July 28, 2025 • 17 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) The US and European Union agreed on a hard-fought deal that will see the bloc face 15% tariffs on most of its exports, including automobiles, staving off a trade war that could have delivered a hammer blow to the global economy.
(2) US and Chinese officials are meeting Monday to extend their tariff detente beyond a mid-August deadline, and haggle over other ways to further defuse trade tensions.
(3) UK Prime Minister Keir Starmer will meet US President Donald Trump in Scotland on Monday in a bid to remove the remaining obstacles to their trade deal and press for a lasting ceasefire in Gaza.
(4) Israel increased aid distribution to Gaza over the weekend in an effort to defuse a growing international outcry over hunger convulsing the shattered Palestinian enclave.
(5) Samsung Electronics Co. will produce AI semiconductors for Tesla Inc. in a new $16.5 billion pact that marks a win for its underperforming foundry division.
Podcast Conversation: Rome's Next Big Tourist Draw Risks Going Bust Before It Opens
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Blue Big dayvaq AT podcast. Good morning,
It's Monday, the twenty eighth of July. I'm Caroline Hepkut
in London.
Speaker 3 (00:16):
And I'm Stephen Carroll and Brussels. Coming up today, the
United States and the European Union strike a deal setting
tariffs on the EU at fifteen percent, but many details
are left to be worked out.
Speaker 2 (00:26):
Kis Starmer heads to the US President's Scottish golf course
for talks on trade and diplomacy.
Speaker 3 (00:33):
Plus still holding the faith Plunging long dated UK bonds
become a cult trade for yield chasing investors.
Speaker 2 (00:41):
Let's start with a round up of our top stories.
Speaker 3 (00:43):
The United States and the European Union have agreed a
deal that will see fifteen percent tariffs on most EU
imports into the US. The deal staves off and escalation
and hostilities and the world's biggest trading relationship, with many
details are still to be ironed out. European Commissioned President
or still Underline, announced the deal alongside President Trump during
his trip to Scotland.
Speaker 4 (01:04):
We have a trade deal between the two largest economies
in the world, and it's a big deal. It's a
huge deal. It will bring stability, it will bring predictability.
That's very important for our businesses on both sides of
the Atlantic. It's fifteen percent tariffs across the board, all
in inclusive, but.
Speaker 3 (01:25):
Our slav Underline and the US presidents appeared to differ
on some key details. Donald Trump said the deal did
not include pharmaceuticals, but officials on both sides later indicated
the sector was included in the fifteen percent rate, and
while the US president said there would be no change
to the fifty percent tariff on steel and aluminium products,
Vonderline said that metals duties will be cut and a
(01:46):
quota system will be put in place. Details were also
scant on an EU commitment to purchase seven hundred and
fifty billion dollars in American energy products and invest six
hundred billion dollars in the United States.
Speaker 2 (01:59):
US and Chinese officials are meeting in Sweden today to
extend their trade truce beyond its August deadline. It will
be the third meeting in less than three months. Will
Chinese Vice Premier Hourly Fang and US Treasury Sectary Scott Bessend,
who will discuss how long the current tariff arrangement can
be prolonged. The news comes after President Trump confirmed yesterday
(02:20):
that dozens of other countries will hear details about their
US levees this week.
Speaker 5 (02:26):
They'll probably receive a letter of clarification or a confirmation
type letter which will go out sometime during this week
prior to August first, and the tariffs will start being
paid by those countries prior to August. On August first
and beyond.
Speaker 2 (02:46):
US President Donald Trump speaking, their American levies on China
are well above those for other nations, making bilateral trade
more expensive. Any breakthrough indiscussions could set the stage for
the US President to meet Sijinping inper after the Chinese
leader invited him to visit last month.
Speaker 3 (03:04):
The British Prime Minister Kir Starmer will join President Trump
today in Scotland to finalize their trade deal and press
for a ceasefire in Gaza. The two are set to
meet in Turnbury on the west coast of Scotland, where
the President is visiting one of his golf courses. Or
some elements of the UK US trade agreement reached and
may have taken effect. The President's pledged to remove tariffs
(03:25):
on a quota of steel imports currently at twenty five percent,
remains problematic. The Prime Minister is also hoping to secure
a carve out from potential pharmaceutical tariffs.
