WEBVTT - Daybreak Weekend: US CPI, Paris Nuclear Talks, Vietnam Elections 0:00:00.240 --> 0:00:07.680 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.320 --> 0:00:13.440 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.480 --> 0:00:16.280 top stories in the coming week from our Daybreak anchors 0:00:16.360 --> 0:00:19.000 all around the world. Straight Ahead on the program, we 0:00:19.040 --> 0:00:22.120 looked to some key inflation data and the US. I'm 0:00:22.200 --> 0:00:23.840 Nathan Hager in Washington. 0:00:24.040 --> 0:00:26.200 I'm Caroline Hepkit in London, where we're looking ahead to 0:00:26.239 --> 0:00:30.560 talk in Paris about sharing France's nuclear capabilities with other 0:00:30.680 --> 0:00:31.800 European countries. 0:00:32.040 --> 0:00:38.000 I'm Doug Chrisner looking ahead to legislative elections in Vietnam. 0:00:38.159 --> 0:00:42.200 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.240 --> 0:00:45.920 eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.440 --> 0:00:51.559 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 0:00:51.720 --> 0:00:55.240 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.280 --> 0:00:57.520 dot Com and the Bloomberg Business App. 0:01:00.920 --> 0:01:05.280 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.319 --> 0:01:08.640 program with some key inflation data in the US. The 0:01:08.800 --> 0:01:11.800 Consumer Price Index for the month of February comes out 0:01:11.840 --> 0:01:15.200 on Wednesday at eight thirty am Wall Street Time. For 0:01:15.240 --> 0:01:17.120 a look ahead to the numbers and what they could 0:01:17.160 --> 0:01:20.200 mean for Fed policy. We're joined by Bloomberg News senior 0:01:20.240 --> 0:01:24.920 strategist Edward Harrison, the author of Bloomberg's The Everything Risk newsletter. 0:01:25.280 --> 0:01:27.399 Ed It's great to speak with you, And of course, 0:01:27.400 --> 0:01:30.679 after we just got that big surprise on February jobs, 0:01:30.800 --> 0:01:34.800 what's the risk of a market surprise on the inflation front? 0:01:35.040 --> 0:01:40.399 Hey, Nathan, I think the risk is there. Certainly, the 0:01:40.480 --> 0:01:44.080 risk is probably less there for CPI than it is 0:01:44.280 --> 0:01:48.240 for the PCE index, which is the one that the 0:01:48.320 --> 0:01:53.400 Fed really tracks more closely. Given the fact that we 0:01:53.520 --> 0:01:57.000 have this war in Iran, I think they might look 0:01:57.120 --> 0:02:00.960 through some of the gasoline prices and look towards the core, 0:02:01.440 --> 0:02:06.080 you know, not including food, not including energy. And so 0:02:06.160 --> 0:02:07.480 the numbers to look. 0:02:07.280 --> 0:02:10.440 For are the core for. 0:02:10.560 --> 0:02:16.160 CPI, which is the Bloomberg Economist estimate is at two 0:02:16.200 --> 0:02:19.880 point four percent on average, and the estimates that we 0:02:19.960 --> 0:02:23.680 have for the PCE core, however, are three point one percent. 0:02:24.040 --> 0:02:26.880 So that's the number that to key in on for 0:02:27.000 --> 0:02:31.959 this week, because that's the highest number of the numbers 0:02:32.000 --> 0:02:32.959 that we're looking at. 0:02:33.120 --> 0:02:36.880 Why are we seeing that dispersion ed between what the 0:02:36.919 --> 0:02:40.400 FED keeps its zion and what really matters to the 0:02:40.440 --> 0:02:43.960 American consumer. The CPI number that we're getting this week. 0:02:45.080 --> 0:02:46.720 Yeah, well, you know, I think a lot of it 0:02:46.720 --> 0:02:50.680 has to do with the different measures of that go 0:02:50.840 --> 0:02:55.360 in that play into those particular indices. And what the 0:02:55.400 --> 0:02:58.400 FED said in the past is that the PCE number 0:02:58.440 --> 0:03:01.640 is more reflective of the overall trend of the economy. 