1 00:00:03,000 --> 00:00:05,480 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,480 --> 00:00:07,800 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,840 --> 00:00:10,520 Speaker 1: anchors all around the world, and straight ahead on the program. 4 00:00:10,560 --> 00:00:14,240 Speaker 1: After this week's encouraging retail sales numbers, we check in 5 00:00:14,280 --> 00:00:17,360 Speaker 1: on the health of the US consumer. I'm Tom Busby 6 00:00:17,400 --> 00:00:18,000 Speaker 1: in New York. 7 00:00:18,280 --> 00:00:21,000 Speaker 2: I'm callin Hedge here in London, where we're asking what's 8 00:00:21,120 --> 00:00:23,079 Speaker 2: next for the UK retail center. 9 00:00:23,360 --> 00:00:25,880 Speaker 3: I'm Derek Prisoner. We map out what comes next for 10 00:00:25,960 --> 00:00:26,800 Speaker 3: the Bank of Japan. 11 00:00:27,240 --> 00:00:29,760 Speaker 4: I'm Kabie Liones in Washington, where the SEC is in 12 00:00:29,800 --> 00:00:32,519 Speaker 4: the spotlight as it soon may decide whether to approve 13 00:00:32,560 --> 00:00:34,080 Speaker 4: a spotfit point ets. 14 00:00:37,159 --> 00:00:41,239 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend. The business 15 00:00:41,280 --> 00:00:44,040 Speaker 5: news you need to wrap up your week, Available on 16 00:00:44,120 --> 00:00:48,720 Speaker 5: Apple Spotify, The Bloomberg Business Happen everywhere you get your podcasts. 17 00:00:53,240 --> 00:00:55,760 Speaker 1: Good day to you. I'm Tom Busby. It's the most 18 00:00:55,800 --> 00:00:59,000 Speaker 1: wonderful time of the year for retailers anyway. So we 19 00:00:59,080 --> 00:01:01,640 Speaker 1: begin today's program with a look at the US retail 20 00:01:01,680 --> 00:01:05,400 Speaker 1: sector and the strength of the US consumer. Last week's 21 00:01:05,480 --> 00:01:09,199 Speaker 1: unexpected rise in retail sales for November. I'll welcome sign 22 00:01:09,400 --> 00:01:11,919 Speaker 1: as we enter the final shopping week of the holiday season, 23 00:01:11,959 --> 00:01:15,039 Speaker 1: and for more we're joined by economists a Stelle Oh 24 00:01:15,160 --> 00:01:20,080 Speaker 1: of Bloomberg Economics and Bloomberg Intelligence retail analyst Abigail gil Martin. 25 00:01:20,160 --> 00:01:22,560 Speaker 1: Thank you both for being here. All right, is Stelle, 26 00:01:22,600 --> 00:01:24,960 Speaker 1: We're going to start with you. After that early Christmas 27 00:01:25,000 --> 00:01:27,720 Speaker 1: gift last week from the Fed signaling several interest rate 28 00:01:27,880 --> 00:01:31,720 Speaker 1: cuts in the new year, solid jobs data, the unemployment 29 00:01:31,800 --> 00:01:33,880 Speaker 1: rate down to three point seven percent last month, and 30 00:01:34,040 --> 00:01:37,319 Speaker 1: retail sales in November up more than four percent year 31 00:01:37,360 --> 00:01:41,399 Speaker 1: over year. How is the US consumer doing right now? 32 00:01:41,600 --> 00:01:44,520 Speaker 6: Thanks Tom? Yeah, so, the US consumer right now is 33 00:01:44,560 --> 00:01:51,120 Speaker 6: still continuing their spending moment from over the summer, but 34 00:01:51,560 --> 00:01:55,120 Speaker 6: ver seeing that the consumer is still remaining under pressure 35 00:01:55,240 --> 00:01:59,680 Speaker 6: even with this week's upbeat retail sales report. And that's 36 00:01:59,720 --> 00:02:01,960 Speaker 6: because when we look under the hood of the retail 37 00:02:02,000 --> 00:02:04,480 Speaker 6: sales report, we see that most of the strength is 38 00:02:04,520 --> 00:02:09,359 Speaker 6: actually coming from non store retail sales and food services 39 00:02:09,560 --> 00:02:13,400 Speaker 6: retail sales categories. What this means is that, you know, 40 00:02:14,000 --> 00:02:18,639 Speaker 6: consumers are still very much bargain hunting online, where when 41 00:02:18,639 --> 00:02:22,440 Speaker 6: you're online you can compare prices much more easily between stores. 42 00:02:22,800 --> 00:02:26,560 Speaker 6: And also still not really purchasing big ticket items that 43 00:02:26,600 --> 00:02:30,760 Speaker 6: are sensitive to interest rates right now, So they're not 44 00:02:30,919 --> 00:02:36,280 Speaker 6: purchasing large home appliances that require more credit card spending, 45 00:02:36,560 --> 00:02:40,880 Speaker 6: and they're also not purchasing more larger electronic products at 46 00:02:40,880 --> 00:02:43,600 Speaker 6: this time of the year where you would expect more 47 00:02:44,440 --> 00:02:48,360 Speaker 6: you know, big ticket discretionary purchases. So overall, Tom, we 48 00:02:48,440 --> 00:02:52,040 Speaker 6: still think that the US consumer health is still more 49 00:02:52,120 --> 00:02:55,040 Speaker 6: fragile than it was at the very beginning of the year. 50 00:02:55,200 --> 00:02:58,560 Speaker 1: And could many consumers, especially younger ones, be kind of 51 00:02:58,639 --> 00:03:01,560 Speaker 1: hurting themselves relying a little too much on credit cards, 52 00:03:01,720 --> 00:03:04,280 Speaker 1: buy now, pay later plans for their spending habits. 53 00:03:04,360 --> 00:03:07,799 Speaker 6: Absolutely, Tom. In fact, we actually think that with the 54 00:03:07,960 --> 00:03:11,080 Speaker 6: increase in interest rates, there's a risk that you know, 55 00:03:11,200 --> 00:03:15,000 Speaker 6: household debt servings cost debt servings costs as a ratio 56 00:03:15,240 --> 00:03:18,440 Speaker 6: of income, that's, you know, the interest rate you would 57 00:03:18,480 --> 00:03:21,880 Speaker 6: have to pay on your credit card balances could rise 58 00:03:21,960 --> 00:03:25,760 Speaker 6: to at least you know, eleven or twelve percent by 59 00:03:25,919 --> 00:03:29,520 Speaker 6: year end next year, even if the labor market stays 60 00:03:29,600 --> 00:03:33,520 Speaker 6: cool and the Fed, as you know, cut may cut 61 00:03:33,560 --> 00:03:36,880 Speaker 6: interest Even if the Fed cuts interest rates as they 62 00:03:36,960 --> 00:03:41,280 Speaker 6: suggest that they might do earlier this week, and you know, 63 00:03:41,400 --> 00:03:46,240 Speaker 6: with the household debt servicing cost ratio that is roughly 64 00:03:46,320 --> 00:03:49,960 Speaker 6: eleven percent, that's the highest it's been since early twenty ten. 65 00:03:50,160 --> 00:03:54,600 Speaker 6: So we really expect that, you know, if consumers continue 66 00:03:54,640 --> 00:04:00,720 Speaker 6: to build up their credit card balances through purchases in 67 00:04:00,760 --> 00:04:05,360 Speaker 6: the holiday season, that is just you know, more debt 68 00:04:05,400 --> 00:04:07,080 Speaker 6: burden for the household ahead. 69 00:04:07,520 --> 00:04:10,840 Speaker 1: Well, that does not paint a very good picture. Abigail, 70 00:04:10,920 --> 00:04:13,600 Speaker 1: let's turn to you. How is that, you know, this 71 00:04:13,840 --> 00:04:17,560 Speaker 1: uneven recovery in the consumer spending and how does that 72 00:04:17,640 --> 00:04:19,080 Speaker 1: impact the retail sector. 