1 00:00:00,280 --> 00:00:07,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,640 --> 00:00:13,000 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:13,000 --> 00:00:15,160 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:15,160 --> 00:00:17,840 Speaker 2: anchors all around the world. Straight Ahead on the program, 5 00:00:17,880 --> 00:00:20,319 Speaker 2: a look ahead to some key inflation data in the 6 00:00:20,440 --> 00:00:23,919 Speaker 2: US how that may impact monetary policy for the FED. 7 00:00:24,200 --> 00:00:25,680 Speaker 2: I'm Tom Busby in New York. 8 00:00:25,840 --> 00:00:28,520 Speaker 3: I'm Caroline Hedge in London, where we're asking if the 9 00:00:28,600 --> 00:00:32,560 Speaker 3: UK has what it takes to become a global tech superpower. 10 00:00:32,720 --> 00:00:35,400 Speaker 4: I'm Doug Christner looking at what we may learn from 11 00:00:35,440 --> 00:00:37,680 Speaker 4: next week's data on the Chinese economy. 12 00:00:38,720 --> 00:00:42,760 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,800 --> 00:00:46,480 Speaker 1: eleven three to zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:47,000 --> 00:00:52,120 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 15 00:00:52,280 --> 00:00:55,800 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:55,840 --> 00:00:58,040 Speaker 1: dot Com and the Bloomberg Business App. 17 00:01:02,840 --> 00:01:05,000 Speaker 2: Good day to you. I'm Tom Busby. We begin today's 18 00:01:05,000 --> 00:01:08,040 Speaker 2: program with some key inflation data here in the US. 19 00:01:08,319 --> 00:01:11,319 Speaker 2: The consumer price index for May on Wednesday, the producer 20 00:01:11,400 --> 00:01:14,280 Speaker 2: price index for that same month out on Thursday. For 21 00:01:14,400 --> 00:01:16,880 Speaker 2: more on what to look for and how that data 22 00:01:16,959 --> 00:01:19,800 Speaker 2: may impact the fed's next decision on rates. Were joined 23 00:01:19,800 --> 00:01:23,240 Speaker 2: by Edward Harrison, senior editor at Bloomberg and author of 24 00:01:23,240 --> 00:01:27,240 Speaker 2: Bloomberg's The Everything Risk newsletter. Edward, thank you so much 25 00:01:27,240 --> 00:01:27,839 Speaker 2: for being here. 26 00:01:28,440 --> 00:01:29,319 Speaker 5: Well, good to talk to you. 27 00:01:29,360 --> 00:01:30,000 Speaker 4: Tom. 28 00:01:30,080 --> 00:01:32,840 Speaker 2: A slightly better than forecast made jobs report this past 29 00:01:32,840 --> 00:01:36,000 Speaker 2: week after a lot of incoming data not as upbeat. 30 00:01:36,400 --> 00:01:40,520 Speaker 2: So what does this job's report tell you in regarding 31 00:01:40,600 --> 00:01:42,800 Speaker 2: the Fed? And what are you expecting to see in 32 00:01:42,840 --> 00:01:45,360 Speaker 2: these May CPI and PPI reports. 33 00:01:46,080 --> 00:01:49,840 Speaker 5: Yeah, so, Tom, I think that the headline number tells 34 00:01:49,880 --> 00:01:53,040 Speaker 5: the equity market that the jobs market is not falling apart, 35 00:01:53,080 --> 00:01:55,960 Speaker 5: the economy is not falling apart. We got one hundred 36 00:01:55,960 --> 00:01:59,960 Speaker 5: and thirty nine thousand added to nonfarm payrolls, which was 37 00:02:00,160 --> 00:02:05,040 Speaker 5: ahead of expectations, and we had the unemployment rate staying 38 00:02:05,520 --> 00:02:08,600 Speaker 5: solid at four point two percent. Those numbers just on 39 00:02:08,639 --> 00:02:13,320 Speaker 5: the surface, it says that you know, the labor markets 40 00:02:13,360 --> 00:02:15,520 Speaker 5: not falling apart, and that's what you actually would have 41 00:02:15,639 --> 00:02:20,800 Speaker 5: needed to get to galvanize the Federal reserve to cut 42 00:02:20,880 --> 00:02:25,680 Speaker 5: rates more quickly than anticipated. So, given that the Fed's 43 00:02:25,720 --> 00:02:29,359 Speaker 5: going to be on hold and as a result of that, 44 00:02:29,639 --> 00:02:33,239 Speaker 5: the CPI and the PPI are less important in terms 45 00:02:33,280 --> 00:02:35,640 Speaker 5: of the Fed's thinking in terms of the rate decision 46 00:02:35,680 --> 00:02:36,280 Speaker 5: going forward. 47 00:02:36,880 --> 00:02:39,680 Speaker 2: Well, what are the big drivers for inflation right now, 48 00:02:39,720 --> 00:02:43,040 Speaker 2: both for consumers and businesses? And you say it's a 49 00:02:43,080 --> 00:02:46,640 Speaker 2: little less important, still key for them, still, you know, 50 00:02:47,520 --> 00:02:50,160 Speaker 2: maybe not so much as the PCE, but they're still 51 00:02:50,200 --> 00:02:52,080 Speaker 2: going to look at it very closely. 52 00:02:53,080 --> 00:02:56,440 Speaker 5: Well, there are two things. One is that we still 53 00:02:56,480 --> 00:03:01,320 Speaker 5: have services inflation, which is above where they would like 54 00:03:01,360 --> 00:03:04,360 Speaker 5: it to be. That's still sticky. And then the second 55 00:03:04,400 --> 00:03:08,440 Speaker 5: thing is that we're seeing a pass through of the 56 00:03:08,440 --> 00:03:13,600 Speaker 5: goods inflation that comes from the tariffs into into the 57 00:03:13,680 --> 00:03:17,720 Speaker 5: numbers the companies are talking about passing on the price increases. 58 00:03:17,800 --> 00:03:20,720 Speaker 5: So these numbers that we're going to see are from May, 59 00:03:20,840 --> 00:03:24,200 Speaker 5: and as a result, you can think of them as 60 00:03:25,240 --> 00:03:29,120 Speaker 5: after the fact, after the the the tariffs were put on, 61 00:03:29,520 --> 00:03:33,440 Speaker 5: But they're not. They're not consistent with the data, the 62 00:03:33,480 --> 00:03:35,760 Speaker 5: incoming data that we're seeing, which is that you know, 63 00:03:36,080 --> 00:03:39,600 Speaker 5: there is inflation in the pipeline, and so given that 64 00:03:39,600 --> 00:03:41,600 Speaker 5: that means that the Fed is going to continue to 65 00:03:41,640 --> 00:03:43,600 Speaker 5: be on the whole. The only reason that they would 66 00:03:43,640 --> 00:03:47,800 Speaker 5: actually cut rates more aggressively. Is if we had numbers 67 00:03:48,160 --> 00:03:51,840 Speaker 5: that came out last week from the jobs report that 68 00:03:52,600 --> 00:03:57,560 Speaker 5: showed the economy stalling in a very precipitous way. 69 00:03:58,120 --> 00:04:01,560 Speaker 2: Well, let's let's continue on with the tariffs, because in 70 00:04:01,680 --> 00:04:04,600 Speaker 2: these reports that we're going to see this coming week, 71 00:04:05,000 --> 00:04:07,280 Speaker 2: maybe just at least a hint, a little hint of 72 00:04:07,320 --> 00:04:09,640 Speaker 2: the impact of the tariffs. But we have that ninety 73 00:04:09,720 --> 00:04:12,800 Speaker 2: day reprieve on most tariffs expires in July. Is that 74 00:04:12,840 --> 00:04:14,840 Speaker 2: when we're really going to see the impact. 75 00:04:15,160 --> 00:04:18,200 Speaker 5: Well, you know, I think that actually the June CPI 76 00:04:18,279 --> 00:04:21,440 Speaker 5: and PPI numbers will show you a little bit more 77 00:04:21,680 --> 00:04:25,560 Speaker 5: of what's there. It is interesting that if you look 78 00:04:25,600 --> 00:04:29,560 Speaker 5: at just the month on month numbers, the consensus is 79 00:04:29,600 --> 00:04:33,760 Speaker 5: for zero point three percent CPI taking out food and energy, 80 00:04:33,839 --> 00:04:36,479 Speaker 5: so you know, sort of the core CPI number, which 81 00:04:36,520 --> 00:04:40,160 Speaker 5: is higher than it was in April. But you know, 82 00:04:40,520 --> 00:04:43,120 Speaker 5: if that number is actually high, let's say zero point 83 00:04:43,200 --> 00:04:46,400 Speaker 5: four percent, as you know, a miss to the upside, 84 00:04:46,839 --> 00:04:50,960 Speaker 5: then you could say to yourself already in maybe we're 85 00:04:50,960 --> 00:04:54,680 Speaker 5: seeing these numbers have impacted. We certainly will see them 86 00:04:54,720 --> 00:04:57,960 Speaker 5: therefore impacted in June. That would make the Fed even 87 00:04:58,080 --> 00:05:03,080 Speaker 5: more reticent about lowering interest rates, despite by the way, 88 00:05:03,200 --> 00:05:05,720 Speaker 5: the fact that Donald Trump last week was saying that 89 00:05:06,440 --> 00:05:10,039 Speaker 5: power should lower interest rates by one full percentage point. 90 00:05:10,839 --> 00:05:13,920 Speaker 2: Now, a little more about the tariffs. We know there 91 00:05:13,920 --> 00:05:16,599 Speaker 2: are talks slated to happen. They're supposed to happen with China, 92 00:05:16,640 --> 00:05:19,480 Speaker 2: the European Union, they've been on and off, even Japan. 