1 00:00:03,120 --> 00:00:05,760 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,800 --> 00:00:07,960 Speaker 1: the top stories in the coming week from our day 3 00:00:07,960 --> 00:00:10,119 Speaker 1: Break anchors all around the world and straight ahead on 4 00:00:10,160 --> 00:00:12,960 Speaker 1: the program. Tech earnings continued this week, and we'll get 5 00:00:12,960 --> 00:00:15,480 Speaker 1: a preview. I'm Tom Busby in New York. 6 00:00:15,600 --> 00:00:17,599 Speaker 2: I'm Stephen carl and London, who are looking ahead to 7 00:00:17,600 --> 00:00:19,840 Speaker 2: the options facing the Bank of England as an inflation 8 00:00:19,920 --> 00:00:22,640 Speaker 2: in the UK remains the highest in the G seven. 9 00:00:22,960 --> 00:00:25,960 Speaker 3: I'm Deck Prisner. How close is the aviation industry in 10 00:00:26,040 --> 00:00:28,400 Speaker 3: the APAC to pre pandemic levels. 11 00:00:28,640 --> 00:00:30,960 Speaker 4: I'm Gaylei Lynes in Washington, where we're looking ahead to 12 00:00:31,000 --> 00:00:33,680 Speaker 4: Florida Governor Ronda Santis getting set to make a big 13 00:00:33,840 --> 00:00:34,760 Speaker 4: economic speech. 14 00:00:35,440 --> 00:00:38,720 Speaker 5: That's all straight ahead on Bloomberg day Break Weekend on 15 00:00:38,880 --> 00:00:42,000 Speaker 5: Bloomberg Eleve them three oh New York Bloomberg ninety nine 16 00:00:42,000 --> 00:00:45,400 Speaker 5: to one, Washington, DC, Bloomberg one O six one, Boston, 17 00:00:45,440 --> 00:00:50,240 Speaker 5: Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 18 00:00:50,400 --> 00:00:53,640 Speaker 5: XM one nineteen and around the world on Bloomberg Radio 19 00:00:53,720 --> 00:00:56,320 Speaker 5: dot com and via the Bloomberg Business app. 20 00:01:00,160 --> 00:01:00,279 Speaker 6: You. 21 00:01:00,320 --> 00:01:02,760 Speaker 1: I'm Tom Busby, and we begin today's program with two 22 00:01:02,760 --> 00:01:06,120 Speaker 1: of the biggest names in tech, Apple and Amazon, posting 23 00:01:06,120 --> 00:01:09,600 Speaker 1: their latest earnings this coming week and joining us to 24 00:01:09,600 --> 00:01:12,679 Speaker 1: talk about what to expect. Ed Ludlow, co host of 25 00:01:12,760 --> 00:01:15,800 Speaker 1: Bloomberg Technology, ed, thank you for being here. 26 00:01:15,959 --> 00:01:17,480 Speaker 7: Thank you for having me. Happy weekend. 27 00:01:17,880 --> 00:01:21,200 Speaker 1: Yes it is well. Now, before we jump into Apple 28 00:01:21,200 --> 00:01:24,880 Speaker 1: and Amazon, let's talk about takeaways from the other megacap 29 00:01:24,959 --> 00:01:27,440 Speaker 1: tech names that have already posted earnings for last quarter. 30 00:01:27,720 --> 00:01:30,679 Speaker 1: And there's a lot to digest here. So why don't 31 00:01:30,720 --> 00:01:33,160 Speaker 1: I let you talk about and we can go one 32 00:01:33,200 --> 00:01:35,800 Speaker 1: by one, starting with maybe meta platforms. 33 00:01:35,920 --> 00:01:38,000 Speaker 7: Yeah, I think there is a commonality between all of 34 00:01:38,040 --> 00:01:41,320 Speaker 7: them that we've all been so hyped up over artificial 35 00:01:41,400 --> 00:01:46,119 Speaker 7: intelligence AI, and we go into earnings hoping that we 36 00:01:46,200 --> 00:01:48,840 Speaker 7: hear some big piece of breaking news about what the 37 00:01:49,080 --> 00:01:52,400 Speaker 7: big tech names doing in AI. But interestingly, the real 38 00:01:52,480 --> 00:01:55,680 Speaker 7: theme of this earning season had been that the core 39 00:01:55,800 --> 00:01:58,560 Speaker 7: legacy businesses for each of these big tech names have 40 00:01:58,680 --> 00:02:04,080 Speaker 7: done really well, prizingly well, and that outperformance against expectations 41 00:02:04,120 --> 00:02:08,360 Speaker 7: has seen the shares rise after earnings print indicate of 42 00:02:08,400 --> 00:02:11,320 Speaker 7: meta alphabet Microsoft, And even though you know there's a 43 00:02:11,320 --> 00:02:13,800 Speaker 7: lot of talk on the call about AI, you know 44 00:02:13,880 --> 00:02:16,000 Speaker 7: that's what investors have been looking at. So Meta's a 45 00:02:16,040 --> 00:02:19,440 Speaker 7: really interesting one. It's been an interesting quarter because Meta 46 00:02:19,480 --> 00:02:23,760 Speaker 7: also launched Threads right, and they stopped telling us how 47 00:02:23,840 --> 00:02:26,320 Speaker 7: that was going after it reached one hundred million users. 48 00:02:26,960 --> 00:02:30,200 Speaker 7: But again the messaging from Mark Zuckerberg the CEO, and 49 00:02:30,280 --> 00:02:34,240 Speaker 7: Susan Lee the CFO, is we're we're playing it slow, 50 00:02:34,280 --> 00:02:37,160 Speaker 7: we're playing it safe with Threads. But Zuckerberg did say 51 00:02:37,160 --> 00:02:39,840 Speaker 7: that if cloud providers, for example, want access to their 52 00:02:40,280 --> 00:02:43,400 Speaker 7: generative AI technology and they're going to make money off it, 53 00:02:43,400 --> 00:02:45,560 Speaker 7: it's only fair the Meta makes money off it too, 54 00:02:45,600 --> 00:02:47,079 Speaker 7: So that was a really interesting U turn. 55 00:02:47,240 --> 00:02:49,640 Speaker 1: Now, speaking of cloud, Microsoft had a bit of a 56 00:02:49,680 --> 00:02:52,680 Speaker 1: surprise in its earnings last week about yeah, a bit 57 00:02:52,720 --> 00:02:55,160 Speaker 1: of a slump and growth in its cloud computing unit, 58 00:02:55,200 --> 00:02:56,600 Speaker 1: which is a big money maker for them. 59 00:02:57,200 --> 00:02:59,600 Speaker 7: Two ways of looking at it. It was a milestone 60 00:02:59,639 --> 00:03:03,360 Speaker 7: because Azure, which is the cloud unit, hit a milestone 61 00:03:03,360 --> 00:03:07,160 Speaker 7: where for the first time it represented more than fifty 62 00:03:07,160 --> 00:03:11,000 Speaker 7: percent of the overall share of cloud revenue. Like they 63 00:03:11,000 --> 00:03:12,799 Speaker 7: make one hundred and ten billion dollars a year in 64 00:03:12,840 --> 00:03:17,400 Speaker 7: collaborated revenues. Sales growth is slipping, but you know it's 65 00:03:17,440 --> 00:03:20,560 Speaker 7: still when you look at the azual unit becoming increasingly 66 00:03:20,600 --> 00:03:23,239 Speaker 7: important to them. And there's an interesting parallel which we 67 00:03:23,240 --> 00:03:25,240 Speaker 7: can talk about with Amazon, which is going to report 68 00:03:25,360 --> 00:03:27,640 Speaker 7: next week. Because we all know Amazon has an e 69 00:03:27,639 --> 00:03:31,760 Speaker 7: commerce platform, right Amazon dot Com, Amazon Prime Video, but 70 00:03:31,840 --> 00:03:34,200 Speaker 7: the cash cow for them is cloud. That's why we 71 00:03:34,240 --> 00:03:37,040 Speaker 7: look so closely at how all of these guys perform, 72 00:03:37,280 --> 00:03:39,720 Speaker 7: because it's a competitive market between the three of them. 73 00:03:40,280 --> 00:03:41,480 Speaker 7: You know, there is some life there. 74 00:03:41,840 --> 00:03:44,920 Speaker 1: And another encouraging sign we got from Intel, and that 75 00:03:45,040 --> 00:03:48,600 Speaker 1: is about PC sales. They're saying things are looking up again. 76 00:03:49,200 --> 00:03:49,480 Speaker 6: Yeah. 77 00:03:49,640 --> 00:03:52,680 Speaker 7: Intel's a really interesting story because every earning season and 78 00:03:52,800 --> 00:03:56,160 Speaker 7: executive will say we think things will get better. You're 79 00:03:56,160 --> 00:03:57,680 Speaker 7: going to have to take our word for it, but 80 00:03:57,720 --> 00:04:00,760 Speaker 7: they'll get better at some point. And the messaging from 81 00:04:00,840 --> 00:04:03,520 Speaker 7: Intel in the last couple of quarters is that the 82 00:04:03,640 --> 00:04:07,760 Speaker 7: demand will recover in the second half of twenty twenty three. Well, 83 00:04:07,800 --> 00:04:10,520 Speaker 7: what Intel did this week is demonstrate that that is 84 00:04:10,560 --> 00:04:13,240 Speaker 7: actually true. We got some evidence. So they had a 85 00:04:13,280 --> 00:04:16,520 Speaker 7: surprise profit in the quarter just gone, and in the 86 00:04:16,560 --> 00:04:20,440 Speaker 7: current quarter they forecast sales of thirteen point eight billion dollars, 87 00:04:20,640 --> 00:04:22,320 Speaker 7: which was ahead of what the street thinks they were 88 00:04:22,320 --> 00:04:24,800 Speaker 7: going to make thirteen point three billion dollars, and it 89 00:04:24,839 --> 00:04:27,520 Speaker 7: all comes down to PC. The story is that there 90 00:04:27,600 --> 00:04:31,160 Speaker 7: was just a surplus of chips that go into personal computers. 