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

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Speaker 2: This is the Bloomberg Day Bacur podcast. Good morning, It's Thursday,

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Speaker 2: the twenty fourth of July. I'm Caroline Hepca in London and.

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Speaker 1: I'm Stephen Caroline Brussels. Coming up today, the European Union

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Speaker 1: is closing in on a trade deal that would set

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Speaker 1: a fifteen percent tariff for most of its goods.

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Speaker 2: Narendra Mody jets into London to sign a landmark UK

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Speaker 2: India trade agreement worth four point eight billion pounds.

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Speaker 1: Plus after the UK Supreme Court quashed the convictions of

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Speaker 1: two traders over rigging rates. What's the future of prosecuting

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Speaker 1: financial crime in Britain.

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

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Speaker 1: The European Union and the United States are progressing towards

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Speaker 1: a trade agreement that would set a fifteen percent tariff

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Speaker 1: for most imports into the US. According to diplomats brief

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Speaker 1: to the negotiations, EU member states could be ready to

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Speaker 1: accept duties at that level, as European officials push for

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Speaker 1: the rate to cover sectors including cars.

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Speaker 3: The talk of a possible deal.

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Speaker 1: Comes as the US President Donald Trump suggested that he

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Speaker 1: would not go below fifteen percent, as he sets so

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Speaker 1: called reciprocal tariff rights.

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Speaker 4: We're going to have a very very simple tariff for

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Speaker 4: some of the countries. Have so many countries, you can

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Speaker 4: negotiate deals with everyone.

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Speaker 3: So we'll have a straight simple.

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Speaker 4: Tariff of anywhere between fifteen and fifty percent. A couple

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Speaker 4: of weeks fifteen because we haven't been getting along with

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Speaker 4: those countries too well, so we just say, let's pay

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Speaker 4: fifty and that's.

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Speaker 3: The way it is.

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Speaker 1: Trump added that if the European Union agrees to open

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Speaker 1: up to American businesses, then we will let them pay

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Speaker 1: a lower tariff. Other countries, including South Korea and India,

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Speaker 1: are also pushing for an agreement before the heightened tariffs

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Speaker 1: go into effect in just over a week's time.

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Speaker 2: The trade negotiations come as top representatives from the European

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Speaker 2: Union have been meeting with Chinese present Hijing. Paying however,

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Speaker 2: spanning trade to the war in Ukraine are casting a

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Speaker 2: shadow over an event that coincides with the fiftieth anniversary

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Speaker 2: of the establishment of China EU diplomatic ties. The Chinese

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Speaker 2: leader met with European Commission President Ersa Vanderline and the

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Speaker 2: head of the European Council, Antonio Costa, according to the

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Speaker 2: official Shinwa news agency and state broadcaster CCTV, says that

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Speaker 2: she used his opening remarks at the summit to urge

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Speaker 2: the EU to strengthen trust and communication with China amid

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Speaker 2: global uncertainty. The first meeting of its kind since twenty

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Speaker 2: twenty three comes as Bloomberg has learned that European metals

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Speaker 2: traders are engaged in an increasingly frantic scramble to secure

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Speaker 2: rare earth metal supplies after it became all but impossible

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Speaker 2: to directly source them from China.

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Speaker 3: The UK and India plan to sign their long awaited.

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Speaker 1: Free trade agreement today and move with the British government

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Speaker 1: has will add four point eight billion pounds to the

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Speaker 1: size of the economy.

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Speaker 3: Bloomberg's ewen parts has More.

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Speaker 5: To deal with India is the biggest trade agreement secured

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Speaker 5: by the UK since Brexit five years ago. The signing

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Speaker 5: comes as part of Indian Prime Minister Neurendrom Modi's two

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Speaker 5: day visit to Britain and follows three years of intense negotiations. India,

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Speaker 5: which is a significantly more protectionist economy than the UK,

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Speaker 5: will reduce ninety percent of its tariff lines, cutting the

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Speaker 5: average levee on British imports from fifteen percent to three percent.

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Speaker 5: In the other direction, fully, ninety nine percent of Indian

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Speaker 5: goods exports will benefit from zero duties in London.

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Speaker 3: I'm une pots Pplinberg Radio.

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Speaker 6: Now.

