WEBVTT - Sunak Speech, McCarthy Out & Ray Dalio Talks

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<v Speaker 1>Good morning. It's Wednesday, the fourth of October in London.

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<v Speaker 1>This is the Bloomberg Daybreak EUROP podcast. I'm Stephen Carroll.

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<v Speaker 1>Coming up today, Rishi Sunac looks to both the Conservative

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<v Speaker 1>Party agenda back on track as HS two dominates headlines.

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<v Speaker 2>And I'm Caroline Hipkett at the Conservative Party conference in

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<v Speaker 2>Manchester with the latest on what could be the Prime

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<v Speaker 2>Minister's biggest speech of his political career.

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<v Speaker 1>Plus a House divided Republican Kevin McCarthy is ousted as

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<v Speaker 1>US Speaker by those and his own party. Let's start

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<v Speaker 1>with a roundup of our top stories. The Prime Minister,

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<v Speaker 1>Rishi Sunac is today expected to announce that part of

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<v Speaker 1>Europe's biggest infrastructure project, HS two is being scrapped. It's

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<v Speaker 1>understood that the Prime Minister will use his speech at

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<v Speaker 1>today's Conservative Party conference to soften the blow, announcing that

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<v Speaker 1>some of the savings will be used to boost other

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<v Speaker 1>parts of the UK's transport network. But Labour's Greater Manchester

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<v Speaker 1>Mayor Andy Burnham says the plan is a disgrace.

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<v Speaker 3>Do not pull the plug on the North of England.

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<v Speaker 3>Do not treat people here as second class citizens when

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<v Speaker 3>it comes to transport because if you do do those things,

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<v Speaker 3>people here will never forget.

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<v Speaker 1>Burnham's criticism has been echoed by both the former Chancellor,

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<v Speaker 1>George Osbourne and Conservative West Midlands mayor Andy Street, who

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<v Speaker 1>had this to say when we asked him about the

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<v Speaker 1>fact that costs of the project have spiraled to more

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<v Speaker 1>than one hundred billion pounds.

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<v Speaker 4>My argument is you do need to have ages too,

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<v Speaker 4>so that's not really the question, is it. And of

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<v Speaker 4>course what's been put to the Prime Minister is a

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<v Speaker 4>proposal which is supported by private businesses, to say let

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<v Speaker 4>us try to rethink the Lake to the North, but

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<v Speaker 4>it is still needed to win the investment around the world.

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<v Speaker 1>Those comments from Andy Street and others have helped to

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<v Speaker 1>cast a long shadow over the annual Tory gathering, with

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<v Speaker 1>HS two a core plank of previous Tory pledges to

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<v Speaker 1>level up economic opportunities across the country. In the United States,

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<v Speaker 1>Kevin McCarthy has been ousted as the House Speaker after

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<v Speaker 1>the Republican hardliners revolted over his compromise with Democrats to

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<v Speaker 1>avert at government shutdown. Goldman Sachs says the raises the

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<v Speaker 1>risk of a government shut down next month. With his

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<v Speaker 1>successor under even more pressure from those on the right

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<v Speaker 1>of the party. The move ends a tumultuous nine months

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<v Speaker 1>in the job for McCarthy, who says he won't run

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<v Speaker 1>for the position again.

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<v Speaker 3>I don't regret standing up for choosing governing over grievance.

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<v Speaker 5>It is my responsibility, it is my job. I do

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<v Speaker 5>not regret negotiating. Our government is designed to find compromise.

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<v Speaker 5>I don't regret my efforts to build coalitions and find solutions.

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<v Speaker 5>I was raised to solve problems, not create them.

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<v Speaker 1>Despite McCarthy's lack of regret, the latest turmoil as fueled

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<v Speaker 1>concerns about deepening dysfunction in Washington. The last time the

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<v Speaker 1>House even voted on removing a speaker was in nineteen ten,

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<v Speaker 1>and in that case, it survived the test. US job

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<v Speaker 1>openings unexpectedly increase in August, fueled by white collar postings.

