Daybreak Weekend: Fed Preview & Tech Earnings, Bank of England Decision, Japan's Golden Week

Bloomberg Audio Studios, Podcasts, radio news.
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, we'll
look ahead to the April rate decision from the Federal Reserve,
plus a big week for Magnificent seven earnings. I'm Nathan
Hager in Washington.
I'm Karin Hedg in London, where we're looking ahead to
the Bank of England's rate decision, as the Middle East
openn's Europe's plans for growth.
I'm Doug Krisner looking ahead to the Golden Week holiday
in Japan.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three y oh New York, Bloomberg ninety nine to one, Washington, DC,
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dot Com and the Bloomberg Business App.
Good day to you. I'm Nathan Hager. We begin today's
program with the Federal Reserve. The Central Bank's latest two
day policy meeting kicks off this Tuesday. For what may
be the final rate decision under Chairman Jerome Powell on Wednesday.
Bloomberg International Economics and Policy correspondent Michael McKee will be
in Washington, d C. For the decision and Powell news conference,
and Mike is here with me. Now, I always ask
you what your question the Chairman Powell is going to
be at the news conference? I dare to ask whether
it's going to be what are you going to do?
Jay?
Is that where you're going?
You know, I know you're gonna ask me what the
Fed's gonna do, and they're not gonna do anything. They're
not gonna raise ye.
Or lower in terms of policy, right, and.
There's no new economic projections and there's no new dot plot.
So it could very well be that that's the first
question somebody asks, where are you going from here? Powell
has already said said that he will stay on as
chairman pro tem of the Board of Governors, and he
would stay on as chair of the Open Market Committee,
which makes the interest rate decisions, because he was elected
by the Open Market Committee in January to a full
year term, so they don't have to do anything, they
just continue on, and so he would continue on in
that role until worsh is confirmed, and members of the
Open Market Committee and Board of Governors have said that
once Warsh is confirmed then they will elect him as
chair of the Open Market Committee.
All right, well, let's talk about the decision itself. On Wednesday,
you mentioned that there's probably not going to be any
change in policy, no changes to the outlook as well.
What is the policy environment for the FED right now,
given all the uncertainties around what's happening in the war
in the Middle East, what that could mean for inflation,
what it could mean for the labor market as well.
They will always tell you, under any circumstance that their
monetary policy is well positioned to handle whatever happens. That's
sort of a standard line, But in this case it's true.
There does seem to be a general consensus that there
is still tight. Monetary policy may not be very tight,
and there's disagreement over how tight, but if you're going
to have inflation, where they are now is not a
bad place to be to try to cut off as
much as you can. You can't do anyth about oil prices,
but getting into other parts of the economy, and the
economy seems to be moving along pretty well. We are
not seeing a lot of hiring, but we're not seeing
a lot of firing either. We're still seeing reasonable average
hourly earnings, and consumers are still spending, and of course
business spending on AI type stuff is very strong. So
at this point they're sort of bright where they want
to be, so they don't need to do anything one
way or another.
And given this as the last official policy decision under
Chairman Powell, how would you sum up the Powell legacy?
After all the fights of the president, the fights with inflation,
after the pandemic, and after tariffs, how do you sum
up a Powell FED?
I think he did a very good job of managing
the FED and following two very academic chairs who were
much more steeped in the economics that goes into these decisions.
But he is a consensus builder. He is a very
genial person to get along with, so he was able
to pull the committee together. We went for a very
very long period with no descents until we got into
the last year maybe of this, when they started moving
rates again. And so I think he'll be seen as
a fairly effective chair. Now there are some obviously blots
on his record. They were slow to recognize that inflation
was not transitory in twenty twenty one, and they did
move quickly after that. And they also have had a
difficulty with their communications. They switched to saying more than
just maximum employment, we want maximum and inclusive employment back
in twenty and twenty and that helped contribute to the
inflation because they let inflation get a little higher to
do that and it got out of control. And also
then they haven't really figured out how they want to
talk to the markets. The dot plot has a lot
of problems with it, and there is a lot of
Fed speak out there. Kevin Worsch wants to rain it
all in, But on balance, Powell gets very strong marks
from people, especially over the last year or so when
he's had to defend the FED against the President. He
gets a lot of praise from people within the FED
for doing that.
