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

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Speaker 2: This is the Bloomberg DAYBAQ podcast. Good Morning is Thursday,

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Speaker 2: the tenth of July. I'm Caroline Hepkit in London and.

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Speaker 3: I'm Stephen Caroline Brussels. Coming up today, Brazil's currency plunges

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Speaker 3: as Donald Trump hits the country with a fifty percent

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Speaker 3: trade tariff.

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Speaker 2: Macro and Starmer agree to closer defense and energy ties

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Speaker 2: and discuss steps to stop migrant channel crossings.

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Speaker 3: Plus getting back on track, Puman Adidas looked to running

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Speaker 3: shoes to turn around their fortunes after losing ground to

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Speaker 3: small arrivals.

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Speaker 4: Let's start with a roundup of our top stories.

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Speaker 3: US President Donald Trump says he will impose fifty percent

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Speaker 3: tariffs on goods from Brazil, citing what he called the

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Speaker 3: country's insidious attacks on free elections. The Brazilian reale summed

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Speaker 3: by nearly three percent against the US dollar after the announcement.

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Speaker 5: Bloomberg's Washington Deputy.

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Speaker 3: Beewer chief Lura Davison says it's a big escalation.

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Speaker 6: Brazil actually had an original ten percent tariff on liberation

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Speaker 6: Data's fifty percent is the largest delta we've seen of

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Speaker 6: any of these countries that have come out so far,

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Speaker 6: and the US actually has a trade surplus with Brazil,

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Speaker 6: So unlike the justification of this being basically some part

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Speaker 6: on trade deficits, this seems to be much more about politics.

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Speaker 3: Lora Davison, referring there to Trump's citing a witch hunt

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Speaker 3: trial against former Brazilian president jarrebal scenario as the reason

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Speaker 3: for the hike in the levee. The right wing former

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Speaker 3: leader is facing trial on charges that he attempted a

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Speaker 3: coup following his twenty twenty two election defeat. Brazil's current president,

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Speaker 3: Luis Ignacio Lula de Silva, says he would respond to

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Speaker 3: any unilateral tariff hikes.

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Speaker 2: President Champ also confirms that a planned fifty percent tariff

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Speaker 2: on copper imports will begin on the first of August.

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Speaker 2: The hard and expected levee was signaled by Trump in

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Speaker 2: comments to reporters on Tuesday, but the president to tooth

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Speaker 2: social late on Wednesday to confirm the start date. Speaking

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Speaker 2: to Blue Blomberg, the chair of the President's US Council

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Speaker 2: of Economic Advisors, Stephen Mirran, said that the move is

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Speaker 2: part of Trump's push to rebuild US industries.

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Speaker 7: You know there are certain critical minerals, of which copper

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Speaker 7: is one that you just absolutely need if you're going

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Speaker 7: to have a manufacturing sector. And having a manufacturing sector

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Speaker 7: is important, not just economically, because it tends to be

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Speaker 7: a high, high capital, high productivity field.

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Speaker 2: Stephen Myron spoke to Bloomberg as the President also unveiled

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Speaker 2: a new round of tariff letters yesterday. They set levies

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Speaker 2: on imported goods effective from the first of August, for

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Speaker 2: those partners who failed to reach trade deals with the US.

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Speaker 2: So the list includes a thirty percent rate on Algeria, Libya,

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Speaker 2: Iraq and Sri Lanka, twenty five percent duties on products

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Speaker 2: from Brunei and Moldova, and a twenty percent rate on

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Speaker 2: goods from the Philippines. Of those seven countries, only the

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Speaker 2: Philippines ranks Amongst America's top fifty trading partners.

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Speaker 3: As the deadline for TOM on US reciprocal tariffs knee nears,

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Speaker 3: the European Union seems increasingly willing to accept a one

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Speaker 3: sided deal to stave off a trade war. That's the

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Speaker 3: view of Bloomberg Economics, which says that in a best

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Speaker 3: case scenario where the EU faces only ten percent tariffs

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Speaker 3: and no duties on cars, car parks or metal products,

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Speaker 3: the tariff shop would drop to about five and a

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Speaker 3: half percentage points, down from nine points under the current policy.

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Speaker 3: Former EU trade negotiator John Clark told us that the

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Speaker 3: block is in what he believes is an impossible position.

