1 00:00:00,280 --> 00:00:07,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,680 --> 00:00:12,920 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,960 --> 00:00:15,120 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:15,120 --> 00:00:17,560 Speaker 2: anchors all around the world, and straight ahead on the program, 5 00:00:17,560 --> 00:00:19,880 Speaker 2: But look ahead to the June Jobs Report, what it 6 00:00:19,920 --> 00:00:23,040 Speaker 2: means for the FED moving forward. I'm Tom Busby in 7 00:00:23,120 --> 00:00:23,560 Speaker 2: New York. 8 00:00:23,760 --> 00:00:26,880 Speaker 3: I'm Stephen Carolin London. We're asking what's next for France 9 00:00:26,920 --> 00:00:29,960 Speaker 3: as it navigates a new economic and political reality. 10 00:00:30,280 --> 00:00:33,320 Speaker 4: I'm Dek Krisner looking at the state of Chinese Iranian 11 00:00:33,360 --> 00:00:36,040 Speaker 4: relations as tension simmer in the Middle East. 12 00:00:38,520 --> 00:00:42,560 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,600 --> 00:00:46,280 Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,800 --> 00:00:51,040 Speaker 1: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 15 00:00:51,479 --> 00:00:54,680 Speaker 1: Sirius XM one twenty one, and around the world on 16 00:00:54,720 --> 00:00:57,880 Speaker 1: Bloomberg Radio, dot Com and the Bloomberg Business App. 17 00:01:02,760 --> 00:01:04,920 Speaker 2: Good day to U. I'm Tom Buzby. We begin today's 18 00:01:04,920 --> 00:01:07,839 Speaker 2: program with the June Jobs Report. Non farm payroll numbers 19 00:01:07,880 --> 00:01:11,000 Speaker 2: out on Thursday eight thirty am Wall Street Time, just 20 00:01:11,000 --> 00:01:13,920 Speaker 2: ahead of the July fourth holiday. On Friday, for more 21 00:01:14,120 --> 00:01:17,600 Speaker 2: on those numbers and some key inflation and spending data 22 00:01:17,680 --> 00:01:20,319 Speaker 2: out this past week how it may impact the Fed's 23 00:01:20,400 --> 00:01:23,920 Speaker 2: moves going forward. We're joined by Stuart paul Us, economist 24 00:01:24,080 --> 00:01:27,759 Speaker 2: with Bloomberg Economics. Well, Stuart, let's start with this what 25 00:01:27,800 --> 00:01:31,480 Speaker 2: we saw on Friday. Real surprise, huh, that's right. 26 00:01:31,640 --> 00:01:35,319 Speaker 5: On Friday, we got the May Personal Income and outlays report, 27 00:01:35,600 --> 00:01:38,960 Speaker 5: which really just had a very stagflationary contour to the 28 00:01:39,000 --> 00:01:43,560 Speaker 5: whole thing. Personal spending declined zero point one percent, Personal 29 00:01:43,600 --> 00:01:47,880 Speaker 5: income growth really surprised the downside, declining zero point four percent, 30 00:01:48,120 --> 00:01:51,760 Speaker 5: and we saw a bit more core inflation than we anticipated. 31 00:01:51,880 --> 00:01:54,920 Speaker 5: Core prices rose zero point two percent in the month 32 00:01:54,920 --> 00:01:57,840 Speaker 5: of May. By our estimates, it was about four basis 33 00:01:57,880 --> 00:02:00,840 Speaker 5: points more than we were estimating. But what we're really 34 00:02:00,880 --> 00:02:05,200 Speaker 5: seeing is tariff passed through, especially into non durable goods. 35 00:02:05,640 --> 00:02:09,280 Speaker 5: What's that doing That's causing consumers to retrench. They're pulling 36 00:02:09,320 --> 00:02:14,120 Speaker 5: back their spending, especially in discretionary services categories, things like travel, 37 00:02:14,200 --> 00:02:17,720 Speaker 5: things like food services. They're seeing higher prices, They're pulling 38 00:02:17,760 --> 00:02:21,080 Speaker 5: back their spending where they can. And on the income side, 39 00:02:21,520 --> 00:02:26,400 Speaker 5: while there is still reasonably strong labor income for now. 40 00:02:27,040 --> 00:02:31,760 Speaker 5: Transfer payments materially declined in the month of May, and 41 00:02:32,160 --> 00:02:35,200 Speaker 5: we think that that did play a role in forcing 42 00:02:35,240 --> 00:02:40,320 Speaker 5: spending lower. Consumers are feeling the pinch of lower income 43 00:02:40,320 --> 00:02:42,440 Speaker 5: in the month of May, and so they pulled back 44 00:02:42,560 --> 00:02:46,000 Speaker 5: in the discretionary categories. They're really just trying to satisfy 45 00:02:46,040 --> 00:02:49,440 Speaker 5: their needs right now and meet their demand for staples. 46 00:02:49,480 --> 00:02:52,320 Speaker 5: They're really just trying to spend on necessities. 47 00:02:52,000 --> 00:02:55,040 Speaker 2: Lower income slightly higher prices. And we have not even 48 00:02:55,120 --> 00:02:58,080 Speaker 2: seen near the full effect of these Trump tariffs. We 49 00:02:58,160 --> 00:03:00,600 Speaker 2: may have seen those some impact of China. The tariffs 50 00:03:00,639 --> 00:03:01,840 Speaker 2: correct last week. 51 00:03:02,080 --> 00:03:05,480 Speaker 5: Yeah, so in the month of May, consumer spending really 52 00:03:05,520 --> 00:03:08,960 Speaker 5: pulled back, in part because consumers are feeling the pinch 53 00:03:08,960 --> 00:03:12,320 Speaker 5: of higher prices, in part because of tariffs on China. 54 00:03:12,840 --> 00:03:16,480 Speaker 5: Higher prices rippled through, especially to the non durable goods 55 00:03:16,960 --> 00:03:20,640 Speaker 5: that come from China. But the tariff effect is not 56 00:03:21,120 --> 00:03:23,840 Speaker 5: just a consequence of what we're seeing on China. There 57 00:03:23,880 --> 00:03:27,440 Speaker 5: was a real pull forward of spending on autos earlier 58 00:03:27,480 --> 00:03:31,360 Speaker 5: this year in anticipation of tariffs, and now we're seeing 59 00:03:31,360 --> 00:03:35,480 Speaker 5: the payback. Spending on autos declined really swiftly in the 60 00:03:35,480 --> 00:03:37,360 Speaker 5: month of May, and a lot of that is just 61 00:03:37,360 --> 00:03:40,279 Speaker 5: because of the policy uncertainty that we've seen, the uncertainty 62 00:03:40,360 --> 00:03:43,000 Speaker 5: around tariffs throughout this year so far. 63 00:03:43,480 --> 00:03:46,400 Speaker 2: That's a six percent drop in auto that's right. What 64 00:03:46,480 --> 00:03:50,000 Speaker 2: else did we see? Airfares, hotels, anything like that that 65 00:03:50,120 --> 00:03:52,000 Speaker 2: we saw prices go down. 66 00:03:51,800 --> 00:03:56,080 Speaker 5: Airfares, soft hotels, softs. We saw most of most of 67 00:03:56,080 --> 00:03:59,080 Speaker 5: those data points in the CPI report earlier in the month. 68 00:03:59,560 --> 00:04:03,200 Speaker 5: And a big part of what's driving that is cancel 69 00:04:03,280 --> 00:04:05,880 Speaker 5: travel plans. A lot of travel from abroad that's been 70 00:04:05,960 --> 00:04:08,880 Speaker 5: pulled back again. This is downstream of the trade war 71 00:04:08,960 --> 00:04:11,680 Speaker 5: and folks not wanting to travel necessarily into the United 72 00:04:11,720 --> 00:04:14,520 Speaker 5: States and they're canceling some of their summer travel plans. 73 00:04:14,800 --> 00:04:17,400 Speaker 2: Now, this consumer spending down by the most since the 74 00:04:17,440 --> 00:04:20,359 Speaker 2: start of the year. Do you see moving forward for 75 00:04:20,480 --> 00:04:23,920 Speaker 2: consumer spending? This is gonna it's not looking good. 76 00:04:24,400 --> 00:04:26,680 Speaker 5: It's not looking great. So much of it hinges on 77 00:04:26,839 --> 00:04:30,160 Speaker 5: the labor market right now. As I mentioned, income's declined, 78 00:04:30,200 --> 00:04:32,320 Speaker 5: so consumer spending retrenched quite a bit. 79 00:04:32,960 --> 00:04:33,800 Speaker 2: But where we. 80 00:04:33,760 --> 00:04:38,440 Speaker 5: Do see one tiny little bright spot is in labor income. 81 00:04:38,560 --> 00:04:41,080 Speaker 5: Labor income increase zero point four percent of the month 82 00:04:41,120 --> 00:04:44,080 Speaker 5: of May. That's because wages accelerated and hiring continue to 83 00:04:44,120 --> 00:04:47,200 Speaker 5: pace during that month. Looking ahead, we do expect to 84 00:04:47,200 --> 00:04:50,200 Speaker 5: see a more material cooling of the labor market, and 85 00:04:50,320 --> 00:04:54,240 Speaker 5: as it cools, so should consumer spending. We already see 86 00:04:54,279 --> 00:04:58,920 Speaker 5: consumers trying to build up precautionary savings by rotating toward 87 00:04:59,600 --> 00:05:03,440 Speaker 5: focus on necessities and away from discretionary spending. We think 88 00:05:03,480 --> 00:05:06,680 Speaker 5: that if the cracks in the labor market widen further, 89 00:05:07,200 --> 00:05:09,279 Speaker 5: that spending is going to pull back even further. 90 00:05:09,480 --> 00:05:10,880 Speaker 2: And we're going to get a good look at that 91 00:05:11,200 --> 00:05:13,960 Speaker 2: this Thursday's June jobs report. What are you expecting to 92 00:05:14,000 --> 00:05:15,520 Speaker 2: see headline numbers? 