1 00:00:00,240 --> 00:00:07,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:10,320 --> 00:00:13,440 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,480 --> 00:00:16,280 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,360 --> 00:00:19,000 Speaker 2: all around the world. Straight Ahead on the program, we 5 00:00:19,040 --> 00:00:22,120 Speaker 2: looked to some key inflation data and the US. I'm 6 00:00:22,200 --> 00:00:23,840 Speaker 2: Nathan Hager in Washington. 7 00:00:24,040 --> 00:00:26,200 Speaker 3: I'm Caroline Hepkit in London, where we're looking ahead to 8 00:00:26,239 --> 00:00:30,560 Speaker 3: talk in Paris about sharing France's nuclear capabilities with other 9 00:00:30,680 --> 00:00:31,800 Speaker 3: European countries. 10 00:00:32,040 --> 00:00:38,000 Speaker 4: I'm Doug Chrisner looking ahead to legislative elections in Vietnam. 11 00:00:38,159 --> 00:00:42,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,240 --> 00:00:45,920 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,440 --> 00:00:51,559 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 14 00:00:51,720 --> 00:00:55,240 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,280 --> 00:00:57,520 Speaker 1: dot Com and the Bloomberg Business App. 16 00:01:00,920 --> 00:01:05,280 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 17 00:01:05,319 --> 00:01:08,640 Speaker 2: program with some key inflation data in the US. The 18 00:01:08,800 --> 00:01:11,800 Speaker 2: Consumer Price Index for the month of February comes out 19 00:01:11,840 --> 00:01:15,200 Speaker 2: on Wednesday at eight thirty am Wall Street Time. For 20 00:01:15,240 --> 00:01:17,120 Speaker 2: a look ahead to the numbers and what they could 21 00:01:17,160 --> 00:01:20,200 Speaker 2: mean for Fed policy. We're joined by Bloomberg News senior 22 00:01:20,240 --> 00:01:24,920 Speaker 2: strategist Edward Harrison, the author of Bloomberg's The Everything Risk newsletter. 23 00:01:25,280 --> 00:01:27,399 Speaker 2: Ed It's great to speak with you, And of course, 24 00:01:27,400 --> 00:01:30,679 Speaker 2: after we just got that big surprise on February jobs, 25 00:01:30,800 --> 00:01:34,800 Speaker 2: what's the risk of a market surprise on the inflation front? 26 00:01:35,040 --> 00:01:40,399 Speaker 5: Hey, Nathan, I think the risk is there. Certainly, the 27 00:01:40,480 --> 00:01:44,080 Speaker 5: risk is probably less there for CPI than it is 28 00:01:44,280 --> 00:01:48,240 Speaker 5: for the PCE index, which is the one that the 29 00:01:48,320 --> 00:01:53,400 Speaker 5: Fed really tracks more closely. Given the fact that we 30 00:01:53,520 --> 00:01:57,000 Speaker 5: have this war in Iran, I think they might look 31 00:01:57,120 --> 00:02:00,960 Speaker 5: through some of the gasoline prices and look towards the core, 32 00:02:01,440 --> 00:02:06,080 Speaker 5: you know, not including food, not including energy. And so 33 00:02:06,160 --> 00:02:07,480 Speaker 5: the numbers to look. 34 00:02:07,280 --> 00:02:10,440 Speaker 6: For are the core for. 35 00:02:10,560 --> 00:02:16,160 Speaker 5: CPI, which is the Bloomberg Economist estimate is at two 36 00:02:16,200 --> 00:02:19,880 Speaker 5: point four percent on average, and the estimates that we 37 00:02:19,960 --> 00:02:23,680 Speaker 5: have for the PCE core, however, are three point one percent. 38 00:02:24,040 --> 00:02:26,880 Speaker 5: So that's the number that to key in on for 39 00:02:27,000 --> 00:02:31,959 Speaker 5: this week, because that's the highest number of the numbers 40 00:02:32,000 --> 00:02:32,959 Speaker 5: that we're looking at. 41 00:02:33,120 --> 00:02:36,880 Speaker 2: Why are we seeing that dispersion ed between what the 42 00:02:36,919 --> 00:02:40,400 Speaker 2: FED keeps its zion and what really matters to the 43 00:02:40,440 --> 00:02:43,960 Speaker 2: American consumer. The CPI number that we're getting this week. 44 00:02:45,080 --> 00:02:46,720 Speaker 5: Yeah, well, you know, I think a lot of it 45 00:02:46,720 --> 00:02:50,680 Speaker 5: has to do with the different measures of that go 46 00:02:50,840 --> 00:02:55,360 Speaker 5: in that play into those particular indices. And what the 47 00:02:55,400 --> 00:02:58,400 Speaker 5: FED said in the past is that the PCE number 48 00:02:58,440 --> 00:03:01,640 Speaker 5: is more reflective of the overall trend of the economy. 49 00:03:01,840 --> 00:03:03,880 Speaker 5: And one of the reasons that they're using the core 50 00:03:03,960 --> 00:03:07,120 Speaker 5: as the number that they're watching more closely is to 51 00:03:07,400 --> 00:03:11,240 Speaker 5: rule out vital food and energy prices that irrespective of 52 00:03:11,280 --> 00:03:15,960 Speaker 5: what's happening in Iran, are going to move around irrespective 53 00:03:16,800 --> 00:03:19,400 Speaker 5: and so you know, they want to look at what's 54 00:03:19,480 --> 00:03:22,920 Speaker 5: the trend level. And if the trend levels three point 55 00:03:22,960 --> 00:03:27,440 Speaker 5: one percent it was three percent in the in December, 56 00:03:27,440 --> 00:03:29,440 Speaker 5: which is the last reading that we got for PCE, 57 00:03:30,080 --> 00:03:33,920 Speaker 5: then that's really not a level at which they would 58 00:03:33,960 --> 00:03:37,960 Speaker 5: feel comfortable cutting interest rates. Suddenly we're starting to think about, 59 00:03:38,400 --> 00:03:41,400 Speaker 5: you know, an extended hold and potentially the next move 60 00:03:41,520 --> 00:03:44,120 Speaker 5: being a rate hike, not a cut. 61 00:03:44,520 --> 00:03:50,160 Speaker 2: Even after that surprise drop in jobs numbers that we 62 00:03:50,240 --> 00:03:53,560 Speaker 2: saw just this past week in the February number. 63 00:03:54,160 --> 00:03:57,520 Speaker 5: Yeah, so that number that we saw this past week, 64 00:03:58,360 --> 00:04:02,000 Speaker 5: it points to what I would called stagflation light. That 65 00:04:02,120 --> 00:04:05,800 Speaker 5: means that not only do we have inflation, but we 66 00:04:05,920 --> 00:04:09,520 Speaker 5: also have slowing growth. And this is something that's very 67 00:04:09,560 --> 00:04:12,600 Speaker 5: difficult for the FED to deal with because you know, 68 00:04:12,920 --> 00:04:16,200 Speaker 5: they're looking at inflation and their ability to stop inflation, 69 00:04:16,279 --> 00:04:18,640 Speaker 5: but then when growth is slowing at the same time, 70 00:04:18,960 --> 00:04:22,640 Speaker 5: their hands are tied because the inflation is already elevated. 71 00:04:23,160 --> 00:04:27,120 Speaker 2: If we do continue to see a prolonged conflict in 72 00:04:27,160 --> 00:04:30,159 Speaker 2: the Middle East, could that have knock on effects on 73 00:04:30,440 --> 00:04:34,720 Speaker 2: overall inflation if we continue to see energy prices elevated 74 00:04:34,800 --> 00:04:36,400 Speaker 2: like they are right now. 75 00:04:37,160 --> 00:04:40,839 Speaker 5: Yes, I think it could, Nathan, I think that if 76 00:04:40,839 --> 00:04:47,520 Speaker 5: you have a protracted conflict, it could add to inflation expectations, 77 00:04:47,560 --> 00:04:51,120 Speaker 5: not just for the next year, but it could get 78 00:04:51,160 --> 00:04:55,680 Speaker 5: you a sense that inflation is trending higher. Since we 79 00:04:55,680 --> 00:04:59,279 Speaker 5: already have this core PCE number that I've been talking 80 00:04:59,320 --> 00:05:04,840 Speaker 5: about at three percent, suddenly, you know, mindsets change and 81 00:05:05,240 --> 00:05:08,280 Speaker 5: people start thinking this could be in for the long 82 00:05:08,320 --> 00:05:13,000 Speaker 5: haul as sort of an inflationary number that we're going 83 00:05:13,080 --> 00:05:15,200 Speaker 5: to have. Let me just say, by the way, that 84 00:05:16,440 --> 00:05:19,440 Speaker 5: we've been above the fed's target for five years now, 85 00:05:19,920 --> 00:05:24,560 Speaker 5: so we're getting to a point where that inflationary mindset 86 00:05:24,640 --> 00:05:26,080 Speaker 5: starts to creep. 