1 00:00:02,360 --> 00:00:04,960 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:04,960 --> 00:00:07,640 Speaker 1: top stories in the coming week from our Daybreak anchors 3 00:00:07,640 --> 00:00:10,160 Speaker 1: all around the world, and straight ahead on the program, 4 00:00:10,440 --> 00:00:12,680 Speaker 1: Time for another big round of stress tests for the 5 00:00:12,760 --> 00:00:15,560 Speaker 1: nation's big banks. I'm Tom Busby in New York. 6 00:00:15,640 --> 00:00:17,759 Speaker 2: I'm Stephen Carolyn London, who we're looking ahead at the 7 00:00:17,800 --> 00:00:20,520 Speaker 2: gathering of many of the world's top central bankers in 8 00:00:20,560 --> 00:00:22,680 Speaker 2: the Portuguese Hilltop ten of Centro. 9 00:00:22,960 --> 00:00:25,800 Speaker 3: I'm Brian Curtis in Hong Kong. What will it take 10 00:00:25,920 --> 00:00:28,480 Speaker 3: to revive the animal spirits in China? 11 00:00:28,720 --> 00:00:30,880 Speaker 4: I'm palely Lyones in Washington, where the end of the 12 00:00:30,920 --> 00:00:34,600 Speaker 4: second fundraising quarter is rapidly approaching for presidential candidates. 13 00:00:35,440 --> 00:00:39,440 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 14 00:00:39,479 --> 00:00:43,280 Speaker 5: Eleve Them three own New York, Bloomberg ninety nine to one, Washington, DC, 15 00:00:43,600 --> 00:00:47,040 Speaker 5: Bloomberg one O six one, Boston, Bloomberg nine sixty, San 16 00:00:47,080 --> 00:00:51,680 Speaker 5: Francisco DAB Digital Radio, London, Sirius XM one nineteen and 17 00:00:51,760 --> 00:00:54,680 Speaker 5: around the world on Bloomberg Radio dot com and via 18 00:00:54,720 --> 00:00:55,960 Speaker 5: the Bloomberg Business app. 19 00:01:00,000 --> 00:01:02,080 Speaker 1: If I'm Tom Busby, and we begin today's program with 20 00:01:02,120 --> 00:01:06,200 Speaker 1: the nation's banks still emerging from this spring's banking crisis 21 00:01:06,240 --> 00:01:08,600 Speaker 1: and the stress test they're about to face this week, 22 00:01:08,640 --> 00:01:11,240 Speaker 1: and joining us now to talk about those tests and 23 00:01:11,440 --> 00:01:16,240 Speaker 1: all things bank related. Bloomberg Wall Street reporter Shanali Basik. Now, Shanali, 24 00:01:16,400 --> 00:01:18,840 Speaker 1: let's start by walking us through the history of these tests, 25 00:01:18,880 --> 00:01:22,679 Speaker 1: when they started, how they started, and why they're being done. 26 00:01:23,280 --> 00:01:25,560 Speaker 6: The really important thing about these tests is that they 27 00:01:25,640 --> 00:01:27,920 Speaker 6: started in the wake of the two thousand and eight 28 00:01:27,959 --> 00:01:30,760 Speaker 6: financial crisis, and they were set up as a way 29 00:01:30,800 --> 00:01:33,760 Speaker 6: for bank regulators to really test the health of the 30 00:01:33,800 --> 00:01:38,640 Speaker 6: financial system. And these are the big globally systemic financial institutions, 31 00:01:38,880 --> 00:01:41,120 Speaker 6: the big banks that had to take bailout money in 32 00:01:41,120 --> 00:01:43,679 Speaker 6: the wake of the financial crisis, as well as a 33 00:01:43,720 --> 00:01:48,240 Speaker 6: broader array of financial institutions, you know, mid size banks 34 00:01:48,280 --> 00:01:52,040 Speaker 6: really up to two hundred and fifty billion in assets 35 00:01:52,160 --> 00:01:55,680 Speaker 6: or more that have to go through these tests to 36 00:01:55,760 --> 00:01:58,240 Speaker 6: make sure that the financial system is safe and sound. 37 00:01:58,280 --> 00:01:59,760 Speaker 1: And how is the financial system. 38 00:02:00,440 --> 00:02:04,280 Speaker 6: Well, it's an interesting year, isn't it, because a lot 39 00:02:04,320 --> 00:02:09,520 Speaker 6: of these tests were really formulated before the failure of 40 00:02:09,680 --> 00:02:12,359 Speaker 6: three major banks in the United States, three major mid 41 00:02:12,400 --> 00:02:15,000 Speaker 6: size banks in the United States, now all of those 42 00:02:15,040 --> 00:02:17,360 Speaker 6: banks were in and around that two hundred and fifty 43 00:02:17,400 --> 00:02:21,720 Speaker 6: billion dollars threshold and ended up failing for reasons that 44 00:02:21,760 --> 00:02:25,240 Speaker 6: were much different than what was in the stress test themselves. 45 00:02:25,600 --> 00:02:28,240 Speaker 6: So it shows you that while the stress tests have 46 00:02:28,440 --> 00:02:31,239 Speaker 6: really done a lot to make sure that most of 47 00:02:31,280 --> 00:02:34,280 Speaker 6: the banking system is saving money, putting capital aside to 48 00:02:34,360 --> 00:02:37,440 Speaker 6: cover any potential losses in the future, it's also showing 49 00:02:37,480 --> 00:02:40,240 Speaker 6: you that there are certain things that the Federal Reserve 50 00:02:40,360 --> 00:02:43,080 Speaker 6: has not tested for and just has not really seen 51 00:02:43,160 --> 00:02:44,880 Speaker 6: as an issue until more recently. 52 00:02:45,280 --> 00:02:48,040 Speaker 1: So the question is with Silicon Valley Banks, Signature Bank, 53 00:02:48,080 --> 00:02:50,000 Speaker 1: First Republic, what has the FED learned? 54 00:02:50,520 --> 00:02:52,400 Speaker 6: Well, a few things, and it's not just the Fed. 55 00:02:52,480 --> 00:02:55,800 Speaker 6: The market has also learned that everyone thought that deposits 56 00:02:55,800 --> 00:02:58,120 Speaker 6: were very, very sticky, that when people put money in 57 00:02:58,160 --> 00:03:00,240 Speaker 6: the bank, that they would keep it there. And for 58 00:03:00,400 --> 00:03:02,840 Speaker 6: a lot of history that was true, wasn't it. You 59 00:03:03,000 --> 00:03:05,880 Speaker 6: enter your local bank, you put in your savings, you 60 00:03:05,960 --> 00:03:07,920 Speaker 6: left it there and you didn't think about it. But 61 00:03:08,440 --> 00:03:11,840 Speaker 6: in the age of mobile banking, we saw tens of 62 00:03:11,840 --> 00:03:15,560 Speaker 6: billions of dollars leave these banks essentially overnight. When people 63 00:03:15,560 --> 00:03:18,440 Speaker 6: were worried about the strength of their banks, and that 64 00:03:18,639 --> 00:03:21,440 Speaker 6: is one problem. The other problem is how these banks 65 00:03:21,440 --> 00:03:24,440 Speaker 6: have managed their interest rate risk. In most of these 66 00:03:24,480 --> 00:03:29,799 Speaker 6: FED stress test scenarios, you see interest rates eventually decline, 67 00:03:30,160 --> 00:03:33,040 Speaker 6: and the reason is in a time of severe stress, 68 00:03:33,600 --> 00:03:37,280 Speaker 6: you would see the Federal Reserve lower interest rates to 69 00:03:37,320 --> 00:03:40,520 Speaker 6: meet a market shock, not raise interest rates, Whereas in 70 00:03:40,560 --> 00:03:43,320 Speaker 6: the last year we have seen a tremendous rise in 71 00:03:43,320 --> 00:03:46,200 Speaker 6: interest rates that has impacted these banks and has caused 72 00:03:46,240 --> 00:03:48,560 Speaker 6: some severe stresses on the banking system. 73 00:03:48,560 --> 00:03:51,000 Speaker 1: And that was not accounted for in these tests before 74 00:03:51,120 --> 00:03:53,680 Speaker 1: to go up five percent in fifteen months. 75 00:03:53,920 --> 00:03:56,640 Speaker 6: Exactly, and in many cases just the opposite. There's only 76 00:03:56,680 --> 00:03:59,280 Speaker 6: a few scenarios in which the FED has tested interest 77 00:03:59,320 --> 00:04:02,560 Speaker 6: rates in this manner, and it is something that has 78 00:04:02,600 --> 00:04:05,320 Speaker 6: been seen of something of a blind spot for regulators. 79 00:04:06,240 --> 00:04:09,720 Speaker 1: Now it means clearly that the FED has to make 80 00:04:09,760 --> 00:04:10,880 Speaker 1: these tests a little tougher. 