1 00:00:00,080 --> 00:00:07,520 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,960 --> 00:00:12,320 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,360 --> 00:00:14,720 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:14,720 --> 00:00:17,520 Speaker 2: anchors all around the world. Straight ahead on the program, 5 00:00:17,520 --> 00:00:20,280 Speaker 2: and look ahead to the December jobs report in the 6 00:00:20,400 --> 00:00:23,680 Speaker 2: US what it could mean for FED policy moving forward. 7 00:00:24,000 --> 00:00:25,680 Speaker 2: I'm Tom Busby in New York. 8 00:00:25,840 --> 00:00:27,040 Speaker 3: I'm Stephen Caroen and London. 9 00:00:27,080 --> 00:00:29,520 Speaker 4: We're digging into some of the food and culture trends 10 00:00:29,560 --> 00:00:31,960 Speaker 4: to watch in Europe in twice and twenty five. 11 00:00:32,240 --> 00:00:34,680 Speaker 5: I'm deg Prisner, looking at what's in store for the 12 00:00:34,720 --> 00:00:36,400 Speaker 5: world's second largest economy. 13 00:00:38,159 --> 00:00:42,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 14 00:00:42,240 --> 00:00:45,960 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 15 00:00:46,440 --> 00:00:50,680 Speaker 1: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 16 00:00:51,120 --> 00:00:54,320 Speaker 1: Sirius XM one twenty one, and around the world on 17 00:00:54,400 --> 00:00:57,520 Speaker 1: Bloomberg Radio, dot Com and the Bloomberg Business App. 18 00:01:02,080 --> 00:01:02,640 Speaker 3: Good day to you. 19 00:01:02,840 --> 00:01:05,200 Speaker 2: I'm Tom Busby, and we begin today's program with the 20 00:01:05,319 --> 00:01:09,920 Speaker 2: December jobs report. We get non farm payrolls data on 21 00:01:10,040 --> 00:01:13,200 Speaker 2: Friday eight thirty am Wall Street Time, and for more 22 00:01:13,240 --> 00:01:16,400 Speaker 2: on that data and what it could mean for FED policy. 23 00:01:16,600 --> 00:01:21,800 Speaker 2: We're joined by Stuart paul Us, economists with Bloomberg Economics. Well, Stuart, 24 00:01:21,880 --> 00:01:25,520 Speaker 2: let's start with November. Job growth really rebound. It two 25 00:01:25,560 --> 00:01:28,520 Speaker 2: hundred and twenty seven thousand jobs added thanks to retailer 26 00:01:28,560 --> 00:01:32,000 Speaker 2: staffing for the holidays, no major storms, no big strikes. 27 00:01:32,760 --> 00:01:35,200 Speaker 2: What do you expect to see in December's number and 28 00:01:35,240 --> 00:01:37,480 Speaker 2: will this give us kind of a clear picture of 29 00:01:37,520 --> 00:01:39,360 Speaker 2: where the US labor market is right now. 30 00:01:39,880 --> 00:01:42,480 Speaker 6: Good day to you, Tom, and happy New Year. You're 31 00:01:42,600 --> 00:01:47,200 Speaker 6: absolutely right that hiring did rebound in November. That's after 32 00:01:47,400 --> 00:01:49,840 Speaker 6: hurricane season came to an end and the effects of 33 00:01:49,920 --> 00:01:52,760 Speaker 6: Hurricane Beryl and Milton really came to an end, and 34 00:01:53,120 --> 00:01:56,440 Speaker 6: the Boeing strike was resolved early in the month in November. 35 00:01:57,000 --> 00:01:59,120 Speaker 6: But we're not going to have some of those same 36 00:01:59,240 --> 00:02:03,680 Speaker 6: favorable wins for hiring in the December jobs report. It's 37 00:02:03,840 --> 00:02:06,440 Speaker 6: just about one hundred and fifty five thousand jobs that 38 00:02:06,480 --> 00:02:10,079 Speaker 6: were likely added during the month, and that's again far 39 00:02:10,240 --> 00:02:13,799 Speaker 6: slower than even the average pace that we saw over 40 00:02:13,880 --> 00:02:16,480 Speaker 6: the year, which has been running at about one hundred 41 00:02:16,520 --> 00:02:21,079 Speaker 6: and eighty thousand jobs per month. The hiring rate, Tom, 42 00:02:21,280 --> 00:02:25,320 Speaker 6: has been declining and quite rapidly in the last couple months, 43 00:02:25,320 --> 00:02:29,239 Speaker 6: which suggested the expansion of the labor pool is really 44 00:02:29,280 --> 00:02:32,200 Speaker 6: slowing down. And more importantly, I think Tom, is that 45 00:02:32,480 --> 00:02:36,320 Speaker 6: the Establishment Survey has been overstating the pace of hiring 46 00:02:36,440 --> 00:02:39,440 Speaker 6: in twenty twenty four by an average about ninety thousand 47 00:02:39,480 --> 00:02:42,360 Speaker 6: to one hundred thousand jobs per month. And after we 48 00:02:42,440 --> 00:02:45,040 Speaker 6: factor that in, the average pace of hiring over the 49 00:02:45,120 --> 00:02:47,919 Speaker 6: last year was likely just about seventy five to eighty 50 00:02:48,000 --> 00:02:51,680 Speaker 6: thousand jobs per month. And that's really inconsistent with a 51 00:02:51,720 --> 00:02:57,160 Speaker 6: steady unemployment rate. That's not enough hiring given population growth 52 00:02:57,360 --> 00:03:00,799 Speaker 6: to keep the unemployment rates steady. Are expecting to see 53 00:03:00,840 --> 00:03:04,280 Speaker 6: the unemployment rate rise in that December payroll report? 54 00:03:04,520 --> 00:03:06,840 Speaker 2: Now in November it went from four point one to 55 00:03:06,880 --> 00:03:10,800 Speaker 2: four point two. Are you thinking just one notch four 56 00:03:10,800 --> 00:03:13,399 Speaker 2: point three or or are you looking at something maybe 57 00:03:13,600 --> 00:03:14,600 Speaker 2: a little more troubling. 58 00:03:16,040 --> 00:03:18,640 Speaker 6: This is this is a little bit of a frustrating 59 00:03:18,720 --> 00:03:21,560 Speaker 6: knife edge estimate. When we really sharpen our pencils and 60 00:03:21,600 --> 00:03:24,800 Speaker 6: get right down to it. We're estimating a four point 61 00:03:25,000 --> 00:03:28,880 Speaker 6: three six percent unemployment rate and that could of course 62 00:03:29,000 --> 00:03:32,240 Speaker 6: round up if we're off by just a smidge. That 63 00:03:32,400 --> 00:03:35,120 Speaker 6: is just one notch higher at four point three percent. 64 00:03:35,840 --> 00:03:39,960 Speaker 6: But again, it's undoubtedly a cooling labor market, and even 65 00:03:40,000 --> 00:03:42,080 Speaker 6: with about one hundred and fifty five thousand jobs added 66 00:03:42,160 --> 00:03:44,920 Speaker 6: during the month, it's not enough to keep the unemployment 67 00:03:45,040 --> 00:03:48,600 Speaker 6: rate steady. We are seeing that unemployment rate rise, and 68 00:03:48,680 --> 00:03:51,560 Speaker 6: we do expect to see the unemployment rate continue rising 69 00:03:51,600 --> 00:03:53,440 Speaker 6: to about four and a half percent as we get 70 00:03:53,480 --> 00:03:55,560 Speaker 6: closer to mid year twenty twenty five. 71 00:03:56,000 --> 00:03:57,720 Speaker 2: Now does that mean do you see it as more 72 00:03:57,760 --> 00:04:00,960 Speaker 2: Americans looking for work unable to to get one. Does 73 00:04:01,000 --> 00:04:03,880 Speaker 2: that mean more people re entering the workforce, more college 74 00:04:03,920 --> 00:04:07,160 Speaker 2: graduates coming out? I mean, what's the reason that you see? 75 00:04:08,240 --> 00:04:10,040 Speaker 6: There are a couple factors at play, but I think 76 00:04:10,160 --> 00:04:13,480 Speaker 6: the most pressing is that the duration of unemployment is 77 00:04:13,560 --> 00:04:19,080 Speaker 6: rising as employers become a little bit more discerning, employers 78 00:04:19,120 --> 00:04:24,400 Speaker 6: are slowing again, the increase in headcount workers who are 79 00:04:24,520 --> 00:04:27,839 Speaker 6: in the labor force who have been having trouble finding 80 00:04:27,920 --> 00:04:32,800 Speaker 6: new employment. They're stagnating among the ranks of the unemployed, 81 00:04:33,160 --> 00:04:37,040 Speaker 6: and the duration of unemployment. The median duration of unemployment 82 00:04:37,080 --> 00:04:40,040 Speaker 6: has been steadily climbing throughout the previous year. It now 83 00:04:40,040 --> 00:04:43,400 Speaker 6: stands at about ten and a half weeks, which is 84 00:04:43,440 --> 00:04:47,560 Speaker 6: again getting rather along. So you have that stagnating pool 85 00:04:47,680 --> 00:04:50,520 Speaker 6: of workers who are in the labor force looking for work, 86 00:04:51,040 --> 00:04:55,320 Speaker 6: slower increase in headcount, and just general population growth all 87 00:04:55,440 --> 00:04:58,960 Speaker 6: creating a confluence of factors that are creating talo winds 88 00:04:59,000 --> 00:04:59,880 Speaker 6: for the unemployment rate. 89 00:05:00,680 --> 00:05:03,400 Speaker 2: But you're not alarmed by this. I mean, even if 90 00:05:03,400 --> 00:05:05,800 Speaker 2: it goes up to four point three four point four, 91 00:05:05,880 --> 00:05:08,280 Speaker 2: it's kind of what the Fed expected to see right 92 00:05:08,320 --> 00:05:10,560 Speaker 2: in their last dot plot from last year. 93 00:05:10,920 --> 00:05:13,279 Speaker 6: We are expecting that four and a half percent increase 94 00:05:13,320 --> 00:05:15,800 Speaker 6: around mid year. The Fed has been noting that there 95 00:05:15,839 --> 00:05:18,600 Speaker 6: is cooling in the labor market. This is a dynamic 96 00:05:18,680 --> 00:05:20,800 Speaker 6: that's not really a shock to anyone, And if you 97 00:05:20,880 --> 00:05:25,039 Speaker 6: really hold monetary policy makers feet to the fire, even 98 00:05:25,080 --> 00:05:28,360 Speaker 6: four and a half percent unemployment rate isn't the sort 99 00:05:28,400 --> 00:05:32,840 Speaker 6: of thing that's going to make them lose too much sleep. 