July 23, 2025 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) President Donald Trump reached a trade deal with Japan that will impose 15% tariffs on US imports from the country, including its auto sector, while creating a $550 billion fund backed by the Japanese to make investments in America.
(2) UniCredit dropped its bid for rival Banco BPM ending an eight-month standoff with its rival and the Italian government over the plan to create the country’s largest lender.
(3) The US agency responsible for maintaining and designing the nation’s cache of nuclear weapons was among those breached by a hack of Microsoft Corp.’s SharePoint document management software, according to a person with knowledge of the matter.
(4) Morgan Stanley is being probed by the Financial Industry Regulatory Authority over its vetting of clients for the risk of money laundering, the Wall Street Journal reported.
(5) SAP reported quarterly cloud and software sales that fell just short of estimates as tariff insecurities weighed on Europe’s most valuable company.
Podcast Conversation: Meme Stock Fever Is Spreading Like It’s 2021 With Kohl’s Soaring
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Blueberg Day ba Q podcast. Good morning,
It's Wednesday, the twenty third of July. I'm Caroline Hepka
in London.
Speaker 3 (00:15):
And I'm Stephen Carolin Brussels. Coming up today, Reports say
Japan's prime minister will announce he's resigning as soon as
this month. After sealing a US trade deal setting tariffs
at fifteen percent.
Speaker 2 (00:26):
The US Nuclear Safety Agency suffers a cyber security breach
as Microsoft points the finger at Chinese sponsored hackers.
Speaker 3 (00:34):
Plus Europe warms to China's growing investments across the continent
and what Beijing may want in return.
Speaker 4 (00:41):
Let's start with the roundup of our top stories.
Speaker 3 (00:43):
Japanese media reporting that the Countries and Battles Prime Minister
Shigero Ishuba will announce he's stepping down as soon as
this month. The reporting comes after Issuba's ruling coalition suffered
a historic setback in Sunday's Upper House election, and comes
just hours after Japan secured a trade agreement with the
Trump administration. The Prime minister had sited the trade talks
(01:04):
as one of the reasons he needed to stay on
with the agreement with the US now seemingly clears the
way for him to leave office.
Speaker 2 (01:10):
Reports of Isshaba's decision came as President Trump announced a
deal with Japan that sets tariffs on the country's imports
into the US at fifteen percent. The agreement spares the
key American ally from a threatened twenty five percent tariff
rate that was set to take effect next week. Crucially
for Japan, the fifteen percent rate covers car and car
(01:33):
parts exports to the US. Shares in Japanese carmakers jumped
on the news, with Toyota Motor Corporation up as much
as sixteen point three percent in trading now. In return,
Japan will accept cars and trucks built to American safety standards.
Here is President Trump discussing the deal.
Speaker 5 (01:53):
We worked on it long and hard, and it's a
great deal for everybody. I always say it has to
be great for everybody. It's a great deal, A lot
different from the deals in the pest.
Speaker 4 (02:02):
I can tell you that.
Speaker 2 (02:03):
A centerpiece of the packed outlined by Trump is a
five hundred and fifty billion dollar fund backed by the
Japanese to make investments in America, with details still to
be hammered out. Japan has also agreed to buy one
hundred Boeing aircraft, boost rice purchases and increased defense spending
with US firms. President Trump meanwhile pledged to guarantee Japan
(02:26):
the lowest global rate on forthcoming sect all tariffs, expected
to include semiconductors and pharmaceuticals.
Speaker 3 (02:35):
The US Japan deal will add pressure on the European
Union to secure an agreement with the White House, as
the block's top leaders also seek to deepen ties with Japan.
European Commissioned President Ursula vander Lyne and European Council President
Antonio Costa were expected to meet Prime Minister Ishiba in
the coming hours, but even if the meeting goes ahead,
it takes on a new tone. European officials described Japan
(02:58):
as its closest strategic trading partner in the Indo Pacific region.
