Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world, and straight ahead on the
Speaker 1: program Wall Street, kicking off the new week with a
Speaker 1: closely watched jobs report. I'm Tom Busby and I'll have
Speaker 1: that store.
Speaker 2: I'm Stephen Carolyn London. If we're thinking about what's in
Speaker 2: store for London's restaurants and cultural scenes in twenty twenty four.
Speaker 2: Is the economic backdrop in the UK remains gloomy.
Speaker 3: I'm Doug Prisoner with a look at what the new
Speaker 3: year may mean for markets in China, India and Japan.
Speaker 4: I'm Heeley Lyons from Washington, where we're looking ahead to
Speaker 4: a very busy political season.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend, The business
Speaker 5: news you need to wrap up your week, Available on Apple, Spotify,
Speaker 5: The Bloomberg Business Happen everywhere you get your podcasts.
Speaker 1: Good day to you. I'm Tom Busby and we begin
Speaker 1: today's program with a key economic report to begin twenty
Speaker 1: twenty four. This Friday, we get the jobs report for
Speaker 1: the month of December and with the Federal Reserve keeping
Speaker 1: interest rates unchanged since July, each report takes on more
Speaker 1: significance for the Central Bank's next move. For more, we're
Speaker 1: pleased to welcome. Bloomberg News US economist Alisa Winger, Well,
Speaker 1: we've seen a pretty resilient US labor market along with
Speaker 1: continued consumer spending that has kept the economy growing even
Speaker 1: flourishing throughout this past year twenty twenty three. Just this
Speaker 1: past week, their first time jobless claims showing layoffs are
Speaker 1: in check, continuing claims a little higher. What are you
Speaker 1: expecting to see in the December jobs report this Friday?
Speaker 6: We are expecting to see a slow down, soft ter gains.
Speaker 6: What Bloomberg Economics is predicting is one hundred and twenty
Speaker 6: five k jobs being created, which is down from one
Speaker 6: ninety nine prior, and that's our estimate, is below the
Speaker 6: consensus estimate of one hundred and seventy. Also, we are
Speaker 6: expecting higher unemployment rate ticking up to three point nine
Speaker 6: from three point seven prior, and also above the consensus
Speaker 6: which is expecting unemployment rate to uptick to just three
Speaker 6: point eight percent.
Speaker 1: But why the slow down?
Speaker 6: I think the biggest The biggest reason is in the
Speaker 6: month of November, we saw that forty one k jobs
Speaker 6: came from the resolution of a strike. That's just not
Speaker 6: going to happen. That's not going to repeat in December,
Speaker 6: given that, we're just going to see us a much slower,
Speaker 6: much softer growth. Also, what we saw in November and
Speaker 6: what we are expecting in December is that not a
Speaker 6: lot of sectors are creating jobs. In November, although sure
Speaker 6: we got a number that beat the consensus, it was
Speaker 6: mostly the government and healthcare sector that created jobs, and
Speaker 6: that sort of I think we're also going to see
Speaker 6: in December, so overall less jobs being created and probably
Speaker 6: you know we're going to be surprised to the downside.
Speaker 1: Now you spoke about the healthcare sector, government sector, these
Speaker 1: will you see these continued growth in the new year
Speaker 1: and are there other sectors where you really see a
Speaker 1: pullback expected?
Speaker 6: So these are acyclical sectors. They not being affected by
Speaker 6: a downturn or any sort of slow down in economic activity.
Speaker 6: So these sectors could still grow mine as well grow
Speaker 6: in the next year. But as we've seen in the
Speaker 6: November jobs Jobs report, a lot of the sectors were
Speaker 6: either flat or decline, like for example, retail sales is
Speaker 6: very cyclical and jobs in retail sectors decline or whole trade.
Speaker 6: So we're probably going to see a lot less job
Speaker 6: creation in those consumer facing industries.
Speaker 1: And you talked about manufacturing. You know, the UAW strike
Speaker 1: that ended forty one thousand added November's numbers, which skewed
Speaker 1: it a lot higher than maybe than it should have been.
Speaker 1: Where do you see manufacturcturing heading?
Speaker 6: So I think you know, I s A Manufacturing is
Speaker 6: gonna come out on Wednesday and sector is going to
Speaker 6: be in contraction for fourteen straight months. We're probably gonna
Speaker 6: not gonna see a lot of jobs coming. I mean,
Speaker 6: there's packets of strength with and manufacturing coming from the
Speaker 6: Chips Act and AI, but a lot of it is
Speaker 6: just you know, us consumer demand is going to slow
Speaker 6: and we don't expect the holiday season, Like National Federation
Speaker 6: of Retailers came out and they said that overall holiday
Speaker 6: sales are in between three and four percent. Our estimate
Speaker 6: is at the low end of that estimate. So I
Speaker 6: think we're gonna as we head into the new year,
Speaker 6: we're gonna see less consumer demand and those industries within
Speaker 6: manufacturing that produce goods, this is not gonna hire.
