Daybreak Weekend: November Jobs, Electric Vehicles, China-EU Relations, Senate Banking Hearing

This is Bloomberg day Break Weekend, our global look at 0:00:05.160 --> 0:00:07.320 the top stories in the coming week from our Daybreak 0:00:07.360 --> 0:00:10.200 anchors all around the world. Straight ahead on the program, 0:00:10.240 --> 0:00:13.440 Wall Street races for a key jobs report. I'm Tom 0:00:13.480 --> 0:00:15.520 Busby in New York. I'll have that story. 0:00:15.720 --> 0:00:18.360 I'm Carolyn Hetki here in London, where we're asking what's 0:00:18.520 --> 0:00:20.840 next for the UK's car industry. 0:00:21.000 --> 0:00:23.200 I'm Brian Curtisy in Hong Kong. We look at what 0:00:23.280 --> 0:00:26.040 to expect and what not to expect when China and 0:00:26.079 --> 0:00:28.400 the European Union get together for a summit. 0:00:28.640 --> 0:00:31.240 I'm Kayley Lyones in Washington, where the CEOs of the 0:00:31.360 --> 0:00:34.680 US's biggest banks are getting set to testify in the summer. 0:00:37.159 --> 0:00:41.239 That's all straight ahead on Bloomberg Daybreak Weekend. The business 0:00:41.280 --> 0:00:45.240 news you need to wrap up your week. Available on Apple, Spotify, 0:00:45.400 --> 0:00:53.239 The Bloomberg Business Appen everywhere you get your podcasts. Good 0:00:53.320 --> 0:00:53.680 day to you. 0:00:53.760 --> 0:00:56.320 I'm Tom Busby. We begin today's program with a focus 0:00:56.400 --> 0:00:59.440 on the economy. While many expect the Fed to put 0:00:59.440 --> 0:01:03.120 further rate increases on hold for now, each key economic 0:01:03.200 --> 0:01:07.200 report takes on more importance after signs that US consumer 0:01:07.280 --> 0:01:11.240 spending and the labor market maybe cooling along with inflation. 0:01:11.680 --> 0:01:14.120 This coming Friday, we get the November jobs report, and 0:01:14.120 --> 0:01:16.399 helping us break down what it all means and what 0:01:16.400 --> 0:01:19.759 we should expect to see is anawong Chief US economists 0:01:19.760 --> 0:01:24.720 with Bloomberg Economics and Michael McKee, Bloomberg's International Economics and 0:01:24.760 --> 0:01:28.520 Policy correspondent. Now, let's start with some of the data 0:01:28.600 --> 0:01:30.800 that we've taken, whether that we've seen over the last 0:01:30.840 --> 0:01:34.480 week or so, Americans slowing their spending in October. Personal 0:01:34.560 --> 0:01:38.560 spending along with personal incomes both rising two tenths of 0:01:38.560 --> 0:01:41.839 a percent in October. Mike, that's in line with forecasts, 0:01:41.880 --> 0:01:44.800 but not a very encouraging numbers. 0:01:45.520 --> 0:01:48.240 It's not bad given the month and the fact that 0:01:49.240 --> 0:01:52.400 September was a very strong month for spending and it 0:01:52.440 --> 0:01:55.080 was also back to school month. We haven't seen in 0:01:55.160 --> 0:01:58.680 the October numbers yet the holiday spending that is to come, 0:01:59.040 --> 0:02:01.400 so you really have have to sort of average it 0:02:01.440 --> 0:02:03.160 out over a couple of months and we'll see how 0:02:03.240 --> 0:02:05.480 October turns out. I thought one of the most interesting 0:02:05.520 --> 0:02:11.080 things though, was on the income side, because incomes were 0:02:11.120 --> 0:02:16.079 definitely restrained, and the biggest drop was in wages after 0:02:16.400 --> 0:02:19.919 many months of a half percent or four tens percent 0:02:20.000 --> 0:02:23.720 gain in wages each month. We only saw a tenth 0:02:23.760 --> 0:02:26.360 of eight percent gain. Now, one month does not make 0:02:26.400 --> 0:02:29.520 a trend. We saw some months last year where we 0:02:29.600 --> 0:02:37.560 had negative percentages for wage gains and it rebounded. But 0:02:38.280 --> 0:02:40.840 if this is a sign that labor markets are loosening, 0:02:40.880 --> 0:02:42.960 and if this continues, it's kind of what the Fed 0:02:43.040 --> 0:02:46.760 wants to see wage gains coming down to a more 0:02:48.320 --> 0:02:53.440 sustainable level. And therefore it fits the narrative that their 0:02:53.480 --> 0:02:55.440 hoping comes true of a soft landing. 0:02:55.600 --> 0:02:56.720 And what do you think about that? 0:02:56.960 --> 0:02:59.680 Yeah, what struck me about what Mike just said is 0:02:59.680 --> 0:03:03.120 the narrative. What is the narrative right out there right now? 0:03:03.320 --> 0:03:06.519 So this past week we saw a lot of Fed 0:03:06.680 --> 0:03:11.440 speaker came out and I detected a visibly dubbish pivot 0:03:11.560 --> 0:03:15.040 and all of them. Particularly most notable to me is 0:03:15.120 --> 0:03:21.040 Chris Waller and Lorettamester, both of whom are among the 0:03:21.080 --> 0:03:25.240 most hawkish FED officials, and it sounded to me that 0:03:25.360 --> 0:03:29.280 they have become more confident that the labor market is loosening, 0:03:29.720 --> 0:03:34.320 wage growth is slowing, and that inflation is definitely on 0:03:34.400 --> 0:03:38.440 track to have a couple more good months of low 0:03:38.480 --> 0:03:42.280 monthly print. And I think what the PCE report last 0:03:42.280 --> 0:03:44.400 week showed us, as Mike was sane, is like. 0:03:44.360 --> 0:03:46.360 The wage growth is lowing. 0:03:46.760 --> 0:03:49.360 Even though it's only one month of report, it actually 0:03:50.080 --> 0:03:56.400 corroborates what the Beige Book narrative is also telling us. 0:03:56.520 --> 0:03:59.680 So our read of the Beige Book that was released 0:03:59.760 --> 0:04:03.720 last week is that it was pretty downbeat and across 0:04:03.840 --> 0:04:08.120 most of the districts contexts we're talking about how there 0:04:08.120 --> 0:04:11.760 are more job at hints for other jobs while the 0:04:11.880 --> 0:04:15.400 turnover within the same firm as lower, so less people 0:04:15.440 --> 0:04:18.520 are quitting. So what this means is that the people 0:04:18.560 --> 0:04:21.119 who are looking for jobs would take a longer time 0:04:21.200 --> 0:04:25.359 being in the unemployed state. And usually historical this tends 0:04:25.400 --> 0:04:30.840 to drive unemployment persistently. It's not just a one month thing. 0:04:31.000 --> 0:04:34.520 Usually it will become a trend thing when you see 0:04:34.839 --> 0:04:35.880 such a phenomenon. 0:04:36.040 --> 0:04:39.280 Yeah, those continuing claims up to nearly two million. 