1 00:00:00,240 --> 00:00:07,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,200 --> 00:00:12,600 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:12,600 --> 00:00:14,880 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:14,880 --> 00:00:17,400 Speaker 2: anchors all around the world, and straight ahead on the program, 5 00:00:17,440 --> 00:00:19,639 Speaker 2: we'll look ahead to some key economic data here in 6 00:00:19,680 --> 00:00:23,119 Speaker 2: the US and how that may impact FED policy. I'm 7 00:00:23,160 --> 00:00:24,600 Speaker 2: Tom Busby in New York. 8 00:00:24,800 --> 00:00:27,280 Speaker 3: I'm Krolyn Hepke in London, where we're looking ahead to 9 00:00:27,320 --> 00:00:30,880 Speaker 3: Poland's presidential election and a populist challenger. 10 00:00:31,280 --> 00:00:34,159 Speaker 4: I'm deg Christner with a preview of next week's rate 11 00:00:34,240 --> 00:00:35,879 Speaker 4: decision from the Bank of Korea. 12 00:00:38,360 --> 00:00:42,440 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,440 --> 00:00:46,160 Speaker 1: eleven to three, Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,640 --> 00:00:50,840 Speaker 1: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 15 00:00:51,320 --> 00:00:54,520 Speaker 1: Sirius XM one twenty one, and around the world on 16 00:00:54,600 --> 00:00:57,760 Speaker 1: Bloomberg Radio, dot Com and the Bloomberg Business App. 17 00:01:02,720 --> 00:01:04,959 Speaker 2: Good day to you. I'm Tom Busby. We begin today's 18 00:01:04,959 --> 00:01:07,880 Speaker 2: program with some key economic data in the US, A 19 00:01:08,000 --> 00:01:10,760 Speaker 2: second read on US GDP for the first quarter that 20 00:01:10,800 --> 00:01:13,160 Speaker 2: comes out on Thursday, and the next day, a read 21 00:01:13,200 --> 00:01:17,640 Speaker 2: on inflation with a personal consumption Expenditures Price index the 22 00:01:17,720 --> 00:01:21,240 Speaker 2: PCE for April. Now for more on what to expect 23 00:01:21,319 --> 00:01:24,319 Speaker 2: and how it could impact FED policy, we're joined by 24 00:01:24,360 --> 00:01:29,000 Speaker 2: Stuart paul Us, economist with Bloomberg Economics. Stuart, thank you 25 00:01:29,040 --> 00:01:31,920 Speaker 2: for being here. Let's start with what you're expecting to 26 00:01:31,959 --> 00:01:34,280 Speaker 2: see in the second read. The second read on gross 27 00:01:34,280 --> 00:01:36,400 Speaker 2: domestic product for the first three months of this year, 28 00:01:36,440 --> 00:01:39,080 Speaker 2: because the first one was quite a shock, wasn't it. 29 00:01:39,200 --> 00:01:41,880 Speaker 5: That's right. In the first quarter we saw GDP growth 30 00:01:41,920 --> 00:01:45,240 Speaker 5: decline at an annualized pace of zero point three percent. 31 00:01:45,280 --> 00:01:48,000 Speaker 5: That was a modest downside surprise. Now, a lot of 32 00:01:48,040 --> 00:01:52,160 Speaker 5: attention has been given to this decline in economic activity 33 00:01:52,200 --> 00:01:54,320 Speaker 5: in the first quarter, and a lot of spokespeople for 34 00:01:54,360 --> 00:01:57,279 Speaker 5: the administration are coming out and saying that we should 35 00:01:57,280 --> 00:02:01,640 Speaker 5: anticipate an upward revision to the GDP data. Personally, I 36 00:02:01,760 --> 00:02:04,720 Speaker 5: think that it's a bit optimistic, and I think that 37 00:02:04,840 --> 00:02:07,720 Speaker 5: maybe on a good day, an upward revision of let's say, 38 00:02:07,960 --> 00:02:13,280 Speaker 5: inventories within the GDP tabulation could be enough to lift 39 00:02:13,320 --> 00:02:16,320 Speaker 5: the estimate of first quarter growth, but just to about 40 00:02:16,440 --> 00:02:19,960 Speaker 5: zero percent, so still not a very good reading. A 41 00:02:19,960 --> 00:02:22,600 Speaker 5: lot of folks are really focused on this calculation, this 42 00:02:22,720 --> 00:02:28,400 Speaker 5: accounting for GDP, and they're basically saying, look, trade weighed 43 00:02:28,440 --> 00:02:31,520 Speaker 5: on first quarter growth because there was a surge in imports. 44 00:02:32,000 --> 00:02:35,120 Speaker 5: But those imports are either being held as inventories or 45 00:02:35,160 --> 00:02:39,000 Speaker 5: they were consumed, or they were used in fixed investment 46 00:02:39,200 --> 00:02:42,919 Speaker 5: or machinery or computers, et cetera. And so the drag 47 00:02:43,600 --> 00:02:46,600 Speaker 5: or the subtraction that we get from the trade component 48 00:02:46,720 --> 00:02:50,840 Speaker 5: should just be offsetting what's added by the domestic components. 49 00:02:51,200 --> 00:02:53,960 Speaker 5: But I think that when the administration officials and when 50 00:02:54,040 --> 00:02:58,880 Speaker 5: economic commentators focus on that accounting, they're missing the forest 51 00:02:58,919 --> 00:03:02,960 Speaker 5: for the trees. There was more growth in demand for 52 00:03:03,240 --> 00:03:07,840 Speaker 5: and utilization of stuff from abroad than there was in 53 00:03:07,919 --> 00:03:12,079 Speaker 5: stuff produced and used and created domestically, and I think 54 00:03:12,080 --> 00:03:14,520 Speaker 5: that that's really what's most important. And even if we 55 00:03:14,560 --> 00:03:19,360 Speaker 5: do see this upward revision as a consequence of better 56 00:03:19,520 --> 00:03:24,280 Speaker 5: estimates of inventory growth, for example, that just means that 57 00:03:24,680 --> 00:03:28,600 Speaker 5: inventories are likely to subtract from growth in the quarters ahead. 58 00:03:28,880 --> 00:03:35,440 Speaker 5: So undoubtedly the trade tensions and the higher trade barriers, 59 00:03:35,680 --> 00:03:39,920 Speaker 5: higher economic policy uncertainty is weighing on domestic activity. 60 00:03:40,440 --> 00:03:43,640 Speaker 2: And as you said, this revision at best could just 61 00:03:43,680 --> 00:03:44,200 Speaker 2: be flat. 62 00:03:44,600 --> 00:03:46,560 Speaker 5: I think so. I think that it's going to be 63 00:03:47,360 --> 00:03:50,840 Speaker 5: a pretty soft reading for first quarter growth. And looking ahead, 64 00:03:52,000 --> 00:03:57,559 Speaker 5: we see weakening PMIS, we see elevated economic policy uncertainty. 65 00:03:58,280 --> 00:04:01,760 Speaker 5: There is this sort of relief wave, especially showing up 66 00:04:01,760 --> 00:04:07,680 Speaker 5: in financial markets of the temporarily lowered trade barriers, but 67 00:04:07,800 --> 00:04:11,119 Speaker 5: everything is just on a ninety day delay, and that's 68 00:04:11,240 --> 00:04:14,400 Speaker 5: going to weigh on fixed investment plans and hiring plans. 69 00:04:15,360 --> 00:04:17,880 Speaker 2: And there's also inflation we have to talk about, because 70 00:04:17,880 --> 00:04:21,479 Speaker 2: on Friday is April's PCE, the Fed's preferred measure of 71 00:04:21,480 --> 00:04:25,080 Speaker 2: consumer inflation. Earlier this month, the April Consumer Price Index 72 00:04:25,200 --> 00:04:27,920 Speaker 2: rose just slightly, but it still rose point two percent. 73 00:04:28,920 --> 00:04:30,720 Speaker 2: That was from March, a third month in a row. 74 00:04:30,800 --> 00:04:32,360 Speaker 2: So what are you expecting to see in the pc 75 00:04:32,800 --> 00:04:34,600 Speaker 2: will Will it be anything different? 