Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 1: top stories in the coming week from our Daybreak anchors
Speaker 1: all around the world. Straight ahead on the program, the
Speaker 1: housing market and the economy. I'm Amy Morris in Washington.
Speaker 1: I'm Stephen Carol in London. We're asking if things look
Speaker 1: any better or worse for next year. I'm Brian Curtis
Speaker 1: Bloomberg Daybreak a ship. We crack the code on the
Speaker 1: biggest market trends expected in twenty three for Hong Kong
Speaker 1: and China. I'm Joe Matthew in Washington. President Biden ends
Speaker 1: a tough year on a high note. That's all straight
Speaker 1: ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three, on
Speaker 1: New York Bloomberg one, Washington d C, Bloomberg one oh
Speaker 1: six one Boston, Bloomberg nine sixties, San Francisco, d A
Speaker 1: B Digital Radio, London, Sirius XM one nine ten, and
Speaker 1: around the world on Bloomberg Radio dot com and via
Speaker 1: the Bloomberg Business App. Good day to you. I'm Amy
Speaker 1: more As we begin today's program with housing. A bunch
Speaker 1: of housing data coming next week, including pending home sales
Speaker 1: for November economists we've surveyed are forecasting another drop. You remember,
Speaker 1: pending sales fell in October as buyers faced mortgage rates
Speaker 1: pretty much at twenty year highs. Pending home sales are
Speaker 1: a leading indicator, so we're watching that one closely for
Speaker 1: you here this coming Wednesday, with live coverage breaking it
Speaker 1: all down for you on Bloomberg Radio. Existing home sales
Speaker 1: also fell in November, but it's interesting some are saying
Speaker 1: home sales may not fall much more from here, including
Speaker 1: Mark Zandy of Moody's Analytics. Yeah, I think in terms
Speaker 1: of home sales, I think we're pretty close to the bottom,
Speaker 1: pretty close to the bottom, and that reflects the peak
Speaker 1: in mortgage rates, which we're back a couple of months
Speaker 1: ago when they were significantly north of seven percent for
Speaker 1: three year fix. Now we're down closer to six percent
Speaker 1: and I don't think we're going back to over seven again.
Speaker 1: So I think we're pretty close to the bottom and
Speaker 1: sales now. Mark's Andy of Moody's Analytics also tells us
Speaker 1: that home prices could fall more from here because mortgages
Speaker 1: are still just taking up too much of people's paychecks
Speaker 1: right now. You're right, I mean affordability has been completely
Speaker 1: hammered here, and that's the fundamental issue. You know, you
Speaker 1: mix the high mortgage rates with the high previously high
Speaker 1: house prices, it's just too much to bear. I mean,
Speaker 1: I think the average monthly payment for a typical for
Speaker 1: American buying a typical priced home is up the seven
Speaker 1: eight hundred bucks from where it was about a year ago.
Speaker 1: And that's just not affordable. So we need a combination
Speaker 1: to get restore affordability and get demand moving in the
Speaker 1: right direction again. We need a combination of of lower
Speaker 1: mortgage rates, lower house prices, and rising incomes. And my senses,
Speaker 1: if mortgage rates come in back to you know, five
Speaker 1: and a half percentag is, which is where I would
Speaker 1: expect them in the long run, incomes continue to rise,
Speaker 1: we don't go into recession. We need about a ten
Speaker 1: percent decline in house prices to restore for affordability sufficiently.
Speaker 1: That probably won't happen until late going into twenty I
Speaker 1: think we've got a couple of years here before affordability
Speaker 1: we'll get to a place where you know, demand will
Speaker 1: start to improve again, significantly improve. Now. Mark Zany, chief
Speaker 1: economist of Moodies Analytics, also tells us he thinks the
Speaker 1: Fed does not need to go too much higher on
Speaker 1: its benchmark interest rate, and one reason he thinks inflation
Speaker 1: is abating is that rents are coming down. Market rents,
Speaker 1: you know, the rents that are being charged people that
Speaker 1: are signing leases today, they've suddenly gone week and down
Speaker 1: for uh for in part because rents are so high
Speaker 1: that people can't afford to rent. So you had so
Speaker 1: called demand destruction and a lot more supply. The supply
Speaker 1: chains are easing and builders can get appliances and building materials.
Speaker 1: Labor markets are easing. For an Immigrants that work in
Speaker 1: construction sites are getting on the job, getting a lot
Speaker 1: more properties going across the finish line to completion. More
Speaker 1: more supply less demand. Rents are weak, and that's gonna
Speaker 1: show up in the cost of housing services over the
Speaker 1: course of the next six, six and twelve months. And
Speaker 1: that's one reason I feel reasonably confident that inflation's gonna
Speaker 1: be coming in here pretty quickly. We're also going to
Speaker 1: be getting the SNP Cora Logic Home Price Index this
Speaker 1: coming Tuesday that is expected to show home prices fell
Speaker 1: about one and a half percent monthly in October, but
Speaker 1: still gained more than eight percent year on year. Michael
Speaker 1: fred Antoni is chief economist at the Mortgage Bankers Association
Speaker 1: and says, if mortgage rates stay lower than the October peak,
Speaker 1: we could see a big wave of home buying starting
Speaker 1: this coming March and April. If we can keep rates six,
Speaker 1: maybe a little bit below stakes as we get into
Speaker 1: the first quarter of next year, when we're at the
Speaker 1: beginning of the spring buying season, that's really going to
Speaker 1: be impactful. A lot of the folks have stepped away
Speaker 1: from the market in two and May and June because
Speaker 1: of that sticker shock and stayed away through the fall.
