Daybreak Weekend: Nvidia Earnings, G20 Summit, PBOC Decision

Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.960 --> 0:00:13.280 This is Bloomberg day Break Weekend, our global look at 0:00:13.280 --> 0:00:15.560 the top stories in the coming week from our Daybreak 0:00:15.560 --> 0:00:18.360 anchors all around the world, and straight ahead on the program, 0:00:18.400 --> 0:00:21.840 I'll look at earnings from AI giant Nvidia, along with 0:00:21.960 --> 0:00:23.360 existing home sales data. 0:00:23.760 --> 0:00:25.279 I'm Tom Busby in New York. 0:00:25.560 --> 0:00:28.000 I'm callin Hepkee here in London, where we're looking ahead 0:00:28.000 --> 0:00:30.680 to the Group of Twenty Leaders summit in Rio. 0:00:31.000 --> 0:00:33.919 I'm Dog Prisner looking ahead to the upcoming rate decision 0:00:33.920 --> 0:00:35.320 from the People's Bank of China. 0:00:36.000 --> 0:00:40.200 That's all strain ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:40.240 --> 0:00:44.160 eleven THREEO, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:44.560 --> 0:00:49.440 Bloomberg ninety two nine Boston, DAB Digital Radio, London, Sirius 0:00:49.600 --> 0:00:53.000 XM one twenty one, and around the world on Bloomberg Radio, 0:00:53.040 --> 0:00:55.160 dot Com and the Bloomberg Business App. 0:01:00.520 --> 0:01:01.960 Good day to you. I'm Tom Busby. 0:01:01.960 --> 0:01:05.000 We've begin today's program with Nvidia, the last of the 0:01:05.080 --> 0:01:09.200 Magnificent seven tech giants, reporting its third quarter earnings on Wednesday, 0:01:09.240 --> 0:01:12.320 and for more on what to expect from the AI heavyweight, 0:01:12.360 --> 0:01:16.960 We're joined by kuon John Savanni, Bloomberg Intelligence Senior semiconductor 0:01:17.000 --> 0:01:19.319 analysts Coon, John, thank you so much for joining us. 0:01:19.600 --> 0:01:21.759 It looks like all the stars. 0:01:21.360 --> 0:01:24.240 Have aligned for Nvidia, now the most valuable company on 0:01:24.280 --> 0:01:27.800 the planet, a market cap three and a half trillion dollars. 0:01:28.319 --> 0:01:30.640 So what are you expecting from its Q three results. 0:01:30.720 --> 0:01:34.119 It's first as a member of the Dow Jones Industrial average. 0:01:34.280 --> 0:01:37.120 Yeah, we expect nothing different this time, like we have 0:01:37.240 --> 0:01:40.280 seen over the last almost eight quarters. Now we again 0:01:40.360 --> 0:01:44.400 expect a very strong beaten race. Our call on that 0:01:44.520 --> 0:01:47.360 is a likelihood of the magnitude of the beaten race 0:01:47.440 --> 0:01:49.040 to be higher than what we've seen in the last 0:01:49.080 --> 0:01:52.200 two quarters. You know, in Q three and Q four 0:01:53.040 --> 0:01:55.760 Blackwell was supposed to RAM and they had some delay 0:01:56.600 --> 0:02:00.840 which has allowed its existing Hopper product line to expand. 0:02:01.320 --> 0:02:04.920 And we have seen no signs of slowing demand and 0:02:04.960 --> 0:02:08.639 adoption for Hopper right now in three Q and four 0:02:08.720 --> 0:02:14.120 Q until the large cloud customers and hyperscalers really eagerly 0:02:14.160 --> 0:02:16.919 wait for the Blackwell shipments in twenty twenty five. 0:02:17.320 --> 0:02:19.239 Well, we know about demand for those Hoppers, the H 0:02:19.320 --> 0:02:24.000 two hundred accelerators. How about hardware software data center services. 0:02:24.360 --> 0:02:27.799 Are there any weaknesses for Nvidia? And as you said 0:02:27.800 --> 0:02:31.160 about that delay in the Blackwells supply chain issues, have 0:02:31.280 --> 0:02:32.440 they all been settled down? 0:02:32.680 --> 0:02:35.160 From all of our channel checks and supply checks, it 0:02:35.240 --> 0:02:39.239 seems most, or if not all, black Well supply chain 0:02:39.280 --> 0:02:43.000 issues have been settled down. We have heard that some 0:02:43.040 --> 0:02:47.000 customers are starting to get the shipments as early as 0:02:47.040 --> 0:02:49.560 the end of this year, so that's a very promising 0:02:49.600 --> 0:02:53.320 good news. And a lot of other large customers are 0:02:53.360 --> 0:02:55.960 preparing to accept shipments starting in one queue, so that 0:02:56.080 --> 0:03:00.240 suggests there's no more major issues. There will be, however, 0:03:00.320 --> 0:03:03.560 Blackwell will be supply constraint as was Hopper in its 0:03:03.639 --> 0:03:04.360 initial ramp. 0:03:04.560 --> 0:03:06.840 Well, let me ask you, now that Hopper has about 0:03:07.360 --> 0:03:11.000 ninety percent of the market for these types of accelerators, 0:03:11.400 --> 0:03:15.280 what will Blackwell mean for Nvidia? And as you said, 0:03:15.320 --> 0:03:18.320 they're ramping up production now you expect deliveries this quarter 0:03:18.760 --> 0:03:20.400 next quarter to really speed up. 0:03:20.720 --> 0:03:22.200 What will that mean for the company. 0:03:22.880 --> 0:03:25.040 Yeah, So when you look at in terms of market 0:03:25.080 --> 0:03:28.519 share in GPUs for in media, you know they started 0:03:28.560 --> 0:03:31.200 out with almost close to like ninety ninety seven ninety 0:03:31.240 --> 0:03:34.680 eight percent on a revenue basis, and slowly you know, 0:03:34.720 --> 0:03:37.800 they're trickled down to close to I would say low nineties, 0:03:38.040 --> 0:03:42.600 if not nineties. We think Blackwell will actually stop that, 0:03:42.800 --> 0:03:45.880 won't really call it share laws, but actually increase those number. 0:03:46.400 --> 0:03:51.760 You know, Blackwell, especially the cluster of GPUs using their 0:03:52.000 --> 0:03:56.040 envi link technology has really up their game if you 0:03:56.040 --> 0:03:58.800 can even believe that's possible, and there is no other 0:03:59.360 --> 0:04:02.960 competent of end to end product out there, so actually 0:04:03.040 --> 0:04:07.280 that increases their motive, even makes the share more defensible. 0:04:07.120 --> 0:04:10.320 And they sell to the big East. There's Meta, Microsoft, Alphabet, 0:04:10.360 --> 0:04:13.320 all of them big buyers. What about the competition though, 0:04:13.400 --> 0:04:16.640 I mean we've heard Apple, Amazon now making their own 0:04:16.720 --> 0:04:22.360 AI accelerators, their own GPUs. How does that affect Nvidio 0:04:22.600 --> 0:04:23.440 or does it at all? 0:04:23.960 --> 0:04:26.080 I mean it does look in terms of long term 0:04:26.120 --> 0:04:28.840 and in terms of the size of opportunity, it does 0:04:28.960 --> 0:04:33.360 affect A six which are the chips that these customers 0:04:33.480 --> 0:04:36.760 designed for themselves, which are called you know, those are 0:04:36.839 --> 0:04:40.520 the largest risk to Nvidia because frankly, there is no 0:04:40.600 --> 0:04:43.360 other sort of semiconductor company which is a huge risk 0:04:43.400 --> 0:04:46.680 to them. So that is definitely a large risk. All 0:04:46.720 --> 0:04:50.919 of these you know, its largest buyers have already started 0:04:50.960 --> 0:04:54.720 to adopt their some of them their own A six 0:04:54.760 --> 0:04:58.039 in a lot of volume. There's also a possibility like 0:04:58.120 --> 0:05:01.120 someone like let's say Amazon, who has successfully using their 0:05:01.120 --> 0:05:03.880 A six for a while now, are have also started 0:05:03.920 --> 0:05:07.520 to offer those to their own cloud customers as an 0:05:07.520 --> 0:05:11.000 alternative to Nvidia's GPUs that are running in Amazon's cloud, 0:05:11.040 --> 0:05:15.520 So that is definitely a risk. However, this the AA rarely, 0:05:15.600 --> 0:05:18.360 we think is in the early innings. What it means is, 0:05:18.880 --> 0:05:23.080 as of this point, neither their customers, their direct customers 0:05:23.080 --> 0:05:26.280 are slowing down the buying our media chips. Neither are 0:05:26.560 --> 0:05:29.479 their customers customers are slowing down using of Nvidia chips. 