Daybreak Weekend: CPI Preview, Reeves Statement, BYD Earnings

Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.039 --> 0:00:12.400 This is Bloomberg day Break Weekend, our global look at 0:00:12.440 --> 0:00:15.040 the top stories in the coming week from our Daybreak 0:00:15.080 --> 0:00:17.520 anchors all around the world. Straight ahead on the program, 0:00:17.520 --> 0:00:19.439 and look ahead to some key inflation data in the 0:00:19.600 --> 0:00:22.800 US how that may impact FED policy, Plus a look 0:00:22.800 --> 0:00:26.079 at the impact of tariffs on housing. I'm Tom Busby 0:00:26.200 --> 0:00:26.799 in New York. 0:00:27.080 --> 0:00:29.600 I'm Carolyn Hepke here in London, where we're weighing up 0:00:29.640 --> 0:00:32.920 the Chancellor's options ahead of the spring statements. 0:00:33.120 --> 0:00:36.000 I'm Derek Prisner, looking ahead to the earnings from Chinese 0:00:36.080 --> 0:00:38.159 ev Giant byd. 0:00:38.400 --> 0:00:42.400 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.440 --> 0:00:46.160 eleven to three, Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.640 --> 0:00:50.920 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 0:00:51.320 --> 0:00:54.520 Sirius XM one twenty one, and around the world on 0:00:54.600 --> 0:00:57.720 Bloomberg Radio, dot Com and the Bloomberg Business App. 0:01:02.480 --> 0:01:04.280 Good day to you. I'm Tom Busby, and we begin 0:01:04.319 --> 0:01:07.720 today's program with fresh reads on US economic growth that's 0:01:07.720 --> 0:01:10.559 for the final quarter of last year, and the Fed's 0:01:10.640 --> 0:01:14.520 preferred measure of consumer inflation for last month. For more 0:01:14.680 --> 0:01:17.440 on what it all means, we're joined by Stuart Paul 0:01:17.560 --> 0:01:21.520 Us economists with Bloomberg Economics. Well, Stuart, thank you for 0:01:21.600 --> 0:01:24.440 joining us. Did the economy continue to grow in the 0:01:24.440 --> 0:01:26.560 fourth quarter and what's behind that growth? 0:01:26.920 --> 0:01:29.120 Well, we knew that the economy grew in the fourth quarter. 0:01:29.240 --> 0:01:31.600 Our previous estimates that we got from the Bureau of 0:01:31.640 --> 0:01:35.280 Economic Analysis showed two point three percent annualized pace of 0:01:35.319 --> 0:01:39.160 growth in the fourth quarter, mostly supported by consumer spending, 0:01:39.160 --> 0:01:43.679 which was pretty robust, strong, healthy spending through the holidays. 0:01:44.280 --> 0:01:46.360 We're likely to see the same two point three percent 0:01:46.720 --> 0:01:50.840 estimate in the final reading of that fourth quarter GDP number. 0:01:51.720 --> 0:01:54.240 If anything, risk might be skewed a little bit to 0:01:54.320 --> 0:01:58.720 the upside. We do know that there was some adjustments 0:01:58.760 --> 0:02:01.600 that firms were making into imports. We know that some 0:02:01.680 --> 0:02:05.320 foreign countries were trying to get ahead of any sort 0:02:05.320 --> 0:02:09.280 of escalating trade tensions as the Trump administration was gearing 0:02:09.400 --> 0:02:12.360 up to come into office in the first quarter. So, 0:02:12.680 --> 0:02:15.200 if anything, maybe there's a little bit of risk that 0:02:15.320 --> 0:02:18.920 GDP will be revised up just to touch. But we 0:02:19.000 --> 0:02:21.600 do know that there was a healthy, robust pace of 0:02:21.600 --> 0:02:24.120 growth in the fourth quarter. Probably not going to see 0:02:24.160 --> 0:02:26.840 the same degree of growth this year. We know that 0:02:27.000 --> 0:02:30.480 amid policy uncertainty, but I think that we did end 0:02:30.840 --> 0:02:32.880 twenty twenty four in a relatively strong place. 0:02:33.320 --> 0:02:36.920 Well. To your point, consumer spending the big driver of 0:02:36.960 --> 0:02:40.280 all that, and there are indications though in this current 0:02:40.320 --> 0:02:43.520 first quarter, which is about to end, there has been 0:02:43.520 --> 0:02:46.440 a significant pullback though in consumer spending, unlike what we 0:02:46.480 --> 0:02:47.720 saw leading up to the holidays. 0:02:47.800 --> 0:02:50.239 That's right, the first quarter is going to be especially choppy. 0:02:50.600 --> 0:02:55.519 In January sales, we're just dismal. Spending in January decline 0:02:55.639 --> 0:02:58.360 zero point two percent. A big part of that was 0:02:58.360 --> 0:03:00.480 a pullback in autos, and a big part of that 0:03:00.720 --> 0:03:03.280 was that there was a polar vortex in the lower 0:03:03.280 --> 0:03:07.080 forty eight states. When it's snowing in Houston, folks aren't 0:03:07.080 --> 0:03:10.480 going to be wanting to walk around an auto dealer's lot. 0:03:11.000 --> 0:03:15.000 We do expect to see quite a rebound in February. Again, 0:03:15.040 --> 0:03:17.480 a big part of that is a rebound in auto sales. 0:03:17.840 --> 0:03:22.080 We're estimating that February personal spending growth will register zero 0:03:22.120 --> 0:03:24.760 point six percent. That's pretty strong, and that is the 0:03:24.800 --> 0:03:27.800 type of number that's going to justify the Fed's decision 0:03:27.880 --> 0:03:30.440 to hold rate steady when it met just last week. 0:03:31.400 --> 0:03:34.960 But I think that when we decompose what's driving the spending, 0:03:35.360 --> 0:03:39.400 it's not all sunshine and rainbows. After January's polar vortex, 0:03:39.560 --> 0:03:41.960 the February data we're going to be so we think 0:03:41.960 --> 0:03:45.480 we're supported by spending on autos again, just a rebound 0:03:45.840 --> 0:03:49.160 on healthcare because of the rise in the number of 0:03:49.160 --> 0:03:52.960 flu cases, and a little bit of an increase in 0:03:53.080 --> 0:03:57.120 discretionary goods. But we also do know that people pulled 0:03:57.160 --> 0:04:01.120 back on their spending at foods services, in drinking places. 0:04:01.120 --> 0:04:02.880 They were dining out, which is one of the key 0:04:03.000 --> 0:04:05.120 measures of discretionary spending. 0:04:05.320 --> 0:04:08.240 That was the biggest decrease right in bars and restaurant. 0:04:07.920 --> 0:04:09.920 That's right in the retail sales report. So when we 0:04:10.000 --> 0:04:12.520 think about what we should expect from the personal spending 0:04:12.520 --> 0:04:16.000 report coming out this Friday, I think that the headline 0:04:16.080 --> 0:04:18.520 number for spending is going to look pretty solid zero 0:04:18.560 --> 0:04:21.080 point six percent growth, But some of the details, some 0:04:21.120 --> 0:04:23.520 of the composition under the surface is just going to 0:04:23.600 --> 0:04:26.159 illustrate this choppiness in the first quarter. 0:04:26.960 --> 0:04:29.839 Well, let's talk about an even stickier subject related to that, 0:04:29.880 --> 0:04:34.800 and that's inflation. We have the PCE for February that's 0:04:34.800 --> 0:04:36.920 out this week. What are you expecting to see there. 0:04:37.000 --> 0:04:40.240 We're expecting to see a very hot core number, core 0:04:40.279 --> 0:04:43.360 inflation of thirty five basis points during the month. That's 0:04:43.400 --> 0:04:45.840 going to push the year on year measure of core 0:04:45.880 --> 0:04:48.919 inflation up to nearly two point eight percent from a 0:04:49.040 --> 0:04:52.360 touch under two point seven. And what's a little bit 0:04:52.360 --> 0:04:57.400 troubling is that we did see a nice cool CPI measure. 