WEBVTT - Funds Commit 5% To UK, Global Markets Soar, Starmer House Fire Probe

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is the BlueBag Day BAKR podcast failable every morning

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<v Speaker 2>on Apple, Spotify or wherever you listen. It's Tuesday, the

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<v Speaker 2>thirteenth of May in London. I'm Caroline Hepka.

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<v Speaker 1>And I'm Stephen Carroll. Coming up today. UK pension funds

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<v Speaker 1>agree to invest at least five percent of their assets

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<v Speaker 1>in Britain in a win for the Chancellor.

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<v Speaker 2>Rachel Reeves, the S and B five hundred and NASAK

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<v Speaker 2>make huge gains as US China tariff cuts fuel, the

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<v Speaker 2>return of a Buy America trade.

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<v Speaker 1>Glass, police investigator, fire at Prime Minister Kier Starmer's house,

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<v Speaker 1>and possible links to two other blazers.

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<v Speaker 2>Let's start with a roundup of our top stories.

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<v Speaker 1>Britain's largest pension funds are agreeing to invest at least

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<v Speaker 1>five percent of their assets at home in a new

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<v Speaker 1>deal with the labor government. The seventeen funds who've signed

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<v Speaker 1>up to the Mansion House Accords say the deal will

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<v Speaker 1>inject as much as fifty billion pounds of new investment

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<v Speaker 1>over the next five years. Bloomberg's James Wilcock has more.

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<v Speaker 3>It sets funds who manage nine to ten UK savers,

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<v Speaker 3>direct contribution pension pots a target keep five percent of

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<v Speaker 3>your assets in Britain's private markets. It's a significant amount

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<v Speaker 3>of money, but it is voluntary and it's not the

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<v Speaker 3>first use of the name. A previous mansion House Compact,

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<v Speaker 3>signed two years ago, has been criticized for only leading

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<v Speaker 3>to a limited amount of investment. This new version comes

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<v Speaker 3>as the government weighs legally forcing funds to invest more

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<v Speaker 3>domestically as it seeks more money for infrastructure projects in London.

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<v Speaker 3>James Wilcock Bloomberg Radio.

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<v Speaker 2>Global stocks have made huge gains on optimism that the

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<v Speaker 2>decision to slash US China reciprocal tariffs for ninety days

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<v Speaker 2>marks the end of an all our trade war. The

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<v Speaker 2>S and P five hundred jump to three point three

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<v Speaker 2>percent to take it back above the level when President

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<v Speaker 2>Trump first announced those sweeping global levies on the second

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<v Speaker 2>of April. Meanwhile, a surge in Big Text put then

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<v Speaker 2>as that one hundred back into a bull market, just

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<v Speaker 2>about a month after it plunged twenty percent from a

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<v Speaker 2>previous record high. Investors also moved out of defensive positions

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<v Speaker 2>and reduced expectations for Federal Reserve interest rate cuts. Kathy Jones,

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<v Speaker 2>chief fixed income strateist that Charles Schwab says there is

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<v Speaker 2>reason for traders to feel more confident.

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<v Speaker 4>The market has been so valerable because it keeps trying

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<v Speaker 4>to recalibrate what the outlook is right and now it

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<v Speaker 4>seems as if the worst case scenario is probably behind

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<v Speaker 4>us because China was the big one to get a

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<v Speaker 4>deal with. So if we've dialed back the rhetoric, if

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<v Speaker 4>we've dialed back the limit on China, maybe we dial

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<v Speaker 4>back limits on everybody else and we get more of

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<v Speaker 4>a soft landing.

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<v Speaker 2>Kathy Jones speaking there following the announcement of the US

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<v Speaker 2>China trade truce. On the markets right now, the MASCI

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<v Speaker 2>Asia Pacific indexes up by four tenths of one percent,

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<v Speaker 2>US SOX fifty futures are down two tenths of one percent,

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<v Speaker 2>and tenure US treasure yields down one and a half

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<v Speaker 2>basis points are trading at four forty six.

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<v Speaker 1>The massive gains across equity markets and the dollar follow

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<v Speaker 1>carefully coordinated joint statements issued yesterday from Beijing and Washington.

