WEBVTT - Daybreak Weekend: Shutdown Averted, Autumn Statement, Fentanyl Crisis 0:00:01.840 --> 0:00:04.280 This is Bloomberg day Break Weekend, our global look at 0:00:04.320 --> 0:00:06.120 the top stories in the coming week from our day 0:00:06.120 --> 0:00:09.000 Break anchors all around the world. Straight Ahead on the program, 0:00:09.080 --> 0:00:12.520 the world's most valuable chip maker reports earnings this week. 0:00:12.600 --> 0:00:14.640 I'm Tom Busby in New York. We'll tell you what 0:00:14.720 --> 0:00:15.880 to expect from end video. 0:00:16.040 --> 0:00:18.479 I'm Caroline Hedge in London, where we're looking ahead to 0:00:18.520 --> 0:00:22.000 the UK government's autumn statement and it's a gloomy economic 0:00:22.040 --> 0:00:22.520 back job. 0:00:22.600 --> 0:00:24.880 I'm Bryan Curtis in Hong Kong. We look at the 0:00:24.960 --> 0:00:28.240 US China agreement on fentanyl. What needs to happen to 0:00:28.320 --> 0:00:29.280 disrupt the supply. 0:00:29.440 --> 0:00:32.080 I'm Kaylee Lines in Washington, where Congress has averted a 0:00:32.120 --> 0:00:35.240 government shutdown for now, with the real spending fight still ahead. 0:00:35.360 --> 0:00:39.120 That's all straight ahead on Bloomberg Daybreak Weekend, the business 0:00:39.159 --> 0:00:41.479 news you need to wrap up your week in just 0:00:41.640 --> 0:00:46.200 one fifteen minute podcast available on Apple, Spotify, The Bloomberg 0:00:46.240 --> 0:00:49.320 Business Appen everywhere you get your podcasts. 0:00:51.200 --> 0:00:53.080 Good day to you. I'm Tom Busby, and we begin 0:00:53.159 --> 0:00:56.680 today's program with one of the last important third quarter 0:00:56.720 --> 0:01:00.200 earnings reports, and it's a biggie and video reports on Tuesday, 0:01:00.520 --> 0:01:04.920 Fueled by blockbuster demand for its artificial intelligence chips shares 0:01:05.360 --> 0:01:07.760 up more than two hundred and thirty percent just so 0:01:07.840 --> 0:01:11.360 far this year. Also in Vidia's latest breakthrough trip and 0:01:11.400 --> 0:01:14.360 the impact of US restrictions on tech sales to China. 0:01:14.680 --> 0:01:17.320 For all that and more, let's bring in Bloomberg Technology 0:01:17.360 --> 0:01:21.120 host ed Ludlow in San Francisco and Bloomberg Intelligence senior 0:01:21.160 --> 0:01:25.000 technology analyst man Deep Singing here in New York. Both 0:01:25.000 --> 0:01:27.840 of you welcome, Ed. Let's start with you. What are 0:01:27.880 --> 0:01:31.520 you expecting to see from Nvidio's earnings and its outlook? 0:01:32.080 --> 0:01:34.279 So they'll just be a big focus on the data 0:01:34.319 --> 0:01:37.679 center business for Nvideo, right and in the context of 0:01:37.720 --> 0:01:42.480 artificial intelligence, in video makes GPUs graphics processing units, and 0:01:42.560 --> 0:01:46.480 those are chips that are basically capable of doing lots 0:01:46.520 --> 0:01:49.440 of parallel data processes at a very high level. It's 0:01:49.480 --> 0:01:51.960 kind of what you need in an AI accelerator to 0:01:52.000 --> 0:01:56.200 train the foundation models that POWERAI. And they've just seen 0:01:56.200 --> 0:01:59.680 massive growth in that data center business. You know, last 0:01:59.720 --> 0:02:01.600 quarter it was kind of one hundred and seventy percent 0:02:01.640 --> 0:02:04.720 top line growth year on year, and going into this 0:02:05.000 --> 0:02:08.400 fiscal third quarter, the expectation is that that growth jumps 0:02:08.400 --> 0:02:11.359 to two hundred and thirty percent approximately year on year, 0:02:12.600 --> 0:02:15.600 but as you pointed out, the stocks had an incredible 0:02:15.680 --> 0:02:18.480 run in twenty twenty three so far the story is 0:02:18.520 --> 0:02:20.959 well known in video. Is still the kind of market 0:02:20.960 --> 0:02:25.000 incumbent for this specialized AI chip, and so expectations will 0:02:25.040 --> 0:02:28.120 be really high. And around the corner they have their 0:02:28.160 --> 0:02:31.040 next generation chip, the GH two hundred, which is due 0:02:31.080 --> 0:02:33.760 to go in production in the second quarter of next year. 0:02:33.840 --> 0:02:36.399 So you know that's how earnings always go, right, how 0:02:36.400 --> 0:02:38.560 did they do on the things we know they're doing? 