Wall Street Elite Warm Up to Tariffs; Trump-Carney Meeting
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, let's begin this morning with the latest from the Milken Institute Global Conference in Beverly Hills. Financial leaders gathering at the annual event may be warming to the idea of tariffs.

But there's a catch, as we hear from Bloomberg's John Tucker. Good morning, John. Good morning, Nathan. The industry titans say they can live with tariffs and a reworking of trade. Just get it settled soon. KKR co-founder Henry Kravis tells Bloomberg corporate leaders right now aren't sure what to expect. You need certainty. Is the table going to be round? Is the table going to be square? Whatever it is, but leave it at that, and then we can operate accordingly. The unfortunate thing, it's been changing, and it constantly changes.

Mark Rowan, CEO and co-founder of Apollo Global Management, says the longer this goes on, the more damage is done. Uncertainty will eventually resolve itself. Longer term, the way we've done this, we have done damage to the U.S. brand. Robin Grew, CEO of Mangroup, is certain of at least one thing from the tariffs. I think that volatility is going to be here for some time.

The Milken elites say it would be also helpful if the Trump administration, which has said it's deeply engaged in talks with a slew of major trading partners, would announce at least a few deals and give business leaders a sense of what the future holds. Again, they want some degree of certainty.

I'm John Tucker, Bloomberg Radio. Okay, John, thank you. And stay with Bloomberg for the biggest names and most important conversations. We're going to be bringing them to you live from Milken all day long, broadcasting live with a special edition of Bloomberg Business Week Daily, starting at 2 p.m. Wall Street time on Bloomberg Radio, Bloomberg Television, and the Bloomberg Podcast page on YouTube.

Nathan, Canada's prime minister will meet with President Trump at the White House today. It'll be the first face-to-face meeting since Mark Carney won election in part because of his anti-Trump message. Bloomberg's Amy Morris has a preview of today's meeting in Washington. Carney and Trump are expected to discuss trade issues and a broader relationship between Canada and the U.S. But when he was asked about the meeting, Trump told reporters in the Oval Office... He's coming to see me. I'm not sure what he wants to see me about, but I guess he wants to make a deal. Everybody does.

because we have something that they all want. The meeting comes after a trade war between the two countries, the U.S. placing tariffs on Canadian products, Canada retaliating with its own tariffs on U.S. goods. Carney has promised to protect Canadian sovereignty and strengthen trading relationships in Europe and Asia, saying that the old economic and security relationship with the U.S. is, quote, over.

Over. In Washington, I'm Amy Morris, Bloomberg Radio. Amy, thank you. The Trump administration is now offering an incentive in its effort to ramp up mass deportations. The Department of Homeland Security is offering $1,000 plus travel costs to undocumented migrants who leave the U.S. voluntarily using the CBP Home app. This follows an ad campaign that began earlier this year featuring Homeland Security Secretary Kristi Noem. Let me be clear.

If you come to our country and you break our laws, we will hunt you down. Criminals are not welcome in the United States. DHS says the payouts will cut deportation costs by about 70%. The agency says the current process of arrests, detentions, and removals costs about $17,000 per person. Under former President Joe Biden, the CBP Home app was used to schedule asylum interviews.

Nathan, the Trump administration is ramping up its fight with Harvard University. The Ivy League institution has been declared ineligible for new federal research grants. According to a letter from Education Secretary Linda McMahon, the move will remain in effect for Harvard until, quote, they demonstrate responsible management. Pershing Square founder and Harvard alum Bill Ackman has been critical of his alma mater and its chair, Penny Pritzker. At some point, you have to have accountability involved.

for what's gone on at Harvard. And I've not seen any accountability at the governance level. The notion that she's still chairing the Harvard board and leading the charge here, I think is a big negative.

Billionaire Bill Ackman spoke to Bloomberg from the Milken Conference in Beverly Hills. A Harvard spokesman says McMahon's letter amounts to retaliation for the university's lawsuit against the administration over more than $2 billion in frozen research funds. And Karen, the Trump administration is looking to thin the ranks at the highest levels of the military. Defense Secretary Pete Hegseth is ordering a 20% reduction to four-star general and admiral positions. A

Another 20% cut to officers in the National Guard and at least 10% cuts to all generals and admirals. Hegseth called it the less generals, more GIs policy in a social media post. Now, this is not a slash and burn exercise meant to punish high ranking officers. Nothing could be further from the truth.

