WEBVTT - Daybreak Weekend: US Jobs, Made in Europe, China PMI Data 0:00:00.240 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.600 --> 0:00:13.640 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.640 --> 0:00:16.240 top stories in the coming week from our Daybreak anchors 0:00:16.360 --> 0:00:19.080 all around the world. Straight Ahead on the program, we'll 0:00:19.079 --> 0:00:21.400 look ahead to jobs data in the US and what 0:00:21.440 --> 0:00:24.960 they may mean for FED policy. I'm Nathan Hager in Washington. 0:00:25.160 --> 0:00:27.680 I'm Carolin Hedgod London, where we discussed what the Maid 0:00:27.760 --> 0:00:30.680 in Europe plan means for countries and companies. 0:00:30.960 --> 0:00:33.800 I'm deg Prisner looking ahead to the reading on sentiment 0:00:33.880 --> 0:00:36.480 among Chinese purchasing managers. 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 zero, 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, Sirius 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. 0:01:02.440 --> 0:01:05.000 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.040 --> 0:01:07.880 program with some key economic data in the US. We 0:01:07.959 --> 0:01:10.800 get non farm payrolls for the month of February at 0:01:10.840 --> 0:01:14.399 eight thirty am Wall Street Time on Friday. For more 0:01:14.440 --> 0:01:17.480 on how this latest jobs report could affect FED policy 0:01:17.520 --> 0:01:20.920 and interest rates. Let's bring in Bloomberg International Economics and 0:01:20.959 --> 0:01:24.840 Policy correspondent Michael McKee. Mike, thanks for being here. Of course, 0:01:25.040 --> 0:01:29.640 this comes after that surprisingly strong January jobs report. Is 0:01:29.640 --> 0:01:31.160 that going to be a one off or could it 0:01:31.200 --> 0:01:32.199 be the start of a trend. 0:01:32.760 --> 0:01:36.399 Well, that's the question that this whole data release will 0:01:36.440 --> 0:01:39.080 turn on. And for once we can say that this 0:01:39.280 --> 0:01:44.399 is an important number because we've had several FED officials say, 0:01:44.920 --> 0:01:47.480 particularly Chris Waller, say that if we get the same 0:01:47.600 --> 0:01:50.880 kind of number this month, then he would think that 0:01:51.440 --> 0:01:54.920 he probably would vote to hold instead of dissenting in 0:01:54.960 --> 0:01:58.480 favor of a rate cut on March eighteenth. So it 0:01:58.560 --> 0:02:02.360 does have somess. Of course, the other side of that 0:02:02.720 --> 0:02:06.080 is does unemployment go up? The forecast at the moment 0:02:06.440 --> 0:02:08.600 is for it to tick up to four point four 0:02:08.600 --> 0:02:11.840 percent from four point three. That might not move the 0:02:11.880 --> 0:02:14.440 needle for the FED, but if it were anything more 0:02:14.520 --> 0:02:19.080 than that, then they might get nervous and cut rates. 0:02:19.120 --> 0:02:22.360 So there's gonna be a lot of scrutiny of this 0:02:22.480 --> 0:02:23.240 number this time. 0:02:23.360 --> 0:02:25.720 So it sounds like it could really go one way 0:02:25.840 --> 0:02:28.240 or the other at a time when a lot of 0:02:28.320 --> 0:02:31.400 market participants have been thinking maybe the FED might stay 0:02:31.440 --> 0:02:33.200 on hold just until we get a new chair. 0:02:34.000 --> 0:02:37.959 Well that's probably the case. It would I think take 0:02:38.080 --> 0:02:42.160 a lot for the FED itself to change its views. 0:02:42.639 --> 0:02:45.120 In general, the majority are in favor of being on 0:02:45.200 --> 0:02:47.760 hold for right now, because they think they're tight enough 0:02:48.919 --> 0:02:52.280 that they can bring down inflation if they leave rates 0:02:52.280 --> 0:02:55.679 where they are without hurting the labor market. Now, the 0:02:55.800 --> 0:02:58.920 question is what hurts the labor market these days, because 0:02:58.960 --> 0:03:02.880 with the lack of people entering the labor force, in 0:03:03.040 --> 0:03:07.040 large part because of all the deportations. What you're seeing 0:03:07.200 --> 0:03:11.960 