1 00:00:02,040 --> 00:00:04,360 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:04,400 --> 00:00:06,480 Speaker 1: the top stories in the coming week from our day 3 00:00:06,480 --> 00:00:08,920 Speaker 1: Break anchors all around the world, and straight ahead on 4 00:00:08,960 --> 00:00:11,760 Speaker 1: the program. After the Fed's big rate cut, we look 5 00:00:11,760 --> 00:00:14,560 Speaker 1: ahead to a fresh reading on the Central banks preferred 6 00:00:14,760 --> 00:00:18,760 Speaker 1: measure of inflation PCE plus. Could the uneven housing market 7 00:00:18,800 --> 00:00:22,040 Speaker 1: see a boost with lower lending rates. I'm Tom Busby 8 00:00:22,120 --> 00:00:22,640 Speaker 1: in New York. 9 00:00:22,720 --> 00:00:24,840 Speaker 2: I'm callin heatgre in London, where we're looking ahead to 10 00:00:24,840 --> 00:00:28,440 Speaker 2: one of the most pivotal periods on the UK's political calendar. 11 00:00:28,600 --> 00:00:31,400 Speaker 3: I'm Brian Curtis in Hong Kong. A wide open race 12 00:00:31,480 --> 00:00:34,960 Speaker 3: in the upcoming LDP election in Japan narrows. 13 00:00:35,479 --> 00:00:39,440 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 14 00:00:39,479 --> 00:00:42,960 Speaker 4: eleve on three OW, New York, BLOOMBERGEN ninety nine to one, Washington, 15 00:00:43,080 --> 00:00:47,280 Speaker 4: d C, Bloombergen ninety two to nine, Boston, Bloomberg nine sixty, 16 00:00:47,360 --> 00:00:52,320 Speaker 4: San Francisco, DAB Digital Radio, London, Syris XM one twenty one, 17 00:00:52,360 --> 00:00:55,120 Speaker 4: and around the world on Bloomberg Radio dot com and 18 00:00:55,200 --> 00:00:56,720 Speaker 4: via the Bloomberg Business App. 19 00:01:00,240 --> 00:01:03,120 Speaker 1: I'm Tom Busby. We begin today's program with the Federal 20 00:01:03,120 --> 00:01:06,800 Speaker 1: reserve and inflation. Now, the FED cutting its benchmark lending 21 00:01:06,840 --> 00:01:10,560 Speaker 1: rate by fifty basis points this past Wednesday and hinting 22 00:01:10,600 --> 00:01:13,720 Speaker 1: it's not done yet, lowering rates two more FOMC meetings 23 00:01:13,800 --> 00:01:16,240 Speaker 1: this year. So what does the FED see in its 24 00:01:16,280 --> 00:01:19,559 Speaker 1: dot plot and is inflation really in check? For more 25 00:01:19,959 --> 00:01:23,759 Speaker 1: we turned out a Bloomberg economist, Stuart Paul, So start, 26 00:01:23,880 --> 00:01:27,600 Speaker 1: after that aggressive rate cut fifty basis points, what is 27 00:01:27,600 --> 00:01:28,720 Speaker 1: the FED thinking now? 28 00:01:29,319 --> 00:01:32,040 Speaker 5: The Fed was thinking that it was a bit behind 29 00:01:32,120 --> 00:01:34,320 Speaker 5: the curve and it was necessary to do a catch 30 00:01:34,360 --> 00:01:37,200 Speaker 5: up rate cut. The FED had been focusing on inflation 31 00:01:37,640 --> 00:01:40,959 Speaker 5: almost exclusively for a couple of years now, but the 32 00:01:40,959 --> 00:01:43,720 Speaker 5: balance of risks is now improved now. That's to say 33 00:01:43,760 --> 00:01:46,480 Speaker 5: that the risk of a surge in inflation in the 34 00:01:46,520 --> 00:01:49,720 Speaker 5: near term is pretty muted, but risk of deterioration in 35 00:01:49,760 --> 00:01:53,040 Speaker 5: the labor market is more at the forefront now, So 36 00:01:53,080 --> 00:01:55,680 Speaker 5: it is more important to do that catch up cut, 37 00:01:56,040 --> 00:01:58,360 Speaker 5: get the fifty basis points out of the way. But 38 00:01:58,560 --> 00:02:01,520 Speaker 5: looking ahead, it's like going to go at a slower cadence. 39 00:02:01,760 --> 00:02:04,960 Speaker 5: We're likely to see just two more modest twenty five 40 00:02:05,000 --> 00:02:08,200 Speaker 5: basis point cuts this year, in November and December, early 41 00:02:08,240 --> 00:02:09,680 Speaker 5: November and December. 42 00:02:09,880 --> 00:02:12,560 Speaker 1: And we're likely to see just four. 43 00:02:13,040 --> 00:02:15,960 Speaker 5: Twenty five basis point cuts next year, probably at a 44 00:02:16,000 --> 00:02:16,919 Speaker 5: quarterly cadence. 45 00:02:17,680 --> 00:02:21,800 Speaker 1: And does all this mean a soft landing. 46 00:02:22,880 --> 00:02:26,200 Speaker 5: Well, it depends exactly what you mean by a soft landing, right, Oh, 47 00:02:26,200 --> 00:02:30,160 Speaker 5: you tell me so. If we're expecting inflation to quickly 48 00:02:30,200 --> 00:02:33,120 Speaker 5: get back to the two percent target target without any 49 00:02:33,200 --> 00:02:37,120 Speaker 5: sort of a deterioration the labor market from here, not likely. 50 00:02:37,280 --> 00:02:40,920 Speaker 5: If we're expecting sort of that long last mile, but 51 00:02:41,560 --> 00:02:45,360 Speaker 5: nothing crazy in either the growth or labor market landscape, 52 00:02:45,600 --> 00:02:48,639 Speaker 5: but a tolerable but slow move back to the two 53 00:02:48,639 --> 00:02:52,000 Speaker 5: percent target. I think that's entirely possible. The things that 54 00:02:52,120 --> 00:02:55,399 Speaker 5: keep in mind, though, is that the labor market has 55 00:02:55,480 --> 00:02:58,200 Speaker 5: been cooling, so there is that upside risk to the 56 00:02:58,280 --> 00:03:01,920 Speaker 5: unemployment rate, and things just haven't been as good in 57 00:03:02,000 --> 00:03:04,360 Speaker 5: the labor market as some of the headline figures have 58 00:03:04,440 --> 00:03:07,160 Speaker 5: been suggesting for well over a year. The pace of 59 00:03:07,240 --> 00:03:10,280 Speaker 5: payrolls has not actually been as strong as the headline 60 00:03:10,280 --> 00:03:13,360 Speaker 5: figures have been saying each month, and they will be 61 00:03:13,480 --> 00:03:16,960 Speaker 5: revised down in due time. So it's more like a 62 00:03:17,000 --> 00:03:21,960 Speaker 5: soft ish landing, but we're not as likely to enter 63 00:03:22,040 --> 00:03:25,200 Speaker 5: a recession, That recession risk isn't nearly as potent as 64 00:03:25,240 --> 00:03:25,800 Speaker 5: it once was. 65 00:03:25,919 --> 00:03:28,280 Speaker 1: I mean, we're still adding jobs every month, just not 66 00:03:28,360 --> 00:03:30,560 Speaker 1: as many as we've seen in past months. 67 00:03:30,600 --> 00:03:33,600 Speaker 5: Correct, we're adding We're still adding jobs, we're adding them 68 00:03:33,600 --> 00:03:36,800 Speaker 5: at a slower pace, and we're probably not adding them 69 00:03:36,920 --> 00:03:39,680 Speaker 5: at a pace that's fast enough to keep the unemployment 70 00:03:39,800 --> 00:03:40,960 Speaker 5: rate totally steady. 71 00:03:41,480 --> 00:03:44,880 Speaker 1: But you've seen this focus now for the FED away 72 00:03:44,960 --> 00:03:48,640 Speaker 1: from inflation more toward the labor market. I mean, does 73 00:03:48,680 --> 00:03:50,720 Speaker 1: that tell you that they feel we are on the 74 00:03:50,800 --> 00:03:54,080 Speaker 1: right path for inflation, that it is in check in 75 00:03:54,080 --> 00:03:56,080 Speaker 1: a way. It's not at the two percent target, but 76 00:03:56,120 --> 00:03:59,000 Speaker 1: it's certainly heading that way. But the real threat rent now, 77 00:03:59,080 --> 00:04:01,160 Speaker 1: the real risk maybe the labor market. 78 00:04:01,400 --> 00:04:04,040 Speaker 5: That's right, So the real risk is the labor market. 79 00:04:04,040 --> 00:04:06,680 Speaker 5: Inflation has been in check. Most of the things that 80 00:04:06,720 --> 00:04:11,040 Speaker 5: have been supporting or undergirding inflation at this point are 81 00:04:11,080 --> 00:04:14,720 Speaker 5: things like shelter, so a critical a critical necessity for 82 00:04:14,800 --> 00:04:18,920 Speaker 5: consumers and something that's pretty sticky. Prices are pretty sticky 83 00:04:18,960 --> 00:04:22,279 Speaker 5: for shelter and some items services in particular that have 84 00:04:22,360 --> 00:04:25,400 Speaker 5: catch up inflation, things like auto insurance and homeowners insurance. 85 00:04:25,400 --> 00:04:27,440 Speaker 5: When the price of your car and the price of 86 00:04:27,480 --> 00:04:29,920 Speaker 5: your home go up, and the replacement cost of those 87 00:04:29,920 --> 00:04:32,760 Speaker 5: things go up, so too will the insurance premiums for 88 00:04:32,920 --> 00:04:36,120 Speaker 5: those items, and so we have that stickier inflation. Now, 89 00:04:36,160 --> 00:04:39,080 Speaker 5: that's why we're likely to see core inflation of zero 90 00:04:39,120 --> 00:04:41,680 Speaker 5: point two percent just to touch under zero point two 91 00:04:41,720 --> 00:04:43,760 Speaker 5: percent for the month of August. When we look at 92 00:04:43,800 --> 00:04:46,880 Speaker 5: the core PCE Price Index that's the FEDS preferred measure. 