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Speaker 2: When it comes to UK car making, it has hit

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Speaker 2: its lowest level since nineteen fifty three, according to the

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Speaker 2: Society of Motor Manufacturers and Trader As car output fell

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Speaker 2: by seven point three percent in the six months to June,

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Speaker 2: whilst van production is down by forty five percent. The

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Speaker 2: UK car industry remains export focus, with the EU and

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Speaker 2: then the US being the main destinations. Uncertainty over US

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Speaker 2: tariffs meant that some firms slowed or stopped production in

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Speaker 2: the first half of this year, although a transatlantic tariff

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Speaker 2: deal briefly bolstered output in June. The SMMT says that

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Speaker 2: with the right conditions, UK automotive can reverse the current decline,

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Speaker 2: but current estimates show that only seven hundred and fifty

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Speaker 2: five thousand vehicles are expected to roll off production lines

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Speaker 2: this year. In twenty twenty five.

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Speaker 1: Some breaking earnings news this morning, BNP Paribas areported better

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Speaker 1: than expected profits in the second quarter, the French lender

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Speaker 1: getting a boost from its fixed income traders while equities

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Speaker 1: slumped in the volatility triggered by the US tariff announcements,

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Speaker 1: so revenue from trading debt, securities and currencies jumped by

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Speaker 1: twenty seven percent from a year earlier, beating estimates. Equities income,

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Speaker 1: though declined by fifteen percent, in a stark contrast with

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Speaker 1: double digit gains at the biggest US firms, BNP Parwabou

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Speaker 1: now sees its fullier net income above twelve point two

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Speaker 1: big euro's higher than estimates.

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Speaker 2: Meanwhile, at Deutsche Bank, their results for fixed income and

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Speaker 2: commodity sales and trading in the second quarter revenue was

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Speaker 2: a beat at two point two eight billion euros. Estimate

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Speaker 2: had been for two point two billion, so a beat

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Speaker 2: of average analysts estimates. Fixed income traders joined Wall Street

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Speaker 2: peers in reaping the profits from volatility following the US

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Speaker 2: Administration's tariff announcement, So it's an eleven percent increase for

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Speaker 2: the German lenders securities unit in Deutsche Bank earnings this morning.

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Speaker 1: Weld's earnings from Wall Street. Tesla's CEO Elon Mosk has

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Speaker 1: warned of difficult times ahead as the firm reported results

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Speaker 1: below estimates. Carmaker posted adjusted earnings of forty cents to share,

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Speaker 1: missing Wall Streets already lowered expectations. Revenue fell by twelve

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Speaker 1: percent to twenty two and a half billion dollars, the

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Speaker 1: sharpest decline in a decade. Speaking to analysts, Musk blamed

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Speaker 1: the loss of benefits for the company's performance.

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Speaker 7: We're in this weird transition period where we will lose

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Speaker 7: a lot of incentives in the US, incentives actually in

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Speaker 7: many other parts of the world, but rules them in

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Speaker 7: the US and across all a bit at the rod

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Speaker 7: early stages of autonomy and the other autonomy, it's most

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Speaker 7: advanced and most available from a regulatory standpoint in the US.

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Speaker 1: Elon Musk speaking there, Tesla's shares fell as he spoke,

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Speaker 1: citing as much as five point three percent, and after

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Speaker 1: ours trading in New York, the stock has already tumbled

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Speaker 1: by eighteen percent this year. Through the close of trading yesterday.

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Speaker 2: Alphabet be to Wall Street expectations for second quarter revenue,

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Speaker 2: but shares slipped after the tech giant warned of higher

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Speaker 2: spending ahead. The Google parent posted eighty one point seven

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Speaker 2: billion dollars in sales excluding partner payouts, which exceeded estimates,

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Speaker 2: but capital expenditures on our forecast to hit eighty five

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Speaker 2: billion dollars in twenty twenty five, up from seventy five

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Speaker 2: billion that it previously expected. Man Deep Singh is senior

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Speaker 2: tech analyst for Bloomberg Intelligence.

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Speaker 8: One third of their business is cloud and YouTube, right,

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Speaker 8: and that's still growing north off twenty five percent. So

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Speaker 8: to my mind, they are showing ROI on all that

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Speaker 8: AI spend, and if they have more AI infrastructure capacity,

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Speaker 8: the cloud business would be growing even faster.

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Speaker 2: Man Deep sing speaking there as, Alphabet shares fell about

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Speaker 2: one point four percent in extended New York trading.

