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

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Speaker 2: This is the Bloombag Day Bak 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: thirtieth of June. Here in London. I'm Caroline Hepka. Coming

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Speaker 2: up today, back to ten percent. The UK becomes the

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Speaker 2: first country to partially reduce President Trump's tariffs as its

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Speaker 2: trade deal takes effect in Limbo. With nine days until

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Speaker 2: the end of the US's tariff pause. Canada, the EU

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Speaker 2: and Japan are all still chasing deals, and Europeans dogs

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Speaker 2: outperform their us peers as the Euro surges since the

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Speaker 2: start of the year. Why global investors are shifting money

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Speaker 2: to Europe. Let's start with the roundup of our top stories.

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Speaker 2: The UK US Trade deal comes into effect this morning,

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Speaker 2: marking the only trade deal that the White House has implemented,

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Speaker 2: with nine days to go on its self imposed tariff

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Speaker 2: pool use, the limited agreement sees tariffs reduced on cars

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Speaker 2: imported into America from twenty five percent to ten percent,

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Speaker 2: while import taxes on the aerospace sector have been removed

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Speaker 2: completely for Britain. The US promises dozens more deals on

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Speaker 2: the table in the coming days, but Bloomberg's senior editor

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Speaker 2: Bill Ferries says the White House's slogans don't match reality.

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Speaker 3: It's all over the board in terms of the messaging

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Speaker 3: from the administration. Scott Bessett really signaling a handful of

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Speaker 3: countries that are seen as negotiating in good faith will

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Speaker 3: possibly get extensions. But then Donald Trump also signaling that

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Speaker 3: he's willing to just make announcements about what some economies,

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Speaker 3: what some countries will have to pay. And in the talks,

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Speaker 3: we're not getting close to the ninety deals in ninety

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Speaker 3: days that trades are Peter Navarro promised at the beginning of.

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Speaker 2: This Fairies points to Taiwan, Japan, and the EU are

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Speaker 2: some of those who may be able to brow and extension.

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Speaker 2: President Trump's policy of reshaping global trade has shattered market

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Speaker 2: assumptions about the strength of the US dollar, stocks and

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Speaker 2: the economy. Canada has withdrawn its digital services tax on

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Speaker 2: technology companies in a bid to restart trade talks with

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Speaker 2: the US. The tax would have charged three percent of

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Speaker 2: the digital services revenue that firm makes from Canadian users

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Speaker 2: above twenty million Canadian dollars in a calendar year, with

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Speaker 2: the first payment due today, but the move comes after

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Speaker 2: President Trump said that he was ending all trade discussions

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Speaker 2: with Canada last Friday due to the levee. About three

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Speaker 2: quarters of Canada's exports go to the US, but it

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Speaker 2: is also America's largest buyer. Republicans have until Friday to

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Speaker 2: pass President Trump's tax bill through a fractious Senate h

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Speaker 2: Republican senators openly dislike parts of the so called Big

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Speaker 2: Beautiful Bill, with only four dissenting votes needed to sink it.

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Speaker 2: Some say it doesn't cut enough, Others, like Senator Tom Tillis,

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Speaker 2: say it cuts health benefits too much.

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Speaker 3: Now Republicans are about to make a mistake on healthcare

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Speaker 3: and betraying a promise.

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Speaker 2: After speaking out, Tillis was threatened by President Trump with

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Speaker 2: a rival Republican primary candidate, prompting Tillis to say that

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Speaker 2: he would not stand for re election and will not

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Speaker 2: back the bill. A recent Pew Research survey found that

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Speaker 2: forty nine percent of Americans oppose the bill, while twenty

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Speaker 2: nine percent support it. Now. New York's a Democratic mayor candidate,

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Speaker 2: Zoran mam Darni, says that he'd rather live in a

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Speaker 2: world without billionaires, citing the need for greater equality across

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Speaker 2: the city, state, and the country. In the US, the

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Speaker 2: thirty three year old a state assemblyman, gained international attention

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Speaker 2: after winning a major victory in last week's New York

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Speaker 2: Democrat primary. Over the weekend, ma'm Darmie stepped up his

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Speaker 2: rhetoric against the city's wealthiest.

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Speaker 4: What our victory showed on election night was less a

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Speaker 4: victory between one man and another, but a victory for

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Speaker 4: a city that New York is going to afford.

