Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing and on this edition, world markets respond with concern to the furious public row between President Trump and President Zelensky.
Also, the fat finger problem, how Citigroup mistakenly turned a $280 deposit into $80 trillion.
Plus the problems for Americans facing tariffs on importing energy from Canada.
and why Hungary is the Hollywood movie location of choice.
But first, it was an extraordinary, unprecedented angry row between Ukraine's President Zelensky and US President Donald Trump in the White House in front of the world's press.
You have a nice ocean, and don't feel now.
But you will feel it in the future.
Don't tell us what we're going to feel.
We're trying to solve a problem.
I'm not telling you.
Because you're in no position to dictate that.
Remember this. You're in no position to dictate what we're going to feel.
We're going to feel very good.
We're going to feel very good and very strong.
You're right now not in a very good position.
You've allowed yourself to be in a very bad position, and He happens to be right about it.
From the very beginning of the war, Mr.
Brown, I was arrested.
You don't have the cards right now.
With us, you start having cards.
I'm not playing cards.
Right now, you're playing cards.
You're playing cards.
You're gambling with the lives of millions of people.
You're gambling with World War III.
You're gambling with World War III.
And what you're doing is very disrespectful to the country, this country.
The argument in the Oval Office, and there's been shock from many of the European leaders who are Ukraine's closest allies.
And glee in Moscow, as the US seems to be taking Russia's side in the war.
President Emmanuel Macron of France, who saw Mr Trump earlier this week, said Russia was clearly the aggressor and it was important to respect the people who've been fighting since the beginning.
There is an aggressor which is Russia.
There is an aggressed people which is Ukraine.
I think we were right to help Ukraine and sanction Russia three years ago and continue to do so.
And when I say we, I mean the United States of America, the Europeans, the Canadians, the Japanese and many others.
And we must thank all those who have helped.
and respect those who have been fighting since the beginning.
Because they're fighting for their dignity, their independence, their children and the security of Europe.
These are simple things, but they're worth remembering at times like these.
President Macron, the events at the White House were broadcast live and investors have been reacting to what's being perceived as a bit of a disaster, adding uncertainty to financial markets, which are already concerned about weakening US economic data and volatility.
Joining me now is George Conboy, Chairman of Brighton Securities.
George, thanks for being with us.
I mean, it was quite a drop.
The Nasdaq, I think, registered the deepest monthly percentage loss since April.
Right, all over the place, Roger.
We've been having all the fun we can stand on Wall Street lately.
Yeah, I mean, it does seem extraordinary.
I mean, what is it really that investors are worried about in this?
Because in some ways, it's not going to directly affect them.
Investors are always worried about uncertainty.
It could be political uncertainty, global uncertainty, economic uncertainty.
They're always worried about that.
And when there's more of it, they get more nervous.
OK, so let's break it down a bit because I think there was quite a few big movement in terms of government, U .S.
government bonds. Ten -year Treasury yields declined.
What does that tell us?
Right. Classic safe haven.
If you're scared of stocks, if you're scared of the economy, you go into Treasuries.
When you buy Treasuries, it pushes the price up and the yield down.
Yield was down, and that's because there are a lot of buyers out there.
They like treasuries more than stocks right now.
Yeah, and also interesting on the currency market.
I mean, the euro tumbled.
What's behind that?
I think they know I'm headed over there shortly, and they're trying to give me a good deal.
You hope, yes. No, uncertainty or not, the fact is that the U .S.
looks stronger here.
And love him or hate him, what Trump had to say about holding the cards, he's right.
that Zelensky's position is not too strong, it looks like Ukraine probably needs help from the US more than it doesn't.
And so that strengthens the dollar.
And weakness in Europe can be ascribed to maybe more fighting in Ukraine, maybe more weakness there.
Now, this was obviously what was happening on Wall Street.
But looking across, as I'm sure you do, what's going on elsewhere and after hours trading, are you getting a sense the world is kind of following the same route in terms of its reaction to what happened?
Maybe a classic case of US sneezes, world catches a cold.
We did see a big drop in Asia today, down about 3%.
A lot of volatility.
Some of that is tech -inspired, but others of it is tariff -inspired.
There are big concerns on both fronts.
