July 10, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Donald Trump’s threat to impose 50% tariffs on Brazilian goods sent the country’s currency plunging as the US leader sharply escalated a dispute with Latin America’s largest nation and leftist leader Luiz Inacio Lula da Silva.
(2) President Donald Trump said the US would begin levying a 50% tariff on copper imports from Aug. 1, confirming a move that will hurt American producers of everything from automobiles to appliances.
(3) Nvidia became the first company in history to achieve a $4 trillion market valuation, cementing its status as a kingpin in the global financial market.
(4) As the deadline for talks on US 'reciprocal' tariffs nears, Bloomberg Economics estimates the EU's best-case scenario - where the EU faces only 10% tariffs and no duties on cars, car parts, or metal products -- the tariff shock would drop to about 5.5 percentage points, down from 9 points under current policy.
(5) Running could turn around the fortunes of Puma SE and Adidas AG as they look to make up ground lost to new upstarts before US tariffs start to bite.
(6) The UK and French governments plan to order more of the Storm Shadow cruise missiles that they’ve been supplying to Ukraine, as well as accelerate efforts to develop a next-generation replacement for the weapons.
(7) On Wednesday, scientists released a first-of-its-kind rapid attribution study linking recent deaths in Europe due to climate change-linked extreme heat, which killed an estimated 2,300 people in 12 European cities, including Barcelona, between June 23 and July 2.
Podcast Conversation: The Part-Time Soldiers Signing Up to Defend Europe
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg DAYBAQ podcast. Good Morning is Thursday,
the tenth of July. I'm Caroline Hepkit in London and.
Speaker 3 (00:16):
I'm Stephen Caroline Brussels. Coming up today, Brazil's currency plunges
as Donald Trump hits the country with a fifty percent
trade tariff.
Speaker 2 (00:24):
Macro and Starmer agree to closer defense and energy ties
and discuss steps to stop migrant channel crossings.
Speaker 3 (00:32):
Plus getting back on track, Puman Adidas looked to running
shoes to turn around their fortunes after losing ground to
small arrivals.
Speaker 4 (00:41):
Let's start with a roundup of our top stories.
Speaker 3 (00:43):
US President Donald Trump says he will impose fifty percent
tariffs on goods from Brazil, citing what he called the
country's insidious attacks on free elections. The Brazilian reale summed
by nearly three percent against the US dollar after the announcement.
Speaker 5 (00:58):
Bloomberg's Washington Deputy.
Speaker 3 (00:59):
Beewer chief Lura Davison says it's a big escalation.
Speaker 6 (01:03):
Brazil actually had an original ten percent tariff on liberation
Data's fifty percent is the largest delta we've seen of
any of these countries that have come out so far,
and the US actually has a trade surplus with Brazil,
So unlike the justification of this being basically some part
on trade deficits, this seems to be much more about politics.
Speaker 3 (01:20):
Lora Davison, referring there to Trump's citing a witch hunt
trial against former Brazilian president jarrebal scenario as the reason
for the hike in the levee. The right wing former
leader is facing trial on charges that he attempted a
coup following his twenty twenty two election defeat. Brazil's current president,
Luis Ignacio Lula de Silva, says he would respond to
any unilateral tariff hikes.
Speaker 2 (01:41):
President Champ also confirms that a planned fifty percent tariff
on copper imports will begin on the first of August.
The hard and expected levee was signaled by Trump in
comments to reporters on Tuesday, but the president to tooth
social late on Wednesday to confirm the start date. Speaking
to Blue Blomberg, the chair of the President's US Council
(02:02):
of Economic Advisors, Stephen Mirran, said that the move is
part of Trump's push to rebuild US industries.
Speaker 7 (02:11):
You know there are certain critical minerals, of which copper
is one that you just absolutely need if you're going
to have a manufacturing sector. And having a manufacturing sector
is important, not just economically, because it tends to be
a high, high capital, high productivity field.
Speaker 2 (02:24):
Stephen Myron spoke to Bloomberg as the President also unveiled
a new round of tariff letters yesterday. They set levies
on imported goods effective from the first of August, for
those partners who failed to reach trade deals with the US.
So the list includes a thirty percent rate on Algeria, Libya,
Iraq and Sri Lanka, twenty five percent duties on products
(02:46):
from Brunei and Moldova, and a twenty percent rate on
goods from the Philippines. Of those seven countries, only the
Philippines ranks Amongst America's top fifty trading partners.
Speaker 3 (02:58):
As the deadline for TOM on US reciprocal tariffs knee nears,
the European Union seems increasingly willing to accept a one
sided deal to stave off a trade war. That's the
view of Bloomberg Economics, which says that in a best
case scenario where the EU faces only ten percent tariffs
and no duties on cars, car parks or metal products,
(03:19):
the tariff shop would drop to about five and a
half percentage points, down from nine points under the current policy.