76 00:04:35,520 --> 00:04:37,640 Speaker 5: This is going to be one of those readings where 77 00:04:37,640 --> 00:04:40,080 Speaker 5: you really need to look under the hood and dissect 78 00:04:40,120 --> 00:04:43,200 Speaker 5: what's going on. As you said, the CPI reading was 79 00:04:43,240 --> 00:04:47,000 Speaker 5: about a touch over zero point two percent. The PCE reading, 80 00:04:47,080 --> 00:04:49,960 Speaker 5: especially the core PCE reading, which matters most for the 81 00:04:49,960 --> 00:04:53,760 Speaker 5: Federal Reserve, is likely to show just one zero point 82 00:04:53,800 --> 00:04:58,599 Speaker 5: one percent growth in prices. So the fed's preferred price 83 00:04:58,640 --> 00:05:01,520 Speaker 5: measure is just going to show zero point one percent 84 00:05:01,560 --> 00:05:04,640 Speaker 5: price growth during the month, and that might allow people 85 00:05:04,680 --> 00:05:06,839 Speaker 5: to breathe a sigh of relief, But what's really going 86 00:05:06,880 --> 00:05:10,599 Speaker 5: on in that core PCE price index is that core 87 00:05:10,680 --> 00:05:13,920 Speaker 5: goods prices are rising because there is some pass through 88 00:05:13,960 --> 00:05:19,640 Speaker 5: from tariffs, but services prices, especially excluding housing, retreated during 89 00:05:19,720 --> 00:05:24,240 Speaker 5: the month. So we estimate that core PCE services excluding 90 00:05:24,279 --> 00:05:28,359 Speaker 5: housing declined about zero point one percent during the month, 91 00:05:28,960 --> 00:05:33,120 Speaker 5: offsetting the effect of higher goods prices. And one of 92 00:05:33,120 --> 00:05:37,240 Speaker 5: the reasons why services prices fell is because the cost 93 00:05:37,279 --> 00:05:41,760 Speaker 5: of financial services in portfolio management services declined in the 94 00:05:41,800 --> 00:05:45,039 Speaker 5: past couple months, and that was due in large part 95 00:05:45,120 --> 00:05:48,760 Speaker 5: to the stock market retreat when trade barriers were going up. Now, 96 00:05:49,120 --> 00:05:52,279 Speaker 5: the rebound that we've seen more recently, especially in late 97 00:05:52,279 --> 00:05:54,920 Speaker 5: April and early May, is just going to mean that 98 00:05:54,960 --> 00:05:58,000 Speaker 5: those services prices are going to start catching up in 99 00:05:58,080 --> 00:06:01,120 Speaker 5: the months ahead, likely two to three months ahead, as 100 00:06:01,120 --> 00:06:04,000 Speaker 5: we get deeper into the spring, at a time when 101 00:06:04,040 --> 00:06:07,159 Speaker 5: firms are also starting to pass through higher costs of 102 00:06:07,320 --> 00:06:10,520 Speaker 5: tariffs and higher input costs. And so even if we 103 00:06:10,560 --> 00:06:14,400 Speaker 5: see a week reading for the headline and for the 104 00:06:14,400 --> 00:06:17,600 Speaker 5: core in the aggregate. When it comes to these inflation measures, 105 00:06:17,839 --> 00:06:19,719 Speaker 5: I think the details under the hood are going to 106 00:06:19,720 --> 00:06:25,400 Speaker 5: be foreshadowing a further deterioration of the economic landscape and 107 00:06:25,920 --> 00:06:28,440 Speaker 5: higher prices, especially in the month's ed well. 108 00:06:28,440 --> 00:06:31,360 Speaker 2: A second read on first quarter GDP out this Thursday. 109 00:06:31,480 --> 00:06:34,640 Speaker 2: PCE for April out on Friday our thanks to Stuart 110 00:06:34,640 --> 00:06:38,280 Speaker 2: paul Us economists with Bloomberg Economics, we turned out to 111 00:06:38,360 --> 00:06:41,080 Speaker 2: earnings and this week we get first quarter results from 112 00:06:41,080 --> 00:06:44,320 Speaker 2: the last of Big Text, Magnificent seven, AI chip maker, 113 00:06:44,520 --> 00:06:48,240 Speaker 2: and Nvidia. The three and a quarter trillion dollars semiconductor 114 00:06:48,279 --> 00:06:50,680 Speaker 2: giant has been facing some of the same challenges a 115 00:06:50,680 --> 00:06:52,920 Speaker 2: lot of other firms are, like the impact of President 116 00:06:52,960 --> 00:06:56,839 Speaker 2: Trump's tariff wars, brief worries about a pullback an enterprise spending, 117 00:06:56,920 --> 00:07:00,440 Speaker 2: and an uncertain economy. It's also had to navigate severe 118 00:07:00,480 --> 00:07:03,680 Speaker 2: restrictions on exports to China and other nations. And for 119 00:07:03,720 --> 00:07:06,440 Speaker 2: more on that and what to expect from in video 120 00:07:06,520 --> 00:07:10,320 Speaker 2: this week, we're joined by Kunjohn Subani, Bloomberg Intelligence Senior 121 00:07:10,480 --> 00:07:14,080 Speaker 2: semiconductor analyst. Boy there is a lot to unpack about 122 00:07:14,080 --> 00:07:17,640 Speaker 2: what Nvidia has been through the last three months, so 123 00:07:18,440 --> 00:07:21,200 Speaker 2: we know that they've talked about a massive charge they're 124 00:07:21,240 --> 00:07:24,440 Speaker 2: taken because of those export restrictions. What are you expecting 125 00:07:24,480 --> 00:07:26,440 Speaker 2: to see in its results this coming Wednesday? 126 00:07:27,040 --> 00:07:29,440 Speaker 6: Yeah, I mean this has been the most noisiest three 127 00:07:29,480 --> 00:07:32,080 Speaker 6: months coming into an earnings call for Nvidia over the 128 00:07:32,120 --> 00:07:36,480 Speaker 6: last two three years. But despite everything both negative and positive, 129 00:07:36,520 --> 00:07:39,960 Speaker 6: we think still again the results will still be similar 130 00:07:40,000 --> 00:07:42,480 Speaker 6: to what we have seen from them, which is a 131 00:07:42,560 --> 00:07:46,480 Speaker 6: strong beat and raise. We don't expect any weakness in 132 00:07:46,520 --> 00:07:48,960 Speaker 6: the reporting numbers or the guidance at all. 133 00:07:50,280 --> 00:07:54,800 Speaker 2: No change then the trajectory, despite what we've seen the 134 00:07:54,840 --> 00:07:57,680 Speaker 2: last three months, the stock losing almost thirty percent of 135 00:07:57,680 --> 00:08:01,040 Speaker 2: its value and then coming back. I mean, what do 136 00:08:01,080 --> 00:08:03,440 Speaker 2: you attribute that to? Is it the new Blackwell chips 137 00:08:03,480 --> 00:08:05,920 Speaker 2: which we know did you know gangbusters in the fourth 138 00:08:06,000 --> 00:08:06,880 Speaker 2: quarter of last year. 139 00:08:08,240 --> 00:08:10,840 Speaker 6: Yeah, it's going to be primarily driven by the strength 140 00:08:10,880 --> 00:08:13,320 Speaker 6: and Blackwell, and we can unpack a little bit the 141 00:08:13,440 --> 00:08:16,720 Speaker 6: negatives and how those are sort of not impacting the 142 00:08:16,760 --> 00:08:21,560 Speaker 6: fundamentals right now. So the couple of concerns right this year, 143 00:08:21,640 --> 00:08:24,880 Speaker 6: we are starting with the Blackwell. There were some hiccups 144 00:08:24,880 --> 00:08:28,040 Speaker 6: in the GB two hundred, which is their first full 145 00:08:28,240 --> 00:08:29,760 Speaker 6: rack level Blackwell. 146 00:08:29,680 --> 00:08:32,360 Speaker 7: Chip or solution that they're shipping right now. 147 00:08:32,920 --> 00:08:36,480 Speaker 6: Those concerns from our channel chicks seems to be mostly abated. 148 00:08:36,559 --> 00:08:38,920 Speaker 6: The shipments are sort of back on track. 