1 00:00:00,280 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,680 --> 00:00:13,920 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,960 --> 00:00:16,560 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,680 --> 00:00:19,239 Speaker 2: all around the world. Straight Ahead, on the program, we 5 00:00:19,280 --> 00:00:22,599 Speaker 2: look to earnings from streaming giant Netflix, and three of 6 00:00:22,680 --> 00:00:26,360 Speaker 2: Wall Street's biggest banks. I'm Nathan Hager in Washington. 7 00:00:26,520 --> 00:00:29,960 Speaker 3: I'm Carolin Hebke in London, where we discuss the Hungarian election. 8 00:00:30,280 --> 00:00:32,879 Speaker 4: I'm Doug Chrisner looking at the visit to China by 9 00:00:32,960 --> 00:00:35,120 Speaker 4: Spanish Prime Minister Pedro Sanchez. 10 00:00:38,200 --> 00:00:42,240 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 11 00:00:42,280 --> 00:00:45,960 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 12 00:00:46,479 --> 00:00:51,599 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias 13 00:00:51,760 --> 00:00:55,280 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 14 00:00:55,320 --> 00:00:57,560 Speaker 1: dot Com and the Bloomberg Business App. 15 00:01:03,040 --> 00:01:05,880 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 16 00:01:05,920 --> 00:01:09,840 Speaker 2: program with earnings from Netflix. The streaming giant reports its 17 00:01:09,920 --> 00:01:13,960 Speaker 2: latest quarterly results after the market close on Thursday. For more, 18 00:01:14,040 --> 00:01:17,479 Speaker 2: We're joined by Bloomberg Intelligence Senior media analyst Githa ron 19 00:01:17,520 --> 00:01:20,800 Speaker 2: Ganathan Great to have you with us, Githa. Of course, 20 00:01:20,959 --> 00:01:24,560 Speaker 2: this was supposed to be the quarter when Netflix celebrated 21 00:01:24,640 --> 00:01:27,480 Speaker 2: blocking in it's deal to buy Warner Brothers Discovery, but 22 00:01:28,360 --> 00:01:31,559 Speaker 2: Paramount Skydance pulled the rug out from under that. What's 23 00:01:31,600 --> 00:01:34,000 Speaker 2: that mean for what we could hear from Netflix when 24 00:01:34,000 --> 00:01:35,399 Speaker 2: it comes to the results this week. 25 00:01:35,800 --> 00:01:39,520 Speaker 5: Yeah, thank you so much, Nathan. This is actually good 26 00:01:39,560 --> 00:01:42,600 Speaker 5: news for Netflix, right and this is back to business 27 00:01:42,600 --> 00:01:46,960 Speaker 5: as usual. Netflix without Warner Brothers is a much cleaner, 28 00:01:47,280 --> 00:01:53,400 Speaker 5: higher visibility business, lower volatility business. They have much better 29 00:01:53,440 --> 00:01:58,040 Speaker 5: financial standing now, they have a lot more flexibility. And 30 00:01:58,280 --> 00:02:01,400 Speaker 5: you know this is really now us just focusing on 31 00:02:01,560 --> 00:02:04,680 Speaker 5: their fundamentals, but their short term as well as their 32 00:02:04,720 --> 00:02:09,400 Speaker 5: long term fundamentals as they kind of really focus on content, 33 00:02:09,480 --> 00:02:13,200 Speaker 5: as they focus on engagement and really the big numbers 34 00:02:13,240 --> 00:02:16,919 Speaker 5: that investors are looking for, the revenue growth numbers as 35 00:02:16,960 --> 00:02:21,240 Speaker 5: well as operating margins. So they just height prices in 36 00:02:21,320 --> 00:02:24,280 Speaker 5: the US and we're expecting to see that somehow flow 37 00:02:24,360 --> 00:02:27,799 Speaker 5: through in their guidance. What they're guiding to right now 38 00:02:27,840 --> 00:02:30,200 Speaker 5: for revenue growth for the entire year is twelve to 39 00:02:30,240 --> 00:02:34,480 Speaker 5: fourteen percent. We expect them to revise that guidance upwards 40 00:02:34,760 --> 00:02:38,440 Speaker 5: and then also kind of revise their guidance for operating margins. 41 00:02:38,480 --> 00:02:41,240 Speaker 5: So those are really the two most critical metrics for 42 00:02:41,320 --> 00:02:42,280 Speaker 5: Netflix when they're poor. 43 00:02:42,400 --> 00:02:45,079 Speaker 2: Yeah, I got to admit I remember that price hike 44 00:02:45,120 --> 00:02:48,120 Speaker 2: announcement coming and feeling a little bit of dread there 45 00:02:48,639 --> 00:02:51,480 Speaker 2: just for myself. But are we expecting that that's going 46 00:02:51,560 --> 00:02:54,800 Speaker 2: to lead to greater churn for Netflix? Is that something 47 00:02:54,840 --> 00:02:56,680 Speaker 2: the company itself is concerned about. 48 00:02:57,200 --> 00:03:00,560 Speaker 5: I don't think so. So what we've seen historically, this 49 00:03:00,639 --> 00:03:03,480 Speaker 5: is actually its second price hike in just over a year. 50 00:03:03,919 --> 00:03:07,400 Speaker 5: So last January when they hiked prices, we didn't see 51 00:03:07,440 --> 00:03:12,280 Speaker 5: any big spike in churn. You know, it's kind of 52 00:03:12,320 --> 00:03:17,000 Speaker 5: been business as usual. People generally absorb these price hikes 53 00:03:17,040 --> 00:03:20,840 Speaker 5: pretty nicely, pretty smoothly. We haven't really seen too much 54 00:03:20,840 --> 00:03:23,000 Speaker 5: of a disruption in the past, and so we don't 55 00:03:23,040 --> 00:03:26,000 Speaker 5: expect that to be the case, especially as you kind 56 00:03:26,040 --> 00:03:28,919 Speaker 5: of look across the board, Nathan. So you know, we've 57 00:03:28,960 --> 00:03:32,520 Speaker 5: seen Apple TV, for instance, We've seen Disney, We've seen 58 00:03:32,560 --> 00:03:35,560 Speaker 5: all of these other rival services hike their prices and 59 00:03:35,640 --> 00:03:38,600 Speaker 5: hike their prices pretty dramatically. So just to provide some 60 00:03:38,640 --> 00:03:43,440 Speaker 5: context over the past four years. Netflix has definitely increased prices, 61 00:03:43,440 --> 00:03:46,240 Speaker 5: but it's been about a thirty percent increase over the 62 00:03:46,280 --> 00:03:49,360 Speaker 5: past four years. You compare that to Disney Plus where 63 00:03:49,440 --> 00:03:53,240 Speaker 5: prices have gone up seventy five percent, or Apple TV, 64 00:03:53,280 --> 00:03:55,920 Speaker 5: where prices have gone up about eighty to eighty five percent. 65 00:03:56,280 --> 00:03:59,200 Speaker 5: So you know, yes, you know prices have gone up, 66 00:03:59,200 --> 00:04:02,360 Speaker 5: but it seems to be much more digestible and definitely 67 00:04:03,400 --> 00:04:05,920 Speaker 5: much more justifiable in the case of Netflix, just kind 68 00:04:05,960 --> 00:04:08,400 Speaker 5: of given the depth and the breadth of their content. 69 00:04:08,600 --> 00:04:12,560 Speaker 2: Well, now that Netflix isn't getting that slate of Warner 70 00:04:12,600 --> 00:04:17,440 Speaker 2: Brothers IP like the DC comics and Harry Potter and 71 00:04:17,480 --> 00:04:20,400 Speaker 2: all that, where is it positioned when it comes to 72 00:04:20,720 --> 00:04:24,800 Speaker 2: the content race. Was it important for Netflix to have 73 00:04:24,960 --> 00:04:27,680 Speaker 2: all that Warner Brothers IP as part of its longer 74 00:04:27,760 --> 00:04:28,520 Speaker 2: term strategy. 