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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, a look ahead to some key data in the U.S., how it may impact Fed policy moving forward. I'm Tom Busby in New York. I'm Caroline Hipka in London, where we're asking what next in the global AI race? I'm Doug Krisner looking at the potential fallout of Donald Trump's trade war with China.
That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.
Good day to you. I'm Tom Busby. We begin today's program with some key economic data here in the U.S. CPI data on Wednesday, U.S. retail sales on Friday. Now, for more on these readings, what they tell us about the consumer, how they may impact Fed policy moving forward, we're joined by Stuart Paul, U.S. economist with Bloomberg Economics. Stuart, thank you for being here.
Now, before we look ahead, let's start with some important data we just got at the end of this past week, the January jobs report. Why don't you tell us those numbers, and how do you read this? My read of the January jobs report is that it's a bit mixed. The data are a bit mixed. Headline job growth, actually surprised at the downside. We had just 143,000 jobs added in January. That's below our estimate of about 200,000 jobs added during the month.
And in addition to that, there were downward revisions of past month's data. But, and this is where it gets to be a little bit mixed, the downward revisions weren't as steep as we had expected, as most of Wall Street had expected. We saw just 610,000 fewer workers on payrolls at the end of 2024. Most folks were expecting...
over 900,000 fewer workers on payrolls at the end of 2024. So, those downward revisions weren't actually as steep as folks had expected. Where we did see a little bit of negative details were in some of the industry-level composition of those revisions. So, at the end of 2024, there were fewer workers working in professional and business services, leisure and hospitality, manufacturing, some of those more cyclically sensitive industries. So,
We take the downward revisions. We take the industry-level composition. We take slowing payroll growth to start 2025. And it's really just not a great picture in terms of the labor market right now. It does characterize labor market cooling. But we did see the unemployment rate move lower. That's exactly right. Adding to the mixed nature of this job report, we see the unemployment rate inching lower. Some of that is because of updates and revisions to
how the household survey is computed. A lot of it comes from revisions or updates to the total population. The estimate of the population increased by about 3 million people, and the number of people who the Bureau of Labor Statistics estimates are employed increased by way more than we had anticipated. That creates downward pressure on the unemployment rate. More people joining the workforce. I mean, it sounds like...
Former President Biden left on a pretty high note here if it's 4% unemployment. That's right. Adding to his economic legacy of delivering a slower pace of inflation without creating a massive disturbance in the labor market, that's going to be part of his economic legacy. And so, again, as he exited on the 20th of January, this is a rather favorable situation.
little detail for his economic legacy. But in terms of the job report overall, it is a pretty mixed picture. Payroll's not looking great. But then again, unemployment inching down. Now, you mentioned inflation and the legacy of former President Biden. I mean, it has been the bête noire for this economy and for consumers. And what are you expecting to see on Wednesday? That would be the January CPI
Everybody goes to the gas station, everybody tries to buy eggs, if there are eggs in there. There's a lot into this. What do you expect to see, and why? What is the reason it is so stubbornly high? We're expecting to see headline inflation registering 0.3% on a monthly basis. That's a little bit slower than we saw in December. There are a couple tricky seasonal factors operating in the background that are
are allowing for that slowdown in the monthly pace of headline inflation. But underneath the surface, what's going on at the consumer level for headline inflation is that gasoline prices are exceptionally stable through the winter. Typically, you would expect to see a major decline in December. That never materialized. That boosted the December number. Now, as we get into January,
There's less of that going on, again, just at the pump. Things are relatively stable. And so, we're going to see a little bit of a slowdown in the pace of headline inflation. When it comes to the core, we're also expecting to see just barely 0.3% monthly inflation. That's faster than we saw in December, 0.2% in December.
but favorable base effect will allow the annual measure of core inflation to inch down just a little bit to 3.1%. Still stubbornly high, it's still characteristic of that long last mile to the Fed's 2% target. And a lot of what's going on in the background is that goods disinflation, deflation in goods, which is typical for the U.S. the last decade,
It's just not there. We're just not getting that goods deflation that we would typically rely on. Now, on Friday, we're going to see the result of this with retail sales for January. What are you expecting to see? Is the consumer pulling back? And is it not just low-wage earners, but all consumers? What I'm really seeing for the retail sales number is a consequence of...
