Daybreak Weekend: Davos Preview, Oil Volatility, Mester Speaks, Iowa Caucuses

This is Bloomberg Daybreak Weekend, our global look at the 0:00:04.640 --> 0:00:07.280 top stories in the coming week from our Daybreak anchors 0:00:07.320 --> 0:00:09.600 all around the world. Straight ahead on the program. But 0:00:09.720 --> 0:00:13.240 holidays are over, so how did the nation's retailers fare. 0:00:13.400 --> 0:00:14.960 I'm Tom Busby in New York. 0:00:15.040 --> 0:00:17.320 I'm Stephen Caron and London, who are asking if peliscal 0:00:17.400 --> 0:00:20.439 and business leaders can rebuild trust at this year's Wild 0:00:20.440 --> 0:00:22.040 Economic Forum in Davos. 0:00:22.239 --> 0:00:26.080 I'm Brian Curtis in Hong Kong. With Taiwan election results looming, 0:00:26.239 --> 0:00:29.360 we look at Taiwan Semiconductor at delegate time in the 0:00:29.440 --> 0:00:30.160 chip industry. 0:00:30.240 --> 0:00:33.000 I'm Kavid Lyons in Washington, where we're looking ahead to 0:00:33.080 --> 0:00:34.320 the Iowa Caucasus. 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 --> 0:00:48.720 the Bloomberg Business Appen everywhere you get your podcasts. 0:00:53.159 --> 0:00:55.440 Good day to you. I'm Tom Busby. We begin today's 0:00:55.480 --> 0:00:57.320 program with a look at the strength of the US 0:00:57.360 --> 0:01:01.160 consumer through the lens of the holidays and fourth quarter 0:01:01.200 --> 0:01:04.240 retail sales, and we take a peek at the year ahead. 0:01:04.720 --> 0:01:07.760 We're joined today by Poonham Goyle, Senior retail analysts for 0:01:07.880 --> 0:01:12.440 Bloomberg Intelligence and Molly Smith, Bloomberg News Economy editor. Thank 0:01:12.480 --> 0:01:15.479 you both for being here. Poonam. It's still a little early, 0:01:16.040 --> 0:01:19.200 but what we've heard so far about retail sales and 0:01:19.560 --> 0:01:23.280 December's numbers. We know the National Retail Federation says sales 0:01:23.319 --> 0:01:25.800 last month up three percent five percent for all of 0:01:25.880 --> 0:01:30.040 last year. Master cards spending pulse an increase of three 0:01:30.080 --> 0:01:33.600 point one not spectacular, but would you say pretty solid? 0:01:33.720 --> 0:01:35.840 Yeah, I'd say, you know, the holiday season ring in 0:01:35.920 --> 0:01:39.040 pretty solid results. In fact, a number that you didn't 0:01:39.080 --> 0:01:41.720 cite was the Adobe number where they came out with 0:01:41.800 --> 0:01:45.200 also a slight increase, which suggests that online sales also 0:01:45.280 --> 0:01:48.760 did well. So we think holiday overall did do well 0:01:49.000 --> 0:01:51.320 and a large part of that was the strength that 0:01:51.360 --> 0:01:54.680 we saw in November versus December. So it was a 0:01:54.680 --> 0:01:58.000 great start to holiday, It ended okay and led the 0:01:58.040 --> 0:02:00.680 season to be higher than what most expected. 0:02:00.960 --> 0:02:02.920 And Molly, I'm going to ask you about what that 0:02:03.080 --> 0:02:07.520 means for the consumer. We have a very strong labor market, right, 0:02:07.720 --> 0:02:10.799 unemployment holding steady just three point seven percent last month. 0:02:10.840 --> 0:02:13.280 What appears to be a soft landing. What does it 0:02:13.320 --> 0:02:13.640 look like? 0:02:13.840 --> 0:02:17.799 I think it's it's maybe a little bit more complicated 0:02:17.919 --> 0:02:21.600 than that that the jobs report on the surface that 0:02:21.680 --> 0:02:24.440 we got for the month of December, well, it's great 0:02:24.440 --> 0:02:26.760 from the headline number in terms of the payrolls, the 0:02:26.840 --> 0:02:29.560 unemployment figure that you cited, wage growth, but there are 0:02:29.600 --> 0:02:32.040 a few other things under the surface, like duration of 0:02:32.080 --> 0:02:35.200 unemployment growing longer, and a few other caveats that made 0:02:35.200 --> 0:02:38.000 this maybe just not as strong as you might expect. 0:02:38.160 --> 0:02:41.040 And it's kind of contributing then to what we're expecting 0:02:41.080 --> 0:02:44.120 to be a slowdown in consumer spending this year. I 0:02:44.160 --> 0:02:45.840 know we've been calling for that for a while. There 0:02:45.840 --> 0:02:47.920 have been people who would have expected us to have 0:02:47.960 --> 0:02:50.480 a recession already, Like you said, look like that's probably 0:02:50.520 --> 0:02:53.520 not going to happen, But there has just been this 0:02:53.639 --> 0:02:57.440 really outsize strength and consumer spending. Given all of these 0:02:58.040 --> 0:03:01.680 this other macro backdrop, that you would expected consumer spending 0:03:01.960 --> 0:03:04.600 to taper off by now. And I think the cumulative 0:03:04.600 --> 0:03:08.000 effect of the inflation that we've had for the last 0:03:08.120 --> 0:03:11.240 year and a half plus now, higher borrowing costs and 0:03:11.280 --> 0:03:14.040 how much longer they're going to stay this elevated level, 0:03:14.320 --> 0:03:17.480 is probably going to lead to consumer spend tapering off 0:03:17.720 --> 0:03:19.200 in this year, and you talked. 0:03:18.960 --> 0:03:22.480 About the higher borrowing costs. We're consumer spending. We're still spending, 0:03:22.639 --> 0:03:25.639 but it looks like we're charging more more than ever before. 0:03:26.040 --> 0:03:28.959 There is Yeah, definitely has been a pickup in credit 0:03:29.000 --> 0:03:31.280 card balances. I think important though to keep that in 0:03:31.320 --> 0:03:35.360 the context of deposits, and those are still pretty high, 0:03:35.400 --> 0:03:38.920 so when you look at card balances to deposits, it's 0:03:39.000 --> 0:03:41.720 not as startling of a rise as if you were 0:03:41.720 --> 0:03:45.000 to just look at card balances in an absolute dollar amount. 0:03:45.080 --> 0:03:48.160 So I think that's important to remember. And when we 0:03:48.200 --> 0:03:52.000 talk about the consumer, obviously like that's you know, millions 0:03:52.000 --> 0:03:54.440 and millions of people, there's obviously a lot of different 0:03:54.480 --> 0:03:58.400 income brackets within that, a lot of different spending propensities. 0:03:58.440 --> 0:04:01.120 So important to keep in mind that this isn't really 0:04:01.160 --> 0:04:05.400 a broad, you know, decline in spending power. It's really 0:04:05.400 --> 0:04:08.560 more affecting consumers at the lower end the most as 0:04:08.600 --> 0:04:12.240 you would expect, and higher end, you know, higher income 0:04:12.280 --> 0:04:14.400 earners are still really propping up a lot of the 0:04:14.440 --> 0:04:15.280 aggregate numbers. 