The leader has planned to sign agreements on defense, industry
cooperation and economic security, with officials saying they will also
compare notes on their trade negotiations with the Trump administration.
Speaker 2 (03:13):
Now, the Italian bank UniCredit has reported second quarter net
profits that beat estimates. Net to profits are coming in
at almost three point five billion euros. UniCredit is kicking
off the earning season four Italian banks, also announcing revenue
of six point one to three billion euros, just slightly
below the estimated six point one seven billion. The focus
(03:37):
overrule for the company remains on chief executive officer Andrea
Orchell's M and A ambitions, which have seen setbacks. Unicredits
board decided to withdraw an offer for Banker BPM on
Tuesday because it effectively couldn't secure government authorization. According to
a statement and a separate approach by UniCredit for Germany's
comments bank is stalled amid opposition from Berlin.
Speaker 3 (04:00):
Europe's most valuable company, SAP, has reported quarterly sales that
fell just short of estimates. The firm, which sells software
to manage business operations, said cloud and software revenue rose
by eleven percent to just shy of eight billion euros.
SAP also warns of the weakening dollar poses currency pressures
for the firm, which generates more than thirty percent of
(04:20):
its sales in the US.
Speaker 2 (04:22):
The US agency responsible for producing and dismantling nuclear weapons
has been breached by a hack of Microsoft's share Point system.
Bloomberg understands that no sensitive information from the National Nuclear
Security Administration is believed to have been compromised, but Aur Newburger,
former US Deputy National Security Advisor, says the attack is significant.
Speaker 6 (04:47):
Because shrpoint is so widely used. We can expect likely
a fair number of victims and the vulnerability is a
major one. So attackers cannot only steal data, they're stealing keys.
And when they steal key, think about physical keys in
our own homes. That means they can get back in
unless keys are changed, and they can maintain access.
Speaker 2 (05:08):
Anne Neuberger, former US Deputy National Security Advisor, speaking there,
hackers were able to breach the agency as part of
a twenty twenty attack on a widely used software program
from Solar Wins that Microsoft blames on Chinese state sponsored attackers.
A department spokesperson at the National Nuclear Security Administration said
(05:29):
then that malware had been isolated to business networks only.
In a statement recently, the Chinese Embassy in Washington that
said that China firmly opposes all forms of cyber attacks
and cybercrime.
Speaker 3 (05:43):
In sports news, England's Lionesses through to the final of
the Women's Football European Championship after defeating Italy an extra time.
Managestin Aviigman says she's experiencing a range of emotions following
the dramatic two to one victory.
Speaker 1 (05:56):
I'm feeling relieved, something happy. It feels a bit surreal
making a final again, but we're here and we're going
to the final, so we need to recover a bit.
Speaker 3 (06:10):
England's threenawigmand speaking there, the defending champions forced extra time
with the ninety sixth minute equalizer from nineteen year old
Michelle Agamang, before Chloe Kelly struck in the one hundred
and nineteenth minute from a rebound after seeing her penalty saved.
The team will play Spain or Germany in the final
on Sunday.
Speaker 2 (06:29):
So those are our top stories for you this morning. Well,
you know, the football was exciting, but the markets factly
are also exciting today, Stephen, because of this a trade
deal between the US and Japan. So at the moment,
we're seeing the MSCI Asia Pacific Index broadly up by
one point eight percent, the nick A two two five
surging three point five percent, and you've also got Toyota
(06:51):
Motor Corporation. It's not the only one, but it's certainly
seeing a huge jump currently up fourteen point seven percent
right now. Stop futures for you are also surging one
point two percent higher.
Speaker 4 (07:02):
A word in there.
Speaker 2 (07:03):
For the bond markets, there were up a couple of
basis points on the ten year US treasure yield at
four thirty six. The Japanese yen is slightly we could
against the dollar down two tenths of one percent, and
then of course we're in the midst of earning season,
so we've still got Tesla and Alphabet to report.
