1 00:00:02,680 --> 00:00:05,160 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,160 --> 00:00:07,320 Speaker 1: the top stories in the coming week from our Daybreak 3 00:00:07,360 --> 00:00:10,200 Speaker 1: anchors all around the world. Straight ahead on the program, 4 00:00:10,240 --> 00:00:13,440 Speaker 1: Wall Street races for a key jobs report. I'm Tom 5 00:00:13,480 --> 00:00:15,520 Speaker 1: Busby in New York. I'll have that story. 6 00:00:15,720 --> 00:00:18,360 Speaker 2: I'm Carolyn Hetki here in London, where we're asking what's 7 00:00:18,520 --> 00:00:20,840 Speaker 2: next for the UK's car industry. 8 00:00:21,000 --> 00:00:23,200 Speaker 3: I'm Brian Curtisy in Hong Kong. We look at what 9 00:00:23,280 --> 00:00:26,040 Speaker 3: to expect and what not to expect when China and 10 00:00:26,079 --> 00:00:28,400 Speaker 3: the European Union get together for a summit. 11 00:00:28,640 --> 00:00:31,240 Speaker 4: I'm Kayley Lyones in Washington, where the CEOs of the 12 00:00:31,360 --> 00:00:34,680 Speaker 4: US's biggest banks are getting set to testify in the summer. 13 00:00:37,159 --> 00:00:41,239 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend. The business 14 00:00:41,280 --> 00:00:45,240 Speaker 5: news you need to wrap up your week. Available on Apple, Spotify, 15 00:00:45,400 --> 00:00:53,239 Speaker 5: The Bloomberg Business Appen everywhere you get your podcasts. Good 16 00:00:53,320 --> 00:00:53,680 Speaker 5: day to you. 17 00:00:53,760 --> 00:00:56,320 Speaker 1: I'm Tom Busby. We begin today's program with a focus 18 00:00:56,400 --> 00:00:59,440 Speaker 1: on the economy. While many expect the Fed to put 19 00:00:59,440 --> 00:01:03,120 Speaker 1: further rate increases on hold for now, each key economic 20 00:01:03,200 --> 00:01:07,200 Speaker 1: report takes on more importance after signs that US consumer 21 00:01:07,280 --> 00:01:11,240 Speaker 1: spending and the labor market maybe cooling along with inflation. 22 00:01:11,680 --> 00:01:14,120 Speaker 1: This coming Friday, we get the November jobs report, and 23 00:01:14,120 --> 00:01:16,399 Speaker 1: helping us break down what it all means and what 24 00:01:16,400 --> 00:01:19,759 Speaker 1: we should expect to see is anawong Chief US economists 25 00:01:19,760 --> 00:01:24,720 Speaker 1: with Bloomberg Economics and Michael McKee, Bloomberg's International Economics and 26 00:01:24,760 --> 00:01:28,520 Speaker 1: Policy correspondent. Now, let's start with some of the data 27 00:01:28,600 --> 00:01:30,800 Speaker 1: that we've taken, whether that we've seen over the last 28 00:01:30,840 --> 00:01:34,480 Speaker 1: week or so, Americans slowing their spending in October. Personal 29 00:01:34,560 --> 00:01:38,560 Speaker 1: spending along with personal incomes both rising two tenths of 30 00:01:38,560 --> 00:01:41,839 Speaker 1: a percent in October. Mike, that's in line with forecasts, 31 00:01:41,880 --> 00:01:44,800 Speaker 1: but not a very encouraging numbers. 32 00:01:45,520 --> 00:01:48,240 Speaker 6: It's not bad given the month and the fact that 33 00:01:49,240 --> 00:01:52,400 Speaker 6: September was a very strong month for spending and it 34 00:01:52,440 --> 00:01:55,080 Speaker 6: was also back to school month. We haven't seen in 35 00:01:55,160 --> 00:01:58,680 Speaker 6: the October numbers yet the holiday spending that is to come, 36 00:01:59,040 --> 00:02:01,400 Speaker 6: so you really have have to sort of average it 37 00:02:01,440 --> 00:02:03,160 Speaker 6: out over a couple of months and we'll see how 38 00:02:03,240 --> 00:02:05,480 Speaker 6: October turns out. I thought one of the most interesting 39 00:02:05,520 --> 00:02:11,080 Speaker 6: things though, was on the income side, because incomes were 40 00:02:11,120 --> 00:02:16,079 Speaker 6: definitely restrained, and the biggest drop was in wages after 41 00:02:16,400 --> 00:02:19,919 Speaker 6: many months of a half percent or four tens percent 42 00:02:20,000 --> 00:02:23,720 Speaker 6: gain in wages each month. We only saw a tenth 43 00:02:23,760 --> 00:02:26,360 Speaker 6: of eight percent gain. Now, one month does not make 44 00:02:26,400 --> 00:02:29,520 Speaker 6: a trend. We saw some months last year where we 45 00:02:29,600 --> 00:02:37,560 Speaker 6: had negative percentages for wage gains and it rebounded. But 46 00:02:38,280 --> 00:02:40,840 Speaker 6: if this is a sign that labor markets are loosening, 47 00:02:40,880 --> 00:02:42,960 Speaker 6: and if this continues, it's kind of what the Fed 48 00:02:43,040 --> 00:02:46,760 Speaker 6: wants to see wage gains coming down to a more 49 00:02:48,320 --> 00:02:53,440 Speaker 6: sustainable level. And therefore it fits the narrative that their 50 00:02:53,480 --> 00:02:55,440 Speaker 6: hoping comes true of a soft landing. 51 00:02:55,600 --> 00:02:56,720 Speaker 1: And what do you think about that? 52 00:02:56,960 --> 00:02:59,680 Speaker 7: Yeah, what struck me about what Mike just said is 53 00:02:59,680 --> 00:03:03,120 Speaker 7: the narrative. What is the narrative right out there right now? 54 00:03:03,320 --> 00:03:06,519 Speaker 7: So this past week we saw a lot of Fed 55 00:03:06,680 --> 00:03:11,440 Speaker 7: speaker came out and I detected a visibly dubbish pivot 56 00:03:11,560 --> 00:03:15,040 Speaker 7: and all of them. Particularly most notable to me is 57 00:03:15,120 --> 00:03:21,040 Speaker 7: Chris Waller and Lorettamester, both of whom are among the 58 00:03:21,080 --> 00:03:25,240 Speaker 7: most hawkish FED officials, and it sounded to me that 59 00:03:25,360 --> 00:03:29,280 Speaker 7: they have become more confident that the labor market is loosening, 60 00:03:29,720 --> 00:03:34,320 Speaker 7: wage growth is slowing, and that inflation is definitely on 61 00:03:34,400 --> 00:03:38,440 Speaker 7: track to have a couple more good months of low 62 00:03:38,480 --> 00:03:42,280 Speaker 7: monthly print. And I think what the PCE report last 63 00:03:42,280 --> 00:03:44,400 Speaker 7: week showed us, as Mike was sane, is like. 64 00:03:44,360 --> 00:03:46,360 Speaker 8: The wage growth is lowing. 65 00:03:46,760 --> 00:03:49,360 Speaker 7: Even though it's only one month of report, it actually 66 00:03:50,080 --> 00:03:56,400 Speaker 7: corroborates what the Beige Book narrative is also telling us. 67 00:03:56,520 --> 00:03:59,680 Speaker 7: So our read of the Beige Book that was released 68 00:03:59,760 --> 00:04:03,720 Speaker 7: last week is that it was pretty downbeat and across 69 00:04:03,840 --> 00:04:08,120 Speaker 7: most of the districts contexts we're talking about how there 70 00:04:08,120 --> 00:04:11,760 Speaker 7: are more job at hints for other jobs while the 71 00:04:11,880 --> 00:04:15,400 Speaker 7: turnover within the same firm as lower, so less people 72 00:04:15,440 --> 00:04:18,520 Speaker 7: are quitting. So what this means is that the people 73 00:04:18,560 --> 00:04:21,119 Speaker 7: who are looking for jobs would take a longer time 74 00:04:21,200 --> 00:04:25,359 Speaker 7: being in the unemployed state. And usually historical this tends 75 00:04:25,400 --> 00:04:30,840 Speaker 7: to drive unemployment persistently. It's not just a one month thing. 76 00:04:31,000 --> 00:04:34,520 Speaker 7: Usually it will become a trend thing when you see 77 00:04:34,839 --> 00:04:35,880 Speaker 7: such a phenomenon. 78 00:04:36,040 --> 00:04:39,280 Speaker 1: Yeah, those continuing claims up to nearly two million. 