1 00:00:02,440 --> 00:00:05,040 Speaker 1: This is Bloomberg Daybreak Weekend, our global look if the 2 00:00:05,160 --> 00:00:07,440 Speaker 1: top stories of the coming week from our daybreak anchors 3 00:00:07,560 --> 00:00:10,280 Speaker 1: all around the world. Just to hand of the program, 4 00:00:10,440 --> 00:00:13,920 Speaker 1: the FEDS December meeting is upon us. I'm John Tucker 5 00:00:14,040 --> 00:00:16,200 Speaker 1: in New York. I'm Stephen Carl in London, where Central 6 00:00:16,239 --> 00:00:19,640 Speaker 1: Banks and Frankfurst and London are considering easing open interest 7 00:00:19,720 --> 00:00:23,959 Speaker 1: rate heights despite the continuing inflationary pressures. I'm Doug Chrisoner. 8 00:00:24,120 --> 00:00:26,759 Speaker 1: We look at what's ahead for the Chinese economy. I'm 9 00:00:26,800 --> 00:00:30,240 Speaker 1: Amy Morris in Washington. We're watching the continual ship in 10 00:00:30,280 --> 00:00:35,880 Speaker 1: the political landscape after Christian cinema changes parties. That's all 11 00:00:36,000 --> 00:00:40,120 Speaker 1: straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three 12 00:00:40,120 --> 00:00:44,440 Speaker 1: on New York, Bloomberg one, Washington d C, Bloomberg one 13 00:00:44,440 --> 00:00:48,199 Speaker 1: oh six one, Boston, Bloomberg nine sixties, San Francisco d 14 00:00:48,320 --> 00:00:52,040 Speaker 1: A B, Digital Radio, London, Sirius XM one nineteen and 15 00:00:52,120 --> 00:00:55,000 Speaker 1: around the world on Bloomberg Radio dot Com and via 16 00:00:55,080 --> 00:01:02,120 Speaker 1: the Bloomberg Business at Hi. Everybody, I'm John Tucker, and 17 00:01:02,200 --> 00:01:04,640 Speaker 1: let's start today's program with the big fed mad in 18 00:01:04,760 --> 00:01:07,360 Speaker 1: this coming week, joining us, how to frame the conversation 19 00:01:07,560 --> 00:01:11,480 Speaker 1: as always has events on fold. Bloomberg Global Economics and 20 00:01:11,600 --> 00:01:15,960 Speaker 1: Policy Editor Michael McKee, Uh, no surprise, we're going to 21 00:01:16,040 --> 00:01:19,760 Speaker 1: get another rate hike from the Federal Reserve? Mike, Yes, 22 00:01:19,920 --> 00:01:22,840 Speaker 1: we are. Wouldn't you like it if you knew what 23 00:01:23,080 --> 00:01:26,360 Speaker 1: Santa or what you were going to get from which 24 00:01:28,720 --> 00:01:30,840 Speaker 1: we we can shake the FED box and we know 25 00:01:30,880 --> 00:01:33,600 Speaker 1: what's inside it, and we know the size. They've pretty 26 00:01:33,640 --> 00:01:35,560 Speaker 1: much told us we're gonna do fifty basis points a 27 00:01:35,600 --> 00:01:38,920 Speaker 1: half percentage point increase, which a year ago would have 28 00:01:38,920 --> 00:01:43,920 Speaker 1: been considered very large because they hadn't done a fifty 29 00:01:43,920 --> 00:01:46,840 Speaker 1: base point move in years. But now that we've had 30 00:01:46,880 --> 00:01:50,080 Speaker 1: four seventy five in a row fifties, this seems like 31 00:01:50,080 --> 00:01:53,040 Speaker 1: a slow down, a significant slowdown to some. But the 32 00:01:53,040 --> 00:01:55,240 Speaker 1: Fed is continuing to raise interest rates, and that's the 33 00:01:55,280 --> 00:01:59,120 Speaker 1: important thing that they keep going higher because they haven't 34 00:01:59,120 --> 00:02:02,720 Speaker 1: won the battle of inflation yet. Now I keep asking 35 00:02:02,760 --> 00:02:05,760 Speaker 1: you this question every time we get together. I'm like 36 00:02:05,840 --> 00:02:10,200 Speaker 1: a broken record. Are they trying to torpedo the labor market? 37 00:02:10,400 --> 00:02:13,160 Speaker 1: Is that what they have to do to bring inflation 38 00:02:13,320 --> 00:02:18,000 Speaker 1: under control while they are trying to shave Shall we 39 00:02:18,040 --> 00:02:23,880 Speaker 1: say growth by shaving demand, bring down demand some so 40 00:02:23,919 --> 00:02:27,640 Speaker 1: that Americans aren't spending as much money, which then translates 41 00:02:27,639 --> 00:02:30,400 Speaker 1: into less production at the companies that make the things 42 00:02:30,400 --> 00:02:35,799 Speaker 1: that we're not buying, and therefore translates into uh, fewer jobs. Now, 43 00:02:35,800 --> 00:02:39,040 Speaker 1: the Fed's view is, because there's so many job openings, 44 00:02:39,200 --> 00:02:41,839 Speaker 1: they don't have to torpedo the labor market. They can 45 00:02:41,880 --> 00:02:44,920 Speaker 1: slow it down. We can see a very small rise 46 00:02:44,960 --> 00:02:49,400 Speaker 1: in the unemployment rate, and we can get a soft landing. 47 00:02:49,480 --> 00:02:53,079 Speaker 1: That's their hope. In the past, they've never been able 48 00:02:53,240 --> 00:02:57,959 Speaker 1: to manage the increase in unemployment once. There's a rule 49 00:02:58,000 --> 00:03:00,680 Speaker 1: called the some rule that once it goes of half 50 00:03:00,680 --> 00:03:04,040 Speaker 1: a percentage point change, then it takes off to about 51 00:03:04,200 --> 00:03:12,400 Speaker 1: three percentage points. So i've some rule gamed after No, 52 00:03:12,480 --> 00:03:14,800 Speaker 1: I'm not who who came up with this when she 53 00:03:14,880 --> 00:03:18,680 Speaker 1: was at the New York head And basically, any increasing 54 00:03:18,800 --> 00:03:24,520 Speaker 1: unemployment over half a percentage point would then not stop 55 00:03:24,639 --> 00:03:29,359 Speaker 1: until you get to unemployment rate and it would bring 56 00:03:29,400 --> 00:03:31,720 Speaker 1: on a recession. So they haven't been able to do 57 00:03:31,760 --> 00:03:34,639 Speaker 1: it in the past. But even Claudia Sum says it's 58 00:03:34,680 --> 00:03:38,160 Speaker 1: a guide, not a promise, So we'll wait and see. Okay, 59 00:03:38,240 --> 00:03:41,360 Speaker 1: when we're talking about the rate of inflation and the increase, 60 00:03:41,440 --> 00:03:45,760 Speaker 1: how much of that comes from labor costs, Well, it 61 00:03:45,800 --> 00:03:49,400 Speaker 1: depends on the category you're looking at, because for service companies, 62 00:03:49,480 --> 00:03:53,000 Speaker 1: it's about eighty percent of their overall costs is the 63 00:03:53,040 --> 00:03:55,800 Speaker 1: cost of labor. So it is a very big part 64 00:03:55,960 --> 00:03:58,720 Speaker 1: of services, and services is where the money is going 65 00:03:58,800 --> 00:04:01,520 Speaker 1: right now. We yeah, that's the biggest part of the economy. 66 00:04:01,520 --> 00:04:03,320 Speaker 1: That's the biggest part of the economy. But we bought 67 00:04:03,320 --> 00:04:05,200 Speaker 1: a lot of stuff. We were sort of out of 68 00:04:05,200 --> 00:04:08,520 Speaker 1: whack for two years because people couldn't go out, so 69 00:04:08,880 --> 00:04:13,600 Speaker 1: they bought stuff and goods. Inflation went went way up, 70 00:04:13,640 --> 00:04:16,640 Speaker 1: and then there were shortages and supply chain problems, and 71 00:04:16,720 --> 00:04:19,840 Speaker 1: that contributed to the inflation that we're seeing. Now there's 72 00:04:19,839 --> 00:04:23,360 Speaker 1: a shift away from that supply chains and normalizing somewhat, 73 00:04:23,839 --> 00:04:28,000 Speaker 1: and goods prices are not rising anywhere near the cost 74 00:04:28,040 --> 00:04:30,240 Speaker 1: of services. But as we go out, as we go 75 00:04:30,240 --> 00:04:34,960 Speaker 1: on vacations and spend money at restaurants, Uh, we're seeing 76 00:04:35,000 --> 00:04:40,240 Speaker 1: inflation there and that's largely driven by labor costs. They 77 00:04:40,279 --> 00:04:45,159 Speaker 1: started raising rates earlier this year, and has it started 78 00:04:45,160 --> 00:04:47,279 Speaker 1: to take effect yet. Certainly we've seen it in the 79 00:04:47,279 --> 00:04:49,680 Speaker 1: housing market. I would we've seen it in the housing market, 80 00:04:49,760 --> 00:04:53,520 Speaker 1: and we're seeing little bits of slow down in consumer spending. 