0:02:38.800 --> 0:02:40.880 And when's the next big thing actually going to come 0:02:40.919 --> 0:02:43.720 and materialize in their financials? And I'm sure that that 0:02:44.000 --> 0:02:46.920 will be the discussion man do well. 0:02:47.000 --> 0:02:50.680 So from my perspective, you know, the last two quarters 0:02:50.800 --> 0:02:54.680 and videos come out not only beat their numbers, but 0:02:54.919 --> 0:02:57.880 raise the guidance by you know, almost thirty forty percent, 0:02:58.200 --> 0:03:01.680 And now that you know it's happened two times, I 0:03:01.720 --> 0:03:04.760 think the bar is pretty high. But at the same time, 0:03:04.800 --> 0:03:07.799 we know the market is still supply constrained. I mean, 0:03:07.919 --> 0:03:10.960 everyone that we talk to keep saying, you know, they 0:03:11.000 --> 0:03:13.560 can't find the GPUs, whether it's a eight hundred or 0:03:13.600 --> 0:03:17.600 the h hundreds, to train the models to really invest 0:03:17.600 --> 0:03:21.600 in GENAI. And so from that perspective, it still feels 0:03:21.639 --> 0:03:24.800 like the market is supply constrained and that goes in 0:03:24.800 --> 0:03:29.400 in Video's favor. Look, there are announcements from Microsoft yesterday 0:03:29.480 --> 0:03:33.359 and then from AMD saying that their GPU business could 0:03:33.400 --> 0:03:36.760 be two billion dollar und rate in twenty twenty four. 0:03:37.120 --> 0:03:39.800 But when you compare to where in Video is we're 0:03:39.840 --> 0:03:43.600 talking about sixty billion in data center revenue next year 0:03:44.120 --> 0:03:47.320 or even higher, it just tells you like they have 0:03:47.400 --> 0:03:50.560 the dominant share and they continue to be the preferred 0:03:50.600 --> 0:03:53.240 accelerator for anyone who is training these a lot of 0:03:53.280 --> 0:03:54.080 language models. 0:03:54.280 --> 0:03:55.880 And Mandy, let me jump in and kind of help 0:03:55.880 --> 0:03:57.480 out the audience with some of what you said. So 0:03:57.560 --> 0:04:02.280 supply constrained means that basically there is more demand for 0:04:02.360 --> 0:04:05.560 their AI accelerators or GPUs than they can actually make 0:04:05.640 --> 0:04:09.000 right now. And that's kind of important because the risk 0:04:09.120 --> 0:04:11.920 or the unknown in the background is China, and China 0:04:12.040 --> 0:04:14.240 in the data center context has been like twenty to 0:04:14.280 --> 0:04:17.640 twenty five percent of their business historically, and there are 0:04:17.720 --> 0:04:22.000 technology export curbs, and how originally Nvidia got around that 0:04:22.560 --> 0:04:25.000 was to make a lower spec version of the H 0:04:25.080 --> 0:04:27.240 one hundred called the H eight hundred, or a lower 0:04:27.279 --> 0:04:29.200 spec version of the A one hundred called the A 0:04:29.360 --> 0:04:33.279 eight hundred. Those were GPUs specifically for the China market 0:04:33.839 --> 0:04:39.560 that were conforming with the US technology export curbs that 0:04:39.560 --> 0:04:42.200 were put in place. Those curbs were then expanded, and 0:04:42.240 --> 0:04:45.119 you probably noticed last week some activity in the share 0:04:45.160 --> 0:04:49.600 price around reports that they're planning three new chips next gen, 0:04:50.000 --> 0:04:53.120 even lower spec to comply with those with those curbs. 0:04:53.279 --> 0:04:55.279 But the reason I make that point, and I'm interesting 0:04:55.360 --> 0:04:57.280 you take on this, man deep, is that when your 0:04:57.320 --> 0:05:01.040 supply constrained, if one of your big market, China is 0:05:01.400 --> 0:05:04.600 a warrior or a problem, there's plenty of demand elsewhere. 