81 00:04:11,440 --> 00:04:14,600 Speaker 6: Well, this is interesting. There's a lot of debate around this. 82 00:04:14,600 --> 00:04:19,400 Speaker 6: This year's tests are tougher. You have GDP falling in 83 00:04:19,480 --> 00:04:22,680 Speaker 6: a scenario that is much more severe than what you 84 00:04:22,680 --> 00:04:25,080 Speaker 6: saw last year. In the scenario that the FED is 85 00:04:25,120 --> 00:04:28,440 Speaker 6: posing to the banks, you're also seeing home prices fall 86 00:04:28,480 --> 00:04:31,760 Speaker 6: pretty significantly. So there are certain things about this stress 87 00:04:31,800 --> 00:04:36,840 Speaker 6: test that are showing you that there could be you know, 88 00:04:36,920 --> 00:04:40,040 Speaker 6: severe stresses that these banks undergo, and the question is 89 00:04:40,080 --> 00:04:42,040 Speaker 6: whether they are able to make it through those stresses. 90 00:04:42,040 --> 00:04:45,080 Speaker 6: But like I said, there's other stresses, like those deposit 91 00:04:45,160 --> 00:04:48,080 Speaker 6: runs that are not included in these stress tests, and 92 00:04:48,160 --> 00:04:51,320 Speaker 6: so there's a lot of question about whether they're testing 93 00:04:51,320 --> 00:04:53,239 Speaker 6: all the right things and all the right banks. 94 00:04:53,600 --> 00:04:56,400 Speaker 1: And one thing that came up this year an exploratory 95 00:04:56,680 --> 00:05:00,840 Speaker 1: market shock they're testing for what so fighting. 96 00:05:00,640 --> 00:05:03,200 Speaker 6: It doesn't it doesn't it? Well, remember back in two 97 00:05:03,240 --> 00:05:05,719 Speaker 6: thousand and eight, it was really the big trading desks 98 00:05:05,920 --> 00:05:10,080 Speaker 6: that had ran into trouble. And now what the firms 99 00:05:10,080 --> 00:05:12,120 Speaker 6: are doing here is they're trying to test the big 100 00:05:12,160 --> 00:05:15,480 Speaker 6: investment banks in a harder way. Now, these are not 101 00:05:15,720 --> 00:05:20,000 Speaker 6: tests that are likely going to you know, slap them 102 00:05:20,000 --> 00:05:23,120 Speaker 6: with much higher rules after coming out of this exploratory 103 00:05:23,120 --> 00:05:25,840 Speaker 6: market shock. It is a brand new test and it 104 00:05:25,920 --> 00:05:27,719 Speaker 6: is not part of kind of the core things that 105 00:05:27,720 --> 00:05:30,960 Speaker 6: the FED is testing for. But what the implication is 106 00:05:31,000 --> 00:05:34,279 Speaker 6: here is that the FED will most likely start to 107 00:05:34,360 --> 00:05:37,960 Speaker 6: test these trading desks more and more in the future. 108 00:05:38,279 --> 00:05:40,880 Speaker 6: Remember this is all happening in the backdrop of FED 109 00:05:41,000 --> 00:05:45,360 Speaker 6: Chair Powell speaking to Congress and telling them that there 110 00:05:45,560 --> 00:05:49,239 Speaker 6: will be bigger rules, much bigger rules for the biggest banks. 111 00:05:49,480 --> 00:05:53,480 Speaker 6: He wants to raise capital requirements by maybe twenty percent 112 00:05:53,560 --> 00:05:56,480 Speaker 6: for the eight biggest banks, and he wants to potentially 113 00:05:56,560 --> 00:05:59,640 Speaker 6: test those trading desks more rigorously in the future. But 114 00:05:59,680 --> 00:06:01,680 Speaker 6: those are all things that will come up for public 115 00:06:01,680 --> 00:06:04,679 Speaker 6: comment and it won't really be implemented at a greater 116 00:06:04,760 --> 00:06:06,279 Speaker 6: scale for years to come. 117 00:06:06,560 --> 00:06:10,080 Speaker 1: Well, those capital requirements, as you said, he said, Chairman Powell, 118 00:06:10,640 --> 00:06:13,159 Speaker 1: the eight biggest banks, but there are twenty three banks 119 00:06:13,160 --> 00:06:15,479 Speaker 1: being tested, so some of them are not going to 120 00:06:15,480 --> 00:06:18,679 Speaker 1: face that same kind of scrutiny. But will they also 121 00:06:18,760 --> 00:06:21,200 Speaker 1: have to see their capital requirements rise. 122 00:06:21,360 --> 00:06:24,080 Speaker 6: It's not even just that they may potentially see capital 123 00:06:24,120 --> 00:06:27,440 Speaker 6: requirements rise, it's also that there is likely to be 124 00:06:27,480 --> 00:06:30,119 Speaker 6: a greater set of banks in the future. If you remember, 125 00:06:30,160 --> 00:06:32,200 Speaker 6: I was talking about that two hundred and fifty billion 126 00:06:32,200 --> 00:06:34,960 Speaker 6: dollars limit when it came to the asset base that 127 00:06:35,000 --> 00:06:37,440 Speaker 6: the FED was testing for two fifty billion and above. 128 00:06:37,880 --> 00:06:39,680 Speaker 6: Now the FED is saying that they want to really 129 00:06:39,680 --> 00:06:42,000 Speaker 6: lower that bar to about one hundred billion and so 130 00:06:42,360 --> 00:06:45,440 Speaker 6: that will include a much wider array of banks. Now 131 00:06:45,520 --> 00:06:47,800 Speaker 6: let's put that into the contacts. That's not happening this year. 132 00:06:47,960 --> 00:06:50,680 Speaker 6: But if you look at what Mike Mayo saying, for example, 133 00:06:50,960 --> 00:06:54,599 Speaker 6: the outcome that you'll see here is that the moving 134 00:06:54,680 --> 00:06:58,520 Speaker 6: parts here, you'll see the jesups, these big globally systemic 135 00:06:58,520 --> 00:07:00,960 Speaker 6: financials issutions, those eight big banks, they're likely to come 136 00:07:01,000 --> 00:07:05,200 Speaker 6: out of this just fine and keep buybacks pretty robust 137 00:07:05,279 --> 00:07:09,000 Speaker 6: and really reward Wall Street Bank investors. They'll be just fine, essentially. 138 00:07:09,360 --> 00:07:12,880 Speaker 6: But it's the regional banks that Mike Mayo believes may 139 00:07:12,880 --> 00:07:15,480 Speaker 6: need to hold off on buybacks given the degree of 140 00:07:15,560 --> 00:07:19,480 Speaker 6: uncertainty about the rules. And he's saying that and not 141 00:07:19,560 --> 00:07:22,800 Speaker 6: expecting these banks to fail, but he is expecting the 142 00:07:22,880 --> 00:07:27,240 Speaker 6: rules to disproportionately impact the mid size banks that are 143 00:07:27,280 --> 00:07:31,440 Speaker 6: currently in the process. And regulators are worried, and frankly, 144 00:07:31,520 --> 00:07:34,680 Speaker 6: a lot of frankly more Republican lawmakers are very worried 145 00:07:34,960 --> 00:07:37,440 Speaker 6: that putting more rules on these smaller and mid size 146 00:07:37,480 --> 00:07:40,720 Speaker 6: banks will really constrain those banks in the future to 147 00:07:40,800 --> 00:07:43,120 Speaker 6: do things like buybacks as well as lend more into 148 00:07:43,120 --> 00:07:44,200 Speaker 6: the economy, and. 149 00:07:44,160 --> 00:07:46,320 Speaker 1: Will they have to issue more debt some of these banks. 150 00:07:46,440 --> 00:07:49,000 Speaker 6: That's the other thing. And the worry from Wall Street 151 00:07:49,080 --> 00:07:51,960 Speaker 6: then becomes, if the banks have to issue more debt, 152 00:07:52,320 --> 00:07:54,960 Speaker 6: then does their cost of capital start to rise? 153 00:07:55,000 --> 00:07:55,720 Speaker 7: Do they have to. 154 00:07:55,640 --> 00:07:59,440 Speaker 6: Pay more to bring more money in? It's a complicated 155 00:07:59,600 --> 00:08:00,520 Speaker 6: equation here. 156 00:08:00,640 --> 00:08:04,280 Speaker 1: Now, another thing that has changed greatly is mobile banking. 