79 00:04:39,120 --> 00:04:42,320 Speaker 6: Last week, Mike, continuing claims do show that the labor 80 00:04:42,320 --> 00:04:44,520 Speaker 6: market seems to be getting a little looser. People who 81 00:04:44,560 --> 00:04:48,480 Speaker 6: get jobless claim jobless benefits are taking longer to find jobs, 82 00:04:48,520 --> 00:04:51,120 Speaker 6: which is what you would expect in this situation. I 83 00:04:51,120 --> 00:04:54,640 Speaker 6: thought perhaps one of the most interesting things, not just 84 00:04:54,720 --> 00:04:59,279 Speaker 6: the sort of shading of their views by Chris Waller 85 00:04:59,320 --> 00:05:02,440 Speaker 6: and Loretta mess was in the page book when we 86 00:05:02,520 --> 00:05:06,360 Speaker 6: saw for the first time since the recovery began, companies 87 00:05:06,360 --> 00:05:09,960 Speaker 6: saying they are beginning to accept the idea that they 88 00:05:10,000 --> 00:05:12,680 Speaker 6: might lay people off and that they're not filling jobs 89 00:05:12,839 --> 00:05:16,120 Speaker 6: because of attrition. It's not a huge trend yet, but 90 00:05:16,200 --> 00:05:19,919 Speaker 6: it does. It's a break with what the narrative, to 91 00:05:20,040 --> 00:05:23,640 Speaker 6: use the term again has been that we have this 92 00:05:23,800 --> 00:05:26,280 Speaker 6: very strong labor market. It does seem to be finally 93 00:05:26,320 --> 00:05:28,720 Speaker 6: loosening up. And I think that's the point that Chris 94 00:05:28,760 --> 00:05:31,720 Speaker 6: Waller was making, that what we have now is an 95 00:05:31,760 --> 00:05:35,599 Speaker 6: economy that is feeling the lagged impacts of the rate increases. 96 00:05:35,760 --> 00:05:38,479 Speaker 1: So we may have had peak employment because of that. 97 00:05:38,400 --> 00:05:41,320 Speaker 6: Well, it depends on how you define peak employment. The 98 00:05:42,040 --> 00:05:47,000 Speaker 6: economy continues to add jobs, but the question is do 99 00:05:47,040 --> 00:05:50,760 Speaker 6: we see unemployment go up or the number of jobs 100 00:05:50,839 --> 00:05:54,960 Speaker 6: created go down significantly, which is what the FED is expecting, 101 00:05:55,040 --> 00:05:59,160 Speaker 6: but not so far. Analys and Economy surveyed by Bloomberg. 102 00:06:00,080 --> 00:06:02,240 Speaker 1: Let's en and then let's talk about what's coming up 103 00:06:02,240 --> 00:06:05,720 Speaker 1: this Friday, the November Jobs report. What are you expecting 104 00:06:05,760 --> 00:06:06,600 Speaker 1: to see. 105 00:06:06,520 --> 00:06:10,159 Speaker 7: So we are definitely focusing more on what's happening to 106 00:06:10,200 --> 00:06:14,520 Speaker 7: the unemployment rate as opposed to putting too much weight 107 00:06:14,760 --> 00:06:18,800 Speaker 7: on the headline non farm payroll. So that's aid we 108 00:06:18,880 --> 00:06:22,000 Speaker 7: are expecting the unemployment rate to climb to four percent, 109 00:06:23,200 --> 00:06:27,440 Speaker 7: that's versus the three point nine percent from the previous month, 110 00:06:28,080 --> 00:06:32,920 Speaker 7: and for non farm payroll to add about one hundred 111 00:06:32,960 --> 00:06:36,960 Speaker 7: and fifty thousand jobs. And let me qualify those numbers 112 00:06:36,960 --> 00:06:39,400 Speaker 7: for a little bit. So in terms of the non 113 00:06:39,440 --> 00:06:42,080 Speaker 7: farm payroll headline, we are the one hundred. 114 00:06:41,800 --> 00:06:43,600 Speaker 8: And fifty k that we are expecting. 115 00:06:43,800 --> 00:06:48,480 Speaker 7: Well, that includes the thirty k that's added from the 116 00:06:48,560 --> 00:06:53,520 Speaker 7: resolution of the UAW strike. So if you smooth it 117 00:06:53,680 --> 00:06:57,560 Speaker 7: over a couple of months, in fact that that underlying 118 00:06:57,680 --> 00:07:00,480 Speaker 7: pace of job growth is actually low more than one 119 00:07:00,520 --> 00:07:03,320 Speaker 7: hundred and fifty k, And then in terms of the 120 00:07:03,400 --> 00:07:07,719 Speaker 7: unemployment rate of four point zero unemployment rate would trigger 121 00:07:08,480 --> 00:07:10,920 Speaker 7: the psalm's rule as well as a whole bunch of 122 00:07:10,960 --> 00:07:14,560 Speaker 7: other recession rules. So Bill Dudley and I looked at 123 00:07:14,800 --> 00:07:19,120 Speaker 7: about twenty eight rules of thumbs on that tends to 124 00:07:19,200 --> 00:07:23,119 Speaker 7: have a very good record of calling for real time 125 00:07:23,720 --> 00:07:26,680 Speaker 7: in real time calling and real time a recession. And 126 00:07:26,880 --> 00:07:30,880 Speaker 7: we look at, for example, the U one unemployment rate. 127 00:07:30,960 --> 00:07:35,880 Speaker 7: That unemployment rate captures how many of the unemployed have 128 00:07:35,320 --> 00:07:40,600 Speaker 7: been so for fifteen weeks or longer. And whenever that 129 00:07:40,800 --> 00:07:47,640 Speaker 7: YOU one unemployment rate increases persistently, it is usually a 130 00:07:47,680 --> 00:07:51,600 Speaker 7: harbinger of recession already in place. And also there's another 131 00:07:51,720 --> 00:07:55,840 Speaker 7: unemployment rate called U two unemployment rate, and it captures 132 00:07:55,880 --> 00:07:59,200 Speaker 7: the layoffs and the temporary workers who are and I 133 00:07:59,200 --> 00:08:02,560 Speaker 7: able to find anymore. And that part actually has not 134 00:08:02,680 --> 00:08:06,280 Speaker 7: triggered any rules yet, and so we would be keeping 135 00:08:06,400 --> 00:08:08,520 Speaker 7: an eye on all those U one, you two, you 136 00:08:08,680 --> 00:08:12,600 Speaker 7: three unemploymery because it tells you various parts of the 137 00:08:12,680 --> 00:08:15,320 Speaker 7: labor market. And what that tells me so far is 138 00:08:15,360 --> 00:08:19,160 Speaker 7: that number one layoffs has not really happened yet. Mass 139 00:08:19,240 --> 00:08:24,320 Speaker 7: layoffs has not happened yet. That's the YouTube unemployment rate. However, 140 00:08:24,880 --> 00:08:28,920 Speaker 7: people who are unemployed indeed has been taker taking longer 141 00:08:28,960 --> 00:08:32,240 Speaker 7: and longer to find a job. That's you one unemployment rate, 142 00:08:32,559 --> 00:08:36,440 Speaker 7: and overall that should drive YOU three unemployment rate up, 143 00:08:36,480 --> 00:08:41,240 Speaker 7: which is the typical UH metric for measuring whether a 144 00:08:41,280 --> 00:08:42,560 Speaker 7: recession has happened. 145 00:08:42,480 --> 00:08:46,040 Speaker 6: And it makes the job support much more interesting, many 146 00:08:46,080 --> 00:08:51,040 Speaker 6: more UH indicators to dive into there. I think one 147 00:08:51,120 --> 00:08:54,360 Speaker 6: of the things that we do want to see besides unemployment, 148 00:08:54,360 --> 00:08:57,560 Speaker 6: which she gave a very good description of, is whether 149 00:08:57,679 --> 00:09:02,080 Speaker 6: or not job creation does slow. If we got one 150 00:09:02,160 --> 00:09:04,920 Speaker 6: hundred and twenty thousand, which is proximately what Enna is 151 00:09:04,960 --> 00:09:09,240 Speaker 6: talking about in terms of job creation x strikers being 152 00:09:09,280 --> 00:09:11,960 Speaker 6: added back, that would be much closer to what the 153 00:09:12,000 --> 00:09:16,319 Speaker 6: Fed thinks is the minimum needed to absorb new entrance 154 00:09:16,480 --> 00:09:19,280 Speaker 6: to the labor force to basically keep us kind of neutral, 155 00:09:19,600 --> 00:09:22,360 Speaker 6: and they wouldn't think that's bad at all. I'm not 156 00:09:22,400 --> 00:09:25,080 Speaker 6: sure how the markets would react to that. Right now, 157 00:09:25,120 --> 00:09:27,920 Speaker 6: the Bloomberg consensus is one hundred and seventy five thousand, 158 00:09:28,080 --> 00:09:30,880 Speaker 6: which one assumes includes that thirty thousand, so it's a 159 00:09:30,920 --> 00:09:33,959 Speaker 6: little bit stronger than the Bloomberg Economics number. But I 160 00:09:34,000 --> 00:09:37,199 Speaker 6: would also caution that over the coming week we'll get 161 00:09:37,240 --> 00:09:40,480 Speaker 6: a lot more of the input data that people look 162 00:09:40,520 --> 00:09:42,320 Speaker 6: at when they make their forecasts, so that could be 163 00:09:42,320 --> 00:09:44,600 Speaker 6: revised by the time we get to Friday morning. 