1 00:00:03,279 --> 00:00:06,160 Speaker 1: This is Bloomberg Daybreak Weekend, our global look at the 2 00:00:06,200 --> 00:00:08,760 Speaker 1: top stories in the coming week from our daybreak anchors 3 00:00:08,800 --> 00:00:12,119 Speaker 1: all around the world, and straight ahead on the program Inflation. 4 00:00:12,560 --> 00:00:14,400 Speaker 1: I'm Tom Busby in New York. 5 00:00:14,560 --> 00:00:17,079 Speaker 2: I'm Karin Hety here in London, where we're looking ahead 6 00:00:17,120 --> 00:00:21,000 Speaker 2: to Europe's insurers reporting earnings admit extreme weather. 7 00:00:21,280 --> 00:00:22,800 Speaker 3: I'm Brian Curtis in Hong Kong. 8 00:00:22,920 --> 00:00:26,040 Speaker 4: We look forward to Ali Baba's earnings and to see 9 00:00:26,079 --> 00:00:28,040 Speaker 4: if the environment has really changed. 10 00:00:28,320 --> 00:00:31,360 Speaker 5: I'm Daily Liones in Washington, where we're thinking about libor 11 00:00:31,440 --> 00:00:33,680 Speaker 5: strife and its impact on President Biden. 12 00:00:36,400 --> 00:00:40,400 Speaker 6: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:40,440 --> 00:00:44,240 Speaker 6: Eleve them three on New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:44,560 --> 00:00:48,560 Speaker 6: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 15 00:00:48,880 --> 00:00:53,040 Speaker 6: DAB Digital Radio, London, Sirius XM one nineteen and around 16 00:00:53,120 --> 00:00:55,720 Speaker 6: the world on Bloomberg Radio, dot Com and via the 17 00:00:55,760 --> 00:00:57,000 Speaker 6: Bloomberg Business App. 18 00:01:00,080 --> 00:01:01,920 Speaker 1: Good day to you. I'm Tom Busby, and we begin 19 00:01:02,000 --> 00:01:06,199 Speaker 1: today's program with Inflation, as we await July inflation data 20 00:01:06,240 --> 00:01:08,399 Speaker 1: coming out this Thursday, and joining us to talk about 21 00:01:08,440 --> 00:01:11,720 Speaker 1: what do you expect and so much more. Bloomberg's Global 22 00:01:11,760 --> 00:01:15,000 Speaker 1: Economics and Policy editor Michael McKee. Michael, thanks for being here. 23 00:01:15,120 --> 00:01:16,040 Speaker 3: Great to be here again. 24 00:01:16,160 --> 00:01:19,120 Speaker 1: Well for starters, what are we expecting to see in 25 00:01:19,160 --> 00:01:20,760 Speaker 1: the July consumer Prices report? 26 00:01:21,400 --> 00:01:23,000 Speaker 7: I hate to do this to you, but I'll start 27 00:01:23,040 --> 00:01:26,360 Speaker 7: by being a little nerdy here. We are expecting inflation 28 00:01:26,560 --> 00:01:29,920 Speaker 7: to rise because there was no inflation in July of 29 00:01:30,000 --> 00:01:34,720 Speaker 7: last year. Inflation came in flat at zero percent change 30 00:01:34,959 --> 00:01:37,480 Speaker 7: in July of twenty twenty two. So if we get 31 00:01:37,520 --> 00:01:40,720 Speaker 7: a little inflation, and we're predicting a little inflation, it 32 00:01:40,920 --> 00:01:43,800 Speaker 7: just is going to make inflation overall go up. So 33 00:01:43,800 --> 00:01:46,880 Speaker 7: we're expecting at this point a two tenths percent gain 34 00:01:47,000 --> 00:01:49,400 Speaker 7: for the month of July, which would push inflation up 35 00:01:49,440 --> 00:01:52,200 Speaker 7: to three point two percent from three percent. And obviously 36 00:01:52,720 --> 00:01:56,400 Speaker 7: that is something the Fed is going to look through 37 00:01:56,480 --> 00:01:59,440 Speaker 7: and analysts are going to look through and not think it's. 38 00:01:59,440 --> 00:02:00,720 Speaker 3: A MA your issue. 39 00:02:00,800 --> 00:02:03,800 Speaker 1: Well, the Fed last month in June three percent. That 40 00:02:04,000 --> 00:02:07,560 Speaker 1: was very encouraging. Still, the Fed voted unanimously to hike 41 00:02:07,600 --> 00:02:10,320 Speaker 1: ats benchmark lending grade twenty five basis points. That's after 42 00:02:10,639 --> 00:02:13,960 Speaker 1: a slight pause in the previous meeting. What would it 43 00:02:14,000 --> 00:02:18,120 Speaker 1: take in terms of CPI for the Fed to change 44 00:02:18,200 --> 00:02:21,040 Speaker 1: up to pause again to know what would we they 45 00:02:21,080 --> 00:02:22,440 Speaker 1: look for. J. 46 00:02:22,639 --> 00:02:25,120 Speaker 7: Powell was asked that question at his news conference after 47 00:02:25,160 --> 00:02:27,360 Speaker 7: that FED decision, and basically he said it would. 48 00:02:27,160 --> 00:02:28,919 Speaker 3: Take several months of a trend. 49 00:02:29,240 --> 00:02:32,959 Speaker 7: In other words, if we saw inflation rising for several months, 50 00:02:33,320 --> 00:02:36,000 Speaker 7: then they would start to think that we have a problem, 51 00:02:36,040 --> 00:02:38,720 Speaker 7: that inflation is coming back and they need to crack 52 00:02:38,760 --> 00:02:42,480 Speaker 7: down more. If inflation were to surprise to the downside 53 00:02:42,520 --> 00:02:45,959 Speaker 7: this month and maybe another month, then the FED might 54 00:02:46,000 --> 00:02:48,520 Speaker 7: be inclined when they get to the September meeting to 55 00:02:48,600 --> 00:02:49,400 Speaker 7: hold off again. 56 00:02:49,480 --> 00:02:51,960 Speaker 1: And the next day we get producer prizes. What have 57 00:02:52,040 --> 00:02:53,440 Speaker 1: we seen there there? 58 00:02:53,440 --> 00:02:54,680 Speaker 3: We've seen some disinflation. 59 00:02:54,760 --> 00:02:58,320 Speaker 7: Producer prices have come down, particularly for energy and food 60 00:02:58,800 --> 00:03:02,400 Speaker 7: and some of the more basic numbers. The issue is 61 00:03:02,440 --> 00:03:06,359 Speaker 7: that we have seen oil prices rise in the last 62 00:03:06,400 --> 00:03:10,639 Speaker 7: couple of weeks, and that could catch It wasn't through 63 00:03:10,720 --> 00:03:12,720 Speaker 7: much of July, but that could catch on to the 64 00:03:12,840 --> 00:03:15,280 Speaker 7: end of the survey and we could see end up 65 00:03:15,280 --> 00:03:19,120 Speaker 7: seeing a little bit of a rise in headline producer prices. 66 00:03:19,440 --> 00:03:22,320 Speaker 7: We'll be watching the core to see if progress continues 67 00:03:22,360 --> 00:03:25,799 Speaker 7: to be made there. Producer prices and consumer prices are 68 00:03:25,840 --> 00:03:28,680 Speaker 7: not directly linked because there are middlemen in the middle, 69 00:03:29,200 --> 00:03:32,359 Speaker 7: but they give you a sort of trend idea of 70 00:03:32,400 --> 00:03:33,320 Speaker 7: which way you're going. 71 00:03:33,480 --> 00:03:36,400 Speaker 1: Now, you talked about energy prices. Oil prices back to 72 00:03:36,520 --> 00:03:39,040 Speaker 1: eighty bucks a barrel. We haven't seen that in several months. 73 00:03:39,640 --> 00:03:42,080 Speaker 1: Gasoline up twenty five cents a gallon in just the 74 00:03:42,120 --> 00:03:45,520 Speaker 1: past week. So now there are legitimate factors in this, 75 00:03:45,640 --> 00:03:49,280 Speaker 1: the heat, opec plus. But is there any end is 76 00:03:49,720 --> 00:03:51,040 Speaker 1: demand is actually down? 77 00:03:51,760 --> 00:03:54,760 Speaker 3: Yeah, the real problem has been time that we've had 78 00:03:54,960 --> 00:03:59,240 Speaker 3: some refinery outages, especially down south, in part because of 79 00:03:59,240 --> 00:04:03,200 Speaker 3: the heat, some unusual outages of refineries, and that's made 80 00:04:03,200 --> 00:04:06,320 Speaker 3: gasoline more scarce. So the price has gone up, and 81 00:04:06,440 --> 00:04:09,800 Speaker 3: there's a feeling that if and when things cool off 82 00:04:09,840 --> 00:04:12,080 Speaker 3: down there. I feel lucky because we're in the Northeast 83 00:04:12,120 --> 00:04:15,400 Speaker 3: where it's not been that hot, But if and when 84 00:04:15,440 --> 00:04:17,400 Speaker 3: things cool off down there, then we should see the 85 00:04:17,400 --> 00:04:20,320 Speaker 3: refineries come back online and prices dropped. So sometime within 86 00:04:20,680 --> 00:04:21,440 Speaker 3: the next month. 