Daybreak Weekend: Disney Earnings, Reeves to US, China Trade

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg day 0:00:12.200 --> 0:00:14.480 Break Weekend, our global look at the top stories in 0:00:14.520 --> 0:00:16.759 the coming week from our day Break anchors all around 0:00:16.800 --> 0:00:19.000 the world, and straight ahead on the program, and look 0:00:19.000 --> 0:00:22.360 at how some recent box office blockbusters may have impacted 0:00:22.440 --> 0:00:26.599 quarterly results at the world's biggest entertainment company, Walt Disney. 0:00:26.840 --> 0:00:29.520 I'm Stephen Carrol in London, where we're asking if Rachel 0:00:29.520 --> 0:00:32.080 Reeves can sell the British Dream in America. 0:00:32.440 --> 0:00:35.360 I Riyan Curtis in Hong Kong along with Doug Chrisner 0:00:35.400 --> 0:00:38.360 in New York. We look ahead to Ali Baba's earnings, 0:00:38.440 --> 0:00:41.000 and we preview China's upcoming trade data. 0:00:43.960 --> 0:00:47.960 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:47.960 --> 0:00:51.800 Eleve Them three own New York, Bloomberg ninety nine to one, Washington, DC, 0:00:52.120 --> 0:00:56.200 Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 0:00:56.400 --> 0:01:00.680 DAB Digital Radio London, Sirius XM one nineteen and around 0:01:00.680 --> 0:01:03.320 the world on Bloomberg Radio dot Com and via the 0:01:03.360 --> 0:01:04.560 Bloomberg Business App. 0:01:08.880 --> 0:01:11.640 Good day to you. I'm Tom Busby. We begin today's program, 0:01:11.640 --> 0:01:14.560 but the Walt Disney Company, set to report third quarter 0:01:14.600 --> 0:01:19.120 earnings on Wednesday. The world's most popular parks, cruises, movies, 0:01:19.160 --> 0:01:22.160 broadcast cable streaming properties. The list goes on. For more 0:01:22.319 --> 0:01:25.520 on what to expect and what investors are looking to hear. 0:01:25.600 --> 0:01:30.120 We're joined by Thomas Buckley, Bloomberg Entertainment reporter. Thomas. Thank 0:01:30.160 --> 0:01:32.679 you for being here. Why don't we start with what 0:01:32.720 --> 0:01:35.000 you're expecting to see in these results? 0:01:35.040 --> 0:01:36.400 Great to be hit, Tom. You know, it's going to 0:01:36.440 --> 0:01:39.679 be a really interesting set of results for Disney, especially, 0:01:39.680 --> 0:01:41.559 as you said, you know, one of the world's most 0:01:42.240 --> 0:01:45.640 popular parks companies. I think that what's going to be 0:01:45.760 --> 0:01:48.600 very interesting for shallholders here is to gauge the performance 0:01:48.680 --> 0:01:51.600 of the parks in the current period. I mean, basically, 0:01:51.640 --> 0:01:56.280 we've seen Comcast reports earlier in July results that were 0:01:56.320 --> 0:01:59.920 fairly tepid in its parks division, so that includes Universal Studio, 0:02:00.640 --> 0:02:03.080 and Disney had been very clear early on that they 0:02:03.080 --> 0:02:06.920 have seen demand start to moderate at the parks following 0:02:06.960 --> 0:02:10.640 a peak as we came out of COVID, So that's 0:02:10.639 --> 0:02:12.680 been well flagged. But we want to see exactly just 0:02:12.880 --> 0:02:16.680 how much the slowdown has impacted the company. CFO Hugh 0:02:16.720 --> 0:02:19.320 Johnston was very clear last quarter that the third quarter 0:02:19.360 --> 0:02:22.440 would be impacted by costs related to its cruise division 0:02:22.480 --> 0:02:25.120 as well as well as higher inflation. So that's it 0:02:25.160 --> 0:02:28.040 on the experiences side. What's interesting as well on the 0:02:28.160 --> 0:02:30.520 entertainment side is to see whether or not's Disney's going 0:02:30.520 --> 0:02:33.640 to be able to achieve its first profit since April 0:02:33.720 --> 0:02:36.720 twenty twenty two thanks to the blowout performance of the 0:02:36.760 --> 0:02:39.480 blockbuster Inside Out Too, which is a Pixart film. 0:02:39.600 --> 0:02:42.440 And they've got Deadpool and Wolverine which just came out, 0:02:42.480 --> 0:02:45.960 won't affect these earnings and in the pipeline some huge 0:02:46.080 --> 0:02:50.040 movies Moana two in November, Mufasa the Lion King at 0:02:50.120 --> 0:02:53.760 Christmas time. I mean, parks always seems to be driving earnings, 0:02:53.800 --> 0:02:56.919 but is entertainment Is this division really hitting it out 0:02:56.919 --> 0:02:57.760 of the park right now? 0:02:57.960 --> 0:02:59.960 You know, that's a really interesting question that certainly feel 0:03:00.120 --> 0:03:02.600 as though this is the year that Disney's movie studio 0:03:02.720 --> 0:03:06.080 has truly come back to past performance. There were a 0:03:06.120 --> 0:03:08.720 few stumbles in recent years. If we think about last 0:03:08.800 --> 0:03:11.079 year's and Man of the wosquantum mania that called into 0:03:11.120 --> 0:03:14.040 question the appeal of the Marvel franchise that was then 0:03:14.160 --> 0:03:17.240 followed by The Marvels in November, which also did not 0:03:17.320 --> 0:03:20.160 perform well at all. If we think about the film 0:03:20.240 --> 0:03:22.480 Light Year back in twenty twenty two, that called into 0:03:22.520 --> 0:03:25.600 question the appeal of the Pixar franchise. Both of those 0:03:25.639 --> 0:03:28.800 franchise seem to have really come back this year with 0:03:28.960 --> 0:03:31.840 Inside Out Too in June the Pixar as I mentioned, 0:03:31.960 --> 0:03:35.080 and then Deadpool and Wolverine. The numbers on this are 0:03:35.120 --> 0:03:39.360 absolutely outstanding. Is the highest ever our rated debut in 0:03:39.440 --> 0:03:42.840 terms of an opening weekend in history. It's already grossed 0:03:42.880 --> 0:03:46.320 above five hundred million dollars and could easily compete with 0:03:46.480 --> 0:03:48.360 the Disney's own Inside Out two to be one of 0:03:48.360 --> 0:03:49.440 the biggest films. 0:03:49.120 --> 0:03:49.520 Of the year. 0:03:50.120 --> 0:03:53.720 Yeah, a little confusing to people though Mowana is a two. 0:03:53.920 --> 0:03:56.640 Mufasa is I think the third in a series, Deadpool 0:03:56.680 --> 0:03:59.840 and Wolverine the third and net series. I mean, na 0:04:00.040 --> 0:04:01.400 a whole lot original coming out of. 0:04:01.360 --> 0:04:05.040 That studio, though that is certainly true aspertains to this year. 0:04:05.160 --> 0:04:07.720 I think there's been interesting ever since Barbaya came back 0:04:07.760 --> 0:04:10.880 as CEO in November twenty twenty two. Is his ambition 0:04:11.000 --> 0:04:13.040 to get the studio back to pass form and the 0:04:13.040 --> 0:04:15.720 way that he's done that is these pulled back on 0:04:15.760 --> 0:04:19.480 some titles to focus exclusively on their quality, to make 0:04:19.480 --> 0:04:21.280 sure that as perfect as can be at the time 0:04:21.279 --> 0:04:24.880 that they're released. And coincidentally, what's happened is that the 0:04:24.880 --> 0:04:28.799 primary focus of films this year has been on sequels 0:04:28.839 --> 0:04:31.280 or spin offs, and so far that's worked out very 0:04:31.279 --> 0:04:33.560 well for the company. I think it serves to remind 0:04:33.600 --> 0:04:36.960 audiences what they once loved about these franchises, and we 0:04:37.000 --> 0:04:39.560 can certainly expect a lot of aretionality coming down the 0:04:39.600 --> 0:04:40.360 pipe next year. 0:04:40.760 --> 0:04:43.560 Now, another big part of Eiger's turnaround is a focus 0:04:43.600 --> 0:04:46.800 on streaming, and it just locked down an eleven year 0:04:46.839 --> 0:04:49.760 deal with the NBA along with some partners Comcast in Amazon. 