149 00:08:39,040 --> 00:08:41,240 Speaker 7: Everything is flowing in, you know. 150 00:08:41,360 --> 00:08:44,440 Speaker 6: And the second big concern was the China restrictions, as 151 00:08:44,440 --> 00:08:48,040 Speaker 6: you pointed out, which for the whole year, the estimate 152 00:08:48,120 --> 00:08:51,600 Speaker 6: of that impact is supposed to be fifteen billion dollars. Now, 153 00:08:52,440 --> 00:08:55,560 Speaker 6: having said that, we think they have other avenues to 154 00:08:55,720 --> 00:09:00,280 Speaker 6: ship Blackwell to other customers as back on time again. Member, 155 00:09:00,320 --> 00:09:02,880 Speaker 6: They're also still shipping the Hopper series, the New Age 156 00:09:02,920 --> 00:09:06,360 Speaker 6: two hundred to other customers. And this product was supply 157 00:09:06,400 --> 00:09:08,600 Speaker 6: continents last year, which is not this year, so they 158 00:09:08,600 --> 00:09:11,520 Speaker 6: can ship a lot more of that if they wanted 159 00:09:11,520 --> 00:09:14,440 Speaker 6: to to meet the numbers. So they have different leavers 160 00:09:14,800 --> 00:09:18,559 Speaker 6: to pull right now to at least get to the 161 00:09:18,640 --> 00:09:20,640 Speaker 6: numbers that the street is guiding to. 162 00:09:20,960 --> 00:09:23,800 Speaker 2: And even though they've said there could be a charge 163 00:09:23,800 --> 00:09:26,200 Speaker 2: of up to five and a half billion dollars just 164 00:09:26,200 --> 00:09:28,840 Speaker 2: from the export restrictions, you still think it's going to 165 00:09:28,840 --> 00:09:29,920 Speaker 2: be a clear beat. 166 00:09:31,240 --> 00:09:33,720 Speaker 6: Well that the charge is sort of a known quantity, 167 00:09:33,760 --> 00:09:35,959 Speaker 6: So I'm taking into consideration the account that it's a 168 00:09:36,000 --> 00:09:38,880 Speaker 6: one time charge not impacting you know, non gap numbers, 169 00:09:39,000 --> 00:09:39,400 Speaker 6: which is. 170 00:09:39,360 --> 00:09:41,560 Speaker 7: What most of the investors really focus on. 171 00:09:41,800 --> 00:09:45,080 Speaker 6: So when you look beyond the charge, having already baked 172 00:09:45,080 --> 00:09:48,440 Speaker 6: that into the numbers, the new sort of baked in 173 00:09:48,520 --> 00:09:52,000 Speaker 6: numbers don't seem to at risk. Also, you know, these 174 00:09:52,080 --> 00:09:56,360 Speaker 6: headfins are likely to become tailwinds in the second half. 175 00:09:56,640 --> 00:09:59,400 Speaker 6: The company is working has announced that it's working on 176 00:09:59,440 --> 00:10:02,160 Speaker 6: a new China variant chip. In the past, they have 177 00:10:02,240 --> 00:10:05,199 Speaker 6: been slapped with these sanctions almost three to four times 178 00:10:05,200 --> 00:10:08,000 Speaker 6: now and every time they've come out, designed the new 179 00:10:08,080 --> 00:10:12,600 Speaker 6: chip which is restriction compliant, and started shipping to China 180 00:10:12,760 --> 00:10:15,960 Speaker 6: very soon, really offsetting the loss of revenue. So we 181 00:10:16,040 --> 00:10:18,800 Speaker 6: think they will still gain back some of these fifteen 182 00:10:18,880 --> 00:10:21,760 Speaker 6: billion dollars in the second half when they start shipping 183 00:10:21,760 --> 00:10:22,840 Speaker 6: the new China variant. 184 00:10:23,400 --> 00:10:26,000 Speaker 2: Now, speaking of new chips, we just wrapped up the 185 00:10:26,240 --> 00:10:30,280 Speaker 2: videos GtC twenty twenty five conference. What is the latest 186 00:10:30,320 --> 00:10:33,880 Speaker 2: on the Blackwell Ultra also the Ruben and the Ruben Ultra. 187 00:10:35,440 --> 00:10:38,040 Speaker 6: Yeah, I mean, look, they've laid out a really impressive 188 00:10:38,280 --> 00:10:42,080 Speaker 6: roadmap for almost a three year roadmap for their next 189 00:10:42,120 --> 00:10:45,760 Speaker 6: coming chips, which you just highlighted more recent than the 190 00:10:45,800 --> 00:10:50,280 Speaker 6: Black GtC was the computext conference, which is actually happening 191 00:10:51,120 --> 00:10:56,000 Speaker 6: or have started this week in Asia, where they made 192 00:10:56,840 --> 00:10:59,960 Speaker 6: even newer announcements about new prout line. One of the 193 00:11:00,120 --> 00:11:02,360 Speaker 6: key ones I want to highlight is that they're opening 194 00:11:02,480 --> 00:11:07,080 Speaker 6: up their Envy Link scale up connectivity system to the 195 00:11:07,120 --> 00:11:10,640 Speaker 6: rest of the semi connector world, which is which is 196 00:11:10,679 --> 00:11:13,920 Speaker 6: a big thing. And just to give some context, one 197 00:11:14,000 --> 00:11:17,079 Speaker 6: of the biggest concerns or risk or pushback from Nvidia's 198 00:11:17,080 --> 00:11:20,400 Speaker 6: customers is that it's a proprietary closed system where you 199 00:11:20,520 --> 00:11:23,440 Speaker 6: have to use Nvidia GPUs and connect them with the 200 00:11:23,520 --> 00:11:26,439 Speaker 6: Nvidia's proprietary and we link to connect all of these 201 00:11:26,440 --> 00:11:29,800 Speaker 6: GPUs together into a cluster. What they have done now 202 00:11:29,880 --> 00:11:32,600 Speaker 6: is basically opened that for the world where you know, 203 00:11:32,640 --> 00:11:36,280 Speaker 6: you can use someone else's CPU to work with Nvidia GPUs. 204 00:11:36,320 --> 00:11:39,760 Speaker 6: You can use your own A six and still get 205 00:11:39,800 --> 00:11:44,040 Speaker 6: this technology the switching gear from Nvidia, use their technology 206 00:11:44,120 --> 00:11:45,560 Speaker 6: to customize your rack. 207 00:11:45,800 --> 00:11:47,280 Speaker 7: What this does is a couple of things. 208 00:11:47,280 --> 00:11:51,240 Speaker 6: One removes these risks and concerned about proprietary ship and 209 00:11:51,320 --> 00:11:54,400 Speaker 6: vendor lock in. Two, it opens up a brand new 210 00:11:54,960 --> 00:11:57,640 Speaker 6: HAAM for in media where they are still part of 211 00:11:57,720 --> 00:12:01,360 Speaker 6: the ecosystem. Even if the Voska scenario, which is a 212 00:12:01,440 --> 00:12:05,480 Speaker 6: six taking OVERGPU, comes through, they still get some wallet 213 00:12:05,559 --> 00:12:07,920 Speaker 6: share out of the hyperscalers and the other customers, and 214 00:12:07,960 --> 00:12:09,800 Speaker 6: they're not completely removed from the stack. 215 00:12:10,120 --> 00:12:13,240 Speaker 2: In Nvidia earnings out this Wednesday, just after Wall Street's 216 00:12:13,240 --> 00:12:17,199 Speaker 2: closing bell our thanks to Kunjan Sabani, Bloomberg Intelligence Senior 217 00:12:17,320 --> 00:12:20,800 Speaker 2: Semiconductor analyst, and coming up on Bloomberg day Break weekend, 218 00:12:20,800 --> 00:12:24,920 Speaker 2: we'll look ahead to Poland's presidential runoff election. I'm Tom Busby, 219 00:12:25,040 --> 00:12:39,400 Speaker 2: and this is Bloomberg. This is Bloomberg day Break weekend, 220 00:12:39,400 --> 00:12:41,839 Speaker 2: our global look ahead at the top stories for investors 221 00:12:41,840 --> 00:12:44,360 Speaker 2: in the coming week. I'm Tom Busby in New York. 222 00:12:44,600 --> 00:12:46,680 Speaker 2: Up later in our program and look ahead to South 223 00:12:46,760 --> 00:12:51,079 Speaker 2: Korea's Central Bank meeting. But first, a presidential election in 224 00:12:51,120 --> 00:12:54,600 Speaker 2: Poland will determine whether that country can restore political stability 225 00:12:54,960 --> 00:12:58,360 Speaker 2: and remain a reliable partner in the European Union. That's 226 00:12:58,360 --> 00:13:02,360 Speaker 2: after nearly a decade of device right wing populism. For more, 227 00:13:02,760 --> 00:13:04,800 Speaker 2: let's get to London and bring in Bloomberg day Break 228 00:13:04,840 --> 00:13:06,800 Speaker 2: euro banker Caroline Hepger. 229 00:13:06,960 --> 00:13:10,080 Speaker 3: Tom the Nationalist Law and Justice Party governed Poland for 230 00:13:10,120 --> 00:13:13,280 Speaker 3: eight years under Prime Minister Donald Tusk, and his Pro 231 00:13:13,360 --> 00:13:17,360 Speaker 3: EU coalition unexpectedly swept into power towards the end of 232 00:13:17,400 --> 00:13:22,000 Speaker 3: twenty twenty three. Now, Tusk is hoping that centrist ally 233 00:13:22,120 --> 00:13:26,800 Speaker 3: and Warsaw Mayor Rafael Tchaskovsky from his Civic Coalition will 234 00:13:26,880 --> 00:13:31,440 Speaker 3: win the presidential poll and help to secure his policy agenda. 