Speaker 1: This is Bloomberg Daybreak Weekend, our global look if the
Speaker 1: top stories of the coming week from our daybreak anchors
Speaker 1: all around the world. Just to hand of the program,
Speaker 1: the FEDS December meeting is upon us. I'm John Tucker
Speaker 1: in New York. I'm Stephen Carl in London, where Central
Speaker 1: Banks and Frankfurst and London are considering easing open interest
Speaker 1: rate heights despite the continuing inflationary pressures. I'm Doug Chrisoner.
Speaker 1: We look at what's ahead for the Chinese economy. I'm
Speaker 1: Amy Morris in Washington. We're watching the continual ship in
Speaker 1: the political landscape after Christian cinema changes parties. That's all
Speaker 1: straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three
Speaker 1: on New York, Bloomberg one, Washington d C, Bloomberg one
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Speaker 1: the Bloomberg Business at Hi. Everybody, I'm John Tucker, and
Speaker 1: let's start today's program with the big fed mad in
Speaker 1: this coming week, joining us, how to frame the conversation
Speaker 1: as always has events on fold. Bloomberg Global Economics and
Speaker 1: Policy Editor Michael McKee, Uh, no surprise, we're going to
Speaker 1: get another rate hike from the Federal Reserve? Mike, Yes,
Speaker 1: we are. Wouldn't you like it if you knew what
Speaker 1: Santa or what you were going to get from which
Speaker 1: we we can shake the FED box and we know
Speaker 1: what's inside it, and we know the size. They've pretty
Speaker 1: much told us we're gonna do fifty basis points a
Speaker 1: half percentage point increase, which a year ago would have
Speaker 1: been considered very large because they hadn't done a fifty
Speaker 1: base point move in years. But now that we've had
Speaker 1: four seventy five in a row fifties, this seems like
Speaker 1: a slow down, a significant slowdown to some. But the
Speaker 1: Fed is continuing to raise interest rates, and that's the
Speaker 1: important thing that they keep going higher because they haven't
Speaker 1: won the battle of inflation yet. Now I keep asking
Speaker 1: you this question every time we get together. I'm like
Speaker 1: a broken record. Are they trying to torpedo the labor market?
Speaker 1: Is that what they have to do to bring inflation
Speaker 1: under control while they are trying to shave Shall we
Speaker 1: say growth by shaving demand, bring down demand some so
Speaker 1: that Americans aren't spending as much money, which then translates
Speaker 1: into less production at the companies that make the things
Speaker 1: that we're not buying, and therefore translates into uh, fewer jobs. Now,
Speaker 1: the Fed's view is, because there's so many job openings,
Speaker 1: they don't have to torpedo the labor market. They can
Speaker 1: slow it down. We can see a very small rise
Speaker 1: in the unemployment rate, and we can get a soft landing.
Speaker 1: That's their hope. In the past, they've never been able
Speaker 1: to manage the increase in unemployment once. There's a rule
Speaker 1: called the some rule that once it goes of half
Speaker 1: a percentage point change, then it takes off to about
Speaker 1: three percentage points. So i've some rule gamed after No,
Speaker 1: I'm not who who came up with this when she
Speaker 1: was at the New York head And basically, any increasing
Speaker 1: unemployment over half a percentage point would then not stop
Speaker 1: until you get to unemployment rate and it would bring
Speaker 1: on a recession. So they haven't been able to do
Speaker 1: it in the past. But even Claudia Sum says it's
Speaker 1: a guide, not a promise, So we'll wait and see. Okay,
Speaker 1: when we're talking about the rate of inflation and the increase,
Speaker 1: how much of that comes from labor costs, Well, it
Speaker 1: depends on the category you're looking at, because for service companies,
Speaker 1: it's about eighty percent of their overall costs is the
Speaker 1: cost of labor. So it is a very big part
Speaker 1: of services, and services is where the money is going
Speaker 1: right now. We yeah, that's the biggest part of the economy.
Speaker 1: That's the biggest part of the economy. But we bought
Speaker 1: a lot of stuff. We were sort of out of
Speaker 1: whack for two years because people couldn't go out, so
Speaker 1: they bought stuff and goods. Inflation went went way up,
Speaker 1: and then there were shortages and supply chain problems, and
Speaker 1: that contributed to the inflation that we're seeing. Now there's
Speaker 1: a shift away from that supply chains and normalizing somewhat,
Speaker 1: and goods prices are not rising anywhere near the cost
Speaker 1: of services. But as we go out, as we go
Speaker 1: on vacations and spend money at restaurants, Uh, we're seeing
Speaker 1: inflation there and that's largely driven by labor costs. They
Speaker 1: started raising rates earlier this year, and has it started
Speaker 1: to take effect yet. Certainly we've seen it in the
Speaker 1: housing market. I would we've seen it in the housing market,
Speaker 1: and we're seeing little bits of slow down in consumer spending.