87 00:04:21,720 --> 00:04:27,479 Speaker 7: Now, obviously, as opek plus raises the price of the 88 00:04:27,520 --> 00:04:31,279 Speaker 7: input to this oil, that's going to put some upward 89 00:04:31,320 --> 00:04:34,080 Speaker 7: pressure on gasoline prices, but nothing to the extent that 90 00:04:34,160 --> 00:04:36,839 Speaker 7: we have seen. And what would end up happening is 91 00:04:36,960 --> 00:04:40,920 Speaker 7: gasoline prices would not rise by as much and so 92 00:04:40,960 --> 00:04:43,480 Speaker 7: you'd see a down trend in headline. 93 00:04:43,520 --> 00:04:46,719 Speaker 1: And again, people are not filling up like they were before. 94 00:04:46,760 --> 00:04:49,200 Speaker 1: People still working from home, don't need the gas, so 95 00:04:49,839 --> 00:04:52,200 Speaker 1: it's confounding to see it keep going up even though 96 00:04:52,240 --> 00:04:53,480 Speaker 1: demand has leveled off. 97 00:04:53,800 --> 00:04:56,320 Speaker 7: Well, it's been an unusual kind of situation. But what 98 00:04:56,400 --> 00:05:00,440 Speaker 7: happened after this pandemic. Maybe people are flying more. People 99 00:05:00,400 --> 00:05:03,279 Speaker 7: are I don't know about taking a train, but taking 100 00:05:03,320 --> 00:05:05,640 Speaker 7: cruise ships, things like that. We've seen good reports from 101 00:05:05,640 --> 00:05:10,279 Speaker 7: the airlines, so maybe it isn't a driving summer for 102 00:05:10,480 --> 00:05:12,520 Speaker 7: a lot of people. And I guess with the heat 103 00:05:12,560 --> 00:05:14,320 Speaker 7: the way it is, you can understand that. 104 00:05:14,560 --> 00:05:17,840 Speaker 1: Well people are traveling. Part of that consumer confidence has 105 00:05:17,839 --> 00:05:21,160 Speaker 1: moved higher. Fears about a recession. We just had last 106 00:05:21,160 --> 00:05:25,520 Speaker 1: week Bank of America squash the previous forecast for a recession, 107 00:05:26,600 --> 00:05:29,719 Speaker 1: but there are signs consumers maybe pulling back on their spending. 108 00:05:29,760 --> 00:05:31,440 Speaker 1: Let me give you a couple of examples that I 109 00:05:31,480 --> 00:05:33,880 Speaker 1: saw on that is Altria, the maker of Marlborough saying 110 00:05:34,360 --> 00:05:37,839 Speaker 1: people are cigarettes are so expensive, they're buying discount smokes. 111 00:05:38,839 --> 00:05:42,760 Speaker 1: Pepsi says, people want pepsi, but they're going to dollar stores, 112 00:05:42,760 --> 00:05:44,640 Speaker 1: They're going to warehouse clubs trying to get a deal. 113 00:05:45,279 --> 00:05:49,120 Speaker 1: So are we seeing that, you know, are there signs 114 00:05:49,120 --> 00:05:51,479 Speaker 1: that consumers are being more conservative? Now? 115 00:05:51,920 --> 00:05:54,440 Speaker 7: We're kind of getting back to spending levels and spending 116 00:05:54,520 --> 00:05:56,800 Speaker 7: patterns that we saw before the pandemic. 117 00:05:57,160 --> 00:05:58,159 Speaker 3: A lot of people. 118 00:05:58,120 --> 00:06:02,040 Speaker 7: Went to the walmarts and dollar stores and things like that, 119 00:06:02,160 --> 00:06:05,159 Speaker 7: trying to save money in the past on groceries, et cetera. 120 00:06:05,520 --> 00:06:08,200 Speaker 3: And they're going back to that behavior. 121 00:06:08,600 --> 00:06:10,719 Speaker 7: But this is all kind of what you would expect 122 00:06:10,839 --> 00:06:13,880 Speaker 7: in a world that's not overstimulated by the government and 123 00:06:14,560 --> 00:06:19,279 Speaker 7: that is facing higher interest rates and cost of doing business, 124 00:06:19,320 --> 00:06:21,680 Speaker 7: because if it is trying to tamp down on demand, 125 00:06:22,160 --> 00:06:25,599 Speaker 7: the issue becomes when it crosses some sort of line 126 00:06:25,960 --> 00:06:29,520 Speaker 7: and we get to the point where people start to 127 00:06:29,560 --> 00:06:33,160 Speaker 7: worry about recession and then pull back even more and 128 00:06:33,200 --> 00:06:36,000 Speaker 7: we get what results in a contraction. 129 00:06:36,000 --> 00:06:38,360 Speaker 1: And the clock is ticking on something that could really 130 00:06:38,480 --> 00:06:42,600 Speaker 1: change that for forty million Americans. That's the looming restart 131 00:06:42,640 --> 00:06:45,680 Speaker 1: of those federal student loan payments. And that's in October. 132 00:06:45,760 --> 00:06:46,960 Speaker 1: That's coming up pretty quickly. 133 00:06:47,240 --> 00:06:49,560 Speaker 7: That is coming quickly, and it's going to be interesting 134 00:06:49,600 --> 00:06:53,080 Speaker 7: to see what happens because for a lot of people, 135 00:06:53,960 --> 00:06:58,560 Speaker 7: they just use that money to spend on other things 136 00:06:58,640 --> 00:07:00,720 Speaker 7: and in theory still have it. 137 00:07:00,800 --> 00:07:03,040 Speaker 3: They just have to reprogram it to paying bills. 138 00:07:03,320 --> 00:07:06,279 Speaker 7: But a lot of people took out other loans and 139 00:07:07,560 --> 00:07:09,960 Speaker 7: use the money they were saving on their student loan 140 00:07:09,960 --> 00:07:12,000 Speaker 7: bills to pay the other loans. And now they're going 141 00:07:12,040 --> 00:07:14,720 Speaker 7: to have two sets of bills and one set of payments. 142 00:07:15,520 --> 00:07:19,480 Speaker 7: And then there's another group that kept paying throughout the 143 00:07:19,640 --> 00:07:21,960 Speaker 7: entire time period because they figured, well, it's going to 144 00:07:21,960 --> 00:07:25,640 Speaker 7: come back anyway, and I should make progress on bringing 145 00:07:25,680 --> 00:07:28,520 Speaker 7: down my loan, especially when they're not charging me interest. 146 00:07:29,120 --> 00:07:31,520 Speaker 7: And so how that all plays out isn't going to 147 00:07:31,520 --> 00:07:34,760 Speaker 7: be clear, but it isn't completely clear, but it is 148 00:07:34,880 --> 00:07:36,120 Speaker 7: expected to have an impact. 149 00:07:36,120 --> 00:07:36,360 Speaker 6: Now I e. 150 00:07:36,440 --> 00:07:39,760 Speaker 7: Kondoms sort of extrapolate from the total number of people 151 00:07:39,760 --> 00:07:44,040 Speaker 7: with loans and their average loan payment and come up 152 00:07:44,080 --> 00:07:46,880 Speaker 7: with a number like a tenth or two tenths off GDP, 153 00:07:47,080 --> 00:07:51,960 Speaker 7: so not a huge amount, but enough to make a difference. 154 00:07:51,600 --> 00:07:54,480 Speaker 1: Well, a huge amount for people in their twenties and thirties. 155 00:07:54,480 --> 00:07:56,720 Speaker 1: I would think, well, let's talk a little bit more 156 00:07:56,720 --> 00:08:00,280 Speaker 1: about the FED and their timeline the next meeting number 157 00:08:00,320 --> 00:08:03,800 Speaker 1: twentieth right, correct, Well, what do we see between then 158 00:08:04,040 --> 00:08:07,040 Speaker 1: and now that's going to influence the Fed's next decision 159 00:08:07,080 --> 00:08:10,640 Speaker 1: as far as consumer spending, inflation, jobs, and more. 160 00:08:10,960 --> 00:08:15,400 Speaker 7: Well, I've got the couple of jobs reports like the 161 00:08:15,440 --> 00:08:18,920 Speaker 7: one we just saw, and we have another one coming 162 00:08:18,960 --> 00:08:21,280 Speaker 7: up which will give us the August payrolls at the 163 00:08:21,280 --> 00:08:25,200 Speaker 7: beginning of September, and then the CPI report we're talking 164 00:08:25,200 --> 00:08:28,280 Speaker 7: about in another CPI report before they meet again, and 165 00:08:28,280 --> 00:08:32,280 Speaker 7: we'll have one more PCE inflation report along with consumer 166 00:08:32,320 --> 00:08:35,200 Speaker 7: spending at the end of August. So the Fed will 167 00:08:35,200 --> 00:08:38,199 Speaker 7: have a couple of months worth the data before they 168 00:08:38,200 --> 00:08:39,880 Speaker 7: meet again. And that goes back to the point I 169 00:08:39,920 --> 00:08:42,599 Speaker 7: made about what jay Pal said that they want to 170 00:08:42,600 --> 00:08:45,920 Speaker 7: see a couple of months trend to have an idea 171 00:08:45,960 --> 00:08:48,240 Speaker 7: of where we're really going with this. Are we seeing 172 00:08:48,280 --> 00:08:52,840 Speaker 7: inflation come down and demand soften? Are we seeing incipient 173 00:08:52,960 --> 00:08:56,319 Speaker 7: signs of a recession because people are pulling back a lot, 174 00:08:57,200 --> 00:08:59,920 Speaker 7: or is inflation coming back? Those are the questions that 175 00:09:00,080 --> 00:09:02,120 Speaker 7: they hope a lot of this data will answer. 