0:03:01.840 --> 0:03:03.880 And one of the reasons that they're using the core 0:03:03.960 --> 0:03:07.120 as the number that they're watching more closely is to 0:03:07.400 --> 0:03:11.240 rule out vital food and energy prices that irrespective of 0:03:11.280 --> 0:03:15.960 what's happening in Iran, are going to move around irrespective 0:03:16.800 --> 0:03:19.400 and so you know, they want to look at what's 0:03:19.480 --> 0:03:22.920 the trend level. And if the trend levels three point 0:03:22.960 --> 0:03:27.440 one percent it was three percent in the in December, 0:03:27.440 --> 0:03:29.440 which is the last reading that we got for PCE, 0:03:30.080 --> 0:03:33.920 then that's really not a level at which they would 0:03:33.960 --> 0:03:37.960 feel comfortable cutting interest rates. Suddenly we're starting to think about, 0:03:38.400 --> 0:03:41.400 you know, an extended hold and potentially the next move 0:03:41.520 --> 0:03:44.120 being a rate hike, not a cut. 0:03:44.520 --> 0:03:50.160 Even after that surprise drop in jobs numbers that we 0:03:50.240 --> 0:03:53.560 saw just this past week in the February number. 0:03:54.160 --> 0:03:57.520 Yeah, so that number that we saw this past week, 0:03:58.360 --> 0:04:02.000 it points to what I would called stagflation light. That 0:04:02.120 --> 0:04:05.800 means that not only do we have inflation, but we 0:04:05.920 --> 0:04:09.520 also have slowing growth. And this is something that's very 0:04:09.560 --> 0:04:12.600 difficult for the FED to deal with because you know, 0:04:12.920 --> 0:04:16.200 they're looking at inflation and their ability to stop inflation, 0:04:16.279 --> 0:04:18.640 but then when growth is slowing at the same time, 0:04:18.960 --> 0:04:22.640 their hands are tied because the inflation is already elevated. 0:04:23.160 --> 0:04:27.120 If we do continue to see a prolonged conflict in 0:04:27.160 --> 0:04:30.159 the Middle East, could that have knock on effects on 0:04:30.440 --> 0:04:34.720 overall inflation if we continue to see energy prices elevated 0:04:34.800 --> 0:04:36.400 like they are right now. 0:04:37.160 --> 0:04:40.839 Yes, I think it could, Nathan, I think that if 0:04:40.839 --> 0:04:47.520 you have a protracted conflict, it could add to inflation expectations, 0:04:47.560 --> 0:04:51.120 not just for the next year, but it could get 0:04:51.160 --> 0:04:55.680 you a sense that inflation is trending higher. Since we 0:04:55.680 --> 0:04:59.279 already have this core PCE number that I've been talking 0:04:59.320 --> 0:05:04.840 about at three percent, suddenly, you know, mindsets change and 0:05:05.240 --> 0:05:08.280 people start thinking this could be in for the long 0:05:08.320 --> 0:05:13.000 haul as sort of an inflationary number that we're going 0:05:13.080 --> 0:05:15.200 to have. Let me just say, by the way, that 0:05:16.440 --> 0:05:19.440 we've been above the fed's target for five years now, 0:05:19.920 --> 0:05:24.560 so we're getting to a point where that inflationary mindset 0:05:24.640 --> 0:05:26.080 starts to creep. 0:05:25.720 --> 0:05:29.080 In, which raises the question I think you're alluding to 0:05:29.160 --> 0:05:33.440 about whether inflation expectations may be coming unanchored now, Is 0:05:33.760 --> 0:05:34.760 that what you're getting at? 0:05:35.279 --> 0:05:37.919 Yeah, that's exactly what I'm getting at. What we've seen 0:05:38.240 --> 0:05:42.680 thus far is that inflation expectations haven't been unanchored. That 0:05:43.080 --> 0:05:46.680 even in the beginning stages of this particular conflict in 0:05:46.720 --> 0:05:50.279 the Middle East. You know, if you look at break evens, 0:05:50.560 --> 0:05:55.360 that's the number that gets you between inflation protected securities 0:05:55.360 --> 0:05:58.800 and treasuries. And if you look at swaps rates in 0:05:58.839 --> 0:06:03.279 the market that show you, you know, what expectations are 0:06:03.279 --> 0:06:06.960 in two years or five years. You know, the longer 0:06:07.080 --> 0:06:12.000 term ones, five years, ten years, those expectations have remained 0:06:12.120 --> 0:06:15.560 a solid It's when those go off that the FED 0:06:15.680 --> 0:06:16.800 is most concerned. 0:06:17.080 --> 0:06:21.000 Thank you, Ed, As always, that's Edward Harrison, senior strategist 0:06:21.080 --> 0:06:25.240 at Bloomberg News, author of Bloomberg's The Everything Risk newsletter. 