US Midterms Election Day, Freezer Hack Hits Europe, Hungary Opens Secret Files

0:02 Bloomberg Audio Studios Podcasts Radio News.

0:10 This is the Bloomberg Daybreak Europe podcast. Good morning. It's Tuesday, the 3rd of November. I'm Caroline Hepkett in London. Coming up today, Americans get ready to head to the polls in a major midterm test of Trump's second presidency. A suspected cyber attack hits supermarket freezers across Europe. Plus, a renewed examination of the past. Hungary's leader opened secret files from the Orban and communist era. Let's start with a roundup of our top stories. Voters across the United States go to the polls today, passing judgment on the first half of Donald Trump's second term. All 435 House seats and 35 Senate seats are being contested, as well as 36 state governor races. Republicans currently control both chambers of Congress,

1:00 but polls point to significant Democratic gains that could flip those majorities. Democratic Party Chair Ken Martin is optimistic. Our job is to make sure we put a check on Donald Trump's power to win back at least one chamber of the U.S.

1:16 Congress.

1:17 And I believe we're going to do that tomorrow. Ken Martin there. Democrats need three more House seats and four in the Senate to take control of both chambers. For Republicans, the focus, though, is turnout. Here's their National Committee chair, Joe Gruters. Everything comes down to turnout.

1:34 If our voters turn out, if they believe that the American dream is still alive and well for themselves or their children, they'll come out and vote and they'll vote red.

1:43 RNC Chair Joe Gruters, the cost of living has been a key factor in how many Americans say they plan to vote. Exclusive Bloomberg economics analysis of millions of price points puts headline inflation in the United States at 4.4%. The data show the Iran war driving gasoline almost 40% higher, while tariffs have also pushed up some prices. Supermarkets across Europe have been hit by a string of suspected cyber attacks.

2:12 Hacks on freezers and fridges resulted in sudden changes of temperature and spoiled food. Incidents reported in Belgium, Ireland, Finland, Estonia and Sweden. Ricard Nilsson is a store manager at Swedish grocery chain ICA. He was speaking for a translator.

2:31 Some organization has hacked into the temperature monitoring system for our refrigerators and freezers. They've gained access and tampered with settings and the like. It's insane. I don't see what they stand to gain from it. It's a form of terrorism, really.

2:49 That was Richard Nielsen, ICA store manager in Sweden, voiced by a translator. No group has claimed responsibility for the hacks so far, which took place less than a month after similar events in France. In the UK, the head of the National Cyber Security Centre says it's highly likely that critical infrastructure will be targeted by 2028. Now, oil is steadying after a sharp drop as hopes build of a diplomatic opening in the Middle East. Iran's President Massoud Pazeshkian said that the country's supreme leader had granted him more authority to pursue peace talks with the U.S. Meanwhile, President Trump told reporters in Washington they want to make a deal and that could happen. However, Amos Hochstein, who

3:32 is managing partner at TWG Global, says that markets should beware the caveats.

3:39 I would take the news from yesterday with a huge grain of salt. I would hope that we get a negotiated settlement. But I think that is market should really be cognizant of the heavy likelihood towards strikes. And again, I hope that we do make some progress here over the next few days.

3:58 That was Amos Hochstein, who is managing partner at TWG Global. Even as both sides signal an openness to negotiations, the Wall Street Journal reported U.S. strikes on Iran's Qashem Island on Monday as part of a series of limited bombardments. Gold is trading slightly lower today after its biggest jump in two months yesterday as hopes of progress in U.S.-Iran peace talks eased inflation anxiety. And despite the pressure from oil and interest rates, demand from a key group of buyers has remained strong. Bloomberg's Ewan Potts has more.

4:37 Central banks bought gold at the fastest pace since the end of 2024 in the third quarter, this even as the yellow metal faced pressure from higher oil prices and interest rates. According to the World Gold Council, they accumulated a net 321 tonnes in the three months to September, underlining how they've remained a key support to prices in an otherwise tepid market. Gold has lost about a quarter of its value since the Iran war began in late February.

5:03 In London, I'm Ewan Potts, Bloomberg Radio.