87 00:05:25,720 --> 00:05:29,080 Speaker 2: In, which raises the question I think you're alluding to 88 00:05:29,160 --> 00:05:33,440 Speaker 2: about whether inflation expectations may be coming unanchored now, Is 89 00:05:33,760 --> 00:05:34,760 Speaker 2: that what you're getting at? 90 00:05:35,279 --> 00:05:37,919 Speaker 5: Yeah, that's exactly what I'm getting at. What we've seen 91 00:05:38,240 --> 00:05:42,680 Speaker 5: thus far is that inflation expectations haven't been unanchored. That 92 00:05:43,080 --> 00:05:46,680 Speaker 5: even in the beginning stages of this particular conflict in 93 00:05:46,720 --> 00:05:50,279 Speaker 5: the Middle East. You know, if you look at break evens, 94 00:05:50,560 --> 00:05:55,360 Speaker 5: that's the number that gets you between inflation protected securities 95 00:05:55,360 --> 00:05:58,800 Speaker 5: and treasuries. And if you look at swaps rates in 96 00:05:58,839 --> 00:06:03,279 Speaker 5: the market that show you, you know, what expectations are 97 00:06:03,279 --> 00:06:06,960 Speaker 5: in two years or five years. You know, the longer 98 00:06:07,080 --> 00:06:12,000 Speaker 5: term ones, five years, ten years, those expectations have remained 99 00:06:12,120 --> 00:06:15,560 Speaker 5: a solid It's when those go off that the FED 100 00:06:15,680 --> 00:06:16,800 Speaker 5: is most concerned. 101 00:06:17,080 --> 00:06:21,000 Speaker 2: Thank you, Ed, As always, that's Edward Harrison, senior strategist 102 00:06:21,080 --> 00:06:25,240 Speaker 2: at Bloomberg News, author of Bloomberg's The Everything Risk newsletter. 103 00:06:25,640 --> 00:06:27,920 Speaker 2: Let's take a look now at some stocks making news 104 00:06:27,960 --> 00:06:30,400 Speaker 2: in the week ahead. I'm Nathan Hager, joined by Bloomberg 105 00:06:30,440 --> 00:06:34,000 Speaker 2: Equities reporter Matthew Griffin. On another week where we're going 106 00:06:34,040 --> 00:06:38,120 Speaker 2: to see some pretty big names reporting earnings starting on Tuesday, 107 00:06:38,240 --> 00:06:41,200 Speaker 2: when we'll be in the cloud with Oracle. Could we 108 00:06:41,240 --> 00:06:45,800 Speaker 2: see a benefit for Oracle from the AI spending boom, Matthew. 109 00:06:46,120 --> 00:06:49,039 Speaker 7: Well, Nathan, I think that is the question that is 110 00:06:49,080 --> 00:06:52,159 Speaker 7: going to be front and center of investors' minds because 111 00:06:53,240 --> 00:06:59,080 Speaker 7: the huge outlays on AI from Oracle have been greeted 112 00:06:59,200 --> 00:07:02,360 Speaker 7: enthusiastically on Wall Street in the past and have been 113 00:07:02,480 --> 00:07:06,120 Speaker 7: punished on Wall Street. I mean, you just look at 114 00:07:06,120 --> 00:07:10,520 Speaker 7: what the stock did in twenty twenty four, up sixty 115 00:07:10,560 --> 00:07:12,960 Speaker 7: one percent, a twenty percent boost last year. All of 116 00:07:13,000 --> 00:07:18,000 Speaker 7: this AI spending, their move to position themselves as an 117 00:07:18,040 --> 00:07:23,280 Speaker 7: AI cloud provider, made Oracle a darling on Wall Street. 118 00:07:24,600 --> 00:07:28,200 Speaker 7: But after that you have had questions arise about what 119 00:07:28,240 --> 00:07:30,800 Speaker 7: the return is going to be on this spending. The 120 00:07:30,840 --> 00:07:35,640 Speaker 7: stocks now down about fifty percent from its September record high, 121 00:07:35,880 --> 00:07:39,120 Speaker 7: and you actually saw the shares plunge in December after 122 00:07:39,160 --> 00:07:42,960 Speaker 7: the company raised its spending on data centers. So they're 123 00:07:43,040 --> 00:07:46,440 Speaker 7: reporting in a moment where this is really a question. 124 00:07:46,640 --> 00:07:48,600 Speaker 2: And the reporting in a moment where we've just heard 125 00:07:48,600 --> 00:07:51,280 Speaker 2: in the last few days that Oracles has plans to 126 00:07:51,920 --> 00:07:56,400 Speaker 2: cut thousands of jobs just ahead of this earnings report, 127 00:07:56,480 --> 00:07:59,600 Speaker 2: what more do investors want to see from Larry Ellison's company? 128 00:07:59,600 --> 00:08:06,200 Speaker 7: Matthew, Yes, I think they're going to be looking again 129 00:08:06,400 --> 00:08:10,520 Speaker 7: at this cost benefit payoff. I mean, you have analysts 130 00:08:10,600 --> 00:08:15,120 Speaker 7: looking for revenue growth here they see just under sixteen 131 00:08:15,160 --> 00:08:18,440 Speaker 7: billion dollars of revenue versus fourteen billion in the year 132 00:08:18,440 --> 00:08:22,840 Speaker 7: ago quarter. And I think that's also at the heart 133 00:08:22,880 --> 00:08:25,520 Speaker 7: and center of whether these tens of billions of dollars 134 00:08:25,560 --> 00:08:28,120 Speaker 7: of capital expenditure are going to pay off on the 135 00:08:28,120 --> 00:08:33,079 Speaker 7: top and ultimately the bottom line. You see that in 136 00:08:33,120 --> 00:08:37,000 Speaker 7: the reports of some of the Magnificent seven companies this quarter, 137 00:08:37,080 --> 00:08:40,240 Speaker 7: where again it's it's the question not just of are 138 00:08:40,240 --> 00:08:42,680 Speaker 7: you spending are you an AI player, but are you 139 00:08:42,800 --> 00:08:47,280 Speaker 7: generating revenue to fund those expenditures. The job cuts are 140 00:08:47,559 --> 00:08:51,040 Speaker 7: actually aimed at freeing up money to pay for capital 141 00:08:51,080 --> 00:08:54,240 Speaker 7: expenditures for the AI boom. That's what people familiar with 142 00:08:54,280 --> 00:08:58,840 Speaker 7: the matter have told us. So again, I think investors 143 00:08:58,880 --> 00:09:00,920 Speaker 7: are going to be looking for both sides of the 144 00:09:00,960 --> 00:09:01,640 Speaker 7: ledger there. 145 00:09:01,720 --> 00:09:04,720 Speaker 2: And we're gonna hear another side of the AI story. 146 00:09:04,760 --> 00:09:08,360 Speaker 2: I think probably on Thursday when Adobe reports. I gotta 147 00:09:08,400 --> 00:09:10,520 Speaker 2: think this is one of those stocks that's been caught 148 00:09:10,559 --> 00:09:13,760 Speaker 2: up in the question about whether software companies are going 149 00:09:13,800 --> 00:09:16,480 Speaker 2: to be hit by the AI disruption. 150 00:09:17,440 --> 00:09:23,560 Speaker 7: Yes, Nathan, Adobe shares have tumbled actually during what investors, 151 00:09:23,600 --> 00:09:26,520 Speaker 7: the atalysts have started to call these SaaS apocalypse, this 152 00:09:27,200 --> 00:09:35,000 Speaker 7: giant selloff in software stocks. Adobe's shares again, you think 153 00:09:35,000 --> 00:09:38,640 Speaker 7: about this happening in the last couple of months, but 154 00:09:38,679 --> 00:09:42,040 Speaker 7: these concerns have really been swirling for a while. Adobe 155 00:09:42,040 --> 00:09:44,760 Speaker 7: down about twenty percent year to date, but actually got 156 00:09:44,760 --> 00:09:47,720 Speaker 7: a really lukewarm reception on Wall Street back in December, 157 00:09:47,800 --> 00:09:51,000 Speaker 7: even though they had a pretty upbeat forecast, because you 158 00:09:51,080 --> 00:09:55,080 Speaker 7: already had people questioning do the numbers matter now if 159 00:09:55,320 --> 00:09:58,280 Speaker 7: what you do can be replicated by cheap AI tools? 160 00:09:58,720 --> 00:10:04,840 Speaker 7: So the commentary on that may be as important, you know, 161 00:10:04,880 --> 00:10:08,120 Speaker 7: whether the company sees itself as shielded as any actual 162 00:10:08,200 --> 00:10:09,080 Speaker 7: number they report. 