Global Market Meltdown Deepens; Trump Retains Tariff Stance
26:15 Share

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...

There are presentations.

And then there are Canva presentations. With Canva, you can use AI to take your presentation to the next level. You can generate dynamic slides and text with a simple prompt. You can drag and drop graphics and charts from Canva's media library and add interactive elements to plus up your deck. And with collaboration tools built in, the whole team can work together better. You'll love the presentations you can easily design with Canva. Your clients and coworkers will too. Love your work with Canva presentations at canva.com.

Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, markets around the world are headed for a third day of deep selling after President Donald Trump's tariff announcement on Wednesday. But the president and his team appear undeterred by the investor reaction. Trump says his trade policies are already paying off.

Because of the tariffs, we have $7 trillion already committed to be invested in the United States, building auto plants, building chip companies, and all sorts of companies are coming into our country at levels that we've never seen before.

President Trump spoke aboard Air Force One last night, as heard here on Bloomberg, and his economic team fanned out across the Sunday political shows to defend tariffs. Treasury Secretary Scott Besson said he's not worried about the sell-off. We had record volume on Friday, and everything is working very smoothly, so the American people, they can be very...

Take great comfort in that. Treasury Secretary Scott Bessant appeared on NBC's Meet the Press. Well, Nathan, on ABC's This Week, National Economic Council Director Kevin Hassett acknowledged that tariffs could boost inflation in the short term. Well, there might be some increase in prices, but the fact is that if there were going to be a heavy burden on the U.S. consumer, then this trade deficit that for 30 years we've seen really since China entered the WTO would be something that would have gone down.

And on CBS's Face the Nation, Commerce Secretary Howard Lutnick said the so-called reciprocal tariffs on some 60 nations will arrive on schedule this Wednesday. The United States of America is going to protect the people who invest in America. This is the economy of the world. We are the consumer of the world, and companies need to build it here, and we will protect them for building it here.

And you can hear Face the Nation this week and Meet the Press every Sunday on Bloomberg Radio. And Karen, as the White House continues that defiant tone, markets continue the sell-off and several experts are weighing in this morning. Bloomberg's John Tucker begins our global team coverage in New York. John, good morning. And good morning, Nathan. Libby Cantrell of PIMCO says tariffs aren't going away. As she puts it, they are high and they will be high for a while. There's going to be stickiness to these tariffs.

And even if there are some negotiations and some concessions along the way, I think the direction of travel here is very clear. Mohamed El-Erian, president of Queens College, Cambridge, says uncertainty dominates the markets. The hardest thing for the markets right now is not only to try to evaluate where the destination is, but how bumpy will the journey be?

Hedge fund billionaire Stanley Druckenmiller and Bill Ackman are slamming the tariffs. Ackman of Pershing Square, a vocal Trump supporter, says bluntly the new trade regime is a mistake. He added this is not what we voted for. Karen Georges, an equity fund manager at EchoFi, says it may feel like COVID again, but this sell-off is man-made.

A strategist at Morgan Stanley say investors should be prepared for the S&P 500 to drop a further 7% to 8%. If the S&P 500 falls another 5% today, this will mark the worst stretch since the market meltdown of 1987. And futures do indicate last week's $5 trillion wipeout isn't over. In New York, I'm John Tucker, Bloomberg Radio.

All right, John, thank you. Checking some of the stocks on the decline this morning. Shares of Tesla down about 7%, Nvidia off by 4.5%, and shares of Microsoft, Meta, Amazon, and Alphabet down roughly 4%. And Karen Betts are increasing on Wall Street that the Federal Reserve will need to take action and cut rates. Bloomberg's Lisa Mateo continues our team coverage. Lisa.

Hey, good morning, Nathan. So traders now expect policymakers to slash interest rates another five times this year, according to overnight interest rate swaps. Markets pricing in 125 basis points of easing by year end, which is equal to five quarter point moves. Now, Bob Michael, global head of fixed income at J.P. Morgan Asset Management, says the Fed can't sit on the sidelines. He also added that they may have to cut interest rates before the next meeting in May.

We already know that businesses in the lower rated end of the quality spectrum have been struggling. When you look at private credit and look at the percentage of amend and extends, it's very high. What happens when their cost of funding just ratcheted up another couple percent and they're going to see top line growth come down as well as their input costs.