Speaker 1: They still need to live somewhere. They're still seeing their
Speaker 1: rent increase. So I'm not going to be surprised if
Speaker 1: the market shifts a bit more towards sort of the
Speaker 1: first time home buyer segment, because again, a lot of
Speaker 1: the folks that would have planned to have bought last
Speaker 1: year put it off. Give him this Vike and raid
Speaker 1: swee had just a little bit of leite of relief
Speaker 1: and mortgage rage, they could come back. Michael fred Antonia
Speaker 1: is chief economist at the Mortgage Bankers Association, and he
Speaker 1: also tells us he thinks that nationally home prices won't
Speaker 1: fall too much more next year, maybe one down on
Speaker 1: the year. We'll be getting more data on that from
Speaker 1: the f hf A this coming Tuesday. As well. Housing
Speaker 1: demand very affected by the ability to get a mortgage.
Speaker 1: Another thing we're watching in the housing market how big
Speaker 1: banks are doing on their promise to boost lending to
Speaker 1: black homebuyers. Joining me now to talk about this very
Speaker 1: important part of the housing story that's shaping the economic
Speaker 1: health of housing and black Americans in the months and
Speaker 1: years to come, Bloomberg Senior economics writer Sean Donnan. Sean,
Speaker 1: it is always a pleasure. Thanks for taking the time
Speaker 1: with us. Hey, thanks so much for having me. Now
Speaker 1: set the stage for me here. You did a deep
Speaker 1: five into a block in Baltimore. Um, and this actually
Speaker 1: wound up being a feature story in a Bloomberg Big
Speaker 1: take on the Bloomberg Terminal. It's really fascinating. Tell us
Speaker 1: what you found. Yeah, what we dived into was really
Speaker 1: one of the main causes of the racial wealth gap
Speaker 1: in America. We have learned a lot about in recent
Speaker 1: years about how there's this persistent gap in wealth between
Speaker 1: black families and white families, and and how that kind
Speaker 1: of nause at the economy. One of the main causes
Speaker 1: of that is the home ownership gap. Black families, about
Speaker 1: forty of them own the homes that they live in
Speaker 1: versus about of white families. And that is a gap
Speaker 1: that has persisted for years. And one of the things
Speaker 1: we saw in recent years is the big banks in America,
Speaker 1: alongside other companies, make some big promises to the black community,
Speaker 1: to the USA economy to try and close that racial
Speaker 1: wealth gap, that home ownership gap. And so we dove
Speaker 1: into that, and that took us all the way down
Speaker 1: to the block of Waber Captain. Now, when you got there,
Speaker 1: when you dig when you were digging deep, let's say,
Speaker 1: did you find that promises were made and well, not
Speaker 1: kept necessarily, but at least the attempt was there. So
Speaker 1: the promises that we looked at were some big, ambitious
Speaker 1: promises made by the banks. Wells Fargo in made the
Speaker 1: biggest of those. It said that it would lend sixty
Speaker 1: billion dollars that's billion, not a million, sixty billion dollars
Speaker 1: to create two hundred and fifty thousand black homeowners in
Speaker 1: America within a decade and so we looked at the
Speaker 1: data and what we found was that actually every year
Speaker 1: since making that promise, Wells Fargo, which was the biggest
Speaker 1: bank player was actually the biggest player in the mortgage
Speaker 1: market in back in that every year since making that promise,
Speaker 1: Wells Fargo has actually backed fewer mortgages to black home
Speaker 1: buyers than it did the year before, and that it's
Speaker 1: gone down to a point where actually the San Francisco
Speaker 1: based lender underwrote forty fewer mortgages to black buyers than
Speaker 1: it did in when it made that promise. It isn't
Speaker 1: the only bank to have made such a promise. JP
Speaker 1: Morgan in October twenty after that summer of racial reckoning
Speaker 1: that we had in America, and made a promise to
Speaker 1: create or originate mortgages to an additional forty thousand black
Speaker 1: and Latino buyers over five years. Now it's much earlier
Speaker 1: into delivering on its promise. But in one it originated
Speaker 1: just two more mortgages to black comebuyers than it did
Speaker 1: in the year it said as a benchmark, and it's
Speaker 1: lending to Latino home buyers actually went down in Bank
Speaker 1: of America has made some some slightly different promises. They're
Speaker 1: they're they're broader, they're harder to measure, but it's pledged
Speaker 1: thirty billion dollars in lending and down payment assistance to
Speaker 1: minority and low income homeowners in America. All of this
Speaker 1: matters because what we're seeing across the board and what
Speaker 1: we've seen over the last fifteen years, it's been a
Speaker 1: big dip in in originations and mortgages that are issued
Speaker 1: to two black home buyers in America, and that hasn't
Speaker 1: caught up with where we were back If you remember
Speaker 1: the last financial crisis of the two thousand and eight
Speaker 1: two thousand nine, the subprime crisis was the type of
Speaker 1: lending we had back in the early two thousands that
Speaker 1: beetn't caught up to those levels until actually in the
Speaker 1: middle of the pandemic. And in that time, we've had
Speaker 1: a huge housing boom of property boom in America, and
Speaker 1: there's a lot of wealth that's been created for homeowners
Speaker 1: in America that black families simply have missed out on
Speaker 1: because they have that lower homeownership break. All Right, just
Speaker 1: terrific reporting, Sean, Thank you so much for digging deep
Speaker 1: into this issue. You can find it on Bloomberg's Big
Speaker 1: Take and on the Bloomberg terminal. Thank you so much, Sean,
Speaker 1: thanks for having me, Bloomberg Senior economics writer Sean Donn
Speaker 1: And and coming up on Bloomberg Daybreak weekend, things aren't
Speaker 1: exactly looking up for the UK economy in three more
Speaker 1: on that just ahead. I'm Amy Morris. This is Bloomberg.