176 00:09:02,000 --> 00:09:04,800 Speaker 1: And it's not just our central bank, but in England 177 00:09:04,880 --> 00:09:08,640 Speaker 1: and in the Eurozone they're dealing with very similar situations, 178 00:09:08,679 --> 00:09:11,840 Speaker 1: but in a way a worse inflation problem over there. 179 00:09:11,960 --> 00:09:15,199 Speaker 1: Is it influencing the US inflation or is it the opposite? 180 00:09:15,240 --> 00:09:16,880 Speaker 1: Are we helping them. 181 00:09:18,280 --> 00:09:21,400 Speaker 7: At this point we are not helping Europe all that 182 00:09:21,520 --> 00:09:24,599 Speaker 7: much because the dollar is strong, so their trade is 183 00:09:24,640 --> 00:09:31,079 Speaker 7: not as vigorous with the US, but it does help 184 00:09:31,800 --> 00:09:35,920 Speaker 7: the United States some now. Trade in this case, because 185 00:09:36,480 --> 00:09:40,040 Speaker 7: we're in a post pandemic situation, is less important between 186 00:09:40,040 --> 00:09:42,559 Speaker 7: the United States and these other countries than it is 187 00:09:42,679 --> 00:09:47,920 Speaker 7: among those countries. The European Union trades heavily among itself, 188 00:09:48,040 --> 00:09:50,520 Speaker 7: and people there have done sort of the same thing 189 00:09:50,559 --> 00:09:53,880 Speaker 7: that we have in terms of cutting back on goods spending, 190 00:09:54,400 --> 00:09:58,240 Speaker 7: and companies have cut back on investments and that's hurting them. 191 00:09:58,240 --> 00:10:02,800 Speaker 7: Manufacturing powers like Germany in France and Italy there because 192 00:10:03,480 --> 00:10:09,640 Speaker 7: their economies are struggling with the lack of manufacturing, and 193 00:10:09,920 --> 00:10:12,600 Speaker 7: we've seen that in the PMI numbers, and we see 194 00:10:12,600 --> 00:10:15,640 Speaker 7: that in the industrial production numbers in the UK. It's 195 00:10:15,679 --> 00:10:18,080 Speaker 7: a combination of things. It's a little bit of that, 196 00:10:18,920 --> 00:10:23,520 Speaker 7: but it's also the bureaucracy brought on by Brexit. 197 00:10:23,360 --> 00:10:26,599 Speaker 3: For trade has slowed trade. 198 00:10:26,320 --> 00:10:29,599 Speaker 7: And made it more expensive. They're still trying to negotiate 199 00:10:29,720 --> 00:10:33,640 Speaker 7: new free trade agreements and they haven't had a lot 200 00:10:33,679 --> 00:10:36,679 Speaker 7: of luck, certainly not with the United States yet, so 201 00:10:36,840 --> 00:10:39,280 Speaker 7: they have the added costs from that as well. And 202 00:10:39,320 --> 00:10:42,400 Speaker 7: then they've got a very strong labor market in the 203 00:10:42,440 --> 00:10:45,280 Speaker 7: same way that the United States does, which also puts 204 00:10:45,360 --> 00:10:46,720 Speaker 7: upward pressure on prices. 205 00:10:46,840 --> 00:10:50,040 Speaker 1: Well, thank you, Michael, And that was Bloomberg's Global Economics 206 00:10:50,040 --> 00:10:53,240 Speaker 1: and Policy editor Michael McKee. Coming up on Bloomberg day 207 00:10:53,240 --> 00:10:57,400 Speaker 1: Break weekend, Insurance companies attempt to change with climate change 208 00:10:57,480 --> 00:11:11,040 Speaker 1: risk lurking. I'm Tom Busby and this is Bloomberg. This 209 00:11:11,160 --> 00:11:13,400 Speaker 1: is Bloomberg day Break Weekend, our global look at the 210 00:11:13,400 --> 00:11:16,240 Speaker 1: top stories in the coming week from our Daybreak anchors 211 00:11:16,320 --> 00:11:19,760 Speaker 1: all around the world. Up later in our program earnings 212 00:11:19,800 --> 00:11:23,080 Speaker 1: from Chinese e commerce giant Ali Baba and the Chinese 213 00:11:23,080 --> 00:11:26,920 Speaker 1: government's role in tech in that country. But first, extreme 214 00:11:26,960 --> 00:11:30,280 Speaker 1: weather gripping many parts of the world, with July likely 215 00:11:30,360 --> 00:11:33,200 Speaker 1: to be announced as the world's hottest month on record. 216 00:11:33,600 --> 00:11:37,080 Speaker 1: The impact on society is enormous and on the insurers 217 00:11:37,200 --> 00:11:40,040 Speaker 1: who navigate climate change. For more, let's say to London 218 00:11:40,080 --> 00:11:44,040 Speaker 1: and bring in Bloomberg Daybreak Europe anchor Caroline Hepgark Tom. 219 00:11:44,160 --> 00:11:48,560 Speaker 2: Europe's big insurers, from Alians to Generali, munich Ree and 220 00:11:48,679 --> 00:11:51,720 Speaker 2: Zero Insurance, are reporting their earnings in the days ahead. 221 00:11:52,280 --> 00:11:56,480 Speaker 2: But Europeans are among the least insured against certain types 222 00:11:56,559 --> 00:12:00,120 Speaker 2: of extreme weather and other natural disasters, something that we've 223 00:12:00,160 --> 00:12:03,160 Speaker 2: seen a lot of across the continent over the last 224 00:12:03,160 --> 00:12:06,520 Speaker 2: few months. For more, I'm joined by Bloomberg's Germany correspondent 225 00:12:06,520 --> 00:12:10,240 Speaker 2: Oliver Crook. Oliver, great to have you with us. Extreme 226 00:12:10,280 --> 00:12:12,480 Speaker 2: weather has hit Europe in the past few months in 227 00:12:12,520 --> 00:12:15,840 Speaker 2: a way I think, I'm sure you'll agree that has 228 00:12:16,040 --> 00:12:19,840 Speaker 2: made many people think about climate change in a totally 229 00:12:19,840 --> 00:12:20,320 Speaker 2: new light. 230 00:12:20,400 --> 00:12:23,160 Speaker 8: Don't you think I would think so? But you know, obviously, 231 00:12:23,200 --> 00:12:25,960 Speaker 8: as you know, this is an exceedingly polarized issue for 232 00:12:26,080 --> 00:12:28,360 Speaker 8: some people. It's hard, though, when you see the kind 233 00:12:28,400 --> 00:12:31,320 Speaker 8: of trend in terms of the temperatures rising over the 234 00:12:31,360 --> 00:12:34,400 Speaker 8: last century to kind of not at least pose yourself 235 00:12:34,480 --> 00:12:37,320 Speaker 8: the question, particularly when you see the ways that it touches, 236 00:12:37,440 --> 00:12:39,319 Speaker 8: you know, human life in all this different way. We've 237 00:12:39,320 --> 00:12:42,960 Speaker 8: talked about how it touches agriculture. Sometimes it's cooking food 238 00:12:43,080 --> 00:12:45,720 Speaker 8: right on the branch you have. You know, all these 239 00:12:45,880 --> 00:12:48,000 Speaker 8: rivers drying up. The Rhine is one we've talked about 240 00:12:48,000 --> 00:12:50,560 Speaker 8: a lot of the most important waterway in Europe. You 241 00:12:50,559 --> 00:12:53,480 Speaker 8: know that moves just tons and tons and tons down, 242 00:12:53,600 --> 00:12:56,400 Speaker 8: up and down every single day, and that basically becomes 243 00:12:56,480 --> 00:12:59,120 Speaker 8: unnavigable at a certain point. We've seen it in France 244 00:12:59,160 --> 00:13:01,640 Speaker 8: with the nuclear react they can't draw enough water to 245 00:13:01,720 --> 00:13:04,440 Speaker 8: cool off, and obviously these wildfires in Greece. So I 246 00:13:04,440 --> 00:13:06,439 Speaker 8: think it's front of mine for everybody. I think the 247 00:13:06,559 --> 00:13:08,880 Speaker 8: challenge that the market has is how do you price 248 00:13:08,960 --> 00:13:11,160 Speaker 8: these risks and how do you think about these financially? 