WEBVTT - (Radio) 0:00:02.520 --> 0:00:05.440 This is Bloomberg Daybreak Weekend, our global look ahead of 0:00:05.480 --> 0:00:07.680 the top stories in the coming week from our Daybreak 0:00:07.720 --> 0:00:10.520 anchors all around the world, and just the hand of 0:00:10.520 --> 0:00:13.880 the program, the job market and the fade in twenty 0:00:13.480 --> 0:00:16.520 twenty three. I'm John Tucker in New York. I'm calling 0:00:16.600 --> 0:00:19.639 Hepe in London, where we're looking at Europe entering a 0:00:19.720 --> 0:00:23.239 new year with an old conflict. I'm Madison Mills with 0:00:23.280 --> 0:00:25.959 a look at how things are already heating up for 0:00:26.040 --> 0:00:29.920 the presidential race. I'm Brian Curtis in Hong Kong. We 0:00:30.000 --> 0:00:32.920 look at the biggest market trends expected in twenty twenty 0:00:33.000 --> 0:00:39.120 three for Asia. That's all straight ahead on Bloomberg Daybreak 0:00:39.159 --> 0:00:43.400 Weekend on Bloomberg Eliven Free on New York, Bloomberg N one, 0:00:43.520 --> 0:00:47.120 Washington d C, Bloomberg one oh six one, Boston, Bloomberg 0:00:47.200 --> 0:00:50.840 nine sixties, San Francisco, d A B Digital Radio, London, 0:00:51.000 --> 0:00:54.440 Sirius XM one nineteen and around the world on Bloomberg 0:00:54.520 --> 0:01:00.800 Radio dot Com and via the Bloomberg Business Act. Everybody. 0:01:00.840 --> 0:01:03.160 I'm John Tucker, and let's start today's program with the 0:01:03.240 --> 0:01:07.520 December jobs report that's going to be released this coming Friday, 0:01:07.840 --> 0:01:09.800 joining me now to the preview that what it means 0:01:09.840 --> 0:01:14.040 for the Federal Reserve Bloomberg's Matt Mosler Matt. Before the 0:01:14.240 --> 0:01:16.600 end of the year, we got a piece of data 0:01:16.680 --> 0:01:21.399 applications for unemployment benefits, the jobless claims. They rose slightly, 0:01:21.600 --> 0:01:25.800 so as this proof positive that FED policy is starting 0:01:25.840 --> 0:01:28.520 to work as far as the the US labor market 0:01:28.959 --> 0:01:32.039 is concerned. You know, it was really only an ever 0:01:32.240 --> 0:01:36.399 so slight uptick, and initial claims for unemployment insurance are 0:01:36.400 --> 0:01:39.760 actually down quite a bit from where they were over 0:01:39.800 --> 0:01:43.280 the summer, and so we actually really aren't seeing yet 0:01:43.360 --> 0:01:47.360 much of an impact from FED policy on the labor market, 0:01:47.360 --> 0:01:49.880 and it continues to be the big vexing question for 0:01:49.960 --> 0:01:54.120 policymakers and a lot of forecasters who are forecasting or 0:01:54.120 --> 0:01:57.840 recession in the coming quarters. Yeah, it's important we have 0:01:57.880 --> 0:02:01.840 to explain to everybody because because of wages in particular, 0:02:02.200 --> 0:02:04.800 that's a big component of inflation, and we know the 0:02:04.800 --> 0:02:08.800 FED is battling to get the rate of inflation down. Um, 0:02:08.840 --> 0:02:12.960 do they really have to target and maybe even the 0:02:13.160 --> 0:02:17.120 torpedo the US jobs market to achieve their goal of 0:02:17.200 --> 0:02:21.480 some price stability. Well, you know, that's a really interesting 0:02:21.520 --> 0:02:24.440 debate right now because what we're seeing in the inflation 0:02:24.560 --> 0:02:29.720 data is services inflation is still running pretty high. And 0:02:29.800 --> 0:02:33.480 the FED kind of used the services sector as the 0:02:33.639 --> 0:02:37.919 sector where wages are going to pass through two prices 0:02:38.600 --> 0:02:42.200 most effectively and efficiently, and so the logic is that, yes, 0:02:42.240 --> 0:02:44.960 they do need to weaken the job market and bring 0:02:45.000 --> 0:02:47.800 that wage growth down in order to filter through to 0:02:47.880 --> 0:02:52.640 the lower services inflation. However, the services inflation story is 0:02:52.639 --> 0:02:55.760 pretty interesting because that's really being driven by um, things 0:02:55.840 --> 0:03:00.640 in healthcare and transportation like think airline tickets, and the 0:03:00.800 --> 0:03:04.040 case that that is really driven by wage growth in 0:03:04.080 --> 0:03:06.880 particular is not super strong when you actually dig into 0:03:06.919 --> 0:03:09.760 the data. So um, this is going to continue to 0:03:09.760 --> 0:03:12.680 be part of the debate. Definitely. The Fed is watching 0:03:12.680 --> 0:03:15.320 that wage growth number very carefully because that's how they 0:03:15.360 --> 0:03:18.720 think of it. But it is still possible that inflation 0:03:18.760 --> 0:03:20.720 could come down a lot in the coming months even 0:03:20.760 --> 0:03:24.079 if wage growth does stay high, and services will remind 0:03:24.080 --> 0:03:26.560 everybody that's the that's the biggest part of the economy 0:03:26.639 --> 0:03:30.360 right now, right that's right, Yeah, it's definitely. Uh, you know, 0:03:30.400 --> 0:03:33.960 the goods producing sector has shrunk and shrunk over the years, 0:03:34.080 --> 0:03:37.760 leaving mostly services behind and so that's where most Americans 0:03:37.800 --> 0:03:41.000 are employed these days. Uh, it makes up the majority 0:03:41.120 --> 0:03:43.920 of consumption patterns, and so that's why you know, there's 0:03:43.960 --> 0:03:47.520 so much attention on it. We've heard a lot about 0:03:47.960 --> 0:03:52.680 some job cuts coming up Wall Street, job cuts in technology. 0:03:52.760 --> 0:03:55.520 Have they shown up anywhere in the data? Are Are 0:03:55.600 --> 0:04:00.320 they big enough to have an impact? Not yet? You know, 0:04:00.400 --> 0:04:02.920 we're seeing we've certainly seen a lot of job cuts, 0:04:02.960 --> 0:04:06.160 and say the mortgage industry, you know, in the housing sector, 0:04:06.240 --> 0:04:09.200 things just aren't really happening because interest rates have shot 0:04:09.240 --> 0:04:11.760 up so quickly. But you know, these big, high profile 0:04:11.800 --> 0:04:14.400 announcements from the big ted companies are the big Wall 0:04:14.440 --> 0:04:17.679 Street firms, They're just not really enough to move the needle. 0:04:17.800 --> 0:04:20.560 And it seems like there is some anecdotal evidence, at 0:04:20.640 --> 0:04:23.719 least on the tech side, that engineers and the like 0:04:23.839 --> 0:04:26.000 who have been laid off from some of those firms 0:04:26.360 --> 0:04:30.200 are not having too much trouble finding new jobs. So 0:04:30.279 --> 0:04:33.719 it seems like the labor market does remain very fluid, 0:04:33.839 --> 0:04:37.080 very strong. Um, you know, both from a kind of 0:04:37.160 --> 0:04:41.599 economic data perspective and also somewhat from an anecdotal perspective 0:04:41.600 --> 0:04:45.440 as well. Okay, so let's move a hand to Friday 0:04:45.480 --> 0:04:49.600 with the release of the December jobs report. What's the expectation. 0:04:50.920 --> 0:04:54.200 So the expectation is for a further slowdown in job 0:04:54.240 --> 0:04:57.880 growth to something like two hundred thousand jobs created in December, 0:04:57.880 --> 0:05:02.240 which is still quite high, you know, relatives historical standards, 0:05:02.839 --> 0:05:07.279 um a unemployment rate staying unchanged at three point seven percent, 0:05:07.400 --> 0:05:10.760 so still quite low, and wage growth, you know, still 0:05:10.760 --> 0:05:13.880 coming in pretty robustly at at five percent on a 0:05:13.960 --> 0:05:16.200 year or year basement. I think that wage number is 0:05:16.240 --> 0:05:18.680 going to be really key for some of the reasons 0:05:18.720 --> 0:05:21.839 we just discussed. Now. An interesting thing about the last 0:05:21.920 --> 0:05:24.640 jobs report last month is that, you know, everybody was 0:05:24.680 --> 0:05:28.039 forecasting a slowdown in wage growth, continuing the trend of 0:05:28.080 --> 0:05:31.320 the previous several months. We actually got a huge pop 0:05:31.400 --> 0:05:33.720 in wage growth last month. And the reason for that 0:05:33.839 --> 0:05:36.880 was we had a three point eight percent increase in 0:05:36.920 --> 0:05:41.320 wages in the transportation warehousing sector alone. Now, just for perspective, 0:05:41.760 --> 0:05:46.400 that is the biggest increase on record in monthly data 0:05:46.440 --> 0:05:49.159 going back to the early nineteen seventies by by an 0:05:49.279 --> 0:05:51.800 order of