Powell Sees Tariff Impact as Transitory, Trump Says Fed Should Cut Rates On today's podcast:
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the T word. In fact, we begin with two T words, tariffs and transitory. Yes, Fed Chair Jay Powell brought back the infamous transitory word. After leaving interest rates unchanged, Powell downplayed mounting growth concerns and the price hits that could be on the way from President Donald Trump's aggressive trade war.

It can be the case that it's appropriate sometimes to look through inflation if it's going to go away quickly without action by us, if it's transitory. And that can be the case in the case of tariff inflation. I think that would depend on...

the tariff inflation moving through fairly quickly and would depend critically as well on inflation expectations being well anchored. Jay Powell's comments came along with median forecasts showing two interest rate cuts this year.

Well, Nathan Powell's stance calmed financial markets. The S&P 500 climbed more than 1% for the biggest rally for any Fed day since July. On a special edition of Bloomberg Surveillance, we got this Fed reaction from Bloomberg Intelligence Rate Analyst Ira Jersey. The market certainly took him as dovish. He wasn't hawkish by any stretch of the imagination.

The one thing that I think is interesting is the dot plot. And, you know, we thought that maybe the median dot would move down a little bit. It didn't. It stayed the same. So this is pretty unusual for the rate market to rally like it did when the Fed didn't move the dots. That's Ira Jersey of Bloomberg Intelligence. On that surveillance special, we also heard from Bloomberg opinion columnist and former New York Fed President Bill Dudley.

Powell then came in and I think gave a pretty dovish performance in the sense that, you know, we got this. We're in a good place. We can afford to wait. We'll see how it goes. We're going to get the job done. So he, I think, was pretty reassuring to people that this was all, you know, quite manageable.

And that was former New York Fed President Bill Dudley on a special edition of Bloomberg Surveillance following the Fed decision. Hear the entire special on the Bloomberg Surveillance podcast feed or watch it on the Bloomberg podcast page on YouTube. And Karen, as Fed officials and investors weigh the Fed's next move, President Donald Trump says the central bank should cut. In a post on Truth Social, the president said, quote, the Fed would be much better off cutting rates

as U.S. tariffs start to transition their way into the economy. The Fed's next meeting, May 7th. Well, Nathan, now let's get to the latest on the war in Ukraine. Ukrainian President Volodymyr Zelensky says he's agreed to stop hitting energy assets as a first step toward a ceasefire with Russia. Zelensky spoke with President Trump on the phone yesterday. Christopher Smart is a former special assistant to the president under the Obama administration. Both Russia and Ukraine appear to be

ratcheting down their level of hostilities one notch in terms of a ceasefire that avoids energy targets. But there's a long way to go to get the two parties to agree to any kind of a longer term solution.

Christopher Smart, now with the Arbroath Group, was a guest on Bloomberg's Balance of Power. A White House statement says President Trump agreed to work with Zelensky on finding additional air defenses for Ukraine. Trump also offered to help run Ukraine's electricity and nuclear facilities, saying American ownership would be the best protection for that infrastructure. And, Karen, President Trump's also talking about meeting face-to-face with China's president. He says he wouldn't mind a summit in June with Xi Jinping.

The president discussed trade talks with China in an interview with Fox News this week. We have our own discussions with President Xi of China, and he wants to get along also, and he's looking to get along, and we're looking to get along with him, and we will. We have a problem of trade where we have a very big imbalance with China. President Trump spoke with Fox News host Laura Ingraham. The Wall Street Journal reported this week that the U.S. and China are discussing a birthday summit between Presidents Trump and Xi. Both leaders were born in June.

Well, Nathan, this afternoon, President Trump is scheduled to sign an executive order at the White House. Sources tell Bloomberg the president will formally direct Education Secretary Linda McMahon to dismantle her department and, quote, return education authority to the states. Josh Cowan with the Education Law Center says the Trump administration has already been hollowing out the agency.

Trump, Secretary Linda McMahon, the Musk-Doge operation have sort of hollowed out the department on their own. There's some litigation behind that sort of questioning whether that itself is even legal. But what's certainly true is that thousands of department staff have been laid off at this point, even preceding the order. And that's going to have the real material effect on kids and families across the country.

Josh Cowan with the Education Law Center. The Education Department was created by Congress and would technically need lawmakers' approval to shut down. Karen, the White House is also doubling down on verbal attacks on federal judges, even after the Chief Justice of the Supreme Court issued a rebuke.