Former EU trade negotiator John Clark told us that the
block is in what he believes is an impossible position.
Speaker 8 (03:32):
I think this is the most difficult negotiation in memory,
frankly for the European Union, and I would not want
to be an EU train negotiator on this one. The
go posts are moving all the time, the US negotiating
with They've gun against its head of twenty percent or
fifty percent tariff in August, depending on what daily week
it is. There are doubts I think whether any deal
that Trump Incs will be actually honored. And then the
(03:54):
Commission is very divided about whether it should stick to principles,
not accept anything which is to illegal, or the equivalent
quote pragmatic and go for a quick thirty deal of
the kind that the British did.
Speaker 3 (04:06):
You can hear that full conversation with John Clark on
the Bloomberg Talks podcast. All of our key conversations in
one place now.
Speaker 2 (04:13):
In other news, Nvidia became the first company in history
to reach a valuation of four trillion dollars. The chip
maker's stock has risen more than twenty percent this year,
and is up more than one thousand percent since the
beginning of twenty twenty three. Bloomberg Semiconductor editor Ian King
says it could still go further, so on.
Speaker 9 (04:33):
A price to winnings ratio fifty two times doesn't sound
totally crazy, and that doesn't even get it into the
top ten list of semiconductor makers, so relatively, it's not
that expensive. No other semiconductor company has ever had more
than one hundred million dollars of revenue, ever, not even
Intel at its peak.
Speaker 2 (04:53):
King adds that the latest catalyst for the stock's boom
has been a commitment to AI spending from Nvidia's big customers,
showing demand to remain strong. It's a stunning rebound after
a rough start to the year when China's Deep Seek
sparked spending fits across the AI space. Nvidia now accounts
to seven point five percent of the S and P
(05:14):
five hundred index, n its highest influence on record.
Speaker 3 (05:18):
The British and French governments plan to order more storm
Shadow cruise missiles as they seek closer ties on defense
and migration. The announcement comes as Francis President Emanuel Macron
makes the first state visit to the UK of any
European leader since Brexit. Macron hailed Starmar's work on Ukraine
as bringing the two countries closer together, but.
Speaker 8 (05:40):
As well as changing time from a great to Middle
East icing scene. It's a fathership and a friendship between
the Europe and France is absolutely I would see the
game changer.
Speaker 3 (05:53):
The UK is keen to get President Macron to sign
up to a new deal on migration before he leaves
later today. The two leaders will also dial into a
meeting of nations willing to help Ukraine, the so called
Coalition of the Willing, including a US representative. It comes
as Sky News reports that President Trump is likely to
visit the UK at the end of July or beginning
(06:15):
of August in an unofficial trip to his golf courses
in Scotland.
Speaker 2 (06:21):
This week, scientists have released a first of its kind
rapid attribution study linking recent deaths in Europe to climate
change driven extreme heat.
Speaker 4 (06:32):
Bloomberg's U and pots has more now.
Speaker 10 (06:35):
Scientists say the hot weather in Europe over the ten
day period to the second of July killed and estimated
two three hundred people in twelve cities. The research, led
by a team at two London universities, found that climate
change made the continent's recent heat wave three times more fatal,
with man made global warming increasing temperatures by between one
and four degrees centigrade in the city studied. The report
(06:58):
comes as more and more countries measures to mitigate periods
of extreme heat. In London i'm Une pots Spoonberg Radio.
Speaker 3 (07:05):
The Bank of England is warning that UK bond's risk
being hit by a wave of forced selling and an
echo of the truss era meltdown. The Central Bank's Financial
Stability Report points to hedge funds borrowing seventy seven billion
pounds in the repo market to make big bets on
the margin between government bonds and their futures, the so
called basis trade. The fear is that these small, highly
(07:27):
leveraged players could cause a market blow up have caught short.
Officials also pointed out because some of these funds are
domiciled off shore, the BOE will find it tough to
keep track of the threat they pose to the market.
It shows the perilous market backdrop that threatens to turn
against Chancellor of the Exchequer Rachel Reeves.
Speaker 2 (07:48):
And those are our top stories for you this morning.
So thinking about the markets, the Brazilian reale led emerging
market currency losses on Wednesday, dropping as much as two
point nine percent because of Trump's tower fifty percent on
the Latin American country. It was the biggest drop in
more than three months for the raale. This morning, the
Bloomberg Dollar Spot index is softer, down a tenth of
(08:10):
one percent. Also, stop futures for the US in the
red orthough they're in the green for Europe up almost
two tenths of one percent. Let's see if that holds
given the uncertainty, the worries around tariffs and the tariff
letters and the copper tariff. In terms of the bond markets,
two year treasuries fairly steady in terms of yields three
(08:32):
eighty five ten yeards at four thirty four. Bitcoin hit
a record high on Wednesday and it holds close to
that level. We're up a three tenths of one percent
this morning, and copper on the London Metals Exchange up
six tenths of one percent this morning. So pressure in
the copper market still in.
