Daybreak Weekend: US Inflation, Lagarde Address, China Eco Outlook

Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.560 --> 0:00:12.800 This is Bloomberg day Break Weekend, our global look at 0:00:12.800 --> 0:00:14.840 the top stories in the coming week from our day 0:00:14.880 --> 0:00:17.799 Break anchors all around the world. Straight ahead on the program, 0:00:17.800 --> 0:00:20.000 but look ahead to some key inflation data in the 0:00:20.120 --> 0:00:23.840 US how that may impact FED policy. I'm Tom Busby 0:00:23.960 --> 0:00:24.520 in New York. 0:00:24.720 --> 0:00:27.200 I'm Carolyn Hedke in London, where we're considering the role 0:00:27.240 --> 0:00:29.720 of the ECB and a changing Europe. 0:00:29.880 --> 0:00:32.760 I'm Doug Christner looking at the outlook for China's economy 0:00:32.800 --> 0:00:34.919 with those new US tariffs in effect. 0:00:36.600 --> 0:00:40.640 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:40.680 --> 0:00:44.400 eleven to three, Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:44.880 --> 0:00:49.120 Bloomberg ninety two to nine, Boston, DAB, Digital Radio, London, 0:00:49.560 --> 0:00:52.760 Sirius XM one twenty one, and around the world on 0:00:52.840 --> 0:00:55.960 Bloomberg Radio, dot Com and the Bloomberg Business App. 0:01:01.280 --> 0:01:03.120 Good day to you. I'm Tom Busby, and we begin 0:01:03.200 --> 0:01:06.440 today's program with some key inflation data out this week 0:01:06.480 --> 0:01:09.920 here in the US CPI data for February on Wednesday, 0:01:10.000 --> 0:01:13.240 PPI for that same month on Thursday, and for more 0:01:13.319 --> 0:01:16.559 and much more. We're joined by Bloomberg's Edward Harrison, editor 0:01:16.640 --> 0:01:21.520 of the Everything Risk newsletter. Well, Edward, inflation the problem 0:01:21.560 --> 0:01:24.319 that won't seem to go away, with all the uncertainty 0:01:24.360 --> 0:01:27.080 cause by President Trump goes on again off again tariffs 0:01:27.080 --> 0:01:29.959 and policy changes. What do you expect to see in 0:01:30.000 --> 0:01:33.039 these two reports, the first inflation reports of the new 0:01:33.040 --> 0:01:34.000 Trump administration. 0:01:34.800 --> 0:01:37.640 Hey, Tomm, good to talk to you. In terms of 0:01:37.680 --> 0:01:41.160 what I'm expecting, I know the market is expecting two 0:01:41.160 --> 0:01:43.839 point nine percent to be the headline number year over year. 0:01:44.240 --> 0:01:47.800 It was three percent in the prior month, that's in January. 0:01:47.880 --> 0:01:51.320 These are the February numbers. And so to the degree 0:01:51.400 --> 0:01:54.600 that we get a two handle on the number, the 0:01:54.640 --> 0:01:58.680 first number being two, which is the Fed's target two percent, 0:01:59.240 --> 0:02:02.640 that's good. But you know, any upside surprises will leave 0:02:02.720 --> 0:02:05.760 us at three percent inflation or more. And we know 0:02:06.280 --> 0:02:08.440 that the CPI is going to be followed, as you 0:02:08.480 --> 0:02:11.600 were saying, by the PPI, where the expectation is actually 0:02:11.760 --> 0:02:14.000 three percent three point three percent. 0:02:14.400 --> 0:02:18.280 Well, that's good news, and that's looking back looking ahead. 0:02:18.320 --> 0:02:20.520 Do you see anything being done right now by the 0:02:20.520 --> 0:02:24.959 White House to drive consumer prices lower? Or could we 0:02:25.080 --> 0:02:27.080 be seeing you know, more trouble ahead. 0:02:27.880 --> 0:02:30.440 There's nothing that I see in terms of the actual 0:02:30.520 --> 0:02:35.560 policy on tariffs that is helpful for inflation. However, I 0:02:35.600 --> 0:02:40.320 would say that a lot of the what we've seen 0:02:40.360 --> 0:02:44.600 in terms of the overall policy makes is dampening growth. 0:02:44.960 --> 0:02:49.400 And to the degree that dampening growth means that you know, 0:02:49.680 --> 0:02:54.720 there's less demand, that could actually mean that prices fall. So, 0:02:55.080 --> 0:02:57.400 you know, you talked about the jobs numbers that we 0:02:57.480 --> 0:03:01.639 saw last week. Those were pretty bad if you look 0:03:01.680 --> 0:03:04.799 at the internals that the numbers underneath in terms of 0:03:04.840 --> 0:03:09.160 what it says about the wherewithal, particularly of low income households, 0:03:09.320 --> 0:03:13.160 and so that's going to be a largely positive coortinflation, 0:03:13.320 --> 0:03:14.920 although negative for the economy. 0:03:15.760 --> 0:03:18.480 Well, let's talk about what else we didn't see in 0:03:18.480 --> 0:03:21.720 those numbers. That's all those massive job cuts at the 0:03:21.720 --> 0:03:25.120 federal level. We won't see maybe till March's numbers April 0:03:25.200 --> 0:03:25.960 or even beyond. 0:03:26.080 --> 0:03:28.760 Right, that's right, Yeah, And you know, if you look 0:03:28.760 --> 0:03:32.040 at the jobless claims that we've seen over the last 0:03:32.080 --> 0:03:35.680 few months, they've actually been relatively good. For instance, the 0:03:35.720 --> 0:03:39.040 one that came out last week showed a decrease in 0:03:39.080 --> 0:03:43.320 the number of initial jobless claims and it was lower 0:03:43.360 --> 0:03:45.800 than expectations, So that says that it's really at a 0:03:45.920 --> 0:03:48.880 gross level, you know, the economy wide not having an 0:03:48.920 --> 0:03:52.720 impact yet. It may have an impact later, but we're 0:03:52.720 --> 0:03:54.480 not seeing that in any of the job's numbers that 0:03:54.520 --> 0:03:57.920 we've seen so far. But even though we haven't seen it, 0:03:58.000 --> 0:04:01.880 we did see a huge spike in underemployment. That's the 0:04:01.960 --> 0:04:04.760 so called U six number, which takes into account you know, 0:04:04.800 --> 0:04:08.040 people who are who want to work but can't find 0:04:08.040 --> 0:04:12.200 full time employment and those who are underutilized. This underemployment 0:04:12.280 --> 0:04:15.760 number eight point zero percent is up from seven point 0:04:15.800 --> 0:04:17.840 five percent the previous month. And this is the largest 0:04:17.880 --> 0:04:20.840 spike that we've seen in the last two to three years. 0:04:20.880 --> 0:04:24.640 This is the highest number since like twenty twenty one. 0:04:24.880 --> 0:04:26.800 And what does it tell us looking ahead? I mean, 0:04:26.839 --> 0:04:30.239 are more people going to be fighting for fewer jobs 0:04:30.760 --> 0:04:31.960 more qualified people? 0:04:33.080 --> 0:04:36.839 Yes, it tells us number one, that there's a trend 0:04:37.240 --> 0:04:41.160 towards underemployment. It's been going on for you know, two 0:04:41.279 --> 0:04:43.600 years now. We hit sort of a low in the 0:04:43.600 --> 0:04:46.600 beginning of twenty twenty three, and we've spiked up. This 0:04:46.640 --> 0:04:49.680 particular spike being the worst in that time period. And 0:04:49.720 --> 0:04:52.400 it also says that in conjunction with other data, that 0:04:52.440 --> 0:04:56.279 we see that lower income households in particular are really hurting. 