Stocks Bounce Back; Harvard Sues Trump Administration
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Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, the bounce back in the markets this morning follows another sell-off on Wall Street on Monday. All three major indexes fell at least 2.4%. President Trump's demands on Fed Chair Jay Powell to act on rates are renewing concern about the president meddling with central bank policy. Claudia Somm, a former Federal Reserve economist, says it is a real concern.

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 Assam is currently chief economist at New Century Advisors and concerns about Fed independence also have gold on the rise again this morning. Earlier, it topped $3,500 an ounce for the first time. Right now, it's at $3,460.70.

Well, Nathan, the S&P 500 is down by 9% since Trump unveiled sweeping tariffs earlier this month on most U.S. trading partners. The chief economist of Apollo Global Management, Torsten Slocke, says a recession is the most likely scenario if the current tariffs take place. Maybe it will take a few more weeks, maybe in the worst case a month or two, but we will eventually begin to see the net effect increase.

if these tariffs stay in place. And that's why we think there's a 90% chance of a recession if these tariffs stay at these current levels. Apollo Global Management's Torsten Slocke says foreigners own $19 trillion of U.S. equities, $7 trillion of treasuries, and $5 trillion of U.S. corporate bonds, accounting for about 20 to 30 percent of the total market.

He says the unwinding of those holdings could cause substantial pain. And Karen Bloomberg Economics estimates President Trump's tariffs would shave about $2 trillion off global output by the end of 2027. We get that part of the story from Bloomberg's Amy Morris in Washington.

Analysts find that the president's so-called Liberation Day tariffs will mean a historic shock to the world GDP. Bloomberg economics analysts find that for the U.S., Trump's tariffs act like a massive tax hike and is considered a major shock. They say one casualty could be Fed independence.

Whether President Trump attempts to fire Fed Chair Jay Powell or waits until the end of his term, it now does look likely that the next Fed chief will be picked at least in part based on alignment with Trump's policy preferences. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. President Trump met with major retailers at the White House as executives sought relief from tariffs that have destabilized global supply chains and rattled U.S. consumers. Jordan Fabian is Bloomberg News White House editor.

That China 145% tariff looms large over this conversation, and you start to do work across purposes when you have these companies coming in asking for relief, and you have, not to mention these Southeast Asian countries who have higher rates as well, you know, questions about transshipment, et cetera. These are...

A lot of issues to untangle. And so it's unclear where this is going to end up as a result of this meeting. Bloomberg's Jordan Fabian says the meeting included representatives from Walmart, Home Depot, Lowe's and Target. And the tariffs are already starting to hit some firms in Japan. Karen, a survey of more than 500 companies by Japan's Ministry of Finance shows about 10 percent of them say the measures have affected their businesses.

The CEO of Japanese beverage giant Suntory Holdings says tariffs could make companies reluctant to invest in the U.S. Current tariff situation is losing the appetite from other countries to the United States. So this is really killing the appetite from the world to the United States. So we are losing the appetite to invest in the United States.

Suntory Holdings CEO Takeshi Ninami warns U.S. tariffs could reduce Japan's GDP by as much as 1.2%. Well, Nathan, one of the hardest hit stocks during the recent market sell-off has been Tesla. This afternoon, the EV giant will report its first quarter earnings. So we get a preview with Bloomberg's Tom Busby. It's been a tough start to the new year for Tesla. Shares have lost about 45% of their value so far in 2025, and it posted weaker than forecast Q1 sales earlier this month.

The reasons, an aging lineup, few details about more affordable EVs to come, and a lot of backlash against CEO Elon Musk for ties to President Trump's cost-cutting Doge task force and support for far-right politicians in Germany. Consensus calls for adjusted earnings per share of 44 cents, total revenue of $21.43 billion.

Tom Busby, Bloomberg Radio. All right, Tom, thank you. In other news this morning, President Trump is standing behind Defense Secretary Pete Hegseth as he faces a new report that he shared Yemen attack plans on a second unsecured signal chat that included his wife and brother. The president was asked if he still has confidence in Hegseth at the White House Easter egg roll. Why do you

Why do you even ask a question like that? We have regroupments at that center at an all-time high. The spirit in the armed forces is fantastic. Great confidence. The president spoke after a former Pentagon spokesman, John Elliott, said the Defense Department's in a full-blown meltdown in his words. It could cost Hegseth his job. That criticism came after three top Defense Department officials said they were fired in the middle of a leak investigation but weren't told what they were being investigated for.

