Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our day
Speaker 1: Break anchors all around the world. And just to handle
Speaker 1: the program, Earnings, earnings and more earnings, big Tech highlights
Speaker 1: the week, plus Chair Jay Cowell, the Fawn's the Fed's
Speaker 1: plan to continue fighting inflation. I'm John Tucker in New York.
Speaker 2: I'm Brian Curtis in Hong Kong. We look at China's
Speaker 2: efforts to do more on the global stage.
Speaker 3: I'm Caroline Hedker Hair in London, where we're looking at
Speaker 3: the European response to the Israel Hamas Wool.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend, the business
Speaker 4: news You need to wrap up your week in just
Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg
Speaker 4: Business App, and everywhere you get your podcasts.
Speaker 1: Hi everybody, I'm John Tucker, and we begin today's program
Speaker 1: with companies opening their books. A big week for earnings
Speaker 1: with about a third of the S and P five
Speaker 1: head at reporting this coming week. Among the highlights, Google,
Speaker 1: Meta and Amazon. And let's start right now with Bloomberg
Speaker 1: Intelligence Senior US retail analyst Punamgoyle as she covers Amazon
Speaker 1: for us put them good to talk to Amazon reporting
Speaker 1: third quarter earnings in the coming week, can you break
Speaker 1: down for us the part the important parts of Amazon.
Speaker 1: They're not just selling stuff online that then gets delivered
Speaker 1: to my front porridge.
Speaker 5: No they're not. They're doing a lot more than that.
Speaker 5: So when you think about Amazon, you clearly have their marketplace,
Speaker 5: which is Amazon dot Com. But they also have a
Speaker 5: big business known as awus, which is their cloud business,
Speaker 5: which not only is a growing business, it's also Amazon's
Speaker 5: most profitable business, contributing to largely all its profit are
Speaker 5: most of its profits today. Those are the two big
Speaker 5: businesses inside Amazon. But within that there's also a third
Speaker 5: business which is now a forty plus billion dollar busin
Speaker 5: it is their advertising business, and that business continues to
Speaker 5: grow at a twenty percent plush clip. It also boasts
Speaker 5: high profit margins, which we think will be the third
Speaker 5: growth river to the Amazon story and a key one,
Speaker 5: especially in the coming years of the scales app business.
Speaker 1: Even further, Yeah, you know, when I signed up for Prime,
Speaker 1: I got Prime Video, and only because I can't share
Speaker 1: somebody's Netflix account anymore. I think I've switched to commercials
Speaker 1: on that and is that really a driving force for them?
Speaker 5: Well, it is so right now, their advertising business, the
Speaker 5: forty billion dollars roughly business that I talked about, is
Speaker 5: primarily driven by their retail business. So the add on
Speaker 5: of these ads onto Prime video is incremental. And remember
Speaker 5: you have the option right you can choose the ad
Speaker 5: free version and pay for that, or you can take
Speaker 5: the adversion, So the clients will have an opportunity to
Speaker 5: decide what works for them. Given that they've added this
Speaker 5: new revenue stream for advertising, it's only going to help
Speaker 5: growth even faster for the advertising segment of their business.
Speaker 1: You mentioned AWS, How does generative AI everybody's latching on
Speaker 1: to that. How does that figure into it?
Speaker 5: Yeah, Generative AI is really something that Amazon is investing
Speaker 5: heavily in, just like the rest of the world, including
Speaker 5: tech companies and even retail companies. You know, it's all
Speaker 5: about making sure that you can really use the data
Speaker 5: that you've have hand at hand, and you can implement
Speaker 5: solutions to make it plus frictionless for the consumer and
Speaker 5: also provide capabilities to businesses. For Amazon, which is for
Speaker 5: AWS to really grow their business in a way that
Speaker 5: they couldn't do it before.
Speaker 6: Right.
Speaker 5: We've heard of AI for a very long time, for decades,
Speaker 5: it's been around, but generative AI is truly game it's
Speaker 5: a game changer. And our colleague wandsays, we're in a
Speaker 5: whole piece on generative AI where you know, they talk
Speaker 5: about just the growth in that industry and the investments
Speaker 5: that are going to come and I have already started
Speaker 5: to begin. That's really going to help improve ROI across
Speaker 5: every facet of the organization, whether it's on the e
Speaker 5: commerce side, whether it's in the back office, whether it's
Speaker 5: in marketing and advertising. I mean, you name it. It's
Speaker 5: going to implement every it's going to have an impact
Speaker 5: on every part of your business.
Speaker 1: Oh, the Prime Day events was so what do they
Speaker 1: tell us? How did they go so far?