0:04:56.480 --> 0:04:59.880 You know, we've seen the highest car payments than the 0:05:00.000 --> 0:05:02.400 the largest number of Americans falling behind on their carent 0:05:02.440 --> 0:05:07.159 payments in three decades. We see spiking credit card delinquencies, 0:05:07.520 --> 0:05:10.880 and in this particular report, we also saw that the 0:05:10.960 --> 0:05:13.800 number of hours worked was down as well as the 0:05:13.839 --> 0:05:16.360 libor force participation. So all of that is like, if 0:05:16.360 --> 0:05:18.800 you think of this as forward looking, it's saying that 0:05:18.880 --> 0:05:23.000 the number which was only slightly higher and unemployment will 0:05:23.040 --> 0:05:26.760 go even higher going forward, and that's a negative sign 0:05:26.800 --> 0:05:27.520 for the economy. 0:05:28.240 --> 0:05:31.280 Well, this is all fuel for the FED. Again, they're 0:05:31.320 --> 0:05:35.919 battling stubbornly high inflation. We've got this mixed information coming 0:05:35.960 --> 0:05:39.440 on jobs. Is there anything you see that could make 0:05:39.480 --> 0:05:42.800 the FOMC consider a change in rates, whether up or 0:05:42.920 --> 0:05:45.600 down or is it just hold steady. 0:05:46.000 --> 0:05:49.799 They've played their cards close to their vest recently. However, 0:05:50.279 --> 0:05:53.840 I would say that the market at a minimum has 0:05:53.920 --> 0:05:57.960 been leaning into pulling forward the rate cuts that the 0:05:58.000 --> 0:05:59.880 Fed would make. You know, if you think about the 0:06:00.040 --> 0:06:03.080 who pushes in put the pull and push of higher 0:06:03.120 --> 0:06:07.520 inflation and lower growth. You know, the market has definitely 0:06:07.600 --> 0:06:11.000 been leaning towards the lower growth, pushing the FED forward 0:06:11.040 --> 0:06:12.960 in terms of their rate cuts, and given the fact 0:06:12.960 --> 0:06:17.239 that growth looks to be declining. A GDP now, for instance, 0:06:17.279 --> 0:06:21.200 shows a negative number for the Q one that would 0:06:21.200 --> 0:06:25.040 say that yes, they could cut as soon as June. 0:06:25.040 --> 0:06:27.520 The market has June as the first cut and it's 0:06:27.560 --> 0:06:31.280 looking for almost three cuts for the entirety of twenty 0:06:31.360 --> 0:06:32.400 and twenty five. 0:06:32.800 --> 0:06:36.000 The February Consumer Price Index out there Wednesday, the Producer 0:06:36.040 --> 0:06:38.760 Price Index out on Thursday, and our thanks to Bloomberg's 0:06:38.839 --> 0:06:42.920 Edward Harrison, editor of the Everything Risk newsletter. We move 0:06:43.040 --> 0:06:47.320 now to corporate earnings from computer software giants Oracle and Adobe. 0:06:47.360 --> 0:06:50.600 Oracle earnings out on Monday. Adobe comes out on Wednesday, 0:06:50.600 --> 0:06:53.120 and for more on what to expect, we're joined by 0:06:53.120 --> 0:06:57.719 Brody Ford, Bloomberg Tech reporter. Now, Brody, let's start with Oracle, 0:06:57.800 --> 0:07:01.000 a pioneer in cloud computing, use that to enhance its 0:07:01.040 --> 0:07:04.359 AI solutions to customers. What do you expect to see 0:07:04.760 --> 0:07:05.320 this week? 0:07:05.960 --> 0:07:09.040 Oracle is so interesting because yeah, there is pioneer and 0:07:09.160 --> 0:07:12.000 database technology that for a couple of years they was 0:07:12.080 --> 0:07:15.440 kind of written off as a bit of a software dinosaur, 0:07:15.960 --> 0:07:19.160 but they've managed to really remake themselves as a large 0:07:19.200 --> 0:07:22.200 cloud provider. I mean, the best example of that being 0:07:22.320 --> 0:07:24.400 what happened at the White House a couple of weeks ago, 0:07:24.440 --> 0:07:27.640 when you know, Trump brought Larry Ellison up on the 0:07:28.000 --> 0:07:31.760 podium and announced this giant Stargate initiative, saying that one 0:07:31.840 --> 0:07:34.840 hundred billion dollars will be spent building data centers across 0:07:34.880 --> 0:07:38.040 the country. And so investors are really curious, like do 0:07:38.160 --> 0:07:41.200 we see this happening in Oracle's earnings, what are the 0:07:41.360 --> 0:07:44.280 trends and their cloud infrastructure, which is really what folks 0:07:44.320 --> 0:07:47.480 are trading on right now. There's been this whole storyline 0:07:47.520 --> 0:07:52.680 too of whether the cloud infrastructure providers like Microsoft are 0:07:52.760 --> 0:07:56.360 starting to pull back on building data centers. If so, 0:07:56.640 --> 0:08:00.679 that would maybe you know, indicate poorly for or AI 0:08:00.800 --> 0:08:04.040 demand and how sustainable this boom can be. And so 0:08:04.280 --> 0:08:07.760 any commentary around the pace of building data centers and 0:08:07.800 --> 0:08:10.240 any pullback will be really important. 0:08:10.920 --> 0:08:13.480 Well, part of that Stargate project that you mentioned, I mean, 0:08:13.520 --> 0:08:17.920 that seems to be Oracle's main project in that main 0:08:17.960 --> 0:08:20.720 participation is building those data centers out, is that right? 0:08:21.920 --> 0:08:22.120 Right? 0:08:22.160 --> 0:08:25.680 So with Stargate the infrastructure, there's a lot of names involved, right, 0:08:25.720 --> 0:08:29.600 Open AI, Oracle, soft Bank, but really who's building this 0:08:29.640 --> 0:08:32.439 stuff is Oracle, right, And so they're effectively a vendor 0:08:32.520 --> 0:08:35.600 here and that's that. You know, any of this spending 0:08:35.640 --> 0:08:39.320 would in theory boost Oracle sales. Of course, you have 0:08:39.360 --> 0:08:43.240 to ask how much is this marketing? Because Oracle the 0:08:43.280 --> 0:08:46.000 one project we know about Oracle is already working on 0:08:46.120 --> 0:08:50.439 before this announcement, and so there's some potential that this 0:08:50.600 --> 0:08:54.240 is a you know, rebranding of work Oracles already doing. 0:08:55.160 --> 0:08:57.480 And if it is net new, I think we will 0:08:57.559 --> 0:08:59.960 find out, you know, with earnings. 