249 00:13:11,760 --> 00:13:11,960 Speaker 4: Yeah? 250 00:13:11,960 --> 00:13:14,880 Speaker 2: Absolutely, And you were speaking to someone very interesting Munich 251 00:13:14,920 --> 00:13:17,880 Speaker 2: reads ernst Rauch about this, because they've got a whole 252 00:13:17,880 --> 00:13:22,280 Speaker 2: climate center and they do big reporting not just on 253 00:13:22,320 --> 00:13:25,560 Speaker 2: their own business, but kind of more broadly across the 254 00:13:25,600 --> 00:13:29,480 Speaker 2: insurance sector. They've also Munich re itself has its earnings 255 00:13:29,559 --> 00:13:34,280 Speaker 2: coming up in the days ahead. Is weather making certain 256 00:13:34,320 --> 00:13:35,640 Speaker 2: things uninsurable? 257 00:13:36,320 --> 00:13:38,040 Speaker 8: So this is the this is the question. I asked 258 00:13:38,120 --> 00:13:40,400 Speaker 8: him if it made things uninsurable? And so he gave 259 00:13:40,400 --> 00:13:42,480 Speaker 8: a sort of interesting response that he said, listen, we're 260 00:13:42,480 --> 00:13:45,560 Speaker 8: an insurance company. We will ensure anything. The problem is 261 00:13:45,600 --> 00:13:47,600 Speaker 8: you will not be able to afford it. And they 262 00:13:47,600 --> 00:13:49,760 Speaker 8: look at a sort of simple equation about kind of 263 00:13:49,800 --> 00:13:52,760 Speaker 8: the risk that is generated by kind of natural disasters, 264 00:13:52,920 --> 00:13:55,000 Speaker 8: how vulnerable we know, how and what ways have you 265 00:13:55,040 --> 00:13:58,000 Speaker 8: mitigated it, and the underlying value of the assets, and 266 00:13:58,040 --> 00:14:00,240 Speaker 8: he says that even despite the latter two, so what 267 00:14:00,320 --> 00:14:04,400 Speaker 8: he's seeing across the globe is a high higher risk 268 00:14:04,800 --> 00:14:07,560 Speaker 8: of basically weather related events. He says eighty to ninety 269 00:14:07,600 --> 00:14:10,120 Speaker 8: percent is down to weather, and that a third of 270 00:14:10,160 --> 00:14:11,960 Speaker 8: all of the losses in the first half of this 271 00:14:12,160 --> 00:14:14,440 Speaker 8: year we're not down to actually a single weather event, 272 00:14:14,480 --> 00:14:17,559 Speaker 8: but just more powerful storms over in the United States. 273 00:14:17,840 --> 00:14:18,040 Speaker 4: Yeah. 274 00:14:18,040 --> 00:14:22,320 Speaker 2: Absolutely, And the data that munich Re pulled together showing 275 00:14:22,400 --> 00:14:25,640 Speaker 2: a near record year for losses due to natural disasters, 276 00:14:25,640 --> 00:14:28,920 Speaker 2: so things like earthquakes in Turkey and Syria and the 277 00:14:28,960 --> 00:14:31,560 Speaker 2: storms that you mentioned in the US. I mean, the 278 00:14:31,640 --> 00:14:33,600 Speaker 2: numbers globally are quite staggering, aren't they. 279 00:14:34,200 --> 00:14:36,440 Speaker 8: Yeah. Absolutely, I mean one hundred and ten billion dollars 280 00:14:36,440 --> 00:14:38,560 Speaker 8: in the first half of the year. And really, again 281 00:14:38,600 --> 00:14:41,320 Speaker 8: I was very interested to speak to him because you know, 282 00:14:41,560 --> 00:14:44,240 Speaker 8: in a topic that is polarized for many people, it's 283 00:14:44,280 --> 00:14:47,360 Speaker 8: their business to understand what is going on in the 284 00:14:47,400 --> 00:14:49,680 Speaker 8: world and to try to appraise that risk. So I 285 00:14:49,720 --> 00:14:52,720 Speaker 8: asked him about kind of how he really thinks about 286 00:14:52,760 --> 00:14:54,640 Speaker 8: climate change and how many you know, how much are 287 00:14:54,640 --> 00:14:57,800 Speaker 8: these losses can we say are really attributable to climate change? 288 00:14:58,120 --> 00:15:02,640 Speaker 9: We observe up what of losses from weather related events 289 00:15:02,640 --> 00:15:05,840 Speaker 9: in many parts of the world, and with many weather 290 00:15:05,880 --> 00:15:10,160 Speaker 9: related perils, depending on the region, it is flooding, it 291 00:15:10,200 --> 00:15:13,840 Speaker 9: can be what's called these convective storms of severe thunderstorms 292 00:15:13,840 --> 00:15:16,920 Speaker 9: in the United States, or wildfires in some parts of 293 00:15:16,960 --> 00:15:20,440 Speaker 9: the world. So with this upward trend, we of course 294 00:15:20,520 --> 00:15:23,600 Speaker 9: as a risk management company, we need to understand what 295 00:15:23,880 --> 00:15:27,840 Speaker 9: are the drivers of this trend, and the first element 296 00:15:28,000 --> 00:15:33,360 Speaker 9: of these drivers are socioeconomic factors, so increasing wealth and 297 00:15:33,440 --> 00:15:37,840 Speaker 9: population and inflation of course today plays a major role 298 00:15:37,920 --> 00:15:42,800 Speaker 9: in this as well. However, even after adjusting for inflation 299 00:15:42,960 --> 00:15:46,440 Speaker 9: and wells, we do see in some regions upward trends 300 00:15:47,080 --> 00:15:50,160 Speaker 9: with respect to losses which cannot be explained by these 301 00:15:50,200 --> 00:15:54,800 Speaker 9: socio economic factors. And here we analyze and also meteorological data. 302 00:15:54,880 --> 00:15:59,560 Speaker 9: We collaborate with scientific organizations in order to understand whether 303 00:15:59,600 --> 00:16:05,480 Speaker 9: they're a link between increasingly severe weathers it's understorms of flooding, 304 00:16:05,560 --> 00:16:09,280 Speaker 9: extreme rainfalls and others and the losses we observe. And 305 00:16:09,400 --> 00:16:12,880 Speaker 9: the outcome is as of today, is that we have 306 00:16:13,440 --> 00:16:18,120 Speaker 9: strong indications, not a scientific proof, but strong indications that 307 00:16:18,400 --> 00:16:21,760 Speaker 9: part of the increase of losses is already driven by 308 00:16:21,960 --> 00:16:25,760 Speaker 9: changing weather patterns, and they are by themselves driven by 309 00:16:25,760 --> 00:16:26,960 Speaker 9: climate change, and. 310 00:16:26,960 --> 00:16:29,320 Speaker 8: Sort of regardless of the cause, if this is just 311 00:16:29,440 --> 00:16:32,680 Speaker 8: proportionally and numerically going up, this obviously is going to 312 00:16:32,720 --> 00:16:35,800 Speaker 8: bear on the price of ensuring things. Can you talk 313 00:16:35,840 --> 00:16:38,400 Speaker 8: to me about how much more expensive insurance is going 314 00:16:38,440 --> 00:16:40,240 Speaker 8: to get as a result of these changes. 315 00:16:40,920 --> 00:16:45,040 Speaker 10: Well, first of all, if the has a component of 316 00:16:45,200 --> 00:16:49,760 Speaker 10: our analysis, so the probability of severe flooding or severe 317 00:16:49,840 --> 00:16:53,640 Speaker 10: other weather events is increasing and or the intensity of 318 00:16:53,960 --> 00:16:58,200 Speaker 10: these events, then yes, the overall risk increases and that 319 00:16:58,520 --> 00:17:03,480 Speaker 10: drives the premium. Now the question is, of course, by 320 00:17:03,560 --> 00:17:05,280 Speaker 10: how much, and there. 321 00:17:05,200 --> 00:17:09,360 Speaker 9: Is no simple answer, especially no uniform answer for all 322 00:17:09,480 --> 00:17:11,160 Speaker 9: parts of the gold or parents. 323 00:17:11,240 --> 00:17:12,760 Speaker 8: I also want to talk to you about the risk 324 00:17:12,840 --> 00:17:16,000 Speaker 8: not just of insurance prices going up, but basically parts 325 00:17:16,040 --> 00:17:19,320 Speaker 8: of the world becoming uninsurable. We hear about this in Florida, 326 00:17:19,440 --> 00:17:22,000 Speaker 8: you know, California possibly a risk. Now we see kind 327 00:17:22,040 --> 00:17:25,040 Speaker 8: of weather patterns changing and how hot it's getting across Europe. 328 00:17:25,720 --> 00:17:28,680 Speaker 8: What's the risk for the uninsurable portions of the world 329 00:17:28,680 --> 00:17:30,560 Speaker 8: where you just cannot make an assessment or it's just 330 00:17:30,600 --> 00:17:31,159 Speaker 8: too risky. 331 00:17:31,720 --> 00:17:35,000 Speaker 9: The challenge is much more if we look at the 332 00:17:35,240 --> 00:17:40,400 Speaker 9: need to adjust our prices in line with increasing risks, 333 00:17:40,480 --> 00:17:44,120 Speaker 9: and here climate change drives up the risks and as 334 00:17:44,119 --> 00:17:47,680 Speaker 9: a consequent drives up the risk premium. 