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Good morning, I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
Karen, we begin with the new salvo in President Donald Trump's global trade war. So called reciprocal tariffs are now in effect for roughly sixty countries, bringing duties around the world to levels that haven't been seen in a century.
They've ripped us off left and right.
But now it's our turn to do the rippin'.
That's okay. We're gonna make our.
Country even stronger, stronger than it ever was.
Speaking at a Republican fundraising event, President Trump said tariffs are already bringing in two billion dollars a day, and he said they're leading to negotiations. The President says he had a great call yesterday with South Korea's acting president. He also spoke with this week to Japan's Prime minister, who urged the president to reconsider.
And Asian nations are bearing the brunt of the new tariffs. Cambodia is now under a forty nine percent tariff rate, Vietnams is forty six percent, but China is taking the hardest hit with duties on top of existing tariffs running as high as one hundred four percent. President Trump says that'll force Beijing to the table.
They don't want tariffs on themselves.
And it's very simple.
We're making deals and people are paying tariffs.
Countries are paying tariffs right now.
China's paying a one hundred and four percent tariff.
Think of it, one hundred and four percent.
And President Trump said he won't stop there. He says he'll announced tariffs on pharmaceuticals very soon. He's also threatened other sectorial tariffs on lumber and semiconductors.
Well.
So far, Karen, China has not immediately responded to the new tariffs. That's a departure from the last two episodes when Beijing hit back within minutes. For more, Let's go to Hong Kong check in with Bloomberg's Joe Lisis So, Jill, what is the latest.
Morning, Nathan and Karen. Yes, so far, we have not really seen any kind of drastic measures out of China. It's really been radio silence. All we've really seen from Beijing is they've released a short white paper on trade
with the United States. But this does stand in pretty start contrast to just earlier this year when there were earlier levies that Donald Trump implemented on China, we saw immediate responses in the form of additional retaliations that came with some tariffs on American goods that were sent to China. That also came with some other punitive measures, such as investigations into various American companies that do some operations in China.
That doesn't mean, though, that China isn't going to respond. Remember, we did see over the weekend when that initial ten percent tariff went into effect that China came out with its own duties on the United States. That's, of course what led to this massive escalation leading to that total number of one hundred and four percent that Trump is implemented in tariffs on China. So it could be that China is kind of biting its time. Maybe it'll come
back with something else. We've also heard there's been some reporting that some within Chinese officials are meeting to talk about some economic measures that they could take to sort of bolster the economy. Right now, obviously, all of that coming against the backdrop of tariffs. We'll have to see what continues to come just over the coming hours. If not days and weeks in Hong Kong, Jilldy says Bloomberg Radio.
All right, Jill, thank you. Now it's head to Europe where stocks are selling off on the Trump tariffs, and bloombergs U and Pots joins us in London with the latest Good morning you.
In Karen Nathan. After yesterday's bumpy session in Europe, which saw stocks gain before a late selloff, the direction of travel so far this morning is very clear and it is down only sixteen of six hundred shares on the benchmark stocks ex hundred in the green today within next currently down two point seven percent. All twenty industry groups low, with healthcare stocks the worst performers, off more than four and a half percent. Energy and real estate also under
performing this morning. Looking across the region, the Swiss market at the bottom of the table, it's going down more than four percent. Live in London, I'm um Pots, Bloomberg radea you.
And thank you hearing the US futures are mixed down, futures lower, Nasdaq futures higher. That puts SMP futures right in the middle. That that follows yet another turbulent session on Wall Street for four straight sessions we've seen moves at least four percent from peak to trough. The S and P five hundred is down almost nineteen percent from its February record, posting the worst four day run since March twenty twenty.
Well, Nathan, we are seeing major movements in the bond market once again this morning, and we bring in Bloomberg John Tucker for the very latest, John and Karen.
Treasuries, which are supposed to be the safest and most liquid assets, they're selling off and when the prices go down, the yields go up. A Calvin yo Muddy, manager at hedge fund blue Edge at Binzer, says this is a fire sale of treasuries. He adds, it's like ice sculpting in a forest.
Fire.