0:04:15.400 --> 0:04:16.280 Poon let's starn to you. 0:04:16.400 --> 0:04:19.080 Let's talk about some of the retailers that really did 0:04:19.120 --> 0:04:21.800 benefit no matter who the shoppers are, high end low end. 0:04:22.080 --> 0:04:25.360 We heard from Abercrombie and Fitch, Lulu, Lemon, American Eagle, 0:04:25.839 --> 0:04:29.640 all reporting strong sales and strong outlooks. Who else have 0:04:29.720 --> 0:04:30.360 you heard from? 0:04:30.440 --> 0:04:32.359 Well, those are the few that we've heard from, and 0:04:32.440 --> 0:04:34.960 we'll hear from more as a report earning, but we 0:04:35.000 --> 0:04:38.480 did see strength and the Amazon numbers based on our 0:04:38.520 --> 0:04:40.840 own channel checks and what we're hearing, so we do 0:04:40.960 --> 0:04:44.600 think that's another retailer or web giant that will continue 0:04:44.640 --> 0:04:47.159 to take share, not just for the holiday but even 0:04:47.200 --> 0:04:49.880 as we move into twenty twenty four, as spending just 0:04:49.920 --> 0:04:53.640 shifts more online. Broadly speaking, the one interesting thing that 0:04:53.680 --> 0:04:56.360 I will call out, and just to piggyback on Molly's 0:04:56.400 --> 0:04:58.720 comments on the credit card, you know, part of the 0:04:58.760 --> 0:05:01.279 reason that we saw such strength in twenty twenty four 0:05:01.680 --> 0:05:04.280 was the rise of BNPL, which is buy now, pay later, 0:05:04.760 --> 0:05:07.720 and in fact, from data that we're seeing in four 0:05:07.800 --> 0:05:12.480 q BNPL spending online was up fourteen percent year every year, 0:05:12.960 --> 0:05:17.520 and that's based on Adobe's estimate. So as consumers leverage 0:05:17.600 --> 0:05:20.000 this new payment option and really use that to stretch 0:05:20.040 --> 0:05:22.880 their wallets, we'll probably continue to see more of that 0:05:23.080 --> 0:05:24.719 heading into twenty twenty four too. 0:05:25.040 --> 0:05:28.560 And you talked about more use by the lower end consumer. 0:05:28.640 --> 0:05:32.200 Let's talk about the lower and consumer and where we 0:05:32.279 --> 0:05:36.920 see some of the big giants like Walmart, Target, Coals 0:05:37.000 --> 0:05:40.760 another big discounter. What did you see this past season 0:05:40.880 --> 0:05:44.440 and what do you see ahead Poonam for those big retailers. 0:05:44.640 --> 0:05:46.720 Yes, I think the big retailers, you know, it's a 0:05:46.760 --> 0:05:50.960 double edged sword for them because they are getting spend 0:05:51.000 --> 0:05:53.760 from people that are trading down or people that want 0:05:53.800 --> 0:05:57.720 to stretch their dollars further. They're seeing that spend come through, 0:05:57.960 --> 0:06:00.560 but then at the same time they're also ground with 0:06:01.360 --> 0:06:05.280 just consumers that don't have enough to spend and also deflation. Right, 0:06:05.320 --> 0:06:07.760 we saw deflation kick in at least in a lot 0:06:07.800 --> 0:06:10.800 of the consumables later in the year. So because of that, 0:06:10.960 --> 0:06:13.760 you're seeing some pressure on their top line, which we 0:06:13.800 --> 0:06:17.160 think could continue into twenty twenty four, especially early twenty 0:06:17.200 --> 0:06:17.720 twenty four. 0:06:18.640 --> 0:06:20.760 Now, you wrote a piece, I think it came out 0:06:20.800 --> 0:06:25.159 just last week about the challenges in retail specific to 0:06:25.200 --> 0:06:28.080 the retail calendar. What did you tell us about that? 0:06:29.080 --> 0:06:31.719 Yeah, so it's interesting, you know, regardless of where consumer 0:06:31.800 --> 0:06:34.560 spending shapes out to be this year, we're entering the 0:06:34.640 --> 0:06:38.560 year with fewer shopping days between Thanksgiving and Christmas, and 0:06:38.600 --> 0:06:42.039 that's five fewer shopping days. So that means that consumers 0:06:42.080 --> 0:06:45.440 are going to have to consolidate their purchases in a 0:06:45.480 --> 0:06:48.599 shorter window, and there's fewer days for retailers to try 0:06:48.640 --> 0:06:52.080 to sell them more. That's a negative. The other negative 0:06:52.320 --> 0:06:55.320 is coming up shortly, which is Easter. Easter this year 0:06:55.400 --> 0:06:58.680 falls on March thirty first, versus later in April in 0:06:58.800 --> 0:07:02.800 years past, so that means temperatures will be cooler. It 0:07:02.880 --> 0:07:07.000 means that consumers maybe spending a little less. Historically, when 0:07:07.040 --> 0:07:11.119 Easter has come earlier, it has impacted sales of food 0:07:11.640 --> 0:07:14.360 and clothing, and that could occur again this year. 0:07:15.680 --> 0:07:18.320 Molly, where do you see the calendar falling in for 0:07:18.400 --> 0:07:19.240 consumer spending? 0:07:19.560 --> 0:07:21.640 I just always have to like smile a little because, 0:07:21.640 --> 0:07:23.360 you know, we always say, like the weather one way 0:07:23.480 --> 0:07:26.080 or the other seems to play a role in this. 0:07:26.200 --> 0:07:28.160 You know, it was like two cold people didn't shop, 0:07:28.200 --> 0:07:30.680 it was two warm people wanted to play outside and 0:07:30.680 --> 0:07:33.960 didn't shop. So there's always some kind of factor and 0:07:34.000 --> 0:07:36.920 you know, who the heck knows, so it'll it'll play 0:07:36.960 --> 0:07:40.640 out into time. That's certainly more Punam's specialty than mine 0:07:40.640 --> 0:07:43.880 to forecast how the weather will factor into spending patterns. 0:07:43.920 --> 0:07:46.679 But you know, she raised an interesting point though about 0:07:46.880 --> 0:07:51.160 how retailers have been seeing deflation for a few months, 0:07:51.240 --> 0:07:53.320 and that was something that when we just got the 0:07:53.360 --> 0:07:56.200 Consumer Price Index report last week that was for the 0:07:56.200 --> 0:08:00.720 month of December, really important moment here where the good sector, 0:08:01.040 --> 0:08:03.360 you know, this is where all of like the purchases 0:08:03.400 --> 0:08:07.560 of stuff like cars, furniture, clothing, things of that nature, 0:08:07.920 --> 0:08:12.240 that sector has been showing price declines, had been showing 0:08:12.240 --> 0:08:16.120 price declined, sorry, for six months, and that unexpectedly stopped 0:08:16.400 --> 0:08:19.160 in December. That was a that's a really key potential 0:08:19.200 --> 0:08:22.200 turning point because this has been in the broader context 0:08:22.240 --> 0:08:25.040 of where is inflation going? The good sector has been 0:08:25.120 --> 0:08:28.240 driving so much of the disinflation that we've been seeing 0:08:28.280 --> 0:08:31.440 in recent months, and now it's kind of raising some questions, 0:08:31.680 --> 0:08:33.679 is that running out of steam? How much more can 0:08:33.720 --> 0:08:37.280 the supply side continue to help? So that's going to 0:08:37.320 --> 0:08:39.719 be a really key question going forward for retailers and 0:08:39.840 --> 0:08:40.600 for the economy. 