0:09:01.320 --> 0:09:06.360 And you mentioned Microsoft's the big leaders, Microsoft's as your 0:09:06.800 --> 0:09:11.720 Amazon Web Services. How is Oracle competing against those giants 0:09:11.760 --> 0:09:13.840 and is it a giant itself and all this. 0:09:15.360 --> 0:09:19.400 They have tried to brand themselves as particularly effective for 0:09:19.520 --> 0:09:23.000 AI workloads and I think successfully. So, I mean they've 0:09:23.040 --> 0:09:25.800 really had a pretty crazy boost in sales. You got 0:09:25.840 --> 0:09:28.839 to remember that, Yeah, I mean Aws, Microsoft, to a 0:09:28.920 --> 0:09:33.440 lesser extent, Google, they are magnitudes larger than Oracle. But 0:09:33.520 --> 0:09:36.480 Oracle's growing really quickly. I mean they really burst on 0:09:36.559 --> 0:09:40.160 the scene with being the main vendor for TikTok, which 0:09:40.280 --> 0:09:43.280 creates a ton of you know, computational demand and is 0:09:43.320 --> 0:09:45.320 a huge customer. And then kind of from there they 0:09:45.320 --> 0:09:49.480 were able to land these more kind of AI native startups, 0:09:49.520 --> 0:09:53.079 and they landed Uber and so they're taken very seriously 0:09:53.160 --> 0:09:56.200 now as a contender in this cloud world, but they're 0:09:56.320 --> 0:10:00.080 still in that challenger basket. If they're able to be 0:10:00.000 --> 0:10:02.840 become more of a primary vendor for open Ai with 0:10:02.880 --> 0:10:06.000 all their massive AI workloads, I think that would be 0:10:06.080 --> 0:10:08.920 a game changer for Oracle, But it's still yet to 0:10:08.960 --> 0:10:11.360 be seen whether they can continue. I mean, they've been 0:10:11.400 --> 0:10:14.760 posting numbers like sixty seventy percent revenue growth in their 0:10:14.760 --> 0:10:17.520 cloud unit, which is I mean, in this market is 0:10:17.559 --> 0:10:18.640 pretty unheard. 0:10:18.320 --> 0:10:23.160 Of runaway success. Well let me ask you then, you know, besides, 0:10:23.280 --> 0:10:26.040 it's a participation in Stargate, which, as you mentioned, maybe 0:10:26.280 --> 0:10:29.600 a rebranding, some other plans. What kind of capital spending 0:10:29.640 --> 0:10:31.839 do you see in the year ahead? Where is their 0:10:31.880 --> 0:10:34.679 money going with all that revenue coming in from their 0:10:34.720 --> 0:10:35.480 cloud business? 0:10:36.800 --> 0:10:39.679 Right now, that Capex is all about data centers, right, 0:10:39.720 --> 0:10:42.200 I mean, outside of Stargate, they're building data centers all 0:10:42.240 --> 0:10:46.480 over America and the Middle East. I mean, it's a 0:10:46.559 --> 0:10:49.520 real data center boom right now. And it's kind of 0:10:49.600 --> 0:10:53.440 like how in previous eras of the tech booms, we 0:10:53.480 --> 0:10:56.160 would watch headcount as an as kind of a leading 0:10:56.200 --> 0:10:58.960 indicator of how the business is going. That's kind of 0:10:59.000 --> 0:11:01.560 what's happened with cap you know, it's become a number 0:11:01.600 --> 0:11:05.000 that investors track to be able to say are they 0:11:05.320 --> 0:11:08.920 experiencing enough demand that they're going to keep building data centers. 0:11:08.960 --> 0:11:13.559 It's watched as leading indicator, and so if that misses expectations, 0:11:13.600 --> 0:11:16.679 that might sell investors. Oh man, are they seeing a 0:11:16.720 --> 0:11:19.319 little demand slow down? So that's a kind of a 0:11:19.400 --> 0:11:22.360 key number here that it wasn't, you know, a year 0:11:22.480 --> 0:11:23.000 or two ago. 0:11:23.160 --> 0:11:25.760 Yeah, oh well look for that. Well let's let's now 0:11:25.760 --> 0:11:28.760 get your expectations for Adobe, which issued a pretty weak 0:11:29.000 --> 0:11:32.280 outlook back at its last earnings in December, ciding uncertainty 0:11:32.280 --> 0:11:35.400 about losing business to AI startups. So what do you 0:11:35.400 --> 0:11:37.640 expect to see in its earnings this week? 0:11:38.160 --> 0:11:40.840 The big question for Adobe is that in the age 0:11:40.840 --> 0:11:44.400 of AI, are people still going to pay for programs 0:11:44.400 --> 0:11:48.679 like Photoshop? You know, if I can google AI image 0:11:48.720 --> 0:11:51.720 generator and make a pretty good photo. Am I going 0:11:51.800 --> 0:11:54.600 to pay my you know, forty dollars a month license? 0:11:55.080 --> 0:11:57.160 And investors can't decide the answer here. If you look 0:11:57.200 --> 0:12:00.280 at the stock, it goes up, it goes down. Adobe 0:12:00.360 --> 0:12:03.920 itself has unveiled all types of generative AI products, saying 0:12:03.920 --> 0:12:07.040 that look, professionals use our services and they're going to 0:12:07.120 --> 0:12:09.600 want to have AI within it. They're not going to 0:12:09.640 --> 0:12:12.720 abandon us for you know, some startup that only has 0:12:12.760 --> 0:12:16.320 a web interface. I think that argument makes sense, but 0:12:16.440 --> 0:12:19.240 it's unclear that in the age of AI, when more 0:12:19.280 --> 0:12:23.640 work can be automated, maybe you need less people for 0:12:23.760 --> 0:12:26.880 a business like Adobe which charges per user. 0:12:27.720 --> 0:12:27.960 You know. 0:12:28.320 --> 0:12:31.000 It doesn't seem to bode well ultimately. 0:12:31.360 --> 0:12:34.160 Oracle Q three earnings out on Monday after Wall Street's 0:12:34.160 --> 0:12:37.240 closing bill. Adobe Q one earnings out after the bill 0:12:37.400 --> 0:12:40.960 on Wednesday. Our thanks to Brody Ford, Bloomberg Tech reporter. 0:12:41.320 --> 0:12:43.640 Coming up on Bloomberg Day Break weekend, we'll look ahead 0:12:43.679 --> 0:12:47.040 to the role of the ECB in a changing Europe. 0:12:47.120 --> 0:13:00.840 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:13:00.920 --> 0:13:03.280 Daybreak Weekend, our global look ahead at the top stories 0:13:03.280 --> 0:13:05.839 for investors in the coming week. I'm Tom Busby in 0:13:05.920 --> 0:13:08.400 New York. Up Later in our program will look at 0:13:08.400 --> 0:13:11.959 whether China can maintain its growth target for twenty twenty five. 0:13:12.400 --> 0:13:15.520 But first, after a week filled with geopolitical uncertainty at 0:13:15.520 --> 0:13:19.760 potential inflation boosting tariff announcements, European Central Bank chief Christine 0:13:19.800 --> 0:13:24.079 Lagarde will address central bankers, financial market participants, and academics 0:13:24.120 --> 0:13:27.560 this week. How will she make sense of a changing landscape? Well, 0:13:27.559 --> 0:13:29.880 for more, let's go to London and bring in Bloomberg 0:13:29.960 --> 0:13:32.800 Daybreak europe Banker Caroline Hepgar Tom. 0:13:32.920 --> 0:13:36.640 While Europe is reckoning with questions of defense and security 0:13:36.800 --> 0:13:41.240 and trade uncertainty, its central Bank is mulling how to respond. 0:13:41.760 --> 0:13:44.640 Nearing the final leg of the interest rate cutting cycle, 0:13:44.800 --> 0:13:50.559 policymakers in Europe must now navigate internal divisions and complicated 0:13:50.600 --> 0:13:54.400 decision making in the months ahead. At the March meeting, 0:13:54.559 --> 0:13:58.120 the group delivered a widely anticipated cut in the deposit 0:13:58.200 --> 0:14:01.480 rate to two and a half percent. Now attention shifts 0:14:01.559 --> 0:14:06.000 to how the institution can support a regent facing significant 0:14:06.040 --> 0:14:11.839 threats to peace and prosperity. Impetus to fill defense coffers 0:14:12.160 --> 0:14:16.440 spurred by waning US military commitments in what has been 0:14:16.520 --> 0:14:21.200 one of the most consequential changes of recent decades. Germany 0:14:21.320 --> 0:14:25.320 says that it will alter its own ironclad fiscal rules 0:14:25.360 --> 0:14:30.280 and unlock hundreds of billions of euros for rearmament. Other 0:14:30.360 --> 0:14:33.680 European leaders are turning more united in their support of 0:14:33.840 --> 0:14:39.400 Ukraine and also fast tracking defense capabilities. It could all 0:14:39.480 --> 0:14:43.040 still come unstuck, but all told, it will surely be 0:14:43.200 --> 0:14:46.840 a major focus now for the European Central Bank and 0:14:46.920 --> 0:14:51.800 its leader, Christine Lagarde. We've been speaking to Natalia Lippikina, 0:14:51.960 --> 0:14:56.360 head of EMEA Equity Strategy at JP Morgan, about the 0:14:56.400 --> 0:15:00.000 broader new reality now facing Europe. 