is maybe fifty sixty thousand being a neutral rate, the 0:03:12.040 --> 0:03:16.320 level that keeps the unemployment rate unchanged. And so if 0:03:16.320 --> 0:03:18.680 you get something much higher like we got last month, 0:03:19.000 --> 0:03:21.360 then it looks really good for the labor market and 0:03:21.400 --> 0:03:23.000 you don't need to cut rates. If you get something 0:03:23.040 --> 0:03:26.959 significantly below that, then they'll get a little concerned going 0:03:27.040 --> 0:03:30.800 into it. We're looking at about sixty thousand as an estimate, 0:03:30.840 --> 0:03:32.440 but that could change over the week. 0:03:32.800 --> 0:03:34.880 Of course, as you know, a lot of the discussion 0:03:34.920 --> 0:03:37.320 that's been cropping up in the FED is about how 0:03:37.520 --> 0:03:40.560 artificial intelligence might be affecting the labor market. As well, 0:03:40.640 --> 0:03:43.520 not just the immigration story. Do you expect that to 0:03:43.600 --> 0:03:46.200 feed into the February numbers or is that kind of 0:03:46.240 --> 0:03:47.320 a broader discussion. 0:03:47.840 --> 0:03:50.600 It's a broader discussion at this point. Most economists, I 0:03:50.600 --> 0:03:53.880 think the vast majority, don't think AI is showing up 0:03:53.880 --> 0:03:57.680 in the data yet other than the money that's being 0:03:57.680 --> 0:04:02.760 spent on being a building AI. Yeah, but the technology 0:04:02.800 --> 0:04:06.520 is too new and hasn't been adopted by enough companies 0:04:06.640 --> 0:04:12.000 in enough scale to really change the way companies are organized, 0:04:12.480 --> 0:04:14.840 and so it's not going to be in the labor 0:04:14.880 --> 0:04:19.839 market data, and it's not been adopted widely enough to 0:04:19.960 --> 0:04:22.680 change the inflation data yet. This is something that's on 0:04:22.760 --> 0:04:25.720 the horizon and it's certainly got everybody talking about it, 0:04:26.680 --> 0:04:28.080 but it's not there yet. 0:04:28.279 --> 0:04:30.280 Well, one phrase I keep hearing from you and your 0:04:30.320 --> 0:04:34.880 coverage of this labor market is low higher, low fire. 0:04:35.920 --> 0:04:38.160 Is that still where we are? And if we do 0:04:38.600 --> 0:04:41.599 get some job growth in this report, where do you 0:04:41.600 --> 0:04:42.680 think it's going to show up? 0:04:43.560 --> 0:04:45.400 Well, the best bet for job growth is going to 0:04:45.440 --> 0:04:48.680 be in healthcare services, because that's where almost all the 0:04:48.760 --> 0:04:52.240 job growth has been for some months. The people who 0:04:52.279 --> 0:04:54.799 take care of all the baby boomers who are retiring 0:04:54.800 --> 0:04:57.599 that sort of thing. We haven't seen much job growth 0:04:57.600 --> 0:05:01.760 anywhere else. There has been some construction because of the 0:05:01.960 --> 0:05:06.960 AI build out, but I think what we're still seeing 0:05:06.960 --> 0:05:09.359 at this point is a lot of companies sitting on 0:05:09.400 --> 0:05:12.720 the sidelines, not sure what the business climate is going 0:05:12.760 --> 0:05:15.640 to be like. And now even more so it wouldn't 0:05:15.680 --> 0:05:18.599 show up in these February numbers, but even more so 0:05:18.760 --> 0:05:22.400 because of the tariff decision by the Supreme Court. We 0:05:22.400 --> 0:05:23.960 don't know what tariffs are going to be, We don't 0:05:23.960 --> 0:05:26.520 know what they'll put them on again, and so you 0:05:26.520 --> 0:05:28.960 don't know what companies are going to do. So at 0:05:29.000 --> 0:05:32.320 this point, don't look for a huge amount of hiring, 0:05:32.680 --> 0:05:37.320 and you're right, it's low firing. Jobless claims remain extremely low. 0:05:37.720 --> 0:05:40.719 Don't give any indication that companies are making big layoffs. 0:05:40.960 --> 0:05:42.520 So does that mean we're in kind of wait in 0:05:42.600 --> 0:05:45.240 C mode as far as a company thinking is going 0:05:45.279 --> 0:05:48.320 in terms of where wages go as well, because we 0:05:48.800 --> 0:05:52.000 have heard at least some talk from the administration that 0:05:52.040 --> 0:05:54.960 they think that wages are keeping up with or even 0:05:55.040 --> 0:05:56.080 outpacing inflation. 