1 00:00:03,040 --> 00:00:05,480 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,519 --> 00:00:07,440 Speaker 1: the top stories in the coming week from our day 3 00:00:07,480 --> 00:00:10,280 Speaker 1: Break anchors all around the world. And straight ahead on 4 00:00:10,280 --> 00:00:13,920 Speaker 1: the program, the Fed decides J Powell and Company make 5 00:00:13,960 --> 00:00:17,439 Speaker 1: a key interest rate decision. I'm Tom Busby in New York. 6 00:00:17,800 --> 00:00:20,799 Speaker 2: I'm Kathie Lyons in Washington, where President Biden is preparing 7 00:00:20,800 --> 00:00:23,440 Speaker 2: to head to New York for the UN General as Sunday. 8 00:00:23,800 --> 00:00:26,439 Speaker 3: I'm Caroline Hepga here in London, where we're looking ahead 9 00:00:26,440 --> 00:00:28,720 Speaker 3: to the next Bank of England rate decision. 10 00:00:29,160 --> 00:00:32,280 Speaker 4: I'm Doug Prisner. Inflation in Japan is above target. Now 11 00:00:32,320 --> 00:00:33,720 Speaker 4: it's up to the Bank of Japan. 12 00:00:35,440 --> 00:00:38,720 Speaker 5: That's all straight ahead on Bloomberg day Break Weekend. On 13 00:00:38,880 --> 00:00:41,959 Speaker 5: Bloomberg Eleve them three own New York, Bloomberg ninety nine 14 00:00:42,000 --> 00:00:45,400 Speaker 5: to one, Washington, DC, Bloomberg one O six one, Boston, 15 00:00:45,440 --> 00:00:50,280 Speaker 5: Bloomberg nine sixty, San Francisco, DAB Digital Radio London, Sirius 16 00:00:50,400 --> 00:00:53,640 Speaker 5: XM one nineteen and around the world on Bloomberg Radio 17 00:00:53,720 --> 00:00:56,000 Speaker 5: dot Com and via the Bloomberg Business App. 18 00:01:00,040 --> 00:01:01,800 Speaker 1: Good day to you. I'm Tom Busby, and we begin 19 00:01:01,800 --> 00:01:05,000 Speaker 1: today's program with the Federal Reserve meeting again this week, 20 00:01:05,120 --> 00:01:08,080 Speaker 1: after nearly two months since the last MED decision, in 21 00:01:08,120 --> 00:01:11,760 Speaker 1: which J. Powell and Central bank policymakers raised their benchmark 22 00:01:11,840 --> 00:01:14,920 Speaker 1: lending rate to a twenty two year high. So will 23 00:01:14,959 --> 00:01:17,640 Speaker 1: the Fed hit pause again or is there another rate 24 00:01:17,720 --> 00:01:19,800 Speaker 1: hike in the cards. We'll find out Wednesday and for 25 00:01:19,880 --> 00:01:23,560 Speaker 1: more we're joined by Bloomberg International Economics and Policy correspondent 26 00:01:23,920 --> 00:01:26,880 Speaker 1: Michael McKee. Now, before we take a deeper dive into 27 00:01:26,880 --> 00:01:28,880 Speaker 1: the data, the FED is looking at what are you 28 00:01:29,080 --> 00:01:31,360 Speaker 1: expecting to see from the FOMC this week? 29 00:01:31,920 --> 00:01:34,039 Speaker 6: I think I go with the consensus on Wall Street 30 00:01:34,080 --> 00:01:37,440 Speaker 6: that the Fed will pause. They gave every indication in 31 00:01:37,520 --> 00:01:40,760 Speaker 6: their speeches, those who did speak since the last meeting 32 00:01:41,160 --> 00:01:44,040 Speaker 6: that they are not in a hurry to raise rates again. 33 00:01:44,720 --> 00:01:46,679 Speaker 6: They leave it on the table, but not in a hurry. 34 00:01:46,760 --> 00:01:50,040 Speaker 6: And so they've created a consensus on Wall Street that 35 00:01:50,080 --> 00:01:51,760 Speaker 6: they're not going to do anything and they would be 36 00:01:51,840 --> 00:01:53,520 Speaker 6: loath to surprise investors. 37 00:01:53,760 --> 00:01:56,040 Speaker 1: Let's talk about rates and where they are right now. 38 00:01:56,080 --> 00:01:58,040 Speaker 1: We're at a range of five and a quarter to 39 00:01:58,120 --> 00:02:01,280 Speaker 1: five and a half percent. That's a twenty two year high, right, 40 00:02:01,360 --> 00:02:02,720 Speaker 1: and how high can they go? 41 00:02:03,160 --> 00:02:06,600 Speaker 6: Well, they've only said that they would go one more time, 42 00:02:07,760 --> 00:02:10,320 Speaker 6: and that may change at this meeting, but if they did, 43 00:02:10,440 --> 00:02:12,959 Speaker 6: they'd go up to a range of five and a 44 00:02:13,000 --> 00:02:15,320 Speaker 6: half to five and three quarters percent. But of course, 45 00:02:15,360 --> 00:02:19,360 Speaker 6: if inflation continues to rise and they don't feel like 46 00:02:19,440 --> 00:02:23,040 Speaker 6: they have tight enough to bring it down, they could 47 00:02:23,040 --> 00:02:25,600 Speaker 6: go higher than that. Some people were predicting earlier this 48 00:02:25,680 --> 00:02:28,079 Speaker 6: year that they'd get to six or six and a 49 00:02:28,160 --> 00:02:32,280 Speaker 6: quarter percent. Jim Bullard, who just left the FED after 50 00:02:32,360 --> 00:02:36,960 Speaker 6: that last meeting, had predicted in his June dot plot 51 00:02:37,000 --> 00:02:39,400 Speaker 6: that they'd go to six and a quarter percent. So 52 00:02:39,480 --> 00:02:42,280 Speaker 6: it's very possible that we haven't seen the end of it. 53 00:02:42,280 --> 00:02:44,520 Speaker 6: It will just depend on the progress against inflation. 54 00:02:44,800 --> 00:02:47,320 Speaker 1: We saw some inflation data this past week, some good, 55 00:02:47,400 --> 00:02:49,480 Speaker 1: some of it not so good. Let's talk about what 56 00:02:49,520 --> 00:02:52,520 Speaker 1: happened in August month over month and what was behind 57 00:02:52,560 --> 00:02:53,399 Speaker 1: that big increase. 58 00:02:53,800 --> 00:02:58,960 Speaker 6: Well, the big increase came in the CPI headline numbers, 59 00:03:00,080 --> 00:03:02,160 Speaker 6: so we saw it in the PPI as well, the 60 00:03:02,160 --> 00:03:06,880 Speaker 6: Producer Price Index. The oil prices pushed up, gasoline prices 61 00:03:06,919 --> 00:03:10,720 Speaker 6: that pushed up the headline numbers. Overall, the core went 62 00:03:10,840 --> 00:03:15,120 Speaker 6: down though, particularly for the CPI, and that is what 63 00:03:15,160 --> 00:03:18,120 Speaker 6: the Fed's focused on. Because they know they can't affect 64 00:03:18,280 --> 00:03:19,120 Speaker 6: the oil price. 65 00:03:19,639 --> 00:03:20,120 Speaker 1: They can't. 66 00:03:20,520 --> 00:03:21,960 Speaker 6: They can raise raise all I want, but they're not 67 00:03:21,960 --> 00:03:24,960 Speaker 6: going to bring down the price of gasoline by doing that. 68 00:03:25,480 --> 00:03:27,920 Speaker 6: So they're focused on the core, and the core gave 69 00:03:27,960 --> 00:03:31,480 Speaker 6: them some evidence that they're still making progress. Slow, but 70 00:03:31,560 --> 00:03:32,639 Speaker 6: there is still progress. 71 00:03:32,919 --> 00:03:34,880 Speaker 1: And that core year of a year was the biggest 72 00:03:34,880 --> 00:03:37,920 Speaker 1: decline in two years, so there is progress. 73 00:03:38,080 --> 00:03:40,720 Speaker 6: It's definitely progress, and now they need to keep that going. 74 00:03:41,320 --> 00:03:43,720 Speaker 6: The question is do they need to raise rates further 75 00:03:43,800 --> 00:03:46,160 Speaker 6: to keep the momentum going or are they at a 76 00:03:46,520 --> 00:03:49,720 Speaker 6: tight enough spot now that it already keeps the pressure on. 77 00:03:50,280 --> 00:03:53,120 Speaker 1: Let's go to the labor market. Still strong, initial jobless 78 00:03:53,120 --> 00:03:56,720 Speaker 1: claims edging a little lower, surprising some economists. There's a 79 00:03:56,720 --> 00:03:58,320 Speaker 1: lot of labor strife though. 