5:06 Now to earnings and other corporate news. So Disney is planning thousands of layoffs targeting annual savings of 20%. Bloomberg understands that some operations including theme parks, TV channels and the movie studio will be affected disproportionately. The news comes after Disney has cut billions of dollars worth. In costs and eliminated thousands of positions in recent years, Disney has promised double-digit growth in adjusted earnings per share in the current fiscal year. Meanwhile, Apple has delivered a mixed outlook with narrower profit, overshadowing an upbeat sales forecast. The firm predicted revenue growth of 7% to 10% during the holiday season, beating estimates, but warnings that gross margins could be thinner

5:52 due to AI costs increasing. captured attention. Bloomberg's Ed Ludlow says that the numbers disappointed the market.

5:59 What's amazing is that even in the low end, growth of 7% to 10%, consensus for the fiscal first quarter 27, again, the December quarter, was 6.1%. So, it beat Wall Street expectations technically, but it just wasn't good enough for investors.

6:15 Bloomberg's tech host Ed Ludlow there. It's the tech giant's first quarterly report under new CEO John Ternes, who took the job last month. A recent rally added roughly $ 1 trillion to Apple's market value. Against that backdrop, shares fell about 3% in late trading yesterday. The UK and the EU are drafting major changes to their relationship ahead of a summit this month, the BBC reports. The two sides have agreed a draft deal to remove post-Brexit checks on food and agriculture exports. And Bloomberg understands that university fees are also on the table with a plan for students to pay domestic rates on both sides of the border.

6:57 Bloomberg's James Walcock has more. Supply chains, cars and, of course, fish. It all sounds very Brexit. The EU and the UK are trying to patch up their relationship. Officials tell Bloomberg economic security is on the agenda, though talks are still ongoing and can change. Across Europe, countries collectively want to have a counterbalance to the US and China. In the UK, new Prime Minister Andy Burnham has restarted a debate about reintegrating Britain with the EU a decade after Brexit. In London, James Wilcock, Bloomberg Radio. UK Home Secretary Shabana Mahmood says that high-earning migrants will get a faster path to settlement rights.

7:41 Migrants earning more than £ 125, 000 will be able to claim indefinite leave to remain in Britain after three years instead of five. The move is part of a broader shift by Mahmood to water down plans to tighten immigration rules.

7:57 This country welcomes those who seek a new and better life within it. But I also know there is an expectation of those who do, that they will play their part, contribute to their community and become a part of our national life.

8:12 The Home Secretary has faced pushback from Labour MPs over her plans being both strict and retroactive. Concerns about immigration fed into both Brexit in 2016 and the rise of Nigel Farage's right-wing Reform UK party. Those are our top stories then. So, let's think about the markets this morning. Stock futures firstly sinking for the Nasdaq, S & P 500 and the US stock. 50 futures down by 1% this morning. We had those mixed signals from Apple, from its forecasts, also from the Palantir outlook. That seems to have hurt the US. But remember yesterday, European stocks did better as oil fell. The hope of more diplomacy in the Middle East. Actually, the stock 600 closed up by four tenths of 1%. Now, in Asia this morning, most

8:58 stocks are declining. MSCI, Asia Pacific Index down by 1.2%, but the TAIX and the KOSPI are both down well over 3%. As for the bond markets, 10-year US Treasury yields at 491. Oil prices, Brent crude futures, at the moment at $ 105. 83, the barrel. So, up by more than 1% and the dollar flat to slightly firmer. So, those are the markets. In a moment, we're going to be bringing you more on our special reporting six months into a new a new term for Prime Minister Peter Magyar. So six months after a landslide election victory, we want to talk about what's happening in Eastern Europe, but also we'll have a preview of the US midterm elections. There's going to be a lot to think about. How will it affect the United States domestically, foreign policy, but also stocks

9:50 and how we think about things in terms of investing. Another story, though, has caught my eye today. I really love this one. Where to invest $ 1 million Anyone out there with a lucky windfall? I hope that's you. Well, this story is a mix of how to spend it and how to invest it. Bloomberg's Suzanne Woolley has been asking three investment experts for their advice. There are absolutely lovely illustrations by Tommy Um, huge million dollar sign there flashing at the top of that story. It's really good fun. So, I like the fact that they have asked Pictet Wealth Management's Alexandre Tavazzi what he would do. On the fun bit, he wants to take an e-bike to explore all the beautiful places above 2,000 meters in Switzerland, Austria, Italy, and

10:36 across Europe. Meanwhile, when it comes to the investing fund, what would he do with that money? Well, AI via companies that build grids, pipelines, logistic hubs and other critical assets. That's his advice. Then another bit of advice, Anne Berry, the founder of Threadneedle Ventures. Her idea is digital meets experiential.