163 00:10:09,200 --> 00:10:11,559 Speaker 2: And has there been a question as well about whether 164 00:10:11,800 --> 00:10:16,400 Speaker 2: the AI tools that Adobe says it has are going 165 00:10:16,480 --> 00:10:18,800 Speaker 2: to have their own payoff. It's been kind of dealing 166 00:10:18,840 --> 00:10:20,400 Speaker 2: with that struggle as well, hasn't it. 167 00:10:21,200 --> 00:10:25,760 Speaker 7: Yes, absolutely so. I was looking at what analysts were saying, 168 00:10:25,800 --> 00:10:30,080 Speaker 7: and what Piper Sandler says is investors are going to 169 00:10:30,200 --> 00:10:33,920 Speaker 7: be honing in on metrics related to how much money 170 00:10:33,960 --> 00:10:37,120 Speaker 7: the company is making from AI. Now, they do see 171 00:10:37,320 --> 00:10:42,439 Speaker 7: that the stock may be de risked here. The company 172 00:10:42,559 --> 00:10:46,040 Speaker 7: has given guidance, you know, taking a step back again. 173 00:10:46,080 --> 00:10:48,320 Speaker 7: The shares have slid, and so they actually see that 174 00:10:48,360 --> 00:10:52,760 Speaker 7: there could be some upside here if AI adoption is 175 00:10:52,880 --> 00:10:55,400 Speaker 7: better than expected. But yes, I think you're absolutely right. 176 00:10:55,400 --> 00:10:56,920 Speaker 7: That's a key question for investors. 177 00:10:57,240 --> 00:10:59,960 Speaker 2: And along with those marquee names in the tech space, 178 00:11:00,080 --> 00:11:02,040 Speaker 2: we're going to hear from a big name in retail 179 00:11:02,160 --> 00:11:05,560 Speaker 2: when Cole's opens its books. I guess the question here 180 00:11:05,720 --> 00:11:07,600 Speaker 2: is how's the consumer doing? 181 00:11:08,160 --> 00:11:14,280 Speaker 7: Yes, absolutely, Cole's is the latest big consumer name. They 182 00:11:14,320 --> 00:11:19,559 Speaker 7: are estimated to report next week. And you know, the 183 00:11:20,000 --> 00:11:23,120 Speaker 7: question of the health of the American consumer is really 184 00:11:23,400 --> 00:11:26,200 Speaker 7: another thing that's front and center for investors' minds. As 185 00:11:26,200 --> 00:11:28,640 Speaker 7: if they didn't have enough to think about, you know, 186 00:11:29,040 --> 00:11:34,160 Speaker 7: you think about us unexpectedly shedding jobs. You've had this 187 00:11:34,280 --> 00:11:37,640 Speaker 7: idea that consumers are trading down, but actually Coals so 188 00:11:37,720 --> 00:11:41,400 Speaker 7: far has held up against this backdrop. They raised their 189 00:11:41,440 --> 00:11:47,920 Speaker 7: full year outlook in November because consumers had shown that 190 00:11:47,960 --> 00:11:50,959 Speaker 7: they were willing to spend on brands that they really wanted. 191 00:11:51,400 --> 00:11:54,920 Speaker 7: And so again, so far Cole's has been a relative 192 00:11:54,920 --> 00:11:57,280 Speaker 7: winner here. But I don't think investors see that as 193 00:11:57,280 --> 00:11:59,319 Speaker 7: a guarantee, and they're going to be looking closely at 194 00:11:59,440 --> 00:12:04,199 Speaker 7: consumer and I think again at the commentary from executives 195 00:12:04,240 --> 00:12:06,920 Speaker 7: about whether the consumer's under pressure, what that looks like. 196 00:12:07,200 --> 00:12:10,560 Speaker 2: Yeah, another a very busy week once again on the 197 00:12:10,600 --> 00:12:12,959 Speaker 2: earnings front. Thank you for this, Matthew, great having you 198 00:12:13,000 --> 00:12:16,760 Speaker 2: on with us. That's Bloomberg Equities reporter Matthew Griffin, And 199 00:12:16,880 --> 00:12:19,520 Speaker 2: coming up on Bloomberg day Break weekend, we'll look ahead 200 00:12:19,559 --> 00:12:24,840 Speaker 2: to Tuks in Paris on spreading France's nuclear umbrella across Europe. 201 00:12:25,000 --> 00:12:39,360 Speaker 2: I'm Nathan Hager, and this is Bloomberg. This is Bloomberg 202 00:12:39,440 --> 00:12:41,800 Speaker 2: day Break Weekend, our global look ahead at the top 203 00:12:41,840 --> 00:12:44,760 Speaker 2: stories for investors in the coming week. I'm Nathan Hager 204 00:12:44,800 --> 00:12:47,559 Speaker 2: in Washington. Up later in our program, we look ahead 205 00:12:47,559 --> 00:12:52,160 Speaker 2: to legislative elections in Vietnam. But first, Europe's defense debate 206 00:12:52,280 --> 00:12:55,280 Speaker 2: is entering a new phase. For decades, the continent has 207 00:12:55,320 --> 00:12:58,360 Speaker 2: relied on the US nuclear umbrella, but with war on 208 00:12:58,440 --> 00:13:01,720 Speaker 2: Europe's borders, escalating tensions in the Middle East, and growing 209 00:13:01,800 --> 00:13:06,200 Speaker 2: uncertainty about America's long term commitments that calculation is shifting. 210 00:13:06,520 --> 00:13:10,040 Speaker 2: It's a conversation that exposes deep divisions across the block 211 00:13:10,160 --> 00:13:13,800 Speaker 2: over defense spending, strategic autonomy, and how far Europe should 212 00:13:13,840 --> 00:13:17,280 Speaker 2: go to secure itself. On one hand, countries like Poland 213 00:13:17,320 --> 00:13:20,560 Speaker 2: want to ramp up efforts aggressively, whereas Spain sees no 214 00:13:20,720 --> 00:13:24,120 Speaker 2: need to meet US set NATO targets. Next week, European 215 00:13:24,120 --> 00:13:27,840 Speaker 2: diplomats gather in Paris to discuss whether France's nuclear deterrent 216 00:13:27,880 --> 00:13:31,080 Speaker 2: could play a broader role, including the possibility of stationing 217 00:13:31,200 --> 00:13:34,640 Speaker 2: nuclear capable jets in allied countries. Let's get more from 218 00:13:34,640 --> 00:13:38,520 Speaker 2: Bloomberg Daybreak Europe anchor Caroline Hepger in London, Nathan. 219 00:13:38,720 --> 00:13:42,640 Speaker 3: In Europe, only France and Britain have access to nuclear weapons, 220 00:13:42,679 --> 00:13:45,400 Speaker 3: but that may be about to change. The wars in 221 00:13:45,440 --> 00:13:48,560 Speaker 3: the Middle East and in Ukraine, and Europe's relationship with 222 00:13:48,600 --> 00:13:52,040 Speaker 3: the United States has made other countries think again about 223 00:13:52,040 --> 00:13:56,560 Speaker 3: their nuclear options. Next week, talk start in Paris about 224 00:13:56,559 --> 00:14:01,199 Speaker 3: hosting nuclear capable jets in allied European countries. It's part 225 00:14:01,240 --> 00:14:05,680 Speaker 3: of a wider conversation about how Europe defends itself. Those 226 00:14:05,720 --> 00:14:09,839 Speaker 3: discussions have only been accelerated by events in Iran. We'll 227 00:14:09,880 --> 00:14:12,880 Speaker 3: joining me now to discuss but INDs Pyotr Skolamowski, who 228 00:14:12,920 --> 00:14:16,200 Speaker 3: runs our coverage of economies and governments in Central and 229 00:14:16,360 --> 00:14:21,040 Speaker 3: Eastern Europe, from Warsaw and Rodrigo Arijuela, our bureau chief 230 00:14:21,240 --> 00:14:23,920 Speaker 3: in Spain. Welcome to both of you. Thank you for 231 00:14:24,000 --> 00:14:26,760 Speaker 3: being with me. I want to get a sense of 232 00:14:26,800 --> 00:14:31,240 Speaker 3: how your two different countries represent really opposite sides of 233 00:14:31,280 --> 00:14:36,680 Speaker 3: the debate inside the EU on defense spending. Pyota, Poland 234 00:14:36,760 --> 00:14:41,440 Speaker 3: has expressed this wish for more autonomous capabilities. Does that 235 00:14:41,600 --> 00:14:42,960 Speaker 3: mean nuclear weapons? 236 00:14:43,520 --> 00:14:46,240 Speaker 8: Yes? Indeed, so that's probably what Polish leaders have been 237 00:14:46,240 --> 00:14:49,080 Speaker 8: trying to say, and we've been hearing it for quite 238 00:14:49,080 --> 00:14:52,520 Speaker 8: some time. So even the previous president Andre Duda expressed 239 00:14:52,520 --> 00:14:55,640 Speaker 8: this interest in Poland acquiring or taking part in what's 240 00:14:55,680 --> 00:14:58,480 Speaker 8: called nuclear sharing program with the US. The idea was 241 00:14:58,520 --> 00:15:02,120 Speaker 8: rebuff but then now coming back and the new president 242 00:15:02,480 --> 00:15:05,080 Speaker 8: said just last month that that he would be in 243 00:15:05,120 --> 00:15:09,000 Speaker 8: favor of Poland looking and developing its nuclear weapons. We 244 00:15:09,080 --> 00:15:12,880 Speaker 8: heard from Prime Minister Tusk as well earlier this month, 245 00:15:13,320 --> 00:15:18,040 Speaker 8: pretty much saying we eventually Poland will look at developing 246 00:15:18,080 --> 00:15:23,480 Speaker 8: these autonomous capabilities, meaning nuclear bomb Whether and when it's 247 00:15:23,520 --> 00:15:26,880 Speaker 8: going to happen, it's obviously nothing imminent at this point. 