73 00:04:19,279 --> 00:04:21,120 Speaker 7: You know, we weren't too surprised so that we've been 74 00:04:21,160 --> 00:04:25,640 Speaker 7: kind of saying all November we've been seeing strong holiday momentum, 75 00:04:25,720 --> 00:04:28,240 Speaker 7: as it was evident in Cyber Week numbers. You know, 76 00:04:28,279 --> 00:04:30,920 Speaker 7: we saw sales beating or in line with forecasts all 77 00:04:30,960 --> 00:04:34,479 Speaker 7: week and what we've heard from companies and retailers after 78 00:04:34,560 --> 00:04:38,080 Speaker 7: reporting three key results, you know, going into four Q 79 00:04:38,240 --> 00:04:40,960 Speaker 7: this holiday quarter, inventory is our leaner, which is going 80 00:04:41,000 --> 00:04:43,880 Speaker 7: to bode well for you know, margins because there won't 81 00:04:43,880 --> 00:04:47,719 Speaker 7: be discounts. What we've seen so far are similar to 82 00:04:47,839 --> 00:04:52,360 Speaker 7: last year, but nowhere near you know, as steep as 83 00:04:52,400 --> 00:04:55,360 Speaker 7: a few years prior. So that's really great, and retailers 84 00:04:55,400 --> 00:04:58,120 Speaker 7: are encouraged with the strong start and also the fact 85 00:04:58,160 --> 00:05:01,120 Speaker 7: that there's an extra shopping day between Thanksgiving and Christmas 86 00:05:01,160 --> 00:05:04,920 Speaker 7: this year, with Christmas actually falling on a Monday, it's 87 00:05:04,920 --> 00:05:07,560 Speaker 7: giving consumers at one extra weekend day, which is going 88 00:05:07,600 --> 00:05:11,160 Speaker 7: to be pretty important and probably also help retailer sales 89 00:05:11,240 --> 00:05:13,440 Speaker 7: kind of going into the holidays. 90 00:05:13,440 --> 00:05:15,880 Speaker 1: So well, one thing is still mentioned. I want to 91 00:05:15,880 --> 00:05:19,560 Speaker 1: go back to and Abigail, you would know this encouraging 92 00:05:19,600 --> 00:05:23,480 Speaker 1: retail sales figures for online retailers, they are getting the 93 00:05:23,640 --> 00:05:28,040 Speaker 1: bulk of this, you know, largest and spending. What can 94 00:05:28,080 --> 00:05:33,040 Speaker 1: you tell me about Amazon, which started it's holiday sales 95 00:05:33,040 --> 00:05:35,000 Speaker 1: back in October, maybe even before. 96 00:05:36,080 --> 00:05:38,640 Speaker 7: Yeah, it did, and I'm pretty sure they actually had 97 00:05:38,680 --> 00:05:42,520 Speaker 7: a couple extra days for their Black Friday sales event 98 00:05:42,600 --> 00:05:45,159 Speaker 7: this year as well, so they actually extended their deals. 99 00:05:45,400 --> 00:05:48,320 Speaker 7: But at the same time, their deals were in line 100 00:05:48,440 --> 00:05:51,359 Speaker 7: or even you know, less than last year. And we 101 00:05:51,400 --> 00:05:53,640 Speaker 7: think that's because they were spread out over a longer time. 102 00:05:53,760 --> 00:05:56,120 Speaker 7: So they're just trying to draw those sales on earlier 103 00:05:56,120 --> 00:05:58,599 Speaker 7: in the month first, you know, later now where things 104 00:05:58,640 --> 00:06:01,760 Speaker 7: are about to get congested. But yeah, the shift online 105 00:06:01,800 --> 00:06:05,239 Speaker 7: it's persisting from COVID, and we're seeing consumers really value 106 00:06:05,279 --> 00:06:08,600 Speaker 7: convenience and speed, and those are two big things that 107 00:06:08,640 --> 00:06:10,600 Speaker 7: are going to be driving holiday spending this year, and 108 00:06:10,680 --> 00:06:13,640 Speaker 7: Amazon really hits both of those on the head and 109 00:06:13,800 --> 00:06:17,320 Speaker 7: it provides that to customers, so we're not surprised. We 110 00:06:17,360 --> 00:06:20,560 Speaker 7: saw that online retailers were doing strong over Cyber Week, 111 00:06:20,600 --> 00:06:24,080 Speaker 7: and even on Thanksgiving and Black Friday, we saw stores 112 00:06:24,080 --> 00:06:26,719 Speaker 7: were strong, but online was just as strong on Black Friday, 113 00:06:27,720 --> 00:06:29,360 Speaker 7: So I think it goes well for Amazon. But yeah, 114 00:06:29,400 --> 00:06:32,000 Speaker 7: I think it's really that value and convenience that's helping there. 115 00:06:32,200 --> 00:06:32,400 Speaker 6: Now. 116 00:06:32,520 --> 00:06:36,600 Speaker 1: Conversely, one big name, Etsy, the craft retailer, not doing 117 00:06:36,640 --> 00:06:38,360 Speaker 1: as well, just announce some layoffs. 118 00:06:38,720 --> 00:06:42,760 Speaker 7: Yeah, they announced some layoffs. You know, they're going back 119 00:06:42,800 --> 00:06:46,159 Speaker 7: to their staffing back in twenty twenty two, similar Earth levels. 120 00:06:46,720 --> 00:06:49,039 Speaker 7: But they did, you know, they raised guidance. They raised 121 00:06:49,040 --> 00:06:52,000 Speaker 7: GMB guidance and profit guidance, which I think went a 122 00:06:52,040 --> 00:06:54,239 Speaker 7: little unnoticed just due to the you know, the cost 123 00:06:54,240 --> 00:06:57,000 Speaker 7: cuts as well as they still see two to three 124 00:06:57,000 --> 00:07:02,800 Speaker 7: percent sales revenue gains in four Q. So some good 125 00:07:02,800 --> 00:07:04,680 Speaker 7: and bad things there, but we think in the long run, 126 00:07:04,760 --> 00:07:08,239 Speaker 7: it's what they need at drive profitable growth going forward. 127 00:07:08,720 --> 00:07:10,680 Speaker 1: Estella, I want to go back to you and the 128 00:07:10,760 --> 00:07:15,800 Speaker 1: impact of lower gasoline prices and how that has helped retailers. 129 00:07:16,160 --> 00:07:20,280 Speaker 1: Maybe consumers feeling a little more impoltant to spend more, 130 00:07:20,320 --> 00:07:22,440 Speaker 1: they're spending a lot less at the gas pump. Now, 131 00:07:22,800 --> 00:07:23,280 Speaker 1: we we. 132 00:07:23,200 --> 00:07:27,120 Speaker 6: Did some estimates on our team of how much of 133 00:07:27,160 --> 00:07:30,440 Speaker 6: a contribution the recent decline and oil prices may have 134 00:07:30,880 --> 00:07:35,320 Speaker 6: boosted spending space and consumer's wallet and estimate that, you know, 135 00:07:35,480 --> 00:07:39,800 Speaker 6: depending on how long lower gas prices last and how 136 00:07:39,920 --> 00:07:43,680 Speaker 6: much further they dropped, they could potentially see savings that 137 00:07:43,840 --> 00:07:46,360 Speaker 6: range from you know, twenty dollars per month to almost 138 00:07:46,360 --> 00:07:49,200 Speaker 6: one hundred dollars per month per household. And that's quite 139 00:07:49,240 --> 00:07:53,360 Speaker 6: a bit of stimulus that's been provided to consumers during 140 00:07:53,400 --> 00:07:54,320 Speaker 6: the holiday season. 141 00:07:54,520 --> 00:07:56,920 Speaker 1: And another sector that did well and these are in 142 00:07:56,960 --> 00:08:00,480 Speaker 1: the numbers for November, bars and restaurants. People are they 143 00:08:00,480 --> 00:08:02,240 Speaker 1: want to get out, they want to eat, they want 144 00:08:02,240 --> 00:08:03,880 Speaker 1: to drink, they want to see other people. 145 00:08:04,240 --> 00:08:09,440 Speaker 6: Absolutely right. That's actually a continuation from what we've been 146 00:08:09,480 --> 00:08:13,800 Speaker 6: seeing throughout the most of the year, where you know, service, 147 00:08:13,840 --> 00:08:16,520 Speaker 6: the services sector has been quite the pillar of strength 148 00:08:16,600 --> 00:08:19,840 Speaker 6: for the US economy, but we do expect that to 149 00:08:19,920 --> 00:08:24,520 Speaker 6: slow down as again, you know, households see increase debt 150 00:08:24,520 --> 00:08:26,560 Speaker 6: burdens and higher interest recosts. 151 00:08:27,000 --> 00:08:28,360 Speaker 1: Abigail, I want to go back to you. I want 152 00:08:28,360 --> 00:08:32,080 Speaker 1: to talk about some of the retailers that are doing well, 153 00:08:32,520 --> 00:08:34,760 Speaker 1: maybe some aren't. And we can start with some of 154 00:08:34,800 --> 00:08:39,480 Speaker 1: the biggest like Walmart, Target, some other discount and then 155 00:08:39,480 --> 00:08:43,679 Speaker 1: also the traditional department stores. So one week left of shopping, 156 00:08:44,040 --> 00:08:45,920 Speaker 1: how are these retailers doing. 