May 8, 2025 • 18 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) President Donald Trump is expected to announce a trade agreement with the United Kingdom at a news conference Thursday morning in Washington, according to people familiar with the matter.
(2) Details of An agreement are not immediately clear, but it is likely to be a framework deal that will serve as a starting point for further negotiations. The UK and US have been in intensive discussions about an economic agreement that would reduce the impact of some tariffs, with a team of British officials in Washington to negotiate terms this week, people familiar with the matter said.
(3) Chancellor of the Exchequer Rachel Reeves is on track to miss both her fiscal rules by tens of billions of pounds in the UK’s autumn budget, according to a prominent economic think tank, leaving her no option but to raise taxes or cut spending.
(4) The Bank of England is expected to cut interest rates by a quarter percentage point Thursday and may signal that another move is likely in June, potentially putting the central bank on course for its first back-to-back reductions since 2009 as the US trade war darkens the outlook for growth.
(5) Federal Reserve Chair Jerome Powell said officials are not in a hurry to adjust interest rates, adding tariffs could lead to higher inflation and unemployment.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said Wednesday at the conclusion of a two-day meeting in Washington.
(6) The Trump administration plans to rescind Biden-era AI chip curbs as part of a broader effort to revise semiconductor trade restrictions that have drawn strong opposition from major tech companies and foreign governments, according to people familiar with the matter.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Daybreak, heurate podcast, available every morning
on Apple, Spotify or wherever you listen. It's Thursday, the
eighth of May in London. I'm Stephen Carroll. Coming up today.
Bloomberg understands that a UK US trade agreement will be
announced by President Trump later today. The possibility of a
deal could hand British Prime Minister cair Starmer a political win,
(00:31):
but the devil will be in the details. Plus threading
the needle on thread Needle Street, the Bank of England
prepares to cut interest rates as a potential tariff deal
adds complexity to the inflation outlook. Let's start with the
roundup of our top stories. US President Donald Trump is
expected to announce a trade agreement with the UK later today.
Details of the agreement remain unclear, but it is believed
(00:54):
to be a framework deal that could serve as a
starting point for further negotiations. Trump hinted at the announcement
and a social media post on Wednesday night saying he
would hold an Oval Office news conference to discuss a
major trade deal with representatives of a quote big and
highly respected country. The New York Times first report of
the deal would be with the UK, with sources later
(01:15):
confirming the prospect to Bloomberg. Speaking last month, when President
Trump announced his first global tariffs, Prime Minister Kirs starmer
It said getting a deal was his plan.
Speaker 3 (01:25):
Nobody wins in a trade war that is not in
our national interest. We have a fair and balanced trade
relationship with the US. Negotiations on an economic prosperity deal,
one that strengthens our existing trading relationship they continue and
we will fight for the best deal for.
Speaker 2 (01:45):
Britain, Kis starmer There, speaking last month. Now, the UK
and US have been an intensive discussions about an economic
agreement that would reduce the impact of some tariffs, with
a team of British officials in Washington negotiating terms. This
week has strengthened and stop futures have risen after those
reports emerged. Investors will be watching closely to see the
extent to which Trump is willing to backtrack from his
(02:08):
sweeping tariffs. The UK has been pushing to strike a
deal with Donald Trump to shield British industry from tariff's,
including twenty five percent duties on steel and car exports.
Kirs Starmer's government has also been worried about the tariffs
the US may impose on the pharmaceuticals sector and the
British film industry. A key sticking point for the US
is Britain's two percent digital services tax on revenues from
(02:30):
UK users of platforms like Google, Meta and Amazon. The
taxes unpopular in Washington, and UK ministers have been weighing
whether to cut or scrap it in a bid to
secure an agreement. A deal with the US would be
a welcome boost for Kirstarmer's government here, but as You
and Parts explains, the detail will be all important.
Speaker 4 (02:48):
A deal with the United States has long been the
holy grail of UK trade policy. Imports from and exports
to the world's biggest economy total more than three hundred
billion dollars, an account for one pounds in six of
all UK trade, but politically a deal has always been
fraught with risk, with many fearing a lowering of food
standards leading to the imports of American hormone treated beef
(03:09):
and chlorine washed chicken. US healthare companies have also long
pushed for fuller access to the UK market, causing concern
for many in Starmer's own party, and if the PM's
expecting unqualified support from those in other parties, well, the
FARI pushback to the India trade deal should serve as
something of a warning in London, I'm unepots Bloomberg Radio.