157 00:08:05,800 --> 00:08:08,200 Speaker 1: You hinted before that, you know when First Republic, within 158 00:08:08,320 --> 00:08:12,160 Speaker 1: minutes of the troubles there, one quarter of their deposits 159 00:08:13,000 --> 00:08:16,480 Speaker 1: on people's phones was just removed gone. I mean, has 160 00:08:16,520 --> 00:08:19,320 Speaker 1: the Fed kept up with that evolution in banking? Do 161 00:08:19,360 --> 00:08:20,240 Speaker 1: you think it's. 162 00:08:20,120 --> 00:08:23,080 Speaker 6: Interesting that you asked that too, because we were just 163 00:08:23,120 --> 00:08:25,440 Speaker 6: talking about how the stress test doesn't really account for, 164 00:08:25,760 --> 00:08:30,040 Speaker 6: you know, mass deposit flight, and you know, you don't 165 00:08:30,120 --> 00:08:33,720 Speaker 6: really often see it either. I mean even some of 166 00:08:33,840 --> 00:08:37,079 Speaker 6: the banks that investors were worried about, yes they saw 167 00:08:37,080 --> 00:08:41,319 Speaker 6: a deposit flight, but that deposit flight was not necessarily 168 00:08:41,360 --> 00:08:45,560 Speaker 6: this deposit flight that came from scares of bank runs. 169 00:08:46,679 --> 00:08:48,760 Speaker 6: You know, I all use Jim Bianco, who is a 170 00:08:48,760 --> 00:08:51,360 Speaker 6: research jannalyst that we speak to a lot here at Bloomberg. 171 00:08:52,240 --> 00:08:55,760 Speaker 6: He always called it a deposit walk, not a deposit run, 172 00:08:56,200 --> 00:08:59,640 Speaker 6: because when interest rates started rising, people did start pulling 173 00:08:59,640 --> 00:09:03,200 Speaker 6: their mind from banks and putting into higher yielding places 174 00:09:03,200 --> 00:09:06,680 Speaker 6: like money market funds, and so you did see deposits slowly, 175 00:09:06,720 --> 00:09:10,160 Speaker 6: slowly moving Internet or no Internet, right, they were moving 176 00:09:10,200 --> 00:09:13,520 Speaker 6: because of the economics. But then you saw that crash 177 00:09:13,600 --> 00:09:17,600 Speaker 6: with Silicon Valley Bank, with that sharp deposit flight, and 178 00:09:17,679 --> 00:09:20,040 Speaker 6: so you can argue it in a lot of ways. 179 00:09:20,200 --> 00:09:22,440 Speaker 6: Probably the Internet made it a lot faster and easier 180 00:09:22,440 --> 00:09:25,640 Speaker 6: to move your money. But also people would have moved 181 00:09:25,640 --> 00:09:26,480 Speaker 6: their money anyways. 182 00:09:26,640 --> 00:09:29,720 Speaker 1: Yeah, they would have, and what it could have should 183 00:09:29,720 --> 00:09:32,360 Speaker 1: have been. So much of this really is backward looking, though, 184 00:09:32,400 --> 00:09:32,760 Speaker 1: isn't it. 185 00:09:33,160 --> 00:09:35,840 Speaker 6: Yeah, it is very backward looking, And I think that 186 00:09:36,000 --> 00:09:39,400 Speaker 6: is always the big fear when it comes to these 187 00:09:39,400 --> 00:09:44,079 Speaker 6: stress tests. But I will say this, while people do 188 00:09:44,360 --> 00:09:47,720 Speaker 6: argue about the scope and the scale of the stress tests, 189 00:09:48,040 --> 00:09:51,680 Speaker 6: even bankers themselves believed that the stress tests overall were 190 00:09:51,760 --> 00:09:55,000 Speaker 6: not positive to the banking system because at the end 191 00:09:55,000 --> 00:09:57,360 Speaker 6: of the day, what it did was it forced a 192 00:09:57,400 --> 00:10:00,720 Speaker 6: more prudent way to operate, and it forced regulators and 193 00:10:00,720 --> 00:10:02,440 Speaker 6: the banks to step back and take a look at 194 00:10:02,440 --> 00:10:06,080 Speaker 6: everything they're doing at all points in time across many 195 00:10:06,080 --> 00:10:10,240 Speaker 6: different scenarios. In a systematic way. You will have some 196 00:10:10,280 --> 00:10:12,160 Speaker 6: of the biggest bankers in the world tell you they're 197 00:10:12,200 --> 00:10:15,160 Speaker 6: happy they're there, they just don't need more of it. 198 00:10:16,480 --> 00:10:21,200 Speaker 1: And going into this week, is there a good feeling 199 00:10:21,240 --> 00:10:22,640 Speaker 1: among the biggest banks. 200 00:10:23,080 --> 00:10:26,040 Speaker 6: There's a frustration knowing that these rules are going to 201 00:10:26,080 --> 00:10:29,760 Speaker 6: get more stringent, especially because there are other rules that 202 00:10:29,800 --> 00:10:33,440 Speaker 6: are also changing for the banks, like the FDIC, for example, 203 00:10:33,760 --> 00:10:36,400 Speaker 6: Since the Federal Deposit Insurance Corporation have lost so much 204 00:10:36,480 --> 00:10:39,120 Speaker 6: money with these bank failures, there's a sense that these 205 00:10:39,160 --> 00:10:40,880 Speaker 6: banks are going to have to pay more already to 206 00:10:40,920 --> 00:10:43,800 Speaker 6: the Deposit Insurance Fund, particularly the biggest banks that will 207 00:10:43,800 --> 00:10:44,680 Speaker 6: have to pay the most. 208 00:10:44,800 --> 00:10:48,040 Speaker 1: Thank you very much, Bloomberg Wall Street reporter Shanali bask 209 00:10:48,160 --> 00:10:51,240 Speaker 1: And coming up on Bloomberg Daybreak weekend, here comes that 210 00:10:51,360 --> 00:10:55,160 Speaker 1: big annual forum of European Central bankers. I'm Tom Busby 211 00:10:55,320 --> 00:11:11,040 Speaker 1: and this is Bloomberg. This is Bloomberg day Break weekend, 212 00:11:11,080 --> 00:11:13,640 Speaker 1: our global look ahead at the top stories for investors 213 00:11:13,640 --> 00:11:16,160 Speaker 1: in the coming week. I'm Tom Busby in New York. 214 00:11:16,720 --> 00:11:20,040 Speaker 1: Up later in our program, China's economy hits a rough patch, 215 00:11:20,160 --> 00:11:23,319 Speaker 1: but first central bankers from all around the world will 216 00:11:23,320 --> 00:11:25,760 Speaker 1: be heading to the Portuguese town of CenTra in the 217 00:11:25,800 --> 00:11:29,000 Speaker 1: coming days for the annual forum hosted by the European 218 00:11:29,040 --> 00:11:32,200 Speaker 1: Central Bank. It's happening at a time when policymakers are 219 00:11:32,200 --> 00:11:36,280 Speaker 1: contemplating an end to their monetary tightening. For more, let's 220 00:11:36,280 --> 00:11:40,080 Speaker 1: head to London and bring in Bloomberg Daybreak eurobanker Stephen Carroll. 221 00:11:39,880 --> 00:11:42,480 Speaker 2: Tom It's a fairytale setting for one of the most 222 00:11:42,520 --> 00:11:45,920 Speaker 2: important global gatherings of central bankers. The town of CenTra 223 00:11:46,040 --> 00:11:49,360 Speaker 2: and the hilltops outside Lesbon is dotted with brightly colored 224 00:11:49,440 --> 00:11:53,079 Speaker 2: palaces worthy of a Disney film. The discussions, though, will 225 00:11:53,120 --> 00:11:56,440 Speaker 2: be much more grounded, as the world's top monetary policymakers 226 00:11:56,520 --> 00:11:59,520 Speaker 2: discuss their efforts to bring down inflation. For more on 227 00:11:59,640 --> 00:12:02,320 Speaker 2: this joined biour Economics needs to be reporter yan Orando, 228 00:12:02,800 --> 00:12:06,280 Speaker 2: who's in Frankfurt ahead of the trip to Portugal. Yana, 229 00:12:06,360 --> 00:12:07,959 Speaker 2: great to have you with us before we get to 230 00:12:08,040 --> 00:12:09,800 Speaker 2: the very serious matters at hand, and I don't want 231 00:12:09,840 --> 00:12:11,480 Speaker 2: to play them down, but I do want to talk 232 00:12:11,520 --> 00:12:14,559 Speaker 2: a little bit about Cintra as a place. Can you 233 00:12:14,720 --> 00:12:17,800 Speaker 2: describe it for us? I've tried my best. How would 234 00:12:17,840 --> 00:12:19,000 Speaker 2: you describe CenTra? 