1 00:00:02,960 --> 00:00:11,880 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg day 2 00:00:11,880 --> 00:00:14,240 Speaker 1: Break Weekend, our global look at the top stories in 3 00:00:14,280 --> 00:00:17,040 Speaker 1: the coming week from our Daybreak anchors all around the world, 4 00:00:17,239 --> 00:00:19,880 Speaker 1: and straight ahead on the program, a preview of core 5 00:00:20,160 --> 00:00:24,960 Speaker 1: USPCE prices and GDP, also earnings from the US's biggest 6 00:00:25,000 --> 00:00:27,479 Speaker 1: ev maker. I'm Tom Busby in New York. 7 00:00:27,800 --> 00:00:30,360 Speaker 2: I'm Stephen Carol in London, where we're discussing what's in 8 00:00:30,440 --> 00:00:34,440 Speaker 2: store for Europe's biggest banks as earning season gets underway. 9 00:00:34,720 --> 00:00:37,239 Speaker 3: I'm Brian Curtis in Hong Kong. We look forward to 10 00:00:37,320 --> 00:00:40,880 Speaker 3: what's referred to as Auto Show China in the coming week. 11 00:00:41,040 --> 00:00:43,280 Speaker 3: Is it about the cars or the politics? 12 00:00:43,960 --> 00:00:47,239 Speaker 4: That's all straight ahead on Bloomberg day Break Weekend on 13 00:00:47,400 --> 00:00:50,479 Speaker 4: Bloomberg Eleve Them three Own New York, Bloomberg ninety nine 14 00:00:50,520 --> 00:00:53,920 Speaker 4: to one, Washington, DC, Bloomberg one O six one, Boston, 15 00:00:53,960 --> 00:00:58,760 Speaker 4: Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 16 00:00:58,920 --> 00:01:02,160 Speaker 4: XM one nineteen and around the world on Bloomberg Radio 17 00:01:02,240 --> 00:01:04,560 Speaker 4: dot Com and via the Bloomberg Business App. 18 00:01:08,600 --> 00:01:10,480 Speaker 1: Good day to you. I'm Tom Busby, and we begin 19 00:01:10,520 --> 00:01:13,400 Speaker 1: today's program with a look at key economic data here 20 00:01:13,400 --> 00:01:16,920 Speaker 1: in the US. On Thursday, we get core PCE for 21 00:01:17,120 --> 00:01:20,479 Speaker 1: March GDP data for the first quarter of this year. 22 00:01:20,800 --> 00:01:23,920 Speaker 1: What will this mean for the Fed's monetary policy going forward? 23 00:01:24,000 --> 00:01:27,280 Speaker 1: Well for more, we're joined by Stuart Paul Us economists 24 00:01:27,319 --> 00:01:32,679 Speaker 1: with Bloomberg Economics. Stuart, the PCE Price Index the preferred 25 00:01:32,680 --> 00:01:35,240 Speaker 1: measure of inflation for the FED. What do you expect 26 00:01:35,280 --> 00:01:36,119 Speaker 1: to see for March. 27 00:01:36,280 --> 00:01:39,840 Speaker 5: We're expecting to see the headline PCE Price Index show 28 00:01:40,160 --> 00:01:43,479 Speaker 5: about zero point three percent growth month on month. The core, 29 00:01:43,680 --> 00:01:45,880 Speaker 5: which is more illustrative of what's going on in the 30 00:01:45,880 --> 00:01:49,600 Speaker 5: actual economy, strips out energy, strips out food. We're expecting 31 00:01:49,600 --> 00:01:52,080 Speaker 5: to see the core rise about the same zero point 32 00:01:52,120 --> 00:01:55,120 Speaker 5: three percent month on month, and that's going to allow 33 00:01:55,200 --> 00:01:59,240 Speaker 5: just a very slight moderation in the annual measure of 34 00:01:59,360 --> 00:02:02,720 Speaker 5: core pc inflation. We're expecting about two point seven percent 35 00:02:02,960 --> 00:02:07,080 Speaker 5: annual PCEE inflation. A big part of that inflation pressure 36 00:02:07,160 --> 00:02:11,080 Speaker 5: is coming from core services in particular, and if we 37 00:02:11,200 --> 00:02:13,640 Speaker 5: drill down and look underneath the hood of what's going on, 38 00:02:14,160 --> 00:02:18,040 Speaker 5: we see insurance products are really helping to drive that 39 00:02:18,200 --> 00:02:19,600 Speaker 5: inflationary pressure. 40 00:02:19,960 --> 00:02:21,679 Speaker 1: Auto insurance, homeowners insurance. 41 00:02:21,760 --> 00:02:25,360 Speaker 5: Everything that's right, So auto insurance, home insurance, and we're 42 00:02:25,440 --> 00:02:29,440 Speaker 5: seeing those prices rise in large part because of rising 43 00:02:29,480 --> 00:02:33,079 Speaker 5: prices that we saw for autos and homes post pandemic. 44 00:02:33,360 --> 00:02:36,560 Speaker 5: So when the replacement cost of autos and when construction 45 00:02:36,720 --> 00:02:40,200 Speaker 5: costs rise for homes, for example, so to do the 46 00:02:40,200 --> 00:02:42,760 Speaker 5: insurance premiums that people have to pay. So this is 47 00:02:42,800 --> 00:02:44,720 Speaker 5: sort of a residual effects from the inflation that we've 48 00:02:44,720 --> 00:02:47,560 Speaker 5: already seen in the past. But that's not the full story. 49 00:02:47,600 --> 00:02:49,840 Speaker 5: The fact that people can afford to pay those higher 50 00:02:49,840 --> 00:02:54,200 Speaker 5: premiums is again just downstreaming the fact that the economy 51 00:02:54,240 --> 00:02:57,960 Speaker 5: continues chugging long and if people are doing relatively well, 52 00:02:57,960 --> 00:02:59,680 Speaker 5: and we're going to see that exact same thing in 53 00:02:59,680 --> 00:03:01,760 Speaker 5: the person income data that we get at the same time, 54 00:03:02,040 --> 00:03:04,680 Speaker 5: we're going to see March personal income growth about zero 55 00:03:04,720 --> 00:03:07,920 Speaker 5: point six percent. Again, it's just too hot for the Fed. 56 00:03:07,960 --> 00:03:11,280 Speaker 5: It's too hot for the FED to have confidence that 57 00:03:11,440 --> 00:03:13,240 Speaker 5: inflation pressures are truly waning. 58 00:03:13,680 --> 00:03:17,080 Speaker 1: Well, we've seen wage growth, and we've seen the labor 59 00:03:17,120 --> 00:03:20,200 Speaker 1: market to an upside surprise almost every month, well certainly 60 00:03:20,200 --> 00:03:23,600 Speaker 1: every month this year. How could it not, that's right, Yeah, 61 00:03:23,680 --> 00:03:25,840 Speaker 1: the labor market has been resilient. We saw it just 62 00:03:25,880 --> 00:03:27,720 Speaker 1: in the month of March, three hundred and three thousand 63 00:03:27,760 --> 00:03:29,880 Speaker 1: jobs added. We saw an increase in the number of 64 00:03:30,040 --> 00:03:33,000 Speaker 1: hours worked on average, We saw wages rising on an 65 00:03:33,000 --> 00:03:38,120 Speaker 1: hourly basis, and to our best estimate, employee compensation, so 66 00:03:38,320 --> 00:03:42,520 Speaker 1: that's both salaries and other additional benefits. Our best estimate 67 00:03:42,560 --> 00:03:46,360 Speaker 1: is that employee compensation rose about zero point eight percent 68 00:03:46,480 --> 00:03:49,400 Speaker 1: during the month. That is a hot labor market that 69 00:03:49,560 --> 00:03:53,280 Speaker 1: is really helping tabooy spending, and that PCE spending that 70 00:03:53,280 --> 00:03:54,600 Speaker 1: we're going to see is probably going to be on 71 00:03:54,640 --> 00:03:58,800 Speaker 1: the order about zero point seven percent. Retail sales was hot, and. 72 00:03:58,760 --> 00:04:01,520 Speaker 5: We're expecting to see the same thing in March PCE spending. 73 00:04:01,640 --> 00:04:04,080 Speaker 1: Let's talk about then, the other reading that we'll get 74 00:04:04,120 --> 00:04:06,640 Speaker 1: on Thursday, and that is economic growth. What do you 75 00:04:06,680 --> 00:04:09,000 Speaker 1: expect to see? This is an initial reading for the 76 00:04:09,040 --> 00:04:10,360 Speaker 1: first quarter of this year. 77 00:04:10,680 --> 00:04:13,880 Speaker 5: We're very likely to see robust growth to start the air. 78 00:04:14,040 --> 00:04:17,080 Speaker 5: I'm estimating two and a half percent real GDP growth 79 00:04:17,120 --> 00:04:20,080 Speaker 5: that's on an annualized basis in the first quarter. That's 80 00:04:20,120 --> 00:04:23,520 Speaker 5: really supported again by consumer spending, which is creating that 81 00:04:23,600 --> 00:04:28,040 Speaker 5: inflationary impulse but about two point nine percent annualized consumer 82 00:04:28,080 --> 00:04:30,599 Speaker 5: spending growth on a real basis in the first quarter 83 00:04:30,960 --> 00:04:35,960 Speaker 5: is very impressive. Fixed investment a bit weak. Investment is 84 00:04:36,000 --> 00:04:38,680 Speaker 5: really coming from residential investment because of a bit of 85 00:04:38,720 --> 00:04:41,280 Speaker 5: a housing shortage because people are staying in their homes 86 00:04:41,320 --> 00:04:43,640 Speaker 5: they locked in low rates. So we have a little 87 00:04:43,640 --> 00:04:46,320 Speaker 5: bit of a housing shortage with very low inventories and 88 00:04:46,400 --> 00:04:49,760 Speaker 5: a lot of investment in intellectual property. Right, this is 89 00:04:49,800 --> 00:04:52,760 Speaker 5: all downstream of the AI boom and people really looking 90 00:04:52,800 --> 00:04:56,359 Speaker 5: to improve the