Speaker 1: Now, how about housing though we have seen continued demand.
Speaker 1: We know that existing houses a little uneven, sometimes time
Speaker 1: better than others. But the demand for new houses, which
Speaker 1: is three jobs for every house going up, how does
Speaker 1: that look in the future.
Speaker 6: I do think there is demand for housing and not
Speaker 6: enough supply. Having said that, the affordability is very low.
Speaker 6: So even I think even if we would see more housing,
Speaker 6: more houses being available, there is only so much demand.
Speaker 6: And the demand is being flooded into the new construction
Speaker 6: market only because there is just not enough existing home
Speaker 6: for sales. But if the FED will start cutting rates,
Speaker 6: that will relieve some of the pressure on both the
Speaker 6: existing inventory of homes, which will probably rebalance the demand
Speaker 6: back towards existing home and away from new construction.
Speaker 1: If the FED starts cutting rates, and that's what this
Speaker 1: is all about, whether job growth slows, inflation has slowed
Speaker 1: down quite a bit, it's not exactly at the fed's target.
Speaker 1: We've seen wage growth slow a little bit, all leading
Speaker 1: to the first meeting at the end of January for
Speaker 1: the FED. And if everything is aligned in the jobs report,
Speaker 1: what do you expect the FED to do? Where do
Speaker 1: you see them in the next few months.
Speaker 6: We put out an outlook in December ahead of the
Speaker 6: meeting in December, which was December twelve thirteen, where everybody,
Speaker 6: I think most of us were surprised at the tilt
Speaker 6: dovish tilt that Powell basically said, you know, they've discussed
Speaker 6: a rate cut. We anticipated ahead of that meeting that
Speaker 6: the Fed is going to cut rates in March by
Speaker 6: twenty five basis points and another one hundred throughout twenty
Speaker 6: twenty four, and mostly because that aligns with our forecast.
Speaker 6: We are expecting less jobs this Friday, and we are
Speaker 6: expecting unemployment rate to go up, and we are seeing
Speaker 6: less holiday sales. We are on the lower end of
Speaker 6: the forecast. That data is still not fully out for
Speaker 6: the month of December, but it looks like the holiday
Speaker 6: sales weren't as strong as people are expecting. So all
Speaker 6: of that tells us we should get the Fed to
Speaker 6: cut rates in March.
Speaker 1: We have the likelihood of job creation slowing down. We
Speaker 1: have the unemployment rate notching just a little bit higher
Speaker 1: right now, three seven to three nine. You anticipate it's
Speaker 1: not cataclysmic, it's not the sign of a recession. Is
Speaker 1: it just a little bit of a slowdown.
Speaker 6: What we have actually, so we not only have three
Speaker 6: point nine unemployment rate in December, but if unemployment rate
Speaker 6: goes up to four that will trigger the summ rule
Speaker 6: for identifying a recession. Again, is it going to be
Speaker 6: a hard lending. No, it's going to be a mild recession.
Speaker 6: We still think that's probably in the cards. And with
Speaker 6: the Fed though cutting rates in March, possibly in March,
Speaker 6: that's a smart move and the Feds, you know, that's like,
Speaker 6: that's that's cutting rates against an economy that is showing
Speaker 6: signs of slowdown. And also why Powell pivot as much
Speaker 6: at the December meeting is because inflation surprise to the downside.
Speaker 6: The six month annuallyized core PCE was at one point
Speaker 6: nine percent. So all of that tells you that if
Speaker 6: we're going to get unemployment rate surprising to the to
Speaker 6: the upside, meaning it will go up. I mean, in
Speaker 6: our forecast shows that unemployment rate can go up even
Speaker 6: in Q one to four point three and can pick
Speaker 6: at five percent, that's not a soft lending. That's that's
Speaker 6: a mild recession.
Speaker 1: You predict that we're going to see as much as
Speaker 1: four point five percent in the next three months.
Speaker 6: Four point three in Q one four point five in
Speaker 6: Q two in Q two Okay, so.
Speaker 1: We've got our work cut out for the FED, certainly,
Speaker 1: and they've got in that time. They have three meetings, right,
Speaker 1: the third one ends May first, so we could see
Speaker 1: multiple rate cuts to staunch the reaction from the economy
Speaker 1: and from the markets.
Speaker 6: Right exactly. And even as we mentioned in the beginning
Speaker 6: of the segment that jobless claims, we're seeing sure low layouts,
Speaker 6: but continued claims. If you look at the same the
Speaker 6: same week four week moving average claims, continued claims are
Speaker 6: up seventeen percent between between this year and last year.
Speaker 6: That tells you that it's the duration of unemployment, meaning
Speaker 6: is getting longer and longer. And that's usually the sign
Speaker 6: where the market is changing, where the when the where
Speaker 6: there is a shift going on in the labor market.
