1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,560 --> 00:00:12,319 Speaker 2: This is the BlueBag Dabakerup Podcast. Good morning, It's finally 3 00:00:12,360 --> 00:00:15,600 Speaker 2: the twenty seventh of February. I'm Caroline Hepka in London and. 4 00:00:15,560 --> 00:00:19,640 Speaker 1: I'm Stephen Carolin Brussels. Coming up today. Netflix walks away 5 00:00:19,680 --> 00:00:22,479 Speaker 1: from its bid for Warner Brothers, clearing the way for 6 00:00:22,640 --> 00:00:26,040 Speaker 1: Paramounts one hundred and eleven billion dollar offer. 7 00:00:26,680 --> 00:00:29,720 Speaker 2: The Green Party wins a UK Parliamentary seat in a 8 00:00:29,840 --> 00:00:33,600 Speaker 2: Labour stronghold, underscoring the threat to Prime Minister Kissed Arma. 9 00:00:34,080 --> 00:00:39,040 Speaker 1: Plus deep inside Russia's war machine economic pain it's starting 10 00:00:39,080 --> 00:00:39,640 Speaker 1: to show. 11 00:00:40,080 --> 00:00:42,080 Speaker 2: Let's start with a roundup of our top stories. 12 00:00:42,880 --> 00:00:45,280 Speaker 1: Netflix has dropped out of the fight to buy Warner 13 00:00:45,320 --> 00:00:48,640 Speaker 1: Brothers Discovery, clearing the way for rival bidder Paramount to 14 00:00:48,680 --> 00:00:52,440 Speaker 1: clinch a one hundred and eleven billion dollar deal. The 15 00:00:52,440 --> 00:00:55,160 Speaker 1: streaming giant says while its offer would have passed muster 16 00:00:55,280 --> 00:00:58,760 Speaker 1: with regulators and created shareholder value, it didn't want to 17 00:00:58,840 --> 00:01:02,360 Speaker 1: keep bidding Bloomberg's because Shaw says, ultimately it came down 18 00:01:02,400 --> 00:01:02,880 Speaker 1: to money. 19 00:01:03,720 --> 00:01:06,759 Speaker 3: The Warner brother is bored, not really concerned about synergies. 20 00:01:06,800 --> 00:01:08,600 Speaker 3: I think that if they could have chosen between the 21 00:01:08,600 --> 00:01:11,360 Speaker 3: two buyers, they preferred Netflix. Netflix is a bigger, stronger, 22 00:01:11,360 --> 00:01:14,440 Speaker 3: healthier company, but Paramount ultimately offered more money. 23 00:01:15,520 --> 00:01:18,680 Speaker 1: Sure added that the takeover fight has been contentious, with 24 00:01:18,760 --> 00:01:22,479 Speaker 1: both both in Hollywood and in Washington. After apparently losing 25 00:01:22,480 --> 00:01:25,760 Speaker 1: the fight, Paramount launched a multi pronged campaign offering more 26 00:01:25,800 --> 00:01:29,040 Speaker 1: money and lobbying US President Donald Trump about the deal. 27 00:01:30,160 --> 00:01:32,600 Speaker 2: Here in the UK, the Green Party has taken a 28 00:01:32,680 --> 00:01:36,880 Speaker 2: Labour safe seat in a special election, raising existential questions 29 00:01:36,880 --> 00:01:41,040 Speaker 2: for Kirs Starmer's government. Hannah Spencer secured forty point seven 30 00:01:41,080 --> 00:01:44,399 Speaker 2: percent of the vote in the Gorton and Denton constituency, 31 00:01:44,680 --> 00:01:47,880 Speaker 2: with Labour coming in third with twenty five percent and 32 00:01:47,920 --> 00:01:52,680 Speaker 2: Reform UK second on twenty eight percent. Spencer says the 33 00:01:52,720 --> 00:01:56,600 Speaker 2: Greens have defeated the parties backed by billionaire donors. 34 00:01:57,440 --> 00:01:59,680 Speaker 4: Things have changed a lot over the last few decades 35 00:02:00,000 --> 00:02:03,280 Speaker 4: because working hard used to get you something. You've got 36 00:02:03,360 --> 00:02:07,440 Speaker 4: your house, a nice life, holidays, It got you somewhere, 37 00:02:07,880 --> 00:02:10,120 Speaker 4: But now working. 38 00:02:09,760 --> 00:02:11,480 Speaker 5: Hard, what does that get you. 39 00:02:13,680 --> 00:02:16,400 Speaker 2: Spencer's win is the first time the Green Party has 40 00:02:16,400 --> 00:02:19,120 Speaker 2: ever won a UK by election. The scale of the 41 00:02:19,200 --> 00:02:22,720 Speaker 2: victory allows the Greens to frame themselves as an electable 42 00:02:22,840 --> 00:02:26,519 Speaker 2: left wing alternative to the labor government that is likely 43 00:02:26,560 --> 00:02:29,400 Speaker 2: to set off alarm bells inside Downing Street, where Labor 44 00:02:29,520 --> 00:02:33,760 Speaker 2: MPs have already questioned Pro Minister Kistarmer's political strategy and future. 45 00:02:35,480 --> 00:02:39,200 Speaker 1: Anthropic has rejected the Pentagon's latest offerer means a dispute 46 00:02:39,240 --> 00:02:42,040 Speaker 1: over the use of its technology by the US military. 