157 00:08:46,200 --> 00:08:49,240 Speaker 7: You know, they're doing good. I think they retailers are 158 00:08:49,280 --> 00:08:52,680 Speaker 7: going out to you know, mass margins. Like she said, 159 00:08:52,840 --> 00:08:56,880 Speaker 7: people consumers are still looking to buy you know, the necessities, 160 00:08:56,880 --> 00:09:00,640 Speaker 7: and I think that's where Walmart will continue to benefit 161 00:09:00,720 --> 00:09:04,480 Speaker 7: as well as with this value proposition. I think department 162 00:09:04,559 --> 00:09:07,400 Speaker 7: stores are coming out, you know, they're really going strong 163 00:09:07,440 --> 00:09:10,960 Speaker 7: for the holiday with experiences as well, which you know, 164 00:09:11,120 --> 00:09:13,640 Speaker 7: back to kind of what you mentioned with restaurants and services. 165 00:09:13,679 --> 00:09:17,680 Speaker 7: Consumers are still seeking those experiences this holiday season, and 166 00:09:18,280 --> 00:09:20,920 Speaker 7: the more that those retailers can start to provide them, 167 00:09:21,400 --> 00:09:23,400 Speaker 7: you know, we think that that'll bide really well. But 168 00:09:23,480 --> 00:09:25,920 Speaker 7: I think what's really going to be driving any kind 169 00:09:25,960 --> 00:09:28,520 Speaker 7: of winners or losers this year is going to be 170 00:09:28,600 --> 00:09:32,640 Speaker 7: the value proposition that they're offering shoppers. Like you know, 171 00:09:33,000 --> 00:09:36,240 Speaker 7: she mentioned, they're under pressure. We're still seeing some strong 172 00:09:36,320 --> 00:09:39,320 Speaker 7: sales results, but it's where the deals are. Where are 173 00:09:39,320 --> 00:09:40,920 Speaker 7: they going to get the best staying for their buck. 174 00:09:41,280 --> 00:09:43,080 Speaker 7: So the more that they can kind of provide that, 175 00:09:43,200 --> 00:09:44,960 Speaker 7: the more that we think they'll do well. 176 00:09:45,400 --> 00:09:47,920 Speaker 1: And do you think some of the smaller retailers, the 177 00:09:48,320 --> 00:09:50,599 Speaker 1: mom and pop stores, how are they faring against the 178 00:09:50,640 --> 00:09:51,200 Speaker 1: big names? 179 00:09:51,640 --> 00:09:55,640 Speaker 7: Yeah, I think, you know, I think with the younger generations, 180 00:09:55,679 --> 00:09:58,720 Speaker 7: you know, they're actually doing well. They're going younger generations 181 00:09:58,760 --> 00:10:01,040 Speaker 7: are looking for those kind of one off shop so 182 00:10:01,160 --> 00:10:04,440 Speaker 7: they can find something unique, which is always good for 183 00:10:04,520 --> 00:10:06,680 Speaker 7: those mom and pop retailers. But they're going to be 184 00:10:06,679 --> 00:10:09,520 Speaker 7: having to compete with these larger retailers for the price, 185 00:10:09,960 --> 00:10:11,560 Speaker 7: and it's going to be a little harder for them 186 00:10:11,960 --> 00:10:14,560 Speaker 7: to kind of have that discount down compared to some 187 00:10:14,640 --> 00:10:16,760 Speaker 7: other retailers that have the scale and are able to 188 00:10:16,840 --> 00:10:20,720 Speaker 7: drive that more. So they'll definitely be pressured going forward. 189 00:10:20,800 --> 00:10:24,720 Speaker 7: But the more they can leverage Amazon with Amazon Amazon 190 00:10:24,760 --> 00:10:27,480 Speaker 7: today kind of in that sense that they're kind of 191 00:10:27,520 --> 00:10:30,000 Speaker 7: still getting some of that online sales. 192 00:10:29,880 --> 00:10:32,240 Speaker 1: Well with one week left a lot to look forward to. 193 00:10:32,280 --> 00:10:35,559 Speaker 1: Our thanks to economists To stell Oh of Bloomberg Economics 194 00:10:35,559 --> 00:10:40,320 Speaker 1: and Bloomberg Intelligence, retail analyst Abigail gil Martin. Coming up 195 00:10:40,360 --> 00:10:42,960 Speaker 1: on Bloomberg day Break weekend, we continue looking at the 196 00:10:43,040 --> 00:10:45,640 Speaker 1: retail sector and get a view from the perspective of 197 00:10:45,720 --> 00:10:59,440 Speaker 1: European shoppers. I'm Tom Busby, and this is Bloomberg. This 198 00:10:59,520 --> 00:11:01,839 Speaker 1: is Bloomberg Daybreak weekend, our global look ahead at the 199 00:11:01,880 --> 00:11:04,480 Speaker 1: top stories for investors in the coming week. I'm Tom 200 00:11:04,480 --> 00:11:07,440 Speaker 1: Busby in New York. Up later in our program, after 201 00:11:07,480 --> 00:11:11,520 Speaker 1: the FED, the BOE, and the ECB all holding rates steady, 202 00:11:11,800 --> 00:11:13,880 Speaker 1: we get a preview of what we can expect from 203 00:11:13,920 --> 00:11:16,840 Speaker 1: the Bank of Japan. But first in the UK, we'll 204 00:11:16,840 --> 00:11:20,120 Speaker 1: get new consumer and retail price data in the coming days. 205 00:11:20,320 --> 00:11:24,720 Speaker 1: Despite falling inflation, festive shopping might still be held back 206 00:11:24,880 --> 00:11:28,560 Speaker 1: by slowing wage growth as COVID piggybank savings run dry. 207 00:11:28,960 --> 00:11:31,040 Speaker 1: For more, Let's go to London and bring in Bloomberg 208 00:11:31,080 --> 00:11:33,280 Speaker 1: Daybreak europe banker Caroline Hepger. 209 00:11:33,559 --> 00:11:36,480 Speaker 2: Tom, It's crunch time for last minute shoppers ahead of 210 00:11:36,520 --> 00:11:39,600 Speaker 2: the holidays here in London, with retailers hoping for a 211 00:11:39,720 --> 00:11:44,359 Speaker 2: last minute surge in spending despite the general economic gloom. 212 00:11:44,400 --> 00:11:47,880 Speaker 2: The latest growth data for the UK showed that consumer 213 00:11:47,960 --> 00:11:51,960 Speaker 2: facing services contracted for a fourth month in a row, 214 00:11:52,240 --> 00:11:56,120 Speaker 2: while the economy overall contracted more than had been expected. 215 00:11:56,400 --> 00:11:59,600 Speaker 2: Now Here is what Dan Hanson of Bloomberg Economics told 216 00:11:59,640 --> 00:12:02,760 Speaker 2: us about the outlook for the coming months. 217 00:12:03,200 --> 00:12:07,040 Speaker 8: This line between contraction and stagnation is going to be 218 00:12:07,040 --> 00:12:08,720 Speaker 8: a fine one, and it remains a fine one. It 219 00:12:08,720 --> 00:12:10,400 Speaker 8: has been a fine one for the past eighteen months, 220 00:12:10,520 --> 00:12:11,880 Speaker 8: is probably going to be the same for the next 221 00:12:11,960 --> 00:12:15,240 Speaker 8: nine months. But I think you know, it was worse 222 00:12:15,280 --> 00:12:17,800 Speaker 8: than expected, and you know, it looks like the fourth 223 00:12:17,880 --> 00:12:22,000 Speaker 8: quarter there'll probably be a contraction. I think everyone's understanding 224 00:12:22,040 --> 00:12:24,320 Speaker 8: is that the goal to grow the economy was to 225 00:12:24,360 --> 00:12:27,200 Speaker 8: get quarterly growth in the final quarter of the year, 226 00:12:27,559 --> 00:12:29,679 Speaker 8: and it looks like it's based on this data. It's 227 00:12:29,720 --> 00:12:30,520 Speaker 8: going to be a tough ask. 228 00:12:31,080 --> 00:12:34,040 Speaker 2: Is there anything in the data or in the stance 229 00:12:34,080 --> 00:12:37,080 Speaker 2: at the moment that proves that next year could be 230 00:12:37,080 --> 00:12:38,320 Speaker 2: better than expected? 