Speaker 6: At first it started it's taking longer for people to
Speaker 6: find jobs, and then companies manage headcunt going to manage
Speaker 6: headcunt from a tree to actually layoffs. So that's been
Speaker 6: happening and we see that over and over in jobless
Speaker 6: claims figures.
Speaker 1: Wow, So this Friday a lot to look forward to.
Speaker 1: Our thanks to Bloomberg News US economist Alisa Winger, and
Speaker 1: coming up on Bloomberg day Break weekend, we take you
Speaker 1: to London for a closer look at the UK economy
Speaker 1: in the new year. I'm Tom Busby and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak weekend, our global look ahead at
Speaker 1: the top stories for investors in the coming week. I'm
Speaker 1: Tom Busby in New York. The UK sliding into twenty
Speaker 1: twenty four with negative growth, with the impact of interest
Speaker 1: rate hikes still feeding into the economy. Consumers feeling the
Speaker 1: pinch from the higher cost of living, but they're still
Speaker 1: spending enough to fuel London's restaurant and cultural scenes. The
Speaker 1: weaker pound versus the dollar also has helped attract more
Speaker 1: big spending tourists, particularly from the US. For more, let's
Speaker 1: go to London and bring in Bloomberg Daybreak Europe banker
Speaker 1: Stephen Carroll.
Speaker 3: Tom.
Speaker 2: Despite the gloomy economic background in the UK this year,
Speaker 2: it's been a busy year for London's restaurants scene, with
Speaker 2: several high profile openings that came after a difficult winter.
Speaker 2: Add to that not one but two billion pound hotel openings.
Speaker 2: So what's in store for twenty twenty four to discuss.
Speaker 2: I'm joined by our food editor Kate Crater and our
Speaker 2: Bloomberg Pursuits UK correspondent Sarah Rappaport. Great to have you
Speaker 2: both with us. You are our eyes and ears in London. So, Kate,
Speaker 2: I wanted to start with a serious question for you.
Speaker 2: Was twenty twenty three a good year for restaurants and
Speaker 2: further hospitality sector here in London?
Speaker 7: I think that the year in hospitality for restaurants, it
Speaker 7: was a sort of glass half fall. So you can
Speaker 7: look at it and say, after COVID and certainly after
Speaker 7: the train strikes that hit restaurants last year, right at
Speaker 7: this time, right when everyone was getting optimistic, this has
Speaker 7: been a much much better year and you're seeing so
Speaker 7: many signs for recovery. Restaurants that have only been opened
Speaker 7: for four days are now open for five, six and
Speaker 7: seven days and that's a really healthy sign, and places
Speaker 7: are packed. On the other hand, it's rest places are
Speaker 7: still struggling. They don't have enough staff and a report
Speaker 7: recently came out from an accounting firm, Hacker Young that said
Speaker 7: restaurants in London are carrying three billion.
Speaker 8: Dollars in debt.
Speaker 7: So as a result of trying to expand too quickly
Speaker 7: and dealing with problems like food inflation. So there might
Speaker 7: be underneath the ice that everyone's sort of happily skating on.
Speaker 7: It might be a little bit thin, so it sort
Speaker 7: of remains to be seen. So there's things to be
Speaker 7: really happy about. As you said, there were some fantastic openings.
Speaker 7: The Wolsey City opened right near our corner, conveniently open
Speaker 7: for breakfast, lunch and dinner. And there's a bunch of
Speaker 7: things coming in twenty twenty four that are gonna be fun.
Speaker 7: So there's definitely optimism. Holiday parties are really booked up
Speaker 7: this year. But I wouldn't say everything's fine and deady.
Speaker 7: I wouldn't tie it up with a little ribbon, okay.
Speaker 2: So things also looking kind of curious as we look
Speaker 2: towards twenty twenty four as well, Sarah. Meanwhile, it's been
Speaker 2: a booming year for luxury hotels in London in particular.
Speaker 2: You've written some great pieces about this. What is driving
Speaker 2: the demand for luxury hotels in London?
Speaker 8: Well, I mean it's been a huge year. In September,
Speaker 8: the raffles London at the Old War Office and the
Speaker 8: Peninsula both opened, both which cost over a billion dollars
Speaker 8: each to build, and room rates start at over one
Speaker 8: thousand pounds a night for both. So certainly, yeah, very expensive.
Speaker 8: And in terms of who's actually staying in them, the
Speaker 8: answer is generally rich Americans than people from the Middle East.
Speaker 2: Okay.
Speaker 8: They're very special hotels that took a really long time
Speaker 8: to build.
Speaker 2: The Old War Office in particular is a fascinating one
Speaker 2: because it's a historical building.
Speaker 8: It is it opened in nineteen oh six. It's a
Speaker 8: grand building. It was the head of you know, the
Speaker 8: Grand Office of War right during both world wars. Now
Speaker 8: there's a site in Churchill's old Office with a rubber
Speaker 8: gloffice desk worries to work. It'll cost you about twenty
Speaker 8: thousand pounds a night if you want to stay there.