0:04:57.640 --> 0:05:00.159 What could it be that's driving core PC the E 0:05:00.320 --> 0:05:03.640 inflation higher. Well, if you track all the components that 0:05:03.680 --> 0:05:07.360 come from CPI and that come from producer prices the 0:05:07.360 --> 0:05:12.080 PPI and combine those to create the PCE measure, which 0:05:12.120 --> 0:05:15.800 is what the FED is really good at estimating before 0:05:15.800 --> 0:05:19.720 it even meets, we see that the composition of all 0:05:19.720 --> 0:05:22.279 the different spending categories are going to boost the Fed's 0:05:22.320 --> 0:05:27.240 preferred measure. You had hot financial services inflation, you had 0:05:27.240 --> 0:05:32.039 hot food services inflation despite the pullback in spending. You 0:05:32.120 --> 0:05:36.760 had rising healthcare costs, possibly just a continuation of the 0:05:36.800 --> 0:05:40.479 annual resets that typically take place in January. And we 0:05:40.560 --> 0:05:44.479 saw a lot of goods inflation, typically core goods, particularly 0:05:44.600 --> 0:05:49.200 durable goods. Way on headline inflation over the past couple months. 0:05:49.240 --> 0:05:52.640 In February in particular, goods were boosting inflation, which is 0:05:52.640 --> 0:05:56.000 something that's troubling, especially as tarot's start to hit. We 0:05:56.040 --> 0:05:58.919 only saw just the first little wave of tariff's in 0:05:58.960 --> 0:06:03.240 February taking effect. As we get reciprocal tariffs in April 0:06:03.360 --> 0:06:06.719 April second, as we've been told to expect. 0:06:06.720 --> 0:06:09.240 We could expect right now anyway, at least for. 0:06:09.240 --> 0:06:12.080 Now, that's right. As we get those reciprocal tariffs, we 0:06:12.120 --> 0:06:15.720 should expect a little bit more goods inflation. So it 0:06:15.800 --> 0:06:17.360 is the sort of thing that should be troubling for 0:06:17.400 --> 0:06:19.920 the Fed. And again we'll justify that decision to hold 0:06:20.000 --> 0:06:21.719 RAID steady just last week Q. 0:06:21.640 --> 0:06:24.840 Four GDP a third and final reading on GDP. That's 0:06:24.839 --> 0:06:28.520 how this Thursday, February's PCE out on Friday our thanks 0:06:28.560 --> 0:06:32.599 to Stuart Paul, us economists with Bloomberg Economics. Well, we 0:06:32.720 --> 0:06:35.919 turn now to housing, and spring has sprung, the busiest 0:06:35.920 --> 0:06:37.840 time of the year for the US housing market. Bud 0:06:37.880 --> 0:06:42.360 boy has it struggled. Skyrocketing home prices, elevated mortgage rates, 0:06:42.360 --> 0:06:45.359 a dearth of homes on the market despite pent up demand, 0:06:45.480 --> 0:06:50.360 and now a new worry President Trump's tariffs against Canada, Mexico, 0:06:50.480 --> 0:06:53.320 and China, and for more on how those policies could 0:06:53.320 --> 0:06:56.640 impact housing and home building. We welcome Drew reading Bloomberg 0:06:56.640 --> 0:07:01.440 Intelligence US home building analysts. Drew, thank you for being here. 0:07:01.520 --> 0:07:05.760 I tell you, the timing could not be worse for builders, contractors, buyers, 0:07:05.920 --> 0:07:08.200 people that want to replace their back deck or renovate 0:07:08.240 --> 0:07:10.720 their kitchen. I mean, could it be even worse for 0:07:10.760 --> 0:07:11.400 them right now? 0:07:12.240 --> 0:07:15.360 Yeah, you're right. There's a lot of factors conspiring against 0:07:15.400 --> 0:07:18.240 the home building industry. You know, whether it's high home 0:07:18.280 --> 0:07:24.720 prices as you mentioned, elevated rates, declining consumer confidence, potential tariffs, 0:07:25.480 --> 0:07:28.840 immigration policy. So there's a lot of things that builders 0:07:28.880 --> 0:07:31.480 and investors in the space are having to digest right now. 0:07:31.520 --> 0:07:33.040 So definitely a difficult period. 0:07:33.640 --> 0:07:36.400 And these tariffs, these numbers are staggering. Twenty five percent 0:07:36.480 --> 0:07:39.240 on certain imports from Mexico and Canada that went into 0:07:39.280 --> 0:07:42.440 effect early March, and that includes softwood lumber and the 0:07:42.520 --> 0:07:45.600 US gets what like forty percent of its lumber from Canada. 0:07:45.720 --> 0:07:48.720 Also the appliances in Mexico and China that come in 0:07:48.760 --> 0:07:51.800 twenty percent tariffs there drywall out of you know, the 0:07:51.840 --> 0:07:55.840 gypsum and drywall out of Mexico, and we're expecting even 0:07:55.920 --> 0:07:59.400 more tariffs on April second. As of today anyway. 0:08:00.200 --> 0:08:02.040 Right, So for just for a little bit of context, 0:08:02.040 --> 0:08:04.680 the US imports about thirteen billion dollars worth of goods 0:08:04.760 --> 0:08:08.120 used in residential construction. So that's about seven percent of 0:08:08.160 --> 0:08:10.680 all goods used in the industry coming from other countries. 0:08:11.240 --> 0:08:14.800 Within that, you have about forty five percent coming from China, Mexico, 0:08:14.840 --> 0:08:16.680 and Canada, which is you know, have kind of been 0:08:17.280 --> 0:08:19.520 at the forefront of all this tariff talk. China is 0:08:19.520 --> 0:08:22.679 about thirty percent of imports, Mexico about ten in Canada 0:08:22.720 --> 0:08:25.440 almost ten percent. And you're right, it's it's there's products 0:08:25.480 --> 0:08:27.880 you mentioned, it's you know, appliance isn't lighting from China, 0:08:27.920 --> 0:08:31.440 it's drywall from Mexico. And I think you know, the 0:08:31.480 --> 0:08:34.880 real biggie, as you mentioned, is lumber from Canada. That 0:08:34.920 --> 0:08:38.720 accounts for about seventy percent of all US lumber imports, 0:08:38.760 --> 0:08:42.400 and it's about thirty percent of the lumber used in 0:08:42.559 --> 0:08:46.320 US construction. So certainly an important thing to watch. Now, 0:08:46.800 --> 0:08:49.280 keep in mind we're already paying a fourteen and a 0:08:49.320 --> 0:08:53.720 half percent tariff on imports of Canadian lumber, so you know, 0:08:53.720 --> 0:08:55.959 when these go into effect in April will be at 0:08:56.000 --> 0:08:59.480 forty percent, So certainly a real threat to the builders. 0:08:59.120 --> 0:09:02.640 Wow, big builders of Last week, the National Association of 0:09:02.640 --> 0:09:06.600 Home Builders said tariffs on lumber, appliances, steel aluminum piping 0:09:06.640 --> 0:09:09.520 could add as much as ten thousand dollars. That's just 0:09:09.520 --> 0:09:11.800 to the cost of building a home. I mean, what 0:09:11.800 --> 0:09:12.880 does that mean to a buyer? 0:09:13.400 --> 0:09:16.240 Yeah, it's a great question. So typically builders are able 0:09:16.280 --> 0:09:18.679 to pass their costs onto the consumers. 0:09:19.440 --> 0:09:19.640 You know. 0:09:19.880 --> 0:09:22.400 The concern I guess from an investor perspective would be, 0:09:22.880 --> 0:09:25.920 you know, home shoppers have become increasingly sensitive to costs, 0:09:25.920 --> 0:09:28.520 whether it's financing costs or you know, the actual cost 0:09:28.520 --> 0:09:30.480 of a home. So you know, I'm not sure in 0:09:30.480 --> 0:09:33.840 this environment how much they're going to be able to absorb. 