# Daybreak Weekend: US CPI, Paris Nuclear Talks, Vietnam Elections

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 6 Mar 2026, 39 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/d15648c4-cee0-4e99-a5ca-af80014d921d/0c17fbf8-40e1-4f44-bbc2-b405014c9ebf/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Bloomberg Daybreak Weekend with Host Nathan Hager take a look at some of the stories we'll be tracking in the coming week. • In the US – a look ahead to U.S CPI data, along with a focus on 3 stocks for the week ahead. • In the UK – a look ahead to Paris nuclear talks. • In Asia – a look ahead to legislative elections in Vietnam. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
[0:10] Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the
[0:13] Speaker 2: top stories in the coming week from our Daybreak anchors
[0:16] Speaker 2: all around the world. Straight Ahead on the program, we
[0:19] Speaker 2: looked to some key inflation data and the US. I'm
[0:22] Speaker 2: Nathan Hager in Washington.
[0:24] Speaker 3: I'm Caroline Hepkit in London, where we're looking ahead to
[0:26] Speaker 3: talk in Paris about sharing France's nuclear capabilities with other
[0:30] Speaker 3: European countries.
[0:32] Speaker 4: I'm Doug Chrisner looking ahead to legislative elections in Vietnam.
[0:38] Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
[0:42] Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC,
[0:46] Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias,
[0:51] Speaker 1: XM one twenty one, and around the world on Bloomberg Radio,
[0:55] Speaker 1: dot Com and the Bloomberg Business App.
[1:00] Speaker 2: Good day to you. I'm Nathan Hager. We begin today's
[1:05] Speaker 2: program with some key inflation data in the US. The
[1:08] Speaker 2: Consumer Price Index for the month of February comes out
[1:11] Speaker 2: on Wednesday at eight thirty am Wall Street Time. For
[1:15] Speaker 2: a look ahead to the numbers and what they could
[1:17] Speaker 2: mean for Fed policy. We're joined by Bloomberg News senior
[1:20] Speaker 2: strategist Edward Harrison, the author of Bloomberg's The Everything Risk newsletter.
[1:25] Speaker 2: Ed It's great to speak with you, And of course,
[1:27] Speaker 2: after we just got that big surprise on February jobs,
[1:30] Speaker 2: what's the risk of a market surprise on the inflation front?
[1:35] Speaker 5: Hey, Nathan, I think the risk is there. Certainly, the
[1:40] Speaker 5: risk is probably less there for CPI than it is
[1:44] Speaker 5: for the PCE index, which is the one that the
[1:48] Speaker 5: Fed really tracks more closely. Given the fact that we
[1:53] Speaker 5: have this war in Iran, I think they might look
[1:57] Speaker 5: through some of the gasoline prices and look towards the core,
[2:01] Speaker 5: you know, not including food, not including energy. And so
[2:06] Speaker 5: the numbers to look.
[2:07] Speaker 6: For are the core for.
[2:10] Speaker 5: CPI, which is the Bloomberg Economist estimate is at two
[2:16] Speaker 5: point four percent on average, and the estimates that we
[2:19] Speaker 5: have for the PCE core, however, are three point one percent.
[2:24] Speaker 5: So that's the number that to key in on for
[2:27] Speaker 5: this week, because that's the highest number of the numbers
[2:32] Speaker 5: that we're looking at.
[2:33] Speaker 2: Why are we seeing that dispersion ed between what the
[2:36] Speaker 2: FED keeps its zion and what really matters to the
[2:40] Speaker 2: American consumer. The CPI number that we're getting this week.
[2:45] Speaker 5: Yeah, well, you know, I think a lot of it
[2:46] Speaker 5: has to do with the different measures of that go
[2:50] Speaker 5: in that play into those particular indices. And what the
[2:55] Speaker 5: FED said in the past is that the PCE number
[2:58] Speaker 5: is more reflective of the overall trend of the economy.
[3:01] Speaker 5: And one of the reasons that they're using the core
[3:03] Speaker 5: as the number that they're watching more closely is to
[3:07] Speaker 5: rule out vital food and energy prices that irrespective of
[3:11] Speaker 5: what's happening in Iran, are going to move around irrespective
[3:16] Speaker 5: and so you know, they want to look at what's
[3:19] Speaker 5: the trend level. And if the trend levels three point
[3:22] Speaker 5: one percent it was three percent in the in December,
[3:27] Speaker 5: which is the last reading that we got for PCE,
[3:30] Speaker 5: then that's really not a level at which they would
[3:33] Speaker 5: feel comfortable cutting interest rates. Suddenly we're starting to think about,
[3:38] Speaker 5: you know, an extended hold and potentially the next move
[3:41] Speaker 5: being a rate hike, not a cut.
[3:44] Speaker 2: Even after that surprise drop in jobs numbers that we
[3:50] Speaker 2: saw just this past week in the February number.
[3:54] Speaker 5: Yeah, so that number that we saw this past week,
[3:58] Speaker 5: it points to what I would called stagflation light. That
[4:02] Speaker 5: means that not only do we have inflation, but we
[4:05] Speaker 5: also have slowing growth. And this is something that's very
[4:09] Speaker 5: difficult for the FED to deal with because you know,
[4:12] Speaker 5: they're looking at inflation and their ability to stop inflation,
[4:16] Speaker 5: but then when growth is slowing at the same time,
[4:18] Speaker 5: their hands are tied because the inflation is already elevated.
[4:23] Speaker 2: If we do continue to see a prolonged conflict in
[4:27] Speaker 2: the Middle East, could that have knock on effects on
[4:30] Speaker 2: overall inflation if we continue to see energy prices elevated
[4:34] Speaker 2: like they are right now.