10:59 So she's thinking about robotics, architecture, but also hospitality. She's even got an investment in a women's basketball league. So, I love that. Have a read of it. I'm going to put a link to it in our podcast show notes, wondering if you've got that million dollars out there and you're looking for a home for it. Well, there's lots of advice from Bloomberg. So, there you go. Now, let's think about what's happening in the United States. The US midterm elections will give voters a chance to pass judgment on the first two years of President Trump's second term in office. Now, the odds of Democrats sweeping one or both chambers of Congress are up. but they're far from guaranteed. Now, Trump, we know, has raised tariffs, has cut taxes, has launched

11:42 an aggressive immigration crackdown, started a war with Iran that has roiled energy markets, led to surging fuel prices and persistent inflation. So what is going to be the verdict of voters? Let's discuss with Bloomberg's Oliver Crook, who joins us now from New York. Good to speak to you, Ollie. Voters go to the polls today. Just lay out what are we expecting Yeah, absolutely, Caroline.

12:05 So, it's officially voting day here in the United States. It's about 1 a.m. Eastern time here. And in New York, the polls will open in about five hours' time. They'll be open until 9 p.m. But we'll get the first polls closing at about 6 p.m. Eastern time in Indiana and Kentucky. And then the very last poll on the sort of furthest western point of Alaska closes about 9 p.m.

12:23 24 hours from now, and then that is when all of the counting will begin, really across every single part of the United States. Now, as you know, in the United States, all of the states sort of operate somewhat differently. We have a ton of different kinds of races. But within the sort of few hours of closing of some of these polls, particularly the ones on the East Coast that we'll be watching very, very closely, we may begin to get an idea of whether or not this blue wave that has been forecasted across the polls over the last couple of weeks, and indeed even more so over the last couple of days, whether or not that is actually materializing. There is a likelihood that the House will flip.

12:56 That is the wide expectation. The real question is about the Senate, where the Democrats need to net Four seats in total. And again, compared to the polling that we've seen over the last couple of days, that prospect seems a lot more likely than it was even a couple of weeks ago. But the real question, as ever with these elections, particularly when Trump is in the White House or on the ballot, is the blue wave going to be real or is it going to be a false dawn?

13:16 Yeah, and maybe how big that wave is. It's going to be interesting for listeners in Europe, of course, in our time zone, because we might get some information about that whilst we're on air. What will this mean, though, for President Trump? Also, there's a lot of thinking about what it might mean for the next two years. Yeah, I mean, there's a lot of speculation on that, obviously.

13:35 I mean, there's obviously how the president will actually deal with the results of this election. You've already seen some legal attempts by the Trump administration to do certain things. There was an attempt in California to basically pull out some of the ballots, put them aside. Almost 20,000 of them do, according to the Trump administration's DOJ, that these were ballots that belonged to likely non-citizens. Now the Supreme Court has decided not to. to interdict on behalf of the Trump administration. You could see a lot of inventive legal acrobatics. We shouldn't lose sight of the fact that this is firmly within the Trump playbook. This is a president who still denies the outcome of the 2020 election

14:12 all those years ago. So that's something that we'll be watching very, very closely. But again, if you do get a very large blue wave, it makes it a little bit harder to make those kinds of disputes. And we should also say that it does seem that the president himself is beginning to lay the groundwork for the possibility of the Democrats winning. He gave an interview a couple of days ago to the New York Post where he was saying if that were to happen, i.e. really game planning, his strategy would be to basically veto all the legislations that Democrats kick up and then ultimately cut a deal.

14:39 Yes, that's an interesting thought. Well, then in that case, which races are you, are we watching most closely?

14:45 Yeah, I think right now we're really laser focused from the international audience standpoint on the Senate races. Obviously, you have these seats that are held by the Republicans in Kansas and Maine and Alaska, Iowa, Ohio, North Carolina and Texas. that currently, again, according to the latest polling, many of those races, if not all of them, now you seem to have a lead from the Democrats. I should say that another one that we're watching sort of uncharacteristically closely is this Alaska race, because there has been a lot of controversy around it. It was a candidate that was put up with the same name as the Republican candidate.

15:19 The Democrats denied having any hand in that. There was a lot of New York Times reporting around the fact that it seemed that potentially there actually had been, that that had been done deliberately. And of course, so there was these two men named Dan Sullivan. So the Republicans have made a lot of the decoy Dan. So we're watching a lot of these races very closely. But again, just to reiterate to the listeners here, what the Democrats need to do in the Senate is net four seats. Currently, according to the polling that we're seeing, if it is in fact correct, that is something that is definitely within reach.