software and intellectual property that they have 91 00:04:57,360 --> 00:04:58,720 Speaker 5: so that they could take advantage of that. 92 00:04:59,160 --> 00:05:03,840 Speaker 1: Let's go back to housing and the challenges not just 93 00:05:04,000 --> 00:05:08,280 Speaker 1: home buying, but also rents surprisingly a little higher. I mean, 94 00:05:08,320 --> 00:05:11,320 Speaker 1: how is that affecting things for the overall GDP. 95 00:05:12,279 --> 00:05:16,000 Speaker 5: So the fact that rent prices are up is not 96 00:05:16,400 --> 00:05:20,400 Speaker 5: directly pushing GDP one way or another, but the fact 97 00:05:20,400 --> 00:05:24,920 Speaker 5: that rents are up is encouraging additional investment in housing. Right, 98 00:05:24,960 --> 00:05:28,120 Speaker 5: there's clearly a shortage of a housing stock. People who 99 00:05:28,200 --> 00:05:31,320 Speaker 5: are homeowners are not listing their homes because the average 100 00:05:31,400 --> 00:05:35,080 Speaker 5: rate being paid on mortgages, not new originations, but existing 101 00:05:35,120 --> 00:05:38,760 Speaker 5: mortgages is still below four percent. Right, So the fact 102 00:05:38,800 --> 00:05:43,120 Speaker 5: that homes are not turning over encourages more construction of 103 00:05:43,240 --> 00:05:47,080 Speaker 5: rental units, which is providing growth in the form of 104 00:05:47,360 --> 00:05:50,760 Speaker 5: residential fixed investment, and so we are getting some of 105 00:05:50,760 --> 00:05:54,080 Speaker 5: those tailwinds again. You know, rent prices are a signal. 106 00:05:54,200 --> 00:05:58,760 Speaker 5: There are signal to builders that we need more construction, 107 00:05:59,080 --> 00:06:01,240 Speaker 5: and I think that that's going to show up a 108 00:06:01,279 --> 00:06:04,200 Speaker 5: bit in residential fixed investment in the Q one GDP numbers. 109 00:06:04,320 --> 00:06:07,240 Speaker 1: Well, let's hope. So you have a rather upbeat out 110 00:06:07,240 --> 00:06:10,680 Speaker 1: look for the GDP PCE leveling off a little bit 111 00:06:10,720 --> 00:06:13,359 Speaker 1: two point seven percent on an annualized basis, which is 112 00:06:13,680 --> 00:06:15,920 Speaker 1: it's not two percent, but it's getting there. Add it 113 00:06:16,000 --> 00:06:18,920 Speaker 1: all up. The FEDS coming up a meeting later this month, 114 00:06:18,960 --> 00:06:21,400 Speaker 1: the thirtieth and May. First, what do you think is 115 00:06:21,440 --> 00:06:23,800 Speaker 1: going through their heads? What is the FOMC thinking with 116 00:06:23,839 --> 00:06:24,080 Speaker 1: all of this? 117 00:06:24,400 --> 00:06:28,440 Speaker 5: I think here really the three items that the FED 118 00:06:28,680 --> 00:06:30,919 Speaker 5: is looking at that they need to synthesize into a 119 00:06:30,960 --> 00:06:34,120 Speaker 5: monetary policy view. Growth has remained robust and there is 120 00:06:34,160 --> 00:06:36,840 Speaker 5: a bit of momentum there. The labor market has been 121 00:06:36,920 --> 00:06:41,080 Speaker 5: tight and that's created upward pressure owned wages and inflation, yes, 122 00:06:41,240 --> 00:06:43,440 Speaker 5: ticking down a little bit. Certainly an out of the 123 00:06:43,480 --> 00:06:48,240 Speaker 5: two percent target, and it's that disinflation progress is stalling out. 124 00:06:48,240 --> 00:06:51,279 Speaker 5: So you have robust growth, tight labor market, and stalling 125 00:06:51,480 --> 00:06:54,320 Speaker 5: disinflation progress. That's going to allow the Fed to keep 126 00:06:54,320 --> 00:06:56,320 Speaker 5: their foot on the brakes a little bit longer. I 127 00:06:56,360 --> 00:06:58,400 Speaker 5: think that as we get to June, we might end 128 00:06:58,480 --> 00:07:02,040 Speaker 5: up seeing a revision to the famous FOMC dot plot, 129 00:07:02,320 --> 00:07:05,760 Speaker 5: which shows monetary policy makers forecast for where rates are 130 00:07:05,760 --> 00:07:08,320 Speaker 5: going to go. Right now, they're showing seventy five bases 131 00:07:08,360 --> 00:07:10,760 Speaker 5: points of cuts in this year. In twenty twenty four, 132 00:07:11,160 --> 00:07:14,040 Speaker 5: I think that the risk is really toward a revision 133 00:07:14,080 --> 00:07:16,920 Speaker 5: where even policymakers have to admit they're not going to 134 00:07:16,960 --> 00:07:18,840 Speaker 5: be able to cut rates as much as they once thought. 135 00:07:18,960 --> 00:07:21,400 Speaker 1: Yeah, maybe not seventy five, but we may see something 136 00:07:21,440 --> 00:07:22,560 Speaker 1: by the end of this year. 137 00:07:22,440 --> 00:07:25,360 Speaker 5: Fifty twenty five. It's possible. But then we're getting close 138 00:07:25,440 --> 00:07:26,800 Speaker 5: to the end of the year and we're getting close 139 00:07:26,800 --> 00:07:29,440 Speaker 5: to election season, and it gets really difficult to navigate 140 00:07:29,440 --> 00:07:31,240 Speaker 5: both political and economic conditions. 141 00:07:31,360 --> 00:07:33,720 Speaker 1: Oh boy, a lot to look forward to. Well that 142 00:07:33,840 --> 00:07:37,600 Speaker 1: March pce Q one gdp out this coming Thursday in 143 00:07:37,640 --> 00:07:41,920 Speaker 1: our thanks to Stuart paul Us economist with Bloomberg Economics. Well, 144 00:07:41,960 --> 00:07:44,520 Speaker 1: we turn now to the first quarter earning season with 145 00:07:44,560 --> 00:07:46,920 Speaker 1: a ton of big reports this week. One company though 146 00:07:47,000 --> 00:07:51,520 Speaker 1: getting a lot of attention, the world's most valuable electric automaker, Tesla, 147 00:07:51,680 --> 00:07:54,520 Speaker 1: posting its latest results on Tuesday. And for more on 148 00:07:54,560 --> 00:07:56,880 Speaker 1: what we can expect and all the challenges that Tesla 149 00:07:56,960 --> 00:08:00,520 Speaker 1: is facing, we're joined by Steve Mann, Bloomberg and Intelligence, 150 00:08:00,560 --> 00:08:05,120 Speaker 1: Global Autos and Industrials Research Analyst. Now, Steve, let's start 151 00:08:05,120 --> 00:08:07,160 Speaker 1: with what you expect to see with the results, and 152 00:08:07,200 --> 00:08:10,040 Speaker 1: then we'll get into everything else with Tesla's So what 153 00:08:10,040 --> 00:08:11,480 Speaker 1: do you expect to see on Tuesday? 154 00:08:12,680 --> 00:08:16,160 Speaker 6: Oh, it's not going to be pretty for Tesla. They've 155 00:08:16,280 --> 00:08:19,400 Speaker 6: announced a cut ten percent of their workforce, and you 156 00:08:19,440 --> 00:08:21,680 Speaker 6: know they announced it right beginning of the second quarterer, 157 00:08:21,840 --> 00:08:25,800 Speaker 6: so it may be signaling that things are a lot 158 00:08:25,840 --> 00:08:29,480 Speaker 6: worse than the street anticipated, maybe a lot worse than 159 00:08:29,480 --> 00:08:32,880 Speaker 6: what they anticipated. So, you know, first quarter earning, it's 160 00:08:32,920 --> 00:08:35,520 Speaker 6: not going to be pretty. You know, we're thinking it's, 161 00:08:35,640 --> 00:08:38,280 Speaker 6: you know, based on a scenario analysis, likely a miss 162 00:08:38,360 --> 00:08:40,320 Speaker 6: versus consensus. 163 00:08:39,720 --> 00:08:43,280 Speaker 1: And we've seen a few misses from a Tesla lately. 164 00:08:43,800 --> 00:08:48,600 Speaker 1: We saw the deliveries missed. You know, there's a laundry 165 00:08:48,600 --> 00:08:50,880 Speaker 1: list of things we could talk about, and we'll also 166 00:08:50,920 --> 00:08:52,880 Speaker 1: talk about some of the good things. So well, let's 167 00:08:52,880 --> 00:08:55,720 Speaker 1: get more on those job cuts. Ten percent of its workforce, 168 00:08:55,760 --> 00:08:59,280 Speaker 1: fourteen thousand jobs worldwide. Like you said, not a good sign, 169 00:08:59,520 --> 00:09:02,160 Speaker 1: not a sign of confidence for employees or for investors, 170 00:09:02,240 --> 00:09:02,480 Speaker 1: is it? 171 00:09:03,000 --> 00:09:07,400 Speaker 6: No? No? And and interestingly, they actually raise prices in 172 00:09:07,440 --> 00:09:11,560 Speaker 6: the US and they cut incentives in China. So you know, 173 00:09:11,679 --> 00:09:13,520 Speaker 6: I think journey earnings call, it's going to be a 174 00:09:13,640 --> 00:09:17,760 Speaker 6: huge earnings call for Tesla, and hopefully they're prepared for that. 175 00:09:18,880 --> 00:09:21,960 Speaker 6: They're going to have to set you know, real expectations 176 00:09:22,040 --> 00:09:26,320 Speaker 6: for the investors and how to move forward because you know, 177 00:09:26,360 --> 00:09:30,199 Speaker 6: they cut prices earlier this month. You know, the fear 178 00:09:30,240 --> 00:09:32,679 Speaker 6: is that they're going to reverse it. If they do, 179 00:09:33,160 --> 00:09:35,440 Speaker 6: you know, we're going to probably see more downgrades on 180 00:09:35,480 --> 00:09:39,000 Speaker 6: the stock, earnings downgrade and ratings down grade by the street. 