0:05:56.160 --> 0:05:58.760 At this point, wages have been growing a little faster 0:05:58.880 --> 0:06:01.440 than inflation, which is what you want to see. You 0:06:01.480 --> 0:06:04.240 don't want to see wages shooting up because then that 0:06:04.400 --> 0:06:09.520 could create inflation issue. But that's not the historical pattern. 0:06:09.600 --> 0:06:12.680 We did see wages rise significantly coming out of the 0:06:12.680 --> 0:06:16.320 pandemic because companies were desperate to try to get workers 0:06:16.360 --> 0:06:19.279 to come work for them. But now since they're not hiring, 0:06:19.360 --> 0:06:22.320 wages have been coming down and they're just about at 0:06:22.320 --> 0:06:25.640 a kind of a neutral level where they're not an 0:06:25.640 --> 0:06:28.679 inflation problem, but they're still enough to get you ahead 0:06:28.680 --> 0:06:34.000 of inflation. So the wage issue isn't going to change 0:06:34.040 --> 0:06:35.240 much probably either. 0:06:35.760 --> 0:06:39.280 Appreciate this, Mike, ahead of another Jobs Friday later on 0:06:39.320 --> 0:06:43.400 this week. That's Michael McKee, international economics and policy correspondent 0:06:43.440 --> 0:06:46.480 for Bloomberg Radio and Television. Let's take a look now 0:06:46.520 --> 0:06:48.640 at some stocks making news in the week ahead. I'm 0:06:48.720 --> 0:06:52.919 Nathan Hager, joined by Bloomberg Equities reporter Carmen Reinikey. On 0:06:53.000 --> 0:06:56.159 another pretty busy week for earnings, despite the fact almost 0:06:56.160 --> 0:06:59.200 everybody's reported already, but we hear from a big name 0:06:59.640 --> 0:07:04.240 in retail this week, Target on Tuesday. It seems like 0:07:04.279 --> 0:07:06.880 it's been tough for Target for several quarters now. 0:07:06.960 --> 0:07:10.120 Carmen, Yeah, it's true, So a key figure for them 0:07:10.360 --> 0:07:13.280 is comparable sales growth. It's been negative in the last 0:07:13.360 --> 0:07:16.560 three quarters, and it's something that analysts are expecting will 0:07:16.600 --> 0:07:19.440 fall again. So that's something I'm definitely going to be watching. 0:07:20.560 --> 0:07:22.720 Shares have actually gotten a little bit of a resurgence 0:07:22.800 --> 0:07:25.400 so far this year. They're up about seventeen percent after 0:07:25.560 --> 0:07:29.000 four consecutive years of falling, so that's going to be 0:07:29.080 --> 0:07:33.040 really important. You know, earnings generally speaking, move stocks. I'm 0:07:33.040 --> 0:07:36.080 also watching this after Walmart's report earlier in the month. 0:07:36.200 --> 0:07:38.720 It forecasts less earnings growth for the year than Wall 0:07:38.760 --> 0:07:42.440 Street anticipated and had a pretty conservative view of the 0:07:42.520 --> 0:07:47.080 US economy and sort of unpredictable times for consumers, which 0:07:47.200 --> 0:07:49.040 I think raised a little bit of a red flag. 0:07:49.160 --> 0:07:52.000 So Walmart usually does offer a kind of conservative guidance 0:07:52.040 --> 0:07:53.640 at the start of the year and then raises it 0:07:53.680 --> 0:07:56.120 in the following quarters. But this is still one that 0:07:56.160 --> 0:07:58.760 people are really watching, as you know, a bell weather 0:07:58.920 --> 0:08:02.000 for the US economy, and Target is right in line 0:08:02.040 --> 0:08:02.680 sort of after that. 0:08:02.960 --> 0:08:07.160 Yeah, absolutely. You mentioned that the stock has been on 0:08:07.200 --> 0:08:09.920 the rise since the start of the year despite all 0:08:09.960 --> 0:08:12.880 the troubles. Does that really kind of raise the bar 0:08:13.000 --> 0:08:16.760 for Target? When it comes to meeting those earning expectations, 0:08:17.120 --> 0:08:17.840 it certainly could. 