Speaker 1: This is Bloomberg Daybreak week and our globe will look
Speaker 1: ahead at the top stories for investors in the coming week.
Speaker 1: I'm Ammy Morris in Washington. Up later in our program
Speaker 1: as President Biden really finally hit his stride, but first
Speaker 1: a roller coaster year for the UK economy, with political
Speaker 1: upheaval adding to the already gloomy economic outlook. Things aren't
Speaker 1: looking up in three either. The o E c D
Speaker 1: is warning the UK is said to be the worst
Speaker 1: performer in the G twenty Russia for the next two years.
Speaker 1: For more, let's go to London and bring in Bloomberg
Speaker 1: Daybreak Europe anchor Stephen Carroll. We've had three prime ministers,
Speaker 1: four finance ministers, and one ill fated budget in the
Speaker 1: UK this year, all of that dragging the pounds than
Speaker 1: an inch of parity versus the US dollar at one point. Overall,
Speaker 1: it's been quite the wild ride for the UK economy.
Speaker 1: Now the Bank of England is expecting a prolonged recession
Speaker 1: in twenty three. Joining us to discuss the year that
Speaker 1: was and what's ahead our UK correspondent Lizzie Byrden and
Speaker 1: our senior UK economist Dan Hansen. And Lizzie, let's start
Speaker 1: with you. One measure of the volatile as we've seen
Speaker 1: this year is in the pound. Talk us through what
Speaker 1: were the highlights and low lights for sterling? And two,
Speaker 1: I think it's very obvious what the low light would
Speaker 1: have been, but you could say that this whole year
Speaker 1: has been an annus horrible ifs for sterling. So we
Speaker 1: started the year at one dollar thirty five and then
Speaker 1: the pound dropped to a record low in September of
Speaker 1: near adult the parity, and of course that was just
Speaker 1: after the mini budget. And ultimately it was the chaos
Speaker 1: in currency and FX markets that ousted Liz Trust. They
Speaker 1: were the guardrails on the government in the end. Now
Speaker 1: we've got Risci Snack in number ten. His fiscal plans
Speaker 1: are obviously more austere than Lizz Truss. Is this Dullness
Speaker 1: dividend has helped to recover the pound somewhat, but even
Speaker 1: after the recent rebound, it's still sterling down almost ten
Speaker 1: percent since the start of the year. Yes, dollar strength
Speaker 1: has played in but to give it some historical context,
Speaker 1: two has been the pound's worst ever apart from the
Speaker 1: break sit vote, the financial crisis and Black Wednesday in
Speaker 1: ninety two another collection of greatest hits. Don How is
Speaker 1: the UK economy finishing the year compared to how it started? Well,
Speaker 1: it started the year pretty strongly if you look at
Speaker 1: the data, because if you if you remember back then,
Speaker 1: it seems an awful long time ago. Now we had
Speaker 1: we had the rebound from the homochron wave, so you
Speaker 1: had a pretty strong GDP reading at the start of
Speaker 1: the year, and since then things have really really slowed
Speaker 1: down to the second quarter was there was growth in
Speaker 1: the second quarter, but it was weak, and then we've
Speaker 1: obviously had a fall in GDP in the third quarter,
Speaker 1: and most forecasts are expecting a fall in GDP in
Speaker 1: the final quarter. Though I think I know we've we're
Speaker 1: gonna we're most likely going to have two consecutive quarters
Speaker 1: of negative growth, which as we all know that will
Speaker 1: signal the start of a technical recession, but I think
Speaker 1: try and sort of put a positive spin on it. Actually,
Speaker 1: those two quarters have been very, very mild in terms
Speaker 1: of their drops. So you've had a point two drop
Speaker 1: in the in the third quarter and the fourth quarter.