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Speaker 8: I think this is the most difficult negotiation in memory,

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Speaker 8: frankly for the European Union, and I would not want

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Speaker 8: to be an EU train negotiator on this one. The

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Speaker 8: go posts are moving all the time, the US negotiating

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Speaker 8: with They've gun against its head of twenty percent or

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Speaker 8: fifty percent tariff in August, depending on what daily week

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Speaker 8: it is. There are doubts I think whether any deal

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Speaker 8: that Trump Incs will be actually honored. And then the

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Speaker 8: Commission is very divided about whether it should stick to principles,

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Speaker 8: not accept anything which is to illegal, or the equivalent

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Speaker 8: quote pragmatic and go for a quick thirty deal of

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Speaker 8: the kind that the British did.

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Speaker 3: You can hear that full conversation with John Clark on

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Speaker 3: the Bloomberg Talks podcast. All of our key conversations in

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Speaker 3: one place now.

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Speaker 2: In other news, Nvidia became the first company in history

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Speaker 2: to reach a valuation of four trillion dollars. The chip

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Speaker 2: maker's stock has risen more than twenty percent this year,

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Speaker 2: and is up more than one thousand percent since the

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Speaker 2: beginning of twenty twenty three. Bloomberg Semiconductor editor Ian King

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Speaker 2: says it could still go further, so on.

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Speaker 9: A price to winnings ratio fifty two times doesn't sound

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Speaker 9: totally crazy, and that doesn't even get it into the

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Speaker 9: top ten list of semiconductor makers, so relatively, it's not

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Speaker 9: that expensive. No other semiconductor company has ever had more

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Speaker 9: than one hundred million dollars of revenue, ever, not even

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Speaker 9: Intel at its peak.

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Speaker 2: King adds that the latest catalyst for the stock's boom

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Speaker 2: has been a commitment to AI spending from Nvidia's big customers,

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Speaker 2: showing demand to remain strong. It's a stunning rebound after

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Speaker 2: a rough start to the year when China's Deep Seek

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Speaker 2: sparked spending fits across the AI space. Nvidia now accounts

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Speaker 2: to seven point five percent of the S and P

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Speaker 2: five hundred index, n its highest influence on record.

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Speaker 3: The British and French governments plan to order more storm

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Speaker 3: Shadow cruise missiles as they seek closer ties on defense

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Speaker 3: and migration. The announcement comes as Francis President Emanuel Macron

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Speaker 3: makes the first state visit to the UK of any

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Speaker 3: European leader since Brexit. Macron hailed Starmar's work on Ukraine

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Speaker 3: as bringing the two countries closer together, but.

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Speaker 8: As well as changing time from a great to Middle

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Speaker 8: East icing scene. It's a fathership and a friendship between

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Speaker 8: the Europe and France is absolutely I would see the

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Speaker 8: game changer.

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Speaker 3: The UK is keen to get President Macron to sign

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Speaker 3: up to a new deal on migration before he leaves

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Speaker 3: later today. The two leaders will also dial into a

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Speaker 3: meeting of nations willing to help Ukraine, the so called

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Speaker 3: Coalition of the Willing, including a US representative. It comes

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Speaker 3: as Sky News reports that President Trump is likely to

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Speaker 3: visit the UK at the end of July or beginning

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Speaker 3: of August in an unofficial trip to his golf courses

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Speaker 3: in Scotland.

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Speaker 2: This week, scientists have released a first of its kind

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Speaker 2: rapid attribution study linking recent deaths in Europe to climate

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Speaker 2: change driven extreme heat.

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Speaker 4: Bloomberg's U and pots has more now.

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Speaker 10: Scientists say the hot weather in Europe over the ten

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Speaker 10: day period to the second of July killed and estimated

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Speaker 10: two three hundred people in twelve cities. The research, led

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Speaker 10: by a team at two London universities, found that climate

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Speaker 10: change made the continent's recent heat wave three times more fatal,

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Speaker 10: with man made global warming increasing temperatures by between one

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Speaker 10: and four degrees centigrade in the city studied. The report

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Speaker 10: comes as more and more countries measures to mitigate periods

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Speaker 10: of extreme heat. In London i'm Une pots Spoonberg Radio.

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Speaker 3: The Bank of England is warning that UK bond's risk

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Speaker 3: being hit by a wave of forced selling and an

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Speaker 3: echo of the truss era meltdown. The Central Bank's Financial

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Speaker 3: Stability Report points to hedge funds borrowing seventy seven billion

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Speaker 3: pounds in the repo market to make big bets on

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Speaker 3: the margin between government bonds and their futures, the so

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Speaker 3: called basis trade. The fear is that these small, highly

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Speaker 3: leveraged players could cause a market blow up have caught short.

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Speaker 3: Officials also pointed out because some of these funds are

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Speaker 3: domiciled off shore, the BOE will find it tough to

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Speaker 3: keep track of the threat they pose to the market.

