1 00:00:02,040 --> 00:00:04,320 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,360 --> 00:00:06,440 Speaker 1: the top stories in the coming week from our day 3 00:00:06,440 --> 00:00:09,440 Speaker 1: Break anchors all around the world. Straight ahead on the program, 4 00:00:09,480 --> 00:00:12,440 Speaker 1: the nation's biggest retailers battle it out for your summer 5 00:00:12,480 --> 00:00:16,120 Speaker 1: spending dollars, and what earnings from Delta Airlines will tell 6 00:00:16,160 --> 00:00:19,480 Speaker 1: us about travel demand Right now, I'm Tom Busby in 7 00:00:19,560 --> 00:00:20,040 Speaker 1: New York. 8 00:00:20,440 --> 00:00:23,920 Speaker 2: I'm Caroline Hetka in London as JP Morgan's Jmie Daman 9 00:00:24,079 --> 00:00:27,360 Speaker 2: visits Ireland ahead of the US tariff deadline. 10 00:00:27,360 --> 00:00:30,720 Speaker 3: For Europe, I'm Doug Prisner looking ahead to next week 11 00:00:30,840 --> 00:00:35,440 Speaker 3: CPI and PPI reports for China. 12 00:00:36,200 --> 00:00:40,240 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:40,280 --> 00:00:43,960 Speaker 4: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:44,479 --> 00:00:48,720 Speaker 4: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 15 00:00:49,159 --> 00:00:52,320 Speaker 4: Sirius XM one twenty one, and around the world on 16 00:00:52,440 --> 00:00:55,520 Speaker 4: Bloomberg Radio, dot Com and the Bloomberg Business App. 17 00:01:00,080 --> 00:01:02,320 Speaker 1: Good day to you. I'm Tom Busby. We begin today's 18 00:01:02,320 --> 00:01:05,800 Speaker 1: program with what's become a Black Friday sales bonanza in 19 00:01:05,840 --> 00:01:09,600 Speaker 1: the middle of summer. Amazon's annual Prime Day July sales 20 00:01:09,600 --> 00:01:13,360 Speaker 1: event kicks off with Target, Walmart and others joining in. 21 00:01:13,959 --> 00:01:16,959 Speaker 1: How much money is at stake? Are Americans expected to 22 00:01:17,000 --> 00:01:19,399 Speaker 1: spend like we did before? And what role could the 23 00:01:19,440 --> 00:01:22,520 Speaker 1: Trump tariffs play in sales? For more, we bring in 24 00:01:22,600 --> 00:01:26,600 Speaker 1: Poonham Goyle, Senior US e Commerce and retail analysts at 25 00:01:26,600 --> 00:01:30,160 Speaker 1: Bloomberg Intelligence. Poonham, thank you so much for joining us 26 00:01:30,160 --> 00:01:34,320 Speaker 1: this holiday weekend. Millions of Americans gearing up to spend, spend, 27 00:01:34,360 --> 00:01:38,520 Speaker 1: spend at the nation's biggest retailers, and this year is 28 00:01:38,560 --> 00:01:40,880 Speaker 1: a little different. I think we have a couple of 29 00:01:41,000 --> 00:01:44,520 Speaker 1: competing forces. A pullback in consumer spending, no doubt some 30 00:01:44,560 --> 00:01:48,559 Speaker 1: people are spending less, and then fears about these Trump 31 00:01:48,600 --> 00:01:51,760 Speaker 1: tariffs that are scheduled to kick in this coming Wednesday, 32 00:01:51,840 --> 00:01:55,960 Speaker 1: July ninth. What do you see coming up on these 33 00:01:55,960 --> 00:01:57,200 Speaker 1: big sales events? 34 00:01:57,520 --> 00:02:00,760 Speaker 5: You know, you said it exactly right. They're really consumers 35 00:02:00,840 --> 00:02:04,600 Speaker 5: are pulling back, and consumers are looking for deals. So 36 00:02:04,760 --> 00:02:07,400 Speaker 5: what better way to find deals than on Amazon's Prime 37 00:02:07,480 --> 00:02:10,600 Speaker 5: Day sales, which now is a four day event versus 38 00:02:10,600 --> 00:02:15,120 Speaker 5: a two day event. Historically, deals matter, and hopefully these 39 00:02:15,200 --> 00:02:19,600 Speaker 5: deals draw consumers to Amazon to buy what they want. 40 00:02:20,240 --> 00:02:22,320 Speaker 1: Now, this is a lot of money last year in 41 00:02:22,360 --> 00:02:26,079 Speaker 1: twenty four American This is, according to eMarketer, fourteen point 42 00:02:26,120 --> 00:02:28,679 Speaker 1: two billion dollars. And as you said, this was only 43 00:02:28,720 --> 00:02:31,960 Speaker 1: Amazon had a two day sales event. This year, they've 44 00:02:31,960 --> 00:02:34,680 Speaker 1: stretched it to four. Do you think we're going to 45 00:02:34,680 --> 00:02:36,320 Speaker 1: see that kind of spending. 46 00:02:36,560 --> 00:02:39,640 Speaker 5: I think spending will be up double digits, including on 47 00:02:39,680 --> 00:02:42,320 Speaker 5: this Prime Day. Now, the fact that it's four days 48 00:02:42,320 --> 00:02:45,040 Speaker 5: and two days, does that mean that you double what 49 00:02:45,040 --> 00:02:48,920 Speaker 5: you're expected to get? Probably not double, because there is 50 00:02:49,000 --> 00:02:52,119 Speaker 5: spending that still occurs right on the Amazon platform after 51 00:02:52,200 --> 00:02:54,880 Speaker 5: Prime Day. But I think what this helps do is 52 00:02:54,880 --> 00:02:57,720 Speaker 5: if you think about what's happened since Amazon has introduced 53 00:02:57,760 --> 00:03:01,200 Speaker 5: Prime Day, is that other retailers, as you have followed suit. 54 00:03:01,560 --> 00:03:04,840 Speaker 5: So Walmart has its deals, Target has its steals, Best 55 00:03:04,880 --> 00:03:08,320 Speaker 5: by Wayfair, you name it. But these deals aren't just 56 00:03:08,400 --> 00:03:12,240 Speaker 5: two days, they're longer. So by Amazon going from two 57 00:03:12,360 --> 00:03:16,120 Speaker 5: days to four days, they're now in play along with 58 00:03:16,160 --> 00:03:18,799 Speaker 5: the rest of them for a longer duration. I think 59 00:03:18,840 --> 00:03:20,160 Speaker 5: that's really what helps here. 60 00:03:20,400 --> 00:03:23,680 Speaker 1: And Target is seven days, Walmart is a six day event. 61 00:03:23,760 --> 00:03:26,000 Speaker 1: I mean, they are real. They're really stretching things here, 62 00:03:26,080 --> 00:03:26,519 Speaker 1: aren't they. 63 00:03:26,680 --> 00:03:29,560 Speaker 5: Yeah? Exactly, So you know, Amazon being just two days. 64 00:03:29,560 --> 00:03:31,880 Speaker 5: I think it's smart of them to go to four days, 65 00:03:31,919 --> 00:03:34,400 Speaker 5: and I do think it'll help them draw higher sales 66 00:03:34,440 --> 00:03:35,680 Speaker 5: because it is a longer event. 67 00:03:36,200 --> 00:03:39,720 Speaker 1: Now, Amazon did something I think really smart this year. 68 00:03:39,760 --> 00:03:42,920 Speaker 1: They moved up the dates. Last year, i'll say there 69 00:03:42,960 --> 00:03:45,880 Speaker 1: was a two day event. It started July sixteenth. This 70 00:03:46,000 --> 00:03:49,440 Speaker 1: year it's starting July ninth, and that's an important day 71 00:03:50,000 --> 00:03:52,800 Speaker 1: because that's the day that the across the board Trump 72 00:03:52,880 --> 00:03:55,360 Speaker 1: tariffs are supposed to kick in, and we know anything 73 00:03:55,360 --> 00:03:59,520 Speaker 1: could change before then. But I think it's a savvy 74 00:03:59,600 --> 00:04:03,600 Speaker 1: move to move this up because people are afraid. People 75 00:04:03,640 --> 00:04:06,440 Speaker 1: are worried. There's a lot of uncertainty about those tariffs, 76 00:04:06,440 --> 00:04:09,960 Speaker 1: how much it's going to change, you know, prices on things, 77 00:04:10,600 --> 00:04:14,040 Speaker 1: inflation rising, and it looks like everybody else has followed suit. 78 00:04:15,360 --> 00:04:18,279 Speaker 5: Yeah, you're absolutely right. Look, that day is clearly going 79 00:04:18,279 --> 00:04:20,120 Speaker 5: to be an important day and we'll find out what 80 00:04:20,160 --> 00:04:23,040 Speaker 5: happens with tariffs. But as tariffs are top of mind 81 00:04:23,080 --> 00:04:25,800 Speaker 5: on that day, consumers are also at the tip of 82 00:04:25,839 --> 00:04:29,480 Speaker 5: their seats looking for deals because if things do change 83 00:04:29,800 --> 00:04:32,320 Speaker 5: and if things get more expensive for the consumer, they're 84 00:04:32,320 --> 00:04:34,280 Speaker 5: going to want to buy it now. And the Prime 85 00:04:34,320 --> 00:04:36,479 Speaker 5: day sale happens to be just that day and for 86 00:04:36,520 --> 00:04:37,560 Speaker 5: the next four days. 87 00:04:38,120 --> 00:04:41,200 Speaker 1: Now, this started kind of the dog days of summer. 88 00:04:41,560 --> 00:04:43,839 Speaker 1: People were not spending a lot of money. It started 89 00:04:43,880 --> 00:04:47,919 Speaker 1: in twenty fifteen with Amazon, and they've grown into maybe 90 00:04:48,400 --> 00:04:52,360 Speaker 1: stretching out not only back to school sales, they've early 91 00:04:52,440 --> 00:04:56,400 Speaker 1: those up. I mean, this has really become an annual 92 00:04:56,760 --> 00:05:00,159 Speaker 1: event along the lines of Black Friday, hasn't it all 93 00:05:00,200 --> 00:05:01,800 Speaker 1: these retailers and consumers. 