May 12, 2025 • 22 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) The US and China will temporarily lower tariffs on each other’s products, according to a joint statement, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.
(2) Investors rushed back into stocks and risk assets, powering a 3% surge in S&P 500 futures, after China and the US agreed to cut tariffs and de-escalate a trade war that had sown turmoil in global markets. Treasuries and gold tumbled.
(3) Treasury Secretary Scott Bessent also told press the positive mood music set by the UK and Swiss teams was in stark contrast to the EU.
(4) Shares of pharmaceutical companies fell across the world after US President Donald Trump said he planned to order a cut in US prescription drug costs to bring them in line with other countries, prompting concern that profits will take a hit.
(5) UniCredit has posted first-quarter profit that topped analyst expectations, as net income in the first three months of the year rose to €2.77 billion
(6) Donald Trump’s effort to secure peace in Ukraine is reaching a decisive moment with Ukraine’s Volodymyr Zelenskiy challenging Vladimir Putin to engage in talks this week.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Daybreak Europe podcast, available every morning on Apple, Spotify or
wherever you listen. It's Monday, the twelfth, the May in London.
Speaker 2 (00:17):
I'm Lizzie Burden and I'm Stephen Carroll coming up today.
Substantial progress may have been an understatement. The US and
China agree to significantly lower tariffs in a ninety day
cool augh period.
Speaker 1 (00:28):
The US cuts its levees on Chinese goods from one
hundred and forty five percent to thirty percent, while China
reduces its duties from one hundred and twenty.
Speaker 3 (00:37):
Five percent to ten percent.
Speaker 2 (00:39):
Markets rejoice, SMP mini futures jump as much as three percent,
as equities power ahead and bonds and gold tumble.
Speaker 3 (00:46):
Let's start with a roundup of our top stories.
Speaker 1 (00:49):
The United States and China have agreed to significantly cut
tariffs on each other's goods in a ninety day pause
of the trade war between the world's two largest economies.
The US will reduce its tariffs from one hundred and
forty five percent to thirty percent on Chinese imports, while
China will bring its levees down to ten percent from
one hundred and twenty five percent. US Treasury Secretary Scott
(01:10):
Bessent says neither country wants to see trade between them stop.
Speaker 4 (01:15):
The consensus from both delegations this weekend is neither side
wants a pecuplin and what had occurred with these very
high tariffs, as Investador Reverse said, was the equivalent of
an embargo, and neither side want set. We do want trade.
Speaker 1 (01:38):
Bessent added that the US still wants supply chain independence
in six key industries and will continue with what he
called strategic rebalancing in those sectors.
Speaker 3 (01:48):
The pause was announced in a.
Speaker 1 (01:49):
Joint statement with China, with a Foreign Ministry spokesperson in
Beijing declining to give further details.
Speaker 2 (01:56):
US Talk features if Sara's bonds are selling off and
the dollar is strengthening After the announcement from the US
and China, SMP five hundred SMP mini futures are up
two point six percent on Wall Street, the NASDAK features
are up by three point four percent, as the Bloomberg
Dollar Spot Index is up by nine tenths of one percent.
Benedict Low Equity and Derivative Strategist for Europe at BNP
(02:16):
Parri about markets three point sixty, says the move was
a pleasant surprise for investors.
Speaker 5 (02:21):
We were actually surprised by the number that came out.
The kind of hearing all word on the street was
fifty to sixty percent on China. So I think that
was a net positive, and you're seeing huge reaction, especially
in the US equity market, which makes sense because that
was the market that was and the economy as a
whole that will be more.
Speaker 3 (02:38):
Affected by it.
Speaker 5 (02:39):
So I would say it's a bris coonstint at least
for the next few days.
Speaker 2 (02:42):
That's BNP Parabos Benedict Low speaking there. As we are
seeing European stocks rising as well as the dollar has rallied.
The euros heading for its worst day this year against
the dollar, down currently one point two percent at one eleven,
the en also dropping by one point seven percent, goal
prices sliding two down two point nine percent, as crude
(03:04):
oil has rallied.
Speaker 1 (03:05):
The Treasury Secretary also used the press conference to make
the case for the way in which the US likes
other nations to approach relations. Scott Bessent told the press
the positive mood music set by the UK and Swiss
teams was in stock contrast to that of the EU.
Speaker 4 (03:19):
The UK and Switzerland have moved to the front of
the queue for the trade deals, whereas the EU has
been much slower, so we value.
Speaker 1 (03:30):
That also, Treasury Secretary Scott Best sent speaking there in
Geneva after the US and UK last week secured an
agreement to roll back some of the Trump administration's recent
tariffs on the British economy.
Speaker 2 (03:40):
Pharmaceutical stocks have dropped after President Trump announced plans to
sign an executive order later aimed at significantly reducing US
prescription drug prices in Europe. Obesity drug maker Novo Nordisk
fell by as much as eight point six percent at
the open, one of the steepest decliners in the stocks
six hundred Healthcare Index, which slid by three point three percent.
(04:01):
With more details here at Boombergs ta are.
Speaker 6 (04:02):
At a bio.
Speaker 7 (04:03):
While the details remain unclear, the President claims the order
will require that Americans pay no more than the lowest
price charged for the same medication in any other country.
In a post on truth Social Trump said the move
could lower US drug prices buy as much as eighty percent.
