1 00:00:02,960 --> 00:00:12,039 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg day 2 00:00:12,039 --> 00:00:14,200 Speaker 1: Break Weekend, our global look at the top stories in 3 00:00:14,240 --> 00:00:16,880 Speaker 1: the coming week from our Daybreak anchors all around the world. 4 00:00:17,000 --> 00:00:18,840 Speaker 1: It's great ahead on the program, a look at some 5 00:00:19,040 --> 00:00:22,320 Speaker 1: key inflation data in the US and how it may 6 00:00:22,400 --> 00:00:26,239 Speaker 1: impact FED policy moving forward. I'm Tom Busby in New York. 7 00:00:26,480 --> 00:00:28,920 Speaker 2: I'm Callin Hetgo in London, where we're delving into the 8 00:00:29,000 --> 00:00:31,920 Speaker 2: universe of the world's most famous prizes. 9 00:00:32,400 --> 00:00:34,960 Speaker 3: I'm Brian Curtis in Hong Kong. We look ahead to 10 00:00:35,080 --> 00:00:39,760 Speaker 3: new Japanese Prime Minister's Shighetto Ishiba's idea of Asian NATO. 11 00:00:44,000 --> 00:00:48,240 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg Eleve, 12 00:00:48,320 --> 00:00:51,840 Speaker 4: The Free Ow, New York, Bloombergen ninety nine to one, Washington, DC, 13 00:00:52,159 --> 00:00:56,720 Speaker 4: Bloomberg ninety two to nine, Boston, Bloomberg nine sixty, San Francisco, 14 00:00:56,960 --> 00:01:01,520 Speaker 4: DAB Digital Radio, London, SIRIS XM one, and around the 15 00:01:01,520 --> 00:01:04,600 Speaker 4: world on Bloomberg Radio dot Com and via the Bloomberg 16 00:01:04,640 --> 00:01:05,280 Speaker 4: Business Channel. 17 00:01:08,440 --> 00:01:10,720 Speaker 1: Good day to you. I'm Tom Busby. We begin today's 18 00:01:10,760 --> 00:01:14,480 Speaker 1: program with US inflation data out this week. September's consumer 19 00:01:14,520 --> 00:01:17,920 Speaker 1: price index out this Thursday. On Friday, the producer price 20 00:01:17,959 --> 00:01:20,680 Speaker 1: index for that same month, with less than a month 21 00:01:20,680 --> 00:01:24,240 Speaker 1: ago before its next policy meeting. How might this impact 22 00:01:24,280 --> 00:01:27,840 Speaker 1: the Fed's monetary policy moving forward? Well for more, we're 23 00:01:27,920 --> 00:01:31,400 Speaker 1: joined by Edwin Harrison, senior editor and the author of 24 00:01:31,440 --> 00:01:34,880 Speaker 1: the Everything Risk newsletter Well Edward. Just last week, FED 25 00:01:34,959 --> 00:01:38,240 Speaker 1: Chair Jern Pal said inflation still easing, moving toward the 26 00:01:38,280 --> 00:01:41,440 Speaker 1: central bank's long held goal of two percent, and despite 27 00:01:41,480 --> 00:01:43,520 Speaker 1: a slight up ticket inflation for August, what are you 28 00:01:43,560 --> 00:01:46,160 Speaker 1: expecting to see this week for September? 29 00:01:46,920 --> 00:01:51,120 Speaker 5: Yes, Tom good to talk to you. We are expecting, 30 00:01:51,240 --> 00:01:55,880 Speaker 5: or at least the market's expecting CPI on the tenth 31 00:01:55,920 --> 00:01:58,760 Speaker 5: to come in at two point three percent. But you know, 32 00:01:59,000 --> 00:02:01,480 Speaker 5: without food and enery, which are the valet items that 33 00:02:01,520 --> 00:02:03,880 Speaker 5: are in there, that number is expected to be at 34 00:02:03,920 --> 00:02:07,200 Speaker 5: three point two percent, which is in line with the 35 00:02:07,240 --> 00:02:08,040 Speaker 5: previous read. 36 00:02:08,160 --> 00:02:10,360 Speaker 6: So three point two percent is pretty high. 37 00:02:10,960 --> 00:02:13,240 Speaker 5: The next day, we're going to get a look at 38 00:02:13,440 --> 00:02:17,000 Speaker 5: producer prices and those are expected to go up slightly 39 00:02:17,080 --> 00:02:20,640 Speaker 5: to two point seven percent, also well above the fed's 40 00:02:20,680 --> 00:02:23,919 Speaker 5: two percent targets. So those numbers, you know, they may 41 00:02:23,919 --> 00:02:26,240 Speaker 5: be coming down, they're still relatively high. 42 00:02:27,160 --> 00:02:27,320 Speaker 6: Well. 43 00:02:27,360 --> 00:02:30,720 Speaker 1: One reason oil and gas prices. You know, they have 44 00:02:30,919 --> 00:02:34,720 Speaker 1: been terrific for the consumer for the last few months. 45 00:02:34,720 --> 00:02:37,840 Speaker 1: But wor someing tentions in the Middle East, crude price 46 00:02:37,919 --> 00:02:41,120 Speaker 1: is soaring this past week. That could really impact people's 47 00:02:41,160 --> 00:02:43,280 Speaker 1: wallets and spending. Will that be a big factor, do 48 00:02:43,360 --> 00:02:46,079 Speaker 1: you think? Or not yet in these numbers. 49 00:02:47,200 --> 00:02:47,680 Speaker 6: Not yet. 50 00:02:47,720 --> 00:02:50,359 Speaker 5: In these numbers, Tom, you point out a very good 51 00:02:50,440 --> 00:02:54,960 Speaker 5: thing because when you look at the CPI without food 52 00:02:54,960 --> 00:02:57,640 Speaker 5: and energy, it's at two point three percent. You know, 53 00:02:57,680 --> 00:02:59,519 Speaker 5: you take out food and energy and it's three point 54 00:02:59,560 --> 00:03:02,600 Speaker 5: two percent, so it's higher. You know, the numbers that 55 00:03:02,639 --> 00:03:05,800 Speaker 5: you were talking about coming down have actually suppressed the 56 00:03:05,840 --> 00:03:10,160 Speaker 5: CPI over the last year. But with those numbers going 57 00:03:10,280 --> 00:03:14,960 Speaker 5: up recently, it's going to make the overall CPI higher 58 00:03:15,520 --> 00:03:18,000 Speaker 5: than it otherwise would have been. So down the line, 59 00:03:18,040 --> 00:03:20,920 Speaker 5: we could probably expect that two point three number to 60 00:03:21,000 --> 00:03:21,799 Speaker 5: kick up from here. 61 00:03:22,360 --> 00:03:24,560 Speaker 1: That is troubling data. But we have a lot of 62 00:03:24,560 --> 00:03:27,840 Speaker 1: good news too. Let's talk about this past Friday's jobs report. 63 00:03:27,960 --> 00:03:30,799 Speaker 1: We're showing a lot more ads than forecasting, unemployment rate 64 00:03:30,880 --> 00:03:33,920 Speaker 1: edging lower. This is good news. A GDP in the 65 00:03:33,919 --> 00:03:37,040 Speaker 1: third quarter two point five percent, That is solid growth. 66 00:03:37,640 --> 00:03:37,880 Speaker 7: Yeah. 67 00:03:37,920 --> 00:03:40,440 Speaker 5: I mean, I have to say, it really does change 68 00:03:40,440 --> 00:03:45,080 Speaker 5: the narrative. Instead of people worrying about a recession, now 69 00:03:45,160 --> 00:03:48,560 Speaker 5: people are almost thinking. I've heard the term no landing, 70 00:03:48,640 --> 00:03:51,480 Speaker 5: as in the economy doesn't land, it doesn't slow down, 71 00:03:51,480 --> 00:03:52,760 Speaker 5: It just keeps on chugging. 72 00:03:53,040 --> 00:03:54,560 Speaker 6: That's how good the numbers were. 73 00:03:54,840 --> 00:03:56,280 Speaker 5: You know, just to break it down for you a 74 00:03:56,280 --> 00:03:59,120 Speaker 5: little bit, the unemployment rate kick down to four point 75 00:03:59,160 --> 00:04:02,560 Speaker 5: one percent. We saw the non farm payrolls at two 76 00:04:02,640 --> 00:04:06,360 Speaker 5: hundred and fifty four thousand, which is well above the 77 00:04:06,400 --> 00:04:08,600 Speaker 5: one hundred and fifty that people thought about. It was 78 00:04:08,800 --> 00:04:13,480 Speaker 5: outside of all estimates. And you know, hourly earnings were 79 00:04:13,600 --> 00:04:16,080 Speaker 5: up four point zero percent year on year. 80 00:04:16,240 --> 00:04:17,320 Speaker 6: That's really good. 81 00:04:17,960 --> 00:04:21,080 Speaker 1: Also good now the Boeing strike that is slogging on, 82 00:04:21,279 --> 00:04:23,159 Speaker 1: but we had a bit of a break in that 83 00:04:23,240 --> 00:04:27,839 Speaker 1: long shortman strike at least until January after the November's election. 