47 00:02:42,480 --> 00:02:46,040 Speaker 1: The move escalates and existing standoff just one day before 48 00:02:46,080 --> 00:02:49,080 Speaker 1: a government deadline for the company to drop its restrictions 49 00:02:49,160 --> 00:02:54,720 Speaker 1: or face severe consequences. Anthropic CEO Dario ama Day says 50 00:02:54,760 --> 00:02:57,799 Speaker 1: the firm cannot in good conscience accept the request, and 51 00:02:57,840 --> 00:03:02,120 Speaker 1: a statement released yesterday, Archie Sidiki, a Democratic strastist and 52 00:03:02,240 --> 00:03:06,480 Speaker 1: CEO of Bellwether Government Affairs, says the situation is unprecedented. 53 00:03:07,440 --> 00:03:11,160 Speaker 6: We're in uncharted waters. This technology is still developing, and 54 00:03:11,560 --> 00:03:13,760 Speaker 6: had Anthropic not taken the stance, it would have been 55 00:03:13,760 --> 00:03:16,200 Speaker 6: a race to the bottom, because this isn't just about Anthropic, 56 00:03:16,320 --> 00:03:19,280 Speaker 6: this is about other companies as well, where they might 57 00:03:19,360 --> 00:03:22,600 Speaker 6: be then forced to this race to the bottom where 58 00:03:22,639 --> 00:03:26,240 Speaker 6: everybody is trying to get this DoD work and not 59 00:03:26,320 --> 00:03:29,079 Speaker 6: having any sort of guardrail. So from my perspective, I 60 00:03:29,120 --> 00:03:30,520 Speaker 6: think democrats are going to see. 61 00:03:30,320 --> 00:03:34,560 Speaker 1: This as a true leadership CEO of Bellwether Government Affairs 62 00:03:34,760 --> 00:03:39,480 Speaker 1: Archie Sidiki. Anthropic is insisting on two conditions for military 63 00:03:39,560 --> 00:03:42,640 Speaker 1: use of its clawed AI tools. It doesn't want its 64 00:03:42,640 --> 00:03:46,960 Speaker 1: technology used to surveil US citizens or for autonomous lethal 65 00:03:47,040 --> 00:03:49,840 Speaker 1: strikes without a human in the loop. The US Defense 66 00:03:49,880 --> 00:03:53,480 Speaker 1: Department says it will declare Anthropic a supply chain risk 67 00:03:53,760 --> 00:03:57,160 Speaker 1: if the company fails to drop its conditions. It could 68 00:03:57,200 --> 00:04:00,440 Speaker 1: also use the Defense Production Act to utilize is its 69 00:04:00,480 --> 00:04:02,680 Speaker 1: software even if the company objects. 70 00:04:04,120 --> 00:04:07,600 Speaker 2: US and Iranian forces have agreed to restart nuclear talks 71 00:04:07,640 --> 00:04:10,240 Speaker 2: as soon as next week after the latest round of 72 00:04:10,240 --> 00:04:14,320 Speaker 2: discussions ended yesterday, with just days ago before US President 73 00:04:14,360 --> 00:04:17,960 Speaker 2: Donald Trump's deadline to reach an agreement. Plumag understands the 74 00:04:18,040 --> 00:04:21,960 Speaker 2: Americans have been disappointed with progress so far. However, Iranian 75 00:04:21,960 --> 00:04:27,200 Speaker 2: Foreign Minister Abbasaragchi told State television the meetings showed good progress. 76 00:04:27,400 --> 00:04:30,960 Speaker 2: The US in Iran have faced deadlock over nuclear activity, 77 00:04:31,000 --> 00:04:34,000 Speaker 2: with the US building military forces in the region and 78 00:04:34,160 --> 00:04:37,640 Speaker 2: Iran refusing to allow it's highly enriched uranium to be 79 00:04:37,920 --> 00:04:39,320 Speaker 2: moved out of the country. 80 00:04:40,279 --> 00:04:43,680 Speaker 1: Hillary Clinton has denied any association with convicted sex offender 81 00:04:43,760 --> 00:04:48,160 Speaker 1: Jeffrey Epstein. Under questioning from congressional investigators, the former US 82 00:04:48,200 --> 00:04:51,560 Speaker 1: Secretary of State and presidential candidates spoke to reporters after 83 00:04:51,560 --> 00:04:53,080 Speaker 1: giving an hours long deposition. 84 00:04:54,040 --> 00:04:58,039 Speaker 2: I did not know Jeffrey Epstein. I never went to 85 00:04:58,120 --> 00:05:01,200 Speaker 2: his island, I never went to homes, I never went 86 00:05:01,240 --> 00:05:02,240 Speaker 2: to his offices. 87 00:05:03,320 --> 00:05:07,880 Speaker 1: So it's on the record numerous times. Hillary Clinton also 88 00:05:07,920 --> 00:05:10,840 Speaker 1: maintained that her husband, former President Bill Clinton, knew nothing 89 00:05:10,880 --> 00:05:14,640 Speaker 1: about Epstein's crimes and described his associate, Gallaine Maxwell, as 90 00:05:14,640 --> 00:05:18,400 Speaker 1: a casual acquaintance. As Democrats are demanding the US president 91 00:05:18,440 --> 00:05:22,800 Speaker 1: Donald Trump also testifies to congressional investigators on ties to Epstein. 