Speaker 2 (03:29):
The prospect of a potential economic and political win for
the UK government comes as a new forecast suggests the
Chancellor Rachel Reeves will miss her fiscal rules by tens
of billions of pounds in the upcoming utumn budget. According
to the National Institute of Economic and Social Research, Reeves
is projected to fall fifty seven billion pounds short of
(03:49):
meeting her primary fiscal stability rule, has nearly thirty billion
pounds short on her investment rule. The prominent economic think
tank warrants of the resulting fiscal black hole will leave
the government with little choice but to raise taxes or
cut spending in the year ahead, with Reeves facing what
it caused difficult choices come the autumn, while the uncertain
(04:09):
fiscal backdrop comes as the Bank of England is widely
expected to cut interest rates by a quarter percentage point
later today with May.
Speaker 5 (04:15):
Here's Boomberg's Crispit.
Speaker 6 (04:17):
All thirty two economists surveyed by Bloomberg anticipate the policy
makers will lower the benchmark rate by twenty five basis
points to four point two five percent. Markets are also
pricing in a quarter point reduction as a near certainty,
with strong odds of another cut when policy makers reconvene
next month. What remains less certain is the longer term path.
(04:41):
The potential for a UK US agreement on reducing tariffs
could further complicate the inflation outlook. Just as the Bank
prepares to unveil its first full assessment of the impact
of President Trump's trade levies in London, Christopher Pitt Bloomberg Radio.
Speaker 2 (04:59):
Federal Reserve Charge your own Powells says policymakers aren't in
a hurry to alter interest rates. Officials voted unanimously yesterday
to keep borrowing costs unchanged for a third straight meeting.
Speaking after the decision, Powell warned that the Trump administration
tariffs could lead to higher inflation and unemployment.
Speaker 7 (05:16):
Near term measures of inflation expectations have moved up, as
reflected in both market and survey based measures. Survey respondents,
including consumers, businesses, and professional forecasters, point to tariffs as
the driving factor.
Speaker 5 (05:29):
The federal reserves to your own Powells.
Speaker 2 (05:30):
Speaking there, several officials have signals they would not support
lowering interest rates preemptively to protect against a slowing economy. Meanwhile,
President Donald Trump is repeatedly called on the Central Bank
to cut borrowing costs immediately. Now, President Trump is planning
to rescind Biden era US AI chip curbs in a
bid to revise semiconductor trade restrictions. Bloomberg understands the existing
(05:54):
measures have been heavily criticized by major tech companies and
foreign governments. The repeal, yet to be finalized, aims to
abolish the tiered system to create created to regulate chip
exports Nvidia and other firms. Our senior Tech editor Michael
Shepherd says the decision is a win for big tech's win.
Speaker 8 (06:12):
For in Nvidia, which is pressed for a total repeal
of these chips curves. It's known as AI diffusion rule,
and it really has caused a lot of consternation in
the industry because they see it as something that will
have the perverse effect of throwing countries and their companies
into China's arms seeking access to advanced AI technology.
Speaker 2 (06:32):
Bloomberg's Michael Shepherd, speaking their sources say the Trump administration
won't enforce the curb known as the AI Diffusion Rule
when it takes effect on May fifteenth, And those are
your top stories on the markets. The pound is trading
at the moment a quarter of one percent stronger against
the dollar. One thirty three twenty five is. The Bloomberg
Dollar Spot Index is flat, driven by some of those
(06:54):
trade headlines. We're looking at foot SYE one hundred features
up by eight tenths of one percent, eurostocks fifty features
are nine tenths higher. On Wall Street, SMP minis are
up by eight tens and NASDAK futures are up by
one point one percent. This as the tenure treasury yield
is up three basis points to four point three percent.
In a moment, will a full coverage of the expected
USUK trade deal due to announced later today, but just
(07:17):
a word first on a transatlantic deal of a different kind.
A British made watch that's become a prized possession of
one of the biggest names in American finance. In his
latest Watch Club newsletter, Bloomberg Pursuits editor Chris Ross are
spoken to Pershing Square founder Bill Ackman, and it turns
out that he owns a particularly important timepiece to those
in the know. It's Roger Smith's pocket watch number two,
(07:38):
the watch that started the legendary watchmaker's career making pieces
which can sell for millions of dollars at auction now
and Chris has a great summary of that story in
his newsletter, plus some pictures of the beautiful craftsmanship in
that pocket watch, which Ackman bought for four point nine
million dollars in twenty twenty three. Now Acman's right to
get Roger Smith's first watch, which has an even more
(07:59):
in story about how it led to that month's particular success.
You can read the details in the watch Club newsletter
Bloomberg dot com slash Newsletters. Okay, well, let's dig into
our top story. Then, Donald Trump going to announce a
trade deal with the UK later today, according to Bloomberg sources.
Charlie Weills is here with some more details for us.
