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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Day BAC podcast. Good morning, It's Tuesday,

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Speaker 2: the eighth of July. I'm Caroline Hepke in London.

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Speaker 3: And I'm Stephen Caroline Brussels. Coming up today, Donald Trump

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Speaker 3: announces new tarifrates for more than a dozen trading partners,

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Speaker 3: but suggests he's open to more negotiation.

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Speaker 2: The British government says it will ban non disclosure agreements

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Speaker 2: that are used to silence victims of misconduct.

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Speaker 3: Plus, hya once unimaginable sale or breakup of the Schroeder

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Speaker 3: family's two hundred and twenty year old City of London

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Speaker 3: firm seems more and more feasible to onlookers.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 3: US President Donald Trump has unveiled letters that threatened to

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Speaker 3: impose higher tarifrates on key trading partners, but also suggested

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Speaker 3: he was open to further negotiations. Trump began the notifications

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Speaker 3: by announcing his intent to host twenty five percent levies

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Speaker 3: on goods from Japan and South Korea. A dozen more

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Speaker 3: followed throughout the afternoon on Monday, outlining plans to tariff

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Speaker 3: foreign goods from the likes of South Africa, Indonesia, Thailand,

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Speaker 3: and Cambodia. However, in a move reminiscent of previous delays,

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Speaker 3: the US President also teased the possibility of further talks.

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Speaker 4: I would say firm, but not one hundred percent firm.

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Speaker 4: If they call up and they say would like to

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Speaker 4: do something a different way, We're going to be open

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Speaker 4: to that. But essentially that's the way it is right now.

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Speaker 3: Trump spoke shortly after signing an executive order that delays

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Speaker 3: the new tariff rates from July ninth until the first

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Speaker 3: of August for all countries facing a so called reciprocal tariff.

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Speaker 3: The move effectively buys countries an extra three weeks to

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Speaker 3: cut a deal with the White House.

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Speaker 2: The European Union is seeking to conclude a preliminary trade

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Speaker 2: deal with the US this week. The Block is hoping

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Speaker 2: to lock in a ten percent tariff right beyond the

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Speaker 2: first of August day line as it negotiates a permanent

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Speaker 2: agreement with the White House. Now, if no deal can

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Speaker 2: be done by that date, tariff's on nearly all EU

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Speaker 2: exports to the US would jump to fifty percent. Portuguese

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Speaker 2: Finance Minister, you are Quim Miranda Sarmento says that he's

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Speaker 2: hopeful a deal can be done.

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Speaker 5: We do expect that at the end it's possible to

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Speaker 5: have an agreement with very low tariffs, an agreement that

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Speaker 5: could be perceived as beneficial for both parts, and that

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Speaker 5: we could continue to allow us to trade and to

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Speaker 5: increase value for our citizens.

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Speaker 2: You are Kim Miranda Sarmento speaking there to Bloomberg. As

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Speaker 2: sources tell us, the European Commission seeking an exemption from

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Speaker 2: the ten percent rate for certain key products, including aircraft,

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Speaker 2: aircraft parts, and wine and spirits. Meanwhile, the UK says

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Speaker 2: that it is working to secure a deal with the

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Speaker 2: US to eliminate tariffs on British steel ahead of the

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Speaker 2: Wednesday deadline, when the US could raise tariffs to fifty percent.

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Speaker 3: Bulgaria could clear the final hurdle to become the twenty

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Speaker 3: first member of the euro Area next year. European Union

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Speaker 3: finance ministers are expected to sign off on the bid

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Speaker 3: later today, the culmination of nearly two decades of work

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Speaker 3: by the country towards adopting the single currency. Bulgaria would

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Speaker 3: be the second country to adopt the Euro in the

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Speaker 3: past decade. And one of only a handful to do

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Speaker 3: so since the euro crisis threatened to bring down the

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Speaker 3: currency zone now.

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Speaker 2: The number of people killed in Friday's devastating floods in

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Speaker 2: Texas has continued to rise. At least one hundred and

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Speaker 2: four people have been confirmed dead, as sarch and rescue

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Speaker 2: teams continue to look for trapped survivors. The Texas Senator

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Speaker 2: Ted Cruz gave an emotional press conference praising the bravery

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Speaker 2: of those who helped others.

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Speaker 6: Last week we were picking up our daughter camp here

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Speaker 6: in Hunt. There's still ten girls and one councilor from

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Speaker 6: Campstic that are unaccounted for. And the pain and agony

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Speaker 6: of not knowing your child's whereabouts. It's the worst thing imagine.

