October 3, 2025 • 37 mins
Bloomberg Daybreak Weekend with Host Tom Busby take a look at some of the stories we'll be tracking in the coming week.
- In the US – a look ahead to the impact of lumber and timber tariffs on housing, and President Donald Trump’s Pfizer deal on drugmakers.
- In the UK – a look ahead to the Nobel Prize decisions.
- In Asia – a look ahead to the impact of the Golden Week holiday.
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:10):
This is Bloomberg day Break Weekend, our global look at
the top stories in the coming week from our Daybreak
anchors all around the world. Straight ahead on the program,
and look at how tariffs on lumber and timber could
impact the US housing market. I'm Tom Busby in New York.
Speaker 3 (00:24):
I'm Caroline Hebge in London. What's in a prize, specifically
the Nobel Prize Decisions.
Speaker 4 (00:30):
I'm Dog Prisner looking at Chinese consumers during Golden Week
plus trouble with some Hong Kong real estate.
Speaker 1 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven to three year, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirias,
XM one twenty one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business App.
Speaker 2 (01:02):
Good day to you. I'm Tom Busby. We begin today's
program with a new batch of tariffs announced by President
Trump on imports of soft wood, timber, and lumber, as
well as levees on kitchen cabinets, vanities, and upholstered wood
products brought into the US. How will this impact the
housing market moving forward? And what about housing prices?
Speaker 5 (01:19):
For more?
Speaker 2 (01:20):
We're joined by Drew Redding, Bloomberg Intelligence US home building Analyst. Well, Drew,
thank you so much for being here, appreciated home builders.
Home buyers now, they've already been paying sky high prices,
elevated mortgage rates, they've been paying tariffs on imported kitchen appliances,
washers and dryers, and now October fourteenth, they'll be paying
ten percent levees on softwood, lumber and timber, twenty five
(01:42):
percent on kitchen cabinets, vanities, other pre assembled I mean,
this is looking This is not good, is it?
Speaker 6 (01:50):
Yeah? Well, certainly, you know, the consumer doesn't need higher
costs when it comes to housing, given the affordability constraints
that they've been under for the last several years. Just
to take a step back on the tariffs, to put
it in perspective, the US imports about thirteen million dollars
or seven percent roughly of the goods used in new
residential construction. So at the headline level, it's not necessarily
(02:13):
a massive piece. But you know, there are particular areas
where tariffs will be felt perhaps more than others. If
you look at the top of three countries that we
import from, it's China. That's about twenty seven percent of imports.
From there, we're talking about things like appliance, is lighting,
electrical components, hand tools. The second is Mexico and from
(02:33):
there we're primarily talking about gypsum products. So I think
drywall Mexico is about seventy two percent of imports there.
And then third, you know, which has really come into
focus now is Canada, which accounts for eighty five percent
of lumber imports. So when you put all this together,
the previously announced tariffs, you know, country specific fat and
(02:53):
on reciprocal tariffs, along with these newly announced tariffs, we
think that the costs, the total cost to a builder
will be about ten thousand dollars per home, which which
is a pretty staggering number. Now, we don't think the
builders will ultimately absorb all of these costs. I think,
you know, they'll probably be spread throughout the supply chain.
(03:14):
And when you think about the large public builders, they're
really better positioned in this environment given you know, their
scale now in terms of their ability to pass on
to consumers. You know, I think that could be tough.
And you know, you've got prices already coming down for
a lot of builders due to affordability, and then they're
still having to use an elevated degree of incentives, which
(03:35):
is accounted for as a reduction in salespace. So there's
a lot of moving pieces. But at the end of
the day, the point is that it becomes increasingly expensive
to build a home, and I.
Speaker 2 (03:45):
Mean this could really deter a lot of builders. Like
you said, we're not worried about the KB homes and
the Pulties of the world, but a lot of smaller
ones from constructing new homes, at least initially.
Speaker 5 (03:55):
Right.
Speaker 6 (03:56):
No, it's a good point. And you know why we
haven't seen a huge packed impact on you know, tariffs
to this point. One of the things we have heard,
and to your point, really from the smaller private builders,
is that there hasn't been a lot of certainty, so
they don't know what their costs are going to be.
When you don't know what your costs are going to be,
it's hard for you to plan out into the future
and put new production into the ground. So I do
(04:17):
think it is definitely more challenging for the smaller names
in the group. One thing that I think that's worth
pointing out on the lumber side of this is that
prior to this announcement of a ten percent tariff on
software imports, we already had duties on lumber coming in
from Canada. If you're talking about forty five percent on
Canadian lumber imports, which again is eighty five percent of
(04:40):
all the lumber imported into the US.
Speaker 2 (04:42):
Yeah, I mean it sounds like some of these Canadian
lumber makers, these these manufacturers could really be struggling now
if you know, sales get hurt.
Speaker 6 (04:51):
Yeah, it's a great point. And you know, the announcement
really came because the administration wanted to open an investigation
as to, you know, whether or not the lumber trade
was of risk to national security, which they determined that
it was. So the question becomes, well, can the US
produce enough lumber domestically to meet all the demand. And
(05:11):
I think the answer for now is no. And you know,
as I mentioned, we produced about seventy percent of the
lumber utilized in the US and to get that to
one hundred percent would really require a lot of time.
The National Association of home builders estimates you know, somewhere
around ten years to be able to achieve this. So
certainly no small feat.
Speaker 2 (05:29):
And not only the industrial or resilience, but also Trump's
had the high quality jobs that this would create. Would
they really be high quality jobs?
Speaker 6 (05:39):
I mean that remains to be seen. And like I said,
it's will take a lot of time to add new
capacity to the industry. But you know, there are a
lot of jobs along the supply train and in terms
of you know, just the not only jobs you're creating
at the mills, but logistics and you know, getting wood
to factories to job sites and things like that. So
(05:59):
it would certainly help.
Speaker 2 (06:00):
Now let's talk about the other tariffs, and these are big.
They're twenty five percent on on kitchen bathroom, Vanity's kitchen cabinets,
that type of thing. We know that Ethan Allen, Lazy
Boys source and manufacture a lot of their products in
the US, But there are big retailers that import a
ton of goods Wayfair William soonoma our Age formerly a
restoration hardware. I mean, they may really be impacted by
(06:22):
these tariffs, right, you.
Speaker 6 (06:23):
Know, I think from from their perspective, you know, the
impact isn't going to be as great as you might expect.
But if you think about the individual consumer who is
going out and making a single purchase, you know, on
a kitchen cabinet or vanity, and was looking for a
low cost option, all of a sudden to them that
becomes significantly more expensive. So there's I think there's a
big difference between how you know a home improvement retailer
(06:46):
can manage the situation versus individual consumer.
Speaker 2 (06:50):
A lot of challenges well our thanks to Drew Redding,
Bloomberg Intelligence US home Building analyst. We move next to
a turning point for big pharma. This past week, five
US negotiated a three year reprieve on drug import tariffs
in exchange for a promise to reduce what it charges
Medicaid for some prescription meds, also to price future drugs
(07:10):
on part with what it charges other wealthy nations, and
to sell certain drugs at discounted prices to the public. Now,
how might this impact the pharmaceutical space, what other drug
makers are working on their own deals, and what does
it mean for consumers. For all that, we're joined by
Madison Muller, Bloomberg Health reporter. Madison, thanks for being here.
Speaker 7 (07:28):
Thanks for having me. I appreciate it.
Speaker 2 (07:30):
Can you kind of detail the finer points of this
agreement with the White House? And I'm most curious about
trump RX. It sounds a little like his answer to Obamacare.
