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

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Speaker 2: This is the Bloomberg Daybreak Europe podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Monday, the

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Speaker 2: tenth of February in London. I'm Stephen Carroll. Coming up today.

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Speaker 2: Donald Trump on veil's plans for punitive tariffs on steel

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Speaker 2: and aluminium imports. Activist investor Elliott builds a significant stake

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Speaker 2: in the struggling British oil giant BP plus. After years

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Speaker 2: of decline, currency trading is cool again. We have a

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Speaker 2: special report on why. Let's start with a roundup of

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Speaker 2: our top stories. Donald Trump says he will impose twenty

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Speaker 2: five percent tariffs on all imports of steel and aluminium

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Speaker 2: into the United States. The US President says the tariffs

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Speaker 2: will apply to imports of the metals from all countries.

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Speaker 2: Here is his exchange with reporters on our Force one yesterday.

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Speaker 1: We'll also be announcing steel tariffs on Monday, this.

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Speaker 3: Monday.

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Speaker 2: Yeah tomorrow, count on everybody steel.

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Speaker 3: Yeah. Eddy Steele coming into the United States is going

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Speaker 3: to have a twenty five percent terrible a.

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Speaker 2: Little bit of two ten percent, twenty five for both.

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Speaker 2: Trump didn't clarify if imports of metal from China would

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Speaker 2: face double tariffs, after he imposed a blanket ten percent

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Speaker 2: charge on products from the country last week. According to

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Speaker 2: a report for Morgan Stanley, US industry is heavily reliant

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Speaker 2: on imported aluminium, while the aerospace and auto sectors also

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Speaker 2: use high grade steel from overseas. Joe Doe covers metals

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Speaker 2: and mining for Bloomberg News.

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Speaker 3: A lot of difficulty for traders, for buyers in the

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Speaker 3: US and more broadly across the markets across the globe, right,

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Speaker 3: because the US market kind of sets the tone. And

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Speaker 3: I think there's a concern, right We had Trump say

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Speaker 3: he was going to put tariffs on, you know, imports

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Speaker 3: from canaon in Mexico last week, and then he pulled

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Speaker 3: back from that. Now he's coming out and saying aluminum

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Speaker 3: and steel tariffs on all incoming imports across the globe.

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Speaker 2: And I was just there from Boomberg's Joe Doe as

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Speaker 2: Donald Trump says he'll also announce reciprocal tariffs this week

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Speaker 2: on countries that tax US imports away from tariffs. The

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Speaker 2: US president also told reporters he believes Elon Musk's government

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Speaker 2: efficiency team had found irregularities in US Treasury Department data.

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Speaker 1: There could be a problem.

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Speaker 4: You've been reading about that with treasuries, and that could

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Speaker 4: be an interesting problem because it could be that a

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Speaker 4: lot of those things don't count.

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Speaker 5: With other words, that some of that stuff that.

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Speaker 1: We're finding is very fraudulent. Therefore, maybe we have less

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Speaker 1: debt than we thought.

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Speaker 2: Of think of that, It's not clear whether Trump was

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Speaker 2: talking about US government debt or payments processed through the

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Speaker 2: Treasury Department. When asked about the president's remarks, and official

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Speaker 2: tel Bloomberg that mosk's so called Department of Government Efficiency

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Speaker 2: and improvements to the Treasury payment system would reduce future

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Speaker 2: deficits and debt. The White House as yes to respond

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Speaker 2: to a request to elaborate. BP is facing a showdown

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Speaker 2: with one of the world's most aggressive activist investors. Elliott

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Speaker 2: Investment Management, has built a significant stake in the British

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Speaker 2: energy giant, which has seen dramatically worse returns than other

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Speaker 2: oil majors for years. In other companies, Elliott has successfully

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Speaker 2: campaigned for breakups, ousted board members, and changed corporate policy.

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Speaker 2: BP reports fourth quarter financial results tomorrow and a new

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Speaker 2: strategy in two weeks time. British workers think job cuts

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Speaker 2: are coming and they're holding back on spending. Unemployment expectations

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Speaker 2: hit a two year high last month as companies and

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Speaker 2: employees grow miserable about the economy. Bloomberg's James Wilcock has

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Speaker 2: the story did you.

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Speaker 6: Check to see if your CV was up to date

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Speaker 6: this new year? While a report from the Bank of

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Speaker 6: America says nearly half the people they surveyed are worried

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Speaker 6: about their job. That's a sudden jump of ten percentage

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Speaker 6: points in one month. Despite twenty twenty four being one

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Speaker 6: of the best years on record for real terms pay increases,

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Speaker 6: it seems reports of job cuts and retailers and rising

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Speaker 6: taxes and making people plan for the worst. Many had

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Speaker 6: looked to the UK consumer to boost growth and spend more,

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Speaker 6: but instead they seem to be bracing for a rainy

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Speaker 6: day in London. James Walcock, Bloomberg Radio.