pretty negative weather consequences from the polar vortex in January. We saw really dismal auto sales during the month. The annualized pace of auto sales fell to about 15.6 million units from 16.8 million units in December. So that major decline is characteristic of folks who just really don't want to walk the lot.
and get pitched on the undercoat sealant by the salesman. It's just too cold to do that during the month of January, during a polar vortex. And when you have auto sales declining like that, that could result in headline retail sales declining by about 0.4% during the month, and that's what we expect.
Well, a lot to look forward to. Our thanks to Stuart Paul, U.S. economist with Bloomberg Economics. We move next to corporate earnings from the fast food giant McDonald's. Its fourth quarter results out on Monday. For more on the world's biggest burger chain, the state of the fast food industry, and whether consumers are pulling back on their spending, we're joined by Michael Halen, Bloomberg Intelligence Senior Restaurant and Food Service Analyst. Michael, thank you for joining us.
Now, like every other dining establishment, McDonald's has had to face a lot of challenges. Rising costs. Look at the price of eggs. Higher salaries. Cautious consumer spending. It also had an E. coli outbreak last year that may have really set things back. So what are you looking for in this earnings report out on Monday?
Yeah, I think this earnings report is going to be kind of ugly. So, you know, to your point, E. coli threw a wrench into things. They had started off the quarter well. October, same-store sales were up mid-single digits. Traffic was positive. They had kind of reestablished themselves as, you know, one of the big dogs in terms of value providers in the restaurant business in the United States with their $5 meal deal. It was going really well.
And then they were hit that E. coli outbreak. And so, yeah,
from data we've seen and just what we expect November and December were probably pretty tough months for the chain. I think what the street is really interested in is how January is doing so far. They've revamped their McValue menu, which hasn't been touched in quite some time. And we think that could create some buzz. The street really wants to see some progress here on the same source sales and traffic.
Well, I'd say more than any other chain. They are pretty nimble. They're willing to change. And how do you think McDonald's did reacting to that E. coli scare? I mean, they shut things down right away. The quarter pounder was unavailable, I think, nationwide even for a while just to L.A. fears. But how do you think they came back from that?
Yeah, so sales and traffic haven't bounced back. I think they handled it pretty well. They quickly, you know, stopped serving quarter pounders and quickly got to the bottom of the issue. You know, I think what's going to help McDonald's versus, say, Chipotle, which was the last, you know, large E. coli outbreak in the industry, you know, we think this is going to be a much shallower market.
event for McDonald's because it wasn't their fault. It wasn't because of poor procedures or cleanliness issues or cross-contamination or anything like that. They received bags of onions from a distributor that were infected with E. coli, right? And so for that reason, we think this is going to be a much shallower impact to same-store sales.
We had some work done by a partner of ours, Cognolvi Labs. They use AI to analyze tweets and online forums and things of that nature. And what their research found for us was that mentions of E. coli quickly disappeared.
faded throughout the fourth quarter in November and by year end. And also the negative emotions tied to E. coli comments dissipated pretty quickly. And so that what that tells us is that, that we think this is going to be a much faster recovery than, than Chipotle experience. We don't know if it's going to be the end of by the end of one Q or not, but you know, there's a potential for them to, to increase sales low single digits here in the second quarter, which is,
like i said earlier the street wants to see progress we want to see progress in this um earnings report we want to hear that january is doing better than december which did better than november right right right now you mentioned the five dollar meal deals that they had and everybody it seems came up with their own meal deals after that and not just fast food but quick service restaurants casual dining chains
Do you think that really changed the industry? McDonald's launching those five dollar. It seems like that started, I think, in June of last year. They extended it still going on. You say now they're going to revamp their McValue meal. I mean, is this for right now here to stay? Yeah. And I'd say that the big reason is that that quick service chains are expanding.
