WEBVTT - (Radio) 0:00:02.520 --> 0:00:05.280 This is Bloomberg day Break Weekend, our global look ahead 0:00:05.280 --> 0:00:06.960 of the top stories of the coming week from our 0:00:07.040 --> 0:00:10.440 day Break anchors all around the world, and just ahead 0:00:10.440 --> 0:00:13.920 on the program, here come to those US inflation numbers. 0:00:14.280 --> 0:00:16.760 I'm John Tucker in New York. I'm killing head get 0:00:16.880 --> 0:00:19.599 in London, where we're looking at the next major climate 0:00:19.720 --> 0:00:23.200 summit called twenty seven in Egypt. I'm Brian Curtis in 0:00:23.239 --> 0:00:26.240 Hong Kong. We look at COVID zero in China, locking 0:00:26.280 --> 0:00:29.840 down a factory of two hundred thousand workers making iPhones. 0:00:30.360 --> 0:00:32.839 I'm Any Morris in Washington. We're gaging the turnout in 0:00:32.960 --> 0:00:35.880 the last minute scramble before the mid turns. That's all 0:00:36.000 --> 0:00:40.120 straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three 0:00:40.120 --> 0:00:44.440 on New York, Bloomberg one, Washington d C, Bloomberg one 0:00:44.440 --> 0:00:48.199 oh six one, Boston, Bloomberg nine sixties, San Francisco d 0:00:48.320 --> 0:00:52.040 A B Digital Radio, London, Sirius XM one nineteen and 0:00:52.120 --> 0:00:55.000 around the world on Bloomberg Radio dot com and via 0:00:55.080 --> 0:01:00.480 the Bloomberg Business app. Him nobody, I'm John Scer Let's 0:01:00.480 --> 0:01:04.240 start today's program with the inflation. Households are watching the 0:01:04.280 --> 0:01:07.319 Feds certainly watching it, and we're tracking developments for you 0:01:07.640 --> 0:01:10.800 right here on the Bloomberg Radio Studio with Boomberg Global 0:01:10.880 --> 0:01:15.280 Economics and Policy Editor Michael McKee. You have inflation in 0:01:15.319 --> 0:01:19.080 your title that keeps getting longer. Um, So I guess 0:01:19.120 --> 0:01:22.320 we're talking about c p I that prints coming out. 0:01:22.560 --> 0:01:25.160 That that's become sort of like the mother of all 0:01:25.319 --> 0:01:28.760 economic indicators. Lately, it was always the Job's Report, and 0:01:28.840 --> 0:01:31.680 now it's the CPI again. Of course, Um, that depends 0:01:31.720 --> 0:01:34.000 on how old your mother is, because back in the 0:01:34.080 --> 0:01:36.800 Paul Vulgar day, don't talk about my Back in the 0:01:36.800 --> 0:01:39.520 Paul Vulgar days, the CPI was important as well. And 0:01:39.520 --> 0:01:42.319 then we had very very low inflation for a very 0:01:42.440 --> 0:01:45.520 very long time, and then all of a sudden we've 0:01:45.520 --> 0:01:47.840 got big inflation again. So people care about this number. 0:01:48.320 --> 0:01:51.240 We used to talk about a word transitory, and now 0:01:51.240 --> 0:01:53.880 we're talking about a word. I think it's sticky. Has 0:01:53.960 --> 0:01:59.960 replaced transitory, right about them retired the word transitory. Uh, sticky. 0:02:00.320 --> 0:02:02.320 Price inflation has been around for a long time, and 0:02:02.320 --> 0:02:07.160 it's basically a concept that prices change very slowly. The 0:02:07.200 --> 0:02:11.560 old example that they would use in economic school is 0:02:11.760 --> 0:02:16.079 restaurants would be reluctant to change their prices because they 0:02:16.080 --> 0:02:18.600 would have to print all new menus and that would 0:02:18.639 --> 0:02:23.919 be an expense. But of course, nowadays restaurants give you 0:02:24.400 --> 0:02:26.880 message on your phone your phone, so I don't know 0:02:26.919 --> 0:02:29.320 if that's a good example anymore. But there are things 0:02:29.320 --> 0:02:31.960 that like that that take a while to adjust, and 0:02:32.080 --> 0:02:34.960 that's the idea of sticky price inflation. And some of 0:02:34.960 --> 0:02:38.200 those things have have not moved as much as the 0:02:38.200 --> 0:02:41.960 Fed would like. That's the question for uh next week's 0:02:42.080 --> 0:02:45.440 uh CBI report is do we see some movement in 0:02:45.520 --> 0:02:47.840 any of the areas that the Fed has been waiting for. 0:02:48.080 --> 0:02:51.280 What's the breakdown? Well, prices won't come down, probably, but 0:02:51.440 --> 