1 00:00:01,840 --> 00:00:04,280 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,320 --> 00:00:06,120 Speaker 1: the top stories in the coming week from our day 3 00:00:06,120 --> 00:00:09,000 Speaker 1: Break anchors all around the world. Straight Ahead on the program, 4 00:00:09,080 --> 00:00:12,520 Speaker 1: the world's most valuable chip maker reports earnings this week. 5 00:00:12,600 --> 00:00:14,640 Speaker 1: I'm Tom Busby in New York. We'll tell you what 6 00:00:14,720 --> 00:00:15,880 Speaker 1: to expect from end video. 7 00:00:16,040 --> 00:00:18,479 Speaker 2: I'm Caroline Hedge in London, where we're looking ahead to 8 00:00:18,520 --> 00:00:22,000 Speaker 2: the UK government's autumn statement and it's a gloomy economic 9 00:00:22,040 --> 00:00:22,520 Speaker 2: back job. 10 00:00:22,600 --> 00:00:24,880 Speaker 3: I'm Bryan Curtis in Hong Kong. We look at the 11 00:00:24,960 --> 00:00:28,240 Speaker 3: US China agreement on fentanyl. What needs to happen to 12 00:00:28,320 --> 00:00:29,280 Speaker 3: disrupt the supply. 13 00:00:29,440 --> 00:00:32,080 Speaker 4: I'm Kaylee Lines in Washington, where Congress has averted a 14 00:00:32,120 --> 00:00:35,240 Speaker 4: government shutdown for now, with the real spending fight still ahead. 15 00:00:35,360 --> 00:00:39,120 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend, the business 16 00:00:39,159 --> 00:00:41,479 Speaker 5: news you need to wrap up your week in just 17 00:00:41,640 --> 00:00:46,200 Speaker 5: one fifteen minute podcast available on Apple, Spotify, The Bloomberg 18 00:00:46,240 --> 00:00:49,320 Speaker 5: Business Appen everywhere you get your podcasts. 19 00:00:51,200 --> 00:00:53,080 Speaker 1: Good day to you. I'm Tom Busby, and we begin 20 00:00:53,159 --> 00:00:56,680 Speaker 1: today's program with one of the last important third quarter 21 00:00:56,720 --> 00:01:00,200 Speaker 1: earnings reports, and it's a biggie and video reports on Tuesday, 22 00:01:00,520 --> 00:01:04,920 Speaker 1: Fueled by blockbuster demand for its artificial intelligence chips shares 23 00:01:05,360 --> 00:01:07,760 Speaker 1: up more than two hundred and thirty percent just so 24 00:01:07,840 --> 00:01:11,360 Speaker 1: far this year. Also in Vidia's latest breakthrough trip and 25 00:01:11,400 --> 00:01:14,360 Speaker 1: the impact of US restrictions on tech sales to China. 26 00:01:14,680 --> 00:01:17,320 Speaker 1: For all that and more, let's bring in Bloomberg Technology 27 00:01:17,360 --> 00:01:21,120 Speaker 1: host ed Ludlow in San Francisco and Bloomberg Intelligence senior 28 00:01:21,160 --> 00:01:25,000 Speaker 1: technology analyst man Deep Singing here in New York. Both 29 00:01:25,000 --> 00:01:27,840 Speaker 1: of you welcome, Ed. Let's start with you. What are 30 00:01:27,880 --> 00:01:31,520 Speaker 1: you expecting to see from Nvidio's earnings and its outlook? 31 00:01:32,080 --> 00:01:34,279 Speaker 6: So they'll just be a big focus on the data 32 00:01:34,319 --> 00:01:37,679 Speaker 6: center business for Nvideo, right and in the context of 33 00:01:37,720 --> 00:01:42,480 Speaker 6: artificial intelligence, in video makes GPUs graphics processing units, and 34 00:01:42,560 --> 00:01:46,480 Speaker 6: those are chips that are basically capable of doing lots 35 00:01:46,520 --> 00:01:49,440 Speaker 6: of parallel data processes at a very high level. It's 36 00:01:49,480 --> 00:01:51,960 Speaker 6: kind of what you need in an AI accelerator to 37 00:01:52,000 --> 00:01:56,200 Speaker 6: train the foundation models that POWERAI. And they've just seen 38 00:01:56,200 --> 00:01:59,680 Speaker 6: massive growth in that data center business. You know, last 39 00:01:59,720 --> 00:02:01,600 Speaker 6: quarter it was kind of one hundred and seventy percent 40 00:02:01,640 --> 00:02:04,720 Speaker 6: top line growth year on year, and going into this 41 00:02:05,000 --> 00:02:08,400 Speaker 6: fiscal third quarter, the expectation is that that growth jumps 42 00:02:08,400 --> 00:02:11,359 Speaker 6: to two hundred and thirty percent approximately year on year, 43 00:02:12,600 --> 00:02:15,600 Speaker 6: but as you pointed out, the stocks had an incredible 44 00:02:15,680 --> 00:02:18,480 Speaker 6: run in twenty twenty three so far the story is 45 00:02:18,520 --> 00:02:20,959 Speaker 6: well known in video. Is still the kind of market 46 00:02:20,960 --> 00:02:25,000 Speaker 6: incumbent for this specialized AI chip, and so expectations will 47 00:02:25,040 --> 00:02:28,120 Speaker 6: be really high. And around the corner they have their 48 00:02:28,160 --> 00:02:31,040 Speaker 6: next generation chip, the GH two hundred, which is due 49 00:02:31,080 --> 00:02:33,760 Speaker 6: to go in production in the second quarter of next year. 50 00:02:33,840 --> 00:02:36,399 Speaker 6: So you know that's how earnings always go, right, how 51 00:02:36,400 --> 00:02:38,560 Speaker 6: did they do on the things we know they're doing? 52 00:02:38,800 --> 00:02:40,880 Speaker 6: And when's the next big thing actually going to come 53 00:02:40,919 --> 00:02:43,720 Speaker 6: and materialize in their financials? And I'm sure that that 54 00:02:44,000 --> 00:02:46,920 Speaker 6: will be the discussion man do well. 55 00:02:47,000 --> 00:02:50,680 Speaker 7: So from my perspective, you know, the last two quarters 56 00:02:50,800 --> 00:02:54,680 Speaker 7: and videos come out not only beat their numbers, but 57 00:02:54,919 --> 00:02:57,880 Speaker 7: raise the guidance by you know, almost thirty forty percent, 58 00:02:58,200 --> 00:03:01,680 Speaker 7: And now that you know it's happened two times, I 59 00:03:01,720 --> 00:03:04,760 Speaker 7: think the bar is pretty high. But at the same time, 60 00:03:04,800 --> 00:03:07,799 Speaker 7: we know the market is still supply constrained. I mean, 61 00:03:07,919 --> 00:03:10,960 Speaker 7: everyone that we talk to keep saying, you know, they 62 00:03:11,000 --> 00:03:13,560 Speaker 7: can't find the GPUs, whether it's a eight hundred or 63 00:03:13,600 --> 00:03:17,600 Speaker 7: the h hundreds, to train the models to really invest 64 00:03:17,600 --> 00:03:21,600 Speaker 7: in GENAI. And so from that perspective, it still feels 65 00:03:21,639 --> 00:03:24,800 Speaker 7: like the market is supply constrained and that goes in 66 00:03:24,800 --> 00:03:29,400 Speaker 7: in Video's favor. Look, there are announcements from Microsoft yesterday 67 00:03:29,480 --> 00:03:33,359 Speaker 7: and then from AMD saying that their GPU business could 68 00:03:33,400 --> 00:03:36,760 Speaker 7: be two billion dollar und rate in twenty twenty four. 69 00:03:37,120 --> 00:03:39,800 Speaker 7: But when you compare to where in Video is we're 70 00:03:39,840 --> 00:03:43,600 Speaker 7: talking about sixty billion in data center revenue next year 71 00:03:44,120 --> 00:03:47,320 Speaker 7: or even higher, it just tells you like they have 72 00:03:47,400 --> 00:03:50,560 Speaker 7: the dominant share and they continue to be the preferred 73 00:03:50,600 --> 00:03:53,240 Speaker 7: accelerator for anyone who is training these a lot of 74 00:03:53,280 --> 00:03:54,080 Speaker 7: language models. 