Chair Powell's Tariff Concerns; Harvard Pushes Back on Trump
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Good morning, I'm John Tucker. And I'm Karen Moscow. Here are the stories we're following today. And Karen, futures are getting a lift on this last trading day, the holiday shortened week on optimism over trade talks. President Trump says negotiators made, quote, big progress in a meeting with Japanese officials. We're seeking to avoid higher levies that he's threatened against U.S. trading partners. Let's get more from Bloomberg Tokyo Bureau Chief Isabel Reynolds.

Japan's negotiator Akasawa, he's been the focus of global attention really because he's been first in the line to try and get a reprieve from these global tariffs. He was preparing for talks with the Commerce Secretary and the Treasury Secretary while he was on his way to Washington. Suddenly Trump announces, oh, I'm going to be part of these negotiations. So that must have been rather a shock for him.

It's rather unclear what actually happened in the end, but what seems to have happened, in fact, is that Akazawa went to the White House and had brief talks with Trump ahead of the actual negotiations. Bloomberg's Isabel Reynolds says the talks did not result in an immediate halt on the tariffs, but preparations are underway for a second round of talks to take place later this month.

Well, John, Chinese President Xi Jinping is making a diplomatic push to counter U.S. pressure on nations to limit trade ties with Beijing. He is wrapping up a three-nation tour of Southeast Asia, and Xi promoted the idea of a, quote, Asian family and called for regional unity.

And Goldman Sachs says U.S. investors could be forced to offload up to $800 billion in Chinese stocks in a worst-case financial decoupling with China. In the same scenario, Chinese investors might need to unload up...

unload their U.S. financial assets, which could amount to $1.7 trillion. And Carlyle Group CEO Harvey Schwartz says that global economic growth relies on the two countries finding a way to work together. I don't think it's a good outcome if the

number one and two largest economies in the world haven't found an equilibrium around cooperation. It's really critical for the global economy and for trade that we and China find a place of cooperation and an equilibrium. And I think the faster that can happen, the better it is for all business activity globally, especially in the United States. Carlyle Group CEO Schwartz was speaking to Shinali Basik for Bloomberg Originals' upcoming series Bullish.

Well, John, we turn to the markets now, and futures are higher. Following yesterday's sell-off on Wall Street, the S&P 500 dropped 2.25 percent, and the Nasdaq fell 3 percent. After Fed Chair Jay Powell said trade tensions risk undermining the Fed's employment and inflation goals, Powell spoke at the Economic Club of Chicago. The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects.

which will include higher inflation and slower growth. Powell's remarks heard live here on Bloomberg reinforce a message he has repeatedly emphasized. Fed officials are in no hurry to change the central bank's benchmark policy rate. The Fed next decides on May 7th. And monetary policy also in focus this morning overseas. The European Central Bank set to make an interest rate decision. Let's get the very latest from Bloomberg's Ewan Potts in London. Ewan, good morning.

John and Karen, while the Fed may be in no hurry to change rates, that is exactly what we're expecting today from Frankfurt. 61 of 62 economists in Bloomberg's survey reckon the European Central Bank will cut rates at their lunchtime meeting. That will take the deposit rate from 2.5% to 2.25%.

The threat of swinging tariffs from the United States putting pay to any talk of a pause at this meeting. And investors expect at least two more rate cuts later this year. But you won't be surprised to hear there is a lot of uncertainty around the outlook. In London, I'm Ewan Potts, Bloomberg Radio.

All right, Ewan, thank you. Well, back here in the U.S., the government's antitrust trial seeking to break up MetaPlatforms continues today. Now, some may think of MetaPlatforms as a giant conglomerate, but according to Mark Zuckerberg, the company is fighting for its survival. We get more with Bloomberg's Denise Pellegrini.

