Daybreak Weekend: December Jobs, UK Restaurants, APAC Markets

This is Bloomberg day Break Weekend, our global look at 0:00:04.800 --> 0:00:07.080 the top stories in the coming week from our Daybreak 0:00:07.080 --> 0:00:09.280 anchors all around the world, and straight ahead on the 0:00:09.280 --> 0:00:11.880 program Wall Street, kicking off the new week with a 0:00:11.920 --> 0:00:15.080 closely watched jobs report. I'm Tom Busby and I'll have 0:00:15.160 --> 0:00:15.640 that store. 0:00:15.800 --> 0:00:18.040 I'm Stephen Carolyn London. If we're thinking about what's in 0:00:18.079 --> 0:00:21.639 store for London's restaurants and cultural scenes in twenty twenty four. 0:00:21.920 --> 0:00:24.720 Is the economic backdrop in the UK remains gloomy. 0:00:24.800 --> 0:00:26.760 I'm Doug Prisoner with a look at what the new 0:00:26.840 --> 0:00:30.080 year may mean for markets in China, India and Japan. 0:00:30.280 --> 0:00:33.000 I'm Heeley Lyons from Washington, where we're looking ahead to 0:00:33.080 --> 0:00:35.080 a very busy political season. 0:00:37.159 --> 0:00:41.239 That's all straight ahead on Bloomberg Daybreak Weekend, The business 0:00:41.280 --> 0:00:45.240 news you need to wrap up your week, Available on Apple, Spotify, 0:00:45.400 --> 0:00:50.800 The Bloomberg Business Happen everywhere you get your podcasts. 0:00:53.560 --> 0:00:55.480 Good day to you. I'm Tom Busby and we begin 0:00:55.520 --> 0:00:59.040 today's program with a key economic report to begin twenty 0:00:59.120 --> 0:01:01.920 twenty four. This Friday, we get the jobs report for 0:01:01.960 --> 0:01:04.600 the month of December and with the Federal Reserve keeping 0:01:04.640 --> 0:01:08.520 interest rates unchanged since July, each report takes on more 0:01:08.560 --> 0:01:12.480 significance for the Central Bank's next move. For more, we're 0:01:12.520 --> 0:01:16.039 pleased to welcome. Bloomberg News US economist Alisa Winger, Well, 0:01:16.080 --> 0:01:18.959 we've seen a pretty resilient US labor market along with 0:01:19.040 --> 0:01:22.399 continued consumer spending that has kept the economy growing even 0:01:22.440 --> 0:01:25.360 flourishing throughout this past year twenty twenty three. Just this 0:01:25.480 --> 0:01:28.240 past week, their first time jobless claims showing layoffs are 0:01:28.280 --> 0:01:31.000 in check, continuing claims a little higher. What are you 0:01:31.120 --> 0:01:34.240 expecting to see in the December jobs report this Friday? 0:01:34.360 --> 0:01:39.240 We are expecting to see a slow down, soft ter gains. 0:01:40.080 --> 0:01:43.679 What Bloomberg Economics is predicting is one hundred and twenty 0:01:43.680 --> 0:01:47.480 five k jobs being created, which is down from one 0:01:47.600 --> 0:01:51.200 ninety nine prior, and that's our estimate, is below the 0:01:51.240 --> 0:01:55.480 consensus estimate of one hundred and seventy. Also, we are 0:01:55.560 --> 0:01:59.760 expecting higher unemployment rate ticking up to three point nine 0:01:59.800 --> 0:02:04.400 from three point seven prior, and also above the consensus 0:02:04.400 --> 0:02:08.839 which is expecting unemployment rate to uptick to just three 0:02:08.840 --> 0:02:09.680 point eight percent. 0:02:10.000 --> 0:02:11.040 But why the slow down? 0:02:11.120 --> 0:02:15.280 I think the biggest The biggest reason is in the 0:02:15.320 --> 0:02:19.280 month of November, we saw that forty one k jobs 0:02:19.360 --> 0:02:22.760 came from the resolution of a strike. That's just not 0:02:22.840 --> 0:02:25.480 going to happen. That's not going to repeat in December, 0:02:25.960 --> 0:02:29.520 given that, we're just going to see us a much slower, 0:02:30.200 --> 0:02:33.000 much softer growth. Also, what we saw in November and 0:02:33.040 --> 0:02:36.880 what we are expecting in December is that not a 0:02:36.880 --> 0:02:40.760 lot of sectors are creating jobs. In November, although sure 0:02:40.960 --> 0:02:45.200 we got a number that beat the consensus, it was 0:02:45.280 --> 0:02:49.040 mostly the government and healthcare sector that created jobs, and 0:02:49.080 --> 0:02:51.800 that sort of I think we're also going to see 0:02:52.120 --> 0:02:57.440 in December, so overall less jobs being created and probably 0:02:57.840 --> 0:03:00.000 you know we're going to be surprised to the downside. 0:03:00.160 --> 0:03:03.400 Now you spoke about the healthcare sector, government sector, these 0:03:03.880 --> 0:03:07.200 will you see these continued growth in the new year 0:03:07.680 --> 0:03:09.560 and are there other sectors where you really see a 0:03:09.600 --> 0:03:10.680 pullback expected? 0:03:11.200 --> 0:03:15.040 So these are acyclical sectors. They not being affected by 0:03:15.080 --> 0:03:20.360 a downturn or any sort of slow down in economic activity. 0:03:20.840 --> 0:03:24.920 So these sectors could still grow mine as well grow 0:03:24.960 --> 0:03:29.320 in the next year. But as we've seen in the 0:03:29.360 --> 0:03:32.280 November jobs Jobs report, a lot of the sectors were 0:03:32.320 --> 0:03:36.280 either flat or decline, like for example, retail sales is 0:03:36.400 --> 0:03:42.000 very cyclical and jobs in retail sectors decline or whole trade. 0:03:42.760 --> 0:03:45.720 So we're probably going to see a lot less job 0:03:45.800 --> 0:03:48.960 creation in those consumer facing industries. 0:03:49.400 --> 0:03:52.720 And you talked about manufacturing. You know, the UAW strike 0:03:52.760 --> 0:03:56.400 that ended forty one thousand added November's numbers, which skewed 0:03:56.440 --> 0:03:58.360 it a lot higher than maybe than it should have been. 0:03:58.720 --> 0:04:01.160 Where do you see manufacturcturing heading? 0:04:01.600 --> 0:04:04.080 So I think you know, I s A Manufacturing is 0:04:04.120 --> 0:04:07.840 gonna come out on Wednesday and sector is going to 0:04:07.880 --> 0:04:13.040 be in contraction for fourteen straight months. We're probably gonna 0:04:13.200 --> 0:04:15.120 not gonna see a lot of jobs coming. I mean, 0:04:15.160 --> 0:04:18.000 there's packets of strength with and manufacturing coming from the 0:04:18.120 --> 0:04:21.080 Chips Act and AI, but a lot of it is 0:04:21.240 --> 0:04:25.000 just you know, us consumer demand is going to slow 0:04:25.560 --> 0:04:30.400 and we don't expect the holiday season, Like National Federation 0:04:30.560 --> 0:04:35.960 of Retailers came out and they said that overall holiday 0:04:36.520 --> 0:04:39.120 sales are in between three and four percent. Our estimate 0:04:39.200 --> 0:04:42.200 is at the low end of that estimate. So I 0:04:42.240 --> 0:04:44.680 think we're gonna as we head into the new year, 0:04:44.720 --> 0:04:49.119 we're gonna see less consumer demand and those industries within 0:04:49.200 --> 0:04:52.240 manufacturing that produce goods, this is not gonna hire. 0:04:52.880 --> 0:04:56.320 Now, how about housing though we have seen continued demand. 