Americans currently pay the highest prices in the world for
prescription medications. However, drug makers argue that such reforms would
(04:28):
cut into their revenues and undermine the development of breakthrough
therapies that could extend and improve lives. In London, Tea
were at a bio Bloomberg Radio to earnings.
Speaker 1 (04:38):
UniCredit has posted first quarter profit that topped analyst expectations,
as net income in the first three months of the
year rose to two point seven to seven billion euros.
The results strengthen the hand of CEO Andrea Orceell as
he pursues potential acquisitions, including Germany's comments Bank and an
unsolicited bid for ital Italy's Banco BPM. UniCredit, Italy's second
(05:00):
largest bank, is now forecasting annual profit exceeding nine point
three billion euros.
Speaker 3 (05:05):
The shares are up more than three percent.
Speaker 2 (05:07):
Vladimir Zelenski says he will be waiting for Vladimir Putin
in Turkey on Thursday. The leaders of Russia and Ukraine
are being pushed to begin peace talks by the United
States and Europe. Ukraine's president says, Kiev is ready to
end this war.
Speaker 3 (05:21):
Your nas Vukrainian maa.
Speaker 6 (05:23):
Ukraine which absolutely no problem engaging in negotiations. We're ready
for any format. I will be in Turkey this Thursday,
the fifteenth May. I expect Britain to come to Turkey
as well.
Speaker 2 (05:35):
Zelenski's planned trip comes after US President Donald Trump insisted
the two leaders meet despite Moscow's reluctance to agree to
a thirty day ceasefire. The UK and other European countries
say they're a ready a dramatic increase in sanctions on
Russia should Putin not engage with negotiations.
Speaker 3 (05:53):
Those are you top stories this morning? On the markets.
Speaker 1 (05:55):
The stock six hundred is higher half of eight percent
on Wall Street, smp E many futures up two point
five percent. Now is that future is up three point
three percent, and the tenure US treasure reeled is up
seven basis points at four point four to four percent.
Speaker 2 (06:08):
In a moment, we'll bring you analysis of the US
China trade war pause and take you through the big
reaction on markets. But Lizzie listening to the US Treasury
Secretary Scott Besant and Jemson Greer, the US Trade Representative,
speaking in Geneva announcing those measures that did strike me
that both yesterday and today they've mentioned the setting, they've
talked about. How you know, the fact that they were
in such a beautiful place with lots of tranquility really
(06:31):
helped to steer those discussions along. And even Jemeson Grier
going as far as sort of making a dig at
hotel diplomacy, saying that because they were in the Swiss
ambassador's residence, the Swiss delegation to the United Nations engineer,
that's where some of those talks took place, and he
was saying that really helped them get the deal across
the line. This is a new era for Mountain diplomacy.
(06:51):
Maybe late diplomacy a.
Speaker 1 (06:53):
Bit harsh on the hotel, but look, we've got the
Peak District, the Lake District.
Speaker 3 (06:56):
If anyone wants to come.
Speaker 1 (06:57):
Here and negotiate build on that UK US trade packed,
I'm sure that they could do it.
Speaker 6 (07:02):
Well.
Speaker 2 (07:03):
That's bringing more details of what we heard from those
US representatives on this tariff poles between the US and China,
our trades are. Brandon Murray is with us for more
in studio. Brandon, good morning. How significant is the relief
for both economies from what we heard.
Speaker 8 (07:18):
Well, it's very significant for the Chinese economy. What we
saw today was a major pullback in the trade war
that the US waged against China. Remember yesterday there were
one hundred and forty five percent tariffs on almost every
Chinese import into the US. That gets reduced down to
thirty percent, which, if you recalled, President Trump said just
(07:38):
a few days ago that eighty percent sounded reasonable. So
what the US walked out of there today with is
less than half of what Donald Trump said was reasonable.
If you're on the Chinese side, you got a great
deal in given what you gave up. Remember China's China
had duties on American imports into China, but much less
(08:01):
than the U that than China ships to the U S. So, uh,
if you're if you're in Beijing today, you might be
calling this uh uh just six weeks from Donald Trump's
liberation Day. Uh, the US retreat day in in a
large way because uh, the definitely the heat of the
trade war is much lower now, and it gives time
(08:21):
three months is what the this period of negotiation will
we'll move into next. And it gives, uh, it gives
to give them, gives the two sides a chance to
work through the pretty major agreement disagreements that they still have.
But I think the analysis at the end of the
day is going to be that the US gave up
(08:43):
a lot of its leverage.
Speaker 1 (08:44):
Do you read anything, Brendan into the fact that the
China Foreign Ministry offered no further comment on the trade deal.
Speaker 8 (08:51):
I'm no analyst of Chinese politics, but they you know,
they wouldn't want to be seen as grand standing. But
we'll have We'll have to wait and see what the
trade hawks and walk Shington say when they get up,
when they wake up this morning. But my guess is
that there it will be seen as a major, almost
too much of a retreat from Washington's perspective.
Speaker 2 (09:11):
I mean, what does that mean for trade flows? We've
been reporting about how so many of Chinese goods had
been moving away from the US to other countries in
anticipation of these or as these tires have taken effect
as well. What about the prospect that a ninety day
pause could be enough for some of that damage to
be undone?
Speaker 8 (09:32):
It could? You know, a thirty percent tariff on Chinese
imports into the US can be managed, one hundred and
forty five percent can't be. So you can divert, you
can divert products to other countries where you can ship
from to avoid tariffs. But this is going to be
(09:53):
Remember this thirty percent is divided into two segments, the
ten percent baseline that every other country gets and the
twenty percent fentanyl tariff that the US put on China.
