WEBVTT - Bloomberg Daybreak Holiday Edition 0:00:01.400 --> 0:00:03.360 Thank you so much for joining us on this good 0:00:03.400 --> 0:00:07.360 Friday edition of Bloomberg Daybreak. I'm Nathan Hagar coming up 0:00:07.400 --> 0:00:10.360 this hour with so much division on Capitol Hill, is 0:00:10.400 --> 0:00:13.280 the US in real jeopardy of defaulting on its debt? 0:00:13.440 --> 0:00:15.760 We'll look at the debate awaiting lawmakers when they get 0:00:15.800 --> 0:00:19.000 back from the holiday with Bloomberg Government's Emily Wilkins. Plus, 0:00:19.040 --> 0:00:20.560 we'll take you to part of the country that has 0:00:20.600 --> 0:00:23.480 traditionally been a pretty good indicator of the economy. We'll 0:00:23.480 --> 0:00:26.560 tell you why it's now flashing signs of a recession. Plus, 0:00:26.760 --> 0:00:28.680 we'll take it to Geneva, where one of the year's 0:00:28.720 --> 0:00:33.200 biggest events in the luxury watch industry just wrapped up. First, though, 0:00:33.200 --> 0:00:35.800 it was a shock to commodity markets to begin the 0:00:35.800 --> 0:00:40.120 week at surprise production cut from OPEC Plus for more 0:00:40.159 --> 0:00:42.920 on the short and long term implications of this move 0:00:43.000 --> 0:00:45.600 in the oil space, We're pleased to welcome Stephen Schork, 0:00:45.880 --> 0:00:48.559 who of course covers energy markets as president of the 0:00:48.600 --> 0:00:51.280 Short Group. Stephen, thanks for being with us. How big 0:00:51.280 --> 0:00:53.960 a surprise was this for you to hear OPEC plus 0:00:53.960 --> 0:00:55.280 come out and say we're going to take more than 0:00:55.320 --> 0:00:58.400 a million barrels off the market every day. It was 0:00:58.480 --> 0:01:02.440 a surprise, but but not shocking surprise. Actually, I thought 0:01:02.480 --> 0:01:06.640 we would have more hawkish rhetoric out of OPEC in 0:01:06.680 --> 0:01:10.960 their prior meeting, so this did come out of the blows. 0:01:11.040 --> 0:01:15.160 So I was surprised that we didn't get a hawkish 0:01:15.280 --> 0:01:18.280 rhetoric the last time and the last go around, and 0:01:18.440 --> 0:01:22.080 I'm surprised that it happened now, but not shocked. So 0:01:22.880 --> 0:01:25.920 the real shocking thing is not the cut itself, but 0:01:26.000 --> 0:01:30.080 what the cut tells us. And first and foremost, it 0:01:30.200 --> 0:01:33.679 isn't a political move. Yeah, there's the old Saint on 0:01:33.720 --> 0:01:36.759 Wall Street that bulls and bears make money, hogs get slaughtered. 0:01:37.160 --> 0:01:40.759 And OPEC is very aware there's a limit to how 0:01:40.840 --> 0:01:43.880 high they want prices to go. And what they're telling 0:01:43.959 --> 0:01:47.480 us now by this production cut is they're very skeptical 0:01:47.720 --> 0:01:52.520 about the economy, the global economy, and therefore they want 0:01:52.560 --> 0:01:56.440 to get ahead of any sort of demand destruction. So 0:01:56.480 --> 0:01:59.520 they've decided to pull that supply off of the market. 0:01:59.800 --> 0:02:01.920 So it's more of a kind of a canary in 0:02:01.960 --> 0:02:04.720 a coal mine, and for all of us, that canary 0:02:05.480 --> 0:02:08.560 is sucking wind right now, telling us that there are 0:02:08.600 --> 0:02:11.560 some economic headwinds in the nearby future. Is that a 0:02:11.560 --> 0:02:14.760 concern that you share with the oil ministers at OPEC, 0:02:14.840 --> 0:02:19.680 Plus that we could see demand concerns for energy in 0:02:19.720 --> 0:02:23.799 the months to come here, Well, it really seems that 0:02:25.440 --> 0:02:28.160 the OPEC and kind of the all the language we 0:02:28.160 --> 0:02:31.079 were getting out of China is China was full steam 0:02:31.120 --> 0:02:36.840 ahead with regard to summer demand. And so I didn't 0:02:36.880 --> 0:02:39.200 quite buy into that. I don't buy into anything that 0:02:39.240 --> 0:02:43.480 comes out of official reports coming out of China. They 0:02:43.520 --> 0:02:46.160 did raise their quotas they did, they did signal some 0:02:46.360 --> 0:02:50.440 some demand uptick and they have been buying for an 0:02:50.440 --> 0:02:54.519 