0:08:41.400 --> 0:08:43.400 Unless you're selling houses, of course. 0:08:43.679 --> 0:08:46.760 Yes still pretty far. Insurance yes still both of those 0:08:46.800 --> 0:08:51.200 also still pretty expensive, so also have not really turned 0:08:51.200 --> 0:08:53.760 out to be the bigger disinflation story that you would 0:08:53.760 --> 0:08:56.200 have hoped to see in rents. So far those are 0:08:56.240 --> 0:08:57.640 still pretty expensive. 0:08:58.240 --> 0:09:00.000 Now, Molly, one more thing I want to ask you 0:09:00.040 --> 0:09:05.880 and Poonum, it looks excuse me, it looks like we're 0:09:05.880 --> 0:09:08.360 not going to see an interest rate cut anytime soon, 0:09:08.480 --> 0:09:11.120 maybe maybe according to the FED, back half of the year, 0:09:11.559 --> 0:09:14.240 and that will certainly impact borrowing costs. How do you 0:09:14.280 --> 0:09:16.599 think that will help consumers? 0:09:16.960 --> 0:09:19.559 Well, I think right now, you know, the bets are 0:09:19.600 --> 0:09:23.440 still kind of coalescing around the earliest being for a 0:09:23.520 --> 0:09:27.200 March reduction, which FED officials have pushed back on that 0:09:27.360 --> 0:09:31.480 pretty strongly. But I mean, it's it's still really tough 0:09:31.520 --> 0:09:34.520 to tell when that is going to come. I mean, 0:09:34.559 --> 0:09:37.079 I don't think the you know, the reports that we 0:09:37.080 --> 0:09:39.520 were just talking about, the CPI that we just got, 0:09:39.640 --> 0:09:42.680 or retail sales coming up, those aren't going to really 0:09:43.000 --> 0:09:45.640 you know, move the needle in terms of where that's 0:09:45.920 --> 0:09:49.199 where when that cut's going to happen. But for I mean, 0:09:49.240 --> 0:09:52.520 consumers can definitely count on borrowing costs coming down this year. 0:09:52.760 --> 0:09:55.600 It's more a question just of when rather than if. 0:09:56.160 --> 0:09:57.600 And Poonam final thoughts. 0:09:58.440 --> 0:10:00.800 Yeah, And I'd say if both borrowing boss do come down, 0:10:00.840 --> 0:10:05.680 which they are likely too. That is on the note like, 0:10:05.679 --> 0:10:08.520 it would be positive for consumer spending. Right, Just the 0:10:08.640 --> 0:10:11.720 idea of boring costs coming down and the rates coming 0:10:11.760 --> 0:10:14.720 down would be positive to consumer spending this year. 0:10:15.440 --> 0:10:18.280 Oh that's great. Well, our thanks to Punham Goyle, She's 0:10:18.320 --> 0:10:22.920 senior retail analyst from Bloomberg Intelligence, and Molly Smith, Bloomberg 0:10:23.000 --> 0:10:26.480 News Economy editor. Coming up on Bloomberg day Break Weekend, 0:10:26.640 --> 0:10:29.280 It's that time of year for the World Economic Forum 0:10:29.360 --> 0:10:33.040 in Davos, Switzerland. Who's going and what's on the agenda. 0:10:33.280 --> 0:10:46.960 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:10:47.000 --> 0:10:49.560 Daybreak Weekend, our global look ahead at the top stories 0:10:49.559 --> 0:10:52.199 for investors in the coming week. I'm Tom Busby in 0:10:52.280 --> 0:10:55.480 New York. Up later in our program, the Iowa Coxes 0:10:55.520 --> 0:10:59.640 begin jump starting the Republican presidential nominating race. But first, 0:11:00.120 --> 0:11:03.760 the globe's political, corporate, and cultural elite gathering in a 0:11:03.880 --> 0:11:07.720 tiny alpine village in Switzerland for the World Economic Forum. 0:11:08.040 --> 0:11:09.680 For a look at what to expect, we turned to 0:11:09.679 --> 0:11:11.240 Stephen Carroll in London. 0:11:11.520 --> 0:11:14.439 Tom, It's the annual pilgrimage to Davos, for the event 0:11:14.480 --> 0:11:17.000 that's over the year has been dubbed everything from globalist 0:11:17.120 --> 0:11:21.400 Glastonbury to speed dating for CEOs. This year's World Economic 0:11:21.440 --> 0:11:24.199 Forum will be attended by more than twenty seven hundred 0:11:24.200 --> 0:11:28.080 political and business leaders, including the Chinese Premier League Chung Francis, 0:11:28.080 --> 0:11:31.040 Emmanuel Macron, the EU Commission President our Slavanda Line, and 0:11:31.200 --> 0:11:34.680 the Israeli President Isaac Hertzog. There's plenty to discuss on 0:11:34.720 --> 0:11:37.760 the geopolitical front, but also the hundreds of CEOs attending 0:11:37.880 --> 0:11:40.280 will be talking about economic issues as well as new 0:11:40.280 --> 0:11:43.840 technologies and climate change. Will have full coverage across Bloomberg 0:11:43.960 --> 0:11:46.560 Radio and television throughout the event. Our editor at large, 0:11:46.559 --> 0:11:48.400 Francin and Lacort, will be there speaking to some of 0:11:48.400 --> 0:11:51.800 the big names. And she's with me now, fran This is, 0:11:51.800 --> 0:11:54.319 of course, in theory an economic event, but our economic 0:11:54.400 --> 0:11:57.800 issues this year in Davos being overshadowed by things like 0:11:57.920 --> 0:11:59.920 the wars in the Middle East and in Ukraine. 0:12:00.080 --> 0:12:02.160 One hundred percent. I think there are mainly three themes, 0:12:02.160 --> 0:12:04.839 and I know it's always mean. The themes that the 0:12:04.880 --> 0:12:08.520 World Economic Form pick are always I guess the you know, 0:12:09.400 --> 0:12:13.480 building too. We make jokes about it. Because some of 0:12:13.480 --> 0:12:16.760 the predictions don't end up actually being the right ones. 0:12:16.800 --> 0:12:18.720 But rebuilding trust. I think there are probably focused on 0:12:18.760 --> 0:12:21.760 three things. It is monetary, so it's what's happening with 0:12:21.800 --> 0:12:24.080 interest rates, Do we have a big pivot from central banks? 0:12:24.120 --> 0:12:27.160 What does to inflation and therefore does that help and 0:12:27.200 --> 0:12:29.880 support governments and companies. Remember twenty twenty three was meant 0:12:29.880 --> 0:12:31.959 to be the wash out year. We started the year 0:12:32.000 --> 0:12:35.160 by saying companies will go bus countries will get into 0:12:35.400 --> 0:12:38.680 very very large debt situations, and it hasn't really played 0:12:38.679 --> 0:12:41.720 out yet. The second thing, the World Economic Form participants. 