Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is Bloomberg day Break Weekend, our global look at
Speaker 2: the top stories in the coming week from our Daybreak
Speaker 2: anchors all around the world, and straight ahead on the program,
Speaker 2: I'll look at earnings from AI giant Nvidia, along with
Speaker 2: existing home sales data.
Speaker 3: I'm Tom Busby in New York.
Speaker 4: I'm callin Hepkee here in London, where we're looking ahead
Speaker 4: to the Group of Twenty Leaders summit in Rio.
Speaker 1: I'm Dog Prisner looking ahead to the upcoming rate decision
Speaker 1: from the People's Bank of China.
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Speaker 3: Good day to you. I'm Tom Busby.
Speaker 2: We've begin today's program with Nvidia, the last of the
Speaker 2: Magnificent seven tech giants, reporting its third quarter earnings on Wednesday,
Speaker 2: and for more on what to expect from the AI heavyweight,
Speaker 2: We're joined by kuon John Savanni, Bloomberg Intelligence Senior semiconductor
Speaker 2: analysts Coon, John, thank you so much for joining us.
Speaker 3: It looks like all the stars.
Speaker 2: Have aligned for Nvidia, now the most valuable company on
Speaker 2: the planet, a market cap three and a half trillion dollars.
Speaker 2: So what are you expecting from its Q three results.
Speaker 2: It's first as a member of the Dow Jones Industrial average.
Speaker 6: Yeah, we expect nothing different this time, like we have
Speaker 6: seen over the last almost eight quarters. Now we again
Speaker 6: expect a very strong beaten race. Our call on that
Speaker 6: is a likelihood of the magnitude of the beaten race
Speaker 6: to be higher than what we've seen in the last
Speaker 6: two quarters. You know, in Q three and Q four
Speaker 6: Blackwell was supposed to RAM and they had some delay
Speaker 6: which has allowed its existing Hopper product line to expand.
Speaker 6: And we have seen no signs of slowing demand and
Speaker 6: adoption for Hopper right now in three Q and four
Speaker 6: Q until the large cloud customers and hyperscalers really eagerly
Speaker 6: wait for the Blackwell shipments in twenty twenty five.
Speaker 2: Well, we know about demand for those Hoppers, the H
Speaker 2: two hundred accelerators. How about hardware software data center services.
Speaker 2: Are there any weaknesses for Nvidia? And as you said
Speaker 2: about that delay in the Blackwells supply chain issues, have
Speaker 2: they all been settled down?
Speaker 6: From all of our channel checks and supply checks, it
Speaker 6: seems most, or if not all, black Well supply chain
Speaker 6: issues have been settled down. We have heard that some
Speaker 6: customers are starting to get the shipments as early as
Speaker 6: the end of this year, so that's a very promising
Speaker 6: good news. And a lot of other large customers are
Speaker 6: preparing to accept shipments starting in one queue, so that
Speaker 6: suggests there's no more major issues. There will be, however,
Speaker 6: Blackwell will be supply constraint as was Hopper in its
Speaker 6: initial ramp.
Speaker 2: Well, let me ask you, now that Hopper has about
Speaker 2: ninety percent of the market for these types of accelerators,
Speaker 2: what will Blackwell mean for Nvidia? And as you said,
Speaker 2: they're ramping up production now you expect deliveries this quarter
Speaker 2: next quarter to really speed up.
Speaker 3: What will that mean for the company.
Speaker 6: Yeah, So when you look at in terms of market
Speaker 6: share in GPUs for in media, you know they started
Speaker 6: out with almost close to like ninety ninety seven ninety
Speaker 6: eight percent on a revenue basis, and slowly you know,
Speaker 6: they're trickled down to close to I would say low nineties,
Speaker 6: if not nineties. We think Blackwell will actually stop that,
Speaker 6: won't really call it share laws, but actually increase those number.
Speaker 6: You know, Blackwell, especially the cluster of GPUs using their
Speaker 6: envi link technology has really up their game if you
Speaker 6: can even believe that's possible, and there is no other
Speaker 6: competent of end to end product out there, so actually
Speaker 6: that increases their motive, even makes the share more defensible.
Speaker 2: And they sell to the big East. There's Meta, Microsoft, Alphabet,
Speaker 2: all of them big buyers. What about the competition though,
Speaker 2: I mean we've heard Apple, Amazon now making their own
Speaker 2: AI accelerators, their own GPUs. How does that affect Nvidio
Speaker 2: or does it at all?
Speaker 6: I mean it does look in terms of long term
Speaker 6: and in terms of the size of opportunity, it does
Speaker 6: affect A six which are the chips that these customers
Speaker 6: designed for themselves, which are called you know, those are
Speaker 6: the largest risk to Nvidia because frankly, there is no
Speaker 6: other sort of semiconductor company which is a huge risk
Speaker 6: to them. So that is definitely a large risk. All
Speaker 6: of these you know, its largest buyers have already started
Speaker 6: to adopt their some of them their own A six
Speaker 6: in a lot of volume. There's also a possibility like
Speaker 6: someone like let's say Amazon, who has successfully using their
Speaker 6: A six for a while now, are have also started
Speaker 6: to offer those to their own cloud customers as an
Speaker 6: alternative to Nvidia's GPUs that are running in Amazon's cloud,
Speaker 6: So that is definitely a risk. However, this the AA rarely,
Speaker 6: we think is in the early innings. What it means is,
Speaker 6: as of this point, neither their customers, their direct customers
Speaker 6: are slowing down the buying our media chips. Neither are
Speaker 6: their customers customers are slowing down using of Nvidia chips.
