President Trump Pushes Powell on Rates; Bessent Says China Talks Stalled
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Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Lisa Mateo. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest developments in the global trade war. President Trump's tariffs will remain in place for now. That's after an appeals court temporarily paused a ruling that had blocked them. Derek Walbank is our senior editor for U.S. Economics and Government.

This is going to work through the US legal process. In the meantime, though, it has kind of complicated the idea that the Trump administration in this 90 day pause window was going and trying to do deals with individual countries. We really haven't seen a ton of deals come through with that. We've had the UK, a lot of others are said to be maybe close or near, but haven't gotten over the line.

Well, Bloomberg's Derek Walbank says that despite the temporary reprieve, the possibility does remain that the appeals court could ultimately back the original ruling and block President Trump's tariff policy. However, White House officials stress President Trump has options to pursue similar tariffs through other authorities if appeals ultimately fall short.

Meanwhile, Lisa, Treasury Secretary Scott Besson says trade talks with China are currently at a bit of a standstill. Besson says a call may be required between President Trump and Chinese President Xi Jinping in order to reach a deal. I would say that they are a bit stalled.

I believe that we will be having more talks with them in the next few weeks. And I believe we may at some point have a call between the president and party chair Xi. Treasury Secretary Scott Besson made the comments on Fox News. President Trump had said he would speak to the Chinese leader in the days after trade talks in mid-May, but that call has yet to materialize.

Karen, tensions between the U.S. and China may be growing on another front. Reuters is reporting President Trump is planning to ramp up weapons sales to Taiwan to a level exceeding the pace set during his first term. Reuters says the new weapons packages are expected to focus on missiles, munitions and drones.

Lisa, the president met with Fed Chair Jay Powell at the White House for their first in-person meeting since the inauguration. The Fed says the president invited Powell to discuss economic developments for growth, employment and inflation. White House Press Secretary Caroline Leavitt says Trump pushed Powell to lower interest rates.

The president did say that he believes the Fed chair is making a mistake by not lowering interest rates, which is putting us at an economic disadvantage to China and other countries. And the president's been very vocal about that both publicly and now I can reveal privately as well.

White House Press Secretary Caroline Leavitt says they did not discuss whether Trump would seek to remove Powell from his role. Powell's term as Fed chair expires in May of next year. President Trump will hold a news conference with Elon Musk later today at the White House to mark Musk's departure from Doge. We get the latest from Bloomberg's John Tucker. John. And Lisa, the event gives an opportunity for the president and his biggest campaign benefactor to dispel any notion of an acrimonious divorce.

In a post last night, President Trump said this will be his last day, but not really because he will always be with us, helping all the way. Elon is terrific. In the past two weeks, Musk has sworn off future political donations and also criticized Trump's signature tax and spending cut proposal. The world's richest man had already announced he was pulling back from the so-called Department of

government efficiency in order to spend more time running his various companies. His full exit comes at a critical time for Tesla, which is set to roll out full self-driving cars and a robo-taxi service. The Moscow van isn't the only thing on the president's schedule. He's going to travel to U.S. Steel today after announcing a deal with Japan's Nippon Steel.

I'm John Tucker, Bloomberg Radio. All right, John, thank you. I'll catch President Trump and Elon Musk comments live here on Bloomberg, scheduled for 1.30 Wall Street time this afternoon on Bloomberg Radio, Bloomberg Television, and the Bloomberg podcast page on YouTube. All right, we now turn to the latest developments in the Middle East. Israel has accepted a U.S. ceasefire proposal for Gaza. It involves a 60-day pause in fighting and restores U.N.-led aid distribution to the enclave.

Now the proposal includes Hamas releasing 10 live hostages and returning the remains of 18 who died in captivity, as well as engaging in negotiations toward a permanent end to the fighting. Hamas has criticized the proposal as one-sided and has not officially responded.

And to the markets now, Lisa, where futures are lower as we head into the last trading day of May, traders are trying to navigate growing uncertainty about tariffs that are mired in legal battles. Rebecca Patterson, a former chief investment strategist at Bridgewater Associates. The tariff level we settle at, I believe, will still be significantly higher than where we were at the beginning of the year. To me, I'm not sure.