80 00:03:59,280 --> 00:04:02,480 Speaker 6: There is labor strife now with the United Auto Workers 81 00:04:02,760 --> 00:04:07,240 Speaker 6: out on strike, but you won't really notice that too 82 00:04:07,320 --> 00:04:10,960 Speaker 6: much in the data for a while. The strike began 83 00:04:11,160 --> 00:04:15,720 Speaker 6: during the reference week for the September payrolls report, so 84 00:04:16,040 --> 00:04:19,719 Speaker 6: since the workers were at work for most of that week, 85 00:04:19,960 --> 00:04:23,400 Speaker 6: they won't fall off of the payrolls numbers for September 86 00:04:23,600 --> 00:04:27,119 Speaker 6: if they still on strike in October. Is a good chance, 87 00:04:27,160 --> 00:04:29,120 Speaker 6: then we would see a decline in the number of 88 00:04:29,200 --> 00:04:33,640 Speaker 6: people who are at work in manufacturing. The other aspect 89 00:04:33,680 --> 00:04:36,599 Speaker 6: of it is that if you are on strike, you're 90 00:04:36,640 --> 00:04:41,960 Speaker 6: not eligible for unemployment benefits. Twelve seven hundred workers are 91 00:04:42,000 --> 00:04:44,240 Speaker 6: actually on strike, but there's one hundred and forty six 92 00:04:44,279 --> 00:04:47,760 Speaker 6: thousand United Auto Workers. If other plants are shut down 93 00:04:47,839 --> 00:04:51,640 Speaker 6: because those few workers are out, then all those people 94 00:04:51,920 --> 00:04:56,320 Speaker 6: could file for unemployment benefits and we'll know it's a strike. 95 00:04:56,520 --> 00:04:58,320 Speaker 6: So the FED won't be too upset about it, but 96 00:04:58,360 --> 00:05:00,560 Speaker 6: it'll certainly make it hard to get a read on 97 00:05:00,600 --> 00:05:02,159 Speaker 6: the numbers from the jobless claims. 98 00:05:02,520 --> 00:05:04,640 Speaker 1: On the other hand, the Writers Guild strike it started 99 00:05:04,720 --> 00:05:07,840 Speaker 1: May TEWOD has really ballooned to other industries that are 100 00:05:07,960 --> 00:05:10,480 Speaker 1: sitting idle in Hollywood. You have the sag after strike 101 00:05:10,560 --> 00:05:14,080 Speaker 1: compounding that you see that show up in the unemployment data. 102 00:05:14,200 --> 00:05:18,359 Speaker 6: Yeah, the people who are collateral victims of the strike 103 00:05:19,279 --> 00:05:25,320 Speaker 6: don't get counted as jobs lost. But the strikers are 104 00:05:25,400 --> 00:05:27,839 Speaker 6: only just in the last month or so beginning to 105 00:05:27,920 --> 00:05:31,760 Speaker 6: get counted in terms of number of jobs lost in 106 00:05:31,760 --> 00:05:35,000 Speaker 6: the motion picture industry and things like that because they 107 00:05:35,080 --> 00:05:38,159 Speaker 6: had irregular paychecks. Most of them are freelancers, and so 108 00:05:38,600 --> 00:05:41,080 Speaker 6: they don't get paid in the same way that other 109 00:05:41,120 --> 00:05:44,600 Speaker 6: workers do, so it's harder for the Bureau of Labor Statistics. 110 00:05:44,080 --> 00:05:47,359 Speaker 1: To count them now. Despite inflation still a problem, retail 111 00:05:47,400 --> 00:05:49,960 Speaker 1: spending held up pretty well in August. You talked about 112 00:05:49,960 --> 00:05:52,400 Speaker 1: fuel prices being a big part of that increase, but 113 00:05:52,440 --> 00:05:54,720 Speaker 1: still Americans are spending. 114 00:05:54,839 --> 00:05:58,440 Speaker 6: Americans are spending. Gasoline went up five point two percent, 115 00:05:58,520 --> 00:06:01,280 Speaker 6: a big jump, and that of course means people had 116 00:06:01,400 --> 00:06:05,000 Speaker 6: less to spend on other things, but they spent anyway. 117 00:06:05,400 --> 00:06:08,640 Speaker 6: It really was a sort of traditional back to school 118 00:06:08,680 --> 00:06:11,800 Speaker 6: month of August, as clothing store sales went up by 119 00:06:12,120 --> 00:06:15,720 Speaker 6: nine tenths. We also saw a rise in personal care 120 00:06:15,760 --> 00:06:17,400 Speaker 6: as people went out and got their back to school 121 00:06:17,440 --> 00:06:22,440 Speaker 6: haircuts and things like that. And we saw electronics rise 122 00:06:22,480 --> 00:06:25,560 Speaker 6: people buying computers for their kids to go back to school, 123 00:06:26,839 --> 00:06:31,160 Speaker 6: and calculators and things like that. So it was kind 124 00:06:31,160 --> 00:06:34,839 Speaker 6: of the spending that you would expect for an August, 125 00:06:34,960 --> 00:06:36,800 Speaker 6: which is good news for the fat Now. 126 00:06:36,839 --> 00:06:40,000 Speaker 1: Housing long term mortgage rates still above seven percent at 127 00:06:40,000 --> 00:06:42,880 Speaker 1: a two decade high. Adjustable rates just hit a twelve 128 00:06:42,960 --> 00:06:45,359 Speaker 1: year high. Still a problem in housing. 129 00:06:45,520 --> 00:06:48,720 Speaker 6: It is a problem in housing, particularly for existing home 130 00:06:48,760 --> 00:06:52,440 Speaker 6: sales because so many people, something like forty percent of 131 00:06:52,520 --> 00:06:55,680 Speaker 6: mortgage holders now have mortgages under four percent, and they 132 00:06:55,680 --> 00:06:59,159 Speaker 6: don't want to get a new mortgage that's at seven 133 00:06:59,240 --> 00:07:01,440 Speaker 6: or eight percent, so they're not putting their homes on 134 00:07:01,480 --> 00:07:04,279 Speaker 6: the market, and it's sort of frozen the housing market, 135 00:07:04,279 --> 00:07:07,880 Speaker 6: which then leads to fewer sales of new carpets and 136 00:07:07,960 --> 00:07:10,680 Speaker 6: appliances and things like that. So that's a problem. The 137 00:07:10,680 --> 00:07:13,400 Speaker 6: new home sales market has been booming because it's the 138 00:07:13,440 --> 00:07:15,960 Speaker 6: only place you can get a house these days, and 139 00:07:16,000 --> 00:07:18,400 Speaker 6: a lot of the builders have come up with their 140 00:07:18,440 --> 00:07:21,560 Speaker 6: own financing and they're buying down your mortgage rate so 141 00:07:21,720 --> 00:07:24,960 Speaker 6: you don't have to pay eight percent, you might pay five. 142 00:07:26,320 --> 00:07:27,600 Speaker 6: We don't know if that's going to be enough to 143 00:07:27,680 --> 00:07:29,800 Speaker 6: keep it going, but for right now that's the only 144 00:07:29,840 --> 00:07:30,840 Speaker 6: bright spot in housing. 145 00:07:31,000 --> 00:07:34,440 Speaker 1: According to b Redfin, the average mortgage costs two six 146 00:07:34,480 --> 00:07:37,080 Speaker 1: hundred and thirty two bucks a month. That's the highest ever. 147 00:07:37,640 --> 00:07:40,240 Speaker 1: Not even prices on those houses, but mortgage rates and 148 00:07:40,360 --> 00:07:43,800 Speaker 1: insurance making that change. Car insurance, we know, went up 149 00:07:43,920 --> 00:07:45,840 Speaker 1: nineteen percent in August year over year. 150 00:07:46,160 --> 00:07:49,920 Speaker 6: Well, particularly with cars insurance. Cars have gotten much more 151 00:07:49,920 --> 00:07:54,680 Speaker 6: complex and more expensive to fix. We also saw a 152 00:07:54,720 --> 00:07:57,600 Speaker 6: big rise obviously in used car prices and more used 153 00:07:57,640 --> 00:08:01,320 Speaker 6: cars break down. People were buying used cars because there 154 00:08:01,320 --> 00:08:05,840 Speaker 6: weren't new cars to buy. So for the insurance companies, 155 00:08:05,920 --> 00:08:08,040 Speaker 6: their costs have gone up a lot and they've been 156 00:08:08,120 --> 00:08:10,800 Speaker 6: raising rates to make up for that. 157 00:08:11,080 --> 00:08:13,960 Speaker 1: Now, staying on autos, how do you think a protracted 158 00:08:14,040 --> 00:08:16,520 Speaker 1: job action might impact the economy. 159 00:08:16,800 --> 00:08:21,280 Speaker 6: Well, in the past, we have not seen huge macroeconomic effects. 