I think this is a serious moment. Now, TD Securities also pulled forward its policy easing expectations. In a note, strategist Oscar Munoz wrote that the brokerage is advancing its forecast for the rate cut to June from July and now expects the committee will ease rates at each meeting through May 2026.

But not all experts feel the same way. You have in a post on X, double line capitals, Jeffrey Gundlach. He said he does not see a single cut anytime soon unless the losses and risk assets greatly increase. Lisa Mateo, Bloomberg Radio.

All right, Lisa, thank you. Well, stocks are selling off around the world. The hardest hit this morning is in Asia, where stocks in Hong Kong plunged and stocks in Japan fell into a bear market. Let's get the very latest and check in with Bloomberg's Jill Desis, who continues our global team coverage in Hong Kong.

Jill, please give us an update on the carnage. Good morning, Karen and Nathan. Yes, it's been an absolute bloodbath in Asia this morning throughout the entire day, really. The Nikkei 225 stock average in Japan slid into a bear market, as you mentioned, that blue chip index closing down 7.8%, experiencing its first bear market since August. That's back when the Bank of

Japan unexpectedly hiked rates. We're also seeing quite a lot of fallout in China. That's where a closely watched gauge of Chinese shares in Hong Kong tumbled nearly 14 percent. That was also entering a bear market. We've seen some similar stories in Taipei, where TSMC really led losses. India has also experienced some fallout today. I mean,

really what investors here in Asia are experiencing, what they're trying to gauge here is not just the impact from these tariffs, the Donald Trump tariffs, but also what kind of reaction we're really seeing in region. It's really China, I think, that's really kind of led this region here just a couple of days ago, launched a bunch of retaliatory efforts, including measures to introduce a 34% tariff on all American goods starting April 10th. That's sort of led to fears that

This trade war is really just going to escalate. Donald Trump has really sort of hit back against that, you know, ended up sort of calling off what he said was a deal to reach a sale for TikTok. So you're really seeing a lot that's developing there. We'll have to see whether this continues to spread out through the rest of the week. We're still waiting for to see how other governments in Asia are ultimately going to respond here.

In Hong Kong, Jill Desas, Bloomberg News. Jill, thank you. Stocks in Europe are feeling the pain as well this morning. Bloomberg's Ewan Potts continues our global team coverage from London. Ewan, good morning. What's the latest there?

Nathan and Karen, European investors will have had a heads up from Trading Asia that today was not going to be a good start to the week. Stock markets around the region opened in the red and the stampede from global equities gathered momentum. The stock 600 currently down 5.9%. The index now less than three percentage points away from a bear market.

Thank you.

For any trader who can take their eyes off their plummeting investments this morning, worth watching for headlines today coming from Luxembourg. European Union trade ministers are meeting there to discuss their response to President Trump's tariffs. Spain's economy minister telling Bloomberg today that the EU needs to be open to all potential means of retaliation. Live in London, I'm Ewan Potts, Bloomberg Radio.

All right, Ewan, thank you. But we're also seeing some big moves in the commodities markets this morning. And checking oil right now, NYMEX crude oil is down 3.8%. It's at $59.60 a barrel. Goldman this morning cut its oil forecast for the second time in less than a week as the escalating trade war raises recessionary risk. It's been a very volatile morning for copper. At one point, the metal was heading for its worst three-day route since the great financial crisis.

It was down more than 8%. It has since trimmed those declines. And we're seeing more stability in the gold market. Right now, gold or COMEX gold is up a third of a percent. It's at $3,046.20 an ounce.

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. Rivers rose and flooding worsened across the South and Midwest, threatening communities already waterlogged and badly damaged by days of heavy rain and storms that killed at least 18 people.

From Texas to Ohio, utilities scrambled to shut off power and gas, while cities deployed sandbags to protect homes and businesses. Forecasters warn that flooding could persist for days, especially in Kentucky, Tennessee and Alabama. Debbie West is the public information officer for Bowling Green, Kentucky. This is yet another heartbreaking weather event for the city of Bowling Green and Warren County.

While we have had no loss of life reported, loss of property is expected to be substantial. Some rivers that inundated towns rose to near record levels and were expected to crest today. Israeli Prime Minister Benjamin Netanyahu will visit the White House today to meet with President Trump. They are expected to talk about Gaza, tariffs, and other issues. Bloomberg will bring you comments to reporters with Trump and Netanyahu starting at 2.30 p.m. Wall Street time.