At the end of the day, we're going to have volatility continuing. And I think we still have a bias of risk that U.S. bond yields, government bond yields are sticky or biased higher. And that is going to be something that acts as a cap on equity sentiment.

Former chief investment strategist at Bridgewater Associates, Rebecca Patterson, also says investors will be paying close attention to a key economic report this morning. It's the personal consumption expenditures price index, excluding food and energy, the Fed's preferred gauge of underlying inflation. And Bloomberg surveillance will bring you the numbers with context live at 830 Wall Street time on Bloomberg Radio and the Bloomberg podcast page on YouTube. All right. Checking some stocks on the move this morning. Shares of Gap

They're down almost 15% in early trading. Revenue fell at its Banana Republic and Athleta chains. The gap estimates an impact of $250 million to $300 million from tariffs if their level remains at 30% for most goods from China and 10% for other countries.

Costco reported better than expected earnings in the third quarter. Lisa, the nation's largest club chain is taking steps to navigate tariffs, including rerouting goods, sourcing more locally produced items and examining potential price changes on an item-by-item basis.

and shares are down about four-tenths of a percent this morning. All right, and we're seeing impending tariffs impacting the luxury watch market. Watch enthusiasts, they snapped up Rolex and Patek Philippe timepieces in late April. The watch dealer, Subdial, says volume was 160% higher than normal trading levels. The growth is particularly strong in the U.S. and the U.K.

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. The man who led the NYPD through the deadliest domestic attack in U.S. history has died. As New York City Police Commissioner on 9-11, Bernard Carrick was front and center. He spoke the next day on September 12, 2001. We want to get in there. We want to rescue the people that are alive and well in there. But we've also, we have to do it safely. And we've had

an enormous problem with the structural damage because the buildings keep collapsing. Carrick later pleaded guilty to tax fraud in 2009. FBI Director Kash Patel posted on social media that Carrick's death came after a private battle with illness. Bernard Carrick was 69.

Two NYPD officers, including a detective on Mayor Eric Adams' security detail, have been placed on modifying duty after authorities discovered their connection to two crypto entrepreneurs charged with kidnapping and torturing an Italian tourist.

According to people with knowledge of the internal investigation, the officers were working off-duty for John Walsh and William DuPlessis. Investigators are looking into allegations that the detective transported tourists to the location where he was held captive for 17 days in an upscale townhouse in Manhattan. Prosecutors allege Walsh and DuPlessis tortured the victim to extract the password to his Bitcoin account.

Harvard University President Alan Garber emphasized the school's international reach at Thursday's commencement ceremony amid a battle with Trump administration officials over enrolling foreign students. Garber's speech was met with a standing ovation. Members of the class of 2025 from down the street, across the country, and around the world.

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. How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business.

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Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. It's a Knicks season that saw them win 51 games, advance further in the playoffs than they had in 25 years. No Knicks player or fan wanted it to end on the garden floor where they have struggled in the playoffs. As Game 5 wound down, a Knicks victory was secured.

And now.

the series to game six in Indy with the Pacer lead cut three games to two. On TNT, Knicks never trailed, built up a 22-point lead third quarter, and Pacers never got it down to single digits. Knicks won 111-94 in the battle of the All-Star point guards. Jalen Brunson this time dominated Tyrese Halliburton. Brunson scored 32 points. That's his 21st career playoff game with at least 30. Halliburton went from 32 points in that Pacers game four win down to

He went from a triple-double to a triple-single. Six assists, two rebounds. Still a long way to go for the Knicks to become the 14th team in NBA history to win a series after trailing 3-1, but they live to play Game 6 tomorrow. For the sixth time in Stanley Cup playoff history, the same two teams will meet in consecutive finals. Florida beat Edmonton a year ago in a Game 7. They'll start this series next Wednesday in Edmonton. The Oilers wrapped up the West with a 6-3 win yesterday.

We'll be right back.