President Trump is blaming disgruntled employees for the pressure on Hegseth, says he's doing a great job. But Republican Congressman Don Bacon, who sits on the House Armed Services Committee, says if the reports about Hegseth are true, he won't tolerate it.

Well, Nathan, Harvard University's high-stakes showdown with the Trump administration has ratcheted up another notch. And Bloomberg's John Tucker joins us with more. And, John, it looks like this battle is headed to court. Yeah, Karen, Harvard is suing several U.S. agencies as well as top officials for freezing billions of dollars in federal funding, much of it critical medical research funding.

Lawyers for the university argued in a lawsuit filed yesterday in federal court that the government unlawfully suspended Harvard's funding after it refused to comply with unconstitutional demands to overhaul governance, discipline, hiring, and diversity programs.

Donald Trump escalated his fight with Harvard after the school refused to bow to his administration's demands. Since threatening its funding, Trump suggested the IRS should also tax the university as a political entity. Without the funding, the school will get in the complaint. It will be forced to either reduce or halt ongoing research projects and terminate employment contracts with researchers. In New York, I'm John Tucker, Bloomberg Radio.

It is 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. Cardinals are meeting at the Vatican to make the first decisions about

running the Catholic Church following Monday's death of Pope Francis. They need to decide when the conclave will begin to elect his successor. Today's congregation of cardinals could choose to begin the public viewing as soon as Wednesday. The funeral is Saturday. Tributes continue to pour in for Francis. President Trump. He was a good man, worked hard. He loved the world, and it's an honor to do that.

Former Speaker of the House Nancy Pelosi called the Pope's passing personally devastating. All of us who are singing the praises of his holiness will pray to him and also follow his legacy.

Chicago Cardinal Blaise Cupich. Even though it was clear that he was not feeling well, he wanted to be with people. And I think that he had the intention of making sure that people realized that he was with them. The Vatican says the Pope died from a cerebral stroke, which caused him to fall into a coma and then essentially heart failure.

The Trump administration says starting May 5th, federal student loans in default will be referred to debt collection. Ayesa Conchola-Banez is the policy director for the Student Borrower Protection Center. She says there are about 5 million Americans who are currently in default. Folks who are behind are already seeing major hits to their credit score and seeing these negative marks on their credit reports.

After a 30-day notice, the Department of Education will also begin garnishing wages for borrowers in default. Finally, the Trump administration is threatening to stop federal approvals for transportation products in Manhattan and May, withholding funding if New York City's congestion pricing program continues.

The U.S. Transportation Secretary has given the Metropolitan Transportation Authority an ultimatum to end the congestion pricing by May 21st or face the consequences. New York Governor Kathy Hochul and the MTA are refusing to back down, with the MTA seeking a court decision to declare the administration's move to end the fee as null and void.

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.

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Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. The Knicks were able to come from behind in the fourth quarter and win game one from Detroit at the Garden. 48 hours later, they almost did it again. Trailed by 13, but with just over a minute to go, it was only two. Brunson handles it.

It's a two-point game. Brunson one-on-one with Schroeder. Brunson drive. Dish. Hearts open. He throws it down. The last New York lead was 16-15 in the first. Schroeder's jumper. It's a three.

Ice water in his veins. On TNT, so Detroit went back ahead. Mikael Bridges later had a wide open look at a game-tying three-pointer. He missed, and Detroit won its first playoff game since 2008. 100-94, Cade Cunningham, 33 points. Jalen Brunson led the Knicks with 37. Game three is Thursday.

in Detroit. Clippers won in Denver 105-102. Kawhi Leonard scored 39. That series also tied at one. While the road teams won in the NBA, the home teams went 4-0 on the ice. Two games went overtime. Dallas beat Colorado 4-3 and Washington beat Montreal 3-2.

on an Alex Ovechkin game winner. Winnipeg top St. Louis 2-1 and a wild one in L.A. The Kings led Edmonton 4-0, 5-3 with just over two minutes left. The Oilers tied it up and then L.A. scored with 48 seconds to go to win 6-5. Another win for the Mets at Citi Field where they're now 10-1. More great pitching. Although the Phillies scored four times in the ninth inning, the Mets held on to win 5-4. Francisco Lindor.