Speaker 1: The Bank of England has said that it thinks that
Speaker 1: the drop waby point one percent, So yeah, us it's
Speaker 1: not good news. But when you put that in the
Speaker 1: context of the living squeeze that is occurring here in
Speaker 1: the UK, actually the economy is holding up relatively well. Yes,
Speaker 1: we were probably heading into a recession of protractive recession,
Speaker 1: but it's going, at least on our forecast, to be
Speaker 1: relatively mild. So I know, those aren't Those aren't words
Speaker 1: people want to hear, recession, downturn. But actually when you
Speaker 1: look at the depth of it relative to his past
Speaker 1: down turns, it doesn't look like it's going to be
Speaker 1: as bad. Okay, Lizzie. In terms of Sterling, are we
Speaker 1: over the worst of the upheaval that we've seen this
Speaker 1: year when we look into three Yes, But says she trepidaciously,
Speaker 1: if you look at the options market, there's currently a
Speaker 1: fort chance that the plan is going to get stuck
Speaker 1: between one dollar turn and one dollar thirty for the
Speaker 1: next two years, and that's still it's weakest have a
Speaker 1: trading range. And that's because of the factors Done talks about.
Speaker 1: We've got a year of high inflation ahead rising interest
Speaker 1: rates to combat it, housing slowdown, and this is a
Speaker 1: content innuation of a long term downward trends. So the
Speaker 1: five years before the Brexit vote in twenty sixteen, the
Speaker 1: pounds average was about one dollar fifty nine. The five
Speaker 1: years before that it was about one dollar seventy six.
Speaker 1: But it's not just a Brexit thing. It's what Brexit
Speaker 1: has created, more trade frictions with the EU, It's left
Speaker 1: the labor market short of workers, it's undermined business investment.
Speaker 1: Looking ahead Bank of America. I was there speaking to
Speaker 1: the economists last week. They say that Sterling in three
Speaker 1: is actually going to be dominated by Brexit and whether
Speaker 1: this government can reach a compromise on Brexit, whether they
Speaker 1: can find a sustainable solution on the Northern Ireland Protocol.
Speaker 1: And I have to say, even though Rischie Sunac, probably
Speaker 1: for the benefit of the Brexit wing of his party,
Speaker 1: has talked tough on not wanting a Swiss style deal
Speaker 1: as as was reported. Actually in the markets, people are
Speaker 1: very optimistic that he will be pragmathematic on Brexit. So
Speaker 1: for me, three is about feeling how much he's willing
Speaker 1: to stand up to his party or in their eyes,
Speaker 1: the degree to which he's a true Brexitter. Yeah, indeed,
Speaker 1: And of course the deadline for that that everyone's notionally
Speaker 1: aiming for is the anniversary of the Good Friday Agreement
Speaker 1: in April of next year. Is the hope is that
Speaker 1: they will have done a deal between the UK and
Speaker 1: the EU by then that will resolve the issues and
Speaker 1: allow there to be an official commemoration of that deal
Speaker 1: without the ongoing political tensions that we've seen in Northern
Speaker 1: Ireland on that issue. And optimistically all of this back
Speaker 1: and forth is just choreography to show that everybody's trying
Speaker 1: to defend their sides, but hopefully we'll get to something then. Yeah.
Speaker 1: Let's take a listen now to what the Bank having
Speaker 1: The Governor Andrew Bailey said that their last rate decision
Speaker 1: about what he expects in terms of inflation next year.
Speaker 1: We think we've seen, possibly this week, the first glimmer
Speaker 1: that with the figures that were released this week that
Speaker 1: it's not only beginning to come down, but it was
Speaker 1: a little bit below where we thought it would be,
Speaker 1: and that's obviously very good news, but it's a long
Speaker 1: way to go, and there is and we expect that
Speaker 1: to happen. By the way, we expect inflation to start
Speaker 1: falling more rapidly, probably from the late spring onwards, but
Speaker 1: there is a risk that it won't happen in that way,
Speaker 1: particularly because the labor market and labor supply in this
Speaker 1: country are so tight. Okay, So that's what Andrew Bailey
Speaker 1: has to say about the outlook for the next year.
Speaker 1: Dan Hansen, what are the particular pressure points you're watching
Speaker 1: out for going into next year. Andrew Bailey seems to
Speaker 1: think things are going to improve pretty soon an inflation, Yes,
Speaker 1: so I think I think you can think of the
Speaker 1: inflation path next year in sort of to two elements
Speaker 1: to it. So over the winter and into the first
Speaker 1: quarter of next year, we don't think inflation is going
Speaker 1: to drop below ten per cent. I think our forecast
Speaker 1: in March in fact, just has it dropping a little
Speaker 1: bit low below ten per cent here to nine and
Speaker 1: a half. So you've got pretty sticky inflation for the
Speaker 1: next sort of four or five months. But then what
Speaker 1: you'll we think at least and we hope you'll see,
Speaker 1: is these base effects coming through um and the impact
Speaker 1: of the energy price rises that we've seen this year
Speaker 1: falling out of the annual comparison. And what the Governor
Speaker 1: was a loud into there was the good news from
Speaker 1: the latest inflation print was that core goods inflation. So
Speaker 1: this is a bit of the inflation basket that's been
Speaker 1: really impacted by supply constraints, and we've seen it coming
Speaker 1: off very sharply in the US. We think those that
Speaker 1: that part of the inflation basket is going to ease
Speaker 1: quite sharply as well. So I think what you'll get
Speaker 1: is is a pretty sharp fall in inflation. But the
Speaker 1: key thing to remember here is that I think the
Speaker 1: easy bid is getting from say ten to four or five,
Speaker 1: the hard bid is getting from four or five to two.