0:04:39.120 --> 0:04:42.320 Last week, Mike, continuing claims do show that the labor 0:04:42.320 --> 0:04:44.520 market seems to be getting a little looser. People who 0:04:44.560 --> 0:04:48.480 get jobless claim jobless benefits are taking longer to find jobs, 0:04:48.520 --> 0:04:51.120 which is what you would expect in this situation. I 0:04:51.120 --> 0:04:54.640 thought perhaps one of the most interesting things, not just 0:04:54.720 --> 0:04:59.279 the sort of shading of their views by Chris Waller 0:04:59.320 --> 0:05:02.440 and Loretta mess was in the page book when we 0:05:02.520 --> 0:05:06.360 saw for the first time since the recovery began, companies 0:05:06.360 --> 0:05:09.960 saying they are beginning to accept the idea that they 0:05:10.000 --> 0:05:12.680 might lay people off and that they're not filling jobs 0:05:12.839 --> 0:05:16.120 because of attrition. It's not a huge trend yet, but 0:05:16.200 --> 0:05:19.919 it does. It's a break with what the narrative, to 0:05:20.040 --> 0:05:23.640 use the term again has been that we have this 0:05:23.800 --> 0:05:26.280 very strong labor market. It does seem to be finally 0:05:26.320 --> 0:05:28.720 loosening up. And I think that's the point that Chris 0:05:28.760 --> 0:05:31.720 Waller was making, that what we have now is an 0:05:31.760 --> 0:05:35.599 economy that is feeling the lagged impacts of the rate increases. 0:05:35.760 --> 0:05:38.479 So we may have had peak employment because of that. 0:05:38.400 --> 0:05:41.320 Well, it depends on how you define peak employment. The 0:05:42.040 --> 0:05:47.000 economy continues to add jobs, but the question is do 0:05:47.040 --> 0:05:50.760 we see unemployment go up or the number of jobs 0:05:50.839 --> 0:05:54.960 created go down significantly, which is what the FED is expecting, 0:05:55.040 --> 0:05:59.160 but not so far. Analys and Economy surveyed by Bloomberg. 0:06:00.080 --> 0:06:02.240 Let's en and then let's talk about what's coming up 0:06:02.240 --> 0:06:05.720 this Friday, the November Jobs report. What are you expecting 0:06:05.760 --> 0:06:06.600 to see. 0:06:06.520 --> 0:06:10.159 So we are definitely focusing more on what's happening to 0:06:10.200 --> 0:06:14.520 the unemployment rate as opposed to putting too much weight 0:06:14.760 --> 0:06:18.800 on the headline non farm payroll. So that's aid we 0:06:18.880 --> 0:06:22.000 are expecting the unemployment rate to climb to four percent, 0:06:23.200 --> 0:06:27.440 that's versus the three point nine percent from the previous month, 0:06:28.080 --> 0:06:32.920 and for non farm payroll to add about one hundred 0:06:32.960 --> 0:06:36.960 and fifty thousand jobs. And let me qualify those numbers 0:06:36.960 --> 0:06:39.400 for a little bit. So in terms of the non 0:06:39.440 --> 0:06:42.080 farm payroll headline, we are the one hundred. 0:06:41.800 --> 0:06:43.600 And fifty k that we are expecting. 0:06:43.800 --> 0:06:48.480 Well, that includes the thirty k that's added from the 0:06:48.560 --> 0:06:53.520 resolution of the UAW strike. So if you smooth it 0:06:53.680 --> 0:06:57.560 over a couple of months, in fact that that underlying 0:06:57.680 --> 0:07:00.480 pace of job growth is actually low more than one 0:07:00.520 --> 0:07:03.320 hundred and fifty k, And then in terms of the 0:07:03.400 --> 0:07:07.719 unemployment rate of four point zero unemployment rate would trigger 0:07:08.480 --> 0:07:10.920 the psalm's rule as well as a whole bunch of 0:07:10.960 --> 0:07:14.560 other recession rules. So Bill Dudley and I looked at 0:07:14.800 --> 0:07:19.120 about twenty eight rules of thumbs on that tends to 0:07:19.200 --> 0:07:23.119 have a very good record of calling for real time 0:07:23.720 --> 0:07:26.680 in real time calling and real time a recession. And 0:07:26.880 --> 0:07:30.880 we look at, for example, the U one unemployment rate. 0:07:30.960 --> 0:07:35.880 That unemployment rate captures how many of the unemployed have 0:07:35.320 --> 0:07:40.600 been so for fifteen weeks or longer. And whenever that 0:07:40.800 --> 0:07:47.640 YOU one unemployment rate increases persistently, it is usually a 0:07:47.680 --> 0:07:51.600 harbinger of recession already in place. And also there's another 0:07:51.720 --> 0:07:55.840 unemployment rate called U two unemployment rate, and it captures 0:07:55.880 --> 0:07:59.200 the layoffs and the temporary workers who are and I 0:07:59.200 --> 0:08:02.560 able to find anymore. And that part actually has not 0:08:02.680 --> 0:08:06.280 triggered any rules yet, and so we would be keeping 0:08:06.400 --> 0:08:08.520 an eye on all those U one, you two, you 0:08:08.680 --> 0:08:12.600 three unemploymery because it tells you various parts of the 0:08:12.680 --> 0:08:15.320 labor market. And what that tells me so far is 0:08:15.360 --> 0:08:19.160 that number one layoffs has not really happened yet. Mass 0:08:19.240 --> 0:08:24.320 layoffs has not happened yet. That's the YouTube unemployment rate. However, 0:08:24.880 --> 0:08:28.920 people who are unemployed indeed has been taker taking longer 0:08:28.960 --> 0:08:32.240 and longer to find a job. That's you one unemployment rate, 0:08:32.559 --> 0:08:36.440 and overall that should drive YOU three unemployment rate up, 0:08:36.480 --> 0:08:41.240 which is the typical UH metric for measuring whether a 0:08:41.280 --> 0:08:42.560 recession has happened. 0:08:42.480 --> 0:08:46.040 And it makes the job support much more interesting, many 0:08:46.080 --> 0:08:51.040 more UH indicators to dive into there. I think one 0:08:51.120 --> 0:08:54.360 of the things that we do want to see besides unemployment, 0:08:54.360 --> 0:08:57.560 which she gave a very good description of, is whether 0:08:57.679 --> 0:09:02.080 or not job creation does slow. If we got one 0:09:02.160 --> 0:09:04.920 hundred and twenty thousand, which is proximately what Enna is 0:09:04.960 --> 0:09:09.240 talking about in terms of job creation x strikers being 0:09:09.280 --> 0:09:11.960 added back, that would be much closer to what the 0:09:12.000 --> 0:09:16.319 Fed thinks is the minimum needed to absorb new entrance 0:09:16.480 --> 0:09:19.280 to the labor force to basically keep us kind of neutral, 0:09:19.600 --> 0:09:22.360 and they wouldn't think that's bad at all. I'm not 0:09:22.400 --> 0:09:25.080 sure how the markets would react to that. Right now, 0:09:25.120 --> 0:09:27.920 the Bloomberg consensus is one hundred and seventy five thousand, 0:09:28.080 --> 0:09:30.880 which one assumes includes that thirty thousand, so it's a 0:09:30.920 --> 0:09:33.959 little bit stronger than the Bloomberg Economics number. But I 0:09:34.000 --> 0:09:37.199 would also caution that over the coming week we'll get 0:09:37.240 --> 0:09:40.480 a lot more of the input data that people look 0:09:40.520 --> 0:09:42.320 at when they make their forecasts, so that could be 0:09:42.320 --> 0:09:44.600 revised by the time we get to Friday morning. 