Well, of course, the tariffs are in the background as well.
A sense that that is an unresolved issue at the moment and potentially within a few days could become a real thing.
That's right. It may get resolved fairly shortly.
A lot of this is probably a hard -knuckled negotiating stance from the U .S., and they're supposed to be imposed on Mexico and Canada early next week.
We'll see if that happens or if negotiators pull something out of a hat, but the market will be on the edge of the chair watching.
Well, I was going to say how we go from here, George, because you're going to see next week we've got a big international meeting of European leaders with Ukraine over the weekend, of course, in Britain.
We've got a fair bit of data coming up in the next few days and weeks.
Where do you see investors' confidence going?
Are they going to say, well, inflation's down to where we thought it would be 2 .5 percent?
Actually, despite all the noise, we're probably fine?
Yeah, we probably are.
There is one potential bright spot.
It looks like U .S. interest rates could edge down a bit.
There's some softness in the economy.
If that were the case, it would do two things.
be good for U .S. stocks might also be good for the euro versus the dollar.
A higher interest rate tends to lead to a higher dollar.
Lower rates might help the euro against the dollar may be good for everyone over the next couple of weeks.
Well, I was going to ask, good for everyone?
I mean, normally, you know, stocks that form little clusters, what's good for some isn't good for others.
Which of the sectors that are really concerned at the moment, would you say?
Well, we look at defense, because a lot of that defense is government spending.
And there's a lot of talk about government spending here.
But defense is on the upswing in Europe.
The thought is from some investors and some traders that European defense spending may rise, and that's buoying those stocks up a little bit.
So plus there as well, the financials should do well unless we get lower interest rates, and the insurance stocks will probably back up a little bit there.
All right, George, thank you so much for being with us.
George Conboy there, Chairman of Brighton Securities.
Well, of course, a lot of these investors, as George was saying, there are going to be keeping an eagle eye on what comes out of all this, because uncertainty is at the core of it.
Let's try and put together what might happen next.
Joining me now is Sergei Radchenko, professor at the Johns Hopkins School of Advanced International Studies.
Sergei, thank you for being with us.
First of all, just your straight reaction to what we all saw a few hours ago in the Oval Office.
Oh, it's disgraceful.
It's disgraceful for the United States.
Here we have The leader of the free world behaving like some sort of Don Corleone, you know, making Zelensky deals that he cannot refuse.
So it's dismay and frustration and, you know, feeling that the United States has fallen in the eyes of the world.
Well, what it has done, of course, though, is take away some of the, I suppose, the stuckness of all this.
the fact that it's in a position which hasn't been moving for a long time.
The Ukraine war, of course, seems to grind on.
There is movement now.
Do you get a sense that perhaps at the end of all this, there will actually be a change, real change, in the war itself, possibly towards the peace that Donald Trump wants?
Well, wars, of course, end one way or another.
The Russians and the Americans have been talking over the heads of the Ukrainians and the Europeans.
The Russians have their demands.
I think those are going to be very steep demands.
But Donald Trump is in a rush to conclude a peace agreement or some kind of a peace deal with the Russians that he can then sell to his own public as the greatest victory the world has ever seen.
And that is what puts the United States and Ukraine and Europe at a disadvantage because Putin is playing for time.
Putin knows that the winds are blowing in his sails and he will be a tough negotiator.
OK, well, let's see how this could progress in the next few days, because there is this big summit meeting coming up in the UK.
European leaders and Zelensky is likely to be there.
Do you think that this is now going to galvanise the Europeans to put something completely different, something new on the table, or just try and rebuild what seems to have been destroyed?
Well, we have been hoping that the Europeans would have been galvanised a long time ago.
things were not going in the right direction for some time and we have had those conversations in Europe and after the Munich Security Conference too that the Europeans need to act together to help Ukraine to cooperate to a greater extent but so far we have not really seen that or maybe we're just beginning
to see the beginning of that sort of new attitude.
So far what we have seen though is European leaders going to Washington trying to win Donald Trump over, whether it was the Polish President Duda or the French President Macron or Keir Starmer just recently, who, by the way, handled Trump, I thought, in a much better way than Zelensky ultimately handled
him. But one way or another, I think the Europeans are still hoping, hoping through despair that the Americans will come out on their side in this conflict and not back Vladimir Putin.