oil they have in buying US crude oil. But that said, 0:02:55.080 --> 0:02:59.280 I cannot argue with this when we look at sort 0:02:59.320 --> 0:03:02.160 of the the headlines that are coming out, the I 0:03:02.400 --> 0:03:06.440 S numbers, n numbers, the industrial production numbers, record credit 0:03:06.480 --> 0:03:09.720 card debt, uh, you know, so forth, there are a 0:03:09.760 --> 0:03:13.120 lot of indications out there that the economy has a 0:03:13.200 --> 0:03:17.799 big up uphill battle and the thing really shaving kind 0:03:17.840 --> 0:03:20.080 of the the you know, the bulls, you know, the 0:03:20.240 --> 0:03:24.239 on the economic front was strong, you know, strong job numbers, 0:03:24.240 --> 0:03:26.560 which are battle you know, to me, they are baffling. 0:03:27.440 --> 0:03:31.200 But look, we just got the job, job opening, and 0:03:31.280 --> 0:03:34.000 labor turnover surveyed. The Jolts report out of the BLS 0:03:34.040 --> 0:03:36.560 the other day and it disappointed. It was a downer 0:03:37.120 --> 0:03:40.160 um and then the ADPEP report came out today with 0:03:40.280 --> 0:03:45.000 jobs again another downer. So if that if we get 0:03:45.080 --> 0:03:48.360 confirmation you know a month, oh you know, this month, 0:03:48.440 --> 0:03:51.480 next month, so forth in the in the BLS employment numbers, 0:03:51.720 --> 0:03:54.200 then yeah, we we Yeah, I'm certainly buying into the 0:03:54.200 --> 0:03:57.880 theory that we got trouble ahead. Okay, so we have 0:03:58.000 --> 0:04:02.360 a lot of these economic potential head wins moving forward. Here. 0:04:02.520 --> 0:04:05.960 What's the potential that if we do start to see 0:04:06.280 --> 0:04:10.880 commodity prices spike with this level of production coming off 0:04:10.920 --> 0:04:16.839 the market, adding even further to those macroeconomic pressure Stephen, Oh, 0:04:16.880 --> 0:04:18.640 if we see the spike, and you know, keep in 0:04:18.720 --> 0:04:23.040 mind we had a significant sell off over the prior 0:04:23.120 --> 0:04:27.040 two weeks related to first with Signature Banking then SVB. 0:04:28.000 --> 0:04:31.080 So there are those issues and the banking system, as 0:04:31.120 --> 0:04:34.039 Jamie Diamonds just said, there are troubles there now. A 0:04:34.120 --> 0:04:36.960 banking crisis has been an antecede into two of the 0:04:37.000 --> 0:04:40.120 prior three recessions. Of course, what we all can remember 0:04:40.120 --> 0:04:43.880 what happened during the mortgage backed securities in Great Recession, 0:04:43.920 --> 0:04:45.960 but we also had the recession that was brought on 0:04:46.040 --> 0:04:50.520 by the SNL crisis. So right now we have one 0:04:50.720 --> 0:04:53.720 of the fuses lit for an implosion in the economy. 0:04:54.320 --> 0:04:57.360 What also, going back to two thousand and eight, what 0:04:57.400 --> 0:05:01.320 we saw was oil prices one hundred and fifty dollars, 0:05:01.520 --> 0:05:05.840 massive increases and energy costs, which of course hampered US 0:05:05.920 --> 0:05:08.520 spending this time around. Yes, we did get to one 0:05:08.560 --> 0:05:11.520 hundred and fifty dollars last year. We didn't stay there, 0:05:11.880 --> 0:05:15.680 but we've stayed high on the energy front and also 0:05:16.080 --> 0:05:20.479 on the entire inflation front. So consumers, I think it's 0:05:20.560 --> 0:05:25.000 thirty three straight months that they're purchasing power has decreased. 0:05:25.200 --> 0:05:28.520 So for thirty three straight months, we're getting poorer each month. 0:05:29.480 --> 0:05:33.440 I just intuitively, logically, I have to think that is 0:05:33.480 --> 0:05:36.000 going to have a carry on. Now, if this spike 0:05:36.520 --> 0:05:41.120 goes any higher than what we've already seen, than yeah, 0:05:41.360 --> 0:05:45.599 the odds are for a significant downturn. But what I 0:05:45.640 --> 0:05:48.960 want to point out now is Sunday night, the first 0:05:49.000 --> 0:05:53.400 opportunity to trade the OPEC number, the market surged higher. Okay, 0:05:53.760 --> 0:05:56.600 hasn't gone any higher since then. So all we are 0:05:56.720 --> 0:05:59.640 right now is right back to where we wore prior 0:05:59.680 --> 0:06:04.599 to the of the S ANDDB a catastrophe. So kind 0:06:04.640 --> 0:06:06.359 of like the market is kind of like pumping the 0:06:06.400 --> 0:06:10.880 brakes here. The bulls are not getting any carry over momentum. 