160 00:08:21,280 --> 00:08:23,040 Speaker 6: You see them for a very short period of time. 161 00:08:23,520 --> 00:08:26,280 Speaker 6: Nineteen ninety eight was a very similar year to what 162 00:08:26,320 --> 00:08:29,239 Speaker 6: we're seeing right now. There was a strike against General Motors, 163 00:08:29,280 --> 00:08:31,760 Speaker 6: but it was called against only two plants and only 164 00:08:31,840 --> 00:08:35,640 Speaker 6: nine two hundred workers went out, but that shut down 165 00:08:35,760 --> 00:08:38,520 Speaker 6: GM around the country, so there were about two hundred 166 00:08:38,559 --> 00:08:41,680 Speaker 6: thousand people who were off work, and you can see 167 00:08:41,760 --> 00:08:45,920 Speaker 6: in the auto manufacturing statistics there's a big drop in 168 00:08:45,960 --> 00:08:49,000 Speaker 6: the third quarter of nineteen ninety eight, and in the 169 00:08:49,080 --> 00:08:51,360 Speaker 6: number of workers there was a big drop in the 170 00:08:51,400 --> 00:08:54,480 Speaker 6: third quarter of nineteen ninety eight. But plot GDP over 171 00:08:54,520 --> 00:08:56,360 Speaker 6: that and you don't see it because as soon as 172 00:08:56,400 --> 00:08:59,520 Speaker 6: the strike's over, the company gets back to producing cars 173 00:08:59,520 --> 00:09:02,480 Speaker 6: as fast as as it can, and Americans are still 174 00:09:02,480 --> 00:09:05,000 Speaker 6: going to be buying cars, and the people who were 175 00:09:05,040 --> 00:09:07,679 Speaker 6: striking get raises and go out and maybe spend a 176 00:09:07,720 --> 00:09:10,920 Speaker 6: little bit more, So you end up with it not 177 00:09:11,080 --> 00:09:14,199 Speaker 6: having a major macro effect. Where you do see it 178 00:09:14,240 --> 00:09:19,000 Speaker 6: is in equities, because it not only affects the automakers 179 00:09:19,400 --> 00:09:22,720 Speaker 6: but the parts makers and their stocks drop, and it 180 00:09:22,920 --> 00:09:28,240 Speaker 6: spreads beyond that raw materials makers steel and rubber. And 181 00:09:28,280 --> 00:09:32,920 Speaker 6: then in nineteen ninety eight, the New York Times saw 182 00:09:33,000 --> 00:09:38,640 Speaker 6: a decline in revenue because automobile advertising was pulled during 183 00:09:38,679 --> 00:09:41,520 Speaker 6: the strike. So if you're looking for an effect, that's 184 00:09:41,520 --> 00:09:43,679 Speaker 6: probably where you're going to see it more than in 185 00:09:43,720 --> 00:09:44,680 Speaker 6: the macroeconomy. 186 00:09:44,720 --> 00:09:48,400 Speaker 1: Well, Michael, thank you. Bloomberg International Economics and Policy correspondent 187 00:09:48,520 --> 00:09:51,439 Speaker 1: Michael McKee. Coming up here on Bloomberg day Break weekend. 188 00:09:51,840 --> 00:09:54,040 Speaker 1: Leaders from around the world gather in New York for 189 00:09:54,080 --> 00:09:57,040 Speaker 1: the United Nations General Assembly meeting. Will tell you what 190 00:09:57,120 --> 00:10:01,040 Speaker 1: to expect next week. I'm Tom Busby and is Bloomberg. 191 00:10:11,160 --> 00:10:13,600 Speaker 1: This is Bloomberg Day Break Weekend, our global look ahead 192 00:10:13,640 --> 00:10:15,720 Speaker 1: at the top stories for investors in the coming week. 193 00:10:16,080 --> 00:10:18,959 Speaker 1: I'm Tom Busby in New York. The United Nations General 194 00:10:19,000 --> 00:10:21,719 Speaker 1: Assembly holds its seventy eighth Annual Session the week of 195 00:10:21,760 --> 00:10:25,280 Speaker 1: September eighteenth, leaders from around the world descending upon New 196 00:10:25,360 --> 00:10:28,760 Speaker 1: York for what's expected to be the most interesting UNNGA 197 00:10:29,040 --> 00:10:32,200 Speaker 1: since before the pandemic, with a focus on Russia's invasion 198 00:10:32,240 --> 00:10:36,440 Speaker 1: of Ukraine, shadowed diplomacy with Iran, and the increasingly tense 199 00:10:36,720 --> 00:10:40,720 Speaker 1: geostrategic divide between the US and China. General Debate begins 200 00:10:40,720 --> 00:10:43,439 Speaker 1: on Tuesday. For more, Let's head to our Bloomberg ninety 201 00:10:43,480 --> 00:10:46,760 Speaker 1: nine one newsroom in Washington and Bloomberg Sound On. Co 202 00:10:46,920 --> 00:10:48,080 Speaker 1: host Kaylee. 203 00:10:47,800 --> 00:10:50,480 Speaker 2: Lines, Yeah, Tom, Well, everyone in New York is bracing 204 00:10:50,559 --> 00:10:54,640 Speaker 2: for heavier traffic associated with the annual UN General Assembly meeting, 205 00:10:54,920 --> 00:10:58,360 Speaker 2: fondly known as UNGA. Washington is watching to see what 206 00:10:58,440 --> 00:11:01,640 Speaker 2: real policy developments could come out of this gathering, and 207 00:11:01,679 --> 00:11:05,120 Speaker 2: Bloomberg TV's very own chief Washington correspondent, Anrie horder And 208 00:11:05,200 --> 00:11:08,000 Speaker 2: will be making the trip up there herself this coming week. 209 00:11:08,360 --> 00:11:11,560 Speaker 2: She joins me now with more of a preview. So Anri, 210 00:11:12,040 --> 00:11:14,959 Speaker 2: let's just talk about what the objective here really is. 211 00:11:15,080 --> 00:11:18,280 Speaker 2: For President Biden, for example, he's gonna make the trip, 212 00:11:18,720 --> 00:11:20,760 Speaker 2: what exactly does he want to achieve? 213 00:11:20,880 --> 00:11:22,760 Speaker 7: I think what you'll see this year, Kaylee, is similar 214 00:11:22,800 --> 00:11:25,560 Speaker 7: to what we saw from President Biden last year. Some 215 00:11:25,600 --> 00:11:28,240 Speaker 7: of these major themes he wants to address in front 216 00:11:28,280 --> 00:11:30,720 Speaker 7: of the international community. One of course, is going to 217 00:11:30,760 --> 00:11:34,720 Speaker 7: be Russia's invasion of Ukraine. He talked about this last year. 218 00:11:34,760 --> 00:11:37,920 Speaker 7: He said it's a war where Russia wants to extinguish 219 00:11:38,080 --> 00:11:40,480 Speaker 7: Ukraine's right to exist. You're going to see him want 220 00:11:40,520 --> 00:11:43,959 Speaker 7: to really continue to ramp up the support in favor 221 00:11:44,120 --> 00:11:49,000 Speaker 7: of Ukraine against Russia at the international community, especially when 222 00:11:49,040 --> 00:11:51,240 Speaker 7: Russia will be in the room, not by President Putin, 223 00:11:51,320 --> 00:11:54,960 Speaker 7: but far Missus Sergei Lavrov will be there. Of course, 224 00:11:55,160 --> 00:11:57,439 Speaker 7: China will be the other elephant in the room. Shijiping 225 00:11:57,640 --> 00:11:59,719 Speaker 7: is also not going to be in attendance. Both those 226 00:11:59,800 --> 00:12:02,520 Speaker 7: leader Putin and she didn't also go to the G twenty. 227 00:12:03,400 --> 00:12:05,640 Speaker 7: But this is a chance for Biden to show that 228 00:12:05,720 --> 00:12:09,200 Speaker 7: the US is in that presence, even those other leaders 229 00:12:09,200 --> 00:12:11,920 Speaker 7: are not going to be there. Once again, I think 230 00:12:11,960 --> 00:12:15,559 Speaker 7: you'll hear from the American President and from any American 231 00:12:15,600 --> 00:12:19,040 Speaker 7: official that's asked about China, they continuously say, it's not 232 00:12:19,440 --> 00:12:22,000 Speaker 7: that we want to have a conflict with China. We 233 00:12:22,040 --> 00:12:24,280 Speaker 7: want to be able to have competition and put guard 234 00:12:24,360 --> 00:12:27,599 Speaker 7: rails around that competition. It's becoming a little bit of 235 00:12:27,640 --> 00:12:30,960 Speaker 7: a joke. But everyone in DC says what they constantly say. 236 00:12:30,960 --> 00:12:35,079 Speaker 7: They're not decoupling, they're risking. If you're able to figure 237 00:12:35,080 --> 00:12:38,000 Speaker 7: out the difference between those two, let me know. And 238 00:12:38,000 --> 00:12:42,000 Speaker 7: then I think the final big point that the President 239 00:12:42,040 --> 00:12:44,720 Speaker 7: may talk about is going to be Iran, because I 240 00:12:44,760 --> 00:12:47,600 Speaker 7: have some reporting that the Iran hostage swap will happen 241 00:12:47,679 --> 00:12:50,679 Speaker 7: as soon as Monday, and that's just before these leaders 242 00:12:50,840 --> 00:12:55,880 Speaker 7: come together. And you have Ibraham Rayisi speaking to NBC 243 00:12:56,080 --> 00:13:00,319 Speaker 7: News before the UN General Assembly saying that this unforen 244 00:13:00,960 --> 00:13:04,079 Speaker 7: fund of six billion dollars that's going to be released 245 00:13:04,080 --> 00:13:06,640 Speaker 7: in exchange for the prisoners, it is Iranian money, but 246 00:13:06,679 --> 00:13:09,600 Speaker 7: it was frozen in South Korea. He's saying that they 247 00:13:09,640 --> 00:13:11,800 Speaker 7: can use it on whatever they need in Iran. The 248 00:13:11,840 --> 00:13:14,520 Speaker 7: administration continues to say that is not true. It's for 249 00:13:14,600 --> 00:13:18,120 Speaker 7: humanitarian purposes only. And imagine, given the fact that's happening 250 00:13:18,480 --> 00:13:21,160 Speaker 7: likely on Monday, the President's going to have to address this. 251 00:13:21,640 --> 00:13:24,280 Speaker 2: Okay, so Iran will be on the agenda for him, 252 00:13:24,320 --> 00:13:27,200 Speaker 2: perhaps an unavoidable subject. But to go back to the 253 00:13:27,280 --> 00:13:31,080 Speaker 2: idea of this also really being about China and Russia. 