Speaker 6: So in the near term you might see both in
Speaker 6: Vidia's GPUs and A six continue to grow significantly cause
Speaker 6: because there's a lot of demand appetite. But once this
Speaker 6: sort of demand rarely matures, that is when we'll really
Speaker 6: see that fight for each dollar spend.
Speaker 3: Wow.
Speaker 2: And there's no end, no view right now of when
Speaker 2: that will happen, that slow down, not yet anyway.
Speaker 6: No, we're I mean, we keep that's the biggest question
Speaker 6: we get, right and we keep a very close eye
Speaker 6: on it every quarter. And as we have seen from
Speaker 6: Q three earnings from most of its largest customers, most
Speaker 6: of the enterprise. The appetite has actually increased, if you
Speaker 6: might even believe that in twenty twenty five looks like
Speaker 6: another recorder in terms of CAPEX spend for these AI
Speaker 6: GPUs and hardware and unbelievable.
Speaker 2: Now we know all these other companies, these big tech companies,
Speaker 2: small tech companies.
Speaker 3: Where they're putting.
Speaker 2: Their CAPEX is in AI. Where is Nvidia putting their capex?
Speaker 6: Well, yeah, so you know since the launch of its
Speaker 6: first sort of aserver GPUs, which was called the MPa
Speaker 6: product line. So, first of all, in media, as a
Speaker 6: fablus semicinetor company, what it means is does not manufacture
Speaker 6: or produce its own shifts. So usually these fablust companies
Speaker 6: do not spend a lot in CAPEX. They spend a
Speaker 6: lot more in op x. Their CAPEX is generally just
Speaker 6: you know, having test equipments, packaging equipments, and just R
Speaker 6: and D equipments needed to develop their products and their chips.
Speaker 2: Well, Nvidia third quarter earnings out this Wednesday are thanks
Speaker 2: to Kon John Sobonnie Bloomberg Intelligence senior semiconductor analyst. We
Speaker 2: move next to a look at the uneven US housing
Speaker 2: market with existing sales for the month of October that
Speaker 2: is out this Thursday. Also, what earnings from Home Depot
Speaker 2: last week and from Low's this Tuesday tell us about
Speaker 2: the US housing market. And for more we're joined by
Speaker 2: Drew Redding, Bloomberg Intelligence US home building analyst. Drew bottom line,
Speaker 2: existing home sales not doing well, on track for the
Speaker 2: worst year since twenty ten. That's according to the National
Speaker 2: Association of Realtors. So what gives and what are you
Speaker 2: expecting for the month of October.
Speaker 7: So we do think we could see some improvement in
Speaker 7: existing home sales in October, and that's really reflective of
Speaker 7: the more favorable mortgage rate environment that we had during September.
Speaker 7: Remember these are contract closing, so there's typically a thirty
Speaker 7: to sixty day like from when a deal is signed.
Speaker 7: That being said, the date is going to be stale
Speaker 7: before it even comes out. I mean the rate when
Speaker 7: a thirty year mortgage has gone from the lowes six
Speaker 7: percent range in September to above seven percent in just
Speaker 7: a matter of weeks. Despite the FED cutting rates, the
Speaker 7: total seventy five basis points, and we've seen demand EBB
Speaker 7: and flow with these fluctuations. So we think you could
Speaker 7: see some improvement reflecting September, but like we said, we
Speaker 7: think it's going to be stale and there's going to
Speaker 7: be pressure going forward. If we zoom out just a
Speaker 7: little bit, look at the bigger picture. Existing home sales
Speaker 7: continue to sit below a four million analyzed rate, and
Speaker 7: current activity is the lowest in over a decade, and
Speaker 7: that really afflects the affordability picture, which continues to hover
Speaker 7: near historically at the levels.
Speaker 2: I mean those record high prices on homes, mortgage rates
Speaker 2: as you said back, you know, near seven percent, but
Speaker 2: also the cost of home ownership, right insurance, maintenance, lawn care,
Speaker 2: upgrades for furniture, and more.
Speaker 7: Yeah, it's a good point, and it's a combination of
Speaker 7: all those factors. And I think you hit the nail
Speaker 7: on the head when you mentioned prices, because mortgage rates
Speaker 7: get a lot of attention, particularly when we pay such
Speaker 7: close attention to what the FED is going to do.
Speaker 7: But home prices are up over fifty percent prior to
Speaker 7: the pandemic, and payments have become increasingly disconnected from incomes.
Speaker 7: We did an analysis that shows that property values we
Speaker 7: need to fall about thirty percent for monthly payments relative
Speaker 7: to incomes to return to historical levels. So we're not
Speaker 7: saying that you're going to see that type of decline
Speaker 7: at the national level in the near term, but I
Speaker 7: think it illustrates the problem. So we're going to need
Speaker 7: some combination of you know, maybe prices coming down a bit,
Speaker 7: rates moderating, and then further income growth in order to
Speaker 7: get things headed in the right direction. And it's probably
Speaker 7: going to take some time.
Speaker 2: Yeah, I mean, besides what we saw in two thousand
Speaker 2: and eight, what can bring the price of these homes
Speaker 2: to a more reasonable level.