15:46 Yeah, okay. We'll be watching all of this. Olly, thank you so much for being with us. Bloomberg's Oliver Crook, yes, 435 seats in the House of Representatives, about a third of the Senate being contested. There's also been a huge early voter turnout in the US, surpassing similar periods in the past. So we will have all of the races, the results, whatever we get for you with full coverage on Bloomberg Radio TV and across our platforms. Stay with us.

16:14 More from Bloomberg Daybreak Europe coming up after this. Now, let's think about Europe a bit next. Six months after winning a landslide election, Hungary's new prime minister, Peter Magyar, is opening files from both the Orban and the communist eras in a bid for accountability and a reckoning for Hungary.

16:35 Joining us now is Bloomberg's Eastern Europe editor, Zoltan Simon. Good to speak to you, Zoltan. What is the new government doing to look at past corruption or suspected corruption? Secret files. What does that mean for officials in Viktor Orban's former government?

16:51 Peter Magyar, who obviously won that landslide election ending 16 years of Orban's rule, he had... on shining a light on what basically graft watchdogs had called a captured state in Hungary, where high-level corruption was basically normalized and went unpunished for years. Magyar in the campaign, he just simply called it a mafia state. And he said he would, when he comes to power, he would shed light on the workings of it. So what has happened? Parliament has has set up truth commissions. There are thousands of secret government decisions that have never been published that are now being outlined and is now part of the public purview.

17:39 And most importantly, perhaps, the criminal justice system is being depoliticized, and it's allowing investigators to move on cases. So, several former ministers have been arrested. The former central bank chief is also in custody. And there's an international arrest worn out for his son. And just today, Parliament will elect a new chief prosecutor, which is expected to give a new impetus to these probes.

18:03 Yeah, this is really major change. The search goes back, though, even further. It goes to the years of Soviet rule after the Hungarian uprising of 1956. Those documents and details about informants are only just being examined now. And I say only just because other countries in Eastern Europe have grappled with some of this previously, but not Hungary. So, why now and what's happening with this? Yes, exactly.

18:33 As you point out, it's been 36 years. When people were asking in the European member state, how did a regime of the sort that Viktor Orban had for 16 years, how did that come about? There's often a sense that it goes back some ways. And there's this sense that Hungary never, as you mentioned, unlike other Eastern European countries, never quite faced its past. And obviously during communism, like in many other places, there was a wide network of informants at all levels of society that were co-opted in some ways or perhaps voluntarily some of them joined basically a repressive government. And Magyar says that that too needs to be faced. In order for Hungary to move forward, they need to know what happened, right? And to set

19:30 out on this journey of healing, as he put it yesterday in Parliament. So beginning tomorrow, these files that have been shrouded in secrecy for almost four decades will start to come to light over a process of several months and as Magyar said it's going to be painful. It's going to be painful as a society, and it's going to be painful for many at the individual level where.

19:57 Perhaps parents, grandparents, etc.

20:00 some information will come to light that maybe they had never even known. Yeah.

20:05 What are the future then? Is there progress towards joining the Euro? Because Magyar made an eye-catching social media post when he was in Brussels recently. And the point of sort of looking to the deep past, the painful past, is also about the future, isn't it? What very much is.

20:23 So the whole basically goal at this point is to face the past, to start to heal, and to really, this is the number one priority of the government, to integrate deeply with the European Union. Obviously, Hungary is a member of the EU. It's not a member yet of the Euro, but it's a major goal of the government to join the Euro. So there's the next budget for next year that's The debate will be starting in Parliament on that. That very much envisions deeper deficit cuts precisely to meet Euro criteria. And I think the goal there is to basically join the Euro at a level, at a depth. where it can no longer, can never, ever, ever, ever again be untangled. And there can never be a reversal either to the immediate past, you know, under the

21:13 Orban rule or the far past that we're talking about under communism.

21:21 Thank you for listening to Bloomberg Daybreak Europe. If you've enjoyed the podcast, give us a follow, leave a rating or review and maybe send it to that one friend or colleague who's always trying to keep up with the news. And if one podcast a day isn't enough, you can listen to us live every weekday from 6am in London on DAB radio, on TuneIn and on the Bloomberg Business app.

21:44 Or if you've got a smart speaker nearby, just say play Bloomberg radio.