0:15:00.160 --> 0:15:03.120 I think it's just uncertainty that you will have to 0:15:03.160 --> 0:15:06.000 live with, and we still don't know how big the 0:15:06.080 --> 0:15:08.920 terrafs will be, will they be temporary or not. So 0:15:09.120 --> 0:15:11.640 there will be still this overhang risk that most likely 0:15:11.640 --> 0:15:14.600 will stay with the market for some time. And what 0:15:14.720 --> 0:15:17.080 is interesting is that there probably will be more volatility 0:15:17.080 --> 0:15:19.400 in the market, which we really haven't seen in the 0:15:19.440 --> 0:15:22.160 last couple of years. But this year shows us that 0:15:22.360 --> 0:15:24.440 there is just so much going on in the world 0:15:24.840 --> 0:15:27.520 that we will see the markets going up and down, 0:15:27.600 --> 0:15:29.720 and you know, having this volatility in between. 0:15:30.120 --> 0:15:31.720 Some of the very big names in the US sold 0:15:31.760 --> 0:15:33.840 off a great deal yesterday and they have done since 0:15:33.840 --> 0:15:38.040 the February high. Is US exceptionalism at risk? That's the 0:15:38.080 --> 0:15:40.320 other kind of big thought in markets right now. 0:15:40.640 --> 0:15:44.600 I would say that there are probably cracks in that theme, 0:15:44.640 --> 0:15:46.960 but overall, we do continue to think that the US 0:15:47.000 --> 0:15:51.120 will perform Europe into the year end. We do continue 0:15:51.120 --> 0:15:53.600 to see very strong earnings growth in the US market, 0:15:54.040 --> 0:15:57.040 call it ten twelve percent this year, followed by very 0:15:57.040 --> 0:16:01.360 similar growth next year. The market is getting worried about 0:16:01.360 --> 0:16:04.560 this AI trade. We think that it's still a secular 0:16:04.560 --> 0:16:07.480 growth story and there are loads of interesting, you know, 0:16:07.680 --> 0:16:11.120 themes and companies that have from been beaten up recently 0:16:11.320 --> 0:16:12.640 that are quite attractive right now. 0:16:12.840 --> 0:16:16.400 That was Natarlie Lippikin, a head of EMEA equity strategy 0:16:16.440 --> 0:16:20.080 at JP Morgan, speaking to us on Bloomberg Radio. So 0:16:20.120 --> 0:16:24.080 how will Christine Legard present the place of her institution 0:16:24.600 --> 0:16:28.920 amidst all of this uncertainty? I've been speaking to Bloomberg's 0:16:28.960 --> 0:16:35.160 ECB reporter Yanna Randau about the ECB and its watchers' conference. 0:16:35.600 --> 0:16:39.360 Who will be there and why is it so important? 0:16:39.960 --> 0:16:42.520 There is some sentiment in the market and in the 0:16:42.560 --> 0:16:47.160 ECB watchers community that that quarter point interest rate cut, 0:16:47.320 --> 0:16:49.920 that was the last easy decision for the ECB for 0:16:49.960 --> 0:16:52.040 a very long time, and that has to do with 0:16:52.080 --> 0:16:56.080 the fact that the economic outlook is just so uncertain. 0:16:56.240 --> 0:16:59.400 We don't know what's going to happen to tariffs, we 0:16:59.520 --> 0:17:03.160 don't know what's going to happen to massive fiscal spending 0:17:03.520 --> 0:17:06.679 across the region. Is it going through? The plans are 0:17:06.720 --> 0:17:10.680 there now, but they have to go through parliaments, that 0:17:11.000 --> 0:17:14.040 those bonds have to be issued, those orders for equipment 0:17:14.080 --> 0:17:17.359 have to be made, and that doesn't happen overnight. We 0:17:17.480 --> 0:17:21.159 all know how how difficult it is. So you know, 0:17:21.240 --> 0:17:24.960 the ECB is flying blind once again and that makes 0:17:25.320 --> 0:17:28.440 you know, predictions about where they're headed very very difficult 0:17:29.000 --> 0:17:31.080 for April, but also for beyond. 0:17:32.040 --> 0:17:35.160 Tell us about the ECB and it's watchers conference. Who 0:17:35.200 --> 0:17:37.199 will be there? Why is it important? 0:17:37.960 --> 0:17:42.159 Yeah? So the ECB Watchers Conference is this one conference 0:17:42.240 --> 0:17:45.640 a year which is hosted at the at the University 0:17:45.680 --> 0:17:50.360 in Frankfurt, where ECB watchers from from the world of academia, 0:17:51.080 --> 0:17:54.960 economists from from some of the biggest banks, but also 0:17:55.080 --> 0:18:00.560 the ECB policymakers themselves get together to discuss whatever is 0:18:00.600 --> 0:18:03.600 happening in the world, whatever is on their mind. So 0:18:03.840 --> 0:18:06.440 it's the place to be if you're interested in DCB 0:18:06.600 --> 0:18:09.800 next week. It's the one event that you cannot miss, 0:18:10.160 --> 0:18:13.439 maybe aside from from the Cintra conference that the ECB 0:18:13.560 --> 0:18:16.400 puts on at the start of summer every year, and 0:18:16.880 --> 0:18:20.200 for a few years now, the President Laguard has has 0:18:20.440 --> 0:18:23.040 yeah showed up there as the as the keynote speaker, 0:18:24.359 --> 0:18:30.919 usually delivering a very meaty, heavy policy speech, outlining the challenges, 0:18:30.960 --> 0:18:35.160 discussing the challenges, and outlining her vision of what policy 0:18:35.200 --> 0:18:38.160 should do over the next couple of months. Now. I've 0:18:38.200 --> 0:18:41.000 tried to find out what she might be talking about 0:18:41.000 --> 0:18:45.959 next week, and I have gloriously failed because the ecv 0:18:46.320 --> 0:18:50.240 UH has has kept very tight lit about about even 0:18:50.280 --> 0:18:55.240 the topic of of of her comments. So I'm fully 0:18:55.280 --> 0:19:03.160 expecting her to be very authoritative, very yeah, very clear 0:19:03.200 --> 0:19:06.520 in her analysis. But what she is actually going to 0:19:06.520 --> 0:19:09.480 be talking about, you know, it's going to be a 0:19:09.520 --> 0:19:10.560 secret for a while longer. 0:19:11.119 --> 0:19:16.240 That's fascinating. It is such an uncertain time for you, 0:19:16.600 --> 0:19:20.320 for the region. It will be very interesting to see 0:19:20.400 --> 0:19:24.399 how Christine le Gard maybe tackles that, what is the 0:19:24.520 --> 0:19:27.600 role of the ECB here? Then how will the Gard 0:19:27.640 --> 0:19:31.199 and her team be thinking about this huge moment for 0:19:31.280 --> 0:19:31.920 the continent. 