75 00:03:54,280 --> 00:03:55,880 Speaker 6: And Mandy, let me jump in and kind of help 76 00:03:55,880 --> 00:03:57,480 Speaker 6: out the audience with some of what you said. So 77 00:03:57,560 --> 00:04:02,280 Speaker 6: supply constrained means that basically there is more demand for 78 00:04:02,360 --> 00:04:05,560 Speaker 6: their AI accelerators or GPUs than they can actually make 79 00:04:05,640 --> 00:04:09,000 Speaker 6: right now. And that's kind of important because the risk 80 00:04:09,120 --> 00:04:11,920 Speaker 6: or the unknown in the background is China, and China 81 00:04:12,040 --> 00:04:14,240 Speaker 6: in the data center context has been like twenty to 82 00:04:14,280 --> 00:04:17,640 Speaker 6: twenty five percent of their business historically, and there are 83 00:04:17,720 --> 00:04:22,000 Speaker 6: technology export curbs, and how originally Nvidia got around that 84 00:04:22,560 --> 00:04:25,000 Speaker 6: was to make a lower spec version of the H 85 00:04:25,080 --> 00:04:27,240 Speaker 6: one hundred called the H eight hundred, or a lower 86 00:04:27,279 --> 00:04:29,200 Speaker 6: spec version of the A one hundred called the A 87 00:04:29,360 --> 00:04:33,279 Speaker 6: eight hundred. Those were GPUs specifically for the China market 88 00:04:33,839 --> 00:04:39,560 Speaker 6: that were conforming with the US technology export curbs that 89 00:04:39,560 --> 00:04:42,200 Speaker 6: were put in place. Those curbs were then expanded, and 90 00:04:42,240 --> 00:04:45,119 Speaker 6: you probably noticed last week some activity in the share 91 00:04:45,160 --> 00:04:49,600 Speaker 6: price around reports that they're planning three new chips next gen, 92 00:04:50,000 --> 00:04:53,120 Speaker 6: even lower spec to comply with those with those curbs. 93 00:04:53,279 --> 00:04:55,279 Speaker 6: But the reason I make that point, and I'm interesting 94 00:04:55,360 --> 00:04:57,280 Speaker 6: you take on this, man deep, is that when your 95 00:04:57,320 --> 00:05:01,040 Speaker 6: supply constrained, if one of your big market, China is 96 00:05:01,400 --> 00:05:04,600 Speaker 6: a warrior or a problem, there's plenty of demand elsewhere. 97 00:05:04,839 --> 00:05:07,159 Speaker 6: You know, from countries and companies all over the world 98 00:05:07,160 --> 00:05:10,400 Speaker 6: who are kind of clamoring to get hold of those 99 00:05:10,520 --> 00:05:13,480 Speaker 6: those specialist GPUs. And I know that on the Bloomberg 100 00:05:13,520 --> 00:05:16,640 Speaker 6: Technology Show and everyone I speak to that's certainly the case, right, 101 00:05:16,640 --> 00:05:18,360 Speaker 6: people would say, I'll take some of those if we 102 00:05:18,400 --> 00:05:18,960 Speaker 6: can get them. 103 00:05:19,320 --> 00:05:22,680 Speaker 7: Yeah, And look the way to model the revenue for 104 00:05:22,880 --> 00:05:26,960 Speaker 7: Nvidia or AMD. You know the lift from Jenni is 105 00:05:27,360 --> 00:05:30,719 Speaker 7: look at the hyperscaler CAPEX. I mean, these are still 106 00:05:30,839 --> 00:05:34,039 Speaker 7: the largest customers for these chips, because all these chips 107 00:05:34,040 --> 00:05:37,520 Speaker 7: are being deployed on public cloud. And we know Microsoft 108 00:05:37,560 --> 00:05:42,000 Speaker 7: has phrased their CAPEX expectations Googled not so much, and 109 00:05:42,600 --> 00:05:45,400 Speaker 7: Jensen was there at the Microsoft event. So it just 110 00:05:45,800 --> 00:05:48,960 Speaker 7: tells you that, you know, there is an appetite to 111 00:05:49,040 --> 00:05:52,440 Speaker 7: get these chips. However many Nvidia has, and you know, 112 00:05:52,560 --> 00:05:55,320 Speaker 7: if it's a hyperscaler, they're going to buy it, even 113 00:05:55,360 --> 00:05:57,880 Speaker 7: if they're investing in their own chips. And right now, 114 00:05:57,960 --> 00:06:01,800 Speaker 7: the definitely the markets seems like, you know, there is 115 00:06:01,839 --> 00:06:04,520 Speaker 7: a huge appetite for whatever and video is making on 116 00:06:04,560 --> 00:06:05,960 Speaker 7: the Accelerator. 117 00:06:05,360 --> 00:06:08,320 Speaker 6: Site exactly, and it's kind of important to think about 118 00:06:08,320 --> 00:06:10,479 Speaker 6: how those chips manifest in the real world. You just 119 00:06:10,520 --> 00:06:13,080 Speaker 6: outlined it. But in the courter Gone, I actually visited 120 00:06:13,120 --> 00:06:15,600 Speaker 6: in Nvidia and I got my hands on the now 121 00:06:15,720 --> 00:06:19,800 Speaker 6: infamous H one hundred. And when we're talking about GPUs 122 00:06:19,880 --> 00:06:24,200 Speaker 6: or literally semiconductors that are the brains behind training AI models, 123 00:06:24,640 --> 00:06:26,320 Speaker 6: it's not like a chip you can just hold in 124 00:06:26,360 --> 00:06:28,640 Speaker 6: your hand. You know, when people say, oh, I secured 125 00:06:28,640 --> 00:06:31,320 Speaker 6: a cluster of ten thousand, h one hundreds, they don't 126 00:06:31,480 --> 00:06:33,200 Speaker 6: just sort of have them in a bag slung over 127 00:06:33,240 --> 00:06:38,360 Speaker 6: their shoulder. As Mandeep explained, these GPUs go in combination 128 00:06:38,560 --> 00:06:41,960 Speaker 6: several GPUs into a box called a server design. That 129 00:06:42,120 --> 00:06:46,640 Speaker 6: server design goes, alongside dozens of others, into the infrastructure 130 00:06:46,640 --> 00:06:49,680 Speaker 6: that forms data centers. We're talking about like massive scale here. 131 00:06:50,040 --> 00:06:53,080 Speaker 6: And what Invidia has done and how it's been able 132 00:06:53,120 --> 00:06:56,440 Speaker 6: to maintain its lead is that right now, the work 133 00:06:56,480 --> 00:07:00,960 Speaker 6: that's being done on AI is training foundation models or 134 00:07:01,000 --> 00:07:04,320 Speaker 6: large language models that have billions and billions of parameters, 135 00:07:04,360 --> 00:07:07,520 Speaker 6: tens of billions, sometimes hundreds of billions of parameters. Only 136 00:07:07,560 --> 00:07:10,760 Speaker 6: the h one hundred can can really handle that right now? 137 00:07:11,040 --> 00:07:14,840 Speaker 6: And what was so interesting manib reference the news from AMD, 138 00:07:14,960 --> 00:07:18,560 Speaker 6: but specifically Microsoft coming out with its own silicon this week, 139 00:07:19,480 --> 00:07:22,480 Speaker 6: the Azure MAYA one hundred. You know, from what I 140 00:07:22,480 --> 00:07:25,600 Speaker 6: can tell, that's an AI accelerator that's much lower spec 141 00:07:25,680 --> 00:07:28,800 Speaker 6: right and it will do some of the more the 142 00:07:28,840 --> 00:07:32,760 Speaker 6: smaller models, more basic models. I guess what I'm saying 143 00:07:32,840 --> 00:07:36,280 Speaker 6: is like the market expectations super high because in Vidia 144 00:07:36,320 --> 00:07:38,160 Speaker 6: has a lead, and it looks like it will continue 145 00:07:38,200 --> 00:07:40,200 Speaker 6: to grow and maintain that lead for the time being. 146 00:07:40,400 --> 00:07:43,600 Speaker 7: I mean, what I'm interested in is what the software 147 00:07:43,640 --> 00:07:46,840 Speaker 7: strategy is so what people forget with then Vidia is 148 00:07:46,880 --> 00:07:49,960 Speaker 7: not only they have the accelerator, but they also had 149 00:07:49,960 --> 00:07:53,720 Speaker 7: the Kuda software that really makes it easy to train 150 00:07:53,840 --> 00:07:56,920 Speaker 7: your llms. And in this case, you know, if the 151 00:07:57,000 --> 00:08:01,240 Speaker 7: hyperscalers are spending five to ten billion dollars every hyperscaler 152 00:08:01,320 --> 00:08:04,400 Speaker 7: is spending on these GPU chips, how does it translate 153 00:08:04,480 --> 00:08:07,360 Speaker 7: into the cloud revenue next year? Because right now, when 154 00:08:07,360 --> 00:08:11,920 Speaker 7: you look at the cloud estimates, whether it's Azure, Amazon AWLS, 155 00:08:12,040 --> 00:08:17,120 Speaker 7: or Google GCP, the accelerator revenue is still not reflected 156 00:08:17,120 --> 00:08:19,560 Speaker 7: in the number. So I'm curious to see what is 157 00:08:19,600 --> 00:08:23,080 Speaker 7: the lag when you know the monetization starts to show 158 00:08:23,160 --> 00:08:24,480 Speaker 7: up in the cloud numbers. 