75 00:04:29,160 --> 00:04:32,000 Speaker 5: It was definitely a nice to have, Nathan, but we 76 00:04:32,080 --> 00:04:34,000 Speaker 5: don't think it was a must have. I mean, they 77 00:04:34,040 --> 00:04:36,760 Speaker 5: have been able to build up this tremendous base of 78 00:04:36,760 --> 00:04:39,880 Speaker 5: three hundred and twenty five million subscribers with a lot 79 00:04:39,920 --> 00:04:42,560 Speaker 5: of original content, with a lot of licensed content, but 80 00:04:42,680 --> 00:04:46,120 Speaker 5: without having to pay you know, one hundred billion dollars 81 00:04:46,160 --> 00:04:48,800 Speaker 5: for a studio, and so we think that they can 82 00:04:48,920 --> 00:04:51,920 Speaker 5: you know, continue to hold that dominance, and they are 83 00:04:51,960 --> 00:04:54,960 Speaker 5: diversifying their content strategy. So first it was a lot 84 00:04:55,480 --> 00:04:59,320 Speaker 5: of focus on scripted content, on local language content. You know, 85 00:04:59,360 --> 00:05:01,719 Speaker 5: they've played this game really well in terms of going 86 00:05:01,720 --> 00:05:04,320 Speaker 5: after pieces of content in different territories, whether you know 87 00:05:04,360 --> 00:05:08,200 Speaker 5: it's Korean series or you know, a Japanese series or 88 00:05:08,200 --> 00:05:11,400 Speaker 5: all across the world. Really but their latest foray is 89 00:05:11,480 --> 00:05:15,240 Speaker 5: really into live events. So we're seeing them kind of 90 00:05:15,240 --> 00:05:17,800 Speaker 5: now make a push for more NFL games. They already 91 00:05:17,800 --> 00:05:20,159 Speaker 5: had Christmas Day NFL games, looks like they're going for 92 00:05:20,200 --> 00:05:23,599 Speaker 5: a slightly bigger package. And then we're seeing them do 93 00:05:23,680 --> 00:05:26,600 Speaker 5: a lot of other different things in terms of live content. 94 00:05:26,640 --> 00:05:29,599 Speaker 5: You know, whether you have the WWE RAW on Monday nights, 95 00:05:29,640 --> 00:05:33,840 Speaker 5: whether you had the BTS, you know, first live concert 96 00:05:33,920 --> 00:05:37,240 Speaker 5: in three years, we had the New York Yankees versus 97 00:05:37,240 --> 00:05:40,400 Speaker 5: San Francisco Giants on MLB Opening Night. We have the 98 00:05:40,480 --> 00:05:45,000 Speaker 5: upcoming Ronda Rousi versus Gina Carano in you know, in May, 99 00:05:45,960 --> 00:05:47,320 Speaker 5: you have Mayweather Pakio. 100 00:05:48,040 --> 00:05:48,240 Speaker 6: You know. 101 00:05:48,240 --> 00:05:50,159 Speaker 5: So there's just a whole lot of different things that 102 00:05:50,200 --> 00:05:53,360 Speaker 5: they're doing, and I think that will help them with 103 00:05:53,440 --> 00:05:56,520 Speaker 5: their subscriber acquisition and retention strategy. 104 00:05:56,240 --> 00:05:59,680 Speaker 2: A lot of live content, but we don't have k Pop, 105 00:05:59,720 --> 00:06:04,400 Speaker 2: DMA Hunters, we don't have another season of Stranger Things. 106 00:06:04,480 --> 00:06:08,400 Speaker 2: In terms of the scripted content, what's out there for 107 00:06:08,839 --> 00:06:10,120 Speaker 2: consumers to look forward to. 108 00:06:10,680 --> 00:06:13,760 Speaker 5: Yeah, that's an excellent point. So it's interesting they had 109 00:06:13,800 --> 00:06:16,719 Speaker 5: some of their biggest pieces of content in twenty twenty 110 00:06:16,760 --> 00:06:20,040 Speaker 5: five and obviously that helped. But you know, Netflix has 111 00:06:20,080 --> 00:06:23,520 Speaker 5: said over and over again that no single piece of 112 00:06:23,640 --> 00:06:27,280 Speaker 5: content contributes to, you know, more than one percent of 113 00:06:27,320 --> 00:06:29,640 Speaker 5: total engagement, and if you just kind of look at 114 00:06:29,680 --> 00:06:32,720 Speaker 5: engagement on the platform, you know, it's approaching almost two 115 00:06:32,760 --> 00:06:36,760 Speaker 5: hundred billion hours here. So really they have a whole 116 00:06:36,880 --> 00:06:40,080 Speaker 5: breadth and a great pipeline in terms of content. And 117 00:06:40,120 --> 00:06:43,080 Speaker 5: as we just look out to twenty twenty six, I 118 00:06:43,120 --> 00:06:45,240 Speaker 5: mean we have some of their they still have a 119 00:06:45,240 --> 00:06:48,080 Speaker 5: lot of things that you know, we can get excited about, 120 00:06:48,880 --> 00:06:51,279 Speaker 5: you know, whether it is all of that live content 121 00:06:51,560 --> 00:06:53,800 Speaker 5: or you know, you have Beef season two, you have 122 00:06:53,880 --> 00:06:57,800 Speaker 5: The Last Airbender, you have loupem which is a French series, 123 00:06:58,320 --> 00:07:01,560 Speaker 5: and then of course you have Narnia come out in December, 124 00:07:01,600 --> 00:07:04,960 Speaker 5: which people are really excited about. Outer Bank season five, 125 00:07:05,040 --> 00:07:08,800 Speaker 5: you know Enola Holmes season three. So there's there's just 126 00:07:08,839 --> 00:07:11,520 Speaker 5: a lot of different things, and again we think that 127 00:07:11,840 --> 00:07:15,720 Speaker 5: they will continue to you know, build their business with 128 00:07:15,840 --> 00:07:17,520 Speaker 5: all of these diverse pieces of content. 129 00:07:17,720 --> 00:07:20,160 Speaker 2: Of course, investors are going to get some content from 130 00:07:20,240 --> 00:07:23,240 Speaker 2: the company itself in the call after the close when 131 00:07:23,400 --> 00:07:27,239 Speaker 2: Netflix reports on Thursday. Thank you for this, Keita, as always, 132 00:07:27,240 --> 00:07:32,080 Speaker 2: that's Keitha. Rangan Nathan, senior US Media analyst for Bloomberg Intelligence. 133 00:07:32,360 --> 00:07:34,679 Speaker 2: Let's take a look now at some stocks making news 134 00:07:34,760 --> 00:07:37,360 Speaker 2: in the week ahead. I'm Nathan Hager, joined by Bloomberg 135 00:07:37,400 --> 00:07:41,320 Speaker 2: Intelligence senior US banks analyst Herman Chan, and it is 136 00:07:41,400 --> 00:07:44,720 Speaker 2: all about the banks this week, with three heavyweights kicking 137 00:07:44,720 --> 00:07:49,120 Speaker 2: off earning season on Tuesday. JP Morgan, Chase Wells Fargo 138 00:07:49,320 --> 00:07:52,520 Speaker 2: and City Group. Herman, let's start with the big guy. 139 00:07:52,680 --> 00:07:55,760 Speaker 2: What are you watching for from Jamie Diamond in company? 140 00:07:56,680 --> 00:07:59,600 Speaker 7: Yeah, it's going to be a great and interesting quarter 141 00:07:59,800 --> 00:08:03,400 Speaker 7: for Jamie Diamond, JP Morgan and the rest of the banks. 142 00:08:03,680 --> 00:08:10,440 Speaker 7: We're an interesting setup heading into earnings with heightened gipetal concerns, stackflation, potential, 143 00:08:10,800 --> 00:08:13,600 Speaker 7: private credit worries. That's all been weighing on the group 144 00:08:14,000 --> 00:08:16,480 Speaker 7: On the other hand, one key earnings is looking to 145 00:08:16,520 --> 00:08:20,600 Speaker 7: be pretty solid, with JP Morgan expecting fifteen percent growth 146 00:08:20,680 --> 00:08:23,840 Speaker 7: in trading revenues and also investment banking could be up 147 00:08:23,920 --> 00:08:27,440 Speaker 7: that same level as well. We're also seeing a pickup 148 00:08:27,720 --> 00:08:31,720 Speaker 7: in commercial lending activity, which is helpful across the group, 149 00:08:32,720 --> 00:08:37,840 Speaker 7: and some margin stability and really good performance across the 150 00:08:37,920 --> 00:08:41,800 Speaker 7: credit quality as well. So macro concerns, but the underlying 151 00:08:41,800 --> 00:08:43,360 Speaker 7: fundamentals still look really strong. 152 00:08:43,480 --> 00:08:46,480 Speaker 2: What has you thinking those underlying fundamentals still look strong 153 00:08:46,559 --> 00:08:49,320 Speaker 2: given you know so much of the concern we have 154 00:08:49,480 --> 00:08:52,120 Speaker 2: in the market right now around all the uncertainties and 155 00:08:52,160 --> 00:08:54,200 Speaker 2: the economic impact from the warn Iran. 156 00:08:55,000 --> 00:08:58,880 Speaker 7: That's right. I would characterize the economy right now as 157 00:08:58,920 --> 00:09:03,240 Speaker 7: really resilient, so we're seeing that resiliency flow through into 158 00:09:03,520 --> 00:09:07,600 Speaker 7: the bank's earnings and profitability. On the other hand, really 159 00:09:07,720 --> 00:09:11,719 Speaker 7: what we're focused on going forward is what's going to 160 00:09:11,760 --> 00:09:14,880 Speaker 7: happen next and guidance will be key for across the 161 00:09:14,920 --> 00:09:18,600 Speaker 7: banks that we cover. Are we seeing any sort of 162 00:09:18,720 --> 00:09:24,160 Speaker 7: cracks and credit due to higher energy costs that consumers 163 00:09:24,200 --> 00:09:27,520 Speaker 7: are facing today? Are we seeing any cracks and credit 164 00:09:27,760 --> 00:09:30,480 Speaker 7: on the commercial side as well? And it is the 165 00:09:30,520 --> 00:09:35,800 Speaker 7: market volatility affecting some of the backclogs for areas like 166 00:09:35,840 --> 00:09:39,320 Speaker 7: investment making and IPO. So those are questions that the 167 00:09:39,360 --> 00:09:43,120 Speaker 7: bank management teams will need to answer on the first 168 00:09:43,200 --> 00:09:44,280 Speaker 7: quarter earnings calls. 