0:05:04.839 --> 0:05:07.159 You know, from countries and companies all over the world 0:05:07.160 --> 0:05:10.400 who are kind of clamoring to get hold of those 0:05:10.520 --> 0:05:13.480 those specialist GPUs. And I know that on the Bloomberg 0:05:13.520 --> 0:05:16.640 Technology Show and everyone I speak to that's certainly the case, right, 0:05:16.640 --> 0:05:18.360 people would say, I'll take some of those if we 0:05:18.400 --> 0:05:18.960 can get them. 0:05:19.320 --> 0:05:22.680 Yeah, And look the way to model the revenue for 0:05:22.880 --> 0:05:26.960 Nvidia or AMD. You know the lift from Jenni is 0:05:27.360 --> 0:05:30.719 look at the hyperscaler CAPEX. I mean, these are still 0:05:30.839 --> 0:05:34.039 the largest customers for these chips, because all these chips 0:05:34.040 --> 0:05:37.520 are being deployed on public cloud. And we know Microsoft 0:05:37.560 --> 0:05:42.000 has phrased their CAPEX expectations Googled not so much, and 0:05:42.600 --> 0:05:45.400 Jensen was there at the Microsoft event. So it just 0:05:45.800 --> 0:05:48.960 tells you that, you know, there is an appetite to 0:05:49.040 --> 0:05:52.440 get these chips. However many Nvidia has, and you know, 0:05:52.560 --> 0:05:55.320 if it's a hyperscaler, they're going to buy it, even 0:05:55.360 --> 0:05:57.880 if they're investing in their own chips. And right now, 0:05:57.960 --> 0:06:01.800 the definitely the markets seems like, you know, there is 0:06:01.839 --> 0:06:04.520 a huge appetite for whatever and video is making on 0:06:04.560 --> 0:06:05.960 the Accelerator. 0:06:05.360 --> 0:06:08.320 Site exactly, and it's kind of important to think about 0:06:08.320 --> 0:06:10.479 how those chips manifest in the real world. You just 0:06:10.520 --> 0:06:13.080 outlined it. But in the courter Gone, I actually visited 0:06:13.120 --> 0:06:15.600 in Nvidia and I got my hands on the now 0:06:15.720 --> 0:06:19.800 infamous H one hundred. And when we're talking about GPUs 0:06:19.880 --> 0:06:24.200 or literally semiconductors that are the brains behind training AI models, 0:06:24.640 --> 0:06:26.320 it's not like a chip you can just hold in 0:06:26.360 --> 0:06:28.640 your hand. You know, when people say, oh, I secured 0:06:28.640 --> 0:06:31.320 a cluster of ten thousand, h one hundreds, they don't 0:06:31.480 --> 0:06:33.200 just sort of have them in a bag slung over 0:06:33.240 --> 0:06:38.360 their shoulder. As Mandeep explained, these GPUs go in combination 0:06:38.560 --> 0:06:41.960 several GPUs into a box called a server design. That 0:06:42.120 --> 0:06:46.640 server design goes, alongside dozens of others, into the infrastructure 0:06:46.640 --> 0:06:49.680 that forms data centers. We're talking about like massive scale here. 0:06:50.040 --> 0:06:53.080 And what Invidia has done and how it's been able 0:06:53.120 --> 0:06:56.440 to maintain its lead is that right now, the work 0:06:56.480 --> 0:07:00.960 that's being done on AI is training foundation models or 0:07:01.000 --> 0:07:04.320 large language models that have billions and billions of parameters, 0:07:04.360 --> 0:07:07.520 tens of billions, sometimes hundreds of billions of parameters. Only 0:07:07.560 --> 0:07:10.760 the h one hundred can can really handle that right now? 0:07:11.040 --> 0:07:14.840 And what was so interesting manib reference the news from AMD, 0:07:14.960 --> 0:07:18.560 but specifically Microsoft coming out with its own silicon this week, 0:07:19.480 --> 0:07:22.480 the Azure MAYA one hundred. You know, from what I 0:07:22.480 --> 0:07:25.600 can tell, that's an AI accelerator that's much lower spec 0:07:25.680 --> 0:07:28.800 right and it will do some of the more the 0:07:28.840 --> 0:07:32.760 smaller models, more basic models. I guess what I'm saying 0:07:32.840 --> 0:07:36.280 is like the market expectations super high because in Vidia 0:07:36.320 --> 0:07:38.160 has a lead, and it looks like it will continue 0:07:38.200 --> 0:07:40.200 to grow and maintain that lead for the time being. 