Bloomberg Audio Studios, Podcasts, radio news.

Bloomberg Audio Studios, Podcasts, radio news.

This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, and look ahead to the December jobs report in the US what it could mean for FED policy moving forward. I'm Tom Busby in New York.

This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, and look ahead to the December jobs report in the US what it could mean for FED policy moving forward. I'm Tom Busby in New York.

I'm Stephen Caroen and London.

I'm Stephen Caroen and London.

We're digging into some of the food and culture trends to watch in Europe in twice and twenty five.

We're digging into some of the food and culture trends to watch in Europe in twice and twenty five.

I'm deg Prisner, looking at what's in store for the world's second largest economy.

I'm deg Prisner, looking at what's in store for the world's second largest economy.

That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, Sirius XM one twenty one, and around the world on Bloomberg Radio, dot Com and the Bloomberg Business App.

That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, Sirius XM one twenty one, and around the world on Bloomberg Radio, dot Com and the Bloomberg Business App.

Good day to you.

Good day to you.

I'm Tom Busby, and we begin today's program with the December jobs report. We get non farm payrolls data on Friday eight thirty am Wall Street Time, and for more on that data and what it could mean for FED policy. We're joined by Stuart paul Us, economists with Bloomberg Economics. Well, Stuart, let's start with November. Job growth really rebound. It two hundred and twenty seven thousand jobs added thanks to retailer staffing for the holidays, no major storms, no big strikes. What do you expect to see in December's number and will this give us kind of a clear picture of where the US labor market is right now.

I'm Tom Busby, and we begin today's program with the December jobs report. We get non farm payrolls data on Friday eight thirty am Wall Street Time, and for more on that data and what it could mean for FED policy. We're joined by Stuart paul Us, economists with Bloomberg Economics. Well, Stuart, let's start with November. Job growth really rebound. It two hundred and twenty seven thousand jobs added thanks to retailer staffing for the holidays, no major storms, no big strikes. What do you expect to see in December's number and will this give us kind of a clear picture of where the US labor market is right now.

Good day to you, Tom, and happy New Year. You're absolutely right that hiring did rebound in November. That's after hurricane season came to an end and the effects of Hurricane Beryl and Milton really came to an end, and the Boeing strike was resolved early in the month in November. But we're not going to have some of those same favorable wins for hiring in the December jobs report. It's just about one hundred and fifty five thousand jobs that were likely added during the month, and that's again far slower than even the average pace that we saw over the year, which has been running at about one hundred and eighty thousand jobs per month. The hiring rate, Tom, has been declining and quite rapidly in the last couple months, which suggested the expansion of the labor pool is really slowing down. And more importantly, I think Tom, is that the Establishment Survey has been overstating the pace of hiring in twenty twenty four by an average about ninety thousand to one hundred thousand jobs per month. And after we factor that in, the average pace of hiring over the last year was likely just about seventy five to eighty thousand jobs per month. And that's really inconsistent with a steady unemployment rate. That's not enough hiring given population growth to keep the unemployment rates steady. Are expecting to see the unemployment rate rise in that December payroll report?

Good day to you, Tom, and happy New Year. You're absolutely right that hiring did rebound in November. That's after hurricane season came to an end and the effects of Hurricane Beryl and Milton really came to an end, and the Boeing strike was resolved early in the month in November. But we're not going to have some of those same favorable wins for hiring in the December jobs report. It's just about one hundred and fifty five thousand jobs that were likely added during the month, and that's again far slower than even the average pace that we saw over the year, which has been running at about one hundred and eighty thousand jobs per month. The hiring rate, Tom, has been declining and quite rapidly in the last couple months, which suggested the expansion of the labor pool is really slowing down. And more importantly, I think Tom, is that the Establishment Survey has been overstating the pace of hiring in twenty twenty four by an average about ninety thousand to one hundred thousand jobs per month. And after we factor that in, the average pace of hiring over the last year was likely just about seventy five to eighty thousand jobs per month. And that's really inconsistent with a steady unemployment rate. That's not enough hiring given population growth to keep the unemployment rates steady. Are expecting to see the unemployment rate rise in that December payroll report?

Now in November it went from four point one to four point two. Are you thinking just one notch four point three or or are you looking at something maybe a little more troubling.

Now in November it went from four point one to four point two. Are you thinking just one notch four point three or or are you looking at something maybe a little more troubling.

This is this is a little bit of a frustrating knife edge estimate. When we really sharpen our pencils and get right down to it. We're estimating a four point three six percent unemployment rate and that could of course round up if we're off by just a smidge. That is just one notch higher at four point three percent. But again, it's undoubtedly a cooling labor market, and even with about one hundred and fifty five thousand jobs added during the month, it's not enough to keep the unemployment rate steady. We are seeing that unemployment rate rise, and we do expect to see the unemployment rate continue rising to about four and a half percent as we get closer to mid year twenty twenty five.

This is this is a little bit of a frustrating knife edge estimate. When we really sharpen our pencils and get right down to it. We're estimating a four point three six percent unemployment rate and that could of course round up if we're off by just a smidge. That is just one notch higher at four point three percent. But again, it's undoubtedly a cooling labor market, and even with about one hundred and fifty five thousand jobs added during the month, it's not enough to keep the unemployment rate steady. We are seeing that unemployment rate rise, and we do expect to see the unemployment rate continue rising to about four and a half percent as we get closer to mid year twenty twenty five.

Now does that mean do you see it as more Americans looking for work unable to to get one. Does that mean more people re entering the workforce, more college graduates coming out? I mean, what's the reason that you see?

Now does that mean do you see it as more Americans looking for work unable to to get one. Does that mean more people re entering the workforce, more college graduates coming out? I mean, what's the reason that you see?

There are a couple factors at play, but I think the most pressing is that the duration of unemployment is rising as employers become a little bit more discerning, employers are slowing again, the increase in headcount workers who are in the labor force who have been having trouble finding new employment. They're stagnating among the ranks of the unemployed, and the duration of unemployment. The median duration of unemployment has been steadily climbing throughout the previous year. It now stands at about ten and a half weeks, which is again getting rather along. So you have that stagnating pool of workers who are in the labor force looking for work, slower increase in headcount, and just general population growth all creating a confluence of factors that are creating talo winds for the unemployment rate.

There are a couple factors at play, but I think the most pressing is that the duration of unemployment is rising as employers become a little bit more discerning, employers are slowing again, the increase in headcount workers who are in the labor force who have been having trouble finding new employment. They're stagnating among the ranks of the unemployed, and the duration of unemployment. The median duration of unemployment has been steadily climbing throughout the previous year. It now stands at about ten and a half weeks, which is again getting rather along. So you have that stagnating pool of workers who are in the labor force looking for work, slower increase in headcount, and just general population growth all creating a confluence of factors that are creating talo winds for the unemployment rate.

But you're not alarmed by this. I mean, even if it goes up to four point three four point four, it's kind of what the Fed expected to see right in their last dot plot from last year.

But you're not alarmed by this. I mean, even if it goes up to four point three four point four, it's kind of what the Fed expected to see right in their last dot plot from last year.

We are expecting that four and a half percent increase around mid year. The Fed has been noting that there is cooling in the labor market. This is a dynamic that's not really a shock to anyone, And if you really hold monetary policy makers feet to the fire, even four and a half percent unemployment rate isn't the sort of thing that's going to make them lose too much sleep. The real problem is what ends up being the policy outcome that comes from a rising unemployment rate amid a stagnating or elevated but steady level of inflation.