0:02:55.280 the whole point of the inflation numbers is the rate 0:02:55.320 --> 0:02:58.399 of change. The rate of increases is what the Fed 0:02:58.720 --> 0:03:02.000 look looks at in their arget is a two annual 0:03:02.160 --> 0:03:05.480 rate of increase. In these things, Um, you don't get 0:03:05.919 --> 0:03:10.640 prices going down except in crises situations. We saw some 0:03:10.720 --> 0:03:13.040 prices fall at the beginning of the pandemic, and then 0:03:13.040 --> 0:03:15.959 they went back up because there were shortages. What we're 0:03:15.960 --> 0:03:19.679 looking for here is a decline in the month to 0:03:19.880 --> 0:03:23.919 month increases. When you look at the year over year 0:03:24.240 --> 0:03:27.440 because of base effects and the fact that inflation was 0:03:27.520 --> 0:03:31.280 higher last year. Uh, you would see declines. But what 0:03:31.320 --> 0:03:34.080 the Fed wants to see is that right now we're 0:03:34.080 --> 0:03:37.760 seeing inflation slowing down, and for that they're looking at 0:03:37.800 --> 0:03:40.800 things that have had a big impact on it. Um. Obviously, 0:03:40.880 --> 0:03:44.440 energy over the recent months has has come down. Gasoline 0:03:44.440 --> 0:03:46.880 prices have come down. That's helped the CPI. But now 0:03:47.520 --> 0:03:50.680 the basic premises it's for the month of October it 0:03:50.720 --> 0:03:54.040 went up, so that should add. But things like medical 0:03:54.080 --> 0:03:58.200 care as the COVID crisis has fallen out of the 0:03:58.240 --> 0:04:02.160 public consciousness, used car prices on the wholesale level have 0:04:02.200 --> 0:04:05.920 been falling significantly because suddenly there are cars available and 0:04:05.960 --> 0:04:09.360 so that should change. Airfares they think may go down, 0:04:09.520 --> 0:04:13.520 Hotel room prices may go down. So there are areas 0:04:13.680 --> 0:04:16.880 that had not moved as much as the Fed thought 0:04:16.920 --> 0:04:20.480 they would. That people are expecting to see some progress 0:04:20.480 --> 0:04:23.200 on not huge, but some progress. Okay. So the thinking 0:04:23.400 --> 0:04:26.440 is with the Central Bank, short term pain i e. 0:04:26.920 --> 0:04:31.360 Higher interest rates will lead to longer term gains. Right, 0:04:32.120 --> 0:04:36.239 that's I mean, how much pain do I have to endure? Well, 0:04:36.320 --> 0:04:39.720 that depends on a lot of things that are out 0:04:39.760 --> 0:04:43.000 of your control, UM, like you know what you're gonna 0:04:43.040 --> 0:04:46.960 pay at the gas pump and what what you're going 0:04:47.000 --> 0:04:50.560 to have to pay for, um, things that you buy 0:04:50.600 --> 0:04:54.600 in the store that maybe suffering from supply chain problems. 0:04:54.880 --> 0:04:58.440 Supply chains are getting better, so we should see goods 0:04:58.480 --> 0:05:02.440 prices continue to drop. We're still seeing services prices rise 0:05:02.839 --> 0:05:06.720 with the higher rates. Are are they having an impact 0:05:06.760 --> 0:05:10.200 that we can see, Well, it depends on the category. 0:05:10.600 --> 0:05:13.719 Certainly they're having an impact on real estate and housing. 0:05:14.279 --> 0:05:17.080 Mortgage rates have gone way up and new home sales 0:05:17.120 --> 0:05:20.880 and existing home sales have gone way way down. Mortgage 0:05:20.960 --> 0:05:25.440 Bankers Association Mortgage Activity index is at a level that 0:05:26.080 --> 0:05:31.960 last reached, so we're seeing a definite impact there. It's 0:05:32.000 --> 0:05:35.320 going to be interesting to see what happens with other 0:05:35.600 --> 0:05:41.960 inflation sensitive things like car purchases, UH and UM, whether 0:05:42.040 --> 0:05:45.480 or not people continue to use credit cards as much 0:05:45.520 --> 0:05:49.119 as if they have adjustable rate credit cards. We're seeing 0:05:49.160 --> 0:05:54.279 some slowing in the overall economy in terms of retail sales. 