84 00:04:28,279 --> 00:04:30,960 Speaker 1: You know, that's easing a lot of worriedes minds right now. 85 00:04:31,040 --> 00:04:33,240 Speaker 1: I think no runs on toilet paper at least for now. 86 00:04:34,279 --> 00:04:37,000 Speaker 5: And you know, Tom, you make a good point because 87 00:04:37,600 --> 00:04:40,560 Speaker 5: when you know there's going to be two numbers that 88 00:04:40,600 --> 00:04:43,880 Speaker 5: we get, there was the number that we got on Friday, 89 00:04:43,920 --> 00:04:45,280 Speaker 5: and then there's another one. 90 00:04:45,200 --> 00:04:49,159 Speaker 6: Right before the FED decides in November. And it had been. 91 00:04:49,040 --> 00:04:51,400 Speaker 5: The case that the read that we get in early 92 00:04:51,480 --> 00:04:54,839 Speaker 5: November was going to be sort of sullied by one 93 00:04:54,880 --> 00:04:56,880 Speaker 5: off factors like the long Shortman strike. 94 00:04:56,960 --> 00:04:59,800 Speaker 6: But now we're going to get a good read. 95 00:05:00,240 --> 00:05:03,200 Speaker 5: And when you add in how good this number was, 96 00:05:03,680 --> 00:05:07,680 Speaker 5: with the potential that that's also a potentially good number 97 00:05:07,680 --> 00:05:11,680 Speaker 5: that we can use as a real data point, it 98 00:05:11,839 --> 00:05:15,000 Speaker 5: says that instead of thinking the FED would ease fifty 99 00:05:15,040 --> 00:05:19,440 Speaker 5: basis point potentially, the market could start thinking, wait a minute, 100 00:05:19,440 --> 00:05:20,200 Speaker 5: the Fed's not. 101 00:05:20,120 --> 00:05:22,680 Speaker 6: Going to ease at all at one of these next meetings. 102 00:05:22,880 --> 00:05:26,120 Speaker 1: Oh so there's whispers now not even a twenty five 103 00:05:26,160 --> 00:05:27,200 Speaker 1: basis point cut. 104 00:05:27,400 --> 00:05:30,800 Speaker 5: If the data continue to be as good as they 105 00:05:30,839 --> 00:05:34,039 Speaker 5: are one of these next meetings, not necessarily the one 106 00:05:34,040 --> 00:05:37,880 Speaker 5: in November, but December or January, the market could price 107 00:05:37,960 --> 00:05:39,800 Speaker 5: in no cut for those meetings. 108 00:05:40,240 --> 00:05:40,480 Speaker 6: Wow. 109 00:05:40,640 --> 00:05:43,359 Speaker 1: But we did hear from a chairman pal this past 110 00:05:43,360 --> 00:05:47,680 Speaker 1: week and it sounds like if the economic data remains consistent, 111 00:05:47,960 --> 00:05:51,080 Speaker 1: another cut in November, you know, four weeks from now, 112 00:05:51,279 --> 00:05:56,000 Speaker 1: possibly another small cut in December. So there is a 113 00:05:56,040 --> 00:05:58,520 Speaker 1: lot of hope that that's going to happen. But it's 114 00:05:58,560 --> 00:06:00,760 Speaker 1: all as they say, dat it dependent. 115 00:06:01,320 --> 00:06:02,239 Speaker 6: That's very true. 116 00:06:02,360 --> 00:06:05,600 Speaker 5: And so now with the data looking as good as 117 00:06:05,640 --> 00:06:08,360 Speaker 5: it is, I think that we can breathe a sigh 118 00:06:08,400 --> 00:06:08,960 Speaker 5: of relief. 119 00:06:09,920 --> 00:06:10,960 Speaker 6: And I think that will be. 120 00:06:11,080 --> 00:06:15,719 Speaker 5: Very helpful for the equity markets going forward, because ultimately, 121 00:06:16,120 --> 00:06:19,960 Speaker 5: when people are making four percent more in their paychecks, 122 00:06:19,960 --> 00:06:23,240 Speaker 5: they're able to spend more. That's going to support corporate 123 00:06:23,320 --> 00:06:26,560 Speaker 5: earnings and as a result, we should continue to see 124 00:06:26,560 --> 00:06:28,000 Speaker 5: stocks rally from here. 125 00:06:28,240 --> 00:06:32,479 Speaker 1: Well September CPI data out this Thursday, PPI on Friday. 126 00:06:32,480 --> 00:06:36,080 Speaker 1: Our thanks to Edward Harrison, Bloomberg Senior Editor, the author 127 00:06:36,120 --> 00:06:40,120 Speaker 1: of the Everything risk newsletter Time Flies and to prove it. 128 00:06:40,160 --> 00:06:42,960 Speaker 1: A new earning season kicking off this week, two of 129 00:06:43,000 --> 00:06:45,920 Speaker 1: the nation's biggest banks, JP Morgan Chase and Wells Fargo 130 00:06:45,960 --> 00:06:49,160 Speaker 1: will report their third quarter earnings this Friday. What will 131 00:06:49,200 --> 00:06:51,279 Speaker 1: the results tell us about the health of the banking system, 132 00:06:51,320 --> 00:06:54,520 Speaker 1: the US economy and the US consumer? For more, we're 133 00:06:54,560 --> 00:06:59,039 Speaker 1: joined by Alison Williams, Bloomberg Intelligence Senior Analyst, Global Banks 134 00:06:59,080 --> 00:07:02,560 Speaker 1: and Asset Manager. Allison, what are you expecting to see 135 00:07:02,560 --> 00:07:06,000 Speaker 1: from JP Morgan Chase and Wells Fargo later this week. 136 00:07:06,279 --> 00:07:09,280 Speaker 8: So generally expecting solid quarter for the banks. Of course, 137 00:07:09,320 --> 00:07:11,800 Speaker 8: it's all about the outlook and a few things that 138 00:07:12,040 --> 00:07:16,120 Speaker 8: we'll be focusing on. First, the outlook for net interest 139 00:07:16,200 --> 00:07:20,760 Speaker 8: income is certainly top of mind with investors given the 140 00:07:21,000 --> 00:07:23,840 Speaker 8: FED cuts that we saw in September and the implied 141 00:07:24,520 --> 00:07:28,239 Speaker 8: cuts in the months ahead, and our view it's really 142 00:07:28,440 --> 00:07:31,720 Speaker 8: about loan growth and if we can see that loan 143 00:07:31,760 --> 00:07:35,840 Speaker 8: growth to help improve the net interest income. On the 144 00:07:35,880 --> 00:07:39,920 Speaker 8: positive side of things, the beginning of the rate cut 145 00:07:40,120 --> 00:07:45,240 Speaker 8: cycle I think removes some of the concerns around higher 146 00:07:45,240 --> 00:07:50,160 Speaker 8: deposit costs. The banks still have a very big deposit bases, 147 00:07:51,560 --> 00:07:56,400 Speaker 8: core deposits where they're getting free funding and so there's 148 00:07:56,520 --> 00:08:01,240 Speaker 8: less risk to those deposits in that price saying with 149 00:08:01,360 --> 00:08:05,680 Speaker 8: the FED beginning to ease. But again, what's happening with 150 00:08:05,840 --> 00:08:08,880 Speaker 8: loan growth to some extent that also relates to the 151 00:08:08,920 --> 00:08:13,560 Speaker 8: economic outlook. On the capital market side, we expect that 152 00:08:13,640 --> 00:08:17,440 Speaker 8: trading will continue to be resilient at all of the banks, 153 00:08:17,440 --> 00:08:20,600 Speaker 8: and so this is obviously a bigger source of revenue 154 00:08:20,640 --> 00:08:25,760 Speaker 8: for JP Morgan. But Wells Fargo has certainly been making 155 00:08:25,800 --> 00:08:30,240 Speaker 8: strides to invest and improve their business. Equities trading is 156 00:08:30,240 --> 00:08:35,480 Speaker 8: really going to be the highlight. The world's market capitalization 157 00:08:35,679 --> 00:08:40,480 Speaker 8: reached a record high in Bloomberg data in September, and 158 00:08:41,000 --> 00:08:44,600 Speaker 8: we think that the prime brokerage business has certainly gotten 159 00:08:44,640 --> 00:08:48,679 Speaker 8: some help from the stronger equity prices. We expect that 160 00:08:48,720 --> 00:08:54,760 Speaker 8: equities trading will outperform fixed income trading, but that fixed 161 00:08:54,800 --> 00:08:59,559 Speaker 8: income trading will be relatively resilient, helped from the credit 162 00:08:59,600 --> 00:09:04,079 Speaker 8: trading side of things. The fee revenue side is really 163 00:09:04,160 --> 00:09:07,520 Speaker 8: where investors are focusing on in terms of the outlook 164 00:09:07,559 --> 00:09:11,040 Speaker 8: for twenty twenty five. It's a smaller revenue source but 165 00:09:11,200 --> 00:09:16,080 Speaker 8: certainly helps the profitability of the banks M and A, 166 00:09:16,240 --> 00:09:19,600 Speaker 8: which is an area that we think we could see 167 00:09:19,640 --> 00:09:24,439 Speaker 8: a lift next year coming off of some very low levels. 