magnitude. So the big question is, you know, 0:05:52.120 --> 0:05:54.720 is that kind of wage growth in that one sector, 0:05:54.720 --> 0:05:56.520 which was so big that it was enough to lift 0:05:56.560 --> 0:05:58.920 overall wage growth. Is that something that really is going 0:05:58.960 --> 0:06:01.640 to repeat this month or was that some sort of 0:06:01.680 --> 0:06:04.040 you know aberration one off? And so I think that's 0:06:04.040 --> 0:06:07.159 the big thing to be watching in this report. There's 0:06:07.200 --> 0:06:10.720 the report a little muddy because of the season, because 0:06:10.760 --> 0:06:14.520 of the holidays and hiring associated with that. Yeah, there's 0:06:14.560 --> 0:06:16.800 so many questions around that, and that would be especially 0:06:16.839 --> 0:06:20.360 something that could impact the transportation where housing sector. That's 0:06:20.360 --> 0:06:23.440 a sector where we've seen massive job growth since the 0:06:23.440 --> 0:06:26.080 pandemic began because of all of the ship to you know, 0:06:26.240 --> 0:06:29.839 online purchases and Amazon deliveries and so on and so forth. 0:06:30.080 --> 0:06:33.279 So we've got those normal seasonal holiday patterns. We've got 0:06:33.279 --> 0:06:37.160 other issues like declining response rates to the surveys that 0:06:37.279 --> 0:06:39.240 make up the jobs report. A lot of people are 0:06:39.279 --> 0:06:42.520 asking questions about whether that's having an impact on the data. 0:06:42.880 --> 0:06:45.800 So just tons of moving pieces right now that are 0:06:45.839 --> 0:06:49.119 making this really hard to read, even somewhat harder than usual. 0:06:49.160 --> 0:06:51.599 I mean it's never easy, but lots of cross currents 0:06:51.600 --> 0:06:55.080 at the moment. Now. Is the Federal Reserve still the 0:06:55.160 --> 0:06:59.800 number one story for for markets overall? As we hit 0:06:59.839 --> 0:07:04.279 it into I think so, although you know that if 0:07:04.360 --> 0:07:06.640 we're starting to see signs maybe a little bit that 0:07:06.760 --> 0:07:09.560 that is changing, because a couple of weeks ago, the 0:07:09.640 --> 0:07:12.400 latest Federal Reserve interest rate decision, they came out and 0:07:12.400 --> 0:07:16.360 they were very hawkish um and the markets didn't really 0:07:16.600 --> 0:07:18.680 buy the hawk ish message. And the reason for that 0:07:18.800 --> 0:07:21.720 is because the Feed put out these inflation forecasts that 0:07:21.840 --> 0:07:23.800 really look way too high to the markets. And so 0:07:23.840 --> 0:07:26.520 now investors are kind of saying, well, we think inflation 0:07:26.600 --> 0:07:28.600 is going to be lower than the fat thanks, and 0:07:28.640 --> 0:07:31.400 when the Fed realizes that and sees the lower inflation, 0:07:31.440 --> 0:07:33.520 they're going to kind of back off their hawker is stand. 0:07:33.600 --> 0:07:36.520 So we're starting to see a bit of a divergence 0:07:36.600 --> 0:07:39.080 between what the Fed thinks is going to happen and 0:07:39.120 --> 0:07:41.840 what investors think is going to happen. And that's really 0:07:41.840 --> 0:07:44.320 going to put a premium on what the data actually 0:07:44.320 --> 0:07:46.960 show going forward to dictate the course of markets. The 0:07:47.000 --> 0:07:50.720 investors are fighting the Fed. Did you just say that, Well, 0:07:50.920 --> 0:07:53.280 not quite. The way the Fed says that when they're 0:07:53.320 --> 0:07:55.440 at that question is we just have a difference of 0:07:55.480 --> 0:07:58.520 opinion and we'll see who's right. Yeah, we'll see it's 0:07:58.600 --> 0:08:02.080 usually the Feder reserve. If history is is any guid 0:08:02.600 --> 0:08:06.600 what what factors go into a fit I hate this word, 0:08:06.640 --> 0:08:12.360 but a fit pivot. So definitely, the inflation reports are 0:08:12.400 --> 0:08:15.200 going to be very important. Um, we need to see 0:08:15.640 --> 0:08:19.920 inflation coming down at a rate similar to the last 0:08:19.960 --> 0:08:22.560 few months when when it's really started coming down. You know. 0:08:22.600 --> 0:08:25.720 The wage growth is also going to be a major 0:08:25.880 --> 0:08:28.800 factor