335 00:17:47,880 --> 00:17:51,199 Speaker 2: So that was answer Ralph ahead of Corporate Climate Center 336 00:17:51,320 --> 00:17:55,040 Speaker 2: at Munich re speaking to you, Oliver. As we think 337 00:17:55,080 --> 00:18:00,320 Speaker 2: then about you know, the financial consequences of this, how 338 00:18:00,320 --> 00:18:02,760 Speaker 2: do we think about then the earnings that we're going 339 00:18:02,840 --> 00:18:06,080 Speaker 2: to get from Munich read zero Insurance, General, Ali and 340 00:18:06,119 --> 00:18:09,080 Speaker 2: the other big insurance names across Europe. 341 00:18:09,400 --> 00:18:11,840 Speaker 8: Yeah, so listen, I'll talk about Alians because they're sort 342 00:18:11,840 --> 00:18:14,080 Speaker 8: of the biggest and they would released over on Thursday 343 00:18:14,119 --> 00:18:16,159 Speaker 8: and so they you know, they've actually have had a 344 00:18:16,160 --> 00:18:18,640 Speaker 8: pretty good run. And what's interesting is because Alliance also 345 00:18:18,680 --> 00:18:22,840 Speaker 8: has this massive asset management unit, but actually this year 346 00:18:23,520 --> 00:18:26,040 Speaker 8: it's the insurance that's done the heavy lifting. Their insurance 347 00:18:26,040 --> 00:18:28,439 Speaker 8: side of the business has done very well and they 348 00:18:28,480 --> 00:18:31,199 Speaker 8: may even raise you know, operating profit outlook, and so 349 00:18:31,240 --> 00:18:34,359 Speaker 8: things are looking very solid in the insurance sector. They've 350 00:18:34,359 --> 00:18:36,920 Speaker 8: actually you know, they I don't know how big natural 351 00:18:36,960 --> 00:18:39,840 Speaker 8: catastrophe will be in terms of their bottom line. We 352 00:18:39,880 --> 00:18:42,639 Speaker 8: may see some more claims in Italy and Germany in 353 00:18:42,680 --> 00:18:44,960 Speaker 8: the second quarter due to the floods, but they did 354 00:18:44,960 --> 00:18:49,040 Speaker 8: not have huge natural catastrophe expenses over in the first quarter, 355 00:18:49,080 --> 00:18:51,719 Speaker 8: and that is in part, perhaps, Caroline. Something that we 356 00:18:51,800 --> 00:18:53,720 Speaker 8: I'm sure we will talk about is the lack of 357 00:18:53,800 --> 00:18:56,960 Speaker 8: insurance for natural disasters here in Europe. I was actually 358 00:18:56,960 --> 00:18:58,400 Speaker 8: astounded by some of these numbers. 359 00:18:58,720 --> 00:18:58,920 Speaker 11: Yeah. 360 00:18:58,920 --> 00:19:04,320 Speaker 2: Absolutely, This, this idea of the underinsured in Europe is 361 00:19:04,800 --> 00:19:07,960 Speaker 2: a big issue, especially as you say, you've highlighted well 362 00:19:08,000 --> 00:19:10,480 Speaker 2: the wildfare is in Greece, but there've been drought conditions 363 00:19:10,520 --> 00:19:13,080 Speaker 2: in Spain as well as along the River Rhine. 364 00:19:13,640 --> 00:19:13,840 Speaker 3: Yeah. 365 00:19:13,880 --> 00:19:15,840 Speaker 8: Absolutely. And when you look at a sort of global 366 00:19:15,880 --> 00:19:19,879 Speaker 8: breakdown of kind of what is uninsured Asia Pacific, fifty 367 00:19:19,960 --> 00:19:23,280 Speaker 8: seven percent of the direct losses are uninsured North America. 368 00:19:23,440 --> 00:19:26,919 Speaker 8: That's only twenty four percent globally on average, it's sixty 369 00:19:26,960 --> 00:19:30,679 Speaker 8: one percent. In Europe, it's almost ninety percent. So I 370 00:19:30,720 --> 00:19:32,600 Speaker 8: mean that that to me came as a you know, 371 00:19:32,640 --> 00:19:34,159 Speaker 8: as a real shock. You think of a kind of 372 00:19:34,200 --> 00:19:36,960 Speaker 8: more developed nations and richer nations are kind of more 373 00:19:37,040 --> 00:19:39,800 Speaker 8: risk averse and more willing to ensure certain assets, and 374 00:19:39,840 --> 00:19:42,240 Speaker 8: I was really stunned to discover that that's the sort 375 00:19:42,240 --> 00:19:43,880 Speaker 8: of europe European figure. 376 00:19:43,600 --> 00:19:46,919 Speaker 2: Here absolutely, Oliver, thank you so much for joining me. 377 00:19:47,000 --> 00:19:50,280 Speaker 2: We look ahead then and await the earnings in the 378 00:19:50,320 --> 00:19:52,879 Speaker 2: next few days from the big insurance names hit in 379 00:19:52,920 --> 00:19:57,440 Speaker 2: Europe Alians generally Munich Res Insurance and others, so there'll 380 00:19:57,480 --> 00:19:59,480 Speaker 2: be a lot of focus on those results. Thank you 381 00:19:59,520 --> 00:20:02,040 Speaker 2: so much for being with me. I'm Caroline hepgear here 382 00:20:02,040 --> 00:20:03,879 Speaker 2: in London. You can catch us every weekday morning for 383 00:20:03,960 --> 00:20:05,960 Speaker 2: bin Bag Daybreak you at the beginning at six am 384 00:20:05,960 --> 00:20:07,760 Speaker 2: in London. That's one am on Wall Street. 385 00:20:07,800 --> 00:20:11,199 Speaker 1: John, Thank you, Caroline, and coming up on Bloomberg day 386 00:20:11,240 --> 00:20:14,760 Speaker 1: Break weekend, Ali Baba earnings and the Chinese tech industry. 387 00:20:15,160 --> 00:20:24,199 Speaker 1: I'm Tom Busby. This is Bloomberg. I'm Tom Busby in 388 00:20:24,200 --> 00:20:26,040 Speaker 1: New York with your global look ahead at the top 389 00:20:26,080 --> 00:20:28,840 Speaker 1: stories for investors in the coming week. What's next for 390 00:20:28,960 --> 00:20:32,600 Speaker 1: tech companies in China following the end of a government crackdown. 391 00:20:32,760 --> 00:20:35,720 Speaker 1: Chinese e commerce giant Ali Baba among those in focus 392 00:20:35,800 --> 00:20:37,920 Speaker 1: with an earnings report on tap and for more. Let's 393 00:20:37,960 --> 00:20:41,080 Speaker 1: go to Hong Kong and Bloomberg Daybreak Asia host Brian. 394 00:20:40,840 --> 00:20:44,359 Speaker 4: Curtis Tom Ali Baba reports earnings in the coming week, 395 00:20:44,400 --> 00:20:46,560 Speaker 4: and the results will be arriving at a time that 396 00:20:46,640 --> 00:20:50,720 Speaker 4: the landscape is changing fast, especially for big platform companies 397 00:20:50,720 --> 00:20:53,680 Speaker 4: in China. Ali Baba, May Twan and Peers make it 398 00:20:53,760 --> 00:20:57,119 Speaker 4: an extra subsidy through twenty twenty four to speed up 399 00:20:57,160 --> 00:20:59,959 Speaker 4: their business expansion. That's a step that Paul, as you make, 400 00:21:00,240 --> 00:21:03,400 Speaker 4: is hope will speed up consumption in the country. China 401 00:21:03,440 --> 00:21:05,840 Speaker 4: has been making a number of efforts of late to 402 00:21:06,040 --> 00:21:09,600 Speaker 4: stimulate the economy, and consumption is a very big part 403 00:21:09,760 --> 00:21:12,879 Speaker 4: of that story. Joining us now is Sarah Jung, Bloomberg 404 00:21:12,960 --> 00:21:17,120 Speaker 4: China Technology Reporter. So Sarah, let's talk about the earnings first, 405 00:21:17,280 --> 00:21:20,240 Speaker 4: and then we'll take a look at the broader environment 406 00:21:20,600 --> 00:21:23,360 Speaker 4: and see how that is changing. What are we expecting 407 00:21:23,400 --> 00:21:26,520 Speaker 4: in terms of sales and profits from these earnings in 408 00:21:26,520 --> 00:21:27,280 Speaker 4: this latest quarter. 409 00:21:27,359 --> 00:21:30,280 Speaker 12: We're expecting to see some of the recovery that you 410 00:21:30,400 --> 00:21:35,320 Speaker 12: just talked about being reflected. Obviously, consumption has been more 411 00:21:35,400 --> 00:21:40,040 Speaker 12: uneven than expected following China's reopening, but there have been 412 00:21:40,960 --> 00:21:45,720 Speaker 12: new revenue growth factors that have been injecting momentum in 413 00:21:45,800 --> 00:21:49,480 Speaker 12: the various businesses. And that's because Ali Baba announced its 414 00:21:49,640 --> 00:21:55,040 Speaker 12: historic reshuffling with a division into six individual business units 415 00:21:55,040 --> 00:21:57,800 Speaker 12: earlier this year, and so that's given each of the 416 00:21:57,920 --> 00:22:03,960 Speaker 12: units a chance to actually seek independent funding or public listings. 