China can get out of that fentanyl tariff if it
does what the US wants it to crack down on
the export of the materials used to make vents and all.
(10:16):
So at the end of the day, China is in
the same place as everybody else is it could be,
and most China Hawks in Washington would say they're the
biggest violator of trade rules. So it'll be interesting to
see how the Trump administration defends what it got here.
Certainly markets like it, that will be seen as a positive.
(10:41):
But if you're in a long term trade disagreement with
China to rebalance one point two trillion dollar trade and balance,
this is going to make it more difficult to apply
leverage to China.
Speaker 1 (10:56):
So how much hope is this going to give to
other countries that they can negotiate good terms too.
Speaker 8 (11:02):
Yeah, you would think that that that this would this
would give them, uh, you know, some sense of relief
between this deal and the and the deal that the
UK signed last week. Uh, you know, a lot of
these details are still kind of vague, and and you
know that there's no there's nothing, uh, there's not a
whole lot of fine print on on either of these two.
(11:23):
But you've got to think that the that the US
administration has felt, the has heard the concerns from US
businesses about how they came out of the gates fast
and high with their tariffs and that is applying economic
pain to the US and that they are now uh,
you know, in a in a situation where they you know,
(11:45):
they have to bring those down in a big way.
This is this is not uncharacteristic of Donald Trump's style.
He comes in big, with his hardest punch, and then
he says, you know, let's you know, then you know,
then then will then we'll uh you know, will negotiate things,
you know, in a calmer fashion. But and this seems
to be what we're hearing. We heard Scott Besson say
(12:07):
today that he and the US Trade Representative Jameson Greer say,
we don't want to decouple from China, we don't want
to trade embargo and what's what that's doing to the
US economy? Right now is causing a lot of disruption
and a lot of small companies can't do can't do
business if with tariffs of one hundred and forty five
(12:29):
percent on their Chinese parts and products. So I think
what we're seeing is a pretty sharp pullback from the
US administration. Now that could all that could all change
too this. You know, they can tariffs can come back
as soon as they go away. But it looks today
like the US gave more concessions than China did.
Speaker 2 (12:50):
Okay, Brendon Murray, our trades are thank you very much.
Speaker 1 (12:52):
Well, let's get to the market reaction now. Cridy Gupster,
who anchors the opening trade on Bloomberg Television, has been
watching the markets move in real time, and she joins
us now in the studio. Christy, what stood out for
you in the market reaction, particularly the equity maybe seem
pretty stoning.
Speaker 9 (13:08):
So the bar was high going into this presser. There
was a lot of optimism baked in really starting on
Friday actually, and you saw it on both sides of
the Atlantic, and then over the weekend the substantial progress
line even Donald Trump's buy stocks on Friday was or
on Thursday night, I should say was quite telling. We
didn't expect this kind of optimism though, because, as Brendan
(13:29):
was saying, the expectation the line in the sand was
eighty percent. To come down to thirty is massive. A
one hundred and fifteen percent reprieve on that tariff freight
is enormous. The problem here, and the hiccup here that
you're going to see perhaps maybe filter through the markets
in the next couple of days, is that this is
only for ninety days, and those tariffs initially were meant
(13:49):
to be put on four ninety days. That one hundred
and forty five percent was meant to be for ninety days,
and we're not even I don't even think we're thirty
days through, maybe a little over thirty days, and already
we're seeing a reversal. So when you start to see
some of the commentary come from Donald Trump or Scott Bessend,
that's where the red herrings kind of.
Speaker 3 (14:05):
Lie in some of the data.
Speaker 9 (14:07):
But right now, again the bar was high, and Scott
Bessant already beat. So the optimism is showing up in
the equities picture, in the bonds picture, in the currency's picture,
and even in oil, which was really weighed down by
those growth concerns.
Speaker 2 (14:19):
But how sustainable can this sentiment be? To your point
that this is only ninety days, so there are a
couple of things.
Speaker 9 (14:26):
So now this has kind of shown, so you're right,
can't it's not sustainable because this can always you turn
and that is the kind of word on the street here.
But what it is showing is a mechanism with which
to de escalate. And that is a crucial piece because
thirty days ago we didn't have this mechanism.
Speaker 3 (14:42):
We didn't have high level talks.
Speaker 9 (14:43):
We didn't even have lower level talks for then ultimately
Scott bessen to go over to Geneva and sign the deal.
Both sides were not talking and I think that has
been the real game changer here, that if there was
some sort of hiccup in policy. For example, and you
heard that in the press conference from Scott Bessant that
he brought up the cartels in terms of the fentanyl
trade in Mexico, he brought up currency manipulation, He brought
(15:06):
up the fact that both sides, the US and China,
were acting in their national interests. So it wasn't exactly
the all friendly, all sunshine and rainbows. There were clear
pieces of concerns that were still meant to be the
Currncy manipulation is the piece of it. Notably absent was
the fact that the Treasury Secretary didn't talk about the
massive holdings of treasuries that China has. So you can
(15:28):
see that there are still sticking points. But now we
know that if things were to ratchet up, there is
a way back to de ratcheting.
Speaker 1 (15:35):
Okay, Kritty group to opening trade anchor from Bloomberg Television,
we thank you. Let's bring in our Hong Kong News
Desk editor Jill de Sis Jill, good morning.
Speaker 3 (15:45):
Does this count as a win for Beijing?