Speaker 7 (07:40):
But yeah, it's an interesting concept, and I think we
knew that they were working on something like this. I mean,
for the last few months, the administration has been talking
about direct to consumer websites and platforms. Some drug makers
had already started doing that. Eli Lilly, for example, has
Lily direct. Nova Nordisk has been doing this for some
of the real high demand drugs like GLP one weight
(08:02):
loss drugs, And so we knew the administration was thinking
about doing something like this, and its answer to one
of the biggest priorities in terms of healthcare is lowering
drug prices, and this is sort of one of the
one of multiple things that the administration thinks could help
address that by making a website where drug makers can
(08:23):
put their drugs on there and at a steep discount
to the list price and have consumers sort of directly
buy them from the manufacturers as a way to cut
drug prices. But it's an interesting concept, and cash pay
might not necessarily be super popular for other medications like
it has been for the GLP one weight loss drugs.
Speaker 2 (08:45):
Is that because so many of those other medications are so.
Speaker 7 (08:47):
Expensive exactly, and the insurance landscape for weight loss drugs
is quite patchy still, it's very difficult to get insurance coverage.
The drugs are expensive, so a lot of people are
willing to pay out of pocket for those medications. But
in terms of this Feiser deal, some of the medications
that we know that Pfizer will be discounting, like It's
blood thinner Eloquist, those are usually covered by insurance anyway,
(09:10):
so people with insurance will have coverage for that. There
wouldn't really be a reason for them to buy it
directly from the manufacturer on a website like trump Orex,
and those who don't have insurance, it's probably still going
to be pretty expensive for now.
Speaker 2 (09:25):
Some of the drugs that are made by Pfizer, by Lilly,
by Johnson and Johnson all made or mostly made in
the US. Let's talk about what Trump threatened to impose
on branded drugs from outside the US. A one hundred
percent tariff. Now, that's not going to help a whole
lot of consumers is.
Speaker 7 (09:41):
It right exactly. I mean, that's one thing that's been
sort of in conflict with the administration's efforts to lower
drug prices is if there are tariffs on pharmaceutical products,
that could end up raising drug prices because it will
make it a lot more expensive for manufacturers to make
these medications. And like you said, all of the big
US and you know, international drug makers have plants, have
(10:03):
manufacturing plants in the US. They're building more in the US,
but the pharmaceutical supply chain is really complex, and they
do have some elements of their manufacturing or supply outside
of the US. ELI Lilly, for example, makes the critical
first step in their weight loss and diabetes drugs Manjarro
and zepbound in Ireland and then they ship it here
and the rest of the manufacturing process happens here. So
(10:25):
tariffs really had, you know, huge potential implications for this industry.
And what Peiser has been able to do is negotiate
a three year reprieve and it's the assumption that other
drug makers are going to try to follow suit with this.
Speaker 2 (10:40):
Well, part Offiser's deal is they made a seventy billion
dollar pledge to expand manufacturing and research and development here.
So what is in Peiser's plans and what are some
of the other US manufacturers doing.
Speaker 7 (10:51):
Yeah, so, like we said, there are other US manufacturers
and international manufacturers that have pledged billions of dollars of investments.
Over the last couple of months we've seen I mean,
I think Lily was the first one back in February,
and since then there's been a lot of other pledges
to invest. And so right now, what we're hearing is
(11:13):
that these negotiations are sort of on hold for the
time being in terms of this one hundred percent tariffs
that Trump had threatened. And there was also this ongoing
two thirty two investigation, which is a national security investigation
into the pharmaceutical supply chain sort of as to lay
the groundwork for eventual tariffs. So we're hearing right now,
as these sort of deals are going on, that all
(11:35):
of that is on pause for the time being. And
I guess it was a couple of months ago the
Trump administration sent letters to seventeen drug makers laying out
a couple of specific demands, you know, to lower drug prices,
look into direct to consumer, you know, offer discounts through medicaid,
and so what we're seeing is Pfizer follow through on
(11:55):
some of those demands and make promises that they will
discount a lot of their drugs on this trump are
X website, that they'll just count drugs through medicaid, which
that it's sort of Actually for the industry was a
bit of a relief because they thought it was going
to be worse than this, and it could be worse
than this if there were sweeping most favored nation policies
(12:18):
or tariffs implemented, and so for Pfizer, actually it was
a good thing and there was some fault, you know,
I guess follow through for the rest of the industry
that this would be a good thing too well.
Speaker 2 (12:28):
A lot to look forward to in a lot of deals,
likely in the pipeline. Our thanks to Madison Muller, Bloomberg
Health Reporter, and coming up on Bloomberg Gay Break Weekend,
we'll look at the global political implications of the Nobel
Prize decisions. I'm Tom Busby and this is Bloomberg. This
(12:54):
is Bloomberg Gay Break Weekend, our global look ahead at
the top stories for investors in the coming week. I'm
Tom in New York. Up later in our program, a
look at the Golden Week holiday in China and what
it'll mean for consumer spending. But first, a new batch
of recipients for the Nobel Prize, one of the world's
most prestigious accolades, established in the will of Swedish chemist
(13:14):
and inventor Alfred Nobel to honor individuals who made outstanding
contributions to humankind. The awards have become an emblem of achievement,
even capturing the interest of US President Donald Trump. For more,
Let's go to London and bring in Bloomberg Daybreak Europe
anchor Caroline hepger Tom.
Speaker 3 (13:31):
It's no secret that President Trump has been courting the
idea of winning a Nobel Peace Prize for some time.
According to Bloomberg opinion columnist Andres Klouth, it's one of
the reasons he's been pushing so hard for a cease
far between Russia and Ukraine. Other political leaders, including the
Congolese president, have weighed into the debate, saying Trump will
(13:55):
have earned the award if he can end more than
three decades of conflict between Rwanda and the Democratic Republic
of Congo. And of course, previous US presidents have managed
to impress the Nobel Committee in the past. Prior winners
include Theodore Roosevelt, Jimmy Carter, and most recently Barack Obama
(14:15):
in two thousand and nine. The current president mentioned the
prize during his recent address to the United Nations General Assembly,
although he did remain philosophical about his chances of winning.
Speaker 8 (14:29):
I didn't think of it at the time because I
was too busy working to save millions of lives, that is,
the saving and stopping of these wars. But later I
realized that the United Nations wasn't there for us.
Speaker 9 (14:42):
They weren't there.
Speaker 8 (14:44):
I thought of it really after the fact, not during
these negotiations, which were not easy. That being the case,
what is the purpose of the United Nations? The UN
has such tremendous potential. I've always said it, such tremendous,
tremendous potential. But it's not even coming close to living
(15:05):
up to that potential for the most part, at least
for now. All they seem to do is write a
really strongly worded letter and then never follow that letter up.
It's empty words, and empty words don't solve war. The
only thing that solves war and wars is action. Now,
(15:26):
after ending all of these wars and also earlier negotiating
the Abraham Accords, which is a very big thing for
which our country received no credit, never receives credit. Everyone
says that I should get the Nobel Peace Prize for
each one of these achievements. But for me, the real
prize will be the sons and daughters who live to
(15:48):
grow up with the mothers and fathers, because millions of
people are no longer being killed in endless and unglorious wars.
Speaker 3 (15:59):
That Donald Trump speaking there at the UN General Assembly
in New York, so just how likely is it that
he'll walk away with Nobel recognition and how important is
the upcoming prize giving. It's something I've been discussing with
our Nordic managing editor Katy Poyan Palo and Stockholm bureau
chief Charles Daily. Charles, can I start with you Firstie?
(16:22):
So the Nobels are obviously hugely prestigious. They are known
around the world, just in terms of the history and
where we are for this year. To tell us a
bit about the history of the Nobels and how they've
come about.
Speaker 5 (16:35):
Yep, sure, I mean to do that. We have to
go back to eighteen ninety five and the Last Will
and Testament, of a Swedish engineer and chemist by the
name of Alfred Nobel, who is known really as well
as the Nobel Prizes, he's also known for inventing dynamite
as his claim to fame. In that will, he listed
five prizes for those who have conferred the greatest benefit
(16:58):
to mankind in the preceding year. And there were five
categories of prizes in the will physics, chemistry, physiology or medicine,
literature and peace, and they were first awarded in nineteen
oh one. Some years later, in nineteen sixty eight, however,
a prize was added in memory of Alfred Nobel, and
(17:20):
that was established by the central bank here in Sweden,
which is called the Risbank, and not surprisingly that is
called now the Economics Prize.