417 00:22:04,480 --> 00:22:07,439 Speaker 12: So that, in addition to some of the latest leadership 418 00:22:07,720 --> 00:22:13,359 Speaker 12: announcements and reshufflings that we've seen, are expected to bring 419 00:22:13,400 --> 00:22:15,000 Speaker 12: more optimism for investors. 420 00:22:15,400 --> 00:22:19,600 Speaker 4: We understand that the consumption boom is lagging a little 421 00:22:19,600 --> 00:22:23,359 Speaker 4: bit compared to what was expected. Is that the case 422 00:22:23,480 --> 00:22:26,200 Speaker 4: at that end, at the sort of e commerce segment 423 00:22:26,680 --> 00:22:30,040 Speaker 4: that Alibaba represents, or is it right across the board. 424 00:22:30,160 --> 00:22:33,480 Speaker 12: Yeah, we're expecting that to be reflected in terms of 425 00:22:33,520 --> 00:22:35,600 Speaker 12: your on your growth, especially for their bread and butter 426 00:22:35,680 --> 00:22:39,040 Speaker 12: business Talba and t Mal, and also in the international business. 427 00:22:39,480 --> 00:22:42,680 Speaker 12: There's going to be some headwinds from just the broader 428 00:22:42,800 --> 00:22:48,399 Speaker 12: macroeconomic environment for Ali Express, Lozada and Traniol, which is 429 00:22:48,440 --> 00:22:51,119 Speaker 12: their businesses in Europe and Southeast Asia. 430 00:22:51,200 --> 00:22:54,400 Speaker 4: What about the cloud business is that something that will 431 00:22:54,440 --> 00:22:56,600 Speaker 4: stand out in terms of the rest of the earnings. 432 00:22:56,960 --> 00:22:59,840 Speaker 12: So Cloud is very interesting because we saw that the CEO, 433 00:23:00,000 --> 00:23:02,439 Speaker 12: so Daniel Jong, he's stepping down and he's going to 434 00:23:02,480 --> 00:23:07,280 Speaker 12: focus just on heading up Cloud. Cloud is expected to be, 435 00:23:07,480 --> 00:23:09,480 Speaker 12: it was expected to be a pillar of growth for 436 00:23:09,520 --> 00:23:12,840 Speaker 12: Ali Baba in the years to come. It's been you know, 437 00:23:12,920 --> 00:23:14,719 Speaker 12: lost making so far, and it's been losing a bit 438 00:23:14,760 --> 00:23:17,399 Speaker 12: of market share to some of the government state backed 439 00:23:17,680 --> 00:23:21,320 Speaker 12: cloud providers. But because of the energy and the frenzy 440 00:23:21,480 --> 00:23:24,639 Speaker 12: and excitement around AI in China's market right now, that 441 00:23:24,800 --> 00:23:27,760 Speaker 12: is something that we're looking to see Ali Cloud now 442 00:23:27,760 --> 00:23:30,800 Speaker 12: that it's separate and has its own operating environment where 443 00:23:30,840 --> 00:23:34,159 Speaker 12: Daniel John can focus entirely on Cloud to give it 444 00:23:34,240 --> 00:23:35,719 Speaker 12: some new energy. 445 00:23:36,240 --> 00:23:39,520 Speaker 4: So at the top, now, with Joe's High there, it 446 00:23:39,640 --> 00:23:42,480 Speaker 4: seems like it's coincided with his being named to that 447 00:23:42,560 --> 00:23:45,760 Speaker 4: position and Daniel Jong being moved to the Cloud exclusively 448 00:23:46,359 --> 00:23:49,080 Speaker 4: that the stock has kind of caught fire. I'm not 449 00:23:49,160 --> 00:23:51,400 Speaker 4: sure the two are connected, but if you could say 450 00:23:51,400 --> 00:23:53,240 Speaker 4: a couple of words about what it means to have 451 00:23:53,359 --> 00:23:55,120 Speaker 4: Joe's High back in that position. 452 00:23:55,520 --> 00:23:58,040 Speaker 12: Sure, So Joe's high. He's a known entity. He's been 453 00:23:58,040 --> 00:24:01,040 Speaker 12: with Alibaba since the very beginning. Having him there as 454 00:24:01,080 --> 00:24:04,400 Speaker 12: a reliable, you know, person at the helm of the company, 455 00:24:04,600 --> 00:24:08,280 Speaker 12: that's something that investors are excited about. Same with the 456 00:24:08,320 --> 00:24:11,439 Speaker 12: new CEO, Eddie Wu. He's also been a longtime veteran 457 00:24:11,480 --> 00:24:14,320 Speaker 12: of the company. So these are people who have been 458 00:24:14,560 --> 00:24:16,880 Speaker 12: with Jack Maw who's sort of still the spiritual leader 459 00:24:16,880 --> 00:24:20,640 Speaker 12: of the company from the very beginning. Again, known entities, 460 00:24:20,840 --> 00:24:23,520 Speaker 12: known quantities who have been heading up some of the 461 00:24:23,560 --> 00:24:26,560 Speaker 12: major units since the beginning. Eddie Wu, for example, he 462 00:24:27,000 --> 00:24:29,320 Speaker 12: was the chief architect of some of Ali Baba's flagship 463 00:24:29,320 --> 00:24:30,680 Speaker 12: products like Taba. 464 00:24:30,280 --> 00:24:30,800 Speaker 9: And t mal. 465 00:24:31,720 --> 00:24:34,080 Speaker 12: So we know that we know positive. 466 00:24:34,320 --> 00:24:35,040 Speaker 6: It's a positive. 467 00:24:35,160 --> 00:24:35,640 Speaker 8: That's right. 468 00:24:35,720 --> 00:24:38,680 Speaker 4: You mentioned Jack Maw is still the spiritual leader of 469 00:24:38,760 --> 00:24:41,840 Speaker 4: Ali Baba, and I'm just curious about to what extent 470 00:24:41,880 --> 00:24:44,080 Speaker 4: he's still involved in the running of the company. 471 00:24:44,600 --> 00:24:47,880 Speaker 12: It's interesting because earlier this year when he reappeared on campus, 472 00:24:47,960 --> 00:24:51,280 Speaker 12: employees were so excited to see him, and that sort 473 00:24:51,320 --> 00:24:55,280 Speaker 12: of speaks to the mantra and maxims that he has 474 00:24:55,320 --> 00:24:58,480 Speaker 12: instilled in the company's culture from the beginning. Joe Tie 475 00:24:58,480 --> 00:25:00,560 Speaker 12: and Eddie Woo. Like I mentioned, they both embody that 476 00:25:00,600 --> 00:25:03,800 Speaker 12: as well. He is not directly involved in the day 477 00:25:03,840 --> 00:25:07,840 Speaker 12: to day operations from what we know anymore, given the 478 00:25:07,880 --> 00:25:10,639 Speaker 12: regulatory scrutiny and the tech crackdown over the last two years, 479 00:25:10,640 --> 00:25:13,240 Speaker 12: he's really been stepping back from the limelight, and there 480 00:25:13,280 --> 00:25:15,480 Speaker 12: was a lot of speculation before about whether or not 481 00:25:15,520 --> 00:25:18,920 Speaker 12: he could return to China. We did see him back 482 00:25:18,920 --> 00:25:22,600 Speaker 12: in Honzo, so that's another positive sign from the regulatory side. 483 00:25:22,720 --> 00:25:26,000 Speaker 4: Now, I'm curious about the overall environment. We've had a 484 00:25:26,040 --> 00:25:28,280 Speaker 4: little bit of a change in thinking in China, I 485 00:25:28,280 --> 00:25:32,159 Speaker 4: think from policymakers, even to the extent that in the 486 00:25:32,240 --> 00:25:35,320 Speaker 4: property market, what they've been saying now is they've sort 487 00:25:35,320 --> 00:25:38,439 Speaker 4: of not repeated the old mantra that houses are for 488 00:25:38,520 --> 00:25:42,359 Speaker 4: living in, not for investing in. I wonder if the 489 00:25:42,359 --> 00:25:45,720 Speaker 4: attitude has changed for the big technology companies, the big 490 00:25:45,760 --> 00:25:49,560 Speaker 4: platform companies. It seems like ever since the ant IPO 491 00:25:49,760 --> 00:25:53,679 Speaker 4: was pulled that big was bad and they wanted to 492 00:25:53,720 --> 00:25:56,919 Speaker 4: support smaller companies, and I wonder whether or not that 493 00:25:57,000 --> 00:25:58,600 Speaker 4: has changed right exactly. 