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Speaker 2: Ma'am Darney's views have unsettled business leaders and mainstream Democrats.

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Speaker 2: President Donald Trump threatened to withhold federal funding from New

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Speaker 2: York City if ma'm Danny is elected in November, calling

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Speaker 2: him a communist. President Trump says that he has identified

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Speaker 2: a buyer for the US operations of TikTok, but did

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Speaker 2: not name the winning bidder. The news comes after US

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Speaker 2: and Chinese officials confirmed that they'd agreed on a trade

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Speaker 2: framework last week. Speaking during a pre taped interview on

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Speaker 2: Fox News yesterday, the President expanded on the terms of

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Speaker 2: that deal.

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Speaker 5: We have a buyer for TikTok, by the way, I

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Speaker 5: think only probably China, and I think presidency will prob

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Speaker 5: probably do.

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Speaker 4: It was a group of very wealthy people.

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Speaker 2: President Trump speaking. A January deadline for TikTok's Chinese parent

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Speaker 2: company Bike Dance to find a local bar was pushed

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Speaker 2: back twice by Trump, who this month extended it again

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Speaker 2: by further ninety days. From the nineteenth of June. European

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Speaker 2: stocks have outperformed their US peers by the biggest margin

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Speaker 2: on record in dollar terms in the first half of

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Speaker 2: twenty twenty five. Now it's the most dramatic sign yet

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Speaker 2: that the region's markets are staging a comeback after more

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Speaker 2: than a decade playing catch up. But it makes you

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Speaker 2: Adebayo has that story.

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Speaker 6: Europe's market is on the comeback relative to the US.

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Speaker 6: The euro is up thirteen percent against the dollar in

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Speaker 6: the six months through June, and German burns have outperformed

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Speaker 6: Treasury since April after a chaotic Trump tariff rollout. Assets

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Speaker 6: in emerging European markets like Poland and Hungary are also

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Speaker 6: rallying sharply as investors pivot to Europe amid concern that

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Speaker 6: White House economic policy will harm earnings. Market participants are

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Speaker 6: optimistic about the future, especially as Germany, the region's largest economy,

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Speaker 6: is now committed to borrow more and invest massively in

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Speaker 6: defense and infrastructure after over a decade of austerity. A

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Speaker 6: net thirty four percent of investors are currently overweight Euro

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Speaker 6: Area equities, compared to a net thirty six percent underweight

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Speaker 6: US peers, according to the Bank of America Fund Manager

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Speaker 6: survey published this month in London. To you Adebayo Bloomberg Radio.

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Speaker 2: And to the UK Now, where the Prime Minister is

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Speaker 2: working to contain a government rebellion ahead of a vote

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Speaker 2: on his flagship welfare policy, Kirsom admitted that he was

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Speaker 2: distracted by international affairs in the week when more than

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Speaker 2: one hundred and twenty Labour MPs threatened to vote against

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Speaker 2: planned cuts to sickness and disability benefits. The government was

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Speaker 2: forced into a humiliating u turn on the plans, canceling

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Speaker 2: some three billion pounds of planned disability cuts. Health Secretary

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Speaker 2: West Treeting says that the government has listened to backbenches concerns.

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Speaker 7: The overall message from the Parliamentary Party was we agree

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Speaker 7: with your principles of reform that we've got to provide

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Speaker 7: better protection for those who genuinely can't work through no

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Speaker 7: fort their own. We've got to get more support for

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Speaker 7: people who can work, to get them into work. And thirdly,

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Speaker 7: we've got to make the system more sustainable.

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Speaker 2: So Health Secretary West streeting speaking there as the government

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Speaker 2: is expected to win Tuesday's vote on the reformed welfare

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Speaker 2: bill in the House of Commons despite the U turn,

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Speaker 2: those dozens of MPs are still considering a vote against

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Speaker 2: the government. So those are our top stories for you

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Speaker 2: this morning. Right, Let's think about the markets then, So

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Speaker 2: I mentioned the hope the optimism around the outperformance that

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Speaker 2: Europe has seen over the first six months of the year.