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Speaker 1: And the number of companies and organizations compromised by a

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Speaker 1: security vulnerability in Microsoft's SharePoint servers is rising rapidly. According

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Speaker 1: to cybersecurity firm I Security, hackers have now breached approximately

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Speaker 1: four hundred government agencies, corporations, and other entities.

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Speaker 3: These hacks are among the latest.

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Speaker 1: Major cybersecurity breaches that Microsoft has partially attributed to China.

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Speaker 1: The incident's occurringment heightened tensions between Washington and Beijing over

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Speaker 1: global security and trade.

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Speaker 2: And those were our top stories for you this morning,

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Speaker 2: looking at the markets and aws that future is currently

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Speaker 2: up by three tenths of one percent. S and P

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Speaker 2: five found at EMI futures also close to a record high.

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Speaker 3: You had.

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Speaker 2: Those strong alphabet earnings has also given some impetus to

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Speaker 2: Asian equities this morning, especially the chip stocks the AI boom,

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Speaker 2: so you've got the MSCI Asia Pacific Index up by

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Speaker 2: nine tenths of one percent. Also, a possible USU trade

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Speaker 2: deal maybe before that August first deadline possibly means that

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Speaker 2: we saw European stocks close up by one point one

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Speaker 2: percent yesterday. As stop futures also really flying today, up

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Speaker 2: by one point three percent right now. The BlueBag Dollar

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Speaker 2: Spot index, though weakening for a fifth day in a row,

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Speaker 2: had Lutnik calling for lower interest rates and for the

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Speaker 2: Fed chair your own power to exit. So that's also

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Speaker 2: quite important when we think about the bond market's ten

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Speaker 2: year treasury yields this morning trading at four thirty nine,

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Speaker 2: up a basis point. Those are the markets.

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Speaker 1: In a moment, we'll bring you the latest on the

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Speaker 1: US EU trade negotiations, plus what yesterday's you CREATE Supreme

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Speaker 1: Court ruling quashing the convictions of two traders over rigging

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Speaker 1: the interbank lending brates Libor and eurobor mean for the

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Speaker 1: future of prosecuting financial crimes in Britain. But another story

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Speaker 1: that we've been reading this morning that's got us thinking

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Speaker 1: and talking, An Odyssey is now apparently going to the

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Speaker 1: cinema because the casual form of entertainment is dead, Caroline.

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Speaker 1: Now we have to plan everything years in.

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Speaker 3: Advance, a yeah, and entire year.

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Speaker 2: This is Christopher Nolan's film adaptation of Homer's poem The Odyssey.

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Speaker 2: It's coming out in a year's time, and the director

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Speaker 2: of Oppenheim, of course, is hoping that it will be

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Speaker 2: an event. I'm using air quotes there. Jason Bailey has

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Speaker 2: been writing about this for Bloombagummy You Like It. Tickets

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Speaker 2: being sold in advance. The thing is that tickets completely

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Speaker 2: sold out in the US in minutes for iMac cinemas,

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Speaker 2: because this is going to be a kind of mega

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Speaker 2: movie on seventeen millimeter film for any film boss out there.

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Speaker 2: There are actually only sixteen in Imax cinemas in the

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Speaker 2: US anyway, so they sold that in minutes, which sent

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Speaker 2: me scurrying to the Imax cinemas. In the UK, and

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Speaker 2: yes it's sold out of the BFI. Apparently the Science

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Speaker 2: Museum has also got an IMAX sold out there too.

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Speaker 1: So this is this is the part I can't handle

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Speaker 1: as someone who is chronically organized. There's a few things

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Speaker 1: in life that I feel like you can leave to

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Speaker 1: the last minute. One of them was going to the cinema,

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Speaker 1: and now that's gone too. I'm just going home forget

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Speaker 1: about it. The thing is at least at least you

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Speaker 1: don't have to read the book.

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Speaker 2: Maybe if you know Christopher Lowland does a good job.

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Speaker 3: Look, I hope he does.

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Speaker 2: My Emily Wilson translation of the Odyssey is still on

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Speaker 2: my bookshelf.

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Speaker 1: Okay, love to you like that deal. Let's bring you

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Speaker 1: up to date though, on the trade story. This morning,

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Speaker 1: Donald Trump suggesting he won't allow his baseline tariff right

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Speaker 1: to go below fifteen percent, and as EU diplomats tell

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Speaker 1: us they're making progress on an agreement to that level.