81 00:04:54,040 --> 00:04:56,880 Speaker 1: Part of the problem for the FED is there was 82 00:04:56,920 --> 00:04:59,920 Speaker 1: so much fiscal support from the government during the PAS 83 00:05:00,040 --> 00:05:01,719 Speaker 1: endemic that people have a lot of money in the 84 00:05:01,760 --> 00:05:04,640 Speaker 1: bank that they can keep spending. So demand is not 85 00:05:04,760 --> 00:05:08,480 Speaker 1: slowing as fast, perhaps as they hoped it might. Now 86 00:05:08,839 --> 00:05:11,200 Speaker 1: the FED knows that at some point soon we should 87 00:05:11,200 --> 00:05:15,440 Speaker 1: start seeing a much bigger impact on consumer demand, but 88 00:05:15,480 --> 00:05:18,480 Speaker 1: they don't know when, and they don't know how big, 89 00:05:18,839 --> 00:05:22,799 Speaker 1: and because this is an unusual situation, UH, they can't 90 00:05:22,800 --> 00:05:27,680 Speaker 1: be sure. Also, in the years since we started looking 91 00:05:27,720 --> 00:05:32,200 Speaker 1: for these lags, the development of companies like Bloomberg and 92 00:05:32,320 --> 00:05:35,839 Speaker 1: others that provide data on the economy and consumers and 93 00:05:35,920 --> 00:05:40,240 Speaker 1: companies UH may have shortened the lags. So that's one 94 00:05:40,279 --> 00:05:44,919 Speaker 1: reason the FED wants to dial back. It's increases. What 95 00:05:44,920 --> 00:05:48,720 Speaker 1: do you mean by that? The data increased visibility with 96 00:05:48,760 --> 00:05:52,400 Speaker 1: the data has UH affected the lives The feedback effects 97 00:05:52,800 --> 00:05:56,200 Speaker 1: become much faster because companies can see in real time 98 00:05:56,600 --> 00:06:00,240 Speaker 1: what is happening out there. Okay, to what degree is 99 00:06:00,320 --> 00:06:03,880 Speaker 1: j Powe worried about reputational damage to himself and to 100 00:06:03,960 --> 00:06:05,839 Speaker 1: the FED at this point. Well, he's got to be 101 00:06:05,920 --> 00:06:08,839 Speaker 1: concerned in the sense that the Feds getting blamed a 102 00:06:08,839 --> 00:06:12,640 Speaker 1: lot for the inflation rate skyrocketing over the past year, 103 00:06:12,720 --> 00:06:16,839 Speaker 1: much more quickly than the FED anticipated, because they thought 104 00:06:16,920 --> 00:06:19,960 Speaker 1: that what would end up happening is when everybody went 105 00:06:20,000 --> 00:06:21,960 Speaker 1: back to work, things would go back to the way 106 00:06:22,000 --> 00:06:25,000 Speaker 1: they were pre pandemic, and the inflation they were getting 107 00:06:25,080 --> 00:06:28,840 Speaker 1: was transitory, which obviously turned out not to be. Now 108 00:06:29,720 --> 00:06:32,320 Speaker 1: the consensus is Powell and company have done a good 109 00:06:32,400 --> 00:06:36,359 Speaker 1: job since then, and so we're waiting to see what 110 00:06:36,520 --> 00:06:40,000 Speaker 1: kind of longer term credibility problem they have. Jay Power 111 00:06:40,000 --> 00:06:42,240 Speaker 1: would tell you he's not worried about himself. He'd worry 112 00:06:42,240 --> 00:06:45,320 Speaker 1: about the FED, because if the FED loses credibility, if 113 00:06:45,440 --> 00:06:47,160 Speaker 1: people don't think they're going to do what they say 114 00:06:47,200 --> 00:06:49,000 Speaker 1: they're going to do, or that they're not going to 115 00:06:49,120 --> 00:06:51,760 Speaker 1: get the forecast right, then it's going to be harder 116 00:06:51,960 --> 00:06:54,640 Speaker 1: for monetary policy to work, and you can get things 117 00:06:54,839 --> 00:06:59,480 Speaker 1: like either skyrocketing inflation or deflation. So the FED is 118 00:06:59,520 --> 00:07:02,080 Speaker 1: going to keep keep their foot on the brake, and 119 00:07:02,320 --> 00:07:03,720 Speaker 1: that's gonna be the big thing to watch in two 120 00:07:03,760 --> 00:07:06,960 Speaker 1: thousand twenty three. Markets think the FED will back down 121 00:07:07,000 --> 00:07:09,840 Speaker 1: if we start to see unemployment rise, and Powell and 122 00:07:09,880 --> 00:07:12,280 Speaker 1: company are saying they will not. So we will see 123 00:07:12,360 --> 00:07:15,320 Speaker 1: what that showdown produces. And the bond market seems to 124 00:07:15,360 --> 00:07:18,920 Speaker 1: be saying that there is going to be a recession. 125 00:07:20,280 --> 00:07:22,560 Speaker 1: Is that? Is that what I'm reading? Well, that's a 126 00:07:22,560 --> 00:07:26,320 Speaker 1: fair interpretation of what you're reading about. Is the inverted 127 00:07:26,400 --> 00:07:32,040 Speaker 1: yield curves where longer maturity treasury bonds and notes are 128 00:07:33,200 --> 00:07:38,240 Speaker 1: the interest rate on those is lower than short rutten treasuries. 129 00:07:38,600 --> 00:07:41,600 Speaker 1: And that's because people think that either there's going to 130 00:07:41,640 --> 00:07:44,680 Speaker 1: be a recession and interest rates will come down across 131 00:07:44,720 --> 00:07:47,920 Speaker 1: the board, or they think that we're going to achieve 132 00:07:47,920 --> 00:07:50,440 Speaker 1: the soft landing and inflation will come down. It's a 133 00:07:50,440 --> 00:07:54,040 Speaker 1: little hard to separate, but the kind of the feeling 134 00:07:54,040 --> 00:07:55,920 Speaker 1: in the bond market is it's going to be the 135 00:07:55,960 --> 00:08:01,440 Speaker 1: recession scenario because that's general only what's happened in the past. 136 00:08:01,760 --> 00:08:04,000 Speaker 1: What's the message that he's going to send at the 137 00:08:05,000 --> 00:08:08,200 Speaker 1: FED policy meeting and what questions do you have for 138 00:08:08,400 --> 00:08:11,480 Speaker 1: Chairman Powell. Well, it's gonna be sort of two messages. 139 00:08:11,600 --> 00:08:15,800 Speaker 1: One is that fifty basis points as opposed to seventy 140 00:08:15,840 --> 00:08:19,280 Speaker 1: five does not mean the Fed is loosening its conviction 141 00:08:19,320 --> 00:08:21,960 Speaker 1: that interest rates have to go up, and two that 142 00:08:22,000 --> 00:08:24,480 Speaker 1: it's going to be steady as she goes. He wants 143 00:08:24,520 --> 00:08:27,160 Speaker 1: to reinforce the idea that the Fed is going to 144 00:08:28,240 --> 00:08:30,400 Speaker 1: keep raising rates and they probably aren't gonna be done 145 00:08:30,440 --> 00:08:33,880 Speaker 1: after December. They'll probably do some more in early, but 146 00:08:33,920 --> 00:08:38,280 Speaker 1: then they're gonna leave them there for a very long time. Uh. 147 00:08:38,440 --> 00:08:41,160 Speaker 1: We heard John Williams, the president of the New York Fed, 148 00:08:41,200 --> 00:08:44,120 Speaker 1: say last week that he thought it would be throughout 149 00:08:45,760 --> 00:08:50,760 Speaker 1: and maybe into and the bond market, as you pointed out, 150 00:08:51,080 --> 00:08:53,760 Speaker 1: is not buying that right now, so he he will 151 00:08:54,160 --> 00:08:57,559 Speaker 1: be trying to convince them. And I guess the uh, 152 00:08:58,000 --> 00:09:03,360 Speaker 1: the overriding question for every one is, uh, how high 153 00:09:03,600 --> 00:09:07,120 Speaker 1: do they think they have to go? At this point? 