Speaker 4 (07:17):
On Wednesday.
Speaker 2 (07:18):
The mag seven companies overall expected to post a combined
fourteen percent rise in second quarter profits.
Speaker 3 (07:25):
Yeah, indeed, and on that story from Uniu Credit as well,
improving their outlook for fullier profit and shareholder distributions of
fullier profit expectations now lifted to around ten and a
half billion euros, the distribution to shareholders planning to get
to nine and a half billion euros this year as well.
The net income figure for the second quarter at three
point three billion euros, which was an increase as well.
(07:48):
In a moment, we'll bring you more on the US
Japan trade deal and look at how Chinese companies are
shifting their investment strategies.
Speaker 4 (07:54):
In Europe.
Speaker 3 (07:54):
But another story that we've been reading this morning, if
you hadn't perhaps realized it is twenty to twenty fo
but we are talking about meme stocks all over again.
They're meanier than ever, it seems. I don't know, if
you want to go back to the days of Game
Stop and bed Bath and beyond. This time around, it's
the department store Coals and the property website open Door
(08:14):
that have caught the internet's imagination. So quite similar to
in twenty twenty one, we're seeing traders piling into heavily
shorted companies in a bit to strike quick riches. Some
similarities to twenty twenty one stock markets at all time highs.
Bitcoins doubled in less than a year. But Steve Stasnik
for Interactive Traders is charmingly called this a flight to crap.
Speaker 4 (08:36):
I love that that is wild.
Speaker 2 (08:38):
Look, I mean, you know, not to do down the
retail investor, I mean, why not, you know, if you've
got might invest in you, you know you want to
try to make a profit, of course, But yes, I
think it is also kind of a difficult moment, whether
you know, when people pile into these yeah, to these stocks,
it's yeah, and I don't want to go back to
twenty twenty one though. No.
Speaker 3 (08:58):
Indeed, perhaps not the moment we'll remember from twenty to
twenty one down the line. Let's bring you more details
though on that top story this morning in the trade
agreementstry in the US and Japan lowering tariffs and exchange
for commitments to purchase more American goods and set up
that fund to invest five hundred and fifty billion dollars
in the US and Japanese media are also reporting the
Prime Minister Shigeroshiba will now resign from his post. Winburgs
(09:22):
John Harskovetz joins US from Tokyo for more, John, great
to talk to you. Let's start with the trade deal. Then,
what are the key headlines from it?
Speaker 5 (09:30):
Im sure? The main thing is the reduction of the
tariffs trumpet twenty five percent that's been knocked down to
fifteen percent, and this also applies to automobiles and automobiles
in all the parts are the bulk of Japanese exports
to the US. This is the biggest sector effected, and
this is the one that's going to see the rate
(09:50):
drop by ten percentage points of fifteen percent. As you
mentioned previously. Auto shares like Toyota have jumped on the news.
There's finally some sort of certainty what's going on. And
the one thing that Japan offered in return is like
dropping some of these non tariff barriers, like accepting US
safety standards. But the thing is, for the Japanese auto market,
(10:13):
even with these changes, you're probably not going to see
a lot of US cars here. About forty percent of
the Japanese auto market is this type of this car
called a K car for light small engine displacement, small
in size and weight, and the US automakers don't make
anything for this market. Also, Japanese cars are on the
(10:35):
right side of the road. Japanese cars drive on the
other side, as US cars steering wheels on the other side,
So the US cars probably aren't going to be making
much of an inroad here. And other things in the
deal are this five hundred and fifty five five hundred
and fifty billion dollar fund, which Trump says will be
(10:57):
similar to a sovereign investment fund. I think we still
have to wait for the details to find out what
this is. It It may it may be difficult to
see Japan actually giving this amount of money when it's
already one of the largest foreign direct investment countries in
the US. So it's just it's a lot of money
(11:18):
on top of what's already gone on. We have the
blowing aircraft, about one hundred more agricultural goods, increase in
defense spending, and there's also an LNG product project in
Alaska that the US have been pitching for years, bringing
LNG from the state to Asia to places like Japan.