169 00:09:44,520 --> 00:09:47,560 Speaker 2: And when it comes to Wells Fargo Herman, how are 170 00:09:47,600 --> 00:09:50,680 Speaker 2: they doing now that they're not under that asset cap 171 00:09:50,720 --> 00:09:51,600 Speaker 2: restriction anymore? 172 00:09:52,280 --> 00:09:54,320 Speaker 7: That's right, So that's going to be one of the 173 00:09:54,320 --> 00:09:58,320 Speaker 7: growth stories for the banking group. And in the first 174 00:09:58,400 --> 00:10:02,920 Speaker 7: quarter reporting where another quarter outside of the asset cat 175 00:10:03,000 --> 00:10:05,760 Speaker 7: we're going to see some strong balance sheet growth for 176 00:10:05,760 --> 00:10:09,320 Speaker 7: for Wells Fargo continuation of what they were reporting in 177 00:10:09,360 --> 00:10:12,160 Speaker 7: the fourth quarter. That's really going to be reflected in 178 00:10:12,240 --> 00:10:17,679 Speaker 7: areas like trading assets within the investment bank and also 179 00:10:18,080 --> 00:10:23,520 Speaker 7: in areas like lending in the markets business lending to 180 00:10:23,559 --> 00:10:26,720 Speaker 7: these non bank financial institutions that I alluded to earlier. 181 00:10:27,320 --> 00:10:30,560 Speaker 7: So it's one other thing that we're looking for is 182 00:10:30,600 --> 00:10:33,640 Speaker 7: maybe a renown in the capital markets results relative to 183 00:10:33,679 --> 00:10:36,960 Speaker 7: its peers. I would mention in the fourth quarter they 184 00:10:37,040 --> 00:10:39,719 Speaker 7: lagged a little bit, so hoping for a rebound there 185 00:10:39,760 --> 00:10:40,400 Speaker 7: in the first quarter. 186 00:10:40,760 --> 00:10:42,520 Speaker 2: And when it comes to City Group, we had some 187 00:10:42,520 --> 00:10:45,440 Speaker 2: recent reporting from Bloomberg News that they might be thinking 188 00:10:45,440 --> 00:10:49,240 Speaker 2: about buying a regional bank to grow their business further. 189 00:10:49,600 --> 00:10:51,880 Speaker 2: How real is that? Do you expect that to come 190 00:10:52,000 --> 00:10:52,760 Speaker 2: up in the call? 191 00:10:53,559 --> 00:10:53,960 Speaker 8: I do? 192 00:10:54,280 --> 00:10:57,760 Speaker 7: I think analysts will probe on that. I think in 193 00:10:57,800 --> 00:11:04,280 Speaker 7: the near term probably Jane Frasier, their CEO, pauses that 194 00:11:05,520 --> 00:11:11,080 Speaker 7: potential in the near term. I think that's really reflected 195 00:11:11,200 --> 00:11:14,920 Speaker 7: due to the fact that their evaluation is relatively weaker 196 00:11:14,960 --> 00:11:17,320 Speaker 7: than peers, and they're going to need to improve in 197 00:11:17,400 --> 00:11:20,320 Speaker 7: order to make an M and a deal work financially. 198 00:11:21,400 --> 00:11:25,000 Speaker 7: I mean said, they have a investor day coming up 199 00:11:25,000 --> 00:11:29,160 Speaker 7: in May, so we'll hear more about that in the 200 00:11:29,200 --> 00:11:32,520 Speaker 7: first quarter reporting, and we think first quarter results really 201 00:11:32,600 --> 00:11:39,120 Speaker 7: lays the groundwork for some positive news heading into the 202 00:11:39,120 --> 00:11:39,760 Speaker 7: investor day. 203 00:11:40,040 --> 00:11:44,800 Speaker 2: Yeah, really interesting kickoff to earning season, particularly around what 204 00:11:44,840 --> 00:11:47,600 Speaker 2: we've seen around the war with Iron of course, thank 205 00:11:47,600 --> 00:11:49,680 Speaker 2: you for this, Herman, great having you with us. That's 206 00:11:49,679 --> 00:11:54,600 Speaker 2: Herman Chan, senior US Banks analyst for Bloomberg Intelligence, and 207 00:11:54,679 --> 00:11:57,440 Speaker 2: coming up on Bloomberg day Break weekend, we'll look ahead 208 00:11:57,480 --> 00:12:02,000 Speaker 2: to the election in Hungary. Is it Orbon's Last Stand? 209 00:12:02,400 --> 00:12:17,720 Speaker 2: I'm Nathan Hager, and this is Bloomberg. This is Bloomberg Daybreak. Weekend, 210 00:12:17,840 --> 00:12:20,480 Speaker 2: our global look ahead at the top stories for investors 211 00:12:20,520 --> 00:12:23,440 Speaker 2: in the coming week. I'm Nathan Hager in Washington. Up 212 00:12:23,520 --> 00:12:25,800 Speaker 2: later in the program will look to Spanish Prime Minister 213 00:12:25,840 --> 00:12:29,880 Speaker 2: Pedro Sanchez's upcoming visit to China. But first, voters in 214 00:12:29,960 --> 00:12:32,520 Speaker 2: Hungary are headed to the polls. We find out on 215 00:12:32,600 --> 00:12:36,880 Speaker 2: Sunday whether the EU's longest serving leader, trump ally Victor Orbon, 216 00:12:37,000 --> 00:12:40,040 Speaker 2: will keep his grip on power to much of the world. 217 00:12:40,160 --> 00:12:42,600 Speaker 2: Orbon is best known for his support for Russia and 218 00:12:42,640 --> 00:12:45,920 Speaker 2: his opposition to the European Union and Ukraine. But what 219 00:12:45,960 --> 00:12:48,720 Speaker 2: are the issues that will decide this election for Hungarian 220 00:12:48,840 --> 00:12:52,360 Speaker 2: voters and what to expect from a new government? For more, 221 00:12:52,520 --> 00:12:54,920 Speaker 2: Let's go to London and bring in Bloomberg Daybreak. You're 222 00:12:54,920 --> 00:12:57,080 Speaker 2: a banker, Caroline Hepger Nathan. 223 00:12:57,160 --> 00:13:00,319 Speaker 3: For sixteen years, right wing Prime Minister Victor all Ban 224 00:13:00,480 --> 00:13:04,160 Speaker 3: has been building what he calls an illiberal laboratory in 225 00:13:04,200 --> 00:13:08,360 Speaker 3: the EU state. Hungary has been the European Union's black sheep, 226 00:13:08,720 --> 00:13:12,640 Speaker 3: cozying up to the Kremlin and obstructing assistance to Ukraine. 227 00:13:12,960 --> 00:13:17,079 Speaker 3: But now Auburn faces a serious threat from leadership contender 228 00:13:17,200 --> 00:13:21,880 Speaker 3: Peter Maggiar, who leads the pro European Teaser Party. Some 229 00:13:21,960 --> 00:13:26,520 Speaker 3: voters are losing patients with a stagnating economy plus allegations 230 00:13:26,559 --> 00:13:31,000 Speaker 3: of government corruption and Russian interference. In the last few weeks, 231 00:13:31,120 --> 00:13:35,440 Speaker 3: EU leaders accused Victor Auburn of disloyalty and blackmail after 232 00:13:35,520 --> 00:13:39,120 Speaker 3: Hungary moved to veto the bloc's ninety billion year alone 233 00:13:39,320 --> 00:13:42,120 Speaker 3: to Ukraine. Here's Bloomberg's Oliver Kruk. 234 00:13:42,760 --> 00:13:45,040 Speaker 9: We should say that this was an issue, this ninety 235 00:13:45,040 --> 00:13:47,679 Speaker 9: eight billion year alone that was settled back in December, 236 00:13:47,840 --> 00:13:50,560 Speaker 9: and as a consequence, with Victor Ormond pulling out of this, 237 00:13:50,640 --> 00:13:53,520 Speaker 9: it has upset very greatly all the other European leaders, 238 00:13:53,679 --> 00:13:56,280 Speaker 9: not just on the principle of not supporting Ukraine, but 239 00:13:56,360 --> 00:13:58,560 Speaker 9: on the fact that it reduces the credibility of the 240 00:13:58,559 --> 00:13:59,360 Speaker 9: European Union. 