Speaker 2 (03:35):
Iswell increased aid distribution to Gaza over the weekend in
an effort to diffuse a growing international outcry over hunger
in the Palestinian enclave. The UN World Food Program has
warned four weeks that two point one million people in
the Gaza strip face crisis levels of food insecurity. Dozens
of organizations have warned of mass starvation in the territory.
(03:58):
Israel's Prime Minister Benjamin Netting, who has disputed their account of.
Speaker 6 (04:04):
The UNS making excuses and laws about the state of Israel,
it says, we're not allowed to end it with humanitarian supplies.
We are allowing them. There are secured roads, they have
been all along. But it is official. There will be
no more excuses.
Speaker 2 (04:18):
Benjamin Letniel, who's speaking there, vire a translator. On Sunday,
as the Israeli Army suspended some military operations against her
Mass to facilitate UN relief convoys arriving from Gaza and Egypt.
The IDF also restored electricity to a desalination plant in
Gaza for the first time since March.
Speaker 3 (04:40):
In Corporate new Samsung will produce semiconductors for Tesla and
a sixteen and a half billion dollar deal lasting until
twenty thirty three. The contract is a win for South
Korea's largest company, which has been steadily losing ground in
chip manufacturing. According to Bloomberg Intelligence, the agreement couldoo Samsung's
foundry sales by up to ten percent annually. In a
social media post, Tesla CEO Elon Musk said the strategic
(05:03):
importance of the deal was hard to overstate.
Speaker 2 (05:06):
The England women's football team have retained their European Cup title,
beating Spain and a penalty shootout. Chloe Kelly converted the
spot kick to seal victory for the Lionesses in Basel
after Spain missed three in a row. It is the
first time an England team has won a major trophy
on foreign soil. Let's have a listen to the historic
(05:27):
winning moment Chloe Kelly. To retain England's title, Kelly steps up,
It's a hopskin of a job and she swamps it
into the back of the nut.
Speaker 3 (05:39):
England oh Lorban champions once again.
Speaker 2 (05:44):
The Prime Minister, kirst Armer praised the victory, saying the
Lionesses have once again captured the hearts of the nation.
A special reception for the team will take place at
ten Downing Street this afternoon, with a victory parade through
central London on Tuesday.
Speaker 3 (05:58):
And those these top stories on those are your top
stories on the markets this morning. We are looking at
European stock futures pointing higher after the news of that
US EU deal. Eurostocks fifty features up by one percent.
ADS features are one percent higher as well. On Wall Street,
smpm ands are up by half of one percent. Not
much movement in currency markets, the euro just a touch
(06:18):
stronger against the dollar at one seventeen forty seven. The
Bloomberg Dollar Spot Index is flat that ten. Your Treasury
helds up a basis point just four point four percent,
and just one companies earnings that we've had out this
morning from Heineken seeing a decline in beer volumes, unexpectedly,
according to an analyst, had been expecting from the brewer.
Retailer disputes across Europe dragging on sales and limiting the
(06:39):
company's ability to take advantage of the summer heat wave,
the Dutch beer reporting a zero point four percent full
in volumes during the second quarter.
Speaker 2 (06:47):
Well, in a moment, we're going to bring you more
on what we know and what we don't know about
that EU US tariff deal, plus the much hyped London
bond trade that is testing investors' patients. Before we get
to those big stories, something else is caught our eye.
Have you been to Rome lately, Stephen, Have you seen
the enormous building site that is the Aquarium of Rome.
Speaker 3 (07:09):
No, but I'm fascinated by this idea because I mean,
as if there wasn't enough to see in Rome already,
this is supposed to be the kind of next generation
of attraction to bring people to somewhere as we know
already attracts huge numbers of tourists. The aquarium has been
under construction for more than two decades. It's meant to
house more than one hundred marine species. It's already cost
(07:30):
more than one hundred million euros, but according to the
latest corporate filings, it needs at least another twenty million
euro to emerge from the financial distress that it's found
itself in. So it's sort of become symbolic of how
it's really difficult to build landmark or to deliver rather
landmark building projects in modern times. Even with the great
ambitions there was.