Speaker 5: They actually went really well. You know what we noticed
Speaker 5: over the Prime Day that just happened recently is according
Speaker 5: to numbers that we've seen, sales were up about six percent.
Speaker 5: And that's pretty impressive just given that we're in a
Speaker 5: period of time where the consumer, you know, could be
Speaker 5: stretched a little in terms of their pocketbook because of
Speaker 5: the growing interest rates, the rising debt levels that we're seeing.
Speaker 5: Consumer confidence is clearly you know, not where we'd like
Speaker 5: it to be. So we do think that having a
Speaker 5: respectable mid single digit game based on numerator numbers is
Speaker 5: a good number, and it's actually bodes for the holiday
Speaker 5: season for Amazon. The desire for value is clearly fun
Speaker 5: and center in the consumer's mind and we saw that
Speaker 5: over Prime Day.
Speaker 1: Okay, so real quick, what do you expect from Amazon's results?
Speaker 5: I think the results will be good. On the online side.
Speaker 5: We'll start to see mid single digit game, which is
Speaker 5: an improvement from earlier this year when salesware down. I
Speaker 5: also think the cloud business will hold study. Our analysts
Speaker 5: who covers the cloud business you know, thinks that the
Speaker 5: uptick that we wanted to see later this year won't
Speaker 5: come as soon as we expected, but the business will
Speaker 5: still hold study at around a twelve percent clip. And
Speaker 5: next year is really when we'll start to see improvement
Speaker 5: in the cloud business of growth rates will begin to
Speaker 5: pick up. The longer term opportunity for aw rest remains
Speaker 5: very much impact with margins increasing and growth also increasing.
Speaker 1: That's the preview of the Amazon from Bloomberg Intelligence. Senior
Speaker 1: US retail analyst Punham Goil put them, Thanks very much,
Speaker 1: appreciate it and the other earnings we're keeping track of
Speaker 1: and previewing Amazon and Meta platforms. And to take a
Speaker 1: deeper dive into that, Bloomberg Intelligence Senior technology analyst man
Speaker 1: Deep Sing joints us, what's the overarching themes for all
Speaker 1: these companies?
Speaker 6: Well, so, for Alphabet and Meta, clearly there is a
Speaker 6: read through on ad spending and it is tied to Macro.
Speaker 6: So if Tesla is saying macro is not looking good,
Speaker 6: that doesn't bode very well for ad spending. At the
Speaker 6: same time, these companies have much easier comps going into
Speaker 6: this quarter because the last four quarters weren't that great either.
Speaker 6: So my sense is, given what we have heard so far,
Speaker 6: they should at least have an inline quota or at
Speaker 6: least better than expected given the easier comps I alluded to,
Speaker 6: and the ad pricing has gotten better from the data
Speaker 6: points that we've gutted so far.
Speaker 1: Yeah, we had those bang up results from Netflix. Does
Speaker 1: that give us any indication what we can expect here?
Speaker 3: Yeah?
Speaker 6: So, Actually Alphabet has exposure to YouTube where which is
Speaker 6: very similar to Netflix in terms of the subscription side
Speaker 6: of the business as well as ads, is much bigger
Speaker 6: and what Netflix said last night was they were able
Speaker 6: to raise prices without really causing churn as well as
Speaker 6: they saw some lift in their ads business. Albeit it's
Speaker 6: very small for Netflix, but clearly the read through is
Speaker 6: YouTube numbers should look solid when Alphabet reports. And now
Speaker 6: on the cloud side, another of alphabet segments, the tailwinds
Speaker 6: are their generative AI investments should help Alphabet Cloud segment
Speaker 6: actually to post better than expected print.
Speaker 1: All right with Punam we discussed generitive AI. How does
Speaker 1: it apply here? I mean specifically, give me a good example.
Speaker 6: So Alphabet has launched their own copilots for their productivity suite,
Speaker 6: so these are subscription based offerings as well as the
Speaker 6: entire training of these large aguage models is done on
Speaker 6: the cloud and Alphabet we know Google Cloud is one
Speaker 6: of the most formidable players when it comes to generative
Speaker 6: AI training.
Speaker 1: What are large language models?
Speaker 6: So in a nutshell, these are you know, models that
Speaker 6: can do a lot of things, you know, from being
Speaker 6: a chat bot to doing language translations, to helping you
Speaker 6: with your searches and really you know, with the chat
Speaker 6: gipt wave catching on this year, this has become a
Speaker 6: big market. In fact, we think it's going to be
Speaker 6: a trillion dollar market over the next ten years. In
Speaker 6: terms of influencing how we use our software, this will
Speaker 6: be a feature in everything we interact with around us
Speaker 6: with a software, websites, apps.