0:05:54.760 --> 0:05:56.359 People still have a lot of money, but they're not 0:05:56.520 --> 0:06:00.360 spending as much of it UH as as they so 0:06:00.920 --> 0:06:04.640 we're seeing some movement on the margins was the way 0:06:04.680 --> 0:06:07.880 that Powell put it this last week. So what's the 0:06:07.960 --> 0:06:11.480 expectation from the consumer prices index that we're gonna be 0:06:11.480 --> 0:06:14.520 going well? On a month over month basis. Economists think 0:06:14.560 --> 0:06:17.680 we're gonna go up by seven tenths of a percent 0:06:17.720 --> 0:06:20.599 in the month of October, which would bring the year 0:06:20.640 --> 0:06:23.719 over year rate to eight percent, a tick down from 0:06:23.920 --> 0:06:28.240 last month. But that's base effects. Now, the Fed's gonna 0:06:28.240 --> 0:06:31.440 be looking at the core and that should increase by 0:06:31.480 --> 0:06:34.560 five tenths which is lower than the prior month. And 0:06:35.000 --> 0:06:38.840 six point six percent is the year over year estimate 0:06:38.880 --> 0:06:41.440 for the core rate, which would be the same as 0:06:41.520 --> 0:06:45.320 the prior month. Any little bit would be seen as progress. 0:06:45.760 --> 0:06:47.880 The real concern for the markets is if we get 0:06:47.880 --> 0:06:52.320 a surprise upward. Mike, always a pleasure, Bloomberg's Michael McKee 0:06:53.000 --> 0:06:55.560 And just to hand on Bloomberg Daybreak weekend, the United 0:06:55.640 --> 0:06:59.719 Nations COP twenty seven Climate Summit in Egypt. On John, 0:07:00.480 --> 0:07:12.040 this is Broomber. This is Bloomberg Day Break weekend, our 0:07:12.040 --> 0:07:14.480 global looking ahead at the top stories for investors in 0:07:14.480 --> 0:07:17.440 the coming week. I'm John Tucker in New York. Up 0:07:17.520 --> 0:07:21.360 later in the program, Taiwan and it's tricky business relationship 0:07:21.400 --> 0:07:25.960 with China. But first world leaders, activists, diplomats and throngs 0:07:26.000 --> 0:07:29.640 of journalists gathering for the United Nations COP twenty seven 0:07:29.680 --> 0:07:32.679 Climate Summit in Egypt. And for more, let's say to London, 0:07:32.720 --> 0:07:36.520 bring in Bloomberg Daybreak, euro Bagger Caroline Hecker John COP 0:07:36.560 --> 0:07:39.760 twenty seven takes place in Chamel shak amid an energy 0:07:39.800 --> 0:07:44.360 crisis and global economic upheaval that's testing the commitment of 0:07:44.520 --> 0:07:48.040 many countries to cutting emissions. The world is still not 0:07:48.200 --> 0:07:51.720 on track to keep global temperature rises below one and 0:07:51.760 --> 0:07:54.400 a half degree celsius. This, of course, is seen as 0:07:54.440 --> 0:07:58.640 a key threshold for averting catastrophic climate change. For more, 0:07:58.680 --> 0:08:01.360 I'm joined by Bloomberg Green in a senior climate reporter, 0:08:01.480 --> 0:08:05.840 Actual Ratty and Bloomberg Green reporter Lower Milan in Madrid. 0:08:06.280 --> 0:08:08.760 Lor I want to start with you, what is the 0:08:08.880 --> 0:08:12.080 mood like? Well, I would say that based on the 0:08:12.080 --> 0:08:15.040 conversations that both actually and I have had with people 0:08:15.040 --> 0:08:21.000 attending over the last few days, Um, everyone's expectations are 0:08:21.080 --> 0:08:24.640 really high. Um. You can think that COP meetings happen 0:08:24.760 --> 0:08:28.320 every year and so many people go there, Over forty 0:08:28.360 --> 0:08:32.640 five thousand registered participants UM for this one, according to 0:08:32.679 --> 0:08:37.600 the Egyptian presidency, and everyone wants to um do the 0:08:37.600 --> 0:08:39.880 best they can. They know the eyes of the world 0:08:39.880 --> 0:08:43.400 will be on them for these two weeks, that climate 0:08:43.480 --> 0:08:46.880 issues will be on top of the agenda, on the 0:08:46.880 --> 0:08:49.280 news everywhere for these two weeks, and they just want 0:08:49.320 --> 0:08:52.000 to make sure that they do the best they can. Yeah. 0:08:52.000 --> 0:08:55.040 And also because the consequences of climate change are becoming 0:08:55.080 --> 0:08:58.760 so apparent. Actually, what is the latest research on trying 0:08:58.800 --> 0:09:05.240 to keep global warming in check? It's a two step process. Essentially, 0:09:05.840 --> 0:09:08.040 if we go back seven years, the world was on 0:09:08.160 --> 0:09:12.479 track for catastrophic climate change and now it isn't quite 0:09:12.520 --> 