93 00:05:15,560 --> 00:05:18,440 Speaker 5: We're expecting one hundred and twenty thousand jobs added, but 94 00:05:18,800 --> 00:05:22,039 Speaker 5: I will admit risk is skewed to the downside. We 95 00:05:22,120 --> 00:05:26,320 Speaker 5: can see a situation which there are just tens of 96 00:05:26,360 --> 00:05:28,520 Speaker 5: thousands of jobs added, not over one hundred thousand. 97 00:05:28,560 --> 00:05:30,920 Speaker 2: Peokulde whisper is below one hundred k. 98 00:05:31,360 --> 00:05:34,400 Speaker 5: Whisper right now is fluttering around one hundred thousand. We 99 00:05:34,480 --> 00:05:38,080 Speaker 5: haven't seen a whisper number that's the expectation for market 100 00:05:38,120 --> 00:05:42,279 Speaker 5: participants beyond just forecasters. We haven't seen a whisper number 101 00:05:42,320 --> 00:05:45,279 Speaker 5: fall below one hundred thousand since early twenty twenty one. 102 00:05:45,960 --> 00:05:50,400 Speaker 5: So right now folks are feeling this tendency to lower 103 00:05:50,440 --> 00:05:53,359 Speaker 5: their expectations for the pace of hiring. But there's a 104 00:05:53,400 --> 00:05:56,599 Speaker 5: little bit of a mental block in getting below one 105 00:05:56,640 --> 00:05:59,320 Speaker 5: hundred thousand. We think it could fall below one hundred thousand, 106 00:05:59,320 --> 00:06:01,279 Speaker 5: and it will at the end of the year, certainly. 107 00:06:01,800 --> 00:06:04,360 Speaker 5: But for the month of June we estimate one hundred 108 00:06:04,360 --> 00:06:07,960 Speaker 5: and twenty thousand jobs added. But that is not enough 109 00:06:08,080 --> 00:06:11,599 Speaker 5: hiring to keep pace with the increase in the labor force, 110 00:06:11,640 --> 00:06:13,919 Speaker 5: and so the unemployment rate is likely to rise to 111 00:06:14,000 --> 00:06:17,159 Speaker 5: four point three percent, and we're getting closer to the 112 00:06:17,200 --> 00:06:20,719 Speaker 5: four and a half percent unemployment that the median FOMC 113 00:06:20,920 --> 00:06:24,159 Speaker 5: member and the median monetary policy maker is expecting to 114 00:06:24,200 --> 00:06:25,280 Speaker 5: see at year end. 115 00:06:25,680 --> 00:06:28,920 Speaker 2: Boy An important readout the June jobs report this Thursday, 116 00:06:29,000 --> 00:06:31,520 Speaker 2: eight thirty am Wall Street Time our thanks to Stuart 117 00:06:31,520 --> 00:06:35,479 Speaker 2: paul Us, economist with Bloomberg Economics. We move next to 118 00:06:35,680 --> 00:06:39,800 Speaker 2: oil prices tumbled early last week amid hostilities between Israel 119 00:06:39,839 --> 00:06:42,840 Speaker 2: and Iran, before stopping that slide in prices after a 120 00:06:42,920 --> 00:06:45,400 Speaker 2: tentative ceasefire was called and the straight of horror moves 121 00:06:45,480 --> 00:06:49,800 Speaker 2: remained open. The question now, where are crude prices headed 122 00:06:49,920 --> 00:06:52,880 Speaker 2: and why and for more. We're joined by Javier Blass 123 00:06:52,920 --> 00:06:57,599 Speaker 2: Bloomberg opinion columns covering energy and commodities. Well, Javier, thank 124 00:06:57,600 --> 00:07:01,240 Speaker 2: you so much for joining us. Where are crude prices now? 125 00:07:01,320 --> 00:07:03,440 Speaker 2: And with all the recent turmoil in the Middle East? 126 00:07:03,440 --> 00:07:05,400 Speaker 2: Do you think prices are where they should be? 127 00:07:05,760 --> 00:07:09,680 Speaker 6: I think that prices are about right right now. WTI 128 00:07:09,840 --> 00:07:13,280 Speaker 6: around sixty five dollars a barrel, range US a bit 129 00:07:13,360 --> 00:07:16,200 Speaker 6: higher than that. So the price of oil right now 130 00:07:16,280 --> 00:07:19,160 Speaker 6: is somewhere between sixty five and seventy dollars a barrel. 131 00:07:19,480 --> 00:07:22,400 Speaker 6: The market is discounting that the turmoil in the Middle 132 00:07:22,440 --> 00:07:26,240 Speaker 6: East is on the rear mirror, that Iranian oil production 133 00:07:26,400 --> 00:07:29,320 Speaker 6: is going to continue, that there is no risk of 134 00:07:29,400 --> 00:07:32,880 Speaker 6: the Estrado hormus, which is that chalk point for about 135 00:07:32,920 --> 00:07:36,200 Speaker 6: twenty percent of the walls oil. It's not going to 136 00:07:36,240 --> 00:07:40,080 Speaker 6: be close. And I think that the market is also 137 00:07:40,080 --> 00:07:43,680 Speaker 6: suspecting that the Opeq oil Carteil is going to continue 138 00:07:43,680 --> 00:07:47,640 Speaker 6: increasing production through the summer. And if we were having 139 00:07:47,680 --> 00:07:52,080 Speaker 6: this conversation towards at the end of the summer period 140 00:07:52,920 --> 00:07:55,240 Speaker 6: kind of September early October, and I will not be 141 00:07:55,320 --> 00:07:58,120 Speaker 6: surprised if we see prices a lot lower. 142 00:07:58,840 --> 00:08:00,360 Speaker 2: Are you saying there's a lot of oil. 143 00:08:01,160 --> 00:08:04,000 Speaker 6: There is a glott of oil, and certainly that glood 144 00:08:04,120 --> 00:08:06,960 Speaker 6: is going to increase as OPEK is putting more barrels 145 00:08:06,960 --> 00:08:10,720 Speaker 6: into the market. And also the high prices that we 146 00:08:11,320 --> 00:08:15,320 Speaker 6: had recently at the height of the conflict between Israel 147 00:08:15,360 --> 00:08:20,640 Speaker 6: and Iran, where we saw prices around fifteen dollars higher, 148 00:08:20,720 --> 00:08:25,160 Speaker 6: and that also has a low US shale producers to 149 00:08:25,320 --> 00:08:29,360 Speaker 6: lock in those high prices to hatch. So that means 150 00:08:29,360 --> 00:08:32,200 Speaker 6: that probably we're going to see American oil production a 151 00:08:32,240 --> 00:08:35,319 Speaker 6: bit higher than we expected, and that's going to add 152 00:08:35,400 --> 00:08:39,840 Speaker 6: to that kind of glott on oil that we are seen. 153 00:08:39,920 --> 00:08:42,360 Speaker 6: And the way I have put it is that we 154 00:08:42,480 --> 00:08:45,920 Speaker 6: have enough oil, probably too much oil right now, and 155 00:08:45,960 --> 00:08:48,000 Speaker 6: by the end of the summer, the work the global 156 00:08:48,000 --> 00:08:49,560 Speaker 6: economy is going to be swimming in oil. 157 00:08:50,040 --> 00:08:53,280 Speaker 2: Well, let's talk about Iranian oil right now. Because Israeli 158 00:08:53,320 --> 00:08:56,920 Speaker 2: American missile spider jets they did not target Iranian energy 159 00:08:56,920 --> 00:08:58,160 Speaker 2: assets at all. 160 00:08:58,360 --> 00:09:00,880 Speaker 6: Now, there was a there was a small a couple 161 00:09:00,880 --> 00:09:04,000 Speaker 6: of targets by Israel Verry early in the conflict. I 162 00:09:04,040 --> 00:09:07,120 Speaker 6: think that it was a message to the Iranians careful, 163 00:09:07,240 --> 00:09:10,800 Speaker 6: we can't go after your energy sector if we want. 164 00:09:11,160 --> 00:09:14,760 Speaker 6: But I also believe that quietly the White House intervened 165 00:09:14,760 --> 00:09:18,480 Speaker 6: and told both sides oil is not should not be 166 00:09:18,559 --> 00:09:22,880 Speaker 6: attacked in this conflict. So ironically, what we have seen 167 00:09:23,000 --> 00:09:25,600 Speaker 6: is that the Iranian oil production probably is higher today 168 00:09:25,920 --> 00:09:28,800 Speaker 6: that it was in May. And despite all this talk 169 00:09:28,880 --> 00:09:32,360 Speaker 6: about maximum pressure and oil sanctions from the United States 170 00:09:32,360 --> 00:09:35,480 Speaker 6: in Iran, the truth is that Tehran is producing the 171 00:09:35,520 --> 00:09:37,720 Speaker 6: most oil in seven years right now. 172 00:09:37,600 --> 00:09:39,719 Speaker 2: And that must be a big benefit for China, right 173 00:09:39,760 --> 00:09:42,880 Speaker 2: that is its main customer, and of course President Trump 174 00:09:43,040 --> 00:09:46,120 Speaker 2: was encouraging to Ran to keep selling to Beijing. 175 00:09:47,000 --> 00:09:49,800 Speaker 6: Yes, President Trump, on one hunt has been talking about 176 00:09:49,960 --> 00:09:54,480 Speaker 6: maximum pressure and the sanctions are still there. But at best, 177 00:09:55,760 --> 00:09:59,880 Speaker 6: I think that one can argue that either Beijing has 178 00:10:00,040 --> 00:10:03,640 Speaker 6: found a way to bypass all the sanctions, or was 179 00:10:03,679 --> 00:10:06,680 Speaker 6: intern stand in a blind eye and it's not enforcing 180 00:10:06,679 --> 00:10:09,160 Speaker 6: the sanctions. I think it's a combination of both. But 181 00:10:09,200 --> 00:10:11,160 Speaker 6: I don't think that the White House wants to do 182 00:10:12,280 --> 00:10:17,120 Speaker 6: anything with Iranian oil esports. I believe that the talk 183 00:10:17,160 --> 00:10:20,720 Speaker 6: about maximum pressure is that talk but very little. 