Daybreak Weekend: Neflix Earnings, Hungary Election, Spain Prime Minister Visits China

Bloomberg Audio Studios, Podcasts, radio News.
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead, on the program, we
look to earnings from streaming giant Netflix, and three of
Wall Street's biggest banks. I'm Nathan Hager in Washington.
I'm Carolin Hebke in London, where we discuss the Hungarian election.
I'm Doug Chrisner looking at the visit to China by
Spanish Prime Minister Pedro Sanchez.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three year, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias
XM one twenty one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business App.
Good day to you. I'm Nathan Hager. We begin today's
program with earnings from Netflix. The streaming giant reports its
latest quarterly results after the market close on Thursday. For more,
We're joined by Bloomberg Intelligence Senior media analyst Githa ron
Ganathan Great to have you with us, Githa. Of course,
this was supposed to be the quarter when Netflix celebrated
blocking in it's deal to buy Warner Brothers Discovery, but
Paramount Skydance pulled the rug out from under that. What's
that mean for what we could hear from Netflix when
it comes to the results this week.
Yeah, thank you so much, Nathan. This is actually good
news for Netflix, right and this is back to business
as usual. Netflix without Warner Brothers is a much cleaner,
higher visibility business, lower volatility business. They have much better
financial standing now, they have a lot more flexibility. And
you know this is really now us just focusing on
their fundamentals, but their short term as well as their
long term fundamentals as they kind of really focus on content,
as they focus on engagement and really the big numbers
that investors are looking for, the revenue growth numbers as
well as operating margins. So they just height prices in
the US and we're expecting to see that somehow flow
through in their guidance. What they're guiding to right now
for revenue growth for the entire year is twelve to
fourteen percent. We expect them to revise that guidance upwards
and then also kind of revise their guidance for operating margins.
So those are really the two most critical metrics for
Netflix when they're poor.
Yeah, I got to admit I remember that price hike
announcement coming and feeling a little bit of dread there
just for myself. But are we expecting that that's going
to lead to greater churn for Netflix? Is that something
the company itself is concerned about.
I don't think so. So what we've seen historically, this
is actually its second price hike in just over a year.
So last January when they hiked prices, we didn't see
any big spike in churn. You know, it's kind of
been business as usual. People generally absorb these price hikes
pretty nicely, pretty smoothly. We haven't really seen too much
of a disruption in the past, and so we don't
expect that to be the case, especially as you kind
of look across the board, Nathan. So you know, we've
seen Apple TV, for instance, We've seen Disney, We've seen
all of these other rival services hike their prices and
hike their prices pretty dramatically. So just to provide some
context over the past four years. Netflix has definitely increased prices,
but it's been about a thirty percent increase over the
past four years. You compare that to Disney Plus where
prices have gone up seventy five percent, or Apple TV,
where prices have gone up about eighty to eighty five percent.
So you know, yes, you know prices have gone up,
but it seems to be much more digestible and definitely
much more justifiable in the case of Netflix, just kind
of given the depth and the breadth of their content.
Well, now that Netflix isn't getting that slate of Warner
Brothers IP like the DC comics and Harry Potter and
all that, where is it positioned when it comes to
the content race. Was it important for Netflix to have
all that Warner Brothers IP as part of its longer
term strategy.
It was definitely a nice to have, Nathan, but we
don't think it was a must have. I mean, they
have been able to build up this tremendous base of
three hundred and twenty five million subscribers with a lot
of original content, with a lot of licensed content, but
without having to pay you know, one hundred billion dollars
for a studio, and so we think that they can
you know, continue to hold that dominance, and they are
diversifying their content strategy. So first it was a lot
of focus on scripted content, on local language content. You know,
they've played this game really well in terms of going
after pieces of content in different territories, whether you know
it's Korean series or you know, a Japanese series or
all across the world. Really but their latest foray is
really into live events. So we're seeing them kind of
now make a push for more NFL games. They already
had Christmas Day NFL games, looks like they're going for
a slightly bigger package. And then we're seeing them do
a lot of other different things in terms of live content.
