May 24, 2024 • 38 mins
Bloomberg Daybreak Weekend with Tom Busby takes a look at some of the stories we'll be tracking in the coming week.
- In the US – a preview of core PCE inflation and GDP data, and a look ahead to Dell and HP earnings.
- In the UK - a look ahead to the 77th World Health Assembly in Geneva.
- In Asia – a preview of a two-day summit between Japan, South Korea and China in Seoul.
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Speaker 1 (00:02):
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,
a look at more economic data in the US that
may impact FED policy moving forward. I'm Tom Busby in
New York. I'm Stephen Carolyn London.
Speaker 2 (00:19):
But we're thinking about the future of healthcare as we
look ahead to the dowey Ho's World Health Assembly in Geneva.
Speaker 3 (00:25):
I'm dek Prisner looking ahead to the trilateral meeting between Japan,
South Korea and China.
Speaker 4 (00:35):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleve on three Own New York, Bloombergen ninety nine to one, Washington, DC,
Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco,
DAB Digital Radio, London, Sirius XM one nineteen and around
the world on Bloomberg Radio dot com and via the
Bloomberg Business App.
Speaker 1 (01:00):
Day to You, I'm Tom Busby, and we begin today's
program with some key economic data out this week in
the US. We'll get the first quarter GDP, a second
look at the GDP, and also core PCE numbers for April.
What could this data mean for Fed policy moving forward?
Well for more, we're joined by Stuart paul Us, economist
with Bloomberg Economics. Now, we got a welcome surprise on
(01:22):
April CPI a few weeks back. What are you expecting
to see this week?
Speaker 5 (01:27):
The core PCE inflation measure is going to show some
cooling in price inflation. We're expecting to see headline PCEE
inflation of just zero point two percent during the month,
and that's going to allow the annual measure of PCE
inflation to slow to about two point six percent from
two point seven in March. The Fed's preferred measure is
core PCE inflation and is likely to register just about
(01:50):
a quarter of one percent during the month. Most of
the consensus is expecting about zero point three. We're a
touch below that. That's going to hold the annual measure
of core inflation and at two point eight percent holding
steady between March and April. And it's a really slow,
gradual pace of disinflation that we're seeing. And some of
(02:10):
that in April is due to the cooling labor market,
slowing personal income growth, and slowing spending growth. All of
which we'll see on Friday in the Personal Income and
Outlayers report.
Speaker 1 (02:21):
All right, so people are pulling back. Is it all
levels of consumer or is it mostly just lower end?
So you get a reservation at a restaurant in New York,
there is, it's full.
Speaker 5 (02:34):
That's right. It does appear that it is mostly at
the lower end. We see folks are focusing a bit
more on spending on consumer staples and some of the necessities.
They are raining in their spending a little bit on
some of the more discretionary items. If you look at
retail sales for example, which we saw earlier this month,
basically the entire increase in spending that we saw on
(02:56):
clothing was just an increase in prices. And if that's
downstream of retailers doing a good job of managing their
inventories rather than consumers just going out and spending more,
it is indicative of a bit more of some belt
tightening on the part of consumers.
Speaker 1 (03:14):
Oh yeah, and we saw that from Walmart, which lowered
prices in the first quarter and sales rose, and they
say more consumers who don't normally shop here come in.
And now Target doing the same thing, and these are
those two companies account for about one third of all
the grocery sold in the US, so it's not a
small thing, that's right.
Speaker 5 (03:34):
There are some folks who are rotating from higher end
retailers to some of those lower end retailers. They are
doing a little bit of bargain hunting out there, and
they are focusing more on those consumer staples as opposed
to discretionary spending. We would expect to see folks like
Walmart and Target benefiting as opposed to higher end retailers
and folks that are selling more intra sensitive durable goods.
Speaker 1 (03:56):
For example. Now, how about gasoline? And I ask because
here we're coming into the summer season. When you get
the summer blends, usually prices go up for gasoline, not
only because of demand, but the more expensive way that
they have to fabricate that summer blend. What do you
expect to see there? If that affects everybody, poor, rich,
doesn't matter.
Speaker 5 (04:14):
That's right. So we are expecting to see gases gas
priceline rising in line with typical seasonal factors. Gasoline prices
are downstream from global energy prices, and there's very little
that folks can do to combat rising global energy prices. Fortunately,
there's very little geopolitical risk premium, despite there being some
conflict in the Middle East. And if we think about
(04:37):
it in terms of consumer spending on a real basis,
spending on gasoline is very very steady once you adjust
for fluctuations in gasoline prices. So again, like you say,
it is the sort of thing that affects everybody. It
does shrip out the ability of consumers to spend more
on other more discretionary categories, and perhaps that's part of
(04:59):
the reason why we're seeing consumers rotating away from the
more interest sensitive, the more discretionary spending categories.
Speaker 1 (05:05):
Now in April for the CPI, we got a nice surprise.
After three months this year of inflation going higher, we
got a little pullback one month though not a pattern,
not a pattern, but it sounds like you're expecting, you know,
the PCE to be pretty good. What does that mean?
And do you think we're maybe turning a corner or
(05:27):
do you think the Fed is hoping we're turning a corner?
Speaker 5 (05:30):
The timing really matters here, right, So these are all
April figures, and we did see that Q one was
quite hot. It was hot for prices. It was hot
for economic growth. We'll get some revisions to the Q
one GDP numbers coming up this week, but all things considered,
domestic economic activity was really strong through March. As we
made the transition into April, we started seeing the economy
(05:53):
end prices losing some of that momentum. As you say,
it's not a pattern. We did hear a lot of
FED speak this week that completely took a summer rate cut,
either in June coming up or in July off the table.
Markets are currently pricing in just two rate cuts this year,
but I think that, if anything, risk probably skews to
(06:15):
maybe just having one twenty five basis point cut this year,
perhaps just in December, but very likely in the fourth quarter.
So what does it mean. It means that we are
seeing some of the waning momentum that the FED has
been looking for to gain confidence that prices will sustainably
go towards that two percent inflation target. But waning momentum
isn't enough. There needs to be a more persistent, more
(06:37):
convincing slide towards that two percent inflation target.
Speaker 1 (06:41):
And we're nowhere near that right now, and the Fed
does meet Let's see June eleventh and twelfth, So that's
coming up soon. Obviously, nobody, especially after what we heard
last week from pretty much every single Fed governor, FED president,
FED official, that don't expect a rate cut anytime soon.
Speaker 5 (06:59):
That's right. The June meeting, we're going to get the
new summary of the economic projections commonly referred to as.
Speaker 4 (07:04):
The dot plot.
Speaker 5 (07:05):
In the previous dot plot from March FED officials, the
median FED official was expecting to see seventy five basis
points of cuts this year. We expect that the June
dot plot is going to show just fifty basis points
a cut this year. And so not only are we
not going to see a cut coming up, but they're
going to push out expectations for any cuts this year.
Speaker 6 (07:25):
Well.
Speaker 1 (07:25):
Our thanks to Stuart paul Us, economists with Bloomberg Economics.
Next week, computers services giants Dell and HP report their
latest quarterly results, just as both make a huge push
into hardware infused with artificial intelligence technology. Now for more
on those companies and what to expect next, we're joined
by Wujin Hoe, Bloomberg Intelligence Senior technology analyst. Well Woujin
(07:50):
Before we get into the newest proclamations from Dell HP.
What role did artificial intelligence play in the upcoming earnings,
if at all? And what are you expecting to see
in those earnings?
Speaker 7 (08:01):
Well, if we think about AI artificial intelligence, there's two
aspects for both Dell and HP. Dell has AI PCs
as well as HP, and that's still a fairly new
category for both of those those companies. And but you
also have AI servers and Dell has much more exposure
(08:24):
to AI servers and that's already driving growth momentum for Dell,
and I expected to drive more momentum going forward.
Speaker 1 (08:33):
Okay, so they're they're they're a little ahead of the game.
But this past week we learned from Dell at one
of their showcases that it looks like they're almost starting
over with these AI p c s and laptops and
they're promising a whole new world. Why don't you tell
us about that?