0:08:17.960 --> 0:08:21.040 It's the next catalyst for sure that investors will be 0:08:21.240 --> 0:08:24.160 watching for, you know, deciding if they want to continue 0:08:24.200 --> 0:08:26.480 to buy the stock or sell. I think the target's 0:08:26.480 --> 0:08:29.040 gotten so beat up in the last few years that 0:08:29.280 --> 0:08:33.800 it's maybe not the biggest indicator that the bar is raised. 0:08:34.160 --> 0:08:37.080 And especially because we know they're in the turnaround, I 0:08:37.080 --> 0:08:40.520 think expectations aren't super high for them, so we'll see. 0:08:40.559 --> 0:08:43.599 I mean, certainly bulls want to see this rally continue. 0:08:44.400 --> 0:08:49.320 And we also hear from another software name, CrowdStrike on 0:08:49.400 --> 0:08:53.080 Tuesday as well. You know, every time I think about CrowdStrike, 0:08:53.120 --> 0:08:55.760 I think about the outage from a year or so ago. 0:08:56.320 --> 0:08:58.120 Is that something investors still think about? 0:08:58.360 --> 0:08:59.600 You know, that's such a good question. 0:08:59.760 --> 0:09:00.000 I think. 0:09:00.000 --> 0:09:02.440 I think the CrowdStrike was able to really move past 0:09:02.480 --> 0:09:06.080 that quite quickly. It's not something that I've necessarily seen 0:09:06.160 --> 0:09:09.720 is the biggest problem for CrowdStrike in the last few months. 0:09:09.760 --> 0:09:11.920 I mean, certainly, the bigger thing that I'm kind of 0:09:11.920 --> 0:09:14.760 looking at is that we've seen really broad based weakness 0:09:14.840 --> 0:09:17.959 in software and this was actually one of the stocks 0:09:17.960 --> 0:09:22.840 that got hit recently when Anthropic announced a new security 0:09:22.880 --> 0:09:26.440 feature and it's clawed AI models, so it's a cyber 0:09:26.800 --> 0:09:30.320 security company. And other companies sort of in that space, 0:09:30.679 --> 0:09:35.959 Cloud flare Z scaler sale point slumped, so Crowdstrikes regained 0:09:35.960 --> 0:09:40.240 some of those losses. It's down still though, nineteen percent 0:09:40.320 --> 0:09:43.560 almost twenty percent on the year. So that's actually something 0:09:43.600 --> 0:09:45.760 that I'm looking for sort of most in these earnings 0:09:45.800 --> 0:09:48.680 is what are they going to say about AI going 0:09:48.720 --> 0:09:51.680 forward and how they're incorporating it. If they're you know, 0:09:51.880 --> 0:09:54.160 they are worried about disruption, or if they sort of 0:09:54.160 --> 0:09:57.040 have plans to maybe integrate it and you know, build 0:09:57.040 --> 0:09:58.599 their business going forward. 0:09:58.320 --> 0:10:00.679 You know what that kind of decline and with you know, 0:10:00.800 --> 0:10:03.400 the way that software stocks have been hammered so far 0:10:03.480 --> 0:10:06.360 in this discussion around AI disruption, you have to wonder 0:10:06.360 --> 0:10:09.720 whether after these earnings maybe some investors might see CrowdStrike 0:10:09.760 --> 0:10:13.000 as a buy opportunity. Is that something that you're thinking about, Oh, totally. 0:10:13.080 --> 0:10:15.640 I mean, we've seen so many valuations kind of come 0:10:15.679 --> 0:10:18.320 in because of these big sell offs. So if you 0:10:18.440 --> 0:10:20.559 are a value investor, if you're even just looking for 0:10:20.760 --> 0:10:24.000 you know, stocks at a discount, there are a lot 0:10:24.000 --> 0:10:27.840 of names in software that maybe makes sense. So definitely 0:10:27.880 --> 0:10:30.440 going to be watching there and seeing if investors you know, 0:10:30.520 --> 0:10:32.520 hear good things in the report and say, Okay, this 0:10:32.640 --> 0:10:33.800 is definitely the time to buy. 0:10:34.200 --> 0:10:38.240 And then on Wednesday, Broadcom reports its results. With all 0:10:38.280 --> 0:10:42.440 this nervousness around the AI spending story, where is the 0:10:42.480 --> 0:10:47.160 bar for the AI infrastructure company Broadcom. 0:10:46.960 --> 0:10:49.280 You know, especially after Nvidia. I think it's going to 0:10:49.280 --> 0:10:53.160 be really interesting to see how investors react to this report. 