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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Debut podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Thursday, the fourteenth of November here in London.

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Speaker 2: I'm Caroline Hepki and.

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Speaker 3: I'm Stephen Carroll. Coming up today, the rise of megafunds.

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Speaker 3: Rachel Reeves announces plans to pull one point three trillion

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Speaker 3: pounds of pension savings.

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Speaker 2: Few curbs on power.

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Speaker 1: The Republicans retain their majority in the US House, giving

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Speaker 1: Trump's party overall control of the US government.

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Speaker 3: Plus tariff war. As Emmanuel Macron warns the EU as

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Speaker 3: hurtling towards an economic confrontation with the US and China.

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

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Speaker 3: The UK's chancellor wants to create a one point three

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Speaker 3: trillion pound pension pot to drive private investment. Rachel Reeves

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Speaker 3: plans to bring in new laws to force smaller funds

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Speaker 3: to consolidate. She told Bloomberg, Bigger fund brings with US expertise.

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Speaker 4: What we don't have in the UK is mega pension funds.

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Speaker 4: We don't have those economies of scale in our pension funds.

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Speaker 4: Those sorts of mega funds or will have the expertise

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Speaker 4: to make those investments, both in startup and scale up

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Speaker 4: businesses and in British infrastructure.

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Speaker 3: Rachel Reeves also told Bloomberg she was not going to

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Speaker 3: force pension funds to invest in UK assets. The Chancellor

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Speaker 3: gives her annual speech to the financial sector tonight, which

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Speaker 3: is expected to outline her reforms for growth. Reeves will

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Speaker 3: also emphasize the importance of free trade in her address,

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Speaker 3: which comes as Bloomberg has learned officials of warrant her

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Speaker 3: government to be realistic about any attempt to agree a

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Speaker 3: free trade deal with Donald Trump.

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Speaker 1: Republicans have maintained their majority in the US House of Representatives.

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Speaker 1: The victory gives President elect Trump and the Republican Party

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Speaker 1: unified control of the elected branches of government, strengthening their

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Speaker 1: hand to enact immigration controls and extend tax cuts. The

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Speaker 1: announcement of the Republicans sweep came as Donald Trump met

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Speaker 1: Joe Biden at the White House.

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Speaker 5: Politics is tough, and it's many cases not a very

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Speaker 5: nice world. But it is a nice world today, and

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Speaker 5: I appreciate very much a transition that's so smooth. It'll

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Speaker 5: be as smooth as.

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Speaker 6: You can get.

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Speaker 1: The face to face meeting was preceded by Trump's appearance

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Speaker 1: at an event in Washington, where he told Republicans it's

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Speaker 1: quote nice to win. The party will hold a razor

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Speaker 1: thin majority of at least two hundred and eighteen seats

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Speaker 1: in the four hundred and thirty five member House, with

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Speaker 1: a fifty three to forty seven advantage in the Senate.

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Speaker 3: President Tell Act. Trump has nominated former Democrat Tulsey Gabbard

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Speaker 3: as Director of National Intelligence and Florida Congressman Matt Gates

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Speaker 3: as US Attorney General. Gates has been plagued by scandals,

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Speaker 3: including an investigation by the Justice Department that he had

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Speaker 3: a sexual relationship with a seventeen year old girl in

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Speaker 3: exchange for money. He denied the allegations and was notified

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Speaker 3: last year that he wouldn't charges. In an interview with Bloomberg,

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Speaker 3: former House Speaker Kevin McCarthy predicted Gates wouldn't be confirmed

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Speaker 3: as attorney general, but praised Trump's other picks.

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Speaker 7: I think choices are very good except one. Look, Gates

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Speaker 7: won't get confirmed. Everybody knows that. But when you look

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Speaker 7: at a Rubio, just the knowledge that he has being

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Speaker 7: in the Intel Committee, I was on the Gang of Eight,

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Speaker 7: and his understanding. Even when you listen to the other

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Speaker 7: side of the aisle, they say he'll make a great

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Speaker 7: Secretary State.

