December 5, 2025 • 39 mins
Bloomberg Daybreak Weekend with Host Nathan Hager take a look at some of the stories we'll be tracking in the coming week.
- In the US – a look ahead to next week’s Fed decision and earnings from Oracle and Adobe.
- In the UK – a look ahead to the Blackhat cybersecurity conference.
- In Asia – a look ahead to China consumer and producer price data.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:10):
This is Bloomberg Daybreak 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, we'll
look ahead to the final monetary policy decision from the
Fed of twenty twenty five and how that could affect
interest rates into the next year. I'm Nathan Hager in Washington.
Speaker 3 (00:27):
I'm Caline Hegger in London, where we're looking ahead to
the black Hat cybersecurity conference in London.
Speaker 4 (00:33):
I'm Doug Prisner looking at why China's economy is stuck
in deflation.
Speaker 2 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three zero, New York, Bloomberg ninety nine to one.
Speaker 4 (00:45):
Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London,
Sirius XM one twenty one, and.
Speaker 2 (00:54):
Around the world on Bloomberg Radio, dot Com and the
Bloomberg Business app. Good day to you. I'm Nathan Hager.
We begin today's program with the Federal Reserve. The Central
Bank holds its final two day policy meeting of twenty
twenty five this week, issuing its final monetary policy decision
(01:15):
of the year on Wednesday. So for more on the
path ahead four interest rates, we are very pleased to
be joined by Stuart Paul, us economist with Bloomberg Economics. Stuart,
thanks for being with us. And it seems as though
the market is all but fully priced in that we
are going to get a rate cut this week. Did
some of the private data that we've seen ahead of
(01:36):
this decision sort of shake any of that, bet?
Speaker 5 (01:38):
I don't think so. When we look at some of
the private sector data, including the ADP report showing a
pretty cool labor market, and then some of the official
data as well, relatively weak manufacturing in the month of September,
import prices that were relatively dull. When we receive those
data points earlier last week, it basically gave the green
(02:01):
light for this rate cut. So I don't think that
the Fed is going to be that concerned about whether
it can defend its decision to cut when it meets
this week. I think that the bigger conversation around the
table at the FOMC meeting is going to be what
message to send to the markets and what message to
(02:21):
send to interested parties out there when it releases it's
summary of economic projections. I think that's where we're going
to see a more division and in fact, maybe a
little bit of confusion.
Speaker 2 (02:32):
How so, I mean, I guess we have seen sort
of diversion of thinking when it comes to where policy
should go from even some of the FED speakers ahead
of this meeting. But I mean, how much of a
change could we see in the dot plot.
Speaker 5 (02:47):
I think it's going to be pretty significant in twenty
twenty six. And I think that even more important than
the dispersion of dots in the dot plot included in
the summary of Economic projections, is to remember that the
voters on the FMC next year are going to be
shifting pretty dramatically. There is going to be a contingent
(03:08):
of hawkish regional Fed bank presidents that become voters, and
among them are Dallas FED President Laurie Logan, Cleveland FED
President Beth Hammock. Those are some folks who were among
the more hawkish, among the more hawkish and the more
vocal FED speakers over the last several months, and when
(03:29):
they become voters, it's going to be all the more
important to try to identify which dots they are and
I expect they're going to be among the more hawkish
cluster when we look into twenty twenty six. A lot
of attention has been put toward who the next FED
chairman is going to be. But I think then more
important actually than who the next FED chairman is is
(03:50):
this point about division on the FED, because we're going
to see a lot of it. We're going to see
a growing division on the FED, and.
Speaker 2 (03:58):
We've even heard some concerns raised. I guess you could
say about whether that next FED chair is going to
be able to deliver the kind of rapid rate cuts
that President Trump has been looking for. We heard from
p Jim's Greg Peters just in the last couple of
days saying, even if it is Kevin has it, the
President's White House Economic advisor, he might not be able
(04:20):
to get that kind of consensus. How do you see it.
Speaker 5 (04:23):
I think that's right. I think it's going to be
difficult for the next FED chairman to build a coalition
of voters that can show some sort of a united
front around the pace of rate cuts. I think that's
going to be true of any FED chairman. It seems
as though a lot of attention over the last week
has turned to whether or not somebody like Kevin Hassett,
someone coming from the White House, has the credibility that
(04:46):
the Fed will remain devoted to its two percent inflation target.
Somebody like that has the credibility to keep markets calm.
I will say that when the trial balloon was floated
a couple of weeks ago. Now regarding Kevin Hassett as
the finalist for the chairmanship, he passed the markets test
with flying colors. Equities rallied, two and ten year rates fell.
(05:10):
It's exactly what the White House wants to see. So
as much as we've heard chatter over the last week
questioning whether somebody like Hassett has the credibility to build
a coalition or to maintain the FEDS two percent inflation target,
it seems as though the market thinks he has enough credibility.
It seems as though to me, no matter who the
(05:30):
next FED chairman is, it's going to be difficult to
build a coalition. I think that's just the nature of
the evolving voting roster at the FOMC right now.
Speaker 2 (05:40):
So, given the evolving roster, how much attention should the
markets be putting on chairman Powell's news conference after the
decision on Wednesday.
Speaker 5 (05:50):
I think that markets will put a lot of weight
on it. Basically, no matter what, he still is the
person who will be leading the FOMC for pretty close
to six months, and I think that the question is
going to be around whether the FED will maintain any
sort of cutting pace in the first half of next year,
given the expectation that a new more dubbish chairman will
(06:12):
take the reins starting in May. So I think that
when we see this press conference from FED Chairman Powell
on Wednesday, the question is really going to be what's
it going to look like in January, what's it going
to look like as we get towards the end of
Q one and into Q two, What is the Board
of Governors and what are the regional Fed bank presidents
(06:33):
thinking about cuts in the first half of next year.
Right now, our base case in Bloomberg Economics is for
the FED to move more towards a quarterly cadence of
quarter point cuts next year, and that's based on our
expectations for economic fundamentals right now. I think that FED
Chairman Powell is going to try his best to not
(06:54):
show his hand in any one direction. But again when
we just at the evolving roster, it's going to be
very difficult next year to deliver quick rate cuts the
kind of the president wants.
Speaker 2 (07:07):
Yeah, it is going to be a fascinating discussion and
a fascinating final decision coming up later this week. Thank
you for this, Stuart, really great having you on with us.
That is Stuart paul Us, economist with Bloomberg Economics. We
move next to more corporate earnings in the tech space.
We hear from two big names on Wednesday, Oracle and Adobe.
Let's bring in Bloomberg Intelligence technology analyst Anurag Rana from
(07:30):
More on this latest round of tech results. Anurag, these
are a couple of names that have kind of been
hit pretty hard lately around the question about whether artificial
intelligence valuations have gotten two stretch. So let's start with Oracle.
How high is the bar for their earnings?
Speaker 6 (07:45):
So I think they have to come out and basically
explain that the big backlock of orders that they have
from open AI, how is that going to get funded
and how is that going to get recognized into revenue.
That is the single biggest question in our mind at
this point, especially when you go back and look at
the stock chart. It had a massive run up when
(08:07):
they Oracle announced that big order book from open Aie.
But in the last you could say, two months, two
and a half months, there has been a lot of
scrutiny in the market as to how some of this
is going to get funded, and that I think is
what has been being on the stock. So the management
has to come and explain their strategy of data center
(08:28):
expansion and where that money is going to come from.
Speaker 2 (08:31):
Yeah, to your point, I think we saw in just
the last few days report that the cost of protecting
Oracle's debt from default at its highest level in more
than fifteen years. I mean, what kind of explanation can
we expect for how Oracle can kind of service that.
Speaker 6 (08:48):
So one of the things you have to think about
it is there is a lot of investor demand for
anything that's related to data center expansion because I think
people understand that's an area where you are looking act
more and more build up over the next several years.
So you know, whether it's private credit or whether it
is private equity. A lot of these companies may be
(09:10):
able to fund some of that expansion. But the big
question is you know at what level, because one of
the things is open AI has talked about, you know,
several hundred billion dollar investments out in the public for
those data centers, so the appetite is not so much.
