Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world, and just a hint on
Speaker 1: the program, politicians are pushing for more regulation in the
Speaker 1: crypto industry. I'm John Tucker in New York. I'm Stephen
Speaker 1: Carol in London, where the economic picture across Europe looks
Speaker 1: less gloomy than expected after inflation east up in November.
Speaker 1: But there could be more body news on the way.
Speaker 1: I'm dead Chrisner to the central banks of Australia and
Speaker 1: India take cues from the Fed. I'm Amy Morris in Washington.
Speaker 1: We're watching the Senate runoff in Georgia. That's all straight
Speaker 1: ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three on
Speaker 1: New York, Bloomberg one, Washington d C, Bloomberg one oh
Speaker 1: six one, Boston, Bloomberg nine sixties, San Francisco d A B,
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Speaker 1: world on Bloomberg Radio dot Com and via the Bloomberg
Speaker 1: Business App. Hi, everybody, I'm John Tucker, and let's start
Speaker 1: today's program with the swirl of crypto chaos and joining
Speaker 1: me now Bloomber, Katie Greiphil and Katie, we've had some
Speaker 1: big crypto companies go bust. The contagion and ripple effects
Speaker 1: still swirling as we speak. Here's Tim Adams, he's the
Speaker 1: CEO of the Institute of International Finance. Bubbles are gonna
Speaker 1: pop and f t X as an example of business
Speaker 1: plans are made on a napkin that just didn't work.
Speaker 1: But I don't think it's crypto per se. I think
Speaker 1: what we saw with that particular enterprise is just really
Speaker 1: bad governance in bad oversight, bad governance and bad oversight,
Speaker 1: as he puts it. In the other coming weeks, we're
Speaker 1: gonna have the House Financial Committee convened for a hybrid
Speaker 1: hearing entitled Investigating the Collapse of f t X, Part One.
Speaker 1: So Katie, um, the horses left the barn and now
Speaker 1: it's time to close the barn doors. Hab. I mean,
Speaker 1: it's a complicated regulatory puzzle here. Who actually has oversight,
Speaker 1: especially in the case of f t X. I mean,
Speaker 1: clearly there was some failing here, but just a reminder
Speaker 1: of what we're dealing with. This was a Bahamas based exchange.
Speaker 1: What a US regulatory agency should have done about that
Speaker 1: as an open question right now. Congressional hearings usually don't
Speaker 1: get my attention, but I'll be sitting down with a
Speaker 1: big bowl of popcorn for this one. What do you expect?
Speaker 1: Is he going to show up? Sam Bankman Freed, the
Speaker 1: head of bankrupt Well, he's given an interview to just
Speaker 1: about everyone. It feels like I think that the reporting
Speaker 1: has shown that they would like him to be in
Speaker 1: person physically there, whether or not he will actually come
Speaker 1: to you. Maybe he shouldn't come to the US because
Speaker 1: somebody's gonna want to put some cufflings on him. Hopefully
Speaker 1: he's talking to his lawyers. I'm not I'm not sure
Speaker 1: who's advising him here. But in any case, uh, theoretically
Speaker 1: he will be appearing in front of Congress, or at
Speaker 1: least that is the hope. But I don't know he has.
Speaker 1: We've heard a lot from him between the New York
Speaker 1: Times interview, his tweets, the reporting from other outlets as well.
Speaker 1: What did he say in that that interview with andrews
Speaker 1: ross Sorkin? It was pretty amazing. I mean, the big
Speaker 1: takeaway is that he said that he wasn't trying to
Speaker 1: commit fraud. So the intent was, well, no, I'm not
Speaker 1: sure that you know in the annals of fraud history
Speaker 1: that you really start off trying. It's sort of like
Speaker 1: a well worn path, like unless you're a cartoon villa
Speaker 1: in theoretically most people don't start off with fraud in mind.
Speaker 1: But I mean, he was very candid. It was a
Speaker 1: long interview. First of all, this of course, was at
Speaker 1: the New York Times deal Book summit with Andrew Ross Sorkin.
Speaker 1: He said, I made a lot of mistakes. There are
Speaker 1: things I would give to be able to do it
Speaker 1: over again again and again. I didn't ever try to
Speaker 1: commit fraud. There was a lot of talk about whether
Speaker 1: he knew that the customer deposits at f t X
Speaker 1: were being com mingled with the trading shop, which is
Speaker 1: Alameda Research, which when you put you know, customers funds
Speaker 1: into different accounts, that's that's a big no no. Yeah,
Speaker 1: for sure that that is typically on the naughty list,
Speaker 1: And the Wall Street Journal has reported that that's exactly
Speaker 1: what was happening, that they were basically funneling those customer
Speaker 1: funds into the trading shop to fuel those risky bets.
Speaker 1: And you end up with a ton of leverage and
Speaker 1: when the market moves against you, here we are. Yeah.
