,960 --> 00:34:26,520 Speaker 8: the media conferences and the announcement of various measures, and 605 00:34:26,600 --> 00:34:29,160 Speaker 8: really since then there have been a few milestones along 606 00:34:29,200 --> 00:34:32,000 Speaker 8: the way. The first milestone, of course, was in Hong Kong, 607 00:34:32,000 --> 00:34:34,640 Speaker 8: where we saw the Hong Kong market really move, and 608 00:34:34,680 --> 00:34:38,120 Speaker 8: now we're seeing the onshore market ashare rally taking place. 609 00:34:38,560 --> 00:34:41,520 Speaker 8: And what we're hearing from our clients and investors is 610 00:34:42,160 --> 00:34:46,840 Speaker 8: sentiment has improved. Foreign investors are showing more interest, but 611 00:34:46,920 --> 00:34:49,839 Speaker 8: the positioning changes are yet to come. Most of what 612 00:34:49,880 --> 00:34:53,319 Speaker 8: we're seeing is still domestically oriented, and I think it's 613 00:34:53,320 --> 00:34:56,480 Speaker 8: worth remembering that a big driver of this rally remains 614 00:34:56,480 --> 00:34:59,960 Speaker 8: the retail investor in China, and it's that retail investor 615 00:35:00,360 --> 00:35:03,000 Speaker 8: who's got this excess saving that a lot of people 616 00:35:03,000 --> 00:35:05,279 Speaker 8: are talking about the household savings that are built up 617 00:35:05,760 --> 00:35:08,240 Speaker 8: and they're looking for other options, and the equity markets 618 00:35:08,239 --> 00:35:12,680 Speaker 8: are providing some of that focus. But sentiment has improved 619 00:35:13,160 --> 00:35:16,760 Speaker 8: the first half in China, so are relatively strong GDP growth. 620 00:35:17,160 --> 00:35:19,759 Speaker 8: The second half is likely to be more challenging, so 621 00:35:19,880 --> 00:35:23,680 Speaker 8: we should keep a careful attention to the underpinnings here, 622 00:35:23,760 --> 00:35:27,719 Speaker 8: the fundamentals. China still faces many challenges that this rally 623 00:35:27,719 --> 00:35:29,360 Speaker 8: and the equity markets has. 624 00:35:29,200 --> 00:35:29,880 Speaker 1: Got some legs. 625 00:35:30,480 --> 00:35:33,120 Speaker 12: What are your clients saying about what they want to 626 00:35:33,160 --> 00:35:36,759 Speaker 12: see more of before that positioning comes back, Well, it 627 00:35:36,760 --> 00:35:37,719 Speaker 12: really depends. 628 00:35:37,400 --> 00:35:40,520 Speaker 8: Which clients if from your question you're asking about the 629 00:35:40,560 --> 00:35:44,640 Speaker 8: foreign investor, Clarity and consistency are the key words that 630 00:35:44,719 --> 00:35:48,360 Speaker 8: come to mind, because ultimately there's still a focus in 631 00:35:48,400 --> 00:35:52,200 Speaker 8: some of the headwinds, the demographic headwind deflation and the 632 00:35:52,280 --> 00:35:55,480 Speaker 8: challenges that we're seeing from a combination of over capacity 633 00:35:55,800 --> 00:35:59,360 Speaker 8: and demand limitations. And finally, of course, the backdrop for 634 00:35:59,400 --> 00:36:04,400 Speaker 8: all of this, geopolitics remains and lingers. So progress in 635 00:36:04,440 --> 00:36:09,080 Speaker 8: Each of these is what underpins confidence to ensure the 636 00:36:09,120 --> 00:36:12,520 Speaker 8: foreign investor can return and the flows can move. We 637 00:36:12,600 --> 00:36:14,840 Speaker 8: are seeing some return, though I think it's important to 638 00:36:14,880 --> 00:36:19,279 Speaker 8: acknowledge that hedge fund positioning has improved, but the long onlays, 639 00:36:19,400 --> 00:36:22,160 Speaker 8: the longer term investor. That's