Daybreak Weekend: US CPI, ECB Decision, BRICS Summit

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2:03I'm Nathan Hager in Washington. I'm Stephen Carolyn London, where we're looking ahead to what renewed fears about inflation mean for the ECB's path ahead. I'm Doug Krizener, looking at the Balancing Act ahead for Prime Minister Modi, as India prepares to host the BRICS Summit. That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 11th Rio, New York, Bloomberg 991, Washington, DC, Bloomberg 929 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on Bloomberg Radio.com and the Bloomberg Business app. Good day to you, I'm Nathan Hager, and we begin today's program with some key inflation data coming out in the US. We get the August producer price index on Thursday, consumer prices, the following day, Friday, of course, all this comes days before the Federal Reserve's September policy decision. And here to get us ready for it in our Washington, DC studio is Bloomberg News,

3:06Fed and Economy reporter, and current. So, and we've already heard Fed Governor Chris Waller say this inflation data is going to heavily influence his decision on interest rates. Is that the case across the committee? Do you think? I think it is. It feels like a lot is riding on the inflation data that we're going to get this week. As you mentioned, we will get consumer and producer prices. Officials will calculate from the CPI and the PPI, their own preferred gauge of inflation, which is called PCE. And from that, then, they will have a good sense of what where inflation is at and what the numbers are telling them. Now, it's not a done deal going through inflation data that a rate hike in September is guaranteed. We get different signals from officials we have, soon, who are warning that inflation remains consistently too high. Above the central bank's 2% target, they look at pockets of inflation in the services sector, for example. That's where a lot of people are worried about. Less worried about tariffs. I believe we're not less worried about oil prices unless it starts to spill over

4:06into the broader economy. It's kind of services sector that's that people are more worried about. On the other hand, you have some officials making the point. Listen, inflation has been coming off the boil. We don't need to raise rates. We have time to wait and see. And that's why those numbers will determine what happens when they meet in the mid-September. Okay, so let's get into the specifics of what we're thinking we could see in the numbers coming out this week. The consensus on the Bloomberg terminal on producer prices for final demand in August is for a pretty significant increase. This has been pretty well above any 2% target. I don't know if that's a 2% target that the Fed sees on producer prices. But what do we see driving that on the producer level? Well, there isn't always a perfect correlation between producer prices and consumer prices. I mean, logically, you would think upstream what producers are paying would be eventually paid off, downstream to consumers. It doesn't always work like that. Nonetheless, though, lately there is a bit of more of a spill over our correlation than usual in Nathan. Part of the issue there is that the producers are in the front line of costs related to energy. So oil costs were seen that big spike

5:07in diesel costs, for example, those costs are inevitably going to be passed on downstream to their to their own consumers. And of course, they're also on the front line of somebody AI related capex billet, boom, some of that is impacting PPI. So those pressures, those upstream pressures are certainly in the system and the worries that are going to filter downstream too. And to that point, when it comes to the consumer price index as well, at least on the headline level, still well above the 2% target north of 3% at the same time, we're looking at the core expected to edge ever so slightly closer to the 2% target. What are we expecting when it comes to consumer prices this time around? Again, keep it on your eye for the any hint of broader spill over from higher oil prices and energy costs. So, you know, is it really impacting the costs for other goods through say like airline tickets, for example, you might see an uptick in restaurant and food costs because of delivery prices for example, there will be a lot to compute from all of that.

6:08Also keep an eye on costs of high-to-litings that are being impacted by the AI boom, like laptops and technology. It's only a small part of consumer inflation basket, but keep an eye on that. But then look at the broader services basket, costs of insurance, for example, home insurance and car insurance. That's been a big issue on the inflation front. Keep an eye on what's happening on shelter and rental costs. So, these are some of the usual suspects. People look at every month in terms of to get a gauge where is inflation headed. And I think, you know, at the moment, as I say to you, there isn't a great degree of confidence that inflation is slowing the way policy makers would like. And I think all told would probably require a big downside reading on the inflation numbers to really give policy makers comfort. Although we did hear Governor Waller just this past week say that he's starting to see signs of disinflation. Where's the disconnect potentially? Yeah, no doubt about it. I mean, some officials and some private sector economists would point to you. For example, the tariff effect has waned off now. They think that's not what