Speaker 1: I don't want to get too complicated, but f t
Speaker 1: X was not just a platform, but it was other
Speaker 1: stuff too. There was a hedge fund, did you pointed
Speaker 1: out and they had their own token, right, yes, So
Speaker 1: the exchange out of token, the f t T token,
Speaker 1: which it's hard to describe. I mean, Matt Levine of
Speaker 1: Bloomberg Opinion has basically described it as kind of like
Speaker 1: equity in the exchange itself. But I mean, to your point.
Speaker 1: The thing about the crypto industry, the reason that it
Speaker 1: has this very uh, these strong connections, this interconnectedness, is
Speaker 1: because a lot of these companies are wearing a lot
Speaker 1: of hats that would be separate roles in the traditional
Speaker 1: finance world. It's not uncommon for a firm in the
Speaker 1: crypto industry to be a custodian, to be a brokerage,
Speaker 1: to be in exchange. Again, those are all distinct roles
Speaker 1: in the world of traditional finance. But these crypto companies
Speaker 1: were putting them all under one house, and then it
Speaker 1: sort of creates this really what can be an unstable situation,
Speaker 1: as we've seen play out and he complained about too
Speaker 1: much regulation. He did so he felt like he had
Speaker 1: spent too much time trying to get licenses for f
Speaker 1: t x. Uh. He said of the regulatory process that
Speaker 1: he had spent hundreds even thousands of hours meeting with
Speaker 1: regulators to try and get approval for f t x US,
Speaker 1: the US arm of the platform to offer futures trading
Speaker 1: that of course didn't work out. Maybe for the best. Okay,
Speaker 1: this I'm I'm betting this will be one of the
Speaker 1: first questions if he shows up, if he's there for
Speaker 1: any congressionally hearing, where's the money? It's a great question. No,
Speaker 1: it's does he know they were still talking about missing
Speaker 1: billions here? Uh. The the people who are handling the
Speaker 1: liquidation process, of course, John Jay Ray, the third is
Speaker 1: at the helm of it, the new fd X CEO.
Speaker 1: He of course handled en Ron. He's the he's the
Speaker 1: court a point at the bankruptcy court appointed dude who's
Speaker 1: done every major bankruptcy you can think of. Yeah, he Ron,
Speaker 1: I think exactly exactly. So he's been around the block
Speaker 1: a few times, and I mean the words, he hasn't
Speaker 1: minced words when it comes to ft X. He's talked
Speaker 1: about completely just so unprofessional in terms of the record keeping,
Speaker 1: basically that it didn't exist. So one of the things
Speaker 1: they're trying to do right now is figure out where
Speaker 1: all the billions of dollars of customer deposits when they've
Speaker 1: located some of the bitcoin in cold wallets, for example.
Speaker 1: But there's still a lot to uncover here. Katie, always
Speaker 1: a pleasure to appreciate it. Bloomberg's Katie Grindfeld helping us
Speaker 1: explore the world of crypto. Katie, thanks a lot, and
Speaker 1: just to hand. On Bloomberg Daybreak weekend, I'll look at
Speaker 1: the inflation picture and what next in Europe. I'm John Tucker.
Speaker 1: This is Bloomberg. This is Bloomberg Daybreak Weekend, our global
Speaker 1: look ahead of the top stories for investors in the
Speaker 1: coming week. I'm John Tucker in New York. Up later
Speaker 1: in the program, big week coming for central banks in
Speaker 1: Australia and India. But first November's inflation numbers from the
Speaker 1: countries using the Euro will lay the groundwork for the
Speaker 1: European Central banks next decision December fift But in the
Speaker 1: coming days a raft of other economic data will tell
Speaker 1: us more about the state of economies across Europe and
Speaker 1: from or lets into London and bring in Bloomberg Daybreak
Speaker 1: Europe anchors Stephen Carroll John The predictions for this winter
Speaker 1: were dire for Europe, warnings of blackouts forced factory shutdowns
Speaker 1: due to the energy crisis provoked by Russia's invasion of Ukraine.
Speaker 1: Milder weather, though until early November, has avoided the worst
Speaker 1: scenario for many major European economy, but inflation remains close
Speaker 1: to record high. As our tief eerupoconumis. Jamie Ross joins
Speaker 1: us now for more Jamie's The latest CPI figures for
Speaker 1: the Aurozone showed a slowdown to ten percent from ten
Speaker 1: point six percent in October, better than had been expected.
Speaker 1: What was driving us, so the bulk about has been
Speaker 1: has been best news on energy prices, so particularly in
Speaker 1: the Netherlands and Spain, and I think to some extent
Speaker 1: Belgium that these countries see very quick paths through from
Speaker 1: wholesale gas prices into into retail prices. So you know,
Speaker 1: that's what we're seeing. It's taking some pressure off, it's
Speaker 1: beaten consensus to the you know, to the downside, and
Speaker 1: you know, actually the cp just needs that it just
Speaker 1: needs some good news on inflation. We've had a year
Speaker 1: and a half of upside surprises. This is the first
Speaker 1: time I've got a downside one in that period. And
Speaker 1: does it give us any indication as to whether or
Speaker 1: not we could be close to a peak of inflation
Speaker 1: and we're still talking about ten percent even though it
Speaker 1: has come down slightly. I think we probably are past
Speaker 1: the peak, depending on clearly things could things could change, right,
Speaker 1: We're not only just it going into winter now, we're
Speaker 1: not actually there and so it could easily prove cold things.