0:06:11.160 --> 0:06:14.120 Now if you're bullish, if you bought Sunday night, you're 0:06:14.160 --> 0:06:16.240 out of the money right now. And you know, with 0:06:16.600 --> 0:06:19.760 us allegedly bullish, this headline was you're not getting any 0:06:19.760 --> 0:06:23.559 followed through and that is a very clear telltale that 0:06:24.160 --> 0:06:26.480 the market is skeptical. I don't think skeptical of the 0:06:26.480 --> 0:06:28.919 OPEC decision that they'll carry through. I think they are 0:06:29.000 --> 0:06:32.080 skeptical of what the OPEC decision is telling them about 0:06:32.080 --> 0:06:35.400 the economy. Speaking with Stephen Short, oil analyst and president 0:06:35.440 --> 0:06:38.080 of the Short Group here on Bloomberg Day Break, So 0:06:38.120 --> 0:06:41.840 we talked about the short term implications here. Stephen, what's 0:06:41.880 --> 0:06:45.080 your longer term view on what this could mean for 0:06:45.320 --> 0:06:49.800 oil prices? Are you changing your target for where barrel 0:06:49.800 --> 0:06:53.560 accrude could go from here? Well, I run probabilistic models 0:06:53.560 --> 0:06:55.120 and ate Nathan that that kind of gives you a 0:06:55.240 --> 0:07:01.400 range and likelihood based on uncertain giving odds of prices happening, 0:07:01.880 --> 0:07:05.160 and we've been in the upper range since the beginning 0:07:05.200 --> 0:07:07.440 of the year. What I've shared with with with with 0:07:07.520 --> 0:07:11.160 clients and analysis for clients, and that was oil bottoming 0:07:11.200 --> 0:07:14.560 in the seventy dollars area, that is the Brent crudal 0:07:14.680 --> 0:07:17.440 market more of a global market, which means that w 0:07:17.640 --> 0:07:20.720 TI would would would bottom some near somewhere around there, 0:07:20.840 --> 0:07:25.000 you know, high sixties. And that's exactly where where we've bottomed. UH. 0:07:25.040 --> 0:07:27.720 And the catalyst was that for was for that major headline, 0:07:27.760 --> 0:07:32.280 the SVB. But we we've ricocheted back. We're back around 0:07:32.400 --> 0:07:34.720 hovering eighty dollars a barrel. So we're right in the 0:07:34.760 --> 0:07:38.400 middle of where I expected to meet and we'll call 0:07:38.440 --> 0:07:41.400 it the sixty eight percent. That that one standard deviation 0:07:41.400 --> 0:07:43.960 of where my outcomes were coming out. They were coming 0:07:43.960 --> 0:07:47.720 out between seventy ninety dollars. Now, when we move further 0:07:47.800 --> 0:07:50.800 out on the tail and we factor in a potential 0:07:51.320 --> 0:07:56.600 UH demand destruction going forth for at least this month, 0:07:57.200 --> 0:07:59.680 UH in the what we can get down into the 0:07:59.720 --> 0:08:03.880 low sixties and in the first quarter oil below fifty 0:08:03.920 --> 0:08:07.000 dollars in a severe recession ALLAH akin to what we 0:08:07.080 --> 0:08:09.560 saw in O eight oh nine that we're talking about 0:08:09.560 --> 0:08:12.160 oil back down below fifty dollars barrel. Do you see 0:08:12.160 --> 0:08:15.560 a move like this having an impact on diversification of 0:08:15.600 --> 0:08:18.400 the energy mix. Do renewables get a lift if we 0:08:18.480 --> 0:08:21.920 start to see more pressure on fossil fuel prices? No, 0:08:22.040 --> 0:08:24.840 because renewables have been one of the catalysts for the 0:08:25.040 --> 0:08:28.440 rise in fossil fuel. I mean nothing, nothing brought coal 0:08:28.560 --> 0:08:33.040 back or wood burning back in Europe this winter than 0:08:33.240 --> 0:08:36.360 what we've seen, the manipulation that we saw with carbon 0:08:36.400 --> 0:08:39.760 credits and renewable prices. So, for crying out loud, Germany 0:08:39.800 --> 0:08:43.839 was cutting down ancient forests for fuel this So no, 0:08:43.920 --> 0:08:47.520 I don't I think what's going to happen is not diversification. 