[4:37] Speaker 5: Yes, I think it could, Nathan, I think that if
[4:40] Speaker 5: you have a protracted conflict, it could add to inflation expectations,
[4:47] Speaker 5: not just for the next year, but it could get
[4:51] Speaker 5: you a sense that inflation is trending higher. Since we
[4:55] Speaker 5: already have this core PCE number that I've been talking
[4:59] Speaker 5: about at three percent, suddenly, you know, mindsets change and
[5:05] Speaker 5: people start thinking this could be in for the long
[5:08] Speaker 5: haul as sort of an inflationary number that we're going
[5:13] Speaker 5: to have. Let me just say, by the way, that
[5:16] Speaker 5: we've been above the fed's target for five years now,
[5:19] Speaker 5: so we're getting to a point where that inflationary mindset
[5:24] Speaker 5: starts to creep.
[5:25] Speaker 2: In, which raises the question I think you're alluding to
[5:29] Speaker 2: about whether inflation expectations may be coming unanchored now, Is
[5:33] Speaker 2: that what you're getting at?
[5:35] Speaker 5: Yeah, that's exactly what I'm getting at. What we've seen
[5:38] Speaker 5: thus far is that inflation expectations haven't been unanchored. That
[5:43] Speaker 5: even in the beginning stages of this particular conflict in
[5:46] Speaker 5: the Middle East. You know, if you look at break evens,
[5:50] Speaker 5: that's the number that gets you between inflation protected securities
[5:55] Speaker 5: and treasuries. And if you look at swaps rates in
[5:58] Speaker 5: the market that show you, you know, what expectations are
[6:03] Speaker 5: in two years or five years. You know, the longer
[6:07] Speaker 5: term ones, five years, ten years, those expectations have remained
[6:12] Speaker 5: a solid It's when those go off that the FED
[6:15] Speaker 5: is most concerned.
[6:17] Speaker 2: Thank you, Ed, As always, that's Edward Harrison, senior strategist
[6:21] Speaker 2: at Bloomberg News, author of Bloomberg's The Everything Risk newsletter.
[6:25] Speaker 2: Let's take a look now at some stocks making news
[6:27] Speaker 2: in the week ahead. I'm Nathan Hager, joined by Bloomberg
[6:30] Speaker 2: Equities reporter Matthew Griffin. On another week where we're going
[6:34] Speaker 2: to see some pretty big names reporting earnings starting on Tuesday,
[6:38] Speaker 2: when we'll be in the cloud with Oracle. Could we
[6:41] Speaker 2: see a benefit for Oracle from the AI spending boom, Matthew.
[6:46] Speaker 7: Well, Nathan, I think that is the question that is
[6:49] Speaker 7: going to be front and center of investors' minds because
[6:53] Speaker 7: the huge outlays on AI from Oracle have been greeted
[6:59] Speaker 7: enthusiastically on Wall Street in the past and have been
[7:02] Speaker 7: punished on Wall Street. I mean, you just look at
[7:06] Speaker 7: what the stock did in twenty twenty four, up sixty
[7:10] Speaker 7: one percent, a twenty percent boost last year. All of
[7:13] Speaker 7: this AI spending, their move to position themselves as an
[7:18] Speaker 7: AI cloud provider, made Oracle a darling on Wall Street.
[7:24] Speaker 7: But after that you have had questions arise about what
[7:28] Speaker 7: the return is going to be on this spending. The
[7:30] Speaker 7: stocks now down about fifty percent from its September record high,
[7:35] Speaker 7: and you actually saw the shares plunge in December after
[7:39] Speaker 7: the company raised its spending on data centers. So they're
[7:43] Speaker 7: reporting in a moment where this is really a question.
[7:46] Speaker 2: And the reporting in a moment where we've just heard
[7:48] Speaker 2: in the last few days that Oracles has plans to
[7:51] Speaker 2: cut thousands of jobs just ahead of this earnings report,
[7:56] Speaker 2: what more do investors want to see from Larry Ellison's company?
[7:59] Speaker 7: Matthew, Yes, I think they're going to be looking again
[8:06] Speaker 7: at this cost benefit payoff. I mean, you have analysts
[8:10] Speaker 7: looking for revenue growth here they see just under sixteen
[8:15] Speaker 7: billion dollars of revenue versus fourteen billion in the year
[8:18] Speaker 7: ago quarter. And I think that's also at the heart
[8:22] Speaker 7: and center of whether these tens of billions of dollars
[8:25] Speaker 7: of capital expenditure are going to pay off on the
[8:28] Speaker 7: top and ultimately the bottom line. You see that in
[8:33] Speaker 7: the reports of some of the Magnificent seven companies this quarter,
[8:37] Speaker 7: where again it's it's the question not just of are
[8:40] Speaker 7: you spending are you an AI player, but are you
[8:42] Speaker 7: generating revenue to fund those expenditures. The job cuts are
[8:47] Speaker 7: actually aimed at freeing up money to pay for capital
[8:51] Speaker 7: expenditures for the AI boom. That's what people familiar with
[8:54] Speaker 7: the matter have told us. So again, I think investors
[8:58] Speaker 7: are going to be looking for both sides of the
[9:00] Speaker 7: ledger there.
[9:01] Speaker 2: And we're gonna hear another side of the AI story.
[9:04] Speaker 2: I think probably on Thursday when Adobe reports. I gotta
[9:08] Speaker 2: think this is one of those stocks that's been caught
[9:10] Speaker 2: up in the question about whether software companies are going
[9:13] Speaker 2: to be hit by the AI disruption.
[9:17] Speaker 7: Yes, Nathan, Adobe shares have tumbled actually during what investors,
[9:23] Speaker 7: the atalysts have started to call these SaaS apocalypse, this
[9:27] Speaker 7: giant selloff in software stocks. Adobe's shares again, you think
[9:35] Speaker 7: about this happening in the last couple of months, but
[9:38] Speaker 7: these concerns have really been swirling for a while. Adobe
[9:42] Speaker 7: down about twenty percent year to date, but actually got
[9:44] Speaker 7: a really lukewarm reception on Wall Street back in December,
[9:47] Speaker 7: even though they had a pretty upbeat forecast, because you
[9:51] Speaker 7: already had people questioning do the numbers matter now if
[9:55] Speaker 7: what you do can be replicated by cheap AI tools?