241 00:13:59,480 --> 00:14:03,440 Speaker 3: Bloombergs chief Europe correspondent Oliver Crook there, who went on 242 00:14:03,559 --> 00:14:06,280 Speaker 3: to say that Auburn has been tough on Ukraine in 243 00:14:06,400 --> 00:14:09,920 Speaker 3: order to bolster support among his own voter base. But 244 00:14:10,000 --> 00:14:13,000 Speaker 3: could the focus on foreign affairs be a short sighted 245 00:14:13,080 --> 00:14:18,080 Speaker 3: strategy with the electorate at home increasingly preoccupied by domestic 246 00:14:18,160 --> 00:14:21,280 Speaker 3: concerns and the cost of living. Joining me now is 247 00:14:21,360 --> 00:14:25,880 Speaker 3: Sultan Shimon, Bloomberg's Eastern Europe editor and formerly are Budapest 248 00:14:26,000 --> 00:14:30,680 Speaker 3: bureau chief and Bloomberg's Brussels bureau chief Suzanne Lynch. Welcome 249 00:14:30,720 --> 00:14:33,560 Speaker 3: to both of you. Thanks for your time, Zultan. Can 250 00:14:33,600 --> 00:14:36,400 Speaker 3: I start with you just to focus in on Hungary. 251 00:14:37,000 --> 00:14:40,000 Speaker 3: First thing, I want to ask about the opposition party 252 00:14:40,080 --> 00:14:44,800 Speaker 3: Peter Maggiar emerging as a serious contender in the election. 253 00:14:45,480 --> 00:14:48,640 Speaker 3: What do we make of his chances in this vote? 254 00:14:49,680 --> 00:14:53,400 Speaker 8: Well, yes, Peter Modor founded his party two years ago 255 00:14:53,880 --> 00:14:56,320 Speaker 8: and really came out of nowhere. Actually he came out 256 00:14:56,360 --> 00:15:01,240 Speaker 8: of inside Prime Minister Victor Bahn's ruling elite to essentially 257 00:15:01,360 --> 00:15:07,480 Speaker 8: call out corruption and mismanagement in Hungary, and he has 258 00:15:07,680 --> 00:15:11,880 Speaker 8: found that his message has resonated incredibly over the past 259 00:15:11,920 --> 00:15:16,520 Speaker 8: two years. Pro government posters as well as some skeptics, 260 00:15:16,560 --> 00:15:20,680 Speaker 8: say Orbond, who has been in power for sixteen years, 261 00:15:20,720 --> 00:15:24,119 Speaker 8: still has what they tend to call the quiet majority 262 00:15:24,320 --> 00:15:26,680 Speaker 8: on his side. We'll find out soon enough. 263 00:15:27,200 --> 00:15:30,800 Speaker 3: Yeah, indeed, what do you think are the issues then 264 00:15:31,040 --> 00:15:34,680 Speaker 3: facing all Band? You know, if you see and agree 265 00:15:34,720 --> 00:15:37,960 Speaker 3: with the polls that favored the opposition leader, what would 266 00:15:38,000 --> 00:15:40,160 Speaker 3: you see as Allband's main failings. 267 00:15:41,160 --> 00:15:45,280 Speaker 8: Well, Mojar has really tried to focus on Orband's domestic failings, 268 00:15:45,720 --> 00:15:50,120 Speaker 8: which included the economy, which has been in bouts of 269 00:15:50,360 --> 00:15:54,000 Speaker 8: recession over the past four years. The economy has barely grown, 270 00:15:54,440 --> 00:15:57,400 Speaker 8: There's been a cost of living crisis during the pandemic, 271 00:15:57,480 --> 00:16:01,800 Speaker 8: Inflation was the highest in the year Union. There's also 272 00:16:02,240 --> 00:16:07,320 Speaker 8: rampant corruption, with Transparency International now ranking Hungary in last 273 00:16:07,360 --> 00:16:11,840 Speaker 8: place in the European Union for graft. The European Union 274 00:16:12,120 --> 00:16:15,840 Speaker 8: has in response suspended we estimated is about still about 275 00:16:15,840 --> 00:16:19,520 Speaker 8: twenty billion euros worth of fund due to the erosion 276 00:16:19,600 --> 00:16:22,600 Speaker 8: of the rule of law and graft. So that's been 277 00:16:23,320 --> 00:16:27,720 Speaker 8: basically Modiar's focus, as well as sort of the effects 278 00:16:27,760 --> 00:16:32,320 Speaker 8: of all this, which is seen in social services, in healthcare, 279 00:16:32,480 --> 00:16:37,960 Speaker 8: in education, in public transportation, especially dilapidated rail network. So 280 00:16:38,360 --> 00:16:44,040 Speaker 8: he's saying, essentially to Hungarians, please look around you see 281 00:16:44,080 --> 00:16:45,640 Speaker 8: if you think we can do better. 282 00:16:46,920 --> 00:16:51,200 Speaker 3: What has been the focus of Urban's campaign, then, Urban. 283 00:16:51,040 --> 00:16:55,800 Speaker 8: Has really campaigned more on foreign policy since his return 284 00:16:55,880 --> 00:17:02,280 Speaker 8: to power. He has essentially held up a sort of nemesis, 285 00:17:02,640 --> 00:17:07,560 Speaker 8: a rotating cast of characters really which he suggested post 286 00:17:07,720 --> 00:17:11,520 Speaker 8: threats to Hungary and to their lives going back to 287 00:17:11,600 --> 00:17:14,959 Speaker 8: twenty ten, when he returned to power, from the International 288 00:17:15,000 --> 00:17:21,199 Speaker 8: Monetary Fund, to the European Union, to multinational companies to 289 00:17:21,320 --> 00:17:27,280 Speaker 8: George Soros, the Hungarian born US financier and philanthropists. In 290 00:17:27,720 --> 00:17:31,240 Speaker 8: the past several years, but most recently, he held the 291 00:17:31,359 --> 00:17:37,560 Speaker 8: Ukraine interestingly up as the biggest threat to Hungary. He's 292 00:17:37,600 --> 00:17:44,640 Speaker 8: saying Ukraine wants to drag Hungary into its war with Russia. Now, obviously, 293 00:17:44,760 --> 00:17:49,280 Speaker 8: Urban has allied himself quite significantly with Moscow over the 294 00:17:49,359 --> 00:17:53,640 Speaker 8: past several years, doubling down on energy contracts with Russia 295 00:17:54,240 --> 00:17:58,560 Speaker 8: even since or especially since Russia's invasion of Ukraine. 296 00:17:58,920 --> 00:18:01,240 Speaker 3: Well, Hungry, of course, is a member of the European 297 00:18:01,400 --> 00:18:04,960 Speaker 3: Union and the NATO member too. So let's bring in 298 00:18:05,040 --> 00:18:09,280 Speaker 3: Nasuzanne Lynch's Bloomberg's Brussels Bureau chief for a perspective on this. 299 00:18:09,520 --> 00:18:12,520 Speaker 3: I mean, Victor Auban has been a thorn in the 300 00:18:12,720 --> 00:18:15,639 Speaker 3: side of the EU for many years. It's got to 301 00:18:15,680 --> 00:18:18,439 Speaker 3: be said, So what do you think is going to 302 00:18:18,480 --> 00:18:20,399 Speaker 3: be the response? So what do you think is the 303 00:18:20,560 --> 00:18:24,560 Speaker 3: thinking within the EU about the possibility of a change 304 00:18:24,600 --> 00:18:27,480 Speaker 3: in leadership in this election? We don't know yet. But 305 00:18:27,560 --> 00:18:29,000 Speaker 3: what do you think the EU is thinking. 306 00:18:29,320 --> 00:18:31,280 Speaker 10: Well, look, I mean, as you say there, I mean 307 00:18:31,440 --> 00:18:34,640 Speaker 10: Orban has been a presence here in Europe for such 308 00:18:34,680 --> 00:18:36,800 Speaker 10: a long time. He's been sixteen years in power. At 309 00:18:36,800 --> 00:18:40,159 Speaker 10: this time, he's the longest serving EU leader around the table. 310 00:18:41,080 --> 00:18:42,959 Speaker 10: And I think it's fair to say there is an 311 00:18:43,040 --> 00:18:46,400 Speaker 10: argument that the European Union has chosen to a large 312 00:18:46,440 --> 00:18:49,440 Speaker 10: extent over the years, maybe to look away to kind 313 00:18:49,520 --> 00:18:52,520 Speaker 10: of hope Urban will one day be voted out of 314 00:18:52,520 --> 00:18:55,639 Speaker 10: office and that the Hungary will step back into line 315 00:18:55,760 --> 00:18:58,520 Speaker 10: and become a good member of the European Union. Now 316 00:18:58,520 --> 00:19:01,119 Speaker 10: that policy has not really worked until now, because he 317 00:19:01,160 --> 00:19:05,960 Speaker 10: has managed to survive politically this long. It's extraordinary term. 318 00:19:06,400 --> 00:19:09,560 Speaker 10: Even in the last few weeks they resulton has alluded 319 00:19:09,560 --> 00:19:12,560 Speaker 10: to we've seen an even more kind of brazen attempt 320 00:19:12,680 --> 00:19:15,720 Speaker 10: by Hungary to undermine Brussels. At the end of March. 