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This is the Bloomberg Daybakute podcast available every morning on Apple, Spotify or wherever you listen. It's Monday, the 27th of January in London. I'm Caroline Heppker. And I'm Stephen Carroll. Coming up today, Donald Trump and Keir Starmer talk trade as the US president uses Columbia as a test case for his use of tariffs. Four weeks before Germany's election, the campaign shifts onto contentious terrain over migration.
Plus no longer the smartest AI in the room, a Chinese artificial intelligence startup rocks global tech stocks with its low-cost, large-language model. Let's start with the round-up of our top stories. Keir Starmer and Donald Trump have discussed trade in the Middle East in their first conversation since President Trump re-entered office.
While the U.S. and U.K. are historically close allies, Trump's policy agenda puts him at odds with the British government in several areas. Before the call, Trump told reporters on Air Force One the two leaders had a quote, very good relationship.
which is a little bit different for me. But I think he's a very good person. I think he's done a very good job. Trump's White House says the two leaders discussed how both countries can promote a fair bilateral economic relationship.
In Britain, there is hope that the U.S. trade surplus with the U.K. could spare it from the worst of Trump's protectionist instincts. However, the Labour leader will have to tread a fine line as he balances the competing interests of the EU and U.S. for Britain. Business activity in British firms has slumped to its lowest level since February 2021, according to new research. Bloomberg's Taylor Adebayo has the details.
UK businesses are facing slowing demand and rising profit warnings. That's according to two separate reports from the Confederation of British Industry and EY Parthenon, which say both trends are at their worst level since the pandemic.
Despite government ambitions to go further and faster on growth, private sector activity fell again in the three months to January, say the CBI. And one in five companies have struggled to meet their financial goals, issuing warnings of ratio only exceeded during the COVID lockdown and after the bursting of the dot-com bubble.
The figures are the latest in a raft of weak economic data which will make sobering reading for Labour ministers hoping to boost economic expansion. In London, Thiwa Adabaya, Bloomberg Radio.
In the space of a few hours, President Trump threatened to impose a 25 percent tariff on all Colombian goods entering the U.S. before abruptly pulling the threat. Colombia had refused to allow two military planes carrying deported migrants to land, objecting to the use of shackles and handcuffs on detainees. But then agreed to a deal, according to the White House, to accept the return of all deported migrants. Bloomberg's Bill Ferry says the events confirm the role of tariffs in Trump's policy toolbox.
The U.S. is Columbia's biggest export trading partner. It had very little leverage in this fight. And it also gave President Donald Trump an opportunity to showcase that his threats were not just bluff, that he will institute tariffs on very short notice for almost whatever reason he deems fit. So this has resolved already within a matter of just hours the White House announcing that Columbia backed down and Columbia's president in fact reposted the White House press secretary statement.
social media. So a very quick turnaround but also a warning for other countries out there if they cross this administration. Our senior editor Bill Fairie speaking there as the news left a cloud over global markets even after the decision was reversed as the dollar strengthened against most of its peers. So those that is one story from the US.
Thousands of people in Germany took part in protest over the weekend against the far right AFD party and a crackdown on migration from the conservative CDU party. CDU's plans include permanent border checks and a faster deportation of people who've entered Germany illegally. Meanwhile, Elon Musk stepped up his support for the far right, making a virtual appearance at the AFD's campaign launch. The Tesla CEO called on Germans to preserve their culture as he appeared to refer to the country's Nazi past.
It's like, frankly, too much of a focus on on past guilt and we need to move beyond that. Children should not be guilty of the sins of their parents or even let alone their parents, their great-grandparents, maybe even. Elon Musk speaking there, Polish Prime Minister Donald Tusk said on acts that the message heard during the event was all too familiar and ominous, adding that it took place just hours before the anniversary of the liberation of Auschwitz.
Chinese startup DeepSeek is building competitive AI models for a fraction of the cost of its U.S. rivals. The company's AI assistant is now top of the iPhone download chart, despite being hobbled by sanctions. Capital.com's senior market analyst Karl Roder says that it raises questions about the market narrative around U.S. tech dominance.
If anyone's on a sort of group chat with equity investors or any kind of equity strategist, phones are running hot effectively talking about, well, what is this product? How have they achieved these outcomes? And what does this mean for the AI investment firm in the United States? You know, it raises concerns about overinvestment in artificial intelligence. It raises concerns that perhaps the United States might have the competitive advantage that it has over the rest of the world. It raises concerns that chip demand won't be as great going forward either in companies like Nvidia or overvalued.