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<v Speaker 1>The US announced it would slash duties on Chinese products

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<v Speaker 1>to thirty percent from one hundred and forty five percent

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<v Speaker 1>for a ninety day period, while Beijing reduced its levy

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<v Speaker 1>on most US goods to ten percent. The rollback in

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<v Speaker 1>tariff s appears to validate Cheating Ping's decision to stand

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<v Speaker 1>firm against Donald Trump's tariff offensive. Speaking this morning, the

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<v Speaker 1>Chinese president warns that acts of coercion and dominance ultimately

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<v Speaker 1>lead to isolation. May there are no winners in tariff

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<v Speaker 1>wars or trade wars. Bullying or through hegeminism only leads

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<v Speaker 1>to self isolation. The Chinese President's remark, spoken thereby a translator,

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<v Speaker 1>come as President Trump said he could speak with she

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<v Speaker 1>as early asn't it the end of this week, touting

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<v Speaker 1>what he called a total reset in US China relations.

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<v Speaker 2>US drug may because meanwhile, have avoided a worst case scenario.

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<v Speaker 2>After President Donald Trump signed an executive order asking them

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<v Speaker 2>to lower prices for Americans voluntarily. Farm's futuel companies had

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<v Speaker 2>feared action on drug prices, but analysts saw the order

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<v Speaker 2>as less severe and vague, looking for cuts of between

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<v Speaker 2>sixty and ninety percent. President Trump said that the cost

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<v Speaker 2>of US drugs should match the lowest prices in developed nations.

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<v Speaker 5>Starting today, the United States will no longer subsidize the

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<v Speaker 5>healthcare of foreign countries, countries where they paid a small

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<v Speaker 5>fraction of what for the same drug that what we

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<v Speaker 5>pay many many times more for, and were no longer

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<v Speaker 5>tolerate profiteering and price gouging from Big farmer. But again,

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<v Speaker 5>it was really the countries that forced big farmer to

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<v Speaker 5>do things that, frankly, I'm not sure they really felt

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<v Speaker 5>comfortable doing.

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<v Speaker 2>President Trump suggesting that other countries should pay more for medicines.

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<v Speaker 2>Shares of Farm's futul companies have rebounded in Asia this

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<v Speaker 2>morning after the S and P five hundred Pharmaceutical and

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<v Speaker 2>Biotech Index, which includes names like Gilead Sciences, Murk and

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<v Speaker 2>Eli Lilly, close up three point seven percent on Monday.

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<v Speaker 1>Counter terrorism officers are leading an investigation into a fire

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<v Speaker 1>at a home owned by the Prime Minister in North London.

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<v Speaker 1>Emergency services were called to the property in the early

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<v Speaker 1>hours on Monday, but nobody was hurt. The building has

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<v Speaker 1>been targeted by protesters in the past. Three people were

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<v Speaker 1>convicted of public order offenses last year after carrying out

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<v Speaker 1>a pro Palestine demonstration outside. While the home is owned

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<v Speaker 1>by Kerstarmar he has not lived there since taking office

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<v Speaker 1>last year. Police now say they're looking at whether two

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<v Speaker 1>other fires last week could be connected to the blaze.

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<v Speaker 2>And lastly, could artificial intelligence be the secret to more

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<v Speaker 2>efficient phone charging. Apple thinks that the technology could answer

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<v Speaker 2>a frequent source of customer frustration, the iPhone's battery life.

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<v Speaker 2>Bloombig cba Adebayo has the story.

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<v Speaker 6>Howard battery management mode is set to be included in

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<v Speaker 6>the latest iPhone software update, due in September. Bloomberg understands

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<v Speaker 6>the enhancement will analyze device use and make adjustments to

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<v Speaker 6>conserve energy. The move is part of Apple's ongoing bid

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<v Speaker 6>to integrate AI into its core features, building on the

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<v Speaker 6>first version of Apple Intelligence, which rolled out last year.

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<v Speaker 6>Behind the push for battery efficiency is the soon to

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<v Speaker 6>be released slimmed down iPhone seventeen, which will have fewer

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<v Speaker 6>hours of life due to its size. In London to

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<v Speaker 6>at a bio Bloomberg Radio and.

