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This is the BlueBag Day BAKR podcast failable every morning on Apple, Spotify or wherever you listen. It's Tuesday, the thirteenth of May in London. I'm Caroline Hepka.
And I'm Stephen Carroll. Coming up today. UK pension funds agree to invest at least five percent of their assets in Britain in a win for the Chancellor.
Rachel Reeves, the S and B five hundred and NASAK make huge gains as US China tariff cuts fuel, the return of a Buy America trade.
Glass, police investigator, fire at Prime Minister Kier Starmer's house, and possible links to two other blazers.
Let's start with a roundup of our top stories.
Britain's largest pension funds are agreeing to invest at least five percent of their assets at home in a new deal with the labor government. The seventeen funds who've signed up to the Mansion House Accords say the deal will inject as much as fifty billion pounds of new investment over the next five years. Bloomberg's James Wilcock has more.
It sets funds who manage nine to ten UK savers, direct contribution pension pots a target keep five percent of your assets in Britain's private markets. It's a significant amount of money, but it is voluntary and it's not the first use of the name. A previous mansion House Compact, signed two years ago, has been criticized for only leading
to a limited amount of investment. This new version comes as the government weighs legally forcing funds to invest more domestically as it seeks more money for infrastructure projects in London. James Wilcock Bloomberg Radio.
Global stocks have made huge gains on optimism that the decision to slash US China reciprocal tariffs for ninety days marks the end of an all our trade war. The S and P five hundred jump to three point three percent to take it back above the level when President Trump first announced those sweeping global levies on the second of April. Meanwhile, a surge in Big Text put then as that one hundred back into a bull market, just about a month after it plunged twenty percent from a
previous record high. Investors also moved out of defensive positions and reduced expectations for Federal Reserve interest rate cuts. Kathy Jones, chief fixed income strateist that Charles Schwab says there is reason for traders to feel more confident.
The market has been so valerable because it keeps trying to recalibrate what the outlook is right and now it seems as if the worst case scenario is probably behind us because China was the big one to get a deal with. So if we've dialed back the rhetoric, if we've dialed back the limit on China, maybe we dial back limits on everybody else and we get more of a soft landing.
Kathy Jones speaking there following the announcement of the US China trade truce. On the markets right now, the MASCI Asia Pacific indexes up by four tenths of one percent, US SOX fifty futures are down two tenths of one percent, and tenure US treasure yields down one and a half basis points are trading at four forty six.
The massive gains across equity markets and the dollar follow carefully coordinated joint statements issued yesterday from Beijing and Washington. The US announced it would slash duties on Chinese products to thirty percent from one hundred and forty five percent for a ninety day period, while Beijing reduced its levy on most US goods to ten percent. The rollback in tariff s appears to validate Cheating Ping's decision to stand
firm against Donald Trump's tariff offensive. Speaking this morning, the Chinese president warns that acts of coercion and dominance ultimately lead to isolation. May there are no winners in tariff wars or trade wars. Bullying or through hegeminism only leads to self isolation. The Chinese President's remark, spoken thereby a translator, come as President Trump said he could speak with she as early asn't it the end of this week, touting what he called a total reset in US China relations.
US drug may because meanwhile, have avoided a worst case scenario. After President Donald Trump signed an executive order asking them to lower prices for Americans voluntarily. Farm's futuel companies had feared action on drug prices, but analysts saw the order as less severe and vague, looking for cuts of between sixty and ninety percent. President Trump said that the cost of US drugs should match the lowest prices in developed nations.
Starting today, the United States will no longer subsidize the healthcare of foreign countries, countries where they paid a small fraction of what for the same drug that what we pay many many times more for, and were no longer tolerate profiteering and price gouging from Big farmer. But again, it was really the countries that forced big farmer to do things that, frankly, I'm not sure they really felt comfortable doing.
President Trump suggesting that other countries should pay more for medicines. Shares of Farm's futul companies have rebounded in Asia this morning after the S and P five hundred Pharmaceutical and Biotech Index, which includes names like Gilead Sciences, Murk and Eli Lilly, close up three point seven percent on Monday.
Counter terrorism officers are leading an investigation into a fire at a home owned by the Prime Minister in North London. Emergency services were called to the property in the early hours on Monday, but nobody was hurt. The building has been targeted by protesters in the past. Three people were convicted of public order offenses last year after carrying out a pro Palestine demonstration outside. While the home is owned by Kerstarmar he has not lived there since taking office
last year. Police now say they're looking at whether two other fires last week could be connected to the blaze.