0:09:44.920 --> 0:09:47.080 What kind of jobs are we absorbing here. 0:09:46.960 --> 0:09:50.400 Well, mostly what we have been seeing is healthcare jobs, 0:09:50.480 --> 0:09:54.120 and still some leisure and hospitality jobs. Leisure hospitality is 0:09:54.160 --> 0:09:57.520 the category that has not regained all of its employment 0:09:57.600 --> 0:10:01.400 yet from the pandemic, so probably we'll see more in 0:10:01.480 --> 0:10:04.520 that category. It will be interesting to see what we 0:10:04.559 --> 0:10:06.960 see in terms of retail because of course this is 0:10:07.000 --> 0:10:11.240 the time of year when retailers add temporary employees, and 0:10:11.920 --> 0:10:16.720 there's anecdotal reporting that they've added fewer than in previous years. 0:10:16.720 --> 0:10:20.400 But does that mean we're adding more people in warehousing 0:10:20.480 --> 0:10:23.120 and transportation, which is where sort of the Amazon and 0:10:23.240 --> 0:10:27.199 Walmart workers end up in those situations over the holidays. 0:10:27.240 --> 0:10:28.960 So that's going to be something to look at in 0:10:29.000 --> 0:10:30.000 the jobs report as well. 0:10:30.040 --> 0:10:30.199 Well. 0:10:30.240 --> 0:10:32.960 We'll find out this Friday and our thanks to Anna Wong, 0:10:33.080 --> 0:10:37.040 Chief US Economists with Bloomberg Economics and Michael McKee, Bloomberg 0:10:37.160 --> 0:10:41.120 International Economics and Policy correspondent, and coming up on Bloomberg 0:10:41.200 --> 0:10:43.080 day Break weekend, we head to Europe and look at 0:10:43.080 --> 0:10:45.559 some key data coming out of the auto industry. 0:10:45.559 --> 0:10:45.839 There. 0:10:46.040 --> 0:10:59.199 I'm Tom Busby and this is Bloomberg. I'm Tom Busby, 0:10:59.280 --> 0:11:04.000 New York. Later in our program, Congress continues its funding battles, 0:11:04.280 --> 0:11:06.840 but first in the UK we get fresh data on 0:11:06.880 --> 0:11:09.840 the number of new car registrations in the coming days. 0:11:10.120 --> 0:11:12.719 The sector has shown some signs of recovery recently, but 0:11:12.920 --> 0:11:18.199 manufacturer is still battling against the challenging post Brexit economic environment, 0:11:18.520 --> 0:11:22.320 including painful tariffs on electric vehicles. For more, let's go 0:11:22.320 --> 0:11:24.559 to London and bring in Bloomberg day break europe banker 0:11:24.800 --> 0:11:26.199 Caroline hepgar Tom. 0:11:26.240 --> 0:11:28.520 Only a few days ago, nis An announced more than 0:11:28.520 --> 0:11:32.160 two billion pounds of investment into the British car industry. 0:11:32.480 --> 0:11:35.560 The Japanese car maker will set up another battery factory 0:11:35.600 --> 0:11:38.960 and produce more electric vehicles at its plant in Sunderland. 0:11:39.320 --> 0:11:42.600 The government is supporting this investment, which is the latest 0:11:42.640 --> 0:11:46.600 attempt to inject life into an industry that continues to 0:11:46.679 --> 0:11:50.880 grapple with the lasting effects of the twenty sixteen Brexit vote. 0:11:51.120 --> 0:11:54.439 So can the UK really compete as the industry shifts 0:11:54.480 --> 0:11:57.920 towards electric vehicles. Were thinking about this, of course, in 0:11:57.960 --> 0:12:02.160 the context of new car registration's data that is due 0:12:02.280 --> 0:12:06.520 in the next few days. Bluemberg's Global Automotive editor, Craig 0:12:06.559 --> 0:12:09.360 Trudell has been speaking to me about it. I began 0:12:09.400 --> 0:12:12.480 by asking him just to give us a reading on 0:12:12.520 --> 0:12:17.720 the current state of the UK car market sales overall. 0:12:16.880 --> 0:12:19.920 On the surface, the numbers have looked pretty good lately. 0:12:20.200 --> 0:12:23.839 We've had fifteen consecutive months of growth. That's obviously you 0:12:23.880 --> 0:12:27.760 know that that sounds great, but so has the European market, 0:12:28.120 --> 0:12:30.640 and so it's really sort of a matter of you know, 0:12:30.720 --> 0:12:33.239 kind of keeping up with the joneses that in that respect, 0:12:33.840 --> 0:12:36.600 it's also the case that, as you alluded to, you know, 0:12:36.640 --> 0:12:39.360 we're still a long ways from where we were pre pandemics. 0:12:39.400 --> 0:12:42.760 So back in twenty nineteen there were two point three 0:12:42.800 --> 0:12:46.000 million new cars registered in the UK. Last year there 0:12:46.040 --> 0:12:49.319 was one point six million, so about seven hundred thousand 0:12:49.520 --> 0:12:52.280 units short of of where we were before the pandemic, 0:12:52.320 --> 0:12:55.080 and so we're still a long ways from where we 0:12:55.080 --> 0:12:59.640 were before, you know, before the industry dealt with this 0:12:59.679 --> 0:13:00.560 mass disruption. 0:13:01.320 --> 0:13:04.560 So in terms then of how important the UK car 0:13:04.640 --> 0:13:07.439 market actually is to these Comke has just put that 0:13:07.679 --> 0:13:08.640 into context. 0:13:08.720 --> 0:13:12.000 For Yeah, for all the challenges the UK has been having, 0:13:12.120 --> 0:13:15.280 it is still Europe's number two market after Germany. It's 0:13:15.320 --> 0:13:18.000 also one of the more important markets in the world 0:13:18.120 --> 0:13:21.400 for premium and higher end vehicles. So you still have 0:13:22.080 --> 0:13:24.599 quite a bit of wealth on the part of consumers 0:13:24.600 --> 0:13:27.280 in the UK. A lot of the luxury brands do 0:13:27.480 --> 0:13:30.440 quite well here, so it is a very important market, 0:13:30.480 --> 0:13:33.160 even if it has you know, faded and relevance to 0:13:33.200 --> 0:13:36.040 some degree, I would say, especially on the manufacturing side. 0:13:36.160 --> 0:13:39.679 Okay, So then on that side of things, how important 0:13:39.880 --> 0:13:42.680 was the announcement from Nissan for example, that two big 0:13:42.720 --> 0:13:44.680 into a pounds worth of investment. 