Trump: Not Firing Powell, Recession Fear, Musk’s Tesla Focus
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Wednesday the 23rd of April in London. I'm Caroline Hepke. And I'm Stephen Carroll. Coming up today, Donald Trump says he never had plans to remove the head of the Federal Reserve.

but still wants Jerome Powell to cut interest rates. The US president says China tariffs will come down substantially as the IMF warns trade uncertainty raises the risk of a global recession. Plus shock therapy. Elon Musk says he will devote more time to Tesla.

as the automaker suffers from slumping sales and rising costs. Let's start with a roundup of our top stories. President Donald Trump says he never had any intention of firing Federal Reserve Chair Jerome Powell after the prospect triggered a sharp sell-off in US assets.

The apparent walkback comes just days after the president posted on social media that Powell's termination cannot come fast enough. And his National Economic Council director told reporters that Trump was exploring whether he had the authority to remove the Fed chair. But when asked directly on Tuesday if he wanted to remove Powell, Trump had this to say.

Never did. The press runs away with things. Now, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates. This is a perfect time to lower interest rates. If he doesn't, is it the end? No, it's not.

Trump's decision to reverse his previous comments on Powell eased tensions in financial markets with stocks and the dollar both gaining. Meanwhile, Federal Reserve Governor Adriana Kugler warned that Trump's tariff plans could drive prices higher and have a more significant economic impact than previously expected.

The economy is facing heightened uncertainty with upside risk to inflation and downside risk to employment. This month, we learned that the tariff increases are significantly larger than previously expected. As a result, the economic effects of tariffs and the associated uncertainty are also likely to be larger than we anticipated.

Adriana Kugler was speaking as a majority of Fed officials continue to signal support for holding interest rates steady until inflation risks begin to ease.

Well, the apparent easing of White House pressure on the Federal Reserve comes as President Trump indicates a willingness to dial down tariff tensions with China. Speaking to reporters, he said he plans to be very nice to China in any trade negotiations and that tariffs could be reduced if the two countries reach a deal.

145% is very high, and it won't be that high. It's not gonna be that high. It got up to there. We were talking about fentanyl, where, you know, various elements built it up to 145. No, it won't be anywhere near that high. It'll come down substantially, but it won't be zero. It used to be zero. We were just destroyed. China was taking us for a ride, and it's not gonna happen.

Trump's comments echo earlier remarks from Treasury Secretary Scott Besant, who said that the standoff between the world's two largest economies is unsustainable. Top Chinese officials, including the central bank governor and finance minister, are in Washington for World Bank and IMF meetings this week. It's understood that the gatherings could offer a key opportunity for US and Chinese officials to reconnect and revive trade discussions.

The International Monetary Fund has slashed its global growth forecast and warns that the trade war could spark even more economic pain. The IMF now expects global GDP to grow by 2.8% versus its 3.3% estimate previously. That will be the worst year for the economy since COVID and the financial crash. It's the IMF's managing director, Kristalina Georgieva, told Bloomberg the risk of a global recession is growing.

If we had this cloud of uncertainty coming lower and lower, making it difficult for the business community and for households to take decisions, we could have a self-inflicted injury that I guarantee you we would regret.

The IMF cut China and the US's growth outlooks more than most countries. Britain also saw a bigger downgrade than its European peers as the fund judged the UK's high bond yields and inflation pose a fiscal risk.

UK Chancellor Rachel Reeves says that she will defend British interests when she meets her US counterpart, Scott Besant, for the first time. The pair are set to discuss a trade agreement and the new US tariffs on the sidelines of those IMF meetings. Bloomberg's James Alcock has more. London has long hoped its close relationship with the US and trade deficit will give them a boost in talks. We're starting to see how that's shaping up.

The UK is hoping for changes to car and drugs levies, which will hit a quarter of all their exports to America. And the Wall Street Journal report Washington wants changes to UK food safety rules. That's the same demand that collapsed trade talks in Trump's first term. But the journal adds that the negotiating position may yet change, and the final call will come from the US president himself. In London, James Wilcock, Bloomberg Radio.