254 00:13:31,120 --> 00:13:35,080 Speaker 2: How complicated is that considering they are also permanent members 255 00:13:35,080 --> 00:13:37,920 Speaker 2: of the UN Security Council. Does that hinder what can 256 00:13:38,000 --> 00:13:41,199 Speaker 2: actually be achieved it to something like this, well, I think. 257 00:13:41,000 --> 00:13:43,240 Speaker 7: It hinders what the UN has been able to achieve 258 00:13:43,280 --> 00:13:47,439 Speaker 7: at all regarding Russia's invasion of Ukraine. They're members of 259 00:13:47,480 --> 00:13:51,719 Speaker 7: Security Council. The UN hasn't been able to act on 260 00:13:51,800 --> 00:13:54,560 Speaker 7: this war. So while the UN General Assembly offers a 261 00:13:54,600 --> 00:13:56,959 Speaker 7: place for dialogue, there hasn't been a lot of action 262 00:13:57,080 --> 00:14:00,520 Speaker 7: when it comes to that, which is why many people 263 00:14:00,559 --> 00:14:04,920 Speaker 7: say the UN. Many call it obsolete and useless. But 264 00:14:04,960 --> 00:14:06,920 Speaker 7: it will be a place for dialogue, but at the 265 00:14:06,960 --> 00:14:11,880 Speaker 7: moment nothing can really happen because you do have Shijipang 266 00:14:11,920 --> 00:14:14,200 Speaker 7: and Russia's hold on the Security Council. 267 00:14:14,640 --> 00:14:16,960 Speaker 2: So you say it's a place for dialogue, and obviously 268 00:14:17,000 --> 00:14:20,640 Speaker 2: that is you know, wider dialogue among the entire General Assembly. 269 00:14:20,720 --> 00:14:23,800 Speaker 2: But also we often see at meetings like this sideline 270 00:14:23,800 --> 00:14:27,760 Speaker 2: meetings between different leaders, and our understanding is President Biden 271 00:14:28,240 --> 00:14:30,560 Speaker 2: maybe having a few of those as well, including with 272 00:14:31,160 --> 00:14:35,320 Speaker 2: reportedly Prime Minister of Israel Benjamin Netanyahu, who has had 273 00:14:35,320 --> 00:14:38,840 Speaker 2: a pretty tense relationship with the President of the US. 274 00:14:38,880 --> 00:14:41,560 Speaker 2: At this point, I would argue, Anne Marie, what do 275 00:14:41,600 --> 00:14:44,640 Speaker 2: we expect out of that meeting? Why have that one. 276 00:14:44,840 --> 00:14:48,560 Speaker 7: So right now? You have not had net Yahoo yes 277 00:14:48,760 --> 00:14:51,360 Speaker 7: yet have this invite to the White House. He and 278 00:14:51,440 --> 00:14:54,200 Speaker 7: Joe Biden go years back. They know each other, They've 279 00:14:54,200 --> 00:14:56,920 Speaker 7: been in this circle for a while. But the issue is, 280 00:14:56,960 --> 00:15:00,240 Speaker 7: of course, the White House has taken aim on a 281 00:15:00,360 --> 00:15:04,040 Speaker 7: number of policies the net Yahoo government has wanted to 282 00:15:04,040 --> 00:15:08,000 Speaker 7: push forward, especially coming from the right wing of his government, 283 00:15:08,440 --> 00:15:12,800 Speaker 7: most notably the judicial overhaul plan. So this is gonna 284 00:15:12,800 --> 00:15:14,520 Speaker 7: be the first time they're seeing each other in person 285 00:15:14,600 --> 00:15:17,560 Speaker 7: since he took office again in December. All eyes are 286 00:15:17,560 --> 00:15:19,840 Speaker 7: going to be on this meeting, not only because these 287 00:15:19,840 --> 00:15:22,200 Speaker 7: two individuals will be meeting and there's been some some 288 00:15:22,240 --> 00:15:24,520 Speaker 7: of that tension you just mentioned, but also the fact 289 00:15:24,560 --> 00:15:28,320 Speaker 7: that this administration is working at the same time to 290 00:15:28,320 --> 00:15:32,160 Speaker 7: try to bring normalization between Saudi Arabia and Israel. They 291 00:15:32,200 --> 00:15:35,000 Speaker 7: were just at the G twenty they did this infrastructure deal, 292 00:15:35,000 --> 00:15:37,080 Speaker 7: which Saudi Arabia is a part of, Israel is also 293 00:15:37,160 --> 00:15:40,800 Speaker 7: tangently a part of, and everyone is trying to see 294 00:15:40,800 --> 00:15:43,440 Speaker 7: if this can actually happen, So this will be an 295 00:15:43,440 --> 00:15:46,720 Speaker 7: interesting pull aside meeting. But it's also interesting that it's 296 00:15:46,760 --> 00:15:49,600 Speaker 7: not a White House meeting. It's happening at Anga. Also, 297 00:15:49,640 --> 00:15:52,200 Speaker 7: apparently net and Yahoo will also be meeting Elon Musk 298 00:15:52,440 --> 00:15:54,960 Speaker 7: next week. He's doing a little bit of a US 299 00:15:54,960 --> 00:15:58,520 Speaker 7: tour that might be just as interesting as the POTUS meeting. 300 00:15:58,760 --> 00:16:01,880 Speaker 2: To go back to what you were talking about earlier, 301 00:16:01,920 --> 00:16:05,240 Speaker 2: with the idea of some kind of normalization happening, you 302 00:16:05,280 --> 00:16:08,280 Speaker 2: of course spoke this past week with Amos Hawkstein of 303 00:16:08,320 --> 00:16:10,040 Speaker 2: the White House and you touched on this a little bit. 304 00:16:10,040 --> 00:16:11,560 Speaker 2: How close realistically are we. 305 00:16:11,920 --> 00:16:14,800 Speaker 7: I think there's some cold water on that, meaning the 306 00:16:14,920 --> 00:16:17,600 Speaker 7: US has been very honest that they would want to 307 00:16:17,600 --> 00:16:20,040 Speaker 7: see that extension really of the Abraham Accords that were 308 00:16:20,040 --> 00:16:23,280 Speaker 7: done to the Trump administration, where you saw a number 309 00:16:23,320 --> 00:16:26,760 Speaker 7: of Gulf countries, notably the UAE, have these normalized ties 310 00:16:26,800 --> 00:16:32,080 Speaker 7: with Israel. Travel started, embassies opened, lots of commercial ties 311 00:16:32,760 --> 00:16:36,160 Speaker 7: came to fruition after that. But they're just not there yet. 312 00:16:36,200 --> 00:16:39,480 Speaker 7: There's a number of steps that have to happen, but 313 00:16:40,560 --> 00:16:42,800 Speaker 7: it's still on the table, and it's something that could happen. 314 00:16:43,120 --> 00:16:46,880 Speaker 7: I just think you know, potentially we're a little over 315 00:16:46,880 --> 00:16:49,000 Speaker 7: our skis if we think that might happen at this 316 00:16:49,160 --> 00:16:51,440 Speaker 7: U and General Assembly or before the year is up. 317 00:16:51,560 --> 00:16:53,640 Speaker 7: I think that a lot of work needs to still 318 00:16:54,000 --> 00:16:56,000 Speaker 7: be deciphered through, and then they really need to make 319 00:16:56,040 --> 00:16:58,120 Speaker 7: sure they're selling it to their constituents. 