0:05:29.560 --> 0:05:32.560 So in the near term you might see both in 0:05:32.680 --> 0:05:36.000 Vidia's GPUs and A six continue to grow significantly cause 0:05:36.000 --> 0:05:38.880 because there's a lot of demand appetite. But once this 0:05:39.120 --> 0:05:42.400 sort of demand rarely matures, that is when we'll really 0:05:42.520 --> 0:05:45.480 see that fight for each dollar spend. 0:05:45.839 --> 0:05:46.119 Wow. 0:05:46.200 --> 0:05:49.840 And there's no end, no view right now of when 0:05:49.880 --> 0:05:52.520 that will happen, that slow down, not yet anyway. 0:05:53.560 --> 0:05:56.160 No, we're I mean, we keep that's the biggest question 0:05:56.240 --> 0:05:58.360 we get, right and we keep a very close eye 0:05:58.400 --> 0:06:01.160 on it every quarter. And as we have seen from 0:06:01.279 --> 0:06:04.680 Q three earnings from most of its largest customers, most 0:06:04.680 --> 0:06:08.400 of the enterprise. The appetite has actually increased, if you 0:06:08.560 --> 0:06:10.880 might even believe that in twenty twenty five looks like 0:06:10.960 --> 0:06:14.880 another recorder in terms of CAPEX spend for these AI 0:06:14.960 --> 0:06:17.520 GPUs and hardware and unbelievable. 0:06:17.560 --> 0:06:20.800 Now we know all these other companies, these big tech companies, 0:06:20.800 --> 0:06:21.760 small tech companies. 0:06:21.839 --> 0:06:22.920 Where they're putting. 0:06:22.680 --> 0:06:27.440 Their CAPEX is in AI. Where is Nvidia putting their capex? 0:06:27.880 --> 0:06:30.280 Well, yeah, so you know since the launch of its 0:06:30.440 --> 0:06:33.840 first sort of aserver GPUs, which was called the MPa 0:06:33.880 --> 0:06:37.080 product line. So, first of all, in media, as a 0:06:37.080 --> 0:06:40.760 fablus semicinetor company, what it means is does not manufacture 0:06:41.040 --> 0:06:44.640 or produce its own shifts. So usually these fablust companies 0:06:44.720 --> 0:06:47.200 do not spend a lot in CAPEX. They spend a 0:06:47.200 --> 0:06:50.000 lot more in op x. Their CAPEX is generally just 0:06:50.720 --> 0:06:54.279 you know, having test equipments, packaging equipments, and just R 0:06:54.320 --> 0:06:58.440 and D equipments needed to develop their products and their chips. 0:06:58.600 --> 0:07:02.239 Well, Nvidia third quarter earnings out this Wednesday are thanks 0:07:02.240 --> 0:07:07.000 to Kon John Sobonnie Bloomberg Intelligence senior semiconductor analyst. We 0:07:07.040 --> 0:07:09.679 move next to a look at the uneven US housing 0:07:09.720 --> 0:07:12.440 market with existing sales for the month of October that 0:07:12.560 --> 0:07:15.760 is out this Thursday. Also, what earnings from Home Depot 0:07:15.840 --> 0:07:18.960 last week and from Low's this Tuesday tell us about 0:07:18.960 --> 0:07:21.000 the US housing market. And for more we're joined by 0:07:21.080 --> 0:07:26.760 Drew Redding, Bloomberg Intelligence US home building analyst. Drew bottom line, 0:07:26.760 --> 0:07:29.640 existing home sales not doing well, on track for the 0:07:29.680 --> 0:07:32.840 worst year since twenty ten. That's according to the National 0:07:32.880 --> 0:07:35.760 Association of Realtors. So what gives and what are you 0:07:35.800 --> 0:07:37.280 expecting for the month of October. 0:07:37.760 --> 0:07:40.120 So we do think we could see some improvement in 0:07:40.200 --> 0:07:43.560 existing home sales in October, and that's really reflective of 0:07:43.600 --> 0:07:47.320 the more favorable mortgage rate environment that we had during September. 0:07:47.760 --> 0:07:50.840 Remember these are contract closing, so there's typically a thirty 0:07:50.840 --> 0:07:52.960 to sixty day like from when a deal is signed. 0:07:53.760 --> 0:07:55.320 That being said, the date is going to be stale 0:07:55.320 --> 0:07:57.240 before it even comes out. I mean the rate when 0:07:57.280 --> 0:08:00.240 a thirty year mortgage has gone from the lowes six 0:08:00.240 --> 0:08:03.760 percent range in September to above seven percent in just 0:08:03.760 --> 0:08:06.520 a matter of weeks. Despite the FED cutting rates, the 0:08:06.600 --> 0:08:09.560 total seventy five basis points, and we've seen demand EBB 0:08:09.600 --> 0:08:12.360 and flow with these fluctuations. So we think you could 0:08:12.360 --> 0:08:15.400 see some improvement reflecting September, but like we said, we 0:08:15.440 --> 0:08:16.800 think it's going to be stale and there's going to 0:08:16.840 --> 0:08:19.040 be pressure going forward. If we zoom out just a 0:08:19.040 --> 0:08:22.640 little bit, look at the bigger picture. Existing home sales 0:08:22.840 --> 0:08:25.400 continue to sit below a four million analyzed rate, and 0:08:25.520 --> 0:08:28.240 current activity is the lowest in over a decade, and 0:08:28.280 --> 0:08:32.000 that really afflects the affordability picture, which continues to hover 0:08:32.160 --> 0:08:33.840 near historically at the levels. 0:08:33.720 --> 0:08:36.960 I mean those record high prices on homes, mortgage rates 0:08:36.960 --> 0:08:39.360 as you said back, you know, near seven percent, but 0:08:39.440 --> 0:08:43.319 also the cost of home ownership, right insurance, maintenance, lawn care, 0:08:43.520 --> 0:08:45.480 upgrades for furniture, and more. 0:08:46.000 --> 0:08:48.280 Yeah, it's a good point, and it's a combination of 0:08:48.320 --> 0:08:50.320 all those factors. And I think you hit the nail 0:08:50.320 --> 0:08:53.280 on the head when you mentioned prices, because mortgage rates 0:08:53.280 --> 0:08:55.560 get a lot of attention, particularly when we pay such 0:08:55.600 --> 0:08:57.440 close attention to what the FED is going to do. 0:08:57.520 --> 0:09:00.520 But home prices are up over fifty percent prior to 0:09:00.559 --> 0:09:05.200 the pandemic, and payments have become increasingly disconnected from incomes. 0:09:05.240 --> 0:09:08.680 We did an analysis that shows that property values we 0:09:08.720 --> 0:09:12.160 need to fall about thirty percent for monthly payments relative 0:09:12.160 --> 0:09:15.360 to incomes to return to historical levels. So we're not 0:09:15.400 --> 0:09:17.040 saying that you're going to see that type of decline 0:09:17.080 --> 0:09:18.719 at the national level in the near term, but I 0:09:18.760 --> 0:09:21.360 think it illustrates the problem. So we're going to need 0:09:21.400 --> 0:09:23.920 some combination of you know, maybe prices coming down a bit, 0:09:24.080 --> 0:09:26.920 rates moderating, and then further income growth in order to 0:09:26.920 --> 0:09:29.360 get things headed in the right direction. And it's probably 0:09:29.400 --> 0:09:30.320 going to take some time. 0:09:30.880 --> 0:09:33.800 Yeah, I mean, besides what we saw in two thousand 0:09:33.840 --> 0:09:37.079 and eight, what can bring the price of these homes 0:09:37.240 --> 0:09:38.559 to a more reasonable level. 