And also remember Oracle is not the one that's funding
a lot of that from their own balance sheet or
(09:31):
their cash flow. They go out in the market, they
raise the funds with the help of a consortium, and
that goes you know, into that special purpose vehicle that
does not impact Oracle's balance sheet directly, but at the
end of the day, they are the ones who will
be recognizing some of the revenue from it, not just
the investors. So they have to come out and explain
(09:54):
a bunch of these things.
Speaker 2 (09:55):
Where do you see Oracle stacking up compared to some
of the other hyper scalers. I mean, think of the
Magnificent Seven all the time, and Oracle, of course isn't
part of that cohort. Is it going to stay behind?
Speaker 6 (10:07):
So one of the things that we have talked about
quite a bit over the last few years when it
comes to cloud computing, there are three big players, Amazon
being the biggest one, Microsoft after that, and then Google,
you know, the third player. But because of this massive
demand for AI infrastructure and AI infrastructure workloads, Oracle has
really kicked up and become what we call us the
(10:30):
fourth hyperscale cloud providers. And the big question is are
they each other taking market share from each other? There
is a little bit of that going along, but at
the same time, the market has expanded very very strongly
because one of the things that you have to do
is when you're running an application like chat GPT, you
will be running on a cloud infrastructure. You typically don't
(10:50):
run that in somebody's internal data center. Same thing for
an enterprise when they are expanding some of these AI workloads,
cloud is usually where it's hosted. So when you take
a look at that, the the end markets, which is
cloud infrastructure, has actually grown quite nicely, which gives growth
opportunities for all foward vendors and not just one or two.
Speaker 2 (11:13):
Let's talk about Adobe. Now, looking at a chart on
that stock it's kind of upper left to lower right
for the whole year here. So what are the expectations
around Adobe's results?
Speaker 6 (11:24):
Yeah, I think that seems to be a big story
when it comes to Adobe, that you know their lunch
is going to get eaten up by AI related tools
that are out there, free tools. So when you look
at Adobe and you go back a few years before
the launch of any large language models, this company used
to trade even higher than Microsoft because of high free
(11:46):
cash flow, the perception that nothing can happen to some
of their marquee products, that is Photoshop or Acrobat, et cetera.
But what has happened is when you're seeing these free
products that can create images and videos, investors allverrid that
their code business is going to get attacked and they
won't be able to protect that. Now, when you look
(12:08):
at their results, at least in the last three quarters,
they have reported decent results, but at the same time,
you know they have not seen any acceleration, and I
think that's always brings that question mark. So we're going
to see that a little bit of the same thing.
They're going to come out talk about how they can
grow next year, They're going to talk about their own
AI products. The question is whether that's going to be
(12:31):
enough to pacify this this little fear that's out there
in the market that Adobe is a net casualty of
AI related developments.
Speaker 2 (12:40):
Thanks for this on a rock, great having you with us.
That's honorog Ran, a technology analyst for Bloomberg Intelligence, and
coming up on Bloomberg Daybreak weekend, we look ahead to
the black Hat Cybersecurity Conference in London. I'm Nathan Hager,
and this is Bloomberg. This is Bloomberg day Break weekend,
(13:08):
our global look ahead at the top stories for investors
in the coming week. I'm Nathan Hager in Washington. Up
later in the program, we'll preview upcoming data out of
China in the health of the Chinese economy. But first,
cybersecurity challenges facing Europe are clear. Airports, businesses, financial institutions
are all at risk from an increase in cyber attacks
by criminals and state actors. That's the black drop to
(13:31):
the Black Hat Europe conference in London, which gathers top
professionals for briefings on modern day strategies to counter those
threats online. Let's get more from Bloomberg Daybreak Europe banker
Caroline Hepger in London, Nathan.
Speaker 3 (13:43):
The Black Hat cyber Security Conference in London over the
next few days will look at the latest trends in
cyber security, as attacks are becoming increasingly costly for governments
and businesses, sometimes into the billions. Briefings will be held
on how to bolster sign defense strategies in both the
public and private sector. The Bloomberg London Tech Summit recently
(14:07):
featured interviews with top CEOs on how businesses can build
resilience in a rapidly changing threat landscape. Speaking at that summit,
Yevgeny Dibrov, who is the CEO of the cyber security
firm Armis, who explained why there's been such a surge
in interest in the company, the.
Speaker 7 (14:27):
Great demand that we are witnessing right now because of
attacks on critical infrastructure. Basically all the geopolitical tensions Russia, Iran,
North Korea, everybody. You see a lot of targeting infrastructure,
targeting national infrastructure, the most critical areas from airports to
grids to manufacturing in the US, in the Mia, we
(14:50):
see a lot of UK as well.
Speaker 3 (14:53):
That was Armis CEO Yevgeny Dibrov being interviewed there by
Bloomberg's senior cyber security reporter Jordan Robertson, and Jordan is
with me. Great to have you on the program. It
has been such an important and interesting year, hasn't it?
For your beat? The era of rapid digital advancement of AI.
(15:17):
Can you just talk to us about the elevated kind
of cyber threats levels that we're seeing in the UK
in Europe. I mean you heard it in that interview
that you did. It's everything from big companies to personal
data to airports. This ahead of discussions at black Hats.
Speaker 8 (15:35):
Sure, yeah, thanks for having me on. You know, if
you take a look at the conference agenda for this
Blackhat conference, I mean, first of all, it's a very
technical conference. It's technical content for technical people, but the
overarching themes are still the same that people would kind
of recognize. And there are two main themes that are
happening in cybersecurity right now. One and perhaps the biggest
one is ransomware. Computer hacks used to be pretty secret things.
(15:57):
Companies by and large could keep these events secret unless
certain data was leaked, and they could prove that certain
data was leaked, personal information, things like that. But most
cyber attacks were secret and companies were allowed to do that.
You can't keep secret a ransomware attack because your business stops.
And we saw that this year with the you know,
the attacks on m ands. We saw that this year
with the attacks on Jaguar Land Rover, you know, which
(16:19):
brought really significant critical operations to a halt. And this
idea of ransomware, which very often is executed by by
young people, by kids. In many cases you're talking about teenagers.
You're talking about young people who connect online and kind
of I guess, get radicalized if you will, and see
this as a real business, business opportunity. There are millions
(16:39):
of pounds to be made through some of these hacks.
These attacks are very easy to do, they're extremely disruptive.
You can get a lot of money in extortion fees
if you're the hacker. So, you know, one of the
things that the cybersecurity industry, including this conference this coming week,
you know, is really focused on, is, you know, technically,
how do you get ahead of these attacks? Like are
(16:59):
there technical countermeasures you can put in place to repel
ransomware attacks? And it's a really hard problem because it's
not so simple as saying there's a bad actor on
my network, therefore they are not allowed to do anything.
Bad actors routinely impersonate real users or steel credentials of
real users. So if you're running a large network, the
(17:20):
biggest threat to your network is going to be somebody
on your network, that is using credentials that belong to
your employees. So very very hard problem. There are no
easy technical solutions. But that's one of the themes of
this conference, and another which is kind of a perpetual theme.
You know, ransomware is here to stay. And one of
the things I like to describe is that we didn't
(17:40):
have ransomware before we had crypto, Like we have crypto
and now we have ransomware, and the two are interrelated
because prior to crypto hacker, it was really hard for
hackers to get paid. They would sell data on the
dark web, and you know, they'd have fake bank accounts
and it was very, very challenging to actually collect revenue
(18:01):
from your hacks. But now that you have digital currencies,
that's that's what's facilitating all of these attacks and making
it easier for making it possible for criminals get paid. Okay,
the other side of the ledger are espionage attacks, as
you heard the Armiss CEO talk about, which is now
that everything is digitized from obviously from telephones to cars,
to transportation networks to you know, the power grid. You know,
(18:24):
everything will have a digital footprint. So every country on
the planet has intelligence services that's trying to build up
their cyber capabilities to potentially disrupt their adversaries. And you
know that can range from hacking into a power grid
and not doing anything but positioning yourself so that if
there is some sort of armed military conflict, you can
(18:44):
flip a switch and turn off the lights. And those
are the threats that people are trying to protect against.
Speaker 3 (18:50):
Yeah, and wow, that's the kind of head spinning list,
isn't it, in terms of the threats that are out there.