We are expecting that four and a half percent increase around mid year. The Fed has been noting that there is cooling in the labor market. This is a dynamic that's not really a shock to anyone, And if you really hold monetary policy makers feet to the fire, even four and a half percent unemployment rate isn't the sort of thing that's going to make them lose too much sleep. The real problem is what ends up being the policy outcome that comes from a rising unemployment rate amid a stagnating or elevated but steady level of inflation.

We still have two.

We still have two.

Point seven percent headline inflation, so we have a long last mile to the two percent average inflation target at a moment when unemployment is starting to rise. That makes it pretty difficult for the FED to have a clear cut decision whether it should continue cutting rates to address the cooling labor market or slow its pace of rate cuts to continue putting pressure on inflation. Ultimately, we think that this shakes out to a slower pace of rate cuts, something like a quarterly cadence of quarter point cuts by the Fed. So we're expecting the Fed, for example, to skip cutting rates by a quarter point in January and to then pick up with rate cuts again at its subsequent meeting.

Point seven percent headline inflation, so we have a long last mile to the two percent average inflation target at a moment when unemployment is starting to rise. That makes it pretty difficult for the FED to have a clear cut decision whether it should continue cutting rates to address the cooling labor market or slow its pace of rate cuts to continue putting pressure on inflation. Ultimately, we think that this shakes out to a slower pace of rate cuts, something like a quarterly cadence of quarter point cuts by the Fed. So we're expecting the Fed, for example, to skip cutting rates by a quarter point in January and to then pick up with rate cuts again at its subsequent meeting.

This Friday, we get the December jobs report our thanks to Stuart paul Us, economists with Bloomberg Economics. Well, we move next to the airline industry, which has seen a burst of travel demand this past year, and this coming Friday, Delta Airlines becomes the first major carrier posting its fourth quarter earnings, which will likely show continued strong demand right through the holidays. And for more on what to expect from Delta, along with his outlook for the airline industry in twenty two five, were joined by George ferguson Bloomberg Intelligence Senior Aerospace, Defense and Airline analyst, George, thank you and Happy New Year to you.

This Friday, we get the December jobs report our thanks to Stuart paul Us, economists with Bloomberg Economics. Well, we move next to the airline industry, which has seen a burst of travel demand this past year, and this coming Friday, Delta Airlines becomes the first major carrier posting its fourth quarter earnings, which will likely show continued strong demand right through the holidays. And for more on what to expect from Delta, along with his outlook for the airline industry in twenty two five, were joined by George ferguson Bloomberg Intelligence Senior Aerospace, Defense and Airline analyst, George, thank you and Happy New Year to you.

Happy New Year to you too. Thanks for having me on.

Happy New Year to you too. Thanks for having me on.

Oh you bet well. Let's start with Delta now. It posted record revenue in the spring quarter of twenty twenty four, took a bit of a hit from that worldwide IT outage in the summer, but boy, demand just keeps chugging along. What do you expect to see for the falls fourth quarter?

Oh you bet well. Let's start with Delta now. It posted record revenue in the spring quarter of twenty twenty four, took a bit of a hit from that worldwide IT outage in the summer, but boy, demand just keeps chugging along. What do you expect to see for the falls fourth quarter?

Yeah, so it's definitely been a good year for Delta. United. Full service carriers especially have done very good this year when it comes to profitability, and so, like you mentioned, you know, record revenues for most of those carriers because fairs have been quite strong. The challenge really has been throughout the year that you know, costs, especially wages, especially to the pilots, have really taken away sort of peak profitability. We just haven't seen twenty nineteen levels of profit. But so in four Q what we expect to see is that we expect to see an increase of a little bit one hundred basis points over twenty twenty three. EBITDAR levels is where we measure earnings before interest, taxes, depreciation, amortization and aircraft rentals. What's going to help drive this increase in four Q is going to be fuel costs actually, so fuel is going to be down twenty two percent that was at the wholesale level for four Q. It'll be different for every airline, but it should roughly coincide with that twenty two percent decline. And we basically use Golf Coast Jet as our measure, and that's going to provide like a four hundred and fifty basis point gain. You know, we think for Delta's earnings, pilot wages aren't going down, right, so those wages still sort of take away a bunch of the profitability on revenue, or the potential profitability gains I should say on revenue. We do expect fares to start the taper off for the big full service carriers again, United Delta American are the ones I'm mostly talking about there. You know, what we've seen is we've seen growth in seats in four Q for full service carriers up about six and a half percent year every year. That beats inflation. So we think that means that there's going to be more competition for filling those premium seats, and therefore we're going to see again sort of tapering off in fares for the broader market. For the domestic market the most important for all the airlines, we're seeing increase in seats of about two percent, so that may help actually some of the low cost carriers as we're starting to see some of the supplied demand in seats tilt towards the the low cost carriers favor. They've had more problems during the year, but so we expect essentially Delta is going to increase capacity about four percent. We think that yields maybe decline about one percent well, so we think they'll be like a three percent revenue growth. Again, we're kind of looking for a pick up, a slight pickup and profitability.

Yeah, so it's definitely been a good year for Delta. United. Full service carriers especially have done very good this year when it comes to profitability, and so, like you mentioned, you know, record revenues for most of those carriers because fairs have been quite strong. The challenge really has been throughout the year that you know, costs, especially wages, especially to the pilots, have really taken away sort of peak profitability. We just haven't seen twenty nineteen levels of profit. But so in four Q what we expect to see is that we expect to see an increase of a little bit one hundred basis points over twenty twenty three. EBITDAR levels is where we measure earnings before interest, taxes, depreciation, amortization and aircraft rentals. What's going to help drive this increase in four Q is going to be fuel costs actually, so fuel is going to be down twenty two percent that was at the wholesale level for four Q. It'll be different for every airline, but it should roughly coincide with that twenty two percent decline. And we basically use Golf Coast Jet as our measure, and that's going to provide like a four hundred and fifty basis point gain. You know, we think for Delta's earnings, pilot wages aren't going down, right, so those wages still sort of take away a bunch of the profitability on revenue, or the potential profitability gains I should say on revenue. We do expect fares to start the taper off for the big full service carriers again, United Delta American are the ones I'm mostly talking about there. You know, what we've seen is we've seen growth in seats in four Q for full service carriers up about six and a half percent year every year. That beats inflation. So we think that means that there's going to be more competition for filling those premium seats, and therefore we're going to see again sort of tapering off in fares for the broader market. For the domestic market the most important for all the airlines, we're seeing increase in seats of about two percent, so that may help actually some of the low cost carriers as we're starting to see some of the supplied demand in seats tilt towards the the low cost carriers favor. They've had more problems during the year, but so we expect essentially Delta is going to increase capacity about four percent. We think that yields maybe decline about one percent well, so we think they'll be like a three percent revenue growth. Again, we're kind of looking for a pick up, a slight pickup and profitability.

Now, have the major carriers have they now surpassed pre pandemic levels for seats filled for af fares they.

Now, have the major carriers have they now surpassed pre pandemic levels for seats filled for af fares they.

Have, they're all well above pre pandemic and fair level, and they're also well above in the amount of capacity they put in the marketplace. The entire marketplace is, you know, sort of recovered back all the pre pandemic levels were up. I think in the domestic market something around five percent over pre pandemic seat levels.

Have, they're all well above pre pandemic and fair level, and they're also well above in the amount of capacity they put in the marketplace. The entire marketplace is, you know, sort of recovered back all the pre pandemic levels were up. I think in the domestic market something around five percent over pre pandemic seat levels.