248 00:15:26,880 --> 00:15:29,640 Speaker 8: What Poland is looking at, that's what the government seems 249 00:15:29,640 --> 00:15:32,160 Speaker 8: to be focused on, is is working with France. They 250 00:15:32,400 --> 00:15:34,560 Speaker 8: already have a treaty with France that was signed last 251 00:15:34,880 --> 00:15:37,600 Speaker 8: last year that sort of stipulates the possibility of working 252 00:15:37,640 --> 00:15:44,680 Speaker 8: together in sharing capabilities. And Tusk was really enthusiastic right 253 00:15:44,720 --> 00:15:47,440 Speaker 8: from the start when when Marc Kron floated this idea 254 00:15:47,520 --> 00:15:53,920 Speaker 8: and again repeated it now during recently that that that 255 00:15:54,280 --> 00:15:57,880 Speaker 8: France will be willing to share it's its nuclear capable 256 00:15:58,440 --> 00:16:01,800 Speaker 8: jets and stationed in another count. So they're definitely willing 257 00:16:01,840 --> 00:16:04,520 Speaker 8: to take part in that in that endeavor. 258 00:16:05,320 --> 00:16:09,600 Speaker 3: And of course this is as Poland spends a great deal, 259 00:16:09,720 --> 00:16:13,359 Speaker 3: is a significant defense spender in Europe. 260 00:16:13,800 --> 00:16:17,080 Speaker 8: Yes, indeed, so obviously that comes on top of the 261 00:16:17,080 --> 00:16:19,360 Speaker 8: fact that that Poland is spending almost five percent of 262 00:16:19,800 --> 00:16:26,240 Speaker 8: GDP on defense. There is obviously a certain differensive opinion 263 00:16:26,320 --> 00:16:29,160 Speaker 8: between the President and the Prime Minister how the money 264 00:16:29,200 --> 00:16:32,920 Speaker 8: should be spent. Polish president is very much in favor 265 00:16:32,960 --> 00:16:35,360 Speaker 8: and he's been endorsed by Donald Trump. He's very close 266 00:16:35,400 --> 00:16:38,560 Speaker 8: to Tumaga movement in the US, and he's all in 267 00:16:38,600 --> 00:16:41,720 Speaker 8: favor of Poland spending money in the US as it 268 00:16:41,800 --> 00:16:46,280 Speaker 8: has been spending previously to buy weapons. On the other hand, 269 00:16:46,560 --> 00:16:51,600 Speaker 8: Polish Prime Minister is definitely gravitating towards some form of 270 00:16:51,960 --> 00:16:55,040 Speaker 8: European solution when it comes to defense spending, and he 271 00:16:55,680 --> 00:16:59,440 Speaker 8: thinks in terms of if US is really diverging and 272 00:16:59,520 --> 00:17:04,920 Speaker 8: trying to the couple from from Europe, then Poland should 273 00:17:04,960 --> 00:17:08,280 Speaker 8: take part in trying to work on some form of 274 00:17:08,520 --> 00:17:12,040 Speaker 8: joint solutions when it comes to defense in Europe. So 275 00:17:12,440 --> 00:17:15,160 Speaker 8: that's where the differences are, but it does not impact 276 00:17:15,200 --> 00:17:17,760 Speaker 8: the fact that, you know, where we have the consensus 277 00:17:17,800 --> 00:17:19,440 Speaker 8: of the fact that we need to spend more and more. 278 00:17:20,240 --> 00:17:24,880 Speaker 3: Yeah, indeed, it's quite a different picture, though with different ideas. 279 00:17:24,920 --> 00:17:30,320 Speaker 3: In Spain, Rodrigo, Spain's leader Pedro Sanchez, is increasingly seen 280 00:17:30,520 --> 00:17:33,760 Speaker 3: as one of the most aggressive voices pushing back against 281 00:17:33,800 --> 00:17:36,919 Speaker 3: the war in Iran. I suppose I'd like to understand 282 00:17:36,960 --> 00:17:41,600 Speaker 3: from you, firstly why that position that Spain has taken. 283 00:17:42,320 --> 00:17:47,720 Speaker 9: So that position is not totally surprising given his position 284 00:17:48,040 --> 00:17:52,520 Speaker 9: on other issues in recent years. He also took a contrarian, 285 00:17:52,600 --> 00:17:56,400 Speaker 9: if you want, position compared to other Western countries when 286 00:17:56,440 --> 00:18:00,720 Speaker 9: it came to Israel and Gaza, and he his government 287 00:18:00,800 --> 00:18:06,240 Speaker 9: also took a very strong position against increasing the NATO 288 00:18:06,480 --> 00:18:08,760 Speaker 9: spending targets. So this is kind of, you could say, 289 00:18:08,800 --> 00:18:11,720 Speaker 9: the third within that trend, the third time he does 290 00:18:11,760 --> 00:18:14,840 Speaker 9: something like this. In this specific case, what the government 291 00:18:14,880 --> 00:18:18,600 Speaker 9: has argued is that the military basis that the US 292 00:18:18,720 --> 00:18:21,880 Speaker 9: operates from in Spain, there are two of those, They've 293 00:18:21,920 --> 00:18:26,480 Speaker 9: been used for over fifty years, and there are many 294 00:18:26,640 --> 00:18:31,200 Speaker 9: used as a logistics supports, bases for refueling and things 295 00:18:31,280 --> 00:18:34,600 Speaker 9: like that, and the government has the Spanish government has 296 00:18:34,640 --> 00:18:39,639 Speaker 9: said those bases cannot be used for any attack operations. 297 00:18:39,720 --> 00:18:41,600 Speaker 9: So they don't want the basis to be used for 298 00:18:41,880 --> 00:18:46,800 Speaker 9: American military to use as a touching stone to attack Iran. Now, 299 00:18:46,960 --> 00:18:50,200 Speaker 9: what is the argument to justify that. What they're saying 300 00:18:50,320 --> 00:18:54,919 Speaker 9: is that the attack against Iran has been unilateral from 301 00:18:54,960 --> 00:18:58,359 Speaker 9: the attackers Israel and the US, and that it has 302 00:18:58,520 --> 00:19:03,639 Speaker 9: not been formed within the UN Charter or any international laws. 303 00:19:04,240 --> 00:19:08,000 Speaker 9: And so they are saying that any operations of this scale, 304 00:19:08,320 --> 00:19:11,359 Speaker 9: any wars of these of the scale, have to follow 305 00:19:11,440 --> 00:19:15,399 Speaker 9: international law and that they cannot allow their bases to 306 00:19:15,560 --> 00:19:19,360 Speaker 9: be used in operations that are outside the international order. 307 00:19:19,720 --> 00:19:23,080 Speaker 9: And that is the government's official line on this issue, 308 00:19:23,320 --> 00:19:26,560 Speaker 9: that they want to follow the rules and that the 309 00:19:26,800 --> 00:19:30,159 Speaker 9: Americans are not following them and therefore they cannot partner 310 00:19:30,240 --> 00:19:30,520 Speaker 9: with them. 311 00:19:31,280 --> 00:19:34,280 Speaker 3: Okay, I mean there has been in some sense is 312 00:19:34,280 --> 00:19:36,600 Speaker 3: a similar sort of difficulty for the UK kids some 313 00:19:36,720 --> 00:19:40,240 Speaker 3: of the Prime minister here talking about allowing US military 314 00:19:40,280 --> 00:19:44,440 Speaker 3: to use British basis for defensive strikes against ira a 315 00:19:44,520 --> 00:19:48,439 Speaker 3: debate about what that actually means. Look in terms of Spain, 316 00:19:48,600 --> 00:19:52,920 Speaker 3: I mean again, Pedro Sanchez's views sort of chimes also 317 00:19:53,000 --> 00:19:57,120 Speaker 3: with the fact that Spain has not really galvanized defense spending. 318 00:19:57,280 --> 00:19:59,720 Speaker 3: It's been quite resistant to that idea of spending a 319 00:20:00,280 --> 00:20:03,000 Speaker 3: deal more, which has been what President Donald Trump has wanted. 320 00:20:03,359 --> 00:20:05,600 Speaker 6: Why that thinking, do you think in Spain? 