154 00:09:07,120 --> 00:09:10,040 Speaker 1: We will get a new survey of all of the 155 00:09:10,080 --> 00:09:13,199 Speaker 1: FED members and they'll give us a median dot plot 156 00:09:14,080 --> 00:09:16,600 Speaker 1: that shows where they think they're going to have to go, 157 00:09:16,760 --> 00:09:19,559 Speaker 1: But uh, we'd like to get more clarity on that. 158 00:09:19,720 --> 00:09:23,319 Speaker 1: Remind ofpability what their target for inflation is. Well, two 159 00:09:23,360 --> 00:09:26,280 Speaker 1: percent is the target, and Fed officials think it's still 160 00:09:26,320 --> 00:09:31,760 Speaker 1: realistic the most most economists and the FED have projected 161 00:09:31,800 --> 00:09:34,560 Speaker 1: we would get to about three and a half percent 162 00:09:34,800 --> 00:09:39,000 Speaker 1: by the end of which is UH on the pc 163 00:09:39,800 --> 00:09:43,160 Speaker 1: index measurement, not the c p I is the preferred 164 00:09:43,160 --> 00:09:46,240 Speaker 1: measure for the preferred measure for the FED. Now, then 165 00:09:46,360 --> 00:09:48,920 Speaker 1: after that three and a half, how much harder is 166 00:09:48,960 --> 00:09:51,120 Speaker 1: it going to be to get down to two. That's 167 00:09:51,120 --> 00:09:54,360 Speaker 1: a big argument among economists at this point, something that 168 00:09:54,440 --> 00:09:58,360 Speaker 1: we could go down very fast and go below get 169 00:09:58,440 --> 00:10:01,439 Speaker 1: some disinflation below two pers and and others think it's 170 00:10:01,440 --> 00:10:04,040 Speaker 1: gonna be another year or two after the end of 171 00:10:04,840 --> 00:10:07,640 Speaker 1: three before you can get there. So that's also started 172 00:10:07,640 --> 00:10:10,640 Speaker 1: a debate about whether the FEDS should raise its target, 173 00:10:10,760 --> 00:10:13,400 Speaker 1: But Fed's not buying that all right. The other big 174 00:10:13,480 --> 00:10:16,640 Speaker 1: number is the terminal rate is kind of alluded to that. 175 00:10:17,120 --> 00:10:20,839 Speaker 1: Where is that right now where the FED winds up. Well, 176 00:10:20,880 --> 00:10:24,559 Speaker 1: we're at four percent going into the meeting, and the 177 00:10:24,640 --> 00:10:29,520 Speaker 1: general consensus now is we will get to about five percent. Uh. 178 00:10:29,559 --> 00:10:32,760 Speaker 1: Some members of the Open Market Committee that the decision 179 00:10:32,760 --> 00:10:35,840 Speaker 1: makers think they're gonna have to go over five five 180 00:10:35,880 --> 00:10:39,080 Speaker 1: to five and a quarter what poland Uh. Some of 181 00:10:39,120 --> 00:10:42,000 Speaker 1: the leadership of the FED have said is we don't 182 00:10:42,080 --> 00:10:46,000 Speaker 1: know um and there is this consensus out there and 183 00:10:46,080 --> 00:10:49,720 Speaker 1: that might be right, but it's not going to keep 184 00:10:49,840 --> 00:10:53,240 Speaker 1: us from going beyond it if we feel it's necessary. Mike, 185 00:10:53,520 --> 00:10:56,280 Speaker 1: as always a pleasure, Michael McKee, And just to hand 186 00:10:56,320 --> 00:10:58,880 Speaker 1: on Bloomberg Daybreak weekend, we're gonna head to Europe for 187 00:10:59,040 --> 00:11:01,720 Speaker 1: a look at the neck central bank poise to raise 188 00:11:01,880 --> 00:11:05,760 Speaker 1: interustrates this week. I'm John Tucker, and this is Bloomberg. 189 00:11:16,760 --> 00:11:19,480 Speaker 1: This is Bloomberg Daybreak weekend, our global look ahead of 190 00:11:19,520 --> 00:11:22,120 Speaker 1: the top stories for investors in the coming week. I'm 191 00:11:22,200 --> 00:11:25,280 Speaker 1: John Tucker in New York. Coming up, look at the 192 00:11:25,360 --> 00:11:29,120 Speaker 1: balance of power in the Senate after Senator Kirsten Cinema's 193 00:11:29,160 --> 00:11:32,880 Speaker 1: flipped too independent. But first, the Federal Reserve isn't the 194 00:11:32,920 --> 00:11:37,400 Speaker 1: only major central bank meeting of the coming days. In Europe. 195 00:11:37,440 --> 00:11:40,640 Speaker 1: The Bank of England, the European Central and the Swiss 196 00:11:40,720 --> 00:11:44,800 Speaker 1: National Bank will all announce rate decisions Thursday as they 197 00:11:44,840 --> 00:11:48,400 Speaker 1: face massive inflationary pressures. And for more I let's said 198 00:11:48,400 --> 00:11:51,800 Speaker 1: to London and bring in Bloomberg Daybreak Europe anchor Stephen Carroll. 199 00:11:52,000 --> 00:11:54,480 Speaker 1: John and the central banks in London and Frankfurt are 200 00:11:54,520 --> 00:11:57,360 Speaker 1: both facing double digit inflation. The Bank of England got 201 00:11:57,360 --> 00:11:59,800 Speaker 1: a headstart on hiking rates a year ago there now 202 00:11:59,840 --> 00:12:02,520 Speaker 1: at our highest level since two thousand and eight, while 203 00:12:02,559 --> 00:12:05,400 Speaker 1: the ECB has been raising borrowing costs at a record 204 00:12:05,480 --> 00:12:08,520 Speaker 1: pace for its relatively short history. Or we have our 205 00:12:08,559 --> 00:12:10,480 Speaker 1: top team of central bank reporters with us to look 206 00:12:10,520 --> 00:12:13,160 Speaker 1: ahead to this week's decisions. Yan Rando joins us from 207 00:12:13,200 --> 00:12:16,360 Speaker 1: Frank Fertilizes on the ECB and Philipolitics here in studio 208 00:12:16,480 --> 00:12:18,800 Speaker 1: in London watching the Bank of England. To get this 209 00:12:18,880 --> 00:12:21,280 Speaker 1: conversation started, though, I want to bring you a bit 210 00:12:21,320 --> 00:12:23,079 Speaker 1: of a chat that we had on Bloomberg Radio with 211 00:12:23,120 --> 00:12:25,320 Speaker 1: Alex Brazier. He's a former director at the Bank of 212 00:12:25,360 --> 00:12:28,880 Speaker 1: England now deputy head of the black Rock Investment Institute. 213 00:12:28,920 --> 00:12:31,400 Speaker 1: Let's take a listen. We need to rethink the way 214 00:12:31,440 --> 00:12:34,000 Speaker 1: central banks are operating these days. They're they're not the 215 00:12:34,000 --> 00:12:36,960 Speaker 1: cavalry that's riding to the rescue when the economy turns down. 216 00:12:37,280 --> 00:12:41,439 Speaker 1: They're actually deliberately creating economic damage. And that's because their 217 00:12:41,480 --> 00:12:44,920 Speaker 1: economies are basically overheating because of supply constraints, and if 218 00:12:44,920 --> 00:12:46,560 Speaker 1: they want to get inflation all the way down to 219 00:12:46,600 --> 00:12:51,120 Speaker 1: two pc. They actually need to generate recessions, so that's 220 00:12:51,120 --> 00:12:53,079 Speaker 1: what central banks are working with. Let's start with you, 221 00:12:53,120 --> 00:12:55,760 Speaker 1: Philipolgic here in London, and the recession may well have 222 00:12:55,800 --> 00:12:58,520 Speaker 1: already started in the UK. Will the Bank of England 223 00:12:58,600 --> 00:13:01,480 Speaker 1: be easing up on the monetary breaks? Do you think? No? 224 00:13:02,360 --> 00:13:05,600 Speaker 1: So they raised rates three quarters of a point um 225 00:13:05,679 --> 00:13:07,800 Speaker 1: in November and they're expected to raise rates by a 226 00:13:07,800 --> 00:13:11,880 Speaker 1: half a percentage point in December, so it's still, you know, 227 00:13:11,920 --> 00:13:15,520 Speaker 1: all all guns blazing. There is some division though on 228 00:13:15,559 --> 00:13:18,440 Speaker 1: the committee because two members didn't vote for the three 229 00:13:18,480 --> 00:13:21,520 Speaker 1: quarter point rise and one member only wanted a hut 230 00:13:21,760 --> 00:13:24,640 Speaker 1: a quarter point increase and warned that you know, we 231 00:13:25,280 --> 00:13:28,079 Speaker 1: both of those members that actually are warning that, um, 232 00:13:28,120 --> 00:13:32,800 Speaker 1: you know, two aggressive future moves will risk extending the 233 00:13:32,840 --> 00:13:35,400 Speaker 1: recession and making what is projected