Among the more than 200 people the Trump administration deported to an El Salvador prison last month is Kilmar Abrego-Garcia of Maryland.

Trump officials admit he was deported due to an administrative error, but have signaled they may not comply with a separate judge's order to return Garcia to the U.S. by 11.59 p.m. tonight, arguing the judge does not have jurisdiction. And the president says Garcia is a gang member, just not with TDA. They say, oh, we made a mistake because he's not with them. He's with MS-13. Bring them back. Bring them back. MS-13 is a very bad group.

Garcia's family says he is not with any gang. Health Secretary Robert F. Kennedy Jr. now throwing his support behind the vaccine. It comes after he attended the funeral over the weekend of a child who died from the measles. The U.S. has now seen more than 600 confirmed measles cases across 21 states.

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. Well, coming up, we're going to have more on the market sell-off. We are speaking live with Morgan Stanley's Andrew Sheets.

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. When your company has a position to fill, are you really seeing the best professional candidates?

Sure, you get plenty of resumes, but you may be missing an untapped resource. Ideal candidates not currently job searching. People not actively looking, but who may be open to the right opportunity. It can be the difference between a good hire and a great hire.

Specialized Recruiting Group is ready to find the talent you need. Go to srgpros.com and see how the recruiters, with a deep understanding of the experience and expertise you need, can find the right fit for your business. After all, you deserve to see the best candidates, both active and passive. Whether you're looking for a long-term or project-based professional,

Specialized Recruiting Group is ready to find the talent you need. Go to srgpros.com right now to get started. That's srgpros.com. Specialized Recruiting Group, a tailored approach to professional hiring.

But first, it's time for the Bloomberg Sports Update with John Stashower. John, good morning. Good morning, Karen. They call Connecticut the capital of college basketball. Why not? 18 national championships for the last 30 years. The UConn men won the NCAAs the last two seasons. The women hadn't won them since 2016, but they were dominant this tournament. Six wins by an average of 33 points. Final four wins by 34 and 23 points. In Tampa, they dethrone South Carolina. It's the 12th title for their legendary coach.

Gino Auriemma. This afternoon I went for a walk, right? And as I'm walking outside the hotel, at one point I said, you know, hey, dear God, you know, like, I don't need one of these, but damn, my players do, man. Can you do it for them? Men's title game tonight in San Antonio, Florida against Houston, who comes off that remarkable rally against Duke at UBS Arena. Hockey history.

Oh, that's good. Has it. He scores! He's scored! Scores 895! There's a new goal-scoring tip!

WJFK move over Wayne Gretzky who was there to see actually the Capitals only goal they lost to the Islanders 4-1 at the Garden welcome back Jalen Brunson missed 15 games an injured ankle the Knicks went 9-6 with the captain back they beat Phoenix 1-12 98 their 50th win the Nets lost to Toronto the Celtics blew out Washington late last night big baseball news it was believed that Vladimir Guerrero Jr. would be the next winter's big free agent he's staying with the Blue Jays a

14-year deal for half a billion. Mets finished a sweep of Toronto 2-1 at Citi Field. The Yankees and Pittsburgh rallied with two outs in the ninth inning, scored three runs to tie the game, but the Pirates won 5-4 in 11. The Nationals won. The Red Sox a doubleheader sweep of the Cardinals first in 10 innings, and then last night, 18-7. The Sox have won five in a row.

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. Good morning, I'm Nathan Hager. The global stock sell-off that has greeted President Trump's tariff announcement is reviving Black Monday memories for many on Wall Street. But the president is rejecting market concerns that his trade barrage will send the U.S. into a recession. Watch.

with the market, I can't tell you, but I can tell you our country has gotten a lot stronger.

It'll be a country like no other. It'll be the most dominant country economically in the world. And that was the president speaking aboard Air Force One last night. This morning, we are joined by Bloomberg Markets reporter Valerie Teitel as we watch the sell-off extend into a third trading session. Following the Rose Garden announcement, Valerie, the president says he might not be able to predict what the market's doing, but the market seems to be sending a pretty loud message to the president this morning.