You know, whether you have the WWE RAW on Monday nights,
whether you had the BTS, you know, first live concert
in three years, we had the New York Yankees versus
San Francisco Giants on MLB Opening Night. We have the
upcoming Ronda Rousi versus Gina Carano in you know, in May,
you have Mayweather Pakio.
You know.
So there's just a whole lot of different things that
they're doing, and I think that will help them with
their subscriber acquisition and retention strategy.
A lot of live content, but we don't have k Pop,
DMA Hunters, we don't have another season of Stranger Things.
In terms of the scripted content, what's out there for
consumers to look forward to.
Yeah, that's an excellent point. So it's interesting they had
some of their biggest pieces of content in twenty twenty
five and obviously that helped. But you know, Netflix has
said over and over again that no single piece of
content contributes to, you know, more than one percent of
total engagement, and if you just kind of look at
engagement on the platform, you know, it's approaching almost two
hundred billion hours here. So really they have a whole
breadth and a great pipeline in terms of content. And
as we just look out to twenty twenty six, I
mean we have some of their they still have a
lot of things that you know, we can get excited about,
you know, whether it is all of that live content
or you know, you have Beef season two, you have
The Last Airbender, you have loupem which is a French series,
and then of course you have Narnia come out in December,
which people are really excited about. Outer Bank season five,
you know Enola Holmes season three. So there's there's just
a lot of different things, and again we think that
they will continue to you know, build their business with
all of these diverse pieces of content.
Of course, investors are going to get some content from
the company itself in the call after the close when
Netflix reports on Thursday. Thank you for this, Keita, as always,
that's Keitha. Rangan Nathan, senior US Media analyst for Bloomberg Intelligence.
Let's take a look now at some stocks making news
in the week ahead. I'm Nathan Hager, joined by Bloomberg
Intelligence senior US banks analyst Herman Chan, and it is
all about the banks this week, with three heavyweights kicking
off earning season on Tuesday. JP Morgan, Chase Wells Fargo
and City Group. Herman, let's start with the big guy.
What are you watching for from Jamie Diamond in company?
Yeah, it's going to be a great and interesting quarter
for Jamie Diamond, JP Morgan and the rest of the banks.
We're an interesting setup heading into earnings with heightened gipetal concerns, stackflation, potential,
private credit worries. That's all been weighing on the group
On the other hand, one key earnings is looking to
be pretty solid, with JP Morgan expecting fifteen percent growth
in trading revenues and also investment banking could be up
that same level as well. We're also seeing a pickup
in commercial lending activity, which is helpful across the group,
and some margin stability and really good performance across the
credit quality as well. So macro concerns, but the underlying
fundamentals still look really strong.
What has you thinking those underlying fundamentals still look strong
given you know so much of the concern we have
in the market right now around all the uncertainties and
the economic impact from the warn Iran.
That's right. I would characterize the economy right now as
really resilient, so we're seeing that resiliency flow through into
the bank's earnings and profitability. On the other hand, really
what we're focused on going forward is what's going to
happen next and guidance will be key for across the
banks that we cover. Are we seeing any sort of
cracks and credit due to higher energy costs that consumers
are facing today? Are we seeing any cracks and credit
on the commercial side as well? And it is the
market volatility affecting some of the backclogs for areas like
investment making and IPO. So those are questions that the
bank management teams will need to answer on the first
quarter earnings calls.
And when it comes to Wells Fargo Herman, how are
they doing now that they're not under that asset cap
restriction anymore?
That's right, So that's going to be one of the
growth stories for the banking group. And in the first
quarter reporting where another quarter outside of the asset cat
we're going to see some strong balance sheet growth for
for Wells Fargo continuation of what they were reporting in
the fourth quarter. That's really going to be reflected in
areas like trading assets within the investment bank and also
in areas like lending in the markets business lending to
these non bank financial institutions that I alluded to earlier.
So it's one other thing that we're looking for is
maybe a renown in the capital markets results relative to
its peers. I would mention in the fourth quarter they
lagged a little bit, so hoping for a rebound there
in the first quarter.
And when it comes to City Group, we had some
recent reporting from Bloomberg News that they might be thinking
about buying a regional bank to grow their business further.