0:12:41.760 --> 0:12:44.240 I think we'll really focus on is AI and we're 0:12:44.240 --> 0:12:46.760 expecting number of papers from the World Economic Forum to 0:12:46.760 --> 0:12:50.920 trying to figure out exactly how you protect yourself for disinformation, 0:12:51.280 --> 0:12:54.360 for fake news, especially in an election year. And now 0:12:54.360 --> 0:12:56.079 I'm not only talking about the US. We have the 0:12:56.080 --> 0:12:59.320 European Parliament. We have I think over fifty percent of 0:12:59.320 --> 0:13:01.079 world GDP going to the poll, so a lot of 0:13:01.120 --> 0:13:03.160 the folks will be on that. And then third one 0:13:03.200 --> 0:13:05.920 one hundred percent will be geopolitics. So we have two 0:13:06.000 --> 0:13:10.440 active wars Ukraine, the one between Israel and Hamas, and 0:13:10.520 --> 0:13:13.200 there's you know, concerns that, of course, the Middle East 0:13:13.200 --> 0:13:16.960 tensions spill over, so I think a lot of the 0:13:17.000 --> 0:13:19.440 sessions and the conversations will be around that and what 0:13:19.480 --> 0:13:20.680 it means for the world economy. 0:13:20.760 --> 0:13:23.439 Now, every year of the World's Economic Forum publishers, it's Global 0:13:23.520 --> 0:13:26.559 Risks reports. Top of the list you mentioned, they're misinformation 0:13:26.640 --> 0:13:29.240 and disinformation. This year you've been speaking to the forums 0:13:29.240 --> 0:13:32.319 Managing director Sadi is Ahiti about this. Let's take a listen. 0:13:32.760 --> 0:13:37.200 In the two year timeframe, miss and disinformation number one risk. 0:13:37.400 --> 0:13:39.840 So we put together the views of fifteen hundred experts 0:13:39.840 --> 0:13:43.079 and that's what they're most worried about, very closely followed 0:13:43.080 --> 0:13:47.520 by extreme weather, societal polarization, inflation. These are some of 0:13:47.520 --> 0:13:50.400 the topics that are top of mind. But ten years out, 0:13:50.840 --> 0:13:54.120 four top risks all about the environment, including for the 0:13:54.120 --> 0:13:58.880 first time crossing tipping points for the Earth systems. That's 0:13:58.880 --> 0:14:01.000 something that is top of mind, and I think the 0:14:01.000 --> 0:14:03.719 predictions that that could happen in ten years and how 0:14:03.760 --> 0:14:05.040 severe that could be. 0:14:05.120 --> 0:14:09.120 Deeply concerning disinformation, fake news is extremely worrying. In an 0:14:09.120 --> 0:14:13.360 election year, we have a large percentage of world GDP 0:14:13.559 --> 0:14:16.200 actually going to the polls this year, how worried are 0:14:16.240 --> 0:14:17.200 you about the US election? 0:14:17.960 --> 0:14:21.240 I mean, depending on how you count it, major economies 0:14:21.280 --> 0:14:25.640 with large populations, India, the US are going into these elections. 0:14:26.040 --> 0:14:29.280 And what we found is that at each country level, 0:14:29.400 --> 0:14:32.280 in addition to the global risk around miss and disinformation, 0:14:32.680 --> 0:14:36.000 it's usually ranked very high among the top five risks 0:14:36.040 --> 0:14:39.400 around the world, as is concerns about ourn economic downturn. 0:14:39.520 --> 0:14:42.680 So what we're thinking is when these two things come together, 0:14:42.760 --> 0:14:45.800 the economic hardship being faced by many people and the 0:14:45.920 --> 0:14:49.360 rise of synthetic content, combined with going into an election 0:14:49.440 --> 0:14:51.800 year where people get to make decisions about who's going 0:14:51.800 --> 0:14:54.400 to be leading them, that together can be a very 0:14:54.440 --> 0:14:58.000 potent mix. And in particular, if some of those views 0:14:58.040 --> 0:15:01.800 start spilling over into very different perceptions of reality when 0:15:01.840 --> 0:15:05.280 it comes to health, when it comes to what people 0:15:05.320 --> 0:15:08.280 are thinking about education, what people think about specific people, 0:15:08.560 --> 0:15:10.560 who then becomes the owner of the truth? 0:15:11.360 --> 0:15:13.520 And again, do you have a breakdown of Actually this 0:15:13.600 --> 0:15:17.000 misinformation is its state actors, and Russia has been involved 0:15:17.000 --> 0:15:18.840 in the past in US elections. 0:15:18.640 --> 0:15:21.600 So we're seeing a concern that this could be become 0:15:21.680 --> 0:15:25.240 much more pervasive. To some extent, it's almost easier to 0:15:25.360 --> 0:15:28.960 track some of that state sponsored disinformation and misinformation. But 0:15:29.160 --> 0:15:31.880 now at some point that starts spilling over and it 0:15:31.920 --> 0:15:36.960 becomes very difficult to track, especially without tracking systems, water 0:15:37.040 --> 0:15:41.080 marking systems, and especially without the public being well educated 0:15:41.240 --> 0:15:44.640 about the risks of synthetic content and especially when that 0:15:44.840 --> 0:15:45.840 is fake news. 0:15:46.400 --> 0:15:49.520 Does that have a clear impact on the economy, As 0:15:49.560 --> 0:15:52.160 I guess, chief executives don't want to spend because they 0:15:52.160 --> 0:15:54.200 don't know what pans out in the next twelve months. 0:15:54.640 --> 0:15:58.320 So there's a lot of economic uncertainty. We're seeing a 0:15:58.440 --> 0:16:01.440 risk of the lack of economic opportunity, we're seeing inflation 0:16:01.560 --> 0:16:03.680 in the top ten or we're seeing a lot of 0:16:03.720 --> 0:16:06.560 concerns around what exactly happens. And that's because of two 0:16:06.640 --> 0:16:11.040 different situations. One is, of course, there continues to be 0:16:11.160 --> 0:16:14.960 uncertainty as to what the policy outlook will be. Yes, 0:16:15.080 --> 0:16:18.720 we are starting to tend towards a softer landing, but 0:16:18.840 --> 0:16:21.120 at the same time, I think there are new pressures 0:16:21.120 --> 0:16:23.960 coming in, supply side pressures that are coming in. There's 0:16:24.000 --> 0:16:27.880 geopolitical risks out there and that may change what happens 0:16:27.880 --> 0:16:29.920 over the course of the coming year. And then there's 0:16:29.960 --> 0:16:32.240 a longer term economic risk and that has a lot 0:16:32.280 --> 0:16:36.040 more to do with the divergence between developed and developing economies, 0:16:36.080 --> 0:16:37.440 and that also has a lot to do with the 0:16:37.440 --> 0:16:41.560 divergence between high income people and low income people across 0:16:41.600 --> 0:16:42.320 all countries. 0:16:42.440 --> 0:16:45.640 That is the World's Economic Forums. Sadiaz Ahdi, managing director there, 0:16:45.680 --> 0:16:48.560 speaking to Francine Lack where Francine is still with us Fan. 0:16:48.600 --> 0:16:50.880 You mentioned there the fact that it's a big election 0:16:51.000 --> 0:16:53.960 year globally, with all those different elections happening. Does that 0:16:54.040 --> 0:16:57.440 make the conversations in Davos different if some of those 0:16:57.480 --> 0:16:59.320 world leaders who are going to be attending, we're also 0:16:59.360 --> 0:17:00.800 going to be face the electors. 