0:06:25.640 --> 0:06:27.920 Let's take a look now at some stocks making news 0:06:27.960 --> 0:06:30.400 in the week ahead. I'm Nathan Hager, joined by Bloomberg 0:06:30.440 --> 0:06:34.000 Equities reporter Matthew Griffin. On another week where we're going 0:06:34.040 --> 0:06:38.120 to see some pretty big names reporting earnings starting on Tuesday, 0:06:38.240 --> 0:06:41.200 when we'll be in the cloud with Oracle. Could we 0:06:41.240 --> 0:06:45.800 see a benefit for Oracle from the AI spending boom, Matthew. 0:06:46.120 --> 0:06:49.039 Well, Nathan, I think that is the question that is 0:06:49.080 --> 0:06:52.159 going to be front and center of investors' minds because 0:06:53.240 --> 0:06:59.080 the huge outlays on AI from Oracle have been greeted 0:06:59.200 --> 0:07:02.360 enthusiastically on Wall Street in the past and have been 0:07:02.480 --> 0:07:06.120 punished on Wall Street. I mean, you just look at 0:07:06.120 --> 0:07:10.520 what the stock did in twenty twenty four, up sixty 0:07:10.560 --> 0:07:12.960 one percent, a twenty percent boost last year. All of 0:07:13.000 --> 0:07:18.000 this AI spending, their move to position themselves as an 0:07:18.040 --> 0:07:23.280 AI cloud provider, made Oracle a darling on Wall Street. 0:07:24.600 --> 0:07:28.200 But after that you have had questions arise about what 0:07:28.240 --> 0:07:30.800 the return is going to be on this spending. The 0:07:30.840 --> 0:07:35.640 stocks now down about fifty percent from its September record high, 0:07:35.880 --> 0:07:39.120 and you actually saw the shares plunge in December after 0:07:39.160 --> 0:07:42.960 the company raised its spending on data centers. So they're 0:07:43.040 --> 0:07:46.440 reporting in a moment where this is really a question. 0:07:46.640 --> 0:07:48.600 And the reporting in a moment where we've just heard 0:07:48.600 --> 0:07:51.280 in the last few days that Oracles has plans to 0:07:51.920 --> 0:07:56.400 cut thousands of jobs just ahead of this earnings report, 0:07:56.480 --> 0:07:59.600 what more do investors want to see from Larry Ellison's company? 0:07:59.600 --> 0:08:06.200 Matthew, Yes, I think they're going to be looking again 0:08:06.400 --> 0:08:10.520 at this cost benefit payoff. I mean, you have analysts 0:08:10.600 --> 0:08:15.120 looking for revenue growth here they see just under sixteen 0:08:15.160 --> 0:08:18.440 billion dollars of revenue versus fourteen billion in the year 0:08:18.440 --> 0:08:22.840 ago quarter. And I think that's also at the heart 0:08:22.880 --> 0:08:25.520 and center of whether these tens of billions of dollars 0:08:25.560 --> 0:08:28.120 of capital expenditure are going to pay off on the 0:08:28.120 --> 0:08:33.079 top and ultimately the bottom line. You see that in 0:08:33.120 --> 0:08:37.000 the reports of some of the Magnificent seven companies this quarter, 0:08:37.080 --> 0:08:40.240 where again it's it's the question not just of are 0:08:40.240 --> 0:08:42.680 you spending are you an AI player, but are you 0:08:42.800 --> 0:08:47.280 generating revenue to fund those expenditures. The job cuts are 0:08:47.559 --> 0:08:51.040 actually aimed at freeing up money to pay for capital 0:08:51.080 --> 0:08:54.240 expenditures for the AI boom. That's what people familiar with 0:08:54.280 --> 0:08:58.840 the matter have told us. So again, I think investors 0:08:58.880 --> 0:09:00.920 are going to be looking for both sides of the 0:09:00.960 --> 0:09:01.640 ledger there. 0:09:01.720 --> 0:09:04.720 And we're gonna hear another side of the AI story. 0:09:04.760 --> 0:09:08.360 I think probably on Thursday when Adobe reports. I gotta 0:09:08.400 --> 0:09:10.520 think this is one of those stocks that's been caught 0:09:10.559 --> 0:09:13.760 up in the question about whether software companies are going 0:09:13.800 --> 0:09:16.480 to be hit by the AI disruption. 