91 00:04:31,560 --> 00:04:34,320 Speaker 7: That meant that people that make personal computers had an 92 00:04:34,360 --> 00:04:37,120 Speaker 7: inventory they had to work through. They had a surplus 93 00:04:37,120 --> 00:04:40,039 Speaker 7: of chips. The messaging from Intel is that they've worked 94 00:04:40,080 --> 00:04:43,880 Speaker 7: through that inventory and they're now ordering again for the future. 95 00:04:44,600 --> 00:04:47,719 Speaker 1: Very encouraging. All right, now, let's look ahead what's coming 96 00:04:47,800 --> 00:04:50,280 Speaker 1: up this week, and let's start with what you see 97 00:04:50,560 --> 00:04:51,440 Speaker 1: Apple reporting. 98 00:04:52,040 --> 00:04:55,160 Speaker 7: Yeah, so the quarter that we've already reported this year 99 00:04:55,240 --> 00:04:58,560 Speaker 7: for Apple, the calendar second quarter, a lot of evidence 100 00:04:58,600 --> 00:05:03,000 Speaker 7: that iPhone shipped me to rebounding. Everyone is so stoked 101 00:05:03,200 --> 00:05:07,560 Speaker 7: about the vision pro everything. One's talking about the arvii headself. 102 00:05:07,560 --> 00:05:10,400 Speaker 7: But the thing is, it's just like AI. It's such 103 00:05:10,440 --> 00:05:13,919 Speaker 7: a distant technology. It's so distant from being a meaningful 104 00:05:13,960 --> 00:05:17,440 Speaker 7: revenue contributor that we just look at the iPhone and 105 00:05:17,480 --> 00:05:20,640 Speaker 7: the latest generations of hardware that they're actually shipping. That 106 00:05:20,839 --> 00:05:23,280 Speaker 7: is going to be the story for Apple. It always is, 107 00:05:23,839 --> 00:05:27,200 Speaker 7: and it's important because the more devices that they sell 108 00:05:27,200 --> 00:05:30,279 Speaker 7: around the world, and the more surprised to the upside 109 00:05:30,320 --> 00:05:33,400 Speaker 7: that there is for things like Mac. In markets like China, 110 00:05:33,440 --> 00:05:37,840 Speaker 7: it also usually translates to an improvement in their services revenue. 111 00:05:38,000 --> 00:05:40,240 Speaker 7: What Apple wants to do is build an ecosystem. They 112 00:05:40,279 --> 00:05:43,479 Speaker 7: want people to have multiple types of their devices in 113 00:05:43,520 --> 00:05:46,839 Speaker 7: their hand or in their home and then be lured 114 00:05:46,880 --> 00:05:49,840 Speaker 7: in to spend more on the software and services side. 115 00:05:49,960 --> 00:05:52,200 Speaker 7: And so that's why we pay such close attention to 116 00:05:52,880 --> 00:05:54,040 Speaker 7: Apple and iPhone. 117 00:05:54,200 --> 00:05:56,960 Speaker 1: And let's talk about that thirty five hundred dollars price 118 00:05:57,040 --> 00:05:58,560 Speaker 1: tag on that vision one. 119 00:05:59,080 --> 00:06:03,360 Speaker 7: Thirty five hundred dollars is very expensive. By comparison, the 120 00:06:03,400 --> 00:06:07,599 Speaker 7: premium meta Quest headset is about one thousand dollars and 121 00:06:07,640 --> 00:06:11,479 Speaker 7: its latest generation is about five hundred dollars. So thirty 122 00:06:11,480 --> 00:06:16,240 Speaker 7: five hundred dollars is absolute premium. Now, Bloomberger reported that 123 00:06:16,320 --> 00:06:19,359 Speaker 7: in its first year, applew had hoped to ship around 124 00:06:19,440 --> 00:06:22,320 Speaker 7: nine hundred thousand units. But if you do the math, 125 00:06:22,400 --> 00:06:25,040 Speaker 7: this is what I'm talking about. Nine hundred thousand units 126 00:06:25,040 --> 00:06:29,359 Speaker 7: at thirty five hundred dollars still does not translate to 127 00:06:29,680 --> 00:06:32,560 Speaker 7: three point five billion dollars of sales. That's nothing in 128 00:06:32,600 --> 00:06:34,760 Speaker 7: the scheme of what they do on iPhone and Mac. 129 00:06:34,960 --> 00:06:38,880 Speaker 7: Then The Financial Times reported that they're actually cutting expectations 130 00:06:38,920 --> 00:06:41,600 Speaker 7: and telling suppliers, you know what, we're going to build 131 00:06:41,960 --> 00:06:44,479 Speaker 7: nearer to half of those units. So they've kind of 132 00:06:44,520 --> 00:06:47,200 Speaker 7: scaled back what they hope to do. It's going to 133 00:06:47,240 --> 00:06:50,440 Speaker 7: be a really long time until this is mainstream. But 134 00:06:50,520 --> 00:06:52,880 Speaker 7: the price point also makes you realize that the vision 135 00:06:52,960 --> 00:06:56,680 Speaker 7: Pro it's four developers. It is four people who are 136 00:06:56,720 --> 00:07:01,240 Speaker 7: early adopters at the cutting edge. Bigger question earnings, do 137 00:07:01,320 --> 00:07:04,320 Speaker 7: we get a carrot dangle that has some information about 138 00:07:04,480 --> 00:07:07,799 Speaker 7: future generations of the vision Pro at a lower price point, 139 00:07:07,839 --> 00:07:11,720 Speaker 7: a more mass market product. Apple is usually self restrained. 140 00:07:11,880 --> 00:07:13,880 Speaker 7: They usually don't do that at earnings, but you can 141 00:07:13,920 --> 00:07:14,880 Speaker 7: always be surprised. 142 00:07:15,160 --> 00:07:15,880 Speaker 5: Yeah they are. 143 00:07:15,920 --> 00:07:19,480 Speaker 1: That just one more thing so you never know. Let's 144 00:07:19,480 --> 00:07:22,720 Speaker 1: switch now to Amazon dot Com and you know, we 145 00:07:22,800 --> 00:07:27,160 Speaker 1: talked very much about the cloud computing, their Amazon Web services. 146 00:07:27,200 --> 00:07:29,440 Speaker 1: What that means, what are you looking for? 147 00:07:29,600 --> 00:07:33,880 Speaker 7: And that report it's really interesting. Amazon is still unraveling 148 00:07:34,000 --> 00:07:38,280 Speaker 7: its COVID era investments where they just threw billions of 149 00:07:38,320 --> 00:07:41,880 Speaker 7: dollars at fulfillment, getting packages to you as quickly as 150 00:07:41,920 --> 00:07:44,000 Speaker 7: you could because during the pandemic we were all at home. 151 00:07:44,640 --> 00:07:46,680 Speaker 7: It drove a lot of business for them, but they 152 00:07:46,680 --> 00:07:49,120 Speaker 7: were left with head count and infrastructure that they just 153 00:07:49,160 --> 00:07:54,680 Speaker 7: don't need. Andy Jasse replaced Jeff Bezos's CEO and discipline 154 00:07:54,720 --> 00:07:57,440 Speaker 7: and kind of unraveling that investment in the panemic era 155 00:07:57,480 --> 00:08:01,520 Speaker 7: has been the story. AWS revenue rows around sixteen percent, 156 00:08:01,600 --> 00:08:03,760 Speaker 7: twenty one billion dollars of sales in the court are 157 00:08:03,840 --> 00:08:07,840 Speaker 7: just gone, so those stories continue. We know Amazon as 158 00:08:07,880 --> 00:08:10,520 Speaker 7: consumers is Amazon dot Com where we buy things and 159 00:08:10,520 --> 00:08:13,240 Speaker 7: they're delivered to our doorstep, but the cash cow is 160 00:08:13,280 --> 00:08:16,880 Speaker 7: its cloud business. Now throw artificial intelligence into the mix, 161 00:08:16,960 --> 00:08:20,200 Speaker 7: we might get some early signs about their strategy, which 162 00:08:20,200 --> 00:08:23,720 Speaker 7: has been less about a consumer facing generative AI tool 163 00:08:23,880 --> 00:08:28,360 Speaker 7: like chat GPT and more about providing the infrastructure, cloud 164 00:08:28,360 --> 00:08:32,280 Speaker 7: based infrastructure for companies to work on their own AI tools. 165 00:08:32,679 --> 00:08:35,240 Speaker 7: And once we have a sense that they're going to 166 00:08:35,240 --> 00:08:37,000 Speaker 7: make some money on that in the timeline for that, 167 00:08:37,559 --> 00:08:40,839 Speaker 7: you add this in as another revenue stream alongside AWS. 168 00:08:41,280 --> 00:08:44,040 Speaker 7: Advertising has also been a surprise because it's a higher 169 00:08:44,040 --> 00:08:46,520 Speaker 7: margin revenue that they make hand in hand with their 170 00:08:46,559 --> 00:08:49,720 Speaker 7: e commerce platform. So a lot to focus on there. 