0:17:01.320 --> 0:17:03.040 I think so. I think if you look at the 0:17:03.080 --> 0:17:06.120 world economy and what we've been speaking with a number 0:17:06.200 --> 0:17:08.800 of participants in the markets, is that actually an election year, 0:17:08.920 --> 0:17:12.120 probably the incumbent will spend a lot more So if 0:17:12.119 --> 0:17:13.800 you look at the economy, it's probably going to be 0:17:13.880 --> 0:17:16.639 more resilient this year had we not had elections, because 0:17:16.680 --> 0:17:18.280 no one wants to go into an election with a 0:17:18.320 --> 0:17:19.040 week economy. 0:17:19.119 --> 0:17:19.199 Now. 0:17:19.280 --> 0:17:21.479 I know it's a very simplistic way of looking at it, 0:17:21.560 --> 0:17:25.040 but it's probably something that gives us a little bit 0:17:25.080 --> 0:17:28.960 of support for the outlook for a lot of these countries. 0:17:29.200 --> 0:17:33.280 Longer term, it's a really question mark about what happens. 0:17:33.280 --> 0:17:34.919 So some of the policies in place. It can be 0:17:34.920 --> 0:17:37.320 here in the UK, it could of course be the 0:17:37.440 --> 0:17:41.439 US which changes everything in our relationship with China, climate change, 0:17:41.560 --> 0:17:44.840 some of the support that a potential for example, President 0:17:44.880 --> 0:17:48.120 Trump would give to companies. But if you also listened 0:17:48.160 --> 0:17:50.600 to what Zadia was saying about the top ten risks, 0:17:50.640 --> 0:17:53.000 and I don't think we should underestimate this Stephen, is 0:17:53.040 --> 0:17:55.520 that if you look at the two year horizon, so 0:17:55.840 --> 0:17:59.040 people that they surveyed worry about misinformation, extreme weather events, 0:17:59.160 --> 0:18:04.520 social paroles, cybersecurity. Ten years, it's critical changes to earth systems, bidiversity, 0:18:04.560 --> 0:18:06.960 extreme weather. But if you worry about what's happening in 0:18:06.960 --> 0:18:09.120 the next two years, and if you have bigger concerns 0:18:09.160 --> 0:18:11.800 that are different ten years, then you don't address the 0:18:11.840 --> 0:18:14.879 longer term concerns. So there's also a real worry of 0:18:14.960 --> 0:18:18.720 everyone splitting and not really get anything done to managing 0:18:18.760 --> 0:18:19.680 the longer term risks. 0:18:19.760 --> 0:18:21.840 Yeah, and it's part of the sort of dilemma that 0:18:21.880 --> 0:18:24.200 faces Davos every year is that often there are big 0:18:24.240 --> 0:18:26.199 long term issues that need to be talked about, but 0:18:26.240 --> 0:18:28.359 everyone's much more focused on what's happening in the coming 0:18:28.400 --> 0:18:31.520 months or the coming weeks as well. Much is made 0:18:31.600 --> 0:18:34.160 every year of the politicians who do and don't go 0:18:34.200 --> 0:18:36.480 to the World Economic Forum. Here in the UK, we 0:18:36.520 --> 0:18:39.240 had the opposition labor leader Career Starmer being criticized for 0:18:39.320 --> 0:18:42.159 attending last year. Is it a bad look any year? 0:18:42.240 --> 0:18:44.480 What we're talking about rebuilding trust. If you go to 0:18:44.560 --> 0:18:46.360 Davos or if you don't go, I. 0:18:46.280 --> 0:18:48.919 Think it depends. I think it depends on cultural sensitivities 0:18:49.080 --> 0:18:51.639 of the country. I think if you're an emerging economy, 0:18:52.480 --> 0:18:54.879 showing up in Davos and getting deals done on trade 0:18:55.200 --> 0:18:57.720 is a good thing. If you're Rishie Sunac and you're 0:18:57.760 --> 0:19:00.520 married to a billionaire, it's probably not a good look, 0:19:00.560 --> 0:19:02.720 which is why he stayed away last year. He's not 0:19:02.800 --> 0:19:05.600 expected to show up this year as well. If you're 0:19:05.840 --> 0:19:09.040 you know, mister Zelenski, President of Ukraine, then it probably 0:19:09.080 --> 0:19:11.720 would be a good look, whether it's by video or 0:19:11.760 --> 0:19:13.720 in person, to show up to make sure that people 0:19:13.760 --> 0:19:16.439 don't forget Ukraine. So I think it's very personal and 0:19:16.480 --> 0:19:18.720 whether you show up or not really gives you a 0:19:18.720 --> 0:19:21.000 glimpse actually of what your country is facing or your 0:19:21.000 --> 0:19:21.720 company is facing. 0:19:21.840 --> 0:19:23.640 Okay, I'm looking forward to hearing the answers to those 0:19:23.720 --> 0:19:25.840 questions as well. Our editor at large, Fancy and Laqua 0:19:26.000 --> 0:19:29.040 full coverage from the World Economic Forum in Davos throughout 0:19:29.080 --> 0:19:32.000 the week. Here a call across Bloomberg Radio, television, and 0:19:32.040 --> 0:19:34.600 of course online on the terminal as well. I'm Stephen 0:19:34.600 --> 0:19:37.080 Carolyn London. You can catch us every weekday morning here 0:19:37.080 --> 0:19:39.560 for Bloomberg Daybreak here at beginning at six am in 0:19:39.600 --> 0:19:41.679 London and one am on Wall Street. 0:19:41.920 --> 0:19:44.360 Tom, thank you, Steven, and coming up here on Bloomberg 0:19:44.400 --> 0:19:46.800 day Break weekend, we take a look at the geopolitical 0:19:46.840 --> 0:19:52.640 machinations surrounding the business of computer chip manufacturing. I'm Tom Busby, 0:19:52.720 --> 0:20:05.959 and this is Bloomberg. This is Bloomberg day Break Weekend, 0:20:05.960 --> 0:20:08.280 our global look ahead at the top stories for investors 0:20:08.280 --> 0:20:10.720 in the coming week. I'm Tom Busby in New York. 0:20:11.280 --> 0:20:15.640 The incredibly complex, high stakes business of making semiconductors has 0:20:15.640 --> 0:20:18.880 always been a battle of corporate giants. Now it's also 0:20:18.920 --> 0:20:23.320 a race among governments, especially between China, the US and Taiwan, 0:20:23.800 --> 0:20:27.119 with the Taiwan election now underway, an event closely watched 0:20:27.119 --> 0:20:29.280 by China, we take a look at the chip industry 0:20:29.640 --> 0:20:31.840 and how the geopolitics play out. 0:20:32.119 --> 0:20:35.280 Tom will know the full results of the Taiwan election shortly. 0:20:35.560 --> 0:20:37.800 In the meantime, we thought it was a good time 0:20:37.840 --> 0:20:40.280 to take a look at the business climate on the island, 0:20:40.640 --> 0:20:45.240 especially through the prism of TSMC. Taiwan Semi is arguably 0:20:45.440 --> 0:20:48.480 one of the most important companies in the world and 0:20:48.600 --> 0:20:51.240 sits at the nexus of the relationship among the US, 0:20:51.359 --> 0:20:54.840 China and Taiwan. Joining US now to look at TSMC 0:20:55.200 --> 0:20:58.879 and possibly the up and coming challenge from Huawei Technologies 0:20:59.240 --> 0:21:04.000 is Bloomberg's savov Tech editor here in Hong Kong, so Vlad. 0:21:04.160 --> 0:21:09.200 Recently we learned that Huawei Technology's latest laptop was running 0:21:09.200 --> 0:21:12.240 on a chip made by TSMC. This was a five 0:21:12.359 --> 0:21:16.399 nanimeter chip and it was actually made by TSMC instead 0:21:16.400 --> 0:21:18.840 of Huawei, and that seemed to head off some of 0:21:18.880 --> 0:21:22.920 the talk about a Chinese technological breakthrough. How much did 0:21:22.960 --> 0:21:26.359 that revelation sort of mean in lowering the temperature in 0:21:26.400 --> 0:21:29.399 the relationship between US and China and chips. 