93 00:05:19,680 --> 00:05:24,080 Speaker 2: But is there any clear read that you're seeing on 94 00:05:24,680 --> 00:05:27,040 Speaker 2: what these negotiations are going to bring as far as 95 00:05:27,160 --> 00:05:30,120 Speaker 2: you know, a tariff deal, a trade deal with these 96 00:05:30,120 --> 00:05:31,479 Speaker 2: countries and the EU. 97 00:05:31,800 --> 00:05:35,839 Speaker 5: No, and there's no clear deal that's there. I think 98 00:05:35,839 --> 00:05:40,080 Speaker 5: there are three countries Japan, the EU, and China that 99 00:05:40,160 --> 00:05:43,680 Speaker 5: are outstanding which are definitely going to impact inflation and 100 00:05:43,680 --> 00:05:46,760 Speaker 5: therefore the economy. There was actually a report from Bloomberg 101 00:05:46,880 --> 00:05:50,120 Speaker 5: that the trade negotiators for the United States were fighting 102 00:05:50,160 --> 00:05:54,080 Speaker 5: amongst each other in front of the Japanese delegation, and 103 00:05:54,880 --> 00:05:59,200 Speaker 5: that certainly doesn't lead to any sort of positive outcome. Moreover, 104 00:05:59,520 --> 00:06:02,479 Speaker 5: this whole old taco trade that people talk about, the 105 00:06:02,520 --> 00:06:06,360 Speaker 5: fact that Trump eventually backs down only leads to the 106 00:06:06,360 --> 00:06:09,880 Speaker 5: negotiators from the other side thinking, you know, we have 107 00:06:09,960 --> 00:06:13,320 Speaker 5: some leverage here if we played chicken because eventually he'll 108 00:06:13,480 --> 00:06:17,960 Speaker 5: cave on or you know, he'll back out in some regard. 109 00:06:18,240 --> 00:06:20,080 Speaker 5: So I think that, you know, there's a lot of 110 00:06:20,160 --> 00:06:22,880 Speaker 5: risk associated with that. And just going back to the 111 00:06:22,960 --> 00:06:26,880 Speaker 5: jobs numbers for a second, really, even though the equity 112 00:06:26,920 --> 00:06:29,680 Speaker 5: market thinks of this in a positive way and it's 113 00:06:29,680 --> 00:06:32,360 Speaker 5: not going to galvanize the FED, the internals of the 114 00:06:32,440 --> 00:06:34,560 Speaker 5: numbers were actually not as good as you might think. 115 00:06:34,600 --> 00:06:38,880 Speaker 5: That the household survey showed labor participation going down. There 116 00:06:38,960 --> 00:06:44,960 Speaker 5: were a negative ninety five two month payroll net revision, 117 00:06:45,320 --> 00:06:48,400 Speaker 5: so that means that really we only saw forty four 118 00:06:48,480 --> 00:06:52,000 Speaker 5: thousand net jobs if you take revisions into account. So 119 00:06:52,080 --> 00:06:55,400 Speaker 5: the labor market is slowing, it's just not slowing enough 120 00:06:56,320 --> 00:06:59,760 Speaker 5: to galvanize the FED to start to cut rates. And 121 00:06:59,760 --> 00:07:02,839 Speaker 5: then you have the backdrop of these negotiations which aren't 122 00:07:02,920 --> 00:07:05,919 Speaker 5: really going anywhere at this point, and that sort of 123 00:07:06,000 --> 00:07:08,240 Speaker 5: downside risk for equities in particular. 124 00:07:08,480 --> 00:07:10,679 Speaker 2: Well, a lot of variables for the FED to consider, 125 00:07:10,920 --> 00:07:13,920 Speaker 2: including the may CPI out on Wednesday, the may PPI 126 00:07:14,040 --> 00:07:17,080 Speaker 2: on Thursday. Our thanks to Edward Harrison, senior editor at 127 00:07:17,080 --> 00:07:20,920 Speaker 2: Bloomberg and author of Bloomberg's The Everything Risk newsletter. We 128 00:07:21,000 --> 00:07:23,920 Speaker 2: turn now to the ev maker Tesla, which is scheduled 129 00:07:23,960 --> 00:07:27,320 Speaker 2: to launch its long delayed robo taxi service this week 130 00:07:27,360 --> 00:07:30,520 Speaker 2: in Austin, Texas. For more on that expected launch, we're 131 00:07:30,600 --> 00:07:34,480 Speaker 2: joined by Craig Trudell, Bloomberg's Global Autos editor. Well, Craig, 132 00:07:34,480 --> 00:07:37,280 Speaker 2: thanks so much for joining us. Let's start with what 133 00:07:37,440 --> 00:07:40,480 Speaker 2: is Tesla expected to do this Thursday in Austin, And 134 00:07:40,560 --> 00:07:44,320 Speaker 2: after all the delays and setbacks, will it be ready? 135 00:07:44,520 --> 00:07:46,640 Speaker 6: You know, that's the big question. But there are so 136 00:07:46,760 --> 00:07:50,480 Speaker 6: many questions about Tesla's plans for this upcoming week that 137 00:07:51,200 --> 00:07:54,720 Speaker 6: are still very much unanswered. I mean, even starting with 138 00:07:54,800 --> 00:07:58,240 Speaker 6: that timing right where Bloomberg was first to report that 139 00:07:58,280 --> 00:08:01,160 Speaker 6: the company was aiming for June twelve, we haven't heard 140 00:08:01,240 --> 00:08:03,720 Speaker 6: anything to the contrary, at least to the point where 141 00:08:03,720 --> 00:08:06,520 Speaker 6: you and I are speaking. But that number still has 142 00:08:06,520 --> 00:08:09,600 Speaker 6: not been confirmed by the company. And you know, what 143 00:08:09,680 --> 00:08:12,200 Speaker 6: we do know is is Elon Musk has talked about 144 00:08:12,240 --> 00:08:15,360 Speaker 6: you know, sort of starting slows, starting with a small 145 00:08:15,480 --> 00:08:18,600 Speaker 6: number of Model Y vehicles that they'll run around Austin. 146 00:08:19,640 --> 00:08:22,240 Speaker 6: We don't know sort of you know, specifics about what 147 00:08:22,440 --> 00:08:26,760 Speaker 6: areas of the city that they expect to run these 148 00:08:26,800 --> 00:08:30,000 Speaker 6: these driver lists, you know, rides, we don't know what 149 00:08:30,120 --> 00:08:32,720 Speaker 6: time of day, and some of these details are important 150 00:08:32,800 --> 00:08:36,200 Speaker 6: because it can make real differences as to you know, 151 00:08:36,240 --> 00:08:39,240 Speaker 6: how many other cars are out on the road, how 152 00:08:39,360 --> 00:08:41,800 Speaker 6: challenging is it for these cars to sort of navigate 153 00:08:41,840 --> 00:08:44,360 Speaker 6: those situations. And so you know, there's a lot of 154 00:08:44,720 --> 00:08:47,600 Speaker 6: specifics that the company has yet to address that will 155 00:08:47,640 --> 00:08:50,160 Speaker 6: be really important to sort of suss out, you know 156 00:08:50,200 --> 00:08:51,400 Speaker 6: in the days toccomme. 157 00:08:51,240 --> 00:08:53,439 Speaker 2: Yeah, not even how many cars they're going to put 158 00:08:53,440 --> 00:08:54,400 Speaker 2: on the road this week. 159 00:08:54,880 --> 00:08:57,520 Speaker 6: Yeah, what we've heard Musks say is something on the 160 00:08:57,640 --> 00:09:00,240 Speaker 6: order of ten or twenty, So we're talking really small. 161 00:09:00,880 --> 00:09:02,480 Speaker 6: This is you know, I guess what you would call 162 00:09:02,480 --> 00:09:05,600 Speaker 6: in the tech business a soft launch. And you know, 163 00:09:05,720 --> 00:09:08,760 Speaker 6: Musk has talked about, you know, scaling up quickly, but 164 00:09:09,520 --> 00:09:10,920 Speaker 6: I think we have to kind of take that with 165 00:09:11,000 --> 00:09:13,840 Speaker 6: a grain of salt because he's talked about, you know, 166 00:09:13,880 --> 00:09:16,760 Speaker 6: putting driverless cars on the road you know, anytime now, 167 00:09:17,120 --> 00:09:20,120 Speaker 6: year after year, and you know, we will see, we 168 00:09:20,160 --> 00:09:22,120 Speaker 6: will see if twenty twenty five is his year. 169 00:09:22,720 --> 00:09:25,360 Speaker 2: Well, we know that Tesla has for years been doing 170 00:09:25,360 --> 00:09:27,839 Speaker 2: a lot of work. It's been testing these autonomous cars 171 00:09:27,840 --> 00:09:30,920 Speaker 2: out on closed roads. It's been gathering data for years 172 00:09:30,960 --> 00:09:34,079 Speaker 2: working on machine learning, and it has of course that 173 00:09:34,200 --> 00:09:38,000 Speaker 2: controversial some would say misnamed full self driving mode, which 174 00:09:38,320 --> 00:09:40,560 Speaker 2: I know you reported on just last week, involved in 175 00:09:40,559 --> 00:09:44,959 Speaker 2: a recent string of sometimes deadly crashes. So with all that, 176 00:09:45,280 --> 00:09:49,520 Speaker 2: can it still compete against Waimo and GM's Cruise, which 177 00:09:49,559 --> 00:09:51,839 Speaker 2: packed it in after ten years because it was just 178 00:09:51,920 --> 00:09:52,600 Speaker 2: too expensive. 