I think for domestic and which carriers I know you make a difference between the full service carriers and the low cost carriers, which have fair the best. We know Spirit Airlines what happened there, But obviously, yeah, you know, how have all the other carriers adjusted to that bankruptcy that change?

I think for domestic and which carriers I know you make a difference between the full service carriers and the low cost carriers, which have fair the best. We know Spirit Airlines what happened there, But obviously, yeah, you know, how have all the other carriers adjusted to that bankruptcy that change?

Yeah, so that's part I think what's driving some of that improvement in you know, what we expect to see in four Q in non premium leisure seating, right, and so carriers like you know, Spirit went through it declared bankruptcy, It knocked down a bunch of their schedule. Southwest was a large adder of seats, if that's a great way to say that during twenty twenty four, and their profitability really suffered, and so they've pulled back on their expansion because generally, I think those low cost carriers just haven't done as well in twenty twenty four as the full service carriers and the poorest of the low cost carriers were the ones like Southwest and Jet Blue that have been around the longest, gave the pilots maybe some of the better pilot contracts. Jeff Blue was also embroiled in the whole we're going to take over Spirit Airlines, you know sort of mess and that I think sort of hurt their momentum. And again the outperformers during the year really were airlines that had premium seating capability.

Yeah, so that's part I think what's driving some of that improvement in you know, what we expect to see in four Q in non premium leisure seating, right, and so carriers like you know, Spirit went through it declared bankruptcy, It knocked down a bunch of their schedule. Southwest was a large adder of seats, if that's a great way to say that during twenty twenty four, and their profitability really suffered, and so they've pulled back on their expansion because generally, I think those low cost carriers just haven't done as well in twenty twenty four as the full service carriers and the poorest of the low cost carriers were the ones like Southwest and Jet Blue that have been around the longest, gave the pilots maybe some of the better pilot contracts. Jeff Blue was also embroiled in the whole we're going to take over Spirit Airlines, you know sort of mess and that I think sort of hurt their momentum. And again the outperformers during the year really were airlines that had premium seating capability.

Wow.

Wow.

Our thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines Analyst, And coming up on Bloomberg day Break Weekend, we'll dig into some of the food and culture trends to watch in Europe in twenty twenty five. I'm Tom Busby, and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program we'll look at what's in store for the world's second large just economy in twenty twenty five. But first, the picture for the UK economy right now significantly better than it was a year ago. Inflation has come down dramatically. The Bank of England has begun its easing cycle. Also, there are some bright spots in the vibrant UK food and culture scenes to look forward to.

Our thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines Analyst, And coming up on Bloomberg day Break Weekend, we'll dig into some of the food and culture trends to watch in Europe in twenty twenty five. I'm Tom Busby, and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program we'll look at what's in store for the world's second large just economy in twenty twenty five. But first, the picture for the UK economy right now significantly better than it was a year ago. Inflation has come down dramatically. The Bank of England has begun its easing cycle. Also, there are some bright spots in the vibrant UK food and culture scenes to look forward to.

For more.

For more.

Let's go to London in Bloomberg Daybreak. Euro Banker Stephen Carroll Tom After what.

Let's go to London in Bloomberg Daybreak. Euro Banker Stephen Carroll Tom After what.

Feels like years of gloom over the UK economy, there are hopefully some things to be optimistic about heading into twenty twenty five, even though the picture hasn't been great in recent months. Bloomberg Economics is expecting moderate growth in twenty twenty five and they say a recovery in consumer spending has further to run, supported by higher real incomes and falling interest rates. So that's the backdrop. But given the time of year, we've decided to lean into the optimism and talk about some of the highlights and trends to watch in the dining, hotel and cultural scenes in the UK and maybe beyond as well. For that, I'm joined by our food outit O K Crater and our Bloomberg Pursuits UK correspondents. Aera great to have you both with us. Sarah, you have done and seen so much in twenty twenty four, and I mean that in a positive way. Talk us through some of your cultural highlights of the year.

Feels like years of gloom over the UK economy, there are hopefully some things to be optimistic about heading into twenty twenty five, even though the picture hasn't been great in recent months. Bloomberg Economics is expecting moderate growth in twenty twenty five and they say a recovery in consumer spending has further to run, supported by higher real incomes and falling interest rates. So that's the backdrop. But given the time of year, we've decided to lean into the optimism and talk about some of the highlights and trends to watch in the dining, hotel and cultural scenes in the UK and maybe beyond as well. For that, I'm joined by our food outit O K Crater and our Bloomberg Pursuits UK correspondents. Aera great to have you both with us. Sarah, you have done and seen so much in twenty twenty four, and I mean that in a positive way. Talk us through some of your cultural highlights of the year.

Yeah, what, It's been a really fun year for London theater. My actual favorite show this year was the Picture of Dory and Gray with Sarah Snook from Succession Yes Shiv, who was incredible playing all the roles all twenty six incredible and she was captivating on stage. She used a lot of live and prerect camera work, but it was just like she controlled the whole stage for a good two hours. I was tired just watching her like it was exhausting. It was amazing. So that's transferring to Broadway next year and I think it's going to do great there. She won the Olivier for her performance in that. And next week I'm actually seeing The Tempest. Ah, it's a gourney Weaver in the andre Lloyd Webber Theater. I'm very excited about that, So that might be my new favorite. Next week you'll have to to see. But before that, picture of Dorian Gray.

Yeah, what, It's been a really fun year for London theater. My actual favorite show this year was the Picture of Dory and Gray with Sarah Snook from Succession Yes Shiv, who was incredible playing all the roles all twenty six incredible and she was captivating on stage. She used a lot of live and prerect camera work, but it was just like she controlled the whole stage for a good two hours. I was tired just watching her like it was exhausting. It was amazing. So that's transferring to Broadway next year and I think it's going to do great there. She won the Olivier for her performance in that. And next week I'm actually seeing The Tempest. Ah, it's a gourney Weaver in the andre Lloyd Webber Theater. I'm very excited about that, So that might be my new favorite. Next week you'll have to to see. But before that, picture of Dorian Gray.

Okay, got a good place to start anyway. Let's top food though, Kate. I mean, how how has your year been for food in London? Has this been a good year? Is it a good vintage?

Okay, got a good place to start anyway. Let's top food though, Kate. I mean, how how has your year been for food in London? Has this been a good year? Is it a good vintage?

The year has been delicious and an excellent vintage. What a good thing to say. I think London's come on really strong, and it's come on really strong, especially like in an accessible, affordable way. There are a ton of wine bars that also happen to serve that sort of wonderful food. Wonderful compelling food. And you know London, it's it's sometimes so hard to get into restaurants. They get jammed, they get booked up early. You have to be a major planner. And wine bars. A lot of these wine bars, like there's one I love called Kaday up in Newington Green and you just you walk in. I mean they do take reservations now, but guaranteed there's a counter with a seat that you can find and sit down and eat at. And it's Marvelous Mountain which is in Soho on Beak Street. I'm in love with that place. It helps to book, but they also have just like dozens and dozens of cool counter seats. You can sit there with a delicious class of wine.

The year has been delicious and an excellent vintage. What a good thing to say. I think London's come on really strong, and it's come on really strong, especially like in an accessible, affordable way. There are a ton of wine bars that also happen to serve that sort of wonderful food. Wonderful compelling food. And you know London, it's it's sometimes so hard to get into restaurants. They get jammed, they get booked up early. You have to be a major planner. And wine bars. A lot of these wine bars, like there's one I love called Kaday up in Newington Green and you just you walk in. I mean they do take reservations now, but guaranteed there's a counter with a seat that you can find and sit down and eat at. And it's Marvelous Mountain which is in Soho on Beak Street. I'm in love with that place. It helps to book, but they also have just like dozens and dozens of cool counter seats. You can sit there with a delicious class of wine.

