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This is the Bloomberg Day Baker podcast. Good morning, It's Tuesday, the twelfth of May. I'm Caroline Hebkeit in London and.
I'm Stephen Carolin Brussels. Coming up today over seventy of Kier Starmer's own MP's call for him to go as British Prime Minister, as worries in the bond market grow.
President Trump slams Iran's latest peace offer as he warns the sea spot is on massive life support.
Plus why the EU Commissioned Chief Ursula Vonderlon is facing mounting scrutiny.
Over her use of power. Let's start with a roundup of our top stories.
A growing number of junior government ministers and backbench MPs are calling on Kir Starmer to quit as momentum builds against the British Prime Minister. Bloomberg understands Cabinet ministers, including Home Secretary Shabana Mattmood, have privately told Starmer to set out a timetable to step down own. The meeting came after the Prime Minister defended his party's poor local election results.
Yes, I acknowledge the results are tough. Yes, I acknowledge that we've lost brilliant representatives across the United Kingdom.
I have a responsibility for that.
But I also have a responsibility to deliver the change that we were elected and that we promised this country, and I'll deliver on that.
Starmer's speech was billed as a change of direction, but instead prompted waves of lawmakers to publicly urge him to go. More than seventy of Labour's four hundred and three MPs have now publicly called Anstarmer to step aside. Chris Curtis is one of them.
I don't think we saw a plan from the Prime Minister in order to implement the kind of change that this country needs, and I therefore think it's time for us to look for new leadership. And I think what that means is the Prime Minister rightly now setting out a timetable and an orderly process for leadership election and one in which Labor has a discussion about the vision for the country and what changes we think are needed in order to face the very real challenges that Britain currently faces.
Labor MP and head of the Labor Growth Group in Parliament, Chris Curtis there. The Prime Minister is showing a cabinet meeting this morning where he will have to confront some senior ministers who privately think his time is up well.
Fears over the future of the UK's Prime minister are already feeding through into Britain's bond market. UK Gilts was swept up in another sell off yesterday as investors grew increasingly anxious about the country's finances. Investors appear concerned that a change of prime minister could bring in a left leaning candidate whose spending plans would require increased bondish ones.
Despite yields being close to their highest level since two thousand and eight, James Stringer of Schroeders is advising investors to steer clear of UK debt. The bonfund manager says that even ten year yields around five percent are not enough compensation to justify resuming the firm's previously bullish stance on guilts.
Oil prices are climbing after President Trump cast doubt on the fragile US around ceasefire. Brent crud rose above one hundred and five dollars a barrel as fears grow that the strait of hor moves could remain closed for longer than markets had hoped. Speaking in the Oval Office, Trump dismissed Tehran's latest proposal.
It's unbelievably wik We say, I would go with the weakest right now, after reading a piece of garbage. They said, I didn't even finish reading it. They said, I'm going to waste my time reading it. I would say it's one of the weakest right now. It's on life support. They understood, these are all medical people. Doctor US life support is not a good thing, you dreck bag prognostic. I would say the seasfire is on massive life support.
Trump's comments came after sources told Bloomberg that Irans offered demanded the US lift its naval blockade and provide sanctions relief while allowing Tehran to retain a degree of control over traffic through the Strait. According to Axios, citing multiple US officials, Trump met his national security team yesterday to discuss the war and possible resumption.
Of military action.
In a further sign of escalation, arounds, semi official Tasmum News agency now says the country has deployed armed mini submarines in the Persian Gulf.
The US has ramped up sanctions on the sale of Iranian oil to China, just days ahead of President Trump's visit to the country. The US Treasury has blacklisted twelve firms and individuals, including some base in Hong Kong, the UAE, and Oman. In a statement, the Treasury said that Iran is relying on front companies in permissive jurisdictions to funnel it oil revenue. The Treasury also repeated it threat to impose secondary sanctions on firms linked to China's private oil refineries.
President Trump and China's Xijingping will meet in Beijing on Thursday, where they'll discuss trade and the war in Iran.
Michael Berry says he believes the Nasdaq one hundred index has headed for a dramatic reversal after what he has dubbed a parabolic surge. With more Here's Bloomberg's crispet.