Speaker 1: Yeah, every time I use my free YouTube looking at
Speaker 1: videos on that, it asked me if I want to
Speaker 1: sign up or the paid subscription service? Is that really
Speaker 1: a driver a lot of people going to that? I
Speaker 1: think so.
Speaker 6: YouTube, just to give you some numbers, has a two
Speaker 6: point seven billion monthly active user base. Compare that to Netflix,
Speaker 6: they reported two hundred and fifty million subscribers and out
Speaker 6: of that two point seven billion for YouTube they have
Speaker 6: about eighty to ninety million paid subscribers. And now they
Speaker 6: have launched YouTube TV, they're showing live sports content the
Speaker 6: NFL Sunday Ticket So clearly things are moving in their
Speaker 6: direction and the subscription revenue should come out pretty strong.
Speaker 1: What's specific to meta platforms earnings?
Speaker 6: Are you looking at the reality lab losses? They keep
Speaker 6: saying every time the street models lower losses, they say,
Speaker 6: we are still spending on metaverse and.
Speaker 1: Clearly that they still don't know what metaverse is.
Speaker 6: Yes, so they are. They've just released a third version
Speaker 6: of their Quest headset and they're still investing heavily in it.
Speaker 6: At the same time, I think Meta has turned around
Speaker 6: in the sense they've done some effective cost cutting as
Speaker 6: well as the ad site has rebounded. And look, they
Speaker 6: are a formidable player in the large anguid models and
Speaker 6: generateor AI space as well.
Speaker 1: Bloomberg Intelligence Senior Technology analyst man Deep sing Man Deep
Speaker 1: thanks a lot for stop off. I appreciate it. And
Speaker 1: just to head on Bloomberg day Break Weekend the future
Speaker 1: of the interest rates, we bring you a conversation with
Speaker 1: Federal Reserve Chair J. Pllell. I'm John Tucker, and this
Speaker 1: is Bloomberg. This is Bloomberg day Break Weekend, our global
Speaker 1: look a heap of the top stories for investors in
Speaker 1: the coming week. I'm John Tucker in New York. Up
Speaker 1: later in the program reaction from Europe involving the conflict
Speaker 1: in the Middle East. But first we're going to turn
Speaker 1: our attention to the economy. The Federal Reserve currently in
Speaker 1: its quiet period until November three, but our David Weston
Speaker 1: going up with the fedshere J Powell right before that
Speaker 1: quiet period began and got his thoughts on the economy
Speaker 1: and the interest rates.
Speaker 7: We all write down our estimates of the longer run
Speaker 7: neutral rate every quarter in the Summary of Economic Projections,
Speaker 7: and that's based on models. It's based on also looking
Speaker 7: out the window and including lags, thinking how are our
Speaker 7: current rates affecting the economy. So the evidence of your
Speaker 7: eyes is that the economy is handling much higher rates
Speaker 7: at least for now, without difficulties. So notionally, that might
Speaker 7: tell you that the neutral rate has risen, or it
Speaker 7: may just tell you that we haven't had rates high
Speaker 7: enough for long enough. You're right, though, but you know,
Speaker 7: we have models for everything, we have formulas for everything. Ultimately,
Speaker 7: as a practitioner, we have to, you know, focused on
Speaker 7: what the economy is telling us, even taking lags into account.
Speaker 7: What's it telling us. Does it feel like policy is
Speaker 7: too tight right now?
Speaker 1: I would have to say no.
Speaker 7: I think the evidence is not that policy is too
Speaker 7: tight right now. And word five five and a quarter
Speaker 7: to five and a half percent.
Speaker 1: That was Jay Powell speaking with Bloomberg's David Weston late
Speaker 1: last week, and we're pleased to welcome David right now
Speaker 1: in the studio for more on his interview with a chairman.
Speaker 1: My impression with Palell's speech preceding you to the Economic
Speaker 1: Club of New York was that it was, And I'll
Speaker 1: use the phrase that our interest rates strategist Tira Jersey
Speaker 1: used kind of wishy washy, see a wishy washy kind
Speaker 1: of guy.
Speaker 8: Well, I'm not sure he would embrace that description. But
Speaker 8: one man's wishy washy may be another man's optionality and saying,
Speaker 8: we don't know a lot of things right now. We
Speaker 8: have to be able to move in different directions. And
Speaker 8: he clearly is incremental. He wants to take it data
Speaker 8: point by data points, see what comes in. Doesn't want
Speaker 8: to commit to early. He's not a grand theorist. I
Speaker 8: think he would admit to that.
Speaker 1: You know, I'm more than happy to have other people
Speaker 1: do my work for me and kick up my feet
Speaker 1: on the desk.