to be a nasty 234 00:13:35,400 --> 00:13:38,360 Speaker 1: period over three even even worse. And I think that 235 00:13:38,440 --> 00:13:41,400 Speaker 1: effectively would do some of the work that rate rises 236 00:13:42,480 --> 00:13:45,599 Speaker 1: will be are doing. So they would like to to 237 00:13:45,840 --> 00:13:49,040 Speaker 1: to slow down. So the expectation for the moment is 238 00:13:49,400 --> 00:13:52,040 Speaker 1: fifty basis points, are right? Yeah, that's right? Okay, So 239 00:13:52,120 --> 00:13:55,320 Speaker 1: let's turn to Juyana and Frankfurt as well, so whereas 240 00:13:55,320 --> 00:13:57,640 Speaker 1: we're looking at this sort of dilemma about slowing down 241 00:13:57,960 --> 00:14:00,079 Speaker 1: rate rises, here it seems to be more so, and 242 00:14:00,240 --> 00:14:02,199 Speaker 1: perhaps at the ECB is going sets foot off the 243 00:14:02,240 --> 00:14:06,160 Speaker 1: break very much so. UM. What we're seeing is that 244 00:14:06,240 --> 00:14:11,000 Speaker 1: the appetite for UM a third consecutive seventy five basis 245 00:14:11,000 --> 00:14:15,760 Speaker 1: point move has UM has really dwindled. It's not really 246 00:14:15,800 --> 00:14:19,520 Speaker 1: there UM. The market is pricing UM fifty as well, 247 00:14:19,640 --> 00:14:22,000 Speaker 1: which um you know, if you read the minutes of 248 00:14:22,040 --> 00:14:25,880 Speaker 1: the last meeting very closely, which was an argument in 249 00:14:25,920 --> 00:14:30,080 Speaker 1: their last decision market expectations. So everything seems to be 250 00:14:30,160 --> 00:14:33,520 Speaker 1: lining up UM for for a slight slowdown in the 251 00:14:33,520 --> 00:14:37,040 Speaker 1: pace of tightening to fifty. That takes the interest rate 252 00:14:37,200 --> 00:14:41,080 Speaker 1: UM of course to two, which is um you know, 253 00:14:41,400 --> 00:14:44,320 Speaker 1: widely in the range of what people consider neutral UM. 254 00:14:44,520 --> 00:14:47,440 Speaker 1: But what might actually even more important for the might 255 00:14:47,480 --> 00:14:49,240 Speaker 1: actually be even more important for the e c B 256 00:14:49,520 --> 00:14:53,600 Speaker 1: um uh at at their upcoming meeting is a decision 257 00:14:53,640 --> 00:14:57,880 Speaker 1: on qt UH. They want to outline key principles for 258 00:14:57,960 --> 00:15:01,920 Speaker 1: how they how they plan to tackle that UM details 259 00:15:01,960 --> 00:15:04,120 Speaker 1: probably only arriving at this uh you know, at some 260 00:15:04,160 --> 00:15:07,840 Speaker 1: point next year. But but that in itself is such 261 00:15:07,880 --> 00:15:12,400 Speaker 1: an important decision. The e CP has never done it before. UM. 262 00:15:12,520 --> 00:15:15,040 Speaker 1: You know, there is probably the one or two bargain 263 00:15:15,320 --> 00:15:19,760 Speaker 1: uh to be made about the pace about the start date. UM. 264 00:15:19,800 --> 00:15:22,000 Speaker 1: Maybe that will feature in the in the rate debate 265 00:15:22,040 --> 00:15:24,280 Speaker 1: as well. Who knows. UM, it's not going to be 266 00:15:24,320 --> 00:15:27,400 Speaker 1: straightforward at all, because of course, the CBS balance sheet 267 00:15:27,440 --> 00:15:30,000 Speaker 1: is absolutely huge, so quantity of tightening could potentially be 268 00:15:30,240 --> 00:15:33,920 Speaker 1: a massive shock to the Euro Area. UM. It could 269 00:15:33,960 --> 00:15:36,720 Speaker 1: and it couldn't. It's interesting when when you talk to 270 00:15:36,760 --> 00:15:40,520 Speaker 1: economists and watchers in general, they tell you, well, you know, 271 00:15:40,560 --> 00:15:43,600 Speaker 1: if if one trillion rolls off the ECB balance sheet 272 00:15:43,640 --> 00:15:46,320 Speaker 1: in terms of liquidity, that's actually not going to do much, 273 00:15:46,320 --> 00:15:48,800 Speaker 1: which makes you wonder, of course, um, you know, why 274 00:15:48,920 --> 00:15:51,600 Speaker 1: was that money out there in the first place. Um. 275 00:15:51,800 --> 00:15:54,880 Speaker 1: But one other feature that that um, you know, we 276 00:15:54,920 --> 00:15:56,800 Speaker 1: need to take a look at when when we talk 277 00:15:56,880 --> 00:16:01,600 Speaker 1: about QT is of course the long term loan initiatives 278 00:16:01,840 --> 00:16:06,000 Speaker 1: the ECB has uh you know, has has done over 279 00:16:06,040 --> 00:16:09,400 Speaker 1: the past years. UM. A lot of that money is 280 00:16:09,400 --> 00:16:13,920 Speaker 1: is expiring. UM. Banks have the option to repay um 281 00:16:14,040 --> 00:16:16,560 Speaker 1: you know over the next month, um, all the way 282 00:16:16,600 --> 00:16:20,960 Speaker 1: into into the first half of next year, and and 283 00:16:21,160 --> 00:16:24,040 Speaker 1: that in itself might actually remove a lot of liquidity 284 00:16:24,080 --> 00:16:27,840 Speaker 1: from the system. UM. Put QT on top of that, UM, 285 00:16:28,040 --> 00:16:31,800 Speaker 1: it makes it makes a decision really really difficult. UM. Yeah, 286 00:16:31,960 --> 00:16:33,920 Speaker 1: but all the more fascinating for us to be watching. 287 00:16:34,000 --> 00:16:37,760 Speaker 1: Of course, back back here in in the UK, of course, 288 00:16:37,760 --> 00:16:39,800 Speaker 1: the bank having and already started a quantity of tightening, 289 00:16:39,800 --> 00:16:41,680 Speaker 1: should we expect to hear more about it this week? 290 00:16:42,080 --> 00:16:44,400 Speaker 1: It's unlikely. I mean, we're sort of on a on 291 00:16:44,480 --> 00:16:47,920 Speaker 1: a trajectory already. We're so bonds are maturing, so they're 292 00:16:47,960 --> 00:16:51,280 Speaker 1: being rolled off and not being reinvested in guilts. So 293 00:16:51,320 --> 00:16:54,280 Speaker 1: that's the passive aspect of quantitative tightening. But we're also 294 00:16:54,320 --> 00:16:56,600 Speaker 1: doing active quantity of tining, which is we are we 295 00:16:56,640 --> 00:17:01,160 Speaker 1: are now selling guilts which uh you know, at at 296 00:17:01,200 --> 00:17:03,760 Speaker 1: market prices to to to basically shrink the balance sheet. 297 00:17:03,840 --> 00:17:07,360 Speaker 1: The explanation for that, UM is that so in America 298 00:17:08,320 --> 00:17:10,680 Speaker 1: the Fed is doing passive quantity of tightening, but because 299 00:17:10,680 --> 00:17:13,440 Speaker 1: the bonds are rolling off so quickly, they are reducing 300 00:17:13,440 --> 00:17:16,040 Speaker 1: their balance sheet at a at a rapid pace, where 301 00:17:16,200 --> 00:17:20,119 Speaker 1: in the UK are just relying on maturities will reduce 302 00:17:20,200 --> 00:17:23,440 Speaker 1: the size of the balance sheet relatively slowly. So they're 303 00:17:23,440 --> 00:17:26,359 Speaker 1: doing the active sales basically to keep up, you know, 304 00:17:26,600 --> 00:17:28,880 Speaker 1: with that this kind of pace of tightening that you're 305 00:17:28,920 --> 00:17:32,360 Speaker 1: seeing at the FED. But it is a more complicated operation. 