179 00:09:53,000 --> 00:09:56,040 Speaker 6: Yeah, you know, I think with Cruise the sort of 180 00:09:56,280 --> 00:09:58,040 Speaker 6: you know, thing that we took away from. One of 181 00:09:58,080 --> 00:10:00,120 Speaker 6: the things to take away from that was, you know, 182 00:10:00,480 --> 00:10:04,079 Speaker 6: it can come down to a single crash, a single 183 00:10:04,120 --> 00:10:07,679 Speaker 6: crash that in Crusi's case, actually didn't result in a fatality, 184 00:10:08,360 --> 00:10:11,400 Speaker 6: but it was a gruesome one and unfortunate one. Nonetheless, 185 00:10:12,240 --> 00:10:14,839 Speaker 6: the company's handling of that and sort of running a 186 00:10:14,920 --> 00:10:18,040 Speaker 6: foul of you know, the local regulators that was working 187 00:10:18,120 --> 00:10:21,719 Speaker 6: with in San Francisco, you know, really ultimately led to 188 00:10:21,920 --> 00:10:24,839 Speaker 6: GM deciding, you know what, we're going to pull the 189 00:10:24,880 --> 00:10:27,240 Speaker 6: plug on this company. And I go back to you know, 190 00:10:27,360 --> 00:10:30,360 Speaker 6: twenty eighteen, there was a similar incident in the case 191 00:10:30,440 --> 00:10:33,560 Speaker 6: of Uber right where they had a self driving test 192 00:10:33,640 --> 00:10:36,599 Speaker 6: vehicle that was involved in a fatal crash, and that 193 00:10:36,800 --> 00:10:40,240 Speaker 6: ultimately led Uber to decide to get out of this space. 194 00:10:40,360 --> 00:10:43,240 Speaker 6: So part of the reason why this is such a 195 00:10:43,360 --> 00:10:46,079 Speaker 6: big story in terms of, you know, having a closer 196 00:10:46,160 --> 00:10:48,800 Speaker 6: look at one of the fatal crashes that has resulted 197 00:10:48,880 --> 00:10:52,840 Speaker 6: from people using full self driving is we the public 198 00:10:52,920 --> 00:10:56,840 Speaker 6: are much less tolerant of crashes in which a robot 199 00:10:57,400 --> 00:11:00,560 Speaker 6: or sort of you know, something other and a human 200 00:11:01,120 --> 00:11:04,280 Speaker 6: is involved in running the car. And you know, in 201 00:11:04,360 --> 00:11:06,800 Speaker 6: this case, it was a crash that you know, sort 202 00:11:06,840 --> 00:11:11,760 Speaker 6: of avoided the headlines. Initially, it took the US safety regulator, 203 00:11:11,880 --> 00:11:17,320 Speaker 6: the National Highway Traffic Safety Administration, investigating full self driving 204 00:11:17,559 --> 00:11:19,920 Speaker 6: on the basis of this and a few other crashes 205 00:11:20,440 --> 00:11:22,440 Speaker 6: for it to really come to light and get our 206 00:11:22,520 --> 00:11:25,400 Speaker 6: attention and lead to us seeking out some public records 207 00:11:25,720 --> 00:11:27,520 Speaker 6: to learn more about what happened. 208 00:11:28,040 --> 00:11:32,600 Speaker 2: And these aren't isolated incidents with with Tesla and it's 209 00:11:32,600 --> 00:11:35,439 Speaker 2: full self driving. I mean, there is there is a 210 00:11:35,559 --> 00:11:37,840 Speaker 2: paper trail on this, right, a number of incidents. 211 00:11:38,360 --> 00:11:41,240 Speaker 6: That's right, full self driving has not been around as 212 00:11:41,360 --> 00:11:44,480 Speaker 6: long as autopilot, but that's the other sort of branding 213 00:11:44,600 --> 00:11:47,760 Speaker 6: that that Tesla has used for sort of lower level 214 00:11:47,840 --> 00:11:51,439 Speaker 6: capability of you know, driver ass as features and I 215 00:11:51,440 --> 00:11:53,280 Speaker 6: would say, you know, when you look at this, you 216 00:11:53,320 --> 00:11:56,160 Speaker 6: know long track record of autopilot and full self driving, 217 00:11:56,800 --> 00:11:59,720 Speaker 6: there have been a string of investigations into whether these 218 00:12:00,280 --> 00:12:04,840 Speaker 6: are defective, and one of those investigations involving autopilot actually 219 00:12:05,520 --> 00:12:08,160 Speaker 6: got to the point where Nitsa said to Tesla, look, 220 00:12:08,240 --> 00:12:10,120 Speaker 6: we think that there's a safety risk here that you 221 00:12:10,200 --> 00:12:13,120 Speaker 6: need to address for the recall. It led to Tesla 222 00:12:13,240 --> 00:12:16,560 Speaker 6: recalling two million cars, and you know, in a matter 223 00:12:16,600 --> 00:12:19,320 Speaker 6: of a few months, Nitsa came back to Tesla and said, 224 00:12:19,559 --> 00:12:21,760 Speaker 6: you know what, we're not sure that the remedy that 225 00:12:21,840 --> 00:12:24,600 Speaker 6: you offered to address you know, what we were raising 226 00:12:25,600 --> 00:12:29,240 Speaker 6: was sufficient. And so not only is Tesla under investigation 227 00:12:30,160 --> 00:12:32,599 Speaker 6: with respect to full self driving, it's also you know, 228 00:12:32,800 --> 00:12:36,079 Speaker 6: under a pending investigation a query as to whether that 229 00:12:36,280 --> 00:12:39,839 Speaker 6: recall that it did to sort of, you know, make 230 00:12:39,920 --> 00:12:43,120 Speaker 6: autopilots safer to use, whether or not that went far enough. 231 00:12:43,240 --> 00:12:46,040 Speaker 2: Well, Thursday, June twelfth, the expected launch date for the 232 00:12:46,120 --> 00:12:49,880 Speaker 2: Tesla robotaxi in Austin, Texas. Our thanks to Bloomberg's Global 233 00:12:49,920 --> 00:12:53,760 Speaker 2: autos editor Craig Drudell, coming up on Bloomberg Day Break weekend, Well, 234 00:12:53,760 --> 00:12:56,199 Speaker 2: look at whether the UK has what it takes to 235 00:12:56,280 --> 00:12:59,800 Speaker 2: become a global tech superpower. I'm Tom Busby and this 236 00:13:00,000 --> 00:13:04,760 Speaker 2: this is Bloomberg. This is Bloomberg day Break weekend, our 237 00:13:04,800 --> 00:13:07,120 Speaker 2: global look ahead at the top stories for investors in 238 00:13:07,200 --> 00:13:10,040 Speaker 2: the coming week. I'm Tom Busby and New York Up. 239 00:13:10,200 --> 00:13:12,199 Speaker 2: Later in our program we'll look ahead to some key 240 00:13:12,280 --> 00:13:15,800 Speaker 2: economic data coming out in China. But first, tech leaders 241 00:13:15,840 --> 00:13:18,240 Speaker 2: from around the world will gather in the UK capital 242 00:13:18,320 --> 00:13:21,640 Speaker 2: for the London Tech Summit, with speakers ranging from the 243 00:13:21,800 --> 00:13:24,720 Speaker 2: inventor of the World Wide Web to renowned professors, even 244 00:13:24,760 --> 00:13:28,480 Speaker 2: some tech CEOs. Forty thousand tech enthusiasts set to flock 245 00:13:28,520 --> 00:13:31,319 Speaker 2: to Olympia for a week of panel discussions. But with 246 00:13:31,520 --> 00:13:35,080 Speaker 2: stiff competition from innovators around the world, can the UK 247 00:13:35,360 --> 00:13:38,600 Speaker 2: keep up with the global tech revolution for more, Let's 248 00:13:38,600 --> 00:13:41,160 Speaker 2: get to London and bring in Bloomberg Daybreak Europe anchor 249 00:13:41,440 --> 00:13:43,200 Speaker 2: Caroline Hepgar Tom. 250 00:13:43,400 --> 00:13:46,480 Speaker 3: The Great Tech Race has been a permanent feature of 251 00:13:46,559 --> 00:13:49,439 Speaker 3: the corporate world for much of twenty twenty five. The 252 00:13:49,600 --> 00:13:53,880 Speaker 3: rise of the Chinese artificial intelligence startup Deep Seek has 253 00:13:53,920 --> 00:13:57,520 Speaker 3: only added attention to the issue. In February, the company 254 00:13:57,600 --> 00:14:01,360 Speaker 3: released an open source model that it said rivaled software 255 00:14:01,640 --> 00:14:05,040 Speaker 3: from the top American AI developers, and it claimed to 256 00:14:05,120 --> 00:14:08,679 Speaker 3: have done so for a fraction of the development cost 257 00:14:09,120 --> 00:14:13,920 Speaker 3: using less powerful hardware. And now global businesses including Meta, 258 00:14:14,000 --> 00:14:17,480 Speaker 3: are busy buying several hundreds of acres in a bid 259 00:14:17,600 --> 00:14:22,840 Speaker 3: to build data centers capable of fueling their AI focused dreams. 260 00:14:23,240 --> 00:14:27,200 Speaker 3: Primig Intelligence is senior tech industry analyst says the world's 261 00:14:27,240 --> 00:14:30,600 Speaker 3: biggest tech firms are all in when it comes to 262 00:14:30,800 --> 00:14:34,080 Speaker 3: leveling up their artificial intelligence capabilities. 