100 00:05:33,320 --> 00:05:38,040 Speaker 6: The real problem is what ends up being the policy 101 00:05:38,080 --> 00:05:42,359 Speaker 6: outcome that comes from a rising unemployment rate amid a 102 00:05:42,600 --> 00:05:47,200 Speaker 6: stagnating or elevated but steady level of inflation. 103 00:05:47,360 --> 00:05:48,480 Speaker 3: We still have two. 104 00:05:48,400 --> 00:05:52,159 Speaker 6: Point seven percent headline inflation, so we have a long 105 00:05:52,279 --> 00:05:56,360 Speaker 6: last mile to the two percent average inflation target at 106 00:05:56,400 --> 00:05:59,680 Speaker 6: a moment when unemployment is starting to rise. That makes 107 00:05:59,720 --> 00:06:02,480 Speaker 6: it pretty difficult for the FED to have a clear 108 00:06:02,600 --> 00:06:06,760 Speaker 6: cut decision whether it should continue cutting rates to address 109 00:06:06,800 --> 00:06:09,880 Speaker 6: the cooling labor market or slow its pace of rate 110 00:06:09,920 --> 00:06:14,440 Speaker 6: cuts to continue putting pressure on inflation. Ultimately, we think 111 00:06:14,440 --> 00:06:18,160 Speaker 6: that this shakes out to a slower pace of rate cuts, 112 00:06:18,200 --> 00:06:21,839 Speaker 6: something like a quarterly cadence of quarter point cuts by 113 00:06:21,880 --> 00:06:25,039 Speaker 6: the Fed. So we're expecting the Fed, for example, to 114 00:06:25,160 --> 00:06:28,960 Speaker 6: skip cutting rates by a quarter point in January and 115 00:06:29,080 --> 00:06:31,840 Speaker 6: to then pick up with rate cuts again at its 116 00:06:31,839 --> 00:06:32,640 Speaker 6: subsequent meeting. 117 00:06:33,080 --> 00:06:36,400 Speaker 2: This Friday, we get the December jobs report our thanks 118 00:06:36,560 --> 00:06:41,040 Speaker 2: to Stuart paul Us, economists with Bloomberg Economics. Well, we 119 00:06:41,080 --> 00:06:43,760 Speaker 2: move next to the airline industry, which has seen a 120 00:06:43,760 --> 00:06:46,640 Speaker 2: burst of travel demand this past year, and this coming Friday, 121 00:06:47,040 --> 00:06:50,120 Speaker 2: Delta Airlines becomes the first major carrier posting its fourth 122 00:06:50,200 --> 00:06:53,919 Speaker 2: quarter earnings, which will likely show continued strong demand right 123 00:06:54,000 --> 00:06:56,200 Speaker 2: through the holidays. And for more on what to expect 124 00:06:56,200 --> 00:06:59,320 Speaker 2: from Delta, along with his outlook for the airline industry 125 00:06:59,360 --> 00:07:02,480 Speaker 2: in twenty two five, were joined by George ferguson Bloomberg 126 00:07:02,560 --> 00:07:07,840 Speaker 2: Intelligence Senior Aerospace, Defense and Airline analyst, George, thank you 127 00:07:07,880 --> 00:07:09,120 Speaker 2: and Happy New Year to you. 128 00:07:10,400 --> 00:07:12,440 Speaker 7: Happy New Year to you too. Thanks for having me on. 129 00:07:12,600 --> 00:07:15,080 Speaker 2: Oh you bet well. Let's start with Delta now. It 130 00:07:15,200 --> 00:07:18,520 Speaker 2: posted record revenue in the spring quarter of twenty twenty four, 131 00:07:18,920 --> 00:07:20,680 Speaker 2: took a bit of a hit from that worldwide IT 132 00:07:21,000 --> 00:07:24,880 Speaker 2: outage in the summer, but boy, demand just keeps chugging along. 133 00:07:24,920 --> 00:07:27,360 Speaker 2: What do you expect to see for the falls fourth quarter? 134 00:07:28,480 --> 00:07:32,760 Speaker 7: Yeah, so it's definitely been a good year for Delta. United. 135 00:07:33,120 --> 00:07:36,320 Speaker 7: Full service carriers especially have done very good this year 136 00:07:36,800 --> 00:07:40,640 Speaker 7: when it comes to profitability, and so, like you mentioned, 137 00:07:41,280 --> 00:07:45,119 Speaker 7: you know, record revenues for most of those carriers because 138 00:07:45,160 --> 00:07:48,600 Speaker 7: fairs have been quite strong. The challenge really has been 139 00:07:49,200 --> 00:07:55,320 Speaker 7: throughout the year that you know, costs, especially wages, especially 140 00:07:55,320 --> 00:08:00,000 Speaker 7: to the pilots, have really taken away sort of peak profitability. 141 00:08:00,120 --> 00:08:04,680 Speaker 7: We just haven't seen twenty nineteen levels of profit. But 142 00:08:04,800 --> 00:08:08,000 Speaker 7: so in four Q what we expect to see is 143 00:08:08,000 --> 00:08:11,320 Speaker 7: that we expect to see an increase of a little 144 00:08:11,360 --> 00:08:16,240 Speaker 7: bit one hundred basis points over twenty twenty three. EBITDAR 145 00:08:16,360 --> 00:08:19,960 Speaker 7: levels is where we measure earnings before interest, taxes, depreciation, 146 00:08:20,480 --> 00:08:24,400 Speaker 7: amortization and aircraft rentals. What's going to help drive this 147 00:08:24,520 --> 00:08:27,440 Speaker 7: increase in four Q is going to be fuel costs actually, 148 00:08:27,560 --> 00:08:32,360 Speaker 7: so fuel is going to be down twenty two percent 149 00:08:32,720 --> 00:08:36,640 Speaker 7: that was at the wholesale level for four Q. It'll 150 00:08:36,640 --> 00:08:40,600 Speaker 7: be different for every airline, but it should roughly coincide 151 00:08:40,640 --> 00:08:46,160 Speaker 7: with that twenty two percent decline. And we basically use 152 00:08:46,280 --> 00:08:50,040 Speaker 7: Golf Coast Jet as our measure, and that's going to 153 00:08:50,040 --> 00:08:52,480 Speaker 7: provide like a four hundred and fifty basis point gain. 154 00:08:53,679 --> 00:08:57,760 Speaker 7: You know, we think for Delta's earnings, pilot wages aren't 155 00:08:57,760 --> 00:09:00,840 Speaker 7: going down, right, so those wages still sort of take 156 00:09:00,880 --> 00:09:05,400 Speaker 7: away a bunch of the profitability on revenue, or the 157 00:09:05,400 --> 00:09:09,679 Speaker 7: potential profitability gains I should say on revenue. We do 158 00:09:09,760 --> 00:09:13,720 Speaker 7: expect fares to start the taper off for the big 159 00:09:13,760 --> 00:09:17,120 Speaker 7: full service carriers again, United Delta American are the ones 160 00:09:17,640 --> 00:09:21,520 Speaker 7: I'm mostly talking about there. You know, what we've seen 161 00:09:22,320 --> 00:09:26,760 Speaker 7: is we've seen growth in seats in four Q for 162 00:09:26,840 --> 00:09:30,760 Speaker 7: full service carriers up about six and a half percent 163 00:09:30,920 --> 00:09:33,960 Speaker 7: year every year. That beats inflation. So we think that 164 00:09:34,080 --> 00:09:37,880 Speaker 7: means that there's going to be more competition for filling 165 00:09:37,920 --> 00:09:41,640 Speaker 7: those premium seats, and therefore we're going to see again 166 00:09:41,760 --> 00:09:45,200 Speaker 7: sort of tapering off in fares for the broader market. 167 00:09:45,240 --> 00:09:48,199 Speaker 7: For the domestic market the most important for all the airlines, 168 00:09:48,640 --> 00:09:51,840 Speaker 7: we're seeing increase in seats of about two percent, so 169 00:09:51,880 --> 00:09:54,200 Speaker 7: that may help actually some of the low cost carriers 170 00:09:54,200 --> 00:09:57,400 Speaker 7: as we're starting to see some of the supplied demand 171 00:09:57,440 --> 00:10:02,080 Speaker 7: in seats tilt towards the the low cost carriers favor. 172 00:10:02,360 --> 00:10:04,920 Speaker 7: They've had more problems during the year, but so we 173 00:10:05,000 --> 00:10:09,640 Speaker 7: expect essentially Delta is going to increase capacity about four percent. 174 00:10:10,400 --> 00:10:13,400 Speaker 7: We think that yields maybe decline about one percent well, 175 00:10:13,400 --> 00:10:16,200 Speaker 7: so we think they'll be like a three percent revenue growth. Again, 176 00:10:16,240 --> 00:10:19,360 Speaker 7: we're kind of looking for a pick up, a slight 177 00:10:19,440 --> 00:10:20,760 Speaker 7: pickup and profitability. 178 00:10:21,080 --> 00:10:24,360 Speaker 2: Now, have the major carriers have they now surpassed pre 179 00:10:24,440 --> 00:10:28,720 Speaker 2: pandemic levels for seats filled for af fares they. 180 00:10:28,520 --> 00:10:32,280 Speaker 7: Have, they're all well above pre pandemic and fair level, 181 00:10:33,160 --> 00:10:36,559 Speaker 7: and they're also well above in the amount of capacity 182 00:10:36,679 --> 00:10:40,400 Speaker 7: they put in the marketplace. The entire marketplace is, you know, 183 00:10:40,440 --> 00:10:44,200 Speaker 7: sort of recovered back all the pre pandemic levels were up. 184 00:10:44,240 --> 00:10:48,240 Speaker 7: I think in the domestic market something around five percent 185 00:10:48,360 --> 00:10:50,960 Speaker 7: over pre pandemic seat levels. 186 00:10:51,000 --> 00:10:54,120 Speaker 2: I think for domestic and which carriers I know you 187 00:10:54,120 --> 00:10:57,760 Speaker 2: make a difference between the full service carriers and the 188 00:10:57,800 --> 00:11:00,640 Speaker 2: low cost carriers, which have fair the best. We know 189 00:11:00,679 --> 00:11:04,199 Speaker 2: Spirit Airlines what happened there, But obviously, yeah, you know, 190 00:11:04,320 --> 00:11:08,040 Speaker 2: how have all the other carriers adjusted to that bankruptcy 191 00:11:08,440 --> 00:11:09,000 Speaker 2: that change? 