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<v Speaker 1>Those are our top stories and a moment more on

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<v Speaker 1>that promise by UK pension funds to invest more here

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<v Speaker 1>in Britain, plus the US China tariff cut which turbocharged

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<v Speaker 1>global markets. With another story that caught her eye this morning, Carlin.

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<v Speaker 1>Recently I did one of those things where you clean

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<v Speaker 1>out that drawer of technology that you just kind of

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<v Speaker 1>gather as it just.

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<v Speaker 2>A draw I've got buckets and buckets of tech at home.

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<v Speaker 1>But again marveling at how small my old phone was

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<v Speaker 1>versus the one that I have now. And this is

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<v Speaker 1>a trend, perhaps not smaller, but definitely thinner phones are

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<v Speaker 1>coming back. The latest model from Samsung going to be

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<v Speaker 1>thirty percent thinner. This is the S twenty five edgephone,

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<v Speaker 1>and sort of creates a nostalgia around Do you remember

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<v Speaker 1>when phones used to be tiny? Yeah, not to change ourselves,

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<v Speaker 1>of course, Kyline the nock your.

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<v Speaker 2>Eight to ten comes to mind. It was absolutely tiny,

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<v Speaker 2>the buttons were minute, and look, I think this is

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<v Speaker 2>amazing that the phones are going to be thinner and thinner,

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<v Speaker 2>and yet of course the perennial problem of never having

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<v Speaker 2>a pocket large enough for your phone.

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<v Speaker 1>It gives me a strange sense of like, I feel

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<v Speaker 1>like my hands are giant when I've changed the size

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<v Speaker 1>on my phone because I keep dropping it ab it's

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<v Speaker 1>the wrong size. And I mean, it's worrying how much

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<v Speaker 1>you've become accustomed to holding one piece of technology in

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<v Speaker 1>your handholes.

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<v Speaker 2>Yeah, and it is the race to also lighter phones

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<v Speaker 2>as well. I mean, okay, so the S twenty five

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<v Speaker 2>from Samsung is coming out, but then we know that

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<v Speaker 2>the iPhone, the latest version, is going to come out

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<v Speaker 2>later this year, and surely that will also be a

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<v Speaker 2>point of competition. BS phones getting lighter, thinner and with.

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<v Speaker 1>Good battery life, which is the other challenge of course,

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<v Speaker 1>as well as we've been reporting. We'll put a link

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<v Speaker 1>to that article in our podcast show notes. Well, now,

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<v Speaker 1>the Chancellor ray To Reeves is unveiling a new mansion

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<v Speaker 1>house accord today with the pension industry that could possibly

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<v Speaker 1>unlock as much as fifty billion pounds of investment into

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<v Speaker 1>the UK. Seventeen large workplace pension providers have pledged to

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<v Speaker 1>voluntarily invest ten percent of assets into private markets and

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<v Speaker 1>five percent specifically in the UK, joining US now for more,

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<v Speaker 1>our asset management reporter Leo Ken share earlier, Good morning.

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<v Speaker 1>What is in this agreement and what is it aiming

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<v Speaker 1>to do? Yes, good morning, Stephen. So the large pension

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<v Speaker 1>providers you know, names like Aviva Legal and General Phoenix,

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<v Speaker 1>they have all signed up to this voluntary commitment to

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<v Speaker 1>invest ten percent of their assets into private markets, half

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<v Speaker 1>of which or five percent of the total would be

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<v Speaker 1>going to the UK, so to you know, on list

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<v Speaker 1>of businesses and also infrastructure projects and MNG one of

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<v Speaker 1>the signatories. They have actually sent over some helpful examples

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<v Speaker 1>of what they already doing, so you know, their lender

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<v Speaker 1>to Gales, the rather nice bakery chain, if I may

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<v Speaker 1>say that, and Belfast International Airport, and essentially that's what

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<v Speaker 1>the government wants to see more of. And I think

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<v Speaker 1>it's really important to note that this is definitely a

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<v Speaker 1>step up. The initial compact was signed than a little

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<v Speaker 1>less than two years ago with the previous Conservative government

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<v Speaker 1>and there the goal was to invest five percent into

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<v Speaker 1>private markets, and now that's up to ten percent. There's

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<v Speaker 1>more signatories as well, and there's also a specific allocation

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<v Speaker 1>to the UK.