0:09:39.040 --> 0:09:40.880 Well, I think one thing you're starting to see is 0:09:40.880 --> 0:09:44.240 that we're having more inventory come to market. You know, 0:09:44.280 --> 0:09:46.480 the lack of resale inventory has been one of the 0:09:46.600 --> 0:09:49.160 key themes really over the last several years, and it's 0:09:49.160 --> 0:09:50.880 been one of the reasons why the new home market 0:09:50.960 --> 0:09:53.800 has done so well. But if we look in some 0:09:53.840 --> 0:09:56.679 markets around the country, in Texas and in Florida, we're 0:09:56.679 --> 0:09:59.520 starting to see inventory levels which are approaching or exceeding 0:10:00.040 --> 0:10:02.760 those in twenty nineteen. And it's due to the fact 0:10:02.800 --> 0:10:05.400 that you have weaker demands, so homes are sitting on 0:10:05.400 --> 0:10:08.360 the market longer and you also have more starting to 0:10:08.400 --> 0:10:10.080 come to market. So as we get that build up, 0:10:10.120 --> 0:10:13.040 we think that's going to put some downward pressure on prices. 0:10:13.240 --> 0:10:15.080 So you think we're still going to see a shift 0:10:15.200 --> 0:10:18.600 in population to sun Belt states where where the last 0:10:18.640 --> 0:10:23.040 four years they've exploded in home sales, home building, or 0:10:23.520 --> 0:10:25.640 is it going to even off other parts of the 0:10:25.679 --> 0:10:26.920 country maybe. 0:10:26.640 --> 0:10:28.240 Well, I think that's still where you're going to see 0:10:28.280 --> 0:10:31.640 the population over time continue to grow. That's where, at 0:10:31.720 --> 0:10:34.320 least on a relative basis, affordability is. That's where a 0:10:34.360 --> 0:10:37.600 majority of the jobs are compared to some of the 0:10:37.640 --> 0:10:40.319 slower markets in the Midwest and the Northeast. And that's 0:10:40.320 --> 0:10:42.360 why you see that the builders continue to grow there. 0:10:42.360 --> 0:10:46.240 That's where they continue to expand their communities and purchase 0:10:46.280 --> 0:10:48.760 more land because we do think that, you know, bigger 0:10:48.760 --> 0:10:50.840 picture and longer term, that's where a lot of the 0:10:50.840 --> 0:10:51.920 growth in the country will be. 0:10:52.320 --> 0:10:54.160 Well, let's hope we see more. Hey, I want to 0:10:54.160 --> 0:10:55.520 pivot to last week. 0:10:55.640 --> 0:10:58.640 Now, we got home depots earnings better than foregasts, even 0:10:58.679 --> 0:11:02.559 though sales actually down again. That boost and sales though 0:11:02.600 --> 0:11:06.439 mostly for the wrong reason on storms and and you know, 0:11:06.760 --> 0:11:10.160 and extended warmer weather what does that tell us about 0:11:10.160 --> 0:11:12.920 the market, the housing market, And you know, I look ahead, 0:11:12.920 --> 0:11:14.760 if you can to Low's earnings, is it going to 0:11:14.800 --> 0:11:16.640 tell us the same thing this week? 0:11:16.880 --> 0:11:19.560 Yeah, So starting with Lows, we're looking for a low 0:11:19.600 --> 0:11:21.959 single digit decline in same store sales, which would be 0:11:22.000 --> 0:11:26.560 the eighth straight quarter of declining seam store sales. You know, 0:11:26.559 --> 0:11:28.440 there could be some upside to the numbers based on 0:11:28.480 --> 0:11:30.720 what we did hear from Home Depot. As you mentioned, 0:11:30.760 --> 0:11:33.760 we've had warm, dry weather across you know, most of 0:11:33.760 --> 0:11:35.800 the country for the last several months, and that's provide 0:11:35.840 --> 0:11:38.480 a better than expected lift to some of the seasonal 0:11:38.480 --> 0:11:41.280 and outdoor categories, you know, and you also pointed to 0:11:41.280 --> 0:11:44.120 the hurricane activity. Home Depot called out a two hundred 0:11:44.120 --> 0:11:47.880 million dollar benefit related to the storms, you know, as 0:11:47.880 --> 0:11:50.640 they sold more items such as you know, Lombard generators, 0:11:50.960 --> 0:11:54.280 and that contributed about fifty basis points seam store sales. Now, 0:11:54.400 --> 0:11:57.040 we think Lows could see an even barre lift from 0:11:57.080 --> 0:12:00.120 the storms just given their exposure to some of the 0:12:00.160 --> 0:12:03.400 impacted markets. They've got about twenty five percent of their 0:12:03.440 --> 0:12:06.200 store base in those Southern states compared to about eighteen 0:12:06.800 --> 0:12:09.240 percent for Home Depot. But you know, stepping back when 0:12:09.240 --> 0:12:12.200 we think about the core business. While it does appear 0:12:12.200 --> 0:12:14.800 to be maybe bouncing along the bottom and stabilizing a 0:12:14.800 --> 0:12:17.560 little bit, and you know, comps will certainly be easier 0:12:17.559 --> 0:12:19.960 in coming quarters, there's still some headwinds out there. You have, 0:12:20.400 --> 0:12:23.440 you know, consumers who continue to grapple with the cumulative 0:12:23.520 --> 0:12:26.720 impact of inflation. Over the last couple of years, both 0:12:26.760 --> 0:12:30.359 companies have called out more cautious consumers due to economic uncertainty. 0:12:30.720 --> 0:12:33.600 And as we've discussed, housing activity is extremely depressed. You've 0:12:33.640 --> 0:12:36.640 got you know, volumes at the lowest level and over 0:12:36.679 --> 0:12:39.480 a decade, there's still some difficulties out there for the industry. 0:12:40.120 --> 0:12:43.640 Lows Q three earnings out on Tuesday, October. Existing home 0:12:43.679 --> 0:12:46.960 sales out on Thursday. Our thanks to Drew Redding, Bloomberg 0:12:47.000 --> 0:12:50.439 Intelligence US home building analysts, and coming up on Bloomberg 0:12:50.520 --> 0:12:52.400 day Break weekend, we'll look ahead to the Group of 0:12:52.480 --> 0:12:56.400 Twenty Leaders summit in Rio de Janeiro. I'm Tom Busby, 0:12:56.480 --> 0:13:10.760 and this is Bloomberg. This is Bloomberg Daybreak weekend, our 0:13:10.760 --> 0:13:13.000 global look ahead at the top stories for investors in 0:13:13.040 --> 0:13:16.000 the coming week. I'm Tom Busby in New York. Up 0:13:16.080 --> 0:13:18.640 later in our program will look ahead to the pboc's 0:13:18.720 --> 0:13:22.320 upcoming great Decision. But first G twenty leaders gather in 0:13:22.440 --> 0:13:25.400 Rio de Janio, Brazil, this Monday and Tuesday for what'll 0:13:25.440 --> 0:13:29.319 surely be US President Joe biden swansong as focus shifts 0:13:29.400 --> 0:13:32.839 to President elect Trump's return now, despite the threat of 0:13:32.880 --> 0:13:35.400 Trump tariffs dealing with a more volatile White House. 