231 00:12:38,840 --> 00:12:39,040 Speaker 5: Yeah? 232 00:12:39,080 --> 00:12:41,600 Speaker 8: Absolutely. So you can look at the sort of data 233 00:12:41,600 --> 00:12:43,840 Speaker 8: in two ways, can't You can always be like, oh, well, 234 00:12:43,880 --> 00:12:46,680 Speaker 8: the economy contracted and it contracted by a bit, but 235 00:12:46,679 --> 00:12:48,839 Speaker 8: it's still contracted and that's not very good. But if 236 00:12:48,880 --> 00:12:51,480 Speaker 8: you compare that to the reality or sort of what 237 00:12:51,520 --> 00:12:55,160 Speaker 8: you would have expected if you were told eighteen months 238 00:12:55,200 --> 00:12:57,520 Speaker 8: ago or two years ago that the Bank of England 239 00:12:57,600 --> 00:12:59,720 Speaker 8: was about to jack up interest rates by five hundred 240 00:12:59,720 --> 00:13:02,040 Speaker 8: bases points, you know, most of us would have fallen 241 00:13:02,080 --> 00:13:04,640 Speaker 8: off chair and said there'd be a deep recession, and 242 00:13:04,679 --> 00:13:07,520 Speaker 8: we just haven't had that. So this sort of upside 243 00:13:07,679 --> 00:13:09,679 Speaker 8: or the sort of better news story that's there is 244 00:13:09,720 --> 00:13:13,959 Speaker 8: that the economy has almost consistently outperformed expectations and the 245 00:13:14,080 --> 00:13:17,440 Speaker 8: hit from interest rates has been far, far less than 246 00:13:17,640 --> 00:13:20,000 Speaker 8: anyone would have expected if you'd sort of been given 247 00:13:20,000 --> 00:13:23,079 Speaker 8: this scenario and said, how will this play out over 248 00:13:23,120 --> 00:13:25,280 Speaker 8: the next two years or so. And you know, the 249 00:13:25,320 --> 00:13:27,680 Speaker 8: other thing, the other very important point for consumers is 250 00:13:27,720 --> 00:13:30,280 Speaker 8: that there's real wage growth has returned, and that is 251 00:13:30,360 --> 00:13:34,240 Speaker 8: that's a really positive thing. Nominal wages are growing faster 252 00:13:34,880 --> 00:13:37,480 Speaker 8: than prices, and that that is a really positive story, 253 00:13:37,520 --> 00:13:40,040 Speaker 8: and that could be a reason why again the economy 254 00:13:40,080 --> 00:13:42,000 Speaker 8: does hold up over the course of twenty twenty four. 255 00:13:42,320 --> 00:13:45,440 Speaker 2: So that was Dan Hanson with his view from Bloomberg 256 00:13:45,600 --> 00:13:50,199 Speaker 2: Economics after those GDP figures. Well, inflation in the UK 257 00:13:50,840 --> 00:13:53,240 Speaker 2: is slowing. That's one bit of good news. In October 258 00:13:53,280 --> 00:13:56,240 Speaker 2: the headline print was at four point six percent. The 259 00:13:56,360 --> 00:13:59,840 Speaker 2: CPI released you in the coming few days will also 260 00:14:00,080 --> 00:14:02,840 Speaker 2: tell us just how far it remains above the Bank 261 00:14:02,880 --> 00:14:03,680 Speaker 2: of England's goal. 262 00:14:03,800 --> 00:14:04,120 Speaker 6: Now. 263 00:14:04,520 --> 00:14:07,079 Speaker 2: Ahead of that, we've been thinking about the outlook for 264 00:14:07,120 --> 00:14:10,520 Speaker 2: the UK consumer, hit hard by price rises over the 265 00:14:10,559 --> 00:14:14,480 Speaker 2: past year. I've been discussing this with Bloomberg opinion columnist 266 00:14:14,559 --> 00:14:19,000 Speaker 2: Andrea Felsted and our UK retail reporter Katie linsel. I 267 00:14:19,040 --> 00:14:22,920 Speaker 2: started by asking Andrew what the mindset of British consumers 268 00:14:23,320 --> 00:14:24,240 Speaker 2: is right now. 269 00:14:24,840 --> 00:14:28,680 Speaker 9: I think it really depends where you are. You know, 270 00:14:28,920 --> 00:14:33,920 Speaker 9: older people they don't have mortgages. They're finally getting some 271 00:14:34,360 --> 00:14:37,320 Speaker 9: return on their savings, their pensions of one up. They're 272 00:14:37,320 --> 00:14:42,000 Speaker 9: doing very nicely and are spending well on holidays, eating out. 273 00:14:43,080 --> 00:14:47,800 Speaker 9: Midlife families much more difficult. They've got mortgage. You know, 274 00:14:47,920 --> 00:14:52,120 Speaker 9: inflation hasn't gone away. You know, we think about things 275 00:14:52,160 --> 00:14:55,280 Speaker 9: like school fees they've been going up for years, and 276 00:14:55,320 --> 00:14:58,200 Speaker 9: then you've got you know, unfortunately, those who are really 277 00:14:58,280 --> 00:15:01,360 Speaker 9: struggling in the economy, who spend a lot more on 278 00:15:01,560 --> 00:15:04,320 Speaker 9: essential so they're still having to pay more for food 279 00:15:04,480 --> 00:15:08,520 Speaker 9: even though inflation is easing, more for heating, and we're 280 00:15:08,600 --> 00:15:11,800 Speaker 9: not getting the help that we got for the government 281 00:15:11,840 --> 00:15:15,400 Speaker 9: on heating last year, so they are really struggling. It 282 00:15:15,480 --> 00:15:19,000 Speaker 9: really depends where you are on how you are looking 283 00:15:19,520 --> 00:15:21,840 Speaker 9: forward to Christmas and next year. 284 00:15:22,040 --> 00:15:25,640 Speaker 2: Yeah, really a segmentation the issue or issues around inequality 285 00:15:25,680 --> 00:15:29,040 Speaker 2: and what your pay pack. It looks like Katie, the 286 00:15:29,080 --> 00:15:33,160 Speaker 2: UK consumer having said that, has been quite broadly resilient. 287 00:15:33,680 --> 00:15:35,680 Speaker 2: What's the outlook for the coming months as far as 288 00:15:35,680 --> 00:15:36,920 Speaker 2: you're concerned. 289 00:15:36,720 --> 00:15:38,680 Speaker 10: I think exactly as Andrew said, you know, this is 290 00:15:38,680 --> 00:15:40,360 Speaker 10: the time when people are going to be spending on 291 00:15:40,440 --> 00:15:44,080 Speaker 10: Christmas within their means as much as they can. So 292 00:15:44,120 --> 00:15:46,160 Speaker 10: I think the key thing is to see really how 293 00:15:46,320 --> 00:15:49,640 Speaker 10: the consumer copes in January and the months beyond when 294 00:15:49,680 --> 00:15:51,840 Speaker 10: the credit card bills come in. The buy now, pay 295 00:15:51,920 --> 00:15:56,400 Speaker 10: later figures need to be settled. We have seen that 296 00:15:56,960 --> 00:16:00,360 Speaker 10: figures from PwC say that Christmas spending is going to 297 00:16:00,360 --> 00:16:04,040 Speaker 10: be down thirteen percent to twenty billion pounds in the UK, 298 00:16:04,240 --> 00:16:06,840 Speaker 10: and so shoppers are sort of pulling back a bit, 299 00:16:08,120 --> 00:16:10,240 Speaker 10: and I think it's going to be interesting to see 300 00:16:10,280 --> 00:16:12,920 Speaker 10: how they how they cope in the months when the 301 00:16:12,920 --> 00:16:13,800 Speaker 10: bills come due. 302 00:16:13,960 --> 00:16:16,640 Speaker 2: Oh yeah, they buy now, pay later. Yes, that's a 303 00:16:16,640 --> 00:16:20,840 Speaker 2: big issue. But on the other side of things, luxury Andrew, 304 00:16:20,880 --> 00:16:24,320 Speaker 2: you keep a close watch on this sector amongst others 305 00:16:24,320 --> 00:16:28,320 Speaker 2: in retail. Are there those sectors that remain robust. 306 00:16:28,720 --> 00:16:31,760 Speaker 9: The only set of retail that really seems to be 307 00:16:31,880 --> 00:16:36,280 Speaker 9: remaining robust is that catering through the very wealthiest echelon 308 00:16:36,360 --> 00:16:39,080 Speaker 9: in society. So we had Brunello Cucinelli makes, you know, 309 00:16:39,280 --> 00:16:43,600 Speaker 9: very expensive cashmere. They upgraded their outlook for the fourth 310 00:16:43,680 --> 00:16:48,120 Speaker 9: time this year. Hermes make a very expensive bags, still 311 00:16:48,160 --> 00:16:52,080 Speaker 9: doing well, but lower down luxury, the luxury that you know, 312 00:16:52,120 --> 00:16:56,160 Speaker 9: perhaps the simply comfortable treat themselves too. They might treat 313 00:16:56,200 --> 00:16:59,920 Speaker 9: themselves to a Gucci handbag or perhaps a nice watch. 