This is Bloomberg Daybreak Weekend or Global look at the top stories in the coming week from our day break anchors all around the world, and just to have on the program some insight into what the Reserve officials are really thinking. I'm John Tucker in New York.
I'm Kaylee Lyones in Washington, where we're looking ahead to Tim Scott and Ron De Santis entering the presidential race.
I'm Brian Curtis in Hong Kong. What might we learn about China's ev market through the prism of X Punk's earnings.
I'm callin Heppy here in London. We're looking ahead to Bloomberg's cut our Economic forum in Doha.
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Hi, everybody, I'm John Tucker. Let's start today's program with a federal Reserve Board, the US Center Bank will be releasing minutes of its last policy setting meeting, and for a look at that and more insight into everything to do with monetary policy. We're joined now by Bluebird's Mike McKee. I hope that captured everybody's attention there, Michael. But anyway, what are we expecting.
Well, this is gonna be a little bit different minutes, and it may be a little bit more important. Usually we're pointing out that the minutes come out three weeks after a decision, and a lot changes in those three weeks, and Fed officials may have changed their views. But in this case, it doesn't look like much has changed. Inflation has come down just a little bit, but it's starting
to slow at the rate of descent. Unemployment is still very very low, at a like forty to fifty year record low, and so the conditions are still about the same, which raises the question of is the Fed going to pause when it gets to June? And at this point the minutes may give us a real insight into a lot of their thinking. A lot of them have been talking lately and they all say pretty much the same thing. We don't want to decide yet because the data haven't been decisive and we're data dependent.
Well, let me ask you that is really every It sounded to me like not everybody is on the same page at the Federal Reserve, and I'll harken back to Alan Greenspan, who seemed to rule the Federal Reserve with an iron fist. Everybody was on the same page. They better be or they were going to get slapped down by the chairman.
Well that doesn't happen anymore. There's a little bit more democracy on the Fed board. But the overall impression you get is that some people are leaning towards a pause because they've gone up five hundred and twenty five basis points in the last year, and at some point you start to risk a recession. But they are all emphasize that they are very much locked on the idea of bringing down inflation, and inflation if it doesn't start to really drop soon could get them to continue raising rates
at least one more time. And we have another CPI report and a PCEE inflation report before their meeting, So at this point people are going to be looking at the minutes to see what it is they are focused on, whether they think that the outlook for inflation is going to slow, or if they think the outlook for inflation is very mixed and maybe they need a little insurance.
I found this quote from the late German economist Rudy Dormbusch. I think, you know it. Things take longer to happen than you think in economics than they will, and then they happen faster than you thought they could. So my question is when things turn. Are they turning in terms of the inflation front for the Federal Reserve? And when they turn? Today happened really fast. I mean, we've been waiting for these whatever long and variable lags, seems like forever.
It's probably not going to barring some sort of outside shock, something with oil or energy, or the war in Ukraine or something like that. It's probably going to be a more gradual turn. Unemployment will start to go up. If it does slowly, then it could jump in a couple of months. But at this point the Fed is not expecting that to happen, so it's not going to be what their focus is in terms of short term economic policy.
And even if it does go up. I talked to a number of them at the Atlanta Fed conference this past week, and they all said, we're not going to lower rates if unemployment starts to rise because we still
need to bring inflation down. Now, inflation could start to fall relatively quickly because we've been waiting for over a year for dropping rents to bring down housing prices in the CPI and the PCE, and that hasn't really happened yet, but there are signals that could start happening, So we could see a relatively quick drop in overall inflation if that starts to happen. But again, FED wants to make sure that inflation is on its way down, so they're not going to be quick to move on it.
All right, If you look at the market betting market participants, they're betting that they're going to be not just a pause at the Fed's meeting in June, but they're also betting that they're going to be actual interest rate counts by the Federal Reserve this year. Why is there such a disconnect, it seems, between what the market participants are thinking and what the Federal Reserve officials are actually saying.
Well, there seem to be two reasons. One is that a lot of participants in the markets are using FED fun futures as a hedge in case we had a debt ceiling collapse. So that puts some weight on the FED cutting rate, Fed having to cut rates if the United States defaulted in June, and so that's one reason
that we've seen some movement. The other is that there is a feeling in the markets perhaps that the FED is going to see inflation coming down quickly and cut rates, and the Fed's view is we're going to see inflation come down quickly and not cut rates. But that's going to be a face off for the coming months between the markets and the Fed.