Speaker 7: Well, I think one thing you're starting to see is
Speaker 7: that we're having more inventory come to market. You know,
Speaker 7: the lack of resale inventory has been one of the
Speaker 7: key themes really over the last several years, and it's
Speaker 7: been one of the reasons why the new home market
Speaker 7: has done so well. But if we look in some
Speaker 7: markets around the country, in Texas and in Florida, we're
Speaker 7: starting to see inventory levels which are approaching or exceeding
Speaker 7: those in twenty nineteen. And it's due to the fact
Speaker 7: that you have weaker demands, so homes are sitting on
Speaker 7: the market longer and you also have more starting to
Speaker 7: come to market. So as we get that build up,
Speaker 7: we think that's going to put some downward pressure on prices.
Speaker 2: So you think we're still going to see a shift
Speaker 2: in population to sun Belt states where where the last
Speaker 2: four years they've exploded in home sales, home building, or
Speaker 2: is it going to even off other parts of the
Speaker 2: country maybe.
Speaker 7: Well, I think that's still where you're going to see
Speaker 7: the population over time continue to grow. That's where, at
Speaker 7: least on a relative basis, affordability is. That's where a
Speaker 7: majority of the jobs are compared to some of the
Speaker 7: slower markets in the Midwest and the Northeast. And that's
Speaker 7: why you see that the builders continue to grow there.
Speaker 7: That's where they continue to expand their communities and purchase
Speaker 7: more land because we do think that, you know, bigger
Speaker 7: picture and longer term, that's where a lot of the
Speaker 7: growth in the country will be.
Speaker 3: Well, let's hope we see more. Hey, I want to
Speaker 3: pivot to last week.
Speaker 2: Now, we got home depots earnings better than foregasts, even
Speaker 2: though sales actually down again. That boost and sales though
Speaker 2: mostly for the wrong reason on storms and and you know,
Speaker 2: and extended warmer weather what does that tell us about
Speaker 2: the market, the housing market, And you know, I look ahead,
Speaker 2: if you can to Low's earnings, is it going to
Speaker 2: tell us the same thing this week?
Speaker 7: Yeah, So starting with Lows, we're looking for a low
Speaker 7: single digit decline in same store sales, which would be
Speaker 7: the eighth straight quarter of declining seam store sales. You know,
Speaker 7: there could be some upside to the numbers based on
Speaker 7: what we did hear from Home Depot. As you mentioned,
Speaker 7: we've had warm, dry weather across you know, most of
Speaker 7: the country for the last several months, and that's provide
Speaker 7: a better than expected lift to some of the seasonal
Speaker 7: and outdoor categories, you know, and you also pointed to
Speaker 7: the hurricane activity. Home Depot called out a two hundred
Speaker 7: million dollar benefit related to the storms, you know, as
Speaker 7: they sold more items such as you know, Lombard generators,
Speaker 7: and that contributed about fifty basis points seam store sales. Now,
Speaker 7: we think Lows could see an even barre lift from
Speaker 7: the storms just given their exposure to some of the
Speaker 7: impacted markets. They've got about twenty five percent of their
Speaker 7: store base in those Southern states compared to about eighteen
Speaker 7: percent for Home Depot. But you know, stepping back when
Speaker 7: we think about the core business. While it does appear
Speaker 7: to be maybe bouncing along the bottom and stabilizing a
Speaker 7: little bit, and you know, comps will certainly be easier
Speaker 7: in coming quarters, there's still some headwinds out there. You have,
Speaker 7: you know, consumers who continue to grapple with the cumulative
Speaker 7: impact of inflation. Over the last couple of years, both
Speaker 7: companies have called out more cautious consumers due to economic uncertainty.
Speaker 7: And as we've discussed, housing activity is extremely depressed. You've
Speaker 7: got you know, volumes at the lowest level and over
Speaker 7: a decade, there's still some difficulties out there for the industry.
Speaker 2: Lows Q three earnings out on Tuesday, October. Existing home
Speaker 2: sales out on Thursday. Our thanks to Drew Redding, Bloomberg
Speaker 2: Intelligence US home building analysts, and coming up on Bloomberg
Speaker 2: day Break weekend, we'll look ahead to the Group of
Speaker 2: Twenty Leaders summit in Rio de Janeiro. I'm Tom Busby,
Speaker 2: and this is Bloomberg. This is Bloomberg Daybreak weekend, our
Speaker 2: global look ahead at the top stories for investors in
Speaker 2: the coming week. I'm Tom Busby in New York. Up
Speaker 2: later in our program will look ahead to the pboc's
Speaker 2: upcoming great Decision. But first G twenty leaders gather in
Speaker 2: Rio de Janio, Brazil, this Monday and Tuesday for what'll
Speaker 2: surely be US President Joe biden swansong as focus shifts
Speaker 2: to President elect Trump's return now, despite the threat of
Speaker 2: Trump tariffs dealing with a more volatile White House.
Speaker 3: For Europe, the.
Speaker 2: Issue of top concern is Ukraine. For more, Let's go
Speaker 2: to London and bring in Bloomberg Daybreak Europe anchor Caroline
Speaker 2: Hepgar Tom.
Speaker 4: The geopolitical landscape has already shifted radically as the world
Speaker 4: awaits a Trump white House and Republican control of the
Speaker 4: US government. The Biden administration is rushing aid to Ukraine
Speaker 4: in its final weeks in power, with US Sector of
Speaker 4: State Ashley blinkn say that every dollar we have at
Speaker 4: our disposal is being pushed to Ukraine, but others are
Speaker 4: getting cold feet, like South Korea having second thoughts about
Speaker 4: the possibility of sending weapons directly to Ukraine. Now, the
Speaker 4: President elect pledged on the campaign trail to end the
Speaker 4: war within twenty four hours by getting Russia and Ukraine
Speaker 4: to negotiate in a moment, I'm going to get the
Speaker 4: view on what to expect from the group of twenty
Speaker 4: leaders who are meeting in Brazil with Bloomberg Sylvia Westall.