235 00:12:19,880 --> 00:12:23,719 Speaker 8: Oh, it's gorgeous. I had the pleasure of spending a 236 00:12:23,800 --> 00:12:27,599 Speaker 8: couple of days there last year, and let me tell you, 237 00:12:27,679 --> 00:12:31,000 Speaker 8: it's definitely worth a trip. You have whimsical palaces, you 238 00:12:31,160 --> 00:12:34,520 Speaker 8: have extravagant villas, you have ruins of a Moorish castle 239 00:12:34,600 --> 00:12:37,040 Speaker 8: that go way back to the eighth, ninth or tenth 240 00:12:37,080 --> 00:12:42,720 Speaker 8: century for good. But it's just it's colorful, it's mysterious, 241 00:12:43,600 --> 00:12:47,240 Speaker 8: and you know, there is a reason why the Portuguese 242 00:12:47,320 --> 00:12:50,559 Speaker 8: kings chose shows that place as their summer retreat. And 243 00:12:51,160 --> 00:12:53,120 Speaker 8: you know, while we're at it, I have to say 244 00:12:53,200 --> 00:12:56,720 Speaker 8: what's also royal about Cintra is the view from cabud Rocca, 245 00:12:57,160 --> 00:13:00,400 Speaker 8: which is the western most point of mainland. It's not 246 00:13:00,440 --> 00:13:03,800 Speaker 8: far from CenTra. It's definitely worth going and and you know, 247 00:13:04,640 --> 00:13:07,400 Speaker 8: it's it's certainly a nice view. So for those of 248 00:13:07,480 --> 00:13:10,480 Speaker 8: you who of those of our listeners who haven't, who 249 00:13:10,559 --> 00:13:14,160 Speaker 8: haven't gone, it's worth easy easy be retreat or not, 250 00:13:15,080 --> 00:13:17,679 Speaker 8: you know, you should go. You should put it on 251 00:13:17,800 --> 00:13:18,200 Speaker 8: your list. 252 00:13:18,520 --> 00:13:20,599 Speaker 2: It's always a good time to visit CenTra anyway. The 253 00:13:20,679 --> 00:13:23,160 Speaker 2: theme of this year's EASYB Forum, taking place in Cinra 254 00:13:23,360 --> 00:13:27,959 Speaker 2: is macroeconomic stabilization and a volatile inflation environment. It's quite 255 00:13:27,960 --> 00:13:29,920 Speaker 2: a mouthful. What are the big themes that you'll be 256 00:13:30,000 --> 00:13:30,599 Speaker 2: watching out for. 257 00:13:31,040 --> 00:13:34,280 Speaker 8: Yeah, it's certainly an agenda that's featuring many of the 258 00:13:34,400 --> 00:13:39,040 Speaker 8: challenges central banks face today. So they have some really 259 00:13:39,120 --> 00:13:43,400 Speaker 8: interesting papers they'll be discussing on, for example, inflation expectations 260 00:13:43,440 --> 00:13:47,280 Speaker 8: and an economy facing supply shocks, obviously, you know, very 261 00:13:47,640 --> 00:13:51,599 Speaker 8: very very relevant today, on the cost of inflation, on 262 00:13:51,720 --> 00:13:55,199 Speaker 8: the future size of central bank balance sheets, on the 263 00:13:55,280 --> 00:13:58,880 Speaker 8: optimal mix between monetary and fiscal policy. There will be 264 00:13:58,960 --> 00:14:04,559 Speaker 8: discussions on energy markets, on lessons learned from forecasting mistakes, 265 00:14:04,960 --> 00:14:08,200 Speaker 8: so all of that highly highly relevant to the policy 266 00:14:08,280 --> 00:14:11,480 Speaker 8: debate now. And of course the highlight of each CINRA 267 00:14:12,559 --> 00:14:18,000 Speaker 8: conference is the policy panel that features the Governor of 268 00:14:18,120 --> 00:14:22,240 Speaker 8: the Bank of England, the FED chair, the Governor of 269 00:14:22,280 --> 00:14:24,920 Speaker 8: the Bank of Japan, and of course the ECB President 270 00:14:25,400 --> 00:14:26,240 Speaker 8: Christine Lagarde. 271 00:14:26,720 --> 00:14:29,200 Speaker 2: Yeah, of course, it's a really fascinating moment to be 272 00:14:29,320 --> 00:14:32,600 Speaker 2: discussing monetary policy as well, as we have global central 273 00:14:32,680 --> 00:14:35,840 Speaker 2: banks shifting in many cases towards the end of their 274 00:14:35,960 --> 00:14:40,520 Speaker 2: hiking cycle, or at least that's the current expectations the ECB, 275 00:14:40,760 --> 00:14:43,440 Speaker 2: of course, given that they're the hosts out in force 276 00:14:43,680 --> 00:14:46,760 Speaker 2: at this event. Are the Hawks and the Doves getting 277 00:14:46,760 --> 00:14:48,480 Speaker 2: an equal share of time? Do you think here? 278 00:14:49,280 --> 00:14:51,280 Speaker 8: Well, we've certainly invited all of them to join us 279 00:14:51,360 --> 00:14:53,760 Speaker 8: on TV for interviews, so it's. 280 00:14:53,440 --> 00:14:56,360 Speaker 2: Up to them, and they're WELLcom on radio as well well. 281 00:14:56,480 --> 00:15:00,360 Speaker 8: I will make sure to tell them. But jokes side, 282 00:15:00,720 --> 00:15:03,840 Speaker 8: all of the ECB board members will make an appearance 283 00:15:04,400 --> 00:15:08,680 Speaker 8: during the panel discussions and during the conference, and of 284 00:15:08,800 --> 00:15:12,119 Speaker 8: course lots of Governing Council members will be in attendance. 285 00:15:12,600 --> 00:15:15,800 Speaker 8: They are known to ask questions during the sessions, so 286 00:15:15,920 --> 00:15:17,800 Speaker 8: we will hear from from a fair share of them, 287 00:15:17,840 --> 00:15:20,440 Speaker 8: and I'm certainly looking forward to catching up with them, 288 00:15:20,920 --> 00:15:24,680 Speaker 8: you know, one by one and in big groups. It's 289 00:15:24,720 --> 00:15:27,160 Speaker 8: a nice atmosphere there. You really get to spend some 290 00:15:27,280 --> 00:15:28,240 Speaker 8: time with them and. 291 00:15:28,280 --> 00:15:31,400 Speaker 2: Get insights, of course, into those all important decisions coming 292 00:15:31,480 --> 00:15:35,240 Speaker 2: up for central banks. The ECB's next meeting is in July. 293 00:15:35,560 --> 00:15:38,640 Speaker 2: What's the current thinking about where the ECB is on 294 00:15:38,840 --> 00:15:40,760 Speaker 2: its rate tightening path. 295 00:15:41,840 --> 00:15:46,880 Speaker 8: Well, certainly inflation is not going in the direction that 296 00:15:47,000 --> 00:15:49,320 Speaker 8: the ECB wants to see it go, or at least 297 00:15:49,400 --> 00:15:53,840 Speaker 8: not fast enough. They did revise up their inflation outlook 298 00:15:54,480 --> 00:15:57,920 Speaker 8: at the last meeting, and that's certainly not you know, 299 00:15:58,000 --> 00:16:01,720 Speaker 8: what you want to do in this situation. So they 300 00:16:02,200 --> 00:16:08,320 Speaker 8: have been very determined in suggesting or even almost pre 301 00:16:08,480 --> 00:16:12,800 Speaker 8: announcing that raids will will rise again in July, that 302 00:16:12,960 --> 00:16:15,400 Speaker 8: at least one more rate hike is coming. We are 303 00:16:15,560 --> 00:16:18,760 Speaker 8: hearing from a lot of Governing Council members now about 304 00:16:18,840 --> 00:16:22,080 Speaker 8: September whether that, you know, should be on the table, 305 00:16:22,200 --> 00:16:25,040 Speaker 8: whether that should already be considered sort of a done deal. 306 00:16:25,960 --> 00:16:28,360 Speaker 8: So so it's going to be very interesting to see 307 00:16:29,920 --> 00:16:33,600 Speaker 8: where where they see monetary policy heading, but also where 308 00:16:34,480 --> 00:16:38,800 Speaker 8: you know, how they see the monetary tightening in place 309 00:16:39,240 --> 00:16:43,800 Speaker 8: already since since last July, actually how that is reaching 310 00:16:43,880 --> 00:16:47,200 Speaker 8: the economy. And you know, we've we've seen some transmission 311 00:16:47,280 --> 00:16:51,360 Speaker 8: problems because of labor market strength and and a shortage 312 00:16:51,400 --> 00:16:55,080 Speaker 8: of workers there. So they're really dealing with the situation 313 00:16:55,240 --> 00:16:58,280 Speaker 8: they they haven't they haven't seen before. There is no 314 00:16:58,480 --> 00:17:01,600 Speaker 8: textbook example of how to deal with their challenges we're facing, 315 00:17:01,920 --> 00:17:05,040 Speaker 8: and that's interesting. So it's about where rates are heading 316 00:17:05,440 --> 00:17:10,000 Speaker 8: and and but also how how you how you go 317 00:17:10,200 --> 00:17:12,719 Speaker 8: beyond uh you know, once you're freege to peak, how 318 00:17:12,880 --> 00:17:14,440 Speaker 8: how policy pans out after that? 319 00:17:15,040 --> 00:17:16,359 Speaker 2: Yeah, you want to stay with us. I want to 320 00:17:16,400 --> 00:17:18,600 Speaker 2: get bring us in some of the market's perspective on 321 00:17:18,720 --> 00:17:21,080 Speaker 2: this too. And a conversation that we had on Bloomberg 322 00:17:21,160 --> 00:17:22,960 Speaker 2: Radio in the past few days with Sonia Martin is 323 00:17:23,040 --> 00:17:25,680 Speaker 2: chief f extrastist at DZ Bank. We asked her about 324 00:17:25,880 --> 00:17:30,160 Speaker 2: about her expectations for euro dollar given this shifting point 325 00:17:30,359 --> 00:17:33,000 Speaker 2: in central bank policies on both sides of the Atlantic. 