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Speaker 2: It does seem like something quite profound and fundamental is happening,

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Speaker 2: given Germany has removed its debt break and there is

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Speaker 2: this focus on additional spend. Is partly also driven of

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Speaker 2: course by the strength of the euro, which this morning

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Speaker 2: trades at one seventeen thirty two, so by tenth of

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Speaker 2: one percent. The dollar is weakening against most currencies, down

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Speaker 2: three tenths right now. As for the stock market futures

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Speaker 2: for the US, we're seeing the S and P five

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Speaker 2: hundred ematings up by four tenths of one percent. Last week,

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Speaker 2: of course, we had a gain every single day five

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Speaker 2: sessions for the SMP five hundred. As for the optimism

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Speaker 2: around the trade talks, the looneys edging higher. Canada ditched

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Speaker 2: its digital services tax to try to get a trade discussion,

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Speaker 2: you know, back on track with the US. The Nikey's

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Speaker 2: also jumped about one and a half percent this morning,

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Speaker 2: again on optimism. Actually is up by about nine tenths

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Speaker 2: right now. The yen also strengthening near one hundred and

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Speaker 2: forty four, Asian equities gaining for fifth day, also in

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Speaker 2: a row tenny US treasury yields. Meanwhile, let's think about

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Speaker 2: the bond markets. This morning, four twenty eight is where

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Speaker 2: we sell, so little movement on the ten year yield

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Speaker 2: brain crude futures this morning trade at sixty seven dollars

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Speaker 2: sixty three, so down two tenths of one percent. Those

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Speaker 2: are the market figures that you need to know about.

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Speaker 2: Coming up in the next part of the program, we're

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Speaker 2: going to be talking then about the ninety trade deals

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Speaker 2: that were meant to happen in ninety days. Where are

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Speaker 2: we were going to get an update on that, And

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Speaker 2: we'll also be speaking about the European stock market outperformance

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Speaker 2: with Fara Albarawi, who leads our team covering equities in

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Speaker 2: the European region, which I think will be an interesting chat.

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Speaker 2: But before we get to that, there's another attention, a

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Speaker 2: story that's got my attention. Of course, another issue. The

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Speaker 2: heat wave in the UK set to peak today at

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Speaker 2: thirty four degrees in some parts of Britain, including here

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Speaker 2: in London. The newspapers say the heats on meltdown Monday.

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Speaker 2: Twitter has advice for walking your dog early or late,

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Speaker 2: and Bloomberg's Lara Williams says that one of Britain's warmest

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Speaker 2: and sunniest springs ever may lift the spirits chance strawberries,

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Speaker 2: a jump in retail sales and solar energy, but actually

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Speaker 2: repeatedly breaking records comes with a lot of challenges, she

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Speaker 2: points out, which I hadn't realized that this spring has

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Speaker 2: been the driest in the UK in more than fifty years,

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Speaker 2: and they were also increasingly swinging between hot, dry and

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Speaker 2: rainy weather. And you can see that in just the

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Speaker 2: last three years of data, twenty three very very hot,

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Speaker 2: twenty twenty four was super soggy, and then again back

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Speaker 2: to very hot and dry for twenty twenty five. So,

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Speaker 2: as Lara says, you know the UK uniquely exposed also

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Speaker 2: because of the housing stock here, the lack of air conditioning.

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Speaker 2: I'm sure you noticed it over the weekend, so I'll

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Speaker 2: put a note so that you can find Lara Williams's

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Speaker 2: reporting on yes, the heat wave in the UK. Now,

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Speaker 2: Trump's trades are Peter and Navarro promised that there would

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Speaker 2: be ninety trade deals in ninety day as well, with

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Speaker 2: nine days or so until present, Trump's country specific tariffs

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Speaker 2: are set to resume, the UK's, Canada's scrambling, and Japan

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Speaker 2: is still talking. Bluebag's Lizzie Burden joins me now to

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Speaker 2: discuss Good morning Lizzie. So firstly, Britain seems to be

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Speaker 2: the only country that has actually managed to reduce its

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Speaker 2: Trump hera tariffs. How big a difference will it make?