0:09:34.880 --> 0:09:36.920 So I think you're going to see builders take some 0:09:37.000 --> 0:09:38.600 of that on the margin side. So I think it's 0:09:38.600 --> 0:09:41.320 going to be a little bit on the builder side 0:09:41.360 --> 0:09:43.600 as well as consumers having to pay a higher price 0:09:43.640 --> 0:09:45.000 for a new product. 0:09:45.280 --> 0:09:47.360 And it's not just the builders. Of course, you want 0:09:47.360 --> 0:09:50.160 to replace your deck or your kitchen cabinets, I mean 0:09:50.200 --> 0:09:51.560 you are going to pay more aren't you. 0:09:53.080 --> 0:09:54.920 Yeah, we're going to see it across the industry. So 0:09:54.960 --> 0:09:57.400 you're going to see it in the repair and remodeling space, 0:09:57.440 --> 0:10:01.319 which is dealing with its own issues with As consumers 0:10:01.360 --> 0:10:04.559 continue to battle with the cumutive impact of inflation over 0:10:04.559 --> 0:10:07.840 the last couple of years, you know, people not wanting 0:10:07.880 --> 0:10:10.199 to go out and make big purchasing decisions. So we're 0:10:10.200 --> 0:10:14.160 seeing pullback indiscretionary categories, and of course, you know, lumbers 0:10:14.200 --> 0:10:17.440 a big component of that. You know, the appliance market 0:10:17.559 --> 0:10:19.920 has also struggled over the last couple of years, so 0:10:20.400 --> 0:10:23.960 you know, on appliances that are imported from China and 0:10:24.000 --> 0:10:26.320 other countries, you're starting going to see higher prices there. 0:10:27.280 --> 0:10:30.920 Now, we did get some encouraging data last week on housing. 0:10:30.960 --> 0:10:34.640 New home construction sharply higher in February. But is that 0:10:34.720 --> 0:10:37.440 more because of the all that wicked winter weather in January? 0:10:37.600 --> 0:10:39.760 I mean, what's behind that push on construction? 0:10:40.840 --> 0:10:42.520 Yeah, I think you're right there. I think a lot 0:10:42.559 --> 0:10:45.080 of is some payback from some of the weather disruption 0:10:45.200 --> 0:10:48.720 we've seen. Within that same report, our preferred measure of 0:10:49.080 --> 0:10:53.160 activity is really building permits. It's a much less volatile indicator, 0:10:53.160 --> 0:10:55.200 and it's a better leading indicator of production, and they 0:10:55.200 --> 0:10:57.720 were actually down eleven percent compared to last year, and 0:10:57.720 --> 0:11:00.520 that jives with the data we saw in builders sentiment. 0:11:01.080 --> 0:11:03.920 You're definitely seeing a more cautious approach to the market. 0:11:03.960 --> 0:11:06.720 What they're doing is matching starts with demand, and with 0:11:06.760 --> 0:11:10.760 the market slowing, you're seeing a corresponding pullback in new production. 0:11:10.880 --> 0:11:13.640 The other important piece is the fact that the industry 0:11:13.760 --> 0:11:16.760 was so aggressive in ramping up speccom production to fill 0:11:16.800 --> 0:11:19.240 the void left by resales that you know, there's a 0:11:19.240 --> 0:11:21.760 lot of inventory out there that's already under construction, so 0:11:21.840 --> 0:11:24.600 there's a lot less incentive for builders to be aggressive 0:11:24.679 --> 0:11:27.560 until they start to work through that inventory. And to 0:11:27.559 --> 0:11:29.080 do that, we think they're going to have to continue 0:11:29.080 --> 0:11:32.839 to lean on incentives, particularly given the increase as you 0:11:32.840 --> 0:11:35.960 allude to before, with the increased competition that we're seeing 0:11:36.000 --> 0:11:38.880 in the resale market in key markets in Florida and Texas. 0:11:39.600 --> 0:11:42.280 Yeah, does that mean maybe there's too many houses out there, 0:11:42.320 --> 0:11:45.480 too many new houses, or maybe not the right kinds 0:11:45.520 --> 0:11:49.120 of houses. People are looking for more affordable houses instead 0:11:49.120 --> 0:11:51.559 of you know, five bedrooms four bats. 0:11:52.400 --> 0:11:54.680 Yeah. I certainly think when you talk about a lack 0:11:54.720 --> 0:11:57.280 of for sale inventory over the last couple of years, 0:11:57.280 --> 0:12:00.720 it's really for more affordably priced products. Now it's an 0:12:00.720 --> 0:12:03.400 area where the builders have been shifting to over the 0:12:03.440 --> 0:12:06.679 last couple of years. They've done that through smaller square 0:12:06.679 --> 0:12:10.480 footage floor plans, are less amenotized home so they realized 0:12:10.520 --> 0:12:13.880 that's where the gap in the market is. But now, 0:12:13.960 --> 0:12:16.240 you know, when you start to pile on additional calls, 0:12:16.240 --> 0:12:18.280 it gets harder and harder for them, you know, to 0:12:18.360 --> 0:12:21.680 make that product work. But by and large, if you 0:12:21.720 --> 0:12:24.160 look at the inventory picture, I mean, over the last 0:12:24.240 --> 0:12:27.040 couple of years, the lack of resale supply has really 0:12:27.080 --> 0:12:29.880 been what's driven demand into the new home market. It's 0:12:29.880 --> 0:12:31.240 been certainly been a key factor. 0:12:31.679 --> 0:12:34.120 Well, we get more housing data out this week, new 0:12:34.160 --> 0:12:37.400 home sales for February coming out on Tuesday. Our thanks 0:12:37.400 --> 0:12:41.280 to Drew Redding Bloomberg Intelligence US home building analysts. Coming 0:12:41.360 --> 0:12:43.320 up on Bloomberg day Break weekend to look ahead to 0:12:43.400 --> 0:12:48.480 UK Chancellor Rachel reeves hotly anticipated spring statement. I'm Tom 0:12:48.480 --> 0:13:02.600 Busby and this is Bloomberg. This is Bloomberg Day Break weekend, 0:13:02.600 --> 0:13:04.880 our global look ahead at the top stories for investors 0:13:04.880 --> 0:13:07.360 in the coming week. I'm Tom Busby in New York. 0:13:07.960 --> 0:13:10.360 Up later, our program will look ahead to earnings from 0:13:10.440 --> 0:13:15.240 Chinese ev maker byd But first UK Chancellor Rachel Reeves 0:13:15.320 --> 0:13:19.559 presenting her hotly anticipated spring statement this week. She faces 0:13:19.600 --> 0:13:24.319 contentious a contentious environment, including recently slash growth figures and 0:13:24.440 --> 0:13:27.760 expensive promises on defense. Now there's also a question of 0:13:27.800 --> 0:13:30.720 silencing critics, some of whom may be from within her 0:13:30.760 --> 0:13:33.160 own party. For more, let's go to London and bring 0:13:33.160 --> 0:13:36.079 in Bloomberg Daybreak Europe anchor Caroline hepgar. 0:13:36.240 --> 0:13:39.320 Tom On Wednesday, the twenty sixth of March, the Chancellor 0:13:39.360 --> 0:13:42.440 is expected to announce billions of pounds of spending cuts 0:13:42.760 --> 0:13:46.320 to ensure that she meets her key fiscal rule, which 0:13:46.360 --> 0:13:49.520 requires day to day government spending to be covered by 0:13:49.640 --> 0:13:53.360 tax receipts. Her task is not an easy one. Rachel 0:13:53.400 --> 0:13:57.880 Reeves left herself an historically slim nine point nine billion 0:13:58.000 --> 0:14:02.040 pound margin against that time target at her budget in October, 0:14:02.320 --> 0:14:05.600 a buffer that has since been eroded by higher government 0:14:05.640 --> 0:14:10.320 borrowing costs and lower growth forecasts. Net debt for Britain 0:14:10.400 --> 0:14:14.400 stood at ninety five point three percent of GDP in January. 