0:09:17.440 --> 0:09:23.560 Yes, Nathan, Adobe shares have tumbled actually during what investors, 0:09:23.600 --> 0:09:26.520 the atalysts have started to call these SaaS apocalypse, this 0:09:27.200 --> 0:09:35.000 giant selloff in software stocks. Adobe's shares again, you think 0:09:35.000 --> 0:09:38.640 about this happening in the last couple of months, but 0:09:38.679 --> 0:09:42.040 these concerns have really been swirling for a while. Adobe 0:09:42.040 --> 0:09:44.760 down about twenty percent year to date, but actually got 0:09:44.760 --> 0:09:47.720 a really lukewarm reception on Wall Street back in December, 0:09:47.800 --> 0:09:51.000 even though they had a pretty upbeat forecast, because you 0:09:51.080 --> 0:09:55.080 already had people questioning do the numbers matter now if 0:09:55.320 --> 0:09:58.280 what you do can be replicated by cheap AI tools? 0:09:58.720 --> 0:10:04.840 So the commentary on that may be as important, you know, 0:10:04.880 --> 0:10:08.120 whether the company sees itself as shielded as any actual 0:10:08.200 --> 0:10:09.080 number they report. 0:10:09.200 --> 0:10:11.559 And has there been a question as well about whether 0:10:11.800 --> 0:10:16.400 the AI tools that Adobe says it has are going 0:10:16.480 --> 0:10:18.800 to have their own payoff. It's been kind of dealing 0:10:18.840 --> 0:10:20.400 with that struggle as well, hasn't it. 0:10:21.200 --> 0:10:25.760 Yes, absolutely so. I was looking at what analysts were saying, 0:10:25.800 --> 0:10:30.080 and what Piper Sandler says is investors are going to 0:10:30.200 --> 0:10:33.920 be honing in on metrics related to how much money 0:10:33.960 --> 0:10:37.120 the company is making from AI. Now, they do see 0:10:37.320 --> 0:10:42.439 that the stock may be de risked here. The company 0:10:42.559 --> 0:10:46.040 has given guidance, you know, taking a step back again. 0:10:46.080 --> 0:10:48.320 The shares have slid, and so they actually see that 0:10:48.360 --> 0:10:52.760 there could be some upside here if AI adoption is 0:10:52.880 --> 0:10:55.400 better than expected. But yes, I think you're absolutely right. 0:10:55.400 --> 0:10:56.920 That's a key question for investors. 0:10:57.240 --> 0:10:59.960 And along with those marquee names in the tech space, 0:11:00.080 --> 0:11:02.040 we're going to hear from a big name in retail 0:11:02.160 --> 0:11:05.560 when Cole's opens its books. I guess the question here 0:11:05.720 --> 0:11:07.600 is how's the consumer doing? 0:11:08.160 --> 0:11:14.280 Yes, absolutely, Cole's is the latest big consumer name. They 0:11:14.320 --> 0:11:19.559 are estimated to report next week. And you know, the 0:11:20.000 --> 0:11:23.120 question of the health of the American consumer is really 0:11:23.400 --> 0:11:26.200 another thing that's front and center for investors' minds. As 0:11:26.200 --> 0:11:28.640 if they didn't have enough to think about, you know, 0:11:29.040 --> 0:11:34.160 you think about us unexpectedly shedding jobs. You've had this 0:11:34.280 --> 0:11:37.640 idea that consumers are trading down, but actually Coals so 0:11:37.720 --> 0:11:41.400 far has held up against this backdrop. They raised their 0:11:41.440 --> 0:11:47.920 full year outlook in November because consumers had shown that 0:11:47.960 --> 0:11:50.959 they were willing to spend on brands that they really wanted. 0:11:51.400 --> 0:11:54.920 And so again, so far Cole's has been a relative 0:11:54.920 --> 0:11:57.280 winner here. But I don't think investors see that as 0:11:57.280 --> 0:11:59.319 a guarantee, and they're going to be looking closely at 0:11:59.440 --> 0:12:04.199 consumer and I think again at the commentary from executives 0:12:04.240 --> 0:12:06.920 about whether the consumer's under pressure, what that looks like. 0:12:07.200 --> 0:12:10.560 Yeah, another a very busy week once again on the 0:12:10.600 --> 0:12:12.959 earnings front. Thank you for this, Matthew, great having you 0:12:13.000 --> 0:12:16.760 on with us. That's Bloomberg Equities reporter Matthew Griffin, And 0:12:16.880 --> 0:12:19.520 coming up on Bloomberg day Break weekend, we'll look ahead 0:12:19.559 --> 0:12:24.840 to Tuks in Paris on spreading France's nuclear umbrella across Europe. 