7:11it once was. They think, as I mentioned a few times earlier, the energy story, even though we've seen high gasoline prices, it hasn't spilled over as broad as you might think. So that's given some people some comfort. And then the numbers have been shall we say nudging somewhat towards the right direction towards central bank's target. That doesn't mean prices are not high. It just means that the pace has slowed a touch. But as I say, all of that could change when we get these numbers. If these numbers come in on the hot side, Governor Waller himself made clear that if they do come in on the so-called hot side, then he will be prepared to raise interest rates. And of course, these numbers are coming as we're just coming off a pretty hot jobs report. Do you see the bias at the Fed changing away from the focus on inflation, given what we saw in the August non-Farm payrolls this past week? We had very strong employment data. It is tempting to say, oh, wow, that's a game changer. The Fed will raise interest rates now as a slam dunk. But in truth, a couple of things there, officials have broadly priced in that the job market is in good shape. They've

8:15they're looking through that. They've been saying for some time now their bigger concern is inflation rather than employment. And importantly, on the employment side, we even thought the numbers were very strong for August. We didn't really get any hint of inflation pressure through wages there in terms of average hourly earnings. We know the chairman's war, Fed chairman's war has made the point that wages haven't been a great indicator for underlying inflation for some time. So again, it's an interesting story where, oh, look, really strong jobs in Merd much stronger than expected. Doesn't that lean into the Fed raising rates? I mean, it will, of course, at the margins, but it all comes back to the inflation data in the week ahead. And that data coming up, yeah, at the end of this week. Thank you. And great to have you with us. That is Bloomberg Fed and Economy reporter and a current head of that inflation data. Let's take a look now at some stocks making news in the week ahead. I'm Nathan Hager with Bloomberg Equities reporter Carmen Reinecke. I say week ahead, Carmen, but it seems like everything's stacked on Thursday because we're going to hear from a bunch of names just that day alone. Maybe the biggest earning story that day is going to be

9:19Oracle. What are we expecting from this company that's kind of become an AI bell weather, right? You know, I was going to say exactly the same thing. Thursday is the day to be watching for next week. And your right Oracle is one of the premier names. So this is ticker ORC. It's going to report results on Thursday. So this stock has been on a little bit of a down slide. So shares are down about 40% from the start of June and down more than 20% so far this year, which is on track for its worst annual performance since 2001. So I think this earnings report is going to be really important to maybe potentially reverse some of this downward selling that we're seeing. So analysts are overwhelmingly bullish here and they expect adjusted earnings per share to grow 18% in the quarter and revenue to grow 28% to 19 billion. Bloomberg intelligence is looking for strong results here and saying that you know, strong results from hyper skill cloud providers and the Neo clouds point to better end markets for AI infrastructure. And it suggests that Oracle Cloud infrastructure could have a solid fiscal 2027 growth guidance that could exceed the consensus.

10:26So that's really important and it's what investors will be watching for on. So is part of the story here that just the fact that Oracle has been on such a down slide that any positivity is just going to move the stock higher. Is that kind of what analysts are thinking right now? You know, I think it's a little bit more complicated than that just because we've seen such a high bar sort of environment for earnings lately that good news isn't always rewarded. So I think that yes, good news could really help the stock here. It's been really beaten down, but it's going to have to sort of assuage a lot of concerns that are in the market right now. So obviously we're going to hear from Oracle, but we're also going to hear this week on Thursday from Adobe company that there'd been some SaaS apocalypse fears around I think a while back. Is that still overshadowing Adobe, Carmen? You know, that is such a good question here from Adobe. So this is ticker adbe. This stock has really been on a terribly actually shares are up

11:2645% from the end of June. And a lot of it is because of this rebound in software stocks as some of these SaaS apocalypse fears kind of go away. So earnings are going to be really important here to kind of keep this rally potentially going. The stock is still really beaten down. If you look back, you know, over the last few years. So earnings could be a great catalyst. Analysts are expecting adjusted EPS of about $6 a share 14% jump from the same period a year ago revenue about the same jump to 6.7 billion. So what's big here is just is AI disrupting these companies as much as sort of investors had initially feared, which is what really brought down a lot of the software stocks. And you know, after Salesforce earnings last week, I think there's more positivity in the market. And people are really looking for sort of proof that these companies can integrate AI and it can help them instead of sort of disrupt their business. Aside from tech, we're also going