Speaker 1: Could you know that the reason that gas prices have
Speaker 1: fallen is partly because the risk premium has just gone
Speaker 1: away that could come back. So it's I think it's
Speaker 1: too early to say to you know, to rule out
Speaker 1: another surgeon inflation. But my best guess is that from
Speaker 1: what we know now, probably we've we've passed the peak
Speaker 1: and we do like your best gases, they proved to
Speaker 1: be right quite a lot of the time. How much
Speaker 1: divergence are we seeing among countries in the euro Area,
Speaker 1: because that's part of the picture now that's emerging as
Speaker 1: we're getting you know, are the individual figures that we've
Speaker 1: gotten from countries. France still seems a little bit sticky,
Speaker 1: but we did get the sign of a slowdown in
Speaker 1: Spain and in Germany. Yeah, that's right. I mean, we
Speaker 1: know that there are quite big differences in the energy
Speaker 1: mix in different European countries, France in particularly because it's
Speaker 1: reliance on nuclear and also that you know, government policies
Speaker 1: just cap prices there. So we've seen much low inflation
Speaker 1: in France and the rest of the Eurozone, but it's
Speaker 1: gonna last for much longer. So we have very different experiences,
Speaker 1: which actually trying to say in different politics as well,
Speaker 1: and just you know the way people are people are
Speaker 1: viewing the crisis itself. Well, this figures that we've gotten
Speaker 1: for the broader Eurozone will be complemented by more data
Speaker 1: that's coming in the next few days, of course, going
Speaker 1: to form the basis of the next rate eyed decision
Speaker 1: by the European Central Bank. ECB President Christine Laud was
Speaker 1: speaking to the European European Parliament in Brussels in the
Speaker 1: past few days. She said she'd be surprised if inflation
Speaker 1: has peaked. By reducing people's real income and pushing up
Speaker 1: costs for firms, high inflation is dampening spending and production.
Speaker 1: High uncertainty tied to financial conditions and weakening global demand
Speaker 1: are also weighing on economic growth, which is expected to
Speaker 1: continue weakening for the remainder of this year fourth quarter
Speaker 1: and the beginning of next year first quarter of twenties three.
Speaker 1: That's to be President Christine are talking there about the
Speaker 1: outlook for the months to come, and we will get
Speaker 1: final third quarter GDP data for the Eurozone coming up
Speaker 1: in the next couple of days. The last you know
Speaker 1: that the preliminary readings for the third quarter did show
Speaker 1: small growth. But where where where does this go from here?
Speaker 1: What's such ajectory for for the euro Area? But I
Speaker 1: think most people are expecting a shallow ish recession over
Speaker 1: the winter and going into next year. But I think
Speaker 1: what's one thing that's interesting now is that because energy
Speaker 1: prices have fallen back, the impact from the gas crisis,
Speaker 1: that the direct impact could actually end up being smaller
Speaker 1: then the e CBS response to it. Because the if
Speaker 1: you just use like a simple model and you compare
Speaker 1: what what the impact of gas prices is too to
Speaker 1: the impact of higher higher interest rates, it's now looking
Speaker 1: like higher interest rates could be the dominant factor driving
Speaker 1: the slowdown in the Eurozone next year. So it's um,
Speaker 1: you know, the the queue has been potentially worse than
Speaker 1: the than the and the illness to start with. Well, this,
Speaker 1: of course as we're looking ahead towards the next meeting
Speaker 1: of the European Center Banking in just under two weeks time. Now,
Speaker 1: what is the calculation the ECB has to make here,
Speaker 1: because it's this question of their only mandates is inflation.
Speaker 1: So how much do they actually care about you know,
Speaker 1: it's not the same as the fair so how much
Speaker 1: they actually care about the rest of the economy and
Speaker 1: kind of striking that balance. So I think there's two
Speaker 1: things they need to think about. One is the risk
Speaker 1: from just high headline inflation what that does for inflation expectations.
Speaker 1: Now on that side, on that dimension, things are looking better, right,
Speaker 1: So headline inflation surprises downside is lower. That on balance,
Speaker 1: I think means that the UP doesn't need to do
Speaker 1: seventy five when it meets in December. It can do fifty.
Speaker 1: That's fine. Across another dimension though, they're going to be
Speaker 1: looking much more closely in months to come at core inflation,
Speaker 1: underlying inflation and that's going to be pretty sticky, so
Speaker 1: we think that they're going to keep hiking rates in
Speaker 1: twenty three UM. So it's it's those two things they're
Speaker 1: looking at slightly. One one calls for urgent action headline inflation.