heavily frequented by low-income consumers and low-income consumers are still being impacted more than other consumers by inflation. Inflation is cumulative. And so last year was a restaurant recession and that's why we saw McDonald's start to lean into this. Early in the year last year, there was a lot of shade being thrown at McDonald's because it
a Big Mac meal was $18 at a store in Connecticut, right? And there was other quick service and fast casual names like Five Guys actually had a 22 or $23 meal deal, right? And so
it was really important for quick service to reestablish that value proposition. And that's why they did these $5 meal deals. And that's why they're going to continue to do them. Right. It was a tough year for restaurants and quick service had to do what they could to, to keep the low income consumers coming back. You know, we're, we're more bullish on 2025, you know, with asset prices, including the S and P Bitcoin home prices, all near all time highs. We think,
you know, middle income, higher income consumers are going to spend more, you know, and we think there could be, you know, the results since the election have been better as well. And so, and some of the economic data that we watch. And so, you know, for that reason, the low income consumer could be a little bit better too, but, you know, because of the impacts of inflation on them, we think quick services is probably the segment of the industry we're the least excited about in 2025. And so you're going to continue to see these discounts. Yeah.
Oh, that's good. Well, McDonald's Q4 earnings, along with the return of the Shamrock Shake, out on Monday. Our thanks to Michael Halen, Bloomberg Intelligence Senior Restaurant and Food Service Analyst. Coming up on Bloomberg Daybreak Weekend, we'll look at what comes next in the global AI race. I'm Tom Busby, and this is Bloomberg. ♪upbeat music playing♪
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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, we'll look at the potential fallout of Donald Trump's trade war with China. But first, a summit on artificial intelligence taking place in Paris this week, set to bring together the biggest names in the sector, including government officials and business leaders. But first, a look ahead at the top stories for investors in the coming week.
This comes after Chinese startup DeepSeek jolted competitors around the world with the debut of its AI model, trained at just a fraction of the cost of rivals. How will the international community respond? For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.
Tom, the AI Action Summit is due to take place in Paris in the next few days and at a fascinating moment. It will be the first trip abroad for the newly installed US Vice President J.D. Vance. The Trump administration is keen to take a leading role in this area. Just look at President Trump's Stargate initiative, a $100 billion venture designed to accelerate AI development.
Plus, the gathering takes place in the wake of Chinese firm DeepSeek's model raising questions about the billions of dollars firms have spent to develop artificial intelligence technology and whether Beijing is closing the gap with the US in this rapidly developing sphere.
So what's in store at the Paris AI Action Summit and beyond for the industry? I've been asking Bloomberg's technology opinion columnist, Parmi Olson. The summit came about in 2023 as an AI safety summit,
in the UK in Bletchley Park, which is kind of famed for being a home to a lot of computer related innovation. And it was brought together, I think, out of concern about the speed at which AI was developing and the sense that there needed to be guardrails put in place. And there was a lot of talk back then about not just the short term risks of AI, such as
the rise of misinformation that chatbots could contribute to or the way that they could perhaps entrench certain stereotypes, racial stereotypes, gender stereotypes and biases, but also the potential existential risk that AI could bring to civilization
These were the sorts of things that Rishi Sunak, who was the British prime minister at the time and who was hosting the event, spoke about. It's a very different tone this time around. The name has changed from AI Safety Summit to AI Action Summit. And I think there's a very interesting potential shift there in how governments want to approach AI. Now they seem to be more eager to kind of
remain ahead in this race and maybe even stimulate and encourage their own national champions more so than putting guardrails in place for companies, which was really the focus of the first summit. Yeah. So why is this taking place now then? Well, as I understand it, this is an annual event. And so there was one in 2023, then there was another one in Seoul, South Korea last year. And this year we've got one in Paris.