235 00:13:31,679 --> 00:13:36,280 Speaker 3: Tchaskovsky edged out Law and Justice rival Carol Navroki in 236 00:13:36,360 --> 00:13:39,240 Speaker 3: the first round vote, with the two men now set 237 00:13:39,280 --> 00:13:41,720 Speaker 3: to take part in a runoff vote on the first 238 00:13:41,760 --> 00:13:44,760 Speaker 3: of June. It's a ballot that will be keenly watched 239 00:13:44,800 --> 00:13:48,120 Speaker 3: across the EU as more of the bloc's members see 240 00:13:48,160 --> 00:13:51,640 Speaker 3: growing populist support. In a moment, we'll discuss what is 241 00:13:51,720 --> 00:13:55,600 Speaker 3: at stake for the Polish presidential election, but first listen 242 00:13:55,640 --> 00:14:00,360 Speaker 3: to this snippet of Europe's top diplomat Kaya Kallas puts 243 00:14:00,400 --> 00:14:03,680 Speaker 3: the issue for Europe clearly. Given the conflicts in the 244 00:14:03,679 --> 00:14:04,240 Speaker 3: Middle East. 245 00:14:04,720 --> 00:14:10,120 Speaker 8: The situation in Gaza is catastrophic. The aid that Israel 246 00:14:10,280 --> 00:14:14,240 Speaker 8: has allowed in is of course welcomed, but it's the 247 00:14:14,360 --> 00:14:19,400 Speaker 8: drop in the ocean. Aid must flow immediately without obstruction 248 00:14:19,680 --> 00:14:25,280 Speaker 8: and at scale, because this is what is needed. I've 249 00:14:25,400 --> 00:14:28,920 Speaker 8: made these points also with my talks with Israelis also 250 00:14:29,680 --> 00:14:33,720 Speaker 8: I've had talks with UN and the regional leaders as well. 251 00:14:34,480 --> 00:14:39,240 Speaker 8: Pressure is necessary to change the situation. It is clear 252 00:14:39,440 --> 00:14:42,960 Speaker 8: from today's discussion that there is a strong majority in 253 00:14:43,040 --> 00:14:46,960 Speaker 8: favor of review of Article two of our association agreement 254 00:14:47,000 --> 00:14:51,560 Speaker 8: with Israel. So we will launch this exercise and in 255 00:14:51,600 --> 00:14:55,120 Speaker 8: the meantime it is up to Israel to unblock the 256 00:14:55,240 --> 00:15:00,200 Speaker 8: humanitarian aid. Saving lives must be our top priority. 257 00:15:00,880 --> 00:15:03,800 Speaker 3: So that was the EU's top diplomat, Kayakala, speaking to 258 00:15:03,840 --> 00:15:07,560 Speaker 3: the press after the recent EU Foreign Affairs Council meeting. 259 00:15:08,120 --> 00:15:11,440 Speaker 3: So which direction will Poland head in next and how 260 00:15:11,480 --> 00:15:15,040 Speaker 3: will its choice affect its neighbors and the EU as 261 00:15:15,080 --> 00:15:19,160 Speaker 3: an institution joining me to discuss is Bloomberg's Brussels deputy 262 00:15:19,200 --> 00:15:25,920 Speaker 3: bureau chief Eva Klukowska and our Poland based reporter Voutech Moskva. 263 00:15:26,200 --> 00:15:28,120 Speaker 3: Welcome to both of you, and thank you for being 264 00:15:28,160 --> 00:15:32,320 Speaker 3: with me. Voutech, Can I start with you? Firstly? You 265 00:15:32,440 --> 00:15:35,840 Speaker 3: get the sense that this is a crossroad moment for Poland. 266 00:15:36,280 --> 00:15:38,080 Speaker 3: Can you talk us through what's at stake? 267 00:15:38,480 --> 00:15:41,960 Speaker 9: This is a big test for liberal Europe. And for 268 00:15:42,520 --> 00:15:47,360 Speaker 9: liberal Poland at steak two different versions of what Poland 269 00:15:47,640 --> 00:15:51,040 Speaker 9: can be and should be within Europe. One vision of 270 00:15:51,080 --> 00:15:56,520 Speaker 9: the Prime Minister took and his candidate is for increased cooperation, 271 00:15:56,960 --> 00:16:00,680 Speaker 9: especially on defense. The other vision is or a halt 272 00:16:00,880 --> 00:16:05,680 Speaker 9: to further integration and for Poland's security to lie solely 273 00:16:05,720 --> 00:16:08,800 Speaker 9: in the hands of NATO and the US. 274 00:16:08,960 --> 00:16:11,800 Speaker 3: The first round in the election was actually incredibly close, 275 00:16:11,880 --> 00:16:14,680 Speaker 3: So what do you think we're expecting this time round. 276 00:16:15,640 --> 00:16:18,880 Speaker 9: It's going to be quite difficult for the Warsaw mayor 277 00:16:19,080 --> 00:16:23,400 Speaker 9: Ravol Saskowsky too to pull this out, it seems because 278 00:16:23,600 --> 00:16:25,360 Speaker 9: the way that the vote has split up. In the 279 00:16:25,480 --> 00:16:29,600 Speaker 9: first round, the far right candidates got more than twenty 280 00:16:29,600 --> 00:16:33,520 Speaker 9: percent of the vote, and these are candidates which are 281 00:16:34,080 --> 00:16:35,480 Speaker 9: generally against the EU. 282 00:16:35,720 --> 00:16:37,640 Speaker 7: They are more likely to back. 283 00:16:37,680 --> 00:16:42,200 Speaker 9: The conservative candidate Karol Navrotsky in the second round. On 284 00:16:42,280 --> 00:16:45,120 Speaker 9: the other hand, the Warsiw mayor is looking to gather 285 00:16:45,400 --> 00:16:48,440 Speaker 9: more moderate and left of center voters. 286 00:16:48,640 --> 00:16:51,880 Speaker 3: Ever, so that's the picture within the country and the voting. 287 00:16:51,920 --> 00:16:54,920 Speaker 3: But what is Poland's position actually in the EU currently? 288 00:16:54,960 --> 00:16:58,600 Speaker 3: Because Prime Minister Donald Tusk, He's had obviously an illustrious 289 00:16:58,720 --> 00:17:01,760 Speaker 3: history and career with the in the EU. He's now 290 00:17:02,320 --> 00:17:05,000 Speaker 3: leading Poland, but you know, we don't know who's going 291 00:17:05,040 --> 00:17:07,600 Speaker 3: to be partnered with in terms of the president. Has 292 00:17:07,720 --> 00:17:12,320 Speaker 3: that contributed Do you think Tusk's history within the EU 293 00:17:12,840 --> 00:17:15,200 Speaker 3: to the country's influence within Europe. 294 00:17:15,640 --> 00:17:18,639 Speaker 10: Let's step back for a moment. Posk was at the 295 00:17:18,680 --> 00:17:22,120 Speaker 10: helm of the European Council for five years between twenty 296 00:17:22,200 --> 00:17:25,119 Speaker 10: fourteen and nineteen, and that is one of the most 297 00:17:25,119 --> 00:17:28,320 Speaker 10: important roles in the EU. It involves turing meetings of 298 00:17:28,440 --> 00:17:32,199 Speaker 10: national leaders and basically setting the political tone for the 299 00:17:32,200 --> 00:17:36,960 Speaker 10: block's agenda. So Posk understands very well the inner workings 300 00:17:36,960 --> 00:17:40,399 Speaker 10: of Brussels, the political nuances and the balance of power. 301 00:17:41,359 --> 00:17:44,800 Speaker 10: Worth noting that he belongs to the European People's Party, 302 00:17:45,160 --> 00:17:48,240 Speaker 10: the biggest political group in the EU. That's also the 303 00:17:48,240 --> 00:17:52,159 Speaker 10: political family of the European Commissioned President or soula vonderlyon 304 00:17:52,840 --> 00:17:57,960 Speaker 10: German Chancellor Friedrich Mertz, as well as the leaders of Sweden, Greece, 305 00:17:58,200 --> 00:18:02,760 Speaker 10: Finland and Austria, to name just a few. Poland is 306 00:18:02,800 --> 00:18:05,760 Speaker 10: among the biggest countries in the EU, which matters a 307 00:18:05,800 --> 00:18:09,439 Speaker 10: lot in the EU voting system. In an actual the 308 00:18:09,560 --> 00:18:13,159 Speaker 10: bigger the population, the more weight a nation has in 309 00:18:13,280 --> 00:18:16,639 Speaker 10: votes on EU laws, and the more it matters for 310 00:18:16,760 --> 00:18:21,000 Speaker 10: other countries when it comes to building political alliances. If 311 00:18:21,000 --> 00:18:24,439 Speaker 10: you combine all those factors, Poland with Tusk at the 312 00:18:24,440 --> 00:18:26,920 Speaker 10: helm of the government, is definitely. 