0:14:14.480 --> 0:14:17.440 That is close to levels last scene in the early 0:14:17.559 --> 0:14:21.360 nineteen sixties. The deficit in the first ten months of 0:14:21.400 --> 0:14:25.160 the year was one hundred and eighteen billion pounds, and 0:14:25.240 --> 0:14:28.040 that is nearly thirteen billion more than the Office for 0:14:28.080 --> 0:14:33.520 Budget Responsibility forecasts only in October. But Reeves is standing strong. 0:14:33.840 --> 0:14:36.720 She told Bloomberg that she is committed to bringing down 0:14:36.840 --> 0:14:39.560 government borrowing despite the obstacles. 0:14:39.880 --> 0:14:44.840 We've already made some substantial changes on regulation. Last week 0:14:44.880 --> 0:14:47.640 the Prime Minister announced that we're going to be getting 0:14:47.720 --> 0:14:51.000 rid of NHS England, the biggest quango in the world. 0:14:51.360 --> 0:14:55.320 We announced last week getting rid of the Payment Systems 0:14:55.400 --> 0:15:00.560 Regulator and just today the merger of the Community Interest 0:15:00.600 --> 0:15:04.400 Companies Regulator into Company's House. So you can see that 0:15:04.440 --> 0:15:08.479 this government are determined to make it easier for businesses 0:15:08.560 --> 0:15:11.680 to do business in the UK, to get building and 0:15:11.760 --> 0:15:17.360 to get on with things. Over Burdensome regulation, overlapping regulation 0:15:17.560 --> 0:15:20.360 has held back Britain for too long and we're determined 0:15:20.400 --> 0:15:21.160 to turn that around. 0:15:21.280 --> 0:15:23.760 Well, what's the metric for success here, how soon and 0:15:23.800 --> 0:15:25.840 how much do you expect this to boost GDP? 0:15:26.200 --> 0:15:29.400 Well, we've made a commitment to reduce the regulatory burden, 0:15:29.480 --> 0:15:33.000 the administrative burden by twenty five percent during the course 0:15:33.040 --> 0:15:36.240 of this parliament. That's across all regulators, whether it is 0:15:36.280 --> 0:15:40.760 in the environment or financial services, right across the economy, 0:15:41.080 --> 0:15:43.920 and that is to meet our ambition to grow the economy, 0:15:44.000 --> 0:15:46.840 to make working people better off, and to make our 0:15:46.920 --> 0:15:51.440 country and our economy more competitive. So next week the 0:15:51.480 --> 0:15:54.960 new growth forecast will be published by the Office of 0:15:55.000 --> 0:15:58.680 Budget Responsibility. But this is just one of a range 0:15:58.680 --> 0:16:01.560 of measures, along with the Planning an Infrastructure Bill that 0:16:01.640 --> 0:16:04.680 was published last week, the Pensions Bill which is coming 0:16:04.760 --> 0:16:08.680 soon to turn around the lackluster growth performance that has 0:16:08.800 --> 0:16:10.600 affected the UK for far too long. 0:16:10.720 --> 0:16:14.040 Well, the OCD published its forecast today has cut its 0:16:14.080 --> 0:16:16.960 growth forecast for this year and next. Do you accept 0:16:17.040 --> 0:16:19.800 responsibility for that or is it all the fault of 0:16:19.840 --> 0:16:21.640 Donald Trump and the Conservatives. 0:16:22.240 --> 0:16:25.200 Well, if you look at what the OECD have done today, 0:16:25.480 --> 0:16:31.200 they have downgraded most major economies growth forecasts. The UK 0:16:31.400 --> 0:16:34.640 is not immune from those global headwinds. But if you 0:16:34.680 --> 0:16:37.000 look at the forecast for next year for the UK, 0:16:37.400 --> 0:16:40.840 with forecast to be the second fastest growing economy in 0:16:40.880 --> 0:16:43.600 the G seven, that is up from the third fast 0:16:43.680 --> 0:16:46.440 is the last time they published their forecasts. But if 0:16:46.440 --> 0:16:49.880 you're asking am I happy with those numbers, of course not. 0:16:50.440 --> 0:16:53.480 I want to see the UK economy create more jobs, 0:16:53.560 --> 0:16:57.040 create more prosperity, to lift the living standards of working people, 0:16:57.240 --> 0:17:02.240 and that's what this regulatory drive is all about, unlocking growth, 0:17:02.400 --> 0:17:04.479 making it easier to do business in Britain. 0:17:04.600 --> 0:17:07.280 What I'm asking is, do you accept any responsibility for 0:17:07.280 --> 0:17:10.640 the downgrade? Is it anything to do with your gloomy 0:17:10.640 --> 0:17:13.280 messaging or your tax risers in the October budget. 0:17:13.840 --> 0:17:18.679 Well, of course there are costs from any measures on tax, 0:17:18.720 --> 0:17:22.000 but there are also costs of irresponsibility. And if in 0:17:22.040 --> 0:17:24.760 the budget last year I hadn't have dealt with a 0:17:24.800 --> 0:17:27.840 twenty two billion pound black hole that I'd inherited from 0:17:27.880 --> 0:17:31.159 the Conservatives, if I hadn't put our public finances on 0:17:31.240 --> 0:17:33.879 a firm footing, then we wouldn't have been able to 0:17:34.119 --> 0:17:37.080 increase defense spending in the way that we did just 0:17:37.160 --> 0:17:40.240 a couple of weeks ago, and we wouldn't be able 0:17:40.280 --> 0:17:44.240 to weather the global economic headwinds. So we made the 0:17:44.320 --> 0:17:48.280 right decisions in that budget to return stability to the economy. 0:17:48.440 --> 0:17:50.560 And since the general election, of course, there's been three 0:17:50.600 --> 0:17:54.639 cuts in interest rates, only possible because we've returned stability 0:17:54.680 --> 0:17:55.400 to the economy. 0:17:55.440 --> 0:17:58.119 But do you regret not giving yourself more breathing space 0:17:58.200 --> 0:18:01.080 against your fiscal rules at the time of the October prodject. 0:18:01.320 --> 0:18:04.800 Well, in October we set the fiscal rules for this 0:18:04.880 --> 0:18:07.320 Parliament that we would balance day to day spending with 0:18:07.400 --> 0:18:09.879 tax receipts and we would get decked down as a 0:18:09.920 --> 0:18:13.280 share of GDP. But significantly we changed the way that 0:18:13.400 --> 0:18:16.480 we measured investments. So for the first time ever we 0:18:16.560 --> 0:18:19.399 count the benefits of investment, not just the costs. And 0:18:19.480 --> 0:18:22.320 because of that we were able to invest in an additional 0:18:22.280 --> 0:18:25.120 one hundred billion pounds during the course of this parliament 0:18:25.359 --> 0:18:30.440 in capital projects, transport, digital energy and of course a 0:18:30.600 --> 0:18:33.240 housing that's pro business, that's pro growth and it's pro 0:18:33.280 --> 0:18:33.960 working people. 0:18:34.720 --> 0:18:38.200 That was Chancellor Rachel Reeves speaking two Bluebags Lizzie Burden 0:18:38.280 --> 0:18:41.040 ahead of her big day in the Commons. This is 0:18:41.080 --> 0:18:43.760 an event the government, though, has tried to play down, 0:18:44.160 --> 0:18:47.800 even as Work and Pension Secretary Liz Kendall announced the 0:18:47.880 --> 0:18:50.879 plan to save five billion pounds a year by twenty 0:18:51.000 --> 0:18:54.919 thirty with cuts to welfare benefits. So what will we 0:18:55.000 --> 0:18:58.560 learn from the Chancellor's spring statement? Can Rachel Reeves keep 0:18:58.640 --> 0:19:03.000 markets on side and also fend off her political opponents. 