164 00:09:44,920 --> 00:09:47,080 Speaker 1: What kind of jobs are we absorbing here. 165 00:09:46,960 --> 00:09:50,400 Speaker 6: Well, mostly what we have been seeing is healthcare jobs, 166 00:09:50,480 --> 00:09:54,120 Speaker 6: and still some leisure and hospitality jobs. Leisure hospitality is 167 00:09:54,160 --> 00:09:57,520 Speaker 6: the category that has not regained all of its employment 168 00:09:57,600 --> 00:10:01,400 Speaker 6: yet from the pandemic, so probably we'll see more in 169 00:10:01,480 --> 00:10:04,520 Speaker 6: that category. It will be interesting to see what we 170 00:10:04,559 --> 00:10:06,960 Speaker 6: see in terms of retail because of course this is 171 00:10:07,000 --> 00:10:11,240 Speaker 6: the time of year when retailers add temporary employees, and 172 00:10:11,920 --> 00:10:16,720 Speaker 6: there's anecdotal reporting that they've added fewer than in previous years. 173 00:10:16,720 --> 00:10:20,400 Speaker 6: But does that mean we're adding more people in warehousing 174 00:10:20,480 --> 00:10:23,120 Speaker 6: and transportation, which is where sort of the Amazon and 175 00:10:23,240 --> 00:10:27,199 Speaker 6: Walmart workers end up in those situations over the holidays. 176 00:10:27,240 --> 00:10:28,960 Speaker 6: So that's going to be something to look at in 177 00:10:29,000 --> 00:10:30,000 Speaker 6: the jobs report as well. 178 00:10:30,040 --> 00:10:30,199 Speaker 5: Well. 179 00:10:30,240 --> 00:10:32,960 Speaker 1: We'll find out this Friday and our thanks to Anna Wong, 180 00:10:33,080 --> 00:10:37,040 Speaker 1: Chief US Economists with Bloomberg Economics and Michael McKee, Bloomberg 181 00:10:37,160 --> 00:10:41,120 Speaker 1: International Economics and Policy correspondent, and coming up on Bloomberg 182 00:10:41,200 --> 00:10:43,080 Speaker 1: day Break weekend, we head to Europe and look at 183 00:10:43,080 --> 00:10:45,559 Speaker 1: some key data coming out of the auto industry. 184 00:10:45,559 --> 00:10:45,839 Speaker 5: There. 185 00:10:46,040 --> 00:10:59,199 Speaker 1: I'm Tom Busby and this is Bloomberg. I'm Tom Busby, 186 00:10:59,280 --> 00:11:04,000 Speaker 1: New York. Later in our program, Congress continues its funding battles, 187 00:11:04,280 --> 00:11:06,840 Speaker 1: but first in the UK we get fresh data on 188 00:11:06,880 --> 00:11:09,840 Speaker 1: the number of new car registrations in the coming days. 189 00:11:10,120 --> 00:11:12,719 Speaker 1: The sector has shown some signs of recovery recently, but 190 00:11:12,920 --> 00:11:18,199 Speaker 1: manufacturer is still battling against the challenging post Brexit economic environment, 191 00:11:18,520 --> 00:11:22,320 Speaker 1: including painful tariffs on electric vehicles. For more, let's go 192 00:11:22,320 --> 00:11:24,559 Speaker 1: to London and bring in Bloomberg day break europe banker 193 00:11:24,800 --> 00:11:26,199 Speaker 1: Caroline hepgar Tom. 194 00:11:26,240 --> 00:11:28,520 Speaker 2: Only a few days ago, nis An announced more than 195 00:11:28,520 --> 00:11:32,160 Speaker 2: two billion pounds of investment into the British car industry. 196 00:11:32,480 --> 00:11:35,560 Speaker 2: The Japanese car maker will set up another battery factory 197 00:11:35,600 --> 00:11:38,960 Speaker 2: and produce more electric vehicles at its plant in Sunderland. 198 00:11:39,320 --> 00:11:42,600 Speaker 2: The government is supporting this investment, which is the latest 199 00:11:42,640 --> 00:11:46,600 Speaker 2: attempt to inject life into an industry that continues to 200 00:11:46,679 --> 00:11:50,880 Speaker 2: grapple with the lasting effects of the twenty sixteen Brexit vote. 201 00:11:51,120 --> 00:11:54,439 Speaker 2: So can the UK really compete as the industry shifts 202 00:11:54,480 --> 00:11:57,920 Speaker 2: towards electric vehicles. Were thinking about this, of course, in 203 00:11:57,960 --> 00:12:02,160 Speaker 2: the context of new car registration's data that is due 204 00:12:02,280 --> 00:12:06,520 Speaker 2: in the next few days. Bluemberg's Global Automotive editor, Craig 205 00:12:06,559 --> 00:12:09,360 Speaker 2: Trudell has been speaking to me about it. I began 206 00:12:09,400 --> 00:12:12,480 Speaker 2: by asking him just to give us a reading on 207 00:12:12,520 --> 00:12:17,720 Speaker 2: the current state of the UK car market sales overall. 208 00:12:16,880 --> 00:12:19,920 Speaker 9: On the surface, the numbers have looked pretty good lately. 209 00:12:20,200 --> 00:12:23,839 Speaker 9: We've had fifteen consecutive months of growth. That's obviously you 210 00:12:23,880 --> 00:12:27,760 Speaker 9: know that that sounds great, but so has the European market, 211 00:12:28,120 --> 00:12:30,640 Speaker 9: and so it's really sort of a matter of you know, 212 00:12:30,720 --> 00:12:33,239 Speaker 9: kind of keeping up with the joneses that in that respect, 213 00:12:33,840 --> 00:12:36,600 Speaker 9: it's also the case that, as you alluded to, you know, 214 00:12:36,640 --> 00:12:39,360 Speaker 9: we're still a long ways from where we were pre pandemics. 215 00:12:39,400 --> 00:12:42,760 Speaker 9: So back in twenty nineteen there were two point three 216 00:12:42,800 --> 00:12:46,000 Speaker 9: million new cars registered in the UK. Last year there 217 00:12:46,040 --> 00:12:49,319 Speaker 9: was one point six million, so about seven hundred thousand 218 00:12:49,520 --> 00:12:52,280 Speaker 9: units short of of where we were before the pandemic, 219 00:12:52,320 --> 00:12:55,080 Speaker 9: and so we're still a long ways from where we 220 00:12:55,080 --> 00:12:59,640 Speaker 9: were before, you know, before the industry dealt with this 221 00:12:59,679 --> 00:13:00,560 Speaker 9: mass disruption. 222 00:13:01,320 --> 00:13:04,560 Speaker 2: So in terms then of how important the UK car 223 00:13:04,640 --> 00:13:07,439 Speaker 2: market actually is to these Comke has just put that 224 00:13:07,679 --> 00:13:08,640 Speaker 2: into context. 225 00:13:08,720 --> 00:13:12,000 Speaker 9: For Yeah, for all the challenges the UK has been having, 226 00:13:12,120 --> 00:13:15,280 Speaker 9: it is still Europe's number two market after Germany. It's 227 00:13:15,320 --> 00:13:18,000 Speaker 9: also one of the more important markets in the world 228 00:13:18,120 --> 00:13:21,400 Speaker 9: for premium and higher end vehicles. So you still have 229 00:13:22,080 --> 00:13:24,599 Speaker 9: quite a bit of wealth on the part of consumers 230 00:13:24,600 --> 00:13:27,280 Speaker 9: in the UK. A lot of the luxury brands do 231 00:13:27,480 --> 00:13:30,440 Speaker 9: quite well here, so it is a very important market, 232 00:13:30,480 --> 00:13:33,160 Speaker 9: even if it has you know, faded and relevance to 233 00:13:33,200 --> 00:13:36,040 Speaker 9: some degree, I would say, especially on the manufacturing side. 234 00:13:36,160 --> 00:13:39,679 Speaker 2: Okay, So then on that side of things, how important 235 00:13:39,880 --> 00:13:42,680 Speaker 2: was the announcement from Nissan for example, that two big 236 00:13:42,720 --> 00:13:44,680 Speaker 2: into a pounds worth of investment. 