First of what we've heard out of the US. Charlie,
(08:20):
good morning. What do we know that about what's coming
in this announcement?
Speaker 1 (08:23):
Steven, So, the details so far are hazy, but we
can definitely view this as a win for both the
US and the UK. If you want to start with
the US, you know, the White House certainly needs an
off ramp as these trade tensions ratchet up. Trump's selling
point to American voters had been his stewardship for the
American economy, and we're seeing in polling numbers that trend down,
and not just on that broader economic point, but also
(08:46):
on the issue of tariffs, Americans having a more negative view,
and a lot of this polling for the UK, you know,
the country has been searching for a trade deal since Brexit.
Starmar of course announced this week a major trade deal
with India and this just kind of builds on that
story there. But as far as specifics, we don't have
a lot yet. But what we know about where things
stand right now, you know, the US is the UK's
(09:08):
largest single export market. They are the UK is subject
to that ten percent global baseline that Trump announced, as
well as a lot of these sectoral tariffs, that twenty
five percent tariff on steel and autos, and then this
looming threat of pharma tariff. So I think the big
question is how would a potential deal change that dynamic.
Speaker 2 (09:27):
And indeed, of course trade deals normally take many years
to negotiate as well, So the prospect of what we
will get will be very interesting to see what detail
or how much detailed there will be, or what this
perhaps sets the stage for further negotiations down the line.
Where does the power line Washington in this as well?
What can the White eyes do? Where does Congress get
involved in the process as we go forward?
Speaker 5 (09:49):
So you know that has been incredibly hazy as well.
Speaker 1 (09:51):
Right there has been so much coming from the executive branch,
and I think a big question has been, you know,
how much power does the president have versus the legislative branch.
And I think you know, there have been concerns on
the Democratic side about this happening, and so I think,
you know, this is one of the questions where you
can announce, say a top line deal between countries, but
(10:12):
then the specifics just takes so long to hammer out.
We know that the US and the UK have formally
been talking about a trade deal since twenty twenty, and
I think one concern, you know, we're seeing a lot
of optimism in the market right now, but as that
starts to digest as the fact that these deals take
so long, that this potential one has you know, been
in the works for a very long time. That could
(10:33):
dampen some of the positivity.
Speaker 2 (10:35):
What about the prospect beyond the UK then, could this
be as it would be the first a template for
deals to come for other countries down the line, Stephen.
Speaker 1 (10:44):
I think that's why there is a lot of optimism
we're seeing across the globe right now, the fact that
you know, this could provide an off ramp, not just
for the US and the UK, and in a lot
of ways that relationship has been strong. We knew when
those initial tariffs the UK was targeted much less in
other countries. But yes, this could provide something of a framework,
a starting point that other countries could use. That could signal,
(11:06):
you know, an end to a lot of the uncertainty
that we're seeing because we have an idea of a
way forward.
Speaker 2 (11:11):
Okay, Charlie Wells, thank you very much. What an agreement
that would lower US tariffs and UK and boards would
be a big win for the British government, as Charlie
was saying, it could also bring some good economic news
on a day when we're expecting the Bank of England
to cut interest rates, So let's bring in our UK
politic supporter James Wilcock and our UK correspondent Lizzie Burden,
who's covering the Bank of England decision today as well.
Speaker 5 (11:30):
James, I want to start with you.
Speaker 2 (11:32):
Charlie pointed to some of the strength of the relationship
or the history between the UK and the US there,
but how significant would it be for the UK to
be first with a deal on trade.
Speaker 9 (11:43):
It would be a genuine coup for Prime Minister Kissed
Arma and one he would hold over all opposition parties
for the duration of his prime ministership. I mean, look
back in the Brexit referendum, even before any referend was
voted on, people talking up a US UK trade deal.
Theresa May in twenty eighteen went to Trump to go
and try and get one signed. Boris Johnson went again,
went to Biden. These negotiations contigued all through twenty twenty
(12:06):
and then it faded, and then we had COVID and
then by the time of Richies Sunak and this Trust,
they were just talks of sort of odd deals with
the odd US states. So to go from that to
having a deal be back on the table and potentially
having one there that it would validate Starmer's approach to
how he's a conducting negotiations and to an extent five
years after the UK left the EU gives Breggs it
(12:28):
is some backing as well in terms of being able
to negotiate with the US outside of the EU.
Speaker 2 (12:34):
Okay, so there's plenty of positives to focus on. But
what could be the sensitive issues at play. We don't know,
as Charlie was outlining, what the details of the agreement
will contain, but there are some hot button issues that
could come up in that that perhaps might give the
opposition some food for criticism.