Speaker 3 (17:30):
So how important do you think it is then to
Swedish people.
Speaker 5 (17:35):
I think the fact that a Nobel Prize is seen
as you know, the most prestigious award in the world
in its field is really a source of national pride
for a country that, you know, let's be honest, is
only ten point five million people on the northern edges
of Europe. I think it's worth also noting that Sweden
is a nation that looks outward beyond its borders in
(17:58):
many respects. So the international attention that these prizes gone
is of huge importance to the country. Nobel Day on
December tenth, which is the anniversary of Nobel's death, is
when the prizes are awarded by the King and there
is a lavish banquet in Stockholm City Hall. And it's
probably fair to say that that is the biggest academic
(18:21):
and cultural highlight of the year in Sweden.
Speaker 3 (18:25):
So deliberations normally do take place in secret. So what
do we know about the process for this year.
Speaker 5 (18:34):
Yeah, the process for this year is as with other years.
So Nobel in his will listed the institutions responsible for
awarding the prize, for example the Royal Swedish Academy of
Sciences and for the Peace Prize it is a committee
of five elected by Norway's Parliament. Then there is an
approved list of nominators, for example former winners, members of
(18:58):
the Swedish Academy, or professors or chair people affiliated with universities,
and they can then put forward a name and a
voting committee then decides on the winner or winners. There
can only be three winners per prize. Is the maximum
number of winners per prize, and disclosure about nominations is
(19:20):
restricted for fifty years, so very a process shrouded in secrecy.
Speaker 3 (19:26):
So Katy, let me turn to you the history of
awarding the Peace Prize by Norway to foreign leaders. It
has at times been controversial.
Speaker 9 (19:37):
Well, absolutely, it's been controversial. So one thing to know
about this prize is you cannot ever give it to
a person that has deceased, And so living people tend
to after being awarded, continue their careers and lives, and
sometimes they do things that don't really kind of fit
(19:58):
in with the spirit of why they were awarded a
peace prize. One super well known example is two thousand
and nine when Barack Obama was awarded the Nobel Peace
Prize just nine months after becoming US president, and he
of course went on to take a lot of US
(20:18):
troops into Afghanistan.
Speaker 3 (20:20):
Yes, and of course we know that President Trump has
been talking about wanting to win the prize for some time,
and so again this perhaps put some pressure, adds some
pressure to these awards. When did we first find out
about his ambitions?
Speaker 9 (20:41):
Trump has been talking about this for almost a decade.
He keeps bringing up the fact that Obama was given
the prize and says, you know, if he were named Obama,
he would have been given this prize. In ten seconds.
Trump talks about having brokeered peace or helped end seven wars,
(21:04):
but many of these are actually a little bit questionable.
Speaker 3 (21:07):
Indeed, in terms of the political implications. Then the pressure,
I wonder whether that is being felt. And maybe also
we don't know were the US president to win, what
might be the implications in the fallout.
Speaker 9 (21:23):
I think the big question is what if he doesn't win.
This is where the main implication is or Norway. Really
very recently, Trump declared that not winning would represent a
big insult to our country. He there sort of applied
some pressure on the Norwegians. Norwegians are really worried about this.
(21:46):
They're bracing for what's happening if Trump doesn't win. Now,
if Trump were to win, I think a lot of
people would put to question the sort of foundation of
the Nobel Peace Prize and what it's done for. But
the same question has been raised with the previous winner.
As you know, Obama himself questioned his own.
Speaker 3 (22:08):
Victory indeed, But then, of course, the Peace Prize is
separate from the Norwegian government. So whilst there might be trepidation,
how does that factor into the kind of decision making.
Speaker 9 (22:20):
The committee is independent, we know that, and some of
the controversial decisions it's taken in the past were precisely
because it is independent. The Norwegian government wanted no conflict
with China in twenty ten, and yet the committee you know,
went and awarded the Chinese dissident that year.
Speaker 3 (22:39):
Charles, just coming back to you in our specific sphere,
there's always lots of interest in the prize in economics,
as well as the other sciences that are awarded, in
literature and so on. Again, we don't know very much
about those awards, But what do you think might be
in the mix here for all of those of the
(23:00):
hugely important nobels.
Speaker 5 (23:03):
That's a very difficult question because it really is hard
to name names. I mean, the betting odds at the
moment are really only available for the Peace and Literature prizes.
The favorites for the literature this year include the Australian
fiction writer Gerald Mernaine and also the Mexican author Christina
Rivera Gaza. So yeah, in conclusion, it's really hard to
(23:29):
sort of say were we think the winners might be.
It might be worth noting though, however, in terms of
the science related awards, prizes are typically shared by multiple
scholars and they often have an affiliation to universities on
the respective research departments. The North America and Europe tend
to dominate the science related prizes as well. And I
(23:53):
think you know, one area that's caught a lot of
media attention rightly in recent years has been the lack
of women representation on the awards. And you know, I
don't think that necessarily reflects badly on the Nobel committee
per se, but probably is more a reflection of the
barriers that women face in working and progressing through the
(24:16):
scientific community.
Speaker 3 (24:18):
So my thanks there to Bloomberg's Charles Daily and Katty
poyan Palo. We'll have full coverage of the Nobel Prize
ceremonies across at Bloomberg platforms. I'm Caroline Hepgar here in
London and you can catch us every weekday morning for
Blueberg Daybreak you at beginning at six am in London,
that's one am on Wall Street.
Speaker 2 (24:37):
Tom, Thank you Caroline, and coming up on Bloomberg Daybreak weekend,
I'll look at China's Golden Week holiday and what it
could reveal about the strength of the Chinese consumer. I'm
Tom Busby and this is Bloomberg. This is Bloomberg day
(25:00):
Break Weekend, our global look ahead of the top stories
for investors in the coming week. I'm Tom Busby in
New York. In China, the Golden Week holiday is now underway.
It began last Wednesday with National Day and runs through
the mid Autumn festival, and the government is hoping Chinese
consumers will celebrate for more. Let's get to the host
of the Daybreak Asia podcast, Doug Krisner.
Speaker 4 (25:22):
Tom, Golden Week is regarded as the most important travel
period in China. Authorities are expecting two point four billion
people to travel during this eight day break, and needless
to say, the holiday represents a major opportunity for more
domestic consumption. Joining me now is Bloomberg's Catherine Lim, retail
analyst for Bloomberg Intelligence. She's on the line from Singapore.
(25:45):
Thank you so much for making time to chat with me.
Can you give me a sense on the extent to
which there is optimism over the outlook for consumer spending
this year?
Speaker 8 (25:55):
Right?
Speaker 10 (25:55):
You know, happy to be here and gen as you've
highlighted we are into the world holiday period. Over eight days,
you're gonna see celebrations not just for National Day, but
also the mid Autumn festival, which is a traditional, you
know event that family and friends together. So it was
(26:15):
very timely seeing how some of the cities are issuing
consumption vouchers out to their consumers so that you could
stimulate a little bit more of that spending, which admittedly
had put on a dreg in August because there was
a calender shift in that very important mid autumn festival
(26:38):
that I've just talked about, where by family and friends gether.
Speaker 4 (26:41):
I'm wondering about sentiment right now, and maybe we can
tie to the equity markets in China which have been
performing very well. Is that expected to provide some positivity
to sentiment?
Speaker 2 (26:53):
Do you think?
Speaker 10 (26:55):
Well, definitely, I guess you know, when you look at
asset and asset value creation, it's either property if not.