0:04:56.400 --> 0:05:00.160 We know that existing houses a little uneven, sometimes time 0:05:00.400 --> 0:05:02.839 better than others. But the demand for new houses, which 0:05:02.880 --> 0:05:05.640 is three jobs for every house going up, how does 0:05:05.680 --> 0:05:06.680 that look in the future. 0:05:06.760 --> 0:05:10.080 I do think there is demand for housing and not 0:05:10.240 --> 0:05:15.839 enough supply. Having said that, the affordability is very low. 0:05:16.440 --> 0:05:20.040 So even I think even if we would see more housing, 0:05:20.200 --> 0:05:25.120 more houses being available, there is only so much demand. 0:05:25.640 --> 0:05:28.960 And the demand is being flooded into the new construction 0:05:29.120 --> 0:05:32.920 market only because there is just not enough existing home 0:05:33.000 --> 0:05:36.800 for sales. But if the FED will start cutting rates, 0:05:36.880 --> 0:05:40.080 that will relieve some of the pressure on both the 0:05:40.160 --> 0:05:45.240 existing inventory of homes, which will probably rebalance the demand 0:05:45.600 --> 0:05:49.120 back towards existing home and away from new construction. 0:05:49.480 --> 0:05:52.080 If the FED starts cutting rates, and that's what this 0:05:52.240 --> 0:05:58.880 is all about, whether job growth slows, inflation has slowed 0:05:58.920 --> 0:06:01.679 down quite a bit, it's not exactly at the fed's target. 0:06:02.360 --> 0:06:05.359 We've seen wage growth slow a little bit, all leading 0:06:05.400 --> 0:06:07.760 to the first meeting at the end of January for 0:06:07.800 --> 0:06:11.880 the FED. And if everything is aligned in the jobs report, 0:06:12.240 --> 0:06:14.200 what do you expect the FED to do? Where do 0:06:14.240 --> 0:06:16.680 you see them in the next few months. 0:06:16.800 --> 0:06:20.280 We put out an outlook in December ahead of the 0:06:20.440 --> 0:06:24.479 meeting in December, which was December twelve thirteen, where everybody, 0:06:24.640 --> 0:06:27.320 I think most of us were surprised at the tilt 0:06:27.440 --> 0:06:32.320 dovish tilt that Powell basically said, you know, they've discussed 0:06:32.480 --> 0:06:38.120 a rate cut. We anticipated ahead of that meeting that 0:06:38.160 --> 0:06:40.800 the Fed is going to cut rates in March by 0:06:40.839 --> 0:06:44.119 twenty five basis points and another one hundred throughout twenty 0:06:44.200 --> 0:06:48.200 twenty four, and mostly because that aligns with our forecast. 0:06:48.240 --> 0:06:51.440 We are expecting less jobs this Friday, and we are 0:06:51.520 --> 0:06:55.000 expecting unemployment rate to go up, and we are seeing 0:06:55.160 --> 0:06:58.800 less holiday sales. We are on the lower end of 0:06:58.880 --> 0:07:01.880 the forecast. That data is still not fully out for 0:07:02.279 --> 0:07:05.160 the month of December, but it looks like the holiday 0:07:05.240 --> 0:07:09.400 sales weren't as strong as people are expecting. So all 0:07:09.440 --> 0:07:12.720 of that tells us we should get the Fed to 0:07:12.760 --> 0:07:14.080 cut rates in March. 0:07:14.240 --> 0:07:17.720 We have the likelihood of job creation slowing down. We 0:07:17.800 --> 0:07:21.680 have the unemployment rate notching just a little bit higher 0:07:21.760 --> 0:07:24.280 right now, three seven to three nine. You anticipate it's 0:07:24.320 --> 0:07:27.800 not cataclysmic, it's not the sign of a recession. Is 0:07:27.800 --> 0:07:29.280 it just a little bit of a slowdown. 0:07:29.520 --> 0:07:32.960 What we have actually, so we not only have three 0:07:33.000 --> 0:07:37.400 point nine unemployment rate in December, but if unemployment rate 0:07:37.480 --> 0:07:40.920 goes up to four that will trigger the summ rule 0:07:41.320 --> 0:07:44.760 for identifying a recession. Again, is it going to be 0:07:45.080 --> 0:07:48.840 a hard lending. No, it's going to be a mild recession. 0:07:48.920 --> 0:07:53.040 We still think that's probably in the cards. And with 0:07:53.160 --> 0:07:56.040 the Fed though cutting rates in March, possibly in March, 0:07:56.840 --> 0:07:59.840 that's a smart move and the Feds, you know, that's like, 0:08:00.120 --> 0:08:05.280 that's that's cutting rates against an economy that is showing 0:08:05.400 --> 0:08:10.120 signs of slowdown. And also why Powell pivot as much 0:08:10.160 --> 0:08:14.520 at the December meeting is because inflation surprise to the downside. 0:08:14.560 --> 0:08:18.200 The six month annuallyized core PCE was at one point 0:08:18.280 --> 0:08:22.880 nine percent. So all of that tells you that if 0:08:22.920 --> 0:08:27.160 we're going to get unemployment rate surprising to the to 0:08:27.200 --> 0:08:30.400 the upside, meaning it will go up. I mean, in 0:08:30.480 --> 0:08:33.600 our forecast shows that unemployment rate can go up even 0:08:33.640 --> 0:08:36.640 in Q one to four point three and can pick 0:08:36.679 --> 0:08:39.839 at five percent, that's not a soft lending. That's that's 0:08:39.880 --> 0:08:40.760 a mild recession. 0:08:40.960 --> 0:08:43.559 You predict that we're going to see as much as 0:08:43.760 --> 0:08:47.360 four point five percent in the next three months. 0:08:47.360 --> 0:08:49.280 Four point three in Q one four point five in 0:08:49.320 --> 0:08:51.720 Q two in Q two Okay, so. 0:08:51.559 --> 0:08:54.760 We've got our work cut out for the FED, certainly, 0:08:55.160 --> 0:08:58.560 and they've got in that time. They have three meetings, right, 0:08:58.600 --> 0:09:02.320 the third one ends May first, so we could see 0:09:02.559 --> 0:09:08.880 multiple rate cuts to staunch the reaction from the economy 0:09:08.920 --> 0:09:09.640 and from the markets. 0:09:09.720 --> 0:09:14.400 Right exactly. And even as we mentioned in the beginning 0:09:14.400 --> 0:09:19.440 of the segment that jobless claims, we're seeing sure low layouts, 0:09:19.480 --> 0:09:23.160 but continued claims. If you look at the same the 0:09:23.240 --> 0:09:28.800 same week four week moving average claims, continued claims are 0:09:28.920 --> 0:09:33.200 up seventeen percent between between this year and last year. 0:09:33.600 --> 0:09:38.080 That tells you that it's the duration of unemployment, meaning 0:09:38.280 --> 0:09:41.439 is getting longer and longer. And that's usually the sign 0:09:42.000 --> 0:09:45.280 where the market is changing, where the when the where 0:09:45.320 --> 0:09:48.800 there is a shift going on in the labor market. 