0:13:35.440 --> 0:13:36.319 For Europe, the. 0:13:36.400 --> 0:13:39.560 Issue of top concern is Ukraine. For more, Let's go 0:13:39.600 --> 0:13:42.600 to London and bring in Bloomberg Daybreak Europe anchor Caroline 0:13:42.640 --> 0:13:44.199 Hepgar Tom. 0:13:44.000 --> 0:13:47.960 The geopolitical landscape has already shifted radically as the world 0:13:48.000 --> 0:13:51.160 awaits a Trump white House and Republican control of the 0:13:51.240 --> 0:13:55.520 US government. The Biden administration is rushing aid to Ukraine 0:13:55.520 --> 0:13:58.600 in its final weeks in power, with US Sector of 0:13:58.640 --> 0:14:02.079 State Ashley blinkn say that every dollar we have at 0:14:02.080 --> 0:14:05.640 our disposal is being pushed to Ukraine, but others are 0:14:05.679 --> 0:14:09.720 getting cold feet, like South Korea having second thoughts about 0:14:09.760 --> 0:14:13.720 the possibility of sending weapons directly to Ukraine. Now, the 0:14:13.880 --> 0:14:17.640 President elect pledged on the campaign trail to end the 0:14:17.640 --> 0:14:21.560 war within twenty four hours by getting Russia and Ukraine 0:14:21.600 --> 0:14:24.400 to negotiate in a moment, I'm going to get the 0:14:24.520 --> 0:14:28.120 view on what to expect from the group of twenty 0:14:28.280 --> 0:14:32.760 leaders who are meeting in Brazil with Bloomberg Sylvia Westall. 0:14:33.160 --> 0:14:36.400 But first I wanted to bring you two perspectives on 0:14:36.480 --> 0:14:42.000 these security challenges now facing Europe. The former NATO Secretary 0:14:42.040 --> 0:14:46.280 General Jen Stoltenberg has been discussing this with Bloomberg's farcin 0:14:46.320 --> 0:14:49.480 in Laqua. She asked him about Donald Trump's claim that 0:14:49.560 --> 0:14:52.000 he could end the war in Ukraine in a day. 0:14:52.320 --> 0:14:54.840 The quickest way to end the war is to do 0:14:55.040 --> 0:14:57.520 so war, but that will not bring peace, That will 0:14:57.520 --> 0:15:00.480 bring occupation of Ukraine, and it will make the whole 0:15:00.480 --> 0:15:03.600 world more dangerous because a message tend to pressent Purteen 0:15:03.640 --> 0:15:06.360 but also the other authoritarian leaders is that when they 0:15:06.440 --> 0:15:08.760 use force, when they invade in all the country, they 0:15:08.800 --> 0:15:11.200 get what they want. So it's in our security interest 0:15:11.320 --> 0:15:14.960 to ensure that the Ukraine prevails. So the challenge is 0:15:14.960 --> 0:15:17.760 to end the war in a way that doesn't need 0:15:17.800 --> 0:15:20.680 you occupation, but to end the war in a way 0:15:20.920 --> 0:15:25.000 where Ukraine prevails as a suffiate, independent nation. At some 0:15:25.120 --> 0:15:28.000 stage there has to be some kind of political negotiated solution. 0:15:28.240 --> 0:15:31.720 But you know, what happens around the negotiating table is 0:15:31.800 --> 0:15:34.200 so close a link to the strength on the battlefield. 0:15:34.240 --> 0:15:37.800 So if you want a negotiated solution to the war 0:15:37.920 --> 0:15:41.680 where you Ukraine prevails as a democratic state in Europe, 0:15:42.080 --> 0:15:44.400 then we need to provide military support to Ukraine. 0:15:44.960 --> 0:15:47.160 So what does that look like, that solution And is 0:15:47.200 --> 0:15:50.240 there a danger that the US actually you know, manages 0:15:50.280 --> 0:15:52.640 to cobble something together, some kind of agreement without the 0:15:52.680 --> 0:15:55.440 guarantee from the US side of Ukraine's sovereignty. 0:15:55.600 --> 0:15:59.880 Well, it's for Ukrainians to decide what will be would 0:15:59.880 --> 0:16:04.480 be acceptable solution, but there has to be at least 0:16:04.480 --> 0:16:08.240 two elements. One is a line agreed. But second, when 0:16:08.400 --> 0:16:11.440 such a line is agreed, then we need to ensure 0:16:11.440 --> 0:16:14.200 that actually it stops there because we have agreed or 0:16:14.240 --> 0:16:17.800 the Ukrainians have agreed lines with Russia before when they 0:16:17.840 --> 0:16:20.400 annexed Cramea. I'm back in twenty fourteen, we had something 0:16:20.440 --> 0:16:23.360 called minskwom there was a line. Then Russia violated that 0:16:23.440 --> 0:16:27.120 and we've got Minsk to a line further west, and 0:16:27.160 --> 0:16:31.480 then the Russian waited for seven years and invade on 0:16:31.480 --> 0:16:34.440 the full scale Ukraine. So we cannot have what theyre 0:16:34.480 --> 0:16:37.480 called Minsk Tree, yet another line which is not respected. 0:16:37.760 --> 0:16:41.360 So when a line is agreed, we need some kind 0:16:41.400 --> 0:16:48.440 of guarantee that Russia doesn't continue after reorganizing their troops 0:16:47.400 --> 0:16:51.520 and THEREFO. We need either to arm the Ukrainian so 0:16:51.560 --> 0:16:55.560 they can deter your future reggression themselves, and or some 0:16:55.680 --> 0:16:58.760 kind of security guarantees. And NATO membership is of course 0:16:58.800 --> 0:17:01.000 the ultimate security garante for Ukraine. 0:17:01.240 --> 0:17:04.119 That was the former NATO boss ya In Stoltenberg speaking 0:17:04.160 --> 0:17:07.720 to Bloomberg's farc In Laqua. Let's get another view now 0:17:07.800 --> 0:17:13.439 from Finland, which joined NATO after Russia invaded Ukraine. The 0:17:13.520 --> 0:17:17.320 Finnish President Alexander Stubb has been speaking into Bloomberg's Jumana 0:17:17.359 --> 0:17:21.800 Bisecchi after his call with the US president elect. She 0:17:21.880 --> 0:17:26.240 asked him about his expectations for the second Trump presidency. 0:17:26.840 --> 0:17:31.480 Of course, focused very much on US foreign policy under Trump, 0:17:31.600 --> 0:17:33.920 and I think his agenda is quite clear. 0:17:34.320 --> 0:17:36.200 He talks about ending the war. 0:17:36.080 --> 0:17:39.440 In Ukraine, so we discussed that, it talks about ending 0:17:39.520 --> 0:17:42.959 the war in the Middle East. He talks about the 0:17:43.080 --> 0:17:44.919 US as a competitor to China. 0:17:45.280 --> 0:17:46.159 We talked about that. 0:17:46.320 --> 0:17:49.960 He talked about Europe taking more responsibility for its own 0:17:50.000 --> 0:17:53.640 defense and security. We talked about that, so I think 0:17:53.680 --> 0:17:56.200 it's pretty clear speak when you talk about American foreign 0:17:56.200 --> 0:17:58.560 posit Then of course there will be challenges. You know, 0:17:58.840 --> 0:18:03.320 tariffs can be a challenge, climate issues can be a challenge. 0:18:03.480 --> 0:18:05.680 But the truth is that throughout history of the United 0:18:05.760 --> 0:18:08.199 States and Europe have usually seen eye to eye, and 0:18:08.200 --> 0:18:10.040 I'm sure we'll be doing that again in the next 0:18:10.040 --> 0:18:10.400 four years. 0:18:10.480 --> 0:18:12.840 Do you expect perhaps this next turn to be less 0:18:12.920 --> 0:18:14.680 combative towards Europe. 0:18:14.960 --> 0:18:18.359 I think the United States needs Europe, but Europe needs 0:18:18.359 --> 0:18:22.200 to understand that the United States has changed. That means 0:18:22.200 --> 0:18:25.000 that we need to take more responsibility for what we do, 0:18:25.200 --> 0:18:28.960 for instance, in terms of security. And when that happens, 0:18:29.000 --> 0:18:32.399 I think the United States, whose number one competitor is China, 0:18:32.600 --> 0:18:36.200 will look at Europe and say, okay, about twenty twenty 0:18:36.200 --> 0:18:39.040 five percent of our allies are right there in Europe. 0:18:39.160 --> 0:18:40.600 Let's play ball with those guys. 0:18:40.720 --> 0:18:42.280 Can I just pick up on Ukraine. I know you 0:18:42.320 --> 0:18:44.879 spoke about it with President Trump, and he seems to 0:18:44.920 --> 0:18:48.160 think that he can secure peace deal between Russia and Ukraine. 0:18:48.160 --> 0:18:50.560 If that does happen, what is the likelihood that it's 0:18:50.600 --> 0:18:53.840 done in a way that's just unfair for Ukraine. 