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Speaker 2: Stephen, this is a story you've been following closely in Bustles,

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Speaker 2: of course, in terms of what the latest is on

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Speaker 2: the talks where are they now?

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Speaker 1: What it seems to be is a return to that

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Speaker 1: sort of cautious optimism of.

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Speaker 3: Where we were just over a week ago.

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Speaker 1: Now, diplomats brief and the negotiations tell us that they're

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Speaker 1: making progress towards that deal. So fifteen percent is the

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Speaker 1: baseline for most imports that they're looking at. The senses

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Speaker 1: is that's a level that member states could accept, especially.

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Speaker 3: If the EU can get that level agreed.

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Speaker 1: For cars, they're currently subject, of course to the twenty

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Speaker 1: five percent tariff, So like the situation we saw in Japan,

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Speaker 1: a fifteen percent deal will be an improvement for that sector,

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Speaker 1: of course, very important in countries like Germany. They're also

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Speaker 1: working on a quota system for steel and aluminium, which

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Speaker 1: would see imports above the quotas that would be agreed

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Speaker 1: facing a fifty percent tariff. That's an issue that we

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Speaker 1: know has come up in the UK US trade deal

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Speaker 1: as well. Of course, all of this has efforts to

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Speaker 1: try and avoid the thirty percent tariff that Donald Trump

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Speaker 1: has threatened the EU with from the first of August

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Speaker 1: if there isn't a deal by then. The E is

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Speaker 1: also preparing for that. They've identified more than ninety billion

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Speaker 1: euros worth of American goods that would face also a

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Speaker 1: thirty percent tariff, including Boeing planes, American cars, and Bourbon whiskey.

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Speaker 1: Then there's the question that they could go even further.

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Speaker 1: They could take out their most powerful trade tool in

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Speaker 1: the EU, which is the Anti coercion Instrument. That's something

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Speaker 1: that could actually restrict US company's access to the EU market,

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Speaker 1: which would be a massive escalation of this as well.

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Speaker 1: But the focus for now is on getting that deal.

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Speaker 2: What do we know about where the US is on

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Speaker 2: this agreement potentially.

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Speaker 1: Look, one US official told us the negotiations remain fluid

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Speaker 1: and the deal may not be announced imminently, so perhaps

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Speaker 1: let's not hold our breath just yet. But it was

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Speaker 1: interesting to hear President Trump say that his baseline wouldn't

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Speaker 1: go below fifteen percent and could go as high as

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Speaker 1: fifty percent, which seems to be an escalation of the

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Speaker 1: previous range he's given when he was talking about a

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Speaker 1: ten to fifteen percent rate. We spoke to the US

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Speaker 1: Commerce Secretary Harold Lutnik yesterday. Take a listen to what

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Speaker 1: he told our colleague Amri Hordern about those negotiations with

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Speaker 1: the EU.

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Speaker 6: If they say to the President, we will open our

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Speaker 6: market to you like and I mean really open it,

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Speaker 6: meaning we will take US cars. Like think of what

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Speaker 6: the Japanese did. They said, we will take US cars

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Speaker 6: based on US standards. So you don't have to make

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Speaker 6: a different car. You can take the car you make

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Speaker 6: in Detroit, put it on a boat, and send it.

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Speaker 6: If the Europeans will accept that, and they will accept,

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Speaker 6: really really accepting US products in Europe.

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Speaker 3: That's a giant.

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Speaker 6: That's hundreds of billions of dollars of export opportunity for Americans.

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Speaker 6: That's going to move the President because he's going to

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Speaker 6: say that opportunity for Americans is so great. That's what

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Speaker 6: well we've been We've been talking about it for months.

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Speaker 6: I mean, holy moly, I can't I can't.

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Speaker 3: Tell they're saying they're going to retaliate if they don't

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Speaker 3: get a deal.

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Speaker 6: By all this, I understand. Then the President wrote them

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Speaker 6: a letter saying, if you don't get the deal, we're charging.

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Speaker 3: You thirty percentiating tactics out in public. Well, of course

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Speaker 3: it is.

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Speaker 6: I mean, Donald Trump writes a letter and says, if

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Speaker 6: you don't make a deal, it's thirty percent. And the

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Speaker 6: thing about Donald Trump is he's dead serious. If you

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Speaker 6: don't make a deal, it's thirty percent. Now, that puts

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Speaker 6: the pressure on them right to say, Okay, that's my alternative.