159 00:08:24,840 --> 00:08:27,760 Speaker 1: You know, let's talk then let's pivot to the newest 160 00:08:27,840 --> 00:08:30,240 Speaker 1: chip that it's going to develop and come out next year. 161 00:08:30,400 --> 00:08:33,520 Speaker 1: You talked at about the Age one hundred, it's going 162 00:08:33,559 --> 00:08:36,280 Speaker 1: to come out with an Age two hundred. Sure, how 163 00:08:36,360 --> 00:08:39,040 Speaker 1: will that be different and how much more will it 164 00:08:39,080 --> 00:08:41,360 Speaker 1: be able to handle these large data sets? 165 00:08:41,840 --> 00:08:42,040 Speaker 8: Yes? 166 00:08:42,800 --> 00:08:43,160 Speaker 5: Go ahead. 167 00:08:43,679 --> 00:08:47,640 Speaker 6: So what we're talking about is the Grace Hopper super chip, 168 00:08:47,960 --> 00:08:51,120 Speaker 6: and it is both a GPU that we've just been 169 00:08:51,160 --> 00:08:56,080 Speaker 6: talking about a graphics processing unit, but also it has 170 00:08:56,760 --> 00:09:01,440 Speaker 6: within the design other components a processor, but particularly it 171 00:09:01,480 --> 00:09:06,400 Speaker 6: addresses the issue of memory. One of the challenges in 172 00:09:07,160 --> 00:09:12,800 Speaker 6: artificial intelligence and training large language models, which are basically 173 00:09:12,800 --> 00:09:21,440 Speaker 6: the underpinnings of artificial intelligence, is something called the memory wall. Okay, 174 00:09:21,640 --> 00:09:25,520 Speaker 6: and the memory wall basically is an issue where when 175 00:09:25,520 --> 00:09:30,000 Speaker 6: you have a really big AI workload, large AI models 176 00:09:30,040 --> 00:09:34,160 Speaker 6: have basically poor data reuse. They're drawing on lots of 177 00:09:34,240 --> 00:09:37,360 Speaker 6: data for their training, but when you deploy that AI 178 00:09:38,240 --> 00:09:42,080 Speaker 6: technology as a chatbot or another generative AI tool, it 179 00:09:42,200 --> 00:09:47,000 Speaker 6: basically has a poor success rateed cycling data that's already there, 180 00:09:47,320 --> 00:09:50,200 Speaker 6: and so it's really important to increase the memory capacity. 181 00:09:50,320 --> 00:09:53,440 Speaker 6: So in simple terms, the super chip GH two hundred 182 00:09:53,960 --> 00:09:59,559 Speaker 6: just has a more cutting edge inclusion of high BAM 183 00:09:59,679 --> 00:10:02,920 Speaker 6: with memory, and GH two hundred is going to go 184 00:10:02,920 --> 00:10:04,960 Speaker 6: into production in the second quarter of twenty twenty four, 185 00:10:05,040 --> 00:10:06,320 Speaker 6: so it's not going to be out there in the 186 00:10:06,320 --> 00:10:09,280 Speaker 6: real world at volume for some time. But from the 187 00:10:09,400 --> 00:10:12,880 Speaker 6: sheer technology standpoint, this is now the battleground. If you 188 00:10:12,920 --> 00:10:17,199 Speaker 6: look at AMD's equivalent, their AI accelerator, they lean very 189 00:10:17,240 --> 00:10:19,959 Speaker 6: heavily in this idea that they've addressed the high bandwidth 190 00:10:20,040 --> 00:10:23,000 Speaker 6: memory issue but AMD ain't going to be in production 191 00:10:23,040 --> 00:10:24,600 Speaker 6: at volume for some time as well. 192 00:10:24,800 --> 00:10:25,079 Speaker 5: Well. 193 00:10:25,120 --> 00:10:27,240 Speaker 1: A lot to look forward to our thanks to Bloomberg 194 00:10:27,240 --> 00:10:31,480 Speaker 1: Television Technology host ed Ludlow in San Francisco and Bloomberg 195 00:10:31,520 --> 00:10:35,280 Speaker 1: Intelligence Senior technology analyst man Deep sing here in New York. 196 00:10:35,559 --> 00:10:39,160 Speaker 1: Catch Bloomberg Technology weekdays at noon Wall Street Time and 197 00:10:39,720 --> 00:10:43,120 Speaker 1: get the B Tech podcast wherever you download. Coming up 198 00:10:43,160 --> 00:10:45,800 Speaker 1: on Bloomberg day Break Weekend, a preview of UK Prime 199 00:10:45,800 --> 00:10:50,240 Speaker 1: Minister Rishi Sunak's spending plans. I'm Tom Busby and this 200 00:10:50,520 --> 00:11:03,800 Speaker 1: is Bloomberg. This is Bloomberg Daybreak Weekend, our global look 201 00:11:03,800 --> 00:11:06,520 Speaker 1: ahead at the top stories for investors in the coming week. 202 00:11:06,800 --> 00:11:09,440 Speaker 1: I'm Tom Busby in New York. Up later in our 203 00:11:09,480 --> 00:11:11,640 Speaker 1: program a look at one of the key agreements reached 204 00:11:11,640 --> 00:11:14,320 Speaker 1: by the US in China following that presidential meeting in 205 00:11:14,400 --> 00:11:18,600 Speaker 1: San Francisco. But first in the UK, Rishi Sunak's government 206 00:11:18,679 --> 00:11:21,520 Speaker 1: will unveil its tax and spending plans in the coming days. 207 00:11:21,800 --> 00:11:24,760 Speaker 1: Some positive economic data has given the Prime minister a 208 00:11:24,840 --> 00:11:28,240 Speaker 1: boost on achieving its economic goals, but the budget may 209 00:11:28,280 --> 00:11:30,960 Speaker 1: not make for such optimistic reading. For more or let's 210 00:11:30,960 --> 00:11:33,320 Speaker 1: go to London and bring in Bloomberg Daybreak, europe Banker 211 00:11:33,679 --> 00:11:35,599 Speaker 1: Caroline Hepger tom. 212 00:11:35,480 --> 00:11:37,920 Speaker 2: Rischie Sunak has been on a roller coaster in the 213 00:11:37,960 --> 00:11:41,160 Speaker 2: past week. He met one of his five key pledges 214 00:11:41,200 --> 00:11:44,440 Speaker 2: to votus that inflation should come down below five percent 215 00:11:44,480 --> 00:11:46,480 Speaker 2: by the end of the year, but he suffered a 216 00:11:46,559 --> 00:11:50,199 Speaker 2: major setback on another to reduce illegal migration, when the 217 00:11:50,320 --> 00:11:53,720 Speaker 2: UK's top court said that his plan to deport asylum 218 00:11:53,760 --> 00:11:57,800 Speaker 2: seekers to Rwanda was illegal. Add to that a controversial 219 00:11:57,880 --> 00:12:01,480 Speaker 2: reshuffle of his top team and it has been a 220 00:12:01,520 --> 00:12:05,680 Speaker 2: busy few days. So in the coming week, the Prime Minister, 221 00:12:05,760 --> 00:12:08,439 Speaker 2: along with his Chancellor Jeremy Hunt, will be trying to 222 00:12:08,480 --> 00:12:12,400 Speaker 2: reset the government's economic agenda. All this with one eye 223 00:12:12,400 --> 00:12:16,080 Speaker 2: on a general election that is expected within the next year. 224 00:12:16,440 --> 00:12:19,320 Speaker 2: The economic and fiscal situation in the UK is still 225 00:12:19,360 --> 00:12:24,160 Speaker 2: pretty gloomy, with growth flatlining, inflation is still well above 226 00:12:24,240 --> 00:12:28,240 Speaker 2: the Bank of England's two percent target, and rising borrowing costs. 227 00:12:28,679 --> 00:12:31,760 Speaker 2: On Blueberg Radio, I've been speaking to Elizabeth Martin's UK 228 00:12:31,800 --> 00:12:36,920 Speaker 2: economist at HSBC for her view about the situation facing 229 00:12:36,960 --> 00:12:37,679 Speaker 2: the chancellor. 230 00:12:38,440 --> 00:12:41,240 Speaker 9: What's the UK government borrowing is actually coming in below 231 00:12:41,400 --> 00:12:44,880 Speaker 9: what the OBR had been expecting in the near terms 232 00:12:44,920 --> 00:12:47,480 Speaker 9: it's okay, but you know, the amount of issuance into 233 00:12:47,480 --> 00:12:50,480 Speaker 9: the guilt market is concerning, I think to everyone involved 234 00:12:50,480 --> 00:12:53,640 Speaker 9: in in that market, and I think, look, we're servicing 235 00:12:53,640 --> 00:12:56,800 Speaker 9: a debt level of nearly one hundred percent of GDP 236 00:12:57,800 --> 00:13:01,080 Speaker 9: at rates at fifteen year half. So all of those 237 00:13:01,120 --> 00:13:03,680 Speaker 9: things do worry me. And I think whoever wins the 238 00:13:03,760 --> 00:13:06,800 Speaker 9: election is going to have some difficult choices to make 239 00:13:06,880 --> 00:13:09,600 Speaker 9: unless we can find that holy grail supply side growth 240 00:13:09,640 --> 00:13:12,400 Speaker 9: and you know, grow the pie, as Let's Trust used 241 00:13:12,400 --> 00:13:12,800 Speaker 9: to say. 242 00:13:12,920 --> 00:13:17,560 Speaker 2: So that was Elizabeth Martin's UK economists at HSBC for herview. 