And lastly, could artificial intelligence be the secret to more efficient phone charging. Apple thinks that the technology could answer a frequent source of customer frustration, the iPhone's battery life. Bloombig cba Adebayo has the story.
Howard battery management mode is set to be included in the latest iPhone software update, due in September. Bloomberg understands the enhancement will analyze device use and make adjustments to conserve energy. The move is part of Apple's ongoing bid to integrate AI into its core features, building on the first version of Apple Intelligence, which rolled out last year. Behind the push for battery efficiency is the soon to be released slimmed down iPhone seventeen, which will have fewer
hours of life due to its size. In London to at a bio Bloomberg Radio and.
Those are our top stories and a moment more on that promise by UK pension funds to invest more here in Britain, plus the US China tariff cut which turbocharged global markets. With another story that caught her eye this morning, Carlin. Recently I did one of those things where you clean out that drawer of technology that you just kind of gather as it just.
A draw I've got buckets and buckets of tech at home.
But again marveling at how small my old phone was versus the one that I have now. And this is a trend, perhaps not smaller, but definitely thinner phones are coming back. The latest model from Samsung going to be thirty percent thinner. This is the S twenty five edgephone, and sort of creates a nostalgia around Do you remember when phones used to be tiny? Yeah, not to change ourselves, of course, Kyline the nock your.
Eight to ten comes to mind. It was absolutely tiny, the buttons were minute, and look, I think this is amazing that the phones are going to be thinner and thinner, and yet of course the perennial problem of never having a pocket large enough for your phone.
It gives me a strange sense of like, I feel like my hands are giant when I've changed the size on my phone because I keep dropping it ab it's the wrong size. And I mean, it's worrying how much you've become accustomed to holding one piece of technology in your handholes.
Yeah, and it is the race to also lighter phones as well. I mean, okay, so the S twenty five from Samsung is coming out, but then we know that the iPhone, the latest version, is going to come out later this year, and surely that will also be a point of competition. BS phones getting lighter, thinner and with.
Good battery life, which is the other challenge of course, as well as we've been reporting. We'll put a link to that article in our podcast show notes. Well, now, the Chancellor ray To Reeves is unveiling a new mansion house accord today with the pension industry that could possibly unlock as much as fifty billion pounds of investment into
the UK. Seventeen large workplace pension providers have pledged to voluntarily invest ten percent of assets into private markets and five percent specifically in the UK, joining US now for more, our asset management reporter Leo Ken share earlier, Good morning. What is in this agreement and what is it aiming
to do? Yes, good morning, Stephen. So the large pension providers you know, names like Aviva Legal and General Phoenix, they have all signed up to this voluntary commitment to invest ten percent of their assets into private markets, half of which or five percent of the total would be going to the UK, so to you know, on list of businesses and also infrastructure projects and MNG one of
the signatories. They have actually sent over some helpful examples of what they already doing, so you know, their lender to Gales, the rather nice bakery chain, if I may say that, and Belfast International Airport, and essentially that's what the government wants to see more of. And I think it's really important to note that this is definitely a
step up. The initial compact was signed than a little less than two years ago with the previous Conservative government and there the goal was to invest five percent into private markets, and now that's up to ten percent. There's more signatories as well, and there's also a specific allocation to the UK.
So, as you say, it's focused on private assets, so it doesn't include listed stocks I suppose. My question is why not? And it's voluntary not mandatory.
Why Yes, that's a good point.
So the goal of the accord is really to boost companies and projects that don't have the access to significant capital that a member of the foot Sea one hundred sort of already has and a really important point to
make here, uh. In the in the new agreement, it says if pension funds buy shares in companies listed on the London Stock Stock Exchanges aim Market for growth companies and also from aquis in another exchange for smaller companies basically, then that will count toward their allocation target into UK private markets.
So it's it's it's quite fascinating.
That they've found they found a way here to include a sizable part of the of the stock market here.
One of the criticisms that has been made of the previous version of this acord is that it was voluntary and not mandatory. This still isn't going to be a mandatory commitment from these funds.