263 00:14:34,840 --> 00:14:37,920 Speaker 7: Just look at how far they have come in terms 264 00:14:38,000 --> 00:14:41,480 Speaker 7: of you know, infrastructure, Like a company like Google, Not 265 00:14:41,680 --> 00:14:45,400 Speaker 7: only are they designing their own data centers and you know, 266 00:14:46,400 --> 00:14:50,440 Speaker 7: creating their own chips, and now they are you know, 267 00:14:50,600 --> 00:14:54,080 Speaker 7: procuring power do they extend that they want to make 268 00:14:54,160 --> 00:14:58,880 Speaker 7: sure that these AI chips, which can have volatile power needs, 269 00:14:59,360 --> 00:15:03,040 Speaker 7: are more optimize when it comes to the efficiency of 270 00:15:03,120 --> 00:15:08,280 Speaker 7: their infrastructure. And that's why these hyperscaler companies really have 271 00:15:08,480 --> 00:15:11,720 Speaker 7: got so many different aspects to their mode. So it's 272 00:15:11,840 --> 00:15:15,400 Speaker 7: not just about the search algorithm or in the case 273 00:15:15,480 --> 00:15:18,440 Speaker 7: of Meta, you know, their social media knowledge graph. It 274 00:15:18,600 --> 00:15:21,880 Speaker 7: is about the entirety of how they run their infrastructure, 275 00:15:21,920 --> 00:15:24,360 Speaker 7: and that is what is a long term mode because 276 00:15:24,440 --> 00:15:28,720 Speaker 7: nobody else can operate at the scale at which these 277 00:15:28,800 --> 00:15:30,400 Speaker 7: hyperscalers are operating right now. 278 00:15:30,680 --> 00:15:34,840 Speaker 3: That was Bloomberg Intelligence's man Deep Singh speaking there. Well. 279 00:15:34,880 --> 00:15:39,200 Speaker 3: The UK's role in the AI and wider technology arms 280 00:15:39,320 --> 00:15:42,720 Speaker 3: race is something that I've been discussing with Bloomberg Daybreak 281 00:15:42,760 --> 00:15:48,320 Speaker 3: Europe anchor Tom McKenzie. As London Tech Week approaches, this 282 00:15:48,520 --> 00:15:51,080 Speaker 3: is always a really exciting week, isn't it. In London, 283 00:15:51,640 --> 00:15:54,600 Speaker 3: CEOs and visionaries are going to be arguing surely that 284 00:15:54,680 --> 00:15:58,200 Speaker 3: the UK can be one of the AI capitals of 285 00:15:58,320 --> 00:15:58,720 Speaker 3: the world. 286 00:15:59,240 --> 00:16:02,160 Speaker 8: Absolutely, and we're going to have government presence there at 287 00:16:02,240 --> 00:16:04,520 Speaker 8: London Tech Week. You have London Tech Week and you 288 00:16:04,680 --> 00:16:07,600 Speaker 8: have Founders Forum as well. In Paris, by the way, 289 00:16:07,640 --> 00:16:09,640 Speaker 8: you have Vivtech which is also drawing a lot of 290 00:16:09,640 --> 00:16:11,680 Speaker 8: these big names there. So there's the competition between Paris 291 00:16:11,720 --> 00:16:14,160 Speaker 8: and London next week as well. But certainly the government's involved. 292 00:16:14,160 --> 00:16:16,040 Speaker 8: Peter Carr will be there of course, the Secrety of 293 00:16:16,080 --> 00:16:19,800 Speaker 8: State in terms of science and innovation and technology. You 294 00:16:19,920 --> 00:16:22,360 Speaker 8: also have the likes of Matt Clifford, who is the 295 00:16:22,400 --> 00:16:25,960 Speaker 8: Prime Minister's advisor on AI, and they will be making 296 00:16:26,040 --> 00:16:28,640 Speaker 8: the case that London is the place to invest and 297 00:16:29,000 --> 00:16:31,840 Speaker 8: to innovate, and there are some data that backs that up. 298 00:16:31,880 --> 00:16:34,080 Speaker 8: In terms of fun flows, you have seen more money 299 00:16:34,240 --> 00:16:38,040 Speaker 8: moving into the tech sector last year from venture capital 300 00:16:38,600 --> 00:16:42,840 Speaker 8: into London into the UK than into France and Germany combined. 301 00:16:42,880 --> 00:16:46,440 Speaker 8: And we have some big name startups now that are 302 00:16:46,480 --> 00:16:48,760 Speaker 8: raising real capital and have an impact, companies like Wave 303 00:16:49,000 --> 00:16:51,560 Speaker 8: in the mobility space, which is valued at a little 304 00:16:51,600 --> 00:16:56,240 Speaker 8: over two billion US dollars. You have companies like Synthesia, 305 00:16:56,480 --> 00:17:00,640 Speaker 8: eleven Labs, Polyai, Luminance, Revolute, which is huge in terms 306 00:17:00,680 --> 00:17:03,840 Speaker 8: of fintech. So we do have examples of successful startups here. 307 00:17:03,920 --> 00:17:06,560 Speaker 8: There is money flowing in, but there is a lot 308 00:17:06,640 --> 00:17:09,639 Speaker 8: more to do, and in terms of positioning the UK 309 00:17:09,720 --> 00:17:11,480 Speaker 8: when it comes to AI, that is going to be 310 00:17:11,560 --> 00:17:14,320 Speaker 8: crucial in terms of the conversations I think going forward 311 00:17:14,359 --> 00:17:17,239 Speaker 8: and the kind of traction that government ministers can get 312 00:17:17,280 --> 00:17:18,920 Speaker 8: and that companies can get in terms of fundraising. 313 00:17:19,160 --> 00:17:21,679 Speaker 3: Yeah, I mean the UK government website talking about London 314 00:17:21,760 --> 00:17:24,440 Speaker 3: becoming the epicenter of global innovation. 315 00:17:25,480 --> 00:17:27,399 Speaker 9: That's one side of things. 316 00:17:27,640 --> 00:17:30,480 Speaker 3: On the other, in recent days we've seen why saying 317 00:17:30,520 --> 00:17:33,480 Speaker 3: that it's going to move its listing primary listing to 318 00:17:33,600 --> 00:17:37,239 Speaker 3: the US. So there are some concerns also, aren't there. 319 00:17:37,480 --> 00:17:40,639 Speaker 8: And I'm glad you brought up wise because that really 320 00:17:40,800 --> 00:17:43,680 Speaker 8: points to one of the key hurdles, one of the 321 00:17:43,760 --> 00:17:47,600 Speaker 8: key headwinds for the UK. This, of course, the money 322 00:17:47,640 --> 00:17:52,080 Speaker 8: transfer business listed in twenty twenty one to great fanfare. 323 00:17:52,359 --> 00:17:55,800 Speaker 8: It's been one of the few tech companies listed in 324 00:17:55,840 --> 00:17:58,600 Speaker 8: the UK now, as you say, making that decision to 325 00:17:58,680 --> 00:18:00,680 Speaker 8: put its primal listing in the US, which tells a 326 00:18:00,720 --> 00:18:03,680 Speaker 8: bigger story. It tells a story about the valuations these 327 00:18:03,720 --> 00:18:06,440 Speaker 8: companies think they can get in the US market versus 328 00:18:06,640 --> 00:18:10,320 Speaker 8: here in the UK. It tells a story about companies 329 00:18:10,800 --> 00:18:15,480 Speaker 8: including for example, Delivery that was bought over and bought 330 00:18:15,520 --> 00:18:18,800 Speaker 8: by door Dash, Dark Trace which is brought by private equity. 331 00:18:19,119 --> 00:18:21,000 Speaker 8: The companies that are able to build here in terms 332 00:18:21,040 --> 00:18:24,440 Speaker 8: of the tech sector, they often then go to the 333 00:18:24,560 --> 00:18:27,119 Speaker 8: US to raise the bigger funds and to list. And 334 00:18:27,240 --> 00:18:29,400 Speaker 8: that is not a trend that we have seen stopping 335 00:18:29,480 --> 00:18:32,159 Speaker 8: despite changes that London Stock has changed have tried to 336 00:18:32,200 --> 00:18:35,000 Speaker 8: make so capital access to capital and the capital markets 337 00:18:35,240 --> 00:18:37,080 Speaker 8: is really key when it comes to the question of 338 00:18:37,280 --> 00:18:39,400 Speaker 8: how you scale and how you grow these businesses. 339 00:18:40,320 --> 00:18:44,280 Speaker 3: What about regulation when it comes to tech. I mean, 340 00:18:44,320 --> 00:18:49,720 Speaker 3: obviously global companies have a huge market in Europe and 341 00:18:50,119 --> 00:18:53,000 Speaker 3: the UK being sort of attached to that. What about 342 00:18:53,200 --> 00:18:57,440 Speaker 3: the idea of deregulation or how we regulate artificial intelligence 343 00:18:57,520 --> 00:18:59,679 Speaker 3: and other bits of the tech sphere. 344 00:19:00,119 --> 00:19:04,080 Speaker 8: Keir Starmer's government is actually taking a more proactive approach 345 00:19:04,119 --> 00:19:06,320 Speaker 8: in terms of looking at the opportunities versus the risk. 346 00:19:06,359 --> 00:19:09,440 Speaker 8: So the emphasis has shifted. Some would say that's because 347 00:19:09,480 --> 00:19:11,760 Speaker 8: the growth needs of this economy are so much more 348 00:19:11,800 --> 00:19:14,840 Speaker 8: acute that if you're looking for one alexir of growth, 349 00:19:15,240 --> 00:19:17,320 Speaker 8: AI could be that, So you have to reach for 350 00:19:17,320 --> 00:19:19,760 Speaker 8: the opportunities. The UK is still trying to carve out 351 00:19:19,840 --> 00:19:21,639 Speaker 8: what the regulatory framework is going to be. We have 352 00:19:21,680 --> 00:19:25,240 Speaker 8: an AI strategy. The European Union does have its AI 353 00:19:25,400 --> 00:19:28,040 Speaker 8: Safety Act that is being implemented gradually towards the end 354 00:19:28,080 --> 00:19:31,520 Speaker 8: of this year and into twenty twenty six. There's a 355 00:19:31,680 --> 00:19:35,640 Speaker 8: lot of pushback against that regulation still from the tech industry. 