314 00:17:00,160 --> 00:17:03,520 Speaker 9: They're really under pressure from interest rates, you know, stock 315 00:17:03,600 --> 00:17:09,560 Speaker 9: markets being quite volatile, less crypto gains, you know, interest rates. 316 00:17:09,560 --> 00:17:12,040 Speaker 9: They can't buy things on credit, or they're putting their 317 00:17:12,080 --> 00:17:13,960 Speaker 9: safe if they've got savory, they may be putting them 318 00:17:13,960 --> 00:17:17,639 Speaker 9: to work rather than perhaps spend spending it on a rolex, 319 00:17:17,720 --> 00:17:20,960 Speaker 9: so that they're they're really you know, they are pulling 320 00:17:21,240 --> 00:17:24,960 Speaker 9: it pulling back, and we've got luxury really normalizing. Aside 321 00:17:24,960 --> 00:17:26,200 Speaker 9: from that really top. 322 00:17:26,080 --> 00:17:30,600 Speaker 2: End, Well, what about the pricing power that retailers broadly have, Katie, 323 00:17:30,600 --> 00:17:32,919 Speaker 2: Do they have much of that left? We talked a 324 00:17:32,920 --> 00:17:35,960 Speaker 2: lot about that, you know, with the rise in inflation. 325 00:17:36,640 --> 00:17:39,200 Speaker 10: Yes, I think retailers are still really flagging the fact 326 00:17:39,200 --> 00:17:41,760 Speaker 10: that they are under pressure from inflation, that there is 327 00:17:41,800 --> 00:17:44,120 Speaker 10: still a huge burden from the cost of energy. Yes, 328 00:17:44,160 --> 00:17:46,040 Speaker 10: it's come down, but it's still much higher than where 329 00:17:46,080 --> 00:17:48,520 Speaker 10: it was before. And then the other key thing to 330 00:17:48,560 --> 00:17:52,439 Speaker 10: look at is the labor market, and labor costs have 331 00:17:52,480 --> 00:17:55,280 Speaker 10: really gone up. Also, we can look at the fact 332 00:17:55,359 --> 00:17:58,240 Speaker 10: that we had the recent awesome statement announcing that from 333 00:17:58,320 --> 00:18:01,200 Speaker 10: April we will see a rise in the national living wage, 334 00:18:01,280 --> 00:18:04,679 Speaker 10: and we had a piece recently out from saying that 335 00:18:04,720 --> 00:18:07,320 Speaker 10: retailers are really not not best placed in a way 336 00:18:07,320 --> 00:18:10,560 Speaker 10: about this burden. They have a huge workforce and that's 337 00:18:10,600 --> 00:18:13,600 Speaker 10: really going to push up their costs. And I think 338 00:18:13,600 --> 00:18:17,359 Speaker 10: therefore we can actually expect that inflation won't necessarily come down. 339 00:18:17,640 --> 00:18:20,080 Speaker 10: Price inflation from retailers won't come down as fast as 340 00:18:20,119 --> 00:18:23,200 Speaker 10: we might hope, because they've got to help their margins, 341 00:18:23,240 --> 00:18:25,800 Speaker 10: you know, they can't cost their cut their prices as 342 00:18:25,840 --> 00:18:28,199 Speaker 10: frequently as quickly as they might like to because of 343 00:18:28,200 --> 00:18:29,920 Speaker 10: that burden from the higher wages. 344 00:18:30,600 --> 00:18:32,960 Speaker 2: And then you have the story of the Dice and 345 00:18:33,040 --> 00:18:36,800 Speaker 2: Air app which is apparently one of the potentially hot 346 00:18:36,840 --> 00:18:39,639 Speaker 2: items of the holiday season of this quarter, and it's 347 00:18:39,680 --> 00:18:43,600 Speaker 2: something you've written about. Andrea, A thousand bucks. What's the 348 00:18:43,640 --> 00:18:46,000 Speaker 2: price tag in the UK or in Europe, Well. 349 00:18:46,040 --> 00:18:49,359 Speaker 9: It should be about four hundred and eighty pounds, but 350 00:18:49,440 --> 00:18:51,919 Speaker 9: at the moment there's about eighty pounds off, so this 351 00:18:52,000 --> 00:18:55,520 Speaker 9: is quite unusual that it's actually been discounted at the moment. 352 00:18:55,640 --> 00:18:58,720 Speaker 9: Now curries are saying they're selling very well, and this 353 00:18:58,800 --> 00:19:02,159 Speaker 9: is really interesting because you know, we're buying them so 354 00:19:02,400 --> 00:19:06,119 Speaker 9: we can save on getting our hairstyled. We can do, 355 00:19:06,280 --> 00:19:09,919 Speaker 9: you know, a bouncy look at home rather than have 356 00:19:10,080 --> 00:19:11,960 Speaker 9: to go to the salon. So I thought that was 357 00:19:12,040 --> 00:19:15,520 Speaker 9: quite an interesting little take on the consumer mindset. 358 00:19:15,720 --> 00:19:17,560 Speaker 2: Yes, and I'm sorry your peace was talking about how 359 00:19:17,600 --> 00:19:19,800 Speaker 2: they should be a thously They. 360 00:19:19,640 --> 00:19:23,080 Speaker 9: Should they should be because there's lots of competition in 361 00:19:23,160 --> 00:19:23,719 Speaker 9: this space. 362 00:19:23,800 --> 00:19:23,960 Speaker 11: Now. 363 00:19:24,440 --> 00:19:27,359 Speaker 9: Interesting last year there were no discounts. I mean you 364 00:19:27,359 --> 00:19:29,840 Speaker 9: couldn't count the amount of times. I googled dice and 365 00:19:29,880 --> 00:19:33,280 Speaker 9: air app discount last year and there were none, But 366 00:19:33,520 --> 00:19:35,159 Speaker 9: this year, you know, there were a lot of discous 367 00:19:35,240 --> 00:19:39,240 Speaker 9: There's a lot of competition out there, so to stay 368 00:19:39,280 --> 00:19:42,800 Speaker 9: ahead of the curve, Dyson needs to reinvent itself as 369 00:19:42,840 --> 00:19:43,840 Speaker 9: a luxury brand. 370 00:19:43,920 --> 00:19:47,400 Speaker 2: Thanks to Blimberg's consumer goods opinion colonist Andrew Fel said, 371 00:19:47,400 --> 00:19:51,040 Speaker 2: and our UK retail reporter Katie Lindsel, I'm Calline Hepgar 372 00:19:51,080 --> 00:19:53,560 Speaker 2: here in London. You can catch us every weekday morning 373 00:19:53,560 --> 00:19:56,719 Speaker 2: for Bloomberg Daybreak Europe, beginning at six am in London. 374 00:19:56,880 --> 00:19:58,320 Speaker 2: That's one am on Wall Street. 375 00:19:58,440 --> 00:20:02,040 Speaker 1: Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend, 376 00:20:02,080 --> 00:20:04,560 Speaker 1: we preview the upcoming rate decision out of the Bank 377 00:20:04,600 --> 00:20:18,440 Speaker 1: of Japan. I'm Tom Busby and this is Bloomberg. I'm 378 00:20:18,440 --> 00:20:20,480 Speaker 1: Tom Busby with your global look ahead at the top 379 00:20:20,520 --> 00:20:24,080 Speaker 1: stories for investors in the coming week. Onto Japan and 380 00:20:24,160 --> 00:20:26,879 Speaker 1: whether we're at the end of an unprecedented run of 381 00:20:27,000 --> 00:20:30,639 Speaker 1: monetary easing policies. Economists expect the Bank of Japan to 382 00:20:30,720 --> 00:20:34,040 Speaker 1: scrap negative interest rates by the end of April. Meantime, 383 00:20:34,040 --> 00:20:37,160 Speaker 1: Bloomberg has reported Japan's Central Bank is likely to keep 384 00:20:37,200 --> 00:20:41,720 Speaker 1: its monetary stimulus settings unchanged at a policy meeting next week. 385 00:20:42,160 --> 00:20:44,520 Speaker 1: Let's take a further look with Bloomberg Daybreak Asia co 386 00:20:44,600 --> 00:20:45,960 Speaker 1: host Doug Krisner. 387 00:20:46,280 --> 00:20:48,800 Speaker 3: Tom Our sources tell us the Bank of Japan is 388 00:20:48,840 --> 00:20:51,720 Speaker 3: in no rush to scrap negative interest rates, nor is 389 00:20:51,760 --> 00:20:55,240 Speaker 3: the BOJ ready to drop its yield curve control program. 