12:27to hear on Thursday from Macy's way apart from big tech. We go to big department stores. What are we expecting along 34th Street? I know. A very different part of the market indeed. So this will be really interesting. Analysts are expecting, you know, pretty flat revenue growth. So almost like no revenue growth from the same quarter last year, 4.8 billion revenue in the quarter and adjusted earnings of 36 cents per share, which is actually a little bit down from the same quarter last year. I think what's most important is looking for the impacts of things like tariff refunds against sales expectations. So we've seen some weakness in retailer results last week. Coals reported and those results were mixed. So looking for the health of retailers and the health of consumers is going to be really important. And this stock has also been a little bit weak lately. So shares are down, you know, about 15% from an early August peak. So, you know, earnings are

13:30always an important catalyst. But again, here, solid results could maybe reverse some of this decline while if there is sort of a negative reaction, we could see more selling ahead. Well, it has to be said. I mean, Macy's over the last several quarters have managed to beat expectations in most of its last few reports. Our analysts feeling kind of positive again, this time around when it comes to what we get, you know, heading into the holidays as well. And thinking about the Thanksgiving parade, it's not too soon to think about that, I guess. You know, I think that's a great question. And there are a lot of overhangs. I will say, though, going into the end of the year and sort of this holiday season. So I think the bar has been sort of raised for Macy's having some of really solid earnings reports in the last few quarters. And so what they say about that forward guidance is going to be really important. Yeah, another busy earnings day coming up this week. Thank you for this, Carmen. Good to have you with us. That's Carmen Rannike Bloomberg equities reporter with stocks to watch in the week ahead.

14:30And coming up on Bloomberg Daybreak weekend, we're going to look ahead to what renewed fears about inflation mean for the European Central Bank's path forward. I'm Nathan Hager and this is Bloomberg. Some people treat Chachy PT like some kind of smart search engine. And some use it to get work done. Chachy PT work is a new way of working in Chachy PT that can take action across your apps and files. Stay with a project for hours if needed and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials briefs and scattered information that you have to grind through to turn into something useful can just become something useful. Put Chachy PT to work on your most ambitious ideas and projects. Get started at chachy PT dot com by selecting work mode available on plus and pro plans. You already know how AI is changing how everyday work gets done,

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16:41At Oppenheimer, we're working at the forefront of the innovation economy to invest where progress begins. Finding opportunities that build and protect wealth for individuals and institutions that want to seat at the edge of tomorrow. Put the power of Oppenheimer thinking to work for you. Wealth management, capital markets, investment banking. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Later in the program, we'll look ahead to the 18th Bricks Summit in India. But first in the coming days, we'll find out if the European Central Bank raises interest rates again as policymakers gather for their September meeting. But how will the recent sell-off sweeping global bond markets affect the decision-making process? For more, let's go to London and bring in Bloomberg Daybreak Europe Banker, Stephen Carroll. Nathan, even before the latest ramping up of tensions between the US and Iran, sent energy prices higher. Markets were expecting the European Central Bank to hike interest rates

17:45this month. That seems even more certain given the global bond sell-off of the past week. In recent days, the ECB-Jawakim Nagel-Tel Bloomberg, that the market pricing of more than 95% probability of a hike was a, quote, good understanding of the central banks, thinking. Other policymakers have also widely telegraphed their preference for another hike, which would follow the quarter-point move back in June. Questions do remain though about whether another hike would be enough to tame inflation and get it back to the 2% target for the investor, Anika Gupter, global head of private banking, wealth management and investments at ING inflation, is the key catalyst behind the recent unrest in bond markets. The main issue, which is spooking the markets, is clearly risks of inflation. Given the geopolitical events happening, what's happening? To energy pricing, etc. And there, I think the markets are looking for confidence. And there, if the Fed is in September to do that rate hike, which is now very probable, and with conviction shows and brings back

18:46credibility that, look, as central banks, we are bringing inflation under control, because quite frankly, they have been able to do so. There was a lot of cynicism, there was a lot of skepticism by the markets, criticizing central banks that they were responding to slowly, post-COVID, they caught up and they did control inflation. So if we see such a move, I think such a move could already, in itself, just that one hike, calm things down. That was Anika Gupter from ING speaking on Bloomberg Radio. Well, to set the scene for this decision, we're joined by our FX and rates reporter, Alice Glettell, and by our senior ECB reporter, Jan Arrando, who's in Frankfurt. Jan, policymakers, as I say, have been pretty clear that they have a preference for a hike at this meeting. So what will you be watching for in this upcoming decision? Yeah, I mean, pretty much if that's the end of the road or if more is to come, economists have a bit of a different view than markets on this. So economists have September and then largely nothing else.