321 00:19:15,760 --> 00:19:18,800 Speaker 10: There we saw an extraordinary phone call, has leaked. Other 322 00:19:19,160 --> 00:19:22,960 Speaker 10: media outlets in Hungary reported this, and it alleged that 323 00:19:23,080 --> 00:19:26,879 Speaker 10: as Sergai Lavrov, the Foreign Minister, spoke to the Hungarian 324 00:19:26,880 --> 00:19:31,760 Speaker 10: Foreign Minister asking for individual to be removed from a 325 00:19:31,800 --> 00:19:34,720 Speaker 10: proposed EU sanctions list. So you know, we now have 326 00:19:34,760 --> 00:19:37,959 Speaker 10: the situation where the Hungarian government is talking to Russia 327 00:19:38,480 --> 00:19:42,360 Speaker 10: about the EU sanctioned list, and it has worked at 328 00:19:42,480 --> 00:19:47,720 Speaker 10: various points since the start of the Russian War against Ukraine. 329 00:19:48,040 --> 00:19:50,920 Speaker 10: It has worked against the EU on a number of levels. 330 00:19:50,920 --> 00:19:55,760 Speaker 10: So it has again and again blocked sanctions packages. We're 331 00:19:55,800 --> 00:19:58,600 Speaker 10: now at the twentieth sanctions package from the EU against 332 00:19:58,640 --> 00:20:02,360 Speaker 10: Russia and Hungary's block that. And also it's currently for example, 333 00:20:02,400 --> 00:20:05,680 Speaker 10: blocking a ninety billion loan to Ukraine. So it's quite 334 00:20:05,680 --> 00:20:09,359 Speaker 10: obvious that the European Union and the European Commission in 335 00:20:09,440 --> 00:20:13,400 Speaker 10: particular has become a lightning rod for Urban He's actually 336 00:20:13,440 --> 00:20:16,920 Speaker 10: campaigning heavily against this, against what he sees is overly, 337 00:20:17,520 --> 00:20:21,000 Speaker 10: you know, an intrusive European Commission. He's obviously campaigning heavily 338 00:20:21,040 --> 00:20:23,600 Speaker 10: against continued to support for Ukraine. That is part of 339 00:20:23,640 --> 00:20:24,600 Speaker 10: the election playbook. 340 00:20:24,840 --> 00:20:25,159 Speaker 6: Yeah. 341 00:20:25,359 --> 00:20:29,679 Speaker 3: In terms of then, the opposition parties in Hungary seemed 342 00:20:29,720 --> 00:20:33,879 Speaker 3: to be, you know, thinking about Hungary's place within Europe 343 00:20:33,880 --> 00:20:37,119 Speaker 3: and maybe accessing more funding. That seems to be part 344 00:20:36,880 --> 00:20:40,960 Speaker 3: of their drive. How much do you think, though, if 345 00:20:41,000 --> 00:20:43,600 Speaker 3: there were a change of leadership in Hungary that that 346 00:20:43,760 --> 00:20:46,800 Speaker 3: might change the level in terms of the big support 347 00:20:46,840 --> 00:20:47,800 Speaker 3: package for Ukraine. 348 00:20:48,480 --> 00:20:51,160 Speaker 10: Yeah, it's interesting. I mean Mayer, who has emerged as 349 00:20:51,200 --> 00:20:54,639 Speaker 10: this serious threat now to Urban, is a member of 350 00:20:54,680 --> 00:20:57,760 Speaker 10: the European Parliament. He's here, that's his full time role, 351 00:20:57,800 --> 00:21:00,600 Speaker 10: if you like. So he's already a known figure in Brussels. 352 00:21:01,000 --> 00:21:04,080 Speaker 10: He was, as aulto An explained, part of the Fidees fold. 353 00:21:04,080 --> 00:21:07,760 Speaker 10: He was married at Stitude at Varaga, former Hungarian justice minister, 354 00:21:07,800 --> 00:21:10,200 Speaker 10: who for example, was very well known here in Brussels too. 355 00:21:10,760 --> 00:21:12,840 Speaker 10: So you know, I think there is a wariness here 356 00:21:12,920 --> 00:21:15,879 Speaker 10: that it might not just be as simple as a 357 00:21:15,880 --> 00:21:20,280 Speaker 10: more pro EU person taking over if his party is successful. 358 00:21:20,560 --> 00:21:23,800 Speaker 10: So let's see. And I suppose it is true to 359 00:21:23,840 --> 00:21:28,159 Speaker 10: say to Urban yet he is using the European Union 360 00:21:28,280 --> 00:21:30,600 Speaker 10: as a foil in this election. But you know, there 361 00:21:30,640 --> 00:21:33,879 Speaker 10: is some sympathy for his view, particularly when it comes 362 00:21:33,920 --> 00:21:37,520 Speaker 10: to among people in Hungary about support for Ukraine. So 363 00:21:37,520 --> 00:21:38,760 Speaker 10: it may not be as simple as that. 364 00:21:39,000 --> 00:21:42,680 Speaker 3: Yeah, it's very interesting, is it as Altan? In terms 365 00:21:42,800 --> 00:21:48,600 Speaker 3: of Oban's brand of sort of populist illiberalism and Christian nationalism. 366 00:21:48,680 --> 00:21:52,199 Speaker 3: I mean there is already across Europe this is being examined, 367 00:21:52,440 --> 00:21:55,840 Speaker 3: you know, the rise of more right wing parties maybe 368 00:21:56,359 --> 00:22:00,960 Speaker 3: across different European countries. Is it really weighing in terms 369 00:22:01,000 --> 00:22:04,960 Speaker 3: of appeal? And what do you expect the opposition parties 370 00:22:05,119 --> 00:22:07,520 Speaker 3: might do if they come into office. What kind of 371 00:22:08,160 --> 00:22:10,760 Speaker 3: voice would they bring to Hungary. I mean Teaser is 372 00:22:10,760 --> 00:22:12,280 Speaker 3: a conservative party. 373 00:22:12,640 --> 00:22:15,960 Speaker 8: Yes, Now when it comes to the opposition because of 374 00:22:16,040 --> 00:22:19,520 Speaker 8: our bonds is sort of what he calls the sovereign tests, 375 00:22:19,800 --> 00:22:23,440 Speaker 8: very nationalists, you know, rhetoric. If Mother were to come 376 00:22:23,480 --> 00:22:26,280 Speaker 8: to power. It's not like he would switch that off 377 00:22:26,440 --> 00:22:30,040 Speaker 8: from one day to the next. He very much wants 378 00:22:30,080 --> 00:22:34,000 Speaker 8: to say, and very much says that Hungary will remain 379 00:22:34,680 --> 00:22:39,359 Speaker 8: or will be truly he says, truly independent. He always 380 00:22:39,440 --> 00:22:43,800 Speaker 8: says the Hungarian's history is not going to be written 381 00:22:44,040 --> 00:22:48,600 Speaker 8: in Brussels or in Washington, nor in Moscow. He tends 382 00:22:48,640 --> 00:22:52,360 Speaker 8: to say at rallies, it will be written here in Hungary. 383 00:22:52,640 --> 00:22:54,919 Speaker 8: So he says he will stand up for the interests 384 00:22:54,960 --> 00:22:58,800 Speaker 8: of Hungary, even if it were to go against, for example, 385 00:22:58,840 --> 00:23:02,639 Speaker 8: the EU mainstream. But more broadly though, he says he 386 00:23:02,840 --> 00:23:07,320 Speaker 8: would bring back Hungary to the European fold and especially 387 00:23:07,760 --> 00:23:10,600 Speaker 8: away from Russia's orbit Yeah. 388 00:23:10,440 --> 00:23:13,640 Speaker 3: I think that's very interesting, isn't it. I mean, Suzann, 389 00:23:13,760 --> 00:23:15,720 Speaker 3: is it going to be a free and fair election? 390 00:23:16,240 --> 00:23:20,320 Speaker 3: There are worries, always persistent worries around Russian interference or 391 00:23:20,400 --> 00:23:24,280 Speaker 3: influence in the election process in Europe, and that has 392 00:23:24,320 --> 00:23:26,520 Speaker 3: become more acute since the war in Ukraine. 393 00:23:26,840 --> 00:23:29,919 Speaker 10: Yes, the European Parliament actually has been a big voice 394 00:23:29,960 --> 00:23:32,960 Speaker 10: on this about issues like rule of law, about free 395 00:23:32,960 --> 00:23:36,880 Speaker 10: and fair elections, and of course about media freedom in Hungary. 396 00:23:37,359 --> 00:23:42,000 Speaker 10: There have been countless reports about the real challenges for 397 00:23:42,160 --> 00:23:44,720 Speaker 10: independent media and Hungary and how that is driving the 398 00:23:44,760 --> 00:23:48,960 Speaker 10: political conversation in a certain way in Hungary. But I 399 00:23:48,960 --> 00:23:52,480 Speaker 10: think there will be a strong interest in this election 400 00:23:53,280 --> 00:23:56,120 Speaker 10: how it's monitored when those results come in. 401 00:23:56,480 --> 00:23:59,520 Speaker 3: Suzanne, thank you so much. That was Bloomberg's Brussels bureau 402 00:23:59,640 --> 00:24:04,960 Speaker 3: chiefs Lynch and Zultan Shimon, Bloomberg's Eastern Europe editor. We 403 00:24:05,000 --> 00:24:07,560 Speaker 3: will bring you all the latest on the story from 404 00:24:07,680 --> 00:24:11,200 Speaker 3: Hungary as it develops. I'm Caroline Hebge here in London. 