Do you know the equity market, and I think in
the last two to three years, both of these market
hasn't been you know, in the best of shape. In
year to date, equity market the rarely definitely brings relieved
(27:18):
and you know, does help stimulate that centiment if you
ask me.
Speaker 4 (27:23):
So, when I think of destinations in China, one of
the things that comes to mind is Macau and the casinos.
Are people feeling reasonably optimistic about casino business this year
and traffic at the big places, well.
Speaker 10 (27:37):
We've also seen traffic, and I would say, you know,
the table roles, etc. Picking up in terms of our crowd,
so that is a good sign. On the other hand,
what I'll say is that you know, a lot of
these spenders, whether your gamblers or your shoppers per se,
there is more discerning spending that we have observed, So
(28:00):
I'm not sure whether we should be putting that much
bet on Macau. Similarly, you know, even Hong Kong per se,
I would say that, you know, after the recent typhoon
hits and we are anticipating another typhoon hitting you know,
the South over the next ten days, et cetera, it
may not actually be you know, the biggest thing for
(28:23):
these two autonomous regions within the country itself. I'm a
little more optimistic about domestic tourism within the country, as
you know, more of the shoppers or consumers take a
break out into you know, the suburban regions and there
are more camping sites as well as you know, areas
(28:45):
that consumers can take a break from the city.
Speaker 4 (28:49):
So you mentioned a moment ago that domestic governments in
China are handing out vouchers and coupons and things to
kind of stimulate domestic consumption. Give me a sense of
how they are applied and whether we should be looking
for kind of high frequency data among retailers, whether it's
more a story about restaurants, whether it's a story about
(29:11):
air travel.
Speaker 10 (29:13):
Right, you know, for restaurants, definitely, because you know, we
are still seeing lots of promotions ongoing for platforms like
Ali Baba, may twe and JD dot Com when it
comes to food delivery and quick commerce. You know, you
would have heard of the competition that was ongoing among
(29:36):
these three companies since the beginning, since the middle of
this year itself, and it continues to actually intensify as
we go into the holiday season again, you know, all
the gatherings that's going on now that will likely come
through and on a more intensified level into October and November. Doug,
(29:58):
Let's not forget that we are now very close to
the start of the Singles Day shopping festival, which is
essentially a near two month long shopping festival, and it
will kick start sometimes on the seventh of October, which
is essentially next week itself. Once the consumers returns from
(30:20):
the holidays, they may actually be shopping more online. So
I would say that, going back to your earlier point
about consumption vouchers, it's definitely good to actually have an
extra vouchure on hand to spend. But we'll let's look
at the discretionary side of things itself. Those spending may
(30:41):
actually come through in October and November, particularly during the
Singles Day promotions.
Speaker 4 (30:48):
Catherine will leave it there. Thank you so very much,
Bloomberg's Catherine Lim, retail analyst for Bloomberg Intelligence. Catherine joining
us from Singapore, So we go from the Chinese consumer
to the challenges facing some of the most wealthy families
in Hong Kong. Joining me now is Bloomberg Shirley Joo.
Shirley and her team have been reporting on how trouble
(31:10):
in several high profile real estate projects is creating financial
risk for some very wealthy families in China. Shirley, thank
you for making time to chat with me before we
get to specific examples. Can you help me understand the
state of the Hong Kong real estate market right now?
Speaker 11 (31:29):
So, Hong Kong's property market has been in a crisis
since COVID. It's mainly to do with the rising interest
rate globally and the slowing economy in China. A lot
of developers borrowed a lot of money before COVID and
(31:49):
before you know, Hong Kong sort of plunged into years
of political turmoil and the COVID isolation around the time
of twenty seventeen and twenty eighteen. That was when you know,
a lot of developers and a lot of smaller businesses
borrowed a lot of money and invested heavily into the
(32:10):
real estate sector. But then, you know, during COVID, people
stopped traveling and the retail businesses really did very badly.
And after COVID, China's economy started to slow down, and
that really put a lot of pressure on developers and
the businesses that sort of went on in the real
(32:32):
estate sector. Today, real estate prices, we have data showing
that it's about thirty percent down from the pre COVID level.
Speaker 4 (32:43):
So can you give me an example of how a
wealthy family in Hong Kong made a big bet on
a major real estate project, only to see that project
underperform in a major way mis expectations wildly.
Speaker 11 (32:58):
New World is one of the most high profile examples
of this. They borrowed a lot of money to invest
in developing several major projects, including a huge shopping mall
and hotel complex near Hong Kong's famous Victoria Harbor and
mega shopping mall near Hong Kong's International Airport, as well
(33:22):
as a sports park near Hong Kong's old Airport. And
they did that in twenty seventeen and twenty eighteen, and
they spent a lot of money, fueled by debt, and
then in twenty nineteen, Hong Kong started to enter this
prolonged period of political turmoil and COVID isolation, and after COVID,
(33:44):
Hong Kong's economy didn't rebound, it slowed down, so a
lot of these projects didn't really have time to materialize.
They didn't have the chance to generate cash for New
World to pay off their debt, and that's why New
World's step problem really emerged over the past two years
and it was pushed to the brink of default. And
(34:07):
it had to line up Hong Kong's biggest ever refinancing
with dozens of banks, and it put it off. But
then banks started to feel that they had too much
exposure on your world.
Speaker 4 (34:21):
One of the things that I think is very interesting
here in terms of context is the notion of family
empires being involved here. It's not just a company. It's
almost like a dynasty, isn't it. And you mentioned in
your piece this issue which I found very interesting the
notion of self correcting. So when a family makes a mistake,
(34:41):
it's the dynamics of the family sometimes that can make
the correcting process even more challenging, right.
Speaker 11 (34:48):
Right, Yeah, So the issue with a lot of family
owned businesses is that a lot of the decision making
is sometimes down to the personal whim of family members.
Even though they hired professional managers to run their companies,
the final decision making will be swighed by the will
(35:09):
of family members, and that's making management more difficult and
less professional. And in New World's case, because they expanded
so aggressively in twenty seventeen and twenty eighteen and the
timing was really bad. So now there that problem really showed,
and that's really raising an alarm bell for a lot
(35:33):
of other family owned businesses in Hong Kong and around
the world as well.
Speaker 4 (35:38):
So we know on the mainland, the government's been very
concerned about problems with the property market. How is the
local government in Hong Kong viewing this situation right now?
Are people very concerned?
Speaker 11 (35:50):
People are concerned, and that was why you would see
reports about Hong Kong's mondatary Authority actually following up on
New wor World refinancing effort. You know, there were reports
about Hong Kong Monetary Authority calling banks up to check
on the status on their refinancing arrangement with New World,
(36:11):
and banks felt that they didn't want to be the
one that make New World default and trigger the rippling
effect on Hong Kong's economy. So there is this saying
that New World is too big to fail, and that
really showed during its refinancing effort with the banks and
(36:32):
with the involvement of Hong Kong's monetary authorities.
Speaker 4 (36:35):
When I think about the residential market in Hong Kong,
I know that for years there have been challenges trying
to add to new supplies. So many restrictions on developing
land and yet here we have a situation where commercial
developers don't seem to have any problems. Can you imagine
a world where things get turned and so that perhaps
(36:55):
in a way, these companies begin to focus their energy,
maybe more on residential property than on commercial property.
Speaker 11 (37:03):
That's exactly what New World is doing right now. So
now they are refocusing on selling and building more residential
projects and from selling apartments that will generate money for
them to pay down debt. So that's their main strategy
right now.
Speaker 4 (37:22):
Shirley, we'll leave it there. Thank you so very much,
Bloomberg Shirley Joe in Hong Kong, and I'm Doug Chrisner.
Catch us weekdays for the Daybreak Asia podcast. It's available
wherever you get your podcast. Tom.