321 00:20:05,640 --> 00:20:06,159 Speaker 8: Where do we go? 322 00:20:06,640 --> 00:20:09,280 Speaker 9: Yes, I mean quite resistant. I think is in fact 323 00:20:10,200 --> 00:20:13,680 Speaker 9: an understatement, because they are the only NATO member that 324 00:20:13,800 --> 00:20:15,800 Speaker 9: has said we are not going to do this, and 325 00:20:15,920 --> 00:20:19,280 Speaker 9: there is no way we're changing our position. And while 326 00:20:19,320 --> 00:20:22,960 Speaker 9: everybody else has gone to the five percent target that 327 00:20:23,119 --> 00:20:25,800 Speaker 9: the Americans came up with, they have said that they 328 00:20:25,800 --> 00:20:28,680 Speaker 9: were sticking to two point one percent. There are two 329 00:20:28,800 --> 00:20:32,760 Speaker 9: arguments for this are one that with two point one 330 00:20:32,840 --> 00:20:37,280 Speaker 9: percent they can meet all the demands and all the needs, 331 00:20:37,320 --> 00:20:41,520 Speaker 9: all the requirements for defensive spending. What they are saying 332 00:20:41,640 --> 00:20:44,840 Speaker 9: is that the five percent number was kind of pulled 333 00:20:44,840 --> 00:20:47,000 Speaker 9: out of the blue and that there is no actual 334 00:20:47,160 --> 00:20:50,040 Speaker 9: justification for it. There is no explanation as to why 335 00:20:50,520 --> 00:20:53,639 Speaker 9: that's the magic number, and that if you look at 336 00:20:53,800 --> 00:20:58,040 Speaker 9: the military needs, at weapons and all other kind of 337 00:20:58,200 --> 00:21:00,960 Speaker 9: military needs, you can cover. I was with two point 338 00:21:01,000 --> 00:21:03,840 Speaker 9: one percent in Spain's case, and that's the main one. 339 00:21:03,880 --> 00:21:05,960 Speaker 9: The other one is that if you go up to 340 00:21:06,359 --> 00:21:09,520 Speaker 9: five percent, you have to start pulling money out of 341 00:21:09,880 --> 00:21:14,120 Speaker 9: other expenses, other parts of your budget, and that going 342 00:21:14,240 --> 00:21:17,719 Speaker 9: up to five percent without an explanation as to why 343 00:21:17,800 --> 00:21:20,200 Speaker 9: you're going to that number, means that you'll have less 344 00:21:20,240 --> 00:21:24,080 Speaker 9: money for things such as social welfare, healthcare, education. 345 00:21:24,320 --> 00:21:24,720 Speaker 10: That is the. 346 00:21:24,720 --> 00:21:28,399 Speaker 9: Government's official line on this, and that is their position. 347 00:21:28,560 --> 00:21:30,440 Speaker 9: If we have to put money into this, we'll have 348 00:21:30,520 --> 00:21:32,240 Speaker 9: to take it out of other places, and there is 349 00:21:32,359 --> 00:21:35,160 Speaker 9: no reason that has been given to us as to why. 350 00:21:35,119 --> 00:21:37,800 Speaker 6: We have to do that. Okay, so that's the Spanish view. 351 00:21:38,080 --> 00:21:41,840 Speaker 3: Meanwhile, back to Poland Pyota and what about these nuclear 352 00:21:41,920 --> 00:21:46,720 Speaker 3: power jets, because there's discussion about having nuclear capable fighter 353 00:21:46,760 --> 00:21:51,120 Speaker 3: jets being stationed elsewhere in Europe, not for Spain, but Germany, 354 00:21:51,320 --> 00:21:56,679 Speaker 3: the UK, Belgium, other countries and also Poland are looking 355 00:21:56,800 --> 00:21:59,760 Speaker 3: at this. You know, Manue Macaw has been talking about 356 00:22:00,160 --> 00:22:02,280 Speaker 3: and there's going to be a meeting to discuss this, 357 00:22:02,440 --> 00:22:04,680 Speaker 3: and what do you think might emerge from that? 358 00:22:05,440 --> 00:22:08,879 Speaker 8: Yes, indeed, so Tusk has been very keen on the 359 00:22:09,000 --> 00:22:11,719 Speaker 8: idea right from the start when it was first floated 360 00:22:11,800 --> 00:22:15,640 Speaker 8: i believe last year, and then obviously now officially sort 361 00:22:15,640 --> 00:22:19,000 Speaker 8: of communicated by by Macron. So indeed there's a there's 362 00:22:19,040 --> 00:22:25,320 Speaker 8: a meeting in Paris nuclear about nuclear energy. But what 363 00:22:25,480 --> 00:22:28,639 Speaker 8: Tusk also said is that we assume on on the 364 00:22:28,720 --> 00:22:31,520 Speaker 8: sidelines of that meeting there's going to be more consultations 365 00:22:31,600 --> 00:22:35,240 Speaker 8: going on about about this idea. He also mentioned that 366 00:22:35,920 --> 00:22:38,600 Speaker 8: when it comes to this this plan, he will be 367 00:22:38,760 --> 00:22:42,560 Speaker 8: in touch or or will be communicating with other allies, 368 00:22:42,680 --> 00:22:46,440 Speaker 8: especially from the Nordic region, where cooperation between Poland and 369 00:22:46,520 --> 00:22:50,000 Speaker 8: Nordics and all the countries around the Baltics have been 370 00:22:50,320 --> 00:22:54,520 Speaker 8: growing tighter there's definitely willingness on the on the Polish 371 00:22:54,600 --> 00:22:59,040 Speaker 8: side to to engage in that that plan. Clearly, the 372 00:22:59,160 --> 00:23:03,280 Speaker 8: experience that they had with the previous idea of nuclear 373 00:23:03,359 --> 00:23:06,520 Speaker 8: sharing with the US, which was rebuffed, told them that 374 00:23:06,880 --> 00:23:10,800 Speaker 8: at least that route is closed. And it sort of 375 00:23:10,920 --> 00:23:15,480 Speaker 8: speaks or fits very nicely in how the government sees 376 00:23:15,880 --> 00:23:19,600 Speaker 8: its cooperation and how it wants to build its its defense. 377 00:23:20,200 --> 00:23:24,000 Speaker 8: It sees the US sort of disengaging, although it wants 378 00:23:24,040 --> 00:23:28,080 Speaker 8: to keep US close. Still, Poland still hosts ten thousand 379 00:23:28,160 --> 00:23:31,640 Speaker 8: around ten thousand troops on its soil, but it wants 380 00:23:31,720 --> 00:23:35,080 Speaker 8: to have or be part of the of the cooperation 381 00:23:35,200 --> 00:23:38,400 Speaker 8: with Europe and and sort of the fact that these clear, 382 00:23:38,560 --> 00:23:42,080 Speaker 8: enabled or capable jets will be stationed in Poland is 383 00:23:42,440 --> 00:23:44,520 Speaker 8: very much something that that Pland will be keen on it. 384 00:23:44,680 --> 00:23:47,440 Speaker 8: But obviously the devil is in the details. It's it's 385 00:23:47,720 --> 00:23:50,520 Speaker 8: hard to say how quickly it could be done. And 386 00:23:50,600 --> 00:23:54,280 Speaker 8: the other question is purely political in that sense. Obviously, 387 00:23:54,480 --> 00:23:57,560 Speaker 8: France is going into election next year, a Manual Macron 388 00:23:57,760 --> 00:24:00,000 Speaker 8: is not running in this election, and the post show 389 00:24:00,040 --> 00:24:02,760 Speaker 8: that the fire Right could take power, and that's a 390 00:24:02,800 --> 00:24:05,240 Speaker 8: big question mark for everyone in Eastern Europe as a 391 00:24:05,320 --> 00:24:07,840 Speaker 8: matter of fact. So if we commit to that idea, 392 00:24:08,359 --> 00:24:11,800 Speaker 8: what happens next after the macron is gone, and would 393 00:24:11,840 --> 00:24:15,080 Speaker 8: that plan change? And if we over commit, would that 394 00:24:15,280 --> 00:24:19,040 Speaker 8: mean US will not be willing to work with us 395 00:24:19,119 --> 00:24:21,680 Speaker 8: on that project in the future. So there's a lot 396 00:24:21,720 --> 00:24:25,480 Speaker 8: of issues here to consider before it all happens. 397 00:24:25,760 --> 00:24:28,680 Speaker 3: Yeah, I think it's going to be interesting to see 398 00:24:29,080 --> 00:24:31,960 Speaker 3: where this issue leads. Thank you so much to both 399 00:24:32,000 --> 00:24:34,879 Speaker 3: of you for joining me. Bin Begs, Rodrigo Olijuera are 400 00:24:35,000 --> 00:24:38,959 Speaker 3: bureau chief in Spain, and Peot Scolimouski, who runs our 401 00:24:39,080 --> 00:24:42,320 Speaker 3: coverage of economies and government in Central and Eastern Europe, 402 00:24:42,359 --> 00:24:46,520 Speaker 3: are joining me from WARSAW. Really appreciate your time, as 403 00:24:46,800 --> 00:24:49,320 Speaker 3: will bring you full coverage then of what happens next 404 00:24:49,480 --> 00:24:54,200 Speaker 3: with the discussions around this advanced deterrence, the idea of 405 00:24:54,400 --> 00:24:59,560 Speaker 3: these nuclear capable fighter jets maybe being stationed across Europe, 406 00:25:00,119 --> 00:25:03,920 Speaker 3: not just in France. We'll see where those discussions lead. 407 00:25:04,040 --> 00:25:06,720 Speaker 3: I'm Caroline Hepkee here in London. You can catch us 408 00:25:06,760 --> 00:25:09,920 Speaker 3: every weekday morning for Blueberg Daybreak Europe, beginning at six 409 00:25:10,000 --> 00:25:10,679 Speaker 3: am in London. 