Trump Targets Powell, Traders Dump US Assets, $2 Trillion Tariff Hit
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Tuesday the 22nd of April here in London. I'm Caroline Hipker. And I'm Stephen Carroll. Coming up today, Donald Trump demands an immediate rate cut from Fed Chair Jerome Powell as investors flee US stocks, bonds and the dollar amid growing sell America momentum.

A $2 trillion tariff hit. Bloomberg crunches the numbers on the cost of the US president's global levies. Plus, the art of the deal. Rachel Reeves vows to put the UK front and centre as she prepares for face-to-face talks with her US counterpart Scott Besant. Let's start with a round-up of our top stories. US markets have sold off amid renewed attacks from President Trump on Federal Reserve Chair Jerome Powell.

In his latest broadside against the central bank chief, Trump warned the economy could slow unless, quote, Mr. Too Late, a major loser, lowers interest rates now.

Bloomberg reports that Trump has privately questioned advisers about the possibility of removing Powell, though some administration officials have cautioned him against such a move. Economists widely expect Trump's tariffs to boost inflation and slow growth, even if just temporarily. Former Federal Reserve economist Claudia Somm says markets need to be alive to the possibility of the White House trying to remove Powell. I take it very seriously. And I, you know, this administration has taken steps, whether it's

with the tariffs or with downsizing the government that really were, you know, beyond expectations. So I, you know, the unthinkable is thinkable with this administration. Claudia Sam speaking there after Federal Reserve Chair Jerome Powell again stressed last week that the central bank must ensure tariffs don't trigger a more persistent rise in inflation.

Trump's escalating frustration with the Fed chair has triggered a broad flight from US stocks, bonds and the dollar as traders grow increasingly uneasy with the administration's policy approach. A key gauge of the greenback is on track for a fourth straight day of losses as sentiment on Wall Street shifts from optimism to what some are calling a sell America mood. A

Apollo's chief economist, Torsten Slocke, says the US economy is facing an ever-growing list of headwinds.

It's just not only tariffs and retaliation, which of course are the most important ones. It's also corporate confidence is very low. The conference board measures and also the CEO index measure from various sources and CFO measures are going lower. CapEx plans are also grinding lower literally for the last two months. And of course, consumer confidence is also at the lowest level literally in decades.

Apollo's chief economist Torsten Slocke speaking there as investors continue to pile into gold amid increasing market uncertainty. The precious metal has now hit yet another record, topping $3,444 an ounce following a 2.9% surge on Monday.

Donald Trump's trade tariffs announced at the beginning of April will shave about $2 trillion off the global economy by the end of 2027, according to a new estimate from Bloomberg Economics. The effects of the trade war are hanging over the world's economic leaders as they gather for the IMF and World Bank spring meetings in Washington. Saxo Bank's chief investment strategist, Charu Chinanna, says the shape of the shock is still unclear. Will it be a growth shock? Will it be an inflation shock?

So some kind of an event-driven, you know, issues may be resulting in a kind of a cyclical issue, some kind of a recession or a stagflation, whatever it might be. But now we're just morphing it into a structural one, you know, with the kind of questions that it raises on the credibility, you know, of U.S. and U.S.D. assets.

Saxo Bank's Chief Investment Strategist, Cherry Tanana there. Tariff moves have brought into question US economic and security leadership and the multilateral rules-based system symbolised by institutions like the International Monetary Fund.

Many leaders will be using the IMF gathering as an opportunity for trade talks with the U.S. government. U.K. Chancellor Rachel Reeves is one of the finance ministers flying to Washington to make the case for free trade. She's expected to meet with U.S. Treasury Secretary Scott Besant for the first time there.

The United States has announced new tariffs on solar panel imports from Cambodia, Vietnam, Malaysia and Thailand. The levies could be more than 3,500 percent, the culmination of a trade probe started by former President Joe Biden. Many Chinese manufacturers had set up operations in Southeast Asia after they were hit by similar tariffs 12 years ago. The tariffs are likely to boost U.S. domestic manufacturing but increase the cost of ramping up renewable energy production.

To other news, a papal conclave is now due to decide on Pope Francis' successor after he passed away on Easter Monday. The College of Cardinals will meet in about two weeks' time when around 135 members will cast their vote. Amongst those travelling to Rome for the proceedings will be the Archbishop of Westminster, Cardinal Vincent Nicholls, who says that Francis will be remembered fondly.