Speaker 1: Part of the problem for the FED is there was
Speaker 1: so much fiscal support from the government during the PAS
Speaker 1: endemic that people have a lot of money in the
Speaker 1: bank that they can keep spending. So demand is not
Speaker 1: slowing as fast, perhaps as they hoped it might. Now
Speaker 1: the FED knows that at some point soon we should
Speaker 1: start seeing a much bigger impact on consumer demand, but
Speaker 1: they don't know when, and they don't know how big,
Speaker 1: and because this is an unusual situation, UH, they can't
Speaker 1: be sure. Also, in the years since we started looking
Speaker 1: for these lags, the development of companies like Bloomberg and
Speaker 1: others that provide data on the economy and consumers and
Speaker 1: companies UH may have shortened the lags. So that's one
Speaker 1: reason the FED wants to dial back. It's increases. What
Speaker 1: do you mean by that? The data increased visibility with
Speaker 1: the data has UH affected the lives The feedback effects
Speaker 1: become much faster because companies can see in real time
Speaker 1: what is happening out there. Okay, to what degree is
Speaker 1: j Powe worried about reputational damage to himself and to
Speaker 1: the FED at this point. Well, he's got to be
Speaker 1: concerned in the sense that the Feds getting blamed a
Speaker 1: lot for the inflation rate skyrocketing over the past year,
Speaker 1: much more quickly than the FED anticipated, because they thought
Speaker 1: that what would end up happening is when everybody went
Speaker 1: back to work, things would go back to the way
Speaker 1: they were pre pandemic, and the inflation they were getting
Speaker 1: was transitory, which obviously turned out not to be. Now
Speaker 1: the consensus is Powell and company have done a good
Speaker 1: job since then, and so we're waiting to see what
Speaker 1: kind of longer term credibility problem they have. Jay Power
Speaker 1: would tell you he's not worried about himself. He'd worry
Speaker 1: about the FED, because if the FED loses credibility, if
Speaker 1: people don't think they're going to do what they say
Speaker 1: they're going to do, or that they're not going to
Speaker 1: get the forecast right, then it's going to be harder
Speaker 1: for monetary policy to work, and you can get things
Speaker 1: like either skyrocketing inflation or deflation. So the FED is
Speaker 1: going to keep keep their foot on the brake, and
Speaker 1: that's gonna be the big thing to watch in two
Speaker 1: thousand twenty three. Markets think the FED will back down
Speaker 1: if we start to see unemployment rise, and Powell and
Speaker 1: company are saying they will not. So we will see
Speaker 1: what that showdown produces. And the bond market seems to
Speaker 1: be saying that there is going to be a recession.
Speaker 1: Is that? Is that what I'm reading? Well, that's a
Speaker 1: fair interpretation of what you're reading about. Is the inverted
Speaker 1: yield curves where longer maturity treasury bonds and notes are
Speaker 1: the interest rate on those is lower than short rutten treasuries.
Speaker 1: And that's because people think that either there's going to
Speaker 1: be a recession and interest rates will come down across
Speaker 1: the board, or they think that we're going to achieve
Speaker 1: the soft landing and inflation will come down. It's a
Speaker 1: little hard to separate, but the kind of the feeling
Speaker 1: in the bond market is it's going to be the
Speaker 1: recession scenario because that's general only what's happened in the past.
Speaker 1: What's the message that he's going to send at the
Speaker 1: FED policy meeting and what questions do you have for
Speaker 1: Chairman Powell. Well, it's gonna be sort of two messages.
Speaker 1: One is that fifty basis points as opposed to seventy
Speaker 1: five does not mean the Fed is loosening its conviction
Speaker 1: that interest rates have to go up, and two that
Speaker 1: it's going to be steady as she goes. He wants
Speaker 1: to reinforce the idea that the Fed is going to
Speaker 1: keep raising rates and they probably aren't gonna be done
Speaker 1: after December. They'll probably do some more in early, but
Speaker 1: then they're gonna leave them there for a very long time. Uh.
Speaker 1: We heard John Williams, the president of the New York Fed,
Speaker 1: say last week that he thought it would be throughout
Speaker 1: and maybe into and the bond market, as you pointed out,
Speaker 1: is not buying that right now, so he he will
Speaker 1: be trying to convince them. And I guess the uh,
Speaker 1: the overriding question for every one is, uh, how high
Speaker 1: do they think they have to go? At this point?
Speaker 1: We will get a new survey of all of the
Speaker 1: FED members and they'll give us a median dot plot
Speaker 1: that shows where they think they're going to have to go,
Speaker 1: But uh, we'd like to get more clarity on that.