Speaker 3 (08:48):
A moment, we'll bring you more on what Donald Trump's
trade letters have in store for Brazil, plus why top
European sportswear brands are helping for a run of success
with running. But another story that we've been reading this
morning European countries. We've been talking about this a lot
Caroline ramping up their spending on defense, but we've been
speaking to some of the part time soldiers who've signed
(09:09):
up as reservists in different parts of the continent. This
is a whole different part of the challenge where Europe's
rethinking its defense, which is actually getting people to sign
up to the armed forces, either as volunteers or as
conscripts under military service rules. So we've spoken to people
in Lithuania, in Denmark, in France, and some really fascinating
(09:29):
insights about what motivates people to sign up. Our colleagues
in France talking to a twenty year old student who
said that he signed up out of patriotism, not specifically
to fight, but because he says there are other things
that he can bring to being in the army. And
at the same camp there was the oldest of the reservists,
sixty year old Dalila. She was previously in the Algerian
Air Force before earning her master's degree and going on
(09:52):
to a career in the French public service. And she
also signed up because she wanted to reskill the skills
that she had used in her previous career and didn't
mind going back to the lowest rank because she said
it was necessary to learn what the common practices are now.
Speaker 2 (10:08):
Yeah, look, it's part of a huge rethink, isn't it.
Across Europe military service hadn't been as popular. Also, we've
got an aging population, I mean in Britain and across
the continent. But there is a massive mind shift that
is taking place. And as you say conscription reservists, there
is also pay. There's additional pay also for people who
(10:29):
sign up. In a lot of these European countries, you can,
for example, do your reserve days and also be paid
for your regular job, whatever that might be. But yes,
as you say, massive mental adjustment, I think in Europe.
Speaker 3 (10:42):
Yeah, indeed. And we'll put a link to that story
in our podcast show Notes for you. Let's bring you
the latest throw on our top story this morning and
the round of trade letters from Donald Trump sending Brazil's
currency into a slump, the reale plunging after the US
president threatened fifty percent tariff from the country, saying that
it was art due to Brazil's attacks on free elections.
(11:02):
Our EMA and news director Osmad Matheson is with us
from more Eros.
Speaker 5 (11:06):
Good morning.
Speaker 3 (11:06):
This fifty percent figure higher than most of the tarifrates
that Donald Trump is announced. Why is he targeting Brazil
in particular?
Speaker 11 (11:13):
Well, yes, quite a surprise for the market to see this,
and we could see that in the extent of the
market reaction that came.
Speaker 5 (11:20):
There seemed to be several factors at play here.
Speaker 11 (11:24):
One is that we had quite a bit of public
wrangling between Trump and the Brazilian leader Lula, who was
hosting leaders from the Bricks grouping this past weekend, and
when Trump threatened to put a ten percent levy on
BRICKS members, you got quite a public a pushback there
(11:45):
from Lula, who pushed back very publicly, and so that
probably created a bit of tension between the two of them.
You've also got this long running issue of the former
leader Jared Bolsonaro, who is somewhat of a friend of
Donald Trump, and Donald Trump has for a long time
accused Brazil of politically persecuted, persecuting Bolsonaro. Bolsnow, of course,
(12:09):
is about to face trial on charges that he attempted
a coup, and he's barred from political office, which means
he cannot currently run again in the next presidential election.
Donald Trump has been accusing Brazil of persecuting Bolsonaro, calling
it even a witch hunt of Bolsno and his families,
and saying that the trial should end. So quite a
(12:30):
direct insertion there by Donald Trump in domestic Brazil politics
and in putting the fifty percent tariff on Brazil, he
actually cited this case and saying that he was making
this charge due to what he called Brazil's insitious attacks
on free elections, And so very much seems to be
quite a political motivation behind this fifty percent, not just
(12:54):
the pure realities of trade.
Speaker 2 (12:56):
Yeah, because Brazil has a trade deficit with the US.
Lessons will other countries draw from this that it's not
just about the trade balance that President Trump is focused on.
Speaker 5 (13:08):
Well, absolutely, so that is the interesting thing.
Speaker 11 (13:10):
Again, as you say, Brazil is the second largest trading
partner of the US, so this could affect it quite significantly.
China of course is the first, but exports a lot
of staff to the US, including steel products, aircraft and
aircraft parts and so on, but it does run a
surplus with the US. And so the question is is
(13:34):
Donald Trump coming for countries purely on the basis of
their trade relationship and their trade surplus. Is he coming
for them because he thinks they have a lock on
certain important things like copper steel in the case of
China recently.