356 00:19:36,160 --> 00:19:38,560 Speaker 8: Where the UK lands on this will be interesting, Will 357 00:19:38,640 --> 00:19:41,680 Speaker 8: it align more with less a fair approach that we're 358 00:19:41,680 --> 00:19:44,160 Speaker 8: starting seeing at least the federal level in the US 359 00:19:44,240 --> 00:19:46,280 Speaker 8: when it comes to AI. Or will it start to 360 00:19:46,320 --> 00:19:49,520 Speaker 8: take account of the risk factors and take lessons from 361 00:19:49,720 --> 00:19:53,199 Speaker 8: what Europe's craft in terms of their regulations. It may 362 00:19:53,280 --> 00:19:54,040 Speaker 8: find a middle spot. 363 00:19:54,760 --> 00:19:57,960 Speaker 3: So do you think that artificial intelligence will dominate given 364 00:19:58,440 --> 00:20:01,360 Speaker 3: the questions about tak up about disruption? 365 00:20:01,800 --> 00:20:03,720 Speaker 9: How important is that going to be on the agenda 366 00:20:03,800 --> 00:20:04,680 Speaker 9: artificial intelligence? 367 00:20:04,720 --> 00:20:06,560 Speaker 8: There is one name that I have not mentioned yet, 368 00:20:06,600 --> 00:20:09,159 Speaker 8: and that is Jensen Huang of Nvidia, of course, the 369 00:20:09,240 --> 00:20:12,359 Speaker 8: CEO of that company that makes the AI accelerators that 370 00:20:12,440 --> 00:20:15,840 Speaker 8: has become the litmus test of AI demand that underpins 371 00:20:16,000 --> 00:20:18,639 Speaker 8: so much of this AI revolution that we're seeing. Jensen 372 00:20:18,720 --> 00:20:21,600 Speaker 8: Huang will be a keynote speaker at London Tech Week. 373 00:20:21,640 --> 00:20:24,320 Speaker 8: He will also be at Viva Tech, the event taking 374 00:20:24,359 --> 00:20:27,840 Speaker 8: place in Paris. So watch for any announcements from the 375 00:20:27,960 --> 00:20:33,000 Speaker 8: CEO of Nvidia. They are building and funding the build out, 376 00:20:33,040 --> 00:20:35,000 Speaker 8: of course of data centers in the US. They've announced 377 00:20:35,000 --> 00:20:37,800 Speaker 8: plans to invest in data centers in the UAE. What 378 00:20:38,080 --> 00:20:40,280 Speaker 8: is the data center story in the UK? What is 379 00:20:40,320 --> 00:20:43,119 Speaker 8: the data story data center story in Europe? How much 380 00:20:43,200 --> 00:20:46,359 Speaker 8: is Nvidia going to be investing in the infrastructure that 381 00:20:46,600 --> 00:20:50,399 Speaker 8: underpins the advancements and innovations that we're seeing in AI 382 00:20:50,600 --> 00:20:52,160 Speaker 8: and how is the UK trying to get a piece 383 00:20:52,160 --> 00:20:53,800 Speaker 8: of that. I think that's going to be something really 384 00:20:53,840 --> 00:20:56,280 Speaker 8: worth watching next week what we hear from Gensen Wang. 385 00:20:56,440 --> 00:20:59,320 Speaker 3: Yeah, although I have sort of heard this idea that 386 00:20:59,520 --> 00:21:02,800 Speaker 3: maybe those data centers are going to become less energy 387 00:21:02,840 --> 00:21:05,480 Speaker 3: hungry and so maybe, you know, as we get the 388 00:21:05,560 --> 00:21:08,800 Speaker 3: leaps forward in tech, that might be something in the future. 389 00:21:09,400 --> 00:21:11,560 Speaker 3: Going back to your point there about the UK and 390 00:21:12,080 --> 00:21:16,280 Speaker 3: its non EU status, does that help or hinder when 391 00:21:16,320 --> 00:21:20,920 Speaker 3: it comes to tech firms with regulation, with fundraising? 392 00:21:21,080 --> 00:21:22,480 Speaker 9: How are we seeing things now? 393 00:21:22,760 --> 00:21:25,159 Speaker 8: If you look just at the data in terms of 394 00:21:25,240 --> 00:21:28,320 Speaker 8: fun flows, in terms of talent, in terms of the 395 00:21:28,400 --> 00:21:31,920 Speaker 8: numbers of startups, then the UK again is ahead of 396 00:21:32,520 --> 00:21:35,520 Speaker 8: a number of its European peers. I think on the 397 00:21:35,640 --> 00:21:40,440 Speaker 8: regulatory question, the jury is probably still out. The screaming 398 00:21:40,560 --> 00:21:43,840 Speaker 8: question when you're in Continental Europe maan izon An event 399 00:21:43,880 --> 00:21:46,880 Speaker 8: a few weeks ago and the CEOs and the investors 400 00:21:46,880 --> 00:21:52,200 Speaker 8: I spoke to there in Germany talking about regulation in Europe. Regulation, regulation, regulation, 401 00:21:52,520 --> 00:21:54,080 Speaker 8: That's what they were banging on about in terms of 402 00:21:54,160 --> 00:21:57,119 Speaker 8: one of the key headwinds that are holding back, that 403 00:21:57,320 --> 00:22:00,760 Speaker 8: is holding back the build out of tech and the 404 00:22:00,840 --> 00:22:03,560 Speaker 8: ability to invest and scale in that economy, whether it's 405 00:22:03,800 --> 00:22:07,600 Speaker 8: ESG or DEI or AI regulations. One person at this 406 00:22:07,680 --> 00:22:11,240 Speaker 8: event quoted this line saying, you need to invest in Asia, 407 00:22:11,359 --> 00:22:13,480 Speaker 8: do business in the US, and holiday in Europe, and 408 00:22:13,520 --> 00:22:15,280 Speaker 8: they want to get away from that. In the UK, 409 00:22:15,600 --> 00:22:17,680 Speaker 8: it's slightly it is slightly different. We do not have 410 00:22:17,800 --> 00:22:20,359 Speaker 8: the EUAI Act. We don't have the same ESG and 411 00:22:20,440 --> 00:22:24,800 Speaker 8: DEI regulations that they have in Europe that those particular 412 00:22:24,840 --> 00:22:28,840 Speaker 8: participants were complaining about. We're starting to I'm trying to 413 00:22:28,880 --> 00:22:30,560 Speaker 8: find our footing in terms of what the AAR regulation 414 00:22:30,640 --> 00:22:32,159 Speaker 8: is going to look like. Here in the UK, we 415 00:22:32,359 --> 00:22:34,960 Speaker 8: have seen again the talent flow as well, some evidence 416 00:22:35,000 --> 00:22:37,399 Speaker 8: that talent is being drawn to the UK from the 417 00:22:37,560 --> 00:22:40,600 Speaker 8: US in small numbers, but some venture counselors I've spoken 418 00:22:40,640 --> 00:22:42,920 Speaker 8: to have said that as a result of the politics 419 00:22:42,960 --> 00:22:44,840 Speaker 8: of the US, we're seeing some of that talent move 420 00:22:45,119 --> 00:22:47,320 Speaker 8: to the UK. So we're benefiting from that. But talent 421 00:22:47,440 --> 00:22:49,080 Speaker 8: is another key piece of this because you can have 422 00:22:49,160 --> 00:22:51,920 Speaker 8: investors and you can have founders, but then finding the people, 423 00:22:52,000 --> 00:22:55,520 Speaker 8: the CFOs and the coos to actually implement that strategy 424 00:22:56,280 --> 00:22:58,880 Speaker 8: that is proving a challenge that kind of talent. There's 425 00:22:58,880 --> 00:22:59,879 Speaker 8: still a shortage there when it. 426 00:22:59,840 --> 00:23:03,040 Speaker 3: Come k Yeah, and the UK doesn't often perform well 427 00:23:03,119 --> 00:23:05,440 Speaker 3: when it comes to management in the UK if you 428 00:23:05,480 --> 00:23:08,560 Speaker 3: look at the kind of indices and yeah, we've you know, 429 00:23:08,680 --> 00:23:11,399 Speaker 3: the government here really wants Oxford and Cambridge in that 430 00:23:11,680 --> 00:23:14,960 Speaker 3: arc there to be a kind of Silicon Valley esque, 431 00:23:15,119 --> 00:23:18,000 Speaker 3: don't they. But look on again on this on the 432 00:23:18,080 --> 00:23:21,760 Speaker 3: big picture, the UK and Europe have to compete with 433 00:23:21,840 --> 00:23:24,600 Speaker 3: the US and China when it comes to kind of 434 00:23:24,680 --> 00:23:26,560 Speaker 3: transformational technology, don't they. 435 00:23:27,119 --> 00:23:27,320 Speaker 7: They do. 436 00:23:27,520 --> 00:23:30,879 Speaker 8: They have to compete with real innovation in the Chinese market, 437 00:23:31,040 --> 00:23:33,399 Speaker 8: not just from deep Sat, which of course created all 438 00:23:33,440 --> 00:23:36,680 Speaker 8: those headlines, the large language model that is open source 439 00:23:36,760 --> 00:23:39,480 Speaker 8: and that was much cheaper to build according to the 440 00:23:39,640 --> 00:23:42,359 Speaker 8: team who run that. There's all sorts of innovations coming 441 00:23:42,440 --> 00:23:46,359 Speaker 8: through from key tech players in China and it is 442 00:23:46,600 --> 00:23:49,240 Speaker 8: a race right now between China and the US. That 443 00:23:49,400 --> 00:23:51,320 Speaker 8: is where the race is at. Can Europe catch up? 444 00:23:51,600 --> 00:23:54,160 Speaker 8: It remains a key question. We do have players large 445 00:23:54,200 --> 00:23:57,359 Speaker 8: language model company called mistral over in France. Can the 446 00:23:57,520 --> 00:23:59,680 Speaker 8: UK play Where is the value in this? Is the 447 00:23:59,760 --> 00:24:01,920 Speaker 8: value in those larger language models or is it in 448 00:24:02,000 --> 00:24:04,000 Speaker 8: the companies that are building the solutions on top of that, 449 00:24:04,320 --> 00:24:08,359 Speaker 8: like eleven Labs, which does things like audio translation here 450 00:24:08,400 --> 00:24:11,480 Speaker 8: in the UK. Is it in legal and finance? We're 451 00:24:11,560 --> 00:24:13,520 Speaker 8: very strong of course in terms of financial services and 452 00:24:13,560 --> 00:24:17,480 Speaker 8: legal services companies like Luminance AI, which does AI for 453 00:24:17,680 --> 00:24:20,080 Speaker 8: the legal sector. Is that where our strength is rather 454 00:24:20,160 --> 00:24:22,200 Speaker 8: than the foundation models? Where is the value? And that 455 00:24:22,280 --> 00:24:23,160 Speaker 8: still remains a debate. 