Speaker 1: Remind ofpability what their target for inflation is. Well, two
Speaker 1: percent is the target, and Fed officials think it's still
Speaker 1: realistic the most most economists and the FED have projected
Speaker 1: we would get to about three and a half percent
Speaker 1: by the end of which is UH on the pc
Speaker 1: index measurement, not the c p I is the preferred
Speaker 1: measure for the preferred measure for the FED. Now, then
Speaker 1: after that three and a half, how much harder is
Speaker 1: it going to be to get down to two. That's
Speaker 1: a big argument among economists at this point, something that
Speaker 1: we could go down very fast and go below get
Speaker 1: some disinflation below two pers and and others think it's
Speaker 1: gonna be another year or two after the end of
Speaker 1: three before you can get there. So that's also started
Speaker 1: a debate about whether the FEDS should raise its target,
Speaker 1: But Fed's not buying that all right. The other big
Speaker 1: number is the terminal rate is kind of alluded to that.
Speaker 1: Where is that right now where the FED winds up. Well,
Speaker 1: we're at four percent going into the meeting, and the
Speaker 1: general consensus now is we will get to about five percent. Uh.
Speaker 1: Some members of the Open Market Committee that the decision
Speaker 1: makers think they're gonna have to go over five five
Speaker 1: to five and a quarter what poland Uh. Some of
Speaker 1: the leadership of the FED have said is we don't
Speaker 1: know um and there is this consensus out there and
Speaker 1: that might be right, but it's not going to keep
Speaker 1: us from going beyond it if we feel it's necessary. Mike,
Speaker 1: as always a pleasure, Michael McKee, And just to hand
Speaker 1: on Bloomberg Daybreak weekend, we're gonna head to Europe for
Speaker 1: a look at the neck central bank poise to raise
Speaker 1: interustrates this week. I'm John Tucker, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak weekend, our global look ahead of
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: John Tucker in New York. Coming up, look at the
Speaker 1: balance of power in the Senate after Senator Kirsten Cinema's
Speaker 1: flipped too independent. But first, the Federal Reserve isn't the
Speaker 1: only major central bank meeting of the coming days. In Europe.
Speaker 1: The Bank of England, the European Central and the Swiss
Speaker 1: National Bank will all announce rate decisions Thursday as they
Speaker 1: face massive inflationary pressures. And for more I let's said
Speaker 1: to London and bring in Bloomberg Daybreak Europe anchor Stephen Carroll.
Speaker 1: John and the central banks in London and Frankfurt are
Speaker 1: both facing double digit inflation. The Bank of England got
Speaker 1: a headstart on hiking rates a year ago there now
Speaker 1: at our highest level since two thousand and eight, while
Speaker 1: the ECB has been raising borrowing costs at a record
Speaker 1: pace for its relatively short history. Or we have our
Speaker 1: top team of central bank reporters with us to look
Speaker 1: ahead to this week's decisions. Yan Rando joins us from
Speaker 1: Frank Fertilizes on the ECB and Philipolitics here in studio
Speaker 1: in London watching the Bank of England. To get this
Speaker 1: conversation started, though, I want to bring you a bit
Speaker 1: of a chat that we had on Bloomberg Radio with
Speaker 1: Alex Brazier. He's a former director at the Bank of
Speaker 1: England now deputy head of the black Rock Investment Institute.
Speaker 1: Let's take a listen. We need to rethink the way
Speaker 1: central banks are operating these days. They're they're not the
Speaker 1: cavalry that's riding to the rescue when the economy turns down.
Speaker 1: They're actually deliberately creating economic damage. And that's because their
Speaker 1: economies are basically overheating because of supply constraints, and if
Speaker 1: they want to get inflation all the way down to
Speaker 1: two pc. They actually need to generate recessions, so that's
Speaker 1: what central banks are working with. Let's start with you,
Speaker 1: Philipolgic here in London, and the recession may well have
Speaker 1: already started in the UK. Will the Bank of England
Speaker 1: be easing up on the monetary breaks? Do you think? No?
Speaker 1: So they raised rates three quarters of a point um
Speaker 1: in November and they're expected to raise rates by a
Speaker 1: half a percentage point in December, so it's still, you know,
Speaker 1: all all guns blazing. There is some division though on
Speaker 1: the committee because two members didn't vote for the three
Speaker 1: quarter point rise and one member only wanted a hut
Speaker 1: a quarter point increase and warned that you know, we
Speaker 1: both of those members that actually are warning that, um,
Speaker 1: you know, two aggressive future moves will risk extending the
Speaker 1: recession and making what is projected to be a nasty
Speaker 1: period over three even even worse. And I think that
Speaker 1: effectively would do some of the work that rate rises
Speaker 1: will be are doing. So they would like to to
Speaker 1: to slow down. So the expectation for the moment is
Speaker 1: fifty basis points, are right? Yeah, that's right? Okay, So
Speaker 1: let's turn to Juyana and Frankfurt as well, so whereas
Speaker 1: we're looking at this sort of dilemma about slowing down
Speaker 1: rate rises, here it seems to be more so, and
Speaker 1: perhaps at the ECB is going sets foot off the
Speaker 1: break very much so. UM. What we're seeing is that
Speaker 1: the appetite for UM a third consecutive seventy five basis
Speaker 1: point move has UM has really dwindled. It's not really
Speaker 1: there UM. The market is pricing UM fifty as well,
Speaker 1: which um you know, if you read the minutes of
Speaker 1: the last meeting very closely, which was an argument in
Speaker 1: their last decision market expectations. So everything seems to be
Speaker 1: lining up UM for for a slight slowdown in the
Speaker 1: pace of tightening to fifty. That takes the interest rate
Speaker 1: UM of course to two, which is um you know,
Speaker 1: widely in the range of what people consider neutral UM.