306 00:17:32,400 --> 00:17:36,199 Speaker 1: And and the question I'm always wondering about with the 307 00:17:36,240 --> 00:17:38,920 Speaker 1: with the QT operations is they say that quantity of 308 00:17:39,000 --> 00:17:41,040 Speaker 1: easing the bank central banks say the quantity of easing 309 00:17:41,320 --> 00:17:44,879 Speaker 1: was most effective when markets were in periods of volatility, 310 00:17:45,280 --> 00:17:48,560 Speaker 1: so um, and what they're doing QT at a time 311 00:17:48,600 --> 00:17:51,520 Speaker 1: when markets are, you know, seriously volatile at the moment, 312 00:17:51,640 --> 00:17:54,640 Speaker 1: and yet they say it will have relatively little, if 313 00:17:54,680 --> 00:17:58,359 Speaker 1: any impact on market pricing and market dynamics. They're obviously 314 00:17:58,400 --> 00:18:00,840 Speaker 1: keeping an eye to to watch out for disruption, but 315 00:18:00,880 --> 00:18:03,359 Speaker 1: there seems to be some kind of logical inconsistency in 316 00:18:03,400 --> 00:18:05,440 Speaker 1: there the way the q E works and the way 317 00:18:05,440 --> 00:18:07,640 Speaker 1: that QT will work. Obviously it's the it's the same 318 00:18:07,640 --> 00:18:10,840 Speaker 1: set of guilts. One of the volatili volatile events I 319 00:18:10,880 --> 00:18:14,040 Speaker 1: suppose we've had was everything around the ill fated Many 320 00:18:14,040 --> 00:18:15,960 Speaker 1: budget at the end of September and everything that every 321 00:18:16,080 --> 00:18:18,840 Speaker 1: everything that went wrong since then. Will the Bank of 322 00:18:18,880 --> 00:18:20,880 Speaker 1: England kind of be telling us that that's all over 323 00:18:20,920 --> 00:18:25,960 Speaker 1: and calm down now, yes, I think they they've been 324 00:18:26,080 --> 00:18:29,200 Speaker 1: saying that already. I mean the fact that they did. 325 00:18:29,480 --> 00:18:31,440 Speaker 1: There was a period where people believed that they were 326 00:18:31,480 --> 00:18:33,960 Speaker 1: not going to press ahead with with the active QT 327 00:18:34,440 --> 00:18:37,280 Speaker 1: operation because of the level of volatility caused by the 328 00:18:37,280 --> 00:18:39,560 Speaker 1: Many budget, which which actually caused the long end of 329 00:18:39,560 --> 00:18:41,639 Speaker 1: the guilt market to completely blow up and needed a 330 00:18:41,680 --> 00:18:45,399 Speaker 1: rescue operation. But so the fact that they then pressed 331 00:18:45,440 --> 00:18:49,440 Speaker 1: ahead with the QT operation, the active qut was was striking. 332 00:18:49,480 --> 00:18:52,879 Speaker 1: So they do believe that you, even even at that point, 333 00:18:52,920 --> 00:18:55,000 Speaker 1: the conditions were stable enough to go ahead, and they 334 00:18:55,040 --> 00:18:58,600 Speaker 1: have proved to be so. So there's certainly no suggestion 335 00:18:58,640 --> 00:19:00,200 Speaker 1: that they're going to They're going to say an think 336 00:19:00,200 --> 00:19:02,280 Speaker 1: other than we think that these operations can continue and 337 00:19:02,320 --> 00:19:06,439 Speaker 1: we've not seen any any undue stresses so far. M okay, Well, 338 00:19:06,480 --> 00:19:09,240 Speaker 1: let's talk about I suppose the bigger picture of the 339 00:19:09,240 --> 00:19:13,360 Speaker 1: the economic forecast or updates we'll get from these central banks, 340 00:19:13,640 --> 00:19:16,280 Speaker 1: and let's hear from the Governor of the Irish Central 341 00:19:16,320 --> 00:19:18,800 Speaker 1: Bank and member of the e CPS Governing Council, Gabrielle 342 00:19:18,840 --> 00:19:21,240 Speaker 1: mcclufu's in speaking to Bloomberg in the past few days. 343 00:19:22,320 --> 00:19:26,520 Speaker 1: We're likely to see the euro Area in a technical recession. 344 00:19:26,600 --> 00:19:29,960 Speaker 1: I suspect that Q four this year, the one that 345 00:19:30,280 --> 00:19:34,800 Speaker 1: we're in now, we'll see a very slightly negative GDP number, 346 00:19:35,840 --> 00:19:39,080 Speaker 1: and we're likely to see that for Q one next year. 347 00:19:39,200 --> 00:19:41,679 Speaker 1: On the other hand, my expectations were not going to 348 00:19:41,680 --> 00:19:46,680 Speaker 1: see three as a year of recession. Okay, Philip Aldrick, 349 00:19:46,720 --> 00:19:48,239 Speaker 1: our banking Think the Reporter. I thank you very much 350 00:19:48,240 --> 00:19:50,440 Speaker 1: for joining me here in the studio. Thank you to 351 00:19:50,600 --> 00:19:53,920 Speaker 1: Yana in frank first as well. I'm Stephen Carroll in London. 352 00:19:53,960 --> 00:19:56,240 Speaker 1: You can catch us every weekday morning here for Bloomberg 353 00:19:56,280 --> 00:19:58,960 Speaker 1: Daybreak Europe, beginning at six am in London and one 354 00:19:59,000 --> 00:20:02,160 Speaker 1: am on Wall Street. John all right, Stephen, thanks a lot, 355 00:20:02,359 --> 00:20:05,919 Speaker 1: and coming up on Bloomberg Daybreak weekend. Arizona Senator Kristen 356 00:20:06,000 --> 00:20:11,199 Speaker 1: Cinemas switched from democratsy independent Democrats, tenuous grip on the Senate. 357 00:20:11,560 --> 00:20:23,680 Speaker 1: I'm John Tucker. This is Bloomberg broadcasting live from the 358 00:20:23,760 --> 00:20:27,960 Speaker 1: Bloomberg Interactive Broker Studio in New York. Bloomberg eleven three 359 00:20:27,960 --> 00:20:32,360 Speaker 1: oh to Washington, d C. Bloomberg to Boston, Bloomberg one 360 00:20:32,359 --> 00:20:35,600 Speaker 1: O six one to San Francisco, Bloomberg nine six to 361 00:20:35,680 --> 00:20:39,080 Speaker 1: the country Sirius XM Channel one nineteen to London, d 362 00:20:39,240 --> 00:20:42,359 Speaker 1: a B Digital Radio and around the globe the Bloomberg 363 00:20:42,359 --> 00:20:46,280 Speaker 1: Business Act and Bloomberg Radio dot Com. This is Bloomberg 364 00:20:46,359 --> 00:20:55,480 Speaker 1: Daybreak Weekend. I'm John Tucker, New York with your global 365 00:20:55,480 --> 00:20:57,840 Speaker 1: look ahead of the top stories for investors in the 366 00:20:57,840 --> 00:21:01,600 Speaker 1: coming week. Shifting political say asked for Democrats even after 367 00:21:01,640 --> 00:21:05,080 Speaker 1: their big Senate win in Georgia. More, let's head to 368 00:21:05,119 --> 00:21:10,359 Speaker 1: our Bloomberg newsroom in Washington and Amy Morris Amy, all right, 369 00:21:10,359 --> 00:21:12,919 Speaker 1: thank you, John. We're coming off a wild week politically, 370 00:21:13,000 --> 00:21:16,359 Speaker 1: with the Democratic win in Georgia followed by Arizona Senator 371 00:21:16,480 --> 00:21:20,440 Speaker 1: Kirston Cinema's defection from the Democratic Party. She's now registered 372 00:21:20,480 --> 00:21:22,600 Speaker 1: as an independent. We've got a lot of questions about 373 00:21:22,600 --> 00:21:26,200 Speaker 1: what might happen next, even just in the next few weeks. 374 00:21:26,480 --> 00:21:29,120 Speaker 1: Joining me now to talk about this Bloomberg Capital He'll 375 00:21:29,160 --> 00:21:33,919 Speaker 1: reporter Stephen Dennis Stephen, thanks for taking the time. Okay. 376 00:21:33,920 --> 00:21:36,840 Speaker 1: Senator Cinema has always been a bit of a magverick. 377 00:21:37,000 --> 00:21:40,840 Speaker 1: She didn't always tow the Democratic Party line. Why is 378 00:21:40,840 --> 00:21:44,760 Speaker 1: she doing this now? Yeah, So, if you look at 379 00:21:44,800 --> 00:21:48,719 Speaker 1: the polls, all the polls this year of her standing 380 00:21:48,720 --> 00:21:53,520 Speaker 1: in Arizona have been terrible with Democrats. You know, there 381 00:21:53,560 --> 00:21:56,800 Speaker 1: was a pole way back in January showing her getting 382 00:21:56,840 --> 00:22:01,720 Speaker 1: blown out by Representative rupen Diego in a hypothetical primary 383 00:22:01,800 --> 00:22:05,080 Speaker 1: contest set four to sixteen. And then there was a 384 00:22:05,119 --> 00:22:09,320 Speaker 1: poll right before the midterm elections by Civics that had 385 00:22:09,320 --> 00:22:14,560 Speaker 1: her at seven percent approval among Democratic voters that you know, 386 00:22:14,760 --> 00:22:17,040 Speaker 1: she basically if she tried to run for re election 387 00:22:17,080 --> 00:22:19,560 Speaker 1: as a Democrat, she was going to get primaried and 388 00:22:19,640 --> 00:22:22,480 Speaker 1: she was going to lose that primary. This might be 389 