93 00:04:47,640 --> 00:04:49,800 Speaker 5: But again, because of some of those sticky items in 94 00:04:49,839 --> 00:04:53,000 Speaker 5: the core and because of unfavorable base effects over the 95 00:04:53,040 --> 00:04:56,120 Speaker 5: last year, we'll probably see an uptick in the annual 96 00:04:56,200 --> 00:04:59,039 Speaker 5: measure of core inflation when we get the August reading, 97 00:04:59,279 --> 00:05:01,800 Speaker 5: an uptick ti about two point seven percent from two 98 00:05:01,880 --> 00:05:05,480 Speaker 5: point six But again because of those sticky items, because 99 00:05:05,480 --> 00:05:08,279 Speaker 5: of the unfavorable base effects, the FED will probably fade 100 00:05:08,279 --> 00:05:08,760 Speaker 5: that reading. 101 00:05:09,400 --> 00:05:12,400 Speaker 1: So we've seen housing and you talked about insurance, but 102 00:05:12,920 --> 00:05:16,440 Speaker 1: energy prices at the gas pump, we've seen, you know, 103 00:05:17,200 --> 00:05:19,680 Speaker 1: a real dip just even in the past month, the 104 00:05:19,680 --> 00:05:22,440 Speaker 1: steady decline, but a real dip. Also volatile prices for 105 00:05:22,520 --> 00:05:25,279 Speaker 1: food they have stabilized, they haven't gotten any worse. So 106 00:05:26,040 --> 00:05:29,560 Speaker 1: could that mean, you know, could that show up in 107 00:05:29,640 --> 00:05:32,440 Speaker 1: the headline reading a lot better than expected, or you're 108 00:05:32,480 --> 00:05:36,200 Speaker 1: still saying all these other factors housing rents, you know, 109 00:05:36,600 --> 00:05:38,400 Speaker 1: are really going to keep things in check. 110 00:05:38,800 --> 00:05:40,359 Speaker 5: That's a good point. I think that you're right. I 111 00:05:40,360 --> 00:05:42,359 Speaker 5: think that the headline is going to be quite a 112 00:05:42,360 --> 00:05:45,200 Speaker 5: bit better. I think that on our best estimate is 113 00:05:45,240 --> 00:05:49,680 Speaker 5: that monthly headline pce inflation. So adding back in food 114 00:05:49,720 --> 00:05:53,600 Speaker 5: and energy, we expect the monthly headline inflation reading to 115 00:05:53,640 --> 00:05:56,720 Speaker 5: register to zero point one percent, so a bit slower 116 00:05:56,839 --> 00:05:59,240 Speaker 5: inflation for the headline than for the core. And we 117 00:05:59,279 --> 00:06:02,200 Speaker 5: also expect the annual measure to improve to about two 118 00:06:02,240 --> 00:06:04,839 Speaker 5: point two percent from two point five percent previously, So 119 00:06:05,520 --> 00:06:07,719 Speaker 5: headline's going to be a little bit better. Something to 120 00:06:07,800 --> 00:06:10,960 Speaker 5: keep in mind, though, is that the decline in gasoline prices, 121 00:06:10,960 --> 00:06:13,640 Speaker 5: which has been good for folks when they drive around 122 00:06:13,680 --> 00:06:16,720 Speaker 5: and see prices at the pump, it might actually support 123 00:06:16,800 --> 00:06:20,760 Speaker 5: sentiment a little bit. That's downstream of declining global energy prices, 124 00:06:21,120 --> 00:06:24,920 Speaker 5: and that's a consequence of expectations for slower global growth. 125 00:06:25,279 --> 00:06:27,760 Speaker 5: So again it just speaks to the FED being at 126 00:06:27,760 --> 00:06:30,560 Speaker 5: the at the right point in the rate cutting cycle, 127 00:06:30,560 --> 00:06:33,400 Speaker 5: getting started with that jumbo cut to try to support 128 00:06:33,400 --> 00:06:34,680 Speaker 5: global growth going forward. 129 00:06:35,400 --> 00:06:38,640 Speaker 1: Now, also out this week, August personal income and personal 130 00:06:38,760 --> 00:06:41,880 Speaker 1: spending data. Are people still spending? That is the question. 131 00:06:42,279 --> 00:06:44,039 Speaker 1: Are we going to see that in the personal incomes 132 00:06:44,080 --> 00:06:44,719 Speaker 1: and spending? 133 00:06:44,880 --> 00:06:47,159 Speaker 5: People are still spending, but they're quite a bit more 134 00:06:47,240 --> 00:06:49,960 Speaker 5: selective in what they're spending on. So we're still going 135 00:06:50,000 --> 00:06:53,839 Speaker 5: to see that increase in spending on housing, on healthcare. 136 00:06:54,160 --> 00:06:57,480 Speaker 5: But when we look more closely at goods in particular, 137 00:06:57,520 --> 00:07:00,800 Speaker 5: when we look at things like autos, look at things 138 00:07:00,920 --> 00:07:04,440 Speaker 5: like appliances and other home durables, things that are more 139 00:07:04,480 --> 00:07:07,640 Speaker 5: interest sensitive, consumers are getting a bit more selective. They're 140 00:07:07,680 --> 00:07:12,200 Speaker 5: also searching for bargains online as opposed to shopping more 141 00:07:12,200 --> 00:07:16,360 Speaker 5: frivolously just walking down Rodeo Drive. So we are again 142 00:07:16,480 --> 00:07:21,520 Speaker 5: seeing spending rising, but spending more so on necessities than 143 00:07:21,600 --> 00:07:23,160 Speaker 5: on discretionary categories. 144 00:07:23,440 --> 00:07:26,520 Speaker 1: All right, Well, the August PCE the Price Index out 145 00:07:26,520 --> 00:07:30,240 Speaker 1: this Friday are thanks to Stuart Paull of Bloomberg Economics. 146 00:07:30,520 --> 00:07:33,679 Speaker 1: While we turn now from inflation data to housing data. 147 00:07:33,680 --> 00:07:36,040 Speaker 1: With the interest rate cut from the Fed this past week, 148 00:07:36,480 --> 00:07:39,640 Speaker 1: will the uneven housing market get a boost through lower 149 00:07:39,680 --> 00:07:42,880 Speaker 1: lending rates, which have already been trending lower or are 150 00:07:43,000 --> 00:07:45,280 Speaker 1: rising home prices and a dearth of homes on the market, 151 00:07:45,520 --> 00:07:48,640 Speaker 1: squeezing too many would be buyers out of the marketplace. 152 00:07:49,000 --> 00:07:52,200 Speaker 1: For more, we're joined by Bloomberg Intelligence home builder analyst 153 00:07:52,640 --> 00:07:55,880 Speaker 1: Drew Reading. Now Drew Banks lenders they've been lowering the 154 00:07:55,960 --> 00:07:57,800 Speaker 1: rates for weeks. They're now at a two year low 155 00:07:57,840 --> 00:08:00,720 Speaker 1: averaging six point one five percent. But with this move 156 00:08:00,760 --> 00:08:02,880 Speaker 1: from the Fed last week, are they now poised to 157 00:08:02,960 --> 00:08:05,920 Speaker 1: edge even lower? And how long will it take before 158 00:08:05,960 --> 00:08:08,440 Speaker 1: we see those pre pandemic rates of three and a 159 00:08:08,480 --> 00:08:09,720 Speaker 1: half percent or so. 160 00:08:09,720 --> 00:08:12,800 Speaker 6: So, as you mentioned, mortgage rates have already been moving down. 161 00:08:12,880 --> 00:08:15,480 Speaker 6: They've really been coming down since late April when they 162 00:08:16,040 --> 00:08:18,000 Speaker 6: kind of peaked this year at seven and a half percent, 163 00:08:18,040 --> 00:08:20,960 Speaker 6: and then there's another move lower in July. So the 164 00:08:21,000 --> 00:08:23,800 Speaker 6: tenure yield and mortgage rates kind of anticipated what was 165 00:08:23,840 --> 00:08:25,920 Speaker 6: going to happen with the Fed. So I wouldn't expect 166 00:08:26,040 --> 00:08:28,200 Speaker 6: a whole lot more movement on the rate front in 167 00:08:28,280 --> 00:08:30,640 Speaker 6: the near term. In terms of when we think that's 168 00:08:30,680 --> 00:08:32,680 Speaker 6: going to start to impact the market, I think we 169 00:08:32,720 --> 00:08:35,720 Speaker 6: already have. You know, there hasn't been a massive shift 170 00:08:35,760 --> 00:08:38,040 Speaker 6: in demand to this point, but we have seen a 171 00:08:38,120 --> 00:08:40,480 Speaker 6: market that continues the trend in the right direction, and 172 00:08:40,480 --> 00:08:45,000 Speaker 6: we saw a pickup in mortgage purchase applications. We saw 173 00:08:45,040 --> 00:08:47,720 Speaker 6: a little bit better data on housing starts, so I 174 00:08:47,720 --> 00:08:51,640 Speaker 6: think we are starting to see the benefit from those 175 00:08:51,720 --> 00:08:52,319 Speaker 6: lower rates. 176 00:08:52,480 --> 00:08:55,640 Speaker 1: Yeah, those green shoots. What is behind that jump though, 177 00:08:55,640 --> 00:08:58,319 Speaker 1: when housing starts, I mean that was a pretty significant 178 00:08:58,400 --> 00:09:00,880 Speaker 1: leap from August. 179 00:09:00,120 --> 00:09:01,640 Speaker 6: Of it had to do with the bounce back from 180 00:09:01,720 --> 00:09:04,319 Speaker 6: weather in the prior month, so that's certainly part of it. 181 00:09:04,640 --> 00:09:07,320 Speaker 6: The other thing to remember is that builders have really 182 00:09:07,360 --> 00:09:10,160 Speaker 6: been trying to align their production so starts, with what 183 00:09:10,200 --> 00:09:12,959 Speaker 6: they're seeing in the demand environment. So as demand has 184 00:09:12,960 --> 00:09:15,400 Speaker 6: started to pick up after kind of a lull in 185 00:09:15,440 --> 00:09:18,520 Speaker 6: the summer, I think you're starting to see the corresponding 186 00:09:18,600 --> 00:09:20,000 Speaker 6: increase in housing activity. 