going to take a lot 640 00:36:22,200 --> 00:36:24,520 Speaker 8: more clarity and a lot more consistency before we see 641 00:36:24,520 --> 00:36:25,120 Speaker 8: the flows move. 642 00:36:25,280 --> 00:36:28,360 Speaker 12: Has it been a national golment to lowerds bar on 643 00:36:29,040 --> 00:36:33,279 Speaker 12: investing in China as well as you know, build on 644 00:36:33,400 --> 00:36:34,640 Speaker 12: the business that's already here. 645 00:36:34,960 --> 00:36:37,080 Speaker 8: Well, we've been in China for forty years. We have 646 00:36:37,080 --> 00:36:39,319 Speaker 8: a long history here. We are very committed to our 647 00:36:39,360 --> 00:36:42,480 Speaker 8: business here. We've been maintaining the footprint through tough times 648 00:36:42,480 --> 00:36:45,000 Speaker 8: and good times. This is a moment when we see 649 00:36:45,040 --> 00:36:48,160 Speaker 8: certainly opportunity and we continue to look at China with 650 00:36:48,239 --> 00:36:50,600 Speaker 8: a lens that says there are plenty of places where 651 00:36:50,600 --> 00:36:53,920 Speaker 8: our clients need services, need the support that we can provide, 652 00:36:54,080 --> 00:36:55,799 Speaker 8: and we're going to be there for them. And it's 653 00:36:55,840 --> 00:36:58,279 Speaker 8: with that lens, our client lens, that we are very 654 00:36:58,320 --> 00:37:00,680 Speaker 8: focused on the opportunities that we have in We. 655 00:37:00,640 --> 00:37:01,719 Speaker 5: Talked about Hong Kong I. 656 00:37:02,080 --> 00:37:06,200 Speaker 12: We seeing this IPO boom is Goldman looking at expansion 657 00:37:06,280 --> 00:37:07,040 Speaker 12: potentially here. 658 00:37:07,520 --> 00:37:10,040 Speaker 8: Well, this has been a busy type fifty seven so 659 00:37:10,120 --> 00:37:12,640 Speaker 8: far this year, two hundred in the pipeline. There's a 660 00:37:12,680 --> 00:37:16,640 Speaker 8: lot of activity building in Hong Kong, and in that context, 661 00:37:16,640 --> 00:37:19,680 Speaker 8: we're hiring. We certainly are hiring. We continue to look 662 00:37:19,719 --> 00:37:21,840 Speaker 8: at the opportunity to meet the needs of our clients, 663 00:37:22,400 --> 00:37:24,359 Speaker 8: but we'll do it in a thoughtful way because one 664 00:37:24,400 --> 00:37:26,799 Speaker 8: of the things which I'm very focused on and my 665 00:37:26,840 --> 00:37:29,399 Speaker 8: colleagues are very focused on, is making sure that we're 666 00:37:29,400 --> 00:37:32,120 Speaker 8: there for our clients, but we don't get ahead of ourselves. 667 00:37:32,120 --> 00:37:34,960 Speaker 8: And so it's a thoughtful approach that we certainly are hiring. 668 00:37:35,480 --> 00:37:40,280 Speaker 3: Kevin Sneader apac X Japan, President at Goldman Sachs speaking 669 00:37:40,320 --> 00:37:44,359 Speaker 3: with Bloomberg's April Hong and I'm Charlie Pellett, cash us 670 00:37:44,360 --> 00:37:49,360 Speaker 3: weekdays for the Daybreak Asia podcast. It's available wherever you 671 00:37:49,440 --> 00:37:50,520 Speaker 3: get your podcasts. 672 00:37:50,680 --> 00:37:53,919 Speaker 1: Tom, Thanks Charlie, and that does it for this edition 673 00:37:53,960 --> 00:37:56,560 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 674 00:37:56,600 --> 00:37:58,400 Speaker 1: at five am Wall Street Time for the latest on 675 00:37:58,560 --> 00:38:01,359 Speaker 1: markets overseas and the new you need to start your day. 676 00:38:01,840 --> 00:38:04,720 Speaker 1: I'm Tom Busby. Stay with us top stories and global 677 00:38:04,760 --> 00:38:06,879 Speaker 1: business headlines are coming up right now.