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Speaker 2: Cruz also address people pointing to recent Trump budget cuts

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Speaker 2: to weather forecasting staff, saying quote, this is not a

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Speaker 2: time for partisan finger pointing. Local, state, and federal officials

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Speaker 2: have faced criticism in the aftermath of the tragedy, including

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Speaker 2: questions about why the flood prone county lacked warning sirens.

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Speaker 3: President Trump says he'll ship more weapons to Ukraine in

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Speaker 3: an apparent reversal after the Pentagon halted flows of some

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Speaker 3: air defense missiles and artillery shells to the country. Trump

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Speaker 3: didn't specify what the US would provide, except to say

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Speaker 3: the armaments would be defense weapons primarily. The president's comments

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Speaker 3: will offer a measure of relief to Ukraine's President Vladimir Zelenski,

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Speaker 3: who spoke with Trump on front in an effort to

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Speaker 3: get the Holt lifted.

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Speaker 2: Now, UK businesses are going to be banned from imposing

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Speaker 2: non disclosure agreements on victims of harassment and discrimination in

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Speaker 2: the workplace. Deputy Prime Minister Angela Rayner announced the plans

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Speaker 2: to add the ban onto the Employment Rights Bill, which

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Speaker 2: is passing through parliament. Bloomberg's James Wilcock has more.

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Speaker 7: Now, if you've signed an NDA to prevent you talking

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Speaker 7: about harassment or discrimination in the workplace, the new rule

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Speaker 7: would make that contract legally null and void. It crucially, though,

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Speaker 7: would only apply to those allegations and not the standard

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Speaker 7: use of NDAs to stop commercially sensitive information leaving a company.

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Speaker 7: The bill is yet to pass, and the amendments could

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Speaker 7: yet fail or be altered further, but it is in

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Speaker 7: part a response to the years of high profile sexual

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Speaker 7: misconduct scandals in the city of London. In London, James Wilcock,

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Speaker 7: Bloomberg Radio Francis.

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Speaker 3: President Emmanuel Macron arrives in Britain today for the first

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Speaker 3: state visit from a French leader since two thousand and eight.

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Speaker 3: The three day trip is both a chance for the

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Speaker 3: countries to forage new deals on migration, defense and investment,

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Speaker 3: but also assigns a sign of thawing relations after Brexit.

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Speaker 3: Prime Minister kiro Steamer has topped up his administration improving

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Speaker 3: relationships with European countries as a way to solve Britain's issues.

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Speaker 2: And those are some of our top stories for you

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Speaker 2: this morning. Now, looking at the market, some element of

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Speaker 2: reprieve with President Trump leaving the door open to additional

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Speaker 2: trade talks. Few nations successfully negotiated trade deals in the

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Speaker 2: very short term. But looking at the MSCI Asia Pacific Index,

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Speaker 2: we're now up by two tenths of one percent. You

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Speaker 2: also had relief at least for the understanding of what

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Speaker 2: the tariffs will look like. In South Korea, the cost's

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Speaker 2: up by one and a half percent. The NIK two

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Speaker 2: five are by three tenths of one percent. Looking at

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Speaker 2: stock futures for Europe, they are down a tenth of

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Speaker 2: one percent. Europe still negotiating a deal. S and P

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Speaker 2: five founded emanis are up this morning. Goldin Sachs is

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Speaker 2: David Costin talking about a new target high target for

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Speaker 2: the S and P five hundred, up eleven percent in

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Speaker 2: twelve months time is their view. Bloomberg Dollar Spot Index

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Speaker 2: this morning is down two tents of one percent, the

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Speaker 2: pound is up. The Euro trades at one seventeen forty one,

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Speaker 2: so also stronger three tenths of one percent. And then

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Speaker 2: just looking at the bond markets this morning, tenny US

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Speaker 2: yields trading fairly flat at four thirty nine. That's a

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Speaker 2: look at the markets.

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Speaker 3: Well, in a moment, we'll bring you up to date

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Speaker 3: on the latest tariff news. Plus the challenge is facing

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Speaker 3: the UK's largest standalone asset manager, Schroeders. But another story

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Speaker 3: that caught her eye this morning, in case you're in

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Speaker 3: the market for a luxury home in the Cotswolds, you're

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Speaker 3: not alone. Apparently our Bloomberg Pursuits the UK correspondents, Sara

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Speaker 3: Rappaport has been writing about how this is peak house

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Speaker 3: buying season.