Because it's true the counter seats aren't that big a thing here in general. So it's always great to know, especially places in central London that you can go and you don't have a book it, which can often be the situation that I find myself in. Do you have a best meal of the year?

Because it's true the counter seats aren't that big a thing here in general. So it's always great to know, especially places in central London that you can go and you don't have a book it, which can often be the situation that I find myself in. Do you have a best meal of the year?

I mean you have to eat out a lot professionally, so.

I mean you have to eat out a lot professionally, so.

I have to. Yes, it's a job.

I have to. Yes, it's a job.

I will say.

I will say.

I just came back from Kyoto from Japan, and that was you have to fly.

I just came back from Kyoto from Japan, and that was you have to fly.

For you have to you have to travel.

For you have to you have to travel.

Traveling for food. But I had a sensational, mind blowing meal at a place called Cooke, which is Spanish Japanese, which sounds really unpromising. I was wondering if it would actually be one of one of the worst meals I had this year, and instead it really was transformative. This chef, and he's ever been to Spain, so I don't quite know how he does it, but he does these like genius forms of tapis using using local ingredients. And I have a best Dishes story about to come out, and one of them one of the dishes, which was like a sort of charred winter melon, which is a boring fruit, but he caramelizes it and serve it with like a smoking a smoking butter milk soup and fermented cream.

Traveling for food. But I had a sensational, mind blowing meal at a place called Cooke, which is Spanish Japanese, which sounds really unpromising. I was wondering if it would actually be one of one of the worst meals I had this year, and instead it really was transformative. This chef, and he's ever been to Spain, so I don't quite know how he does it, but he does these like genius forms of tapis using using local ingredients. And I have a best Dishes story about to come out, and one of them one of the dishes, which was like a sort of charred winter melon, which is a boring fruit, but he caramelizes it and serve it with like a smoking a smoking butter milk soup and fermented cream.

It's crazy, it's so good.

It's crazy, it's so good.

That sounds incredible.

That sounds incredible.

Okay, So that's I'm glad you've given us a global flavor to the conversation as well, Sarah.

Okay, So that's I'm glad you've given us a global flavor to the conversation as well, Sarah.

We're thinking globally.

We're thinking globally.

The strength of the dollar has been a really big theme for tourism spending, I mean everywhere in the world, but the UK has benefited quite a.

The strength of the dollar has been a really big theme for tourism spending, I mean everywhere in the world, but the UK has benefited quite a.

Lot ye, the rich Americans are here.

Lot ye, the rich Americans are here.

They're here and they're spending their money. We talked a lot last year about the big hotel openings in London. I wonder because this is a big part of your job as well as looking at the best places to stay. So what stood out for you of what's happened in twenty twenty four.

They're here and they're spending their money. We talked a lot last year about the big hotel openings in London. I wonder because this is a big part of your job as well as looking at the best places to stay. So what stood out for you of what's happened in twenty twenty four.

Well, London's a five star hospitality gold rush is continuing on.

Well, London's a five star hospitality gold rush is continuing on.

Okay.

Okay.

I really liked the Emory, which is a new hotel from the Clarges Group and it's as an all sweet hotel in Knightsbridge, and there's a gen doorge restaurant. It's very fun, it's good, huge rooms. But next year what I'm excited about is the Trancery Rosewood and it's in the old US Embassy in may Fair. The last time I was there was a twenty sixteen election night party actually and different times. It's going to be a hotel and they're going to have a carbone as Kate's aware, they're gonna bring sort of American Italian flavors into central London and they're just gonna have the Eagle from the Embassy is going to be at the bar on the top of the hotel, so look out for that next year.

I really liked the Emory, which is a new hotel from the Clarges Group and it's as an all sweet hotel in Knightsbridge, and there's a gen doorge restaurant. It's very fun, it's good, huge rooms. But next year what I'm excited about is the Trancery Rosewood and it's in the old US Embassy in may Fair. The last time I was there was a twenty sixteen election night party actually and different times. It's going to be a hotel and they're going to have a carbone as Kate's aware, they're gonna bring sort of American Italian flavors into central London and they're just gonna have the Eagle from the Embassy is going to be at the bar on the top of the hotel, so look out for that next year.

Okay, interesting features to watch.

Okay, interesting features to watch.

Now, why does it feel like that, all of a sudden everyone has just discovered the English countryside. I feel like I've seen so many pieces, not just from you, but everywhere about the number of people that are coming to stay in the beautiful parts of this country.

Now, why does it feel like that, all of a sudden everyone has just discovered the English countryside. I feel like I've seen so many pieces, not just from you, but everywhere about the number of people that are coming to stay in the beautiful parts of this country.

Especially the Coswels. Everyone's in the Cotswolds now, I mean me too. Taylor Swift to stay there this summer when she was in the UK for her aerostour. Ellen DeGeneres just bought a house in the Gospels. I don't know why it's so trending so much. There's been a lot of cool new hotels, like a still Manner's quite trending. Lot of members clubs, places from London coming up, coming up to the Cotswolds. It's getting kind of more seeny and exclusive. There's always been the cozy country pubs and it's like nice walks and cozy feeling, but now it's kind of gotten. The London vibe as well is becoming quite hip.

Especially the Coswels. Everyone's in the Cotswolds now, I mean me too. Taylor Swift to stay there this summer when she was in the UK for her aerostour. Ellen DeGeneres just bought a house in the Gospels. I don't know why it's so trending so much. There's been a lot of cool new hotels, like a still Manner's quite trending. Lot of members clubs, places from London coming up, coming up to the Cotswolds. It's getting kind of more seeny and exclusive. There's always been the cozy country pubs and it's like nice walks and cozy feeling, but now it's kind of gotten. The London vibe as well is becoming quite hip.

Kate, look into your dining crystal ball. Is that a crystal plate?

Kate, look into your dining crystal ball. Is that a crystal plate?

Quite sure? I'll work on that metaphor what are you excited about the foods. Even twenty twenty five are their openings. We should be looking forward to.

Quite sure? I'll work on that metaphor what are you excited about the foods. Even twenty twenty five are their openings. We should be looking forward to.

A Sarah was saying at the Rosewood. Besides Carbone, which is this big deal Italian American restaurant, been, Richard Caring, who is quite famous, is bringing back the Caprice, you know, the Seminole restaurant. So that hotel is going to have two really important dieting rooms. It's going to be a destination. But even bigger, I would say, Gordon Ramsey, who hasn't opened a place in years and years, is coming to the city actually, and he's opening up five food and drink concepts, including one a bar that's going to be the highest bar. I think it's on the sixty second floor, Okay, place with the best view probably in London. He's opening up a dining room on the sixty first floor and that is coming in February, so sooner than you think. And there's also a fun trend. Jamie Oliver's opening up a cooking school in John Lewis in the spring, and Gordon Ramsey's going to have some kind of a culinary school or culinary program at his new restaurant complex.

A Sarah was saying at the Rosewood. Besides Carbone, which is this big deal Italian American restaurant, been, Richard Caring, who is quite famous, is bringing back the Caprice, you know, the Seminole restaurant. So that hotel is going to have two really important dieting rooms. It's going to be a destination. But even bigger, I would say, Gordon Ramsey, who hasn't opened a place in years and years, is coming to the city actually, and he's opening up five food and drink concepts, including one a bar that's going to be the highest bar. I think it's on the sixty second floor, Okay, place with the best view probably in London. He's opening up a dining room on the sixty first floor and that is coming in February, so sooner than you think. And there's also a fun trend. Jamie Oliver's opening up a cooking school in John Lewis in the spring, and Gordon Ramsey's going to have some kind of a culinary school or culinary program at his new restaurant complex.

