WEBVTT - Daybreak Weekend: Fed and Apple Preview, Autonomous Weapons Conference, Samsung Earnings 0:00:02.920 --> 0:00:08.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.400 --> 0:00:13.800 This is Bloomberg day Break Weekend, our global look at 0:00:13.800 --> 0:00:15.760 the top stories in the coming week from our day 0:00:15.800 --> 0:00:18.639 Break anchors all around the world. Straight Ahead on the program, 0:00:18.640 --> 0:00:20.920 a look at next week's BED meeting and what stubbornly 0:00:21.000 --> 0:00:25.280 high inflation may mean for interest rates going forward. Also 0:00:25.400 --> 0:00:28.720 earnings from a US tech giant. I'm Tom Busby in 0:00:28.800 --> 0:00:29.280 New York. 0:00:29.560 --> 0:00:30.840 I'm Stephen Carolyn London. 0:00:30.880 --> 0:00:33.239 The question of autonomous weapons and how they should be 0:00:33.280 --> 0:00:36.840 regulated is up for discussion at a global conference in Vienna. 0:00:36.920 --> 0:00:39.680 I'm dead Prisoner, looking at whether the market for memory 0:00:39.800 --> 0:00:42.720 chips is turning as we look ahead to earnings from Samsung. 0:00:43.960 --> 0:00:47.239 That's all straight ahead on Bloomberg day Break Weekend on 0:00:47.400 --> 0:00:50.479 Bloomberg Eleve Them three Own, New York, Bloomberg ninety nine 0:00:50.520 --> 0:00:53.920 to one, Washington, DC, Bloomberg one O six one, Boston, 0:00:53.960 --> 0:00:58.800 Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 0:00:58.920 --> 0:01:02.160 XM one nineteen and around the world on Bloomberg Radio 0:01:02.240 --> 0:01:04.560 dot Com and via the Bloomberg Business App. 0:01:08.480 --> 0:01:09.039 Good day to you. 0:01:09.120 --> 0:01:11.320 I'm Tom Busby, and we begin today's program with the 0:01:11.360 --> 0:01:15.520 Federal Reserve policymakers meet this coming Tuesday and Wednesday to 0:01:15.600 --> 0:01:19.520 decide on monetary policy. But after some rather disturbing data 0:01:19.560 --> 0:01:22.920 on inflation, could there really be interest rate cuts in 0:01:22.959 --> 0:01:25.720 the near future and for more? Were joined by Michael McKee, 0:01:25.840 --> 0:01:30.440 Bloomberg International Economics and Policy correspondent, Well, Michael, after the 0:01:30.440 --> 0:01:33.800 Fed's preferred measure of underlying inflation rose by just a 0:01:33.800 --> 0:01:36.559 little more than forecast in March, what do you expect 0:01:36.560 --> 0:01:39.240 to hear from the Federal Open Market Committee this Wednesday? 0:01:39.400 --> 0:01:43.000 And will it change their dot plot any There's. 0:01:42.840 --> 0:01:43.960 No change in the dot plot. 0:01:43.959 --> 0:01:46.720 That dot plot won't be revised until June, so we 0:01:46.720 --> 0:01:49.560 don't have to worry about that. No new economic forecasts, 0:01:50.080 --> 0:01:53.120 and no change in the Fed's attitude at this point. 0:01:53.120 --> 0:01:57.279 We saw the last couple of months before this coming 0:01:57.360 --> 0:02:00.520 meeting a lot of FED officials starting to say, well, 0:02:00.560 --> 0:02:03.640 maybe we're in no hurry to cut interest rates, and 0:02:03.760 --> 0:02:06.840 the data only reinforce that. So I think at this 0:02:07.040 --> 0:02:11.919 point that you're going to hear Jaypoal push back on 0:02:12.000 --> 0:02:15.000 the idea of rate cuts anytime soon. He won't put 0:02:15.040 --> 0:02:18.040 a time frame on it because they really don't know 0:02:18.240 --> 0:02:21.440 what's going to happen with the inflation. So I think 0:02:21.480 --> 0:02:23.360 what we're going to end up with is sort of 0:02:23.360 --> 0:02:26.560 status quo anti after the meeting, where the Fed is 0:02:26.600 --> 0:02:31.200 on hold and markets can price in November or December 0:02:31.240 --> 0:02:35.560 if they want, and nobody will really care because everybody 0:02:35.560 --> 0:02:38.320 will figure it'll change a lot between now and then 0:02:38.360 --> 0:02:39.400 and we'll see what happens. 