The Financial Times reports that Russian President Vladimir Putin offered to freeze the war in Ukraine along current front lines during a recent meeting with Trump envoy Steve Witkoff. European officials remain wary, warning it could be a tactic to draw Trump into broader Russian demands. The report comes as US, European and Ukrainian officials meet in London today to discuss Ukraine's future with Trump's envoy Keith Kellogg representing the US.

Ukrainian President Volodymyr Zelensky is also seeking a meeting with Trump at the Vatican on Saturday during the Pope's funeral. Trump has warned he may walk away if no deal is reached.

Elon Musk has vowed to devote more time to Tesla and step back from his stint leading the US Department of Government Efficiency. The news follows calls from investors and analysts for the CEO to refocus on the electric car company, which is struggling with slumping sales and rising costs. Musk says his workload with the government department will decrease.

Starting probably in next month, May, my time allocation to Doge will drop significantly. I'll have to continue doing it for, I think, the remainder of the president's term, just to make sure that the waste and fraud that we stopped does not come roaring back.

Tesla CEO Elon Musk speaking there to analysts yesterday. Now, the stock rose on the news in extended New York trading, rallying from an initial lukewarm reaction to the carmaker's first quarter results. Tesla reported adjusted earnings of 27 cents per share for the first quarter below the average analyst's estimate, while backing off its earlier prediction that sales would return to growth this year.

Intel is expected to announce plans to cut over 20% of its staff this week. Bloomberg understands the chipmaker is aiming to eliminate bureaucracy as part of new CEO Lip Bhutan's turnaround plan. The cutbacks follow an effort last year to slash about 15,000 jobs, a round of layoffs announced in August. Intel has struggled to keep up with rivals, including NVIDIA, after three straight years.

of sales declines.

Also higher, 1.7% now. The Hang Seng Index in Hong Kong jumping 2.5%. The Nikkei 225 up by 1.7%. The U.S. dollar jumped the most in two weeks yesterday, rising half of 1%. And we add to that overnight, we're up another 10%.

of 1% this morning. Treasury's rally 30-year yield dropped eight basis points earlier this morning. That's the biggest drop in yields in three weeks. And gold has retraced. And we were talking yesterday about powering through those record highs in the early session. But actually, this morning, we're down another 1% after a 1.3% decline yesterday. So those are the markets. In a moment, we'll bring you more on what Donald Trump has said that's given markets some cause for relief. Plus, we'll get the details of what we learned from Tesla's earnings.

But if the rain in London this morning is perhaps making you think of sunnier shores, there's a great piece from, it's the latest installment of the CEO diet series by our food editor, Kate Crader, which talks to company bosses about their favourite travel destinations. Some great picks in there. The boss of the Swiss chocolate company

talking about Maracas Bay in Trinidad as being his favourite place to visit. He goes when he's visiting their cocoa farms in Trinidad, talks about swimming in the great beaches there, but also the local bake and shark, a fried fish sandwich worth trying. That's amazing. Yeah, we often see Kate Crader in the corridors here at Bloomberg and she's always got a fantastic tale. Great person for restaurant recommendations. Yes, absolutely. But her piece is always so lovely. Yeah.

Yeah, and George Graham of the fashion platform Wolf & Badger picking, of course, where else but Venice. Yeah, and some tips to avoid the tourist crowds in Venice as well. Very useful too. You'll find a link to the story in the show notes for the Bloomberg Daybreak Europe podcast.

Now, Donald Trump has stepped back from previous comments targeting Jerome Powell, saying that he has no intention of firing the Fed chair. Our News Desk editor, Jill Desis, joins us now for more. Good morning, Jill. How much of a softening of the position is this by President Trump?

Good morning. Well, it's hard to, you know, see what he's just said about how he never had any intention of firing him and then not just look back to what Trump was saying last week when he was writing on his Truth Social platform that Powell's termination cannot come fast enough. He was calling Powell a major loser. So it does feel like certainly a pretty dramatic shift

in tone from where we stood at the end of last week. We also at that time had the director of the National Economic Council for Trump, Kevin Hassett, tell reporters that Trump was studying the question of whether he was able to fire Powell. So, you know, regardless of whether something happened to kind of shift Trump's mindset a little bit, it does seem like he certainly toned down some of that rhetoric, at least for the time being on Powell.