0:18:53.960 --> 0:18:58.240 Well, in my mind, Ukraine needs four things. One is territory, 0:18:58.520 --> 0:19:01.280 and here we don't know where things are going to settle. 0:19:02.119 --> 0:19:06.119 The second one is security guarantees, so probably territory and 0:19:06.160 --> 0:19:09.880 security guarantees in these negotiations will go hand in hand, 0:19:09.920 --> 0:19:12.399 and of course in my mind eventually EU membership and 0:19:12.520 --> 0:19:16.080 NATO membership. The third one is justice, so Russian war 0:19:16.119 --> 0:19:19.040 criminals indicted. And then the low hanging fruit is actually 0:19:19.200 --> 0:19:21.520 number four, which is reconstruction. 0:19:22.160 --> 0:19:25.240 It's difficult to say at this stage, but I. 0:19:25.200 --> 0:19:27.359 Think we in Europe and the rest of the world 0:19:27.400 --> 0:19:30.760 needs to understand that Donald Trump is very serious about 0:19:30.800 --> 0:19:34.080 getting a piece deal sooner rather than later. I have 0:19:34.200 --> 0:19:37.600 myself said that there's a window of opportunity for these 0:19:37.640 --> 0:19:42.600 negotiations between the election and the inauguration day. Let's see 0:19:42.600 --> 0:19:43.120 what happens. 0:19:43.600 --> 0:19:47.720 That was Finland's President Alexander Stubb speaking to Bloomberg's Jimana 0:19:47.760 --> 0:19:51.960 Bisecchi at the COP twenty nine Climate conference in Baku 0:19:52.160 --> 0:19:56.080 in Azerbaijan. More than two and a half years into 0:19:56.119 --> 0:20:00.360 the war, Ukraine has steadily lost territory to Russia. There 0:20:00.400 --> 0:20:04.280 are preliminary plans for a meeting between the Ukrainian President 0:20:04.520 --> 0:20:09.439 Vlodomi Zelenski and President elect Trump, according to Kiev's top diplomat, 0:20:09.800 --> 0:20:14.440 but no timing. Bloomberg's managing editor for Russia, the Middle East, 0:20:14.440 --> 0:20:18.640 and Africa Economy and Government, Sylvia Westall, has been taking 0:20:18.680 --> 0:20:21.560 me through what to expect from the Group of twenty 0:20:21.680 --> 0:20:26.640 gathering in Latin America and how much Ukraine will feature. 0:20:27.160 --> 0:20:30.520 It's an interesting G twenty, and it's obviously a big 0:20:30.640 --> 0:20:33.359 showcase for Lula. It's always sort of, you know, the 0:20:33.440 --> 0:20:35.840 leaders try and shape kind of what they want this 0:20:35.920 --> 0:20:38.440 to be about. I mean, Brazil's made it quite clear 0:20:38.440 --> 0:20:40.760 that they want this summit not to really focus on 0:20:40.920 --> 0:20:45.480 things like wars, Russia's invasion of Ukraine, the current conflicts 0:20:45.480 --> 0:20:46.760 in the Middle East, and they want to look at 0:20:46.800 --> 0:20:50.639 things like trade and climate and finance. But of course, 0:20:50.680 --> 0:20:52.960 because of world events, other things are going to dominate, 0:20:53.040 --> 0:20:54.800 and one of those things, as you mentioned before, is 0:20:54.840 --> 0:20:57.840 Donald Trump. Of course, so you've got Biden and She 0:20:58.359 --> 0:21:01.800 planning to meet, but really the focus is on Trump 0:21:01.840 --> 0:21:04.600 and what happens next. So in that sense, it's a 0:21:04.680 --> 0:21:08.000 kind of chickyd twenty for Brazil to handle because all 0:21:08.040 --> 0:21:10.280 the kind of topics it wants to focus on are 0:21:10.320 --> 0:21:13.679 kind of being overtaken by events, both you know, in 0:21:13.720 --> 0:21:15.800 the US and elsewhere in the world. 0:21:16.240 --> 0:21:19.120 Ukraine's European allies have been concerned that Trump will pull 0:21:19.160 --> 0:21:21.959 the plug on the embattled country and push the burden 0:21:22.000 --> 0:21:25.680 to Europe. Do we expect a major policy shift? 0:21:26.280 --> 0:21:29.080 Well, Ukraine at the moment, according to you know, some 0:21:29.160 --> 0:21:31.280 of the officials we've talked to in preparations for the 0:21:31.320 --> 0:21:33.840 G twenty, isn't really figuring very hard on the agenda 0:21:33.880 --> 0:21:37.560 again because Brazil doesn't really want it to and we 0:21:37.640 --> 0:21:40.560 know that. You know, there have been discussions each D 0:21:40.680 --> 0:21:44.080 twenty whether presidents Zelenski will actually turn up or do 0:21:44.240 --> 0:21:46.960 a virtual address. It doesn't look like that's going to 0:21:47.000 --> 0:21:50.040 happen this one. You know, in the last G twenty, 0:21:50.160 --> 0:21:53.840 Ukraine was a very prickly topic, and so you know, 0:21:54.240 --> 0:21:56.800 Ukraine is very worried looking at the G twenty and 0:21:56.840 --> 0:22:00.280 further on into the Trump era that Trump, you know, 0:22:00.280 --> 0:22:02.199 will apply pressure on it to give up land in 0:22:02.240 --> 0:22:04.400 peace talks with Russia and cut back on this financial 0:22:04.400 --> 0:22:06.760 and military support. I think that risk is there, and 0:22:06.840 --> 0:22:08.720 you know, that's happening as you know, Russia's making this 0:22:08.800 --> 0:22:11.200 sort of important headway on the ground in Ukraine. So 0:22:11.280 --> 0:22:14.240 Russia feels it's in a stronger position right now. And 0:22:14.520 --> 0:22:16.960 you know, the big question is whether you know Ukraine, 0:22:17.600 --> 0:22:19.880 you know will well, whether the US will eventually allow 0:22:19.960 --> 0:22:23.280 Ukraine to strike deeper into Russian territory with Western arms. 0:22:23.920 --> 0:22:25.760 But I do think actually on the Russian side as well, 0:22:25.760 --> 0:22:28.320 there is concern about what that Trump era might bring. 0:22:28.359 --> 0:22:30.119 So I think the G twenty probably isn't going to 0:22:30.280 --> 0:22:34.040 offer and many clues as to where Ukraine's where that 0:22:34.200 --> 0:22:36.320 is going, but it's definitely going to highlight some of 0:22:36.320 --> 0:22:38.040 the concerns that countries involve have. 0:22:38.400 --> 0:22:41.879 In terms of Trump's stance. What about the Middle East 0:22:42.320 --> 0:22:44.560 as well, obviously hoping that Trump's returned to the White 0:22:44.560 --> 0:22:48.040 House will help in terms of cooperation for them in 0:22:48.080 --> 0:22:52.479 the Middle East on diplomacy and other issues. Again, how 0:22:52.560 --> 0:22:55.359 much will that features, you say, the hosts of the 0:22:55.359 --> 0:22:59.680 G twenty gathering sort of don't really want conflicts to dominate. 0:23:00.080 --> 0:23:01.840 How much will we hear about the Middle East? 0:23:02.640 --> 0:23:04.359 Mm hmm, Well, I think it was going to have 0:23:04.400 --> 0:23:06.000 to come up because it is you know, this you know, 0:23:06.520 --> 0:23:09.920 still going on, and this the conflict's spread now into 0:23:10.000 --> 0:23:16.480 Lebelon with the violence between Hezbolla and Israel. I think, 0:23:16.600 --> 0:23:19.159 you know, as as we look forward to to the 0:23:19.200 --> 0:23:24.320 Trump administration. Trump applied this maximum pressure policy towards Iran 0:23:24.440 --> 0:23:25.800 and when he was last in the White House, and 0:23:25.840 --> 0:23:28.399 that definitely stoked tensions in the region. And so the 0:23:28.440 --> 0:23:30.360 expectation is that that's coming up. So I think there's 0:23:30.359 --> 0:23:33.800 gonna be a lot of you know, looking forward, you know, 0:23:33.880 --> 0:23:36.760 towards questions about whether there can be any kind of 0:23:37.160 --> 0:23:40.920 cease fire between Israel and Hezbolla, what can be happening next, 0:23:41.000 --> 0:23:44.120 and this quite big question mark over where that policy 0:23:44.119 --> 0:23:47.000 will head in the US and whether you know, these 0:23:47.040 --> 0:23:49.560 appointments of these sort of very sort of pro Israel 0:23:49.920 --> 0:23:53.919 members to Trump's administration will mean that that kind of 0:23:53.920 --> 0:23:59.280 aggravates tensions in the Middle East and alienates Arab countries 0:23:59.320 --> 0:23:59.680 as well. 0:24:00.760 --> 0:24:03.879 Russia's Varn Minister Sergei Lavrov will be attending the summit 0:24:03.920 --> 0:24:07.840 in Brazil on Monday and Tuesday, representing Russia, not Putin himself. 