Bloomberg Daybreak Weekend: Jackson Hole Preview (Radio)

near peaking in South Korea? I'm Amy Morris in Washington. The White House has had a few political wins. Will that move the needle with goods? That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven three O, New York, Bloomberg one, Washington d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties, San Francisco, d A B, Digital Radio, London, Sirius x M one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business at Everybody.

I'm John Tucker. Let's start today's program with becoming annual gathered in Jackson Hole that officially he kicks off this coming Thursday. Blumber Global economics policy er Mike McKee is among those going and he joins us now for some insights. So you're gonna say it's really important this year because you're going, it's important ever justified your trip for for for people who don't know, we're not talking about going to do some early skiing or you know, fly fishing.

This is a symposium of sorts. We might have some fishing. This is the Kansas City fat To Annual Economic Symposium. Started back in moved to Jackson Hole in one I believe, and has been going on ever since. Uh, they did a virtually the last couple of years. So this is a return to Jackson Lake Lodge in Grand Teton National Park.

It's central bankers and academic economists from all over. They present like really boring papers nobody understands, and then there's like a few highlights where they say stuff that could move markets potentially. Well, if I were going to be honest, I totally agree with you. I don't think anybody there would say that their papers that people don't understand, because

all those people understand it. There is a misconception about Jackson Hole that it is someplace where central bankers come to discuss the issues that face them and figure out how they're going to attack them. It's really an academic conference. Papers are submitted on topics related to monetary policy, and people do sort of exploratory work that sets the stage for thinking about ways to do things. But the average person probably would not if you don't have an economics

theree would not understand a lot of it. Uh. And it is not as dramatic or exciting as people make it out to be. But by tradition, every year the FED Chairman gives a keynote address, and most years it falls under the category of nice to see you, glad you're all here. This is a really important topic. But a couple of times, most notably with Ben burn Anki during the Great Financial Crisis, he laid out strategies for the FED uh in monetary policy to deal with a

financial crisis. And there is a hope or a feeling or a thought that J. Powe might do something similar at this meeting on Friday. Okay, where are we right now with the economic data? I mean, there's all sorts of speculation fifty or seventy five basis points at the next FEDER Reserve meeting that's coming up, what in September um And yet we've got this data that seems to indicate the rate of inflation may be slowing at this point.

So I'm kind of wondering has the FED done its job or inflation data that we're getting is working against the Fed. There's a message that j Pal is going to want to deliver if he's going to talk about things like that, is that no, we're not anywhere near close to done yet. Uh. The markets took the idea that they could do fifty basis points in seven instead of seventy five, which was just laid out as a kind of a talking point by Jay Paula in July.

They took it as a sort of a hint that the FED was going to pivot, and they look at some of the slowing economic data and they say, well, the Fed's gonna have to back off and next year they're gonna have to cut rates, and that's not gonna happen. The FED is committed to keeping infest rates higher for longer to make sure that inflation is squeezed out of the economy. So if you know what I mean, that the data that we recently got is that because of

FED policy or because of something else. I mean, do you know when it's the policies working and done. That's part of the problem if you're a policy maker. You don't have real time confirmation because all the economic data is by nature backward looking, so you're trying to extrapolate from what you see and figure out what that means six, eight, ten,

twelve months down the road. Now, we've seen inflation ease up a little bit one month's data, and a lot of that had to do with energy prices, and energy prices aren't anything at the FED deals with. The FED is crypt housing, and we've seen declines in new home sales and existing home sales and housing starts. So that is starting to affect the economy. But we're only just starting to see the impacts. And that's one of the discussions they have in their meetings is how far do

we want to go? Because we want to go as far as we can without damaging the economy, and nobody quite knows where that is. Maybe it's something that Paul would address, all right, So who knows best the markets or the policy makers? Because it correct me if I'm wrong. It seems there's a bit of a disconnect between those two thinking. There's an old saying don't fight the Fed, and the young people who are in the markets these