410 00:25:10,720 --> 00:25:12,240 Speaker 6: That's one am on Wall Street. 411 00:25:12,560 --> 00:25:16,320 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend, 412 00:25:16,359 --> 00:25:19,760 Speaker 2: we turned to Vietnam, where legislative elections are set to 413 00:25:19,840 --> 00:25:34,280 Speaker 2: take place. I'm Nathan Hagar, and this is Bloomberg. This 414 00:25:34,440 --> 00:25:37,119 Speaker 2: is Bloomberg Daybreak Weekend, our global look ahead at the 415 00:25:37,160 --> 00:25:39,640 Speaker 2: top stories for investors in the coming week. I'm Nathan 416 00:25:39,680 --> 00:25:43,400 Speaker 2: Hager in Washington. We go to Vietnam next where legislative 417 00:25:43,400 --> 00:25:46,040 Speaker 2: elections are set to take place. For more, Let's check 418 00:25:46,080 --> 00:25:49,200 Speaker 2: in with Doug Krisner, host of the Bloomberg Daybreak Asia podcast. 419 00:25:49,640 --> 00:25:53,359 Speaker 4: Thanks Nathan. Next weekend, voters across Vietnam will be going 420 00:25:53,440 --> 00:25:56,480 Speaker 4: to the polls and they will elect deputies to the 421 00:25:56,560 --> 00:26:00,480 Speaker 4: sixteenth National Assembly along with members of the People's Concils. 422 00:26:00,960 --> 00:26:04,720 Speaker 4: And then on April sixth, Vietnam's National Assembly will convene. 423 00:26:05,160 --> 00:26:07,360 Speaker 4: To help us understand what to look for. I'm joined 424 00:26:07,400 --> 00:26:11,400 Speaker 4: by Bloomberg's Francesca Stevens. She is our Vietnam Bureau chief. 425 00:26:11,600 --> 00:26:14,600 Speaker 4: And Francesca joins us from Hanoi. Thank you so much 426 00:26:14,640 --> 00:26:17,480 Speaker 4: for being here. As we know, Vietnam is a communist 427 00:26:17,560 --> 00:26:21,240 Speaker 4: country with one party rule, not unlike China. Help us 428 00:26:21,359 --> 00:26:23,480 Speaker 4: understand what this election means for Vietnam. 429 00:26:25,240 --> 00:26:28,359 Speaker 10: So the background to this is in January we had 430 00:26:28,440 --> 00:26:33,000 Speaker 10: the Communist Party Congress and that was when to Lamb 431 00:26:33,080 --> 00:26:37,000 Speaker 10: the Party Chief, got elected for a full five year 432 00:26:37,160 --> 00:26:40,720 Speaker 10: term as Party chief, and we also understood the Party 433 00:26:40,840 --> 00:26:44,040 Speaker 10: Congress that was when he was put forward to take 434 00:26:44,119 --> 00:26:47,520 Speaker 10: the position of president as well. And so what we'll 435 00:26:47,560 --> 00:26:51,680 Speaker 10: be watching for when the National Assembly meets is if 436 00:26:51,800 --> 00:26:56,280 Speaker 10: that dual position is confirmed, and that will be a 437 00:26:56,720 --> 00:27:01,760 Speaker 10: significant move for Vietnam, the first time in many years 438 00:27:02,320 --> 00:27:06,479 Speaker 10: that the president and Party chief has been put forward 439 00:27:06,560 --> 00:27:09,680 Speaker 10: at Congress and then backed by the National Assembly. So 440 00:27:09,760 --> 00:27:14,119 Speaker 10: to Lem had previously held the presidency and the party 441 00:27:14,200 --> 00:27:17,000 Speaker 10: chief position, but only on a temporary basis, and his 442 00:27:17,160 --> 00:27:19,600 Speaker 10: predecessor in Winfu Chong had also held it on a 443 00:27:19,680 --> 00:27:22,240 Speaker 10: temporary basis. So that's one of the big things that 444 00:27:22,400 --> 00:27:26,520 Speaker 10: we're watching out for when the National Assembly meets, but 445 00:27:26,640 --> 00:27:30,480 Speaker 10: it's also when we'll find out who the new Prime 446 00:27:30,520 --> 00:27:34,800 Speaker 10: Minister will be again. At Party Congress in January, we 447 00:27:34,960 --> 00:27:38,440 Speaker 10: had heard that Layminghun had been tipped to be the 448 00:27:38,960 --> 00:27:42,159 Speaker 10: new Prime minister, and he's currently head of the Central 449 00:27:42,240 --> 00:27:46,080 Speaker 10: Organization Committee, So we're watching to see if that position 450 00:27:46,400 --> 00:27:51,520 Speaker 10: is confirmed as well. Before Christmas, there were many different 451 00:27:51,840 --> 00:27:55,200 Speaker 10: rumors flying around in Hanoi as to who would be 452 00:27:55,280 --> 00:27:58,280 Speaker 10: getting the different positions. But as we get closer to 453 00:27:58,320 --> 00:28:01,600 Speaker 10: April the sixth, we're all watching to see what happens there, 454 00:28:01,960 --> 00:28:05,639 Speaker 10: and then once the National Assembly confirms who's in the 455 00:28:05,720 --> 00:28:09,040 Speaker 10: top positions, will start to see more of the policy 456 00:28:09,119 --> 00:28:12,640 Speaker 10: steps unfold for Vietnam over the next next few months. 457 00:28:12,800 --> 00:28:15,840 Speaker 4: I'm curious about the way in which the economy has 458 00:28:15,920 --> 00:28:19,600 Speaker 4: been impacted by US tariff policy and whether that has 459 00:28:19,720 --> 00:28:22,560 Speaker 4: necessarily been a negative. I know that over the years 460 00:28:22,760 --> 00:28:26,080 Speaker 4: a lot of manufacturing moved out of China into places 461 00:28:26,240 --> 00:28:29,000 Speaker 4: like Vietnam, and for a while it seemed as though 462 00:28:29,080 --> 00:28:33,320 Speaker 4: Vietnam's economy was a beneficiary of that de risking from China. 463 00:28:33,920 --> 00:28:36,440 Speaker 4: Can you talk about the overall impact and what it's 464 00:28:36,480 --> 00:28:38,200 Speaker 4: been like for the Vietnamese economy. 465 00:28:39,040 --> 00:28:43,440 Speaker 10: It was a rollercoaster for Vietnam trade talks last year. 466 00:28:43,680 --> 00:28:46,480 Speaker 10: We were all shocked when we saw the forty six 467 00:28:46,600 --> 00:28:51,480 Speaker 10: percent tariff that was first announced, but Tolan one applawed 468 00:28:51,560 --> 00:28:54,200 Speaker 10: it here for his quick response and jumping on the 469 00:28:54,240 --> 00:28:57,480 Speaker 10: phone with Donald Trump, and then we saw that reduced 470 00:28:57,520 --> 00:29:00,840 Speaker 10: to a twenty percent deal announced Donald Trump on his 471 00:29:01,120 --> 00:29:05,080 Speaker 10: Truth Social in July, but crucially with a forty percent 472 00:29:05,240 --> 00:29:09,080 Speaker 10: tariff on any goods deemed to be transhipped through the country. 473 00:29:09,680 --> 00:29:13,520 Speaker 10: All through the year, the uncertainty over what was happening 474 00:29:13,560 --> 00:29:16,680 Speaker 10: with the trade talks and how that would impact exporters 475 00:29:17,240 --> 00:29:20,400 Speaker 10: was the key economic theme here. There were at least 476 00:29:20,520 --> 00:29:24,440 Speaker 10: six rounds of trade talks, with teams of negotiators flying 477 00:29:24,480 --> 00:29:27,600 Speaker 10: out to DC on a fairly regular basis, and Vietnam 478 00:29:27,680 --> 00:29:32,120 Speaker 10: making multiple pledges to buy more American goods in an 479 00:29:32,160 --> 00:29:35,800 Speaker 10: effort to reduce the trade gap between the two. The 480 00:29:35,880 --> 00:29:38,600 Speaker 10: two sides were said to have moved on from the 481 00:29:38,680 --> 00:29:41,680 Speaker 10: initial sticking points, which were around transhipment and how you 482 00:29:41,760 --> 00:29:45,000 Speaker 10: define that and rules of origin, and we understood that 483 00:29:45,000 --> 00:29:48,080 Speaker 10: the focus had moved to areas such as intellectual property, 484 00:29:48,400 --> 00:29:53,520 Speaker 10: sovereignty enforcement. We also saw the trade minister replaced in 485 00:29:53,640 --> 00:29:55,600 Speaker 10: the process of the talks, in a sign of the 486 00:29:55,680 --> 00:29:59,400 Speaker 10: frustration in Hanoi at how they were going. But despite 487 00:29:59,440 --> 00:30:04,320 Speaker 10: all of that, Vietnam's exports to the US only continued 488 00:30:04,560 --> 00:30:07,360 Speaker 10: to grow last year, and the massive trade gap that 489 00:30:07,480 --> 00:30:11,440 Speaker 10: had initially caught Donald Trump's eye and continued to get bigger. 