Speaker 2 (07:50):
Yes, I mean I can understand you saying, you know,
it's an indoor attraction versus all of the amazing outdoor
architectural attractions that there are in Rome. But yes, I
mean it is so difficult to actually deliver massive building projects.
I mean the Italian banks who were sort of behind this,
have actually written off ninety five percent of their loan exposure.
(08:11):
There's been so much restructure. Any Bloomberg's been looking at
the company filings that we've seen. There's a legal dispute
with the local authorities, which also, you know, is a
perennial issue when it comes to building. If you kind
of lose the relationship with the local leadership, then it
also becomes very hard to deliver something.
Speaker 3 (08:30):
Yeah, doing some great pictures as well of this particular
area in Rome as well, which their aquarium is located,
meant to be part of a renewal effort going on
there too. It's a great piece. You'll find a link
to it in our podcast show notes. Well, let's bring
you more on The top story this morning, the deal
agree between the European Union and the United States on
trade lower tariffs generally, but key questions remaining over certain
(08:51):
sectors and other commitments are Brussels Bureau Chief Suzan Lynch
was in Scotland. She joined us this morning for more. Suzan,
Good morning. The headline that a fifteen percent tariff, but
there are several areas which appear quite unclear. What do
we and don't we know this Monday morning.
Speaker 1 (09:08):
Good morning, Stephen, Yes, I mean, look, a lot of
people from the EU side are saying this is a breakthrough.
They've managed to lock in that fifteen percent. Obviously, Donald
Trump had threatened a hire thirty percent, and we had
Scott signaled from last week that they were closing in
on a fifteen percent tariff rate. But as you say,
there there are a lot of unknowns. I think it's
(09:30):
crucial to say we haven't seen a document yet, we
haven't seen a text with any of the details. Now
officials are saying that that is forthcoming in the next
few days, and that is going to we will be
pouring over that to see some of the details on that.
I think one of the key questions remained around pharmaceuticals.
That's a huge export for the European Union to the
(09:54):
United States. And there was some mixed messaging on this
from the President first, but then later on we did
get confirmation from both Arsla Vonderlion and senior US Administration
officials that pharmaceuticals were covered by the fifteen percent rate. However,
vonderlin had said that perhaps there will be further action
(10:15):
by Donald Trump at some point later she said, whatever
the discussions later by the President of the US, that's
on a different sheet of paper, she said, So we
do know that this section two three to two investigation
is ongoing into pharmaceuticals, so we're still trying to get
clarity on exactly what the implication of that will be
on this fifteen percent rate that they agreed.
Speaker 2 (10:37):
It's a small point, but I think it's illustrative. There
was a table between Donald Trump and Ursula of underline
with some flowers on it. To me, this read as
the coolness and the distance with which the EUS try
to handle this in some ways. Is it a good deal?
Is it going to go down well with Member States?
Speaker 1 (10:58):
Yeah, it's funny. The body language ways is so interesting
to watch here between. I mean, you could not get
two more different people in terms of personality, and Earthly
Underline was very poised, very quiet spoken in that meeting
and said very little, and I think that's the way
the EU wanted it. Now there is a debate about
whether the EU it's quite late coming to the table
with this deal with the United States, and perhaps it
(11:21):
could have, you know, plaid a stronger hand earlier in
the process. Obviously, the EU is a very big trading block.
This is a hugely important trading relationship and I could
have and would have. We are told hit back, but
you are right in that this is a question now
will EU members state to go for this now? The
(11:41):
way the choreography worked yesterday was that before the meeting
took place, European Commissioned President earth of underlyon her team
briefed EU ambassadors who happened to be on a trip
to denmarkt Greenland. In fact, they were briefed on what
they believed was going to be the content of the deal.