in that. Um. You know. The other big question 0:08:28.960 --> 0:08:34.160 is all of these forecasters see a recession in I mean, 0:08:34.200 --> 0:08:38.360 it's definitely the majority consensus opinion now, and so does 0:08:38.400 --> 0:08:40.800 that start showing up in the data. We haven't really 0:08:40.800 --> 0:08:42.839 seen it start showing up in the data yet. If 0:08:42.840 --> 0:08:45.160 it does start showing up, then do we kind of 0:08:45.200 --> 0:08:48.200 get a change of tone from the Fed because it's like, Okay, 0:08:48.240 --> 0:08:51.360 this is really happening. Now there's a lot more certainty 0:08:51.400 --> 0:08:54.319 that that's a big possibility. I think that's going to 0:08:54.400 --> 0:08:56.640 be really interesting to see how they respond to the 0:08:57.040 --> 0:09:00.240 changing data. That comes to be the case. Got to 0:09:00.360 --> 0:09:03.200 know a recession when we're in it, or we're going 0:09:03.240 --> 0:09:06.560 to know a recession when you know, some few quarters 0:09:06.679 --> 0:09:10.520 after it happens. Yeah, Typically it's the latter, which is 0:09:10.559 --> 0:09:13.160 the way it normally plays out. But you know, I 0:09:13.200 --> 0:09:17.240 think part of the complication this time around is that 0:09:17.280 --> 0:09:20.480 we've got the pandemic, which has just reordered the economy 0:09:20.480 --> 0:09:22.840 in so many interesting ways that it's making it a 0:09:22.840 --> 0:09:26.400 lot harder to read the early warning signs, those bleeding 0:09:26.440 --> 0:09:30.199 indicators of recession that people usually rely on to kind 0:09:30.240 --> 0:09:32.520 of get a feel for where we're at in the economy, 0:09:32.600 --> 0:09:35.640 even if the actual data aren't going to show it 0:09:35.720 --> 0:09:38.520 until a few quarters later. And so just the way 0:09:38.520 --> 0:09:41.800 the pandemic has scrambled all of those patterns is kind 0:09:41.800 --> 0:09:45.720 of leaving plenty of room for speculation and debate that 0:09:45.800 --> 0:09:49.960 you know, might not even necessarily be present in more 0:09:50.040 --> 0:09:54.320 normal downturns. And there can't be a recession if the 0:09:54.400 --> 0:09:59.680 labor market is still resilient. No, So we're really that 0:09:59.800 --> 0:10:03.240 is either so much focus on that data and so 0:10:03.360 --> 0:10:07.199 much head scratching over why it stayed still strong. I 0:10:07.240 --> 0:10:10.000 mean that is really the you know, what defines the recession. 0:10:10.000 --> 0:10:13.480 Earlier this year, we had two quarters of negative GDP growth, 0:10:13.559 --> 0:10:15.320 and there was a big debate is that a recession 0:10:15.400 --> 0:10:18.000 or is that not a recession? And ultimately I think 0:10:18.000 --> 0:10:20.560 the consensus was, well, it's not because the labor market 0:10:20.600 --> 0:10:23.840 did stay strong, and so if the labor market continues 0:10:23.920 --> 0:10:27.199 chogging along, then maybe we start seeing some of these 0:10:27.240 --> 0:10:30.240 recession calls get pushed back even further. We've already seen 0:10:30.240 --> 0:10:32.760 a little bit of that so far, with people making 0:10:32.760 --> 0:10:34.880 these calls and then saying, you know what, it's gonna 0:10:34.920 --> 0:10:36.800 come a little later than we thought because the data 0:10:36.760 --> 0:10:40.000 are staying so strong in the near term. Matt, always 0:10:40.040 --> 0:10:43.480 a pleasure and happy New Year. Thank you, John, same 0:10:43.559 --> 0:10:47.000 to you. And that's Bloomberg's math Bosler. Just to handle 0:10:47.000 --> 0:10:50.319 Blueberg Daybreak Weekend, I'll look at the devastating impact of 0:10:50.440 --> 0:11:05.640 Russia's warn't Ukraine on John Tucker. This is Bloomberg. This 0:11:05.880 --> 0:11:08.520 is Bloomberg Daybreak Weekend, our global looking ahead of the 0:11:08.600 --> 0:11:11.200 top stories for investors in the coming week. I'm John 0:11:11.240 --> 0:11:14.480 Tucker in New York. Up later in the program shifting 0:11:14.559 --> 0:11:18.720 political winds in Washington. But first, Russia's invasion of Ukraine 0:11:18.760 --> 0:11:22.679 has had a devastating impact on its people, infrastructure, and