19:51Markets are pricing quite a few more steps toward the end of the year and also toward the middle of next year. And most importantly, new forecasts will be out, new staff projections for inflation, for growth, and they will ultimately confirm whether the ECB is still on track to reaching its 2% target in the medium term. As you say, the latest data has painted a contrasting picture, surprising resilience as you point out in economic growth. But when it came to the inflation figures, I mean, certainly when you look at the numbers out of countries like Spain, it does look very high compared to a lot of the other bigger member states in the Euro area and kind of a mixed picture overall. What was your reading of what we learned from the last set of inflation data that we've gotten before this decision? Yeah, absolutely. I mean, Spain is now about 4%, and even 3.3% for the Eurozone. That's the August print the latest is not very reassuring. It's the highest in almost 3 years. And really, if you look at it, phase value going in the wrong direction.

20:52But if you look a little bit under the hood, there were some encouraging signs as well, because it seems to have been driven almost exclusively by energy. The core rate which excludes energy and also food prices and services, which is what the ECB has been watching very, very closely. Those gauges they slowed a bit. Now, still above 2%, still not where they're supposed to be. But the direction there is encouraging. And what's probably even more interesting is if you look at inflation expectations, if you look at wage gauges that signal or wood signal signal signal effects, there's really nothing to see. Inflation expectations and the medium to longer terms seem to be quite well anchored. Wages really haven't picked up on the latest inflation surge. So that is reassuring to the ECB. And then of course, you have tightening and financial markets with the bond sale off. So that's helping the ECB a little bit as well. That would reinforce

21:53the arguments that maybe after September, they have a bit more time to look and maybe the market is doing enough of the job for the ECB to let it be for a while. But yeah, a lot depends on Iran on energy. And as I said on the forecasts. I'm trying to think as well about how we're citing this ECB decision in the context of the global pressure or the global trend towards a rate hiking cycle that we've seen. We've had, of course, Kevin Worsh from the Fed speaking in Jackson Hole recently reinforcing his message on inflation, which has been part of what's moved on markets as well. ECB though, perceived to have been really ahead of the curve by hiking in June of this year already. So does that make it a little bit easier for them when we're thinking about the path ahead? I don't know to be honest. I mean, if you say they're ahead of the curve, and one of the most vigilant central banks in the world, they would sure take that batch. Thank you for that, probably. Exactly. But also, you have to talk a little bit about where each of these central banks came from before the Iran was started and where inflation and

22:59interest rates were placed. And what's true for the eurozone is that they had inflation largely under control, interest rates were in so-called neutral territory, so neither restricting nor stimulating demand. And that is very different from where policy settings were in the US and also in the UK, where inflation was still much more of a problem. And interest rates were was still restrictive. And that, of course, meant that the policy makers there had a bit more time to watch the situation play out, monitor what's happening, because policy rates were restrictive. And that the ECB didn't have that benefit if you want, so they simply had to move into a higher interest rate regime. Now, interest rates are still within the range of what you would call neutral in the ECB, but we're getting to the upper bound. And certainly at 2.5% that the upper limit, the ECB defines as neutral, anything else after that would get into restrictive territory.