187 00:09:20,760 --> 00:09:24,720 Speaker 1: Now. Builder confidence had also been moving higher. They must 188 00:09:24,760 --> 00:09:27,640 Speaker 1: be through the roof right now after this rate cut, 189 00:09:27,760 --> 00:09:31,880 Speaker 1: and you know, all these these indications that things are 190 00:09:31,920 --> 00:09:32,439 Speaker 1: picking up. 191 00:09:32,760 --> 00:09:35,600 Speaker 6: Yeah, I mean, expectations pretty much across the board or 192 00:09:35,600 --> 00:09:37,920 Speaker 6: that in the next several months we should see demand 193 00:09:38,320 --> 00:09:42,080 Speaker 6: perk up even further. What's interesting for the builders, as 194 00:09:42,080 --> 00:09:44,679 Speaker 6: we've discussed in the past, is they've had a lot 195 00:09:44,720 --> 00:09:47,280 Speaker 6: of success even when the market was slow by buying 196 00:09:47,320 --> 00:09:50,440 Speaker 6: down mortgage rates. So they've been doing pretty well over 197 00:09:50,440 --> 00:09:52,920 Speaker 6: the last several months, and we think that with rates 198 00:09:52,920 --> 00:09:55,239 Speaker 6: starting to come back down, they may have an opportunity 199 00:09:55,600 --> 00:09:58,000 Speaker 6: to kind of dial back their use of sales incentives, 200 00:09:58,040 --> 00:10:00,640 Speaker 6: which if you think bigger pictures for the public come builders, 201 00:10:00,640 --> 00:10:02,480 Speaker 6: that could be a benefit to the margin side. 202 00:10:02,679 --> 00:10:05,200 Speaker 1: Now in the week ahead, there's a lot more housing 203 00:10:05,280 --> 00:10:08,400 Speaker 1: data coming out new home sales, pending home sales for August, 204 00:10:08,679 --> 00:10:11,840 Speaker 1: also home prices for July. Are you expecting to see 205 00:10:11,880 --> 00:10:14,439 Speaker 1: any more positive trends in all that data? 206 00:10:14,559 --> 00:10:16,400 Speaker 6: Yeah. With the new home sales, I expect to see 207 00:10:16,400 --> 00:10:18,440 Speaker 6: a market that continues to trend in the right direction. 208 00:10:18,480 --> 00:10:22,600 Speaker 6: As they said earlier, we got some purchase applications specific 209 00:10:22,720 --> 00:10:26,080 Speaker 6: to the new home market not too long ago, and 210 00:10:26,080 --> 00:10:28,880 Speaker 6: what that showed us is that demand in August was 211 00:10:28,920 --> 00:10:31,680 Speaker 6: actually the strongest for this time of the year since 212 00:10:31,800 --> 00:10:35,000 Speaker 6: twenty twenty, So that's a real positive indication for the market. 213 00:10:35,559 --> 00:10:37,840 Speaker 6: We had some data on existing home sales which was 214 00:10:37,880 --> 00:10:39,680 Speaker 6: a little soft, but what you have to remember is 215 00:10:39,720 --> 00:10:43,200 Speaker 6: that represents closings, so that likely reflects deals that were 216 00:10:43,200 --> 00:10:45,800 Speaker 6: signed in June and July when rates were still in 217 00:10:45,840 --> 00:10:47,079 Speaker 6: that seven percent range. 218 00:10:47,120 --> 00:10:49,880 Speaker 1: Now that existing home sales that was last Thursday are 219 00:10:50,120 --> 00:10:53,120 Speaker 1: is it still a problem that people are not putting 220 00:10:53,160 --> 00:10:56,079 Speaker 1: the houses up for sale, you know, because of the 221 00:10:56,559 --> 00:10:59,360 Speaker 1: rates are down. Six point five percent is great, but 222 00:10:59,440 --> 00:11:03,120 Speaker 1: it's still double if you had your mortgage ten years ago, 223 00:11:03,320 --> 00:11:06,760 Speaker 1: you know. I mean, are people still you know, not 224 00:11:06,880 --> 00:11:08,840 Speaker 1: putting their homes up for sale afraid to buy a 225 00:11:08,840 --> 00:11:10,640 Speaker 1: new one at those high rates. 226 00:11:11,120 --> 00:11:13,680 Speaker 6: Yeah, it's a great question, and there's a lot of 227 00:11:13,679 --> 00:11:16,320 Speaker 6: disincentive for kurrent homeowner who doesn't need to move to 228 00:11:16,320 --> 00:11:18,400 Speaker 6: put their house on the market and taking a higher rate. 229 00:11:18,880 --> 00:11:22,479 Speaker 6: If you look at kind of the composition of outstanding mortgages, 230 00:11:22,880 --> 00:11:25,360 Speaker 6: more than eighty percent have a rate below five percent 231 00:11:25,400 --> 00:11:28,480 Speaker 6: and sixty five percent or below four percent. So I 232 00:11:28,480 --> 00:11:32,480 Speaker 6: think that that lock and rate, you know, is still 233 00:11:32,480 --> 00:11:34,640 Speaker 6: a factor. I think it will start start to loosen 234 00:11:34,760 --> 00:11:36,559 Speaker 6: up as we get through the year and into next 235 00:11:36,640 --> 00:11:39,280 Speaker 6: year because people have been transacting at these higher rates. 236 00:11:40,559 --> 00:11:43,200 Speaker 6: So it's definitely a concern, but I do think that 237 00:11:43,400 --> 00:11:45,800 Speaker 6: it starts to ease a little bit as we get 238 00:11:45,800 --> 00:11:46,520 Speaker 6: into next year. 239 00:11:47,400 --> 00:11:50,120 Speaker 1: Now, speaking of next year, you've reported that home sales 240 00:11:50,280 --> 00:11:55,160 Speaker 1: typically move higher after a presidential election. Why is that 241 00:11:55,280 --> 00:11:57,760 Speaker 1: and are you expecting to see that no matter who 242 00:11:57,760 --> 00:11:59,199 Speaker 1: wins the White House in November? 243 00:11:59,720 --> 00:12:02,800 Speaker 6: Yes, So when we looked at what happens typically in 244 00:12:02,880 --> 00:12:06,319 Speaker 6: an election year, you know, there's not a whole heck 245 00:12:06,360 --> 00:12:08,200 Speaker 6: of a lot of impact on home sales. I know, 246 00:12:08,559 --> 00:12:11,160 Speaker 6: you know, there could be an impact on confidence, maybe 247 00:12:11,160 --> 00:12:12,880 Speaker 6: that impact that kind of the lull we saw in 248 00:12:12,920 --> 00:12:15,720 Speaker 6: the summer, But really the point was to show that 249 00:12:15,840 --> 00:12:20,040 Speaker 6: regardless of what party ends up winning, home sales have 250 00:12:20,160 --> 00:12:22,280 Speaker 6: had success in the following year. And I think, you know, 251 00:12:22,320 --> 00:12:24,599 Speaker 6: there's other factors at play, certainly what's happening with the 252 00:12:24,600 --> 00:12:27,080 Speaker 6: broader economy and what's happening with rates. And I think, 253 00:12:27,559 --> 00:12:29,760 Speaker 6: you know, if we do kind of get this soft 254 00:12:29,840 --> 00:12:32,959 Speaker 6: landing that we're talking about and rates, you know, remain 255 00:12:33,000 --> 00:12:35,600 Speaker 6: in the low six percent range, even fall into the 256 00:12:35,600 --> 00:12:37,760 Speaker 6: five percent range, I think home sales should do pretty 257 00:12:37,800 --> 00:12:38,440 Speaker 6: well next year. 258 00:12:38,720 --> 00:12:41,520 Speaker 1: Well, a lot to look forward to, Bloomberg Intelligence home 259 00:12:41,559 --> 00:12:44,880 Speaker 1: builder analyst Drew Redding, thanks for joining us and coming 260 00:12:44,920 --> 00:12:47,040 Speaker 1: up on Bloomberg Day Break weekend, we look ahead to 261 00:12:47,080 --> 00:12:51,400 Speaker 1: one of the most pivotable periods on the UK's political calendar. 262 00:12:51,679 --> 00:13:05,160 Speaker 1: I'm Tom Busby and This is Bloomberg. This is Bloomberg 263 00:13:05,200 --> 00:13:07,720 Speaker 1: Daybreak weekend, our global look ahead at the top stories 264 00:13:07,720 --> 00:13:10,560 Speaker 1: for investors in the coming week. I'm Tom Busby in 265 00:13:10,600 --> 00:13:12,800 Speaker 1: New York. Up later in our program we head to 266 00:13:12,800 --> 00:13:16,320 Speaker 1: Asia and preview the race to become Japan's next Prime minister. 267 00:13:16,440 --> 00:13:19,280 Speaker 1: But first in the coming days, the UK's most powerful 268 00:13:19,280 --> 00:13:23,480 Speaker 1: politicians will vacate the Palace of Westminster for their party 269 00:13:23,520 --> 00:13:26,120 Speaker 1: conferences all around the country. It's a pivotal time for 270 00:13:26,160 --> 00:13:29,400 Speaker 1: the ruling Labor Party as it prepares for its first budget, 271 00:13:29,800 --> 00:13:32,520 Speaker 1: and as the Conservative Party licks its wounds and crowns 272 00:13:32,559 --> 00:13:33,160 Speaker 1: a new leader. 