Speaker 1: And what that reflects is what's going on, as the
Speaker 1: Governor mentioned there as well, is what's going on in
Speaker 1: the labor market, and what's going on in with services inflation,
Speaker 1: and before you get services inflation, what's going on in
Speaker 1: pay So I think you'll see you'll see a pretty
Speaker 1: sharp drop this year, but they're the sort of easy yards.
Speaker 1: You've got the hardy yards to come. And that will
Speaker 1: that will only really be revealed in the latter half
Speaker 1: of three the sort of what's the residual bit of
Speaker 1: inflation and that that's really what will that will focus
Speaker 1: the bank next year as well, Lizzie, we are rattling
Speaker 1: towards the end of the year in the UK and
Speaker 1: amidst this massive wave of strikes. Is that going to
Speaker 1: be a continuing theme when we think about the labor
Speaker 1: Marcus next year. Well, my colleague Philip aldric Our, senior
Speaker 1: UK Economics reporter, had a really interesting conversation with Charles Goodhart,
Speaker 1: who's a former bankoving the policymaker, and he said that
Speaker 1: it might not just be a winter of discontent, it
Speaker 1: could be a year of discontent unless the government agrees
Speaker 1: to a wage deal to end this industrial action. Labor's
Speaker 1: point the opposition Labor Party is that you need to
Speaker 1: treat it as a whole rather than strike by strike,
Speaker 1: union by union. And if you think about what DNS
Speaker 1: saying that this inflation is going to be sticky, it's
Speaker 1: not going to drop below ten percent for four to
Speaker 1: five months. That really keeps the pressure on the government. Okay,
Speaker 1: thank you very much to Blomberg's UK corresponded Lizzie Burden,
Speaker 1: and to our senior UK economist Dan Hansen as well.
Speaker 1: I'm even Carl in London. You can catch us every
Speaker 1: weekday morning here for Bloomberg Daybreak Europe, beginning at six
Speaker 1: am in London and one am on Wall Streets. Thank you, Stephen.
Speaker 1: Coming up on Bloomberg Daybreak weekend. President Biden continues to
Speaker 1: chalk up successes. But can it last? We'll find out.
Speaker 1: I'm Amy Morris. This is Bloomberg broadcasting live from the
Speaker 1: Bloomberg in our active broker studio in New York. Bloomberg
Speaker 1: Even three oh to Washington, d C, Bloomberg to Boston,
Speaker 1: Bloomberg one O six one to San Francisco, Bloomberg nine
Speaker 1: sixty to the country Sirius XM Channel one nineteen to
Speaker 1: London d A B Digital Radio, and around the globe
Speaker 1: the Bloomberg Business Act and Bloomberg Radio dot Com. This
Speaker 1: is Bloomberg day Break Weekend. I'm Amy Morris in Washington
Speaker 1: with your global look ahead at the top stories for
Speaker 1: investors in the coming week has does it in Biden
Speaker 1: really finally hit his stride. Were more here in our
Speaker 1: Bloomberg NY nine one newsroom in Washington. We go to
Speaker 1: Bloomberg Sound On host Joe Matthew. Jo thank you Amy.
Speaker 1: President Biden feeling good as he heads into the new
Speaker 1: year after what was arguably the best mid term performance
Speaker 1: by a sitting president in decades. The President saying, it's
Speaker 1: clear Americans are committed to protecting and defending democracy, a
Speaker 1: strong rejection of election deniers at every level, from those
Speaker 1: seeking lead our states and those of seeking to serve
Speaker 1: in Congress, and also those seeking to oversee the election.
Speaker 1: Joining us now to talk about this, Bloomberg White House
Speaker 1: reporter Josh wind Grove, Josh, happy holiday, is great to
Speaker 1: see you. Thank you for being here as we talk
Speaker 1: about this moment for Joe Biden. Uh, not only did
Speaker 1: he outperform in the mid terms, your reporting shows that
Speaker 1: he did a bit of an end run around his
Speaker 1: own advisors by insisting that democracy itself beyond the ballot
Speaker 1: as opposed to so many other issues that were in
Speaker 1: the air. I guess his instincts were correct. Yeah, I think, Look,
Speaker 1: this is a guy that likes to measure twice or
Speaker 1: three times and four times, five times and then cut once. Right,
Speaker 1: Like the knock on that strategy is sometimes they get
Speaker 1: to be a little flat footed. But on the flip side,
Speaker 1: you know he thinks that he keeps his eye on
Speaker 1: the ball or you know, has a focus that he's
Speaker 1: not distracted. Uh. You know, rewind to the start of
Speaker 1: the year, right, you know, the inflation was really taking off,
Speaker 1: the COVID's cases. We all remember the omicron start of
Speaker 1: Jurga was insane. Of course, Russia was about to invade Ukraine.