243 00:13:17,800 --> 00:13:21,520 Speaker 2: As the governing Conservatives continue to trail behind the opposition 244 00:13:21,600 --> 00:13:24,520 Speaker 2: Labor Party in the polls, the Chancellor will be keen 245 00:13:24,640 --> 00:13:28,079 Speaker 2: to make an impact with his autumn statement. And I've 246 00:13:28,120 --> 00:13:32,800 Speaker 2: been discussing the context with Bloomberg opinion columnist Marcus Ashworth 247 00:13:33,120 --> 00:13:36,160 Speaker 2: asking him what he thinks the context is to the 248 00:13:36,200 --> 00:13:37,040 Speaker 2: autumn statement. 249 00:13:37,640 --> 00:13:39,920 Speaker 8: I actually think that the data out recently has been 250 00:13:40,040 --> 00:13:42,120 Speaker 8: very good for the UK and it's why sterling is 251 00:13:42,120 --> 00:13:44,840 Speaker 8: at one twenty four. So I appreciate that's more dollar 252 00:13:44,880 --> 00:13:47,240 Speaker 8: drive them, but you know, look, the economy is only 253 00:13:47,280 --> 00:13:50,560 Speaker 8: at zero. I mean, that's a great result, and I 254 00:13:50,600 --> 00:13:54,480 Speaker 8: do think interest rates are have Peete and I will 255 00:13:54,480 --> 00:13:58,160 Speaker 8: come lower. The interesting point is he's got a little 256 00:13:58,200 --> 00:14:00,600 Speaker 8: bit of wiggle room because if you look at numbers 257 00:14:01,000 --> 00:14:04,320 Speaker 8: year today, the public finances as ever are completely different 258 00:14:04,360 --> 00:14:07,160 Speaker 8: for what the Ober thought they might be. I'm not 259 00:14:07,200 --> 00:14:08,880 Speaker 8: having a go at them, it's it's the way the 260 00:14:08,920 --> 00:14:12,439 Speaker 8: system works. But we're probably going to be about thirty 261 00:14:12,480 --> 00:14:14,800 Speaker 8: six billion or something like that better by the end 262 00:14:14,840 --> 00:14:18,360 Speaker 8: of this financial year. Were already about twenty billion better. 263 00:14:18,880 --> 00:14:21,440 Speaker 8: And that means that probably we will have to issue 264 00:14:21,480 --> 00:14:26,320 Speaker 8: about twenty twenty six less guilts and t bills. He 265 00:14:26,360 --> 00:14:29,800 Speaker 8: can play around this stuff. He has some headroom that 266 00:14:29,880 --> 00:14:33,240 Speaker 8: could of course go away, and it's more a political 267 00:14:33,320 --> 00:14:36,240 Speaker 8: question whether he wants to spend it now. I think 268 00:14:36,240 --> 00:14:38,440 Speaker 8: he made There's lots of hints already coming in as 269 00:14:38,880 --> 00:14:42,960 Speaker 8: his usual UK politics, and I think inheritance tax is 270 00:14:42,960 --> 00:14:46,480 Speaker 8: something he wants to do something about very soon. He 271 00:14:46,560 --> 00:14:50,200 Speaker 8: may cup the limit from forty percent tax down to say, 272 00:14:50,520 --> 00:14:54,400 Speaker 8: I know, thirty or even twenty percent. That's a sort 273 00:14:54,400 --> 00:14:56,240 Speaker 8: of to keep the background is happy a bit, but 274 00:14:56,320 --> 00:15:00,040 Speaker 8: he wants to keep the dry powder for clearly the 275 00:15:00,040 --> 00:15:02,440 Speaker 8: the budget in March, and I think all they can 276 00:15:02,520 --> 00:15:05,480 Speaker 8: really do this government is at least give the inclination 277 00:15:05,560 --> 00:15:08,240 Speaker 8: that they will cut taxes in the future, wait for 278 00:15:08,280 --> 00:15:10,920 Speaker 8: the Bank of the until possibly have cut rates by 279 00:15:10,960 --> 00:15:13,120 Speaker 8: the time of the next election. But you know, they've 280 00:15:13,240 --> 00:15:15,200 Speaker 8: not got much room, but they have enough room to 281 00:15:15,200 --> 00:15:18,320 Speaker 8: do something. They could of course increase spending, but I 282 00:15:18,320 --> 00:15:20,280 Speaker 8: think all they'll really do is set traps for the 283 00:15:20,280 --> 00:15:21,280 Speaker 8: next labor government. 284 00:15:21,640 --> 00:15:24,520 Speaker 2: What about any tax books do you think for UK businesses, 285 00:15:24,560 --> 00:15:28,080 Speaker 2: because that's the other big kind of lobby is companies 286 00:15:28,120 --> 00:15:32,200 Speaker 2: who want to be able to invest, to grow businesses, 287 00:15:32,280 --> 00:15:35,560 Speaker 2: to get to get well an extension of tax breaks 288 00:15:35,560 --> 00:15:39,000 Speaker 2: that they've enjoyed. Do you think that's possible. Would it 289 00:15:39,040 --> 00:15:40,880 Speaker 2: be well received by market? 290 00:15:40,280 --> 00:15:42,960 Speaker 8: It should be possible, It should be the right thing 291 00:15:42,960 --> 00:15:44,840 Speaker 8: to do. The question is how many votes are actually 292 00:15:44,840 --> 00:15:47,680 Speaker 8: in there, and that's a very horrible situation we're in. 293 00:15:48,000 --> 00:15:50,760 Speaker 8: The right thing to do is to extend these basically 294 00:15:51,280 --> 00:15:55,440 Speaker 8: all investments investment be set up against tax, which they've 295 00:15:55,480 --> 00:15:57,920 Speaker 8: had to because of again these OBR rules, they had 296 00:15:57,920 --> 00:16:01,400 Speaker 8: to limit that to three years. They're playing games of 297 00:16:01,480 --> 00:16:05,080 Speaker 8: their around their own rules. It's a situation we're in. Unfortunately, 298 00:16:05,320 --> 00:16:08,680 Speaker 8: we're boxed in by this this ridiculous fiscal framework, and 299 00:16:08,720 --> 00:16:11,640 Speaker 8: that's why if you're investing, you will need an horizon 300 00:16:11,680 --> 00:16:13,600 Speaker 8: longer than three years. At the moment, the tax breaks 301 00:16:13,600 --> 00:16:16,040 Speaker 8: only out for three years and it's about to expire. 302 00:16:17,160 --> 00:16:19,760 Speaker 8: They will increase that. Will they extend it permanently? I 303 00:16:19,800 --> 00:16:23,080 Speaker 8: hope they do so in essence or business investment can 304 00:16:23,120 --> 00:16:26,160 Speaker 8: be offset against corporation tax. I don't think they'll cut 305 00:16:26,200 --> 00:16:28,880 Speaker 8: corporation tax every roll, but they'll increase analysis. It's the 306 00:16:28,960 --> 00:16:30,960 Speaker 8: right thing to do. I hope they do it. Whether 307 00:16:31,000 --> 00:16:34,080 Speaker 8: they do it or not depends purely on the politics 308 00:16:34,080 --> 00:16:36,160 Speaker 8: sadly here, and I think there is a chance they 309 00:16:36,200 --> 00:16:39,280 Speaker 8: may delay that or certainly put that into it in 310 00:16:39,320 --> 00:16:41,840 Speaker 8: a situation where it makes it all that pain will 311 00:16:41,880 --> 00:16:44,400 Speaker 8: come in future fiscal years and not this currently. 312 00:16:45,440 --> 00:16:49,360 Speaker 2: There's also been a drive to try to turn around 313 00:16:49,440 --> 00:16:53,200 Speaker 2: the fortunes of London listings to try to get pension 314 00:16:53,280 --> 00:16:55,960 Speaker 2: funds and we've spoken about this before, to get them 315 00:16:56,040 --> 00:16:59,120 Speaker 2: to invest into UK businesses. Now today we've been talking 316 00:16:59,160 --> 00:17:02,880 Speaker 2: this money on big Radio about the British ier. I mean, 317 00:17:03,000 --> 00:17:06,120 Speaker 2: is that the answer to the poor performance of UK stocks. 