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<v Speaker 1>The number of available positions increased to nine point six million,

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<v Speaker 1>with hiring increasing while layoffs remained low. According to Jolts,

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<v Speaker 1>the level of openings topped all estimates in a Bloomberg

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<v Speaker 1>survey of economists. Treasury yields rose to multi year highs,

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<v Speaker 1>and the SMP declined after the report. Polunteer, the data

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<v Speaker 1>analysis firm founded by tech billionaire Peter Thiel, has emerged

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<v Speaker 1>as the top pick for a major NHS data contract.

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<v Speaker 1>The five year deal could be worth close to half

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<v Speaker 1>a billion pounds and focuses on analyzing medical information. Volunteer's

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<v Speaker 1>relationship with the NHS has been criticized by civil rights

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<v Speaker 1>and patient advocacy groups who worry about data privacy and

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<v Speaker 1>the firm's work with intelligence and defense agencies, and the

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<v Speaker 1>billionaire investor. Ray Dalio says US China relations are close

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<v Speaker 1>to breaking down. Speaking to Bloomberg's David Weston, the Bridgewater

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<v Speaker 1>Associates founder warned of the risk of conflict between the

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<v Speaker 1>world's two largest economies.

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<v Speaker 6>US China relationship are in a number of areas on

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<v Speaker 6>the brink of red lines, so, in other words, these

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<v Speaker 6>irreconcilable differences, they're right on the.

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<v Speaker 1>Brig Dahalio went on to say the breaking point would

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<v Speaker 1>be if the United States comes out in favor of

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<v Speaker 1>an independent Taiwan, that he said would be quote the

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<v Speaker 1>equivalent of a declaration of war. Dahalio has long nurtured

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<v Speaker 1>relations with Chinese officials and previously expressed admiration for some

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<v Speaker 1>of Beijing's economic policies. Well, let's turn two politics here

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<v Speaker 1>in the UK, Rishi Sunak facing one of the most

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<v Speaker 1>important speeches of his career as Prime Minister at the

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<v Speaker 1>Conservative Party conference. Later he needs to unite his supporters

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<v Speaker 1>ahead of an election year after a party gathering overshadowed

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<v Speaker 1>by questions over the Hyighth Chess two high speed rail link.

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<v Speaker 1>Karlin Hepker's been following all the developments at the Conservative

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<v Speaker 1>Party conference, he joins us from Manchester, Carl and great

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<v Speaker 1>to have you. Good morning. What are the key things

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<v Speaker 1>that Rishie Sinak is trying to achieve today?

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<v Speaker 2>So Rigie Sunac took over from Prime Minister Liz Trust

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<v Speaker 2>last year when the party was at historic lows in

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<v Speaker 2>the polling. Remember, of course, the Bank of England had

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<v Speaker 2>to intervene after Liz Trust's chancellor made a disastrous speech

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<v Speaker 2>pledging unfunded tax cuts and that sent bondials spiking and

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<v Speaker 2>there had to be Bank of England intervention to prop

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<v Speaker 2>up the pensions industry. Richie Sunac took over. He has

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<v Speaker 2>managed to stabilize the situation in the month since then

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<v Speaker 2>with his Chancellor Jeremy hunt this speech, though, the Prime

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<v Speaker 2>Minister needs to wow MPs and party activists here, not

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<v Speaker 2>just deliver stability that we've seen in the last few months.

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<v Speaker 2>Perhaps the sort of speech that we really have not

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<v Speaker 2>seen from the Prime Minister so far. He must prepare

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<v Speaker 2>the Conservatives for the next general election, which is expected

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<v Speaker 2>to take place perhaps in the autumn of next year.