0:09:49.240 --> 0:09:53.040 At first it started it's taking longer for people to 0:09:53.080 --> 0:09:59.160 find jobs, and then companies manage headcunt going to manage 0:09:59.240 --> 0:10:04.280 headcunt from a tree to actually layoffs. So that's been 0:10:04.360 --> 0:10:07.400 happening and we see that over and over in jobless 0:10:07.400 --> 0:10:08.200 claims figures. 0:10:08.520 --> 0:10:10.920 Wow, So this Friday a lot to look forward to. 0:10:10.960 --> 0:10:14.240 Our thanks to Bloomberg News US economist Alisa Winger, and 0:10:14.320 --> 0:10:16.480 coming up on Bloomberg day Break weekend, we take you 0:10:16.559 --> 0:10:19.679 to London for a closer look at the UK economy 0:10:19.960 --> 0:10:23.520 in the new year. I'm Tom Busby and this is Bloomberg. 0:10:33.960 --> 0:10:36.800 This is Bloomberg Daybreak weekend, our global look ahead at 0:10:36.800 --> 0:10:39.360 the top stories for investors in the coming week. I'm 0:10:39.440 --> 0:10:43.280 Tom Busby in New York. The UK sliding into twenty 0:10:43.360 --> 0:10:46.440 twenty four with negative growth, with the impact of interest 0:10:46.520 --> 0:10:50.280 rate hikes still feeding into the economy. Consumers feeling the 0:10:50.320 --> 0:10:53.000 pinch from the higher cost of living, but they're still 0:10:53.040 --> 0:10:56.680 spending enough to fuel London's restaurant and cultural scenes. The 0:10:56.840 --> 0:11:00.280 weaker pound versus the dollar also has helped attract more 0:11:00.320 --> 0:11:04.240 big spending tourists, particularly from the US. For more, let's 0:11:04.240 --> 0:11:06.680 go to London and bring in Bloomberg Daybreak Europe banker 0:11:06.880 --> 0:11:07.720 Stephen Carroll. 0:11:08.000 --> 0:11:08.520 Tom. 0:11:08.600 --> 0:11:11.480 Despite the gloomy economic background in the UK this year, 0:11:11.520 --> 0:11:14.240 it's been a busy year for London's restaurants scene, with 0:11:14.320 --> 0:11:17.360 several high profile openings that came after a difficult winter. 0:11:17.840 --> 0:11:21.880 Add to that not one but two billion pound hotel openings. 0:11:21.920 --> 0:11:24.240 So what's in store for twenty twenty four to discuss. 0:11:24.280 --> 0:11:26.440 I'm joined by our food editor Kate Crater and our 0:11:26.440 --> 0:11:29.960 Bloomberg Pursuits UK correspondent Sarah Rappaport. Great to have you 0:11:30.040 --> 0:11:33.520 both with us. You are our eyes and ears in London. So, Kate, 0:11:33.559 --> 0:11:35.360 I wanted to start with a serious question for you. 0:11:36.080 --> 0:11:39.000 Was twenty twenty three a good year for restaurants and 0:11:39.040 --> 0:11:40.880 further hospitality sector here in London? 0:11:41.240 --> 0:11:44.920 I think that the year in hospitality for restaurants, it 0:11:45.000 --> 0:11:47.800 was a sort of glass half fall. So you can 0:11:47.840 --> 0:11:51.520 look at it and say, after COVID and certainly after 0:11:51.800 --> 0:11:55.800 the train strikes that hit restaurants last year, right at 0:11:55.840 --> 0:11:59.440 this time, right when everyone was getting optimistic, this has 0:11:59.520 --> 0:12:02.360 been a much much better year and you're seeing so 0:12:02.400 --> 0:12:05.000 many signs for recovery. Restaurants that have only been opened 0:12:05.040 --> 0:12:07.520 for four days are now open for five, six and 0:12:07.600 --> 0:12:10.760 seven days and that's a really healthy sign, and places 0:12:10.800 --> 0:12:15.400 are packed. On the other hand, it's rest places are 0:12:15.440 --> 0:12:19.920 still struggling. They don't have enough staff and a report 0:12:19.920 --> 0:12:23.400 recently came out from an accounting firm, Hacker Young that said 0:12:23.520 --> 0:12:26.199 restaurants in London are carrying three billion. 0:12:25.840 --> 0:12:26.720 Dollars in debt. 0:12:27.400 --> 0:12:30.320 So as a result of trying to expand too quickly 0:12:30.400 --> 0:12:35.600 and dealing with problems like food inflation. So there might 0:12:35.679 --> 0:12:39.000 be underneath the ice that everyone's sort of happily skating on. 0:12:39.080 --> 0:12:40.800 It might be a little bit thin, so it sort 0:12:40.840 --> 0:12:43.000 of remains to be seen. So there's things to be 0:12:43.040 --> 0:12:45.760 really happy about. As you said, there were some fantastic openings. 0:12:45.800 --> 0:12:50.920 The Wolsey City opened right near our corner, conveniently open 0:12:50.960 --> 0:12:54.120 for breakfast, lunch and dinner. And there's a bunch of 0:12:54.160 --> 0:12:56.480 things coming in twenty twenty four that are gonna be fun. 0:12:56.520 --> 0:13:00.360 So there's definitely optimism. Holiday parties are really booked up 0:13:00.400 --> 0:13:04.160 this year. But I wouldn't say everything's fine and deady. 0:13:04.160 --> 0:13:06.160 I wouldn't tie it up with a little ribbon, okay. 0:13:06.240 --> 0:13:08.920 So things also looking kind of curious as we look 0:13:08.960 --> 0:13:12.480 towards twenty twenty four as well, Sarah. Meanwhile, it's been 0:13:12.559 --> 0:13:15.600 a booming year for luxury hotels in London in particular. 0:13:15.679 --> 0:13:18.200 You've written some great pieces about this. What is driving 0:13:18.240 --> 0:13:19.960 the demand for luxury hotels in London? 0:13:20.320 --> 0:13:22.480 Well, I mean it's been a huge year. In September, 0:13:22.760 --> 0:13:24.760 the raffles London at the Old War Office and the 0:13:24.760 --> 0:13:28.240 Peninsula both opened, both which cost over a billion dollars 0:13:28.320 --> 0:13:31.120 each to build, and room rates start at over one 0:13:31.160 --> 0:13:36.199 thousand pounds a night for both. So certainly, yeah, very expensive. 0:13:36.640 --> 0:13:38.560 And in terms of who's actually staying in them, the 0:13:38.600 --> 0:13:41.880 answer is generally rich Americans than people from the Middle East. 0:13:42.040 --> 0:13:42.400 Okay. 0:13:42.679 --> 0:13:45.199 They're very special hotels that took a really long time 0:13:45.240 --> 0:13:45.760 to build. 0:13:46.280 --> 0:13:48.440 The Old War Office in particular is a fascinating one 0:13:48.480 --> 0:13:49.840 because it's a historical building. 0:13:50.400 --> 0:13:52.280 It is it opened in nineteen oh six. It's a 0:13:52.320 --> 0:13:55.120 grand building. It was the head of you know, the 0:13:55.480 --> 0:13:59.000 Grand Office of War right during both world wars. Now 0:13:59.040 --> 0:14:02.280 there's a site in Churchill's old Office with a rubber 0:14:02.280 --> 0:14:04.720 gloffice desk worries to work. It'll cost you about twenty 0:14:04.720 --> 0:14:06.240 thousand pounds a night if you want to stay there. 