The reason these have started is, again, just because...
of these rapid advancements. Since ChatGPT came out two years ago, the rate at which AI models have been improving is even taking scientists by surprise. Some of the academics studying this stuff will read one paper. By the time they finished reading it, it's sort of out of date because Anthropic or OpenAI or Google have come up with something more incredible, like a video generation tool. And for businesses,
investors and policymakers, it's been very tricky just to keep up, whether it's to try and plug these systems into your businesses or try and put the standards in place to keep them safe. And the other reason why I think this is happening is I think that governments have realized over the last decade that Silicon Valley companies should not be left to regulate themselves.
And governments need to come together and maybe put together some sort of international agency related to the United Nations that can put some standards in place that companies have a perhaps a legal obligation to follow because, you know,
There is nothing like that yet in existence. And just a case in point, Google announced that they are now removing their own ban on the use of their AI for military purposes, for weapons and for surveillance tools.
And so this has really caused a lot of concern and consternation, particularly among civil society organizations and policymakers that really governments need to step in and do something. Interesting.
So in terms of the heads of state who are going to be there and the important players out of Silicon Valley, who do you think will be there? I mean, obviously Emmanuel Macron, but also possibly JD Vance, possibly the other Silicon Valley leaders,
Could things get a bit tense given that everybody is jostling to be at the forefront of this AI race? You know, at first I thought there might be a lot of tension between the US and China, as there always is, on this topic of AI governance. But it was interesting when the first AI summit, international AI summit happened in the UK two years ago, China sent...
this kind of vice minister for science and technology. And he was really kept at arm's length on these kind of national security concerns. Now, I think it's going to be different. I think that China's officials and China sending one of its top government officials, a very close ally to Xi Jinping, much higher ranking than the guy who came the first time,
I think he's going to be given a much warmer welcome just because of DeepSeat, the Chinese company that in the last couple of weeks has really shocked the market with its ability to make AI models so efficiently and really disrupt the economics of this new market. And so just given what Chinese companies have been achieving in research and development,
I think the Chinese officials there are going to be given a warmer welcome overall. There might well be some tensions over what policy should be, but also it really just depends on who ends up going to represent the United States. And I believe some quite high ranking people from India are going to be there as well. And again, that's
I think, again, that comes down to what happened with DeepSeek. DeepSeek showed that the current AI race in it, the guaranteed winners are not necessarily American companies, America's tech giants. It could be smaller companies from developing nations. Yeah, which is fascinating, isn't it, that DeepSeek has forced such a rethink of
But a lot of the big US companies are still committed to spending on growth, OpenAI in particular and others. I wonder whether there's any development on that front as far as you're concerned. I think the spending is going to continue and we saw a commitment to that actually just in last week when tech companies like Microsoft and meta platforms were...
were announcing their earnings. So it was an awkward time for them because they had just been completely undercut in a way by DeepSeek. And then they had to talk to their investors about
These tens of billions of dollars they want to continue spending on AI. And I think actually they can continue. They do have some justification to spend that much because in the last week, there have been a lot of security concerns raised about DeepSeek, the AI.
Some security researchers have said that although DeepSeek made its model very efficient, it's actually really low on the scale when it comes to the ability for people to jailbreak its model, meaning they could get it to do things it's not supposed to or steal
private information that the model is kind of plugged into. So I think that would really hurt DeepSea's prospects in terms of getting business customers potentially. And that
It's a little bit of a vindication for the tech giants who are spending a lot on infrastructure, billions and billions of dollars on infrastructure, which isn't just to power AI, but also to keep it secure. Tell us also a little bit about one of the other ventures within AI, which is Stargate.
And what's kind of happening with that and why people think it's so interesting, what may come in the weeks and months ahead? Yeah, so I think we really it's an open question because this is a project that was a $500 billion project to really just boost the infrastructure investment in the US on AI data center spending and so forth.