Speaker 10 (15:47):
Here is just trying to parse through all of the
numbers along with everybody else, and I do think this
is a pretty significant improvement for China. I mean, obviously
there's just the headline number, right if you're reducing those
tariffs that significant for the next ninety days. I mean,
it does indicate that maybe relations are improving. Obviously it's
only temporary, but I think that you know, that does
(16:08):
indicate that there's you know, that's a step in the
right direction. It certainly isn't you know, I mean, removing
the you know, one hundred and twenty five and forty five
percent terriffs that we saw in China. That's that's that's
a that's a pretty good victory for China. So yeah,
I think we have to see where things go from here.
But the fact that the progresses even gotten to this point,
I think that's pretty promising.
Speaker 2 (16:27):
How much could this bring relief for the Chinese economy, Joe,
because we've been seeing early signs of the effects the
tariffs had already been having, or at least the uncertainty
over the tariffs had been having on things like trade flows.
Speaker 10 (16:39):
Yeah, I mean I think that you know, when you're
looking at you know exactly what this means for the
Chinese economy, and you know, taking a look at some
of the Bloomberg Economics data that we've been really putting out,
I mean, just that the fact that the shock on
you know, how much this meaning for US imports is
going down significantly. I think the that's you know, a
(17:01):
really really big improvement. I'm talking actually right now with
the some of our reporters who have been reaching out
to Chinese exporters who are absolutely elated at this news
so far. I mean we were, you know, just talking
to somebody who has a t moostore selling you know,
sort of face and body painting tools, saying that, you know,
(17:21):
their entire office was shouting horay. That particular Chinese exporter.
I mean, that's somebody that had a stockpile of about
five months supply and a US warehouse, just kind of
waiting to see what was ultimately going to happen in
this trade war. You know what that person was telling us,
you know, just a few minutes ago, is essentially that
they're elated because they were actually expecting this to drag
(17:44):
on for quite a bit longer. And the fact that
you already have this reprieve not too long, you know,
about a month and some change after these tarrots really
went into effect, that's actually been really promising for them.
So at least from the Chinese exporter side, I mean,
people that are doing direct business with American consumers that
are really really dependent on these types of trade flows,
We're already seeing a lot of encouragement there. Again, I
(18:04):
do have to stress obviously these tariffs, you know, this reprieve,
these cuts are.
Speaker 3 (18:09):
Only in place for ninety days.
Speaker 10 (18:10):
But again, the trajectory is certainly very positive, or at
least the sentiment here is that this has been very positive.
Speaker 1 (18:16):
Well, Jill, some of those exporters out of China had
already moved trade to other countries in Asia worried about
the tariff war. We saw that in the data on Friday.
Do you think we now just hit undo on that.
Speaker 10 (18:28):
Pleissie, I think, you know, obviously too early to say there,
because ultimately, you know, I mean, if you're some of
these exupporters, sure you do have those ones that are
you know, very elated by this, and we're really banking
on that business. But you also, you know, have a
lot of people that you know, at the end of
the day, there's still a lot of uncertainty here here, right,
I mean, you know, let's just park it and rewind,
you know to where we were about a month or
(18:48):
you know, two months ago. I mean, you know, you
had you know, these not just these tariffs on China,
but also these reciprocal tariffs that countries all over the
world were facing, and there was you know a lot
of confusion over what exactly that would ultimately mean for
how the United States is doing trade in business with
you know, countries worldwide. I mean, we saw during the
first Trump administration, you know, a lot of you know,
(19:09):
different companies that were already starting to diversify away from China,
trying to put the rigs in different baskets in Southeast Asia.
Some of those guys got burned, you know, just a
month or so ago when we saw really high tariffs
on Vietnam and others. Obviously, some of those have currently
been paused. But I think, you know, that's a long
way of saying that there's still a lot of uncertainty
in this environment. Obviously, the cuts that we've seen so far,
(19:31):
while dramatic, I'm still only in place for ninety days,
so I can imagine that if you're you know, an exporter,
if you're considering where exactly you're sort of setting up
shop and how you want to do business with the
United States, it's still a bit of an uncertain environment
until you have something that actually does feel like a
definitive deal.
Speaker 3 (19:47):
Jill.
Speaker 2 (19:47):
Another note of caution, perhaps too, from these comments from
Scott best and about the five or six strategic industries
where the US is going to seek supply chain independence
and this quote strategic rebalancing that he's promising, is that
suggests that there'll still be significant bones of contenent and
the trading relationship between the US and China.
Speaker 10 (20:07):
Yes, Stephen, I think you know, we were talking about
this earlier. It's interesting, I think, particularly when you had
Scott Besn't call out industry such as pharmaceuticals and steel
saying that the US is going to seek supply chain
independence in these types of field. I mean, you know,
to go back, you know, just a few months ago
to the Biden administration obviously, so you saw a tremendous
focus from the United States on ensuring independence, and you know,
(20:31):
the strategy toward focusing on semiconductors and immense technology and chips.
The fact that the United States now appears to be
sort of broadening out the areas in which it's really
sort of pursuing supply chain independence, I think is a
pretty significant development. Obviously, we don't know exactly what went
on behind closed doors in Geneva this weekend, but that
does indicate that, you know, obviously the United States position
(20:53):
on trade protectionism, this idea of that supply chain independence
certainly seems to be strengthening. So I think, you know,
it's definitely something where to look out for again. I
think at the end of the day, while you know,
markets are obviously taking things, as you know, incredibly positive
from this weekend, you still have a reprieve that's really
only in place for the next ninety days. You still
have various areas that the United States says, let me
(21:15):
to negotiate on. I still think, you know, we're quite
a ways from being able to sit here and call
the saga over. It's certainly going to continue over the
next few months at least.