94 00:05:02,760 --> 00:05:06,240 Speaker 5: Absolutely, the Prime Day sale is a big event. It's 95 00:05:06,320 --> 00:05:08,920 Speaker 5: not as big as Black Friday, but still a very 96 00:05:08,920 --> 00:05:11,520 Speaker 5: big event, and it comes at a key shopping point 97 00:05:11,560 --> 00:05:13,760 Speaker 5: in time, right it's right ahead of back to school, 98 00:05:14,080 --> 00:05:16,760 Speaker 5: So consumers have the intent to shop, they have the 99 00:05:16,920 --> 00:05:20,320 Speaker 5: urgency to shop, they have the need to shop, and 100 00:05:20,400 --> 00:05:23,760 Speaker 5: this year especially, they want the deals right. They're looking 101 00:05:23,839 --> 00:05:27,560 Speaker 5: to spend less and get more and the only way 102 00:05:27,600 --> 00:05:29,880 Speaker 5: to do that is to go shop on Dal Days. 103 00:05:29,960 --> 00:05:33,920 Speaker 5: And this is one of Amazon's biggest deal days outside 104 00:05:34,000 --> 00:05:34,960 Speaker 5: of Black Friday. 105 00:05:35,720 --> 00:05:39,120 Speaker 1: Now, Amazon now has two hundred and twenty million subscribers, 106 00:05:39,240 --> 00:05:42,960 Speaker 1: and really to get the full benefits of these Prime Days, 107 00:05:43,040 --> 00:05:45,320 Speaker 1: you have to be a subscriber. What kind of deals 108 00:05:45,320 --> 00:05:47,520 Speaker 1: are we talking about and are there ones that stick 109 00:05:47,560 --> 00:05:51,680 Speaker 1: out to you that you've seen that could really really 110 00:05:52,080 --> 00:05:53,520 Speaker 1: have a big impact on sales. 111 00:05:54,360 --> 00:05:56,919 Speaker 5: So we'll see the deals this week when you know. 112 00:05:56,960 --> 00:05:59,160 Speaker 5: Amazon starts launching them this year. They're doing it a 113 00:05:59,200 --> 00:06:03,360 Speaker 5: little differently. They're dropping new deals every day on different categories. 114 00:06:03,680 --> 00:06:06,600 Speaker 5: So they're being very targeted in how they get consumers 115 00:06:06,640 --> 00:06:08,719 Speaker 5: to keep coming back. Right, you don't want to go 116 00:06:08,760 --> 00:06:10,320 Speaker 5: shop the first day and then not come back the 117 00:06:10,360 --> 00:06:13,279 Speaker 5: second day. So they're being targeted for their deals. In 118 00:06:13,360 --> 00:06:15,320 Speaker 5: terms of what the deals will be, I think you're 119 00:06:15,360 --> 00:06:17,240 Speaker 5: going to see the same as you've seen before. You're 120 00:06:17,240 --> 00:06:19,680 Speaker 5: going to see deals on electronics. You're going to see 121 00:06:19,680 --> 00:06:22,760 Speaker 5: deals on Amazon gadgets, whether it's a Kindle or any 122 00:06:22,800 --> 00:06:26,760 Speaker 5: of their other devices. You're going to see them use 123 00:06:27,040 --> 00:06:32,240 Speaker 5: their Rufus and Alexa AI assistance to help consumers find deals. 124 00:06:32,240 --> 00:06:35,080 Speaker 5: So that's the real new thing here is that Amazon 125 00:06:35,120 --> 00:06:37,680 Speaker 5: is going to try to have consumers lean into these 126 00:06:37,720 --> 00:06:41,560 Speaker 5: AI tools not only just to compare products on their website, 127 00:06:41,680 --> 00:06:44,880 Speaker 5: but also to learn about them, get smarter, and really 128 00:06:44,880 --> 00:06:47,440 Speaker 5: see the value in them to help them hit Dappa 129 00:06:47,560 --> 00:06:48,279 Speaker 5: and buy now. 130 00:06:48,880 --> 00:06:52,200 Speaker 1: Our thanks to Punamgoyle, Senior US e Commerce and retail 131 00:06:52,240 --> 00:06:56,440 Speaker 1: analysts at Bloomberg Intelligence. We turn out to the airline 132 00:06:56,480 --> 00:06:59,960 Speaker 1: industry with the latest earnings from Delta Airlines, out on Thursday, 133 00:07:00,240 --> 00:07:02,760 Speaker 1: just as the summer travel season is in full swing 134 00:07:03,320 --> 00:07:06,640 Speaker 1: or is it for more. We're joined by George ferguson Airlines, 135 00:07:06,680 --> 00:07:11,440 Speaker 1: Aerospace and Defense, senior analyst with Bloomberg Intelligence. Well, George, 136 00:07:11,480 --> 00:07:13,520 Speaker 1: thank you for being here. I want to start with 137 00:07:13,680 --> 00:07:16,400 Speaker 1: what you expect to see from Delta second quarter earnings 138 00:07:16,400 --> 00:07:19,520 Speaker 1: this week, which comes after blowout earnings for Q one 139 00:07:19,560 --> 00:07:22,120 Speaker 1: three months ago. But since then, I think we both 140 00:07:22,120 --> 00:07:24,600 Speaker 1: agree a lot has changed in the industry. 141 00:07:25,280 --> 00:07:27,800 Speaker 6: It has, and thanks for having me on. Delta is 142 00:07:27,800 --> 00:07:32,160 Speaker 6: always the first airline to report and usually one of 143 00:07:32,200 --> 00:07:36,080 Speaker 6: the stronger airlines in the US industry, and we'd expect 144 00:07:36,080 --> 00:07:38,720 Speaker 6: the same this time. I think you know, the big 145 00:07:38,760 --> 00:07:42,920 Speaker 6: things that we're going to watch is first US domestic travel. 146 00:07:42,960 --> 00:07:46,760 Speaker 6: We think US domestic travel is probably cooling. It's the 147 00:07:46,800 --> 00:07:51,080 Speaker 6: biggest driver of revenues profits for the airlines, and so 148 00:07:51,240 --> 00:07:54,160 Speaker 6: to give us a good sense for how much that 149 00:07:54,280 --> 00:07:57,320 Speaker 6: is cooling right now, it's hard for these airlines to 150 00:07:57,360 --> 00:08:01,000 Speaker 6: continue to push to higher profitability if that market isn't working. 151 00:08:01,040 --> 00:08:05,760 Speaker 6: And we're expecting across the board that the US airlines 152 00:08:05,760 --> 00:08:09,080 Speaker 6: are going to have lower profitability than last year. In 153 00:08:09,160 --> 00:08:12,480 Speaker 6: the same quarter, we'll also get a first look at 154 00:08:12,600 --> 00:08:16,520 Speaker 6: Europe during the summer vacation season that's been super strong 155 00:08:16,760 --> 00:08:20,800 Speaker 6: for the big US full service carriers United, Delta, and American. 156 00:08:21,600 --> 00:08:23,680 Speaker 6: You know, we suspect that this market's going to cool 157 00:08:23,720 --> 00:08:28,160 Speaker 6: as well, although this is probably because of a slowing economy, 158 00:08:28,760 --> 00:08:31,600 Speaker 6: the US dollar weakening a bit. We don't think it's 159 00:08:31,600 --> 00:08:33,560 Speaker 6: going to fall off a cliff, but we just can't 160 00:08:33,559 --> 00:08:37,520 Speaker 6: see it remaining as super strong as it has been. 161 00:08:38,320 --> 00:08:40,800 Speaker 6: Kind of suspect that a lot of these travelers book 162 00:08:41,320 --> 00:08:43,400 Speaker 6: pretty far in advance. I have sort of a joke 163 00:08:43,480 --> 00:08:46,880 Speaker 6: that on Christmas Morning, everybody wakes up, opens their presence 164 00:08:46,920 --> 00:08:49,240 Speaker 6: and then decides where they're going to travel to Europe 165 00:08:49,240 --> 00:08:52,200 Speaker 6: that summer in the well heeled families of America, And 166 00:08:52,240 --> 00:08:54,200 Speaker 6: so we suspect that two q' is probably going to 167 00:08:54,240 --> 00:08:57,360 Speaker 6: hang in there pretty well. But we'll be listening closely 168 00:08:57,400 --> 00:09:02,120 Speaker 6: for trends for three Q and into four Q because 169 00:09:02,240 --> 00:09:03,880 Speaker 6: again we think there's a bit of a lag that 170 00:09:04,679 --> 00:09:09,000 Speaker 6: occurs in bookings into Europe. We still think two Q 171 00:09:09,200 --> 00:09:14,160 Speaker 6: may provide some insight into some potential softening in that market. 172 00:09:14,480 --> 00:09:16,320 Speaker 6: And I think one of the challenges we'll also have 173 00:09:16,360 --> 00:09:18,880 Speaker 6: as we look at Delta, like I said, is you know, 174 00:09:18,920 --> 00:09:22,720 Speaker 6: we're expecting that domestic market to soften, and we'll see 175 00:09:22,760 --> 00:09:26,079 Speaker 6: some of that in Delta's earnings, but it won't be 176 00:09:26,120 --> 00:09:29,400 Speaker 6: a good indicator as good an indicator, but we expect 177 00:09:29,400 --> 00:09:32,679 Speaker 6: that at the low cost carriers, because the low cost 178 00:09:32,720 --> 00:09:37,120 Speaker 6: carriers really catering to a different clientele, we would expect 179 00:09:37,160 --> 00:09:41,319 Speaker 6: that anything Delta reports on the domestic industry is going 180 00:09:41,400 --> 00:09:43,599 Speaker 6: to be even softer when we get to some of 181 00:09:43,640 --> 00:09:48,640 Speaker 6: the low costs like Jet Blue, Southwest Frontier, those kind 182 00:09:48,679 --> 00:09:49,240 Speaker 6: of companies. 183 00:09:49,880 --> 00:09:53,400 Speaker 1: Well back to Delta now, they telegraph this softening back 184 00:09:53,440 --> 00:09:56,679 Speaker 1: in April their last earnings report, right where they withdrew 185 00:09:56,679 --> 00:09:59,960 Speaker 1: a full year guidance because of softer demand. And since then, 186 00:10:00,200 --> 00:10:02,160 Speaker 1: I mean, we've seen more unrest in the Middle East, 187 00:10:02,559 --> 00:10:06,320 Speaker 1: these White House, you know, policies on migrants, travel bands, 188 00:10:06,720 --> 00:10:09,240 Speaker 1: the Trump tariffs, I mean, have things even gotten a 189 00:10:09,280 --> 00:10:10,839 Speaker 1: little worse than even you suspected? 