This has been a deliberative process, working with the Joint Chiefs of Staff with one goal, maximizing strategic readiness and operational effectiveness by making prudent reductions in the general and flag officer ranks. Defense Secretary Pete Hegseth's reductions could be challenged in Congress. Lawmakers have to approve any changes to military command.

Nathan, in Europe, Friedrich Merz has suffered a setback in his bid to become the next German chancellor. The conservative leader fell short of a majority in an initial vote in the lower house of parliament. The failure to secure a majority in what was expected to be a rubber stamp vote delays his swearing in as head of government. Bloomberg's Oliver Crook is in Berlin and says it's an embarrassing setback for the conservative leader.

This was supposed to be kind of a rubber stamp day where Friedrich Merz, the CDU leader, was going to be ushered in as the next chancellor of Germany. It has now encountered a stumbling block at the very first step of this process. Frankly, right now, I think everyone is scrambling to figure out exactly why that was the case.

Bloomberg's Oliver Crook says it's the first time since World War II that an incoming chancellor failed to get parliamentary backing in the first round of voting and breaking across the Bloomberg moments ago, German leaders will not vote again today on Mertz's chancellor. Turning back to markets now, Karen, futures are lower. A day after the S&P 500 saw its nine-day winning streak snapped,

Best performing stock in the index so far this year is helping to lead the losses this morning. Shares of Palantir down nearly 8%. The company did raise its revenue forecast for the full year on strong demand for its artificial intelligence software products. Palantir's growth was strong in the U.S., but tepid enthusiasm in the rest of the world, which constitutes less than a third of Palantir's business, was enough to concern some analysts.

Shares of Ford are down 2.6 percent. Nathan, the automaker is suspending its full year financial guidance. Ford says President Trump's auto tariffs reduced 2025 adjusted earnings before interest and taxes by about one and a half billion dollars on a net basis this year. CEO Jim Farley spoke on the earnings call. It's still too early to fully understand our competitors' responses to these tariffs.

It's also early to gauge the related market dynamics, including the potential industry-wide supply chain disruptions and the impact of Ford's domestic manufacturing advantages. And as a result, we decided to suspend our guidance.

And Ford CEO Jim Farley says the company's total tariff impact is about $2.5 billion, $1 billion of which is expected to be offset through actions such as using bonded transportation to shield parts from levies. And Karen, we've got some deal news this morning. This one's official. DoorDash has agreed to buy UK-based food delivery platform Deliveroo for a price tag of $3.9 billion today.

DoorDash controls two-thirds of the restaurant delivery market in the U.S. It says this acquisition will expand that reach to more than 40 countries.

And it's 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 nation's aviation problems are the center of concern following the troubles at Newark Airport. Following a radar system failure last week, Newark's air traffic controllers are refusing to come into work, calling it a traumatic event, a contract clause to call out. The screens went black for about 90 seconds.

Senator Chuck Schumer. We have ATC folks giving warnings. We have a 1990 technology being used in 2025. And we have safety issues, plain and simple.

The union has been trying to bring attention for years of dealing with staff shortages and out-of-date technology. The sex trafficking and racketeering trial of rap mogul Sean Diddy Combs began in New York City with jury selection. Jurors are filling out written questionnaires stating there may be graphic and sexually explicit evidence in connection with the case.

Out today, U.S. News & World Report's Best States Rankings for 2025. The list looks at dozens of metrics across categories like education, led by New Jersey, and health care, led by Hawaii, while overall, Utah takes the lead for the third year in a row. Senior Data Editor Jacqueline Jeffrey-Wilinski.

The first is Utah. The second is New Hampshire. The third is Idaho. And then rounding out that top five, we've got Minnesota and Nebraska. So a lot of Midwest representation. Massachusetts ranked ninth, Connecticut 15th, New Jersey 19th, New York ranked 22nd. 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...

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Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. The Knicks keep pulling out playoff games on the road three times in Detroit in game one in Boston against the defending NBA champs who the Knicks couldn't beat in the regular season. They trailed by 20 in the third quarter. But some more Jalen Brunson heroics in the fourth. He made three three-pointers in a two-and-a-half-minute stretch, though Brunson missed an easier shot that would have won the game in regulation. It then went to overtime.

Holiday is all over Brunson. Horford will watch hard. Two and a half in overtime. It goes to Ananobi. Tatum is there. In the corner, Bridges, three, bullseye! It's a six-point New York lead in overtime!