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Speaker 3: It shows the perilous market backdrop that threatens to turn

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Speaker 3: against Chancellor of the Exchequer Rachel Reeves.

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Speaker 2: And those are our top stories for you this morning.

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Speaker 2: So thinking about the markets, the Brazilian reale led emerging

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Speaker 2: market currency losses on Wednesday, dropping as much as two

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Speaker 2: point nine percent because of Trump's tower fifty percent on

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Speaker 2: the Latin American country. It was the biggest drop in

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Speaker 2: more than three months for the raale. This morning, the

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Speaker 2: Bloomberg Dollar Spot index is softer, down a tenth of

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Speaker 2: one percent. Also, stop futures for the US in the

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Speaker 2: red orthough they're in the green for Europe up almost

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Speaker 2: two tenths of one percent. Let's see if that holds

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Speaker 2: given the uncertainty, the worries around tariffs and the tariff

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Speaker 2: letters and the copper tariff. In terms of the bond markets,

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Speaker 2: two year treasuries fairly steady in terms of yields three

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Speaker 2: eighty five ten yeards at four thirty four. Bitcoin hit

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Speaker 2: a record high on Wednesday and it holds close to

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Speaker 2: that level. We're up a three tenths of one percent

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Speaker 2: this morning, and copper on the London Metals Exchange up

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Speaker 2: six tenths of one percent this morning. So pressure in

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Speaker 2: the copper market still in.

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Speaker 3: A moment, we'll bring you more on what Donald Trump's

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Speaker 3: trade letters have in store for Brazil, plus why top

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Speaker 3: European sportswear brands are helping for a run of success

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Speaker 3: with running. But another story that we've been reading this

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Speaker 3: morning European countries. We've been talking about this a lot

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Speaker 3: Caroline ramping up their spending on defense, but we've been

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Speaker 3: speaking to some of the part time soldiers who've signed

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Speaker 3: up as reservists in different parts of the continent. This

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Speaker 3: is a whole different part of the challenge where Europe's

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Speaker 3: rethinking its defense, which is actually getting people to sign

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Speaker 3: up to the armed forces, either as volunteers or as

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Speaker 3: conscripts under military service rules. So we've spoken to people

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Speaker 3: in Lithuania, in Denmark, in France, and some really fascinating

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Speaker 3: insights about what motivates people to sign up. Our colleagues

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Speaker 3: in France talking to a twenty year old student who

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Speaker 3: said that he signed up out of patriotism, not specifically

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Speaker 3: to fight, but because he says there are other things

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Speaker 3: that he can bring to being in the army. And

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Speaker 3: at the same camp there was the oldest of the reservists,

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Speaker 3: sixty year old Dalila. She was previously in the Algerian

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Speaker 3: Air Force before earning her master's degree and going on

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Speaker 3: to a career in the French public service. And she

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Speaker 3: also signed up because she wanted to reskill the skills

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Speaker 3: that she had used in her previous career and didn't

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Speaker 3: mind going back to the lowest rank because she said

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Speaker 3: it was necessary to learn what the common practices are now.

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Speaker 2: Yeah, look, it's part of a huge rethink, isn't it.

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Speaker 2: Across Europe military service hadn't been as popular. Also, we've

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Speaker 2: got an aging population, I mean in Britain and across

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Speaker 2: the continent. But there is a massive mind shift that

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Speaker 2: is taking place. And as you say conscription reservists, there

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Speaker 2: is also pay. There's additional pay also for people who

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Speaker 2: sign up. In a lot of these European countries, you can,

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Speaker 2: for example, do your reserve days and also be paid

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Speaker 2: for your regular job, whatever that might be. But yes,

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Speaker 2: as you say, massive mental adjustment, I think in Europe.

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Speaker 3: Yeah, indeed. And we'll put a link to that story

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Speaker 3: in our podcast show Notes for you. Let's bring you

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Speaker 3: the latest throw on our top story this morning and

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Speaker 3: the round of trade letters from Donald Trump sending Brazil's

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Speaker 3: currency into a slump, the reale plunging after the US

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Speaker 3: president threatened fifty percent tariff from the country, saying that

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Speaker 3: it was art due to Brazil's attacks on free elections.

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Speaker 3: Our EMA and news director Osmad Matheson is with us

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Speaker 3: from more Eros.

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Speaker 5: Good morning.

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Speaker 3: This fifty percent figure higher than most of the tarifrates

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Speaker 3: that Donald Trump is announced. Why is he targeting Brazil

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Speaker 3: in particular?

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Speaker 11: Well, yes, quite a surprise for the market to see this,

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Speaker 11: and we could see that in the extent of the

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Speaker 11: market reaction that came.