0:04:50.440 --> 0:04:53.719 But streaming, what do investors hope to hear about the 0:04:53.760 --> 0:04:56.400 streaming numbers? And it has a lot of properties, I mean, 0:04:56.600 --> 0:04:59.760 Hulu is part of that family, ESPN with a standalone 0:04:59.800 --> 0:05:03.200 stream service of course, Disney plus what are we looking 0:05:03.240 --> 0:05:07.279 to hear in subscribers and what's ahead for the streaming division? 0:05:07.720 --> 0:05:10.160 Absolutely so. A you that's very well documented at this 0:05:10.200 --> 0:05:12.480 point on Wall Street is that for the longest time, 0:05:12.520 --> 0:05:16.359 shareholders were purely focused on subscriber growth, and especially at 0:05:16.400 --> 0:05:18.320 the peaks of the pandemic when the market cap of 0:05:18.360 --> 0:05:20.720 Netflix was what it was with people locked at home. 0:05:21.279 --> 0:05:24.599 I think that that focus has now since shifted to 0:05:24.839 --> 0:05:29.000 streaming profitability, and Disney has lost in excess of eleven 0:05:29.040 --> 0:05:32.440 billion dollars ever since debuting the flagship Disney Plus streaming 0:05:32.480 --> 0:05:35.799 service in twenty nineteen, and now I think the shareholders 0:05:35.800 --> 0:05:39.479 are becoming increasingly impatient and want to see profitability in 0:05:39.480 --> 0:05:43.640 the streaming division. Now, Disney has been clear that achieving 0:05:43.720 --> 0:05:47.000 profitability would not be a linear exercise. There would be 0:05:47.040 --> 0:05:50.560 ebs and flows quarter to quarter. Last quarter they came 0:05:50.920 --> 0:05:54.520 very very close to achieving an overall profit in the 0:05:54.560 --> 0:05:58.599 streaming division. So for the third quarter, CFO Hugh Johnson 0:05:58.640 --> 0:06:01.880 had flag that he doesn't exp growth in coll Disney 0:06:01.880 --> 0:06:05.640 Plus numbers of subscribers. As a result, we're probably going 0:06:05.680 --> 0:06:09.400 to see the overall division come down slightly lower than 0:06:09.880 --> 0:06:13.880 achieving a profit. We're thinking maybe one hundred million dollars 0:06:14.480 --> 0:06:18.719 in losses in that division this quarter or thereabouts. Now, 0:06:19.000 --> 0:06:22.280 Barbaiga has said that he's very confident in achieving streaming 0:06:22.279 --> 0:06:26.160 profitability by the end of Disney's fiscal year, which would 0:06:26.200 --> 0:06:27.560 be as early as next quarter. 0:06:27.880 --> 0:06:29.960 Now investors are going to be a little restless to 0:06:30.040 --> 0:06:33.040 hear those kind of figures, those kinds of losses and 0:06:33.480 --> 0:06:36.159 maybe muted subscriber growth with all the competition. Do you 0:06:36.160 --> 0:06:37.960 think people are not going to be happy? 0:06:38.240 --> 0:06:43.960 I think fundamentally, Disney has flagged repeatedly that achieving a profit, 0:06:44.000 --> 0:06:46.640 as I mentioned in streaming would not be a linear exercise. 0:06:46.720 --> 0:06:49.719 And also I think that they have guided towards achieving 0:06:49.760 --> 0:06:52.640 break even by the end of their fiscal year. So 0:06:52.760 --> 0:06:54.840 on that basis, I think that you know, if they 0:06:55.720 --> 0:07:01.080 hold to that timeline, then the performance will be unsurprising 0:07:01.360 --> 0:07:04.640 and a relief for many shareholders, as in when that 0:07:04.760 --> 0:07:05.880 streaming profit comes in. 0:07:06.200 --> 0:07:09.200 Disney earnings out this Wednesday, that's ahead of Wall Street's 0:07:09.200 --> 0:07:13.560 opening Bell and our thanks to Thomas Buckley, Bloomberg Entertainment Reporter. Well, 0:07:13.640 --> 0:07:16.920 we move next to the ride sharing companies Uber and Lift. 0:07:17.040 --> 0:07:21.040 Uber reporting its latest quarterly results on Tuesday, Lift on Wednesday, 0:07:21.040 --> 0:07:23.480 and for more on what to expect, We're joined by 0:07:23.520 --> 0:07:28.240 Mandeep Singh, Bloomberg Intelligence Senior tech industry analyst. Man Deep 0:07:28.280 --> 0:07:31.720 The COVID nineteen lockdowns are over people hailing rides again, 0:07:32.040 --> 0:07:35.400 ordering food deliveries and big numbers. What are you expecting 0:07:35.400 --> 0:07:36.360 to see. 0:07:36.600 --> 0:07:39.800 Well, So I think what we have seen with Uber 0:07:39.920 --> 0:07:43.920 specifically is the ride sharing segment has come back very 0:07:44.040 --> 0:07:48.720 strongly since the reopenings, and travel continues to be strong. 0:07:48.840 --> 0:07:53.320 So mobility segment, which is their big driver of profitability, 0:07:53.720 --> 0:07:57.680 should have another quarter of twenty percent plus booking's growth. 0:07:58.240 --> 0:08:01.640 And I think in terms of scale, I find Uber 0:08:01.680 --> 0:08:03.920 to be the best position when it comes to the 0:08:04.040 --> 0:08:08.560 right sharing side. The delivery side is still not profitable. 0:08:08.680 --> 0:08:12.200 They've been layering ads, they've been pulling back from markets 0:08:12.280 --> 0:08:15.160 that are not profitable. But in the end, we haven't 0:08:15.200 --> 0:08:19.240 seen the type of synergy that everyone feels should come 0:08:19.360 --> 0:08:22.720 with a company like Uber given its own right sharing 0:08:22.800 --> 0:08:27.200 and food delivery and freight, which is a completely different segment, 0:08:27.280 --> 0:08:30.400 so money losing segment. So in the case of Uber, 0:08:30.600 --> 0:08:34.440 everyone wants to see mobility do well because that's when 0:08:34.440 --> 0:08:37.640 they beat on their profitability metrics. And look, there has 0:08:37.679 --> 0:08:42.920 been news about Tesla launching robotaxis, Wemo actually scaling up 0:08:42.960 --> 0:08:46.480 their robotaxis that they currently have in three cities in 0:08:46.520 --> 0:08:49.160 the US, and that's a big risk when it comes 0:08:49.240 --> 0:08:52.240 to long term what happens to the business model of 0:08:52.320 --> 0:08:53.400 right sharing companies? 0:08:53.760 --> 0:08:56.520 How about Lyft, which does not have the food delivery. 0:08:57.000 --> 0:08:59.640 Yeah, I mean, look, this is a scale business, and 0:08:59.679 --> 0:09:03.000 if you don't have scale, then you know, there is 0:09:03.040 --> 0:09:06.360 a very little chance of sustaining profitability. And that's been 0:09:06.480 --> 0:09:10.959 Lift's biggest problem because look, Uber with a revenue run 0:09:11.040 --> 0:09:14.680 rate of over forty billion dollars a year can barely 0:09:15.000 --> 0:09:18.600 be profitable because of its mobility segment. Lyft is like 0:09:18.880 --> 0:09:23.560 five times smaller and that's where and just like you 0:09:23.559 --> 0:09:27.360 SAIDT doesn't have delivery, so that's where it gets challenging 0:09:27.440 --> 0:09:32.040 to get supply to really do this in a profitable fashion. 0:09:32.240 --> 0:09:34.880 There are insurance costs, and look, this is not a 0:09:34.920 --> 0:09:39.840 software type eighty percent gross margin business right sharing delivery. 0:09:39.960 --> 0:09:42.600 This is more of a fifty percent gross margin business. 