0:14:06.320 --> 0:14:08.679 Okay, but you're getting a piece of that piece. 0:14:08.520 --> 0:14:11.079 Of history, which is pretty incredible. Kate and I actually 0:14:11.120 --> 0:14:13.200 went to a subterranean bar in the basement called the 0:14:13.240 --> 0:14:13.760 Spy Bar. 0:14:14.000 --> 0:14:15.760 You know, I've actually heard about. 0:14:15.440 --> 0:14:20.080 This as interrogation rooms, right, so now wow, which is 0:14:20.120 --> 0:14:21.640 truly The spices used to go down there and my 0:14:21.720 --> 0:14:24.160 five used to have offices there, and now it's a 0:14:24.200 --> 0:14:26.120 bar with you know, nice twenty pounds martinis. 0:14:26.200 --> 0:14:26.680 Yeah, indeed. 0:14:26.720 --> 0:14:28.200 I mean, look, the strength of the dollars has been 0:14:28.200 --> 0:14:29.720 part of that story as well as that it's been 0:14:29.760 --> 0:14:32.160 helped to support those American tourists that are use. 0:14:32.120 --> 0:14:34.760 For both tourism and for the luxury real estate market. 0:14:34.840 --> 0:14:36.600 Yeah, it is the fact that they opened this year 0:14:36.640 --> 0:14:39.400 because of delays, because of the pandemic where they planned. 0:14:39.120 --> 0:14:41.000 It's because of delays. They were not planned for this year, 0:14:41.000 --> 0:14:43.240 either of them. They're pushedbacks a story. In a lot 0:14:43.280 --> 0:14:46.520 of hotels, they're opening dates a little optimistic, but they 0:14:46.600 --> 0:14:48.400 all open with two weeks of each other. 0:14:48.640 --> 0:14:48.880 Wow. 0:14:48.960 --> 0:14:52.000 Okay, it's a conversation in that space as well. And Kat, 0:14:52.000 --> 0:14:54.240 when we think about trends that we've seen over the 0:14:54.240 --> 0:14:56.040 past year in the food scene, was there anything that 0:14:56.040 --> 0:14:57.680 stood out for you that was kind of something that 0:14:57.720 --> 0:15:00.280 you were like, yes, this is we're now co hosting 0:15:00.480 --> 0:15:00.920 a five. 0:15:01.360 --> 0:15:03.600 Well, Stephen, here's where I remember that. I think we 0:15:03.600 --> 0:15:05.400 were supposed to go have drinks at a wine bar 0:15:05.520 --> 0:15:08.680 because last year at this time I said wine bars 0:15:08.680 --> 0:15:10.480 are going to be big in London. 0:15:10.200 --> 0:15:11.600 Which I was very excited about it. 0:15:11.640 --> 0:15:13.920 And Jerry I'm still excited for this to happen. And 0:15:13.960 --> 0:15:16.200 the good news for us is that wine bars were 0:15:16.280 --> 0:15:20.920 indeed a huge trend in London in twenty twenty three. 0:15:21.320 --> 0:15:23.920 There's so many of them. There's a place, especially in 0:15:23.960 --> 0:15:27.360 North London around Newington Green, a place that opens sort 0:15:27.360 --> 0:15:30.160 of towards the end of last year called Caday has 0:15:30.240 --> 0:15:34.440 been going super strong. It's so popular it's been called 0:15:34.480 --> 0:15:37.560 out all these all these places have recognized the chef. 0:15:37.600 --> 0:15:42.280 They have this charcuderie superstar there. So that's i think 0:15:42.320 --> 0:15:44.760 set the scene for a lot of other places to open. 0:15:44.840 --> 0:15:47.720 A place called one O seven opened I think it's 0:15:47.800 --> 0:15:51.600 around Hackney in Covent Garden. Ten cases has been a 0:15:51.600 --> 0:15:54.720 popular wine bar, and they just opened a place called 0:15:54.800 --> 0:15:58.840 Bawdry Green that's wine bar. And the problem is that 0:15:59.000 --> 0:16:01.640 now it's become such a popular model that I think 0:16:01.680 --> 0:16:04.600 places that are actually restaurants are calling themselves wine bars, 0:16:04.680 --> 0:16:06.600 like yeah, in the way that everyone wants to say 0:16:06.680 --> 0:16:08.720 natural wine, like you don't just pour wine, you pour 0:16:08.760 --> 0:16:11.720 a natural wine. And so it's very quickly become an 0:16:11.800 --> 0:16:13.320 overused concept. 0:16:13.440 --> 0:16:15.440 Interesting, have we reached peak wine bar? 0:16:15.600 --> 0:16:16.840 We've reached peak wine bar. 0:16:17.240 --> 0:16:18.920 You're right, terrible news for those of us. 0:16:19.000 --> 0:16:20.840 About peak natural wine. Are we there yet or is 0:16:20.880 --> 0:16:21.400 that some times? 0:16:21.400 --> 0:16:23.760 Well, I think it's good. That's a good question. I 0:16:23.800 --> 0:16:26.760 think I'm here for natural wine. But everyone, I mean, 0:16:26.800 --> 0:16:29.480 it's sort of like saying something that does need to 0:16:29.480 --> 0:16:31.720 be said, you know, It's just like say that you're 0:16:31.720 --> 0:16:34.480 pouring wine. You don't need to say natural anymore exactly. 0:16:34.520 --> 0:16:35.960 I mean there's a whole other conversation to be hod 0:16:35.960 --> 0:16:37.560 about the evolution of natural wine, which we will have 0:16:37.600 --> 0:16:39.680 to do on another occasion. But I want you to 0:16:39.680 --> 0:16:41.400 look into your crystal bowl for us and tell us 0:16:41.440 --> 0:16:44.840 what you're seeing. Considering you predicted so accurately the trend 0:16:44.920 --> 0:16:46.160 for this year, what do you what are you thinking 0:16:46.200 --> 0:16:48.320 about when it comes to the FI scene in twenty twenty. 0:16:48.040 --> 0:16:50.600 Four, I will say I think I love London. I 0:16:50.600 --> 0:16:52.880 have fallen in love with London. I think Manchester is 0:16:52.880 --> 0:16:54.640 going to get bigger and bigger next year. I think 0:16:54.680 --> 0:16:57.240 we're going to be seeing a lot more energy outside 0:16:57.240 --> 0:16:57.680 of London. 0:16:57.760 --> 0:16:58.560 It's already happening. 0:16:58.720 --> 0:17:01.760 Edinburgh's a super hot food city right now and it's 0:17:01.840 --> 0:17:04.359 just going to be bigger in twenty twenty four. I 0:17:04.359 --> 0:17:06.560 think you're going to see a lot more local ingredients, 0:17:06.640 --> 0:17:09.200 partly because of climate, partly because of all the issues 0:17:09.240 --> 0:17:13.040 people are having and price concerns. So already you've seen 0:17:13.080 --> 0:17:17.920 some really good sushi places like Dinings SW three sourcing 0:17:18.000 --> 0:17:20.600 local food and not necessarily flying it in from Japan. 