237 00:13:44,559 --> 00:13:49,320 Speaker 9: Was Sunderland is a massive factory. It's Nissan's largest assembly 238 00:13:49,360 --> 00:13:52,240 Speaker 9: plant in the world, and it's really crucial that the 239 00:13:52,360 --> 00:13:55,600 Speaker 9: UK was able to sort of solidify its future, especially 240 00:13:55,640 --> 00:13:58,839 Speaker 9: what we've seen over the last half decade or so. 241 00:13:58,840 --> 00:14:02,240 Speaker 9: So car product here slumped last year to the lowest 242 00:14:02,280 --> 00:14:05,840 Speaker 9: since nineteen fifty six. You could chalk that up to 243 00:14:06,200 --> 00:14:09,240 Speaker 9: a few factors. Honda closed up plant here in twenty 244 00:14:09,280 --> 00:14:12,680 Speaker 9: twenty one, you had Stalantis, you know, shift a car 245 00:14:12,720 --> 00:14:15,800 Speaker 9: factory to vans, which you know don't count toward cars 246 00:14:15,840 --> 00:14:19,000 Speaker 9: of course, but it's also you know, a lower volume plant. 247 00:14:19,000 --> 00:14:21,840 Speaker 9: As a result of that shift, you've seen JLR sort 248 00:14:21,880 --> 00:14:26,480 Speaker 9: of shift you know upmarket to higher value, lower volume products, 249 00:14:26,480 --> 00:14:29,120 Speaker 9: and so you know, the UK now is down to 250 00:14:29,360 --> 00:14:32,120 Speaker 9: four major manufacturers at this point. You have Nissan and 251 00:14:32,240 --> 00:14:35,640 Speaker 9: JLR that kind of compete for top dog status and 252 00:14:35,760 --> 00:14:39,040 Speaker 9: go back and forth. You have BMW and Mini and 253 00:14:39,080 --> 00:14:42,080 Speaker 9: you have Toyota and those four are sort of what 254 00:14:42,160 --> 00:14:42,720 Speaker 9: we have left. 255 00:14:43,520 --> 00:14:47,200 Speaker 2: Wow, for an industry that has been so crucial for 256 00:14:47,280 --> 00:14:51,640 Speaker 2: successive governments, right, that was sort of kicked off really 257 00:14:51,680 --> 00:14:57,080 Speaker 2: going back as far as that, The issue then with 258 00:14:57,320 --> 00:15:00,520 Speaker 2: that how much has the government currently had to help 259 00:15:00,520 --> 00:15:03,760 Speaker 2: in order to keep those names here and in production. 260 00:15:04,200 --> 00:15:06,680 Speaker 2: As you said, I remember the reporting around Sunderland. The 261 00:15:06,760 --> 00:15:09,440 Speaker 2: real worry was around a lot of potential job losses. 262 00:15:09,680 --> 00:15:11,800 Speaker 9: Yeah, you know, we had a good story just this 263 00:15:11,880 --> 00:15:14,880 Speaker 9: week as the UK announced you know, this manufacturing plan 264 00:15:14,960 --> 00:15:17,680 Speaker 9: and I think it was two billion pounds that they 265 00:15:17,680 --> 00:15:21,760 Speaker 9: were committing to auto manufacturing specifically. I think there's been 266 00:15:21,800 --> 00:15:24,240 Speaker 9: a really interesting sort of reluctance to sort of be 267 00:15:24,360 --> 00:15:27,720 Speaker 9: drawn into, you know, the sort of subsidy wars that 268 00:15:27,760 --> 00:15:29,480 Speaker 9: have kicked off. You know you had. Of course, the 269 00:15:29,480 --> 00:15:33,479 Speaker 9: Inflation Production Act in the US has been hugely controversial, 270 00:15:33,720 --> 00:15:38,160 Speaker 9: even among some of America's allies. You've seen Canada react 271 00:15:38,200 --> 00:15:40,840 Speaker 9: to that in an extremely aggressive way and throw billions 272 00:15:40,840 --> 00:15:43,800 Speaker 9: of dollars at companies like Volkswagen to get them to 273 00:15:43,840 --> 00:15:47,480 Speaker 9: make battery investments. I think the UK has both been reluctant, 274 00:15:47,480 --> 00:15:49,960 Speaker 9: as I mentioned, to be drawn into that, but I 275 00:15:50,000 --> 00:15:54,080 Speaker 9: don't think that they can fully exclude themselves. There is 276 00:15:54,120 --> 00:15:57,880 Speaker 9: some element of needing to bring you know, investment in 277 00:15:57,960 --> 00:16:01,800 Speaker 9: by sort of offering some major incentives. And that's always 278 00:16:01,800 --> 00:16:04,080 Speaker 9: been how the game has has been played in this 279 00:16:04,200 --> 00:16:07,520 Speaker 9: industry because of the number of jobs and high value 280 00:16:07,640 --> 00:16:10,480 Speaker 9: employment that that this industry brings. It's it's sort of 281 00:16:10,520 --> 00:16:14,640 Speaker 9: inherent to the way you know, plants, plant locations get decided. 282 00:16:14,720 --> 00:16:17,480 Speaker 2: Yeah, absolutely stuck with that. Competition got to deal with it. 283 00:16:18,040 --> 00:16:20,800 Speaker 2: What about the problem though, of this sort of post 284 00:16:20,840 --> 00:16:25,480 Speaker 2: Brexit issue. How significant are these tariffs meant to come 285 00:16:25,520 --> 00:16:26,560 Speaker 2: in on the first of January. 286 00:16:27,040 --> 00:16:28,920 Speaker 9: It would be really significant and I think it would 287 00:16:28,960 --> 00:16:31,920 Speaker 9: be embarrassing honestly, both, you know, for the UK government 288 00:16:32,000 --> 00:16:35,160 Speaker 9: and for Brussels. I think, you know, there was good 289 00:16:35,200 --> 00:16:38,200 Speaker 9: intention here. There was you know, really an interest in 290 00:16:38,520 --> 00:16:42,400 Speaker 9: getting the EV supply chain localized in the UK and 291 00:16:42,440 --> 00:16:45,800 Speaker 9: in Europe, but there have been real challenges with the industry, 292 00:16:46,000 --> 00:16:48,280 Speaker 9: you know, making progress on that on that front. Here 293 00:16:48,320 --> 00:16:51,280 Speaker 9: in the UK, you had a British Vault, a startup 294 00:16:51,320 --> 00:16:53,960 Speaker 9: that you know, had big ambitions but wasn't able to 295 00:16:54,000 --> 00:16:57,960 Speaker 9: execute on them. You've had in Europe in general, just 296 00:16:58,040 --> 00:17:00,400 Speaker 9: you know, sort of slow progress and getting the supply 297 00:17:00,520 --> 00:17:03,840 Speaker 9: chain up and running and so, you know, again good intentions. 298 00:17:03,880 --> 00:17:05,679 Speaker 9: It made sense to try and you know push the 299 00:17:05,720 --> 00:17:09,000 Speaker 9: industry in that direction, but you know, given how far 300 00:17:09,080 --> 00:17:12,159 Speaker 9: behind the industry is and sort of you know, getting 301 00:17:12,160 --> 00:17:14,240 Speaker 9: that set up, and it's you know, really sort of 302 00:17:14,320 --> 00:17:18,280 Speaker 9: across the board. Even Tesla's is behind in you know, 303 00:17:18,359 --> 00:17:23,520 Speaker 9: localizing battery production and its German plant. You know, if 304 00:17:23,560 --> 00:17:25,400 Speaker 9: nothing is done before the end of the year, we're 305 00:17:25,440 --> 00:17:29,160 Speaker 9: talking about tariffs between the EU and the UK, two 306 00:17:29,320 --> 00:17:32,920 Speaker 9: you know, very important trade partners to one another, Tariffs 307 00:17:32,920 --> 00:17:36,679 Speaker 9: being put on each other's evs that wouldn't apply to say, China, 308 00:17:37,400 --> 00:17:39,960 Speaker 9: and of course that would not go over particularly well, 309 00:17:40,040 --> 00:17:43,680 Speaker 9: especially when consumers already sort of bocking at buying evs 310 00:17:43,680 --> 00:17:45,040 Speaker 9: because they're already too expensive. 311 00:17:45,320 --> 00:17:48,960 Speaker 2: Yeah, and so unusually you've got this, Actually the car 312 00:17:48,960 --> 00:17:51,000 Speaker 2: industry on both sides of the channel, in Europe and 313 00:17:51,040 --> 00:17:55,360 Speaker 2: the UK, you really wanting some mitigation measures. So what's 314 00:17:55,359 --> 00:17:56,879 Speaker 2: the EU proposing on that front? 