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This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead, on the program, we discuss some key economic data in the US and how it might impact FED policy moving forward, Plus a look at corporate earnings from the nation's largest department store chain. I'm Tom Busby in New York.
I'm callin Hedger in London, where we're looking ahead to a key gathering of the biggest names in British business.
I'm dek Krisner, looking ahead to next week's policy decision from the Bank of Korea, as well as the state of global trade.
That's all it's truly had on Bloomberg Daybreak Weekend on Bloomberg eleven, TRIEO, New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, Sirius XM one twenty one, and around the world on Bloomberg Radio, dot Com and The Bloomberg Business. A good day to you. I'm Tom Busby, and we begin today's program with some key data coming out in the US.
In this holiday shortened week ahead, we get a second read on US third quarter GDP and a read on what Americans are earning and spending with October's Personal consumption Expenditures Price Index.
That's a mouthful.
How might this impact FED policy moving forward? For more, we're joined by Stuart Paul, us economist with Bloomberg Economics. Stuart, thank you for joining us. Now let's start with what you expect to see this Wednesday, the second estimate as far as Q three economic growth.
So, as we saw in the first estimate, GDP growth ran at an annualized pace of two point eight percent, pretty robust in the third quarter. We still think that two point eight percent is about right, but there is
room for an upward revision. When we look at the spending data that we saw over the past few months, there have been some upward revisions, especially at August and September, and so we can see the already exceptional pace of personal spending growth get revised up further to almost an annualized pace of four percent, beyond the actual number itself.
What I think matter is most to the FED is where that spending is and some of the categories that were revised up were things like spending out at bars and restaurants, some of the more discretionary categories that show that people aren't raining in their spending habits as much as maybe the FED had expected given where rates were.
And so when the FED is starting to think about where policy should go, and it takes into consideration what it is likely to see with these revisions, a potential upward revision to growth, the back of an upward revision to household spending, it's indicative that the FED should be maybe moving a little bit slower in its rate cut trajectory than it had previously planned.
Well, let's go back to spending. So you think bars, restaurants, I imagine, back to school spending. I imagine also travel. Were there laggards and as it always come back to housing when it comes to laggards.
Well, so what we're really looking at in next week's data is the revision two Q three data, and fortunately we have some monthly data that give us a little bit of an insight into what we can expect for the revision to the quarterly print. And when we look at those monthly figures, households really just were not as frugal in some of those discretionary categories as we had
previously believed. And so the FED, when it started on its rate cut trajectory, now has fresher data in hand that shows well, at the time that you started making those cuts, we previously believed that households were starting to get a little bit more frugal, they were starting to get a little bit worried, so we started cutting rates. Well, now it turns out, based on some of the revisions that we've seen to the monthly data, maybe they haven't
been as frugal as we thought. When we look at the quarterly data, there's room for that upward revision, and so the FED can sort of slow its pace of cuts going forward.
Okay, got it. So people were emboldened by that do a little more spending with that first half a percent rate cut, exactly. All right, let's move on. Then. Also Wednesday, we get something I know you look at very closely, October's Personal Income and Outlayser Report PCE spending and personal income. What do you see? What are you looking at there and how is that related to that third quarter growth?
So that third quarter growth, we're probably going to get a modest revision upward. And then on the same day, at the same time, we're going to get the October as you said, Personal Income and Outlayser Report, which really has three main components to it October personal spending, October personal income, and PCE inflation, the Fed's preferred gauge of prices. So taking those in order, we have some income data that again might make the FED want to slow its
role just a little bit. Personal income growth likely increased at a monthly pace in October of zero point four percent per month. That's up from a pace of zero
point three per in September. Now you might be thinking to yourself, we had such a dismal jobs report in October, how could it be that personal income is growing, but wages increase during the month, headcount increase just very slightly enough to boost labor income, and we also saw transfer payments from unemployment insurance claims and interest income likely increasing
about one percent during the month. And that's enough to keep personal income growing at a pace that's a bit too hot for comfort for the FED to cut in these big chunks or even to cut maybe even twenty five basis points in October. And then the next major line item within that personal income and outlaser report spending October. Personal spending really supported by spending on autos. And then
when we think about inflation, it's really auto price. Is vehicle prices that put the brakes on the disinflation process. We're expecting core PCEE inflation, the annual pace of core PC inflation to register two point eight percent in October. That's up from two point seven percent, where that figure had been lingering for about three months. So all these numbers sort of point to the Fed maybe needing to slow down just a little bit. It caught up to
the curve with that fifty bases point cut early. We got another twenty five basis points off just during the month, and now when we're thinking about December and twenty twenty five, the Fed can move just a little bit slower as it cuts rates.