0:12:25.000 --> 0:12:39.360 I'm Nathan Hager, and this is Bloomberg. This is Bloomberg 0:12:39.440 --> 0:12:41.800 day Break Weekend, our global look ahead at the top 0:12:41.840 --> 0:12:44.760 stories for investors in the coming week. I'm Nathan Hager 0:12:44.800 --> 0:12:47.559 in Washington. Up later in our program, we look ahead 0:12:47.559 --> 0:12:52.160 to legislative elections in Vietnam. But first, Europe's defense debate 0:12:52.280 --> 0:12:55.280 is entering a new phase. For decades, the continent has 0:12:55.320 --> 0:12:58.360 relied on the US nuclear umbrella, but with war on 0:12:58.440 --> 0:13:01.720 Europe's borders, escalating tensions in the Middle East, and growing 0:13:01.800 --> 0:13:06.200 uncertainty about America's long term commitments that calculation is shifting. 0:13:06.520 --> 0:13:10.040 It's a conversation that exposes deep divisions across the block 0:13:10.160 --> 0:13:13.800 over defense spending, strategic autonomy, and how far Europe should 0:13:13.840 --> 0:13:17.280 go to secure itself. On one hand, countries like Poland 0:13:17.320 --> 0:13:20.560 want to ramp up efforts aggressively, whereas Spain sees no 0:13:20.720 --> 0:13:24.120 need to meet US set NATO targets. Next week, European 0:13:24.120 --> 0:13:27.840 diplomats gather in Paris to discuss whether France's nuclear deterrent 0:13:27.880 --> 0:13:31.080 could play a broader role, including the possibility of stationing 0:13:31.200 --> 0:13:34.640 nuclear capable jets in allied countries. Let's get more from 0:13:34.640 --> 0:13:38.520 Bloomberg Daybreak Europe anchor Caroline Hepger in London, Nathan. 0:13:38.720 --> 0:13:42.640 In Europe, only France and Britain have access to nuclear weapons, 0:13:42.679 --> 0:13:45.400 but that may be about to change. The wars in 0:13:45.440 --> 0:13:48.560 the Middle East and in Ukraine, and Europe's relationship with 0:13:48.600 --> 0:13:52.040 the United States has made other countries think again about 0:13:52.040 --> 0:13:56.560 their nuclear options. Next week, talk start in Paris about 0:13:56.559 --> 0:14:01.199 hosting nuclear capable jets in allied European countries. It's part 0:14:01.240 --> 0:14:05.680 of a wider conversation about how Europe defends itself. Those 0:14:05.720 --> 0:14:09.839 discussions have only been accelerated by events in Iran. We'll 0:14:09.880 --> 0:14:12.880 joining me now to discuss but INDs Pyotr Skolamowski, who 0:14:12.920 --> 0:14:16.200 runs our coverage of economies and governments in Central and 0:14:16.360 --> 0:14:21.040 Eastern Europe, from Warsaw and Rodrigo Arijuela, our bureau chief 0:14:21.240 --> 0:14:23.920 in Spain. Welcome to both of you. Thank you for 0:14:24.000 --> 0:14:26.760 being with me. I want to get a sense of 0:14:26.800 --> 0:14:31.240 how your two different countries represent really opposite sides of 0:14:31.280 --> 0:14:36.680 the debate inside the EU on defense spending. Pyota, Poland 0:14:36.760 --> 0:14:41.440 has expressed this wish for more autonomous capabilities. Does that 0:14:41.600 --> 0:14:42.960 mean nuclear weapons? 0:14:43.520 --> 0:14:46.240 Yes? Indeed, so that's probably what Polish leaders have been 0:14:46.240 --> 0:14:49.080 trying to say, and we've been hearing it for quite 0:14:49.080 --> 0:14:52.520 some time. So even the previous president Andre Duda expressed 0:14:52.520 --> 0:14:55.640 this interest in Poland acquiring or taking part in what's 0:14:55.680 --> 0:14:58.480 called nuclear sharing program with the US. The idea was 0:14:58.520 --> 0:15:02.120 rebuff but then now coming back and the new president 0:15:02.480 --> 0:15:05.080 said just last month that that he would be in 0:15:05.120 --> 0:15:09.000 favor of Poland looking and developing its nuclear weapons. We 0:15:09.080 --> 0:15:12.880 heard from Prime Minister Tusk as well earlier this month, 0:15:13.320 --> 0:15:18.040 pretty much saying we eventually Poland will look at developing 0:15:18.080 --> 0:15:23.480 these autonomous capabilities, meaning nuclear bomb Whether and when it's 0:15:23.520 --> 0:15:26.880 going to happen, it's obviously nothing imminent at this point. 