[9:58] Speaker 7: So the commentary on that may be as important, you know,
[10:04] Speaker 7: whether the company sees itself as shielded as any actual
[10:08] Speaker 7: number they report.
[10:09] Speaker 2: And has there been a question as well about whether
[10:11] Speaker 2: the AI tools that Adobe says it has are going
[10:16] Speaker 2: to have their own payoff. It's been kind of dealing
[10:18] Speaker 2: with that struggle as well, hasn't it.
[10:21] Speaker 7: Yes, absolutely so. I was looking at what analysts were saying,
[10:25] Speaker 7: and what Piper Sandler says is investors are going to
[10:30] Speaker 7: be honing in on metrics related to how much money
[10:33] Speaker 7: the company is making from AI. Now, they do see
[10:37] Speaker 7: that the stock may be de risked here. The company
[10:42] Speaker 7: has given guidance, you know, taking a step back again.
[10:46] Speaker 7: The shares have slid, and so they actually see that
[10:48] Speaker 7: there could be some upside here if AI adoption is
[10:52] Speaker 7: better than expected. But yes, I think you're absolutely right.
[10:55] Speaker 7: That's a key question for investors.
[10:57] Speaker 2: And along with those marquee names in the tech space,
[11:00] Speaker 2: we're going to hear from a big name in retail
[11:02] Speaker 2: when Cole's opens its books. I guess the question here
[11:05] Speaker 2: is how's the consumer doing?
[11:08] Speaker 7: Yes, absolutely, Cole's is the latest big consumer name. They
[11:14] Speaker 7: are estimated to report next week. And you know, the
[11:20] Speaker 7: question of the health of the American consumer is really
[11:23] Speaker 7: another thing that's front and center for investors' minds. As
[11:26] Speaker 7: if they didn't have enough to think about, you know,
[11:29] Speaker 7: you think about us unexpectedly shedding jobs. You've had this
[11:34] Speaker 7: idea that consumers are trading down, but actually Coals so
[11:37] Speaker 7: far has held up against this backdrop. They raised their
[11:41] Speaker 7: full year outlook in November because consumers had shown that
[11:47] Speaker 7: they were willing to spend on brands that they really wanted.
[11:51] Speaker 7: And so again, so far Cole's has been a relative
[11:54] Speaker 7: winner here. But I don't think investors see that as
[11:57] Speaker 7: a guarantee, and they're going to be looking closely at
[11:59] Speaker 7: consumer and I think again at the commentary from executives
[12:04] Speaker 7: about whether the consumer's under pressure, what that looks like.
[12:07] Speaker 2: Yeah, another a very busy week once again on the
[12:10] Speaker 2: earnings front. Thank you for this, Matthew, great having you
[12:13] Speaker 2: on with us. That's Bloomberg Equities reporter Matthew Griffin, And
[12:16] Speaker 2: coming up on Bloomberg day Break weekend, we'll look ahead
[12:19] Speaker 2: to Tuks in Paris on spreading France's nuclear umbrella across Europe.
[12:25] Speaker 2: I'm Nathan Hager, and this is Bloomberg. This is Bloomberg
[12:39] Speaker 2: day Break Weekend, our global look ahead at the top
[12:41] Speaker 2: stories for investors in the coming week. I'm Nathan Hager
[12:44] Speaker 2: in Washington. Up later in our program, we look ahead
[12:47] Speaker 2: to legislative elections in Vietnam. But first, Europe's defense debate
[12:52] Speaker 2: is entering a new phase. For decades, the continent has
[12:55] Speaker 2: relied on the US nuclear umbrella, but with war on
[12:58] Speaker 2: Europe's borders, escalating tensions in the Middle East, and growing
[13:01] Speaker 2: uncertainty about America's long term commitments that calculation is shifting.
[13:06] Speaker 2: It's a conversation that exposes deep divisions across the block
[13:10] Speaker 2: over defense spending, strategic autonomy, and how far Europe should
[13:13] Speaker 2: go to secure itself. On one hand, countries like Poland
[13:17] Speaker 2: want to ramp up efforts aggressively, whereas Spain sees no
[13:20] Speaker 2: need to meet US set NATO targets. Next week, European
[13:24] Speaker 2: diplomats gather in Paris to discuss whether France's nuclear deterrent
[13:27] Speaker 2: could play a broader role, including the possibility of stationing
[13:31] Speaker 2: nuclear capable jets in allied countries. Let's get more from
[13:34] Speaker 2: Bloomberg Daybreak Europe anchor Caroline Hepger in London, Nathan.
[13:38] Speaker 3: In Europe, only France and Britain have access to nuclear weapons,
[13:42] Speaker 3: but that may be about to change. The wars in
[13:45] Speaker 3: the Middle East and in Ukraine, and Europe's relationship with
[13:48] Speaker 3: the United States has made other countries think again about
[13:52] Speaker 3: their nuclear options. Next week, talk start in Paris about
[13:56] Speaker 3: hosting nuclear capable jets in allied European countries. It's part
[14:01] Speaker 3: of a wider conversation about how Europe defends itself. Those
[14:05] Speaker 3: discussions have only been accelerated by events in Iran. We'll
[14:09] Speaker 3: joining me now to discuss but INDs Pyotr Skolamowski, who
[14:12] Speaker 3: runs our coverage of economies and governments in Central and
[14:16] Speaker 3: Eastern Europe, from Warsaw and Rodrigo Arijuela, our bureau chief
[14:21] Speaker 3: in Spain. Welcome to both of you. Thank you for
[14:24] Speaker 3: being with me. I want to get a sense of
[14:26] Speaker 3: how your two different countries represent really opposite sides of
[14:31] Speaker 3: the debate inside the EU on defense spending. Pyota, Poland
[14:36] Speaker 3: has expressed this wish for more autonomous capabilities. Does that
[14:41] Speaker 3: mean nuclear weapons?