313 00:18:26,359 --> 00:18:31,320 Speaker 3: Influential, okay, influential. And so, how what do you think 314 00:18:31,320 --> 00:18:36,800 Speaker 3: of the standing of Tusk's chosen candidate, Tzaskovsky versus his 315 00:18:36,960 --> 00:18:41,800 Speaker 3: rival Karl Navrotki? Does he have allies? How they positioned 316 00:18:41,800 --> 00:18:42,639 Speaker 3: those two people? 317 00:18:43,520 --> 00:18:47,640 Speaker 10: First of all, Shaskovsky already has some experience in the government. 318 00:18:47,720 --> 00:18:51,159 Speaker 10: He was a minister in the previous government of Donald Tusk. 319 00:18:51,680 --> 00:18:55,800 Speaker 10: Navrotsky is a relatively new candidate. Nobody really knows him. 320 00:18:56,440 --> 00:19:00,640 Speaker 10: His party belongs to the Group of European Conservatives and 321 00:19:00,760 --> 00:19:04,399 Speaker 10: Reformist which is the fourth biggest political family in the 322 00:19:04,440 --> 00:19:09,159 Speaker 10: European Parliament. It's also the group where Italian Prime Minister 323 00:19:09,280 --> 00:19:13,600 Speaker 10: Jeorgia Meloney belongs to. But make no mistake, even if 324 00:19:13,760 --> 00:19:17,879 Speaker 10: very few people know Navrotsky, now if he wins the elections, 325 00:19:18,200 --> 00:19:20,880 Speaker 10: he will become the president of one of the biggest 326 00:19:20,920 --> 00:19:21,880 Speaker 10: EU nations. 327 00:19:22,280 --> 00:19:25,320 Speaker 3: Wow, so voytek In terms of then the campaigning and 328 00:19:25,359 --> 00:19:29,600 Speaker 3: the battleground, I imagine Poland's relationship with the EU has 329 00:19:29,680 --> 00:19:33,960 Speaker 3: come up a lot. What is the view within Poland? 330 00:19:34,760 --> 00:19:40,600 Speaker 9: Yes, EO has been a big campaign topic. Has security. 331 00:19:40,720 --> 00:19:45,200 Speaker 9: Poland is bordering Ukraine, and the Ukraine conflict has already 332 00:19:45,320 --> 00:19:48,760 Speaker 9: kind of spread into Poland. Poland is home to more 333 00:19:48,800 --> 00:19:51,840 Speaker 9: than a million Ukrainian refugees. The main topic is whether 334 00:19:52,000 --> 00:19:55,720 Speaker 9: the European Union can provide a sort of security that's 335 00:19:55,840 --> 00:19:59,480 Speaker 9: needed at a time that US President Donald Trump said 336 00:19:59,840 --> 00:20:02,600 Speaker 9: he wants Europe to take the greater care for itself 337 00:20:02,640 --> 00:20:06,840 Speaker 9: instead of the US providing such guarantees. The other key 338 00:20:06,920 --> 00:20:11,240 Speaker 9: issue is whether Poland will be able to undo some 339 00:20:11,359 --> 00:20:14,880 Speaker 9: of the justice reforms that the previous populist government did 340 00:20:15,000 --> 00:20:17,359 Speaker 9: that have been blocked for the last two years. If 341 00:20:17,440 --> 00:20:20,399 Speaker 9: the government will not have this president as an ally, 342 00:20:20,640 --> 00:20:24,679 Speaker 9: that's not likely, so there may be Nebrotsky victory is 343 00:20:24,800 --> 00:20:28,000 Speaker 9: likely to lead to more tensions between Poland and the EU. 344 00:20:28,359 --> 00:20:32,359 Speaker 3: In terms of the other campaigning issues, Voytek, can you 345 00:20:32,520 --> 00:20:35,959 Speaker 3: talk us through what the economic propositions on both sides are, 346 00:20:36,040 --> 00:20:39,760 Speaker 3: What the other topics are that have emerged in terms 347 00:20:39,800 --> 00:20:40,680 Speaker 3: of the campaigning. 348 00:20:41,160 --> 00:20:45,760 Speaker 9: Poland has one of the fastest growing economies in Europe. 349 00:20:45,920 --> 00:20:49,679 Speaker 9: It's going around three percent a year. But interestingly, we 350 00:20:49,800 --> 00:20:52,880 Speaker 9: haven't really seen that much of a feel good factor 351 00:20:52,960 --> 00:20:58,520 Speaker 9: coming with the fast economic growth because inflation remains stubbornly 352 00:20:58,600 --> 00:21:02,679 Speaker 9: high around the five percent. And a lot of the 353 00:21:02,760 --> 00:21:07,399 Speaker 9: talk during this campaign has been about lowering costs for 354 00:21:07,760 --> 00:21:13,040 Speaker 9: the self employed, payroll costs, deregulation, increasing tax cuts. So 355 00:21:14,040 --> 00:21:17,840 Speaker 9: these are some of the themes that economically Poland is 356 00:21:17,880 --> 00:21:21,040 Speaker 9: looking and I think both of the candidates are generally 357 00:21:21,320 --> 00:21:25,640 Speaker 9: aligned behind lower taxes. It's a question of how they 358 00:21:25,720 --> 00:21:27,040 Speaker 9: plan to get there. 359 00:21:27,240 --> 00:21:30,679 Speaker 3: So that's the domestic issue then perhaps or some of 360 00:21:30,680 --> 00:21:34,399 Speaker 3: the domestic issues. Ever, what's at stake for Brussels in 361 00:21:34,480 --> 00:21:37,560 Speaker 3: terms of this election? I mean, could the eventual winner 362 00:21:37,720 --> 00:21:41,399 Speaker 3: end up wielding, you know, significant power. How do you 363 00:21:41,440 --> 00:21:44,600 Speaker 3: think Brussels is thinking about this election? I mean I 364 00:21:44,720 --> 00:21:50,119 Speaker 3: mentioned the fact that populism is there within Europe but 365 00:21:50,359 --> 00:21:53,439 Speaker 3: has been rising. This will surely be another test of that. 366 00:21:54,440 --> 00:21:57,040 Speaker 10: Let's try to put it a bit in a sort 367 00:21:57,080 --> 00:22:01,880 Speaker 10: of broader context. Whoever wins the elections in Poland will 368 00:22:01,920 --> 00:22:06,280 Speaker 10: have only a limited say on European politics. That's because 369 00:22:06,359 --> 00:22:09,919 Speaker 10: the role of the president under the Polish law is 370 00:22:10,080 --> 00:22:15,000 Speaker 10: largely symbolic, but as Voytek said, he has essay, he 371 00:22:15,080 --> 00:22:18,640 Speaker 10: has the power of a veto. So when it comes 372 00:22:18,720 --> 00:22:23,080 Speaker 10: to domestic legislation, some of the domestic legislation will be 373 00:22:23,119 --> 00:22:26,800 Speaker 10: based on what the Euty sites I decisions. Brussel's decision 374 00:22:26,840 --> 00:22:30,440 Speaker 10: will have to be translated into national laws, and if 375 00:22:30,520 --> 00:22:33,600 Speaker 10: we have a Eurosceptic candidate, he may of course block it. 376 00:22:34,359 --> 00:22:38,520 Speaker 10: There could be also implications for wider European security, given 377 00:22:38,600 --> 00:22:42,479 Speaker 10: that the president in Poland has essay on defense. Poland 378 00:22:42,560 --> 00:22:45,399 Speaker 10: emerged as a key supply route for Western arms and 379 00:22:45,600 --> 00:22:49,680 Speaker 10: aid to Ukraine after the Russian invasion, and Tusk approach 380 00:22:49,920 --> 00:22:53,320 Speaker 10: has been to six stronger ties with key European allies 381 00:22:53,960 --> 00:22:57,680 Speaker 10: and also try to stay on Trump's site by American 382 00:22:57,880 --> 00:23:01,800 Speaker 10: arms and nuclear power technology. Do that the current president 383 00:23:02,600 --> 00:23:07,919 Speaker 10: enjoyed a war relationship with Trump. So if Navrovsky wins, 384 00:23:08,440 --> 00:23:10,960 Speaker 10: or if just Conscu wins, their challenge will be to 385 00:23:11,080 --> 00:23:12,320 Speaker 10: maintain those times. 