Thanks for this, Mike, looking forward to your coverage on Wednesday.
That's Bloomberg International Economics and Policy correspondent Michael mckeeth, head
of the April rate decision from the Fed Wednesday afternoon,
two pm Wall Street Time. Of course, we will have
complete coverage across Bloomberg Radio and television and on the
Bloomberg Business app. Let's take a look now, add some
stocks to watch in the week ahead. I'm Nathan Hager,
joined by Bloomberg Intelligence Global Head of Tech Research, Man Deep, saying,
because it really is all about tech this week, I
think we're hearing from what five of the mag seven
when it comes to earnings, and a lot of them
are just this Wednesday, right, Man Deep.
They are.
And look, I think what Tesla has shown us is,
you know, capex increases are still a big focus in
terms of what these companies are doing around the AI
infrastructure build out, and so that's a common thread across
all of them.
Yeah.
Absolutely, Well, let's start off with one of the biggest names.
Microsoft is one of them that's reporting on Wednesday. We
just heard this past week that they're offering voluntary buyouts
to a bunch of their workforce. What does that tell
you about what we could get when it comes to
the earnings.
Look, I think with Microsoft, clearly the stock has been
under pressure because of their open AI partnership and you
know just the way it's evolving, and when it comes
to the top line growth, I think what investors are
waiting for is what kind of lift they are going
to see in their Azure segment from all these AI workloads.
I mean last quarter Google had that ten percentage point
gap where Google grew forty eight percent and Microsoft's was
thirty eight percent growth. So Microsoft really needs that lift
in that Azure growth line and that's where I think
investors will be comparing them against the likes of Amazon
Aws and Google Cloud, and to me, that's what they
need to show that they can deliver on that Azure
growth numbers.
Are you expecting that we're going to hear much more
from Microsoft about their capex plans after what we heard
from Tesla. I mean, they were a big part of
that six hundred and fifty billion dollar number we heard
from the hyperscalers just a few months ago.
Yeah, I wouldn't be surprised if that number is revised upward. Now.
It won't be a big revision, but clearly, as things stand,
everyone seems to be compute constrained. That's what we have
heard from Anthropic and these leading labs and Microsoft. If
they are able to show that sequential acceleration and Azure growth,
that could be the justification to raise their capex. But otherwise,
I think the stock may react negatively if they end
up raising their capex.
Also Wednesday, we're going to hear from Google parent Alphabet.
They're a big part of this kapex story as well,
and they just came out with a new generation TPU chip.
Where is Google Cloud in the AI race, Mandy.
Yeah, Google Cloud clearly has seen an acceleration, and so
I expect, you know, this quarter to be the growth
and Google Cloud to be closer to fifty percent. And look,
they've just launched two new chips TPUs, one for training,
the other one for inferencing, and they signed that big
deal three point five gigabard deal with Anthropic and Broadcom.
So from that perspective, there is a lot of momentum
they have with their chips and cloud, and their margins
in the cloud business also seem to be expanding. The
only thing which I'm not sure about is their search business,
because there are puts and takes. I mean, clearly there
is some search volume pressure because these chat pots, whether
it's Open Ai or Nthropic Cloud, they are taking some
volume of search queries away from Google. At the same time,
they don't really have an AD's kind of surface to
their queries. So from that perspective, Google should be insulated,
but I would be curious to see how they end
up doing in their core search business in terms of
the top line growth.
I keep seeing Google Gemini try to sneak into my
search results as well. Where do they factor in when
it comes to some of the other chat pots.