Speaker 7 (08:50):
Well, I mean, if you think about AI PC's, it's
still a fairly new category. As I said, what you're
seeing with a PCs is that you're getting new chips
that have neural processors units, which it essentially enables the
AI functions on the PCs. Traditionally what AI applications run
(09:11):
on are graphic processors, but they're less efficient on the
PC and Intel Qualcomm AMD. They are all announcing or
have announced, new chips with these NPUs, and the number
that we expect this year is roughly about forty million
to fifty million units of aipcs that Dell as well
(09:33):
as HPE will participate in.
Speaker 1 (09:35):
And these process or these semiconductor makers have made deals
with just about everybody, and you know it seems Yeah.
Speaker 7 (09:43):
One of the things that Dell said at their event
is that they expect every PC will be an AI
enabled PC. Right, So look beyond the forty million this year,
forty to fifty million this year, I'm forecasting roughly around
two hundred and sixty seven million PCs in total next year.
I wouldn't be surprised that there will be some sort
of AI enablement for roughly a third or half of
(10:07):
the pieces that are out there now.
Speaker 1 (10:08):
This almost exponential leap into AI, is this what's going
to really jumpstart sales of hardware? And you talked about servers,
but I mean some of these Dell they saw huge
gains during the pandemic and then things have slacked off
HP you know has been almost and also ran for
a little bit here. But is this going to really
(10:29):
boost sales?
Speaker 7 (10:30):
So there are two aspects of sales, right, unit volume
growth and ASP growth. Right, And then if we think
about it from a unit volume perspective, this year, I
don't think so. I do think both companies are forecasting
roughly low single digit growth in terms of PC. In
terms of the PC market, I don't think that's going
(10:51):
to change when they report earnings later this week. Now,
in terms of asps, I'll tell you what was very
interesting the Apple I pad event, Right, they introduced a
new chip that was AI enabled, their own chip, right,
their own chip that was AI enabled. There was no
ASP boost to the new iPad pro. What that tells
(11:12):
me that the basic PC that is AI enabled may
not get an ASP boost. That being said, what we're
about roughly four years into coming out of COVID right now,
or the beginning of COVID. The average refresh cycle for
the corporate PC is roughly four to five years. We're
actually in the early cusp of the necessary refresh cycle
(11:34):
number one. And there's a bigger catalyst that's coming in
later this year and early next year the Windows eleven
upgrade cycle, and I actually think twenty twenty five PC
volumes are could be much stronger than twenty twenty four.
Speaker 1 (11:46):
Corporate schools, consumer everybody.
Speaker 7 (11:49):
Corporates predominantly right, I think the enthusiasts on the consumer
side will really lean into the AIPC schools. They're gonna
take a while.
Speaker 1 (12:01):
Yeah, that's a big expenditure. Well, our thanks to Wu
Jin Hoo, Bloomberg Intelligence Senior Technology Analyst, and coming up
on Bloomberg day Break weekend, a look at the global
health landscape ahead of the seventy seventh World Health Assembly
in Geneva. I'm Tom Busby, and this is Bloomberg. This
(12:30):
is Bloomberg day Break Weekend, our global look ahead at
the top stories for investors in the coming week. I'm
Tom Busby in New York. Up later in our program
will look ahead to the trilateral meeting between China, Japan,
and South Korea and what it means for their relationships
moving forward. But first, since COVID nineteen, healthcare has become
even more of a big business. This past March, Danish
(12:51):
drugmaker Novo Nordisk became Europe's most valuable company. Overtaking LVMH
thanks to its wonder drugs, weight life medicines ozempic and wagovi.
And this week is the seventy seventh World Health Assembly.
We're reconciling the worlds of business and healthcare will be
just one topic on the agenda.
Speaker 8 (13:10):
For more.
Speaker 1 (13:11):
Let's go to London and bring in Bloomberg Daybreak europe
Banker Stephen Carroll.
Speaker 2 (13:15):
Tom The World Health Assembly is the decision making body
of the World Health Organization, and delegates from the who's
member states will be gathering in Geneva in the coming
days with some key issues in mind. They're aiming to
improve access to treatment around the world, with a key
ambition to see one billion more people benefit from universal
health coverage. Reaching every corner of the world with healthcare
(13:38):
is no easy feat, though, and often requires the use
of complementary tools. It's something Nissa Leung, managing partner at
Chieming Venture Partners, has been discussing that this year's Cutar
Economic Forum.
Speaker 9 (13:50):
I've been involved with healthcare investment for the last eighteen
years and it's great to see the development we've seen
in the last fifteen years and so forth. At the beginning,
we would be looking at potentially areas that you know,
when we first started in China and investing in areas
where there's no metronic, there's no vizor and whatnot, So
(14:13):
how do we provide basic services and care and drugs
and devices to China. And as we continue to grow
in the last ten years, we started looking at innovation
from all over the world and we think about how
do we use technology, how do we use the next
dimensions of life scien institutes and whatnot to actually help
(14:33):
our research institutions to develop beyond. So you know, we're
very one of the early investors in AI drug discovery,
starting with the investment in Sturinger in New York, and
we were also angel investor in Recursion out of Salt
Lake City, and then followed by in Silico and so forth.
So you know what's really interesting is now we're able
(14:56):
to use AI to identify target and use AI to
develop moleca the structure, and now we have drugs in
phase two clinical in US with a pipeline out of
another thirteen drugs in the pipeline focused on unmad medical
needs that previously we were not able to develop on
our own. So now beyond that we've actually started looking into,
(15:17):
and we've recently invested in a company. We're thinking, since
we have so many targets coming out from AI assets
and assets, we can't continue to rely on animal studies.
That would be the bottleneck. So how can we use
technology to combat that? So we recently invested in a
spinoff from Harvard Medical School with institute Organs on the chip,
(15:39):
so every chip is a different organ including liver that
would test toxicity and so forth. So we're always thinking, five, ten,
twenty years from now, what do we need?
Speaker 2 (15:47):
That was Nissa Leung there from Teaming Venture Partners speaking now.
The pharmaceutical giants are key to developing and rolling out
new medical treatments. Some of the biggest names in the
sector have been boosted by block us to a weight
glass drugs like a Zenpic and d weegav, but others
like Astrozenica are setting ambitious growth targets too. They want
to double sales by twenty thirty. In recent days, Astrazeneka's
(16:11):
CFO Arethana Saren, spoke to Bloomberg.
Speaker 10 (16:14):
The breadth and scope of our medicines is truly incredible,
and it ranges everything from oncology and rare diseases to
the medicines in biopharma for metabolic disorders as well as
respiratory and the growth that we anticipate is both from
existing products as well as the twenty new medicines that
we expect to launch by twenty thirty.
Speaker 11 (16:34):
Doncology clearly absolutely fronts and censor as we work our
way through this period, how big is oncology going to
be for astrosenica as we get to the end of
this period, how big a slice of the pie is
oncology going to represent.
Speaker 10 (16:49):
You know, oncology continues to grow very strongly. Today oncology
is about forty percent of the business and we expect
very strong double digit growth in oncology, both in new
medicines as well as our existing medicines and new indications
for those medicines. Overall, we have over one hundred and
twenty Phase two and three studies going on for our medicines,
(17:12):
and again we're working on a whole bunch of new
medicines that you'll hear about today.
Speaker 12 (17:17):
Rathern I talk to us a little bit about your
manufacturing plans here. Recently, there have been investments in facilities
in Dunkirk, Singapore, Liverpool, even Maryland as well. In light
of some of the kind of crackdown that US regulatory
authorities are putting in terms of where supply chains extend
into Asia. How is Astrodenka tackling that manufacturing story.
Speaker 10 (17:38):
So our manufacturing investments are very strategic. They are aligned
very much with the new modalities and the new technologies
that we have in our pipeline. So the announcement, for example,
in Maryland is for cell therapy products, which we see
as sort of a completely new modality that will change
how cancer care and autoimmune diseases are treated. What we
(18:00):
announced in Singapore is for antibody drug conjugates. We expect
that antibody drug conjugates will replace traditional chemotherapy over the
next decade. And so we're making these investments ahead of
what we see coming in our pipeline because we know
that these medicines have the potential to be very large medicines.
Speaker 2 (18:21):
That's Aratana Saren from AstraZeneca. They're speaking to our colleagues
on Bloomberg Television. Those conversations are helping to set the
industry context for the upcoming World Health Assembly, and our
health reporter, actually Furlong has been telling me about how
the gathering works.