Speaker 6: Is J.
Speaker 1: Powell able to kick up his feet on his desk
Speaker 1: at the Federal Reserve in Washington as interest rates rise
Speaker 1: and the bond market might be doing some of the
Speaker 1: work for the Federal Reserve.
Speaker 8: Well, we talked to you about that specifically, whether, in fact,
Speaker 8: particularly raising the yields in the longer end of the curve,
Speaker 8: we're really doing some of his work for him. And
Speaker 8: when pressed, he allowed as how, on the margin, as
Speaker 8: he put it, on the margin, it reduces some of
Speaker 8: the pressure to keep interest rates going up. At the
Speaker 8: same time, he thinks inflation is coming down, perhaps a
Speaker 8: little more slowly than he would have thought it is
Speaker 8: coming down. At the same time, the economy, as you know, John,
Speaker 8: is just really charging ahead, which is I think a conundrum.
Speaker 8: But he says, look, it's good news at least so far.
Speaker 1: Yeah, you know, it's just I just can't believe the figures,
Speaker 1: especially when it comes to consumer spending. I suppose a
Speaker 1: lot of this is left over from the pandemic that
Speaker 1: we have pent up spending. Did he address that at
Speaker 1: all the reasons behind why the economy and especially the
Speaker 1: US consumer is just so darn strong at this point.
Speaker 8: He certainly said that there were more savings than they
Speaker 8: had understood.
Speaker 1: That was his prize.
Speaker 8: They had more dry powder, if you will, to spend
Speaker 8: down for the consumer that they've really kicked in. He
Speaker 8: also suggested that perhaps part of it is just a
Speaker 8: pent up demand because we were cooped up for so long,
Speaker 8: and so we're coming out, whether it's travel or its
Speaker 8: other experiences, to really spend money. He also suggested that
Speaker 8: in fact, we will see some slowdown and that's not
Speaker 8: necessarily a recession. I'm not saying that, but we will
Speaker 8: see some slow down and probably as we get into
Speaker 8: twenty twenty four.
Speaker 1: A credibility is so important at this juncture. And just
Speaker 1: to tell everybody just to go back in time just
Speaker 1: a bit. It was a time when the United States
Speaker 1: dollar was backed up by gold, something really credible you
Speaker 1: could put your hands on. Then along came the Nixon
Speaker 1: administration and they sort of gutted the Breton Woods Agreement
Speaker 1: where there was a gold standard, and then you had
Speaker 1: the US Central Bank had to come in and that
Speaker 1: had to be the credible source to back everything up.
Speaker 1: That's kind of the history of why it's so important.
Speaker 1: Is j Pal in your sense, a credible guy? And
Speaker 1: is the institution as we know it today credible institution?
Speaker 8: Probably one of the most important questions there is in
Speaker 8: the economy today, John and I guess I would say
Speaker 8: time will tell. Thus far, I think he's been fine.
Speaker 8: One of the issues though, I think John and I
Speaker 8: did ask him about this is do you have as
Speaker 8: much control over the economy as we thought you did.
Speaker 8: There are some people who indicate. Larrie Summers has said
Speaker 8: this to us that because of the so called terming
Speaker 8: out of the debt, both corporate and household, that is
Speaker 8: to say, when interest rates were zero or close to it,
Speaker 8: people took a lot longer term debt and as a result,
Speaker 8: when they raise intertrace now a lot of people and
Speaker 8: corporations are not directly affected because they got their money
Speaker 8: locked up for a while. And I asked, is that
Speaker 8: a real issue. He said he thinks they still have
Speaker 8: effect with respect to interest rates, but he allowed, as
Speaker 8: how that is something of a change in the economy.
Speaker 1: They've got this target of two percent inflation in the
Speaker 1: US economy. David, I have no idea where that number
Speaker 1: came from. Are they really sticking to that or can
Speaker 1: that sort of fluctuate?
Speaker 8: If memory is serious. I think it came from New Zealand.
Speaker 8: Originally New Zealand said the band came up with that,
Speaker 8: as I recall, And that's a good question. But I
Speaker 8: think important question is not should it be two percent?
Speaker 8: But if they change it at this point, does it
Speaker 8: do more damage than good.
Speaker 1: There's this thing we call the neutral rate, the rate
Speaker 1: that the failed reserve wants. That would no longer be
Speaker 1: contractionary for the economy and would no longer stimulate the economy.
Speaker 1: Does he give any indication of does he have any
Speaker 1: idea where that should be?
