Funds Commit 5% To UK, Global Markets Soar, Starmer House Fire Probe
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Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybreak Europe podcast available every morning on Apple, Spotify or wherever you listen. It's Tuesday the 13th of May in London. I'm Caroline Hepker. And I'm Stephen Carroll. Coming up today, UK pension funds agree to invest at least 5% of their assets in Britain in a win for the Chancellor Rachel Reeves. The S&P

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

Britain's largest pension funds are agreeing to invest at least 5% of their assets at home in a new deal with the Labour government. The 17 funds who've signed up to the Mansion House Accords say the deal will inject as much as £50 billion of new investment over the next five years. Bloomberg's James Woolcock has more. It sets funds who manage 9 in 10 UK savers' direct contribution pension pots a target.

Keep 5% 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 criticised 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 90 days marks the end of an all-out trade war. The S&P 500 jumped 3.3% to take it back above the level when President Trump first announced those sweeping global levies on the 2nd of April. Meanwhile, a surge in big tech

shares put the Nasdaq 100 back into a bull market just about a month after it plunged 20% from a previous record high. Investors also moved out of defensive positions and reduced expectations for Federal Reserve interest rate cuts. Cathy Jones, Chief Fixed Income Strategist at Charles Schwab, says there is reason for traders to feel more confident.

The market has been so volatile 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 limits on China, maybe we'd dial back the limits on everybody else and we get more of a soft landing. Cathy Jones speaking there following the announcement of the U.S.-China trade truce. On the markets right now, the MSCI Asia-Pacific index is up by four-tenths of one percent. Eurostoxx 50 futures are down two-tenths of one percent. And 10-year U.S. Treasury yields down one and a half basis points, trading at 446.

The

The rollback in tariffs appears to validate Xi Jinping's decision to stand firm against Donald Trump's tariff offensive. Speaking this morning, the Chinese president warned that acts of coercion and dominance ultimately lead to isolation.

There are no winners in tariff wars or trade wars. Bullying or hegemonism only leads to self-isolation. The Chinese president's remarks spoken there by a translator come as President Trump said he could speak with Xi as early as the end of this week, touting what he called a total reset in U.S.-China relations.

US drug makers, meanwhile, have avoided a worst case scenario after President Donald Trump signed an executive order asking them to lower prices for Americans voluntarily. Pharmaceutical companies had feared action on drug prices, but analysts saw the order as less severe and vague. Looking for cuts of between 60 and 90 percent, President Trump said that the

cost of U.S. drugs should match the lowest prices in developed nations. Starting today, the United States will no longer subsidize the health care 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 will no longer tolerate profiteering and price gouging from big pharma. But again, it was really the countries that forced big pharma 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 pharmaceutical companies have rebounded in Asia this morning after the S&P 500 Pharmaceutical and Biotech Index, which includes names like Gilead Sciences, Merck and Eli Lilly, closed up 3.7% 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 offences last year after carrying out a pro-Palestine demonstration outside.

While the home is owned by Keir Starmer, 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. Bloomberg's Tiba Adebayo has the story.

An AI-powered 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 17, which will have fewer hours of life due to its size. In London, Tiwa Adebayo, Bloomberg Radio.

And those are our top stories in 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. But another story that caught our 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. Is it just a drawer? I've got a bucket.

Buckets and buckets of tech at home. But again, marvelling 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 30% thinner. This is the S25 Edge phone and sort of,

creates a nostalgia around... Do you remember when phones used to be tiny? Yeah, of course I do. And not to age ourselves, of course, Caroline. The Nokia 8210 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. And...

But it gives me a strange sense of like, I feel like my hands are giant when I've changed the size of my phone because I keep dropping it and it's the wrong size. I mean, it's worrying how much you become accustomed to holding one piece of technology in your hand the whole time. Yeah, and it is the race to also lighter phones as well. I mean, okay, so the S25 from Samsung is coming out, but then we know that the iPhone, the next...

The latest version is going to come out later this year, and surely that will also be a point of competition. But yes, phones getting lighter and thinner. And 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, Rachel Reeves, is unveiling a new Mansion House Accord today with the pension industry that could possibly unlock as much as £50 billion of investment into the UK. 17 large workplace pension providers have pledged to voluntarily invest 10% of assets into private markets and 5% specifically in the UK. Joining us now for more, our asset management reporter, Leo Kensherper. Leo, 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 & General, Phoenix, they have all signed up to this voluntary commitment to invest 10% of their assets into private markets, half of which, or 5% of the total, would be going to the UK.

So to, you know, unlisted businesses and also infrastructure projects. And M&G, one of the signatories, they have actually sent over some helpful examples of what they're already doing. So, you know, they are a 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 a little less than two years ago with the previous Conservative government. And there the goal was to invest 5% into private markets. And now that's up to 10%. 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 FTSE 100 sort of already has. And

A really important point to make here. In the new agreement, it says if pension funds buy shares in companies listed on the London Stock Exchange's AIM market for growth companies and also from ACQUIS, another exchange for smaller companies, basically, then that will count toward the allocation target into UK private markets. So it's quite fascinating. They found a way here to include a sizable part of the stock market here.

One of the criticisms that has been made of the previous version of this accord is that it was voluntary and not mandatory. This still isn't going to be a mandatory commitment from these funds? No, that's right. And I think the key issue is the fiduciary duty of the trustees of those pension funds. 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

or region, you know, really runs against that. And it's quite interesting. Also in the statement, the Treasury said, you know, 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 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 Kenship, our asset management reporter, thank you very much for joining us. When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations, and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

If you're going there, so are we. Book now on Emirates.com. Fly Emirates. Fly better. People endure presentations.

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Now, let's move on and talk about US-China. Xi Jinping's decision to stand firm against Donald Trump resulted in a massive de-escalation in tariffs. The Chinese president has been speaking this morning saying that bullying and hegemonism 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

on Boeing deliveries. Joining us now is our senior editor, Bill Ferrys, to discuss all of this. So we're a day on from the tariff deal we've heard from Xi Jinping today. He does seem to clearly come out on top in the tariff war with the U.S.,

Yeah, it's hard to see what the argument is for what the U.S. has gotten out of this when you go back to maybe where the U.S. was before or on April 2nd, 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 trade war, where tariffs went to 34 percent and then up

to 145 percent and China responded with 125 percent tariffs in return. China's got basically, you know, back to square one. The tariffs are down to 30 percent. That's 10 percent and the baseline that all countries have now and additional 20 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 U.S. 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 has gotten most of its demands and that Xi 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 ban 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 90-day window where they continue to talk, for instance, about things like the actions against the fentanyl precursor producers. If the U.S. sees progress on that front, you have the potential for up to 20 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 Besant, the Treasury Secretary, saying that he sees the 10 percent tariff increase

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 a 10% tariff. I think we'll continue to see some of these sectoral tariffs, and you can see tweaks in that. Donald Trump has changed his tariff policy a lot in the last few months.

Whether China stays at 30 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 Besant, Jameson 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. 5% growth target looks perhaps a bit more possible.

Yeah, absolutely. We saw ING upgrade their target to about 4.7 percent for Chinese GDP. I was looking at the S&P 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, you have to wonder kind of what the U.S. has gotten out of this. I think that endgame remains to be seen.

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, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.

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