390 00:20:55,560 --> 00:20:58,439 Speaker 3: Now this does counter market speculation a bit. There have 391 00:20:58,520 --> 00:21:02,680 Speaker 3: been bets on the BOJ shifting to end negative interest rates, 392 00:21:02,960 --> 00:21:05,240 Speaker 3: and some were saying it could happen as soon as 393 00:21:05,240 --> 00:21:07,280 Speaker 3: this meeting. But what we are told is that the 394 00:21:07,280 --> 00:21:10,439 Speaker 3: BOJ has yet to see enough evidence of wage growth, 395 00:21:10,480 --> 00:21:14,560 Speaker 3: and wage growth would support the notion of sustainable inflation. 396 00:21:15,240 --> 00:21:15,880 Speaker 5: To help us. 397 00:21:15,800 --> 00:21:19,160 Speaker 3: Preview the BOJ meeting, we bring in Bloomberg's Taro Komura. 398 00:21:19,720 --> 00:21:24,760 Speaker 3: Tarrow is Bloomberg Economics Japan economist. He joins us from Tokyo. Taro, 399 00:21:24,880 --> 00:21:27,640 Speaker 3: thanks for making time for us. I think we have 400 00:21:27,720 --> 00:21:31,080 Speaker 3: to say that the BOJ has in the past surprise 401 00:21:31,240 --> 00:21:34,800 Speaker 3: not only economists but markets. Is it likely that we 402 00:21:34,840 --> 00:21:36,479 Speaker 3: get a surprise this time around? 403 00:21:36,960 --> 00:21:40,399 Speaker 12: No, I don't think so. I At this time, the 404 00:21:40,480 --> 00:21:43,840 Speaker 12: busy will stand pad on its ilk curve control and 405 00:21:43,920 --> 00:21:47,720 Speaker 12: negative interest rates. So of course, like I understand, the 406 00:21:47,840 --> 00:21:53,199 Speaker 12: market suspects another surprise this month, particularly after last year's 407 00:21:53,480 --> 00:21:58,800 Speaker 12: December accrued US YCC surprise. That's understandable, But the governor 408 00:21:58,920 --> 00:22:04,000 Speaker 12: changed and with us communication, although he had to tweak 409 00:22:04,480 --> 00:22:07,760 Speaker 12: YCC a little bit in July in October, but I 410 00:22:07,760 --> 00:22:10,639 Speaker 12: think his baseline is he don't want to make a 411 00:22:10,800 --> 00:22:15,800 Speaker 12: huge surprise and shock to the financial market. And based 412 00:22:15,840 --> 00:22:21,560 Speaker 12: on his communication, it's clear that economic development doesn't support 413 00:22:22,240 --> 00:22:26,720 Speaker 12: achieving two percent inflation near time soon and with a 414 00:22:27,160 --> 00:22:31,199 Speaker 12: clearly underscores that he has to see the result of 415 00:22:31,280 --> 00:22:34,800 Speaker 12: the spring waste negotiation, which is an annual catalyst of 416 00:22:36,240 --> 00:22:40,680 Speaker 12: Japanese workers regular workers base pay. So that's why he 417 00:22:40,920 --> 00:22:45,240 Speaker 12: at least has to wait until April before scrapping YC 418 00:22:45,320 --> 00:22:47,960 Speaker 12: see a negative rate instead of this month. 419 00:22:48,160 --> 00:22:51,240 Speaker 3: So Governor Wada, the head of the BOJ, has a 420 00:22:51,280 --> 00:22:53,320 Speaker 3: long history with the Bank of Japan, and I think 421 00:22:53,359 --> 00:22:56,520 Speaker 3: it's fair to say that he understands the danger of 422 00:22:56,680 --> 00:23:00,000 Speaker 3: moving hastily. Am I right on that right absolutely? 423 00:23:00,080 --> 00:23:05,600 Speaker 12: Looking back the boj's history, there are two painful experience 424 00:23:06,200 --> 00:23:11,640 Speaker 12: in which the BOJ was hugely criticized as their exits 425 00:23:11,720 --> 00:23:16,280 Speaker 12: were hasty. One timing is its exit from zero interest 426 00:23:16,400 --> 00:23:21,199 Speaker 12: rate policy already back in two thousand and Actually the 427 00:23:21,400 --> 00:23:25,359 Speaker 12: terrent governor Uda was one of the policy members then 428 00:23:25,480 --> 00:23:28,600 Speaker 12: and he actually voted against to that exit, but also 429 00:23:28,920 --> 00:23:31,320 Speaker 12: as a policy member, I think he has a vivid 430 00:23:31,400 --> 00:23:36,280 Speaker 12: memory that its exit was probably too quick, given that 431 00:23:36,800 --> 00:23:40,520 Speaker 12: soon after that there was a US tech bubble collapse 432 00:23:40,760 --> 00:23:43,600 Speaker 12: and a huge downturn in the economy. And the second 433 00:23:43,640 --> 00:23:46,239 Speaker 12: one is back in two thousand and six, when it 434 00:23:46,720 --> 00:23:51,879 Speaker 12: exits from its first quantitative easing started in two thousand 435 00:23:51,920 --> 00:23:56,040 Speaker 12: and one, and even though it was criticized as hasty, 436 00:23:56,840 --> 00:24:01,880 Speaker 12: the BOJ took more than half a year to signals. 437 00:24:01,960 --> 00:24:05,680 Speaker 12: It's given that timeframe, I think it's still a long 438 00:24:05,720 --> 00:24:09,560 Speaker 12: way for the BOJ to communicate and to make market 439 00:24:09,680 --> 00:24:11,359 Speaker 12: understand the exits is coming. 440 00:24:11,720 --> 00:24:14,840 Speaker 3: That said, I can understand the market's tendency to want 441 00:24:14,880 --> 00:24:17,119 Speaker 3: to make a bet that the BOJ would move at 442 00:24:17,119 --> 00:24:20,000 Speaker 3: the December meeting. We've been well above or when I 443 00:24:20,040 --> 00:24:23,159 Speaker 3: say we am speaking of the Japanese economy, we have 444 00:24:23,280 --> 00:24:26,480 Speaker 3: seen inflation well above the two percent target for more 445 00:24:26,520 --> 00:24:28,960 Speaker 3: than a year now, and I'm going to go back 446 00:24:28,960 --> 00:24:32,480 Speaker 3: to last week with the ton Con data, the large 447 00:24:32,520 --> 00:24:37,760 Speaker 3: manufacturing and non manufacturing indexes were much above forecast. So 448 00:24:37,960 --> 00:24:40,159 Speaker 3: is there not a case to be made that the 449 00:24:40,160 --> 00:24:44,000 Speaker 3: economy is doing well enough where the BOJ could begin 450 00:24:44,640 --> 00:24:46,879 Speaker 3: altering policy at this point in time? 451 00:24:47,320 --> 00:24:51,680 Speaker 12: Right the assessment about the assessment of the Japan's economy, 452 00:24:51,920 --> 00:24:56,399 Speaker 12: it's correct that the Tonkens data was a big positive, 453 00:24:56,560 --> 00:25:00,359 Speaker 12: so the sentiment for at least big corporates are getting better. 454 00:25:00,920 --> 00:25:04,320 Speaker 12: And actually that's right. The headline inflation as well above 455 00:25:04,520 --> 00:25:10,000 Speaker 12: boj's two percent target for nineteen months. Now. I'm having 456 00:25:10,080 --> 00:25:13,960 Speaker 12: said that in terms of the inflation, as a japan 457 00:25:14,080 --> 00:25:17,879 Speaker 12: economist and as a person who grew up in Japan, 458 00:25:18,040 --> 00:25:23,359 Speaker 12: I cannot underscore enough that it's such a high hurdle 459 00:25:24,119 --> 00:25:28,720 Speaker 12: for this country to have two percent inflation. So long 460 00:25:28,800 --> 00:25:35,680 Speaker 12: term macroeconomic stagnation since nineteen nineties led firms very reluctant 461 00:25:35,880 --> 00:25:42,240 Speaker 12: to raise prices because customers got really price sensitive. And 462 00:25:42,320 --> 00:25:48,960 Speaker 12: at the same time, we haven't had inflation for three decades. 463 00:25:49,000 --> 00:25:55,000 Speaker 12: That means one generation. That means people don't expect inflation 464 00:25:55,359 --> 00:25:58,639 Speaker 12: to happen very easily. So those are the background in 465 00:25:58,680 --> 00:26:02,679 Speaker 12: which the BOJ is very causes. Although headline inflation is 466 00:26:03,200 --> 00:26:05,159 Speaker 12: above two percent, they are very I think they are 467 00:26:05,280 --> 00:26:08,600 Speaker 12: very afraid of after the cost push factor abates, it's 468 00:26:08,680 --> 00:26:12,560 Speaker 12: getting back to this inflation state. That's why they keep 469 00:26:12,640 --> 00:26:16,000 Speaker 12: the stimulus. At the same time, a recent positive note 470 00:26:16,040 --> 00:26:21,679 Speaker 12: in TUNCAM supports the next year's annual spring wage negotiation. 