490 00:30:12,160 --> 00:30:15,080 Speaker 10: So on the trade deal front, we now expect to 491 00:30:15,120 --> 00:30:18,080 Speaker 10: see a long slow walk on that front. I mean 492 00:30:18,080 --> 00:30:20,800 Speaker 10: it's actually hard to see whether one will now materialize 493 00:30:20,840 --> 00:30:24,320 Speaker 10: after the US Supreme Court's decision. And so from the 494 00:30:24,480 --> 00:30:29,240 Speaker 10: economic perspective, you know, we were expecting to see exports 495 00:30:29,520 --> 00:30:33,760 Speaker 10: slow down and actually, in contrast, Vietnam defied that. 496 00:30:34,400 --> 00:30:36,920 Speaker 4: So what's the picture on sentiment right now? Is there 497 00:30:36,960 --> 00:30:37,960 Speaker 4: a sense of optimism? 498 00:30:39,080 --> 00:30:41,200 Speaker 10: There is this huge growth story, and even if it 499 00:30:41,320 --> 00:30:45,960 Speaker 10: doesn't reach ten percent, I think that the trajectory for 500 00:30:46,120 --> 00:30:49,760 Speaker 10: Vietnam over the next few years still looks hugely positive. 501 00:30:49,840 --> 00:30:52,760 Speaker 10: I mean last year it was eight point zero two percent, 502 00:30:53,440 --> 00:30:58,080 Speaker 10: and we see so much manufacturing activity in the northern provinces. 503 00:30:58,160 --> 00:31:02,000 Speaker 10: Got your fox conno luctuare yu Go Tech making Apple 504 00:31:02,120 --> 00:31:05,640 Speaker 10: AirPods I've heard, and watches and you know, Samsung making 505 00:31:05,720 --> 00:31:09,440 Speaker 10: and around sixty percent of its phones here. So there 506 00:31:09,560 --> 00:31:12,520 Speaker 10: is this sort of huge boom in activities. There is 507 00:31:12,560 --> 00:31:16,880 Speaker 10: a lot of bullishness around the direction that Vietnam is 508 00:31:16,960 --> 00:31:21,400 Speaker 10: going in from an economic perspective and the growth potential here. 509 00:31:22,000 --> 00:31:25,360 Speaker 10: But of course we are also at risk from what 510 00:31:25,840 --> 00:31:28,160 Speaker 10: happens in the rest of the world, and you know, 511 00:31:28,240 --> 00:31:30,800 Speaker 10: seeing what's happening in the Middle East at the moment, 512 00:31:31,480 --> 00:31:34,160 Speaker 10: you know how that's going to trickle through and impact 513 00:31:34,280 --> 00:31:37,560 Speaker 10: us here. What happens in the US has a has 514 00:31:37,600 --> 00:31:40,960 Speaker 10: a huge impact on what happens here in Vietnam. It's 515 00:31:41,000 --> 00:31:45,720 Speaker 10: the biggest export market for Vietnam, and exporters and the 516 00:31:45,800 --> 00:31:50,360 Speaker 10: business community know that Vietnam needs to keep that keep 517 00:31:50,400 --> 00:31:55,280 Speaker 10: that market open, but also manage relations with China. It's 518 00:31:55,560 --> 00:31:58,080 Speaker 10: you know, it's just over the border in the north. 519 00:31:58,640 --> 00:32:01,880 Speaker 10: Vietnam imports a huge, huge amount of its raw materials 520 00:32:01,960 --> 00:32:05,520 Speaker 10: and production components from China. In fact, it's you know, 521 00:32:05,560 --> 00:32:09,080 Speaker 10: it's Vietnam's largest trading partner. So it's heavily reliant on 522 00:32:09,240 --> 00:32:13,560 Speaker 10: China for maintaining its manufacturing driven growth as well. So 523 00:32:13,640 --> 00:32:18,800 Speaker 10: there's just this this fascinating story here around this domestic 524 00:32:18,880 --> 00:32:22,520 Speaker 10: growth story, but also a nation that really sort of 525 00:32:22,720 --> 00:32:27,080 Speaker 10: sits in this kind of key geo political position, which 526 00:32:27,440 --> 00:32:30,320 Speaker 10: is a position that it wants to expand further as well. 527 00:32:30,400 --> 00:32:34,400 Speaker 4: I think what about the equity market in Vietnam. Last October, 528 00:32:34,560 --> 00:32:38,760 Speaker 4: as I recall, foot Sea Russell upgraded Vietnam's market from 529 00:32:38,880 --> 00:32:43,320 Speaker 4: frontier to secondary emerging status. How is that expected to 530 00:32:43,360 --> 00:32:44,240 Speaker 4: impact the market. 531 00:32:44,800 --> 00:32:48,040 Speaker 10: Yes, so the decision was announced last year, but it 532 00:32:48,120 --> 00:32:52,560 Speaker 10: doesn't actually come into effect until September this year, and 533 00:32:52,720 --> 00:32:56,000 Speaker 10: in fact there is actually an interim review taking place 534 00:32:56,120 --> 00:32:59,440 Speaker 10: in the next few weeks. We don't expect there to 535 00:32:59,480 --> 00:33:02,560 Speaker 10: be any shoes with that interim review. The government has 536 00:33:02,680 --> 00:33:06,520 Speaker 10: taken a lot of different steps to try and make 537 00:33:06,600 --> 00:33:09,760 Speaker 10: sure that that process goes through. In just a few 538 00:33:09,800 --> 00:33:13,800 Speaker 10: weeks ago, the government moved to allow foreign investors to 539 00:33:13,920 --> 00:33:18,920 Speaker 10: trade through global brokerages directly instead of with local firms, 540 00:33:19,320 --> 00:33:22,520 Speaker 10: and again that was one of the steps that Footsie 541 00:33:22,560 --> 00:33:27,440 Speaker 10: Russell had been looking for from the government. Here. It's 542 00:33:27,480 --> 00:33:30,200 Speaker 10: been quite the weight for Vietnam to get here. They 543 00:33:30,240 --> 00:33:33,680 Speaker 10: were first added to the watch list for potential reclassification 544 00:33:33,880 --> 00:33:37,920 Speaker 10: back in September twenty eighteen, but since then big steps 545 00:33:37,960 --> 00:33:40,480 Speaker 10: had been taken to bring the market into line with 546 00:33:40,520 --> 00:33:44,680 Speaker 10: global standards. That's included things like removing the requirement for 547 00:33:44,760 --> 00:33:49,520 Speaker 10: overseas investors to fully prefund equity trades and establishing a 548 00:33:49,640 --> 00:33:54,480 Speaker 10: formal process for handling failed trades. So there are various 549 00:33:55,560 --> 00:34:01,240 Speaker 10: estimates of how much foreign capital that should attract when 550 00:34:01,280 --> 00:34:05,959 Speaker 10: the decision goes through in September. Various estimates from around 551 00:34:06,480 --> 00:34:11,440 Speaker 10: three to five or six billion in foreign capital inflows, 552 00:34:12,080 --> 00:34:14,840 Speaker 10: but obviously we're waiting to see what happens when that 553 00:34:15,160 --> 00:34:17,080 Speaker 10: upgrade happens in September. 554 00:34:17,360 --> 00:34:19,640 Speaker 4: Francesca will leave it there, Thank you so very much. 555 00:34:19,800 --> 00:34:24,080 Speaker 4: Francesca Stevens is Bloomberg's Vietnam bureau chief. Joining from Hanoi, 556 00:34:24,520 --> 00:34:27,200 Speaker 4: we go to Australia next where in the last week 557 00:34:27,640 --> 00:34:31,680 Speaker 4: Goldmunt Sachs held its Australia Week Alternatives and Macro Summit. 558 00:34:32,000 --> 00:34:34,000 Speaker 4: It was there that we caught up with Goldman CEO 559 00:34:34,200 --> 00:34:37,800 Speaker 4: David Solomon. He spoke with Bloomberg's Heidi Stroud Watts. Heidi 560 00:34:37,880 --> 00:34:41,080 Speaker 4: began the conversation by asking Solomon for his views on 561 00:34:41,200 --> 00:34:43,399 Speaker 4: the Chinese markets. Here's what he had to say. 562 00:34:43,560 --> 00:34:44,160 Speaker 10: Chat is one of the. 563 00:34:44,200 --> 00:34:45,960 Speaker 11: Largest economies in the world. That's going to continue to 564 00:34:46,000 --> 00:34:47,359 Speaker 11: be one of the largest economies in the world. 