# Daybreak Weekend: Fed Meeting, UK Election, BOJ Decision

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 12 Jun 2026, 38 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/d15648c4-cee0-4e99-a5ca-af80014d921d/7e8958b6-5c44-427e-90e6-b467014b81e6/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

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 the next FOMC decision, along with a focus on 3 stocks for the week ahead. • In the UK – a look ahead to a high stakes UK election and Bank of England decision. • In Asia – a look ahead to a monetary policy decision from the Bank of Japan. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
[0:10] Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the
[0:13] Speaker 2: top stories in the coming week from our Daybreak anchors
[0:15] Speaker 2: all around the world. Straight Ahead on the program, we'll
[0:18] Speaker 2: look to the next policy decision from the FET. I'm
[0:21] Speaker 2: Nathan Hager in Washington.
[0:22] Speaker 3: I'm Caroline Hepkeit in London, where we're asking what's next
[0:26] Speaker 3: for the UK as it sits on the precipice of
[0:28] Speaker 3: two big economic and political decisions.
[0:31] Speaker 4: I'm Doug Christner looking ahead at what's expected to be
[0:34] Speaker 4: a rate hike next week from the Bank of Japan.
[0:38] Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
[0:42] Speaker 1: eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC,
[0:46] Speaker 1: Bloomberg ninety two nine Boston, DAB Digital Radio, London, Syrias,
[0:51] Speaker 1: XM one twenty one, and around the world on Bloomberg Radio,
[0:55] Speaker 1: dot Com and the Bloomberg Business App.
[1:02] Speaker 2: Good day to you. I'm Nathan Hager. We begin today's
[1:05] Speaker 2: program with the Federal Reserve. All eyes will be on
[1:08] Speaker 2: the world's most important central bank when it begins its
[1:11] Speaker 2: June policy meeting on Tuesday and issues its decision Wednesday,
[1:15] Speaker 2: the first decision and news conference for new FED chair
[1:19] Speaker 2: Kevin worsh For more and what to expect, we are
[1:22] Speaker 2: joined by the man who will be in the room
[1:23] Speaker 2: when the decision comes down, Michael McKee, International economics and
[1:27] Speaker 2: policy correspondent for Bloomberg Radio and Television. No pressure, right, Mike,
[1:33] Speaker 2: I mean how much pressure is Warsh facing? Is he
[1:37] Speaker 2: under pressure right now?
[1:39] Speaker 5: Yes, he's under pressure, maybe a little bit different than
[1:43] Speaker 5: people anticipated. When the President was first nominating him, there
[1:47] Speaker 5: was a feeling that, of course Trump would be on
[1:50] Speaker 5: his case immediately to start lowering interest rates. The President
[1:54] Speaker 5: said at one point, I'm not going to pick anybody
[1:56] Speaker 5: who won't cut interest rates. But since then we've seen
[1:59] Speaker 5: inflation flow up quite a bit because of the war
[2:02] Speaker 5: that Donald Trump started. So Trump seems to be willing
[2:06] Speaker 5: to give him the benefit of the doubt still as
[2:08] Speaker 5: a cloud hanging over Warsh and his nomination and his
[2:12] Speaker 5: ascension to the chair, and so people will be watching
[2:16] Speaker 5: to see what he does to try to demonstrate his independence.
[2:19] Speaker 5: He doesn't have to make a decision, he doesn't have
[2:21] Speaker 5: to cut rates, he doesn't have to raise rates. They
[2:24] Speaker 5: can just leave them where they are. But does he
[2:27] Speaker 5: say the right things that the market wants to hear
[2:30] Speaker 5: about the FED caring about inflation and making sure that
[2:34] Speaker 5: they will do the right thing as opposed to just
[2:36] Speaker 5: automatically wanting to cut rates.
[2:38] Speaker 2: Well, let's talk about what the market is looking for
[2:41] Speaker 2: in terms of how the Fed could react to the data.
[2:44] Speaker 2: We are still seeing elevated price pressures, a little bit
[2:49] Speaker 2: of shakiness, I think you could say in the labor
[2:52] Speaker 2: market right now. How does the FED react to that
[2:55] Speaker 2: in this meaning.
[2:56] Speaker 5: Well, the interesting question and probably not going to be
[3:01] Speaker 5: too controversial, is whether they drop the guidance that they've
[3:05] Speaker 5: had in there by saying that, you know, in considering
[3:09] Speaker 5: any further rate moves, which everybody reads as a sign
[3:13] Speaker 5: of in considering further rate cuts. That was the phrase
[3:18] Speaker 5: that led to the three descents last time. And so
[3:23] Speaker 5: they'll probably take that out and leave the statement fairly
[3:26] Speaker 5: and and I and leave it open as neutral as
[3:29] Speaker 5: they can be, which will then lead us into the
[3:34] Speaker 5: summary of economic projections and the dot plot. Do they
[3:37] Speaker 5: still foresee rate cuts in the dot plot either this
[3:40] Speaker 5: year or next, or do we start seeing people think
[3:43] Speaker 5: that they need to move rates up? Are there going
[3:46] Speaker 5: to be any higher dots? And then we get Kevin
[3:49] Speaker 5: Warsh and we'll see what he says about all of that.
[3:52] Speaker 2: And we'll see what he says about the dot plot itself. Right,
[3:56] Speaker 2: I mean, even before he became chair, he has been
[3:58] Speaker 2: critical of a lot of the communication that the FED
[4:03] Speaker 2: puts out there. Do you expect him to say anything
[4:07] Speaker 2: more about FED communication?
[4:10] Speaker 5: Well, I'm sure he's going to be asked. I don't
[4:12] Speaker 5: know if he's ready yet to say exactly what he
[4:15] Speaker 5: wants to do, but he has made it clear he
[4:17] Speaker 5: thinks a that federal Federal Reserve officials talk too much,
[4:21] Speaker 5: that it becomes a cacaphany and it doesn't help the markets.