Speaker 6 (18:37):
So usually it's all the countries of the World Health Organization,
which really represents the anti globe, coming together to take
decisions that sort of set the scene for, you know,
how to sort of advance you know, global health aims
for the coming year. This year, it's all about the
Pandemic Treaty and this is quite controversial potential agreement that's
(19:02):
still being negotiated, and we're obviously really you know, on
the cusp of the actual assembly. The agreement would sort
of set out how countries could be better prepared for
the next pandemic, and it includes things potential provisions such as,
you know, how to share vaccines more equitively next time,
or you know, how to you know, ensure that intellectual
(19:26):
property rights provisions related to these these medicines enable them
to be better shared. But it agreement hasn't actually been
reached and reached yet, so that that is really what
everyone's waiting to see if we will reach agreement next week.
Speaker 2 (19:42):
Are these discussions also do they look backwards at what
went wrong, for example, during COVID to try and bring
lessons from them, or is this sort of a more
forward looking.
Speaker 6 (19:51):
Event definitely, So it is looking back, it's saying what
went wrong, and included in the in the draft that's
that's currently being discussed are many things that would that
countries believe would fix the mistakes that happened in the past.
For example, it's things such as when you find viruses
in a country, you know, how you share that really
(20:13):
quickly with other countries, and then how drug makers would
be able to take those virus sequences and produce medicines quickly.
But a lot of it's really controversial because you know,
it would require drug makers potentially then to a certain
amounts of those products that they make with the World
Health Organization, and countries need to agree to share these products,
(20:35):
you know, in a more equitable way. And I think
that you know this is this has become highly controversial,
and almost separately to that, commentators, particularly right when commentators
in the US and the UK, have led quite a
vocal campaign against the Pandemic Treaty, claiming that it would
violate countries sovereignty and give the who you know, increased
(20:56):
powers that they believe it shouldn't have. The World Health
Organization says that you know, that's that's not the case
that this is in agreement by countries and that the
countries are pushing for it, But that's sort of I
suppose Muddy the Water is in the sense and made
the sort of even more controversial document.
Speaker 2 (21:14):
How much is the industry involved in these discussions? You know,
drug makers of course very much in focus during COVID,
but now the focus has you know, been largely in
recent months on things like the rise of weight loss
drugs or drugs and aid weight loss for treating diabetes,
the likes of ZAMPE.
Speaker 6 (21:31):
I think drug makers are following it very closely, and
they're represented in the discussions by the International Farmer Lobby group,
you know, and they I think have supporters you know,
on their side in the form of sort of countries
like the UK and the US, who you know are
pushing for similar provisions. For example, you know, drug makers
(21:52):
gains provisions that might force them to share intellectual property
rights you know, related to their products, and they're also
concerned about you know that there's sort of an argument
for sort of a quid procro If you find a
genetic sequence of a virus and then you want a
country wants to share it globally, you know, what should
that country get back in sort of return for that,
(22:14):
And drug makers are broadly sort of you know, against
the idea that there should be that sort of direct
relationship between sharing virus sequences and then and then countries
getting something back, So I think they're very much involved. Obviously,
you know, there's quite a small chance that this agreement
actually might be reached in time, so I suppose that
you know, there's a sort of less concern that some
(22:35):
of these very controversial provisions might actually be included in
the end.
Speaker 2 (22:39):
Where I suppose are the biggest roadblocks in arriving at
that agreement. Is it a case of countries lobbying for
their own particular interests or is it on the kind
of the issues themselves.
Speaker 6 (22:50):
It's I think the issues themselves, because they require you know,
they they would this would be an agreement that then
would be you know, sort of for the foreseeable future,
for any pandemic in the future. So you know, it's
making these decisions as you know, it's it's not something
that countries do likely and you know, international treaties are
quite rare. As diplomats negotiating this would argue, you know,
(23:13):
the timelines that they've had, which has just been a
few years since the end of the pandemic, you know,
are actually it's actually pretty short, even though it might
seem quite long, you know, in negotiating international treaties. I
think because there's such you know, controversial issues and I
suppose there's no current pandemic going on, that's sort of
putting the pressure on them. That's made it quite difficult
(23:35):
to reach that agreement, and countries, some countries are pushing
for more time to to to conclude the negotiations and
potentially saying should we delay this to the next World
Health Assembly, which would be next year obviously or potentially
later this year, So they're still you know, uncertainty about
when this when this would actually be agreed.
Speaker 2 (23:55):
Okay, So that that the pandemic agreement, as you've outlined,
a very key focus of the discussion these anything else
you're going to be watching out for in the conversations
happening in Geneva, I think that.
Speaker 6 (24:05):
Will really be key. But I suppose it's also about
the World Health Organization's broader role on you know, hard
important countries. See this institution that is really sort of
a guidance setting institution and you know, they recently have
pushed forward on guidance on digital health, on artificial intelligence
as well, so you know, they're trying to sort of
(24:26):
ensure that they are relevant to the you know, to
the current world that we're living in and ensure that
they provide guidance on global health issues. Obviously, you know,
whether they take an increasing role on obesity drugs in
the form of you know, sort of commenting on the
price of the drugs and also ensuring that countries potentially
include these drugs in the list of essential medicines is
(24:49):
also something that you know, we'll be watching for, not
necessarily at this upcoming World Health Assembly, but in the
coming months, you know, more broadly at the at the wh.
Speaker 2 (25:00):
Thanks to our health reporter Ashley Furlong, I'm Stephen Carolyn London.
You can catch us every weekday morning here for Bloomberg
Daybreak Europe, beginning at six am in London and one
am on Wall Streets.
Speaker 1 (25:11):
Tom, thank you, Steven, and coming up on Bloomberg day
Break weekend to look ahead to a trilateral summit with China,
Japan and South Korea. I'm Tom Busby and this is Bloomberg.
(25:33):
I'm Tom Busby in New York with your global look
ahead at the top stories for investors in the coming week.
We look ahead now to a trilateral meeting between China, Japan,
and South Korea. The two day summit may be seen
as an opportunity for Japan and South Korea to manage
their relationship with China. For more, Let's go to Hong
Kong and Bloomberg Daybreak Asia hosts Brian Curtis and Doug.
Speaker 3 (25:54):
Krisner tom The talks are expected to cover a range
of issues from trade and economic policy to geopolitics and
peace and security, and these discussions will be happening at
a high level. Japanese Prime Minister of Fumiyo Kishida, South
Korean President Yunsokyol, and Chinese Premier Lie Chung will attend.
Speaker 13 (26:15):
And the summer will be the first major test on
the diplomatic front for President Yun. He's trying to maintain
momentum for the remaining three years of his term. Last month,
Yun suffered a major defeat in South Korean parliamentary elections.
From the China perspective, Beijing is likely looking to hamper
strengthening American ties with both Tokyo and Soul.
Speaker 3 (26:35):
And we spoke earlier with Heiner tongan senior fellow at
the Taiha Institute. I asked him about the role of
the US in relations with these three countries.
Speaker 14 (26:45):
If Washington feels strongly that they have to contain China
and that's the only thing that works for them, they're
going to put as much pressure as they can on
allies to kind of toe the line. But you know,
right now things despite the way things look in the US,
you know, you have positive numbers, but you have a
lot of unhappy people, and that could mean political change.
(27:06):
A lot of people are wondering if Trump was going
to be in and how that will impact this kind
of relationship, especially in Asia. It's not clear how he
wants to treat it. In the past, he you know,
he dallied with North Korea. Obviously that's still an issue there.
I don't know that Young Kim is going to deal
with him again. I think he felt humiliated by that.
Speaker 1 (27:28):
So there's got to be some other.
Speaker 14 (27:29):
Way of dealing with a nuclearized North Korea, hopefully not
one that involves a nuclear arms race throughout Asia.
Speaker 13 (27:36):
So Japan and South Korea moved a lot closer to
Washington in recent years. But if you look at this
relationship going back a long period of time, there are
not so many things that China and South Korea agree
on except for you know, very bad feelings that stretch
all the way back to the Second World War about Japan.
Speaker 14 (27:54):
Yeah, you know, and I don't think that's useful. I mean,
looking back at the past is not going to change
the present. It can certainly sour it.