192 00:11:09,360 --> 00:11:12,160 Speaker 7: Yeah, so that's part I think what's driving some of 193 00:11:12,200 --> 00:11:16,440 Speaker 7: that improvement in you know, what we expect to see 194 00:11:16,440 --> 00:11:21,760 Speaker 7: in four Q in non premium leisure seating, right, and 195 00:11:21,840 --> 00:11:27,600 Speaker 7: so carriers like you know, Spirit went through it declared bankruptcy, 196 00:11:28,360 --> 00:11:32,280 Speaker 7: It knocked down a bunch of their schedule. Southwest was 197 00:11:32,280 --> 00:11:36,199 Speaker 7: a large adder of seats, if that's a great way 198 00:11:36,200 --> 00:11:40,920 Speaker 7: to say that during twenty twenty four, and their profitability 199 00:11:41,000 --> 00:11:44,040 Speaker 7: really suffered, and so they've pulled back on their expansion 200 00:11:45,720 --> 00:11:48,320 Speaker 7: because generally, I think those low cost carriers just haven't 201 00:11:48,400 --> 00:11:51,560 Speaker 7: done as well in twenty twenty four as the full 202 00:11:51,600 --> 00:11:56,240 Speaker 7: service carriers and the poorest of the low cost carriers 203 00:11:56,679 --> 00:11:59,680 Speaker 7: were the ones like Southwest and Jet Blue that have 204 00:11:59,720 --> 00:12:02,840 Speaker 7: been around the longest, gave the pilots maybe some of 205 00:12:02,840 --> 00:12:06,400 Speaker 7: the better pilot contracts. Jeff Blue was also embroiled in 206 00:12:06,440 --> 00:12:10,439 Speaker 7: the whole we're going to take over Spirit Airlines, you 207 00:12:10,480 --> 00:12:12,560 Speaker 7: know sort of mess and that I think sort of 208 00:12:12,920 --> 00:12:17,200 Speaker 7: hurt their momentum. And again the outperformers during the year 209 00:12:17,559 --> 00:12:21,719 Speaker 7: really were airlines that had premium seating capability. 210 00:12:22,120 --> 00:12:22,400 Speaker 3: Wow. 211 00:12:22,600 --> 00:12:27,200 Speaker 2: Our thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense 212 00:12:27,440 --> 00:12:30,800 Speaker 2: and Airlines Analyst, And coming up on Bloomberg day Break Weekend, 213 00:12:31,080 --> 00:12:33,200 Speaker 2: we'll dig into some of the food and culture trends 214 00:12:33,200 --> 00:12:36,920 Speaker 2: to watch in Europe in twenty twenty five. I'm Tom Busby, 215 00:12:37,040 --> 00:12:51,240 Speaker 2: and this is Bloomberg. This is Bloomberg day Break Weekend, 216 00:12:51,280 --> 00:12:53,679 Speaker 2: our global look ahead at the top stories for investors 217 00:12:53,720 --> 00:12:56,160 Speaker 2: in the coming week. I'm Tom Busby in New York. 218 00:12:56,480 --> 00:12:58,480 Speaker 2: Up later in our program we'll look at what's in 219 00:12:58,559 --> 00:13:01,360 Speaker 2: store for the world's second large just economy in twenty 220 00:13:01,400 --> 00:13:05,000 Speaker 2: twenty five. But first, the picture for the UK economy 221 00:13:05,080 --> 00:13:07,760 Speaker 2: right now significantly better than it was a year ago. 222 00:13:08,000 --> 00:13:11,280 Speaker 2: Inflation has come down dramatically. The Bank of England has 223 00:13:11,360 --> 00:13:14,840 Speaker 2: begun its easing cycle. Also, there are some bright spots 224 00:13:14,840 --> 00:13:17,840 Speaker 2: in the vibrant UK food and culture scenes to look 225 00:13:17,880 --> 00:13:18,280 Speaker 2: forward to. 226 00:13:18,559 --> 00:13:18,960 Speaker 3: For more. 227 00:13:19,320 --> 00:13:22,199 Speaker 2: Let's go to London in Bloomberg Daybreak. Euro Banker Stephen 228 00:13:22,280 --> 00:13:24,040 Speaker 2: Carroll Tom After what. 229 00:13:24,040 --> 00:13:26,800 Speaker 4: Feels like years of gloom over the UK economy, there 230 00:13:26,800 --> 00:13:30,000 Speaker 4: are hopefully some things to be optimistic about heading into 231 00:13:30,040 --> 00:13:33,040 Speaker 4: twenty twenty five, even though the picture hasn't been great 232 00:13:33,040 --> 00:13:36,680 Speaker 4: in recent months. Bloomberg Economics is expecting moderate growth in 233 00:13:36,760 --> 00:13:39,440 Speaker 4: twenty twenty five and they say a recovery in consumer 234 00:13:39,520 --> 00:13:43,400 Speaker 4: spending has further to run, supported by higher real incomes 235 00:13:43,679 --> 00:13:46,679 Speaker 4: and falling interest rates. So that's the backdrop. But given 236 00:13:46,720 --> 00:13:48,400 Speaker 4: the time of year, we've decided to lean into the 237 00:13:48,400 --> 00:13:51,120 Speaker 4: optimism and talk about some of the highlights and trends 238 00:13:51,120 --> 00:13:53,920 Speaker 4: to watch in the dining, hotel and cultural scenes in 239 00:13:53,960 --> 00:13:56,240 Speaker 4: the UK and maybe beyond as well. For that, I'm 240 00:13:56,320 --> 00:13:57,920 Speaker 4: joined by our food outit O K Crater and our 241 00:13:57,960 --> 00:14:01,320 Speaker 4: Bloomberg Pursuits UK correspondents. Aera great to have you both 242 00:14:01,679 --> 00:14:05,480 Speaker 4: with us. Sarah, you have done and seen so much 243 00:14:05,520 --> 00:14:06,800 Speaker 4: in twenty twenty four, and I mean that in a 244 00:14:06,840 --> 00:14:10,040 Speaker 4: positive way. Talk us through some of your cultural highlights 245 00:14:10,080 --> 00:14:10,560 Speaker 4: of the year. 246 00:14:10,960 --> 00:14:13,360 Speaker 8: Yeah, what, It's been a really fun year for London theater. 247 00:14:13,760 --> 00:14:16,200 Speaker 8: My actual favorite show this year was the Picture of 248 00:14:16,240 --> 00:14:19,520 Speaker 8: Dory and Gray with Sarah Snook from Succession Yes Shiv, 249 00:14:19,560 --> 00:14:22,200 Speaker 8: who was incredible playing all the roles all twenty six 250 00:14:22,640 --> 00:14:25,360 Speaker 8: incredible and she was captivating on stage. She used a 251 00:14:25,360 --> 00:14:28,320 Speaker 8: lot of live and prerect camera work, but it was 252 00:14:28,400 --> 00:14:30,920 Speaker 8: just like she controlled the whole stage for a good 253 00:14:30,920 --> 00:14:33,240 Speaker 8: two hours. I was tired just watching her like it 254 00:14:33,240 --> 00:14:36,120 Speaker 8: was exhausting. It was amazing. So that's transferring to Broadway 255 00:14:36,120 --> 00:14:37,640 Speaker 8: next year and I think it's going to do great there. 256 00:14:37,800 --> 00:14:40,120 Speaker 8: She won the Olivier for her performance in that. And 257 00:14:40,160 --> 00:14:42,760 Speaker 8: next week I'm actually seeing The Tempest. Ah, it's a 258 00:14:42,800 --> 00:14:45,480 Speaker 8: gourney Weaver in the andre Lloyd Webber Theater. I'm very 259 00:14:45,480 --> 00:14:47,480 Speaker 8: excited about that, So that might be my new favorite. 260 00:14:47,480 --> 00:14:49,880 Speaker 8: Next week you'll have to to see. But before that, 261 00:14:49,920 --> 00:14:50,920 Speaker 8: picture of Dorian Gray. 262 00:14:51,080 --> 00:14:54,160 Speaker 4: Okay, got a good place to start anyway. Let's top 263 00:14:54,200 --> 00:14:56,720 Speaker 4: food though, Kate. I mean, how how has your year 264 00:14:56,880 --> 00:14:59,560 Speaker 4: been for food in London? Has this been a good year? 265 00:14:59,640 --> 00:15:00,600 Speaker 4: Is it a good vintage? 266 00:15:00,760 --> 00:15:03,840 Speaker 9: The year has been delicious and an excellent vintage. What 267 00:15:04,000 --> 00:15:06,920 Speaker 9: a good thing to say. I think London's come on 268 00:15:07,080 --> 00:15:10,160 Speaker 9: really strong, and it's come on really strong, especially like 269 00:15:10,200 --> 00:15:13,560 Speaker 9: in an accessible, affordable way. There are a ton of 270 00:15:14,000 --> 00:15:17,000 Speaker 9: wine bars that also happen to serve that sort of 271 00:15:17,040 --> 00:15:21,000 Speaker 9: wonderful food. Wonderful compelling food. And you know London, it's 272 00:15:21,080 --> 00:15:23,680 Speaker 9: it's sometimes so hard to get into restaurants. They get jammed, 273 00:15:23,680 --> 00:15:26,240 Speaker 9: they get booked up early. You have to be a 274 00:15:26,280 --> 00:15:29,480 Speaker 9: major planner. And wine bars. A lot of these wine bars, 275 00:15:29,520 --> 00:15:31,720 Speaker 9: like there's one I love called Kaday up in Newington 276 00:15:31,840 --> 00:15:34,480 Speaker 9: Green and you just you walk in. I mean they 277 00:15:34,480 --> 00:15:38,520 Speaker 9: do take reservations now, but guaranteed there's a counter with 278 00:15:38,600 --> 00:15:40,560 Speaker 9: a seat that you can find and sit down and 279 00:15:40,600 --> 00:15:45,520 Speaker 9: eat at. And it's Marvelous Mountain which is in Soho 280 00:15:45,640 --> 00:15:48,400 Speaker 9: on Beak Street. I'm in love with that place. It 281 00:15:48,520 --> 00:15:51,440 Speaker 9: helps to book, but they also have just like dozens 282 00:15:51,520 --> 00:15:53,920 Speaker 9: and dozens of cool counter seats. You can sit there 283 00:15:53,920 --> 00:15:55,960 Speaker 9: with a delicious class of wine. 284 00:15:56,200 --> 00:15:58,360 Speaker 4: Because it's true the counter seats aren't that big a 285 00:15:58,440 --> 00:16:00,520 Speaker 4: thing here in general. So it's always great to know, 286 00:16:00,600 --> 00:16:02,600 Speaker 4: especially places in central London that you can go and 287 00:16:02,640 --> 00:16:04,240 Speaker 4: you don't have a book it, which can often be 288 00:16:04,320 --> 00:16:06,720 Speaker 4: the situation that I find myself in. Do you have 289 00:16:06,960 --> 00:16:08,400 Speaker 4: a best meal of the year? 290 00:16:08,440 --> 00:16:11,400 Speaker 3: I mean you have to eat out a lot professionally, so. 291 00:16:11,600 --> 00:16:13,200 Speaker 9: I have to. Yes, it's a job. 292 00:16:14,040 --> 00:16:14,520 Speaker 8: I will say. 293 00:16:14,560 --> 00:16:19,360 Speaker 9: I just came back from Kyoto from Japan, and that 294 00:16:19,600 --> 00:16:21,240 Speaker 9: was you have to fly. 295 00:16:21,320 --> 00:16:23,880 Speaker 8: For you have to you have to travel. 