Speaker 2: Okay, but you're getting a piece of that piece.
Speaker 8: Of history, which is pretty incredible. Kate and I actually
Speaker 8: went to a subterranean bar in the basement called the
Speaker 8: Spy Bar.
Speaker 2: You know, I've actually heard about.
Speaker 8: This as interrogation rooms, right, so now wow, which is
Speaker 8: truly The spices used to go down there and my
Speaker 8: five used to have offices there, and now it's a
Speaker 8: bar with you know, nice twenty pounds martinis.
Speaker 5: Yeah, indeed.
Speaker 2: I mean, look, the strength of the dollars has been
Speaker 2: part of that story as well as that it's been
Speaker 2: helped to support those American tourists that are use.
Speaker 8: For both tourism and for the luxury real estate market.
Speaker 7: Yeah, it is the fact that they opened this year
Speaker 7: because of delays, because of the pandemic where they planned.
Speaker 8: It's because of delays. They were not planned for this year,
Speaker 8: either of them. They're pushedbacks a story. In a lot
Speaker 8: of hotels, they're opening dates a little optimistic, but they
Speaker 8: all open with two weeks of each other.
Speaker 9: Wow.
Speaker 2: Okay, it's a conversation in that space as well. And Kat,
Speaker 2: when we think about trends that we've seen over the
Speaker 2: past year in the food scene, was there anything that
Speaker 2: stood out for you that was kind of something that
Speaker 2: you were like, yes, this is we're now co hosting
Speaker 2: a five.
Speaker 7: Well, Stephen, here's where I remember that. I think we
Speaker 7: were supposed to go have drinks at a wine bar
Speaker 7: because last year at this time I said wine bars
Speaker 7: are going to be big in London.
Speaker 2: Which I was very excited about it.
Speaker 7: And Jerry I'm still excited for this to happen. And
Speaker 7: the good news for us is that wine bars were
Speaker 7: indeed a huge trend in London in twenty twenty three.
Speaker 7: There's so many of them. There's a place, especially in
Speaker 7: North London around Newington Green, a place that opens sort
Speaker 7: of towards the end of last year called Caday has
Speaker 7: been going super strong. It's so popular it's been called
Speaker 7: out all these all these places have recognized the chef.
Speaker 7: They have this charcuderie superstar there. So that's i think
Speaker 7: set the scene for a lot of other places to open.
Speaker 7: A place called one O seven opened I think it's
Speaker 7: around Hackney in Covent Garden. Ten cases has been a
Speaker 7: popular wine bar, and they just opened a place called
Speaker 7: Bawdry Green that's wine bar. And the problem is that
Speaker 7: now it's become such a popular model that I think
Speaker 7: places that are actually restaurants are calling themselves wine bars,
Speaker 7: like yeah, in the way that everyone wants to say
Speaker 7: natural wine, like you don't just pour wine, you pour
Speaker 7: a natural wine. And so it's very quickly become an
Speaker 7: overused concept.
Speaker 2: Interesting, have we reached peak wine bar?
Speaker 8: We've reached peak wine bar.
Speaker 2: You're right, terrible news for those of us.
Speaker 8: About peak natural wine. Are we there yet or is
Speaker 8: that some times?
Speaker 7: Well, I think it's good. That's a good question. I
Speaker 7: think I'm here for natural wine. But everyone, I mean,
Speaker 7: it's sort of like saying something that does need to
Speaker 7: be said, you know, It's just like say that you're
Speaker 7: pouring wine. You don't need to say natural anymore exactly.
Speaker 2: I mean there's a whole other conversation to be hod
Speaker 2: about the evolution of natural wine, which we will have
Speaker 2: to do on another occasion. But I want you to
Speaker 2: look into your crystal bowl for us and tell us
Speaker 2: what you're seeing. Considering you predicted so accurately the trend
Speaker 2: for this year, what do you what are you thinking
Speaker 2: about when it comes to the FI scene in twenty twenty.
Speaker 7: Four, I will say I think I love London. I
Speaker 7: have fallen in love with London. I think Manchester is
Speaker 7: going to get bigger and bigger next year. I think
Speaker 7: we're going to be seeing a lot more energy outside
Speaker 7: of London.
Speaker 8: It's already happening.
Speaker 7: Edinburgh's a super hot food city right now and it's
Speaker 7: just going to be bigger in twenty twenty four. I
Speaker 7: think you're going to see a lot more local ingredients,
Speaker 7: partly because of climate, partly because of all the issues
Speaker 7: people are having and price concerns. So already you've seen
Speaker 7: some really good sushi places like Dinings SW three sourcing
Speaker 7: local food and not necessarily flying it in from Japan.
Speaker 7: And I think you're going to see even more chefs
Speaker 7: highlighting the fact that they've got vegetables from cornwall and
Speaker 7: seafood from you know, from that coast as well. That's
Speaker 7: gonna be You're going to see more and more of that.