Yeah, so Gemini will not show you any ads. It's
purely subscription driven. Although Gemini is what's powering their AI
overviews and that's where Google could show a lot more
engagement with their searches and so in turn that could
translate into better ADS growth. But clearly Gemini is the
model that's powering all of their llms across the family
of apps, so whether it's YouTube or search or any
other surface they have. So from that perspective, you know,
Gemini standalone contribution may not be that much, but clearly
it's influencing all the family of apps that Google has.
And also Wednesday we get earnings from meta platforms they're
guiding for what thirty percent revenue growth?
Is that right?
It's phenomenal that upward revisions we have seen on Meta,
partly because they have used their compute capacity for their
ad recommendation systems. So the expectation is that ad pricing
will probably be very strong for someone like Meta, which
is able to target the ads much better than anyone
else in that digital ad ecosystem, and that's what's driving
the expectation for thirty percent growth. But look, they raised
their cap bags. They've talked about how they're releasing a
new model and that will help improve the ad targeting
and engagement further. So high expectations, but they seem to
be doing quite well in terms of that top line
growth in digital ads compared to everyone else.
Happy Tech Wednesday, Man Deep, thanks so much. That's Man
Deep saying, Global head of Tech Research for Bloomberg Intelligence,
and coming up on Bloomberg day Break weekend, we'll look
to another big central bank decision this week from the
Bank of England. I'm Nathan Hager, and this is Bloomberg.
This is Bloomberg day Break Weekend, our global look ahead
at the top stories for investors in the coming week.
I'm Nathan Hager in Washington. Up later in the program,
we'll get you set for the Golden Week celebrations on
the way in Japan. But first, the economic shock spreading
from the Middle East is catching up with central bankers
across Europe. The Bank of England meets next week and
the Spider week jobs market and sluggish UK growth, people
suspect policymakers are turning hawkish. A renewed surge in oil prices,
driven by conflict between the US and Iran is what's
making rate setters worry. Let's get more from Bloomberg Daybreak.
You're a banker, Caroline Hepger in London.
Nathan Sarah Breden has said the UK may be in
for a rocky ride over the next few months. The
economist and Deputy Governor of the Bank of England thinks
the conflict in the Middle East could cause shocks to growth,
inflation and interest rates all at the same time. She's
not the only one. The hawkish shift in rhetoric from
Bank of England policymakers was so stark. At their last meeting,
Governor Andrew Bailey took to the press to directly talk
down the markets.
That's getting ahead of whether the commistee as frankly, the committee,
it was very clear and it was obviously unanimous vote
this time actually that the right thing to do was
to hold the right thing to do is to pause,
to take a very close you know, give a very
close watch on what's going on. But also this is
a very volatile situation. I think by the next time
we meet, which will be our next decision is at
the end of April, a lot will have happened and
I can't predict what I can't possibly none of us
can predict what it will be. But it is a
very volatile situation. So I would caution really against getting
ahead of that position, which is we held.
This time Andrew Bailey speaking there. But the UK's high
reliance on gas imports and difficult fiscal position means many
are wondering what the central bankers will say when they
meet next week. Joining us now is Bloomberg's chief UK economist,
Dan Hanson and Alice Gledhill are FX and Rates report
a based in London. Welcome to both of you and
thanks for your time.
Dan.
What is the state of the UK economy going into
this Bank of England meeting?
So we've had since the Bank last met, I mean
we have obviously had the meeting in March, since the
Bank last put together a forecast which is in FI
and obviously prior to the war. We've had quite a
lot of information. I would say it's been on it's
probably been on the hawkish side. So you've had You've
had some information about GDP that shown the economy is
growing a little bit faster. You've had some pmis that
showed the economy took a hit in March but perhaps
rebounded a little bit in April, which is obviously really
interesting against the backdrop of the war. And we've also
had data on the labor market that showed, I think
prior to the war that you could argue that the labor
market was stabilizing. There may have been a hit in March.
And finally, of course you've had CPI inflation, which has
picked up as many economists expected because of what we've
seen in oil prices. That has fed into fuel prices.