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Speaker 3: Kevin McCarthy says the President elect has learned from his

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Speaker 3: earlier experience in the White House and will hit the

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Speaker 3: ground running.

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Speaker 1: Several Federal Reserve officials have reiterated their deep uncertainty about

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Speaker 1: how far they can lower US interest rates. It comes

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Speaker 1: after nuanced US inflation data out on Wednesday that was

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Speaker 1: in line with expectations on a headline basis, but the

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Speaker 1: annualized three month call rate picked up increasingly. Monetary policymakers

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Speaker 1: say that the point where interest rates won't harm growth,

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Speaker 1: which is known as the neutral rate, might have risen

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Speaker 1: since the pandemic. Minneapolis Fed President Neil Kashkari is one

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Speaker 1: of them.

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Speaker 8: I've been surprised at the resilience of the US economy

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Speaker 8: in the face of seemingly quite high policy rates. Yet

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Speaker 8: the labor market has stayed strong and the economic growth

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Speaker 8: continues to surprise us. So for me, I've been asking

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Speaker 8: questions about where's the neutral rate for the last year

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Speaker 8: or two. For me, as a policymaker. That's what's leading

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Speaker 8: to my own uncertainty about where's our ultimate destination.

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Speaker 1: Keshcari's comments were echoed by Kansas and Dallas FED presidents

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Speaker 1: Jeff Schmidt and Lorie Logan. Despite the uncertainty on the horizon,

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Speaker 1: traders see an eighty percent chance of a cut at

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Speaker 1: the next FED meeting.

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Speaker 3: In December, bitcoin briefly spiked above ninety three thousand dollars.

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Speaker 3: Investors are putting money into the cryptocurrency as a bet

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Speaker 3: on possible interest rate cuts and Donald Trump's policy agenda.

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Speaker 3: Future Perfect Ventures founder Jalak Jobin Poutras says Trump's election

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Speaker 3: has given the market confidence.

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Speaker 6: There was a lot of uncertainty on whether we would

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Speaker 6: have a crypto friendly ADM administration here.

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Speaker 2: In the US.

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Speaker 6: The answer is a resounding yes. And so I think

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Speaker 6: we're seeing all this pent up demand the fact that

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Speaker 6: we continue to see it rise. I mean, we've seen

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Speaker 6: a little bit of profit taking, but overall Ethereum, Bitcoin, Salana,

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Speaker 6: which is the base of a lot of these DeFi applications,

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Speaker 6: they're all up significantly and continue to rise.

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Speaker 3: Joe and Putra ads there's been a surge of momentum

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Speaker 3: behind mean coins, especially doge coin. Bitcoin's price later fell

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Speaker 3: back below the ninety thousand Marcus traders took profits, but

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Speaker 3: analysts expect the trends to remain higher.

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Speaker 9: Now.

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Speaker 1: To Europe, the French president has warned that your risks

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Speaker 1: being divided by Donald Trump's economic policies and being thrown

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Speaker 1: into a simultaneous trade war with Washington and Beijing. Mackel

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Speaker 1: says the US will continue to be protectionist unto Trump,

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Speaker 1: but his ideas put Europe at risk of being caught

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Speaker 1: up in the US China trade war.

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Speaker 10: One thing could be tariffs for everyone. The other could

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Speaker 10: be to force Europeans to separate more quickly from the Chinese.

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Speaker 10: That's when there'll be a risk of division among Europeans,

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Speaker 10: depending on the sectoral interests of different countries. Some which

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Speaker 10: are very exposed to the Chinese market will say it

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Speaker 10: scares me to lead the market too quickly, while others

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Speaker 10: who are more dependent on the American market will give

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Speaker 10: in more quickly to pressure from the federal government. But

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Speaker 10: we're clearly entering a world of tariff wars.