405 00:24:11,280 --> 00:24:14,320 Speaker 3: You can catch us every weekday morning for Bloomberg Daybreak 406 00:24:14,320 --> 00:24:16,880 Speaker 3: you at beginning at six am in London. That's one 407 00:24:16,920 --> 00:24:18,000 Speaker 3: am on Wall Street. 408 00:24:18,119 --> 00:24:22,080 Speaker 2: Nathan Thanks Caroline, and coming up on Bloomberg day Break Weekend, 409 00:24:22,119 --> 00:24:24,760 Speaker 2: we'll look at what to expect when Spain's Prime minister 410 00:24:25,000 --> 00:24:40,200 Speaker 2: visits China. I'm Nathan Hager, and this is Bloomberg. This 411 00:24:40,240 --> 00:24:43,159 Speaker 2: is Bloomberg Daybreak Weekend, our global look ahead of the 412 00:24:43,200 --> 00:24:45,879 Speaker 2: top stories for investors in the coming week. I'm Nathan 413 00:24:45,880 --> 00:24:50,000 Speaker 2: Hager in Washington. This week, Spain's Prime Minister Pedro Sanchez 414 00:24:50,200 --> 00:24:53,320 Speaker 2: heads to China. For more, we bring in Doug Krisner, 415 00:24:53,400 --> 00:24:55,360 Speaker 2: host of the Daybreak Asia podcast. 416 00:24:55,840 --> 00:24:59,399 Speaker 4: Thanks Nathan. This will be Sanchez's fourth trip to China 417 00:24:59,440 --> 00:25:02,440 Speaker 4: since twenty t twenty three, and it follows a visit 418 00:25:02,520 --> 00:25:05,919 Speaker 4: by King Philippe the Sixth back in November. Incidentally, that 419 00:25:06,040 --> 00:25:08,880 Speaker 4: was the first visit to China by a Spanish monarch 420 00:25:08,920 --> 00:25:12,120 Speaker 4: in eighteen years. Now we're being told that Sanchez will 421 00:25:12,119 --> 00:25:14,760 Speaker 4: travel with a group of business leaders and to help 422 00:25:14,840 --> 00:25:18,040 Speaker 4: us understand some of the dynamics. I'm joined by Bloomberg's 423 00:25:18,119 --> 00:25:21,600 Speaker 4: ros Matheson ras is our chief Asia correspondent, and she 424 00:25:21,720 --> 00:25:24,560 Speaker 4: joins from our studios in Singapore. Thank you for being here. 425 00:25:25,280 --> 00:25:28,840 Speaker 4: It seems like there is a strengthening of economic ties 426 00:25:28,920 --> 00:25:32,480 Speaker 4: right now between Spain and China. It certainly has been 427 00:25:32,480 --> 00:25:35,280 Speaker 4: the case in recent years. I'm wondering if you're getting 428 00:25:35,280 --> 00:25:37,960 Speaker 4: the sense of this move becoming even closer right now. 429 00:25:38,880 --> 00:25:42,640 Speaker 11: Well, certainly there's been a warming of the relationship between 430 00:25:42,760 --> 00:25:47,040 Speaker 11: Spain and China for a while. And you know, Sanchez, 431 00:25:47,040 --> 00:25:49,520 Speaker 11: as you say, is making his fourth trip since twenty 432 00:25:50,119 --> 00:25:53,240 Speaker 11: twenty three, and he's been slightly to the side of 433 00:25:54,000 --> 00:25:57,359 Speaker 11: many other members of the EU in a way on China. 434 00:25:57,880 --> 00:26:01,800 Speaker 11: He's repeatedly said that Europe needs to set its own 435 00:26:01,880 --> 00:26:05,160 Speaker 11: terms for its relationship with China and not just follow 436 00:26:05,320 --> 00:26:09,640 Speaker 11: what the US is doing. And he's been a little 437 00:26:09,720 --> 00:26:11,600 Speaker 11: less willing to sort of talk about some of the 438 00:26:11,640 --> 00:26:16,159 Speaker 11: frustrations that other member states have about Chinese dumping of 439 00:26:16,200 --> 00:26:20,720 Speaker 11: goods in Europe, for example, or keeping control of technology in. 440 00:26:20,640 --> 00:26:21,080 Speaker 8: All of that. 441 00:26:21,840 --> 00:26:25,760 Speaker 11: And the trade relationship has been growing between China and Spain, 442 00:26:25,800 --> 00:26:29,760 Speaker 11: although it's very asymmetric because China exports a lot more 443 00:26:29,800 --> 00:26:33,080 Speaker 11: to Spain than it buys from Spain. So they tend 444 00:26:33,119 --> 00:26:37,680 Speaker 11: to sell cars, electronics, green energy to Spain because Spain's 445 00:26:37,720 --> 00:26:41,280 Speaker 11: very big on renewables and Spain sells things like machinery. 446 00:26:41,280 --> 00:26:44,040 Speaker 11: They're a big exporter of pork actually also to China, 447 00:26:44,119 --> 00:26:47,440 Speaker 11: but this trip seems to be about, you know, less 448 00:26:47,480 --> 00:26:51,480 Speaker 11: about that trade dynamic and more about attracting investment, because 449 00:26:51,520 --> 00:26:55,600 Speaker 11: Spain is really keen to get more significant Chinese investments. 450 00:26:55,680 --> 00:26:58,040 Speaker 11: So Sanchez is taking a business group with him, as 451 00:26:58,080 --> 00:27:02,000 Speaker 11: you say, he'll be looking to get some deals on 452 00:27:02,119 --> 00:27:03,919 Speaker 11: the table as part of this trip. 453 00:27:04,080 --> 00:27:06,400 Speaker 4: So it's interesting that you point out that Sanchez has 454 00:27:06,520 --> 00:27:10,639 Speaker 4: essentially differentiated himself among a number of European leaders who 455 00:27:10,720 --> 00:27:14,480 Speaker 4: have been very strongly critical, especially when it comes to 456 00:27:14,560 --> 00:27:18,359 Speaker 4: war in Iran between Iran and the US in Israel. 457 00:27:18,480 --> 00:27:22,320 Speaker 4: Does that necessarily strengthen his connection with Beijing. 458 00:27:23,440 --> 00:27:26,240 Speaker 11: Well, certainly. He's been very vocal about his views on 459 00:27:26,320 --> 00:27:29,480 Speaker 11: the war in the Middle East, and he barred American 460 00:27:29,520 --> 00:27:33,159 Speaker 11: forces from using two military bases, and he's put himself 461 00:27:33,160 --> 00:27:36,399 Speaker 11: in the crosshairs again with Donald Trump directly. They're ready 462 00:27:36,920 --> 00:27:41,600 Speaker 11: sparring over things like Spain's contribution to NATO defense spending, 463 00:27:41,680 --> 00:27:45,640 Speaker 11: for example, collective spending. You know, Sanchez has been critical 464 00:27:45,680 --> 00:27:49,439 Speaker 11: of the US administration for its policies on immigration and 465 00:27:49,480 --> 00:27:53,000 Speaker 11: critical of the move to pick up the then Venezuelan 466 00:27:53,119 --> 00:27:57,280 Speaker 11: leader Nicholas madeiro So there's been those strong tension points 467 00:27:57,320 --> 00:28:00,520 Speaker 11: between the US and Spain already, and Sanchez has certainly 468 00:28:00,600 --> 00:28:03,159 Speaker 11: been quite vocal in his views about the war. He 469 00:28:03,280 --> 00:28:06,199 Speaker 11: just says their position is no to war, and so 470 00:28:06,359 --> 00:28:10,879 Speaker 11: perhaps there'll be some conversations between China and Spain about 471 00:28:10,880 --> 00:28:16,360 Speaker 11: that while he's there, because China does like to exploit fishes, 472 00:28:16,480 --> 00:28:20,520 Speaker 11: they like to find gaps, and they like stirring a bit, 473 00:28:20,680 --> 00:28:23,480 Speaker 11: including with the US. So it's handy to have a 474 00:28:23,560 --> 00:28:27,680 Speaker 11: leader coming who's been very critical of the US over 475 00:28:27,720 --> 00:28:30,879 Speaker 11: the war. But the interesting thing will be how much 476 00:28:30,920 --> 00:28:33,919 Speaker 11: he moves, if any, out of alignment again with the 477 00:28:33,960 --> 00:28:38,600 Speaker 11: EU on China, because obviously that's a relationship that everyone's watching. 