Whether this will actually happen is another matter. Trump has
(11:40):
been pitching this for a while. Actually getting this and
getting the purchases getting in Dasias is something that is
a bit in doubt at this moment.
Speaker 2 (11:50):
Okay, interesting, So the main issue on the car manufacturers. Yes,
Honda Motor Corporations share price up by twelve percent and
Nissan Motors up ten percent at the peak. The kind
of immediate reaction then to this deal. But look, there
also reports in Japanese media that the Prime minister is
now planning to resign. So what more can you tell
(12:12):
us on that front?
Speaker 5 (12:14):
Sure way it looks now what we've seen in Japanese media,
people close to the ruling Liberal Democratic Party are saying
that Prime Minisy issue, but is looking to resign in August.
This will set up a leadership struggle for the party
that's ruled for most of Japan's post war history. But
the interesting thing is that the LDP, the ruling LDP party,
(12:36):
doesn't have an outright majority in either house of parliament.
So even if they pick a leader, there's probably going
to be some deal making with some of the smaller
parties to get that leader to stay on as the
prime minister. So it's interesting to see Isshuba was suffered
the defeat in the upper house election this month. He
(12:57):
suffered a previous defeat in a lower warehouse selection. He's
been on the job for about nine ten months. His
popularity is below, his approval readings below twenty percent. That's
considered when you get below twenty percent is consider a
danger zone in Japan. And two election losses, low popularity
(13:19):
and a lot of people angry about inflation. It's just
it's been he just doesn't have a way to stay
on in the job.
Speaker 3 (13:28):
Okay, John, thanks very much for being with us. John
Houskwetz and what in Tokyo there with more on these
stories out of Japan this morning.
Speaker 2 (13:36):
Well, meanwhile, European Union leaders are traveling to Beijing tomorrow
for a high level summit. It could signal a turning
point in a sometimes strange relationship at a time when
both parties are facing Donald Trump's trade tariffs. Chinese companies, too,
have been shifting their investment strategies in Europe, with a
move to higher value industries and building their own factories
(13:56):
with the help of state subsidies. Bluebag's Libby Cherry has
been about this in today's Big Take stories.
Speaker 4 (14:02):
She joins us now from Frankfurt for more.
Speaker 2 (14:04):
Good Morning, Libby, How have Chinese attitudes to European investments shifted?
Speaker 7 (14:11):
I think what is really important when we're talking about
the kind of shift in strategy that we've seen from
Chinese companies when it comes to their investments in Europe
is to put it in the kind of broader arc
of where we've seen European investments. So I would say
the peak of that investment, and we're looking at a
report pit together by Radium Group and Merricks was in
(14:34):
twenty sixteen, which was really we saw a lot of
Chinese companies looking to buy I don't know, stakes and
football clubs, a lot of trophy assets, and since then,
obviously the climate has slightly shifted, and you know, we've
seen kind of seven years of decline up until twenty
(14:56):
twenty four, where we've seen a bit of a rebound.
It does seem when we sort of speak to people
anecdotally that Chinese companies are looking to do a bit
more investment in Europe. But obviously this comes in a
context where investment has really really come down. I mean,
the levels in twenty twenty four are about a fifth
of where they were at the peak in twenty sixteen.
Speaker 3 (15:19):
One of the main reasons for it then leby.
Speaker 7 (15:22):
So a lot of this comes down to the politics.
So obviously on the Chinese side, what's happened is you've
seen a lot of from the government looking to trying
to shift Chinese investments to more of these sort of
so called strategic investments, so that might be for example,
in battery technology rather than the sort of trophy assets
(15:43):
I was talking about before. And on the European side,
sort of in response to that shift to more strategic investments,
you've seen a lot more tightening of screening and that
stopped some Chinese acquisitions from occurring. However, it isn't whole
political So if we look at the industries where Chinese
companies have traditionally invested, so for example, in automotive machinery,
(16:08):
we've seen a lot of macroeconomic pressure that.