320 00:16:58,480 --> 00:17:00,720 Speaker 2: So when we're talking about selling thing, and this goes 321 00:17:00,760 --> 00:17:03,240 Speaker 2: back to the Ukraine issue, which you said is going 322 00:17:03,280 --> 00:17:05,439 Speaker 2: to be high on the agenda for Biden, I just 323 00:17:05,520 --> 00:17:07,879 Speaker 2: wonder how much harder that job is in a body 324 00:17:08,000 --> 00:17:11,040 Speaker 2: like this one full of those who come from different 325 00:17:11,040 --> 00:17:13,080 Speaker 2: countries and are looking in on the US and the 326 00:17:13,080 --> 00:17:17,280 Speaker 2: conversation happening here in Washington on Capitol Hill around continued 327 00:17:17,280 --> 00:17:20,360 Speaker 2: funding for Ukraine, and what that does to the President's 328 00:17:20,400 --> 00:17:22,320 Speaker 2: position is he's trying to make the case that other 329 00:17:22,359 --> 00:17:25,879 Speaker 2: countries should be still engaging, still funding, still trying to 330 00:17:25,880 --> 00:17:28,320 Speaker 2: support the war, when it's clear that not everyone here 331 00:17:28,320 --> 00:17:29,639 Speaker 2: in Washington is with him on that. 332 00:17:30,320 --> 00:17:32,320 Speaker 7: It's going to be challenging for the President because he's 333 00:17:32,359 --> 00:17:34,000 Speaker 7: going to want to come to the podium and he's 334 00:17:34,040 --> 00:17:37,640 Speaker 7: going to want to be so forthright about America's stance 335 00:17:37,840 --> 00:17:40,919 Speaker 7: in supporting Ukraine. At the same time, he will be 336 00:17:41,520 --> 00:17:44,679 Speaker 7: in New York City at the UN giving this speech. 337 00:17:44,760 --> 00:17:47,840 Speaker 7: There's going to be debates behind Congress closed doors whether 338 00:17:47,960 --> 00:17:50,600 Speaker 7: or not they're going to sign off on his request 339 00:17:50,640 --> 00:17:54,359 Speaker 7: and that supplemental funding request for aid for Ukraine. It 340 00:17:54,359 --> 00:17:56,520 Speaker 7: does look like the Senate wants to go forward with that, 341 00:17:57,040 --> 00:17:59,800 Speaker 7: but in the House it's really anyone's guest on how 342 00:18:00,119 --> 00:18:03,280 Speaker 7: it gets done. Does McCarthy have to remove it from 343 00:18:03,320 --> 00:18:06,040 Speaker 7: the supplemental put it with maybe border concerns to make 344 00:18:06,040 --> 00:18:09,040 Speaker 7: sure the hard right flank of his party joins in 345 00:18:09,440 --> 00:18:12,080 Speaker 7: and votes for it because they see something enticing and 346 00:18:12,160 --> 00:18:15,480 Speaker 7: border money and potentially some controversial what the Democrats would 347 00:18:15,480 --> 00:18:20,600 Speaker 7: call controversial asylum provisions. So Ukraine is this issue where 348 00:18:20,920 --> 00:18:24,120 Speaker 7: not just in Congress, but on the debate stage Republican candidates, 349 00:18:24,160 --> 00:18:28,639 Speaker 7: you see people taking different points of views. And President 350 00:18:28,800 --> 00:18:30,840 Speaker 7: Lenski is going to be really honest when he's also 351 00:18:30,880 --> 00:18:33,840 Speaker 7: in New York next week and he wants to make 352 00:18:33,840 --> 00:18:37,640 Speaker 7: this case for a peace formula plan. And then Reuter's 353 00:18:37,680 --> 00:18:40,280 Speaker 7: also reported that he's going to come to Washington to 354 00:18:40,320 --> 00:18:43,440 Speaker 7: have another meeting with the President, and the timing, of course, 355 00:18:43,480 --> 00:18:47,560 Speaker 7: is interesting. Zelenski obviously sees and is privy to the 356 00:18:47,600 --> 00:18:50,119 Speaker 7: debate that's ongoing in America and on how long and 357 00:18:50,160 --> 00:18:53,480 Speaker 7: how much Americans are willing to fund and support Ukraine. 358 00:18:53,520 --> 00:18:56,679 Speaker 2: Looking forward to all of your coverage of UNGA, Bloomberg's 359 00:18:56,680 --> 00:18:59,840 Speaker 2: and Marie Hordern, our very own chief Washington correspondent for 360 00:19:00,440 --> 00:19:02,879 Speaker 2: Bloomberg Television, and Tom we'll send it back to you. 361 00:19:03,240 --> 00:19:05,840 Speaker 1: Thank you, Kaylee. That was Bloomberg Sound On co host 362 00:19:05,920 --> 00:19:08,840 Speaker 1: Kaylee Liones reporting from our Bloomberg ninety nine one newsroom 363 00:19:08,840 --> 00:19:11,680 Speaker 1: in Washington, and you can hear sound on weekdays one 364 00:19:11,680 --> 00:19:14,920 Speaker 1: to three pm on Bloomberg Radio. Coming up on Bloomberg 365 00:19:15,000 --> 00:19:18,240 Speaker 1: day Break. Weekend interest rates also in focus overseas, we 366 00:19:18,320 --> 00:19:20,440 Speaker 1: take you to London to preview the Bank of England's 367 00:19:20,480 --> 00:19:23,720 Speaker 1: policy decision this week. I'm Tom Busby and this is 368 00:19:23,760 --> 00:19:45,879 Speaker 1: Bloomberg broadcasting. 369 00:19:35,240 --> 00:19:38,320 Speaker 5: Live from the Bloomberg it a Active Brokers studio in 370 00:19:38,440 --> 00:19:41,440 Speaker 5: New York. Bloomberg elemon three oh to Washington d C, 371 00:19:41,600 --> 00:19:45,000 Speaker 5: Bloomberg ninety nine one to Boston, Bloomberg one O six 372 00:19:45,119 --> 00:19:48,400 Speaker 5: one to San Francisco, Bloomberg nine sixteen to the country, 373 00:19:48,480 --> 00:19:52,360 Speaker 5: Sirius XM Channel one to nineteen to London DAB digital 374 00:19:52,440 --> 00:19:55,359 Speaker 5: radio and around the globe the Bloomberg Business app in 375 00:19:55,440 --> 00:19:59,959 Speaker 5: Bloomberg Radio dot com. This is Bloomberg Daybreak weekend. 376 00:20:05,680 --> 00:20:08,040 Speaker 1: This is Bloomberg day Break weekend, our global look ahead 377 00:20:08,040 --> 00:20:10,240 Speaker 1: at the top stories for investors in the coming week. 378 00:20:10,440 --> 00:20:14,040 Speaker 1: I'm Tom Busby in New York. Bloomberg Economics expects the 379 00:20:14,080 --> 00:20:17,080 Speaker 1: Bank of England to continue raising interest rates to five 380 00:20:17,240 --> 00:20:20,520 Speaker 1: point five percent next week, despite signs of the impact 381 00:20:20,680 --> 00:20:22,959 Speaker 1: on the economy. Now for more, let's say to London 382 00:20:23,040 --> 00:20:26,800 Speaker 1: and bring in Bloomberg Daybreak Europe banker Caroline hepgar Tom. 383 00:20:26,840 --> 00:20:30,440 Speaker 3: As the UK's economic outlook gets cloudier, the debate about 384 00:20:30,480 --> 00:20:33,439 Speaker 3: whether the Bank of England will continue raising interest rates 385 00:20:33,800 --> 00:20:38,159 Speaker 3: and for how long is intensifying. UK inflation remains the 386 00:20:38,240 --> 00:20:41,600 Speaker 3: worst in the group of seven nations, but July saw 387 00:20:41,640 --> 00:20:46,160 Speaker 3: a bigger than expected drop in UK economic growth. Remember, 388 00:20:46,200 --> 00:20:50,280 Speaker 3: although the UK was the first amongst major central banks 389 00:20:50,520 --> 00:20:54,560 Speaker 3: to start raising interest rates, inflation in Britain is stuck 390 00:20:54,600 --> 00:20:57,840 Speaker 3: at six point eight percent according to the August figure. 391 00:20:57,880 --> 00:21:00,800 Speaker 3: That is almost double the level that you're seeing over 392 00:21:00,840 --> 00:21:03,639 Speaker 3: in the US, and it's still well above the eure 393 00:21:03,720 --> 00:21:07,160 Speaker 3: Area rate of five point three percent. Now for more, 394 00:21:07,200 --> 00:21:09,000 Speaker 3: on all of this. Tom McKenzie and I have been 395 00:21:09,000 --> 00:21:12,720 Speaker 3: speaking to Blueberg Senior at UK Economists Dan Hansen about 396 00:21:12,720 --> 00:21:16,080 Speaker 3: the Bank of England's upcoming decision. I started by asking 397 00:21:16,160 --> 00:21:20,680 Speaker 3: Dan how badly the UK is losing steam after monthly 398 00:21:20,800 --> 00:21:24,080 Speaker 3: GDP fell by half of one percent in July. 399 00:21:24,520 --> 00:21:27,040 Speaker 8: We're certainly worried that the economy is losing steam a 400 00:21:27,080 --> 00:21:31,359 Speaker 8: little bit faster than we'd anticipated it would. Obviously, you 401 00:21:31,400 --> 00:21:33,480 Speaker 8: would expect this to happen to some extent given the 402 00:21:33,480 --> 00:21:35,639 Speaker 8: scale of the interest rate rises that we've had, but 403 00:21:35,680 --> 00:21:37,800 Speaker 8: I think it might be happening a little bit faster. 404 00:21:39,520 --> 00:21:40,640 Speaker 9: And yeah, so we're looking. 