494 00:25:58,600 --> 00:26:01,080 Speaker 12: It's really interesting we're seeing more and more signs from 495 00:26:01,119 --> 00:26:04,840 Speaker 12: regulators that they want the big tech companies Tencent, Ali 496 00:26:04,840 --> 00:26:07,760 Speaker 12: Baba by doing the rest to help them resuscitate what's 497 00:26:07,800 --> 00:26:10,200 Speaker 12: really a flagging economy at the at the. 498 00:26:10,160 --> 00:26:11,920 Speaker 4: Moment, so so Big is okay. 499 00:26:11,960 --> 00:26:13,600 Speaker 11: Now, we won't see. 500 00:26:13,480 --> 00:26:17,400 Speaker 12: Them return to sort of the swaggering days of before 501 00:26:18,240 --> 00:26:24,000 Speaker 12: COVID zero, before the tech crackdown in but we will 502 00:26:24,040 --> 00:26:27,600 Speaker 12: see them slightly be unshackled to be able to pursue 503 00:26:27,880 --> 00:26:30,800 Speaker 12: sort of tech sectors that Beijing sees as its primary 504 00:26:31,320 --> 00:26:36,040 Speaker 12: priorities strategically, So for example, in AI, cloud, computing, chips, 505 00:26:36,200 --> 00:26:38,280 Speaker 12: these are all strategic areas they need to compete with 506 00:26:38,320 --> 00:26:40,240 Speaker 12: the US, and we're going to see them be able 507 00:26:40,320 --> 00:26:42,080 Speaker 12: to move forward in those areas. 508 00:26:42,160 --> 00:26:44,720 Speaker 4: In the past, they snapped up a lot of smaller companies, 509 00:26:44,760 --> 00:26:49,800 Speaker 4: startups and really used the energy there. And you know, 510 00:26:49,840 --> 00:26:54,320 Speaker 4: the push in new technology areas is that likely to continue. 511 00:26:53,960 --> 00:26:56,879 Speaker 12: That it seems like is still being rained in to 512 00:26:57,440 --> 00:26:59,520 Speaker 12: some extent. So we're not going to see them be 513 00:26:59,840 --> 00:27:03,040 Speaker 12: the main drivers of venture capital and investment. So a 514 00:27:03,080 --> 00:27:05,399 Speaker 12: lot of the startups we're talking to now they're not 515 00:27:05,520 --> 00:27:09,000 Speaker 12: really looking for investments from Tensen and some of the 516 00:27:09,000 --> 00:27:12,040 Speaker 12: big giants anymore. Now they're more focused on just like 517 00:27:12,119 --> 00:27:17,919 Speaker 12: smaller level applications and working with maybe early stage kind 518 00:27:17,960 --> 00:27:20,560 Speaker 12: of investors rather than trying to be acquired by the 519 00:27:20,560 --> 00:27:21,200 Speaker 12: big giants. 520 00:27:21,760 --> 00:27:24,239 Speaker 4: And I wonder whether or not they're as successful as 521 00:27:24,280 --> 00:27:26,639 Speaker 4: they were before in attracting talent. 522 00:27:27,520 --> 00:27:30,240 Speaker 12: Talent is a big problem. Like we've been sort of 523 00:27:30,320 --> 00:27:33,720 Speaker 12: dancing around this issue of China's likeish economy and so 524 00:27:33,880 --> 00:27:37,040 Speaker 12: youth unemployment. That's a really big issue. Another reason why 525 00:27:37,080 --> 00:27:40,159 Speaker 12: Beijing wants these big tech companies to come back and 526 00:27:40,280 --> 00:27:45,199 Speaker 12: revive some of that employment situation. But yeah, talent is 527 00:27:45,240 --> 00:27:47,800 Speaker 12: definitely a big issue. We were seeing some layoffs from 528 00:27:47,840 --> 00:27:51,880 Speaker 12: some of these companies and just a lot of anecdotes 529 00:27:52,040 --> 00:27:55,119 Speaker 12: about people leaving the industry or not being able to 530 00:27:55,119 --> 00:27:57,120 Speaker 12: get the same kind of bonuses that they did before. 531 00:27:57,600 --> 00:28:01,159 Speaker 4: Now, we had an interesting moment recently where and wanted 532 00:28:01,200 --> 00:28:04,960 Speaker 4: to buy back shares and wanted to buy back shares 533 00:28:05,119 --> 00:28:09,040 Speaker 4: from all the shareholders, including the biggest one, Ali Baba, 534 00:28:09,119 --> 00:28:12,080 Speaker 4: and Ali Baba chose not to sell. Now, some people 535 00:28:12,080 --> 00:28:15,359 Speaker 4: interpreted that as a positive because it meant that Ali 536 00:28:15,359 --> 00:28:20,240 Speaker 4: Baba wanted to retain, you know, more ownership and involvement 537 00:28:20,600 --> 00:28:23,239 Speaker 4: in Ant, and others might have wondered whether or not 538 00:28:23,680 --> 00:28:25,600 Speaker 4: that meant that there was a little bit of difference 539 00:28:25,640 --> 00:28:28,800 Speaker 4: in the management teams. Have we been able to explore that. 540 00:28:29,400 --> 00:28:32,000 Speaker 12: We have, So I think what Ali Baba said officially 541 00:28:32,080 --> 00:28:34,560 Speaker 12: is that they decided not to sell any of their 542 00:28:34,600 --> 00:28:38,200 Speaker 12: stake because and is still an important strategic partner to them. 543 00:28:38,280 --> 00:28:41,360 Speaker 12: And what analysts say is that actually they're really hoping that, 544 00:28:41,680 --> 00:28:43,640 Speaker 12: you know, as ant starts to come back, they're able 545 00:28:43,640 --> 00:28:46,560 Speaker 12: to build up their business again they can help contribute to, 546 00:28:47,160 --> 00:28:50,880 Speaker 12: for example, Ali Baba Cloud Ali Cloud's growth going forward. 547 00:28:51,040 --> 00:28:54,360 Speaker 12: They have been a really big contributor to their revenue, 548 00:28:54,520 --> 00:28:56,600 Speaker 12: and now that they can build themselves back up again 549 00:28:56,840 --> 00:29:00,480 Speaker 12: and expand, they can again be one of the highest 550 00:29:00,480 --> 00:29:02,640 Speaker 12: contributors to that cloud revenue. 551 00:29:03,040 --> 00:29:06,480 Speaker 4: So we've seen Ali Baba split into six different parts, 552 00:29:06,920 --> 00:29:09,960 Speaker 4: and that's as kind of slow in rolling out for 553 00:29:10,080 --> 00:29:12,720 Speaker 4: the other big companies like ten Cent and may Twan 554 00:29:13,800 --> 00:29:16,400 Speaker 4: and perhaps a few others, is it likely they'll take 555 00:29:16,400 --> 00:29:17,280 Speaker 4: that path as well. 556 00:29:18,000 --> 00:29:21,680 Speaker 12: Olibaba actually is relatively unique in this aspect where we've 557 00:29:21,760 --> 00:29:24,240 Speaker 12: when we talk to analysts, they say that splitting into 558 00:29:24,240 --> 00:29:27,719 Speaker 12: six different units allows them to unlock different kinds of 559 00:29:27,840 --> 00:29:31,120 Speaker 12: business potential of these individual units. So for example like 560 00:29:31,600 --> 00:29:36,280 Speaker 12: Ali Clouds, Tau which is a logistics arm and uh 561 00:29:36,440 --> 00:29:40,040 Speaker 12: International Digital Commerce so for example Ali Express, Lazada. They 562 00:29:40,080 --> 00:29:43,800 Speaker 12: all have business models that can be spun off relatively independently. 563 00:29:44,000 --> 00:29:46,400 Speaker 12: Where it's different from a company like Tencent, which is 564 00:29:46,440 --> 00:29:49,360 Speaker 12: built around we Chat, this everything app that everyone uses 565 00:29:49,440 --> 00:29:52,280 Speaker 12: in China. It's a lot harder to break off parts 566 00:29:52,320 --> 00:29:56,400 Speaker 12: of the Tencent, you know, business from that core ecosystem, 567 00:29:56,560 --> 00:29:59,680 Speaker 12: so we're not expecting to see the same kinds of 568 00:29:59,720 --> 00:30:02,640 Speaker 12: movement it's from competitors like Tencent. 569 00:30:02,960 --> 00:30:07,040 Speaker 4: Sarah Young, Bloomberg China Technology Reporter. I'm Brian Curtis along 570 00:30:07,080 --> 00:30:10,080 Speaker 4: with Doug Christner. You can catch us every weekday here 571 00:30:10,160 --> 00:30:13,000 Speaker 4: for Bloomberg day Break Asia, beginning at six am in 572 00:30:13,120 --> 00:30:15,720 Speaker 4: Hong Kong and six pm on Wall Street. 573 00:30:16,000 --> 00:30:18,840 Speaker 1: Tom, thank you, Brian, And coming up here on Bloomberg 574 00:30:18,880 --> 00:30:21,200 Speaker 1: day Break Weekend, we go to Washington and I'll look 575 00:30:21,240 --> 00:30:24,400 Speaker 1: at all the union activity lately and what this means 576 00:30:24,520 --> 00:30:28,280 Speaker 1: for the presidential race. I'm Tom Busby. This is Bloomberg. 577 00:30:33,640 --> 00:30:36,040 Speaker 1: This is Bloomberg day Break Weekend, our global look ahead 578 00:30:36,040 --> 00:30:38,200 Speaker 1: at the top stories for investors in the coming week. 579 00:30:38,320 --> 00:30:41,400 Speaker 1: I'm Tom Busby in New York labor and politics and 580 00:30:41,480 --> 00:30:44,719 Speaker 1: focus as we head to the twenty twenty four presidential election. 