And you mentioned a little bit about the difficulties of
how businesses come up, specifically business is with strategies to
try to count these attacks. Maybe we can talk about
that a bit more, because the thing that was extraordinary
about the JLR hack in the UK was that the
government agreed to an emergency loan for Jaguar land Rover
(19:14):
so that it could pay its suppliers. They were worried
about the fallout across the UK, and so that is
something very novel as well.
Speaker 8 (19:24):
Yeah, the Jaguar hack was very significant in many ways,
and we did some pretty great coverage of it, and
as you mentioned, the most significant aspect of it was
the UK government stepped in and underwrote an emergency two
billion dollar loan to Jaguar land Rover, which by the way,
is owned by a five hundred billion dollar foreign conglomerate, Caltata.
(19:46):
You know, UK government underwrote that loan to bail out
the company. It's not because the parent company couldn't pay.
It was the concern that if this breach dragged out,
you'd have people out of work for a long time,
potentially forever, if the factories had to close. And it's
the first time to our knowledge that we've seen a
government underwrite a rescue of a ransomware victim, especially to
(20:08):
this degree. You know, governments will often send their cyber
experts into these you know, critical companies, you know, nationally
important companies to help them investigate breaches. But you know
now that the UK has kind of gotten into the
business of underwriting the rescue packages for a ransomware victim.
You know, it raises this question of precedent and it's like,
(20:28):
is this what we're doing now and what are the
implications of that? And I mean, to be clear, this
is a loan that needs to be repaid. But when
if you're a ransomware operator and you're a hacker. This
is the best news you could have asked for, because
you know, and you are basically guaranteed that the companies
that you are hacking will survive long enough to potentially
(20:49):
pay you, and that's what they're after.
Speaker 3 (20:52):
Yeah, if they dissrupt things enough that there would be
a pay date at the end of it. You know,
you've also covered the threats to buy things and critical
financial infrastructure of particular interest. I imagine to our audience,
how would you quantify and characterize the increase in hacks,
especially from China, but maybe other countries.
Speaker 8 (21:13):
Yeah, this is such an interesting topic because whereas ransomware
is in your face, I mean, security experts describe ransomware
as an exit strategy. The exit strategy is announcing to
the world that this has happened and then demanding payment,
so everybody sees a ransomware attack. These attacks on the
financial system, however, that we've been writing about largely are
designed to be totally invisible. And you know, what hackers
(21:34):
in those cases are after is not disruption. In fact,
it's the opposite. What thereafter and that in those cases
are intelligence, our information about how the financial system works.
Who's under investigation who's under investigation for sanctions and things
like that. You know, powers of the government, whatever government
that is, US, UK, wherever governments have extraordinary powers to
sanction individuals, and foreign governments that may be targets of
(21:57):
those investigations, are extremely interested in understanding who's on that list,
who's being investigated, what information do they have. So there's
so much, you know, reporting this year focused largely on
the US Treasury, which has suffered a series of very
devastating espionage attacks in recent years. And what we looked
at was how does the US Treasury, which has a
(22:19):
large cybersecurity team, which has a great budget for cybersecurity
and increased budget, you know, for this this kind of work,
how do they keep getting hacked at a very deep
level by Russia and China in particular. And the answer
is a little bit complicated. But one thing that you
take away from it is there is no silver bullet
in cybersecurity. If there were, everybody would use it. There
(22:39):
are best practices, there are approaches, there are techniques you
can use, but there is no silver bullet. And you know,
so what you're left with is whether it's ransomware or
whether it's an espionage attack. You know, cybersecurity is an
even more difficult problem now than it was before. Even
though we have more cybersecurity protections, we have more venus.
(23:00):
Like the Black aut conference, there will be it's a
vendor conference with research as part of it, so they're
going to be there selling cybersecurity technologies that you know
they all do something. But if there were a technology
that could cure cybersecurity attacks, you know, everybody would obviously
would be the most valuable company in the world.
Speaker 3 (23:16):
It's the game of chase, isn't it? With all crime?
Is how you know all perhaps criminal and other activities,
how to keep pays. A final word then, too, on
AI and what difference artificial intelligence is making, because this
is another area that you've reported on in a big
way over the past few months.
Speaker 8 (23:36):
So what I've what I've been doing the past couple
of years is with most sources I meet, and these
are your senior cybersecurity people at governments and companies or whatever,
and I will ask I will try to ask every
single one of them, how is your organization using AI today?
Like practical examples, not like experimenting, but like practical examples,
how are you using AI? It's been really revealing, Like
(23:58):
most of them have said, not really at all, very
surprising to me, with some exceptions. And the reason that's
surprising when it comes to cybersecurity, you're dealing with hackers
the way it's been explained to me. You're dealing with
hackers that in most cases are trying really really hard
not to be detected. If you're writing that code to
perform those attacks, you're not going to outsource that to
(24:19):
a large language model which can hallucinate and make mistakes
and maybe blow up your operation. So we're seeing that
there's not a lot of utility for these llms in
custom hacks, espionage attacks, really high level stuff. There's too
many uncertainties around it. Where we are seeing AI being
used is especially true in spamming. So if you're doing
(24:40):
a spam operation. It's kind of a funny story is
we're seeing increased spam activity in countries that previously didn't
have a lot of it. Japan comes up a lot,
so places where you have character based languages that are
not really used elsewhere in the world. Some of these
countries have seen very very low rates of spam for decades.
(25:02):
There just isn't a lot of that activity because crafting
the messages in the local language is very challenging. You
have to have subject matter experts. Large language models have
really helped the hackers in that regard, Jordren.
Speaker 3 (25:15):
That means many more stories I expect from you and
from your colleagues. Thank you for being with me. Been
a hugely fascinating conversation about cyber security, Bloomberg's senior cyber
security report at children Robertson. Thank you, and we'll have
full coverage on Bloomberg Radio of developments on this topic
and the black Hat cyber security conference in London in
(25:37):
the coming days. I'm Caroline Hepcker here in London. You
can catch us every weekday morning for Bloomberg Daybreak Europe,
beginning at six am in London. That's one am on
wol Street.
Speaker 2 (25:46):
Nathan, Thanks Caroline, and coming up on Bloomberg day Break Weekend,
we take a look at why China's economy is stuck
in deflation. I'm Nathan Hager, and this is Bloomberg. This
(26:07):
is Bloomberg Daybreak Weekend, our global look ahead of the
top stories for investors in the coming week. I'm Nathan
Hager in Washington. This week China releases the latest readings
on consumer and producer prices. For more, Let's go to
Bloomberg's Doug Prisner, host of the Daybreak Asia podcast.
Speaker 4 (26:23):
Nathan the Chinese economy is caught in a deflationary trap,
and the factors that led to steadily declining prices appear
to be firmly entrenched. Bloomberg Economics is saying it's going
to be tough to shake and to make matters worse.
Economic growth in China in the current quarter has been weak.
Let's bring in Bloomberg economist Eric Zu, who covers China
(26:44):
and other economies in the Asia Pacific. Eric joins us
from Hong Kong. Eric, thank you so much for making time.
This period of deflation in China has been going on,
as we know for several years. Why the stubbornness.
Speaker 9 (26:59):
I think the reason is the demand side, so the
consumer side, business side, I mean the demand domestic demand
is too weak, so it's not enough to you know,
driving and sustain inflation especially. I think a key issue
the confidence here. So we see lots of data, you know,
see the consumer they're deleveraging, corporation they're also delaverging, so
(27:23):
noing is willing to borrow, you know, to expand consumption
spend investment. So there are lots of downward pressure on
the pricess on the from the domestic side. So I
think so people are over anxiety, they overwork, so basically
they don't have time to consume. And at the same time,
you know, the income is slowing, you know, the job
(27:44):
looks are not looking great. So people are very cautious,
you know, on spending, and if they have any you know, money,
they would rather you know, say for the future. Right
in the case I lose my job or I got
income cut, so it's it's better to saving for you know,
in a certain future rather than spend whatever I have
right now. So I think that's long a deep rooted
(28:08):
issue which is creating a very deflationary economy right now.
Speaker 4 (28:12):
At the same time, I think we need to mention
the issue of excess factory capacity, and this is something
that many of China's trading partners have been critical of China,
essentially exporting deflation.