273 00:13:33,240 --> 00:13:33,640 Speaker 3: For more. 274 00:13:33,760 --> 00:13:36,079 Speaker 1: Let's go to London and bring in Bloomberg Daybreak europe 275 00:13:36,080 --> 00:13:38,160 Speaker 1: Banker Caroline Hepker Tom. 276 00:13:38,280 --> 00:13:42,680 Speaker 2: After the summer's general election and landslide Labor victory, UK 277 00:13:42,800 --> 00:13:46,160 Speaker 2: politics is settling into its back to school rhythm, with 278 00:13:46,320 --> 00:13:48,800 Speaker 2: a new party and a new prime minister at the helm. 279 00:13:49,280 --> 00:13:53,240 Speaker 2: A staple of the autumnal political calendar is, of course, 280 00:13:53,360 --> 00:13:57,400 Speaker 2: party conference season, where members gather to regroup and reflect 281 00:13:57,480 --> 00:14:01,559 Speaker 2: on the year ahead. Traditionally the health in historic seaside 282 00:14:01,600 --> 00:14:06,000 Speaker 2: resorts like Blackpool and Brighton, the gatherings can often give 283 00:14:06,120 --> 00:14:09,520 Speaker 2: rise to a gender, setting events and turn young talent 284 00:14:09,640 --> 00:14:13,320 Speaker 2: into rising stars. This year conference season falls at a 285 00:14:13,360 --> 00:14:16,880 Speaker 2: critical time for the two biggest parties in Parliament. Dust 286 00:14:16,920 --> 00:14:21,080 Speaker 2: is settling on the Labour Party's emphatic July election victory, 287 00:14:21,360 --> 00:14:26,720 Speaker 2: as jubilation turns to expectation and the economic reality facing 288 00:14:26,760 --> 00:14:30,920 Speaker 2: the government. On economic decisions, Kirs Starmer has already faced 289 00:14:31,040 --> 00:14:35,400 Speaker 2: fervent opposition to what his party has called difficult decisions 290 00:14:35,640 --> 00:14:39,440 Speaker 2: to means test the winter fuel allowance that is granted 291 00:14:39,800 --> 00:14:43,920 Speaker 2: to pensioners, and also to maintain the cap on benefits 292 00:14:43,960 --> 00:14:48,120 Speaker 2: for families to a maximum of two children. The first 293 00:14:48,160 --> 00:14:52,720 Speaker 2: test four Starmer's administration will come in the government's inaugural 294 00:14:52,800 --> 00:14:56,600 Speaker 2: budget on the thirtieth of October, but first he must 295 00:14:56,640 --> 00:15:00,680 Speaker 2: convince his party that he has a plan. Meanwhile, the 296 00:15:00,720 --> 00:15:04,960 Speaker 2: Conservatives will face a different question altogether at their gathering 297 00:15:05,040 --> 00:15:08,720 Speaker 2: in Birmingham, the future direction of the party, as Tory 298 00:15:08,840 --> 00:15:12,600 Speaker 2: members consider who to anoint their next leader. For the 299 00:15:12,640 --> 00:15:16,320 Speaker 2: Liberal Democrats, who have already concluded their conference in Bournemouth, 300 00:15:16,360 --> 00:15:19,720 Speaker 2: the issue has been where now after the party secured 301 00:15:19,720 --> 00:15:23,400 Speaker 2: and historic seventy two seats in the vote in July. 302 00:15:23,840 --> 00:15:26,400 Speaker 2: It's something that I have been discussing on the Bloomberg 303 00:15:26,520 --> 00:15:30,840 Speaker 2: UK Partics podcast with the former lib Dem leader, so 304 00:15:31,000 --> 00:15:31,760 Speaker 2: Vince Cable. 305 00:15:32,280 --> 00:15:36,400 Speaker 7: First priority will be to consolidate the base that's already 306 00:15:36,440 --> 00:15:40,560 Speaker 7: built up. And you know these are relatively high income 307 00:15:40,640 --> 00:15:44,800 Speaker 7: South of England, suburban rural. I mean, it's a very 308 00:15:44,840 --> 00:15:50,040 Speaker 7: clear constituency, it's not undifferentiated, but that this is not, 309 00:15:50,080 --> 00:15:54,360 Speaker 7: as it were, not natural center left territory. But what 310 00:15:54,440 --> 00:15:58,239 Speaker 7: Libdems are very good at is digging in doing extremely 311 00:15:58,280 --> 00:16:02,200 Speaker 7: good local camper in constituency work. And I would think 312 00:16:02,280 --> 00:16:06,720 Speaker 7: that unless there's some terrible misfortune, that they should be 313 00:16:06,720 --> 00:16:10,360 Speaker 7: able to hold on to the overwhelming bulk of these 314 00:16:10,440 --> 00:16:14,760 Speaker 7: by the next election. But the libdems fortunes in large part, 315 00:16:14,840 --> 00:16:17,200 Speaker 7: I think depend on what happens to the other the 316 00:16:17,280 --> 00:16:21,280 Speaker 7: two major parties. I mean, the Conservative Party, if they 317 00:16:21,520 --> 00:16:24,240 Speaker 7: make a bad choice of leaders, if they continue to 318 00:16:24,320 --> 00:16:27,240 Speaker 7: behave the way they have in recent years, is going 319 00:16:27,280 --> 00:16:30,720 Speaker 7: to continue to flounder. They lose support to us in 320 00:16:30,800 --> 00:16:34,160 Speaker 7: their heartlands, and they could make no progress on the 321 00:16:34,200 --> 00:16:39,320 Speaker 7: other front because reform is gobbling up the populist nationalist vote, 322 00:16:40,320 --> 00:16:42,920 Speaker 7: and that the Tory Party could find itself in a 323 00:16:43,000 --> 00:16:46,320 Speaker 7: kind of existential crisis. I mean, we don't know, but 324 00:16:46,400 --> 00:16:50,440 Speaker 7: that could well happen. Then in terms of labor. They 325 00:16:50,480 --> 00:16:53,280 Speaker 7: are clearly already losing support, and they're going to lose 326 00:16:53,320 --> 00:16:57,040 Speaker 7: support in the four hundred plus seats that they won 327 00:16:57,120 --> 00:17:00,200 Speaker 7: at the last election. But the question then is where 328 00:17:00,240 --> 00:17:02,760 Speaker 7: will it go? I mean, will it go to reform 329 00:17:02,880 --> 00:17:06,680 Speaker 7: if they get better organized. Nigel Farage is a good 330 00:17:06,760 --> 00:17:12,000 Speaker 7: TV personality but clearly not an organizational junius. Or could 331 00:17:12,000 --> 00:17:16,480 Speaker 7: it go to the dissident left, the reborn Corby Knights 332 00:17:16,720 --> 00:17:17,880 Speaker 7: or the Green Party. 333 00:17:18,000 --> 00:17:20,640 Speaker 2: Okay, okay, but hang on a second. Let's cut through 334 00:17:20,640 --> 00:17:22,800 Speaker 2: this a little bit and say is there appetite in 335 00:17:22,800 --> 00:17:26,320 Speaker 2: the Liberal Democrats for leadership? Because there was a glimmer 336 00:17:26,320 --> 00:17:28,520 Speaker 2: of it in the election campaign? Is there now? 337 00:17:29,080 --> 00:17:29,280 Speaker 6: Oh? 338 00:17:29,320 --> 00:17:32,639 Speaker 7: I think so. I mean, I think the mantra which 339 00:17:32,720 --> 00:17:37,680 Speaker 7: is a good mantra. It's a constructive opposition. I don't 340 00:17:37,720 --> 00:17:41,600 Speaker 7: think we just want to go around you cashing in 341 00:17:41,640 --> 00:17:45,320 Speaker 7: on every drift in the public mood. I want to 342 00:17:45,320 --> 00:17:47,879 Speaker 7: play a show that we can be a force in 343 00:17:48,000 --> 00:17:52,920 Speaker 7: Parliament and building on the base that we've already got. 344 00:17:53,520 --> 00:17:57,080 Speaker 2: That was the former Liberal Democrat leader and former Business 345 00:17:57,119 --> 00:18:00,359 Speaker 2: Secretary Vince Cable speaking to me ant Ewan on the 346 00:18:00,359 --> 00:18:04,760 Speaker 2: Bloomberg UK Politics podcast. So what is in store for 347 00:18:04,920 --> 00:18:08,560 Speaker 2: the UK's most powerful politicians then when they gather in 348 00:18:08,600 --> 00:18:12,680 Speaker 2: the coming days, I've been asking Bloomberg's associate editor Alva Ray. 349 00:18:13,000 --> 00:18:16,919 Speaker 2: We started by discussing where Keir Starmer is heading into 350 00:18:17,040 --> 00:18:18,119 Speaker 2: his party's event. 351 00:18:18,680 --> 00:18:22,639 Speaker 8: He's having, i'd say, at a rocky time at the moment, 352 00:18:23,640 --> 00:18:27,840 Speaker 8: his party is being slightly rocked by allegations of cronyism, 353 00:18:28,080 --> 00:18:31,480 Speaker 8: a lot of scrutiny of gifts and freebies that the 354 00:18:31,520 --> 00:18:35,680 Speaker 8: Prime Minister has received, and scrutiny of a wonder owner 355 00:18:35,760 --> 00:18:40,080 Speaker 8: in particular Wahidali, who we have profiled on Bloomberg and 356 00:18:42,280 --> 00:18:46,040 Speaker 8: revealed some things about in stories in the past few weeks. 357 00:18:46,119 --> 00:18:48,960 Speaker 8: But there's sort of other challenges for Keir Starmer that 358 00:18:49,760 --> 00:18:52,560 Speaker 8: there's a lot of tension among his top advisors and 359 00:18:52,680 --> 00:18:57,440 Speaker 8: so his chief of staff, Sue Gray, has been named 360 00:18:57,480 --> 00:19:00,120 Speaker 8: in a BBC story. The story itself is less import 361 00:19:00,320 --> 00:19:03,040 Speaker 8: than the fact that she has been targeted by colleagues 362 00:19:03,080 --> 00:19:07,240 Speaker 8: for quite a an aggressive briefing. So he's dealing with 363 00:19:07,320 --> 00:19:11,840 Speaker 8: quite a lot of discontent and sort of difficult stories 364 00:19:12,240 --> 00:19:14,000 Speaker 8: so soon into his premiership. 