Speaker 5 (13:50):
Obviously rare earths as well?
Speaker 11 (13:52):
Do you have something that he wants to get his
hands on more easily for US companies or is there
a mix of everything in there, his view on politics
in your country or his relationship with your leader.
Speaker 3 (14:05):
This is such an interesting time to be watching these
developments as well. For now, Rosler Mathson, thank you very
much for bringing us up to date, our EMEA news director.
Speaker 2 (14:14):
Now let's turn our attention to running, which could turn
around the fortunes of these sports where brands Puma and
added US as they look to make up ground lost
to new rivals. These firms are also facing major risks
from tariff on countries like Vietnam, a big supplier in
the region. Our EMEA earning specialist Chloe Malay joins US
(14:34):
now for more on the story, come morning, Chloe.
Speaker 4 (14:37):
Why is running now such a key sport for Puma
and added us?
Speaker 1 (14:41):
Yeah, so running is obviously nothing new necessarily for Puma
and Adidas. It's always been a space fit for innovation,
but there is a renewed focus at the moment and
that's due to the intersection of a few things.
Speaker 5 (14:53):
Obviously, there's a growing enthusiasm.
Speaker 4 (14:55):
For the sport.
Speaker 1 (14:56):
Secondly, those two big players have lost a bit of
market share to smaller brands like Hokker and On, etc.
And then finally, there is a tariff threat there is
hanging over those two companies that they've really hurt the
shares over the last few months. So all of this
makes it so that reviving the demand in that category
really is key to sort of cushion that tariff impact
(15:17):
and to take advantage of that sales momentum in the category.
So I spoke to an analyst at Deutsche Bank who
said that running is the most exciting category for growth
over the coming quarters as well as this one, and
he said that those companies really hadn't focused on running
as much as they should have over the last five
years or so, but now it looks like a smart
bet really, because all of this points to the running
(15:40):
category are something that provides some sort of relief essentially.
Speaker 3 (15:45):
So how could these companies shift their strategies to respond
to this momentum.
Speaker 1 (15:52):
Well, one thing to look for in particular is what
is going to happen with the new CEO of Puma,
Arthur Hold, who just started the job couple of weeks ago.
So the consensus is that he's really keen to focus
on that category and in particular the nitro line, which
is a which those shoes are with the souls with
nitrogen gas inside for the added bounce, So that CEO
(16:14):
change might be a real kind of important catalyst for Puma.
For Adidas, analysts are saying that the company is becoming
more relevant thanks to record breaking performances from athletes wearing
that Adidas gear and then also quite strong engagement on
the running Instagram page of Adidas, so we could see
the company kind of doubling down on those areas. And
(16:36):
another thing to note is also that China is becoming
it might become even more of a key market. It
has a national Fitness Plan which is kind of promoting
physical exercise among the population. Then that could lead companies
like Adidas to sponsor events and to sell price or
equipment there as well.
Speaker 2 (16:53):
Okay, so investors, how do they feel about this?
Speaker 1 (16:56):
Well, the idea from analyst is that the bigger brands,
those bigger brands start to get attraction in the running category,
that could kind of lift investor sentiment. But obviously they're
starting from quite a tough position. So Adidas is done
about ten percent here today, Puma as much as almost
down fifty percent, so they have quite a long way
to come back from. And obviously the geopolitical context, the
(17:17):
macroeconomic context kind of complicates that and makes it a
bit harder for investors to focus on the positives.
Speaker 3 (17:24):
Well, indeed, on that point, KOI, what do we think
that we might hear from these companies on the issue
of tariffs and their upcoming updates.
Speaker 1 (17:31):
Yeah, so obviously we've got brand new rates on Cambodia,
allows Thailand, Vietnam, et cetera. So all of these are
key supply hubs for the fashion industry, and that really
complicates the picture. Means higher cost, it means probably having
to raise prices, and Puma and Adidas are reporting right
before so on the thirtieth and thirty first of July,
which is right before the August first deadline that was
(17:53):
imposed by bat Donald Trump. So they might be, as
we speak, tweaking those earning states to kind of add
a line about that caution and about how they might
be thinking about, you know, adjusting their supply chains for example.
But because there has been so much back and forth
with the tariffs, I think it's quite likely to see
very specific numbers on the impact, but they'll definitely be
(18:15):
cautious commentary around this and what that means for the
business going forward.
Speaker 4 (18:19):
Yeah, okay, interesting.
Speaker 2 (18:20):
Chloe, thank you so much for being with us our
e MAA earning specist, Chloe Malay, who's just about to
get into another very busy earning season, so thank you
for being with us. Look, the only person, frankly who
knows much about running on this podcast I suspect is
Stephen Carot. I wonder whether you found a new running
route in your new city.