So wow, and interesting to see those names that are still worths of the British restaurants scene. I suppose having a twenty twenty five renaissance.

So wow, and interesting to see those names that are still worths of the British restaurants scene. I suppose having a twenty twenty five renaissance.

What's all this new?

What's all this new?

Right exactly? They're coming back.

Right exactly? They're coming back.

Not to bring down our conversation, but there's a lot of talk about how there are tax changes that were announced in the budget in October. They're coming into fourth at April, particularly going to effect employers and the tax they have to pay for their employees and part time workers are keys. There's a lot of hospitality businesses say they're worried about it. You know in conversations because you speak to restauranteurs all the time, Are they worried about this?

Not to bring down our conversation, but there's a lot of talk about how there are tax changes that were announced in the budget in October. They're coming into fourth at April, particularly going to effect employers and the tax they have to pay for their employees and part time workers are keys. There's a lot of hospitality businesses say they're worried about it. You know in conversations because you speak to restauranteurs all the time, Are they worried about this?

Yeah?

Yeah?

You know what. In fact, Jason Atherton, who just did a terrific Bloomberg TV interview and he has a really cool new restaurant called Row on five, a very ambitious restaurant on Saville Row, said that something everyone is worried about. He said specifically, he's worried that entrepreneurs are going to leave the UK and go to other places where there's more chance of where the playing field looks easier to navigate on.

You know what. In fact, Jason Atherton, who just did a terrific Bloomberg TV interview and he has a really cool new restaurant called Row on five, a very ambitious restaurant on Saville Row, said that something everyone is worried about. He said specifically, he's worried that entrepreneurs are going to leave the UK and go to other places where there's more chance of where the playing field looks easier to navigate on.

We've heard from some of the big particularly pub groups have been talking about in their results as well, the impact in terms of millions of pounds on their wage bills for that as well. Now, Kate, you do travel as well. You mentioned your trip to Kyoto there as well. I wonder if you're thinking about Europe more broadly, is there a foody destination. If people are thinking about a break in twenty twenty five and they love food, where would you send them.

We've heard from some of the big particularly pub groups have been talking about in their results as well, the impact in terms of millions of pounds on their wage bills for that as well. Now, Kate, you do travel as well. You mentioned your trip to Kyoto there as well. I wonder if you're thinking about Europe more broadly, is there a foody destination. If people are thinking about a break in twenty twenty five and they love food, where would you send them.

That's such a good question because you can almost make a case for anywhere. I do think, you know, France, it's such a boring answer.

That's such a good question because you can almost make a case for anywhere. I do think, you know, France, it's such a boring answer.

Or is that Paris? Or is it outside of say Paris?

Or is that Paris? Or is it outside of say Paris?

Actually, I think the energy in Paris is so good right now. People are doing all these compelling little things. You find these fantastic storefronts. People are doing that kind of fusion cuisine, you know, I mentioned weird Spanish Japanese and yet it works. You know, it's this fantastic combustible experiment and then you taste it and you're like wow. You know, it's like kind of little fireworks. And that's happening all across Paris, like in the eighteenth in the first it's I think, I don't know if it's like the effect of the Paris Olympics. You know, there was so much angst about it going into it, but I think the after effect of it, the energy that people put into it, has made it like, don't forget about Paris, even as you're going to all these other places. You know, even as you're going to Spain. Spain was you know the rock star last year. I would say, yeah, and it's going to keep going strong. Is relatively affordable, you know, especially if you're coming from a place like London or the US. But don't sleep on don't.

Actually, I think the energy in Paris is so good right now. People are doing all these compelling little things. You find these fantastic storefronts. People are doing that kind of fusion cuisine, you know, I mentioned weird Spanish Japanese and yet it works. You know, it's this fantastic combustible experiment and then you taste it and you're like wow. You know, it's like kind of little fireworks. And that's happening all across Paris, like in the eighteenth in the first it's I think, I don't know if it's like the effect of the Paris Olympics. You know, there was so much angst about it going into it, but I think the after effect of it, the energy that people put into it, has made it like, don't forget about Paris, even as you're going to all these other places. You know, even as you're going to Spain. Spain was you know the rock star last year. I would say, yeah, and it's going to keep going strong. Is relatively affordable, you know, especially if you're coming from a place like London or the US. But don't sleep on don't.

Sleep on Paris in Paris in terms of staying places across Europe's sah. I wonder as well if there are places that you've kind of got some interesting hotels and your horizon of anywhere in Europe that you've experienced or excited about.

Sleep on Paris in Paris in terms of staying places across Europe's sah. I wonder as well if there are places that you've kind of got some interesting hotels and your horizon of anywhere in Europe that you've experienced or excited about.

Yeah, I think.

Yeah, I think.

Greek islands outside of Mikinos for Sansorini. One is where you have to get on a ferry, which you know can be maybe a little bit annoying and involves a little bit of I guess planning is a way to go, but they're less busy the beaches of Pristine The food's really good, fresh fish, happy people, it's just, you know, a lovely thing to do. And there's a lot of cool new Boutiko hotels popping up on places like Paros or Anti Paros as well. Yes, just supposed to get international airport in twenty twenty six, So come now for all the crowds to do, is what I'd say. Next to year, next summer, go before the American masses with their dollars come over.

Greek islands outside of Mikinos for Sansorini. One is where you have to get on a ferry, which you know can be maybe a little bit annoying and involves a little bit of I guess planning is a way to go, but they're less busy the beaches of Pristine The food's really good, fresh fish, happy people, it's just, you know, a lovely thing to do. And there's a lot of cool new Boutiko hotels popping up on places like Paros or Anti Paros as well. Yes, just supposed to get international airport in twenty twenty six, So come now for all the crowds to do, is what I'd say. Next to year, next summer, go before the American masses with their dollars come over.

What else are you putting in your calendar for twenty twenty five? So there are the things that your booking. So you mentioned you've got The Tempest coming up there as well. Are there are cultural highlights you have on your agenda, things that you're already definitely making sure that you're going to be doing.

What else are you putting in your calendar for twenty twenty five? So there are the things that your booking. So you mentioned you've got The Tempest coming up there as well. Are there are cultural highlights you have on your agenda, things that you're already definitely making sure that you're going to be doing.

Jamie Lloyd is my own, my favorite directors and he's doing in a big Shakespeare season that includes The Tempest but also as you like It with Tom Middleston and Haley at Well coming next year in February in March. That should be really fun to see. And also the National Theater is doing a bunch of really cool stuff. They just announced a thing of Jane Krakouse gably so pick on their website, but book that.

Jamie Lloyd is my own, my favorite directors and he's doing in a big Shakespeare season that includes The Tempest but also as you like It with Tom Middleston and Haley at Well coming next year in February in March. That should be really fun to see. And also the National Theater is doing a bunch of really cool stuff. They just announced a thing of Jane Krakouse gably so pick on their website, but book that.

Soon, very excited about that.

Soon, very excited about that.

It's always good things on at the National at the South Bank. You can always get return tickets as well. Even if something looks booked. I would show up on the day and you can normally get returns because there's a big theater de Olivier and there's always returns.

It's always good things on at the National at the South Bank. You can always get return tickets as well. Even if something looks booked. I would show up on the day and you can normally get returns because there's a big theater de Olivier and there's always returns.