0:02:39.480 --> 0:02:41.679 But higher for longer. That's going to be the watch 0:02:42.040 --> 0:02:43.839 through the spring, through the summer into the fall. 0:02:43.880 --> 0:02:46.040 Yeah, we need a new watch word, because it's not higher, 0:02:46.160 --> 0:02:48.919 it's high, it's you know, it's leave it where it is. 0:02:49.080 --> 0:02:53.600 There's no sentiment at all for raising interest rates at 0:02:53.600 --> 0:02:56.840 this point. The Fed thinks that interest rates are high enough, 0:02:56.919 --> 0:02:59.880 especially real rates being like two and a half percent, 0:03:00.120 --> 0:03:04.560 that that will have an effect. It will push down 0:03:04.600 --> 0:03:07.560 on inflation over time. It's just a question of how 0:03:07.600 --> 0:03:09.960 long that time period is now. 0:03:10.000 --> 0:03:14.200 Previously, the Fed projected hinted allegations of as many as 0:03:14.200 --> 0:03:17.040 three rate cuts this year. I think we can safely 0:03:17.080 --> 0:03:18.919 say that maybe out the window right now. 0:03:18.760 --> 0:03:21.760 That's probably out the window right now. I think it's 0:03:21.800 --> 0:03:23.720 fair to say that if there were a dot plot, 0:03:23.800 --> 0:03:27.960 it would be showing two or fewer rate cuts this year. 0:03:28.280 --> 0:03:31.480 But again I go back to the markets are always 0:03:31.600 --> 0:03:34.160 trying to figure out what the FED is going to do, 0:03:34.320 --> 0:03:37.800 and investors are taking options on what the Fed might 0:03:37.880 --> 0:03:41.600 do because they want to be there if the story 0:03:41.720 --> 0:03:44.040 changes and they want to make money on it. So 0:03:44.360 --> 0:03:47.440 we get these narratives of the market saying two rate 0:03:47.480 --> 0:03:49.840 cuts or three rate cuts or no rate cuts or whatever. 0:03:50.120 --> 0:03:52.160 And Fed officials are at a point now where they 0:03:52.240 --> 0:03:54.800 just do not know what's going to happen with inflation. 0:03:55.040 --> 0:03:58.120 It's hard to predict given the things that are moving, 0:03:58.200 --> 0:04:03.320 given the issues that we're seeing. So they're just going 0:04:03.360 --> 0:04:07.160 to take it month by month, and they're not really 0:04:07.160 --> 0:04:10.440 going to give you a good firm answer on what's 0:04:10.480 --> 0:04:12.400 going to happen, and they're not going to say whether 0:04:12.480 --> 0:04:13.600 markets are right or wrong. 0:04:13.880 --> 0:04:16.240 Yeah, and there's a lot of meetings. Well, we have 0:04:16.279 --> 0:04:19.159 May first, we'll have a decision. That's that's this coming week, 0:04:19.520 --> 0:04:22.680 a June meeting, of July meeting, a September meeting. Interesting 0:04:22.720 --> 0:04:25.560 timing on the November meeting, and two days after the election, 0:04:25.880 --> 0:04:28.120 two days after a little delay there, right. 0:04:28.200 --> 0:04:33.039 Well, the loser is of the election is going to say, well, 0:04:33.080 --> 0:04:35.680 the FED should have and why did they wait until 0:04:36.080 --> 0:04:36.720 I lost? 0:04:37.080 --> 0:04:39.960 Yeah, Yeah, it's all the Fed's fault. Well, let's talk 0:04:40.000 --> 0:04:44.279 about there are still also good news in the economy. 0:04:44.279 --> 0:04:46.440 The economy is still strong, There is still strength, the 0:04:46.520 --> 0:04:50.200 labor to market market, still resilient, consumer spending a ton 0:04:50.240 --> 0:04:53.680 of money. So what's the fundamental cause of all this 0:04:53.960 --> 0:04:55.200 stubbornly high inflation. 0:04:57.520 --> 0:04:59.920 The fundamental cause appears to be that we just got 0:05:00.080 --> 0:05:05.200 into a situation of higher inflation and for a lot 0:05:05.240 --> 0:05:09.600 of reasons. Companies couldn't raise prices for years and years 0:05:09.600 --> 0:05:14.599 and years, and now they can, and they're trying to 0:05:14.640 --> 0:05:18.760 make up for the fact that they couldn't raise prices 0:05:18.760 --> 0:05:22.359 for so long, raise their margins, pay for some of 0:05:22.400 --> 0:05:25.240 the additional stuff that they're going to have to buy, 0:05:25.320 --> 0:05:27.440 or the additional wages they're going to have to pay, 0:05:27.920 --> 0:05:32.160 and it's it's gradually getting squeezed out of the economy. 