0:10:53.280 --> 0:10:57.240 So it's another chip maker, it's also kind of gotten 0:10:57.280 --> 0:11:00.079 some shine as maybe you know, moving in and the 0:11:00.240 --> 0:11:02.960 kind of grabbing more market share in the chip making space. 0:11:03.360 --> 0:11:06.640 But that being said, it's also kind of moved sideways. 0:11:06.679 --> 0:11:07.120 This year. 0:11:07.160 --> 0:11:09.960 We've seen you know, investors really rotating out of these 0:11:10.000 --> 0:11:13.559 sort of big tech companies, these you know, early sort 0:11:13.600 --> 0:11:16.800 of picks and shovels AI companies and into you know, 0:11:16.960 --> 0:11:20.080 just maybe safer parts of the market. So broad comes 0:11:20.120 --> 0:11:24.160 down ten percent so far this year, and I'm I'm 0:11:24.200 --> 0:11:28.120 just really interested to see how investors react to this report. 0:11:28.640 --> 0:11:32.720 Analysts still expect really solid figures out of Broadcom, so 0:11:32.720 --> 0:11:36.440 they're estimating you know, adjusted earnings per share growth and 0:11:36.600 --> 0:11:40.080 revenue growth of more than twenty seven twenty eight percent 0:11:40.840 --> 0:11:43.760 for this company, So we could see another kind of 0:11:43.760 --> 0:11:46.400 similar reaction where you know, the results are really good 0:11:46.400 --> 0:11:51.240 and investors just still aren't convinced and you know, buying 0:11:51.280 --> 0:11:51.840 shares here. 0:11:52.240 --> 0:11:54.280 Yeah, I mean it used to be you know, it's 0:11:54.320 --> 0:11:58.760 twenty something percent earnings growth was huge, but after Nvidia 0:11:58.880 --> 0:12:02.560 reporting something like sex and d plus percent, the bar 0:12:02.720 --> 0:12:05.720 is kind of in a different place for these companies, 0:12:05.760 --> 0:12:06.960 isn't it totally? 0:12:07.000 --> 0:12:10.120 And it's also just under this umbrella of the like 0:12:10.280 --> 0:12:14.200 wide based anxiety around AI and kind of coming from 0:12:14.240 --> 0:12:16.480 two sides. I mean, we talked about software people worried 0:12:16.480 --> 0:12:18.840 about disruption there, but then on the flip side, you 0:12:18.880 --> 0:12:22.280 know all of the CAPEX spending that's you know, boosted 0:12:22.360 --> 0:12:24.960 Nvidia and you know Broadcome would also be a beneficiary 0:12:25.040 --> 0:12:28.680 of is worrying to investors. They're worried about cyclicality. They're 0:12:28.679 --> 0:12:30.960 worried that it's going to stop at some point. So 0:12:32.040 --> 0:12:35.240 that's really you know, overshadowed one just stocks in the 0:12:35.280 --> 0:12:36.840 e eye trade, but the broader market. 0:12:37.320 --> 0:12:39.000 You have some big names to keep an eye on 0:12:39.040 --> 0:12:41.440 this week. Thank you of Carmen really appreciate this. That's 0:12:41.520 --> 0:12:45.360 Carmen Rhynie equities reporter for Bloomberg News, and coming up 0:12:45.400 --> 0:12:47.880 on Bloomberg day Break weekend, we'll look at the Maid 0:12:48.000 --> 0:12:50.400 in Europe plan and what it'll mean in the EU 0:12:50.760 --> 0:12:54.640 and me on I'm Nathan Hager and this is Bloomberg. 0:13:05.120 --> 0:13:07.800 This is Bloomberg day Break Weekend, our global look ahead 0:13:07.800 --> 0:13:10.160 at the top stories for investors in the coming week. 0:13:10.320 --> 0:13:13.160 I'm Nathan Hager in Washington. Up later in the program, 0:13:13.200 --> 0:13:16.520 we'll look ahead to manufacturing data in China, but first 0:13:16.840 --> 0:13:19.440 made in Europe. That's the tagline of a new scheme 0:13:19.480 --> 0:13:23.600 to rejuvenate Europe's defense, energy and manufacturing sectors. The raft 0:13:23.640 --> 0:13:27.360 of policy ideas proposed by the EU Commission is drastic. 0:13:27.440 --> 0:13:31.760 They include forcing government procurement processes to look locally, tying 0:13:31.800 --> 0:13:35.880 foreign investors into joint ventures, and hiring European workers. The 0:13:35.920 --> 0:13:38.480 Act is set to be adopted by the EU Parliament 0:13:38.559 --> 0:13:41.520 next week. Let's get more now from Bloomberg Daybreak Europe 0:13:41.559 --> 0:13:43.280 banker Caroline Hepger in London. 