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<v Speaker 2>Will he talk about his own personal story, not quite

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<v Speaker 2>to riches, but certainly a big British success story, imagining

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<v Speaker 2>to get into an elite private school, go to Oxford,

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<v Speaker 2>then get into Goldman Sachs, become elected as an MP

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<v Speaker 2>and make it all the way to Chancellor and then

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<v Speaker 2>the first British Asian Prime minister that the country has

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<v Speaker 2>ever seen. Will he talk about that? So far this

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<v Speaker 2>Conservative Party conference has been pretty policy light, so big

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<v Speaker 2>expectations for what we'll get from the Prime Minister today.

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<v Speaker 1>What about the issue that has dominated so many of

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<v Speaker 1>the conversations that you've been having there, Caroline, Are we

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<v Speaker 1>any clearer now about what's going to happen over the

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<v Speaker 1>HS two rail link?

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<v Speaker 4>No?

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<v Speaker 2>Not particularly The Prime Minister spent all of yesterday speaking

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<v Speaker 2>to journalists. It has been the question that has dominated

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<v Speaker 2>this party conference. We are in Manchester after all, and

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<v Speaker 2>the rumor has been for weeks and months, several weeks

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<v Speaker 2>at least, that there would be the potential of high

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<v Speaker 2>speed rail to the connection from Birmingham to the city

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<v Speaker 2>here in Manchester would be scrapped because of rising costs.

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<v Speaker 2>The Prime Minister has meant Tuesday telly journalists that he

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<v Speaker 2>has still not made up his mind on this issue,

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<v Speaker 2>has not made a decision, even though holding a cabinet

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<v Speaker 2>meeting it would seem during conference, which is also quite

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<v Speaker 2>an extraordinary step. So will we get perhaps a decision

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<v Speaker 2>on HS two It's possible as part of the Prime

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<v Speaker 2>Minister's speech and what comes alongside that if the HS

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<v Speaker 2>two rail line is scrapped or part of it is scrapped,

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<v Speaker 2>will we hear about new transport projects in the north

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<v Speaker 2>of England to try to sweeten that blow?

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<v Speaker 1>Caroline, The question of party unity has been another continuing

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<v Speaker 1>theme during this event as well. Is the party because

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<v Speaker 1>of the discussions that you've been talking about over HS two,

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<v Speaker 1>over tax cuts? Is the Conservative Party coming away less

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<v Speaker 1>united from this conference than it went into us Ah.

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<v Speaker 2>I'm not sure. It's hard to say whether it's less united.

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<v Speaker 2>I mean, it's certainly been an immensely difficult few years

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<v Speaker 2>for the Conservatives, you know, chopping and changing prime ministers

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<v Speaker 2>through Boris Johnson, you know, Theresa May, Boris Johnson, Liz

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<v Speaker 2>Tras now Rishi Sunac. That's quite something, totally unprecedented really

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<v Speaker 2>in British history. Frankly, having said that, we spoke for

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<v Speaker 2>example to former Minister and member of the Treasury Select

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<v Speaker 2>Committee Andrea led Some, you know, incredibly strong about how

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<v Speaker 2>united the party is. But there are of course signs

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<v Speaker 2>of division. You've got really open positioning for the leadership

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<v Speaker 2>of the Tories. Were Rishi Sunac to lose the next

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<v Speaker 2>general election, particularly, it would seem between Kemy Baide, not

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<v Speaker 2>the Business Secretary, and the Home Secretary, Sella Bartherman. But

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<v Speaker 2>the other thing to mention is that the thing that

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<v Speaker 2>is more clear is that the US style culture wars,

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<v Speaker 2>at least the language of those culture wars, does seem

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<v Speaker 2>very present at this Conservative conference. The Home Sectuary Sweller

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<v Speaker 2>Bravman got a standing ovation yesterday a speech talking about

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<v Speaker 2>how toys were calling out the woke politics of labor.