4-order deep-seek success might even make the Trump administration revisit tariffs. Nasdaq 100 futures tumbled as much as 1.9% on the news and the Hang saying tech index climbed by a similar amount.
The Kansas City Chiefs have a chance to become the first team in history to win three Super Bowls in a row after beating the Buffalo Bills in the AFC Championship game. Patrick Mahomes and Travis Kelsey combined to help deliver a result, which also saw Mahomes run through the Buffalo defense for two of the scores. Here's one of those brought to you by NFL's 96 five the fan.
First down play, Mahomes keeps it on an RPO at the fight. It's a lead block. He goes into the end zone, new sign. Touchdown, Karen Zos city, Patrick Mahomes, a 16 yard run, his second rushing touchdown of the game. Mahomes Chiefs will play the Philadelphia Eagles in the Super Bowl final. They beat the Washington commanders 55-23 in the NFC conference championship game.
And those are your top stories this morning. Let's get to the markets where the moment stop futures for the US, particularly the NASDAQ, are sinking 2.4% lower. S&P 500, even if futures are also down 1.4% US stocks, 50 futures down by 1%.
The threat of a big A.I. rival cheaper A.I. rival out of China. MSCI Asia-Pacific index is down two tenths of 1% on the bond markets. We see treasuries rising 4.56 is where we are for 10 US yields down five and a half basis points. The Bloomberg dollar spot index is stronger. Three tenths of 1% at all prices are also a fraction lower this morning.
Well, in a moment, we'll get you more on that phone call between Donald Trump and Keir Starmer, and also the latest in the politics in Germany. But on the story that we've been reading this morning, can you be nostalgic about old apps on your phone? This is something our colleague Austin Carr has been writing about in Bloomberg's Weekend Edition as well. He explains that he has a whole range of discontinued apps that he still holds this on, even though they don't work, including Four Square,
and Flappy Bird, which was a huge thing in about 2013, of being like an extremely basic game on an extremely advanced piece of technology. It's getting a real onto this year as well. But it opens the door to the idea of, is this what nostalgia is in 2025? Is it holding on to old CDs long after you have a CD player available to you? Or an old Walkman?
Well, I think Wacom probably goes for a decent amount of money now. It does, yeah. I mean, I get that. Maybe keeping the old tech, you know, your very first computer, something like that. But no, he's keeping hold of these ghost apps. Just because he likes looking at the icons. I mean, they don't work. I have to say, I did quite enjoy that he talked about Yo, though, which was one of the most silly apps ever, where all you could do was send someone a message that said Yo, which was a big thing for, I think, about 25 minutes in the mid-2010s.
Yeah, I really like that story. Look, it's a great one on the terminal that you can read a bit more about, you know, the internet that wasn't, I suppose, is what he's pointing to as well with those obsolete apps. Right, let's turn our attention, though, to what's happening here in the UK. Prime Minister Kistama and President Donald Trump discussed trade in their first conversation since Trump returned to the White House.
The UK along with Saudi Arabia could be President Trump's first overseas destination. Joining us now is Bloomberg's UK correspondent Lizzie Burton. Before we get on to whether or not we'll be seeing President Trump having tea in one of the royal palaces. What actually emerged from that call in terms of trade and other issues?
Well, they were on for 45 minutes. I'd love to get a breakdown of who did the talking. But Trump praised Starmer as a very good person despite their ideological differences. So that's encouraging, given all the criticism Elon Musk has been doing of Keir Starmer. And Trump said that he's, as you said, considering a trip to the UK as his first destination abroad. It's here or Saudi Arabia. So that's a compliment as well for London. But Caroline, I'd say what's striking here is what
was not discussed. Tariffs and Peter Mandelson, Starmers Pick for US ambassador to Washington. The UK is hoping to dodge Trump's tariffs because we send less to the US than they send here. But I'd say from what happened to Colombia this morning, that just shows that the UK is not safe, even if
The UK is the David to the US's Goliath in this situation. Actually, the US is the UK's biggest single-nation trade partner, Britain is America's fifth. But if you look at the Columbia example, that imbalance meant it had to capitulate to Trump's demands, so perhaps still not safe from Trump's tariffs.