0:13:43.600 --> 0:13:46.960 For decades, Europe has advocated for and been built on 0:13:47.080 --> 0:13:49.679 free trade. But in the next few days, the European 0:13:49.800 --> 0:13:53.360 Union is hoping to introduce a strategy to reverse the 0:13:53.400 --> 0:13:57.800 continent's d industrialization. The so called Made in Europe plan 0:13:57.960 --> 0:14:01.560 will enforce strict rules to keep investment factories and know 0:14:01.679 --> 0:14:06.240 how inside the EU, but it's causing fights not just 0:14:06.360 --> 0:14:11.040 internally between countries within the EU's borders, but externally from 0:14:11.080 --> 0:14:15.280 those who are warning against protectionism. Recently, Stephen cowl and 0:14:15.320 --> 0:14:19.680 I spoke to the US Ambassador to the EU, Andrew Pozda. 0:14:20.080 --> 0:14:22.600 He called the idea a serious mistake. 0:14:23.440 --> 0:14:27.320 Well, they made in europeuels would be a direct contravention 0:14:27.480 --> 0:14:30.880 of not only the terms but the spirit of the 0:14:30.920 --> 0:14:34.160 framework trade agreement that was agreed to in Scotland, because 0:14:34.720 --> 0:14:37.720 we've agreed not to have those kinds of preferences between 0:14:37.760 --> 0:14:40.960 our two countries, and I think adopting them would be 0:14:40.960 --> 0:14:43.280 a serious mistake. I would say, particularly in the area 0:14:43.320 --> 0:14:48.440 of defense, because we have a very intermixed defense industrial 0:14:48.480 --> 0:14:54.640 base between the United States and Europe. Many of the weapons, 0:14:54.640 --> 0:14:58.040 the armaments that were using not only in NATO but 0:14:58.120 --> 0:15:04.280 also shipping to Ukraine, have production capacities in Europe as 0:15:04.280 --> 0:15:06.760 well as the United States, and the machines that make them. 0:15:07.200 --> 0:15:09.280 Some are made in the Czech Republic in Finland, some 0:15:09.320 --> 0:15:13.520 are made in the US, there's a very intermixed supply chain, 0:15:13.960 --> 0:15:18.200 a defense industrial base, and a focus on having our 0:15:18.280 --> 0:15:22.640 defense products be interoperable. In other words, that if we are, 0:15:23.040 --> 0:15:26.080 if we're a NATO member and we're producing military hardware 0:15:26.120 --> 0:15:28.400 we wanted to be, we want to you know, we 0:15:28.440 --> 0:15:31.760 can't have it. You know, you're working for different sized 0:15:31.800 --> 0:15:34.840 train rails or weights that are that don't work on 0:15:34.920 --> 0:15:38.080 European highways. We have to have these things interoperable, and 0:15:38.240 --> 0:15:43.000 these by europe preference, particularly in these defense procurement initiatives, 0:15:43.040 --> 0:15:45.680 is a real threat to our defense industrial base, and 0:15:45.800 --> 0:15:46.760 that worries me a lot. 0:15:47.240 --> 0:15:50.280 That was the US is Ambassador to the European Union, 0:15:50.520 --> 0:15:54.600 Andrew Posda, speaking to Stephen Cowl and I on Bloomberg Radio. 0:15:55.200 --> 0:15:58.280 Joining me now to discuss is our Brussels Bureau chief 0:15:58.320 --> 0:16:03.920 Suzanne Lynch and our chief europe correspondent Oliver Krook Susan firstly, 0:16:04.160 --> 0:16:07.280 what is the plan from the European Commission when it 0:16:07.320 --> 0:16:08.960 comes to this legislation. 0:16:10.320 --> 0:16:13.280 Look, I think this is the culmination of a long 0:16:13.360 --> 0:16:17.320 running discussion here in Brussels about the EU's competitiveness problem. 0:16:17.520 --> 0:16:20.480 We've been hearing for a long time about problems within 0:16:20.600 --> 0:16:23.360 this single market, that businesses field, that there are. 0:16:23.280 --> 0:16:24.680 Too many regulations. 