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Speaker 2: France's president says companies and funds will invest over one

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Speaker 2: hundred billion euros and artificial intelligence projects in his country

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Speaker 2: over the coming years. Speaking in a television interview last night,

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Speaker 2: President Macron referred to a previously announced project up to

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Speaker 2: fifty billion euros from an Emorati fund, but also fresh

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Speaker 2: money from US and Canadian sources Brookfield Asset Managements, as

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Speaker 2: it plans to invest twenty billion to develop AI infrastructure

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Speaker 2: in France over the next five years. Macron was speaking

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Speaker 2: ahead of today's AI Action Summit in Paris, which is

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Speaker 2: being attended by political and business leaders, including India's Prime Minister.

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Speaker 2: And The Philadelphia Eagles are Super Bowl champions the defeat

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Speaker 2: of the Kansas City Chiefs forty to twenty.

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Speaker 1: Two in New Orleans.

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Speaker 2: The win denies the Chiefs the third consecutive victory in

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Speaker 2: American football's showpiece event. His Super Bowl MVP and Eagles

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Speaker 2: quarterback Jalen Hurts and what it took to beat the

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Speaker 2: two time defending champions.

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Speaker 3: You don't do great things without the jazz around you.

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Speaker 1: So the effort, the word, always leaning on net, trusting

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Speaker 1: in Net, and trusting the process, and staying the course

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Speaker 1: and sticking to the script.

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Speaker 2: Eagles quarterback jail And Hurts speaking there after. His opposite

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Speaker 2: number Patrick Mahomes, was sacked six times and through two

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Speaker 2: interceptions during the one sided game. It is the Eagles

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Speaker 2: second Super Bowl win, having claimed their first in twenty eighteen.

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Speaker 2: Those are our top stories on the markets. We're looking

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Speaker 2: at the msci as, the Pacific Index a quarter of

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Speaker 2: one percent weeker this morning, the Bloomberg Dollar Spot Index

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Speaker 2: two tenths stronger on the back of those latest tariff announcements.

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Speaker 2: The tenure Treasury yield is down a basis point at

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Speaker 2: four point four to nine percent. European stock features are

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Speaker 2: positive for now, up three tenths of one percent, and

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Speaker 2: on Wall Street stock features are looking positive as well.

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Speaker 2: A s MPE ME and He's are three tenths of

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Speaker 2: one percent higher. Well, in a moment, we'll bring you

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Speaker 2: more on the steel and aluminium tariffs that Donald Trump

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Speaker 2: is planning, plus why the new president's policies are making

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Speaker 2: currency trading cool again. The first round of the story

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Speaker 2: that caught my eye this morning to do with smaller

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Speaker 2: amounts of currencies, the perhw's we're used to talking about pennies.

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Speaker 2: Donald Trump says he's ordered a stop to minting new

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Speaker 2: pennies because they cost more to make than they're worth now.

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Speaker 2: There have been attempts to eliminate the coin for decades,

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Speaker 2: the US Mint said, and it's twenty twenty four annual

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Speaker 2: report that it costs about three point seven cents to

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Speaker 2: produce and distribute a penny, up more than twenty percent

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Speaker 2: from the previous year. These higher costs are partly due

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Speaker 2: to the rising price of metals like zinc and copper.

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Speaker 2: But on truth Social Trump announced that he directed the

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Speaker 2: Treasury Secretary to halt production of the one cent coin

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Speaker 2: featuring Abraham Lincoln as part of a broader effort to

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Speaker 2: cut waste in the national budget. Now, this is reigniting

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Speaker 2: an old debate over the penny. It's not just one

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Speaker 2: being having the US as well. It's worth noting Finland,

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Speaker 2: Belgium and the Netherlands of stop minting one and two

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Speaker 2: cent coins, and last year the British government didn't place

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Speaker 2: an order with the Royal Mint for new one and

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Speaker 2: two pe coins as well, something being thought about in

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Speaker 2: many parts of the world. But that's what Donald Trump

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Speaker 2: is planning to do with the penny. Anyway, Let's bring

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Speaker 2: you more now on those Trump tariff plans. The US

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Speaker 2: President announcing at twenty five percent levy on all imports

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Speaker 2: of steel and aluminium ORIMEA. And He's director Rosalind Matson

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Speaker 2: is with me now for more. Ros Good morning, Steel

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Speaker 2: and aluminium tariffs were among the first ones that Donald

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Speaker 2: Trump imposed during his last presidency. So how significant is

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Speaker 2: this latest move.