168 00:09:25,200 --> 00:09:29,360 Speaker 8: We think that the dialogues have been very active, but 169 00:09:29,480 --> 00:09:33,240 Speaker 8: also to the extent that the FED cuts and the 170 00:09:33,240 --> 00:09:37,920 Speaker 8: FED actions helped to improve CEO confidence, we could get 171 00:09:37,920 --> 00:09:41,960 Speaker 8: an uplift in deals. On the equity underwriting side, we 172 00:09:42,120 --> 00:09:46,280 Speaker 8: have seen some better trends, especially in the US market 173 00:09:46,679 --> 00:09:51,319 Speaker 8: this year, although it was slowed down certainly more than 174 00:09:51,559 --> 00:09:54,000 Speaker 8: investors would have liked to see in September, just given 175 00:09:54,000 --> 00:09:58,000 Speaker 8: some of the volatility, But turning to the debt side, 176 00:09:58,679 --> 00:10:01,319 Speaker 8: very strong activity that to help both for the banks, 177 00:10:01,880 --> 00:10:06,080 Speaker 8: but we want to hear what's on tap for the 178 00:10:06,120 --> 00:10:10,800 Speaker 8: months ahead in the debt market. We do suspect that 179 00:10:10,840 --> 00:10:13,520 Speaker 8: there has been a little bit of pull forward of refinancing, 180 00:10:13,679 --> 00:10:17,720 Speaker 8: just based on some of the experts comments here in 181 00:10:17,840 --> 00:10:20,520 Speaker 8: BI as well as some of the banks, and so 182 00:10:20,600 --> 00:10:23,320 Speaker 8: that I think is a key question for the earnings calls. 183 00:10:23,920 --> 00:10:27,680 Speaker 1: And have banks put aside more money for credit losses 184 00:10:28,400 --> 00:10:31,000 Speaker 1: and some of those commercial real estate losses. 185 00:10:31,880 --> 00:10:35,360 Speaker 8: They have, they've been putting aside money for commercial real 186 00:10:35,440 --> 00:10:38,160 Speaker 8: estate losses, but credit card has really been the area 187 00:10:38,640 --> 00:10:42,280 Speaker 8: where banks have been reserving, and that really relates to 188 00:10:42,520 --> 00:10:45,080 Speaker 8: a lot of the growth. Card is really the area 189 00:10:45,440 --> 00:10:48,360 Speaker 8: that we've continued to see strong growth, especially at the 190 00:10:48,360 --> 00:10:51,760 Speaker 8: big universal banks that I cover, which as you know, 191 00:10:52,200 --> 00:10:54,880 Speaker 8: are over indexed to that product versus some of the 192 00:10:55,080 --> 00:10:58,040 Speaker 8: regional banks, and so a lot of it is just 193 00:10:58,160 --> 00:11:01,880 Speaker 8: the fact that this is a general only higher loss product, 194 00:11:02,720 --> 00:11:04,839 Speaker 8: and so when you get the growth and you're looking 195 00:11:04,880 --> 00:11:07,320 Speaker 8: out over the life of the loan, which is the 196 00:11:08,000 --> 00:11:11,280 Speaker 8: accounting change that we saw back in twenty twenty, that 197 00:11:11,400 --> 00:11:14,440 Speaker 8: does tend to lead to relatively bigger reserves. But I 198 00:11:14,480 --> 00:11:16,960 Speaker 8: think what of users are going to be focusing on 199 00:11:17,720 --> 00:11:20,320 Speaker 8: as well as ourselves are you know, what are the 200 00:11:20,400 --> 00:11:24,280 Speaker 8: trends in charge offs and delinquencies. We did see a 201 00:11:24,360 --> 00:11:28,360 Speaker 8: pickup in the first half, but the seasonal trends generally 202 00:11:28,400 --> 00:11:32,000 Speaker 8: support things improving, and so we'll be looking for evidence 203 00:11:32,000 --> 00:11:33,000 Speaker 8: of that at the banks. 204 00:11:33,240 --> 00:11:36,160 Speaker 1: Now you spoke about an uptick in M and A activity, 205 00:11:36,200 --> 00:11:39,960 Speaker 1: are you also seeing any IPO activity on the horizon 206 00:11:40,240 --> 00:11:40,800 Speaker 1: picking up? 207 00:11:41,080 --> 00:11:43,560 Speaker 8: We have seen some pick up this year. We did 208 00:11:43,640 --> 00:11:47,280 Speaker 8: see a very strong July which was boosted by one 209 00:11:47,320 --> 00:11:51,600 Speaker 8: particular IPO in the US, so that is helpful to fees. 210 00:11:52,200 --> 00:11:55,440 Speaker 8: But I think that is something that we'd like to 211 00:11:55,480 --> 00:11:59,319 Speaker 8: see sort of more of a pickup in the months ahead. 212 00:12:00,040 --> 00:12:03,320 Speaker 8: Certainly with the strength of the equity markets, we would 213 00:12:03,360 --> 00:12:07,240 Speaker 8: expect to see a little bit more strength than we have. 214 00:12:07,440 --> 00:12:11,040 Speaker 8: But I think, you know, that disappointment really relates to 215 00:12:11,200 --> 00:12:15,000 Speaker 8: the fact that a couple of years ago we saw 216 00:12:15,679 --> 00:12:18,240 Speaker 8: some of the valuation rounds for some of the private 217 00:12:18,280 --> 00:12:24,160 Speaker 8: companies come at much higher valuation levels, and so while 218 00:12:24,240 --> 00:12:28,120 Speaker 8: the global equity markets are reaching a new high, that's 219 00:12:28,160 --> 00:12:30,800 Speaker 8: not necessarily true for all companies, and for a lot 220 00:12:30,840 --> 00:12:34,240 Speaker 8: of the companies waiting to go public, they are still 221 00:12:34,720 --> 00:12:37,200 Speaker 8: waiting on a little bit more valuation improvement. 222 00:12:37,720 --> 00:12:41,480 Speaker 1: Oh boy, okay, so trading revenue, net interest income. The 223 00:12:41,520 --> 00:12:44,000 Speaker 1: new earning season kicking off this Friday, a lot to 224 00:12:44,040 --> 00:12:47,160 Speaker 1: look forward to. Our thanks to Alison Williams, Bloomberg Intelligence 225 00:12:47,280 --> 00:12:51,240 Speaker 1: Senior analyst, Global Banks and Asset Managers. Coming up on 226 00:12:51,280 --> 00:12:53,800 Speaker 1: Bloomberg day Break Weekend will delve into the universe of 227 00:12:53,840 --> 00:12:57,640 Speaker 1: the world's most famous prizes. I'm Tom Busby and this 228 00:12:57,840 --> 00:13:12,440 Speaker 1: is Bloomberg. This is Bloomberg day Break Weekend, our global 229 00:13:12,440 --> 00:13:14,600 Speaker 1: look ahead at the top stories for investors in the 230 00:13:14,600 --> 00:13:17,800 Speaker 1: coming week. I'm Tom Busby in New York. Up later 231 00:13:17,920 --> 00:13:21,000 Speaker 1: in our program, we'll discuss what's next for Japan after 232 00:13:21,040 --> 00:13:24,120 Speaker 1: selecting a new leader for its ruling party. But first, 233 00:13:24,320 --> 00:13:27,079 Speaker 1: in the coming days, the Nobel Prizes will be handed 234 00:13:27,120 --> 00:13:31,080 Speaker 1: out in chemistry, economics, literature, and more. The Swedish Academy 235 00:13:31,120 --> 00:13:34,480 Speaker 1: recognizing and rewarding an impressive list of industry leaders in 236 00:13:34,520 --> 00:13:37,320 Speaker 1: its one hundred and twenty three years. But what is 237 00:13:37,360 --> 00:13:40,880 Speaker 1: the influence of the awards today? For more, Let's go 238 00:13:40,880 --> 00:13:44,599 Speaker 1: to London and bring in Bloomberg Daybreak Europe anchor Caroline. 239 00:13:44,080 --> 00:13:49,240 Speaker 2: Hepgar tom Before Alfred Nobel, a nineteenth century businessman and chemist, 240 00:13:49,360 --> 00:13:54,280 Speaker 2: created his eponymous awards. He was best known for inventing dynamite. 241 00:13:54,640 --> 00:13:58,199 Speaker 2: The explosives soon became popular in construction and mining, as 242 00:13:58,240 --> 00:14:01,560 Speaker 2: well as in the weapons industry. It made Nobel a 243 00:14:01,840 --> 00:14:05,000 Speaker 2: very rich man. Perhaps it also made him think about 244 00:14:05,000 --> 00:14:07,880 Speaker 2: his legacy, because towards the end of his life he 245 00:14:07,960 --> 00:14:11,760 Speaker 2: decided to use his vast fortune to fund annual prizes 246 00:14:12,240 --> 00:14:15,920 Speaker 2: to those who, during the preceding year have conferred the 247 00:14:16,040 --> 00:14:20,760 Speaker 2: greatest benefit to humankind in the modern world. Some argue 248 00:14:20,800 --> 00:14:24,520 Speaker 2: that the Nobel Prizes project has an aura of being 249 00:14:24,720 --> 00:14:28,440 Speaker 2: above the political fray focus solely on the benefits of humanity, 250 00:14:29,120 --> 00:14:32,760 Speaker 2: but the institution isn't a stranger to controversy. The Peace 251 00:14:32,880 --> 00:14:36,840 Speaker 2: and Literature Awards in particular, are sometimes accused of bias. 252 00:14:37,320 --> 00:14:41,080 Speaker 2: Critics question where the winners are selected because their work 253 00:14:41,120 --> 00:14:45,040 Speaker 2: is truly outstanding or because it aligns with the political 254 00:14:45,080 --> 00:14:50,680 Speaker 2: preferences of the judges. The Norwegian Nobel Committee responsible for 255 00:14:50,720 --> 00:14:55,000 Speaker 2: the Peace Prize insists that it is independent, with the 256 00:14:55,000 --> 00:14:58,680 Speaker 2: sole mission of carrying out the will of Alfred Nobel. However, 257 00:14:58,880 --> 00:15:02,440 Speaker 2: it does have links to Norway's political system. The five 258 00:15:02,520 --> 00:15:06,520 Speaker 2: members are appointed by the Norwegian Parliament, so the panel's 259 00:15:06,560 --> 00:15:11,200 Speaker 2: composition reflects the power balance in the legislature. The body's 260 00:15:11,240 --> 00:15:15,560 Speaker 2: efforts to remain neutral don't always protect against a backlash either. 