456 00:24:23,840 --> 00:24:27,119 Speaker 3: This makes me laugh because months ago, Tommy, you were 457 00:24:27,160 --> 00:24:29,879 Speaker 3: telling me about how important it was to understand how 458 00:24:30,000 --> 00:24:32,960 Speaker 3: those apps work, Which kind of leads me to my 459 00:24:33,280 --> 00:24:35,399 Speaker 3: last thought, which is that you're not just at London 460 00:24:35,480 --> 00:24:38,359 Speaker 3: Tech Week, but you're also launching a brand new show 461 00:24:38,520 --> 00:24:41,840 Speaker 3: covering all things tech. It's such an important time now 462 00:24:42,440 --> 00:24:44,639 Speaker 3: more than ever. What are you going to hope to 463 00:24:44,800 --> 00:24:45,400 Speaker 3: bring us. 464 00:24:45,480 --> 00:24:46,200 Speaker 9: In that show? 465 00:24:46,560 --> 00:24:50,040 Speaker 8: I don't think I can overstress what this moment is 466 00:24:50,160 --> 00:24:53,000 Speaker 8: in terms of the significance. You look at the defense, space, 467 00:24:53,160 --> 00:24:55,720 Speaker 8: you look at energy, you look at space technology. In 468 00:24:55,880 --> 00:24:58,840 Speaker 8: all those areas the UK and Europe need to be 469 00:24:58,920 --> 00:25:01,800 Speaker 8: stepping up. These changes are going to happen rapidly with 470 00:25:02,000 --> 00:25:03,760 Speaker 8: all of those sectors. AI is going to be powering 471 00:25:03,800 --> 00:25:05,800 Speaker 8: a lot of it, whether it is energy, defense or 472 00:25:05,880 --> 00:25:08,720 Speaker 8: space tech, and what we hope to do with Bloomberg 473 00:25:09,000 --> 00:25:12,000 Speaker 8: Tech Europe is to chart some of that invasion, talk 474 00:25:12,040 --> 00:25:14,119 Speaker 8: about where they close the gap is and how we 475 00:25:14,240 --> 00:25:16,359 Speaker 8: close that gap, and speak to some of the key leaders, 476 00:25:16,359 --> 00:25:20,359 Speaker 8: whether it is Demsisabis, whether it is Arms CEO Rennie 477 00:25:20,359 --> 00:25:23,920 Speaker 8: has who I'll be speaking to next week, and key funders, 478 00:25:24,040 --> 00:25:27,080 Speaker 8: venture capitalists and key founders as well across Europe and 479 00:25:27,119 --> 00:25:27,359 Speaker 8: the UK. 480 00:25:27,880 --> 00:25:29,720 Speaker 3: I bet it's going to be a great show, and 481 00:25:29,840 --> 00:25:31,840 Speaker 3: of course we'll have lots of those snippets of all 482 00:25:31,840 --> 00:25:34,359 Speaker 3: of those great interviews on Bloomberg Radio. 483 00:25:34,480 --> 00:25:35,920 Speaker 9: Thank you so much, Tom for being with me. 484 00:25:36,160 --> 00:25:39,040 Speaker 3: Bloomberg's Tom McKenzie will have full coverage of all the 485 00:25:39,119 --> 00:25:43,480 Speaker 3: key moments for you from London Tech Week across Bloomberg platforms. 486 00:25:43,680 --> 00:25:45,919 Speaker 3: I'm Caline Hepge here in London. You can catch us 487 00:25:46,000 --> 00:25:49,040 Speaker 3: every weekday morning for Bloomberg Daybreak you at the beginning 488 00:25:49,040 --> 00:25:50,119 Speaker 3: at six am in London. 489 00:25:50,480 --> 00:25:51,840 Speaker 9: That's one am on Wall Street. 490 00:25:52,040 --> 00:25:55,399 Speaker 2: Tom, Thanks Caroline, And coming up on Bloomberg day Break weekend, 491 00:25:55,440 --> 00:25:58,280 Speaker 2: we'll look ahead to some fresh economic data out of China. 492 00:25:58,800 --> 00:26:13,080 Speaker 2: I'm Tom Busby and this is Bloomberg. This is Bloomberg 493 00:26:13,160 --> 00:26:15,200 Speaker 2: day Break Weekend, our global look ahead at the top 494 00:26:15,240 --> 00:26:18,040 Speaker 2: stories for investors in the coming week. I'm Tom Busby 495 00:26:18,119 --> 00:26:21,280 Speaker 2: in New York. Last week we learned China's services activity 496 00:26:21,359 --> 00:26:23,840 Speaker 2: expanded at a faster pace in May. It was a 497 00:26:23,920 --> 00:26:26,800 Speaker 2: positive sign for the country as it looks to stabilize 498 00:26:26,840 --> 00:26:30,000 Speaker 2: trade relations with the US following a call between Presidents 499 00:26:30,040 --> 00:26:33,159 Speaker 2: Trump and She. This week, we'll get fresh data and 500 00:26:33,240 --> 00:26:35,040 Speaker 2: a clearer view of the health of the world's second 501 00:26:35,080 --> 00:26:37,800 Speaker 2: largest economy. For more, let's get to the host of 502 00:26:37,840 --> 00:26:40,120 Speaker 2: the Daybreak Asia podcast, Doug Krisner. 503 00:26:40,560 --> 00:26:43,200 Speaker 4: Tom. The trade truce between the US and China is 504 00:26:43,240 --> 00:26:46,280 Speaker 4: a month old, and it appears to be on shaky ground. 505 00:26:46,760 --> 00:26:50,240 Speaker 4: Distrust between Washington and Beijing is running deep, and the 506 00:26:50,400 --> 00:26:53,960 Speaker 4: question is whether a talk between Presidents Trump and She 507 00:26:54,200 --> 00:26:57,560 Speaker 4: will produce a positive outcome. So how well is the 508 00:26:57,680 --> 00:27:01,359 Speaker 4: Chinese economy holding up under the weight of this trade conflict. 509 00:27:01,800 --> 00:27:04,120 Speaker 4: We'll get some insight in the week ahead with readings 510 00:27:04,200 --> 00:27:08,879 Speaker 4: on Chinese exports, as well as industrial production and retail sales, 511 00:27:09,040 --> 00:27:11,320 Speaker 4: to name a few. Joining me now for a closer 512 00:27:11,359 --> 00:27:14,440 Speaker 4: look at the broader Chinese economy is John lou. He 513 00:27:14,640 --> 00:27:18,600 Speaker 4: is Bloomberg Executive editor for Greater China, John joins us 514 00:27:18,600 --> 00:27:21,560 Speaker 4: from our studios in Beijing. Good of you to make 515 00:27:21,640 --> 00:27:23,760 Speaker 4: time to chat with me. There's a lot to cover here, 516 00:27:24,240 --> 00:27:27,280 Speaker 4: but can we just start with kind of a summary 517 00:27:27,359 --> 00:27:29,639 Speaker 4: of how you see the macro in China right now. 518 00:27:30,800 --> 00:27:34,960 Speaker 10: I would describe it as being relatively stable, but in 519 00:27:35,080 --> 00:27:39,480 Speaker 10: a relatively weak state. So I think the data that 520 00:27:39,560 --> 00:27:43,880 Speaker 10: we've gotten as it refers to manufacturing, as it refers 521 00:27:44,000 --> 00:27:47,520 Speaker 10: to trade, has shown that the economy has taken a 522 00:27:47,640 --> 00:27:49,920 Speaker 10: hit from the tariffs imposed by the United States. We 523 00:27:50,040 --> 00:27:53,920 Speaker 10: saw a pretty sharp drop off in shipments to the 524 00:27:54,080 --> 00:27:56,800 Speaker 10: United States, a twenty percent decline in exports in the 525 00:27:56,880 --> 00:28:00,040 Speaker 10: month of April. As we understand it, after the the 526 00:28:00,600 --> 00:28:04,479 Speaker 10: sort of detent that came together in Geneva, trade did 527 00:28:04,560 --> 00:28:07,800 Speaker 10: pick up. So we are expecting to see better trade 528 00:28:07,880 --> 00:28:12,280 Speaker 10: numbers for the month of May because American importers are 529 00:28:12,320 --> 00:28:14,960 Speaker 10: trying to get their goods in while the getting was good, 530 00:28:15,480 --> 00:28:21,040 Speaker 10: but still we're expecting inflation factory gate prices to remain 531 00:28:21,240 --> 00:28:26,760 Speaker 10: weak in May. That speaks to domestic consumption, domestic demand 532 00:28:26,880 --> 00:28:27,760 Speaker 10: still not picking up. 533 00:28:28,160 --> 00:28:32,800 Speaker 4: We had comments recently from Treasury Secretary Scott Bessant saying 534 00:28:33,000 --> 00:28:36,000 Speaker 4: that China needs to shift to a more consumption led 535 00:28:36,080 --> 00:28:39,800 Speaker 4: economy to help ease global imbalances. It seems to be 536 00:28:39,880 --> 00:28:42,720 Speaker 4: stating the obvious right now, what is the government in 537 00:28:42,880 --> 00:28:47,480 Speaker 4: Beijing doing to try to address the issue of stronger 538 00:28:47,560 --> 00:28:48,360 Speaker 4: domestic demand? 