Speaker 9 (12:51):
Yes, I mean, as Charlie was saying, we're quite like
to go what's called like a head of terms agreements
going to the press speculation, which is where you get
a preliminary deal rather than the full thing. So the
question then is how long will the full fat deal
take to negotiate on when will it take effects? The
key areas though, are will this base ten percent tariff
that's been applied globally be rolled back in any way,
shape or form. And then we seen reporting in previous
(13:14):
weeks that were likely some sort of movement on steel
and cars, both which phase twenty five percent tariffs. Let's
see what happens with pharmaceuticals, which is another key area,
especially for the UK with big farmer giants. Now the
political hot topics for the UK at least are the NHS,
any talk about healthcare or privatize healthcare, farmers and agriculture
(13:34):
where there have been big fears around chlorinated chicken. But
also farmers have been hit by the UK labor government
last year, so any further pain for them would be
politically difficult. And migration, which as we saw with the
UK India deal just this week, it's a very hot topic,
so any changes there may get picked up by rival parties, So.
Speaker 2 (13:52):
Some of the political strands at play here as well.
Let's think about the economics then, with you, Lizzie Burden.
A trade deal that lessens the impact of tariff's surely
good news for the Bank of England. How worried have
policymakers been about this issue?
Speaker 10 (14:06):
Really worried, Stephen, because today we were expecting to get
the Trump cut from the Bank of England because of
this growing consensus that the tariff war was going to
weigh on UK growth and weigh on UK inflation as well.
Speaker 5 (14:20):
But the expectation of a deal.
Speaker 10 (14:23):
Throser Spanner in the works about the path ahead for rates,
because we were expecting that the signaling around the decision
today was going to be potentially very very duvish. We
could have had a vote split with more than one
member going for a jumbo cut, not just swatted Ingrad
the arched of, but maybe even Deputy Governor Dave Ramsden
and Alan Taylor as well, the newest member of the
(14:44):
Monitary Policy Committee. We were expecting maybe the guidance around
the decision would be dubvish as well. At the moment,
they say that the path ahead for rates is gradual
and careful, careful because they wanted to assess the impact
of Trump's trade war, and if that had been dropped,
it was suggests that the balance of risks was tilted
to a slow down in growth, not inflation rising. And
(15:07):
if they took away careful, gradual, sorry, it would suggest
that maybe a June cut was on the table as well,
and that'd be the first back to back rate cut
since COVID and before that the financial crisis.
Speaker 5 (15:18):
But this changes things, Liz.
Speaker 2 (15:20):
I'm going to ask you an impossible question, given that
we don't know what's going to be in this announcement
later on. But what potentially could a trade deal with
the US do for Britain's economic trajectory. We know that,
for example, there are plenty of fiscal challenges facing the
Chancellor which are to do with slow and growth.
Speaker 10 (15:35):
Well, let me pick up where James left off. We
don't know what the terms of this deal will be,
but we do know that Primier secure style has been
focused on mitigating those twenty five percent steal and car tariffs.
It may be that the UK still faces this ten
percent baseline tariff, but even if they were successful on
those fronts, the UK would still be impacted by global
(15:58):
lower demand. Oil is lower, that's disinflationary. You don't know
what they're going to achieve on US China talks at
this weekend and beyond, so it may still be that
the UK's flooded with cheap goods, as may be the
rest of Europe. That would be disinflationary, and we've still
got a stronger pound. So there are lots to factor in,
(16:19):
as well as the fact which is hopeful that this
trade deal, if we get one, opens the door to
more trade deals, lowering the impact of that Tarifar.
Speaker 2 (16:28):
Overall okay, and of course look ahead to in the
short term. Something we do know about, which is the
Bank of England decision that's happening at twelve o two
today and well, of course have full coverage across Bloomberg.
Speaker 5 (16:38):
James.
Speaker 2 (16:39):
The final thought from you this would be an agreement
coming after the India trade deal and now it's just
a couple of days ago. Is this going to help
broadly the government to convince voters that they are making
progress on their plan to grow the UK economy, which
we know is this big and main priority that they have.
Speaker 9 (16:57):
I mean to state the obviously, then voters don't look
at trade deals when they go to the polls. They
look at how much cut things are on the shelves.
They look at how they feel about their quality of life.
And that's why what Lizzie was saying is so important
in terms of global demand. Imagine a world, for example,
where this trade deal creates big economic growth, but then
broadly the UK still suffers from a high inflation, low
(17:19):
growth global picture.
Speaker 5 (17:21):
Do people feel better off?
Speaker 9 (17:24):
So that's the challenge that kir starmer Face is coming
into today in communicating the benefits of this deal and
any gains from it. It's not enough for the average
voter just to have the great economic headlines, which are
a good new economic used and potentially the good print
sort of media noise around this. It also has to
translate to quite literally the penny in your pocket, and
(17:44):
that kind of varies sort of retail politics site, so
that will be for him, I think the key judge
of political success. How this deal is then sold to
the general public.