Speaker 1: Things were in installed in Congress, everything had collapsed with
Speaker 1: Mansion and you know, things turned around. They got some
Speaker 1: bills through Congress. The mid term performance are pretty happy
Speaker 1: about and so on balance, you had Biden there being like,
Speaker 1: how can I frame this? How do we avoid the
Speaker 1: blood bath politically speaking that presidents usually see in the
Speaker 1: middle of their first term. And you know he's been
Speaker 1: sitting down and talking with historians that sort of thing.
Speaker 1: So that's when you got this focus on we gotta
Speaker 1: make it on democracy. We've gotta be like, vote for
Speaker 1: anyone that will honor the result of the vote. Do
Speaker 1: you remember he did that speech in Philly that kind
Speaker 1: of bombed. It was like a weird background and like
Speaker 1: red and very like you know, the seventies horror film
Speaker 1: kind of like look. So he did sort of took
Speaker 1: it a second kick at the can, a bit of
Speaker 1: a haphazard one here in d C. But they think
Speaker 1: that that was part of the message that resonated, of
Speaker 1: course in the broader context about their messages as well,
Speaker 1: you know, things like that moves on student loans for instance,
Speaker 1: motivating young voters, things like that, you know, cocktail and stuff.
Speaker 1: He's buoyant right now. You can tell, because he's a
Speaker 1: little chippy with the press that he feels boldened a
Speaker 1: little bit right now. I like new Gingrich's take in
Speaker 1: your piece the former speaker basically referring to Joe Biden's
Speaker 1: challenges that lead many Republicans to underestimate him, his speech impediment,
Speaker 1: his memory lapses that lead new Gingrich to compare Joe
Speaker 1: Biden to Eisenhower or even Ronald Reagan. Yeah. Well, Gingrich
Speaker 1: just kind of put himself out on a limb, right
Speaker 1: If you read his blog post, essentially what it is
Speaker 1: he's he's enumerating a pretty sharp, grueling attack on Joe Bay.
Speaker 1: But the headline is we keep underestimating. In other words,
Speaker 1: he's trying to convince his fellow sort of Republican brethren
Speaker 1: that that just sort of casting Biden is like, you know,
Speaker 1: either extreme, which voters tend not to believe because he's
Speaker 1: been around it kind of known quantity, or as you know,
Speaker 1: bumbling grandpa, great grandpa or whatever. Um. Then um. Then
Speaker 1: they sort of get away from the stuff that actually
Speaker 1: might work more and being like we should attack him
Speaker 1: for his policy. So you have you have Gingrich saying, look,
Speaker 1: if we just write Joe Biden off because he's now
Speaker 1: eighty years old and we think he's going to stumble
Speaker 1: his way out of the presidency out of sixteen hundred Pennsylvania,
Speaker 1: then he thinks that they should give their head a shake.
Speaker 1: Because that's the argument from Gingris. You know, we reached
Speaker 1: out to a lot of Republicans for their thoughts on
Speaker 1: what new Gingridge is saying, we got a lot of
Speaker 1: we got a lot of no responses. So you know,
Speaker 1: it's not it's not a it's it's a pitch that
Speaker 1: they're willing to let sail right by rather than thinking
Speaker 1: a wing at So we'll see where whether Gingrich is
Speaker 1: speaking for the sort of silent you know, chunk of
Speaker 1: the party who might think that. But remember we're sitting here.
Speaker 1: You know, Joe b and has not formally announced his
Speaker 1: re election campaign, but gosh, all signs point yes, and
Speaker 1: it's right. This is a guy that is not looking
Speaker 1: for his exit, and he'll have inflation waiting for him
Speaker 1: when he makes that decision and when he enters the
Speaker 1: new year and the new Congress begins as he tries
Speaker 1: to put a good face on all in the world
Speaker 1: where inflation is rising a double digits, so many major
Speaker 1: economies around the world. Inflation is coming down in America,
Speaker 1: then again, ask Muhammadhill area. Inflation is not going to
Speaker 1: come down in an orderly fashion. We're gonna get sticky inflation.
Speaker 1: The Bloomberg opinion columnists on Bloomberg. Of course, sticky inflation.
Speaker 1: It's come down a bit, the feed is still working,
Speaker 1: and you've also got the prospect of breaking the job
Speaker 1: market to fix the inflation issue. Josh, how do you
Speaker 1: square that when you're starting a re election campaign? You know, Look, yeah,
Speaker 1: the chances that even if it doesn't come down, you know,
Speaker 1: Joe Biden could be facing a recession either a year
Speaker 1: or even six months out of the next election. That
Speaker 1: sucks for any for any president reelection technical term, right, yeah,
Speaker 1: that's that's the that's the macro term. Um. So you
Speaker 1: know he right now. I think that they are praying
Speaker 1: that some of the stuff kicks in and in the meantime,
Speaker 1: some of the stuff that they have done, which is
Speaker 1: a little bit nibbling around the edges, were being honest,
Speaker 1: but not for the people who it affects. It starts
Speaker 1: to kicking things like Medicare capping the cost of insulin
Speaker 1: for certain people starting in January. That's a big deal.