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Speaker 6: They want to get a deal done. For sure, they

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Speaker 6: want to get a deal done. But does Donald Trump

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Speaker 6: want to get a deal done? How much does he

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Speaker 6: value the fact that they open their market? Do they

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Speaker 6: completely open their market? Because that's what he's looking for.

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Speaker 6: I think they will. I think they will really really

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Speaker 6: open their market, and I mean open it, which is

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Speaker 6: something the United States of America has never had.

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Speaker 1: Sounds hard lot next Peking John Murray, horror, darn. It

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Speaker 1: gives us an idea of where the US is in

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Speaker 1: these negotiations. But some of the things that he's raised

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Speaker 1: are extremely sensitive subjects. The EU fiercely protects these standards

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Speaker 1: within its internal marcus, so changing those for one trading.

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Speaker 3: Partner would be a very big deal.

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Speaker 1: But it gives us that idea, again quite similar to

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Speaker 1: the deal which pan of how having something which Donald

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Speaker 1: Trump can be happy with is perhaps more important than

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Speaker 1: the individual level of detail. Remember, we are talking about

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Speaker 1: the world's biggest trading relationship thirty percent of global trade

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Speaker 1: worth almost forty percent of global GDP. The risks of

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Speaker 1: this escalating for both sides and for the whole global

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Speaker 1: economy are also huge.

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Speaker 2: Gosh that that would be certainly a tricky proposition. Look,

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Speaker 2: I think the comparison as I sit in London is

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Speaker 2: perhaps to the UK's position. The UK has secured its

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Speaker 2: at least framework deal with the US and also today,

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Speaker 2: of course the UK is hosting the Indian Prime Minister

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Speaker 2: Narendra Mody because in May the UK managed to sign

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Speaker 2: and manage to agree a free trade agreement after three

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Speaker 2: years of tough negotiation with India. India is still negotiating

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Speaker 2: with the EU for an agreement there on trade. So

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Speaker 2: again it feels like a real moment for the Keir

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Speaker 2: Starmer administration in Britain. Mody's on a two day visit

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Speaker 2: to the UK. Is going to meet with Starmer, He's

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Speaker 2: going to sign this FTA, He's going to meet with

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Speaker 2: King Charles. This is the fourth visit for Modi since

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Speaker 2: becoming Prime minister. Now, in terms of tariffs on for

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Speaker 2: the UK, on more than ninety percent of UK exports,

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Speaker 2: tariffs are going to be cut. So that includes slashing

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Speaker 2: tariffs on things like Scott Schwitski on salmon, on lamb.

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Speaker 3: There'll be a.

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Speaker 2: Quota based tariff production for electric vehicle exports. Overall, the

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Speaker 2: average levy on UK products it is going to drop

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Speaker 2: down from fifteen percent to three percent. So look, kis

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Speaker 2: Starmer's saying that this deal is going to increase wages

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Speaker 2: for British workers. It's the biggest trade agreement since Brexit

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Speaker 2: five years ago. So no wonder Starmer's used lots of

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Speaker 2: you know, positive language and landmark deal and major win

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Speaker 2: for the UK. The UK didn't allow wider visa access

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Speaker 2: which India was pushing hard for. For India though, it's

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Speaker 2: also the most significant trade deal that the country's ever signed.

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Speaker 2: And you know, the UK already imports eleven billion pounds

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Speaker 2: worth of go from India every year, so this is

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Speaker 2: also going to add to that relationship. The agreement still

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Speaker 2: needs to be ratified by both countries, and the UK

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Speaker 2: and India also negotiating an investment partnership. But I think

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Speaker 2: you're going to hear a lot today from Kirstarma's government about,

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Speaker 2: you know, how Britain under this labor government's managed to

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Speaker 2: secure now a series of trade agreements.

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Speaker 1: And I do wonder who's writing the book about how

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Speaker 1: the trade and whiskey illustrates global trade relations coming up

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Speaker 1: in both of those key trade negotiations that we've been

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Speaker 1: talking about. Let's turn into a different story now. The

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Speaker 1: UK Supreme Court quashing the convictions of Tom Hayes and

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Speaker 1: Carlo Palombo, and a stunning reversal of criminal convictions in

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Speaker 1: the Libor and Eurobor rigging cases. Tom Hayes, the former

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Speaker 1: star Ubs trader, became the face of the library rigging

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Speaker 1: scandal when he was arrested more than thirteen years ago.