[4:25] Speaker 5: And he's also been an opponent of the dot plot,
[4:27] Speaker 5: feeling it locks members into their positions longer than they
[4:31] Speaker 5: should be if the circumstances change. It's very early. He's
[4:36] Speaker 5: only been in the job for about two weeks, given
[4:38] Speaker 5: the length of time it took to get him confirmed.
[4:41] Speaker 5: So he may just let the process go forward this month,
[4:45] Speaker 5: but he'll be asked about it, and so it'll be
[4:47] Speaker 5: interesting to see whether he says, I want to get
[4:49] Speaker 5: rid of it or I'm going to talk to my
[4:51] Speaker 5: colleagues about it, or I haven't thought about it yet.
[4:55] Speaker 2: I don't know if we could call this an elephant
[4:57] Speaker 2: in the room, Mike, but we do know that a
[4:59] Speaker 2: former chair is going to be in the room in
[5:03] Speaker 2: Jay Powell. Does Powell fade away in this meeting or
[5:07] Speaker 2: what's it going to mean for the Central Bank to
[5:10] Speaker 2: have two chairs at the same meeting.
[5:14] Speaker 5: I suspect that Jay powellill do his best to fade away,
[5:18] Speaker 5: to fade into the background. It would probably be some
[5:22] Speaker 5: sort of really strange decision that would lead him to dissent,
[5:28] Speaker 5: and that would be the only news he would make
[5:29] Speaker 5: out of it. He's not going to be talking to us.
[5:33] Speaker 5: We won't know from the transcripts what he said, what
[5:38] Speaker 5: positions he took, and I don't think we're going to
[5:40] Speaker 5: hear from him a lot Outside of all of this.
[5:43] Speaker 5: He's remaining on the Fed, obviously for the reasons that
[5:47] Speaker 5: we all know about with his dispute with the administration,
[5:50] Speaker 5: but he has made it clear he doesn't want to
[5:51] Speaker 5: be the shadow FED chair. He doesn't want to interrupt
[5:55] Speaker 5: or interfere with what Kevin Warsh is doing. So while
[5:58] Speaker 5: he will play a role. He'll get his speaking moments
[6:01] Speaker 5: during the meeting. We won't know about it, and that'll
[6:04] Speaker 5: be the way he likes it.
[6:06] Speaker 2: Thanks for this, Mike, really looking forward to your coverage
[6:08] Speaker 2: this week. That is Michael McKee, international economics and Policy
[6:11] Speaker 2: correspondent for Bloomberg Radio and Television. Ahead of Kevin Warsh's
[6:16] Speaker 2: first policy decision this Wednesday, we will of course have
[6:19] Speaker 2: full coverage for you right here on Bloomberg Radio. Let's
[6:23] Speaker 2: take a look now at some stocks making news in
[6:25] Speaker 2: the week ahead. I'm Nathan Hager, joined by Bloomberg's Judy LaGrue,
[6:29] Speaker 2: and we're looking forward to some more earnings this week.
[6:32] Speaker 2: We're going to hear from Kroger Thursday. Look at what
[6:35] Speaker 2: Bloomberg Intelligence has to say about the grocery chain. Expectations
[6:39] Speaker 2: here don't look too great, Judy.
[6:42] Speaker 6: That's right. Bloomberg Intelligence analysts are seeing that Kroger is
[6:45] Speaker 6: set for its weakest sales and profit growth of the year.
[6:50] Speaker 6: So I think for them it's really like the focus
[6:53] Speaker 6: on that is the seam source sales growth, which is
[6:56] Speaker 6: expected to be the lowest since August twenty twenty four.
[6:59] Speaker 6: But Nathan, I have a question for you. Yeah, talk
[7:02] Speaker 6: to me a little bit about how you think about
[7:04] Speaker 6: grocery shopping. Do you prefer to go in person? Do
[7:08] Speaker 6: you prefer to go through an app to get your
[7:10] Speaker 6: groceries delivery?
[7:11] Speaker 2: I go to the grocery store almost every day just
[7:14] Speaker 2: to fill up on like the one recipe that I
[7:16] Speaker 2: have to do every day. So yeah, I'm an in
[7:18] Speaker 2: store person.
[7:19] Speaker 6: Kind of okay, interesting, you know, I am here in
[7:21] Speaker 6: Manhattan and I miss going to the grocery store in person.
[7:24] Speaker 6: I am a transplant, and so I've had to adjust
[7:27] Speaker 6: to you getting delivery over going into the grocery store.
[7:31] Speaker 6: But it is an experience and I do like and
[7:34] Speaker 6: miss that experience greatly.
[7:36] Speaker 7: Yeah.
[7:36] Speaker 2: Well, I mean these grocery stores they still get the business,
[7:40] Speaker 2: you know, whether whether they're getting it delivered or not. Right,
[7:44] Speaker 2: But I mean, is it just same store sales alone
[7:46] Speaker 2: that are potentially going to be dragging Kroger's results down?
[7:51] Speaker 6: I mean, truly, for Kroger, it's a story of trying
[7:53] Speaker 6: to catch up to where the business is. And so
[7:57] Speaker 6: Kroger primarily is trying to spur growth than their grocery
[8:01] Speaker 6: business through their e commerce fulfillment. So that's through partnerships
[8:05] Speaker 6: with Instacart, with door Dash, with Uber Eats, and right
[8:09] Speaker 6: now they're really seeing that basically a lot of their
[8:12] Speaker 6: business is coming from people who are ordering delivery on
[8:15] Speaker 6: an increasing basis, and so in tandem with that, there
[8:19] Speaker 6: is for Kroger a lot of thought into price cuts
[8:23] Speaker 6: and what that looks like for them as they compete
[8:26] Speaker 6: with other grocery store providers who deliver like Amazon, like Walmart.
[8:32] Speaker 6: And so one thing I was looking at was City
[8:35] Speaker 6: researchers really noting how vocal the CEO, Greg Foreman, what
[8:40] Speaker 6: foreign was in the press about price cuts on the
[8:44] Speaker 6: day that Walmart reported their earnings, and City analy is
[8:48] Speaker 6: called that quote strange timing and not coincidental, which I liked,
[8:53] Speaker 6: you know, I thought that was really interesting and good
[8:55] Speaker 6: language to use. But they certainly perceived the talk about
[8:59] Speaker 6: price cuts as quote poking the bear.
