Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Daybreak Youro podcast, available every morning on Apple, Spotify or
Speaker 1: wherever you listen. It's Friday, the fourteenth of February in London.
Speaker 1: I'm Stephen Carroll coming up today. US President Trump moves
Speaker 1: to impose reciprocal tariffs on its trading partners. You can't
Speaker 1: trust him, Ukraine Zelensky sounds of warning on Vladimir Putin.
Speaker 1: Plus cuts are coming, Bloomberg learns HSBC is preparing for
Speaker 1: a fresh round of layoffs. Let's start with a round
Speaker 1: up of our top stories. US President Donald Trump has
Speaker 1: ordered his administration to consider imposing reciprocal tariffs on its
Speaker 1: trading partners. The levees would be customized for each country
Speaker 1: and aim to offset their tariffs on US goods as
Speaker 1: well as non tariff barriers to trade.
Speaker 2: Again, whatever they charge us with judging the EMI, so
Speaker 2: it works out very on. It's very It's a beautiful,
Speaker 2: simple system, and we don't have to worry judging too
Speaker 2: much or too little.
Speaker 1: Reciprocal tariffs would amount Trump's broadest action to address US
Speaker 1: trade deficits. Bloomberg Senior Economic Supporter Sean Donnan says, the
Speaker 1: key focus is on how other countries tax consumers.
Speaker 3: Value added taxes or VAT, and that's big in the EU.
Speaker 3: There's more than one hundred and sixty countries in the
Speaker 3: world that use a VAT. The US, of course, does not.
Speaker 3: This kind of rekindles a battle that the US has
Speaker 3: had on and off with Europe since the nineteen sixties
Speaker 3: over how to treat taxes and trade. But we're going
Speaker 3: to end up with some big numbers aim that some
Speaker 3: big trading partners. We just don't yet know what those
Speaker 3: numbers are going to be.
Speaker 1: Bloomberg Shawn donnand speaking there as, Trump also told reporters
Speaker 1: that he would enact import taxes at a later date
Speaker 1: on cars, semiconductors, and pharmaceuticals, over and above the reciprocal tariffs.
Speaker 1: The US president has already imposed ten percent tariffs on
Speaker 1: Chinese goods and plans to put twenty five percent duties
Speaker 1: in all US steel and aluminium imports next month. The
Speaker 1: latest salvo on tariffs came as Trump and India's Prime
Speaker 1: Minister Narandro Modi met in Washington. The two leaders agreed
Speaker 1: to begin negotiations to address what Trump described as long
Speaker 1: running disparities in their trade relationship.
Speaker 2: It has been to US just about the highest tariffed
Speaker 2: nation anywhere in the world. They've been very strong on tariffs.
Speaker 2: I don't blame them necessarily, but it's a different way
Speaker 2: of doing business. It's very hard to sell into India
Speaker 2: because they have their trade bearers very strong tariffs.
Speaker 1: Donald Trump was speaking there in that joint press conference
Speaker 1: this as Narandro Mody said the two men had agreed
Speaker 1: to more than double bilateral trade to five hundred billion
Speaker 1: dollars by twenty thirty. Trump also said the US would
Speaker 1: take steps to sell the F thirty five warplane to
Speaker 1: India as part of a bigger commitment to deepening defense ties.
Speaker 1: US has been reluctant to sell the planes to countries
Speaker 1: where its technology might be stolen by adversaries. In Europe,
Speaker 1: leaders are still coming to terms with the u US
Speaker 1: shift and its policy towards Russia. After Trump and Putin's
Speaker 1: surprise call to discross Ukraine, Ukrainian leader of Ladimir Zelenski
Speaker 1: says he's warned the US president that Putin cannot be trusted,
Speaker 1: adding that Ukraine must be part of any peace talks.
Speaker 4: Today, we cannot predict how it all will go on.
Speaker 4: But we must be strong. We will be very careful.
Speaker 4: We need allies and fair partners. We cannot accept as
Speaker 4: an independent country any agreements made without us.
Speaker 5: Shap.
Speaker 1: That was doder Mezelenski. They're speaking through a translator. The
Speaker 1: Trump administration also told European allies they should buy American
Speaker 1: weapons and military equipment to maintain the NATO alliance. This
Speaker 1: as Bloomberg Economics calculates that protecting Ukraine and expanding Europe's
Speaker 1: own militaries could cost the continent's major powers an additional
Speaker 1: three point one trillion dollars over the next ten years.