Speaker 5 (18:37):
Right I'm still working it out.
Speaker 3 (18:38):
This is the problem is that like you go one direction,
you think, yeah, this will be fine, you realize you're
actually running along a motorway. So then sometimes google matter
is not the most helpful when you're looking for places
to run, So all suggestions a post card, please.
Speaker 4 (18:52):
Yeah, absolutely, Okay.
Speaker 2 (18:55):
I've got some producers chiming in as well about how
we are all runners.
Speaker 4 (18:59):
Perhaps just it's not me.
Speaker 3 (19:02):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:08):
Look for us on your podcast feed every morning on Apple,
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Speaker 3 (19:14):
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Speaker 2 (19:20):
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Speaker 3 (19:27):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg day Break Europe
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg DAYBAQ podcast. Good Morning is Thursday,
the tenth of July. I'm Caroline Hepkit in London and.
Speaker 3 (00:16):
I'm Stephen Caroline Brussels. Coming up today, Brazil's currency plunges
as Donald Trump hits the country with a fifty percent
trade tariff.
Speaker 2 (00:24):
Macro and Starmer agree to closer defense and energy ties
and discuss steps to stop migrant channel crossings.
Speaker 3 (00:32):
Plus getting back on track, Puman Adidas looked to running
shoes to turn around their fortunes after losing ground to
small arrivals.
Speaker 4 (00:41):
Let's start with a roundup of our top stories.
Speaker 3 (00:43):
US President Donald Trump says he will impose fifty percent
tariffs on goods from Brazil, citing what he called the
country's insidious attacks on free elections. The Brazilian reale summed
by nearly three percent against the US dollar after the announcement.
Speaker 5 (00:58):
Bloomberg's Washington Deputy.
Speaker 3 (00:59):
Beewer chief Lura Davison says it's a big escalation.
Speaker 6 (01:03):
Brazil actually had an original ten percent tariff on liberation
Data's fifty percent is the largest delta we've seen of
any of these countries that have come out so far,
and the US actually has a trade surplus with Brazil,
So unlike the justification of this being basically some part
on trade deficits, this seems to be much more about politics.
Speaker 3 (01:20):
Lora Davison, referring there to Trump's citing a witch hunt
trial against former Brazilian president jarrebal scenario as the reason
for the hike in the levee. The right wing former
leader is facing trial on charges that he attempted a
coup following his twenty twenty two election defeat. Brazil's current president,
Luis Ignacio Lula de Silva, says he would respond to
any unilateral tariff hikes.
Speaker 2 (01:41):
President Champ also confirms that a planned fifty percent tariff
on copper imports will begin on the first of August.
The hard and expected levee was signaled by Trump in
comments to reporters on Tuesday, but the president to tooth
social late on Wednesday to confirm the start date. Speaking
to Blue Blomberg, the chair of the President's US Council
(02:02):
of Economic Advisors, Stephen Mirran, said that the move is
part of Trump's push to rebuild US industries.
Speaker 7 (02:11):
You know there are certain critical minerals, of which copper
is one that you just absolutely need if you're going
to have a manufacturing sector. And having a manufacturing sector
is important, not just economically, because it tends to be
a high, high capital, high productivity field.
Speaker 2 (02:24):
Stephen Myron spoke to Bloomberg as the President also unveiled
a new round of tariff letters yesterday. They set levies
on imported goods effective from the first of August, for
those partners who failed to reach trade deals with the US.
So the list includes a thirty percent rate on Algeria, Libya,
Iraq and Sri Lanka, twenty five percent duties on products
(02:46):
from Brunei and Moldova, and a twenty percent rate on
goods from the Philippines. Of those seven countries, only the
Philippines ranks Amongst America's top fifty trading partners.
Speaker 3 (02:58):
As the deadline for TOM on US reciprocal tariffs knee nears,
the European Union seems increasingly willing to accept a one
sided deal to stave off a trade war. That's the
view of Bloomberg Economics, which says that in a best
case scenario where the EU faces only ten percent tariffs
and no duties on cars, car parks or metal products,
(03:19):
the tariff shop would drop to about five and a
half percentage points, down from nine points under the current policy.
Former EU trade negotiator John Clark told us that the
block is in what he believes is an impossible position.
Speaker 8 (03:32):
I think this is the most difficult negotiation in memory,
frankly for the European Union, and I would not want
to be an EU train negotiator on this one. The
go posts are moving all the time, the US negotiating
with They've gun against its head of twenty percent or
fifty percent tariff in August, depending on what daily week
it is. There are doubts I think whether any deal
that Trump Incs will be actually honored. And then the
(03:54):
Commission is very divided about whether it should stick to principles,
not accept anything which is to illegal, or the equivalent
quote pragmatic and go for a quick thirty deal of
the kind that the British did.