Speaker 9 (28:25):
They're you know blaming China for you know, down pins
of chief goods into their country and you know, taking
their markets. So but just at the same time, I
think the key issue is China's although trying to have
a very big domestic market, but just right now that
demand is too slow, nobody willing to spend, so they
cannot digest or the production within the country.
Speaker 4 (28:47):
Under these circumstances, Eric, do you believe it's possible for
China to achieve that growth target of around five percent
or will a lot more be required in terms of stimulus.
Speaker 9 (28:59):
I think in sery it's possible. You see this year,
so although the four Q the last quarter, I think
the data is quite weak, but they basically have done
that within the first three quarters or within the first
half of the year, so I think it's probably the same,
you know style next year. They want front load some stimulus,
you know, at the beginning of the year, make sure
(29:20):
we have a strong first half. Then on the second
half they might you know, relax the momentum a little bit.
But I think in theory we do not really think
China needs to maintain a five percent every year. So
if you look at the five year plan they just
release in October, some reading is that if you still
want to achieve the twenty thirty five, the develpment go.
(29:45):
I think it's a mostly you just need four point
five percent girls over the next decade. So I think
probably next year they're still going to maintain five percent
girls target, but I think further on they might gradually,
you know, be more relaxed on the girls time. It's
no longer I don't think five percent is a must
hit target. Maybe next year, but in the future years,
(30:06):
I think they want to give more room, even solve
the language, which means we no longer have to hit
a hot target of five percent. They might you know,
change your language like a range, right, we will have
a range target instead of a very hard five percent target.
Speaker 4 (30:23):
So help me understand how the currency enters into all
of this. Lately, the Chinese you want has been stronger,
particularly against the dollar, and if anything, you would think
that authorities in China would want to slow that down
just a bit.
Speaker 9 (30:37):
I don't think the government, you know, will allow a
very quick appression, just like they won't let depreciation to
happen very quickly. So I think the government is okay
with you know, appreasion, appreciation or depreciat They just don't
like hit a very sharp one way, you know movement,
so they're more like, you know, you can you know,
(31:00):
gradually do that. But I think that the fundamental reason
is one is the weaker dollar so globally because of
the US policy. And another thing is I think it's
some funds coming to China, you know, betting on China's
tech boom. And also the tear side, the China US
relations seems you know, in quiet a periodore right now.
(31:21):
So I think before the next excalation next year probably so,
I think it's will be give a window for the currency,
Chinese currency to gain stronger. But on the PBOC side,
I think they will only try to manage this to
happen in a you know, slow motion, not overnight.
Speaker 4 (31:41):
So if you had to speculate on what more stimulus
might look like, give me some possibilities, what might Beijing offer?
Speaker 9 (31:50):
Yeah, I think next year it's probably quite similar to
this year. I think on the monetor side, they're doing
to be some monist modest eating you know, interestry cards
and the triple our cards. I think it's more emphasis
on the fiscal side, So like this year, I think
again next year they will do some short term consumption tuments, right,
(32:10):
the subsidies for trading program. And also I would like
to see you know more some long term structure, you know,
measures like I just mentioned, you know, more subsidy for childcare,
for elderly care for you know, services consumption, so which
can help consumers ease their living off course burdens. So
(32:30):
I think if the government continued to do that this,
you know, in a sustainable way, that will give consumer
more confidence. Okay, the government really you know, cared about
consumption and they want to support us. Although the amount
may not be such big, but you add this at
that together, I think it can create you know, more
stumulus for for for the consumption next year.
Speaker 4 (32:53):
As we know, the weakness of the property market has
been central to the problems with Chinese an. Can you
envision some sort of recovery that may take place, let's
say in twenty twenty six.
Speaker 9 (33:08):
Depends how defire recovery. So my definition of recovery is,
you know, like the government's saying, holt in the decline.
So if we can achieve to you know, decline, you know,
decline less than this year, so I will I think
that of progress, and I think that's also the target
(33:28):
of the government. I think they they're okay, you know,
with the correction in the property market. But the bottom
line is there are no collapse. So as long as
you know, the adjustment is milder than this year, I
think they will feel comfortable. But that being said, I
think in the near term they still want to you know,
prevent a very sharp you know slow down, and they
(33:49):
want to you know, put a flaw in the market,
right so you can, you can, you can go downward,
but just like you know, five percent or ten percent down,
it's okay, but like twenty thirty percent, I think that
will create monitors for the governments. So I think we
must still see some support measures in the new term,
so some you know relaxing more mortgage relaxation and the
(34:13):
more you know, just reducing the transaction costs, so which
can help, you know, stimulate the demand a little bit,
you know, trying to stabilize the market. But I don't
think the correction will be over next year. We still
we're going to still see the markets down, but probably
the magnitude of downwardjustment will be bounded than this year.
(34:34):
So that's where still be some progress.
Speaker 4 (34:37):
Eric will leave it there, thank you so very much.
Bloomberg economist Eric Ju from Hong Kong. We turn to
digital currency next and the firm you Trip. This is
a fintech platform based in Singapore and it's known for
a multi currency travel wallet. Well now you Trip is
planning an expansion into Australia as it looks to target
(34:57):
that outbound travel market. We caught up with you Trip
co founder and CEO Secilia Chew about her company's growth strategy.
She spoke with Bloomberg TV host April hon and Shay
on talk to us.
Speaker 10 (35:09):
About why Australia. Why do you see so much opportunity
in that market? Yeah? Absolutely. You Trip is a multi
currency digital wallet that comes with a travel CUD, so
users can actually use us to buy anything online offline
around the world in any currencies at the best ethics rates.
Speaker 1 (35:28):
We started a.
Speaker 10 (35:28):
Business seven years ago here in Singapore twenty eighteen, and
now we are category leaders in both Singapore Thailand, serving
millions of travelers and Australia. It's a really important and
strategic market for us. What we are committed to do
is actually to invest into the market for.
Speaker 1 (35:47):
The long term.
Speaker 10 (35:48):
Australians love to travel, just like many of us. You know,
every year there's more than twelve million people going overseas
and spending more than fifty billion dollars on this category.
We think it's going to be such a strategic choice
for us.
Speaker 1 (36:04):
To be there.
Speaker 10 (36:04):
And many of the people also tends to make longer trips.
You know what we saw in Singapore Thailand, we tend
to travel about six to seven days each time. For Australians,
they like to make longer trips like fifteen days on
average each time. So I would say that, you know,
for our no fee proposition, best ethics race, we hope
(36:25):
we can actually make a meaningful impact on how they
travel and how they spend. That's in Australia is a
market where we do have already quite long established local
grown players. How do you expect to differentiate yourself? So
absolutely right, you know, in terms of the banks who
(36:48):
also might have a very similar offering to us, I
would say we differentiate ourselves with our laser focus on
the travel assignment, on the crossbord assignment. So when you
really take a look at the big banks, right, so
they do many things. They have saving products, they have
lending products, they have mortgages. They might have twenty cuts
(37:09):
in just the cut portfolios. So how we differentiate it's
over the last seven years we actually have created and
optimized our business model, our pricing, our partnership network, and
also our product features to be sure that we actually
offer the best and most competitive products for travelers in
(37:32):
any of our markets.
Speaker 1 (37:34):
So, Cilia, that sounds like you're going to need a
lot of employees to do all of that. Your expansion
seems to be accelerated at this point. What does your
workforce look like? Are you hiring more white regions? Are
you putting more people in So.
Speaker 10 (37:46):
A key part of our market expansion strategy is localization.
So of course, over the years, we now have three
hundred people in the business and we're growing in size.
But for Australia, we have established a office, we are
building up our team, we already have boots on the ground,
and most importantly, we are going to do much more
(38:07):
in the market. So we are going to have partnerships team,
we are going to have customer operations, we are going
to have product compliance, marketing, really all aspects of the business.
So I would say localization is a key aspect when
we think about our strategy going forward, when we think
about growth, because it's very important for us to show
that deep understanding and also appreciation of the local preferences
(38:32):
and also the local culture and people.
Speaker 4 (38:34):
That was you Trip. CEO Cecilia Chew speaking with Bloomberg
TV host April Hong and Sherry On and I'm Doug Kristner.
You can catch us weekdays for the Daybreak Asia podcast.