Speaker 1 (28:02):
But you know, look at South Korea.
Speaker 14 (28:03):
It's grew one point three percent quarter last time, much
higher than they expected. They were only expecting point five.
And you know, exports are forty two percent of gross
domestic product. In Japan it's about around twenty one percent
depending on the ear you're looking at. So it's slightly
(28:24):
different positions, but both need exports. And right now, with
you know the mean streets coming in terms of economic activity,
these countries have to keep a practical eye out for jobs.
You know, the questions about inflation, and as I said,
you know, these are two leaders who desperately need some wins.
(28:44):
You'll note that Chi Jinping is not going He's sending
his premiere to deal with this, but the two leaders
are going there obviously trying to bolster their leadership credentials,
so they're in a slightly weaker position. But you know,
China so far hasn't been putting the screws to and
they just said, look.
Speaker 3 (29:00):
Let's trade heiner As you know, each of these three
countries are heavily reliant on the importation of crude oil
to power their energy needs. And I'm wondering whether you
consider the amount of Iranian crude oil entering China, or
whether we're talking about the degree to which sanctions have
limited the exportation of oil out of Russia. I'm wondering,
(29:22):
is there a commonality here when it comes to the
topic of energy.
Speaker 1 (29:26):
Well, there is.
Speaker 14 (29:27):
I mean it's not much talked about, but both South
Korea and Japan are still getting Russian oil and gas
and things like this. They're not willing to sacrifice to
their economies the way that Germany was by cutting off
the cheap gas that was coming in, and you know,
they're going to take a kind of a realistic look
at this. China, on the other hand, has a slightly
(29:48):
different situation. I mean, everyone talks about China somehow blockading
the South China seas or Taiwan Straits. I don't put
much crehdenence in that because that would cut off eighty
percent of their oil imports just and forty percent of
their economy because it wouldn't be able to send things out.
It's not very practical, you know, you'd be slicing your
(30:09):
own throat to make a point. Not something that very
pragmatic China is going to do. So this issue about
access to oil, at least on that part, is not
going to be an issue. The Huthi's Red Sea that
affects some of it, but you're seeing that oil is fungible.
It kind of moves from market to market.
Speaker 13 (30:29):
You know.
Speaker 14 (30:30):
For instance, Indian is now the largest purchaser of Russian oil,
which eventually makes it way where to Europe, unfortunately at
a higher cost, which is adding to inflation and also
affecting competitiveness of industries there to reliant on energy.
Speaker 3 (30:46):
He is Einer Tongan from the Taia Institute speaking with
us earlier on day Breakasion. Now let's bring in John Hirskowitz,
Bloomberg East Asia Government editor, who joins us from the
Japanese capital. So a two day summit in souls On
it's high level, Japan, South Korea, China all involved. Typically
when meetings like this happen at high levels, there are deliverables.
(31:09):
Should we be looking at specific areas where we would
most likely see some sort of agreement.
Speaker 8 (31:15):
Well, I think that the main thing for this is
that they're actually meeting. The last some of that they
did this was twenty nineteen, and there have been so
many changes in Asia in that time, in the global
economy in that time. But we're going to see some deliverables.
We've had some talk about like discussing trade, people to
people exchanges, looking at some sort of joint statement for cooperation.
(31:39):
But I don't think we're going to get anything really
in the nitty gritty, anything significant. But we're going to
get something, some sort of statements, some sorts of agreements
that are going to show that there's progress, that this
meeting resulted in something.
Speaker 13 (31:55):
John, we heard from einor Tangin earlier about supposed pressure.
I'm curious, is the US putting pressure on Japan and
South Korea here to confront China or is this happening organically.
Speaker 8 (32:07):
Yeah, the US is supporting both Japan and South Korea
and having talks with China. I don't think the pressure
that has come on Tokyo and Seoul has been to
cooperate with Biden Biden administration initiatives on things like exports
of high tech to China, chip technology, things that are
(32:30):
trying to keep the US pre eminence and its partner's
pre eminence in high tech gear and equipment. In terms
of like actual pressure for confronting China, I don't think
that we're going to find that specifically in the meeting.
But the US is such a concerned party that what
they have to say will probably have been convened many
(32:50):
times over to both Tokyo and Seoul before they have
this sit down with the premiere of China.
Speaker 3 (32:57):
We know that both South Korea and Japan have or
are supporting the US export controls when it comes to
high end semiconductor manufacturing into equipment into China. These countries
are so dependent on trade with China. Is there a
way that they can kind of embrace that relationship and
I'm talking about the Chinese relationship with both Japan and
(33:19):
South Korea without allowing this high tech issue to kind
of enter into the conversation or do you think that's
going to be central.
Speaker 8 (33:29):
It's a balancing act that Japan and South Korea have
had for years decades that their biggest trading partner has
both been China and their biggest security partner is the US.
So they've found ways to work both sides to keep
the trade with China on as even a kil as
possible and keep its relationship with the US strong. But
(33:53):
what we've seen in recent years is that the pace
of investment from Japan and South Korea into China has
slowed and trade with the US has picked up. So
we're seeing incentives for Japanese companies, South Korean companies in
various states to move in set up facilities, and we're
seeing more and more of this investment coming. And the
(34:15):
importance of China and China still dominates the trade for
these two countries, but it's been slightly diminishing over the
past couple of years.
Speaker 13 (34:25):
So trade is obviously very central to these talks. What
about concern about North Korea and its military cooperation with Russia.
Speaker 8 (34:36):
Yeah, we're seeing the Japan South Korea has been in
locks up with the US in their concerns about North Korea.
They've all made the allegations of North Korea sending arms
to Russia, millions of rounds of munitions, missiles, and the
government of the US has shown satellite pictures of these
(34:58):
transfers of equipment from North Korea into Russia, showing trains
going over to the front lines near Ukraine. But China
has asked for a bit more measured tone. They've said
the burden for a peace and stability on the Korean
Peninsula should lie with the US and its partners. But
(35:19):
China is North Korea's biggest economic benefactor for years and years. Washington, Seoul,
and Tokyo would all like to see China play a
greater role in reigning in Kim Jong un and his
nuclear ambitions, and this will be a part of the conversation.
But this has been an ongoing conversation. So I don't
think we're going to see huge amounts of headway when
(35:40):
it comes to North Korea.
Speaker 3 (35:41):
When I think about the politics of the APAC region
and I think about where that intersects trade, I think
of the South China Sea. This is obviously going to
be up for discussion, is it not.
Speaker 8 (35:51):
I believe so. In Japan, more so than South Korea
has expressed its concerns about what it sees as Chinese
assertiveness in the South China. South Korea has been a
little bit more tepe it in its statements regarding the issue,
and this will be a subject of concern. But also
China has its concerns with the Yellow Sea. It has
(36:15):
a great deal of its naval forces in the Yellow Sea,
where the US and South Korea could exert its naval
influence and in theory bottle up a lot of Chinese
naval forces. So there's a little bit of China has
its attention in some areas. The South China Sea is
(36:35):
a huge issue as well. The Yellow Sea may come
into focus. It's been a subject of China's concerns for
a bit.
Speaker 13 (36:41):
We have to remember it was not that long ago
that China whipped up the nationalistic fervor and boycotting various
products from bout Japan and South Korea. I think none
of these countries is an easy partner of any of the.
Speaker 8 (36:56):
Others, exactly. The nationalists river can get whipped up from
time to time. We're seeing it a bit with Japan's
discharge of treated water from the Fukushima nuclear reactor. This
is from the twenty eleven Tsunamia nuclear disaster. Japan is
going to see if you can raise the issue of
(37:17):
Chinese bands of imports of some of its food products,
seafood products related to the Fukushima disaster. But there are
sentiments dating back into history which do get stoked for
political purposes. The ones between Japan and South Korea have
cooled down a little bit, but the Fukushima incident is
(37:38):
something that is of concern in South Korea and even
more so in China.
Speaker 3 (37:43):
John, thank you so much for joining us and helping
us set up this two days some that will be
taking place in Seoul in the week ahead where top
officials from Japan, South Korea and China will be meeting.