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<v Speaker 2>She talked about how politicians have been too squeamish about

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<v Speaker 2>being smeared as racist in her words by not talking

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<v Speaker 2>about migration. She talked about the hurricane of migrants that

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<v Speaker 2>would becoming to the UK. She herself is of Indian origin,

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<v Speaker 2>her parents migrated to the UK from East Africa. So

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<v Speaker 2>that has been clear that the language is certainly ratcheting

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<v Speaker 2>up with the science sectually. Michelle donnellan railing against woke

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<v Speaker 2>scientists that got a lot of attention. So certainly some

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<v Speaker 2>perhaps US style language and that does seem very divisive.

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<v Speaker 1>Caroline, the questions around you mentioned they're the Conservative Party

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<v Speaker 1>conference so far being quite light on policy. You've been

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<v Speaker 1>speaking to a lot of the business groups over the

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<v Speaker 1>past few days about what they want to see in

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<v Speaker 1>terms of policy. I mean, one of the most notable absences,

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<v Speaker 1>I suppose, given that we haven't had that many announcements.

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<v Speaker 2>Well, they want long term thinking, they want delivery, and

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<v Speaker 2>there is a level of frustration you can detect, and

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<v Speaker 2>yet also the need to be even handed, you know,

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<v Speaker 2>you think about the big business lobbies in the UK,

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<v Speaker 2>the Confederation of British Industry we spoke to this week,

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<v Speaker 2>one of the export associations we spoke to this week

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<v Speaker 2>they are, they want to give everybody a fair hearing,

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<v Speaker 2>but you can sense that there is a question mark

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<v Speaker 2>about the tone of this conference, which is policy light

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<v Speaker 2>and not that enthusiastic. It's not packed. People are walking

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<v Speaker 2>around the floor here and we were sort of commenting

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<v Speaker 2>yesterday that it's more the pace of a museum shop,

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<v Speaker 2>it would seem, or perhaps you know, there's not the

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<v Speaker 2>excitement that we are perhaps expecting from the Labor Party

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<v Speaker 2>confidence at the weekend. But all all business people say,

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<v Speaker 2>you know, they want policy, They want clarity in terms

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<v Speaker 2>of policy, they don't want to see big changes, and

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<v Speaker 2>they want industrial policy to be clear. Certainly the net

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<v Speaker 2>zero issue is also why a lot of business.

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<v Speaker 1>Leaders Yeah, and understandably, I think, given that idea of

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<v Speaker 1>wanting policy certainty, which seems to have come up as

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<v Speaker 1>a theme in many of the conversations that you've been

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<v Speaker 1>having there at the Conservative Party conference. Caroline for now

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<v Speaker 1>thank you very much. More from Caroline throughout the day

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<v Speaker 1>on Bloomberg Radio and of course the Bloomberg UK Politics

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<v Speaker 1>podcast as well, where you can hear some of the

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<v Speaker 1>conversations that Caroline has been having with those business leaders,

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<v Speaker 1>but also some of the leading Conservative MPs as well.

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<v Speaker 1>Caroline for now, thank you very much. Let's turn to

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<v Speaker 1>us politics now. The House Speaker Kevin McCarthy has been

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<v Speaker 1>removed from his position after a rebellion by hardliners within

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<v Speaker 1>his own Republican party, plunges Congress into an internal power

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<v Speaker 1>struggle as it faces key deadlines on avoiding a government

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<v Speaker 1>shutdown and approving more aid for Ukraine. Let's get more

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<v Speaker 1>now from Bloomberg's Gill Desis on this story. Great to

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<v Speaker 1>have you with us. Kevin McCarthy is gone from the position,

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<v Speaker 1>says he won't run again. Who could replace him?