0:05:32.200 --> 0:05:34.360 Although for the last three months, what we're seeing is 0:05:34.600 --> 0:05:40.400 it's sort of just paused. It's just stopped. So when 0:05:40.480 --> 0:05:44.600 does it reaccelerate higher or lower, we don't know. 0:05:44.920 --> 0:05:47.279 And the inflation rate that we saw this was just 0:05:47.360 --> 0:05:50.480 last week. The PCE for March two point seven percent. 0:05:50.600 --> 0:05:52.919 Right year of a year. It's not bad. 0:05:53.440 --> 0:05:55.440 I mean, it's not the two percent goal, but it 0:05:55.560 --> 0:05:58.240 really and it didn't affect, you know, the markets all 0:05:58.279 --> 0:06:00.359 that much you would expect if it was came in 0:06:00.400 --> 0:06:04.040 a little higher than expected and certainly higher than it 0:06:04.080 --> 0:06:07.560 was a year ago. But is that a new normal? 0:06:07.720 --> 0:06:09.239 Maybe a two point seven? 0:06:10.920 --> 0:06:13.160 It could be at least something we have to get 0:06:13.240 --> 0:06:17.120 used to for a while because we're not going to 0:06:17.160 --> 0:06:22.560 see any major changes anytime soon. The base effects, the 0:06:22.560 --> 0:06:26.559 fact that inflation was lower last year at this time 0:06:26.800 --> 0:06:30.240 means we won't get as much of a benefit on 0:06:30.320 --> 0:06:32.479 the year over year numbers. They are going to stay higher, 0:06:32.800 --> 0:06:35.599 and so people will look at that and think this 0:06:35.640 --> 0:06:39.159 is a problem. Also, the annualized rate of where we 0:06:39.200 --> 0:06:41.880 are now, if you're looking at the last three months 0:06:41.880 --> 0:06:44.239 and you look at it at an annual rate, you're 0:06:44.640 --> 0:06:47.760 up in the threes three point nine or something like that. 0:06:47.920 --> 0:06:54.000 So the trend is not your friend. Is the story here? 0:06:54.040 --> 0:06:56.720 And even if we don't see a big breakout in inflation, 0:06:57.080 --> 0:06:59.440 it doesn't look like we're going to see it come 0:06:59.520 --> 0:07:02.200 down soon. So then the question becomes how. 0:07:02.080 --> 0:07:03.240 Do people adapt to that? 0:07:03.680 --> 0:07:08.480 Do they start to feel this is a normal price level, 0:07:08.960 --> 0:07:11.720 even if the inflation rate has come down but not 0:07:11.800 --> 0:07:14.880 all the way to where it was, or do they 0:07:15.080 --> 0:07:20.040 still stay angry about it and complain about prices going up. 0:07:20.320 --> 0:07:24.160 Well, we shall see May first this Wednesday, the decision 0:07:24.200 --> 0:07:27.280 from the Fed. Our thanks to Michael McKee, Bloomberg International 0:07:27.320 --> 0:07:30.720 Economics and Policy correspondent, And we turn now to more 0:07:30.880 --> 0:07:34.320 big tech earnings as Apple reports at second quarter results 0:07:34.320 --> 0:07:36.600 this coming Thursday, and for more on what to look for, 0:07:36.760 --> 0:07:41.720 we're joined by Anna rag Rana, Bloomberg Intelligence Senior Technology Analyst. 0:07:42.360 --> 0:07:45.720 Now Honor Rock. A lot of headwinds facing Cooper Tino lately, 0:07:45.800 --> 0:07:48.400 but let's start with what you're expecting to hear in 0:07:48.440 --> 0:07:49.920 Apple's Q two report. 0:07:50.400 --> 0:07:53.160 Yeah, the expectations are pretty low. And you know, in 0:07:53.240 --> 0:07:55.800 all fairness, things have been tough for them and we 0:07:55.840 --> 0:07:58.400 don't see that changing at least in the next you know, 0:07:58.480 --> 0:08:01.880 six or twelve months, only because China has been weak 0:08:01.920 --> 0:08:04.960 and there are no signs that that's improving. 0:08:05.000 --> 0:08:08.280 Frankly, Now, China, there were reports that iPhone shipments in 0:08:08.320 --> 0:08:11.320 the first three months of this year tumbled nineteen percent. 