How real is that? Do you expect that to come
up in the call?
I do?
I think analysts will probe on that. I think in
the near term probably Jane Frasier, their CEO, pauses that
potential in the near term. I think that's really reflected
due to the fact that their evaluation is relatively weaker
than peers, and they're going to need to improve in
order to make an M and a deal work financially.
I mean said, they have a investor day coming up
in May, so we'll hear more about that in the
first quarter reporting, and we think first quarter results really
lays the groundwork for some positive news heading into the
investor day.
Yeah, really interesting kickoff to earning season, particularly around what
we've seen around the war with Iron of course, thank
you for this, Herman, great having you with us. That's
Herman Chan, senior US Banks analyst for Bloomberg Intelligence, and
coming up on Bloomberg day Break weekend, we'll look ahead
to the election in Hungary. Is it Orbon's Last Stand?
I'm Nathan Hager, and this is Bloomberg. This is Bloomberg Daybreak. Weekend,
our global look ahead at the top stories for investors
in the coming week. I'm Nathan Hager in Washington. Up
later in the program will look to Spanish Prime Minister
Pedro Sanchez's upcoming visit to China. But first, voters in
Hungary are headed to the polls. We find out on
Sunday whether the EU's longest serving leader, trump ally Victor Orbon,
will keep his grip on power to much of the world.
Orbon is best known for his support for Russia and
his opposition to the European Union and Ukraine. But what
are the issues that will decide this election for Hungarian
voters and what to expect from a new government? For more,
Let's go to London and bring in Bloomberg Daybreak. You're
a banker, Caroline Hepger Nathan.
For sixteen years, right wing Prime Minister Victor all Ban
has been building what he calls an illiberal laboratory in
the EU state. Hungary has been the European Union's black sheep,
cozying up to the Kremlin and obstructing assistance to Ukraine.
But now Auburn faces a serious threat from leadership contender
Peter Maggiar, who leads the pro European Teaser Party. Some
voters are losing patients with a stagnating economy plus allegations
of government corruption and Russian interference. In the last few weeks,
EU leaders accused Victor Auburn of disloyalty and blackmail after
Hungary moved to veto the bloc's ninety billion year alone
to Ukraine. Here's Bloomberg's Oliver Kruk.
We should say that this was an issue, this ninety
eight billion year alone that was settled back in December,
and as a consequence, with Victor Ormond pulling out of this,
it has upset very greatly all the other European leaders,
not just on the principle of not supporting Ukraine, but
on the fact that it reduces the credibility of the
European Union.
Bloombergs chief Europe correspondent Oliver Crook there, who went on
to say that Auburn has been tough on Ukraine in
order to bolster support among his own voter base. But
could the focus on foreign affairs be a short sighted
strategy with the electorate at home increasingly preoccupied by domestic
concerns and the cost of living. Joining me now is
Sultan Shimon, Bloomberg's Eastern Europe editor and formerly are Budapest
bureau chief and Bloomberg's Brussels bureau chief Suzanne Lynch. Welcome
to both of you. Thanks for your time, Zultan. Can
I start with you just to focus in on Hungary.
First thing, I want to ask about the opposition party
Peter Maggiar emerging as a serious contender in the election.
What do we make of his chances in this vote?
Well, yes, Peter Modor founded his party two years ago
and really came out of nowhere. Actually he came out
of inside Prime Minister Victor Bahn's ruling elite to essentially
call out corruption and mismanagement in Hungary, and he has
found that his message has resonated incredibly over the past
two years. Pro government posters as well as some skeptics,
say Orbond, who has been in power for sixteen years,
still has what they tend to call the quiet majority
on his side. We'll find out soon enough.
Yeah, indeed, what do you think are the issues then
facing all Band? You know, if you see and agree
with the polls that favored the opposition leader, what would
you see as Allband's main failings.