Speaker 2 (21:24):
This is Bloomberg Daybreak Europe, your morning brief on the
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Speaker 3 (21:50):
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Speaker 2 (21:51):
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the news you need to start your day right here
on Bloomberg day Break Europe.
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Daybreak Europe podcast, available every morning on Apple, Spotify or
wherever you listen. It's Monday, the twelfth, the May in London.
Speaker 2 (00:17):
I'm Lizzie Burden and I'm Stephen Carroll coming up today.
Substantial progress may have been an understatement. The US and
China agree to significantly lower tariffs in a ninety day
cool augh period.
Speaker 1 (00:28):
The US cuts its levees on Chinese goods from one
hundred and forty five percent to thirty percent, while China
reduces its duties from one hundred and twenty.
Speaker 3 (00:37):
Five percent to ten percent.
Speaker 2 (00:39):
Markets rejoice, SMP mini futures jump as much as three percent,
as equities power ahead and bonds and gold tumble.
Speaker 3 (00:46):
Let's start with a roundup of our top stories.
Speaker 1 (00:49):
The United States and China have agreed to significantly cut
tariffs on each other's goods in a ninety day pause
of the trade war between the world's two largest economies.
The US will reduce its tariffs from one hundred and
forty five percent to thirty percent on Chinese imports, while
China will bring its levees down to ten percent from
one hundred and twenty five percent. US Treasury Secretary Scott
(01:10):
Bessent says neither country wants to see trade between them stop.
Speaker 4 (01:15):
The consensus from both delegations this weekend is neither side
wants a pecuplin and what had occurred with these very
high tariffs, as Investador Reverse said, was the equivalent of
an embargo, and neither side want set. We do want trade.
Speaker 1 (01:38):
Bessent added that the US still wants supply chain independence
in six key industries and will continue with what he
called strategic rebalancing in those sectors.
Speaker 3 (01:48):
The pause was announced in a.
Speaker 1 (01:49):
Joint statement with China, with a Foreign Ministry spokesperson in
Beijing declining to give further details.
Speaker 2 (01:56):
US Talk features if Sara's bonds are selling off and
the dollar is strengthening After the announcement from the US
and China, SMP five hundred SMP mini futures are up
two point six percent on Wall Street, the NASDAK features
are up by three point four percent, as the Bloomberg
Dollar Spot Index is up by nine tenths of one percent.
Benedict Low Equity and Derivative Strategist for Europe at BNP
(02:16):
Parri about markets three point sixty, says the move was
a pleasant surprise for investors.
Speaker 5 (02:21):
We were actually surprised by the number that came out.
The kind of hearing all word on the street was
fifty to sixty percent on China. So I think that
was a net positive, and you're seeing huge reaction, especially
in the US equity market, which makes sense because that
was the market that was and the economy as a
whole that will be more.
Speaker 3 (02:38):
Affected by it.
Speaker 5 (02:39):
So I would say it's a bris coonstint at least
for the next few days.
Speaker 2 (02:42):
That's BNP Parabos Benedict Low speaking there. As we are
seeing European stocks rising as well as the dollar has rallied.
The euros heading for its worst day this year against
the dollar, down currently one point two percent at one eleven,
the en also dropping by one point seven percent, goal
prices sliding two down two point nine percent, as crude
(03:04):
oil has rallied.
Speaker 1 (03:05):
The Treasury Secretary also used the press conference to make
the case for the way in which the US likes
other nations to approach relations. Scott Bessent told the press
the positive mood music set by the UK and Swiss
teams was in stock contrast to that of the EU.
Speaker 4 (03:19):
The UK and Switzerland have moved to the front of
the queue for the trade deals, whereas the EU has
been much slower, so we value.
Speaker 1 (03:30):
That also, Treasury Secretary Scott Best sent speaking there in
Geneva after the US and UK last week secured an
agreement to roll back some of the Trump administration's recent
tariffs on the British economy.
Speaker 2 (03:40):
Pharmaceutical stocks have dropped after President Trump announced plans to
sign an executive order later aimed at significantly reducing US
prescription drug prices in Europe. Obesity drug maker Novo Nordisk
fell by as much as eight point six percent at
the open, one of the steepest decliners in the stocks
six hundred Healthcare Index, which slid by three point three percent.
(04:01):
With more details here at Boombergs ta are.
Speaker 6 (04:02):
At a bio.
Speaker 7 (04:03):
While the details remain unclear, the President claims the order
will require that Americans pay no more than the lowest
price charged for the same medication in any other country.
In a post on truth Social Trump said the move
could lower US drug prices buy as much as eighty percent.
Americans currently pay the highest prices in the world for
prescription medications. However, drug makers argue that such reforms would
(04:28):
cut into their revenues and undermine the development of breakthrough
therapies that could extend and improve lives. In London, Tea
were at a bio Bloomberg Radio to earnings.
Speaker 1 (04:38):
UniCredit has posted first quarter profit that topped analyst expectations,
as net income in the first three months of the
year rose to two point seven to seven billion euros.
The results strengthen the hand of CEO Andrea Orceell as
he pursues potential acquisitions, including Germany's comments Bank and an
unsolicited bid for ital Italy's Banco BPM. UniCredit, Italy's second
(05:00):
largest bank, is now forecasting annual profit exceeding nine point
three billion euros.