Speaker 3 (04:06):
You can hear that full conversation with John Clark on
the Bloomberg Talks podcast. All of our key conversations in
one place now.
Speaker 2 (04:13):
In other news, Nvidia became the first company in history
to reach a valuation of four trillion dollars. The chip
maker's stock has risen more than twenty percent this year,
and is up more than one thousand percent since the
beginning of twenty twenty three. Bloomberg Semiconductor editor Ian King
says it could still go further, so on.
Speaker 9 (04:33):
A price to winnings ratio fifty two times doesn't sound
totally crazy, and that doesn't even get it into the
top ten list of semiconductor makers, so relatively, it's not
that expensive. No other semiconductor company has ever had more
than one hundred million dollars of revenue, ever, not even
Intel at its peak.
Speaker 2 (04:53):
King adds that the latest catalyst for the stock's boom
has been a commitment to AI spending from Nvidia's big customers,
showing demand to remain strong. It's a stunning rebound after
a rough start to the year when China's Deep Seek
sparked spending fits across the AI space. Nvidia now accounts
to seven point five percent of the S and P
(05:14):
five hundred index, n its highest influence on record.
Speaker 3 (05:18):
The British and French governments plan to order more storm
Shadow cruise missiles as they seek closer ties on defense
and migration. The announcement comes as Francis President Emanuel Macron
makes the first state visit to the UK of any
European leader since Brexit. Macron hailed Starmar's work on Ukraine
as bringing the two countries closer together, but.
Speaker 8 (05:40):
As well as changing time from a great to Middle
East icing scene. It's a fathership and a friendship between
the Europe and France is absolutely I would see the
game changer.
Speaker 3 (05:53):
The UK is keen to get President Macron to sign
up to a new deal on migration before he leaves
later today. The two leaders will also dial into a
meeting of nations willing to help Ukraine, the so called
Coalition of the Willing, including a US representative. It comes
as Sky News reports that President Trump is likely to
visit the UK at the end of July or beginning
(06:15):
of August in an unofficial trip to his golf courses
in Scotland.
Speaker 2 (06:21):
This week, scientists have released a first of its kind
rapid attribution study linking recent deaths in Europe to climate
change driven extreme heat.
Speaker 4 (06:32):
Bloomberg's U and pots has more now.
Speaker 10 (06:35):
Scientists say the hot weather in Europe over the ten
day period to the second of July killed and estimated
two three hundred people in twelve cities. The research, led
by a team at two London universities, found that climate
change made the continent's recent heat wave three times more fatal,
with man made global warming increasing temperatures by between one
and four degrees centigrade in the city studied. The report
(06:58):
comes as more and more countries measures to mitigate periods
of extreme heat. In London i'm Une pots Spoonberg Radio.
Speaker 3 (07:05):
The Bank of England is warning that UK bond's risk
being hit by a wave of forced selling and an
echo of the truss era meltdown. The Central Bank's Financial
Stability Report points to hedge funds borrowing seventy seven billion
pounds in the repo market to make big bets on
the margin between government bonds and their futures, the so
called basis trade. The fear is that these small, highly
(07:27):
leveraged players could cause a market blow up have caught short.
Officials also pointed out because some of these funds are
domiciled off shore, the BOE will find it tough to
keep track of the threat they pose to the market.
It shows the perilous market backdrop that threatens to turn
against Chancellor of the Exchequer Rachel Reeves.
Speaker 2 (07:48):
And those are our top stories for you this morning.
So thinking about the markets, the Brazilian reale led emerging
market currency losses on Wednesday, dropping as much as two
point nine percent because of Trump's tower fifty percent on
the Latin American country. It was the biggest drop in
more than three months for the raale. This morning, the
Bloomberg Dollar Spot index is softer, down a tenth of
(08:10):
one percent. Also, stop futures for the US in the
red orthough they're in the green for Europe up almost
two tenths of one percent. Let's see if that holds
given the uncertainty, the worries around tariffs and the tariff
letters and the copper tariff. In terms of the bond markets,
two year treasuries fairly steady in terms of yields three
(08:32):
eighty five ten yeards at four thirty four. Bitcoin hit
a record high on Wednesday and it holds close to
that level. We're up a three tenths of one percent
this morning, and copper on the London Metals Exchange up
six tenths of one percent this morning. So pressure in
the copper market still in.