News that's been welcomed by markets who are also getting some relief from President Trump's comments that he said he plans to be very nice to China in trade talks. How much is that going to help to de-escalate the trade war?

Well, the big question is what that actually means and how that actually sort of, you know, renders itself as a trade relationship between the United States and China. So as of right now, Trump has placed 145 percent duties on Chinese shipments. You know, China has fairly substantial duties in response that it's put on U.S. goods.

being shipped. So you ultimately do have these incredibly high tariffs right now, although I would point out that there are certainly several exemptions, including some exceptions for computers, popular consumer electronics. So, you know, I mean, at least from like sort of an industry by industry basis, you already do have some attempts to kind of

pair back some of those really big headline tariffs. Now, in terms of what Trump's actually talking about when it comes to being nice to China, I mean, he's suggested that the tariff rates would come down substantially, but it wouldn't be zero. I mean, at this point, I think it really does matter how these talks actually go and what kind of agreement these two countries can ultimately come to, because as we've heard from Trump, I mean, he's really, really big on rhetoric. You know, we'll have to see whether he actually sticks with that or how exactly these negotiations go.

Yeah, indeed. So more uncertainty there. Meanwhile, the IMF warning of the economic impact of tariffs. How bad does that look?

Well, I mean, I think, you know, as we were talking about in this program just a bit ago, you know, this idea of really slashing that global growth forecast is pretty significant, right? I mean, looking at global growth at about 2.8% for 2025, you know, under the 3.3 or so percent that we were essentially looking at. I mean, these are pretty substantial cuts in terms of what we're actually trying to weigh for when it comes to these types of tariffs. I mean, you know, and I think just as Georgieva said,

said, if you're looking at losses in places like, you know, China and the United States, the world's two biggest economies becoming even larger in 2026 and beyond, I mean, that ultimately would have some pretty strong reverberations throughout the rest of the world. So again, I really think the IMF, they're really warning, as many economists have, that the impact from tariffs can be incredibly substantial if we don't see some kind of significant shift over the next

you know, I mean, at this point, less than 90 days as we see a lot of these countries kind of come to the table and try to negotiate something. Okay. Our news desk editor, Jill Desas, thank you very much.

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...

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Elon Musk has vowed to pull back from his work in the Trump administration from next month to focus on Tesla. That's after his electric car maker reported earnings that came in below what analysts had been expecting. Shares in Tesla rose in after hours trading and Bloomberg's Charlie Wells is here with more. So the story from Tesla missing on key metrics in the first quarter.

But the share price reaction, is this all about Musk? It is. And, you know, the numbers tell that story, because for any other company missing on revenue by such a wide margin, missing on earnings per share, I mean, the expectation had been $0.43. They brought in $0.27. For any other company, this would have spelled doom in the stock market. But it was those comments from Musk about

peeling back work on Doge and refocusing on Tesla that really helped the share price extend gains in that late trading. And this is something that analysts have been asking for, right? They've been talking, you know, kind of leading up to this earnings call about how he needed to come back. He needed to kind of step away from some of the political positions that he's been taking that have really prompted backlash to the products.

Well, will Musk refocus on Tesla? Will that be enough to turn the business around? Because it's not as if he said he was walking away from Doge.

And she has, as we know, many business interests. Yeah. I mean, if you look back, not just to some of the indicators on Tesla's performance during Doge, but even stepping back a couple years, you can see, say, in California, which is kind of traditionally, maybe not so much anymore, but traditionally Tesla's heartland, registrations of EVs, for

for Tesla had been ticking down over the years. I think going back to maybe 2022, 2023, slowly but surely. And I think that might speak to a kind of degradation of the Tesla brand, but also an increase in competition, right? You have mainstream car manufacturers, you have competitors, startups,

coming into the EV space in a way that they just hadn't before. So I think what Musk might have up his sleeve as he refocuses on Tesla, it's really difficult to say right now, but he's got stiff competition.

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.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepke. 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.

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