Speaker 8: He calls it the long term equilibrium rate. That's what
Speaker 8: you're talking about, and some people call it our star, right,
Speaker 8: that sort of number. And I asked him that flat out,
Speaker 8: because back in twenty twenty, you remember, they changed their framework,
Speaker 8: and he said he thought that that equilibrium rate had
Speaker 8: come down to about one point eight from about two
Speaker 8: point five. I asked him where he thought it was today.
Speaker 8: He said he thought most people thought it was a
Speaker 8: little under two. He's around two percent, he thinks, is
Speaker 8: what it is?
Speaker 1: What kind of a time frame? Does he have a
Speaker 1: time frame or when we can see number one, the
Speaker 1: true effects of the previous policy tightening taking effect. I
Speaker 1: think it was Milton Friedman the University of Chicago who
Speaker 1: came up with the phrase long and variable lags for
Speaker 1: monetary policy, I eat the tightening.
Speaker 8: I brought that up with him quite specifically. I said, Okay,
Speaker 8: long and variable we understand that how far are we
Speaker 8: through those long and variable laves? Are we twenty five percent?
Speaker 8: Are we fifty percent? He said, nobody can know. He
Speaker 8: also said he thinks it's different than when Milton Friedman
Speaker 8: came up with that phrase because Center Bank's now telegraph
Speaker 8: so much more, and so it affects my financial conditions,
Speaker 8: which is a way of tightening policy without actually raising rates.
Speaker 8: So he said it may be different how long and
Speaker 8: variable they are, but he refused to commit. And basically,
Speaker 8: by the way, John I said, how can you set
Speaker 8: monetary policy going forward if you do have a sense
Speaker 8: of with your twenty five fifty seventy five percent way through?
Speaker 8: He said, no, we'll wait and see.
Speaker 1: Yeah, it used to be in the past where you
Speaker 1: wouldn't see an immediate reaction in the markets at least,
Speaker 1: but with the added transparency from the Federal Reserve, you
Speaker 1: almost see it instantaneously in the markets. He addressed that
Speaker 1: as well well.
Speaker 8: The financial conditions clearly are doing part of the work
Speaker 8: for him, and they very much are focused on financial
Speaker 8: conditions in the extent of tightening. And certainly John obviously
Speaker 8: came up with what's going on with bond yields because
Speaker 8: we've had real tightening with the ten and the thirty.
Speaker 8: What's happened with it? So and he recognizes that's an
Speaker 8: important part of how they try to influence monetary policy is.
Speaker 1: The transparency working for the Federal Reserve. I mean, you
Speaker 1: remember from previous Fed chairman, you didn't know what the
Speaker 1: hell they were talking about at times.
Speaker 8: But he's come back a little bit from that.
Speaker 1: Right.
Speaker 8: At one point it was all about forward guidance, and
Speaker 8: now he's a little more reluctant to give foreign guides.
Speaker 8: It's not like the Greenspan opacity where you really, as
Speaker 8: you say, he'd go up to Congress and you had
Speaker 8: no idea what the man was saying. He certainly is
Speaker 8: much more transparent than that. You have to put that together,
Speaker 8: John once again with what you called wishy washy I
Speaker 8: said optionality. He's taking it one step at a time.
Speaker 8: We have to remember he is a lawyer like I'm
Speaker 8: a lawyer, and listening to him talking to him, he's
Speaker 8: a very smart man and you know, learn in hand.
Speaker 8: The famous judge once said, if I get to write
Speaker 8: the facts in the opinion, you can write anything you
Speaker 8: want in the law because the facts are determined. I
Speaker 8: think my impression of j. Powal, this is just me
Speaker 8: talking now, is that he is that kind of lawyer
Speaker 8: that he wants to take it fact by fact and
Speaker 8: that will tell us where we're going. He doesn't come
Speaker 8: in with a Cartesian theory like Descartes, a theory of
Speaker 8: the case in advance.
Speaker 1: Well, that wasn't wishy washy at all and very transparent.
Speaker 1: David Weston, thanks a lot. I we appreciate it. Just
Speaker 1: ahead on Bloomberg Daybreak weekend, we take you to Asia
Speaker 1: and look at how China is trying to reinvigorate its
Speaker 1: role on the global stage. I'm John Tucker. This is Bloomberg.
Speaker 1: I'm John Tucker in New York with your global look
Speaker 1: ahead of the top stories for investors in the coming week.
Speaker 1: At the height of the Israel Gaza conflict and China's
Speaker 1: economic slow to how is China trying to reinvigorate its
Speaker 1: role on the global stage. To find out more, Let's
Speaker 1: go to Bloomberg Daybreak Asia co host Brian Curtis.