261 00:15:15,960 --> 00:15:20,280 Speaker 2: When the imprisoned Chinese dissident Liu Xiaobo won the Peace 262 00:15:20,360 --> 00:15:24,640 Speaker 2: Prize in twenty ten, Beijing responded by freezing trade talks 263 00:15:24,680 --> 00:15:28,560 Speaker 2: with Norway. It took years for Norway China relations to 264 00:15:28,600 --> 00:15:33,800 Speaker 2: be restored. External scrutiny can also become intense when high 265 00:15:33,880 --> 00:15:37,160 Speaker 2: profile winners are involved, such as in two thousand and 266 00:15:37,280 --> 00:15:41,200 Speaker 2: nine when President Barack Obama won the Peace Prize less 267 00:15:41,240 --> 00:15:45,840 Speaker 2: than a year after taking office. But despite the occasional backlash, 268 00:15:45,960 --> 00:15:50,720 Speaker 2: honorees enjoy wide ranging influence after taking home a Nobel. 269 00:15:50,960 --> 00:15:54,160 Speaker 2: Their opinions on the issues of the day often carry 270 00:15:54,200 --> 00:15:57,680 Speaker 2: weight for many. Joseph Stiglitz, the winner of the two 271 00:15:57,800 --> 00:16:01,680 Speaker 2: thousand and one Nobel Prize in Eco Nomics, often shares 272 00:16:01,720 --> 00:16:06,080 Speaker 2: his insights on matters of global importance. Here he is 273 00:16:06,160 --> 00:16:09,640 Speaker 2: discussing the upcoming US presidential election. 274 00:16:10,520 --> 00:16:15,240 Speaker 7: I think both candidates will have policies that recognize that 275 00:16:15,280 --> 00:16:22,520 Speaker 7: we went too far in books sometimes called hyperglobalization, and 276 00:16:22,640 --> 00:16:26,560 Speaker 7: the evidence was that during two thousand, during the pandemic, 277 00:16:27,000 --> 00:16:30,560 Speaker 7: the United States couldn't produce even simple products like face 278 00:16:30,640 --> 00:16:32,600 Speaker 7: masks and protective gear. 279 00:16:33,440 --> 00:16:34,680 Speaker 6: You're let alone ventilators. 280 00:16:34,720 --> 00:16:38,920 Speaker 7: We got to own ventilators or even tests. And Europe 281 00:16:39,400 --> 00:16:44,120 Speaker 7: had become totally dependent on Russian gas. In a book 282 00:16:44,160 --> 00:16:46,600 Speaker 7: at one of the books I wrote was called Making 283 00:16:46,640 --> 00:16:51,720 Speaker 7: Globalization Work. After I wrote this book called Globalization Discontent 284 00:16:52,200 --> 00:16:54,520 Speaker 7: that explained what was wrong, my wife said, you have 285 00:16:54,600 --> 00:16:57,600 Speaker 7: to get the answers. You can't just be a critic. 286 00:16:58,200 --> 00:17:01,240 Speaker 7: So I wrote that book. But in that one of 287 00:17:01,240 --> 00:17:04,320 Speaker 7: the things I said was it is really crazy for 288 00:17:04,400 --> 00:17:08,960 Speaker 7: Germany to be so dependent on Russian gas, and indeed 289 00:17:08,960 --> 00:17:11,600 Speaker 7: it was, and indeed it was. You know, Bush could 290 00:17:11,680 --> 00:17:14,240 Speaker 7: look in the eyes of Putlin said there's somebody I 291 00:17:14,280 --> 00:17:16,200 Speaker 7: could trust. But I think the rest of the world 292 00:17:16,200 --> 00:17:20,399 Speaker 7: didn't feel quite quite so comfortable. So there will be 293 00:17:20,440 --> 00:17:26,840 Speaker 7: an adjustment from hyper globalization in both parties. But the 294 00:17:26,960 --> 00:17:33,760 Speaker 7: difference is one in which I think Harris is committed 295 00:17:33,880 --> 00:17:39,280 Speaker 7: to a global framework working with what she views, you know, 296 00:17:39,520 --> 00:17:43,320 Speaker 7: with our partners, close partners of those you know, like 297 00:17:43,400 --> 00:17:47,359 Speaker 7: our NATO allies, but also our partners in the South, 298 00:17:47,920 --> 00:17:51,119 Speaker 7: and so it's trying to avoid of rupture and doing 299 00:17:51,160 --> 00:17:55,600 Speaker 7: everything we can't as we adjust our economy to embrace 300 00:17:55,880 --> 00:17:58,199 Speaker 7: the rest of the world. But the other one is 301 00:17:59,119 --> 00:18:02,680 Speaker 7: I think the way to understand Trump is his view 302 00:18:02,720 --> 00:18:05,480 Speaker 7: of the world is a zero sum, and that means 303 00:18:05,920 --> 00:18:09,080 Speaker 7: if the US does better, other countries will do worse. 304 00:18:09,280 --> 00:18:12,280 Speaker 7: Other countries do better. You saw the charts about how 305 00:18:12,359 --> 00:18:16,240 Speaker 7: other countries were doing. His view is that's at the 306 00:18:16,359 --> 00:18:20,760 Speaker 7: expense of the United States. And so any of you 307 00:18:21,000 --> 00:18:26,200 Speaker 7: who study at economics know that we believe it's positive sum. 308 00:18:26,800 --> 00:18:30,320 Speaker 7: If the developing countries and emerging markets grow, it's a 309 00:18:30,359 --> 00:18:35,240 Speaker 7: better global world and helps us. So it's not zero sum, 310 00:18:35,320 --> 00:18:39,480 Speaker 7: it's positive some and that is the fundamental philosophical difference 311 00:18:39,840 --> 00:18:41,160 Speaker 7: between the two candidates. 312 00:18:41,600 --> 00:18:45,359 Speaker 2: That was Joseph Stiglitz speaking at the Bloomberg New Economy 313 00:18:45,440 --> 00:18:48,520 Speaker 2: Forum in New York last month. So, as we look 314 00:18:48,560 --> 00:18:53,040 Speaker 2: ahead to upcoming announcements about the twenty twenty four crop 315 00:18:53,080 --> 00:18:57,159 Speaker 2: of Nobel Prize recipients, I've been discussing the history of 316 00:18:57,200 --> 00:19:02,240 Speaker 2: the Nobel Awards, the diplomatic tension and past winners along 317 00:19:02,280 --> 00:19:06,800 Speaker 2: with the current challenges in choosing who to recognize today 318 00:19:07,280 --> 00:19:11,880 Speaker 2: with Bloomberg's Nor Dick Managing editor Katy poian Palo. 319 00:19:12,119 --> 00:19:16,600 Speaker 9: So, we've got six prizes being awarded starting next week, 320 00:19:17,119 --> 00:19:19,760 Speaker 9: and each one of them can be shared by up 321 00:19:19,800 --> 00:19:23,640 Speaker 9: to three persons. With the Peace Prize, it can actually 322 00:19:23,720 --> 00:19:27,960 Speaker 9: also go to an organization. So it's a selection process 323 00:19:27,960 --> 00:19:31,320 Speaker 9: that is shrouded in secrecy. Who is considered for the 324 00:19:31,400 --> 00:19:36,120 Speaker 9: award is not known, and the list of people nominated 325 00:19:36,520 --> 00:19:40,920 Speaker 9: is sealed for fifty years. There's even some people who 326 00:19:40,920 --> 00:19:44,080 Speaker 9: get nominated dozens of times before they end up getting 327 00:19:44,119 --> 00:19:45,720 Speaker 9: the award or or not. 328 00:19:46,520 --> 00:19:49,200 Speaker 2: So remind us of what sort of work has won 329 00:19:49,280 --> 00:19:52,879 Speaker 2: in the past. Then, if the process is so secretive. 