00:22:22,880 --> 00:22:24,840 Speaker 1: the only chance for her to try to win re 390 00:22:24,960 --> 00:22:28,560 Speaker 1: election is to try to appeal to independent voters, which 391 00:22:28,600 --> 00:22:31,800 Speaker 1: is a growing election block, and to some Republicans and 392 00:22:31,920 --> 00:22:35,280 Speaker 1: the moderate Democrats. Um, but you know it's going to 393 00:22:35,359 --> 00:22:39,000 Speaker 1: be an uphill fight for her, and and really this 394 00:22:39,280 --> 00:22:45,760 Speaker 1: complicates the Democratic efforts to keep their majority because if 395 00:22:45,760 --> 00:22:50,680 Speaker 1: she creates a three way race and splits the Democratic vote, 396 00:22:51,280 --> 00:22:55,880 Speaker 1: that could make it a lot easier for a Republican candidate, 397 00:22:56,000 --> 00:23:00,399 Speaker 1: maybe Carry Lake or somebody else, to win that Senate 398 00:23:00,440 --> 00:23:03,480 Speaker 1: seat in Arizona for the Republicans. So in the short term, 399 00:23:03,520 --> 00:23:07,200 Speaker 1: it doesn't really change much for the Democrats on Capitol Hill. 400 00:23:07,200 --> 00:23:11,320 Speaker 1: At least in the Senate, they still have a slim majority, 401 00:23:11,359 --> 00:23:13,919 Speaker 1: but it is their majority. But that's only in the 402 00:23:13,960 --> 00:23:17,719 Speaker 1: short term. What you're looking forward to is what and 403 00:23:17,760 --> 00:23:21,480 Speaker 1: how she's positioning herself there exactly. I think that's what 404 00:23:21,640 --> 00:23:26,560 Speaker 1: this decision was about, was to try to expand her 405 00:23:26,600 --> 00:23:31,760 Speaker 1: appeal in Arizona to independent voters and to just sort 406 00:23:31,800 --> 00:23:34,760 Speaker 1: of clear the decks where she's not constantly being asked 407 00:23:34,760 --> 00:23:39,800 Speaker 1: about her standing among Democratic primary voters. You know, Diego 408 00:23:40,160 --> 00:23:44,000 Speaker 1: slammed her immediately afterwards with a statement for abandoning the 409 00:23:44,040 --> 00:23:48,280 Speaker 1: Democratic Party and hinted that he's going to run. So, 410 00:23:48,440 --> 00:23:50,159 Speaker 1: you know, it's kind of creates a bit of a 411 00:23:50,200 --> 00:23:55,760 Speaker 1: mess for Democrats for their political strategy. Four it's a 412 00:23:55,960 --> 00:24:01,080 Speaker 1: key to presidential primary state as well. But she did 413 00:24:01,160 --> 00:24:04,600 Speaker 1: talk to Chuck Schumer, the Senate majority leader. She is 414 00:24:04,640 --> 00:24:08,720 Speaker 1: going to stick with Democrats as far as controlling their 415 00:24:08,760 --> 00:24:12,560 Speaker 1: control of committees, their ability to subpoena corporations, which is 416 00:24:12,600 --> 00:24:16,879 Speaker 1: something that Schumer has highlighted. Uh. And you know, so 417 00:24:16,960 --> 00:24:22,520 Speaker 1: they'll still technically sort of have a majority um for 418 00:24:22,520 --> 00:24:26,679 Speaker 1: for all practical purposes, it doesn't really change how Washington 419 00:24:26,800 --> 00:24:29,359 Speaker 1: is going to work the next year or two. But 420 00:24:29,440 --> 00:24:32,640 Speaker 1: it does change that Democratic political strategy as they try 421 00:24:32,680 --> 00:24:36,240 Speaker 1: to keep the Senate majority in which is already looking 422 00:24:36,760 --> 00:24:40,680 Speaker 1: very tough because that Senate map is much much more 423 00:24:40,760 --> 00:24:44,240 Speaker 1: difficult for them than it was just a few weeks ago. 424 00:24:44,520 --> 00:24:46,840 Speaker 1: One more question for you, Dennis, before we let you go. 425 00:24:47,640 --> 00:24:50,359 Speaker 1: Her strategy for the next couple of years. She said 426 00:24:50,359 --> 00:24:52,760 Speaker 1: she was not going to caucus with Republicans, but she 427 00:24:52,760 --> 00:24:55,480 Speaker 1: didn't specifically say she was going to caucus with Democrats. 428 00:24:55,680 --> 00:24:57,800 Speaker 1: But doesn't she have to if she wants to keep 429 00:24:57,840 --> 00:25:01,800 Speaker 1: her committee assignments. Does that change? Yeah? No, So basically 430 00:25:01,920 --> 00:25:05,880 Speaker 1: she's keeping her committee assignments. From a de facto perspective, 431 00:25:06,440 --> 00:25:10,359 Speaker 1: she's caucusing with Democrats and giving them control of committees. 432 00:25:10,800 --> 00:25:13,040 Speaker 1: You know, the past for her to win re election 433 00:25:13,480 --> 00:25:16,959 Speaker 1: is to keep in the center of American politics and 434 00:25:17,000 --> 00:25:20,959 Speaker 1: get more things done by bridging the gap between the parties. 435 00:25:21,000 --> 00:25:24,200 Speaker 1: And certainly we've got a lot of messy stuff happening 436 00:25:24,280 --> 00:25:28,280 Speaker 1: next year that limit all kinds of other things. You know, 437 00:25:28,359 --> 00:25:30,399 Speaker 1: I suspect she's going to be in the thick of 438 00:25:30,480 --> 00:25:33,920 Speaker 1: things all of that the next two years. All right, 439 00:25:33,920 --> 00:25:36,040 Speaker 1: Thank you so much. For taking the time with us. 440 00:25:36,080 --> 00:25:39,280 Speaker 1: Great to be here. Bloomberg Capitol Hill reporter Stephen Dennis 441 00:25:39,320 --> 00:25:42,240 Speaker 1: with what happens next now that Senator Kirsten Cinema of 442 00:25:42,280 --> 00:25:45,960 Speaker 1: Arizona has left the Democratic Party, she is an independent, 443 00:25:46,200 --> 00:25:49,199 Speaker 1: and we've been watching the national and political implications of 444 00:25:49,240 --> 00:25:53,359 Speaker 1: the Democratic victory in Georgia. It is my honor to 445 00:25:53,560 --> 00:25:58,600 Speaker 1: out of the fore most powerful words ever spoken in 446 00:25:58,680 --> 00:26:03,119 Speaker 1: a democracy, the people have spoken, alright, and that was 447 00:26:03,200 --> 00:26:07,000 Speaker 1: Democratic Senator Raphael Warnock of Georgia during his victory speech 448 00:26:07,080 --> 00:26:09,920 Speaker 1: after winning the runoff election in Georgia this past week. 449 00:26:10,520 --> 00:26:15,480 Speaker 1: During his concession speech, Republican Herschel Walker encouraged his supporters 450 00:26:15,520 --> 00:26:19,680 Speaker 1: to remain engaged in the political process. And I want 451 00:26:19,720 --> 00:26:23,520 Speaker 1: to say, God is a good God. God bless you guys, 452 00:26:23,720 --> 00:26:27,240 Speaker 1: and let me say stay together, continue to believe in 453 00:26:27,280 --> 00:26:30,760 Speaker 1: our elected official. Always, always cash your vote, no matter 454 00:26:30,800 --> 00:26:33,760 Speaker 1: whatever has happening, cash your vote and joining me now 455 00:26:33,800 --> 00:26:36,439 Speaker 1: to talk about all of this, Bloomberg National political reporter 456 00:26:36,520 --> 00:26:39,960 Speaker 1: Christian Hall. And Christian, it's important to note you were 457 00:26:40,080 --> 00:26:42,919 Speaker 1: there in Georgia as all of this was happening. What 458 00:26:43,080 --> 00:26:46,440 Speaker 1: is your bottom line take away from the victory that 459 00:26:46,480 --> 00:26:49,440 Speaker 1: the Democrats saw in Georgia. You know, I think that 460 00:26:49,480 --> 00:26:52,840 Speaker 1: this is really big for Democrats. Georgia has been a 461 00:26:52,880 --> 00:26:56,600 Speaker 1: Republican bastion for years and years, and I think a 462 00:26:56,640 --> 00:27:01,600 Speaker 1: lot of the voter turnout efforts from Democrats really uh 463 00:27:01,960 --> 00:27:04,600 Speaker 1: made the state possibly become a swing state. That is 464 00:27:04,680 --> 00:27:07,600 Speaker 1: probably one of the biggest takeaways from this. That final 465 00:27:07,680 --> 00:27:11,280 Speaker 1: vote that was coming in between um Warnock and Walker 466 00:27:11,880 --> 00:27:15,280 Speaker 1: h fifty one percent for Democrat Warnock fort point six 467 00:27:15,280 --> 00:27:18,840 Speaker 1: percent for Republican herschel Walker. A clear victory, but not 468 00:27:19,000 --> 00:27:21,600 Speaker 1: a landslide. That is pretty much as razor thing as 469 00:27:21,640 --> 00:27:24,760 Speaker 1: you can get without having to force another runoff election. 