315 00:17:57,080 --> 00:18:00,520 Speaker 9: Yeah, it's it's interesting, you know, three options being propos here, 316 00:18:01,119 --> 00:18:03,879 Speaker 9: you know, one being do nothing, which I think is 317 00:18:03,880 --> 00:18:06,800 Speaker 9: is you know, quite unlikely that that that that will happen, 318 00:18:06,840 --> 00:18:09,560 Speaker 9: because again I think it would be embarrassing to sort of, 319 00:18:10,000 --> 00:18:12,600 Speaker 9: you know, for for Europe and the UK to put 320 00:18:12,600 --> 00:18:16,919 Speaker 9: themselves in this position. Uh, there's a complicated you know, 321 00:18:17,000 --> 00:18:20,280 Speaker 9: sort of you know, short term measure of sort of 322 00:18:20,359 --> 00:18:22,800 Speaker 9: kicking the can down the road by one year. That 323 00:18:22,840 --> 00:18:25,000 Speaker 9: would be you know, complicated just from a sort of 324 00:18:25,000 --> 00:18:29,080 Speaker 9: logistical standpoint. The other option that the industry is is 325 00:18:29,080 --> 00:18:32,760 Speaker 9: pushing for is a much longer delay here, roughly three years. 326 00:18:33,200 --> 00:18:36,919 Speaker 9: And you know, of course it would necessarily you know, 327 00:18:37,119 --> 00:18:40,639 Speaker 9: it would to some degree not necessarily reflect well on 328 00:18:40,680 --> 00:18:43,520 Speaker 9: the industry that you know, it's taking them this much time. 329 00:18:43,520 --> 00:18:45,399 Speaker 9: But I also think it's a sort of you know 330 00:18:45,880 --> 00:18:49,239 Speaker 9: reality that it does take you know, an industry this 331 00:18:49,280 --> 00:18:53,160 Speaker 9: big and this complicated, uh, you know, to make these 332 00:18:53,200 --> 00:18:56,159 Speaker 9: sorts of you know, longer term investments, and you know, 333 00:18:56,240 --> 00:18:58,920 Speaker 9: if the industry were to sort of rush into them 334 00:18:59,640 --> 00:19:02,359 Speaker 9: before or you know, before the consumer is ready and 335 00:19:02,480 --> 00:19:07,919 Speaker 9: before you know, or sort of under under dress you know, 336 00:19:08,040 --> 00:19:11,120 Speaker 9: you you sort of raised the odds that that we 337 00:19:11,400 --> 00:19:14,320 Speaker 9: have problems and and you know, put evs out there 338 00:19:14,359 --> 00:19:17,240 Speaker 9: that aren't aren't ready, and with batteries that that are problematic. 339 00:19:17,240 --> 00:19:19,199 Speaker 9: We've seen a lot of you know, sort of teething 340 00:19:19,200 --> 00:19:22,560 Speaker 9: issues on the part of the industry with battery fire something. 341 00:19:22,600 --> 00:19:24,440 Speaker 2: Yeah, thank you so much for being with us. Craig 342 00:19:24,480 --> 00:19:27,639 Speaker 2: tru Dallas, Bloomberg's Global Automotive edis are looking at one 343 00:19:27,640 --> 00:19:30,680 Speaker 2: of the key issues facing the UK's car industry. I'm 344 00:19:30,720 --> 00:19:33,040 Speaker 2: Caroline Hepga here in London. You can catch us every 345 00:19:33,040 --> 00:19:36,520 Speaker 2: weekday morning for Bloomberg Daybreak Europe, beginning at six am 346 00:19:36,560 --> 00:19:38,600 Speaker 2: in London. That's one am on Wall Street. 347 00:19:38,760 --> 00:19:42,359 Speaker 1: Tom our thanks to Bloomberg Daybreak Europe Banker Caroline Hepgar 348 00:19:42,680 --> 00:19:45,480 Speaker 1: and coming up on Bloomberg day Break weekend. China trying 349 00:19:45,520 --> 00:19:49,359 Speaker 1: to improve trade relations with another vital partner, not the 350 00:19:49,520 --> 00:20:02,960 Speaker 1: US though. I'm Tom Busby and this is Bloomberg. I'm 351 00:20:03,000 --> 00:20:05,000 Speaker 1: Tom Busby in New York with your global look ahead 352 00:20:05,040 --> 00:20:07,080 Speaker 1: at the top stories for investors in the coming week. 353 00:20:07,520 --> 00:20:09,960 Speaker 1: The European Union has said it does not want to 354 00:20:10,119 --> 00:20:14,480 Speaker 1: decouple from China, but rather de risk parts of its relationship. 355 00:20:14,960 --> 00:20:17,119 Speaker 1: So with a summit coming up between the two blocks, 356 00:20:17,160 --> 00:20:20,479 Speaker 1: how my China and the EU navigate their dialogue on 357 00:20:20,560 --> 00:20:24,240 Speaker 1: improving their trade relationship. For more, let's get to Bloomberg 358 00:20:24,280 --> 00:20:27,239 Speaker 1: Daybreak Asia co host Brian Curtis. 359 00:20:26,920 --> 00:20:29,760 Speaker 3: Tom China and the European Union are sent to hold 360 00:20:29,800 --> 00:20:33,200 Speaker 3: a summit on December seventh and eighth. The European Commission 361 00:20:33,200 --> 00:20:36,840 Speaker 3: and Council presidents Ursulav Underlay and then Charles Michelle will 362 00:20:36,840 --> 00:20:40,080 Speaker 3: travel to China. One of the big issues of late 363 00:20:40,480 --> 00:20:43,479 Speaker 3: China is concerned about the European Union's launch of an 364 00:20:43,520 --> 00:20:48,359 Speaker 3: anti subsidy investigation into the imports of electric vehicles. This 365 00:20:48,440 --> 00:20:51,560 Speaker 3: summit comes around after a series of high level dialogues 366 00:20:51,600 --> 00:20:54,679 Speaker 3: of late and these happened earlier this year on issues 367 00:20:54,680 --> 00:20:57,879 Speaker 3: including trade and foreign policy. Joining us now is Jenny 368 00:20:57,960 --> 00:21:02,080 Speaker 3: Marsh Bloomberg Team leader for Greater China and the Economics 369 00:21:02,119 --> 00:21:05,080 Speaker 3: and Government Team. Jenny, thanks so much for being with us. 370 00:21:05,520 --> 00:21:08,880 Speaker 3: So this is the first face to face or in 371 00:21:08,920 --> 00:21:13,200 Speaker 3: person summit with Beijing's leadership for Europe in some four years. 372 00:21:13,359 --> 00:21:15,760 Speaker 3: A lot is expected. What can we expect? 373 00:21:15,880 --> 00:21:18,160 Speaker 10: Yeah, I mean a lot's expected, and at the same time, 374 00:21:18,600 --> 00:21:21,600 Speaker 10: almost nothing is expected because you know these two blocks 375 00:21:21,640 --> 00:21:24,000 Speaker 10: they are they're at a really low point in their 376 00:21:24,040 --> 00:21:27,720 Speaker 10: ties at the moment. It's extremely acrimonious, and you know 377 00:21:28,400 --> 00:21:31,600 Speaker 10: they're going to obviously be talking about the differences in trades, 378 00:21:31,640 --> 00:21:33,760 Speaker 10: and I think, you know, market access is what this 379 00:21:33,880 --> 00:21:37,399 Speaker 10: trip is all going to come down to, and you know, 380 00:21:37,600 --> 00:21:40,000 Speaker 10: neither side has really much room to give. I think, 381 00:21:40,040 --> 00:21:43,080 Speaker 10: you know, obviously front and center for the Chinese is 382 00:21:43,119 --> 00:21:47,760 Speaker 10: this probe into its subsidies and support for the EV market, 383 00:21:49,280 --> 00:21:51,399 Speaker 10: and the europe has been saying to China that it 384 00:21:51,440 --> 00:21:54,320 Speaker 10: needs to cooperate with this probe because it's very hard 385 00:21:54,359 --> 00:21:56,280 Speaker 10: for Europe to come to a fair conclusion if it 386 00:21:56,320 --> 00:21:59,639 Speaker 10: doesn't have visibility over all the different ways. You know 387 00:22:00,240 --> 00:22:04,320 Speaker 10: that China does support its EV industry, so they're going 388 00:22:04,359 --> 00:22:07,080 Speaker 10: to be looking for more access there. You know, China's 389 00:22:07,080 --> 00:22:09,879 Speaker 10: position on this is very clear. They think that the 390 00:22:09,920 --> 00:22:14,399 Speaker 10: Europeans are being unfair and they say they have this 391 00:22:14,520 --> 00:22:16,639 Speaker 10: kind of full supply chain of the things that you 392 00:22:16,720 --> 00:22:19,000 Speaker 10: need to create evs in China and lots of the 393 00:22:19,040 --> 00:22:21,920 Speaker 10: raw materials for batteries for example, are made in China 394 00:22:21,960 --> 00:22:24,800 Speaker 10: and processed in China, which would use its costs. So 395 00:22:25,520 --> 00:22:27,560 Speaker 10: they each have their own positions on this, and it's 396 00:22:27,600 --> 00:22:30,080 Speaker 10: going to be probably at the heart of the discussions, 397 00:22:30,080 --> 00:22:33,399 Speaker 10: although there are other issues around the trade relationship and 398 00:22:33,480 --> 00:22:36,120 Speaker 10: just the bilateral relationship in general they'll be discussing. 