365 00:19:14,000 --> 00:19:17,280 Speaker 9: I mean he only won the election in July. 366 00:19:18,200 --> 00:19:21,920 Speaker 8: But then also they're quite quite substantial fiscal difficulties, so 367 00:19:21,960 --> 00:19:23,200 Speaker 8: I'm sure we'll come on to talk about. 368 00:19:24,160 --> 00:19:27,920 Speaker 2: Yeah, and this idea of factionalism, of divisions within the 369 00:19:27,960 --> 00:19:31,960 Speaker 2: labor parties. You say, very recently elected, do you think 370 00:19:31,960 --> 00:19:34,359 Speaker 2: that that will mean there'll be a big focus on 371 00:19:34,480 --> 00:19:37,719 Speaker 2: party unity? I mean also there has already been in 372 00:19:37,760 --> 00:19:42,080 Speaker 2: the actual parliamentary session. There's been rebellion already over policy. 373 00:19:42,200 --> 00:19:44,600 Speaker 2: So do you think there'll be a sort of focus 374 00:19:44,760 --> 00:19:49,000 Speaker 2: on trying to I mean, a surely celebrate the recent 375 00:19:49,119 --> 00:19:52,439 Speaker 2: victory at the party conference, but then also try to 376 00:19:52,640 --> 00:19:53,760 Speaker 2: unify the party. 377 00:19:53,920 --> 00:19:57,679 Speaker 8: It's not so much factionalism in the way that we 378 00:19:57,720 --> 00:20:02,160 Speaker 8: would have seen under perhaps Ermie Corbyn's leadership. It's more 379 00:20:02,240 --> 00:20:05,439 Speaker 8: sort of just tension, tensions on an individual level between 380 00:20:05,880 --> 00:20:06,879 Speaker 8: individual people. 381 00:20:07,200 --> 00:20:09,440 Speaker 9: But as you say, there has been. 382 00:20:10,119 --> 00:20:13,719 Speaker 8: A bit of tension already, and there's been a rebellion 383 00:20:14,320 --> 00:20:17,639 Speaker 8: over this issue of the Winter Fuel Alliance, which is 384 00:20:17,640 --> 00:20:19,800 Speaker 8: a sort of benefit given to pensioners to pay for 385 00:20:19,840 --> 00:20:23,280 Speaker 8: their heating bills in the winter. Rachel reeves the incoming 386 00:20:23,359 --> 00:20:28,680 Speaker 8: chancellor has decided to means test that she announced that 387 00:20:29,080 --> 00:20:32,919 Speaker 8: before the summer and was clearly not expecting the backlash 388 00:20:33,080 --> 00:20:37,639 Speaker 8: that she received. So even though they have passed that 389 00:20:37,840 --> 00:20:40,320 Speaker 8: now and that will that will go ahead. 390 00:20:40,480 --> 00:20:42,480 Speaker 9: Lots of labor MPs abstained. 391 00:20:42,680 --> 00:20:46,840 Speaker 8: Some cabinet ministers anonymously told news outlets that they were 392 00:20:47,200 --> 00:20:50,720 Speaker 8: nervous about the decision. And essentially this decision has has 393 00:20:50,760 --> 00:20:55,520 Speaker 8: expended a lot of political capital very early on, and 394 00:20:55,600 --> 00:20:58,960 Speaker 8: it makes all the all the decisions that are coming 395 00:20:59,080 --> 00:21:02,280 Speaker 8: quite difficult. Because Rachel Riefs still has to deliver a 396 00:21:02,400 --> 00:21:05,240 Speaker 8: very difficult budget. She's been speaking about twenty two billion 397 00:21:05,280 --> 00:21:09,240 Speaker 8: black hole in the public finances. She's asking cabinet ministers 398 00:21:09,280 --> 00:21:11,919 Speaker 8: to look for cuts in their departments. We'll see a 399 00:21:11,920 --> 00:21:16,080 Speaker 8: lot of conference probably of individual cabinet ministers hinting that 400 00:21:16,119 --> 00:21:19,200 Speaker 8: they want more money for ailing public services, for prisons, 401 00:21:19,200 --> 00:21:22,640 Speaker 8: for the health service, for transport. I think there will 402 00:21:22,680 --> 00:21:28,800 Speaker 8: be a lot of tension and kind of bartering for goodies. 403 00:21:28,119 --> 00:21:28,760 Speaker 9: In the budget. 404 00:21:29,320 --> 00:21:31,879 Speaker 8: But I think because it is so early on, the 405 00:21:32,520 --> 00:21:37,919 Speaker 8: party is still feeling united behind Keir Starmer and Rachel Reeves, 406 00:21:37,920 --> 00:21:39,640 Speaker 8: even though I think they feel like they've been put 407 00:21:39,680 --> 00:21:41,640 Speaker 8: through the ring aer a bit in recent weeks. 408 00:21:42,240 --> 00:21:47,680 Speaker 2: Yeah, absolutely, and I suppose that the money and that, 409 00:21:47,840 --> 00:21:51,159 Speaker 2: as you say, the winter fuel allowance issue, which is 410 00:21:51,240 --> 00:21:55,800 Speaker 2: money given to pension or was You know that contrast 411 00:21:56,280 --> 00:21:59,720 Speaker 2: with the story around Kars Darmer's advisors to great and 412 00:21:59,760 --> 00:22:02,080 Speaker 2: her salary that has been kind of one of the 413 00:22:02,119 --> 00:22:04,919 Speaker 2: threads in recent days, hasn't it, So you know how 414 00:22:05,000 --> 00:22:07,240 Speaker 2: much people are being paid, and that kind of contrast 415 00:22:07,240 --> 00:22:09,720 Speaker 2: has been something that's been focused on a lot. Look, 416 00:22:09,840 --> 00:22:13,679 Speaker 2: I also want to talk a bit about business. What 417 00:22:13,800 --> 00:22:16,720 Speaker 2: business will be looking to hear from the Labor Party 418 00:22:16,720 --> 00:22:18,760 Speaker 2: conference because of of course, we spent a lot of 419 00:22:18,800 --> 00:22:23,280 Speaker 2: time reporting about what Labor was saying to businesses and 420 00:22:23,359 --> 00:22:26,119 Speaker 2: investors here in the UK before they came into power. 421 00:22:26,119 --> 00:22:28,639 Speaker 2: There'll be the budget after the party conference, So what 422 00:22:28,720 --> 00:22:31,280 Speaker 2: do you think we will hear from Labor at conference? 423 00:22:31,359 --> 00:22:32,359 Speaker 2: On business? 424 00:22:33,040 --> 00:22:36,440 Speaker 8: I think this will be really interesting because it actually 425 00:22:36,520 --> 00:22:39,280 Speaker 8: goes to the heart of some of the big questions 426 00:22:39,359 --> 00:22:41,760 Speaker 8: that Rachel Reeves is grappling with right now as she 427 00:22:42,040 --> 00:22:45,520 Speaker 8: finalizes her budget, which is happening in October. 428 00:22:45,880 --> 00:22:47,800 Speaker 9: I think that we've. 429 00:22:47,440 --> 00:22:51,600 Speaker 8: Already seen mattering from the business community that they have 430 00:22:51,720 --> 00:22:55,639 Speaker 8: been finding her rhetoric around this twenty two billion black 431 00:22:55,640 --> 00:23:00,240 Speaker 8: hole to be not terribly inspiring of confidence. And there's 432 00:23:00,240 --> 00:23:04,000 Speaker 8: a bit of a tension between all this emphasis on 433 00:23:04,040 --> 00:23:07,560 Speaker 8: the need for cuts and fiscal prudence and the difficult inheritance, 434 00:23:07,920 --> 00:23:10,119 Speaker 8: and then on the other hand, the fact that this 435 00:23:10,200 --> 00:23:14,040 Speaker 8: is the same Labor Party has spoken about the need 436 00:23:14,080 --> 00:23:17,760 Speaker 8: to go for growth and to invest and Rachel Reeves 437 00:23:17,800 --> 00:23:20,959 Speaker 8: describing the value of capital investment. So I think that 438 00:23:21,000 --> 00:23:23,199 Speaker 8: a lot of people from the business community, particularly on 439 00:23:23,240 --> 00:23:26,960 Speaker 8: the Monday of conference next Monday, which is Business Day, 440 00:23:27,480 --> 00:23:31,720 Speaker 8: I think that business figures will be looking for a 441 00:23:31,760 --> 00:23:36,680 Speaker 8: bit of clarity from Rachel Reeves on whether that capital 442 00:23:36,720 --> 00:23:41,440 Speaker 8: investment is coming. There are all these new vehicles established 443 00:23:41,480 --> 00:23:44,000 Speaker 8: by the Labor Party that they're still getting set up, 444 00:23:44,119 --> 00:23:48,680 Speaker 8: like gb Energy, a state owned energy company, the National 445 00:23:48,720 --> 00:23:53,880 Speaker 8: Wealth Fund, various sort of vehicles to leverage private investment. 446 00:23:53,920 --> 00:23:55,680 Speaker 8: So the state will put in a bit and then 447 00:23:55,680 --> 00:23:58,080 Speaker 8: they're hoping that the private sector will come in. But 448 00:23:58,200 --> 00:24:00,520 Speaker 8: I think that business is feeling that my they're getting 449 00:24:00,560 --> 00:24:03,199 Speaker 8: mixed messages at the moment, as I think probably the 450 00:24:03,240 --> 00:24:07,200 Speaker 8: whole of the Labor Party and the political community feels 451 00:24:07,200 --> 00:24:09,760 Speaker 8: as well. So I think that's kind of the key 452 00:24:09,840 --> 00:24:13,080 Speaker 8: thing that she's grappling with, whether they'll get answers and 453 00:24:13,119 --> 00:24:16,119 Speaker 8: whether she's decided which one she's prioritizing, I think is 454 00:24:16,119 --> 00:24:16,760 Speaker 8: a different matter. 