FED Chair Jerome Palce said the bank is in no rush, no rush to lower that benchmark rate, and of course, as always, it's all data dependent, so he's put the signals out there. Don't get too excited, that's right.
The keyword from all the Fed speak that we've heard over the past week has been cautious, cautious, cautious.
Well, we got a lot of data dump this short this holiday shortened week ahead our thanks to Stuart Pohl, us economist with Bloomberg Economics. We move next to third quarter earning season, which may be winding down, but this Tuesday we hear from retail giant Macy's. How will those results position the chain ahead of the all important holiday shopping season. For more, we're joined by Mary Ross Gilbert Bloomberg Intelligence, senior equity analyst covering retail. Mary, thank you
so much for joining us. Well, we know Americans continue to spend a lot of money. Have they been spending their money at Macy's, That's the question.
Tom. They have been spending their money at Macy's, but not as much as they're spending money elsewhere. So with their third quarter numbers due out on Tuesday, we're expecting them to miss the top line estimates, and we think they'll probably beat on the profit line. They've done a really good job managing costs, managing inventories, and they've beat their earnings for the past eight quarters, so we think they beat again on the bottom line, but we think
they miss on the top line. So we're showing they could miss consensus estimates for sales to decline about one and a half percent. We think it could decline more like maybe three to five percent, So we'll see when they go to report, But the big focus really will be once they come out with the results, what comparable sales look like. And while we think generally they'll be down, we're really looking for the first fifty stores that they've
completely transformed. That means they've added personnel to the shoot apartment so they have more service, and also in women's apparel and men's apparel. So we think that with all the improvements that they made to the first fifty stores in the first two quarters of the year, they were able to show positive comps. So we're looking to see if they can still continue that trend in the third quarter, and that could show some encouraging signs as they seek to transform the business.
So refreshed stores, more salespeople on the floor, designer brands, all of that adding up in the last couple of quarters to a little bump in sales. But we think is it the consumer, Is it Macy's what may have held back sale in the third quarter.
Clearly department stores has been seeing a weakness there's been a trend away from department stores going toward more off price and also in the mass channel. So if you look at Walmart's numbers out, they reported robust results, exceeded estimates on the top line, and they indicated that two thirds of their beat was related to consumers who have come from households that earn over one hundred thousand. Now Macy's their core customer earns under one hundred thousand, so
the largest contingent that shops Macy's. But they're shutting down about one hundred and fifty stores, so they sort of have two classifications. One would be the go forward stores. We really think that's the most important metric to look at, but we will also look at the fifty refresh store performance too as a sign of what could come in
terms of improving performance. But generally the department store space has seen a decline, and looking at our transaction data early we only have fifteen days in their fourth quarter, but we haven't seen an improvement. One of the things that we've noticed in looking at this data is that October was pretty weak across the board, and we think it was because of unusual warm weather around the country and now that the weather has turned colder, that should
improve outerwear sales, which are higher margin. But a change in weather is the number one reason why consumers will buy something new, according to a survey that we just conducted this week and published.
Wow. And speaking of weather, how do you think Macy's was impacted by a series of devastating storms? I mean one affecting about a quarter of the country.
That's exactly right, Florida, in North Carolina, but mainly Florida. So yes, they will be impacted by that. We saw that with tj X, which reported their results and again they beat, and they their guidance was sort of light, but they typically beat, so we think generally the news coming out of TJX was very positive. But they did say that they were impacted by the hurricanes and then
also impacted by unseasonably warm weather in October. So we think we'll hear something similar to that when we get results out of Macy's.