Speaker 1: But what might actually even more important for the might
Speaker 1: actually be even more important for the e c B
Speaker 1: um uh at at their upcoming meeting is a decision
Speaker 1: on qt UH. They want to outline key principles for
Speaker 1: how they how they plan to tackle that UM details
Speaker 1: probably only arriving at this uh you know, at some
Speaker 1: point next year. But but that in itself is such
Speaker 1: an important decision. The e CP has never done it before. UM.
Speaker 1: You know, there is probably the one or two bargain
Speaker 1: uh to be made about the pace about the start date. UM.
Speaker 1: Maybe that will feature in the in the rate debate
Speaker 1: as well. Who knows. UM, it's not going to be
Speaker 1: straightforward at all, because of course, the CBS balance sheet
Speaker 1: is absolutely huge, so quantity of tightening could potentially be
Speaker 1: a massive shock to the Euro Area. UM. It could
Speaker 1: and it couldn't. It's interesting when when you talk to
Speaker 1: economists and watchers in general, they tell you, well, you know,
Speaker 1: if if one trillion rolls off the ECB balance sheet
Speaker 1: in terms of liquidity, that's actually not going to do much,
Speaker 1: which makes you wonder, of course, um, you know, why
Speaker 1: was that money out there in the first place. Um.
Speaker 1: But one other feature that that um, you know, we
Speaker 1: need to take a look at when when we talk
Speaker 1: about QT is of course the long term loan initiatives
Speaker 1: the ECB has uh you know, has has done over
Speaker 1: the past years. UM. A lot of that money is
Speaker 1: is expiring. UM. Banks have the option to repay um
Speaker 1: you know over the next month, um, all the way
Speaker 1: into into the first half of next year, and and
Speaker 1: that in itself might actually remove a lot of liquidity
Speaker 1: from the system. UM. Put QT on top of that, UM,
Speaker 1: it makes it makes a decision really really difficult. UM. Yeah,
Speaker 1: but all the more fascinating for us to be watching.
Speaker 1: Of course, back back here in in the UK, of course,
Speaker 1: the bank having and already started a quantity of tightening,
Speaker 1: should we expect to hear more about it this week?
Speaker 1: It's unlikely. I mean, we're sort of on a on
Speaker 1: a trajectory already. We're so bonds are maturing, so they're
Speaker 1: being rolled off and not being reinvested in guilts. So
Speaker 1: that's the passive aspect of quantitative tightening. But we're also
Speaker 1: doing active quantity of tining, which is we are we
Speaker 1: are now selling guilts which uh you know, at at
Speaker 1: market prices to to to basically shrink the balance sheet.
Speaker 1: The explanation for that, UM is that so in America
Speaker 1: the Fed is doing passive quantity of tightening, but because
Speaker 1: the bonds are rolling off so quickly, they are reducing
Speaker 1: their balance sheet at a at a rapid pace, where
Speaker 1: in the UK are just relying on maturities will reduce
Speaker 1: the size of the balance sheet relatively slowly. So they're
Speaker 1: doing the active sales basically to keep up, you know,
Speaker 1: with that this kind of pace of tightening that you're
Speaker 1: seeing at the FED. But it is a more complicated operation.
Speaker 1: And and the question I'm always wondering about with the
Speaker 1: with the QT operations is they say that quantity of
Speaker 1: easing the bank central banks say the quantity of easing
Speaker 1: was most effective when markets were in periods of volatility,
Speaker 1: so um, and what they're doing QT at a time
Speaker 1: when markets are, you know, seriously volatile at the moment,
Speaker 1: and yet they say it will have relatively little, if
Speaker 1: any impact on market pricing and market dynamics. They're obviously
Speaker 1: keeping an eye to to watch out for disruption, but
Speaker 1: there seems to be some kind of logical inconsistency in
Speaker 1: there the way the q E works and the way
Speaker 1: that QT will work. Obviously it's the it's the same
Speaker 1: set of guilts. One of the volatili volatile events I
Speaker 1: suppose we've had was everything around the ill fated Many
Speaker 1: budget at the end of September and everything that every
Speaker 1: everything that went wrong since then. Will the Bank of
Speaker 1: England kind of be telling us that that's all over
Speaker 1: and calm down now, yes, I think they they've been
Speaker 1: saying that already. I mean the fact that they did.