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Speaker 5: Yeah, good morning Caroline. Well there's been a lot of debate,

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Speaker 5: hasn't there about weather being front of the que vindicated

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Speaker 5: Starmer's softly, softly approached to Trump. This image of him

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Speaker 5: picking up Trump's scattered papers from the floor widely mocked

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Speaker 5: as a symbol of the Prime Minister bowing to the

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Speaker 5: President literally, and Caroline, Britain's deal has really been held

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Speaker 5: up as a cautionary tale for other countries of why

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Speaker 5: not to accept a partial deal before you settle all

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Speaker 5: the key details on sexual tariffs on steel, for example,

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Speaker 5: because those are still at twenty five percent when the

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Speaker 5: government's goal was zero. Now the UK government is touting

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Speaker 5: the immediate benefits for UK auto's for the aerospace sector

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Speaker 5: because of the lower tariffs. But I think it's really

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Speaker 5: telling that even despite all of this progress, the Bank

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Speaker 5: of England Governor Andrew Bailey has repeatedly emphasized the importance

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Speaker 5: of other deals, especially with US and China, and kind

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Speaker 5: of implicitly acknowledging that that's more consequential for the UK economy.

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Speaker 5: Hence why we had the US China trade talks hosted

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Speaker 5: in London. It's a sign of the economic significance of

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Speaker 5: that deal politically in terms of the US UK framework

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Speaker 5: the agreement between the two, but being in Donald Trump's

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Speaker 5: good books isn't really doing much for kir Starmer. On Friday,

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Speaker 5: that's going to be a year of the Labor government

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Speaker 5: in office, and it's the domestic picture that's giving Starmer

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Speaker 5: a headache. You've got Starma facing a vote on his

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Speaker 5: flagship Welfare policy tomorrow. It's provoked wide spread criticism. It's

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Speaker 5: called his leadership into doubt, and his fiscal uturns have

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Speaker 5: really threatened the Chancellor's fiscal rules and her job as well.

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Speaker 5: So being the globe trotting deal maker isn't necessarily actually

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Speaker 5: helping kre Starmer.

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Speaker 2: No, indeed. But then in terms of the broad a

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Speaker 2: state of the trade negotiations with the US and other countries,

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Speaker 2: where do we stand well?

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Speaker 5: Markets are looking ahead to this July ninth deadline. The

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Speaker 5: President says that it could be brought forward. The Treasury

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Speaker 5: Secretary says it could be pushed back. But we've got

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Speaker 5: lots of good news. You've run through some of it.

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Speaker 5: You could say Trump's policy of escalating to de escalate

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Speaker 5: is actually working. We had China last week confirming that

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Speaker 5: it's reached a trade framework with the US. We've had

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Speaker 5: reports that the EU does actually see some sort of

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Speaker 5: agreement before July ninth, which would mean that the EU

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Speaker 5: can avoid fifty percent tariffs and that US can avoid

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Speaker 5: possible countermeasures. And then this morning we've had Canada dropping

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Speaker 5: its digital services tax on tech companies like Metro and

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Speaker 5: Alphabet so that the US talks can restart so that

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Speaker 5: they can get a deal done by July twenty first,

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Speaker 5: that's the date that they're aiming for, so progress on

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Speaker 5: lots of fronts, but there is this criticism that the

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Speaker 5: Trump administration's prioritizing speed over substance. So really a question

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Speaker 5: lingering over how much thesemus will really reduce the trade risk.

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Speaker 2: Yeah, okay, do we yet know the full economic impact

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Speaker 2: that they're going to have though, because that's the other

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Speaker 2: calculation to be made.

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Speaker 5: No, but we'll get more of an idea of it

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Speaker 5: this week, where because we've got lots of economic data

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Speaker 5: coming out tomorrow. We've got the Eurozone CPI print ten

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Speaker 5: am London time, economists expecting inflation to hit two percent,

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Speaker 5: so the ECB's target, but tariffs, as you hint, remaining

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Speaker 5: a potential headwind. Then in the US on Thursday, we

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Speaker 5: get the jobs report a day early because of the

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Speaker 5: Independence Day holiday on Friday, So again we're going to

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Speaker 5: look for cracks in the labor market as evidence of

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Speaker 5: the impact of tariffs. And if you get a week

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Speaker 5: report that could further fuel the Fed cut bets. And

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Speaker 5: then if we look back on Friday, we already had

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Speaker 5: some crucial US economic data. We had the US consumer

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Speaker 5: spending report falling in May, a sign of the elevated uncertainty,

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Speaker 5: and you had PCE more than expected, ever so slightly,

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Speaker 5: but both fueling the stagflation narrative. So there's plenty more

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Speaker 5: data to fill in this picture.