Well, Mojar has really tried to focus on Orband's domestic failings,
which included the economy, which has been in bouts of
recession over the past four years. The economy has barely grown,
There's been a cost of living crisis during the pandemic,
Inflation was the highest in the year Union. There's also
rampant corruption, with Transparency International now ranking Hungary in last
place in the European Union for graft. The European Union
has in response suspended we estimated is about still about
twenty billion euros worth of fund due to the erosion
of the rule of law and graft. So that's been
basically Modiar's focus, as well as sort of the effects
of all this, which is seen in social services, in healthcare,
in education, in public transportation, especially dilapidated rail network. So
he's saying, essentially to Hungarians, please look around you see
if you think we can do better.
What has been the focus of Urban's campaign, then, Urban.
Has really campaigned more on foreign policy since his return
to power. He has essentially held up a sort of nemesis,
a rotating cast of characters really which he suggested post
threats to Hungary and to their lives going back to
twenty ten, when he returned to power, from the International
Monetary Fund, to the European Union, to multinational companies to
George Soros, the Hungarian born US financier and philanthropists. In
the past several years, but most recently, he held the
Ukraine interestingly up as the biggest threat to Hungary. He's
saying Ukraine wants to drag Hungary into its war with Russia. Now, obviously,
Urban has allied himself quite significantly with Moscow over the
past several years, doubling down on energy contracts with Russia
even since or especially since Russia's invasion of Ukraine.
Well, Hungry, of course, is a member of the European
Union and the NATO member too. So let's bring in
Nasuzanne Lynch's Bloomberg's Brussels Bureau chief for a perspective on this.
I mean, Victor Auban has been a thorn in the
side of the EU for many years. It's got to
be said, So what do you think is going to
be the response? So what do you think is the
thinking within the EU about the possibility of a change
in leadership in this election? We don't know yet. But
what do you think the EU is thinking.
Well, look, I mean, as you say there, I mean
Orban has been a presence here in Europe for such
a long time. He's been sixteen years in power. At
this time, he's the longest serving EU leader around the table.
And I think it's fair to say there is an
argument that the European Union has chosen to a large
extent over the years, maybe to look away to kind
of hope Urban will one day be voted out of
office and that the Hungary will step back into line
and become a good member of the European Union. Now
that policy has not really worked until now, because he
has managed to survive politically this long. It's extraordinary term.
Even in the last few weeks they resulton has alluded
to we've seen an even more kind of brazen attempt
by Hungary to undermine Brussels. At the end of March.
There we saw an extraordinary phone call, has leaked. Other
media outlets in Hungary reported this, and it alleged that
as Sergai Lavrov, the Foreign Minister, spoke to the Hungarian
Foreign Minister asking for individual to be removed from a
proposed EU sanctions list. So you know, we now have
the situation where the Hungarian government is talking to Russia
about the EU sanctioned list, and it has worked at
various points since the start of the Russian War against Ukraine.
It has worked against the EU on a number of levels.
So it has again and again blocked sanctions packages. We're
now at the twentieth sanctions package from the EU against
Russia and Hungary's block that. And also it's currently for example,
blocking a ninety billion loan to Ukraine. So it's quite
obvious that the European Union and the European Commission in
particular has become a lightning rod for Urban He's actually
campaigning heavily against this, against what he sees is overly,
you know, an intrusive European Commission. He's obviously campaigning heavily
against continued to support for Ukraine. That is part of
the election playbook.
Yeah.
In terms of then, the opposition parties in Hungary seemed
to be, you know, thinking about Hungary's place within Europe
and maybe accessing more funding. That seems to be part
of their drive. How much do you think, though, if
there were a change of leadership in Hungary that that
might change the level in terms of the big support
package for Ukraine.
Yeah, it's interesting. I mean Mayer, who has emerged as
this serious threat now to Urban, is a member of
the European Parliament. He's here, that's his full time role,
if you like. So he's already a known figure in Brussels.
He was, as aulto An explained, part of the Fidees fold.
He was married at Stitude at Varaga, former Hungarian justice minister,
who for example, was very well known here in Brussels too.
So you know, I think there is a wariness here
that it might not just be as simple as a
more pro EU person taking over if his party is successful.
So let's see. And I suppose it is true to
say to Urban yet he is using the European Union
as a foil in this election. But you know, there
is some sympathy for his view, particularly when it comes
to among people in Hungary about support for Ukraine. So
it may not be as simple as that.