The investor made famous by the Big Short, is now sounding the alarm on US tech stocks. Writing in a post on Substack, Burry said we are witnessing history in the stock market that is not a good thing. He argues that the market resembles the peak of the dot com bubble, pointing to the Nasdaq one hundred, now trading US around forty three times earnings. Burry is among a number of market observers who raised concerns about the rally driven by artificial intelligence spending boom that for now at
lease shows no signs of calling. In London, Chris Pitt, Bloomberg.
Radio, South Korea's Cosby Index shed more than three hundred billion dollars in value in just ninety seven minutes today. The sharp seller followed a proposal from the President's policy chief to its use a so called citizen dividend funded by excess profits from the AI industry. Christy Tan, senior Investment straatches at Franklin Templeton Institute, says there may be more volatility ahead for the index.
What we saw this morning that Marcus still very sensitive. I would be enthusiastic and careful at the same time. The markets are wieners from a capex, but they are also concentrated, especially in Taiwan. For Korea, the structural discount has narrowed, but that's not close totally.
Christy Tan of the Franklin Templeton Institute, speaking there, the cell of equates to more than three billion dollars a minute in losses for the Benchmark index, weighing on sentiment across Asia, although the costby is still up seventy eight percent this year.
Germany's fiscal watchdog is warned that the government risks breaching EU fiscal rules of current spending continues. The Stability Council expects the country's budget deficit to reach four point two five percent of GDP this year, with spending growth of six percent. Both figures exceed EU limits. Today, the Chancellor, Frederick Martz will hold a key meeting with his coalition partners to discuss plans to overhaul Germany's tax and pension system.
And those are our top stories. Looking at the markets this morning, bank read futures training up six tens of one percent at one hundred and four dollars eighty six, with WCI crewed at ninety eight dollars ninety three. The Cosby has seen wild swings today at the moment is down by three percent. The AI boom enriching the chip makers like Samsung Electronics and s k Heinex book calls
for taxes on profits treasuries. This morning, US yields up by about a basis point at four forty two for ten year yields, stop futures for the US in the red USOX swifty futures slumping seven tenths of one percent, and we keep an eye on the PAD which is weakening two tens of one percent this morning. Remember thirty year guilt yields yesterday rose almost eleven basis points of five point six y nine because of the political pressures on the Prime minister of those the market.
Well, in a moment, we'll have more on those political pressures on Caer Starmer and why finding compromise over Iran's nuclear program will be difficult, plus why a concentration of power at the top of the European Commission is being blamed for slow progress on tackling the EU's key challenges. Before all that, I wanted to mention the story that we've been reading this morning about parenting in the age of AI Bloomberg Opinions. Lisa Jarvis has been writing about
this the newest challenge facing parents. How do you place guardrails on yet another piece of rapidly evolving technology. Now I am woefully underqualified, Caroline to talk about this, but I find it quite jarring, not being a parent that Lisa Jarvis is talking about running a full scale experiment on teams social emotional, and cognitive development, and parents are the main backstop for their safety. Doesn't that give you Comforst. Caroline at this hour.
Of the morning. Absolutely?
Wooh, it's all down to the parents in densely difficult Look, I'm afraid I am a parent, and this absolutely is a daily issue.
You know, the concerns.
About what teens are doing, how they're using technology online, and what it means, you know, for their life. I think it's a balancing act between living in the digital age and needing those skills maybe for your life future, but then also being worried about whether it's going to have unintended consequences or Yeah, it's a very difficult balancing act.
But she raises a point that's relevant to teenagers, but I think relevant to all of us as well, about what AI makes easy and whether it's skipping over the parts that feel hard, which are the parts that you actually learn things from.
Yes, and this is part of my kind of broader.
Existential fear about AI, is that maybe actually it's taking away the things that's going to you know, keep our cognitive functions working and keep us thinking and learning throughout our lives. Anyway, it's a great read. We'll put a link to on our podcast show notes.
Well, let's go to the big story in the UK now, kist Arma is facing renewed pressure on his position. Has dozens of MPs and at least one senior cabinet member are urging him to reconsider his position. Our UK Politics who reported James Walcock joins us for more. Now, how much pressure is the prime minister under? This morning you and I were listening and we broadcast it on London dab the speech that Starma made after the local election results.