Speaker 4: But first I wanted to bring you two perspectives on
Speaker 4: these security challenges now facing Europe. The former NATO Secretary
Speaker 4: General Jen Stoltenberg has been discussing this with Bloomberg's farcin
Speaker 4: in Laqua. She asked him about Donald Trump's claim that
Speaker 4: he could end the war in Ukraine in a day.
Speaker 8: The quickest way to end the war is to do
Speaker 8: so war, but that will not bring peace, That will
Speaker 8: bring occupation of Ukraine, and it will make the whole
Speaker 8: world more dangerous because a message tend to pressent Purteen
Speaker 8: but also the other authoritarian leaders is that when they
Speaker 8: use force, when they invade in all the country, they
Speaker 8: get what they want. So it's in our security interest
Speaker 8: to ensure that the Ukraine prevails. So the challenge is
Speaker 8: to end the war in a way that doesn't need
Speaker 8: you occupation, but to end the war in a way
Speaker 8: where Ukraine prevails as a suffiate, independent nation. At some
Speaker 8: stage there has to be some kind of political negotiated solution.
Speaker 8: But you know, what happens around the negotiating table is
Speaker 8: so close a link to the strength on the battlefield.
Speaker 8: So if you want a negotiated solution to the war
Speaker 8: where you Ukraine prevails as a democratic state in Europe,
Speaker 8: then we need to provide military support to Ukraine.
Speaker 9: So what does that look like, that solution And is
Speaker 9: there a danger that the US actually you know, manages
Speaker 9: to cobble something together, some kind of agreement without the
Speaker 9: guarantee from the US side of Ukraine's sovereignty.
Speaker 8: Well, it's for Ukrainians to decide what will be would
Speaker 8: be acceptable solution, but there has to be at least
Speaker 8: two elements. One is a line agreed. But second, when
Speaker 8: such a line is agreed, then we need to ensure
Speaker 8: that actually it stops there because we have agreed or
Speaker 8: the Ukrainians have agreed lines with Russia before when they
Speaker 8: annexed Cramea. I'm back in twenty fourteen, we had something
Speaker 8: called minskwom there was a line. Then Russia violated that
Speaker 8: and we've got Minsk to a line further west, and
Speaker 8: then the Russian waited for seven years and invade on
Speaker 8: the full scale Ukraine. So we cannot have what theyre
Speaker 8: called Minsk Tree, yet another line which is not respected.
Speaker 8: So when a line is agreed, we need some kind
Speaker 8: of guarantee that Russia doesn't continue after reorganizing their troops
Speaker 8: and THEREFO. We need either to arm the Ukrainian so
Speaker 8: they can deter your future reggression themselves, and or some
Speaker 8: kind of security guarantees. And NATO membership is of course
Speaker 8: the ultimate security garante for Ukraine.
Speaker 4: That was the former NATO boss ya In Stoltenberg speaking
Speaker 4: to Bloomberg's farc In Laqua. Let's get another view now
Speaker 4: from Finland, which joined NATO after Russia invaded Ukraine. The
Speaker 4: Finnish President Alexander Stubb has been speaking into Bloomberg's Jumana
Speaker 4: Bisecchi after his call with the US president elect. She
Speaker 4: asked him about his expectations for the second Trump presidency.
Speaker 10: Of course, focused very much on US foreign policy under Trump,
Speaker 10: and I think his agenda is quite clear.
Speaker 3: He talks about ending the war.
Speaker 10: In Ukraine, so we discussed that, it talks about ending
Speaker 10: the war in the Middle East. He talks about the
Speaker 10: US as a competitor to China.
Speaker 3: We talked about that.
Speaker 10: He talked about Europe taking more responsibility for its own
Speaker 10: defense and security. We talked about that, so I think
Speaker 10: it's pretty clear speak when you talk about American foreign
Speaker 10: posit Then of course there will be challenges. You know,
Speaker 10: tariffs can be a challenge, climate issues can be a challenge.
Speaker 10: But the truth is that throughout history of the United
Speaker 10: States and Europe have usually seen eye to eye, and
Speaker 10: I'm sure we'll be doing that again in the next
Speaker 10: four years.
Speaker 11: Do you expect perhaps this next turn to be less
Speaker 11: combative towards Europe.
Speaker 10: I think the United States needs Europe, but Europe needs
Speaker 10: to understand that the United States has changed. That means
Speaker 10: that we need to take more responsibility for what we do,
Speaker 10: for instance, in terms of security. And when that happens,
Speaker 10: I think the United States, whose number one competitor is China,
Speaker 10: will look at Europe and say, okay, about twenty twenty
Speaker 10: five percent of our allies are right there in Europe.
Speaker 10: Let's play ball with those guys.
Speaker 11: Can I just pick up on Ukraine. I know you
Speaker 11: spoke about it with President Trump, and he seems to
Speaker 11: think that he can secure peace deal between Russia and Ukraine.
Speaker 11: If that does happen, what is the likelihood that it's
Speaker 11: done in a way that's just unfair for Ukraine.
Speaker 10: Well, in my mind, Ukraine needs four things. One is territory,
Speaker 10: and here we don't know where things are going to settle.