184 00:10:20,440 --> 00:10:24,200 Speaker 2: Action, because and to cut off that oil or the 185 00:10:24,200 --> 00:10:28,480 Speaker 2: oil production would devastate that economy. Is the tactic maybe 186 00:10:28,520 --> 00:10:31,400 Speaker 2: to keep that economy moving along and ran as best 187 00:10:31,760 --> 00:10:32,720 Speaker 2: President Trump can. 188 00:10:33,120 --> 00:10:36,720 Speaker 6: Yes, it would be bad for Iran if the esports 189 00:10:36,720 --> 00:10:40,200 Speaker 6: were to go again towards zero, as they went during 190 00:10:40,240 --> 00:10:43,480 Speaker 6: the first administration of President Trump. But I do believe 191 00:10:43,480 --> 00:10:45,679 Speaker 6: that this is nothing to do with trying to get 192 00:10:45,679 --> 00:10:48,480 Speaker 6: the Iranians into the negotiation table or anything like that. 193 00:10:49,679 --> 00:10:52,560 Speaker 6: China was able to continue buying Irani and production at 194 00:10:52,600 --> 00:10:55,640 Speaker 6: the beginning of the second administration of President Trump, and 195 00:10:56,000 --> 00:10:59,280 Speaker 6: the administration has done very little to really stop the 196 00:10:59,360 --> 00:11:00,760 Speaker 6: Chinese buy that oil. 197 00:11:00,960 --> 00:11:03,360 Speaker 2: It looks like the framework of a trade deal between 198 00:11:03,400 --> 00:11:05,920 Speaker 2: the US and China just this past week, So I 199 00:11:05,920 --> 00:11:08,360 Speaker 2: guess this is all part of that keeping the peace 200 00:11:08,480 --> 00:11:10,840 Speaker 2: with China. Now, I want to talk to you about 201 00:11:10,840 --> 00:11:14,120 Speaker 2: West Texas Intermediate the US pumping out more oil than 202 00:11:14,120 --> 00:11:16,960 Speaker 2: ever before. It's the start of the summer driving season, 203 00:11:17,000 --> 00:11:21,040 Speaker 2: traditionally demands skyrocketing gas prices that were down down twenty 204 00:11:21,080 --> 00:11:23,520 Speaker 2: three cents on average from a year ago. What does 205 00:11:23,559 --> 00:11:27,280 Speaker 2: that tell you about domestic production here in the US? 206 00:11:27,640 --> 00:11:31,040 Speaker 6: Well, domestic production continues to be very, very strong. The 207 00:11:31,120 --> 00:11:35,200 Speaker 6: last monthly data that we have comes from March, so 208 00:11:35,240 --> 00:11:37,480 Speaker 6: it's a bit dated, but I was an all time 209 00:11:37,559 --> 00:11:40,920 Speaker 6: high juice under twenty one million barrels a day that 210 00:11:41,000 --> 00:11:45,120 Speaker 6: compassed twenty years ago, the United States was producing about 211 00:11:45,160 --> 00:11:49,160 Speaker 6: seven and a half million barrels of crude and other liquids. 212 00:11:49,200 --> 00:11:52,120 Speaker 6: When you put all the petroleum that gets out of 213 00:11:52,160 --> 00:11:54,440 Speaker 6: the ground in the United States today is close to 214 00:11:54,440 --> 00:11:57,559 Speaker 6: twenty one million borrowers a day. That's what the shale 215 00:11:57,600 --> 00:12:01,840 Speaker 6: revolution has done to American oil production. And when I 216 00:12:01,880 --> 00:12:05,400 Speaker 6: was thinking about what were the capitals of the most 217 00:12:05,440 --> 00:12:10,320 Speaker 6: recent conflict involved in the fighting. You obviously have Tehran, 218 00:12:10,920 --> 00:12:15,080 Speaker 6: you have Jerusalem, Taalabeb, and you have Washington. But I 219 00:12:15,120 --> 00:12:17,079 Speaker 6: thought that there was a four capital or a four 220 00:12:17,160 --> 00:12:20,960 Speaker 6: important town in this conflict because you cannot really understand 221 00:12:21,000 --> 00:12:24,480 Speaker 6: geopolitically what happened in recent weeks if you don't include 222 00:12:24,600 --> 00:12:27,760 Speaker 6: Midland in West Texas, that town of about one hundred 223 00:12:27,760 --> 00:12:31,280 Speaker 6: and fifty thousand inhabitants, which is the capital of the 224 00:12:31,320 --> 00:12:34,360 Speaker 6: shale revolution, and a lot of what happened in the 225 00:12:34,360 --> 00:12:40,400 Speaker 6: Middle East has been shaped by American entrepreneurs in Midland, 226 00:12:40,480 --> 00:12:43,360 Speaker 6: which discovered the riches of shale. 227 00:12:43,640 --> 00:12:47,439 Speaker 2: Our thanks to Javier Blast Bloomberg opinion columnists covering energy 228 00:12:47,640 --> 00:12:50,559 Speaker 2: and commodities, and coming up on Bloomberg day Break weekend, 229 00:12:50,600 --> 00:12:53,000 Speaker 2: we'll look at whether financial services can deliver for the 230 00:12:53,120 --> 00:12:56,520 Speaker 2: UK and what the city of London needs to thrive. 231 00:12:56,760 --> 00:13:10,840 Speaker 2: I'm Tom Busby, and this is Bloomberg. This is Bloomberg 232 00:13:10,920 --> 00:13:12,920 Speaker 2: day Break Weekend, our global look ahead at the top 233 00:13:12,960 --> 00:13:15,960 Speaker 2: stories for investors in the coming week. I'm Tom Busby 234 00:13:15,960 --> 00:13:18,439 Speaker 2: in New York. Up later in our program we'll look 235 00:13:18,440 --> 00:13:21,000 Speaker 2: at the state of China's relations with Iran amid the 236 00:13:21,040 --> 00:13:23,960 Speaker 2: simmering tensions in the Middle East. But first in the 237 00:13:23,960 --> 00:13:27,040 Speaker 2: coming days, top economists and political and business leaders will 238 00:13:27,040 --> 00:13:30,040 Speaker 2: descend on the southern French city of x for its 239 00:13:30,120 --> 00:13:33,640 Speaker 2: annual Summer Economic Conference. It comes as France marks one 240 00:13:33,720 --> 00:13:37,400 Speaker 2: year since the snap parliamentary elections that plunged the country 241 00:13:37,400 --> 00:13:41,520 Speaker 2: into political and economic turmoil. For more, let's go to 242 00:13:41,600 --> 00:13:44,720 Speaker 2: London and bring in Bloomberg day Break europanker Stephen Carroll. 243 00:13:45,080 --> 00:13:47,959 Speaker 3: Tom, It's been quite a year in France. Last July, 244 00:13:48,080 --> 00:13:51,679 Speaker 3: President Emmanuel Macron's party suffered a crushing defeat in early 245 00:13:51,760 --> 00:13:54,960 Speaker 3: elections that fractured the National Assembly and left it without 246 00:13:55,000 --> 00:13:59,319 Speaker 3: any group holding a majority. That triggered months of political chaos. 247 00:14:00,160 --> 00:14:02,280 Speaker 3: The Prime Minister of Francois Bairu is holding together a 248 00:14:02,320 --> 00:14:06,199 Speaker 3: fragile minority government. He faces an uphill battle to pass 249 00:14:06,240 --> 00:14:09,640 Speaker 3: a budget later this year. As the one year mark 250 00:14:09,800 --> 00:14:13,520 Speaker 3: passes since the last elections, Emmanuel Macron could choose to 251 00:14:13,559 --> 00:14:16,760 Speaker 3: dissolve the parliament again, a step he hasn't ruled out. 252 00:14:17,080 --> 00:14:19,640 Speaker 3: At the same time, Marie Le Penn's far right National 253 00:14:19,720 --> 00:14:23,600 Speaker 3: Rally party has continued its ascendants despite her conviction for embezzlement, 254 00:14:23,640 --> 00:14:25,920 Speaker 3: which may rule her out of standing in the next 255 00:14:25,960 --> 00:14:29,680 Speaker 3: presidential race in twenty twenty seven. While all that is happening, 256 00:14:29,840 --> 00:14:32,960 Speaker 3: France is facing a slew of economic challenges, from increasing 257 00:14:32,960 --> 00:14:36,600 Speaker 3: defense spending to trade tariffs from US President Donald Trump. 258 00:14:36,880 --> 00:14:40,680 Speaker 3: The CEO of French cosmetics giant Lorel Nicola Ironimus told 259 00:14:40,680 --> 00:14:43,120 Speaker 3: Bloomberg recently how his firm is preparing. 260 00:14:43,400 --> 00:14:46,320 Speaker 7: If I look at my US business right now, I 261 00:14:46,480 --> 00:14:50,120 Speaker 7: manufacture in the US around fifty percent of the unit 262 00:14:50,200 --> 00:14:52,920 Speaker 7: to sell in the US. And by the way, we 263 00:14:52,960 --> 00:14:55,800 Speaker 7: are a net exporter from a US because what some 264 00:14:55,920 --> 00:14:59,080 Speaker 7: people sometimes forget is that we have like eighteen US 265 00:14:59,080 --> 00:15:01,960 Speaker 7: brands and the brand Keels is manufacturing in the US 266 00:15:01,960 --> 00:15:04,080 Speaker 7: and exported to China and the rest of Europe. So 267 00:15:04,480 --> 00:15:07,760 Speaker 7: we're a net exported from the US, but overall half 268 00:15:07,800 --> 00:15:11,640 Speaker 7: of our units are manufactured there. You add around fifteen 269 00:15:11,680 --> 00:15:16,400 Speaker 7: percent which are Canada and Mexico so on. In all, 270 00:15:16,560 --> 00:15:18,960 Speaker 7: we have like thirty percent that comes from Europe. It's 271 00:15:19,000 --> 00:15:22,760 Speaker 7: mainly fragrances or luxury products which we have indeed built 272 00:15:22,760 --> 00:15:26,200 Speaker 7: a little bit of inventory on prior to the to 273 00:15:26,240 --> 00:15:29,840 Speaker 7: the tariff increases and which in the end we don't 274 00:15:29,880 --> 00:15:33,600 Speaker 7: really know whether they're going they're going to end up being. 