92 00:05:23,120 --> 00:05:25,960 Speaker 1: President Trump and both Clintons have denied any knowledge of 93 00:05:26,000 --> 00:05:28,039 Speaker 1: Epstein's criminal activities. 94 00:05:29,480 --> 00:05:32,760 Speaker 2: Shares in Callwe've fell as much as thirteen percent in 95 00:05:32,839 --> 00:05:35,960 Speaker 2: late trading after it reported a bigger than expected loss 96 00:05:35,960 --> 00:05:40,560 Speaker 2: and increase capital expenditure that alarmed investors. The AI data 97 00:05:40,600 --> 00:05:44,480 Speaker 2: center operator reported its losses had widened eighty nine cents 98 00:05:44,480 --> 00:05:47,080 Speaker 2: per share in the fourth quarter, more than analysts expected. 99 00:05:47,440 --> 00:05:51,320 Speaker 2: Corwe've has been raising billions to plow into new infrastructure, 100 00:05:52,160 --> 00:05:55,440 Speaker 2: but some investors are starting to look cautiously at the 101 00:05:55,480 --> 00:05:59,520 Speaker 2: amount of capital spending in the AI space. Those are 102 00:05:59,560 --> 00:06:01,839 Speaker 2: some of our top stories for you this morning. In 103 00:06:01,920 --> 00:06:03,760 Speaker 2: terms of the markets, as we get to the end 104 00:06:03,839 --> 00:06:08,000 Speaker 2: of February, it looks like Asian equities and European equities 105 00:06:08,000 --> 00:06:11,279 Speaker 2: will outperform the US. MSCI AS Pacific Index are more 106 00:06:11,279 --> 00:06:14,320 Speaker 2: than seven percent this month, in Europe three point six percent. 107 00:06:14,400 --> 00:06:18,320 Speaker 2: Heard this morning, MSCI Asia Pacific continues to gain. The 108 00:06:18,360 --> 00:06:21,000 Speaker 2: All Country World Index is up a tenth of one percent. 109 00:06:21,240 --> 00:06:24,039 Speaker 2: US DOT futures, though are in the red for the Nasdaq, 110 00:06:24,120 --> 00:06:26,360 Speaker 2: and the S and P five hundred ten year treasury 111 00:06:26,440 --> 00:06:29,680 Speaker 2: yields at four percent this morning. Looking elsewhere to the 112 00:06:29,720 --> 00:06:32,960 Speaker 2: oil markets, brain cred futures at seventy one dollars eleven, 113 00:06:33,200 --> 00:06:36,320 Speaker 2: up half of one percent. The dollar weakening a tenth 114 00:06:36,360 --> 00:06:37,679 Speaker 2: on the Bloomig Dollar Spot Index. 115 00:06:37,720 --> 00:06:41,120 Speaker 1: Stephen Well in a moment will bring you the latest 116 00:06:41,120 --> 00:06:43,880 Speaker 1: on the Warner Brothers deal, the UK by election results, 117 00:06:43,920 --> 00:06:47,760 Speaker 1: and new documents seen by Bloomberg which reveal the state 118 00:06:48,240 --> 00:06:51,359 Speaker 1: of part of Russia's war economy. But another story that 119 00:06:51,360 --> 00:06:55,279 Speaker 1: we've been reading this morning are we entering the trillionaire era. 120 00:06:55,800 --> 00:06:58,320 Speaker 1: Ben Stevenman has been writing about the rising wealth of 121 00:06:58,360 --> 00:07:00,599 Speaker 1: the super rates for Bloomberg Weekend. He points out that 122 00:07:00,600 --> 00:07:03,760 Speaker 1: in twenty seventeen, nobody was worth more than one hundred 123 00:07:03,920 --> 00:07:07,200 Speaker 1: billion dollars. Now there are eighteen people who are, and 124 00:07:07,279 --> 00:07:11,520 Speaker 1: a successful SpaceX public offering could make Elon Mosk his 125 00:07:11,600 --> 00:07:14,920 Speaker 1: fortune now tops six hundred and seventy billion dollars, the 126 00:07:14,920 --> 00:07:19,320 Speaker 1: world's first trillionaire. The Ben writes, this soaring wealth is 127 00:07:19,360 --> 00:07:21,680 Speaker 1: reminiscent of another area the turn of the twentieth century, 128 00:07:21,720 --> 00:07:25,080 Speaker 1: when the first billionaire emerged was John D. Rockefeller, and 129 00:07:25,120 --> 00:07:27,520 Speaker 1: the comparison of public perceptions of the super rich are 130 00:07:27,600 --> 00:07:29,840 Speaker 1: very interesting if we think about then and now. He 131 00:07:29,920 --> 00:07:33,520 Speaker 1: dove into the Rockefeller archives for this story as well 132 00:07:33,560 --> 00:07:37,640 Speaker 1: and looked at how the family really were perceived by 133 00:07:37,640 --> 00:07:40,360 Speaker 1: the public, the fears that they had about taxation, and 134 00:07:40,400 --> 00:07:43,960 Speaker 1: some of the conversations between father and son about what 135 00:07:44,200 --> 00:07:46,960 Speaker 1: was going to happen in society and what it meant 