Speaker 7: And I think also this is very bold, so you
Speaker 7: can fact check me on it. I think we're going
Speaker 7: to start seeing the end of small plates. We've eaten
Speaker 7: so many small plates, so much food has been eatn
Speaker 7: off small plates, I think Webb, Oh my god, Stephen,
Speaker 7: you will keep talking. I know, Sarah's big plates.
Speaker 2: I know, because inevitably you just end up spending three
Speaker 2: times as much money because you think I'm going to
Speaker 2: need loads more.
Speaker 7: That's exactly right, exactly, And I think there is more
Speaker 7: like the Wolsely City just open, and they don't have
Speaker 7: like a small plate section. It's a place where you
Speaker 7: get you know, regular size plates of food. So and
Speaker 7: you have like food food, and you have like three courses,
Speaker 7: you know. So I think that sort of idea that
Speaker 7: not everything is a snackathon is is going to be prevalent.
Speaker 2: The three course is coming back. You heard it here first, Yes,
Speaker 2: she did. Sarah talk to us about the cultural scene
Speaker 2: in London this year. What stood out for you? What
Speaker 2: was your big highlight?
Speaker 8: Well, I was just talking about this with my letters
Speaker 8: at Business Week and we're saying between me and my
Speaker 8: boss in New York, Chris, the editor of Pursuits, we've
Speaker 8: seen over one hundred plays and musicals this year.
Speaker 2: Wow.
Speaker 8: So we've seen quite a lot, and there's some really
Speaker 8: amazing shows on in London. And my favorite actually is
Speaker 8: Operation mince Meat with Sharks. Have you seen it?
Speaker 10: No?
Speaker 2: I haven't. Sorry I could have gasped there about it.
Speaker 2: No I haven't, but it's very high on my list.
Speaker 2: Go on, tell me about its.
Speaker 8: Going on till June, so you have plenty of time
Speaker 8: to book, both you and your listeners. But it's actually
Speaker 8: about an I five intelligence operation during World War Two.
Speaker 8: They stole a corpse m I five, dressed it up
Speaker 8: as a army officer, washed it up ashore and Spain
Speaker 8: with fake invasion plans of Sicily right, this sounds like
Speaker 8: it's a stranger than fiction story. Yeah, but it makes
Speaker 8: for a really hilarious musical with some really touching sad
Speaker 8: scenes as well. So who would have thought this crazy
Speaker 8: World War two operation would be the best musical on stage?
Speaker 8: But it really is.
Speaker 2: Thank you to you both, Kate Creator, our food editor
Speaker 2: and Sarah Rappaport, our Bloomberg Pursuits UK correspondent. I'm Stephen
Speaker 2: Carroll in London. You can catch us every weekday morning
Speaker 2: here for Bloomberg day Break Europe're gonna at six am
Speaker 2: in London and one am on Wall Streets.
Speaker 1: Tom Our thanks to Bloomberg day Break Europe Banker Steven
Speaker 1: Carroll and coming up on Bloomberg day Break weekend, and
Speaker 1: look at what's ahead for the Asian markets in twenty
Speaker 1: twenty four. I'm Tom Busby and this is Bloomber I'm
Speaker 1: Tom Busby in New York with your global look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: As year twenty twenty three comes to a close, we
Speaker 1: take a look at what's ahead for markets in China,
Speaker 1: India and Japan in twenty twenty four, Let's get to
Speaker 1: Bloomberg Daybreak Asia co host Doug Krisner.
Speaker 3: Tom The challenges ranged from a flopped reopening trade to
Speaker 3: faltering economic growth, as well as an unprecedented outflow of
Speaker 3: foreign capital. So as we wrap up twenty twenty three,
Speaker 3: we turn to the outlook for the year ahead. Bloomberg's
Speaker 3: Felipe Pacheco is with us. He is the capital markets
Speaker 3: reporter for APAC Equity. He joins us from our studios
Speaker 3: in Hong Kong. I think we can agree, Philip that
Speaker 3: for China, the major problem, not only for the economy
Speaker 3: but for markets as well, has been this weak sentiment.
Speaker 3: Maybe there was some initial excitement around a strong recovery
Speaker 3: post pandemic that never materialized. Is there any optimism that
Speaker 3: we can expect in the new year that will mean
Speaker 3: that twenty twenty four is better than twenty three?
Speaker 9: Well, that's correct. I think that it's very hard to
Speaker 9: find that optimism out there, especially at this time of
Speaker 9: the year. We usually do a ton of talks with
Speaker 9: bankers get their outlook for what they're expecting, at least
Speaker 9: for the first quarter of the following year. When we
Speaker 9: had these conversations last year. Most of them were very
Speaker 9: very positive about the outlook for China, especially because at
Speaker 9: that point we knew that the country was opening up.