171 00:08:50,559 --> 00:08:52,760 Speaker 1: Now, ed I want to talk about the impact of 172 00:08:52,800 --> 00:08:56,480 Speaker 1: a couple of strikes in Hollywood on not big revenue 173 00:08:57,440 --> 00:09:01,280 Speaker 1: generators for both companies Apple and Amazon, but they're streaming services. 174 00:09:02,400 --> 00:09:06,040 Speaker 1: What's the thinking on how this is impacting Apple TV 175 00:09:06,160 --> 00:09:07,640 Speaker 1: Plus and Amazon Prime. 176 00:09:08,120 --> 00:09:12,160 Speaker 7: There is two competing forces happening in the world of 177 00:09:12,200 --> 00:09:16,600 Speaker 7: content and streaming, and it applies pretty uniformly to all 178 00:09:16,640 --> 00:09:19,880 Speaker 7: of the names that are involved. The writers and actors 179 00:09:19,920 --> 00:09:24,360 Speaker 7: strike gives everybody a lot of concern that the content 180 00:09:24,480 --> 00:09:27,680 Speaker 7: timeline and content slate's going to be impacted. Simply put, 181 00:09:27,720 --> 00:09:30,520 Speaker 7: if the actors and writers are on strike, new shows 182 00:09:30,559 --> 00:09:32,720 Speaker 7: and films are not being written, and they're certainly not 183 00:09:32,760 --> 00:09:35,679 Speaker 7: being produced, which means there's a delay in putting them 184 00:09:35,679 --> 00:09:39,160 Speaker 7: out and in some cases projects get canceled altogether. The 185 00:09:39,240 --> 00:09:42,360 Speaker 7: competing force is that, if you're taking the case of Amazon, 186 00:09:43,120 --> 00:09:47,199 Speaker 7: Andy Jasse is looking very very closely about how much 187 00:09:47,400 --> 00:09:52,000 Speaker 7: money the Prime video unit is spending on producing content, 188 00:09:52,640 --> 00:09:55,640 Speaker 7: because it is not a money maker for them. He 189 00:09:55,720 --> 00:09:58,440 Speaker 7: wants to rein in that spending. So you can understand 190 00:09:58,480 --> 00:10:01,360 Speaker 7: right why these are competing forces. We're concerned that not 191 00:10:01,480 --> 00:10:04,440 Speaker 7: enough content's being made, and yet at the same time 192 00:10:04,559 --> 00:10:07,440 Speaker 7: executives are saying, we've really got to scale back what 193 00:10:07,440 --> 00:10:11,360 Speaker 7: we're spending because otherwise we're not going to reach profitability, 194 00:10:11,360 --> 00:10:14,640 Speaker 7: and the long term profitability of streaming platforms is certainly 195 00:10:14,720 --> 00:10:17,360 Speaker 7: a big question. Let's be honest, guys, Like no one 196 00:10:17,440 --> 00:10:21,840 Speaker 7: wants their favorite show to be canceled or indeed like 197 00:10:22,320 --> 00:10:24,320 Speaker 7: wait a whole year and a half for the next 198 00:10:24,360 --> 00:10:26,600 Speaker 7: season to come out. But that is the prospect we face. 199 00:10:27,440 --> 00:10:30,200 Speaker 7: So that's basically the equation the industry's facing. 200 00:10:30,440 --> 00:10:32,520 Speaker 1: Well, a lot to look forward to. Ed, thank you 201 00:10:32,559 --> 00:10:36,200 Speaker 1: so much. That's Bloomberg Technology, host ed Ludlow. Watch the 202 00:10:36,200 --> 00:10:39,560 Speaker 1: show weekdays at twelve pm Wall Street Time, or download 203 00:10:39,760 --> 00:10:43,720 Speaker 1: the b Tech podcast wherever you get your podcasts. Coming 204 00:10:43,760 --> 00:10:45,960 Speaker 1: up on Bloomberg day Break Weekend, we're looking ahead to 205 00:10:46,000 --> 00:10:49,240 Speaker 1: the options facing the Bank of England. I'm Tom Busby 206 00:10:49,360 --> 00:11:03,760 Speaker 1: and this is Bloomberg. This is Bloomberg Daybreak Weekend, our 207 00:11:03,760 --> 00:11:06,120 Speaker 1: global look ahead at the top stories for investors in 208 00:11:06,160 --> 00:11:08,760 Speaker 1: the coming week. I'm Tom Busby in New York. Now 209 00:11:08,840 --> 00:11:11,080 Speaker 1: up later in our program we take a look at 210 00:11:11,120 --> 00:11:14,240 Speaker 1: the aviation sector in Asia. But first, after the reft 211 00:11:14,240 --> 00:11:17,640 Speaker 1: of Central Bank decisions last week, attention now shifts to 212 00:11:17,720 --> 00:11:20,000 Speaker 1: London in the coming days, where the Bank of England 213 00:11:20,040 --> 00:11:23,960 Speaker 1: will announce its latest rate move. Unlike their colleagues in 214 00:11:24,120 --> 00:11:27,760 Speaker 1: Washington or Frankfurt, policymakers in the UK are some way 215 00:11:27,800 --> 00:11:30,200 Speaker 1: off from the end of their hiking cycle. For more, 216 00:11:30,280 --> 00:11:32,720 Speaker 1: let's head to London and bring in Bloomberg Daybreak europe 217 00:11:32,760 --> 00:11:34,480 Speaker 1: banker Stephen Carroll. 218 00:11:34,480 --> 00:11:36,360 Speaker 2: Tom The UK has been an outlier in the G 219 00:11:36,480 --> 00:11:39,720 Speaker 2: seven for its inflation path, which saw the pasive price 220 00:11:39,840 --> 00:11:43,040 Speaker 2: rises remaining higher and stickier in recent months, which had 221 00:11:43,080 --> 00:11:45,240 Speaker 2: the Bank of England to hike by fifty basis points 222 00:11:45,240 --> 00:11:47,920 Speaker 2: the last time around. The most recent inflation print did 223 00:11:47,920 --> 00:11:50,600 Speaker 2: finally show a slowdown, but the headline figure was still 224 00:11:50,640 --> 00:11:53,240 Speaker 2: at seven point nine percent. For more, let's bring in 225 00:11:53,240 --> 00:11:56,800 Speaker 2: Bloomberg senior UK economist Dan Hansen. Dan, what is your 226 00:11:56,800 --> 00:11:59,080 Speaker 2: expectation then for this Bank of England meeting? The last 227 00:11:59,080 --> 00:12:00,840 Speaker 2: time around the bank gave it's a bit of a surprise. 228 00:12:01,200 --> 00:12:03,960 Speaker 8: Yeah, they did, and I think looking at this meeting, 229 00:12:04,000 --> 00:12:06,560 Speaker 8: there is I think, at least to my mind a 230 00:12:06,559 --> 00:12:08,680 Speaker 8: fifty to fifty split, fifty to fifty chance if you like, 231 00:12:08,720 --> 00:12:10,760 Speaker 8: between a twenty five and a fifty basis point hike. 232 00:12:12,360 --> 00:12:16,120 Speaker 8: You mentioned, they're the inflation data for us that probably 233 00:12:16,160 --> 00:12:20,079 Speaker 8: tips the balance towards a twenty five, but it's certainly 234 00:12:20,080 --> 00:12:22,400 Speaker 8: going to be a very close call. I think what 235 00:12:22,440 --> 00:12:24,800 Speaker 8: you have to look at is, of course there's been 236 00:12:24,840 --> 00:12:27,000 Speaker 8: some good news on inflation, and you've just mentioned it there, 237 00:12:27,160 --> 00:12:30,000 Speaker 8: But I think the underlying picture goes to your first 238 00:12:30,040 --> 00:12:33,040 Speaker 8: point about stickiness. So the composition of inflation is actually 239 00:12:33,280 --> 00:12:35,720 Speaker 8: looking stickier now than the bank was expecting back in 240 00:12:35,760 --> 00:12:38,640 Speaker 8: its May forecast. And it might be the case that 241 00:12:39,280 --> 00:12:42,200 Speaker 8: looking at that, that's the thing that dominates and pushes 242 00:12:42,240 --> 00:12:45,920 Speaker 8: them towards a fifty basis point hike. As I say, 243 00:12:45,920 --> 00:12:48,360 Speaker 8: we think probably on balance that the good news on 244 00:12:48,400 --> 00:12:50,920 Speaker 8: the headline figure is enough to push them back towards 245 00:12:50,960 --> 00:12:54,680 Speaker 8: twenty five. They've done a lot already and doing another 246 00:12:54,720 --> 00:12:57,880 Speaker 8: fifty again would be quite a would be quite a 247 00:12:57,920 --> 00:13:00,200 Speaker 8: message to send. But I think on balance they'll they'll 248 00:13:00,280 --> 00:13:01,120 Speaker 8: up for a smaller move. 249 00:13:01,320 --> 00:13:04,480 Speaker 2: Where is the stickiness coming from now and the inflation data? 250 00:13:05,120 --> 00:13:07,720 Speaker 8: Yeah, so it's if you look at it, it is 251 00:13:07,800 --> 00:13:11,400 Speaker 8: services that's running it probably twice a little bit above that. 252 00:13:11,440 --> 00:13:13,840 Speaker 8: In fact twice it's long run average, So it's sup 253 00:13:13,840 --> 00:13:16,120 Speaker 8: at seven point two percent long run average about three 254 00:13:16,160 --> 00:13:18,480 Speaker 8: point three percent, so it's more than twice it's long 255 00:13:18,559 --> 00:13:21,839 Speaker 8: run average, and of course that's a reflection of I 256 00:13:21,840 --> 00:13:23,800 Speaker 8: think it's a reflection of two things. Actually, one is 257 00:13:23,960 --> 00:13:26,160 Speaker 8: the obvious thing is the labor market, because a lot 258 00:13:26,160 --> 00:13:30,240 Speaker 8: of services firms their biggest cost is labor. But I 259 00:13:30,240 --> 00:13:34,040 Speaker 8: also think there's an element of the lagged impact of 260 00:13:34,240 --> 00:13:36,520 Speaker 8: high energy prices. So if you think back to last year, 261 00:13:36,520 --> 00:13:39,200 Speaker 8: you've got a lot of firms who rightly would have 262 00:13:39,240 --> 00:13:42,040 Speaker 8: looked at the outlook for energy price has been extremely worried, 263 00:13:43,040 --> 00:13:44,560 Speaker 8: and I think a lot of them have locked in 264 00:13:44,960 --> 00:13:48,680 Speaker 8: higher energy prices into their tariffs, and it's going to 265 00:13:48,920 --> 00:13:50,280 Speaker 8: take a bit of time for them to roll off 266 00:13:50,280 --> 00:13:53,800 Speaker 8: onto the new lower tariffs, because obviously wholesale energy costs 267 00:13:53,800 --> 00:13:56,840 Speaker 8: have fallen and households have started to feel the effect 268 00:13:56,920 --> 00:13:58,360 Speaker 8: of that, and we'll see that in fact in the 269 00:13:58,440 --> 00:14:01,719 Speaker 8: July data, the July inflation data. But I think that's 270 00:14:01,760 --> 00:14:04,800 Speaker 8: one reason why it serves as inflation as well as 271 00:14:04,800 --> 00:14:08,160 Speaker 8: the labor market has been sticky, there's been a little 272 00:14:08,160 --> 00:14:10,360 Speaker 8: bit better news on the good side. As I've said 273 00:14:10,559 --> 00:14:13,719 Speaker 8: many times to before, there are reasons thinks that think 274 00:14:13,760 --> 00:14:16,719 Speaker 8: that goods prices will continue to or goods inflation. I 275 00:14:16,720 --> 00:14:19,800 Speaker 8: should say we'll continue to ease off, but the stickiness, 276 00:14:19,800 --> 00:14:21,640 Speaker 8: to answer your question, is really in services. 277 00:14:21,800 --> 00:14:24,240 Speaker 2: Yeah, and that's interesting because of the changeus what we've 278 00:14:24,240 --> 00:14:26,600 Speaker 2: been talking about over the past couple of months of 279 00:14:26,640 --> 00:14:29,400 Speaker 2: inflation prints, where really the energy picture was the part 280 00:14:29,440 --> 00:14:31,280 Speaker 2: that was kind of helping to bring things down. As 281 00:14:31,280 --> 00:14:33,920 Speaker 2: you say, the fact that getting getting baked into the 282 00:14:33,920 --> 00:14:36,360 Speaker 2: service's side of the picture if we think about the 283 00:14:36,360 --> 00:14:38,080 Speaker 2: broader economic picture and all this, because this is the 284 00:14:38,080 --> 00:14:40,320 Speaker 2: dilemma the Bank of England is having, is that, you know, 285 00:14:40,400 --> 00:14:44,120 Speaker 2: the more at hikes obviously, the greater the risk of recession. 286 00:14:44,120 --> 00:14:46,840 Speaker 2: The latest PMI data for the UK showed, you know, 287 00:14:46,840 --> 00:14:49,240 Speaker 2: the flash number of fifty point seven, down from fifty 288 00:14:49,280 --> 00:14:50,800 Speaker 2: two point eight in June. Does that kind of tell 289 00:14:50,880 --> 00:14:53,080 Speaker 2: us that the Bank of England's rate hikes so far 290 00:14:53,120 --> 00:14:54,600 Speaker 2: at least are working. 291 00:14:54,520 --> 00:14:56,840 Speaker 8: Well, they're beginning to Yeah. I mean we've seen up 292 00:14:56,920 --> 00:14:59,480 Speaker 8: until this point that actually the response of the economy 293 00:14:59,520 --> 00:15:02,680 Speaker 8: to everything it's been done and the high inflation, there's 294 00:15:02,720 --> 00:15:04,800 Speaker 8: not been much change in the direction of the economy. 295 00:15:04,800 --> 00:15:08,400 Speaker 8: We've had sort of broadly say stagnation over the past year, 296 00:15:08,400 --> 00:15:11,520 Speaker 8: but we haven't had anywhere near the level of weakness 297 00:15:11,640 --> 00:15:16,560 Speaker 8: that we and almost all other forecasters had been expecting. 298 00:15:16,600 --> 00:15:19,080 Speaker 8: I mean, I think just on the PMI itself. I 299 00:15:19,080 --> 00:15:21,120 Speaker 8: didn't mention it in the answer to the first question, 300 00:15:21,160 --> 00:15:22,920 Speaker 8: but I think that's another reason to think that twenty 301 00:15:22,920 --> 00:15:26,000 Speaker 8: five might be a better bet than a fifty, just 302 00:15:26,040 --> 00:15:29,040 Speaker 8: because there is now a little bit more evidence that 303 00:15:29,080 --> 00:15:33,280 Speaker 8: this very rapid tightening cycle is beginning to take hold 304 00:15:33,720 --> 00:15:36,560 Speaker 8: on the economy. And I think what we'll get as 305 00:15:36,560 --> 00:15:38,800 Speaker 8: well as as a policy decision, of course, is a 306 00:15:38,840 --> 00:15:40,880 Speaker 8: forecast from the banking and this time around, and we'll 307 00:15:40,880 --> 00:15:43,800 Speaker 8: see what they're thinking in terms of where the economy 308 00:15:43,840 --> 00:15:48,760 Speaker 8: is heading. They'll have to take in the rising yields 309 00:15:48,760 --> 00:15:51,120 Speaker 8: that we've seen to the higher path of interest rates. 310 00:15:51,600 --> 00:15:55,720 Speaker 8: So it'll be really interesting to see how they put 311 00:15:55,760 --> 00:15:58,000 Speaker 8: that in and where it ends up. Because of course, 312 00:15:58,040 --> 00:16:00,560 Speaker 8: remember back in May they took the recession out of forecast. 313 00:16:01,560 --> 00:16:05,400 Speaker 8: You know, there's a question this time exactly that is 314 00:16:05,400 --> 00:16:07,440 Speaker 8: it going to go back in. And just for sort 315 00:16:07,480 --> 00:16:09,640 Speaker 8: of people that don't know the ins and outs of 316 00:16:09,640 --> 00:16:12,280 Speaker 8: the Bank of England's forecasting process, what the bank does 317 00:16:12,400 --> 00:16:14,960 Speaker 8: is it takes the market curve as given and it 318 00:16:15,000 --> 00:16:17,960 Speaker 8: puts that into its forecast. So and then the forecast 319 00:16:18,000 --> 00:16:20,800 Speaker 8: gets spat out based on that market curve, so it 320 00:16:20,800 --> 00:16:22,720 Speaker 8: gives it. The point of doing it is to give 321 00:16:22,760 --> 00:16:25,640 Speaker 8: a sense of whether the market is right or wrong 322 00:16:25,960 --> 00:16:27,920 Speaker 8: in terms of the path of interest rates, whether that's 323 00:16:27,960 --> 00:16:31,320 Speaker 8: consistent with two percent inflation in the medium term. So 324 00:16:31,880 --> 00:16:33,880 Speaker 8: it's sort of the the bank is sort of hostage 325 00:16:33,880 --> 00:16:36,320 Speaker 8: to that yeal curve, so it goes in and then 326 00:16:36,720 --> 00:16:39,120 Speaker 8: the forecast gets spat out back to it, and you 327 00:16:39,200 --> 00:16:42,720 Speaker 8: sort of see whether that path of rates is consistent 328 00:16:42,760 --> 00:16:45,760 Speaker 8: with one two percent inflation in the medium term, and second, 329 00:16:45,800 --> 00:16:47,840 Speaker 8: whether it's consistent with and the economy going through a 330 00:16:47,880 --> 00:16:48,880 Speaker 8: downturn to get there. 331 00:16:49,120 --> 00:16:51,000 Speaker 2: So of course the forecast is going to be very 332 00:16:51,000 --> 00:16:53,840 Speaker 2: closely watched in Westminster as well, because the Prime Minister 333 00:16:53,880 --> 00:16:57,200 Speaker 2: has made his number one priority having inflation by the 334 00:16:57,360 --> 00:16:59,800 Speaker 2: end of the year. After the most recent inflation figures, 335 00:17:00,000 --> 00:17:02,720 Speaker 2: bloombergerre speaking to John glenn as a minister in the 336 00:17:02,720 --> 00:17:06,320 Speaker 2: Trousury Department, and here's his take on where the inflation 337 00:17:06,440 --> 00:17:07,200 Speaker 2: challenges lie. 338 00:17:07,240 --> 00:17:10,000 Speaker 9: Now, what I'm doing is controlling public spending to make 339 00:17:10,040 --> 00:17:12,480 Speaker 9: sure that we don't do anything that adds fuel to inflation. 