0:09:42.600 --> 0:09:45.160 And you've got a lot of variable costs. And on 0:09:45.240 --> 0:09:48.040 top of that, you have a technology threat. You know, 0:09:48.080 --> 0:09:50.320 if there are robot taxis, then you don't need a 0:09:50.400 --> 0:09:53.640 human driver or a human career to deliver. So that's 0:09:53.720 --> 0:09:57.560 the big overhang when it comes to these two companies. 0:09:57.600 --> 0:10:00.600 The good thing is the market has rationalized. It's just 0:10:00.640 --> 0:10:03.120 two players in the US. A lot of the other 0:10:03.160 --> 0:10:07.000 players outside the US are retrenching. They're pulling back, you know, 0:10:07.120 --> 0:10:11.960 from unprofitable markets. So that rationalization is all good. But 0:10:12.040 --> 0:10:15.360 if Weimo comes up with a driver less car that 0:10:15.360 --> 0:10:18.760 can operate in certain zip codes, that really puts a 0:10:18.800 --> 0:10:21.440 lot of pressure on the take rates for these companies. 0:10:21.480 --> 0:10:25.400 And that's why you see an Uber stock reacting every 0:10:25.440 --> 0:10:28.760 time there is news of Tessa talking about robotaxis, even 0:10:28.800 --> 0:10:30.760 though it was a delay this time around, which is 0:10:30.800 --> 0:10:31.199 a good thing. 0:10:31.559 --> 0:10:34.439 And that's all that Cruz and Weimo are doing right 0:10:34.480 --> 0:10:35.360 now is yeah. 0:10:35.400 --> 0:10:37.840 I mean Cruse, I think has pulled back. So it's 0:10:38.000 --> 0:10:42.840 really Tesla and Weimo right now who are really pulling ahead. 0:10:42.840 --> 0:10:46.240 When it comes to scaling this technology, there are challenges. 0:10:46.280 --> 0:10:50.760 I don't think they feel comfortable these autonomous driving kind 0:10:50.760 --> 0:10:53.600 of can take care of all the edgy use cases. 0:10:54.000 --> 0:10:56.600 So there is that risk that you know, you can 0:10:56.720 --> 0:11:00.280 only operate with certain guardrails and you know, making sure 0:11:00.080 --> 0:11:03.600 or you don't run into the ed scenarios. But still, 0:11:03.800 --> 0:11:06.839 as I said, for Uber and Lyft, it's all about 0:11:06.880 --> 0:11:10.680 the take rates. If your take rates compress, then it's 0:11:10.679 --> 0:11:12.800 going to put a lot of pressure on your business model. 0:11:12.840 --> 0:11:15.120 And that's why you know, every time you hear about 0:11:15.120 --> 0:11:19.680 Prop twenty two New York cab drivers asking for more, 0:11:20.480 --> 0:11:24.679 that is all putting pressure on Uber that you know, 0:11:24.800 --> 0:11:27.880 they cannot even talk about raising their take rates. They 0:11:27.960 --> 0:11:30.640 just have to find a way to be profitable by 0:11:30.720 --> 0:11:31.960 keeping their take rates slow. 0:11:32.120 --> 0:11:34.240 Well, let's dive a little deeper into that. The Prop 0:11:34.280 --> 0:11:38.320 twenty two a victory of sorts in California, officials there 0:11:38.400 --> 0:11:41.400 leaving intact, at least for now, the classic classification that 0:11:41.480 --> 0:11:45.679 drivers are independent contractors, not employees. And in New York 0:11:45.720 --> 0:11:48.560 City officials backing away from their threat to impose a 0:11:48.600 --> 0:11:51.600 minimum pay regulation on Uber and Lyft and other drivers 0:11:51.840 --> 0:11:55.080 as long as they stop locking out drivers to avoid 0:11:55.160 --> 0:11:58.920 paying overtime. So, boy, this is very contentious. 0:11:58.840 --> 0:12:01.960 It is. And that's you know, if you hear Uber 0:12:02.559 --> 0:12:06.520 kind of profits jumping forty to fifty percent, then it 0:12:06.559 --> 0:12:10.080 brings so much more attention to these companies because on 0:12:10.160 --> 0:12:13.440 one hand, they are increasing their profitability. On the other hand, 0:12:13.480 --> 0:12:17.840 the drivers feel they're not compensated very well by these companies. 0:12:17.480 --> 0:12:19.760 And marginalized by these companies exactly. 0:12:20.040 --> 0:12:22.680 And so that's the push and pull that you cannot 0:12:22.679 --> 0:12:26.760 show too much profitability because then it brings in too 0:12:26.840 --> 0:12:29.440 much attention to your business. And you know the fact 0:12:29.480 --> 0:12:32.200 that you're not paying enough to your drivers, and I 0:12:32.240 --> 0:12:34.800 think that's not going away, which is why this business 0:12:34.880 --> 0:12:37.720 is so hard. I still feel compared to other tech 0:12:37.760 --> 0:12:41.360 business models, this is the hardest business model to keep showing, 0:12:41.760 --> 0:12:43.240 you know, steady profitability. 0:12:43.600 --> 0:12:43.880 Wow. 0:12:44.000 --> 0:12:47.360 Well, Uber's latest earnings out on Tuesday. Lift on Wednesday 0:12:47.400 --> 0:12:51.040 in our thanks to Mandeep Singh, Bloomberg Intelligence senior tech 0:12:51.120 --> 0:12:54.280 industry analysts. All right, coming up on Bloomberg day Break weekend, 0:12:54.280 --> 0:12:58.040 we'll discuss whether new UK Chancellor Rachel Reeves can sell 0:12:58.080 --> 0:13:01.839 the British dream in a mariera. I'm Tom Busby and 0:13:01.960 --> 0:13:16.000 this is Bloomberg. This is Bloomberg day Break Weekend, our 0:13:16.040 --> 0:13:18.400 global look ahead at the top stories for investors in 0:13:18.440 --> 0:13:21.480 the coming week. I'm Tom Busby in New York. Up 0:13:21.559 --> 0:13:23.680 later in our program and look ahead to some key 0:13:23.840 --> 0:13:26.880 trade data in China and earnings from the Chinese tech 0:13:26.920 --> 0:13:30.480 giant Ali Baba. But first, the UK's new Chancellor of 0:13:30.520 --> 0:13:34.360 the Exchequer, Rachel Reives, has already made her mark auditing 0:13:34.480 --> 0:13:38.040 UK public spending, finding a nearly twenty two bill pounds 0:13:38.040 --> 0:13:42.720 spending whole of unfunded and undisclosed commitments, and now she's 0:13:42.760 --> 0:13:45.960 looking to reign and spending a jumpstart international investment in 0:13:45.960 --> 0:13:48.439 the UK, and to help make that happen, she heads 0:13:48.440 --> 0:13:50.960 to the US this week to wo deep pocketed Wall 0:13:50.960 --> 0:13:53.960 Street executives for more. Let's go to London and bring 0:13:54.000 --> 0:13:56.920 in Bloomberg day Break Europe anchor Stephen Carroll. 0:13:57.080 --> 0:13:59.679 Tom It's been a busy few weeks for Rachel Reeves, 0:13:59.679 --> 0:14:02.600 now in charge of the UK Treasury. The dire state 0:14:02.679 --> 0:14:05.080 of the public finances means she's already had to make 0:14:05.080 --> 0:14:08.559 difficult decisions to cut spending on things like winter fuel 0:14:08.559 --> 0:14:12.840 payments for some pensioners and several infrastructure projects. Next up, though, 0:14:12.840 --> 0:14:15.360 she's jetting after the United States to drum up interest 0:14:15.600 --> 0:14:19.040 from global investors in her new National Wealth Fund. The 0:14:19.080 --> 0:14:21.400 government's plan is to use the equivalent of around nine 0:14:21.440 --> 0:14:24.160 billion dollars of public money to get three times as 0:14:24.240 --> 0:14:27.720 much investment from the private sector, building backing from financial 0:14:27.760 --> 0:14:30.560 stakeholders at home and abroad. As something the Chancellor discussed 0:14:30.600 --> 0:14:33.760 with Bloomberg in her first major broadcast interview in the 0:14:33.840 --> 0:14:34.760 role last month. 