330 00:19:52,720 --> 00:19:56,119 Speaker 9: What we've got the science awards, you know, medicine or 331 00:19:56,160 --> 00:19:59,400 Speaker 9: physiologies one of them. We've got physics, we've got chemistry, 332 00:19:59,800 --> 00:20:02,520 Speaker 9: and these ones tend to award a lot of sort 333 00:20:02,520 --> 00:20:06,880 Speaker 9: of scientific work that is foundational science. It's things that 334 00:20:06,920 --> 00:20:10,320 Speaker 9: can underpin other discoveries, things that can be used in 335 00:20:10,359 --> 00:20:13,600 Speaker 9: a number of fields. So as an example, last year, 336 00:20:14,119 --> 00:20:18,280 Speaker 9: the Chemistry prize went to something that was called quantum dots, 337 00:20:18,480 --> 00:20:22,200 Speaker 9: and these are extremely tiny in animal particles that can 338 00:20:22,240 --> 00:20:25,440 Speaker 9: be used on things like TVs and lead lamps, or 339 00:20:25,480 --> 00:20:29,960 Speaker 9: they can guide surgeons when they've removed tumor tissue for example. 340 00:20:30,560 --> 00:20:34,120 Speaker 9: Some of the other discoveries that we have had, for example, 341 00:20:34,160 --> 00:20:38,840 Speaker 9: in medicine in twenty to ten you had individual fertilization. 342 00:20:39,200 --> 00:20:43,439 Speaker 9: When the award discoveries of various viruses such as the HIV, 343 00:20:44,080 --> 00:20:48,240 Speaker 9: the human papilloma viruses. They've also been awarded back in 344 00:20:48,280 --> 00:20:50,639 Speaker 9: the day and one hundred years ago the discovery of 345 00:20:50,720 --> 00:20:56,520 Speaker 9: insulin got the award. Now for physics, you also you 346 00:20:56,600 --> 00:20:59,639 Speaker 9: tend to get a lot of awards for science that 347 00:20:59,760 --> 00:21:03,600 Speaker 9: is indecipherable for a layman. But some years you get 348 00:21:03,640 --> 00:21:08,280 Speaker 9: things like the development of lithium ion batteries or you know, 349 00:21:08,359 --> 00:21:12,600 Speaker 9: some several several decades ago there was an award for 350 00:21:13,200 --> 00:21:17,600 Speaker 9: how to preserve animal fodder, so that keeps over winter. 351 00:21:18,160 --> 00:21:21,520 Speaker 9: For the Peace and the Literature Prize, it can really 352 00:21:21,600 --> 00:21:26,119 Speaker 9: vary what sort of work is awarded, but really really 353 00:21:26,160 --> 00:21:30,560 Speaker 9: it's supposed to award work that have had the greatest 354 00:21:30,640 --> 00:21:34,480 Speaker 9: benefits to humankind, as by the will of Alfred Noble. 355 00:21:35,000 --> 00:21:38,920 Speaker 2: In terms of the issues sometimes around the prize I 356 00:21:38,960 --> 00:21:44,960 Speaker 2: mean Norway has faced backlash for perhaps not the scientific 357 00:21:45,119 --> 00:21:48,440 Speaker 2: names as much, but certainly for the Nobel Peace Prize. 358 00:21:48,560 --> 00:21:50,159 Speaker 2: Is there a risk that there is going to be 359 00:21:50,240 --> 00:21:52,680 Speaker 2: some controversy maybe this year too well. 360 00:21:52,720 --> 00:21:55,440 Speaker 9: Definitely is that risk. So five of the prizes are 361 00:21:55,440 --> 00:21:58,520 Speaker 9: handed out in Sweden and the Peace Prize in Norway, 362 00:21:58,520 --> 00:22:01,920 Speaker 9: and this also according to Alfred Nobel's will that set 363 00:22:01,960 --> 00:22:05,960 Speaker 9: out these awards, and what we've seen in Norway. For example, 364 00:22:06,000 --> 00:22:10,960 Speaker 9: in twenty ten, prize was awarded to Chinese dissident Liu Chielbo, 365 00:22:11,640 --> 00:22:14,920 Speaker 9: and that really ended up straining China's ties with Norway, 366 00:22:15,680 --> 00:22:18,480 Speaker 9: and the Norwegian government had nothing to do with awarding 367 00:22:18,480 --> 00:22:21,920 Speaker 9: this prize, so it's taken years for them to improve 368 00:22:21,960 --> 00:22:25,760 Speaker 9: that relationship between the two countries. And so what tends 369 00:22:25,760 --> 00:22:29,359 Speaker 9: to happen is sometimes the Peace Prize goes to a contemporary, 370 00:22:29,480 --> 00:22:33,639 Speaker 9: a very highly controversial political actor, and in that case 371 00:22:33,720 --> 00:22:39,160 Speaker 9: that can drive a controversy. Or other times you see 372 00:22:39,480 --> 00:22:44,680 Speaker 9: more focus being put on some national conflict, for example, 373 00:22:44,720 --> 00:22:48,640 Speaker 9: and then local authorities interpret that as interference in their 374 00:22:48,720 --> 00:22:49,600 Speaker 9: national matters. 375 00:22:49,920 --> 00:22:52,080 Speaker 2: Who makes up the judging committee then. 376 00:22:52,680 --> 00:22:56,040 Speaker 9: You actually need to talk about a selection process with 377 00:22:56,080 --> 00:23:01,000 Speaker 9: this because it's not a competition as such. Prizes themselves 378 00:23:01,040 --> 00:23:05,160 Speaker 9: are awarded by a number of different institutions in Sweden 379 00:23:05,240 --> 00:23:08,280 Speaker 9: and then also in the Norway, and each of them 380 00:23:08,359 --> 00:23:11,320 Speaker 9: have a handful of voting members who ultimately get to 381 00:23:11,400 --> 00:23:14,720 Speaker 9: choose who it becomes a Nobel Laureate. How they get 382 00:23:14,760 --> 00:23:20,320 Speaker 9: the names though, is they send out requests to qualified 383 00:23:21,200 --> 00:23:25,680 Speaker 9: people who can nominate them. These include previous laureates, people 384 00:23:25,720 --> 00:23:29,920 Speaker 9: who've been awarded in the past, university professors in a 385 00:23:30,000 --> 00:23:33,040 Speaker 9: relevant subject in the Nordic countries for example, and they 386 00:23:33,040 --> 00:23:36,320 Speaker 9: could also just reach out to other scientists who they've 387 00:23:36,359 --> 00:23:41,440 Speaker 9: specifically selected to give their views, and then they draw 388 00:23:41,520 --> 00:23:45,240 Speaker 9: up you know, long list, shortlist, and ultimately there is 389 00:23:45,280 --> 00:23:45,760 Speaker 9: a vote. 390 00:23:46,240 --> 00:23:50,560 Speaker 2: Why do some people think then that the judging, the adjudication, 391 00:23:50,760 --> 00:23:54,080 Speaker 2: the thought around this, especially around the Peace Prize then 392 00:23:54,440 --> 00:23:59,600 Speaker 2: is kind of biased or maybe even influenced in terms 393 00:23:59,680 --> 00:24:02,240 Speaker 2: of the Nobel Prizes. How does that play out? 394 00:24:02,800 --> 00:24:06,919 Speaker 9: Controversies really from the politics surrounding this. So, for example, 395 00:24:06,920 --> 00:24:09,440 Speaker 9: if you look at the Peace Prize, when it gets 396 00:24:09,560 --> 00:24:14,080 Speaker 9: awarded to a dissident in a country, the government of 397 00:24:14,119 --> 00:24:18,040 Speaker 9: that country would likely feel that that is against them 398 00:24:18,480 --> 00:24:19,800 Speaker 9: and call a bias. 399 00:24:20,080 --> 00:24:23,600 Speaker 2: Is the Nobel still relevant? Does its influence on the 400 00:24:23,640 --> 00:24:24,840 Speaker 2: Nobel Prize winners? 401 00:24:25,240 --> 00:24:28,320 Speaker 9: I think many would argue that the Nobels are relevant. 402 00:24:28,440 --> 00:24:31,840 Speaker 9: There is a lot of prestige that comes with the prize, 403 00:24:32,160 --> 00:24:35,359 Speaker 9: and a lot of these laureates can actually, you know, 404 00:24:35,920 --> 00:24:38,720 Speaker 9: they can become superstars of the science world. It can 405 00:24:38,760 --> 00:24:42,800 Speaker 9: tremendously help the universities raise funds for peace laureates. It 406 00:24:42,880 --> 00:24:46,440 Speaker 9: shines a light on the cause that they are advocating for. 407 00:24:46,840 --> 00:24:50,280 Speaker 9: But there are some problems as well, and on the 408 00:24:50,320 --> 00:24:54,000 Speaker 9: science side. Really a big problem is that scientific research 409 00:24:54,080 --> 00:24:58,159 Speaker 9: is increasingly collaborative in nature, and so you don't have 410 00:24:58,280 --> 00:25:02,040 Speaker 9: these loan geniuses anymore. And when you can only give 411 00:25:02,080 --> 00:25:04,879 Speaker 9: the prize to up to three people, what do you 412 00:25:04,920 --> 00:25:07,280 Speaker 9: do in cases where the science is actually the papers 413 00:25:07,280 --> 00:25:09,919 Speaker 9: are written by hundreds, if not even thousands of people, 414 00:25:10,960 --> 00:25:14,399 Speaker 9: so it can feel rather hard to sell, like who's 415 00:25:14,440 --> 00:25:17,119 Speaker 9: the winner, why shouldn't another person get it? And then 416 00:25:17,280 --> 00:25:21,600 Speaker 9: additionally you can see discoveries being made simultaneously by different teams, 417 00:25:22,280 --> 00:25:25,120 Speaker 9: so they can feel unfair. Then also, one more thing 418 00:25:25,320 --> 00:25:27,240 Speaker 9: is that there are a lot of fields where there 419 00:25:27,280 --> 00:25:32,119 Speaker 9: is no Nobel Mathematics, computer science, climate, science. There is 420 00:25:32,160 --> 00:25:35,040 Speaker 9: no Nobel Prize for these because these were not set 421 00:25:35,080 --> 00:25:37,960 Speaker 9: out in the will of Alfred Nobel as the fields 422 00:25:37,960 --> 00:25:39,720 Speaker 9: for which there should be a prize. 