0:19:32.920 --> 0:19:36.640 Yeah, I mean, first of all, you know, she has 0:19:37.160 --> 0:19:41.960 she has a very large number of very talented economists, 0:19:41.960 --> 0:19:44.200 and I think they will They will do the heavy 0:19:44.200 --> 0:19:48.800 work now trying to understand what all these announcements and 0:19:48.840 --> 0:19:51.879 all the news we've seen over the over the past 0:19:51.920 --> 0:19:55.040 couple of days, uh, and also are still going to 0:19:55.119 --> 0:19:58.199 see as we march forward, how that is going to 0:19:58.240 --> 0:20:01.600 affect the economy. She was as at her post decision 0:20:01.600 --> 0:20:04.520 press conference, does the EASB have a role in maybe 0:20:04.560 --> 0:20:09.160 helping to finance these massive investments that are going to come? 0:20:09.480 --> 0:20:12.160 And she was very very clear there saying, our job 0:20:12.240 --> 0:20:15.679 is to guarantee press stability, and you know that is 0:20:15.760 --> 0:20:18.800 the best contribution we can make. And after that it's 0:20:18.840 --> 0:20:22.440 for somebody else or other people to step up. And 0:20:22.480 --> 0:20:24.680 I think that tells you a little bit about their 0:20:24.720 --> 0:20:27.960 state of mind. They are going to watch the implications, 0:20:28.240 --> 0:20:33.240 They will take the decisions necessary to keep inflation stable, 0:20:34.160 --> 0:20:38.800 keep the economy in a good place, and will be 0:20:39.080 --> 0:20:41.399 very very attentive to the data as they arrive and 0:20:41.880 --> 0:20:45.480 to projections that hopefully, unlike the ones that came out 0:20:45.760 --> 0:20:49.280 the recent ones, will actually tell them where where the 0:20:49.320 --> 0:20:50.119 region is headed. 0:20:50.480 --> 0:20:54.359 And yet the ECB has been so influential and often 0:20:54.520 --> 0:20:59.320 central in past crises in Europe. So one wonders what 0:20:59.400 --> 0:21:03.200 the ECB will be thinking about tariffs, the threat to. 0:21:03.200 --> 0:21:04.160 Peace in Europe? 0:21:04.600 --> 0:21:08.000 Will they be on Legard's agenda, on the agenda of 0:21:08.040 --> 0:21:09.480 the European Central Bank. 0:21:09.960 --> 0:21:12.560 For sure? And if there's one thing that can be 0:21:12.560 --> 0:21:15.760 said about President Leguarde is that she's a very political, 0:21:15.800 --> 0:21:19.359 easyb president and she has her very own opinions. She 0:21:20.040 --> 0:21:22.639 you know, is not shy to to lash out at 0:21:22.640 --> 0:21:27.359 Donald Trump. She's she's made her opinions very well understood 0:21:27.400 --> 0:21:30.000 in the past on on what she thinks about tariffs, 0:21:30.000 --> 0:21:33.880 what she thinks about certain types of policies, and I'm 0:21:33.920 --> 0:21:37.080 sure you know we can we can expect to her 0:21:38.080 --> 0:21:40.439 to hear more from from her about that. But she 0:21:40.560 --> 0:21:45.280 also very well knows how sensitive the situation is and 0:21:45.320 --> 0:21:50.080 how how charged the situation is, and and that central 0:21:50.160 --> 0:21:53.120 banks in the current moment, and especially when you sit 0:21:53.119 --> 0:21:56.879 in Europe, are very well advised to to be a 0:21:56.920 --> 0:21:59.639 force of calm and not add to the tension. So 0:21:59.680 --> 0:22:02.040 she's got to do her job as much as she 0:22:02.119 --> 0:22:07.520 can and keeping inflation stable in the Eurozone, be a 0:22:07.640 --> 0:22:11.320 voice of reason when it comes to warning against tariffs 0:22:11.359 --> 0:22:15.960 and navigating the challenges with defense. I wouldn't add expect 0:22:15.960 --> 0:22:19.640 her to add to tensions, but she will make yourself heard. 0:22:20.080 --> 0:22:24.000 Talk to us then, about whether there are internal divisions 0:22:24.200 --> 0:22:30.040 in the meeting of European leaders. In just the last 0:22:30.040 --> 0:22:32.960 few days, the divisions have been clear when it comes 0:22:33.040 --> 0:22:36.199 to Hungary and the rest of Europe one out of 0:22:36.560 --> 0:22:41.480 twenty seven. Do you think on the Council the ECB divisions, 0:22:41.560 --> 0:22:45.480 internal divisions might might deepen or might even emerge. 0:22:46.040 --> 0:22:50.280 I think yes, I think so. I mean there were speculation, 0:22:50.400 --> 0:22:52.920 or there was speculation already going into the March meeting 0:22:52.960 --> 0:22:56.600 about what happens next, and April was always a bit 0:22:56.640 --> 0:22:58.760 of a question mark. It's even more of a question 0:22:58.880 --> 0:23:01.359 mark now we're going to see another cut or we 0:23:01.520 --> 0:23:04.600 maybe going to see a pause. And and my impression 0:23:04.640 --> 0:23:08.240 from speaking to to people after after the meeting was out, 0:23:08.920 --> 0:23:12.920 is that that you know, the Dovish camp is worried 0:23:12.960 --> 0:23:15.320 about the economy in in in the in the current 0:23:15.359 --> 0:23:19.320 state sees room for more interest rate cuts. The more 0:23:19.359 --> 0:23:23.359 hawkish members, Uh, they are slightly more concerned about the 0:23:23.400 --> 0:23:27.840 implications of foreign inflation from terrorists, from fiscal policy, and 0:23:27.920 --> 0:23:31.399 that they, uh, they might want to you know, just 0:23:31.520 --> 0:23:33.880 pause and take stock and and be a bit careful. 0:23:34.200 --> 0:23:38.560 Also because interest rates are now broadly approaching that territory 0:23:38.600 --> 0:23:42.600 that we can we can describe as neutral where you know, 0:23:42.640 --> 0:23:47.320 it's not restricting the economy anymore. And so so there 0:23:47.359 --> 0:23:51.159 are different different views on what the economy needs, but 0:23:51.359 --> 0:23:55.480 overall there is this sentiment that they don't want to 0:23:55.520 --> 0:24:00.040 add to the fighting and and the controversy. Uh. And 0:24:00.080 --> 0:24:03.679 this is what we saw yesterday. I saw last at 0:24:03.680 --> 0:24:07.040 the last meeting as well, that there was this sense 0:24:07.080 --> 0:24:11.360 of coming together and rallying behind the consensus. And as 0:24:11.440 --> 0:24:14.000 much as I expect, you know, a lot of loud 0:24:14.080 --> 0:24:18.200 noises going or approaching the April meeting with very forceful opinions, 0:24:18.640 --> 0:24:22.119 I also see a lot of room for them coming together, 0:24:22.280 --> 0:24:26.040 coming to the table and making a decision that everybody 0:24:26.040 --> 0:24:28.640 can support in April, or at least a broad majority 0:24:28.680 --> 0:24:29.240 can support. 0:24:29.760 --> 0:24:33.199 Just very briefly, Yanna, as ECB reporter, you know, the 0:24:33.240 --> 0:24:35.800 EASYB in its Watches event, the annual event, as you 0:24:35.880 --> 0:24:39.320 describe it, very important, you know, on the same sort 0:24:39.359 --> 0:24:42.800 of footing as the Cintra meeting in terms of what 0:24:42.840 --> 0:24:45.400 you're going to try to glean out of the events. 