[9:01] Speaker 2: Seriously, when you think about, you know, just how expensive
[9:06] Speaker 2: everything is right now, it's very top of mind for anybody,
[9:11] Speaker 2: whether they're going into the store or getting it by delivery.
[9:15] Speaker 2: But before we hear from Kroger on Thursday, we're going
[9:18] Speaker 2: to get some more earnings from Carmas on Wednesday. How's
[9:23] Speaker 2: the car market looking right?
[9:25] Speaker 6: Now, Judy, I mean, look, I think that there's a
[9:28] Speaker 6: lot going on and the car market is a reflection
[9:32] Speaker 6: of what we're seeing in the economy. I think, really
[9:34] Speaker 6: Carmas is an interesting company stock earning result to watch
[9:40] Speaker 6: because used car sales are certainly on top of mind
[9:43] Speaker 6: for a lot of us in terms of it's read
[9:45] Speaker 6: on the consumer, it's read on affordability for used cars,
[9:48] Speaker 6: auto credit, whether the retail turnaround is actually working. I mean,
[9:53] Speaker 6: there's so many roads that lead to use car purchasing.
[9:56] Speaker 6: So at least for Carmas, what we're looking at in
[10:00] Speaker 6: terms of the street and analysts, they're looking at and
[10:03] Speaker 6: adjusted earnings per share of about ninety seven cents, which
[10:06] Speaker 6: is down thirty percent from this time last year, and
[10:10] Speaker 6: revenue was also expected to be slightly lower year over year.
[10:13] Speaker 6: And so I think that is really sort of reflective
[10:16] Speaker 6: of where we're seeing used car sales just as an economy,
[10:19] Speaker 6: as a country, there's just strain there. And so as
[10:22] Speaker 6: a result, investors aren't really looking for a blowout growth
[10:26] Speaker 6: story here. They're looking for evidence that the worst of
[10:30] Speaker 6: this storm, in terms of really wavering and dropping used
[10:35] Speaker 6: car interest in sales, is starting to stabilize and sort
[10:39] Speaker 6: of steady out as far as CarMax.
[10:42] Speaker 2: And what more stock we're going to watch maybe for
[10:44] Speaker 2: the next few weeks here with the World Cup on
[10:46] Speaker 2: is Draft Kings do you think we're going to see
[10:49] Speaker 2: investors get a payoff from the tournament?
[10:52] Speaker 6: Judy, Oh goodness, this is a really this is the
[10:54] Speaker 6: crux of the question here. I think it depends on
[10:57] Speaker 6: a number of things. It depends on whether the World
[11:00] Speaker 6: Cup will bring in more betters, more dollars waged, or
[11:04] Speaker 6: more repeat customers, and that is something that in my view,
[11:09] Speaker 6: remains to be seen. I think we'll have to sort
[11:12] Speaker 6: of understand what the handle or the total amount bet
[11:16] Speaker 6: looks like as the World Cup gets underway, and whether
[11:21] Speaker 6: or not Draft Kings can turn this big event into
[11:26] Speaker 6: new users without spending too much on promotions, which I
[11:29] Speaker 6: think is really they're set up for that. Analyst Ian
[11:33] Speaker 6: Moore at Bernstein really pointed out Draft Kings as being
[11:39] Speaker 6: the clearest prediction market sports betting winner of the World Cup,
[11:43] Speaker 6: and I think those are really really strong words, and
[11:47] Speaker 6: for that, I think it's certainly something to watch from
[11:50] Speaker 6: a perspective of stock movement as it pertains to the
[11:53] Speaker 6: perception of the amount of betters who are jumping in
[11:56] Speaker 6: or even increasing their wagers as a result of the
[11:58] Speaker 6: World Cup.
[11:59] Speaker 2: Yeah, we'll be keeping an eye on it as the
[12:01] Speaker 2: tournament goes on. Thanks for this, Judy, great having you
[12:04] Speaker 2: on with us.
[12:04] Speaker 8: Thanks guy.
[12:05] Speaker 2: That's Judy LaGrue, reporter for Bloomberg News and coming up
[12:10] Speaker 2: on Bloomberg day Break weekend, we'll look at what's next
[12:12] Speaker 2: for the UK as it's on the precipice of two
[12:15] Speaker 2: big economic and political decisions. I'm Nathan Hager and this
[12:20] Speaker 2: is Bloomberg. This is Bloomberg Daybreak Weekend, our global look
[12:34] Speaker 2: ahead at the top stories for investors in the coming week.
[12:37] Speaker 2: I'm Nathan Hager in Washington. Up later in the program,
[12:40] Speaker 2: we'll look to a monetary policy decision from the Bank
[12:42] Speaker 2: of Japan. But in the coming days, a high stakes
[12:45] Speaker 2: election takes place in the UK on the same day
[12:48] Speaker 2: as the Bank of England's Monetary Policy Committee meets to
[12:51] Speaker 2: make its latest interest rate decision. With both economics and
[12:54] Speaker 2: politics at a crucial juncture, how will the two interact
[12:58] Speaker 2: in the UK? For more, Let's go to London and
[13:01] Speaker 2: bring in Bloomberg day Break. You're a banker, Caroline Hepger Nathan.