I've heard some people say that 500 million, like the billion, it doesn't need to be that high, that for what the government is trying to do and what OpenAI is trying to do as a potential beneficiary to all this, just does not need that amount of funding. But we'll see, I suppose, in the months ahead, whether OpenAI actually is able to
make good on some of the discoveries that DeepSeek has made. Because remember, DeepSeek is not strictly open source, but it's an open weights model in that it has put the blueprints for its incredibly efficient model on the internet for anybody to copy and use. So if OpenAI and Microsoft and Google just start copying what China has come up with, they're probably going to start
building much more efficient AI models and maybe they won't need all that infrastructure that has been
you know, applauded and talked up in the last few weeks with Stargate. We've heard that, of course, the big tech companies are ditching commitments to DEI as the federal government in the US is. How much of a role do you think the regulation is going to play now in determining the future of AI? And this is also very important as we sit in Europe and think about
the tensions between, you know, the European understanding of safety for consumers and a very different approach in the U.S. Yeah. And I think that's something hopefully that will actually gain some more attention at this summit in the next few days, because, you know,
What we've seen, what I talked about in the beginning is this kind of shift in tone and in terms of governments being not just in the US, but even in the UK, shifting away from framing themselves as
standard bearers, putting in the standards and the guardrails for companies to build AI safely. And I hope that we will continue to sort of continue that confidence in that role that governments have to play. My thanks there to Bloomberg's Parmi Olson for joining me. So, technology with the potential to transform our lives and
and for some global leaders, a matter of national security. Where will the world's journey with AI take us next?
We will have full coverage of the AI Action Summit in Paris for you here on Bloomberg. I'm Caroline Hepke in London, and you can catch us every weekday morning for Bloomberg Daybreak Europe, beginning at 6 a.m. in London. That's 1 a.m. on Wall Street. Tom. Thanks, Caroline. And coming up on Bloomberg Daybreak Weekend, we'll look at the potential fallout of Donald Trump's trade war with China. I'm Tom Busby, and this is Bloomberg. ♪
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This episode is brought to you by Intuit Enterprise Suite, helping your business grow smarter. All right, let's chat to all the CFOs and business leaders out there. As your company grows, so do the headaches. You're juggling multiple entities, locations, and subsidiaries all across different systems. And that's just the beginning. It's tough to get a clear view of your business when the data's a mess. And understanding intercompany transactions or eliminations can feel like solving a puzzle.
Then you've got forecasting and budgeting to deal with, each department using different tools. Oh boy. And let's be honest, you're probably paying way more for all this without getting the real support you need to grow. That's where the all-new Intuit Enterprise Suite comes in. The Intuit Enterprise Suite is an AI-powered platform that pulls together your financials,
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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. President Trump has to some extent made good on his promises of tariffs. The U.S. reaching deals to delay implementing tariffs on neighbors Canada and Mexico, but tariffs on Chinese goods are
are now in effect. And for a look at the potential fallout, let's get to the host of the Daybreak Asia podcast, Doug Krisner. Tom, the U.S.-China trade war seems to be underway. Donald Trump's threat of those U.S. tariffs loomed over the presidential campaign, and they're now a reality. A blanket 10% tariff on all Chinese goods imported to the U.S. So the question now is, where do we go from here?
Let's cross to Singapore, where we find Bloomberg Opinion columnist Karishma Vaswani. She has been writing about the potential backlash. Karishma, joining us from our studios in the Lion City. Thank you for making time to chat with us. It's always a pleasure. Can I start by getting your initial reaction to what we know so far?
I think what you're seeing from the United States and from President Donald Trump is a degree of what he said that he was going to do on the campaign trail, that he was going to be tough on drugs. He was going to be tough when it came to trade. You know, one of the things I found particularly notable in my research was that with regards to some of the most important issues for Americans, and you'll know this well, Doug, you know, being based out there, that
they wanted their leader to focus on drugs, possibly even more so, some surveys suggested, than reducing the budget deficit and even unemployment. So that's what he's showing to his domestic audience. He's saying, look, I'm tying tariffs and trade...
to this issue of drugs coming into our borders and immigrants coming into our borders. And I'm going to show the world who's boss. Now, in the short term, as I argue in my column, he seems to have achieved that, certainly with Canada and Mexico. In the long term, I feel like this will be a massive reputational damage to the United States in terms of its image as a fair player, a global actor and
a force of stability. Instead, I think countries will be looking at the U.S. and trying to figure out their Trump 2.0 playbook and, you know, getting a sense that the U.S. under Trump is going to be quite unpredictable. And then that brings us to China, of course.