0:24:45.560 --> 0:24:47.600 What are you going to be beetling around and trying 0:24:47.600 --> 0:24:51.440 to trying to do and write about you think, just briefly. 0:24:51.720 --> 0:24:54.600 Yeah, I mean, I think it's just the way the 0:24:54.640 --> 0:24:57.840 ECB analyzes the current situation. There wasn't a whole lot 0:24:57.920 --> 0:25:02.960 yet in the post EASYB press conference, just because it 0:25:03.119 --> 0:25:07.120 was so fresh and maybe policymakers didn't have a whole 0:25:07.119 --> 0:25:12.199 lot of time to reflect on the new situation, the 0:25:12.240 --> 0:25:16.000 new reality they're in. So I expect a lot more 0:25:16.040 --> 0:25:20.320 reflection on the challenges for Europe, on what might be 0:25:20.440 --> 0:25:24.840 necessary in running the economy, and I think that will 0:25:24.880 --> 0:25:28.399 be interesting because we can infer how policy, how they 0:25:28.440 --> 0:25:30.800 might also think about policy in the months ahead. 0:25:30.920 --> 0:25:34.280 My thanks to Bloomberg's EASYB reporter Yanna Ruandau, and we 0:25:34.320 --> 0:25:37.000 will keep you up to date with the European Central 0:25:37.040 --> 0:25:40.640 Bank and its Watchers Conference in the coming days here 0:25:40.720 --> 0:25:44.200 on Bloomberg Radio. I'm Caroline Hepgitt in London. You can 0:25:44.240 --> 0:25:46.919 catch us every weekday morning for Blueberg Daybreak. You up 0:25:47.080 --> 0:25:49.639 beginning at six am in London. That's one am on 0:25:49.760 --> 0:25:51.560 Wall Street, Tom, Thank. 0:25:51.359 --> 0:25:54.000 You, Caroline. And coming up on Bloomberg day Break Weekend, 0:25:54.080 --> 0:25:56.520 we'll look at whether China can maintain its growth target 0:25:56.680 --> 0:26:01.000 in twenty twenty five. I'm Tom Busby and this is Bloomberg. 0:26:11.680 --> 0:26:14.040 This is Bloomberg day Break Weekend, our global look ahead 0:26:14.080 --> 0:26:16.400 at the top stories for investors in the coming week. 0:26:16.560 --> 0:26:18.120 I'm Tom Busby in New York. 0:26:18.560 --> 0:26:18.760 US. 0:26:18.840 --> 0:26:22.040 Tariffs on Canada and Mexico capturing the headlines last week, 0:26:22.080 --> 0:26:26.200 but the Trump administration also slapped additional tariffs on China. 0:26:26.640 --> 0:26:28.520 For more on what those levees could mean for the 0:26:28.520 --> 0:26:30.960 world's second largest economy, Let's get to the host of 0:26:31.000 --> 0:26:33.680 the Daybreak Asia podcast, Doug Krisner. 0:26:34.040 --> 0:26:37.159 Tom. In the last week, Chinese leadership set an ambitious 0:26:37.240 --> 0:26:40.560 goal for economic growth at around five percent for twenty 0:26:40.640 --> 0:26:43.320 twenty five. You know, this marks the third straight year 0:26:43.359 --> 0:26:46.639 that China has maintained that growth target, and Premier Lee 0:26:46.720 --> 0:26:49.560 Chan did say that meeting it again will be difficult. 0:26:49.880 --> 0:26:54.119 I'm joined now by Katya Dmitrieva, Bloomberg News Asia Economy reporter. 0:26:54.240 --> 0:26:57.440 She joins us from our studios in Hong Kong. Katya, 0:26:57.480 --> 0:26:59.560 thank you for joining us. Can we talk about the 0:26:59.600 --> 0:27:02.600 growth target to begin with? Does it seem realistic at 0:27:02.600 --> 0:27:03.200 this point? 0:27:03.520 --> 0:27:08.400 Depends who you ask. Chinese officials definitely think they can 0:27:08.440 --> 0:27:11.280 make it. It's the exact same target they've set in 0:27:11.320 --> 0:27:14.480 twenty twenty four. They've met their targets for the past 0:27:14.640 --> 0:27:19.120 three years, so history would suggest that once they set something, 0:27:19.880 --> 0:27:22.199 they're going to do everything they can to meet it. 0:27:22.840 --> 0:27:25.840 If you ask economists, however, we've got a Bloomberg survey 0:27:26.119 --> 0:27:29.600 and it says that they're likely China is more likely 0:27:29.680 --> 0:27:33.040 to hit four point five percent. Now, the question is 0:27:33.080 --> 0:27:38.760 really how much the stimulus can help revive consumption. I 0:27:38.800 --> 0:27:42.440 know that's always the question, but this year in particular, 0:27:42.520 --> 0:27:48.159 because from Premiere Li Cheang's speech, it's very clear that 0:27:48.560 --> 0:27:52.720 they're doing a couple things. So they're boosting how much 0:27:52.760 --> 0:27:55.119 they're going to be spending in their budget deficit or 0:27:55.160 --> 0:27:57.960 how much they're comfortable with spending this year. 0:27:58.200 --> 0:27:59.760 What is that percentage right now? 0:28:00.280 --> 0:28:03.640 So they've got a fiscal deficit target of four percent, 0:28:04.440 --> 0:28:06.800 which means that they're going to be spending a lot 0:28:06.880 --> 0:28:09.640 more on a number of programs. We only know kind 0:28:09.640 --> 0:28:12.920 of a handful of what those will be. They're raising 0:28:12.960 --> 0:28:16.600 the pension payout levels, there's a public subsidy for medical 0:28:16.640 --> 0:28:20.639 insurance that they're going to be boosting. The question, though, 0:28:21.000 --> 0:28:23.840 is what else are they going to do? And if 0:28:23.960 --> 0:28:27.119 history again serves as a guide, we know that throughout 0:28:27.160 --> 0:28:30.760 the year, the first few months growth is quite strong. 0:28:30.840 --> 0:28:33.400 They roll out these programs, and then about halfway through 0:28:33.440 --> 0:28:37.200 the year they're forced to do more because the numbers 0:28:37.560 --> 0:28:38.280 aren't stacking it. 0:28:38.400 --> 0:28:41.000 Do you think that leadership in Beijing is operating under 0:28:41.040 --> 0:28:44.959 the assumption that it is inevitable that more US tariffs, 0:28:45.040 --> 0:28:47.120 or at least higher US tariffs are on the way. 0:28:47.520 --> 0:28:50.600 Absolutely, and you can see that in their reaction. So 0:28:51.400 --> 0:28:54.840 if you just look at Trump's previous statements, everything from 0:28:55.120 --> 0:28:58.440 sixty percent to one hundred percent tariffs on China, which 0:28:58.440 --> 0:29:00.640 he said during the campaign trail, Now one hundred percent, 0:29:00.680 --> 0:29:02.560 take that with a grain of salt, But I think 0:29:02.640 --> 0:29:05.480 sixty percent was mentioned enough that that's what a lot 0:29:05.520 --> 0:29:08.920 of economists and analysts and people in Beijing are now 0:29:09.120 --> 0:29:13.640 pricing in. And so the reason why this NPC was 0:29:13.640 --> 0:29:16.880 particularly important is because it was the first chance that 0:29:16.960 --> 0:29:21.160 Chinese officials could react to that eventuality or what is 0:29:21.200 --> 0:29:25.000 perceived to be that eventuality. So raising the fiscal deficit 0:29:25.080 --> 0:29:29.640 target and also raising the fiscal deficit target and also 0:29:29.720 --> 0:29:32.600 focusing on the consumer is a sign that they're not 0:29:32.880 --> 0:29:36.240 going to be or trying not to be as reliant 0:29:36.240 --> 0:29:39.480 on exports, right, because if you have these tariffs coming 0:29:39.560 --> 0:29:42.040 in from the US and you have this growing protectionism 0:29:42.320 --> 0:29:45.960 really globally, then you can't rely on those tariffs, or 0:29:46.320 --> 0:29:49.240 you can't rely on trade. You can't rely on exports 0:29:49.240 --> 0:29:52.000 as much because it's just going to contribute to deflation. 