Grace Peters a JP Morgan Chase sees it this way.
You know what the market is digesting this week is that tariffs are not going away. In Volatility is likely here to stay.
US government bonds may be losing their safe haven status if it concerns the trade war will trigger stagflation. Hedge funds may be unwinding a popular leverage trade, and investors maybe just be dumping whatever they can to get cash That could signal liquidity concerns, and that's never a good sign for markets. Some investors also speculate that global reserve managers like China could be re evaluating their positions in US government debt. In the US right now, the ten
year is now ten thirty seconds in price. That is pushing the yield up four basis points the four thirty three you know, New yorkom John Tucker, Bloomberg Radio.
All right, John, thank you for hearing a warning this morning from former Treasury Secretary Larry Summers. He says the US is now likely headed toward a recession thanks to the tariff increases.
We'll see an extra two million people be unemployed. We'll see losses in household income that are five thousand dollars of family or more. We're very likely, in the context of a recession, to see markets reach levels significantly below their current levels.
Former Treasury Secretary Larry Summers also tells Bloomberg's Wall Street Week and economic downturn would have various other negative effects, including a wider budget deficit. You can get the full conversation with Bloomberg's David Weston on the Bloomberg Talks podcast, or watch it on the Bloomberg Podcasts page on YouTube.
Meywell Nathan. Many strategists say Trump's tariff policy should not come as a surprise. Limy Countrilla, as Managing director for Public Policy at PIMCO, this.
Is a worldview that President Trump has had for forty years. This is what we keep telling our clients, and he ran on this. He believes he has a mandate to fulfill this. He believes that there's a lot of unfinished business from the first administration. And I think that the market obviously wants to maybe see through this or hope that there is some this will result in a different outcome.
But our view is tariff rates are going to be going up and that will have a headwind on growth and likely have implications for inflation.
Jim Coos Lebby Cantrell says one of the president's primary goals is balancing the goods trade deficit, and that he plans to use tariffs until that metric is better balanced.
Karen, this morning, we have a warning as well from Ray daly O for investors who may be too fixated on tariffs. Let's get the details on that. From Bloomberg's li So Mateo.
In a post on X. The billionaire founder of Bridgewater Associates, said investors are not paying attention to underlying conditions the breakdown in major monetary, political, and geopolitical orders, and that failing to do so may blindside them to the biggest disruptions that are still to come. Dalli explained how Trump's tariff policies are driven by too much existing debt and
the rate at which new borrowing is added. He said the US is hooked on using debt to finance successive spending, while creditor countries like China sell goods to detornations like the US, and that will lead to a correction of
these imbalances and a change in the monetary order. Balio also notes that gaps and education, opportunity and values are contributing to a breakdown of the democratic system and the rise of autocratic leaders, while the US is shifting from a multilateral to a unilateral approach in the geopolitical arena. Lisa Matteo, Bloomberg Radio, all.
Right, Lisa, thank you about Bloomberg News has learned the White House's top economic team argued over plans to impose even bigger tariffs. Trade advisor Peter Navarro was among the more hawkish officials who pushed for a flat twenty five percent levy on all countries. The revelation comes as Elon Musk called Navarro dumber than a sack of bricks. That's a quote and truly a moron. On social media, Navarro said the Tesla CEO was a quote car assembler who
used parts from other countries. White House spokesperson Caroline Levitt downplay the spat.
Look, these are obviously two individuals who have very different views on trade and on tariff's. Boys will be boys, and we will let their public sparring continue. And you guys should all be very grateful that we have the most transparent administration in history. And I think it also speaks to the President's willingness to hear from all sides that he has people at the highest levels of this government, in this White House who have very diverse opinions on very diverse issues.
Whitehouse spokes version Caroline love it and must defend a Tesla as the most vertically integrated auto manufacturer in America. It's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloombergy's Michael Baher Machael good morning.
Good morning, Karen. It's another disturbing milestone in the Texas measles outbreak. Texas has now confirmed more than five hundred measles cases in a little more than two months. The outbreak is responsible for two deaths and more than fifty hospitalizations. Meanwhile, Health and Human Services Secretary Robert F. Kennedy Jr. Now says he is encouraging people to get vaccinated against measles.