190 00:10:11,040 --> 00:10:13,160 Speaker 6: Yeah, I mean I think that the backdrop is getting 191 00:10:13,559 --> 00:10:16,280 Speaker 6: is definitely getting more difficult. I don't know that they 192 00:10:16,480 --> 00:10:20,280 Speaker 6: totally telegraphed more difficult times ahead. You know, the sense 193 00:10:20,320 --> 00:10:23,520 Speaker 6: I got was at earnings there was just so much, 194 00:10:24,000 --> 00:10:26,920 Speaker 6: so many things changing in the US right tariffs were 195 00:10:26,960 --> 00:10:29,839 Speaker 6: being announced. Everybody wasn't sure what it was going to 196 00:10:29,880 --> 00:10:33,480 Speaker 6: do to GDP that I think that the company has 197 00:10:33,559 --> 00:10:37,600 Speaker 6: just decided that it was most prudent, maybe easiest, just 198 00:10:37,640 --> 00:10:40,839 Speaker 6: to pull guidance for the year. But as we went 199 00:10:40,840 --> 00:10:42,520 Speaker 6: through the call, there was you know, a lot of 200 00:10:42,520 --> 00:10:45,760 Speaker 6: discussion about how they hadn't seen the softening yet in 201 00:10:45,840 --> 00:10:48,520 Speaker 6: many of these markets. But again I agree with you. 202 00:10:48,559 --> 00:10:51,960 Speaker 6: I think since then the backdrop has gotten a little 203 00:10:52,000 --> 00:10:55,280 Speaker 6: bit worse on all those fronts. You know, again, I 204 00:10:55,280 --> 00:10:59,400 Speaker 6: think commentary on the back half of the year won't 205 00:10:59,400 --> 00:11:01,640 Speaker 6: be as strong. We'll be listening very closely for that, 206 00:11:02,440 --> 00:11:04,439 Speaker 6: but all this takes time to filter through, and so 207 00:11:04,600 --> 00:11:04,880 Speaker 6: too Q. 208 00:11:05,559 --> 00:11:06,480 Speaker 5: You know, we expect it. 209 00:11:06,400 --> 00:11:09,880 Speaker 6: To be okay, not more profitable than last year, but okay. 210 00:11:10,840 --> 00:11:14,200 Speaker 1: Now, chances are, if you're traveling this summer, you've already 211 00:11:14,240 --> 00:11:17,360 Speaker 1: made your flight and hotel bookings. But if not, could 212 00:11:17,440 --> 00:11:20,360 Speaker 1: that mean right now it's July there are solid deals 213 00:11:20,360 --> 00:11:21,400 Speaker 1: out there for consumers. 214 00:11:22,120 --> 00:11:25,920 Speaker 6: Again, I think that some of the shortest distance between 215 00:11:26,120 --> 00:11:30,840 Speaker 6: booking and travel is typically the domestic market. I would 216 00:11:30,840 --> 00:11:33,920 Speaker 6: suspect that there's probably some interesting deals out there right 217 00:11:33,960 --> 00:11:35,800 Speaker 6: now for the domestic market, because that's the one I 218 00:11:35,800 --> 00:11:39,320 Speaker 6: think we'll get softest sooner. And then I think, you know, 219 00:11:39,400 --> 00:11:42,239 Speaker 6: you'll see the airlines discount that try to fill those airplanes. 220 00:11:42,679 --> 00:11:44,720 Speaker 6: You know, the way we see sort of revenue management 221 00:11:44,760 --> 00:11:48,280 Speaker 6: at the airlines nowadays, all these carriers traditionally have sort 222 00:11:48,280 --> 00:11:52,439 Speaker 6: of eight plus percent capacity of every airplane that flies. 223 00:11:52,960 --> 00:11:55,200 Speaker 6: You know, those revenue managers will get out there and 224 00:11:55,240 --> 00:11:58,400 Speaker 6: try to fill those airplanes at the marginal cost of 225 00:11:58,440 --> 00:12:00,640 Speaker 6: the seat, and so, like I said, that means you 226 00:12:00,640 --> 00:12:04,360 Speaker 6: could get some pretty interesting opportunities. I suspect on some 227 00:12:04,440 --> 00:12:08,840 Speaker 6: of the international travel long haul Latin America, Asia, pac 228 00:12:09,040 --> 00:12:12,000 Speaker 6: and Europe, I suspect still a good amount of those 229 00:12:12,000 --> 00:12:15,200 Speaker 6: seats have been filled and filled earlier in the year, 230 00:12:15,400 --> 00:12:19,040 Speaker 6: and so I think you'll see maybe less great deals 231 00:12:19,040 --> 00:12:22,520 Speaker 6: in the marketplace for those, but you'll probably see some well. 232 00:12:22,559 --> 00:12:25,439 Speaker 1: Delta Airlines Q two earnings out this Thursday ahead of 233 00:12:25,440 --> 00:12:28,880 Speaker 1: Wall Street's opening bell our Thanks to George Ferguson, Senior analyst, 234 00:12:29,160 --> 00:12:33,280 Speaker 1: for airlines, aerospace, and defense with Bloomberg Intelligence and coming 235 00:12:33,320 --> 00:12:36,280 Speaker 1: up on Bloomberg day Break Weekend, JP Morgan Chase's Jamie 236 00:12:36,320 --> 00:12:40,080 Speaker 1: Diamond visits Ireland head of the US tariff deadline for Europe. 237 00:12:40,200 --> 00:12:52,560 Speaker 1: I'm Tom Busby and this is Bloomberg. This is Bloomberg 238 00:12:52,640 --> 00:12:54,680 Speaker 1: day Break Weekend, our global look ahead at the top 239 00:12:54,720 --> 00:12:57,720 Speaker 1: stories for investors in the coming week. I'm Tom Busby 240 00:12:57,720 --> 00:13:00,959 Speaker 1: in New York. Up later in our program, China firms 241 00:13:01,040 --> 00:13:03,079 Speaker 1: locked in a race to the bottom when it comes 242 00:13:03,120 --> 00:13:07,280 Speaker 1: to pricing artificial intelligence. But first, Jamie Diamond, Chairman and 243 00:13:07,400 --> 00:13:10,480 Speaker 1: CEO of JP Morgan, visits Ireland this week, just ahead 244 00:13:10,520 --> 00:13:13,960 Speaker 1: of this Wednesday's July ninth deadline for US tariffs, which, 245 00:13:14,080 --> 00:13:17,160 Speaker 1: if they go ahead as planned, would add fifty percent 246 00:13:17,240 --> 00:13:21,040 Speaker 1: duties to most European goods exported to the US. Ireland, 247 00:13:21,160 --> 00:13:24,960 Speaker 1: a major beneficiary of global economic integration. That's, according to 248 00:13:25,000 --> 00:13:29,280 Speaker 1: the Finance Minister, is aiming to maintain formidable growth while 249 00:13:29,320 --> 00:13:33,920 Speaker 1: balancing European interest with its traditionally strong relationship with America. 250 00:13:34,160 --> 00:13:37,480 Speaker 1: For more, we turn to Bloomberg Daybreak anchor Caroline Hepger 251 00:13:38,000 --> 00:13:38,880 Speaker 1: in the midst. 252 00:13:38,760 --> 00:13:41,760 Speaker 2: Of a boom in Europe's banking sector. JP Morgan, Chair 253 00:13:41,800 --> 00:13:44,160 Speaker 2: and CEO Jamie Diamond, will head to Dublin for talks 254 00:13:44,200 --> 00:13:47,160 Speaker 2: with the country's second in command on trade, tariffs and 255 00:13:47,200 --> 00:13:51,800 Speaker 2: sustaining economic growth the Banking Store. We'll meet with Ireland's 256 00:13:51,920 --> 00:13:55,840 Speaker 2: tournished in effect, the Deputy Prime Minister. Just as geopolitical 257 00:13:55,920 --> 00:14:01,440 Speaker 2: uncertainty both drives interest in Ireland's goldilock business climate but 258 00:14:01,559 --> 00:14:05,480 Speaker 2: also could pose threats to its tech and farmer industry. Well, 259 00:14:05,559 --> 00:14:09,040 Speaker 2: joining me now to discuss is Olivia Fletcher, Boomberg's Dublin 260 00:14:09,080 --> 00:14:12,640 Speaker 2: bureau reporter, and here in London Blueberg Senior finance reporter 261 00:14:12,840 --> 00:14:15,400 Speaker 2: Laura Noonan. Welcome to both of you and thanks for 262 00:14:15,440 --> 00:14:19,200 Speaker 2: being with me. Olivia. To you first. Jamie Diamond has 263 00:14:19,400 --> 00:14:22,960 Speaker 2: raised the alarm on macroeconomic risk, on bond markets, on 264 00:14:23,080 --> 00:14:26,360 Speaker 2: tariff uncertainty. What do you think he's going to be 265 00:14:26,600 --> 00:14:30,200 Speaker 2: talking about and thinking about when he's in Ireland. How 266 00:14:30,280 --> 00:14:33,480 Speaker 2: much is Ireland at a risk from all of these Well. 267 00:14:33,520 --> 00:14:39,200 Speaker 7: Big question now is how Ireland could remain competitive. You know, 268 00:14:39,280 --> 00:14:43,320 Speaker 7: its whole economic model has been based off attracting and 269 00:14:43,360 --> 00:14:47,360 Speaker 7: knowing foreign direct investment internationally, got especially from a lot 270 00:14:47,400 --> 00:14:50,320 Speaker 7: of US firms. There are a lot of multinational hubs here, 271 00:14:50,800 --> 00:14:54,720 Speaker 7: Apple Visor, a lot of the investment banks here as well, 272 00:14:55,080 --> 00:14:59,240 Speaker 7: And the key is going to be staying competitives because 273 00:15:00,280 --> 00:15:02,520 Speaker 7: was basically the envy of Europe. You know, it's got 274 00:15:02,480 --> 00:15:07,800 Speaker 7: this huge budgets. Last year reaped record thirty nine billion 275 00:15:07,880 --> 00:15:11,680 Speaker 7: euros in corporate tax receipts. Albeit they are kind of volatile, 276 00:15:11,760 --> 00:15:15,040 Speaker 7: but that's a huge, huge amount of money that has 277 00:15:15,120 --> 00:15:18,960 Speaker 7: transformed it from one of europe'spores to one of its richest. 