0:14:35.240 --> 0:14:39.000 We've introduced to Parliament today the Budget Responsibility Bill that 0:14:39.160 --> 0:14:42.960 was first announced in the King's Speech just yesterday. And 0:14:43.000 --> 0:14:46.080 the purpose of this bill is to provide the fiscal 0:14:46.160 --> 0:14:48.760 lock so that never again can a Prime Minister or 0:14:48.920 --> 0:14:52.440 Chancellor do what Liz Trust and Quasi Cootting did with 0:14:52.520 --> 0:14:56.920 their disastrous mini budget just under two years ago. So 0:14:57.360 --> 0:14:59.680 this will mean that the Office of Budget Responsibility, the 0:14:59.720 --> 0:15:03.480 ind Pendant Office, can always provide a forecast when there 0:15:03.520 --> 0:15:08.480 are significant and permanent tax and spending changes, specifically worth 0:15:08.480 --> 0:15:11.600 more than one percent of GDP. That would have meant 0:15:11.640 --> 0:15:15.240 it would have triggered an OBR forecast back when Liz 0:15:15.240 --> 0:15:17.920 Trust and Cosey Quotin introduced that disastrous Many budget. 0:15:18.520 --> 0:15:21.280 And so that I guess it is something that investors will, 0:15:21.400 --> 0:15:24.760 you know, take solos to You've announced a what the 0:15:24.800 --> 0:15:26.440 Premier has said that you will achieve that two point 0:15:26.480 --> 0:15:28.720 five percent target. Are you confident that's achievable. 0:15:29.920 --> 0:15:34.479 So the purpose of today really was to give businesses, 0:15:34.520 --> 0:15:38.840 give investors that confidence that Britain is a stable place 0:15:38.960 --> 0:15:42.120 to invest and do business. I'm determined to do that. 0:15:42.400 --> 0:15:45.720 We were elected two weeks ago on a mandate to 0:15:45.800 --> 0:15:50.360 grow our economy based on that stability that is so 0:15:50.560 --> 0:15:54.520 essential to underpin any economic decision making, and so that's 0:15:54.520 --> 0:15:57.560 why this bill is so important. Now. I'm under no 0:15:57.640 --> 0:16:00.720 illusions about the scale of the challenge that face in 0:16:00.800 --> 0:16:03.880 this job. There are going to be difficult decisions ahead, 0:16:04.360 --> 0:16:07.400 but I was really clear during the election that everything 0:16:07.400 --> 0:16:09.800 that we put forward, whether that is on the NHS 0:16:09.920 --> 0:16:12.640 or on defense or on tax policy, will always be 0:16:12.680 --> 0:16:16.000 fully costed and fully funded. That's very different so what 0:16:16.000 --> 0:16:19.640 we've had these last fourteen years with decisions with no 0:16:19.760 --> 0:16:22.200 regard to where the money's going to come from, and 0:16:22.240 --> 0:16:23.760 I'm going to be different and. 0:16:23.760 --> 0:16:25.800 Chance for a lot of course of what you're trying 0:16:25.800 --> 0:16:28.080 to put in place will depend on private capital coming 0:16:28.120 --> 0:16:28.720 into the UK. 0:16:28.880 --> 0:16:29.360 Have you had. 0:16:29.280 --> 0:16:33.600 Discussions with institutions, investors, even pension funds of their willingness 0:16:33.680 --> 0:16:34.320 to come to the UK. 0:16:34.720 --> 0:16:38.520 You're absolutely right that our plans to grow the economy 0:16:39.040 --> 0:16:43.080 depend on businesses and investors choosing Britain as a place 0:16:43.120 --> 0:16:45.600 to invest. And I want investors to look at Britain 0:16:45.720 --> 0:16:48.400 and see a country that's got a stable government with 0:16:48.480 --> 0:16:51.560 a clear mandate to grow the economy, and chooses Britain 0:16:51.920 --> 0:16:54.560 as a stable place to invest in an increasingly volatile 0:16:54.600 --> 0:16:58.240 and uncertain world, which is why the fiscal lot today 0:16:58.280 --> 0:17:01.440 is so important, but also the other changes we've announced 0:17:01.480 --> 0:17:04.640 in the last two weeks. We have announced more policies 0:17:05.000 --> 0:17:07.480 to grow the economy than the last government did in 0:17:07.520 --> 0:17:11.359 fourteen years. In the first seventy two hours in the job, 0:17:11.880 --> 0:17:16.000 I made more comprehensive changes to the UK planning system 0:17:16.080 --> 0:17:19.040 than the previous government did in more than a decade, 0:17:19.240 --> 0:17:23.120 because I know that we need to unlock that private 0:17:23.200 --> 0:17:26.160 investment that businesses tell me they are ready to invest 0:17:26.520 --> 0:17:28.280 if we get rid of some of those blockages, and 0:17:28.320 --> 0:17:30.480 the blockages in the planning system I think are more 0:17:30.520 --> 0:17:35.280 significant than anything else. And so those changes to bring 0:17:35.320 --> 0:17:39.560 back mandatory housing targets for local authorities, ending the moratorium 0:17:39.800 --> 0:17:43.960 on shore when calling in planning decisions, on data centers 0:17:44.000 --> 0:17:47.359 and on housing really crucial both to send a signal 0:17:47.359 --> 0:17:50.080 to business that Britain is a place to invest, but 0:17:50.200 --> 0:17:52.800 also to make sure that we can get on with 0:17:52.880 --> 0:17:54.560 things and get building in Britain again. 0:17:54.960 --> 0:17:56.760 And are they listening. Have you gotten cars from big 0:17:56.840 --> 0:17:59.359 investors saying yes, that's a plan that I wanted to 0:17:59.359 --> 0:18:00.000 see and I'm. 0:17:59.840 --> 0:18:04.360 In absolutely so. In my first speech at the Treasury 0:18:04.760 --> 0:18:07.159 a week and a half ago. We had businesses, we 0:18:07.240 --> 0:18:10.760 had investors in the audience met afterwards. The following day 0:18:11.160 --> 0:18:14.240 we announced the creation of a National Wealth Fund, work 0:18:14.359 --> 0:18:17.000 led by Mark Carney. The task force led by Mark 0:18:17.040 --> 0:18:19.679 Carney for the Labor Party when we were in opposition 0:18:20.040 --> 0:18:23.480 now reporting to a Labor government, and on that Wealth 0:18:23.520 --> 0:18:26.560 Fund task Force, we also had Amanda Blank from a 0:18:26.640 --> 0:18:32.040 Viva Vencat, from Berkley's Antonio from Energy and other big 0:18:32.200 --> 0:18:36.399 UK investors. And that is absolutely crucial because there's no 0:18:36.560 --> 0:18:39.359 plans that I can draw up in my new office 0:18:39.359 --> 0:18:42.720 in the Treasury that are going to work unless we 0:18:42.840 --> 0:18:45.720 have business buy in. And I hope that businesses saw 0:18:45.720 --> 0:18:48.560 in Labour's manifesto and also in the plans that we've 0:18:48.560 --> 0:18:52.600 announced in government have the fingerprints of business all over 0:18:52.640 --> 0:18:55.760 them because these plans have been co written with business, 0:18:56.000 --> 0:18:59.800 because they're all about unlocking private sector investment into our economy. 0:19:00.240 --> 0:19:03.280 Chancellor, are you considering tax breaks to either boost pension 0:19:03.359 --> 0:19:05.480 savings or of make UK investments more attractive. 0:19:06.320 --> 0:19:09.320 I'm not going to announce any tax breaks or tax 0:19:09.400 --> 0:19:13.600 changes without saying where the money is going to come from. 0:19:13.800 --> 0:19:16.720 And we will have a budget later this year. But 0:19:16.800 --> 0:19:19.520 I also just need to be really clear and honest 0:19:19.520 --> 0:19:22.760 about the scale of the challenge that we've inherited with 0:19:22.840 --> 0:19:26.600 the public finances. We're going to have to make difficult decisions. 0:19:26.680 --> 0:19:29.399 We need to fix the foundations before we can start 0:19:29.440 --> 0:19:33.560 rebuilding things in Britain. But unlike the previous government, I 0:19:33.560 --> 0:19:35.560 am going to be honest about the scale of the challenge. 