275 00:15:33,560 --> 00:15:37,360 Speaker 3: That's Larry L. Ceo, Nicola Eronymous. They're speaking to Bloomberg's 276 00:15:37,360 --> 00:15:39,360 Speaker 3: Francy and Lackweb. Now many of these issues are going 277 00:15:39,400 --> 00:15:41,640 Speaker 3: to be discussed the key economic conference that's happening in 278 00:15:41,680 --> 00:15:45,240 Speaker 3: the coming days. It's the wrong economic or economic encounters. 279 00:15:45,360 --> 00:15:48,160 Speaker 3: I think our best translated out in excellent province. For 280 00:15:48,280 --> 00:15:50,520 Speaker 3: more on this, let's go to Paris. We can speak 281 00:15:50,520 --> 00:15:52,880 Speaker 3: to our buer chief, Alan Katz, and Jean Albert from 282 00:15:52,840 --> 00:15:56,760 Speaker 3: Blueberg Economics is with us as well. Alan, First of all, 283 00:15:56,920 --> 00:15:59,640 Speaker 3: can we just put in context this event that's coming up. 284 00:15:59,640 --> 00:16:03,160 Speaker 3: It's a bit big set of economic conversations, lots of policymakers, 285 00:16:03,640 --> 00:16:06,920 Speaker 3: lots of politicians there as well, happening in Xent Provence. 286 00:16:07,200 --> 00:16:11,640 Speaker 3: It is a dating the calendar for French economists and 287 00:16:11,720 --> 00:16:16,520 Speaker 3: politicians and a pretty spectacular location that it happens as well. 288 00:16:16,680 --> 00:16:17,000 Speaker 8: It is. 289 00:16:17,040 --> 00:16:20,000 Speaker 9: But the main thing that's actually going to happen at Extra, 290 00:16:20,080 --> 00:16:22,400 Speaker 9: the main person that the people in x are trying 291 00:16:22,440 --> 00:16:25,560 Speaker 9: to deal with or understand is someone that you didn't 292 00:16:25,600 --> 00:16:29,040 Speaker 9: mention in your introduction, which is Donald Trump. The I 293 00:16:29,080 --> 00:16:31,200 Speaker 9: was really struck have to say this year that the 294 00:16:31,640 --> 00:16:39,200 Speaker 9: title of experance is a front so which best translates 295 00:16:39,240 --> 00:16:41,880 Speaker 9: by is confronting the clash of realities. So they don't 296 00:16:41,880 --> 00:16:44,160 Speaker 9: mention him by name, but they're really referring to Donald Trump. 297 00:16:44,200 --> 00:16:47,280 Speaker 9: When you look at you know, the opening session, it's 298 00:16:47,840 --> 00:16:50,880 Speaker 9: the urgent need for a rational debate on Thursday that 299 00:16:51,000 --> 00:16:53,920 Speaker 9: this this session. If you look at the closing session 300 00:16:53,920 --> 00:16:56,440 Speaker 9: on the first day h the title is the fiction 301 00:16:56,680 --> 00:16:59,120 Speaker 9: of a you know, a Western bloc. I mean really 302 00:16:59,160 --> 00:17:02,360 Speaker 9: like there's there's a bit of panic that has It's 303 00:17:02,440 --> 00:17:06,240 Speaker 9: not about France and not about France's problems that you've mentioned, 304 00:17:06,560 --> 00:17:08,520 Speaker 9: but really is about sort of this broader view that 305 00:17:08,560 --> 00:17:12,679 Speaker 9: Trump is upending the global order. And in France, the 306 00:17:12,680 --> 00:17:15,240 Speaker 9: people who are at this meeting, it's mostly in French, 307 00:17:15,359 --> 00:17:17,880 Speaker 9: not all French people, but mostly French, have to deal 308 00:17:17,880 --> 00:17:20,040 Speaker 9: with this again as well, and they have to understand 309 00:17:20,080 --> 00:17:22,119 Speaker 9: really what's going on and what's changing if they're going 310 00:17:22,160 --> 00:17:25,480 Speaker 9: to try to figure out a way to make it 311 00:17:25,600 --> 00:17:27,120 Speaker 9: work for France in the future. 312 00:17:28,119 --> 00:17:30,199 Speaker 3: Yeah, and some I mean some pretty big names involved 313 00:17:30,200 --> 00:17:33,240 Speaker 3: as well. Mario Dragi, former ACV president, is going to 314 00:17:33,280 --> 00:17:35,480 Speaker 3: be their former Italian Prime minister of course as well, 315 00:17:35,680 --> 00:17:38,800 Speaker 3: and not the current prime minister, but the previous prime 316 00:17:38,800 --> 00:17:40,840 Speaker 3: minister of the three that we've had in the past 317 00:17:40,920 --> 00:17:43,600 Speaker 3: year in France. Michelle Bonney is also going to be attending. 318 00:17:45,080 --> 00:17:48,679 Speaker 9: Yeah, I'm not quite sure if he's the best place 319 00:17:48,720 --> 00:17:53,280 Speaker 9: to to sort of chart a path out for France 320 00:17:53,280 --> 00:17:54,920 Speaker 9: since he wasn't able to last more than a few 321 00:17:54,960 --> 00:17:57,320 Speaker 9: months in the prime ministership. But there's also the current 322 00:17:57,400 --> 00:18:01,360 Speaker 9: Foreign Minister, the current Labor Minister will be there. She's 323 00:18:01,359 --> 00:18:04,960 Speaker 9: also Elizabeth Balloon, She's also a former prime minister. This 324 00:18:04,960 --> 00:18:08,360 Speaker 9: this this event always has heavy hitters, whether it's government 325 00:18:08,680 --> 00:18:11,680 Speaker 9: or Central Bank or CEOs among you know they're they're 326 00:18:11,680 --> 00:18:13,879 Speaker 9: a bunch of of CEO board members who are going 327 00:18:13,920 --> 00:18:16,480 Speaker 9: to be there, a bunch of of sorry of ECB 328 00:18:16,600 --> 00:18:19,760 Speaker 9: board members who are going to be there as well 329 00:18:19,800 --> 00:18:22,240 Speaker 9: as CEO is like tomar Buball, who is the CEO 330 00:18:22,280 --> 00:18:26,159 Speaker 9: of Axa, or Patrick Puene the CEO of Totel, the 331 00:18:26,160 --> 00:18:29,320 Speaker 9: big energy company. So from that perspective, like you do 332 00:18:29,400 --> 00:18:32,080 Speaker 9: get sort of the great and mighty of France coming together. 333 00:18:33,119 --> 00:18:35,639 Speaker 9: It's but as I said, like it's usually a pretty 334 00:18:35,640 --> 00:18:38,720 Speaker 9: relaxed environment and it's mostly chit chat, and as you said, 335 00:18:38,760 --> 00:18:41,919 Speaker 9: it's a spectacular, spectacular location and people are sort of 336 00:18:42,200 --> 00:18:44,240 Speaker 9: you get that sort of summer vibe from this thing. 337 00:18:44,400 --> 00:18:46,280 Speaker 9: And this year I really do feel like there's a 338 00:18:46,440 --> 00:18:49,000 Speaker 9: little it's a little more tense and people are really 339 00:18:49,000 --> 00:18:51,159 Speaker 9: trying to figure out what are they going to do 340 00:18:51,160 --> 00:18:53,439 Speaker 9: down there. Now, maybe you're right, maybe Balunia can provide 341 00:18:53,440 --> 00:18:56,280 Speaker 9: a with with the experience of that he went through 342 00:18:56,280 --> 00:18:57,960 Speaker 9: in the fall, can provide a way to sort of 343 00:18:58,320 --> 00:19:01,520 Speaker 9: reconcile France with the change order that's been brought about 344 00:19:01,520 --> 00:19:03,840 Speaker 9: by Trump's that's been brought about by trump selection. But 345 00:19:04,600 --> 00:19:05,640 Speaker 9: what we'll have to see on that. 346 00:19:06,040 --> 00:19:08,440 Speaker 3: Yeah, I mean the heat and exoprovance not just later 347 00:19:08,520 --> 00:19:10,920 Speaker 3: all this time, but also perhaps metaphorical as well. Let's 348 00:19:10,920 --> 00:19:13,960 Speaker 3: bring in John Delba from Blouemberg Economics who joins us 349 00:19:14,000 --> 00:19:16,480 Speaker 3: as well. Jean, when we're trying to think about where 350 00:19:16,520 --> 00:19:19,680 Speaker 3: France's economy is going into this set of discussions and 351 00:19:19,760 --> 00:19:22,960 Speaker 3: action provance which you know well talk us through where 352 00:19:23,000 --> 00:19:25,919 Speaker 3: the French economy is now with all of the challenges 353 00:19:25,960 --> 00:19:27,399 Speaker 3: that are laid out before us. 354 00:19:27,640 --> 00:19:30,439 Speaker 8: Sure, Hi, good morning. So yes, indeed, France is currently 355 00:19:30,480 --> 00:19:34,120 Speaker 8: facing a pretty sluggish gross momentum. We have pointed out 356 00:19:34,119 --> 00:19:36,760 Speaker 8: a zero point five percent GDP growth this year, which 357 00:19:37,240 --> 00:19:39,680 Speaker 8: folds down from zero point nine percent in twenty twenty 358 00:19:39,680 --> 00:19:43,520 Speaker 8: five twenty four sorry, and this is below the European 359 00:19:43,560 --> 00:19:46,520 Speaker 8: average of one point one percent for twenty twenty five. 360 00:19:46,640 --> 00:19:50,920 Speaker 8: So a pretty sluggish momentum and basically all its gross 361 