423 00:25:39,880 --> 00:25:43,520 Speaker 2: My warm thanks to Bloomberg's Katty Poyan Paalo speaking to 424 00:25:43,560 --> 00:25:46,880 Speaker 2: me from Norway as we think about the Nobel Prizes 425 00:25:46,960 --> 00:25:51,159 Speaker 2: being awarded this year between the seventh and fourteenth of October. 426 00:25:51,760 --> 00:25:54,160 Speaker 2: I'm Kline Hepke here in London and you can catch 427 00:25:54,240 --> 00:25:56,840 Speaker 2: us every weekday morning for Bloomberg Daybreak you at beginning 428 00:25:56,840 --> 00:25:59,639 Speaker 2: at six am in London. That's one am on Wall Street. 429 00:25:59,720 --> 00:26:03,119 Speaker 1: Tom, Thanks Caroline, And coming up on Bloomberg day Break Weekend, 430 00:26:03,200 --> 00:26:06,240 Speaker 1: Japan's ruling party has a new leader. We'll discuss his 431 00:26:06,320 --> 00:26:07,760 Speaker 1: defense policy approach. 432 00:26:08,080 --> 00:26:08,439 Speaker 6: Next. 433 00:26:08,760 --> 00:26:22,880 Speaker 1: I'm Tom Busby and this is Bloomberg. This is Bloomberg 434 00:26:22,920 --> 00:26:24,960 Speaker 1: day Break Weekend, our global look ahead at the top 435 00:26:25,000 --> 00:26:27,800 Speaker 1: stories for investors in the coming week. I'm Tom Busby 436 00:26:27,840 --> 00:26:31,639 Speaker 1: in New York. Japan's ruling party has pict suregeru Ishiba 437 00:26:31,800 --> 00:26:34,400 Speaker 1: as its new leader in a surprise result. Let's get 438 00:26:34,400 --> 00:26:37,720 Speaker 1: to Bloomberg Daybreak Asia co host Brian Curtis to discuss 439 00:26:37,760 --> 00:26:40,280 Speaker 1: more on Aeshiba's defense policy approach. 440 00:26:40,720 --> 00:26:44,480 Speaker 3: Tom. Japan's new Prime Minister Shigoto Ishiba, floated the idea 441 00:26:44,640 --> 00:26:49,080 Speaker 3: of an Asian NATO security apparatus that could deter aggression 442 00:26:49,160 --> 00:26:53,119 Speaker 3: in the region. In essence, he believes that collective security 443 00:26:53,160 --> 00:26:57,200 Speaker 3: works best when it is obligatory. It's a plan that's 444 00:26:57,359 --> 00:27:00,879 Speaker 3: very much fraught with risk. China, for instance, has blasted 445 00:27:00,880 --> 00:27:03,880 Speaker 3: the idea of such an alliance. The US itself has 446 00:27:03,920 --> 00:27:07,000 Speaker 3: repeatedly said that it's not looking for the creation of 447 00:27:07,040 --> 00:27:12,200 Speaker 3: an Asian NATO, and India's Foreign Minister su Ramanyam Jaishankar 448 00:27:12,600 --> 00:27:16,600 Speaker 3: said that India is not sharing in this vision. So 449 00:27:16,680 --> 00:27:19,080 Speaker 3: the odds might be against the idea in the short term, 450 00:27:19,080 --> 00:27:22,560 Speaker 3: but nonetheless, Shigeto Ishiba has made it a top issue 451 00:27:22,840 --> 00:27:25,479 Speaker 3: and the LDP did elect him to be their leader 452 00:27:25,760 --> 00:27:28,359 Speaker 3: and he wants to explore it. As a result, we 453 00:27:28,480 --> 00:27:31,320 Speaker 3: too would like to examine it more closely and work 454 00:27:31,400 --> 00:27:34,120 Speaker 3: through some of the pros and cons of the framework. 455 00:27:34,600 --> 00:27:37,400 Speaker 3: Joining us now on the program is Bill Ferries, Bloomberg 456 00:27:37,440 --> 00:27:41,680 Speaker 3: Senior editor and Gerode Reedy, Bloomberg opinion columnist. To take 457 00:27:41,680 --> 00:27:44,800 Speaker 3: a closer look, Bill, let me start with you. It's 458 00:27:44,800 --> 00:27:48,520 Speaker 3: one of these ideas that seems perhaps good on paper, 459 00:27:48,680 --> 00:27:51,680 Speaker 3: but might be very difficult to implement. 460 00:27:52,040 --> 00:27:55,040 Speaker 10: If so, why well, I think when you look across Asia, 461 00:27:55,160 --> 00:27:57,359 Speaker 10: I mean, if you're really taking this idea of a 462 00:27:57,520 --> 00:28:02,399 Speaker 10: kind of a pan Asian security alliance seriously in the 463 00:28:02,400 --> 00:28:05,480 Speaker 10: way that you see kind of a traditional NATO concept 464 00:28:05,480 --> 00:28:09,040 Speaker 10: in Europe, there's some pretty big divergences in opinion in 465 00:28:09,119 --> 00:28:14,960 Speaker 10: terms of how to approach China, whether to join these 466 00:28:15,080 --> 00:28:18,359 Speaker 10: kind of blocks that might provoke China or might be 467 00:28:18,359 --> 00:28:22,200 Speaker 10: seen as provoking China versus just trying to ensure your 468 00:28:22,200 --> 00:28:24,840 Speaker 10: own collective defense. So, you know, I think we saw 469 00:28:24,880 --> 00:28:28,399 Speaker 10: that most dramatically, perhaps over the last several years with 470 00:28:28,480 --> 00:28:33,200 Speaker 10: the Philippines, which had a leader Rodrigo de Tte, who 471 00:28:33,520 --> 00:28:37,040 Speaker 10: really kind of started to turn his back on the 472 00:28:37,080 --> 00:28:41,960 Speaker 10: traditional US Philippines military alliance and really tried to work 473 00:28:41,960 --> 00:28:46,280 Speaker 10: a lot more closely with China, including on things like 474 00:28:46,320 --> 00:28:49,840 Speaker 10: the South China Sea. And then you have one election, 475 00:28:50,120 --> 00:28:54,280 Speaker 10: and the Philippines foreign policy and its approach towards China 476 00:28:54,280 --> 00:28:56,560 Speaker 10: and the US really went almost one hundred and eighty 477 00:28:56,600 --> 00:29:00,920 Speaker 10: degrees in the opposite direction, where the US military started 478 00:29:00,960 --> 00:29:05,680 Speaker 10: getting more access to Philippine military facilities, and there was 479 00:29:05,720 --> 00:29:08,920 Speaker 10: a much stronger, tighter alliance. So I think when you 480 00:29:08,960 --> 00:29:11,760 Speaker 10: look across Asia you do see kind of those differences. 481 00:29:11,840 --> 00:29:15,000 Speaker 10: So whereas when you talk about NATO and Europe having 482 00:29:15,080 --> 00:29:18,720 Speaker 10: I think it's thirty two members who are all agreed 483 00:29:18,760 --> 00:29:21,680 Speaker 10: to come to each other's collective defense when attacked, it's 484 00:29:21,680 --> 00:29:24,160 Speaker 10: a lot harder to imagine that kind of a framework 485 00:29:24,200 --> 00:29:29,360 Speaker 10: in Asia. Would South Korea really come to Japan's defensive attacked? Well, 486 00:29:29,680 --> 00:29:32,800 Speaker 10: you know some nations are they really interested in coming 487 00:29:32,880 --> 00:29:37,840 Speaker 10: to Taiwan's defense, particularly if attacked. So that's one reason 488 00:29:37,880 --> 00:29:41,240 Speaker 10: you just don't have more of the uniformity or views 489 00:29:41,280 --> 00:29:44,000 Speaker 10: about the common threat that you do. You did when 490 00:29:44,040 --> 00:29:47,000 Speaker 10: NATO was formed in the Soviet Union was looming over 491 00:29:47,120 --> 00:29:48,000 Speaker 10: much of Europe. 492 00:29:48,240 --> 00:29:51,280 Speaker 3: So Gerod we pose the idea at the beginning that 493 00:29:51,320 --> 00:29:54,640 Speaker 3: this is something that Issiba wants. Why does he want 494 00:29:54,640 --> 00:29:58,040 Speaker 3: it when it seems, as Bill suggested, so difficult to implement. 