0:21:29.240 --> 0:21:31.560 Well, a good way to think about it is if 0:21:31.560 --> 0:21:34.320 it wasn't the case, if it was Huawei actually making 0:21:34.320 --> 0:21:36.800 five and animated chips. This would be the story we're 0:21:36.800 --> 0:21:40.719 we're talking about for the inside January. National Security Adviser 0:21:40.800 --> 0:21:46.199 Jake Sullivan would have dropped everything else. He's got a 0:21:46.320 --> 0:21:48.680 very busy agenda, but he would have dropped everything else 0:21:48.680 --> 0:21:51.879 because this would have been a breakthrough that would have 0:21:51.880 --> 0:21:54.800 been entirely unforeseen. When you think about the sanctions that 0:21:54.840 --> 0:21:57.679 the US is imposed on Chinese chip makers, this was 0:21:57.720 --> 0:21:59.960 what they were trying to prevent, so you can say 0:22:00.080 --> 0:22:02.119 they've been effective. But the reason we're talking about this 0:22:02.160 --> 0:22:04.640 in the first place is because of Huawei seven nanimeter, 0:22:04.760 --> 0:22:08.960 a generation behind breakthrough that happened in August last year 0:22:09.280 --> 0:22:11.400 that was also unforeseen and unexpected. 0:22:12.320 --> 0:22:14.040 It's worth bearing in mind again. 0:22:13.920 --> 0:22:16.360 That this chip that Huawei would have stuck part from 0:22:16.359 --> 0:22:19.480 TSMC way back in twenty twenty is still one or 0:22:19.480 --> 0:22:22.280 two generations ahead of what Huawei is capable of doing. 0:22:22.600 --> 0:22:27.040 Where China and manufacturers such a Smick, which is Huawe's 0:22:27.400 --> 0:22:31.199 domestic partner, our positioned at the moment. So what we 0:22:31.200 --> 0:22:36.120 can really say is that Huawei is certainly trying. There 0:22:36.119 --> 0:22:38.600 are a number of voices, including a video one of 0:22:39.760 --> 0:22:43.200 TSMC's biggest customers that say that Huawei and a whole 0:22:43.200 --> 0:22:47.760 bunch of China mainline startups are going to be legitimate competitors. 0:22:47.960 --> 0:22:49.919 But we haven't seen the evidence this would have been 0:22:49.960 --> 0:22:51.119 it it didn't happen. 0:22:51.640 --> 0:22:53.879 Let me ask a question that may sound political, but 0:22:53.960 --> 0:22:57.479 it's not really. The sanctions that are in place by 0:22:57.480 --> 0:23:00.879 the US, is this slowing down the develop and Bismic 0:23:01.080 --> 0:23:04.520 and by Juawei and others, or in a sense, is 0:23:04.560 --> 0:23:08.040 it actually speeding it up because now in China domestically 0:23:08.280 --> 0:23:09.200 they know they need this. 0:23:10.000 --> 0:23:14.280 Well, absolutely, it's political, but I keep saying every tech 0:23:14.320 --> 0:23:17.440 story nowadays a political story. Every political story has attach angle, 0:23:17.560 --> 0:23:20.480 So of course it is. I think the answer is 0:23:20.560 --> 0:23:24.240 yes to both aspects of your question. It has categorically 0:23:24.280 --> 0:23:29.240 slowed down Chinese domestic chip making. You have these key 0:23:30.240 --> 0:23:33.240 machines which are bus sized and they cost hundreds of 0:23:33.320 --> 0:23:37.640 thousands millions of dollars each made by ASML in the Netherlands. 0:23:38.040 --> 0:23:42.240 Because of US and Dutch relations, SMO doesn't ship those 0:23:42.800 --> 0:23:46.520 super advanced machines into China. They are the effectively the 0:23:46.560 --> 0:23:49.600 gateway to get into five ninimeters and beyond. TSMC has 0:23:49.640 --> 0:23:51.760 a bunch of them, is spent tens of billions of 0:23:51.800 --> 0:23:54.800 dollars acquiring them. They can't get into China without them. 0:23:55.400 --> 0:23:59.320 China has to invent effectively alternative methods to get to 0:23:59.320 --> 0:24:00.240 those super advice. 0:24:00.040 --> 0:24:02.840 On manufacturing techniques. 0:24:03.119 --> 0:24:05.359 Now that being said again to the latter aspect of 0:24:05.440 --> 0:24:11.960 your question, because China, Beijing, its government sees no breakthrough, 0:24:12.080 --> 0:24:16.280 no path to coming to terms and acquiring those machines 0:24:16.880 --> 0:24:21.400 in straightforward fashion, it is pouring money resources. Like I say, 0:24:21.440 --> 0:24:25.119 all these startups are effectively state back startups to again 0:24:25.200 --> 0:24:28.800 invent its way out of its issue or maybe come 0:24:28.880 --> 0:24:30.880 up with more inventive ways of acquiring the machines. 0:24:31.720 --> 0:24:34.680 Can these companies in China catch up or will they 0:24:34.760 --> 0:24:37.879 always be one or two generations behind? 0:24:38.560 --> 0:24:41.560 Well, if you ask the US, they want them a 0:24:41.640 --> 0:24:44.639 couple of generations behind. That's effective their entire agenda. They 0:24:44.640 --> 0:24:48.440 don't want to shut down Chinese tech manufacturing altogether. They 0:24:48.480 --> 0:24:51.600 have repeatedly said that it's tailored sanctions that they have 0:24:51.760 --> 0:24:55.040 to prevent China's military from acquiring advanced tech. So if 0:24:55.119 --> 0:24:58.760 it's two three generations behind, they're comfortable with that. Will 0:24:58.800 --> 0:25:01.359 they make I mean effectively the answer to your question 0:25:01.440 --> 0:25:04.160 is we'll try to make a breakthrough that nobody is expecting. 0:25:04.680 --> 0:25:07.440 We saw some of that again last year from Huawei. 0:25:07.680 --> 0:25:12.200 Will they repeat defeat? It's open to a member of guesswork. 0:25:12.200 --> 0:25:12.680 I suppose. 0:25:12.960 --> 0:25:16.959 In recent days, TSMC gave us its fourth quarter revenue. 0:25:17.040 --> 0:25:20.200 Some of these numbers were pretty decent. They did beat 0:25:20.440 --> 0:25:24.280 estimates of a decline, but there's obviously a little bit 0:25:24.280 --> 0:25:27.320 of a slow path ahead. What they said was that 0:25:27.359 --> 0:25:32.879 demand from AI players offset the slower smartphone and laptop 0:25:33.000 --> 0:25:36.879 chip sales. Where are we now in terms of full 0:25:36.920 --> 0:25:39.399 recovery by the chip makers, including TSMC. 0:25:40.119 --> 0:25:41.840 Well, one of the things that we did over the 0:25:41.840 --> 0:25:44.360 course of the year on the terminal is we tracked 0:25:44.480 --> 0:25:48.560 Taiwanese supplies to Apple, surely the most important tech company 0:25:48.600 --> 0:25:51.960 in the world, and every month it was red figures. 