Oh, yeah. And I want to echo, you know, the flashbacks to Black Monday. If this move in the S&P 500 futures holds into the close, we are looking at the worst three days for the U.S. equity market since 1987 when it dropped 24.6.

in a matter of two days. So keep an eye on those kind of superlatives. That just really puts it into perspective. Black Monday, GFC, COVID. That is what people are comparing the last market drop to. And Nathan, the one thing that's in stark contrast to what's going on now versus those other instances in the past is

During those other instances, you had the monetary easing floodgates open, the fiscal easing floodgates open after Black Monday during the great financial crisis and during COVID. But what stands now is a stark contrast to that. We have a Fed who says that they are going to be patient and wait for further information.

clarity. Mike Wilson over at Morgan Stanley noting that the S&P 500 could drop another 7-8% if the Fed remains on hold and these tariffs continue in the market. But while we're seeing these selling continuing here on Wall Street, it looks at least at this point this morning like the sell-off is even worse overseas, Valerie. Yeah, that's right. In the European Open, Nathan, was quite shaky. We had the DAX

dropped 10% at the open. That's its third biggest gap lower in history. We're also seeing credit spreads widen across a high yield and investment grade in Europe, and that's leading to a very punishing session for European banks, SX7E.

is down 6.7%. And over the last three days, Nathan, it's nearing a near 20% slide in European banks in the last three sessions. And it's hard not to notice, Valerie, this more than 13% close for the Hang Seng in Hong Kong. The Asian session has been

absolutely brutal as China sounds like it's not willing to back down either. Yeah, it was a bloodbath that HSI index, the Hang Seng in Hong Kong dropping 13%. Nathan, that's its worst one day drop since the Asian financial crisis of 1997. The broader Asia index, the MSCI Asia Pacific had its worst one day drop since October 2008. We had the Nikkei

entering into bear market territory and the eight shares that trade in Hong Kong also down more than 20 percent from peak. The one thing, though, that may be a solace for those EM Asian nations is the fact that we are not seeing a rip roaring rally in the dollar. And that could be, you know, one aspect of perhaps positivity for these nations who in normal times of

economic instability. They have to deal with capital flight and their currencies depreciating strongly versus the dollar. We at least are not seeing that as yet.

Bloomberg Market Reporter Valerie Teitel, thank you for this. As we continue to watch the global market sell off, we are joined now by Andrew Sheets, Chief Cross-Asset Strategist at Morgan Stanley. Andrew, thank you so much for joining us this morning. And Valerie mentioned the call from your colleague at Morgan Stanley, Mike Wilson, the Chief U.S. Equity Strategist, saying stocks could fall another 7% to 8% if the tariff risk doesn't subside and the Fed stays on hold. Is that your call as well? Good morning.

Yeah, good morning. So I think, unfortunately, you do have the confluence of a number of quite negative factors where it is hard to see enough offsets. You had before the tariff announcement, I think, already a deteriorating earnings picture in the U.S. with negative revisions. You had deterioration in leading economic indicators like consumer confidence.

And then you also had signs of inflation rising. Recall that the last three prints for core PCE, the Fed's preferred measure, have increased for three straight months. So we walked into this tariff announcement, I think, with a quite challenging macro backdrop. And then the tariffs that we got were much larger than expected. They were, I think, much more severe than our forecast and many forecasters has penciled in.

And so that creates additional downside risk to growth, additional upside risk to inflation, and also this challenging dynamic where it's not clear that either valuations or a policy change is right there for support. So I thought your colleague, you know, what they just mentioned about

you know, previously under some of this weakness, you had fiscal stimulus or you had you had easing. We think that's going to be much more difficult. The Fed is missing much more on their inflation mandate than they're missing on the jobs part of their mandate. Right. We had actually a pretty good payroll number on Friday, whereas core PCE is is two point eight percent in the US. It's we think that makes it quite difficult to

for the Fed to cut. We think that the Fed will cut far less than the market is expecting this year at Morgan Stanley, and valuations still remain elevated. The S&P is still at 19 times. So I think you put all that together, and while it's always difficult to be too precise, that still means that there's potential for downside. So then, Andrew, what do you make of the move that we're seeing in the money markets, the money markets pricing in fully five