0:15:26.880 --> 0:15:29.640 What Poland is looking at, that's what the government seems 0:15:29.640 --> 0:15:32.160 to be focused on, is is working with France. They 0:15:32.400 --> 0:15:34.560 already have a treaty with France that was signed last 0:15:34.880 --> 0:15:37.600 last year that sort of stipulates the possibility of working 0:15:37.640 --> 0:15:44.680 together in sharing capabilities. And Tusk was really enthusiastic right 0:15:44.720 --> 0:15:47.440 from the start when when Marc Kron floated this idea 0:15:47.520 --> 0:15:53.920 and again repeated it now during recently that that that 0:15:54.280 --> 0:15:57.880 France will be willing to share it's its nuclear capable 0:15:58.440 --> 0:16:01.800 jets and stationed in another count. So they're definitely willing 0:16:01.840 --> 0:16:04.520 to take part in that in that endeavor. 0:16:05.320 --> 0:16:09.600 And of course this is as Poland spends a great deal, 0:16:09.720 --> 0:16:13.359 is a significant defense spender in Europe. 0:16:13.800 --> 0:16:17.080 Yes, indeed, so obviously that comes on top of the 0:16:17.080 --> 0:16:19.360 fact that that Poland is spending almost five percent of 0:16:19.800 --> 0:16:26.240 GDP on defense. There is obviously a certain differensive opinion 0:16:26.320 --> 0:16:29.160 between the President and the Prime Minister how the money 0:16:29.200 --> 0:16:32.920 should be spent. Polish president is very much in favor 0:16:32.960 --> 0:16:35.360 and he's been endorsed by Donald Trump. He's very close 0:16:35.400 --> 0:16:38.560 to Tumaga movement in the US, and he's all in 0:16:38.600 --> 0:16:41.720 favor of Poland spending money in the US as it 0:16:41.800 --> 0:16:46.280 has been spending previously to buy weapons. On the other hand, 0:16:46.560 --> 0:16:51.600 Polish Prime Minister is definitely gravitating towards some form of 0:16:51.960 --> 0:16:55.040 European solution when it comes to defense spending, and he 0:16:55.680 --> 0:16:59.440 thinks in terms of if US is really diverging and 0:16:59.520 --> 0:17:04.920 trying to the couple from from Europe, then Poland should 0:17:04.960 --> 0:17:08.280 take part in trying to work on some form of 0:17:08.520 --> 0:17:12.040 joint solutions when it comes to defense in Europe. So 0:17:12.440 --> 0:17:15.160 that's where the differences are, but it does not impact 0:17:15.200 --> 0:17:17.760 the fact that, you know, where we have the consensus 0:17:17.800 --> 0:17:19.440 of the fact that we need to spend more and more. 0:17:20.240 --> 0:17:24.880 Yeah, indeed, it's quite a different picture, though with different ideas. 0:17:24.920 --> 0:17:30.320 In Spain, Rodrigo, Spain's leader Pedro Sanchez, is increasingly seen 0:17:30.520 --> 0:17:33.760 as one of the most aggressive voices pushing back against 0:17:33.800 --> 0:17:36.919 the war in Iran. I suppose I'd like to understand 0:17:36.960 --> 0:17:41.600 from you, firstly why that position that Spain has taken. 0:17:42.320 --> 0:17:47.720 So that position is not totally surprising given his position 0:17:48.040 --> 0:17:52.520 on other issues in recent years. He also took a contrarian, 0:17:52.600 --> 0:17:56.400 if you want, position compared to other Western countries when 0:17:56.440 --> 0:18:00.720 it came to Israel and Gaza, and he his government 0:18:00.800 --> 0:18:06.240 also took a very strong position against increasing the NATO 0:18:06.480 --> 0:18:08.760 spending targets. So this is kind of, you could say, 0:18:08.800 --> 0:18:11.720 the third within that trend, the third time he does 0:18:11.760 --> 0:18:14.840 something like this. In this specific case, what the government 0:18:14.880 --> 0:18:18.600 has argued is that the military basis that the US 0:18:18.720 --> 0:18:21.880 operates from in Spain, there are two of those, They've 0:18:21.920 --> 0:18:26.480 been used for over fifty years, and there are many 0:18:26.640 --> 0:18:31.200 used as a logistics supports, bases for refueling and things 0:18:31.280 --> 0:18:34.600 like that, and the government has the Spanish government has 0:18:34.640 --> 0:18:39.639 said those bases cannot be used for any attack operations. 