318 00:17:06,160 --> 00:17:08,800 Speaker 2: Would it work. There's a chance they're going to do it. 319 00:17:08,800 --> 00:17:13,320 Speaker 8: It's the answer for UK stockbreakers for sure. I mean 320 00:17:13,600 --> 00:17:16,920 Speaker 8: it's amazing to read some of the commentary on perhaps 321 00:17:17,680 --> 00:17:20,200 Speaker 8: great ideas coming out. Let's make a British ier and 322 00:17:20,560 --> 00:17:25,880 Speaker 8: increase the allowances. I'm very, very nervous when they're talking 323 00:17:25,920 --> 00:17:30,320 Speaker 8: about putting our pensions, for instance, into sort of infrastructure products. 324 00:17:30,359 --> 00:17:33,119 Speaker 8: Please leave our sayings alone. That's not where the government 325 00:17:33,160 --> 00:17:36,080 Speaker 8: should be. If you want to give us greater allowances, fine, 326 00:17:36,119 --> 00:17:38,880 Speaker 8: but don't alter or steer it in such a way 327 00:17:38,880 --> 00:17:42,439 Speaker 8: that you are making you invest in something which we 328 00:17:42,440 --> 00:17:46,199 Speaker 8: shouldn't necessarily be investing in. And I think it's a 329 00:17:46,280 --> 00:17:49,720 Speaker 8: very dangerous subject. I do think there's a halfway house. 330 00:17:49,760 --> 00:17:52,440 Speaker 8: They can increase the allowance if you put it into 331 00:17:52,640 --> 00:17:55,520 Speaker 8: UK things, but I don't think you should be altering 332 00:17:55,560 --> 00:17:58,160 Speaker 8: the current allowances to invest around the world or where 333 00:17:58,160 --> 00:18:00,240 Speaker 8: you want to, because I don't think that's what and 334 00:18:00,280 --> 00:18:04,520 Speaker 8: should be steering and picking winners. So yes, they may 335 00:18:04,640 --> 00:18:06,720 Speaker 8: play with this. This has been flagged quite hard, so 336 00:18:06,800 --> 00:18:09,080 Speaker 8: I imagine there will be something, whether they leave it 337 00:18:09,119 --> 00:18:11,400 Speaker 8: till the budget or they do it now. They also 338 00:18:11,440 --> 00:18:13,680 Speaker 8: said I don't know, but yeah, we might get something 339 00:18:13,680 --> 00:18:15,560 Speaker 8: on that. To sound all pro British. 340 00:18:15,920 --> 00:18:18,120 Speaker 2: The issue, you know, more broadly is about the kind 341 00:18:18,160 --> 00:18:20,800 Speaker 2: of inflationary pressures and what the Bank of England does. 342 00:18:20,880 --> 00:18:24,120 Speaker 2: I mean, put that into context. How much further does 343 00:18:24,440 --> 00:18:27,440 Speaker 2: the Bank of England have to work to bring down 344 00:18:27,440 --> 00:18:28,320 Speaker 2: inflation in the UK. 345 00:18:29,240 --> 00:18:31,320 Speaker 8: They don't have to do anything. They've overdone it. In fact, 346 00:18:31,440 --> 00:18:35,679 Speaker 8: I think the panic hike in Dune and fifty basis 347 00:18:35,720 --> 00:18:37,920 Speaker 8: points two days later they got the CPI number which 348 00:18:38,000 --> 00:18:40,040 Speaker 8: realized the actual fact they didn't need to do anything. 349 00:18:41,359 --> 00:18:45,600 Speaker 8: And we've seen the numbers out this week that you know, 350 00:18:45,640 --> 00:18:48,879 Speaker 8: particularly services inflation down to six point six that's already 351 00:18:48,920 --> 00:18:51,040 Speaker 8: well above where the Bank of England expects to be 352 00:18:51,080 --> 00:18:52,639 Speaker 8: a six point nine at the end of this quarter. 353 00:18:54,000 --> 00:18:56,879 Speaker 8: They've overdone it, as has I think the European Central 354 00:18:56,920 --> 00:19:00,600 Speaker 8: Bank as well, which brings us into As I said, 355 00:19:00,640 --> 00:19:04,200 Speaker 8: I expect a rate cut before the next election. As 356 00:19:04,200 --> 00:19:07,600 Speaker 8: I think the economy, as I said, flatlining at zero. 357 00:19:07,760 --> 00:19:12,400 Speaker 8: It's a fantastic result. In our economists expect overall drop 358 00:19:12,440 --> 00:19:15,399 Speaker 8: a one four percentage point in ghost domestic product over 359 00:19:15,440 --> 00:19:18,920 Speaker 8: the course of the next year. I think that's certainly possible, 360 00:19:19,000 --> 00:19:21,640 Speaker 8: and I think we'll be talking more about the prospect 361 00:19:21,640 --> 00:19:24,639 Speaker 8: of inflation coming down too quickly. And I'm the worries 362 00:19:24,680 --> 00:19:26,920 Speaker 8: again of getting below that target a little and earth 363 00:19:26,880 --> 00:19:27,720 Speaker 8: than they're expected. 364 00:19:28,040 --> 00:19:29,840 Speaker 1: So I think the cost. 365 00:19:29,680 --> 00:19:33,160 Speaker 8: Of living crisis we're now should we say, reverse earnings 366 00:19:33,160 --> 00:19:36,160 Speaker 8: are now substantially above where inflation is. I think food 367 00:19:36,200 --> 00:19:38,280 Speaker 8: prices can you come down. We've already seen the energy 368 00:19:38,280 --> 00:19:41,040 Speaker 8: stuff watch out, so I personally think we'll get some 369 00:19:41,080 --> 00:19:42,000 Speaker 8: good us on that front. 370 00:19:42,040 --> 00:19:45,399 Speaker 2: That was Bloomberg opinion columnist Marcus Ashworth. My thanks to 371 00:19:45,480 --> 00:19:48,000 Speaker 2: him for joining me. I'm Caroline Hepgar here in London. 372 00:19:48,320 --> 00:19:51,160 Speaker 2: You can catch us every weekday morning for Bloomberg Daybreak 373 00:19:51,240 --> 00:19:53,720 Speaker 2: eu at beginning at six am in London. That's one 374 00:19:53,760 --> 00:19:54,879 Speaker 2: am on Wall Street. 375 00:19:55,040 --> 00:19:58,679 Speaker 1: Tom our thanks to Bloomberg Daybreak Europe banker Caroline Hepgar 376 00:19:58,760 --> 00:20:01,240 Speaker 1: and coming up on Bloomberg day Break weekend, the plan 377 00:20:01,400 --> 00:20:05,000 Speaker 1: for a crackdown on fentanyl by both the US and China. 378 00:20:05,440 --> 00:20:19,240 Speaker 1: I'm Tom Busby and this is Bloomberg. I'm Tom Busby 379 00:20:19,240 --> 00:20:20,960 Speaker 1: in New York with your global look ahead at the 380 00:20:20,960 --> 00:20:23,640 Speaker 1: top stories for investors in the coming week. The US 381 00:20:23,720 --> 00:20:27,800 Speaker 1: government avoids another possible shutdown, at least for now, as 382 00:20:27,840 --> 00:20:30,600 Speaker 1: we'll look at what's next for Congress. But first, the 383 00:20:30,720 --> 00:20:34,400 Speaker 1: deal that President Biden reached with Chinese President shi Jinping 384 00:20:34,560 --> 00:20:37,879 Speaker 1: to combat the manufacture and export of fentanyl into the 385 00:20:37,960 --> 00:20:41,600 Speaker 1: US has been characterized by senior US officials as the 386 00:20:41,600 --> 00:20:45,240 Speaker 1: most important agreement coming out of that summit. So what's next? 387 00:20:45,600 --> 00:20:47,679 Speaker 1: What steps are needed to disrupt the supply? 388 00:20:47,960 --> 00:20:48,400 Speaker 3: For more? 389 00:20:48,600 --> 00:20:52,679 Speaker 1: Bloomberg Daybreak Asia anchor Brian Curtis speaks with Michelle Cortes 390 00:20:52,800 --> 00:20:55,440 Speaker 1: Bloomberg Medical Science and Tech reporter. 