00:19:51,000 --> 00:19:55,520 Speaker 8: drivers are contributing to that. We are observing a pretty 362 00:19:55,560 --> 00:20:00,560 Speaker 8: weak investment dynamic despite and currently easying in financing conditions, 363 00:20:00,840 --> 00:20:04,320 Speaker 8: and this is probably related to the increase in uncertainty 364 00:20:04,359 --> 00:20:08,399 Speaker 8: that we do face in France. Consumption is going poorly 365 00:20:08,440 --> 00:20:12,520 Speaker 8: as well. Gains in dispossible income are limited this year 366 00:20:12,720 --> 00:20:17,600 Speaker 8: and the saving rate remains pretty high currently. And finally, 367 00:20:17,640 --> 00:20:21,320 Speaker 8: and pretty obviously the contribution from net trade will be 368 00:20:21,400 --> 00:20:26,119 Speaker 8: negative tyre. So all of that contributes to a pretty 369 00:20:26,160 --> 00:20:31,440 Speaker 8: sluggish across from mentument France, which again contrasts with other 370 00:20:31,480 --> 00:20:34,960 Speaker 8: European countries at the moment. And if we look at it, 371 00:20:35,040 --> 00:20:38,719 Speaker 8: we France will face a lot of challenges. First and 372 00:20:38,760 --> 00:20:42,639 Speaker 8: foremost the political uncertainty, which remains pretty high and as 373 00:20:42,760 --> 00:20:46,400 Speaker 8: has even increased these days given the collapse of the 374 00:20:46,640 --> 00:20:50,840 Speaker 8: pensions reform stalks. So that's that's the main challenge. I 375 00:20:50,840 --> 00:20:54,399 Speaker 8: would say. The second one is obviously the current trade 376 00:20:54,440 --> 00:20:56,760 Speaker 8: uncertainty that we are we are facing all of France 377 00:20:56,840 --> 00:21:00,800 Speaker 8: is less exposed than its European peers. And finally, the 378 00:21:00,840 --> 00:21:05,960 Speaker 8: fiscal The fiscal topic is really important and some tough 379 00:21:06,000 --> 00:21:09,720 Speaker 8: negotiations will will have to take place in autumn to 380 00:21:10,359 --> 00:21:11,760 Speaker 8: pass the new budget. 381 00:21:12,280 --> 00:21:15,520 Speaker 3: Yeah, very tricky couple of months ahead on that point, Jean, 382 00:21:15,560 --> 00:21:19,080 Speaker 3: We've just had the NATO summers where leaders agreed to 383 00:21:19,200 --> 00:21:23,159 Speaker 3: increase spending on defense. How is France placed to be 384 00:21:23,200 --> 00:21:24,920 Speaker 3: able to cope with that fiscally? 385 00:21:25,280 --> 00:21:27,760 Speaker 8: So it's it's also a tricky situation for France. I mean, 386 00:21:27,800 --> 00:21:31,000 Speaker 8: the different spending in terms of GDP have already increased 387 00:21:31,040 --> 00:21:33,359 Speaker 8: a bit in France. They are now like above the 388 00:21:33,400 --> 00:21:36,080 Speaker 8: two percent NATO mark, so it's it's pretty positive, and 389 00:21:36,119 --> 00:21:38,800 Speaker 8: they are already expected to increase again, to increase further 390 00:21:38,880 --> 00:21:42,439 Speaker 8: to two point five percent of GDP in twenty thirty. 391 00:21:42,880 --> 00:21:45,919 Speaker 8: So yesterday we had President Macon saying that five percent 392 00:21:46,640 --> 00:21:48,760 Speaker 8: is a target or I mean can be a target. 393 00:21:49,600 --> 00:21:51,919 Speaker 8: We think it is unlikely. We think it will be 394 00:21:52,040 --> 00:21:56,840 Speaker 8: a huge challenge exactly because of the fiscal constraint we 395 00:21:56,880 --> 00:21:59,320 Speaker 8: mentioned before, So it would be very costly for France 396 00:22:00,080 --> 00:22:03,000 Speaker 8: reached that five percent mark, and we've made some estimate 397 00:22:03,080 --> 00:22:05,960 Speaker 8: that it would add a fifteen percentage point of debt 398 00:22:06,760 --> 00:22:09,960 Speaker 8: on the deput GDP ratio over thirty sorts, so it 399 00:22:09,960 --> 00:22:11,680 Speaker 8: would be a lot and we think it would not 400 00:22:11,800 --> 00:22:15,920 Speaker 8: be possible, and we have pencil like one three point 401 00:22:15,960 --> 00:22:20,240 Speaker 8: five percent mark, which will be tricky but still manageable 402 00:22:20,280 --> 00:22:22,240 Speaker 8: and feasible in the coming news. 403 00:22:22,800 --> 00:22:24,679 Speaker 3: Okay, Alan, I wanted to go back to you as 404 00:22:24,720 --> 00:22:26,719 Speaker 3: well because I mentioned that we're coming up on this 405 00:22:26,840 --> 00:22:30,800 Speaker 3: point where Emmanuel Macron could call another election for the 406 00:22:30,880 --> 00:22:34,119 Speaker 3: National Assembly. He hasn't ruled it out, but give us 407 00:22:34,160 --> 00:22:37,800 Speaker 3: a sense of how stable the political situation is in 408 00:22:37,840 --> 00:22:38,760 Speaker 3: France at the moment. 409 00:22:39,520 --> 00:22:42,439 Speaker 9: It's a little bit of a tricky question. I guess 410 00:22:42,840 --> 00:22:46,320 Speaker 9: it's stable probably in the short term, and unstable in 411 00:22:46,359 --> 00:22:48,120 Speaker 9: the longer term. I guess would probably be the best 412 00:22:48,160 --> 00:22:50,600 Speaker 9: way to put it. As you point out, Manuel Macron 413 00:22:50,720 --> 00:22:53,440 Speaker 9: could dissolve problem and call no elections as soon as 414 00:22:53,800 --> 00:22:57,720 Speaker 9: as next month. In July he said that he doesn't 415 00:22:57,880 --> 00:22:59,600 Speaker 9: plan to do that, doesn't expect to do it, as 416 00:22:59,600 --> 00:23:02,800 Speaker 9: you point out, hasn't ruled that out entirely. But it 417 00:23:02,840 --> 00:23:07,800 Speaker 9: seems unlikely because if you look at opinion polls, if 418 00:23:07,840 --> 00:23:10,359 Speaker 9: you called new elections now, you'd end up with roughly 419 00:23:10,400 --> 00:23:13,800 Speaker 9: the same sort of breakdown among political parties in Parliament. 420 00:23:13,800 --> 00:23:15,920 Speaker 9: So there's no real reason to do it. The other 421 00:23:15,960 --> 00:23:18,320 Speaker 9: reason why it's unlikely to happen in the very near 422 00:23:18,440 --> 00:23:22,800 Speaker 9: term is that Jean mentioned that, you know, these pension 423 00:23:22,880 --> 00:23:26,320 Speaker 9: talks have broken down, which they did, though by who 424 00:23:26,400 --> 00:23:28,520 Speaker 9: is pledged to Prime minister, by who is pledged to 425 00:23:28,640 --> 00:23:32,439 Speaker 9: come with something, some sort of something to try to 426 00:23:32,440 --> 00:23:35,679 Speaker 9: present to Parliament, is really unclear as yet what that 427 00:23:35,720 --> 00:23:39,480 Speaker 9: will be. But in any event, the far right National 428 00:23:39,560 --> 00:23:42,199 Speaker 9: Rally has said that it will not participate in a 429 00:23:42,240 --> 00:23:47,240 Speaker 9: no confidence vote until budget time, and that won't be 430 00:23:47,320 --> 00:23:51,639 Speaker 9: until the fall. So while the Socialists have filed a 431 00:23:51,640 --> 00:23:53,879 Speaker 9: no confidence motion against by who, there's no chance of 432 00:23:53,880 --> 00:23:57,400 Speaker 9: a passing without the far right because again mentioning done 433 00:23:57,600 --> 00:24:00,320 Speaker 9: before what actually pushed him out back in December, when 434 00:24:00,320 --> 00:24:02,400 Speaker 9: you had the far left, sort of the center left 435 00:24:03,280 --> 00:24:06,080 Speaker 9: and then the far right all joining together. That got 436 00:24:06,119 --> 00:24:09,080 Speaker 9: you up to a majority of parliamentarians who could push 437 00:24:09,119 --> 00:24:11,240 Speaker 9: them out. And that's not the case at least for 438 00:24:11,320 --> 00:24:13,320 Speaker 9: the next couple of months. So I would say short 439 00:24:13,400 --> 00:24:17,480 Speaker 9: term stability, but it doesn't mean that creates any sort 440 00:24:17,520 --> 00:24:20,040 Speaker 9: of long, longer term stability for the government or allows 441 00:24:20,080 --> 00:24:22,919 Speaker 9: the government to really do much because again, like in 442 00:24:22,960 --> 00:24:25,040 Speaker 9: this case, it's a fight over pensions, but as soon 443 00:24:25,080 --> 00:24:26,240 Speaker 9: as we get to the fall, it will be a 444 00:24:26,240 --> 00:24:28,040 Speaker 9: fight over the budget. It's going to be a major fight. 