0:17:21.280 --> 0:17:24.159 And I think you're going to see even more chefs 0:17:24.240 --> 0:17:28.639 highlighting the fact that they've got vegetables from cornwall and 0:17:28.960 --> 0:17:32.320 seafood from you know, from that coast as well. That's 0:17:32.359 --> 0:17:33.960 gonna be You're going to see more and more of that. 0:17:34.520 --> 0:17:37.840 And I think also this is very bold, so you 0:17:37.840 --> 0:17:39.720 can fact check me on it. I think we're going 0:17:39.800 --> 0:17:42.480 to start seeing the end of small plates. We've eaten 0:17:42.520 --> 0:17:45.640 so many small plates, so much food has been eatn 0:17:45.640 --> 0:17:49.399 off small plates, I think Webb, Oh my god, Stephen, 0:17:49.640 --> 0:17:52.560 you will keep talking. I know, Sarah's big plates. 0:17:52.600 --> 0:17:55.280 I know, because inevitably you just end up spending three 0:17:55.280 --> 0:17:57.000 times as much money because you think I'm going to 0:17:57.000 --> 0:17:57.800 need loads more. 0:17:58.000 --> 0:18:00.560 That's exactly right, exactly, And I think there is more 0:18:00.760 --> 0:18:03.119 like the Wolsely City just open, and they don't have 0:18:03.160 --> 0:18:05.720 like a small plate section. It's a place where you 0:18:05.880 --> 0:18:08.919 get you know, regular size plates of food. So and 0:18:08.960 --> 0:18:11.760 you have like food food, and you have like three courses, 0:18:12.160 --> 0:18:14.399 you know. So I think that sort of idea that 0:18:14.520 --> 0:18:18.080 not everything is a snackathon is is going to be prevalent. 0:18:18.160 --> 0:18:21.200 The three course is coming back. You heard it here first, Yes, 0:18:21.200 --> 0:18:24.240 she did. Sarah talk to us about the cultural scene 0:18:24.320 --> 0:18:25.919 in London this year. What stood out for you? What 0:18:25.960 --> 0:18:26.679 was your big highlight? 0:18:27.000 --> 0:18:28.960 Well, I was just talking about this with my letters 0:18:29.000 --> 0:18:31.280 at Business Week and we're saying between me and my 0:18:31.359 --> 0:18:34.199 boss in New York, Chris, the editor of Pursuits, we've 0:18:34.200 --> 0:18:36.120 seen over one hundred plays and musicals this year. 0:18:36.240 --> 0:18:36.520 Wow. 0:18:36.720 --> 0:18:38.720 So we've seen quite a lot, and there's some really 0:18:38.760 --> 0:18:41.919 amazing shows on in London. And my favorite actually is 0:18:41.960 --> 0:18:44.040 Operation mince Meat with Sharks. Have you seen it? 0:18:44.119 --> 0:18:44.399 No? 0:18:44.480 --> 0:18:46.639 I haven't. Sorry I could have gasped there about it. 0:18:46.680 --> 0:18:48.240 No I haven't, but it's very high on my list. 0:18:48.280 --> 0:18:49.160 Go on, tell me about its. 0:18:49.040 --> 0:18:50.439 Going on till June, so you have plenty of time 0:18:50.480 --> 0:18:52.960 to book, both you and your listeners. But it's actually 0:18:53.040 --> 0:18:55.880 about an I five intelligence operation during World War Two. 0:18:56.200 --> 0:18:59.280 They stole a corpse m I five, dressed it up 0:18:59.320 --> 0:19:02.760 as a army officer, washed it up ashore and Spain 0:19:02.800 --> 0:19:05.439 with fake invasion plans of Sicily right, this sounds like 0:19:05.480 --> 0:19:07.720 it's a stranger than fiction story. Yeah, but it makes 0:19:07.720 --> 0:19:11.399 for a really hilarious musical with some really touching sad 0:19:11.400 --> 0:19:13.600 scenes as well. So who would have thought this crazy 0:19:13.640 --> 0:19:15.920 World War two operation would be the best musical on stage? 0:19:15.920 --> 0:19:16.480 But it really is. 0:19:16.640 --> 0:19:18.520 Thank you to you both, Kate Creator, our food editor 0:19:18.560 --> 0:19:22.679 and Sarah Rappaport, our Bloomberg Pursuits UK correspondent. I'm Stephen 0:19:22.720 --> 0:19:25.040 Carroll in London. You can catch us every weekday morning 0:19:25.080 --> 0:19:27.520 here for Bloomberg day Break Europe're gonna at six am 0:19:27.600 --> 0:19:30.120 in London and one am on Wall Streets. 0:19:30.160 --> 0:19:33.160 Tom Our thanks to Bloomberg day Break Europe Banker Steven 0:19:33.240 --> 0:19:35.560 Carroll and coming up on Bloomberg day Break weekend, and 0:19:35.600 --> 0:19:38.359 look at what's ahead for the Asian markets in twenty 0:19:38.400 --> 0:19:51.960 twenty four. I'm Tom Busby and this is Bloomber I'm 0:19:52.000 --> 0:19:54.040 Tom Busby in New York with your global look ahead 0:19:54.040 --> 0:19:56.160 at the top stories for investors in the coming week. 0:19:56.680 --> 0:19:59.080 As year twenty twenty three comes to a close, we 0:19:59.119 --> 0:20:01.159 take a look at what's ahead for markets in China, 0:20:01.440 --> 0:20:05.199 India and Japan in twenty twenty four, Let's get to 0:20:05.200 --> 0:20:08.399 Bloomberg Daybreak Asia co host Doug Krisner. 0:20:08.040 --> 0:20:11.920 Tom The challenges ranged from a flopped reopening trade to 0:20:12.080 --> 0:20:15.760 faltering economic growth, as well as an unprecedented outflow of 0:20:15.760 --> 0:20:18.680 foreign capital. So as we wrap up twenty twenty three, 0:20:19.280 --> 0:20:21.720 we turn to the outlook for the year ahead. Bloomberg's 0:20:21.760 --> 0:20:25.400 Felipe Pacheco is with us. He is the capital markets 0:20:25.440 --> 0:20:28.480 reporter for APAC Equity. He joins us from our studios 0:20:28.520 --> 0:20:31.080 in Hong Kong. I think we can agree, Philip that 0:20:31.119 --> 0:20:33.800 for China, the major problem, not only for the economy 0:20:33.800 --> 0:20:36.240 but for markets as well, has been this weak sentiment. 0:20:36.880 --> 0:20:40.720 Maybe there was some initial excitement around a strong recovery 0:20:40.760 --> 0:20:45.000 post pandemic that never materialized. Is there any optimism that 0:20:45.040 --> 0:20:46.960 we can expect in the new year that will mean 0:20:47.000 --> 0:20:49.520 that twenty twenty four is better than twenty three? 