Speaker 2 (37:34):
Thanks Doug, and that does it for this edition of
Bloomberg day Break Weekend. Join us again Monday morning at
five am Wall Street Time for the latest on markets
overseas and the news you need to start your day.
I'm Tom Buzzby. Stay with us. Top stories and global
business headlines are coming up right now.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:10):
This is Bloomberg day Break Weekend, our global look at
the top stories in the coming week from our Daybreak
anchors all around the world. Straight ahead on the program,
and look at how tariffs on lumber and timber could
impact the US housing market. I'm Tom Busby in New York.
Speaker 3 (00:24):
I'm Caroline Hebge in London. What's in a prize, specifically
the Nobel Prize Decisions.
Speaker 4 (00:30):
I'm Dog Prisner looking at Chinese consumers during Golden Week
plus trouble with some Hong Kong real estate.
Speaker 1 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven to three year, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirias,
XM one twenty one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business App.
Speaker 2 (01:02):
Good day to you. I'm Tom Busby. We begin today's
program with a new batch of tariffs announced by President
Trump on imports of soft wood, timber, and lumber, as
well as levees on kitchen cabinets, vanities, and upholstered wood
products brought into the US. How will this impact the
housing market moving forward? And what about housing prices?
Speaker 5 (01:19):
For more?
Speaker 2 (01:20):
We're joined by Drew Redding, Bloomberg Intelligence US home building Analyst. Well, Drew,
thank you so much for being here, appreciated home builders.
Home buyers now, they've already been paying sky high prices,
elevated mortgage rates, they've been paying tariffs on imported kitchen appliances,
washers and dryers, and now October fourteenth, they'll be paying
ten percent levees on softwood, lumber and timber, twenty five
(01:42):
percent on kitchen cabinets, vanities, other pre assembled I mean,
this is looking This is not good, is it?
Speaker 6 (01:50):
Yeah? Well, certainly, you know, the consumer doesn't need higher
costs when it comes to housing, given the affordability constraints
that they've been under for the last several years. Just
to take a step back on the tariffs, to put
it in perspective, the US imports about thirteen million dollars
or seven percent roughly of the goods used in new
residential construction. So at the headline level, it's not necessarily
(02:13):
a massive piece. But you know, there are particular areas
where tariffs will be felt perhaps more than others. If
you look at the top of three countries that we
import from, it's China. That's about twenty seven percent of imports.
From there, we're talking about things like appliance, is lighting,
electrical components, hand tools. The second is Mexico and from
(02:33):
there we're primarily talking about gypsum products. So I think
drywall Mexico is about seventy two percent of imports there.
And then third, you know, which has really come into
focus now is Canada, which accounts for eighty five percent
of lumber imports. So when you put all this together,
the previously announced tariffs, you know, country specific fat and
(02:53):
on reciprocal tariffs, along with these newly announced tariffs, we
think that the costs, the total cost to a builder
will be about ten thousand dollars per home, which which
is a pretty staggering number. Now, we don't think the
builders will ultimately absorb all of these costs. I think,
you know, they'll probably be spread throughout the supply chain.
(03:14):
And when you think about the large public builders, they're
really better positioned in this environment given you know, their
scale now in terms of their ability to pass on
to consumers. You know, I think that could be tough.
And you know, you've got prices already coming down for
a lot of builders due to affordability, and then they're
still having to use an elevated degree of incentives, which
(03:35):
is accounted for as a reduction in salespace. So there's
a lot of moving pieces. But at the end of
the day, the point is that it becomes increasingly expensive
to build a home, and I.
Speaker 2 (03:45):
Mean this could really deter a lot of builders. Like
you said, we're not worried about the KB homes and
the Pulties of the world, but a lot of smaller
ones from constructing new homes, at least initially.
Speaker 5 (03:55):
Right.
Speaker 6 (03:56):
No, it's a good point. And you know why we
haven't seen a huge packed impact on you know, tariffs
to this point. One of the things we have heard,
and to your point, really from the smaller private builders,
is that there hasn't been a lot of certainty, so
they don't know what their costs are going to be.
When you don't know what your costs are going to be,
it's hard for you to plan out into the future
and put new production into the ground. So I do
(04:17):
think it is definitely more challenging for the smaller names
in the group. One thing that I think that's worth
pointing out on the lumber side of this is that
prior to this announcement of a ten percent tariff on
software imports, we already had duties on lumber coming in
from Canada. If you're talking about forty five percent on
Canadian lumber imports, which again is eighty five percent of
(04:40):
all the lumber imported into the US.
Speaker 2 (04:42):
Yeah, I mean it sounds like some of these Canadian
lumber makers, these these manufacturers could really be struggling now
if you know, sales get hurt.
Speaker 6 (04:51):
Yeah, it's a great point. And you know, the announcement
really came because the administration wanted to open an investigation
as to, you know, whether or not the lumber trade
was of risk to national security, which they determined that
it was. So the question becomes, well, can the US
produce enough lumber domestically to meet all the demand. And
(05:11):
I think the answer for now is no. And you know,
as I mentioned, we produced about seventy percent of the
lumber utilized in the US and to get that to
one hundred percent would really require a lot of time.
The National Association of home builders estimates you know, somewhere
around ten years to be able to achieve this. So
certainly no small feat.
Speaker 2 (05:29):
And not only the industrial or resilience, but also Trump's
had the high quality jobs that this would create. Would
they really be high quality jobs?
Speaker 6 (05:39):
I mean that remains to be seen. And like I said,
it's will take a lot of time to add new
capacity to the industry. But you know, there are a
lot of jobs along the supply train and in terms
of you know, just the not only jobs you're creating
at the mills, but logistics and you know, getting wood
to factories to job sites and things like that. So
(05:59):
it would certainly help.
Speaker 2 (06:00):
Now let's talk about the other tariffs, and these are big.
They're twenty five percent on on kitchen bathroom, Vanity's kitchen cabinets,
that type of thing. We know that Ethan Allen, Lazy
Boys source and manufacture a lot of their products in
the US, But there are big retailers that import a
ton of goods Wayfair William soonoma our Age formerly a
restoration hardware. I mean, they may really be impacted by
(06:22):
these tariffs, right, you.
Speaker 6 (06:23):
Know, I think from from their perspective, you know, the
impact isn't going to be as great as you might expect.
But if you think about the individual consumer who is
going out and making a single purchase, you know, on
a kitchen cabinet or vanity, and was looking for a
low cost option, all of a sudden to them that
becomes significantly more expensive. So there's I think there's a
big difference between how you know a home improvement retailer
(06:46):
can manage the situation versus individual consumer.
Speaker 2 (06:50):
A lot of challenges well our thanks to Drew Redding,
Bloomberg Intelligence US home Building analyst. We move next to
a turning point for big pharma. This past week, five
US negotiated a three year reprieve on drug import tariffs
in exchange for a promise to reduce what it charges
Medicaid for some prescription meds, also to price future drugs
(07:10):
on part with what it charges other wealthy nations, and
to sell certain drugs at discounted prices to the public. Now,
how might this impact the pharmaceutical space, what other drug
makers are working on their own deals, and what does
it mean for consumers. For all that, we're joined by
Madison Muller, Bloomberg Health reporter. Madison, thanks for being here.
Speaker 7 (07:28):
Thanks for having me. I appreciate it.
Speaker 2 (07:30):
Can you kind of detail the finer points of this
agreement with the White House? And I'm most curious about
trump RX. It sounds a little like his answer to Obamacare.
Speaker 7 (07:40):
But yeah, it's an interesting concept, and I think we
knew that they were working on something like this. I mean,
for the last few months, the administration has been talking
about direct to consumer websites and platforms. Some drug makers
had already started doing that. Eli Lilly, for example, has
Lily direct. Nova Nordisk has been doing this for some
of the real high demand drugs like GLP one weight
(08:02):
loss drugs, And so we knew the administration was thinking
about doing something like this, and its answer to one
of the biggest priorities in terms of healthcare is lowering
drug prices, and this is sort of one of the
one of multiple things that the administration thinks could help
address that by making a website where drug makers can
(08:23):
put their drugs on there and at a steep discount
to the list price and have consumers sort of directly
buy them from the manufacturers as a way to cut
drug prices. But it's an interesting concept, and cash pay
might not necessarily be super popular for other medications like
it has been for the GLP one weight loss drugs.