Speaker 9: There was the whole excitement towards the fact that China's
Speaker 9: economy would be way more open than it was during
Speaker 9: the COVID years, and what we saw in equity capital
Speaker 9: markets was this gigantic frustration. For example, China was responsible
Speaker 9: mainly in China mostly for about half of all of
Speaker 9: the deals within ECM that happened in twenty twenty two.
Speaker 9: This time this year we have China representing less than
Speaker 9: thirty percent for global offerings. So it's very hard to
Speaker 9: say when this is going to actually improve. There's no
Speaker 9: perspective that there is a better first half of twenty
Speaker 9: twenty four than what we saw in the two final
Speaker 9: quarters of twenty three. And I think that what investors,
Speaker 9: bankers and companies are looking for right now is indication
Speaker 9: from the Chinese government that there will be support, that
Speaker 9: there will be measures to actually bring back optimism towards
Speaker 9: the economy, and therefore they will be looking for money again.
Speaker 3: Yeah, I think the slump in the property market has
Speaker 3: been the central problem in restoring confidence. Is there any
Speaker 3: signal that the government is sending that it understands the
Speaker 3: severity of the problem.
Speaker 9: I think that that are signals that they are willing
Speaker 9: to address such problems. There has been an indication is
Speaker 9: of support in different ways, especially to the real state sector.
Speaker 9: Is it enough? I don't think so. When we talk
Speaker 9: to bankers they say that they need more, like the
Speaker 9: market needs more. They need like a bazooka, something that
Speaker 9: would send a clear message of support, that would give
Speaker 9: indications that there is a turnaround, that we've hit the
Speaker 9: bottom and from now on things should get better. I
Speaker 9: don't think anyone has seen that yet. I don't think
Speaker 9: there is indication that this is on the way. For example,
Speaker 9: when we talk to bankers looking at IPOs, they say
Speaker 9: that we need to see bigger deals. We need to
Speaker 9: see those blackbusters, deals with names that cash the headlines,
Speaker 9: and we need to see a few of them performing
Speaker 9: quite well for a while. We cannot see deals flopping.
Speaker 9: We cannot see IPOs coming to market and then just
Speaker 9: grabbing negative attention. This is the worst that you can
Speaker 9: have for a market that is very sensitive to sentiment.
Speaker 3: And that's one of the things that I think has
Speaker 3: contributed to foreign investors removing a lot of capital out
Speaker 3: of the markets. Not a lot of evidence that the
Speaker 3: government really understands what the problem is to the extent
Speaker 3: that they're really willing to throw as you mentioned the
Speaker 3: Pazuka behind it. To what extent is that lack of
Speaker 3: foreign capital creating difficulty for capital markets?
Speaker 9: More broadly, I think that it creates a lot of gaps.
Speaker 9: Let's say within equity capital markets. For example, you have
Speaker 9: all flows for all kinds of Chinese investments, including equities
Speaker 9: in the secondary market. Hong Kong's market is going through
Speaker 9: a very very hard time. The index here in Hong Kong,
Speaker 9: the HCI, is now more than fifteen percent for the year.
Speaker 9: We also have the bench markets in the mainland down
Speaker 9: by a similar percentage. So it's just a very very
Speaker 9: heart scenario, and you see money just getting out of
Speaker 9: Chinese assets as a whole. Of course, that impacts the
Speaker 9: way companies that are considering to tap the markets to
Speaker 9: make their plans as well. Companies are pretty much on
Speaker 9: that state right now. They are on pause, they're on
Speaker 9: hold because they do not know if this improvement will come.
Speaker 9: And then at the end of the day, of course,
Speaker 9: if you have money flowing out of China. This money
Speaker 9: is going somewhere else. We see a lot of optimism,
Speaker 9: for example, when it comes to assets trading in India
Speaker 9: and also activity in ECM for India because this is
Speaker 9: a huge emerging market that's just like bringing a lot
Speaker 9: of positive headlines. And then another market that's catching a
Speaker 9: lot of attention for this particular segment is also so Japan.
Speaker 9: Japan is a developed economy, it's a completely different economy
Speaker 9: than what you would see in China. But of course
Speaker 9: it's been a great year for Japanese assets, especially equities.
Speaker 3: Yeah, it's been a very good year for the market
Speaker 3: in India. I think the major market measures are up
Speaker 3: double digits in US taller terms. But if you look
Speaker 3: at the year ahead, are analyst assuming that this positivity
Speaker 3: is going to continue or might we see a bit
Speaker 3: of a pause. Is it a market that is maybe
Speaker 3: a little overextended.
Speaker 9: That's a very interesting point because we do know that
Speaker 9: India is training at very expensive levels right now when
Speaker 9: it comes to equities trading. But one of the binkers
Speaker 9: that I talked to with someone that is close to
Speaker 9: the Indian market, he said, we do know that India
Speaker 9: is expensive, and we hear that from our clients, but
Speaker 9: at the same time we ask are you willing to buy?