Speaker 1: One calls for something that's going to be drawn out
Speaker 1: into next year. Given that core inflation element, though, does
Speaker 1: that also tell us that we're going to be looking
Speaker 1: at rates higher for longer and that they will hold
Speaker 1: at a certain position, which you know, in the history
Speaker 1: of the Euro Area, we haven't really seen long periods
Speaker 1: of higher interest rates. So I think what's going to
Speaker 1: happen is this this focus on core inflation. I think
Speaker 1: they're only going to be able to bring the cycle,
Speaker 1: the hiking cycle to a close once they see co
Speaker 1: inflation dropping, and our forecasts show that happening around the
Speaker 1: beginning of the second quarter next year, so we think
Speaker 1: that's when they'll be they'll have like the breathing space
Speaker 1: just to to stop hiking rates, and we think they'll
Speaker 1: get to three percent on the refinancing rate. Then I
Speaker 1: think it won't be until perhaps was the end of
Speaker 1: the year that they feel they can cut and so
Speaker 1: we are going to see potentially that the high relatively
Speaker 1: high interest rate period for for much of next year.
Speaker 1: And again, one of those challenges the ECB has is
Speaker 1: a very diverse group of countries that it is, you know,
Speaker 1: the monetary policy institution. For either countries within the euro
Speaker 1: Area that are going to suffer more because of higher rates,
Speaker 1: there are I mean, the CBS own models show that
Speaker 1: when you hike interest rates, countries like Italy and Spain
Speaker 1: are hit much harder than countries like France and Germany.
Speaker 1: And actually Italy is one of the country is just
Speaker 1: going to be worse hit by the gas crisis, so
Speaker 1: it just doesn't need it um So we are going
Speaker 1: to see differing performances across the Eurozone going through when
Speaker 1: we're looking at the broader economic picture, is it too
Speaker 1: soon to worry about next winter or is this where
Speaker 1: policymakers should be thinking too now about how the energy
Speaker 1: crisis might play out over the more medium term. And
Speaker 1: let's think about it. We've entered this winter missing six
Speaker 1: months of gas flows from Russia. When we go into
Speaker 1: next winter, we're gonna be missing twelve months of gas
Speaker 1: flows from from Russia. So the problem is going to
Speaker 1: be bigger The question is how quickly can the European
Speaker 1: economy adapt to the new energy reality. We've been surprised
Speaker 1: at how much energy has come into the Eurozone and
Speaker 1: also we've got lucky with the weather. But I mean
Speaker 1: it's not going to be an easy winter next year either.
Speaker 1: Thank you very much to Boomberg Steve economist Jamie Rush.
Speaker 1: I'm Stephen Carroll in London. You can catch us every
Speaker 1: weekday morning here for Bloomberg Daybreak Europe, beginning at six
Speaker 1: am in London and one am on Wall Streets. John
Speaker 1: all right, Stephen, thanks a lot. Just ahead on Bloomberg
Speaker 1: day Break weekend, look at inflation issues in Australia and India,
Speaker 1: impossible central bank moves in those countries this coming week.
Speaker 1: I'm John Tucker at This is Bloomberg broadcasting live from
Speaker 1: the Bloomberg Interactive Broker Studio in New York. Bloomberg elmon
Speaker 1: Frio to Washington, d C, Bloomberg to Boston, Bloomberg one
Speaker 1: oh six one to San Francisco, Bloomberg six to the Country,
Speaker 1: Serious XM Channel one nineteen to London d A B
Speaker 1: digital radio, and around the globe. The Bloomberg Business APT
Speaker 1: and Bloomberg Radio dot Com. This is Bloomberg day Break weekend.
Speaker 1: I'm John Tuckery in New York with your global look
Speaker 1: ahead of the top stories for investors in the coming week.
Speaker 1: Policy Makers at central banks in Australia and India will
Speaker 1: be grappling with some big questions this coming week, and
Speaker 1: for more, let's go to Hong Kong and Bloomberg Daybreak
Speaker 1: Asian host Brian Purtison and his colleague Doug Prisoner. John,
Speaker 1: the central banks of both countries are facing interest rate
Speaker 1: decisions as they grapple with the dominant issue across much
Speaker 1: of the globe, high inflation, and both economies are now
Speaker 1: feeling the effect of aggressive monetary tightening. We want to
Speaker 1: take a closer look now with Bloomberg's Global Economics and
Speaker 1: Policy editor Kathleen Hayes. Kathleen, let's begin with the Reserve
Speaker 1: Bank of Australia. The RBA will meet on Tuesday, and
Speaker 1: the question that I have for you will they borrow
Speaker 1: from the Fed's playbook, at least what we seem to
Speaker 1: know of it, as it was implied this week from
Speaker 1: FED chair J Powell that the size of rate hikes
Speaker 1: will be reduced going forward fair statement. Well, let me
Speaker 1: tell you about the Reserve Bank of Australia. By starting
Speaker 1: with the Bank of Korea. The Bank of Korea last Friday,
Speaker 1: uh it was pretty widely expected they had they'd done
Speaker 1: to fifty base point rate hikes July and October and
Speaker 1: and other than that. When they started back in July one,
Speaker 1: they had did twenty five basis point hikes. And one
Speaker 1: of the big reasons they were expected to dial back
Speaker 1: to the twenty five basis point hike was because the
Speaker 1: feder Reserve has been signaling more and more strongly that
Speaker 1: they're not going to do seventy five bases point rate hikes.