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Speaker 5: There seemed to be several factors at play here.

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Speaker 11: One is that we had quite a bit of public

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Speaker 11: wrangling between Trump and the Brazilian leader Lula, who was

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Speaker 11: hosting leaders from the Bricks grouping this past weekend, and

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Speaker 11: when Trump threatened to put a ten percent levy on

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Speaker 11: BRICKS members, you got quite a public a pushback there

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Speaker 11: from Lula, who pushed back very publicly, and so that

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Speaker 11: probably created a bit of tension between the two of them.

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Speaker 11: You've also got this long running issue of the former

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Speaker 11: leader Jared Bolsonaro, who is somewhat of a friend of

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Speaker 11: Donald Trump, and Donald Trump has for a long time

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Speaker 11: accused Brazil of politically persecuted, persecuting Bolsonaro. Bolsnow, of course,

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Speaker 11: is about to face trial on charges that he attempted

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Speaker 11: a coup, and he's barred from political office, which means

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Speaker 11: he cannot currently run again in the next presidential election.

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Speaker 11: Donald Trump has been accusing Brazil of persecuting Bolsonaro, calling

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Speaker 11: it even a witch hunt of Bolsno and his families,

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Speaker 11: and saying that the trial should end. So quite a

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Speaker 11: direct insertion there by Donald Trump in domestic Brazil politics

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Speaker 11: and in putting the fifty percent tariff on Brazil, he

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Speaker 11: actually cited this case and saying that he was making

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Speaker 11: this charge due to what he called Brazil's insitious attacks

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Speaker 11: on free elections, And so very much seems to be

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Speaker 11: quite a political motivation behind this fifty percent, not just

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Speaker 11: the pure realities of trade.

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Speaker 2: Yeah, because Brazil has a trade deficit with the US.

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Speaker 2: Lessons will other countries draw from this that it's not

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Speaker 2: just about the trade balance that President Trump is focused on.

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Speaker 5: Well, absolutely, so that is the interesting thing.

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Speaker 11: Again, as you say, Brazil is the second largest trading

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Speaker 11: partner of the US, so this could affect it quite significantly.

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Speaker 11: China of course is the first, but exports a lot

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Speaker 11: of staff to the US, including steel products, aircraft and

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Speaker 11: aircraft parts and so on, but it does run a

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Speaker 11: surplus with the US. And so the question is is

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Speaker 11: Donald Trump coming for countries purely on the basis of

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Speaker 11: their trade relationship and their trade surplus. Is he coming

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Speaker 11: for them because he thinks they have a lock on

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Speaker 11: certain important things like copper steel in the case of

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Speaker 11: China recently.

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Speaker 5: Obviously rare earths as well?

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Speaker 11: Do you have something that he wants to get his

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Speaker 11: hands on more easily for US companies or is there

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Speaker 11: a mix of everything in there, his view on politics

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Speaker 11: in your country or his relationship with your leader.

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Speaker 3: This is such an interesting time to be watching these

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Speaker 3: developments as well. For now, Rosler Mathson, thank you very

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Speaker 3: much for bringing us up to date, our EMEA news director.

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Speaker 2: Now let's turn our attention to running, which could turn

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Speaker 2: around the fortunes of these sports where brands Puma and

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Speaker 2: added US as they look to make up ground lost

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Speaker 2: to new rivals. These firms are also facing major risks

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Speaker 2: from tariff on countries like Vietnam, a big supplier in

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Speaker 2: the region. Our EMEA earning specialist Chloe Malay joins US

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Speaker 2: now for more on the story, come morning, Chloe.

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Speaker 4: Why is running now such a key sport for Puma

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Speaker 4: and added us?

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Speaker 1: Yeah, so running is obviously nothing new necessarily for Puma

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Speaker 1: and Adidas. It's always been a space fit for innovation,

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Speaker 1: but there is a renewed focus at the moment and

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Speaker 1: that's due to the intersection of a few things.

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Speaker 5: Obviously, there's a growing enthusiasm.

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Speaker 4: For the sport.

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Speaker 1: Secondly, those two big players have lost a bit of

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Speaker 1: market share to smaller brands like Hokker and On, etc.

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Speaker 1: And then finally, there is a tariff threat there is

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Speaker 1: hanging over those two companies that they've really hurt the

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Speaker 1: shares over the last few months. So all of this

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Speaker 1: makes it so that reviving the demand in that category

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Speaker 1: really is key to sort of cushion that tariff impact

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Speaker 1: and to take advantage of that sales momentum in the category.