Such a good tip as well, because as you say, so much feels like in London you have to plan it months in advance, so the idea being able to do something last minute can be certainly very tempting.

Such a good tip as well, because as you say, so much feels like in London you have to plan it months in advance, so the idea being able to do something last minute can be certainly very tempting.

Kate.

Kate.

I do wonder if we're thinking about trends for next year. I mean, famously you predicted the death of small plates. I can't remember if that was a year or two years ago. And yes I still see a small plate in many places.

I do wonder if we're thinking about trends for next year. I mean, famously you predicted the death of small plates. I can't remember if that was a year or two years ago. And yes I still see a small plate in many places.

You know.

You know.

I'm sure you're one hundred percent of the money. But is there anything that we should be excited about in terms of trends coming up?

I'm sure you're one hundred percent of the money. But is there anything that we should be excited about in terms of trends coming up?

I think we're going to see more and more Japanese food here in London. It's been coming and coming. You might have seen more sushi restaurants from high end ones to casual one casual places that specialize in hand rolls. Tourism to Japan has been crazy. In October, I think three million people went. I think it was a record breaking number for them, and so I'm seeing and hearing more Japanese concepts that are coming. I think also there's going to be a fun this is a bit random, but a fusion pizza thing where you'll have buttered chicken, a buttered chicken topping. You're neapalatan pie. I'm looking for things like that. The bakery, the bakery trend is just not stopp I mean that's going to keep going.

I think we're going to see more and more Japanese food here in London. It's been coming and coming. You might have seen more sushi restaurants from high end ones to casual one casual places that specialize in hand rolls. Tourism to Japan has been crazy. In October, I think three million people went. I think it was a record breaking number for them, and so I'm seeing and hearing more Japanese concepts that are coming. I think also there's going to be a fun this is a bit random, but a fusion pizza thing where you'll have buttered chicken, a buttered chicken topping. You're neapalatan pie. I'm looking for things like that. The bakery, the bakery trend is just not stopp I mean that's going to keep going.

Never mid about more begs goods. That's a good thing to going forward too. I love to Stephen Okay, creditor, our food editor on our Bloomberg Pursuit's UK correspondent, Sarah Rappaport, thank you very much for joining us. I'm Stephen Carolyn London. You can catch us every weekday morning here for Bloomberg Daybreak. Here at begetting at six am in London and one am on Wall Streets.

Never mid about more begs goods. That's a good thing to going forward too. I love to Stephen Okay, creditor, our food editor on our Bloomberg Pursuit's UK correspondent, Sarah Rappaport, thank you very much for joining us. I'm Stephen Carolyn London. You can catch us every weekday morning here for Bloomberg Daybreak. Here at begetting at six am in London and one am on Wall Streets.

Tom, thank you, Stephen, and coming up on Bloomberg day Break weekend, we'll look at what's in store for China's economy in twenty twenty five. I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Threats of tariffs, trade curbs, and risks linked to excessive economic stimulus just some of the challenges looming over the world's second largest economy in the new year. For more, let's get to the host of the Daybreak Aisha podcast, Doug Krisner.

Tom, thank you, Stephen, and coming up on Bloomberg day Break weekend, we'll look at what's in store for China's economy in twenty twenty five. I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Threats of tariffs, trade curbs, and risks linked to excessive economic stimulus just some of the challenges looming over the world's second largest economy in the new year. For more, let's get to the host of the Daybreak Aisha podcast, Doug Krisner.

Tom, we know the weak state of the Chinese economy and how authorities in Beijing have pledged more stimulus to support a more robust recovery. The big question is will those steps lead to a prosperous twenty twenty five or we'll China continue its struggle. For a closer look at the road ahead, I'm joined by Bloomberg's Jenny Marsh. She is team leader for Greater China Eco GUV. Jenny joins us from our studios in Hong Kong. Thank you for making time. I know it's a busy end of year season for you. Where do things stand, particularly in light of what we've heard recently from the polit Bureau on stimulus and what may the year ahead hold for China?

Tom, we know the weak state of the Chinese economy and how authorities in Beijing have pledged more stimulus to support a more robust recovery. The big question is will those steps lead to a prosperous twenty twenty five or we'll China continue its struggle. For a closer look at the road ahead, I'm joined by Bloomberg's Jenny Marsh. She is team leader for Greater China Eco GUV. Jenny joins us from our studios in Hong Kong. Thank you for making time. I know it's a busy end of year season for you. Where do things stand, particularly in light of what we've heard recently from the polit Bureau on stimulus and what may the year ahead hold for China?

I think going into next year, there are high expectations that the Communist Party now has woken up to the idea it needs to be supporting the economy forcefully and then it's really taking the challenges ahead seriously. And I think the return of Donald Trump to the White House has only helped Hugenpeeing and his fellow leaders arrive at that point, because you know, we've had this two track economy this year, and exports was sort of doing a lot of the heavy lifting. And I think looking into next year, there is a very sort of sobering realization that with Trump returning and this sort of tariff war looming, that isn't something anyone sensible would bank on. And so since September we've seen this sort of change in rhetoric from the senior ECO policy makers talking about bolder steps. And then I think the Politbering meeting in December, which always focuses on the economy and sort of sets up the year ahead, really made clear that they are going to sort of switch gears. You know, they talked about they changed the monetary policy stunts to moderately loose, which is something they only ever is there sort of a phase they only ever go into at times of crisis. So the last time was the Great Financial Crisis. They went to this moderately loose sort of zone of monetary policy, and then they named boosting consumption. Is that the number one goal for twenty twenty five, but just something you know, foreign governments and economists have been calling for for a long time. So I think, you know, while obviously the need for Chining to become sort of a self sufficient text superpower that can rival America, that ambition is not going anywhere. They're now much more serious about Okay, we're going to do that, but we also need our own consumers to start spending, and there's like a whole kind of menu of reasons for that if you like. But I think policymakers are now taking it seriously.

I think going into next year, there are high expectations that the Communist Party now has woken up to the idea it needs to be supporting the economy forcefully and then it's really taking the challenges ahead seriously. And I think the return of Donald Trump to the White House has only helped Hugenpeeing and his fellow leaders arrive at that point, because you know, we've had this two track economy this year, and exports was sort of doing a lot of the heavy lifting. And I think looking into next year, there is a very sort of sobering realization that with Trump returning and this sort of tariff war looming, that isn't something anyone sensible would bank on. And so since September we've seen this sort of change in rhetoric from the senior ECO policy makers talking about bolder steps. And then I think the Politbering meeting in December, which always focuses on the economy and sort of sets up the year ahead, really made clear that they are going to sort of switch gears. You know, they talked about they changed the monetary policy stunts to moderately loose, which is something they only ever is there sort of a phase they only ever go into at times of crisis. So the last time was the Great Financial Crisis. They went to this moderately loose sort of zone of monetary policy, and then they named boosting consumption. Is that the number one goal for twenty twenty five, but just something you know, foreign governments and economists have been calling for for a long time. So I think, you know, while obviously the need for Chining to become sort of a self sufficient text superpower that can rival America, that ambition is not going anywhere. They're now much more serious about Okay, we're going to do that, but we also need our own consumers to start spending, and there's like a whole kind of menu of reasons for that if you like. But I think policymakers are now taking it seriously.

So we can talk about the consumption story in a little more detail momentarily. You know, for such a long time, when you and I have spoken in the past, the debt problem in China has been a hot topic, and it's curious that officials have now agreed that the government should be allowed to have a larger budget deficit to borrow more along with the cuts in interest rates that you just kind of suggested there is anyone concerned about increasing debt levels or is that no longer a problem?