Bloomberg's Amy Morris has the latest on that from Washington. White House Press Secretary Caroline Leavitt says President Trump is now calling on the Supreme Court to take action. The president has made it clear that he believes this judge in this case should be impeached. And he has also made it clear that he has great respect for the Chief Justice John Roberts.

and it's incumbent upon the Supreme Court to rein in these activist judges. Leavitt says the judge in question was appointed by President Obama. He was actually appointed by President George W. Bush and then promoted by Obama. Leavitt says the White House does not have any flights planned specifically, but the administration will continue with mass deportations. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. We want to turn back to the markets now, and futures are higher following yesterday's post-Fed rally. It's also a

Getting a lift out of news from NVIDIA. And for the latest, we bring in Bloomberg's John Tucker. John, good morning. Good morning, Karen. NVIDIA reportedly plans to invest hundreds of billions of dollars in U.S.-made chips and electronics over the next year.

over the next four years. This according to the Financial Times, the chip giant will spend around half a trillion dollars. The paper quoting CEO Jensen Huang is saying Nvidia can now manufacture its latest systems in the United States through suppliers like TSMC and Foxconn. Well, those companies operate US-based factories. And this would mark a major step forward in supply chain resilience for Nvidia.

NVIDIA this week hosted its GTC developer conference where they said they ultimately plan to ship manufacturing onshore. It's already using TMSC's Arizona factory. And NVIDIA shares right now among the most active pre-market up 1.4%. In New York, I'm John Tucker, Bloomberg Radio. Okay, John, thanks. We also want to keep you up to date on the latest market reaction to the political turmoil in Turkey. This morning, the cost of borrowing the Turkish lira in the offshore market rose to its highest in two years.

That's after Turkish authorities detained President Recep Tayyip Erdogan's main political rival on corruption charges. After dropping almost 9% yesterday, Turkey's main stock index is up more than 2% this morning.

And Nathan, the latest world happiness rankings are out. And for the eighth straight year, Finland is the happiest nation on Earth. That's according to Oxford's Wellbeing Research Center. Other Nordic countries right at the top five, Denmark, Iceland, Sweden and the Netherlands. The U.S. has dropped to its lowest place ever on the list, 24th. This year's report says belief in the kindness of others is more closely tied to happiness than previously thought.

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. Israel said it began a limited ground operation in Gaza with troops retaking part of Gaza. Israeli officials are vowing further pressure unless Hamas releases its 59 remaining hostages.

The move comes after Israel ended the pause in fighting early this week with airstrikes across Gaza that killed hundreds of people. Dr. Faraz Sidwa is a trauma surgeon volunteering at Gaza's Khan Yunis Hospital. He says that malnutrition is a big concern after Israel blocked humanitarian aid from coming into Gaza.

People are coming in hungry, thirsty. There's no clean water anymore because Israel cut the water and electric supplies so the desalination plants can't even work. And that leads to the problems with human health that you can imagine. Kids have gastroenteritis all the time. We actually had a woman's heart stop in the ICU because her gastroenteritis was so bad that we couldn't keep up with her fluid requirements. Meanwhile, protests were held in Israel yesterday over concerns that the airstrikes will leave the remaining future of hostages uncertain.

Tal Shoham was one of the freed hostages and spent roughly 500 days in captivity. Shoham says at one point he was taken to a small tunnel and he shared that space with three others. We had four mattresses on the ground which we slept on and lived on. Then one meter like empty space.

on the sand and a hole in the ground, which was our toilet. Shoham's wife and children were also kidnapped and were released from captivity in November of 2023. Severe weather hit the Chicago area. Roofs were ripped off buildings in Gary, Indiana, where several people had to be rescued and a tornado was suspected to have formed. At least seven homes have been destroyed. Gary Mayer, Eddie Melton.

A lot of folks have been displaced from their homes, so we're working with the Red Cross to make sure they receive the shelter, working with the Gary School Corporation, because one of their schools was significantly damaged as well. Mayor Melton also says some residents are without power. Finally, the University of California says it will stop requiring the use of diversity statements in hiring. Diversity statements ask people applying for jobs how they would contribute to campus diversity. The announcement comes as universities across the nation

have faced directives from the new Trump administration. Global News 24 hours a day and whenever you want it with Bloomberg News Now, I'm Michael Barr. 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. Deep domain expertise. Strong relationships. Broad capabilities. It's what makes Stiefel one of the industry's leading providers of M&A and capital-raising services in the middle market.