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<v Speaker 7>So there's a few names in mind, Stephen, as we

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<v Speaker 7>kind of reached this very unprecedented in historical situation, first

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<v Speaker 7>of all, remember that essentially Congress is kind of calling

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<v Speaker 7>for resos at this point, will reconvene in October eleventh

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<v Speaker 7>and ultimately decide who maybe neesked I think the front

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<v Speaker 7>runner at this point is the second ranking Republican in

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<v Speaker 7>the House, that Steve Scalase of Louisiana. At this point,

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<v Speaker 7>he's got the backing of Matt Gates, who's ultimately the

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<v Speaker 7>rep who called this vote to oust McCarthy in the

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<v Speaker 7>first place. Scleas is pretty popular, but also kind of

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<v Speaker 7>comes from more of that establishment line of thought that

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<v Speaker 7>might not be something that's necessarily desired in an incredibly

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<v Speaker 7>politically tumultuous environment where McCarthy was ultimately ousted with the

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<v Speaker 7>help of a lot of very Republican hardliners who weren't

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<v Speaker 7>happy with the government shutdown deal, just the stop gap

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<v Speaker 7>deal that he made with Democrats over the weekend. The

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<v Speaker 7>other thing that's a challenge for Scalise is that he's

0:13:01.800 --> 0:13:04.920
<v Speaker 7>currently receiving some pretty serious medical treatment at this point.

0:13:04.960 --> 0:13:08.079
<v Speaker 7>Gates has said that that shouldn't preclude him, but ultimately,

0:13:08.800 --> 0:13:11.679
<v Speaker 7>you know, it's just a consideration among some of the

0:13:11.679 --> 0:13:14.959
<v Speaker 7>other options. Here. You've got a GOP whip, Tom Emmer,

0:13:15.080 --> 0:13:18.640
<v Speaker 7>he's from Minnesota. And then you've also got Alistaphonics. She's

0:13:18.679 --> 0:13:22.000
<v Speaker 7>a representative from New York who is the GOP's fourth

0:13:22.360 --> 0:13:26.600
<v Speaker 7>in command. She's a pretty big, full throated Donald Trump loyalist,

0:13:26.640 --> 0:13:28.520
<v Speaker 7>though I'm not sure how well that's going to play

0:13:28.800 --> 0:13:32.480
<v Speaker 7>with some in the Republican Party who are a bit

0:13:32.520 --> 0:13:35.480
<v Speaker 7>more moderate than you see a lot of these hardliners here.

0:13:35.480 --> 0:13:37.200
<v Speaker 7>But I think the bottom line here, Stephen, is that

0:13:37.240 --> 0:13:39.080
<v Speaker 7>this is an incredibly open race.

0:13:39.480 --> 0:13:41.920
<v Speaker 1>Which, of course, you know, leads us to think, what's

0:13:41.920 --> 0:13:46.640
<v Speaker 1>happening to policymaking in the meantime is as Congress now

0:13:46.679 --> 0:13:48.559
<v Speaker 1>focuses on electing the speaker.

0:13:49.600 --> 0:13:51.280
<v Speaker 7>Yeah, I mean, I think that at this point, Stephen,

0:13:51.840 --> 0:13:54.160
<v Speaker 7>it's pretty obvious that it's going to be very, very

0:13:54.200 --> 0:13:56.480
<v Speaker 7>difficult to get a lot done. It already was pretty

0:13:56.480 --> 0:13:58.560
<v Speaker 7>difficult to get a lot done. I think that, you know,

0:13:58.760 --> 0:14:02.280
<v Speaker 7>even when you had temporary deal to avert an immediate

0:14:02.320 --> 0:14:04.880
<v Speaker 7>government shut down over the weekend that was came it

0:14:04.960 --> 0:14:06.800
<v Speaker 7>as I think a little bit of a surprise to some,

0:14:07.320 --> 0:14:10.880
<v Speaker 7>but ultimately we only have until November seventeenth to actually

0:14:10.960 --> 0:14:14.079
<v Speaker 7>get another deal done, and I'm not really sure how

0:14:14.200 --> 0:14:16.760
<v Speaker 7>likely that's going to be, especially when whoever the new

0:14:16.800 --> 0:14:19.400
<v Speaker 7>House speaker coming in is they're going to be under

0:14:19.440 --> 0:14:23.200
<v Speaker 7>even more pressure, especially from these Republican hardliners, to avoid