278 00:15:19,120 --> 00:15:21,920 Speaker 7: But now it's kind of make an headvise, I guess 279 00:15:22,080 --> 00:15:25,239 Speaker 7: for maybe the wrong reasons, because Arland is now directly 280 00:15:25,320 --> 00:15:28,040 Speaker 7: in Trump's line of sight. It has one of the 281 00:15:28,080 --> 00:15:31,600 Speaker 7: biggest trade imbalances with the US, and Howard Lutnick has 282 00:15:31,720 --> 00:15:36,040 Speaker 7: repeatedly singled out Land for its huge SURFLUS. So big question, 283 00:15:36,240 --> 00:15:39,520 Speaker 7: I guess is how does Ireland continue to attract and 284 00:15:39,600 --> 00:15:44,880 Speaker 7: maintain the foreign direct investment that's kind of funded its coffers, 285 00:15:45,000 --> 00:15:47,160 Speaker 7: just as Trump is trying to nawse so many of 286 00:15:47,200 --> 00:15:49,600 Speaker 7: those US companies back to American shores. 287 00:15:50,160 --> 00:15:54,040 Speaker 2: Laura A lot of uncertainty then around tariffs and trade 288 00:15:54,080 --> 00:15:55,920 Speaker 2: and what that means for Ireland, there. 289 00:15:55,840 --> 00:15:57,800 Speaker 8: Is certainly a lot of uncertainty. What I would say 290 00:15:57,920 --> 00:16:01,840 Speaker 8: is Ireland has tried to tread very fine line around 291 00:16:02,520 --> 00:16:06,240 Speaker 8: Turfs and around the current Trump administration. So Ireland's always 292 00:16:06,240 --> 00:16:08,920 Speaker 8: been in a particular position. I think where it is 293 00:16:09,120 --> 00:16:11,600 Speaker 8: economically and politically is also similar to where it is 294 00:16:11,600 --> 00:16:14,920 Speaker 8: from a geographic perspective. It is midway between it itself 295 00:16:14,920 --> 00:16:17,760 Speaker 8: has been between the EU and between the US, and 296 00:16:17,800 --> 00:16:21,880 Speaker 8: there has always been close ties between Ireland and the US, 297 00:16:21,920 --> 00:16:24,440 Speaker 8: some of which predate Ireland's EU membership. So I think 298 00:16:24,480 --> 00:16:26,680 Speaker 8: Ireland is trying to play a very fine line here. 299 00:16:27,000 --> 00:16:30,960 Speaker 8: They are very conscious of not wanting to alienate the 300 00:16:31,080 --> 00:16:36,360 Speaker 8: US administration anymore than is definitionally necessary. Because Ireland does 301 00:16:36,400 --> 00:16:38,800 Speaker 8: have a low corporate tax base, that low corporate tax 302 00:16:38,840 --> 00:16:42,040 Speaker 8: base has attracted a lot of multinational activity, a lot 303 00:16:42,040 --> 00:16:45,280 Speaker 8: of US activity, which the US administration believes should be 304 00:16:45,360 --> 00:16:48,520 Speaker 8: in the US. So that is a definitional problem. But 305 00:16:48,760 --> 00:16:52,400 Speaker 8: beyond that, Ireland is trying to position itself as a 306 00:16:52,520 --> 00:16:55,680 Speaker 8: friend to the US while also being a good European 307 00:16:56,000 --> 00:16:59,560 Speaker 8: So you won't see the Irish administration making the same 308 00:16:59,640 --> 00:17:03,520 Speaker 8: kind of combative statements as what you have seen some 309 00:17:03,560 --> 00:17:06,320 Speaker 8: of the other eunations doing. In terms of Jamie coming 310 00:17:06,359 --> 00:17:09,840 Speaker 8: to Ireland and Jamie Diamond, JP Morgan, Chase CEO, Jamie 311 00:17:09,880 --> 00:17:12,119 Speaker 8: loves Ireland. That's the first thing to say. There are 312 00:17:12,160 --> 00:17:16,640 Speaker 8: sometimes it's several times, there are some Americans who love Ireland. 313 00:17:16,840 --> 00:17:19,760 Speaker 8: Jamie is one of those. So he loves Ireland. I 314 00:17:19,760 --> 00:17:23,240 Speaker 8: think he will be stressing the benefits our of the 315 00:17:23,240 --> 00:17:26,040 Speaker 8: Irish economy. He'll be spress stressing all the great things 316 00:17:26,560 --> 00:17:29,840 Speaker 8: that the Irish landscape has delivered for JP Morgan, They've 317 00:17:29,880 --> 00:17:31,920 Speaker 8: already got a couple of thousand people there. One of 318 00:17:31,960 --> 00:17:34,639 Speaker 8: the jokes about Jamie coming to Ireland is that Jamie 319 00:17:34,640 --> 00:17:36,760 Speaker 8: will come to Ireland to promise a couple of thousand 320 00:17:36,800 --> 00:17:38,639 Speaker 8: jobs and then it's up for everyone else to figure 321 00:17:38,640 --> 00:17:40,159 Speaker 8: out how to make that happen, or like how to 322 00:17:40,200 --> 00:17:42,679 Speaker 8: walk that back. Like he just loves the place. So 323 00:17:42,760 --> 00:17:45,760 Speaker 8: I think he will be stressing the strengths of Ireland 324 00:17:46,119 --> 00:17:48,680 Speaker 8: and also trying to encourage Ireland to stay the path. 325 00:17:48,680 --> 00:17:51,920 Speaker 8: From a stability perspective, one of the other assets Arreold 326 00:17:51,960 --> 00:17:54,639 Speaker 8: has had through the recent geopolitical ups and downs is 327 00:17:54,640 --> 00:17:57,200 Speaker 8: that there have been a lot of big elections. There's 328 00:17:57,240 --> 00:17:59,119 Speaker 8: been a lot of political shifts in a lot of 329 00:17:59,119 --> 00:18:02,119 Speaker 8: big countries and the UK. So last year we had 330 00:18:02,119 --> 00:18:04,400 Speaker 8: elections and a lot of major EU countries. We had 331 00:18:04,440 --> 00:18:07,359 Speaker 8: elections in the US, there was a lot of public 332 00:18:07,400 --> 00:18:11,080 Speaker 8: talk about that. Internationally, we also had Irish elections. Nobody 333 00:18:11,119 --> 00:18:14,600 Speaker 8: cared because essentially they rearranged the chairs in a very 334 00:18:14,600 --> 00:18:16,560 Speaker 8: similar order to the old chairs. And I think that 335 00:18:16,640 --> 00:18:20,240 Speaker 8: stability as well has become an asset. So while it 336 00:18:20,240 --> 00:18:22,800 Speaker 8: doesn't make Olivia's life uny easier in trying to excite 337 00:18:22,800 --> 00:18:26,479 Speaker 8: people about the Irish elections, it does become a selling 338 00:18:26,560 --> 00:18:30,640 Speaker 8: point when you think about companies like JP Morrigan, who 339 00:18:30,720 --> 00:18:33,120 Speaker 8: in this world have a lot of uncertainty. I think 340 00:18:33,160 --> 00:18:36,280 Speaker 8: people do look for stability, and I think Jamie will 341 00:18:36,320 --> 00:18:38,600 Speaker 8: be stressing the stability they have found in Ireland and 342 00:18:38,640 --> 00:18:41,520 Speaker 8: will be encouraging the country to continue on that route. 343 00:18:41,640 --> 00:18:44,560 Speaker 2: And of course some of these points were reflected in 344 00:18:44,600 --> 00:18:48,640 Speaker 2: some recent interviews that we've had, including my Daybreak Europe 345 00:18:48,680 --> 00:18:52,159 Speaker 2: co host co Ankers Stephen Carroll, who sat down with 346 00:18:52,200 --> 00:18:56,480 Speaker 2: the Irish Finance Minister Pascal Donacue when Bloomberg opened its 347 00:18:56,560 --> 00:18:59,639 Speaker 2: brand new bureau in Dublin. So have a listen to 348 00:18:59,680 --> 00:19:01,080 Speaker 2: what on a Hue had to say. 349 00:19:01,440 --> 00:19:04,200 Speaker 9: We have a growth outlook for our economy even now 350 00:19:04,560 --> 00:19:07,960 Speaker 9: of to maybe even more than two percent per year. 351 00:19:08,560 --> 00:19:11,800 Speaker 9: The reason why these companies have part of their global 352 00:19:11,880 --> 00:19:15,040 Speaker 9: supply chains here in Ireland is because we have the skill, 353 00:19:15,320 --> 00:19:19,000 Speaker 9: the experience and the competitiveness built up to keep them 354 00:19:19,000 --> 00:19:21,280 Speaker 9: in our country, and we will look down at how 355 00:19:21,320 --> 00:19:24,600 Speaker 9: we can maintained us even if the trade environment around 356 00:19:24,600 --> 00:19:25,840 Speaker 9: it does begin to change. 357 00:19:26,040 --> 00:19:29,800 Speaker 2: So quite a rosy vision then for Ireland's economy, despite 358 00:19:30,119 --> 00:19:35,840 Speaker 2: the trade worries from Donahue Olivia, in terms of you know, 359 00:19:35,920 --> 00:19:39,440 Speaker 2: the reliance as you say, on corporate tax receipts from 360 00:19:40,160 --> 00:19:43,720 Speaker 2: large multinational companies, and also what the government is going 361 00:19:43,760 --> 00:19:47,240 Speaker 2: to do with the budget surplus that it's got in 362 00:19:47,320 --> 00:19:50,560 Speaker 2: terms of setting up a sovereign wealth fund. What are 363 00:19:50,600 --> 00:19:52,760 Speaker 2: the next steps for the Irish government? 