No, that's that's right, And I think the key issue is the fugutiary duty of the trustees of the of those pension funds. You know, they have to act in the best interests of their customers make the best possible investments, and being forced to invest in a particular sector or region,
you know, really runs against that. And it's quite interesting also in the statement of Treasury said, you know, programs progress against that voluntary commitment will be monitored and the initiative will be reinforced by measures to be announced in
the upcoming final report of the Pensions Investment Review. So that doesn't sound like outright mandation, but it sounds a bit like a backstop where the government plans potentially legislation that will allow it to tell pension funds, you know, if you don't follow through with your commitments, we can make you do it.
That's interesting, isn't it that they're being pressed a little bit harder. But then the question is whether it will really work. So the first mansion house compact, they did a review after a year, and actually it was it was the ABI that did a review, and they hadn't found that it had made a huge difference. They said that there were quite a lot of barriers actually to investment, and there's also quite a big kind of get out
of free jail card. I suppose assuming a sufficient supply of suitable investable assets.
Yes, that's a great that's a very great point. And this is you know what most asset managers and pension funds I talk to keep telling me. You know, it comes down to having that pipeline of investable assets. And this ultimately depends on other government policies, you know, like the Industrial strategy, you know, where the government identifies priority sectors for growth, and also the planning reform that's supposed to make it easier to build more homes in this country.
So ultimately the ball is again with the government and the government's call.
Okay, Leo Kenchapper, Asset Management reporter, thank you very much for joining us.
Now, let's move on and talk about US. China. Chi Jinping's decision to stand firm against Donald Trump resulted in a massive de escalation in taris. The Chinese president has been speaking this morning saying that bullying and hegeminism only lead to isolation and that there are no winners in tariff wars or trade wars. In a further sign of the improvement though in relations, China is removing its ban on Boeing deliveries. Joining us now as our senior editor,
Bill ferries to discuss all of this. So we're a day on from the tariff deal. We've heard from Xijiping today. He does seem to clearly come out on top of the tariff for with the US.
Yeah, it's hard to see. It's hard to see what the argument is for what the US has gotten out of this when you go back to maybe where the US was before or on April second, that Liberation Day, when the Trump administration announced these tariffs on a whole bunch of countries, but which really started this escalation in the China China trade war, where tariffs went to thirty four percent and then up to one hundred and forty five percent and China responded with one hundred and twenty
five percent tariffs. In return, China's got basically, you know, back to square one. The tariffs are down to thirty percent. That's ten percent and the baseline that all countries have now and additional twenty percent for fentanyl. But you know, we know both countries were feeling some pain. Chinese factory orders were down, cargo ships orders were declining as well, and the US was looking at the potential of good shortages. So both sides had a lot of reason to go
into these talks in Switzerland. But it does seem that China's gotten most of its demands and that Chi Jinping's policy of basically standing firm worked out pretty well for him.
So what does that mean about the strategy from here? We've just had this news that China's removing this month long band that it had on airlines taking delivery of Boeing planes. So that's clearly a sign of China moving towards the US on this as well. But in terms of what we think about next, where should we be looking.
Well, there's supposed to be this ninety day window where they continue to talk, for instance, about things like the actions against the fentanyl precursor producers. If the US sees progress on that front, you have the potential for up to twenty percent of these extra tariffs coming off of China. So that's one area I think both sides will try to make some progress there. Scott Bessent, the Treasury Secretary, say that he sees the ten percent tariff at this
point as the floor on China. It's the floor on every country, even that the deal they announced last week with the UK includes the ten percent tariff. I think we'll continue to see some of these sectoral tariffs, and you could see tweaks in that. Donald Trump has changed his tariff policy a lot in the last few months. So whether China stays at thirty percent may depend on how well talks are going or not.
Going.
But I think one thing that has come out of this that both sides would applaud is that there is this channel for negotiation now that's been created with Scott Bessett and Jamison Greer and their counterparts from Beijing. That's I think a channel that's expected to stay open and continue talking.
And lastly, of course, markets hugely relieved at de escalation, and China may well be able to hit its growth target. Five percent growth target looks perhaps a bit more possible. Yeah.
Absolutely, we saw ing upgrade their target to about four point seven percent for Chinese GDP. I was looking at the SMP before coming in here. It's basically at the level it was at I think in November around election day last year. So a lot of the losses have been wiped out so far. But again it's you have to wonder kind of what the US has gotten out of this. I think that endgame remains to be seen.
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