0:18:39.720 --> 0:18:41.600 So they don't want the basis to be used for 0:18:41.880 --> 0:18:46.800 American military to use as a touching stone to attack Iran. Now, 0:18:46.960 --> 0:18:50.200 what is the argument to justify that. What they're saying 0:18:50.320 --> 0:18:54.919 is that the attack against Iran has been unilateral from 0:18:54.960 --> 0:18:58.359 the attackers Israel and the US, and that it has 0:18:58.520 --> 0:19:03.639 not been formed within the UN Charter or any international laws. 0:19:04.240 --> 0:19:08.000 And so they are saying that any operations of this scale, 0:19:08.320 --> 0:19:11.359 any wars of these of the scale, have to follow 0:19:11.440 --> 0:19:15.399 international law and that they cannot allow their bases to 0:19:15.560 --> 0:19:19.360 be used in operations that are outside the international order. 0:19:19.720 --> 0:19:23.080 And that is the government's official line on this issue, 0:19:23.320 --> 0:19:26.560 that they want to follow the rules and that the 0:19:26.800 --> 0:19:30.159 Americans are not following them and therefore they cannot partner 0:19:30.240 --> 0:19:30.520 with them. 0:19:31.280 --> 0:19:34.280 Okay, I mean there has been in some sense is 0:19:34.280 --> 0:19:36.600 a similar sort of difficulty for the UK kids some 0:19:36.720 --> 0:19:40.240 of the Prime minister here talking about allowing US military 0:19:40.280 --> 0:19:44.440 to use British basis for defensive strikes against ira a 0:19:44.520 --> 0:19:48.439 debate about what that actually means. Look in terms of Spain, 0:19:48.600 --> 0:19:52.920 I mean again, Pedro Sanchez's views sort of chimes also 0:19:53.000 --> 0:19:57.120 with the fact that Spain has not really galvanized defense spending. 0:19:57.280 --> 0:19:59.720 It's been quite resistant to that idea of spending a 0:20:00.280 --> 0:20:03.000 deal more, which has been what President Donald Trump has wanted. 0:20:03.359 --> 0:20:05.600 Why that thinking, do you think in Spain? 0:20:05.640 --> 0:20:06.159 Where do we go? 0:20:06.640 --> 0:20:09.280 Yes, I mean quite resistant. I think is in fact 0:20:10.200 --> 0:20:13.680 an understatement, because they are the only NATO member that 0:20:13.800 --> 0:20:15.800 has said we are not going to do this, and 0:20:15.920 --> 0:20:19.280 there is no way we're changing our position. And while 0:20:19.320 --> 0:20:22.960 everybody else has gone to the five percent target that 0:20:23.119 --> 0:20:25.800 the Americans came up with, they have said that they 0:20:25.800 --> 0:20:28.680 were sticking to two point one percent. There are two 0:20:28.800 --> 0:20:32.760 arguments for this are one that with two point one 0:20:32.840 --> 0:20:37.280 percent they can meet all the demands and all the needs, 0:20:37.320 --> 0:20:41.520 all the requirements for defensive spending. What they are saying 0:20:41.640 --> 0:20:44.840 is that the five percent number was kind of pulled 0:20:44.840 --> 0:20:47.000 out of the blue and that there is no actual 0:20:47.160 --> 0:20:50.040 justification for it. There is no explanation as to why 0:20:50.520 --> 0:20:53.639 that's the magic number, and that if you look at 0:20:53.800 --> 0:20:58.040 the military needs, at weapons and all other kind of 0:20:58.200 --> 0:21:00.960 military needs, you can cover. I was with two point 0:21:01.000 --> 0:21:03.840 one percent in Spain's case, and that's the main one. 0:21:03.880 --> 0:21:05.960 The other one is that if you go up to 0:21:06.359 --> 0:21:09.520 five percent, you have to start pulling money out of 0:21:09.880 --> 0:21:14.120 other expenses, other parts of your budget, and that going 0:21:14.240 --> 0:21:17.719 up to five percent without an explanation as to why 0:21:17.800 --> 0:21:20.200 you're going to that number, means that you'll have less 0:21:20.240 --> 0:21:24.080 money for things such as social welfare, healthcare, education. 0:21:24.320 --> 0:21:24.720 That is the. 0:21:24.720 --> 0:21:28.399 Government's official line on this, and that is their position. 