3-25 on the road. They've been outscored by 175 runs. The Nationals with a six-run 10th inning to win 9-3 at Seattle. Phillies and Braves with a doubleheader. The Phillies two games ahead of the Mets. French Open, second-round victories for Novak Djokovic going for his 25th career Grand Slam. Also, top seed Yannick Sinner and Coco Gauff. Third round begins today. John Stashower, Bloomberg Sports. Karen and Lisa.

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.

It is 5:12 on Wall Street. Now to the latest in the Trump administration's battle to keep control of global tariffs. This is after a pair of court decisions try and block it. For more, we are joined by Bloomberg News Senior Editor Bill Farris. Bill, thanks for joining us. The headlines coming in fast and furious yesterday. Most recently though, the Federal Appeals Court has allowed the president's tariff sustain effect for now, so it's temporary. Comes after the Trump administration, they threatened to go to the Supreme Court.

So if you could tell us what kind of signal is this latest move and how long is this order going to last? Yeah, it seems like every day we're reacting to something completely different. Right. And the White House right now really celebrating this decision by the appeals court to temporarily halt that decision by the U.S. trade court. That trade court had basically said most of President Trump's tariffs that he's enacted since January were illegal. And

and had to be taken care of, eliminated within 10 days. This appeals court had just basically put the brakes on that. They said, hold on, we need more time to assess this. We will leave things as they are. Now, the challenge here is no one really knows what that appeals court final decision will be like. They could still rule against the White House and against the Trump administration on these tariffs.

The White House has already said it would be willing to take this all the way to the Supreme Court. I think almost no matter what happens, this will be a Supreme Court decision. The White House is really committed to this tariff policy. And they say that even if they lose at the Supreme Court, they have other tools at their disposal to make sure their focus on tariffs continues. And what are some of those tools? Because we heard White House Trade Advisor Peter Navarro, he told Bloomberg yesterday that

It doesn't change things, this court decision, that the president has other options. What are these options? Well, it's true. There are other options. I mean, some of the Section 301 tariffs that the president put in place in his first term against China, those are still there. Those are still in place.

The challenge is the White House chose this path, declaring a national emergency to impose these tariffs because it was the fastest and easiest way to get their policies in place. If that's not the tool they have, there are other legislative options. But the challenge is they take more time. They may not be permanent. They're also going to be subject to legal cases. So

Declaring a national emergency and putting in a 10% tariff is something the President felt like he could do right away. If you're using some of these other options, it might take up to 270 days for an investigation to take place. You might only be able to have them in place for five months. So they're much more restrictive. I think the White House is hoping to avoid that option. So all these options, and you mentioned the Supreme Court too and everything, how far does the President's power stretch?

Well, the big question here is, you know, and the issue the trade court raised was, listen, you're saying there's a national emergency because of the arrival of fentanyl within the U.S., and you're saying there's a national emergency because of the U.S. trade deficits. The court ruled those may be problems for the United States, but they aren't the kind of national emergency that allows you to just slap tariffs across the board on every country, even if the issue you're talking about

isn't really related to those countries. That's the question before the courts now. We're going to see whether that's a power that the Supreme Court and the appeals court believe the president should have. All right. And does this take away any leverage from his team as they continue with trade negotiations coming up?

Well, yeah, we're right in the middle of all those. We're in the back half, actually, of those delayed reciprocal tariff negotiations. That's going to be continuing. We heard from Scott Besant over the last day that trade talks with China seem to have stalled a little bit. It's hard to know. If you're a foreign government and you're going in, you have to make the assumption that the White House is going to keep pushing on tariffs one way or the other. But it does look like they've lost a little bit of their leverage.

that may allow you to have a little bit harder of a negotiating position when you're dealing with the U.S. 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 Lisa Mateo. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

Every business starts with an idea. How can you go from daydreamer to industry leader? Amazon Business accelerates your journey. With smart business buying, get everything you need to grow in one familiar place. From office supplies to IT essentials and maintenance tools. Amazon Business takes the buying experience you know and love from Amazon, plus tools that help you save costs and make insights-based decisions.

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