The FED has this dual mandate price stability. That's the part where you try to keep inflation somewhere near their target and the employment part of it. What's the employment part doing well.
The employment part is not doing what the FED thought it would be doing. The FED thought, based on what's happened in the past, that they raise interest rates and businesses don't want to pay higher rates, so they stop investing, business goes down, and they end up cutting employees. That hasn't happened. This is an unusual situation coming out of
the pandemic, where companies could not find workers. And again at the Atlanta FED conference, the FED people I talked to all said that the companies in their districts are telling them they're going to hoard workers for now. They're not going to let people go right away because it was so hard to find them before. So unemployment's been
very sticky. As I mentioned, it's come down to the lowest since nineteen sixty nine at three point four percent, and it is it's an open question as to how fast that might move.
Okay, how far away are we from the Fed's goal of what is a two percent rate of inflation in the United States?
Well, it's an interesting question because we're a lot closer than we were. We're at four point nine percent on the CPI and we were at nine. So it's come down quickly given the FED restraint. But from here on it gets harder to do. We get into categories that are more sticky, harder for the FED to effect, and so they don't really know how fast it can come down. Their latest forecast, which was made at the March meeting, was that we would not get to two percent until
twenty twenty five. We'll see if they change that when they get to.
June is that carved in stone or can they amend that?
They can amend that, they will amend it. And also we have to realize that these forecasts that we always talk about, it's not a forecast. I keep getting reminded of that by FED people. These are nineteen different outlooks for various economic indicators based on what these FED officials individually think is the proper monetary policy. So we tend to look at the sort of combined number and average it out and say this is the FED forecast, and it's it's not really a forecast, but it's the closest
thing we have. So that's how the markets react.
Well, let's get back to the projection, at least by the markets, that there could be rate cuts sometime this year. Does that if there were to be, doesn't that strike at the heart of the credibility of the Federal Reserve? In one turn they're raising rights and then a few months later they're cutting. That's like an admission of we blew it.
It could be. But FED funds futures are only one small part.
Of the market.
It's not a very deep or liquid market. And what you also have is things like tip yields, tips shields and other inflation break even indicators that suggest the FED is going to be bringing down inflation. Inflation is going
to fall off. So then it just becomes a question of does the FED keep rates high because it wants to make sure it's going to get to two percent and they don't think that will happen until twenty twenty five, or do they respond to falling inflation by saying we need to cut rates a little bit because otherwise we get too restrictive. Real rates will start to go up
even farther. So at this point, again it's kind of an open question, which brings the minutes back into it in terms of being something that might actually provide us with some guidance on how they're thinking about this.
As always, Bloomberg's Mike McKeith, thanks very much for stopping, but I appreciate it, and just to hend on Bloomberg Daybreak Weekend, the Middle Eastern Focus. Final preparations underway for Bloomberg's Guitar and Economic Forum. I'm John Tucker. This is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm
John Tucker in New York. Up later in the program Florida Governorrohan DeSantis and the race for the Republican presidential nomination. But first, Bloomberg's Guitar Economic Forum taking place next week with newsmakers from the urgeoning Middle East, and for more, let's send to London and bring in Bloomberg Daybreak Europe anchor Caroline hepger.
John Gulf nations like Cutter may be expected to grow more slowly in the short term with the oil prices down, but their ambition in recent years has soared. Remember Cutter hosted the World Cup in twenty twenty two is looking now to increase local stock trading to diversify its economy, as many other countries in the region are attempting to
do so. A moment for unique perspectives from business and government leaders and Bloomberg anchor and editor at large Francine Lackwell will be in Doha force and he joined me now today discussed before the big trip. Look, first of all, I suppose this is a moment to think about cut on its role in the global economy, right, yes.
And Ei, Caroline, I mean the question is that there are so many uncertainties. When it comes to global growth, it's of course the US China tensions, it's all the supply chain issues, it's inflation, and really China's reopening providing this welcome boost to global growth, off setting weakness in Europe, but we're not one hundred percent sure how long this lasts,
and then this lingering recession risk in the US. So I think when we go to Doha and Qatar for the third annual Qatar Economic Forum, we'll try and take stock on what role the Middle East plays into all of this, not only geopolitical, of course, these are very energy intensive countries because of oil and gas, but really how they're capitalizing on this new world So the region's sovereign wealth funds, a lot of them, will be their flush with oil and gas revenue, and they're really trying
to compete to fill the three trillion dollar liquidity gap left by Wall Street retreat. So if you look at you know, the warring World, so on geopolitics, US China with Europe somewhere in the middle you know, the Rush attentions because of the invasion of Ukraine. The real question is how do the oil rich nations behave going forward?