Speaker 5 (17:55):
This is Bloomberg Daybreak Europe.
Speaker 2 (17:57):
You're a morning brief on the stories making news from
London to Wall Street and beyond.
Speaker 11 (18:01):
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Speaker 2 (18:07):
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Speaker 11 (18:13):
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Speaker 5 (18:21):
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Speaker 2 (18:23):
Join us again tomorrow morning for all the news you
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Break Europe.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Daybreak, heurate podcast, available every morning
on Apple, Spotify or wherever you listen. It's Thursday, the
eighth of May in London. I'm Stephen Carroll. Coming up today.
Bloomberg understands that a UK US trade agreement will be
announced by President Trump later today. The possibility of a
deal could hand British Prime Minister cair Starmer a political win,
(00:31):
but the devil will be in the details. Plus threading
the needle on thread Needle Street, the Bank of England
prepares to cut interest rates as a potential tariff deal
adds complexity to the inflation outlook. Let's start with the
roundup of our top stories. US President Donald Trump is
expected to announce a trade agreement with the UK later today.
Details of the agreement remain unclear, but it is believed
(00:54):
to be a framework deal that could serve as a
starting point for further negotiations. Trump hinted at the announcement
and a social media post on Wednesday night saying he
would hold an Oval Office news conference to discuss a
major trade deal with representatives of a quote big and
highly respected country. The New York Times first report of
the deal would be with the UK, with sources later
(01:15):
confirming the prospect to Bloomberg. Speaking last month, when President
Trump announced his first global tariffs, Prime Minister Kirs starmer
It said getting a deal was his plan.
Speaker 3 (01:25):
Nobody wins in a trade war that is not in
our national interest. We have a fair and balanced trade
relationship with the US. Negotiations on an economic prosperity deal,
one that strengthens our existing trading relationship they continue and
we will fight for the best deal for.
Speaker 2 (01:45):
Britain, Kis starmer There, speaking last month. Now, the UK
and US have been an intensive discussions about an economic
agreement that would reduce the impact of some tariffs, with
a team of British officials in Washington negotiating terms. This
week has strengthened and stop futures have risen after those
reports emerged. Investors will be watching closely to see the
extent to which Trump is willing to backtrack from his
(02:08):
sweeping tariffs. The UK has been pushing to strike a
deal with Donald Trump to shield British industry from tariff's,
including twenty five percent duties on steel and car exports.
Kirs Starmer's government has also been worried about the tariffs
the US may impose on the pharmaceuticals sector and the
British film industry. A key sticking point for the US
is Britain's two percent digital services tax on revenues from
(02:30):
UK users of platforms like Google, Meta and Amazon. The
taxes unpopular in Washington, and UK ministers have been weighing
whether to cut or scrap it in a bid to
secure an agreement. A deal with the US would be
a welcome boost for Kirstarmer's government here, but as You
and Parts explains, the detail will be all important.
Speaker 4 (02:48):
A deal with the United States has long been the
holy grail of UK trade policy. Imports from and exports
to the world's biggest economy total more than three hundred
billion dollars, an account for one pounds in six of
all UK trade, but politically a deal has always been
fraught with risk, with many fearing a lowering of food
standards leading to the imports of American hormone treated beef
(03:09):
and chlorine washed chicken. US healthare companies have also long
pushed for fuller access to the UK market, causing concern
for many in Starmer's own party, and if the PM's
expecting unqualified support from those in other parties, well, the
FARI pushback to the India trade deal should serve as
something of a warning in London, I'm unepots Bloomberg Radio.
Speaker 2 (03:29):
The prospect of a potential economic and political win for
the UK government comes as a new forecast suggests the
Chancellor Rachel Reeves will miss her fiscal rules by tens
of billions of pounds in the upcoming utumn budget. According
to the National Institute of Economic and Social Research, Reeves
is projected to fall fifty seven billion pounds short of
(03:49):
meeting her primary fiscal stability rule, has nearly thirty billion
pounds short on her investment rule. The prominent economic think
tank warrants of the resulting fiscal black hole will leave
the government with little choice but to raise taxes or
cut spending in the year ahead, with Reeves facing what
it caused difficult choices come the autumn, while the uncertain
(04:09):
fiscal backdrop comes as the Bank of England is widely
expected to cut interest rates by a quarter percentage point
later today with May.
Speaker 5 (04:15):
Here's Boomberg's Crispit.