Speaker 1: They're gonna go back to fifty in parts so they
Speaker 1: can pause and see the impact of the recent rate
Speaker 1: hikes to date. So that's another reason I think why
Speaker 1: you know the b okay has gone in that direction,
Speaker 1: that the r b A is expected to do so
Speaker 1: as well. And I think just generally the conditions in
Speaker 1: in Australia or another reason why they're expected to do that.
Speaker 1: The Reserve Bank has surprised markets three out of ten
Speaker 1: meetings this year. That's that's quite interesting in itself. It
Speaker 1: means that their communication policy a little bit different from
Speaker 1: the Fed. Is it likely that they'll surprise us again
Speaker 1: this time? Well, certainly we can say Phil Low isn't
Speaker 1: afraid to change his mind when he sees what's going
Speaker 1: on in the economy around him, and go ahead and
Speaker 1: do what he thinks needs to be done. And in
Speaker 1: fact we know that now traders, instead of seeing the
Speaker 1: twenty five basis paint rate hike that is is by
Speaker 1: far and away the majority of view, they think it
Speaker 1: could be a fifty basis point hike. And in fact,
Speaker 1: when he started uh tightening last May, if he did
Speaker 1: a quarter point hike to zero point three when the
Speaker 1: market was pricing in fifteen basis points to start on
Speaker 1: winding the last of the pandemic eric rate cuts and
Speaker 1: returned to the usual basis point move, then he followed
Speaker 1: that up with a surprise half point increase in June.
Speaker 1: Then he broke ranks with central banks around the world
Speaker 1: in October by down shifting to a quarter point. And
Speaker 1: he was talking about the sharp tightening already delivered by
Speaker 1: the r b A and that it had yet to
Speaker 1: work it's ready through the economy, so a small hike
Speaker 1: would actually leave him the key rate at three percent,
Speaker 1: and a lot of investors are saying that will give
Speaker 1: them some time to assess the incoming data flow over
Speaker 1: the summer break. So I'm wondering whether or not he's
Speaker 1: going to get any push back on reducing to twenty
Speaker 1: five basis points that there is a contingent saying, hey,
Speaker 1: it's time to remain aggressive, because what we've been hearing
Speaker 1: from a number of central bankers, when you lose control
Speaker 1: of the inflation problem, it's really really difficult as time
Speaker 1: goes on to attack it in a way that's going
Speaker 1: to be effective. There was an investment conference recently in
Speaker 1: Australia that Bloomberg News wrote about, and the theme here
Speaker 1: is that they're playing with fire by signaling a higher
Speaker 1: tolerance for inflation, by slowing the pace of policy tightening
Speaker 1: and trying to deliver a soft landing. That's one of
Speaker 1: the things people criticize the FED for. It's a little
Speaker 1: bit contradictory. Don't want to have a soft landing and
Speaker 1: still be super aggressive or aggressive enough on inflation. Another comment,
Speaker 1: it feels like they're playing with fire, but the payoff
Speaker 1: is a pretty good one if they can achieve that.
Speaker 1: Uh and of course that's as you just mentioned, I
Speaker 1: mean risk the inflation expectations will become un anchored because
Speaker 1: it's going to be a long time to keep inflation
Speaker 1: outside of the target band. One estimate that Australia we
Speaker 1: have four or five and six percent inflation for a
Speaker 1: few years and that that could come back to haunt
Speaker 1: them now the day after the r b A meets,
Speaker 1: so we'll have an RBI decision. And is it is
Speaker 1: it too early for them to take their foot off
Speaker 1: the pedal. Yes, they're supposed to, although they are supposed
Speaker 1: to do a smaller thirty five basis point hiked to
Speaker 1: six and a quarter percent. About you know, well more
Speaker 1: than half, about two thirds of investors saying they can't
Speaker 1: stop fighting inflation. That's for sure. It's slow to six
Speaker 1: point seven seven percent in October um, and it's been
Speaker 1: but still it's been above the upper end of the
Speaker 1: two to six percent band for all year. More modest,
Speaker 1: modest rate rise of thirty five basis points would follow
Speaker 1: a series of fifty basis point hikes. And it again
Speaker 1: it's coincides with the fetter reserve sending a signal that
Speaker 1: they're going to shift to smaller rating increases at their
Speaker 1: policy meeting this month. Kathleen, thank you so much for
Speaker 1: that preview of the r b A and RBI meetings.