And now you talked about the discount stores Walmart. How is Macy's faring in online sales? And of course you know the big bugaboo there is Amazon.
Yes, absolutely, well it's not just Amazon. If you look at Walmart, and Target. They both reported double digit increases in online sales, so they're actually doing really well on the e comm part. Now for Macy's, Macy's online sales are about, you know, sort of a little. It's over thirty percent, somewhere around that thirty three thirty four percent of sales is online, and that business has been doing okay. But again they're really more of an omni channel, Taylor.
So you might have a consumer originated transaction and then pick it up in store. So I think it's going to follow the trend that the overall business is seeing generally in terms of increases.
Wow, A lot to look forward to. Macy's Q three earnings out this Tuesday. Our thanks to Mary Ross Gilbert, Bloomberg Intelligence senior echoity analyst covering retail. Coming up on Bloomberg day Break weekend, we look ahead to a key gathering in the biggest names in British business. I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York.
Up later in the program, we look ahead to a meeting from the Bank of Korea. But first, it's been an eventful year for British business, the first change in government in fourteen years, a pivotal autumn budget announcement, an
uncertain g' your political environment. This week, entrepreneurs, finance leaders, politicians all convene at the Confederation for British Industry's annual conference to discuss what's ahead in twenty twenty five and for more, let's go to London and bring in Bloomberg day break, euro banker Caroline hepgar Tom.
The UK's business leaders and politicians may be at odds on some matters, but both groups agree on one thing, the need for sustainable economic growth in Britain. It is something that has proven elusive in twenty twenty four, but with a new Labour government to out the country's helm, many are still hoping that next year will bring more prosperity. The Confederation for British Industry says that the problem is evident. The economy is faltering and firms are struggling to solve
challenges without support. The group has also bemoaned the cost of doing business in the UK against the backdrop of unreliable supply chains and a declining stock market in London. In response, the Chancellor Rachel Reeves is doing her best to rev up the engine of industry. The Chancellor used her landmark mansion House address to announce a swathe of measures, including bringing bonus payments forwards for financial professionals and a
reassessment of Posts two thousand and eight crisis regulation. But will her efforts be enough to spur growth given the uncertain backdrop? The threat of headwinds is something I've been discussing with the director of research at the think tank the Resolution Foundation, James Smith. I started off by asking him where the recent hard than expected UK inflation numbers are an indicator of worse to come.
It's a pretty disappointing inflation release all round. As you say, inflation is up. We expected that.
Because energy bills were going.
Up some falls in the past, we dropping out of the twelvemonth calculation. But what we've seen is inflation tacking up a little bit. We've seen services inflation up from four point nine percent in September to five percent in October, and those underlying measures of inflation what really the Bank of England is watching.
So those rises there.
They're not big, but and they have been a little bit erratic in recent months, but still there's a disappointing release and doesn't really encourage us to think there's very rapid cuts and interest rates coming.
Inflation still looks quite sticky.
Okay, Yeah, in terms of the work that you have done then on the pressures that there might be for higher inflation, and also on the data, it's quite fascinating. We've known for two years that the official Labor for survey that's produced by the RNs has had significant problems. What do you think that the official data has missed because you know it's close to a million people.
Maybe.
Yeah.
We've known for as you say, for quite some time that the Labor four Survey, the key measure of employment lad market quantities in the UK, has had problems of declining response rates. So what we've been doing is trying to figure out what the lad market might look like if you just use ADMIN data, so the HMRC Real Time Indicators measure of employment and HRC data on self employment to try and give you an overall sense of employment.
And if you do that calculation, it suggests that as you say, something like a million more people might be in employment.
So the laborforce.