445 00:24:28,080 --> 00:24:30,320 Speaker 9: I mean, as Geen was mentioning, you know, the government's 446 00:24:30,359 --> 00:24:35,639 Speaker 9: pledge to reduce, the pledge to have about forty billion 447 00:24:35,680 --> 00:24:37,880 Speaker 9: euros in what they call savings. So that's a combination 448 00:24:37,920 --> 00:24:41,880 Speaker 9: of potential you know, revenue increases and spending cuts. It's 449 00:24:41,960 --> 00:24:43,560 Speaker 9: unclear what there's going to be where they're going to 450 00:24:43,560 --> 00:24:45,560 Speaker 9: come from, but that's a lot of money. So how 451 00:24:45,640 --> 00:24:48,040 Speaker 9: they're going to get there without you know, they're being 452 00:24:48,080 --> 00:24:49,920 Speaker 9: a major blow up and the government being forced out 453 00:24:50,000 --> 00:24:51,560 Speaker 9: is how they're going to get there without a major 454 00:24:51,600 --> 00:24:53,480 Speaker 9: blow up is very hard to see. Whether or not 455 00:24:53,560 --> 00:24:55,880 Speaker 9: that ends up pushing out the government is another question 456 00:24:55,960 --> 00:24:58,960 Speaker 9: because it depends on again on opinion polls and whether 457 00:24:59,160 --> 00:25:02,040 Speaker 9: parties seed in their interest to sort of make the 458 00:25:02,280 --> 00:25:05,359 Speaker 9: big buy who take on whatever budget cuts are going 459 00:25:05,440 --> 00:25:07,840 Speaker 9: to come and you know that's what the unpopularity that 460 00:25:07,880 --> 00:25:09,280 Speaker 9: goes with that, and leave that all in the current 461 00:25:09,320 --> 00:25:12,040 Speaker 9: government and save their sort of their fire for later 462 00:25:12,080 --> 00:25:14,360 Speaker 9: when they get to either municipal elections twenty twenty six 463 00:25:14,480 --> 00:25:16,880 Speaker 9: or as you mentioned, the presidential election in twenty twenty seven. 464 00:25:16,960 --> 00:25:20,480 Speaker 9: So it's again, as I said, just to boil it 465 00:25:20,480 --> 00:25:22,360 Speaker 9: all down, I would say short term stable for the 466 00:25:22,359 --> 00:25:24,680 Speaker 9: next couple of months. Longer term all bits are off. 467 00:25:25,040 --> 00:25:28,400 Speaker 3: Yeah, keeping us very interested in our eyes closely focused 468 00:25:28,440 --> 00:25:30,520 Speaker 3: on what's happening in France over this summer as well 469 00:25:30,560 --> 00:25:32,560 Speaker 3: as some of those conversations are taking place for now, 470 00:25:32,600 --> 00:25:35,080 Speaker 3: Alan katz Our Paris Bureau Chief and Jehan Dadba from 471 00:25:35,080 --> 00:25:37,680 Speaker 3: Bloomberg Economics. Thank you very much for joining us. Will 472 00:25:37,680 --> 00:25:39,679 Speaker 3: be bringing you some of the key conversations from the 473 00:25:39,680 --> 00:25:43,159 Speaker 3: ex some Provenance Economic Conference across at Bloomberg platforms in 474 00:25:43,200 --> 00:25:44,200 Speaker 3: the coming days. 475 00:25:44,520 --> 00:25:45,879 Speaker 2: I'm Stephen Caroll in London. 476 00:25:45,960 --> 00:25:48,120 Speaker 3: You can catch us every weekday morning here for Bloomberg 477 00:25:48,200 --> 00:25:50,399 Speaker 3: day Break Europe, beginning at six am in London and 478 00:25:50,560 --> 00:25:51,879 Speaker 3: one am on Wall Streets. 479 00:25:52,080 --> 00:25:54,760 Speaker 2: Tom Well, thank you, Stephen, and coming up on Bloomberg 480 00:25:54,840 --> 00:25:56,639 Speaker 2: day Break weekend to look at the state of Sino 481 00:25:56,680 --> 00:26:01,520 Speaker 2: Iranian relations as a Rants defense minister visits China. I'm 482 00:26:01,560 --> 00:26:14,920 Speaker 2: Tom Busby, and this is Bloomberg. This is Bloomberg Gay 483 00:26:14,920 --> 00:26:17,040 Speaker 2: Break Weekend, our global look ahead at the top stories 484 00:26:17,040 --> 00:26:19,720 Speaker 2: for investors in the coming week. I'm Tom Busby in 485 00:26:19,760 --> 00:26:23,280 Speaker 2: New York. RAN's defense minister arrived in China last week 486 00:26:23,320 --> 00:26:26,960 Speaker 2: for his first known overseas trip since that country's war 487 00:26:27,119 --> 00:26:30,720 Speaker 2: with Israel began. The visit highlighting just how critical Beijing 488 00:26:30,760 --> 00:26:35,000 Speaker 2: has become to Tran's strategic calculations. For more, let's get 489 00:26:35,040 --> 00:26:37,960 Speaker 2: to the host of the Daybreak Asia podcast, Doug Krisner. 490 00:26:38,480 --> 00:26:41,840 Speaker 4: Tom Israel and Iran have spent the better part of 491 00:26:41,840 --> 00:26:44,879 Speaker 4: the past two weeks exchanging strikes, and in the process, 492 00:26:44,960 --> 00:26:48,960 Speaker 4: the US was drawn into this conflict. The situation highlights 493 00:26:48,960 --> 00:26:52,840 Speaker 4: the role of another power player though China. Joining me 494 00:26:52,880 --> 00:26:56,440 Speaker 4: now is Jenny marsh. Jenny is Greater China Eco GUV 495 00:26:56,520 --> 00:26:58,800 Speaker 4: team leader for Bloomberg News, and she joins us from 496 00:26:58,840 --> 00:27:02,199 Speaker 4: our studios in Hong Kong. It's always a pleasure to 497 00:27:02,200 --> 00:27:05,280 Speaker 4: benefit from your perspective. And as long as we're talking 498 00:27:05,320 --> 00:27:10,480 Speaker 4: about geopolitics, let's talk about what's going on between the US, Israel, 499 00:27:10,600 --> 00:27:11,280 Speaker 4: and Iran. 500 00:27:12,000 --> 00:27:12,240 Speaker 2: Now. 501 00:27:12,280 --> 00:27:15,040 Speaker 4: After the strikes, the recent strikes by the US government 502 00:27:15,080 --> 00:27:20,919 Speaker 4: on Iranian nuclear facilities, Beijing issued a strong condemnation and 503 00:27:21,000 --> 00:27:23,600 Speaker 4: basically called it a violation of the UN Charter and 504 00:27:23,760 --> 00:27:28,000 Speaker 4: of international law. I'm wondering whether or not China may 505 00:27:28,040 --> 00:27:30,280 Speaker 4: have played a role in this. Do you have a 506 00:27:30,320 --> 00:27:30,760 Speaker 4: sense of that. 507 00:27:31,840 --> 00:27:34,639 Speaker 10: My sense is that China very much here will be 508 00:27:34,680 --> 00:27:38,080 Speaker 10: remembered for sitting on the sidelines. You know, Like they 509 00:27:38,400 --> 00:27:42,000 Speaker 10: issued this very strong statement condemning the US, and they 510 00:27:42,040 --> 00:27:45,719 Speaker 10: talked about how America was sort of blowing up, you know, 511 00:27:45,760 --> 00:27:49,480 Speaker 10: the international system for sort of maintaining order, i e. 512 00:27:49,680 --> 00:27:53,639 Speaker 10: The US led you know, UN framework for resolving conflicts, 513 00:27:54,440 --> 00:27:58,240 Speaker 10: and before the US strikes, you know, she and Putin 514 00:27:58,280 --> 00:28:00,640 Speaker 10: had got on the phone and sort of worked out 515 00:28:00,640 --> 00:28:04,679 Speaker 10: this four point plan for peace. But really for China, 516 00:28:04,760 --> 00:28:08,879 Speaker 10: they kind of left it at diplomacy, and I don't think, 517 00:28:09,119 --> 00:28:12,720 Speaker 10: you know, they were particularly effective in what they were messaging. 518 00:28:13,040 --> 00:28:15,320 Speaker 10: We know that Wang Yi spoke to both the Israeli 519 00:28:15,440 --> 00:28:19,120 Speaker 10: and the Iranian foreign ministers, so there was some sort 520 00:28:19,119 --> 00:28:23,880 Speaker 10: of attempt at sort of back channeling. But essentially, you know, Tehran, 521 00:28:24,119 --> 00:28:27,240 Speaker 10: you know, China was one of Tehran's sort of strongest partners, 522 00:28:27,400 --> 00:28:30,240 Speaker 10: and when it came to its darkest hour, China really 523 00:28:30,280 --> 00:28:32,000 Speaker 10: didn't do much apart from call for peace. 524 00:28:32,680 --> 00:28:36,359 Speaker 4: Is it pretty much a selfish move that boils down 525 00:28:36,400 --> 00:28:38,720 Speaker 4: to crude oil? Is that really what this is about? 526 00:28:38,720 --> 00:28:39,640 Speaker 4: This relationship? 527 00:28:39,840 --> 00:28:42,960 Speaker 10: I think this relationship is about the US, and I 528 00:28:43,000 --> 00:28:44,920 Speaker 10: think one of the reasons I say that is, yes, 529 00:28:45,120 --> 00:28:48,640 Speaker 10: China is one of the places that will buy sanctioned 530 00:28:48,680 --> 00:28:52,840 Speaker 10: Iranian oil. It's a very very slim percentage of China's 531 00:28:52,960 --> 00:28:56,360 Speaker 10: oil supplies, about ten percent, and they can easily source 532 00:28:56,400 --> 00:28:58,959 Speaker 10: this oil from other places. And I think, you know, 533 00:28:59,120 --> 00:29:02,120 Speaker 10: there's a couple of practic reasons why these sort of 534 00:29:02,240 --> 00:29:04,840 Speaker 10: it's mainly sort of these teapot refineries in northern China 535 00:29:04,840 --> 00:29:07,600 Speaker 10: that take this oil. It's much cheaper. But also I 536 00:29:07,600 --> 00:29:10,960 Speaker 10: think the Chinese government tolerates it because they are vehemently 537 00:29:11,000 --> 00:29:15,040 Speaker 10: opposed to the US sanctions regime, and so they they 538 00:29:15,280 --> 00:29:18,120 Speaker 10: let this go as a way of sort of defying 539 00:29:18,160 --> 00:29:21,280 Speaker 10: the US sanctions regime, which is something they and Russia 540 00:29:21,360 --> 00:29:25,640 Speaker 10: and Iran are all united in opposing. But I think 541 00:29:25,760 --> 00:29:29,400 Speaker 10: the broader relationship with