0:07:40.400 --> 0:07:43.600 I mean, what I'm interested in is what the software 0:07:43.640 --> 0:07:46.840 strategy is so what people forget with then Vidia is 0:07:46.880 --> 0:07:49.960 not only they have the accelerator, but they also had 0:07:49.960 --> 0:07:53.720 the Kuda software that really makes it easy to train 0:07:53.840 --> 0:07:56.920 your llms. And in this case, you know, if the 0:07:57.000 --> 0:08:01.240 hyperscalers are spending five to ten billion dollars every hyperscaler 0:08:01.320 --> 0:08:04.400 is spending on these GPU chips, how does it translate 0:08:04.480 --> 0:08:07.360 into the cloud revenue next year? Because right now, when 0:08:07.360 --> 0:08:11.920 you look at the cloud estimates, whether it's Azure, Amazon AWLS, 0:08:12.040 --> 0:08:17.120 or Google GCP, the accelerator revenue is still not reflected 0:08:17.120 --> 0:08:19.560 in the number. So I'm curious to see what is 0:08:19.600 --> 0:08:23.080 the lag when you know the monetization starts to show 0:08:23.160 --> 0:08:24.480 up in the cloud numbers. 0:08:24.840 --> 0:08:27.760 You know, let's talk then let's pivot to the newest 0:08:27.840 --> 0:08:30.240 chip that it's going to develop and come out next year. 0:08:30.400 --> 0:08:33.520 You talked at about the Age one hundred, it's going 0:08:33.559 --> 0:08:36.280 to come out with an Age two hundred. Sure, how 0:08:36.360 --> 0:08:39.040 will that be different and how much more will it 0:08:39.080 --> 0:08:41.360 be able to handle these large data sets? 0:08:41.840 --> 0:08:42.040 Yes? 0:08:42.800 --> 0:08:43.160 Go ahead. 0:08:43.679 --> 0:08:47.640 So what we're talking about is the Grace Hopper super chip, 0:08:47.960 --> 0:08:51.120 and it is both a GPU that we've just been 0:08:51.160 --> 0:08:56.080 talking about a graphics processing unit, but also it has 0:08:56.760 --> 0:09:01.440 within the design other components a processor, but particularly it 0:09:01.480 --> 0:09:06.400 addresses the issue of memory. One of the challenges in 0:09:07.160 --> 0:09:12.800 artificial intelligence and training large language models, which are basically 0:09:12.800 --> 0:09:21.440 the underpinnings of artificial intelligence, is something called the memory wall. Okay, 0:09:21.640 --> 0:09:25.520 and the memory wall basically is an issue where when 0:09:25.520 --> 0:09:30.000 you have a really big AI workload, large AI models 0:09:30.040 --> 0:09:34.160 have basically poor data reuse. They're drawing on lots of 0:09:34.240 --> 0:09:37.360 data for their training, but when you deploy that AI 0:09:38.240 --> 0:09:42.080 technology as a chatbot or another generative AI tool, it 0:09:42.200 --> 0:09:47.000 basically has a poor success rateed cycling data that's already there, 0:09:47.320 --> 0:09:50.200 and so it's really important to increase the memory capacity. 0:09:50.320 --> 0:09:53.440 So in simple terms, the super chip GH two hundred 0:09:53.960 --> 0:09:59.559 just has a more cutting edge inclusion of high BAM 0:09:59.679 --> 0:10:02.920 with memory, and GH two hundred is going to go 0:10:02.920 --> 0:10:04.960 into production in the second quarter of twenty twenty four, 0:10:05.040 --> 0:10:06.320 so it's not going to be out there in the 0:10:06.320 --> 0:10:09.280 real world at volume for some time. But from the 0:10:09.400 --> 0:10:12.880 sheer technology standpoint, this is now the battleground. If you 0:10:12.920 --> 0:10:17.199 look at AMD's equivalent, their AI accelerator, they lean very 0:10:17.240 --> 0:10:19.959 heavily in this idea that they've addressed the high bandwidth 0:10:20.040 --> 0:10:23.000 memory issue but AMD ain't going to be in production 0:10:23.040 --> 0:10:24.600 at volume for some time as well. 0:10:24.800 --> 0:10:25.079 Well. 0:10:25.120 --> 0:10:27.240 A lot to look forward to our thanks to Bloomberg 0:10:27.240 --> 0:10:31.480 Television Technology host ed Ludlow in San Francisco and Bloomberg 0:10:31.520 --> 0:10:35.280 Intelligence Senior technology analyst man Deep sing here in New York. 0:10:35.559 --> 0:10:39.160 Catch Bloomberg Technology weekdays at noon Wall Street Time and 0:10:39.720 --> 0:10:43.120 get the B Tech podcast wherever you download. Coming up 0:10:43.160 --> 0:10:45.800 on Bloomberg day Break Weekend, a preview of UK Prime 0:10:45.800 --> 0:10:50.240 Minister Rishi Sunak's spending