days are fighting the Fed. They haven't been around. You don't fight the Fed because they make the policy and they have pretty much unlimited funds when it comes to But what's happened over the years is you know what people jokingly referred to as the Greenspan Bernankee, Yell and and now Powell put where if markets get disrupted enough, the FED will come into the markets and save them. Uh. The Fed seems to be of the mind now that they're not going to do that because the markets aren't

going to need saving. They don't. They're functioning just fine. It's just maybe that some people are losing money on this or that trade. So they want to make sure Inflation to them is the worst enemy, and they want to make sure that they get it out of the economy. So they want to deliver the message that's what they're going to do. Mike, thanks very much. We'll be hosting Bloomberg Surveillance Live for you from the Jackson Bowl Gallery

here on Bloomberg Radio. And on Bloomberg Television as well. Just ahead on Bloomberg day Break weekend, the UK braces for a surgeon energy prices. This yeah, this is Bloomberg Daybreak weekend, our global look ahead of the top stories for investors in the coming week. I'm John Tucker in New York. Up later in the program, inflation and monetary policy in South Korea takes center stage. But first, Despite hitting double digits in July, inflation in the UK still

hasn't passed a peak. An upcoming decision with the country's energy regulator will play a major role in deciding how much higher it's going to go. And for more, let's tend to London and bringing Bloomberg Daybreak Europe anchor Stephen Carroll John. Since the UK's energy regulator, off Jam has been setting maximum prices that energy firms can charge households

for electricity and natural gas. The next price rise comes into a fact in October, and in the coming days we'll find out just how much it will be rising by. It's a move that will be a major driver of inflation in the UK for the latter months of this year. For more on this, I'm joined by Bloomberg's Renewable Energy and Climate Change of porter Will Mathis and our E M. E.

A Economics and government correspondent, Buzzy Barden. Welcome to you both. Well, can you explain, first of all, what actually is the price cap and is it the maximum price that consumers can expect to pay this year? So this is a really good question and something that's pretty widely misunderstood. The price cap is a tool that the off Jim, the energy regulator, uses to cap like the unit price of energy.

So for every megawatt hour of electricity and gas that you use in your home, the energy suppiers can only charge you a certain rate poor per unit of energy. But they when they're communicating this, they know that no one really knows what a kill watt hour electricity is. And if they come out and say, oh, we've kept energy prices at five p per kill watt hour, you know that means nothing to anyone, including you know me

and I write about this stuff all the time. So what they do is they take that cap and then they multiply it by the average energy use across the country over a year, and then they put out that number to everyone. And that's what all the headlines are and so they say, for a whole year, the average energy bill in the country is going to be, you know, whatever it is. Most recently it was one thousand nine pounds and we're expecting a mere dart in the background

now such a small price. Now we're talking about something that's much larger. So yeah, yeah, so that they use it as a way to communicate what people can expect their bills will be. But um, it is a bit more complicated, but it is just to kind of limit how much um suppliers can charge and they want to make sure that's in line with what it is costing those suppliers to actually buy energy and so they're not just you know, making obscene profits. So how exactly is

the cop calculates it? Then basically they, um, you know, calculate what it costs the suppliers. And the absolutely number one thing is wholesale gas prices. Gas in the UK sets the price electricity. Gas is the way that the vast majority of homes get their heating in the winter.

So you know, there are other things like taxes and certain policies that get funded off of bills, but the really big thing on the bills, And the thing that is fluctuating right now is wholesale enterry prices, and those are changing so much right now that it's pretty difficult to you know, know, you know in the beginning of the year what the cap is going to be at the end of the year, because the entry prices just look so much different right now amid just record volatility

we're seeing in the market. How much is the price cop expected to arise by for October? So for October they're expecting it to go up to about three thousand, six hundred pounds and that is for an estimate for bills for the year from October, or one for the next twelve months that in that period they would estimate that it would be about three thousand, six hundred pounds UM. It's expected to go up even more in the first

quarter of next year. And so for like the winter period, the six months of winter from October to March, the bills are expected to have tripled from what it was a year ago. Lizzie Burton turning to you, this is going to be so important for the broader inflation picture. We had that blistering number in the past few days, ten point one percent the inflation rate in July. This is going to determine how much hire that goes. Yeah, we're in double digits already. Economists got it wrong again.