181 00:09:39,360 --> 00:09:41,840 Speaker 1: And that's about forty percent just a year to date 182 00:09:41,920 --> 00:09:42,800 Speaker 1: right on that stock. 183 00:09:43,120 --> 00:09:47,240 Speaker 6: Yeah, forty percent. Now, they're not alone at this This 184 00:09:47,280 --> 00:09:51,600 Speaker 6: is an industry wide issue, particularly in the US, more 185 00:09:51,640 --> 00:09:54,079 Speaker 6: so in the US, but we're seeing it globally as well. 186 00:09:54,559 --> 00:09:57,680 Speaker 6: I think the early adopters for evs have pretty much 187 00:09:57,720 --> 00:09:58,320 Speaker 6: tapped out. 188 00:09:58,800 --> 00:09:59,000 Speaker 4: Right. 189 00:09:59,080 --> 00:10:01,440 Speaker 6: A lot of the evs today that are offered today, 190 00:10:01,520 --> 00:10:04,520 Speaker 6: especially in the West, in Europe and as well in 191 00:10:04,559 --> 00:10:09,160 Speaker 6: the US, they're well above fifty thousand dollars per vehicle. 192 00:10:09,600 --> 00:10:12,640 Speaker 6: Above fifty thousand, you're pretty much at the premium and 193 00:10:12,760 --> 00:10:17,280 Speaker 6: luxury segment, So the market for that segment is relatively small. 194 00:10:17,679 --> 00:10:21,600 Speaker 6: What we're also looking for Tesla to talk about in 195 00:10:21,640 --> 00:10:26,320 Speaker 6: their earnings it's their next model. It's dubbed the Model two. 196 00:10:26,880 --> 00:10:32,440 Speaker 6: It's a compact subcompact vehicle supposedly under thirty thousand dollars. 197 00:10:32,720 --> 00:10:35,600 Speaker 6: It's a critical product, not just for Tesla but for 198 00:10:35,679 --> 00:10:40,000 Speaker 6: the market because, like I said earlier, the luxury segment 199 00:10:40,360 --> 00:10:43,160 Speaker 6: is pretty much tapped out, so we need to bring 200 00:10:43,200 --> 00:10:47,680 Speaker 6: in new buyers for battery electric vehicles and more affordable 201 00:10:47,720 --> 00:10:50,240 Speaker 6: evs is really what the market needs right now. 202 00:10:50,440 --> 00:10:50,600 Speaker 4: Now. 203 00:10:50,600 --> 00:10:54,280 Speaker 1: There were reports that that Model too production had been delayed. 204 00:10:55,240 --> 00:10:58,640 Speaker 1: Tesla denied those reports. But where is it? They have 205 00:10:58,720 --> 00:11:02,320 Speaker 1: said the robotaxis comme August eighth, right, But I think, 206 00:11:02,440 --> 00:11:04,319 Speaker 1: like you said, most people want to see a more 207 00:11:04,360 --> 00:11:05,280 Speaker 1: affordable car. 208 00:11:05,920 --> 00:11:10,280 Speaker 6: Yeah, that Model two is critical for tests up. It's interesting. 209 00:11:10,760 --> 00:11:13,920 Speaker 6: I'm still optimistic. I think, you know, they's already spent 210 00:11:14,000 --> 00:11:16,720 Speaker 6: a lot of money, made a lot of investment in 211 00:11:17,360 --> 00:11:21,120 Speaker 6: developing that model too, you know, and they were scheduled 212 00:11:21,160 --> 00:11:25,120 Speaker 6: to actually launch that at the end of twenty twenty five. 213 00:11:25,280 --> 00:11:28,400 Speaker 6: You know, it's not that far away, given that it 214 00:11:28,440 --> 00:11:31,920 Speaker 6: takes multi years to develop a new car, So for 215 00:11:32,000 --> 00:11:34,960 Speaker 6: them to scrap it pretty much almost the last minute, 216 00:11:35,120 --> 00:11:39,560 Speaker 6: it's kind of unheard of. So now you no elon 217 00:11:39,679 --> 00:11:43,000 Speaker 6: must it come out on Twitter or on x to 218 00:11:43,080 --> 00:11:47,560 Speaker 6: say that the reporting on cancellational Model two is false. 219 00:11:48,440 --> 00:11:52,200 Speaker 6: I hope that's that's the case. But in the fourth 220 00:11:52,320 --> 00:11:57,080 Speaker 6: quarter announcement earnings announcement, he did mention that this model 221 00:11:57,160 --> 00:12:00,240 Speaker 6: too will be launched at the end of time twenty 222 00:12:00,280 --> 00:12:04,200 Speaker 6: twenty five, and that the production actually will start in 223 00:12:04,280 --> 00:12:09,800 Speaker 6: the US and then expand into Mexico. Hopefully it's really 224 00:12:09,880 --> 00:12:14,800 Speaker 6: not a cancellation of the model to the subcompact compact vehicle. 225 00:12:15,240 --> 00:12:18,319 Speaker 6: Maybe there's some hurdles that they need to get through 226 00:12:18,760 --> 00:12:22,079 Speaker 6: in building that plant in Mexico, and that's probably hopefully, 227 00:12:22,080 --> 00:12:23,040 Speaker 6: that's probably what it is. 228 00:12:23,320 --> 00:12:26,040 Speaker 1: Well, a lot to look forward to Tesla's first quarter 229 00:12:26,080 --> 00:12:28,880 Speaker 1: results coming out after the close this Tuesday, and our 230 00:12:28,920 --> 00:12:33,000 Speaker 1: thanks to Steve Man, Bloomberg Intelligence, Global Autos and Industrials 231 00:12:33,040 --> 00:12:36,400 Speaker 1: research analyst. Coming up on Bloomberg day Break weekend, we'll 232 00:12:36,440 --> 00:12:39,280 Speaker 1: look at what's in store for Europe's biggest banks as 233 00:12:39,400 --> 00:12:43,200 Speaker 1: earning season gets underway. There, I'm Tom Busby, and this 234 00:12:43,640 --> 00:12:57,120 Speaker 1: is Bloomberg. This is Bloomberg day Break weekend, our global 235 00:12:57,160 --> 00:12:59,240 Speaker 1: look ahead at the top stories for investors in the 236 00:12:59,280 --> 00:13:02,600 Speaker 1: coming week. I'm Tom Busby in New York. Up later 237 00:13:02,600 --> 00:13:04,760 Speaker 1: in our program a look at the twenty twenty four 238 00:13:05,000 --> 00:13:09,920 Speaker 1: Beijing International Automotive Exhibition. But first, it's earning season for 239 00:13:09,960 --> 00:13:13,120 Speaker 1: Europe's biggest banks, and hotter than expected inflation in Europe 240 00:13:13,120 --> 00:13:16,000 Speaker 1: could put its central banks in a difficult position as 241 00:13:16,040 --> 00:13:19,320 Speaker 1: far as plans to lower interest rates higher for longer 242 00:13:19,520 --> 00:13:21,760 Speaker 1: may not be the mantra that the markets want to hear, 243 00:13:21,800 --> 00:13:25,440 Speaker 1: but for Europe's biggest lenders it could prove lucrative for more. 244 00:13:25,720 --> 00:13:28,000 Speaker 1: Let's go to London and bring in Bloomberg Daybreak europe 245 00:13:28,000 --> 00:13:29,680 Speaker 1: banker Steven Carroll. 246 00:13:29,800 --> 00:13:32,800 Speaker 2: Tom High interest rates have been the key profit driver 247 00:13:32,960 --> 00:13:36,600 Speaker 2: for European banks over the past year. In twenty twenty three, 248 00:13:36,720 --> 00:13:39,960 Speaker 2: Elevated borrowing costs saw the combined net income of the 249 00:13:40,040 --> 00:13:44,680 Speaker 2: twenty biggest continental European banks exceed one hundred billion euros 250 00:13:44,679 --> 00:13:48,080 Speaker 2: for the first time. According to Bloomberg data, three quarters 251 00:13:48,080 --> 00:13:50,920 Speaker 2: of the lenders and the group achieved their highest profits ever. 252 00:13:51,440 --> 00:13:54,440 Speaker 2: Barkley's Deutche Bank and BMP Paribar are just some of 253 00:13:54,440 --> 00:13:57,520 Speaker 2: the names reporting results in the coming days. As markets 254 00:13:57,520 --> 00:14:00,000 Speaker 2: are staring down the barrel of an even longer period 255 00:14:00,200 --> 00:14:02,640 Speaker 2: of high interest rates, many will be hoping to emulate 256 00:14:02,760 --> 00:14:05,800 Speaker 2: last year's success, but that may be difficult as the 257 00:14:05,840 --> 00:14:09,400 Speaker 2: tailwinds attached to high rates begin to fade. Annaly survey 258 00:14:09,440 --> 00:14:12,520 Speaker 2: by Bloomberg expect the combined net income for eleven of 259 00:14:12,520 --> 00:14:16,319 Speaker 2: Europe's biggest banks to fall by six point three percent 260 00:14:16,440 --> 00:14:18,719 Speaker 2: this year, but that would still make twenty twenty four 261 00:14:18,800 --> 00:14:22,720 Speaker 2: the second most profitable year for more than two decades. Now, 262 00:14:22,800 --> 00:14:26,440 Speaker 2: JP Morgan's research team is reassessing it's initially wary outlook 263 00:14:26,480 --> 00:14:29,080 Speaker 2: on the sector, admitting their cautious approach was not the 264 00:14:29,160 --> 00:14:32,400 Speaker 2: right decision, but uncertainty over the right path is a 265 00:14:32,440 --> 00:14:35,800 Speaker 2: cloud on the horizon. Markets are expecting the European Central 266 00:14:35,800 --> 00:14:37,920 Speaker 2: Bank to cut rates for the first time in June, 267 00:14:38,120 --> 00:14:41,800 Speaker 2: but the trajectory after that looks more uncertain. We've been 268 00:14:41,800 --> 00:14:45,080 Speaker 2: discussing this with Klaus Badder, global chief economist at SUSSIA 269 00:14:45,080 --> 00:14:48,040 Speaker 2: to general he says that borrowing costs will start to 270 00:14:48,080 --> 00:14:49,280 Speaker 2: come down slowly. 