So going into the meeting the Bank of England, you're
looking at it and you're thinking the economy is probably
in okaysh shape. There's probably some slack in the labor market,
but we know there is this shot coming down the pipeline.
And the thing I would say about it, particularly thinking
about the demand side of the economy, is that we
know the hit is going to be felt most by households,
and the story of the past few years is that
households have experienced a lot of shocks, but they've also
been very cautious. So I think the Bank has got
this real challenge when it's putting together it's new forecast
between capturing this big inflation shock we know that's coming,
but also the demand side is the real uncertainty and
how big a hit the economy is going to take.
If you read our forecast, read the IMF forecast, it's
fairly substantial. And I think that's a really important framing
for how the bank would then respond to that to
the shock.
Yeah, and given all of that uncertainty, there's also the
other point that has to be made. Unlike the Federal Reserve,
the Bank of England doesn't have the kind of strict
dual mandate, but there is obviously a worry about the
impact on growth. If we get a much more hawkish
NPC that cancerned about the labor market, at what point
do they start to weigh on the Bank of England.
Yeah, that I mean that balance is crucial. So I
think if you think about how this shock might permeate
through the UK economy. We know we're going to get
a big rise in energy bills and also in fuel costs.
We're seeing that already. What will be most important for
the Bank of England to judge is whether those shocks
feed through into wage setting, into price setting. In the
Bank of England vernacular, it's second round effects, that's what
they call it. And the interesting point here is that
the extent to which those second round effects can materialize
stems or is very closely linked to the state of
the labor market. So if the labor market's type workers
can bid up wages, firms feel confident about passing on
higher prices, so they give those give it to those
higher wage demands. I think the situation we find ourselves
in at the moment, though, is a different situation where
you have a loose labor market, and particularly Governor Bailey
has been talking about firms telling him that they have
very limited pricing power. So I think actually that's a
very important consideration, and it goes back to my answer
to the first question is that this is looking very
much like a trade off for the Bank of England,
and I think the bar for hiking interest rate into
this shock is much much higher than it was, say
in twenty twenty two, when the labor market was tight.
Obviously the inflation shock was bigger, but the key point
was the labor market was tight and there was an
imbalance between supply and demand in the economy.
Let's turn our attention to the guilt market and what
investors and traders think about this. Alice, this is the
focus of your work. We know that guilt markets have
been very volatile and have reacted quite strongly to the
Ivan War. How do you see the setup for the
guilt market ahead of the Bank of England's meeting.
It's a fascinating one because there's been such a u
turn in terms of where the market was kind of
coming into March and before the war to where it
is now. So I think before for the start of March,
before the US struck Iran for the first time markets
for respecting I think around two interest rate cuts this
year and that was a key reason why people have
been piling into gilts. It was really popular trade before
the war. I think what we've seen since then and
this is really a global story. It's not just the UK,
but trade has flipped to pricing in interest rate hikes
because of the warriors around inflation, we've seen a pullback
from some of the more extream levels. So I think
at the worst of the route earlier in March, we
saw as much as for interest rate hikes priced from
the BOE this year back to about sort of fifty
or sixty basis points. There's sort of two maybe through
interest rate hikes this year starting from sort of the
middle of the year. I don't think anyone thinks they're
going to hike this coming week. For gilts, it's yeah,
it's an interesting one. I mean, we've seen a massive
sell off. Gilts have been hit worse than piers, US treasuries,
bins even and I think there's a few reasons for that.
I think partly there's sort of technical reasons. So they
were this really popular trade before the war, so I
think naturally you've seen more selling. But also guiltza just
what we call a high beater asset class, like they're
just particularly sensitive. They tend to sell off more compared
to you know, sort of boons or oats for example,
like French government bonds, So I think that's part of
it as well. I think right now the market is
just waiting to see sort of what the Bank of
England says on Thursday. You know, lots of the points
that Dan spoke to you there. So that's yeah, that's
definitely the next focal point for the market.