Yeah, it's very interesting, is it as Altan? In terms
of Oban's brand of sort of populist illiberalism and Christian nationalism.
I mean there is already across Europe this is being examined,
you know, the rise of more right wing parties maybe
across different European countries. Is it really weighing in terms
of appeal? And what do you expect the opposition parties
might do if they come into office. What kind of
voice would they bring to Hungary. I mean Teaser is
a conservative party.
Yes, Now when it comes to the opposition because of
our bonds is sort of what he calls the sovereign tests,
very nationalists, you know, rhetoric. If Mother were to come
to power. It's not like he would switch that off
from one day to the next. He very much wants
to say, and very much says that Hungary will remain
or will be truly he says, truly independent. He always
says the Hungarian's history is not going to be written
in Brussels or in Washington, nor in Moscow. He tends
to say at rallies, it will be written here in Hungary.
So he says he will stand up for the interests
of Hungary, even if it were to go against, for example,
the EU mainstream. But more broadly though, he says he
would bring back Hungary to the European fold and especially
away from Russia's orbit Yeah.
I think that's very interesting, isn't it. I mean, Suzann,
is it going to be a free and fair election?
There are worries, always persistent worries around Russian interference or
influence in the election process in Europe, and that has
become more acute since the war in Ukraine.
Yes, the European Parliament actually has been a big voice
on this about issues like rule of law, about free
and fair elections, and of course about media freedom in Hungary.
There have been countless reports about the real challenges for
independent media and Hungary and how that is driving the
political conversation in a certain way in Hungary. But I
think there will be a strong interest in this election
how it's monitored when those results come in.
Suzanne, thank you so much. That was Bloomberg's Brussels bureau
chiefs Lynch and Zultan Shimon, Bloomberg's Eastern Europe editor. We
will bring you all the latest on the story from
Hungary as it develops. I'm Caroline Hebge here in London.
You can catch us every weekday morning for Bloomberg Daybreak
you at beginning at six am in London. That's one
am on Wall Street.
Nathan Thanks Caroline, and coming up on Bloomberg day Break Weekend,
we'll look at what to expect when Spain's Prime minister
visits China. I'm Nathan Hager, and this is Bloomberg. This
is Bloomberg Daybreak Weekend, our global look ahead of the
top stories for investors in the coming week. I'm Nathan
Hager in Washington. This week, Spain's Prime Minister Pedro Sanchez
heads to China. For more, we bring in Doug Krisner,
host of the Daybreak Asia podcast.
Thanks Nathan. This will be Sanchez's fourth trip to China
since twenty t twenty three, and it follows a visit
by King Philippe the Sixth back in November. Incidentally, that
was the first visit to China by a Spanish monarch
in eighteen years. Now we're being told that Sanchez will
travel with a group of business leaders and to help
us understand some of the dynamics. I'm joined by Bloomberg's
ros Matheson ras is our chief Asia correspondent, and she
joins from our studios in Singapore. Thank you for being here.
It seems like there is a strengthening of economic ties
right now between Spain and China. It certainly has been
the case in recent years. I'm wondering if you're getting
the sense of this move becoming even closer right now.
Well, certainly there's been a warming of the relationship between
Spain and China for a while. And you know, Sanchez,
as you say, is making his fourth trip since twenty
twenty three, and he's been slightly to the side of
many other members of the EU in a way on China.
He's repeatedly said that Europe needs to set its own
terms for its relationship with China and not just follow
what the US is doing. And he's been a little
less willing to sort of talk about some of the
frustrations that other member states have about Chinese dumping of
goods in Europe, for example, or keeping control of technology in.
All of that.
And the trade relationship has been growing between China and Spain,
although it's very asymmetric because China exports a lot more
to Spain than it buys from Spain. So they tend
to sell cars, electronics, green energy to Spain because Spain's
very big on renewables and Spain sells things like machinery.
They're a big exporter of pork actually also to China,
but this trip seems to be about, you know, less
about that trade dynamic and more about attracting investment, because
Spain is really keen to get more significant Chinese investments.
So Sanchez is taking a business group with him, as
you say, he'll be looking to get some deals on
the table as part of this trip.