plans. I'm Tom Busby and this 0:10:50.520 --> 0:11:03.800 is Bloomberg. This is Bloomberg Daybreak Weekend, our global look 0:11:03.800 --> 0:11:06.520 ahead at the top stories for investors in the coming week. 0:11:06.800 --> 0:11:09.440 I'm Tom Busby in New York. Up later in our 0:11:09.480 --> 0:11:11.640 program a look at one of the key agreements reached 0:11:11.640 --> 0:11:14.320 by the US in China following that presidential meeting in 0:11:14.400 --> 0:11:18.600 San Francisco. But first in the UK, Rishi Sunak's government 0:11:18.679 --> 0:11:21.520 will unveil its tax and spending plans in the coming days. 0:11:21.800 --> 0:11:24.760 Some positive economic data has given the Prime minister a 0:11:24.840 --> 0:11:28.240 boost on achieving its economic goals, but the budget may 0:11:28.280 --> 0:11:30.960 not make for such optimistic reading. For more or let's 0:11:30.960 --> 0:11:33.320 go to London and bring in Bloomberg Daybreak, europe Banker 0:11:33.679 --> 0:11:35.599 Caroline Hepger tom. 0:11:35.480 --> 0:11:37.920 Rischie Sunak has been on a roller coaster in the 0:11:37.960 --> 0:11:41.160 past week. He met one of his five key pledges 0:11:41.200 --> 0:11:44.440 to votus that inflation should come down below five percent 0:11:44.480 --> 0:11:46.480 by the end of the year, but he suffered a 0:11:46.559 --> 0:11:50.199 major setback on another to reduce illegal migration, when the 0:11:50.320 --> 0:11:53.720 UK's top court said that his plan to deport asylum 0:11:53.760 --> 0:11:57.800 seekers to Rwanda was illegal. Add to that a controversial 0:11:57.880 --> 0:12:01.480 reshuffle of his top team and it has been a 0:12:01.520 --> 0:12:05.680 busy few days. So in the coming week, the Prime Minister, 0:12:05.760 --> 0:12:08.439 along with his Chancellor Jeremy Hunt, will be trying to 0:12:08.480 --> 0:12:12.400 reset the government's economic agenda. All this with one eye 0:12:12.400 --> 0:12:16.080 on a general election that is expected within the next year. 0:12:16.440 --> 0:12:19.320 The economic and fiscal situation in the UK is still 0:12:19.360 --> 0:12:24.160 pretty gloomy, with growth flatlining, inflation is still well above 0:12:24.240 --> 0:12:28.240 the Bank of England's two percent target, and rising borrowing costs. 0:12:28.679 --> 0:12:31.760 On Blueberg Radio, I've been speaking to Elizabeth Martin's UK 0:12:31.800 --> 0:12:36.920 economist at HSBC for her view about the situation facing 0:12:36.960 --> 0:12:37.679 the chancellor. 0:12:38.440 --> 0:12:41.240 What's the UK government borrowing is actually coming in below 0:12:41.400 --> 0:12:44.880 what the OBR had been expecting in the near terms 0:12:44.920 --> 0:12:47.480 it's okay, but you know, the amount of issuance into 0:12:47.480 --> 0:12:50.480 the guilt market is concerning, I think to everyone involved 0:12:50.480 --> 0:12:53.640 in in that market, and I think, look, we're servicing 0:12:53.640 --> 0:12:56.800 a debt level of nearly one hundred percent of GDP 0:12:57.800 --> 0:13:01.080 at rates at fifteen year half. So all of those 0:13:01.120 --> 0:13:03.680 things do worry me. And I think whoever wins the 0:13:03.760 --> 0:13:06.800 election is going to have some difficult choices to make 0:13:06.880 --> 0:13:09.600 unless we can find that holy grail supply side growth 0:13:09.640 --> 0:13:12.400 and you know, grow the pie, as Let's Trust used 0:13:12.400 --> 0:13:12.800 to say. 0:13:12.920 --> 0:13:17.560 So that was Elizabeth Martin's UK economists at HSBC for herview. 0:13:17.800 --> 0:13:21.520 As the governing Conservatives continue to trail behind the opposition 0:13:21.600 --> 0:13:24.520 Labor Party in the polls, the Chancellor will be keen 0:13:24.640 --> 0:13:28.079 to make an impact with his autumn statement. And I've 0:13:28.120 --> 0:13:32.800 been discussing the context with Bloomberg opinion columnist Marcus Ashworth 0:13:33.120 --> 0:13:36.160 asking him what he thinks the context is to the 0:13:36.200 --> 0:13:37.040 autumn statement. 