136 00:07:47,240 --> 00:07:49,360 Speaker 1: for their wealth as well. I mean, there are parallels 137 00:07:49,360 --> 00:07:53,400 Speaker 1: to be driven to what's happening right now. 138 00:07:54,160 --> 00:07:58,080 Speaker 2: Yeah, I think this piece was so thought provoking to 139 00:07:58,160 --> 00:08:02,520 Speaker 2: me because he looks at those letters between father and son. 140 00:08:02,560 --> 00:08:06,720 Speaker 2: He discusses the drive to tax and break up Rockefeller's 141 00:08:06,800 --> 00:08:13,240 Speaker 2: standard oil, how the priorities of the Rockefellers suffused American society, 142 00:08:13,880 --> 00:08:18,800 Speaker 2: and he talks about how when you're talking about such 143 00:08:19,000 --> 00:08:23,280 Speaker 2: extreme and unimaginable wealth in the hands of one person, 144 00:08:23,880 --> 00:08:30,720 Speaker 2: their patients, their conscientiousness, their creativity is enormously important. And 145 00:08:30,800 --> 00:08:33,720 Speaker 2: i'd sort of add to that even that if you 146 00:08:33,760 --> 00:08:39,160 Speaker 2: think about the parallels to today, the outsized impact that 147 00:08:39,200 --> 00:08:42,880 Speaker 2: these kind of mega wealthy have. The past was about 148 00:08:42,880 --> 00:08:45,840 Speaker 2: the influence on just us society, but maybe you could 149 00:08:45,880 --> 00:08:48,440 Speaker 2: say today it's about the influence of these you know, 150 00:08:48,600 --> 00:08:52,160 Speaker 2: super super wealthy on the whole world. So it's such 151 00:08:52,200 --> 00:08:52,760 Speaker 2: a new era. 152 00:08:53,120 --> 00:08:55,360 Speaker 1: Yeah, I mean Ben's conclusion is is that, you know, 153 00:08:55,559 --> 00:08:58,000 Speaker 1: it's not the fact that someone's becoming super rich, it's 154 00:08:58,000 --> 00:09:01,280 Speaker 1: that who becomes super rich is what's important now because 155 00:09:01,280 --> 00:09:04,040 Speaker 1: of the influence that they have global as it can be, 156 00:09:04,120 --> 00:09:08,280 Speaker 1: and the more patient, conscientious, and creative the super wealthy are, 157 00:09:08,320 --> 00:09:11,360 Speaker 1: the more effective that they can be. So something to 158 00:09:11,400 --> 00:09:13,839 Speaker 1: think about. Perhaps it's a great read. We'll put a 159 00:09:13,880 --> 00:09:17,199 Speaker 1: link to it in our podcast show notes. Well, that's 160 00:09:17,240 --> 00:09:19,200 Speaker 1: bringing more on the Big Deal's news of the morning, 161 00:09:19,240 --> 00:09:22,600 Speaker 1: Netflix dropping its bid to buy Warner Brothers discovery that 162 00:09:22,679 --> 00:09:25,520 Speaker 1: clears the way for Paramoun's guidance to buy the studio. 163 00:09:25,760 --> 00:09:27,800 Speaker 1: Nano Bagori, who leads our deals team in age it 164 00:09:27,880 --> 00:09:31,720 Speaker 1: joins us. Now for more Manuel, Why did Netflix pull out? 165 00:09:32,160 --> 00:09:35,320 Speaker 7: Well, the deal became just too expensive for them, right, 166 00:09:35,400 --> 00:09:40,079 Speaker 7: Paramount kept coming back with superior or Sweden offers, so 167 00:09:40,120 --> 00:09:43,679 Speaker 7: to speak, and despite the Netflix having an agreement with 168 00:09:43,720 --> 00:09:47,080 Speaker 7: Warner Brothers since December, you know, Warner Brothers, you know, 169 00:09:47,360 --> 00:09:51,480 Speaker 7: just realized that the latest offer from Paramount to thirty 170 00:09:51,480 --> 00:09:56,760 Speaker 7: one dollars a share was just superior to that over 171 00:09:57,360 --> 00:10:01,240 Speaker 7: by Netflix. And you know this in time, you know, 172 00:10:01,400 --> 00:10:04,400 Speaker 7: Netflix had a few days to potentially come back with 173 00:10:04,480 --> 00:10:07,760 Speaker 7: a student offer, but they just realized that it was 174 00:10:07,800 --> 00:10:11,600 Speaker 7: becoming too expensive and a potential new offer from them 175 00:10:11,960 --> 00:10:16,200 Speaker 7: could have potentially geopardized their own financial so they decided 176 00:10:16,240 --> 00:10:18,839 Speaker 7: to remain discipline and just walk away. 177 00:10:19,440 --> 00:10:22,280 Speaker 2: So what happens next then with Paramounts offer? Is it 178 00:10:22,440 --> 00:10:24,600 Speaker 2: likely then to clear regulatory hurdles? 