So we can talk about the consumption story in a little more detail momentarily. You know, for such a long time, when you and I have spoken in the past, the debt problem in China has been a hot topic, and it's curious that officials have now agreed that the government should be allowed to have a larger budget deficit to borrow more along with the cuts in interest rates that you just kind of suggested there is anyone concerned about increasing debt levels or is that no longer a problem?

You know, I think China has a lot of space to increase central debt levels, right So, and what they're planning for next year, to be honest, is fairly modest. So an extra one percent of GDP for the government spending the fiscal budget that was sort of on the conservative side of estimates. It's the highest or ever of ben but it's still not you know, that's not pulling out all of the big guns, so it's still sort of relatively modest. But they have ways of augmenting that, right So there's like the official budget, and then there are all these unofficial ways they can spend. So we saw them making this unprecedented step in recent months singling out two big state owned companies that can now issue what people are calling central government financial vehicle bonds. So while you had these like local government companies before that were kind of create issuing debt to be spent on the economy, now perhaps the central government is showing science it might do that. So you've got this expanded government spending on the official books, but they might place more sort of in other ways, which a sort of less baked in, if you like, in natural official budget. But the task they have ahead of them is huge. You know, how arey going to get people spending? Because the things that are holding back the Chinese consumer. It isn't just sort of an idea of like the economy is bad. It's sort of the property crash is the biggest one, right, Like everyone, yeah, had their money invested in property. And while there are some signs that you know that is that the crash is sort of slurring and maybe you are reaching a bottom, very very very tentative. You know, time prices are still declining, but the declines are easing, so it's still not anywhere out of the woods on that. That's one reason people in China want to put all their money. They squirrel them into savings accounts.

You know, I think China has a lot of space to increase central debt levels, right So, and what they're planning for next year, to be honest, is fairly modest. So an extra one percent of GDP for the government spending the fiscal budget that was sort of on the conservative side of estimates. It's the highest or ever of ben but it's still not you know, that's not pulling out all of the big guns, so it's still sort of relatively modest. But they have ways of augmenting that, right So there's like the official budget, and then there are all these unofficial ways they can spend. So we saw them making this unprecedented step in recent months singling out two big state owned companies that can now issue what people are calling central government financial vehicle bonds. So while you had these like local government companies before that were kind of create issuing debt to be spent on the economy, now perhaps the central government is showing science it might do that. So you've got this expanded government spending on the official books, but they might place more sort of in other ways, which a sort of less baked in, if you like, in natural official budget. But the task they have ahead of them is huge. You know, how arey going to get people spending? Because the things that are holding back the Chinese consumer. It isn't just sort of an idea of like the economy is bad. It's sort of the property crash is the biggest one, right, Like everyone, yeah, had their money invested in property. And while there are some signs that you know that is that the crash is sort of slurring and maybe you are reaching a bottom, very very very tentative. You know, time prices are still declining, but the declines are easing, so it's still not anywhere out of the woods on that. That's one reason people in China want to put all their money. They squirrel them into savings accounts.

So the decline that we've been talking about in property prices kind of moves out more broadly to include consumer goods, food, electronics, and the like. And this obviously is going to complicate things for Beijing because it's been mired. The economy in China has been mired in this deflationary trap for a while, particularly at the wholesale level. Is there a way that you're familiar with where Beijing has been able to articulate first that there is a problem with deflation in a way that calls for a much greater response, And what are they suggesting those measures may look like.

So the decline that we've been talking about in property prices kind of moves out more broadly to include consumer goods, food, electronics, and the like. And this obviously is going to complicate things for Beijing because it's been mired. The economy in China has been mired in this deflationary trap for a while, particularly at the wholesale level. Is there a way that you're familiar with where Beijing has been able to articulate first that there is a problem with deflation in a way that calls for a much greater response, And what are they suggesting those measures may look like.

So to your first point, I think you know, no one in the Chinese system is using the word deflation. Still that is still a dirty word, even though with the GDP deflator, which is the economy wide sort of measure of prices, that will have been its longest period deflation ever on record in January or it will match the longest record and then most economists expected in Q two to exceed it.

So to your first point, I think you know, no one in the Chinese system is using the word deflation. Still that is still a dirty word, even though with the GDP deflator, which is the economy wide sort of measure of prices, that will have been its longest period deflation ever on record in January or it will match the longest record and then most economists expected in Q two to exceed it.

So this is a.

So this is a.

Serious problem they do need to face. And the polit Bureau meeting did talk about prices, so they're not talking about deflation using that word, but they are talking about sort of prices as a problem.

Serious problem they do need to face. And the polit Bureau meeting did talk about prices, so they're not talking about deflation using that word, but they are talking about sort of prices as a problem.

Now.

Now.

I was just in Beijing recently. You know, behind closed doors, all the economists that you talk to see deflation is sort of the biggest threat to the economy right now, and many of them make the comparison with Japan when it was going into last decade and talk about the sort of three arrows policy that they had to sort of roll out, you know, to try and defeat deflation, which obviously in Japan wasn't necessarily particularly successful. But the way the economists see it is this is going to take a forceful and coordinated policy approach. You would need to go all in on fiscal, all in on monetary, and then rescue the housing sector if you really want to stop the deflationary spiral. It takes that kind of a response. It can't be sort of what you're seeing now, which is, you know, this year, for example, they rolled out enough fiscal and enough rate cuts, enough sort of sprinkling of measures to get to the growth target. And I think for a lot of economists, both in and outside China, you know, the growth target is one thing meeting that is possible. If they said it at about five percent again next year, that's possible because GDP is really a measure of sort of activity.

I was just in Beijing recently. You know, behind closed doors, all the economists that you talk to see deflation is sort of the biggest threat to the economy right now, and many of them make the comparison with Japan when it was going into last decade and talk about the sort of three arrows policy that they had to sort of roll out, you know, to try and defeat deflation, which obviously in Japan wasn't necessarily particularly successful. But the way the economists see it is this is going to take a forceful and coordinated policy approach. You would need to go all in on fiscal, all in on monetary, and then rescue the housing sector if you really want to stop the deflationary spiral. It takes that kind of a response. It can't be sort of what you're seeing now, which is, you know, this year, for example, they rolled out enough fiscal and enough rate cuts, enough sort of sprinkling of measures to get to the growth target. And I think for a lot of economists, both in and outside China, you know, the growth target is one thing meeting that is possible. If they said it at about five percent again next year, that's possible because GDP is really a measure of sort of activity.

Right.

Right.

So, even with what we've heard from the government in terms of what stimulus may look like, the sketch that's been provided, has that been enough in and of itself to move the needle when it comes to sentiment. Have things become a little bit more optimistic or is there too much to say.

So, even with what we've heard from the government in terms of what stimulus may look like, the sketch that's been provided, has that been enough in and of itself to move the needle when it comes to sentiment. Have things become a little bit more optimistic or is there too much to say.

I haven't sensed any increase in optimism at all. You know, I'm sure people don't feel optimistic. They feel very pessimistic about where things are going. And I think the return of Trump is only adding to that, right, this sort of sense of like foreboding of what is de harmon, what is around the corner. I think there's a real sense China was facing some serious challenges. The only positive I think is that the government is now showing some signs of being more proactive. You know, I think there was a sense that like some of the stimulus that came before Trump came into office, like changing the monetary policy stance for example, before Trump came in that afterwards was being more proactive than reactive to something happening in the economy. But it's still you know, changing the stance is one thing, but sort of how deeply were they cut rates next year? You know, you have economistsay, maybe up to sort of fifty bit, sixty bits, So we don't know yet, right, so it still remains to be seen how forcefully they actually will roll out those particular sort of stimulus.