0:09:15.880 that bad. But even what we have today, which is 0:09:16.040 --> 0:09:18.520 three degree celsius farming, not one and a half degree 0:09:18.520 --> 0:09:22.560 celsius farming, that is still in sight. And the world 0:09:22.640 --> 0:09:27.040 is not cutting emissions fast enough. So we had two reports, 0:09:27.080 --> 0:09:29.320 one from the United Nations and one from the International 0:09:29.480 --> 0:09:33.600 Energy Agency saying two things that seem opposite, but they 0:09:33.640 --> 0:09:37.920 are actually quite aligned, which is we're not making enough progress, 0:09:37.920 --> 0:09:40.160 but we are making some progress, and that we might 0:09:40.240 --> 0:09:44.040 be able to speak emissions UH and fossil fuel use 0:09:44.240 --> 0:09:47.000 within this decade. A lot more just needs to be 0:09:47.040 --> 0:09:52.080 done though, Okay, and this of course because energy security 0:09:52.200 --> 0:09:56.120 has has become so much more important and central because 0:09:56.240 --> 0:10:01.480 of Russia's warren in Ukraine. Has that concern around energy 0:10:01.520 --> 0:10:06.719 security scuppered some progress on climates, you know, given the 0:10:06.840 --> 0:10:10.920 energy crisis in Europe, it certainly has. In the short term, 0:10:11.160 --> 0:10:13.920 you know, countries are turning to whatever fields they can 0:10:13.960 --> 0:10:16.840 get access to if it means burning more cold, they are, 0:10:18.000 --> 0:10:23.000 but scoping long term goals. That hasn't happened. If you've 0:10:23.040 --> 0:10:25.080 seen what has happened in the US with the US 0:10:25.160 --> 0:10:29.160 passing a climate bill called the Inflation Reduction Act, or 0:10:29.160 --> 0:10:33.040 Europe which is doubling down on deploying more renewables while 0:10:33.160 --> 0:10:37.920 legislating it's green deal. Those are clear actions that if 0:10:38.280 --> 0:10:40.920 the world wants energy security and wants to act on 0:10:40.960 --> 0:10:43.640 climate change, it needs to double down on green energy. 0:10:43.920 --> 0:10:46.480 But in the short term, because building out green energy 0:10:46.559 --> 0:10:50.320 takes a while, people are turning to more fossil fields 0:10:50.400 --> 0:10:53.040 and that's going to reverse some of the progress made 0:10:53.080 --> 0:10:57.040 so far. Pakistan and that the awful monsoons that have 0:10:57.160 --> 0:11:00.760 killed hundreds of people, um, you know, and and submerged 0:11:00.800 --> 0:11:04.160 the country underwater. I mean This is perhaps one of 0:11:04.160 --> 0:11:08.920 the clearest examples of the sort of devastation from changing 0:11:09.360 --> 0:11:11.800 weather and climate. Do you think there's going to be 0:11:11.840 --> 0:11:14.960 a lot more focused in on this idea of loss 0:11:14.960 --> 0:11:18.960 and damage on demands from countries that are being affected 0:11:19.000 --> 0:11:21.200 now by climate change is one group in the G 0:11:21.360 --> 0:11:25.400 seventy seven, but there are you know, demands for richer 0:11:25.440 --> 0:11:30.120 countries to pay more, to support more. Definitely, as we 0:11:30.200 --> 0:11:33.480 think that the so called issue of loss and namit 0:11:33.760 --> 0:11:37.280 will be the central theme and in this year's cop 0:11:37.440 --> 0:11:39.600 one of the reasons is because this is a COP 0:11:39.720 --> 0:11:42.640 that's being held in Africa for the first time in 0:11:42.640 --> 0:11:47.520 a few years, so obviously the presidency of every cop 0:11:47.720 --> 0:11:51.640 um holds certain power over which issues it wants to prioritize. 0:11:52.040 --> 0:11:55.559 But also because obviously of the devastating floods in Pakistan 0:11:55.600 --> 0:11:59.600 earlier this year, but also another developing nations who which 0:11:59.720 --> 0:12:03.839 are bearing the costs of climate change even though they 0:12:03.880 --> 0:12:08.160 contributed very little to eat in comparison to developed nations. 