386 00:23:13,320 --> 00:23:16,919 Speaker 3: Okay, So thinking about the US and President Trump, are 387 00:23:16,920 --> 00:23:19,639 Speaker 3: there any concerns about free and fair voting in the 388 00:23:19,760 --> 00:23:24,240 Speaker 3: upcoming election? I mean, you mentioned at the start democratic 389 00:23:24,359 --> 00:23:28,560 Speaker 3: standards and the concerns that the EU has had in 390 00:23:28,720 --> 00:23:33,960 Speaker 3: recent years with those standards in Poland. What about the 391 00:23:34,040 --> 00:23:36,399 Speaker 3: election in and of itself, No. 392 00:23:36,560 --> 00:23:39,440 Speaker 9: There really hasn't been any There were a lot of 393 00:23:39,560 --> 00:23:44,399 Speaker 9: concerns about the elections when five years ago when Poland 394 00:23:44,760 --> 00:23:48,399 Speaker 9: held them during the COVID pandemic, But this time around 395 00:23:48,680 --> 00:23:52,600 Speaker 9: there is an independent election commission which is running and 396 00:23:52,760 --> 00:23:56,040 Speaker 9: counting the votes, so that is not concern at this time. 397 00:23:56,680 --> 00:24:00,440 Speaker 3: Buytak just lastly thinking about you know what hey come 398 00:24:00,520 --> 00:24:03,959 Speaker 3: in the future and what's at risk perhaps in this election, 399 00:24:04,200 --> 00:24:05,280 Speaker 3: how are you thinking about it? 400 00:24:06,200 --> 00:24:10,320 Speaker 9: If the government does not get its ally into the 401 00:24:10,400 --> 00:24:14,520 Speaker 9: presidential palace, it raises a question of whether the pro 402 00:24:14,680 --> 00:24:19,000 Speaker 9: European alliance that Donald Tusk currently controls will be able 403 00:24:19,080 --> 00:24:22,640 Speaker 9: to hold on to power in the next parliamentary elections 404 00:24:22,640 --> 00:24:26,600 Speaker 9: in twenty twenty seven. So the key thing for European 405 00:24:26,880 --> 00:24:32,080 Speaker 9: watchers is if Poland's pro eu tilt is to continue, 406 00:24:32,480 --> 00:24:35,080 Speaker 9: he needs his own person in the presidential palace, and 407 00:24:35,119 --> 00:24:37,480 Speaker 9: if he doesn't get that, that is there's a big 408 00:24:37,600 --> 00:24:40,800 Speaker 9: question mark over Poland beyond twenty twenty seven. 409 00:24:41,119 --> 00:24:45,560 Speaker 3: My thanks to Bloomberg's Brussels deputy bureau chief Eva Krukowska 410 00:24:45,880 --> 00:24:50,040 Speaker 3: and to our Poland based reporter Voytek Moskva for joining 411 00:24:50,119 --> 00:24:52,880 Speaker 3: me and we will have full coverage of the results 412 00:24:52,960 --> 00:24:56,040 Speaker 3: of that Polish vote. I'm Karlin Hepkea here in London. 413 00:24:56,080 --> 00:24:59,160 Speaker 3: You can catch us every weekday morning for Bloomberg Daybreak 414 00:24:59,240 --> 00:25:02,359 Speaker 3: Europe beginning six am in London. That's one am on 415 00:25:02,520 --> 00:25:03,000 Speaker 3: Wall Street. 416 00:25:03,160 --> 00:25:06,239 Speaker 2: Tom, thank you, Caroline. And coming up on Bloomberg day 417 00:25:06,240 --> 00:25:08,800 Speaker 2: Break weekend, we'll look ahead to South Korea's Central Bank 418 00:25:08,880 --> 00:25:12,359 Speaker 2: meeting and what it means from monetary policy moving forward. 419 00:25:12,880 --> 00:25:27,240 Speaker 2: I'm Tom Busby, and this is Bloomberg. This is Bloomberg 420 00:25:27,320 --> 00:25:29,400 Speaker 2: day Break Weekend, our global look ahead at the top 421 00:25:29,480 --> 00:25:32,359 Speaker 2: stories for investors in the coming week. I'm Tom Busby 422 00:25:32,440 --> 00:25:35,600 Speaker 2: in New York. South Korea Central Bank meets this week 423 00:25:35,720 --> 00:25:40,320 Speaker 2: amid growing economic strain. New US tariffs are rattling exporters 424 00:25:40,400 --> 00:25:43,920 Speaker 2: and the data is already showing some cracks. Can monetary 425 00:25:44,000 --> 00:25:46,840 Speaker 2: policy offer some support well? For a closer look, let's 426 00:25:46,880 --> 00:25:50,040 Speaker 2: get to the host of the Daybreak Asia podcast, Doug Krisner. 427 00:25:50,520 --> 00:25:50,720 Speaker 7: Tom. 428 00:25:50,800 --> 00:25:53,440 Speaker 4: The latest trade data for South Korea shows a sharp 429 00:25:53,520 --> 00:25:56,720 Speaker 4: drop in shipments to the US via collect sports were 430 00:25:56,800 --> 00:25:59,560 Speaker 4: down for a second straight month now. On the other hand, 431 00:25:59,640 --> 00:26:02,960 Speaker 4: there was the jump in sales of semiconductors. Still, the 432 00:26:03,080 --> 00:26:06,320 Speaker 4: broader outlook does remain a little shaky, and to help 433 00:26:06,440 --> 00:26:08,760 Speaker 4: unpack what it all means for the Bank of Korea, 434 00:26:09,160 --> 00:26:12,600 Speaker 4: I'm joined now by Hyosung Kuan, he covers career for 435 00:26:12,640 --> 00:26:16,040 Speaker 4: Bloomberg Economics from our bureau in Seoul. Thank you so 436 00:26:16,200 --> 00:26:19,000 Speaker 4: much for making time to chat with me, Heosong. Before 437 00:26:19,040 --> 00:26:21,600 Speaker 4: we get to what the BOK may do at its 438 00:26:21,680 --> 00:26:25,520 Speaker 4: next meeting, can you help me understand the current macro 439 00:26:25,960 --> 00:26:29,280 Speaker 4: situation in South Korea, especially given the fact that these 440 00:26:29,880 --> 00:26:31,960 Speaker 4: US tariffs are in place right now. 441 00:26:32,440 --> 00:26:35,119 Speaker 11: First of all, thanks for having me, Douk sous Kristi. 442 00:26:35,240 --> 00:26:41,439 Speaker 11: Economy is under great strain now. Growth momentum has weakened 443 00:26:41,520 --> 00:26:47,200 Speaker 11: significantly due to political instabilities spoked by former President Unisoguil's 444 00:26:48,000 --> 00:26:52,199 Speaker 11: controversial martial attempt, which he wrote it. Consumer and business 445 00:26:52,359 --> 00:26:57,360 Speaker 11: confidence delaying consumption investment, and the vacuum of leadership made 446 00:26:57,400 --> 00:27:00,520 Speaker 11: it difficult for the government to respond to economic challenges. 447 00:27:00,960 --> 00:27:04,120 Speaker 11: On top of this, the batterge of Trump tartiffs hit 448 00:27:04,160 --> 00:27:09,480 Speaker 11: the economy. The South Korea's economy is highly dependent on exports, 449 00:27:09,840 --> 00:27:15,000 Speaker 11: and the US economy is one of the largest destinations 450 00:27:15,000 --> 00:27:20,360 Speaker 11: of South Korean exports. So higher tatiffs on Trump's administration 451 00:27:21,000 --> 00:27:25,679 Speaker 11: on South Korea's key exports such as automobile and automotive 452 00:27:25,800 --> 00:27:32,440 Speaker 11: pots and also steal and potential the imposition of tariffs 453 00:27:32,520 --> 00:27:37,920 Speaker 11: on semiconductors, but way on South Korea's exports and South 454 00:27:38,000 --> 00:27:38,879 Speaker 11: Korea's growth. 455 00:27:39,119 --> 00:27:41,680 Speaker 4: I'm curious, Jo Sung, how has the Korean one, the 456 00:27:41,800 --> 00:27:44,959 Speaker 4: currency been holding up during this period of stress. 457 00:27:45,040 --> 00:27:49,959 Speaker 11: As you put it, Korean one was under severe download 458 00:27:50,080 --> 00:27:57,000 Speaker 11: pressure since actually September last year, when there was a 459 00:27:57,720 --> 00:28:05,160 Speaker 11: in the US the possibility of Trump is growing. Then 460 00:28:05,280 --> 00:28:09,960 Speaker 11: South Korea's one started to get down with the pressure, 461 00:28:10,400 --> 00:28:17,119 Speaker 11: and then after that the depreciation pressure spiked after the 462 00:28:17,280 --> 00:28:21,879 Speaker 11: Units of Yo declared the martial law last December. But 463 00:28:22,640 --> 00:28:29,080 Speaker 11: recently Korean one is gaining slightly as there's a global 464 00:28:29,600 --> 00:28:34,879 Speaker 11: sentiment that US dollar is weakening, possibly due to the 465 00:28:35,640 --> 00:28:39,120 Speaker 11: you know, the ongoing current stokes with the US and 466 00:28:39,360 --> 00:28:40,600 Speaker 11: its trading partners. 