Speaker 3 (16:11):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (16:17):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 3 (16:23):
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Speaker 2 (16:29):
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Speaker 4 (16:37):
I'm Caroline Hepka and I'm Stephen Carroll.
Speaker 3 (16:39):
Join us again tomorrow morning for all the news you
need to start your day right here on Bloomberg Daybreak Europe.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Blueberg Day ba Q podcast. Good morning,
It's Wednesday, the twenty third of July. I'm Caroline Hepka
in London.
Speaker 3 (00:15):
And I'm Stephen Carolin Brussels. Coming up today, Reports say
Japan's prime minister will announce he's resigning as soon as
this month. After sealing a US trade deal setting tariffs
at fifteen percent.
Speaker 2 (00:26):
The US Nuclear Safety Agency suffers a cyber security breach
as Microsoft points the finger at Chinese sponsored hackers.
Speaker 3 (00:34):
Plus Europe warms to China's growing investments across the continent
and what Beijing may want in return.
Speaker 4 (00:41):
Let's start with the roundup of our top stories.
Speaker 3 (00:43):
Japanese media reporting that the Countries and Battles Prime Minister
Shigero Ishuba will announce he's stepping down as soon as
this month. The reporting comes after Issuba's ruling coalition suffered
a historic setback in Sunday's Upper House election, and comes
just hours after Japan secured a trade agreement with the
Trump administration. The Prime minister had sited the trade talks
(01:04):
as one of the reasons he needed to stay on
with the agreement with the US now seemingly clears the
way for him to leave office.
Speaker 2 (01:10):
Reports of Isshaba's decision came as President Trump announced a
deal with Japan that sets tariffs on the country's imports
into the US at fifteen percent. The agreement spares the
key American ally from a threatened twenty five percent tariff
rate that was set to take effect next week. Crucially
for Japan, the fifteen percent rate covers car and car
(01:33):
parts exports to the US. Shares in Japanese carmakers jumped
on the news, with Toyota Motor Corporation up as much
as sixteen point three percent in trading now. In return,
Japan will accept cars and trucks built to American safety standards.
Here is President Trump discussing the deal.
Speaker 5 (01:53):
We worked on it long and hard, and it's a
great deal for everybody. I always say it has to
be great for everybody. It's a great deal, A lot
different from the deals in the pest.
Speaker 4 (02:02):
I can tell you that.
Speaker 2 (02:03):
A centerpiece of the packed outlined by Trump is a
five hundred and fifty billion dollar fund backed by the
Japanese to make investments in America, with details still to
be hammered out. Japan has also agreed to buy one
hundred Boeing aircraft, boost rice purchases and increased defense spending
with US firms. President Trump meanwhile pledged to guarantee Japan
(02:26):
the lowest global rate on forthcoming sect all tariffs, expected
to include semiconductors and pharmaceuticals.
Speaker 3 (02:35):
The US Japan deal will add pressure on the European
Union to secure an agreement with the White House, as
the block's top leaders also seek to deepen ties with Japan.
European Commissioned President Ursula vander Lyne and European Council President
Antonio Costa were expected to meet Prime Minister Ishiba in
the coming hours, but even if the meeting goes ahead,
it takes on a new tone. European officials described Japan
(02:58):
as its closest strategic trading partner in the Indo Pacific region.
The leader has planned to sign agreements on defense, industry
cooperation and economic security, with officials saying they will also
compare notes on their trade negotiations with the Trump administration.