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<v Speaker 2>So, as you say, it's focused on private assets, so

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<v Speaker 2>it doesn't include listed stocks I suppose. My question is

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<v Speaker 2>why not? And it's voluntary not mandatory.

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<v Speaker 1>Why Yes, that's a good point.

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<v Speaker 7>So the goal of the accord is really to boost

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<v Speaker 7>companies and projects that don't have the access to significant

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<v Speaker 7>capital that a member of the foot Sea one hundred

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<v Speaker 7>sort of already has and a really important point to

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<v Speaker 7>make here, uh. In the in the new agreement, it

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<v Speaker 7>says if pension funds buy shares in companies listed on

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<v Speaker 7>the London Stock Stock Exchanges aim Market for growth companies

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<v Speaker 7>and also from aquis in another exchange for smaller companies basically,

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<v Speaker 7>then that will count toward their allocation target into UK

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<v Speaker 7>private markets.

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<v Speaker 1>So it's it's it's quite fascinating.

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<v Speaker 7>That they've found they found a way here to include

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<v Speaker 7>a sizable part of the of the stock market here.

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<v Speaker 1>One of the criticisms that has been made of the

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<v Speaker 1>previous version of this acord is that it was voluntary

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<v Speaker 1>and not mandatory. This still isn't going to be a

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<v Speaker 1>mandatory commitment from these funds.

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<v Speaker 7>No, that's that's right, And I think the key issue

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<v Speaker 7>is the fugutiary duty of the trustees of the of

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<v Speaker 7>those pension funds. You know, they have to act in

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<v Speaker 7>the best interests of their customers make the best possible investments,

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<v Speaker 7>and being forced to invest in a particular sector or region,

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<v Speaker 7>you know, really runs against that. And it's quite interesting

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<v Speaker 7>also in the statement of Treasury said, you know, programs

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<v Speaker 7>progress against that voluntary commitment will be monitored and the

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<v Speaker 7>initiative will be reinforced by measures to be announced in

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<v Speaker 7>the upcoming final report of the Pensions Investment Review. So

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<v Speaker 7>that doesn't sound like outright mandation, but it sounds a

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<v Speaker 7>bit like a backstop where the government plans potentially legislation

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<v Speaker 7>that will allow it to tell pension funds, you know,

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<v Speaker 7>if you don't follow through with your commitments, we can

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<v Speaker 7>make you do it.

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<v Speaker 2>That's interesting, isn't it that they're being pressed a little

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<v Speaker 2>bit harder. But then the question is whether it will

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<v Speaker 2>really work. So the first mansion house compact, they did

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<v Speaker 2>a review after a year, and actually it was it

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<v Speaker 2>was the ABI that did a review, and they hadn't

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<v Speaker 2>found that it had made a huge difference. They said

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<v Speaker 2>that there were quite a lot of barriers actually to investment,

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<v Speaker 2>and there's also quite a big kind of get out

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<v Speaker 2>of free jail card. I suppose assuming a sufficient supply

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<v Speaker 2>of suitable investable assets.

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<v Speaker 7>Yes, that's a great that's a very great point. And

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<v Speaker 7>this is you know what most asset managers and pension

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<v Speaker 7>funds I talk to keep telling me. You know, it

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<v Speaker 7>comes down to having that pipeline of investable assets. And

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<v Speaker 7>this ultimately depends on other government policies, you know, like

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<v Speaker 7>the Industrial strategy, you know, where the government identifies priority

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<v Speaker 7>sectors for growth, and also the planning reform that's supposed

0:12:16.800 --> 0:12:19.360
<v Speaker 7>to make it easier to build more homes in this country.

0:12:19.440 --> 0:12:22.599
<v Speaker 7>So ultimately the ball is again with the government and

0:12:22.840 --> 0:12:23.520
<v Speaker 7>the government's call.

0:12:24.040 --> 0:12:26.839
<v Speaker 1>Okay, Leo Kenchapper, Asset Management reporter, thank you very much

0:12:26.880 --> 0:12:27.520
<v Speaker 1>for joining us.