Usually this morning at eight thirty am, there is another
(12:03):
meeting of those ambassadors, a hybrid meeting, and that's going
to be key to what we're going to be watching
this closely what kind of reception the deal gets. Now, obviously,
the way this works, the EU knew it. It had
sign off effectively to go ahead and make this. But now,
of course, as we've been discussing, the devil will be
in the detail. So let's see what happens with that
(12:24):
meeting this morning. We're also expecting a lot of messaging
from the European Commissions morning. We're expecting some kind of
press conference by the EU Trade Commissioner Mario Zeeskevich. He
was also in the room in those negotiations yesterday that
that's just over an hour between Vanderlin and Trump. They
weren't on their own the other team, five on each
side in total. So we'll be looking forward and waiting
(12:46):
to hear what he says and whether he can shed
more light on exactly what was agreed and what remains
to be ironed out.
Speaker 3 (12:54):
Okay, Suzanne, thank you very much for our RUSSA spirit
Chief Suzanne Lynch, and just looking at their latest reaction
we've had from answers. You're a minister this morning talking
about this being an agreement that's not an equilibrium for
the two sides, saying that it has the advantage of
bringing temporary stability, but that it is an unbalanced agreement.
That's what Banjermaine had Dad has been posting on social
(13:16):
media this morning, but indicating there as the zand pointed
to where things have to go next within the internal
e U processes on this deal as well.
Speaker 2 (13:24):
Absolutely so that on the EU US tariff agreement.
Speaker 4 (13:28):
Right.
Speaker 2 (13:29):
Let's pivot though to a story here in the UK,
a big bet from the pandemic era that is turning
out actually to be a losing one. A UK bond
maturing in twenty sixty one, a Niche Ultra long bond
has the potential to deliver big returns in the event
of the recession, but of a recession, but that's not
really how it's turned out, and our Bloemberg reporter Greg
(13:49):
Richie has been writing about this. Greg, good morning. So
at Firstie, why do people invest in this long bond
in the first place? Why was it so popular?
Speaker 7 (13:58):
Good morning? Two main reasons for why it attracted so
many private investors. The first is that it's fallen so
far on price. So it's issued back in May twenty
twenty at around one hundred pounds and it's fallen all
the way down to twenty five, so the player is
pretty simple. If it can return back to its pandemic levels,
we're talking about a rally of three hundred percent and
(14:19):
that's very alluring to many people. The other reason is
a tax benefits. So because of a quirk in UK
tax policy, guilt so exempt from capital gains tax. So
rather than betting on meme stock or a crypto currency
for example, whether it be a lot of tax, if
there is any capital games, this guilt is exempt from that.
(14:41):
And because of the bulk of the games will come
from the capital games rather than any kind of interest income.
Because the coupon on the bond is very low, it's
something that became very fashionable for people to bet on.
Speaker 3 (14:52):
The notes have plunged, So how does it compare now.
Speaker 7 (14:56):
Well, I think what's happened over the last year. So
it's people that are realizing that long bond globally are
doing very badly and that while there might be a
recession in the coming years, it might not be similar
to a recession from previous decades. It might be a
stagflationary recession for example, where it's a lot of concerns
(15:16):
around inflation and therefore long bond deals don't drop in
the same way that we've seen in previous recessions. There's
also concerns that biscal jitters that we've seen globally but
particularly concentrated in the UK will persist, and therefore, again,
if there is an economic slow down, the long end
of the curve won't recover in the same way it has.
For that reason, we're not people are becoming concerned about
(15:40):
their bets and I'm not sort of sure that it
will perform the way that they hope.
Speaker 2 (15:45):
And you spoke to obviously a number of investors on this,
some do still think that it could deliver. I suppose
why are they holding out hope?
Speaker 7 (15:54):
Yeah, I've s talking to a few dozen investors, a
lot of them bankers, an invested in the city, looking
to put down their tax bill, and how betterness. The
sentiment I'm getting is that they don't want to sell
at these rates, they don't want to realize a large
capital loss. At the same time, they're not so positive
on this. So in previous guilt set offs, what they'd
(16:15):
be telling me that they'd be buying the dip, and
they're often be boasting about buying the dip think you'd
be great trades now that we're seen as bonds fall
further in the last few weeks, I'm not getting that
same sentiment. They're not looking to add to their exposure
at the same time, they're not looking to reverse in
their exposure. It's something they're just going to hold on
to and hope it comes off one day, but they're
becoming increasingly pessimistic about that.