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Speaker 1: Safe speaking alongside the former ECB president Mario Draghi at

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Speaker 1: an event in Paris. Emmanuel Macon also warned that the

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Speaker 1: EU should quote synchronize its financial regulation with the US.

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Speaker 1: The European Union and the UK are facing pressure to

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Speaker 1: delay or soften a planned increase in bank capital requirements,

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Speaker 1: as Donald Trump's victory is likely to ease the burden

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Speaker 1: on the US competition.

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Speaker 3: Marie La Penn may not be able to run in

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Speaker 3: France's next presidential electionist she faces an embezzlement trial. The

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Speaker 3: leader of France's far right National Rally party is accused

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Speaker 3: of using EU funds to pay her own political aids.

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Speaker 3: She has denied all charges. If found guilty, prosecutors are

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Speaker 3: seeking a two year jail term and a ban on

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Speaker 3: her running from office for five years. Now.

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Speaker 1: Those are our top stories for you this morning. In

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Speaker 1: terms of the markets, So thinking about yesterday's close, US

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Speaker 1: stocks wavered and then the S and P five hundred

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Speaker 1: was little changed. The real news was the CPI, which

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Speaker 1: came in in line, but it was quite nuanced. Markets

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Speaker 1: moved to price a FED cut in December two year

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Speaker 1: yelds rallied five basis points and then you had that

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Speaker 1: surge in bitcoin above ninety three thousand dollars. We've fallen

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Speaker 1: back below that this morning, though we're trading just above

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Speaker 1: ninety thousand. In Europe, the stock six hundred ended in

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Speaker 1: the red, down a tenth of one percent. European stock

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Speaker 1: future is also up this morning two tenths of one percent,

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Speaker 1: and again in the Asian trading session, the dollar has

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Speaker 1: hit a two year high. Just looking at the euro

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Speaker 1: sinking towards one sports zero five this morning, one sport

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Speaker 1: zero is five five two. Gold has fallen for five

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Speaker 1: sessions in a row, and you continue to see losses

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Speaker 1: in Asia for stocks, especially the hang Saying which is

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Speaker 1: currently down one and a half percent.

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Speaker 2: So those are the market. Stephen.

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Speaker 3: In a moment, we'll have more and what to expect

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Speaker 3: from Rachel Reeves's Mansion House speech. Plus we'll discuss the

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Speaker 3: latest political developments in the United States.

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Speaker 9: But I also wanted to.

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Speaker 3: Mention another story that I've been reading this morning after

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Speaker 3: chat GPT are we now preparing for action GPT. This

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Speaker 3: is the firm behind the popular AI tool said to

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Speaker 3: be working on the next Iteration, which is one that

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Speaker 3: can actually do things for you, as opposed to just

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Speaker 3: telling you what it's going to do or giving a

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Speaker 3: description of it. So it could book flights or write code,

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Speaker 3: even sources of toel Bloomberg, It's code named operator OpenAI,

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Speaker 3: planning to release it as a research preview in January.

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Speaker 3: This is part of a broader industry posture towards agents

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Speaker 3: or AI software that can do multiple things for users

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Speaker 3: with minimal supervision.

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Speaker 1: Well, that's the main thing that I took away from

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Speaker 1: this story, this word agents that.

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Speaker 3: I must I've not heard of an agent, Caroline me.

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Speaker 2: Well, if only, but maybe this would be quite useful.

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Speaker 2: An agent.

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Speaker 1: Yeah, somebody can do all of those tasks for you,

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Speaker 1: wade through all of the user interface of the flights,

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Speaker 1: and you'll have to.

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Speaker 3: Become good at delegating. That's the other problem, something I've

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Speaker 3: definitely I've got. It's worth pointing out other companies are

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Speaker 3: working on similar projects, Anthropic or using one as well,

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Speaker 3: which can take control of a user's computer in real time,

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Speaker 3: you know. Open Ay, though, has also been looking at

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Speaker 3: a set of tools designed to send emails and manage

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Speaker 3: records for workers too. So this is a process that's

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Speaker 3: moving very quickly.