[14:43] Speaker 8: Yes? Indeed, so that's probably what Polish leaders have been
[14:46] Speaker 8: trying to say, and we've been hearing it for quite
[14:49] Speaker 8: some time. So even the previous president Andre Duda expressed
[14:52] Speaker 8: this interest in Poland acquiring or taking part in what's
[14:55] Speaker 8: called nuclear sharing program with the US. The idea was
[14:58] Speaker 8: rebuff but then now coming back and the new president
[15:02] Speaker 8: said just last month that that he would be in
[15:05] Speaker 8: favor of Poland looking and developing its nuclear weapons. We
[15:09] Speaker 8: heard from Prime Minister Tusk as well earlier this month,
[15:13] Speaker 8: pretty much saying we eventually Poland will look at developing
[15:18] Speaker 8: these autonomous capabilities, meaning nuclear bomb Whether and when it's
[15:23] Speaker 8: going to happen, it's obviously nothing imminent at this point.
[15:26] Speaker 8: What Poland is looking at, that's what the government seems
[15:29] Speaker 8: to be focused on, is is working with France. They
[15:32] Speaker 8: already have a treaty with France that was signed last
[15:34] Speaker 8: last year that sort of stipulates the possibility of working
[15:37] Speaker 8: together in sharing capabilities. And Tusk was really enthusiastic right
[15:44] Speaker 8: from the start when when Marc Kron floated this idea
[15:47] Speaker 8: and again repeated it now during recently that that that
[15:54] Speaker 8: France will be willing to share it's its nuclear capable
[15:58] Speaker 8: jets and stationed in another count. So they're definitely willing
[16:01] Speaker 8: to take part in that in that endeavor.
[16:05] Speaker 3: And of course this is as Poland spends a great deal,
[16:09] Speaker 3: is a significant defense spender in Europe.
[16:13] Speaker 8: Yes, indeed, so obviously that comes on top of the
[16:17] Speaker 8: fact that that Poland is spending almost five percent of
[16:19] Speaker 8: GDP on defense. There is obviously a certain differensive opinion
[16:26] Speaker 8: between the President and the Prime Minister how the money
[16:29] Speaker 8: should be spent. Polish president is very much in favor
[16:32] Speaker 8: and he's been endorsed by Donald Trump. He's very close
[16:35] Speaker 8: to Tumaga movement in the US, and he's all in
[16:38] Speaker 8: favor of Poland spending money in the US as it
[16:41] Speaker 8: has been spending previously to buy weapons. On the other hand,
[16:46] Speaker 8: Polish Prime Minister is definitely gravitating towards some form of
[16:51] Speaker 8: European solution when it comes to defense spending, and he
[16:55] Speaker 8: thinks in terms of if US is really diverging and
[16:59] Speaker 8: trying to the couple from from Europe, then Poland should
[17:04] Speaker 8: take part in trying to work on some form of
[17:08] Speaker 8: joint solutions when it comes to defense in Europe. So
[17:12] Speaker 8: that's where the differences are, but it does not impact
[17:15] Speaker 8: the fact that, you know, where we have the consensus
[17:17] Speaker 8: of the fact that we need to spend more and more.
[17:20] Speaker 3: Yeah, indeed, it's quite a different picture, though with different ideas.
[17:24] Speaker 3: In Spain, Rodrigo, Spain's leader Pedro Sanchez, is increasingly seen
[17:30] Speaker 3: as one of the most aggressive voices pushing back against
[17:33] Speaker 3: the war in Iran. I suppose I'd like to understand
[17:36] Speaker 3: from you, firstly why that position that Spain has taken.
[17:42] Speaker 9: So that position is not totally surprising given his position
[17:48] Speaker 9: on other issues in recent years. He also took a contrarian,
[17:52] Speaker 9: if you want, position compared to other Western countries when
[17:56] Speaker 9: it came to Israel and Gaza, and he his government
[18:00] Speaker 9: also took a very strong position against increasing the NATO
[18:06] Speaker 9: spending targets. So this is kind of, you could say,
[18:08] Speaker 9: the third within that trend, the third time he does
[18:11] Speaker 9: something like this. In this specific case, what the government
[18:14] Speaker 9: has argued is that the military basis that the US
[18:18] Speaker 9: operates from in Spain, there are two of those, They've
[18:21] Speaker 9: been used for over fifty years, and there are many
[18:26] Speaker 9: used as a logistics supports, bases for refueling and things
[18:31] Speaker 9: like that, and the government has the Spanish government has
[18:34] Speaker 9: said those bases cannot be used for any attack operations.
[18:39] Speaker 9: So they don't want the basis to be used for
[18:41] Speaker 9: American military to use as a touching stone to attack Iran. Now,
[18:46] Speaker 9: what is the argument to justify that. What they're saying
[18:50] Speaker 9: is that the attack against Iran has been unilateral from
[18:54] Speaker 9: the attackers Israel and the US, and that it has
[18:58] Speaker 9: not been formed within the UN Charter or any international laws.
[19:04] Speaker 9: And so they are saying that any operations of this scale,
[19:08] Speaker 9: any wars of these of the scale, have to follow
[19:11] Speaker 9: international law and that they cannot allow their bases to
[19:15] Speaker 9: be used in operations that are outside the international order.
[19:19] Speaker 9: And that is the government's official line on this issue,
[19:23] Speaker 9: that they want to follow the rules and that the
[19:26] Speaker 9: Americans are not following them and therefore they cannot partner
[19:30] Speaker 9: with them.
[19:31] Speaker 3: Okay, I mean there has been in some sense is
[19:34] Speaker 3: a similar sort of difficulty for the UK kids some
[19:36] Speaker 3: of the Prime minister here talking about allowing US military
[19:40] Speaker 3: to use British basis for defensive strikes against ira a
[19:44] Speaker 3: debate about what that actually means. Look in terms of Spain,
[19:48] Speaker 3: I mean again, Pedro Sanchez's views sort of chimes also
[19:53] Speaker 3: with the fact that Spain has not really galvanized defense spending.