467 00:28:41,040 --> 00:28:44,960 Speaker 4: During that period of weakness, and the currency did inflation 468 00:28:45,160 --> 00:28:47,880 Speaker 4: pick up in a meaningful way to the extent that 469 00:28:47,960 --> 00:28:50,920 Speaker 4: the Bank of Korea may have become a little concerned. 470 00:28:51,720 --> 00:28:56,080 Speaker 11: Inflation was a relatively stable Actually, as you mentioned that 471 00:28:56,480 --> 00:29:01,280 Speaker 11: the weaker Korean one would have a inflation the pressure 472 00:29:01,800 --> 00:29:06,560 Speaker 11: through higher import costs. Right, But as I mentioned before 473 00:29:07,120 --> 00:29:11,560 Speaker 11: that South Korea's domestic demand is very weak. You know 474 00:29:11,720 --> 00:29:17,880 Speaker 11: that big domestic demand pressure probably mitigated the increase in 475 00:29:18,680 --> 00:29:23,760 Speaker 11: the inflation pressure by import costs. But still I think 476 00:29:24,640 --> 00:29:30,720 Speaker 11: inflation is slightly higher than well compared to its economic conditions, 477 00:29:31,160 --> 00:29:32,800 Speaker 11: I mean big domestic demand. 478 00:29:33,360 --> 00:29:36,480 Speaker 4: So given weak domestic demand, does that necessarily mean that 479 00:29:36,640 --> 00:29:40,280 Speaker 4: household debt hasn't been growing as quickly that consumers have 480 00:29:40,360 --> 00:29:41,800 Speaker 4: become a lot more conservative. 481 00:29:42,560 --> 00:29:47,800 Speaker 11: So even if the domestic amount was weak, the household 482 00:29:47,880 --> 00:29:54,480 Speaker 11: that was increasing recently because that was driven by the 483 00:29:55,120 --> 00:30:00,000 Speaker 11: expectation that housing prices in the sole metropolitan area, especially 484 00:30:00,640 --> 00:30:04,480 Speaker 11: in Kangnam area, could rise. So it was driven by 485 00:30:04,560 --> 00:30:09,040 Speaker 11: the speculation of housing price increases even with the wik 486 00:30:09,120 --> 00:30:09,880 Speaker 11: domestic demand. 487 00:30:10,240 --> 00:30:13,480 Speaker 4: That's very interesting because I recall in the past the 488 00:30:13,560 --> 00:30:18,080 Speaker 4: Bank of Korea has been very concerned about the extent 489 00:30:18,160 --> 00:30:20,680 Speaker 4: to which the property market in South Korea has been 490 00:30:21,320 --> 00:30:24,840 Speaker 4: very robust, almost too hot for comfort. Is that still 491 00:30:24,920 --> 00:30:26,240 Speaker 4: the case outside of. 492 00:30:26,280 --> 00:30:32,040 Speaker 11: Soul, Outside sold the demand for housing is weakening or weak, 493 00:30:32,400 --> 00:30:37,000 Speaker 11: But demand for housing in Seoul is still very strong. 494 00:30:37,440 --> 00:30:40,840 Speaker 11: So it is a kind of two spit economy that's 495 00:30:40,880 --> 00:30:44,240 Speaker 11: all metroportsan area and other areas. 496 00:30:44,720 --> 00:30:46,520 Speaker 4: I think a lot when I think of South Korea 497 00:30:46,520 --> 00:30:49,320 Speaker 4: about the trade relationship with China, not just the US, 498 00:30:50,120 --> 00:30:52,680 Speaker 4: so the China side of the trade story. How has 499 00:30:52,760 --> 00:30:56,160 Speaker 4: that been impacting South Korean exports to China. 500 00:30:56,800 --> 00:31:01,120 Speaker 11: Well, recently we saw from data that expert to China 501 00:31:01,720 --> 00:31:07,560 Speaker 11: is also declining. Possibly. First of all, China's economy is 502 00:31:07,680 --> 00:31:12,920 Speaker 11: also slowing down. And secondly, the export to China was 503 00:31:13,120 --> 00:31:17,600 Speaker 11: mainly due to the export to the US after assembling 504 00:31:18,200 --> 00:31:22,720 Speaker 11: intermediate parts in China, right, So that means that US 505 00:31:22,880 --> 00:31:27,040 Speaker 11: China's trade tention would also affect South Korea's export to 506 00:31:27,160 --> 00:31:33,360 Speaker 11: China indirect way. And thirdly, the competitiveness of China is 507 00:31:33,480 --> 00:31:37,640 Speaker 11: also increased, meaning that China's demand for South Korea as 508 00:31:37,960 --> 00:31:40,840 Speaker 11: the intermediate pot probably declined. 509 00:31:41,200 --> 00:31:44,760 Speaker 4: When I recall that South Korea is very much allied 510 00:31:44,840 --> 00:31:46,680 Speaker 4: with the United States, and they were one of the 511 00:31:46,720 --> 00:31:49,880 Speaker 4: first countries I think, along with Japan, to come to 512 00:31:49,960 --> 00:31:54,239 Speaker 4: the negotiating table shortly after the tariffs were imposed by 513 00:31:54,280 --> 00:31:57,280 Speaker 4: the Trump administration. It was a hopeful sign I think 514 00:31:57,360 --> 00:31:59,800 Speaker 4: for many economists that cover South Korea that there would 515 00:31:59,800 --> 00:32:03,640 Speaker 4: be some type of resolution in the short term. Is 516 00:32:03,960 --> 00:32:07,440 Speaker 4: that still very much the expectations that will see some 517 00:32:07,680 --> 00:32:11,240 Speaker 4: type of trade agreement between Washington and Seoul soon? 518 00:32:11,960 --> 00:32:17,160 Speaker 11: I think that's that's unlikely because even as you mentioned 519 00:32:17,280 --> 00:32:21,680 Speaker 11: that the delegations of South Korea went to Washington to 520 00:32:21,840 --> 00:32:26,680 Speaker 11: have trade talks earlier than other trading partners of the US. 521 00:32:27,240 --> 00:32:31,040 Speaker 11: Actually the delegates at that time, the finest minister Chessamo, 522 00:32:31,520 --> 00:32:36,880 Speaker 11: said that their objective was to pay ways for you know, 523 00:32:37,240 --> 00:32:41,800 Speaker 11: that trade deal or trade negotiations with the US after 524 00:32:42,040 --> 00:32:49,360 Speaker 11: the new administration established after their presidence election on June three, 525 00:32:49,680 --> 00:32:52,440 Speaker 11: which means that they you know, try to have a 526 00:32:53,480 --> 00:32:57,280 Speaker 11: trade talks with the US, but they actually didn't want 527 00:32:57,360 --> 00:33:02,160 Speaker 11: to rush into any trade. So that's still the case. 528 00:33:02,280 --> 00:33:06,840 Speaker 11: So I think it is very unlikely we South Korea 529 00:33:06,920 --> 00:33:09,560 Speaker 11: will have a trade to deal with the US in 530 00:33:09,640 --> 00:33:10,320 Speaker 11: the near time. 531 00:33:11,000 --> 00:33:15,160 Speaker 4: Yosung, we've touched on some of the macroeconomic elements which 532 00:33:15,240 --> 00:33:17,760 Speaker 4: helps us kind of set the stage for this decision 533 00:33:17,840 --> 00:33:20,760 Speaker 4: that the Bank of Korea confronts. What do you believe 534 00:33:20,880 --> 00:33:23,520 Speaker 4: policymakers will do at their next meeting. 535 00:33:23,880 --> 00:33:27,960 Speaker 11: The Bank of Korea will cut interest rate twenty five 536 00:33:28,040 --> 00:33:34,120 Speaker 11: basis point in May, resuming a very contious easing cycle. So, 537 00:33:34,560 --> 00:33:40,560 Speaker 11: as I told you before, the growth momentum has weakened significantly, 538 00:33:41,080 --> 00:33:47,800 Speaker 11: but inflation remained relatively stable around Bank of Korea's two 539 00:33:47,840 --> 00:33:52,720 Speaker 11: percent target, So the Bank of Korea will move to 540 00:33:53,560 --> 00:33:54,520 Speaker 11: boost economy. 