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Speaker 1: Yeah, can they manage my enormous hall of photographs? I

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Speaker 1: wander let's see. Okay, that's one of the fun and

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Speaker 1: interesting stories that we've been reading this morning. Let's also

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Speaker 1: get on though, to the UK Chancellor, who's going to

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Speaker 1: give her first mansion House addressed tonight. In what's being

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Speaker 1: billed as a wide ranging policy pitch. Rachel Reeve's plans

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Speaker 1: to introd she used legislation to pull one point three

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Speaker 1: two million pounds of pension savings into megafunds. This in

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Speaker 1: order to unlock eighty billion pounds of extra investment to

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Speaker 1: boost growth in Britain. Our UK correspondent Lizzie Burden spoke

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Speaker 1: to Rachel Reeves ahead of today's address and she joins

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Speaker 1: us now to discuss Lizzie great interview, big sit down.

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Speaker 1: This is a major change now that's being proposed for

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Speaker 1: government pension funds, but how exactly would it work?

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Speaker 11: Well, thank you Caroline, it was nice to get a

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Speaker 11: bit of a preview of this mansion House speech tonight.

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Speaker 11: The Chancellor framed the pension reforms as continuity of what

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Speaker 11: her conservative predecessor Jeremy Hunt did, but she said the

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Speaker 11: difference is that Labour's actually going to legislate, not just consult,

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Speaker 11: and that legislation, she says, is going to come in

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Speaker 11: the spring. So the idea is to pool the eighty

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Speaker 11: six local government pension schemes together to make a bigger

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Speaker 11: pot that actually it creates significant returns for savers and

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Speaker 11: it drives a economic growth, and it is based on

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Speaker 11: similar examples in Australia and Canada. When you look at

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Speaker 11: those examples, it shows that the megafund, as she's calling it,

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Speaker 11: has to be at least twenty five to fifty billion

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Speaker 11: pounds worth to reach that critical mass. And indeed the

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Speaker 11: IPPR think tank says that doing this is going to

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Speaker 11: help lift the UK off the bottom of the G

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Speaker 11: seven Investment League table.

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Speaker 3: Raisarievez, though also rejecting the idea of compelling pension funds

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Speaker 3: to invest in UK assets, something that we've been discussing

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Speaker 3: for it seems like a fairly long time now.

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Speaker 9: Yeah.

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Speaker 11: So there are two issues I raised with the Chancellor. Yes,

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Speaker 11: you can get economies of scale by pooling pensions. Size matters,

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Speaker 11: but then you've got to encourage that money to be

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Speaker 11: invested here in the UK when you could get juicy

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Speaker 11: returns elsewhere. And you need to get more money into

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Speaker 11: the pots in the first place. At a time when

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Speaker 11: thanks to Reeves's budget. Employers are already facing higher national

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Speaker 11: insurance contributions, a higher minimum wage bill, potentially interest rates

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Speaker 11: higher for longer because this is a fiscal loosening according

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Speaker 11: to the Bank of England, though they didn't say quite

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Speaker 11: that it would keep rates higher, but they did say

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Speaker 11: it would be inflationary. Look, she didn't have answers to

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Speaker 11: those questions, so it's not immediately clear why her plan

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Speaker 11: will work where her predecessors failed.

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Speaker 1: What else we're expecting from Rachel Reeves tonight? This is

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Speaker 1: the big set piece speech that chances get to give.

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Speaker 2: You know, the Lord Mayor hosts it.

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Speaker 1: We're going to actually be speaking to the brand new

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Speaker 1: Lord Mayor later on this morning. What else are we

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Speaker 1: expecting from Rachel Reeves tonight.