Speaker 1: There was a period where people believed that they were
Speaker 1: not going to press ahead with with the active QT
Speaker 1: operation because of the level of volatility caused by the
Speaker 1: Many budget, which which actually caused the long end of
Speaker 1: the guilt market to completely blow up and needed a
Speaker 1: rescue operation. But so the fact that they then pressed
Speaker 1: ahead with the QT operation, the active qut was was striking.
Speaker 1: So they do believe that you, even even at that point,
Speaker 1: the conditions were stable enough to go ahead, and they
Speaker 1: have proved to be so. So there's certainly no suggestion
Speaker 1: that they're going to They're going to say an think
Speaker 1: other than we think that these operations can continue and
Speaker 1: we've not seen any any undue stresses so far. M okay, Well,
Speaker 1: let's talk about I suppose the bigger picture of the
Speaker 1: the economic forecast or updates we'll get from these central banks,
Speaker 1: and let's hear from the Governor of the Irish Central
Speaker 1: Bank and member of the e CPS Governing Council, Gabrielle
Speaker 1: mcclufu's in speaking to Bloomberg in the past few days.
Speaker 1: We're likely to see the euro Area in a technical recession.
Speaker 1: I suspect that Q four this year, the one that
Speaker 1: we're in now, we'll see a very slightly negative GDP number,
Speaker 1: and we're likely to see that for Q one next year.
Speaker 1: On the other hand, my expectations were not going to
Speaker 1: see three as a year of recession. Okay, Philip Aldrick,
Speaker 1: our banking Think the Reporter. I thank you very much
Speaker 1: for joining me here in the studio. Thank you to
Speaker 1: Yana in frank first as well. I'm Stephen Carroll in London.
Speaker 1: You can catch us every weekday morning here for Bloomberg
Speaker 1: Daybreak Europe, beginning at six am in London and one
Speaker 1: am on Wall Street. John all right, Stephen, thanks a lot,
Speaker 1: and coming up on Bloomberg Daybreak weekend. Arizona Senator Kristen
Speaker 1: Cinemas switched from democratsy independent Democrats, tenuous grip on the Senate.
Speaker 1: I'm John Tucker. This is Bloomberg broadcasting live from the
Speaker 1: Bloomberg Interactive Broker Studio in New York. Bloomberg eleven three
Speaker 1: oh to Washington, d C. Bloomberg to Boston, Bloomberg one
Speaker 1: O six one to San Francisco, Bloomberg nine six to
Speaker 1: the country Sirius XM Channel one nineteen to London, d
Speaker 1: a B Digital Radio and around the globe the Bloomberg
Speaker 1: Business Act and Bloomberg Radio dot Com. This is Bloomberg
Speaker 1: Daybreak Weekend. I'm John Tucker, New York with your global
Speaker 1: look ahead of the top stories for investors in the
Speaker 1: coming week. Shifting political say asked for Democrats even after
Speaker 1: their big Senate win in Georgia. More, let's head to
Speaker 1: our Bloomberg newsroom in Washington and Amy Morris Amy, all right,
Speaker 1: thank you, John. We're coming off a wild week politically,
Speaker 1: with the Democratic win in Georgia followed by Arizona Senator
Speaker 1: Kirston Cinema's defection from the Democratic Party. She's now registered
Speaker 1: as an independent. We've got a lot of questions about
Speaker 1: what might happen next, even just in the next few weeks.
Speaker 1: Joining me now to talk about this Bloomberg Capital He'll
Speaker 1: reporter Stephen Dennis Stephen, thanks for taking the time. Okay.
Speaker 1: Senator Cinema has always been a bit of a magverick.
Speaker 1: She didn't always tow the Democratic Party line. Why is
Speaker 1: she doing this now? Yeah, So, if you look at
Speaker 1: the polls, all the polls this year of her standing
Speaker 1: in Arizona have been terrible with Democrats. You know, there
Speaker 1: was a pole way back in January showing her getting
Speaker 1: blown out by Representative rupen Diego in a hypothetical primary
Speaker 1: contest set four to sixteen. And then there was a
Speaker 1: poll right before the midterm elections by Civics that had
Speaker 1: her at seven percent approval among Democratic voters that you know,
Speaker 1: she basically if she tried to run for re election
Speaker 1: as a Democrat, she was going to get primaried and
Speaker 1: she was going to lose that primary. This might be
Speaker 1: the only chance for her to try to win re
Speaker 1: election is to try to appeal to independent voters, which
Speaker 1: is a growing election block, and to some Republicans and
Speaker 1: the moderate Democrats. Um, but you know it's going to
Speaker 1: be an uphill fight for her, and and really this
Speaker 1: complicates the Democratic efforts to keep their majority because if
Speaker 1: she creates a three way race and splits the Democratic vote,
Speaker 1: that could make it a lot easier for a Republican candidate,
Speaker 1: maybe Carry Lake or somebody else, to win that Senate
Speaker 1: seat in Arizona for the Republicans. So in the short term,
Speaker 1: it doesn't really change much for the Democrats on Capitol Hill.