Speaker 2: John. If last week's Belton Road Forum told us anything,
Speaker 2: it's that despite recent issues, China still wants to play
Speaker 2: a role on the global stage, the leading role, in fact,
Speaker 2: of an alternative block to the West. Never mind that
Speaker 2: its hands are full with a property crisis with a
Speaker 2: stumbling economy, or that his Belt and Road initiative has
Speaker 2: garnered some charges of China being labeled an irresponsible lender.
Speaker 2: China sees the Big Infrastructure project as a big success,
Speaker 2: and Russian President Vladimir Putin degrees. I caught up with
Speaker 2: Daniel ten Kate Bloomberg Asia Ekogov Executive editor and asked
Speaker 2: him how she and Putin used the bri to move forward. First,
Speaker 2: from the perspective of Vladimir Putin.
Speaker 9: China is a safe space for him to show that
Speaker 9: he's still embraced by countries, particularly in the Global South.
Speaker 9: He needs that diplomatic support to fight the isolation that
Speaker 9: the US and its allies are trying to impose on Putsin.
Speaker 9: For she, he sees Russia as a key diplomatic partner,
Speaker 9: a way to fight back against the US worldview and
Speaker 9: US rules. And this is particularly in the context of Taiwan.
Speaker 2: Bloomberg's Dan ten kid Well Alan Wong Bloomberg, China Eco
Speaker 2: guv Editor joins us for a little bit more in
Speaker 2: the way of insights on where China goes next. Alan,
Speaker 2: thanks very much for being with us. So I'm wondering
Speaker 2: in the coming week, might we see more efforts by
Speaker 2: China to mediate in some way in the Israel Hamas conflict.
Speaker 10: China has always been trying to play it a role
Speaker 10: of the peacemaker. It has proposed some sort of pre
Speaker 10: peace conference between Palestine and Israel for many decades without
Speaker 10: great success, and it will try to say things that
Speaker 10: signal its intention to be mediator, but based on our experience,
Speaker 10: that's unlikely to go very far. But China wants to
Speaker 10: position itself as a country that could bring rivals together,
Speaker 10: unlike the US. Yet, one of China's greatest diplomatic achievements
Speaker 10: in recent years is helping broker a deton between Saudi
Speaker 10: Arabia and Iran. And it's definitely going to try to
Speaker 10: do the same thing again if it can between the
Speaker 10: Palestinians and Israelis. But then that's extremely unlikely because it
Speaker 10: has tried to do the same over the last couple
Speaker 10: of decades with no success.
Speaker 2: We know that the two heads of state had in
Speaker 2: depth discussions, some of which was very private, and obviously
Speaker 2: they both made speeches. Do we know how they are
Speaker 2: approaching the idea of anything together in the Middle East?
Speaker 10: I mean, China has for decades framed itself as an
Speaker 10: ally of the Palestinian people. These ties go back many
Speaker 10: decades and back to the mal Era. Though has moderated
Speaker 10: somewhat in the recent years, it will not change his
Speaker 10: position on this sympathy. But in terms of what she
Speaker 10: and Putin can really do on the ground, I don't
Speaker 10: think there's much they can beyond rhetoric, and the most
Speaker 10: that China would say right now at this stage is
Speaker 10: that they want both parties to come to the negotiating
Speaker 10: table and stop any hostilities. But realistic there really isn't
Speaker 10: much that China would do or I mean, there's no
Speaker 10: reason for China to pressure Putin to persuade its proxies,
Speaker 10: or Iran to pressure has Bola to reduce his support
Speaker 10: for hamas this is unlikely and this will also undercut
Speaker 10: the China Russia partnership.
Speaker 2: We talked a little bit about the Built and Road
Speaker 2: Initiative as part of China setting up institutions to stand
Speaker 2: up to the West, primarily to the United States. In
Speaker 2: your view, how successful has China been in building up
Speaker 2: some of these institutions, including BLI and including BRICK and others.
Speaker 10: The b o I is a loose network of bilateral
Speaker 10: trade agreement and infrastructure projects, and it's never been formalized
Speaker 10: as like a centralized institution. In fact, people dispute over
Speaker 10: what really counts as the BI projects, and then there
Speaker 10: are projects that predate the br that are now counted
Speaker 10: as br projects. So that goes to show that it's
Speaker 10: not a very organized investment scheme. But then there are
Speaker 10: attempts by China or it's part to try to turn
Speaker 10: it into something more institutionalized. For example, in the summit
Speaker 10: this week, Csinking announced the launch of a secretariat. We
Speaker 10: don't have any details about what it's going to do,
Speaker 10: but it sounds like one step in formalizing the br
Speaker 10: I initiative going forward.