Speaker 2 (08:45):
Is that because so many of those other medications are so.
Speaker 7 (08:47):
Expensive exactly, and the insurance landscape for weight loss drugs
is quite patchy still, it's very difficult to get insurance coverage.
The drugs are expensive, so a lot of people are
willing to pay out of pocket for those medications. But
in terms of this Feiser deal, some of the medications
that we know that Pfizer will be discounting, like It's
blood thinner Eloquist, those are usually covered by insurance anyway,
(09:10):
so people with insurance will have coverage for that. There
wouldn't really be a reason for them to buy it
directly from the manufacturer on a website like trump Orex,
and those who don't have insurance, it's probably still going
to be pretty expensive for now.
Speaker 2 (09:25):
Some of the drugs that are made by Pfizer, by Lilly,
by Johnson and Johnson all made or mostly made in
the US. Let's talk about what Trump threatened to impose
on branded drugs from outside the US. A one hundred
percent tariff. Now, that's not going to help a whole
lot of consumers is.
Speaker 7 (09:41):
It right exactly. I mean, that's one thing that's been
sort of in conflict with the administration's efforts to lower
drug prices is if there are tariffs on pharmaceutical products,
that could end up raising drug prices because it will
make it a lot more expensive for manufacturers to make
these medications. And like you said, all of the big
US and you know, international drug makers have plants, have
(10:03):
manufacturing plants in the US. They're building more in the US,
but the pharmaceutical supply chain is really complex, and they
do have some elements of their manufacturing or supply outside
of the US. ELI Lilly, for example, makes the critical
first step in their weight loss and diabetes drugs Manjarro
and zepbound in Ireland and then they ship it here
and the rest of the manufacturing process happens here. So
(10:25):
tariffs really had, you know, huge potential implications for this industry.
And what Peiser has been able to do is negotiate
a three year reprieve and it's the assumption that other
drug makers are going to try to follow suit with this.
Speaker 2 (10:40):
Well, part Offiser's deal is they made a seventy billion
dollar pledge to expand manufacturing and research and development here.
So what is in Peiser's plans and what are some
of the other US manufacturers doing.
Speaker 7 (10:51):
Yeah, so, like we said, there are other US manufacturers
and international manufacturers that have pledged billions of dollars of investments.
Over the last couple of months we've seen I mean,
I think Lily was the first one back in February,
and since then there's been a lot of other pledges
to invest. And so right now, what we're hearing is
(11:13):
that these negotiations are sort of on hold for the
time being in terms of this one hundred percent tariffs
that Trump had threatened. And there was also this ongoing
two thirty two investigation, which is a national security investigation
into the pharmaceutical supply chain sort of as to lay
the groundwork for eventual tariffs. So we're hearing right now,
as these sort of deals are going on, that all
(11:35):
of that is on pause for the time being. And
I guess it was a couple of months ago the
Trump administration sent letters to seventeen drug makers laying out
a couple of specific demands, you know, to lower drug prices,
look into direct to consumer, you know, offer discounts through medicaid,
and so what we're seeing is Pfizer follow through on
(11:55):
some of those demands and make promises that they will
discount a lot of their drugs on this trump are
X website, that they'll just count drugs through medicaid, which
that it's sort of Actually for the industry was a
bit of a relief because they thought it was going
to be worse than this, and it could be worse
than this if there were sweeping most favored nation policies
(12:18):
or tariffs implemented, and so for Pfizer, actually it was
a good thing and there was some fault, you know,
I guess follow through for the rest of the industry
that this would be a good thing too well.
Speaker 2 (12:28):
A lot to look forward to in a lot of deals,
likely in the pipeline. Our thanks to Madison Muller, Bloomberg
Health Reporter, and coming up on Bloomberg Gay Break Weekend,
we'll look at the global political implications of the Nobel
Prize decisions. I'm Tom Busby and this is Bloomberg. This
(12:54):
is Bloomberg Gay Break Weekend, our global look ahead at
the top stories for investors in the coming week. I'm
Tom in New York. Up later in our program, a
look at the Golden Week holiday in China and what
it'll mean for consumer spending. But first, a new batch
of recipients for the Nobel Prize, one of the world's
most prestigious accolades, established in the will of Swedish chemist
(13:14):
and inventor Alfred Nobel to honor individuals who made outstanding
contributions to humankind. The awards have become an emblem of achievement,
even capturing the interest of US President Donald Trump. For more,
Let's go to London and bring in Bloomberg Daybreak Europe
anchor Caroline hepger Tom.
Speaker 3 (13:31):
It's no secret that President Trump has been courting the
idea of winning a Nobel Peace Prize for some time.
According to Bloomberg opinion columnist Andres Klouth, it's one of
the reasons he's been pushing so hard for a cease
far between Russia and Ukraine. Other political leaders, including the
Congolese president, have weighed into the debate, saying Trump will
(13:55):
have earned the award if he can end more than
three decades of conflict between Rwanda and the Democratic Republic
of Congo. And of course, previous US presidents have managed
to impress the Nobel Committee in the past. Prior winners
include Theodore Roosevelt, Jimmy Carter, and most recently Barack Obama
(14:15):
in two thousand and nine. The current president mentioned the
prize during his recent address to the United Nations General Assembly,
although he did remain philosophical about his chances of winning.
Speaker 8 (14:29):
I didn't think of it at the time because I
was too busy working to save millions of lives, that is,
the saving and stopping of these wars. But later I
realized that the United Nations wasn't there for us.
Speaker 9 (14:42):
They weren't there.
Speaker 8 (14:44):
I thought of it really after the fact, not during
these negotiations, which were not easy. That being the case,
what is the purpose of the United Nations? The UN
has such tremendous potential. I've always said it, such tremendous,
tremendous potential. But it's not even coming close to living
(15:05):
up to that potential for the most part, at least
for now. All they seem to do is write a
really strongly worded letter and then never follow that letter up.
It's empty words, and empty words don't solve war. The
only thing that solves war and wars is action. Now,
(15:26):
after ending all of these wars and also earlier negotiating
the Abraham Accords, which is a very big thing for
which our country received no credit, never receives credit. Everyone
says that I should get the Nobel Peace Prize for
each one of these achievements. But for me, the real
prize will be the sons and daughters who live to
(15:48):
grow up with the mothers and fathers, because millions of
people are no longer being killed in endless and unglorious wars.
Speaker 3 (15:59):
That Donald Trump speaking there at the UN General Assembly
in New York, so just how likely is it that
he'll walk away with Nobel recognition and how important is
the upcoming prize giving. It's something I've been discussing with
our Nordic managing editor Katy Poyan Palo and Stockholm bureau
chief Charles Daily. Charles, can I start with you Firstie?
(16:22):
So the Nobels are obviously hugely prestigious. They are known
around the world, just in terms of the history and
where we are for this year. To tell us a
bit about the history of the Nobels and how they've
come about.
Speaker 5 (16:35):
Yep, sure, I mean to do that. We have to
go back to eighteen ninety five and the Last Will
and Testament, of a Swedish engineer and chemist by the
name of Alfred Nobel, who is known really as well
as the Nobel Prizes, he's also known for inventing dynamite
as his claim to fame. In that will, he listed
five prizes for those who have conferred the greatest benefit
(16:58):
to mankind in the preceding year. And there were five
categories of prizes in the will physics, chemistry, physiology or medicine,
literature and peace, and they were first awarded in nineteen
oh one. Some years later, in nineteen sixty eight, however,
a prize was added in memory of Alfred Nobel, and
(17:20):
that was established by the central bank here in Sweden,
which is called the Risbank, and not surprisingly that is
called now the Economics Prize.