0:24:08.520 --> 0:24:10.760 Why and what will be Russia's role here? 0:24:11.920 --> 0:24:14.520 Sure, so it's very difficult for Putin to turn up 0:24:14.560 --> 0:24:16.600 pop up in places around the world because of this 0:24:16.960 --> 0:24:21.080 International Criminal Court arrest warrant for war crimes due to 0:24:21.080 --> 0:24:26.680 the invasion of Ukraine. He also has skipped several meetings 0:24:27.040 --> 0:24:30.240 you know, elsewhere in the world that included in South Africa. 0:24:30.359 --> 0:24:33.119 South Africa politely asked Putin not to turn up because 0:24:33.160 --> 0:24:36.720 these countries like Brazil as well, would be obligated to 0:24:36.960 --> 0:24:41.159 arrest him under those rules of the ICC. So you know, 0:24:41.280 --> 0:24:43.919 that's Lavov is usually the person who takes his place. 0:24:44.400 --> 0:24:47.879 You know, Russia has been using these international events like 0:24:47.920 --> 0:24:50.719 the Bricks that it hosted earlier this year in Russia 0:24:51.000 --> 0:24:55.960 and elsewhere to show that Russia is not isolated from 0:24:55.960 --> 0:24:58.520 the world, though of course, if Putin can't turn up 0:24:58.560 --> 0:25:01.280 to these events, it does showcases isolation. So I think 0:25:01.359 --> 0:25:04.080 Russia will be using that as a platform to justify 0:25:04.119 --> 0:25:08.560 its invasion of Ukraine, explain its perspective on what it 0:25:08.560 --> 0:25:11.359 thinks will happen next. And it's definitely Russia's definitely in 0:25:11.400 --> 0:25:13.760 a position of a bit more strength right now because 0:25:13.760 --> 0:25:16.439 of what's happening on the battlefield and the expectation that 0:25:16.520 --> 0:25:19.880 despite the big uncertainties about what Trump will bring that 0:25:19.960 --> 0:25:23.680 his stance on Ukraine will perhaps be beneficial to Russia. 0:25:23.760 --> 0:25:27.240 That was Sylvia west Or, Bloomberg's managing editor for Russia, 0:25:27.280 --> 0:25:31.119 the Middle East and Africa, Economy and government. European Union 0:25:31.240 --> 0:25:34.320 leaders are trying to work out whether they can keep 0:25:34.359 --> 0:25:37.920 the Ukrainian war effort going if Trump decides to shut 0:25:37.920 --> 0:25:42.080 off support from the US. Certainly much in the world 0:25:42.200 --> 0:25:47.600 is being reconsidered after the presidential election, and potentially with 0:25:47.720 --> 0:25:52.120 big consequences for Europe. I'm Caroline Hepge here in London. 0:25:52.400 --> 0:25:55.000 You can catch us every weekday morning for Blueberg Daybreak. 0:25:55.000 --> 0:25:57.640 You're at beginning at six am in London. That's one 0:25:57.680 --> 0:25:59.760 am on Wall Street. Tom. 0:26:00.080 --> 0:26:02.320 Thank you, Caroline, and coming up on Bloomberg day Break 0:26:02.320 --> 0:26:04.520 weekend to look ahead to a rate decision this week 0:26:04.680 --> 0:26:08.639 from the PBOC. I'm Tom Busby and this is Bloomberg. 0:26:20.040 --> 0:26:22.280 This is Bloomberg day Break Weekend, our global look at 0:26:22.280 --> 0:26:24.520 the top stories in the coming week from our Daybreak 0:26:24.520 --> 0:26:27.240 anchors all around the world. This week of big decision 0:26:27.280 --> 0:26:29.879 on rates from the People's Bank of China. For more, 0:26:30.160 --> 0:26:33.320 let's go to Daybreak Asia podcast host Doug Krisner. 0:26:33.720 --> 0:26:33.960 Tom. 0:26:34.040 --> 0:26:37.880 Since late September, the Chinese government has launched coordinated support 0:26:38.000 --> 0:26:42.560 focused on lifting economic growth and fighting deflation, and recently 0:26:43.040 --> 0:26:45.959 taxes for both home buyers and property developers have been 0:26:46.040 --> 0:26:48.480 cut as the government tries to put a floor under 0:26:48.520 --> 0:26:51.480 falling prices. Now in the week ahead, the Chinese Central 0:26:51.520 --> 0:26:54.640 Bank will set its rate policy. For a preview, I'm 0:26:54.720 --> 0:26:58.159 joined by Eric Ju, who covers China for Bloomberg Economics. 0:26:58.480 --> 0:27:01.480 Eric joins us from our studios in Hong Kong. Eric, 0:27:01.520 --> 0:27:04.560 thanks for your time. We recently got the inflation data 0:27:04.600 --> 0:27:06.800 for China, and I'm going to ask you to start there. 0:27:07.040 --> 0:27:10.800 Consumer prices, for example, showing their first pickup in the 0:27:10.880 --> 0:27:13.199 core rate since April, and I was reading some of 0:27:13.240 --> 0:27:17.080 your analysis. You called it an encouraging sign in an 0:27:17.119 --> 0:27:20.880 otherwise weak report. Perhaps a little more troubling the fact 0:27:20.920 --> 0:27:24.920 that factory gay deflation deepened. Is this something the PBOC 0:27:25.560 --> 0:27:27.399 must consider at its next meeting. 0:27:28.080 --> 0:27:31.560 I think PBOC has signaled recently that, you know, the 0:27:31.720 --> 0:27:36.800 price has become more important for their partitition. I think 0:27:37.080 --> 0:27:40.280 one of their targets is, of course, except for you know, 0:27:40.560 --> 0:27:44.320 supporting the recovery, they really want to you know, get inflation. 0:27:44.600 --> 0:27:44.879 Get it. 0:27:45.000 --> 0:27:47.679 Call me out of the risk of deflation. So I 0:27:47.720 --> 0:27:50.800 think they would try you know, their best, you know, 0:27:50.880 --> 0:27:54.080 to try to boost the prices up. But I think 0:27:54.480 --> 0:27:58.280 PBOC alone is unable to fulfill that goal. We do 0:27:58.480 --> 0:28:02.520 need you know, other department like especially physical policy also 0:28:02.640 --> 0:28:06.320 to work their way. So it's it's not only the 0:28:06.320 --> 0:28:07.440 pibis's own job. 0:28:07.800 --> 0:28:11.840 What about the stimulus measures that Beijing has already rolled out, 0:28:12.040 --> 0:28:13.439 how would you evaluate them? 0:28:13.720 --> 0:28:16.520 First of all, it's a big shift. It's not only 0:28:16.560 --> 0:28:20.760 from our economics view, we also you know, chat with investors, 0:28:20.760 --> 0:28:23.720 with clients and all the people. Most of people think 0:28:24.400 --> 0:28:27.520 since late September there is a big party shift, which 0:28:27.600 --> 0:28:30.840 signals that the government is not now willing, you know, 0:28:31.040 --> 0:28:34.960 really willing to fix the economic issues. They have rolled 0:28:35.000 --> 0:28:38.120 out you know, a couple of different measures, and I 0:28:38.120 --> 0:28:41.400 think one encouraging science. They also started to you know, 0:28:41.560 --> 0:28:44.920 address some structural issues, not only you know, short term 0:28:45.200 --> 0:28:48.400 cyclical things like you know, local government death swap. They're 0:28:48.400 --> 0:28:52.640 also trying to also fix some oversupply in the housing market. 