0:08:11.800 --> 0:08:15.640 That's devastating. I mean, it's the second biggest market bare yeah. 0:08:15.760 --> 0:08:18.560 Yeah, they're a local brand called Wahweh, which is doing 0:08:18.680 --> 0:08:21.600 very well, and partially they're doing well because they came 0:08:21.600 --> 0:08:23.800 out with a new phone after a few years of 0:08:24.280 --> 0:08:26.920 being really absent in the market. So people who you know, 0:08:26.960 --> 0:08:30.200 I would say, wanted a new phone are probably choosing 0:08:30.240 --> 0:08:33.400 something more local, something that they are used to, And 0:08:34.000 --> 0:08:36.160 you know that's really hurting Apple because it is a 0:08:36.240 --> 0:08:39.560 high end brand, but you know it is it is 0:08:39.600 --> 0:08:42.560 not I would say doing as well as it was 0:08:42.600 --> 0:08:43.440 a few years ago. 0:08:43.679 --> 0:08:46.800 Well, the iPhone definitely the cash cow, but there's also iPads, 0:08:46.960 --> 0:08:51.560 max services like Apple Music, Apple TV plus what's new 0:08:51.600 --> 0:08:55.320 and what will investors be looking for in those revenue streams? 0:08:55.720 --> 0:08:57.760 Yeah, I think you know, almost all of them will 0:08:57.800 --> 0:09:00.000 pretty much be in line with what the company said 0:09:00.040 --> 0:09:03.600 would happen in the last quarter. So no major surprises 0:09:03.640 --> 0:09:05.520 and iPads right now, because the next one is going 0:09:05.520 --> 0:09:09.320 to be launched next month. No same thing for the 0:09:09.360 --> 0:09:12.880 Mac and the back pro. The services business is the 0:09:12.880 --> 0:09:14.680 only one that I would say is going to have 0:09:14.720 --> 0:09:17.360 a good growth rate, somewhere in the ten to twelve 0:09:17.440 --> 0:09:20.800 percent range. They have been doing well there because you know, 0:09:20.840 --> 0:09:23.960 once you have the device, you're going to go and 0:09:24.000 --> 0:09:28.480 buy more things in terms of games and applications, and 0:09:28.840 --> 0:09:31.920 you know, more iCloud storage. So all sorts of things 0:09:31.920 --> 0:09:34.319 do add up into it. You know, you break your phone, 0:09:34.360 --> 0:09:37.480 the Apple care goes into it, so that all those 0:09:37.520 --> 0:09:40.120 things bundle up and that's doing better. But you know, 0:09:40.200 --> 0:09:43.560 services alone cannot just sustain Apple's growth. It has to 0:09:43.600 --> 0:09:46.600 be the iPhone. So the biggest thing for us is 0:09:46.679 --> 0:09:49.680 going to be what comments do they make about China 0:09:50.160 --> 0:09:52.839 and do they really show us any hope of a 0:09:52.960 --> 0:09:53.839 recovery over there? 0:09:54.160 --> 0:09:57.240 How about its AI ambitions? Is there a perception on 0:09:57.280 --> 0:09:59.640 Wall Street Apple maybe a little behind some of the 0:09:59.679 --> 0:10:00.920 other T giants. 0:10:01.400 --> 0:10:05.240 Oh you're too kind by staying a little uh far 0:10:05.280 --> 0:10:08.000 behind and in that particular case, and I think I 0:10:08.040 --> 0:10:10.680 think they've realized it. And you know, we we saw 0:10:10.760 --> 0:10:13.040 Mark German telling us that they shut down the car 0:10:13.080 --> 0:10:16.320 division and are putting all the engineers back in the 0:10:16.360 --> 0:10:19.800 AI you know framework at this point. So they have 0:10:19.840 --> 0:10:22.640 an event coming in June called the WWDC or the 0:10:22.640 --> 0:10:26.240 Worldwide Developers Conference, where they have promised to showcase a 0:10:26.280 --> 0:10:28.960 lot of their new AI features. I think it's going 0:10:29.040 --> 0:10:31.440 to be still too early for them to come up 0:10:31.480 --> 0:10:35.120 with something really a killer app like Opening I. I 0:10:35.160 --> 0:10:37.720 think that's going to take a little bit longer, perhaps 0:10:37.760 --> 0:10:40.760 another year to get get really squared away. If they 0:10:40.800 --> 0:10:43.040 were investing crazy amount of money right now. 0:10:43.600 --> 0:10:44.719 What could happen though? 