economy, 0:11:23.120 --> 0:11:25.920 even as it goes into a second year. And for more, 0:11:26.040 --> 0:11:30.360 let's into London, bringing Bloomberg Daybreak Europe anchor Caroline Hepcker. John, 0:11:30.400 --> 0:11:32.400 it's hard to celebrate the new year with the war 0:11:32.520 --> 0:11:36.760 ongoing in Europe, one which has created eight million refugees, 0:11:36.960 --> 0:11:40.760 are rafter sanctions against Russia, and a global energy shock 0:11:40.840 --> 0:11:43.719 that has taken Europe to the brink of recession. We'll 0:11:43.800 --> 0:11:46.360 joining me now to discuss this is Bloomberg Cedia Report 0:11:46.480 --> 0:11:50.120 for International Affairs, Mark Champion and our Power and Gas 0:11:50.120 --> 0:11:54.920 and Renewables editor Rachel Morrison. Mark, Rachel, You're both often 0:11:54.960 --> 0:11:57.600 guests on Bloomberg radios, so I'm really pleased to have 0:11:57.760 --> 0:12:01.000 you with us today. Mark. Let we just start with 0:12:01.280 --> 0:12:04.160 the war in Ukraine. What is the state of play 0:12:04.320 --> 0:12:07.240 as we now look to a new year and months 0:12:07.240 --> 0:12:10.760 of this conflict ongoing. Well, it's a kind of a 0:12:10.760 --> 0:12:15.480 big question. I mean, essentially, we're just moving into a 0:12:15.760 --> 0:12:21.400 season where offensive campaigning becomes quite possible. Again, the winter 0:12:21.480 --> 0:12:25.640 seasons relatively short. It depends on the ground being firm, um, 0:12:25.840 --> 0:12:29.880 And so you now have the Ukrainians in particular, warning 0:12:30.440 --> 0:12:34.440 that the Russians are as unlikely as it seems to 0:12:34.520 --> 0:12:37.080 many military analysts just because of the state of the 0:12:37.120 --> 0:12:40.640 Russian forces, even the new conscripts that they've brought in, 0:12:41.400 --> 0:12:45.040 but nevertheless saying that whether it's in January, February or March, 0:12:45.679 --> 0:12:50.200 the Russians will try again with a major offensive, including 0:12:50.240 --> 0:12:53.319 trying to take Kiev. You know, whether they do that, 0:12:53.760 --> 0:12:55.920 how much is a faint um. You know, how much 0:12:55.960 --> 0:12:58.880 they can do is very unclear. You know, war is 0:12:59.000 --> 0:13:03.000 largely about opportunity as much as it is about strategy, 0:13:03.040 --> 0:13:05.840 and that it will depend on what the Russians can 0:13:05.880 --> 0:13:08.160 do and what they think they can do. You know, 0:13:08.640 --> 0:13:10.600 it's been clear from the start of the war that 0:13:10.840 --> 0:13:14.520 those things are not always aligned, that their idea of 0:13:14.559 --> 0:13:18.040 what they can do isn't necessarily realistic. So it's difficult 0:13:18.080 --> 0:13:23.520 to predict, but it's likely to be quite long and grim. Yeah, 0:13:23.600 --> 0:13:26.120 and perhaps the most important issue is going to be 0:13:26.720 --> 0:13:29.480 access to weaponry. And you have to remember that it 0:13:29.600 --> 0:13:34.240 was February when the war began in two so yeah, 0:13:34.280 --> 0:13:37.160 perhaps coming into a month that could again be quite critical. 0:13:37.200 --> 0:13:39.840 I mean, what's the aim then in the next few 0:13:39.880 --> 0:13:44.360 weeks and months? Is it? Is it all about weapons? Well, 0:13:44.400 --> 0:13:48.959 weapons are obviously essential, um, and if either side you know, 0:13:49.160 --> 0:13:55.200 runs out of the critical communitions artillery shells or on in. 0:13:55.480 --> 0:13:57.920 You know, there's really two parts of the war. One 0:13:57.960 --> 0:14:01.480 on the ground, which is very reliant on artillery UM 0:14:01.520 --> 0:14:04.480 and one in the air where Russia is um you know, 0:14:05.160 --> 0:14:09.400 attacking essential infrastructure with long range missiles that Ukraine is 0:14:09.400 --> 0:14:11.319 trying to shoot them down. So there's sort of two 0:14:11.360 --> 0:14:14.839 separate campaigns, both of which have real issues as to 0:14:15.480 --> 0:14:17.480 how big of a stockpile do they still have of 0:14:17.520 --> 0:14:22.440 cruise missiles for example, or Iranian drones. And then you know, 0:14:22.440 --> 0:14:24.520 the