0:29:52.160 --> 0:29:54.120 It's not going to get your growth to about five 0:29:54.200 --> 0:29:55.160 percent if. 0:29:55.160 --> 0:29:57.960 Chinese leadership has to do more on the stimulus side. 0:29:58.000 --> 0:30:00.160 Are the people talking about the risk that may be 0:30:00.200 --> 0:30:03.640 associated with that. I'm thinking about the debt levels that 0:30:03.680 --> 0:30:05.520 are maybe problematic already. 0:30:05.840 --> 0:30:08.680 Yeah, there's going to be a lot of debt issuance 0:30:08.960 --> 0:30:13.960 for sure, and of course fiscal deficit increasing. But this 0:30:14.040 --> 0:30:18.840 is kind of with China is a special case in 0:30:18.880 --> 0:30:21.600 some ways, and in some ways it's also not so 0:30:21.640 --> 0:30:23.880 it's a special case and that they have more control 0:30:24.000 --> 0:30:26.640 over these things. So we're going to see a lot 0:30:26.680 --> 0:30:29.160 more bond issuance. There's some response in markets. They're still 0:30:29.240 --> 0:30:31.400 hungry for that debt. 0:30:31.720 --> 0:30:33.719 So we're dealing with a trade war right now. And 0:30:33.760 --> 0:30:36.480 one of the things that I thought was very interesting 0:30:36.640 --> 0:30:40.920 is Beijing reiterating this stance on opening up markets to 0:30:41.080 --> 0:30:45.560 foreign investors. Where is this foreign capital going to come from, 0:30:45.720 --> 0:30:48.920 in the mind of Chinese leadership, other than the US. 0:30:49.560 --> 0:30:53.760 They're hoping it'll come from all over the US, maybe Europe, 0:30:53.800 --> 0:30:58.200 but Southeast Asia and Asia in particular. You've seen since 0:30:58.240 --> 0:31:04.080 twenty eighteen really solidifying of trade and foreign direct investment 0:31:04.760 --> 0:31:09.000 ties between China and Asia, especially as companies kind of 0:31:09.000 --> 0:31:11.040 pulled back from the States in Europe and there were 0:31:11.480 --> 0:31:14.720 a lot more restrictions in those regions and kind of 0:31:14.760 --> 0:31:17.960 the Western world. So there is a sense that Asia 0:31:18.040 --> 0:31:21.240 could contribute a lot more. You know, think of India, 0:31:21.480 --> 0:31:24.360 think of even South Korea, and a lot of the 0:31:24.400 --> 0:31:28.520 Southeast Asian economies that are growing at a much faster 0:31:28.680 --> 0:31:32.400 clip and sort of minting new companies and millionaires and 0:31:32.400 --> 0:31:37.120 billionaires every day. So I think the thinking is that 0:31:37.160 --> 0:31:40.680 the investment will come from there. However, it'll be a 0:31:40.720 --> 0:31:44.760 pretty tall order to get a foreign investment to come back. 0:31:45.240 --> 0:31:47.680 There's still a lot of questions about the property sector 0:31:47.720 --> 0:31:50.720 bottoming out. In fact, if you speak to any investor, 0:31:51.560 --> 0:31:55.520 they will flag that particular issue. In fact, the data 0:31:55.560 --> 0:32:01.080 shows the opposite, that domestic investors are taking their money 0:32:01.160 --> 0:32:04.080 out of China at a much faster clip and money 0:32:04.120 --> 0:32:08.280 is going into China at a much slower rate. So 0:32:08.800 --> 0:32:10.880 it's not looking optimistic for that. 0:32:11.280 --> 0:32:12.880 I think we're going to get figures in the week 0:32:12.880 --> 0:32:16.479 ahead on foreign direct investment for China. But what are 0:32:16.520 --> 0:32:18.920 some of the important data points that you are looking 0:32:19.000 --> 0:32:21.240 at in the coming days. I know over the weekend 0:32:21.280 --> 0:32:25.360 we'll have some inflation numbers, also new loans data. But 0:32:25.520 --> 0:32:28.600 is there anything in particular that you think can shed 0:32:28.640 --> 0:32:32.400 a light on the vibrancy or the lack of vibrancy 0:32:32.840 --> 0:32:34.040 in the Chinese economy. 0:32:34.400 --> 0:32:38.840 I think three things. There's three indicators that I always 0:32:38.840 --> 0:32:43.320 watch when it comes to China. There's the CPI and PPI, 0:32:43.440 --> 0:32:49.040 which I'm wrapping into one as inflation. There's housing and 0:32:49.520 --> 0:32:55.160 in particular how in particular home sales home prices for 0:32:55.240 --> 0:32:58.320 some of the biggest cities. So we get that, we 0:32:58.400 --> 0:33:02.280 get the inflation data this week, we get new home prices, 0:33:02.400 --> 0:33:05.360 used home prices in a couple of weeks, and then 0:33:05.360 --> 0:33:09.640 I would say the third thing is retail spending. 0:33:10.400 --> 0:33:13.240 So talk to me about the behavior of the Chinese consumer. 0:33:13.360 --> 0:33:16.600 Do we know anything about how well retail spending has 0:33:16.640 --> 0:33:17.440 been performing. 0:33:17.960 --> 0:33:21.120 It has been very weak. In fact, the last few 0:33:21.160 --> 0:33:26.040 months in particular have been surprisingly weak. Given that the 0:33:26.040 --> 0:33:28.480 start of the year we had a major holiday. We 0:33:28.520 --> 0:33:32.640 thought spending was going to lift as a result of that, 0:33:32.960 --> 0:33:36.000 but actually to end the year there was this unexpected 0:33:36.480 --> 0:33:39.440 slow down and sort of starting the year as well. 0:33:39.880 --> 0:33:42.160 I mean, in general, the issue is that there's still 0:33:42.160 --> 0:33:46.520 a two speed economy, right. You have industrial production that's 0:33:46.520 --> 0:33:51.360 picking up, you have retail sales and consumption that's flatlining, 0:33:51.560 --> 0:33:55.080 and growth is just nowhere near where it should be 0:33:55.200 --> 0:33:59.200 to support economic growth, and certainly nowhere near where it 0:33:59.200 --> 0:34:02.920 needs to be five percent growth, especially if you're going 0:34:02.960 --> 0:34:05.200 to be relying on the consumer specifically. 0:34:05.520 --> 0:34:08.560 Katya, thank you so much for joining us. Katya Dmitrieva, 0:34:08.600 --> 0:34:12.560 Bloomberg News Asia Economy reporter, joining us. For more on 0:34:12.600 --> 0:34:16.040 the outlook for China's economy, we turned to Shazad Kazi. 0:34:16.120 --> 0:34:19.600 He is the chief operating Officer, also managing director at 0:34:19.680 --> 0:34:23.960 China beije Book International, Shahzad, It's always a pleasure. China 0:34:23.960 --> 0:34:27.480 beige Book International has just released its report for the 0:34:27.520 --> 0:34:31.040 month of February. February, can you help me understand what 0:34:31.120 --> 0:34:32.640 you guys have discovered. 