Speaker 2: Something that is, i suppose not exactly part of br I,
Speaker 2: but the power of Siberia to the gas pipeline that
Speaker 2: is supposed to bring gas from from Russia in to China.
Speaker 2: A little bit of progress.
Speaker 10: There probably we know that Putting and she spoke on
Speaker 10: a sideline, and then this is a great opportunity for
Speaker 10: them to talk to hash out the details of those deals.
Speaker 10: And the pipeline itself is a win win solution for
Speaker 10: both China, which is in need of energy and for Putin,
Speaker 10: which is in need of someone to buy the oil
Speaker 10: and gas. So I can't see why it wouldn't move
Speaker 10: forward more briskly after this.
Speaker 2: Earlier I asked Dan ten Kate about what he saw
Speaker 2: as the main issues in the China Russia partnership.
Speaker 9: Fundamentally, they have different views on the world. Putin has
Speaker 9: been known as sort of a rule breaker, someone who's
Speaker 9: not scared to militarily get involved in Syria. You know,
Speaker 9: we saw what happened in Ukraine that put China in
Speaker 9: a very awkward position. China, and she in particular still
Speaker 9: very much wants to be part of the global system
Speaker 9: and see itself as one of the leaders of the
Speaker 9: world that has some respect.
Speaker 2: And alan your thoughts on those issues.
Speaker 10: There's extra pressure on China to distance itself from Russia,
Speaker 10: which is unlikely because China has declared a no limits
Speaker 10: friendship a partnership with Russia and has reaffirmed it over
Speaker 10: time despite the Ukraine invasion. We know that lots of
Speaker 10: EU leaders shunned the Beltan Row Forum this week because
Speaker 10: of this position that Beijing has taken. But China knows
Speaker 10: this cost well and it deliberately went ahead with it
Speaker 10: and giving putting the platform in the Great Hall of
Speaker 10: the People, so it knows what he's doing and for
Speaker 10: the time being, there's no reason for China to change.
Speaker 10: It's a friendship or partnership with Russia.
Speaker 1: In fact, she's.
Speaker 10: Thinping hailed the profound friendship between China and Russia and
Speaker 10: his personal friendship with Putin, whom he has met dozens
Speaker 10: of times in the last ten years, and that's not going.
Speaker 2: To change now. China would say that it's the US
Speaker 2: that is the aggressor, and that the military, the size,
Speaker 2: and the fact that the United States has kind of
Speaker 2: helped design the world order for so many years since
Speaker 2: the Second World War, that that is one of the
Speaker 2: reasons why this kind of loose grouping of a block
Speaker 2: to stand up against the West exists. But you know,
Speaker 2: we look back at the block that used to be
Speaker 2: the Soviet Union and in essence it bankrupted itself trying
Speaker 2: to stand up to the West. Is there any danger
Speaker 2: that China is going down that road as well?
Speaker 10: The pandemic and the economics slowed down in China are
Speaker 10: hurting China's ability to find money to land to its
Speaker 10: developing country partners but the bigger problem here is that
Speaker 10: those partners are finally harder to borrow money because of
Speaker 10: the interest rate environment and also because of the impact
Speaker 10: of the pandemic on their domestic economies. The greatest threat
Speaker 10: I think will come from the developing world inability to
Speaker 10: continue to grow economically, not on China's ability to land money. Really,
Speaker 10: and China also is smart enough that it's no longer
Speaker 10: pursuing the kind of big infrastructure projects that Belton Road
Speaker 10: Initiative was initially known for, and it is kind of
Speaker 10: pivoting to a small is Beautiful strategy this year, focusing
Speaker 10: on smaller projects that are more efficient, that are better,
Speaker 10: you know, investments, instead of flashy new airport, railroads.
Speaker 2: Alan, thank you for joining us, Alan Wong, Bloomberg China
Speaker 2: ecogov editor. I'm Brian Curtis, along with Doug Prisner. You
Speaker 2: can catch us every weekday here for Bloomberg Daybreak Asia,
Speaker 2: beginning at six am in Hong Kong and six pm
Speaker 2: on Wall Street.
Speaker 1: John all right, thanks to Bloomberg Daybreak Asia co host
Speaker 1: Brian Curtis, and just ahead here on Bloomberg Daybreak weekend,
Speaker 1: we'll head to London and get a European perspective on
Speaker 1: the Italy's conflict. I'm John Tucker, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Weekend or Global look ahead of
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: John Tucker in New York. There are fresh concerns that
Speaker 1: is whereas war with Hermas will spark a bigger conflict
Speaker 1: in the Middle East. European leaders, including UK's Richie Schunek
Speaker 1: and Jeremany's all off Shaws, have tried to exert influence
Speaker 1: of the region to contain the conflict. For more, Let's
Speaker 1: hit to London and bring in Bloomberg Daybreak Europe anchor
Speaker 1: Caroline Hepger.