Iran has been about sort of 542 00:29:29,440 --> 00:29:32,560 Speaker 10: finding partners that it will join hands with Beijing and 543 00:29:32,640 --> 00:29:34,960 Speaker 10: challenge the US of world order. And I think you 544 00:29:34,960 --> 00:29:38,880 Speaker 10: can see that through you know, she has ushered Iran 545 00:29:38,960 --> 00:29:41,480 Speaker 10: into the Bricks Group of Emerging Markets, which is this 546 00:29:41,560 --> 00:29:45,680 Speaker 10: block that it's expanding with India and South Africa and 547 00:29:45,720 --> 00:29:48,680 Speaker 10: Brazil as sort of a kind of a rival framework 548 00:29:48,720 --> 00:29:51,320 Speaker 10: to the G twenty. It also welcomed Iran in the 549 00:29:51,400 --> 00:29:55,760 Speaker 10: last couple of years into the Shanghai Cooperation Organization, which 550 00:29:55,840 --> 00:29:59,120 Speaker 10: is another sort of grouping that it's expanding, which has 551 00:29:59,160 --> 00:30:01,840 Speaker 10: more of a security flavor. But when it comes to 552 00:30:01,840 --> 00:30:04,680 Speaker 10: sort of trade with Iran, I mean, the trade is very, 553 00:30:04,760 --> 00:30:09,640 Speaker 10: very isn't significant, you know, it doesn't sell much to Iran. Actually, 554 00:30:09,760 --> 00:30:13,120 Speaker 10: trade with Iran actually fell off in the first four 555 00:30:13,120 --> 00:30:15,000 Speaker 10: months of this year. It was down about twenty percent. 556 00:30:15,680 --> 00:30:19,520 Speaker 10: And the broader Middle Eastern region from a bottom VeryE perspective, 557 00:30:19,840 --> 00:30:23,440 Speaker 10: is more important to Beijing. So I think really this 558 00:30:23,600 --> 00:30:25,840 Speaker 10: was sort of, you know, a partnership of convenience, and 559 00:30:25,840 --> 00:30:28,640 Speaker 10: for China it was always about finding partners that will 560 00:30:28,720 --> 00:30:32,280 Speaker 10: stand hands, join hands with it to stand against the US. 561 00:30:32,920 --> 00:30:36,520 Speaker 4: So to that point, maybe China is not solely reliant 562 00:30:36,560 --> 00:30:39,040 Speaker 4: on Irani and crude oil. I get the fact that 563 00:30:39,080 --> 00:30:41,680 Speaker 4: they're only going to import let's say ten percent, but 564 00:30:41,800 --> 00:30:45,320 Speaker 4: the Strait of Horn Mouz, I would imagine is perhaps 565 00:30:45,360 --> 00:30:49,640 Speaker 4: more critical. And if there were a way for Beijing 566 00:30:49,680 --> 00:30:53,040 Speaker 4: to become influential and dialing down a lot of this 567 00:30:53,200 --> 00:30:57,720 Speaker 4: tension just so that the conflict didn't extend into the strait, 568 00:30:58,000 --> 00:30:59,880 Speaker 4: is that part of the thinking here as well. 569 00:31:00,400 --> 00:31:03,400 Speaker 10: Yeah, so I think the straight up homes is definitely 570 00:31:03,400 --> 00:31:06,200 Speaker 10: a different story in a much much, sort of more 571 00:31:06,520 --> 00:31:11,320 Speaker 10: alarming concern for China. About forty five percent of its 572 00:31:11,400 --> 00:31:15,200 Speaker 10: oil shipments that comes through that straight and China is 573 00:31:15,280 --> 00:31:17,600 Speaker 10: the country that is most dependent on the oil coming 574 00:31:17,640 --> 00:31:23,080 Speaker 10: through that waterway globally, so yeah, massive exposure there. That 575 00:31:23,200 --> 00:31:27,160 Speaker 10: being said, China has been stockpiling on oil, So if 576 00:31:27,160 --> 00:31:29,160 Speaker 10: the war was a crisis that closed the straight for 577 00:31:29,360 --> 00:31:31,840 Speaker 10: you know, a short period of time, it wouldn't feel 578 00:31:31,840 --> 00:31:34,960 Speaker 10: the immediate impact. But in the long term, absolutely doesn't 579 00:31:35,000 --> 00:31:37,920 Speaker 10: want this conflict despiral and I think that was the 580 00:31:38,000 --> 00:31:41,320 Speaker 10: message from the four point plan that she put forward. 581 00:31:41,400 --> 00:31:44,200 Speaker 10: He talked about like not wanting this to expand, and 582 00:31:44,240 --> 00:31:46,320 Speaker 10: when they're condemning the US, they were saying, you know, 583 00:31:46,360 --> 00:31:49,000 Speaker 10: the US is fanning the flames of war and would 584 00:31:49,000 --> 00:31:51,560 Speaker 10: be to blame essentially if this did become a broader conflict. 585 00:31:53,240 --> 00:31:55,960 Speaker 10: I think the problem for China is like, how can 586 00:31:56,000 --> 00:31:59,120 Speaker 10: it affect or what is it willing to do to 587 00:31:59,200 --> 00:32:02,040 Speaker 10: stop it from coming a broader conflict, And the answer 588 00:32:02,080 --> 00:32:04,480 Speaker 10: is not very much. You know, China doesn't like to 589 00:32:04,480 --> 00:32:08,280 Speaker 10: get its hands dirty in foreign conflicts. It definitely doesn't 590 00:32:08,640 --> 00:32:10,560 Speaker 10: go anywhere near the US play because these sort of 591 00:32:10,720 --> 00:32:14,200 Speaker 10: far away wars and military operations, and even with Russia, 592 00:32:14,320 --> 00:32:17,760 Speaker 10: which it has a much stronger trade relationship and sort 593 00:32:17,760 --> 00:32:21,720 Speaker 10: of interdependency with Russia has now overtaken Saudi as the 594 00:32:21,760 --> 00:32:24,800 Speaker 10: top supplier of crude oil to China. Even when Peutin 595 00:32:24,840 --> 00:32:27,959 Speaker 10: went to war in Ukraine, she was very careful not 596 00:32:28,000 --> 00:32:30,680 Speaker 10: to do anything that would invite US sanctions. So yes, 597 00:32:30,760 --> 00:32:35,080 Speaker 10: he stepped up economic support and diplomatic support. And then 598 00:32:35,120 --> 00:32:38,240 Speaker 10: there was some controversy about sort of you know, the 599 00:32:38,320 --> 00:32:41,320 Speaker 10: dual use items that have been shipped but never any 600 00:32:41,360 --> 00:32:45,000 Speaker 10: to direct you know, military support that would cross these 601 00:32:45,040 --> 00:32:47,520 Speaker 10: red lines in America and Europe layed out very clearly, 602 00:32:48,120 --> 00:32:50,040 Speaker 10: you know, And I think China is a country you 603 00:32:50,080 --> 00:32:53,560 Speaker 10: have to remember that has no formal allies by design, 604 00:32:53,760 --> 00:32:57,120 Speaker 10: you know, and its self interest will always be it's 605 00:32:57,160 --> 00:32:59,880 Speaker 10: sort of north star of what it does when these 606 00:33:00,200 --> 00:33:01,080 Speaker 10: conflicts breakout. 607 00:33:01,720 --> 00:33:05,800 Speaker 4: What is the degree of anti American feeling right now 608 00:33:05,800 --> 00:33:08,560 Speaker 4: in China? Not just because of what we're describing here 609 00:33:08,600 --> 00:33:12,360 Speaker 4: in terms of Israel Iran, but I'm thinking of whether 610 00:33:12,440 --> 00:33:15,920 Speaker 4: it's Taiwan, whether it's the US China trade war. Give 611 00:33:15,960 --> 00:33:18,760 Speaker 4: me a sense of the degree to which people in 612 00:33:18,840 --> 00:33:21,640 Speaker 4: China are feeling very anti American. 613 00:33:22,200 --> 00:33:24,640 Speaker 10: I think that is a really interesting question, and it 614 00:33:24,680 --> 00:33:28,720 Speaker 10: hasn't been as prominent as you might have thought. Sort 615 00:33:28,720 --> 00:33:33,120 Speaker 10: of broadly towards American people. The Minecraft movie came out 616 00:33:33,160 --> 00:33:35,520 Speaker 10: in China and did pretty well, and we've seen other 617 00:33:35,520 --> 00:33:39,240 Speaker 10: sort of examples of sort of American soft power being powerful. 