391 00:20:55,320 --> 00:20:57,639 Speaker 3: Tom We focus on one of the key areas of 392 00:20:57,680 --> 00:21:02,840 Speaker 3: agreement between President Biden and Chinese Leadershijenping, combating the spread 393 00:21:02,920 --> 00:21:07,280 Speaker 3: of fentanyl. Fentanyl is a synthetic opioid produced by companies 394 00:21:07,280 --> 00:21:10,119 Speaker 3: in China. China said that it would take actions to 395 00:21:10,160 --> 00:21:13,320 Speaker 3: prevent the raw materials of the drug, known as precursors, 396 00:21:13,640 --> 00:21:17,520 Speaker 3: from being exported without controls. The precursors find their way 397 00:21:17,560 --> 00:21:21,320 Speaker 3: into Mexico and into the hands of primarily two criminal gangs, 398 00:21:21,680 --> 00:21:26,439 Speaker 3: the Sineloa Cartel and the Cartel Jalisco New Generation. The 399 00:21:26,520 --> 00:21:30,720 Speaker 3: gang synthesize the chemicals into fentanyl and hire US citizens 400 00:21:30,720 --> 00:21:33,399 Speaker 3: for the most part, to smuggle the drugs into the 401 00:21:33,520 --> 00:21:37,600 Speaker 3: United States. So how does that chain get disrupted? Well, 402 00:21:37,720 --> 00:21:41,480 Speaker 3: joining us now is Michelle Cortez from Bloomberg's Global Business 403 00:21:41,520 --> 00:21:45,520 Speaker 3: Asia team, So in terms of how does he get disrupted, 404 00:21:45,600 --> 00:21:48,359 Speaker 3: I suppose it's at the source. That's what this is 405 00:21:48,400 --> 00:21:49,639 Speaker 3: all about. Can they do it? 406 00:21:49,920 --> 00:21:52,399 Speaker 10: Good news, of course that China and the US are 407 00:21:52,400 --> 00:21:55,679 Speaker 10: working together on pretty much anything these days. We're a 408 00:21:55,720 --> 00:21:58,800 Speaker 10: fan of that, but particularly when we're talking about something 409 00:21:58,920 --> 00:22:02,359 Speaker 10: like the opioid christ which is killing about one hundred 410 00:22:02,359 --> 00:22:05,560 Speaker 10: and fifty Americans every single day. And Brian, you're exactly right. 411 00:22:05,600 --> 00:22:08,320 Speaker 10: What they're doing is they're going after the source material, 412 00:22:08,640 --> 00:22:13,480 Speaker 10: the active pharmaceutical ingredient for the fentanyl. China is the 413 00:22:13,520 --> 00:22:16,480 Speaker 10: manufacturing hub of the entire world. That is certainly true 414 00:22:16,480 --> 00:22:20,320 Speaker 10: for pharmaceutical products, and fentanyl is an improved drug. It 415 00:22:20,480 --> 00:22:24,040 Speaker 10: is used for real medical reasons and a lot of 416 00:22:24,040 --> 00:22:26,840 Speaker 10: that production comes out of China. But what is also 417 00:22:26,920 --> 00:22:31,120 Speaker 10: happening is this illegal production that is being also done 418 00:22:31,160 --> 00:22:34,280 Speaker 10: in China, and for a long time was fed directly 419 00:22:34,320 --> 00:22:36,760 Speaker 10: to the US. There was a crackdown on that, and 420 00:22:36,800 --> 00:22:39,600 Speaker 10: what has happened since then is a lot of those 421 00:22:39,640 --> 00:22:43,240 Speaker 10: precursor ingredients are now being sent to Mexico in the 422 00:22:43,240 --> 00:22:47,959 Speaker 10: form of powders and liquids. They're being built into medicines, 423 00:22:48,440 --> 00:22:53,040 Speaker 10: pills and drops that are smuggled over the border as 424 00:22:53,080 --> 00:22:56,480 Speaker 10: you pointed to, getting to Americans. And it's that piece. 425 00:22:56,800 --> 00:23:02,119 Speaker 10: It's actually nailing down who's making the active ingredients in China, 426 00:23:02,240 --> 00:23:05,120 Speaker 10: making sure that only the legitimate stuff is shipped out 427 00:23:05,480 --> 00:23:06,359 Speaker 10: to the right place. 428 00:23:06,680 --> 00:23:10,480 Speaker 3: So do we know much about the way in to 429 00:23:10,680 --> 00:23:15,439 Speaker 3: these companies and the flow out of the chemicals. 430 00:23:15,160 --> 00:23:18,760 Speaker 10: Right, So that's exactly the point. We don't know certainly 431 00:23:19,000 --> 00:23:23,320 Speaker 10: as people in general, as users, as reporters, we don't 432 00:23:23,320 --> 00:23:27,520 Speaker 10: know who's making real ventanyl, who's making illicit ventanyl, and 433 00:23:27,680 --> 00:23:30,280 Speaker 10: where it's going. That is going to require the Chinese 434 00:23:30,280 --> 00:23:33,960 Speaker 10: government to really buckle down and to put money, time 435 00:23:34,000 --> 00:23:38,040 Speaker 10: and effort into organizing and they're going to really have 436 00:23:38,080 --> 00:23:42,159 Speaker 10: to put effort into figuring out which companies, which manufacturing plants, 437 00:23:42,160 --> 00:23:44,840 Speaker 10: are making what medicines and where they're sending it. And 438 00:23:44,880 --> 00:23:46,920 Speaker 10: that's the piece that's where the rubber hits the road 439 00:23:47,119 --> 00:23:49,880 Speaker 10: that they're going to have to actually do the investigations. 440 00:23:50,160 --> 00:23:53,200 Speaker 10: The bureaucracy, the paperwork, all of that kind of nitty 441 00:23:53,200 --> 00:23:55,600 Speaker 10: gritty stuff. It is not easy. It is not going 442 00:23:55,640 --> 00:23:58,000 Speaker 10: to be fast, but that's the stuff that's going to 443 00:23:58,040 --> 00:24:00,200 Speaker 10: have to happen in order to reduce the trade. 444 00:24:00,280 --> 00:24:02,680 Speaker 3: It's always something of a black box in China. It's 445 00:24:02,720 --> 00:24:06,920 Speaker 3: not easy to know exactly what sorts of controls there are. 446 00:24:06,960 --> 00:24:09,440 Speaker 3: Do we know much about the controls that are already 447 00:24:09,440 --> 00:24:12,159 Speaker 3: in place and what needs to be added? 448 00:24:12,520 --> 00:24:15,520 Speaker 10: Well, we certainly know about the controls where the Food 449 00:24:15,560 --> 00:24:19,720 Speaker 10: and Drug Administration comes in and reviews all of the 450 00:24:19,800 --> 00:24:22,080 Speaker 10: manufacturing that's happening to make sure that it's being done 451 00:24:22,160 --> 00:24:25,359 Speaker 10: on the up and up. So anything that is FDA 452 00:24:25,480 --> 00:24:30,240 Speaker 10: approved manufacturers those companies we know. The problem is is 453 00:24:30,280 --> 00:24:33,520 Speaker 10: that that's not where the issue is. That's not the companies 454 00:24:33,600 --> 00:24:37,199 Speaker 10: normally that are sending out the illicit material, and so 455 00:24:37,359 --> 00:24:40,119 Speaker 10: finding those companies people who are doing things on the side, 456 00:24:40,119 --> 00:24:43,800 Speaker 10: perhaps who have the knowledge, maybe they're getting the access 457 00:24:43,800 --> 00:24:48,040 Speaker 10: to these ingredients for things that aren't actually medicines. They're 458 00:24:48,160 --> 00:24:51,840 Speaker 10: used in many other things, painting and automotive uses, stuff 459 00:24:51,880 --> 00:24:55,520 Speaker 10: like that. These chemicals aren't just medicines. So there's a 460 00:24:55,520 --> 00:24:57,480 Speaker 10: lot of different avenues where you can get into that, 461 00:24:57,680 --> 00:24:59,240 Speaker 10: and we are going to really be relying on the 462 00:24:59,280 --> 00:25:04,200 Speaker 10: Chinese government to buckle down and dig deep to find them. 463 00:25:04,400 --> 00:25:07,000 Speaker 3: Well, let me ask you this, If by chance we 464 00:25:07,080 --> 00:25:10,560 Speaker 3: get serious controls put in place, what's to stop the 465 00:25:10,600 --> 00:25:16,000 Speaker 3: Mexican cartels from accessing this material elsewhere? Is it really 466 00:25:16,000 --> 00:25:18,920 Speaker 3: hard to make? Is it really China that specializes in this. 467 00:25:19,320 --> 00:25:22,680 Speaker 10: Well, we have seen since the crackdown on China in 468 00:25:23,440 --> 00:25:26,240 Speaker 10: about twenty nineteen that a lot of this effort has 469 00:25:26,400 --> 00:25:29,199 Speaker 10: shifted over to China, I mean, has shifted over to India. 470 00:25:29,520 --> 00:25:33,280 Speaker 10: China and India are the two big active pharmaceutical ingredient 471 00:25:33,280 --> 00:25:36,199 Speaker 10: producers for the world, and we have seen that shift. 