0:20:49.720 --> 0:20:52.760 Well, that's correct. I think that it's very hard to 0:20:52.840 --> 0:20:56.040 find that optimism out there, especially at this time of 0:20:56.080 --> 0:20:58.919 the year. We usually do a ton of talks with 0:20:59.160 --> 0:21:02.800 bankers get their outlook for what they're expecting, at least 0:21:02.800 --> 0:21:05.840 for the first quarter of the following year. When we 0:21:05.920 --> 0:21:09.640 had these conversations last year. Most of them were very 0:21:09.760 --> 0:21:13.520 very positive about the outlook for China, especially because at 0:21:13.520 --> 0:21:16.359 that point we knew that the country was opening up. 0:21:16.440 --> 0:21:21.119 There was the whole excitement towards the fact that China's 0:21:21.119 --> 0:21:23.760 economy would be way more open than it was during 0:21:24.000 --> 0:21:26.960 the COVID years, and what we saw in equity capital 0:21:27.000 --> 0:21:32.080 markets was this gigantic frustration. For example, China was responsible 0:21:32.200 --> 0:21:35.520 mainly in China mostly for about half of all of 0:21:35.560 --> 0:21:39.439 the deals within ECM that happened in twenty twenty two. 0:21:39.840 --> 0:21:42.600 This time this year we have China representing less than 0:21:42.760 --> 0:21:47.080 thirty percent for global offerings. So it's very hard to 0:21:47.119 --> 0:21:50.320 say when this is going to actually improve. There's no 0:21:50.840 --> 0:21:54.560 perspective that there is a better first half of twenty 0:21:54.800 --> 0:21:57.639 twenty four than what we saw in the two final 0:21:57.720 --> 0:22:01.840 quarters of twenty three. And I think that what investors, 0:22:01.960 --> 0:22:06.320 bankers and companies are looking for right now is indication 0:22:06.560 --> 0:22:09.200 from the Chinese government that there will be support, that 0:22:09.240 --> 0:22:12.639 there will be measures to actually bring back optimism towards 0:22:12.640 --> 0:22:15.520 the economy, and therefore they will be looking for money again. 0:22:15.680 --> 0:22:17.800 Yeah, I think the slump in the property market has 0:22:17.800 --> 0:22:20.680 been the central problem in restoring confidence. Is there any 0:22:20.880 --> 0:22:23.959 signal that the government is sending that it understands the 0:22:23.960 --> 0:22:25.320 severity of the problem. 0:22:25.359 --> 0:22:27.600 I think that that are signals that they are willing 0:22:27.680 --> 0:22:31.280 to address such problems. There has been an indication is 0:22:31.320 --> 0:22:34.760 of support in different ways, especially to the real state sector. 0:22:35.040 --> 0:22:37.359 Is it enough? I don't think so. When we talk 0:22:37.400 --> 0:22:41.360 to bankers they say that they need more, like the 0:22:41.400 --> 0:22:44.840 market needs more. They need like a bazooka, something that 0:22:44.880 --> 0:22:48.760 would send a clear message of support, that would give 0:22:49.080 --> 0:22:52.280 indications that there is a turnaround, that we've hit the 0:22:52.320 --> 0:22:54.959 bottom and from now on things should get better. I 0:22:54.960 --> 0:22:57.560 don't think anyone has seen that yet. I don't think 0:22:57.560 --> 0:23:00.520 there is indication that this is on the way. For example, 0:23:00.560 --> 0:23:03.760 when we talk to bankers looking at IPOs, they say 0:23:03.760 --> 0:23:05.960 that we need to see bigger deals. We need to 0:23:06.000 --> 0:23:10.640 see those blackbusters, deals with names that cash the headlines, 0:23:10.720 --> 0:23:13.320 and we need to see a few of them performing 0:23:13.400 --> 0:23:17.480 quite well for a while. We cannot see deals flopping. 0:23:17.560 --> 0:23:21.120 We cannot see IPOs coming to market and then just 0:23:21.200 --> 0:23:24.480 grabbing negative attention. This is the worst that you can 0:23:24.520 --> 0:23:27.120 have for a market that is very sensitive to sentiment. 0:23:27.359 --> 0:23:29.280 And that's one of the things that I think has 0:23:29.400 --> 0:23:33.240 contributed to foreign investors removing a lot of capital out 0:23:33.280 --> 0:23:35.800 of the markets. Not a lot of evidence that the 0:23:35.840 --> 0:23:38.879 government really understands what the problem is to the extent 0:23:38.920 --> 0:23:41.199 that they're really willing to throw as you mentioned the 0:23:41.280 --> 0:23:46.080 Pazuka behind it. To what extent is that lack of 0:23:46.160 --> 0:23:49.640 foreign capital creating difficulty for capital markets? 0:23:49.720 --> 0:23:52.920 More broadly, I think that it creates a lot of gaps. 0:23:53.000 --> 0:23:55.879 Let's say within equity capital markets. For example, you have 0:23:55.960 --> 0:23:59.880 all flows for all kinds of Chinese investments, including equities 0:24:00.520 --> 0:24:03.080 in the secondary market. Hong Kong's market is going through 0:24:03.119 --> 0:24:05.880 a very very hard time. The index here in Hong Kong, 0:24:05.920 --> 0:24:09.440 the HCI, is now more than fifteen percent for the year. 0:24:09.680 --> 0:24:12.920 We also have the bench markets in the mainland down 0:24:13.000 --> 0:24:17.480 by a similar percentage. So it's just a very very 0:24:17.760 --> 0:24:21.000 heart scenario, and you see money just getting out of 0:24:21.080 --> 0:24:23.719 Chinese assets as a whole. Of course, that impacts the 0:24:23.760 --> 0:24:27.199 way companies that are considering to tap the markets to 0:24:27.320 --> 0:24:29.800 make their plans as well. Companies are pretty much on 0:24:29.840 --> 0:24:33.199 that state right now. They are on pause, they're on 0:24:33.280 --> 0:24:37.840 hold because they do not know if this improvement will come. 0:24:38.240 --> 0:24:39.680 And then at the end of the day, of course, 0:24:40.280 --> 0:24:43.000 if you have money flowing out of China. This money 0:24:43.040 --> 0:24:45.399 is going somewhere else. We see a lot of optimism, 0:24:45.480 --> 0:24:48.720 for example, when it comes to assets trading in India 0:24:48.800 --> 0:24:51.399 and also activity in ECM for India because this is 0:24:51.520 --> 0:24:54.400 a huge emerging market that's just like bringing a lot 0:24:54.400 --> 0:24:57.040 of positive headlines. And then another market that's catching a 0:24:57.040 --> 0:25:00.720 lot of attention for this particular segment is also so Japan. 0:25:01.040 --> 0:25:04.040 Japan is a developed economy, it's a completely different economy 0:25:04.040 --> 0:25:06.200 than what you would see in China. But of course 0:25:06.240 --> 0:25:09.719 it's been a great year for Japanese assets, especially equities. 0:25:09.960 --> 0:25:12.080 Yeah, it's been a very good year for the market 0:25:12.160 --> 0:25:14.760 in India. I think the major market measures are up 0:25:14.760 --> 0:25:17.840 double digits in US taller terms. But if you look 0:25:17.880 --> 0:25:21.560 at the year ahead, are analyst assuming that this positivity 0:25:21.600 --> 0:25:23.639 is going to continue or might we see a bit 0:25:23.680 --> 0:25:25.920 of a pause. Is it a market that is maybe 0:25:25.960 --> 0:25:27.040 a little overextended. 