364 00:19:53,160 --> 00:19:56,720 Speaker 7: Well, like you say, the picture is perhaps not as 365 00:19:56,800 --> 00:20:00,159 Speaker 7: rosy as it once. You know, his Finance Department and 366 00:20:00,400 --> 00:20:03,680 Speaker 7: has revised an it's domestic economic outlook, and so has 367 00:20:03,680 --> 00:20:06,320 Speaker 7: a central bank. You know, the kind of saying that 368 00:20:07,040 --> 00:20:11,520 Speaker 7: while Arland will still see a star plus, the selflus 369 00:20:11,760 --> 00:20:14,960 Speaker 7: might not be as high as you know, it was 370 00:20:14,960 --> 00:20:17,919 Speaker 7: once anticipated to be. And so the next steps for 371 00:20:18,240 --> 00:20:21,359 Speaker 7: the Irish administration are, like I say, to continue to 372 00:20:21,480 --> 00:20:25,600 Speaker 7: keep that competitive edge, you know, the Finance Department and 373 00:20:25,720 --> 00:20:29,080 Speaker 7: you know, and also Arland's for Indirect Investment Agency. The 374 00:20:29,119 --> 00:20:31,800 Speaker 7: idea that keen to stress that while Land has in 375 00:20:31,840 --> 00:20:35,000 Speaker 7: the parson have attracted these companies because they are a 376 00:20:35,040 --> 00:20:38,800 Speaker 7: strategic tax space. You know, Arland also has a hugely 377 00:20:39,000 --> 00:20:42,520 Speaker 7: skilled workforce, and like Law has said as well. Actually 378 00:20:42,560 --> 00:20:44,679 Speaker 7: when I went to see the idea recently when the 379 00:20:44,760 --> 00:20:48,439 Speaker 7: press conferences, their chair said that Arland stands out as 380 00:20:48,480 --> 00:20:52,760 Speaker 7: an oasis of stability to investors. So I think the 381 00:20:52,840 --> 00:20:56,000 Speaker 7: key thing for Arland is to you know, remain stable, 382 00:20:56,040 --> 00:20:57,720 Speaker 7: which seems like that's something they'll be able to do, 383 00:20:57,880 --> 00:21:01,000 Speaker 7: and to continue squirrel and away some of that money 384 00:21:01,000 --> 00:21:04,200 Speaker 7: into the sovereign welfare because Island isn't just thinking about 385 00:21:04,240 --> 00:21:09,080 Speaker 7: the next three four years. The problems potentially could come 386 00:21:09,200 --> 00:21:11,879 Speaker 7: you know, ten years down the line, when you know, 387 00:21:11,960 --> 00:21:15,119 Speaker 7: for example, a company might not pull out of Island 388 00:21:15,200 --> 00:21:17,600 Speaker 7: right away, but they might just decide not to invest 389 00:21:17,800 --> 00:21:20,240 Speaker 7: in a pharmaceutical plant in ten years time. So the 390 00:21:20,280 --> 00:21:22,760 Speaker 7: issue isn't necessarily that all these companies are going to 391 00:21:22,800 --> 00:21:25,639 Speaker 7: lead right away, it's that what might just not be 392 00:21:25,720 --> 00:21:27,879 Speaker 7: there in future, which is harder to measure. So you know, 393 00:21:27,960 --> 00:21:29,840 Speaker 7: Ireland is having to look at all kinds of other 394 00:21:29,840 --> 00:21:33,040 Speaker 7: ways to continue to attract companies. Also invest more in 395 00:21:33,119 --> 00:21:35,639 Speaker 7: research and development. That's quite another thing that's hyped up 396 00:21:35,680 --> 00:21:37,160 Speaker 7: on their agenda, things like that. 397 00:21:37,359 --> 00:21:41,000 Speaker 2: Lord to bring you the context also amidst all of 398 00:21:41,040 --> 00:21:44,240 Speaker 2: this is that European banks have done incredibly well in 399 00:21:44,280 --> 00:21:46,280 Speaker 2: the first half of this year, so there's also that 400 00:21:46,359 --> 00:21:49,640 Speaker 2: context to kind of bring into to this that European 401 00:21:49,640 --> 00:21:52,200 Speaker 2: banks are again sort of back in focus. 402 00:21:52,560 --> 00:21:55,280 Speaker 8: Yeah, I mean Irish banks are a bit of a 403 00:21:55,359 --> 00:21:57,400 Speaker 8: different sector to European banks in the sense that what's 404 00:21:57,400 --> 00:22:00,920 Speaker 8: happening there priorly reflects a reprivatization the market. Ireland is 405 00:22:00,920 --> 00:22:04,760 Speaker 8: a very particular banking market, so there are basically two 406 00:22:04,880 --> 00:22:07,400 Speaker 8: very large banks AIB and Bank of Ireland who dominate 407 00:22:07,440 --> 00:22:10,639 Speaker 8: the market one slightly smaller bank. AIB has just returned 408 00:22:10,640 --> 00:22:12,880 Speaker 8: to fully private ownership. That has put a lot of 409 00:22:13,200 --> 00:22:16,280 Speaker 8: win behind Ireland sales, So I think it's a bit 410 00:22:16,320 --> 00:22:19,439 Speaker 8: of a different sector. The Riish banking sector has gone well, 411 00:22:19,480 --> 00:22:22,320 Speaker 8: but they also had obviously a very problematic legacy, and 412 00:22:22,359 --> 00:22:24,520 Speaker 8: these things do tend to go up in ups and down. 413 00:22:24,600 --> 00:22:26,920 Speaker 8: So because they lost a lot of money, they then 414 00:22:27,000 --> 00:22:29,200 Speaker 8: tighten their standards a ton. I mean, if you think 415 00:22:29,240 --> 00:22:32,400 Speaker 8: about underwriting standard Ireland and probably has some of the toughest. 416 00:22:32,640 --> 00:22:35,719 Speaker 8: We have very tough mortgage rules. All those things do 417 00:22:35,960 --> 00:22:38,480 Speaker 8: mean that the sector should out performed. So I think 418 00:22:38,680 --> 00:22:40,679 Speaker 8: the domestic bank sector is going very well. I did 419 00:22:40,800 --> 00:22:42,639 Speaker 8: want to say a word on the foreign banking sector 420 00:22:42,640 --> 00:22:44,600 Speaker 8: as well in terms of next steps and what Ireland 421 00:22:44,680 --> 00:22:48,119 Speaker 8: is doing. So Ireland will shortly launch its next international 422 00:22:48,160 --> 00:22:51,560 Speaker 8: finance strategy. They launched their last one in twenty twenty. 423 00:22:52,119 --> 00:22:55,040 Speaker 8: This is basically their strategy to make Ireland they go 424 00:22:55,080 --> 00:22:58,600 Speaker 8: to destination for international finance and that will see them 425 00:22:58,640 --> 00:23:01,320 Speaker 8: tackle some of the structure or see them they've certainly 426 00:23:01,359 --> 00:23:03,760 Speaker 8: been lobbied on some of the structural points. Those are 427 00:23:03,800 --> 00:23:06,919 Speaker 8: things like infrastructure. Anyone who's been to Ireland will know 428 00:23:07,000 --> 00:23:08,919 Speaker 8: that we do not have a metro from the airport, 429 00:23:08,960 --> 00:23:11,200 Speaker 8: which has been a bone of contention. I first wrote 430 00:23:11,200 --> 00:23:13,719 Speaker 8: about it in two thousand and four, so there has 431 00:23:13,760 --> 00:23:16,320 Speaker 8: been a very there is that there is housing. There 432 00:23:16,320 --> 00:23:19,120 Speaker 8: are some issues around tax, both in terms of funds taxation. 433 00:23:19,240 --> 00:23:20,960 Speaker 8: We talk a lot about banks, but funds are big 434 00:23:20,960 --> 00:23:24,119 Speaker 8: industry in Ireland. Issues around that, issues around the banking 435 00:23:24,160 --> 00:23:27,360 Speaker 8: bonus tax. So there are policy issues for the international 436 00:23:27,480 --> 00:23:30,399 Speaker 8: finance sector and the international sector more broadly, because we 437 00:23:30,480 --> 00:23:33,040 Speaker 8: all care about housing and infrastructure, which I think Ireland 438 00:23:33,119 --> 00:23:35,120 Speaker 8: is going to commit to tackling quite soon. 439 00:23:35,440 --> 00:23:40,000 Speaker 2: Olivia a last thought. As with all the other European countries, 440 00:23:40,200 --> 00:23:45,399 Speaker 2: Ireland is also under pressure to continue achieving strong economic growth. 441 00:23:45,440 --> 00:23:47,040 Speaker 2: Can they continue to deliver that? 442 00:23:47,760 --> 00:23:52,199 Speaker 7: So the forecast suggests, the forecasts from the Department of 443 00:23:52,200 --> 00:23:55,920 Speaker 7: Finance and the Central Banks suggests that Ireland will continue 444 00:23:55,960 --> 00:23:59,400 Speaker 7: to grow, but at a slower pace. So while Onland 445 00:23:59,440 --> 00:24:02,160 Speaker 7: may continue to you know, like Laura said, there. 446 00:24:01,960 --> 00:24:04,000 Speaker 2: Are a lot of roadblocks to that. 447 00:24:04,000 --> 00:24:07,800 Speaker 7: That actually some of the biggest points that the multinationals raised, 448 00:24:07,960 --> 00:24:11,160 Speaker 7: we're violand you know, things like fix and infrastructure, energy grid, 449 00:24:11,720 --> 00:24:16,760 Speaker 7: increase in housing starts, water supply. So while Island is 450 00:24:16,800 --> 00:24:20,639 Speaker 7: probably can of continue to grow, there are definitely roadlocks 451 00:24:20,640 --> 00:24:24,120 Speaker 7: to that and that's probably Areland's biggest challenge right now. 452 00:24:24,920 --> 00:24:28,720 Speaker 2: So in terms of the economic growth picture your view, Laura. 453 00:24:29,040 --> 00:24:31,080 Speaker 8: Yeah, so I think without putting in too much about 454 00:24:31,119 --> 00:24:33,080 Speaker 8: Green Jersey on is where saying Ireland had the half 455 00:24:33,160 --> 00:24:35,760 Speaker 8: fastest growth rate of any country in the EU in 456 00:24:35,800 --> 00:24:38,000 Speaker 8: the first quarter and is expected to have one of 457 00:24:38,080 --> 00:24:40,679 Speaker 8: the highest growth rates economically, So while it will be 458 00:24:40,800 --> 00:24:42,840 Speaker 8: lower than it has been, it will still be one 459 00:24:42,840 --> 00:24:44,440 Speaker 8: of the highest in the EU. Yeah. 460 00:24:44,440 --> 00:24:46,600 Speaker 2: Absolutely, Laura, thank you so much for being with us 461 00:24:46,840 --> 00:24:49,719 Speaker 2: today here in the radio studio Blueberg Senior Finance Reporter 462 00:24:50,160 --> 00:24:54,440 Speaker 2: Laura Noonan, And in Dublin our Dublin bureau reporter Olivia Fletcher. 