0:28:52.720 --> 0:28:56.320 So they start to address those problems. But I think 0:28:56.880 --> 0:29:01.120 one remaining concern is still soon they can you know, 0:29:01.400 --> 0:29:04.360 really deliver those policies. They have made a lot of announcement. 0:29:04.440 --> 0:29:06.400 They have committed to do this, commit to do that. 0:29:06.960 --> 0:29:09.920 But I think on the ground the people were still 0:29:10.000 --> 0:29:13.160 you know, looking for you know, it's special for local governments. 0:29:13.240 --> 0:29:16.440 How are they going to really deliver those policies. I 0:29:16.480 --> 0:29:20.600 think the October data has shown some initial rebound, but 0:29:20.640 --> 0:29:23.040 I think that's more related to some sentiment. 0:29:23.560 --> 0:29:25.760 This is coming at a very interesting time because we 0:29:25.840 --> 0:29:28.120 have a new administration in the US. It will be 0:29:28.520 --> 0:29:32.600 taking office in January when Donald Trump is sworn in 0:29:32.680 --> 0:29:34.480 for the second time. One of the things that he 0:29:34.520 --> 0:29:39.320 has discussed mightily is tariffs on imported goods from China. 0:29:39.600 --> 0:29:41.600 Now we know that the export sector has been a 0:29:41.600 --> 0:29:45.120 bright spot for the Chinese economy. To what extent is 0:29:45.120 --> 0:29:48.200 there risk here right now with some more tariffs. 0:29:49.320 --> 0:29:51.360 I think it's a real risk, and it can be 0:29:51.400 --> 0:29:55.000 a very big risk because of course we don't know 0:29:55.160 --> 0:29:58.320 how the details yet, the timetable, so how Trump is 0:29:58.320 --> 0:30:02.800 going to start his terriiff, But definitely we think we'll 0:30:02.800 --> 0:30:07.000 look we're expecting probably another the second you know, the 0:30:07.040 --> 0:30:11.320 trade war in his second term. But what's the only 0:30:11.360 --> 0:30:14.160 thing uncertain is whether we're going to get you know, 0:30:14.200 --> 0:30:18.000 sixty percent teriff like Trump had said during his campaign. 0:30:18.400 --> 0:30:21.160 So if that's sixty percent, I think that will be 0:30:21.200 --> 0:30:24.600 a very big risk because we have some model that 0:30:24.880 --> 0:30:29.080 predicting a sixty percent tariff can essentially, you know, reduce 0:30:29.200 --> 0:30:33.160 China US trade basically, you know, near to zero. So 0:30:33.240 --> 0:30:36.080 that's a very big shot to economy. But in the end, 0:30:36.160 --> 0:30:39.360 we think probably we won't get that as high as that. 0:30:39.720 --> 0:30:42.720 You know, there still will be negotiation, there will still 0:30:42.760 --> 0:30:47.080 be bargaining. So the final result is still highly uncertain 0:30:47.120 --> 0:30:50.479 at this point. But we think China will be you know, 0:30:50.560 --> 0:30:53.840 preparing for the worst scenario, and they're also you know, 0:30:54.080 --> 0:30:57.400 we're planning for what kind of retaliation China will do, 0:30:57.840 --> 0:31:00.560 what kind of solutions they can do to you know, 0:31:00.640 --> 0:31:05.560 try to mitigate, to reduce the tariffing pat as much 0:31:05.640 --> 0:31:06.200 as you can. 0:31:06.320 --> 0:31:09.000 Yeah, there's been a lot of questioning as to whether 0:31:09.040 --> 0:31:12.520 or not this is really the beginning of the negotiating strategy. 0:31:12.560 --> 0:31:16.200 Do you think there is room between Washington and Beijing 0:31:16.360 --> 0:31:21.080 to negotiate a trade policy that benefits both parties equally? 0:31:21.560 --> 0:31:22.080 I think so. 0:31:22.680 --> 0:31:25.440 I think so. I think there's still room for negotiation 0:31:25.600 --> 0:31:28.600 at least, you know, China probably compared to the first 0:31:28.640 --> 0:31:32.800 time Trump poarding office, China would have no more tools, 0:31:32.880 --> 0:31:36.480 you know, to retaliate, including more exports control, you know, 0:31:36.560 --> 0:31:40.240 and those rare materials. China has most of the outputs. 0:31:40.560 --> 0:31:45.000 So I think also considering that Trump has to consider 0:31:45.040 --> 0:31:48.480 what's a tariff impact on the domestic economy as well, Right, 0:31:48.520 --> 0:31:51.400 if you impose such a high tariff, that would definitely 0:31:51.440 --> 0:31:56.400 also influence your domestic consumers. So I think at the 0:31:56.560 --> 0:32:00.240 end Trump's side will also do some calculation, right, kinds 0:32:00.280 --> 0:32:03.160 of goods wanting post that will have the minimum impact 0:32:03.320 --> 0:32:06.360 on my own colomy. And at the same time, China 0:32:06.400 --> 0:32:09.400 would also, you know, try to negotiate you to try 0:32:09.400 --> 0:32:13.360 to have something on a table. Tellian Trump, so what 0:32:13.400 --> 0:32:15.480 we're going to retaliate if you do this, if you 0:32:15.560 --> 0:32:19.480 do that, and let's see what negotiation can go on. 0:32:19.800 --> 0:32:21.680 Eric, thanks so much for being with us. S Bloomberg's 0:32:21.760 --> 0:32:25.080 Eric jew who covers China for Bloomberg Economics. We move 0:32:25.160 --> 0:32:28.640 next to geopolitics and the upcoming G twenty summit in 0:32:28.760 --> 0:32:33.320 Riodesian Narro, Brazil. The list of attendees reflects major changes 0:32:33.320 --> 0:32:37.600 in leadership among several member nations. Mexico's new president Claudia 0:32:37.680 --> 0:32:40.840 Schinbaum will be there, as will Britain's new Prime Minister 0:32:40.960 --> 0:32:44.840 Keir Starmer. A weekend German Chancellor all Off Schultz will attend, 0:32:44.840 --> 0:32:48.320 along with the Lane Duck, US President Joe Biden and 0:32:48.400 --> 0:32:51.840 the shadow of his successor, President elect Donald Trump. I 0:32:51.880 --> 0:32:54.480 think it's fair to say will loom large for a 0:32:54.520 --> 0:32:57.040 closer look at what we might expect. We're joined by 0:32:57.520 --> 0:32:58.440 Daniel ten Kid. 0:32:58.520 --> 0:32:59.640 He is Asia. 0:32:59.320 --> 0:33:02.720 Ecogov, executive editor for Bloomberg News. Dan joins us from 0:33:02.720 --> 0:33:05.640 our studios in Hong Kong. The G twenty I think 0:33:05.680 --> 0:33:09.720 represents some eighty five percent of global GDP seventy five 0:33:09.800 --> 0:33:13.760 percent of world trade. It doesn't appear there is going 0:33:13.800 --> 0:33:16.000 to be a group that could challenge the G twenty, 0:33:16.040 --> 0:33:19.080 And I'm thinking of the recent summit of the Bricks 0:33:19.120 --> 0:33:23.480 Plus Nations hosted by Vladimir Putin in Kazan, Russia. Is 0:33:24.240 --> 0:33:26.720 it safe to say that there's not going to be 0:33:26.760 --> 0:33:28.720 a rival for the G twenty for some time? 0:33:29.200 --> 0:33:32.640 Well, the G twenty really brings these various groups together. 