Ser they could be really seriously underestimating the amount of the extent of which people are in employment in the UK, and we really think, you know, that could be quite a big difference. We're not at all certain about what that level looks like. This is giving you a sense
of where employment might be. But the key thing here is in terms of future inflation is if you look at measures of un employment, particularly unemployment relative to the amount of vacancies in the economy, the so called tightness of the labor market, this doesn't radically change your view there. So the counterpart to higher employment is lower inactivity. So the thing we've been talking about is lots of people
falling out the labor market. If more people are in employment that we expect, then the obvious counterpart that would be the less of a problem on the inactivity side.
I'm interested to hear more from you on that front, because this is a narrative that we've had in the UK since the pandemic, that so many more people were inactive in the workforce. Would looking at the calculations that you've done, I mean, how differently should we be thinking about that problem.
Well, it's still clear that we have got a problem of higher levels of poor health, so more people say that they have stability. We certainly are paying more for this little benefit, so that that's not quite the same thing as a sort of survey.
Measures of ill health.
So there's still the types of problems we've been talking about. Those are still there, but the overall effect on in activity through higher employment might be quite a lot smaller. So there could be other things going on pushing down in activity. So more people in work or older people you know, without health problems, and more women participating in the labor market for example, could be the ways in which you reconcile those two estimates.
How much does it mean that government policy has to shift? I mean only last month Kirs Starmer told the Labor Party conference that the long term sick needed to get back to work where they could, saying quote that he was talking to his Labour party. Obviously we have to
do everything we can to tackle worklessness. Liz Kendall, who's the Working Pension Secretary, is meant to be launching big reforms of job centers later this then you know, the way that people get back into work sort of extraordinary. But it does mean that government policy that has flowed from this data probably has to change.
I think the key thing here is that the government have said that they want to get the employment rate up to eighty percent.
So that's a very ambitious target.
You know, we were in the early seventies in terms of employment rate at the moment, but if the ADMIN measure of employment is to be believed, we're a lot closer to that target than we work previously. So we still, as I say, we still have a challenge in terms of the overall welfare bill for those receiving benefits related
to health. So the set of policy issues that are there, and we be hearing about that in the budget with the chance of saying that she would continue to try and make cuts to disability benefits put.
In place by her predecessor, Jeremy Hunt.
So there are definitely, you know, still problems there that the government need to be addressed.
But it's good news potentially for their if.
More people are in work, more people are paying tax, and you know that's the kind of key counterpart to all this.
That was the director of research at the Resolution Foundation, James Smith, speaking to me and Stephen Caroll on Bloomberg Radio. So growth is the name of the game. How to get there though, no doubt that will be the question on the lips of different sector leaders and influential voices at the upcoming CBI Industry Conference. I've been discussing what's ahead with Bloomberg's UK Business editor Julian Harris.
I mean, it never ends for British businesses really. I guess you could say that in a lot of countries as well. Just as they think the coast is clear, something comes up. The latest thing, of course, was the budget. It was expected to be quite severe, but it probably went further than many expected, and the hit from tax is huge. It does depend what kind of business you are, though, and sometimes the CBI has been accused in the past of of just representing the biggest businesses in the UK
and not focusing as much on the smaller ones. And then a hit from NI really depends on how the form of your business, how many staff you employed, how many of them are part time. So businesses are real link to a certain extent, but that there's certainly a big hit from costs.
What do you think is the biggest concern for British businesses currently? Is it the new incoming US president. Is it the regulatory changes for example that Rachel Reeves announced that Manchin hows or is it that budget that is the big issue, perhaps something else.
I think there are the things that they know about and that they can plan for, and then the things that they can't. So from most businesses that we speak to at the moment, when you talk about Trump and the thread of trade war and tariffs, they just kind of shrugged their shoulders and well, we don't know what's going to happen there. There's so many different factors in play. Obviously, if Trump did introduce all his tariffs that the effect would be huge. In the UK is so exposed to
what happens internationally that it can't be neglected. And that's why we're seeing people like Rachel Reeves and even Andrew Bailey kind of almost evangelizing about free trade because that is what the UK needs. But business executives themselves are just saying, well, there's not a huge amount they can
do about that. What they do know is happening are these changes from labor that we talked about, sort of taxes, but also the increase in the minimum wage, the workers rights packages, these things are all written down now and are coming down the line. The worker's rights one is still in negotiation, but the others can be planned for. But from a lot of businesses sort of we're hearing you know that the effect is very, very big. So
they're figuring out how to manage that. Do they put up prices or do they try to stay competitive?