0:08:47.800 --> 0:08:50.800 We need national security. And the problem with renewables, which 0:08:50.800 --> 0:08:52.520 I'm a big fan of, Nathan, you and I were 0:08:52.559 --> 0:08:56.520 just having an off phone talk here. We both have 0:08:56.880 --> 0:08:59.920 versions of you. You have all electric, I have hybrid electric. 0:09:00.160 --> 0:09:02.240 I'm a big fan of it. But it can't do 0:09:02.280 --> 0:09:06.000 it alone, nowhere near alone. So the renewables are part 0:09:06.000 --> 0:09:09.560 of the answer. Fossil fuels hydrocarbons are more of the 0:09:09.600 --> 0:09:11.840 complete answer. And I'm not even go to nukes because 0:09:11.840 --> 0:09:14.679 that's the hundred percent answer. We're not there yet at 0:09:14.679 --> 0:09:17.520 this point. So no, given I think renewables are a 0:09:17.559 --> 0:09:20.360 big driver with the lack of money so forth going 0:09:20.360 --> 0:09:24.439 into hydrocarbon infrastructure longer term out, they're the catalyst, that's 0:09:24.480 --> 0:09:28.439 the catalyst for high prices. So as long as we continue, 0:09:28.480 --> 0:09:31.600 we in the West, continue to pursue a zero sum 0:09:31.720 --> 0:09:34.960 game where we don't want any investments in hydrocarbons and 0:09:35.000 --> 0:09:38.760 we want it in a source that is not reliable. 0:09:39.320 --> 0:09:43.319 Wind solar not reliable, and they're terrible. They're just as 0:09:43.320 --> 0:09:47.680 bad for the environment, Believe it or not, when we 0:09:47.760 --> 0:09:51.360 talk about non recyclable plastics in windmills, we talked about batteries, 0:09:51.400 --> 0:09:54.680 we're talking about landfill fill ups, We're talking about degradation 0:09:54.960 --> 0:09:57.280 of the environment. We're digging up these rare earths, and 0:09:57.320 --> 0:09:59.640 we're digging up rare earths in countries that are not 0:09:59.679 --> 0:10:02.640 exact be friendly to the United States. But yet we 0:10:02.679 --> 0:10:05.640 want all of our investment to go into this one commodity, 0:10:05.679 --> 0:10:08.960 and it's it's it's a terrible risk we are taking. 0:10:09.080 --> 0:10:14.520 So to reiterate my answer, no, you'll see the political moves. 0:10:14.800 --> 0:10:18.080 But with the crash of SVB and the lack of 0:10:18.240 --> 0:10:21.000 return on HT that we are seeing both from an 0:10:21.000 --> 0:10:24.800 economic and a social cost. I would think this would 0:10:24.840 --> 0:10:28.559 be the catalyst to diversify more towards and bring hydrocarbons 0:10:28.800 --> 0:10:31.880 that conversation back into the mix. Now we're going to 0:10:31.960 --> 0:10:34.200 be keeping an eye on the crude market very closely 0:10:34.200 --> 0:10:37.079 as we had even closer to summer driving season. Thanks 0:10:37.120 --> 0:10:40.040 as always, Stephen, good having you with us. Thank you, Nathan. 0:10:40.240 --> 0:10:43.000 That's Stephen Short, the president of the Short Group. And 0:10:43.080 --> 0:10:45.480 up next, time is on our side. One of the 0:10:45.520 --> 0:10:48.640 world's biggest events in the luxury watch its has wrapped up. 0:10:48.640 --> 0:10:52.160 We'll get the highlights from Geneva. Next. I'm Nathan Tiger 0:10:52.480 --> 0:11:09.640 and this is welcome back to the special edition of 0:11:09.640 --> 0:11:13.280 Bloomberg Daybreak. I'm Nathan Hagar. US markets are closed on 0:11:13.320 --> 0:11:16.640 this good Friday, and speaking of time and the future, 0:11:16.960 --> 0:11:19.320 let's talk about time and how we keep track of 0:11:19.320 --> 0:11:21.920 it on our wrists if you can afford it. We 0:11:22.000 --> 0:11:23.920 just wrapped up one of the biggest events of the 0:11:24.000 --> 0:11:28.280 year for the luxury watch business. It happened in Geneva, 0:11:28.400 --> 0:11:32.120 and Bloomberg's Andy Hoffman was there at this event and 0:11:32.400 --> 0:11:34.920 joins us for some of the TikTok I had to 0:11:34.960 --> 0:11:37.680 say it, Andy, thanks for being here. What better place 0:11:37.760 --> 0:11:40.000 to join us from then, the home of luxury Swiss 0:11:40.040 --> 0:11:42.920 time pieces. Tell us more about this event. For those 0:11:42.960 --> 0:11:45.960 who are