He is John Harskowitz, Bloomberg East Asia Government Editor. I'm
Doug Krisner. You can join Brian Curtis and myself weekdays
here for Daybreak Asia beginning at eight am in Hong
(38:04):
Kong eight pm on Wall Street. Tom.
Speaker 1 (38:08):
Thank you Doug, and thank you Brian. 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
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,
a look at more economic data in the US that
may impact FED policy moving forward. I'm Tom Busby in
New York. I'm Stephen Carolyn London.
Speaker 2 (00:19):
But we're thinking about the future of healthcare as we
look ahead to the dowey Ho's World Health Assembly in Geneva.
Speaker 3 (00:25):
I'm dek Prisner looking ahead to the trilateral meeting between Japan,
South Korea and China.
Speaker 4 (00:35):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleve on three Own New York, Bloombergen ninety nine to one, Washington, DC,
Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco,
DAB Digital Radio, London, Sirius XM one nineteen and around
the world on Bloomberg Radio dot com and via the
Bloomberg Business App.
Speaker 1 (01:00):
Day to You, I'm Tom Busby, and we begin today's
program with some key economic data out this week in
the US. We'll get the first quarter GDP, a second
look at the GDP, and also core PCE numbers for April.
What could this data mean for Fed policy moving forward?
Well for more, we're joined by Stuart paul Us, economist
with Bloomberg Economics. Now, we got a welcome surprise on
(01:22):
April CPI a few weeks back. What are you expecting
to see this week?
Speaker 5 (01:27):
The core PCE inflation measure is going to show some
cooling in price inflation. We're expecting to see headline PCEE
inflation of just zero point two percent during the month,
and that's going to allow the annual measure of PCE
inflation to slow to about two point six percent from
two point seven in March. The Fed's preferred measure is
core PCE inflation and is likely to register just about
(01:50):
a quarter of one percent during the month. Most of
the consensus is expecting about zero point three. We're a
touch below that. That's going to hold the annual measure
of core inflation and at two point eight percent holding
steady between March and April. And it's a really slow,
gradual pace of disinflation that we're seeing. And some of
(02:10):
that in April is due to the cooling labor market,
slowing personal income growth, and slowing spending growth. All of
which we'll see on Friday in the Personal Income and
Outlayers report.
Speaker 1 (02:21):
All right, so people are pulling back. Is it all
levels of consumer or is it mostly just lower end?
So you get a reservation at a restaurant in New York,
there is, it's full.
Speaker 5 (02:34):
That's right. It does appear that it is mostly at
the lower end. We see folks are focusing a bit
more on spending on consumer staples and some of the necessities.
They are raining in their spending a little bit on
some of the more discretionary items. If you look at
retail sales for example, which we saw earlier this month,
basically the entire increase in spending that we saw on
(02:56):
clothing was just an increase in prices. And if that's
downstream of retailers doing a good job of managing their
inventories rather than consumers just going out and spending more,
it is indicative of a bit more of some belt
tightening on the part of consumers.
Speaker 1 (03:14):
Oh yeah, and we saw that from Walmart, which lowered
prices in the first quarter and sales rose, and they
say more consumers who don't normally shop here come in.
And now Target doing the same thing, and these are
those two companies account for about one third of all
the grocery sold in the US, so it's not a
small thing, that's right.
Speaker 5 (03:34):
There are some folks who are rotating from higher end
retailers to some of those lower end retailers. They are
doing a little bit of bargain hunting out there, and
they are focusing more on those consumer staples as opposed
to discretionary spending. We would expect to see folks like
Walmart and Target benefiting as opposed to higher end retailers
and folks that are selling more intra sensitive durable goods.
Speaker 1 (03:56):
For example. Now, how about gasoline? And I ask because
here we're coming into the summer season. When you get
the summer blends, usually prices go up for gasoline, not
only because of demand, but the more expensive way that
they have to fabricate that summer blend. What do you
expect to see there? If that affects everybody, poor, rich,
doesn't matter.
Speaker 5 (04:14):
That's right. So we are expecting to see gases gas
priceline rising in line with typical seasonal factors. Gasoline prices
are downstream from global energy prices, and there's very little
that folks can do to combat rising global energy prices. Fortunately,
there's very little geopolitical risk premium, despite there being some
conflict in the Middle East. And if we think about
(04:37):
it in terms of consumer spending on a real basis,
spending on gasoline is very very steady once you adjust
for fluctuations in gasoline prices. So again, like you say,
it is the sort of thing that affects everybody. It
does shrip out the ability of consumers to spend more
on other more discretionary categories, and perhaps that's part of
(04:59):
the reason why we're seeing consumers rotating away from the
more interest sensitive, the more discretionary spending categories.
Speaker 1 (05:05):
Now in April for the CPI, we got a nice surprise.
After three months this year of inflation going higher, we
got a little pullback one month though not a pattern,
not a pattern, but it sounds like you're expecting, you know,
the PCE to be pretty good. What does that mean?
And do you think we're maybe turning a corner or
(05:27):
do you think the Fed is hoping we're turning a corner?
Speaker 5 (05:30):
The timing really matters here, right, So these are all
April figures, and we did see that Q one was
quite hot. It was hot for prices. It was hot
for economic growth. We'll get some revisions to the Q
one GDP numbers coming up this week, but all things considered,
domestic economic activity was really strong through March. As we
made the transition into April, we started seeing the economy
(05:53):
end prices losing some of that momentum. As you say,
it's not a pattern. We did hear a lot of
FED speak this week that completely took a summer rate cut,
either in June coming up or in July off the table.
Markets are currently pricing in just two rate cuts this year,
but I think that, if anything, risk probably skews to
(06:15):
maybe just having one twenty five basis point cut this year,
perhaps just in December, but very likely in the fourth quarter.
So what does it mean. It means that we are
seeing some of the waning momentum that the FED has
been looking for to gain confidence that prices will sustainably
go towards that two percent inflation target. But waning momentum
isn't enough. There needs to be a more persistent, more
(06:37):
convincing slide towards that two percent inflation target.
Speaker 1 (06:41):
And we're nowhere near that right now, and the Fed
does meet Let's see June eleventh and twelfth, So that's
coming up soon. Obviously, nobody, especially after what we heard
last week from pretty much every single Fed governor, FED president,
FED official, that don't expect a rate cut anytime soon.
Speaker 5 (06:59):
That's right. The June meeting, we're going to get the
new summary of the economic projections commonly referred to as.
Speaker 4 (07:04):
The dot plot.
Speaker 5 (07:05):
In the previous dot plot from March FED officials, the
median FED official was expecting to see seventy five basis
points of cuts this year. We expect that the June
dot plot is going to show just fifty basis points
a cut this year. And so not only are we
not going to see a cut coming up, but they're
going to push out expectations for any cuts this year.
Speaker 6 (07:25):
Well.
Speaker 1 (07:25):
Our thanks to Stuart paul Us, economists with Bloomberg Economics.
Next week, computers services giants Dell and HP report their
latest quarterly results, just as both make a huge push
into hardware infused with artificial intelligence technology. Now for more
on those companies and what to expect next, we're joined
by Wujin Hoe, Bloomberg Intelligence Senior technology analyst. Well Woujin
(07:50):
Before we get into the newest proclamations from Dell HP.
What role did artificial intelligence play in the upcoming earnings,
if at all? And what are you expecting to see
in those earnings?
Speaker 7 (08:01):
Well, if we think about AI artificial intelligence, there's two
aspects for both Dell and HP. Dell has AI PCs
as well as HP, and that's still a fairly new
category for both of those those companies. And but you
also have AI servers and Dell has much more exposure
(08:24):
to AI servers and that's already driving growth momentum for Dell,
and I expected to drive more momentum going forward.
Speaker 1 (08:33):
Okay, so they're they're they're a little ahead of the game.
But this past week we learned from Dell at one
of their showcases that it looks like they're almost starting
over with these AI p c s and laptops and
they're promising a whole new world. Why don't you tell
us about that?
Speaker 7 (08:50):
Well, I mean, if you think about AI PC's, it's
still a fairly new category. As I said, what you're
seeing with a PCs is that you're getting new chips
that have neural processors units, which it essentially enables the
AI functions on the PCs. Traditionally what AI applications run
(09:11):
on are graphic processors, but they're less efficient on the
PC and Intel Qualcomm AMD. They are all announcing or
have announced, new chips with these NPUs, and the number
that we expect this year is roughly about forty million
to fifty million units of aipcs that Dell as well
(09:33):
as HPE will participate in.