0:10:44.760 --> 0:10:48.240 And that's another rumor that we heard thanks to Mark German, 0:10:48.920 --> 0:10:51.280 that they may do a deal with Google to license 0:10:51.400 --> 0:10:53.680 their model to put them on the you know, the 0:10:53.720 --> 0:10:57.800 iOS operating system. Now, if that happens, I think that 0:10:57.920 --> 0:11:01.440 could be the catalyst investor may be looking for, because 0:11:02.320 --> 0:11:05.880 while Apple may be behind in some of that GENEI capabilities, 0:11:06.120 --> 0:11:09.479 Google's been doing well over there, and I think licensing 0:11:09.520 --> 0:11:13.840 that intellectual property from Google may may help Apple's ambition. 0:11:14.080 --> 0:11:17.319 No, that would be something very new for Apple dealing 0:11:17.360 --> 0:11:19.320 with Google then, but. 0:11:19.559 --> 0:11:23.160 They do that on the search side, remember they you know, 0:11:23.240 --> 0:11:26.000 that's the default search, So they actually have a partnership 0:11:26.280 --> 0:11:29.319 and Google pays a lot of money to Apple for 0:11:29.320 --> 0:11:30.320 for those rights. 0:11:30.480 --> 0:11:33.440 Hey, let's talk about the vision pro the mixed reality 0:11:33.480 --> 0:11:37.040 headset thirty five hundred bucks. Has this been a real 0:11:37.080 --> 0:11:39.040 swing and a miss for Apple? I mean reports say 0:11:39.040 --> 0:11:41.760 demand is so low that it's slash introduction. 0:11:42.240 --> 0:11:44.880 Yeah, But to be very honest, I saw that report. Also, 0:11:45.000 --> 0:11:47.400 when we had first looked at this thing, we were 0:11:47.440 --> 0:11:50.079 already at that number of four hundred to five hundred 0:11:50.120 --> 0:11:52.600 thousand units or somewhere in that range. This is not 0:11:52.720 --> 0:11:54.640 a killer app. Think of this as this is an 0:11:54.640 --> 0:11:59.880 investment in what could be someday a bigger opportunity in 0:12:00.080 --> 0:12:02.640 terms of a new kind of operating system to do things. 0:12:03.080 --> 0:12:07.560 It's never going to be another iPhone, but it has 0:12:07.600 --> 0:12:10.720 a new category, it could have new apps, so you know, 0:12:10.760 --> 0:12:13.360 it's it's a good R and D experiment. I think, 0:12:13.640 --> 0:12:15.640 you know, some people will own it right now at 0:12:15.640 --> 0:12:17.960 thirty five hundred. I think a lot more people will 0:12:17.960 --> 0:12:20.440 own it at two thousand dollars someday when it you know, 0:12:20.480 --> 0:12:22.960 when the lower model comes out and the price goes 0:12:23.040 --> 0:12:25.960 down and people build applications on it. So it's a 0:12:26.000 --> 0:12:28.440 long term bet, but it's not going to move the 0:12:28.480 --> 0:12:32.079 needle for you and me financially. If you're looking at 0:12:32.120 --> 0:12:35.480 from Apple's you know overall revenue base well. 0:12:35.400 --> 0:12:37.880 Apple Q two earnings out this Thursday. In our thanks 0:12:37.880 --> 0:12:42.920 to Ana rag Rana, Bloomberg Intelligence senior technology analyst, coming 0:12:43.000 --> 0:12:45.120 up on Bloomberg Day Break weekend to look ahead to 0:12:45.160 --> 0:12:48.559 a global conference in Vienna, where the question of autonomous 0:12:48.600 --> 0:12:51.480 weapons and how they should be regulated will be up 0:12:51.480 --> 0:13:05.520 for discussion. I'm Tom Busby and this is Bloomberg. This 0:13:05.640 --> 0:13:07.960 is Bloomberg day Break weekend, our global look ahead at 0:13:07.960 --> 0:13:10.360 the top stories for investors in the coming week. I'm 0:13:10.400 --> 0:13:13.280 Tom Busby in New York. Up later in our program 0:13:13.320 --> 0:13:15.960 will look ahead to earnings from Samsong in the state 0:13:16.000 --> 0:13:19.280 of the chip industry. But first, UK Prime Minister Rishi 0:13:19.320 --> 0:13:22.760 Sunak says he's committed to spending two point five percent 0:13:22.760 --> 0:13:26.880 of his country's GDP on the military by twenty thirty. 0:13:27.240 --> 0:13:29.960 France and Germany have also begun efforts to ramp up 0:13:30.000 --> 0:13:32.720 their own military spending and on the agenda at this 0:13:32.800 --> 0:13:36.880 week twenty twenty four Vienna Conference on Autonomous Weapons Systems, Leaders, 0:13:36.880 --> 0:13:39.520 we're going to peek at the latest technological developments in 0:13:39.640 --> 0:13:44.080 military weaponry which could change modern warfare forever and for more. 0:13:44.160 --> 0:13:46.480 Let's go to London and bring in Bloomberg Daybreak. Europe 0:13:46.480 --> 0:13:48.280 bankor Stephen Carroll. 