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Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. Here's John Stashour. John, good morning. Good morning, Karen. The Knicks this season have struggled against good teams that have generally feasted on bad ones. The Spurs aren't very good. Under .500, they've lost their two best players, Victor Wimbinyama and De'Aaron Fox, to season-ending injuries. And yet San Antonio dominated a 23-2 run in the second quarter, put them up by 27 at halftime. Knicks got it down to eight, no closer. The Spurs won 120-105. Sandro...

Mamou Kelochevili, the former Seton Hall Pirate who comes off the bench, averages nine points a game. He shot 13 of 14, made all seven of his three-pointers. He scored 34 points in only 19 minutes. That's never been done before in NBA history. NCAA Tournament first four was looking like a Texas victory. Back came Xavier. Throws to Conwell. He jumps it with one point out at Dayton. From 13 points a tier.

Westwood 1, Xavier 1, 86-80. Finishing the game on a 16-6 run. We'll now play Illinois. Duke is next for Mount St. Mary's, who beat American 83-72. 16 games today and tonight, including St. John's, a 9.45 tip-off in Providence against Omaha. The Minnesota Vikings say...

They don't want Aaron Rodgers. They'll use the youngster J.J. McCarthy as their quarterback to look for a veteran backup. Presumably, Mains Rodgers, if he doesn't retire, will play for either Pittsburgh or the Giants. The competition committee from the NFL will consider a proposal that home field in the playoffs will be determined by each team's record. Division champs will no longer be sure to get in a home game. John Staschauer, Bloomberg Sports, Darren 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. President Donald Trump is putting pressure on the Fed now that it's waiting to cut rates before tariffs kick in. In a Truth Social post, the president called on the central bank to, quote, do the right thing and cut.

Of course, Trump's made no secret about wanting to sway Jay Powell. I think I'm better than he would be. I think I'm better than most people would be in that position. I think I have the right to say I think you should go up or down a little bit.

That was the president speaking to Bloomberg's John Micklethwaite during the campaign back in October. And this morning, we're joined by Bloomberg News senior editor Derek Walbank. So, Derek, I guess we shouldn't be too surprised that the president would be calling for interest rate cuts now. No, I don't think you should be too surprised, Nathan. It's good to talk with you.

Donald Trump has said throughout his first term he wanted lower rates. He's doing so again here. He has made no secret that he has wanted to have a big voice on rate policy. And look, there's no question right now that the White House is very cognizant of what is happening in markets as Trump is ramping up his tariff push. Now, we're all sort of focused towards this

key date of April 2nd, but with an awful lot of uncertainty. And you can see this uncertainty playing out in markets as kind of arbitrage between what Trump has promised at the maximalist levels and what people think might actually happen. Certainly, there's been a big gap between those maximalist proposals and what has been implemented so far.

So that's really, I think, a key point that they're working. So you're not necessarily too big of a surprise that Trump is calling for a little bit of easing to sort of help out on the margins there. At the same time, it's fairly clear that the Fed is so far interested in doing what it's going to do.

We haven't really seen any movement necessarily towards Trump position so far. And of course, we heard from Jay Powell just yesterday bringing back the T word saying that the impact of tariffs could be transitory. Could that put the Fed at loggerheads with the president when he in this Truth Social post is talking about April 2nd being Liberation Day and tying potential rate cuts to tariffs?

Well, there certainly is a divide between the way that the Fed wants to go, as Powell put it out, and the way that Trump wants to go. There's no question that there's something there. One thing I would point to is that during the first Trump administration, the Fed did actually take some steps to sort of minimize the pain of the tariffs. And that was something that was a little bit controversial at the time, this question of whether or not there's

the Fed, when it's considering its economic mandate, should think about the very short term or should think about the medium or long term. The Fed at the time said essentially that it had a responsibility to the economy as it was.

So whether or not that was good, bad, or indifferent, that was kind of the way that we went. This time, I think it's going to be a real interesting question of what happens. But look, there's been a thought that central banks, not just the Fed but all over the world, are waiting to see exactly what Trump's territory

tariff posture is going to be before they're going to be fully able to effectively respond to whatever economic realities shake out as a result of that. 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. There are presentations.

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