24:00So yes, they were the first ones among the big ones to move also because their policy rate in the terms that matter were probably a bit looser than elsewhere. Yeah, they had the room to be able to move it. Yana, for now, thank you very much. I've seen your ECB reporter Yana Rand, of course, we're citing this ECB decision in the context of what has been a tumultuous time on bond markets. And Alice Glad, tell our FX and rates reporters, been tracking the ups and downs for us as they've been happening. And they've been many and varied, I think it's fair to say, Alice, can you just sort of put in context this bond market context for this ECB decision? We've seen your area government bonds sell off, but it's been part of a big global sell off, right? So we've seen yields hit multi-decade highs across any number of regions, so UK, Germany, France, the US, and particularly at the long end, kind of in long dated bonds. I was kind of having a conversation with someone just before this interview and kind of talking about what a reversal it's been from what investors were expecting kind of coming into this year. I think

25:03in Europe, people saw the ECB staying on hold. People found it quite hard to get excited about European government bonds. You know, yields were kind of attractive, but there were better opportunities elsewhere. But obviously, for the various reasons that we can talk about, we've seen this big repricing higher. What I would say is it hasn't been this disorderly move. It's generally been this kind of grind higher in yields, but there's also reasons to think that that might continue. Let's talk a little bit about the factors driving it higher. I mean, how much of it is down to higher energy prices and inflation fears? That's definitely a massive part. So really, the sell-off in bonds globally came at the end of February when the war began, and we saw energy prices surge. That's when you saw the real reversal in markets. So bond yields move higher and investors start to price in significant rate heights. And I guess, like some of the latest weakness we've seen is again, been on the back of gas oil prices, touching fresh highs or just moving higher again. So I think that's one factor. There's also another factor, which is maybe overlooked a little

26:06bit in bond market. So that's the fact that growth has actually been pretty resilient, particularly in the US, where the AI spending boom, kind of capex boom in particular, is fueling growth and growth that's about patience. Equity has been performing really well. We actually wrote something recently about why stock markets haven't really cracked despite this move higher in yields. Obviously, if people are buying equities, there's less demand for bonds. Don't release it. That's another factor. What about this sense that you made a listen to this, that yields have been elevated from some time and how this compares to what was for such a long time, such a low yield environment? I think it's a return to the old normal. Quite often, you speak to market Vacheron, I spoke to one, and he was saying, no one should be surprised that we're seeing yields at these levels. This is kind of how it used to be before the global financial crisis. I think yields over recent decades following the global financial crisis. They plunged when central banks slashed interest rates. Then we had years of quantitative easing where central banks

27:11were hoovering up government bonds around the world. That really suppressed yields. And I think we're still partly in a normalization following that process. Interest rates are much higher than where they were. We might see more hikes kind of given that energy shot that we talked about earlier. I guess there's also another new dynamic. There's just more debt out there in the world and there was previously when we had high interest rates. I think those two factors mean that's why we're in the environment that we're in now. And the other part of that bigger debt story is bigger debt repayments, consuming more of the budgetary space that countries across Europe have as well. We're facing into the season now where all the U-member states have to finalize their budgets nationally to submit them to the European Union, the UK budget is planned for the end of October as well. I mean, how much does do rising yields are they going to affect the conversations around countries' budget planning? When, I mean, if you look at it, that's a pretty big chunk in most

28:13countries case is going to come out of the available cash pile. It's really important. And I think the UK in particular has been in focus for this reason recently. We've obviously got the first budget coming up under the new Prime Minister, Andy Bylam and his Chancellor. I think in the UK, it's particularly sensitive topic because we have these fiscal rules that essentially dictate how much we can borrow and spend. You might hear people talk about the fiscal headroom. That headroom dwindles if borrowing costs go up and then the UK needs to spend more on servicing its debt. So that's that's a really important thing for the UK, but it's also very topical for somewhere like France where we're facing this presidential election next year. We've had the pro-business centrist president Emmanuel Macron and Charles almost a decade, but there's now a real chance that we see France skewed either at the far left or the far right. We don't really know what that means for France's debt path, but it is on an unsustainable path and it doesn't seem

29:16like there's that much political will or ability to really bring it down. And again, you've seen French politicians this week warn that the latest energy crisis and move higher in yields is really problematic for France. Yeah, indeed, marking our card for perhaps some tumultuous debates to come in many countries across Europe. Alice, thank you very much for joining us. Our FX and rate supporter, Alice Gladhill, and earlier you heard from our senior ECB reporter, Jan Arrando, will have full coverage of the upcoming ECB meeting across all of our Bloomberg platforms. I'm Stephen Carroll in London. You can catch us every week day morning here for Bloomberg Daybreak Europe beginning at 6 a.m. in London and 1 a.m. on Wall Street. Nathan. Thanks, Stephen. And coming up on Bloomberg Daybreak weekend, we'll discuss what to expect from the 18th Brick Summit in New Delhi, India. I'm Nathan Hager and this is Bloomberg. Some people treat Chachy-P-T like some kind of smart search engine and some use it to get