Speaker 3 (05:05):
The shares are up more than three percent.
Speaker 2 (05:07):
Vladimir Zelenski says he will be waiting for Vladimir Putin
in Turkey on Thursday. The leaders of Russia and Ukraine
are being pushed to begin peace talks by the United
States and Europe. Ukraine's president says, Kiev is ready to
end this war.
Speaker 3 (05:21):
Your nas Vukrainian maa.
Speaker 6 (05:23):
Ukraine which absolutely no problem engaging in negotiations. We're ready
for any format. I will be in Turkey this Thursday,
the fifteenth May. I expect Britain to come to Turkey
as well.
Speaker 2 (05:35):
Zelenski's planned trip comes after US President Donald Trump insisted
the two leaders meet despite Moscow's reluctance to agree to
a thirty day ceasefire. The UK and other European countries
say they're a ready a dramatic increase in sanctions on
Russia should Putin not engage with negotiations.
Speaker 3 (05:53):
Those are you top stories this morning? On the markets.
Speaker 1 (05:55):
The stock six hundred is higher half of eight percent
on Wall Street, smp E many futures up two point
five percent. Now is that future is up three point
three percent, and the tenure US treasure reeled is up
seven basis points at four point four to four percent.
Speaker 2 (06:08):
In a moment, we'll bring you analysis of the US
China trade war pause and take you through the big
reaction on markets. But Lizzie listening to the US Treasury
Secretary Scott Besant and Jemson Greer, the US Trade Representative,
speaking in Geneva announcing those measures that did strike me
that both yesterday and today they've mentioned the setting, they've
talked about. How you know, the fact that they were
in such a beautiful place with lots of tranquility really
(06:31):
helped to steer those discussions along. And even Jemeson Grier
going as far as sort of making a dig at
hotel diplomacy, saying that because they were in the Swiss
ambassador's residence, the Swiss delegation to the United Nations engineer,
that's where some of those talks took place, and he
was saying that really helped them get the deal across
the line. This is a new era for Mountain diplomacy.
(06:51):
Maybe late diplomacy a.
Speaker 1 (06:53):
Bit harsh on the hotel, but look, we've got the
Peak District, the Lake District.
Speaker 3 (06:56):
If anyone wants to come.
Speaker 1 (06:57):
Here and negotiate build on that UK US trade packed,
I'm sure that they could do it.
Speaker 6 (07:02):
Well.
Speaker 2 (07:03):
That's bringing more details of what we heard from those
US representatives on this tariff poles between the US and China,
our trades are. Brandon Murray is with us for more
in studio. Brandon, good morning. How significant is the relief
for both economies from what we heard.
Speaker 8 (07:18):
Well, it's very significant for the Chinese economy. What we
saw today was a major pullback in the trade war
that the US waged against China. Remember yesterday there were
one hundred and forty five percent tariffs on almost every
Chinese import into the US. That gets reduced down to
thirty percent, which, if you recalled, President Trump said just
(07:38):
a few days ago that eighty percent sounded reasonable. So
what the US walked out of there today with is
less than half of what Donald Trump said was reasonable.
If you're on the Chinese side, you got a great
deal in given what you gave up. Remember China's China
had duties on American imports into China, but much less
(08:01):
than the U that than China ships to the U S. So, uh,
if you're if you're in Beijing today, you might be
calling this uh uh just six weeks from Donald Trump's
liberation Day. Uh, the US retreat day in in a
large way because uh, the definitely the heat of the
trade war is much lower now, and it gives time
(08:21):
three months is what the this period of negotiation will
we'll move into next. And it gives, uh, it gives
to give them, gives the two sides a chance to
work through the pretty major agreement disagreements that they still have.
But I think the analysis at the end of the
day is going to be that the US gave up
(08:43):
a lot of its leverage.
Speaker 1 (08:44):
Do you read anything, Brendan into the fact that the
China Foreign Ministry offered no further comment on the trade deal.
Speaker 8 (08:51):
I'm no analyst of Chinese politics, but they you know,
they wouldn't want to be seen as grand standing. But
we'll have We'll have to wait and see what the
trade hawks and walk Shington say when they get up,
when they wake up this morning. But my guess is
that there it will be seen as a major, almost
too much of a retreat from Washington's perspective.
Speaker 2 (09:11):
I mean, what does that mean for trade flows? We've
been reporting about how so many of Chinese goods had
been moving away from the US to other countries in
anticipation of these or as these tires have taken effect
as well. What about the prospect that a ninety day
pause could be enough for some of that damage to
be undone?
Speaker 8 (09:32):
It could? You know, a thirty percent tariff on Chinese
imports into the US can be managed, one hundred and
forty five percent can't be. So you can divert, you
can divert products to other countries where you can ship
from to avoid tariffs. But this is going to be
(09:53):
Remember this thirty percent is divided into two segments, the
ten percent baseline that every other country gets and the
twenty percent fentanyl tariff that the US put on China.
China can get out of that fentanyl tariff if it
does what the US wants it to crack down on
the export of the materials used to make vents and all.
(10:16):
So at the end of the day, China is in
the same place as everybody else is it could be,
and most China Hawks in Washington would say they're the
biggest violator of trade rules. So it'll be interesting to
see how the Trump administration defends what it got here.
Certainly markets like it, that will be seen as a positive.