271 00:14:49,760 --> 00:14:52,680 Speaker 7: Well the easy B we see three intrastright cuts, which 272 00:14:52,760 --> 00:14:55,520 Speaker 7: is a pretty slow pace. So cut in June, a 273 00:14:55,560 --> 00:14:59,520 Speaker 7: cut in September, cut in December, which would coincide with 274 00:15:00,160 --> 00:15:03,760 Speaker 7: dates to the staff protections that the UCP has, So 275 00:15:03,800 --> 00:15:07,640 Speaker 7: it's certainly not it's a gradual cut. And by the way, 276 00:15:08,080 --> 00:15:10,600 Speaker 7: all of those reductions we expect them to be by 277 00:15:10,640 --> 00:15:13,720 Speaker 7: twenty five basis points, so it's certainly a much slower 278 00:15:13,760 --> 00:15:16,200 Speaker 7: place on the way down than on the way up. 279 00:15:16,480 --> 00:15:19,240 Speaker 7: And for the Bank of England it's it's fairly similar. 280 00:15:19,280 --> 00:15:22,560 Speaker 7: But one big difference between the Bank of England and 281 00:15:22,600 --> 00:15:24,920 Speaker 7: the ECP, of course, is that the Bank of England 282 00:15:25,160 --> 00:15:29,120 Speaker 7: has rates interest rates much more drastically then the ECB. 283 00:15:29,400 --> 00:15:34,840 Speaker 7: And the UK economy is really quite sensitive to interest 284 00:15:34,880 --> 00:15:38,120 Speaker 7: rates because of the structure of its mortgage market, where 285 00:15:38,320 --> 00:15:42,360 Speaker 7: even though now most mortgage rates are fixed, they're fixed 286 00:15:42,400 --> 00:15:46,040 Speaker 7: for a relatively short period of time. In drastic contrast 287 00:15:46,040 --> 00:15:49,320 Speaker 7: France to Germany or the Netherlands and other countries in 288 00:15:49,320 --> 00:15:52,960 Speaker 7: Europe where you have very long fixed rate deals and 289 00:15:53,000 --> 00:15:55,400 Speaker 7: so the sensitivity of interest rates they are small. So 290 00:15:55,680 --> 00:15:58,880 Speaker 7: I would say that the Bank of England is likely 291 00:15:59,160 --> 00:16:02,680 Speaker 7: and it's over considerable let's say six and nine months, 292 00:16:02,840 --> 00:16:05,440 Speaker 7: is likely to reduce interest rates as somewhat faster clip 293 00:16:05,760 --> 00:16:06,840 Speaker 7: than the ECB will. 294 00:16:07,120 --> 00:16:09,440 Speaker 2: How worried do ECB policy bakers need to be about 295 00:16:09,440 --> 00:16:11,760 Speaker 2: a fact that may not be cutting rights as you 296 00:16:11,800 --> 00:16:13,040 Speaker 2: see as this year. 297 00:16:13,360 --> 00:16:15,920 Speaker 7: You know, of course central banks will always tell you 298 00:16:15,920 --> 00:16:19,200 Speaker 7: you're not quite independent, and we have our brief, and 299 00:16:19,240 --> 00:16:23,440 Speaker 7: our brief is to do with our domestic economy. I 300 00:16:23,480 --> 00:16:27,160 Speaker 7: think that the connection between central bank policies first and 301 00:16:27,200 --> 00:16:29,840 Speaker 7: foremost comes to the exchange rate. Now, the US already 302 00:16:29,840 --> 00:16:33,040 Speaker 7: relatively weak. If you've got an inflation problem, that's not 303 00:16:33,120 --> 00:16:36,560 Speaker 7: a good thing. But if inflation in your area is 304 00:16:36,640 --> 00:16:40,120 Speaker 7: going too slow, then I think the UCB is going 305 00:16:40,160 --> 00:16:43,240 Speaker 7: to have a reasonably high degree of tolerance for a 306 00:16:43,240 --> 00:16:48,040 Speaker 7: weaker exchange rate, and therefore will not be particularly fast. 307 00:16:48,040 --> 00:16:51,240 Speaker 7: But now, clearly, if the FED was cutting interest rates quickly, 308 00:16:51,360 --> 00:16:53,440 Speaker 7: there would be more scope for the UCP to reduce 309 00:16:53,440 --> 00:16:57,760 Speaker 7: interest rates as well. I think that's that's clear. But 310 00:16:58,800 --> 00:17:02,880 Speaker 7: what I've been a bit surprised about is that the 311 00:17:02,960 --> 00:17:08,240 Speaker 7: ECB's portrayal of the inflation picture is not completely in 312 00:17:08,280 --> 00:17:09,800 Speaker 7: line the way I see. I have to say. 313 00:17:10,000 --> 00:17:10,080 Speaker 8: So. 314 00:17:10,160 --> 00:17:14,399 Speaker 2: That was Claud's Bader, Global Chief Economist Assaciaity General in London, 315 00:17:14,400 --> 00:17:17,199 Speaker 2: speaking to us on Bloomberg Radio. What does all of 316 00:17:17,240 --> 00:17:20,399 Speaker 2: this mean for those big European banking names reporting in 317 00:17:20,440 --> 00:17:23,880 Speaker 2: this earning season. I've been discussing that with Bloomberg Opinions 318 00:17:23,920 --> 00:17:26,720 Speaker 2: Global Banking Columbist Paul J. Davies. 319 00:17:27,119 --> 00:17:29,120 Speaker 9: The really fascinating thing that we saw at four year 320 00:17:29,160 --> 00:17:32,439 Speaker 9: earnings that we didn't expect was the southern European banks, 321 00:17:32,960 --> 00:17:37,240 Speaker 9: you know, the Santander's UNI credit, especially those of Spain 322 00:17:37,280 --> 00:17:40,200 Speaker 9: and Italy really kind of outperformed. They did so much 323 00:17:40,200 --> 00:17:42,320 Speaker 9: better than people were expecting. Normally, these banks they have 324 00:17:42,440 --> 00:17:45,760 Speaker 9: kind of they have much shorter duration loans on their books, 325 00:17:45,760 --> 00:17:48,760 Speaker 9: They react much more quickly to interest rates, and people 326 00:17:48,760 --> 00:17:51,240 Speaker 9: were expecting them to sort of fall off quicker, but 327 00:17:51,280 --> 00:17:52,800 Speaker 9: in fact it was the other way around. Those with 328 00:17:52,920 --> 00:17:55,719 Speaker 9: the more new othern Europeans, some of the French BNP, 329 00:17:56,800 --> 00:18:00,159 Speaker 9: German Dutch banks didn't do so well at all. They 330 00:18:00,200 --> 00:18:03,520 Speaker 9: kind of missed their earnings and revenue expectations. So it's like, 331 00:18:03,920 --> 00:18:06,000 Speaker 9: and I think there's a sense that that's going to continue, 332 00:18:06,040 --> 00:18:09,560 Speaker 9: even though we're expecting rate cuts to come. Obviously, I 333 00:18:09,560 --> 00:18:12,280 Speaker 9: think the curves have remained relatively steep, and that's really 334 00:18:12,320 --> 00:18:14,840 Speaker 9: good for these these Southern European banks. So we'll see 335 00:18:14,920 --> 00:18:16,680 Speaker 9: we'll see a bit more of that, probably. 336 00:18:16,400 --> 00:18:18,200 Speaker 2: Because I mean this is of course in the context 337 00:18:18,240 --> 00:18:21,120 Speaker 2: of when we're looking ahead to an expected cut from 338 00:18:21,119 --> 00:18:24,840 Speaker 2: the ECB in June. Are you suggesting that that's going 339 00:18:24,880 --> 00:18:27,480 Speaker 2: to kind of have quite diversion effects across the European 340 00:18:27,520 --> 00:18:30,639 Speaker 2: banking sector than when we're kind of listening out to 341 00:18:30,680 --> 00:18:32,600 Speaker 2: what banks are going to be telling us better out look. 342 00:18:32,680 --> 00:18:34,800 Speaker 9: Yeah, I mean, when the cuts do start to come in, 343 00:18:35,040 --> 00:18:38,200 Speaker 9: then obviously it will affect those Southern European banks quickest 344 00:18:38,240 --> 00:18:41,680 Speaker 9: because their loans reset faster. Later on in the year, 345 00:18:41,720 --> 00:18:44,920 Speaker 9: we might see their earnings expectations start to drop away, 346 00:18:45,000 --> 00:18:48,480 Speaker 9: depending on exactly what cuts materialize and what the outlook 347 00:18:48,520 --> 00:18:50,600 Speaker 9: is for how many more cuts are going to come, 348 00:18:51,080 --> 00:18:53,719 Speaker 9: And then that's when the more defensive you know, the 349 00:18:53,760 --> 00:18:57,280 Speaker 9: northern Europeans with with much longer duration mortgage books and 350 00:18:57,320 --> 00:19:00,639 Speaker 9: things like this, who will have more of you know, 351 00:19:00,720 --> 00:19:03,000 Speaker 9: the recent sort of higher rates lasting for longer in 352 00:19:03,520 --> 00:19:07,000 Speaker 9: their lending. That's when they will look better. But it 353 00:19:07,000 --> 00:19:09,679 Speaker 9: obviously depends on why we're cutting rates and how far 354 00:19:09,720 --> 00:19:11,679 Speaker 9: we're cutting rates, And if we're moving into something that 355 00:19:11,720 --> 00:19:14,439 Speaker 9: looks a lot more recessionary, then that's obviously kind of 356 00:19:14,440 --> 00:19:16,320 Speaker 9: bad for banks in general, and we'll be starting to 357 00:19:16,359 --> 00:19:19,080 Speaker 9: worry about you know, bad debts and provisions and that 358 00:19:19,119 --> 00:19:20,120 Speaker 9: sort of thing creeping up. 359 00:19:20,280 --> 00:19:23,160 Speaker 2: Yeah, because I mean, looking at the stocks bank Bank 360 00:19:23,200 --> 00:19:25,600 Speaker 2: index up over ten percent since the start of the 361 00:19:25,680 --> 00:19:28,520 Speaker 2: years that high borrowing costs have been you know, helping 362 00:19:28,560 --> 00:19:31,360 Speaker 2: to lift those as well is Gulb and Sachs rise. 363 00:19:31,400 --> 00:19:34,720 Speaker 2: And describing the future of European banks is better for longer. 