471 00:26:22,080 --> 00:26:25,679 Speaker 12: So if there's a huge wage hike happened there in 472 00:26:25,720 --> 00:26:28,080 Speaker 12: the next spring, it's going to be a big push 473 00:26:28,119 --> 00:26:31,720 Speaker 12: for the BOJA to consider shifts about the policy. 474 00:26:32,000 --> 00:26:34,760 Speaker 3: Last week on Daybreak Asia, we were talking with Bloomberg's 475 00:26:34,800 --> 00:26:37,440 Speaker 3: Paul Jackson, one of your colleagues in Tokyo, about the 476 00:26:37,520 --> 00:26:41,080 Speaker 3: Japanese economy, and we tried to address the issue of 477 00:26:41,119 --> 00:26:44,199 Speaker 3: how consumers in Japan are feeling and whether or not 478 00:26:44,720 --> 00:26:48,360 Speaker 3: mister and Missus Watanabe are optimistic about the economy. Here's 479 00:26:48,400 --> 00:26:49,480 Speaker 3: what Paul had to say. 480 00:26:49,640 --> 00:26:53,320 Speaker 13: They're not happy at all. The popularity and support for 481 00:26:53,400 --> 00:26:57,199 Speaker 13: the Prime Minister has been at historic record lows for 482 00:26:57,280 --> 00:27:01,080 Speaker 13: his administration, and he's been pulling out all the stops 483 00:27:01,119 --> 00:27:05,000 Speaker 13: with subsidies to try and lower the impact of inflation. 484 00:27:05,160 --> 00:27:09,479 Speaker 13: So the inflation rate actually would be significantly higher without 485 00:27:09,560 --> 00:27:13,040 Speaker 13: these government subsidies. This, of course, has created a lot 486 00:27:13,080 --> 00:27:16,199 Speaker 13: of you know, conflicting signals for the public. You know, 487 00:27:16,480 --> 00:27:20,159 Speaker 13: the government wants inflation and yet it's giving measures to 488 00:27:20,280 --> 00:27:23,600 Speaker 13: lower inflation. It's going to make up your mind. So 489 00:27:23,920 --> 00:27:27,359 Speaker 13: in a sense, if the boj does scrap its negative 490 00:27:27,400 --> 00:27:30,280 Speaker 13: interest rate, it's going to look more like the government 491 00:27:30,320 --> 00:27:32,520 Speaker 13: and the Bank of Japan are pointing in the same 492 00:27:32,560 --> 00:27:34,919 Speaker 13: direction for the average person on the street. 493 00:27:34,840 --> 00:27:37,119 Speaker 3: Tara, I'd like to get your reaction on what you 494 00:27:37,280 --> 00:27:39,680 Speaker 3: just heard there from Paul about the way in which 495 00:27:40,119 --> 00:27:44,400 Speaker 3: the average consumer in Japan is making sense of government policies, right. 496 00:27:44,800 --> 00:27:50,639 Speaker 12: I totally agree with Paul's view. Actually, the current inflation 497 00:27:51,160 --> 00:27:54,560 Speaker 12: is it's clear that it's sapping the consumer sentiment, and 498 00:27:55,320 --> 00:27:59,280 Speaker 12: not only the sentiment. The GDP data shows are GDP 499 00:27:59,359 --> 00:28:05,040 Speaker 12: data show the private consumption drops for the second straight quarters, 500 00:28:05,119 --> 00:28:07,960 Speaker 12: in the second quarter, in the third quarter of this year, 501 00:28:08,880 --> 00:28:13,359 Speaker 12: even though Japan should have had a strong tailwink from 502 00:28:13,520 --> 00:28:18,600 Speaker 12: COVID reopening happened since May. So that says like inflation 503 00:28:18,880 --> 00:28:22,879 Speaker 12: usually way on consumer sentiments and consumption. So it's the 504 00:28:22,960 --> 00:28:26,800 Speaker 12: tricky part is as a Japanic Onnlyst, I always struggle 505 00:28:27,040 --> 00:28:30,400 Speaker 12: to give a easy explanation on this. But the BOJ 506 00:28:30,680 --> 00:28:36,000 Speaker 12: is irked by inflation, the cost push inflation or bad inflation. 507 00:28:36,200 --> 00:28:39,280 Speaker 12: So that's why in their logic they have to keep 508 00:28:39,400 --> 00:28:44,160 Speaker 12: a stimulus in the economy. And actually the government wants 509 00:28:44,200 --> 00:28:47,200 Speaker 12: to do something for that and that Fishita Prime Minister 510 00:28:47,800 --> 00:28:50,320 Speaker 12: decided an income tax cut, but it's going to be 511 00:28:50,360 --> 00:28:54,600 Speaker 12: happening only in June or July in next year. So 512 00:28:54,840 --> 00:28:59,120 Speaker 12: kind of the government is not giving a strong leadership 513 00:28:59,400 --> 00:29:03,160 Speaker 12: and sending a clear message to help the consumer and households. 514 00:29:03,160 --> 00:29:07,200 Speaker 12: And probably that's one of the main reasons Prime Minister 515 00:29:07,280 --> 00:29:10,400 Speaker 12: Kishida's supporting rate is getting lower and lower. 516 00:29:10,520 --> 00:29:12,680 Speaker 3: Taro, thank you so much for helping us set up 517 00:29:12,880 --> 00:29:17,360 Speaker 3: this week's BOJ meeting. Taro Komura is a Bloomberg Economics 518 00:29:17,520 --> 00:29:21,040 Speaker 3: Japan economist joining us. I'm Doug Krisner. You can join 519 00:29:21,080 --> 00:29:24,160 Speaker 3: Brian Curtis and myself weekdays here for Bloomberg day Break 520 00:29:24,160 --> 00:29:27,880 Speaker 3: Asia beginning at seven am in Hong Kong six pm 521 00:29:27,960 --> 00:29:28,719 Speaker 3: on Wall Street. 522 00:29:28,760 --> 00:29:31,640 Speaker 1: Tom, thank you, Doug, and coming up on Bloomberg day 523 00:29:31,640 --> 00:29:34,760 Speaker 1: Break weekend, we hear from the SEC about a possible 524 00:29:34,800 --> 00:29:38,800 Speaker 1: approval of a spot bitcoin et F. I'm Tom Busby 525 00:29:38,880 --> 00:29:52,040 Speaker 1: And this is Bloomberg. This is Bloomberg day Break weekend, 526 00:29:52,080 --> 00:29:54,400 Speaker 1: our global look ahead at the top stories for investors 527 00:29:54,400 --> 00:29:56,840 Speaker 1: in the coming week. I'm Tom Busby in New York. 528 00:29:57,520 --> 00:30:01,240 Speaker 1: Anticipation of a new wave of investors has bitcoin booming 529 00:30:01,400 --> 00:30:05,320 Speaker 1: once again. Key to the newfound optimism indications that the 530 00:30:05,400 --> 00:30:08,760 Speaker 1: US will likely soon approve exchange traded funds that invest 531 00:30:08,840 --> 00:30:11,920 Speaker 1: directly in the cryptocurrency. For more, Let's add to our 532 00:30:11,920 --> 00:30:14,960 Speaker 1: Bloomberg ninety nine to one newsroom in Washington and Bloomberg 533 00:30:15,160 --> 00:30:18,040 Speaker 1: Sound On co host Kaylee lines. 