455 00:24:17,880 --> 00:24:22,400 Speaker 2: Yeah, absolutely. I mean, for example, you've got the Resolution Foundation, 456 00:24:22,600 --> 00:24:25,840 Speaker 2: you know, wanting to know more about economic growth and 457 00:24:25,880 --> 00:24:30,240 Speaker 2: the plans of the government from the Labor Party. Just briefly, 458 00:24:30,560 --> 00:24:33,400 Speaker 2: a question on the Conservative leadership race though, because they 459 00:24:33,400 --> 00:24:36,520 Speaker 2: will also be holding their party conference, how will the 460 00:24:36,560 --> 00:24:39,479 Speaker 2: different candidates be approaching conference. What do you think confidence 461 00:24:39,560 --> 00:24:41,360 Speaker 2: is going to be like this year for the Tories, 462 00:24:41,359 --> 00:24:46,199 Speaker 2: of course, after an absolutely terrible general election result. 463 00:24:47,000 --> 00:24:50,040 Speaker 8: Well, I think that so you would expect them to 464 00:24:50,119 --> 00:24:53,920 Speaker 8: be licking their wounds and for conferences to be a 465 00:24:54,040 --> 00:24:58,920 Speaker 8: quite brutal crash landing because, as you can imagine, Caroline, 466 00:24:59,359 --> 00:25:04,080 Speaker 8: the sort of business and money goes where power is. 467 00:25:04,359 --> 00:25:07,879 Speaker 8: So the Conservatives have been quite used to having lots 468 00:25:07,880 --> 00:25:13,120 Speaker 8: of business representation sponsored events, like a lot of money 469 00:25:13,320 --> 00:25:16,359 Speaker 8: at their conferences for the past fourteen years, and I 470 00:25:16,359 --> 00:25:19,320 Speaker 8: think they will discover this year that that has dried up. 471 00:25:19,400 --> 00:25:22,040 Speaker 9: I think we've already seen reports that they were. 472 00:25:21,880 --> 00:25:26,320 Speaker 8: Struggling to attract sufficient sponsorship or enough attendees for their 473 00:25:26,359 --> 00:25:30,280 Speaker 8: business events, so I think it will feel very different 474 00:25:30,680 --> 00:25:34,280 Speaker 8: just because it's our first conference in opposition. 475 00:25:34,760 --> 00:25:37,919 Speaker 2: That was Boomberg's associate editor al Va ray My thanks 476 00:25:37,960 --> 00:25:38,240 Speaker 2: to her. 477 00:25:38,320 --> 00:25:38,560 Speaker 3: Well. 478 00:25:38,600 --> 00:25:41,560 Speaker 2: Party conference season is always a good moment to understand 479 00:25:41,600 --> 00:25:45,480 Speaker 2: more about the policies to come. I'm Caroline Hepkee here 480 00:25:45,520 --> 00:25:48,000 Speaker 2: in London and you can catch us every weekday morning 481 00:25:48,040 --> 00:25:50,880 Speaker 2: for Bloomberg Daybreak you at beginning at six am in London. 482 00:25:51,200 --> 00:25:52,840 Speaker 2: That's one am on Wall Street. 483 00:25:52,960 --> 00:25:56,000 Speaker 1: Tom, Thanks Caroline, and coming up on Bloomberg day Break weekend, 484 00:25:56,080 --> 00:25:58,159 Speaker 1: we take a look at the wide open race to 485 00:25:58,200 --> 00:26:01,320 Speaker 1: become the next Prime Minister of Japan. I'm Tom Busby, 486 00:26:01,400 --> 00:26:14,280 Speaker 1: and this is Bloomberg. I'm Tom Busby in New York 487 00:26:14,280 --> 00:26:16,199 Speaker 1: with your global look ahead at the top stories for 488 00:26:16,240 --> 00:26:18,960 Speaker 1: investors in the coming week. We're just a week away 489 00:26:19,000 --> 00:26:23,280 Speaker 1: from the election for leadership of Japan's ruling Liberal Democratic Party. 490 00:26:23,400 --> 00:26:26,639 Speaker 1: Let's turn to Bloomberg Daybreak Asia hosts Brian Curtis and 491 00:26:26,720 --> 00:26:27,920 Speaker 1: Doug Krisner for more. 492 00:26:28,080 --> 00:26:30,560 Speaker 10: A record nine candidates are in the race to lead 493 00:26:30,600 --> 00:26:34,200 Speaker 10: the LDP. The election on September twenty seventh is all 494 00:26:34,240 --> 00:26:37,320 Speaker 10: but as sure to dictate Japan's next Prime minister. Because 495 00:26:37,320 --> 00:26:39,080 Speaker 10: of the party's dominance in parliament. 496 00:26:39,640 --> 00:26:42,800 Speaker 3: Whoever is chosen will take over for Fumio Keishia, the 497 00:26:42,800 --> 00:26:46,199 Speaker 3: current Prime minister. Back in August, Kishita made a surprise 498 00:26:46,240 --> 00:26:48,359 Speaker 3: announcement that he would not run in the election. 499 00:26:48,640 --> 00:26:52,800 Speaker 10: Earlier, Brian and I spoke with Gerode Reedy, Bloomberg opinion columnist. 500 00:26:53,119 --> 00:26:56,080 Speaker 10: The question is about the stakes for the future of 501 00:26:56,119 --> 00:26:57,080 Speaker 10: the party right now. 502 00:26:57,840 --> 00:27:02,440 Speaker 11: It's really important that they choose someone who's going to 503 00:27:02,520 --> 00:27:05,880 Speaker 11: restore public trust in the party. You know, the parties 504 00:27:06,440 --> 00:27:12,119 Speaker 11: standing you know with Japanese people is probably close to 505 00:27:12,640 --> 00:27:15,600 Speaker 11: an all time low right now. There's been a series 506 00:27:15,640 --> 00:27:20,520 Speaker 11: of scandals, most recently a funding scandal involving unreported political 507 00:27:20,600 --> 00:27:25,920 Speaker 11: donations that has really damaged the party standing with the public. 508 00:27:26,240 --> 00:27:28,439 Speaker 11: At the same time as this election is going on 509 00:27:28,520 --> 00:27:31,680 Speaker 11: for the leader of the LDP, there's also another election. 510 00:27:31,920 --> 00:27:35,320 Speaker 11: It's less talked about and less reported, but the opposition 511 00:27:35,440 --> 00:27:39,879 Speaker 11: is also choosing a new leader and that is going 512 00:27:39,960 --> 00:27:42,359 Speaker 11: to maybe give a bit of win to their sales. 513 00:27:42,400 --> 00:27:45,600 Speaker 11: There needs to be an election held within basically within 514 00:27:45,680 --> 00:27:50,720 Speaker 11: the next year, and the LDP is pretty vulnerable right now, 515 00:27:50,760 --> 00:27:54,879 Speaker 11: so it is important that they give themselves a bit 516 00:27:54,920 --> 00:27:59,120 Speaker 11: of a facelift and you know, go to the Japanese 517 00:27:59,200 --> 00:28:02,639 Speaker 11: people and show that they that they have changed. 518 00:28:03,200 --> 00:28:08,440 Speaker 3: And speaking of a facelift, the economy minister Sanai's Takaichi 519 00:28:09,000 --> 00:28:10,920 Speaker 3: has emerged as one of the front runners. It would 520 00:28:10,960 --> 00:28:14,160 Speaker 3: be very interesting to see a woman prime minister in Japan. 521 00:28:14,840 --> 00:28:16,439 Speaker 3: Is she kind of rising in the polls? 522 00:28:16,480 --> 00:28:20,439 Speaker 11: Now, that's right. Yet in the last week there there 523 00:28:20,760 --> 00:28:22,600 Speaker 11: was nine candidates at the start of this and the 524 00:28:22,680 --> 00:28:25,040 Speaker 11: nine candidates they're all still in it. But there's definitely 525 00:28:25,080 --> 00:28:27,480 Speaker 11: three people who have pulled away as a sort of 526 00:28:28,240 --> 00:28:32,760 Speaker 11: leading pack, with Shindio Koizumi, Shigheiro Lishiba and as you say, 527 00:28:32,760 --> 00:28:37,800 Speaker 11: Sanai Takaichi. She is definitely I think surprising people with 528 00:28:37,960 --> 00:28:41,640 Speaker 11: her being in that pack and her performance. She would 529 00:28:41,680 --> 00:28:46,200 Speaker 11: be the first female prime minister in Japan. She is 530 00:28:46,240 --> 00:28:51,280 Speaker 11: also probably the most conservative person within those nine people, 531 00:28:51,360 --> 00:28:54,920 Speaker 11: and indeed one of the most high profile conservative politicians 532 00:28:55,360 --> 00:28:57,440 Speaker 11: in the country. It is a little bit of a 533 00:28:57,800 --> 00:29:00,920 Speaker 11: surprise to see her doing so well. I don't know 534 00:29:00,960 --> 00:29:04,000 Speaker 11: if everyone expected her to be doing so well at 535 00:29:04,040 --> 00:29:06,600 Speaker 11: the start of this race. I think we've seen you know, 536 00:29:07,080 --> 00:29:09,680 Speaker 11: cooison me had his moment in the sun, he's dipping 537 00:29:09,720 --> 00:29:12,400 Speaker 11: a little bit in public opinion polls at the moment. 