399 00:22:36,400 --> 00:22:40,520 Speaker 3: It raises the question, I suppose, it's really a dilemma 400 00:22:40,600 --> 00:22:43,439 Speaker 3: whether or not, as a major trading block like Europe, 401 00:22:43,440 --> 00:22:47,639 Speaker 3: whether you can reduce your economic dependence on China without 402 00:22:47,680 --> 00:22:49,600 Speaker 3: souring relations It's difficult. 403 00:22:49,640 --> 00:22:52,919 Speaker 10: I mean, Italy seems to have managed very gracefully to 404 00:22:52,920 --> 00:22:56,320 Speaker 10: sort of boud out of the the bri while maintaining 405 00:22:56,720 --> 00:22:59,400 Speaker 10: its relationship with China. But I think what China does 406 00:22:59,480 --> 00:23:01,399 Speaker 10: really take bridge at is sort of this kind of 407 00:23:02,200 --> 00:23:07,040 Speaker 10: de risking framework, which you know was the Europeans Funderlayan 408 00:23:07,080 --> 00:23:10,560 Speaker 10: who coined that phrase. While de risking is more powasable 409 00:23:10,600 --> 00:23:13,399 Speaker 10: than decoupling to China, it's actually the same thing with 410 00:23:13,480 --> 00:23:16,480 Speaker 10: a different name, And essentially that means sort of ring 411 00:23:16,560 --> 00:23:20,800 Speaker 10: fencing big parts of your economy from the Chinese, and 412 00:23:20,840 --> 00:23:23,000 Speaker 10: often it's those parts of the economies that they really 413 00:23:23,000 --> 00:23:24,600 Speaker 10: care about, and if from the US side it's the 414 00:23:24,680 --> 00:23:30,840 Speaker 10: high tech chips and so yeah, it creates these tensions 415 00:23:31,359 --> 00:23:35,000 Speaker 10: and it's hard to separate the trade relationship from the 416 00:23:35,000 --> 00:23:39,359 Speaker 10: ballateral relationship, and it actually, I mean Europe is telling China. 417 00:23:40,160 --> 00:23:42,480 Speaker 10: On Don Brobsky's visit earlier this year, he made it 418 00:23:42,560 --> 00:23:45,240 Speaker 10: very clear that they don't see the human rights side, 419 00:23:45,280 --> 00:23:48,719 Speaker 10: for example, separate to trade in economic relationships. So if 420 00:23:49,359 --> 00:23:52,919 Speaker 10: increasingly they're both moving away from this idea like you 421 00:23:52,960 --> 00:23:56,760 Speaker 10: can trade with someone but you can disagree on fundamental values, 422 00:23:57,040 --> 00:23:59,480 Speaker 10: now that's sort of changing a bit, and both sides 423 00:24:00,240 --> 00:24:03,560 Speaker 10: actually are linking those two different sides of the relationship more. 424 00:24:04,440 --> 00:24:07,520 Speaker 3: It's been highlighted that what Europe is looking for is 425 00:24:07,800 --> 00:24:10,800 Speaker 3: a level playing field, and as you mentioned, one of 426 00:24:10,800 --> 00:24:12,399 Speaker 3: the ways that we can kind of look at that 427 00:24:12,600 --> 00:24:16,439 Speaker 3: is the trade surplus that China enjoys with Europe. It's massive, 428 00:24:16,520 --> 00:24:20,400 Speaker 3: it's more than four hundred billion euros. So you're wondering, 429 00:24:20,800 --> 00:24:23,840 Speaker 3: how do you write size that in others? What could 430 00:24:24,080 --> 00:24:28,800 Speaker 3: China buy from Europe more to help change that relationship. 431 00:24:29,000 --> 00:24:30,200 Speaker 8: Yeah, and that's a good question. 432 00:24:30,640 --> 00:24:33,520 Speaker 10: There are all these different sort of restrictions at the 433 00:24:33,520 --> 00:24:37,320 Speaker 10: moment on European cosmetics that the Europeans are going to 434 00:24:37,320 --> 00:24:41,640 Speaker 10: be lobbying to get removed, and also on instant formula, 435 00:24:42,080 --> 00:24:44,760 Speaker 10: so there's trade barriers there which are hold mete. European companies, 436 00:24:45,640 --> 00:24:50,280 Speaker 10: the French particularly, are concerned about the cosmetics barriers. 437 00:24:50,680 --> 00:24:52,480 Speaker 8: So that's something that the Europeans. 438 00:24:52,040 --> 00:24:54,720 Speaker 10: Could love be for Whether or not that will be 439 00:24:54,760 --> 00:24:58,639 Speaker 10: sufficient to sort of to narrow that huge trade deficit 440 00:24:58,640 --> 00:25:01,280 Speaker 10: that you mentioned, you know, I'm sure of, but it's 441 00:25:01,280 --> 00:25:04,560 Speaker 10: sort of it's going to be a bigger problem going forward. 442 00:25:04,640 --> 00:25:07,160 Speaker 10: This is not going to go away because China's being 443 00:25:07,240 --> 00:25:09,320 Speaker 10: very clear. You know, you have Pangang Sheng talking in 444 00:25:09,359 --> 00:25:11,719 Speaker 10: Hong Kong this week about how China needs to sort 445 00:25:11,760 --> 00:25:14,840 Speaker 10: of back away from its sort of property led growth 446 00:25:14,920 --> 00:25:16,639 Speaker 10: and to sort of put money into these sort of 447 00:25:16,640 --> 00:25:21,240 Speaker 10: new emerging green markets, which you know EV's is one 448 00:25:21,280 --> 00:25:24,720 Speaker 10: of them. If China ramps up its manufacturing capacity in 449 00:25:24,760 --> 00:25:28,080 Speaker 10: those areas, what Europe and others worried about is sort 450 00:25:28,119 --> 00:25:30,800 Speaker 10: of China's going to flood the market essentially, because it 451 00:25:30,920 --> 00:25:34,000 Speaker 10: has built a sufficient amount of the factories it needs 452 00:25:34,480 --> 00:25:36,320 Speaker 10: to meet domestic demand right now. 453 00:25:36,359 --> 00:25:38,439 Speaker 8: So where where does that excess go? 454 00:25:39,480 --> 00:25:41,400 Speaker 3: And one of the other areas that we haven't talked 455 00:25:41,400 --> 00:25:46,479 Speaker 3: about is the commodities, the crucial commodities that Europe buys 456 00:25:46,560 --> 00:25:50,439 Speaker 3: from China, and there's a little bit of complication with 457 00:25:50,520 --> 00:25:53,560 Speaker 3: that because China is now talking about actually limiting the 458 00:25:53,600 --> 00:25:58,760 Speaker 3: possible sales of certain types of rare earth minerals, for instance, 459 00:25:58,800 --> 00:26:03,560 Speaker 3: and so it may be difficult for Europe to either 460 00:26:03,920 --> 00:26:07,080 Speaker 3: raise or reduce its economic dependence on China when it 461 00:26:07,119 --> 00:26:08,120 Speaker 3: comes to commodities. 