0:12:08.200 --> 0:12:11.679 So we've just seen, for example, devastating floods in Nigeria 0:12:12.120 --> 0:12:17.160 as well, and we can expect developing nations to demand 0:12:17.440 --> 0:12:20.920 reach countries to pay or to come up with a 0:12:21.040 --> 0:12:25.160 system of funding that can help them recover when these 0:12:25.200 --> 0:12:29.559 extreme weather events happen. Yeah, and that's for the sort 0:12:29.600 --> 0:12:33.000 of developing countries. Actually. I think we had a conversation 0:12:33.440 --> 0:12:37.920 when the UK hosted the last COP in Glasgow. Of course, 0:12:38.520 --> 0:12:42.520 just the latest report though from the Independent Climate Change 0:12:42.520 --> 0:12:45.640 Committee here in the UK for two has kind of 0:12:45.760 --> 0:12:50.320 underlined the issues for Britain itself on how committed we 0:12:50.360 --> 0:12:53.600 are and there is, you know, still some doubt about 0:12:53.640 --> 0:12:56.880 how committed Britain is in some ways to decarbonization. What 0:12:57.240 --> 0:12:59.600 do you think of that, the pressure that the UK 0:12:59.760 --> 0:13:04.600 is this as a G seven country. Yeah, that's certainly 0:13:04.840 --> 0:13:08.840 one topic that's come up, especially through the leadership contests 0:13:08.840 --> 0:13:13.320 that have happened in the Conservative Party. Um, and we 0:13:13.400 --> 0:13:17.800 have heard from certain wings of the Conservative Party are 0:13:17.880 --> 0:13:22.000 pushback against climate policies. But where things stand, the UK 0:13:22.280 --> 0:13:25.480 still leads among the G seven countries on how much 0:13:25.520 --> 0:13:29.960 emissions it has cut since nine more than forty UM 0:13:30.160 --> 0:13:34.480 and the UK has met its climate goals until twenty two. 0:13:34.520 --> 0:13:37.840 So this year it will be the third UH carbon 0:13:37.840 --> 0:13:40.000 budget as they are called here in the UK, and 0:13:40.000 --> 0:13:42.520 the UK will have met it. But you are right 0:13:42.600 --> 0:13:45.920 that it is going off track, especially this year. Renewable's 0:13:46.000 --> 0:13:50.559 energy investments have gone down. The UK is in dire 0:13:50.600 --> 0:13:55.319 straits with its financial situation, having to give a lot 0:13:55.320 --> 0:13:58.520 of money to energy companies to try and keep prices 0:13:58.559 --> 0:14:03.400 of energy low for consumers, and so questions are being asked. 0:14:03.400 --> 0:14:06.400 But as you as you can see commitment from the 0:14:06.480 --> 0:14:08.719 UK government. If it ravers, there is a lot of 0:14:08.760 --> 0:14:12.320 backlash and that causes governments to change their mind. So 0:14:12.360 --> 0:14:14.400 it richis and that wasn't going to come to COP 0:14:14.520 --> 0:14:17.880 now he is. Okay, Good luck to both of you. 0:14:17.920 --> 0:14:20.120 I hope you'll join us next week on Bloomberg Radio 0:14:20.200 --> 0:14:23.240 to tell us more. That is our Bloomberg Green Senior 0:14:23.280 --> 0:14:26.640 Climate Reporter actual at Ratti and from Madrid Bloomberg Green 0:14:26.680 --> 0:14:28.920 Reporter at Laura Milan. Thank you so much for your 0:14:28.920 --> 0:14:31.920 time taking us through what to expect from COP twenty 0:14:32.000 --> 0:14:35.440 seven and Climate summit in Egypt. I'm Caroline hepget here 0:14:35.480 --> 0:14:38.000 in London. You can catch us every weekday morning for 0:14:38.080 --> 0:14:40.560 full coverage of COP twenty seven and so much more 0:14:40.800 --> 0:14:43.440 on Bloomberg Daybreak. You are beginning at six am in London. 0:14:43.680 --> 0:14:47.440 That's one am on Wall Street. John Alright, Caroline Thanks 0:14:47.480 --> 0:14:50.320 alone as the head up Bloomberg day Break Weekend Taiwan's 0:14:50.400 --> 0:14:54.880 tech companies in China. I'm John Tucker. This is Bloomberg 0:15:08.080 --> 0:15:12.600 broadcasting live from the Bloomberg Interactive Broker Studio in New York. 0:15:12.680 --> 0:15:17.360 Bloomberg eleven three oh to Washington, d C, Bloomberg to Boston, 0:15:17.440 --> 0:15:20.840 Bloomberg one O six one to San Francisco, Bloomberg nine 0:15:21.440 --> 0:15:24.760 to the Country, Sirius XM chto one nineteen to London, 0:15:24.920 --> 0:15:27.680 d A B Digital Radio, and around the globe the 0:15:27.680 --> 0:15:31.600 Bloomberg Business Act and Bloomberg Radio dot Com. This is 0:15:31.640 --> 0:15:40.440 Bloomberg day Break Weekend, John Tucker in New York with 0:15:40.440 --> 0:15:43.000 your global look aheathly