296 00:16:23,600 --> 00:16:27,760 Speaker 9: Traveling for food. But I had a sensational, mind blowing 297 00:16:27,760 --> 00:16:32,120 Speaker 9: meal at a place called Cooke, which is Spanish Japanese, 298 00:16:32,120 --> 00:16:34,960 Speaker 9: which sounds really unpromising. I was wondering if it would 299 00:16:34,960 --> 00:16:37,200 Speaker 9: actually be one of one of the worst meals I 300 00:16:37,240 --> 00:16:40,880 Speaker 9: had this year, and instead it really was transformative. This chef, 301 00:16:41,040 --> 00:16:42,640 Speaker 9: and he's ever been to Spain, so I don't quite 302 00:16:42,680 --> 00:16:44,360 Speaker 9: know how he does it, but he does these like 303 00:16:44,400 --> 00:16:49,640 Speaker 9: genius forms of tapis using using local ingredients. And I 304 00:16:49,680 --> 00:16:52,200 Speaker 9: have a best Dishes story about to come out, and 305 00:16:52,400 --> 00:16:54,680 Speaker 9: one of them one of the dishes, which was like 306 00:16:54,720 --> 00:16:58,560 Speaker 9: a sort of charred winter melon, which is a boring fruit, 307 00:16:58,600 --> 00:17:00,520 Speaker 9: but he caramelizes it and serve it with like a 308 00:17:00,640 --> 00:17:04,399 Speaker 9: smoking a smoking butter milk soup and fermented cream. 309 00:17:04,440 --> 00:17:06,200 Speaker 8: It's crazy, it's so good. 310 00:17:06,359 --> 00:17:07,160 Speaker 3: That sounds incredible. 311 00:17:07,200 --> 00:17:09,320 Speaker 4: Okay, So that's I'm glad you've given us a global 312 00:17:09,320 --> 00:17:11,760 Speaker 4: flavor to the conversation as well, Sarah. 313 00:17:11,840 --> 00:17:13,080 Speaker 3: We're thinking globally. 314 00:17:13,200 --> 00:17:14,960 Speaker 4: The strength of the dollar has been a really big 315 00:17:15,000 --> 00:17:18,000 Speaker 4: theme for tourism spending, I mean everywhere in the world, 316 00:17:18,040 --> 00:17:19,439 Speaker 4: but the UK has benefited quite a. 317 00:17:19,400 --> 00:17:21,440 Speaker 8: Lot ye, the rich Americans are here. 318 00:17:21,600 --> 00:17:23,920 Speaker 4: They're here and they're spending their money. We talked a 319 00:17:23,920 --> 00:17:26,200 Speaker 4: lot last year about the big hotel openings in London. 320 00:17:26,240 --> 00:17:27,639 Speaker 4: I wonder because this is a big part of your 321 00:17:27,720 --> 00:17:29,720 Speaker 4: job as well as looking at the best places to stay. 322 00:17:29,840 --> 00:17:31,920 Speaker 4: So what stood out for you of what's happened in 323 00:17:32,320 --> 00:17:33,240 Speaker 4: twenty twenty four. 324 00:17:33,760 --> 00:17:37,520 Speaker 8: Well, London's a five star hospitality gold rush is continuing on. 325 00:17:37,600 --> 00:17:37,879 Speaker 3: Okay. 326 00:17:38,160 --> 00:17:40,159 Speaker 8: I really liked the Emory, which is a new hotel 327 00:17:40,240 --> 00:17:43,200 Speaker 8: from the Clarges Group and it's as an all sweet 328 00:17:43,240 --> 00:17:46,080 Speaker 8: hotel in Knightsbridge, and there's a gen doorge restaurant. It's 329 00:17:46,160 --> 00:17:49,159 Speaker 8: very fun, it's good, huge rooms. But next year what 330 00:17:49,200 --> 00:17:51,480 Speaker 8: I'm excited about is the Trancery Rosewood and it's in 331 00:17:51,520 --> 00:17:54,400 Speaker 8: the old US Embassy in may Fair. The last time 332 00:17:54,440 --> 00:17:56,520 Speaker 8: I was there was a twenty sixteen election night party 333 00:17:56,520 --> 00:18:00,800 Speaker 8: actually and different times. It's going to be a hotel 334 00:18:01,040 --> 00:18:04,080 Speaker 8: and they're going to have a carbone as Kate's aware, 335 00:18:04,320 --> 00:18:07,399 Speaker 8: they're gonna bring sort of American Italian flavors into central 336 00:18:07,400 --> 00:18:10,080 Speaker 8: London and they're just gonna have the Eagle from the 337 00:18:10,080 --> 00:18:11,480 Speaker 8: Embassy is going to be at the bar on the 338 00:18:11,520 --> 00:18:13,880 Speaker 8: top of the hotel, so look out for that next year. 339 00:18:13,960 --> 00:18:15,480 Speaker 3: Okay, interesting features to watch. 340 00:18:15,560 --> 00:18:18,040 Speaker 4: Now, why does it feel like that, all of a 341 00:18:18,040 --> 00:18:20,920 Speaker 4: sudden everyone has just discovered the English countryside. I feel 342 00:18:20,960 --> 00:18:23,040 Speaker 4: like I've seen so many pieces, not just from you, 343 00:18:23,560 --> 00:18:25,760 Speaker 4: but everywhere about the number of people that are coming 344 00:18:25,840 --> 00:18:28,120 Speaker 4: to stay in the beautiful parts of this country. 345 00:18:27,920 --> 00:18:30,600 Speaker 8: Especially the Coswels. Everyone's in the Cotswolds now, I mean 346 00:18:30,640 --> 00:18:32,920 Speaker 8: me too. Taylor Swift to stay there this summer when 347 00:18:32,920 --> 00:18:36,120 Speaker 8: she was in the UK for her aerostour. Ellen DeGeneres 348 00:18:36,200 --> 00:18:38,280 Speaker 8: just bought a house in the Gospels. I don't know 349 00:18:38,320 --> 00:18:39,919 Speaker 8: why it's so trending so much. There's been a lot 350 00:18:39,920 --> 00:18:42,240 Speaker 8: of cool new hotels, like a still Manner's quite trending. 351 00:18:42,280 --> 00:18:45,280 Speaker 8: Lot of members clubs, places from London coming up, coming 352 00:18:45,320 --> 00:18:47,680 Speaker 8: up to the Cotswolds. It's getting kind of more seeny 353 00:18:47,680 --> 00:18:50,560 Speaker 8: and exclusive. There's always been the cozy country pubs and 354 00:18:50,840 --> 00:18:53,360 Speaker 8: it's like nice walks and cozy feeling, but now it's 355 00:18:53,400 --> 00:18:55,760 Speaker 8: kind of gotten. The London vibe as well is becoming 356 00:18:55,840 --> 00:18:56,359 Speaker 8: quite hip. 357 00:18:56,600 --> 00:18:59,280 Speaker 3: Kate, look into your dining crystal ball. Is that a 358 00:18:59,280 --> 00:18:59,880 Speaker 3: crystal plate? 359 00:19:00,280 --> 00:19:01,879 Speaker 4: Quite sure? I'll work on that metaphor what are you 360 00:19:01,920 --> 00:19:04,280 Speaker 4: excited about the foods. Even twenty twenty five are their openings. 361 00:19:04,320 --> 00:19:05,640 Speaker 4: We should be looking forward to. 362 00:19:05,880 --> 00:19:09,960 Speaker 9: A Sarah was saying at the Rosewood. Besides Carbone, which 363 00:19:10,000 --> 00:19:13,520 Speaker 9: is this big deal Italian American restaurant, been, Richard Caring, 364 00:19:13,640 --> 00:19:17,359 Speaker 9: who is quite famous, is bringing back the Caprice, you know, 365 00:19:17,480 --> 00:19:20,679 Speaker 9: the Seminole restaurant. So that hotel is going to have 366 00:19:21,000 --> 00:19:24,120 Speaker 9: two really important dieting rooms. It's going to be a destination. 367 00:19:24,440 --> 00:19:27,160 Speaker 9: But even bigger, I would say, Gordon Ramsey, who hasn't 368 00:19:27,200 --> 00:19:30,600 Speaker 9: opened a place in years and years, is coming to 369 00:19:30,720 --> 00:19:34,600 Speaker 9: the city actually, and he's opening up five food and 370 00:19:34,680 --> 00:19:38,080 Speaker 9: drink concepts, including one a bar that's going to be 371 00:19:38,200 --> 00:19:41,040 Speaker 9: the highest bar. I think it's on the sixty second floor, Okay, 372 00:19:41,520 --> 00:19:44,280 Speaker 9: place with the best view probably in London. He's opening 373 00:19:44,320 --> 00:19:47,120 Speaker 9: up a dining room on the sixty first floor and 374 00:19:47,200 --> 00:19:50,920 Speaker 9: that is coming in February, so sooner than you think. 375 00:19:51,040 --> 00:19:54,199 Speaker 9: And there's also a fun trend. Jamie Oliver's opening up 376 00:19:54,200 --> 00:19:57,359 Speaker 9: a cooking school in John Lewis in the spring, and 377 00:19:57,480 --> 00:19:59,640 Speaker 9: Gordon Ramsey's going to have some kind of a culinary 378 00:19:59,680 --> 00:20:03,440 Speaker 9: school or culinary program at his new restaurant complex. 379 00:20:03,560 --> 00:20:06,280 Speaker 4: So wow, and interesting to see those names that are 380 00:20:06,359 --> 00:20:08,680 Speaker 4: still worths of the British restaurants scene. I suppose having 381 00:20:08,800 --> 00:20:10,560 Speaker 4: a twenty twenty five renaissance. 