0:13:48.320 --> 0:13:52.320 Tom After decades of scaling back, Russia's invasion of Ukraine 0:13:52.320 --> 0:13:56.640 prompted a rethink of defense budgets across Europe. Germany has 0:13:56.679 --> 0:14:00.280 started acalarrating military spending, including creating a one hundred undred 0:14:00.360 --> 0:14:04.400 billion euro rearmament fund. France two is stepping up spending 0:14:04.400 --> 0:14:07.040 on weapons. Here in the UK, the Prime Minister has 0:14:07.040 --> 0:14:09.400 promised to increase defense spending to two and a half 0:14:09.480 --> 0:14:12.679 percent of GDP by twenty thirty, although that would be 0:14:12.760 --> 0:14:15.240 after an election that's set for later this year. We 0:14:15.280 --> 0:14:17.760 spoke to a UK Politek's reporter James Wilcock about the 0:14:17.760 --> 0:14:19.480 pledge on Bloomberg Radio this week. 0:14:19.720 --> 0:14:20.560 Well, he would. 0:14:20.400 --> 0:14:23.280 Say that we live in a more uncertain world Steven. 0:14:23.360 --> 0:14:26.120 It's also very, very very popular with his back benches. 0:14:26.160 --> 0:14:27.480 Some of them have even pushed for it to goes 0:14:27.520 --> 0:14:29.200 high as three percent in the past, and that's the 0:14:29.240 --> 0:14:31.760 Defense Secretary, Ben Wallat's former Defense acually I actually say 0:14:32.560 --> 0:14:35.320 so it is a popular policy with the backbenchers. It's 0:14:35.400 --> 0:14:36.960 like to play well with the public as well. It's 0:14:37.000 --> 0:14:39.640 also something that Boris Johnson promised as Prime Minister back 0:14:39.640 --> 0:14:41.520 in twenty twenty two. So it is worth saying that 0:14:41.520 --> 0:14:44.160 this bid has now been refreshed, so it sort of 0:14:44.200 --> 0:14:46.680 plays to all of his bases in the sense, not 0:14:46.760 --> 0:14:48.080 to get away from the fact that it is a 0:14:48.160 --> 0:14:49.120 large sum of money. 0:14:49.520 --> 0:14:52.360 Yes, I'm two and a half percent of GDP of 0:14:52.440 --> 0:14:55.080 the target. I mean, the new element is putting the 0:14:55.160 --> 0:14:58.520 time frame around it, right, delivering that by twenty thirty 0:14:58.560 --> 0:15:01.680 it would seem. But of course there's a general election 0:15:02.080 --> 0:15:03.840 coming up, so how does that work? 0:15:04.520 --> 0:15:07.160 Quite I mean, and this is part of what is 0:15:07.160 --> 0:15:11.240 increasing these some quite cynical politicking by the Conservative Party 0:15:11.720 --> 0:15:14.560 where they promise spending commitment increases that will then have 0:15:14.640 --> 0:15:17.200 to be delivered after the next election. The big spike 0:15:17.240 --> 0:15:19.480 in this kind of money will come in twenty twenty eight, 0:15:20.000 --> 0:15:24.160 and so Labor for its parts, have said that in 0:15:24.200 --> 0:15:26.520 the next year if they were to being government, would 0:15:26.520 --> 0:15:29.080 have to institute a review into the military spending. That 0:15:29.120 --> 0:15:30.920 would happen in the next year. So there is no 0:15:30.920 --> 0:15:33.800 commitment here to continue this beyond the next government if 0:15:33.800 --> 0:15:35.240 the next government work to be Labor. And it was 0:15:35.320 --> 0:15:38.400 quite fascinating at the press conference which is announce this. 0:15:38.480 --> 0:15:41.440 He was next to the Native Secretary General Jen Stoltenberg. 0:15:41.840 --> 0:15:45.280 Journalist tried to ask YenS if he'd had spoken to Labor, 0:15:45.640 --> 0:15:47.560 so like intervened and said, you know, YenS wouldn't be 0:15:47.560 --> 0:15:50.880 answering questions on that because that's dragging him into domestic politics. 0:15:50.960 --> 0:15:54.200 So it's a fascinating move by the Prime Minister to 0:15:54.200 --> 0:15:58.000 sort of look strong on the world stage whilst also 0:15:58.040 --> 0:16:00.760 trying to put labor into a spending commitment in hot water. 