Yes, well, that's the next question. What do we know about the degree to which this is resonating in Beijing? I mean, this is not the first time that President Trump has dealt with Chinese President Xi Jinping. There was a trade war during the first Trump administration. Is this resonating in a slightly different fashion now? I think it is, simply because China is in a very different position now. One, the economy isn't as strong as it was back then. Two, I think China's
It is fair to say that Xi Jinping, President Xi Jinping, is looking to legitimize his image as sort of, you know, somebody who can bring stability to the Chinese economy and to the political situation. It's impossible to know, of course, given how opaque it is. It's like a black box out there.
But certainly when you look at economic indicators, youth unemployment, all of that, that's been under pressure for quite some time in China. So, you know, it is coming off a back foot. But I thought it was really interesting that what we saw instead of a capitulation, the way, you know, the Canada and Mexico actions have been perceived to be, what we saw instead was proper retaliation. And China decided to hit back or at least threatened to retaliate.
with its own set of tariffs, saying that it would implement a 15% tariff on coal and liquefied natural gas products, as well as a 10% tariff on crude oil, agricultural machinery, and large engine cars imported from the U.S. from the 10th of February. So that still gives us some time between the two men, Xi Jinping and Donald Trump. You know, it's been indicated from the U.S. that they're going to have a conversation, uh,
He has talked, Trump has talked in the past about what a good relationship he has with Xi Jinping. He's talked about TikTok being on the table. And I think all of this is quite performative from both sides saying like, look, we're willing to deal, but it has to be on our terms as well. I think that's what you're getting from the Chinese right now. So at the same time that those retaliatory tariffs were announced, China launched an antitrust probe into Google. I thought that was very interesting. I spoke earlier with Annabelle Droolers,
She is our tech reporter from Hong Kong. Here's what she had to say. Well, it is a little bit confusing, actually, you could probably say, because a lot of people would know that Google hasn't been available as a search engine in China going all the way back to 2010. So, you know, the question is really what exactly is China going to be looking into? And essentially what they've announced is an investigation into Alphabet's Google for alleged antitrust violations.
the real focus of this is perhaps going to pertain, and this is what our Bloomberg intelligence team is saying, but it could relate to the market dominance of the Google Android mobile phone operating system, which is in China's smartphone sector, of course. And according to data from IDC, approximately 70% of smartphones that are sold in China were Android based last year. So that
could be the sort of the broader focus. That is Annabelle Droolers, our tech reporter in Hong Kong. Let's get back to our conversation with Karishma Vaswani. Karishma, where do we go from here in terms of the tension on the technology side between the US and China? We know that during the Biden administration, those strict export controls were put in place on semiconductors.
This became revisited with the story on DeepSeek a couple of weeks ago. Now we're talking about Google. Where do we go here on the tech front? Yeah, I think Google, you know, it's a bit of a symbolic gesture, to be very honest. And I think, you know, our tech correspondent in Hong Kong sort of alluded to that. I
I see it as quite a separate issue from things like deep seek, as well as the limited access for Chinese firms, pretty much no access to high end U.S. technology. And I think what China is saying with that is, look, this is our first salvo and it's not a big one. It's not something that could really hurt you all that much. You know, it's still an investigation at this point and it hasn't reached any sort of decision yet.
But I think what China is showing by saying that it's looking into this and it's a big market,
massive American tech company is that, you know, you know, push us a little bit further, Trump, and we could go further, too. And if you want to get into this tit for tat retaliatory kind of battle, we can do that. We did that in the first administration. And if you look back, it's quite interesting. And some of our colleagues have written about this on the Bloomberg website as well, tracking the first set of tariffs during the first trade war and looking at
pretty much the sort of mirroring of what China did every time Trump put in a new set of tariffs. And I'm sure you know this phrase in dating culture, Doug, but matching your energy. I recently learned that. And I think that's what China's trying to do at this point as well, but not to the extent that it would antagonize Trump completely. It's to leave that door open and say, we're willing to talk, but it has to alter
to also work in our favor. You know, I mentioned the export controls that were put in place under the Biden administration. Those were not unilateral. The cooperation came from Japan, also the Netherlands. Are we in a situation now where Trump is functioning more unilaterally? And could that be problematic for the United States going forward?