Speaker 3: John, there are now not one, but two major wars
Speaker 3: that have broken out in the past two years that
Speaker 3: threatened global stability. For the European perspective, I've been speaking
Speaker 3: to Jane Kinnenmont, Policy and Impact director at the European
Speaker 3: Leadership Network. I began by asking Jane Kinemont about what
Speaker 3: form she thinks the ground more might take between Israel
Speaker 3: and Hamas and what to expect next from the Israeli authorities.
Speaker 11: I mean, Israel's made it clear that it wants to
Speaker 11: launch a ground invasion, and also that there will be
Speaker 11: a high price both for the Palestinians in Gaza and
Speaker 11: for Israel. There's a lot of underground tunnels in Gaza
Speaker 11: where Hamas is likely to fight, so it would be
Speaker 11: a conflict where Israel's military superiority from the air might
Speaker 11: not help it that much. But also lots of uncertainty
Speaker 11: exists because Israel's endgame is not entirely certain, you know,
Speaker 11: it doesn't know. Because this har mass attack, it was
Speaker 11: a complete strategic shock. Many people had warned that there
Speaker 11: would be some kind of explosion of violence as a
Speaker 11: result of the neglect of the Palestinian issue and the
Speaker 11: lack of peaceful avenues for Palestinians to take their cause
Speaker 11: for but the predictions were more centering around escalation in
Speaker 11: the West Bank or in Jerusalem, and Israel and many
Speaker 11: of its partners felt that it had Hamas contained, you know,
Speaker 11: and that it understood that threat and had ways to
Speaker 11: manage it. So now Netanyahu's strategy towards Hamas has been upended,
Speaker 11: and Israel does not have a clear replacement strategy. They
Speaker 11: say that they want to destroy Hamas, but they don't
Speaker 11: necessarily know that they can do it, but the bigger
Speaker 11: question still is what comes after. You know, one option
Speaker 11: might be for Israel to reoccupy Gaza, not that that
Speaker 11: would be legal under international law, but in terms of
Speaker 11: the military and political options, that's something being considered, but
Speaker 11: it's not something they strategically want to do.
Speaker 3: Okay, Well, then give me the European perspective. I mean
Speaker 3: we've had the German Laschel's visit Atala also and she
Speaker 3: medi space yesterday that seemed to have some of the
Speaker 3: similar sorts of lines around democracy and Macon. I mean,
Speaker 3: Europe has so struggled. You know, the traditional view of
Speaker 3: Europe is that it struggles with foreign policy because there
Speaker 3: are so many countries. What is the European perspective?
Speaker 11: Now, that's very much the issue is that European governments
Speaker 11: have got very different perspectives, you know, beyond the fact
Speaker 11: they all agree there should be a two state solution,
Speaker 11: but they don't know how to get there. With Ukraine,
Speaker 11: we've seen Europe being united to an unusual degree and
Speaker 11: that has meant that vonder Lane has emerged as more
Speaker 11: of a foreign policy leader than her position normally warrants,
Speaker 11: but actually in Europe, there has been a backlash against
Speaker 11: her taking the lead over Israel and Palestine because her
Speaker 11: expression of solidarity with Israel has tended to come without
Speaker 11: the kinds of points that President Biden is making about
Speaker 11: the legitimate aspirations of Palestinian to a state and the
Speaker 11: need to respect their rights. And so we've seen really
Speaker 11: different noises coming out from different European governments, with some
Speaker 11: saying we should cut all way to the Palestinians and
Speaker 11: in a far out of the other end example, there's
Speaker 11: been a minister in Spain who has said that Netta
Speaker 11: Yahoo should be tried for war crimes. So getting a
Speaker 11: coherent European position together is an issue.
Speaker 3: So that was Jay and Kinemont, the Policy and Impact
Speaker 3: director of the European Leadership Network for the European perspective
Speaker 3: on the conflict in the Middle East. I'm Caroline Hepkee
Speaker 3: here in London. You can catch us every weekday morning
Speaker 3: for Blueberg Daybreak here at beginning at six am in London.
Speaker 3: That's one am on Wall Street. John.
Speaker 1: Thanks Caroline, and that does it for this edition of
Speaker 1: Bloomberg day Break Weekend. Join us again Monday morning at
Speaker 1: five am Wall Street time for the latest markets overseas
Speaker 1: and the blues you need to start your day. I'm
Speaker 1: John Tucker. Stay with us top stories, Global business headlines
Speaker 1: are coming up right now