TNT to call. Nick stunned the Celtics. 108-105. Brunson scored 29 points. So did O.G. Onanobi. The Celtics took 63 pointers. Made only 15 of them. Game 2 is tomorrow. There's also a comeback and an upset at Oklahoma City. Denver won game 1. 121-119 on an Aaron Gordon 3 with 2 seconds left for Nikola Jokic. 42 points, 22 rebounds. Stanley Cup playoffs in Toronto. Maple Leafs won game 1 with Florida State.

5-4. The Islanders won the draft lottery despite having just a 3.5% chance. That stadium, the Padres won their sixth in a row, beat the Yankees 4-3, scoring all four in the eighth inning. The Arizona two-run homer for Pete Alonzo, three-run shot for Francisco Lindor. Mets won 5-4. The Baltimore Ravens released Justin Tucker, the most accurate kicker in NFL history, but he missed 10 kicks last season and accused by 16 women of inappropriate behavior. John Stasch, Bloomberg Sports. Gary 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 turning to a conversation with Citi CEO Jane Fraser speaking with Bloomberg's Shanali Basik from the Milken Institute Global Conference in Beverly Hills. They talked about the economy, the Fed, the outlook for small to mid-sized businesses. Let's listen in.

We're in a world where the difference between the hard data and the soft data is the greatest I've ever seen. And it's very hard for all of us to understand, to get

arms around this and what does it mean. And I think we just got to recognize that this will take some time to play out. On the one hand, we've got investors who had quite the round trip in the last few weeks. But when we look at our corporate clients or our consumer clients, sentiment is weaker, but spending is strong with the consumer still. It's holding up.

Some of that is the pull forward of spending, the same from corporates ahead of tariffs. But we're keeping a very close eye on what will happen with unemployment, what's going to happen with inflation, obviously, what's going to happen with the actual tariffs. Will they be 10 percent? Will they be 25 percent? Will they be more? That uncertainty will get

We will know more. We'll know more about the tax bill. We'll know more about deregulation. But it's going to take some time for the hard and soft data to converge and that we know which scenario we should be acting upon. Well, to that end, you said earlier that a lot of your clients are in this wait-and-see mode. So what is your advice? Bring us into the boardrooms.

waiting to see and what is your message? So with clients there's a couple of things that are going on. One more tactically which is preparing for headwinds and remember we're serving multinational clients and multinational institutions and governments around the world so they are

strengthening balance sheets if they feel the need to take advantage of that. They're pulling forward inventory. They're pausing some of their investment spend, CapEx. There's still activity, but there's definitely the wait and see and preparation. Then you have...

All the work that is going on where we're having heavy client engagement on how should I be rethinking about my supply chains? What should I be thinking about my hedging and financing? And then on the top level, what does it mean from the strategic advice? So the level of engagement everywhere around the world is absolutely tremendous. It's about scenarios right now.

it will turn into action further down the year. What kind of risk is there to mainstream? These trade negotiations aren't sorted out fast. I think it's not just the trade. We want to see the trade. We want to see the tax bill and what that will be. And then also deregulation, because as Secretary Besson has pointed out,

Deregulation has really impeded Main Street as well. We've seen it with Bubble 3. The concern as a large bank was around what does it mean for the consumer? What did it mean for farmers? What did it mean for small businesses? Because they have quite a trickle-down impact.

of too much regulation. So some of that undoing of things that have been overdone is very important for Main Street because they don't have the same flexibility and diversity of business model that the larger corporates do. But don't they have nearer term problems like inflation that could be on the heels of a lot of these tariff talks and access to capital?

capital being different than those larger firms have. As I talked about, I do think the small businesses and those involved in sectors affected by the price increases, by the tariffs, by supply chain disruptions, just because of the magnitude of changes that could be coming, will have an impact on them. And that's, I think, where some of the disruption and the pain from this will be felt first. Do you agree with President Trump that the Fed should cut interest rates?

or do you believe that it would be imprudent to do it at this time when inflation expectations are higher? It's very hard for the Fed right now because of this disconnect between hard data and soft data and the hard data holding up. Well, the sentiment data is clearly impacted. And until there is more clarity, it will be hard to know. If it's a 10% tariff,

easier to absorb. If it's 25% or higher, then that will have more material ramifications. So getting clarity on the trade deals and agreements that will come through. We'll know more about taxes in the summer. We're starting to see some of the benefits of deregulation occurring. All of this will play in. But right now, the Fed's in a tough spot.

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.

Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online quote at Hiscox.com. That's H-I-S-C-O-X dot com.

There's no business like small business. Hiscox Small Business Insurance. You're listening to an iHeart Podcast. ♪