Speaker 1: Biden's approach to inflation has essentially been we can try
Speaker 1: to lower certain costs per month for certain people to
Speaker 1: try to ease the pain across the board and cost
Speaker 1: that everyone in America is facing. The thing is, if
Speaker 1: he did get a recession, energy prices would fall, food
Speaker 1: prices would fall. He enters the final year of a
Speaker 1: presidential campaign, inflation is licked. We're going to fix the economy,
Speaker 1: and the guy I'm running against it could be under
Speaker 1: indictment by them. Yeah, I mean yeah, I don't know
Speaker 1: that any president wants to see a bunch of people
Speaker 1: losing their jobs, and right and then, like equity matters
Speaker 1: to this administration. I mean, some people think it might
Speaker 1: be virtue signaling here and there, but like the people
Speaker 1: that will lose their jobs are the types of people
Speaker 1: workers that Joe Biden at least rhetorically talks about a lot, Right,
Speaker 1: There are people that that live paycheck to paycheck, hourly
Speaker 1: wage workers, often minority, just like he grew up right
Speaker 1: exactly so, like he genuinely seems to just believe that
Speaker 1: he thinks that there has to be a third way,
Speaker 1: There has to be a magical sort of landing here
Speaker 1: where And you know, he might be right, I suppose,
Speaker 1: I don't know, but that whereby the inplation can come
Speaker 1: down and all those folks who so often are the
Speaker 1: first ones to take it on the chin are the
Speaker 1: ones that don't have to do it yet again, I think,
Speaker 1: and that that is what he's sort of holding his
Speaker 1: breath on. Spending time with Josh wind Growth here as
Speaker 1: we slide into the new year, and I have to
Speaker 1: ask you about Ukraine. What a performance this week in
Speaker 1: an appearance to historic appearance from President Zelenski speaking to
Speaker 1: a joint session of Congress. Course, he spent most of
Speaker 1: his day with President Biden at the White House, and
Speaker 1: there was one resounding message, Your money is not cheerity.
Speaker 1: It's an investment in the global security, and dumont or
Speaker 1: see that we handle in the most responsible way. So
Speaker 1: in a remaining moment here, Josh, how much of a
Speaker 1: challenge is it going to be for Joe Biden to
Speaker 1: continue the money and the weapons flowing to Ukraine in
Speaker 1: this new Congress? We don't know. There's one challenge that
Speaker 1: he can control or has more control over, and there's
Speaker 1: another he can First just to back up very quickly,
Speaker 1: you know, this is a surprise. It is that Biden
Speaker 1: is seems pretty jazz that he was that that Zelenski
Speaker 1: is here, he seems to have gotten along well with him.
Speaker 1: The takeaway is twofold number one, big standing ovations for Zelenski,
Speaker 1: notable exceptions among top Republicans, or at least prominent Republicans.
Speaker 1: The question is the billion or so that that that
Speaker 1: that the OMNI carved out for Ukraine? Is that the
Speaker 1: last bucket for Ukraine? Will Kevin McCarthy or whoever led
Speaker 1: Republican House allowed another dollar to go at the door
Speaker 1: very unclear. The second thing which got toward Zelenski publicly
Speaker 1: asked for in Congress next to buy him wherever he could,
Speaker 1: you know, shouting from the rooftops was more weaponry, more
Speaker 1: band's weaponry, particularly offensive weaponry, and Biden has been hesitant
Speaker 1: something that's a different story. I want to trigger something,
Speaker 1: so that's real rob will Biden start ratching up the
Speaker 1: type of gear he's willing to send. Lensky's already been
Speaker 1: ratching it up, including the Patriot miss that he announced,
Speaker 1: and will Congress might be a different conversation, different conversation
Speaker 1: he certainly does not seem Keenanity's hinted that he thinks
Speaker 1: NATO's support for the war would fall apart if you
Speaker 1: did it. So, so Biden has his own reservations about
Speaker 1: what to send. Congress has their own reservations about what
Speaker 1: check to right. Those two things, you know, are are
Speaker 1: hanging in the background, But the top line was Joe
Speaker 1: Biden standing there and pledging Ukraine that US will be
Speaker 1: there for them as long as they're in this war.
Speaker 1: Historic moment. Josh wind Grove is the man that Joe
Speaker 1: Biden looked at and said, if I had his voice
Speaker 1: I would have been elected president a lot earlier. Yeah, yeah, great,
Speaker 1: It's great to see what am I doing with my
Speaker 1: life here. Well, you're talking on the radio. Everyone's listening
Speaker 1: to your voice. Happy Holidays, Happy New Year, see twenty three.
Speaker 1: Thank you, Bloomberg White House reporter Josh wind Grove. Amy,
Speaker 1: All right, thank you, Joe. That was Joe Matthew, host
Speaker 1: of Bloomberg Sound On from our Bloomberg Noddy nine one
Speaker 1: news room here in Washington. And you can hear Sound
Speaker 1: On with Joe Matthew weekdays at five pm Wall Street Time.
Speaker 1: And for more political news coverage, you can tune into
Speaker 1: Balance of Power with David weston weekdays at noon Wall
Speaker 1: Street Time. All of that right here on Bloomberg Radio.