Speaker 10: The second one is security guarantees, so probably territory and
Speaker 10: security guarantees in these negotiations will go hand in hand,
Speaker 10: and of course in my mind eventually EU membership and
Speaker 10: NATO membership. The third one is justice, so Russian war
Speaker 10: criminals indicted. And then the low hanging fruit is actually
Speaker 10: number four, which is reconstruction.
Speaker 3: It's difficult to say at this stage, but I.
Speaker 10: Think we in Europe and the rest of the world
Speaker 10: needs to understand that Donald Trump is very serious about
Speaker 10: getting a piece deal sooner rather than later. I have
Speaker 10: myself said that there's a window of opportunity for these
Speaker 10: negotiations between the election and the inauguration day. Let's see
Speaker 10: what happens.
Speaker 4: That was Finland's President Alexander Stubb speaking to Bloomberg's Jimana
Speaker 4: Bisecchi at the COP twenty nine Climate conference in Baku
Speaker 4: in Azerbaijan. More than two and a half years into
Speaker 4: the war, Ukraine has steadily lost territory to Russia. There
Speaker 4: are preliminary plans for a meeting between the Ukrainian President
Speaker 4: Vlodomi Zelenski and President elect Trump, according to Kiev's top diplomat,
Speaker 4: but no timing. Bloomberg's managing editor for Russia, the Middle East,
Speaker 4: and Africa Economy and Government, Sylvia Westall, has been taking
Speaker 4: me through what to expect from the Group of twenty
Speaker 4: gathering in Latin America and how much Ukraine will feature.
Speaker 12: It's an interesting G twenty, and it's obviously a big
Speaker 12: showcase for Lula. It's always sort of, you know, the
Speaker 12: leaders try and shape kind of what they want this
Speaker 12: to be about. I mean, Brazil's made it quite clear
Speaker 12: that they want this summit not to really focus on
Speaker 12: things like wars, Russia's invasion of Ukraine, the current conflicts
Speaker 12: in the Middle East, and they want to look at
Speaker 12: things like trade and climate and finance. But of course,
Speaker 12: because of world events, other things are going to dominate,
Speaker 12: and one of those things, as you mentioned before, is
Speaker 12: Donald Trump. Of course, so you've got Biden and She
Speaker 12: planning to meet, but really the focus is on Trump
Speaker 12: and what happens next. So in that sense, it's a
Speaker 12: kind of chickyd twenty for Brazil to handle because all
Speaker 12: the kind of topics it wants to focus on are
Speaker 12: kind of being overtaken by events, both you know, in
Speaker 12: the US and elsewhere in the world.
Speaker 4: Ukraine's European allies have been concerned that Trump will pull
Speaker 4: the plug on the embattled country and push the burden
Speaker 4: to Europe. Do we expect a major policy shift?
Speaker 12: Well, Ukraine at the moment, according to you know, some
Speaker 12: of the officials we've talked to in preparations for the
Speaker 12: G twenty, isn't really figuring very hard on the agenda
Speaker 12: again because Brazil doesn't really want it to and we
Speaker 12: know that. You know, there have been discussions each D
Speaker 12: twenty whether presidents Zelenski will actually turn up or do
Speaker 12: a virtual address. It doesn't look like that's going to
Speaker 12: happen this one. You know, in the last G twenty,
Speaker 12: Ukraine was a very prickly topic, and so you know,
Speaker 12: Ukraine is very worried looking at the G twenty and
Speaker 12: further on into the Trump era that Trump, you know,
Speaker 12: will apply pressure on it to give up land in
Speaker 12: peace talks with Russia and cut back on this financial
Speaker 12: and military support. I think that risk is there, and
Speaker 12: you know, that's happening as you know, Russia's making this
Speaker 12: sort of important headway on the ground in Ukraine. So
Speaker 12: Russia feels it's in a stronger position right now. And
Speaker 12: you know, the big question is whether you know Ukraine,
Speaker 12: you know will well, whether the US will eventually allow
Speaker 12: Ukraine to strike deeper into Russian territory with Western arms.
Speaker 12: But I do think actually on the Russian side as well,
Speaker 12: there is concern about what that Trump era might bring.
Speaker 12: So I think the G twenty probably isn't going to
Speaker 12: offer and many clues as to where Ukraine's where that
Speaker 12: is going, but it's definitely going to highlight some of
Speaker 12: the concerns that countries involve have.
Speaker 4: In terms of Trump's stance. What about the Middle East
Speaker 4: as well, obviously hoping that Trump's returned to the White
Speaker 4: House will help in terms of cooperation for them in
Speaker 4: the Middle East on diplomacy and other issues. Again, how
Speaker 4: much will that features, you say, the hosts of the
Speaker 4: G twenty gathering sort of don't really want conflicts to dominate.
Speaker 4: How much will we hear about the Middle East?
Speaker 12: Mm hmm, Well, I think it was going to have
Speaker 12: to come up because it is you know, this you know,
Speaker 12: still going on, and this the conflict's spread now into
Speaker 12: Lebelon with the violence between Hezbolla and Israel. I think,
Speaker 12: you know, as as we look forward to to the
Speaker 12: Trump administration. Trump applied this maximum pressure policy towards Iran
Speaker 12: and when he was last in the White House, and
Speaker 12: that definitely stoked tensions in the region. And so the
Speaker 12: expectation is that that's coming up. So I think there's
Speaker 12: gonna be a lot of you know, looking forward, you know,
Speaker 12: towards questions about whether there can be any kind of
Speaker 12: cease fire between Israel and Hezbolla, what can be happening next,
Speaker 12: and this quite big question mark over where that policy
Speaker 12: will head in the US and whether you know, these
Speaker 12: appointments of these sort of very sort of pro Israel
Speaker 12: members to Trump's administration will mean that that kind of
Speaker 12: aggravates tensions in the Middle East and alienates Arab countries
Speaker 12: as well.