0:25:27.560 --> 0:25:30.040 That's a very interesting point because we do know that 0:25:30.080 --> 0:25:33.360 India is training at very expensive levels right now when 0:25:33.359 --> 0:25:36.560 it comes to equities trading. But one of the binkers 0:25:36.560 --> 0:25:39.280 that I talked to with someone that is close to 0:25:39.280 --> 0:25:42.600 the Indian market, he said, we do know that India 0:25:42.680 --> 0:25:46.040 is expensive, and we hear that from our clients, but 0:25:46.119 --> 0:25:49.119 at the same time we ask are you willing to buy? 0:25:49.200 --> 0:25:51.320 Are you willing to invest at this price, and they 0:25:51.359 --> 0:25:54.600 say yes. You can see things performing well. You can 0:25:54.640 --> 0:25:57.040 see acids just from the fixed income sign and also 0:25:57.040 --> 0:26:00.480 from the equity side doing quite well. That's what investors 0:26:00.520 --> 0:26:03.160 are looking for in a tough year like this. For example, 0:26:03.200 --> 0:26:06.119 if you look just of all of the names that 0:26:06.280 --> 0:26:09.920 so big steaks in Indian companies listed Indian companies this year. 0:26:10.160 --> 0:26:14.680 We're talking about soft Bank, the Canada Pension Plan Investment Board. 0:26:15.040 --> 0:26:18.320 We have Tensen that had several stakes in companies that 0:26:18.480 --> 0:26:22.080 listed in India. So these are big global investors that 0:26:22.160 --> 0:26:25.440 they are coming to market to sell big chunks, let's 0:26:25.440 --> 0:26:28.560 say five to ten percent of the stakes that they 0:26:28.640 --> 0:26:31.920 own in such companies because price is good and they 0:26:31.960 --> 0:26:34.920 are making money out of it. When those companies put 0:26:34.960 --> 0:26:37.680 those blocks and those placements out in the market and 0:26:37.880 --> 0:26:40.960 you see them trading up two days after, this is 0:26:41.080 --> 0:26:44.480 very rare. You clearly see demand coming from the domestic 0:26:44.520 --> 0:26:48.280 market in Indian and also from foreigners. So there is appetite, 0:26:48.280 --> 0:26:51.880 there is a lot of interest. This is India's moment 0:26:52.560 --> 0:26:55.920 is it going to last whenever China is back, whenever 0:26:56.040 --> 0:26:59.840 activity in China picks up. That's the main question for 0:27:00.119 --> 0:27:03.000 Indian as it's and for Indian issuers. 0:27:03.320 --> 0:27:05.520 I think one of the surprises this year in the 0:27:05.560 --> 0:27:08.720 Asia Pacific has been the performance of the Japanese equity market. 0:27:08.800 --> 0:27:10.720 I don't know how much of that has to do 0:27:10.800 --> 0:27:14.240 with anticipation of some type of change in policy from 0:27:14.280 --> 0:27:17.520 the Bank of Japan, but I think the Nike in 0:27:17.640 --> 0:27:21.320 dollar terms is up more than seventeen percent year to date. 0:27:22.119 --> 0:27:25.760 The outlook for Japan is it contingent the positivity contingent 0:27:26.280 --> 0:27:31.600 upon the boj maybe adjusting policy, or is there something 0:27:31.600 --> 0:27:35.200 else going on with Japan inc that's driving the gains. 0:27:35.400 --> 0:27:37.720 I think Japan is a very very very curious cause, 0:27:37.760 --> 0:27:39.400 as you mentioned, there's a lot of it that is 0:27:39.840 --> 0:27:43.639 related to the bog the moment in Japan's economy. This 0:27:43.840 --> 0:27:46.520 is a turning point for a country that hasn't seen 0:27:46.560 --> 0:27:50.119 inflation for like decades, and there is a lot of 0:27:50.160 --> 0:27:52.520 attention that's going towards it. I think when it comes 0:27:52.600 --> 0:27:55.640 specifically to the equities market and all of these companies 0:27:55.640 --> 0:28:01.960 that are actually trying to raise funds through equities It's 0:28:02.080 --> 0:28:04.840 very interesting to see that this comes in combination with 0:28:04.960 --> 0:28:07.240 a lot of measures that are being done by the 0:28:07.280 --> 0:28:11.280 local stock exchange to actually boost governess and to make 0:28:12.240 --> 0:28:16.879 maybe combine this particular moment in the macro aspects of 0:28:16.880 --> 0:28:21.880 the country to what's happening within the corporate sectors. So 0:28:21.960 --> 0:28:25.320 you have, for example, the Stock Exchange in Tokyo asking 0:28:25.400 --> 0:28:28.840 companies to just improve all of the governance levels that 0:28:28.880 --> 0:28:31.440 they have. They are trying to attract more names to 0:28:31.560 --> 0:28:36.840 the market, and they are also trying to improve the 0:28:36.880 --> 0:28:40.480 holdings what they call in Japane's crossholdings. Basically, a lot 0:28:40.520 --> 0:28:44.800 of Japanese big conglomerates the own shares of their sister 0:28:44.880 --> 0:28:47.800 companies and this is not seeen in a good way 0:28:47.840 --> 0:28:52.560 when it comes to governance aspects. So the local regulator 0:28:52.600 --> 0:28:56.920 in the also the exchange, is just trying to unwind 0:28:57.040 --> 0:28:59.520 such traits, and there's a lot of companies that are 0:28:59.600 --> 0:29:02.160 coming to market to actually execute it. 0:29:02.200 --> 0:29:04.200 Philip, great that you could be with us and to 0:29:04.520 --> 0:29:07.200 share your expertise on what's happening in these various equity 0:29:07.240 --> 0:29:10.400 markets across the APEX. That is, Felipe Pacheco, who covers 0:29:10.440 --> 0:29:13.760 APAC Equity Capital Markets from our bureau in Hong Kong. 0:29:14.200 --> 0:29:16.680 I'm Doug Prisner. You can join Brian Curtis and myself 0:29:16.720 --> 0:29:19.480 weekdays here for Bloomberg day Break Asia, beginning at seven 0:29:19.520 --> 0:29:23.440 am in Hong Kong six pm on Wall Street Tom. 0:29:23.320 --> 0:29:26.320 Our thanks to Bloomberg day Break Asia co host Doug Krisner, 0:29:26.720 --> 0:29:29.680 and coming up here on Bloomberg day Break Weekend, look 0:29:29.720 --> 0:29:32.200 at some of the big political items on the agenda 0:29:32.240 --> 0:29:35.120 in Washington in the new year. I'm Tom Busby, and 0:29:35.240 --> 0:29:48.920 this is Bloomberg. This is Bloomberg day Break Weekend, our 0:29:48.920 --> 0:29:51.120 global look ahead at the top stories for investors in 0:29:51.160 --> 0:29:54.680 the coming week. I'm Tom Busby. In New York, lawmakers 0:29:54.680 --> 0:29:57.280 will start the new year running with a full slate 0:29:57.320 --> 0:30:00.080 of legislative priorities as soon as they get back and 0:30:00.160 --> 0:30:04.480 their holiday break that includes another possible government shutdown. For more, 0:30:04.720 --> 0:30:07.880 we turned to Bloomberg's Sound Down co host Kaylee Lines. 0:30:08.360 --> 0:30:10.520 Yeah, thanks Tom. Twenty twenty four is looking to be 0:30:10.640 --> 0:30:14.440 a very busy year in and around Washington, between the 0:30:14.480 --> 0:30:17.240 primary contest for the Republican Party really kicking off in 0:30:17.320 --> 0:30:19.800 earnest and the threat of a government shutdown. And that's 0:30:19.880 --> 0:30:22.120 just in January. There's a lot more that's going to 0:30:22.200 --> 0:30:24.080 come throughout the year, so we wanted to get more 0:30:24.320 --> 0:30:26.680 on what we can expect in the year ahead. For politics, 0:30:26.760 --> 0:30:29.360 I caught up with Henrietta Tre's of Beta Partners, and 0:30:29.360 --> 0:30:32.680 we started with her thoughts on the likelihood of a shutdown. 