539 00:28:49,240 --> 00:28:54,080 Speaker 10: So at a very high three thousand foot level, Beijing 540 00:28:54,160 --> 00:28:58,400 Speaker 10: and Washington are in agreement on that. Chinese officials back 541 00:28:58,960 --> 00:29:02,200 Speaker 10: ten fifteen years been saying the Chinese economy is unbalanced. 542 00:29:02,280 --> 00:29:06,000 Speaker 10: It needs more domestic consumption, it needs to depend less 543 00:29:06,160 --> 00:29:10,200 Speaker 10: on exports and investment. The problem is how to do 544 00:29:10,560 --> 00:29:15,360 Speaker 10: that restructuring reconfiguration of what is the world's second biggest 545 00:29:15,400 --> 00:29:19,960 Speaker 10: economy well over ten trillion dollars. How to do that 546 00:29:20,120 --> 00:29:24,800 Speaker 10: without causing some hiccup and growth that would be destabilizing 547 00:29:24,840 --> 00:29:27,240 Speaker 10: for the country. That is the problem. And so what 548 00:29:27,360 --> 00:29:30,800 Speaker 10: we have instead seeing is it's much easier when growth 549 00:29:31,000 --> 00:29:33,880 Speaker 10: is slow, when it's weak, for the government here in 550 00:29:33,960 --> 00:29:36,120 Speaker 10: Beijing to double down on what has worked, and that 551 00:29:36,200 --> 00:29:39,600 Speaker 10: has been manufacturing, that has been investment, that has been exports. 552 00:29:40,040 --> 00:29:42,600 Speaker 10: And we've seen that through the course of COVID and 553 00:29:42,960 --> 00:29:46,240 Speaker 10: in this most recent set of trade tensions that we've. 554 00:29:46,120 --> 00:29:50,400 Speaker 4: Had deflation continues to be a huge problem. Are authorities 555 00:29:50,440 --> 00:29:53,080 Speaker 4: worried about it reaching a dangerous level? Do you think? 556 00:29:53,800 --> 00:29:56,040 Speaker 10: I think there's a lot of concern about deflation. I 557 00:29:56,080 --> 00:29:58,320 Speaker 10: don't think we are at a point yet where it 558 00:29:58,480 --> 00:30:03,480 Speaker 10: is causing alarm amongst policymakers. Here in Beijing. The PPI, 559 00:30:03,720 --> 00:30:07,960 Speaker 10: the factory gate prices for Chinese companies, has been declining 560 00:30:08,080 --> 00:30:10,800 Speaker 10: for the better part of three years. It speaks to 561 00:30:11,160 --> 00:30:15,120 Speaker 10: Chinese companies not having the ability, the pricing ability when 562 00:30:15,120 --> 00:30:18,240 Speaker 10: they're trying to offload, to get to distribute, to sell 563 00:30:18,280 --> 00:30:22,640 Speaker 10: their products. That speaks to excess capacity in the Chinese economy. 564 00:30:23,480 --> 00:30:26,400 Speaker 10: That's the result of trade barriers on one hand, but 565 00:30:26,440 --> 00:30:29,600 Speaker 10: also the real estate problems that have happened here and 566 00:30:29,680 --> 00:30:32,960 Speaker 10: there being a weakness and domestic demand. So there is worry, 567 00:30:33,080 --> 00:30:35,320 Speaker 10: but we are still not at a level where I 568 00:30:35,400 --> 00:30:38,280 Speaker 10: think it's going to trigger the Chinese government to go 569 00:30:38,400 --> 00:30:42,560 Speaker 10: into overdrive stimulus mode and start churning out new policies 570 00:30:42,600 --> 00:30:43,480 Speaker 10: to try and address it. 571 00:30:44,040 --> 00:30:46,440 Speaker 4: One of the things that I think Beijing would like 572 00:30:46,520 --> 00:30:49,760 Speaker 4: to have happen as part of any negotiation in dealing 573 00:30:49,880 --> 00:30:51,960 Speaker 4: with the trade war, if we can call it that 574 00:30:52,360 --> 00:30:57,080 Speaker 4: certainly the situation with these very very drastic tariffs is 575 00:30:57,160 --> 00:31:00,800 Speaker 4: some type of relaxation when it comes to X controls 576 00:31:00,960 --> 00:31:05,360 Speaker 4: on high technology. How is the high tech sector and 577 00:31:05,440 --> 00:31:07,600 Speaker 4: I use that term very broadly, John, how is it 578 00:31:07,680 --> 00:31:09,000 Speaker 4: performing in China right now? 579 00:31:09,480 --> 00:31:13,560 Speaker 10: So? I think we've seen some breakthroughs in twenty twenty five. 580 00:31:14,240 --> 00:31:16,760 Speaker 10: Deep Seek is probably the best known of those. There 581 00:31:16,840 --> 00:31:19,760 Speaker 10: have been some breakthroughs in terms of robotics here in China, 582 00:31:20,400 --> 00:31:23,719 Speaker 10: and so I think the state of the Chinese Chinese 583 00:31:23,760 --> 00:31:26,920 Speaker 10: technology at the moment is it is still able to 584 00:31:27,040 --> 00:31:29,680 Speaker 10: be innovative and come up with new products. The problem, 585 00:31:29,760 --> 00:31:35,880 Speaker 10: I think is scale. How quickly can China scale AI applications? 586 00:31:36,000 --> 00:31:39,360 Speaker 10: How quickly can China scale robotics? And I think this 587 00:31:39,560 --> 00:31:44,200 Speaker 10: is where the technology, the limitations that the United States 588 00:31:44,240 --> 00:31:46,840 Speaker 10: has placed on Chinese access to technology, I think this 589 00:31:47,000 --> 00:31:49,520 Speaker 10: is where that comes in and starts to hurt the 590 00:31:49,600 --> 00:31:52,080 Speaker 10: Chinese economy. If China could get its hands on more 591 00:31:52,200 --> 00:31:55,160 Speaker 10: Nvidia chips, for example, it could roll out AI at 592 00:31:55,160 --> 00:31:58,160 Speaker 10: a much larger scale than what it's been able to 593 00:31:58,240 --> 00:32:02,320 Speaker 10: do now. And so there is a eagerness and interest 594 00:32:02,360 --> 00:32:06,240 Speaker 10: in Beijing to have some of these technology curves removed. 595 00:32:06,560 --> 00:32:08,360 Speaker 10: But at the same time, I think you have also 596 00:32:08,440 --> 00:32:12,120 Speaker 10: seen Beijing trying to use its leverage when it comes 597 00:32:12,160 --> 00:32:14,760 Speaker 10: to rare earth, when it comes to critical minerals and 598 00:32:14,800 --> 00:32:17,960 Speaker 10: how that affects technology companies and manufacturers in the United 599 00:32:18,000 --> 00:32:21,200 Speaker 10: States as a way to try and bring that issue 600 00:32:21,280 --> 00:32:23,600 Speaker 10: onto the table. And so I think it is ultimately 601 00:32:23,680 --> 00:32:25,680 Speaker 10: going to be a negotiation between the two. 602 00:32:25,560 --> 00:32:27,800 Speaker 4: Governments to put a finer point on some of the 603 00:32:27,880 --> 00:32:32,000 Speaker 4: controls that the US has established. When you look at 604 00:32:32,040 --> 00:32:35,360 Speaker 4: a company like Huawei, are they moving closer to being 605 00:32:35,400 --> 00:32:38,280 Speaker 4: able to compete with a company like in Nvidia when 606 00:32:38,320 --> 00:32:41,480 Speaker 4: it comes to those very sophisticated AI chips. 607 00:32:42,040 --> 00:32:44,440 Speaker 10: So I think this is where the issue of scale 608 00:32:44,520 --> 00:32:48,320 Speaker 10: comes into play. Huawei can design some of the world's 609 00:32:48,400 --> 00:32:52,880 Speaker 10: most leading AI chips. They can produce a few of them, 610 00:32:53,640 --> 00:32:57,080 Speaker 10: you know, at a time, small lots. The problem becomes 611 00:32:57,560 --> 00:33:03,200 Speaker 10: they cannot produce large amounts at economically very viable prices 612 00:33:03,480 --> 00:33:06,880 Speaker 10: because they don't have access to the latest chip manufacturing technology, 613 00:33:06,960 --> 00:33:11,760 Speaker 10: the things that TSMC has, the things that Nvidia has 614 00:33:11,840 --> 00:33:14,720 Speaker 10: access to, and that has been the real hurdle for 615 00:33:14,920 --> 00:33:19,320 Speaker 10: Chinese technology, Chinese Semiconductor's Chinese AI and that is why 616 00:33:19,800 --> 00:33:23,720 Speaker 10: Beijing really wants some relaxation in these curves that the 617 00:33:23,800 --> 00:33:24,640 Speaker 10: United States has put in. 618 00:33:25,000 --> 00:33:27,960 Speaker 4: So I mentioned a moment ago the monthly activity data 619 00:33:28,240 --> 00:33:32,400 Speaker 4: industrial production, retail sales to critical data points. Talk to 620 00:33:32,520 --> 00:33:34,800 Speaker 4: me a little bit about the health of the Chinese 621 00:33:34,880 --> 00:33:37,640 Speaker 4: consumer right now and what we may see in that 622 00:33:37,800 --> 00:33:38,960 Speaker 4: retail sales number. 