463 00:24:54,520 --> 00:24:57,679 Speaker 1: Thank you, thanks Caroline. And coming up on Bloomberg day 464 00:24:57,680 --> 00:25:02,000 Speaker 1: Break weekend, how China's AI drag risk choking each other. 465 00:25:02,240 --> 00:25:04,840 Speaker 10: Whenever a new craze emerges, there's always just so many 466 00:25:04,920 --> 00:25:06,920 Speaker 10: rivals that sort of come out of the woodwork ready 467 00:25:06,920 --> 00:25:09,320 Speaker 10: to pounce. And now these sort of same forces are 468 00:25:09,320 --> 00:25:12,400 Speaker 10: really in full swing in the booming artificial intelligence industry, 469 00:25:12,520 --> 00:25:15,280 Speaker 10: and these AI firms have really been focused on this 470 00:25:15,320 --> 00:25:17,720 Speaker 10: sort of classic playbook, which is scaling up their user 471 00:25:17,760 --> 00:25:19,600 Speaker 10: bases and racing for market share. 472 00:25:19,800 --> 00:25:33,480 Speaker 1: I'm Tom Busby and this is Bloombery. This is Bloomberg 473 00:25:33,560 --> 00:25:35,440 Speaker 1: day Break Weekend, our global look ahead. At the top 474 00:25:35,480 --> 00:25:38,440 Speaker 1: stories for investors in the coming week. I'm Tom Busby 475 00:25:38,440 --> 00:25:41,520 Speaker 1: in New York. Recent data out of China providing an 476 00:25:41,560 --> 00:25:44,440 Speaker 1: ambiguous read on the health of the world's second largest economy. 477 00:25:44,560 --> 00:25:48,000 Speaker 1: With that, investors will be closely watching the next round 478 00:25:48,040 --> 00:25:50,840 Speaker 1: of inflation data out of Beijing, and for a preview, 479 00:25:51,119 --> 00:25:53,440 Speaker 1: let's get to the host of the Daybreak Asia podcast, 480 00:25:53,600 --> 00:25:54,320 Speaker 1: Doug Krisner. 481 00:25:54,680 --> 00:25:57,679 Speaker 3: Tom. Many recent data points for the Chinese economy have 482 00:25:57,840 --> 00:26:01,760 Speaker 3: been mixed in the last week that saisheen manufacturing PMI 483 00:26:01,840 --> 00:26:06,359 Speaker 3: for June seem to improve into expansion. Bloomberg Economic says 484 00:26:06,400 --> 00:26:08,440 Speaker 3: this is a reflection of the truth in the US 485 00:26:08,560 --> 00:26:12,800 Speaker 3: China trade war. However, the latest flash reading from China 486 00:26:12,840 --> 00:26:17,719 Speaker 3: beige Book International shows slowing in June. Most sectors, according 487 00:26:17,760 --> 00:26:20,760 Speaker 3: to China Beige Book, weakened as the result of declining 488 00:26:20,800 --> 00:26:25,080 Speaker 3: revenue and profits, as well as falling prices and fewer hirings. 489 00:26:25,440 --> 00:26:27,639 Speaker 3: Now in the week ahead, we'll get fresh data on 490 00:26:27,840 --> 00:26:30,919 Speaker 3: inflation in the form of both the consumer price and 491 00:26:31,000 --> 00:26:34,440 Speaker 3: producer price indices for a closer look. Now, I'm joined 492 00:26:34,440 --> 00:26:37,960 Speaker 3: by Shazad Kazi. He is the COO also Managing director 493 00:26:38,240 --> 00:26:41,919 Speaker 3: at China beij Book International. When we talk about price 494 00:26:41,960 --> 00:26:45,919 Speaker 3: activity in China, I'm tempted to use the term deflation, 495 00:26:46,080 --> 00:26:49,360 Speaker 3: but maybe that's a bit overused. Can we still use 496 00:26:49,440 --> 00:26:52,360 Speaker 3: that term to characterize what's going on on the mainland? 497 00:26:52,640 --> 00:26:55,000 Speaker 11: If you look at the producer side of the equation, 498 00:26:55,520 --> 00:26:57,960 Speaker 11: there's no question about the fact that there has been 499 00:26:58,480 --> 00:27:03,000 Speaker 11: deflation in and it's tied into the whole concept of 500 00:27:03,080 --> 00:27:06,040 Speaker 11: excess capacity and companies having to cut prices to sell 501 00:27:06,080 --> 00:27:08,840 Speaker 11: and so forth. But if you look at their CPI measure, 502 00:27:08,920 --> 00:27:11,480 Speaker 11: and especially if you look at core CPI, what you 503 00:27:11,560 --> 00:27:14,240 Speaker 11: have got going on and the official data even is 504 00:27:14,280 --> 00:27:18,600 Speaker 11: a lot of disinflation rather than outright deflation. But the 505 00:27:18,640 --> 00:27:21,600 Speaker 11: problem is that there is a profitability challenge in China, 506 00:27:21,640 --> 00:27:23,919 Speaker 11: and fundamentally there's a price war going on in so 507 00:27:23,960 --> 00:27:26,639 Speaker 11: many sectors that that's what's driving depressing a lot of 508 00:27:26,640 --> 00:27:27,480 Speaker 11: those indicators. 509 00:27:27,840 --> 00:27:31,480 Speaker 3: So is this merely an issue of overcapacity or is 510 00:27:31,520 --> 00:27:33,560 Speaker 3: there something else that we need to unpack here? 511 00:27:34,200 --> 00:27:37,000 Speaker 11: A lot of it is certainly over capacity. Chinese industrial 512 00:27:37,000 --> 00:27:41,399 Speaker 11: sector has produced so much, whether it's you're talking about steel, aluminum, copper, 513 00:27:41,640 --> 00:27:44,919 Speaker 11: whether you're talking about cars or evs, now that every 514 00:27:45,080 --> 00:27:47,919 Speaker 11: company feels a pressure to cut cut cut prices in 515 00:27:48,000 --> 00:27:51,800 Speaker 11: order to sell domestically and even more importantly, to sell abroad, 516 00:27:52,080 --> 00:27:54,520 Speaker 11: which is where Chinese overcapacity problem comes in. They cut 517 00:27:54,560 --> 00:27:57,760 Speaker 11: prices to the point where every other countries companies tend 518 00:27:57,840 --> 00:28:00,400 Speaker 11: to not be very competitive, and then that's they fled 519 00:28:00,440 --> 00:28:02,720 Speaker 11: their goods. But ultimately comes back in the form of 520 00:28:02,760 --> 00:28:05,480 Speaker 11: weak industrial profits and it comes back in the form 521 00:28:05,520 --> 00:28:10,200 Speaker 11: of this disinflation or oftentimes deflation challenge that we're talking 522 00:28:10,200 --> 00:28:10,879 Speaker 11: about in China. 523 00:28:11,080 --> 00:28:15,040 Speaker 3: Is there an effective policy response Beijing should employ to 524 00:28:15,160 --> 00:28:18,200 Speaker 3: kind of begin to turn things around or is it 525 00:28:18,280 --> 00:28:21,000 Speaker 3: more a matter of things being in place right now? 526 00:28:21,119 --> 00:28:24,360 Speaker 3: But global markets need to be a little bit more patient. 527 00:28:24,880 --> 00:28:27,399 Speaker 11: So there's no question. You know, this week we got 528 00:28:27,440 --> 00:28:31,360 Speaker 11: some policy statements out criticizing these price wars and saying 529 00:28:31,359 --> 00:28:34,040 Speaker 11: we have to push back on them by authorities in China. 530 00:28:34,160 --> 00:28:36,160 Speaker 11: But you know the reality is that there's no incentive 531 00:28:36,160 --> 00:28:38,800 Speaker 11: structure there. As a matter of fact, the incentive structure 532 00:28:38,840 --> 00:28:42,600 Speaker 11: is the quite opposite. There's no pressure ultimately on many companies, 533 00:28:42,720 --> 00:28:45,400 Speaker 11: especially large state owned companies, to turn a profit. Ever, 534 00:28:45,840 --> 00:28:47,800 Speaker 11: and so as long as you have access to cheap 535 00:28:47,920 --> 00:28:50,680 Speaker 11: or free loans from banks or you know, that Beijing 536 00:28:50,760 --> 00:28:54,040 Speaker 11: is going to bail you out. There's absolutely no desire 537 00:28:54,400 --> 00:28:56,400 Speaker 11: to say we have to whether we cannot do these 538 00:28:56,440 --> 00:28:58,120 Speaker 11: price cutting. As a matter of fact, the whole reason 539 00:28:58,160 --> 00:29:00,760 Speaker 11: you've got this price cutting is because many sectors are 540 00:29:00,800 --> 00:29:02,440 Speaker 11: overly subsidized in that country. 541 00:29:02,520 --> 00:29:05,240 Speaker 3: When I think of problems with price activity, I think 542 00:29:05,240 --> 00:29:08,600 Speaker 3: of the property market, where in many cases prices are 543 00:29:08,640 --> 00:29:11,000 Speaker 3: continuing to decline. Is that still the case? 544 00:29:11,440 --> 00:29:14,600 Speaker 11: That is, unfortunately the case where you had a brief 545 00:29:14,640 --> 00:29:17,720 Speaker 11: period here where prices were beginning to rebound and even 546 00:29:17,760 --> 00:29:19,680 Speaker 11: though year over year they were looking weak, you know, 547 00:29:19,920 --> 00:29:23,160 Speaker 11: the weakness was certainly starting to dissipate. I would say 548 00:29:23,720 --> 00:29:26,680 Speaker 11: that is going away, and you are getting reports at 549 00:29:26,760 --> 00:29:31,360 Speaker 11: least directionally saying that prices are again starting to decline. 550 00:29:31,520 --> 00:29:34,520 Speaker 3: Based on the data that you have access to, what 551 00:29:34,560 --> 00:29:37,800 Speaker 3: are your expectations for the CPI and PPI prints that 552 00:29:37,840 --> 00:29:39,520 Speaker 3: we're going to be looking at in the week ahead. 