Speaker 1: Coming up next on Bloomberg Daybreak Weekend to look at
Speaker 1: market trends to watch out for in China. I'm Amy Morris,
Speaker 1: and this is Bloomberg m This is Bloomberg Daybreak Weekend,
Speaker 1: our global look ahead at the top stories for investors
Speaker 1: in the coming week. I'm Amy Morris in Washington. COVID
Speaker 1: is still very much hanging over China. Bloomberg Daybreak Asia
Speaker 1: host Brian Curtis keeping track of all of it for US,
Speaker 1: Brian Amy, China is reopening and Hong Kong is trying
Speaker 1: to rest back the mantle of Asia's world city. As
Speaker 1: a result, we're curious what new trends we might see
Speaker 1: in markets in twenty twenty three for Hong Kong and
Speaker 1: China joining US now, is Sofia Orte Costa, Bloomberg's chief
Speaker 1: China Markets correspondent Sofia After a couple of very tough
Speaker 1: years for these two markets, might we see better market
Speaker 1: conditions in three? I think the living with COVID story
Speaker 1: UM is the biggest theme going into next year. You know,
Speaker 1: there's still a lot of questions over whether this is
Speaker 1: reckless or not. Some people are calling it the big
Speaker 1: U turn, but it's been so dramatic for China, it's
Speaker 1: perhaps the big V turn on COVID zero. So UM.
Speaker 1: The key thing here is data. You know, will China's
Speaker 1: reopening be positive or negative on the economy? Will it
Speaker 1: be good or bad for consumption? Is they're going to
Speaker 1: be short term gain, short term pain, um for longer
Speaker 1: term gain in terms of growth and also for the
Speaker 1: rest of the world. You know, is it inflationary or
Speaker 1: will it actually lead to deflation, So it will be
Speaker 1: harder actually to track the effect of the outbreak on
Speaker 1: China's economy because actually China releases after releasing December data,
Speaker 1: it only then releases combined January and February data in March,
Speaker 1: So it will be a while before we get any
Speaker 1: kind of real sense of on the ground impact from this.
Speaker 1: Do we have a sense that markets will get well
Speaker 1: out in front of the economy or because the reopening
Speaker 1: has been so uneven so far, will investors really wait
Speaker 1: until they see the proof in the pudding. Investors have
Speaker 1: kind of priced in the first leg of the reopening
Speaker 1: story um at some some cull side analysts saying that
Speaker 1: about forty has been priced in. I mean, also, Brian,
Speaker 1: let's not forget the huge outflows that Chinese assets had
Speaker 1: in It really didn't take much um to move to
Speaker 1: move the needle when it came to markets, you know,
Speaker 1: you only had to revert to the mean. Is already
Speaker 1: a gain for for Chinese stocks. I'm curious whether investors
Speaker 1: think the Party has done a flip flop on market
Speaker 1: friendly and business friendly policies going forward and changing from
Speaker 1: what used to be pretty restrictive policy over the past
Speaker 1: eighteen to twenty four months. It's been perhaps the biggest
Speaker 1: surprise um and in this year is the policy environments
Speaker 1: turning really more friendly for for China China investing. We
Speaker 1: tend to think that China cares cares more about the
Speaker 1: economy than it does about markets, and now it's all
Speaker 1: about creating a better environment and market confidence. Really taking
Speaker 1: sense of stage, this is highly unusual. The last time
Speaker 1: we heard any kind of wording around this was in
Speaker 1: eighteen when the trade war was really hammering confidence in
Speaker 1: Chinese markets. So what's that means? We still don't know.
Speaker 1: Um A lot of support for a private enterprise seems
Speaker 1: to be the focus. Also refinancing help for private developers.
Speaker 1: You know, we're seeing a revival in in in financing
Speaker 1: efforts for property companies. That is extremely different and a
Speaker 1: complete one eighty to what to the trends we've seen
Speaker 1: in in the past two years, Is there one big
Speaker 1: mega trend we can identify for next year? One big
Speaker 1: mega trend? I mean beyond the reopening story, um is,
Speaker 1: I think decoupling, whether that's still a thing. Every single
Speaker 1: geopolitical analyst was talking about that and freendch shoring whether
Speaker 1: that's whether people are moving out of China and whether
Speaker 1: you know, China really showing itself as a more friendly
Speaker 1: actor in the global stage. We seem to get we
Speaker 1: seem to be getting um some evidence of that now.
Speaker 1: So is China aligning itself less with other actors like
Speaker 1: like Russia and moving close to the West. That would
Speaker 1: be a hugely positive development when it comes to investing
Speaker 1: in China. Sophia, thanks so much. Always enjoy your insight.
Speaker 1: Sophia Orte Costa, Bloomberg's chief China Markets correspondent. I'm Brian Curtis,
Speaker 1: along with Doug Krisner. You can catch us every weekday
Speaker 1: here for Bloomberg Daybreak Asia, beginning at seven am in
Speaker 1: Hong Kong and six pm on Wall Street. Amy all right,
Speaker 1: thank you, Brian, and that does it for this edition
Speaker 1: of Bloomberg Daybreak Weekend. Join us again Monday morning at
Speaker 1: five am Wall Street time, where the latest on markets
Speaker 1: overseas and the news you being to start your day.
Speaker 1: I'm Amy Morris. This is Bloomberg