0:19:35.560 --> 0:19:38.040 I'm going to level with people and together we're going 0:19:38.080 --> 0:19:39.200 to rebuild our country. 0:19:39.720 --> 0:19:43.080 That was the Chancellor Rachel Reeves speaking to Bloomberg's Francine Lacweb. 0:19:43.240 --> 0:19:46.040 So big ambitions, but will the support measure up. I've 0:19:46.040 --> 0:19:48.840 been discussing what's at stake in the Chancellor's upcoming trip 0:19:48.840 --> 0:19:52.360 to the United States with our UK political editor Alex Wickham. 0:19:52.840 --> 0:19:55.000 It's a big moment for Rachel Reeves. You know, she's 0:19:55.040 --> 0:19:58.480 got this big, gaping hole in the public finances in 0:19:58.520 --> 0:20:03.960 this country. She has ambitious manifesto plans with Keir Starmer 0:20:04.240 --> 0:20:06.840 for the Labor Party that they want to implement that 0:20:06.880 --> 0:20:09.639 are going to cost money. And they see in the 0:20:09.640 --> 0:20:12.560 absence of not really wanting to put everyone's taxes up, 0:20:12.680 --> 0:20:15.639 not really wanting to massively increase borrowing. They see private 0:20:15.680 --> 0:20:19.880 investment as a key piece of solving that puzzle. So 0:20:19.920 --> 0:20:23.639 whether she can raise really tens of billions of pounds 0:20:23.720 --> 0:20:25.720 over the next year or so to pay for things 0:20:25.760 --> 0:20:28.280 like the green transition in this country, it is going 0:20:28.359 --> 0:20:31.159 to be a huge test of the Starma Reeves government. 0:20:31.880 --> 0:20:34.440 What's the message that she'll be selling to those executives 0:20:34.440 --> 0:20:36.119 that should be meeting on wall streets. 0:20:37.760 --> 0:20:40.879 It's very much similar to the message that she was 0:20:40.920 --> 0:20:43.920 successful with voters in this country at the electure earlier 0:20:43.960 --> 0:20:46.320 this month or last month, which was that you know, 0:20:46.640 --> 0:20:49.200 stability is the order of the day now and they 0:20:49.240 --> 0:20:53.400 will run the politics and the economics of this country 0:20:53.440 --> 0:20:57.280 in a way that is predictable and calm and a 0:20:57.560 --> 0:21:02.360 healthy haven for investors. Is certainly compared to perhaps other 0:21:02.400 --> 0:21:06.520 parts of the world where there's more political and economic turmoil. 0:21:06.600 --> 0:21:09.160 That's obviously a far cry from the last few years 0:21:09.200 --> 0:21:12.440 in Britain since Brexit, which had been much more tumultuous. 0:21:12.760 --> 0:21:15.199 So they are going to make the pitch that you know, 0:21:15.600 --> 0:21:17.600 Britain has changed now and is actually more of a 0:21:17.640 --> 0:21:19.200 safe haven for investors. 0:21:20.160 --> 0:21:23.119 Where does the planned National Wealth Fund come into this. 0:21:23.280 --> 0:21:26.160 JJ Reez wants to raise over twenty billion pounds through 0:21:26.160 --> 0:21:29.560 it from the private sector. I mean, how achievable would 0:21:29.560 --> 0:21:29.840 that be. 0:21:31.359 --> 0:21:35.000 They're very confident, and you know, governments always say that 0:21:35.000 --> 0:21:37.600 they want to raise private investment as we're paying for 0:21:37.640 --> 0:21:42.080 things that they want to happen. But Reeves is a 0:21:42.119 --> 0:21:45.359 bit more open about this idea of borrowing to invest 0:21:45.400 --> 0:21:48.760 as well and borrowing to stimulate private investment. She has 0:21:48.800 --> 0:21:52.480 this idea that for every pound that the government invests 0:21:52.480 --> 0:21:55.440 in infrastructure projects, for example, she thinks she can raise 0:21:55.480 --> 0:21:59.320 three pounds from private investors. You know, obviously whether she 0:21:59.440 --> 0:22:01.760 can do that is to be seen. But for things 0:22:01.920 --> 0:22:05.160 like green Transition, where labor has been forced to really 0:22:05.240 --> 0:22:08.320 pair back the amount of state spending that it's willing 0:22:08.359 --> 0:22:12.320 to put forward for huge projects that are absolutely fundamental 0:22:12.440 --> 0:22:16.600 to the government's plan to get economic growth, being able 0:22:16.640 --> 0:22:19.919 to bring in private investments through things like the National 0:22:19.920 --> 0:22:23.359 Wealth Fund, what labor people call the multiplier effect of 0:22:23.400 --> 0:22:26.840 bringing in all this extra private investment is just absolutely 0:22:26.880 --> 0:22:28.679 a key thing for them. So they will want to 0:22:28.800 --> 0:22:31.840 prove early on that there is interest in these sorts 0:22:31.840 --> 0:22:32.600 of ideas. 0:22:33.440 --> 0:22:36.840 This is also a chance for Rachel Reeves to build 0:22:36.880 --> 0:22:41.800 bridges for the UK outside with its neighbors and the 0:22:41.920 --> 0:22:44.040 US of course being a very important partner there too. 0:22:44.160 --> 0:22:46.399 Now she's focused on the financial side of things, but 0:22:46.480 --> 0:22:50.800 this is also part of I suppose Karstarmer's government relaunching 0:22:50.840 --> 0:22:54.879 the UK as a global partner after a tumultuous for years. 0:22:56.000 --> 0:22:56.200 Yeah. 0:22:56.200 --> 0:22:59.040 Absolutely, And we haven't heard very much from Tiers Armor 0:22:59.160 --> 0:23:03.600 on foreign policy for ever really until he took office 0:23:03.600 --> 0:23:05.560 where really at the first couple of weeks he was 0:23:05.600 --> 0:23:09.359 at NATO in DC, then hosted a big summit of 0:23:09.400 --> 0:23:13.520 European leaders in Britain, and he's really been speed dating 0:23:13.680 --> 0:23:16.080 sort of world leaders and allies to try to say 0:23:16.480 --> 0:23:19.199 I think he used the words Britain is back in 0:23:19.240 --> 0:23:23.080 reference to you know, essentially the Brexit years and under 0:23:23.080 --> 0:23:26.600 the Conservatives, saying that you know, no, actually, under my government, 0:23:26.640 --> 0:23:30.359 we won't be retreating from the world stage. So absolutely 0:23:30.400 --> 0:23:32.080 this is a this is a chance for Rachel Reeves 0:23:32.119 --> 0:23:34.600 to do her version of that on the finance side 0:23:35.080 --> 0:23:37.400 in the US and also to you know, really get 0:23:37.440 --> 0:23:41.040 in with perhaps the next generation of Democrat leaders as well. 0:23:42.480 --> 0:23:44.880 Yeah, I mean, at the same time, Rachard Reeves might 0:23:44.920 --> 0:23:47.199 also be happy to escape some of the problems that 0:23:47.240 --> 0:23:49.840 she has at home. We had that you know conference 0:23:49.880 --> 0:23:53.480 in recent days, that announcement of the bigger than expected 0:23:53.560 --> 0:23:57.600 whole in the public finances in the UK two, I mean, 0:23:57.960 --> 0:24:02.399 the difficult questions about the u uka's government finances in 0:24:02.400 --> 0:24:04.399 the future also looking pretty tricky. 