Okay. There's also the view about whether the Iran linked
inflation shop is really even something that the central Bank
can address, or whether actually the bigger issue is the
government's fiscal position, given that they are under pressure, will
surely continue maybe to be under pressure to support businesses
and households as energy prices go up.
Yeah, exactly. The market is so sensitive to the UK
fiscal story, and I think that's partly. You know, it
does have a lot of debt, it does need to
get it down. But I think it's also sort of
a spillover from the trust scenario back in twenty twenty two.
I think what's interesting this time round is not just
in the UK, but you've seen this across continental Europe
as well, is that governments are trying really hard to
be restrained in their fiscal response. Is kind of how
much they increase public spending. I think they're just trying
their best to try to try and ride the war out.
Because we saw back in twenty twenty two to twenty
three the inflationary impact of sort of heavy public spending
to support economies through an energy supply shock. So so
far we've seen the long end of the guilt YELK curve,
which is more sensitive to sort of fiscal pressures, hasn't
massively underperformed the short end. If anything. Actually it's been
the shorter dated bonds that have been hit worse, and
that's because of the repricing we've seen in terms of
interest rate hikes for this year. I think going forward,
if the government has to start announcing sort of more
fiscal support for households of businesses, if that indicates that
we might get more borrowing, then yes, I think we'll
start to see that at four three to guild markets more.
Okay, that's interesting, Alice Dan, A thought for you on
how you are thinking about the economic impact of the
Iran war. I suppose everybody is also looking to historic precedents.
I mean we've mentioned twenty twenty two, there are other
previous energy price shocks. How do you think about that
as you go about your analysis of the UK economy.
Yeah, so, I think you know twenty twenty two is
very sort of it's you know, it's the most recent
one we've had, and it's one that a lot of
people go back to is it the
right Is it the right one to look at? I'm
not sure, And it comes back to some of the
reasons we've sort of mentioned at the start. I mean,
first of all, the scale of the shock. I mean,
you only have to plot gas prices to see the
difference in the scale of the shop that we're facing.
It's much much smaller, and thankfully, thankfully it's much much
smaller at least so far. And that's you know, that's clearly,
that's clearly good news. And I think the other difference
is the backdrop of the labor market and the backdrop
for the economy generally. I mean, I said at the
start of the year, there seems to have been a
bit of a turnaround and the economy is sort of
holding up. But if you look at the level of
GDP rather than thinking about growth, you know, the economy
is below what we would call its potential level. So
there's spec capacity in the economy that again is very
different to twenty twenty two. So I think, you know,
there are sort of various channels through which this impacts
the economy, some of which we have a very I think,
I would say a very good handle on. So the
direct impact of higher energy prices on inflation. I think
for me, the big uncertainty is one how much of
this feed through, as I was talking about second round
effects feed through to wages. The sort of baseline is
that there isn't much feed through because of the state
of the And the other thing is about consumers and
how they respond to this, And it goes to what
Alice was saying, you know, if the government steps in
with fiscal support, it's going to change the dynamic. Again,
That's what changed the dynamic in twenty twenty two, where
there was this massive fiscal support not just in the
UK but all over Europe, and that changed the dynamic.
And I think that, you know, arguably staved off the
recession that everyone thought was coming. So I think that
there are a lot of things going on, but I
think for me, at least, the nature of this shock
and the shock that the Bank of England has to
think about, is one that presents a sharper trade off.
So it's yes, it's higher inflation, but I think that
there's not much been spoken about in terms of the
demand side of this and the growth impact of this,
and I think that that's just going to be just
as important as it thinks about how it responds.
Yeah, I think it's going to be very interesting meeting
from the Bank of England and also in the coming
few months to see how the Iran war price spike
in energy costs is going to affect everybody. Dan, thank
you so much for being with me. That is our
chief UK economist and Alice Gledhill, ore FX and rates
reporter based here in London. Thank you. I'm Caroline Hepkee
here in London. You can catch us every weekday morning
for Blueberg Daybreak. You're at the beginning at six am
in London. That's one am on Wall Street.
Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend,
we get you set for Golden Week in Japan. I'm
Nathan Hager and this is Bloomberg. I'm Nathan Hager in
Washington with your global look ahead of the top stories
for investors in the coming week. It's going to be
a Golden Week in Japan, that's what they call it.
With a stretch of national holidays on tap in the
upcoming days. For more, let's go to Doug Prisner, host
of the Bloomberg Daybreak Asia podcast.
Thanks Nathan. Golden Week is one of Japan's busiest and
longest holiday seasons. Think of it as several public holidays
over for a week long period. Now, consumer spending typically jumps,
and not surprisingly, travel also usually spikes. Will this year
be any different? For a closer look, let's bring in
Bloomberg's Alice French, who joins us from our studios in Tokyo.
Thank you for taking time. What are we expecting to see?
I think in terms of overall spending this year?
Hi, yeah, I mean, as you say, Golden Week is
always a very busy period for travel, not just outbound
travel but also inbound. You know, we know that we've
seen many years of increasing tourism, but particularly around this period.
I mean, the weather is good, it's sort of before
things get too hot and sweaty, but there should be
some nice sunny days. And obviously, of course the yen
is still down at those really low levels, sort of
you know, not far off the one sixty to the
dollar mark, which is making it very cheap to travel here.
So we do.
Expect strong spending, particularly you know in the touristy areas
of course, Tokyo and Kyoto. The department stores often do
very well out of these holidays from those tax free sales,
but also things like the one hundred yen stores, the
convenience stores, those kind of cheaper ends of the consumer
spectrum as well always get you know, a lot of
popularity at this time. But having said that, we do
know that for sort of going on six months now right,
Tokyo has this ongoing sort of spat with Beijing and
stemming from Takaichi's comments about Taiwan. So it will be
really interesting to see to what extent that kind of
weighs on inbound travel from China during this holiday.
So will most travel be domestic or will there be
some travelers that choose to go out of the country
to places like South Korea and Taiwan.
Well, I think that's the big question, right because as
I mentioned, we obviously have the week yen which is
making it more expensive for you know, Japanese residents to
travel elsewhere. I certainly feel it myself whenever I go
home to London, things are definitely a lot more expensive
and so I think, you know, increasingly Japanese residents are
choosing to stay domestically. Obviously, Japan has a lot of
great tourist spots, you know, coastal areas, hiking and things
all across from you know, Oki nowa down in the south,
up to Hokaido in the north, and so a lot
of people are opting to stay at home, just sort
of do a staycation. I think that those numbers of
outbound travel will be really interesting to see because, yeah,
we don't really know to what extent the week en.
Now that people have sort of got used to it
and settled into this extended period of yen weakness, perhaps
you know, people are starting to dip their toe back
into international travel again. But also, you know, it is
a busy time and everybody is very aware that people
are moving around, and this is kind of peak travel time.
So I think a lot of people actually deliberately stay
at home to sort of avoid the crowds. Right, So
let's see. But I think, you know, if people do
choose to go abroad, like you say, I think it's
more likely that it will be those sort of Asian
closer neighboring countries, not least because the flights are cheaper
as well, and of course everything that's going on globally
Gia politically, with flights, it makes it pretty tricky to
sort of get out of Asia.
Really well, I'm glad you brought that up, because we
can talk about a week currency, but we also have
to talk about higher energy prices. And even before the
war with Iran started, Japan was dealing with high inflation.
Is it much worse now?
One hundred percent? And you know, we know that Japan
and some of its Asian neighbors are the worst hit
by these higher oil prices, right And of course you know,
we actually had A and A one of the domestic
airlines this week saying that they might be increasing their
surcharges because of these oil prices. It's definitely hitting flight prices,
but like you say, it's also just hitting everyday life.