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Speaker 4: I love this fact.

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Speaker 3: Apparently agents say that Sello's well lept buyers visit until

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Speaker 3: everything is in season. Sarah mentions the roses in her

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Speaker 3: piece and that the sun is shining. Essentially, they can

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Speaker 3: showcase their properties in the most flattering light.

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Speaker 2: Yes, of course this is you know, the fabulousness of

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Speaker 2: English gardens. Yes, I can absolutely unders stand this.

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Speaker 4: Likely less fabulous in pouring rain.

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Speaker 2: Yeah, but the weather's been lovely, very very warm, and

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Speaker 2: doesn't Sarah Apple have the best job ever? Apparently the

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Speaker 2: mix of bars is also I was interested to read

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Speaker 2: a little bit different. So yes, ultra wealthy British families

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Speaker 2: from London. I mean, the Cottswolds is so beautiful and

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Speaker 2: pretty quick to get to actually from the capitol. But

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Speaker 2: it's also about global tech and finance names and interestingly

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Speaker 2: that Americans want to put roots down. Is not just

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Speaker 2: about second homes, which I thought was quite different.

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Speaker 3: I quite liked on some of the properties that Sarah

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Speaker 3: visited as well. She identified some key trends for Cotswold's

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Speaker 3: house shopping at the moment. Interestingly, the area that people

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Speaker 3: are looking for not the same as it was before

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Speaker 3: there was a big drawer and soho farmhouse, which apparently

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Speaker 3: is dwindling now everyone wants an outdoor bars and shower

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Speaker 3: and the Americans, as you say, coming and putting down routes.

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Speaker 2: Yeah, and well the outdoor bar you have to see

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Speaker 2: the pictures to really get it. But yes, it's like

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Speaker 2: a beautiful copper outdoor ball. But it's related of course

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Speaker 2: to kind of world swimming and natural swimming pools, which

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Speaker 2: is the other trend that I've noticed. But yeah, really

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Speaker 2: nice piece.

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Speaker 4: Anyway, we'll put a link to on our show notes

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Speaker 4: for you.

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Speaker 3: Let's bring you up to date on Donald Trump's tariffs

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Speaker 3: though after the US President issued that first wave of

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Speaker 3: letters with new rates, he will apply now from the

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Speaker 3: first of August. This as we've learned more about the

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Speaker 3: kind of deal the EU appears to be closing in on.

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Speaker 3: Our EMEA News director Rosalind Matheson is with us for

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Speaker 3: more raz Good morning. The letters have gone out to

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Speaker 3: around a dozen countries with their new tariff rates. Are

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Speaker 3: these better or worse than what we'd expected?

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Speaker 8: Well, they seem to be largely in line with what

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Speaker 8: people expected and in line with the earlier numbers, and

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Speaker 8: so you did see that initial market reaction, of course,

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Speaker 8: but then it has stabilized a bit in market seem

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Speaker 8: to have settled down. The interesting thing is that most

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Speaker 8: of the countries on the initial letters list, at least

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Speaker 8: if there are more to come potentially were in Asia.

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Speaker 8: So you had this twenty five percent levy on Japan

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Speaker 8: and South Korea, notably two significant trading partners with the US,

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Speaker 8: and Japan, of course, as we know, has been tricky

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Speaker 8: in terms of getting a deal with the US for

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Speaker 8: a variety of reasons, including the domestic political climate in

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Speaker 8: Japan ahead of some elections soon, but also hitting a

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Speaker 8: lot of small estates in Asia, including Cambodia, Mi and

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Speaker 8: Mah another one that got impacted, but also Indonesia and Thailand.

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Speaker 8: So real sense in this at least that he was

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Speaker 8: training his eye very much on Asia with these initial deals,

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Speaker 8: largely in line as I said with the figures, but

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Speaker 8: the message seems to be above all that they're trying

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Speaker 8: to stop transhipment of goods from China through these countries

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Speaker 8: and onto the US. So they're hoping to pressure these

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Speaker 8: Asian countries to crack down on that with these raids.

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Speaker 2: Yeah, of essential in such small trading partners or sort

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Speaker 2: of top of the list. But then President Trump also

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Speaker 2: says that there is this new first of August deadline,

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Speaker 2: but it's not one hundred percent firm. That does also

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Speaker 2: leave the door open, therefore to more negotiation. Where are

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Speaker 2: the deals looking most likely now?