0:30:32.760 --> 0:30:33.800 You know, I think that. 0:30:33.760 --> 0:30:37.320 We have staved off a shutdown because shutting down is 0:30:37.360 --> 0:30:40.440 actually worse than taking the votes to keep things functioning 0:30:40.480 --> 0:30:44.080 at their current levels. So I think January nineteenth and 0:30:44.160 --> 0:30:48.120 February second are just going to roll into March and April, 0:30:48.480 --> 0:30:52.320 June and July probably two to six times through the 0:30:52.360 --> 0:30:55.480 first half of twenty twenty four. The most important date 0:30:55.520 --> 0:30:59.040 for investors since we've sort of vibracated the appropriations bills 0:30:59.080 --> 0:31:02.520 and only had a partial shutdowns of pieces of the government. 0:31:03.200 --> 0:31:05.160 In the event that there are shutdowns, I think the 0:31:05.160 --> 0:31:07.160 most important day for investors is sort of the run 0:31:07.240 --> 0:31:10.560 up to May first, particularly in the defense space, because 0:31:10.600 --> 0:31:13.240 they don't think they're going to avoid the sequester early, 0:31:13.480 --> 0:31:14.960 and I don't think they're going to come up with 0:31:15.000 --> 0:31:17.479 some grand bipartisan deal as y'all are sort of alluding 0:31:17.480 --> 0:31:21.480 to earlier. There is no bipartisanship on Capitol Hill around 0:31:21.520 --> 0:31:24.720 anything other than hey, let's just not shut down. So 0:31:24.760 --> 0:31:28.680 I think as we get into mid April, investors in 0:31:28.720 --> 0:31:31.280 the defense space who are looking down the barrel of 0:31:31.280 --> 0:31:34.560 a one percent spending cut for defense are probably going 0:31:34.600 --> 0:31:36.440 to get a little acious a lot of headline risks 0:31:36.520 --> 0:31:38.720 as they seek to avoid that at the eleventh hour. 0:31:39.240 --> 0:31:41.880 So maybe keep May first on your radar and maybe 0:31:42.000 --> 0:31:44.520 April fifteenth around then for headline risk to start. 0:31:44.280 --> 0:31:46.440 Moving before we can even get to twenty twenty five. 0:31:46.480 --> 0:31:49.760 To your point, Henrietta, people need to last twenty twenty four, 0:31:49.800 --> 0:31:52.040 which brings me to the Mike Johnson question. Of course, 0:31:52.080 --> 0:31:55.040 the relatively newly minted Speaker of the House who has 0:31:55.080 --> 0:31:57.880 passed a continuing resolution with Democratic support, which is what 0:31:57.920 --> 0:31:59.720 got Kevin McCarthy kicked out of the job in the 0:31:59.720 --> 0:32:02.600 first place earlier in this fall. So I just wonder 0:32:03.400 --> 0:32:05.640 how much longer he's really got if he's going to 0:32:05.680 --> 0:32:07.600 need to fund the government and potentially does need to 0:32:07.680 --> 0:32:12.120 kick the can and House conservatives don't like it, right, and. 0:32:12.000 --> 0:32:15.240 You've already seen the House Conservatives say, you know, the 0:32:15.320 --> 0:32:18.560 deal that was negotiated last May with Kevin McCartney. A, 0:32:18.720 --> 0:32:19.840 he's not even a speaker. B. 0:32:19.920 --> 0:32:21.360 He's not even a congressman anymore. 0:32:21.360 --> 0:32:23.360 And then the next question is how long is Johnson 0:32:23.360 --> 0:32:25.040 going to be the speaker in DC? 0:32:25.160 --> 0:32:26.840 If you go to meetings with staff, they'll say, is 0:32:26.840 --> 0:32:28.560 it going to be six months or six years? The 0:32:28.640 --> 0:32:31.200 verdict the jury is very much out on that one, 0:32:31.240 --> 0:32:33.080 and it's a popular power of the game, which does 0:32:33.120 --> 0:32:36.000 not bode well. I think the honeymoon phase is over. 0:32:36.760 --> 0:32:38.640 I'm going to be really interested to see how members 0:32:38.640 --> 0:32:42.280 start reacting when they get back into town. It's impossible 0:32:42.560 --> 0:32:45.600 for about eight to twenty members of the far right 0:32:45.680 --> 0:32:48.080 to agree to any spending level. And we're not talking 0:32:48.120 --> 0:32:51.560 about huge chunks of change right now. The difference between 0:32:51.600 --> 0:32:55.160 the far right and the moderates in the Senate, which 0:32:55.160 --> 0:33:00.400 have overwhelmingly passed all twelve appropriations bills, is like five 0:33:00.440 --> 0:33:04.760 billion dollars, and we're talking about a one point five ish. 0:33:04.600 --> 0:33:06.000 Trillion dollar package. 0:33:06.080 --> 0:33:08.600 So for the difference to be twenty five billion dollars, 0:33:08.600 --> 0:33:10.560 it's like you know, me asking you for five bucks 0:33:10.560 --> 0:33:13.320 and should know. But they literally just don't have the 0:33:13.400 --> 0:33:16.240 votes for anything that sounds like yes. So those guys 0:33:16.240 --> 0:33:18.520 are always going to be voting no, which forces Speaker 0:33:18.600 --> 0:33:22.120 Johnson to constantly be negotiating with Democrats, which is of 0:33:22.120 --> 0:33:24.920 course anathma to the far right, but they are ironically 0:33:25.000 --> 0:33:28.080 the ones that are enforcing that reality on Speaker Johnson. 0:33:28.200 --> 0:33:31.480 So I hope you can make it through April. Obviously, 0:33:31.520 --> 0:33:34.680 we've seen how long a series of votes can go 0:33:35.040 --> 0:33:37.880 on the potential for another speaker, so I can tell 0:33:38.440 --> 0:33:41.520 drawn out. Nobody wants to do that, but memories stayed 0:33:41.680 --> 0:33:44.720 and maybe they've forgotten how uncomfortable that was in October. 0:33:44.760 --> 0:33:48.160 That's Henrietta Tree's managing partner at Veda Partners, and Tom, 0:33:48.240 --> 0:33:50.680 it looks like we're in for a wild ride in 0:33:50.720 --> 0:33:51.360 the coming year. 0:33:51.600 --> 0:33:53.880 Thank you, Kaylee. That was Bloomberg Sound on co host 0:33:53.920 --> 0:33:56.520 Kaylee Lines, and you can hear sound on weekdays one 0:33:56.560 --> 0:33:59.680 to three pm on Bloomberg Radio. And that does it 0:33:59.720 --> 0:34:02.400 for this edition of Bloomberg day Break Weekend. Join us 0:34:02.400 --> 0:34:04.440 again Monday morning at five am Wall Street Time for 0:34:04.480 --> 0:34:07.400 the latest on markets overseas and the news you need 0:34:07.440 --> 0:34:10.359 to start your day. I'm Tom Busby. Stay with us. 0:34:10.520 --> 0:34:14.800 Top stories and global business headlines are coming up right now.