0:16:25.080 --> 0:16:28.920 And I think those reports, that those twin reports from 0:16:29.000 --> 0:16:33.880 two former Italian leaders, Mario Dragy and Rico Letta really 0:16:34.200 --> 0:16:37.960 focused mind in Brussels. So I think this Made in europeplan, 0:16:38.000 --> 0:16:41.440 this Industrial Accelerator Act is going to be the full 0:16:41.480 --> 0:16:45.720 crumb of this plan to boost European competitiveness. And I 0:16:45.720 --> 0:16:47.440 think it can be seen as a kind of follow 0:16:47.560 --> 0:16:51.400 up document or repost if you like, to these calls 0:16:51.440 --> 0:16:55.800 for better European competitiveness, a stronger European economy that Mario 0:16:55.920 --> 0:16:59.040 Dragy in particular articulated in his report. 0:16:59.200 --> 0:17:03.960 This seems to be coming in some part from France, 0:17:04.520 --> 0:17:07.280 but it also has seen a lot of delays. Why 0:17:07.320 --> 0:17:08.920 does it keep getting delayed? 0:17:09.440 --> 0:17:12.199 I think it's a sign you're absolutely right. 0:17:12.240 --> 0:17:17.040 Look, France has been vocal for years about, you know, 0:17:17.119 --> 0:17:20.040 it belief that Europe needs to be, as they put it, 0:17:20.119 --> 0:17:23.080 more strategically autonomous, that it needs to stand on its 0:17:23.080 --> 0:17:25.440 own when it comes not just to defense, but also 0:17:25.720 --> 0:17:29.560 to the economy. And you know, I think some of 0:17:29.560 --> 0:17:33.720 the stereotypes Caroline and Europe are sometimes close to the bone. 0:17:33.720 --> 0:17:36.399 I think France has taken a more we would say. 0:17:36.280 --> 0:17:40.200 Protectionist approach to how the single market works. For years 0:17:40.200 --> 0:17:42.600 in the EU it's been always a strong voice for that. 0:17:42.760 --> 0:17:44.760 So yes, France has been pushing this, and the French 0:17:44.760 --> 0:17:48.119 Commissioner says, your na is in the lead on this. However, 0:17:48.200 --> 0:17:50.960 I think what we've seen is pushback or at least 0:17:51.119 --> 0:17:54.280 deep questioning by a lot of other stakeholders in Brussels. 0:17:54.320 --> 0:17:57.600 So firstly within the European Commission itself, that's where this 0:17:58.119 --> 0:18:00.600 plan is going to be published, for this is the 0:18:00.640 --> 0:18:05.200 starting point for EU legislation. There have been several other 0:18:05.320 --> 0:18:09.280 commissioners or their you know, their dgs, their their sections 0:18:09.280 --> 0:18:11.760 of the European Commission, who've had questions about this, about 0:18:11.760 --> 0:18:14.240 how it's going to work in practice, about how is 0:18:14.280 --> 0:18:18.080 it still in tune with the European Union's free trade 0:18:18.080 --> 0:18:21.320 policies for example. So you've got initial blowback within the 0:18:21.320 --> 0:18:24.360 Commission itself before they even publish their document, and then 0:18:24.400 --> 0:18:27.720 outside the European Commission you've got EU member states also 0:18:27.840 --> 0:18:30.560 questioning this. So you've got this coming down the on 0:18:30.600 --> 0:18:34.920 the usual path those more free trade economies, maybe the Nordics, Ireland, 0:18:35.200 --> 0:18:37.600 Germany as well. I mean, we've already had Friedrich mart 0:18:37.640 --> 0:18:39.639 saying yes, we agree there should be a bit of 0:18:39.640 --> 0:18:42.240 a made in Europe policy, but let's make sure that 0:18:42.280 --> 0:18:44.080 this is just in certain sectors and we don't go 0:18:44.160 --> 0:18:46.320 too far down that route. And then there's kind of 0:18:46.320 --> 0:18:49.880 a third pillar, and that's the the other partners of. 0:18:49.840 --> 0:18:52.920 The EU, so be it the UK and the United States. 0:18:53.000 --> 0:18:57.000 They've also raised questions about at a time when these 0:18:57.040 --> 0:18:58.800 third countries are trying to move. 0:18:58.600 --> 0:19:00.960 Closer to Europe and are working closer with Europe, for. 0:19:00.920 --> 0:19:04.880 Example on defense, why is the EU potentially putting off 0:19:04.960 --> 0:19:08.400 barriers as they see it, to collaboration. So I think 0:19:08.480 --> 0:19:10.719 that's why there has been a delay at the European 0:19:10.720 --> 0:19:13.120 Commission is trying to get it right, and even though 0:19:13.320 --> 0:19:15.480 they know what always happens in the EUS, this is 0:19:15.560 --> 0:19:18.120 just the first step. They will put out this Industrial 0:19:18.200 --> 0:19:21.120 Accelerator Act and then everyone will pile in and try 0:19:21.160 --> 0:19:23.040 and get concessions and try and make changes. 