179 00:10:25,800 --> 00:10:28,920 Speaker 7: Yes, yes, it's a very good point. Everybody is going 180 00:10:29,000 --> 00:10:31,760 Speaker 7: to be watching very very closely. This is a very 181 00:10:31,800 --> 00:10:35,960 Speaker 7: big transformative deal in the entertainment industry, affecting not just 182 00:10:36,000 --> 00:10:42,000 Speaker 7: the US but globally and regulators definitely will take a 183 00:10:42,200 --> 00:10:45,440 Speaker 7: very close look at how you know, this affects the 184 00:10:45,520 --> 00:10:50,520 Speaker 7: industry and ultimately consumers. So we'll likely hear a lot 185 00:10:50,559 --> 00:10:54,120 Speaker 7: of voices from different people in the industry, politicians and 186 00:10:54,200 --> 00:10:59,360 Speaker 7: so on, kind of like weighing and given their views 187 00:10:59,440 --> 00:11:04,840 Speaker 7: on the implications of these deals. So for these transformative deals, 188 00:11:05,440 --> 00:11:11,240 Speaker 7: usually the regulatory approvals tend to be lengthy at times 189 00:11:11,880 --> 00:11:15,840 Speaker 7: and also controversial at times. Obviously we'll see what happens 190 00:11:15,840 --> 00:11:19,280 Speaker 7: with this one in particular, but I would expect more 191 00:11:19,320 --> 00:11:21,800 Speaker 7: of a bumpy road than a smooth path ahead. 192 00:11:22,800 --> 00:11:26,280 Speaker 1: How important was the politics in this deal? Well, Parliament 193 00:11:26,360 --> 00:11:29,520 Speaker 1: CEO David Allison's father Larry Allison is a trumpali. 194 00:11:31,440 --> 00:11:35,320 Speaker 7: Yes, very good point, and we've seen different permutations of 195 00:11:35,760 --> 00:11:39,480 Speaker 7: the deal structure and the backers over the past three 196 00:11:39,520 --> 00:11:43,480 Speaker 7: four five months since this thing kicked off by paramount 197 00:11:45,679 --> 00:11:50,200 Speaker 7: one should say, so they ultimately got to where they wanted, 198 00:11:50,520 --> 00:11:54,640 Speaker 7: even if it was a tough fight with Netflix, very 199 00:11:54,720 --> 00:11:57,800 Speaker 7: very interesting, fascinating, I would say, bidding war between the two. 200 00:11:58,920 --> 00:12:02,079 Speaker 7: But the reality it is, yes, it's been political obviously 201 00:12:02,120 --> 00:12:05,560 Speaker 7: when you have such high profile companies, right that affect 202 00:12:06,640 --> 00:12:11,960 Speaker 7: industries from technology to entertainment to consumers. It's just, you know, 203 00:12:12,160 --> 00:12:15,520 Speaker 7: it's just a battleground for everybody to weigh in and 204 00:12:15,600 --> 00:12:21,959 Speaker 7: to share their views. And obviously there is different obviously considerations, right, 205 00:12:22,160 --> 00:12:26,439 Speaker 7: it could also imply that you know, people of different 206 00:12:27,120 --> 00:12:30,680 Speaker 7: views may may may potentially use this deals as a 207 00:12:30,679 --> 00:12:36,680 Speaker 7: way to potentially influence in such an important industry. But 208 00:12:36,720 --> 00:12:39,480 Speaker 7: obviously all this is kind of a little bit of 209 00:12:39,559 --> 00:12:43,240 Speaker 7: speculation at this point in time, and I think what 210 00:12:43,360 --> 00:12:47,360 Speaker 7: will have to you know, do over the coming months 211 00:12:47,440 --> 00:12:50,720 Speaker 7: is to continue to watch closely and continue to do 212 00:12:50,760 --> 00:12:54,000 Speaker 7: great reporting us as Bloomber has done over the past 213 00:12:54,080 --> 00:12:58,120 Speaker 7: few months, reporting the fact and trying to see what 214 00:12:58,160 --> 00:13:01,640 Speaker 7: the next steps will be in these regulatory bath which 215 00:13:01,720 --> 00:13:04,360 Speaker 7: I'm sure will be fascinating as well. 216 00:13:05,040 --> 00:13:07,079 Speaker 2: Okay, manwell, thank you so much for being with us. 217 00:13:07,080 --> 00:13:10,520 Speaker 2: Manuel by Gory, who leads our deals team in Asia, 218 00:13:10,640 --> 00:13:14,839 Speaker 2: so thinking about the Warner Brothers Discovery sky Dance deal. 219 00:13:16,240 --> 00:13:19,160 Speaker 2: Stay with us. More from Bloomberg dayba Qube coming up 220 00:13:19,200 --> 00:13:19,720 Speaker 2: after this. 221 00:13:21,520 --> 00:13:23,560 Speaker 1: Now to the by election result in the UK, with 222 00:13:23,600 --> 00:13:26,199 Speaker 1: the Green Party winning the seat in Manchester's Gordon and 223 00:13:26,280 --> 00:13:30,760 Speaker 1: Denton constituency, formerly held by Labor Bloomberg Opinion columist Rosa 224 00:13:30,760 --> 00:13:33,960 Speaker 1: princes with us now for more Rosa good morning. Their 225 00:13:33,960 --> 00:13:36,920 Speaker 1: governments don't tend to win by elections, So what's the 226 00:13:36,920 --> 00:13:38,400 Speaker 1: significance of this result. 