Fed rate cuts this year and even some calls now for an emergency cut before the next meeting next month. Yeah, we disagree with that. We do think markets are looking at the equity weakness. As you mentioned, this is historic. It's one of the largest three-day drawdowns that we've seen in a very long period of time. And, you know, I think markets are understandably saying, well, a drawdown of that measure would naturally invite a response. But our view is that that will be much more difficult, that,

inflation is in a more difficult place. And because it's I think it's also not clear that Fed rate cuts would necessarily address the issue. The uncertainty from tariffs, the costs of tariffs are not easily offset by, say, you know, an emergency 25 or 50 basis point rate cut. The the issues go deeper. So, you know, we think that the Fed will will will need to and ultimately stay more

focused on its mandate unless we see more seizure or tightness in, say, credit issuance markets, which we

just haven't seen yet. Well, what do you make of the widening in credit spreads that we've started to see now in Asia and in Europe? Yeah, so I think what's fascinating is that I think credit has a reputation. I like to think a well-earned reputation of usually being an early indicator. But in this cycle, that has not been the case. Credit has been quite slow to catch up to weakness that has been in the equity market for some time. And I think that speaks to

to a credit cycle that is entering this downturn in a better place. Companies were somewhat more cautious and less aggressive coming into this. M&A was low. Balance sheet leverage has been stable. So I do think credit remains a follower.

I don't think that we should necessarily see credit as a leading indicator. I think it's following the broader uncertainty around growth and policy that's coming from the administration and these questions around the Fed. But I think what we're seeing from credit should be seen as a catching up. You know, even after the moves this morning, we're really kind of just back to average levels of spreads. We think that's kind of very reasonable given the risks that are surrounding the markets.

We're speaking with Andrew Sheets, chief cross-asset strategist at Morgan Stanley, as we continue to monitor this global stock sell-off and flight, particularly this morning, into treasuries. We're seeing gains across the curve in the treasuries market. Andrew, where do you reallocate? How do you advise clients to make moves in this environment?

Well, so we do think that move in interest rates is correct, that if the odds of a recession are rising, and I think that unfortunately is what is happening given these risks to growth and also the potential that the Fed cannot react as quickly to those growth risks because inflation is persistent.

we think the market will respond to that by lowering interest rates, especially kind of somewhat further out the curve. So, we do think yields will fall here further in the US and in the UK and in Germany.

And, you know, I think that's also something that if we look back to, say, 2018, you know, in the fourth quarter of 2018, you also had a large drawdown. That was also somewhat related to tariff uncertainty. It was related to the Fed, the administration not shifting policy as quickly as the market was hoping they would.

You know, real interest rates in the U.S., real interest rates on 10-year government bonds are still much higher, you know, more attractive than they were during that episode, at the worst part of that episode, while, you know, equity valuations in the U.S. today are still much more expensive.

than at the worst part of that episode. So, you know, I still think that if investors are worried about growth picking up, then, you know, we still think bonds offer kind of reasonable value here. And we think that that's the direction that reallocation will continue in. If we do continue to see stocks and bond yields fall, what does that mean for financial conditions? What could it mean for the Fed in that regard?

So, you know, financial conditions are tightening. Obviously, you know, you have some push and pull here with equities going down, but, you know, but also rates coming down. But I think that the challenge for the Fed is it's not clear that those financial conditions are excessively tight. You know, credit spreads today are kind of near the long run average. That's fine. You know, the S&P is still at roughly 19 times forward earnings. That does not seem like an excessive level of

of equity risk premium that would suggest some sort of market breakage.

So, you know, and I think that you still have credit markets where, you know, you have credit markets have been open. It's been possible to issue, you know, the latest senior loan officer survey suggested that credit standards were loosening a bit in the U.S. rather than tightening. So I think it's kind of hard to look at that full spread of financial conditions and say that there's something here that invites people

a really large shift. Again, we could get it, but I don't think you've seen it yet. And especially for a Fed that is also dealing with inflation that's above its target, is dealing with inflation expectations that have been going up significantly. We think that that is gonna provide a level of caution that prevents this larger intervention you might otherwise get.

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. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

Something unexpected happened after Jeremy Scott confessed to killing Michelle Schofield in Bone Valley Season 1. Every time I hear about my dad, it's, oh, he's a killer. He's just straight evil. I was becoming the bridge between Jeremy Scott and the son he'd never known. At the end of the day, I'm literally a son of a killer. Listen to new episodes of Bone Valley Season 2 starting April 9th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.