Speaker 3 (17:30):
So how important do you think it is then to
Swedish people.
Speaker 5 (17:35):
I think the fact that a Nobel Prize is seen
as you know, the most prestigious award in the world
in its field is really a source of national pride
for a country that, you know, let's be honest, is
only ten point five million people on the northern edges
of Europe. I think it's worth also noting that Sweden
is a nation that looks outward beyond its borders in
(17:58):
many respects. So the international attention that these prizes gone
is of huge importance to the country. Nobel Day on
December tenth, which is the anniversary of Nobel's death, is
when the prizes are awarded by the King and there
is a lavish banquet in Stockholm City Hall. And it's
probably fair to say that that is the biggest academic
(18:21):
and cultural highlight of the year in Sweden.
Speaker 3 (18:25):
So deliberations normally do take place in secret. So what
do we know about the process for this year.
Speaker 5 (18:34):
Yeah, the process for this year is as with other years.
So Nobel in his will listed the institutions responsible for
awarding the prize, for example the Royal Swedish Academy of
Sciences and for the Peace Prize it is a committee
of five elected by Norway's Parliament. Then there is an
approved list of nominators, for example former winners, members of
(18:58):
the Swedish Academy, or professors or chair people affiliated with universities,
and they can then put forward a name and a
voting committee then decides on the winner or winners. There
can only be three winners per prize. Is the maximum
number of winners per prize, and disclosure about nominations is
(19:20):
restricted for fifty years, so very a process shrouded in secrecy.
Speaker 3 (19:26):
So Katy, let me turn to you the history of
awarding the Peace Prize by Norway to foreign leaders. It
has at times been controversial.
Speaker 9 (19:37):
Well, absolutely, it's been controversial. So one thing to know
about this prize is you cannot ever give it to
a person that has deceased, And so living people tend
to after being awarded, continue their careers and lives, and
sometimes they do things that don't really kind of fit
(19:58):
in with the spirit of why they were awarded a
peace prize. One super well known example is two thousand
and nine when Barack Obama was awarded the Nobel Peace
Prize just nine months after becoming US president, and he
of course went on to take a lot of US
(20:18):
troops into Afghanistan.
Speaker 3 (20:20):
Yes, and of course we know that President Trump has
been talking about wanting to win the prize for some time,
and so again this perhaps put some pressure, adds some
pressure to these awards. When did we first find out
about his ambitions?
Speaker 9 (20:41):
Trump has been talking about this for almost a decade.
He keeps bringing up the fact that Obama was given
the prize and says, you know, if he were named Obama,
he would have been given this prize. In ten seconds.
Trump talks about having brokeered peace or helped end seven wars,
(21:04):
but many of these are actually a little bit questionable.
Speaker 3 (21:07):
Indeed, in terms of the political implications. Then the pressure,
I wonder whether that is being felt. And maybe also
we don't know were the US president to win, what
might be the implications in the fallout.
Speaker 9 (21:23):
I think the big question is what if he doesn't win.
This is where the main implication is or Norway. Really
very recently, Trump declared that not winning would represent a
big insult to our country. He there sort of applied
some pressure on the Norwegians. Norwegians are really worried about this.
(21:46):
They're bracing for what's happening if Trump doesn't win. Now,
if Trump were to win, I think a lot of
people would put to question the sort of foundation of
the Nobel Peace Prize and what it's done for. But
the same question has been raised with the previous winner.
As you know, Obama himself questioned his own.
Speaker 3 (22:08):
Victory indeed, But then, of course, the Peace Prize is
separate from the Norwegian government. So whilst there might be trepidation,
how does that factor into the kind of decision making.
Speaker 9 (22:20):
The committee is independent, we know that, and some of
the controversial decisions it's taken in the past were precisely
because it is independent. The Norwegian government wanted no conflict
with China in twenty ten, and yet the committee you know,
went and awarded the Chinese dissident that year.
Speaker 3 (22:39):
Charles, just coming back to you in our specific sphere,
there's always lots of interest in the prize in economics,
as well as the other sciences that are awarded, in
literature and so on. Again, we don't know very much
about those awards, But what do you think might be
in the mix here for all of those of the
(23:00):
hugely important nobels.
Speaker 5 (23:03):
That's a very difficult question because it really is hard
to name names. I mean, the betting odds at the
moment are really only available for the Peace and Literature prizes.
The favorites for the literature this year include the Australian
fiction writer Gerald Mernaine and also the Mexican author Christina
Rivera Gaza. So yeah, in conclusion, it's really hard to
(23:29):
sort of say were we think the winners might be.
It might be worth noting though, however, in terms of
the science related awards, prizes are typically shared by multiple
scholars and they often have an affiliation to universities on
the respective research departments. The North America and Europe tend
to dominate the science related prizes as well. And I
(23:53):
think you know, one area that's caught a lot of
media attention rightly in recent years has been the lack
of women representation on the awards. And you know, I
don't think that necessarily reflects badly on the Nobel committee
per se, but probably is more a reflection of the
barriers that women face in working and progressing through the
(24:16):
scientific community.
Speaker 3 (24:18):
So my thanks there to Bloomberg's Charles Daily and Katty
poyan Palo. We'll have full coverage of the Nobel Prize
ceremonies across at Bloomberg platforms. I'm Caroline Hepgar here in
London and you can catch us every weekday morning for
Blueberg Daybreak you at beginning at six am in London,
that's one am on Wall Street.
Speaker 2 (24:37):
Tom, Thank you Caroline, and coming up on Bloomberg Daybreak weekend,
I'll look at China's Golden Week holiday and what it
could reveal about the strength of the Chinese consumer. I'm
Tom Busby and this is Bloomberg. This is Bloomberg day
(25:00):
Break Weekend, our global look ahead of the top stories
for investors in the coming week. I'm Tom Busby in
New York. In China, the Golden Week holiday is now underway.
It began last Wednesday with National Day and runs through
the mid Autumn festival, and the government is hoping Chinese
consumers will celebrate for more. Let's get to the host
of the Daybreak Asia podcast, Doug Krisner.
Speaker 4 (25:22):
Tom, Golden Week is regarded as the most important travel
period in China. Authorities are expecting two point four billion
people to travel during this eight day break, and needless
to say, the holiday represents a major opportunity for more
domestic consumption. Joining me now is Bloomberg's Catherine Lim, retail
analyst for Bloomberg Intelligence. She's on the line from Singapore.
(25:45):
Thank you so much for making time to chat with me.
Can you give me a sense on the extent to
which there is optimism over the outlook for consumer spending
this year?
Speaker 8 (25:55):
Right?
Speaker 10 (25:55):
You know, happy to be here and gen as you've
highlighted we are into the world holiday period. Over eight days,
you're gonna see celebrations not just for National Day, but
also the mid Autumn festival, which is a traditional, you
know event that family and friends together. So it was
(26:15):
very timely seeing how some of the cities are issuing
consumption vouchers out to their consumers so that you could
stimulate a little bit more of that spending, which admittedly
had put on a dreg in August because there was
a calender shift in that very important mid autumn festival
(26:38):
that I've just talked about, where by family and friends gether.
Speaker 4 (26:41):
I'm wondering about sentiment right now, and maybe we can
tie to the equity markets in China which have been
performing very well. Is that expected to provide some positivity
to sentiment?
Speaker 2 (26:53):
Do you think?
Speaker 10 (26:55):
Well, definitely, I guess you know, when you look at
asset and asset value creation, it's either property if not.
Do you know the equity market, and I think in
the last two to three years, both of these market
hasn't been you know, in the best of shape. In
year to date, equity market the rarely definitely brings relieved
(27:18):
and you know, does help stimulate that centiment if you
ask me.