I certainly feel it here in Tokyo. As you mentioned,
we've of course had inflation here for you know, a
couple of years now, but it is really starting to bite.
And it's not just gasoline and things. It's you know,
it's hitting things like plastics. We're seeing shortages of things
like home goods. Because of obviously hold ups in in
the strait of home mus and yeah, it is. It
is really starting to bite, and I think that will
also probably affect people's travel plans and how they're spending
their time, right. People are trying to sort of cut
costs and save where they can.
Well, that's an interesting point as well, because you were
talking a moment ago about staycations and I'm wondering if
there's also kind of a growing preference for more savings.
Generally speaking, I think so, yeah, there's definitely a preference
for more savings. And also I think we have been
seeing more people getting into investment, right, I mean not
just since the war, but but previously too, but particularly
in the last few months and since we've come into
twenty twenty six. You know, the stock market is looking
quite attractive, and there is sort of, I think a
bit of a conflict, right of what you're seeing in
your everyday life with prices going up and you know
the word, you know, potential recession and things being flung around.
But then you look at the stock market and things
are doing pretty well.
Right.
We've seen the Nike up at another all time high
and in recent weeks and I do think a lot
of people are kind of starting to consider stock investment
as that one form of saving. We know that, you know,
wages have been rising here but not quite keeping pace
with inflation for a lot of workers, and so you know,
invest and savings are starting to look increasingly attractive, and
domestic stocks look like a good option for a lot
of people because of the valley that we've seen.
So when I think of holidays, I think of food.
What are food prices like right now in Japan?
Yeah, that's a good question. I mean, Japan is known
and a lot of Japanese brands are known for sort
of keeping their prices the same and keeping them cheap.
And interestingly, actually there's a very popular chain here which
actually sells Italian food, so they tell you know, they
sell pasta, pizza, wine, but with a bit of a
sort of Japanese twist. It's called size Edia. They do
have some shops in other countries too, but they're very
big here and they've been hitting headlines in recent weeks
because they've managed to somehow keep their prices low. I mean,
you can get a bowl of pasta there for four
hundred gm, which is maybe two dollars fifty, which is
pretty crazy and it's nice quality. So these companies kind
of trying to keep trying all they can to keep
the prices down because they know that that is what
consumers obviously have you been used to for so many
day decades, But certainly in the supermarkets, in the convenience stores,
we are seeing those prices go up, prices of kind
of raw fruits and vegetables, but also particularly imported goods, right,
And I think that's really hitting the supermarket providers too.
And I do think that some people, you know, I've
heard from just friends that people are sort of cutting
down on eating out, trying to you know, be a
little more cust cutting when it comes to the cooking.
And again, I think that will probably impact how people
make their their Golden Week plans this year.
So given these circumstances, I'm curious as to whether or
not the government is doing anything unusual to try to
stimulate maybe a little bit more positive sentiment or increase
consumer confidence in any way.
I mean, specifically around the war and obviously all of
these jitters that we're feeling around oil supply. Taekayuchi, the
Prime Minister, has been putting out, you know, a lot
of statements about don't worry, we do have these reserves,
we have enough, you know, oil reserves for however many months.
We do have reserves of naptha, this feedstock, which is
so important for plastic. I think she said we have
around four months work of supply. But you know, as
much as the government obviously tries to reassure people, when
you also have companies coming out publicly saying that they
are dealing with these shortages and having to raise prices,
that obviously does make people feel a bit worried. Now,
Takaichi did come to Pama with a promise to cut
the consumption tax temporarily to zero, which she has said
that she is going to move forward with, and I
think that was a big reason that she actually was elected. Now,
of course she did get that mandate before the war
broke out, but I think it's now even more relevant
and probably even more popular if she is able to
do that because of, you know, the rising cost of
living that people are really feeling bite them right now.
So when I think of Golden Week in China, I
think of a lot of gift giving as a part
of the celebrations, and I'm wondering whether the same is
true in Japan, where we will see whether or not
they're tokens or something a little bit more luxurious, whether
there is a little bit of exchange of gifts happening
during this holiday period.