623 00:33:39,600 --> 00:33:41,720 Speaker 10: So we've just come off of a holiday at the 624 00:33:41,840 --> 00:33:44,920 Speaker 10: beginning of May, a three day weekend here for the 625 00:33:45,120 --> 00:33:50,120 Speaker 10: Dragon Boat Festival, and that showed while overall consumer spending 626 00:33:50,160 --> 00:33:54,440 Speaker 10: during the holiday was up, the spending per trip was down. 627 00:33:54,920 --> 00:33:57,120 Speaker 10: And so I think it speaks to the fact that 628 00:33:57,960 --> 00:34:01,240 Speaker 10: people are still going out there, are going to lunches 629 00:34:01,320 --> 00:34:04,480 Speaker 10: and dinners, and they're going shopping, and they're going out to, 630 00:34:05,040 --> 00:34:07,320 Speaker 10: you know, have a holiday, but they're doing it less. 631 00:34:07,360 --> 00:34:10,120 Speaker 10: And when they're doing it, they're trying to spend a 632 00:34:10,120 --> 00:34:12,720 Speaker 10: little less. They're holding onto their wallets a little tighter. 633 00:34:12,800 --> 00:34:15,600 Speaker 10: And that is still I think, ultimately a reflection of 634 00:34:16,239 --> 00:34:19,439 Speaker 10: the real estate crash that we've had here in China, 635 00:34:19,560 --> 00:34:22,240 Speaker 10: the fact that so much of household wealth is tied 636 00:34:22,320 --> 00:34:24,640 Speaker 10: up in the home and when people see the value 637 00:34:24,680 --> 00:34:27,759 Speaker 10: of their homes go down, they feel poorer themselves, even 638 00:34:27,840 --> 00:34:30,880 Speaker 10: if their financial situation hasn't actually changed. 639 00:34:31,320 --> 00:34:33,840 Speaker 4: Are consumers caught up in a lot of the rhetoric 640 00:34:33,960 --> 00:34:35,960 Speaker 4: around the trade ward do they have a point of 641 00:34:36,040 --> 00:34:39,200 Speaker 4: view when it comes to what Donald Trump and the 642 00:34:39,239 --> 00:34:41,760 Speaker 4: Trump administration is imposing on China. 643 00:34:42,440 --> 00:34:46,600 Speaker 10: So I think this is a it goes two ways. 644 00:34:47,080 --> 00:34:52,320 Speaker 10: On one hand, it is affecting consumer confidence. The average 645 00:34:52,480 --> 00:34:55,440 Speaker 10: individual here in China understands that trade is an important 646 00:34:55,480 --> 00:34:58,640 Speaker 10: part of the economy, and if China is not able 647 00:34:58,680 --> 00:35:01,239 Speaker 10: to sell products into the United States, that's going to 648 00:35:01,880 --> 00:35:05,400 Speaker 10: make the job market less stable. It's going to make 649 00:35:05,440 --> 00:35:07,960 Speaker 10: it weaker. People are going to be a little bit 650 00:35:08,040 --> 00:35:11,320 Speaker 10: more concerned about their future prospects, and so as a result, 651 00:35:11,400 --> 00:35:15,680 Speaker 10: they may constrain some of their discretionary spending. But at 652 00:35:15,680 --> 00:35:17,680 Speaker 10: the same time, one of the other effects has been 653 00:35:18,480 --> 00:35:23,040 Speaker 10: people broadly see the tariffs as being American aggression, and 654 00:35:23,160 --> 00:35:26,640 Speaker 10: that has resulted in a lot of on the ground 655 00:35:26,760 --> 00:35:30,719 Speaker 10: support Foreshiugen Ping and for the government here to retaliate, 656 00:35:30,880 --> 00:35:33,080 Speaker 10: to play hardball with us, and so it kind of 657 00:35:33,120 --> 00:35:37,279 Speaker 10: creates a situation where people are feeling the effect and 658 00:35:37,400 --> 00:35:40,040 Speaker 10: feeling the hit in terms of confidence, But at the 659 00:35:40,080 --> 00:35:44,440 Speaker 10: same time, ready to continue going on, ready to continue 660 00:35:44,440 --> 00:35:45,560 Speaker 10: fighting the strang ward to. 661 00:35:45,680 --> 00:35:49,040 Speaker 4: What extent is the government working to try to create 662 00:35:49,200 --> 00:35:51,800 Speaker 4: new markets right now to compensate for the fact that 663 00:35:52,080 --> 00:35:55,200 Speaker 4: demand coming from the US may be much less. 664 00:35:55,760 --> 00:35:59,480 Speaker 10: So I think April was a very interesting month as 665 00:35:59,520 --> 00:36:03,279 Speaker 10: an ill of that. In April, Chinese exports to the 666 00:36:03,360 --> 00:36:07,360 Speaker 10: US fell by twenty percent, but Chinese exports to India 667 00:36:07,480 --> 00:36:10,799 Speaker 10: to Southeast Asia increase by twenty percent. And so there 668 00:36:11,080 --> 00:36:14,680 Speaker 10: is an effort by the Chinese government, by Chinese companies 669 00:36:15,000 --> 00:36:18,440 Speaker 10: to look for new markets where they can send their 670 00:36:18,480 --> 00:36:20,880 Speaker 10: products if those products cannot go to the United States. 671 00:36:21,320 --> 00:36:23,359 Speaker 10: That is one thing that they're doing now. The question 672 00:36:23,560 --> 00:36:27,279 Speaker 10: is how long can that last? Because if companies are 673 00:36:27,400 --> 00:36:31,000 Speaker 10: diverting all those products about half a trillion dollars worth 674 00:36:31,040 --> 00:36:33,399 Speaker 10: of exports to the United States in twenty twenty four, 675 00:36:33,680 --> 00:36:36,120 Speaker 10: if that's all or much of that is being diverted 676 00:36:36,160 --> 00:36:38,960 Speaker 10: to other markets, much smaller markets in Southeast Asia and 677 00:36:39,040 --> 00:36:42,239 Speaker 10: India relative to the United States, how long will those 678 00:36:42,360 --> 00:36:45,759 Speaker 10: markets allow those products to come in freely without they 679 00:36:45,880 --> 00:36:48,360 Speaker 10: themselves putting up trade barriers. And so this is a 680 00:36:48,480 --> 00:36:51,200 Speaker 10: question of yes, this is working now, but how long 681 00:36:51,239 --> 00:36:52,360 Speaker 10: will it work into the future. 682 00:36:52,520 --> 00:36:56,480 Speaker 4: What about the trading partners that China already relies heavily on, 683 00:36:56,640 --> 00:36:59,280 Speaker 4: and I'm thinking of South Korea, Japan to some extent, 684 00:36:59,360 --> 00:37:01,839 Speaker 4: certainly Australia. How are those relationships. 685 00:37:02,800 --> 00:37:06,040 Speaker 10: They are tense because part of what is happening in 686 00:37:06,200 --> 00:37:09,680 Speaker 10: these negotiations between the United States and South Korea and 687 00:37:09,840 --> 00:37:15,040 Speaker 10: Japan and Australia is this push to try and get 688 00:37:15,160 --> 00:37:22,399 Speaker 10: those countries to cut off Chinese sort of Chinese manufacturers 689 00:37:22,440 --> 00:37:24,600 Speaker 10: sending their goods to South Korea, for example, so that 690 00:37:24,680 --> 00:37:27,320 Speaker 10: they can be on sent to the United States. We 691 00:37:27,440 --> 00:37:30,399 Speaker 10: saw that when the US reached an agreement with the UK. 692 00:37:31,360 --> 00:37:34,080 Speaker 10: We've seen that with the US pushing for Mexico to 693 00:37:34,280 --> 00:37:38,360 Speaker 10: stop Chinese manufacturers from doing that. And so there is 694 00:37:38,480 --> 00:37:41,440 Speaker 10: an effort to buy the United States to put pressure 695 00:37:41,480 --> 00:37:44,720 Speaker 10: on these allies to cut themselves off from the Chinese 696 00:37:44,719 --> 00:37:47,960 Speaker 10: supply chain. China, on its part, is putting pressure on 697 00:37:48,040 --> 00:37:50,560 Speaker 10: those same countries to not do that, and so it's 698 00:37:50,640 --> 00:37:53,480 Speaker 10: actually caused a lot of these countries to be put 699 00:37:53,600 --> 00:37:56,560 Speaker 10: in a very difficult position and they're having to play 700 00:37:56,640 --> 00:37:58,600 Speaker 10: a balance that none of them wants to be in. 701 00:37:58,960 --> 00:38:01,279 Speaker 4: John, Thank you so much much for helping us set 702 00:38:01,360 --> 00:38:03,600 Speaker 4: the stage as we look forward to the data in 703 00:38:03,719 --> 00:38:07,440 Speaker 4: the coming week on exports along with industrial production and 704 00:38:07,560 --> 00:38:11,640 Speaker 4: retail sales. He's John Lou Bloomberg, Executive Editor for Greater China, 705 00:38:11,840 --> 00:38:14,239 Speaker 4: and I'm Doug Chrisner. You can catch us weekdays for 706 00:38:14,320 --> 00:38:18,520 Speaker 4: the Daybreak Asia podcast. It's available wherever you get your podcast. 707 00:38:18,880 --> 00:38:21,480 Speaker 2: Tom, Thank you Doug. And that does it for this 708 00:38:21,680 --> 00:38:24,560 Speaker 2: edition of Bloomberg day Break Weekend. Join us again Monday 709 00:38:24,560 --> 00:38:26,800 Speaker 2: morning at five am Wall Street Time for the latest 710 00:38:26,840 --> 00:38:29,439 Speaker 2: on markets overseas and the news you need to start 711 00:38:29,480 --> 00:38:33,040 Speaker 2: your day. I'm Tom Busby. Stay with us. Top stories 712 00:38:33,080 --> 00:38:35,520 Speaker 2: and global business headlines are coming up right now.