0:13:37.640 --> 0:13:39.920 I actually think that the data out recently has been 0:13:40.040 --> 0:13:42.120 very good for the UK and it's why sterling is 0:13:42.120 --> 0:13:44.840 at one twenty four. So I appreciate that's more dollar 0:13:44.880 --> 0:13:47.240 drive them, but you know, look, the economy is only 0:13:47.280 --> 0:13:50.560 at zero. I mean, that's a great result, and I 0:13:50.600 --> 0:13:54.480 do think interest rates are have Peete and I will 0:13:54.480 --> 0:13:58.160 come lower. The interesting point is he's got a little 0:13:58.200 --> 0:14:00.600 bit of wiggle room because if you look at numbers 0:14:01.000 --> 0:14:04.320 year today, the public finances as ever are completely different 0:14:04.360 --> 0:14:07.160 for what the Ober thought they might be. I'm not 0:14:07.200 --> 0:14:08.880 having a go at them, it's it's the way the 0:14:08.920 --> 0:14:12.439 system works. But we're probably going to be about thirty 0:14:12.480 --> 0:14:14.800 six billion or something like that better by the end 0:14:14.840 --> 0:14:18.360 of this financial year. Were already about twenty billion better. 0:14:18.880 --> 0:14:21.440 And that means that probably we will have to issue 0:14:21.480 --> 0:14:26.320 about twenty twenty six less guilts and t bills. He 0:14:26.360 --> 0:14:29.800 can play around this stuff. He has some headroom that 0:14:29.880 --> 0:14:33.240 could of course go away, and it's more a political 0:14:33.320 --> 0:14:36.240 question whether he wants to spend it now. I think 0:14:36.240 --> 0:14:38.440 he made There's lots of hints already coming in as 0:14:38.880 --> 0:14:42.960 his usual UK politics, and I think inheritance tax is 0:14:42.960 --> 0:14:46.480 something he wants to do something about very soon. He 0:14:46.560 --> 0:14:50.200 may cup the limit from forty percent tax down to say, 0:14:50.520 --> 0:14:54.400 I know, thirty or even twenty percent. That's a sort 0:14:54.400 --> 0:14:56.240 of to keep the background is happy a bit, but 0:14:56.320 --> 0:15:00.040 he wants to keep the dry powder for clearly the 0:15:00.040 --> 0:15:02.440 the budget in March, and I think all they can 0:15:02.520 --> 0:15:05.480 really do this government is at least give the inclination 0:15:05.560 --> 0:15:08.240 that they will cut taxes in the future, wait for 0:15:08.280 --> 0:15:10.920 the Bank of the until possibly have cut rates by 0:15:10.960 --> 0:15:13.120 the time of the next election. But you know, they've 0:15:13.240 --> 0:15:15.200 not got much room, but they have enough room to 0:15:15.200 --> 0:15:18.320 do something. They could of course increase spending, but I 0:15:18.320 --> 0:15:20.280 think all they'll really do is set traps for the 0:15:20.280 --> 0:15:21.280 next labor government. 0:15:21.640 --> 0:15:24.520 What about any tax books do you think for UK businesses, 0:15:24.560 --> 0:15:28.080 because that's the other big kind of lobby is companies 0:15:28.120 --> 0:15:32.200 who want to be able to invest, to grow businesses, 0:15:32.280 --> 0:15:35.560 to get to get well an extension of tax breaks 0:15:35.560 --> 0:15:39.000 that they've enjoyed. Do you think that's possible. Would it 0:15:39.040 --> 0:15:40.880 be well received by market? 0:15:40.280 --> 0:15:42.960 It should be possible, It should be the right thing 0:15:42.960 --> 0:15:44.840 to do. The question is how many votes are actually 0:15:44.840 --> 0:15:47.680 in there, and that's a very horrible situation we're in. 0:15:48.000 --> 0:15:50.760 The right thing to do is to extend these basically 0:15:51.280 --> 0:15:55.440 all investments investment be set up against tax, which they've 0:15:55.480 --> 0:15:57.920 had to because of again these OBR rules, they had 0:15:57.920 --> 0:16:01.400 to limit that to three years. They're playing games of 0:16:01.480 --> 0:16:05.080 their around their own rules. It's a situation we're in. Unfortunately, 0:16:05.320 --> 0:16:08.680 we're boxed in by this this ridiculous fiscal framework, and 0:16:08.720 --> 0:16:11.640 that's why if you're investing, you will need an horizon 0:16:11.680 --> 0:16:13.600 longer than three years. At the moment, the tax breaks 0:16:13.600 --> 0:16:16.040 only out for three years and it's about to expire. 