[19:57] Speaker 3: It's been quite resistant to that idea of spending a
[20:00] Speaker 3: deal more, which has been what President Donald Trump has wanted.
[20:03] Speaker 6: Why that thinking, do you think in Spain?
[20:05] Speaker 8: Where do we go?
[20:06] Speaker 9: Yes, I mean quite resistant. I think is in fact
[20:10] Speaker 9: an understatement, because they are the only NATO member that
[20:13] Speaker 9: has said we are not going to do this, and
[20:15] Speaker 9: there is no way we're changing our position. And while
[20:19] Speaker 9: everybody else has gone to the five percent target that
[20:23] Speaker 9: the Americans came up with, they have said that they
[20:25] Speaker 9: were sticking to two point one percent. There are two
[20:28] Speaker 9: arguments for this are one that with two point one
[20:32] Speaker 9: percent they can meet all the demands and all the needs,
[20:37] Speaker 9: all the requirements for defensive spending. What they are saying
[20:41] Speaker 9: is that the five percent number was kind of pulled
[20:44] Speaker 9: out of the blue and that there is no actual
[20:47] Speaker 9: justification for it. There is no explanation as to why
[20:50] Speaker 9: that's the magic number, and that if you look at
[20:53] Speaker 9: the military needs, at weapons and all other kind of
[20:58] Speaker 9: military needs, you can cover. I was with two point
[21:01] Speaker 9: one percent in Spain's case, and that's the main one.
[21:03] Speaker 9: The other one is that if you go up to
[21:06] Speaker 9: five percent, you have to start pulling money out of
[21:09] Speaker 9: other expenses, other parts of your budget, and that going
[21:14] Speaker 9: up to five percent without an explanation as to why
[21:17] Speaker 9: you're going to that number, means that you'll have less
[21:20] Speaker 9: money for things such as social welfare, healthcare, education.
[21:24] Speaker 10: That is the.
[21:24] Speaker 9: Government's official line on this, and that is their position.
[21:28] Speaker 9: If we have to put money into this, we'll have
[21:30] Speaker 9: to take it out of other places, and there is
[21:32] Speaker 9: no reason that has been given to us as to why.
[21:35] Speaker 6: We have to do that. Okay, so that's the Spanish view.
[21:38] Speaker 3: Meanwhile, back to Poland Pyota and what about these nuclear
[21:41] Speaker 3: power jets, because there's discussion about having nuclear capable fighter
[21:46] Speaker 3: jets being stationed elsewhere in Europe, not for Spain, but Germany,
[21:51] Speaker 3: the UK, Belgium, other countries and also Poland are looking
[21:56] Speaker 3: at this. You know, Manue Macaw has been talking about
[22:00] Speaker 3: and there's going to be a meeting to discuss this,
[22:02] Speaker 3: and what do you think might emerge from that?
[22:05] Speaker 8: Yes, indeed, so Tusk has been very keen on the
[22:09] Speaker 8: idea right from the start when it was first floated
[22:11] Speaker 8: i believe last year, and then obviously now officially sort
[22:15] Speaker 8: of communicated by by Macron. So indeed there's a there's
[22:19] Speaker 8: a meeting in Paris nuclear about nuclear energy. But what
[22:25] Speaker 8: Tusk also said is that we assume on on the
[22:28] Speaker 8: sidelines of that meeting there's going to be more consultations
[22:31] Speaker 8: going on about about this idea. He also mentioned that
[22:35] Speaker 8: when it comes to this this plan, he will be
[22:38] Speaker 8: in touch or or will be communicating with other allies,
[22:42] Speaker 8: especially from the Nordic region, where cooperation between Poland and
[22:46] Speaker 8: Nordics and all the countries around the Baltics have been
[22:50] Speaker 8: growing tighter there's definitely willingness on the on the Polish
[22:54] Speaker 8: side to to engage in that that plan. Clearly, the
[22:59] Speaker 8: experience that they had with the previous idea of nuclear
[23:03] Speaker 8: sharing with the US, which was rebuffed, told them that
[23:06] Speaker 8: at least that route is closed. And it sort of
[23:10] Speaker 8: speaks or fits very nicely in how the government sees
[23:15] Speaker 8: its cooperation and how it wants to build its its defense.
[23:20] Speaker 8: It sees the US sort of disengaging, although it wants
[23:24] Speaker 8: to keep US close. Still, Poland still hosts ten thousand
[23:28] Speaker 8: around ten thousand troops on its soil, but it wants
[23:31] Speaker 8: to have or be part of the of the cooperation
[23:35] Speaker 8: with Europe and and sort of the fact that these clear,
[23:38] Speaker 8: enabled or capable jets will be stationed in Poland is
[23:42] Speaker 8: very much something that that Pland will be keen on it.
[23:44] Speaker 8: But obviously the devil is in the details. It's it's
[23:47] Speaker 8: hard to say how quickly it could be done. And
[23:50] Speaker 8: the other question is purely political in that sense. Obviously,
[23:54] Speaker 8: France is going into election next year, a Manual Macron
[23:57] Speaker 8: is not running in this election, and the post show
[24:00] Speaker 8: that the fire Right could take power, and that's a
[24:02] Speaker 8: big question mark for everyone in Eastern Europe as a
[24:05] Speaker 8: matter of fact. So if we commit to that idea,
[24:08] Speaker 8: what happens next after the macron is gone, and would
[24:11] Speaker 8: that plan change? And if we over commit, would that
[24:15] Speaker 8: mean US will not be willing to work with us
[24:19] Speaker 8: on that project in the future. So there's a lot
[24:21] Speaker 8: of issues here to consider before it all happens.