Speaker 3 (16:37):
This is Bloomberg Daybreak Europe. You're morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 2 (16:43):
Look for us on your podcast feed every morning on Apple, Spotify,
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Speaker 3 (16:49):
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Speaker 2 (16:55):
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Speaker 3 (17:02):
I'm Caroline Hepka and I'm Stephen Carol Join us again
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your day right here on Bloomberg Daybreak Europe.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Blue Big dayvaq AT podcast. Good morning,
It's Monday, the twenty eighth of July. I'm Caroline Hepkut
in London.
Speaker 3 (00:16):
And I'm Stephen Carroll and Brussels. Coming up today, the
United States and the European Union strike a deal setting
tariffs on the EU at fifteen percent, but many details
are left to be worked out.
Speaker 2 (00:26):
Kis Starmer heads to the US President's Scottish golf course
for talks on trade and diplomacy.
Speaker 3 (00:33):
Plus still holding the faith Plunging long dated UK bonds
become a cult trade for yield chasing investors.
Speaker 2 (00:41):
Let's start with a round up of our top stories.
Speaker 3 (00:43):
The United States and the European Union have agreed a
deal that will see fifteen percent tariffs on most EU
imports into the US. The deal staves off and escalation
and hostilities and the world's biggest trading relationship, with many
details are still to be ironed out. European Commissioned President
or still Underline, announced the deal alongside President Trump during
his trip to Scotland.
Speaker 4 (01:04):
We have a trade deal between the two largest economies
in the world, and it's a big deal. It's a
huge deal. It will bring stability, it will bring predictability.
That's very important for our businesses on both sides of
the Atlantic. It's fifteen percent tariffs across the board, all
in inclusive, but.
Speaker 3 (01:25):
Our slav Underline and the US presidents appeared to differ
on some key details. Donald Trump said the deal did
not include pharmaceuticals, but officials on both sides later indicated
the sector was included in the fifteen percent rate, and
while the US president said there would be no change
to the fifty percent tariff on steel and aluminium products,
Vonderline said that metals duties will be cut and a
(01:46):
quota system will be put in place. Details were also
scant on an EU commitment to purchase seven hundred and
fifty billion dollars in American energy products and invest six
hundred billion dollars in the United States.
Speaker 2 (01:59):
US and Chinese officials are meeting in Sweden today to
extend their trade truce beyond its August deadline. It will
be the third meeting in less than three months. Will
Chinese Vice Premier Hourly Fang and US Treasury Sectary Scott Bessend,
who will discuss how long the current tariff arrangement can
be prolonged. The news comes after President Trump confirmed yesterday
(02:20):
that dozens of other countries will hear details about their
US levees this week.
Speaker 5 (02:26):
They'll probably receive a letter of clarification or a confirmation
type letter which will go out sometime during this week
prior to August first, and the tariffs will start being
paid by those countries prior to August. On August first
and beyond.
Speaker 2 (02:46):
US President Donald Trump speaking, their American levies on China
are well above those for other nations, making bilateral trade
more expensive. Any breakthrough indiscussions could set the stage for
the US President to meet Sijinping inper after the Chinese
leader invited him to visit last month.
Speaker 3 (03:04):
The British Prime Minister Kir Starmer will join President Trump
today in Scotland to finalize their trade deal and press
for a ceasefire in Gaza. The two are set to
meet in Turnbury on the west coast of Scotland, where
the President is visiting one of his golf courses. Or
some elements of the UK US trade agreement reached and
may have taken effect. The President's pledged to remove tariffs
(03:25):
on a quota of steel imports currently at twenty five percent,
remains problematic. The Prime Minister is also hoping to secure
a carve out from potential pharmaceutical tariffs.
Speaker 2 (03:35):
Iswell increased aid distribution to Gaza over the weekend in
an effort to diffuse a growing international outcry over hunger
in the Palestinian enclave. The UN World Food Program has
warned four weeks that two point one million people in
the Gaza strip face crisis levels of food insecurity. Dozens
of organizations have warned of mass starvation in the territory.