question remains for the Ukrainians on the other side, 0:14:24.640 --> 0:14:28.440 you know, how will they have enough anti missile defenses 0:14:28.480 --> 0:14:31.960 and anti aircraft defenses, enough missiles to take all these 0:14:32.000 --> 0:14:35.920 down um, and you know, will they be overwhelmed? And 0:14:35.960 --> 0:14:38.640 the same as is true with artillery, we just don't know. 0:14:39.280 --> 0:14:41.880 There's quite a lot of dispute about exactly what is 0:14:41.920 --> 0:14:45.080 the state of the Russian artillery stocks and you know, 0:14:45.240 --> 0:14:48.880 will they have enough for a major campaign. Look, we've 0:14:48.960 --> 0:14:51.760 we've covered the war in Ukraine, you know, considered by 0:14:51.760 --> 0:14:54.360 many one of the worst conflicts in World War two 0:14:54.400 --> 0:14:57.720 throughout the last few months. And so I want to 0:14:57.720 --> 0:15:01.080 also get onto the hopes that post ability of ending 0:15:01.120 --> 0:15:02.920 the fighting. But I want to at this point also 0:15:02.960 --> 0:15:06.080 bring in Rachel Morrison when it comes to the other 0:15:06.200 --> 0:15:09.680 issue that has flowed from this conflict on the ground, 0:15:09.760 --> 0:15:14.840 which is Putin's energy pressure on Europe. It's certainly become 0:15:14.880 --> 0:15:20.360 immensely expensive. Rachel, is it working Putin's strategy of sort 0:15:20.400 --> 0:15:24.160 of squeezing Europe? How do you see it now? Yes, 0:15:24.200 --> 0:15:27.000 in some ways, some of the pressure and some of 0:15:27.040 --> 0:15:30.920 the power that Putin has had over Europe has been 0:15:31.520 --> 0:15:37.200 has waned somewhat since the nord Stream pipeline attack left 0:15:37.200 --> 0:15:39.680 it unable to flow any gas to Europe. So the 0:15:39.760 --> 0:15:44.000 remaining gas that Europe is getting from Russia goes via Ukraine, 0:15:44.240 --> 0:15:47.360 which is why a lot of the conflict that Mark 0:15:47.520 --> 0:15:51.680 was just outlining is important because at times it has 0:15:51.720 --> 0:15:56.120 seemed as though Russia is really aiming at energy infrastructure, 0:15:56.360 --> 0:16:00.000 which obviously has a big impact on people in Ukraine itself, 0:16:00.360 --> 0:16:03.880 but also on those transit flows to Europe. I think 0:16:03.960 --> 0:16:08.080 we have seen elevated prices obviously from the cutting supplies, 0:16:08.200 --> 0:16:11.720 and everybody is thinking about what will happen if we 0:16:11.760 --> 0:16:15.840 don't have those Russian supplies next winter, and refilling gas 0:16:15.840 --> 0:16:18.720 storage in Europe is going to be more difficult without 0:16:18.800 --> 0:16:22.680 nord Stream, and many people are assuming that the flows 0:16:22.760 --> 0:16:25.880 via Ukraine will eventually be cut because of the conflict, 0:16:25.880 --> 0:16:30.960 Because things are getting worse, it's getting more intense. That 0:16:30.960 --> 0:16:34.640 that is inevitable. And you know, even if some people 0:16:34.680 --> 0:16:36.640 say it's mostly priced in, there'll still be a bit 0:16:36.680 --> 0:16:40.400 of a shock to Europe and to European gas prices 0:16:40.440 --> 0:16:43.280 if and when that does happen. Do you think that 0:16:43.320 --> 0:16:45.960 there's any hope that the energy crisis could get better 0:16:46.000 --> 0:16:49.960 in three if Europe tries to adapt admittedly to a 0:16:50.040 --> 0:16:55.520 terrible situation. Honestly, what we are hearing is that the 0:16:55.520 --> 0:16:58.560 crisis is at least going to stay as bad as 0:16:58.560 --> 0:17:01.080 it has been this year, if not get worse. And 0:17:01.120 --> 0:17:04.280 that's because this year we were able to fill gas 0:17:04.280 --> 0:17:07.560 storage quite quickly because we still had an order string 0:17:07.560 --> 0:17:10.040 gas flowing from Russia. When we come out of the 0:17:10.040 --> 0:17:13.280 winter season, we'll have to see how low storage levels get. 0:17:13.680 --> 0:17:16.280 If they are quite low, and in fact, the lower 0:17:16.320 --> 0:17:18.879 they are, the more difficult that task will be. And 0:17:18.880 --> 0:17:22.040 the European Union has set all kinds of targets to 0:17:22.359 --> 