It's available wherever you get your podcast.
Speaker 2 (38:47):
Nathan, 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 sun
markets overseas and the news you need to start your day.
I'm Nathan Hager. 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 Daybreak 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, we'll
look ahead to the final monetary policy decision from the
Fed of twenty twenty five and how that could affect
interest rates into the next year. I'm Nathan Hager in Washington.
Speaker 3 (00:27):
I'm Caline Hegger in London, where we're looking ahead to
the black Hat cybersecurity conference in London.
Speaker 4 (00:33):
I'm Doug Prisner looking at why China's economy is stuck
in deflation.
Speaker 2 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three zero, New York, Bloomberg ninety nine to one.
Speaker 4 (00:45):
Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London,
Sirius XM one twenty one, and.
Speaker 2 (00:54):
Around the world on Bloomberg Radio, dot Com and the
Bloomberg Business app. Good day to you. I'm Nathan Hager.
We begin today's program with the Federal Reserve. The Central
Bank holds its final two day policy meeting of twenty
twenty five this week, issuing its final monetary policy decision
(01:15):
of the year on Wednesday. So for more on the
path ahead four interest rates, we are very pleased to
be joined by Stuart Paul, us economist with Bloomberg Economics. Stuart,
thanks for being with us. And it seems as though
the market is all but fully priced in that we
are going to get a rate cut this week. Did
some of the private data that we've seen ahead of
(01:36):
this decision sort of shake any of that, bet?
Speaker 5 (01:38):
I don't think so. When we look at some of
the private sector data, including the ADP report showing a
pretty cool labor market, and then some of the official
data as well, relatively weak manufacturing in the month of September,
import prices that were relatively dull. When we receive those
data points earlier last week, it basically gave the green
(02:01):
light for this rate cut. So I don't think that
the Fed is going to be that concerned about whether
it can defend its decision to cut when it meets
this week. I think that the bigger conversation around the
table at the FOMC meeting is going to be what
message to send to the markets and what message to
(02:21):
send to interested parties out there when it releases it's
summary of economic projections. I think that's where we're going
to see a more division and in fact, maybe a
little bit of confusion.
Speaker 2 (02:32):
How so, I mean, I guess we have seen sort
of diversion of thinking when it comes to where policy
should go from even some of the FED speakers ahead
of this meeting. But I mean, how much of a
change could we see in the dot plot.
Speaker 5 (02:47):
I think it's going to be pretty significant in twenty
twenty six. And I think that even more important than
the dispersion of dots in the dot plot included in
the summary of Economic projections, is to remember that the
voters on the FMC next year are going to be
shifting pretty dramatically. There is going to be a contingent
(03:08):
of hawkish regional Fed bank presidents that become voters, and
among them are Dallas FED President Laurie Logan, Cleveland FED
President Beth Hammock. Those are some folks who were among
the more hawkish, among the more hawkish and the more
vocal FED speakers over the last several months, and when
(03:29):
they become voters, it's going to be all the more
important to try to identify which dots they are and
I expect they're going to be among the more hawkish
cluster when we look into twenty twenty six. A lot
of attention has been put toward who the next FED
chairman is going to be. But I think then more
important actually than who the next FED chairman is is
(03:50):
this point about division on the FED, because we're going
to see a lot of it. We're going to see
a growing division on the FED, and.
Speaker 2 (03:58):
We've even heard some concerns raised. I guess you could
say about whether that next FED chair is going to
be able to deliver the kind of rapid rate cuts
that President Trump has been looking for. We heard from
p Jim's Greg Peters just in the last couple of
days saying, even if it is Kevin has it, the
President's White House Economic advisor, he might not be able
(04:20):
to get that kind of consensus. How do you see it.
Speaker 5 (04:23):
I think that's right. I think it's going to be
difficult for the next FED chairman to build a coalition
of voters that can show some sort of a united
front around the pace of rate cuts. I think that's
going to be true of any FED chairman. It seems
as though a lot of attention over the last week
has turned to whether or not somebody like Kevin Hassett,
someone coming from the White House, has the credibility that
(04:46):
the Fed will remain devoted to its two percent inflation target.
Somebody like that has the credibility to keep markets calm.
I will say that when the trial balloon was floated
a couple of weeks ago. Now regarding Kevin Hassett as
the finalist for the chairmanship, he passed the markets test
with flying colors. Equities rallied, two and ten year rates fell.
(05:10):
It's exactly what the White House wants to see. So
as much as we've heard chatter over the last week
questioning whether somebody like Hassett has the credibility to build
a coalition or to maintain the FEDS two percent inflation target,
it seems as though the market thinks he has enough credibility.
It seems as though to me, no matter who the
(05:30):
next FED chairman is, it's going to be difficult to
build a coalition. I think that's just the nature of
the evolving voting roster at the FOMC right now.
Speaker 2 (05:40):
So, given the evolving roster, how much attention should the
markets be putting on chairman Powell's news conference after the
decision on Wednesday.
Speaker 5 (05:50):
I think that markets will put a lot of weight
on it. Basically, no matter what, he still is the
person who will be leading the FOMC for pretty close
to six months, and I think that the question is
going to be around whether the FED will maintain any
sort of cutting pace in the first half of next year,
given the expectation that a new more dubbish chairman will
(06:12):
take the reins starting in May. So I think that
when we see this press conference from FED Chairman Powell
on Wednesday, the question is really going to be what's
it going to look like in January, what's it going
to look like as we get towards the end of
Q one and into Q two, What is the Board
of Governors and what are the regional Fed bank presidents
(06:33):
thinking about cuts in the first half of next year.
Right now, our base case in Bloomberg Economics is for
the FED to move more towards a quarterly cadence of
quarter point cuts next year, and that's based on our
expectations for economic fundamentals right now. I think that FED
Chairman Powell is going to try his best to not
(06:54):
show his hand in any one direction. But again when
we just at the evolving roster, it's going to be
very difficult next year to deliver quick rate cuts the
kind of the president wants.
Speaker 2 (07:07):
Yeah, it is going to be a fascinating discussion and
a fascinating final decision coming up later this week. Thank
you for this, Stuart, really great having you on with us.
That is Stuart paul Us, economist with Bloomberg Economics. We
move next to more corporate earnings in the tech space.
We hear from two big names on Wednesday, Oracle and Adobe.
Let's bring in Bloomberg Intelligence technology analyst Anurag Rana from
(07:30):
More on this latest round of tech results. Anurag, these
are a couple of names that have kind of been
hit pretty hard lately around the question about whether artificial
intelligence valuations have gotten two stretch. So let's start with Oracle.
How high is the bar for their earnings?
Speaker 6 (07:45):
So I think they have to come out and basically
explain that the big backlock of orders that they have
from open AI, how is that going to get funded
and how is that going to get recognized into revenue.
That is the single biggest question in our mind at
this point, especially when you go back and look at
the stock chart. It had a massive run up when
(08:07):
they Oracle announced that big order book from open Aie.
But in the last you could say, two months, two
and a half months, there has been a lot of
scrutiny in the market as to how some of this
is going to get funded, and that I think is
what has been being on the stock. So the management
has to come and explain their strategy of data center
(08:28):
expansion and where that money is going to come from.
Speaker 2 (08:31):
Yeah, to your point, I think we saw in just
the last few days report that the cost of protecting
Oracle's debt from default at its highest level in more
than fifteen years. I mean, what kind of explanation can
we expect for how Oracle can kind of service that.
Speaker 6 (08:48):
So one of the things you have to think about
it is there is a lot of investor demand for
anything that's related to data center expansion because I think
people understand that's an area where you are looking act
more and more build up over the next several years.
So you know, whether it's private credit or whether it
is private equity. A lot of these companies may be
(09:10):
able to fund some of that expansion. But the big
question is you know at what level, because one of
the things is open AI has talked about, you know,
several hundred billion dollar investments out in the public for
those data centers, so the appetite is not so much.
And also remember Oracle is not the one that's funding
a lot of that from their own balance sheet or
(09:31):
their cash flow. They go out in the market, they
raise the funds with the help of a consortium, and
that goes you know, into that special purpose vehicle that
does not impact Oracle's balance sheet directly, but at the
end of the day, they are the ones who will
be recognizing some of the revenue from it, not just
the investors. So they have to come out and explain
(09:54):
a bunch of these things.