618 00:33:39,560 --> 00:33:41,920 Speaker 10: Even though the US and China are locked in this 619 00:33:41,960 --> 00:33:45,160 Speaker 10: trade war. I almost wonder if the Chinese people sort 620 00:33:45,200 --> 00:33:48,240 Speaker 10: of are able to separate Trump and you know, the 621 00:33:48,240 --> 00:33:52,280 Speaker 10: aberration or you know that is Trump from the average 622 00:33:52,400 --> 00:33:56,840 Speaker 10: American people. There was people talking about, you know, how 623 00:33:56,920 --> 00:33:59,960 Speaker 10: foolish run have been to sort of trust the US, saying, 624 00:34:00,000 --> 00:34:02,320 Speaker 10: you know, the US came in to negotiate, then it's 625 00:34:02,360 --> 00:34:05,080 Speaker 10: ally hit Iran, and then the US hit Iran. You know, 626 00:34:05,120 --> 00:34:07,959 Speaker 10: the Iranians were falls for ever trusting America. So there 627 00:34:08,000 --> 00:34:09,759 Speaker 10: was a lot of that kind of sentiment. But I 628 00:34:09,800 --> 00:34:12,759 Speaker 10: think actually the Chinese people sort of it is not 629 00:34:12,840 --> 00:34:15,600 Speaker 10: this sort of like rise of nationalism. And I think 630 00:34:15,640 --> 00:34:18,920 Speaker 10: that is partly because the Chinese government has learned from 631 00:34:18,960 --> 00:34:21,000 Speaker 10: the first time. Around the first trade war, you had 632 00:34:21,000 --> 00:34:23,839 Speaker 10: this wolf warrior policy that really stoked up a lot 633 00:34:23,880 --> 00:34:26,360 Speaker 10: of bad feeling. Then you had sort of people like 634 00:34:26,400 --> 00:34:28,840 Speaker 10: huci Jin, the old the former editor in chief of 635 00:34:28,840 --> 00:34:31,399 Speaker 10: the Global Times, who were allowed to sort of really 636 00:34:31,480 --> 00:34:34,640 Speaker 10: run wild on social media. You know when Nancy Pelosi 637 00:34:34,680 --> 00:34:37,680 Speaker 10: was flying into Taiwan, he was posting things about, you know, 638 00:34:37,880 --> 00:34:42,160 Speaker 10: perhaps shooting down you know, the jet as she came in, 639 00:34:43,200 --> 00:34:45,239 Speaker 10: which obviously just was a step too far. And I 640 00:34:45,280 --> 00:34:48,920 Speaker 10: think this time the nationalist voices on social media and 641 00:34:49,000 --> 00:34:52,240 Speaker 10: state media have been tampered down because the government doesn't 642 00:34:52,320 --> 00:34:54,680 Speaker 10: want it to get out of control to a point 643 00:34:54,680 --> 00:34:56,760 Speaker 10: where they are not the ones managing the narrative. 644 00:34:57,160 --> 00:34:59,600 Speaker 4: Jenny, thank you so much. It's always a pleasure. Jenny 645 00:34:59,640 --> 00:35:04,000 Speaker 4: Marsh Greater China ECOGOV team leader for Bloomberg News. We 646 00:35:04,040 --> 00:35:08,040 Speaker 4: move next to global trade flows have been surprisingly resilient 647 00:35:08,160 --> 00:35:11,000 Speaker 4: in spite of those US tariffs and the uncertainties that 648 00:35:11,040 --> 00:35:14,560 Speaker 4: they have brought. That's the take from adt Rashkina, the 649 00:35:14,560 --> 00:35:18,880 Speaker 4: CEO of DHL Global Forwarding in Greater China. She spoke 650 00:35:18,920 --> 00:35:22,200 Speaker 4: recently with Bloomberg Steven Engel at the World Economic Forum 651 00:35:22,239 --> 00:35:23,960 Speaker 4: summit in Tianjin, China. 652 00:35:24,400 --> 00:35:29,080 Speaker 11: Obviously there's been some turmoil in the world. There's obviously 653 00:35:29,360 --> 00:35:32,760 Speaker 11: an uncertainty around the tariffs and the global reciprocal tariffs 654 00:35:32,760 --> 00:35:35,360 Speaker 11: in the United States. There is rising conflict in the 655 00:35:35,360 --> 00:35:38,480 Speaker 11: Middle East. How is that directly impacting what you're seeing 656 00:35:38,719 --> 00:35:42,160 Speaker 11: as far as package deliveries and essentially demand. 657 00:35:42,520 --> 00:35:45,480 Speaker 12: So let's just start off by saying that global trade 658 00:35:45,480 --> 00:35:48,880 Speaker 12: has been pretty resilient. If we look at China's expert 659 00:35:49,000 --> 00:35:51,640 Speaker 12: growth in the first five months, it's going about seven percent. 660 00:35:52,080 --> 00:35:57,120 Speaker 12: So whilst having said that, with the tensions and tariffs scenarios, 661 00:35:57,920 --> 00:36:02,880 Speaker 12: organizations are deploying different strategs. Some are front loading and 662 00:36:02,920 --> 00:36:05,359 Speaker 12: looking at taking inventory forward so they have it when 663 00:36:05,400 --> 00:36:10,200 Speaker 12: demand peaks. Others are looking at alternative sourcing and manufacturing 664 00:36:10,320 --> 00:36:13,319 Speaker 12: networks where they can in the short run, and yet 665 00:36:13,360 --> 00:36:15,879 Speaker 12: others have a wait and see approach. So let's wait 666 00:36:15,920 --> 00:36:18,279 Speaker 12: it out and see what happens with the tarotts and 667 00:36:18,320 --> 00:36:19,240 Speaker 12: the rest of the situation. 668 00:36:19,520 --> 00:36:24,000 Speaker 11: On that front loading, do you see a tangible increase 669 00:36:24,320 --> 00:36:26,520 Speaker 11: while we're in a ninety day pause which is running 670 00:36:26,520 --> 00:36:30,920 Speaker 11: out already, but our shipment's definitely spiking because we don't 671 00:36:30,960 --> 00:36:33,160 Speaker 11: have the certainty following. 672 00:36:32,760 --> 00:36:35,799 Speaker 12: Mid August, that's right, So it was despiked in order 673 00:36:35,840 --> 00:36:39,600 Speaker 12: to hit the ninety day window. So we're not sure 674 00:36:39,640 --> 00:36:42,239 Speaker 12: what's going to happen after that period of time that 675 00:36:42,400 --> 00:36:45,280 Speaker 12: we do believe that some stage was to meet that window. 676 00:36:46,040 --> 00:36:49,680 Speaker 11: What are you seeing on the Deminimus exemption that the 677 00:36:49,719 --> 00:36:53,560 Speaker 11: Trump administration is essentially done away with that eight hundred 678 00:36:53,600 --> 00:36:58,759 Speaker 11: dollars shipment exemption. Have we seen a complete drop off? 679 00:36:59,160 --> 00:37:01,439 Speaker 12: Yes, e commas I actually would have been the one 680 00:37:01,480 --> 00:37:04,239 Speaker 12: that has had a little bit more of uncertainty of 681 00:37:04,360 --> 00:37:06,560 Speaker 12: not knowing how to deal with the technology on the 682 00:37:06,560 --> 00:37:09,160 Speaker 12: other side when it gets to the customs right So 683 00:37:09,200 --> 00:37:12,799 Speaker 12: it's been on both sides for the customs regulation to 684 00:37:12,800 --> 00:37:14,680 Speaker 12: figure out how they're going to handle it once the 685 00:37:14,719 --> 00:37:19,200 Speaker 12: shipment arrives, but also for the organizations moving to know 686 00:37:19,239 --> 00:37:22,000 Speaker 12: how to deal with the situation. So everyone's working on 687 00:37:22,440 --> 00:37:24,880 Speaker 12: solutions right now to address the demon of it. 688 00:37:25,120 --> 00:37:27,440 Speaker 11: How much of a sales drop are we looking at 689 00:37:27,480 --> 00:37:29,080 Speaker 11: between China and the United States. 690 00:37:30,080 --> 00:37:33,480 Speaker 12: Honestly, it really depends on the sector that it is. 691 00:37:33,560 --> 00:37:35,400 Speaker 12: E commerce has had the biggest head but if you 692 00:37:35,520 --> 00:37:40,879 Speaker 12: look at the tech like Apple's, Dells, HPS, organizations like that, 693 00:37:41,600 --> 00:37:44,120 Speaker 12: they're still flowing in the same form as they've gotten 694 00:37:44,120 --> 00:37:45,960 Speaker 12: exceptions from the tariffs. 695 00:37:46,080 --> 00:37:51,760 Speaker 11: You mentioned about diversification, how are you seeing corporates, individuals 696 00:37:51,880 --> 00:37:55,120 Speaker 11: or mostly corporates. I would say probably diversify from the 697 00:37:55,280 --> 00:37:59,400 Speaker 11: shipping to or from the United States away from the 698 00:37:59,560 --> 00:38:00,480 Speaker 11: morea the lead. 699 00:38:00,360 --> 00:38:05,080 Speaker 12: Tariff China, so we you know, it depends again on 700 00:38:05,120 --> 00:38:08,640 Speaker 12: the sector or industry that organizations are in. So those 701 00:38:08,680 --> 00:38:12,239 Speaker 12: impacted by tariffs look for alternative sourcing locations and you 702 00:38:12,320 --> 00:38:15,040 Speaker 12: see a bit of shift into South East Asia. You 703 00:38:15,120 --> 00:38:18,640 Speaker 12: see a bit moving to Middle East Africa, Latin America. 704 00:38:19,080 --> 00:38:23,040 Speaker 12: So it has been a varied amount of setups. There 705 00:38:23,040 --> 00:38:25,200 Speaker 12: are those that still believe that China is the most 706 00:38:25,239 --> 00:38:29,680 Speaker 12: cost effective model networks for them, and usually the shifts 707 00:38:29,880 --> 00:38:33,319 Speaker 12: of a production into Southeast Asia is to move to 708 00:38:33,360 --> 00:38:35,200 Speaker 12: the US and for the rest of the world in 709 00:38:35,280 --> 00:38:39,000 Speaker 12: intra Asia and within China, consumption generally stays in China. 710 00:38:39,280 --> 00:38:42,120 Speaker 4: That's a d d rush Keina, the CEO of DHL 711 00:38:42,239 --> 00:38:46,320 Speaker 4: Global Forwarding in Greater China, speaking with Bloomberg Steven Engel 712 00:38:46,520 --> 00:38:48,680 Speaker 4: and I'm Doug Kristner. You can catch us weekdays for 713 00:38:48,719 --> 00:38:53,600 Speaker 4: the Daybreak Asia podcast. It's available wherever you get your podcast. Tom. 714 00:38:54,080 --> 00:38:56,480 Speaker 2: Thank you, Doug, and that does it for this edition 715 00:38:56,480 --> 00:38:59,239 Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning 716 00:38:59,239 --> 00:39:01,239 Speaker 2: at five am Wall Street Time for the latest on 717 00:39:01,320 --> 00:39:03,799 Speaker 2: the market's overseas and the news you need to start 718 00:39:03,840 --> 00:39:07,320 Speaker 2: your day. I'm Tom Buzzby. Stay with US. Top stories 719 00:39:07,320 --> 00:39:09,839 Speaker 2: and global business headlines are coming up right now