0:14:23.280 --> 0:14:25.960
<v Speaker 7>making any sort of deals that offer up more funding

0:14:26.040 --> 0:14:29.240
<v Speaker 7>for Ukraine, for example, one of the big points of

0:14:29.280 --> 0:14:32.680
<v Speaker 7>those sticking points of contention that they have with Republicans

0:14:32.760 --> 0:14:35.160
<v Speaker 7>or excuse me, with Democrats. So I think that at

0:14:35.160 --> 0:14:36.720
<v Speaker 7>this point it is going to be very difficult to

0:14:36.720 --> 0:14:39.680
<v Speaker 7>see any kind of a big shift in governance.

0:14:40.560 --> 0:14:44.000
<v Speaker 1>Of course, the looming deadlines that the US government are

0:14:44.160 --> 0:14:46.800
<v Speaker 1>going to be facing is the potential of another shutdown

0:14:46.960 --> 0:14:48.680
<v Speaker 1>only just over a month away.

0:14:49.720 --> 0:14:52.360
<v Speaker 7>Yes, it's really coming up very very soon. I think

0:14:52.400 --> 0:14:54.440
<v Speaker 7>that at this point we're going to have to see whether,

0:14:54.920 --> 0:14:57.520
<v Speaker 7>you know, we actually get somebody in place who's going

0:14:57.560 --> 0:15:00.960
<v Speaker 7>to be able to strike some of those deals. I mean,

0:15:01.160 --> 0:15:03.240
<v Speaker 7>even if you look at McCarthy who was able to

0:15:03.240 --> 0:15:06.720
<v Speaker 7>strike a deal with Democrats over the averting the government

0:15:06.760 --> 0:15:10.760
<v Speaker 7>shutdown in the short term, it's ultimately Democrats who joined

0:15:10.800 --> 0:15:14.720
<v Speaker 7>in with the Republican hardliners who oust him from his speakership.

0:15:14.840 --> 0:15:17.680
<v Speaker 7>So it's yes, it's a very very tricky line to watch,

0:15:17.720 --> 0:15:20.600
<v Speaker 7>especially as they said, when it comes down to matters

0:15:20.600 --> 0:15:23.040
<v Speaker 7>over funding in Ukraine, which could be a very much

0:15:23.080 --> 0:15:25.840
<v Speaker 7>a sticking point for whatever spending package is ultimately passed.

0:15:26.040 --> 0:15:28.280
<v Speaker 7>But I think it's just it's a long road to go,

0:15:28.320 --> 0:15:29.720
<v Speaker 7>and I think it's going to be a really really

0:15:29.800 --> 0:15:32.520
<v Speaker 7>long six weeks or so before we get to that

0:15:32.560 --> 0:15:34.440
<v Speaker 7>next deadline November seventeenth.

0:15:34.840 --> 0:15:36.800
<v Speaker 1>Okay, Jill Desis, thank you very much for bringing us

0:15:36.800 --> 0:15:40.160
<v Speaker 1>the late US on that story around US politics. Bridgewater

0:15:40.240 --> 0:15:43.520
<v Speaker 1>Associates founder Ray Dalio says cash is a good investment

0:15:43.560 --> 0:15:45.440
<v Speaker 1>of the moment, and that he doesn't want to own

0:15:45.520 --> 0:15:48.760
<v Speaker 1>bonds right now. He's told Bloomberg that firms that really

0:15:48.840 --> 0:15:52.560
<v Speaker 1>know how to use artificial intelligence will do well. Ray

0:15:52.640 --> 0:15:55.120
<v Speaker 1>Dalio has been speaking to Bloomberg's David Weston at the

0:15:55.160 --> 0:15:56.600
<v Speaker 1>Greenwich Economic Forum.

0:15:57.080 --> 0:16:03.560
<v Speaker 6>The US China relationship relations are in a number of areas.