Speaker 1: Boomberg's Kathleen Hayes, Global Economics and Policy Editor. I'm Brian Curtis,
Speaker 1: along with Doug Krisner. You can catch us every weekday
Speaker 1: for Bloomberg Daybreak Asia, beginning at seven am in Hong
Speaker 1: Kong and six pm on Wall Street. John, Thanks Brian
Speaker 1: and Doug. And just to hand on Bloomberg Daybreak weekend,
Speaker 1: they hotly contested Georgia runoff race. I'm John Tucker, and
Speaker 1: this is Bloomberg. This is Bloomberg Daybreak Weekend, our global
Speaker 1: look ahead of the top stories for investors in the
Speaker 1: coming week. I'm John Tucker in New York. Send a
Speaker 1: runoff election coming up Tuesday in Georgia and for more
Speaker 1: LEDs in to the Bloomberg newsroom in Washington and Amy Morris. Amy,
Speaker 1: thank you, John. This race is being very closely watched,
Speaker 1: with incumbent Democratic Senator Raphael Warnock facing Republican Herschel Walker.
Speaker 1: Joining me now to talk about all of this. Bloomberg
Speaker 1: Washington correspondent Joe Matthew, host of sound on with Joe Matthew.
Speaker 1: He'll be in Georgia covering this key race. Um, Joe
Speaker 1: Warnock has been trying to pitch a pretty big Democratic
Speaker 1: tent down there. This race really is not about party,
Speaker 1: but it is about who has the character and the
Speaker 1: competence to represent these students and to represent all the
Speaker 1: people of Georgia. And meanwhile, herschel Walker has a different
Speaker 1: style to him. He's fired to get out of that office.
Speaker 1: And then what we no, no, no, what we need
Speaker 1: to do is tell him, don't let that do hit
Speaker 1: you in the bright side as you lead the people office.
Speaker 1: And let's start by talking about what the polls are showing, Joe.
Speaker 1: Let's look at the two candidates could not be more different.
Speaker 1: And some of the latest polls that we've seen this
Speaker 1: past week show that there's, uh, the margin is getting smaller. Yeah,
Speaker 1: there hasn't really been a lot of research. It's interesting,
Speaker 1: you know, you ask about polls, we don't have a
Speaker 1: lot to pick from here. There was one from a
Speaker 1: a r P over a week ago really that found
Speaker 1: that found Raphael Warnock actually ahead by four or five points,
Speaker 1: but that was within the margin. And when you look
Speaker 1: deeper inside. He's Warnock is leading by by double digits
Speaker 1: among young voters eighteen to forty nine. He's got a
Speaker 1: twenty four percentage point lead over herschel Walker. That is significant.
Speaker 1: The more old the older voters are, the more they
Speaker 1: tend to lean towards herschel Walker. Uh. Independence are also
Speaker 1: breaking by just about inside the margin again four or
Speaker 1: five points breaking uh for Senator Warnock. Once again, we
Speaker 1: got another one uh, just a couple of days ago.
Speaker 1: You know, these aren't often the normal polling agencies we
Speaker 1: hear from. This is Frederick Poles compete digital and and political.
Speaker 1: They have both candidates deadlocked, an actual toss up at
Speaker 1: fifty percent each. Now, let's look at some of these numbers, um,
Speaker 1: and let's try to break it down a little bit.
Speaker 1: And let me give you a bit of a story here,
Speaker 1: just some anecdotal. George's Republican Lieutenant Governor Jeff Duncan told
Speaker 1: see an end that he cast his ballot, he voted early,
Speaker 1: he didn't vote for Walker, he didn't vote for war
Speaker 1: not on so hard to believe, called this the most
Speaker 1: disappointing ballot. He oh, you don't buy it, so you
Speaker 1: got out of bed that morning, waited in line for
Speaker 1: an hour without knowing who you're voting for. As the
Speaker 1: lieutenant governor, Brian Kemp with his boss, is all in
Speaker 1: for herschel Walker. He's dedicated his entire ground game. He's
Speaker 1: stumping for him, sharing a stage with him, and raising
Speaker 1: money for him. Having not done that in the mid
Speaker 1: term election cycle, he decided to do this for the runoff,
Speaker 1: just to thumb his nose a bit at Donald Trump
Speaker 1: is what we is, how we see that, But his
Speaker 1: lieutenant governor has no idea who to vote for what
Speaker 1: Maybe maybe you should wait a minute to go vote.