326 00:17:33,280 --> 00:17:33,639 Speaker 3: I think the. 327 00:17:33,680 --> 00:17:36,359 Speaker 7: Market's some overreacted to the c B a little bit. 328 00:17:36,480 --> 00:17:38,880 Speaker 7: I mean, yes, they were hawkish, but so was the Fed. 329 00:17:38,960 --> 00:17:41,480 Speaker 7: To be honest, if anything, and just really short term, 330 00:17:41,560 --> 00:17:43,200 Speaker 7: I think there's a risk that we're going to see 331 00:17:43,240 --> 00:17:46,480 Speaker 7: your doll trading lower again. I think the big turnaround 332 00:17:46,600 --> 00:17:49,360 Speaker 7: has to come from the fundamentals. You know, when US 333 00:17:49,440 --> 00:17:52,200 Speaker 7: goes into a recession and your zone performs better, which 334 00:17:52,240 --> 00:17:54,560 Speaker 7: is like to happen as we move into the autumn. 335 00:17:54,840 --> 00:17:56,400 Speaker 7: I think that's going to be the point where your 336 00:17:56,440 --> 00:17:59,479 Speaker 7: dollar has the potential to really go above one ten 337 00:17:59,600 --> 00:18:02,399 Speaker 7: and move hired to support one fifteen is sort of 338 00:18:02,440 --> 00:18:04,720 Speaker 7: our target, but I don't think the timing is right yet. 339 00:18:05,160 --> 00:18:06,720 Speaker 2: Which of the major center banks do you think is 340 00:18:06,760 --> 00:18:09,119 Speaker 2: most at risk of a policy mistake. Then, given that 341 00:18:09,680 --> 00:18:12,399 Speaker 2: delicate position therein that you outlined. 342 00:18:12,240 --> 00:18:15,320 Speaker 7: Well, there's always been just because of who's to judge 343 00:18:15,320 --> 00:18:17,120 Speaker 7: whether it was a mistake or not, because we will 344 00:18:17,160 --> 00:18:20,120 Speaker 7: never know what the alternative was. There's certainly a risk 345 00:18:20,200 --> 00:18:22,119 Speaker 7: over shooting, I think definitely. When we're looking at the 346 00:18:22,160 --> 00:18:24,520 Speaker 7: banks of England right now, I think ultimately the mistake 347 00:18:24,640 --> 00:18:26,680 Speaker 7: or not will be determined by the ability of the 348 00:18:26,760 --> 00:18:30,080 Speaker 7: central banks to then reverse course once the timing is right. 349 00:18:30,160 --> 00:18:32,720 Speaker 7: I mean, you may have hiked once so many times, 350 00:18:32,840 --> 00:18:34,800 Speaker 7: that's not really going to hurt the economy and massively, 351 00:18:35,480 --> 00:18:37,840 Speaker 7: I think to get the timing right to change course 352 00:18:37,880 --> 00:18:40,440 Speaker 7: when inflation will still be kind of persistently high, that's 353 00:18:40,480 --> 00:18:42,800 Speaker 7: going to be the real the real skill, and that's 354 00:18:42,920 --> 00:18:44,520 Speaker 7: you know, that's not going to happen till next year. 355 00:18:44,560 --> 00:18:47,680 Speaker 2: I think that Sony Martin from DZ Bank jan Arande 356 00:18:47,840 --> 00:18:48,439 Speaker 2: is still with us. 357 00:18:48,520 --> 00:18:48,800 Speaker 1: Jana. 358 00:18:48,960 --> 00:18:50,840 Speaker 2: You mentioned there are some of the special guests at 359 00:18:50,920 --> 00:18:53,960 Speaker 2: this ECB event in CenTra Jerome pal from the Fed, 360 00:18:54,080 --> 00:18:56,199 Speaker 2: Casure Away from the Bank of Japan, Andrew Bailey from 361 00:18:56,240 --> 00:18:58,920 Speaker 2: the Bank of England. How much do these central bankers 362 00:18:59,240 --> 00:19:01,960 Speaker 2: share the same challenges as the ECB When. 363 00:19:01,840 --> 00:19:03,960 Speaker 8: You look at the FED at the in the US, 364 00:19:04,359 --> 00:19:07,960 Speaker 8: most of their problems are demand driven. So we had 365 00:19:08,560 --> 00:19:12,800 Speaker 8: massive fiscal stimulus following the pandemic. A lot of a 366 00:19:12,880 --> 00:19:15,160 Speaker 8: lot of what we see in the US is really 367 00:19:15,240 --> 00:19:18,119 Speaker 8: demand driven, So in that sense, there is something the 368 00:19:18,160 --> 00:19:21,240 Speaker 8: FED can do about about it with rate increases. When 369 00:19:21,280 --> 00:19:23,160 Speaker 8: you look at the Bank of England, on the other hand, 370 00:19:24,359 --> 00:19:27,560 Speaker 8: their problems have a lot to do with supply, and 371 00:19:27,760 --> 00:19:31,440 Speaker 8: one factor that plays into the cards here is Brexit. 372 00:19:31,520 --> 00:19:34,840 Speaker 8: Of course massive impact on the labor market, but also 373 00:19:34,920 --> 00:19:38,760 Speaker 8: on trade. So there the Bank of England really is 374 00:19:38,800 --> 00:19:42,440 Speaker 8: in a tough position. And you know, with rates potentially 375 00:19:42,880 --> 00:19:44,760 Speaker 8: having to go up all the way to six percent, 376 00:19:45,119 --> 00:19:47,920 Speaker 8: there was certainly a big risk that it would crush 377 00:19:47,960 --> 00:19:50,560 Speaker 8: the economy. So it's going to be very very interesting 378 00:19:50,680 --> 00:19:54,320 Speaker 8: to have all these central bankers on one podium, having 379 00:19:54,359 --> 00:19:56,960 Speaker 8: them respond and discuss. I'm certainly looking forward to that. 380 00:19:57,480 --> 00:20:00,960 Speaker 2: Yeah, some fascinating conversations ahead. Thank you Toomberg's ECB reporter 381 00:20:01,080 --> 00:20:03,760 Speaker 2: Jana Randew and Yano're bringing us coverage of the CenTra 382 00:20:03,920 --> 00:20:08,000 Speaker 2: ECB forum on Bloomberg Radio as well. I'm Stephen Carroll 383 00:20:08,040 --> 00:20:10,159 Speaker 2: in London. You can catch us every weekday morning. Here 384 00:20:10,200 --> 00:20:12,760 Speaker 2: for Bloomberg Daybreak Europe. Begetting at six am in London 385 00:20:12,960 --> 00:20:14,480 Speaker 2: and one am on Wall Street. 386 00:20:14,760 --> 00:20:17,520 Speaker 1: Tom, thank you Steven, And coming up on Bloomberg day 387 00:20:17,520 --> 00:20:20,720 Speaker 1: Break weekend to look at China's economy, at prospects for 388 00:20:20,880 --> 00:20:24,760 Speaker 1: stimulus amid some key economic data. I'm Tom Busby, and 389 00:20:25,000 --> 00:20:26,679 Speaker 1: this is Bloomberg. 390 00:20:31,200 --> 00:20:35,680 Speaker 5: Broadcasting live from the Bloomberg Interactive Brokers Studio in New York. 391 00:20:35,800 --> 00:20:38,880 Speaker 5: Bloomberg elemon three to oh to Washington, d C, Bloomberg 392 00:20:38,960 --> 00:20:41,800 Speaker 5: ninety nine to one to Boston, Bloomberg one O six 393 00:20:41,920 --> 00:20:45,159 Speaker 5: one to San Francisco, Bloomberg nine sixteen to the Country, 394 00:20:45,240 --> 00:20:49,520 Speaker 5: Serrius XM channel one to nineteen to London DAB Digital Radio, 395 00:20:49,640 --> 00:20:52,760 Speaker 5: and around the globe the Bloomberg Business app in Bloomberg 396 00:20:52,840 --> 00:20:56,360 Speaker 5: Radio dot Com. This is Bloomberg Daybreak Weekend. 397 00:21:02,240 --> 00:21:04,280 Speaker 1: I'm Tom Busby in New York with your global look 398 00:21:04,280 --> 00:21:06,600 Speaker 1: ahead at the top stories for investors in the coming week. 399 00:21:07,160 --> 00:21:10,200 Speaker 1: You know all the talk about how China's economy would 400 00:21:10,200 --> 00:21:14,560 Speaker 1: come roaring back post pandemic, after all the COVID shutdowns eased. Well, 401 00:21:15,040 --> 00:21:17,480 Speaker 1: the economy did pick up, but not nearly by as 402 00:21:17,600 --> 00:21:19,639 Speaker 1: much as some expected. And now China is in the 403 00:21:19,680 --> 00:21:22,640 Speaker 1: spotlight in the coming week with some key economic data 404 00:21:23,119 --> 00:21:26,000 Speaker 1: as economic growth falters. Now for more, let's go to 405 00:21:26,080 --> 00:21:29,280 Speaker 1: Hong Kong and Bloomberg Daybreak Asia host Brian Curtis and 406 00:21:29,359 --> 00:21:30,640 Speaker 1: his colleague Doug Krisner. 