0:19:23.160 --> 0:19:23.960 But they're trying as. 0:19:23.960 --> 0:19:27.680 Much as possible to get this to as close of 0:19:28.080 --> 0:19:31.560 a consensus document as they can before it's published here 0:19:31.600 --> 0:19:32.280 in Brussels. 0:19:32.680 --> 0:19:37.760 Indeed, I mean embedding European preference into public procurement. Of course, 0:19:37.760 --> 0:19:41.840 it has unleashed a lot of questions within Europe and 0:19:42.000 --> 0:19:46.240 without Oliver in terms of your assessment of what's driven 0:19:46.400 --> 0:19:51.879 Europe into this new phase maybe of industrial strategy. You know, 0:19:52.040 --> 0:19:54.119 I suppose to remind us of why we're here and 0:19:54.240 --> 0:19:55.119 just what's at stake. 0:19:55.560 --> 0:19:57.800 Well, what's really funny is that actually the Drag Report 0:19:57.840 --> 0:20:01.360 came out before Trump was elected president of the United States, right, 0:20:01.400 --> 0:20:03.159 and so there was this idea that this might just 0:20:03.520 --> 0:20:05.360 sort of end up in a drawer somewhere. It might 0:20:05.400 --> 0:20:07.320 just be, you know, make for yet another report and 0:20:07.400 --> 0:20:09.760 a door stop, you know, for somewhere in Brussels. And 0:20:09.800 --> 0:20:13.359 then there was the election and inauguration of President Donald Trump, 0:20:13.359 --> 0:20:16.600 and then all of these questions about European competitiveness, the 0:20:16.680 --> 0:20:19.120 lack of it, the fact that they're not these big companies. 0:20:19.160 --> 0:20:21.800 I mean, you can really go through some many of 0:20:21.840 --> 0:20:23.919 the sort of superlatives used by Mario Draghi. 0:20:23.960 --> 0:20:24.360 One of my. 0:20:24.320 --> 0:20:26.720 Favorite was that basically, no, I think it was no 0:20:26.800 --> 0:20:29.399 company that was founded in the last fifty years in 0:20:29.400 --> 0:20:32.520 Europe's market cap exceeds something like two hundred billion dollars. 0:20:32.520 --> 0:20:34.960 And of course every single one that exceeds a trillion 0:20:35.000 --> 0:20:38.080 dollars in the United States was founded within the last 0:20:38.119 --> 0:20:40.000 fifty years, and so that is sort of the issue 0:20:40.000 --> 0:20:41.399 that is trying to be addressed here. And it was 0:20:41.440 --> 0:20:44.879 really brought home obviously with the maga sort of foreign 0:20:44.920 --> 0:20:47.760 policy of the America first, and then this American foreign 0:20:47.800 --> 0:20:51.120 policy that was obviously not just obsessed with tariffs, which 0:20:51.400 --> 0:20:54.360 it obviously was, but also taking a much more sort 0:20:54.359 --> 0:20:57.520 of active role in economic stake craft and you know, 0:20:57.560 --> 0:21:01.040 buying equity stakes in companies across the United States to 0:21:01.160 --> 0:21:04.080 try to stave off again some of the major issues 0:21:04.119 --> 0:21:06.720 that the United States saw within their own supply chains 0:21:06.720 --> 0:21:10.199 and within their own sovereignty, namely critical raw materials and 0:21:10.240 --> 0:21:12.560 things like that. And the problem is that under this 0:21:12.560 --> 0:21:15.560 Trump administration that has a much more sort of solidified 0:21:15.800 --> 0:21:19.840 and consolidated ability to exert power in the United States, 0:21:19.960 --> 0:21:22.160 the Europeans have sort of come up against the issue 0:21:22.200 --> 0:21:24.080 and the sort of obstacle that they now face in 0:21:24.119 --> 0:21:26.800 this sort of new magaled world, which is that politically 0:21:26.840 --> 0:21:29.240 they're still so sort of fragmented and they cannot move 0:21:29.280 --> 0:21:32.680 with the same speed and effectiveness as the United States. 0:21:32.720 --> 0:21:35.480 So really this is about trying to get the European 0:21:35.480 --> 0:21:38.439