not in the know, it's called Watches and Wonders, right, 0:11:46.320 --> 0:11:48.839 indeed it is. It's called Watches and Wonders. It is, 0:11:49.280 --> 0:11:52.640 without a doubt, the biggest industry event for the watch 0:11:52.679 --> 0:11:56.840 industry each year. It's where most of the top brands, 0:11:56.920 --> 0:12:01.520 including Rolex protect for the old Richmon's own brands come 0:12:01.559 --> 0:12:06.280 together and they present their new watches, their new wares, 0:12:06.720 --> 0:12:11.560 to retailers, to their best collectors, and of course to 0:12:11.679 --> 0:12:16.120 the growing watch press who come. And it was five 0:12:16.200 --> 0:12:19.640 days this week for that private event, and then it 0:12:19.720 --> 0:12:23.360 was two days open to the public for the first time. Overall, 0:12:23.400 --> 0:12:26.400 I think there was something like forty thousand people who 0:12:26.480 --> 0:12:29.800 attended this event, which was twice as many as last year. Wow. 0:12:29.920 --> 0:12:32.360 So that gives you something of an idea of just 0:12:32.520 --> 0:12:37.000 how high demand continues to be in the luxury space 0:12:37.080 --> 0:12:39.800 even with all the macro head ones we continue to 0:12:39.800 --> 0:12:42.720 talk about here on Bloomberg. What are some of the 0:12:42.760 --> 0:12:45.040 highlights for you? What really stood out let's start with 0:12:45.120 --> 0:12:47.640 I mean Rolex. I mean, that's one of the biggest 0:12:47.640 --> 0:12:51.720 brands in Switzerland. What's new from them? Rolex is always 0:12:51.720 --> 0:12:54.040 sort of the focus in the center of attention. They 0:12:54.040 --> 0:12:57.080 are the biggest brand. Their sales or something like nine 0:12:57.120 --> 0:12:59.559 point three billion Swiss francs a year. They have about 0:12:59.600 --> 0:13:03.320 twenty nine percent market share. And so what role X 0:13:03.360 --> 0:13:06.920 does at watches and Wonders is it shows everybody it's 0:13:07.000 --> 0:13:12.960 new models each year, and they also would reveal which 0:13:13.040 --> 0:13:16.760 models they will be discontinuing, and this has a great 0:13:16.800 --> 0:13:21.760 impact obviously on demand and supply for certain models. And 0:13:21.800 --> 0:13:24.679 then what we often see is that, you know, models 0:13:24.679 --> 0:13:29.560 that are discontinued, their value on the secondary market will 0:13:29.679 --> 0:13:33.559 generally increase because we know there will be less supply 0:13:33.720 --> 0:13:37.120 going forward. So what are some of the most notable 0:13:37.360 --> 0:13:41.360 new designs that you saw from Rolex? It was quite interesting. 0:13:41.360 --> 0:13:45.240 I mean, it is an anniversary for the Rolex Daytona, 0:13:45.400 --> 0:13:49.319 their chronograph, and they did a new model which has 0:13:49.360 --> 0:13:52.520 an open case back so you can actually see the 0:13:52.679 --> 0:13:55.160 movement and this is a first for Rolex, They've never 0:13:55.200 --> 0:13:59.880 done this before. They also did a really wild surprise 0:14:00.320 --> 0:14:03.720 version of their day date watch that had a sort 0:14:03.720 --> 0:14:07.120 of a puzzle um pattern on the dial, and then 0:14:07.200 --> 0:14:11.800 instead of days or um there there are sort of 0:14:12.360 --> 0:14:15.679 words like love and emotions and things like that, and 0:14:15.720 --> 0:14:20.400 there's emojis in the in where the date wheel normally 0:14:20.520 --> 0:14:25.000 is so fly one different emojiss. Those quite bold and 0:14:25.200 --> 0:14:27.920 strange for Rolex to do, which is generally a very 0:14:28.000 --> 0:14:32.760 safe and conservative brand. Yeah, I mean that really sort 0:14:32.760 --> 0:14:34.480 of flies in the face of what you think about 0:14:34.560 --> 0:14:36.960 when you think of a Rolex. Did you get a 0:14:37.040 --> 0:14:40.800 chance to talk to any of the officials from Rolex 0:14:40.840 --> 0:14:42.840 about what their strategy might be with some of these 0:14:42.960 --> 0:14:45.720 left field ideas. It's a good question. I mean, we 0:14:45.800 --> 0:14:47.840 get we do get to speak to some of the 0:14:47.880 --> 0:14:51.720 