478 00:28:38,320 --> 00:28:41,320 Speaker 4: Closely, particularly when you think of the automotive industry and 479 00:28:41,360 --> 00:28:44,920 Speaker 4: where Germany is in that. I'm wondering, because Sanchez is 480 00:28:44,920 --> 00:28:48,400 Speaker 4: a member of the Spanish Socialist Workers Party, whether that 481 00:28:49,000 --> 00:28:52,680 Speaker 4: kind of intersects with the politics that Beijing has in 482 00:28:52,720 --> 00:28:54,040 Speaker 4: a very very friendly way. 483 00:28:54,960 --> 00:28:57,360 Speaker 11: It does, or China likes to talk about it. I 484 00:28:57,400 --> 00:29:01,000 Speaker 11: mean they cast it as a very stable relationship. They 485 00:29:01,120 --> 00:29:04,080 Speaker 11: like to talk up the leader to leader rapport that 486 00:29:04,120 --> 00:29:06,640 Speaker 11: they see there, and they do cast Sanchez as a 487 00:29:06,760 --> 00:29:11,120 Speaker 11: leader on the left and therefore somewhat like minded, although 488 00:29:11,320 --> 00:29:14,520 Speaker 11: in reality they're probably not that light minded. They do 489 00:29:14,760 --> 00:29:18,440 Speaker 11: note him also as one of the few outspoken voices 490 00:29:18,560 --> 00:29:23,840 Speaker 11: against what they call US policies harming European interests, and 491 00:29:23,880 --> 00:29:26,320 Speaker 11: they talk about Sanchez being a good example of the 492 00:29:26,400 --> 00:29:32,160 Speaker 11: need to diversify your relationships, your trade relationships, particularly around 493 00:29:32,200 --> 00:29:34,800 Speaker 11: the world. But it's not just Sanchez who's kind of 494 00:29:34,840 --> 00:29:37,640 Speaker 11: looking at this now more in the European perspective. I mean, 495 00:29:37,640 --> 00:29:40,760 Speaker 11: we've had a parade of European leaders through China in 496 00:29:40,840 --> 00:29:44,280 Speaker 11: recent months, Kiir Starmer from the UK, the German Chancellor 497 00:29:44,320 --> 00:29:47,960 Speaker 11: and others, And there is this recognition in Europe too 498 00:29:48,040 --> 00:29:52,240 Speaker 11: that you need to diversify your trade relationships, particularly given 499 00:29:52,280 --> 00:29:55,520 Speaker 11: the tensions the EU has with the US. They're just 500 00:29:55,600 --> 00:29:58,160 Speaker 11: more cautious than Sanchez about how to go about it 501 00:29:58,200 --> 00:29:59,840 Speaker 11: and how far to go with it. 502 00:30:00,080 --> 00:30:02,280 Speaker 4: He inviting a little bit of risk here if he's 503 00:30:02,320 --> 00:30:05,760 Speaker 4: trying to strengthen the relationship with the Chinese. 504 00:30:06,320 --> 00:30:09,440 Speaker 11: Well, he'll probably get another call out from Donald Trump 505 00:30:09,520 --> 00:30:14,120 Speaker 11: potentially on it. An interesting not everyone within Spain is 506 00:30:14,160 --> 00:30:18,200 Speaker 11: happy about this. I mean last October when the Spanish 507 00:30:18,280 --> 00:30:22,640 Speaker 11: Foreign Minister was in China. They met with some Spanish 508 00:30:22,720 --> 00:30:26,280 Speaker 11: business CEOs who said, hang on, you know, please be 509 00:30:26,400 --> 00:30:29,680 Speaker 11: careful in terms of, you know, we need more stringent 510 00:30:29,720 --> 00:30:33,280 Speaker 11: demands for companies to hire local workers rather than parachuting 511 00:30:33,280 --> 00:30:36,720 Speaker 11: in Chinese staff to Spain. For example, Let's make sure 512 00:30:36,760 --> 00:30:38,680 Speaker 11: we're in alignment with the EU on trying to stop 513 00:30:38,760 --> 00:30:43,320 Speaker 11: China dumping low quality goods into our markets. And let's 514 00:30:43,400 --> 00:30:47,320 Speaker 11: watch how we're handling the issues of key technological secrets 515 00:30:47,360 --> 00:30:50,600 Speaker 11: when you're operating inside the EU. So there is that 516 00:30:51,000 --> 00:30:55,080 Speaker 11: element in the Spanish business community who's slightly concerned about 517 00:30:55,120 --> 00:30:57,960 Speaker 11: sort of being all in in a way with China. 518 00:30:58,680 --> 00:31:01,640 Speaker 11: So there is that risk as well. But Sanchez has 519 00:31:01,720 --> 00:31:04,200 Speaker 11: kind of planted the flag when it comes to Donald Trump, 520 00:31:04,200 --> 00:31:06,680 Speaker 11: I think is pretty clear about how he sees that relationship, 521 00:31:06,720 --> 00:31:09,800 Speaker 11: and he doesn't necessarily mind having a bit of sparring 522 00:31:09,840 --> 00:31:13,960 Speaker 11: with the US because it also helps him domestically in 523 00:31:14,080 --> 00:31:16,960 Speaker 11: terms of his own standing, because you know, he does 524 00:31:17,040 --> 00:31:21,200 Speaker 11: have an election in the wind, and you know, it 525 00:31:21,240 --> 00:31:23,960 Speaker 11: does help his narrative that he's standing up to a 526 00:31:24,000 --> 00:31:25,080 Speaker 11: big power like the US. 527 00:31:25,400 --> 00:31:28,320 Speaker 4: But China is offering Spain a great deal in terms 528 00:31:28,320 --> 00:31:30,720 Speaker 4: of investment, dollars, and I think that cuts to the 529 00:31:30,720 --> 00:31:32,880 Speaker 4: other side of the story, right, Spain would be a 530 00:31:32,920 --> 00:31:34,000 Speaker 4: big beneficiary. 531 00:31:34,920 --> 00:31:38,280 Speaker 11: Well, that's right, and that's certainly how Sanchez is casting it. 532 00:31:38,400 --> 00:31:41,320 Speaker 11: He's saying this is very good for Spain in terms 533 00:31:41,320 --> 00:31:44,920 Speaker 11: of having direct investment from China, particularly again in the 534 00:31:45,320 --> 00:31:48,520 Speaker 11: automotive sector, which is a big one for Europe as 535 00:31:48,560 --> 00:31:51,280 Speaker 11: a whole, and also in the renewable sector, because China's 536 00:31:51,320 --> 00:31:54,480 Speaker 11: got a lot of expertise as we know, on green 537 00:31:54,600 --> 00:31:58,320 Speaker 11: energy and is keen to utilize that around the world, 538 00:31:58,400 --> 00:32:01,840 Speaker 11: of course to China's own benefit, but that's something that 539 00:32:01,920 --> 00:32:05,840 Speaker 11: Spain can certainly benefit from as well. So he's talking 540 00:32:05,960 --> 00:32:09,400 Speaker 11: up direct investment. He's also talking up the potential to 541 00:32:09,400 --> 00:32:12,280 Speaker 11: have even more tourists come from China to Spain. They're 542 00:32:12,360 --> 00:32:15,480 Speaker 11: keen to have the tourist dollars come their way. I mean, 543 00:32:15,600 --> 00:32:18,400 Speaker 11: China in turn has been issuing visa waivers for Spanish 544 00:32:18,440 --> 00:32:20,760 Speaker 11: tourists to come, so it's a two way street there. 545 00:32:21,120 --> 00:32:23,640 Speaker 11: So Sanchez is trying to basically find all these ways 546 00:32:23,680 --> 00:32:27,240 Speaker 11: to maximize the relationship, particularly again when it comes to money. 547 00:32:27,600 --> 00:32:30,239 Speaker 4: So Roz, I'm wondering if there are any announcements that 548 00:32:30,440 --> 00:32:34,560 Speaker 4: follow this meeting. They would cover automotive renewable energy and 549 00:32:34,600 --> 00:32:37,080 Speaker 4: I'm going to include battery technology. 550 00:32:37,160 --> 00:32:37,720 Speaker 5: Is that fair? 551 00:32:39,160 --> 00:32:43,720 Speaker 11: Well, that's right, and China's got increasing expertise in battery 552 00:32:43,840 --> 00:32:47,120 Speaker 11: storage in fuel cells. I mean these are fairly nascent 553 00:32:47,720 --> 00:32:50,360 Speaker 11: industries and a lot of countries and still quite expensive 554 00:32:50,560 --> 00:32:54,640 Speaker 11: for companies if they're looking at purchasing these to secure 555 00:32:54,640 --> 00:32:59,000 Speaker 11: their own electricity supply. I mean, Spain has had a 556 00:32:59,120 --> 00:33:03,120 Speaker 11: significant power outage that's still probably in the minds a 557 00:33:03,160 --> 00:33:06,440 Speaker 11: bit and some questions over how good renewable energy is 558 00:33:07,120 --> 00:33:10,240 Speaker 11: as a result. But you could see some new technologies 559 00:33:10,320 --> 00:33:12,360 Speaker 11: emerging from these conversations, for sure. 560 00:33:12,600 --> 00:33:15,120 Speaker 4: So you mentioned a moment ago that not everyone in 561 00:33:15,160 --> 00:33:19,400 Speaker 4: Spain favors deepening this relationship, and I'm wondering whether Sanchez 562 00:33:19,440 --> 00:33:23,040 Speaker 4: at some point could face a little bit of political 563 00:33:23,040 --> 00:33:24,160 Speaker 4: blowback domestically. 