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Speaker 4: Well, it does fit in with the patent that we've

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Speaker 4: seen of quite a blizzard of actions in the early

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Speaker 4: stage of the presidency, an idea that pretty much Donald

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Speaker 4: Donald Trump wants to put tariffs on everything. He's talking

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Speaker 4: about reciprocal tariffs this week, blanket tariffs, and that this

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Speaker 4: is the more targeted announcement really of any that we've

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Speaker 4: seen so far. Mostly he's just announced that he's putting

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Speaker 4: a flat tariff on imports from a particular country. But

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Speaker 4: of course we also can see from the market reaction

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Speaker 4: in the dollar obviously has moved a bit on this,

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Speaker 4: but stock markets don't seem to be crumbling on it.

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Speaker 4: And the sense that maybe is this again an opening

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Speaker 4: salvo of something that would become refined or even deferred

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Speaker 4: as time goes on, because that's what we've seen so

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Speaker 4: far from his announcement speed about blanket tariffs on Canada

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Speaker 4: and Mexico. I mean, obviously tariffs did come into force

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Speaker 4: on China and that's one particular exemption. But the interesting

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Speaker 4: thing will be in this region to see whether the

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Speaker 4: EU now feels it has to get into the fray year.

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Speaker 4: It's been watching all of this, no doubt, in quite

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Speaker 4: a nervous fashion. And now do we see Europe say

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Speaker 4: we're going to have to preempt something here, so we

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Speaker 4: are going to have to announce something ourselves against the

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Speaker 4: US or do they wait to see when or how

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Speaker 4: these tariffs might be enacted, because that's also not clear

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Speaker 4: at the moment. And then do you see some kind

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Speaker 4: of European response come at that point? But certainly just

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Speaker 4: another element in the complex soup, should we say, of

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Speaker 4: tariff announcements so far?

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Speaker 1: Yeah, indeed.

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Speaker 2: I mean who does stand to actually be hurt most

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Speaker 2: by these tariffs?

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Speaker 4: Well, the big one for both steel and aluminum is Canada,

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Speaker 4: as well as Mexico China for both, although China didn't

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Speaker 4: explore a ton of aluminum to the US last year.

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Speaker 4: I mean, it really drops off after Canada as by

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Speaker 4: far the biggest exporter for both. But you do see

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Speaker 4: names on that list that are country as you were

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Speaker 4: considered to be US allies, I mean Germany for one.

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Speaker 4: You also see countries like Vietnam, Korea, Japan, the UAE, Bahrain,

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Speaker 4: So it's a really broad church of countries that could

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Speaker 4: be impacted by but far and away the very biggest

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Speaker 4: one of all of those is Canada, Okay.

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Speaker 1: So that's the key to watch in terms of response.

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Speaker 2: This is all happening, is China's retaliatory tariffs announced last

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Speaker 2: week come into forest today. Does this open the door

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Speaker 2: potentially for further escalation on that front.

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Speaker 4: It's a bit howd to know whether this twenty five

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Speaker 4: percent tariff would be on top of the blanket ten

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Speaker 4: percent tariff that Trump has announced on China or in

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Speaker 4: lieu of because again we don't know when some of

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Speaker 4: these actions might be taking effect. So that's one aspect

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Speaker 4: of it, because if it's then seen as an add

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Speaker 4: on already for China, then you will need to see

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Speaker 4: some kind of response from China to it. What we

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Speaker 4: have seen so far though, is even though China has

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Speaker 4: taken action against the US, they both seem to be

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Speaker 4: looking for something that's quite calibrated to not be seen

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Speaker 4: as to be taking the next step of escalation. And

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Speaker 4: certainly you can see a desire from the part of

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Speaker 4: China at some point for segping the Chinese president to

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Speaker 4: talk to Donald Trump about this and that call has

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Speaker 4: not happened yet. Maybe it will happen at some point

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Speaker 4: this week, because they when they get in a room together,

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Speaker 4: they tend to be able to sort stuff out. We've

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Speaker 4: seen that previously, and perhaps that's the next card that

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Speaker 4: China's going to play.

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Speaker 2: And just a word too, rather than another story that

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Speaker 2: we heard from Donald Trump about Elon Musk finding a

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Speaker 2: regularity or rather his Government Efficiency team finding irregularities at

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Speaker 2: the US Treasury.

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Speaker 1: Not exactly clear what they were.

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Speaker 4: Well, that's right, it's unclear from Donald Trump's comments whether

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Speaker 4: he was talking about treasuries per se or whether he's

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Speaker 4: talking about the payment system that operates through the US Treasury,

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Speaker 4: because that's where Elon Musk and his DOGE group had

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Speaker 4: been focusing their attention really so far as on payments

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Speaker 4: to contractors and grants. But Donald Trump referred specifically to treasuries,

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Speaker 4: so it's a little bit unclear what he meant by

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Speaker 4: that and whether he was also referring to the payment system.