364 00:19:34,440 --> 00:19:36,520 Speaker 9: Well, again, it depends on what rate cuts we have 365 00:19:36,880 --> 00:19:39,520 Speaker 9: and what the outlook is for why they're happening. I mean, 366 00:19:39,720 --> 00:19:41,560 Speaker 9: I mean, if you look at European banks alone, if 367 00:19:41,560 --> 00:19:44,159 Speaker 9: you look at the eurostocks fifty the banks in there 368 00:19:44,200 --> 00:19:47,040 Speaker 9: so exclude the UK banks, then actually the performance has 369 00:19:47,080 --> 00:19:49,600 Speaker 9: been even better. And one of the drivers there has 370 00:19:49,640 --> 00:19:52,280 Speaker 9: been you know, some of the bigger banks. BNP has 371 00:19:52,320 --> 00:19:55,240 Speaker 9: sold businesses, UNI Credit has had years and years of 372 00:19:55,280 --> 00:19:57,840 Speaker 9: fixing its balance sheets, and the benefit of that has 373 00:19:58,000 --> 00:20:00,880 Speaker 9: been coming through. And what that meant is there's been 374 00:20:00,880 --> 00:20:04,160 Speaker 9: this wave of you know, much larger than normal, much 375 00:20:04,240 --> 00:20:06,600 Speaker 9: larger than anything in the last decade or so kind 376 00:20:06,640 --> 00:20:09,560 Speaker 9: of share buybacks coming through. So so investors have looked 377 00:20:09,560 --> 00:20:12,440 Speaker 9: at sort of, you know, reasonably good earnings, you know, 378 00:20:12,560 --> 00:20:14,880 Speaker 9: reasonable hopes for those earnings lasting a little bit longer, 379 00:20:15,119 --> 00:20:17,119 Speaker 9: and this wave of buybacks coming through, and that's what 380 00:20:17,240 --> 00:20:20,480 Speaker 9: supported a lot of the European banks, but probably even 381 00:20:20,520 --> 00:20:21,720 Speaker 9: more than some of the UK banks. 382 00:20:21,720 --> 00:20:24,240 Speaker 2: To be honest, what about investment banking and all of 383 00:20:24,280 --> 00:20:26,000 Speaker 2: this as well? What are it sort of hopes that 384 00:20:26,040 --> 00:20:27,359 Speaker 2: these banks have in that sector. 385 00:20:27,760 --> 00:20:30,680 Speaker 9: Yeah, well, this is where it's this is where they 386 00:20:30,840 --> 00:20:33,760 Speaker 9: are being kind of way more optimistic than is warranted, 387 00:20:33,760 --> 00:20:35,159 Speaker 9: I think. I mean, we've just had all of the 388 00:20:35,160 --> 00:20:38,720 Speaker 9: big US banks reporting there was a jump in investment 389 00:20:38,760 --> 00:20:41,280 Speaker 9: banking fees and a lot of this was driven by 390 00:20:41,400 --> 00:20:43,560 Speaker 9: kind of bond issuance and loan issuance by sort of 391 00:20:43,600 --> 00:20:45,760 Speaker 9: you know, the debt capital market side of things. The 392 00:20:45,920 --> 00:20:48,880 Speaker 9: M and a business is still really really struggling now. 393 00:20:49,080 --> 00:20:51,160 Speaker 9: So good debt market business is going to be good 394 00:20:51,200 --> 00:20:53,160 Speaker 9: for Deutsche Bank, is going to be good for Barkleys. 395 00:20:53,160 --> 00:20:57,440 Speaker 9: That's historically where they've where they've done well. But you know, Barklay's, 396 00:20:57,840 --> 00:21:01,840 Speaker 9: especially BNP also to some degree, Deutsche have like they 397 00:21:01,840 --> 00:21:05,320 Speaker 9: have like really quite bullish expectations for what investment banking 398 00:21:05,359 --> 00:21:07,480 Speaker 9: revenues are going to do over the next few years, 399 00:21:07,520 --> 00:21:10,600 Speaker 9: in terms of what they're promising shareholders, the returns they're 400 00:21:10,640 --> 00:21:12,720 Speaker 9: going to make, you know, for Barkley's, the capital returns 401 00:21:12,760 --> 00:21:14,400 Speaker 9: they're going to fund, and this sort of thing. And 402 00:21:15,040 --> 00:21:18,119 Speaker 9: really it's like the investment banking recovery isn't looking that 403 00:21:18,160 --> 00:21:20,080 Speaker 9: strong yet. It's looking like it's still going to be 404 00:21:20,119 --> 00:21:22,879 Speaker 9: quite a tricky, quite a bumpy year in many ways. 405 00:21:23,240 --> 00:21:25,240 Speaker 9: And where it is good is going to be much 406 00:21:25,280 --> 00:21:28,080 Speaker 9: more US focused. So I'm kind of very skeptical that 407 00:21:28,119 --> 00:21:29,480 Speaker 9: a lot of these Europeans are going to hit the 408 00:21:29,560 --> 00:21:30,800 Speaker 9: kind of targets that they're setting. 409 00:21:31,320 --> 00:21:33,600 Speaker 2: So is it the banks that have a greater US 410 00:21:33,640 --> 00:21:36,800 Speaker 2: investment bank business then that are more likely to outperform 411 00:21:36,840 --> 00:21:37,719 Speaker 2: in this sector? 412 00:21:37,920 --> 00:21:38,120 Speaker 4: Yeah? 413 00:21:38,119 --> 00:21:39,800 Speaker 9: So, I mean, so Barkley is obviously with a lot 414 00:21:39,840 --> 00:21:44,399 Speaker 9: more US exposure, perhaps will do better than BNP or 415 00:21:44,440 --> 00:21:48,040 Speaker 9: Deutsch on that front. But again it's like the expectations 416 00:21:48,040 --> 00:21:51,440 Speaker 9: that they have involved taking market share from somebody else, 417 00:21:51,480 --> 00:21:53,280 Speaker 9: and the question is, well, who is that somebody else? 418 00:21:53,320 --> 00:21:54,960 Speaker 9: I mean, they're not going to take it from the Americans, 419 00:21:55,080 --> 00:21:58,320 Speaker 9: not that easily anyway. You know, obviously creditsueeze blew up 420 00:21:58,359 --> 00:22:00,280 Speaker 9: and is gone. You know, any market shared we had 421 00:22:00,320 --> 00:22:03,520 Speaker 9: from then has probably been already distributed. So then the 422 00:22:03,600 --> 00:22:05,240 Speaker 9: question is, you know, where do you get it from? 423 00:22:05,240 --> 00:22:07,360 Speaker 9: I mean, there's an argument that there are some smaller 424 00:22:07,400 --> 00:22:10,600 Speaker 9: European banks who are going to find it increasingly difficult 425 00:22:10,680 --> 00:22:14,119 Speaker 9: to maintain those investment banking services in any sort of 426 00:22:14,160 --> 00:22:18,320 Speaker 9: you know, cost effective or competitive fashion. But again, they 427 00:22:18,320 --> 00:22:20,080 Speaker 9: don't account for a lot of the business, so there's 428 00:22:20,119 --> 00:22:22,600 Speaker 9: not a lot of share to be taken from them, 429 00:22:22,680 --> 00:22:24,480 Speaker 9: even if they do give up and go away. So 430 00:22:25,119 --> 00:22:28,200 Speaker 9: it's really difficult to see, you know, how these big 431 00:22:28,240 --> 00:22:31,280 Speaker 9: Europeans really kind of do anything better than what the 432 00:22:31,359 --> 00:22:31,960 Speaker 9: market does. 433 00:22:32,280 --> 00:22:36,760 Speaker 2: We've been discussing the differing outlooks for interest rates between 434 00:22:36,920 --> 00:22:40,160 Speaker 2: the US and Europe after the recent comments from Jerome 435 00:22:40,240 --> 00:22:44,280 Speaker 2: Powe signaling a later start to rate cuts in the US. 436 00:22:44,440 --> 00:22:47,000 Speaker 2: Does the currency diversions that could provoke, is that going 437 00:22:47,000 --> 00:22:49,320 Speaker 2: to have an impact on banks outlooks? 438 00:22:49,600 --> 00:22:51,479 Speaker 9: I mean again, certainly. I mean I think it's like, 439 00:22:51,720 --> 00:22:54,280 Speaker 9: you know, for the US, we're almost certainly into a 440 00:22:54,320 --> 00:22:57,720 Speaker 9: world of you know, higher rates for longer, more upward 441 00:22:57,800 --> 00:23:00,399 Speaker 9: volatility in both rates and inflation rather and kind of 442 00:23:00,400 --> 00:23:03,280 Speaker 9: downward volatility, i e. You know, we're going to continue 443 00:23:03,320 --> 00:23:05,760 Speaker 9: to see if rates do move or if there is 444 00:23:05,840 --> 00:23:07,679 Speaker 9: questions over the path of rates, it's going to be 445 00:23:08,000 --> 00:23:11,640 Speaker 9: flat to up rather than suddenly down. In Europe, it's 446 00:23:11,680 --> 00:23:14,600 Speaker 9: a very different world. It's you know, it's lower growth generally, 447 00:23:14,640 --> 00:23:18,160 Speaker 9: it's lower productivity. There's like there's more kind of trade 448 00:23:18,200 --> 00:23:20,480 Speaker 9: and supply chain issues for Europe than there are for 449 00:23:20,520 --> 00:23:23,359 Speaker 9: the US. And there are some people and I kind 450 00:23:23,400 --> 00:23:25,160 Speaker 9: of hadn't decided quite whether I agree with them yet 451 00:23:25,200 --> 00:23:26,680 Speaker 9: or not, but there are some people who really think 452 00:23:26,680 --> 00:23:29,240 Speaker 9: that actually the volatility in Europe is going to be downwards. 