Yeah.
I mean, look, everybody is going to be going home
to their pa, parents and their grandparents, particularly from the
big cities to the kind of more rural farming areas, right,
and of course they will be taking you know, it's
traditional to take and on my iya a souvenir from
where you live and bring it to your family. So
certainly those kind of souvenir providers, which particularly you know,
the fancy department stores in Tokyo, they know that this
period is coming up and they will be packaging up
you know, cookies and chocolates and things for people to
take home to their families. And I think that always
leads to a little spike in in that sort of spending.
We do also have Children's Day, of course, and I
think a lot of parents and grandparents like to spoil
the kids on that special day. So I think, you know,
we could see some uptick in spending there, but again
it will it'd be interesting to see how much the
cost cutting element comes in and whether we might see
perhaps a slightly smaller bump than we usually would do.
Alice will leave it there. Thank you so very much
for helping us preview Golden Week in Japan. Bloomberg's Alice
French from our studio in Tokyo. We go to China
next where the twenty twenty six Beijing International Automotive Exhibition
is underway, and that's where we caught up with Han
Ceo Jose Munos, who spoke with Bloomberg Steven Engel.
Are you still interested though a buying Momenta.
We are not talking about by Momenta. We are holders
of Momenta and utilizing their technology. We have some more meetings,
say going on.
How about other partnerships.
There was Korean media reports about possible partnering with x
Pound as well in using some of their clans driving.
We have ight Geobo Taxis.
Like all companies, we have a lot of explorations to
see how we can really take advantage. For the time being,
the official partnerships that we have announced so the partnership
with General Mottos.
We have a partnership with.
Way More so we're gonna launch this year. By Q four,
the robot taxis integrated fully in our HMGMA factory in Savannah, Georgia,
and then more more to follow. We have also a
partnership that we have announced with Amazon, and then we're
always exploring. So I'm sure that there some more things
will happen in the next few months.
I told you it's gonna be rapid fire questions.
Let's move on the Boston Dynamics, the Atlas Robotic Humanoid Robotics.
Obviously that's a big push here.
All the players, including xbang I mentioned going big into
their Iron Humanoid.
Robots, full scale rollout.
I think for you guys, for Boston Dynamics be twenty
twenty eight.
Can you give us an updake? Yes?
So, well, this is really key integral part of OWER
struggling because this is not about showing off what the
robot can do, et cetera. This is about having a
real physical AI and utilize the robots for a purpose. Right, So,
we are designing robots that have capabilities beyond humans, which
are helping humans, which are not substituting humans, and are doing.
Jobs that the humans cannot do.
Right, So the purpose is to increase productivity is to
increase quality and reduce course. We are working to help,
especially on the manufacturing area. We believe that our control company,
Boston Dynamics, is the best in new work in the technology.
We are one of the best, not the beast, in
the world. From manufacturing, we want to ensure that we're
able to produce robots in a mass produce basis, and
we have announced the intention to bruce about thirty thousand
before the end of twenty thirty.
A lot of market chatter about when an IPO for
that would happen.
Do you have any update for us. We're not going
to speculate.
What I can tell you is that the combination of
a solid fundamental say of our company performances plus the
presentation at CS of our real intention with Poston Dynamics
through the Humanoid Atlas has made our stock to grow
by one hundred and twenty percent on.
Just a few months.
These shows that we have really very strong foundations to
continue to grow in the future.
That's HANDI CEO Jose Munios, who spoke with Bloomberg Steven
Engel at the Beijing International Automotive Exhibition. I'm dok Kristner.
You can catch us weekdays for The Daybreak, AASI of podcast.
It's available wherever you get your podcast.
Nathan, Thanks Doug, and that does it for this edition
of Bloomberg Daybreak Weekend. Join us again Monday morning at
five am Wall Street Time for the latest sun markets,
overseas and the news you need to start your day.
I'm Nathan Hager.
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