[24:25] Speaker 3: Yeah, I think it's going to be interesting to see
[24:29] Speaker 3: where this issue leads. Thank you so much to both
[24:32] Speaker 3: of you for joining me. Bin Begs, Rodrigo Olijuera are
[24:35] Speaker 3: bureau chief in Spain, and Peot Scolimouski, who runs our
[24:39] Speaker 3: coverage of economies and government in Central and Eastern Europe,
[24:42] Speaker 3: are joining me from WARSAW. Really appreciate your time, as
[24:46] Speaker 3: will bring you full coverage then of what happens next
[24:49] Speaker 3: with the discussions around this advanced deterrence, the idea of
[24:54] Speaker 3: these nuclear capable fighter jets maybe being stationed across Europe,
[25:00] Speaker 3: not just in France. We'll see where those discussions lead.
[25:04] Speaker 3: I'm Caroline Hepkee here in London. You can catch us
[25:06] Speaker 3: every weekday morning for Blueberg Daybreak Europe, beginning at six
[25:10] Speaker 3: am in London.
[25:10] Speaker 6: That's one am on Wall Street.
[25:12] Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend,
[25:16] Speaker 2: we turned to Vietnam, where legislative elections are set to
[25:19] Speaker 2: take place. I'm Nathan Hagar, and this is Bloomberg. This
[25:34] Speaker 2: is Bloomberg Daybreak Weekend, our global look ahead at the
[25:37] Speaker 2: top stories for investors in the coming week. I'm Nathan
[25:39] Speaker 2: Hager in Washington. We go to Vietnam next where legislative
[25:43] Speaker 2: elections are set to take place. For more, Let's check
[25:46] Speaker 2: in with Doug Krisner, host of the Bloomberg Daybreak Asia podcast.
[25:49] Speaker 4: Thanks Nathan. Next weekend, voters across Vietnam will be going
[25:53] Speaker 4: to the polls and they will elect deputies to the
[25:56] Speaker 4: sixteenth National Assembly along with members of the People's Concils.
[26:00] Speaker 4: And then on April sixth, Vietnam's National Assembly will convene.
[26:05] Speaker 4: To help us understand what to look for. I'm joined
[26:07] Speaker 4: by Bloomberg's Francesca Stevens. She is our Vietnam Bureau chief.
[26:11] Speaker 4: And Francesca joins us from Hanoi. Thank you so much
[26:14] Speaker 4: for being here. As we know, Vietnam is a communist
[26:17] Speaker 4: country with one party rule, not unlike China. Help us
[26:21] Speaker 4: understand what this election means for Vietnam.
[26:25] Speaker 10: So the background to this is in January we had
[26:28] Speaker 10: the Communist Party Congress and that was when to Lamb
[26:33] Speaker 10: the Party Chief, got elected for a full five year
[26:37] Speaker 10: term as Party chief, and we also understood the Party
[26:40] Speaker 10: Congress that was when he was put forward to take
[26:44] Speaker 10: the position of president as well. And so what we'll
[26:47] Speaker 10: be watching for when the National Assembly meets is if
[26:51] Speaker 10: that dual position is confirmed, and that will be a
[26:56] Speaker 10: significant move for Vietnam, the first time in many years
[27:02] Speaker 10: that the president and Party chief has been put forward
[27:06] Speaker 10: at Congress and then backed by the National Assembly. So
[27:09] Speaker 10: to Lem had previously held the presidency and the party
[27:14] Speaker 10: chief position, but only on a temporary basis, and his
[27:17] Speaker 10: predecessor in Winfu Chong had also held it on a
[27:19] Speaker 10: temporary basis. So that's one of the big things that
[27:22] Speaker 10: we're watching out for when the National Assembly meets, but
[27:26] Speaker 10: it's also when we'll find out who the new Prime
[27:30] Speaker 10: Minister will be again. At Party Congress in January, we
[27:34] Speaker 10: had heard that Layminghun had been tipped to be the
[27:38] Speaker 10: new Prime minister, and he's currently head of the Central
[27:42] Speaker 10: Organization Committee, So we're watching to see if that position
[27:46] Speaker 10: is confirmed as well. Before Christmas, there were many different
[27:51] Speaker 10: rumors flying around in Hanoi as to who would be
[27:55] Speaker 10: getting the different positions. But as we get closer to
[27:58] Speaker 10: April the sixth, we're all watching to see what happens there,
[28:01] Speaker 10: and then once the National Assembly confirms who's in the
[28:05] Speaker 10: top positions, will start to see more of the policy
[28:09] Speaker 10: steps unfold for Vietnam over the next next few months.
[28:12] Speaker 4: I'm curious about the way in which the economy has
[28:15] Speaker 4: been impacted by US tariff policy and whether that has
[28:19] Speaker 4: necessarily been a negative. I know that over the years
[28:22] Speaker 4: a lot of manufacturing moved out of China into places
[28:26] Speaker 4: like Vietnam, and for a while it seemed as though
[28:29] Speaker 4: Vietnam's economy was a beneficiary of that de risking from China.
[28:33] Speaker 4: Can you talk about the overall impact and what it's
[28:36] Speaker 4: been like for the Vietnamese economy.
[28:39] Speaker 10: It was a rollercoaster for Vietnam trade talks last year.
[28:43] Speaker 10: We were all shocked when we saw the forty six
[28:46] Speaker 10: percent tariff that was first announced, but Tolan one applawed
[28:51] Speaker 10: it here for his quick response and jumping on the
[28:54] Speaker 10: phone with Donald Trump, and then we saw that reduced
[28:57] Speaker 10: to a twenty percent deal announced Donald Trump on his
[29:01] Speaker 10: Truth Social in July, but crucially with a forty percent
[29:05] Speaker 10: tariff on any goods deemed to be transhipped through the country.