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Speaker 8: Well, yes, with Donald Trump, nothing is final until it's

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Speaker 8: really final and absolutely final, and so it seems that

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Speaker 8: there is some wiggle rooms still here by pushing off

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Speaker 8: these these increased duties until at least the first of

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Speaker 8: August and so saying that he's open the conversation. We

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Speaker 8: know that there's been quite a lot of push to

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Speaker 8: get a deal with India, for example, and there's no

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Speaker 8: word for now obviously on a rate for them. We

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Speaker 8: don't know if that will come this week, but that's

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Speaker 8: a country that's very much in watch. Obviously. We're also

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Speaker 8: expecting a deal potentially very soon with the European Union,

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Speaker 8: which also has not got a rate in the latest letters.

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Speaker 8: The question is can countries like Japan and Korea navigate

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Speaker 8: their way with the US and South Africa also a

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Speaker 8: notable country that got a letter yesterday. But again, these

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Speaker 8: are significant trading partners where sectors like the Japan rice

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Speaker 8: and autos are particularly fraught. You've got a new administration

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Speaker 8: in South Korea that has to trade carefully given the

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Speaker 8: domestic mood in the country, and so they probably want

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Speaker 8: to get a deal and they're going to keep negotiating.

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Speaker 8: No Japan had the negotiated their day after day trying

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Speaker 8: to make some headway. So you'd want to watch India

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Speaker 8: obviously the EU, but also Japan and South Korea in this.

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Speaker 3: Well, just on the point about the EU, we've been

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Speaker 3: learning a little bit more about what kind of interim

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Speaker 3: arrangement the EU is aiming for a ten percent baseline

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Speaker 3: tariff with some key exclusions.

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Speaker 4: What more can you tell us about that?

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Speaker 8: Well, that's right, and it's largely in line with our

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Speaker 8: own reporting from a week or so or go, which

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Speaker 8: showed that the EU was prepared to swallow that ten

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Speaker 8: percent universal tariff in a way, but also seeking a

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Speaker 8: number of exemptions within that ten percent rate, and that

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Speaker 8: particularly for aircraft and aircraft parts as well as alcohol,

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Speaker 8: wine and spirits, and that it wanted those carve outs

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Speaker 8: from the ten percent rate in order to agree to

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Speaker 8: the deal.

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Speaker 4: But it was getting a lot.

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Speaker 8: Of pressure, we know, the EU, from key lobby groups

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Speaker 8: within the block just to get a deal done and

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Speaker 8: to ward off a broader trade war. With the US,

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Speaker 8: and so that's largely in line with what we've been

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Speaker 8: expecting for the EU. That will get this kicked down

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Speaker 8: the road as well, and it will avoid that fifty

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Speaker 8: percent tariff. But the question is two specific sectors we

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Speaker 8: seem to be particularly fraught, and that's getting the twenty

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Speaker 8: five percent tariff on automobiles and car parts lowered, and

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Speaker 8: it's fifty percent tariff on steel and aluminum. So those

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Speaker 8: are two key areas for the EU that they're trying

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Speaker 8: to get traction on, but from what we can understand,

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Speaker 8: it doesn't seem as though there's a lot of progress there.

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Speaker 8: So they might get this interim broad framework which is

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Speaker 8: just essentially to buy themselves some more time to negotiate

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Speaker 8: on those other areas.

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Speaker 1: Yeah.

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Speaker 2: Indeed, in the UK also trying to negotiate and avoid

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Speaker 2: an increase in steel tariffs that may come also, so,

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Speaker 2: as you say, still lots of negotiations to come. Roz,

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Speaker 2: thank you so much for being with us this morning.

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Speaker 2: Our EMEA news director Roslyn Matheson.

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Speaker 3: Well, in the UK, the future of the country's largest

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Speaker 3: standalone asset manager, Schroeders, is in focus. The Schroder family

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Speaker 3: sold its investment bank to city twenty five years ago.

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Speaker 4: But now many observers.

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Speaker 3: Are saying they have tough decisions to make about the

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Speaker 3: pure fund manager. Our financi porter Leo Kensherper has written

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Speaker 3: today's Bloomberg Big Take about this story, and he joins

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Speaker 3: us nowly a good morning. What are the challenges then

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Speaker 3: that Schroeders is facing.