Speaker 6 (04:17):
All thirty two economists surveyed by Bloomberg anticipate the policy
makers will lower the benchmark rate by twenty five basis
points to four point two five percent. Markets are also
pricing in a quarter point reduction as a near certainty,
with strong odds of another cut when policy makers reconvene
next month. What remains less certain is the longer term path.
(04:41):
The potential for a UK US agreement on reducing tariffs
could further complicate the inflation outlook. Just as the Bank
prepares to unveil its first full assessment of the impact
of President Trump's trade levies in London, Christopher Pitt Bloomberg Radio.
Speaker 2 (04:59):
Federal Reserve Charge your own Powells says policymakers aren't in
a hurry to alter interest rates. Officials voted unanimously yesterday
to keep borrowing costs unchanged for a third straight meeting.
Speaking after the decision, Powell warned that the Trump administration
tariffs could lead to higher inflation and unemployment.
Speaker 7 (05:16):
Near term measures of inflation expectations have moved up, as
reflected in both market and survey based measures. Survey respondents,
including consumers, businesses, and professional forecasters, point to tariffs as
the driving factor.
Speaker 5 (05:29):
The federal reserves to your own Powells.
Speaker 2 (05:30):
Speaking there, several officials have signals they would not support
lowering interest rates preemptively to protect against a slowing economy. Meanwhile,
President Donald Trump is repeatedly called on the Central Bank
to cut borrowing costs immediately. Now, President Trump is planning
to rescind Biden era US AI chip curbs in a
bid to revise semiconductor trade restrictions. Bloomberg understands the existing
(05:54):
measures have been heavily criticized by major tech companies and
foreign governments. The repeal, yet to be finalized, aims to
abolish the tiered system to create created to regulate chip
exports Nvidia and other firms. Our senior Tech editor Michael
Shepherd says the decision is a win for big tech's win.
Speaker 8 (06:12):
For in Nvidia, which is pressed for a total repeal
of these chips curves. It's known as AI diffusion rule,
and it really has caused a lot of consternation in
the industry because they see it as something that will
have the perverse effect of throwing countries and their companies
into China's arms seeking access to advanced AI technology.
Speaker 2 (06:32):
Bloomberg's Michael Shepherd, speaking their sources say the Trump administration
won't enforce the curb known as the AI Diffusion Rule
when it takes effect on May fifteenth, And those are
your top stories on the markets. The pound is trading
at the moment a quarter of one percent stronger against
the dollar. One thirty three twenty five is. The Bloomberg
Dollar Spot Index is flat, driven by some of those
(06:54):
trade headlines. We're looking at foot SYE one hundred features
up by eight tenths of one percent, eurostocks fifty features
are nine tenths higher. On Wall Street, SMP minis are
up by eight tens and NASDAK futures are up by
one point one percent. This as the tenure treasury yield
is up three basis points to four point three percent.
In a moment, will a full coverage of the expected
USUK trade deal due to announced later today, but just
(07:17):
a word first on a transatlantic deal of a different kind.
A British made watch that's become a prized possession of
one of the biggest names in American finance. In his
latest Watch Club newsletter, Bloomberg Pursuits editor Chris Ross are
spoken to Pershing Square founder Bill Ackman, and it turns
out that he owns a particularly important timepiece to those
in the know. It's Roger Smith's pocket watch number two,
(07:38):
the watch that started the legendary watchmaker's career making pieces
which can sell for millions of dollars at auction now
and Chris has a great summary of that story in
his newsletter, plus some pictures of the beautiful craftsmanship in
that pocket watch, which Ackman bought for four point nine
million dollars in twenty twenty three. Now Acman's right to
get Roger Smith's first watch, which has an even more
(07:59):
in story about how it led to that month's particular success.
You can read the details in the watch Club newsletter
Bloomberg dot com slash Newsletters. Okay, well, let's dig into
our top story. Then, Donald Trump going to announce a
trade deal with the UK later today, according to Bloomberg sources.
Charlie Weills is here with some more details for us.
First of what we've heard out of the US. Charlie,
(08:20):
good morning. What do we know that about what's coming
in this announcement?
Speaker 1 (08:23):
Steven, So, the details so far are hazy, but we
can definitely view this as a win for both the
US and the UK. If you want to start with
the US, you know, the White House certainly needs an
off ramp as these trade tensions ratchet up. Trump's selling
point to American voters had been his stewardship for the
American economy, and we're seeing in polling numbers that trend down,
and not just on that broader economic point, but also
(08:46):
on the issue of tariffs, Americans having a more negative view,
and a lot of this polling for the UK, you know,
the country has been searching for a trade deal since Brexit.