453 00:23:29,280 --> 00:23:32,840 Speaker 9: It's going to be inflation undershooting expectations more quickly than 454 00:23:32,880 --> 00:23:36,280 Speaker 9: we might think, rates having to drop to below sort 455 00:23:36,280 --> 00:23:38,320 Speaker 9: of two percent again more quickly than we might think 456 00:23:38,359 --> 00:23:41,879 Speaker 9: as well, and that is bad for trading activity. You know, 457 00:23:41,960 --> 00:23:44,240 Speaker 9: we could be entering a stage where actually Europe and 458 00:23:44,280 --> 00:23:46,760 Speaker 9: the US start to diverge quite a bit, and again 459 00:23:46,800 --> 00:23:49,320 Speaker 9: that will favor the big US banks over the big 460 00:23:49,320 --> 00:23:52,040 Speaker 9: European banks when it comes to investment, banking and trading too. 461 00:23:52,400 --> 00:23:55,200 Speaker 2: Quite about jobs and pay in all of this as well, 462 00:23:55,600 --> 00:23:59,520 Speaker 2: You've written extensively about ubs after the Credits Suite takeover. 463 00:23:59,720 --> 00:24:02,840 Speaker 2: We've reporting on the most recent round of job cuts 464 00:24:02,880 --> 00:24:05,840 Speaker 2: expected at ubs as well. What is the outlook for 465 00:24:05,880 --> 00:24:08,520 Speaker 2: those working in these banks in terms of both the 466 00:24:08,560 --> 00:24:10,880 Speaker 2: security of their jobs but also how much they should 467 00:24:10,920 --> 00:24:12,040 Speaker 2: be expecting in bonuses. 468 00:24:12,240 --> 00:24:14,040 Speaker 9: Well, again, I mean, it depends a lot on what 469 00:24:14,119 --> 00:24:16,040 Speaker 9: happens with the economy. I think in the US it's 470 00:24:16,040 --> 00:24:18,480 Speaker 9: it's obviously looking better apart from I mean, if you're 471 00:24:18,480 --> 00:24:20,840 Speaker 9: an M and a banker, you know, you're still not 472 00:24:20,920 --> 00:24:23,560 Speaker 9: getting the kind of activity that you that will see 473 00:24:23,560 --> 00:24:26,560 Speaker 9: you earning you know, fabulous money. You know, the boutiques 474 00:24:26,760 --> 00:24:29,280 Speaker 9: who also pay their bankers a greater share of the 475 00:24:29,320 --> 00:24:30,800 Speaker 9: revenue they make so they don't have all of the 476 00:24:30,800 --> 00:24:33,040 Speaker 9: rest of the costs are also kind of taking away 477 00:24:33,040 --> 00:24:35,159 Speaker 9: bits of business. So we're talking me like, you know, 478 00:24:35,640 --> 00:24:38,600 Speaker 9: the ever cause, the pgats, the Lazards, you know, those 479 00:24:38,640 --> 00:24:41,480 Speaker 9: sorts of banks, those sorts of investment banks. It's a 480 00:24:41,560 --> 00:24:43,840 Speaker 9: much trickier world. But again it's sort of you know, 481 00:24:43,960 --> 00:24:45,879 Speaker 9: to the extent that there looks like there could be 482 00:24:45,920 --> 00:24:48,159 Speaker 9: a recovery, it's going to be more US based than 483 00:24:48,240 --> 00:24:51,359 Speaker 9: Europe based. So so those people will people focus on 484 00:24:51,400 --> 00:24:53,240 Speaker 9: the US will earn more. But I mean, I guess 485 00:24:53,320 --> 00:24:55,240 Speaker 9: and we've got a big, a big take about this 486 00:24:55,280 --> 00:24:57,520 Speaker 9: on Bloomberg about you know, the private equity industry and 487 00:24:57,520 --> 00:25:00,240 Speaker 9: the lack of activity there. This is a huge, huge 488 00:25:00,280 --> 00:25:03,479 Speaker 9: business for investment banking. They you know, historically supply up 489 00:25:03,520 --> 00:25:06,280 Speaker 9: to thirty percent of all investment banking fees across the 490 00:25:06,280 --> 00:25:08,800 Speaker 9: board in terms of M and A advice, their issuance 491 00:25:08,800 --> 00:25:11,560 Speaker 9: equitations and so on and so forth. And until that 492 00:25:11,760 --> 00:25:15,440 Speaker 9: industry can kind of find its mojo again, can find 493 00:25:15,520 --> 00:25:19,280 Speaker 9: reasons and value in doing deals, then investment banking is 494 00:25:19,280 --> 00:25:22,320 Speaker 9: going to disappoint. And so you know, the job requirements 495 00:25:22,320 --> 00:25:24,640 Speaker 9: and the bonus requirements for a lot of people may 496 00:25:24,680 --> 00:25:25,800 Speaker 9: well disappoint us well. 497 00:25:26,080 --> 00:25:29,200 Speaker 2: Thanks to Bloomberg opinions, Paul J. Davies, we will bring 498 00:25:29,240 --> 00:25:32,560 Speaker 2: you those bank results on Bloomberg Radio as they're released 499 00:25:32,760 --> 00:25:35,439 Speaker 2: in the coming days. I'm Stephen Carroll in London. You 500 00:25:35,440 --> 00:25:38,600 Speaker 2: can catch us every weekday morning here for Bloomberg Daybreak Europe, 501 00:25:38,600 --> 00:25:41,560 Speaker 2: beginning at six am in London and one am on 502 00:25:41,600 --> 00:25:42,199 Speaker 2: Wall Streets. 503 00:25:42,200 --> 00:25:45,000 Speaker 1: Tom, thank you, Steven, And coming up on Bloomberg day 504 00:25:45,000 --> 00:25:47,639 Speaker 1: Break weekend, I'll look at the twenty twenty four Beijing 505 00:25:47,920 --> 00:25:52,760 Speaker 1: International Automotive Exhibition. I'm Tom Busby, and this is Bloomberg. 506 00:26:03,680 --> 00:26:05,720 Speaker 1: I'm Tom Buzzby with your global look ahead at the 507 00:26:05,760 --> 00:26:08,480 Speaker 1: top stories for investors in the coming week. This week 508 00:26:08,560 --> 00:26:11,840 Speaker 1: is the Auto Show China, the twenty twenty four Beijing 509 00:26:12,000 --> 00:26:16,439 Speaker 1: International Automotive Exhibition. Bloomberg Daybreak Asia host Brian Curtis and 510 00:26:16,440 --> 00:26:19,280 Speaker 1: Doug Krisner take a look at China's electric vehicle market 511 00:26:19,359 --> 00:26:23,679 Speaker 1: and how international automakers are reacting to China's dominance in 512 00:26:23,720 --> 00:26:24,280 Speaker 1: that space. 513 00:26:24,800 --> 00:26:28,040 Speaker 3: Tom, we look forward to Auto Show China, the twenty 514 00:26:28,080 --> 00:26:33,560 Speaker 3: twenty four Beijing International Automotive Exhibition. Legacy European automakers will 515 00:26:33,560 --> 00:26:36,520 Speaker 3: be revving up a last ditch offensive to win back 516 00:26:36,600 --> 00:26:39,840 Speaker 3: some of the EV market, and the Chinese brands will 517 00:26:39,840 --> 00:26:41,640 Speaker 3: be showing off their latest models. 518 00:26:41,680 --> 00:26:46,119 Speaker 10: For sure, BMW is showcasing and unprecedented fifteen models. A 519 00:26:46,200 --> 00:26:50,399 Speaker 10: slew of BMW executives will be attending. Mercedes CEO is 520 00:26:50,440 --> 00:26:54,119 Speaker 10: attending as well, and Volkswagen will also bring a number 521 00:26:54,200 --> 00:26:57,600 Speaker 10: of its highest ranking executives. This show comes at a 522 00:26:57,640 --> 00:27:00,959 Speaker 10: time of heightened tensions between bay Jing and the West 523 00:27:01,200 --> 00:27:03,920 Speaker 10: over low cost manufacturing in China, and. 524 00:27:03,920 --> 00:27:05,960 Speaker 3: We thought the Auto Show as a result would be 525 00:27:06,040 --> 00:27:08,199 Speaker 3: a good prism through which to look at some of 526 00:27:08,240 --> 00:27:12,080 Speaker 3: these issues. The still growing domestic auto market in China, 527 00:27:12,400 --> 00:27:16,720 Speaker 3: but also the global auto market EU tensions with China 528 00:27:16,800 --> 00:27:21,120 Speaker 3: over cheap Chinese autos US China issues as well some 529 00:27:21,160 --> 00:27:24,880 Speaker 3: of the travails that Tesla is facing, and what happens 530 00:27:25,000 --> 00:27:28,200 Speaker 3: if and when Chinese manufacturers set up shop in Mexico 531 00:27:28,680 --> 00:27:31,840 Speaker 3: as they eye the big US market joining us. In 532 00:27:31,880 --> 00:27:35,040 Speaker 3: our studios in Hong Kong, our Bloomberg Transport reporters Linda 533 00:27:35,119 --> 00:27:39,800 Speaker 3: lu and Danny Leeb and First German Chancellor Olaf Schultz 534 00:27:39,840 --> 00:27:42,280 Speaker 3: has been in China over the past week and has 535 00:27:42,359 --> 00:27:45,480 Speaker 3: drawn some attention to this issue that Doug mentioned, over 536 00:27:45,600 --> 00:27:50,080 Speaker 3: capacity of evs in China flooding European markets. We asked 537 00:27:50,119 --> 00:27:54,600 Speaker 3: Bloomberg correspondent Rebecca Chong Wilkins to characterize the Chinese response 538 00:27:54,680 --> 00:27:55,760 Speaker 3: to such criticism. 