[29:09] Speaker 10: All through the year, the uncertainty over what was happening
[29:13] Speaker 10: with the trade talks and how that would impact exporters
[29:17] Speaker 10: was the key economic theme here. There were at least
[29:20] Speaker 10: six rounds of trade talks, with teams of negotiators flying
[29:24] Speaker 10: out to DC on a fairly regular basis, and Vietnam
[29:27] Speaker 10: making multiple pledges to buy more American goods in an
[29:32] Speaker 10: effort to reduce the trade gap between the two. The
[29:35] Speaker 10: two sides were said to have moved on from the
[29:38] Speaker 10: initial sticking points, which were around transhipment and how you
[29:41] Speaker 10: define that and rules of origin, and we understood that
[29:45] Speaker 10: the focus had moved to areas such as intellectual property,
[29:48] Speaker 10: sovereignty enforcement. We also saw the trade minister replaced in
[29:53] Speaker 10: the process of the talks, in a sign of the
[29:55] Speaker 10: frustration in Hanoi at how they were going. But despite
[29:59] Speaker 10: all of that, Vietnam's exports to the US only continued
[30:04] Speaker 10: to grow last year, and the massive trade gap that
[30:07] Speaker 10: had initially caught Donald Trump's eye and continued to get bigger.
[30:12] Speaker 10: So on the trade deal front, we now expect to
[30:15] Speaker 10: see a long slow walk on that front. I mean
[30:18] Speaker 10: it's actually hard to see whether one will now materialize
[30:20] Speaker 10: after the US Supreme Court's decision. And so from the
[30:24] Speaker 10: economic perspective, you know, we were expecting to see exports
[30:29] Speaker 10: slow down and actually, in contrast, Vietnam defied that.
[30:34] Speaker 4: So what's the picture on sentiment right now? Is there
[30:36] Speaker 4: a sense of optimism?
[30:39] Speaker 10: There is this huge growth story, and even if it
[30:41] Speaker 10: doesn't reach ten percent, I think that the trajectory for
[30:46] Speaker 10: Vietnam over the next few years still looks hugely positive.
[30:49] Speaker 10: I mean last year it was eight point zero two percent,
[30:53] Speaker 10: and we see so much manufacturing activity in the northern provinces.
[30:58] Speaker 10: Got your fox conno luctuare yu Go Tech making Apple
[31:02] Speaker 10: AirPods I've heard, and watches and you know, Samsung making
[31:05] Speaker 10: and around sixty percent of its phones here. So there
[31:09] Speaker 10: is this sort of huge boom in activities. There is
[31:12] Speaker 10: a lot of bullishness around the direction that Vietnam is
[31:16] Speaker 10: going in from an economic perspective and the growth potential here.
[31:22] Speaker 10: But of course we are also at risk from what
[31:25] Speaker 10: happens in the rest of the world, and you know,
[31:28] Speaker 10: seeing what's happening in the Middle East at the moment,
[31:31] Speaker 10: you know how that's going to trickle through and impact
[31:34] Speaker 10: us here. What happens in the US has a has
[31:37] Speaker 10: a huge impact on what happens here in Vietnam. It's
[31:41] Speaker 10: the biggest export market for Vietnam, and exporters and the
[31:45] Speaker 10: business community know that Vietnam needs to keep that keep
[31:50] Speaker 10: that market open, but also manage relations with China. It's
[31:55] Speaker 10: you know, it's just over the border in the north.
[31:58] Speaker 10: Vietnam imports a huge, huge amount of its raw materials
[32:01] Speaker 10: and production components from China. In fact, it's you know,
[32:05] Speaker 10: it's Vietnam's largest trading partner. So it's heavily reliant on
[32:09] Speaker 10: China for maintaining its manufacturing driven growth as well. So
[32:13] Speaker 10: there's just this this fascinating story here around this domestic
[32:18] Speaker 10: growth story, but also a nation that really sort of
[32:22] Speaker 10: sits in this kind of key geo political position, which
[32:27] Speaker 10: is a position that it wants to expand further as well.
[32:30] Speaker 4: I think what about the equity market in Vietnam. Last October,
[32:34] Speaker 4: as I recall, foot Sea Russell upgraded Vietnam's market from
[32:38] Speaker 4: frontier to secondary emerging status. How is that expected to
[32:43] Speaker 4: impact the market.
[32:44] Speaker 10: Yes, so the decision was announced last year, but it
[32:48] Speaker 10: doesn't actually come into effect until September this year, and
[32:52] Speaker 10: in fact there is actually an interim review taking place
[32:56] Speaker 10: in the next few weeks. We don't expect there to
[32:59] Speaker 10: be any shoes with that interim review. The government has
[33:02] Speaker 10: taken a lot of different steps to try and make
[33:06] Speaker 10: sure that that process goes through. In just a few
[33:09] Speaker 10: weeks ago, the government moved to allow foreign investors to
[33:13] Speaker 10: trade through global brokerages directly instead of with local firms,
[33:19] Speaker 10: and again that was one of the steps that Footsie
[33:22] Speaker 10: Russell had been looking for from the government. Here. It's
[33:27] Speaker 10: been quite the weight for Vietnam to get here. They
[33:30] Speaker 10: were first added to the watch list for potential reclassification
[33:33] Speaker 10: back in September twenty eighteen, but since then big steps
[33:37] Speaker 10: had been taken to bring the market into line with
[33:40] Speaker 10: global standards. That's included things like removing the requirement for
[33:44] Speaker 10: overseas investors to fully prefund equity trades and establishing a
[33:49] Speaker 10: formal process for handling failed trades. So there are various
[33:55] Speaker 10: estimates of how much foreign capital that should attract when
[34:01] Speaker 10: the decision goes through in September. Various estimates from around
[34:06] Speaker 10: three to five or six billion in foreign capital inflows,
[34:12] Speaker 10: but obviously we're waiting to see what happens when that
[34:15] Speaker 10: upgrade happens in September.
[34:17] Speaker 4: Francesca will leave it there, Thank you so very much.
[34:19] Speaker 4: Francesca Stevens is Bloomberg's Vietnam bureau chief. Joining from Hanoi,
[34:24] Speaker 4: we go to Australia next where in the last week
[34:27] Speaker 4: Goldmunt Sachs held its Australia Week Alternatives and Macro Summit.