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Speaker 1: Yes, good morning, Stephen. So essentially Schroders faces the same

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Speaker 1: or very similar challenges that many traditional active asset managers

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Speaker 1: are facing. You know, when you look at their classic

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Speaker 1: mutual funds business, costs arising and revenue is going down

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Speaker 1: because investors switch to cheaper, passively managed funds, and that

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Speaker 1: leads of course to margin compression. Schroders also has a

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Speaker 1: private markets business, you know, which consists of various units

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Speaker 1: that showed US has acquired over the years. You know,

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Speaker 1: Swiss private equity firm, a renewable infrastructure manager, these kinds

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Speaker 1: of businesses. But overall these firms aren't moving the needle

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Speaker 1: enough for Schroders as a whole, and the unit also

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Speaker 1: has missed fundraising targets over the past years. Now, what

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Speaker 1: adds to the pressure for show US is that they're

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Speaker 1: not entirely owned by the family. The family owns forty

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Speaker 1: four percent and the rest is publicly listed. So the

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Speaker 1: share price, which has now dropped, really puts pressure on them.

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Speaker 1: The share price has dropped more than forty sent from

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Speaker 1: its peak in twenty twenty one, so you can tell

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Speaker 1: that Investors Patients is definitely wearing thin here.

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Speaker 8: Yeah.

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Speaker 2: Absolutely, I mean, it's such a huge kind of passive

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Speaker 2: market right now, isn't it. But who has been really

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Speaker 2: talking about this idea that the Schroder family might sell

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Speaker 2: up and what have you learned?

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Speaker 1: Yes, that's a good question. So it's a very wide

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Speaker 1: range of city figures. You've got investment bankers and management

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Speaker 1: consultants who are following this space, of course, very closely.

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Speaker 1: You've got analysts like Pamea Librum who have very openly

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Speaker 1: said they're not sure any longer in their conviction that

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Speaker 1: the family would never sell. You also have but you

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Speaker 1: also have people who know the company or the family

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Speaker 1: who say, you know, look, you've had two patriarchs, Bruno

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Speaker 1: Schroeder and George Melnkrot, who were the main figures at

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Speaker 1: the company for decades. They both died in twenty nineteen

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Speaker 1: and twenty twenty one, and now there are six people

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Speaker 1: who probably make up the family's senior generation. Is you know,

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Speaker 1: according to the people who know them, likely leads to

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Speaker 1: a more diverse range of views about what the right

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Speaker 1: strategy is for Schroders, and any deliberations could include the

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Speaker 1: option of a sale.

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Speaker 4: What is the family said about this if anything?

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Speaker 1: Yeah, the family didn't give us a fresh statement, but

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Speaker 1: they pointed to showed us any report which says the

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Speaker 1: shoulders that showed us so called principal Shareholder Group, which

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Speaker 1: essentially consists of the trusts tied to the family are

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Speaker 1: supportive long term shareholders and intend to retain a substantial

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Speaker 1: shareholding in the company over the long time, over the

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Speaker 1: long term. So that message was in Showder's latest annual report.

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Speaker 1: There's no change here.

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Speaker 2: So then what do you think the options might be

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Speaker 2: that are open? Then if there were a sale maybe considered.

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Speaker 1: Yeah, beyond an outright sale. There are various ideas floating

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Speaker 1: around in the city. So one is from Deutsche Bank,

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Speaker 1: mainly DOTGA BAC analysts have said, you know, us could

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Speaker 1: really sell the asset management business and focus on wealth management.

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Speaker 1: Showed us bought cousin of capital, which Katers as you

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Speaker 1: can imagine too.

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Speaker 4: To high network individuals.

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Speaker 1: They bought that business in twenty thirteen and that business

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Speaker 1: is now widely considered Troda's crown jewel because it attracts

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Speaker 1: a lot of client money and is very profitable. Another

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Speaker 1: option would be to emulate the Rothschilds, you know, another

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Speaker 1: great European banking dynasty, and take the business private, but

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Speaker 1: people close to the family have told me, you know,

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Speaker 1: the showders are unlikely to do this, partly because they're

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Speaker 1: very proud of their of their London listing. And then

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Speaker 1: a final option, which has been explored by the previous CEO,

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Speaker 1: Peter Harrison a few years ago, would be to double

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Speaker 1: down on active fund management and buy Arrival. Peter Harrison

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Speaker 1: a few years ago explored buying mg Acrosstown Rival, which

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Speaker 1: is very strong and fixed income, but then decided to

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Speaker 1: abandon that plan because it would cost too much. And now,

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Speaker 1: you know, with showed us own valuation down so much,

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Speaker 1: it's hard to see, hard to see that stands changing.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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