A leadoff home run, later a three-run shot. Home runs did in the Yankees in Cleveland. Jose Ramirez went back-to-back with Kyle Manzardo. Third inning off Clark Schmidt. Guardians beat the Yanks 6-4. John Staschauer, Bloomberg Sports, down to Nathan.

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. Markets may be due for a bounce back from the steep declines to start the week, but the pressure remains on Fed Chair Jerome Powell since President Trump had this to say in the Oval Office last week. I don't think he's doing the job. He's too late, always too late, a little slow.

And I'm not happy with him. I let him know it. And if I want him out, he'll be out of there real fast. Believe me. And the president followed that up this week with a social media post saying there could be a slowing of the economy if Powell doesn't cut interest rates now. So let's get more on what's happening in this market. We are joined by Daniel Morris, chief market strategist at BNP Paribas Asset Management. Daniel, it's great to speak with you. How seriously should the market take this pressure on Chairman Powell as President Trump continues to

pressure around trade. Good morning. Good morning. Well, certainly it's a quite serious topic, something that most investors would probably be happier with the status quo than the change of that magnitude. So I think it's something we absolutely have to pay attention to, anticipate what the consequences might be. And I think if you look at what's been happening with the dollar in general over the last couple of weeks, this could be another factor. If it escalates, that would potentially weaken the dollar.

Well, what could the consequences be, Daniel, if we did see a serious threat to Federal Reserve independence?

Well, I think what ultimately in an abstract version of it, the reason the argument that you want to have independent central banks is that you don't want the central government, the central government, the federal government of any country using monetary policy to promote their own normally a growth agenda because the concern is going to be over the medium term, you're going to end up with higher inflation. So it really does come down to that anchoring of inflation expectations, which is so important to central bankers. And that would be, I think, the primary risk

that investors would see would inflation expectations become unanchored if you had a central bank that was viewed as less independent. Well, how would the market take it if the Federal Reserve were to cut interest rates?

Well, it's not necessarily a clear cut whether they should or they shouldn't. When you're in arguably or approaching a stagflationary environment, meaning that in the short term, at least, prices are going to go up. So by definition of a change in prices, it's inflationary, even if it's not inflationary, really, in the sense that central banks think about inflation.

Insofar, it's not necessarily going to be a permanent increase in the rate of price changes. But an increase in prices, that's likely to lead to a slowdown of growth, at least in the short term. And then given that the Fed has a dual mandate, essentially focusing on growth vis-a-vis the unemployment rate, but also inflation, you can argue both ways. They should potentially be cutting rates to offset the negative impact on growth or raising rates

offset the impact on inflation but if the inflation effect is temporary you would probably fall back to growth so them cutting in this environment isn't necessarily an outlandish idea we're seeing that happening in the eurozone the ecb just cut rates exactly for that reason

And we've seen some pretty dramatic estimates of the economic impact if President Trump's tariffs were to remain in place beyond the 90-day pause. 90% risk of recession from Torsten Slocke at Apollo Global and Bloomberg Economics estimating $2 trillion in global GDP could be shaved off by the end of 2027. Do those estimates make sense?

Well, I think we should perhaps recall how bad our forecasting was during the pandemic. So it's not to criticize economic forecasting, but at the best of times, it's not particularly accurate. And when you're in an environment that is unprecedented, like it was during lockdowns,

your models really aren't of much use at all. So I think we certainly can attempt to forecast what would happen with GDP growth in the event that tariffs came back and stayed in place. But I think we'd have to acknowledge that there's going to be a huge confidence interval around those estimates simply because there's really been no

preceding episode like this to tell us, okay, that's happened then, this is going to happen this time. 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

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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. Big news. Verizon Small Business Days are here from April 21st through 27th. Book your appointment today to make our experts your experts. Get a free tech check, special deals, and personalized advice. Call 1-800-483-4428.

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