472 00:25:36,600 --> 00:25:39,639 Speaker 10: It is difficult to make medicines. We see that with 473 00:25:39,920 --> 00:25:43,520 Speaker 10: shortages of generic drugs and many other medicines, you know, 474 00:25:43,680 --> 00:25:46,960 Speaker 10: things for cancer, chemotherapy is really important things. It is 475 00:25:47,000 --> 00:25:50,359 Speaker 10: not easy to just crank something up and start generating 476 00:25:50,400 --> 00:25:52,520 Speaker 10: these medicines and rolling it out. So it would be 477 00:25:52,600 --> 00:25:55,720 Speaker 10: difficult for Mexico to actually start producing it. For these 478 00:25:56,240 --> 00:25:58,320 Speaker 10: crime cartels to be doing it on their own, they 479 00:25:58,320 --> 00:26:00,800 Speaker 10: need to get the access to it from where. But 480 00:26:00,920 --> 00:26:03,960 Speaker 10: whether or not they can shift all of the demand, 481 00:26:04,040 --> 00:26:08,400 Speaker 10: all the supply to India or other manufacturing powerhouses. 482 00:26:08,880 --> 00:26:09,600 Speaker 7: We'll have to watch. 483 00:26:10,040 --> 00:26:13,239 Speaker 3: And Michelle from the medical science standpoint, why is it 484 00:26:13,359 --> 00:26:15,560 Speaker 3: that fentanyl is killing so many people? 485 00:26:15,720 --> 00:26:19,400 Speaker 10: It is all overdose. Fentanyl is a synthetic opioid, an 486 00:26:19,400 --> 00:26:24,200 Speaker 10: incredibly powerful medication. It's one hundred times stronger than morphine, 487 00:26:24,200 --> 00:26:27,960 Speaker 10: for example. And the issue is that when you're talking 488 00:26:27,960 --> 00:26:31,919 Speaker 10: about this illegal production of it, there is just not 489 00:26:32,160 --> 00:26:35,800 Speaker 10: the safety guardrails that are put up. And it is 490 00:26:35,960 --> 00:26:40,880 Speaker 10: so powerful, so potent, and so inexpensive that it's easy 491 00:26:40,960 --> 00:26:46,320 Speaker 10: for these crime syndicates to make their pills and their 492 00:26:46,359 --> 00:26:49,359 Speaker 10: other drugs, slip in a little bit of fentanyl to 493 00:26:49,440 --> 00:26:52,119 Speaker 10: kind of give the other ingredients a boost so that 494 00:26:52,160 --> 00:26:55,119 Speaker 10: you're still getting some kind of a some kind of 495 00:26:55,400 --> 00:26:58,240 Speaker 10: a pain relief, some kind of a you know, a 496 00:26:58,320 --> 00:27:01,680 Speaker 10: drug benefit from it in terms terms of illegal drug benefit, 497 00:27:02,240 --> 00:27:05,280 Speaker 10: but it's much less expensive. The thing is that that 498 00:27:05,359 --> 00:27:08,399 Speaker 10: fentanyl is so powerful that if you don't do it 499 00:27:08,480 --> 00:27:11,240 Speaker 10: in in exactly the right amount, then you can easily 500 00:27:11,560 --> 00:27:14,560 Speaker 10: give somebody an overdose. And it varies, it varies for 501 00:27:14,640 --> 00:27:17,639 Speaker 10: every person. It varies based on how much you weigh 502 00:27:17,680 --> 00:27:20,560 Speaker 10: it varies how much you've been using. It varies what 503 00:27:20,600 --> 00:27:23,920 Speaker 10: you've eaten and done that particular day. So you could 504 00:27:23,960 --> 00:27:28,520 Speaker 10: potentially take a ventanyl pill. You can take an opioid 505 00:27:28,560 --> 00:27:30,439 Speaker 10: you don't even know what it is. You could think 506 00:27:30,520 --> 00:27:33,000 Speaker 10: that you're buying LSD or heroin, and in fact you 507 00:27:33,040 --> 00:27:36,760 Speaker 10: get ventanyl slipped into it, and you get it from 508 00:27:36,760 --> 00:27:39,680 Speaker 10: the same person. You think it's the same batch. One 509 00:27:39,760 --> 00:27:42,440 Speaker 10: day you're fine, the next day you've overdosed. 510 00:27:43,200 --> 00:27:46,479 Speaker 3: In any case, the spotlight has really been shown now 511 00:27:46,640 --> 00:27:51,120 Speaker 3: on this triangle from China to Mexico to the United States. 512 00:27:51,640 --> 00:27:55,800 Speaker 3: And we can all hope for progress on stopping or 513 00:27:55,840 --> 00:27:59,200 Speaker 3: combating some of the distribution, but will there be other 514 00:27:59,240 --> 00:28:02,280 Speaker 3: benefits as well, more like just on educating the public 515 00:28:02,280 --> 00:28:03,760 Speaker 3: about what's really happening here. 516 00:28:04,600 --> 00:28:07,159 Speaker 10: Well, anytime you can educate the public, that's definitely going 517 00:28:07,200 --> 00:28:09,320 Speaker 10: to be a good thing. And absolutely we know that, 518 00:28:09,600 --> 00:28:12,520 Speaker 10: certainly from the US perspective, there's been a lot of 519 00:28:13,400 --> 00:28:17,760 Speaker 10: excitement and celebration around the fact that they have gotten 520 00:28:17,920 --> 00:28:20,240 Speaker 10: some meeting of the minds with China when it comes 521 00:28:20,280 --> 00:28:24,280 Speaker 10: to this, because in the US there has been effort 522 00:28:24,520 --> 00:28:28,159 Speaker 10: made to reducing the supply, to catching it early and 523 00:28:28,240 --> 00:28:29,480 Speaker 10: to trying to reduce demand. 524 00:28:29,520 --> 00:28:31,840 Speaker 4: But that is just so very very. 525 00:28:31,680 --> 00:28:32,399 Speaker 6: Difficult to do. 526 00:28:32,880 --> 00:28:35,280 Speaker 10: And the hope is that by actually hitting some of 527 00:28:35,320 --> 00:28:38,640 Speaker 10: that supply early that you can reduce the demand, you 528 00:28:38,680 --> 00:28:40,640 Speaker 10: can reduce the access, you can reduce the give and 529 00:28:40,680 --> 00:28:44,080 Speaker 10: take on that end. So when we have some positive news, 530 00:28:44,440 --> 00:28:48,920 Speaker 10: that's great, something welcome to tell Americans that something that 531 00:28:48,960 --> 00:28:52,240 Speaker 10: is affecting every single community, every single town, all across 532 00:28:52,240 --> 00:28:55,560 Speaker 10: the country. Everyone knows somebody who has either died from this, 533 00:28:55,720 --> 00:28:58,800 Speaker 10: been exposed to it, maybe had to give a life 534 00:28:58,800 --> 00:29:02,160 Speaker 10: saving narcandos to someone. Some of our colleagues actually carried 535 00:29:02,200 --> 00:29:04,480 Speaker 10: around with them just because they live in big cities 536 00:29:04,520 --> 00:29:07,600 Speaker 10: and have had to use it. So anything that's positive 537 00:29:07,840 --> 00:29:08,760 Speaker 10: definitely will take it. 538 00:29:09,320 --> 00:29:12,720 Speaker 3: Michelle, Thanks so much for your insights. Michelle Cortes from 539 00:29:12,760 --> 00:29:16,680 Speaker 3: Bloomberg's Global Business Asia team. Michelle is a specialist in 540 00:29:16,800 --> 00:29:20,400 Speaker 3: health technology and medical science. I'm Brian Curtis along with 541 00:29:20,440 --> 00:29:23,200 Speaker 3: Doug Krisner. You can catch us every weekday here for 542 00:29:23,320 --> 00:29:26,480 Speaker 3: Bloomberg day Break Asia, beginning at seven am in Hong 543 00:29:26,560 --> 00:29:29,840 Speaker 3: Kong and six pm on Wall Street tom Our. 544 00:29:29,920 --> 00:29:32,680 Speaker 1: Thanks to Bloomberg day Break Asia anchor Brian Curtis and 545 00:29:32,760 --> 00:29:35,200 Speaker 1: coming up here on Bloomberg day Break weekend, the US 546 00:29:35,320 --> 00:29:39,200 Speaker 1: once again averting a government shutdown for now. We head 547 00:29:39,240 --> 00:29:42,760 Speaker 1: to Washington next. I'm Tom Busby, and this is Bloomberg. 548 00:29:52,880 --> 00:29:55,360 Speaker 1: This is Bloomberg day Break Weekend, our global look ahead 549 00:29:55,360 --> 00:29:57,640 Speaker 1: at the top stories for investors in the coming week. 550 00:29:57,880 --> 00:30:01,479 Speaker 1: I'm Tom Busby in New York. Stop gap two tiered 551 00:30:01,520 --> 00:30:04,200 Speaker 1: temporary funding bill, finding a lot of support in the 552 00:30:04,240 --> 00:30:07,880 Speaker 1: House and Senate and helping avert a government shutdown at 553 00:30:07,960 --> 00:30:10,480 Speaker 1: least for now. But Congress will have to do this 554 00:30:10,600 --> 00:30:13,480 Speaker 1: all over again in just a few short months. Can 555 00:30:13,560 --> 00:30:16,520 Speaker 1: they get a resolution done for more? Let's head to 556 00:30:16,560 --> 00:30:19,480 Speaker 1: our Bloomberg ninety nine one newsroom in Washington and Bloomberg 557 00:30:19,640 --> 00:30:22,440 Speaker 1: Sound On. Co host Kaylee Lines. 