In the twelve or so hours since he gave that speech, nearly twenty percent of his MPs have called on in publicly to go. It doesn't get more stark than that. Frankly and then Bloomberg are reporting, as our other outlets overnight that cabinet ministers, including Home Secretary Shabonahma Mood and we suspect there are others. And this comes after two weeks ago Edmund banded the same thing. Are privately telling Prime Minister Kirs Starmer that he has to set out
a timetable for this cabinet meet this morning. Those cabinet ministers, one would suspect, are not going to keep their feelings to themselves. Although we know the Prime Minister still has his backers. This is a deeply perilous position and I have to say, Caroline, as we've covered quite a few prime ministers going in our time, this has all the hallmarks of being quite dangerous, potentially terminal.
So is there a path then that Kirstarmer can survive this?
James Stephen, like I said, he has his backers. You look to of Luke Akhurst, you look to Steve Reid, to the House.
And Community Secretary.
There are people who still wants darm to be in charge and fear deeply the impression of being seen as similar to the Conservatives. The difficulty is once, by my count it's seventy two. Once seventy two of your own MPs have publicly said they would.
Rather you gone.
And I mean looking at the quotes, these are not the usual suspects, Steve when These are MPs of Scotland, in London, in Manchester, in Birmingham in the left, the head of the Tribune Group on the right, the Blue Labor Group plus six ministerial aids and they're saying things publicly like the speech failed to show he can regain trust. The Prime Minister has lost the confidence of the public
poor decisions and enforced errors. The animosity towards the Prime Minister was clear from every voter who was choosing to vote for another party. The content of the speech did not suist anything close to the scale of the change need to rebuild communities like mine.
Those are all different MPs.
Once you've said things like that publicly about your leader, you will never be able to wind that back as an MP. So those seventy two MPs are effectively committed to getting starmar out come what may and even if he continues, he'll have to go on without them, So it's not impossible.
What he might have to do is play for time.
He may be able to sort of be in plower for months and things may change as time goes on.
Yeah, look, we know from the local election results. There'll be more analysis done, but we know from polling before the local election results that voters are deeply pessimistic about the economy, deeply worried about things like the cost of living, and about the NHS, the health system. How could Labour's political direction change to answer that because markets are already moving, investors are already concerned.
It all depends what conversation the party wants to have about what direction it goes in here, so kind of the people to watch this cabinet meeting if it's almost certain to leak in some fashion, Caroline but Lo, Look, let's say Starma comes out to give a statement after, we might get a sense of what that contest.
If there were to be a leadership contest, would look like.
How these sort of potential future leaders likes and Andy burn in West Street Andreina might put their ideas forward, what those ideas might look like. That's where you'll get some of the policy you're sort of deeply looking for. If Starma doesn't want to do that, do cabinet ministers take to the media, and we end up with kind of more of a scramble. If we then look to the NEC Labour's rule making body, how are they due
to get a leadship contest? And then finally, if Starmer's determined to stick in, if it's becomes a sort of drawn out contest, do those rivals themselves with Andy Burnham Airgrad Manchester Rayner Street that I've just mentioned, do they take to the airways sort of last resort and themselves call for a change direction. If they set out their stall again, that will give you the kind of idea in terms of policies, change strategy that.
You're looking for. Okay, James r ukpartic supporter, Thank you. Now.
The US President says that the cease far with Iran is on massive life support after he rejected Tehran's latest peace offer. Failed attempts to reach a basic framework for further discussions jeopardize the prospects for successful negotiations over future curves on Iran's nuclear program. Our nuclear diplomacy reporter Jonathan Tyrone joins US Now for more. Good morning, Jonathan. How much has been discussed about Iran's nuclear program then during these attempts at diplomacy, The short.
Answer is not much all.
In fact, the strength that began on February twenty have created a whole new series of problems, primarily focused around the closure of the strati form MOOS and the consequent economic and energy.
Crisis that's caused.
And so the talks to this point of focused mainly on regional security, regional state, ceasefires and opening the straight back up. The nuclear istion has very much become a subsidiary issue. The Iranians are proposing phased approach, basically saying they want to have a regional ceasefire that includes Lebanon UH and UH followed by some sort of men management planner of the stratior for moves, then followed by nuclear talks.