Speaker 4: Russia's Varn Minister Sergei Lavrov will be attending the summit
Speaker 4: in Brazil on Monday and Tuesday, representing Russia, not Putin himself.
Speaker 4: Why and what will be Russia's role here?
Speaker 12: Sure, so it's very difficult for Putin to turn up
Speaker 12: pop up in places around the world because of this
Speaker 12: International Criminal Court arrest warrant for war crimes due to
Speaker 12: the invasion of Ukraine. He also has skipped several meetings
Speaker 12: you know, elsewhere in the world that included in South Africa.
Speaker 12: South Africa politely asked Putin not to turn up because
Speaker 12: these countries like Brazil as well, would be obligated to
Speaker 12: arrest him under those rules of the ICC. So you know,
Speaker 12: that's Lavov is usually the person who takes his place.
Speaker 12: You know, Russia has been using these international events like
Speaker 12: the Bricks that it hosted earlier this year in Russia
Speaker 12: and elsewhere to show that Russia is not isolated from
Speaker 12: the world, though of course, if Putin can't turn up
Speaker 12: to these events, it does showcases isolation. So I think
Speaker 12: Russia will be using that as a platform to justify
Speaker 12: its invasion of Ukraine, explain its perspective on what it
Speaker 12: thinks will happen next. And it's definitely Russia's definitely in
Speaker 12: a position of a bit more strength right now because
Speaker 12: of what's happening on the battlefield and the expectation that
Speaker 12: despite the big uncertainties about what Trump will bring that
Speaker 12: his stance on Ukraine will perhaps be beneficial to Russia.
Speaker 4: That was Sylvia west Or, Bloomberg's managing editor for Russia,
Speaker 4: the Middle East and Africa, Economy and government. European Union
Speaker 4: leaders are trying to work out whether they can keep
Speaker 4: the Ukrainian war effort going if Trump decides to shut
Speaker 4: off support from the US. Certainly much in the world
Speaker 4: is being reconsidered after the presidential election, and potentially with
Speaker 4: big consequences for Europe. I'm Caroline Hepge here in London.
Speaker 4: You can catch us every weekday morning for Blueberg Daybreak.
Speaker 4: You're at beginning at six am in London. That's one
Speaker 4: am on Wall Street. Tom.
Speaker 2: Thank you, Caroline, and coming up on Bloomberg day Break
Speaker 2: weekend to look ahead to a rate decision this week
Speaker 2: from the PBOC. I'm Tom Busby and this is Bloomberg.
Speaker 2: This is Bloomberg day Break Weekend, our global look at
Speaker 2: the top stories in the coming week from our Daybreak
Speaker 2: anchors all around the world. This week of big decision
Speaker 2: on rates from the People's Bank of China. For more,
Speaker 2: let's go to Daybreak Asia podcast host Doug Krisner.
Speaker 3: Tom.
Speaker 1: Since late September, the Chinese government has launched coordinated support
Speaker 1: focused on lifting economic growth and fighting deflation, and recently
Speaker 1: taxes for both home buyers and property developers have been
Speaker 1: cut as the government tries to put a floor under
Speaker 1: falling prices. Now in the week ahead, the Chinese Central
Speaker 1: Bank will set its rate policy. For a preview, I'm
Speaker 1: joined by Eric Ju, who covers China for Bloomberg Economics.
Speaker 1: Eric joins us from our studios in Hong Kong. Eric,
Speaker 1: thanks for your time. We recently got the inflation data
Speaker 1: for China, and I'm going to ask you to start there.
Speaker 1: Consumer prices, for example, showing their first pickup in the
Speaker 1: core rate since April, and I was reading some of
Speaker 1: your analysis. You called it an encouraging sign in an
Speaker 1: otherwise weak report. Perhaps a little more troubling the fact
Speaker 1: that factory gay deflation deepened. Is this something the PBOC
Speaker 1: must consider at its next meeting.
Speaker 13: I think PBOC has signaled recently that, you know, the
Speaker 13: price has become more important for their partitition. I think
Speaker 13: one of their targets is, of course, except for you know,
Speaker 13: supporting the recovery, they really want to you know, get inflation.
Speaker 3: Get it.
Speaker 13: Call me out of the risk of deflation. So I
Speaker 13: think they would try you know, their best, you know,
Speaker 13: to try to boost the prices up. But I think
Speaker 13: PBOC alone is unable to fulfill that goal. We do
Speaker 13: need you know, other department like especially physical policy also
Speaker 13: to work their way. So it's it's not only the
Speaker 13: pibis's own job.
Speaker 1: What about the stimulus measures that Beijing has already rolled out,
Speaker 1: how would you evaluate them?
Speaker 13: First of all, it's a big shift. It's not only
Speaker 13: from our economics view, we also you know, chat with investors,
Speaker 13: with clients and all the people. Most of people think
Speaker 13: since late September there is a big party shift, which
Speaker 13: signals that the government is not now willing, you know,
Speaker 13: really willing to fix the economic issues. They have rolled
Speaker 13: out you know, a couple of different measures, and I
Speaker 13: think one encouraging science. They also started to you know,
Speaker 13: address some structural issues, not only you know, short term
Speaker 13: cyclical things like you know, local government death swap. They're
Speaker 13: also trying to also fix some oversupply in the housing market.