407 00:21:31,160 --> 00:21:33,880 Speaker 3: Tom will be getting China's PMIS in the coming week, 408 00:21:34,160 --> 00:21:37,399 Speaker 3: and the early indicators are not particularly great. In the 409 00:21:37,520 --> 00:21:40,320 Speaker 3: last reading, the official PMI came in at forty eight 410 00:21:40,440 --> 00:21:45,200 Speaker 3: point eight. China's overall economic activity has now reclaimed its 411 00:21:45,280 --> 00:21:48,840 Speaker 3: pre COVID levels, but it doesn't seem all that sustainable. 412 00:21:49,000 --> 00:21:52,080 Speaker 9: Investors are getting a steady stream of more promises of 413 00:21:52,200 --> 00:21:56,320 Speaker 9: stimulus from policymakers, but the effects so far appear negligible. 414 00:21:56,480 --> 00:21:59,399 Speaker 9: Consumption is sluggish and exports have been declining. 415 00:22:00,200 --> 00:22:02,679 Speaker 3: Joining us now to try to chart a path forward 416 00:22:02,800 --> 00:22:07,080 Speaker 3: for the economy is David Chu from Bloomberg Economics. David, 417 00:22:07,119 --> 00:22:09,680 Speaker 3: thanks very much for joining us in our studios here 418 00:22:09,880 --> 00:22:13,760 Speaker 3: in Hong Kong. Have policy makers done enough to kind 419 00:22:13,800 --> 00:22:15,480 Speaker 3: of light the fire under the economy? 420 00:22:15,720 --> 00:22:19,000 Speaker 10: Nope, not yet. What I can say is that yes, 421 00:22:19,280 --> 00:22:23,680 Speaker 10: they are considering some stimulus package and the market is 422 00:22:23,760 --> 00:22:27,480 Speaker 10: also expecting for that. But I have to say that 423 00:22:27,760 --> 00:22:30,280 Speaker 10: there is a risk that the market that may have 424 00:22:30,480 --> 00:22:35,760 Speaker 10: overpriced in the potential stimulus. I mean, maybe investors are 425 00:22:36,160 --> 00:22:40,440 Speaker 10: too much optimistic about the size of the package. 426 00:22:40,960 --> 00:22:42,879 Speaker 9: David, do you have a sense of why the government 427 00:22:43,000 --> 00:22:45,680 Speaker 9: is being so careful here so as not to roll 428 00:22:45,760 --> 00:22:47,840 Speaker 9: out a strong stimulus package. 429 00:22:48,280 --> 00:22:52,720 Speaker 10: I think two main reasons. One is that the policy 430 00:22:52,840 --> 00:22:56,200 Speaker 10: rooms are now more limited than before, because if you 431 00:22:56,280 --> 00:22:59,800 Speaker 10: look at the monetary policy, if you look at the 432 00:23:00,040 --> 00:23:03,440 Speaker 10: base rates or the policy rates, and if you look 433 00:23:03,520 --> 00:23:06,320 Speaker 10: at the devisit in the in the fiscal site, you 434 00:23:06,359 --> 00:23:10,119 Speaker 10: would see that, you know, the room is smaller than before. 435 00:23:10,560 --> 00:23:13,080 Speaker 10: The second thing is that I think the government is 436 00:23:13,200 --> 00:23:16,560 Speaker 10: still concerned about the high debt level in China because 437 00:23:16,840 --> 00:23:21,160 Speaker 10: according to the bs NOW, China's led to GDP racial 438 00:23:21,520 --> 00:23:25,399 Speaker 10: is almost three hundred percent, so it's a huge amount 439 00:23:25,480 --> 00:23:28,520 Speaker 10: of debt, so that the government to make concern that 440 00:23:29,600 --> 00:23:34,680 Speaker 10: aggressive stimulus may lead to more accumulation of the debt. 441 00:23:35,520 --> 00:23:38,800 Speaker 3: In the past few days, we heard from even Wang 442 00:23:38,880 --> 00:23:40,840 Speaker 3: hu Ning, who is the number four official in the 443 00:23:40,920 --> 00:23:45,040 Speaker 3: Communist Party, really stressing how they needed to boost consumption. 444 00:23:45,760 --> 00:23:48,359 Speaker 3: Would they consider do you think handing out cash to 445 00:23:48,480 --> 00:23:51,720 Speaker 3: citizens that's something that they have avoided in the past, 446 00:23:52,200 --> 00:23:55,280 Speaker 3: but it has worked elsewhere, including right here in Hong Kong. 447 00:23:55,440 --> 00:24:00,240 Speaker 10: Well, I think this is something ambiguous because yes, people 448 00:24:00,720 --> 00:24:06,080 Speaker 10: have been calling about vosure or cash to citizen, just 449 00:24:06,320 --> 00:24:09,200 Speaker 10: like what is happening in Hong Kong. But there is 450 00:24:09,320 --> 00:24:13,040 Speaker 10: also some concern that maybe this money, if it is 451 00:24:13,119 --> 00:24:16,840 Speaker 10: allocated to people, people may not spend it at all, 452 00:24:17,240 --> 00:24:19,920 Speaker 10: They may save it in bank so that it won't 453 00:24:20,000 --> 00:24:26,200 Speaker 10: be transferred into consumption. And another view is that because 454 00:24:26,320 --> 00:24:29,919 Speaker 10: China relies on government investment for more than two decades, 455 00:24:30,359 --> 00:24:33,760 Speaker 10: so that it is a belief that the government can 456 00:24:34,400 --> 00:24:40,440 Speaker 10: make investment directly that may form demand. So in the 457 00:24:40,600 --> 00:24:44,480 Speaker 10: view of some government officials, this can be a more 458 00:24:44,800 --> 00:24:48,879 Speaker 10: effective way to lift up the economy or in the 459 00:24:49,000 --> 00:24:53,639 Speaker 10: in the demand side, which is more directly than giving 460 00:24:53,720 --> 00:24:55,000 Speaker 10: money to to people. 461 00:24:55,480 --> 00:24:58,600 Speaker 9: We know that the ailing property market, the housing market 462 00:24:58,640 --> 00:25:00,719 Speaker 9: has been a very big problem. There may have been 463 00:25:00,760 --> 00:25:03,160 Speaker 9: some disappointment in the last week when the five year 464 00:25:03,280 --> 00:25:06,320 Speaker 9: loan prime rate was only reduced by ten basis points. 465 00:25:06,640 --> 00:25:09,480 Speaker 9: Some economists that we're looking for a larger cut as 466 00:25:09,520 --> 00:25:11,639 Speaker 9: a way of kind of engendering a little bit more 467 00:25:11,800 --> 00:25:15,840 Speaker 9: enthusiasm for housing. It's interesting to me that Bloomberg Economics 468 00:25:15,920 --> 00:25:19,680 Speaker 9: is saying that new home prices could gradually recover this 469 00:25:19,840 --> 00:25:22,320 Speaker 9: year by the second half of the year. How is 470 00:25:22,400 --> 00:25:24,760 Speaker 9: this going to happen. How are consumers in China going 471 00:25:24,840 --> 00:25:27,920 Speaker 9: to begin to feel differently about the property market? 472 00:25:28,160 --> 00:25:31,399 Speaker 10: Well, I think I agree that ten biebs cut in 473 00:25:31,480 --> 00:25:34,960 Speaker 10: the rate may not play a lot to the housing market. 