0:16:17.160 --> 0:16:19.760 They will increase that. Will they extend it permanently? I 0:16:19.800 --> 0:16:23.080 hope they do so in essence or business investment can 0:16:23.120 --> 0:16:26.160 be offset against corporation tax. I don't think they'll cut 0:16:26.200 --> 0:16:28.880 corporation tax every roll, but they'll increase analysis. It's the 0:16:28.960 --> 0:16:30.960 right thing to do. I hope they do it. Whether 0:16:31.000 --> 0:16:34.080 they do it or not depends purely on the politics 0:16:34.080 --> 0:16:36.160 sadly here, and I think there is a chance they 0:16:36.200 --> 0:16:39.280 may delay that or certainly put that into it in 0:16:39.320 --> 0:16:41.840 a situation where it makes it all that pain will 0:16:41.880 --> 0:16:44.400 come in future fiscal years and not this currently. 0:16:45.440 --> 0:16:49.360 There's also been a drive to try to turn around 0:16:49.440 --> 0:16:53.200 the fortunes of London listings to try to get pension 0:16:53.280 --> 0:16:55.960 funds and we've spoken about this before, to get them 0:16:56.040 --> 0:16:59.120 to invest into UK businesses. Now today we've been talking 0:16:59.160 --> 0:17:02.880 this money on big Radio about the British ier. I mean, 0:17:03.000 --> 0:17:06.120 is that the answer to the poor performance of UK stocks. 0:17:06.160 --> 0:17:08.800 Would it work. There's a chance they're going to do it. 0:17:08.800 --> 0:17:13.320 It's the answer for UK stockbreakers for sure. I mean 0:17:13.600 --> 0:17:16.920 it's amazing to read some of the commentary on perhaps 0:17:17.680 --> 0:17:20.200 great ideas coming out. Let's make a British ier and 0:17:20.560 --> 0:17:25.880 increase the allowances. I'm very, very nervous when they're talking 0:17:25.920 --> 0:17:30.320 about putting our pensions, for instance, into sort of infrastructure products. 0:17:30.359 --> 0:17:33.119 Please leave our sayings alone. That's not where the government 0:17:33.160 --> 0:17:36.080 should be. If you want to give us greater allowances, fine, 0:17:36.119 --> 0:17:38.880 but don't alter or steer it in such a way 0:17:38.880 --> 0:17:42.439 that you are making you invest in something which we 0:17:42.440 --> 0:17:46.199 shouldn't necessarily be investing in. And I think it's a 0:17:46.280 --> 0:17:49.720 very dangerous subject. I do think there's a halfway house. 0:17:49.760 --> 0:17:52.440 They can increase the allowance if you put it into 0:17:52.640 --> 0:17:55.520 UK things, but I don't think you should be altering 0:17:55.560 --> 0:17:58.160 the current allowances to invest around the world or where 0:17:58.160 --> 0:18:00.240 you want to, because I don't think that's what and 0:18:00.280 --> 0:18:04.520 should be steering and picking winners. So yes, they may 0:18:04.640 --> 0:18:06.720 play with this. This has been flagged quite hard, so 0:18:06.800 --> 0:18:09.080 I imagine there will be something, whether they leave it 0:18:09.119 --> 0:18:11.400 till the budget or they do it now. They also 0:18:11.440 --> 0:18:13.680 said I don't know, but yeah, we might get something 0:18:13.680 --> 0:18:15.560 on that. To sound all pro British. 0:18:15.920 --> 0:18:18.120 The issue, you know, more broadly is about the kind 0:18:18.160 --> 0:18:20.800 of inflationary pressures and what the Bank of England does. 0:18:20.880 --> 0:18:24.120 I mean, put that into context. How much further does 0:18:24.440 --> 0:18:27.440 the Bank of England have to work to bring down 0:18:27.440 --> 0:18:28.320 inflation in the UK. 0:18:29.240 --> 0:18:31.320 They don't have to do anything. They've overdone it. In fact, 0:18:31.440 --> 0:18:35.679 I think the panic hike in Dune and fifty basis 0:18:35.720 --> 0:18:37.920 points two days later they got the CPI number which 0:18:38.000 --> 0:18:40.040 realized the actual fact they didn't need to do anything. 0:18:41.359 --> 0:18:45.600 And we've seen the numbers out this week that you know, 0:18:45.640 --> 0:18:48.879 particularly services inflation down to six point six that's already 0:18:48.920 --> 0:18:51.040 well above where the Bank of England expects to be 0:18:51.080 --> 0:18:52.639 a six point nine at the end of this quarter. 