462 00:26:08,400 --> 00:26:10,359 Speaker 10: This is sort of one of the few areas where 463 00:26:10,440 --> 00:26:12,760 Speaker 10: China actually has some leverage. I think, you know, it's 464 00:26:12,800 --> 00:26:16,360 Speaker 10: fund and difficult to respond to US and Europeans sort 465 00:26:16,400 --> 00:26:19,760 Speaker 10: of trade curves in the past, but it's kind of 466 00:26:19,800 --> 00:26:22,840 Speaker 10: dominance in the market of rare earths is something that 467 00:26:22,920 --> 00:26:26,360 Speaker 10: China does have in its tool box. Although it's sort 468 00:26:26,359 --> 00:26:29,960 Speaker 10: of already granted licenses for the export of some of 469 00:26:30,000 --> 00:26:33,840 Speaker 10: these minerals that it did put the restrictions on, the 470 00:26:33,960 --> 00:26:37,280 Speaker 10: Commerce Ministry has sort of given the green light for 471 00:26:37,400 --> 00:26:40,919 Speaker 10: China to export, and so it sort of still remains 472 00:26:40,920 --> 00:26:43,800 Speaker 10: to be seen how strictly China is going to enforce 473 00:26:43,880 --> 00:26:46,879 Speaker 10: those but it's a reminder to the Europeans that, you know, 474 00:26:47,280 --> 00:26:50,400 Speaker 10: if they press ahead with this EV program, they come 475 00:26:50,400 --> 00:26:54,720 Speaker 10: out with a bunch of sort of tariffs on Chinese 476 00:26:54,720 --> 00:26:57,040 Speaker 10: EV's at the end of it, then China does have 477 00:26:57,080 --> 00:26:59,240 Speaker 10: ways it can respond that could hurt the European market. 478 00:27:00,080 --> 00:27:02,919 Speaker 3: Why hasn't China actually confirmed this summit yet? 479 00:27:03,800 --> 00:27:06,800 Speaker 10: This is sort of how China does diplomacy. It's sort 480 00:27:06,800 --> 00:27:08,880 Speaker 10: of baffling to the rest of the world. But they 481 00:27:09,080 --> 00:27:11,720 Speaker 10: very rarely confirm at these kind of events until the 482 00:27:11,800 --> 00:27:15,119 Speaker 10: last minute, I guess because it just gives them some 483 00:27:15,119 --> 00:27:17,199 Speaker 10: some wiggle room if they want to move things, they 484 00:27:17,200 --> 00:27:19,320 Speaker 10: don't have to then backtrack because they never said anything 485 00:27:19,320 --> 00:27:22,800 Speaker 10: in the first place. It also just adds that kind 486 00:27:22,800 --> 00:27:28,040 Speaker 10: of sort of instability as opposed to the European side. 487 00:27:28,080 --> 00:27:29,680 Speaker 10: You know, we could call this off stop. We haven't 488 00:27:29,680 --> 00:27:32,520 Speaker 10: confirmed it in public. You know, it's kind of petty. 489 00:27:33,119 --> 00:27:35,000 Speaker 10: But this is just sort of textbook and how the 490 00:27:35,080 --> 00:27:37,439 Speaker 10: Chinese do it, and there wasn't really too much to 491 00:27:37,440 --> 00:27:38,160 Speaker 10: be read into it. 492 00:27:38,920 --> 00:27:42,159 Speaker 3: So the US, in describing its relationship and its aims 493 00:27:42,520 --> 00:27:44,720 Speaker 3: on the relationship with China, says it wants to de 494 00:27:44,880 --> 00:27:48,479 Speaker 3: risk but not decouple. Does Europe have a position in 495 00:27:48,520 --> 00:27:53,040 Speaker 3: particular on how it is either reducing its dependence or 496 00:27:53,320 --> 00:27:55,720 Speaker 3: even disengaging from China. 497 00:27:55,760 --> 00:27:59,440 Speaker 10: The Europeans are the architects of the de risking idea 498 00:28:00,200 --> 00:28:03,760 Speaker 10: of the language, and there were some reports earlier this 499 00:28:03,840 --> 00:28:07,120 Speaker 10: year where they did sort of identify you know, national 500 00:28:07,160 --> 00:28:12,159 Speaker 10: security is national security through economic security, so it's sensitive technologies. 501 00:28:13,480 --> 00:28:15,320 Speaker 10: So it's very much in alignment with the US position, 502 00:28:15,359 --> 00:28:18,879 Speaker 10: apart from they haven't they haven't adopted the sort of 503 00:28:18,920 --> 00:28:22,200 Speaker 10: measures that the Americans have about you know, areas where 504 00:28:22,240 --> 00:28:25,720 Speaker 10: American companies can invest or limiting access to sort of 505 00:28:25,760 --> 00:28:26,360 Speaker 10: the chips. 506 00:28:26,760 --> 00:28:28,680 Speaker 8: But they also don't have the same. 507 00:28:28,520 --> 00:28:31,639 Speaker 10: Level of technology that the Americans do right now, so 508 00:28:32,200 --> 00:28:36,480 Speaker 10: they're still really working through how they see the implementation 509 00:28:36,560 --> 00:28:38,720 Speaker 10: of de risking and they're sort of couple of sets 510 00:28:38,760 --> 00:28:40,880 Speaker 10: behind the US And. 511 00:28:41,400 --> 00:28:45,520 Speaker 3: Just finally just a bit of fun. Obviously, European brands 512 00:28:45,640 --> 00:28:49,880 Speaker 3: are very big in China, very well known, particularly in 513 00:28:49,920 --> 00:28:53,000 Speaker 3: the luxury end of the market. Are there China brands 514 00:28:53,200 --> 00:28:56,120 Speaker 3: Chinese brands that are known well in Europe? 515 00:28:56,280 --> 00:28:59,480 Speaker 8: Not too many. I mean Idye. 516 00:28:58,840 --> 00:29:02,880 Speaker 10: Byd By the one probably, and I think the Europeans 517 00:29:02,880 --> 00:29:04,520 Speaker 10: would rather it be less well known. 518 00:29:05,560 --> 00:29:08,040 Speaker 3: All right, Jenny, thanks so much for joining us. Jenny 519 00:29:08,040 --> 00:29:10,480 Speaker 3: marsh with us Bloomberg team leader for a Greater China 520 00:29:10,600 --> 00:29:13,880 Speaker 3: Eco GOV. I'm Brian Curtis's song with Doug Christner. You 521 00:29:13,920 --> 00:29:16,800 Speaker 3: can catch us every weekday. Here for Bloomberg day Break 522 00:29:16,840 --> 00:29:19,920 Speaker 3: Asia beginning at seven am in Hong Kong and six 523 00:29:20,000 --> 00:29:22,200 Speaker 3: pm on Wall Street tom. 524 00:29:21,960 --> 00:29:25,040 Speaker 1: Our thanks to Bloomberg day Break Asia co host Brian Curtison. 525 00:29:25,120 --> 00:29:27,960 Speaker 1: Coming up on Bloomberg day Break Weekend, a look at 526 00:29:27,960 --> 00:29:31,400 Speaker 1: a busy week ahead in Washington. I'm Tom Busby, and 527 00:29:31,520 --> 00:29:44,479 Speaker 1: this is Bloomberg. This is Bloomberg day Break Weekend, our 528 00:29:44,520 --> 00:29:46,840 Speaker 1: global look ahead at the top stories for investors in 529 00:29:46,880 --> 00:29:49,720 Speaker 1: the coming week. I'm Tom Busby in New York. It's 530 00:29:49,760 --> 00:29:51,840 Speaker 1: going to be a busy week ahead in Washington as 531 00:29:51,880 --> 00:29:55,920 Speaker 1: Congress continues its funding battles and some key hearings, including 532 00:29:55,960 --> 00:29:58,880 Speaker 1: testimony from some of the biggest names in the business world, 533 00:29:59,200 --> 00:30:00,600 Speaker 1: appear before the Senate. 534 00:30:01,040 --> 00:30:01,360 Speaker 8: For more. 535 00:30:01,440 --> 00:30:03,560 Speaker 1: Let's add to our Bloomberg ninety nine one newsroom in 536 00:30:03,680 --> 00:30:07,840 Speaker 1: Washington and Bloomberg Sound On co host Kaylee Lines. 537 00:30:07,960 --> 00:30:10,320 Speaker 4: Yeah, Tom, This coming Wednesday is going to be a 538 00:30:10,360 --> 00:30:13,880 Speaker 4: big day for big bank speak on Capitol Hill. The 539 00:30:13,920 --> 00:30:18,320 Speaker 4: CEOs of all eight jesibs global systemically important banks will 540 00:30:18,360 --> 00:30:21,000 Speaker 4: be appearing before the Senate Banking Committee for the annual 541 00:30:21,040 --> 00:30:25,600 Speaker 4: oversight of Wall Street Firm's hearing. So Jamie Diamond Brian moynihan, 542 00:30:25,840 --> 00:30:30,120 Speaker 4: Jane Fraser, David Solomon, James Gorman, Charlie Sharf, and even 543 00:30:30,200 --> 00:30:32,840 Speaker 4: Robin Vince of BNY Mellon and Ron o'hanley of State Street. 