474 00:25:35,600 --> 00:25:39,000 Speaker 10: What we were expecting was that the government can do 475 00:25:39,200 --> 00:25:44,040 Speaker 10: something more in the monetary side, so that to give 476 00:25:44,160 --> 00:25:48,920 Speaker 10: more confidence to people, not only because of the rig 477 00:25:49,000 --> 00:25:54,040 Speaker 10: cut itself, but also because of the confidence that can 478 00:25:54,119 --> 00:25:57,840 Speaker 10: be lifted by such kind of easing or by this 479 00:25:58,560 --> 00:26:02,000 Speaker 10: signal effect. Uh So, based on this, we think that 480 00:26:02,280 --> 00:26:05,800 Speaker 10: ten PEPs cut is just the start of the whole 481 00:26:05,960 --> 00:26:09,720 Speaker 10: procedure in the monetary side, and we are now looking 482 00:26:09,840 --> 00:26:14,159 Speaker 10: for a more cut in both the policy rates and 483 00:26:14,280 --> 00:26:17,720 Speaker 10: also the triple are in the next half of the year. 484 00:26:18,240 --> 00:26:20,679 Speaker 10: So we we are you can see that we are 485 00:26:20,760 --> 00:26:23,159 Speaker 10: expecting more. But on the other hand, I have to 486 00:26:23,240 --> 00:26:27,480 Speaker 10: say that it may be a very optimistic view that 487 00:26:27,800 --> 00:26:31,440 Speaker 10: the housing prices can recover in the next half of 488 00:26:31,560 --> 00:26:34,520 Speaker 10: the of the year, because we what we see in 489 00:26:34,600 --> 00:26:39,440 Speaker 10: the market is that the confidence is still fragile, and 490 00:26:40,480 --> 00:26:44,800 Speaker 10: the sentiment in the housing in the household sector is 491 00:26:44,840 --> 00:26:48,080 Speaker 10: still weak, so that we don't see any silver bullet 492 00:26:48,520 --> 00:26:51,680 Speaker 10: to boost the confidence in the short term. 493 00:26:51,920 --> 00:26:54,560 Speaker 3: So so I wonder if if consumption is still weak, 494 00:26:54,880 --> 00:26:58,160 Speaker 3: it may be that some people are not even confident 495 00:26:58,320 --> 00:27:01,199 Speaker 3: in the stability of the jobs. I know you've been 496 00:27:01,240 --> 00:27:04,359 Speaker 3: looking at search engine data just as a means of 497 00:27:04,480 --> 00:27:07,440 Speaker 3: kind of trying to understand how people feel about their 498 00:27:07,560 --> 00:27:08,600 Speaker 3: jobs and what are you seeing. 499 00:27:09,119 --> 00:27:12,960 Speaker 10: Yeah, I totally agree with that, because we also look 500 00:27:13,000 --> 00:27:17,160 Speaker 10: at the search engine data to see how many people 501 00:27:17,240 --> 00:27:22,440 Speaker 10: were searching for the word unemployment or loose drop. The 502 00:27:22,560 --> 00:27:27,760 Speaker 10: level it's still similar as in the pandemic area. It 503 00:27:27,920 --> 00:27:32,720 Speaker 10: tells us that even China reopened from the pandemic, people 504 00:27:32,920 --> 00:27:36,359 Speaker 10: are still as cultuous as before. So it is about 505 00:27:36,560 --> 00:27:40,640 Speaker 10: forty percent higher than the pre pandemic level. It means 506 00:27:40,720 --> 00:27:43,280 Speaker 10: that it means that, you know, the concern in the 507 00:27:43,800 --> 00:27:45,760 Speaker 10: in the labor market is still very strong. 508 00:27:45,920 --> 00:27:48,400 Speaker 9: Yeah, and I think the latest reading on youth unemployment 509 00:27:48,600 --> 00:27:52,960 Speaker 9: is twenty point eight percent. At a time when universities 510 00:27:53,000 --> 00:27:56,080 Speaker 9: in China are graduating about a million students a year, 511 00:27:56,520 --> 00:28:00,480 Speaker 9: this is particularly difficult. I would imagine where the young 512 00:28:00,520 --> 00:28:01,360 Speaker 9: people are concerned. 513 00:28:01,640 --> 00:28:05,320 Speaker 10: Yes, I think that is also a signal, especially for 514 00:28:05,640 --> 00:28:09,720 Speaker 10: the weak confidence in the private sector, because usually the 515 00:28:09,840 --> 00:28:14,320 Speaker 10: young people are hired, used to be hired by private sector, 516 00:28:14,520 --> 00:28:18,200 Speaker 10: by the servicing sector, but now they have a high 517 00:28:18,760 --> 00:28:22,320 Speaker 10: drop less ratio. It means that these sectors, uh, they 518 00:28:22,359 --> 00:28:26,720 Speaker 10: are slowing and uh the private entrepreneurs that are not 519 00:28:26,880 --> 00:28:31,160 Speaker 10: willing to uh to invest to to expand their business. 520 00:28:31,480 --> 00:28:32,760 Speaker 10: So that is a concern. 521 00:28:32,920 --> 00:28:34,960 Speaker 3: If it was one thing, David that you think they 522 00:28:35,000 --> 00:28:38,720 Speaker 3: could do to try to stoke a renewal and confidence, 523 00:28:39,160 --> 00:28:42,040 Speaker 3: because that's obviously, I mean, both businesses and consumers are 524 00:28:42,120 --> 00:28:42,960 Speaker 3: lacking confidence. 525 00:28:43,040 --> 00:28:46,080 Speaker 10: What might it be, Well, people have been talking about 526 00:28:46,560 --> 00:28:50,400 Speaker 10: giving money directly to people. Another view I think is 527 00:28:50,520 --> 00:28:55,040 Speaker 10: that the government can consider to reduce the cost for hiring. 528 00:28:56,720 --> 00:29:00,400 Speaker 10: Because you know that China has the cost of for 529 00:29:01,320 --> 00:29:04,920 Speaker 10: a company to hire each person, you know, two thousand 530 00:29:04,920 --> 00:29:07,360 Speaker 10: and three thousand a month. So I mean the cost 531 00:29:07,600 --> 00:29:10,520 Speaker 10: the cost giving to the government in the forms of 532 00:29:11,240 --> 00:29:15,680 Speaker 10: pension fund, social security fund or tax. So I think 533 00:29:15,840 --> 00:29:18,120 Speaker 10: the government can do something to reduce this part of 534 00:29:18,280 --> 00:29:24,160 Speaker 10: cost so that to make the employer more active to 535 00:29:24,280 --> 00:29:26,000 Speaker 10: hire new employees. 536 00:29:26,080 --> 00:29:27,800 Speaker 9: It's going to be very interesting to see where we 537 00:29:27,920 --> 00:29:30,760 Speaker 9: go from here, not just in more fiscal stimulus, but 538 00:29:31,400 --> 00:29:34,320 Speaker 9: more stimulus on the monetary side. David, thank you so 539 00:29:34,440 --> 00:29:37,120 Speaker 9: much for being with us. David Chew from Bloomberg Economics. 540 00:29:37,520 --> 00:29:40,000 Speaker 9: I'm Doug Krisner along with Brian Curtis in Hong Kong, 541 00:29:40,080 --> 00:29:42,520 Speaker 9: and you can catch us weekdays here for Bloomberg Daybreak 542 00:29:42,600 --> 00:29:46,080 Speaker 9: Asia beginning at six am in Hong Kong six pm 543 00:29:46,200 --> 00:29:46,840 Speaker 9: on Wall Street. 544 00:29:47,080 --> 00:29:50,040 Speaker 1: Tom, thank you, Brian and Doug, and coming up here 545 00:29:50,160 --> 00:29:53,400 Speaker 1: on Bloomberg day Break Weekend. The fundraising race to be 546 00:29:53,520 --> 00:29:57,520 Speaker 1: nominee for US president is intensifying as November twenty twenty 547 00:29:57,600 --> 00:30:00,800 Speaker 1: four gets closer. Lots of activity right now as we 548 00:30:00,920 --> 00:30:03,560 Speaker 1: bump up against the end of the quarter. I'm Tom 549 00:30:03,640 --> 00:30:22,880 Speaker 1: Busby and this is Bloomberg. This is Bloomberg day Break Weekend, 550 00:30:22,960 --> 00:30:25,280 Speaker 1: our global look ahead at the top stories for investors 551 00:30:25,360 --> 00:30:27,920 Speaker 1: in the coming week. I'm Tom Busby in New York. 552 00:30:28,480 --> 00:30:31,120 Speaker 1: The fundraising scramble is on for those hoping to be 553 00:30:31,160 --> 00:30:34,680 Speaker 1: elected president in twenty twenty four. For more, let's head 554 00:30:34,680 --> 00:30:37,400 Speaker 1: to our Bloomberg ninety nine one newsroom in Washington and 555 00:30:37,480 --> 00:30:40,480 Speaker 1: Bloomberg Sound on co host Kaylee Lines. 556 00:30:40,800 --> 00:30:43,120 Speaker 4: Yeah, Tom, the dash for cash is on in a 557 00:30:43,240 --> 00:30:45,480 Speaker 4: major way. Is it's the last week of June that's 558 00:30:45,520 --> 00:30:47,760 Speaker 4: coming up upon us, and that means the end of 559 00:30:47,840 --> 00:30:50,800 Speaker 4: the second fundraising quarter, So candidates are rushing to get 560 00:30:50,840 --> 00:30:54,320 Speaker 4: their campaign coffers as full as possible before that June 561 00:30:54,480 --> 00:30:57,360 Speaker 4: thirtieth day hits. Here to talk more about this with 562 00:30:57,560 --> 00:31:00,920 Speaker 4: us is Bloomberg's national politics reporter Nancy Cook. So Nancy, 563 00:31:01,080 --> 00:31:03,760 Speaker 4: just talk to us about why it's important to, you know, 564 00:31:03,960 --> 00:31:06,280 Speaker 4: raise all this money into the end of the quarter. Anyway, 565 00:31:06,320 --> 00:31:07,680 Speaker 4: why do quarterly numbers matter. 