0:25:52.040 --> 0:25:55.320 It's TSMC, Fox gone, et cetera. It was always down 0:25:55.359 --> 0:25:57.680 on the prior year's results. So just having a quarter 0:25:57.840 --> 0:25:59.720 that was flat that was the same as the prior 0:25:59.800 --> 0:26:05.080 year is heading in the right direction. TSMC executives, including 0:26:05.160 --> 0:26:07.919 CEO cc Way, have said that they expect to rebound 0:26:07.920 --> 0:26:10.840 in twenty twenty four. Canna lists, one of the market 0:26:10.960 --> 0:26:13.639 research companies. They said that in the final quarter of 0:26:13.680 --> 0:26:16.960 the year, the PC market and laptop market were up 0:26:17.080 --> 0:26:20.080 just by a couple of percentage points, like three percent altogether, 0:26:20.160 --> 0:26:24.119 But again, comparing that to double digit declines over the 0:26:24.160 --> 0:26:27.720 previous several months, that's a big upside. So all of 0:26:27.760 --> 0:26:31.960 it seems to point toward an improvement in consumer demand. 0:26:32.400 --> 0:26:34.280 In Ventory glots that used to exist at the start 0:26:34.280 --> 0:26:36.080 of the year I have gone away, so things are 0:26:36.080 --> 0:26:36.520 looking up. 0:26:37.080 --> 0:26:40.919 You referred earlier to the Huawei May sixty pro and 0:26:40.960 --> 0:26:44.680 the fact that it had a seven nanometer processor in it. 0:26:45.359 --> 0:26:48.199 What sort of progress is Smick making in selling that 0:26:48.480 --> 0:26:49.399 outside of China. 0:26:50.480 --> 0:26:53.679 Well, I think whatever Snick is able to make in 0:26:53.760 --> 0:26:57.800 terms of manufacturing that particular chip, it's probably all going Huawei. 0:26:57.880 --> 0:27:01.399 When we talk to analysts looking at teas prospects. It 0:27:01.440 --> 0:27:04.639 has already taken market share back from Apple in the 0:27:04.680 --> 0:27:08.360 iPhone in mainland China. One of the topics that might 0:27:08.400 --> 0:27:10.840 actually intensify in importance over the course of this year 0:27:11.040 --> 0:27:15.600 is the iPhone's fate in China, which has been increasingly down. 0:27:16.680 --> 0:27:18.560 It was bad to begin with, it was underwhelming, and 0:27:18.560 --> 0:27:21.320 then it got worse. So Huawei is reclaiming that market 0:27:21.320 --> 0:27:23.240 share but when we talk to analysts, they say that 0:27:23.359 --> 0:27:26.600 its limitation, if anything, on shipments is the amount of 0:27:26.800 --> 0:27:28.280 chips and devices that it can produce. 0:27:29.320 --> 0:27:32.479 So when we look at the diminishing sales of Apple, 0:27:32.720 --> 0:27:35.080 who's gaining the lion's share of that in China? 0:27:35.840 --> 0:27:37.240 Right as I say it is Huawei. 0:27:37.280 --> 0:27:39.520 Huawei is number one, But then you have Honor, which 0:27:39.560 --> 0:27:43.240 is a company that spun out of Huawei in twenty twenty. 0:27:43.280 --> 0:27:45.960 It's an independent company. It's pursuing an IPO probably in 0:27:46.040 --> 0:27:48.240 the next year or so. That's what the company has said. 0:27:48.840 --> 0:27:50.840 Shaomi has done a really good job with over the 0:27:50.840 --> 0:27:54.840 past few months. The company is Vivo and Appo, who 0:27:54.960 --> 0:27:56.280 used to be number one. 0:27:56.240 --> 0:27:56.720 Two, three. 0:27:57.000 --> 0:28:01.040 Every quarter they would shift places. We are actually struggling. 0:28:01.720 --> 0:28:06.760 The answer really is that the Chinese smallphone manufacturing ecosystem 0:28:06.880 --> 0:28:10.600 is kind of shifting positions show me and huilbe I 0:28:10.600 --> 0:28:12.760 would say in the strongest position at the moment, and 0:28:12.800 --> 0:28:16.360 even worth mentioning, Samsung, which has had a tiny share 0:28:16.400 --> 0:28:18.600 of the Chinese market for a long time, is making 0:28:18.640 --> 0:28:20.000 efforts making in roads as well. 0:28:20.400 --> 0:28:23.119 Lad outside of China, you mentioned Samsung, what are the 0:28:23.160 --> 0:28:24.680 prospects for its latest phone? 0:28:25.440 --> 0:28:28.879 Well, it's promising us the first AI phone, which is 0:28:29.080 --> 0:28:31.440 a promise that we've heard actually for years. At this point, 0:28:32.359 --> 0:28:34.640 the whole idea of branding your phone as an AI 0:28:34.720 --> 0:28:37.640 device is going to be the theme of twenty twenty 0:28:37.680 --> 0:28:41.479 four across every smartphone manufacturer, and I'm looking forward to 0:28:41.520 --> 0:28:45.320 seeing Samsung, which is generally a serious company, try to 0:28:45.440 --> 0:28:46.360 justify that label. 0:28:46.680 --> 0:28:48.720 We can also look forward to Google. 0:28:49.120 --> 0:28:53.680 The designer and provider of the Android software and ecosystem, 0:28:53.720 --> 0:28:56.280 to do more on this front. I expect Google has 0:28:56.320 --> 0:28:59.200 always been a leader in AI. One of the things 0:28:59.200 --> 0:29:01.000 that came out of the Sea Yes Trade show just 0:29:01.080 --> 0:29:04.760 recently is that Google and Samsung announced that they collaborating 0:29:04.840 --> 0:29:07.960 on a quick sharing function, which is effectively the equivalent 0:29:08.000 --> 0:29:09.040 to Apple's ed Drup. 0:29:09.120 --> 0:29:11.480 All right, Lad, thanks so much for joining us. Bloomberg's 0:29:11.520 --> 0:29:14.800 Lad Salvov, tech editor here in Hong Kong. I'm Brian 0:29:14.840 --> 0:29:17.440 Curtis along with Doug Krisner. You can catch us every 0:29:17.520 --> 0:29:20.840 weekday here for Bloomberg day Break Asia, beginning at seven 0:29:20.920 --> 0:29:24.280 am in Hong Kong and six pm on Wall Street. 0:29:24.720 --> 0:29:27.720 Tom Thank you, Brian. Coming up on Bloomberg day Break 0:29:27.720 --> 0:29:31.360 weekend to look ahead to the Iowa Caucuses. I'm Tom 0:29:31.360 --> 0:29:44.160 Busby and this is Bloomberg. I'm Tom Busby in New 0:29:44.240 --> 0:29:46.280 York with your global look ahead at the top stories 0:29:46.280 --> 0:29:49.160 for investors in the coming week. The official start to 0:29:49.200 --> 0:29:53.720 the twenty twenty four GOP presidential nominating process, the Iowa caucuses, 0:29:53.840 --> 0:29:57.120 begins on Monday, with just a handful of candidates on 0:29:57.160 --> 0:29:59.680 the ballot, one of them former president and clear front 0:29:59.720 --> 0:30:03.120 runner Donald Trump. What can we expect to see for more? 0:30:03.240 --> 0:30:05.760 Let's add to our Bloomberg ninety nine one newsroom in 0:30:05.840 --> 0:30:09.400 Washington and Bloomberg Sound On co host Joe Matthew and 0:30:09.520 --> 0:30:10.360 Kaylee Lines. 