0:24:05.560 --> 0:24:09.280 Absolutely, And you know, we always talk about honeymoon periods 0:24:09.280 --> 0:24:12.240 for new governments after they win elections, and certainly first 0:24:12.359 --> 0:24:16.480 a couple of weeks everybody in Westminster was being pretty 0:24:16.480 --> 0:24:18.760 generous to the new Labor government, sort of saying, oh, 0:24:18.800 --> 0:24:22.600 you know, it's interesting to deal with these new people 0:24:22.640 --> 0:24:26.160 in charge. Well, Rachel Reeves on Monday gave a speech 0:24:26.200 --> 0:24:28.719 in which she said she had uncovered that the public 0:24:28.760 --> 0:24:31.880 finances she's inherited from the Conservatives were far worse than 0:24:31.920 --> 0:24:35.000 she previously thought. Now some of that, no doubt is true, 0:24:35.000 --> 0:24:37.359 but there was a bit of political theater involved in 0:24:37.400 --> 0:24:39.400 that as well by Rachel Reeves, and it's very much 0:24:39.440 --> 0:24:43.320 seen as a pitch rolling exercise for her to raise 0:24:43.400 --> 0:24:46.440 taxes at the coming budget in October, which, of course, 0:24:46.440 --> 0:24:49.120 in the general election campaign over only a few weeks ago, 0:24:49.400 --> 0:24:51.360 she said she wasn't going to do so. That has 0:24:51.440 --> 0:24:53.720 left a bit of a sour taste in the mouth 0:24:53.880 --> 0:24:58.800 just four weeks into Kissed Armour's premiership and yeah, absolutely, 0:24:58.800 --> 0:25:02.320 the honeymoon that new governments often enjoy is very much 0:25:02.400 --> 0:25:03.160 over already. 0:25:04.359 --> 0:25:07.000 Perhaps also, Rachel Reeves might be looking for a bit 0:25:07.040 --> 0:25:10.800 of Americans stardust too. When it comes to economic growth. 0:25:10.800 --> 0:25:13.520 They've been a debate during the election campaign here about 0:25:13.680 --> 0:25:16.399 whether or not a two and a half percent growth 0:25:16.440 --> 0:25:19.200 target might be achievable over the lifetime of the government. 0:25:19.680 --> 0:25:22.040 Rachel Reeves might be looking very enviously at some of 0:25:22.080 --> 0:25:24.359 the economic performance in the US as well. 0:25:25.680 --> 0:25:28.639 Yeah, and Labor saying that they want to have the 0:25:28.640 --> 0:25:31.959 best growth in the G seven and economists are skeptical, 0:25:32.160 --> 0:25:35.520 to put it mildly, as to whether that will be achievable. 0:25:36.160 --> 0:25:40.480 The reality is Labor made this big bet on economic 0:25:40.520 --> 0:25:45.360 growth as the solution to Britain's problems unlocked by planning, 0:25:45.400 --> 0:25:48.280 reform and house building. They thought that they would be 0:25:48.320 --> 0:25:50.879 able to growth the economy enough to be able to 0:25:51.800 --> 0:25:54.879 raise money to fix the public services that are ailing 0:25:54.920 --> 0:25:58.160 in Britain on healthcare and justice and all the rest 0:25:58.200 --> 0:26:03.760 of it. Three four weeks into the job, Rachel Reeves has, 0:26:03.880 --> 0:26:07.040 if not jettisoned that sort of growth miracle plan. She 0:26:07.240 --> 0:26:10.159 sort of very much said, Okay, well, we're also going 0:26:10.200 --> 0:26:13.080 to have to put taxes up, which is you know, 0:26:13.560 --> 0:26:18.320 arguably inhibitatetor growth, and she will face really heavy scrutiny 0:26:18.400 --> 0:26:21.199 over the next few months over whether she really is 0:26:21.280 --> 0:26:23.880 still going for growth as the answer, or whether it's 0:26:23.920 --> 0:26:26.320 actually going to be tax risers a long the wealthy 0:26:26.640 --> 0:26:30.320 that pay for fixing public services, as many people suspected 0:26:30.320 --> 0:26:32.120 in the election, but she didn't want to admit. 0:26:32.920 --> 0:26:36.399 Thanks to Bloomberg's UK Political editor Alex Wickham, I'm Stephen 0:26:36.400 --> 0:26:38.800 Carroll in London. You can catch us every weekday morning 0:26:38.800 --> 0:26:41.280 here for Bloomberg Daybreak Europe, beginning at six am in 0:26:41.320 --> 0:26:43.520 London and one am on Wall Street. 0:26:43.680 --> 0:26:46.560 Tom. Thank you, Steven. And coming up on Bloomberg day 0:26:46.560 --> 0:26:49.040 Break weekend to look ahead to earnings from Chinese tech 0:26:49.080 --> 0:26:53.119 giant Ali Barber. I'm Tom Busby, and this is Bloomberg. 0:27:04.040 --> 0:27:06.520 This is Bloomberg day Break Weekend, our global look ahead 0:27:06.520 --> 0:27:08.680 at the top stories for investors in the coming week. 0:27:08.920 --> 0:27:12.159 I'm Tom Busby in New York. Continuing the theme on 0:27:12.359 --> 0:27:15.080 AI from last week, we expect to hear more from 0:27:15.080 --> 0:27:18.480 tech giant Ali Baba's earnings and outlook, and we look 0:27:18.520 --> 0:27:20.840 ahead to trade data out of China. Let's get to 0:27:20.840 --> 0:27:24.440 Bloomberg Daybreak Asia co host Brian Curtis for a preview. 0:27:24.760 --> 0:27:28.119 Tom ali Baba says it will soon launch an AI 0:27:28.240 --> 0:27:31.960 powered search engine to help small and medium sized companies 0:27:32.000 --> 0:27:35.640 improve their sourcing. Ali Baba has been undergoing a turbulent 0:27:35.680 --> 0:27:39.880 restructuring as it's lost market shared to rivals including PDD 0:27:40.440 --> 0:27:43.720 and byte Dance. The company announced other measures, such as 0:27:44.080 --> 0:27:47.360 charging a zero point six percent service fee on both 0:27:47.440 --> 0:27:51.800 Talbau and Timol merchants that could boost revenue. We'll soon 0:27:51.880 --> 0:27:54.440 learn more about what's happening with the company as Ali 0:27:54.480 --> 0:27:58.280 Baba reports earnings in the coming period. Joining us now 0:27:58.359 --> 0:28:02.040 is Katherine Lim Bloomberg and Intelligent, senior analysts for Asia 0:28:02.119 --> 0:28:05.679 Consumer and Technology. Catherine, thank you very much for joining us. 0:28:05.720 --> 0:28:08.959 Let's start off with competition. How stiff is the competition 0:28:09.200 --> 0:28:11.800 for ali Baba now from those firms like I mentioned 0:28:12.000 --> 0:28:13.760 PDD and ByteDance and others. 0:28:14.119 --> 0:28:17.280 Right, you know, on a topic of competition for ali Baba, 0:28:17.359 --> 0:28:20.879 it's coming in multiple directions depending on which of the 0:28:20.960 --> 0:28:24.919 six key business we're talking about. We've got China and 0:28:24.960 --> 0:28:29.800 that's Talbo and Timo. We've got overseas and that's Ali Express, 0:28:30.280 --> 0:28:36.080 you know, against Timu Shian even Amazon in countries like US. 0:28:36.480 --> 0:28:38.920 And then of course we have the cloud business and 0:28:38.960 --> 0:28:43.760 that's where the AI competition is going on with Baydo 0:28:44.240 --> 0:28:47.480 and other players from China as well as overseas. 0:28:48.280 --> 0:28:51.520 So what do we know about Ali Baba's AI powered 0:28:51.600 --> 0:28:54.480 search engine. We mentioned there that this is supposed to 0:28:54.520 --> 0:28:57.360 help small companies with their sourcing. What do we know 0:28:57.400 --> 0:28:57.760 about it? 0:28:58.400 --> 0:29:02.120 So it's currently still on going d trials and you know, 0:29:02.200 --> 0:29:04.600 this shouldn't come as a surprise given that, you know, 0:29:04.680 --> 0:29:08.040 the training of some of these large language models that's 0:29:08.120 --> 0:29:11.520 backing it is really the key here. We've seen the 0:29:11.600 --> 0:29:16.240 initiatives for do you know Ali Expressed, who was the 0:29:16.280 --> 0:29:20.240 sponsor of the Euro twenty twenty four, and they've actually 0:29:20.320 --> 0:29:24.640 trialed some of those for the bigger audience outside of China, 0:29:25.280 --> 0:29:27.840 and then there was that that was going on within 0:29:28.040 --> 0:29:31.160 China as well. So I would say the company is 0:29:31.320 --> 0:29:34.800 again trying to get as many scenarios as they can 0:29:35.240 --> 0:29:38.160 so that you know, the models is better able to adapt. 