566 00:31:08,280 --> 00:31:12,160 Speaker 11: Well, so basically we have not seen fundraising numbers yet 567 00:31:12,280 --> 00:31:15,560 Speaker 11: for many of these candidates. You know, President Joe Biden 568 00:31:15,760 --> 00:31:19,360 Speaker 11: really just jumped into the election this spring, Florida Governor 569 00:31:19,440 --> 00:31:21,920 Speaker 11: Ron de Santis really just jumped in. And so the 570 00:31:22,040 --> 00:31:27,120 Speaker 11: quarterly Federal Election Commission fundraising reports, which are due by 571 00:31:27,240 --> 00:31:30,640 Speaker 11: July fifteenth, really will be the first snapshot we have 572 00:31:31,160 --> 00:31:34,880 Speaker 11: of both the Democratic field and the Republican field and 573 00:31:35,000 --> 00:31:37,520 Speaker 11: how people are doing it raising money both from like 574 00:31:37,680 --> 00:31:40,840 Speaker 11: big donors like billionaires, but also you know people who 575 00:31:40,960 --> 00:31:43,200 Speaker 11: give like ten dollars or twenty dollars. 576 00:31:43,400 --> 00:31:46,080 Speaker 4: So do we have an idea of what these filings 577 00:31:46,160 --> 00:31:49,840 Speaker 4: ultimately may look like. Who is being successful at raising 578 00:31:49,880 --> 00:31:50,400 Speaker 4: money right now? 579 00:31:50,560 --> 00:31:52,440 Speaker 11: So I would say that all the candidates are out 580 00:31:52,440 --> 00:31:54,640 Speaker 11: there doing a ton of fundraising right now. Joe Biden 581 00:31:54,840 --> 00:31:58,520 Speaker 11: just did a swing through California. Ron DeSantis just did 582 00:31:58,520 --> 00:32:01,080 Speaker 11: a swing through California. He did a swing through Texas, 583 00:32:01,440 --> 00:32:03,719 Speaker 11: and so like everybody's going to places where there are 584 00:32:03,840 --> 00:32:07,240 Speaker 11: big money, like New York, California, Texas, like the big 585 00:32:07,320 --> 00:32:10,240 Speaker 11: money places. I would say I spoke with a source 586 00:32:11,040 --> 00:32:13,480 Speaker 11: who told me that we can expect the Biden numbers 587 00:32:13,520 --> 00:32:17,560 Speaker 11: to be good, not like President obama reelection good, but 588 00:32:18,320 --> 00:32:21,080 Speaker 11: that he is, you know, having a fine time raising money. 589 00:32:21,520 --> 00:32:23,320 Speaker 11: I think that there is a sense that a lot 590 00:32:23,360 --> 00:32:26,800 Speaker 11: of Democrats feel sort of lukewarm about the idea of 591 00:32:26,800 --> 00:32:30,040 Speaker 11: a second Biden term. However, they are very motivated by 592 00:32:30,720 --> 00:32:34,960 Speaker 11: the threat of another term for former President Donald Trump, 593 00:32:35,000 --> 00:32:37,680 Speaker 11: and I think donors really are motivated to give to 594 00:32:37,760 --> 00:32:41,080 Speaker 11: keep Donald Trump out of office. With Trump, what I 595 00:32:41,120 --> 00:32:43,280 Speaker 11: will be looking for is, you know, he does not 596 00:32:43,480 --> 00:32:45,640 Speaker 11: have a lot of support among the donor class. A 597 00:32:45,680 --> 00:32:48,200 Speaker 11: lot of billionaires don't want to get involved with him again. 598 00:32:48,280 --> 00:32:51,479 Speaker 11: They think he's a chaotic president. They don't like his rhetoric, 599 00:32:51,560 --> 00:32:53,960 Speaker 11: they think he's decisive, but he still has a ton 600 00:32:54,080 --> 00:32:56,920 Speaker 11: of support amongst small dollar people who send in like 601 00:32:57,000 --> 00:32:59,960 Speaker 11: ten or twenty dollars, And we've really seen his fundraising 602 00:33:00,200 --> 00:33:03,840 Speaker 11: surge after these last two indictments. And then finally the 603 00:33:04,160 --> 00:33:07,320 Speaker 11: third sort of major candidate, the second runner up so 604 00:33:07,440 --> 00:33:11,400 Speaker 11: far in the GOP primary, Ron DeSantis. You know, he 605 00:33:12,480 --> 00:33:14,560 Speaker 11: I think it remains to be seen whether he can 606 00:33:14,640 --> 00:33:18,120 Speaker 11: master retail politics like meeting and greeting voters in Iowa, 607 00:33:18,200 --> 00:33:20,960 Speaker 11: New Hampshire, but he is not having problems raising money. 608 00:33:21,600 --> 00:33:24,320 Speaker 11: You know, he raised over eight million dollars in the 609 00:33:24,400 --> 00:33:27,920 Speaker 11: first twenty four hours after he announced his campaign. What 610 00:33:28,160 --> 00:33:31,040 Speaker 11: I will be looking for specifically with that report is 611 00:33:31,640 --> 00:33:34,880 Speaker 11: is he raising money both from rich people and from 612 00:33:35,080 --> 00:33:37,920 Speaker 11: everyday people or is it concentrated in one or the other, 613 00:33:38,480 --> 00:33:42,160 Speaker 11: Because if he is not raising money from the small 614 00:33:42,360 --> 00:33:44,720 Speaker 11: dollar donors, that means there's just a lack of grassroots 615 00:33:44,760 --> 00:33:47,200 Speaker 11: support and that will really hurt him in those early 616 00:33:47,240 --> 00:33:48,040 Speaker 11: primary states. 617 00:33:48,640 --> 00:33:51,720 Speaker 4: So this could kind of help us as journalists, but 618 00:33:51,800 --> 00:33:55,840 Speaker 4: also the American people understand who's really gaining traction among 619 00:33:55,920 --> 00:33:58,560 Speaker 4: the American population and I wonder too how this filters 620 00:33:58,600 --> 00:34:00,880 Speaker 4: in as we look ahead, Yes, the end of the 621 00:34:00,960 --> 00:34:03,040 Speaker 4: quarter this coming week on June thirtieth, and you have 622 00:34:03,160 --> 00:34:05,760 Speaker 4: to file by July fifteenth, but looking ahead to August 623 00:34:05,800 --> 00:34:10,160 Speaker 4: twenty third, in the first GOP primary debate, ultimately, how 624 00:34:10,200 --> 00:34:13,320 Speaker 4: do the kinds of donation numbers? And that idea factor 625 00:34:13,400 --> 00:34:16,319 Speaker 4: into that, considering you need to have a certain number 626 00:34:16,360 --> 00:34:19,080 Speaker 4: of donors to even make the debate stage you do, and. 627 00:34:19,200 --> 00:34:22,759 Speaker 11: So I think the threshold is forty thousand donors, and 628 00:34:22,840 --> 00:34:25,279 Speaker 11: so you have to have just a certain amount of 629 00:34:25,320 --> 00:34:28,320 Speaker 11: support to enter the debate. So that's a key criteria. 630 00:34:28,640 --> 00:34:30,799 Speaker 11: But the other thing is is that really to last 631 00:34:30,880 --> 00:34:32,680 Speaker 11: through the fall, you're going to have a certain amount 632 00:34:32,680 --> 00:34:36,160 Speaker 11: of money. There are so many Republicans in the field now, 633 00:34:36,400 --> 00:34:38,839 Speaker 11: it is such a wide GOP field. 634 00:34:38,840 --> 00:34:42,279 Speaker 4: Bloomberg's national politics reporter Nancy Cook, thank you so much, 635 00:34:42,360 --> 00:34:43,640 Speaker 4: and Tom, we'll send it back to you. 636 00:34:43,880 --> 00:34:44,560 Speaker 5: Thank you. Kaylee. 637 00:34:44,640 --> 00:34:47,800 Speaker 1: That was Bloomberg's sound on co host Kaylee Lines, reporting 638 00:34:47,880 --> 00:34:51,200 Speaker 1: from our Bloomberg ninety nine one newsroom in Washington, and 639 00:34:51,360 --> 00:34:53,760 Speaker 1: you can hear sound on weekdays one to three pm 640 00:34:53,960 --> 00:34:56,920 Speaker 1: on Bloomberg Radio. And that does it for this edition 641 00:34:57,000 --> 00:34:59,719 Speaker 1: of Bloomberg day Break Weekend. Join us again Monday morning 642 00:34:59,719 --> 00:35:02,960 Speaker 1: at Wall Street Time for the latest on markets overseas 643 00:35:03,360 --> 00:35:05,919 Speaker 1: and the news you need to start your day. I'm 644 00:35:06,000 --> 00:35:09,280 Speaker 1: Tom Buzzby. Stay with us. Top stories and global business 645 00:35:09,320 --> 00:35:11,040 Speaker 1: headlines are coming up right now.