227 00:13:39,880 --> 00:13:42,520 Speaker 5: Well, they don't tend to win, but actually this is 228 00:13:42,559 --> 00:13:45,560 Speaker 5: a Labor party elected on a laws slide nineteen months ago, 229 00:13:45,640 --> 00:13:48,040 Speaker 5: and usually they do manage to win the first few. 230 00:13:48,760 --> 00:13:52,000 Speaker 5: It was also a really terrible defeat from one of 231 00:13:52,080 --> 00:13:56,280 Speaker 5: the Labour's safest constituencies over fifty percent of the vote 232 00:13:56,320 --> 00:13:59,960 Speaker 5: to come in a miserable third. And they'll really worry 233 00:14:00,160 --> 00:14:03,199 Speaker 5: about who they lost too, because the Green Parties are 234 00:14:03,240 --> 00:14:06,480 Speaker 5: to their left, and it proves that the threat to 235 00:14:06,679 --> 00:14:10,920 Speaker 5: them staying in power not just in three and a 236 00:14:10,920 --> 00:14:13,240 Speaker 5: half years when the general election will be fought, but 237 00:14:13,400 --> 00:14:16,240 Speaker 5: in May local elections that are coming up. It's not 238 00:14:16,320 --> 00:14:18,440 Speaker 5: just from the left but sorry, not just from the 239 00:14:18,559 --> 00:14:20,920 Speaker 5: right the Reform Party that we kind of knew about, 240 00:14:20,960 --> 00:14:24,120 Speaker 5: but also now from the left. And one polster this 241 00:14:24,240 --> 00:14:27,280 Speaker 5: morning has said that Labor is entering the valley of death. 242 00:14:27,320 --> 00:14:29,640 Speaker 5: They can't seem to hang on to voters anywhere. 243 00:14:30,680 --> 00:14:30,960 Speaker 6: Wow. 244 00:14:31,160 --> 00:14:34,400 Speaker 2: So it will raise new questions then about Kirs Darmer's 245 00:14:34,440 --> 00:14:36,880 Speaker 2: the leadership of the Labor Party. I mean, something that's 246 00:14:36,920 --> 00:14:40,960 Speaker 2: been looking more and more difficult and more and more 247 00:14:41,040 --> 00:14:43,320 Speaker 2: doubtful for the past few weeks. 248 00:14:44,640 --> 00:14:47,320 Speaker 5: Well, that's right. He had a terrible start to the year, 249 00:14:47,360 --> 00:14:50,160 Speaker 5: if you remember, a kind of almost a coup attempt, 250 00:14:50,520 --> 00:14:52,320 Speaker 5: and in the last few weeks I kind of got 251 00:14:52,320 --> 00:14:55,120 Speaker 5: the sense that things had settled down, that they'd decided 252 00:14:55,160 --> 00:14:58,600 Speaker 5: to stick with him at least all those May local elections. Now, 253 00:14:58,840 --> 00:15:02,040 Speaker 5: any Labor MP up this morning, we'll think, if we 254 00:15:02,080 --> 00:15:05,960 Speaker 5: can't win in Gorton and Denton, classic Labor territory, then 255 00:15:06,040 --> 00:15:08,720 Speaker 5: maybe my seat isn't safe. Maybe we should try with 256 00:15:08,760 --> 00:15:11,840 Speaker 5: someone else. So I think Starma is in big trouble 257 00:15:11,960 --> 00:15:15,360 Speaker 5: personally today, and I also think his party's in trouble 258 00:15:15,440 --> 00:15:18,320 Speaker 5: because they haven't really got a clear direction of how 259 00:15:18,360 --> 00:15:21,160 Speaker 5: they can see off these populists on both the left 260 00:15:21,200 --> 00:15:23,600 Speaker 5: and the right, and the one message we're hearing from 261 00:15:23,600 --> 00:15:26,520 Speaker 5: the electors is that they've had it with the establishment 262 00:15:26,560 --> 00:15:27,600 Speaker 5: and they want something new. 263 00:15:29,000 --> 00:15:33,440 Speaker 2: And one more question for you, Rosa, on what these 264 00:15:33,480 --> 00:15:36,320 Speaker 2: smaller parties, which actually are not hugely well known in 265 00:15:36,360 --> 00:15:38,920 Speaker 2: the UK, actually now represent. I mean, we've been watching 266 00:15:38,920 --> 00:15:41,720 Speaker 2: the rise of reform UK and the rise of the Greens. 267 00:15:41,920 --> 00:15:46,320 Speaker 2: But the Green winner Hannah Spencer, I just saw this 268 00:15:46,360 --> 00:15:48,760 Speaker 2: line that I thought was interesting. Life has changed. Instead 269 00:15:48,760 --> 00:15:51,560 Speaker 2: of working for a nice life, we're working to line 270 00:15:51,640 --> 00:15:55,040 Speaker 2: the pockets of billionaires Rosa. We've been talking about billionaires 271 00:15:55,080 --> 00:15:58,240 Speaker 2: and trillionaires this morning and what it might mean for 272 00:15:58,320 --> 00:16:01,760 Speaker 2: the world. I mean, the populism that we're seeing now 273 00:16:02,080 --> 00:16:05,280 Speaker 2: in the UK is also really noteworthy and kind of new. 274 00:16:06,560 --> 00:16:08,920 Speaker 5: It is so I was in Gorton and Denton last 275 00:16:08,960 --> 00:16:11,320 Speaker 5: week and I had a nice chat with Hannah Spence 276 00:16:11,720 --> 00:16:14,680 Speaker 5: and she said to me that in the past parties 277 00:16:14,720 --> 00:16:16,520 Speaker 5: like her own, the Greens, who are they are not 278 00:16:16,720 --> 00:16:19,680 Speaker 5: really talking about the climate. They are very much talking 279 00:16:19,720 --> 00:16:23,239 Speaker 5: about this kind of stuff about wealth taxes, about billionaires. 