I'm not going to take people's vaccines away from What I'm going to do is make sure that we have good science so that people can make an informed choice.
Kennedy spoke on CDs Mornings. A roof collapse at the iconic jet Set nightclub and the Dominican Republic has killed at least ninety eight people and others may be trapped. Emergency Center director Juan Manuel Mendez says Cruz would search tirelessly for people at the site of the collapse in Santo Domingo. Among the missing is marengue singer Ruby Perez,
who was among those performing when the roof collapsed. Those who died include a saxophonist on stage, local politicians, and two former Major League Baseball players, Octavio d'hotel and Tony Blanco. The acting chief of the IRS plans to quit after a deal to share tax data of undocumented immigrants with Homeland Security authorities. Acting Commissioner Melanie Krauss is also said
to have disagreed with the agency's direction. A federal judge in New York will hear argument it's on the Trump administration's use of the Alien Enemies Act to deport undocumented migrants. Lee Goerlernt is the American Civil Liberties Union attorney leading the challenge against that use of the Act. He says he believes President Trump has exceeded his authority.
We are hoping that the judge will issue a temporary restraining order to keep things in place while the case can proceed further, and then we can provide the court with more briefing and more facts.
On Monday, the Supreme Court lifted a DC judges order that prevented the White House from deporting Venezuelan migrants who the government alleges our gang members. Global News twenty four hours a day and whenever you want it with Bloomberg News. Now, I'm Michael Barn. This is Bloomberg Karen.
All right, Michael Barr, thank you. Time now for the Bloomberg Sports update. Here's John stash Hour, John, good morning.
Good morning. Here the next of the Celtics with a hint of what could very well happen when the NBA Playoffs get to the second round. Height game with the guard, Nick's had a one point lead and the ball.
Brunsingle try to orchestrate. With the one point lead, Brunsvill tried cutting hard Brunson, who sins play hearts and he's right on the Celtics. It's Tatum on top, Tatum chip stepping three.
For the time.
GNT Josh Hart miss the game when he shot out the end of regulation and Boston won and overtime one nineteen one seventeen. The one time Nick Chris TOMPs Porzingis at seven foot three, put on a long distance shooting display eight three pointers, a couple of them from the logo. He scored thirty four points. Jason Tatum scored thirty two. Karl Anthony Towns led the Knicks with thirty four Next
beat New Orleans won nineteen one fourteen. The Denver Nuggets only three games ago in the regular season, fired Michael Malone, their coach the past decade. He coached them to the NBA Championship only two years ago. Devils lost to the
Ruins seven to two. The Islanders a wild seven six overtime Watson Nashville and talk about while the Vancouver Canucks trailed in Dallas five to two with one minute left, scored three times in the final minute and one in ot make it six wins in a row for the Mets. They're five to zero on this first home stand. They beat the Marlins ten to five. Francisco Lindora lead off home run four RBIs for Pete Alonzo. Those Yankee Torpedo bats very quiet in Detroit against Tigers Ace Trek Scubel.
Yanks had just six singles, got shut out five nothing their third strate Laws all three without a home run being hit. The Nationals again surprise the Dodgers eight to two. James Wood Duomer's five RBIs. Red Sox lost at Toronto six to one. John Stasheward Bloomberg Sports, Darin Nathan.
Coast to Coast on Bloomberg Radio nationwide on Sirius XM, and around the world on Bloomberg dot Com and the Bloomberg Business app. This is Bloomberg Daybreak.
Good morning.
I'm Nathan Hager, and as promised President Donald Trump, so called reciprocal tariffs are now in effect, driving duty rates for countries around the world to one hundred year highs. And even after four straight sessions of market turmoil on Wall Street, the President says tariffs are already a win.
We'll making a fortune with tariffs.
Two billion dollars a day.
Do you believe it?
I was sold two billion.
Dollars a day.
And that was the President speaking at a Republican fundraiser in Washington last night, hours before these new tariffs kicked in. This morning, we were joined by Bloomberg News Global Trade editor Brendan Murray. Brendan, can we start there? Where did two billion dollars a day number come from? How much money? If ed, he is the US taking in from the duties that have already been in effect.