0:13:44.559 --> 0:13:49.320 Was Sunderland is a massive factory. It's Nissan's largest assembly 0:13:49.360 --> 0:13:52.240 plant in the world, and it's really crucial that the 0:13:52.360 --> 0:13:55.600 UK was able to sort of solidify its future, especially 0:13:55.640 --> 0:13:58.839 what we've seen over the last half decade or so. 0:13:58.840 --> 0:14:02.240 So car product here slumped last year to the lowest 0:14:02.280 --> 0:14:05.840 since nineteen fifty six. You could chalk that up to 0:14:06.200 --> 0:14:09.240 a few factors. Honda closed up plant here in twenty 0:14:09.280 --> 0:14:12.680 twenty one, you had Stalantis, you know, shift a car 0:14:12.720 --> 0:14:15.800 factory to vans, which you know don't count toward cars 0:14:15.840 --> 0:14:19.000 of course, but it's also you know, a lower volume plant. 0:14:19.000 --> 0:14:21.840 As a result of that shift, you've seen JLR sort 0:14:21.880 --> 0:14:26.480 of shift you know upmarket to higher value, lower volume products, 0:14:26.480 --> 0:14:29.120 and so you know, the UK now is down to 0:14:29.360 --> 0:14:32.120 four major manufacturers at this point. You have Nissan and 0:14:32.240 --> 0:14:35.640 JLR that kind of compete for top dog status and 0:14:35.760 --> 0:14:39.040 go back and forth. You have BMW and Mini and 0:14:39.080 --> 0:14:42.080 you have Toyota and those four are sort of what 0:14:42.160 --> 0:14:42.720 we have left. 0:14:43.520 --> 0:14:47.200 Wow, for an industry that has been so crucial for 0:14:47.280 --> 0:14:51.640 successive governments, right, that was sort of kicked off really 0:14:51.680 --> 0:14:57.080 going back as far as that, The issue then with 0:14:57.320 --> 0:15:00.520 that how much has the government currently had to help 0:15:00.520 --> 0:15:03.760 in order to keep those names here and in production. 0:15:04.200 --> 0:15:06.680 As you said, I remember the reporting around Sunderland. The 0:15:06.760 --> 0:15:09.440 real worry was around a lot of potential job losses. 0:15:09.680 --> 0:15:11.800 Yeah, you know, we had a good story just this 0:15:11.880 --> 0:15:14.880 week as the UK announced you know, this manufacturing plan 0:15:14.960 --> 0:15:17.680 and I think it was two billion pounds that they 0:15:17.680 --> 0:15:21.760 were committing to auto manufacturing specifically. I think there's been 0:15:21.800 --> 0:15:24.240 a really interesting sort of reluctance to sort of be 0:15:24.360 --> 0:15:27.720 drawn into, you know, the sort of subsidy wars that 0:15:27.760 --> 0:15:29.480 have kicked off. You know you had. Of course, the 0:15:29.480 --> 0:15:33.479 Inflation Production Act in the US has been hugely controversial, 0:15:33.720 --> 0:15:38.160 even among some of America's allies. You've seen Canada react 0:15:38.200 --> 0:15:40.840 to that in an extremely aggressive way and throw billions 0:15:40.840 --> 0:15:43.800 of dollars at companies like Volkswagen to get them to 0:15:43.840 --> 0:15:47.480 make battery investments. I think the UK has both been reluctant, 0:15:47.480 --> 0:15:49.960 as I mentioned, to be drawn into that, but I 0:15:50.000 --> 0:15:54.080 don't think that they can fully exclude themselves. There is 0:15:54.120 --> 0:15:57.880 some element of needing to bring you know, investment in 0:15:57.960 --> 0:16:01.800 by sort of offering some major incentives. And that's always 0:16:01.800 --> 0:16:04.080 been how the game has has been played in this 0:16:04.200 --> 0:16:07.520 industry because of the number of jobs and high value 0:16:07.640 --> 0:16:10.480 employment that that this industry brings. It's it's sort of 0:16:10.520 --> 0:16:14.640 inherent to the way you know, plants, plant locations get decided. 0:16:14.720 --> 0:16:17.480 Yeah, absolutely stuck with that. Competition got to deal with it. 0:16:18.040 --> 0:16:20.800 What about the problem though, of this sort of post 0:16:20.840 --> 0:16:25.480 Brexit issue. How significant are these tariffs meant to come 0:16:25.520 --> 0:16:26.560 in on the first of January. 0:16:27.040 --> 0:16:28.920 It would be really significant and I think it would 0:16:28.960 --> 0:16:31.920 be embarrassing honestly, both, you know, for the UK government 0:16:32.000 --> 0:16:35.160 and for Brussels. I think, you know, there was good 0:16:35.200 --> 0:16:38.200 intention here. There was you know, really an interest in 0:16:38.520 --> 0:16:42.400 getting the EV supply chain localized in the UK and 0:16:42.440 --> 0:16:45.800 in Europe, but there have been real challenges with the industry, 0:16:46.000 --> 0:16:48.280 you know, making progress on that on that front. Here 0:16:48.320 --> 0:16:51.280 in the UK, you had a British Vault, a startup 0:16:51.320 --> 0:16:53.960 that you know, had big ambitions but wasn't able to 0:16:54.000 --> 0:16:57.960 execute on them. You've had in Europe in general, just 0:16:58.040 --> 0:17:00.400 you know, sort of slow progress and getting the supply 0:17:00.520 --> 0:17:03.840 chain up and running and so, you know, again good intentions. 0:17:03.880 --> 0:17:05.679 It made sense to try and you know push the 0:17:05.720 --> 0:17:09.000 industry in that direction, but you know, given how far 0:17:09.080 --> 0:17:12.159 behind the industry is and sort of you know, getting 0:17:12.160 --> 0:17:14.240 that set up, and it's you know, really sort of 0:17:14.320 --> 0:17:18.280 across the board. Even Tesla's is behind in you know, 0:17:18.359 --> 0:17:23.520 localizing battery production and its German plant. You know, if 0:17:23.560 --> 0:17:25.400 nothing is done before the end of the year, we're 0:17:25.440 --> 0:17:29.160 talking about tariffs between the EU and the UK, two 0:17:29.320 --> 0:17:32.920 you know, very important trade partners to one another, Tariffs 0:17:32.920 --> 0:17:36.679 being put on each other's evs that wouldn't apply to say, China, 0:17:37.400 --> 0:17:39.960 and of course that would not go over particularly well, 0:17:40.040 --> 0:17:43.680 especially when consumers already sort of bocking at buying evs 0:17:43.680 --> 0:17:45.040 because they're already too expensive. 