(10:41):
But if you're in a long term trade disagreement with
China to rebalance one point two trillion dollar trade and balance,
this is going to make it more difficult to apply
leverage to China.
Speaker 1 (10:56):
So how much hope is this going to give to
other countries that they can negotiate good terms too.
Speaker 8 (11:02):
Yeah, you would think that that that this would this
would give them, uh, you know, some sense of relief
between this deal and the and the deal that the
UK signed last week. Uh, you know, a lot of
these details are still kind of vague, and and you
know that there's no there's nothing, uh, there's not a
whole lot of fine print on on either of these two.
(11:23):
But you've got to think that the that the US
administration has felt, the has heard the concerns from US
businesses about how they came out of the gates fast
and high with their tariffs and that is applying economic
pain to the US and that they are now uh,
you know, in a in a situation where they you know,
(11:45):
they have to bring those down in a big way.
This is this is not uncharacteristic of Donald Trump's style.
He comes in big, with his hardest punch, and then
he says, you know, let's you know, then you know,
then then will then we'll uh you know, will negotiate things,
you know, in a calmer fashion. But and this seems
to be what we're hearing. We heard Scott Besson say
(12:07):
today that he and the US Trade Representative Jameson Greer say,
we don't want to decouple from China, we don't want
to trade embargo and what's what that's doing to the
US economy? Right now is causing a lot of disruption
and a lot of small companies can't do can't do
business if with tariffs of one hundred and forty five
(12:29):
percent on their Chinese parts and products. So I think
what we're seeing is a pretty sharp pullback from the
US administration. Now that could all that could all change
too this. You know, they can tariffs can come back
as soon as they go away. But it looks today
like the US gave more concessions than China did.
Speaker 2 (12:50):
Okay, Brendon Murray, our trades are thank you very much.
Speaker 1 (12:52):
Well, let's get to the market reaction now. Cridy Gupster,
who anchors the opening trade on Bloomberg Television, has been
watching the markets move in real time, and she joins
us now in the studio. Christy, what stood out for
you in the market reaction, particularly the equity maybe seem
pretty stoning.
Speaker 9 (13:08):
So the bar was high going into this presser. There
was a lot of optimism baked in really starting on
Friday actually, and you saw it on both sides of
the Atlantic, and then over the weekend the substantial progress
line even Donald Trump's buy stocks on Friday was or
on Thursday night, I should say was quite telling. We
didn't expect this kind of optimism though, because, as Brendan
(13:29):
was saying, the expectation the line in the sand was
eighty percent. To come down to thirty is massive. A
one hundred and fifteen percent reprieve on that tariff freight
is enormous. The problem here, and the hiccup here that
you're going to see perhaps maybe filter through the markets
in the next couple of days, is that this is
only for ninety days, and those tariffs initially were meant
(13:49):
to be put on four ninety days. That one hundred
and forty five percent was meant to be for ninety days,
and we're not even I don't even think we're thirty
days through, maybe a little over thirty days, and already
we're seeing a reversal. So when you start to see
some of the commentary come from Donald Trump or Scott Bessend,
that's where the red herrings kind of.
Speaker 3 (14:05):
Lie in some of the data.
Speaker 9 (14:07):
But right now, again the bar was high, and Scott
Bessant already beat. So the optimism is showing up in
the equities picture, in the bonds picture, in the currency's picture,
and even in oil, which was really weighed down by
those growth concerns.
Speaker 2 (14:19):
But how sustainable can this sentiment be? To your point
that this is only ninety days, so there are a
couple of things.
Speaker 9 (14:26):
So now this has kind of shown, so you're right,
can't it's not sustainable because this can always you turn
and that is the kind of word on the street here.
But what it is showing is a mechanism with which
to de escalate. And that is a crucial piece because
thirty days ago we didn't have this mechanism.
Speaker 3 (14:42):
We didn't have high level talks.
Speaker 9 (14:43):
We didn't even have lower level talks for then ultimately
Scott bessen to go over to Geneva and sign the deal.
Both sides were not talking and I think that has
been the real game changer here, that if there was
some sort of hiccup in policy. For example, and you
heard that in the press conference from Scott Bessant that
he brought up the cartels in terms of the fentanyl
trade in Mexico, he brought up currency manipulation, He brought
(15:06):
up the fact that both sides, the US and China,
were acting in their national interests. So it wasn't exactly
the all friendly, all sunshine and rainbows. There were clear
pieces of concerns that were still meant to be the
Currncy manipulation is the piece of it. Notably absent was
the fact that the Treasury Secretary didn't talk about the
massive holdings of treasuries that China has. So you can
(15:28):
see that there are still sticking points. But now we
know that if things were to ratchet up, there is
a way back to de ratcheting.
Speaker 1 (15:35):
Okay, Kritty group to opening trade anchor from Bloomberg Television,
we thank you. Let's bring in our Hong Kong News
Desk editor Jill de Sis Jill, good morning.
Speaker 3 (15:45):
Does this count as a win for Beijing?
Speaker 10 (15:47):
Here is just trying to parse through all of the
numbers along with everybody else, and I do think this
is a pretty significant improvement for China. I mean, obviously
there's just the headline number, right if you're reducing those
tariffs that significant for the next ninety days. I mean,
it does indicate that maybe relations are improving. Obviously it's
only temporary, but I think that you know, that does
(16:08):
indicate that there's you know, that's a step in the
right direction. It certainly isn't you know, I mean, removing
the you know, one hundred and twenty five and forty five
percent terriffs that we saw in China. That's that's that's
a that's a pretty good victory for China. So yeah,
I think we have to see where things go from here.