538 00:29:13,320 --> 00:29:15,880 Speaker 11: Takaichi seems to be has a bit of wind in 539 00:29:15,920 --> 00:29:18,680 Speaker 11: her sales at the moment and is now as a result, 540 00:29:18,800 --> 00:29:21,680 Speaker 11: she is getting attacked a little bit more by the 541 00:29:21,720 --> 00:29:24,640 Speaker 11: other candidates, which you know could damage her as well. 542 00:29:24,880 --> 00:29:26,440 Speaker 11: So still a little bit of a way to go. 543 00:29:26,760 --> 00:29:29,200 Speaker 10: Koison me is forty three years old. I think he's 544 00:29:29,200 --> 00:29:31,960 Speaker 10: the youngest candidate, and he's promised to change what he's 545 00:29:32,000 --> 00:29:35,200 Speaker 10: described as an old fashioned LDP. Do you think there's 546 00:29:35,320 --> 00:29:36,600 Speaker 10: any runway for him here? 547 00:29:36,680 --> 00:29:38,640 Speaker 11: Absolutely there is. I mean, I would still say that 548 00:29:38,720 --> 00:29:42,480 Speaker 11: he is probably the front runner, even though I think 549 00:29:42,520 --> 00:29:44,840 Speaker 11: he has been attacked. I guess because he is the 550 00:29:44,840 --> 00:29:48,720 Speaker 11: front runner, and also maybe some of the talking points 551 00:29:48,760 --> 00:29:51,560 Speaker 11: he brought up, including sort of reform of the labor 552 00:29:51,600 --> 00:29:54,520 Speaker 11: market and making it easier for companies to fire people, 553 00:29:54,920 --> 00:29:57,520 Speaker 11: has put a bit of a target on his back. 554 00:29:57,760 --> 00:30:02,040 Speaker 11: There absolutely is room, however, for him to win this race, 555 00:30:02,120 --> 00:30:04,280 Speaker 11: as I think getting one of those three right now, 556 00:30:04,520 --> 00:30:07,400 Speaker 11: it's quite hard to say, you know, even even talking 557 00:30:07,400 --> 00:30:09,480 Speaker 11: to the experts in this at this point in time, 558 00:30:09,480 --> 00:30:12,440 Speaker 11: it's very hard to say who's going to you know, 559 00:30:12,640 --> 00:30:15,000 Speaker 11: who has the best chance of winning, because it all 560 00:30:15,000 --> 00:30:19,760 Speaker 11: depends on who makes it into the likely runoff election 561 00:30:19,880 --> 00:30:23,680 Speaker 11: if no one candidate gets a majority of the votes. 562 00:30:23,840 --> 00:30:27,160 Speaker 10: He is Gerod Reedy speaking of to us earlier, and 563 00:30:27,440 --> 00:30:29,880 Speaker 10: he is a Bloomberg opinion columnist. 564 00:30:29,400 --> 00:30:33,160 Speaker 3: And now joining us is Isabelle Reynolds, Bloomberg's Tokyo bureau chief. 565 00:30:33,240 --> 00:30:37,160 Speaker 3: For more discussion. Isabelle, thank you for joining us. Is 566 00:30:37,200 --> 00:30:41,080 Speaker 3: this an election that will be determined by almost entirely 567 00:30:41,120 --> 00:30:44,760 Speaker 3: by domestic issues or will international issues. 568 00:30:44,360 --> 00:30:44,880 Speaker 1: Be at play? 569 00:30:45,080 --> 00:30:48,200 Speaker 12: Definitely, the economy is high on the agenda. People are 570 00:30:48,280 --> 00:30:51,479 Speaker 12: not necessarily happy with how the economy is going. You know, 571 00:30:52,000 --> 00:30:55,080 Speaker 12: Japan has touted how inflation has returned to the economy. 572 00:30:55,280 --> 00:30:58,400 Speaker 12: With the many people in Japan, who has a very 573 00:30:58,440 --> 00:31:04,160 Speaker 12: elderly population, unfixed incomes, inflation is not welcome, so people 574 00:31:04,240 --> 00:31:07,920 Speaker 12: are not necessarily feeling happy about their pocketbooks. On the 575 00:31:07,960 --> 00:31:11,360 Speaker 12: other hand, we did see an und alarming incident in 576 00:31:11,480 --> 00:31:14,880 Speaker 12: China where a young Japanese boy was stabbed and sadly 577 00:31:14,920 --> 00:31:17,840 Speaker 12: found out to have died from his injuries, and that 578 00:31:18,040 --> 00:31:20,920 Speaker 12: kind of thing it could inflame sort of public opinion 579 00:31:20,960 --> 00:31:24,400 Speaker 12: about ties with China, and potentially I don't know this 580 00:31:24,480 --> 00:31:27,680 Speaker 12: for sure, but it could potentially give a bit more 581 00:31:27,720 --> 00:31:31,560 Speaker 12: sort of a boost to someone like Takeichi, who is 582 00:31:31,560 --> 00:31:35,200 Speaker 12: a pretty conservative hardliner and would not be afraid to 583 00:31:35,280 --> 00:31:37,160 Speaker 12: sort of take a tough stance with China. 584 00:31:37,640 --> 00:31:40,040 Speaker 10: So do you think the economy right now in Japan 585 00:31:40,160 --> 00:31:43,640 Speaker 10: is kind of at a turning point? Inflation returning for 586 00:31:43,680 --> 00:31:47,400 Speaker 10: the first time in what about three decades, We've recently 587 00:31:47,480 --> 00:31:50,280 Speaker 10: seen the first interest rate hike from the BOJ in 588 00:31:50,320 --> 00:31:53,720 Speaker 10: about seventeen years. Is this a pivot point that is crucial? 589 00:31:54,560 --> 00:31:57,760 Speaker 12: Yes? I mean this year has seen a huge turning 590 00:31:57,800 --> 00:32:01,880 Speaker 12: point for Japan. After decades of deflation, here comes inflation, 591 00:32:02,040 --> 00:32:05,000 Speaker 12: prices a rising. People are not used to that. Some 592 00:32:05,040 --> 00:32:08,000 Speaker 12: people welcome it with particularly young people in the job 593 00:32:08,040 --> 00:32:11,760 Speaker 12: market are being paid more. They're feeling fine about it perhaps, 594 00:32:11,800 --> 00:32:14,000 Speaker 12: But then if you look at the older, older generation, 595 00:32:14,120 --> 00:32:16,720 Speaker 12: as I say that, it's not so comfortable for them. 596 00:32:16,760 --> 00:32:19,680 Speaker 12: But yes, it's definitely a turning point. The Bank of 597 00:32:19,760 --> 00:32:22,880 Speaker 12: Japan is doing things it hasn't done for decades, and 598 00:32:22,920 --> 00:32:26,200 Speaker 12: that's affecting everybody's lives across the board and the way 599 00:32:26,240 --> 00:32:27,240 Speaker 12: companies are operating. 600 00:32:28,320 --> 00:32:33,640 Speaker 3: You mentioned Sannai Kintakeichi earlier, the Economic Security minister, and 601 00:32:33,720 --> 00:32:36,440 Speaker 3: that she's leaning towards the right and might be a 602 00:32:36,480 --> 00:32:39,360 Speaker 3: candidate that has kind of winn in the sales. It's 603 00:32:39,400 --> 00:32:42,400 Speaker 3: funny because when we talked about a month or so ago, 604 00:32:43,160 --> 00:32:46,840 Speaker 3: we talked about Yoko Kamikawa, the Foreign Minister, that she 605 00:32:47,320 --> 00:32:50,840 Speaker 3: might be someone who could become the first woman prime 606 00:32:50,840 --> 00:32:53,480 Speaker 3: minister in Japan. Let's talk a little bit about that. 607 00:32:53,880 --> 00:32:55,880 Speaker 3: I think she's probably slipped a little in the polls, 608 00:32:55,920 --> 00:32:59,960 Speaker 3: but is it possible that Sanai can win. 609 00:33:00,120 --> 00:33:02,480 Speaker 12: Possible, It's very possible. In some of the polls when 610 00:33:02,520 --> 00:33:05,160 Speaker 12: you look at the figures for the supporters of the 611 00:33:05,240 --> 00:33:10,520 Speaker 12: ruling LDP, Takeji has come out on top, So it 612 00:33:10,560 --> 00:33:13,840 Speaker 12: is certainly possible. She's as good was saying earlier, she's 613 00:33:13,880 --> 00:33:16,080 Speaker 12: one of those three who've pulled away from the rest 614 00:33:16,080 --> 00:33:19,120 Speaker 12: of the pack. So it's highly likely that two of 615 00:33:19,160 --> 00:33:22,040 Speaker 12: those three will be in a runoff and one of them, 616 00:33:22,120 --> 00:33:24,280 Speaker 12: one of the three, will will be the winner. I mean, 617 00:33:24,280 --> 00:33:26,360 Speaker 12: it would be a bit of a surprise for all 618 00:33:26,400 --> 00:33:28,760 Speaker 12: sorts of reasons, one of which being that she was 619 00:33:28,880 --> 00:33:31,680 Speaker 12: very close to Prime Minister former Prime Minister Sans or Abbe, 620 00:33:31,720 --> 00:33:35,280 Speaker 12: who was assassinated a couple of years ago after Marth 621 00:33:35,320 --> 00:33:37,880 Speaker 12: of his assassination was one of these huge scandals that 622 00:33:37,960 --> 00:33:41,440 Speaker 12: hit the LDP for its connections with a fringe religion, 623 00:33:42,280 --> 00:33:43,959 Speaker 12: and so it would be in that sense a bit 624 00:33:44,000 --> 00:33:46,720 Speaker 12: of a surprise for the LDP, who wants to present 625 00:33:46,760 --> 00:33:49,880 Speaker 12: a new phase to come up with someone who is 626 00:33:50,160 --> 00:33:52,760 Speaker 12: so closely associated with former Prime Minister Abbe. 627 00:33:52,920 --> 00:33:56,440 Speaker 10: What about the similarity between Snati's economic plan and what 628 00:33:56,440 --> 00:33:58,040 Speaker 10: we used to call Abinomics. 629 00:33:58,360 --> 00:34:01,240 Speaker 12: Absolutely, I mean she was very much a fan of 630 00:34:01,280 --> 00:34:04,480 Speaker 12: his policies in all sorts of senses, and that includes 631 00:34:04,840 --> 00:34:08,440 Speaker 12: the central bank policy. So she's been in contrast to 632 00:34:08,480 --> 00:34:11,439 Speaker 12: the other candidates in this race who have mostly been 633 00:34:11,600 --> 00:34:14,399 Speaker 12: sort of in line with the government and the current 634 00:34:14,480 --> 00:34:17,920 Speaker 12: Bank of Japan policy, she's been sort of fighting against 635 00:34:17,920 --> 00:34:21,280 Speaker 12: the tide and saying, you know, interest rates hikes shouldn't 636 00:34:21,280 --> 00:34:25,040 Speaker 12: go too far. We still need really easy policy. The 637 00:34:25,040 --> 00:34:27,960 Speaker 12: inflation we do have is sort of imported from abroad. 