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31:20with agents and animations for every job in revenue. Adio orchestrates your work around the clock, built to handle the scale of your workloads, extensible with API, and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high growth startups like Grenola, MOTO, and EDGT, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps, picks up leads at 2 a.m. catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart. At Oppenheimer, we're proven because we're grounded in discipline. For 145 years, we've been building and protecting wealth through every market cycle, with precision, clarity, and the courage to think boldly beyond the moment. This is what market-tested legacy looks like, for this generation, and the next. Put the power of Oppenheimer thinking to work for you.

32:24Wealth Management, Capital Markets, Investment Banking. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. This week, India hosts the 18th Bricks Summit. For a closer look, let's get to Doug Krisner, host of the Bloomberg Daybreak Asia podcast. Thanks Nathan. This meeting will bring together leaders from the expanded Bricks membership. What began with four countries is now 11. So let me call the original group Brazil, Russia, India, China, and South Africa. And then we've seen additions over the last few years. That would include Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates. To help us preview the meeting, let's bring in Bloomberg's Roz Matheson. Roz is our chief Asia correspondent, and she joins from Singapore. Thank you for making time to chat. Let's begin with a big picture, Roz. Give me your sense of what you see as unfolding at this meeting.

33:27Well, this meeting in a way is coming at a time of a cluster of other gatherings. So it is a stepping stone in all of that. We just had the meeting of the Shanghai Corporation organization in Kyrgyzstan, for example. We have Bricks coming up. And then we have the big summit in the US between the Chinese President Xi Jinping and the US President Donald Trump. And a lot of this is about telegraphing into that meeting because Bricks has in Donald Trump's mind in a way become a bit of an alternative. He doesn't like Bricks very much. He sees it as a mechanism to move away from the dollar. So he'll be watching this meeting very closely. But what we're going to see is the delicate dance of geopolitics. We've got a bunch of very big leaders, obviously Xi Jinping, but also Vladimir Putin leaders from Iran. And there'll be a lot of conversation as a result about the world that we're in the latest in the Middle East with the

34:30conflict with Iran. You've got a lot of big energy powers who are going to be there. So there'll be a lot of conversation, obviously, also around energy access, energy security and supply chains. It's not hard to imagine that war with Iran is going to be probably the primary focus. I know you mentioned that India is the Bricks chair. And from what I understand, Iran has asked India to help build some common ground against US military action against Iran. Is there going to be enough momentum that comes out of this meeting if in fact Iran and the war is a focal point to get the US to consider more aggressive negotiations? Well, that's going to be the very interesting thing is what is Iran coming to this meeting seeking to achieve. And obviously there's a lot of concern amongst these countries around energy security and the disruption that we've seen from all of this. There'll be conversations again about improving resilience against disruption that's caused by wars, you know,

35:35shipping problems and everything that we've seen. But it does seem that more than six months into this conflict, it's become relatively intractable. Again, we've had a recent flare up with Iran and the US targeting each other's assets in the area. And so you've got the sense that this is dragging on that there's no easy way out. And, you know, for China and Russia, particularly you've seen Russia expressing very strong support for Iran. I've let it move Putin saying that he wants to see ways to deepen cooperation with Iran. You've got China saying, well, we don't particularly like the conflict. It's not great for us on an energy perspective, but we don't want to get to involved. So who's going to take the lead here and pushing the US at least on that side towards negotiation? Who's going to try and convince Iran that negotiations are the way forward? India's

36:37probably going to put that on the table at the meeting, but it'd be difficult to see there being really significant progress that comes from it. So the coalition, the BRICS coalition has obviously grown to cover elements of the global south and the global east. I'm wondering about the risk of it being perceived as moving or drifting to becoming kind of an anti-American alliance. Is that a possibility? Well, that's certainly the way that Donald Trump sees it. Again, he doesn't really like BRICS. He thinks it as a block that's trying to move away from the dollar, I imagine, particularly towards the U.N. He has, in the past, in fact, threatened tariffs, 100% tariffs on BRICS nations if they back a currency to replace the dollar. And there he's looking at countries that run large trade deficit with the US. He's done that before. And so he doesn't like BRICS and what it represents. And certainly, for China, it's been terrific and they're perspective to have it expand to include all these other countries plus all the partner states that are there,