340 00:17:12,960 --> 00:17:16,200 Speaker 9: But of course we welcome these figures. There's no complacency 341 00:17:16,240 --> 00:17:18,040 Speaker 9: though here in the Treasury. We work very closely with 342 00:17:18,080 --> 00:17:21,000 Speaker 9: the Bank. As you say, they do interest rates, we 343 00:17:21,040 --> 00:17:24,359 Speaker 9: do government spending. But these are tough times for families 344 00:17:24,359 --> 00:17:27,120 Speaker 9: in the UK. But we going be relentless in our 345 00:17:27,440 --> 00:17:30,280 Speaker 9: commitment to have inflation and get it down to the 346 00:17:30,359 --> 00:17:31,679 Speaker 9: long term trend two percent. 347 00:17:31,880 --> 00:17:34,840 Speaker 10: That Johnnie, you're going to do anything actively to reach 348 00:17:34,920 --> 00:17:37,919 Speaker 10: your number one target of halving inflation by the end 349 00:17:38,000 --> 00:17:41,960 Speaker 10: of the year. For example, X Banking and policymaker Kate 350 00:17:42,040 --> 00:17:43,800 Speaker 10: Barker suggested you should raise taxes. 351 00:17:44,040 --> 00:17:46,840 Speaker 9: Well, look, we don't want to raise taxes. What we're 352 00:17:46,840 --> 00:17:49,040 Speaker 9: trying to do is make sure that we spend money wisely. 353 00:17:49,080 --> 00:17:51,640 Speaker 9: We had a spending review a few years ago. Obviously 354 00:17:51,680 --> 00:17:54,680 Speaker 9: meeting those numbers is now really hard in a high 355 00:17:54,680 --> 00:17:58,159 Speaker 9: inflation rey or higher inflationary environment. So my job is 356 00:17:58,160 --> 00:18:01,480 Speaker 9: to make sure that we spend wisely, that we accommodated 357 00:18:01,480 --> 00:18:04,960 Speaker 9: the pay Review Body announcements last week for public sector 358 00:18:05,280 --> 00:18:08,640 Speaker 9: pay that increased between six six and a half seven 359 00:18:08,680 --> 00:18:12,240 Speaker 9: percent for one of the workforces. We did that by 360 00:18:12,320 --> 00:18:16,520 Speaker 9: not by taxing more, not by borrowing more, by asking 361 00:18:16,560 --> 00:18:20,320 Speaker 9: government departments by asking cabinet ministers to absorb that additional 362 00:18:21,080 --> 00:18:25,200 Speaker 9: pay requirement. So we're being relentless in focusing on making 363 00:18:25,240 --> 00:18:28,320 Speaker 9: sure that we manage public spending and don't add to 364 00:18:28,359 --> 00:18:30,800 Speaker 9: the inflatory pressure which the IMF and others have warned 365 00:18:30,840 --> 00:18:32,240 Speaker 9: us we would do if we borrowed more. 366 00:18:33,000 --> 00:18:35,359 Speaker 2: That was traguriy Minister John Glenn speaking to Bloomberg, Zazie 367 00:18:35,359 --> 00:18:39,600 Speaker 2: Brayden and Anna Edwards Dan. There'll also be a question 368 00:18:39,680 --> 00:18:43,080 Speaker 2: too about where we are in terms of the pain 369 00:18:43,200 --> 00:18:45,159 Speaker 2: the Bank of England is inflicting and the likelihood of 370 00:18:45,200 --> 00:18:48,560 Speaker 2: a recession. Remind us what the expectations around recession are 371 00:18:48,600 --> 00:18:49,040 Speaker 2: in the UK. 372 00:18:49,840 --> 00:18:52,320 Speaker 8: So I think the consensus is that it's certainly this 373 00:18:52,440 --> 00:18:55,360 Speaker 8: year it's going to be avoided, and I think if 374 00:18:55,359 --> 00:18:57,760 Speaker 8: you look at consensus forecast it's that it will be 375 00:18:57,800 --> 00:19:01,720 Speaker 8: avoided as well next year. We're a little bit more 376 00:19:01,720 --> 00:19:06,360 Speaker 8: pessimistic about it, we do, you know me, but we're 377 00:19:06,400 --> 00:19:09,480 Speaker 8: a little bit so we're a bit more pessimistic. We 378 00:19:09,480 --> 00:19:11,920 Speaker 8: do think there'll be a modest downturn in the economy. 379 00:19:11,920 --> 00:19:14,919 Speaker 8: But I think you know, people jump on this idea 380 00:19:14,960 --> 00:19:16,960 Speaker 8: of recession when you when you sort of ride it 381 00:19:17,000 --> 00:19:20,840 Speaker 8: on a piece of paper. But I think the context 382 00:19:20,840 --> 00:19:22,959 Speaker 8: here is that, as I've said before, the economy has 383 00:19:22,960 --> 00:19:27,080 Speaker 8: been stagnating, so it doesn't take much for a negative 384 00:19:27,160 --> 00:19:30,920 Speaker 8: quarter of growth, and we're what we've penciled in the 385 00:19:31,040 --> 00:19:33,919 Speaker 8: peak trough fall in GDP of only one percent. That 386 00:19:34,000 --> 00:19:36,800 Speaker 8: is not particularly significant. Compare it to the nineties. It 387 00:19:36,840 --> 00:19:38,760 Speaker 8: was a three percent full of the eighties, it's four 388 00:19:38,760 --> 00:19:40,720 Speaker 8: and a half percent full. Of the financial crisis, it 389 00:19:40,760 --> 00:19:43,720 Speaker 8: was over six percent fall in GDP, So you know, 390 00:19:43,760 --> 00:19:46,320 Speaker 8: they're far deeper recessions in history. 391 00:19:46,480 --> 00:19:48,919 Speaker 2: Okay, are the more interested in those forecasts will get 392 00:19:48,960 --> 00:19:50,359 Speaker 2: from the wank of England with They're just sais And 393 00:19:50,400 --> 00:19:53,800 Speaker 2: thanks to Bloomberg Senior UK economist Dan Hansen. I'm Stephen 394 00:19:53,840 --> 00:19:56,200 Speaker 2: Carroll in London. You can catch us every weekday morning 395 00:19:56,200 --> 00:19:58,760 Speaker 2: here for Bloomberg Daybreak Europe, beginning at six am in 396 00:19:58,760 --> 00:20:00,920 Speaker 2: London and one am on Wall Streets. 397 00:20:00,960 --> 00:20:03,800 Speaker 1: Tom, Thanks Steven, and coming up on Bloomberg day Break weekend, 398 00:20:03,840 --> 00:20:07,240 Speaker 1: Governor Ron DeSantis has a big economic speech this week. 399 00:20:07,359 --> 00:20:10,680 Speaker 1: We'll get a preview. I'm Tom Busby and this is. 400 00:20:10,600 --> 00:20:25,280 Speaker 5: Bloomberg broadcasting live from the Bloomberg Get a Active Brokers 401 00:20:25,320 --> 00:20:28,719 Speaker 5: Studio in New York, Bloomberg e Levon free oh to Washington, 402 00:20:28,840 --> 00:20:32,160 Speaker 5: d C, Bloomberg ninety nine one to Boston, Bloomberg one, 403 00:20:32,160 --> 00:20:35,439 Speaker 5: O six one to San Francisco, Bloomberg nine sixteen to 404 00:20:35,480 --> 00:20:38,680 Speaker 5: the country, Sirius XM Channel one to nineteen to London 405 00:20:38,800 --> 00:20:42,560 Speaker 5: DAB Digital Radio, and around the globe the Bloomberg Business 406 00:20:42,560 --> 00:20:46,320 Speaker 5: app in Bloomberg Radio dot Com. This is Bloomberg day 407 00:20:46,320 --> 00:20:47,160 Speaker 5: Break Weekend. 408 00:20:53,440 --> 00:20:55,640 Speaker 1: I'm Tom Busby in New York with your global look 409 00:20:55,680 --> 00:20:58,160 Speaker 1: ahead at the top stories for investors in the coming week. 410 00:20:58,560 --> 00:21:01,120 Speaker 1: Governor Ron DeSantis is in the middle of a campaign 411 00:21:01,200 --> 00:21:04,520 Speaker 1: reset and has a big economic speech planned for later 412 00:21:04,560 --> 00:21:07,320 Speaker 1: this week. For more, let's add to our Bloomberg ninety 413 00:21:07,359 --> 00:21:10,520 Speaker 1: nine one newsroom in Washington and Bloomberg sound On co 414 00:21:10,560 --> 00:21:12,040 Speaker 1: host Kaylee Lines. 415 00:21:12,560 --> 00:21:16,240 Speaker 4: Yeah, Tom. Florida Governor Ron DeSantis is seeking to reset 416 00:21:16,440 --> 00:21:20,359 Speaker 4: his twenty twenty four presidential campaign, which admittedly isn't in 417 00:21:20,400 --> 00:21:22,760 Speaker 4: the best shape right now. It's bleeding a lot of cash, 418 00:21:22,960 --> 00:21:26,480 Speaker 4: he's languishing in the polls behind front runner former President 419 00:21:26,480 --> 00:21:29,320 Speaker 4: Donald Trump, and he's trying to turn things around. So 420 00:21:29,480 --> 00:21:32,320 Speaker 4: this coming week, as part of his revival efforts, he's 421 00:21:32,359 --> 00:21:36,520 Speaker 4: preparing to give a major economic address. Bloomberg's Nancy Cook 422 00:21:36,560 --> 00:21:39,439 Speaker 4: has been covering his campaign and was actually just in 423 00:21:39,480 --> 00:21:43,199 Speaker 4: Iowa and she's joining us now. So Nancy, talk to 424 00:21:43,280 --> 00:21:45,320 Speaker 4: us about this address he's going to give. What are 425 00:21:45,359 --> 00:21:48,479 Speaker 4: the details, what is he going to talk about, and 426 00:21:48,520 --> 00:21:50,200 Speaker 4: what does he hope this achieves. 