0:12:28.559 --> 0:12:31.480
<v Speaker 2>Now, let's move on and talk about US. China. Chi

0:12:31.600 --> 0:12:35.080
<v Speaker 2>Jinping's decision to stand firm against Donald Trump resulted in

0:12:35.120 --> 0:12:38.520
<v Speaker 2>a massive de escalation in taris. The Chinese president has

0:12:38.720 --> 0:12:42.920
<v Speaker 2>been speaking this morning saying that bullying and hegeminism only

0:12:43.000 --> 0:12:45.400
<v Speaker 2>lead to isolation and that there are no winners in

0:12:45.440 --> 0:12:48.800
<v Speaker 2>tariff wars or trade wars. In a further sign of

0:12:48.840 --> 0:12:52.760
<v Speaker 2>the improvement though in relations, China is removing its ban

0:12:53.040 --> 0:12:55.960
<v Speaker 2>on Boeing deliveries. Joining us now as our senior editor,

0:12:56.000 --> 0:12:58.640
<v Speaker 2>Bill ferries to discuss all of this. So we're a

0:12:58.760 --> 0:13:03.200
<v Speaker 2>day on from the tariff deal. We've heard from Xijiping today.

0:13:03.240 --> 0:13:06.079
<v Speaker 2>He does seem to clearly come out on top of

0:13:06.160 --> 0:13:07.679
<v Speaker 2>the tariff for with the US.

0:13:08.920 --> 0:13:11.400
<v Speaker 8>Yeah, it's hard to see. It's hard to see what

0:13:11.440 --> 0:13:14.199
<v Speaker 8>the argument is for what the US has gotten out

0:13:14.200 --> 0:13:16.000
<v Speaker 8>of this when you go back to maybe where the

0:13:16.080 --> 0:13:20.160
<v Speaker 8>US was before or on April second, that Liberation Day,

0:13:21.160 --> 0:13:23.800
<v Speaker 8>when the Trump administration announced these tariffs on a whole

0:13:23.800 --> 0:13:27.440
<v Speaker 8>bunch of countries, but which really started this escalation in

0:13:27.520 --> 0:13:31.280
<v Speaker 8>the China China trade war, where tariffs went to thirty

0:13:31.320 --> 0:13:34.480
<v Speaker 8>four percent and then up to one hundred and forty

0:13:34.520 --> 0:13:37.559
<v Speaker 8>five percent and China responded with one hundred and twenty

0:13:37.559 --> 0:13:42.360
<v Speaker 8>five percent tariffs. In return, China's got basically, you know,

0:13:42.480 --> 0:13:45.520
<v Speaker 8>back to square one. The tariffs are down to thirty percent.

0:13:45.559 --> 0:13:49.520
<v Speaker 8>That's ten percent and the baseline that all countries have

0:13:49.600 --> 0:13:53.360
<v Speaker 8>now and additional twenty percent for fentanyl. But you know,

0:13:53.400 --> 0:13:56.480
<v Speaker 8>we know both countries were feeling some pain. Chinese factory

0:13:56.559 --> 0:14:01.000
<v Speaker 8>orders were down, cargo ships orders were declining as well,

0:14:01.679 --> 0:14:04.439
<v Speaker 8>and the US was looking at the potential of good shortages.

0:14:04.480 --> 0:14:06.679
<v Speaker 8>So both sides had a lot of reason to go

0:14:06.760 --> 0:14:10.120
<v Speaker 8>into these talks in Switzerland. But it does seem that

0:14:10.200 --> 0:14:13.040
<v Speaker 8>China's gotten most of its demands and that Chi Jinping's

0:14:13.080 --> 0:14:17.040
<v Speaker 8>policy of basically standing firm worked out pretty well for him.

0:14:17.559 --> 0:14:19.480
<v Speaker 1>So what does that mean about the strategy from here?

0:14:19.480 --> 0:14:22.600
<v Speaker 1>We've just had this news that China's removing this month

0:14:22.680 --> 0:14:25.320
<v Speaker 1>long band that it had on airlines taking delivery of

0:14:25.400 --> 0:14:29.640
<v Speaker 1>Boeing planes. So that's clearly a sign of China moving

0:14:29.720 --> 0:14:32.360
<v Speaker 1>towards the US on this as well. But in terms

0:14:32.400 --> 0:14:34.800
<v Speaker 1>of what we think about next, where should we be looking.