0:19:03.320 --> 0:19:06.320 I ask putting bogs UK government reporter Joe mays, how 0:19:06.359 --> 0:19:10.360 difficult the backdrop is for Reeves given the UK economy 0:19:10.440 --> 0:19:14.879 shrank in January and Britain has many long standing and 0:19:14.960 --> 0:19:16.920 now some new expenses. 0:19:17.440 --> 0:19:21.520 Yes, the backdob is a stagnating economy. It's barely grown 0:19:21.600 --> 0:19:25.680 since Labor took power last year. And indeed the budget 0:19:25.720 --> 0:19:28.040 that rich Reeves had in October is seen to have 0:19:28.280 --> 0:19:30.960 not made things much better. Indeed, the increase in the 0:19:31.040 --> 0:19:34.119 Nation Insurance payroll tax has led to a decrease in 0:19:34.200 --> 0:19:37.160 business confidence. It's been a hit to hiring as well. 0:19:37.359 --> 0:19:39.840 And rich Reeves has tried to get growth going with 0:19:39.920 --> 0:19:43.960 these initiatives announced such as Heather expansion, developing the Oxford 0:19:43.960 --> 0:19:45.920 Cambridge art but these will take time. So in the 0:19:45.960 --> 0:19:48.040 immediate term there's that there have been headwinds to growth 0:19:48.359 --> 0:19:51.199 and so yeah, the backdrop is difficult for her, and 0:19:51.240 --> 0:19:54.760 it's within that very tight space of low growth that 0:19:54.800 --> 0:19:58.199 she's having to manage these public finances. And now, as 0:19:58.200 --> 0:20:00.280 we'll talk about, she has to find spending cuts, make 0:20:00.320 --> 0:20:02.320 sure she keeps hitting her main fiscal rule and that 0:20:02.359 --> 0:20:04.520 will be a big political difficulty for her. 0:20:05.000 --> 0:20:08.560 Yeah, spending cuts rather than tax increases. Where do we 0:20:08.560 --> 0:20:10.000 think the cuts are going to come from? 0:20:10.359 --> 0:20:13.280 Well, what we expect Richarl Reeves to announce on March 0:20:13.320 --> 0:20:17.359 twenty sixth is a reduction in the overall spending envelope, 0:20:17.400 --> 0:20:19.399 so the overall amount the government's going to spend on 0:20:19.440 --> 0:20:22.240 public services through the end of the parliament. It's currently 0:20:22.280 --> 0:20:24.000 it's set to grow at one point three percent on 0:20:24.040 --> 0:20:26.800 average until twenty thirty and economists thinks she could hit 0:20:26.840 --> 0:20:29.560 it down to one one percent, but she won't crucially 0:20:29.560 --> 0:20:31.720 have to spell out where those cuts will fall. That's 0:20:31.760 --> 0:20:34.680 something that will be revealed at the Spending Review in June, 0:20:34.720 --> 0:20:37.560 which is where each government department is allocated its budget. 0:20:37.840 --> 0:20:40.159 So yeah, that can be that'll come later. But we 0:20:40.200 --> 0:20:43.000 do know that welfare is already earmarked for five billion 0:20:43.040 --> 0:20:45.200 pounds in savings. Governments already announced that. Well off, the 0:20:45.200 --> 0:20:46.800 waiting scene has a where the rest of the cuts 0:20:46.840 --> 0:20:47.040 do for? 0:20:47.800 --> 0:20:50.119 Okay, will we get more details on that then? Do 0:20:50.160 --> 0:20:53.600 you think potentially on Wednesday, given the pressure that Rachel 0:20:53.640 --> 0:20:57.760 Reeves will be under, how much does Reeves need to 0:20:57.800 --> 0:21:00.879 gain in terms of savings in order also to keep 0:21:00.960 --> 0:21:04.600 to her pledge of sticking to her fiscal rules. 0:21:04.960 --> 0:21:07.440 So we think that she might announce up to ten 0:21:07.560 --> 0:21:11.480 billion pounds of production in public spending in addition to 0:21:11.480 --> 0:21:14.200 the welfare savings that have been announced, and that would 0:21:14.359 --> 0:21:17.720 help her get back to a fiscal buffer of about 0:21:17.760 --> 0:21:20.440 ten to fifteen billion pounds against her fiscal rule. Because 0:21:20.440 --> 0:21:22.720 that's another question here, you know, what headroom does she 0:21:22.840 --> 0:21:25.879 build back against that rule. I mean, we saw that 0:21:25.920 --> 0:21:29.359 headroom eroded in recent months because of the weaker growth 0:21:29.359 --> 0:21:32.200 forecasts because of higher borrowing costs. I think Rachel reads 0:21:32.240 --> 0:21:35.879 it alive to the problems that can happen when you 0:21:35.920 --> 0:21:39.119 don't have much headroom to absorb these kind of fiscal shocks. 0:21:39.119 --> 0:21:41.080 So you expect to go back to ten fifteen billion 0:21:41.359 --> 0:21:44.040 funded through that ten billion pound production in public spending. 0:21:44.320 --> 0:21:45.760 I think that's where the explanitions are. 0:21:46.720 --> 0:21:49.920 In terms of that cut to welfare. That has been 0:21:50.280 --> 0:21:55.000 a hugely significant that announcement, and a lot of backlash 0:21:55.119 --> 0:21:58.520 around that sort of cut to welfare is especially from 0:21:58.560 --> 0:22:02.680 within the Chances Own party. That's a very difficult issue. 0:22:02.880 --> 0:22:05.520 Yes, we've already seen signs of what could be quite 0:22:05.520 --> 0:22:08.440 a PUNCHI rebellion here on the labor backbenches. I think 0:22:08.440 --> 0:22:10.919 that the concern is that the welfare cuts that were 0:22:10.920 --> 0:22:14.520 anounced might not necessarily achieve what the government says they 0:22:14.560 --> 0:22:16.800 want them to achieve. The government says that too many 0:22:16.840 --> 0:22:20.359 people are claiming benefits and it creates a disincentive to work. 0:22:20.480 --> 0:22:24.000 But the particular benefit they are targeting and reducing the 0:22:24.000 --> 0:22:27.399 accessibility of is really unclear. Why reducing the availability of 0:22:27.400 --> 0:22:30.760 that benefit, which is prominally taken by people who are 0:22:30.920 --> 0:22:34.560 disabled and have to meet various quite strict criteria to 0:22:35.520 --> 0:22:39.040 receive the benefit, Why reducing access to that would necessarily 0:22:39.200 --> 0:22:41.600 lead to a particular increase in access to work. And 0:22:41.640 --> 0:22:44.800 at the same time, the government is increasing above inflation 0:22:44.960 --> 0:22:48.680 the Universal Credit benefit for everyone else, so that's increasing 0:22:48.680 --> 0:22:51.359 an incentive to stay on that benefit, which would perhaps 0:22:51.520 --> 0:22:53.840 reduce the likely that people go into work. So yeah, 0:22:53.920 --> 0:22:56.720 it's a confused package in that sense. I think lots 0:22:56.720 --> 0:22:58.159 of labor and PE's are worried about it. 0:22:58.240 --> 0:23:00.800 I say that the problems with the UK economy and 0:23:00.840 --> 0:23:04.240 for the government's violences are familiar, but actually the defense 0:23:04.280 --> 0:23:07.160 spending is something quite new. This idea that we must 0:23:07.240 --> 0:23:09.800 ramp up a defense spending. How do you think that 0:23:10.000 --> 0:23:13.920 labor is addressing that issue now and thinking about it fiscally, 0:23:13.960 --> 0:23:17.760 I mean it's something of a massively long term need 0:23:17.920 --> 0:23:18.560 and desire. 