0:33:32.760 --> 0:33:34.800 So you have the G seven on the one hand, 0:33:34.800 --> 0:33:37.840 which is the US and its allies basically, and then 0:33:37.880 --> 0:33:41.760 you have the Bricks Plus Agreement which is grouping, which 0:33:41.800 --> 0:33:46.720 is expanding persistently, but China is really in Russia are 0:33:46.720 --> 0:33:50.080 both trying to use that group to advance their own 0:33:50.120 --> 0:33:53.040 interest and use it as a counterweight to the G 0:33:53.160 --> 0:33:56.720 seven and the US led world order. Now, the G 0:33:56.840 --> 0:34:00.280 twenty kind of brings these groups together in a lot 0:34:00.280 --> 0:34:02.880 of ways and is the only forum really that has 0:34:02.920 --> 0:34:05.920 all of them in one place, so they can really 0:34:06.440 --> 0:34:09.200 haggle over kind of the tough issues facing the globe 0:34:09.320 --> 0:34:10.239 at any given time. 0:34:10.360 --> 0:34:13.960 I was reading a piece in Foreign Affairs magazine, and 0:34:14.520 --> 0:34:17.400 one line from this piece struck me. The essence of 0:34:17.440 --> 0:34:21.719 Trump's approach to foreign policy is naked transactionalism, and that 0:34:21.840 --> 0:34:24.360 remains unchanged. Is that a fair statement? 0:34:25.120 --> 0:34:25.359 Yeah? 0:34:25.400 --> 0:34:29.400 I mean we're already hearing about countries trying to say, Okay, 0:34:29.440 --> 0:34:31.640 what can we give Trump? What do we have to offer? 0:34:32.160 --> 0:34:36.080 And usually that involves what can we buy from the US? 0:34:36.480 --> 0:34:39.120 Can we buy more energy? Can we buy more corn 0:34:40.000 --> 0:34:43.920 agricultural goods? You know, you need to come in with 0:34:43.960 --> 0:34:47.279 some sort of offer with Trump. Now, there is kind 0:34:47.320 --> 0:34:51.120 of a question about whether Trump's view of tariffs has changed, 0:34:51.520 --> 0:34:54.480 and there's first term, he was talking a lot about 0:34:54.520 --> 0:34:56.759 the US trade deficit, and I think that is top 0:34:56.800 --> 0:35:00.440 of mind for Trump. But he's also talked about tariffs 0:35:00.480 --> 0:35:04.279 as a way to generate revenues in the US and 0:35:04.440 --> 0:35:05.680 to lower investment. 0:35:05.800 --> 0:35:07.400 So that's a big question. 0:35:07.600 --> 0:35:09.960 Is he going to come right out on day one 0:35:10.360 --> 0:35:13.520 with sixty percent tariffs on China and twenty percent tariffs 0:35:13.600 --> 0:35:14.520 on the rest of the world. 0:35:14.680 --> 0:35:16.960 One of the things that I think that G twenty 0:35:16.960 --> 0:35:19.280 will have to deal with is the issue of Ukraine. 0:35:19.880 --> 0:35:23.520 The Biden administration took the lead on imposing sanctions on 0:35:23.920 --> 0:35:28.960 Russia and many Russian officials after Ukraine was invaded. Now 0:35:29.000 --> 0:35:32.360 we have North Korean troops joining Russian forces near the 0:35:32.360 --> 0:35:36.280 border with Ukraine. Is this going to be an important 0:35:36.320 --> 0:35:39.040 pressure point that will try to get resolved at this 0:35:39.960 --> 0:35:42.360 summit or or do you think it's it's going to 0:35:42.400 --> 0:35:44.520 take some time for clarity to emerge. 0:35:44.920 --> 0:35:49.280 Well, certainly the war in Ukraine has dominated G twenty 0:35:49.320 --> 0:35:53.839 discussion since Vladimir Putin invaded in twenty twenty two, so 0:35:54.360 --> 0:35:57.960 no doubt that that will be a key talking point. 0:35:58.320 --> 0:36:02.480 The question really is how does Trump change the conversation there? 0:36:03.400 --> 0:36:06.160 Before it was kind of the G seven aligning up 0:36:06.200 --> 0:36:11.520 against Russia, primarily on how strong the language should be 0:36:11.560 --> 0:36:16.680 in condemning Russia for the invasion. Trump has promised to 0:36:16.760 --> 0:36:19.759 end the war. There's a lot of exhaustion among a 0:36:19.800 --> 0:36:22.799 lot of the countries, particularly in the Global South, to 0:36:23.000 --> 0:36:26.319 end the war, and so you might the big question 0:36:26.360 --> 0:36:30.960 would be whether you see some more conciliatory language, people 0:36:31.000 --> 0:36:34.960 talking about talks, negotiations, how do we put an end 0:36:35.000 --> 0:36:37.400 to the war. So that could be the big difference 0:36:37.440 --> 0:36:38.120 this time around. 0:36:38.400 --> 0:36:41.400 Typically, when we think of economic issues, it's the G 0:36:41.520 --> 0:36:45.360 twenty summit of finance ministers that kind of tackles those issues. 0:36:45.360 --> 0:36:47.960 But I was struck by a lot of commentary recently 0:36:48.600 --> 0:36:53.640 regarding Trump's reelection as this being another example of an 0:36:53.680 --> 0:37:00.279 anti incumbency push across a number of jurisdictions globally. When 0:37:00.320 --> 0:37:04.080 you consider that fact that may have been driven largely 0:37:04.120 --> 0:37:06.960 by dissatisfaction with the way a number of economies have 0:37:07.040 --> 0:37:11.640 been performing the stubbornness of inflation. Are economic issues beyond 0:37:11.680 --> 0:37:13.319 trade going to come up at this meeting? Do you 0:37:13.360 --> 0:37:17.000 think independent of the G twenty Finance minister's meeting. 0:37:17.040 --> 0:37:20.200 Yeah, certainly, I mean the Finance minister's meetings kind of 0:37:20.239 --> 0:37:23.240 set the table for the leaders meetings, both at APEX 0:37:23.320 --> 0:37:26.279 and at the G twenty. And if you look back 0:37:26.360 --> 0:37:29.320 at who's still around from the G seven to a 0:37:29.360 --> 0:37:33.480 few months ago, you know you'll have Biden representing the 0:37:33.600 --> 0:37:37.880 US at this meeting, both meetings, the APEC and G twenty, 0:37:38.520 --> 0:37:40.759 but he's not going to be around much longer. You 0:37:40.800 --> 0:37:43.279 have a new prime minister in Japan, you have a 0:37:43.280 --> 0:37:46.560 new prime minister in the UK. A lot of other 0:37:46.600 --> 0:37:50.360 countries have seen leadership changes. Trudeau is hanging by the 0:37:50.440 --> 0:37:53.440 ropes in Canada, so a lot of the incumbents have 0:37:53.480 --> 0:37:56.320 taken a beating this year in the year of elections, 0:37:56.920 --> 0:37:59.880 and inflation is a big reason for that. It's coming 0:38:00.120 --> 0:38:04.120 has come down of late, but voters are still struck 0:38:04.360 --> 0:38:06.880 over the past couple of years by higher prices. They 0:38:06.920 --> 0:38:08.880 see it every time they go to the grocery store, 0:38:09.520 --> 0:38:13.239 and so that's certainly going to hang over everything that 0:38:13.280 --> 0:38:14.600 they discuss this week. 0:38:14.920 --> 0:38:16.840 Dan, thanks so much for helping us set up the 0:38:16.880 --> 0:38:19.520 G twenty summit in the coming week. He's Dan ten 0:38:19.640 --> 0:38:23.520 Kate Bloomberg News Asia ECO Gov executive editor, joining us 0:38:23.520 --> 0:38:26.600 from our studios in Hong Kong. I'm Doug Prisner. Catch 0:38:26.680 --> 0:38:30.480 us weekdays for the Bloomberg Daybreak Asia podcast. It's available 0:38:30.520 --> 0:38:32.160 wherever you get your podcast. 0:38:32.440 --> 0:38:35.040 Tom, Thanks Doug, and that does it for this edition 0:38:35.080 --> 0:38:37.919 of Bloomberg day Break Weekend. Join us again Monday morning 0:38:37.960 --> 0:38:39.840 at five am Wall Street Time for the latest on 0:38:39.960 --> 0:38:42.719 markets overseas and the news you need to start your day. 0:38:43.200 --> 0:38:44.879 I'm Tom Busby. Stay with us. 0:38:45.080 --> 0:38:49.279 Top stories and global business headlines are coming up right now.