427 00:21:50,640 --> 00:21:53,080 Speaker 11: So thanks for having me. I've been in Iowa with 428 00:21:53,200 --> 00:21:56,239 Speaker 11: Governor Ron Stansis where he's starting to preview some of 429 00:21:56,280 --> 00:21:59,520 Speaker 11: the themes economic themes that he's going to talk about 430 00:22:00,160 --> 00:22:03,800 Speaker 11: in this major economic address in New Hampshire. And part 431 00:22:03,840 --> 00:22:05,640 Speaker 11: of the reason that he wants to give this address 432 00:22:05,760 --> 00:22:08,480 Speaker 11: is a lot of his donors and advisors have really 433 00:22:08,520 --> 00:22:11,640 Speaker 11: wanted him in recent weeks to stop talking so much 434 00:22:11,640 --> 00:22:15,480 Speaker 11: about Florida and really to start to talk about broader themes, 435 00:22:15,840 --> 00:22:18,520 Speaker 11: and they feel like the economy and talking about what 436 00:22:18,640 --> 00:22:21,400 Speaker 11: he would do there is a nice pivot away from 437 00:22:21,440 --> 00:22:23,639 Speaker 11: some of the Florida specific things and some of the 438 00:22:23,680 --> 00:22:26,400 Speaker 11: culture wars that his campaign has really been known for. 439 00:22:27,160 --> 00:22:29,040 Speaker 11: So some of the things that we're expecting him to 440 00:22:29,080 --> 00:22:33,359 Speaker 11: talk about with how he's going to tackle inflation, he 441 00:22:33,400 --> 00:22:36,080 Speaker 11: really also wants to make the pitch that he thinks 442 00:22:36,080 --> 00:22:40,200 Speaker 11: that the US should totally open up all domestic energy production. 443 00:22:40,800 --> 00:22:44,760 Speaker 11: He really wants to decouple the US economy from China's. 444 00:22:45,800 --> 00:22:49,440 Speaker 11: And he interestingly sort of waded into the student debt 445 00:22:49,480 --> 00:22:53,520 Speaker 11: cancelation question and talking about how is people take out 446 00:22:53,600 --> 00:22:56,080 Speaker 11: tons of what he called bad debts, you know, for 447 00:22:56,280 --> 00:22:59,399 Speaker 11: majors or things that don't really end up paying off 448 00:22:59,400 --> 00:23:01,840 Speaker 11: at the end. Feels like schools should be stuck with that, 449 00:23:02,000 --> 00:23:06,080 Speaker 11: not the students. And so he's really sort of giving this, 450 00:23:06,320 --> 00:23:09,959 Speaker 11: in some ways a classic Republican message of you know, 451 00:23:10,680 --> 00:23:14,600 Speaker 11: less regulation, particularly on things like energy, but also trying 452 00:23:14,600 --> 00:23:17,600 Speaker 11: to really appeal to blue collar and middle class people 453 00:23:17,680 --> 00:23:22,240 Speaker 11: with some messages on sort of jobs, wages, and student debts. 454 00:23:22,520 --> 00:23:24,720 Speaker 4: So you said he's trying to focus not so much 455 00:23:24,800 --> 00:23:27,560 Speaker 4: on Florida and his governing there when it relates to 456 00:23:27,600 --> 00:23:30,399 Speaker 4: some of the culture wars and fights with Disney, et cetera. 457 00:23:30,920 --> 00:23:32,800 Speaker 4: That doesn't seem to be resonating. But does he have 458 00:23:32,840 --> 00:23:36,520 Speaker 4: an economic track record in Florida that he can tout 459 00:23:36,560 --> 00:23:39,680 Speaker 4: here when he talks about his management of the state's economy, 460 00:23:39,720 --> 00:23:40,840 Speaker 4: because it's a fairly big one. 461 00:23:42,160 --> 00:23:44,639 Speaker 11: It is, Florida is a major state, and he is 462 00:23:44,680 --> 00:23:47,160 Speaker 11: the governor there, and he has been a popular governor 463 00:23:47,200 --> 00:23:50,080 Speaker 11: so far. So on the campaign trail, heat tells things 464 00:23:50,119 --> 00:23:53,480 Speaker 11: like Florida's low unemployment rate. There have also been a 465 00:23:53,560 --> 00:23:57,040 Speaker 11: number of businesses and business people that have moved to Florida, 466 00:23:57,080 --> 00:24:01,200 Speaker 11: particularly during COVID, because they had a less restrictive environment. 467 00:24:01,920 --> 00:24:05,080 Speaker 11: So he talks about that the migration. What he doesn't 468 00:24:05,119 --> 00:24:08,359 Speaker 11: necessarily talk about is that, you know, Florida also has 469 00:24:08,400 --> 00:24:11,000 Speaker 11: a lack of a floridable housing. There's been a real 470 00:24:11,520 --> 00:24:14,480 Speaker 11: housing punch there. And also, and this is a thing 471 00:24:14,880 --> 00:24:18,200 Speaker 11: very unique to Florida, but people there are really suffering 472 00:24:18,320 --> 00:24:22,719 Speaker 11: under very skyrocketing prices for flood insurance, which again sounds 473 00:24:22,720 --> 00:24:24,920 Speaker 11: like the most Florida thing, But if you live there 474 00:24:25,320 --> 00:24:28,200 Speaker 11: and you own a house and your flood insurance sort 475 00:24:28,200 --> 00:24:30,320 Speaker 11: of goes through the roof, it's causing a lot of 476 00:24:30,359 --> 00:24:32,760 Speaker 11: economic pain for people there. So I would say the 477 00:24:32,800 --> 00:24:35,760 Speaker 11: economic picture in Florida is a bit more mixed than 478 00:24:35,760 --> 00:24:37,359 Speaker 11: what he presents on the campaign trail. 479 00:24:37,920 --> 00:24:40,040 Speaker 4: Okay, so we're going to see what he presents this 480 00:24:40,160 --> 00:24:42,920 Speaker 4: coming Monday. But Nancy is I mentioned at the top here, 481 00:24:43,000 --> 00:24:45,600 Speaker 4: this speech is really just part of a wider effort, right, 482 00:24:45,640 --> 00:24:49,440 Speaker 4: he's trying to turn things around, but he is also 483 00:24:49,480 --> 00:24:51,560 Speaker 4: having to penny pinch a little bit more to do that. 484 00:24:51,880 --> 00:24:55,240 Speaker 4: He's laying off staff. What else is happening inside the 485 00:24:55,320 --> 00:24:59,640 Speaker 4: campaign as he tries to you know, reinvigorate this effort. 486 00:25:00,480 --> 00:25:03,920 Speaker 11: So this reset has really been happening for the past 487 00:25:03,920 --> 00:25:06,280 Speaker 11: two weeks, and they've laid off a total of thirty 488 00:25:06,320 --> 00:25:09,520 Speaker 11: eight people, so that's you know, they had about a 489 00:25:09,600 --> 00:25:12,040 Speaker 11: ninety person staff, so that's a huge chunk of people 490 00:25:12,040 --> 00:25:14,960 Speaker 11: that's gone. They have raised a lot of money, but 491 00:25:15,040 --> 00:25:18,000 Speaker 11: they have burned through that money at a very high 492 00:25:18,080 --> 00:25:21,600 Speaker 11: rate given the size of the staff. And also DeSantis 493 00:25:21,680 --> 00:25:26,080 Speaker 11: always likes to travel on private planes. That's expensive, and 494 00:25:26,160 --> 00:25:30,000 Speaker 11: so they're really trying to He's not necessarily cutting back 495 00:25:30,000 --> 00:25:31,800 Speaker 11: in the private travel, but they're trying to cut back 496 00:25:31,840 --> 00:25:34,520 Speaker 11: on staff. And they're also trying to curb his travels. 497 00:25:34,560 --> 00:25:38,200 Speaker 11: So he's not going to states, you know, unnecessarily. Really, 498 00:25:38,240 --> 00:25:40,760 Speaker 11: he's just only going to places to do fundraising and 499 00:25:40,760 --> 00:25:43,639 Speaker 11: then he's going to places early primary voting in states 500 00:25:43,680 --> 00:25:46,880 Speaker 11: like Iowa, New Hampshire, South Carolina, and Nevada. And they're 501 00:25:46,920 --> 00:25:47,919 Speaker 11: really trying to stick to that. 502 00:25:48,440 --> 00:25:50,720 Speaker 4: Yeah, Iowa where you just were. I'm guessing you didn't 503 00:25:50,760 --> 00:25:53,640 Speaker 4: have the privilege of a flying private there, Nancy, Am 504 00:25:53,640 --> 00:25:53,960 Speaker 4: I right? 