Speaker 9: Are you willing to invest at this price, and they
Speaker 9: say yes. You can see things performing well. You can
Speaker 9: see acids just from the fixed income sign and also
Speaker 9: from the equity side doing quite well. That's what investors
Speaker 9: are looking for in a tough year like this. For example,
Speaker 9: if you look just of all of the names that
Speaker 9: so big steaks in Indian companies listed Indian companies this year.
Speaker 9: We're talking about soft Bank, the Canada Pension Plan Investment Board.
Speaker 9: We have Tensen that had several stakes in companies that
Speaker 9: listed in India. So these are big global investors that
Speaker 9: they are coming to market to sell big chunks, let's
Speaker 9: say five to ten percent of the stakes that they
Speaker 9: own in such companies because price is good and they
Speaker 9: are making money out of it. When those companies put
Speaker 9: those blocks and those placements out in the market and
Speaker 9: you see them trading up two days after, this is
Speaker 9: very rare. You clearly see demand coming from the domestic
Speaker 9: market in Indian and also from foreigners. So there is appetite,
Speaker 9: there is a lot of interest. This is India's moment
Speaker 9: is it going to last whenever China is back, whenever
Speaker 9: activity in China picks up. That's the main question for
Speaker 9: Indian as it's and for Indian issuers.
Speaker 3: I think one of the surprises this year in the
Speaker 3: Asia Pacific has been the performance of the Japanese equity market.
Speaker 3: I don't know how much of that has to do
Speaker 3: with anticipation of some type of change in policy from
Speaker 3: the Bank of Japan, but I think the Nike in
Speaker 3: dollar terms is up more than seventeen percent year to date.
Speaker 3: The outlook for Japan is it contingent the positivity contingent
Speaker 3: upon the boj maybe adjusting policy, or is there something
Speaker 3: else going on with Japan inc that's driving the gains.
Speaker 9: I think Japan is a very very very curious cause,
Speaker 9: as you mentioned, there's a lot of it that is
Speaker 9: related to the bog the moment in Japan's economy. This
Speaker 9: is a turning point for a country that hasn't seen
Speaker 9: inflation for like decades, and there is a lot of
Speaker 9: attention that's going towards it. I think when it comes
Speaker 9: specifically to the equities market and all of these companies
Speaker 9: that are actually trying to raise funds through equities It's
Speaker 9: very interesting to see that this comes in combination with
Speaker 9: a lot of measures that are being done by the
Speaker 9: local stock exchange to actually boost governess and to make
Speaker 9: maybe combine this particular moment in the macro aspects of
Speaker 9: the country to what's happening within the corporate sectors. So
Speaker 9: you have, for example, the Stock Exchange in Tokyo asking
Speaker 9: companies to just improve all of the governance levels that
Speaker 9: they have. They are trying to attract more names to
Speaker 9: the market, and they are also trying to improve the
Speaker 9: holdings what they call in Japane's crossholdings. Basically, a lot
Speaker 9: of Japanese big conglomerates the own shares of their sister
Speaker 9: companies and this is not seeen in a good way
Speaker 9: when it comes to governance aspects. So the local regulator
Speaker 9: in the also the exchange, is just trying to unwind
Speaker 9: such traits, and there's a lot of companies that are
Speaker 9: coming to market to actually execute it.
Speaker 3: Philip, great that you could be with us and to
Speaker 3: share your expertise on what's happening in these various equity
Speaker 3: markets across the APEX. That is, Felipe Pacheco, who covers
Speaker 3: APAC Equity Capital Markets from our bureau in Hong Kong.
Speaker 3: I'm Doug Prisner. You can join Brian Curtis and myself
Speaker 3: weekdays here for Bloomberg day Break Asia, beginning at seven
Speaker 3: am in Hong Kong six pm on Wall Street Tom.
Speaker 1: Our thanks to Bloomberg day Break Asia co host Doug Krisner,
Speaker 1: and coming up here on Bloomberg day Break Weekend, look
Speaker 1: at some of the big political items on the agenda
Speaker 1: in Washington in the new year. I'm Tom Busby, and
Speaker 1: this is Bloomberg. This is Bloomberg day Break Weekend, our
Speaker 1: global look ahead at the top stories for investors in
Speaker 1: the coming week. I'm Tom Busby. In New York, lawmakers
Speaker 1: will start the new year running with a full slate
Speaker 1: of legislative priorities as soon as they get back and
Speaker 1: their holiday break that includes another possible government shutdown. For more,
Speaker 1: we turned to Bloomberg's Sound Down co host Kaylee Lines.
Speaker 4: Yeah, thanks Tom. Twenty twenty four is looking to be
Speaker 4: a very busy year in and around Washington, between the
Speaker 4: primary contest for the Republican Party really kicking off in
Speaker 4: earnest and the threat of a government shutdown. And that's
Speaker 4: just in January. There's a lot more that's going to
Speaker 4: come throughout the year, so we wanted to get more
Speaker 4: on what we can expect in the year ahead. For politics,
Speaker 4: I caught up with Henrietta Tre's of Beta Partners, and
Speaker 4: we started with her thoughts on the likelihood of a shutdown.