37:42Malaysia, Thailand, Vietnam, Nigeria, and more. I mean, Turkey has applied for membership and has been offered partner status. So you put that together. You get what? Around 40% of global GDP the 11 members are alone, around 50% of the global population. So certainly, it's a big and growing and powerful block and increasingly representing that idea of nations that are banding together as global alliances shift and representing the global South in that. But equally, there are questions about as it gets bigger, does it become more and will-dee? Not all these countries get on on every issue. Some have quite significant tensions. I mean, China and India alone have tensions over their border and so on. So they're not really homogeneous group. They're a group that are together because they see benefits in doing so, but it's quite transactional. So for Donald Trump, this group morphing into something that's truly an alternative.

38:44It's unlikely to say that happening at least in the near term. So obviously, this summit is going to follow the recent meeting of G20 finance ministers and central bankers in the US. It was on the final day of that meeting. The Treasury Secretary besent accused China of preventing the G20 from issuing a joint communique. Give me your sense of what you believe Beijing to be feeling at this time given the idea that it's trying to project an image of stability, juxtapose to what the US may be perceived in creating right now, which is maybe a little instability in the global economy. That's right. It's interesting to see that the Treasury Secretary Scott Bassant signaled out China. It was China that prevented the G20 from issuing that joint communique after the finance ministers met and saying that it was over issues around trade imbalances. That's something that Scott Bassant, though, has particularly

39:47criticized China for previously, saying that it subsidizes its products very heavily. It may be made equipped that BWD vehicles are the best $70,000 car that $35,000 can buy. So he tends to go quite hard on China. That's something that China is aware of. And they look through some of this. Yes, they respond. Yes, they say they disagree, but they're playing the long game here. And particularly with China, that's about getting a smooth, successful summit between Xi Jinping and Donald Trump in the US, having Xi Jinping welcomed as a statesman on US shores, having the trade understandings continue. Yes, there are tensions. Yes, there's tit-for-tat action going on at the moment, but it's all in that understandable level to avoid a full-blown resumption of a trade conflict between China and the US.

40:48You pointed out a moment ago the diversity among these bricks nations, and I'm wondering if we can assume for the moment that they have been unequally impacted by what's going on with closure of the strait of Hormuz. Can you give me a sense of the economic impact that's being felt as a result of restricted energy flows out of the Persian Gulf area as a result of this war, how it's impacting the global south versus the global east? Well, certainly you've seen global disruption because of that, but you've seen countries that can afford it. Obviously, they've been able to pay more in recent months to secure supply, and sometimes to, in fact, thevert supply from other places. So you've seen that the richer Asian states, for example, be able to pay higher dollar to get the supply. You've also seen places like Taiwan doing that. In other parts of the world, they can less afford to do so, and often these countries are also

41:52already under fiscal strain, even carrying quite heavy fiscal loads that are hangovers from the pandemic, for example, and so less able to support their energy sector by paying higher prices for supply. So you see countries in Africa, for example, South Africa has been impacted in Asia, you've seen Indonesia having to roll out successive packages to try and undercut the support fuel prices, for example, to support their economy at a time that the fiscal picture in Indonesia is quite strained already. And you're seeing that really impact ordinary people in terms of the ability of truckers to drive the distances. They need to go to see fishing fleets, not able to go out. So you're absolutely seeing an impact on some of these what you call global south states, including in Asia, off from it. You've obviously seen Russia being impacted in different

42:54ways, but they're also impacted at the moment because Ukraine's been striking heavily their energy infrastructure, which is causing Russia all sorts of problems around their own energy, supply and exports, and that's having a knock on effect. Ross, thank you so very much for helping us preview the brick summit in the week ahead. Bloomberg's Ross Matheson, our chief Asia correspondent joining from Singapore. I'm Doug Krisner, you can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. Nathan? Thanks, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Tuesday 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 Nathan Hager. Stay with us, top stories, and global business headlines are coming up right now. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an

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