[34:32] Speaker 4: It was there that we caught up with Goldman CEO
[34:34] Speaker 4: David Solomon. He spoke with Bloomberg's Heidi Stroud Watts. Heidi
[34:37] Speaker 4: began the conversation by asking Solomon for his views on
[34:41] Speaker 4: the Chinese markets. Here's what he had to say.
[34:43] Speaker 10: Chat is one of the.
[34:44] Speaker 11: Largest economies in the world. That's going to continue to
[34:46] Speaker 11: be one of the largest economies in the world.
[34:47] Speaker 10: You know.
[34:47] Speaker 11: At the moment, I'm very focused on the bilateral relationship
[34:50] Speaker 11: between the US and China. I'm looking forward to President
[34:54] Speaker 11: Trump's visit with President chief Its planned for later this month,
[34:57] Speaker 11: the beginning of April. It'll be interesting to see what
[34:59] Speaker 11: come out of that, and you know, whether or not
[35:02] Speaker 11: China and the US can make more progress, you know,
[35:05] Speaker 11: on their bilateral relationship. I think that's important for growth
[35:07] Speaker 11: in the world, and I think it's important for both
[35:09] Speaker 11: the US and China, and I think at the moment
[35:11] Speaker 11: that's fragile, and so I'm very curious to see, you know,
[35:13] Speaker 11: how that progresses. In the meantime, Chinese markets have done
[35:17] Speaker 11: very well in the last twelve months. That's increased capital flows,
[35:20] Speaker 11: you know, into the region. We obviously participate in that,
[35:23] Speaker 11: but we're going to watch those bilateral meetings and progress
[35:26] Speaker 11: in the biladderal relationship very closely.
[35:28] Speaker 10: What would you like to come out in terms of
[35:29] Speaker 10: deliverables from.
[35:31] Speaker 11: I'd like to see, you know, more certainty and clarity
[35:34] Speaker 11: around how the bilateral relationship will work going forward. I
[35:38] Speaker 11: think there are things that the US wants and things
[35:39] Speaker 11: that China wants. I'd like more clarity around what that's
[35:42] Speaker 11: going to look like, you know, not just in twenty
[35:44] Speaker 11: twenty six, but you know, over the coming years. And
[35:47] Speaker 11: I think that's still relatively uncertain.
[35:48] Speaker 3: What are we not talking about enough? I know we've
[35:50] Speaker 3: talked a little bit about private credit.
[35:52] Speaker 6: You don't think it's sort of a systemic.
[35:54] Speaker 11: Risk at this point. I think credit formation around the
[36:02] Speaker 11: world is really correlated to economic growth and economic activity.
[36:08] Speaker 11: I do think that we've gone if I just look
[36:10] Speaker 11: at the US market, which is obviously very when you
[36:13] Speaker 11: talk about private credit, a very very large market the
[36:15] Speaker 11: context of private credit, we've gone a long time without
[36:17] Speaker 11: a credit cycle. We've gone a long time without a recession.
[36:20] Speaker 11: I do think when you have these long dated cycles,
[36:23] Speaker 11: they're a variety of things that happen. One, credit spreads narrow.
[36:27] Speaker 11: Two lending standards. People have more capital deploy they get aggressive,
[36:31] Speaker 11: lending standards deteriorate a little bit due diligent standards deteriorate,
[36:35] Speaker 11: And so we're watching very closely to see if there's
[36:38] Speaker 11: been a little bit too much aggression frothiness in those markets.
[36:41] Speaker 11: But fundamentally, when you look at the underlying credit portfolios,
[36:44] Speaker 11: particularly below investment grade credit, while there have been a
[36:47] Speaker 11: bunch of idiosyncratic events where there have been problems, the
[36:51] Speaker 11: broad portfolios are performing reasonably well. Why are they performing
[36:54] Speaker 11: reasonably well because the economy is doing fine, and it's
[36:57] Speaker 11: very hard to have broad underperformance and a broad diversified
[37:01] Speaker 11: credit portfolio. If the economy is doing well. When we
[37:04] Speaker 11: do have a slow down in the economy, you will
[37:06] Speaker 11: see it. I think because of the length of the cycle,
[37:09] Speaker 11: you probably will find places where the losses are higher
[37:11] Speaker 11: than people expect. We're very, very focused on back leverage
[37:14] Speaker 11: and things that could affect or amplify in a more
[37:18] Speaker 11: difficult economic environment, you know, credit deployment. But at the moment,
[37:22] Speaker 11: when you look broadly across portfolios, we're not seeing things
[37:25] Speaker 11: that are super concerning. That's a completely different issue than
[37:29] Speaker 11: retail participation and retail investors wanting liquidity from what are
[37:33] Speaker 11: fundamentally illiquid products, and so that's getting a lot of attention,
[37:37] Speaker 11: but that's different than the underlying credit portfolios. But I
[37:40] Speaker 11: do think that when there is a slowdown in the
[37:42] Speaker 11: economy or we do get to a place where we have,
[37:45] Speaker 11: you know, a recession, you're going to see losses and
[37:48] Speaker 11: credit portfolios, and you know those losses could be meaningful,
[37:51] Speaker 11: but you know, we'll watch that closely while the economy
[37:53] Speaker 11: is jugging along. You know, that's that's not the primary focus.
[37:56] Speaker 4: That was David Solomon Goldman Sachs CEO, speaking with Bloomberg's
[37:59] Speaker 4: Heidies Stroud Watts in Sydney. I'm Doug Prisner. You can
[38:02] Speaker 4: catch us weekdays for the Daybreak Asia podcast. It's available
[38:06] Speaker 4: wherever you get your podcast.
[38:08] Speaker 2: Nathan, Thanks Doug, and that does it for this edition
[38:11] Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at
[38:14] Speaker 2: five am Wall Street Time for the latest don markets,
[38:16] Speaker 2: overseas and the news you need to start your day.
[38:19] Speaker 2: I'm Nathan Hagar.
[38:20] Speaker 4: Stay with us.
[38:21] Speaker 2: Top stories and global business headlines are coming up right now.

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