505 00:25:55,040 --> 00:25:58,119 Speaker 11: Nope, just done a good old American airline site. 506 00:25:59,160 --> 00:26:01,639 Speaker 4: The Life of journal. But on the subject of Iowa 507 00:26:01,680 --> 00:26:04,359 Speaker 4: and New Hampshire, which you just mentioned, if he can't 508 00:26:04,600 --> 00:26:06,760 Speaker 4: pull it off or get close to pulling it off 509 00:26:06,760 --> 00:26:09,960 Speaker 4: in those states, is that it for him? Is it Iowa, 510 00:26:10,000 --> 00:26:11,280 Speaker 4: New Hampshire or bust? 511 00:26:12,400 --> 00:26:15,320 Speaker 11: I think that Iowa New Hampshire will be incredibly important 512 00:26:15,440 --> 00:26:18,720 Speaker 11: because and his campaign is putting a ton of resources 513 00:26:18,720 --> 00:26:22,119 Speaker 11: in Iowa right now, or not his campaign the superpack 514 00:26:22,760 --> 00:26:25,160 Speaker 11: that's supporting them or putting in a ton of resources. 515 00:26:25,520 --> 00:26:28,400 Speaker 11: But really the thing is is that he has fallen 516 00:26:28,520 --> 00:26:30,960 Speaker 11: in the polls. There was so much hope around his 517 00:26:31,080 --> 00:26:34,840 Speaker 11: candidacy and the Republican Party, let's say, in January and February. 518 00:26:35,160 --> 00:26:38,040 Speaker 11: But as he voters have gotten to know him. I 519 00:26:38,080 --> 00:26:40,200 Speaker 11: think that a lot of voters I have to stolely 520 00:26:40,240 --> 00:26:43,240 Speaker 11: like Trump. They haven't totally been won over by DeSantis. 521 00:26:43,560 --> 00:26:47,239 Speaker 11: He's not known for his retail political skills. And I 522 00:26:47,280 --> 00:26:49,280 Speaker 11: think that we've just seen a big drop in the 523 00:26:49,320 --> 00:26:52,080 Speaker 11: polls for him, And so I think Iowa, New Hampshire 524 00:26:52,080 --> 00:26:54,919 Speaker 11: are going to be really crucial because if he can't 525 00:26:55,040 --> 00:26:58,520 Speaker 11: win or do well in both or either state, I 526 00:26:58,600 --> 00:27:01,320 Speaker 11: think he's going to lose even more momentum. And we've 527 00:27:01,359 --> 00:27:03,680 Speaker 11: already seen him really drop in the polls in the 528 00:27:03,760 --> 00:27:07,840 Speaker 11: last week. There's new polling that shows that, you know, 529 00:27:07,920 --> 00:27:12,400 Speaker 11: he Tim Scott is gaining ground on him in Iowa, 530 00:27:12,840 --> 00:27:15,400 Speaker 11: Chris Christy is gaining ground on him in New Hampshire. 531 00:27:15,560 --> 00:27:18,040 Speaker 11: So he has managed to stay stay as like the 532 00:27:18,119 --> 00:27:21,240 Speaker 11: number two front runner or the number two behind Trump 533 00:27:21,280 --> 00:27:24,360 Speaker 11: in the GOP field in polling in early voting states. 534 00:27:24,680 --> 00:27:26,800 Speaker 11: But if other people start to gain on him, I 535 00:27:26,840 --> 00:27:29,720 Speaker 11: think that that will, you know, sort of fell some 536 00:27:29,800 --> 00:27:31,080 Speaker 11: problems for the campaign. 537 00:27:31,560 --> 00:27:34,000 Speaker 4: Well, let's just focus on the front runner, Trump in particular, 538 00:27:34,040 --> 00:27:37,000 Speaker 4: who you just mentioned. Obviously, the legal woes for the 539 00:27:37,000 --> 00:27:42,760 Speaker 4: former president are mounting. Is DeSantis hurt by Trump's legal 540 00:27:42,800 --> 00:27:46,480 Speaker 4: woes growing or does it help him? And I say 541 00:27:46,480 --> 00:27:49,400 Speaker 4: this in that we've seen this pattern where President Trump 542 00:27:49,480 --> 00:27:51,480 Speaker 4: runs into legal trouble and he raises a ton of 543 00:27:51,480 --> 00:27:53,600 Speaker 4: money on it, and his poll numbers actually go up, 544 00:27:53,640 --> 00:27:56,800 Speaker 4: and it's very hard for rondasantists to answer questions about it. 545 00:27:57,359 --> 00:28:00,159 Speaker 4: Without alienating the Trump base. Right, So how hard is 546 00:28:00,520 --> 00:28:03,040 Speaker 4: this entire equation for Rond DeSantis. 547 00:28:04,119 --> 00:28:06,440 Speaker 11: This equation is so much harder than I think any 548 00:28:06,520 --> 00:28:09,679 Speaker 11: of the Disantis team anticipated, because what has happened with 549 00:28:09,760 --> 00:28:14,159 Speaker 11: each of these indictments is it has mobilized and energized 550 00:28:14,200 --> 00:28:18,879 Speaker 11: Republican primary voters to coalesce around former President Donald Trump. 551 00:28:19,400 --> 00:28:23,080 Speaker 11: And the Trump campaign also has developed almost this playbook 552 00:28:23,200 --> 00:28:26,199 Speaker 11: of how they approach indictments, and what they do is 553 00:28:26,200 --> 00:28:28,679 Speaker 11: they really try to use them to their political advantage. 554 00:28:29,000 --> 00:28:31,760 Speaker 11: Former President Trump gets out ahead of them, sort of 555 00:28:31,800 --> 00:28:35,680 Speaker 11: announces them himself, They fundraise when the indictments come out, 556 00:28:36,080 --> 00:28:38,440 Speaker 11: and a lot of Republican primary voters when I talk 557 00:28:38,520 --> 00:28:41,440 Speaker 11: to them on the campaign trail, really feel like a 558 00:28:41,440 --> 00:28:44,000 Speaker 11: lot of these indictments. They don't always like tell the 559 00:28:44,000 --> 00:28:46,440 Speaker 11: difference between them. They kind of mash them together in 560 00:28:46,480 --> 00:28:51,040 Speaker 11: their minds. But Trump has successfully convinced a swath of 561 00:28:51,040 --> 00:28:54,560 Speaker 11: the Republican Party that these indictments are politically motivated. He 562 00:28:54,640 --> 00:28:57,640 Speaker 11: has turned them to his political advantage, and it just 563 00:28:57,720 --> 00:29:01,520 Speaker 11: means that it's very hard for Desantas to break these 564 00:29:01,560 --> 00:29:02,800 Speaker 11: people away from Trump. 565 00:29:03,320 --> 00:29:05,680 Speaker 4: And finally, Nancy, when we talk about the discussions that 566 00:29:05,920 --> 00:29:10,280 Speaker 4: DeSantis is having with his team, with advisors, with the campaign, 567 00:29:10,840 --> 00:29:13,240 Speaker 4: how much of that is just conversation with his wife, 568 00:29:13,320 --> 00:29:14,400 Speaker 4: Casey DeSantis. 569 00:29:14,720 --> 00:29:16,480 Speaker 11: I think a lot of it is. I Mean, the 570 00:29:16,560 --> 00:29:19,560 Speaker 11: interesting thing I'm reporting on DeSantis these last several months 571 00:29:19,640 --> 00:29:22,920 Speaker 11: is that he keeps a very insular, tight world. And 572 00:29:22,960 --> 00:29:26,320 Speaker 11: so there's a campaign manager. They just elevated someone to 573 00:29:26,360 --> 00:29:30,080 Speaker 11: be deputy campaign manager, but they really, you know, he 574 00:29:30,160 --> 00:29:32,880 Speaker 11: and his wife really are their own political advisors and 575 00:29:32,920 --> 00:29:35,800 Speaker 11: their tight knit team. He does not have like a 576 00:29:35,920 --> 00:29:39,520 Speaker 11: kitchen cabinet of policy advisors, you know, sort of none 577 00:29:39,560 --> 00:29:44,960 Speaker 11: of that traditional kind of friends or allies operation that 578 00:29:45,040 --> 00:29:48,040 Speaker 11: a lot of other candidates have or presidents have. It's 579 00:29:48,080 --> 00:29:49,480 Speaker 11: really him in his life, all right. 580 00:29:49,520 --> 00:29:52,400 Speaker 4: Bloomberg's Nancy Cook looking forward to your continued coverage of 581 00:29:52,440 --> 00:29:56,200 Speaker 4: this campaign and the governor's economic address this coming Monday. 