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Speaker 2: Okay, Lizzie, thank you so much for being with me

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Speaker 2: this morning. That is Bloomberg's a Lizzie burden. Then, as

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Speaker 2: we think about President Trum's country specific tariffs, so they

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Speaker 2: are set to resume, although of course Howard Latnik talked

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Speaker 2: about ten deals being on their way, so we are

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Speaker 2: counting down the days when it comes to Trump tarifs

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Speaker 2: and what impact they will have. Now we're also thinking

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Speaker 2: though about stock markets this morning. I mean amazing to

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Speaker 2: think that the first six months of the year European

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Speaker 2: stocks have outperformed their US peers. The euro has also surged.

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Speaker 2: Investors globally are also shifting more money to Europe. So

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Speaker 2: joining us now to discuss is far Al Barawi, who

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Speaker 2: leads our team covering equity markets in the emir Region. Fara,

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Speaker 2: good morning, Just can you put it into context for us?

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Speaker 2: Just how well have you asset it's actually performed.

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Speaker 8: I mean, the answer is really, well, we've seen European

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Speaker 8: stocks outperform the S and P five hundred by the

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Speaker 8: most on record for a half for a semi annual performance,

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Speaker 8: so that's over fifteen percentage points, so really significant strength here.

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Speaker 8: But this is when we're looking at it in dollar terms.

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Speaker 8: So the equity market performance has actually been supported by

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Speaker 8: also a rally in the euro, which is up thirteen

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Speaker 8: percent against the dollar in the six months through June.

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Speaker 8: So you have very strong performance on the equity side,

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Speaker 8: on the FX side, but also on the bond side,

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Speaker 8: we've seen some strength in the German buns even though

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Speaker 8: that government is going to be issuing bonds and you know,

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Speaker 8: investors are really just buying all Europe this year.

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Speaker 2: Yeah, I mean, is it simply about more spending from Germany?

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Speaker 2: Is that why we're seeing such gains? How bored is it?

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Speaker 8: That is a really massive part of it. So, yeah,

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Speaker 8: I had a government that was that had no issuance,

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Speaker 8: it was it was very ustere in terms of its measures,

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Speaker 8: and then all of a sudden, it's spending on defense,

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Speaker 8: on infrastructures and infrastructure, and other governments are following suit.

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Speaker 8: So Germany has sort of really changed the outlook fundamentally

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Speaker 8: for Europe, at least that's according to the investors that

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Speaker 8: we're speaking with, and that's why a lot of them

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Speaker 8: are turning optimistic on the region. That a lot of

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Speaker 8: this spending is going to translate into economic growth and

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Speaker 8: that's going to boost the euro, that's going to lift

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Speaker 8: earnings and potentially even help narrow the gap between valuations

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Speaker 8: in Europe and the US, where the US still continues

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Speaker 8: to trade at a significant premium to Europe.

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Speaker 2: We've had so many full storms for Europe before, why

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Speaker 2: do people think this time is different? And is it

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Speaker 2: going to continue? What about kind of year end and

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Speaker 2: thinking about twenty twenty six.

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Speaker 8: Absolutely, so what's different is that this time people are

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Speaker 8: more and more optimistic. You have over the past four

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Speaker 8: years there were a lot of inflows in to the

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Speaker 8: US equity market, and more and more people are seeing

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Speaker 8: that that's going to start to normalize and Europe will

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Speaker 8: be a beneficiary again as we're start to see some

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Speaker 8: economic growth. At the same time, you have the ECB,

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Speaker 8: it's significantly more dubbish than the FED. It's cut rates

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Speaker 8: significantly more over the past few months. So that's going

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Speaker 8: to help support the region as well. And other than that,

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Speaker 8: you have you can see all of this actually being

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Speaker 8: translated into the flows, So you have flows picking up

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Speaker 8: in Europe. It's actually set for the second biggest amount

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Speaker 8: of inflows into the equity market ever, so again, investors

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Speaker 8: are putting their money where their mouth is. That's not

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Speaker 8: to say people are selling the US or are out

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Speaker 8: of the US, but again there is some optimism about Europe,

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Speaker 8: especially that earnings growth is expected to be pretty close

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Speaker 8: to the rate that we're going to see in the

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Speaker 8: US next year.

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