0:21:28.560 --> 0:21:30.440 If we have to put money into this, we'll have 0:21:30.520 --> 0:21:32.240 to take it out of other places, and there is 0:21:32.359 --> 0:21:35.160 no reason that has been given to us as to why. 0:21:35.119 --> 0:21:37.800 We have to do that. Okay, so that's the Spanish view. 0:21:38.080 --> 0:21:41.840 Meanwhile, back to Poland Pyota and what about these nuclear 0:21:41.920 --> 0:21:46.720 power jets, because there's discussion about having nuclear capable fighter 0:21:46.760 --> 0:21:51.120 jets being stationed elsewhere in Europe, not for Spain, but Germany, 0:21:51.320 --> 0:21:56.679 the UK, Belgium, other countries and also Poland are looking 0:21:56.800 --> 0:21:59.760 at this. You know, Manue Macaw has been talking about 0:22:00.160 --> 0:22:02.280 and there's going to be a meeting to discuss this, 0:22:02.440 --> 0:22:04.680 and what do you think might emerge from that? 0:22:05.440 --> 0:22:08.879 Yes, indeed, so Tusk has been very keen on the 0:22:09.000 --> 0:22:11.719 idea right from the start when it was first floated 0:22:11.800 --> 0:22:15.640 i believe last year, and then obviously now officially sort 0:22:15.640 --> 0:22:19.000 of communicated by by Macron. So indeed there's a there's 0:22:19.040 --> 0:22:25.320 a meeting in Paris nuclear about nuclear energy. But what 0:22:25.480 --> 0:22:28.639 Tusk also said is that we assume on on the 0:22:28.720 --> 0:22:31.520 sidelines of that meeting there's going to be more consultations 0:22:31.600 --> 0:22:35.240 going on about about this idea. He also mentioned that 0:22:35.920 --> 0:22:38.600 when it comes to this this plan, he will be 0:22:38.760 --> 0:22:42.560 in touch or or will be communicating with other allies, 0:22:42.680 --> 0:22:46.440 especially from the Nordic region, where cooperation between Poland and 0:22:46.520 --> 0:22:50.000 Nordics and all the countries around the Baltics have been 0:22:50.320 --> 0:22:54.520 growing tighter there's definitely willingness on the on the Polish 0:22:54.600 --> 0:22:59.040 side to to engage in that that plan. Clearly, the 0:22:59.160 --> 0:23:03.280 experience that they had with the previous idea of nuclear 0:23:03.359 --> 0:23:06.520 sharing with the US, which was rebuffed, told them that 0:23:06.880 --> 0:23:10.800 at least that route is closed. And it sort of 0:23:10.920 --> 0:23:15.480 speaks or fits very nicely in how the government sees 0:23:15.880 --> 0:23:19.600 its cooperation and how it wants to build its its defense. 0:23:20.200 --> 0:23:24.000 It sees the US sort of disengaging, although it wants 0:23:24.040 --> 0:23:28.080 to keep US close. Still, Poland still hosts ten thousand 0:23:28.160 --> 0:23:31.640 around ten thousand troops on its soil, but it wants 0:23:31.720 --> 0:23:35.080 to have or be part of the of the cooperation 0:23:35.200 --> 0:23:38.400 with Europe and and sort of the fact that these clear, 0:23:38.560 --> 0:23:42.080 enabled or capable jets will be stationed in Poland is 0:23:42.440 --> 0:23:44.520 very much something that that Pland will be keen on it. 0:23:44.680 --> 0:23:47.440 But obviously the devil is in the details. It's it's 0:23:47.720 --> 0:23:50.520 hard to say how quickly it could be done. And 0:23:50.600 --> 0:23:54.280 the other question is purely political in that sense. Obviously, 0:23:54.480 --> 0:23:57.560 France is going into election next year, a Manual Macron 0:23:57.760 --> 0:24:00.000 is not running in this election, and the post show 0:24:00.040 --> 0:24:02.760 that the fire Right could take power, and that's a 0:24:02.800 --> 0:24:05.240 big question mark for everyone in Eastern Europe as a 0:24:05.320 --> 0:24:07.840 matter of fact. So if we commit to that idea, 0:24:08.359 --> 0:24:11.800 what happens next after the macron is gone, and would 0:24:11.840 --> 0:24:15.080 that plan change? And if we over commit, would that 0:24:15.280 --> 0:24:19.040 mean US will not be willing to work with us 0:24:19.119 --> 0:24:21.680 on that project in the future. So there's a lot 0:24:21.720 --> 0:24:25.480 of issues here to consider before it all happens. 0:24:25.760 --> 0:24:28.680 Yeah, I think it's going to be interesting to see 0:24:29.080 --> 0:24:31.960 where this issue leads. Thank you so much to both 0:24:32.000 --> 0:24:34.879 of you for joining me. Bin Begs, Rodrigo Olijuera are 0:24:35.000 --> 0:24:38.959 bureau chief in Spain, and Peot Scolimouski, who runs our 0:24:39.080 --> 0:24:42.320