[13:04] Speaker 3: The by election in Makerfield in the coming days will
[13:08] Speaker 3: take place in a constituency of former mining towns, some
[13:12] Speaker 3: leafy villages and commuter suburbs between Liverpool and Manchester in
[13:18] Speaker 3: the north of England. It could have very significant consequences
[13:22] Speaker 3: for the future of Britain. Just about seventy seven thousand
[13:26] Speaker 3: voters will potentially decide the next UK leader, who will
[13:30] Speaker 3: govern over a population of some seventy million. Its Member
[13:35] Speaker 3: of Parliament, Josh Simmons, resigned to give former Greater Manchester
[13:39] Speaker 3: mayor Andy Burnham a route back into Parliament, a prerequisite
[13:43] Speaker 3: for an expected leadership challenge against Prime Minister Kirs Starmer,
[13:48] Speaker 3: but the competition is far from a foregone conclusion. Once
[13:52] Speaker 3: a safe Labour seat due to the area's historic ties
[13:55] Speaker 3: to mining and trade unions, is yet another place where
[13:59] Speaker 3: the governing party has sheared support to the populist and
[14:03] Speaker 3: anti immigrant Reform UK Party led by Nigel Farage. The
[14:08] Speaker 3: constituency is a deliberate choice though for Burnham, say his
[14:12] Speaker 3: backers to fight a tight contest where there is a
[14:15] Speaker 3: direct threat from Reform so he can show how he
[14:18] Speaker 3: would beat them in the next general election, which must
[14:21] Speaker 3: be called before August twenty twenty nine. Burnham is not
[14:26] Speaker 3: the only would be challenger, though to Starmer, former Health Sexuary,
[14:29] Speaker 3: where Streeting is also expected to mount a bid for
[14:31] Speaker 3: the Labor leadership should a contest take place now. He
[14:35] Speaker 3: recently spoke to Bloomberg's Francin in Laqua.
[14:38] Speaker 9: I think Andy will win and make a field when
[14:40] Speaker 9: none of us and the included taking it for granted.
[14:43] Speaker 9: It comes back to this fundamental point, though, which is
[14:46] Speaker 9: I can see Andy's strengths. I think he needs to
[14:50] Speaker 9: be tested. I think his ideas need to be tested,
[14:53] Speaker 9: and so do mine. And I'm probably a rare thing
[14:57] Speaker 9: in the Labor Party. I'm a monarchist, but this is
[15:01] Speaker 9: one coronation that I I'm not enthusiastic about. I think
[15:05] Speaker 9: you need a debate. I think you need a battle
[15:07] Speaker 9: of ideas. He needs to set out his store, I
[15:09] Speaker 9: need to set out mine.
[15:11] Speaker 3: That was Labor politician West Treating, speaking to Bloomberg's Farcy
[15:14] Speaker 3: and Lacqua at the London south By Southwest Festival. The
[15:18] Speaker 3: UK stands at the precipice in no small part due
[15:23] Speaker 3: to the state of the economy and voters who don't
[15:27] Speaker 3: usually turn out in enormous numbers for by elections. We'll
[15:30] Speaker 3: be going to the polls on the very same day
[15:32] Speaker 3: as the Bank of England's Monetary Policy Committee makes its
[15:35] Speaker 3: decision on interest rates as it assesses the extent to
[15:39] Speaker 3: which higher energy costs are affecting domestic prices. We're going
[15:44] Speaker 3: to dig into both topics now with Bloomberg's Politics reported,
[15:47] Speaker 3: Jacob Reid and our economists covering the UK and the
[15:51] Speaker 3: euro Area, Ana Andrede. Welcome to both of you. So
[15:55] Speaker 3: i'll call it the two Andy's Andy Burnham and Andrew Bailey.
[16:00] Speaker 3: Lots of candidates of course running in the by election,
[16:02] Speaker 3: and lots of policymakers at Bank of England too. But
[16:05] Speaker 3: that's just my shorthand for really thinking about next Thursday. Jacob,
[16:10] Speaker 3: why do you think, though, that the vote in make
[16:13] Speaker 3: a Field is so important?
[16:14] Speaker 10: Oh my goodness. I mean it's completely bizarrest by election
[16:18] Speaker 10: in a you know, we're going to be seventy thousand
[16:21] Speaker 10: voters or something like that, and it could reshape British politics.
[16:25] Speaker 10: We've got a Prime Minister, Keir Starmer, who's historically unpopular.
[16:29] Speaker 10: The Labor Party is seeing those polls we're very worried.
[16:33] Speaker 10: And Andy Burnham, the Mayor of Manchester of Greater Manchester,
[16:37] Speaker 10: is the most popular politician in the country. The issue
[16:40] Speaker 10: is he can't become Labor Leader and Prime Minister without
[16:44] Speaker 10: being in Parliament. So one of the Labor MPs stood
[16:47] Speaker 10: down and said, go on, Andy, running this by election
[16:50] Speaker 10: and if you win, you'll be able to challenge for
[16:52] Speaker 10: the leadership. And it's a big if. It's a big if,
[16:55] Speaker 10: it's not a done deal.
[16:56] Speaker 3: No, So what does the polling look like? What have
[16:59] Speaker 3: candidates actually been campaigning on in quite an unusual contest obviously.
[17:04] Speaker 10: Yeah, so there have been two poles. They both put
[17:08] Speaker 10: Andy Burnham ahead by different amounts. For most recent one
[17:12] Speaker 10: was ten percentage points ahead, which you would say is
[17:15] Speaker 10: relatively comfortable. But it's notoriously difficult to do accurate polling
[17:20] Speaker 10: in small constituencies to get an accurate sample. So while
[17:25] Speaker 10: people probably do think Andy Burnham will win, there's a
[17:28] Speaker 10: strong challenge from Robert Kenyan, who's the Reform UK candidate,
[17:32] Speaker 10: and he's basically saying that Andy Burnham is using this
[17:37] Speaker 10: constituency as a stepping stone for his personal ambition and
[17:41] Speaker 10: that you know he's still labor, and Labour's very unpopular.
[17:45] Speaker 3: Is there anyone in the North of England who doesn't
[17:48] Speaker 3: know the name Andy Burnham? I doubt it. He's certainly
[17:50] Speaker 3: playing on home turf in terms of that record. And
[17:55] Speaker 3: I know you've spent lots of time in the constituency
[17:58] Speaker 3: and in the North of England thinking about that. So
[18:02] Speaker 3: what do you kind of extract from his record?
[18:06] Speaker 10: The big thing is buses. I mean to go to
[18:08] Speaker 10: make Afield ashually in Makeerfield, the town center and you
[18:11] Speaker 10: see these big yellow buses going past you. And his
[18:14] Speaker 10: big policy has been taken them back under public control,
[18:18] Speaker 10: capping the fairs to two pounds, making sure they do
[18:22] Speaker 10: roots for the kind of in the middle of nowhere,
[18:24] Speaker 10: but a bit of a lifeline for those people. That's
[18:28] Speaker 10: his big thing. And also Greater Manchester is just an
[18:31] Speaker 10: area of it's doing really well. The UK economy is
[18:34] Speaker 10: quite gloomy, and this is a city, a city region.