Speaker 2 (03:13):
Now, the Italian bank UniCredit has reported second quarter net
profits that beat estimates. Net to profits are coming in
at almost three point five billion euros. UniCredit is kicking
off the earning season four Italian banks, also announcing revenue
of six point one to three billion euros, just slightly
below the estimated six point one seven billion. The focus
(03:37):
overrule for the company remains on chief executive officer Andrea
Orchell's M and A ambitions, which have seen setbacks. Unicredits
board decided to withdraw an offer for Banker BPM on
Tuesday because it effectively couldn't secure government authorization. According to
a statement and a separate approach by UniCredit for Germany's
comments bank is stalled amid opposition from Berlin.
Speaker 3 (04:00):
Europe's most valuable company, SAP, has reported quarterly sales that
fell just short of estimates. The firm, which sells software
to manage business operations, said cloud and software revenue rose
by eleven percent to just shy of eight billion euros.
SAP also warns of the weakening dollar poses currency pressures
for the firm, which generates more than thirty percent of
(04:20):
its sales in the US.
Speaker 2 (04:22):
The US agency responsible for producing and dismantling nuclear weapons
has been breached by a hack of Microsoft's share Point system.
Bloomberg understands that no sensitive information from the National Nuclear
Security Administration is believed to have been compromised, but Aur Newburger,
former US Deputy National Security Advisor, says the attack is significant.
Speaker 6 (04:47):
Because shrpoint is so widely used. We can expect likely
a fair number of victims and the vulnerability is a
major one. So attackers cannot only steal data, they're stealing keys.
And when they steal key, think about physical keys in
our own homes. That means they can get back in
unless keys are changed, and they can maintain access.
Speaker 2 (05:08):
Anne Neuberger, former US Deputy National Security Advisor, speaking there,
hackers were able to breach the agency as part of
a twenty twenty attack on a widely used software program
from Solar Wins that Microsoft blames on Chinese state sponsored attackers.
A department spokesperson at the National Nuclear Security Administration said
(05:29):
then that malware had been isolated to business networks only.
In a statement recently, the Chinese Embassy in Washington that
said that China firmly opposes all forms of cyber attacks
and cybercrime.
Speaker 3 (05:43):
In sports news, England's Lionesses through to the final of
the Women's Football European Championship after defeating Italy an extra time.
Managestin Aviigman says she's experiencing a range of emotions following
the dramatic two to one victory.
Speaker 1 (05:56):
I'm feeling relieved, something happy. It feels a bit surreal
making a final again, but we're here and we're going
to the final, so we need to recover a bit.
Speaker 3 (06:10):
England's threenawigmand speaking there, the defending champions forced extra time
with the ninety sixth minute equalizer from nineteen year old
Michelle Agamang, before Chloe Kelly struck in the one hundred
and nineteenth minute from a rebound after seeing her penalty saved.
The team will play Spain or Germany in the final
on Sunday.
Speaker 2 (06:29):
So those are our top stories for you this morning. Well,
you know, the football was exciting, but the markets factly
are also exciting today, Stephen, because of this a trade
deal between the US and Japan. So at the moment,
we're seeing the MSCI Asia Pacific Index broadly up by
one point eight percent, the nick A two two five
surging three point five percent, and you've also got Toyota
(06:51):
Motor Corporation. It's not the only one, but it's certainly
seeing a huge jump currently up fourteen point seven percent
right now. Stop futures for you are also surging one
point two percent higher.
Speaker 4 (07:02):
A word in there.
Speaker 2 (07:03):
For the bond markets, there were up a couple of
basis points on the ten year US treasure yield at
four thirty six. The Japanese yen is slightly we could
against the dollar down two tenths of one percent, and
then of course we're in the midst of earning season,
so we've still got Tesla and Alphabet to report.
Speaker 4 (07:17):
On Wednesday.
Speaker 2 (07:18):
The mag seven companies overall expected to post a combined
fourteen percent rise in second quarter profits.
Speaker 3 (07:25):
Yeah, indeed, and on that story from Uniu Credit as well,
improving their outlook for fullier profit and shareholder distributions of
fullier profit expectations now lifted to around ten and a
half billion euros, the distribution to shareholders planning to get
to nine and a half billion euros this year as well.