(03:58):
Israel's Prime Minister Benjamin Netting, who has disputed their account of.
Speaker 6 (04:04):
The UNS making excuses and laws about the state of Israel,
it says, we're not allowed to end it with humanitarian supplies.
We are allowing them. There are secured roads, they have
been all along. But it is official. There will be
no more excuses.
Speaker 2 (04:18):
Benjamin Letniel, who's speaking there, vire a translator. On Sunday,
as the Israeli Army suspended some military operations against her
Mass to facilitate UN relief convoys arriving from Gaza and Egypt.
The IDF also restored electricity to a desalination plant in
Gaza for the first time since March.
Speaker 3 (04:40):
In Corporate new Samsung will produce semiconductors for Tesla and
a sixteen and a half billion dollar deal lasting until
twenty thirty three. The contract is a win for South
Korea's largest company, which has been steadily losing ground in
chip manufacturing. According to Bloomberg Intelligence, the agreement couldoo Samsung's
foundry sales by up to ten percent annually. In a
social media post, Tesla CEO Elon Musk said the strategic
(05:03):
importance of the deal was hard to overstate.
Speaker 2 (05:06):
The England women's football team have retained their European Cup title,
beating Spain and a penalty shootout. Chloe Kelly converted the
spot kick to seal victory for the Lionesses in Basel
after Spain missed three in a row. It is the
first time an England team has won a major trophy
on foreign soil. Let's have a listen to the historic
(05:27):
winning moment Chloe Kelly. To retain England's title, Kelly steps up,
It's a hopskin of a job and she swamps it
into the back of the nut.
Speaker 3 (05:39):
England oh Lorban champions once again.
Speaker 2 (05:44):
The Prime Minister, kirst Armer praised the victory, saying the
Lionesses have once again captured the hearts of the nation.
A special reception for the team will take place at
ten Downing Street this afternoon, with a victory parade through
central London on Tuesday.
Speaker 3 (05:58):
And those these top stories on those are your top
stories on the markets this morning. We are looking at
European stock futures pointing higher after the news of that
US EU deal. Eurostocks fifty features up by one percent.
ADS features are one percent higher as well. On Wall Street,
smpm ands are up by half of one percent. Not
much movement in currency markets, the euro just a touch
(06:18):
stronger against the dollar at one seventeen forty seven. The
Bloomberg Dollar Spot Index is flat that ten. Your Treasury
helds up a basis point just four point four percent,
and just one companies earnings that we've had out this
morning from Heineken seeing a decline in beer volumes, unexpectedly,
according to an analyst, had been expecting from the brewer.
Retailer disputes across Europe dragging on sales and limiting the
(06:39):
company's ability to take advantage of the summer heat wave,
the Dutch beer reporting a zero point four percent full
in volumes during the second quarter.
Speaker 2 (06:47):
Well, in a moment, we're going to bring you more
on what we know and what we don't know about
that EU US tariff deal, plus the much hyped London
bond trade that is testing investors' patients. Before we get
to those big stories, something else is caught our eye.
Have you been to Rome lately, Stephen, Have you seen
the enormous building site that is the Aquarium of Rome.
Speaker 3 (07:09):
No, but I'm fascinated by this idea because I mean,
as if there wasn't enough to see in Rome already,
this is supposed to be the kind of next generation
of attraction to bring people to somewhere as we know
already attracts huge numbers of tourists. The aquarium has been
under construction for more than two decades. It's meant to
house more than one hundred marine species. It's already cost
(07:30):
more than one hundred million euros, but according to the
latest corporate filings, it needs at least another twenty million
euro to emerge from the financial distress that it's found
itself in. So it's sort of become symbolic of how
it's really difficult to build landmark or to deliver rather
landmark building projects in modern times. Even with the great
ambitions there was.
Speaker 2 (07:50):
Yes, I mean I can understand you saying, you know,
it's an indoor attraction versus all of the amazing outdoor
architectural attractions that there are in Rome. But yes, I
mean it is so difficult to actually deliver massive building projects.
I mean the Italian banks who were sort of behind this,
have actually written off ninety five percent of their loan exposure.