Speaker 8: You know, I think that.
Speaker 10: We have staved off a shutdown because shutting down is
Speaker 10: actually worse than taking the votes to keep things functioning
Speaker 10: at their current levels. So I think January nineteenth and
Speaker 10: February second are just going to roll into March and April,
Speaker 10: June and July probably two to six times through the
Speaker 10: first half of twenty twenty four. The most important date
Speaker 10: for investors since we've sort of vibracated the appropriations bills
Speaker 10: and only had a partial shutdowns of pieces of the government.
Speaker 10: In the event that there are shutdowns, I think the
Speaker 10: most important day for investors is sort of the run
Speaker 10: up to May first, particularly in the defense space, because
Speaker 10: they don't think they're going to avoid the sequester early,
Speaker 10: and I don't think they're going to come up with
Speaker 10: some grand bipartisan deal as y'all are sort of alluding
Speaker 10: to earlier. There is no bipartisanship on Capitol Hill around
Speaker 10: anything other than hey, let's just not shut down. So
Speaker 10: I think as we get into mid April, investors in
Speaker 10: the defense space who are looking down the barrel of
Speaker 10: a one percent spending cut for defense are probably going
Speaker 10: to get a little acious a lot of headline risks
Speaker 10: as they seek to avoid that at the eleventh hour.
Speaker 10: So maybe keep May first on your radar and maybe
Speaker 10: April fifteenth around then for headline risk to start.
Speaker 4: Moving before we can even get to twenty twenty five.
Speaker 4: To your point, Henrietta, people need to last twenty twenty four,
Speaker 4: which brings me to the Mike Johnson question. Of course,
Speaker 4: the relatively newly minted Speaker of the House who has
Speaker 4: passed a continuing resolution with Democratic support, which is what
Speaker 4: got Kevin McCarthy kicked out of the job in the
Speaker 4: first place earlier in this fall. So I just wonder
Speaker 4: how much longer he's really got if he's going to
Speaker 4: need to fund the government and potentially does need to
Speaker 4: kick the can and House conservatives don't like it, right, and.
Speaker 10: You've already seen the House Conservatives say, you know, the
Speaker 10: deal that was negotiated last May with Kevin McCartney. A,
Speaker 10: he's not even a speaker. B.
Speaker 8: He's not even a congressman anymore.
Speaker 2: And then the next question is how long is Johnson
Speaker 2: going to be the speaker in DC?
Speaker 10: If you go to meetings with staff, they'll say, is
Speaker 10: it going to be six months or six years? The
Speaker 10: verdict the jury is very much out on that one,
Speaker 10: and it's a popular power of the game, which does
Speaker 10: not bode well. I think the honeymoon phase is over.
Speaker 10: I'm going to be really interested to see how members
Speaker 10: start reacting when they get back into town. It's impossible
Speaker 10: for about eight to twenty members of the far right
Speaker 10: to agree to any spending level. And we're not talking
Speaker 10: about huge chunks of change right now. The difference between
Speaker 10: the far right and the moderates in the Senate, which
Speaker 10: have overwhelmingly passed all twelve appropriations bills, is like five
Speaker 10: billion dollars, and we're talking about a one point five ish.
Speaker 8: Trillion dollar package.
Speaker 10: So for the difference to be twenty five billion dollars,
Speaker 10: it's like you know, me asking you for five bucks
Speaker 10: and should know. But they literally just don't have the
Speaker 10: votes for anything that sounds like yes. So those guys
Speaker 10: are always going to be voting no, which forces Speaker
Speaker 10: Johnson to constantly be negotiating with Democrats, which is of
Speaker 10: course anathma to the far right, but they are ironically
Speaker 10: the ones that are enforcing that reality on Speaker Johnson.
Speaker 10: So I hope you can make it through April. Obviously,
Speaker 10: we've seen how long a series of votes can go
Speaker 10: on the potential for another speaker, so I can tell
Speaker 10: drawn out. Nobody wants to do that, but memories stayed
Speaker 10: and maybe they've forgotten how uncomfortable that was in October.
Speaker 4: That's Henrietta Tree's managing partner at Veda Partners, and Tom,
Speaker 4: it looks like we're in for a wild ride in
Speaker 4: the coming year.
Speaker 1: Thank you, Kaylee. That was Bloomberg Sound on co host
Speaker 1: Kaylee Lines, and you can hear sound on weekdays one
Speaker 1: to three pm on Bloomberg Radio. And that does it
Speaker 1: for this edition of Bloomberg day Break Weekend. Join us
Speaker 1: again Monday morning at five am Wall Street Time for
Speaker 1: the latest on markets overseas and the news you need
Speaker 1: to start your day. I'm Tom Busby. Stay with us.
Speaker 1: Top stories and global business headlines are coming up right now.