405 00:21:40,520 --> 00:21:43,600 Speaker 8: We're not looking for We're still looking for the economy 406 00:21:43,640 --> 00:21:47,080 Speaker 8: to expand very modestly in the third quarter, but I 407 00:21:47,119 --> 00:21:51,080 Speaker 8: think moving into the fourth quarter we're still expecting a contraction. 408 00:21:51,240 --> 00:21:52,760 Speaker 8: I think the other thing to remember is that the 409 00:21:52,800 --> 00:21:55,640 Speaker 8: forward looking data isn't looking that great either. So we've 410 00:21:55,640 --> 00:21:59,520 Speaker 8: had that August PM I remember that dropped into recessionary territories. 411 00:21:59,560 --> 00:22:01,359 Speaker 9: So we are we think we're. 412 00:22:01,240 --> 00:22:03,160 Speaker 8: Sort of on the edge, if you like, we're sort 413 00:22:03,160 --> 00:22:06,840 Speaker 8: of we're we're sort of balancing between sort of stagnation, 414 00:22:06,880 --> 00:22:08,359 Speaker 8: which is what we've had over the past year and 415 00:22:08,400 --> 00:22:11,200 Speaker 8: potentially moving into contraction. And as you said at the 416 00:22:11,600 --> 00:22:13,680 Speaker 8: start there, that's making it very difficult for the Bank 417 00:22:13,720 --> 00:22:15,560 Speaker 8: of England as it navigates what to do next. 418 00:22:16,119 --> 00:22:19,880 Speaker 10: So potentially getting and looking at a contraction of recession 419 00:22:20,320 --> 00:22:22,280 Speaker 10: here in the UK. The debate, of course in the 420 00:22:22,400 --> 00:22:24,280 Speaker 10: US is all about a soft landing. That's never really 421 00:22:24,280 --> 00:22:26,280 Speaker 10: been part of the narrative here in the UK. What 422 00:22:26,560 --> 00:22:30,320 Speaker 10: kind of what would that recession look like, dad? How prolonged, 423 00:22:30,400 --> 00:22:32,080 Speaker 10: how deep, how painful? 424 00:22:33,359 --> 00:22:35,800 Speaker 8: Yes, I mean, I think when we look at all 425 00:22:35,880 --> 00:22:39,080 Speaker 8: of this through just through the eye of an economic model, 426 00:22:39,280 --> 00:22:41,800 Speaker 8: the amount of tightening that's come from the Bank of England, 427 00:22:41,800 --> 00:22:44,040 Speaker 8: so we've had over five hundred basis points of tightening. 428 00:22:44,080 --> 00:22:46,840 Speaker 8: If you put that through an economic model, you get 429 00:22:46,880 --> 00:22:49,320 Speaker 8: a very very big hit to GDP, something in the 430 00:22:49,320 --> 00:22:51,240 Speaker 8: region of five percent of GDP hits. 431 00:22:51,400 --> 00:22:52,120 Speaker 9: It's enormous. 432 00:22:52,520 --> 00:22:54,560 Speaker 8: Now, we obviously just haven't had anything like that. We've 433 00:22:54,560 --> 00:22:57,400 Speaker 8: had the economy has been stagnating, so it's been doing 434 00:22:57,440 --> 00:22:59,200 Speaker 8: a lot better than models would tell you. 435 00:23:00,119 --> 00:23:01,480 Speaker 9: The less there are these. 436 00:23:01,400 --> 00:23:03,480 Speaker 8: Lags in the system, and we know that there is 437 00:23:03,520 --> 00:23:05,760 Speaker 8: more to come, and the Bank of England's obviously been 438 00:23:05,840 --> 00:23:08,560 Speaker 8: quite open about this, and it partly reflects the way 439 00:23:08,560 --> 00:23:12,639 Speaker 8: the mortgage market works in the UK, and I think 440 00:23:12,800 --> 00:23:15,360 Speaker 8: we think there's going to be, as I say, a recession, 441 00:23:15,400 --> 00:23:18,639 Speaker 8: a peach trough falling GDP of about one percent. Now, 442 00:23:18,920 --> 00:23:20,840 Speaker 8: as I say, I've sort of spoken about sort of 443 00:23:20,840 --> 00:23:24,159 Speaker 8: model side of it there. In terms of historical context, 444 00:23:24,280 --> 00:23:26,600 Speaker 8: that's also extremely small. So if you think about the 445 00:23:26,640 --> 00:23:29,840 Speaker 8: financial crisis, it was over six percent the falling GDP, 446 00:23:30,440 --> 00:23:32,520 Speaker 8: in the nineties it was about three percent, and in 447 00:23:32,560 --> 00:23:34,359 Speaker 8: the eighties it was about four and a half percent, 448 00:23:34,440 --> 00:23:34,840 Speaker 8: so it's. 449 00:23:34,680 --> 00:23:35,840 Speaker 9: Still very very modest. 450 00:23:36,640 --> 00:23:40,000 Speaker 8: Nonetheless, we still think, and you know, the data of 451 00:23:40,000 --> 00:23:42,080 Speaker 8: the recent data's given us a little bit more confidence 452 00:23:42,119 --> 00:23:44,320 Speaker 8: in this view that the economy is heading for a 453 00:23:44,359 --> 00:23:47,040 Speaker 8: period of falls in output. 454 00:23:48,080 --> 00:23:51,159 Speaker 3: How significant was the revision to the official data, the 455 00:23:51,200 --> 00:23:55,359 Speaker 3: OERNS data post pandemic. I was speaking to the Exchequer sector, 456 00:23:55,480 --> 00:23:59,960 Speaker 3: to the Treasury, Gareth Davies's significant voice obviously for the government, 457 00:24:00,040 --> 00:24:03,520 Speaker 3: and he was sounding pretty pleased about it. Does that 458 00:24:04,080 --> 00:24:07,280 Speaker 3: lead though, to any sort of rethink on future or 459 00:24:07,359 --> 00:24:09,439 Speaker 3: longer term UK economic growth? 460 00:24:10,400 --> 00:24:12,879 Speaker 9: So the way we read it, and I'm not surprised. 461 00:24:12,960 --> 00:24:15,560 Speaker 9: The government has sort of been very happy about. 462 00:24:15,359 --> 00:24:17,760 Speaker 8: It, because, of course, the first thing to say about 463 00:24:17,760 --> 00:24:19,840 Speaker 8: the revisions, I should say is that this is all 464 00:24:19,840 --> 00:24:21,800 Speaker 8: the way up to the end of twenty twenty one, 465 00:24:22,240 --> 00:24:24,679 Speaker 8: so we've had nothing about twenty twenty two and twenty 466 00:24:24,720 --> 00:24:27,159 Speaker 8: twenty three, so we've had nothing really about the impact 467 00:24:27,240 --> 00:24:31,040 Speaker 8: of high inflation and high interest rates and whether the 468 00:24:31,080 --> 00:24:33,399 Speaker 8: economy may have been more resilient in the face of that. 469 00:24:33,440 --> 00:24:34,359 Speaker 9: So we just don't know. 470 00:24:35,359 --> 00:24:38,199 Speaker 8: The story still looks pretty poor on the data that 471 00:24:38,240 --> 00:24:38,760 Speaker 8: we've got. 472 00:24:40,160 --> 00:24:43,200 Speaker 9: What I took away from it looking at it was that. 473 00:24:43,200 --> 00:24:47,000 Speaker 8: Actually the economy was less scarred from the pandemic, So 474 00:24:47,040 --> 00:24:49,880 Speaker 8: the hit to the economy from the pandemic, the sort 475 00:24:49,880 --> 00:24:54,280 Speaker 8: of permanent hit to output, was less severe, and that's obviously. 476 00:24:54,000 --> 00:24:55,639 Speaker 9: A really really good news story. 477 00:24:55,640 --> 00:24:58,560 Speaker 8: And actually going back to the government, it was a 478 00:24:58,560 --> 00:25:01,159 Speaker 8: reflection of the policy that were put in place, in 479 00:25:01,200 --> 00:25:03,960 Speaker 8: particular the furlough scheme, So I think it tells us 480 00:25:04,000 --> 00:25:06,720 Speaker 8: something about the past. We'll be watching it's at the 481 00:25:06,800 --> 00:25:09,400 Speaker 8: end of September we'll get more information about the more 482 00:25:09,440 --> 00:25:12,760 Speaker 8: recent data points, so we'll definitely be watching that to 483 00:25:12,760 --> 00:25:15,920 Speaker 8: see if the economy actually has been carrying more momentum 484 00:25:15,960 --> 00:25:18,200 Speaker 8: and we have been too downbeat about the UK. 485 00:25:19,800 --> 00:25:24,119 Speaker 10: What is your sense, Dan, of the inflation trajectory for 486 00:25:24,200 --> 00:25:27,760 Speaker 10: the UK. Are we seeing a meaningful move lower in 487 00:25:27,840 --> 00:25:31,119 Speaker 10: terms of prices. Are we on a sustained trajectory to 488 00:25:31,200 --> 00:25:33,959 Speaker 10: lower prices that have been flagged by the Bank of England. 