You mentioned Peter Mandelson there. I mean, is there a chance that his appointment as a bastard could be rejected? Well, our columnist Rosa Prince has a really good one on this. She says that he's very much the presumptive next US UK ambassador to Washington emphasis on presumptive because
That question mark still lingers over whether he's going to be confirmed. Certainly the gossip and diplomatic circles on both sides of the pond is that he could be the first ambassadorial nominee to be rejected by a US president. And this is because, for one, Peter Mandelson has long advocated closer ties with Beijing. He also used to be an EU commissioner, you'll remember Stephen,
And in 2018, he wrote an article warning Trump's China policy was putting free trade at risk. He is not somebody who has been pro-Trump over the years. Notably, he wasn't at Nigel Farage's pre-inauguration for Trump in Washington, the party he held, but Karen Pierce, the outgoing UK ambassador to Washington, was.
Nonetheless, the expectation remains that Trump is not going to oppose Manlinson's appointment, and he is due to start in the post-expert, so it's one we keep an eye on. Yeah, absolutely. I mean, Trump's campaign manager, Chris Lasavita, said, you know, that Manlinson should stay home, so that really kind of got a lot of attention. That was a couple of weeks ago. Meanwhile, at home this week, the Chancellor, Rachel Reeves, is going to be trying to reset the economic message from Starmer and Reeves.
Yeah, and for good reason, because the gloomy messaging post-election really has weighed on the economy. And we've seen in the recent data, you know, on Friday we had the UK consumer confidence figures lowest in more than a year, jobs being cut at the fastest pace since the financial crisis, public borrowing, overshooting forecasts, private sector activities stagnating. You had Sainsbury's cutting 3,000 jobs on Thursday. So it's a question of whether this pivot's coming too late, six months too late.
But it kind of started in our Davos interview. We've sitting down with our editor-in-chief, John Mickelthwaite. She says she wants the regulators to factor in growth as well as risk. That's why she's asked the competition and markets authority chair. She's delayed the introduction of stricter bank capital rules.
You could say that all of that's necessary when you've got Donald Trump back in the White House with a deregulatory agenda. We've also reported that she's going to approve this third runway at Heathrow. And in interviews yesterday, she signaled that the UK is open to membership of the Pan Euro Mediterranean Convention as it tries to ease trade tensions with the EU. So we're likely to hear more about all of this in a speech she's giving on Wednesday, which is going to be all about growth.
Okay, Mr. Burton, our UK correspondent. Thank you very much.
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Now, as Europe's leaders are figuring out how to react to the first week of the Trump presidency, Germany's election campaign is heating up tens of thousands of people took part in marches over the weekend to protest against the far right AFD party. This, as Elon Musk, made a virtual appearance at an AFD rally. Our correspondent Oliver Crook is in Berlin for us. Good morning, Oli.
Elon Musk has been a vocal supporter for AFD. What did he say at that rally? How important is it to the party?
Yeah, so listen, I mean, he reiterated many of the points that were sort of been made for the last sort of month and a half that he's been coming out and sort of supporting the AFD. I mean, a lot of the stuff is on economic policy. It's really wanting a sort of smaller government and deregulation, all that sort of thing that's not sort of shocking to hear from Elon Musk. A lot of Brussels bashing, talking about the sort of too much bureaucracy and the really sort of, you know, the much power in the hands of the, in the control of the global elite, which of course is
coming from the richest man on the planet. But it's clearly not just that. There's also this sort of other thread about sort of a pride in being German and not losing oneself in sort of the multiculturalism that dilutes everything in the world. And then, you know, sort of going a little bit later into sort of basically this idea that there is too much focus on past guilt within Germany and that children should not be guilty of the sins of their parents, their grandparents, their great parents, their great parents, and so on.
And this, again, it's coming as you sort of say there's been protests over the weekend, you know, just outside of the office here in front of the Brandenburg Gate. There were tens of thousands of people on Saturday protesting the sort of move to the right. And again, all of this comes in the context of the fact that, you know, there are these very strange sort of moments politically within Germany, particularly with Elon Musk speaking to Alice Vital, the head of the AFD.
in which they had their Twitter spaces a couple of weeks ago in which they started talking about sort of Hitler and how he wasn't really part of the far right and he was part of the far left. And this is, meanwhile, as the AFD is trying to distance itself from being far right. So there's all this sort of model that comes in extreme sort of discomfort for the German political establishment in the mainstream, but even a lot of German citizens, particularly when you have, again, today you have the anniversary of the liberation of Auschwitz. You have the chancellor in Poland right now with Donald Tusk.
and really sort of calling attention to all of this happening all at once. And again, coming to a sort of party, the AFD, that though most of its members or many of its members may not have sort of extreme political reviews, there are members within that have been sort of taken up for having, frankly, Nazi sympathetic views and sort of really being open to that sort of political message. As far as how much it's moving the polls, the answer is not very much, but we'll have to see when the sort of, you know, the final poll is counted in a couple of weeks' time.