top stories for investors in the 0:15:43.040 --> 0:15:46.400 coming week. Time one businesses are facing more challenges in 0:15:46.560 --> 0:15:49.280 China for more, Let's go to Hong Kong and Bloomberg 0:15:49.360 --> 0:15:53.480 Daybreak Asia host Brian Curtis. John not much warning on this, 0:15:53.600 --> 0:15:57.720 but China lockdown the world's largest iPhone factory this past week. 0:15:58.120 --> 0:16:01.280 It's a whole high complex in Chung Show, China, and 0:16:01.320 --> 0:16:04.440 it's probably the last thing that Apple needed, never mind 0:16:04.560 --> 0:16:07.600 hone high or Fox Con. It brings in so many 0:16:07.640 --> 0:16:12.640 issues China's COVID zero policies, Apple's efforts to diversify production, 0:16:13.080 --> 0:16:16.360 other big companies and their plans as well, and also 0:16:16.400 --> 0:16:20.560 the changing nature of supply chains, the ever complex relationship 0:16:20.640 --> 0:16:24.120 that Taiwan companies have operating in mainland China, as well 0:16:24.160 --> 0:16:28.280 as Taiwan China relations and US China relations. It's a big, 0:16:28.320 --> 0:16:31.720 big story. Joining us now to discuss this is Samson. 0:16:31.800 --> 0:16:35.400 Ellis Bloomberg's type a bureau chief. He's embedded with Green 0:16:35.480 --> 0:16:37.760 at the moment, and he's right here in our Hong 0:16:37.800 --> 0:16:41.160 Kong studios with us. Sam, thanks very much for coming in. 0:16:41.240 --> 0:16:45.000 So we've we've got the local authorities. They're sterilizing the 0:16:45.080 --> 0:16:49.320 Fox Con campus and there have been mass walkouts. So 0:16:49.360 --> 0:16:52.320 it's a it's a complicated moving story as we speak, 0:16:52.800 --> 0:16:55.440 but it's a it's a kind of contained bubble, right 0:16:56.360 --> 0:16:58.760 it is, you know, and as you've laid out very well, 0:16:58.800 --> 0:17:00.440 you know, it's been a bit of a week to 0:17:00.480 --> 0:17:03.880 forget for for Hunghai or fox Con, and and all 0:17:03.920 --> 0:17:07.520 of this really stems from China's strict adherence to this 0:17:07.640 --> 0:17:10.600 COVID zero policy, where you know, as soon as you 0:17:10.640 --> 0:17:15.040 get a few cases of COVID the local authorities come 0:17:15.080 --> 0:17:18.480 in and locked down a whole area, and when that 0:17:18.600 --> 0:17:24.360 area happens to be where Nghai's largest iPhone plant is 0:17:24.400 --> 0:17:27.719 in jung Gaol, then that obviously causes problems and creates 0:17:27.800 --> 0:17:32.399 ripples that extends to Cupatina, right, and people want to 0:17:32.520 --> 0:17:35.480 escape the restrictions, so some of them just escape and 0:17:35.520 --> 0:17:38.160 actually walk out of there. Yeah, and the Chinese social 0:17:38.160 --> 0:17:42.440 media has been a wash with videos of hundreds of 0:17:42.520 --> 0:17:47.840 not thousands of people, young people walking down roads and highways, 0:17:47.880 --> 0:17:53.840 pushing large suitcases, walking, you know, sometimes tens of miles 0:17:53.960 --> 0:17:59.040 home to escape the impending lockdown, or at least escaping 0:17:59.240 --> 0:18:02.240 you know, the increasingly worst conditions there. You know, they're 0:18:02.240 --> 0:18:06.240 worried about getting COVID themselves. In the days preceding the lockdown, 0:18:06.280 --> 0:18:08.360 you know, it was it became increasingly difficult to get 0:18:08.400 --> 0:18:12.240 food and basic supplies into the manufacturing complex, and so 0:18:12.400 --> 0:18:15.440 some people were having to subsist on just bread for 0:18:15.440 --> 0:18:18.600 for several days. So that's why people are just fleeing 0:18:18.640 --> 0:18:20.399 these plants right now. And what do we know about 0:18:20.480 --> 0:18:23.280 the impact on production? Fox con says they are going 0:18:23.280 --> 0:18:25.880 to keep manufacturing. It's a question of like how much 0:18:25.920 --> 0:18:28.560 it does lower production by and you know it couldn't 0:18:28.560 --> 0:18:30.280 really couldn't come at the worst time. You know, this 0:18:30.400 --> 0:18:33.000 is the ramp up ahead of the holiday season, which 0:18:33.080 --> 0:18:37.200 is obviously peak sales season four things like your iPhones, 0:18:37.240 --> 0:18:40.800 and so Fox can't a really trying hard to contain this. 0:18:40.960 --> 0:18:46.119 They're they're offering to increase people's salaries by up to 0:18:46.760 --> 0:18:49.879 thirty six percent to persuade them to stay on the 0:18:49.920 --> 0:18:53.160 production lines and stop them from you know, walking out. 0:18:53.280 --> 0:18:55.680 All right, let's take a a sort of lofty look 0:18:55.720 --> 0:18:57.879 at things, and and let me ask you that if 0:18:57.920 --> 0:19:01.359 you if you take COVID zero parlor sees and the 0:19:01.480 --> 0:19:04.000 changes that we saw coming out of the Party Congress, 0:19:04.720 --> 0:19:08.600 the further emphasis on national security and perhaps as somewhat 0:19:08.640 --> 0:19:15.120 of a small lessoning on pure economic interests, is two 0:19:15.520 --> 0:19:19.479 the year that China semi loses the West. Yeah, that's 0:19:19.480 --> 0:19:23.240 an interesting question. I think, you know, the economies are 0:19:23.359 --> 0:19:28.040 so bound to each other, so interconnected. People are not 0:19:28.200 --> 0:19:31.360 going to stop buying iPhones all the various other gadgets 0:19:31.400 --> 0:19:36.480 that are largely manufactured in China. But you know, you 0:19:36.560 --> 0:19:40.720 are certainly going to see companies reducing their reliance on China. 0:19:40.920 --> 0:19:44.960 There's definitely been this realization that maybe you know the 0:19:45.040 --> 0:19:48.680 risk of over concentration in China, and so while you 0:19:48.800 --> 0:19:52.240 might not see companies directly pull out of China, I 0:19:52.240 --> 0:19:54.159 think what you definitely are going to see and the 0:19:54.240 --> 0:19:58.080 numbers do back this up certainly from Taiwanese investment, you know, 0:19:58.119 --> 0:20:01.760 and the taime Andese brands and manufactured factors are often 0:20:01.800 --> 0:20:05.359 the operators of the plants in China. For example, is 0:20:05.440 --> 0:20:09.480 that much less new Capex is going into China. I 0:20:09.560 --> 0:20:11.760 think a lot of people would be interested in how 0:20:11.880 --> 0:20:15.080 ordinary people in Taiwan. You live in Taiwan, how ordinary 0:20:15.119 --> 0:20:19.320 people feel about these tensions with China. Taiwan has been 0:20:19.359 --> 0:20:23.880 facing the threat of invasion by China for the last 0:20:23.880 --> 0:20:27.919 seventy plus years, so they're very, very used to living 0:20:28.200 --> 0:20:32.560 with this threat. I think also largely the feeling is 0:20:32.680 --> 0:20:36.320 that you know an invasion is not certainly not imminent, 0:20:37.280 --> 0:20:40.040 and China does also still hold out hope of being 0:20:40.040 --> 0:20:44.240 able to conduct this peacefully. Sam thanks very much for 0:20:44.320 --> 0:20:47.080 joining us and for sharing your insights with us. Samson 0:20:47.119 --> 0:20:50.000 Ellis Bloomberg's Taibe Bureau achieve is with us here in 0:20:50.240 --> 0:20:53.720 our Hong Kong studios. I'm Brian Curtis in Hong Kong 0:20:53.760 --> 0:20:56.320 along with Doug Prisner. You can catch us every weekday 0:20:56.320 --> 0:20:59.520 for Bloomberg Daybreak Asia, beginning at six am in Hong 0:20:59.560 --> 0:21:03.400 Kong and six pm on Wall Street. John Brian, thanks 0:21:03.400 --> 0:21:06.760 a lot just ahead on Bloomberg Daybreak weekend. A lot 0:21:06.840 --> 0:21:10.520 hanging on this coming week's US mid term elections. I'm 0:21:10.560 --> 0:21:23.439 John Tucker's this is this is Bloomberg Daybreak weekend, our 0:21:23.480 --> 0:21:25.960 global look ahead at the top stories for investors in 0:21:26.000 --> 0:21:28.879 the coming week. I'm John Tucker in New York O. 0:21:29.000 --> 0:21:31.479 Candid It's are scrambling to cover as much ground as 0:21:31.480 --> 0:21:34.520 possible ahead of Tuesday's mid terms, and some key races 0:21:34.560 --> 0:21:37.680 are close, some are just hard to predict. And for 0:21:37.760 --> 0:21:39.600 a look at what to expect. Let's head to our 0:21:39.640 --> 0:21:43.959 Bloomberg ninety nine one newsroom in Washington and Amy Morris. Amy, 0:21:44.440 --> 0:21:46.879 all right, thank you, John, big steaks for Democrats and 0:21:47.000 --> 0:21:49.800 Republicans in