489 00:25:34,920 --> 00:25:37,239 Speaker 8: Yeah, I mean I think you know, Tom, I think 490 00:25:37,280 --> 00:25:40,000 Speaker 8: it's been all about energy here, and we know that 491 00:25:40,119 --> 00:25:43,119 Speaker 8: it takes a little bit longer for the energy effect 492 00:25:43,200 --> 00:25:45,960 Speaker 8: to come through because of the way household energy bills 493 00:25:46,000 --> 00:25:48,720 Speaker 8: work and they enter the CPI basket. I mean, I 494 00:25:48,760 --> 00:25:50,679 Speaker 8: still think we're going to get to about five percent 495 00:25:50,720 --> 00:25:51,600 Speaker 8: by the end of the year. 496 00:25:53,640 --> 00:25:58,119 Speaker 3: Do you think that we should be concerned around the 497 00:25:58,160 --> 00:26:00,879 Speaker 3: housing market? I mean, that's another sort of element of 498 00:26:00,920 --> 00:26:05,800 Speaker 3: this economic picture. It does look as if the housing data, 499 00:26:05,840 --> 00:26:08,119 Speaker 3: as a result of our interest rates is worse than 500 00:26:08,400 --> 00:26:10,600 Speaker 3: quite quite rapidly rapidly. 501 00:26:10,680 --> 00:26:13,359 Speaker 8: Now, Yeah, I mean I think we should. I mean, 502 00:26:13,400 --> 00:26:15,800 Speaker 8: I think that's and it's the bit you know, it's 503 00:26:15,840 --> 00:26:18,600 Speaker 8: one of the most interest rates sensitive bits of the 504 00:26:18,600 --> 00:26:21,280 Speaker 8: economy and it's exactly where you would expect these rate 505 00:26:21,359 --> 00:26:22,840 Speaker 8: hikes to show up first. 506 00:26:22,920 --> 00:26:26,200 Speaker 9: And we've been seeing that we've had, you. 507 00:26:26,160 --> 00:26:28,600 Speaker 8: Know, we think there'll be a fall accumulative fall of 508 00:26:28,600 --> 00:26:31,720 Speaker 8: about ten percent in house prices. We've had about a 509 00:26:31,720 --> 00:26:33,639 Speaker 8: little bit underhalf of that if you look at the 510 00:26:33,720 --> 00:26:36,800 Speaker 8: nationwide figures, so we think there's further to go. 511 00:26:37,480 --> 00:26:39,600 Speaker 9: But yeah, it's it absolutely is a concern. 512 00:26:40,240 --> 00:26:43,120 Speaker 8: And of course here in the UK at least, there 513 00:26:43,160 --> 00:26:46,120 Speaker 8: is a there is a real link between housing confidence 514 00:26:46,160 --> 00:26:49,000 Speaker 8: and spending and that's where it will start to bite, 515 00:26:49,160 --> 00:26:52,280 Speaker 8: is that if consumers start to feel worried about the 516 00:26:52,280 --> 00:26:54,119 Speaker 8: fact that the value of their house is falling, even 517 00:26:54,160 --> 00:26:56,679 Speaker 8: though it doesn't really affect their wealth, they just feel 518 00:26:56,760 --> 00:27:00,879 Speaker 8: less well off. Then yes, you know, there's potentially be 519 00:27:01,240 --> 00:27:04,920 Speaker 8: a bigger hit through sentiment to spending. So yeah, it's 520 00:27:04,920 --> 00:27:07,200 Speaker 8: something we're definitely watching. And you're right, I mean, we 521 00:27:07,680 --> 00:27:10,719 Speaker 8: had the Rick survey. It looks like things are beginning 522 00:27:10,720 --> 00:27:12,800 Speaker 8: to sort of snowball a little bit in the housing market. 523 00:27:12,880 --> 00:27:14,280 Speaker 8: So it's something to definitely keep. 524 00:27:14,119 --> 00:27:15,640 Speaker 9: An eye on and done. 525 00:27:15,680 --> 00:27:17,480 Speaker 10: I wonder how closely the Bank of England are going 526 00:27:17,560 --> 00:27:20,040 Speaker 10: to be focused on the housing sector as well. We 527 00:27:20,119 --> 00:27:22,000 Speaker 10: know that traders have started to kind of pair their 528 00:27:22,040 --> 00:27:25,560 Speaker 10: bets around the terminal rate from the Bank of England, 529 00:27:25,960 --> 00:27:29,720 Speaker 10: but arguably we've had a few mixed messages from officials there, 530 00:27:29,760 --> 00:27:33,280 Speaker 10: whether it's Andrew Bailey talking about table mounted along with you, Peel, 531 00:27:33,960 --> 00:27:36,920 Speaker 10: or Catherine Mann who's on the hawkish spectrum of the NPC. 532 00:27:37,720 --> 00:27:39,399 Speaker 10: Do you have clarity, do you have a clearer steer 533 00:27:39,440 --> 00:27:41,600 Speaker 10: on how the Bank of England is thinking about everything 534 00:27:41,600 --> 00:27:43,600 Speaker 10: that you've talked about and weaving that all together to 535 00:27:43,640 --> 00:27:45,080 Speaker 10: have a clearer projection. 536 00:27:46,520 --> 00:27:48,280 Speaker 8: Yeah, so I think, I mean you're I think you're 537 00:27:48,400 --> 00:27:52,600 Speaker 8: right that the particularly Baileyan pill that feels like a 538 00:27:52,600 --> 00:27:53,359 Speaker 8: bit of a shift. 539 00:27:53,400 --> 00:27:55,560 Speaker 9: And I think the thing to remember with them is as. 540 00:27:55,400 --> 00:27:58,080 Speaker 8: Well is that they're in they're part of the internal 541 00:27:58,080 --> 00:28:00,119 Speaker 8: group with Ben Broadbent that tends that. 542 00:28:00,119 --> 00:28:02,879 Speaker 9: Will have voted together during this hiking cycle. 543 00:28:03,160 --> 00:28:06,720 Speaker 8: And I think the fact that they're shifting away from 544 00:28:07,040 --> 00:28:10,159 Speaker 8: potentially the pace of rate hikes and the fact that 545 00:28:10,160 --> 00:28:12,600 Speaker 8: we need rate hikes to focusing more on the level 546 00:28:12,640 --> 00:28:15,280 Speaker 8: of rates and the level of the extent to which 547 00:28:15,359 --> 00:28:19,679 Speaker 8: rates are restrictive is something that certainly traders and certainly 548 00:28:19,680 --> 00:28:23,199 Speaker 8: we have taken notice of. I mean, going into the 549 00:28:23,240 --> 00:28:27,200 Speaker 8: September meeting, I think the story around wage growth is 550 00:28:27,240 --> 00:28:30,160 Speaker 8: going to dominate, and I think there's definitely something there's 551 00:28:30,160 --> 00:28:33,959 Speaker 8: definitely good reason to think they will lift rates in September, 552 00:28:34,000 --> 00:28:36,240 Speaker 8: and I think the market sort of is pretty much 553 00:28:36,280 --> 00:28:37,960 Speaker 8: there with that. I think it's pricing about an eighty 554 00:28:37,960 --> 00:28:39,880 Speaker 8: percent chance of a hike. 555 00:28:40,120 --> 00:28:43,640 Speaker 3: That was Bloomberg's Chief UK economist Dan Hanson speaking to 556 00:28:43,640 --> 00:28:46,400 Speaker 3: Tom McKenzie and I ahead of the Bank of England's 557 00:28:46,440 --> 00:28:49,960 Speaker 3: interest rate decision, and we'll be covering that rate decision 558 00:28:50,000 --> 00:28:53,640 Speaker 3: at twelve noon London time on Thursday the twenty first, 559 00:28:54,080 --> 00:28:57,840 Speaker 3: and the day before will break the latest UK inflation data. 560 00:28:57,920 --> 00:29:01,960 Speaker 3: That's live on Bloomberg Radio on Wednesday the twentieth, expected 561 00:29:02,040 --> 00:29:05,560 Speaker 3: at seven am London time. I'm Caroline Hepke here in 562 00:29:05,600 --> 00:29:08,240 Speaker 3: London and you can catch us every weekday morning for 563 00:29:08,280 --> 00:29:11,920 Speaker 3: Bloomberg Daybreak Europe, beginning at six am in London. That's 564 00:29:12,000 --> 00:29:13,480 Speaker 3: one am on Wall Street. 565 00:29:13,560 --> 00:29:16,280 Speaker 1: Tom, Thank you, Caroline, and coming up on Bloomberg day 566 00:29:16,280 --> 00:29:19,200 Speaker 1: Break weekend, we stay on Interest Rate Watch as we 567 00:29:19,240 --> 00:29:22,440 Speaker 1: go to Asia to preview the Bank of Japan's policy decision. 568 00:29:22,840 --> 00:29:36,520 Speaker 1: I'm Tom Busby and this is Bloomberg. This is Bloomberg 569 00:29:36,560 --> 00:29:38,600 Speaker 1: day Break Weekend, our global look ahead at the top 570 00:29:38,600 --> 00:29:41,520 Speaker 1: stories for investors in the coming week. I'm Tom Busby 571 00:29:41,560 --> 00:29:44,600 Speaker 1: in New York. Bank of Japan watchers moving forward their 572 00:29:44,600 --> 00:29:47,840 Speaker 1: forecast for an end to negative interest rates. That's after 573 00:29:47,880 --> 00:29:51,920 Speaker 1: Governor Kazuo Uwaita touched on that possibility in a recent interview. 