The net income figure for the second quarter at three
point three billion euros, which was an increase as well.
(07:48):
In a moment, we'll bring you more on the US
Japan trade deal and look at how Chinese companies are
shifting their investment strategies.
Speaker 4 (07:54):
In Europe.
Speaker 3 (07:54):
But another story that we've been reading this morning, if
you hadn't perhaps realized it is twenty to twenty fo
but we are talking about meme stocks all over again.
They're meanier than ever, it seems. I don't know, if
you want to go back to the days of Game
Stop and bed Bath and beyond. This time around, it's
the department store Coals and the property website open Door
(08:14):
that have caught the internet's imagination. So quite similar to
in twenty twenty one, we're seeing traders piling into heavily
shorted companies in a bit to strike quick riches. Some
similarities to twenty twenty one stock markets at all time highs.
Bitcoins doubled in less than a year. But Steve Stasnik
for Interactive Traders is charmingly called this a flight to crap.
Speaker 4 (08:36):
I love that that is wild.
Speaker 2 (08:38):
Look, I mean, you know, not to do down the
retail investor, I mean, why not, you know, if you've
got might invest in you, you know you want to
try to make a profit, of course, But yes, I
think it is also kind of a difficult moment, whether
you know, when people pile into these yeah, to these stocks,
it's yeah, and I don't want to go back to
twenty twenty one though. No.
Speaker 3 (08:58):
Indeed, perhaps not the moment we'll remember from twenty to
twenty one down the line. Let's bring you more details
though on that top story this morning in the trade
agreementstry in the US and Japan lowering tariffs and exchange
for commitments to purchase more American goods and set up
that fund to invest five hundred and fifty billion dollars
in the US and Japanese media are also reporting the
Prime Minister Shigeroshiba will now resign from his post. Winburgs
(09:22):
John Harskovetz joins US from Tokyo for more, John, great
to talk to you. Let's start with the trade deal. Then,
what are the key headlines from it?
Speaker 5 (09:30):
Im sure? The main thing is the reduction of the
tariffs trumpet twenty five percent that's been knocked down to
fifteen percent, and this also applies to automobiles and automobiles
in all the parts are the bulk of Japanese exports
to the US. This is the biggest sector effected, and
this is the one that's going to see the rate
(09:50):
drop by ten percentage points of fifteen percent. As you
mentioned previously. Auto shares like Toyota have jumped on the news.
There's finally some sort of certainty what's going on. And
the one thing that Japan offered in return is like
dropping some of these non tariff barriers, like accepting US
safety standards. But the thing is, for the Japanese auto market,
(10:13):
even with these changes, you're probably not going to see
a lot of US cars here. About forty percent of
the Japanese auto market is this type of this car
called a K car for light small engine displacement, small
in size and weight, and the US automakers don't make
anything for this market. Also, Japanese cars are on the
(10:35):
right side of the road. Japanese cars drive on the
other side, as US cars steering wheels on the other side,
So the US cars probably aren't going to be making
much of an inroad here. And other things in the
deal are this five hundred and fifty five five hundred
and fifty billion dollar fund, which Trump says will be
(10:57):
similar to a sovereign investment fund. I think we still
have to wait for the details to find out what
this is. It It may it may be difficult to
see Japan actually giving this amount of money when it's
already one of the largest foreign direct investment countries in
the US. So it's just it's a lot of money
(11:18):
on top of what's already gone on. We have the
blowing aircraft, about one hundred more agricultural goods, increase in
defense spending, and there's also an LNG product project in
Alaska that the US have been pitching for years, bringing
LNG from the state to Asia to places like Japan.
Whether this will actually happen is another matter. Trump has
(11:40):
been pitching this for a while. Actually getting this and
getting the purchases getting in Dasias is something that is
a bit in doubt at this moment.