582 00:29:56,200 --> 00:29:58,080 Speaker 4: Thank you very much. Tom. We'll send it. 583 00:29:58,040 --> 00:29:58,400 Speaker 10: Back to you. 584 00:29:58,680 --> 00:30:01,520 Speaker 1: Thank you, Gaylee. That was Bloomber Sound on co host 585 00:30:01,640 --> 00:30:04,640 Speaker 1: Kaylee Lines reporting from our Bloomberg ninety nine one newsroom 586 00:30:04,680 --> 00:30:07,920 Speaker 1: in Washington, and you can hear sound on weekdays one 587 00:30:07,960 --> 00:30:11,200 Speaker 1: to three pm Wall Street Time on Bloomberg Radio and 588 00:30:11,280 --> 00:30:14,600 Speaker 1: coming up, here on Bloomberg day Break Weekend. Aviation Day 589 00:30:14,680 --> 00:30:17,080 Speaker 1: is fast approaching in Hong Kong and we'll look at 590 00:30:17,120 --> 00:30:20,760 Speaker 1: the aviation sector in the APAC region. I'm Tom Busby 591 00:30:20,800 --> 00:30:26,440 Speaker 1: and this is Bloomberg. This is Bloomberg day Break Weekend, 592 00:30:26,560 --> 00:30:29,000 Speaker 1: our global look ahead at the top stories for investors 593 00:30:29,000 --> 00:30:31,640 Speaker 1: in the coming week. I'm Tom Busby in New York. 594 00:30:32,200 --> 00:30:34,920 Speaker 1: In Hong Kong. On Tuesday, It's Aviation Day. For a 595 00:30:34,920 --> 00:30:38,120 Speaker 1: look at the aviation sector and the latest developments. Let's 596 00:30:38,120 --> 00:30:42,000 Speaker 1: get to Doug Krisner, co host of Bloomberg day Break Asia, Doug. 597 00:30:42,000 --> 00:30:44,479 Speaker 3: Tom and the week ahead. Hong Kong will hold its 598 00:30:44,560 --> 00:30:47,920 Speaker 3: Aviation Day now. This event is sponsored by the International 599 00:30:47,960 --> 00:30:53,120 Speaker 3: Air Transport Association and the Airport Authority Hong Kong. IADA 600 00:30:53,200 --> 00:30:57,479 Speaker 3: represents over three hundred airlines and nearly eighty five percent 601 00:30:57,520 --> 00:31:01,720 Speaker 3: of global air traffic, and recently the Association upgraded its 602 00:31:01,760 --> 00:31:05,360 Speaker 3: projections for passenger traffic. With that in mind, we thought 603 00:31:05,400 --> 00:31:07,040 Speaker 3: it would be a good time to check in on 604 00:31:07,120 --> 00:31:11,040 Speaker 3: the aviation industry across the Asia Pacific. I'm joined now 605 00:31:11,080 --> 00:31:14,440 Speaker 3: by Danny Lee, Bloomberg Asia Transport Reporter. Danny, thanks so 606 00:31:14,520 --> 00:31:16,520 Speaker 3: much for making the time to chat with me. So 607 00:31:16,720 --> 00:31:20,280 Speaker 3: much of what drives this industry in the APEC is 608 00:31:20,320 --> 00:31:23,720 Speaker 3: of course tied to China, and we have witnessed the 609 00:31:23,800 --> 00:31:28,440 Speaker 3: contraction caused by the pandemic, of course, and the policy 610 00:31:28,480 --> 00:31:31,360 Speaker 3: that Beijing put in place with those severe lockdowns. So 611 00:31:31,680 --> 00:31:34,200 Speaker 3: let's begin with a big picture here. How well has 612 00:31:34,240 --> 00:31:36,959 Speaker 3: the aviation industry in Asia been able to recover? 613 00:31:37,080 --> 00:31:40,920 Speaker 6: The aviation industry in Asia has been able to rebound 614 00:31:41,600 --> 00:31:44,160 Speaker 6: only as soon as the borders have reopened, so we've 615 00:31:44,200 --> 00:31:45,920 Speaker 6: seen a bit of Asia being a bit of a 616 00:31:46,000 --> 00:31:49,239 Speaker 6: lagger to the rest of the wide world. However, we 617 00:31:49,320 --> 00:31:53,200 Speaker 6: are seeing travel demand pick up very very quickly, and 618 00:31:53,280 --> 00:31:57,560 Speaker 6: many many markets are getting ever closer to that magical 619 00:31:57,640 --> 00:32:01,680 Speaker 6: of exceeding their pre COVID levels. We see China and 620 00:32:01,680 --> 00:32:04,640 Speaker 6: particularly the Wonder the world's biggest travel markets very much 621 00:32:05,160 --> 00:32:08,960 Speaker 6: see brisk business onto domestic front, but on the international 622 00:32:09,120 --> 00:32:13,680 Speaker 6: side of things, flight activities less than half of pre 623 00:32:13,760 --> 00:32:16,400 Speaker 6: COVID levels, so that's still very much struggle. When you 624 00:32:16,520 --> 00:32:22,160 Speaker 6: think about Chinese outbound travel being a huge driver of 625 00:32:23,040 --> 00:32:26,840 Speaker 6: tourism and spend for many many markets, including Southeast Asia 626 00:32:26,880 --> 00:32:30,400 Speaker 6: and wider parts of Asia in general, that's a real 627 00:32:30,480 --> 00:32:33,760 Speaker 6: problem where many countries are banking on Chinese travel and 628 00:32:33,800 --> 00:32:36,880 Speaker 6: spend to help their economic recovery. 629 00:32:37,120 --> 00:32:40,760 Speaker 3: Even a regional trip I'd say from Shanghai to Tokyo, 630 00:32:40,800 --> 00:32:42,680 Speaker 3: how is that route performing. 631 00:32:42,360 --> 00:32:44,960 Speaker 6: In good times it would be very very brisk. But 632 00:32:45,840 --> 00:32:50,120 Speaker 6: geopolitical tensions, general strife between the likes of China, Career, 633 00:32:50,280 --> 00:32:54,840 Speaker 6: Japan and other certain markets means flight levels are really 634 00:32:54,920 --> 00:32:58,160 Speaker 6: back nowhere near to the levels it's saw during pre COVID. 635 00:32:58,200 --> 00:33:03,840 Speaker 6: And also as a result, visa access for travel is 636 00:33:03,880 --> 00:33:08,800 Speaker 6: also a huge hurdle. So it's a really problematic part 637 00:33:08,880 --> 00:33:11,640 Speaker 6: of the picture where you don't have as many flights 638 00:33:11,680 --> 00:33:14,440 Speaker 6: and you find it very hard if you're looking to 639 00:33:14,480 --> 00:33:19,080 Speaker 6: travel to outbound into the likes of North Asia that 640 00:33:19,160 --> 00:33:22,080 Speaker 6: you can't really get hold of a visa. So it's 641 00:33:22,120 --> 00:33:24,000 Speaker 6: a problem holding holding things back. 642 00:33:24,080 --> 00:33:26,600 Speaker 3: What do we know about how well these airlines are 643 00:33:26,640 --> 00:33:29,400 Speaker 3: equipped to handle any sort of volume. Are the staffing 644 00:33:29,480 --> 00:33:30,760 Speaker 3: level sufficient right now? 645 00:33:31,360 --> 00:33:36,920 Speaker 6: Staffing levels in Asia have been okay compared to Europe 646 00:33:36,960 --> 00:33:40,640 Speaker 6: the US, where they laid off so many more workers. 647 00:33:41,400 --> 00:33:45,000 Speaker 6: Asia hasn't fared as badly, and we saw quite a 648 00:33:45,040 --> 00:33:48,480 Speaker 6: few airlines who needed to keep all of their staff 649 00:33:48,800 --> 00:33:52,200 Speaker 6: for whatever reason, they had better support from the government 650 00:33:52,440 --> 00:33:56,040 Speaker 6: or like in the case, we saw cargo really propping 651 00:33:56,120 --> 00:33:58,840 Speaker 6: up the airline industry and a lot of the cargo 652 00:33:59,280 --> 00:34:02,240 Speaker 6: cargo activity been driven out of Asia and that very 653 00:34:02,280 --> 00:34:05,160 Speaker 6: much saved a lot of the airlines here in Asia, 654 00:34:05,240 --> 00:34:07,960 Speaker 6: so they didn't have to cut as much and therefore 655 00:34:08,280 --> 00:34:11,960 Speaker 6: they've got a slightly better picture in terms of staffing, 656 00:34:12,000 --> 00:34:14,879 Speaker 6: although by no means it's out of the woods per se. 657 00:34:14,920 --> 00:34:17,439 Speaker 6: You you still see some markets, particularly Hong Kong, which 658 00:34:17,480 --> 00:34:20,719 Speaker 6: had been closed for over three years, they still find 659 00:34:20,719 --> 00:34:25,160 Speaker 6: out a struggle to hire and revive its aviation industry. 660 00:34:25,239 --> 00:34:27,000 Speaker 3: Danny, thank you so much for being with us and 661 00:34:27,320 --> 00:34:31,400 Speaker 3: helping set up Hong Kong Aviation Day and really a 662 00:34:31,400 --> 00:34:33,239 Speaker 3: good discussion about a lot of the trends that were 663 00:34:33,239 --> 00:34:37,040 Speaker 3: seeing unfold across the aviation industry in the Asia Pacific. 664 00:34:37,160 --> 00:34:41,439 Speaker 3: Danny Lee, Bloomberg Asia Transport Reporter. Joining from Hong Kong. 665 00:34:41,920 --> 00:34:45,320 Speaker 3: I'm Doug Prisner. You can join Brian Curtison myself weekdays 666 00:34:45,320 --> 00:34:48,200 Speaker 3: here for Bloomberg Day Break Asia, beginning at six am 667 00:34:48,200 --> 00:34:51,600 Speaker 3: in Hong Kong six pm on Wall Street. Tom. 668 00:34:51,680 --> 00:34:53,920 Speaker 1: Thanks Doug, and that does it for this edition of 669 00:34:53,960 --> 00:34:56,960 Speaker 1: Bloomberg Daybreak weekend. Join us again Monday morning at five 670 00:34:57,000 --> 00:34:59,880 Speaker 1: am Wall Street Time for the latest on markets overseas, 671 00:35:00,160 --> 00:35:03,200 Speaker 1: the news you need to start your day. I'm Tom Busby. 672 00:35:03,400 --> 00:35:06,279 Speaker 1: Stay with us. Top stories and global business headlines are 673 00:35:06,280 --> 00:35:08,439 Speaker 1: coming up right now.