I haven't sensed any increase in optimism at all. You know, I'm sure people don't feel optimistic. They feel very pessimistic about where things are going. And I think the return of Trump is only adding to that, right, this sort of sense of like foreboding of what is de harmon, what is around the corner. I think there's a real sense China was facing some serious challenges. The only positive I think is that the government is now showing some signs of being more proactive. You know, I think there was a sense that like some of the stimulus that came before Trump came into office, like changing the monetary policy stance for example, before Trump came in that afterwards was being more proactive than reactive to something happening in the economy. But it's still you know, changing the stance is one thing, but sort of how deeply were they cut rates next year? You know, you have economistsay, maybe up to sort of fifty bit, sixty bits, So we don't know yet, right, so it still remains to be seen how forcefully they actually will roll out those particular sort of stimulus.

Jenny will leave it there. Thank you so much for making time to chat with us at the end of the year. It's always a pleasure. Bloomberg's Jenny marsh is team leader for Greater China Eco GUV, joining us from our studios in Hong Kong. So we've taken a look at China from the ten thousand foot view, so to speak. Now we want to zero in on one particular sector, automobiles, especially those evs. We know that President electromp has vowed massive levies on vehicles imported from China. Joining me now for a closer look is Chiao Fung. He is co head of China Industrial Research at CLSA. Chiaofung, thank you so much for making time to chat with us. I think we can agree that one cause for concern, at least from the US side, is what has been called an overcapacity issue in China, and that relates to a number of industries in China, especially as we know electric vehicles. I'd like to get your assessment on the degree to which we're going to begin to see maybe a little bit more in the way of consolidation in the EV space in China for the new year.

Jenny will leave it there. Thank you so much for making time to chat with us at the end of the year. It's always a pleasure. Bloomberg's Jenny marsh is team leader for Greater China Eco GUV, joining us from our studios in Hong Kong. So we've taken a look at China from the ten thousand foot view, so to speak. Now we want to zero in on one particular sector, automobiles, especially those evs. We know that President electromp has vowed massive levies on vehicles imported from China. Joining me now for a closer look is Chiao Fung. He is co head of China Industrial Research at CLSA. Chiaofung, thank you so much for making time to chat with us. I think we can agree that one cause for concern, at least from the US side, is what has been called an overcapacity issue in China, and that relates to a number of industries in China, especially as we know electric vehicles. I'd like to get your assessment on the degree to which we're going to begin to see maybe a little bit more in the way of consolidation in the EV space in China for the new year.

What do you think So for now, I think when most of people are talking about overcapacity or low capacity utilization for the EV industry. People refer to the whole industry data which is right now running at around forty to fifty percent of capacity utilization.

What do you think So for now, I think when most of people are talking about overcapacity or low capacity utilization for the EV industry. People refer to the whole industry data which is right now running at around forty to fifty percent of capacity utilization.

It's very low.

It's very low.

We have around forty to forty five million units of capacities in China, while the auto sales is really twenty to twenty three millions a year. But if you look at the structural issues here, EV makers in the meanwhiles running at a much higher capacity utilization, generally around eighty percent or above, while the ice car makers, the traditional ice co makers, are running at the below fifty percent. So that's a structural difference here. As the overall, I believe EV makers will continue that trend. They will be growing much more faster at the losses of the ice makers. We are focasting in the PS and your vehicle market to be at low fingle digit growth next years, But in the meanwhile EV will be growing at twenty five to thirty percent versus twenty five to thirty percent losses from the ice carmakers. The second thing is really the consolidations of the industry. We believe twenty twenty five will start to see a materialization of the industry conthoridations, which already happening this year. We're seeing some joint ventures are shutting down the factories in China. We're seeing some exit of the brands from the new forces of the EV makers, which we're going to be materialized in twenty twenty five. So I think the industry counthoridations will continue to help drive up the capacity utilizations.

We have around forty to forty five million units of capacities in China, while the auto sales is really twenty to twenty three millions a year. But if you look at the structural issues here, EV makers in the meanwhiles running at a much higher capacity utilization, generally around eighty percent or above, while the ice car makers, the traditional ice co makers, are running at the below fifty percent. So that's a structural difference here. As the overall, I believe EV makers will continue that trend. They will be growing much more faster at the losses of the ice makers. We are focasting in the PS and your vehicle market to be at low fingle digit growth next years, But in the meanwhile EV will be growing at twenty five to thirty percent versus twenty five to thirty percent losses from the ice carmakers. The second thing is really the consolidations of the industry. We believe twenty twenty five will start to see a materialization of the industry conthoridations, which already happening this year. We're seeing some joint ventures are shutting down the factories in China. We're seeing some exit of the brands from the new forces of the EV makers, which we're going to be materialized in twenty twenty five. So I think the industry counthoridations will continue to help drive up the capacity utilizations.

When I think of EV's I think of a not only domestic demand, but I think of a very strong export market as well. But when it comes to the issue of domestic demand, how much more can the government be doing? There is a lot that's already been communicated. Are you expecting a lot more in terms of fiscal policy from Beijing in the year head.

When I think of EV's I think of a not only domestic demand, but I think of a very strong export market as well. But when it comes to the issue of domestic demand, how much more can the government be doing? There is a lot that's already been communicated. Are you expecting a lot more in terms of fiscal policy from Beijing in the year head.

So I used to cover commodities. If you are talking about the large scale stimulus like we saw in the two thousand and nine after financial crisis, we probably will be disappointed because from my perspective, I think the Chinese government will stop doing that kind of large scale stimulus. Instead, we are seeing a shift of the policy focus from the production side investment side to consumer site. In China, investment has to be used to be the biggest growth driver, accounts for more than one third of the fixed act investment.

So I used to cover commodities. If you are talking about the large scale stimulus like we saw in the two thousand and nine after financial crisis, we probably will be disappointed because from my perspective, I think the Chinese government will stop doing that kind of large scale stimulus. Instead, we are seeing a shift of the policy focus from the production side investment side to consumer site. In China, investment has to be used to be the biggest growth driver, accounts for more than one third of the fixed act investment.

But for now, with.

But for now, with.

The shrinking of the property space and struggling local government financials, we're seeing the manufacturing industries, the value adding industries are accounting for a larger share of the economy. So that's why going forward we'll see the policy will be more focusing on driving the consumption rather than pushing for the production. This is what our reports is saying, a change of the policy from push to pull.

The shrinking of the property space and struggling local government financials, we're seeing the manufacturing industries, the value adding industries are accounting for a larger share of the economy. So that's why going forward we'll see the policy will be more focusing on driving the consumption rather than pushing for the production. This is what our reports is saying, a change of the policy from push to pull.

Chao Fun, thank you so much for taking time to chat with us. Shall Fung is co head of China Industrial Research at CLSA, and I'm Doug Chrisner. You can catch us weekdays for the Daybreak Asia podcast. It's available on Apple, Spotify or wherever you get your podcast.

Chao Fun, thank you so much for taking time to chat with us. Shall Fung is co head of China Industrial Research at CLSA, and I'm Doug Chrisner. You can catch us weekdays for the Daybreak Asia podcast. It's available on Apple, Spotify or wherever you get your podcast.

Tom, Thanks Doug, and that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Buzzby. Stay with us. Top stories and global business headlines are coming up right now.

Tom, Thanks Doug, and that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Buzzby. Stay with us. Top stories and global business headlines are coming up right now.