Do they buy things up. I know there's a lot of speculation about, for example, the Katari's getting into British football and in general, like what role do they have to play in the next five ten years? Where do they deploy cash? Where did they see the best opportunities?
Yeah? Absolutely, I mean look just at the Guitar Investment Authority with four hundred and fifty billion dollars in the Sovereign Wealth Fund. I mean this is a huge amount of money. But as you say, although these GCC and Middle Eastern countries are trying to diversify away from oil,
the energy picture is so important. I mean I remember at the beginning of my career the idea of peak oil was kind of crack pots, right, And yeah, we have come so far since then, and this is the big issue, isn't it, the energy transition.
I mean I've been a lot around so long. I used to go jogging. I used to cover Opek that was my first job at Bloomberg, and we used to go jogging with the Densaudi oil minister and he'd I mean he'd say one word and the old price would move by four or five dollars. I mean, there were kings and the complex has really changed.
Yeah, and so I suppose they're role in terms of the energy picture. Then how do you think people at the forum are going to be thinking about this issue?
So it'll be interesting, and we have a couple of energy ministers, including of course the guitar Energy Minister or Minister for State Affairs and Energy. He will probably talk about the energy trilemma. So this is the idea that they need to balance energy and reliability with security, affordability and sustainability. Again, this could be a long way off
given how the price of oil has behaved. We did also have this really interesting report yesterday from the International Energy Agency, which we'll probably ask the energy ministers about, because they said global oil demand climb more strongly than previously estimated this year because of the post pandemic rebound from China. That beat expectations. But remember the IA we're really telling OPEK Plus of course, which Qatar is a member of, saying you should not cut production at this point.
This is a mistake going forward, but if you look at the complex, maybe they were right to do so because they also had to readjust their demand for last year. So again, oil demand never walks in a simple line, and so it'll be interesting on the ground, I think to get some of the also hopes or fears for them to get more gas in Europe through various ways because of the invasion in Ukraine.
Yeah, and also the changing picture in China of course, which is moving quite swiftly, has done certainly in the last bits of economic data around China's recovery not perhaps being as strong as we thought that so many factors. The region though, is also a very important in terms of demand for plane makers. We know some of the big names are going to be out the forum and supply chain issues. How does cutoff fits in with that?
So I have a panel which I'm looking forward to with the Qatar Airways chief executive officer and the Boeing chief executive officer and now companies like you know, General Electric, Nike and Boeing have all had supply issues. So I think when we speak to Boeing it'll be one of the first times to really sit down after that massive order that he got from Ryanair and go through right
you're getting the orders in. We understand that Katar also wants to impose new roots or get new roots because travel demand is back a what does that mean for sustainability? What does it mean for their green ambitions? But two, is Boeing going to see a supply chain issue exacerbated because these new orders are going to come through and will they be able to deliver on a lot of these supply chain issues? So I think again there, you know a lot of these big chief executives show up
because they can get orders from these companies. Right, Katar is a very energy intensive country with a lot of money to spend, so the envy really of a lot of our G seven country And I think he'll probably speak quite candidly about how many orders they can get and how much they can deliver, and it'll be interesting to get his thoughts on how we change the way that we travel.
Yeah, definitely. And then there are some other major chief executives that we have to think about and speaking to Bloomberg, one of whom, of course is the boss of TikTok. At a very pivotal moment.
I'm so excited Caroline heid Is sitting down at the chief executive TikTok and this really has everything. It has, you know, the youth wanting to be on TikTok and has like the lawmakers in the US saying, how do we regulated. If we stamp it down completely, maybe we lose voters because people are so addicted to the product.
One of TikTok's most senior officials in charge of ensuring safety also had left the company just a couple of months ago, and he's been one of the most prominent officials in this all out effort to convince skeptical lawmakers and policymakers that the app is safe in the US. So it'll be interesting to hear firsthand from the executive about what he's doing to speak to US lawmakers. Sometimes
they don't speak, you know, with the same words. And again, Katar will be pivotal for that because we know that they're also helping Elon Musk for example on Twitter, so they're you know, they invest a lot in tech across the world and also in China.
Yeah, and I think maybe it's not even just the US conversation. The European conversation is so important. UK lawmakers. They know I've got an or in this also. I mean, we had the gym Sharks CEO speaking to Bimberg Radio and TV just this week, a kind of he's one of the youngest billionaires in the UK, and he's built
the business largely around these social media channels, including TikTok. So, yeah, it was kind of interesting to say, Tim, what happens if TikTok were to disappear, let's say, not totally out of the realms of possibility.