0:29:38.440 --> 0:29:40.600 And I guess you know the million dollar question when 0:29:40.680 --> 0:29:43.120 will we see results and how it will stack up 0:29:43.160 --> 0:29:45.920 to competition. I think it's gonna take a little bit 0:29:45.960 --> 0:29:49.600 more time. Hopefully by the time we get to you know, 0:29:49.680 --> 0:29:52.120 the year end sale and then you know the big 0:29:52.160 --> 0:29:55.960 singles day sales, you know, for the company itself, we 0:29:56.080 --> 0:29:58.440 may be able to see something a lot more tangible 0:29:58.520 --> 0:30:01.080 and for that to be contributing part reively to the 0:30:01.160 --> 0:30:02.440 company's top line. 0:30:02.200 --> 0:30:06.160 Then and what will the impact be on revenue of 0:30:06.240 --> 0:30:10.200 these of these new fees zero point six percent service fees. 0:30:10.560 --> 0:30:13.760 Right now, that was really a very interesting development and 0:30:13.840 --> 0:30:17.200 I have to actually first you know, remind everyone that 0:30:17.400 --> 0:30:21.920 you know, this technology software service fees have been implemented 0:30:22.240 --> 0:30:27.520 by pdd JD dot com in China for you know, 0:30:27.680 --> 0:30:30.520 since late last year, and in fact earlier even for 0:30:30.600 --> 0:30:33.800 Little rate Book, the social media company and doing as well. 0:30:34.320 --> 0:30:39.080 So Ali Baba is the last to implement this. And really, 0:30:39.160 --> 0:30:41.240 you know, as I speak to the company and understanding 0:30:41.240 --> 0:30:44.800 where they're coming from, they are really keeping it flexible. 0:30:45.320 --> 0:30:48.600 They are probably you know, talking to merchants about what 0:30:48.680 --> 0:30:51.400 are the ways and how to really implement the zero 0:30:51.440 --> 0:30:54.200 point six percent. There are puts that they are giving 0:30:54.200 --> 0:30:56.920 back to the merchants, dough so net net, it may 0:30:56.960 --> 0:30:59.960 not really be that zero point six percent. They are 0:31:00.000 --> 0:31:03.720 growing other things like you know, even you know, delivery subsidies, 0:31:03.800 --> 0:31:07.360 et cetera. If you're able to meet not meet certain things. 0:31:07.720 --> 0:31:10.600 So I wouldn't be too you know, hype up about 0:31:10.640 --> 0:31:15.000 step benefits to the company. From a revenue perspective, it's 0:31:15.000 --> 0:31:17.840 going to take time. And really what I'm watching out 0:31:17.880 --> 0:31:21.360 for is whether PDDJD dot com or doing they're going 0:31:21.440 --> 0:31:25.160 to tweak their zero point six percent fee and it 0:31:25.200 --> 0:31:28.440 comes in different forms. It's zero point five, you know, 0:31:28.560 --> 0:31:31.640 up to one percent as well as I understand the 0:31:31.640 --> 0:31:33.200 next few months yep, so. 0:31:33.200 --> 0:31:37.479 A bit unknown. Alibaba's forward pe is just nine. That 0:31:37.560 --> 0:31:41.160 must be close to the lowest since it went public. 0:31:41.480 --> 0:31:45.840 We have this restructuring where they're trying desperately to add value, 0:31:46.200 --> 0:31:48.680 but has the restructuring kind of stalled. 0:31:49.480 --> 0:31:53.080 Well, the restructuring, you know, I think they've put it 0:31:53.120 --> 0:31:55.400 on the shelf for the now. It's still going to 0:31:55.400 --> 0:31:58.560 be the Alibaba conglomerate that we are seeing right now. 0:31:58.960 --> 0:32:02.000 No IPOs, oh spin off. You're gonna hear more share 0:32:02.000 --> 0:32:04.880 buybacks for them for sure, and you know, don't forget 0:32:04.960 --> 0:32:08.560 that this is a company. They've also started paying out dividends, right, 0:32:09.160 --> 0:32:13.920 so that is the you know capital, you know focus 0:32:14.000 --> 0:32:17.320 that they have for their shareholders in the course of 0:32:17.360 --> 0:32:20.840 the next twelve months, so you know, until we actually 0:32:20.840 --> 0:32:23.640 see more signs of improvements to their core business from 0:32:23.680 --> 0:32:26.640 the e commerce side to the claw cloud. I think 0:32:26.680 --> 0:32:29.800 that is what we can be expecting from the company. 0:32:30.640 --> 0:32:33.800 Ali Baba has been funding and in some cases acquiring 0:32:34.080 --> 0:32:39.720 smaller up and coming tech companies. We mentioned ai earlier well, 0:32:39.760 --> 0:32:42.440 a company by trend is a leader in the generative 0:32:42.440 --> 0:32:46.280 AI space in China. So for those acquisitions, will they 0:32:46.320 --> 0:32:48.600 be paying dividends anytime soon? Oh? 0:32:49.040 --> 0:32:51.760 You Now, most of these starts are startup as far 0:32:51.840 --> 0:32:56.240 as I understand, definitely not you know, making money right now, 0:32:56.520 --> 0:33:00.880 and they're probably gonna need more of the investments from 0:33:01.280 --> 0:33:05.000 the lunch funders like Ali Baba themselves, So I don't 0:33:05.000 --> 0:33:08.920 think we should be expecting any dividends and incrementally, if anything, 0:33:09.040 --> 0:33:13.640 hopefully we see some technological breakthrough that can actually help 0:33:13.880 --> 0:33:15.360 and be something new to the market. 0:33:15.680 --> 0:33:17.840 All right, Catherine, thanks so much for joining us. We 0:33:17.920 --> 0:33:21.680 do appreciate it. Catherine lim Bloomberg Intelligence senior analysts for 0:33:21.760 --> 0:33:25.600 Asia Consumer and Technology. Next up, let's get to our 0:33:25.640 --> 0:33:29.240 co host Doug Krisner for a preview of China's trade data. 0:33:29.320 --> 0:33:32.760 Brian, we know the Chinese economy is struggling. Poor sentiment 0:33:33.040 --> 0:33:36.680 is keeping households and businesses from spending and investing, and 0:33:36.680 --> 0:33:40.760 as a result, domestic demand remained sluggish. If there's a 0:33:40.800 --> 0:33:44.120 bright spot, it's the strength of exports for two straight 0:33:44.160 --> 0:33:48.920 months the increases of top forecast. Now, manufacturing and exports 0:33:48.960 --> 0:33:53.880 remain crucial pillars of China's economic recovery. However, weakness in 0:33:53.960 --> 0:33:57.400 parts of the global economy are creating some headwinds now. 0:33:57.400 --> 0:34:01.280 The latest official manufacturing PMI showed traction for a third 0:34:01.280 --> 0:34:04.960 straight month, and factory gate prices seem to be trapped 0:34:04.960 --> 0:34:09.080 in deflation. Joining us now for further discussion of China's 0:34:09.080 --> 0:34:14.160 economic recovery is Katya Dimitrieva, Bloomberg Asia Economics correspondent. She 0:34:14.239 --> 0:34:17.120 joins us from Hong Kong. Nice of you to drop by. 0:34:17.320 --> 0:34:20.399 Let's begin with the trade data and what this may 0:34:20.680 --> 0:34:24.040 tell us about how well China's economy is doing right now. 0:34:24.160 --> 0:34:27.400 Well, the trade data will tell us a lot, because 0:34:27.480 --> 0:34:31.080 it's been the growth engine of the economy so far 0:34:31.160 --> 0:34:35.200 this year in really surprising ways, I think unexpected ways 0:34:35.239 --> 0:34:38.839 for economists. We were looking for a bit more of 0:34:38.880 --> 0:34:42.240 the consumption to play a role, and that just simply 0:34:42.560 --> 0:34:46.439 hasn't happened basically since January. So the trade data will 0:34:46.480 --> 0:34:50.200 tell us where the economy is going, more so than 0:34:50.520 --> 0:34:53.080 if you're looking at the US or a European economy. 