Do you think that's possible?
Well, that is the big question.
To me, it seems that either Trump has already decided to give up on Ukraine and effectively give it over to Putin, or he will simply say, okay, well, I've tried my best, so let the Europeans now take the lead on helping Ukraine, and the Americans will provide a backstop or some vital defense technologies
to the Ukrainians. Now, clearly, the Europeans and Zelensky hope that this is going to be the scenario, the preferred scenario.
But I think the first scenario of basically the United States pulling or trying to impose a very nasty deal on Europe and on Ukraine is also very likely.
And in that situation, will the Europeans buckle under or will they actually take the initiative themselves?
Well, the Europeans, as we know, never miss an opportunity to miss an opportunity.
And, you know, for years they have been trying or they've been talking about Trump -proofing Europe and how to make it stronger, how to make it act together.
But there are real political obstacles to this.
It does look a very tall order, really, at the moment, doesn't it?
It really is. So I don't know that we'll see anything around the corner, but defense spending will increase, that's for sure.
Indeed. Sergei, thank you so much for being with us.
Sergei Radchenko there.
You're with World Business Report from the BBC World Service.
Now the tariffs that President Donald Trump has been threatening to impose on various trading partners are still not entirely clear.
But the plan that the American president rolled out, then delayed earlier this month, included a 10 % tax on energy imports from Canada.
That's likely to increase energy costs for some US residents, including people throughout New England and New York.
Some of that region's gas, oil, and electricity supplies come from Canada.
And on the electricity front in particular, utilities and policymakers have spent years working to bring more power down from the north of the border.
As Marketplace's Henry Epp reports now from Vermont.
In the dimly lit control room of Vermont Electric Co -op in the town of Johnson, six monitors display a diagram of the small utility's system.
Blue, orange, and white lines crisscross the display's black background.
They represent the power lines that deliver electricity to 40 ,000 customers.
Manager Isaac Gillen points to one of the monitors.
So this has pretty much all the high -level switches and breakers and stuff that we can control.
You can see at the top, we have a Hydro -Quebec tie there.
Meaning a power connection to the grid of Hydro -Quebec, the utility on the other side of the Canadian border.
Gillen's pointing to a connection in the town of Highgate, Vermont, which sends power to the whole New England grid.
But there are others on the U .S.
side of the border, in Derby, Norton, and Canaan.
Back in the day when we actually used to have to go out and read meters physically, if you're up in that Derby area, there's times where if you're not paying attention, you just, you can slip right into Canada.
Another display shows the total amount of power Vermont Electric Co -op is getting from Canada, says CEO Rebecca Town.
Right now, it's almost 19 megawatts coming through, flowing through our ties to Hydro -Quebec right now.
That was about 40 percent of the utility's total needs at that moment.
Pretty average, Towne says.
According to Hydro -Quebec, it supplied 14 percent of New England's electricity in a particularly cold January.
Back in the 1980s, utilities in the region built two major transmission lines to bring that power down from Canada.
Mark Montalvo is CEO of Daymark Energy Advisors, a consultant group based in Worcester, Massachusetts.
You know, we were coming out of an energy crisis, right?
There was a lot of concern about diversification of fuel supply.
Quebec had a very rich water resource.
Meaning lots of hydroelectric dams in the north of the province, which for years have produced surplus cheap power.
For the last decade or so, New England and New York have been trying to get more of it.
After many delays, two new connections to the Hydro -Quebec grid are set to be completed by early next year, says the utility's Serge Abergel.
Each of them will bring enough energy to supply a million homes.
One for essentially New England and Massachusetts, and the other one for New York City.
The lines will also be able to send power north, says Pierre -Olivier Pino, a professor at the business school HEC Montreal.
So as New England and New York add more solar and wind, which can also produce surplus power at times.
Quebec can basically import electricity, keep the water in the dams, and then that saved water can be used later on to generate power when solar and wind aren't.
In other words, Quebec can basically store power behind its dams for whenever New England needs it.
The Northeast states shouldn't see Quebec as a net exporter of electricity, but as a big battery to help balance their own market.
And that big battery is already built.