0:16:01.160 --> 0:16:04.720 So worth saying though that in this reporting, Sunak says 0:16:04.960 --> 0:16:07.880 this spending pledge, which he tops up to being seventy 0:16:07.920 --> 0:16:11.680 five billion over the next six years, is already fully costed, 0:16:11.720 --> 0:16:13.720 so it would not involve any spending cuts or any 0:16:13.760 --> 0:16:17.600 tax rises. He says it would be partly down to 0:16:17.680 --> 0:16:20.520 savings of nearly three billion pounds by cutting the civil service. 0:16:20.600 --> 0:16:22.479 The entire civil service paybill. 0:16:22.160 --> 0:16:25.800 Is ten billions, so there are some fascinating sums here 0:16:25.880 --> 0:16:28.960 that civil servants and policy wonks are still yet still 0:16:28.960 --> 0:16:30.920 properly take a look at that. 0:16:31.000 --> 0:16:34.720 Was Benberg Radio's UK politics reporter James Woolcock. Now, where 0:16:34.840 --> 0:16:37.120 all of this extra money will be spent is a 0:16:37.160 --> 0:16:39.360 topic that's going to be discussed at an event in 0:16:39.400 --> 0:16:42.920 the Austrian capital Vienna in the coming days. The Conference 0:16:43.040 --> 0:16:46.840 on Autonomous Weapons Systems will be tackling how developments and 0:16:46.920 --> 0:16:51.560 artificial intelligence are revolutionizing how wars are fought. Our reporter 0:16:51.600 --> 0:16:53.920 at Jonathan Tarne will be there, and I've been speaking 0:16:53.960 --> 0:16:56.480 to him about these issues and started by asking him 0:16:56.640 --> 0:16:59.960 exactly what sort of technology is covered by the term 0:17:00.280 --> 0:17:01.600 autonomous weapons. 0:17:02.000 --> 0:17:05.120 Virtually every day there's a new deal that's announced that 0:17:05.640 --> 0:17:09.359 involves autonomy and weapons systems. We saw the European Commission 0:17:09.359 --> 0:17:14.199 give Fails the Defense Maker contract that will you know, 0:17:14.200 --> 0:17:19.440 basically identify potential battlefield targets that will be uploaded into 0:17:19.440 --> 0:17:22.960 a database so that you know, future weapon systems can 0:17:23.000 --> 0:17:28.120 work with drones and artillery to more quickly kill battlefield targets. Obviously, 0:17:28.119 --> 0:17:31.320 in the Ukraine War we've seen some application of that 0:17:31.440 --> 0:17:36.720 concept already, drones reducing the amount of time that artillery 0:17:36.800 --> 0:17:41.000 needs to identify as target and fire. We've also seen 0:17:41.880 --> 0:17:47.480 in the Gaza conflict the use of artificial intelligence under 0:17:47.520 --> 0:17:51.480 the so called Lavender program to identify potential targets. So 0:17:51.920 --> 0:17:54.879 this is a very rapidly developing war space. 0:17:55.280 --> 0:17:58.639 Tell Us about who's going to be attending this conference. 0:17:58.640 --> 0:18:02.600 I would categorize them as the rule takers rather than 0:18:02.640 --> 0:18:07.800 the rule makers. Generally, these are going to be largely delegations, 0:18:07.840 --> 0:18:11.600 high level delegations from the Global South, some European countries 0:18:11.760 --> 0:18:14.280 on a foreign minister level. But these are not going 0:18:14.320 --> 0:18:17.639 to be the countries that are necessarily making the weapons systems. 0:18:18.119 --> 0:18:20.800 These are the countries that have a huge interest in 0:18:20.880 --> 0:18:25.760 regulating the autonomous weapons systems because they conceivably could be 0:18:25.800 --> 0:18:27.639 on the other end, and they want to have a 0:18:28.320 --> 0:18:31.800 rule book in order before they're before these systems widely proliferate. 0:18:32.040 --> 0:18:35.320 Because of course, this is an issue that poses major 0:18:35.440 --> 0:18:39.760 ethical questions for those that are in this industry. What's 0:18:39.960 --> 0:18:43.000 being thought around the impact that the proliferation of these 0:18:43.240 --> 0:18:45.280 kinds of weapons could have on conflict? 