But the fact that the progresses even gotten to this point,
I think that's pretty promising.
Speaker 2 (16:27):
How much could this bring relief for the Chinese economy, Joe,
because we've been seeing early signs of the effects the
tariffs had already been having, or at least the uncertainty
over the tariffs had been having on things like trade flows.
Speaker 10 (16:39):
Yeah, I mean I think that you know, when you're
looking at you know exactly what this means for the
Chinese economy, and you know, taking a look at some
of the Bloomberg Economics data that we've been really putting out,
I mean, just that the fact that the shock on
you know, how much this meaning for US imports is
going down significantly. I think the that's you know, a
(17:01):
really really big improvement. I'm talking actually right now with
the some of our reporters who have been reaching out
to Chinese exporters who are absolutely elated at this news
so far. I mean we were, you know, just talking
to somebody who has a t moostore selling you know,
sort of face and body painting tools, saying that, you know,
(17:21):
their entire office was shouting horay. That particular Chinese exporter.
I mean, that's somebody that had a stockpile of about
five months supply and a US warehouse, just kind of
waiting to see what was ultimately going to happen in
this trade war. You know what that person was telling us,
you know, just a few minutes ago, is essentially that
they're elated because they were actually expecting this to drag
(17:44):
on for quite a bit longer. And the fact that
you already have this reprieve not too long, you know,
about a month and some change after these tarrots really
went into effect, that's actually been really promising for them.
So at least from the Chinese exporter side, I mean,
people that are doing direct business with American consumers that
are really really dependent on these types of trade flows,
We're already seeing a lot of encouragement there. Again, I
(18:04):
do have to stress obviously these tariffs, you know, this reprieve,
these cuts are.
Speaker 3 (18:09):
Only in place for ninety days.
Speaker 10 (18:10):
But again, the trajectory is certainly very positive, or at
least the sentiment here is that this has been very positive.
Speaker 1 (18:16):
Well, Jill, some of those exporters out of China had
already moved trade to other countries in Asia worried about
the tariff war. We saw that in the data on Friday.
Do you think we now just hit undo on that.
Speaker 10 (18:28):
Pleissie, I think, you know, obviously too early to say there,
because ultimately, you know, I mean, if you're some of
these exupporters, sure you do have those ones that are
you know, very elated by this, and we're really banking
on that business. But you also, you know, have a
lot of people that you know, at the end of
the day, there's still a lot of uncertainty here here, right,
I mean, you know, let's just park it and rewind,
you know to where we were about a month or
(18:48):
you know, two months ago. I mean, you know, you
had you know, these not just these tariffs on China,
but also these reciprocal tariffs that countries all over the
world were facing, and there was you know a lot
of confusion over what exactly that would ultimately mean for
how the United States is doing trade in business with
you know, countries worldwide. I mean, we saw during the
first Trump administration, you know, a lot of you know,
(19:09):
different companies that were already starting to diversify away from China,
trying to put the rigs in different baskets in Southeast Asia.
Some of those guys got burned, you know, just a
month or so ago when we saw really high tariffs
on Vietnam and others. Obviously, some of those have currently
been paused. But I think, you know, that's a long
way of saying that there's still a lot of uncertainty
in this environment. Obviously, the cuts that we've seen so far,
(19:31):
while dramatic, I'm still only in place for ninety days,
so I can imagine that if you're you know, an exporter,
if you're considering where exactly you're sort of setting up
shop and how you want to do business with the
United States, it's still a bit of an uncertain environment
until you have something that actually does feel like a
definitive deal.
Speaker 3 (19:47):
Jill.
Speaker 2 (19:47):
Another note of caution, perhaps too, from these comments from
Scott best and about the five or six strategic industries
where the US is going to seek supply chain independence
and this quote strategic rebalancing that he's promising, is that
suggests that there'll still be significant bones of contenent and
the trading relationship between the US and China.
Speaker 10 (20:07):
Yes, Stephen, I think you know, we were talking about
this earlier. It's interesting, I think, particularly when you had
Scott Besn't call out industry such as pharmaceuticals and steel
saying that the US is going to seek supply chain
independence in these types of field. I mean, you know,
to go back, you know, just a few months ago
to the Biden administration obviously, so you saw a tremendous
focus from the United States on ensuring independence, and you know,
(20:31):
the strategy toward focusing on semiconductors and immense technology and chips.
The fact that the United States now appears to be
sort of broadening out the areas in which it's really
sort of pursuing supply chain independence, I think is a
pretty significant development. Obviously, we don't know exactly what went
on behind closed doors in Geneva this weekend, but that
does indicate that, you know, obviously the United States position
(20:53):
on trade protectionism, this idea of that supply chain independence
certainly seems to be strengthening. So I think, you know,
it's definitely something where to look out for again. I
think at the end of the day, while you know,
markets are obviously taking things, as you know, incredibly positive
from this weekend, you still have a reprieve that's really
only in place for the next ninety days. You still
have various areas that the United States says, let me
(21:15):
to negotiate on. I still think, you know, we're quite
a ways from being able to sit here and call
the saga over. It's certainly going to continue over the
next few months at least.
Speaker 2 (21:24):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 11 (21:30):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (21:36):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 11 (21:42):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 3 (21:50):
I'm Caroline Heitka and.
Speaker 2 (21:51):
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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