In a marathon three days of testimony in the Federal Trade Commission's trial to break up Meta, the CEO of the company that owns Facebook, Insta, WhatsApp and Threads testified Facebook is fighting for its existence even when it's ahead. The FTC wants to force Meta to sell off Insta and WhatsApp.

citing emails and documents that suggest Meta bought the companies to eliminate competitive threats. But Zuckerberg and Meta's lawyers say staying alive in the fast-moving world of social media requires staying nimble. And they also say the acquisitions didn't harm competition. The outcome of the trial is uncertain. Denise Pellegrini, Bloomberg Radio. Thanks, Denise. And shares of Hertz, they are driving higher this morning. In fact, they're soaring 25%. CNBC is reporting Bill Ackman's Pershing Square Capital Management report

And finally, John, Harvard University's refusal to comply with a Trump administration deal to require it to reform its governance and end diversity programs is resulting in retribution. The administration's freezing funding of $2.2 billion of multi-year grants, accusing Harvard of mishandling anti-Semitism on campus.

President Trump said the school should lose its tax-exempt status, and several outlets reported that the IRS is considering the issue. But Larry Summers, former U.S. Treasury Secretary and former president at Harvard, tells Bloomberg the university needed to push back on the administration's requests. Harvard should not go interjecting itself into politics. But God, when it is the object of

of an extra legal set of orders and threats. I don't think it had any viable choice at all but to respond strongly. And former U.S. Treasury Secretary Larry Summers also told Bloomberg that President Trump's actions toward Harvard are part of an effort to suppress institutions that challenge his administration. You can catch David Weston's full conversation with Summers on the Bloomberg podcast page on YouTube.

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 Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. A federal judge said there is probable cause to hold Trump administration officials in criminal contempt of court for sending accused Venezuelan gang members to an El Salvador prison last month, despite his order to immediately halt the deportations.

U.S. District Judge James Boasberg issued an order saying that officials acted in willful disregard. The administration plans to appeal the ruling.

Maryland Senator Chris Van Hollen has flown to El Salvador to find out more about Kilmar Abrego-Garcia's detention. The Maryland man was being detained in the notorious El Salvador prison after he was deported last month. A federal judge found Abrego-Garcia's detention unlawful and ordered the administration to facilitate his return to the U.S. Van Hollen says he had met with U.S. Embassy personnel and Salvadoran officials.

This is simply about letting him have his day in court. We use the courts to make sure that we don't convict people who are not guilty and that we convict those who are. Meanwhile, the Trump administration wants a U.S. appeals court to block a judge's directive that government officials be questioned about their failure to seek the return of Abrego Garcia. Attorney General Pam Bondi.

He is not coming back to our country. President Bukele said he was not sending him back. That's the end of the story. AG Bondi says the administration believes Abrego Garcia was a member of MS-13, an allegation his family denies.

Ten New York prison guards have been charged in connection with the fatal beating of a 22-year-old prison inmate, including two charged with murder. Prisoner Masai Natwee at the Mid-State Correctional Facility was sent to a hospital where he died on March 1st. On a Daga County District Attorney, William Fitzpatrick. The first count charges two individuals, corrections officers Jonah Levy and Caleb Blair, with depraved mind murder, not an intentional murder.

but a murder so depraved and so wanton and disregarding of human life that New York law allows it to rise to the level of intentional murder. DA Fitzpatrick says other guards are accused of trying to cover it up. Global News, 24 hours a day and whenever you want it, with Bloomberg News Now, I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you.

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. This episode is brought to you by Intuit Enterprise Suite, helping your business grow to the next level. To all the CFOs and business leaders listening right now, does it ever feel like the bigger your company gets, the bigger the headaches become due to disconnected tools? Growth is exciting, but it's not.

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Time now for the Bloomberg Sports Update. Here's John Staschauer. John, good morning. Good morning, Karen. All good for the Yankees. They got Clark Schmidt back in the rotation, pitched well in his season debut. They got a seventh inning go-ahead home run from Aaron Judge, his first homer in 11 games, and a game-saving diving catch in right field from Clay Bellinger for the final out of a 4-3 win over Kansas City. They sweep the series plate tonight at Tampa Bay. It'll feel very much like a Yankee home game. The Rays won the game.

We'll be right back.