Speaker 1: Well he My point, my question about this, pardon me,
Speaker 1: is the divisiveness that you see now in the division,
Speaker 1: even within the GOP itself. Yeah. Absolutely, Well, I'm not
Speaker 1: sure how much division there is at this point. Following
Speaker 1: the mid terms, Republicans have decided they need this. There's
Speaker 1: a reason. It's not just because it's fun to have
Speaker 1: one extra seat. If Rafael Warnock keeps his job, they'll
Speaker 1: be able to have a majority on committees. If Republicans
Speaker 1: get this seat herschel Walker wins, they keep Democrats from
Speaker 1: doing that. So there is actually a matter of business
Speaker 1: at hand here. It's not just having that extra layer
Speaker 1: of protection, it'll dictate the way these committees are made up.
Speaker 1: Republicans are all in on that, whether it's Lindsay Graham,
Speaker 1: Tom Cotton, Rick Scott, they've all gone down there. Donald Trump,
Speaker 1: of course picked this candidate. Now Brian Kemp is working
Speaker 1: overtime to get him elected. Things have jelled pretty well
Speaker 1: for herschel Walker inside the Republican Party. One of the
Speaker 1: things I like to watch, especially when it comes to
Speaker 1: a runoff, is how the early voting is turning out.
Speaker 1: Is that going to make a difference here, the turnout
Speaker 1: for early voting. That's the big question we're walking into
Speaker 1: next week with because if they have set a record
Speaker 1: for early voting here, we understand based on history that
Speaker 1: that tends to benefit the Democrat. So Rafael Warnock is
Speaker 1: feeling pretty good about those numbers. A hundred and eighty
Speaker 1: on thousand people voted early last weekend uh and and
Speaker 1: as and we've seen these numbers tick up over the
Speaker 1: course of the week since. Let's talk about the money.
Speaker 1: There's been a lot of money poured into this race.
Speaker 1: Record breaking numbers. Does that make a difference. The more
Speaker 1: person the more you spend, the more likely you are
Speaker 1: to win. Doesn't seem to be right. You've got these
Speaker 1: guys within a percentage point despite all the scandals, the
Speaker 1: abortion stories, the endless talk of vampires and werewolves. It's
Speaker 1: been a crazy campaign and they are essentially tied. So
Speaker 1: it's hard to make the case for money. Although I
Speaker 1: will say this, if you back up a little bit
Speaker 1: to the mid term cycle before this turn into a runoff,
Speaker 1: Mitch McConnell was the one spending money on Herschel Walker,
Speaker 1: not Donald Trump, and if he hadn't done that, it
Speaker 1: might not have gone as well as it did for
Speaker 1: Herschel to begin with. He might not have actually gotten
Speaker 1: into the runoff. So so money does have its time.
Speaker 1: The question is how much Brian Kemp's money might make
Speaker 1: a difference. Now, okay, so what are you watching for
Speaker 1: as you get ready to pack your bags and head
Speaker 1: down to Georgia. Well, you know, look, we're watching turnout.
Speaker 1: To your point, a lot of the things that we've
Speaker 1: discussed as well, and we've Barack Obama showing up has
Speaker 1: its own factor that's difficult to quantify. He's certainly helped
Speaker 1: Raphael Warnock during the general seems to me he's a
Speaker 1: celebrity who wants to be a politician, and we've seen
Speaker 1: how that goes. And then we're gonna see who shows
Speaker 1: up day of. You know, if Republicans can get out
Speaker 1: in force on Tuesday, they might be able to blunt
Speaker 1: the impact of a record relea vote. And we are
Speaker 1: talking with Bloomberg Washington correspondent Joe Matthew about the runoff
Speaker 1: election in Georgia. Is it lost on anyone that this
Speaker 1: is sort of a rerun of what happened a couple
Speaker 1: of years ago. Well, it's not on Raphael Warnock. That's
Speaker 1: part of his stump speech. Now he has run for
Speaker 1: the same job something like five times in the last
Speaker 1: two years. I mean, if you think about it, the general, uh,
Speaker 1: the runoff, the general, the runoff. There he is again
Speaker 1: and he's only been in office for two years. Yeah, mean,
Speaker 1: my goodness, you need to really want that job to
Speaker 1: keep going through this. But you could also argue that
Speaker 1: it gives him a bit of an advantage. It's not
Speaker 1: his first ball game, not by a lunch shot. Uh.
Speaker 1: You mentioned, um, the former president Barack Obama down their
Speaker 1: campaigning for Warnock. Does that help a lot. It made
Speaker 1: a huge difference in the general election for Barack Obama
Speaker 1: to go down there to help activate to mobilize African
Speaker 1: American voters. And that's why he came back that that
Speaker 1: poll that I mentioned from a ARP finds Black voters
Speaker 1: fifty and up differ in preference from their age group,
Speaker 1: right until as I mentioned that the older voters tend
Speaker 1: to favor herschel Walker. In this case, Rafael Warnock has
Speaker 1: an eighty three point lead over herschel Walker among Black
Speaker 1: voters fifty and up, the margin of Ara's five points.