[18:37] Speaker 10: It's really been outpacing a lot of a lot of
[18:40] Speaker 10: the country. It feels like things are happening. Buildings are
[18:44] Speaker 10: going up. So he's kind of trying to capitalize on
[18:47] Speaker 10: that good vibe.
[18:48] Speaker 3: Really yeah, absolutely well, Anna, let's bring you in at
[18:51] Speaker 3: this point, then we know that the UK is facing
[18:54] Speaker 3: obviously political turmoil with all of this, just walk us
[18:57] Speaker 3: through then the economic picture right now for.
[18:59] Speaker 11: The U, Yeah, definitely. So obviously we've had a very
[19:04] Speaker 11: strong start to the year. We've seen real GDP gaining
[19:08] Speaker 11: zero point six percent quarter on quarter. That's very unusual.
[19:12] Speaker 11: There's all these question marks about whether that reflects strong
[19:16] Speaker 11: momentum in underlying activity or actually it's just a problem
[19:20] Speaker 11: that the OS is not fully capturing a shift in
[19:24] Speaker 11: the pattern of economic activity. Regardless, we expect and our
[19:29] Speaker 11: outlook for the next coming quarters is actually quite gloomy.
[19:32] Speaker 11: And that's obviously on the Iran war. So as a
[19:35] Speaker 11: net importer of energy, they run more to rising energy costs,
[19:39] Speaker 11: means that there'll be a taxflationary shock to the economy.
[19:43] Speaker 11: We're going to see headline inflation increasing faster than we
[19:46] Speaker 11: were expecting. We've actually revised our forecast compared to the
[19:50] Speaker 11: pre war We see it higher by one point five
[19:52] Speaker 11: percentage points by the start of next year. That's obviously
[19:56] Speaker 11: a squeeze, real income squeeze for households, and and on
[20:00] Speaker 11: top of that you had tightening and funding conditions because
[20:03] Speaker 11: markets are no longer pricing in rate cuts from the BOE.
[20:06] Speaker 11: So our outlook even before sort of all of this
[20:10] Speaker 11: political thermol was for extreme weak growth over the next
[20:14] Speaker 11: coming quarters.
[20:15] Speaker 8: Yeah.
[20:16] Speaker 3: Absolutely, And you know we don't have a resolution to
[20:18] Speaker 3: the war in Iran and that is certainly a big,
[20:22] Speaker 3: big challenge. And I suppose going back to the kind
[20:26] Speaker 3: of politics, that's one of the big questions, isn't it
[20:30] Speaker 3: how somebody like Andy Burnham would translate his policies nationally,
[20:36] Speaker 3: what his bigger economic plans might be when the backdrop
[20:41] Speaker 3: we know has been massively challenging for Kistoma, the currently leader,
[20:45] Speaker 3: and even leaders.
[20:46] Speaker 10: Before that, exactly, it would be difficult for anyone coming in.
[20:50] Speaker 10: Broadly speaking, Burnham has said he wants to take more
[20:54] Speaker 10: control of essential industries, so the bus is a key example,
[21:00] Speaker 10: or some energy water. He stopped short of saying he
[21:03] Speaker 10: would want to nationalize. It might be more regulation. He's
[21:07] Speaker 10: also talked a bit about a new way of doing politics,
[21:10] Speaker 10: devolving more tax and spend powers to local areas and
[21:15] Speaker 10: maybe even changing the electoral system. And historically he's been
[21:19] Speaker 10: in favor of rejoining the EU, but he knows he's
[21:23] Speaker 10: competing in a constituency that voted to leave, so he's
[21:26] Speaker 10: kind of walked back from those comments. I think basically
[21:29] Speaker 10: there are two different school of thoughts. One is that
[21:33] Speaker 10: he's more left wing than Keir Starmer. He's a bit
[21:35] Speaker 10: more radical. He's talked about MC government shouldn't be in
[21:39] Speaker 10: hot to the bond markets. That was interpreted by some
[21:42] Speaker 10: as you know crikee, he's going to borrow more. He
[21:46] Speaker 10: said that he meant that we need a long term
[21:48] Speaker 10: plan and not to just follow sort of guilt girations.
[21:52] Speaker 10: The other school of thought is that he's basically a
[21:55] Speaker 10: bit more of a charming Kio Starmer. He would have
[21:57] Speaker 10: similar policies. He's said he's in favor of a lot
[22:01] Speaker 10: of pretty tough restrictions the government has done on immigration.
[22:05] Speaker 10: He just sell them a bit better. He's a bit
[22:07] Speaker 10: more charismatic and it's not clear which Andy Vernon we
[22:10] Speaker 10: might get.
[22:11] Speaker 3: So then what do we think that the Bank of
[22:13] Speaker 3: England amidst all of this is going to do.