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Speaker 11: Well, this is her big moment to set out her

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Speaker 11: vision for the square mile as part of her plan

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Speaker 11: to accelerate growth. So building on the budget, building on

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Speaker 11: the investment summit, and one thing we're also expecting her

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Speaker 11: to do is tighten her grip on the watchdogs and

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Speaker 11: cut red tape. So the Prime Minister Kistarma said at

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Speaker 11: the Investment summit he would march through the regulators. They're

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Speaker 11: going to set out new guidance for them PRA, the

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Speaker 11: Prudential Regulation Authority and the FCA, the Financial Conduct Authority,

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Speaker 11: the REMIT letters, and when we've been talking to executives,

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Speaker 11: many of them have been talking about forcing the regulators

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Speaker 11: to view competitiveness as a primary objective in their decisions

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Speaker 11: and revive the idea of the call in power so

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Speaker 11: that ministers can override the regulators that was floated and

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Speaker 11: dropped last year. It'll be interesting to see if that

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Speaker 11: comes up in the Mansion House speech because it would

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Speaker 11: require a change of legislation, so it wouldn't be immediate.

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Speaker 11: The other theme that is going to come up tonight

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Speaker 11: will be, of course, this is a Donald Trump world.

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Speaker 11: He's coming back to the White House in January. Rachel

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Speaker 11: Reeves is going to champion free trade because of course,

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Speaker 11: labor's really under pressure to preempt his protectionism.

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Speaker 3: Okay, Lizzie Burden, thank you very much for joining us.

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Speaker 3: Are UK correspondent Lizzie Burden.

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Speaker 2: Now let's go to the US.

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Speaker 1: Then, the Republicans have attained their narrow majority in the

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Speaker 1: House of Representatives, giving Donald Trump and his party unified

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Speaker 1: control of the elected branches of government. The News came

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Speaker 1: as the President elect announced more names for his administration

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Speaker 1: which have stirred controversy. The Florida congressman Matt Gates for

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Speaker 1: attorney general and Telsea Gabbard, a former Democrat turned Trump backer,

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Speaker 1: as his Director of National Intelligence. Our EMEA News director

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Speaker 1: hilst In Matheson joins us now for more. Ross, good morning.

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Speaker 1: What does a Republican controlled House, Senate and presidency mean

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Speaker 1: for Trump's legislative agenda.

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Speaker 9: Well, it's a boon. Obviously.

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Speaker 12: It doesn't mean everything just magically goes through, of course,

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Speaker 12: but it does mean less of a break potentially on

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Speaker 12: Donald Trump's policymaking and his power, particularly in domestic matters

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Speaker 12: like immigration and tax. For example, there are very big

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Speaker 12: expiring tax provisions and Donald Trump is keen to see

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Speaker 12: those extended and further and it cuts in actors, so

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Speaker 12: likely to face less resistance through Congress on some of

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Speaker 12: the those policymakings. And also, if you look at Elon

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Speaker 12: Musk and this new role about cutting government regulation and

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Speaker 12: red tape, Congress can play a role there too, because

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Speaker 12: a lot of regulation is bound up in law, so

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Speaker 12: if you reduce it, you need Congress on side. But Equally,

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Speaker 12: it is a very thin margin, especially in the House,

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Speaker 12: and not every Republican sitting in Congress is a big

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Speaker 12: fan of Donald Trump or a supporter of all his policies.

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Speaker 12: I guess the question is, are they prepared to cross

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Speaker 12: the floor and vote against him? Because Trump prizes loyalty

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Speaker 12: as we know, they might find themselves on the out

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Speaker 12: if they disagree. But either way, it looks like we

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Speaker 12: could have quite a fractious process in Congress with significant delays.

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Speaker 12: But then again, Congress has been operating that way for

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Speaker 12: years at this point in theory. Though this is obviously

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Speaker 12: very good news for.

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Speaker 3: Donald Trump well, one of the issues that might challenge

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Speaker 3: the unity the party is going to be confirming some

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Speaker 3: of the names that Trump has put forward for key jobs.