This is a new forty year high. It's more than five times the Bank of England's target and as you imply, we're not even at the peak yet. So the Bank of England had forecasts that when the energy price cup rises in October, peak inflation was going to be above but given that we're already above ten percent, that could be even higher. Now City economists are saying that peak inflation could be fifteen percent in the first quarter of

three um. But remember it's not just about energy. In the data, the UK inflation data that we've just had, the main driver actually was food and actually as well it was quite broad based this inflation. The next biggest drivers were recreation and culture. You've had a big contribution from services. So the worry for the Bank of England is that this inflation surge is going to be long lasting because it's spreading beyond energy across the economy as

people's inflation expectations keep running themselves. So what sort of challenges does this present now for the Bank of England. It's such a difficult moment for the Bank of England because, as officials explained after the last meeting, they're having to inflict pain on consumers in order to bring down inflation. So they've already done one jumbo rate hike in August

fifty basis points. Now our economists at Bloomberg Economics and many others are expecting another fifty basis point hike in September, and the Bank of England has said that this is going to cause a long, shallow recession the likes of which we haven't seen since the nineteen nineties. UM Former Monetary Policy Committee member Andrew Sentence has said that the key rate might have to go up to three to four percent because policymakers at the beer we have got

so behind the curve. And the other thing is that this inflation is swallowing up wage growth, which really makes the issue so much more pressing for the Bank of England. But because of the recession risk, that's what's worrying investors, and you've seen the yield curve in voting the most since the financial crisis because of the pain that the necessary rate cuts will inflict on the economy. Is. The energy price cap is something that we talk about so much.

It is a major part of the debate that's happening at the moment on the political front, the toy leadership debate as well. What are politicians saying about how they're going to tackle high energy prices. Well, finally, for the first time in ages, cursed arm of the opposition, Labor Party leader managed to cut through with his proposal to continue the windfall tax and freeze energy bills this winter.

And so in the hustings between Richard Sunac and those Trusts to be the next Conservative Party leader and Prime Minister this week, they had to respond to this proposal. Richie Sunac ruled it out. He said that he would target support the poorest households. Liz Trust said she doesn't want to throw money at a short term fix, but she wouldn't really be drawn on how else she would help other than repeating her promise of tax cuts. Okay, thank you very much to Bloomberg's Will Mathis and Lizzie

Burden for those insights. I'm Stephen Caroline London. You can catch us every weekday morning for Bloomberg Daybreak Europe, beginning at six am. In London and one am on Wall Street, John Stephen, Thanks a lad, Just be UPO brig Daybreak the weekend. Here comes that big central bank meeting in South Korea. Is bloom broadcasting live from the Bloomberg Interactive

Broker Studio in New York. Bloomberg eleven three oh to Washington, d C, Bloomberg to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine to the country Sirius XM Channel one nine to London d A B Digital Radio, and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg day Break Weekend, John Tucker in New York with your global Boocancademy talk stories

for investment coming week. The pressure is on central banks in Asia and South Korea in focus right now for more, Let's into Hong Kong and Bloomberg day Break Asia host Brian Curtis and his colleague Doug Chrisner. John. The cost of living in South Korea is soaring. Last month, consumer inflation soared to the highest level in twenty four years, and it's raised questions as to whether or not the Bank of Korea will in the week ahead be so bold as to raise rates by another fifty basis points,

as it did in July. For a closer look at the b okay meeting and the South Korean economy overall, we're joined by Kathleen Hayes, Bloomberg's Global Economics and Policy editor. Kathleen, thanks so much for joining us for the discussion. We've seen four rate hikes from the b ok this year and quite a lot of aggressive movement there. What are we expecting this time? Well, you know, the last rate hike was fifty basis point and that was a definitely

the more aggressive move. So now the question is will they do another one? You just mentioned consumer prices up six point three percent from a year earlier. UM, that's a slight acceleration from the month before there. Uh. I think it's the highest since four So they are definitely in a position where want to get inflation down. Uh. And recently, however, Chingyong Ri, the new relatively new head of the Bank of Korea, signaled a move maybe of

twenty five even with the high inflation. There's enough clouds, you know, dark clouds over the h Create economy, as there are many economies now in the world. I think they're getting a little less ready and eager to do the more aggressive hikes. They were one of the first central banks to begin tightening, I recall, and as with any central bank, it's trying to strike a balance right between tackling inflation on one hand and supporting economic growth.