Speaker 13: So they start to address those problems. But I think
Speaker 13: one remaining concern is still soon they can you know,
Speaker 13: really deliver those policies. They have made a lot of announcement.
Speaker 13: They have committed to do this, commit to do that.
Speaker 13: But I think on the ground the people were still
Speaker 13: you know, looking for you know, it's special for local governments.
Speaker 13: How are they going to really deliver those policies. I
Speaker 13: think the October data has shown some initial rebound, but
Speaker 13: I think that's more related to some sentiment.
Speaker 1: This is coming at a very interesting time because we
Speaker 1: have a new administration in the US. It will be
Speaker 1: taking office in January when Donald Trump is sworn in
Speaker 1: for the second time. One of the things that he
Speaker 1: has discussed mightily is tariffs on imported goods from China.
Speaker 1: Now we know that the export sector has been a
Speaker 1: bright spot for the Chinese economy. To what extent is
Speaker 1: there risk here right now with some more tariffs.
Speaker 13: I think it's a real risk, and it can be
Speaker 13: a very big risk because of course we don't know
Speaker 13: how the details yet, the timetable, so how Trump is
Speaker 13: going to start his terriiff, But definitely we think we'll
Speaker 13: look we're expecting probably another the second you know, the
Speaker 13: trade war in his second term. But what's the only
Speaker 13: thing uncertain is whether we're going to get you know,
Speaker 13: sixty percent teriff like Trump had said during his campaign.
Speaker 13: So if that's sixty percent, I think that will be
Speaker 13: a very big risk because we have some model that
Speaker 13: predicting a sixty percent tariff can essentially, you know, reduce
Speaker 13: China US trade basically, you know, near to zero. So
Speaker 13: that's a very big shot to economy. But in the end,
Speaker 13: we think probably we won't get that as high as that.
Speaker 13: You know, there still will be negotiation, there will still
Speaker 13: be bargaining. So the final result is still highly uncertain
Speaker 13: at this point. But we think China will be you know,
Speaker 13: preparing for the worst scenario, and they're also you know,
Speaker 13: we're planning for what kind of retaliation China will do,
Speaker 13: what kind of solutions they can do to you know,
Speaker 13: try to mitigate, to reduce the tariffing pat as much
Speaker 13: as you can.
Speaker 1: Yeah, there's been a lot of questioning as to whether
Speaker 1: or not this is really the beginning of the negotiating strategy.
Speaker 1: Do you think there is room between Washington and Beijing
Speaker 1: to negotiate a trade policy that benefits both parties equally?
Speaker 3: I think so.
Speaker 13: I think so. I think there's still room for negotiation
Speaker 13: at least, you know, China probably compared to the first
Speaker 13: time Trump poarding office, China would have no more tools,
Speaker 13: you know, to retaliate, including more exports control, you know,
Speaker 13: and those rare materials. China has most of the outputs.
Speaker 13: So I think also considering that Trump has to consider
Speaker 13: what's a tariff impact on the domestic economy as well, Right,
Speaker 13: if you impose such a high tariff, that would definitely
Speaker 13: also influence your domestic consumers. So I think at the
Speaker 13: end Trump's side will also do some calculation, right, kinds
Speaker 13: of goods wanting post that will have the minimum impact
Speaker 13: on my own colomy. And at the same time, China
Speaker 13: would also, you know, try to negotiate you to try
Speaker 13: to have something on a table. Tellian Trump, so what
Speaker 13: we're going to retaliate if you do this, if you
Speaker 13: do that, and let's see what negotiation can go on.
Speaker 1: Eric, thanks so much for being with us. S Bloomberg's
Speaker 1: Eric jew who covers China for Bloomberg Economics. We move
Speaker 1: next to geopolitics and the upcoming G twenty summit in
Speaker 1: Riodesian Narro, Brazil. The list of attendees reflects major changes
Speaker 1: in leadership among several member nations. Mexico's new president Claudia
Speaker 1: Schinbaum will be there, as will Britain's new Prime Minister
Speaker 1: Keir Starmer. A weekend German Chancellor all Off Schultz will attend,
Speaker 1: along with the Lane Duck, US President Joe Biden and
Speaker 1: the shadow of his successor, President elect Donald Trump. I
Speaker 1: think it's fair to say will loom large for a
Speaker 1: closer look at what we might expect. We're joined by
Speaker 1: Daniel ten Kid.
Speaker 3: He is Asia.
Speaker 1: Ecogov, executive editor for Bloomberg News. Dan joins us from
Speaker 1: our studios in Hong Kong. The G twenty I think
Speaker 1: represents some eighty five percent of global GDP seventy five
Speaker 1: percent of world trade. It doesn't appear there is going
Speaker 1: to be a group that could challenge the G twenty,
Speaker 1: And I'm thinking of the recent summit of the Bricks
Speaker 1: Plus Nations hosted by Vladimir Putin in Kazan, Russia. Is
Speaker 1: it safe to say that there's not going to be
Speaker 1: a rival for the G twenty for some time?
Speaker 14: Well, the G twenty really brings these various groups together.