558 00:30:22,360 --> 00:30:25,520 Speaker 4: Yeah, Tom, a shutdown has been averted. Congress has saved 559 00:30:25,560 --> 00:30:28,840 Speaker 4: the holidays for themselves, and in fact, everyone already left 560 00:30:28,840 --> 00:30:31,760 Speaker 4: town for Thanksgiving this past week. But come the new year, 561 00:30:31,920 --> 00:30:34,320 Speaker 4: there is going to be a reckoning on Capitol Hill. 562 00:30:34,600 --> 00:30:38,240 Speaker 4: The real funding battle still lies ahead. This stop gap 563 00:30:38,240 --> 00:30:41,400 Speaker 4: Continuing Resolution only extends funding for some parts of government 564 00:30:41,520 --> 00:30:45,000 Speaker 4: until January nineteenth, and the other parts until February second, 565 00:30:45,400 --> 00:30:48,520 Speaker 4: and meeting those deadlines is probably going to prove pretty 566 00:30:48,560 --> 00:30:51,080 Speaker 4: challenging here with Mara is Mike Dorning, who helps lead 567 00:30:51,080 --> 00:30:55,800 Speaker 4: our congressional coverage at Bloomberg. So Mike Speaker Mike Johnson 568 00:30:55,880 --> 00:30:58,320 Speaker 4: has already said he does not intend to pursue another 569 00:30:58,400 --> 00:31:01,520 Speaker 4: continuing resolution, no more st gap measures, and it seems 570 00:31:01,560 --> 00:31:04,520 Speaker 4: like hardline conservatives in the House do intend to hold 571 00:31:04,600 --> 00:31:07,240 Speaker 4: him to that. So I kind of see two options here, 572 00:31:07,280 --> 00:31:10,200 Speaker 4: one being do the work finish all the appropriation bills 573 00:31:10,200 --> 00:31:13,880 Speaker 4: in time, the other being shut down. How hard is 574 00:31:13,880 --> 00:31:15,440 Speaker 4: it going to be to go with option one to 575 00:31:15,480 --> 00:31:17,520 Speaker 4: make option one happen and avoid option two. 576 00:31:18,480 --> 00:31:20,160 Speaker 11: Well, actually, I think at the end of the day, 577 00:31:20,200 --> 00:31:22,800 Speaker 11: it'll probably be something in between the two, although it 578 00:31:22,840 --> 00:31:26,520 Speaker 11: may involve a shutdown. They've sort of teed up what 579 00:31:26,800 --> 00:31:31,160 Speaker 11: the conservatives don't like, the omnibuses, but almost like little 580 00:31:31,160 --> 00:31:34,920 Speaker 11: mini buses where you won't do all the twelve appropriations 581 00:31:34,960 --> 00:31:38,320 Speaker 11: bills because it just looks like there's just divisions in 582 00:31:38,360 --> 00:31:42,560 Speaker 11: the Republican Party that are blocking them from even getting 583 00:31:42,640 --> 00:31:45,640 Speaker 11: some of them out of the House with a Republican 584 00:31:45,720 --> 00:31:49,120 Speaker 11: version of them, let alone, you know, actually compromising with 585 00:31:49,240 --> 00:31:53,400 Speaker 11: Democrats and coming up with something. But it does tee 586 00:31:53,480 --> 00:31:59,280 Speaker 11: up like essentially two trashes of global settlements, one for 587 00:31:59,640 --> 00:32:04,640 Speaker 11: part of the government initially and then someone for the 588 00:32:04,680 --> 00:32:07,440 Speaker 11: rest of the government in early February. And I think 589 00:32:07,480 --> 00:32:12,200 Speaker 11: there's a very high risk of a shutdown and at 590 00:32:12,280 --> 00:32:17,200 Speaker 11: least the first instance, and probably maybe both instances, because 591 00:32:17,240 --> 00:32:20,480 Speaker 11: the divisions are just so great well. 592 00:32:20,320 --> 00:32:23,200 Speaker 4: And to your point on division specifically the divisions within 593 00:32:23,280 --> 00:32:26,960 Speaker 4: the Republican Conference. What Mike Johnson just did pass a 594 00:32:27,040 --> 00:32:30,680 Speaker 4: clean continuing resolution with no spending cuts with overwhelming Democratic 595 00:32:30,680 --> 00:32:34,000 Speaker 4: support is exactly what we saw Speaker McCarthy do earlier 596 00:32:34,080 --> 00:32:37,440 Speaker 4: this fall that ultimately led him to be ousted as speaker. 597 00:32:37,520 --> 00:32:39,400 Speaker 4: So I wonder if the question we're dealing with is 598 00:32:39,440 --> 00:32:42,800 Speaker 4: not singularly will the government shut down, but also a 599 00:32:42,880 --> 00:32:45,520 Speaker 4: question of will Mike Johnson keep the speaker's gavel. 600 00:32:46,480 --> 00:32:49,400 Speaker 11: I think that if that becomes a problem, it'll be 601 00:32:49,800 --> 00:32:53,880 Speaker 11: a problem in late January early February, when all of 602 00:32:53,920 --> 00:32:56,720 Speaker 11: this comes to a head and they are teeing it 603 00:32:56,840 --> 00:33:00,840 Speaker 11: up for the sort of grand fight over funding the 604 00:33:00,880 --> 00:33:04,400 Speaker 11: government to be Then you know, he does come into 605 00:33:04,400 --> 00:33:08,720 Speaker 11: this with some credibility, and any reasonable person would say, hey, 606 00:33:09,160 --> 00:33:12,200 Speaker 11: he was barely in the speaker's job three weeks when 607 00:33:12,320 --> 00:33:15,440 Speaker 11: you know he's facing a shutdown, so you got to 608 00:33:15,440 --> 00:33:18,640 Speaker 11: give him some ability to get give an extension. And 609 00:33:18,680 --> 00:33:23,320 Speaker 11: he is really a sort of a core, very credible, 610 00:33:23,840 --> 00:33:26,320 Speaker 11: very conservative guy. I mean, this is a guy who 611 00:33:26,360 --> 00:33:32,280 Speaker 11: basically came up representing the Christian right in lawsuits before 612 00:33:32,280 --> 00:33:34,600 Speaker 11: he ever ran for elective office. So that wasn't some 613 00:33:34,760 --> 00:33:38,959 Speaker 11: opportunistic you know, positioning himself for the Republican primary. This 614 00:33:39,000 --> 00:33:42,200 Speaker 11: appears to be who he is so much like Nancy 615 00:33:42,240 --> 00:33:46,120 Speaker 11: Pelosi was like this incredibly progressive person with this long 616 00:33:46,240 --> 00:33:50,280 Speaker 11: track record, and she was able to have credibility with progressives. 617 00:33:50,640 --> 00:33:54,720 Speaker 11: This is a guy who is a true ultra conservative. 618 00:33:54,760 --> 00:33:57,360 Speaker 11: He called himself an arch conservative and that helps his 619 00:33:57,440 --> 00:34:01,080 Speaker 11: credibility for now until the robber. It's the road the 620 00:34:01,160 --> 00:34:03,640 Speaker 11: end of January, beginning of February. 621 00:34:03,120 --> 00:34:06,760 Speaker 4: So the outlook is murky to see the waste. Mike Dorning, 622 00:34:06,760 --> 00:34:08,640 Speaker 4: one of the leaders of our congressional coverage here at 623 00:34:08,680 --> 00:34:11,879 Speaker 4: Bloomberg in Washington, thank you so much, and Tom the. 624 00:34:11,880 --> 00:34:14,759 Speaker 1: Fight ain't over yet, thank you. Kaylee. That was Bloomberg's 625 00:34:14,760 --> 00:34:17,800 Speaker 1: sound on co host Kaylee Lines, reporting from our Bloomberg 626 00:34:17,880 --> 00:34:20,319 Speaker 1: ninety nine one newsroom in Washington, and you can hear 627 00:34:20,400 --> 00:34:23,040 Speaker 1: sound on weekdays one to three pm Wall Street Time 628 00:34:23,080 --> 00:34:25,920 Speaker 1: on Bloomberg Radio. That does it for this edition of 629 00:34:25,920 --> 00:34:28,799 Speaker 1: Bloomberg day Break Weekend. Join us again Monday morning at 630 00:34:28,800 --> 00:34:30,840 Speaker 1: five am Wall Street Time for the latest on the 631 00:34:30,840 --> 00:34:33,719 Speaker 1: market's overseas and the news you need to start your day. 632 00:34:34,120 --> 00:34:37,080 Speaker 1: I'm Tom Buzzby. Stay with us. Top stories and global 633 00:34:37,080 --> 00:34:39,920 Speaker 1: business headlines are coming up right now.