Speaker 1: At least in the Senate, they still have a slim majority,
Speaker 1: but it is their majority. But that's only in the
Speaker 1: short term. What you're looking forward to is what and
Speaker 1: how she's positioning herself there exactly. I think that's what
Speaker 1: this decision was about, was to try to expand her
Speaker 1: appeal in Arizona to independent voters and to just sort
Speaker 1: of clear the decks where she's not constantly being asked
Speaker 1: about her standing among Democratic primary voters. You know, Diego
Speaker 1: slammed her immediately afterwards with a statement for abandoning the
Speaker 1: Democratic Party and hinted that he's going to run. So,
Speaker 1: you know, it's kind of creates a bit of a
Speaker 1: mess for Democrats for their political strategy. Four it's a
Speaker 1: key to presidential primary state as well. But she did
Speaker 1: talk to Chuck Schumer, the Senate majority leader. She is
Speaker 1: going to stick with Democrats as far as controlling their
Speaker 1: control of committees, their ability to subpoena corporations, which is
Speaker 1: something that Schumer has highlighted. Uh. And you know, so
Speaker 1: they'll still technically sort of have a majority um for
Speaker 1: for all practical purposes, it doesn't really change how Washington
Speaker 1: is going to work the next year or two. But
Speaker 1: it does change that Democratic political strategy as they try
Speaker 1: to keep the Senate majority in which is already looking
Speaker 1: very tough because that Senate map is much much more
Speaker 1: difficult for them than it was just a few weeks ago.
Speaker 1: One more question for you, Dennis, before we let you go.
Speaker 1: Her strategy for the next couple of years. She said
Speaker 1: she was not going to caucus with Republicans, but she
Speaker 1: didn't specifically say she was going to caucus with Democrats.
Speaker 1: But doesn't she have to if she wants to keep
Speaker 1: her committee assignments. Does that change? Yeah? No, So basically
Speaker 1: she's keeping her committee assignments. From a de facto perspective,
Speaker 1: she's caucusing with Democrats and giving them control of committees.
Speaker 1: You know, the past for her to win re election
Speaker 1: is to keep in the center of American politics and
Speaker 1: get more things done by bridging the gap between the parties.
Speaker 1: And certainly we've got a lot of messy stuff happening
Speaker 1: next year that limit all kinds of other things. You know,
Speaker 1: I suspect she's going to be in the thick of
Speaker 1: things all of that the next two years. All right,
Speaker 1: Thank you so much. For taking the time with us.
Speaker 1: Great to be here. Bloomberg Capitol Hill reporter Stephen Dennis
Speaker 1: with what happens next now that Senator Kirsten Cinema of
Speaker 1: Arizona has left the Democratic Party, she is an independent,
Speaker 1: and we've been watching the national and political implications of
Speaker 1: the Democratic victory in Georgia. It is my honor to
Speaker 1: out of the fore most powerful words ever spoken in
Speaker 1: a democracy, the people have spoken, alright, and that was
Speaker 1: Democratic Senator Raphael Warnock of Georgia during his victory speech
Speaker 1: after winning the runoff election in Georgia this past week.
Speaker 1: During his concession speech, Republican Herschel Walker encouraged his supporters
Speaker 1: to remain engaged in the political process. And I want
Speaker 1: to say, God is a good God. God bless you guys,
Speaker 1: and let me say stay together, continue to believe in
Speaker 1: our elected official. Always, always cash your vote, no matter
Speaker 1: whatever has happening, cash your vote and joining me now
Speaker 1: to talk about all of this, Bloomberg National political reporter
Speaker 1: Christian Hall. And Christian, it's important to note you were
Speaker 1: there in Georgia as all of this was happening. What
Speaker 1: is your bottom line take away from the victory that
Speaker 1: the Democrats saw in Georgia. You know, I think that
Speaker 1: this is really big for Democrats. Georgia has been a
Speaker 1: Republican bastion for years and years, and I think a
Speaker 1: lot of the voter turnout efforts from Democrats really uh
Speaker 1: made the state possibly become a swing state. That is
Speaker 1: probably one of the biggest takeaways from this. That final
Speaker 1: vote that was coming in between um Warnock and Walker
Speaker 1: h fifty one percent for Democrat Warnock fort point six
Speaker 1: percent for Republican herschel Walker. A clear victory, but not
Speaker 1: a landslide. That is pretty much as razor thing as
Speaker 1: you can get without having to force another runoff election.