553 00:29:39,840 --> 00:29:41,640 Speaker 11: Look, if you were to base it strictly on what 554 00:29:41,680 --> 00:29:44,440 Speaker 11: we're seeing here, where we're seeing outright, you know, slow 555 00:29:44,480 --> 00:29:46,640 Speaker 11: downs in our in our sales prices and disease and 556 00:29:46,640 --> 00:29:49,239 Speaker 11: our input costs and disease. That tells us that the 557 00:29:49,280 --> 00:29:53,320 Speaker 11: CPI and PPI prints. We should get lower prints there, 558 00:29:53,360 --> 00:29:56,520 Speaker 11: we should probably get you know, CPI falling and PPI 559 00:29:56,720 --> 00:29:58,160 Speaker 11: probably contracting further. 560 00:29:58,440 --> 00:30:01,920 Speaker 3: But this is nothing really that the cent Bank can address, 561 00:30:02,080 --> 00:30:05,200 Speaker 3: or can the PBOC change policy in a way to 562 00:30:05,280 --> 00:30:07,880 Speaker 3: kind of reverse this. It seems to be coming back 563 00:30:07,920 --> 00:30:10,200 Speaker 3: time and again to the issue of sentiment. Whether you're 564 00:30:10,240 --> 00:30:14,400 Speaker 3: talking about consumers or businesses, the sentiment levels have been 565 00:30:14,680 --> 00:30:15,320 Speaker 3: just too weak. 566 00:30:15,680 --> 00:30:18,040 Speaker 11: That's exactly right. The sentiment levels have been too weak. 567 00:30:18,200 --> 00:30:21,680 Speaker 11: And the problem is that monetary policy in China for 568 00:30:21,720 --> 00:30:24,320 Speaker 11: a while now has not been producing the kinds of 569 00:30:24,360 --> 00:30:26,120 Speaker 11: results you would expect it to. And by that I 570 00:30:26,160 --> 00:30:30,360 Speaker 11: mean that interest rates keep coming down. Yet companies generally 571 00:30:30,440 --> 00:30:33,680 Speaker 11: speaking are not particularly inclined to borrow. So in May, 572 00:30:33,720 --> 00:30:36,480 Speaker 11: for example, we saw this nice jump a multi high 573 00:30:36,520 --> 00:30:39,960 Speaker 11: from a monthly standpoint in our borrowing data. It came 574 00:30:40,040 --> 00:30:42,560 Speaker 11: back down to earth in June. So you don't have 575 00:30:42,640 --> 00:30:46,280 Speaker 11: this sustained rise in corporate borrowing for several years over 576 00:30:46,280 --> 00:30:48,400 Speaker 11: the last almost five years as a matter of fact, now, 577 00:30:48,720 --> 00:30:51,960 Speaker 11: because the economy overall is quite weak. So if you're 578 00:30:51,960 --> 00:30:53,920 Speaker 11: not investing a lot, if you're not hiring a lot, 579 00:30:54,000 --> 00:30:56,960 Speaker 11: if that r and d isn't there. The desire to 580 00:30:57,040 --> 00:30:59,000 Speaker 11: borrow is not going to be there. It makes no 581 00:30:59,120 --> 00:31:00,120 Speaker 11: sense to leverage. 582 00:31:00,320 --> 00:31:02,040 Speaker 3: In a moment or two, we're going to be talking 583 00:31:02,080 --> 00:31:05,680 Speaker 3: about the AI story in China. When you look at 584 00:31:05,680 --> 00:31:09,960 Speaker 3: the degree to which tech companies, particularly those that have 585 00:31:10,040 --> 00:31:13,400 Speaker 3: been playing in the AI space, have been contributing to growth, 586 00:31:13,640 --> 00:31:16,120 Speaker 3: is that moving the needle in any way, not in. 587 00:31:16,080 --> 00:31:17,960 Speaker 11: Any kind of meaningful way where you would see it 588 00:31:18,000 --> 00:31:21,920 Speaker 11: showing up I think in big macroeconomic data points. But 589 00:31:22,000 --> 00:31:24,800 Speaker 11: the reality is on the ground, the environment is very exciting. 590 00:31:25,640 --> 00:31:29,000 Speaker 11: China is doing what they've done with for example, EVS 591 00:31:29,040 --> 00:31:31,680 Speaker 11: and other sectors. They are increasingly figuring out ways to 592 00:31:31,720 --> 00:31:36,160 Speaker 11: subsidize the indigenization of chip production, AI, quantum, et cetera. 593 00:31:36,480 --> 00:31:38,560 Speaker 11: So they're throwing a lot of money at it. You've 594 00:31:38,560 --> 00:31:41,600 Speaker 11: got companies that are ipoing in these fields. So certainly 595 00:31:41,680 --> 00:31:43,680 Speaker 11: in China, the tech space and the tech industries and 596 00:31:43,800 --> 00:31:44,960 Speaker 11: is having an exciting moment. 597 00:31:45,080 --> 00:31:47,640 Speaker 3: Shazad will leave it there, Thank you so much. Shazad 598 00:31:47,680 --> 00:31:52,640 Speaker 3: Kazi also Managing director at China Basebook International. And as 599 00:31:52,680 --> 00:31:57,440 Speaker 3: I promised, let's shift gears. China's crowded AI landscape is 600 00:31:57,440 --> 00:32:01,440 Speaker 3: not only fueling rapid innovation, but fierce competition as well, 601 00:32:01,520 --> 00:32:05,480 Speaker 3: and it's that competition that seems to be dragging down profits. 602 00:32:05,560 --> 00:32:09,320 Speaker 3: Let's check in with Bloomberg opinion columnist Catherine Thorbek. She 603 00:32:09,480 --> 00:32:12,680 Speaker 3: covers all things tech in Asia, and she joins us 604 00:32:12,720 --> 00:32:15,720 Speaker 3: from our bureau in Tokyo. Catherine, thank you for making 605 00:32:15,760 --> 00:32:17,840 Speaker 3: time to chat with me about this. Give me a 606 00:32:17,880 --> 00:32:21,240 Speaker 3: sense of perspective on this. How recent has this kind 607 00:32:21,240 --> 00:32:25,240 Speaker 3: of tension between innovation and competition been developing in Ai 608 00:32:25,480 --> 00:32:26,000 Speaker 3: in China? 609 00:32:26,800 --> 00:32:29,080 Speaker 10: This is really a story we've seen play out many 610 00:32:29,120 --> 00:32:31,240 Speaker 10: times in the history of China's tech sector. You know, 611 00:32:31,280 --> 00:32:35,040 Speaker 10: competition is notoriously fierce in the world's second largest economy, 612 00:32:35,080 --> 00:32:37,920 Speaker 10: So whenever a new craze emerges, there's always just so 613 00:32:38,000 --> 00:32:40,000 Speaker 10: many rivals that sort of come out of the woodwork 614 00:32:40,040 --> 00:32:43,360 Speaker 10: ready to pounce. And for example, we saw this in 615 00:32:43,440 --> 00:32:46,080 Speaker 10: the food delivery market. There's some food delivery wars that 616 00:32:46,120 --> 00:32:47,760 Speaker 10: were going on, and it really became a race to 617 00:32:47,760 --> 00:32:49,520 Speaker 10: the bottom when it comes to pricing. You know, we 618 00:32:49,600 --> 00:32:52,760 Speaker 10: saw bubble tea being sold for less than twenty five 619 00:32:52,800 --> 00:32:55,480 Speaker 10: cents last month, and we also saw it in the 620 00:32:55,520 --> 00:32:57,520 Speaker 10: electric vehicle market, which is sort of left behind a 621 00:32:57,560 --> 00:33:00,600 Speaker 10: trail of zombie cars. And now, oh, these sort of 622 00:33:00,680 --> 00:33:03,080 Speaker 10: same forces are really in full swing in the booming 623 00:33:03,160 --> 00:33:06,840 Speaker 10: artificial intelligence industry, and these AI firms have really been 624 00:33:06,840 --> 00:33:09,320 Speaker 10: focused on this sort of classic playbook, which is scaling 625 00:33:09,360 --> 00:33:12,280 Speaker 10: up their user bases and racing for market share, and 626 00:33:12,440 --> 00:33:14,440 Speaker 10: the result has sort of been this rat race. You know, 627 00:33:14,440 --> 00:33:17,320 Speaker 10: they're at each other's throats when it comes to pricing, 628 00:33:17,360 --> 00:33:19,600 Speaker 10: and it's really become a race to the bottom. But 629 00:33:19,640 --> 00:33:22,080 Speaker 10: I think a key difference here is that nobody has 630 00:33:22,120 --> 00:33:24,680 Speaker 10: actually figured out has really cracked the key to getting 631 00:33:24,680 --> 00:33:27,600 Speaker 10: consumers to pay for these services. So it makes the 632 00:33:27,640 --> 00:33:31,120 Speaker 10: issue of monetization or a path to profitability seem a 633 00:33:31,160 --> 00:33:33,720 Speaker 10: really long way off. And this is really unique to 634 00:33:33,800 --> 00:33:37,280 Speaker 10: China's tech sector. You know, in the States, there's in 635 00:33:37,320 --> 00:33:40,200 Speaker 10: Silicon Valley, there's sort of a smaller number of large 636 00:33:40,200 --> 00:33:42,160 Speaker 10: players that really dominate the market and they really have 637 00:33:42,200 --> 00:33:45,520 Speaker 10: control over pricing, whereas in China, you know, there's just 638 00:33:45,680 --> 00:33:47,880 Speaker 10: so many smaller players and as well as the big 639 00:33:47,920 --> 00:33:51,400 Speaker 10: tech companies, so competition has been really really fierce, and 640 00:33:51,440 --> 00:33:53,080 Speaker 10: I'm just not sure how sustainable it is. 641 00:33:53,160 --> 00:33:55,560 Speaker 3: I'm just wondering when you talk about big tech companies, 642 00:33:55,600 --> 00:33:58,320 Speaker 3: I think of Ali Baba, and you would expect maybe 643 00:33:58,360 --> 00:34:01,960 Speaker 3: that company or companies like Baba to have some sort 644 00:34:01,960 --> 00:34:03,520 Speaker 3: of advantage. 