Speaker 14: So you have the G seven on the one hand,
Speaker 14: which is the US and its allies basically, and then
Speaker 14: you have the Bricks Plus Agreement which is grouping, which
Speaker 14: is expanding persistently, but China is really in Russia are
Speaker 14: both trying to use that group to advance their own
Speaker 14: interest and use it as a counterweight to the G
Speaker 14: seven and the US led world order. Now, the G
Speaker 14: twenty kind of brings these groups together in a lot
Speaker 14: of ways and is the only forum really that has
Speaker 14: all of them in one place, so they can really
Speaker 14: haggle over kind of the tough issues facing the globe
Speaker 14: at any given time.
Speaker 1: I was reading a piece in Foreign Affairs magazine, and
Speaker 1: one line from this piece struck me. The essence of
Speaker 1: Trump's approach to foreign policy is naked transactionalism, and that
Speaker 1: remains unchanged. Is that a fair statement?
Speaker 3: Yeah?
Speaker 14: I mean we're already hearing about countries trying to say, Okay,
Speaker 14: what can we give Trump? What do we have to offer?
Speaker 14: And usually that involves what can we buy from the US?
Speaker 14: Can we buy more energy? Can we buy more corn
Speaker 14: agricultural goods? You know, you need to come in with
Speaker 14: some sort of offer with Trump. Now, there is kind
Speaker 14: of a question about whether Trump's view of tariffs has changed,
Speaker 14: and there's first term, he was talking a lot about
Speaker 14: the US trade deficit, and I think that is top
Speaker 14: of mind for Trump. But he's also talked about tariffs
Speaker 14: as a way to generate revenues in the US and
Speaker 14: to lower investment.
Speaker 3: So that's a big question.
Speaker 14: Is he going to come right out on day one
Speaker 14: with sixty percent tariffs on China and twenty percent tariffs
Speaker 14: on the rest of the world.
Speaker 1: One of the things that I think that G twenty
Speaker 1: will have to deal with is the issue of Ukraine.
Speaker 1: The Biden administration took the lead on imposing sanctions on
Speaker 1: Russia and many Russian officials after Ukraine was invaded. Now
Speaker 1: we have North Korean troops joining Russian forces near the
Speaker 1: border with Ukraine. Is this going to be an important
Speaker 1: pressure point that will try to get resolved at this
Speaker 1: summit or or do you think it's it's going to
Speaker 1: take some time for clarity to emerge.
Speaker 14: Well, certainly the war in Ukraine has dominated G twenty
Speaker 14: discussion since Vladimir Putin invaded in twenty twenty two, so
Speaker 14: no doubt that that will be a key talking point.
Speaker 14: The question really is how does Trump change the conversation there?
Speaker 14: Before it was kind of the G seven aligning up
Speaker 14: against Russia, primarily on how strong the language should be
Speaker 14: in condemning Russia for the invasion. Trump has promised to
Speaker 14: end the war. There's a lot of exhaustion among a
Speaker 14: lot of the countries, particularly in the Global South, to
Speaker 14: end the war, and so you might the big question
Speaker 14: would be whether you see some more conciliatory language, people
Speaker 14: talking about talks, negotiations, how do we put an end
Speaker 14: to the war. So that could be the big difference
Speaker 14: this time around.
Speaker 1: Typically, when we think of economic issues, it's the G
Speaker 1: twenty summit of finance ministers that kind of tackles those issues.
Speaker 1: But I was struck by a lot of commentary recently
Speaker 1: regarding Trump's reelection as this being another example of an
Speaker 1: anti incumbency push across a number of jurisdictions globally. When
Speaker 1: you consider that fact that may have been driven largely
Speaker 1: by dissatisfaction with the way a number of economies have
Speaker 1: been performing the stubbornness of inflation. Are economic issues beyond
Speaker 1: trade going to come up at this meeting? Do you
Speaker 1: think independent of the G twenty Finance minister's meeting.
Speaker 14: Yeah, certainly, I mean the Finance minister's meetings kind of
Speaker 14: set the table for the leaders meetings, both at APEX
Speaker 14: and at the G twenty. And if you look back
Speaker 14: at who's still around from the G seven to a
Speaker 14: few months ago, you know you'll have Biden representing the
Speaker 14: US at this meeting, both meetings, the APEC and G twenty,
Speaker 14: but he's not going to be around much longer. You
Speaker 14: have a new prime minister in Japan, you have a
Speaker 14: new prime minister in the UK. A lot of other
Speaker 14: countries have seen leadership changes. Trudeau is hanging by the
Speaker 14: ropes in Canada, so a lot of the incumbents have
Speaker 14: taken a beating this year in the year of elections,
Speaker 14: and inflation is a big reason for that. It's coming
Speaker 14: has come down of late, but voters are still struck
Speaker 14: over the past couple of years by higher prices. They
Speaker 14: see it every time they go to the grocery store,
Speaker 14: and so that's certainly going to hang over everything that
Speaker 14: they discuss this week.
Speaker 1: Dan, thanks so much for helping us set up the
Speaker 1: G twenty summit in the coming week. He's Dan ten
Speaker 1: Kate Bloomberg News Asia ECO Gov executive editor, joining us
Speaker 1: from our studios in Hong Kong. I'm Doug Prisner. Catch
Speaker 1: us weekdays for the Bloomberg Daybreak Asia podcast. It's available
Speaker 1: wherever you get your podcast.
Speaker 2: Tom, Thanks Doug, and that does it for this edition
Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning
Speaker 2: at five am Wall Street Time for the latest on
Speaker 2: markets overseas and the news you need to start your day.
Speaker 3: I'm Tom Busby. Stay with us.
Speaker 2: Top stories and global business headlines are coming up right now.