0:34:53.080 --> 0:34:56.080 There's a lot of different pieces that fit together to 0:34:56.120 --> 0:34:58.920 tell the story. But I think for China right now, 0:34:59.000 --> 0:35:03.560 it is so dependent on exports and on manufacturing and 0:35:03.640 --> 0:35:08.600 industrial production. So this in particular will be July figures, 0:35:09.160 --> 0:35:12.000 so we're already halfway through the year. The story so 0:35:12.080 --> 0:35:17.360 far this year for China has been strong manufacturing, strong trade, 0:35:17.680 --> 0:35:20.120 and then a little bit of weakness on prices for 0:35:20.160 --> 0:35:23.240 those exports. The question is what will be the story 0:35:23.360 --> 0:35:26.799 for the second half, and some of the data that 0:35:26.840 --> 0:35:31.239 we've had recently points to this potentially not being as 0:35:31.280 --> 0:35:32.080 good of a story. 0:35:32.280 --> 0:35:34.000 One of the issues that we've heard about as it 0:35:34.000 --> 0:35:36.960 relates to the industrial economy in China is this issue 0:35:37.000 --> 0:35:40.200 of overcapacity. Is that part of what we're seeing right now. 0:35:40.520 --> 0:35:44.480 Over Capacity is an interesting term, and I think you'll 0:35:44.719 --> 0:35:47.080 hear different answers from different people about what that means. 0:35:47.080 --> 0:35:50.359 But I think generally when we talk about overcapacity, it's 0:35:50.360 --> 0:35:54.800 this idea that China is just producing too much stuff, 0:35:54.880 --> 0:35:58.200 and certainly it's producing too much for the domestic market 0:35:58.360 --> 0:36:01.440 and consumers to eat up. And so we're seeing that 0:36:01.520 --> 0:36:04.920 going into exports and as a results, there's so much 0:36:05.000 --> 0:36:09.360 competition and price competition that those prices of exports are dropping. 0:36:09.920 --> 0:36:12.480 And so you know, in the short term that might 0:36:12.480 --> 0:36:14.359 be a good thing. In the short term, you're really 0:36:14.480 --> 0:36:17.600 juicing all of your goods out of the country. It's 0:36:17.600 --> 0:36:22.440 contributing to manufacturing growth, to jobs, to employment, to wages. 0:36:22.920 --> 0:36:26.040 But in the longer term, as you get that price erosion, 0:36:26.280 --> 0:36:30.319 that's actually not good for Chinese companies. The other thing 0:36:30.360 --> 0:36:33.200 we have to remember about China, and it seems silly 0:36:33.239 --> 0:36:36.120 to say, but it is a very big country and 0:36:36.200 --> 0:36:41.680 there's competition among domestic markets as well. So when a 0:36:41.920 --> 0:36:45.279 US or Europe kind of looks at China and says, well, 0:36:45.280 --> 0:36:48.399 there's you know, there's clearly dumping or there's clearly this 0:36:48.760 --> 0:36:54.600 overcapacity issue domestically, it's not orchestrated, right like you have 0:36:55.239 --> 0:37:00.520 domestic producers in various provinces competing to be the best 0:37:00.520 --> 0:37:04.399 province are the best region within China, and so that's 0:37:04.440 --> 0:37:07.320 where you get a lot of that price erosion happening 0:37:07.360 --> 0:37:09.960 because hey, I'm in this province, I'm offering you a 0:37:10.000 --> 0:37:12.480 price that's going to be lower than this other province. 0:37:12.920 --> 0:37:17.920 But the overall that's obviously not good for trade tensions globally. 0:37:18.480 --> 0:37:22.560 We've seen government officials addressing that in the Plenum and 0:37:22.600 --> 0:37:25.840 some of the other annual meetings this year, but like 0:37:25.920 --> 0:37:28.880 with other measures and out so far, it just needs 0:37:29.000 --> 0:37:30.360 a lot more detail. 0:37:30.520 --> 0:37:33.319 So a moment ago, I mentioned that domestic demand is 0:37:33.480 --> 0:37:35.960 very weak right now, and I'm imagining this is going 0:37:36.000 --> 0:37:38.840 to translate into lackluster imports. 0:37:38.440 --> 0:37:38.880 Will it not? 0:37:39.280 --> 0:37:42.279 Yes, And they have been pretty weak. If you look 0:37:42.400 --> 0:37:47.560 at even last month in June June's trade data, you 0:37:47.600 --> 0:37:52.239 would see that exports were over eight percent growth, but 0:37:52.400 --> 0:37:56.440 imports were in the negative. And so that's also something 0:37:56.880 --> 0:38:00.759 that has been heard from Western countries is is they 0:38:00.840 --> 0:38:04.000 want to see consumers in China come back because that's 0:38:04.080 --> 0:38:06.600 kind for their own companies. So it's not just about 0:38:06.600 --> 0:38:11.080 competition and domestic markets with evs or other green tech. 0:38:11.200 --> 0:38:14.640 It's also about their own economy's growth. 0:38:14.920 --> 0:38:17.000 So the next question that I have given everything that 0:38:17.040 --> 0:38:19.000 we've kind of sketched out there the role of the 0:38:19.040 --> 0:38:22.160 government in trying to stimulate both sides of what we're 0:38:22.200 --> 0:38:26.120 describing the import side that would be the domestic demand 0:38:26.160 --> 0:38:28.600 story and the export side where we're talking about a 0:38:28.640 --> 0:38:32.760 reduction reduction in some of the capacity. Is that likely 0:38:32.880 --> 0:38:35.080 will Beijing step in in a meaningful way. 0:38:35.280 --> 0:38:40.000 That's what we've heard from officials. We have heard through 0:38:40.080 --> 0:38:42.480 the Planum. If you look through the document and you 0:38:42.520 --> 0:38:46.040 know the twenty thousand word document that was put out, 0:38:46.360 --> 0:38:50.759 there are a lot of promises of reform and particularly 0:38:50.880 --> 0:38:55.359 reform in the industrial sector and in manufacturing. Does that 0:38:55.480 --> 0:39:01.800 mean sort of big fiscal stimulus and injecting money into 0:39:02.280 --> 0:39:07.279 domestic industries as we saw other countries do during economic crises. 0:39:08.120 --> 0:39:13.600 Probably not. They really want to encourage local industries to 0:39:13.680 --> 0:39:18.000 be self sufficient, especially you know, after they helped pop 0:39:18.040 --> 0:39:20.439 the real estate bubble. You know, there's really a sense 0:39:20.480 --> 0:39:23.400 in the country that they want companies to stand up 0:39:23.440 --> 0:39:24.000 on their own. 0:39:24.320 --> 0:39:26.920 Katya, thank you so much for helping us preview this 0:39:26.960 --> 0:39:31.320 week's trade data for China. Katya Dmitrieva Bloomberg Asia Economics 0:39:31.360 --> 0:39:34.520 correspondent joining us from Hong Kong. I'm Doug Krisner. You 0:39:34.520 --> 0:39:37.640 can join Brian Curtis and myself weekdays here for Bloomberg 0:39:37.680 --> 0:39:41.279 Daybreak Asia beginning at eight am in Hong Kong eight 0:39:41.360 --> 0:39:42.680 pm on Wall Street. 0:39:42.880 --> 0:39:46.160 Tom, Thank you Doug, and thank you Brian. And that 0:39:46.200 --> 0:39:48.560 does it for this edition of Bloomberg day Break Weekend. 0:39:48.760 --> 0:39:51.040 Join us again Monday morning at five am Wall Street 0:39:51.040 --> 0:39:53.480 time for the latest on markets overseas and the news 0:39:53.520 --> 0:39:56.760 you need to start your day. I'm Tom Buzby. Stay 0:39:56.760 --> 0:39:59.480 with us. Top stories and global business headlines are coming 0:39:59.560 --> 0:40:00.440 up right now.