This is a very unique economy because it's so strongly export driven, but at the same time, there are a lot of internal things here that make it a little complex. The household sector is very heavily levered, right, You've got food inflation that's beginning to pop up. There are labor problems that the new government is having to deal with. So it's a complicated situation I think for the b Okay. And it's interesting because one of the reasons they're having

those labor problems is because of rising prices. That's a big part of it. You know, we think more maybe about um food unrest in some poorer countries, but in in Korea, that's that's gotten people off their feet. I think it's that's one of the reasons why coming back to what the tone has been lately that uh, the the moves they're going to, they're gonna keep moving. They're gonna fight, but the moves are going to be gradual.

That seems to be their message. Now they hope to get I believe to about two point seven five three by the end of the year, so they that means they have some more to run. But again maybe the fifty basis point hike isn't quite as UH probable, particularly after you see the slow down in China and we're seeing action on the fiscal side to the finance minister

recently was talking about cutting spending pretty significantly. I think for ten years in a row, Um, you've been adding to extra spending year and year out with the previous administration. But the new administration wants to cut spending and get a lot more disciplined. How might that impact inflation? Well, if you cut back on spending, it's you know, your there's the money you add to melus or of subtract it. So the question is, I guess where they would be

UH cutting their spending. Who would they be pulling back on And I don't think it's entirely clear yet exactly how that is UH is going to play out, So UH for the immediate future, I think that the b Okay and what they do. They're going to keep an eye on that, and they're very supportive of that. But I think that it's right now, it's going to be again more growth, uh. And it's not just China slowing down, of course that they're looking at. Their looking aggressive rate

hikes by the FED. You mentioned the FED. It's interesting because we just had the FED Minutes recently and one of the things that I took away from it is a reminder that monetary policy works with a lag. We're going to need some time to be able to see more clearly how the tightening is playing out in the economy. And I would imagine the be Okay is in the exact same situation. They certainly are, and that's another reason why presumably they have to be sending out the message

that they're going to keep hiking. They're ready to hike, but they've also stated publicly that this is one of the things they're watching very closely. But certainly Korea, what is it, the leventh biggest country in the world, it's the fourth biggest exporter, so it's something they're very much in tune to. And then something uh that's in the background for everybody, the war in Ukraine, the fact that it's not going away, the fact that commodity prices are

being affected, and that washes over their economy too. All right, Kathleen, thanks so much for joining us an interesting discussion. Kathleen Hayes, Bloomberg's Global Economics and Policy editor. I'm Brian Curtis, along with Doug Krisner. You can catch us every weekday here for Bloomberg Daybreak Asia, beginning at six am in Hong Kong and six pm on Wall Street. John Bryan and Doug Thanks alive, just to hand on Bloomberg Daybreak weekend. The President Biden has had some big wins lately. How

much traction and he get out of it? As politics gets more fractures have a big key midterm election. I'm John Tuckers. Busy is Bloomberg Daybreak weekend, our global look ahead of the top stories for investors in the coming week. I'm John Tuckery in New York. President Biden has had some big wins lightly and the question for him is how much traction can he get out of all of this? For more? Let's into our Bloomberg room in Washington and

Amy Morris Amy, thank you, John. We are looking at the possibility that the Democrats may be feeling some momentum, a question that's especially important for President Biden right now ahead of the midterms. Bloomberg White House reporter Jordan Fabian joins me now is bringing us some insight. Jordan's it's a pleasure. Thanks so much for taking the time with us today. Thanks for having me on Amy. Now, let's start with the laundry list of wins for President Biden.