470 00:27:25,280 --> 00:27:27,960 Speaker 1: What's your take on what maybe at play there? You know, 471 00:27:28,080 --> 00:27:31,399 Speaker 1: I think that it has been a very republican state. 472 00:27:31,760 --> 00:27:34,639 Speaker 1: There have been you know, restrictive voting rights laws in 473 00:27:34,680 --> 00:27:38,360 Speaker 1: the state. UM, but also I think herschel Walker part 474 00:27:38,359 --> 00:27:40,080 Speaker 1: of the reason he didn't win was because he was 475 00:27:40,119 --> 00:27:43,600 Speaker 1: a deeply flawed candidate, and I think, you know, voters 476 00:27:43,640 --> 00:27:45,359 Speaker 1: really got in the booth and they had to make 477 00:27:45,400 --> 00:27:49,240 Speaker 1: a decision. You know, do you think it put some voters, 478 00:27:49,280 --> 00:27:53,880 Speaker 1: some Republican voters particularly who may have otherwise backed Walker 479 00:27:54,440 --> 00:27:56,720 Speaker 1: in a position of having to hold their nose and 480 00:27:56,800 --> 00:28:00,639 Speaker 1: vote for the Democrat because Walker was so flawed. Yeah. Absolutely. 481 00:28:00,680 --> 00:28:02,159 Speaker 1: I mean I think if you take a look at 482 00:28:02,560 --> 00:28:06,199 Speaker 1: Stacy Abrams, uh, and she didn't win, she was the 483 00:28:06,200 --> 00:28:09,000 Speaker 1: Democrat on the ticket, and I think Republicans went in 484 00:28:09,119 --> 00:28:11,720 Speaker 1: and they voted for Kemp. They liked what they saw 485 00:28:11,760 --> 00:28:15,480 Speaker 1: with him, and they weren't really sure on Walker. Well, 486 00:28:15,560 --> 00:28:17,719 Speaker 1: you know what you talked about Stacy Abrams. Let's get 487 00:28:17,760 --> 00:28:20,480 Speaker 1: into that just for a minute. Did did her loss 488 00:28:20,520 --> 00:28:24,840 Speaker 1: in the gubernatorial race, uh to to Kemp? Did? Did 489 00:28:24,880 --> 00:28:27,640 Speaker 1: that help Democrats? Did that motivate them to get out 490 00:28:27,680 --> 00:28:31,560 Speaker 1: the vote even more? Was that some sort of motivation? Well, 491 00:28:31,880 --> 00:28:34,480 Speaker 1: I think you could say that, you know, Stacy Abrams 492 00:28:34,640 --> 00:28:38,960 Speaker 1: really built this political machine, especially amongst black voters in 493 00:28:38,960 --> 00:28:42,360 Speaker 1: the state of Georgia. You know, traditionally Democrats focused on 494 00:28:42,400 --> 00:28:46,400 Speaker 1: the metro areas of Georgia in Atlanta. UM, but I 495 00:28:46,440 --> 00:28:50,720 Speaker 1: think Stacy Abrams really understood that if you got voters 496 00:28:50,720 --> 00:28:52,680 Speaker 1: to turn out across the state, if you talk to 497 00:28:52,720 --> 00:28:56,080 Speaker 1: black voters and smaller towns within the state, you could 498 00:28:56,120 --> 00:28:58,719 Speaker 1: possibly win. And that's what happened with Democrats. Now, just 499 00:28:58,760 --> 00:29:01,040 Speaker 1: a sidebar here, go on a little bit off track. 500 00:29:01,080 --> 00:29:03,560 Speaker 1: I want to talk a little more about Stacy Abrams 501 00:29:03,560 --> 00:29:08,680 Speaker 1: because she seems to becoming more of a political activists 502 00:29:08,760 --> 00:29:11,040 Speaker 1: sort of. I don't want to say kingmaker. She's not 503 00:29:11,160 --> 00:29:14,040 Speaker 1: there yet, but she knows how to get out the vote. 504 00:29:14,080 --> 00:29:15,880 Speaker 1: I mean, she has shown that she knows how to 505 00:29:15,880 --> 00:29:19,760 Speaker 1: mobilize people. Does that look to be her future role 506 00:29:19,800 --> 00:29:22,800 Speaker 1: in the Democratic Party because she didn't win the Democratic 507 00:29:22,920 --> 00:29:27,080 Speaker 1: uh race for or the race rather for governor in Georgia, 508 00:29:27,640 --> 00:29:31,440 Speaker 1: But it's not as though she doesn't have a role there, absolutely. 509 00:29:31,480 --> 00:29:34,440 Speaker 1: I mean, she has done a really good job of 510 00:29:34,440 --> 00:29:38,160 Speaker 1: working with New Georgia Project Black Voters Matter, you know, 511 00:29:38,280 --> 00:29:41,600 Speaker 1: really grassroots organizing throughout the state of Georgia in a 512 00:29:41,640 --> 00:29:44,080 Speaker 1: way that no one else has really done in the past. 513 00:29:44,240 --> 00:29:47,080 Speaker 1: All Right, thank you so much, Bloomberg National political reporter 514 00:29:47,160 --> 00:29:49,680 Speaker 1: Christian Hall. It was a pleasure. Thanks for taking the time. 515 00:29:49,720 --> 00:29:52,960 Speaker 1: Thank you for more of our political news coverage. Tune 516 00:29:52,960 --> 00:29:55,720 Speaker 1: into Bloomberg's Sound On with Joe Matthew, which you can 517 00:29:55,720 --> 00:29:58,880 Speaker 1: hear weekday afternoons at five Wall Street Time, and Balance 518 00:29:58,880 --> 00:30:01,560 Speaker 1: of Power with David West. And that's weekdays at noon 519 00:30:01,640 --> 00:30:04,640 Speaker 1: Wall Street Time. All Right, here on Bloomberg Radio. I'm 520 00:30:04,680 --> 00:30:08,200 Speaker 1: Amy Morris and this is Bloomberg John. Amy Morris reporting 521 00:30:08,240 --> 00:30:12,120 Speaker 1: from our Bloomberg newsroom in Washington. Thanks a lot, Amy, 522 00:30:12,760 --> 00:30:15,600 Speaker 1: and coming up on Bloomberg Daybreak weekend. What do the 523 00:30:15,680 --> 00:30:19,200 Speaker 1: easing of COVID restrictions in China mean for the country's 524 00:30:19,200 --> 00:30:35,520 Speaker 1: a company. I'm John Tucker at this is Bloomberg. This 525 00:30:35,960 --> 00:30:38,760 Speaker 1: is Bloomberg Daybreak weekend, our global look ahead of the 526 00:30:38,840 --> 00:30:41,600 Speaker 1: top stories for investors in the coming week. I'm John 527 00:30:41,640 --> 00:30:44,640 Speaker 1: Tucker in New York. China is very much in focus 528 00:30:44,680 --> 00:30:47,479 Speaker 1: this coming week, and reopening is a theme as COVID 529 00:30:47,560 --> 00:30:50,920 Speaker 1: restrictions ease somewhat more. Let's go to Hong Kong and 530 00:30:50,960 --> 00:30:54,440 Speaker 1: Bloomberg Daybreak Asia host Doug Chrisner John. In the last week, 531 00:30:54,440 --> 00:30:57,760 Speaker 1: the Chinese government took major steps in relaxing it's COVID 532 00:30:57,880 --> 00:31:02,600 Speaker 1: zero policy, and markets generally speaking expressed optimism, but the 533 00:31:02,680 --> 00:31:05,360 Speaker 1: path of the reopening is far from clear, and the 534 00:31:05,400 --> 00:31:08,800 Speaker 1: government appears to be bracing for a very bumpy process. 535 00:31:08,880 --> 00:31:13,120 Speaker 1: As an example, last week, as more relaxations were announced, 536 00:31:13,200 --> 00:31:17,520 Speaker 1: Beijing said prudent monetary policy should be targeted and forceful. 