0:17:24.320 try to make sure that we get those levels back up, 0:17:24.520 --> 0:17:26.600 but we are going to struggle to do that. We 0:17:26.640 --> 0:17:30.119 also have the French nuclear fleet, which has sort of 0:17:30.160 --> 0:17:33.840 problems and extended artages, So that's going to mean that 0:17:33.880 --> 0:17:36.280 we need more gas for electricity production, which means there's 0:17:36.359 --> 0:17:39.719 less spare to put into storage. So even European leaders 0:17:39.720 --> 0:17:43.439 are talking about getting ready for next winter, and it 0:17:43.520 --> 0:17:46.360 doesn't seem like the crisis is over yet or anywhere 0:17:46.359 --> 0:17:51.960 near Mark champion Vladimir Putin? Is he bogged down in 0:17:52.080 --> 0:17:56.480 something protracted? Does this become a forever war, perennial conflict, 0:17:57.080 --> 0:18:00.840 or does Ukraine have to accept a deal in order 0:18:00.840 --> 0:18:03.879 to get a cease far to lose some territory. What 0:18:03.960 --> 0:18:06.879 are the various scenarios now that people are thinking about. 0:18:07.160 --> 0:18:09.160 You know, if if we try to think about an 0:18:09.280 --> 0:18:14.399 end to the conflict, well, what seems to be clear 0:18:14.600 --> 0:18:18.359 at this point is that you know, puting would like 0:18:18.720 --> 0:18:21.879 this to be seen as a forever war and that 0:18:21.960 --> 0:18:26.560 he sees stretching it out. Time being on his side. 0:18:27.080 --> 0:18:30.040 So although when they invaded in February it seems so 0:18:30.080 --> 0:18:34.560 long ago now, the Russian command clearly expected this to 0:18:34.600 --> 0:18:36.919 be a very short campaign, only a few days. They 0:18:36.920 --> 0:18:40.320 weren't prepared. But a lot of water has passed under 0:18:40.359 --> 0:18:44.400 the bridge since then, and at this point the Russian 0:18:44.440 --> 0:18:48.920 strategy is clearly to grind down the will to resist 0:18:49.000 --> 0:18:52.720 in Ukraine and more critically in the West. You know, 0:18:52.840 --> 0:18:55.960 it's clear to the Russians also by now that the 0:18:56.040 --> 0:19:00.080 Russian Ukrainians have a formidable fighting force and all so 0:19:00.680 --> 0:19:04.040 that the Western weapons that are being supplied are critical. 0:19:04.600 --> 0:19:07.240 But it's clear also that as soon as that supply 0:19:07.320 --> 0:19:10.119 of weapon drives up, it will be very difficult for 0:19:10.119 --> 0:19:13.600 the Ukrainians to continue. And that is the situation. You know, 0:19:13.680 --> 0:19:17.880 He's trying to press both in Keep and in Western 0:19:17.920 --> 0:19:21.760 capitals for leaders to decide. Look, there isn't going to 0:19:21.880 --> 0:19:25.680 be a Ukrainian victory. So the sooner that we end 0:19:25.800 --> 0:19:28.880 is the sooner the pain will start, both for Ukraine 0:19:29.400 --> 0:19:33.200 and for Western governments with it, in particular the energy 0:19:33.240 --> 0:19:36.080 issues that you know we're just being described. Mark, thank 0:19:36.119 --> 0:19:38.240 you so much for being with me. Bloomberg Senior reporter 0:19:38.320 --> 0:19:41.240 for International Affairs, Mark Champion and our Power and Gas 0:19:41.440 --> 0:19:45.439 and Renewables editor Rachel Morrison on the difficulties as we 0:19:45.480 --> 0:19:50.159 go into three with Russia's war in Ukraine ongoing. My 0:19:50.240 --> 0:19:52.240 thanks to both of you for joining us. I'm Caroline 0:19:52.240 --> 0:19:55.280 Heppgary in London. You can catch us every weekday morning 0:19:55.280 --> 0:19:58.639 for Bloomberg Daybreak Europe, beginning at six am in London. 