382 00:20:10,640 --> 00:20:11,400 Speaker 9: What's all this new? 383 00:20:11,520 --> 00:20:12,880 Speaker 3: Right exactly? They're coming back. 384 00:20:13,400 --> 00:20:15,920 Speaker 4: Not to bring down our conversation, but there's a lot 385 00:20:15,920 --> 00:20:17,520 Speaker 4: of talk about how there are tax changes that were 386 00:20:17,520 --> 00:20:19,400 Speaker 4: announced in the budget in October. They're coming into fourth 387 00:20:19,440 --> 00:20:22,880 Speaker 4: at April, particularly going to effect employers and the tax 388 00:20:22,920 --> 00:20:24,880 Speaker 4: they have to pay for their employees and part time 389 00:20:24,920 --> 00:20:27,239 Speaker 4: workers are keys. There's a lot of hospitality businesses say 390 00:20:27,280 --> 00:20:29,240 Speaker 4: they're worried about it. You know in conversations because you 391 00:20:29,240 --> 00:20:31,320 Speaker 4: speak to restauranteurs all the time, Are they worried about this? 392 00:20:31,560 --> 00:20:31,760 Speaker 1: Yeah? 393 00:20:31,760 --> 00:20:33,840 Speaker 9: You know what. In fact, Jason Atherton, who just did 394 00:20:33,880 --> 00:20:37,640 Speaker 9: a terrific Bloomberg TV interview and he has a really 395 00:20:37,640 --> 00:20:40,000 Speaker 9: cool new restaurant called Row on five, a very ambitious 396 00:20:40,040 --> 00:20:45,080 Speaker 9: restaurant on Saville Row, said that something everyone is worried about. 397 00:20:45,400 --> 00:20:47,960 Speaker 9: He said specifically, he's worried that entrepreneurs are going to 398 00:20:48,040 --> 00:20:51,440 Speaker 9: leave the UK and go to other places where there's 399 00:20:51,480 --> 00:20:54,840 Speaker 9: more chance of where the playing field looks easier to 400 00:20:55,000 --> 00:20:55,600 Speaker 9: navigate on. 401 00:20:55,920 --> 00:20:58,160 Speaker 4: We've heard from some of the big particularly pub groups 402 00:20:58,200 --> 00:20:59,840 Speaker 4: have been talking about in their results as well, the 403 00:21:00,440 --> 00:21:03,439 Speaker 4: impact in terms of millions of pounds on their wage 404 00:21:03,440 --> 00:21:05,879 Speaker 4: bills for that as well. Now, Kate, you do travel 405 00:21:05,880 --> 00:21:07,800 Speaker 4: as well. You mentioned your trip to Kyoto there as well. 406 00:21:07,800 --> 00:21:10,960 Speaker 4: I wonder if you're thinking about Europe more broadly, is 407 00:21:11,000 --> 00:21:13,679 Speaker 4: there a foody destination. If people are thinking about a 408 00:21:13,720 --> 00:21:16,440 Speaker 4: break in twenty twenty five and they love food, where 409 00:21:16,440 --> 00:21:17,240 Speaker 4: would you send them. 410 00:21:17,560 --> 00:21:21,040 Speaker 9: That's such a good question because you can almost make 411 00:21:21,080 --> 00:21:23,879 Speaker 9: a case for anywhere. I do think, you know, France, 412 00:21:23,920 --> 00:21:25,120 Speaker 9: it's such a boring answer. 413 00:21:26,000 --> 00:21:28,879 Speaker 3: Or is that Paris? Or is it outside of say Paris? 414 00:21:28,960 --> 00:21:32,520 Speaker 9: Actually, I think the energy in Paris is so good 415 00:21:32,600 --> 00:21:35,080 Speaker 9: right now. People are doing all these compelling little things. 416 00:21:35,119 --> 00:21:37,920 Speaker 9: You find these fantastic storefronts. People are doing that kind 417 00:21:37,960 --> 00:21:41,639 Speaker 9: of fusion cuisine, you know, I mentioned weird Spanish Japanese 418 00:21:41,720 --> 00:21:44,199 Speaker 9: and yet it works. You know, it's this fantastic combustible 419 00:21:44,240 --> 00:21:47,120 Speaker 9: experiment and then you taste it and you're like wow. 420 00:21:47,160 --> 00:21:49,640 Speaker 9: You know, it's like kind of little fireworks. And that's 421 00:21:49,680 --> 00:21:53,000 Speaker 9: happening all across Paris, like in the eighteenth in the 422 00:21:53,040 --> 00:21:55,639 Speaker 9: first it's I think, I don't know if it's like 423 00:21:55,920 --> 00:21:58,280 Speaker 9: the effect of the Paris Olympics. You know, there was 424 00:21:58,320 --> 00:22:00,919 Speaker 9: so much angst about it going into it, but I 425 00:22:01,040 --> 00:22:03,520 Speaker 9: think the after effect of it, the energy that people 426 00:22:03,520 --> 00:22:07,359 Speaker 9: put into it, has made it like, don't forget about Paris, 427 00:22:07,400 --> 00:22:09,560 Speaker 9: even as you're going to all these other places. You know, 428 00:22:09,600 --> 00:22:12,000 Speaker 9: even as you're going to Spain. Spain was you know 429 00:22:12,080 --> 00:22:14,400 Speaker 9: the rock star last year. I would say, yeah, and 430 00:22:14,920 --> 00:22:18,240 Speaker 9: it's going to keep going strong. Is relatively affordable, you know, 431 00:22:18,359 --> 00:22:21,240 Speaker 9: especially if you're coming from a place like London or 432 00:22:21,280 --> 00:22:23,960 Speaker 9: the US. But don't sleep on don't. 433 00:22:23,840 --> 00:22:26,800 Speaker 4: Sleep on Paris in Paris in terms of staying places 434 00:22:26,840 --> 00:22:29,679 Speaker 4: across Europe's sah. I wonder as well if there are 435 00:22:29,680 --> 00:22:32,159 Speaker 4: places that you've kind of got some interesting hotels and 436 00:22:32,200 --> 00:22:35,199 Speaker 4: your horizon of anywhere in Europe that you've experienced or 437 00:22:35,240 --> 00:22:36,000 Speaker 4: excited about. 438 00:22:36,480 --> 00:22:37,240 Speaker 9: Yeah, I think. 439 00:22:37,080 --> 00:22:40,240 Speaker 8: Greek islands outside of Mikinos for Sansorini. One is where 440 00:22:40,240 --> 00:22:41,840 Speaker 8: you have to get on a ferry, which you know 441 00:22:42,119 --> 00:22:43,920 Speaker 8: can be maybe a little bit annoying and involves a 442 00:22:43,960 --> 00:22:46,359 Speaker 8: little bit of I guess planning is a way to go, 443 00:22:46,640 --> 00:22:49,439 Speaker 8: but they're less busy the beaches of Pristine The food's 444 00:22:49,480 --> 00:22:52,840 Speaker 8: really good, fresh fish, happy people, it's just, you know, 445 00:22:53,000 --> 00:22:54,679 Speaker 8: a lovely thing to do. And there's a lot of 446 00:22:54,760 --> 00:22:57,480 Speaker 8: cool new Boutiko hotels popping up on places like Paros 447 00:22:57,520 --> 00:22:59,960 Speaker 8: or Anti Paros as well. Yes, just supposed to get 448 00:23:00,040 --> 00:23:03,320 Speaker 8: international airport in twenty twenty six, So come now for 449 00:23:03,359 --> 00:23:04,880 Speaker 8: all the crowds to do, is what I'd say. Next 450 00:23:04,920 --> 00:23:07,399 Speaker 8: to year, next summer, go before the American masses with 451 00:23:07,440 --> 00:23:08,320 Speaker 8: their dollars come over. 452 00:23:08,600 --> 00:23:10,680 Speaker 4: What else are you putting in your calendar for twenty 453 00:23:10,720 --> 00:23:12,960 Speaker 4: twenty five? So there are the things that your booking. 454 00:23:12,960 --> 00:23:14,840 Speaker 4: So you mentioned you've got The Tempest coming up there 455 00:23:14,840 --> 00:23:16,639 Speaker 4: as well. Are there are cultural highlights you have on 456 00:23:16,680 --> 00:23:19,480 Speaker 4: your agenda, things that you're already definitely making sure that 457 00:23:19,480 --> 00:23:20,399 Speaker 4: you're going to be doing. 458 00:23:21,080 --> 00:23:24,600 Speaker 8: Jamie Lloyd is my own, my favorite directors and he's 459 00:23:24,640 --> 00:23:27,280 Speaker 8: doing in a big Shakespeare season that includes The Tempest 460 00:23:27,320 --> 00:23:29,280 Speaker 8: but also as you like It with Tom Middleston and 461 00:23:29,280 --> 00:23:31,880 Speaker 8: Haley at Well coming next year in February in March. 462 00:23:31,920 --> 00:23:34,080 Speaker 8: That should be really fun to see. And also the 463 00:23:34,400 --> 00:23:37,560 Speaker 8: National Theater is doing a bunch of really cool stuff. 464 00:23:37,560 --> 00:23:40,000 Speaker 8: They just announced a thing of Jane Krakouse gably so 465 00:23:40,080 --> 00:23:41,320 Speaker 8: pick on their website, but book that. 466 00:23:41,400 --> 00:23:42,720 Speaker 3: Soon, very excited about that. 467 00:23:43,000 --> 00:23:44,760 Speaker 8: It's always good things on at the National at the 468 00:23:44,800 --> 00:23:47,040 Speaker 8: South Bank. You can always get return tickets as well. 469 00:23:47,359 --> 00:23:49,280 Speaker 8: Even if something looks booked. I would show up on 470 00:23:49,320 --> 00:23:51,600 Speaker 8: the day and you can normally get returns because there's 471 00:23:51,600 --> 00:23:53,600 Speaker 8: a big theater de Olivier and there's always returns. 472 00:23:53,720 --> 00:23:55,600 Speaker 4: Such a good tip as well, because as you say, 473 00:23:55,600 --> 00:23:57,320 Speaker 4: so much feels like in London you have to plan 474 00:23:57,400 --> 00:23:59,480 Speaker 4: it months in advance, so the idea being able to 475 00:23:59,480 --> 00:24:02,080 Speaker 4: do something last minute can be certainly very tempting. 476 00:24:02,640 --> 00:24:02,880 Speaker 3: Kate. 477 00:24:02,960 --> 00:24:05,840 Speaker 4: I do wonder if we're thinking about trends for next year. 478 00:24:05,880 --> 00:24:08,080 Speaker 4: I mean, famously you predicted the death of small plates. 479 00:24:08,119 --> 00:24:09,439 Speaker 4: I can't remember if that was a year or two 480 00:24:09,480 --> 00:24:11,440 Speaker 4: years ago. And yes I still see a small plate 481 00:24:11,440 --> 00:24:12,119 Speaker 4: in many places. 