people from Rolex, but their CEO is known for not 0:14:51.880 --> 0:14:56.920 giving interviews about rolex Um. But yeah, I mean, you 0:14:56.960 --> 0:15:00.360 know they're they're very careful and garden with what they say, 0:15:00.360 --> 0:15:03.520 but they you know, for those who get the invite, 0:15:03.600 --> 0:15:06.280 you do get the chance to come and see the 0:15:06.320 --> 0:15:08.960 new models in the flash, So you get to hold 0:15:09.000 --> 0:15:11.120 these things in your hand and put them on your 0:15:11.120 --> 0:15:14.480 wrist and you know it's you and you can feel 0:15:14.520 --> 0:15:18.800 the weight as it were. So indeed, quite interesting. Yeah, 0:15:18.840 --> 0:15:21.920 anything to dream. We're speaking with Andy Hoffman of Bloomberg 0:15:21.960 --> 0:15:25.360 News talking about the Watches and Wonders event in Geneva, 0:15:25.440 --> 0:15:28.840 Switzerland for luxury time piece collectors. Now, I know you 0:15:28.920 --> 0:15:31.320 did get a chance to talk with the CEO of 0:15:31.440 --> 0:15:34.800 another well known Swiss brandon that would be Potech Philippe. 0:15:34.960 --> 0:15:37.080 What did he have to tell you? We were very fortunate. 0:15:37.360 --> 0:15:40.800 My colleague Chris Rosar and I sat down with Terry Stern, 0:15:40.920 --> 0:15:44.320 who is the chairman of Protect Philip. But it was 0:15:44.440 --> 0:15:47.560 really quite interesting. Mister Stern was very talkative and he 0:15:47.640 --> 0:15:50.600 was in a very good mood, and he revealed to 0:15:50.680 --> 0:15:54.040 us that, you know, they have a prototype ready and 0:15:54.240 --> 0:15:56.040 they you know, they want to get all the final 0:15:56.120 --> 0:15:58.560 designs in place before they start producing. But they are 0:15:58.600 --> 0:16:02.200 going to introduce their first model line for the first 0:16:02.200 --> 0:16:06.200 time since nineteen ninety nine, so it's almost a quarter century. 0:16:06.480 --> 0:16:09.160 So this is a major deal for them. And what 0:16:09.320 --> 0:16:12.360 Potech is trying to do, and we don't know what 0:16:12.400 --> 0:16:14.320 the watch is or what the design is, but what 0:16:14.360 --> 0:16:18.000 they're trying to do is, you know, give their customers 0:16:18.840 --> 0:16:22.040 and the collectors who buy their time pieces, you know, 0:16:22.240 --> 0:16:26.880 something to look beyond the Nautilus and you know those 0:16:27.000 --> 0:16:30.480 great complicated watch that's watches that they're known for. They 0:16:30.480 --> 0:16:33.520 want to be more diversified, you know, like a portfolio 0:16:33.680 --> 0:16:35.400 or something, and they don't want to be just a 0:16:35.440 --> 0:16:37.760 one trick pony. We'll see if they're a new design 0:16:37.840 --> 0:16:40.800 includes any emojis as well, that'd be something. I know, 0:16:40.880 --> 0:16:44.320 you broke some news as well, Andy with another legendary 0:16:44.360 --> 0:16:49.560 Swiss brand, ottomarp Gay and an effort to fight watch theft. 0:16:49.760 --> 0:16:52.840 This is becoming something that's become quite a big concern 0:16:52.920 --> 0:16:55.600 for watchmakers. Yeah, I mean, you know, we've been writing 0:16:55.640 --> 0:16:58.080 stories over the past year. I mean, you know what's 0:16:58.080 --> 0:17:01.040 going on with watches the is you know that more 0:17:01.120 --> 0:17:05.359 of the world is paying attention to watches. People are, 0:17:05.840 --> 0:17:09.639 you know, showing off their watches on Instagram and social media. 0:17:09.760 --> 0:17:13.479 And at the same time, the problem of watch theft, 0:17:13.640 --> 0:17:18.800 people getting mugged for their watches has become a huge issue. 