Speaker 3 (08:48):
A moment, we'll bring you more on what Donald Trump's
trade letters have in store for Brazil, plus why top
European sportswear brands are helping for a run of success
with running. But another story that we've been reading this
morning European countries. We've been talking about this a lot
Caroline ramping up their spending on defense, but we've been
speaking to some of the part time soldiers who've signed
(09:09):
up as reservists in different parts of the continent. This
is a whole different part of the challenge where Europe's
rethinking its defense, which is actually getting people to sign
up to the armed forces, either as volunteers or as
conscripts under military service rules. So we've spoken to people
in Lithuania, in Denmark, in France, and some really fascinating
(09:29):
insights about what motivates people to sign up. Our colleagues
in France talking to a twenty year old student who
said that he signed up out of patriotism, not specifically
to fight, but because he says there are other things
that he can bring to being in the army. And
at the same camp there was the oldest of the reservists,
sixty year old Dalila. She was previously in the Algerian
Air Force before earning her master's degree and going on
(09:52):
to a career in the French public service. And she
also signed up because she wanted to reskill the skills
that she had used in her previous career and didn't
mind going back to the lowest rank because she said
it was necessary to learn what the common practices are now.
Speaker 2 (10:08):
Yeah, look, it's part of a huge rethink, isn't it.
Across Europe military service hadn't been as popular. Also, we've
got an aging population, I mean in Britain and across
the continent. But there is a massive mind shift that
is taking place. And as you say conscription reservists, there
is also pay. There's additional pay also for people who
(10:29):
sign up. In a lot of these European countries, you can,
for example, do your reserve days and also be paid
for your regular job, whatever that might be. But yes,
as you say, massive mental adjustment, I think in Europe.
Speaker 3 (10:42):
Yeah, indeed. And we'll put a link to that story
in our podcast show Notes for you. Let's bring you
the latest throw on our top story this morning and
the round of trade letters from Donald Trump sending Brazil's
currency into a slump, the reale plunging after the US
president threatened fifty percent tariff from the country, saying that
it was art due to Brazil's attacks on free elections.
(11:02):
Our EMA and news director Osmad Matheson is with us
from more Eros.
Speaker 5 (11:06):
Good morning.
Speaker 3 (11:06):
This fifty percent figure higher than most of the tarifrates
that Donald Trump is announced. Why is he targeting Brazil
in particular?
Speaker 11 (11:13):
Well, yes, quite a surprise for the market to see this,
and we could see that in the extent of the
market reaction that came.
Speaker 5 (11:20):
There seemed to be several factors at play here.
Speaker 11 (11:24):
One is that we had quite a bit of public
wrangling between Trump and the Brazilian leader Lula, who was
hosting leaders from the Bricks grouping this past weekend, and
when Trump threatened to put a ten percent levy on
BRICKS members, you got quite a public a pushback there
(11:45):
from Lula, who pushed back very publicly, and so that
probably created a bit of tension between the two of them.
You've also got this long running issue of the former
leader Jared Bolsonaro, who is somewhat of a friend of
Donald Trump, and Donald Trump has for a long time
accused Brazil of politically persecuted, persecuting Bolsonaro. Bolsnow, of course,
(12:09):
is about to face trial on charges that he attempted
a coup, and he's barred from political office, which means
he cannot currently run again in the next presidential election.
Donald Trump has been accusing Brazil of persecuting Bolsonaro, calling
it even a witch hunt of Bolsno and his families,
and saying that the trial should end. So quite a
(12:30):
direct insertion there by Donald Trump in domestic Brazil politics
and in putting the fifty percent tariff on Brazil, he
actually cited this case and saying that he was making
this charge due to what he called Brazil's insitious attacks
on free elections, And so very much seems to be
quite a political motivation behind this fifty percent, not just
(12:54):
the pure realities of trade.
Speaker 2 (12:56):
Yeah, because Brazil has a trade deficit with the US.
Lessons will other countries draw from this that it's not
just about the trade balance that President Trump is focused on.
Speaker 5 (13:08):
Well, absolutely, so that is the interesting thing.
Speaker 11 (13:10):
Again, as you say, Brazil is the second largest trading
partner of the US, so this could affect it quite significantly.
China of course is the first, but exports a lot
of staff to the US, including steel products, aircraft and
aircraft parts and so on, but it does run a
surplus with the US. And so the question is is
(13:34):
Donald Trump coming for countries purely on the basis of
their trade relationship and their trade surplus. Is he coming
for them because he thinks they have a lock on
certain important things like copper steel in the case of
China recently.
Speaker 5 (13:50):
Obviously rare earths as well?
Speaker 11 (13:52):
Do you have something that he wants to get his
hands on more easily for US companies or is there
a mix of everything in there, his view on politics
in your country or his relationship with your leader.
Speaker 3 (14:05):
This is such an interesting time to be watching these
developments as well. For now, Rosler Mathson, thank you very
much for bringing us up to date, our EMEA news director.
Speaker 2 (14:14):
Now let's turn our attention to running, which could turn
around the fortunes of these sports where brands Puma and
added US as they look to make up ground lost
to new rivals. These firms are also facing major risks
from tariff on countries like Vietnam, a big supplier in
the region. Our EMEA earning specialist Chloe Malay joins US
(14:34):
now for more on the story, come morning, Chloe.