0:23:19.240 --> 0:23:22.520 Yes. So the increase in spending from two point three 0:23:22.520 --> 0:23:25.200 percent of GDP to two point five percent of GDP 0:23:25.320 --> 0:23:28.560 by twenty twenty seven is funded by moving money across 0:23:28.560 --> 0:23:30.879 from the foreign aid budget, and that obviously has caused 0:23:30.880 --> 0:23:33.200 some upset in the labor ranks, but it does give 0:23:33.240 --> 0:23:35.680 the government a kind of very credible and definite way 0:23:35.720 --> 0:23:38.440 of funding that uptick. And then they have the line 0:23:38.440 --> 0:23:40.480 that will increase a three percent over the course of 0:23:40.480 --> 0:23:43.399 the next decade. But that line quite conveniently parks the 0:23:43.480 --> 0:23:46.840 question in the next parliament, so the government can say 0:23:46.880 --> 0:23:49.120 I'll get to thirty percent, but won't actually have to 0:23:49.200 --> 0:23:52.040 say how really until after the next election, which is 0:23:52.119 --> 0:23:55.359 kind of in political terms, a very long way away. 0:23:55.480 --> 0:24:00.119 So yes, they have a pretty immediate, plausible uplift. But 0:24:00.119 --> 0:24:02.960 then Rachel Reeves does know that funding pressure is going 0:24:03.000 --> 0:24:08.320 to be significant, sustained and high, so yeah, it does 0:24:08.359 --> 0:24:10.280 add pressure to the public finances. 0:24:09.920 --> 0:24:13.159 In terms of the other sort of part of this story, 0:24:13.200 --> 0:24:15.920 which is the sluggish economic growth that Britain has seen 0:24:15.960 --> 0:24:19.159 and the fact that the economy contracted in January, the 0:24:19.280 --> 0:24:23.160 chance has talked about global uncertainty. We know that there 0:24:23.200 --> 0:24:25.399 has been an increase in global uncertainty in terms of 0:24:25.440 --> 0:24:29.639 the tariff risks and so much more. When we heard 0:24:29.680 --> 0:24:33.679 from the Chancellor, she pointed to worldwide volatility as a 0:24:33.720 --> 0:24:39.040 contributing factor to the country's recent obl growth downgrade. Is 0:24:39.080 --> 0:24:42.760 that a fair assessment? How much is global uncertainty a 0:24:42.840 --> 0:24:43.840 factor for Britain? 0:24:44.680 --> 0:24:47.200 I think that it is true that across the peace. 0:24:47.320 --> 0:24:50.720 You know, governments around the world have seeing boring costs increase. 0:24:50.840 --> 0:24:55.440 We have seen global growth forecasts hit by the trade engiins, 0:24:55.560 --> 0:24:58.720 tariff wars being instigated by the United States and stad 0:24:58.760 --> 0:25:00.920 Trump was lected. So all of that it is true 0:25:00.960 --> 0:25:03.439 and fair. I think they're just a UK element in 0:25:03.480 --> 0:25:06.359 that there's a vulnerability that we have given the significant 0:25:06.680 --> 0:25:09.200 debt stock that we have, and that makes us even 0:25:09.280 --> 0:25:11.840 more kind of susceptible and at risk when it comes 0:25:11.840 --> 0:25:14.919 to boring costs increasing. And then and there is that 0:25:14.920 --> 0:25:17.080 also domestic element of the impact of the budget did 0:25:17.160 --> 0:25:22.600 have in hitting business confidence and making conditions to operate 0:25:22.640 --> 0:25:24.720 in the UK at hard. So you have to combine 0:25:24.720 --> 0:25:25.280 the two things. 0:25:25.600 --> 0:25:28.919 That was Bloomberg's UK government reported Joe Mays My thanks 0:25:28.920 --> 0:25:31.680 to him for joining me. So all the country's first 0:25:31.680 --> 0:25:36.119 female chancellor managed to balance the books amidst stormy Global 0:25:36.200 --> 0:25:39.880 Seas will have full coverage of the spring statement. Here 0:25:39.920 --> 0:25:42.880 for you on Bloomberg. I'm Caroline Hepek. You can catch 0:25:42.960 --> 0:25:45.680 us every weekday morning for bluemberg Daybreak you at beginning 0:25:45.760 --> 0:25:49.119 at six am in London. That's one am or Wall Street. Tom. 0:25:49.640 --> 0:25:52.440 Thank you Caroline, And coming up on Bloomberg day Break weekend, 0:25:52.480 --> 0:25:56.480 we'll look ahead to earnings from Chinese ev giant BYD. 0:25:57.119 --> 0:26:11.000 I'm Tom Buzzbeak and this is Bloomberg. This is Bloomberg 0:26:11.040 --> 0:26:13.080 day Break Weekend, our global look ahead of the top 0:26:13.119 --> 0:26:16.080 stories for investors in the coming week. I'm Tom Busby 0:26:16.119 --> 0:26:19.399 in New York. Earnings this week from BYD. That's the 0:26:19.480 --> 0:26:22.920 Chinese evy giant that's battling Tesla to be that nation's 0:26:22.960 --> 0:26:27.000 top selling automaker. Let's get to Daybreak Asia podcast host 0:26:27.040 --> 0:26:29.480 Doug Prisner for a preview Tom. 0:26:29.600 --> 0:26:33.240 Last year, BYD nearly took over Tesla as the world's 0:26:33.359 --> 0:26:36.640 largest maker of electric vehicles and so far this year, 0:26:37.240 --> 0:26:40.199 shears and BYD are up more than fifty five percent. 0:26:40.840 --> 0:26:43.120 For a closer look at the story on BYD, I'm 0:26:43.200 --> 0:26:46.600 joined by Danny Lee. He is Bloomberg Asia Transport reporter. 0:26:47.240 --> 0:26:49.800 Danny joins us from our studios in Hong Kong. Danny, 0:26:49.800 --> 0:26:52.120 it's always a pleasure. Thanks for taking time to chat 0:26:52.160 --> 0:26:55.040 with us about this story. What is your sense of 0:26:55.040 --> 0:26:57.920 what we may hear from BYD in the coming week? 0:26:59.200 --> 0:27:02.680 Well, he from b YD over the past twelve months 0:27:02.720 --> 0:27:06.280 and twenty twenty four, the record number of sales it 0:27:06.359 --> 0:27:10.439 has delivered in terms of passenger electric vehicles and hybrid 0:27:10.520 --> 0:27:13.639 vehicles four point two five million of them in the 0:27:13.680 --> 0:27:17.480 past year. That will feed into record amount of earnings, 0:27:17.520 --> 0:27:21.280 and in particular it's going to be quite a landmark 0:27:21.320 --> 0:27:23.119 the fact that for the first time it will be 0:27:23.160 --> 0:27:27.880 able to deliver we expect one hundred billion US dollars 0:27:27.880 --> 0:27:30.840 worth of sales and that's for the first time ever. 0:27:31.320 --> 0:27:35.600 And also it's a contrast to one of its near rivals, Tesla, 0:27:35.840 --> 0:27:40.280 which it will overtake if they can deliver on expectations 0:27:40.320 --> 0:27:43.400 that investors and the market is looking for, and by 0:27:43.720 --> 0:27:47.919 quite some margin. So it's yet another metric that we 0:27:48.080 --> 0:27:52.240 see potentially BYD overtaking Tesla on in a growing list 0:27:52.320 --> 0:27:54.720 of numbers that we are closely watching for. 0:27:54.880 --> 0:27:57.240 So I have to ask you about this new charging 0:27:57.320 --> 0:28:01.159 system that BYD recently. Do you think it's going to 0:28:01.200 --> 0:28:04.240 show up in the outlook? Will be WYD say that 0:28:04.560 --> 0:28:08.359 essentially this new technology really will pave the way for 0:28:08.400 --> 0:28:09.679 a jump in earnings growth. 