His commitment to the individual and to the people on the edges of society was unquestioned. But he also fashioned that in a way directed to those who hold the power and generate the wealth.

The Archbishop of Westminster speaking there. The election could threaten what Pope Francis supporters see as his legacy as a reforming pope if a more conservative candidate is chosen and moves the church away from his positions on issues such as LGBTQ rights. American, European and Ukrainian officials are due to hold talks in London tomorrow as the White House pushes for a deal to halt Russia's invasion.

Bloomberg understands US Secretary of State Marco Rubio and special envoys are expected to meet foreign ministers and advisers from France, Germany, the UK and Ukraine. The gathering is intended as a follow-up to meetings in Paris last week where the US shared proposals to enable a ceasefire and peace agreement between Russia and Ukraine.

Those are our top stories for you this morning. Let's look at the markets. The Bloomberg Dollar Spot Index losing ground again for a fourth day in a row. There had been some early gains, but those seem to have evaporated. The Bloomberg Dollar Spot Index is currently down a tenth of one percent. The yen near 140 handled the euro edging higher about a tenth, almost two tenths of one percent this morning. U.S. stock futures are actually in the green after the plunge that we saw on

Asian equities are mixed. Chinese tech shares drifting in Hong Kong. This as we see the Topix index up a tenth and the Nikkei slightly lower this morning. As for oil prices...

WTI crude futures climbing 1% this morning. Gold up 1.7%. So we're actually approaching the $3,500 mark, 3,482. And looking at the bond markets, 10-year U.S. yields at 443, up by two basis points. Those are the markets. In a moment, we'll bring you more on the pressure on Jerome Powell, plus Rachel Reeves heads to Washington for those IMF and World Bank meetings in the shadow of Trump's

tariffs but another story that we've caught our eye this morning the author Rachel Giesa has been writing for Business Week about a topic that she's written a book about as well but this is to do with the title is building a better manosphere but something that's being reflected on is the

particularly masculine approach to policy that's been taken under the Trump administration. Yeah, sort of hyper-aggressive manhood, but not the sort of masculine world, let's say, of Ronald Reagan, where it's kind of tough sheriffs, that sort of part of familiar type of world that Rachel describes. In fact, she talks about the men in the inner circle of Donald Trump, Elon Musk and J.D. Vance and Marco Rubio and Pete Hegseth and others,

not being actually in the kind of traditional American archetypal sort of mode, but actually forming this kind of insecure model of masculinity. She says that the manosphere online doesn't have to be like that, that there could be a kind of another way. And she brings out some really interesting statistics.

that, for example, GOAT, which is a research firm, finds that young men in the US, a quarter of them follow fashion influences. 30% are into film and theatre and acting. So there could be a kind of much broader internet that you could respond to young men's desires for that connection. It's not that the internet is bad, Article. It's that there are bad parts of the internet and perhaps what we need to be able to do is support...

boys and young men in, I suppose, finding the diversity that's out there as well rather than necessarily falling into some of the murkier parts of it. But it's a really interesting read. You'll find it at Bloomberg.com and on the Terminal. And if you're listening to the Bloomberg Daybreak Europe podcast, you'll find a link to the article in our show notes.

Now to the markets. We have seen wild swings on markets as traders face a new source of uncertainty. Will Donald Trump try to remove Jerome Powell as the chair of the Federal Reserve? Bloomberg opinion columnist Daniel Moss joins us now to discuss. Daniel, good morning. How precarious do we think Powell's position is now? I want to go back to a remark that Claudia Sam made on air just a few minutes ago. She says it's a very real possibility that

I agree it certainly is a possibility. Now, does that make it a probability? I don't know. If you look at the way markets have behaved since Thursday morning US time when Trump resumed his threats to get rid of Powell, they've been in abeyance for a little while. The reaction has been swift and punishing.

So as the folks at ISI Evercore have asked, if you liked the market reaction to the tariffs, get ready for something very special in the event Powell is dismissed. In context of central bank independence, though, is this a bigger threat than what we've seen before? It's not the first time we've heard political criticism of central bankers.

Trump has been the first president in some decades to openly take on the Fed. What we tend to forget is prior to the Clinton administration, this was very widespread. One of the things that Bob Rubin imposed on the Clinton White House was we don't criticize the Fed. The other was we believe in a strong dollar. Well, so much for that one.