0:34:32.880 --> 0:34:36.799 Yeah, last week's China Beigebook economic release show that the 0:34:37.160 --> 0:34:41.400 economy continues to improve in twenty twenty five as a 0:34:41.440 --> 0:34:44.200 second straight month at least where we've seen growth accelerate, 0:34:45.000 --> 0:34:48.239 and this time around you had the industrial sector doing 0:34:48.320 --> 0:34:51.719 quite well. However, the one thing that stood out in 0:34:51.920 --> 0:34:54.919 the report that we talk about is that consumption took 0:34:55.280 --> 0:34:56.000 a back seat. 0:34:56.640 --> 0:34:58.719 What do you think is going on there that is 0:34:58.760 --> 0:35:02.120 holding consumption back beyond just negative sentiment. 0:35:02.640 --> 0:35:04.400 Well, what happened was that in the lead up to 0:35:04.600 --> 0:35:07.359 the Lunar New Year, you saw the travel sector do good, 0:35:07.360 --> 0:35:10.160 restaurants do good, people going out there and buying things 0:35:10.160 --> 0:35:13.960 that the retailing segment was doing well also, but there 0:35:14.000 --> 0:35:16.879 was a pair back from that speed or that intensity. 0:35:17.320 --> 0:35:19.640 And I think what this comes down to is the 0:35:19.680 --> 0:35:22.160 fact that you don't have right now any type of 0:35:22.520 --> 0:35:27.040 sustained consumer or household focused stimulus in China. 0:35:27.160 --> 0:35:29.000 One of the things that we talk a lot about 0:35:29.080 --> 0:35:32.200 in terms of consumer confidence in China that it's very 0:35:32.280 --> 0:35:34.399 much linked to the property market, and we know that 0:35:34.560 --> 0:35:37.920 home prices are still struggling, right, Is that sharing a 0:35:37.960 --> 0:35:39.160 big part of the blame here? 0:35:39.280 --> 0:35:43.280 Well, the property market is actually starting to trend, especially 0:35:43.360 --> 0:35:46.280 the housing market, in the right direction. Yes, of course, 0:35:46.320 --> 0:35:50.399 you're still far below levels from years ago. However that 0:35:50.440 --> 0:35:54.440 pain has eased quite significantly over the last year or 0:35:54.480 --> 0:35:57.680 so as Beijing has tried to take its sort of 0:35:57.680 --> 0:35:59.960 foot off the neck of the market. 0:36:00.200 --> 0:36:02.960 What do we know about the labor market? Speaking of markets, the. 0:36:02.960 --> 0:36:06.640 Labor market is doing our right. You haven't seen hiring 0:36:06.760 --> 0:36:11.000 go back to those pre COVID levels and our economic surveys. 0:36:11.239 --> 0:36:14.320 I mean, you've certainly seen periods last year where hiring 0:36:14.360 --> 0:36:17.400 slowed down, which we're concerning, but all around the picture 0:36:17.520 --> 0:36:21.560 isn't very inspiring. But again, there isn't that alarm or 0:36:21.680 --> 0:36:23.479 crisis in the labor market data. 0:36:23.560 --> 0:36:25.560 So when you look at the types of companies that 0:36:25.600 --> 0:36:29.960 you are talking to, I'm thinking there's obviously state owned enterprises, 0:36:30.080 --> 0:36:34.200 the gargantuan companies that exist in China, and then medium, 0:36:34.400 --> 0:36:38.960 smaller sized, more entrepreneurial type organizations. Do we need to 0:36:39.040 --> 0:36:42.760 differentiate and talk about sentiments within those camps. 0:36:43.080 --> 0:36:45.320 Yeah, I think that's going to become even more important, 0:36:45.440 --> 0:36:48.520 especially if the party is now pledging that the private 0:36:48.520 --> 0:36:51.480 sector is going to get very good credit support finally, 0:36:51.600 --> 0:36:55.160 and they're going to be provided the type of a 0:36:55.200 --> 0:36:58.560 policy support rather I actould say that they need in 0:36:58.680 --> 0:37:01.480 order to succeed. Well, that's going to play out in 0:37:01.480 --> 0:37:03.920 the numbers, and that has not been the case. SMEs 0:37:04.000 --> 0:37:08.160 have historically really struggled to go out there and get 0:37:08.200 --> 0:37:11.080 credit and to get the kind of money that they 0:37:11.080 --> 0:37:13.480 need in order to have a successful, thriving business in 0:37:13.560 --> 0:37:16.239 order to invest in higher They've always come second. They've 0:37:16.239 --> 0:37:19.040 always been second fiddle to the big state or enterprises. 0:37:19.120 --> 0:37:21.160 How well capitalized are the banks right now? 0:37:21.800 --> 0:37:23.640 The banks are not in any kind of crisis. Yes, 0:37:23.719 --> 0:37:27.160 China is recapitalizing and that took up a lot of headlines, 0:37:27.440 --> 0:37:30.600 but the major banks are not in any kind of crisis. Now, 0:37:30.640 --> 0:37:33.160 do you have some kind of financial crisis brewing? Maybe 0:37:33.200 --> 0:37:36.480 at some local levels potentially, I think the property market 0:37:36.520 --> 0:37:39.600 story will be playing out there. Obviously continued issues with 0:37:39.640 --> 0:37:42.200 local government finances, so that may be a story for 0:37:42.239 --> 0:37:43.680 the long run. But I think the big banks are 0:37:43.680 --> 0:37:44.879 doing all right for now. 0:37:45.000 --> 0:37:47.000 One of the big things that we've been talking about 0:37:47.239 --> 0:37:50.799 is the deep Seek artificial intelligence chat bought that was 0:37:50.840 --> 0:37:53.439 released a couple of weeks ago, and how that has 0:37:53.600 --> 0:37:56.880 reinvigorated the high tech space in China. Talk to me 0:37:56.920 --> 0:37:59.239 a little bit about the momentum the follow through that 0:37:59.280 --> 0:38:01.279 you're seeing as result of that development. 0:38:01.480 --> 0:38:01.680 Yeah. 0:38:01.760 --> 0:38:03.840 Look, I think we're certainly picking up some amounts of 0:38:03.920 --> 0:38:07.399 positive sentiment from that even within the surveys early on. 0:38:07.880 --> 0:38:09.680 We'll see how that plays out over the rest of 0:38:09.680 --> 0:38:12.839 the year, especially in the e commerce area, and of 0:38:12.840 --> 0:38:16.120 course how some of the more high end tech manufacturing 0:38:16.160 --> 0:38:19.560 firms are performing as we learn more about deep Seak 0:38:19.560 --> 0:38:21.560 and as we learn about some of the other potential 0:38:21.560 --> 0:38:22.520 model similar models. 0:38:22.680 --> 0:38:27.240 Jizad Kazi, COO and managing director at China Beijbook International. 0:38:27.640 --> 0:38:30.360 I'm Doug Chrisner. You can catch us weekdays for the 0:38:30.440 --> 0:38:35.200 Daybreak Asia podcast. It's available wherever you get your podcast. Tom. 0:38:35.680 --> 0:38:38.080 Thank you Doug, And that does it for this edition 0:38:38.080 --> 0:38:40.680 of Bloomberg day Break Weekend. Join us again Monday morning 0:38:40.680 --> 0:38:42.600 at five am Wall Street Time for the latest on 0:38:42.719 --> 0:38:45.520 markets overseas and the news you need to start your day, 0:38:46.040 --> 0:38:49.000 I'm Tom Buzzby. Stay with us. Top stories and global 0:38:49.000 --> 0:38:52.560 business headlines are coming up right now