0:14:35.600 --> 0:14:38.280
<v Speaker 8>Well, there's supposed to be this ninety day window where

0:14:38.280 --> 0:14:41.320
<v Speaker 8>they continue to talk, for instance, about things like the

0:14:41.800 --> 0:14:46.600
<v Speaker 8>actions against the fentanyl precursor producers. If the US sees

0:14:46.640 --> 0:14:49.960
<v Speaker 8>progress on that front, you have the potential for up

0:14:50.000 --> 0:14:53.680
<v Speaker 8>to twenty percent of these extra tariffs coming off of China.

0:14:54.040 --> 0:14:56.400
<v Speaker 8>So that's one area I think both sides will try

0:14:56.400 --> 0:14:59.720
<v Speaker 8>to make some progress there. Scott Bessent, the Treasury Secretary,

0:14:59.800 --> 0:15:03.040
<v Speaker 8>say that he sees the ten percent tariff at this

0:15:03.200 --> 0:15:05.840
<v Speaker 8>point as the floor on China. It's the floor on

0:15:05.960 --> 0:15:08.680
<v Speaker 8>every country, even that the deal they announced last week

0:15:08.720 --> 0:15:11.440
<v Speaker 8>with the UK includes the ten percent tariff. I think

0:15:11.480 --> 0:15:14.080
<v Speaker 8>we'll continue to see some of these sectoral tariffs, and

0:15:14.120 --> 0:15:17.600
<v Speaker 8>you could see tweaks in that. Donald Trump has changed

0:15:17.600 --> 0:15:20.200
<v Speaker 8>his tariff policy a lot in the last few months.

0:15:20.200 --> 0:15:25.280
<v Speaker 8>So whether China stays at thirty percent may depend on

0:15:25.360 --> 0:15:27.160
<v Speaker 8>how well talks are going or not.

0:15:27.320 --> 0:15:27.600
<v Speaker 1>Going.

0:15:27.880 --> 0:15:29.760
<v Speaker 8>But I think one thing that has come out of

0:15:29.800 --> 0:15:32.200
<v Speaker 8>this that both sides would applaud is that there is

0:15:32.240 --> 0:15:36.960
<v Speaker 8>this channel for negotiation now that's been created with Scott

0:15:37.000 --> 0:15:41.080
<v Speaker 8>Bessett and Jamison Greer and their counterparts from Beijing. That's

0:15:41.760 --> 0:15:44.280
<v Speaker 8>I think a channel that's expected to stay open and

0:15:44.320 --> 0:15:45.160
<v Speaker 8>continue talking.

0:15:46.320 --> 0:15:50.560
<v Speaker 2>And lastly, of course, markets hugely relieved at de escalation,

0:15:51.440 --> 0:15:54.080
<v Speaker 2>and China may well be able to hit its growth target.

0:15:54.120 --> 0:15:57.960
<v Speaker 2>Five percent growth target looks perhaps a bit more possible. Yeah.

0:15:58.000 --> 0:16:01.400
<v Speaker 8>Absolutely, we saw ing upgrade their target to about four

0:16:01.440 --> 0:16:04.560
<v Speaker 8>point seven percent for Chinese GDP. I was looking at

0:16:04.560 --> 0:16:07.600
<v Speaker 8>the SMP before coming in here. It's basically at the

0:16:07.680 --> 0:16:10.600
<v Speaker 8>level it was at I think in November around election

0:16:10.720 --> 0:16:14.000
<v Speaker 8>day last year. So a lot of the losses have

0:16:14.080 --> 0:16:17.200
<v Speaker 8>been wiped out so far. But again it's you have

0:16:17.280 --> 0:16:19.640
<v Speaker 8>to wonder kind of what the US has gotten out

0:16:19.680 --> 0:16:22.720
<v Speaker 8>of this. I think that endgame remains to be seen.

0:16:24.360 --> 0:16:27.120
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0:16:27.160 --> 0:16:30.240
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0:16:30.480 --> 0:16:33.680
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