0:17:45.320 --> 0:17:48.960 Yeah, and so unusually you've got this, Actually the car 0:17:48.960 --> 0:17:51.000 industry on both sides of the channel, in Europe and 0:17:51.040 --> 0:17:55.360 the UK, you really wanting some mitigation measures. So what's 0:17:55.359 --> 0:17:56.879 the EU proposing on that front? 0:17:57.080 --> 0:18:00.520 Yeah, it's it's interesting, you know, three options being propos here, 0:18:01.119 --> 0:18:03.879 you know, one being do nothing, which I think is 0:18:03.880 --> 0:18:06.800 is you know, quite unlikely that that that that will happen, 0:18:06.840 --> 0:18:09.560 because again I think it would be embarrassing to sort of, 0:18:10.000 --> 0:18:12.600 you know, for for Europe and the UK to put 0:18:12.600 --> 0:18:16.919 themselves in this position. Uh, there's a complicated you know, 0:18:17.000 --> 0:18:20.280 sort of you know, short term measure of sort of 0:18:20.359 --> 0:18:22.800 kicking the can down the road by one year. That 0:18:22.840 --> 0:18:25.000 would be you know, complicated just from a sort of 0:18:25.000 --> 0:18:29.080 logistical standpoint. The other option that the industry is is 0:18:29.080 --> 0:18:32.760 pushing for is a much longer delay here, roughly three years. 0:18:33.200 --> 0:18:36.919 And you know, of course it would necessarily you know, 0:18:37.119 --> 0:18:40.639 it would to some degree not necessarily reflect well on 0:18:40.680 --> 0:18:43.520 the industry that you know, it's taking them this much time. 0:18:43.520 --> 0:18:45.399 But I also think it's a sort of you know 0:18:45.880 --> 0:18:49.239 reality that it does take you know, an industry this 0:18:49.280 --> 0:18:53.160 big and this complicated, uh, you know, to make these 0:18:53.200 --> 0:18:56.159 sorts of you know, longer term investments, and you know, 0:18:56.240 --> 0:18:58.920 if the industry were to sort of rush into them 0:18:59.640 --> 0:19:02.359 before or you know, before the consumer is ready and 0:19:02.480 --> 0:19:07.919 before you know, or sort of under under dress you know, 0:19:08.040 --> 0:19:11.120 you you sort of raised the odds that that we 0:19:11.400 --> 0:19:14.320 have problems and and you know, put evs out there 0:19:14.359 --> 0:19:17.240 that aren't aren't ready, and with batteries that that are problematic. 0:19:17.240 --> 0:19:19.199 We've seen a lot of you know, sort of teething 0:19:19.200 --> 0:19:22.560 issues on the part of the industry with battery fire something. 0:19:22.600 --> 0:19:24.440 Yeah, thank you so much for being with us. Craig 0:19:24.480 --> 0:19:27.639 tru Dallas, Bloomberg's Global Automotive edis are looking at one 0:19:27.640 --> 0:19:30.680 of the key issues facing the UK's car industry. I'm 0:19:30.720 --> 0:19:33.040 Caroline Hepga here in London. You can catch us every 0:19:33.040 --> 0:19:36.520 weekday morning for Bloomberg Daybreak Europe, beginning at six am 0:19:36.560 --> 0:19:38.600 in London. That's one am on Wall Street. 0:19:38.760 --> 0:19:42.359 Tom our thanks to Bloomberg Daybreak Europe Banker Caroline Hepgar 0:19:42.680 --> 0:19:45.480 and coming up on Bloomberg day Break weekend. China trying 0:19:45.520 --> 0:19:49.359 to improve trade relations with another vital partner, not the 0:19:49.520 --> 0:20:02.960 US though. I'm Tom Busby and this is Bloomberg. I'm 0:20:03.000 --> 0:20:05.000 Tom Busby in New York with your global look ahead 0:20:05.040 --> 0:20:07.080 at the top stories for investors in the coming week. 0:20:07.520 --> 0:20:09.960 The European Union has said it does not want to 0:20:10.119 --> 0:20:14.480 decouple from China, but rather de risk parts of its relationship. 0:20:14.960 --> 0:20:17.119 So with a summit coming up between the two blocks, 0:20:17.160 --> 0:20:20.479 how my China and the EU navigate their dialogue on 0:20:20.560 --> 0:20:24.240 improving their trade relationship. For more, let's get to Bloomberg 0:20:24.280 --> 0:20:27.239 Daybreak Asia co host Brian Curtis. 0:20:26.920 --> 0:20:29.760 Tom China and the European Union are sent to hold 0:20:29.800 --> 0:20:33.200 a summit on December seventh and eighth. The European Commission 0:20:33.200 --> 0:20:36.840 and Council presidents Ursulav Underlay and then Charles Michelle will 0:20:36.840 --> 0:20:40.080 travel to China. One of the big issues of late 0:20:40.480 --> 0:20:43.479 China is concerned about the European Union's launch of an 0:20:43.520 --> 0:20:48.359 anti subsidy investigation into the imports of electric vehicles. This 0:20:48.440 --> 0:20:51.560 summit comes around after a series of high level dialogues 0:20:51.600 --> 0:20:54.679 of late and these happened earlier this year on issues 0:20:54.680 --> 0:20:57.879 including trade and foreign policy. Joining us now is Jenny 0:20:57.960 --> 0:21:02.080 Marsh Bloomberg Team leader for Greater China and the Economics 0:21:02.119 --> 0:21:05.080 and Government Team. Jenny, thanks so much for being with us. 0:21:05.520 --> 0:21:08.880 So this is the first face to face or in 0:21:08.920 --> 0:21:13.200 person summit with Beijing's leadership for Europe in some four years. 0:21:13.359 --> 0:21:15.760 A lot is expected. What can we expect? 0:21:15.880 --> 0:21:18.160 Yeah, I mean a lot's expected, and at the same time, 0:21:18.600 --> 0:21:21.600 almost nothing is expected because you know these two blocks 0:21:21.640 --> 0:21:24.000 they are they're at a really low point in their 0:21:24.040 --> 0:21:27.720 ties at the moment. It's extremely acrimonious, and you know 0:21:28.400 --> 0:21:31.600 they're going to obviously be talking about the differences in trades, 0:21:31.640 --> 0:21:33.760 and I think, you know, market access is what this 0:21:33.880 --> 0:21:37.399 trip is all going to come down to, and you know, 0:21:37.600 --> 0:21:40.000 neither side has really much room to give. I think, 0:21:40.040 --> 0:21:43.080 you know, obviously front and center for the Chinese is 0:21:43.119 --> 0:21:47.760 this probe into its subsidies and support for the EV market, 0:21:49.280 --> 0:21:51.399 and the europe has been saying to China that it 0:21:51.440 --> 0:21:54.320 needs to cooperate with this probe because it's very hard 0:21:54.359 --> 0:21:56.280 for Europe to come to a fair conclusion if it 0:21:56.320 --> 0:21:59.639 doesn't have visibility over all the different ways. You know 0:22:00.240 --> 0:22:04.320 that China does support its EV industry, so they're going 0:22:04.359 --> 0:22:07.080 to be looking for more access there. You know, China's 0:22:07.080 --> 0:22:09.879 position on this is very clear. They think that the 0:22:09.920 --> 0:22:14.399 Europeans are being unfair and they say they have this 0:22:14.520 --> 0:22:16.639 kind of full supply chain of the things that you 0:22:16.720 --> 0:22:19.000 need to create evs in China and lots of the 0:22:19.040 --> 0:22:21.920 raw materials for batteries for example, are made in China 0:22:21.960 --> 0:22:24.800 and processed in China, which would use its costs. So 0:22:25.520 --> 0:22:27.560 they each have their own positions on this, and it's 0:22:27.600 --> 0:22:30.080 going to be probably at the heart of the discussions, 0:22:30.080 --> 0:22:33.399 although there are other issues around the trade relationship and 0:22:33.480 --> 0:22:36.120 just the bilateral relationship in general they'll be discussing. 