these mid terms. Joining me now to talk 0:21:49.840 --> 0:21:53.640 about it all. White House reporter Jordan Fabian Jordan, thanks 0:21:53.640 --> 0:21:55.840 for taking the time with us, Thanks for having me on, Amy. 0:21:56.600 --> 0:21:59.720 What has the White House and perhaps maybe the President 0:21:59.800 --> 0:22:04.760 cancerned at this point? Well, they're certainly concerned about the 0:22:05.040 --> 0:22:08.480 possibility that Democrats could lose control of one or both 0:22:08.600 --> 0:22:11.560 chambers of Congress. That would essentially spell the end for 0:22:11.640 --> 0:22:16.480 their policy agenda. And so President Biden is going around 0:22:16.480 --> 0:22:19.920 the country two different states to try and campaign and 0:22:19.960 --> 0:22:24.320 save some of these jobs and also gubernatorial candidates trying 0:22:24.359 --> 0:22:26.680 to save some statehouses as well. But if you look 0:22:26.720 --> 0:22:31.000 at where he's going, he's going to New York, New Mexico, California. 0:22:31.560 --> 0:22:33.960 These are states that are traditionally blue states. So that 0:22:34.000 --> 0:22:36.600 shows you the kind of trouble that Democrats are in 0:22:36.920 --> 0:22:39.760 that he's having to go to these uh places that 0:22:39.800 --> 0:22:42.199 were thought to be safe in order to try and 0:22:42.320 --> 0:22:46.200 salvage key lawmakers. And it's not just that they all 0:22:46.240 --> 0:22:49.879 see their policy fall by the wayside um. They're also 0:22:50.119 --> 0:22:52.320 they've got to be concerned that they're gonna see sort 0:22:52.320 --> 0:22:53.960 of a little tit for tat when it comes to 0:22:54.000 --> 0:22:58.120 investigations and subpoenas that sort of thing. Certainly, they're they're 0:22:58.320 --> 0:23:01.480 very well aware of the fact that if Republicans gained 0:23:01.520 --> 0:23:04.399 control of Congress, not only will there be investigations, but 0:23:04.480 --> 0:23:09.760 there could be also impeachment proceedings brought against Joe Biden perhaps, 0:23:09.800 --> 0:23:14.000 but also key cabinet secretaries like a Trinity General General 0:23:14.040 --> 0:23:17.800 Merrick Garland or the Secretary of Homeland Security Alejandro my Orchis. 0:23:17.920 --> 0:23:21.000 So they're preparing for all those possibilities. But I'm told 0:23:21.040 --> 0:23:23.320 by senior White House officials and just the course of 0:23:23.400 --> 0:23:27.080 talking folks this week, that they think that there's a 0:23:27.119 --> 0:23:30.840 strong possibility these kind of investigations could backfire on Republicans 0:23:30.840 --> 0:23:33.480 and that it will be viewed as overreach, especially if 0:23:33.520 --> 0:23:37.240 they go after Hunter Biden and some sensitive subjects like that. 0:23:37.359 --> 0:23:40.080 So that would be something to watch next year if 0:23:40.080 --> 0:23:42.880 Republicans do indeed take control in Jordan. The White House 0:23:42.920 --> 0:23:45.920 is saying now it supports the Fed's rate hikes, it's 0:23:45.960 --> 0:23:49.000 still painful for people to see their mortgage rates go up, 0:23:49.119 --> 0:23:51.280 things of that nature, while at the same time, the 0:23:51.280 --> 0:23:54.160 One House says it is trying to fight back against inflation. 0:23:54.400 --> 0:23:57.399 Let's hear more now, White House Press Secretary Korean Jean Pierre. 0:23:57.680 --> 0:24:01.960 The FED is is independent. It's an independent agency, and 0:24:02.119 --> 0:24:05.480 we believe the President believes that it has uh the 0:24:05.880 --> 0:24:10.320 it has the best monetary policies to address inflation. Now, 0:24:10.440 --> 0:24:12.720 Jean Pierre did take it a step further, stable and 0:24:12.720 --> 0:24:15.720 steady growth with lower inflation. This is the kind of 0:24:15.800 --> 0:24:18.760 economy that delivers for working families, and that's how we 0:24:18.800 --> 0:24:21.879 see the work of the of the Fed. So Jordan 0:24:22.040 --> 0:24:25.159 is being on the side of rising rates going to 0:24:25.200 --> 0:24:27.640 wind up being a liability for the president even though 0:24:27.880 --> 0:24:30.879 he's fighting inflation. How does he balance that. It's a 0:24:30.880 --> 0:24:33.320