0:19:58.840 --> 0:20:01.920 That's one am on Warster, John Caroline, thanks a lot. 0:20:02.040 --> 0:20:05.680 Just ahead on Bloomberg day Break. Weekend twenty three could 0:20:05.680 --> 0:20:09.000 be another wild year politically as we head into the 0:20:10.040 --> 0:20:25.919 presidential election. I'm John Tucker, and this is Bloomberg broadcasting 0:20:26.040 --> 0:20:29.760 live from the Bloomberg Interactive Broker Studio in New York. 0:20:29.840 --> 0:20:34.520 Bloomberg eleven three oh to Washington, d C, Bloomberg to Boston, 0:20:34.600 --> 0:20:38.000 Bloomberg one oh six one to San Francisco, Bloomberg nine 0:20:38.600 --> 0:20:42.359 to the Country, Serius xm Channe to London d A 0:20:42.480 --> 0:20:45.840 B Digital Radio, and around the globe the Bloomberg Business 0:20:45.840 --> 0:20:49.560 app and Bloomberg Radio dot Com. This is Bloomberg day 0:20:49.600 --> 0:20:57.720 Break Weekend. I'm John Tucker in New York with your 0:20:57.760 --> 0:21:00.199 global look ahead of the top stories for investor ers 0:21:00.240 --> 0:21:02.840 in the coming week and the new year. While to 0:21:02.880 --> 0:21:05.280 watch when it comes to politics, as the battle lines 0:21:05.320 --> 0:21:09.320 are drawn for the presidential race and for world Let's 0:21:09.320 --> 0:21:12.639 go to Bloomberg quick takes Madison Mills. Thank you, John, 0:21:12.680 --> 0:21:16.800 And it's still almost two years away from the presidential election, 0:21:16.880 --> 0:21:20.520 but things are already heating up on the Democratic side. 0:21:20.720 --> 0:21:24.359 We're seeing people like the newly elected incoming House Democratic 0:21:24.440 --> 0:21:29.040 Leader Hakeem Jeffries. He's saying that he's all four run 0:21:29.119 --> 0:21:32.119 for President Biden. I know he'll have a vision for 0:21:32.160 --> 0:21:35.879 the future. I look forward to strongly supporting President Biden's 0:21:35.920 --> 0:21:40.359 re election. Incoming House Democratic Leader Hakeem Jeffreys there on 0:21:40.440 --> 0:21:43.960 ABC's This Week, heard here on Bloomberg Radio and joining 0:21:44.000 --> 0:21:46.440 me now to talk about how things might unfold in 0:21:46.480 --> 0:21:51.879 the coming year. Bloomberg's deputy managing editor in Washington, Wendy Benjaminson. Wendy, 0:21:51.960 --> 0:21:54.439 always a joy to speak with you, and thanks for 0:21:54.520 --> 0:21:58.720 joining us. Let's start with what's happening for the Democrats here. 0:21:59.080 --> 0:22:02.080 What would you say is the single biggest way that 0:22:02.119 --> 0:22:08.080 we're already seeing Democrats prepare for battle heading into well. 0:22:08.119 --> 0:22:11.840 I think one thing they're doing Madison, and we just 0:22:11.960 --> 0:22:14.879 heard the Democratic leader how King Jefferies say it is 0:22:14.880 --> 0:22:19.040 they're lining up behind Biden. There was some talk earlier, 0:22:20.520 --> 0:22:25.440 earlier this year and last year that you know, maybe 0:22:25.520 --> 0:22:28.040 we should have somebody else. He's eighty, He's going to 0:22:28.080 --> 0:22:31.320 be eighty two in the campaign starts, um, he would 0:22:31.359 --> 0:22:33.760 be the oldest president of American history and there was 0:22:33.840 --> 0:22:36.440 some sense, and you know, his public approval ratings were 0:22:36.520 --> 0:22:39.479 really low, so there was some sense that maybe somebody 0:22:39.520 --> 0:22:41.920 else ought to step in. And then I think they 0:22:41.920 --> 0:22:44.960 looked around and saw who else could step in. The 0:22:45.040 --> 0:22:49.480 bench is not great for people who could beat one 0:22:49.520 --> 0:22:55.000 of the probable Republican nominees. And then Biden did spectacularly 0:22:55.040 --> 0:22:57.000 well in the mid terms. I mean, we knew he 0:22:57.040 --> 0:22:59.679 was going to lose the House of Representatives, but he 0:23:00.000 --> 0:23:03.000 aust them by only I think five seats, a very 0:23:03.000 --> 0:23:06.640 small handful of seats. I think it's eight actually, um, 0:23:06.720 --> 0:23:09.080 but a very small handful of seats. They kept. The 0:23:09.119 --> 0:23:14.040 Senate voters did not seem to despise him as much 0:23:14.080 --> 0:23:16.080 as they thought, and now they are lining up behind 0:23:16.160 --> 0:23:19.760 Joe Biden for a second term. Right voters didn't, And 0:23:19.800 --> 0:23:22.360 now we're seeing lawmakers sort of feeling the same as 0:23:22.400 --> 0:23:25.359 you said, Wendy, just really putting their support behind a 0:23:25.400 --> 0:23:28.600 Biden run after that red wave became more like a 0:23:28.720 --> 0:23:32.280 very very light red trickle. Let's hear what Senate Majority 0:23:32.359 --> 0:23:36.560 Leader Chuck Schumer had to say about race. I think 0:23:36.840 --> 0:23:40.280