0:18:54.000 --> 0:18:56.879 They've overdone it, as has I think the European Central 0:18:56.920 --> 0:19:00.600 Bank as well, which brings us into As I said, 0:19:00.640 --> 0:19:04.200 I expect a rate cut before the next election. As 0:19:04.200 --> 0:19:07.600 I think the economy, as I said, flatlining at zero. 0:19:07.760 --> 0:19:12.400 It's a fantastic result. In our economists expect overall drop 0:19:12.440 --> 0:19:15.399 a one four percentage point in ghost domestic product over 0:19:15.440 --> 0:19:18.920 the course of the next year. I think that's certainly possible, 0:19:19.000 --> 0:19:21.640 and I think we'll be talking more about the prospect 0:19:21.640 --> 0:19:24.639 of inflation coming down too quickly. And I'm the worries 0:19:24.680 --> 0:19:26.920 again of getting below that target a little and earth 0:19:26.880 --> 0:19:27.720 than they're expected. 0:19:28.040 --> 0:19:29.840 So I think the cost. 0:19:29.680 --> 0:19:33.160 Of living crisis we're now should we say, reverse earnings 0:19:33.160 --> 0:19:36.160 are now substantially above where inflation is. I think food 0:19:36.200 --> 0:19:38.280 prices can you come down. We've already seen the energy 0:19:38.280 --> 0:19:41.040 stuff watch out, so I personally think we'll get some 0:19:41.080 --> 0:19:42.000 good us on that front. 0:19:42.040 --> 0:19:45.399 That was Bloomberg opinion columnist Marcus Ashworth. My thanks to 0:19:45.480 --> 0:19:48.000 him for joining me. I'm Caroline Hepgar here in London. 0:19:48.320 --> 0:19:51.160 You can catch us every weekday morning for Bloomberg Daybreak 0:19:51.240 --> 0:19:53.720 eu at beginning at six am in London. That's one 0:19:53.760 --> 0:19:54.879 am on Wall Street. 0:19:55.040 --> 0:19:58.679 Tom our thanks to Bloomberg Daybreak Europe banker Caroline Hepgar 0:19:58.760 --> 0:20:01.240 and coming up on Bloomberg day Break weekend, the plan 0:20:01.400 --> 0:20:05.000 for a crackdown on fentanyl by both the US and China. 0:20:05.440 --> 0:20:19.240 I'm Tom Busby and this is Bloomberg. I'm Tom Busby 0:20:19.240 --> 0:20:20.960 in New York with your global look ahead at the 0:20:20.960 --> 0:20:23.640 top stories for investors in the coming week. The US 0:20:23.720 --> 0:20:27.800 government avoids another possible shutdown, at least for now, as 0:20:27.840 --> 0:20:30.600 we'll look at what's next for Congress. But first, the 0:20:30.720 --> 0:20:34.400 deal that President Biden reached with Chinese President shi Jinping 0:20:34.560 --> 0:20:37.879 to combat the manufacture and export of fentanyl into the 0:20:37.960 --> 0:20:41.600 US has been characterized by senior US officials as the 0:20:41.600 --> 0:20:45.240 most important agreement coming out of that summit. So what's next? 0:20:45.600 --> 0:20:47.679 What steps are needed to disrupt the supply? 0:20:47.960 --> 0:20:48.400 For more? 0:20:48.600 --> 0:20:52.679 Bloomberg Daybreak Asia anchor Brian Curtis speaks with Michelle Cortes 0:20:52.800 --> 0:20:55.440 Bloomberg Medical Science and Tech reporter. 0:20:55.320 --> 0:20:57.639 Tom We focus on one of the key areas of 0:20:57.680 --> 0:21:02.840 agreement between President Biden and Chinese Leadershijenping, combating the spread 0:21:02.920 --> 0:21:07.280 of fentanyl. Fentanyl is a synthetic opioid produced by companies 0:21:07.280 --> 0:21:10.119 in China. China said that it would take actions to 0:21:10.160 --> 0:21:13.320 prevent the raw materials of the drug, known as precursors, 0:21:13.640 --> 0:21:17.520 from being exported without controls. The precursors find their way 0:21:17.560 --> 0:21:21.320 into Mexico and into the hands of primarily two criminal gangs, 0:21:21.680 --> 0:21:26.439 the Sineloa Cartel and the Cartel Jalisco New Generation. The 0:21:26.520 --> 0:21:30.720 gang synthesize the chemicals into fentanyl and hire US citizens 0:21:30.720 --> 0:21:33.399 for the most part, to smuggle the drugs into the 0:21:33.520 --> 0:21:37.600