Yeah, indeed, very interesting to see how much attention Elon Musk's participation is getting versus the impact, as you describe it, all very negligible in polling. Our correspondent Oliver Crock live in Berlin for us this morning. So what have investors found in the Chinese startup DeepSeek, the AI assistant app
has rockers at the top of the Apple's iPhone download charts and is stirring diets and Silicon Valley is about the strength of America's lead in AI. We're seeing those NASDAQ futures sinking. As Caroline just mentioned, but an Asian tech share is getting a boost from this to discuss. We're joined by our executive editor for Market's Live, Mark Hudmore at Market. Good morning. So much excitement, it seems, in the market about deep-seek. Does this look like a game changer for tech stocks for you?
Yeah, it does. I mean, I know that sounds like a very big call, and obviously Wobotite, anyone who's tried to preemptively or prematurely call the kind of the end of the AI tech boom before. But I think there's a couple of things here that are massive. I think the story's been, first of all, a little bit misnustered. So let's recap what's happened. Essentially, over the last week or so, but particularly the last few days,
It's been clear that this Chinese-built AI chatbot is performing competitively with the big US names, open chat GPT, Claude, etc. But that's not the real point here. I think a lot of people are going, oh my God, it's about challenging to US hegemony in the tech space. I think the two bigger aspects are it was done very cheaply. So why the crazy amount of spending that are happening from the US big tech companies?
And I think the second aspect is it's open source. So who's going to pay loads of money for really expensive US models when China just said we've done it open source and we'll let everyone use it. So I think this is massive. And I think it's actually good for global stocks, but it deeply undermines the massive premium in US stocks. And I've used a lot of
they're kind of strong statements, but I mean them like a U.S. share of global market corporate market cap just peaked out last Thursday, made a record high above 50%. And it's just it's it's in crazy how much U.S. stocks are valued versus the rest of the world that are valued very kind of moderately relative to their own history or relative to the U.S. And I think this is probably a game changing moment because I think suddenly the whole U.S. stocks exceptionalism of the last
14-15 years is probably undermined by this because it simultaneously is good for productivity and growth from the rest of the world, good for companies all over the rest of the world, and undermines the whole U.S. tech phenomenon. So I think it hits from both sides. So I think actually last Thursday we probably saw the long-term peak in U.S. share of global market cap.
That is a bit cool. Very interesting, Mark. And as you say, it very much pertains to the trade story as well, the rivalry between the US and China, where you've seen the US sort of try to and indeed block China's access to the kind of cutting edge chips.
Really, the attitude to trade of the current White House is hugely important and also having an impact on markets. I mentioned the Mexican peso, the reaction to the threat of tariffs against Colombia, and then there was a rapid U-turn. What did you make of that whole back and forth between the Colombian president and the US?
Yeah, this is important. It's another incremental step in a story that's been running for a while. But the point is that no one can have faith in any of their supply chain plans when dealing with the US anymore. That is an added cost to business with dealing with the US, with US companies.
And this is another negative out there and another reason why I'm kind of making that big call of the end of US stocks exceptionism. Columbia is a long time ally of the US, probably its longest ally in South America. And it also has a trade plus US, so it's not meant to be one of the big targets here. So if you had to put a list of all the countries in the world that might be vulnerable to Trump's whims or attack,
you probably would have put Columbia relatively low in the list, but suddenly it's getting 25% tariffs that was going to be 50% in a week. Now, of course, it's all changed back, but it shows that Trump is willing to kind of bandy this about at a moment's notice quite aggressively. And that means that every company
that does business with US companies now has to add in this extra uncertainty premium, they can't plan for the long term. I think that's extremely damaging and that means if there is any alternative that's similarly priced or even slightly more expensive, you're going to prefer to do business with those other companies rather than trading with US companies. And that means that President Trump is adding a cost of business with the US and that is another negative for US companies when they're priced exorbitantly expensive.
This is Bloomberg Daybreak Europe. Your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple's Spotify and anywhere else you get your podcast. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.
Our flagship New York station is also available on your Amazon Alexa devices. Just say, Alexa, play Bloomberg 1130. I'm Caroline Heppker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak Europe. Are you looking for a new podcast about stuff related to money? Well, today's your lucky day.
I'm Matt Levine, and I'm Katie Grifield, and we are the hosts of Money Stuff, the podcast. Every Friday, we dive into the top stories about Wall Street, finance, and other stuff. We have fun, we get weird, and we want you to join us. You can listen to Money Stuff, the podcast on Apple Podcasts, Spotify, or wherever you get your podcasts.