0:16:04.640 --> 0:16:06.400
<v Speaker 5>On the brink of red lines.

0:16:07.320 --> 0:16:10.640
<v Speaker 6>So in other words, these irreconcilable differences, they're right on

0:16:10.680 --> 0:16:13.440
<v Speaker 6>the brig So if I was to take let's say

0:16:13.600 --> 0:16:18.000
<v Speaker 6>the Taiwan issue, it's an irreconcilable issue and so on.

0:16:18.360 --> 0:16:20.000
<v Speaker 5>It's right at the line.

0:16:20.200 --> 0:16:24.440
<v Speaker 6>The breaking point is if the United States said we

0:16:24.480 --> 0:16:27.120
<v Speaker 6>are in favor of the independence of Taiwan, that's the

0:16:27.120 --> 0:16:30.680
<v Speaker 6>equivalent of a declaration of war. And because of our

0:16:30.720 --> 0:16:34.760
<v Speaker 6>political issues that are now internally, you're going to be

0:16:35.200 --> 0:16:39.680
<v Speaker 6>likely to push that, because of the fact that many

0:16:40.320 --> 0:16:43.120
<v Speaker 6>in Congress and so on would say, we will defend

0:16:43.640 --> 0:16:46.120
<v Speaker 6>Taiwan and world cost then we will give them this,

0:16:46.280 --> 0:16:48.880
<v Speaker 6>and you could even cross that line. It's my point

0:16:48.960 --> 0:16:51.440
<v Speaker 6>is it's right at the edge. That's that we have

0:16:51.880 --> 0:16:56.520
<v Speaker 6>a chips issue, and we have a technology and sanctions issue.

0:16:56.880 --> 0:17:00.640
<v Speaker 5>The reason in World War two war.

0:17:00.480 --> 0:17:04.760
<v Speaker 6>With Japan you had the cutting off of the oil

0:17:05.440 --> 0:17:10.560
<v Speaker 6>and then the sanctioning them taking their payments. So you

0:17:10.640 --> 0:17:13.760
<v Speaker 6>have a somewhat similar situation. Chips is like oil back then,

0:17:14.000 --> 0:17:16.879
<v Speaker 6>and it's a very very very delicate issue. You have

0:17:16.960 --> 0:17:21.639
<v Speaker 6>the geopolitical issue which also is manifest in each of

0:17:21.720 --> 0:17:26.240
<v Speaker 6>them and so on, supporting the supporting Ukraine, and other

0:17:26.440 --> 0:17:29.240
<v Speaker 6>geopolitical issues which are also right at the edge.

0:17:29.520 --> 0:17:31.880
<v Speaker 5>Neither country wants to go to war.

0:17:32.000 --> 0:17:35.280
<v Speaker 6>Everybody's afraid of what that war would be like because

0:17:35.280 --> 0:17:38.440
<v Speaker 6>it would be devastating economically and politically.

0:17:38.760 --> 0:17:42.840
<v Speaker 5>So you will see sort of the postponing.

0:17:42.920 --> 0:17:46.520
<v Speaker 6>These issues will remain and probably intensify over the next

0:17:46.560 --> 0:17:47.800
<v Speaker 6>five to ten years.

0:17:47.840 --> 0:17:49.600
<v Speaker 5>But they will be at that edge.

0:17:49.600 --> 0:17:52.560
<v Speaker 6>So you're going to see in November there will be

0:17:52.600 --> 0:17:55.720
<v Speaker 6>in San Francisco the APAC Conference and you will see

0:17:55.840 --> 0:17:58.720
<v Speaker 6>presidentcy get together with President Biden. But we have a

0:17:58.760 --> 0:18:02.400
<v Speaker 6>political situation, and so that's it. In China, they are

0:18:02.440 --> 0:18:06.400
<v Speaker 6>also dealing with a number of big problems. As we're

0:18:06.440 --> 0:18:09.000
<v Speaker 6>dealing with our problems, they're dealing with their problems. Those