Tariffs could make fossil fuels in the region more expensive, too.
Right now, fuel oil for homes, gasoline and aviation fuel refined in New Brunswick and some natural gas all across the border.
Vermont Gas takes nearly all of its physical gas supply from a connection at the Canadian border, at Phillipsburg, Quebec.
Neil Lunderville is head of Vermont Gas Systems, which serves 56 ,000 customers in the northern part of the state, including, full disclosure, me.
He says there's no doubt about who would foot the bill for natural gas tariffs.
We pass the cost of gas directly to our customers.
A 10 % tariff on Canadian energy will mean a direct rate impact for our customers.
In the meantime, he's been looking at ways to mitigate that impact, but he's not particularly helpful.
That was Henry Epp reporting from Vermont.
Now, I'm sure you've heard of Fat Finger, the name for what happens when you don't hit the right keys on your computer keyboard and something rather drastic goes wrong.
But perhaps not as drastic as this.
Last year, Citigroup took in a credit for $280 and registered it as $81 trillion.
The Financial Times first reported this story says it was missed by two officials assigned to check the transaction before it was cleared to be processed the next day.
And then a third employee caught the error one and a half hours after the payment was processed and the transaction was reversed several hours later.
City told Reuters the incident had no impact on the bank or the client.
But it's not the first time that Citi have made this kind of gigantic error, as I heard from Matt Kelly, editor of Radical Compliance website, which covers corporate compliance, audit and risk management issues.
It is the fattest example of fat fingers that we've seen, but sadly it is not the only one we've seen from Citi.
So that's why they're under such scrutiny.
But as fat finger errors go, 81 trillion is probably the biggest we've seen.
Yeah, in their defence, they did turn it around within hours and got it sorted.
but as you say, Citi have history.
Just fill us in on some of that.
So the previous most glaring error from Citi was $900 million that they accidentally repaid on behalf of a client to Revlon, which led to a big, huge court decision of battle about trying to get some of that money back.
That was in 2020. Then in 2022, they had another fat finger error where a employee over in Europe was trying to sell a basket of securities worth 58 million dollars, misconfigured the order.
So they sold an order or placed an order for four hundred and forty four billion with a B.
That caused a flash crash in Europe.
And that was in 2022.
Now we have this. And all the while, regulators here in the United States have been leaning on Citibank pretty hard to clean up its act at improving its compliance technology.
And clearly, that has been an uphill road that continues to be nothing but uphill.
Yeah, I mean, we should say other financial institutions have had fat finger problems, but Citi does seem to be ahead of it.
I mean, what might be the reason?
Is it a sort of technological issue?
Is it to do with training?
What's going on? It's a little bit of both.
But we should remember that Citibank is a huge bank with a sprawling organization because it had acquired many different operating units over the years.
So really, the problem is they have a bunch of IT systems that each do individual things, but those systems don't necessarily work well talking to each other.
So you wind up with more human involvement that becomes necessary, and that is where the fingers enter the picture and the potential for error, which is what wound up happening here.
There's not enough automation that should be present given how big Citi is.
Well, it's interesting you say that, Matt, about automation because I've certainly seen some reaction to this suggesting that maybe it's a problem that would grow with greater involvement of, for example, artificial intelligence, that a mistake could be multiplied many times without human involvement.
It could and it couldn't.
For example, you could say AI might have done better at that initial transaction that got suspended.
a system there said, this may be suspicious human, please come and look at it.
Well, when the humans did, they said, no, it's not, it's fine.
Maybe AI could be better than humans at flagging truly suspicious transactions.
That is one theory of the case.
And there's AI applications out there that claim to do it.
But then, you know, maybe AI could also be better at coordinating among multiple systems to clean this up instead of having to manually re -enter that improperly flagged transaction.
But this all assumes that your AI is being coded correctly and learning the right way.
If it is not coded correctly, or if it picks up bad habits, then it will make these fat finger errors at lightning speed.
And I don't even know what the proper word would be because they don't have fingers and it would be enormously fat.
So there's potential to have AI solve this problem, but a misconfigured AI could actually have this problem be much worse.
Both are true at the same time.
Matt Kelly of the Radical Compliance website.
Now the 97th Academy Awards, the Oscars, take place on Sunday when all eyes will be on Hollywood.