581 00:30:45,000 --> 00:30:47,280 Speaker 1: For more, let's head to our Bloomberg ninety nine one 582 00:30:47,360 --> 00:30:50,520 Speaker 1: News from in Washington and Bloomberg Sound On. Co host 583 00:30:50,640 --> 00:30:51,960 Speaker 1: Kaylee lines. 584 00:30:51,880 --> 00:30:54,640 Speaker 5: Tom, that's right, labor has been a hot button issue 585 00:30:54,640 --> 00:30:57,080 Speaker 5: this summer. So joining me now to talk more about 586 00:30:57,160 --> 00:30:59,720 Speaker 5: labor is Ian Colgran, who reports on the subject for 587 00:30:59,800 --> 00:31:03,160 Speaker 5: us you're at Bloomberg. So first of all, let's just 588 00:31:03,200 --> 00:31:06,320 Speaker 5: talk about ups. This deal with the Teamsters is just 589 00:31:06,320 --> 00:31:08,320 Speaker 5: a handshake deal at this point, right, Is there any 590 00:31:08,400 --> 00:31:10,200 Speaker 5: chance that it's not going to be ratified. 591 00:31:10,440 --> 00:31:14,040 Speaker 11: There's always a chance that a deal won't be ratified 592 00:31:14,200 --> 00:31:17,040 Speaker 11: and that everybody is going to be surprised. At this point, 593 00:31:17,080 --> 00:31:21,520 Speaker 11: it's looking, however, like the deal probably will get through. 594 00:31:21,760 --> 00:31:25,200 Speaker 11: There was a near unanimous vote of the local chapters 595 00:31:25,240 --> 00:31:28,080 Speaker 11: of the Teamsters that endorsed it. However, that doesn't mean 596 00:31:28,120 --> 00:31:31,040 Speaker 11: there's not grassroots opposition to this deal, and in fact 597 00:31:31,160 --> 00:31:34,800 Speaker 11: there is. Just yesterday talked to one of the leaders 598 00:31:35,120 --> 00:31:38,600 Speaker 11: of one of the vote No campaigns who is just 599 00:31:38,640 --> 00:31:44,560 Speaker 11: starting to ramp up the campaign and holding webinars and 600 00:31:44,600 --> 00:31:47,960 Speaker 11: getting the word out on Twitter and Instagram, other social media. 601 00:31:48,480 --> 00:31:51,920 Speaker 11: So we'll see if some of this opposition metastasizes in 602 00:31:51,960 --> 00:31:54,800 Speaker 11: the next couple of weeks as teamsters vote. But at 603 00:31:54,840 --> 00:31:58,720 Speaker 11: this point it's looking fairly fairly safe to stay there 604 00:31:58,760 --> 00:31:59,720 Speaker 11: won't be a strike. 605 00:32:00,000 --> 00:32:01,840 Speaker 5: And maybe we won't see a strike in that case, 606 00:32:01,880 --> 00:32:04,800 Speaker 5: But what's the likelihood we will see more strikes this 607 00:32:04,920 --> 00:32:07,280 Speaker 5: summer or later on this year? I'm thinking of the 608 00:32:07,320 --> 00:32:08,840 Speaker 5: auto workers primarily here. 609 00:32:09,160 --> 00:32:12,160 Speaker 11: Strikes, as we've seen over the past few months, are 610 00:32:12,760 --> 00:32:16,400 Speaker 11: events that tend to build on one another. You see 611 00:32:16,600 --> 00:32:20,719 Speaker 11: all of the action going on in Hollywood right now. 612 00:32:20,960 --> 00:32:25,680 Speaker 11: There is certainly a possibility that the auto workers could 613 00:32:26,040 --> 00:32:30,880 Speaker 11: strike when their contract expires in September. It's something that 614 00:32:30,920 --> 00:32:33,840 Speaker 11: they have not been shy to do in the past. 615 00:32:34,200 --> 00:32:36,320 Speaker 11: In twenty nineteen, they went on a six week strike, 616 00:32:36,320 --> 00:32:40,360 Speaker 11: which was the longest strike ever for the autoworker's longest 617 00:32:40,600 --> 00:32:43,840 Speaker 11: auto strike in the history of the United States. And 618 00:32:43,920 --> 00:32:48,600 Speaker 11: now they have a fiery new leader who has promised 619 00:32:48,640 --> 00:32:53,280 Speaker 11: to really take the companies to task, and that will 620 00:32:53,520 --> 00:32:56,640 Speaker 11: be a whole different dynamic here as we get closer 621 00:32:56,800 --> 00:32:59,440 Speaker 11: to the drop dead day for negotiation. 622 00:33:00,040 --> 00:33:02,360 Speaker 5: Speaking of leaders, Ian, how does all this play for 623 00:33:02,520 --> 00:33:05,960 Speaker 5: President Biden, who has tried very hard to bill himself 624 00:33:06,000 --> 00:33:07,440 Speaker 5: as a pro labor president. 625 00:33:07,720 --> 00:33:10,960 Speaker 11: All of these strikes put President Biden in a tough 626 00:33:11,000 --> 00:33:17,440 Speaker 11: spot because it essentially forces him to choose between the 627 00:33:17,560 --> 00:33:20,320 Speaker 11: union and the company, and that's not a choice that 628 00:33:20,360 --> 00:33:24,000 Speaker 11: he wants to make under any circumstance. He's somebody who 629 00:33:24,080 --> 00:33:30,200 Speaker 11: has also tried very hard to champion manufacturing and American 630 00:33:30,600 --> 00:33:34,360 Speaker 11: innovation under his administration, and it's just sort of a 631 00:33:34,400 --> 00:33:38,200 Speaker 11: just sort of a no win situation for the president 632 00:33:38,440 --> 00:33:40,680 Speaker 11: if he is to intervene in some of these strikes, 633 00:33:40,720 --> 00:33:43,600 Speaker 11: because he's going to have to make somebody really unhappy. 634 00:33:43,800 --> 00:33:47,280 Speaker 11: And in the case of the rail deal late last year, 635 00:33:47,720 --> 00:33:50,120 Speaker 11: he did have to make a lot of union members 636 00:33:50,320 --> 00:33:55,320 Speaker 11: really unhappy by forcing a deal through Congress to a 637 00:33:55,440 --> 00:33:58,080 Speaker 11: void a potentially crippling strike for the US to play chain. 638 00:33:58,200 --> 00:34:00,360 Speaker 5: So how do you think this will play in the 639 00:34:00,400 --> 00:34:03,520 Speaker 5: twenty twenty four race, Considering he's not just sitting president, 640 00:34:03,600 --> 00:34:04,800 Speaker 5: he's seeking reelection. 641 00:34:05,200 --> 00:34:08,960 Speaker 11: He's certainly risks alienating his base if he angers too 642 00:34:09,000 --> 00:34:12,040 Speaker 11: many union members by siding against them in some of 643 00:34:12,040 --> 00:34:16,040 Speaker 11: these negotiations. They're going to be watching closely to the 644 00:34:16,480 --> 00:34:22,120 Speaker 11: whether his actions and his words match. It's something that 645 00:34:22,520 --> 00:34:27,880 Speaker 11: no president really wants to deal with during a reelection campaign. 646 00:34:28,120 --> 00:34:32,480 Speaker 11: It's a show of populist anger from the base that 647 00:34:32,640 --> 00:34:39,400 Speaker 11: has very little chance of benefiting a moderate incmbent like 648 00:34:39,440 --> 00:34:40,120 Speaker 11: President Vibe. 649 00:34:40,320 --> 00:34:44,160 Speaker 5: Well, looking forward to your continued coverage of the labor strife. 650 00:34:44,200 --> 00:34:46,600 Speaker 5: Ian Kolgrin, who reports on labor for Bloomberg, thank you 651 00:34:46,640 --> 00:34:48,200 Speaker 5: so much, and Tom back to you. 652 00:34:48,520 --> 00:34:51,360 Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host 653 00:34:51,400 --> 00:34:54,440 Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine one newsroom 654 00:34:54,520 --> 00:34:57,560 Speaker 1: in Washington, and you can hear sound on weekdays one 655 00:34:57,600 --> 00:35:00,160 Speaker 1: to three pm on Bloomberg Radio. And that does for 656 00:35:00,200 --> 00:35:02,560 Speaker 1: this edition of Bloomberg day Break Weekend. Join us again 657 00:35:02,600 --> 00:35:04,600 Speaker 1: Monday morning at five am Wall Street Time for the 658 00:35:04,680 --> 00:35:07,319 Speaker 1: latest on markets overseas and the news you need to 659 00:35:07,360 --> 00:35:08,040 Speaker 1: start your day. 660 00:35:08,239 --> 00:35:09,080 Speaker 3: I'm Tom Busby. 661 00:35:09,320 --> 00:35:09,960 Speaker 12: Stay with us. 662 00:35:10,040 --> 00:35:12,919 Speaker 1: Top stories and global business headlines are coming up right now.