0:17:18.880 --> 0:17:22.080 You know, this in fact, could present a sort of 0:17:22.160 --> 0:17:26.480 existential crisis for the major luxury brands, most of which 0:17:26.480 --> 0:17:31.600 are here in Switzerland. If customers are afraid to wear 0:17:31.720 --> 0:17:35.200 their time pieces, you know, they just might stop buying them. 0:17:35.280 --> 0:17:38.120 And you know, nobody wants. Everybody buys a watch because 0:17:38.160 --> 0:17:40.680 they want to wear it. It's just an unprecedented thing 0:17:40.720 --> 0:17:42.679 that they're doing. They've got a new program where if 0:17:42.760 --> 0:17:46.280 you bought an Odemarpgay watch such as the Royal Oak, 0:17:46.359 --> 0:17:49.200 which is the watch that they're known for in twenty 0:17:49.240 --> 0:17:52.640 twenty two, which was the fiftieth anniversary of that watch, 0:17:52.880 --> 0:17:55.480 or in twenty twenty three this year, you can register 0:17:55.600 --> 0:17:59.760 that watch with Odomarp Gay and become part of an 0:17:59.760 --> 0:18:04.240 extended service program. And if that watch is stolen or 0:18:04.440 --> 0:18:08.639 lost or damaged. You know, the language they use is 0:18:08.720 --> 0:18:13.919 suddenly and unexpectedly i e. And a robbery, they will replace, 0:18:15.200 --> 0:18:19.800 refund or repair that watch. No one has ever done 0:18:19.800 --> 0:18:24.840 this before in the luxury watch industry. It's quite unprecedented. 0:18:25.119 --> 0:18:28.480 We don't know how it's going to play out. It's 0:18:28.520 --> 0:18:32.240 indeed quite a bold move. Yeah, interesting that there hasn't 0:18:32.280 --> 0:18:34.600 been something like that before, But lots to think about 0:18:34.640 --> 0:18:37.800 coming out of the Watches and Wonders event in Geneva. 0:18:37.960 --> 0:18:40.200 Thanks for this, Andy, great having you with us. That's 0:18:40.240 --> 0:18:44.639 Bloomberg's Andy Hoffman from Geneva, Switzerland and still ahead on 0:18:44.680 --> 0:18:48.240 Bloomberg day Break is a US debt default really a risk. 0:18:48.440 --> 0:18:51.880 We speak with Bloomberg government reporter Emily Wilkins. Next, I'm 0:18:51.960 --> 0:18:58.159 Nathan Hagar, and this is Bloomberg. Welcome back to the 0:18:58.200 --> 0:19:01.680 special Good Friday edition of burg Daybreak. I'm Nathan Hagar. 0:19:01.960 --> 0:19:04.240 It is a holiday not just on Wall Street, but 0:19:04.320 --> 0:19:06.800 on Capitol Hill. Lawmakers in factor in the middle of 0:19:06.840 --> 0:19:10.080 a two week spring recess, getting a break from a 0:19:10.080 --> 0:19:12.080 debate that is going to get even more pressing for 0:19:12.119 --> 0:19:14.600 the markets as we get closer to summer. It's over 0:19:14.680 --> 0:19:18.639 the debt ceiling, the risk of an unprecedented default on 0:19:18.680 --> 0:19:22.280 the nation's obligations. House Speaker Kevin McCarthy says he has 0:19:22.280 --> 0:19:25.080 a message for the White House. Mister President, I'm ready 0:19:25.119 --> 0:19:28.400 at any time, at any moment, I'll come tonight. It 0:19:28.440 --> 0:19:31.840 doesn't make it difficult to sit down and negotiate and 0:19:31.920 --> 0:19:35.159 find common ground to make America a little stronger and 0:19:35.240 --> 0:19:37.760 make sure we stop overspending. But the message from White 0:19:37.800 --> 0:19:41.320 House Press Secretary Karine Jean Pierre is President Biden's shown 0:19:41.320 --> 0:19:45.360 Republicans his budget. Now they should show him theirs what 0:19:45.359 --> 0:19:48.160 we have seen, our is and heard our excuses after 0:19:48.200 --> 0:19:51.639 excuses after excuses. But they should be transparent to the 0:19:51.680 --> 0:19:54.119 American people. They should lay out what is it that 0:19:54.160 --> 0:19:57.120 they want to cut Karne, Jean Pierre and Kevin McCarthy 0:19:57.200 --> 0:19:59.720 drawing their lines in this debate over the debt. Let's 0:19:59.720 --> 0:20:02.320 bring it. Bloomberg government reporter Emily Wilkins, who's going to 0:20:02.359 --> 0:20:05.720 be keeping a very close eye on these negotiations once 0:20:05.800 --> 0:20:09.800 lawmakers return to Washington from their home districts. Emily, I 0:20:09.800 --> 0:20:12.320 know you're paying attention to this, but how much attention 0:20:12.359 --> 0:20:15.080 should market participants be paying at this point? I think 0:20:15.080 --> 0:20:18.920 you do have to pay some attention because the agreements 0:20:18.960 --> 0:20:22.440 that they're being worked out right now. We all knew 0:20:22.480 --> 0:20:25.399 that this was going to take time, but at the 0:20:25.480 --> 0:20:28.760 same point, and we're