There are a lot of different sectors of British business who are concerned post a budget. Do you think that the government is getting the tone right? What do you think businesses will be saying at this event. Obviously the Labor leadership courted business assiduously, but then business confidence absolutely slumped ahead of the budget, and then after the budget has as I said, a lot of different sectors have
criticized Rachel Reeves's choices and decisions in the budget. What do you think the tone will be like?
Yeah, I don't think they've got the tone right at all. And there has been a real change in the months since Labor came to power. So they had this sort of schmoozy event in Downing Street Garden shortly after their landslide victory and the mood was said to be absolutely buoyant. I mean it helped that it was summer and it was all very very positive and people, you know, business leaders were coming out of that and they were talking
to journalists and being very upbeat. That's now really changed in terms of sectors you ask about, I mean a retail obvious one, hospitalities another, and there are business figures in those areas saying, you know, this really is not what we expected. We knew that there was going to be some fiscal adjustment, but the scale of it is
far beyond what we thought. And there just seems to be a sort of lack of understanding from laboring in terms of how kind of devastating that can be, and Labour's emphasize growth so much, and a lot of people in business are saying, well, well, how can the economy grow when you're imposing these costs on it?
It doesn't really make sense.
At the same time, like Reeves has been very positive towards the city, so there are some people in the city who are probably quite happy, but that's very different from say, supermarket CEOs.
My thanks to Bloomberg's Julian Harris for looking ahead to the CBI's annual conference. In recent days, they've talked about how the UK economy stalled over the third quarter. Uncertainty ahead of the budget probably played a big part in their words and their expectations that bompier inflation will rule out the prospect of a faster pace of Bank of
England rate cuts in the year ahead. So it'll be an interesting moment then to get the temperature of business leaders and their biggest trade group in the next few days. And we will have full coverage of the gathering in central London here on Bloomberg Radio. I'm Caroline Hepkeitt in London. You can catch us every weekday morning for Bloomberg Daybreak. Youre at beginning at six am in London. That's one am on Wall Street.
Tom, Thank you, Caroline, and coming up on Bloomberg day Break weekend and look ahead to a Bank of Korea meeting. I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. This past week, the IMF lowered it's forecast for South Korea's economic growth, pointing to rising headwinds
facing the export reliant nation. Those are the same headwinds that'll be weighed by the country seven central bankers this week, and for more, we turned to the host of the Daybreak Asia podcast, Doug Krisner.
Tom in the coming week, we'll get a great decision from the Bank of Korea. Now, the bok has recently tilted toward cutting rates, so question will the duvishnists prevail in the coming days. For a closer look, I'm joined by Paul Jackson, Bloomberg Asia Eco GUV editor. Paul joins from our studios in Tokyo. Help me understand the dynamic. I really enjoy talking with you because you're so abreast of everything that's happening, not just in South Korea but
Japan as well. Last month, the Bokay cut rates for the first time in more than four years, and it seemed at that time that it was really the concern over the weakness in the economy that outweighed concern about high household debt. Is that going to continue to be kind of the underlying fabri here, the basic assumption that we should be making.
Yeah, I think going forward it's going to be on this rate cutting path. I think next week's meeting we're going to have a hold. I think it's one of those classic central bank Okay, let's wait and monitor and see how the impact of our previous decision filters through the economy. So I think it's hold for now, and then the rate cuts start again next year, probably in January,
and economists are forecasting three rate cuts next year. But of course we do have the emergency of Donald Trump, which is getting some economists to change their views of how the Bank of Career will act.
Before we get to the issue of US South Korean trade, talk to me a little bit about the inflation story as we understand it right now for South Korea. Are things under control at this point?