Starmar of course announced this week a major trade deal
with India and this just kind of builds on that
story there. But as far as specifics, we don't have
a lot yet. But what we know about where things
stand right now, you know, the US is the UK's
(09:08):
largest single export market. They are the UK is subject
to that ten percent global baseline that Trump announced, as
well as a lot of these sectoral tariffs, that twenty
five percent tariff on steel and autos, and then this
looming threat of pharma tariff. So I think the big
question is how would a potential deal change that dynamic.
Speaker 2 (09:27):
And indeed, of course trade deals normally take many years
to negotiate as well, So the prospect of what we
will get will be very interesting to see what detail
or how much detailed there will be, or what this
perhaps sets the stage for further negotiations down the line.
Where does the power line Washington in this as well?
What can the White eyes do? Where does Congress get
involved in the process as we go forward?
Speaker 5 (09:49):
So you know that has been incredibly hazy as well.
Speaker 1 (09:51):
Right there has been so much coming from the executive branch,
and I think a big question has been, you know,
how much power does the president have versus the legislative branch.
And I think you know, there have been concerns on
the Democratic side about this happening, and so I think,
you know, this is one of the questions where you
can announce, say a top line deal between countries, but
(10:12):
then the specifics just takes so long to hammer out.
We know that the US and the UK have formally
been talking about a trade deal since twenty twenty, and
I think one concern, you know, we're seeing a lot
of optimism in the market right now, but as that
starts to digest as the fact that these deals take
so long, that this potential one has you know, been
in the works for a very long time. That could
(10:33):
dampen some of the positivity.
Speaker 2 (10:35):
What about the prospect beyond the UK then, could this
be as it would be the first a template for
deals to come for other countries down the line, Stephen.
Speaker 1 (10:44):
I think that's why there is a lot of optimism
we're seeing across the globe right now, the fact that
you know, this could provide an off ramp, not just
for the US and the UK, and in a lot
of ways that relationship has been strong. We knew when
those initial tariffs the UK was targeted much less in
other countries. But yes, this could provide something of a framework,
a starting point that other countries could use. That could signal,
(11:06):
you know, an end to a lot of the uncertainty
that we're seeing because we have an idea of a
way forward.
Speaker 2 (11:11):
Okay, Charlie Wells, thank you very much. What an agreement
that would lower US tariffs and UK and boards would
be a big win for the British government, as Charlie
was saying, it could also bring some good economic news
on a day when we're expecting the Bank of England
to cut interest rates, So let's bring in our UK
politic supporter James Wilcock and our UK correspondent Lizzie Burden,
who's covering the Bank of England decision today as well.
Speaker 5 (11:30):
James, I want to start with you.
Speaker 2 (11:32):
Charlie pointed to some of the strength of the relationship
or the history between the UK and the US there,
but how significant would it be for the UK to
be first with a deal on trade.
Speaker 9 (11:43):
It would be a genuine coup for Prime Minister Kissed
Arma and one he would hold over all opposition parties
for the duration of his prime ministership. I mean, look
back in the Brexit referendum, even before any referend was
voted on, people talking up a US UK trade deal.
Theresa May in twenty eighteen went to Trump to go
and try and get one signed. Boris Johnson went again,
went to Biden. These negotiations contigued all through twenty twenty
(12:06):
and then it faded, and then we had COVID and
then by the time of Richies Sunak and this Trust,
they were just talks of sort of odd deals with
the odd US states. So to go from that to
having a deal be back on the table and potentially
having one there that it would validate Starmer's approach to
how he's a conducting negotiations and to an extent five
years after the UK left the EU gives Breggs it
(12:28):
is some backing as well in terms of being able
to negotiate with the US outside of the EU.
Speaker 2 (12:34):
Okay, so there's plenty of positives to focus on. But
what could be the sensitive issues at play. We don't know,
as Charlie was outlining, what the details of the agreement
will contain, but there are some hot button issues that
could come up in that that perhaps might give the
opposition some food for criticism.
Speaker 9 (12:51):
Yes, I mean, as Charlie was saying, we're quite like
to go what's called like a head of terms agreements
going to the press speculation, which is where you get
a preliminary deal rather than the full thing. So the
question then is how long will the full fat deal
take to negotiate on when will it take effects? The
key areas though, are will this base ten percent tariff
that's been applied globally be rolled back in any way,
shape or form. And then we seen reporting in previous
(13:14):
weeks that were likely some sort of movement on steel
and cars, both which phase twenty five percent tariffs. Let's
see what happens with pharmaceuticals, which is another key area,
especially for the UK with big farmer giants. Now the
political hot topics for the UK at least are the NHS,
any talk about healthcare or privatize healthcare, farmers and agriculture
(13:34):
where there have been big fears around chlorinated chicken. But
also farmers have been hit by the UK labor government
last year, so any further pain for them would be
politically difficult. And migration, which as we saw with the
UK India deal just this week, it's a very hot topic,
so any changes there may get picked up by rival parties, So.