So it's interesting that you point out that Sanchez has
essentially differentiated himself among a number of European leaders who
have been very strongly critical, especially when it comes to
war in Iran between Iran and the US in Israel.
Does that necessarily strengthen his connection with Beijing.
Well, certainly. He's been very vocal about his views on
the war in the Middle East, and he barred American
forces from using two military bases, and he's put himself
in the crosshairs again with Donald Trump directly. They're ready
sparring over things like Spain's contribution to NATO defense spending,
for example, collective spending. You know, Sanchez has been critical
of the US administration for its policies on immigration and
critical of the move to pick up the then Venezuelan
leader Nicholas madeiro So there's been those strong tension points
between the US and Spain already, and Sanchez has certainly
been quite vocal in his views about the war. He
just says their position is no to war, and so
perhaps there'll be some conversations between China and Spain about
that while he's there, because China does like to exploit fishes,
they like to find gaps, and they like stirring a bit,
including with the US. So it's handy to have a
leader coming who's been very critical of the US over
the war. But the interesting thing will be how much
he moves, if any, out of alignment again with the
EU on China, because obviously that's a relationship that everyone's watching.
Closely, particularly when you think of the automotive industry and
where Germany is in that. I'm wondering, because Sanchez is
a member of the Spanish Socialist Workers Party, whether that
kind of intersects with the politics that Beijing has in
a very very friendly way.
It does, or China likes to talk about it. I
mean they cast it as a very stable relationship. They
like to talk up the leader to leader rapport that
they see there, and they do cast Sanchez as a
leader on the left and therefore somewhat like minded, although
in reality they're probably not that light minded. They do
note him also as one of the few outspoken voices
against what they call US policies harming European interests, and
they talk about Sanchez being a good example of the
need to diversify your relationships, your trade relationships, particularly around
the world. But it's not just Sanchez who's kind of
looking at this now more in the European perspective. I mean,
we've had a parade of European leaders through China in
recent months, Kiir Starmer from the UK, the German Chancellor
and others, And there is this recognition in Europe too
that you need to diversify your trade relationships, particularly given
the tensions the EU has with the US. They're just
more cautious than Sanchez about how to go about it
and how far to go with it.
He inviting a little bit of risk here if he's
trying to strengthen the relationship with the Chinese.
Well, he'll probably get another call out from Donald Trump
potentially on it. An interesting not everyone within Spain is
happy about this. I mean last October when the Spanish
Foreign Minister was in China. They met with some Spanish
business CEOs who said, hang on, you know, please be
careful in terms of, you know, we need more stringent
demands for companies to hire local workers rather than parachuting
in Chinese staff to Spain. For example, Let's make sure
we're in alignment with the EU on trying to stop
China dumping low quality goods into our markets. And let's
watch how we're handling the issues of key technological secrets
when you're operating inside the EU. So there is that
element in the Spanish business community who's slightly concerned about
sort of being all in in a way with China.
So there is that risk as well. But Sanchez has
kind of planted the flag when it comes to Donald Trump,
I think is pretty clear about how he sees that relationship,
and he doesn't necessarily mind having a bit of sparring
with the US because it also helps him domestically in
terms of his own standing, because you know, he does
have an election in the wind, and you know, it
does help his narrative that he's standing up to a
big power like the US.
But China is offering Spain a great deal in terms
of investment, dollars, and I think that cuts to the
other side of the story, right, Spain would be a
big beneficiary.
Well, that's right, and that's certainly how Sanchez is casting it.
He's saying this is very good for Spain in terms
of having direct investment from China, particularly again in the
automotive sector, which is a big one for Europe as
a whole, and also in the renewable sector, because China's
got a lot of expertise as we know, on green
energy and is keen to utilize that around the world,
of course to China's own benefit, but that's something that
Spain can certainly benefit from as well. So he's talking
up direct investment. He's also talking up the potential to
have even more tourists come from China to Spain. They're
keen to have the tourist dollars come their way. I mean,
China in turn has been issuing visa waivers for Spanish
tourists to come, so it's a two way street there.
So Sanchez is trying to basically find all these ways
to maximize the relationship, particularly again when it comes to money.