0:22:36.400 --> 0:22:40.520 It raises the question, I suppose, it's really a dilemma 0:22:40.600 --> 0:22:43.439 whether or not, as a major trading block like Europe, 0:22:43.440 --> 0:22:47.639 whether you can reduce your economic dependence on China without 0:22:47.680 --> 0:22:49.600 souring relations It's difficult. 0:22:49.640 --> 0:22:52.919 I mean, Italy seems to have managed very gracefully to 0:22:52.920 --> 0:22:56.320 sort of boud out of the the bri while maintaining 0:22:56.720 --> 0:22:59.400 its relationship with China. But I think what China does 0:22:59.480 --> 0:23:01.399 really take bridge at is sort of this kind of 0:23:02.200 --> 0:23:07.040 de risking framework, which you know was the Europeans Funderlayan 0:23:07.080 --> 0:23:10.560 who coined that phrase. While de risking is more powasable 0:23:10.600 --> 0:23:13.399 than decoupling to China, it's actually the same thing with 0:23:13.480 --> 0:23:16.480 a different name, And essentially that means sort of ring 0:23:16.560 --> 0:23:20.800 fencing big parts of your economy from the Chinese, and 0:23:20.840 --> 0:23:23.000 often it's those parts of the economies that they really 0:23:23.000 --> 0:23:24.600 care about, and if from the US side it's the 0:23:24.680 --> 0:23:30.840 high tech chips and so yeah, it creates these tensions 0:23:31.359 --> 0:23:35.000 and it's hard to separate the trade relationship from the 0:23:35.000 --> 0:23:39.359 ballateral relationship, and it actually, I mean Europe is telling China. 0:23:40.160 --> 0:23:42.480 On Don Brobsky's visit earlier this year, he made it 0:23:42.560 --> 0:23:45.240 very clear that they don't see the human rights side, 0:23:45.280 --> 0:23:48.719 for example, separate to trade in economic relationships. So if 0:23:49.359 --> 0:23:52.919 increasingly they're both moving away from this idea like you 0:23:52.960 --> 0:23:56.760 can trade with someone but you can disagree on fundamental values, 0:23:57.040 --> 0:23:59.480 now that's sort of changing a bit, and both sides 0:24:00.240 --> 0:24:03.560 actually are linking those two different sides of the relationship more. 0:24:04.440 --> 0:24:07.520 It's been highlighted that what Europe is looking for is 0:24:07.800 --> 0:24:10.800 a level playing field, and as you mentioned, one of 0:24:10.800 --> 0:24:12.399 the ways that we can kind of look at that 0:24:12.600 --> 0:24:16.439 is the trade surplus that China enjoys with Europe. It's massive, 0:24:16.520 --> 0:24:20.400 it's more than four hundred billion euros. So you're wondering, 0:24:20.800 --> 0:24:23.840 how do you write size that in others? What could 0:24:24.080 --> 0:24:28.800 China buy from Europe more to help change that relationship. 0:24:29.000 --> 0:24:30.200 Yeah, and that's a good question. 0:24:30.640 --> 0:24:33.520 There are all these different sort of restrictions at the 0:24:33.520 --> 0:24:37.320 moment on European cosmetics that the Europeans are going to 0:24:37.320 --> 0:24:41.640 be lobbying to get removed, and also on instant formula, 0:24:42.080 --> 0:24:44.760 so there's trade barriers there which are hold mete. European companies, 0:24:45.640 --> 0:24:50.280 the French particularly, are concerned about the cosmetics barriers. 0:24:50.680 --> 0:24:52.480 So that's something that the Europeans. 0:24:52.040 --> 0:24:54.720 Could love be for Whether or not that will be 0:24:54.760 --> 0:24:58.639 sufficient to sort of to narrow that huge trade deficit 0:24:58.640 --> 0:25:01.280 that you mentioned, you know, I'm sure of, but it's 0:25:01.280 --> 0:25:04.560 sort of it's going to be a bigger problem going forward. 0:25:04.640 --> 0:25:07.160 This is not going to go away because China's being 0:25:07.240 --> 0:25:09.320 very clear. You know, you have Pangang Sheng talking in 0:25:09.359 --> 0:25:11.719 Hong Kong this week about how China needs to sort 0:25:11.760 --> 0:25:14.840 of back away from its sort of property led growth 0:25:14.920 --> 0:25:16.639 and to sort of put money into these sort of 0:25:16.640 --> 0:25:21.240 new emerging green markets, which you know EV's is one 0:25:21.280 --> 0:25:24.720 of them. If China ramps up its manufacturing capacity in 0:25:24.760 --> 0:25:28.080 those areas, what Europe and others worried about is sort 0:25:28.119 --> 0:25:30.800 of China's going to flood the market essentially, because it 0:25:30.920 --> 0:25:34.000 has built a sufficient amount of the factories it needs 0:25:34.480 --> 0:25:36.320 to meet domestic demand right now. 0:25:36.359 --> 0:25:38.439 So where where does that excess go? 0:25:39.480 --> 0:25:41.400 And one of the other areas that we haven't talked 0:25:41.400 --> 0:25:46.479 about is the commodities, the crucial commodities that Europe buys 0:25:46.560 --> 0:25:50.439 from China, and there's a little bit of complication with 0:25:50.520 --> 0:25:53.560 that because China is now talking about actually limiting the 0:25:53.600 --> 0:25:58.760 possible sales of certain types of rare earth minerals, for instance, 0:25:58.800 --> 0:26:03.560 and so it may be difficult for Europe to either 0:26:03.920 --> 0:26:07.080 raise or reduce its economic dependence on China when it 0:26:07.119 --> 0:26:08.120 comes to commodities. 