534 00:30:17,920 --> 00:30:20,480 Speaker 4: Yeah, Tom, So often here in Washington we talk about 535 00:30:20,520 --> 00:30:24,160 Speaker 4: politics because this is where the politicians are, but it's 536 00:30:24,200 --> 00:30:27,680 Speaker 4: also where the regulators are, and one in particular has 537 00:30:27,720 --> 00:30:31,160 Speaker 4: been in the spotlight, the SEC. There's a big question 538 00:30:31,320 --> 00:30:34,200 Speaker 4: around whether the Securities in Exchange Commission may be getting 539 00:30:34,200 --> 00:30:38,800 Speaker 4: close to doing something it hasn't done yet, finally approving 540 00:30:39,080 --> 00:30:42,760 Speaker 4: a spot bitcoin ETF. I actually asked the SEC chair, 541 00:30:42,840 --> 00:30:45,040 Speaker 4: Gary Gensler about that. This past week. 542 00:30:45,280 --> 00:30:49,200 Speaker 11: We have I think somewhere between eight and a dozen 543 00:30:49,360 --> 00:30:53,640 Speaker 11: filings in front of this agency with regard to exchange 544 00:30:53,680 --> 00:30:59,480 Speaker 11: traded products around bitcoin, and the staff of the various 545 00:30:59,480 --> 00:31:06,080 Speaker 11: divisions respond when market participants have filings. We also had 546 00:31:06,280 --> 00:31:11,000 Speaker 11: a court case earlier this fall in this regard, and 547 00:31:11,080 --> 00:31:15,080 Speaker 11: so we do things according to our authorities and how 548 00:31:15,160 --> 00:31:18,480 Speaker 11: courts interpret our authorities, and that's what we'll do here 549 00:31:18,560 --> 00:31:19,320 Speaker 11: as well. 550 00:31:19,480 --> 00:31:21,440 Speaker 4: The court case he is alluding to, by the way, 551 00:31:21,640 --> 00:31:24,640 Speaker 4: is the gray Scale case. Long story short. Grayscale wanted 552 00:31:24,680 --> 00:31:29,080 Speaker 4: to convert its Bitcoin Investment Trust GBTC into a spot ETF. 553 00:31:29,280 --> 00:31:32,480 Speaker 4: The SEC originally said no, so Grayscale sued, and a 554 00:31:32,560 --> 00:31:36,120 Speaker 4: judge ruled that the SEC was arbitrary and capricious. That's 555 00:31:36,120 --> 00:31:39,120 Speaker 4: a quote in its rejection. So the prevailing thinking is 556 00:31:39,160 --> 00:31:41,360 Speaker 4: that gray Scale's finally going to be able to convert, 557 00:31:41,600 --> 00:31:44,560 Speaker 4: and that opens the door to other spot ETFs being approved. 558 00:31:44,680 --> 00:31:47,400 Speaker 4: Let's get more on this with an actual expert. James 559 00:31:47,440 --> 00:31:51,360 Speaker 4: Steifert is joining us. He's an ETF analyst for Bloomberg Intelligence. 560 00:31:51,600 --> 00:31:53,760 Speaker 4: All right, James, is this going to happen and when? 561 00:31:54,040 --> 00:31:56,239 Speaker 14: Yeah? So, first of all, I want to commend you 562 00:31:56,280 --> 00:31:59,280 Speaker 14: on getting like a very unique and differentiative response from 563 00:31:59,320 --> 00:32:02,800 Speaker 14: Kensler on this topic. He's notorious for giving a lot 564 00:32:02,840 --> 00:32:07,080 Speaker 14: of long winded non answers, so that was not exactly 565 00:32:07,080 --> 00:32:09,680 Speaker 14: a clear straightforward answer, but it was better than most 566 00:32:09,720 --> 00:32:13,000 Speaker 14: people get, so put the job on that front. Yeah. 567 00:32:13,040 --> 00:32:16,520 Speaker 14: So we basically since the beginning of October, even since August, 568 00:32:16,560 --> 00:32:18,000 Speaker 14: we've been saying we think this is going to happen 569 00:32:18,040 --> 00:32:19,800 Speaker 14: in January because we thought gray Scale was going to 570 00:32:19,840 --> 00:32:22,720 Speaker 14: win this case. In October we went to ninety percent 571 00:32:22,760 --> 00:32:26,600 Speaker 14: odds that we'd see approvals on this front for spotpack 572 00:32:26,640 --> 00:32:30,000 Speaker 14: on ets by January tenth. There's been some moves by 573 00:32:30,040 --> 00:32:33,320 Speaker 14: the SEC, by Gensler's SEC in the recent weeks, and 574 00:32:33,440 --> 00:32:35,680 Speaker 14: it's really looking like these things are going to be approved, 575 00:32:36,000 --> 00:32:38,200 Speaker 14: and we could see those orders come down anywhere from 576 00:32:38,280 --> 00:32:41,000 Speaker 14: January eighth to January tenth if we're really narrowing in 577 00:32:41,040 --> 00:32:43,480 Speaker 14: on this window. So things are looking good and looking 578 00:32:43,480 --> 00:32:45,920 Speaker 14: like our call is going to be correct. But there 579 00:32:45,920 --> 00:32:48,320 Speaker 14: obviously there's no guarantees here, but that's the way things 580 00:32:48,320 --> 00:32:50,360 Speaker 14: are looking right now. And based on his quote that 581 00:32:50,400 --> 00:32:52,880 Speaker 14: he gave you there, that sounds pretty promising that he's 582 00:32:52,920 --> 00:32:54,200 Speaker 14: basically going to listen to the courts. 583 00:32:54,320 --> 00:32:56,160 Speaker 4: Yeah. Well, he may not have a choice when all 584 00:32:56,200 --> 00:32:58,760 Speaker 4: this said and done, but as we just heard from Chairgainsler, 585 00:32:58,800 --> 00:33:01,080 Speaker 4: there are a lot of these file in front of him, 586 00:33:01,200 --> 00:33:04,440 Speaker 4: so in front of the commission more broadly, and I 587 00:33:04,480 --> 00:33:08,320 Speaker 4: wonder if it's going to be an idea where Greyscale 588 00:33:08,360 --> 00:33:10,600 Speaker 4: won the battle, everybody else gets to win the war. 589 00:33:10,680 --> 00:33:12,880 Speaker 4: Who gets to go first? Does everybody get to go 590 00:33:13,360 --> 00:33:17,040 Speaker 4: all at once? Assuming it is going to be approval, 591 00:33:17,320 --> 00:33:18,960 Speaker 4: Are they all going to get approved at the same time? 592 00:33:18,960 --> 00:33:19,880 Speaker 4: How do you see this working? 593 00:33:20,120 --> 00:33:22,720 Speaker 14: Yeah, so we've been pretty vocal in thinking that they're 594 00:33:22,760 --> 00:33:24,800 Speaker 14: going to approve all at once. Basically, the way they 595 00:33:24,800 --> 00:33:28,080 Speaker 14: approve Bitcoin futures GTS was they let it go first come, 596 00:33:28,120 --> 00:33:30,080 Speaker 14: first serve, and pro shares was the first come in 597 00:33:30,120 --> 00:33:33,120 Speaker 14: that case. And they've basically become dominant in the space. 598 00:33:33,160 --> 00:33:34,760 Speaker 14: They are the only game in town for the most 599 00:33:34,760 --> 00:33:37,040 Speaker 14: part when you look at trading liquidity and volume and 600 00:33:37,200 --> 00:33:40,720 Speaker 14: assets for bitcoin futures etf So they'd learned from that 601 00:33:40,800 --> 00:33:42,640 Speaker 14: and they basically don't want to be a king maker. 602 00:33:42,880 --> 00:33:45,480 Speaker 14: We saw this when they allowed each futures ETFs in October, 603 00:33:45,480 --> 00:33:48,520 Speaker 14: they allowed everyone to go at once. There's thirteen applications 604 00:33:48,720 --> 00:33:51,480 Speaker 14: if you include grey Scale's application for spot Bitcoin ETFs, 605 00:33:51,480 --> 00:33:53,560 Speaker 14: and some of them have different variations how they would 606 00:33:53,560 --> 00:33:55,240 Speaker 14: do this, But our view is they're going to allow 607 00:33:55,280 --> 00:33:57,360 Speaker 14: all of them, basically approve all of them at once. 608 00:33:57,440 --> 00:33:59,560 Speaker 4: All right, Well, they still need to get approval first, 609 00:33:59,560 --> 00:34:01,440 Speaker 4: but it sounds like you think that'll be coming in 610 00:34:01,560 --> 00:34:04,200 Speaker 4: just a few week. Extreme Safer of Bloomberg Intelligence, thank 611 00:34:04,200 --> 00:34:07,000 Speaker 4: you so much, and Tom, I guess it may finally happen. 612 00:34:07,120 --> 00:34:09,680 Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host 613 00:34:09,760 --> 00:34:12,600 Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine to one 614 00:34:12,640 --> 00:34:15,920 Speaker 1: newsroom in Washington. And you can hear sound on weekdays 615 00:34:16,000 --> 00:34:19,680 Speaker 1: one to three pm Eastern Time on Bloomberg Radio. And 616 00:34:19,719 --> 00:34:22,160 Speaker 1: that does it for this edition of Bloomberg day Break Weekend. 617 00:34:22,520 --> 00:34:24,800 Speaker 1: Join us again Monday morning at five am Wall Street 618 00:34:24,840 --> 00:34:27,040 Speaker 1: Time for the latest on the market's overseas and the 619 00:34:27,080 --> 00:34:30,000 Speaker 1: news you need to start your day. I'm Tom Buzzby. 620 00:34:30,200 --> 00:34:33,080 Speaker 1: Stay with us. Top stories and global business headlines are 621 00:34:33,120 --> 00:34:35,239 Speaker 1: coming up right now.