Speaker 2 (09:55):
Where do you see Oracle stacking up compared to some
of the other hyper scalers. I mean, think of the
Magnificent Seven all the time, and Oracle, of course isn't
part of that cohort. Is it going to stay behind?
Speaker 6 (10:07):
So one of the things that we have talked about
quite a bit over the last few years when it
comes to cloud computing, there are three big players, Amazon
being the biggest one, Microsoft after that, and then Google,
you know, the third player. But because of this massive
demand for AI infrastructure and AI infrastructure workloads, Oracle has
really kicked up and become what we call us the
(10:30):
fourth hyperscale cloud providers. And the big question is are
they each other taking market share from each other? There
is a little bit of that going along, but at
the same time, the market has expanded very very strongly
because one of the things that you have to do
is when you're running an application like chat GPT, you
will be running on a cloud infrastructure. You typically don't
(10:50):
run that in somebody's internal data center. Same thing for
an enterprise when they are expanding some of these AI workloads,
cloud is usually where it's hosted. So when you take
a look at that, the the end markets, which is
cloud infrastructure, has actually grown quite nicely, which gives growth
opportunities for all foward vendors and not just one or two.
Speaker 2 (11:13):
Let's talk about Adobe. Now, looking at a chart on
that stock it's kind of upper left to lower right
for the whole year here. So what are the expectations
around Adobe's results?
Speaker 6 (11:24):
Yeah, I think that seems to be a big story
when it comes to Adobe, that you know their lunch
is going to get eaten up by AI related tools
that are out there, free tools. So when you look
at Adobe and you go back a few years before
the launch of any large language models, this company used
to trade even higher than Microsoft because of high free
(11:46):
cash flow, the perception that nothing can happen to some
of their marquee products, that is Photoshop or Acrobat, et cetera.
But what has happened is when you're seeing these free
products that can create images and videos, investors allverrid that
their code business is going to get attacked and they
won't be able to protect that. Now, when you look
(12:08):
at their results, at least in the last three quarters,
they have reported decent results, but at the same time,
you know they have not seen any acceleration, and I
think that's always brings that question mark. So we're going
to see that a little bit of the same thing.
They're going to come out talk about how they can
grow next year, They're going to talk about their own
AI products. The question is whether that's going to be
(12:31):
enough to pacify this this little fear that's out there
in the market that Adobe is a net casualty of
AI related developments.
Speaker 2 (12:40):
Thanks for this on a rock, great having you with us.
That's honorog Ran, a technology analyst for Bloomberg Intelligence, and
coming up on Bloomberg Daybreak weekend, we look ahead to
the black Hat Cybersecurity Conference in London. I'm Nathan Hager,
and this is Bloomberg. This is Bloomberg day Break weekend,
(13:08):
our global look ahead at the top stories for investors
in the coming week. I'm Nathan Hager in Washington. Up
later in the program, we'll preview upcoming data out of
China in the health of the Chinese economy. But first,
cybersecurity challenges facing Europe are clear. Airports, businesses, financial institutions
are all at risk from an increase in cyber attacks
by criminals and state actors. That's the black drop to
(13:31):
the Black Hat Europe conference in London, which gathers top
professionals for briefings on modern day strategies to counter those
threats online. Let's get more from Bloomberg Daybreak Europe banker
Caroline Hepger in London, Nathan.
Speaker 3 (13:43):
The Black Hat cyber Security Conference in London over the
next few days will look at the latest trends in
cyber security, as attacks are becoming increasingly costly for governments
and businesses, sometimes into the billions. Briefings will be held
on how to bolster sign defense strategies in both the
public and private sector. The Bloomberg London Tech Summit recently
(14:07):
featured interviews with top CEOs on how businesses can build
resilience in a rapidly changing threat landscape. Speaking at that summit,
Yevgeny Dibrov, who is the CEO of the cyber security
firm Armis, who explained why there's been such a surge
in interest in the company, the.
Speaker 7 (14:27):
Great demand that we are witnessing right now because of
attacks on critical infrastructure. Basically all the geopolitical tensions Russia, Iran,
North Korea, everybody. You see a lot of targeting infrastructure,
targeting national infrastructure, the most critical areas from airports to
grids to manufacturing in the US, in the Mia, we
(14:50):
see a lot of UK as well.
Speaker 3 (14:53):
That was Armis CEO Yevgeny Dibrov being interviewed there by
Bloomberg's senior cyber security reporter Jordan Robertson, and Jordan is
with me. Great to have you on the program. It
has been such an important and interesting year, hasn't it?
For your beat? The era of rapid digital advancement of AI.
(15:17):
Can you just talk to us about the elevated kind
of cyber threats levels that we're seeing in the UK
in Europe. I mean you heard it in that interview
that you did. It's everything from big companies to personal
data to airports. This ahead of discussions at black Hats.
Speaker 8 (15:35):
Sure, yeah, thanks for having me on. You know, if
you take a look at the conference agenda for this
Blackhat conference, I mean, first of all, it's a very
technical conference. It's technical content for technical people, but the
overarching themes are still the same that people would kind
of recognize. And there are two main themes that are
happening in cybersecurity right now. One and perhaps the biggest
one is ransomware. Computer hacks used to be pretty secret things.
(15:57):
Companies by and large could keep these events secret unless
certain data was leaked, and they could prove that certain
data was leaked, personal information, things like that. But most
cyber attacks were secret and companies were allowed to do that.
You can't keep secret a ransomware attack because your business stops.
And we saw that this year with the you know,
the attacks on m ands. We saw that this year
with the attacks on Jaguar Land Rover, you know, which
(16:19):
brought really significant critical operations to a halt. And this
idea of ransomware, which very often is executed by by
young people, by kids. In many cases you're talking about teenagers.
You're talking about young people who connect online and kind
of I guess, get radicalized if you will, and see
this as a real business, business opportunity. There are millions
(16:39):
of pounds to be made through some of these hacks.
These attacks are very easy to do, they're extremely disruptive.
You can get a lot of money in extortion fees
if you're the hacker. So, you know, one of the
things that the cybersecurity industry, including this conference this coming week,
you know, is really focused on, is, you know, technically,
how do you get ahead of these attacks? Like are
(16:59):
there technical countermeasures you can put in place to repel
ransomware attacks? And it's a really hard problem because it's
not so simple as saying there's a bad actor on
my network, therefore they are not allowed to do anything.
Bad actors routinely impersonate real users or steel credentials of
real users. So if you're running a large network, the
(17:20):
biggest threat to your network is going to be somebody
on your network, that is using credentials that belong to
your employees. So very very hard problem. There are no
easy technical solutions. But that's one of the themes of
this conference, and another which is kind of a perpetual theme.
You know, ransomware is here to stay. And one of
the things I like to describe is that we didn't
(17:40):
have ransomware before we had crypto, Like we have crypto
and now we have ransomware, and the two are interrelated
because prior to crypto hacker, it was really hard for
hackers to get paid. They would sell data on the
dark web, and you know, they'd have fake bank accounts
and it was very, very challenging to actually collect revenue
(18:01):
from your hacks. But now that you have digital currencies,
that's that's what's facilitating all of these attacks and making
it easier for making it possible for criminals get paid. Okay,
the other side of the ledger are espionage attacks, as
you heard the Armiss CEO talk about, which is now
that everything is digitized from obviously from telephones to cars,
to transportation networks to you know, the power grid. You know,
(18:24):
everything will have a digital footprint. So every country on
the planet has intelligence services that's trying to build up
their cyber capabilities to potentially disrupt their adversaries. And you
know that can range from hacking into a power grid
and not doing anything but positioning yourself so that if
there is some sort of armed military conflict, you can
(18:44):
flip a switch and turn off the lights. And those
are the threats that people are trying to protect against.
Speaker 3 (18:50):
Yeah, and wow, that's the kind of head spinning list,
isn't it, in terms of the threats that are out there.
And you mentioned a little bit about the difficulties of
how businesses come up, specifically business is with strategies to
try to count these attacks. Maybe we can talk about
that a bit more, because the thing that was extraordinary
about the JLR hack in the UK was that the
government agreed to an emergency loan for Jaguar land Rover
(19:14):
so that it could pay its suppliers. They were worried
about the fallout across the UK, and so that is
something very novel as well.