Speaker 1: In to some breaking news this hour, and nat West
Speaker 1: has reported pre tax operating profit the beat estimates, coming
Speaker 1: in at one point four to nine billion pounds. That's
Speaker 1: above an estimate of one point four billion pounds. Net
Speaker 1: income in the fourth quarter was at one point two
Speaker 1: five billion pounds, also beating estimates. Net interest income slightly
Speaker 1: above estimates at two point ninety seven billion pounds as well,
Speaker 1: and also news that the UK Treasury has reduced its
Speaker 1: stake in that West to seven point nine to eight percent.
Speaker 1: That's down from eight point nine percent and staying with earnings.
Speaker 1: Sales Aurmez climbed as a luxury group, benefit of from
Speaker 1: a strong appetite over the holiday shopping season. Sales jumped
Speaker 1: almost eighteen percent in the fourth quarter at constant exchange rates,
Speaker 1: according to the latest results out from the firm this morning.
Speaker 1: That's above what analysts had been expecting, which was growth
Speaker 1: of eleven percent. Armes chairs have climbed more than twenty
Speaker 1: percent since the start of this year. HSBC is planning
Speaker 1: any round of job cuts next week. Bloomberg understands the
Speaker 1: changes to its investment bank workforce will affect employees globally,
Speaker 1: starting in Asia. That's the CEO Jean jel Hadri continues
Speaker 1: his overhaul of Europe's biggest lender. Layoffs could begin as
Speaker 1: early as Monday and will be based on performance, job
Speaker 1: duplication and simplification, with some already underway in the firm's
Speaker 1: markets division. JP Morgan, CEO, says the bank will scale
Speaker 1: back spending on what he called stupid diversity initiatives that
Speaker 1: he sees as wasteful. Responding to an employee question, Jamie
Speaker 1: Diamond said plans to cancel some schemes was about costs
Speaker 1: rather than backlash from the Trump administration. JP Morgan's longtime leader,
Speaker 1: also reiterated the bank's commitment to working with black, Hispanic
Speaker 1: and LGBTQ communities, but told staff that he was never
Speaker 1: a firm believer in bias. Training and the UK's Prime Minister,
Speaker 1: Kris Starmer, met China's top diplomat as the two countries
Speaker 1: look to improve ties. The British leader joined a meeting
Speaker 1: between farm mister Wange and National Security Advisor Jonathan Powell
Speaker 1: Bloomberg James Wilcock reports.
Speaker 6: Kiss Starmer expressed his intention to build a consistent and
Speaker 6: respectful relationship between the UK and China, and according to
Speaker 6: China's Global Times, Foreign Minister Wang Yi So, the UK
Speaker 6: government had started the process of improving relations and looked
Speaker 6: forward to deepening cooperation on AI and climate change. Both
Speaker 6: China's top diplomat and the US Ambassador to Britain were
Speaker 6: in Downing Street yesterday. It showcases the balancing act Britain
Speaker 6: is trying to pull off, trying to build ties to
Speaker 6: the world's second largest economy while avoiding the ayre of
Speaker 6: the US President Donald Trump in London, James Orcock Bloomberg Radio.
Speaker 1: Those are your top stories. Eurostocks on the market's Eurostox
Speaker 1: fifty futures of down two tenths of one percent, so
Speaker 1: we're seeing a narrowing of the negative sentiment on European
Speaker 1: stock markets. The Eurostox fifty index actually hit a record
Speaker 1: high in trading yesterday. We've had some optimism boosted around
Speaker 1: the prospect of those reciprocal tariffs not coming until April,
Speaker 1: leaving some space for negotiation. The Mascis Specific Index six
Speaker 1: tenths higher as well. On the currency markets, the Bloomberg
Speaker 1: Dollars Spot Index now in the red a tenth of
Speaker 1: one percent as well. That's after the drop that we
Speaker 1: saw yesterday. So the euros trailing at one of four
Speaker 1: to sixty seven against the dollar of the pound at
Speaker 1: one twenty five sixty seven. And in a moment, we'll
Speaker 1: bring you more on those announcements out of the US
Speaker 1: on tariffs. But just a word or another story that
Speaker 1: caught our eye this morning to do with how one
Speaker 1: hedge fund is using AI. It's replaced junior analysts at
Speaker 1: the Australian hedge fund, Minotaur Capital. That's according to reporting
Speaker 1: by our colleagues Harry Brompton and Georgina McKay so their
Speaker 1: bets using their large language model have returned almost fourteen
Speaker 1: percent in the six months to the end of January,
Speaker 1: versus almost seven percent for the MSCI All Country World Index. Now,
Speaker 1: it's not unusual that hedge funds be using AI for
Speaker 1: this sort of work, but Minotaur believes that they have
Speaker 1: developed a large language model that can digest larger amounts
Speaker 1: of information and produces two thousand word reports on any
Speaker 1: global stock. It deems has the potential to double in
Speaker 1: three years or improve tenfold in the so in decades.