(08:11):
There's been so much restructure. Any Bloomberg's been looking at
the company filings that we've seen. There's a legal dispute
with the local authorities, which also, you know, is a
perennial issue when it comes to building. If you kind
of lose the relationship with the local leadership, then it
also becomes very hard to deliver something.
Speaker 3 (08:30):
Yeah, doing some great pictures as well of this particular
area in Rome as well, which their aquarium is located,
meant to be part of a renewal effort going on
there too. It's a great piece. You'll find a link
to it in our podcast show notes. Well, let's bring
you more on The top story this morning, the deal
agree between the European Union and the United States on
trade lower tariffs generally, but key questions remaining over certain
(08:51):
sectors and other commitments are Brussels Bureau Chief Suzan Lynch
was in Scotland. She joined us this morning for more. Suzan,
Good morning. The headline that a fifteen percent tariff, but
there are several areas which appear quite unclear. What do
we and don't we know this Monday morning.
Speaker 1 (09:08):
Good morning, Stephen, Yes, I mean, look, a lot of
people from the EU side are saying this is a breakthrough.
They've managed to lock in that fifteen percent. Obviously, Donald
Trump had threatened a hire thirty percent, and we had
Scott signaled from last week that they were closing in
on a fifteen percent tariff rate. But as you say,
there there are a lot of unknowns. I think it's
(09:30):
crucial to say we haven't seen a document yet, we
haven't seen a text with any of the details. Now
officials are saying that that is forthcoming in the next
few days, and that is going to we will be
pouring over that to see some of the details on that.
I think one of the key questions remained around pharmaceuticals.
That's a huge export for the European Union to the
(09:54):
United States. And there was some mixed messaging on this
from the President first, but then later on we did
get confirmation from both Arsla Vonderlion and senior US Administration
officials that pharmaceuticals were covered by the fifteen percent rate. However,
vonderlin had said that perhaps there will be further action
(10:15):
by Donald Trump at some point later she said, whatever
the discussions later by the President of the US, that's
on a different sheet of paper, she said, So we
do know that this section two three to two investigation
is ongoing into pharmaceuticals, so we're still trying to get
clarity on exactly what the implication of that will be
on this fifteen percent rate that they agreed.
Speaker 2 (10:37):
It's a small point, but I think it's illustrative. There
was a table between Donald Trump and Ursula of underline
with some flowers on it. To me, this read as
the coolness and the distance with which the EUS try
to handle this in some ways. Is it a good deal?
Is it going to go down well with Member States?
Speaker 1 (10:58):
Yeah, it's funny. The body language ways is so interesting
to watch here between. I mean, you could not get
two more different people in terms of personality, and Earthly
Underline was very poised, very quiet spoken in that meeting
and said very little, and I think that's the way
the EU wanted it. Now there is a debate about
whether the EU it's quite late coming to the table
with this deal with the United States, and perhaps it
(11:21):
could have, you know, plaid a stronger hand earlier in
the process. Obviously, the EU is a very big trading block.
This is a hugely important trading relationship and I could
have and would have. We are told hit back, but
you are right in that this is a question now
will EU members state to go for this now? The
(11:41):
way the choreography worked yesterday was that before the meeting
took place, European Commissioned President earth of underlyon her team
briefed EU ambassadors who happened to be on a trip
to denmarkt Greenland. In fact, they were briefed on what
they believed was going to be the content of the deal.
Usually this morning at eight thirty am, there is another
(12:03):
meeting of those ambassadors, a hybrid meeting, and that's going
to be key to what we're going to be watching
this closely what kind of reception the deal gets. Now, obviously,
the way this works, the EU knew it. It had
sign off effectively to go ahead and make this. But now,
of course, as we've been discussing, the devil will be
in the detail. So let's see what happens with that
(12:24):
meeting this morning. We're also expecting a lot of messaging
from the European Commissions morning. We're expecting some kind of
press conference by the EU Trade Commissioner Mario Zeeskevich. He
was also in the room in those negotiations yesterday that
that's just over an hour between Vanderlin and Trump. They
weren't on their own the other team, five on each
side in total. So we'll be looking forward and waiting
(12:46):
to hear what he says and whether he can shed
more light on exactly what was agreed and what remains
to be ironed out.