Speaker 1: So I think we can call that. So I want
Speaker 1: to make sure I understand older voters tend to lean
Speaker 1: toward herschel Walker, not Warnock. Correct. With the exceptions specifically,
Speaker 1: I'm sure they are. I mean that loyalty in Georgia
Speaker 1: for football, for there's no doubt about, even though living
Speaker 1: in Texas for most of this campaign, that's been an issue,
Speaker 1: most recently as he got a homestead exception for moving
Speaker 1: to Georgia. It's kind of an interesting thing here if
Speaker 1: you go back and look at a lot of his
Speaker 1: interviews on Fox, he was sitting at his home in
Speaker 1: Texas for them, I think it's important to point out
Speaker 1: that this runoff is so significant and there's so much
Speaker 1: writing on it that we are actually Bloomberg is sending
Speaker 1: you down to Georgia for the election results on Tuesday.
Speaker 1: What are you going to be watching for? Well, again,
Speaker 1: we're looking at turnout and to see how Republicans can
Speaker 1: mobilize voters to come out the day of, whether they
Speaker 1: can blunt the impact of a potential Democratic advantage in
Speaker 1: record early voting. What are you going to be watching
Speaker 1: for in the coming week, other issues that may be
Speaker 1: percolating on Capitol Hill or at the White House? Is
Speaker 1: there anything that's got your attention? Look, we could take
Speaker 1: a couple of days to decide this race. First of all,
Speaker 1: we may not know this on Tuesday night. I'd like
Speaker 1: to think by when day will have a sense of it.
Speaker 1: But it's gonna take a minute. This is really close.
Speaker 1: Remember how long it took for them to call Pennsylvania,
Speaker 1: to call Arizona some of these other states. Georgia's like that.
Speaker 1: That's why it went to a runoff. So does it
Speaker 1: take the week? I don't know. We're prepared to cover
Speaker 1: that while the lame duck session continues here in Washington. Republicans,
Speaker 1: you know, they have us in the back of their
Speaker 1: mind here, uh and what a what a fifty first
Speaker 1: seat might mean for them. But the lame duck session
Speaker 1: needs to happen. First, we need to take care of
Speaker 1: government funding, which runs out on December sixte uh. And
Speaker 1: then there's a lot of question about about funding going forward,
Speaker 1: whether they're going to kick the can down the road
Speaker 1: for the entire year or into February. If we get
Speaker 1: a short term cr it increases the risk of a
Speaker 1: possible government shutdown. That's one thing we're watching. And Joe,
Speaker 1: there's been a you know, power shake up in the House.
Speaker 1: That's a great question. No, technically, no, it looks like
Speaker 1: it's Kevin McCarthy. He's certainly been running for the job,
Speaker 1: is cutting a lot of deals right now. But this
Speaker 1: is going to go to the floor, right he's he's
Speaker 1: he received the support of his caucus. But when it
Speaker 1: goes to the full floor, it's just like when we
Speaker 1: were there on midterm election night. You need to eight
Speaker 1: team to win, and Democrats are not likely to help
Speaker 1: him out. So there's a real question about whether he
Speaker 1: comes out of this with the gavel or if Ace
Speaker 1: Steve's callie. For instance, when this goes to round two
Speaker 1: round three, maybe More comes from behind very quietly and
Speaker 1: becomes the next speaker. That's not the most likely scenario,
Speaker 1: but it's when we're hearing a lot more about now.
Speaker 1: Is there a possibility you'd have a Democratic Speaker of
Speaker 1: the House with a Republican majority? Not likely, No, but
Speaker 1: I mean, look, you've got a Republican majority, so they
Speaker 1: would they wouldn't allow that likely to happen, but it
Speaker 1: may not be who they think it's going to be.
Speaker 1: And you don't, by the way, you have to be
Speaker 1: a city member of Congress, which is why they had
Speaker 1: floated the idea at one point. And this was likely
Speaker 1: just a rumor of having a speaker Donald J. Trump
Speaker 1: come in there just to have some fun. If you
Speaker 1: look at the language that the House rules make it
Speaker 1: clear that anybody could actually be speaker if if they
Speaker 1: managed to get to eighteen. Bloomberg Washington correspondent Joe Matthew,
Speaker 1: host of Bloomberg Sound On, which you can hear weekday
Speaker 1: afternoons at five Wall Street Time. Thanks so much for
Speaker 1: taking the time with us, and you can get more
Speaker 1: political news coverage by checking out Balance of Power with
Speaker 1: David West. And that's weekdays at noon, Wall Street Time.
Speaker 1: All right here on Bloomberg Radio, I'm Amy Morris and
Speaker 1: this is Bloomberg John Amy Morris reporting from our Bloomberg
Speaker 1: newsroom in Washington. Amy, thanks a lot, and that does
Speaker 1: it for this edition of Bloomberg Daybreak Weekend. Join us
Speaker 1: again Monday morning at five again Wall Street Time, for
Speaker 1: the latest on markets overseas and the news you need
Speaker 1: to start your day. I'm John Zucker. This is Bloomberg