539 00:27:56,000 --> 00:27:59,840 Speaker 11: EV is a part of this whole channel and plan 540 00:28:00,040 --> 00:28:02,679 Speaker 11: and to replace the old drivers of growth. If we 541 00:28:02,800 --> 00:28:06,119 Speaker 11: do see this kind of friction, this trade friction, that 542 00:28:06,240 --> 00:28:09,679 Speaker 11: does have the potential to significantly impact the ability for 543 00:28:09,760 --> 00:28:13,200 Speaker 11: these industry to continue developing, because exporting is a big 544 00:28:13,240 --> 00:28:14,280 Speaker 11: part of the plan. 545 00:28:14,520 --> 00:28:18,600 Speaker 3: That's Rebecca Cheong Wilkins. So, Danny, this show, which you'll 546 00:28:18,640 --> 00:28:20,840 Speaker 3: be a ten thing and Linda will as well, is 547 00:28:21,119 --> 00:28:25,000 Speaker 3: about cars. Will it be about the cars or the politics? 548 00:28:25,600 --> 00:28:30,280 Speaker 8: It will be about making sure that Germans or Germany's 549 00:28:30,280 --> 00:28:34,679 Speaker 8: auto production is not harmed by the rise of Chinese 550 00:28:34,720 --> 00:28:38,240 Speaker 8: evs ultimately as much as it is about the cars 551 00:28:38,800 --> 00:28:42,040 Speaker 8: automotive show on display. But there is still a sense 552 00:28:42,080 --> 00:28:46,120 Speaker 8: of cheer politics and economy as well, given how much 553 00:28:46,840 --> 00:28:52,120 Speaker 8: the automotive market really contributes to the German economy. And 554 00:28:52,200 --> 00:28:56,480 Speaker 8: you know, you've seen these successful brands over many, many decades. 555 00:28:56,520 --> 00:28:59,680 Speaker 8: You see them in China today. The fact that BM 556 00:28:59,720 --> 00:29:04,960 Speaker 8: Double Mercedes now they count they count China as being 557 00:29:05,040 --> 00:29:07,920 Speaker 8: their biggest markets in some shape or form, whether beyond 558 00:29:07,960 --> 00:29:11,200 Speaker 8: revenue or on sales. So it's very important. And when 559 00:29:11,200 --> 00:29:15,760 Speaker 8: you see the rise of Chinese evs in particular, what 560 00:29:15,800 --> 00:29:21,320 Speaker 8: you're seeing is them having to reposition themselves against the 561 00:29:21,440 --> 00:29:24,800 Speaker 8: rise of Chinese evs. But we've not necessarily necessarily seen 562 00:29:24,840 --> 00:29:28,360 Speaker 8: an impact yet of on revenues or on sales in particular, 563 00:29:28,480 --> 00:29:33,160 Speaker 8: but is bracing themselves for what is an interesting and 564 00:29:33,240 --> 00:29:38,040 Speaker 8: fascinating long term battle for supremacy and relevance in not 565 00:29:38,120 --> 00:29:40,480 Speaker 8: just China, but what will be the global market. 566 00:29:40,680 --> 00:29:42,440 Speaker 10: When I think at the early days of the auto 567 00:29:42,480 --> 00:29:46,080 Speaker 10: industry in China, I think joint venture, both American and 568 00:29:46,200 --> 00:29:50,760 Speaker 10: European partners establishing these jvs, And clearly I think we 569 00:29:50,800 --> 00:29:53,680 Speaker 10: can agree that Chinese firms did benefit from being exposed 570 00:29:53,680 --> 00:29:56,600 Speaker 10: to that technology on the production side. You know, we've 571 00:29:56,600 --> 00:29:58,920 Speaker 10: heard about past disagreements when it comes to things like 572 00:29:59,000 --> 00:30:03,440 Speaker 10: intellectual proper. I'm curious, Linda, where is China now when 573 00:30:03,480 --> 00:30:08,400 Speaker 10: it comes to technology, particularly as it relates to EV's. 574 00:30:08,640 --> 00:30:11,240 Speaker 10: How sophisticated is that technology currently? 575 00:30:11,680 --> 00:30:16,400 Speaker 12: As you mentioned, in the early days of China's automotive manufacturing, 576 00:30:16,480 --> 00:30:20,080 Speaker 12: they've relied on these foreign joint ventures a lot, where 577 00:30:20,640 --> 00:30:24,240 Speaker 12: international brands like Ford and GM went into the China 578 00:30:24,280 --> 00:30:28,960 Speaker 12: market and set up these production facilities together with the 579 00:30:29,040 --> 00:30:33,440 Speaker 12: Chinese partners. And really what's really interesting is that now 580 00:30:33,520 --> 00:30:38,000 Speaker 12: that China has really grown its domestic electric vehicle industry 581 00:30:38,160 --> 00:30:41,360 Speaker 12: and along with that, coming with the battery supply chain, 582 00:30:41,680 --> 00:30:45,960 Speaker 12: it's kind of leapfrog. Now you're seeing the foreign automakers 583 00:30:46,000 --> 00:30:48,840 Speaker 12: having to turn to China to try to get some 584 00:30:48,880 --> 00:30:53,320 Speaker 12: of that technological edge. We've seen Volkswagen tie up with Xpong, 585 00:30:53,480 --> 00:30:56,720 Speaker 12: which is an up and coming EV startup. We've also 586 00:30:56,760 --> 00:31:01,440 Speaker 12: seen Stilantis forming partnership with an EV make her called 587 00:31:01,760 --> 00:31:04,720 Speaker 12: leap Motor. So it's really interesting to see how the 588 00:31:04,800 --> 00:31:05,640 Speaker 12: tide has turned. 589 00:31:05,760 --> 00:31:08,240 Speaker 3: So you've got Neo, you've got le Auto, you've got 590 00:31:08,680 --> 00:31:12,280 Speaker 3: x pun BYD the biggest name I suppose, and now 591 00:31:12,320 --> 00:31:14,880 Speaker 3: a new entrant, shall Me. I'm just curious, will we 592 00:31:14,920 --> 00:31:17,480 Speaker 3: see much at this auto show in the coming week 593 00:31:17,480 --> 00:31:18,000 Speaker 3: from shall Me? 594 00:31:18,480 --> 00:31:22,280 Speaker 12: Yes, Shallmi will be exhibiting at the auto show. What's 595 00:31:22,320 --> 00:31:25,800 Speaker 12: really interesting about shell Me is they've already had a 596 00:31:25,880 --> 00:31:30,640 Speaker 12: major launch a couple of weeks ago, and after that launched, 597 00:31:30,640 --> 00:31:34,640 Speaker 12: the reception has been better than expected. Sales kind of 598 00:31:34,680 --> 00:31:37,280 Speaker 12: went through the roof, so I think at the Auto Show. 599 00:31:37,280 --> 00:31:39,200 Speaker 12: It would be kind of another chance for shell Me 600 00:31:39,360 --> 00:31:42,120 Speaker 12: to display its first EV, the SIU seven. 601 00:31:42,400 --> 00:31:44,960 Speaker 10: Linda just mentioned the auto supply chain Danny. When it 602 00:31:45,000 --> 00:31:49,680 Speaker 10: comes to very critical technology lithium ion batteries, I'm thinking 603 00:31:49,720 --> 00:31:52,240 Speaker 10: of c at L in particular. We just heard from 604 00:31:52,240 --> 00:31:55,600 Speaker 10: the company recently with its earnings report to what extent 605 00:31:55,720 --> 00:31:58,640 Speaker 10: is China dominate the battery space? Is this a slam dunk? 606 00:31:58,680 --> 00:32:01,720 Speaker 10: I mean, nobody can compete against China right now when 607 00:32:01,760 --> 00:32:03,080 Speaker 10: it comes to EV batteries. 608 00:32:03,240 --> 00:32:06,240 Speaker 8: I think China's always had that head start in the 609 00:32:06,280 --> 00:32:09,680 Speaker 8: battery space and doing it in a way in scale 610 00:32:09,720 --> 00:32:13,960 Speaker 8: and identifying what it thought would be the future technologies. 611 00:32:14,040 --> 00:32:15,920 Speaker 8: When you do look at the numbers, you do see 612 00:32:16,240 --> 00:32:21,920 Speaker 8: China in particular having a grip on many aspects of 613 00:32:21,960 --> 00:32:25,600 Speaker 8: the battery supply chain. And that's no coincidence thanks to 614 00:32:26,120 --> 00:32:29,960 Speaker 8: this response to what they thought was the future in 615 00:32:30,120 --> 00:32:33,560 Speaker 8: automotive being evs. When you see some like c ATL 616 00:32:34,320 --> 00:32:38,720 Speaker 8: you performing so strongly, and it seems to whether any 617 00:32:38,800 --> 00:32:42,200 Speaker 8: kind of market conditions, clearly there is a cause can 618 00:32:42,440 --> 00:32:46,280 Speaker 8: concern there, because when you want to have a level 619 00:32:46,280 --> 00:32:50,040 Speaker 8: playing field, when you want to have more players, more diversity, 620 00:32:50,080 --> 00:32:53,400 Speaker 8: and yet there is still more concentration. I think there's 621 00:32:53,440 --> 00:32:56,760 Speaker 8: a big question mark over how governments respond to maybe 622 00:32:56,760 --> 00:32:59,040 Speaker 8: even support their own kind of national champions in the 623 00:32:59,040 --> 00:32:59,960 Speaker 8: battery space. 624 00:33:00,040 --> 00:33:03,160 Speaker 10: Linda, as you know, US Treasury Secretary Janet Yellen was 625 00:33:03,160 --> 00:33:05,160 Speaker 10: recently in China and one of the things that she 626 00:33:05,320 --> 00:33:08,840 Speaker 10: criticized the government for was the subsidy the role that 627 00:33:08,920 --> 00:33:12,720 Speaker 10: subsidies play in supporting the industry. What do we know 628 00:33:13,040 --> 00:33:18,280 Speaker 10: about how the government has supported the EV manufacturers and 629 00:33:18,320 --> 00:33:21,960 Speaker 10: whether or not that has been, to Yellen's point, maybe 630 00:33:22,000 --> 00:33:22,880 Speaker 10: a little excessive. 