[22:16] Speaker 11: I mean, I think right now the focus is still
[22:19] Speaker 11: pretty much on the Iran war and the impact that
[22:21] Speaker 11: it can have on the economy. I think the political
[22:24] Speaker 11: uncertainty and obviously the question mark of what will happen
[22:27] Speaker 11: to fiscal policy will be a crucial thing for the
[22:30] Speaker 11: bo's policy outlook, but it's just not We just know
[22:33] Speaker 11: very little of what's going to happen there. BOE policy
[22:36] Speaker 11: makers take policy announcements as given, so there's little they
[22:39] Speaker 11: can do now regarding the upcoming meeting, I mean, I'm
[22:43] Speaker 11: not expecting much. I think the most notable shift is
[22:47] Speaker 11: probably going to be in the vote split. So in
[22:51] Speaker 11: April we had hu Peel favoring a great hike. He's
[22:55] Speaker 11: probably going to be joined by one or two maybe
[22:58] Speaker 11: extra NPC members Meghan Green, Katherine Mann possibly, But in
[23:03] Speaker 11: the rest of the committee there's really not a lot
[23:06] Speaker 11: of appetite for a rate hike right now, so we
[23:09] Speaker 11: expect rates to be unchanged. I think the interesting thing
[23:13] Speaker 11: to watch is how the BIW is going to manage
[23:15] Speaker 11: its communications, because it has said that it has essentially
[23:21] Speaker 11: talked tough. It said that it was going to do
[23:23] Speaker 11: whatever was necessary to prevent the inflation from deviating from
[23:27] Speaker 11: the two percent target. But we just don't know what
[23:30] Speaker 11: will be the trigger for further action. If it's waiting
[23:34] Speaker 11: for second round effects to show up in the data,
[23:37] Speaker 11: that's wage data. It's a late cycle indicator, so it
[23:40] Speaker 11: will be late by defaults. So I think personally it
[23:44] Speaker 11: already has a lot of the information on the table
[23:47] Speaker 11: to deliver or not that hike. We expect a move
[23:50] Speaker 11: maybe in July, but I think if the buy continues
[23:54] Speaker 11: to act tough, to talk tough, sorry, but not act
[23:57] Speaker 11: tough and not follow up on that, then there's a
[23:59] Speaker 11: big risk to its credibility.
[24:02] Speaker 3: Much to come in terms of politics and economics here
[24:05] Speaker 3: in the UK in the coming days and months. Thank
[24:08] Speaker 3: you so much for being with me. That is that
[24:10] Speaker 3: Bloomberg's Jacob Reed and Anna Andrade really appreciate your input.
[24:14] Speaker 3: We will of course have full coverage of that all
[24:16] Speaker 3: important make Afield by election in England and the upcoming
[24:20] Speaker 3: Bank of England interest rate decision on Bloomberg platforms. I'm
[24:23] Speaker 3: Caroline Hepkee here in London. You can catch us every
[24:25] Speaker 3: weekday morning for Bloomberg Daybreak. You're at the beginning at
[24:28] Speaker 3: six am in London. That's one am on Wall Street, Nathan.
[24:32] Speaker 2: Thanks Caroline, and coming up on Bloomberg day Break weekend,
[24:35] Speaker 2: we'll look ahead to the rate decision coming up from
[24:37] Speaker 2: the Bank of Japan. I'm Nathan Hager, and this is Bloomberg.
[24:52] Speaker 2: This is Bloomberg day Break weekend, our global look ahead
[24:54] Speaker 2: at the top stories for investors in the coming week.
[24:57] Speaker 2: I'm Nathan Hager in Washington. This week I think of
[25:00] Speaker 2: Japan's got a great decision on the way. For more,
[25:03] Speaker 2: let's get to Doug Krisner, host of the Bloomberg Daybreak
[25:05] Speaker 2: Asia podcast.
[25:07] Speaker 4: Thanks Nathan. The market is bracing for the outcome of
[25:10] Speaker 4: this meeting, not so much because it fears an interest
[25:13] Speaker 4: rate hike, but because anything less than a decisive move
[25:17] Speaker 4: could create doubt about the boj's commitment to contain inflation.
[25:21] Speaker 4: For a closer look, let's bring in Bloomberg's Molly Smith.
[25:23] Speaker 4: Molly is a member of the Japan Korea Economy and
[25:26] Speaker 4: Government team. Today she joins us from Hong Kong. Thank
[25:30] Speaker 4: you for being here. Can we begin with the fact
[25:33] Speaker 4: that BOJ Governor Uwaita has been hospitalized for treatment of
[25:37] Speaker 4: a liver cyst infection, and the BOJ has said that
[25:41] Speaker 4: Uwaita's medical treatment means he will miss this two day meeting,
[25:45] Speaker 4: and I'm curious to get your take on what his
[25:48] Speaker 4: absence will do to shift the dynamic of this meeting
[25:52] Speaker 4: if at all.
[25:53] Speaker 8: Yeah, it's interesting. I think that the boj was maybe
[25:57] Speaker 8: doing just like a bit of level setting by saying
[26:00] Speaker 8: off the bat and what Otherwise, it was a fairly
[26:02] Speaker 8: short statement about this, but to say that he's expected
[26:05] Speaker 8: to be in the hospital for two weeks, so like,
[26:08] Speaker 8: you know, not like this is going to be some
[26:09] Speaker 8: swift thing and like leave any question as to if
[26:12] Speaker 8: he could make the meeting next week very clear that
[26:15] Speaker 8: he will not be there, but has a very competent
[26:18] Speaker 8: deputy in Yumino who will be taking the reins as
[26:23] Speaker 8: well as Uchietah, so that I don't think there's any concern,
[26:26] Speaker 8: and you know, the expertise of those two very experienced
[26:29] Speaker 8: central bankers in their own right, So I don't think
[26:32] Speaker 8: it doesn't change anything as far as like the the decision,
[26:36] Speaker 8: I think that's more or less made at this point.
[26:39] Speaker 8: It's I think, you know, what everyone's really just been
[26:42] Speaker 8: curious about is going to be how hawkish the press
[26:45] Speaker 8: conference would be, because at this point it's almost like
[26:49] Speaker 8: we're kind of looking for next week is a done
[26:52] Speaker 8: deal more or less, but like, are you going to
[26:54] Speaker 8: telegraph the possibility of another hike? By the end of
[26:57] Speaker 8: the year, because that's really I think where all of
[26:59] Speaker 8: the ex dictations to our turning to at this point,
[27:02] Speaker 8: and for the sake of the end I think will
[27:04] Speaker 8: also be quite important as we're still right very much
[27:07] Speaker 8: in intervention territory.
[27:09] Speaker 4: Definitely stuck at around one sixty against the greenbeck. I
[27:12] Speaker 4: think we heard from Uweita in the early part of
[27:15] Speaker 4: June and he was talking about the spillover effects of
[27:18] Speaker 4: higher oil prices leading to an upward deviation in underlying inflation.
[27:24] Speaker 4: Is oil still the big problem here in terms of
[27:28] Speaker 4: becoming a driver of higher inflation in Japan or there
[27:31] Speaker 4: are some other things that we need to consider.