Speaker 1: They combine this at making their own inquiries as a
Speaker 1: recipe for success. But the co founder Arman Rosenberg telling
Speaker 1: Bloomberg the cost of developing that AI large language model
Speaker 1: is about half that of a junior analyst's salary. You
Speaker 1: can read more in that story on Bloomberg dot com
Speaker 1: and on the terminal. So let's turn back to tariff's then,
Speaker 1: the US President now talking about reciprocal tariffs on trading
Speaker 1: partners in response to levies, regulation or other non tariff barriers.
Speaker 1: But the timeline is key here. Let's bring in our
Speaker 1: senior editor Bill Ferries for more. But what can you
Speaker 1: tell US about what Donald Trump has announced here.
Speaker 7: Well, what he's announced is a really sweeping demand of
Speaker 7: his US Trade representative and his Commerce secretary to propose
Speaker 7: new levies on a country by country basis in a
Speaker 7: bid to kind of rebalance trade relations between the US
Speaker 7: and every one of its trading partners. So that requires
Speaker 7: looking at not just what kind of tariffs those countries
Speaker 7: impose on US goods, but of non tariff barriers those
Speaker 7: countries have too, And a non tariff barrier could be
Speaker 7: things like regulations that could include things like value added tax,
Speaker 7: include a whole host of things that make selling American
Speaker 7: goods into that country difficult. And the end result of
Speaker 7: this is expected to be a list of recommendations for
Speaker 7: again every single country on how much the US should
Speaker 7: raise tariffs against those countries to try to even things out.
Speaker 7: President Trump presented it as a very easy way of
Speaker 7: trying to rebalance trade, but the reality is it's going
Speaker 7: to be quite difficult, and it's going to take quite
Speaker 7: a bit of time, I think, to go through all
Speaker 7: of that.
Speaker 1: Yeah, indeed, I mean, those are the key factors that
Speaker 1: markets appear to be focused on, both the timeline and
Speaker 1: the fact that this looks like a very complex and
Speaker 1: potentially unworkable task.
Speaker 7: It is going to be complex. The Howard Lutnik, who
Speaker 7: is still Trump's nominee to lead the Commerce Department, he
Speaker 7: told reporters that he think all he thinks all the
Speaker 7: studies about this could be done by April first, and
Speaker 7: that President Trump could act on it on his recommendations
Speaker 7: after that. The reality, of course, is that that also
Speaker 7: opens up a big space of time for negotiations to
Speaker 7: start with all the countries involved. So I would imagine
Speaker 7: any world leader who's talking or meeting with Donald Trump
Speaker 7: over the next six or seven weeks between now and
Speaker 7: April will be putting in a good word and also
Speaker 7: trying to say like what sort of measures they're willing
Speaker 7: to take, whether it's buying more American goods or reducing
Speaker 7: some of those tariffs to try to make it less
Speaker 7: likely that they will face the full impact of potential tariffs.
Speaker 1: The interesting also to see the comments from Peter Navarro
Speaker 1: talking dismissing concerns that this might push up prices for
Speaker 1: US consumers as well, which is, you know, one of
Speaker 1: the factors of the economists have been thinking about.
Speaker 7: Yeah, and it comes you know, all of this comes
Speaker 7: of course, just yesterday there was a higher than expected
Speaker 7: inflation reading in the US, so the trend is not
Speaker 7: looking good. The bets on when the Federal Reserve will
Speaker 7: cut rates have been pushed back even further. The Trump
Speaker 7: administration and Peter Navarro basically arguing that hey, we did
Speaker 7: some tariffs in Trump's first term, and the reality was
Speaker 7: it was a pretty limited impact, they said. Studies have
Speaker 7: shown that exporters to the US absorbed some of that
Speaker 7: some of that cost with lower margins, but there were
Speaker 7: costs passed on. And certainly, as you talk about an
Speaker 7: inflationary environment in the US, when people were worried about
Speaker 7: the price of eggs, the price of homes, the price
Speaker 7: of cars, particularly with things like the steel and aluminum tariffs,
Speaker 7: it's going to be a real difficult question politically about
Speaker 7: whether the president goes forward with US.
Speaker 1: Okay, Bill Ferries, our senior editor, thank you very much
Speaker 1: for joining us this morning. Well, the threat of tariffs
Speaker 1: on Europeanes is also hanging over the security issues being
Speaker 1: discussed at the Munich Security Conference, which gets underway today.