565 00:34:47,640 --> 00:34:47,759 Speaker 10: You know. 566 00:34:47,840 --> 00:34:50,680 Speaker 11: At the moment, I'm very focused on the bilateral relationship 567 00:34:50,760 --> 00:34:53,760 Speaker 11: between the US and China. I'm looking forward to President 568 00:34:54,000 --> 00:34:57,399 Speaker 11: Trump's visit with President chief Its planned for later this month, 569 00:34:57,440 --> 00:34:59,719 Speaker 11: the beginning of April. It'll be interesting to see what 570 00:34:59,800 --> 00:35:01,920 Speaker 11: come out of that, and you know, whether or not 571 00:35:02,640 --> 00:35:05,160 Speaker 11: China and the US can make more progress, you know, 572 00:35:05,239 --> 00:35:07,879 Speaker 11: on their bilateral relationship. I think that's important for growth 573 00:35:07,920 --> 00:35:09,319 Speaker 11: in the world, and I think it's important for both 574 00:35:09,320 --> 00:35:11,200 Speaker 11: the US and China, and I think at the moment 575 00:35:11,239 --> 00:35:13,600 Speaker 11: that's fragile, and so I'm very curious to see, you know, 576 00:35:13,719 --> 00:35:17,200 Speaker 11: how that progresses. In the meantime, Chinese markets have done 577 00:35:17,280 --> 00:35:20,240 Speaker 11: very well in the last twelve months. That's increased capital flows, 578 00:35:20,360 --> 00:35:22,960 Speaker 11: you know, into the region. We obviously participate in that, 579 00:35:23,040 --> 00:35:26,160 Speaker 11: but we're going to watch those bilateral meetings and progress 580 00:35:26,200 --> 00:35:27,920 Speaker 11: in the biladderal relationship very closely. 581 00:35:28,040 --> 00:35:29,480 Speaker 10: What would you like to come out in terms of 582 00:35:29,560 --> 00:35:30,680 Speaker 10: deliverables from. 583 00:35:31,200 --> 00:35:34,280 Speaker 11: I'd like to see, you know, more certainty and clarity 584 00:35:34,360 --> 00:35:38,000 Speaker 11: around how the bilateral relationship will work going forward. I 585 00:35:38,000 --> 00:35:39,799 Speaker 11: think there are things that the US wants and things 586 00:35:39,840 --> 00:35:42,359 Speaker 11: that China wants. I'd like more clarity around what that's 587 00:35:42,400 --> 00:35:44,319 Speaker 11: going to look like, you know, not just in twenty 588 00:35:44,400 --> 00:35:46,880 Speaker 11: twenty six, but you know, over the coming years. And 589 00:35:47,000 --> 00:35:48,440 Speaker 11: I think that's still relatively uncertain. 590 00:35:48,600 --> 00:35:50,799 Speaker 3: What are we not talking about enough? I know we've 591 00:35:50,800 --> 00:35:52,400 Speaker 3: talked a little bit about private credit. 592 00:35:52,320 --> 00:35:54,840 Speaker 6: You don't think it's sort of a systemic. 593 00:35:54,520 --> 00:36:02,120 Speaker 11: Risk at this point. I think credit formation around the 594 00:36:02,160 --> 00:36:07,240 Speaker 11: world is really correlated to economic growth and economic activity. 595 00:36:08,320 --> 00:36:10,560 Speaker 11: I do think that we've gone if I just look 596 00:36:10,600 --> 00:36:13,120 Speaker 11: at the US market, which is obviously very when you 597 00:36:13,160 --> 00:36:15,120 Speaker 11: talk about private credit, a very very large market the 598 00:36:15,160 --> 00:36:17,680 Speaker 11: context of private credit, we've gone a long time without 599 00:36:17,680 --> 00:36:20,240 Speaker 11: a credit cycle. We've gone a long time without a recession. 600 00:36:20,960 --> 00:36:23,280 Speaker 11: I do think when you have these long dated cycles, 601 00:36:23,400 --> 00:36:26,239 Speaker 11: they're a variety of things that happen. One, credit spreads narrow. 602 00:36:27,320 --> 00:36:31,200 Speaker 11: Two lending standards. People have more capital deploy they get aggressive, 603 00:36:31,600 --> 00:36:34,960 Speaker 11: lending standards deteriorate a little bit due diligent standards deteriorate, 604 00:36:35,400 --> 00:36:37,719 Speaker 11: And so we're watching very closely to see if there's 605 00:36:38,280 --> 00:36:41,200 Speaker 11: been a little bit too much aggression frothiness in those markets. 606 00:36:41,239 --> 00:36:44,360 Speaker 11: But fundamentally, when you look at the underlying credit portfolios, 607 00:36:44,680 --> 00:36:47,800 Speaker 11: particularly below investment grade credit, while there have been a 608 00:36:47,920 --> 00:36:50,920 Speaker 11: bunch of idiosyncratic events where there have been problems, the 609 00:36:51,000 --> 00:36:54,680 Speaker 11: broad portfolios are performing reasonably well. Why are they performing 610 00:36:54,719 --> 00:36:57,319 Speaker 11: reasonably well because the economy is doing fine, and it's 611 00:36:57,480 --> 00:37:01,160 Speaker 11: very hard to have broad underperformance and a broad diversified 612 00:37:01,200 --> 00:37:04,600 Speaker 11: credit portfolio. If the economy is doing well. When we 613 00:37:04,680 --> 00:37:06,279 Speaker 11: do have a slow down in the economy, you will 614 00:37:06,320 --> 00:37:09,040 Speaker 11: see it. I think because of the length of the cycle, 615 00:37:09,120 --> 00:37:11,479 Speaker 11: you probably will find places where the losses are higher 616 00:37:11,520 --> 00:37:14,720 Speaker 11: than people expect. We're very, very focused on back leverage 617 00:37:14,719 --> 00:37:18,200 Speaker 11: and things that could affect or amplify in a more 618 00:37:18,200 --> 00:37:21,760 Speaker 11: difficult economic environment, you know, credit deployment. But at the moment, 619 00:37:22,080 --> 00:37:25,120 Speaker 11: when you look broadly across portfolios, we're not seeing things 620 00:37:25,200 --> 00:37:29,319 Speaker 11: that are super concerning. That's a completely different issue than 621 00:37:29,480 --> 00:37:33,600 Speaker 11: retail participation and retail investors wanting liquidity from what are 622 00:37:33,680 --> 00:37:37,400 Speaker 11: fundamentally illiquid products, and so that's getting a lot of attention, 623 00:37:37,520 --> 00:37:40,200 Speaker 11: but that's different than the underlying credit portfolios. But I 624 00:37:40,280 --> 00:37:42,440 Speaker 11: do think that when there is a slowdown in the 625 00:37:42,480 --> 00:37:44,400 Speaker 11: economy or we do get to a place where we have, 626 00:37:45,520 --> 00:37:48,080 Speaker 11: you know, a recession, you're going to see losses and 627 00:37:48,120 --> 00:37:51,400 Speaker 11: credit portfolios, and you know those losses could be meaningful, 628 00:37:51,440 --> 00:37:53,160 Speaker 11: but you know, we'll watch that closely while the economy 629 00:37:53,239 --> 00:37:56,240 Speaker 11: is jugging along. You know, that's that's not the primary focus. 630 00:37:56,480 --> 00:37:59,640 Speaker 4: That was David Solomon Goldman Sachs CEO, speaking with Bloomberg's 631 00:37:59,680 --> 00:38:02,759 Speaker 4: Heidies Stroud Watts in Sydney. I'm Doug Prisner. You can 632 00:38:02,840 --> 00:38:06,200 Speaker 4: catch us weekdays for the Daybreak Asia podcast. It's available 633 00:38:06,280 --> 00:38:07,719 Speaker 4: wherever you get your podcast. 634 00:38:08,120 --> 00:38:11,080 Speaker 2: Nathan, Thanks Doug, and that does it for this edition 635 00:38:11,160 --> 00:38:14,080 Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at 636 00:38:14,160 --> 00:38:16,760 Speaker 2: five am Wall Street Time for the latest don markets, 637 00:38:16,800 --> 00:38:19,279 Speaker 2: overseas and the news you need to start your day. 638 00:38:19,600 --> 00:38:20,480 Speaker 2: I'm Nathan Hagar. 639 00:38:20,640 --> 00:38:21,239 Speaker 4: Stay with us. 640 00:38:21,360 --> 00:38:24,759 Speaker 2: Top stories and global business headlines are coming up right now.