645 00:34:03,200 --> 00:34:06,760 Speaker 10: That's right. So Ali Baba and Byteedance and Tencent, these 646 00:34:06,760 --> 00:34:09,160 Speaker 10: sort of big tech players, I think they really can 647 00:34:09,239 --> 00:34:11,719 Speaker 10: play the long game and they can sort of sort 648 00:34:11,719 --> 00:34:13,560 Speaker 10: of weather this storm a little bit better than these 649 00:34:13,560 --> 00:34:16,600 Speaker 10: so called little dragons, which are these sort of startups 650 00:34:16,640 --> 00:34:19,840 Speaker 10: that are really driving innovation in China's tech ecosystem. And 651 00:34:19,880 --> 00:34:21,920 Speaker 10: so I think the big tech players are definitely in 652 00:34:21,920 --> 00:34:24,319 Speaker 10: a better position. But I also think that's a little 653 00:34:24,320 --> 00:34:26,880 Speaker 10: bit unfortunate because we really see sort of the biggest 654 00:34:26,880 --> 00:34:29,799 Speaker 10: breakthroughs in AI come from these smaller startups, which I 655 00:34:29,800 --> 00:34:30,759 Speaker 10: think are at higher risk. 656 00:34:30,800 --> 00:34:31,000 Speaker 5: Here. 657 00:34:31,239 --> 00:34:33,280 Speaker 3: Does the government have a view on what's happening? 658 00:34:33,320 --> 00:34:34,480 Speaker 4: Do you think so? 659 00:34:34,680 --> 00:34:37,200 Speaker 10: I think post deep Seek, there's just been a lot 660 00:34:37,239 --> 00:34:39,680 Speaker 10: of exuberance. There's been a lot of top down support 661 00:34:40,040 --> 00:34:42,600 Speaker 10: for the AI sector, and so it's sort of driving 662 00:34:42,640 --> 00:34:45,200 Speaker 10: this And in some ways it's a double edged sword, 663 00:34:45,239 --> 00:34:47,960 Speaker 10: you know, because there's so much excitement for AI and 664 00:34:48,000 --> 00:34:50,200 Speaker 10: so much top down support, it has really been driving 665 00:34:50,239 --> 00:34:54,000 Speaker 10: widespread adoption of AI services and AI tools throughout China, 666 00:34:54,040 --> 00:34:56,600 Speaker 10: which the government wants, but I think it definitely puts 667 00:34:56,640 --> 00:34:59,080 Speaker 10: these companies in a crunch when it comes to sort 668 00:34:59,080 --> 00:35:00,400 Speaker 10: of figuring out how to make money. 669 00:35:00,640 --> 00:35:03,360 Speaker 3: So when you talk about adoption, is it primarily on 670 00:35:03,400 --> 00:35:07,279 Speaker 3: the part of consumers using more AI related devices or 671 00:35:07,360 --> 00:35:08,800 Speaker 3: is it in industry as well? 672 00:35:09,200 --> 00:35:12,440 Speaker 10: That's right, So I think consumers definitely demand for AI 673 00:35:12,480 --> 00:35:15,239 Speaker 10: services and tools is red hot. You know, we see 674 00:35:15,280 --> 00:35:18,600 Speaker 10: so many chatbots, so many people using deep seak across 675 00:35:18,640 --> 00:35:21,640 Speaker 10: you know, local governments and across even hospitals. So I 676 00:35:21,680 --> 00:35:24,080 Speaker 10: think the adoption has been widespread. And the way I 677 00:35:24,120 --> 00:35:25,560 Speaker 10: kind of look at it when we talk about the 678 00:35:25,600 --> 00:35:28,360 Speaker 10: sort of top down support was you know, I'm not 679 00:35:28,360 --> 00:35:30,640 Speaker 10: going to remember which US president it was, but there 680 00:35:30,680 --> 00:35:32,839 Speaker 10: was a president that put electricity in the White House 681 00:35:32,840 --> 00:35:35,360 Speaker 10: to sort of signal that, you know, this technology is 682 00:35:35,360 --> 00:35:37,600 Speaker 10: safe and we can you know, rapidly adopt it. And 683 00:35:37,640 --> 00:35:38,920 Speaker 10: I think there have been a lot of top down 684 00:35:39,000 --> 00:35:42,000 Speaker 10: signals coming from Beijing and coming from Hijinping about how 685 00:35:42,120 --> 00:35:44,360 Speaker 10: AI is you know, the future and we shouldn't be 686 00:35:44,400 --> 00:35:46,200 Speaker 10: afraid of it. And I think we've really seen that 687 00:35:46,239 --> 00:35:48,759 Speaker 10: play out when it comes to consumers really sort of 688 00:35:48,800 --> 00:35:51,040 Speaker 10: embracing this technology and not being afraid of it and 689 00:35:51,160 --> 00:35:52,400 Speaker 10: sort of rushing to adopt it. 690 00:35:52,680 --> 00:35:54,880 Speaker 3: One of the big questions in the States as it 691 00:35:54,920 --> 00:35:58,520 Speaker 3: relates to the investments being made in artificial intelligence, is 692 00:35:58,560 --> 00:36:02,799 Speaker 3: the ROI turn on those investments. Do we have any 693 00:36:02,920 --> 00:36:06,440 Speaker 3: visibility into whether or not this is having kind of 694 00:36:06,440 --> 00:36:08,480 Speaker 3: a similar conundrum in China right now? 695 00:36:09,120 --> 00:36:11,560 Speaker 10: Right so, I really think that's sort of the biggest 696 00:36:11,640 --> 00:36:15,000 Speaker 10: existential threat hanging over sort of the entire AI ecosystem 697 00:36:15,000 --> 00:36:17,440 Speaker 10: in China is that there really is not a clear 698 00:36:17,480 --> 00:36:20,839 Speaker 10: path to profitability, and there's not even a clear path 699 00:36:20,880 --> 00:36:23,880 Speaker 10: to sort of monetization and making money off of consumers. 700 00:36:24,200 --> 00:36:27,000 Speaker 10: You know, so many of these chatbots are being offered 701 00:36:27,040 --> 00:36:29,359 Speaker 10: for free, and because you know, competitors are offering them 702 00:36:29,360 --> 00:36:32,680 Speaker 10: for free, it basically peer pressures all of the companies 703 00:36:32,719 --> 00:36:36,320 Speaker 10: to do the same. And I think there's one statistic 704 00:36:36,400 --> 00:36:40,719 Speaker 10: that our Bloomberg Intelligence colleagues wrote which was that I 705 00:36:40,760 --> 00:36:43,680 Speaker 10: think all of the top ten AI chat bots at 706 00:36:43,760 --> 00:36:47,280 Speaker 10: China generated just one million dollars in revenue from Apple's 707 00:36:47,360 --> 00:36:50,839 Speaker 10: iOS app store in twelve months, and during that same 708 00:36:50,840 --> 00:36:53,719 Speaker 10: time period, open AI's chat GBT garnered six hundred and 709 00:36:53,719 --> 00:36:56,520 Speaker 10: sixty nine million dollars in iOS revenue. So that's quite 710 00:36:56,520 --> 00:36:59,040 Speaker 10: a big difference, and that's just one chatbot compared to 711 00:36:59,520 --> 00:37:01,520 Speaker 10: ten of So what do. 712 00:37:01,440 --> 00:37:03,520 Speaker 3: We know about the rate of failure here? I mean, 713 00:37:03,640 --> 00:37:06,640 Speaker 3: do we have enough data to begin to kind of 714 00:37:06,719 --> 00:37:07,440 Speaker 3: quantify that? 715 00:37:08,120 --> 00:37:10,600 Speaker 10: So I think it's too soon to tell. Like I said, 716 00:37:10,640 --> 00:37:12,840 Speaker 10: there's you know, this top down support, and there's just 717 00:37:12,920 --> 00:37:15,319 Speaker 10: this insatiable hype, especially in the wake of Deep Seek, 718 00:37:15,360 --> 00:37:17,280 Speaker 10: and I think for now that's been a really strong 719 00:37:17,320 --> 00:37:20,640 Speaker 10: propellant of the AI sector. You know, a former government 720 00:37:20,640 --> 00:37:22,759 Speaker 10: official in China last week said that the nation is 721 00:37:22,800 --> 00:37:24,799 Speaker 10: on the cusp of generating more than one hundred Deep 722 00:37:24,800 --> 00:37:27,319 Speaker 10: Seek like breakthroughs. But I think, you know, if you 723 00:37:27,320 --> 00:37:29,080 Speaker 10: look at more than one hundred deep Seeks, you know, 724 00:37:29,120 --> 00:37:32,040 Speaker 10: what does that actually mean. That means such fierce competition, 725 00:37:32,560 --> 00:37:34,040 Speaker 10: And so I think in the long run, we may 726 00:37:34,040 --> 00:37:36,720 Speaker 10: see at least one hundred you know, zombie AI tools 727 00:37:36,760 --> 00:37:39,919 Speaker 10: or zombie AI agents. But I think, you know, that's 728 00:37:39,960 --> 00:37:41,880 Speaker 10: still a long way off. And for now, you know, 729 00:37:41,920 --> 00:37:45,600 Speaker 10: this hype is really driving a lot of exuberance, But 730 00:37:45,960 --> 00:37:47,279 Speaker 10: we'll have to see how it plays out. 731 00:37:47,600 --> 00:37:50,200 Speaker 3: Catherine, Thank you so very much. It's always a pleasure. 732 00:37:50,239 --> 00:37:54,720 Speaker 3: That is Catherine Thorbeck, Bloomberg opinion columnist. She covers Asia 733 00:37:54,800 --> 00:37:57,440 Speaker 3: tech for us here at Bloomberg, and I'm Doug Chrisner. 734 00:37:57,480 --> 00:38:00,120 Speaker 3: You can catch us weekdays for the Daybreak Asia Pod. 735 00:38:00,520 --> 00:38:02,719 Speaker 3: It's available wherever you get your podcast. 736 00:38:03,120 --> 00:38:05,960 Speaker 1: Tom, Thank you, Doug. And that does it for this 737 00:38:06,120 --> 00:38:08,920 Speaker 1: edition of Bloomberg day Break Weekend. Join us again Monday 738 00:38:08,920 --> 00:38:10,960 Speaker 1: morning at five am Wall Street Time for the latest 739 00:38:10,960 --> 00:38:13,399 Speaker 1: on markets overseas, in the news you need to start 740 00:38:13,440 --> 00:38:16,920 Speaker 1: your day. I'm Tom Buzzby. Stay with us. Top stories 741 00:38:16,920 --> 00:38:19,960 Speaker 1: and global business headlines are coming up right now.