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Speaker 4: And that's where we are potentially expecting announcements a bit

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Speaker 4: like the way that Elon Musk is looking at every

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Speaker 4: government department and the payments that are occurring.

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Speaker 1: But that certainly does.

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Speaker 4: Raise a question about what did he mean by that,

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Speaker 4: because no one's really talked about bonds so far, and

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Speaker 4: that would be quite a big development if indeed.

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Speaker 1: That's what he meant.

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Speaker 4: But it does again raise concerns about how much people

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Speaker 4: are poking around in the cupboard at Treasury and what

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Speaker 4: does this mean. You know, you can see that the

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Speaker 4: incoming US Treasury Secretary Scott Besson says, don't worry, it's

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Speaker 4: all encrypted.

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Speaker 1: It's read only. They're not able to see a lot

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Speaker 1: or do a lot.

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Speaker 4: But there are those elements of concern about if you

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Speaker 4: start examining what's going on at US Treasury, where does

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Speaker 4: that start and where does that finish?

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Speaker 2: Okay, plenty to watch there as well. Rosla Matson are

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Speaker 2: at the EMEA News director. Thank you. Let's starting out

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Speaker 2: to another aspect of the tariff story. Trump's moves have

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Speaker 2: fired up volatility and the seven point five trillion dollar

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Speaker 2: a day currency trading market that's left banks and hedge

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Speaker 2: funds scrambling to rebuild long neglected FX teams RFX and

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Speaker 2: rates reporter Alics Atkins has been writing about this, and

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Speaker 2: she joins US now for more. Alice, good morning, how

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Speaker 2: are first of all, Trump's tariff announcements affecting currency markets.

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Speaker 5: Well, Stephen, it's a good time to be an FX trader.

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Speaker 5: There's a lot of focus on FX markets, given they

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Speaker 5: tend to be the first to react to this sort

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Speaker 5: of geopolitical news. We're seeing the dollar stronger this morning,

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Speaker 5: and we've seen some big intra day moves between the

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Speaker 5: Canadian dollar and the Mexican paeso as Trump announced and

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Speaker 5: then sort of dulled back on it on his tariff measures.

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Speaker 5: And there's still lots of uncertainty. We don't really know

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Speaker 5: what's coming ahead. Trump's indicated that other regions are next

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Speaker 5: in the firing line, like the EU. So many see

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Speaker 5: these sort of big moves continuing, and it's stacking up

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Speaker 5: to be a very time in terms of FX volumes.

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Speaker 5: Hedge funds have been boosting their exposure and banks have

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Speaker 5: been adding to staffing as a result.

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Speaker 2: It's clearly a lot of interest in effects. How does

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Speaker 2: this compare to the return of the carry trades in

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Speaker 2: recent years under blow up and the end It's.

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Speaker 5: Right, interest in effects did come back in recent years

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Speaker 5: as central banks aggressively hyped rates. You really need those

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Speaker 5: interest rate differences in order to make money in EFFX,

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Speaker 5: and the industry suffered during that period of ultra and

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Speaker 5: ultra low and zero rates and lots of specialist FX

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Speaker 5: funds shut down. But because the central bank action was

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Speaker 5: very synchronized, volatility stayed fairly low, and for bank trading desks,

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Speaker 5: it's volatility which really makes them money. Margins are higher,

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Speaker 5: people need to switch up their positions a little bit

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Speaker 5: more in response, and we're already seeing them starting to

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Speaker 5: benefit from higher volatility since the US election when looking

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Speaker 5: at fourth quarter earnings results.

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Speaker 2: So what does this actually meant for people who work

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Speaker 2: in this area on those trading desks, they had shrunk

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Speaker 2: and now all of a sudden, it's the top job.

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Speaker 1: Yeah, exactly.

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Speaker 5: I think for many banks and market makers often the

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Speaker 5: FX desk was a little bit smaller than rates and equities,

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Speaker 5: and maybe they felt a bit overshadowed by their peers

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Speaker 5: and other asset classes. But now they're very much in

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Speaker 5: the spotlight. And it's particularly been the options desks which

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Speaker 5: have been expanding because with spot effects, it's become very

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Speaker 5: automated and it's all sort of overtaken by trading algorithms.

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Speaker 5: But options a little bit more complicated. So that's where

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Speaker 5: most of the hiring has taken place, and we've seen

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Speaker 5: that across banks and market makers. Hedge funds like options,

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Speaker 5: it's really the center of bets for volatility, and you've

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Speaker 5: also got a lot of corporate demand for hedging that

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Speaker 5: they tend to use options for their effs hedging.

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Speaker 1: This is Bloomberg Daybreak Europe.

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Speaker 2: You're morning brief on the stories making news from London

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