Speaker 4 (27:23):
So, when I think of destinations in China, one of
the things that comes to mind is Macau and the casinos.
Are people feeling reasonably optimistic about casino business this year
and traffic at the big places, well.
Speaker 10 (27:37):
We've also seen traffic, and I would say, you know,
the table roles, etc. Picking up in terms of our crowd,
so that is a good sign. On the other hand,
what I'll say is that you know, a lot of
these spenders, whether your gamblers or your shoppers per se,
there is more discerning spending that we have observed, So
(28:00):
I'm not sure whether we should be putting that much
bet on Macau. Similarly, you know, even Hong Kong per se,
I would say that, you know, after the recent typhoon
hits and we are anticipating another typhoon hitting you know,
the South over the next ten days, et cetera, it
may not actually be you know, the biggest thing for
(28:23):
these two autonomous regions within the country itself. I'm a
little more optimistic about domestic tourism within the country, as
you know, more of the shoppers or consumers take a
break out into you know, the suburban regions and there
are more camping sites as well as you know, areas
(28:45):
that consumers can take a break from the city.
Speaker 4 (28:49):
So you mentioned a moment ago that domestic governments in
China are handing out vouchers and coupons and things to
kind of stimulate domestic consumption. Give me a sense of
how they are applied and whether we should be looking
for kind of high frequency data among retailers, whether it's
more a story about restaurants, whether it's a story about
(29:11):
air travel.
Speaker 10 (29:13):
Right, you know, for restaurants, definitely, because you know, we
are still seeing lots of promotions ongoing for platforms like
Ali Baba, may twe and JD dot Com when it
comes to food delivery and quick commerce. You know, you
would have heard of the competition that was ongoing among
(29:36):
these three companies since the beginning, since the middle of
this year itself, and it continues to actually intensify as
we go into the holiday season again, you know, all
the gatherings that's going on now that will likely come
through and on a more intensified level into October and November. Doug,
(29:58):
Let's not forget that we are now very close to
the start of the Singles Day shopping festival, which is
essentially a near two month long shopping festival, and it
will kick start sometimes on the seventh of October, which
is essentially next week itself. Once the consumers returns from
(30:20):
the holidays, they may actually be shopping more online. So
I would say that, going back to your earlier point
about consumption vouchers, it's definitely good to actually have an
extra vouchure on hand to spend. But we'll let's look
at the discretionary side of things itself. Those spending may
(30:41):
actually come through in October and November, particularly during the
Singles Day promotions.
Speaker 4 (30:48):
Catherine will leave it there. Thank you so very much,
Bloomberg's Catherine Lim, retail analyst for Bloomberg Intelligence. Catherine joining
us from Singapore, So we go from the Chinese consumer
to the challenges facing some of the most wealthy families
in Hong Kong. Joining me now is Bloomberg Shirley Joo.
Shirley and her team have been reporting on how trouble
(31:10):
in several high profile real estate projects is creating financial
risk for some very wealthy families in China. Shirley, thank
you for making time to chat with me before we
get to specific examples. Can you help me understand the
state of the Hong Kong real estate market right now?
Speaker 11 (31:29):
So, Hong Kong's property market has been in a crisis
since COVID. It's mainly to do with the rising interest
rate globally and the slowing economy in China. A lot
of developers borrowed a lot of money before COVID and
(31:49):
before you know, Hong Kong sort of plunged into years
of political turmoil and the COVID isolation around the time
of twenty seventeen and twenty eighteen. That was when you know,
a lot of developers and a lot of smaller businesses
borrowed a lot of money and invested heavily into the
(32:10):
real estate sector. But then, you know, during COVID, people
stopped traveling and the retail businesses really did very badly.
And after COVID, China's economy started to slow down, and
that really put a lot of pressure on developers and
the businesses that sort of went on in the real
(32:32):
estate sector. Today, real estate prices, we have data showing
that it's about thirty percent down from the pre COVID level.
Speaker 4 (32:43):
So can you give me an example of how a
wealthy family in Hong Kong made a big bet on
a major real estate project, only to see that project
underperform in a major way mis expectations wildly.
Speaker 11 (32:58):
New World is one of the most high profile examples
of this. They borrowed a lot of money to invest
in developing several major projects, including a huge shopping mall
and hotel complex near Hong Kong's famous Victoria Harbor and
mega shopping mall near Hong Kong's International Airport, as well
(33:22):
as a sports park near Hong Kong's old Airport. And
they did that in twenty seventeen and twenty eighteen, and
they spent a lot of money, fueled by debt, and
then in twenty nineteen, Hong Kong started to enter this
prolonged period of political turmoil and COVID isolation, and after COVID,
(33:44):
Hong Kong's economy didn't rebound, it slowed down, so a
lot of these projects didn't really have time to materialize.
They didn't have the chance to generate cash for New
World to pay off their debt, and that's why New
World's step problem really emerged over the past two years
and it was pushed to the brink of default. And
(34:07):
it had to line up Hong Kong's biggest ever refinancing
with dozens of banks, and it put it off. But
then banks started to feel that they had too much
exposure on your world.
Speaker 4 (34:21):
One of the things that I think is very interesting
here in terms of context is the notion of family
empires being involved here. It's not just a company. It's
almost like a dynasty, isn't it. And you mentioned in
your piece this issue which I found very interesting the
notion of self correcting. So when a family makes a mistake,
(34:41):
it's the dynamics of the family sometimes that can make
the correcting process even more challenging, right.
Speaker 11 (34:48):
Right, Yeah, So the issue with a lot of family
owned businesses is that a lot of the decision making
is sometimes down to the personal whim of family members.
Even though they hired professional managers to run their companies,
the final decision making will be swighed by the will
(35:09):
of family members, and that's making management more difficult and
less professional. And in New World's case, because they expanded
so aggressively in twenty seventeen and twenty eighteen and the
timing was really bad. So now there that problem really showed,
and that's really raising an alarm bell for a lot
(35:33):
of other family owned businesses in Hong Kong and around
the world as well.
Speaker 4 (35:38):
So we know on the mainland, the government's been very
concerned about problems with the property market. How is the
local government in Hong Kong viewing this situation right now?
Are people very concerned?
Speaker 11 (35:50):
People are concerned, and that was why you would see
reports about Hong Kong's mondatary Authority actually following up on
New wor World refinancing effort. You know, there were reports
about Hong Kong Monetary Authority calling banks up to check
on the status on their refinancing arrangement with New World,
(36:11):
and banks felt that they didn't want to be the
one that make New World default and trigger the rippling
effect on Hong Kong's economy. So there is this saying
that New World is too big to fail, and that
really showed during its refinancing effort with the banks and
(36:32):
with the involvement of Hong Kong's monetary authorities.
Speaker 4 (36:35):
When I think about the residential market in Hong Kong,
I know that for years there have been challenges trying
to add to new supplies. So many restrictions on developing
land and yet here we have a situation where commercial
developers don't seem to have any problems. Can you imagine
a world where things get turned and so that perhaps
(36:55):
in a way, these companies begin to focus their energy,
maybe more on residential property than on commercial property.
Speaker 11 (37:03):
That's exactly what New World is doing right now. So
now they are refocusing on selling and building more residential
projects and from selling apartments that will generate money for
them to pay down debt. So that's their main strategy
right now.
Speaker 4 (37:22):
Shirley, we'll leave it there. Thank you so very much,
Bloomberg Shirley Joe in Hong Kong, and I'm Doug Chrisner.
Catch us weekdays for the Daybreak Asia podcast. It's available
wherever you get your podcast. Tom.
Speaker 2 (37:34):
Thanks Doug, and that does it for this edition of
Bloomberg day Break Weekend. Join us again Monday morning at
five am Wall Street Time for the latest on markets
overseas and the news you need to start your day.
I'm Tom Buzzby. Stay with us. Top stories and global
business headlines are coming up right now.
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