So Roz, I'm wondering if there are any announcements that
follow this meeting. They would cover automotive renewable energy and
I'm going to include battery technology.
Is that fair?
Well, that's right, and China's got increasing expertise in battery
storage in fuel cells. I mean these are fairly nascent
industries and a lot of countries and still quite expensive
for companies if they're looking at purchasing these to secure
their own electricity supply. I mean, Spain has had a
significant power outage that's still probably in the minds a
bit and some questions over how good renewable energy is
as a result. But you could see some new technologies
emerging from these conversations, for sure.
So you mentioned a moment ago that not everyone in
Spain favors deepening this relationship, and I'm wondering whether Sanchez
at some point could face a little bit of political
blowback domestically.
He could, although right now there's a bit of a
rally round the flag moment going on in Spain into
that national election next year. I mean, he's under pressure
at home. He's been the head of a quite fragile
coalition government. His party was hit by corruption scandals, so
support was going down in the polls. But people in
Spain also remember the US led invasion of Iraq in
two thousand and three, and Spain kind of went all
in with the US that in terms of supporting it,
they were quite ally of President Bush at the time,
and that triggered a big backlash in Spain. That was
sort of protests across Spain. The slogan note to war,
which Sanchez has now kind of adopted, that's what he's reviving,
and so he's really tapping into that very long running
anti war sentiment in Spain and those memories of two
thousand and three, and so that's something that he can
probably find a good support based on going into that election.
Ros will leave it there, Thank you so very much
for helping us look at the visit of Spanish Prime
Minister Pedro Sanchez to China. Roz Matheson is our chief
Asia correspondent, joining from Singapore. We go to New Zealand next,
where in the last week the Central Bank held its
benchmark interest rates steady at two hundred quarter percent. The
RBNZ said inflation is likely to accelerate in the second quarter,
and that's where we begin our conversation with Anna Bremen.
Anna is the governor of the Reserve Bank of New Zealand.
She spoke with Bloomberg's Heidi.
Stru What I can sort of begin to really fully
appreciate the complexities of making a policy decision in this
sort of global macroeconomic and geopolitical environment, Right, can you
talk us through some of those challenges, particularly as changes
to the outlook with the ceasefile was happening almost in
real time.
Of course, we are seeing and expecting higher near term
inflation and somewhat weaker growth in the New Zealand economy,
and then what we are really focused on is the
medium term inflation and ensuring that medium term inflation is
at target, and of course in this environment it's very
hard to do forecasting. We had the meeting at nine
am in the morning. It was announced at two pm,
so there was a lot of information in between, but
we knew that that could happen, so we had taken
that into consideration, of course, at the time of the meeting.
If in fact we see global energy supplies restored, some
of the risks to global supply chains minimized in the
coming days or weeks or months, and we accept that
the risk inflation is a near term and a temporary one.
Do you foresee a scenario where easying is back on
the table.
Well, we are more focused on ensuring that medium term
inflation does not increase. We see that the balance of
risks have shifted in terms of inflation and more risk
on the upside because already right now we're New Zealand,
fuel prices are gone up considerably, both petrol but in
particularly diesel, and that's important inputs into transport in general,
but also into the agricultural sector that is speak here,
and that risk getting passed on than into food prices
and other kinds of prices. So we are expecting somewhat
weaker growth, but we are concerned that medium term inflation
pressures could be higher. And if we start seeing inflation
expectations moving up, if we see the core inflation is
moving up, we see wage growth picking up, then we
said that we will act decisively to ensure that medium
charm inflation goes back to target.
That's Aa Bremen, Governor of the Reserve Bank of New Zealand,
speaking with Bloomberg's Heidi Stroud Watts. I'm Doug Prisner. You
can catch us weekdays for the Daybreak Asia podcast. It's
available wherever you get your podcast.
Nathan, Thanks Doug. And that does it for this edition
of Bloomberg Daybreak Weekend. Join us again Monday morning at
five am Wall Street Time for the latest sun markets,
overseas and the news you need to start your day.
I'm Nathan Hager. Stay with US top stories and global
business headlines. They're coming up right now.