495 00:29:58,160 --> 00:29:59,800 Speaker 11: I think that's a very good question, and to be honest, 496 00:30:00,080 --> 00:30:02,600 Speaker 11: you know, I don't have a particularly good answer for this. 497 00:30:02,720 --> 00:30:06,160 Speaker 11: Ishiba is to my knowledge, the only you know, major 498 00:30:06,200 --> 00:30:09,440 Speaker 11: politician in Japan who is promoting this, and this is 499 00:30:09,480 --> 00:30:12,400 Speaker 11: one of you know, one of his you know, policies 500 00:30:12,440 --> 00:30:15,840 Speaker 11: that he has suggested. He's I mean, he outlined a 501 00:30:15,880 --> 00:30:18,200 Speaker 11: long time ago as well as over a decade that 502 00:30:18,280 --> 00:30:21,800 Speaker 11: he first sort of introduced the idea. But like a 503 00:30:21,840 --> 00:30:26,360 Speaker 11: lot of Ishiba's policies, obviously, most people were not expecting 504 00:30:26,440 --> 00:30:30,360 Speaker 11: him to win the election and become Prime minister, so 505 00:30:30,400 --> 00:30:32,760 Speaker 11: a lot of people are having to deal with and suddenly, 506 00:30:32,800 --> 00:30:35,240 Speaker 11: you know, look up what his policies actually are. And 507 00:30:35,280 --> 00:30:37,920 Speaker 11: I think what a lot of people are finding, including myself, 508 00:30:38,440 --> 00:30:41,640 Speaker 11: is that he has these ideas, but they aren't really 509 00:30:42,160 --> 00:30:45,600 Speaker 11: fleshed out. There isn't a lot of substance to them. 510 00:30:45,640 --> 00:30:48,040 Speaker 11: He talks about things like, you know, in terms of 511 00:30:48,080 --> 00:30:51,120 Speaker 11: his domestic policy, you know, he talks about you know, 512 00:30:51,480 --> 00:30:54,640 Speaker 11: revitalizing the regions. Okay, great idea, how do you go 513 00:30:54,680 --> 00:30:57,080 Speaker 11: about that? He hasn't said how he's going to do that. 514 00:30:57,520 --> 00:31:00,400 Speaker 11: In foreign policy, he talks about you know, Asian He 515 00:31:00,440 --> 00:31:04,680 Speaker 11: also talks about you know, reviewing the you know, the 516 00:31:05,360 --> 00:31:08,560 Speaker 11: security alliance with the US to make Japan a more 517 00:31:08,600 --> 00:31:12,400 Speaker 11: equal partner. Ye again, fine idea, how are you actually 518 00:31:12,440 --> 00:31:14,400 Speaker 11: going to go about that in practice? And I think, 519 00:31:14,440 --> 00:31:16,560 Speaker 11: you know, when it comes to Asian NATO is like, 520 00:31:16,720 --> 00:31:19,480 Speaker 11: assuming you did want to set this up, obviously, the 521 00:31:19,480 --> 00:31:21,360 Speaker 11: first thing that you need is the involvement and the 522 00:31:21,400 --> 00:31:23,720 Speaker 11: sign off of the United States, And when I thought, 523 00:31:23,840 --> 00:31:25,120 Speaker 11: it's not really going anywhere. 524 00:31:25,600 --> 00:31:27,920 Speaker 3: So it's difficult to get a real clear picture of 525 00:31:27,960 --> 00:31:30,120 Speaker 3: exactly who he is and what he wants. He seems 526 00:31:30,160 --> 00:31:33,000 Speaker 3: like an opposite, a polar opposite to the former Prime 527 00:31:33,040 --> 00:31:36,040 Speaker 3: Minister Shinzo Abe, who is pretty successful. One of the 528 00:31:36,040 --> 00:31:38,680 Speaker 3: things that Abbe really wanted was a strong Japan. It 529 00:31:38,800 --> 00:31:42,120 Speaker 3: seems that Ishiba does not have that same ambition. Is 530 00:31:42,160 --> 00:31:45,080 Speaker 3: that right? And how does that kind of figure into 531 00:31:45,280 --> 00:31:48,840 Speaker 3: wanting some sort of formalized security alliance if you're not 532 00:31:48,920 --> 00:31:52,040 Speaker 3: necessarily pushing for a very strong Japan itself. 533 00:31:52,240 --> 00:31:55,560 Speaker 11: I think the difference between Ishuba and Abbe is that, Yeah, 534 00:31:55,640 --> 00:32:00,520 Speaker 11: Abbe wanted a strong Japan that you know, projected. It's 535 00:32:00,600 --> 00:32:03,960 Speaker 11: that are that had the ability to project its force, 536 00:32:04,160 --> 00:32:06,880 Speaker 11: you know, so in line with what a large you know, 537 00:32:06,920 --> 00:32:09,480 Speaker 11: what a large country and what a large economy it is. 538 00:32:09,720 --> 00:32:14,000 Speaker 11: Ishiba seems a little bit more isolationist. Would would be 539 00:32:14,040 --> 00:32:17,120 Speaker 11: taking it too far, but I do think he wants 540 00:32:17,600 --> 00:32:22,600 Speaker 11: stability rather than you know, necessarily a Japan that can 541 00:32:22,720 --> 00:32:26,200 Speaker 11: exert its influence further in the region. And I guess 542 00:32:26,280 --> 00:32:28,840 Speaker 11: this is maybe where he has approached the idea of 543 00:32:29,000 --> 00:32:32,680 Speaker 11: Asian NATO from in that he's not incorrect to point 544 00:32:32,720 --> 00:32:34,800 Speaker 11: out that, you know, the reason that, you know, one 545 00:32:34,840 --> 00:32:36,760 Speaker 11: of the reasons that the Ukraine was invaded in other 546 00:32:36,800 --> 00:32:39,200 Speaker 11: countries haven't been invaded is because it wasn't a member 547 00:32:39,240 --> 00:32:42,360 Speaker 11: of NATO and didn't have those security guarantees. So I 548 00:32:42,400 --> 00:32:45,080 Speaker 11: think he is sort of a more like a safety 549 00:32:45,120 --> 00:32:49,520 Speaker 11: first kind of approach, certainly compared to Abbe. And you know, 550 00:32:49,960 --> 00:32:51,720 Speaker 11: as I say, like it is a fine idea to 551 00:32:51,760 --> 00:32:55,120 Speaker 11: say collective self defense would decrease the risk of any 552 00:32:55,200 --> 00:32:58,680 Speaker 11: one partner being involved. That's not an incorrect take to have, 553 00:32:59,080 --> 00:33:02,200 Speaker 11: It's just how how do you get there? I don't 554 00:33:02,200 --> 00:33:05,320 Speaker 11: believe he has articulated that within his own head, has 555 00:33:05,360 --> 00:33:06,200 Speaker 11: he decided. 556 00:33:05,840 --> 00:33:09,200 Speaker 3: That bill If he continues to talk about it, how 557 00:33:09,280 --> 00:33:12,760 Speaker 3: much would this increase tensions with the United States? And 558 00:33:13,400 --> 00:33:15,840 Speaker 3: I guess also part of that question is why would 559 00:33:15,880 --> 00:33:17,200 Speaker 3: the US oppose it. 560 00:33:17,200 --> 00:33:20,440 Speaker 10: It's interesting to have a leader in Japan who's espousing 561 00:33:20,480 --> 00:33:23,160 Speaker 10: these views now because I will say it, in some 562 00:33:23,240 --> 00:33:27,080 Speaker 10: ways it does dovetail with some of the trends that 563 00:33:27,120 --> 00:33:31,240 Speaker 10: we've seen in terms of, you know, the geopolitics of 564 00:33:31,280 --> 00:33:34,160 Speaker 10: the region. I mean, you've seen this trend over years 565 00:33:34,200 --> 00:33:37,480 Speaker 10: of Japan seeming to be a little bit more comfortable 566 00:33:37,800 --> 00:33:42,680 Speaker 10: promoting its own military kinds of missions, its military undertakes. 