Speaker 8 (19:24):
Yeah, the Jaguar hack was very significant in many ways,
and we did some pretty great coverage of it, and
as you mentioned, the most significant aspect of it was
the UK government stepped in and underwrote an emergency two
billion dollar loan to Jaguar land Rover, which by the way,
is owned by a five hundred billion dollar foreign conglomerate, Caltata.
(19:46):
You know, UK government underwrote that loan to bail out
the company. It's not because the parent company couldn't pay.
It was the concern that if this breach dragged out,
you'd have people out of work for a long time,
potentially forever, if the factories had to close. And it's
the first time to our knowledge that we've seen a
government underwrite a rescue of a ransomware victim, especially to
(20:08):
this degree. You know, governments will often send their cyber
experts into these you know, critical companies, you know, nationally
important companies to help them investigate breaches. But you know
now that the UK has kind of gotten into the
business of underwriting the rescue packages for a ransomware victim.
You know, it raises this question of precedent and it's like,
(20:28):
is this what we're doing now and what are the
implications of that? And I mean, to be clear, this
is a loan that needs to be repaid. But when
if you're a ransomware operator and you're a hacker. This
is the best news you could have asked for, because
you know, and you are basically guaranteed that the companies
that you are hacking will survive long enough to potentially
(20:49):
pay you, and that's what they're after.
Speaker 3 (20:52):
Yeah, if they dissrupt things enough that there would be
a pay date at the end of it. You know,
you've also covered the threats to buy things and critical
financial infrastructure of particular interest. I imagine to our audience,
how would you quantify and characterize the increase in hacks,
especially from China, but maybe other countries.
Speaker 8 (21:13):
Yeah, this is such an interesting topic because whereas ransomware
is in your face, I mean, security experts describe ransomware
as an exit strategy. The exit strategy is announcing to
the world that this has happened and then demanding payment,
so everybody sees a ransomware attack. These attacks on the
financial system, however, that we've been writing about largely are
designed to be totally invisible. And you know, what hackers
(21:34):
in those cases are after is not disruption. In fact,
it's the opposite. What thereafter and that in those cases
are intelligence, our information about how the financial system works.
Who's under investigation who's under investigation for sanctions and things
like that. You know, powers of the government, whatever government
that is, US, UK, wherever governments have extraordinary powers to
sanction individuals, and foreign governments that may be targets of
(21:57):
those investigations, are extremely interested in understanding who's on that list,
who's being investigated, what information do they have. So there's
so much, you know, reporting this year focused largely on
the US Treasury, which has suffered a series of very
devastating espionage attacks in recent years. And what we looked
at was how does the US Treasury, which has a
(22:19):
large cybersecurity team, which has a great budget for cybersecurity
and increased budget, you know, for this this kind of work,
how do they keep getting hacked at a very deep
level by Russia and China in particular. And the answer
is a little bit complicated. But one thing that you
take away from it is there is no silver bullet
in cybersecurity. If there were, everybody would use it. There
(22:39):
are best practices, there are approaches, there are techniques you
can use, but there is no silver bullet. And you know,
so what you're left with is whether it's ransomware or
whether it's an espionage attack. You know, cybersecurity is an
even more difficult problem now than it was before. Even
though we have more cybersecurity protections, we have more venus.
(23:00):
Like the Black aut conference, there will be it's a
vendor conference with research as part of it, so they're
going to be there selling cybersecurity technologies that you know
they all do something. But if there were a technology
that could cure cybersecurity attacks, you know, everybody would obviously
would be the most valuable company in the world.
Speaker 3 (23:16):
It's the game of chase, isn't it? With all crime?
Is how you know all perhaps criminal and other activities,
how to keep pays. A final word then, too, on
AI and what difference artificial intelligence is making, because this
is another area that you've reported on in a big
way over the past few months.
Speaker 8 (23:36):
So what I've what I've been doing the past couple
of years is with most sources I meet, and these
are your senior cybersecurity people at governments and companies or whatever,
and I will ask I will try to ask every
single one of them, how is your organization using AI today?
Like practical examples, not like experimenting, but like practical examples,
how are you using AI? It's been really revealing, Like
(23:58):
most of them have said, not really at all, very
surprising to me, with some exceptions. And the reason that's
surprising when it comes to cybersecurity, you're dealing with hackers
the way it's been explained to me. You're dealing with
hackers that in most cases are trying really really hard
not to be detected. If you're writing that code to
perform those attacks, you're not going to outsource that to
(24:19):
a large language model which can hallucinate and make mistakes
and maybe blow up your operation. So we're seeing that
there's not a lot of utility for these llms in
custom hacks, espionage attacks, really high level stuff. There's too
many uncertainties around it. Where we are seeing AI being
used is especially true in spamming. So if you're doing
(24:40):
a spam operation. It's kind of a funny story is
we're seeing increased spam activity in countries that previously didn't
have a lot of it. Japan comes up a lot,
so places where you have character based languages that are
not really used elsewhere in the world. Some of these
countries have seen very very low rates of spam for decades.
(25:02):
There just isn't a lot of that activity because crafting
the messages in the local language is very challenging. You
have to have subject matter experts. Large language models have
really helped the hackers in that regard, Jordren.
Speaker 3 (25:15):
That means many more stories I expect from you and
from your colleagues. Thank you for being with me. Been
a hugely fascinating conversation about cyber security, Bloomberg's senior cyber
security report at children Robertson. Thank you, and we'll have
full coverage on Bloomberg Radio of developments on this topic
and the black Hat cyber security conference in London in
(25:37):
the coming days. I'm Caroline Hepcker here in London. You
can catch us every weekday morning for Bloomberg Daybreak Europe,
beginning at six am in London. That's one am on
wol Street.
Speaker 2 (25:46):
Nathan, Thanks Caroline, and coming up on Bloomberg day Break Weekend,
we take a look at why China's economy is stuck
in deflation. I'm Nathan Hager, and this is Bloomberg. This
(26:07):
is Bloomberg Daybreak Weekend, our global look ahead of the
top stories for investors in the coming week. I'm Nathan
Hager in Washington. This week China releases the latest readings
on consumer and producer prices. For more, Let's go to
Bloomberg's Doug Prisner, host of the Daybreak Asia podcast.
Speaker 4 (26:23):
Nathan the Chinese economy is caught in a deflationary trap,
and the factors that led to steadily declining prices appear
to be firmly entrenched. Bloomberg Economics is saying it's going
to be tough to shake and to make matters worse.
Economic growth in China in the current quarter has been weak.
Let's bring in Bloomberg economist Eric Zu, who covers China
(26:44):
and other economies in the Asia Pacific. Eric joins us
from Hong Kong. Eric, thank you so much for making time.
This period of deflation in China has been going on,
as we know for several years. Why the stubbornness.
Speaker 9 (26:59):
I think the reason is the demand side, so the
consumer side, business side, I mean the demand domestic demand
is too weak, so it's not enough to you know,
driving and sustain inflation especially. I think a key issue
the confidence here. So we see lots of data, you know,
see the consumer they're deleveraging, corporation they're also delaverging, so
(27:23):
noing is willing to borrow, you know, to expand consumption
spend investment. So there are lots of downward pressure on
the pricess on the from the domestic side. So I
think so people are over anxiety, they overwork, so basically
they don't have time to consume. And at the same time,
you know, the income is slowing, you know, the job
(27:44):
looks are not looking great. So people are very cautious,
you know, on spending, and if they have any you know, money,
they would rather you know, say for the future. Right
in the case I lose my job or I got
income cut, so it's it's better to saving for you know,
in a certain future rather than spend whatever I have
right now. So I think that's long a deep rooted
(28:08):
issue which is creating a very deflationary economy right now.
Speaker 4 (28:12):
At the same time, I think we need to mention
the issue of excess factory capacity, and this is something
that many of China's trading partners have been critical of China,
essentially exporting deflation.
Speaker 9 (28:25):
They're you know blaming China for you know, down pins
of chief goods into their country and you know, taking
their markets. So but just at the same time, I
think the key issue is China's although trying to have
a very big domestic market, but just right now that
demand is too slow, nobody willing to spend, so they
cannot digest or the production within the country.