0:30:10.600 --> 0:30:13.600 Yeah. Tom. We spoke with Kyle Condick of Sabado's Crystal 0:30:13.640 --> 0:30:16.520 Ball at the University of Virginia and started by asking him, 0:30:17.040 --> 0:30:19.720 if we know Trump's probably gonna win in Iowa anyway, 0:30:20.280 --> 0:30:22.160 what kind of margin matters? 0:30:22.560 --> 0:30:26.840 So the Trump campaign has noted accurately that of all 0:30:26.880 --> 0:30:30.160 the you know, contested, you know, non incumbent Republican Iowa 0:30:30.200 --> 0:30:33.160 caucuses and over history, the biggest margin of victory is 0:30:33.680 --> 0:30:36.840 twelve points, and so they're sort of setting the bar like, hey, 0:30:36.920 --> 0:30:39.440 we win by more than twelve points, that's good. I 0:30:39.520 --> 0:30:41.720 personally don't you know if they would buy like thirteen 0:30:41.800 --> 0:30:44.120 or fourteen. I don't think that that's some sort of 0:30:44.200 --> 0:30:46.800 impressive performance given what the polls are showing now, which 0:30:46.840 --> 0:30:49.640 is more like he's up by like thirty points. You know, 0:30:49.880 --> 0:30:52.200 what is the difference between a good performance and a 0:30:52.240 --> 0:30:55.080 bad one? I don't know, maybe that's like forty percent 0:30:55.320 --> 0:30:58.480 or something like that, which actually, you know, given the polls, 0:30:58.480 --> 0:31:01.320 he's consistently but over fifty forty percent would seem maybe 0:31:01.360 --> 0:31:03.720 not that great. So there is you know, there are 0:31:03.800 --> 0:31:06.720 maybe there's maybe a higher bar for Trump to impress 0:31:06.800 --> 0:31:08.640 in Iowa, but if he matches the polls, he will 0:31:08.640 --> 0:31:10.720 have done that. I also think it's probably fair to 0:31:10.760 --> 0:31:14.720 treat Trump differently than you would a normal non incumbent 0:31:14.800 --> 0:31:16.880 race because he has sort of like a quasi incumbent, 0:31:17.120 --> 0:31:19.240 given that he's the you know, he's aiming for a 0:31:19.280 --> 0:31:22.960 third straight Republican presidential nomination and has already served the 0:31:23.000 --> 0:31:25.640 term as president before. So I don't know where I 0:31:25.720 --> 0:31:29.560 put the number necessarily, but you know, just just matching 0:31:29.640 --> 0:31:33.000 or slightly exceeding that historical you know, twelve point margin 0:31:33.400 --> 0:31:36.200 that that probably is not good enough to be impressive. 0:31:36.280 --> 0:31:38.360 And in fact, I think would probably be disappointing if 0:31:38.400 --> 0:31:40.480 it's close to that number. Again, given what the polls saying. 0:31:40.600 --> 0:31:42.760 Well, of course everyone's banking on a surprise in New 0:31:42.760 --> 0:31:45.360 Hampshire because it's New Hampshire. Of course it's not a 0:31:45.400 --> 0:31:48.760 surprise if you're expecting it. But after Chris Christie dropped 0:31:48.800 --> 0:31:52.200 out of the race, Kyle, I wonder your thoughts on 0:31:52.320 --> 0:31:55.440 the impact it could have on Nikki Haley. We've seen 0:31:55.480 --> 0:31:58.560 polls that show Donald Trump and Haley within single digits. 0:31:58.600 --> 0:32:00.960 This would make up the different there. But we also 0:32:01.000 --> 0:32:05.080 heard from Christy himself, hot Mike, she's not up for this, 0:32:05.800 --> 0:32:08.800 She's going to get smoked, which Christie is right. 0:32:09.640 --> 0:32:13.280 Look, I would not be surprised by Haley winning in 0:32:13.360 --> 0:32:16.160 New Hampshire. I think she frankly needs to win New 0:32:16.160 --> 0:32:20.720 Hampshire to really to really justify staying in the contest. Frankly, 0:32:21.440 --> 0:32:23.640 you know, her home state of South Carolina votes like 0:32:23.720 --> 0:32:25.880 a month after New Hampshire, and so you kind of 0:32:25.960 --> 0:32:27.960 enter like a little bit of a dead period. There's 0:32:28.520 --> 0:32:32.560 there are contests in Nevada in early February, but there's 0:32:32.600 --> 0:32:35.160 a caucus that's actually awarding the delegates that Donald Trump's 0:32:35.160 --> 0:32:37.360 probably gonna win easily, and then there's like a beauty 0:32:37.360 --> 0:32:40.080 contest primary that Haley's competing and she's not competing for 0:32:40.120 --> 0:32:43.040 the delegates, which she'll probably win comfortably. I don't know 0:32:43.040 --> 0:32:45.200 what you really do with that. So after New Hampshire, 0:32:45.200 --> 0:32:49.320 the focus will really go go to South Carolina. But again, Haley, 0:32:49.560 --> 0:32:52.040 the coalition Haley is building is kind of kind of 0:32:52.280 --> 0:32:54.240 centered on more moderate voters. You know, a lot of 0:32:54.320 --> 0:32:56.840 independence can cross over and vote in the New Hampshire primary. 0:32:56.840 --> 0:32:59.520 It probably will and probably incline to support a candidate 0:32:59.600 --> 0:33:02.120 like her, particularly with Chris Crusty out of the race. 0:33:03.120 --> 0:33:04.880 You know, if Haley can't win there, and let's say 0:33:04.880 --> 0:33:07.600 Trump wins Iowa and New Hampshire, I don't know if 0:33:07.640 --> 0:33:09.400 there's much of a rationale for anyone else to even 0:33:09.440 --> 0:33:11.560 continue given that. You know, I guess at that point, 0:33:11.600 --> 0:33:14.080 the only real threat that Trump would be some of 0:33:14.120 --> 0:33:16.480 these legal matters he's dealing with. But he would have 0:33:16.800 --> 0:33:19.240 you know, he would have basically stopped DeSantis in Iowa 0:33:19.280 --> 0:33:22.000 and stopped Haley in New Hampshire. But again, I could 0:33:22.000 --> 0:33:25.520 definitely see Haley winning New Hampshire. But that's not enough 0:33:25.560 --> 0:33:27.440 to make this thing a real horse race. I think 0:33:27.560 --> 0:33:31.200 Trump would have to lose South Carolina too in order 0:33:31.240 --> 0:33:33.040 fore Weekness to go on to Super Tuesday and say, hey, 0:33:33.040 --> 0:33:34.160 this thing is really opened up. 0:33:34.280 --> 0:33:38.200 That's Kyle Condick from Savado's Crystal Ball and Tom, the 0:33:38.240 --> 0:33:41.240 twenty twenty four race is really just about to get started. 0:33:41.560 --> 0:33:44.280 Thank you, Kaylee and Joe. And that was Bloomberg Sound 0:33:44.320 --> 0:33:47.240 On co host Joe Matthew and Kaylee Lines reporting from 0:33:47.280 --> 0:33:49.960 our Bloomberg ninety nine one newsroom in Washington, and you 0:33:50.000 --> 0:33:52.680 can hear sound on weekdays one to three pm on 0:33:52.760 --> 0:33:56.240 Bloomberg Radio and coming up here on Bloomberg day Break Weekend, 0:33:56.320 --> 0:33:59.360 we take a look at the geo political machination surrounding 0:33:59.360 --> 0:34:03.600 the business of computer chip manufacturing. I'm Tom Busby, and 0:34:03.680 --> 0:34:04.840 this is Bloomberg