482 00:24:12,160 --> 00:24:12,320 Speaker 10: You know. 483 00:24:12,359 --> 00:24:14,439 Speaker 4: I'm sure you're one hundred percent of the money. But 484 00:24:14,760 --> 00:24:17,199 Speaker 4: is there anything that we should be excited about in 485 00:24:17,280 --> 00:24:18,800 Speaker 4: terms of trends coming up? 486 00:24:18,920 --> 00:24:21,760 Speaker 9: I think we're going to see more and more Japanese 487 00:24:21,800 --> 00:24:25,000 Speaker 9: food here in London. It's been coming and coming. You 488 00:24:25,080 --> 00:24:28,200 Speaker 9: might have seen more sushi restaurants from high end ones 489 00:24:28,240 --> 00:24:31,480 Speaker 9: to casual one casual places that specialize in hand rolls. 490 00:24:31,960 --> 00:24:36,240 Speaker 9: Tourism to Japan has been crazy. In October, I think 491 00:24:36,400 --> 00:24:38,520 Speaker 9: three million people went. I think it was a record 492 00:24:38,520 --> 00:24:42,399 Speaker 9: breaking number for them, and so I'm seeing and hearing 493 00:24:42,560 --> 00:24:46,440 Speaker 9: more Japanese concepts that are coming. I think also there's 494 00:24:46,520 --> 00:24:48,360 Speaker 9: going to be a fun this is a bit random, 495 00:24:48,520 --> 00:24:52,280 Speaker 9: but a fusion pizza thing where you'll have buttered chicken, 496 00:24:52,520 --> 00:24:56,399 Speaker 9: a buttered chicken topping. You're neapalatan pie. I'm looking for 497 00:24:56,480 --> 00:24:59,399 Speaker 9: things like that. The bakery, the bakery trend is just 498 00:24:59,440 --> 00:25:01,760 Speaker 9: not stopp I mean that's going to keep going. 499 00:25:02,119 --> 00:25:04,040 Speaker 4: Never mid about more begs goods. That's a good thing 500 00:25:04,040 --> 00:25:07,000 Speaker 4: to going forward too. I love to Stephen Okay, creditor, 501 00:25:07,000 --> 00:25:10,200 Speaker 4: our food editor on our Bloomberg Pursuit's UK correspondent, Sarah Rappaport, 502 00:25:10,280 --> 00:25:13,240 Speaker 4: thank you very much for joining us. I'm Stephen Carolyn London. 503 00:25:13,240 --> 00:25:15,919 Speaker 4: You can catch us every weekday morning here for Bloomberg Daybreak. 504 00:25:15,920 --> 00:25:18,400 Speaker 4: Here at begetting at six am in London and one 505 00:25:18,440 --> 00:25:19,640 Speaker 4: am on Wall Streets. 506 00:25:19,720 --> 00:25:22,399 Speaker 2: Tom, thank you, Stephen, and coming up on Bloomberg day 507 00:25:22,400 --> 00:25:24,760 Speaker 2: Break weekend, we'll look at what's in store for China's 508 00:25:24,800 --> 00:25:28,560 Speaker 2: economy in twenty twenty five. I'm Tom Busby and this 509 00:25:28,840 --> 00:25:42,560 Speaker 2: is Bloomberg. This is Bloomberg day Break weekend, our global 510 00:25:42,600 --> 00:25:44,720 Speaker 2: look ahead at the top stories for investors in the 511 00:25:44,720 --> 00:25:48,600 Speaker 2: coming week. I'm Tom Busby in New York. Threats of tariffs, 512 00:25:48,760 --> 00:25:52,760 Speaker 2: trade curbs, and risks linked to excessive economic stimulus just 513 00:25:52,800 --> 00:25:56,000 Speaker 2: some of the challenges looming over the world's second largest 514 00:25:56,040 --> 00:25:58,639 Speaker 2: economy in the new year. For more, let's get to 515 00:25:58,680 --> 00:26:01,800 Speaker 2: the host of the Daybreak Aisha podcast, Doug Krisner. 516 00:26:02,320 --> 00:26:04,920 Speaker 5: Tom, we know the weak state of the Chinese economy 517 00:26:04,960 --> 00:26:08,600 Speaker 5: and how authorities in Beijing have pledged more stimulus to 518 00:26:08,760 --> 00:26:12,200 Speaker 5: support a more robust recovery. The big question is will 519 00:26:12,240 --> 00:26:15,280 Speaker 5: those steps lead to a prosperous twenty twenty five or 520 00:26:15,920 --> 00:26:18,920 Speaker 5: we'll China continue its struggle. For a closer look at 521 00:26:18,920 --> 00:26:21,919 Speaker 5: the road ahead, I'm joined by Bloomberg's Jenny Marsh. She 522 00:26:22,160 --> 00:26:24,960 Speaker 5: is team leader for Greater China Eco GUV. Jenny joins 523 00:26:25,040 --> 00:26:27,639 Speaker 5: us from our studios in Hong Kong. Thank you for 524 00:26:27,720 --> 00:26:30,400 Speaker 5: making time. I know it's a busy end of year 525 00:26:30,520 --> 00:26:34,680 Speaker 5: season for you. Where do things stand, particularly in light 526 00:26:34,760 --> 00:26:38,560 Speaker 5: of what we've heard recently from the polit Bureau on 527 00:26:38,720 --> 00:26:42,080 Speaker 5: stimulus and what may the year ahead hold for China? 528 00:26:42,560 --> 00:26:45,720 Speaker 10: I think going into next year, there are high expectations 529 00:26:45,760 --> 00:26:48,040 Speaker 10: that the Communist Party now has woken up to the 530 00:26:48,080 --> 00:26:52,560 Speaker 10: idea it needs to be supporting the economy forcefully and 531 00:26:52,600 --> 00:26:55,320 Speaker 10: then it's really taking the challenges ahead seriously. And I 532 00:26:55,320 --> 00:26:58,399 Speaker 10: think the return of Donald Trump to the White House 533 00:26:58,440 --> 00:27:02,560 Speaker 10: has only helped Hugenpeeing and his fellow leaders arrive at 534 00:27:02,560 --> 00:27:05,560 Speaker 10: that point, because you know, we've had this two track 535 00:27:05,600 --> 00:27:08,439 Speaker 10: economy this year, and exports was sort of doing a 536 00:27:08,440 --> 00:27:10,720 Speaker 10: lot of the heavy lifting. And I think looking into 537 00:27:10,800 --> 00:27:14,120 Speaker 10: next year, there is a very sort of sobering realization 538 00:27:14,760 --> 00:27:17,760 Speaker 10: that with Trump returning and this sort of tariff war looming, 539 00:27:18,280 --> 00:27:21,960 Speaker 10: that isn't something anyone sensible would bank on. And so 540 00:27:22,160 --> 00:27:26,480 Speaker 10: since September we've seen this sort of change in rhetoric 541 00:27:26,920 --> 00:27:31,280 Speaker 10: from the senior ECO policy makers talking about bolder steps. 542 00:27:31,960 --> 00:27:34,680 Speaker 10: And then I think the Politbering meeting in December, which 543 00:27:34,720 --> 00:27:37,160 Speaker 10: always focuses on the economy and sort of sets up 544 00:27:37,560 --> 00:27:39,920 Speaker 10: the year ahead, really made clear that they are going 545 00:27:39,960 --> 00:27:42,280 Speaker 10: to sort of switch gears. You know, they talked about 546 00:27:42,960 --> 00:27:46,480 Speaker 10: they changed the monetary policy stunts to moderately loose, which 547 00:27:46,520 --> 00:27:48,800 Speaker 10: is something they only ever is there sort of a 548 00:27:48,840 --> 00:27:51,800 Speaker 10: phase they only ever go into at times of crisis. 549 00:27:52,080 --> 00:27:54,280 Speaker 10: So the last time was the Great Financial Crisis. They 550 00:27:54,320 --> 00:27:58,280 Speaker 10: went to this moderately loose sort of zone of monetary policy, 551 00:27:59,200 --> 00:28:02,359 Speaker 10: and then they named boosting consumption. Is that the number 552 00:28:02,400 --> 00:28:05,760 Speaker 10: one goal for twenty twenty five, but just something you know, 553 00:28:05,880 --> 00:28:08,919 Speaker 10: foreign governments and economists have been calling for for a 554 00:28:08,960 --> 00:28:13,000 Speaker 10: long time. So I think, you know, while obviously the 555 00:28:13,080 --> 00:28:15,359 Speaker 10: need for Chining to become sort of a self sufficient 556 00:28:15,840 --> 00:28:19,240 Speaker 10: text superpower that can rival America, that ambition is not 557 00:28:19,320 --> 00:28:22,640 Speaker 10: going anywhere. They're now much more serious about Okay, we're 558 00:28:22,640 --> 00:28:25,000 Speaker 10: going to do that, but we also need our own 559 00:28:25,040 --> 00:28:27,800 Speaker 10: consumers to start spending, and there's like a whole kind 560 00:28:27,840 --> 00:28:30,359 Speaker 10: of menu of reasons for that if you like. But 561 00:28:30,400 --> 00:28:33,160 Speaker 10: I think policymakers are now taking it seriously. 562 00:28:33,040 --> 00:28:35,520 Speaker 5: So we can talk about the consumption story in a 563 00:28:35,520 --> 00:28:38,320 Speaker 5: little more detail momentarily. You know, for such a long time, 564 00:28:38,360 --> 00:28:40,840 Speaker 5: when you and I have spoken in the past, the 565 00:28:40,960 --> 00:28:44,000 Speaker 5: debt problem in China has been a hot topic, and 566 00:28:44,040 --> 00:28:47,040 Speaker 5: it's curious that officials have now agreed that the government 567 00:28:47,080 --> 00:28:50,680 Speaker 5: should be allowed to have a larger budget deficit to 568 00:28:50,720 --> 00:28:53,719 Speaker 5: borrow more along with the cuts in interest rates that 569 00:28:53,760 --> 00:28:57,160 Speaker 5: you just kind of suggested there is anyone concerned about 570 00:28:57,200 --> 00:29:00,000 Speaker 5: increasing debt levels or is that no longer a problem? 571 00:29:00,360 --> 00:29:02,480 Speaker 10: You know, I think China has a lot of space 572 00:29:02,520 --> 00:29:06,080 Speaker 10: to increase central debt levels, right So, and what they're 573 00:29:06,080 --> 00:29:09,000 Speaker 10: planning for next year, to be honest, is fairly modest. 