The Inflation Reduction Act, the Chips Bill uh signs that inflation may be starting to moderate um. That analysis that was in the New York Times this past week asking the question if the Biden administration is at a turning point, Let me ask you, is the Biden administration at a turning point? I think it's fair to say it is.

All these wins, especially the Inflation Reduction Act, weren't thought possible just weeks ago, and they did manage to push these through and not to mention it, you know, in a fifty Senate where there they really don't have a margin for error. So this is a real These are some real achievements for the White House. The the issue is is it coming too late for them to turn prospects around for Democrats in the November midterm elections. They really need these winds to try to generate momentum for

them politically. But the problem is, Americans are still worried about the state of the economy and inflation, which while slow down last month, is still high compared to last year. And so you know, Americans are still uh dealing with those problems that are likely to have those things on their mind when they go to the batot box of the fall. That's kind of what they're up against, they

being the Democrats. I mean, when they do have some sort of significant legislative win, there's that lag time between when the win happens and when the rank and file voters actually feel the impact of that. That's right. And look, I mean even in uh other administrations, it's not unusual for the president's party to take a beating in the first midterm election after the president was elected. And look at what happened to President Barack Obama. That he got

the Obamacare through the Congress is signature achievement. And yet Democrats still lost in the in November of Donald Trump's Republican Party lost just two years after he was elected as well, the one recent outlier was George W. Bush, and that was that was during the midst of the Iraq War and only on year after the nine eleven attacks. So, uh,

this is just something that happens in American politics. And while the White House has amasked a lot of winds and they're gonna try to put people out there and and get Democrats excited to vote, there's not much they can do to really change the political dynamics here that we've seen for the last few decades. Yeah, I understand that the White House is going to conduct that sort of, um popularity blitz, I guess a PR blitz where they're gonna go all over the country, sending out the cabinet

secretaries and the President himself and sort of tout their accomplishments. Um. My question about that is does something like that normally change hearts and minds. I mean, letting people know what you've done is one thing, but actually thinking you're gonna get somebody to vote for you who might not have voted before or might not be interested in voting Democrat, that seems to be a harder sell. It seems unlikely it's going to help in a major way and shifting

the political dynamic out of this election. But Democrats are hopeful that it can help around the market. In particular, they're hopeful that it could help excite Democrats who maybe we're down on President Joe Biden, to get excited and and go out and vote for Democratic candidates for the House and Senate in November. And they're not only banking on the recent spate of wins, but also on harnessing Democratic voters anger over the Supreme Court decision to end

nationwide abortion rights. So you can expect Democrats to talk about what they've done and then also try to set up this dichotomy, this choice between them and a Republican party. They're gonna seek to label this extreme, and they're going to use their opposition to the inflation and justment acts, their position on abortion rights, and not to mention President Donald Trump, who's now embroiled in new legal problems and making noise that he might even announce another run for

the White House and stuff in the next few months. Now, let's talk about the primaries. Jordan's. So far, they've seemed to be an exercise in seeing how much of a whole Donald Trump has on the Republican Party. A lot of people looking and comparing and contrasting this GOP candidate who has Trump backing versus that GOP candidate who does not. This past week we saw Republicans getting primaried, which I guess is now a Verblizz Cheney the most high profile example.

So what does this say um to the White House and what are they worried about? Where are they more confident, what are they watching? Well, they're definitely watching these primaries closely. And you know from from my sense of talking to people in the White House and in democratic organizations, is that they prefer to have the more pro Trump Republican as the nominee and a lot of these close races because you know I was talking earlier about that contrast,

they want to set up. The belief is that it's easier to do that when they're running against uh, you know, we're publican who's on the right wing of the party and it's espoused all those beliefs that I talked about earlier and also has maybe disputed the results of elections.