I think think that if you look at the statement that came out in October, the policymakers on the board said that sees clear signs of stabilization in the inflation trend. We saw it slow below two percent in September and even further in October. So I think the checkbox of
inflation is marked. But the matrix of calculations, the calculus for the Bank of Career is rather complicated because we've got this household debt that you alluded to, and obviously you want to keep the rates, you know, relatively high and restrictive to stop that trend continuing. Also, you know the currency remains weak, and of course you know you cut the rates, that's going to encourage further weakness in
the currency going forward. On the side in favoring cutting rates, obviously you've got the economic growth.
Now, you know, the.
Economy is ticking over well over two percent growth does seemed too bad for many economies. I think Japan would jump at those kind of figures. But if you look at the trend of Korean growth for the economy over the last ten years, it's usually around two point six percent. That's been the average over the last ten years. If you go back to twenty ten, it's like averaging three point one percent. So it's looking a bit anemic. And one of the key things here is that the Korean
economy is very, very reliant upon export performance. You know, we're talking exports. So the equivalent of forty percent of GDP in South Korea. Now look over the over in Japan and the figures closer to twenty percent, which speaks to a kind of broader economy that they have over in Tokyo. So for South Korea. You know what happens to the exports going down the line, and you know the policy that is implemented by Donald Trump. You know that has key implications for growth going forward.
So protectionism obviously is a theme that mister Trump has been touting, and it would make I would imagine a very strong case in the future for deeper raid cuts from the b Okay right to make up for what you're expecting to see as a drag on exports. Do I have that right?
That's right? So, I mean if the Trump administration were to go ahead with your sixty percent tariffs on Chinese goods and twenty percent blanket rate for the rest of the world, and of course we imagine this is kind of like your starting point for negotiation. Remember it's all the art of the deal, right. However, if he actually ended up coming out at that extreme, Bloomberg Economics estimates that South Korean exports to the US would fall by
fifty five percent by twenty twenty eight. So that is a concerning figure, as you can imagine, and that's also leading into Bloomberg Economics predicting more rate cuts now that Donald Trump has been voted in they're seeing four cuts in twenty twenty five and another one to follow up in early twenty twenty six.
So you mentioned the behavior of the currency, and I have to ask, because I know the BOKA monitors the financial system quite closely in South Korea, how is that holding up? I mean, has there been volatility right now, particularly since the US election or are things fairly stable?
No?
No, we have had quite a lot of high volatility. We're around close to this one thousand, four hundred mark the Korean one to the dollar. That scene as kind of it's not exactly a line in the sand, but it's certainly seen as a very weak level. I think back in twenty twenty two we got up to four hundred and fifty, so any moves in that direction will be a cause of concern. And of course Korea does tend to dip into the market to try and smooth
over movements in the currency. Does spend billions of dollars doing this, and recently it was added to the US Treasury's monitoring list for special attention in terms of its currency policy.
Paul, thanks so much for your time. That's Paul Jackson, Asia Eco, guv editor for Bloomberg News. Joining us from Tokyo. We move next to global trade. As President electromp builds out his cabinet, there are questions as to whether or not he will make good on his campaign promise for those sweeping tariffs, specifically those targeting China. We are joined now by Katherine Thorbeck, tech columnist for Bloomberg Opinion. She
joins us from our studios in Tokyo. Catherine, you write that Trump's policies will only strengthen Beijing's push for self sufficiency. When I read that, I immediately thought, semiconductors. Is that what you're alluding to.
So semiconductors is sort of a big part of this, and I think that's probably the strongest argument from the US side, that you know, China won't be able to
get ahead. But at the same time, I think, you know, there was new research from my Bloomberg Economics and Bloomberg Intelligence colleagues that came out last month that said, you know, despite years of sanctions and export controls and all of these US efforts to sort of hold China back, it's still made pretty good headway in terms of sort of dominating industries of the future and sort of leading the
US in the tech race. It's still behind in some areas, but it's it's made some significant gains and other sort of strategic areas. And I think chips, whether it can catch up in chips will sort of ultimately decide if it does come out ahead. But I think right now, the US I think historically has had a sort of tendency to underestimate China, and I worry that when it comes to the current you know, battle for tech supremacy, that's that's not a good thing to do at this juncture.