Speaker 1 (09:35):
And these process or these semiconductor makers have made deals
with just about everybody, and you know it seems Yeah.
Speaker 7 (09:43):
One of the things that Dell said at their event
is that they expect every PC will be an AI
enabled PC. Right, So look beyond the forty million this year,
forty to fifty million this year, I'm forecasting roughly around
two hundred and sixty seven million PCs in total next year.
I wouldn't be surprised that there will be some sort
of AI enablement for roughly a third or half of
(10:07):
the pieces that are out there now.
Speaker 1 (10:08):
This almost exponential leap into AI, is this what's going
to really jumpstart sales of hardware? And you talked about servers,
but I mean some of these Dell they saw huge
gains during the pandemic and then things have slacked off
HP you know has been almost and also ran for
a little bit here. But is this going to really
(10:29):
boost sales?
Speaker 7 (10:30):
So there are two aspects of sales, right, unit volume
growth and ASP growth. Right, And then if we think
about it from a unit volume perspective, this year, I
don't think so. I do think both companies are forecasting
roughly low single digit growth in terms of PC. In
terms of the PC market, I don't think that's going
(10:51):
to change when they report earnings later this week. Now,
in terms of asps, I'll tell you what was very
interesting the Apple I pad event, Right, they introduced a
new chip that was AI enabled, their own chip, right,
their own chip that was AI enabled. There was no
ASP boost to the new iPad pro. What that tells
(11:12):
me that the basic PC that is AI enabled may
not get an ASP boost. That being said, what we're
about roughly four years into coming out of COVID right now,
or the beginning of COVID. The average refresh cycle for
the corporate PC is roughly four to five years. We're
actually in the early cusp of the necessary refresh cycle
(11:34):
number one. And there's a bigger catalyst that's coming in
later this year and early next year the Windows eleven
upgrade cycle, and I actually think twenty twenty five PC
volumes are could be much stronger than twenty twenty four.
Speaker 1 (11:46):
Corporate schools, consumer everybody.
Speaker 7 (11:49):
Corporates predominantly right, I think the enthusiasts on the consumer
side will really lean into the AIPC schools. They're gonna
take a while.
Speaker 1 (12:01):
Yeah, that's a big expenditure. Well, our thanks to Wu
Jin Hoo, Bloomberg Intelligence Senior Technology Analyst, and coming up
on Bloomberg day Break weekend, a look at the global
health landscape ahead of the seventy seventh World Health Assembly
in Geneva. I'm Tom Busby, and this is Bloomberg. This
(12:30):
is Bloomberg day Break Weekend, our global look ahead at
the top stories for investors in the coming week. I'm
Tom Busby in New York. Up later in our program
will look ahead to the trilateral meeting between China, Japan,
and South Korea and what it means for their relationships
moving forward. But first, since COVID nineteen, healthcare has become
even more of a big business. This past March, Danish
(12:51):
drugmaker Novo Nordisk became Europe's most valuable company. Overtaking LVMH
thanks to its wonder drugs, weight life medicines ozempic and wagovi.
And this week is the seventy seventh World Health Assembly.
We're reconciling the worlds of business and healthcare will be
just one topic on the agenda.
Speaker 8 (13:10):
For more.
Speaker 1 (13:11):
Let's go to London and bring in Bloomberg Daybreak europe
Banker Stephen Carroll.
Speaker 2 (13:15):
Tom The World Health Assembly is the decision making body
of the World Health Organization, and delegates from the who's
member states will be gathering in Geneva in the coming
days with some key issues in mind. They're aiming to
improve access to treatment around the world, with a key
ambition to see one billion more people benefit from universal
health coverage. Reaching every corner of the world with healthcare
(13:38):
is no easy feat, though, and often requires the use
of complementary tools. It's something Nissa Leung, managing partner at
Chieming Venture Partners, has been discussing that this year's Cutar
Economic Forum.
Speaker 9 (13:50):
I've been involved with healthcare investment for the last eighteen
years and it's great to see the development we've seen
in the last fifteen years and so forth. At the beginning,
we would be looking at potentially areas that you know,
when we first started in China and investing in areas
where there's no metronic, there's no vizor and whatnot, So
(14:13):
how do we provide basic services and care and drugs
and devices to China. And as we continue to grow
in the last ten years, we started looking at innovation
from all over the world and we think about how
do we use technology, how do we use the next
dimensions of life scien institutes and whatnot to actually help
(14:33):
our research institutions to develop beyond. So you know, we're
very one of the early investors in AI drug discovery,
starting with the investment in Sturinger in New York, and
we were also angel investor in Recursion out of Salt
Lake City, and then followed by in Silico and so forth.
So you know what's really interesting is now we're able
(14:56):
to use AI to identify target and use AI to
develop moleca the structure, and now we have drugs in
phase two clinical in US with a pipeline out of
another thirteen drugs in the pipeline focused on unmad medical
needs that previously we were not able to develop on
our own. So now beyond that we've actually started looking into,
(15:17):
and we've recently invested in a company. We're thinking, since
we have so many targets coming out from AI assets
and assets, we can't continue to rely on animal studies.
That would be the bottleneck. So how can we use
technology to combat that? So we recently invested in a
spinoff from Harvard Medical School with institute Organs on the chip,
(15:39):
so every chip is a different organ including liver that
would test toxicity and so forth. So we're always thinking, five, ten,
twenty years from now, what do we need?
Speaker 2 (15:47):
That was Nissa Leung there from Teaming Venture Partners speaking now.
The pharmaceutical giants are key to developing and rolling out
new medical treatments. Some of the biggest names in the
sector have been boosted by block us to a weight
glass drugs like a Zenpic and d weegav, but others
like Astrozenica are setting ambitious growth targets too. They want
to double sales by twenty thirty. In recent days, Astrazeneka's
(16:11):
CFO Arethana Saren, spoke to Bloomberg.
Speaker 10 (16:14):
The breadth and scope of our medicines is truly incredible,
and it ranges everything from oncology and rare diseases to
the medicines in biopharma for metabolic disorders as well as
respiratory and the growth that we anticipate is both from
existing products as well as the twenty new medicines that
we expect to launch by twenty thirty.
Speaker 11 (16:34):
Doncology clearly absolutely fronts and censor as we work our
way through this period, how big is oncology going to
be for astrosenica as we get to the end of
this period, how big a slice of the pie is
oncology going to represent.
Speaker 10 (16:49):
You know, oncology continues to grow very strongly. Today oncology
is about forty percent of the business and we expect
very strong double digit growth in oncology, both in new
medicines as well as our existing medicines and new indications
for those medicines. Overall, we have over one hundred and
twenty Phase two and three studies going on for our medicines,
(17:12):
and again we're working on a whole bunch of new
medicines that you'll hear about today.
Speaker 12 (17:17):
Rathern I talk to us a little bit about your
manufacturing plans here. Recently, there have been investments in facilities
in Dunkirk, Singapore, Liverpool, even Maryland as well. In light
of some of the kind of crackdown that US regulatory
authorities are putting in terms of where supply chains extend
into Asia. How is Astrodenka tackling that manufacturing story.
Speaker 10 (17:38):
So our manufacturing investments are very strategic. They are aligned
very much with the new modalities and the new technologies
that we have in our pipeline. So the announcement, for example,
in Maryland is for cell therapy products, which we see
as sort of a completely new modality that will change
how cancer care and autoimmune diseases are treated. What we
(18:00):
announced in Singapore is for antibody drug conjugates. We expect
that antibody drug conjugates will replace traditional chemotherapy over the
next decade. And so we're making these investments ahead of
what we see coming in our pipeline because we know
that these medicines have the potential to be very large medicines.
Speaker 2 (18:21):
That's Aratana Saren from AstraZeneca. They're speaking to our colleagues
on Bloomberg Television. Those conversations are helping to set the
industry context for the upcoming World Health Assembly, and our
health reporter, actually Furlong has been telling me about how
the gathering works.