They think that's an easy contrast to set up, and you're gonna see that in races like out in Arizona was has Senate race pitting an incumbent Mark Kelly against a Republican Canada and Blake Masters, who has expressed out about the election, and a number of other races do. And the problem, maybe though, is that a lot of these in a lot of these races, those candidates might

actually end up winning, so on the Republican side. So while Democrats may have hoped that they've won, and in fact, Democratic political organizations have even run as supporting some of the quote unquote election deniers. Uh, you know, they're they're supporting candidates who might end up winning and having public office and holding the levels of power. And so it's a risky gamble, but it's one that Democrats hope pay off. Let's take that a step further. We mentioned Liz Cheney earlier.

She is one of those Republicans who was one of the biggest adversaries from the GOP for President Trump. She lost that primary, but it doesn't look like she's done with politics. Just this past week, she's made a couple of announcements that make it sound like she is going to make sure her voice will continue to be heard. Did her losing that primary just light a fire in her belly. It certainly seemed to a mean. She even alluded in the past week to launching her own presidential campaign,

possibly something that she's thinking about. The problem for her is, though, is that, you know, with the primaries on the Republican side of me pretty clear is that this is Donald Trump's Republican Party. Now, voters on the Republican side seemed to generally want these pro Trump candidates. They they support candidates who expressed doubts or denied the results of election. So what is Liz Cheney's position in the party at this point that who could she appeal to to win

a nomination for the presidency. That's a very small sliver of voters at this point on the Republican side nationwide. And we are talking with Bloomberg White House correspondent Jordan Fabian about whether the White House winds of late can move the needle at all with the men terms. Um, Jordan's there is a primary coming up in Florida. What are you going to be watching for. I know Rohn

de Santiss name has been coming up more than once. Yeah, certainly, you know Rohn de Santis is another person who's rumored that possibly want to run against Donald Trump or or or seek the presidential nomination for the Republican Party in four So you'll be looking closely at, you know, what, how he's going to perform. Is he is he really gonna you know, sort of run away with it and

demonstrate his strength. And also in the weeks ahead, looking to New York State or on the Democratic side, there's some incumbent on incumbent races in New York City that you're you're going to see some dynamics on the progressive versus establishment wings of the party running against each other. So those races will be interesting too to watch to

see how that power struggle on the Democratic side plays out. Yeah, I wanted to ask about that because, like you said, progressives versus the your your your standard sort of establishment Democrats, and a lot of Democrats right now not too happy with President Biden's response on the Supreme Court abortion rights reversal. They say he's moved too slow on this. Is that going to come back to affect him? Yeah, That's that's

certainly a dynamic that exists right now. Amy, a lot of the activists in the Democratic Party you want to see a more forceful response to harness that energy and frustration that I was talking about earlier. When it comes to the abortion rights this issue, we've seen people like Vice President Kamala Harris really take the torch on this

one run with it, whereas Biden's remarks have been more subdued. However, we haven't seen that frustration translated into a lot of progressive victories against candidates from the more establishment wing or that Joe Biden has backed. In fact, we've seen a lot of those progressive challengers lose to established min's figures.

Uh Right, in the New York race where you're gonna see one Sean Patrick Maloney, the head of the House Democrats campaign, arms facing a progressive challenger, but he's thought

to be a head and at race. Even looking back to a primery in Texas where Henry Quaire, who is a skeptic of abortion rights, ended up beating a progressive challenger, um that that that issue on the Democratic side hasn't seemed to have shifted the results of primaries, even though there is this frustration amongst some of the base voters about how President Biden has handled the issue. All Right, we're gonna watch it with you Jordan. Thank you so

much for taking the time my pleasure. Amy, thanks Jordan's baby and covers the White House for Bloomberg News, and that's what's going on in the nation's capital. For more of our political news coverage, you can tune into Balance of Power with David Weston weekdays at noon Wall Street Time, and Sound On with Joe Matthew weekdays at five pm Wall Street Time. Right here on Bloomberg Radio, I'm Amy Morris, and this is Bloomberg John Amy Morris reporting from our

Bloomberg room at Washington. Thanks a lot, Amy, and that does it for this additional Bloomberg day Break weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas, at the news you need to start your day, I'm John Tucker. This