So what do we know about the extent to which President Chi jinping has been allocating resources to a lot of these industries, whether it's semiconductors or anything that may be kind of connected to that ecosystem.
So I think when Xi jinping has signaled that something is a strategic priority for the country, he really has the power to sort of move a lot of levers to you know, to boost these industries. And I think how the US plays into this and and sort of one example is, you know, Huawei. The US really went all out, and this started under Trump's first term to sort of you know, strangle Huawei and make sure that it doesn't get ahead, and there was a point when
it really seemed like Huawei was done for. But then Xijinping and Beijing got involved and sort of use their muscles to sort of prop up its own you know, domestic tech giant, and now by a lot of measures, Huawei is sort of stronger than ever. And I think that the US should should be careful with how it sort of attacks these you know, Chinese tech industries because in some senses, it's coming back stronger.
You're going to test my memory here because as I recalled, during the first administration, it wasn't Tuahwei, it was Zte, and the concern was that some of this telecom equipment, the devices that these companies manufactured, the concern was there may have been firmware embedded in those chips that could potentially be used by actors in China to spy on communications.
And as I also recall, the Trump administration tried to gather other countries to think similarly about what the Chinese may have the capability to do, and they were trying to curtail usage of Huawei or Zte products in telcosystems globally, right.
Right, So, I think the Zte example is actually a really interesting example specifically for Trump, because he sort of has a history of flip flopping when it comes to issues related to China's tech sector specifically and ZTE, for example, you know, it faced punishments from Washington for violating sanctions, and then Trump actually tried to lift those actions, and he announced this in a tweet at one point saying it was because too many Chinese jobs were lost, which
he he sort of faced a lot of criticism for, and then later he said that he was actually negotiating a broader trade deal with She and that this this move to sort of save ZT essentially was especially reflective of his what he said at the time was his close personal relationship with She. So I think for Trump, it's like he focuses a lot on sort of transactions and deal making, and there's a lot of uncertainty when it comes to, you know, what he will actually do
and sort of going off that. I think another sort of more recent high profile u turn that we've seen Trump do when it comes to Chinese tech is on TikTok, which you know, he initially in his first term sort of spearheaded a lot of the scrutiny on TikTok in Washington.
You know, he signed an executive order that would ban it in the US because of these perceived national security concerns over its parent company being a Chinese parent company, Bye Dance, And he sort of tried to broker a sale of TikTok in the US and that ultimately didn't go through and his executive orders didn't hold up in court.
But you know, if you flash forward to two earlier this year, President Biden actually signed legislation that would once again force TikTok to divest from its Chinese parent company or face a US ban. And then on the campaign trail, Trump posted a video to his True social platform where he said, you know, if you want to save TikTok
in the US, you should vote for me. So he really campaigned on actually saving TikTok, which is a little bit confusing, but at the same time it's it sort of shows this tendency of him to sort of flip flop. And I think it's interesting because you know, he historically hasn't necessarily been a huge national security hawk when it comes to China. You know, he campaigned a lot on the economy and on sort of you know, the prices
that Americans are feeling. But he's surrounded himself in his cabinet, or it seems like he's surrounding himself with some real sort of China security hawks, you know, from Marco Rubio to Mike Walls. So it's going to be interesting to see how this plays out if he can, you know, sort of bring his art of the deal making to this, you know, US technology at US China Tech race what sort of ends up on the negotiating table and what sort of becomes bargaining chips.
Catherine, I appreciate you taking the time to chat with us. Katherine Thorbeck is Bloomberg Opinion columnists, joining us from our studios in Tokyo. You can read her work and other stories from Bloomberg Opinion at Bloomberg dot com, slash Opinion, or on the terminal by typing opin than the Green go Key. I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or wherever you get your podcast. Tom.
Thank you, Doug, and that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Buzby. Stay with US. Top stories and global business headlines are coming up right now.