Speaker 3 (12:54):
Okay, Suzanne, thank you very much for our RUSSA spirit
Chief Suzanne Lynch, and just looking at their latest reaction
we've had from answers. You're a minister this morning talking
about this being an agreement that's not an equilibrium for
the two sides, saying that it has the advantage of
bringing temporary stability, but that it is an unbalanced agreement.
That's what Banjermaine had Dad has been posting on social
(13:16):
media this morning, but indicating there as the zand pointed
to where things have to go next within the internal
e U processes on this deal as well.
Speaker 2 (13:24):
Absolutely so that on the EU US tariff agreement.
Speaker 4 (13:28):
Right.
Speaker 2 (13:29):
Let's pivot though to a story here in the UK,
a big bet from the pandemic era that is turning
out actually to be a losing one. A UK bond
maturing in twenty sixty one, a Niche Ultra long bond
has the potential to deliver big returns in the event
of the recession, but of a recession, but that's not
really how it's turned out, and our Bloemberg reporter Greg
(13:49):
Richie has been writing about this. Greg, good morning. So
at Firstie, why do people invest in this long bond
in the first place? Why was it so popular?
Speaker 7 (13:58):
Good morning? Two main reasons for why it attracted so
many private investors. The first is that it's fallen so
far on price. So it's issued back in May twenty
twenty at around one hundred pounds and it's fallen all
the way down to twenty five, so the player is
pretty simple. If it can return back to its pandemic levels,
we're talking about a rally of three hundred percent and
(14:19):
that's very alluring to many people. The other reason is
a tax benefits. So because of a quirk in UK
tax policy, guilt so exempt from capital gains tax. So
rather than betting on meme stock or a crypto currency
for example, whether it be a lot of tax, if
there is any capital games, this guilt is exempt from that.
(14:41):
And because of the bulk of the games will come
from the capital games rather than any kind of interest income.
Because the coupon on the bond is very low, it's
something that became very fashionable for people to bet on.
Speaker 3 (14:52):
The notes have plunged, So how does it compare now.
Speaker 7 (14:56):
Well, I think what's happened over the last year. So
it's people that are realizing that long bond globally are
doing very badly and that while there might be a
recession in the coming years, it might not be similar
to a recession from previous decades. It might be a
stagflationary recession for example, where it's a lot of concerns
(15:16):
around inflation and therefore long bond deals don't drop in
the same way that we've seen in previous recessions. There's
also concerns that biscal jitters that we've seen globally but
particularly concentrated in the UK will persist, and therefore, again,
if there is an economic slow down, the long end
of the curve won't recover in the same way it has.
For that reason, we're not people are becoming concerned about
(15:40):
their bets and I'm not sort of sure that it
will perform the way that they hope.
Speaker 2 (15:45):
And you spoke to obviously a number of investors on this,
some do still think that it could deliver. I suppose
why are they holding out hope?
Speaker 7 (15:54):
Yeah, I've s talking to a few dozen investors, a
lot of them bankers, an invested in the city, looking
to put down their tax bill, and how betterness. The
sentiment I'm getting is that they don't want to sell
at these rates, they don't want to realize a large
capital loss. At the same time, they're not so positive
on this. So in previous guilt set offs, what they'd
(16:15):
be telling me that they'd be buying the dip, and
they're often be boasting about buying the dip think you'd
be great trades now that we're seen as bonds fall
further in the last few weeks, I'm not getting that
same sentiment. They're not looking to add to their exposure
at the same time, they're not looking to reverse in
their exposure. It's something they're just going to hold on
to and hope it comes off one day, but they're
becoming increasingly pessimistic about that.
Speaker 3 (16:37):
This is Bloomberg Daybreak Europe. You're morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 2 (16:43):
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and anywhere else you get your podcasts.
Speaker 3 (16:49):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (16:55):
Our flagship New York station is also available on your
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Speaker 3 (17:02):
I'm Caroline Hepka and I'm Stephen Carol Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe.
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