Good morning.
Well, that's the number he's saying is coming into the US treasury, collected by the Customs Agency. For He started with ten percent on China, then he went to twenty percent, and now we're looking at one hundred and four percent it is starting today, So that's the amount of money he thinks it's generating. He's going to need a lot of money to pay for the tax cuts that he
trying to push through Congress to extend as well. So there's both the effort to rewrite US trading relationships, trade deals with countries like China, economies like the European Union, and as well as to generary revenue for the Treasury to help reduce the national debt.
Closing sympathis we should talk, Brennan about the scope of these tariffs. You mentioned the one hundred and four percent duty on China. That alone is eyebrow raising. But we're at levels that literally haven't been seen since even before the Smooth Holly tariffs in the nineteen thirties.
Yeah, exactly. So the average US tariff rate has gone from something in the mid single digits five seven percent to over twenty percent now with the tariffs that were enacted today. The European Union was hit with twenty percent, the UK ten percent. Countries like in Southeast Asia, like Cambodia and Vietnam are looking at rates in the mid forty percent too, So those were countries that companies had shifted to to get outside of their move their supply
chains outside of China. So pretty much there's no place to hide from these enormous tariff rates that the President imposed today.
And as the President mentioned last night, he's already been having discussions with the leaders of South Korea, Japan. We saw Israeli Prime Minister natanyahuo in Washington this week. So far, though China hasn't immediately retaliated, does that come as a surprise.
It's a little bit of a surprise. Though China likes to wait until rate before the US stock market opens. It has done that in the past to maximize the impact, the economic impact, the financial impact on the US. So China has been quiet for the past several hours. The government hasn't said anything publicly, but that can't last, and they have said that they will they will fight to the end on this in this trade war and not cave to pressures. So it's only a matter of time.
There's only so much imports that China can hit imports of American products, so they're going to be looking at other other things like export controls, cutting off American access to raw materials, things needed to make high tech gear. And they've also got big, big US tech companies there a big US automakers including Elon, Musk Tesla. So if you're an American company in China right now, you know you're potentially a target for the government's retaliation.
Really appreciate this. Brendan again, thanks so again for being with us this morning. That is Brendan Murray, Global Trade editor for Bloomberg News.
Karen Nathan, We're just watching the markets this morning as treasuries extend their decline. Stocks in Europe or lower, and futures this morning are mixed s and P futures they're up to tens of a percent of eleven points down. Futures are a little change now. Future is up six tens of percent, or one hundred and six points. The decks in Germany is down two point two percent, so's the CAAC in Paris fort C one hundred down two point one percent. Then EK two twenty five in Japan
it was down about four percent. The ten year treasury down twelve thirty seconds, seeal four point three four percent, yield on the two year three point seven eight percent, the thirty year yield four point seven nine percent. NIMEX scrude oil is down three percent, down a dollars seventy seven at fifty seven dollars eighty five cents of barrel comecs Gold up two and a half percent. It's seventy three dollars ten cents at thirty sixty three and ounce.
The Blueberg Dollars Spot index it's lower. It's down half percent, with the euro one point one zero three zero against the dollar, the n one forty five point three eight and Bitcoin up a quarter percent.
Nathan Okay, Karen, thank you for more on the market impact. We are joined now by Sema Shah, chief Global Strategist at Principal Asset Management. Seema, it's great to have you with us this morning. Where do you see risk assets in particular going now that these new tariffs are in effect around the world.
Good morning. Well, look, with the new tariffs, particularly the escalation of China's tariffs, we are looking in a slightly I mean, I think, a very concerning global economic picture and also for the US from our perspective, unless there is I guess a release of those tariffs, or you have some kind of positive news with regards to tax cuts or deregulation, it is quite likely that the US
would slide into recession. There is still I think a lot to be seen over the last next couple of months from the administration per Certainly that is the direction that things would move without any kind of action to reverse some of the things have been playing out over the last couple of weeks. So from that perspective, I think it seems likely that you're going to have risk
of sentiment lingering for a little while longer. At least, we need to see a rerating of valuations to a point where investors are want to get interested, and to have that, you're need to see another downward revision of the earnings forecasts to slightly more realistic level, one which is more reflective of a weaken economic picture.