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Speaker 1: Our legal reporter Luca Depoli, is with us for more. Luca,

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Speaker 1: good morning. Just take us through the decision. Why were

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Speaker 1: these convictions quashed?

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Speaker 9: So both Tom Hayes and Carlo Palombo were convicted after

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Speaker 9: really long jury trials in which judges directed the jury

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Speaker 9: as to what they should consider when they reached their verdict. Obviously,

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Speaker 9: the jury makes the decision, but the decision that they

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Speaker 9: have to make is set by the judge. The crucial

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Speaker 9: thing that the jury was told was that Hayes had

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Speaker 9: made lib Or submissions effectively, submissions designed to help set

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Speaker 9: an interest rate were misleading, and they were not really

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Speaker 9: asked to look at whether that was actually the case

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Speaker 9: in court, sorry, in the jury room, the Justice of

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Speaker 9: the Supreme Court rule that the judge should not have

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Speaker 9: done this and the jury needed to decide this point

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Speaker 9: as a matter of fact. So the jury were never

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Speaker 9: given the opportunity and as a result, Hayes and then

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Speaker 9: after him Palombo were never really given a fair jury trial.

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Speaker 9: Therefore both convictions were quashed.

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Speaker 2: There were also others seven other men who were convicted

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Speaker 2: over rate rigging. What does this decision now mean maybe

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Speaker 2: for them and you know what do we take away

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Speaker 2: from this now?

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Speaker 9: So seven including Hayes, lost trials, and then there were

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Speaker 9: another two that pleaded guilty. And then on top of that,

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Speaker 9: there were a lot of people where cases were brought

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Speaker 9: that were unsuccessful. I think all of those convictions are

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Speaker 9: very much up in the air now.

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Speaker 3: Hayes was the first.

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Speaker 9: So Hayes was sentenced in I think yes, sentenced in

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Speaker 9: twenty fifteen, and then after that in twenty sixteen there

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Speaker 9: was another slew of cases, and then twenty nineteen there's Palumbo,

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Speaker 9: twenty eighteen. Before that there was Christian Bitar and a

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Speaker 9: couple of others. So Hayes was the first mover. It

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Speaker 9: was that case that came under the most scrutiny and

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Speaker 9: the most criticism by the court. So in that relief,

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Speaker 9: it's very hard to see how the people who were

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Speaker 9: convicted won't seek to overturn. And there was a big

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Speaker 9: press conference yesterday in which some of the lawyers for

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Speaker 9: Palumbo and Hayes spoke, and I got the distinct impression

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Speaker 9: that there probably were be.

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Speaker 1: Look at what does this mean then for the Serious

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Speaker 1: Fraud Office that brought these cases and its ability to

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Speaker 1: prosecute financial crime in Britain.

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Speaker 9: So this is this is really bad for the SFO.

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Speaker 9: There have often been existential questions about the SFO. There

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Speaker 9: were actually existential questions about the SFO around the time

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Speaker 9: of the Libor convictions and this was sort of held

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Speaker 9: up as an example of how it can work. The

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Speaker 9: SFO was created to deal with really complex, often financial

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Speaker 9: fraud cases which general law enforcement might struggle with, and

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Speaker 9: Libear was seen as this this sort of one example

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Speaker 9: of them really being effective. They have a number of

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Speaker 9: other cases which have gone really badly, including E n

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Speaker 9: r C, which which is a company which they took

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Speaker 9: legal action against, which might actually end up costing them

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Speaker 9: rather a lot of money. So yeah, it's existential again

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Speaker 9: for the SFI. I think after this, and the other

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Speaker 9: difficulty they have is cases that they are bringing now

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Speaker 9: are coming up against a justice system that's moving incredibly

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Speaker 9: slowly because of the backlog of cases. So the ability

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Speaker 9: of them to ameliorate their reputation with a new conviction

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Speaker 9: is quite difficult because some of their cases they're bringing

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Speaker 9: aren't going to be heard until twenty twenty eight, twenty

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Speaker 9: twenty nine. So yeah, it's as bad as it's been

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Speaker 9: I think in terms of the prospects for the SFO.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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