I think it's extremely problematic and I think it's a really good question that you've posed. Frankly, it's the focus of one of my columns coming up, so I'll be sure to come up and talk to you about that when I do publish. But I think this is a huge issue because what Trump has done with regards to the actions, for example, with
close allies like Canada and Mexico, the signal that sends to other countries like Japan, South Korea, is that we're all at risk, right? Like if Canada and Mexico aren't safe, then who is safe? And in the past, the Biden administration worked really effectively in places like the South China Sea, in the Indo-Pacific, from business, trade and geopolitics to say, look, it's in your interests to side with us. And yes, China is a massive trading partner for you, but we're going to keep you safe.
we are on your side. And that built a degree of goodwill that I think a lot of the time is sort of lost in the geopolitical conversation when it comes to looking back at the Biden administration. And, you know, we have to be fair, there were lots of missteps as well. But I think the
key thing going forward, if Trump is serious about keeping Americans safe, about ensuring that American supremacy to some extent is still valid and something that is respected around the world, then tearing up trading agreements, not
paying attention to close allies like Japan and South Korea, not making sure that these sort of alliances are in place in the Indo-Pacific and South China Sea, that will make America a more dangerous place and reduce the supremacy of the United States in
on the international stage. Very recently, U.S. Secretary of State Marco Rubio traveled to Panama and he essentially echoed Trump's complaints about Chinese influence over certain parts of the Panama Canal. How do you think that resonated in Beijing?
I think that will worry them a lot because, you know, the Chinese have managed to parlay their economic influence into geopolitical influence around the world. That was what Belt and Road was definitely about. And, you know, again, I...
I think it's important to take a balanced view here. What Rubio is saying is not necessarily wrong. It's just the methods I think that he's using might seem a bit heavy handed when you look at the way international diplomacy might well be conducted. But it does echo a lot of what the Biden administration has said before as well.
Karishma, thank you so much for joining us. That's Karishma Vaswani, columnist for Bloomberg Opinion. So let's turn now and get some deeper market analysis. I spoke with Stephanie Leung. She is the chief investment officer at Stashway. We know the situation in China is quite different from what it was during the last Trump administration. And I'm wondering whether Xi Jinping knows or feels that he has a much weaker hand to play right now.
Yes, I think, I mean, to a certain extent, of course, the economic situation now is a lot weaker in China.
But I also think that there is kind of a change in the global view from both sides of the of the continents. Right. From a U.S. perspective, of course, if you ask a media voter a few years ago, they would be much more pro-China. Now, today, I think it's sort of just across the aisle. People are kind of seeing China as a threat, more as a competition than a friendly kind of trade neighbor.
Also from the China side, we have to recognize that the leadership from President Xi is basically that we have to develop our own economy. They can't rely on the external trade. They can't rely on global trade anymore like they've done before. And therefore, there is a lot more focus on developing the domestic economy. And I think that's kind of where the government is focusing on. Now, of course, in the past few months, we've seen some gestures of
stimulus but I think largely what the market wants is from the government to directly stimulate consumption and also investment demand so far we haven't seen that so I'm trying to understand Stephanie whether or not this US China trade war will become protracted okay 10% may not be a lot initially but Trump has already said that this tariff could go as high as 60% and I'm imagining that that would inflict a lot of pain on the export economy in China yeah
Yeah, I think if eventually 60% gets imposed and it gets imposed on the most critical components, then I think, yes, of course, it will dampen growth in China, given that export is still very, very important. But I think we also have to remember that also dampens growth and pushes up inflation potentially in the U.S. as well. And I mean, Trump administration knows that. That was Stephanie Leung, chief investment officer at StashAway.
And I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. Tom? Thank you, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.
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