And also what happens with AI and that transforms right, everything that we're seeing with with our social media channels. So what if the algorithm changes, even if lawmakers don't step in and stomp it out completely. I don't know how you find me if you have a personal friend like chat, GPT that you can just ask things. Do you spend less time on social media? And so many questions that we're going to try to get to the bottom of.
Yeah, absolutely, and other big interviews that we have to watch out for them, thinking about the run down next week and the big names.
It's eclectic.
We like an eclectic forum. So we're speaking to Steve Schwartzman. He's the chairman, chief executive officer and founder of Blackstone. The other one that really caught my eyes general portray us now he's a KKR, but of course he was one of the most important generals for the US will be interesting to talk to him about foreign policy and national security. And then I have a third one Steve Munuchin, again a critical he was Treasury secretary under Donald Trump.
He'll be critical, critical in trying to understand where he thinks the US debt scene. Conversation is going.
Okay, Frosine, I wish you luck. I hope you have a fantastic trip. Lots of reporting for us on Bloomberg Radio. Report pack great. I'm going to beg for some live interviews in amidst all of these high level interviews that you're going to be doing. My thanks to Farci lackw of course, Bloomberg anchor and editor at large. I'm Caroline Hepge Here in London. You can catch us every weekday morning for Bloomberg Daybreak. You at beginning at six am in London. That's one am on Wall Street.
John, Caroline, thanks a lot, just to hit on Bloomberg day Break weekend the race for the GOP presidential nomination. I'm John Tucker. This is Bloomberg.
Broadcasting live from the Bloomberg it a active Brokers studio in New York. Bloomberg eleven three to oh to Washington, d C, Bloomberg ninety nine one to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixteen to the country, Serrius XM Channel one nineteen to London DAB digital radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot Com. This is Bloomberg Daybreak Weekend.
I'm John Tucker in New York with your global Okay Ahead at the Tom Stories for investors in the coming week, a lot of talk about Florida Governor Ron DeSantis throwing his hat in the ring for the GOP nomination for president and for more on what DeSantis candidacy means for the GOP. Let's end to our Bloomberg ninety nine one newsroom in Washington and sound on co host Kaylee Lines.
Kaylee, thank you, John. Yeah, We're gearing up for go time. Watching closely this coming week when Governor DeSantis will have multiple events and it's not just him either. Senator Tim Scott, the Republican from South Carolina, has a big one too. Joining me now to talk more about this is Nancy Cook, one of our national politics reporters who covers all things twenty twenty four for us. So, Nancy, let's start with DeSantis. It's a moment we've seen coming for a long time,
him finally officially throwing his hat in the ring. I know you'll be making the trip down to Florida this coming week, So what exactly are we expecting is going to happen?
So we're expecting that Governor DeSantis is going to announce his candidacy in some way. He has to basically file this paperwork with the FEC to do that, so we're expecting him to do that sometime next week, and then he's going to go down to Miami. We're expecting him to announce it in some fashion the candidacy, like maybe through a video social media post. And then on Thursday, there's a big donor meet up in Miami. So Wednesday
night they have a reception. Thursday, the donors are getting it briefing, and then they're expected to make a bunch of fundraising calls. Really, the purpose of that trip is to really show that they have a lot of financial support, and that's the plan. And then we're expecting him to have a more traditional campaign rally, most likely the week of June first. I think that's going to be in his hometown of Duneed and Florida.
Well, you mentioned that he's going to talk to donors, and obviously he's already been in communication with them. I actually want to read out a quote from a call that the governor had with donors this past week. The New York Times was able to monitor it and reported that the governor said, you basically have three people at this point that are credible in this whole thing, Biden, Trump,
and me. And I think of those three two have a chance to get elected President Biden and me based on all the data in the swing stage, which is not great for the former president. And yet Nancy DeSantis has been consistently trailing former President Trump in the polls.
So he's not wrong that in polling, you know, he is matching up as a very strong candidate against President Biden. That is right. But I think so far we haven't seen the Republican electorate really care about this so called electability argument. You know, they don't care that they perhaps DeSantis is a lot younger than Trump, perhaps he is more electable, Maybe he would do better in Wisconsin and Michigan and Pennsylvania. That sort of remains to be seen.