[27:35] Speaker 8: It's definitely still a problem. I think that this is
[27:38] Speaker 8: where Takeichi and her administration comes in, and this is
[27:41] Speaker 8: really the focal point of where the extra budget is at.
[27:46] Speaker 8: You know, this is all about cushioning the impact from
[27:49] Speaker 8: the Middle East conflict, and that trying to continue these
[27:53] Speaker 8: subsidies that have been in place for quite some time
[27:56] Speaker 8: at capping the cost of gasoline or utility costs, especially
[28:01] Speaker 8: as we're heading into the hot summer months in Japan.
[28:05] Speaker 8: That that's really at the heart of where this extra
[28:08] Speaker 8: budget comes in.
[28:09] Speaker 4: Well, you mentioned the weakness and the currency. That's obviously
[28:12] Speaker 4: a big problem for inflation. How is it showing up
[28:15] Speaker 4: in daily life in Japan? You would know better than I.
[28:20] Speaker 8: Well, I think this is where my bias is. Somebody
[28:23] Speaker 8: who's still being paid in dollars comes in and that
[28:26] Speaker 8: I'm perhaps maybe a little uh, you know, not not
[28:30] Speaker 8: the best person to ask on that, But yeah, for
[28:34] Speaker 8: local people, of course, it's still it's incredibly frustrating, and
[28:38] Speaker 8: that you know, Japan is a place where it's basically
[28:43] Speaker 8: impossible to get fired, But that doesn't necessarily mean that
[28:46] Speaker 8: like your your job conditions and like you know, your
[28:50] Speaker 8: pay is like exactly like you know, something to really
[28:53] Speaker 8: smile and write home about that. It's still like quite
[28:58] Speaker 8: I think with the wage gains that like been showing
[29:01] Speaker 8: up now for the past few months, but there is
[29:02] Speaker 8: a lot of concern now that as inflation is rearing
[29:06] Speaker 8: back up again of that might be quite short lived.
[29:09] Speaker 8: So I think there definitely is a sense of frustration
[29:12] Speaker 8: at the week end for people who are obviously being
[29:15] Speaker 8: paid in yen.
[29:16] Speaker 4: So given the fact that the Japanese yen has been
[29:19] Speaker 4: so weak, particularly against the dollar, I'm wondering whether we've
[29:23] Speaker 4: seen a commensurate pullback in consumer activity, has consumer spending
[29:28] Speaker 4: declined at all.
[29:30] Speaker 8: I think that's where the concern is like starting to
[29:32] Speaker 8: shift for sure of like when this like really will
[29:35] Speaker 8: start to hit household spending that you've had like supportive
[29:39] Speaker 8: wages for like the past couple of months. But sentiment
[29:44] Speaker 8: is still quite poor and as like you know could
[29:46] Speaker 8: tell you from covering the US economy for five years,
[29:49] Speaker 8: that sentiment is hardly a perfect predictor of consumer's actual behavior,
[29:55] Speaker 8: but it's definitely still worth keeping an eye on.
[29:58] Speaker 4: So the other side of a weekend story is obviously
[30:01] Speaker 4: it makes exports cheaper to offshore markets. Is that the
[30:06] Speaker 4: case right now? Or is are things perhaps slow? And
[30:11] Speaker 4: I'm thinking about the American market and the tariff story.
[30:14] Speaker 4: I mean, what's the dynamic when you look at the
[30:16] Speaker 4: export side.
[30:16] Speaker 8: Of the story that's still quite positive? And I think
[30:20] Speaker 8: this is you know, kind of similar in Korea too,
[30:23] Speaker 8: where you still are kind of counting on like this
[30:26] Speaker 8: AI story to really carry a lot of the growth
[30:30] Speaker 8: picture right now. And that's like exactly where you get
[30:34] Speaker 8: all of these talks about k shaped economies around the
[30:37] Speaker 8: world that when if you are like a supplier of
[30:41] Speaker 8: anything AI chips related that that's been a really great
[30:46] Speaker 8: export story, I mean for Korea especially, But then you
[30:50] Speaker 8: start to wonder, like how much is that wealth being distributed?
[30:55] Speaker 8: Is it really like a sustainable growth story? Is it
[30:58] Speaker 8: an equitable one? And seem to be that way.
[31:01] Speaker 4: So MOLLI is you're reporting on the Japanese economy, what
[31:04] Speaker 4: are some of the things that you wrestle with? What
[31:06] Speaker 4: are some of the narratives that that you're trying to understand?
[31:10] Speaker 8: I think it's again it's still like I think I
[31:13] Speaker 8: might have said this when we spoke last time, Doug,
[31:15] Speaker 8: but it's still like quite fascinating coming from the US
[31:19] Speaker 8: perspective of like inflation that is still in the one
[31:25] Speaker 8: percent handle neighborhood, that this is like such a cause
[31:30] Speaker 8: of concern. I understand that a lot of this is
[31:32] Speaker 8: still more I'm like pre like, you know, concern of
[31:35] Speaker 8: where inflation is going, not just where it is right
[31:38] Speaker 8: now or point two. I mean, that's like that's a
[31:40] Speaker 8: scary number. Inflation is nowhere near that in Japan here.
[31:45] Speaker 8: But you see like the response from you know, fiscal
[31:49] Speaker 8: authorities more so than monetary at this point that like,
[31:52] Speaker 8: I feel like it creates in my head. It makes
[31:56] Speaker 8: you would think that situation is much more dire, and
[31:59] Speaker 8: perhaps it is not necessarily downplaying it, but you just
[32:02] Speaker 8: like wonder of, like what if there ever was inflation
[32:05] Speaker 8: in Japan like it's been in the rest of the world,
[32:07] Speaker 8: Like what kind of a response would that take.