Speaker 6 (18:37):
So usually it's all the countries of the World Health Organization,
which really represents the anti globe, coming together to take
decisions that sort of set the scene for, you know,
how to sort of advance you know, global health aims
for the coming year. This year, it's all about the
Pandemic Treaty and this is quite controversial potential agreement that's
(19:02):
still being negotiated, and we're obviously really you know, on
the cusp of the actual assembly. The agreement would sort
of set out how countries could be better prepared for
the next pandemic, and it includes things potential provisions such as,
you know, how to share vaccines more equitively next time,
or you know, how to you know, ensure that intellectual
(19:26):
property rights provisions related to these these medicines enable them
to be better shared. But it agreement hasn't actually been
reached and reached yet, so that that is really what
everyone's waiting to see if we will reach agreement next week.
Speaker 2 (19:42):
Are these discussions also do they look backwards at what
went wrong, for example, during COVID to try and bring
lessons from them, or is this sort of a more
forward looking.
Speaker 6 (19:51):
Event definitely, So it is looking back, it's saying what
went wrong, and included in the in the draft that's
that's currently being discussed are many things that would that
countries believe would fix the mistakes that happened in the past.
For example, it's things such as when you find viruses
in a country, you know, how you share that really
(20:13):
quickly with other countries, and then how drug makers would
be able to take those virus sequences and produce medicines quickly.
But a lot of it's really controversial because you know,
it would require drug makers potentially then to a certain
amounts of those products that they make with the World
Health Organization, and countries need to agree to share these products,
(20:35):
you know, in a more equitable way. And I think
that you know this is this has become highly controversial,
and almost separately to that, commentators, particularly right when commentators
in the US and the UK, have led quite a
vocal campaign against the Pandemic Treaty, claiming that it would
violate countries sovereignty and give the who you know, increased
(20:56):
powers that they believe it shouldn't have. The World Health
Organization says that you know, that's that's not the case
that this is in agreement by countries and that the
countries are pushing for it, But that's sort of I
suppose Muddy the Water is in the sense and made
the sort of even more controversial document.
Speaker 2 (21:14):
How much is the industry involved in these discussions? You know,
drug makers of course very much in focus during COVID,
but now the focus has you know, been largely in
recent months on things like the rise of weight loss
drugs or drugs and aid weight loss for treating diabetes,
the likes of ZAMPE.
Speaker 6 (21:31):
I think drug makers are following it very closely, and
they're represented in the discussions by the International Farmer Lobby group,
you know, and they I think have supporters you know,
on their side in the form of sort of countries
like the UK and the US, who you know are
pushing for similar provisions. For example, you know, drug makers
(21:52):
gains provisions that might force them to share intellectual property
rights you know, related to their products, and they're also
concerned about you know that there's sort of an argument
for sort of a quid procro If you find a
genetic sequence of a virus and then you want a
country wants to share it globally, you know, what should
that country get back in sort of return for that,
(22:14):
And drug makers are broadly sort of you know, against
the idea that there should be that sort of direct
relationship between sharing virus sequences and then and then countries
getting something back, So I think they're very much involved. Obviously,
you know, there's quite a small chance that this agreement
actually might be reached in time, so I suppose that
you know, there's a sort of less concern that some
(22:35):
of these very controversial provisions might actually be included in
the end.
Speaker 2 (22:39):
Where I suppose are the biggest roadblocks in arriving at
that agreement. Is it a case of countries lobbying for
their own particular interests or is it on the kind
of the issues themselves.
Speaker 6 (22:50):
It's I think the issues themselves, because they require you know,
they they would this would be an agreement that then
would be you know, sort of for the foreseeable future,
for any pandemic in the future. So you know, it's
making these decisions as you know, it's it's not something
that countries do likely and you know, international treaties are
quite rare. As diplomats negotiating this would argue, you know,
(23:13):
the timelines that they've had, which has just been a
few years since the end of the pandemic, you know,
are actually it's actually pretty short, even though it might
seem quite long, you know, in negotiating international treaties. I
think because there's such you know, controversial issues and I
suppose there's no current pandemic going on, that's sort of
putting the pressure on them. That's made it quite difficult
(23:35):
to reach that agreement, and countries, some countries are pushing
for more time to to to conclude the negotiations and
potentially saying should we delay this to the next World
Health Assembly, which would be next year obviously or potentially
later this year, So they're still you know, uncertainty about
when this when this would actually be agreed.
Speaker 2 (23:55):
Okay, So that that the pandemic agreement, as you've outlined,
a very key focus of the discussion these anything else
you're going to be watching out for in the conversations
happening in Geneva, I think that.
Speaker 6 (24:05):
Will really be key. But I suppose it's also about
the World Health Organization's broader role on you know, hard
important countries. See this institution that is really sort of
a guidance setting institution and you know, they recently have
pushed forward on guidance on digital health, on artificial intelligence
as well, so you know, they're trying to sort of
(24:26):
ensure that they are relevant to the you know, to
the current world that we're living in and ensure that
they provide guidance on global health issues. Obviously, you know,
whether they take an increasing role on obesity drugs in
the form of you know, sort of commenting on the
price of the drugs and also ensuring that countries potentially
include these drugs in the list of essential medicines is
(24:49):
also something that you know, we'll be watching for, not
necessarily at this upcoming World Health Assembly, but in the
coming months, you know, more broadly at the at the wh.
Speaker 2 (25:00):
Thanks to our health reporter Ashley Furlong, I'm Stephen Carolyn London.
You can catch us every weekday morning here for Bloomberg
Daybreak Europe, beginning at six am in London and one
am on Wall Streets.
Speaker 1 (25:11):
Tom, thank you, Steven, and coming up on Bloomberg day
Break weekend to look ahead to a trilateral summit with China,
Japan and South Korea. I'm Tom Busby and this is Bloomberg.
(25:33):
I'm Tom Busby in New York with your global look
ahead at the top stories for investors in the coming week.
We look ahead now to a trilateral meeting between China, Japan,
and South Korea. The two day summit may be seen
as an opportunity for Japan and South Korea to manage
their relationship with China. For more, Let's go to Hong
Kong and Bloomberg Daybreak Asia hosts Brian Curtis and Doug.
Speaker 3 (25:54):
Krisner tom The talks are expected to cover a range
of issues from trade and economic policy to geopolitics and
peace and security, and these discussions will be happening at
a high level. Japanese Prime Minister of Fumiyo Kishida, South
Korean President Yunsokyol, and Chinese Premier Lie Chung will attend.
Speaker 13 (26:15):
And the summer will be the first major test on
the diplomatic front for President Yun. He's trying to maintain
momentum for the remaining three years of his term. Last month,
Yun suffered a major defeat in South Korean parliamentary elections.
From the China perspective, Beijing is likely looking to hamper
strengthening American ties with both Tokyo and Soul.
Speaker 3 (26:35):
And we spoke earlier with Heiner tongan senior fellow at
the Taiha Institute. I asked him about the role of
the US in relations with these three countries.
Speaker 14 (26:45):
If Washington feels strongly that they have to contain China
and that's the only thing that works for them, they're
going to put as much pressure as they can on
allies to kind of toe the line. But you know,
right now things despite the way things look in the US,
you know, you have positive numbers, but you have a
lot of unhappy people, and that could mean political change.
(27:06):
A lot of people are wondering if Trump was going
to be in and how that will impact this kind
of relationship, especially in Asia. It's not clear how he
wants to treat it. In the past, he you know,
he dallied with North Korea. Obviously that's still an issue there.
I don't know that Young Kim is going to deal
with him again. I think he felt humiliated by that.
Speaker 1 (27:28):
So there's got to be some other.
Speaker 14 (27:29):
Way of dealing with a nuclearized North Korea, hopefully not
one that involves a nuclear arms race throughout Asia.
Speaker 13 (27:36):
So Japan and South Korea moved a lot closer to
Washington in recent years. But if you look at this
relationship going back a long period of time, there are
not so many things that China and South Korea agree
on except for you know, very bad feelings that stretch
all the way back to the Second World War about Japan.
Speaker 14 (27:54):
Yeah, you know, and I don't think that's useful. I mean,
looking back at the past is not going to change
the present. It can certainly sour it.
Speaker 1 (28:02):
But you know, look at South Korea.
Speaker 14 (28:03):
It's grew one point three percent quarter last time, much
higher than they expected. They were only expecting point five.