You know, look, central banking history is full of anecdotes about pressure that people like Richard Nixon, like Lyndon Johnson, like others brought to bear. There was a wartime monetary policy that existed under FDR and Harry Truman. In Asia, central bank independence is slightly less totemic, but it is questioned nonetheless.

Serious questions have arisen about independence in Indonesia, in Thailand and in New Zealand, which rolled out the model of a modern central bank in 1990. The government has really done some things to bring the bank to heel.

So, look, this is not God-given. If you look at the US Constitution, it actually says nothing about the Federal Reserve. Congress has delegated the power to set monetary policy to the Federal Reserve. And I'll just... One other thing. I'm not defending Trump. Political pressure on the Fed has historically been misunderstood. Certainly the decade I spent in Washington, the thing the Fed worried about the most...

was political pressure from the Congress and changes to the Federal Reserve Act. Okay. Daniel, thank you so much for being with us this morning. Bloomberg Opinion columnist Daniel Moss. And yet, of course, the markets are concerned about this. A lot of our opinion writers, including Daniel, have got pieces on the Bloomberg Terminal for you, including John authors, about the worries of what it would do immediately to markets with Powell to be dismissed.

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Well, the UK's Chancellor, Rachel Reeves, is in Washington this week for the International Monetary Fund and World Bank Spring Meetings. She'll be meeting with the US Treasury Secretary, Scott Besant, to push for a UK-US trade deal. Our UK correspondent, Lizzie Burton, is here with us to help us look ahead to that. Lizzie, the world is staring into a trade war abyss. The IMF will release its new economic forecasts tomorrow.

today. What should we expect? Well, it's set to lower its outlook for growth today. And remember, the IMF's projections actually later on tend to have proved optimistic about crises when you look back. So whatever they say today is going to be the impact of tariffs. The reality is likely to be a lot worse.

But this, of course, is going on just a few blocks from the White House. And this is the first gathering of all of these ministers in the U.S. Capitol since Donald Trump's inauguration as U.S. president in January. So that adds another edge to these discussions.

What's Reeves hoping to get from the trip though in particular? There is also the trade deal and the UK's relationship with China. Reeves was talking only a few days ago about cutting ties with China would be foolish. Yeah, if I can thread all those things together. So she's going to be lobbying the US Treasury Secretary Scott Besant for a trade deal. You had Donald

Trump and Keir Starmer speaking on Friday. Officials, though, trying to temper expectations about what Reeves can get out of Besant this week. It's really about improving the mood music for now. But this is her first time meeting him in person. Now, he's seen here in London as one of the less hardline voices in the Trump administration. And the focus of ministers and the

UK ambassador to Washington, Peter Mandelson, Lord Mandelson, is very much to persuade Donald Trump to try and cut his 25% global tariff on car and steel imports. And as you say, also to get a trade deal. Now, Reeves' team have stressed that the UK is not just going to give away anything to get that trade deal over the line. They might be prepared to cut the digital services tax, which of course hits US tech companies. They may cut tariffs on some US meat and seafood exports. But

Keir Starmer, the Prime Minister, has ruled out relaxing food safety standards because, of course, there are huge fears about chlorinated chicken and hormone-fed beef here in the UK. It would send the UK newspapers absolutely mad if those things got over the line. And it could jeopardise closer ties with the EU. And remember, Keir Starmer on May the 19th is hosting this UK-EU summit to reset trade and security ties post-Brexit.

Then there's the China element. And as you say, Rachel Reeves telling the Telegraph newspaper over the weekend that it would be foolish to buckle to Donald Trump's pressure to limit the UK's dealings with China. So a lot of plates to spin for the team in Washington this week.

But perhaps also a chance for Rachel Reeves to get away from some of the big fiscal questions that are persisting at home. Already speculation over what she might do in the next budget. Yeah, it has been a theme for this Labour government to focus on the perhaps easier, could you believe it, international picture than what's going on at home. We know that she's so fiscally strained.

but she has pledged that she is not interested in a wealth tax at the upcoming autumn budget. She says that the capital gains tax changes that they made last autumn are pretty much where they need to be. But of course, we know that she only left the same amount of headroom as she did last autumn, £9.9 billion. So there's lots of speculation about tax rises. And she's ruled out breaking her fiscal rules, so it only leaves spending cuts if that headroom vanishes again.

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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