537 00:31:18,040 --> 00:31:20,680 Speaker 1: What will the shift mean for China and by extension, 538 00:31:20,840 --> 00:31:23,520 Speaker 1: for the global economy in the year ahead. For that, 539 00:31:23,560 --> 00:31:28,320 Speaker 1: we're pleased to join Bloomberg's chief Asia Economics correspondent and 540 00:31:28,440 --> 00:31:30,880 Speaker 1: the current who joins us from Hong Kong, and I 541 00:31:30,920 --> 00:31:33,600 Speaker 1: wanted to begin with a reopening angle because I think 542 00:31:33,920 --> 00:31:36,480 Speaker 1: it's fair to say that if aside from the narrative 543 00:31:36,520 --> 00:31:41,760 Speaker 1: on inflation, the reopening ian China is critical. How China 544 00:31:41,840 --> 00:31:44,640 Speaker 1: is reopening goes next year is one of the big 545 00:31:44,680 --> 00:31:48,080 Speaker 1: wild cards, not just for China's economy but the global economy. 546 00:31:48,320 --> 00:31:50,520 Speaker 1: So let's be clear in terms of where we are at. 547 00:31:50,920 --> 00:31:54,200 Speaker 1: Hardly a day goes by at the moment with some 548 00:31:54,320 --> 00:31:58,200 Speaker 1: new announcements on how the Chinese authorities are changing up 549 00:31:58,240 --> 00:32:02,240 Speaker 1: their controls on meeting the spread of the disease. Analysts 550 00:32:02,240 --> 00:32:05,480 Speaker 1: are interpreting these these changes, such as relax relaxations on 551 00:32:05,560 --> 00:32:08,800 Speaker 1: testing requirements and on quarantine, etcetera. They're saying this means 552 00:32:08,800 --> 00:32:11,520 Speaker 1: the government is moving away from strenuous kind of covidy 553 00:32:11,600 --> 00:32:15,320 Speaker 1: or lockdowns. The authorities themselves have have signaled as much. 554 00:32:15,360 --> 00:32:17,800 Speaker 1: They're talking about a disease that doesn't isn't as harmful 555 00:32:18,400 --> 00:32:21,160 Speaker 1: as previous variants. So that's the story in terms of 556 00:32:21,160 --> 00:32:23,200 Speaker 1: where they're heading. The big question though, is we don't 557 00:32:23,240 --> 00:32:26,080 Speaker 1: know how fast they will get there and how they 558 00:32:26,120 --> 00:32:29,240 Speaker 1: really will navigate this while also protecting the people. Of course, 559 00:32:29,280 --> 00:32:31,840 Speaker 1: we know which China a lot of commentary around and 560 00:32:32,000 --> 00:32:35,600 Speaker 1: elderly population still under under vaccinated, and of course it 561 00:32:35,640 --> 00:32:38,640 Speaker 1: doesn't have yet the hospital network that other countries like 562 00:32:38,720 --> 00:32:40,600 Speaker 1: Japan and South Korea has to be able to cope 563 00:32:40,600 --> 00:32:43,280 Speaker 1: with such an outbreak. So in terms of the consumer, 564 00:32:43,480 --> 00:32:46,479 Speaker 1: we know that people in China have been suffering, not 565 00:32:46,560 --> 00:32:49,840 Speaker 1: just because of the virus itself and the lockdowns, but 566 00:32:50,080 --> 00:32:53,440 Speaker 1: economically speaking, what has happened at the property market. When 567 00:32:53,440 --> 00:32:58,160 Speaker 1: you hear a statement from the PBOC that monetary policy prudent, 568 00:32:58,160 --> 00:33:02,320 Speaker 1: monetary policy should be targeted and forceful, it sounds to 569 00:33:02,360 --> 00:33:04,280 Speaker 1: me like they're ready to do much more in the 570 00:33:04,320 --> 00:33:07,880 Speaker 1: way of stimulus. It'll be precise and surgical perhaps, but 571 00:33:07,960 --> 00:33:10,960 Speaker 1: there's more coming. Fair statement, fair statement. The messaging is 572 00:33:11,040 --> 00:33:13,760 Speaker 1: changing that they are sending more support for the economy. 573 00:33:14,040 --> 00:33:16,600 Speaker 1: The PBUC, for example, has been trying to keep this 574 00:33:16,720 --> 00:33:20,000 Speaker 1: discipline line. They haven't been a fan of QUEI are 575 00:33:20,040 --> 00:33:22,920 Speaker 1: splurging out to support the economy but nonetheless, last week, 576 00:33:23,000 --> 00:33:24,480 Speaker 1: as you mentioned, they came out with a new statement 577 00:33:24,520 --> 00:33:27,760 Speaker 1: saying that they will come with powerful support for those 578 00:33:27,800 --> 00:33:30,280 Speaker 1: sectors of the economy that need the most. But one 579 00:33:30,280 --> 00:33:33,040 Speaker 1: economist said to me, if they can reopen and move 580 00:33:33,040 --> 00:33:35,720 Speaker 1: away from COVID zero, it will be the biggest stimulus 581 00:33:35,720 --> 00:33:39,120 Speaker 1: for China's economy in years. So I mentioned earlier that 582 00:33:39,200 --> 00:33:42,680 Speaker 1: inflation is obviously the big problem globally. I guess China 583 00:33:42,760 --> 00:33:45,560 Speaker 1: doesn't really have the same problem. It's not been facing 584 00:33:45,600 --> 00:33:49,080 Speaker 1: the same level inflationary pressures as the West has been facing. 585 00:33:49,240 --> 00:33:52,080 Speaker 1: I'm wondering what this does, the Chinese reopening does to 586 00:33:52,160 --> 00:33:54,760 Speaker 1: the inflation narrative. What's the impact do you think? So 587 00:33:54,840 --> 00:33:57,400 Speaker 1: let's say we're on the basis that China does reopen 588 00:33:57,400 --> 00:34:00,800 Speaker 1: in three Several economists are already told about it. That's 589 00:34:00,840 --> 00:34:03,760 Speaker 1: sooner than expected. So let's say that's good for China's economy. 590 00:34:03,800 --> 00:34:07,680 Speaker 1: Consumers are out and about again, Chinese tourists are traveling, 591 00:34:08,040 --> 00:34:11,360 Speaker 1: Chinese business people and students of course are traveling. The 592 00:34:11,400 --> 00:34:13,960 Speaker 1: impact will be not just in China's domestic economy, but 593 00:34:14,000 --> 00:34:17,680 Speaker 1: it will mean more Chinese demand for oil, more Chinese 594 00:34:17,760 --> 00:34:21,960 Speaker 1: demand for aviation, capacity around the world, more Chinese tourism 595 00:34:22,040 --> 00:34:25,719 Speaker 1: spending and students spending, and global investment going into every 596 00:34:25,719 --> 00:34:28,799 Speaker 1: corner of the world economy. The story for next year 597 00:34:28,800 --> 00:34:31,320 Speaker 1: is inflation is going to slow down around the world 598 00:34:31,360 --> 00:34:34,560 Speaker 1: because commodity and energy prices have come off. People are 599 00:34:34,560 --> 00:34:36,600 Speaker 1: spending less because of all the pressures on their under 600 00:34:36,800 --> 00:34:39,920 Speaker 1: mortgages and under wallet and of course the favorable favorable 601 00:34:39,920 --> 00:34:42,839 Speaker 1: base effect. But if you throw a rebounding Chinese into 602 00:34:42,880 --> 00:34:44,960 Speaker 1: that mix, a lot of the columns are saying that 603 00:34:45,120 --> 00:34:47,239 Speaker 1: will be something of a wild card. It doesn't mean 604 00:34:47,480 --> 00:34:48,920 Speaker 1: we'll be back to where we war in terms of 605 00:34:49,000 --> 00:34:50,960 Speaker 1: this year's inflation scare, but it will certainly put a 606 00:34:51,000 --> 00:34:53,560 Speaker 1: floor under falling price and it's always a pleasure. Thanks 607 00:34:53,600 --> 00:34:56,000 Speaker 1: for sharing your analysis of the story on China and 608 00:34:56,120 --> 00:35:00,600 Speaker 1: the current is A. Bloomberg's Chief Asia Economics corresponded. I'm 609 00:35:00,680 --> 00:35:04,560 Speaker 1: Doug Prisoner. You can catch Bloomberg Daybreak Asia every week 610 00:35:04,680 --> 00:35:08,200 Speaker 1: night here on Bloomberg at seven a m. In Hong Kong, 611 00:35:08,400 --> 00:35:11,439 Speaker 1: six p m on Wall Street. John all right, thanks Doug, 612 00:35:11,520 --> 00:35:14,000 Speaker 1: and that does it for this edition of Bloomberg Daybreak Weekend. 613 00:35:14,040 --> 00:35:16,680 Speaker 1: Join us again Mounday morning at five am Wall Street. 614 00:35:16,719 --> 00:35:20,000 Speaker 1: Time for the latest on markets overseas, the lows you 615 00:35:20,040 --> 00:35:22,880 Speaker 1: need to start your day. I'm John Tucker, and this 616 00:35:23,320 --> 00:35:24,000 Speaker 1: is Bloomberg.