280 00:16:24,120 --> 00:16:26,400 Speaker 5: She said that in the past it had been seen 281 00:16:26,440 --> 00:16:29,520 Speaker 5: as a wasted vote to vote Green. Now what we've 282 00:16:29,560 --> 00:16:32,600 Speaker 5: seen in Gordon Denton is the idea of five party 283 00:16:32,640 --> 00:16:35,680 Speaker 5: politics that we've sort of been shown hints of in 284 00:16:35,720 --> 00:16:39,160 Speaker 5: the opinion polls are confirmed in an election. We are 285 00:16:39,280 --> 00:16:43,000 Speaker 5: now into five party politics. The Green Party has broken 286 00:16:43,120 --> 00:16:46,640 Speaker 5: through and is now quite substantial, and they've shown that 287 00:16:46,680 --> 00:16:49,520 Speaker 5: they can win anywhere because again, this was not a 288 00:16:49,560 --> 00:16:52,400 Speaker 5: target seat for them. This was never somewhere that they 289 00:16:52,400 --> 00:16:55,040 Speaker 5: had expected to do well. But they managed to really 290 00:16:55,040 --> 00:16:59,600 Speaker 5: pull together a coalition of left leaning graduates and students 291 00:16:59,720 --> 00:17:03,720 Speaker 5: with a big Muslim community there, and it wasn't even close. 292 00:17:03,800 --> 00:17:05,600 Speaker 5: With the idea was that there would be a very 293 00:17:05,640 --> 00:17:07,800 Speaker 5: tight contest, but they won pretty handsomely. 294 00:17:08,600 --> 00:17:13,199 Speaker 1: Okay, Rosea Prince, Bloomberg opinion columnist, thank you very much. Now, 295 00:17:13,280 --> 00:17:16,760 Speaker 1: as Russia's war economy strains undergrowing pressure from sanctions and 296 00:17:16,840 --> 00:17:20,240 Speaker 1: slumping revenues, even businesses in regions that have benefited from 297 00:17:20,240 --> 00:17:24,119 Speaker 1: massive increases in military spending or feeling the pain, documents 298 00:17:24,160 --> 00:17:27,720 Speaker 1: seen by Bloomberg show business leaders raising serious concern with 299 00:17:27,800 --> 00:17:31,440 Speaker 1: officials over the situation. Tony Halpino leads our team covering 300 00:17:31,480 --> 00:17:34,479 Speaker 1: Russia and Ukraine, joins us Now for more, Tony, what 301 00:17:34,560 --> 00:17:35,840 Speaker 1: do these documents show. 302 00:17:36,760 --> 00:17:39,359 Speaker 8: Good morning. Well, it's a survey carried out by Local 303 00:17:39,440 --> 00:17:43,040 Speaker 8: Industrialists Association in the region of Nizhni Novgorod, which is 304 00:17:43,359 --> 00:17:47,480 Speaker 8: historically has been one of Russia's most important centers for 305 00:17:47,520 --> 00:17:51,800 Speaker 8: defense production, for example, and has a large automobile plant 306 00:17:51,800 --> 00:17:54,359 Speaker 8: in the region, And it basically shows them all complaining 307 00:17:54,440 --> 00:17:58,360 Speaker 8: essentially that orders are down, the costs of servicing debt 308 00:17:58,440 --> 00:18:01,240 Speaker 8: is very high because now they have to pay commercial rates, 309 00:18:01,240 --> 00:18:04,160 Speaker 8: which are in excess of twenty percent because subsidized loan 310 00:18:04,240 --> 00:18:08,040 Speaker 8: rates have just all disappeared. They're suffering because they're not 311 00:18:08,080 --> 00:18:10,760 Speaker 8: getting paid on time, and big state corporations are among 312 00:18:10,800 --> 00:18:12,960 Speaker 8: those that are most to blame, so they're having to 313 00:18:13,000 --> 00:18:16,120 Speaker 8: eat into their reserves and they're essentially forecasting that things 314 00:18:16,119 --> 00:18:18,159 Speaker 8: go on like that. Something like twenty thousand people in 315 00:18:18,200 --> 00:18:20,280 Speaker 8: the region are going to lose their jobs in the 316 00:18:20,320 --> 00:18:23,320 Speaker 8: next six months. And there's nothing untypical about nissin offworld. 