0:26:08.400 --> 0:26:10.359 This is sort of one of the few areas where 0:26:10.440 --> 0:26:12.760 China actually has some leverage. I think, you know, it's 0:26:12.800 --> 0:26:16.360 fund and difficult to respond to US and Europeans sort 0:26:16.400 --> 0:26:19.760 of trade curves in the past, but it's kind of 0:26:19.800 --> 0:26:22.840 dominance in the market of rare earths is something that 0:26:22.920 --> 0:26:26.360 China does have in its tool box. Although it's sort 0:26:26.359 --> 0:26:29.960 of already granted licenses for the export of some of 0:26:30.000 --> 0:26:33.840 these minerals that it did put the restrictions on, the 0:26:33.960 --> 0:26:37.280 Commerce Ministry has sort of given the green light for 0:26:37.400 --> 0:26:40.919 China to export, and so it sort of still remains 0:26:40.920 --> 0:26:43.800 to be seen how strictly China is going to enforce 0:26:43.880 --> 0:26:46.879 those but it's a reminder to the Europeans that, you know, 0:26:47.280 --> 0:26:50.400 if they press ahead with this EV program, they come 0:26:50.400 --> 0:26:54.720 out with a bunch of sort of tariffs on Chinese 0:26:54.720 --> 0:26:57.040 EV's at the end of it, then China does have 0:26:57.080 --> 0:26:59.240 ways it can respond that could hurt the European market. 0:27:00.080 --> 0:27:02.919 Why hasn't China actually confirmed this summit yet? 0:27:03.800 --> 0:27:06.800 This is sort of how China does diplomacy. It's sort 0:27:06.800 --> 0:27:08.880 of baffling to the rest of the world. But they 0:27:09.080 --> 0:27:11.720 very rarely confirm at these kind of events until the 0:27:11.800 --> 0:27:15.119 last minute, I guess because it just gives them some 0:27:15.119 --> 0:27:17.199 some wiggle room if they want to move things, they 0:27:17.200 --> 0:27:19.320 don't have to then backtrack because they never said anything 0:27:19.320 --> 0:27:22.800 in the first place. It also just adds that kind 0:27:22.800 --> 0:27:28.040 of sort of instability as opposed to the European side. 0:27:28.080 --> 0:27:29.680 You know, we could call this off stop. We haven't 0:27:29.680 --> 0:27:32.520 confirmed it in public. You know, it's kind of petty. 0:27:33.119 --> 0:27:35.000 But this is just sort of textbook and how the 0:27:35.080 --> 0:27:37.439 Chinese do it, and there wasn't really too much to 0:27:37.440 --> 0:27:38.160 be read into it. 0:27:38.920 --> 0:27:42.159 So the US, in describing its relationship and its aims 0:27:42.520 --> 0:27:44.720 on the relationship with China, says it wants to de 0:27:44.880 --> 0:27:48.479 risk but not decouple. Does Europe have a position in 0:27:48.520 --> 0:27:53.040 particular on how it is either reducing its dependence or 0:27:53.320 --> 0:27:55.720 even disengaging from China. 0:27:55.760 --> 0:27:59.440 The Europeans are the architects of the de risking idea 0:28:00.200 --> 0:28:03.760 of the language, and there were some reports earlier this 0:28:03.840 --> 0:28:07.120 year where they did sort of identify you know, national 0:28:07.160 --> 0:28:12.159 security is national security through economic security, so it's sensitive technologies. 0:28:13.480 --> 0:28:15.320 So it's very much in alignment with the US position, 0:28:15.359 --> 0:28:18.879 apart from they haven't they haven't adopted the sort of 0:28:18.920 --> 0:28:22.200 measures that the Americans have about you know, areas where 0:28:22.240 --> 0:28:25.720 American companies can invest or limiting access to sort of 0:28:25.760 --> 0:28:26.360 the chips. 0:28:26.760 --> 0:28:28.680 But they also don't have the same. 0:28:28.520 --> 0:28:31.639 Level of technology that the Americans do right now, so 0:28:32.200 --> 0:28:36.480 they're still really working through how they see the implementation 0:28:36.560 --> 0:28:38.720 of de risking and they're sort of couple of sets 0:28:38.760 --> 0:28:40.880 behind the US And. 0:28:41.400 --> 0:28:45.520 Just finally just a bit of fun. Obviously, European brands 0:28:45.640 --> 0:28:49.880 are very big in China, very well known, particularly in 0:28:49.920 --> 0:28:53.000 the luxury end of the market. Are there China brands 0:28:53.200 --> 0:28:56.120 Chinese brands that are known well in Europe? 0:28:56.280 --> 0:28:59.480 Not too many. I mean Idye. 0:28:58.840 --> 0:29:02.880 Byd By the one probably, and I think the Europeans 0:29:02.880 --> 0:29:04.520 would rather it be less well known. 0:29:05.560 --> 0:29:08.040 All right, Jenny, thanks so much for joining us. Jenny 0:29:08.040 --> 0:29:10.480 marsh with us Bloomberg team leader for a Greater China 0:29:10.600 --> 0:29:13.880 Eco GOV. I'm Brian Curtis's song with Doug Christner. You 0:29:13.920 --> 0:29:16.800 can catch us every weekday. Here for Bloomberg day Break 0:29:16.840 --> 0:29:19.920 Asia beginning at seven am in Hong Kong and six 0:29:20.000 --> 0:29:22.200 pm on Wall Street tom. 0:29:21.960 --> 0:29:25.040 Our thanks to Bloomberg day Break Asia co host Brian Curtison. 0:29:25.120 --> 0:29:27.960 Coming up on Bloomberg day Break Weekend, a look at 0:29:27.960 --> 0:29:31.400 a busy week ahead in Washington. I'm Tom Busby, and 0:29:31.520 --> 0:29:44.479 this is Bloomberg. This is Bloomberg day Break Weekend, our 0:29:44.520 --> 0:29:46.840 global look ahead at the top stories for investors in 0:29:46.880 --> 0:29:49.720 the coming week. I'm Tom Busby in New York. It's 0:29:49.760 --> 0:29:51.840 going to be a busy week ahead in Washington as 0:29:51.880 --> 0:29:55.920 Congress continues its funding battles and some key hearings, including 0:29:55.960 --> 0:29:58.880 testimony from some of the biggest names in the business world, 0:29:59.200 --> 0:30:00.600 appear before the Senate. 0:30:01.040 --> 0:30:01.360 For more. 0:30:01.440 --> 0:30:03.560 Let's add to our Bloomberg ninety nine one newsroom in 0:30:03.680 --> 0:30:07.840 Washington and Bloomberg Sound On co host Kaylee Lines. 0:30:07.960 --> 0:30:10.320 Yeah, Tom, This coming Wednesday is going to be a 0:30:10.360 --> 0:30:13.880 big day for big bank speak on Capitol Hill. The 0:30:13.920 --> 0:30:18.320 CEOs of all eight jesibs global systemically important banks will 0:30:18.360 --> 0:30:21.000 be appearing before the Senate Banking Committee for the annual 0:30:21.040 --> 0:30:25.600 oversight of Wall Street Firm's hearing. So Jamie Diamond Brian moynihan, 0:30:25.840 --> 0:30:30.120 Jane Fraser, David Solomon, James Gorman, Charlie Sharf, and even 0:30:30.200 --> 0:30:32.840 Robin Vince of BNY Mellon and Ron o'hanley of State Street. 