631 00:33:24,520 --> 00:33:27,800 Speaker 12: Yes, that's right. When Jennet Yellen and China, the word 632 00:33:27,840 --> 00:33:31,040 Speaker 12: that kept coming up was over capacity. And you know 633 00:33:31,120 --> 00:33:34,560 Speaker 12: how the Chinese government subsidies have led to the situation. 634 00:33:35,280 --> 00:33:39,560 Speaker 12: In the early days of the electric vehicle industry in China, 635 00:33:39,680 --> 00:33:44,280 Speaker 12: the government has poured tens of billions of dollars into 636 00:33:44,480 --> 00:33:48,840 Speaker 12: growing and nurturing these companies. Now you've got success stories 637 00:33:48,960 --> 00:33:53,000 Speaker 12: like byd CTL that have come from this government support. 638 00:33:53,320 --> 00:33:57,600 Speaker 12: But in the past few years that support has been 639 00:33:57,840 --> 00:34:01,880 Speaker 12: phased out as China enters kind of its next stage 640 00:34:01,920 --> 00:34:04,280 Speaker 12: of EV adoption, which is more market driven. 641 00:34:04,760 --> 00:34:04,920 Speaker 2: Now. 642 00:34:04,960 --> 00:34:08,440 Speaker 12: I think critics may point to that as unfair competition 643 00:34:08,600 --> 00:34:13,400 Speaker 12: that these Chinese companies survived, so probably mostly due to 644 00:34:13,440 --> 00:34:17,640 Speaker 12: these subsidies. But on the other hand, you see US 645 00:34:17,640 --> 00:34:23,279 Speaker 12: and the EU also now investing into their domestic industry. 646 00:34:23,400 --> 00:34:26,680 Speaker 12: So it's kind of an interesting argument depending on which 647 00:34:26,680 --> 00:34:27,360 Speaker 12: way you spin it. 648 00:34:28,160 --> 00:34:31,480 Speaker 3: And we haven't talked too much about BYD Lend, but BYD. 649 00:34:32,080 --> 00:34:33,960 Speaker 3: You know, we made a lot of the fact that 650 00:34:34,000 --> 00:34:39,280 Speaker 3: they were getting some mass market cars really out across 651 00:34:39,360 --> 00:34:42,399 Speaker 3: the country, but now we've just seen them double down 652 00:34:42,440 --> 00:34:46,759 Speaker 3: on their expansion into luxury SUVs and I'm wondering what 653 00:34:46,840 --> 00:34:49,759 Speaker 3: the impact that that might be and the competition that 654 00:34:49,880 --> 00:34:51,280 Speaker 3: might provide to Tesla. 655 00:34:52,400 --> 00:34:56,759 Speaker 12: Yeah, last night BYD just launched more models from the 656 00:34:57,360 --> 00:35:01,879 Speaker 12: upscale function by brand, and they're doing a lot more 657 00:35:01,920 --> 00:35:04,680 Speaker 12: in the luxury space. And from the analysts that we've 658 00:35:04,719 --> 00:35:08,560 Speaker 12: spoken to, they think these brands are probably not going 659 00:35:08,600 --> 00:35:11,480 Speaker 12: to move a huge amount of volume, but what they 660 00:35:11,560 --> 00:35:15,400 Speaker 12: do bring to the table for BYD is prestige, and 661 00:35:15,520 --> 00:35:18,839 Speaker 12: having that prestige will just lift BYD's brand up and 662 00:35:19,360 --> 00:35:22,120 Speaker 12: help it to compete more in the kind of arena 663 00:35:22,160 --> 00:35:25,680 Speaker 12: where Tesla is at. You know, Tesla has super passionate 664 00:35:25,760 --> 00:35:29,120 Speaker 12: fans and they just really love the Tesla brand, and 665 00:35:29,239 --> 00:35:30,959 Speaker 12: BYD is trying to head that way. 666 00:35:31,280 --> 00:35:35,479 Speaker 10: We've heard of the potential threat of tariffs, not only 667 00:35:35,480 --> 00:35:38,040 Speaker 10: from the US, but certainly from the European side too. 668 00:35:38,640 --> 00:35:44,040 Speaker 10: Workers very much, I think, for both parties are top 669 00:35:44,080 --> 00:35:47,240 Speaker 10: of mind when government officials try to defend their turf 670 00:35:47,360 --> 00:35:51,320 Speaker 10: and keeping people employed. Danny, take me into the shop floor. 671 00:35:51,960 --> 00:35:54,440 Speaker 10: If you look at the way some of these manufacturing 672 00:35:54,880 --> 00:35:59,720 Speaker 10: facilities are structured in China when you get into EV manufacturing, 673 00:36:00,000 --> 00:36:02,279 Speaker 10: are we talking about a great deal of workers or 674 00:36:02,320 --> 00:36:05,280 Speaker 10: as a lot of this already automated that we're using 675 00:36:05,880 --> 00:36:07,480 Speaker 10: a heavy amount of robotics. 676 00:36:07,560 --> 00:36:08,040 Speaker 1: Is that right? 677 00:36:08,480 --> 00:36:12,560 Speaker 8: There is a greater reliance on automation and robotics. And 678 00:36:13,160 --> 00:36:15,400 Speaker 8: you can see the way in which the likes of 679 00:36:15,440 --> 00:36:19,600 Speaker 8: BYD have some of the most efficient supply chains. And 680 00:36:19,640 --> 00:36:22,080 Speaker 8: it's you know, you're taking from the copybook of the 681 00:36:22,239 --> 00:36:26,680 Speaker 8: likes of Tesla, who's redefined the way in which EV's 682 00:36:26,880 --> 00:36:31,560 Speaker 8: cars are produced fundamentally. And you can see and it's 683 00:36:31,600 --> 00:36:35,759 Speaker 8: astonishing kind of perspective when you look at you go 684 00:36:35,840 --> 00:36:38,000 Speaker 8: on to these kind of production lines and you see 685 00:36:38,200 --> 00:36:42,160 Speaker 8: very few workers. You know, you go for up to 686 00:36:42,800 --> 00:36:45,560 Speaker 8: a mile or more and you'd see handfuls of workers 687 00:36:45,600 --> 00:36:48,920 Speaker 8: and all they're doing is fundamentally managing the machines, making 688 00:36:48,920 --> 00:36:53,080 Speaker 8: sure that production is smooth, it can run automatedly and 689 00:36:53,160 --> 00:36:55,839 Speaker 8: they'll just iron out any kinks. And so you know, 690 00:36:56,120 --> 00:36:58,480 Speaker 8: when you can get to that kind of level of efficiency, 691 00:36:58,960 --> 00:37:03,480 Speaker 8: it is, you know, clearly underscores your ability to be 692 00:37:03,560 --> 00:37:07,480 Speaker 8: a successful kind of company. And of course, when you 693 00:37:07,520 --> 00:37:10,879 Speaker 8: see in someone like Europe or even in the US 694 00:37:10,920 --> 00:37:15,440 Speaker 8: where working in the automotive industry is highly unionized, clearly 695 00:37:15,480 --> 00:37:18,480 Speaker 8: people will be concerned about their jobs, and how you 696 00:37:18,560 --> 00:37:22,880 Speaker 8: pivot away from that into something more automated is very difficult. 697 00:37:22,960 --> 00:37:24,239 Speaker 8: Outside of China. 698 00:37:24,520 --> 00:37:28,239 Speaker 3: I mentioned in the intro about Chinese manufacturers looking to 699 00:37:28,280 --> 00:37:31,279 Speaker 3: set up shop in Mexico. I just ask you, in 700 00:37:31,320 --> 00:37:34,000 Speaker 3: a very short question, perhaps a short answer as well, 701 00:37:34,360 --> 00:37:38,840 Speaker 3: do you see Chinese manufacturers manufacturing in Mexico before the 702 00:37:38,920 --> 00:37:41,840 Speaker 3: end of this decade? Yes, all right, we'll finish on 703 00:37:41,880 --> 00:37:44,560 Speaker 3: that note. And that will definitely queue up a lot 704 00:37:44,640 --> 00:37:47,000 Speaker 3: of tensions with the United States. If you think that 705 00:37:47,239 --> 00:37:50,399 Speaker 3: those tensions are high with China and the EU, wait 706 00:37:50,440 --> 00:37:55,239 Speaker 3: till you see a BYD manufacturing cars in Mexico for 707 00:37:55,560 --> 00:37:57,680 Speaker 3: export to the United States. Danny, thanks so much for 708 00:37:57,800 --> 00:38:02,040 Speaker 3: joining us, and Linda Lewis as well. Transport reporters. Here 709 00:38:02,080 --> 00:38:04,880 Speaker 3: at Bloomberg, I'm Brian Curtis in Hong Kong along with 710 00:38:04,960 --> 00:38:07,960 Speaker 3: Doug Krisner. You can catch us every weekday for Bloomberg 711 00:38:08,040 --> 00:38:10,720 Speaker 3: day Break Asia, beginning at eight am in Hong Kong 712 00:38:11,080 --> 00:38:12,840 Speaker 3: and eight pm on Wall Street. 713 00:38:12,880 --> 00:38:15,600 Speaker 1: Tom right, thanks to Brian, and thank you to Doug. 714 00:38:15,960 --> 00:38:17,920 Speaker 1: And that does it for this edition of Bloomberg day 715 00:38:17,920 --> 00:38:20,479 Speaker 1: Break Weekend. Join us again Monday morning at five am 716 00:38:20,480 --> 00:38:23,040 Speaker 1: Wall Street time for the latest on markets overseas and 717 00:38:23,080 --> 00:38:26,120 Speaker 1: the news you need to start your day. I'm Tom Busby. 718 00:38:26,320 --> 00:38:29,160 Speaker 1: Stay with us. Top stories and global business headlines are 719 00:38:29,200 --> 00:38:30,440 Speaker 1: coming up right now.