0:18:45.640 --> 0:18:48.840 Yeah, absolutely, you know, aside from the ethical issue of 0:18:49.160 --> 0:18:53.199 you know, reducing individual human lives to data in a 0:18:53.720 --> 0:18:59.639 potential autonomous weapons system, you know, you're seeing people trying 0:18:59.640 --> 0:19:04.280 to frame within established humanitarian law. So I mean, you know, 0:19:04.400 --> 0:19:10.200 humanitarian law does exist on the books. It requires distinction, proportionality, 0:19:10.200 --> 0:19:16.720 and precaution when militaries engage each other with civilians oftentimes 0:19:16.800 --> 0:19:20.880 in between. And so people are trying to step inside 0:19:20.920 --> 0:19:25.960 the technological development and the engineering development and trying to 0:19:26.000 --> 0:19:30.199 apply some of the ethical norms that have been established 0:19:30.640 --> 0:19:34.119 in the wake of the Last World War and try 0:19:34.160 --> 0:19:39.080 to bring some responsibility to bear to the developers, the engineers, 0:19:39.240 --> 0:19:43.920 the algorithm makers, and as well as the militaries who 0:19:44.160 --> 0:19:46.520 are going to have to develop rules of engagement when 0:19:46.600 --> 0:19:47.560 using this technology. 0:19:47.880 --> 0:19:50.840 When we talk about the sort of the development of 0:19:50.920 --> 0:19:54.879 this technology, where are we seeing the bulk of the 0:19:55.359 --> 0:19:58.120 development happening which parts of the world. 0:19:58.480 --> 0:20:02.400 Well, I mean it's the It closely tracks general military 0:20:02.400 --> 0:20:04.280 expenditures as well as arms exports. 0:20:04.320 --> 0:20:06.040 So you're talking about the big three. 0:20:06.040 --> 0:20:10.119 US, China, and Russia in terms of development and where 0:20:10.160 --> 0:20:12.879 we're focusing. It really depends on who you talk to. Obviously, 0:20:12.920 --> 0:20:14.919 if you speak to the companies, they're going to tell 0:20:14.960 --> 0:20:20.320 you that we're talking about narrow versus general autonomous system 0:20:20.359 --> 0:20:24.320 development that is narrow, which is where we are currently 0:20:24.800 --> 0:20:30.760 with autonomous systems, drones, satellites identifying potential targets that will 0:20:30.760 --> 0:20:32.879 help a human make a decision, but whether it's to 0:20:32.960 --> 0:20:37.280 engage versus eventually conceivably and this is kind of the 0:20:37.320 --> 0:20:40.119 sky net what has been here too for science fiction, 0:20:40.720 --> 0:20:46.800 generalized artificial intelligence that can target and engage by itself. 0:20:47.040 --> 0:20:49.600 If you ask military people, they're going to come out 0:20:49.600 --> 0:20:53.959 with a different set of answers about where we are 0:20:53.960 --> 0:20:56.840 in the development arc, and I think rules of engagement 0:20:57.119 --> 0:21:00.720 speak prominently there. I mean, do we you use this 0:21:00.960 --> 0:21:06.399 in an urban battle landscape populated by civilians and then 0:21:06.680 --> 0:21:10.359 you move down the spectrum to the general public represented 0:21:10.400 --> 0:21:13.959 by officials and diplomats, and you know, that is what 0:21:14.080 --> 0:21:18.400 next week's conference is mostly about speaking too, and that 0:21:18.600 --> 0:21:22.000 is where there's a rising call for regulation. 0:21:22.680 --> 0:21:26.399 Is there any hope of progress being made on that issue? 0:21:26.480 --> 0:21:29.159 Because as you say, there an ativy outline, there are 0:21:29.160 --> 0:21:32.080 so many elements to this that would need to be 0:21:32.359 --> 0:21:35.719 thought about and discussed. What is the hope that there 0:21:36.160 --> 0:21:40.080 might actually be some consensus on what can be regulated? 0:21:40.560 --> 0:21:41.960 Yeah, I mean the short answer is no. 0:21:42.400 --> 0:21:46.000 The reason this is taking place in Vienna is because 0:21:46.119 --> 0:21:49.919 Vienna is home to arguably the most successful arms control 0:21:50.760 --> 0:21:54.119 convention in history. That's Nuclear Non Proliferation Treaty one hundred 0:21:54.119 --> 0:21:57.800