So many Republican primary voters still remain very loyal to President Trump. He has that steadfast based of thirty percent of Republican voters and that has really been immovable so far. And just his relentless attacks on DeSantis have really weakened the governor over the past three months. And I think that real challenge for DeSantis getting into the race at this point is trying to overcome that.
Yeah, and how does he also differentiate himself when it comes down to actual policy, the issues that they're going to run on. When you're trying to get, you know, primary voters to pick one of you, what's DeSantis's kind of game plan there? What do we know at this point?
So I think that DeSantis is really going to talk a lot about his record in Florida and what he has done. He has passed a six week abortion ban through the state legislature, which is actually something a majority of Floridians did not want him to do, but he did it anyway, which will definitely increase his appeal to evangelicals the anti abortion community. He did a permitless carry law, which meant that you can in Florida carry a gun without a permit. He has made education a very central thing,
and also gender issues around transgender people. I would actually say on policy he has been further right than President Trump has, at least when he is president, and Trump has been catching up with Dysantis on some of these things. I think that those things, though, are also not appealing to general election voters. Those policies are not appealing to suburban women. We've seen from polling, they're not appealing to independence.
So I think DeSantis is going to face a very tough road in a general election trying to tout this Florida record that he touts everywhere.
Yeah.
Well, of course, in addition to everything he's done legislatively, there's also this ongoing fight with the Disney Company. We saw just this past week, Disney announcing they're canceling plans for a new campus in Florida, not going to move two thousand employees to the state. And I know, Nancy, you've done a lot of reporting about how donors are kind of viewing this battle he has with what is kind of a behemoth in corporate America. How problematic has that been for him?
I think it's problematic with donors. I don't know how much the American public is paying attention to this escalating fight between the Florida governor and Disney, because they're still kind of trying to figure out like who is Desanta's But donors don't like it. They feel like it's anti business to pick a fight with the state's largest employer. The Disney thing has not been playing well with sort of the big billionaires that he will need to court.
So what does the war chest kind of look like at this point and how does it compare to some of the others that are out there. President Trump obviously front and center, but then we know there's others shocking for position too.
So I would say President Trump, you know, doesn't have as much money as he had last time, but he's still and he but he's never really been extremely popular with billionaires, and a lot of the billionaire class has turned away from him. Where he has always really succeeded is in getting small dollar donations, So people who are mad about the indictment sending him twenty dollars, he has always really been quite successful with that and is continuing
to be. DeSantis has a fair amount of money in his war chest from his governor's campaign, and so he's trying to transfer that money over to what will be his presidential campaign. His super pack has also raised about thirty three million dollars so far, and I think that, you know, they're going to try to raise more. So he's doing ok financially, So that's something that I'll be watching, you know, sort of that burn rate with the cash and how that ends up affecting them.
And of course, you know, we focus so much on just the matchup between Trump and DeSantis because it right now does feel like a kind of number one and number two scenario when it comes to the Republican primaries. There's authors as well, Tim Scott officially going to do the thing too. So what are the real prospects for the senator?
Tim Scott is announcing his candidacy on Monday, May twenty second, and I think that he is really hoping to try to capitalize on Desanta's slipping in the polls and the fact that some of these donors don't like some of his policies. Tim Scott is pretty popular with Wall Street donors, who have given a lot to his Senate campaigns in the past. He is on the Senate Banking Committee, Senate
Financial Services Committee. The interesting thing about Scott, I think is that, you know, unlike Trump and DeSantis, who have sort of angry messages us versus them really doubling down on the culture wars, Scott really tries to speak with a message of hope and optimism. So his tone is much different, even if his policies aren't that different. And I think that's where he is trying to sort of make his mark.
And he obviously is going to have a lot of catching up to do in theory based on the pulling we have seen to this point on what the primary would look like. But do we know how he would stack up against President Biden if he were to get to a general.
I mean, he has much more conservative policies. I think that what he has going for him is that he's in his fifties, you know, he's much younger. He has an optimistic message like Biden. You know, I think it remains to be seen if he can get that far in Iowa for instance. I know he's really trying to appeal to evangelicals. You know, he himself has a deep
faith and he's trying to make that case. He's very, very good at retail politics, and then I think that he's hoping that his home state of South Carolina can really carry him through.
So when we think about how the larger Republican primary field is now stacking up, as we were talking about, you know, Senator Tim Scott trying to message a little bit differently than someone like DeSantis, who is trying to outrte President Trump. What is the broad signal here about the state of the Republican Party and frankly just the different factions within it.