544 00:30:33,200 --> 00:30:36,800 Speaker 4: They'll all be testifying. It's a really important hearing. In fact, 545 00:30:36,840 --> 00:30:40,680 Speaker 4: it's so important that Shanali basic Bloomberg TV's global finance correspondent, 546 00:30:40,920 --> 00:30:42,800 Speaker 4: is going to be making the trip from New York 547 00:30:43,000 --> 00:30:45,720 Speaker 4: down here to Washington to cover it, and she's joining 548 00:30:45,840 --> 00:30:48,880 Speaker 4: us now. So Shanali, let's just talk about themes. 549 00:30:48,960 --> 00:30:49,320 Speaker 8: First. 550 00:30:49,400 --> 00:30:51,320 Speaker 4: What do you expect is going to come up in 551 00:30:51,360 --> 00:30:51,840 Speaker 4: this hearing. 552 00:30:51,960 --> 00:30:54,440 Speaker 11: Well, there's two things. One there's the agenda of the 553 00:30:54,480 --> 00:30:58,440 Speaker 11: lawmakers and then there's the agenda of the bankers themselves. Now, 554 00:30:58,440 --> 00:31:02,360 Speaker 11: you have to remember that you have policymakers really trying 555 00:31:02,360 --> 00:31:07,920 Speaker 11: to firm up rules around bank capital moving forward, and 556 00:31:08,240 --> 00:31:10,800 Speaker 11: those rules are now in their comment period. So what 557 00:31:11,080 --> 00:31:13,080 Speaker 11: is now happening is you're going to see the big 558 00:31:13,200 --> 00:31:17,080 Speaker 11: US banks, the CEOs of them, take this opportunity to 559 00:31:17,200 --> 00:31:20,200 Speaker 11: really make the case on why these rules would be 560 00:31:20,440 --> 00:31:23,840 Speaker 11: too stringent and start to choke off some of the 561 00:31:23,920 --> 00:31:27,920 Speaker 11: economic activity because they have to hold more capital against 562 00:31:27,960 --> 00:31:30,440 Speaker 11: the work that they do. Now from the lawmakers perspective, 563 00:31:30,480 --> 00:31:32,560 Speaker 11: they have other questions, and you saw it right when 564 00:31:32,600 --> 00:31:35,760 Speaker 11: the hearing was announced in the first place. Sharon Brown 565 00:31:35,920 --> 00:31:39,000 Speaker 11: I quote said that Wall Streets megabanks continue to make 566 00:31:39,040 --> 00:31:43,560 Speaker 11: record profits and to reward corporations that raise prices on Americans. 567 00:31:43,560 --> 00:31:47,200 Speaker 11: So inflation will still be a question. And also, like 568 00:31:47,280 --> 00:31:51,000 Speaker 11: we've seen in the prior year, we will also see 569 00:31:51,000 --> 00:31:54,400 Speaker 11: them question why most Americans have not seen the effective 570 00:31:54,440 --> 00:31:57,640 Speaker 11: higher interest rates through their savings accounts, because rates have 571 00:31:57,720 --> 00:32:01,080 Speaker 11: not risen very meaningfully relative to how quickly rates have 572 00:32:01,200 --> 00:32:04,320 Speaker 11: risen been written by the Federal Reserve. 573 00:32:04,600 --> 00:32:07,880 Speaker 4: Yeah, I think the capital requirements especially could be interesting 574 00:32:07,920 --> 00:32:10,600 Speaker 4: and possibly contentious because there are plenty of Republicans on 575 00:32:10,640 --> 00:32:14,320 Speaker 4: the Banking Committee who have been pretty vocally opposed to 576 00:32:14,400 --> 00:32:17,400 Speaker 4: the Postle three end game and those higher requirements. Basically 577 00:32:17,400 --> 00:32:19,440 Speaker 4: all of the Republican senators in fact, had written a 578 00:32:19,480 --> 00:32:22,680 Speaker 4: letter to the FED kind of casting doubt on whether 579 00:32:22,720 --> 00:32:24,800 Speaker 4: the Fed should really be pursuing this. So I guess 580 00:32:24,840 --> 00:32:27,880 Speaker 4: the bankers will be more aligned with that party and 581 00:32:27,920 --> 00:32:31,320 Speaker 4: it could be a little bit more contentious with the Democrats. 582 00:32:31,600 --> 00:32:34,120 Speaker 11: Well, it's interesting that you mentioned that too, because you 583 00:32:34,400 --> 00:32:37,720 Speaker 11: have this just a week after this hearing comes a 584 00:32:37,760 --> 00:32:40,960 Speaker 11: week after Jamie Diamond was pretty public at the CNBC 585 00:32:41,080 --> 00:32:44,360 Speaker 11: delivery Sorry a Dealble New York Times deal Book conference 586 00:32:44,360 --> 00:32:47,600 Speaker 11: over Sorry, and he says that even liberals should be 587 00:32:47,640 --> 00:32:51,520 Speaker 11: supporting Nikki Haley. And you're seeing this big call by 588 00:32:51,760 --> 00:32:56,320 Speaker 11: Wall Street to support her as a presidential candidate. And 589 00:32:56,520 --> 00:32:58,840 Speaker 11: it does have a lot to do with her views 590 00:32:58,880 --> 00:33:02,600 Speaker 11: around the economy and domestic policy as well as international policy. 591 00:33:02,800 --> 00:33:04,719 Speaker 4: Yeah, so I'm sure there are going to be plenty 592 00:33:04,720 --> 00:33:08,400 Speaker 4: of juicy headlines coming out of this hearing. There also 593 00:33:08,480 --> 00:33:10,840 Speaker 4: is the question Shanali, and this kind of comes back 594 00:33:10,840 --> 00:33:13,280 Speaker 4: to the reason why capital requirements might be higher in 595 00:33:13,280 --> 00:33:15,720 Speaker 4: the first place. As we are now, what eight nine 596 00:33:15,720 --> 00:33:19,000 Speaker 4: months out of the start of the bank failures of 597 00:33:19,040 --> 00:33:22,080 Speaker 4: twenty twenty three with SVB, are they going to tell 598 00:33:22,120 --> 00:33:24,959 Speaker 4: us there's still reasons to worry about the health of 599 00:33:25,000 --> 00:33:26,640 Speaker 4: the banking system or is this going to be a 600 00:33:26,680 --> 00:33:29,200 Speaker 4: message of nothing more to see here? Guys, We're fine. 601 00:33:29,320 --> 00:33:32,200 Speaker 11: Well, let's see how tempered that they might be, because 602 00:33:32,280 --> 00:33:35,560 Speaker 11: remember that these banks are slated to pay a lot 603 00:33:35,640 --> 00:33:38,480 Speaker 11: more in terms of a special assessment to the FDIC, 604 00:33:39,000 --> 00:33:42,160 Speaker 11: which is an agency under a lot of fire for 605 00:33:42,200 --> 00:33:45,800 Speaker 11: its own practices in many ways, but the banks were 606 00:33:45,800 --> 00:33:47,760 Speaker 11: feeling the burn of that, and the biggest banks are 607 00:33:47,800 --> 00:33:51,080 Speaker 11: paying the most into that special assessment. 608 00:33:51,120 --> 00:33:53,280 Speaker 4: All right, Well, I'm really looking forward to your coverage 609 00:33:53,320 --> 00:33:57,680 Speaker 4: of this coming week. Shanali Bostic, Bloomberg TV's Global finance correspondent, 610 00:33:57,760 --> 00:34:00,840 Speaker 4: Thank you so much, and Tom for Wall Street to 611 00:34:00,880 --> 00:34:01,640 Speaker 4: head to Washington. 612 00:34:01,760 --> 00:34:04,560 Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host 613 00:34:04,600 --> 00:34:07,160 Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine to one 614 00:34:07,240 --> 00:34:09,640 Speaker 1: news room in Washington, and you can hear sound on 615 00:34:09,680 --> 00:34:12,840 Speaker 1: weekdays one to three pm Wall Street Time on Bloomberg Radio. 616 00:34:13,080 --> 00:34:15,520 Speaker 1: That does it for this edition of Bloomberg day Break Weekend. 617 00:34:15,680 --> 00:34:17,920 Speaker 1: Join us again Monday morning at five am Wall Street 618 00:34:17,960 --> 00:34:20,360 Speaker 1: Time for the latest on the market's overseas and the 619 00:34:20,400 --> 00:34:23,520 Speaker 1: news you need to start your day. I'm Tom Busby. 620 00:34:23,719 --> 00:34:26,480 Speaker 1: Stay with us. Top stories and global business headlines are 621 00:34:26,520 --> 00:34:28,880 Speaker 1: coming up right now.