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Speaker 1: So I spoke to an analyst at Deutsche Bank who

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Speaker 1: said that running is the most exciting category for growth

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Speaker 1: over the coming quarters as well as this one, and

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Speaker 1: he said that those companies really hadn't focused on running

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Speaker 1: as much as they should have over the last five

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Speaker 1: years or so, but now it looks like a smart

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Speaker 1: bet really, because all of this points to the running

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Speaker 1: category are something that provides some sort of relief essentially.

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Speaker 3: So how could these companies shift their strategies to respond

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Speaker 3: to this momentum.

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Speaker 1: Well, one thing to look for in particular is what

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Speaker 1: is going to happen with the new CEO of Puma,

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Speaker 1: Arthur Hold, who just started the job couple of weeks ago.

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Speaker 1: So the consensus is that he's really keen to focus

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Speaker 1: on that category and in particular the nitro line, which

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Speaker 1: is a which those shoes are with the souls with

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Speaker 1: nitrogen gas inside for the added bounce, So that CEO

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Speaker 1: change might be a real kind of important catalyst for Puma.

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Speaker 1: For Adidas, analysts are saying that the company is becoming

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Speaker 1: more relevant thanks to record breaking performances from athletes wearing

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Speaker 1: that Adidas gear and then also quite strong engagement on

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Speaker 1: the running Instagram page of Adidas, so we could see

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Speaker 1: the company kind of doubling down on those areas. And

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Speaker 1: another thing to note is also that China is becoming

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Speaker 1: it might become even more of a key market. It

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Speaker 1: has a national Fitness Plan which is kind of promoting

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Speaker 1: physical exercise among the population. Then that could lead companies

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Speaker 1: like Adidas to sponsor events and to sell price or

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Speaker 1: equipment there as well.

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Speaker 2: Okay, so investors, how do they feel about this?

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Speaker 1: Well, the idea from analyst is that the bigger brands,

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Speaker 1: those bigger brands start to get attraction in the running category,

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Speaker 1: that could kind of lift investor sentiment. But obviously they're

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Speaker 1: starting from quite a tough position. So Adidas is done

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Speaker 1: about ten percent here today, Puma as much as almost

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Speaker 1: down fifty percent, so they have quite a long way

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Speaker 1: to come back from. And obviously the geopolitical context, the

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Speaker 1: macroeconomic context kind of complicates that and makes it a

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Speaker 1: bit harder for investors to focus on the positives.

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Speaker 3: Well, indeed, on that point, KOI, what do we think

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Speaker 3: that we might hear from these companies on the issue

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Speaker 3: of tariffs and their upcoming updates.

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Speaker 1: Yeah, so obviously we've got brand new rates on Cambodia,

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Speaker 1: allows Thailand, Vietnam, et cetera. So all of these are

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Speaker 1: key supply hubs for the fashion industry, and that really

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Speaker 1: complicates the picture. Means higher cost, it means probably having

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Speaker 1: to raise prices, and Puma and Adidas are reporting right

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Speaker 1: before so on the thirtieth and thirty first of July,

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Speaker 1: which is right before the August first deadline that was

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Speaker 1: imposed by bat Donald Trump. So they might be, as

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Speaker 1: we speak, tweaking those earning states to kind of add

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Speaker 1: a line about that caution and about how they might

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Speaker 1: be thinking about, you know, adjusting their supply chains for example.

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Speaker 1: But because there has been so much back and forth

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Speaker 1: with the tariffs, I think it's quite likely to see

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Speaker 1: very specific numbers on the impact, but they'll definitely be

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Speaker 1: cautious commentary around this and what that means for the

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Speaker 1: business going forward.

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Speaker 4: Yeah, okay, interesting.

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Speaker 2: Chloe, thank you so much for being with us our

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Speaker 2: e MAA earning specist, Chloe Malay, who's just about to

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Speaker 2: get into another very busy earning season, so thank you

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Speaker 2: for being with us. Look, the only person, frankly who

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Speaker 2: knows much about running on this podcast I suspect is

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Speaker 2: Stephen Carot. I wonder whether you found a new running

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Speaker 2: route in your new city.

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Speaker 5: Right I'm still working it out.

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Speaker 3: This is the problem is that like you go one direction,

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Speaker 3: you think, yeah, this will be fine, you realize you're

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Speaker 3: actually running along a motorway. So then sometimes google matter

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Speaker 3: is not the most helpful when you're looking for places

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Speaker 3: to run, So all suggestions a post card, please.

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Speaker 4: Yeah, absolutely, Okay.

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Speaker 2: I've got some producers chiming in as well about how

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Speaker 2: we are all runners.

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Speaker 4: Perhaps just it's not me.

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

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