getting kind of early indicators now 0:20:28.800 --> 0:20:31.840 about how easy or difficult this will be, and it's 0:20:31.880 --> 0:20:35.359 going to be quite difficult, as we're seeing now. You know, 0:20:35.440 --> 0:20:39.080 initially saw the meeting between Biden and McCarthy. They sat down, 0:20:39.200 --> 0:20:42.160 it was pretty pleasant, and then Biden kind of said, hey, 0:20:42.160 --> 0:20:44.800 I'm going to release my budget and he expected Republicans 0:20:44.800 --> 0:20:46.680 to do the same. For a minute, it did look 0:20:46.720 --> 0:20:49.880 like Republicans we're going to release a budget either this 0:20:49.920 --> 0:20:52.920 month in April or potentially even next month in May, 0:20:53.280 --> 0:20:57.000 that now seems a little bit less likely. Kevin McCarthy 0:20:57.280 --> 0:21:00.320 sent a letter to Biden with basically four bullets points 0:21:00.320 --> 0:21:02.800 of what Republicans want to see in a Deadlomit agreement, 0:21:03.040 --> 0:21:05.520 and they're basically now saying that they're not going to 0:21:05.720 --> 0:21:08.720 move forward anymore until Biden sits down with them again. 0:21:08.800 --> 0:21:11.400 So it feels like both the sides are a deadlock 0:21:11.600 --> 0:21:14.360 right now. Of course, there is some time to work 0:21:14.400 --> 0:21:16.760 it out, but remember Congress is not a body that 0:21:16.800 --> 0:21:20.000 moves particularly quickly. With any sort of agreement. You're going 0:21:20.040 --> 0:21:22.119 to have to have at least a couple different weeks 0:21:22.119 --> 0:21:24.240 for it to go through the Senate, go through the House, 0:21:24.280 --> 0:21:27.320 have the debate, go through the process. And so I 0:21:27.359 --> 0:21:29.760 don't think we're in a spot yet where we need 0:21:29.800 --> 0:21:34.080 to panic, but things aren't looking super great at the 0:21:34.200 --> 0:21:37.840 moment for getting this agreement done well. I wonder if 0:21:37.840 --> 0:21:41.200 they're feeling any more pressure to move forward on this 0:21:41.240 --> 0:21:44.639 when they get back. Given the turmoil we saw in 0:21:44.680 --> 0:21:47.800 the banking sector with the collapse of Silicon Valley Bank 0:21:48.119 --> 0:21:51.840 and Signature Bank, it's raised all these questions that you 0:21:51.920 --> 0:21:54.480 know when you have a financial system that is so 0:21:54.600 --> 0:21:58.840 reliant on treasuries. If there is a concern about those 0:21:58.880 --> 0:22:02.600 treasuries default, we could be in some trouble. Emily, Oh, 0:22:02.640 --> 0:22:04.600 we definitely could be in some trouble. And I feel 0:22:04.600 --> 0:22:07.879 like every lawmaker understands the states for not raising the 0:22:07.960 --> 0:22:11.920 debt limit. I don't think they're really particularly among leadership. 0:22:12.080 --> 0:22:14.159 A lot of Republicans who don't want to see the 0:22:14.680 --> 0:22:17.240 limit raised in some capacity. They just want to be 0:22:17.280 --> 0:22:20.040 able to say that they've also gotten cuts to do so. 0:22:20.640 --> 0:22:23.800 And so when we think a little bit about you know, 0:22:23.960 --> 0:22:27.000 what is coming next and how the banking crisis relates, 0:22:27.200 --> 0:22:29.520 I think it's also just important to point out Congress 0:22:29.560 --> 0:22:33.200 is certainly taking the banking crisis seriously. You have Financial 0:22:33.200 --> 0:22:36.080 Services Chairman Patrick McHenry, who I think is interested in 0:22:36.119 --> 0:22:39.399 holding more hearings, kind of looking into banking from a 0:22:39.440 --> 0:22:42.600 holistic perspective and seeing what needs to be done there. 0:22:42.920 --> 0:22:45.440 At the same point, a Congress is kind of done 0:22:45.440 --> 0:22:48.399 with like the crisis mode on the banks. They're feeling 0:22:48.400 --> 0:22:50.760 free to kind of look at other issues, look at 0:22:50.760 --> 0:22:53.919 other concerns. There's a sense now that because we haven't 0:22:53.920 --> 0:22:56.800 seen more bank shutter that the bleeding has at least 0:22:56.800 --> 0:22:59.800 been stopped, even if the wound hasn't been fully healed. 0:23:00.080 --> 0:23:03.440