574 00:29:09,080 --> 00:29:11,760 Speaker 10: So an extra one percent of GDP for the government 575 00:29:11,840 --> 00:29:14,200 Speaker 10: spending the fiscal budget that was sort of on the 576 00:29:14,240 --> 00:29:17,280 Speaker 10: conservative side of estimates. It's the highest or ever of 577 00:29:17,320 --> 00:29:20,240 Speaker 10: ben but it's still not you know, that's not pulling 578 00:29:20,240 --> 00:29:21,720 Speaker 10: out all of the big guns, so it's still sort 579 00:29:21,720 --> 00:29:25,160 Speaker 10: of relatively modest. But they have ways of augmenting that, 580 00:29:25,240 --> 00:29:27,719 Speaker 10: right So there's like the official budget, and then there 581 00:29:27,720 --> 00:29:30,400 Speaker 10: are all these unofficial ways they can spend. So we 582 00:29:30,480 --> 00:29:34,320 Speaker 10: saw them making this unprecedented step in recent months singling 583 00:29:34,400 --> 00:29:37,200 Speaker 10: out two big state owned companies that can now issue 584 00:29:37,200 --> 00:29:41,000 Speaker 10: what people are calling central government financial vehicle bonds. So 585 00:29:41,640 --> 00:29:44,200 Speaker 10: while you had these like local government companies before that 586 00:29:44,240 --> 00:29:46,400 Speaker 10: were kind of create issuing debt to be spent on 587 00:29:46,440 --> 00:29:49,520 Speaker 10: the economy, now perhaps the central government is showing science 588 00:29:49,560 --> 00:29:52,120 Speaker 10: it might do that. So you've got this expanded government 589 00:29:52,240 --> 00:29:55,200 Speaker 10: spending on the official books, but they might place more 590 00:29:55,240 --> 00:29:57,760 Speaker 10: sort of in other ways, which a sort of less 591 00:29:58,000 --> 00:30:01,000 Speaker 10: baked in, if you like, in natural official budget. But 592 00:30:01,480 --> 00:30:03,840 Speaker 10: the task they have ahead of them is huge. You know, 593 00:30:03,880 --> 00:30:05,960 Speaker 10: how arey going to get people spending? Because the things 594 00:30:05,960 --> 00:30:09,400 Speaker 10: that are holding back the Chinese consumer. It isn't just 595 00:30:09,480 --> 00:30:11,600 Speaker 10: sort of an idea of like the economy is bad. 596 00:30:11,640 --> 00:30:14,440 Speaker 10: It's sort of the property crash is the biggest one, right, 597 00:30:14,520 --> 00:30:17,959 Speaker 10: Like everyone, yeah, had their money invested in property. And 598 00:30:18,000 --> 00:30:20,360 Speaker 10: while there are some signs that you know that is 599 00:30:20,840 --> 00:30:23,320 Speaker 10: that the crash is sort of slurring and maybe you 600 00:30:23,400 --> 00:30:26,120 Speaker 10: are reaching a bottom, very very very tentative. You know, 601 00:30:26,200 --> 00:30:29,880 Speaker 10: time prices are still declining, but the declines are easing, 602 00:30:30,440 --> 00:30:33,560 Speaker 10: so it's still not anywhere out of the woods on that. 603 00:30:33,560 --> 00:30:36,080 Speaker 10: That's one reason people in China want to put all 604 00:30:36,120 --> 00:30:38,800 Speaker 10: their money. They squirrel them into savings accounts. 605 00:30:39,480 --> 00:30:41,800 Speaker 5: So the decline that we've been talking about in property 606 00:30:41,800 --> 00:30:47,720 Speaker 5: prices kind of moves out more broadly to include consumer goods, food, electronics, 607 00:30:47,720 --> 00:30:50,360 Speaker 5: and the like. And this obviously is going to complicate 608 00:30:50,400 --> 00:30:53,400 Speaker 5: things for Beijing because it's been mired. The economy in 609 00:30:53,520 --> 00:30:56,520 Speaker 5: China has been mired in this deflationary trap for a while, 610 00:30:56,600 --> 00:31:00,040 Speaker 5: particularly at the wholesale level. Is there a way that 611 00:30:59,840 --> 00:31:03,800 Speaker 5: you're familiar with where Beijing has been able to articulate 612 00:31:03,880 --> 00:31:06,320 Speaker 5: first that there is a problem with deflation in a 613 00:31:06,360 --> 00:31:11,080 Speaker 5: way that calls for a much greater response, And what 614 00:31:11,200 --> 00:31:13,880 Speaker 5: are they suggesting those measures may look like. 615 00:31:14,200 --> 00:31:16,520 Speaker 10: So to your first point, I think you know, no 616 00:31:16,560 --> 00:31:18,680 Speaker 10: one in the Chinese system is using the word deflation. 617 00:31:18,800 --> 00:31:22,440 Speaker 10: Still that is still a dirty word, even though with 618 00:31:22,600 --> 00:31:25,720 Speaker 10: the GDP deflator, which is the economy wide sort of 619 00:31:25,760 --> 00:31:28,600 Speaker 10: measure of prices, that will have been its longest period 620 00:31:28,640 --> 00:31:32,680 Speaker 10: deflation ever on record in January or it will match 621 00:31:32,720 --> 00:31:35,160 Speaker 10: the longest record and then most economists expected in Q 622 00:31:35,280 --> 00:31:36,239 Speaker 10: two to exceed it. 623 00:31:36,600 --> 00:31:37,280 Speaker 3: So this is a. 624 00:31:37,240 --> 00:31:40,040 Speaker 10: Serious problem they do need to face. And the polit 625 00:31:40,040 --> 00:31:42,600 Speaker 10: Bureau meeting did talk about prices, so they're not talking 626 00:31:42,600 --> 00:31:45,120 Speaker 10: about deflation using that word, but they are talking about 627 00:31:45,120 --> 00:31:47,080 Speaker 10: sort of prices as a problem. 628 00:31:47,120 --> 00:31:47,320 Speaker 7: Now. 629 00:31:48,560 --> 00:31:51,280 Speaker 10: I was just in Beijing recently. You know, behind closed doors, 630 00:31:51,360 --> 00:31:54,160 Speaker 10: all the economists that you talk to see deflation is 631 00:31:54,200 --> 00:31:57,040 Speaker 10: sort of the biggest threat to the economy right now, 632 00:31:57,360 --> 00:31:59,440 Speaker 10: and many of them make the comparison with Japan when 633 00:31:59,440 --> 00:32:01,680 Speaker 10: it was going into last decade and talk about the 634 00:32:01,720 --> 00:32:04,240 Speaker 10: sort of three arrows policy that they had to sort 635 00:32:04,280 --> 00:32:07,160 Speaker 10: of roll out, you know, to try and defeat deflation, 636 00:32:07,160 --> 00:32:11,120 Speaker 10: which obviously in Japan wasn't necessarily particularly successful. But the 637 00:32:11,200 --> 00:32:13,960 Speaker 10: way the economists see it is this is going to 638 00:32:14,000 --> 00:32:17,760 Speaker 10: take a forceful and coordinated policy approach. You would need 639 00:32:17,800 --> 00:32:20,400 Speaker 10: to go all in on fiscal, all in on monetary, 640 00:32:20,680 --> 00:32:23,480 Speaker 10: and then rescue the housing sector if you really want 641 00:32:23,520 --> 00:32:26,960 Speaker 10: to stop the deflationary spiral. It takes that kind of 642 00:32:27,000 --> 00:32:29,880 Speaker 10: a response. It can't be sort of what you're seeing now, 643 00:32:29,920 --> 00:32:32,520 Speaker 10: which is, you know, this year, for example, they rolled 644 00:32:32,520 --> 00:32:35,800 Speaker 10: out enough fiscal and enough rate cuts, enough sort of 645 00:32:36,160 --> 00:32:39,239 Speaker 10: sprinkling of measures to get to the growth target. And 646 00:32:39,280 --> 00:32:41,520 Speaker 10: I think for a lot of economists, both in and 647 00:32:41,560 --> 00:32:44,320 Speaker 10: outside China, you know, the growth target is one thing 648 00:32:44,920 --> 00:32:47,080 Speaker 10: meeting that is possible. If they said it at about 649 00:32:47,120 --> 00:32:51,040 Speaker 10: five percent again next year, that's possible because GDP is 650 00:32:51,080 --> 00:32:52,640 Speaker 10: really a measure of sort of activity. 651 00:32:52,760 --> 00:32:53,000 Speaker 1: Right. 652 00:32:53,120 --> 00:32:55,520 Speaker 5: So, even with what we've heard from the government in 653 00:32:55,600 --> 00:32:58,800 Speaker 5: terms of what stimulus may look like, the sketch that's 654 00:32:58,800 --> 00:33:02,200 Speaker 5: been provided, has that been enough in and of itself 655 00:33:02,240 --> 00:33:05,120 Speaker 5: to move the needle when it comes to sentiment. Have 656 00:33:05,280 --> 00:33:08,239 Speaker 5: things become a little bit more optimistic or is there 657 00:33:08,280 --> 00:33:09,080 Speaker 5: too much to say. 658 00:33:09,520 --> 00:33:13,800 Speaker 10: I haven't sensed any increase in optimism at all. You know, 659 00:33:14,160 --> 00:33:17,400 Speaker 10: I'm sure people don't feel optimistic. They feel very pessimistic 660 00:33:17,760 --> 00:33:20,240 Speaker 10: about where things are going. And I think the return 661 00:33:20,280 --> 00:33:22,280 Speaker 10: of Trump is only adding to that, right, this sort 662 00:33:22,320 --> 00:33:25,520 Speaker 10: of sense of like foreboding of what is de harmon, 663 00:33:25,600 --> 00:33:27,280 Speaker 10: what is around the corner. I think there's a real 664 00:33:27,320 --> 00:33:30,719 Speaker 10: sense China was facing some serious challenges. The only positive 665 00:33:30,760 --> 00:33:32,600 Speaker 10: I think is that the government is now showing some 666 00:33:32,720 --> 00:33:37,120 Speaker 10: signs of being more proactive. You know, I think there 667 00:33:37,200 --> 00:33:40,000 Speaker 10: was a sense that like some of the stimulus that 668 00:33:40,040 --> 00:33:43,120 Speaker 10: came before Trump came into office, like changing the monetary 669 00:33:43,120 --> 00:33:45,840 Speaker 10: policy stance for example, before Trump came in that afterwards 670 00:33:45,880 --> 00:33:49,240 Speaker 10: was being more proactive than reactive to something happening in 671 00:33:49,280 --> 00:33:52,280 Speaker 10: the economy. But it's still you know, changing the stance 672 00:33:52,360 --> 00:33:54,520 Speaker 10: is one thing, but sort of how deeply were they 673 00:33:54,520 --> 00:33:57,320 Speaker 10: cut rates next year? You know, you have economistsay, maybe 674 00:33:57,360 --> 00:33:59,640 Speaker 10: up to sort of fifty bit, sixty bits, So we 675 00:33:59,680 --> 00:34:01,520 Speaker 10: don't know yet, right, so it still remains to be 676 00:34:01,560 --> 00:34:05,360 Speaker 10: seen how forcefully they actually will roll out those particular 677 00:34:05,360 --> 00:34:06,520 Speaker 10: sort of stimulus. 