Is that what we're seeing in the treasury market right now, with the sell off across the curve this morning, a repricing four recession.
I think the seller for in the treasure curve is actually quite confusing. It's quite opaque. There's a number of different possibilities that could be playing out over here. It could be down to inflation concerns, it could be concerns around tax revenue, with a weaker economic outlook then starting to create additional fears around the budget deficit. And of course there's the key risk out there which investors are increasingly talking about, which is a loss and interest of
the US as a safe haven. As I said, it's very unclear exactly which one of those is really the key driver. Per certainly it does make the economic outlook that much more concerning if you have interest rates which are spiking at a time when they should ideal be falling.
If the US is losing its status as a safe haven, where is a safe haven at this point?
Well, it's been interesting today when you look across across the global market, then you can see that there are some traditional safe havens still playing out to the Japanese yen, German burns, So there are still places in the world, and that gives us an indication where if investors were really to start losing interests, and I have to I think it is still quite premature and there's a lot to be discussed and read into to understand exactly what is going on. But the alternative to a US dollar
it's not entirely obvious at the moment. There is potential maybe over the next couple of years for the euro to show growing prominence. If Europe can show closer integration, you see additional fiscal spending for shure to spend, but that is still a big question mark, so I think the jury is still out. But of course the developments in the last I think twenty four hours are an additional concerent on top of what was already worrying markets point and I want.
To imagine there are some questions as well as what as to what could tariffs could mean for the European economy at a time when they've been looking to increase defense spending. What's the outlook for Europe now?
Yeah, I think after the Wednesday announcement Liberation Day announcement, we did lower our forecast for Europe even further. For Germany we now see recession as quite likely, so that was a shift down from point three percent growth in twenty twenty five. And for Europe we've lowered our forecast from er point eight percent this year down to point
three percent, so they're still skirting recession. But of course these are really based on what are the sensitivities to terrass So there's going to be any substitution, and of course a question around retaliation still there, so there is a risk that this is even deeper concern than we're already seeing.
Now.
The good news is is that the fifth or stimulus from Germany, it will start to positively impact the economy, but not until twenty twenty six, and at that point we would start to see a stronger picture. So right now now twenty twenty five is looking particularly tough, but brighter times ahead from twenty six when the fiscal stem starts to bleed through to the real economy.
To bring things back to the US, there had been a question before these new tariffs kicked in about whether the Fed could step in at some point if we're heading into a stagflationary environment, where is the Fed?
Now?
What kind of response could they pose here with these new tariffs?
Right well, so from a traditional standpoint, when you're just thinking about interest rate cuts, we are expecting the Federal Reserve to be able to put more emphasis on the employment side of their mandate. So even if you were and we are expecting inflation to increase, our forecast is for core PCE to hit around four percent by year end. But even with that and assuming that inflation and expectations
remain fairly and could. We do think the Federal Reserve will start to cut rates within the next meeting of the second in June, and cut maybe by three to four times. The only scenario that we see hikes at this point is if actually the economy were to return to significant strength. So we do think even in stagflation,
the Fed emphasizes the employment side of their mandate. The bigger question I think at the moment, which is really being discussed in circles, is if you were to see a continued sell off of US treasuries, is there a role for the Federal Reserve to come in with some kind of emergency action. We're still far from that, but I think it is something that we need to keep
watching that. If there is a concern around the financial plumbing of the system, is there something that we can expect from the Fed?
On that count?
Got about thirty seconds left, Seima. Are we in a game of chicken between the market and the president? If so, who blinks first?
I think that's exactly what we're in. Trump has focused a lot of bond deals, That's what he's been saying. So if he's watching this picture, He will be likely quite concerned about what is folding in front of him, and if this continues, then potentially we could see a step back from the administration with regards to the policy that they've already introduced.
This is Bloombergy Daybrea, your morning podcast on the stories making news from Wall Street to Washington and beyond.
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I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Day Ray