Speaker 4 (14:37):
Why is running now such a key sport for Puma
and added us?
Speaker 1 (14:41):
Yeah, so running is obviously nothing new necessarily for Puma
and Adidas. It's always been a space fit for innovation,
but there is a renewed focus at the moment and
that's due to the intersection of a few things.
Speaker 5 (14:53):
Obviously, there's a growing enthusiasm.
Speaker 4 (14:55):
For the sport.
Speaker 1 (14:56):
Secondly, those two big players have lost a bit of
market share to smaller brands like Hokker and On, etc.
And then finally, there is a tariff threat there is
hanging over those two companies that they've really hurt the
shares over the last few months. So all of this
makes it so that reviving the demand in that category
really is key to sort of cushion that tariff impact
(15:17):
and to take advantage of that sales momentum in the category.
So I spoke to an analyst at Deutsche Bank who
said that running is the most exciting category for growth
over the coming quarters as well as this one, and
he said that those companies really hadn't focused on running
as much as they should have over the last five
years or so, but now it looks like a smart
bet really, because all of this points to the running
(15:40):
category are something that provides some sort of relief essentially.
Speaker 3 (15:45):
So how could these companies shift their strategies to respond
to this momentum.
Speaker 1 (15:52):
Well, one thing to look for in particular is what
is going to happen with the new CEO of Puma,
Arthur Hold, who just started the job couple of weeks ago.
So the consensus is that he's really keen to focus
on that category and in particular the nitro line, which
is a which those shoes are with the souls with
nitrogen gas inside for the added bounce, So that CEO
(16:14):
change might be a real kind of important catalyst for Puma.
For Adidas, analysts are saying that the company is becoming
more relevant thanks to record breaking performances from athletes wearing
that Adidas gear and then also quite strong engagement on
the running Instagram page of Adidas, so we could see
the company kind of doubling down on those areas. And
(16:36):
another thing to note is also that China is becoming
it might become even more of a key market. It
has a national Fitness Plan which is kind of promoting
physical exercise among the population. Then that could lead companies
like Adidas to sponsor events and to sell price or
equipment there as well.
Speaker 2 (16:53):
Okay, so investors, how do they feel about this?
Speaker 1 (16:56):
Well, the idea from analyst is that the bigger brands,
those bigger brands start to get attraction in the running category,
that could kind of lift investor sentiment. But obviously they're
starting from quite a tough position. So Adidas is done
about ten percent here today, Puma as much as almost
down fifty percent, so they have quite a long way
to come back from. And obviously the geopolitical context, the
(17:17):
macroeconomic context kind of complicates that and makes it a
bit harder for investors to focus on the positives.
Speaker 3 (17:24):
Well, indeed, on that point, KOI, what do we think
that we might hear from these companies on the issue
of tariffs and their upcoming updates.
Speaker 1 (17:31):
Yeah, so obviously we've got brand new rates on Cambodia,
allows Thailand, Vietnam, et cetera. So all of these are
key supply hubs for the fashion industry, and that really
complicates the picture. Means higher cost, it means probably having
to raise prices, and Puma and Adidas are reporting right
before so on the thirtieth and thirty first of July,
which is right before the August first deadline that was
(17:53):
imposed by bat Donald Trump. So they might be, as
we speak, tweaking those earning states to kind of add
a line about that caution and about how they might
be thinking about, you know, adjusting their supply chains for example.
But because there has been so much back and forth
with the tariffs, I think it's quite likely to see
very specific numbers on the impact, but they'll definitely be
(18:15):
cautious commentary around this and what that means for the
business going forward.
Speaker 4 (18:19):
Yeah, okay, interesting.
Speaker 2 (18:20):
Chloe, thank you so much for being with us our
e MAA earning specist, Chloe Malay, who's just about to
get into another very busy earning season, so thank you
for being with us. Look, the only person, frankly who
knows much about running on this podcast I suspect is
Stephen Carot. I wonder whether you found a new running
route in your new city.
Speaker 5 (18:37):
Right I'm still working it out.
Speaker 3 (18:38):
This is the problem is that like you go one direction,
you think, yeah, this will be fine, you realize you're
actually running along a motorway. So then sometimes google matter
is not the most helpful when you're looking for places
to run, So all suggestions a post card, please.
Speaker 4 (18:52):
Yeah, absolutely, Okay.
Speaker 2 (18:55):
I've got some producers chiming in as well about how
we are all runners.
Speaker 4 (18:59):
Perhaps just it's not me.
Speaker 3 (19:02):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:08):
Look for us on your podcast feed every morning on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 3 (19:14):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (19:20):
Our flagship New York station is also available on your
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Speaker 3 (19:27):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg day Break Europe
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