I think the state of the Republican Party is that Trump is still dominant. Trump is not really a political figure anymore in the Republican Party. He's kind of like a movement. And what I have seen on the campaign trail is that voters are still very devoted to him. Many voters are still very devoted to him. Despite the legal challenges that he faces, the indictment. You know some people who say that they are exhausted about the drama
surrounding him. He is really still the dominant figure. And you know, we've seen in polling he is ahead of Desantas by about an average of thirty six percentage points in the polling. That's and he's far ahead of Dysantas, but like even further ahead of the rest of the field. And so you know, whoever is going to join the GOP primary fight at this point for the nomination is really has to take on Trump. He is sort of the big gorilla in the room.
All Right, Our national politics reporter Nancy Cook, thank you so much. We've traveled to Florida this coming week, John, things are about to get a whole lot more exciting in the twenty twenty four race.
All right, Thanks Kelly. That was Bloomberg's sound on co host Kaylee Lions reporting from our Bloomberg ninety nine to one newsroom at Washington, and you can hear sound on weekdays one to three pm on Bloomberg Radio and coming up on Bloomberg day Break Weekend. Competition in the EV industry rev thing into high gear in Asia. I'm John Tucker. 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 John Tucker in New York. Growing competition in the electric vehicle space, in particular in Asia, and for more, let's go to Hong Kong and Bloomberg day Break Asia host Brian Curtis and his colleague Doun Krisner.
John we preview Chinese EV maker x Punk's earnings due out in the coming week. We wanted to get a good reading on the EV market in China now.
Price cuts and falling sales have the potential to undermine gross margins and the much bollyhooed recovery in the mainland economy seems to be sputtering a little.
And with that, Bloomberg Intelligence estimates that Xpun's deliveries in the first quarter will have dropped about forty seven percent or so, and that will likely give earnings a whak. Revenue might see declines of more than forty percent. Tesla's price cuts are taking a toll on companies, although we did see very strong earnings from BYD, but will be interested to see what we get from xpung, Le, Auto, Neo and Zeker. Joining us now for some discussion of
this is Johanna Chen, Bloomberg Intelligence Asia Auto analyst. Joanna, thanks very much for being with us. So if you take a really big broad look at this, China's beating the world really in the EV rollout, and we already had the byd earnings and they were a lot up four hundred percent or so, But there are questions that still loom over the sector, particularly over the short to medium term. What's chief among those concerns.
So basically, some investors are worried about China's TV industry because we do see competition is heating up after the government unplug the purchased subsidies at the end of twenty twenty, and then we also see Tesla cutting prices so that the other automakers might feel the heat a little bit.
But I think we are also looking at battery costs dropping significantly in the first half of this year, and we also see that there are a lot of new models coming to the market, and also we have consumer sentiment picking up from a COVID period, so that we do see all those like positive factors also coming into the picture. So I think China's EV sales is continue to be very strong. We do see competition here, but the overall industry trend is still there.
It's interesting to hear you say that battery costs are coming down. I mean, China really leads the world when it comes to making EV batteries, and we know from wholesale inflation data that factory gate prices are in deflation in China overall. Are our auto manufacturers really in a better position now that the wholesale prices are coming down steel not only batteries, but are of the materials that they need to produce cars.
Yes, the material costs have been like coming down a little bit, and especially for like battery materials for exam Holy throm Litheran, costs like spiked in one and two, but then in the first half of this year it came down as much as like seventy percent off November's peak.
Doug mentioned how China's kind of cornered the market globally on a lot of these materials like cobol, lithium, you just talked about, nickel, other materials. Does that give China an advantage forever over other producers or can they play catch up?
So China definitely has a huge advantage right now in the battery material supply chains, Like the majority of lithm are refined here in China. And you do see like the other capital costs, labor costs, all those costs are much cheaper in China. China will definitely have an advantage and will continue to have advantage in the coming years. But we do see the other countries. They are trying
to build up their supply chains. For example, we have USIRI Infission Reduction Act requires automakers to basically build their evs and build their EV supply chains locally in North America.
Joanna, thank you so much for helping us understand more about what's happening in the auto market in China as we look forward to the earnings in the week ahead from x pun Joanna Chen Bloomberg Intelligence Asia auto analysts joining us here. I'm Doug Krisner along with Brian Curtis in hongko You can catch us weekdays here from Bloomberg Daybreak Asia beginning at six am in Hong Kong six pm on Wall Street.
John, Brian and Doug. Thanks very much. That does it for this edition of Bloomberg Daybreak 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 John Tucker.
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