[32:09] Speaker 4: There's an entire generation in that country that has no
[32:14] Speaker 4: idea that prices are capable of rising, right that they
[32:18] Speaker 4: have lived with deflation or a kind of disinflation for
[32:22] Speaker 4: such a long time. It's been generations. It's remarkable story. Molly,
[32:27] Speaker 4: thank you so very much. It's always a pleasure. Save
[32:29] Speaker 4: travels back to Tokyo. By the way, Bloomberg's Molly Smith
[32:33] Speaker 4: joining from Hong Kong. Let's stay in Hong Kong because
[32:36] Speaker 4: last week the Bloomberg invest Hong Kong Summit took place,
[32:40] Speaker 4: and it was there the top investors, asset managers, and
[32:43] Speaker 4: policymakers gathered to discuss Asia and global market trends. It
[32:48] Speaker 4: was there we had a chance to speak with Susan Chan.
[32:51] Speaker 4: Susan is head of Asia Pacific at Blackrock, and she
[32:55] Speaker 4: spoke with Bloomberg's Rebecca Sin.
[32:57] Speaker 12: You know crypto. You guys do have the largest bitcoenty
[32:59] Speaker 12: tip globally. Let's talk about crypt Hong Kong is trying
[33:02] Speaker 12: to be the crypto hub. We've done a lot in tokenization.
[33:04] Speaker 12: Now in Hong Kong you can buy an ETF and
[33:06] Speaker 12: then switch it into gold and get gold jewelry or
[33:09] Speaker 12: gold bars back. What's Blackrock doing in this space?
[33:12] Speaker 7: So we have, as you mentioned, we have our crypto ETFs.
[33:18] Speaker 7: We continue to see demand for that and that will continue.
[33:23] Speaker 7: We are working across the region in many countries to
[33:27] Speaker 7: see how we can bring that capacity into the countries.
[33:32] Speaker 7: We've actually listed in Australia and we're looking at other
[33:36] Speaker 7: areas that we can do more in, including Hong Kong.
[33:40] Speaker 12: So, if we look at the investment opportunities across Asia Pacific,
[33:44] Speaker 12: where does black Rock seed as the most compelling investment opportunities?
[33:49] Speaker 7: So I think there are a few areas right. So
[33:53] Speaker 7: if we look at countries because of AI, we're seeing
[33:56] Speaker 7: structural shifts. Where are they taking place? Korea, for example,
[34:01] Speaker 7: is one big shift. If we look at what's happening
[34:04] Speaker 7: there with just the AI team playing out and taking
[34:09] Speaker 7: companies like Samsung and High Necks to an incredible level.
[34:14] Speaker 7: And even last week when we had the MSCI rebalance,
[34:18] Speaker 7: the weight of Korea in the EM markets went from
[34:22] Speaker 7: eight nine percent to now twenty two percent. These are
[34:25] Speaker 7: fundamental shifts that are not gonna, you know, revert. So
[34:30] Speaker 7: that's Korea, that's Taiwan. In addition, we see Japan as
[34:36] Speaker 7: a destination now because of the end of deflation. Of
[34:39] Speaker 7: course that's going to take some time to play out,
[34:42] Speaker 7: but there is a lot of interest in Japan. In particular,
[34:46] Speaker 7: in Japan, I would say it's in the private market space,
[34:49] Speaker 7: in the private credit space, in the infrastructure space, So
[34:52] Speaker 7: that's another area that we see a tremendous opportunity. And
[34:57] Speaker 7: then in the Aussian countries, what we what are seeing
[35:00] Speaker 7: is this need for diversification and this need to want
[35:06] Speaker 7: to invest outside of home country. Part of it is
[35:10] Speaker 7: driven because of the weaker currencies in the Asian countries.
[35:14] Speaker 7: You know, they need to diversify to have dollar assets
[35:18] Speaker 7: so that they can balance their portfolios over time, and
[35:24] Speaker 7: broadly we're seeing clients wanting to further diversify. What I
[35:28] Speaker 7: would say, Rebecca, is that the traditional sixty to forty
[35:32] Speaker 7: type of portfolio allocation is really underperforming, and we're finding
[35:38] Speaker 7: that the need to think about that portfolio on a
[35:41] Speaker 7: holistic manner across both equity fixing come private public is
[35:48] Speaker 7: really critical. Today. We're also seeing that you have to
[35:51] Speaker 7: look very and be very deliberate about how you select
[35:55] Speaker 7: what's in each of the categories. Is no longer that
[35:59] Speaker 7: you can just go buy an active equity fund and
[36:02] Speaker 7: expect to generate the returns inactive. And also there is
[36:08] Speaker 7: the demographic challenges of every country in Asia and we
[36:14] Speaker 7: are living longer, We have pension challenges across all and
[36:19] Speaker 7: portfolios of the traditional sixty forty are not going to
[36:22] Speaker 7: generate the outcomes that we're gonna need for the future.
[36:26] Speaker 7: So this is why private markets is becoming such an
[36:29] Speaker 7: incredibly powerful asset class within the longer term portfolios because
[36:35] Speaker 7: you need it and it fits very nicely in so
[36:38] Speaker 7: many ways. Right in terms of long term returns. You know,
[36:43] Speaker 7: when you're saving for the future, you're less dependent on
[36:47] Speaker 7: short term liquidity, but you need to be able to
[36:51] Speaker 7: see those returns and also what you're investing in in
[36:54] Speaker 7: private markets nowadays, we always look at how do we
[36:58] Speaker 7: help the countries, So infrastructure, you invest in country, so
[37:02] Speaker 7: it's a way for you to also, as an investor,
[37:05] Speaker 7: have a part in the development of your country.
[37:08] Speaker 4: That was Susan Chan, head of Asia Pacific at Blackrock,
[37:10] Speaker 4: speaking with Bloomberg's Rebecca Sin. I'm Doug Prisner. You can
[37:14] Speaker 4: catch us weekdays for the Daybreak Asia podcast. It's available
[37:18] Speaker 4: wherever you get your podcast.
[37:20] Speaker 2: Nathan, Thanks Doug, and that does it for this edition
[37:23] Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at
[37:27] Speaker 2: five am Wall Street Time for the latest on markets
[37:29] Speaker 2: overseas and the news you need to start your day.
[37:32] Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global
[37:35] Speaker 2: business headlines are coming up right now.

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