But in reality, very few films are actually made in Tinseltown these days.
You'll find more movies being made in Hungary.
In recent years, that country has risen rapidly to become one of the world's top film destinations as generous tax breaks and incentives lure in moviemakers.
The Academy Award nominees this year, The Brutalist and Dune 2, were both filmed in Hungary, plus the 2024 Oscar winner Poor Things.
Our reporter Wayne Wright has been meeting the people contributing to the country's now nearly a billion dollar industry.
I'm in the Hungarian capital of Budapest to speak to someone who in the early 2000s played a pivotal role in helping to devise Hungary's film tax rebate scheme.
and in doing so helped create the foundations for today's near billion dollar industry.
The Hungarian film industry was in very bad shape.
So everyone went to Prague or to Romania.
No one came here to shoot.
Tomáš's proposals formed the basis of Hungary's 2004 Motion Picture Act, which contained a vital detail that gave the country a key advantage.
The scheme is pretty straightforward and easy.
you spend 100 here, you can get 30 back.
Our system is more flexible because it allows to spend one quarter of the Hungarian spend outside of the country.
My name is Bobby Kellen.
I have been fortunate enough to have been a movie producer for the last 25 years and I'm here in Budapest, Hungary, making the third installment of the global franchise Now You See Me.
Bobby what is it that Hungary offers short film producer?
Well I mean it's become much more difficult as always to make movies and the real reason is or not surprisingly it's about money.
There's a bizarre irony of course that everyone colloquially uses the term Hollywood and assumes that most movies are actually made in Hollywood but the truth is the majority of movies are not made anywhere near Hollywood.
I've had the experience of being on the lot in an executive's office at Universal, having a conversation about where are we going to find stage space to shoot the movie?
And of course, you look out the window and there's a giant stage that's sitting there empty and you can't shoot there.
And why can't you shoot there?
Because it's too expensive to shoot in Los Angeles.
Over the past five years, the number of productions coming to the country has quadrupled and the industry supports an estimated 20 ,000 jobs, both directly and indirectly.
And with the number of productions increasing so rapidly, it's creating opportunities for Hungarian talent too.
Hungarian set decorator Szygy Szypoz won an Oscar for her work on the epic sci -fi film June and is part of the team nominated for an Oscar this year for their work on the sequel, June 2.
Why do you think they choose Hungary to come and shoot?
I mean, first of all, it's the rebate, you have to say that.
But I think they started to realize that there is crew and there are talented people to service them.
Is it becoming harder to find locations or book locations or studios because of the number of different productions taking place during the year?
It does get harder, and then also you can do what you could do like ten years ago in Budapest because the districts are getting more strict what you could do and then the number of days what you could shut down.
You know, the rules have changed and they are a bit more strict but there are still places where you could shoot.
As well as individual talent, Hungary's local film production service companies have also benefited from this growth.
I'm Gergő Balika working at Mid -Atlantic Films as a producer and partner dealing all sort of production issues.
What does the future look like for the film and TV production based in Hungary?
Challenges we face are, I think, several fold.
I would say the budget category has been decreased.
After COVID, during COVID, it did not matter how much money we spent until we delivered the product onto the screen.
These days, there is a very cautious decision making from the studio side on budgets, on projects.
There are a lot of cancelled shows as far as we see.
I would say the national challenge is how we can maintain the crew, how we can keep up with inflation sometimes.
And as costs rise in general, is there potentially competition from other European countries who are looking to offer their services as a production base?
There is always competition.
Hungary can offer certain looks.
Budapest can mimic certain countries and cities, but of course we don't have a desert, we don't have a sea coast, so we are also experimenting to shoot in the neighbourhood countries, like at the sea in Croatia, like in castles in Austria, because that's how we try to attack the challenge that Hungary
is becoming boring for the audience and for the producers and most importantly for the creatives behind who are creating the show.
I think that's a big challenge.
That report by Wayne Wright on the burgeoning film industry in Hungary.
And, of course, the Oscars are coming up on Sunday evening in the US, and we will be reporting on them here on the BBC World Service.
But that's pretty much it from World Business Report for me and the rest of the team.
Thanks for listening and bye -bye.