0:28:09.960 --> 0:28:10.120 Well. 0:28:10.160 --> 0:28:13.800 BYD has already flagged it expects to sell five to 0:28:13.880 --> 0:28:18.240 six million units this year of evs and hybrids, and 0:28:18.600 --> 0:28:21.040 I think when you think about the numbers that it 0:28:21.080 --> 0:28:24.520 has already guided towards, it already knows over a very 0:28:24.560 --> 0:28:28.320 long lead time what products and innovations and developments will 0:28:28.359 --> 0:28:31.280 be coming out over twenty twenty five, and we've already 0:28:31.280 --> 0:28:34.680 had some of those developments emerge already. For example, we've 0:28:34.720 --> 0:28:40.440 had big details on its autonomous driving strategy, driver assist vehicles, 0:28:40.560 --> 0:28:43.719 things that putting in much more tech into its vehicle 0:28:43.840 --> 0:28:47.440 at no extra cost, which will really grab the attention 0:28:47.520 --> 0:28:52.120 of drivers who are weighing up how to, particularly in China, 0:28:52.160 --> 0:28:55.320 how to find more value for the cars that they 0:28:55.360 --> 0:28:57.920 are going to buy, particularly in electric vehicles. And so 0:28:58.520 --> 0:29:02.680 with the announcement last week that they will install or 0:29:02.840 --> 0:29:06.280 have and create fast charging ultra fast charging vehicles that 0:29:06.360 --> 0:29:11.200 can charge four hundred kilometers in five minutes. That in 0:29:11.240 --> 0:29:17.160 itself is way better than what other competitors Tesla, for example, 0:29:17.800 --> 0:29:21.400 Mercedes Benz is putting out, and so it has set 0:29:21.400 --> 0:29:26.560 a high benchmark for other competitors to try and chase down, 0:29:27.040 --> 0:29:30.200 not just outside of China, but even in China where 0:29:30.240 --> 0:29:33.280 there is a much more narrow sense of competition given 0:29:33.320 --> 0:29:36.840 the advancements in in the EV space that there has been, 0:29:36.880 --> 0:29:41.160 and so therefore the kinds of developments that bid has 0:29:41.320 --> 0:29:46.360 already got in train, This will already feed into the 0:29:46.400 --> 0:29:50.640 expectations and also the pressure for them to deliver five 0:29:50.680 --> 0:29:54.040 to six million units this year, which is going to 0:29:54.040 --> 0:29:57.920 be around one potentially two million more. So every year 0:29:57.960 --> 0:30:01.360 they're having to pull out for my act trick. So 0:30:01.920 --> 0:30:03.720 this is always going to be a challenge for them, 0:30:03.760 --> 0:30:06.240 and for now this is them delivering on that promise. 0:30:06.360 --> 0:30:09.200 So in terms of this new charging system Danny, is 0:30:09.240 --> 0:30:12.440 this something that BYD developed on its own. Is it 0:30:12.480 --> 0:30:17.040 proprietary or has the company partnered with a battery manufacturer 0:30:17.080 --> 0:30:20.560 to arrive at this level of speed and sophistication. 0:30:21.320 --> 0:30:24.560 Now, this is very much BYD pursuing its own in 0:30:24.720 --> 0:30:31.719 house development with its frankly army of R and D technicians, developers, researchers, 0:30:31.880 --> 0:30:36.000 over one hundred thousand of them, very much in China 0:30:36.240 --> 0:30:40.480 working on these kind of innovations and breakthroughs day and night. 0:30:40.520 --> 0:30:43.960 And so they know they have the resources, they have 0:30:44.080 --> 0:30:47.040 the firepower to do all of this, and so it's 0:30:47.120 --> 0:30:51.200 important to understand for a global audience just how many 0:30:51.240 --> 0:30:55.479 people BYD employees. We are getting close, if not already 0:30:55.480 --> 0:30:59.640 at a million employees, predominantly in China. And they have 0:30:59.720 --> 0:31:04.239 been so aggressive in their push to higher not just 0:31:04.480 --> 0:31:06.360 on the R and D side, but clearly on their 0:31:06.360 --> 0:31:09.720 manufacturing side, and so you know, they have really rapidly 0:31:09.720 --> 0:31:13.960 expanded its workerforce BACE, and so this all feeds into 0:31:14.400 --> 0:31:19.480 them trying to push out very quickly new innovations, new developments, 0:31:19.520 --> 0:31:23.520 and so this latest push with ultra fast charging is 0:31:24.240 --> 0:31:27.400 a big step forward to them. However, one of the 0:31:27.440 --> 0:31:31.000 fascinating things about last week's announcement was, you know, we 0:31:31.000 --> 0:31:35.040 were anticipating and expecting developments in this space like ultra 0:31:35.080 --> 0:31:39.480 fast charging, more durable batteries, but the one kind of 0:31:39.520 --> 0:31:43.000 phrase that was not mentioned in last week's announcement. In 0:31:43.080 --> 0:31:47.200 last week's event was Blade two refers to type of 0:31:47.440 --> 0:31:51.360 battery product that BID initially produced in twenty twenty called Blade, 0:31:51.520 --> 0:31:53.520 which changed the game for them in many ways to 0:31:53.960 --> 0:31:55.960 really get them to where they are today in terms 0:31:56.000 --> 0:31:59.760 of selling millions of vehicles, and that Blade, which is 0:32:00.400 --> 0:32:05.360 lithium ion phosphate battery, really durable, very low cost to make. 0:32:06.000 --> 0:32:09.240 We were expecting an upgrade on that product this year 0:32:09.360 --> 0:32:13.320 and it hasn't been announced yet. And so whilst we 0:32:13.400 --> 0:32:15.720 all thought that this fast charging was related to that, 0:32:16.000 --> 0:32:19.640 technically yes and no, but it does appear that this 0:32:19.760 --> 0:32:23.360 Blade too battery upgrade is still yet to come. So 0:32:23.840 --> 0:32:26.480 in terms of other innovations in twenty twenty five, this 0:32:26.560 --> 0:32:27.840 is another one to watch. 0:32:27.960 --> 0:32:31.320 So away from the kind of the technological advancements, I'm 0:32:31.360 --> 0:32:34.960 wondering about the extent to which BYD has kind of 0:32:35.000 --> 0:32:38.960 benefited from maybe missteps on the part of Tesla. There 0:32:38.960 --> 0:32:43.560 really hasn't been anything in terms of a material redesign 0:32:43.920 --> 0:32:47.280 that any of the Tesla vehicles have had recently. But 0:32:47.360 --> 0:32:51.280 at the same time BYD has been constantly refining and 0:32:51.360 --> 0:32:55.200 redesigning its cars is that one of the other things 0:32:55.200 --> 0:32:59.440 that has kind of contributed to the enthusiasm around BYD. 0:33:00.080 --> 0:33:03.280 There is always a criticism of Tesla that its lineup 0:33:03.360 --> 0:33:06.440 is very thin, it's very stale, the fact that there's 0:33:06.480 --> 0:33:10.560 no wholesale upgrades of its mass market product. And when 0:33:10.600 --> 0:33:14.320 you look at Tesla as it's rolled out more narrowly 0:33:14.480 --> 0:33:16.840 produced products such as a cyber truck, which is not 0:33:16.880 --> 0:33:20.920 being sold around the world either, and now it's pushing 0:33:20.920 --> 0:33:25.880 its focus into robotaxis autonomous style driving, which is yes, 0:33:26.000 --> 0:33:29.120 very similar to what the Chinese EV producers such as 0:33:29.200 --> 0:33:33.800 BID are focusing on, but they're not necessarily pushing into 0:33:33.840 --> 0:33:36.320 a severe where they are really going to be over 0:33:36.400 --> 0:33:41.160 