317 00:18:23,359 --> 00:18:26,359 Speaker 8: It's the kind of region that if you're not reliant 318 00:18:26,400 --> 00:18:30,200 Speaker 8: on oil or gas revenues, it is seen all over Russia, 319 00:18:30,200 --> 00:18:32,359 Speaker 8: and I think it's indicative very much of the stress 320 00:18:32,440 --> 00:18:33,840 Speaker 8: is now facing Russia's economy. 321 00:18:34,240 --> 00:18:37,840 Speaker 2: Yeah, absolutely, it was really interesting the granular detail about 322 00:18:37,880 --> 00:18:41,280 Speaker 2: this particular region, one of eighty or so in Russia. 323 00:18:41,359 --> 00:18:43,840 Speaker 2: What do you think it tells us then about the 324 00:18:43,880 --> 00:18:46,600 Speaker 2: state of Russia's war economy overall? 325 00:18:47,920 --> 00:18:50,760 Speaker 8: Well, there's no doubt. I mean, growth slows sharply last 326 00:18:50,840 --> 00:18:53,080 Speaker 8: year was down to something like one percent from something 327 00:18:53,080 --> 00:18:55,840 Speaker 8: like four point nine percent in the previous year, and 328 00:18:55,960 --> 00:18:59,879 Speaker 8: this year Russia's economy is struggling quite considerably. Officials already 329 00:18:59,880 --> 00:19:01,880 Speaker 8: recognize that fact. We had a story the other day 330 00:19:02,119 --> 00:19:04,720 Speaker 8: that basically says the Economy Ministry is planning to revise 331 00:19:04,800 --> 00:19:08,080 Speaker 8: its GDP forecast because they understand that oil prices aren't 332 00:19:08,080 --> 00:19:10,960 Speaker 8: coming back to a level that they need anytime soon. 333 00:19:11,680 --> 00:19:15,359 Speaker 8: So there are real pressures now in the Russian economy. 334 00:19:15,560 --> 00:19:17,640 Speaker 8: At the same time, they can't actually really cut back 335 00:19:17,680 --> 00:19:19,760 Speaker 8: on spending because they've got to fund the war, so 336 00:19:19,800 --> 00:19:20,680 Speaker 8: they're in a tough spot. 337 00:19:21,640 --> 00:19:25,680 Speaker 1: How is the Kremlin likely to respond to these concerns 338 00:19:25,720 --> 00:19:26,440 Speaker 1: being raised? 339 00:19:28,080 --> 00:19:29,600 Speaker 8: Well, I think this is one of the paradox is. 340 00:19:30,040 --> 00:19:33,359 Speaker 8: Putin doesn't really view the strains and stresses on the 341 00:19:33,440 --> 00:19:37,000 Speaker 8: Russian economy as something that should really influence his political decisions. 342 00:19:37,240 --> 00:19:40,360 Speaker 8: He thinks it's largely a decision that the government has 343 00:19:40,359 --> 00:19:43,280 Speaker 8: to deal with, and it's their responsibility to make the 344 00:19:43,280 --> 00:19:45,520 Speaker 8: economy run so that he can carry on with his 345 00:19:45,600 --> 00:19:51,320 Speaker 8: political and geopolitical strategy. But clearly you can't act in 346 00:19:51,359 --> 00:19:54,280 Speaker 8: a vacuum, and more and more officials are basically telling 347 00:19:54,280 --> 00:19:57,080 Speaker 8: the Kremlin that things are very difficult. The economy is 348 00:19:57,080 --> 00:20:01,720 Speaker 8: not functioning very well. Later and later in the year, 349 00:20:01,760 --> 00:20:03,800 Speaker 8: it's going to get more and more difficult. So clearly, 350 00:20:03,800 --> 00:20:06,680 Speaker 8: at some point it is going to influence the Kremlin's strategy, 351 00:20:07,000 --> 00:20:10,560 Speaker 8: even as currently the Kremlin isn't really acknowledging that it 352 00:20:10,600 --> 00:20:11,959 Speaker 8: will have any effect. 353 00:20:13,160 --> 00:20:15,879 Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the 354 00:20:15,960 --> 00:20:19,000 Speaker 1: stories making news from London to Wall Street and beyond. 355 00:20:19,320 --> 00:20:23,320 Speaker 2: Look for us on your podcast feed every morning, on Apple, Spotify, 356 00:20:23,400 --> 00:20:25,480 Speaker 2: and anywhere else you get your podcasts. 357 00:20:25,520 --> 00:20:28,560 Speaker 1: You can also listen live each morning on London DAB Radio, 358 00:20:28,600 --> 00:20:31,280 Speaker 1: the Bloomberg Business app, and Bloomberg dot Com. 359 00:20:31,320 --> 00:20:34,080 Speaker 2: Our flagship New York station, is also available on your 360 00:20:34,119 --> 00:20:38,840 Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 361 00:20:39,080 --> 00:20:40,400 Speaker 2: I'm Caroline Hepka and. 362 00:20:40,320 --> 00:20:42,960 Speaker 1: I'm Stephen Carroll. Join us again tomorrow morning for all 363 00:20:43,000 --> 00:20:45,400 Speaker 1: the news you need to start your day right here 364 00:20:45,480 --> 00:20:50,680 Speaker 1: on Bloomberg Daybreak Europe.