Speaker 2 (11:50):
Okay, interesting, So the main issue on the car manufacturers. Yes,
Honda Motor Corporations share price up by twelve percent and
Nissan Motors up ten percent at the peak. The kind
of immediate reaction then to this deal. But look, there
also reports in Japanese media that the Prime minister is
now planning to resign. So what more can you tell
(12:12):
us on that front?
Speaker 5 (12:14):
Sure way it looks now what we've seen in Japanese media,
people close to the ruling Liberal Democratic Party are saying
that Prime Minisy issue, but is looking to resign in August.
This will set up a leadership struggle for the party
that's ruled for most of Japan's post war history. But
the interesting thing is that the LDP, the ruling LDP party,
(12:36):
doesn't have an outright majority in either house of parliament.
So even if they pick a leader, there's probably going
to be some deal making with some of the smaller
parties to get that leader to stay on as the
prime minister. So it's interesting to see Isshuba was suffered
the defeat in the upper house election this month. He
(12:57):
suffered a previous defeat in a lower warehouse selection. He's
been on the job for about nine ten months. His
popularity is below, his approval readings below twenty percent. That's
considered when you get below twenty percent is consider a
danger zone in Japan. And two election losses, low popularity
(13:19):
and a lot of people angry about inflation. It's just
it's been he just doesn't have a way to stay
on in the job.
Speaker 3 (13:28):
Okay, John, thanks very much for being with us. John
Houskwetz and what in Tokyo there with more on these
stories out of Japan this morning.
Speaker 2 (13:36):
Well, meanwhile, European Union leaders are traveling to Beijing tomorrow
for a high level summit. It could signal a turning
point in a sometimes strange relationship at a time when
both parties are facing Donald Trump's trade tariffs. Chinese companies, too,
have been shifting their investment strategies in Europe, with a
move to higher value industries and building their own factories
(13:56):
with the help of state subsidies. Bluebag's Libby Cherry has
been about this in today's Big Take stories.
Speaker 4 (14:02):
She joins us now from Frankfurt for more.
Speaker 2 (14:04):
Good Morning, Libby, How have Chinese attitudes to European investments shifted?
Speaker 7 (14:11):
I think what is really important when we're talking about
the kind of shift in strategy that we've seen from
Chinese companies when it comes to their investments in Europe
is to put it in the kind of broader arc
of where we've seen European investments. So I would say
the peak of that investment, and we're looking at a
report pit together by Radium Group and Merricks was in
(14:34):
twenty sixteen, which was really we saw a lot of
Chinese companies looking to buy I don't know, stakes and
football clubs, a lot of trophy assets, and since then,
obviously the climate has slightly shifted, and you know, we've
seen kind of seven years of decline up until twenty
(14:56):
twenty four, where we've seen a bit of a rebound.
It does seem when we sort of speak to people
anecdotally that Chinese companies are looking to do a bit
more investment in Europe. But obviously this comes in a
context where investment has really really come down. I mean,
the levels in twenty twenty four are about a fifth
of where they were at the peak in twenty sixteen.
Speaker 3 (15:19):
One of the main reasons for it then leby.
Speaker 7 (15:22):
So a lot of this comes down to the politics.
So obviously on the Chinese side, what's happened is you've
seen a lot of from the government looking to trying
to shift Chinese investments to more of these sort of
so called strategic investments, so that might be for example,
in battery technology rather than the sort of trophy assets
(15:43):
I was talking about before. And on the European side,
sort of in response to that shift to more strategic investments,
you've seen a lot more tightening of screening and that
stopped some Chinese acquisitions from occurring. However, it isn't whole
political So if we look at the industries where Chinese
companies have traditionally invested, so for example, in automotive machinery,
(16:08):
we've seen a lot of macroeconomic pressure that.
Speaker 3 (16:11):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (16:17):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 3 (16:23):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (16:29):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (16:37):
I'm Caroline Hepka and I'm Stephen Carroll.
Speaker 3 (16:39):
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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