574 00:29:52,000 --> 00:29:54,240 Speaker 1: So what's next for the BOJ ahead of their next 575 00:29:54,240 --> 00:29:57,040 Speaker 1: policy meeting. For more, Let's head to Bloomberg day Break 576 00:29:57,040 --> 00:29:59,360 Speaker 1: Asia host Doug Krisner. Tom. 577 00:29:59,400 --> 00:30:02,040 Speaker 4: The Bank of has a rate decision in the week ahead, 578 00:30:02,040 --> 00:30:05,320 Speaker 4: and markets have been speculating on the BOJ possibly taking 579 00:30:05,400 --> 00:30:08,800 Speaker 4: steps to adjust policy. The question is whether that bet 580 00:30:08,960 --> 00:30:12,320 Speaker 4: is a bit premature. Let's bring in Paul Jackson, Bloomberg 581 00:30:12,400 --> 00:30:14,959 Speaker 4: Economy editor, who joins us from our studios in Tokyo. 582 00:30:16,320 --> 00:30:19,080 Speaker 4: BOJ policy we know has been ultra easy for decades now, 583 00:30:19,280 --> 00:30:22,880 Speaker 4: largely because of the story on deflation. But for the 584 00:30:22,960 --> 00:30:26,840 Speaker 4: last seventeen months it's a different story. Inflation in Japan 585 00:30:26,920 --> 00:30:29,680 Speaker 4: has been above the boj's target. So is there a 586 00:30:29,680 --> 00:30:31,880 Speaker 4: bit of urgency now to begin normalizing. 587 00:30:32,160 --> 00:30:36,080 Speaker 11: Well, I think we're certainly stepping closer to that day. 588 00:30:36,720 --> 00:30:39,040 Speaker 11: We have a meeting coming up, but there's going to 589 00:30:39,120 --> 00:30:42,760 Speaker 11: be no major change at this coming meeting, but after 590 00:30:42,880 --> 00:30:47,600 Speaker 11: recent remarks from Governor Uda to local media, definitely the 591 00:30:48,040 --> 00:30:53,080 Speaker 11: scrapping of negative interest rates is now on the radar, 592 00:30:53,480 --> 00:30:57,240 Speaker 11: with economists expecting that to happen in the first half 593 00:30:57,520 --> 00:30:58,240 Speaker 11: next year. 594 00:30:58,160 --> 00:31:00,280 Speaker 4: So that would be the policy rate. Now we talk 595 00:31:00,280 --> 00:31:03,440 Speaker 4: about yield curve control quite a bit, So if why 596 00:31:03,720 --> 00:31:06,400 Speaker 4: CC were to be adjusted, what might the preparation for 597 00:31:06,520 --> 00:31:08,200 Speaker 4: normalcy look like on that front. 598 00:31:08,680 --> 00:31:11,840 Speaker 11: Well, it's a complicated framework, isn't it. We've got two 599 00:31:11,920 --> 00:31:15,120 Speaker 11: targets here, one for the short term rate, which is 600 00:31:15,360 --> 00:31:18,440 Speaker 11: currently minus zero point one percent, and then we've got 601 00:31:18,480 --> 00:31:22,960 Speaker 11: this target for a ten year yields, which is normally zero, 602 00:31:23,480 --> 00:31:27,280 Speaker 11: but yields are going to be allowed to rise up 603 00:31:27,320 --> 00:31:31,280 Speaker 11: to one percent. So I think before we can have 604 00:31:31,920 --> 00:31:35,640 Speaker 11: a scrapping of the negative interest rate, that target on 605 00:31:35,760 --> 00:31:41,040 Speaker 11: the ten year yield needs to be abandoned or raised. 606 00:31:41,520 --> 00:31:44,120 Speaker 11: Now the question is would he do it all in 607 00:31:44,200 --> 00:31:47,160 Speaker 11: one go. I think that is a possibility, though some 608 00:31:47,360 --> 00:31:51,080 Speaker 11: economists argue that they'd have to address this ten year 609 00:31:51,200 --> 00:31:55,720 Speaker 11: yield target first and then move to the negative rate 610 00:31:55,800 --> 00:31:56,280 Speaker 11: next year. 611 00:31:56,400 --> 00:31:59,200 Speaker 4: So the BOJ tweaked yield curve control back in July, 612 00:31:59,320 --> 00:32:01,880 Speaker 4: and it was there that Governor Uwaita said the move 613 00:32:01,960 --> 00:32:04,640 Speaker 4: was aimed in part by limiting a lot of the 614 00:32:04,720 --> 00:32:07,200 Speaker 4: volatility that we had seen in the Japanese en. How 615 00:32:07,240 --> 00:32:10,280 Speaker 4: does the currency enter the thinking here when it comes 616 00:32:10,320 --> 00:32:11,760 Speaker 4: to tweaking policy. 617 00:32:11,640 --> 00:32:14,680 Speaker 11: Well, I think, you know, if you look at the 618 00:32:14,720 --> 00:32:17,640 Speaker 11: weakness in the end recently, it's getting to a point 619 00:32:17,680 --> 00:32:22,520 Speaker 11: where you know, businesses are, you know, having difficulty planning 620 00:32:22,520 --> 00:32:27,120 Speaker 11: for the future. Consumers are being hit by higher import prices, 621 00:32:27,160 --> 00:32:30,840 Speaker 11: which is driving inflation. So we're kind of at the 622 00:32:30,880 --> 00:32:34,840 Speaker 11: limit of what is acceptable on the yen level as 623 00:32:34,920 --> 00:32:38,800 Speaker 11: we know. September last year, after the FED met and 624 00:32:38,840 --> 00:32:42,640 Speaker 11: the BOJ met, Japan intervened to prop up the currency 625 00:32:42,840 --> 00:32:45,800 Speaker 11: for the first time since nineteen ninety eight, I think 626 00:32:45,840 --> 00:32:49,040 Speaker 11: that's less likely this time because we haven't had quite 627 00:32:49,120 --> 00:32:52,440 Speaker 11: the sudden moves. People are more used to these yen 628 00:32:52,560 --> 00:32:56,160 Speaker 11: levels this time around, and also I think a Bank 629 00:32:56,200 --> 00:32:58,880 Speaker 11: of Japan Governor Huaida is a little bit more willing 630 00:32:58,920 --> 00:33:01,640 Speaker 11: to talk about FX and give the impression that the 631 00:33:01,640 --> 00:33:05,040 Speaker 11: boj may give the government a helping hand on helping 632 00:33:05,080 --> 00:33:06,320 Speaker 11: support the currency. 633 00:33:06,440 --> 00:33:09,840 Speaker 4: So when intervention is conducted, it's done under the auspices 634 00:33:09,880 --> 00:33:12,480 Speaker 4: of the Ministry of finance that's different than the Bank 635 00:33:12,520 --> 00:33:14,760 Speaker 4: of Japan. I understand that, but I'm wondering whether or 636 00:33:14,840 --> 00:33:18,600 Speaker 4: not Governor Auwada has a level let's say in the 637 00:33:18,800 --> 00:33:21,440 Speaker 4: end visa viv the dollar, that is, he's keeping a 638 00:33:21,480 --> 00:33:23,240 Speaker 4: close eye on ha ha. 639 00:33:23,760 --> 00:33:28,120 Speaker 11: Well, all these motheretary authorities are very reluctant to talk 640 00:33:28,160 --> 00:33:31,840 Speaker 11: about levels. They say it sudden moves. But I would 641 00:33:31,920 --> 00:33:35,280 Speaker 11: say that the last intervention on October last year came 642 00:33:35,400 --> 00:33:37,840 Speaker 11: around the one to five to two mark, so I 643 00:33:37,840 --> 00:33:40,960 Speaker 11: think it'd be very difficult for Japan to move before 644 00:33:41,000 --> 00:33:41,680 Speaker 11: we've got there. 645 00:33:41,880 --> 00:33:43,880 Speaker 4: Paul, thank you so much for helping us set up 646 00:33:44,120 --> 00:33:46,880 Speaker 4: the BOJ meeting. In the week Ahead, Paul Jackson, Bloomberg 647 00:33:46,920 --> 00:33:50,240 Speaker 4: Economy Editor, joining from Tokyo. I'm Doug Prisner. You can 648 00:33:50,320 --> 00:33:53,200 Speaker 4: join Brian Curtis and myself weekdays here for Bloomberg day 649 00:33:53,200 --> 00:33:56,520 Speaker 4: Break Gasia, beginning at six am in Hong Kong six 650 00:33:56,600 --> 00:33:57,840 Speaker 4: pm on Wall Street. 651 00:33:58,040 --> 00:33:59,959 Speaker 1: Tom, thank you, Doug, and that does it for them 652 00:34:00,000 --> 00:34:02,520 Speaker 1: this edition of Bloomberg day Break Weekend. Join us again 653 00:34:02,640 --> 00:34:04,840 Speaker 1: Monday morning at five am Wall Street time for the 654 00:34:04,920 --> 00:34:07,840 Speaker 1: latest on markets overseas and the news you need to 655 00:34:07,840 --> 00:34:11,000 Speaker 1: start your day. I'm Tom Buzzby. Stay with US. Top 656 00:34:11,040 --> 00:34:13,879 Speaker 1: stories and global business headlines are coming up right now