Speaker 1: What's your take on what maybe at play there? You know,
Speaker 1: I think that it has been a very republican state.
Speaker 1: There have been you know, restrictive voting rights laws in
Speaker 1: the state. UM, but also I think herschel Walker part
Speaker 1: of the reason he didn't win was because he was
Speaker 1: a deeply flawed candidate, and I think, you know, voters
Speaker 1: really got in the booth and they had to make
Speaker 1: a decision. You know, do you think it put some voters,
Speaker 1: some Republican voters particularly who may have otherwise backed Walker
Speaker 1: in a position of having to hold their nose and
Speaker 1: vote for the Democrat because Walker was so flawed. Yeah. Absolutely.
Speaker 1: I mean I think if you take a look at
Speaker 1: Stacy Abrams, uh, and she didn't win, she was the
Speaker 1: Democrat on the ticket, and I think Republicans went in
Speaker 1: and they voted for Kemp. They liked what they saw
Speaker 1: with him, and they weren't really sure on Walker. Well,
Speaker 1: you know what you talked about Stacy Abrams. Let's get
Speaker 1: into that just for a minute. Did did her loss
Speaker 1: in the gubernatorial race, uh to to Kemp? Did? Did
Speaker 1: that help Democrats? Did that motivate them to get out
Speaker 1: the vote even more? Was that some sort of motivation? Well,
Speaker 1: I think you could say that, you know, Stacy Abrams
Speaker 1: really built this political machine, especially amongst black voters in
Speaker 1: the state of Georgia. You know, traditionally Democrats focused on
Speaker 1: the metro areas of Georgia in Atlanta. UM, but I
Speaker 1: think Stacy Abrams really understood that if you got voters
Speaker 1: to turn out across the state, if you talk to
Speaker 1: black voters and smaller towns within the state, you could
Speaker 1: possibly win. And that's what happened with Democrats. Now, just
Speaker 1: a sidebar here, go on a little bit off track.
Speaker 1: I want to talk a little more about Stacy Abrams
Speaker 1: because she seems to becoming more of a political activists
Speaker 1: sort of. I don't want to say kingmaker. She's not
Speaker 1: there yet, but she knows how to get out the vote.
Speaker 1: I mean, she has shown that she knows how to
Speaker 1: mobilize people. Does that look to be her future role
Speaker 1: in the Democratic Party because she didn't win the Democratic
Speaker 1: uh race for or the race rather for governor in Georgia,
Speaker 1: But it's not as though she doesn't have a role there, absolutely.
Speaker 1: I mean, she has done a really good job of
Speaker 1: working with New Georgia Project Black Voters Matter, you know,
Speaker 1: really grassroots organizing throughout the state of Georgia in a
Speaker 1: way that no one else has really done in the past.
Speaker 1: All Right, thank you so much, Bloomberg National political reporter
Speaker 1: Christian Hall. It was a pleasure. Thanks for taking the time.
Speaker 1: Thank you for more of our political news coverage. Tune
Speaker 1: into Bloomberg's Sound On with Joe Matthew, which you can
Speaker 1: hear weekday afternoons at five Wall Street Time, and Balance
Speaker 1: of Power with David West. And that's weekdays at noon
Speaker 1: Wall Street Time. All Right, here on Bloomberg Radio. I'm
Speaker 1: Amy Morris and this is Bloomberg John. Amy Morris reporting
Speaker 1: from our Bloomberg newsroom in Washington. Thanks a lot, Amy,
Speaker 1: and coming up on Bloomberg Daybreak weekend. What do the
Speaker 1: easing of COVID restrictions in China mean for the country's
Speaker 1: a company. I'm John Tucker at this is Bloomberg. This
Speaker 1: is Bloomberg Daybreak weekend, our global look ahead of the
Speaker 1: top stories for investors in the coming week. I'm John
Speaker 1: Tucker in New York. China is very much in focus
Speaker 1: this coming week, and reopening is a theme as COVID
Speaker 1: restrictions ease somewhat more. Let's go to Hong Kong and
Speaker 1: Bloomberg Daybreak Asia host Doug Chrisner John. In the last week,
Speaker 1: the Chinese government took major steps in relaxing it's COVID
Speaker 1: zero policy, and markets generally speaking expressed optimism, but the
Speaker 1: path of the reopening is far from clear, and the
Speaker 1: government appears to be bracing for a very bumpy process.
Speaker 1: As an example, last week, as more relaxations were announced,
Speaker 1: Beijing said prudent monetary policy should be targeted and forceful.