Hit a grand slam. And Toronto's 3-1 win over Atlanta. The Blue Jays set a club record. Five pitchers had 19 strikeouts. The Braves are now 5-13. NBA play-in. Two wins for the road teams. Miami in Chicago. Tyler Hero scored 38. Dallas in Sacramento as the Mavs won the second quarter by 25. The Heat and the Mavs will play tomorrow in Atlanta and in Memphis.

to see who gets the last playoff spots. Then Saturday, it's the Knicks and Pistons. Game one at the Garden. Detroit won only 14 games last season, 44 wins this year. The Knicks coach is Tom Thibodeau. They've had a great season. I think, you know, JB's done a great job there. They added, I think, really good veterans to complement

You know, the young players that they have, a lot of their guys have made big steps. You look at the development of Durin and, you know, Stewart. You know, obviously, the obvious one is Cunningham. Yeah, all-cade Cunningham did this season has averaged 26 points, six rebounds, and nine assists per game. Last Stanley Cup playoff spot goes to Montreal. This is after the Canadiens won only eight of their first 24 games. John Stachan, we're at Bloomberg Sports. Karen and John.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak.

And that brings us to 512 on Wall Street. Will the markets continue to be whipsawed by trade uncertainty? And let's try to get a handle on where things stand right now with Bloomberg senior editor Bill Ferry is joining us this morning. Bill, thanks for being with us. Wall Street seems to be grasping at some positive signs in the trade talks between the U.S. and Japan. Let me put the question out there. Is that hope well placed this morning?

Yeah, I think the jury is out on that. President Trump going online yesterday to say that, you know, big progress, big progress had been made in the in the trade talks with the Japanese team. And definitely this Japanese delegation is being seen as a test case.

by dozens of countries that are hoping to see just what it will take to strike a deal with the Trump administration. But I got to point out, it was a very relatively short meeting for a trade negotiation. The top Japanese negotiator met with Trump for about 50 minutes, and then he met with officials from Treasury and Commerce for just over an hour, about an hour and 15 minutes. So usually trade deals are really detailed back and forth negotiations that take—

hundreds of hours and weeks. So they have scheduled a second round of meetings later in this month. But that 90-day clock that President Trump put on reaching deals with other countries is already ticking. And to be sure, the levies remain in place for Japan at this juncture.

That's right. What Japan is wanting to do there, they want to see the full 24 percent tariffs, the reciprocal so-called reciprocal tariffs wiped away. They'd like to see that 10 percent kind of baseline tariff also gone. And those are the kind of things I think investors and the markets are going to really be looking at when they finally if they finally come to a deal. They're going to see, you know, is it possible? How far back can you roll these tariffs?

How far is President Trump willing to go? That's Japan. Are talks with other countries right now going on? Well, the administration says that there are talks maybe at lower levels taking place. We know South Korea is preparing to send a delegation. We've heard Scott Besant talking about countries like Argentina and even India being near the

near the front of the queue. But in terms of the substantive talks, President Trump said he wants to sign off on all these deals. He popped into this meeting with the Japanese. For him to do so with all these other countries is definitely going to take a lot of time. OK. At the same time, Fed Chair Powell, it doesn't sound like he's going to ride to the rescue as the trade war continues. What's happening on that front?

Well, he's definitely signaling kind of a wait-and-see approach here so far, even though I think the markets have been pricing in between three and four rate cuts this year. He said that, you know, the Fed needs to see price stability before they really make a move, that he wants to make sure that inflation, the bump up in inflation expected from tariffs doesn't become a longer-term problem. Remember, the Fed got bogged.

burned during the pandemic when they said that the inflation was temporary or it was in a transition, transitory after the pandemic was winding down. It wasn't transitory, it climbed higher, became a political problem, became an economic problem. They don't want that to happen again. So they're really more in a wait and see mode. - It's hard to de-link trade and foreign relations. The Chinese president, Xi Jinping, he's on a three nation Southeast Asia tour.

And the message there seems to be you can't rely on the U.S., but you can rely on us. Yeah. So Xi Jinping in Cambodia today, he's already visited Malaysia and Vietnam. Those are countries that also have good trading relationships with the U.S. And Vietnam in particular has become a place where supply chains have been rerouting as companies tried to move out.

out of China. Now, a lot of those countries are starting to have a second look at China, seeing it as perhaps a more stable economic partner to have. And they're also worried about, you know, these same reciprocal tariffs and some of the other trade issues that the U.S. is bringing up. So it'll be very interesting to see where that develops. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. I'm John Tucker. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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