564 00:33:26,040 --> 00:33:28,960 Speaker 11: He could, although right now there's a bit of a 565 00:33:29,040 --> 00:33:32,880 Speaker 11: rally round the flag moment going on in Spain into 566 00:33:32,920 --> 00:33:37,000 Speaker 11: that national election next year. I mean, he's under pressure 567 00:33:37,240 --> 00:33:39,760 Speaker 11: at home. He's been the head of a quite fragile 568 00:33:39,840 --> 00:33:44,560 Speaker 11: coalition government. His party was hit by corruption scandals, so 569 00:33:44,800 --> 00:33:48,280 Speaker 11: support was going down in the polls. But people in 570 00:33:48,320 --> 00:33:53,120 Speaker 11: Spain also remember the US led invasion of Iraq in 571 00:33:53,160 --> 00:33:55,680 Speaker 11: two thousand and three, and Spain kind of went all 572 00:33:55,720 --> 00:33:58,840 Speaker 11: in with the US that in terms of supporting it, 573 00:33:59,240 --> 00:34:03,440 Speaker 11: they were quite ally of President Bush at the time, 574 00:34:03,720 --> 00:34:06,760 Speaker 11: and that triggered a big backlash in Spain. That was 575 00:34:06,880 --> 00:34:10,319 Speaker 11: sort of protests across Spain. The slogan note to war, 576 00:34:10,400 --> 00:34:13,920 Speaker 11: which Sanchez has now kind of adopted, that's what he's reviving, 577 00:34:13,960 --> 00:34:17,120 Speaker 11: and so he's really tapping into that very long running 578 00:34:17,160 --> 00:34:20,960 Speaker 11: anti war sentiment in Spain and those memories of two 579 00:34:21,000 --> 00:34:23,480 Speaker 11: thousand and three, and so that's something that he can 580 00:34:23,520 --> 00:34:27,080 Speaker 11: probably find a good support based on going into that election. 581 00:34:27,440 --> 00:34:29,640 Speaker 4: Ros will leave it there, Thank you so very much 582 00:34:29,640 --> 00:34:32,200 Speaker 4: for helping us look at the visit of Spanish Prime 583 00:34:32,200 --> 00:34:36,520 Speaker 4: Minister Pedro Sanchez to China. Roz Matheson is our chief 584 00:34:36,640 --> 00:34:41,000 Speaker 4: Asia correspondent, joining from Singapore. We go to New Zealand next, 585 00:34:41,040 --> 00:34:43,319 Speaker 4: where in the last week the Central Bank held its 586 00:34:43,320 --> 00:34:47,120 Speaker 4: benchmark interest rates steady at two hundred quarter percent. The 587 00:34:47,239 --> 00:34:51,520 Speaker 4: RBNZ said inflation is likely to accelerate in the second quarter, 588 00:34:51,840 --> 00:34:54,840 Speaker 4: and that's where we begin our conversation with Anna Bremen. 589 00:34:55,160 --> 00:34:58,040 Speaker 4: Anna is the governor of the Reserve Bank of New Zealand. 590 00:34:58,239 --> 00:34:59,920 Speaker 4: She spoke with Bloomberg's Heidi. 591 00:34:59,719 --> 00:35:03,240 Speaker 12: Stru What I can sort of begin to really fully 592 00:35:03,280 --> 00:35:06,920 Speaker 12: appreciate the complexities of making a policy decision in this 593 00:35:06,960 --> 00:35:10,279 Speaker 12: sort of global macroeconomic and geopolitical environment, Right, can you 594 00:35:10,320 --> 00:35:13,600 Speaker 12: talk us through some of those challenges, particularly as changes 595 00:35:13,680 --> 00:35:17,520 Speaker 12: to the outlook with the ceasefile was happening almost in 596 00:35:17,560 --> 00:35:18,080 Speaker 12: real time. 597 00:35:20,080 --> 00:35:23,160 Speaker 6: Of course, we are seeing and expecting higher near term 598 00:35:23,200 --> 00:35:26,239 Speaker 6: inflation and somewhat weaker growth in the New Zealand economy, 599 00:35:26,600 --> 00:35:28,680 Speaker 6: and then what we are really focused on is the 600 00:35:28,760 --> 00:35:33,239 Speaker 6: medium term inflation and ensuring that medium term inflation is 601 00:35:33,360 --> 00:35:36,839 Speaker 6: at target, and of course in this environment it's very 602 00:35:36,880 --> 00:35:39,279 Speaker 6: hard to do forecasting. We had the meeting at nine 603 00:35:39,320 --> 00:35:41,520 Speaker 6: am in the morning. It was announced at two pm, 604 00:35:41,640 --> 00:35:43,960 Speaker 6: so there was a lot of information in between, but 605 00:35:44,080 --> 00:35:48,000 Speaker 6: we knew that that could happen, so we had taken 606 00:35:48,040 --> 00:35:51,040 Speaker 6: that into consideration, of course, at the time of the meeting. 607 00:35:52,840 --> 00:35:56,640 Speaker 12: If in fact we see global energy supplies restored, some 608 00:35:56,719 --> 00:35:59,719 Speaker 12: of the risks to global supply chains minimized in the 609 00:35:59,719 --> 00:36:02,520 Speaker 12: coming days or weeks or months, and we accept that 610 00:36:02,560 --> 00:36:05,959 Speaker 12: the risk inflation is a near term and a temporary one. 611 00:36:06,000 --> 00:36:08,719 Speaker 12: Do you foresee a scenario where easying is back on 612 00:36:08,719 --> 00:36:09,160 Speaker 12: the table. 613 00:36:11,239 --> 00:36:15,759 Speaker 6: Well, we are more focused on ensuring that medium term 614 00:36:15,800 --> 00:36:19,360 Speaker 6: inflation does not increase. We see that the balance of 615 00:36:19,480 --> 00:36:22,399 Speaker 6: risks have shifted in terms of inflation and more risk 616 00:36:22,480 --> 00:36:27,320 Speaker 6: on the upside because already right now we're New Zealand, 617 00:36:27,680 --> 00:36:30,680 Speaker 6: fuel prices are gone up considerably, both petrol but in 618 00:36:30,800 --> 00:36:35,520 Speaker 6: particularly diesel, and that's important inputs into transport in general, 619 00:36:35,560 --> 00:36:38,279 Speaker 6: but also into the agricultural sector that is speak here, 620 00:36:38,560 --> 00:36:42,000 Speaker 6: and that risk getting passed on than into food prices 621 00:36:42,040 --> 00:36:46,040 Speaker 6: and other kinds of prices. So we are expecting somewhat 622 00:36:46,040 --> 00:36:50,240 Speaker 6: weaker growth, but we are concerned that medium term inflation 623 00:36:50,280 --> 00:36:54,480 Speaker 6: pressures could be higher. And if we start seeing inflation 624 00:36:54,560 --> 00:36:57,279 Speaker 6: expectations moving up, if we see the core inflation is 625 00:36:57,320 --> 00:37:00,400 Speaker 6: moving up, we see wage growth picking up, then we 626 00:37:00,520 --> 00:37:03,920 Speaker 6: said that we will act decisively to ensure that medium 627 00:37:03,960 --> 00:37:05,640 Speaker 6: charm inflation goes back to target. 628 00:37:06,000 --> 00:37:08,920 Speaker 4: That's Aa Bremen, Governor of the Reserve Bank of New Zealand, 629 00:37:09,200 --> 00:37:12,880 Speaker 4: speaking with Bloomberg's Heidi Stroud Watts. I'm Doug Prisner. You 630 00:37:12,880 --> 00:37:16,120 Speaker 4: can catch us weekdays for the Daybreak Asia podcast. It's 631 00:37:16,160 --> 00:37:18,120 Speaker 4: available wherever you get your podcast. 632 00:37:18,440 --> 00:37:21,640 Speaker 2: Nathan, Thanks Doug. And that does it for this edition 633 00:37:21,680 --> 00:37:24,680 Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at 634 00:37:24,680 --> 00:37:27,440 Speaker 2: five am Wall Street Time for the latest sun markets, 635 00:37:27,480 --> 00:37:30,040 Speaker 2: overseas and the news you need to start your day. 636 00:37:30,320 --> 00:37:33,360 Speaker 2: I'm Nathan Hager. Stay with US top stories and global 637 00:37:33,440 --> 00:37:44,120 Speaker 2: business headlines. They're coming up right now.