678 00:34:06,920 --> 00:34:08,880 Speaker 5: Jenny will leave it there. Thank you so much for 679 00:34:08,960 --> 00:34:10,680 Speaker 5: making time to chat with us at the end of 680 00:34:10,680 --> 00:34:13,880 Speaker 5: the year. It's always a pleasure. Bloomberg's Jenny marsh is 681 00:34:14,000 --> 00:34:17,080 Speaker 5: team leader for Greater China Eco GUV, joining us from 682 00:34:17,080 --> 00:34:20,520 Speaker 5: our studios in Hong Kong. So we've taken a look 683 00:34:20,520 --> 00:34:23,360 Speaker 5: at China from the ten thousand foot view, so to speak. 684 00:34:23,400 --> 00:34:27,640 Speaker 5: Now we want to zero in on one particular sector, automobiles, 685 00:34:27,760 --> 00:34:31,440 Speaker 5: especially those evs. We know that President electromp has vowed 686 00:34:31,520 --> 00:34:35,399 Speaker 5: massive levies on vehicles imported from China. Joining me now 687 00:34:35,440 --> 00:34:37,839 Speaker 5: for a closer look is Chiao Fung. He is co 688 00:34:37,920 --> 00:34:42,799 Speaker 5: head of China Industrial Research at CLSA. Chiaofung, thank you 689 00:34:42,840 --> 00:34:44,600 Speaker 5: so much for making time to chat with us. I 690 00:34:44,600 --> 00:34:47,680 Speaker 5: think we can agree that one cause for concern, at 691 00:34:47,760 --> 00:34:50,680 Speaker 5: least from the US side, is what has been called 692 00:34:51,000 --> 00:34:54,400 Speaker 5: an overcapacity issue in China, and that relates to a 693 00:34:54,480 --> 00:34:58,200 Speaker 5: number of industries in China, especially as we know electric vehicles. 694 00:34:58,440 --> 00:35:00,920 Speaker 5: I'd like to get your assessment on the degree to 695 00:35:00,960 --> 00:35:03,520 Speaker 5: which we're going to begin to see maybe a little 696 00:35:03,560 --> 00:35:07,160 Speaker 5: bit more in the way of consolidation in the EV 697 00:35:07,360 --> 00:35:09,560 Speaker 5: space in China for the new year. 698 00:35:09,560 --> 00:35:12,719 Speaker 11: What do you think So for now, I think when 699 00:35:12,800 --> 00:35:16,000 Speaker 11: most of people are talking about overcapacity or low capacity 700 00:35:16,160 --> 00:35:19,359 Speaker 11: utilization for the EV industry. People refer to the whole 701 00:35:19,360 --> 00:35:22,560 Speaker 11: industry data which is right now running at around forty 702 00:35:22,600 --> 00:35:24,640 Speaker 11: to fifty percent of capacity utilization. 703 00:35:24,719 --> 00:35:25,839 Speaker 3: It's very low. 704 00:35:25,960 --> 00:35:29,360 Speaker 11: We have around forty to forty five million units of 705 00:35:29,440 --> 00:35:32,320 Speaker 11: capacities in China, while the auto sales is really twenty 706 00:35:32,320 --> 00:35:35,399 Speaker 11: to twenty three millions a year. But if you look 707 00:35:35,440 --> 00:35:39,000 Speaker 11: at the structural issues here, EV makers in the meanwhiles 708 00:35:39,040 --> 00:35:43,399 Speaker 11: running at a much higher capacity utilization, generally around eighty 709 00:35:43,480 --> 00:35:46,960 Speaker 11: percent or above, while the ice car makers, the traditional 710 00:35:47,040 --> 00:35:49,400 Speaker 11: ice co makers, are running at the below fifty percent. 711 00:35:49,800 --> 00:35:53,080 Speaker 11: So that's a structural difference here. As the overall, I 712 00:35:53,120 --> 00:35:56,200 Speaker 11: believe EV makers will continue that trend. They will be 713 00:35:56,239 --> 00:35:59,960 Speaker 11: growing much more faster at the losses of the ice makers. 714 00:36:00,280 --> 00:36:02,600 Speaker 11: We are focasting in the PS and your vehicle market 715 00:36:02,680 --> 00:36:06,000 Speaker 11: to be at low fingle digit growth next years, But 716 00:36:06,320 --> 00:36:08,719 Speaker 11: in the meanwhile EV will be growing at twenty five 717 00:36:08,760 --> 00:36:11,680 Speaker 11: to thirty percent versus twenty five to thirty percent losses 718 00:36:11,719 --> 00:36:15,000 Speaker 11: from the ice carmakers. The second thing is really the 719 00:36:15,000 --> 00:36:18,640 Speaker 11: consolidations of the industry. We believe twenty twenty five will 720 00:36:18,680 --> 00:36:22,120 Speaker 11: start to see a materialization of the industry conthoridations, which 721 00:36:22,160 --> 00:36:25,319 Speaker 11: already happening this year. We're seeing some joint ventures are 722 00:36:25,320 --> 00:36:28,840 Speaker 11: shutting down the factories in China. We're seeing some exit 723 00:36:28,880 --> 00:36:31,720 Speaker 11: of the brands from the new forces of the EV makers, 724 00:36:32,160 --> 00:36:35,319 Speaker 11: which we're going to be materialized in twenty twenty five. 725 00:36:35,480 --> 00:36:39,279 Speaker 11: So I think the industry counthoridations will continue to help 726 00:36:39,360 --> 00:36:41,720 Speaker 11: drive up the capacity utilizations. 727 00:36:41,840 --> 00:36:44,359 Speaker 5: When I think of EV's I think of a not 728 00:36:44,400 --> 00:36:47,000 Speaker 5: only domestic demand, but I think of a very strong 729 00:36:47,120 --> 00:36:49,560 Speaker 5: export market as well. But when it comes to the 730 00:36:49,600 --> 00:36:52,360 Speaker 5: issue of domestic demand, how much more can the government 731 00:36:52,719 --> 00:36:55,359 Speaker 5: be doing? There is a lot that's already been communicated. 732 00:36:55,440 --> 00:36:58,360 Speaker 5: Are you expecting a lot more in terms of fiscal 733 00:36:58,400 --> 00:37:00,480 Speaker 5: policy from Beijing in the year head. 734 00:37:00,920 --> 00:37:03,920 Speaker 11: So I used to cover commodities. If you are talking 735 00:37:04,000 --> 00:37:06,719 Speaker 11: about the large scale stimulus like we saw in the 736 00:37:06,760 --> 00:37:10,960 Speaker 11: two thousand and nine after financial crisis, we probably will 737 00:37:11,000 --> 00:37:14,200 Speaker 11: be disappointed because from my perspective, I think the Chinese 738 00:37:14,239 --> 00:37:18,240 Speaker 11: government will stop doing that kind of large scale stimulus. Instead, 739 00:37:18,320 --> 00:37:20,920 Speaker 11: we are seeing a shift of the policy focus from 740 00:37:20,960 --> 00:37:24,720 Speaker 11: the production side investment side to consumer site. In China, 741 00:37:24,800 --> 00:37:27,680 Speaker 11: investment has to be used to be the biggest growth driver, 742 00:37:27,760 --> 00:37:30,520 Speaker 11: accounts for more than one third of the fixed act investment. 743 00:37:30,640 --> 00:37:31,920 Speaker 3: But for now, with. 744 00:37:31,960 --> 00:37:36,359 Speaker 11: The shrinking of the property space and struggling local government financials, 745 00:37:36,600 --> 00:37:40,160 Speaker 11: we're seeing the manufacturing industries, the value adding industries are 746 00:37:40,280 --> 00:37:43,120 Speaker 11: accounting for a larger share of the economy. So that's 747 00:37:43,160 --> 00:37:45,440 Speaker 11: why going forward we'll see the policy will be more 748 00:37:45,480 --> 00:37:49,840 Speaker 11: focusing on driving the consumption rather than pushing for the production. 749 00:37:49,920 --> 00:37:52,719 Speaker 11: This is what our reports is saying, a change of 750 00:37:52,760 --> 00:37:54,560 Speaker 11: the policy from push to pull. 751 00:37:54,960 --> 00:37:56,840 Speaker 5: Chao Fun, thank you so much for taking time to 752 00:37:56,920 --> 00:37:59,480 Speaker 5: chat with us. Shall Fung is co head of China 753 00:37:59,520 --> 00:38:03,480 Speaker 5: Industrial Research at CLSA, and I'm Doug Chrisner. You can 754 00:38:03,520 --> 00:38:07,000 Speaker 5: catch us weekdays for the Daybreak Asia podcast. It's available 755 00:38:07,040 --> 00:38:10,920 Speaker 5: on Apple, Spotify or wherever you get your podcast. 756 00:38:11,280 --> 00:38:14,040 Speaker 2: Tom, Thanks Doug, and that does it for this edition 757 00:38:14,080 --> 00:38:16,879 Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning 758 00:38:16,880 --> 00:38:18,880 Speaker 2: at five am Wall Street Time for the latest on 759 00:38:19,000 --> 00:38:21,839 Speaker 2: markets overseas and the news you need to start your day. 760 00:38:22,320 --> 00:38:25,280 Speaker 2: I'm Tom Buzzby. Stay with us. Top stories and global 761 00:38:25,320 --> 00:38:27,520 Speaker 2: business headlines are coming up right now.