I mean, this comes down to, you know, the big issue is that the Trimp administration is basically entering UH talks expecting some sort of conpitulation to US demands, and the Iranians don't see themselves as a defeated power and expect a lengthy negotiation between equals.
Do we have an idea of what Iran might agree to when it comes to its uranium and its nuclear program.
Yeah, we do have an idea about that. The Foreign Minister Abasar Rachi visited Moscow last week, Resident Putin during his readout of that meeting, you know, suggested a couple of things that had been in public discussions in recent times. I mean, obviously, in twenty fifteen, under the nuclear agreement that Trump abrogated in his first administration, Russia had actually assumed control of a large stockpile of Iranian in riched uranium.
That is one possibility that's been discussed. Another possibility is that the Iranians blend the enriched uranium stockpile down to a level within Iran so that it cannot be turned into a weapon. But at the moment, Iran insisted isn't willing to give up anything. It's not even really willing to talk about those options until the other issues are addressed.
Indeed, so we'll see whether any further progress is made. Jonathan, thank you so much for that explanation and update on nuclear diplomacy. Reporter Jonathan Tyrone. Stay with us. More from Bloomberg Daybakeupe coming up after this Now.
As head of the European commission Erslavanderline has built a presidential operation that exerts control over every aspect of what goes on inside the EASE executive the sources of told Bloomberg the concentration of power has spread her off as thinly and as a result of Vonderline's broader campaign to revive the EU project is faltering. Our EU Economy reporter Jorge Valero joins us now for more. Orge, Good Morning.
This reporting is based on conversations with multiple officials and diplomats who've worked with arslavanderline, what issues have they raised about the way that she's running the European Commission.
Good morning, Stephen.
Well, basically, one of the main points they rate the races that she is overreaching and trying to grab too much power, and she's trying to extend her competencies to issues like foreign ef FIRS and defense that are traditionally in the hands of member states. And on the other hand, she is lacking focus and is not progressing and achieving results on internal market, which is which is her core competence,
and also in other issues. That the dimension is that because of this overreaching, of course commissioners internally commissioners are sidelined, and we have to remember that these commissioners are powerful politicians sent by the capitals, and that she is trying to macro manage every aspect of the Commission, which of course is provoking bottelnets. And therefore this lack of achieve lack of results that we mentioned for example on internal market.
Okay, well, what then does it mean the internal market is one one issue where there isn't enough progress or their key policies in the EU that are not seeing enough progress.
What are they?
Yeah, I mean, well, to put things in context, I mean we have to remember that, I mean the EU is kind of the underdog right now in this big squeeze between the US and China.
US b like the I mean having the old.
The military might and defense capacities, and China controlling for example, minelas in green tech et cetera, et cetera, And the EU is trying to survive this big squeeze. And our
big muscle is the internal market. And the EU has been trying to lower the national warriers to create a true single market for for years and there's been increasing calls from from the leaders to progress on this, on this regard, but we have the remember so the Dragon Report and the Letter Report, but so far the results have been very, very minimal. And therefore, I mean member stage capitals are pointing to funder Lion to I mean to tell her, I mean, let's focus on this, lets
progress on this. But it's also true and this is something that I mean commissioned officials said and on some capitals admit that the lack of progress is not only because they could wonder Lion has not been focusing enough on this, but also because the member states, especially the big ones, have been reluctant to lower those barriers of the internal market because they want to protect the companies.
Indeed, and I spend some of also what Slvangelian and supporters set in her defense on that front, what has our slave agel lions off a certain response to this report.
Well, what her office said is that, I mean, the decisions in the Commission have are taken collectively by all the commissioners what is called the College of Commissioners, and that there are many many hours that are invested in every proposal, in every piece of legislation before it's put forward.
And also what the.
Supporter says is that this concentration of power that she that she has accumulated over the past seven years, I mean since the master people said that is the most powerful commission president or even more than the Lord who is the Commission President who set up created the single market. What they say is that this power is needed to for these new times because if you need to compete with China, you need to compete with the Trump you
need agility. You cannot spend a lot of time internally back and forth.
To come up.
With proposals, for example on defense where I mean or for example survive on cop with the coby with the vaccine. So also, for example, another achievement that she had was in putting together the different rounds of sanctions packages against the Russia, where her cabinet closely coordinated with the Biding administration at the start of the war.
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