0:18:09.080 --> 0:18:14.320
<v Speaker 6>problems are first the debt problem, that has now been

0:18:14.800 --> 0:18:22.159
<v Speaker 6>allowed to pass through the into the system, meaning you

0:18:22.200 --> 0:18:26.359
<v Speaker 6>have real estate, and real estate counts for about seventy

0:18:26.400 --> 0:18:29.520
<v Speaker 6>percent of savings. People put their money in real estate

0:18:29.760 --> 0:18:32.639
<v Speaker 6>and about twenty percent of their economy. And there was

0:18:32.680 --> 0:18:36.000
<v Speaker 6>a bubble, and then that's passing through and that goes

0:18:36.040 --> 0:18:40.119
<v Speaker 6>down to local governments that we're living on debt and

0:18:40.160 --> 0:18:44.200
<v Speaker 6>also land sales for real estate purchases, and so that's

0:18:44.240 --> 0:18:47.480
<v Speaker 6>a structural issue. They need to do a debt restructuring,

0:18:48.040 --> 0:18:50.840
<v Speaker 6>and debt restructuring is a very difficult thing to do.

0:18:50.920 --> 0:18:54.119
<v Speaker 6>They can do it, but it's also very politically impactful

0:18:54.200 --> 0:18:58.879
<v Speaker 6>because those who are you determine whoever's making these decisions

0:18:58.960 --> 0:19:02.240
<v Speaker 6>determines who's wealth and how they divide the pie. So

0:19:02.320 --> 0:19:05.960
<v Speaker 6>you have that going on, you have a move to

0:19:06.200 --> 0:19:10.679
<v Speaker 6>what president she calls the hundred year storm on the horizon.

0:19:10.880 --> 0:19:13.280
<v Speaker 6>In other words, he believes there's one hundred year storm

0:19:13.320 --> 0:19:16.400
<v Speaker 6>on the horizon. That's the sort of things that we're

0:19:16.440 --> 0:19:18.919
<v Speaker 6>now talking about. And with that one hundred year storm

0:19:18.920 --> 0:19:20.120
<v Speaker 6>on the horizon, you.

0:19:20.160 --> 0:19:21.160
<v Speaker 5>Have a very.

0:19:23.440 --> 0:19:28.920
<v Speaker 6>Autocratic in other words, if you don't behave well, you'll

0:19:29.000 --> 0:19:33.160
<v Speaker 6>lose your head and so on, and that kind of environment,

0:19:33.200 --> 0:19:35.640
<v Speaker 6>which by the way, in war periods and so on,

0:19:35.720 --> 0:19:38.919
<v Speaker 6>has been what most countries have moved toward or something,

0:19:39.680 --> 0:19:42.399
<v Speaker 6>and so that's having an effect on the economy. We

0:19:42.480 --> 0:19:46.960
<v Speaker 6>have the US China conflict itself, which is affecting what

0:19:48.080 --> 0:19:50.960
<v Speaker 6>companies do. Do I want to be in China or

0:19:51.000 --> 0:19:52.960
<v Speaker 6>do I want to be in Vietnam. That's one of

0:19:53.000 --> 0:19:56.679
<v Speaker 6>the things that's benefiting neutral countries, so they think, okay,

0:19:56.840 --> 0:20:00.199
<v Speaker 6>if the Acion countries, India and other places can be

0:20:00.200 --> 0:20:02.560
<v Speaker 6>a beneficiary of that, where do I want to be?

0:20:03.040 --> 0:20:08.399
<v Speaker 6>But that's also hurting them. And then of course that

0:20:08.440 --> 0:20:12.159
<v Speaker 6>we have a world economy which is relatively slow moving.

0:20:11.960 --> 0:20:15.720
<v Speaker 5>That affects their exports. So they're going through a very

0:20:15.760 --> 0:20:16.800
<v Speaker 5>difficult period.

0:20:18.440 --> 0:20:21.119
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

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