0:30:33.200 --> 0:30:36.800 They'll all be testifying. It's a really important hearing. In fact, 0:30:36.840 --> 0:30:40.680 it's so important that Shanali basic Bloomberg TV's global finance correspondent, 0:30:40.920 --> 0:30:42.800 is going to be making the trip from New York 0:30:43.000 --> 0:30:45.720 down here to Washington to cover it, and she's joining 0:30:45.840 --> 0:30:48.880 us now. So Shanali, let's just talk about themes. 0:30:48.960 --> 0:30:49.320 First. 0:30:49.400 --> 0:30:51.320 What do you expect is going to come up in 0:30:51.360 --> 0:30:51.840 this hearing. 0:30:51.960 --> 0:30:54.440 Well, there's two things. One there's the agenda of the 0:30:54.480 --> 0:30:58.440 lawmakers and then there's the agenda of the bankers themselves. Now, 0:30:58.440 --> 0:31:02.360 you have to remember that you have policymakers really trying 0:31:02.360 --> 0:31:07.920 to firm up rules around bank capital moving forward, and 0:31:08.240 --> 0:31:10.800 those rules are now in their comment period. So what 0:31:11.080 --> 0:31:13.080 is now happening is you're going to see the big 0:31:13.200 --> 0:31:17.080 US banks, the CEOs of them, take this opportunity to 0:31:17.200 --> 0:31:20.200 really make the case on why these rules would be 0:31:20.440 --> 0:31:23.840 too stringent and start to choke off some of the 0:31:23.920 --> 0:31:27.920 economic activity because they have to hold more capital against 0:31:27.960 --> 0:31:30.440 the work that they do. Now from the lawmakers perspective, 0:31:30.480 --> 0:31:32.560 they have other questions, and you saw it right when 0:31:32.600 --> 0:31:35.760 the hearing was announced in the first place. Sharon Brown 0:31:35.920 --> 0:31:39.000 I quote said that Wall Streets megabanks continue to make 0:31:39.040 --> 0:31:43.560 record profits and to reward corporations that raise prices on Americans. 0:31:43.560 --> 0:31:47.200 So inflation will still be a question. And also, like 0:31:47.280 --> 0:31:51.000 we've seen in the prior year, we will also see 0:31:51.000 --> 0:31:54.400 them question why most Americans have not seen the effective 0:31:54.440 --> 0:31:57.640 higher interest rates through their savings accounts, because rates have 0:31:57.720 --> 0:32:01.080 not risen very meaningfully relative to how quickly rates have 0:32:01.200 --> 0:32:04.320 risen been written by the Federal Reserve. 0:32:04.600 --> 0:32:07.880 Yeah, I think the capital requirements especially could be interesting 0:32:07.920 --> 0:32:10.600 and possibly contentious because there are plenty of Republicans on 0:32:10.640 --> 0:32:14.320 the Banking Committee who have been pretty vocally opposed to 0:32:14.400 --> 0:32:17.400 the Postle three end game and those higher requirements. Basically 0:32:17.400 --> 0:32:19.440 all of the Republican senators in fact, had written a 0:32:19.480 --> 0:32:22.680 letter to the FED kind of casting doubt on whether 0:32:22.720 --> 0:32:24.800 the Fed should really be pursuing this. So I guess 0:32:24.840 --> 0:32:27.880 the bankers will be more aligned with that party and 0:32:27.920 --> 0:32:31.320 it could be a little bit more contentious with the Democrats. 0:32:31.600 --> 0:32:34.120 Well, it's interesting that you mentioned that too, because you 0:32:34.400 --> 0:32:37.720 have this just a week after this hearing comes a 0:32:37.760 --> 0:32:40.960 week after Jamie Diamond was pretty public at the CNBC 0:32:41.080 --> 0:32:44.360 delivery Sorry a Dealble New York Times deal Book conference 0:32:44.360 --> 0:32:47.600 over Sorry, and he says that even liberals should be 0:32:47.640 --> 0:32:51.520 supporting Nikki Haley. And you're seeing this big call by 0:32:51.760 --> 0:32:56.320 Wall Street to support her as a presidential candidate. And 0:32:56.520 --> 0:32:58.840 it does have a lot to do with her views 0:32:58.880 --> 0:33:02.600 around the economy and domestic policy as well as international policy. 0:33:02.800 --> 0:33:04.719 Yeah, so I'm sure there are going to be plenty 0:33:04.720 --> 0:33:08.400 of juicy headlines coming out of this hearing. There also 0:33:08.480 --> 0:33:10.840 is the question Shanali, and this kind of comes back 0:33:10.840 --> 0:33:13.280 to the reason why capital requirements might be higher in 0:33:13.280 --> 0:33:15.720 the first place. As we are now, what eight nine 0:33:15.720 --> 0:33:19.000 months out of the start of the bank failures of 0:33:19.040 --> 0:33:22.080 twenty twenty three with SVB, are they going to tell 0:33:22.120 --> 0:33:24.959 us there's still reasons to worry about the health of 0:33:25.000 --> 0:33:26.640 the banking system or is this going to be a 0:33:26.680 --> 0:33:29.200 message of nothing more to see here? Guys, We're fine. 0:33:29.320 --> 0:33:32.200 Well, let's see how tempered that they might be, because 0:33:32.280 --> 0:33:35.560 remember that these banks are slated to pay a lot 0:33:35.640 --> 0:33:38.480 more in terms of a special assessment to the FDIC, 0:33:39.000 --> 0:33:42.160 which is an agency under a lot of fire for 0:33:42.200 --> 0:33:45.800 its own practices in many ways, but the banks were 0:33:45.800 --> 0:33:47.760 feeling the burn of that, and the biggest banks are 0:33:47.800 --> 0:33:51.080 paying the most into that special assessment. 0:33:51.120 --> 0:33:53.280 All right, Well, I'm really looking forward to your coverage 0:33:53.320 --> 0:33:57.680 of this coming week. Shanali Bostic, Bloomberg TV's Global finance correspondent, 0:33:57.760 --> 0:34:00.840 Thank you so much, and Tom for Wall Street to 0:34:00.880 --> 0:34:01.640 head to Washington. 0:34:01.760 --> 0:34:04.560 Thank you, Kaylee. That was Bloomberg's sound on co host 0:34:04.600 --> 0:34:07.160 Kaylee Lines, reporting from our Bloomberg ninety nine to one 0:34:07.240 --> 0:34:09.640 news room in Washington, and you can hear sound on 0:34:09.680 --> 0:34:12.840 weekdays one to three pm Wall Street Time on Bloomberg Radio. 0:34:13.080 --> 0:34:15.520 That does it for this edition of Bloomberg day Break Weekend. 0:34:15.680 --> 0:34:17.920 Join us again Monday morning at five am Wall Street 0:34:17.960 --> 0:34:20.360 Time for the latest on the market's overseas and the 0:34:20.400 --> 0:34:23.520 news you need to start your day. I'm Tom Busby. 0:34:23.719 --> 0:34:26.480 Stay with us. Top stories and global business headlines are 0:34:26.520 --> 0:34:28.880 coming up right now.