And you know, exports are forty two percent of gross
domestic product. In Japan it's about around twenty one percent
depending on the ear you're looking at. So it's slightly
(28:24):
different positions, but both need exports. And right now, with
you know the mean streets coming in terms of economic activity,
these countries have to keep a practical eye out for jobs.
You know, the questions about inflation, and as I said,
you know, these are two leaders who desperately need some wins.
(28:44):
You'll note that Chi Jinping is not going He's sending
his premiere to deal with this, but the two leaders
are going there obviously trying to bolster their leadership credentials,
so they're in a slightly weaker position. But you know,
China so far hasn't been putting the screws to and
they just said, look.
Speaker 3 (29:00):
Let's trade heiner As you know, each of these three
countries are heavily reliant on the importation of crude oil
to power their energy needs. And I'm wondering whether you
consider the amount of Iranian crude oil entering China, or
whether we're talking about the degree to which sanctions have
limited the exportation of oil out of Russia. I'm wondering,
(29:22):
is there a commonality here when it comes to the
topic of energy.
Speaker 1 (29:26):
Well, there is.
Speaker 14 (29:27):
I mean it's not much talked about, but both South
Korea and Japan are still getting Russian oil and gas
and things like this. They're not willing to sacrifice to
their economies the way that Germany was by cutting off
the cheap gas that was coming in, and you know,
they're going to take a kind of a realistic look
at this. China, on the other hand, has a slightly
(29:48):
different situation. I mean, everyone talks about China somehow blockading
the South China seas or Taiwan Straits. I don't put
much crehdenence in that because that would cut off eighty
percent of their oil imports just and forty percent of
their economy because it wouldn't be able to send things out.
It's not very practical, you know, you'd be slicing your
(30:09):
own throat to make a point. Not something that very
pragmatic China is going to do. So this issue about
access to oil, at least on that part, is not
going to be an issue. The Huthi's Red Sea that
affects some of it, but you're seeing that oil is fungible.
It kind of moves from market to market.
Speaker 13 (30:29):
You know.
Speaker 14 (30:30):
For instance, Indian is now the largest purchaser of Russian oil,
which eventually makes it way where to Europe, unfortunately at
a higher cost, which is adding to inflation and also
affecting competitiveness of industries there to reliant on energy.
Speaker 3 (30:46):
He is Einer Tongan from the Taia Institute speaking with
us earlier on day Breakasion. Now let's bring in John Hirskowitz,
Bloomberg East Asia Government editor, who joins us from the
Japanese capital. So a two day summit in souls On
it's high level, Japan, South Korea, China all involved. Typically
when meetings like this happen at high levels, there are deliverables.
(31:09):
Should we be looking at specific areas where we would
most likely see some sort of agreement.
Speaker 8 (31:15):
Well, I think that the main thing for this is
that they're actually meeting. The last some of that they
did this was twenty nineteen, and there have been so
many changes in Asia in that time, in the global
economy in that time. But we're going to see some deliverables.
We've had some talk about like discussing trade, people to
people exchanges, looking at some sort of joint statement for cooperation.
(31:39):
But I don't think we're going to get anything really
in the nitty gritty, anything significant. But we're going to
get something, some sort of statements, some sorts of agreements
that are going to show that there's progress, that this
meeting resulted in something.
Speaker 13 (31:55):
John, we heard from einor Tangin earlier about supposed pressure.
I'm curious, is the US putting pressure on Japan and
South Korea here to confront China or is this happening organically.
Speaker 8 (32:07):
Yeah, the US is supporting both Japan and South Korea
and having talks with China. I don't think the pressure
that has come on Tokyo and Seoul has been to
cooperate with Biden Biden administration initiatives on things like exports
of high tech to China, chip technology, things that are
(32:30):
trying to keep the US pre eminence and its partner's
pre eminence in high tech gear and equipment. In terms
of like actual pressure for confronting China, I don't think
that we're going to find that specifically in the meeting.
But the US is such a concerned party that what
they have to say will probably have been convened many
(32:50):
times over to both Tokyo and Seoul before they have
this sit down with the premiere of China.
Speaker 3 (32:57):
We know that both South Korea and Japan have or
are supporting the US export controls when it comes to
high end semiconductor manufacturing into equipment into China. These countries
are so dependent on trade with China. Is there a
way that they can kind of embrace that relationship and
I'm talking about the Chinese relationship with both Japan and
(33:19):
South Korea without allowing this high tech issue to kind
of enter into the conversation or do you think that's
going to be central.
Speaker 8 (33:29):
It's a balancing act that Japan and South Korea have
had for years decades that their biggest trading partner has
both been China and their biggest security partner is the US.
So they've found ways to work both sides to keep
the trade with China on as even a kil as
possible and keep its relationship with the US strong. But
(33:53):
what we've seen in recent years is that the pace
of investment from Japan and South Korea into China has
slowed and trade with the US has picked up. So
we're seeing incentives for Japanese companies, South Korean companies in
various states to move in set up facilities, and we're
seeing more and more of this investment coming. And the
(34:15):
importance of China and China still dominates the trade for
these two countries, but it's been slightly diminishing over the
past couple of years.
Speaker 13 (34:25):
So trade is obviously very central to these talks. What
about concern about North Korea and its military cooperation with Russia.
Speaker 8 (34:36):
Yeah, we're seeing the Japan South Korea has been in
locks up with the US in their concerns about North Korea.
They've all made the allegations of North Korea sending arms
to Russia, millions of rounds of munitions, missiles, and the
government of the US has shown satellite pictures of these
(34:58):
transfers of equipment from North Korea into Russia, showing trains
going over to the front lines near Ukraine. But China
has asked for a bit more measured tone. They've said
the burden for a peace and stability on the Korean
Peninsula should lie with the US and its partners. But
(35:19):
China is North Korea's biggest economic benefactor for years and years. Washington, Seoul,
and Tokyo would all like to see China play a
greater role in reigning in Kim Jong un and his
nuclear ambitions, and this will be a part of the conversation.
But this has been an ongoing conversation. So I don't
think we're going to see huge amounts of headway when
(35:40):
it comes to North Korea.
Speaker 3 (35:41):
When I think about the politics of the APAC region
and I think about where that intersects trade, I think
of the South China Sea. This is obviously going to
be up for discussion, is it not.
Speaker 8 (35:51):
I believe so. In Japan, more so than South Korea
has expressed its concerns about what it sees as Chinese
assertiveness in the South China. South Korea has been a
little bit more tepe it in its statements regarding the issue,
and this will be a subject of concern. But also
China has its concerns with the Yellow Sea. It has
(36:15):
a great deal of its naval forces in the Yellow Sea,
where the US and South Korea could exert its naval
influence and in theory bottle up a lot of Chinese
naval forces. So there's a little bit of China has
its attention in some areas. The South China Sea is
(36:35):
a huge issue as well. The Yellow Sea may come
into focus. It's been a subject of China's concerns for
a bit.
Speaker 13 (36:41):
We have to remember it was not that long ago
that China whipped up the nationalistic fervor and boycotting various
products from bout Japan and South Korea. I think none
of these countries is an easy partner of any of the.
Speaker 8 (36:56):
Others, exactly. The nationalists river can get whipped up from
time to time. We're seeing it a bit with Japan's
discharge of treated water from the Fukushima nuclear reactor. This
is from the twenty eleven Tsunamia nuclear disaster. Japan is
going to see if you can raise the issue of
(37:17):
Chinese bands of imports of some of its food products,
seafood products related to the Fukushima disaster. But there are
sentiments dating back into history which do get stoked for
political purposes. The ones between Japan and South Korea have
cooled down a little bit, but the Fukushima incident is
(37:38):
something that is of concern in South Korea and even
more so in China.
Speaker 3 (37:43):
John, thank you so much for joining us and helping
us set up this two days some that will be
taking place in Seoul in the week ahead where top
officials from Japan, South Korea and China will be meeting.
He is John Harskowitz, Bloomberg East Asia Government Editor. I'm
Doug Krisner. You can join Brian Curtis and myself weekdays
here for Daybreak Asia beginning at eight am in Hong
(38:04):
Kong eight pm on Wall Street. Tom.
Speaker 1 (38:08):
Thank you Doug, and thank you Brian. 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
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