Speaker 2 (13:52):
Some of the political strands at play here as well.
Let's think about the economics then, with you, Lizzie Burden.
A trade deal that lessens the impact of tariff's surely
good news for the Bank of England. How worried have
policymakers been about this issue?
Speaker 10 (14:06):
Really worried, Stephen, because today we were expecting to get
the Trump cut from the Bank of England because of
this growing consensus that the tariff war was going to
weigh on UK growth and weigh on UK inflation as well.
Speaker 5 (14:20):
But the expectation of a deal.
Speaker 10 (14:23):
Throser Spanner in the works about the path ahead for rates,
because we were expecting that the signaling around the decision
today was going to be potentially very very duvish. We
could have had a vote split with more than one
member going for a jumbo cut, not just swatted Ingrad
the arched of, but maybe even Deputy Governor Dave Ramsden
and Alan Taylor as well, the newest member of the
(14:44):
Monitary Policy Committee. We were expecting maybe the guidance around
the decision would be dubvish as well. At the moment,
they say that the path ahead for rates is gradual
and careful, careful because they wanted to assess the impact
of Trump's trade war, and if that had been dropped,
it was suggests that the balance of risks was tilted
to a slow down in growth, not inflation rising. And
(15:07):
if they took away careful, gradual, sorry, it would suggest
that maybe a June cut was on the table as well,
and that'd be the first back to back rate cut
since COVID and before that the financial crisis.
Speaker 5 (15:18):
But this changes things, Liz.
Speaker 2 (15:20):
I'm going to ask you an impossible question, given that
we don't know what's going to be in this announcement
later on. But what potentially could a trade deal with
the US do for Britain's economic trajectory. We know that,
for example, there are plenty of fiscal challenges facing the
Chancellor which are to do with slow and growth.
Speaker 10 (15:35):
Well, let me pick up where James left off. We
don't know what the terms of this deal will be,
but we do know that Primier secure style has been
focused on mitigating those twenty five percent steal and car tariffs.
It may be that the UK still faces this ten
percent baseline tariff, but even if they were successful on
those fronts, the UK would still be impacted by global
(15:58):
lower demand. Oil is lower, that's disinflationary. You don't know
what they're going to achieve on US China talks at
this weekend and beyond, so it may still be that
the UK's flooded with cheap goods, as may be the
rest of Europe. That would be disinflationary, and we've still
got a stronger pound. So there are lots to factor in,
(16:19):
as well as the fact which is hopeful that this
trade deal, if we get one, opens the door to
more trade deals, lowering the impact of that Tarifar.
Speaker 2 (16:28):
Overall okay, and of course look ahead to in the
short term. Something we do know about, which is the
Bank of England decision that's happening at twelve o two
today and well, of course have full coverage across Bloomberg.
Speaker 5 (16:38):
James.
Speaker 2 (16:39):
The final thought from you this would be an agreement
coming after the India trade deal and now it's just
a couple of days ago. Is this going to help
broadly the government to convince voters that they are making
progress on their plan to grow the UK economy, which
we know is this big and main priority that they have.
Speaker 9 (16:57):
I mean to state the obviously, then voters don't look
at trade deals when they go to the polls. They
look at how much cut things are on the shelves.
They look at how they feel about their quality of life.
And that's why what Lizzie was saying is so important
in terms of global demand. Imagine a world, for example,
where this trade deal creates big economic growth, but then
broadly the UK still suffers from a high inflation, low
(17:19):
growth global picture.
Speaker 5 (17:21):
Do people feel better off?
Speaker 9 (17:24):
So that's the challenge that kir starmer Face is coming
into today in communicating the benefits of this deal and
any gains from it. It's not enough for the average
voter just to have the great economic headlines, which are
a good new economic used and potentially the good print
sort of media noise around this. It also has to
translate to quite literally the penny in your pocket, and
(17:44):
that kind of varies sort of retail politics site, so
that will be for him, I think the key judge
of political success. How this deal is then sold to
the general public.
Speaker 5 (17:55):
This is Bloomberg Daybreak Europe.
Speaker 2 (17:57):
You're a morning brief on the stories making news from
London to Wall Street and beyond.
Speaker 11 (18:01):
Look for us on your podcast feed every morning, on Apple,
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Speaker 2 (18:07):
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Our flagship New York station is also available on your
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Speaker 5 (18:21):
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Speaker 2 (18:23):
Join us again tomorrow morning for all the news you
need to start your day right here on Bloomberg day
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