541 00:33:55,000 --> 00:33:57,280 Speaker 4: Yo Song, thank you so much for helping us unpack 542 00:33:57,400 --> 00:33:59,200 Speaker 4: what we may get from the Bank of Korea in 543 00:33:59,280 --> 00:34:03,560 Speaker 4: the coming week. Hyosung Kwang covers Korea for Bloomberg Economics 544 00:34:03,600 --> 00:34:06,800 Speaker 4: in Seoul and for a broader look at the economic 545 00:34:06,960 --> 00:34:10,239 Speaker 4: landscape in Asia. I spoke earlier with Joe Little. He 546 00:34:10,520 --> 00:34:14,480 Speaker 4: is the global chief strategist at HSBC Asset Management. He 547 00:34:14,640 --> 00:34:17,880 Speaker 4: joined me from our studios in Hong Kong. Can you 548 00:34:18,040 --> 00:34:23,279 Speaker 4: take me inside the HSBC Asset Management morning meeting? How 549 00:34:23,360 --> 00:34:25,920 Speaker 4: much consensus is there right now? I know there are 550 00:34:26,000 --> 00:34:29,680 Speaker 4: so many different points of view. It's a very mercurial 551 00:34:29,760 --> 00:34:31,920 Speaker 4: world that we're living in right now. Is there much 552 00:34:32,000 --> 00:34:33,600 Speaker 4: in the way of consensus in your shop? 553 00:34:34,160 --> 00:34:34,359 Speaker 7: Yeah? 554 00:34:34,760 --> 00:34:37,799 Speaker 12: I mean that's a great question, and you're quite right, 555 00:34:37,960 --> 00:34:41,799 Speaker 12: because we're living in unusual times, ultra high policy uncertainty, 556 00:34:42,360 --> 00:34:46,759 Speaker 12: many different dimensions to the investment market equation at this 557 00:34:47,120 --> 00:34:50,440 Speaker 12: point in time. So we tend to run an approach 558 00:34:50,560 --> 00:34:54,520 Speaker 12: to think about investment markets based around scenarios, and normally 559 00:34:55,000 --> 00:34:59,880 Speaker 12: we like to have three scenarios in mind. Juggling most 560 00:35:00,000 --> 00:35:04,640 Speaker 12: scenarios and that becomes quite quite quite difficult mental mental exercise, 561 00:35:04,920 --> 00:35:07,279 Speaker 12: and it means then you've got less time to really 562 00:35:07,440 --> 00:35:10,759 Speaker 12: kind of develop and think about what the data flow 563 00:35:10,840 --> 00:35:13,600 Speaker 12: and investment market action might look like under different scenarios. 564 00:35:14,320 --> 00:35:16,680 Speaker 12: The central theme that we've had is what I call 565 00:35:16,719 --> 00:35:20,880 Speaker 12: spinning around. So lots of policy uncertainty, high volatility in markets, 566 00:35:21,160 --> 00:35:25,120 Speaker 12: a big challenge to US exceptionalism, rotation into other global 567 00:35:25,840 --> 00:35:29,640 Speaker 12: stock markets, policy support in Europe and China, and a 568 00:35:29,760 --> 00:35:32,400 Speaker 12: situation then where the rest of the world equities e 569 00:35:32,560 --> 00:35:36,280 Speaker 12: the equities can outperform the US, but clearly with the tariffs, 570 00:35:36,760 --> 00:35:40,000 Speaker 12: with the Dodge fiscal agenda to a degree, as well 571 00:35:40,239 --> 00:35:44,520 Speaker 12: some of the themes around immigration policy in the US. 572 00:35:44,880 --> 00:35:48,000 Speaker 12: There's a there's a left hand scenario which we've been 573 00:35:48,400 --> 00:35:52,120 Speaker 12: also highly attuned to, particularly colleagues in the in the 574 00:35:52,160 --> 00:35:56,279 Speaker 12: fixed income area, highly attuned to this idea of you know, 575 00:35:56,360 --> 00:36:02,840 Speaker 12: big challenges around the growth inflation mix. Recession worries elevated still, 576 00:36:03,239 --> 00:36:07,160 Speaker 12: and that has a slightly different set of prognoses in 577 00:36:07,280 --> 00:36:10,000 Speaker 12: terms of how investment markets then behave. And on the 578 00:36:10,080 --> 00:36:14,520 Speaker 12: right hand side, you know, investors in our equity area, 579 00:36:15,360 --> 00:36:18,560 Speaker 12: more growth focused investors still want to think about technology 580 00:36:18,680 --> 00:36:23,280 Speaker 12: and the importance of AI, which increasingly is the most positive, 581 00:36:23,520 --> 00:36:30,040 Speaker 12: most bullish scenario in the chessboard. And again that would 582 00:36:30,080 --> 00:36:33,880 Speaker 12: have a slightly different set of consequences for markets as 583 00:36:33,920 --> 00:36:36,120 Speaker 12: we think through the scenarios. So we like to think 584 00:36:36,440 --> 00:36:39,560 Speaker 12: in terms of that framework, and most of our discussions 585 00:36:39,560 --> 00:36:42,200 Speaker 12: are focused on a central scenario of spinning around lots 586 00:36:42,200 --> 00:36:44,920 Speaker 12: of volatility, but a way forward for markets over the 587 00:36:45,040 --> 00:36:47,520 Speaker 12: course of the next twelve to eighty months, or a 588 00:36:47,600 --> 00:36:51,600 Speaker 12: more adverse negative scenario. Worries about recession risk being a 589 00:36:51,760 --> 00:36:54,080 Speaker 12: big feature of a lot of our conversations, and of 590 00:36:54,120 --> 00:36:56,360 Speaker 12: course a track in the data very closely to monitor 591 00:36:56,400 --> 00:36:57,080 Speaker 12: that risk. 592 00:36:57,520 --> 00:37:00,800 Speaker 4: Is there some counter intuitive into tuition that you have 593 00:37:01,040 --> 00:37:03,040 Speaker 4: right now that you would be willing to share something 594 00:37:03,080 --> 00:37:06,680 Speaker 4: that you believe the market may be overlooking, that you 595 00:37:06,880 --> 00:37:11,000 Speaker 4: think will develop in a way that represents opportunity. 596 00:37:11,480 --> 00:37:14,840 Speaker 12: So there are some very interesting positive fixed income stories, 597 00:37:15,080 --> 00:37:16,720 Speaker 12: and there's a lot to focus on in the Asia 598 00:37:16,760 --> 00:37:19,880 Speaker 12: region as well, India, fixed income, China stock markets. I 599 00:37:19,920 --> 00:37:21,520 Speaker 12: think a lot of these themes tend to be a 600 00:37:21,560 --> 00:37:25,000 Speaker 12: little bit overlooked by global investors because the story around 601 00:37:25,280 --> 00:37:28,919 Speaker 12: US markets, US exceptionalism, which has been that dominant meme 602 00:37:29,360 --> 00:37:33,560 Speaker 12: over the last decade, has sucked all of the interest 603 00:37:33,640 --> 00:37:36,480 Speaker 12: and oxygen out of these other themes. As that breaks, 604 00:37:37,000 --> 00:37:40,040 Speaker 12: as the fault lines appear in US exceptionalism, then it 605 00:37:40,120 --> 00:37:43,600 Speaker 12: gives oxygen to some of these other stories. So big 606 00:37:43,680 --> 00:37:47,040 Speaker 12: opportunity for rotation, a big opportunity to look at themes 607 00:37:47,080 --> 00:37:50,399 Speaker 12: in Europe and Asia over the next twelve to eighteen months. 608 00:37:50,400 --> 00:37:53,000 Speaker 12: But extending a time horizon rather than just focusing on 609 00:37:53,040 --> 00:37:56,440 Speaker 12: the very near term is probably the best advice at 610 00:37:56,480 --> 00:37:57,000 Speaker 12: this juncture. 611 00:37:57,200 --> 00:38:01,800 Speaker 4: That is Joe Little, chief Global Strategist at HPC Asset Management, 612 00:38:02,040 --> 00:38:04,719 Speaker 4: and I'm Doug Chrisner. You can catch us weekdays for 613 00:38:04,880 --> 00:38:08,279 Speaker 4: the Daybreak Asia podcast. It's available wherever you get your 614 00:38:08,360 --> 00:38:09,600 Speaker 4: podcast Tom. 615 00:38:10,040 --> 00:38:12,360 Speaker 2: Thanks Doug, and that does it for this edition of 616 00:38:12,360 --> 00:38:15,239 Speaker 2: Bloomberg day Break Weekend. Join us again Monday morning at 617 00:38:15,280 --> 00:38:18,120 Speaker 2: five am Wall Street Time for the latest on markets overseas. 618 00:38:18,200 --> 00:38:20,520 Speaker 2: And the news you need to start your day. I'm 619 00:38:20,600 --> 00:38:21,200 Speaker 2: Tom Busby. 620 00:38:21,520 --> 00:38:22,120 Speaker 7: Stay with US. 621 00:38:22,239 --> 00:38:25,319 Speaker 2: Top stories and global business headlines are coming up right now.