Speaker 1: Our correspond to Oliver Crook is there for US and
Speaker 1: he joins US now Live Oliver Good Morning. Trade issues
Speaker 1: intertwined with security issues at this event. How worried will
Speaker 1: leaders there be about the issis they've heard from Donald Trump.
Speaker 5: I mean, listen, they need to figure out what to
Speaker 5: prioritize of what they've heard recently from Donald Trump. I mean,
Speaker 5: the last forty eight hours alone has been a complete
Speaker 5: barrage of information. It's very hard to know really what
Speaker 5: to take away from it, what to take seriously, what
Speaker 5: to take literally. I mean, the week began with this
Speaker 5: conversation between Donald Trump and Vladimir Putin, really kind of
Speaker 5: out of the blue.
Speaker 8: Again, a lot of people were.
Speaker 5: Surprised by it, but again people shouldn't be that surprised
Speaker 5: by the policies that Donald Trump is advancing, and not
Speaker 5: just the substance of them, but their style. Basically, this
Speaker 5: is not a multilateral system anymore. This is a unilateral system.
Speaker 5: This is one that is going to be governed by
Speaker 5: Donald Trump and how he wants, how he wants to
Speaker 5: sort of pursue foreign policy. And for the Europeans are
Speaker 5: sort of left scrambling here. They're trying desperately to get
Speaker 5: a seat of disable. But the concern is that this
Speaker 5: US delegation is not here to listen, it's here to talk.
Speaker 1: This as we've heard from the Trump administration that they've
Speaker 1: told allies in Europe they want them to buy more
Speaker 1: American weapons. This is part of the continued support for NATO.
Speaker 1: Does that seem likely?
Speaker 8: That seems very likely.
Speaker 5: And again that is sort of one of the issues,
Speaker 5: like buying more fossil fuels, that's really for the Europeans
Speaker 5: than the Americans pushing on an open door right. The
Speaker 5: Europeans need more military hardware and they need more fossil fuels.
Speaker 5: The US is very happy to sell that to them.
Speaker 5: So that is one way in which that certainly will
Speaker 5: likely happen. But again to your earlier point, Steve, and
Speaker 5: this whole idea that all these issues are intertwined, this
Speaker 5: is a sort of staple of the sort of Trump policy.
Speaker 5: There are not discrete trade issues, discrete antitrust regulation issues,
Speaker 5: discrete defense issues. Everything is sort of banded up together.
Speaker 5: I mean, I spoke to the highest ranking general in
Speaker 5: the German military yesterday. This is the man who commands
Speaker 5: the armed forces which they needs to bring these things
Speaker 5: into being, and I asked him, listen, if the United
Speaker 5: States is willing to use as leverage points basically anything,
Speaker 5: even on allies.
Speaker 8: Do you feel secure buying arms and being reliant on
Speaker 8: the United States for buying arms, and he said, basically
Speaker 8: there is no other alternative.
Speaker 5: So in short, yes, Stephen, there we'll be buying probably
Speaker 5: more US arms because they also don't have a choice.
Speaker 3: Yeah.
Speaker 1: Indeed, we're going to bring our listeners that interview that
Speaker 1: you did with Krstan Brewer in a moment on the program.
Speaker 1: I'm wondering, though more broadly, about the discussions that are
Speaker 1: going to be happening around Ukraine's future at the Munich
Speaker 1: Security Conference. We've had that phone call between Donald Trump
Speaker 1: and Vladimir Potin, which is really upset the US policy
Speaker 1: position until now, How is this discussion going to play
Speaker 1: out in Munich?
Speaker 8: Again, this is a big question here, and I think
Speaker 8: for the Europeans it's a.
Speaker 5: Very very big question right again, they want to try
Speaker 5: to get their voice heard in this conversation there. It's
Speaker 5: not clear that they're going to and we've heard a
Speaker 5: lot of different things from Donald Trump I and we've
Speaker 5: even heard from some people that this meeting with Putin
Speaker 5: could happen in a matter of weeks.
Speaker 8: Again, we don't know.
Speaker 5: He also said yesterday that basically there would be meetings
Speaker 5: between high level members of the Ukraine delegation, American delegation
Speaker 5: and the Russian delegation here in Munich. That came out
Speaker 5: of the absolute blue sky. So again it's very hard
Speaker 5: to know where this is proceeding. But the sense that
Speaker 5: you're getting here from the certainly from the Europeans, is
Speaker 5: that this negotiation train has already left the station.
Speaker 8: And guess what the Europeans are not on it.
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