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Speaker 3: Matt Gates being picked for attorney general one that has

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Speaker 3: raised a few eyebrows, including from the former House Speaker

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Speaker 3: Kevin McCarthy, who's told Bloomberg that he won't get confirmed.

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Speaker 12: There is a lot of bad blood between the two

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Speaker 12: of them, of course, Gates and McCarthy, I mean, because

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Speaker 12: obviously Gates was the one behind McCarthy's removal as speaker

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Speaker 12: last year. But it's likely to be one of the

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Speaker 12: more controversial picks in a lineup that looks quite controversial overall,

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Speaker 12: because Gates has been the subject of a Justice Department

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Speaker 12: probe into whether he had a sexual relationship with a

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Speaker 12: young girl in exchange for money seventeen year old girl.

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Speaker 12: Gates denied those allegations, but he's also been under a

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Speaker 12: House Ethics Panel investigation and he's resigned, So that ends

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Speaker 12: that we don't know exactly what the process for Gates

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Speaker 12: will look like, but we do know that multiple Republican

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Speaker 12: Senators are quite doubtful about this choice, So that points

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Speaker 12: to confirmation challenges ahead, and of course in the confirmation process,

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Speaker 12: all sorts of things can come to light. You have

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Speaker 12: to go through an FBI background check, a lot of scrutiny.

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Speaker 9: And it's a very.

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Speaker 12: Key post because Donald Trump's loathing for the DOJ is

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Speaker 12: well known. He's very keen to get in there and

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Speaker 12: make a bunch of changes and also to get it

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Speaker 12: to deploy his policies around immigration and border security. So

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Speaker 12: he can't really afford for this to go too wrong here.

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Speaker 12: But certainly you can expect to see quite a tricky

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Speaker 12: and complicated confirmation process for Gates.

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Speaker 1: In this case, and then outside of the US, Bloomberg's

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Speaker 1: been reporting on how world leaders have been recalibrating their

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Speaker 1: diplomatic strategies. I mean in the days since Charms of

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Speaker 1: Victory and we've got the G twenty gathering in Rio

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Speaker 1: in a few days time.

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Speaker 9: Well, that's right.

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Speaker 12: And we know that Donald Trump is not a traditional leader,

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Speaker 12: so the way you communicate with him is different. I

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Speaker 12: mean his famous for example, apparently he takes on board

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Speaker 12: the very last thing that's said to him in the room,

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Speaker 12: so everyone wants to be the last person, the person

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Speaker 12: who says that last thing, and he'll speak to the

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Speaker 12: people he wants to because he really prizes personal and

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Speaker 12: direct communications.

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Speaker 9: So in the UK, for.

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Speaker 12: Example, we know that he had quite a rapport with

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Speaker 12: the former Prime Minister Boris Johnson. Is Boris Johnson the

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Speaker 12: person he just keeps ringing up to find out about

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Speaker 12: what's happening in the UK instead of Kirs Darma.

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Speaker 9: And he's very off the calf in the minute.

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Speaker 12: If he thinks he wants to talk to you, he'll

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Speaker 12: just grab your number and call, which is a bit

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Speaker 12: trickier for those without a mobile phone, like the President

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Speaker 12: of Brazil, Lula for example.

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Speaker 9: So how you talk to him and how you deal

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Speaker 9: with him are.

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Speaker 12: Outside the norms of a lot of protocol because he's

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Speaker 12: very transactional and if he feels he's had a poor

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Speaker 12: encounter in the past, it can be very hard to

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Speaker 12: get past that. I mean there's no rapport, for example,

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Speaker 12: between him and the German Chancellor Earl Scholtz.

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Speaker 9: So you can imagine leaders thinking very.

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Speaker 12: Quickly how can they deal with Donald Trump in this

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Speaker 12: second presidency, and a lot of leaders trying to race

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Speaker 12: their you know, physically, to get in front of him

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Speaker 12: very quickly.

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

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