Speaker 1: What will the shift mean for China and by extension,
Speaker 1: for the global economy in the year ahead. For that,
Speaker 1: we're pleased to join Bloomberg's chief Asia Economics correspondent and
Speaker 1: the current who joins us from Hong Kong, and I
Speaker 1: wanted to begin with a reopening angle because I think
Speaker 1: it's fair to say that if aside from the narrative
Speaker 1: on inflation, the reopening ian China is critical. How China
Speaker 1: is reopening goes next year is one of the big
Speaker 1: wild cards, not just for China's economy but the global economy.
Speaker 1: So let's be clear in terms of where we are at.
Speaker 1: Hardly a day goes by at the moment with some
Speaker 1: new announcements on how the Chinese authorities are changing up
Speaker 1: their controls on meeting the spread of the disease. Analysts
Speaker 1: are interpreting these these changes, such as relax relaxations on
Speaker 1: testing requirements and on quarantine, etcetera. They're saying this means
Speaker 1: the government is moving away from strenuous kind of covidy
Speaker 1: or lockdowns. The authorities themselves have have signaled as much.
Speaker 1: They're talking about a disease that doesn't isn't as harmful
Speaker 1: as previous variants. So that's the story in terms of
Speaker 1: where they're heading. The big question though, is we don't
Speaker 1: know how fast they will get there and how they
Speaker 1: really will navigate this while also protecting the people. Of course,
Speaker 1: we know which China a lot of commentary around and
Speaker 1: elderly population still under under vaccinated, and of course it
Speaker 1: doesn't have yet the hospital network that other countries like
Speaker 1: Japan and South Korea has to be able to cope
Speaker 1: with such an outbreak. So in terms of the consumer,
Speaker 1: we know that people in China have been suffering, not
Speaker 1: just because of the virus itself and the lockdowns, but
Speaker 1: economically speaking, what has happened at the property market. When
Speaker 1: you hear a statement from the PBOC that monetary policy prudent,
Speaker 1: monetary policy should be targeted and forceful, it sounds to
Speaker 1: me like they're ready to do much more in the
Speaker 1: way of stimulus. It'll be precise and surgical perhaps, but
Speaker 1: there's more coming. Fair statement, fair statement. The messaging is
Speaker 1: changing that they are sending more support for the economy.
Speaker 1: The PBUC, for example, has been trying to keep this
Speaker 1: discipline line. They haven't been a fan of QUEI are
Speaker 1: splurging out to support the economy but nonetheless, last week,
Speaker 1: as you mentioned, they came out with a new statement
Speaker 1: saying that they will come with powerful support for those
Speaker 1: sectors of the economy that need the most. But one
Speaker 1: economist said to me, if they can reopen and move
Speaker 1: away from COVID zero, it will be the biggest stimulus
Speaker 1: for China's economy in years. So I mentioned earlier that
Speaker 1: inflation is obviously the big problem globally. I guess China
Speaker 1: doesn't really have the same problem. It's not been facing
Speaker 1: the same level inflationary pressures as the West has been facing.
Speaker 1: I'm wondering what this does, the Chinese reopening does to
Speaker 1: the inflation narrative. What's the impact do you think? So
Speaker 1: let's say we're on the basis that China does reopen
Speaker 1: in three Several economists are already told about it. That's
Speaker 1: sooner than expected. So let's say that's good for China's economy.
Speaker 1: Consumers are out and about again, Chinese tourists are traveling,
Speaker 1: Chinese business people and students of course are traveling. The
Speaker 1: impact will be not just in China's domestic economy, but
Speaker 1: it will mean more Chinese demand for oil, more Chinese
Speaker 1: demand for aviation, capacity around the world, more Chinese tourism
Speaker 1: spending and students spending, and global investment going into every
Speaker 1: corner of the world economy. The story for next year
Speaker 1: is inflation is going to slow down around the world
Speaker 1: because commodity and energy prices have come off. People are
Speaker 1: spending less because of all the pressures on their under
Speaker 1: mortgages and under wallet and of course the favorable favorable
Speaker 1: base effect. But if you throw a rebounding Chinese into
Speaker 1: that mix, a lot of the columns are saying that
Speaker 1: will be something of a wild card. It doesn't mean
Speaker 1: we'll be back to where we war in terms of
Speaker 1: this year's inflation scare, but it will certainly put a
Speaker 1: floor under falling price and it's always a pleasure. Thanks
Speaker 1: for sharing your analysis of the story on China and
Speaker 1: the current is A. Bloomberg's Chief Asia Economics corresponded. I'm
Speaker 1: Doug Prisoner. You can catch Bloomberg Daybreak Asia every week
Speaker 1: night here on Bloomberg at seven a m. In Hong Kong,
Speaker 1: six p m on Wall Street. John all right, thanks Doug,
Speaker 1: and that does it for this edition of Bloomberg Daybreak Weekend.
Speaker 1: Join us again Mounday morning at five am Wall Street.
Speaker 1: Time for the latest on markets overseas, the lows you
Speaker 1: need to start your day. I'm John Tucker, and this
Speaker 1: is Bloomberg.