638 00:34:28,080 --> 00:34:30,880 Speaker 12: It's down to the you know, the wars overseas that 639 00:34:30,920 --> 00:34:34,400 Speaker 12: are bringing it, and it's not that the Japanese economy 640 00:34:34,480 --> 00:34:36,480 Speaker 12: is sort of getting heating up. 641 00:34:37,400 --> 00:34:40,160 Speaker 3: And with her rise, the fact that she's getting support 642 00:34:40,200 --> 00:34:44,239 Speaker 3: from the right wing in the party. Can we extrapolate 643 00:34:44,239 --> 00:34:46,840 Speaker 3: from that and say that in Japanese society that the 644 00:34:46,880 --> 00:34:50,640 Speaker 3: country is turning more nationalists and more to the right. 645 00:34:51,080 --> 00:34:53,879 Speaker 12: No, I don't think that's necessarily the case. I mean, 646 00:34:53,920 --> 00:34:58,359 Speaker 12: she has certain views on women in society which are 647 00:34:58,400 --> 00:34:59,200 Speaker 12: not the mainstream. 648 00:34:59,280 --> 00:34:59,440 Speaker 4: Now. 649 00:34:59,440 --> 00:35:02,439 Speaker 12: For example, there's this whole issue of whether women should 650 00:35:02,480 --> 00:35:05,279 Speaker 12: be allowed to have separate surnames from their husbands, and 651 00:35:05,320 --> 00:35:08,680 Speaker 12: she says no, they should not, whereas most people in 652 00:35:08,760 --> 00:35:11,200 Speaker 12: Japan and most of the other candidates in this race 653 00:35:11,360 --> 00:35:13,480 Speaker 12: say well, yeah, of course men and women should be 654 00:35:13,520 --> 00:35:16,560 Speaker 12: allowed to have separate surnames if they wish. So she 655 00:35:16,719 --> 00:35:21,400 Speaker 12: is more conservative than the general trend. But this is 656 00:35:21,400 --> 00:35:24,279 Speaker 12: all down to dynamics within the ruling LDP, and they 657 00:35:24,320 --> 00:35:26,839 Speaker 12: are not Although they've been in power for so long, 658 00:35:26,880 --> 00:35:29,400 Speaker 12: they are not always exactly in tune with the average 659 00:35:29,520 --> 00:35:30,279 Speaker 12: Japanese voter. 660 00:35:30,640 --> 00:35:33,759 Speaker 10: I was reading that Ishibai is promising to push for 661 00:35:33,880 --> 00:35:37,680 Speaker 10: gender equality and also measures to address not only the 662 00:35:37,719 --> 00:35:41,120 Speaker 10: low birth rate but the declining population as well. What 663 00:35:41,280 --> 00:35:43,920 Speaker 10: is happening right now in Japan demographically? 664 00:35:44,560 --> 00:35:47,840 Speaker 12: Oh well, I mean, Japan, as you know, is the 665 00:35:47,880 --> 00:35:50,400 Speaker 12: oldest country in the world in terms of the number 666 00:35:50,440 --> 00:35:53,359 Speaker 12: of the percentage of people over the age of sixty five. 667 00:35:54,360 --> 00:35:56,800 Speaker 12: Current Prime Minister Kishida has referred to this as a 668 00:35:56,880 --> 00:35:59,960 Speaker 12: national crisis and said we have only a few years 669 00:36:00,200 --> 00:36:03,319 Speaker 12: to really deal with this, or things will get out 670 00:36:03,320 --> 00:36:06,680 Speaker 12: of control and many areas of Japan could be find 671 00:36:06,680 --> 00:36:10,040 Speaker 12: themselves struggling to deal that, you know, provide the basic 672 00:36:10,120 --> 00:36:13,520 Speaker 12: services that people expect. They just simply won't have enough 673 00:36:13,600 --> 00:36:16,560 Speaker 12: young people to look after all the old people. Money's 674 00:36:16,600 --> 00:36:19,520 Speaker 12: being thrown at the problem. There's a lot of support now, 675 00:36:19,640 --> 00:36:23,400 Speaker 12: I think for young families in terms of finance and 676 00:36:23,840 --> 00:36:26,960 Speaker 12: helping them during those early years when it's hard to 677 00:36:27,280 --> 00:36:29,440 Speaker 12: be raising a family and working at the same time. 678 00:36:30,239 --> 00:36:32,920 Speaker 12: But it's very questionable about whether they'll be able to 679 00:36:33,000 --> 00:36:33,799 Speaker 12: turn the tide on this. 680 00:36:34,480 --> 00:36:37,360 Speaker 10: Is there anything in a nationalistic vein? I mean talking 681 00:36:37,400 --> 00:36:40,480 Speaker 10: about Japan's standing or place on the global stage. 682 00:36:40,560 --> 00:36:44,760 Speaker 12: Oh well, that's very much the line that Takeichi, of course, 683 00:36:44,920 --> 00:36:48,520 Speaker 12: would put forward as her basic policy. That's what she wants. 684 00:36:48,520 --> 00:36:52,040 Speaker 12: That's the kind of rhetoric that abbe used to use 685 00:36:52,120 --> 00:36:55,520 Speaker 12: for many years. How far that actually plays with the public, 686 00:36:55,560 --> 00:36:58,400 Speaker 12: I don't really know. I'm not sure that the average 687 00:36:58,480 --> 00:37:01,080 Speaker 12: voter is that key, you know, on this kind of 688 00:37:01,400 --> 00:37:03,400 Speaker 12: issue of whether Japan's playing a huge role on the 689 00:37:03,440 --> 00:37:07,440 Speaker 12: global stage. But on the other hand, this election doesn't 690 00:37:07,480 --> 00:37:10,400 Speaker 12: involve the average voter. It's all members of the LDP, 691 00:37:10,800 --> 00:37:13,160 Speaker 12: and when it comes to the runoff, it's almost exclusively 692 00:37:13,960 --> 00:37:17,680 Speaker 12: LDP lawmakers, so that rhetoric may play better than with 693 00:37:17,800 --> 00:37:19,960 Speaker 12: them that it would with the public at large, who 694 00:37:20,000 --> 00:37:22,320 Speaker 12: are concerned with more kind of bread and butter issues. 695 00:37:22,560 --> 00:37:24,600 Speaker 10: One of the things that Brian and I have noticed 696 00:37:24,640 --> 00:37:27,480 Speaker 10: in covering the Japanese stock market the degree to which 697 00:37:28,120 --> 00:37:32,080 Speaker 10: corporate reform has really made an impact in the performance 698 00:37:32,120 --> 00:37:34,040 Speaker 10: of some of the stocks, let's say, in the Nike 699 00:37:34,640 --> 00:37:38,440 Speaker 10: structural reform. Corporate reform, is that something that will continue 700 00:37:38,480 --> 00:37:38,719 Speaker 10: to be. 701 00:37:38,680 --> 00:37:41,680 Speaker 12: Addressed it very much will I don't think that's something 702 00:37:42,120 --> 00:37:46,440 Speaker 12: really that the various candidates can appeal to the public with, 703 00:37:46,600 --> 00:37:50,880 Speaker 12: But certainly some of the candidates, including Cornell who's famous 704 00:37:50,880 --> 00:37:54,800 Speaker 12: for his love of the idea of reform and Cooison 705 00:37:54,880 --> 00:37:58,200 Speaker 12: me also have been looking into this issue and want 706 00:37:58,239 --> 00:38:00,839 Speaker 12: to make Japan more of a sort of fluid and 707 00:38:01,280 --> 00:38:06,080 Speaker 12: normal in inverted commas economy. Whether they'll be able to 708 00:38:06,080 --> 00:38:08,920 Speaker 12: do that is another question. I mean, they'll come into government, 709 00:38:08,920 --> 00:38:11,040 Speaker 12: but they'll still be dealing with all the same issues 710 00:38:11,080 --> 00:38:14,080 Speaker 12: that obviously everybody has been dealing with for the past 711 00:38:14,120 --> 00:38:14,880 Speaker 12: couple of decades. 712 00:38:15,080 --> 00:38:17,440 Speaker 10: Isabelle, thank you so much for helping us set up 713 00:38:17,480 --> 00:38:21,760 Speaker 10: the election for leadership of the ruling LDP party in Japan. 714 00:38:21,920 --> 00:38:26,200 Speaker 10: Isabelle Reynolds, Bloomberg's Tokyo bureau chief. I'm Doug Prisner along 715 00:38:26,239 --> 00:38:28,440 Speaker 10: with Brian Curtis. You can join us weekdays here for 716 00:38:28,480 --> 00:38:32,319 Speaker 10: Bloomberg Daybreak Asia beginning at eight am in Hong Kong 717 00:38:32,480 --> 00:38:34,080 Speaker 10: eight pm on Wall Street. 718 00:38:34,360 --> 00:38:37,400 Speaker 1: Tom thanks to Bloomberg day Break Asia host Doug Crisner 719 00:38:37,600 --> 00:38:40,200 Speaker 1: and Brian Curtis. And that does it for this edition 720 00:38:40,200 --> 00:38:43,080 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 721 00:38:43,080 --> 00:38:45,160 Speaker 1: at five am Wall Street Time for the latest on 722 00:38:45,320 --> 00:38:48,040 Speaker 1: markets overseas and the news you need to start your day. 723 00:38:48,560 --> 00:38:51,600 Speaker 1: I'm Tom Busby. Stay with us. Top stories and global 724 00:38:51,600 --> 00:38:54,680 Speaker 1: business headlines are coming up right now.