aligned on effectively what we call so called autonomous driving 0:33:41.400 --> 0:33:44.760 to the ultimate extremes that someone like Tesla is pushing to. 0:33:45.440 --> 0:33:48.120 But then the same criticism could be leveled at other 0:33:48.240 --> 0:33:51.040 foreign automakers when we look at someone like a Ford 0:33:51.160 --> 0:33:54.960 or a GM who have lagged behind significantly on such 0:33:55.000 --> 0:33:59.120 a strategy as they have this huge gasoline lineup of cars, 0:33:59.160 --> 0:34:01.760 and you know, it's really hard for those legacy automakers 0:34:01.800 --> 0:34:04.480 to try and transition as we have seen, as we've 0:34:04.480 --> 0:34:08.040 seen with targets on for twenty thirty twenty thirty five 0:34:08.120 --> 0:34:11.560 being pushed back in terms of investing in a strategy 0:34:11.600 --> 0:34:15.320 of evs which is very costly, and where the Chinese 0:34:15.360 --> 0:34:18.480 EV brands and automakers have had bigger bets and more 0:34:18.520 --> 0:34:21.120 bold bets and so far at least in the world's 0:34:21.120 --> 0:34:24.160 biggest auto market of China is paying off handsomely, And 0:34:24.360 --> 0:34:27.680 which is why we're seeing this leadership, this makeup of 0:34:27.719 --> 0:34:31.319 the auto domination kind of shift a little bit when 0:34:31.320 --> 0:34:33.080 you look at the numbers and the way in which 0:34:33.160 --> 0:34:37.239 foreign automakers are seeing sales get pinched, and the likes 0:34:37.239 --> 0:34:40.360 of BYD, who are very much high up there. You know, 0:34:40.440 --> 0:34:43.520 the BDY was so close to overtaking Ford Motors in 0:34:43.640 --> 0:34:46.960 terms of annual sales in the past year, just fell short. 0:34:46.960 --> 0:34:49.280 And when you look at the twenty twenty five targets, 0:34:49.360 --> 0:34:52.160 if they can even reach the top end, that will 0:34:52.200 --> 0:34:55.040 take them beyond potentially General motors. 0:34:55.120 --> 0:34:58.480 So what is BYD doing to expand markets outside of 0:34:58.560 --> 0:35:00.440 China right now? And I think I think we have 0:35:00.480 --> 0:35:02.760 to talk a little bit about the tariff story because 0:35:02.800 --> 0:35:06.640 that seems to be a threat to further expansion, does 0:35:06.680 --> 0:35:06.920 it not? 0:35:07.960 --> 0:35:08.200 Well? 0:35:08.280 --> 0:35:11.359 The tariffs is a fascinating component, and let me answer 0:35:11.400 --> 0:35:14.160 it in two ways. So tariffs obviously being put on 0:35:14.200 --> 0:35:17.000 in markets such as Europe where BYD is really being 0:35:17.040 --> 0:35:21.560 aggressive in that's part of a hindrance. And one of 0:35:21.600 --> 0:35:27.480 the fascinating conversations with automakers generally in China is how 0:35:27.520 --> 0:35:30.839 do they approach such an imposition of tariffs. They are 0:35:30.880 --> 0:35:34.920 actually generally swallowing the cost of these extra tariffs on 0:35:35.000 --> 0:35:38.080 behalf of the consumer because they know what it means 0:35:38.080 --> 0:35:43.000 to try and gain entry into a market and build 0:35:43.120 --> 0:35:46.600 a reputation and build sales, you know, And for someone 0:35:46.600 --> 0:35:49.320 like be D, they have found it tough in Europe 0:35:49.360 --> 0:35:53.320 because they're starting on basically zero to a low base, 0:35:53.600 --> 0:35:56.120 but they are making gains in their steadily increasing sales, 0:35:56.560 --> 0:35:59.799 clearly nowhere near enough for the investment they have put 0:35:59.880 --> 0:36:03.280 in across Europe. But then outside of Europe a mature 0:36:03.880 --> 0:36:08.040 auto market in the emerging market space, BYD in particular 0:36:08.120 --> 0:36:11.919 and generally like most Chinese automakers have been aggressive where 0:36:11.920 --> 0:36:14.120 there are no tariffs, where they have been warmly welcomed, 0:36:14.520 --> 0:36:18.879 and they are selling thousands and thousands of cars every month, 0:36:18.960 --> 0:36:21.600 and that is to a testament to see how well 0:36:21.640 --> 0:36:24.279 they have gone up in the rankings. But BYD, who 0:36:24.320 --> 0:36:27.320 are leading in electric vehicle sales and the number of countries, 0:36:27.360 --> 0:36:30.640 whether it be a Thailand or Brazil, they are delivering 0:36:30.760 --> 0:36:35.040 and squeezing on the existing competitors, not just in the 0:36:35.080 --> 0:36:39.279 EV space, but particularly in the traditional gasoline and the 0:36:39.320 --> 0:36:42.000 overall sales space. So there are lots of games to 0:36:42.040 --> 0:36:45.600 be made. And BYD, who has got bigger targets to 0:36:45.640 --> 0:36:49.520 sell overseas, has been able to deliver so far this year, 0:36:49.800 --> 0:36:52.959 doubling the number of sales overseas a month or month, 0:36:53.080 --> 0:36:55.799 and so that is a sign of just how well 0:36:55.800 --> 0:36:58.640 they're doing and they're not going to be slowing down. 0:36:59.080 --> 0:37:02.200 We talk about or we see ships that BYD has 0:37:02.239 --> 0:37:05.319 bought several of them. We had one or two come 0:37:05.360 --> 0:37:07.640 online last year and now we are coming up to 0:37:07.680 --> 0:37:11.520 at least five ships now, so they will have their 0:37:11.560 --> 0:37:15.920 own dedicated fleet of ships to export, particularly more and 0:37:15.960 --> 0:37:19.600 more cars around the world, on top of localizing production, 0:37:19.840 --> 0:37:22.600 which will see the benefits of not just in Thailand 0:37:22.680 --> 0:37:25.080 where they have localized productions, soon in Brazil in the 0:37:25.120 --> 0:37:29.520 coming year or so, and also in Hungary in Europe, 0:37:29.800 --> 0:37:33.319 so there's lots of excitement to come. But when we 0:37:33.360 --> 0:37:36.520 look at the developments, as you said, of targets of 0:37:36.600 --> 0:37:40.319 pushing into markets, clearly when they localize production, the risk 0:37:40.400 --> 0:37:42.920 of tariff's lessons, even if they're not in the one 0:37:42.920 --> 0:37:45.839 of the world's because the auto markets such as such 0:37:45.840 --> 0:37:46.800 as the United States. 0:37:46.960 --> 0:37:49.440 Danny, thank you so much for joining us and helping 0:37:49.520 --> 0:37:53.080 us understand more about what's happening with BYD these days 0:37:53.520 --> 0:37:56.200 as we look ahead to the company's earnings report in 0:37:56.239 --> 0:37:58.960 the week ahead. Danny Lee. There, he is Bloomberg Asia 0:37:59.000 --> 0:38:02.719 Transport reporter, joining from our studios in Hong Kong. I'm 0:38:02.760 --> 0:38:05.160 deug Christner. You can catch us weekdays here for the 0:38:05.239 --> 0:38:10.240 Daybreak Asia podcast. It's available wherever you get your podcast. Tom. 0:38:10.680 --> 0:38:13.080 Thank you, Doug. And that does it for this edition 0:38:13.080 --> 0:38:15.719 of Bloomberg day Break Weekend. Join us again Monday morning 0:38:15.760 --> 0:38:17.560 at five am Wall Street Time for the latest on 0:38:17.680 --> 0:38:20.359 markets overseas and the news you need to start your day. 0:38:20.719 --> 0:38:23.760 I'm Tom Buzzby. Stay with us. Top stories and global 0:38:23.760 --> 0:38:25.880 business headlines are coming up right now.