567 00:33:42,920 --> 00:33:45,440 Speaker 10: I mean, we just saw, you know, a Japanese ship 568 00:33:45,520 --> 00:33:49,760 Speaker 10: sailing through the Strait of Taiwan for the first time. 569 00:33:50,200 --> 00:33:54,600 Speaker 10: We have seen this bigger embrace with the US. You know, 570 00:33:54,920 --> 00:33:58,520 Speaker 10: Japan is now talking about improving some of its shipbuilding 571 00:33:58,640 --> 00:34:03,000 Speaker 10: ship repair facility for visiting US Navy ships. So I 572 00:34:03,040 --> 00:34:05,440 Speaker 10: think actually some of this, or quite a bit of 573 00:34:05,480 --> 00:34:08,920 Speaker 10: it might dovetail quite well if you're sitting in Washington 574 00:34:09,120 --> 00:34:12,960 Speaker 10: thinking about national security issues in Asia. I mean, you 575 00:34:14,760 --> 00:34:18,280 Speaker 10: want to have more partners in the region doing more 576 00:34:18,800 --> 00:34:22,719 Speaker 10: on defense, and frankly, it kind of dovetails well with 577 00:34:22,920 --> 00:34:25,279 Speaker 10: talking about the US election. Whoever wins. I mean, I 578 00:34:25,320 --> 00:34:29,399 Speaker 10: think there's been this Trumpification of foreign policy where there 579 00:34:29,440 --> 00:34:32,200 Speaker 10: was a lot of questions about whether the US under 580 00:34:32,280 --> 00:34:35,560 Speaker 10: Trump would really stand by some of these alliances. So 581 00:34:35,920 --> 00:34:39,240 Speaker 10: I think what we have in Japan now is talk about, well, listen, 582 00:34:39,280 --> 00:34:41,439 Speaker 10: we need to be able to do more on our own. 583 00:34:41,480 --> 00:34:43,640 Speaker 10: We need to be stronger at home, and a lot 584 00:34:43,680 --> 00:34:46,480 Speaker 10: of these policies, like building up the military budget, the 585 00:34:46,520 --> 00:34:49,759 Speaker 10: defense budget, that plays into that. It also plays well 586 00:34:49,800 --> 00:34:53,960 Speaker 10: into a more traditional foreign policy stance of the US 587 00:34:54,040 --> 00:34:56,399 Speaker 10: wants to work with partners in Asia. So I think 588 00:34:56,400 --> 00:34:58,400 Speaker 10: it's going to work pretty well with We're kind of 589 00:34:58,400 --> 00:34:59,920 Speaker 10: regardless of who's in the White House. 590 00:35:01,040 --> 00:35:03,920 Speaker 3: If there was some sort of security apparatus like this, 591 00:35:04,480 --> 00:35:06,839 Speaker 3: it would reduce the cost of the United States bill 592 00:35:07,040 --> 00:35:09,640 Speaker 3: in Asia, which might be seen as a good thing 593 00:35:09,719 --> 00:35:13,879 Speaker 3: by some Republicans, I guess because Trump has been big 594 00:35:13,920 --> 00:35:17,040 Speaker 3: on this. But would it diminish the influence of the 595 00:35:17,160 --> 00:35:19,399 Speaker 3: United States in the region. Is that one reason why 596 00:35:19,440 --> 00:35:22,839 Speaker 3: the US would be kind of careful about it. 597 00:35:23,320 --> 00:35:26,759 Speaker 10: Well, yeah, I think. I mean it's a little bit 598 00:35:26,760 --> 00:35:29,880 Speaker 10: of a hedge, I think on Japan's part, depending on 599 00:35:29,960 --> 00:35:32,759 Speaker 10: you know, we've seen US policies. I talked about how 600 00:35:32,800 --> 00:35:36,319 Speaker 10: the Philippines changed policy was with respect to China early on. 601 00:35:36,520 --> 00:35:38,640 Speaker 10: I mean, we've seen, you know, the US drastically go 602 00:35:38,719 --> 00:35:42,759 Speaker 10: in different directions in terms of how it approaches alliances. 603 00:35:42,840 --> 00:35:44,640 Speaker 10: And you know, Donald Trump spent a lot of time 604 00:35:44,719 --> 00:35:49,680 Speaker 10: saying Japan and South Korea just weren't spending enough on 605 00:35:49,760 --> 00:35:53,120 Speaker 10: their collective defense. They weren't paying enough for US troops. 606 00:35:53,880 --> 00:35:56,560 Speaker 10: So this is I think this approach we're seeing in 607 00:35:56,640 --> 00:35:59,120 Speaker 10: Japan is a little bit of an insurance policy to 608 00:35:59,280 --> 00:36:01,960 Speaker 10: kind of protect against that kind of a scenario. 609 00:36:02,080 --> 00:36:06,239 Speaker 3: Gerod, you say that the LDP had to skew radical 610 00:36:06,960 --> 00:36:09,680 Speaker 3: with this choice, and it did so, and you mentioned 611 00:36:09,719 --> 00:36:11,400 Speaker 3: that you know, this is a bit of a surprise, 612 00:36:12,080 --> 00:36:14,880 Speaker 3: So I guess it's kind of a radical idea to 613 00:36:14,960 --> 00:36:20,000 Speaker 3: pick shigetto Ishiba. What else about him kind of tilts 614 00:36:20,040 --> 00:36:20,640 Speaker 3: to radical. 615 00:36:20,880 --> 00:36:22,600 Speaker 11: I think he nailed it kind of earlier in the 616 00:36:22,600 --> 00:36:25,440 Speaker 11: conversation when you said that he's almost the anti Abbe 617 00:36:25,840 --> 00:36:29,040 Speaker 11: so within the party for close to a decade now, 618 00:36:29,120 --> 00:36:33,560 Speaker 11: he has been on the outskirts. Abbe famously defeated him 619 00:36:33,960 --> 00:36:37,800 Speaker 11: in twenty twelve to become the leader of the LDP 620 00:36:37,920 --> 00:36:40,400 Speaker 11: for the second time, and then shortly after that Abbe 621 00:36:40,440 --> 00:36:42,520 Speaker 11: became Prime minister when they. 622 00:36:42,440 --> 00:36:43,040 Speaker 6: Had the election. 623 00:36:43,239 --> 00:36:46,760 Speaker 11: Ishiba initially was kind of like welcomed in to Abbe's cabinet, 624 00:36:46,800 --> 00:36:49,640 Speaker 11: but he was always a sort of critical voice within it, 625 00:36:50,080 --> 00:36:53,160 Speaker 11: and then since around twenty fifteen, or twenty sixteen, I 626 00:36:53,160 --> 00:36:55,319 Speaker 11: can't remember exactly which. He has just been on the 627 00:36:55,360 --> 00:36:57,760 Speaker 11: outside and not involved in power. 628 00:36:57,880 --> 00:36:58,080 Speaker 6: You know. 629 00:36:58,120 --> 00:36:59,680 Speaker 11: As a result of this, he has just become sort 630 00:36:59,719 --> 00:37:02,680 Speaker 11: of more or a more critical voice within the LDP. 631 00:37:02,840 --> 00:37:05,200 Speaker 11: There are many people within the LDP who consider him 632 00:37:05,239 --> 00:37:08,640 Speaker 11: to be a traitor, not just for you know, being critical, 633 00:37:08,719 --> 00:37:11,080 Speaker 11: but you know he left the party once in the 634 00:37:11,120 --> 00:37:14,600 Speaker 11: nineteen nineties, only to come back to it later. I 635 00:37:14,640 --> 00:37:17,080 Speaker 11: do think that in a different, you know, a more 636 00:37:17,200 --> 00:37:19,960 Speaker 11: shall we say, a more normal leadership election, he would 637 00:37:20,000 --> 00:37:23,120 Speaker 11: not have had a chance to win. It was only 638 00:37:23,200 --> 00:37:27,520 Speaker 11: because the LDP is in such a bind between the 639 00:37:27,560 --> 00:37:33,520 Speaker 11: slush fund scandal, unification church issue, and Keishida's own lack 640 00:37:33,560 --> 00:37:37,440 Speaker 11: of popularity that they turned to someone like Ishiba, who is, 641 00:37:37,520 --> 00:37:41,560 Speaker 11: as I say, represents completely different wing of the LDP 642 00:37:42,080 --> 00:37:45,759 Speaker 11: to those that have dominated power for the last you know, 643 00:37:46,520 --> 00:37:50,480 Speaker 11: over a decade. Obviously, Abbe came from the right, Kishita 644 00:37:50,600 --> 00:37:54,560 Speaker 11: was more of a centrist, but without let's say, it's 645 00:37:54,560 --> 00:37:57,160 Speaker 11: sort of like a strong vision. Ishiba's election very much 646 00:37:57,160 --> 00:37:59,959 Speaker 11: turns the party to more of its you know, again, 647 00:38:00,160 --> 00:38:04,560 Speaker 11: the more lift leaning side. Obviously, he's still a conservative 648 00:38:04,560 --> 00:38:07,520 Speaker 11: politician and it's still a conservative party, but he represents 649 00:38:07,560 --> 00:38:09,799 Speaker 11: a very very different side from what people might be. 650 00:38:09,840 --> 00:38:12,279 Speaker 3: Us to grow. Thank you so much, Bill, You two, 651 00:38:12,480 --> 00:38:16,239 Speaker 3: Gerode Reedy. There Bloomberg opinion columnists with us along with 652 00:38:16,239 --> 00:38:19,880 Speaker 3: Bill Ferries, Bloomberg Senior Editor. I'm Brian Curtis, along with 653 00:38:19,960 --> 00:38:22,960 Speaker 3: Doug Krisner. You can catch us every weekday here for 654 00:38:23,000 --> 00:38:26,360 Speaker 3: Bloomberg Daybreak Asia, beginning at eight am in Hong Kong 655 00:38:26,440 --> 00:38:29,239 Speaker 3: and eight pm on Wall Street. Tom. 656 00:38:29,560 --> 00:38:31,839 Speaker 1: Thank you, Brian, and that does it for this edition 657 00:38:31,880 --> 00:38:34,759 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 658 00:38:34,760 --> 00:38:36,680 Speaker 1: at five am Wall Street time for the latest on 659 00:38:36,840 --> 00:38:39,680 Speaker 1: markets overseas and the news you need to start your day. 660 00:38:40,160 --> 00:38:43,280 Speaker 1: I'm Tom Busby. Stay with us. Top stories and global 661 00:38:43,320 --> 00:38:45,480 Speaker 1: business headlines are coming up right now.