Speaker 4 (28:47):
Under these circumstances, Eric, do you believe it's possible for
China to achieve that growth target of around five percent
or will a lot more be required in terms of stimulus.
Speaker 9 (28:59):
I think in sery it's possible. You see this year,
so although the four Q the last quarter, I think
the data is quite weak, but they basically have done
that within the first three quarters or within the first
half of the year, so I think it's probably the same,
you know style next year. They want front load some stimulus,
you know, at the beginning of the year, make sure
(29:20):
we have a strong first half. Then on the second
half they might you know, relax the momentum a little bit.
But I think in theory we do not really think
China needs to maintain a five percent every year. So
if you look at the five year plan they just
release in October, some reading is that if you still
want to achieve the twenty thirty five, the develpment go.
(29:45):
I think it's a mostly you just need four point
five percent girls over the next decade. So I think
probably next year they're still going to maintain five percent
girls target, but I think further on they might gradually,
you know, be more relaxed on the girls time. It's
no longer I don't think five percent is a must
hit target. Maybe next year, but in the future years,
(30:06):
I think they want to give more room, even solve
the language, which means we no longer have to hit
a hot target of five percent. They might you know,
change your language like a range, right, we will have
a range target instead of a very hard five percent target.
Speaker 4 (30:23):
So help me understand how the currency enters into all
of this. Lately, the Chinese you want has been stronger,
particularly against the dollar, and if anything, you would think
that authorities in China would want to slow that down
just a bit.
Speaker 9 (30:37):
I don't think the government, you know, will allow a
very quick appression, just like they won't let depreciation to
happen very quickly. So I think the government is okay
with you know, appreasion, appreciation or depreciat They just don't
like hit a very sharp one way, you know movement,
so they're more like, you know, you can you know,
(31:00):
gradually do that. But I think that the fundamental reason
is one is the weaker dollar so globally because of
the US policy. And another thing is I think it's
some funds coming to China, you know, betting on China's
tech boom. And also the tear side, the China US
relations seems you know, in quiet a periodore right now.
(31:21):
So I think before the next excalation next year probably so,
I think it's will be give a window for the currency,
Chinese currency to gain stronger. But on the PBOC side,
I think they will only try to manage this to
happen in a you know, slow motion, not overnight.
Speaker 4 (31:41):
So if you had to speculate on what more stimulus
might look like, give me some possibilities, what might Beijing offer?
Speaker 9 (31:50):
Yeah, I think next year it's probably quite similar to
this year. I think on the monetor side, they're doing
to be some monist modest eating you know, interestry cards
and the triple our cards. I think it's more emphasis
on the fiscal side, So like this year, I think
again next year they will do some short term consumption tuments, right,
(32:10):
the subsidies for trading program. And also I would like
to see you know more some long term structure, you know,
measures like I just mentioned, you know, more subsidy for childcare,
for elderly care for you know, services consumption, so which
can help consumers ease their living off course burdens. So
(32:30):
I think if the government continued to do that this,
you know, in a sustainable way, that will give consumer
more confidence. Okay, the government really you know, cared about
consumption and they want to support us. Although the amount
may not be such big, but you add this at
that together, I think it can create you know, more
stumulus for for for the consumption next year.
Speaker 4 (32:53):
As we know, the weakness of the property market has
been central to the problems with Chinese an. Can you
envision some sort of recovery that may take place, let's
say in twenty twenty six.
Speaker 9 (33:08):
Depends how defire recovery. So my definition of recovery is,
you know, like the government's saying, holt in the decline.
So if we can achieve to you know, decline, you know,
decline less than this year, so I will I think
that of progress, and I think that's also the target
(33:28):
of the government. I think they they're okay, you know,
with the correction in the property market. But the bottom
line is there are no collapse. So as long as
you know, the adjustment is milder than this year, I
think they will feel comfortable. But that being said, I
think in the near term they still want to you know,
prevent a very sharp you know slow down, and they
(33:49):
want to you know, put a flaw in the market,
right so you can, you can, you can go downward,
but just like you know, five percent or ten percent down,
it's okay, but like twenty thirty percent, I think that
will create monitors for the governments. So I think we
must still see some support measures in the new term,
so some you know relaxing more mortgage relaxation and the
(34:13):
more you know, just reducing the transaction costs, so which
can help, you know, stimulate the demand a little bit,
you know, trying to stabilize the market. But I don't
think the correction will be over next year. We still
we're going to still see the markets down, but probably
the magnitude of downwardjustment will be bounded than this year.
(34:34):
So that's where still be some progress.
Speaker 4 (34:37):
Eric will leave it there, thank you so very much.
Bloomberg economist Eric Ju from Hong Kong. We turn to
digital currency next and the firm you Trip. This is
a fintech platform based in Singapore and it's known for
a multi currency travel wallet. Well now you Trip is
planning an expansion into Australia as it looks to target
(34:57):
that outbound travel market. We caught up with you Trip
co founder and CEO Secilia Chew about her company's growth strategy.
She spoke with Bloomberg TV host April hon and Shay
on talk to us.
Speaker 10 (35:09):
About why Australia. Why do you see so much opportunity
in that market? Yeah? Absolutely. You Trip is a multi
currency digital wallet that comes with a travel CUD, so
users can actually use us to buy anything online offline
around the world in any currencies at the best ethics rates.
Speaker 1 (35:28):
We started a.
Speaker 10 (35:28):
Business seven years ago here in Singapore twenty eighteen, and
now we are category leaders in both Singapore Thailand, serving
millions of travelers and Australia. It's a really important and
strategic market for us. What we are committed to do
is actually to invest into the market for.
Speaker 1 (35:47):
The long term.
Speaker 10 (35:48):
Australians love to travel, just like many of us. You know,
every year there's more than twelve million people going overseas
and spending more than fifty billion dollars on this category.
We think it's going to be such a strategic choice
for us.
Speaker 1 (36:04):
To be there.
Speaker 10 (36:04):
And many of the people also tends to make longer trips.
You know what we saw in Singapore Thailand, we tend
to travel about six to seven days each time. For Australians,
they like to make longer trips like fifteen days on
average each time. So I would say that, you know,
for our no fee proposition, best ethics race, we hope
(36:25):
we can actually make a meaningful impact on how they
travel and how they spend. That's in Australia is a
market where we do have already quite long established local
grown players. How do you expect to differentiate yourself? So
absolutely right, you know, in terms of the banks who
(36:48):
also might have a very similar offering to us, I
would say we differentiate ourselves with our laser focus on
the travel assignment, on the crossbord assignment. So when you
really take a look at the big banks, right, so
they do many things. They have saving products, they have
lending products, they have mortgages. They might have twenty cuts
(37:09):
in just the cut portfolios. So how we differentiate it's
over the last seven years we actually have created and
optimized our business model, our pricing, our partnership network, and
also our product features to be sure that we actually
offer the best and most competitive products for travelers in
(37:32):
any of our markets.
Speaker 1 (37:34):
So, Cilia, that sounds like you're going to need a
lot of employees to do all of that. Your expansion
seems to be accelerated at this point. What does your
workforce look like? Are you hiring more white regions? Are
you putting more people in So.
Speaker 10 (37:46):
A key part of our market expansion strategy is localization.
So of course, over the years, we now have three
hundred people in the business and we're growing in size.
But for Australia, we have established a office, we are
building up our team, we already have boots on the ground,
and most importantly, we are going to do much more
(38:07):
in the market. So we are going to have partnerships team,
we are going to have customer operations, we are going
to have product compliance, marketing, really all aspects of the business.
So I would say localization is a key aspect when
we think about our strategy going forward, when we think
about growth, because it's very important for us to show
that deep understanding and also appreciation of the local preferences
(38:32):
and also the local culture and people.
Speaker 4 (38:34):
That was you Trip. CEO Cecilia Chew speaking with Bloomberg
TV host April Hong and Sherry On and I'm Doug Kristner.
You can catch us weekdays for the Daybreak Asia podcast.
It's available wherever you get your podcast.
Speaker 2 (38:47):
Nathan, 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 sun
markets overseas and the news you need to start your day.
I'm Nathan Hager. Stay with us. Top stories and global
business headlines are coming up right now
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