President Trump's Tariff Pivot; Global Markets React
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Good morning. I'm Lisa Mateo. And I'm Karen Moscow. Here are the stories we're following today. Karen, what a difference a day makes. Well, the market moves this morning follows a monumental day on Wall Street. U.S. stocks had their best day since 2008, with the S&P 500 rallying 9.5 percent and the Nasdaq 100 soaring 12 percent. Now, it all happened after President Trump ordered a 90-day pause on non-retaliating countries.

and is lowering reciprocal tariffs to 10% effective immediately while raising duties on China to 125%. I thought that people were jumping a little bit

Out of line, they were getting yippy, you know, they were getting a little bit yippy, a little bit afraid. Well, the president says countries want to make a tariff deal. We don't want to hurt countries that don't need to be hurt. And they all want to negotiate. The only problem is, you know, you can only do so many at one time. It's like it's we want to do it right now.

We want to get it right. Well, that tactic puts Trump on a collision course with Chinese President Xi Jinping, whose government has vowed to fight to the end in any confrontation and looks to shore up ties with trade partners to resist Trump. Well, Lisa, the Wall Street rally is spreading overseas. Our first stop is Asia, where stocks in Japan soared. Let's go to Hong Kong now and get the very latest with Bloomberg's Jill Dees. Jill, good morning.

Good morning, Karen and Lisa. Yes, we've seen surges pretty much across the board. Stocks in South Korea rallied by the most in five years. Japan's equities recorded the biggest gain since August. We also saw some pretty significant numbers in Taiwan, where the TAIX surged, really helped by TSMC, the big chipmaker there. Even in China, we did see some increases in Hong Kong's Hanseng Index. The Shanghai Composite recorded some modest gains earlier today. That's despite that $100

percent tariff that remained part of this really comes down to sentiment that a lot of these tariffs are being delayed maybe there's room for negotiation elsewhere obviously we'll have to ultimately see what happens but certainly the sentiment in asia is that investors are breathing the sigh of relief we've already started to see some responses from various nations that were impacted by these tariffs particularly in vietnam which was set to receive

a 46% tariff from Trump. Obviously, that now called off because of this 90-day reprieve. But yes, certainly the mood is obviously incredibly euphoric here. But again, with this 90-day reprieve still on the table, and it's still being very unclear as to how any of these tariffs would actually be negotiated, there's a lot left over the coming weeks that we'd have

to dig into. In Hong Kong, this is Jill Deas of Bloomberg Radio. All right. Thank you, Jill. In Europe, we have stocks surging the most since 2020. Let's get the very latest with Bloomberg. Ewan Potts in London. Good morning, Ewan. Karen and Lisa, an update for you on the roller coaster that is markets this week. Stocks surging as European investors respond to the US president's tariffs rollback. The Stocks 800 currently up 5%, just pairing some of the gains at the start of the session, but still the biggest surge since the beginning of the pandemic.

Banks up nearly 8% and technology stocks up 7%, currently the top gainers. But a lot of green on screens today with 586 companies higher on the stock 600 today. Live in London, I'm Ewan Potts, Bloomberg Radio. All right, Ewan, thanks. Well, it was quite a wild day on Wall Street with President Trump executing one of the biggest economic

policy reversals in modern presidential history. We get the recap with Bloomberg's John Tucker. John, good morning. And good morning, Karen. Well, in the end, it was the wild market swings that forced the president's hand. Jay Pulaski is with TPW Investment. Thank goodness for independent financial markets, which I believe bounded and forced the president and his team to reverse themselves. And that's a view shared by Professor Nirapalma Rao at the University of Michigan. You can

You can dictate tariffs, but you can't dictate how markets respond to tariffs. On the floor of the New York Stock Exchange, murmurs at first turned into a roar as the news of the tariff reversal hit. One trader said it was total shock and awe. The floor erupted. The S&P 500 ended the day up 9.5%. But Frances Donald at RBC reminds investors tariffs haven't totally gone away.

To me, last week I thought America's cut off both its arms. Today, one arm. Well, Trump implemented the three-month pause after a frenetic meeting with economic aides. The decision came as they were watching the bond market. The 10-year Treasury saw the biggest three-day jump since 2001. The president was confronting a worst-case scenario. Voters who had returned him to the White House because of inflation now face both increased prices and higher borrowing costs.

As the president then said, people were getting a little queasy. In New York, I'm John Tucker, Bloomberg Radio. Thank you, John. Meanwhile, Goldman Sachs economists have rescinded their forecast for a U.S. recession. We have that story from Bloomberg's Charlie Pellett. The call came after President Trump announced a 90-day pause on most of his previously announced tariffs. A deal's going to be made with China. A deal's going to be made with every one of them.

And there'll be fair deals. I just want fair. Goldman chief economist Jan Hatzius said we are now reverting to our previous non-recession baseline forecast. Goldman economists initially called for a U.S. recession, but rescinded it after the president announced the pause.

In New York, Charlie Pellett, Bloomberg Radio. All right, Charlie, thank you. Well, in addition to all the tariff talk, investors will have a key economic report on the docket this morning. We get the CPI report for the month of March and a preview with Bloomberg's Michael McKee. Consumer prices are forecast to have been relatively tame in March, with the annual rates of headline and core inflation falling.

But investors will be looking hard for signs of impending tariff price increases. Goods prices, which had fallen since the pandemic's end, have suddenly reversed course. It's possible buying ahead of Trump's import taxes pushed up the cost of some of those items. Electronics, toys and furniture are categories to watch.

As for Fed officials, they'll watch too. But given the tariff war has just begun, they'll wait for further months' data before considering any policy change. Michael McKee, Bloomberg Radio. Thanks, Mike. And metals rebounding this morning to halt their longest run of daily losses in 25 years. Copper up 5%, aluminum higher by 3%, and tin, well, that's surging, up more than 6%.

Lisa, shares of U.S. Steel, they are down 11.5% in early trading. The drop comes after President Trump said he does not want to see the steelmaker owned by a Japanese company. U.S. Steel and Japan's Nippon Steel have been trying to save their $14 billion deal after former President Joe Biden blocked it on national security grounds.

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. House Speaker Mike Johnson says he will try again today to pass the Senate-approved Republican budget blueprint. The speaker canceled a Wednesday evening vote after opposition from about a dozen holdouts. We're having very productive conversations with a good subset of the House Republican conference.

Everybody has the same idea and mission and goal in mind, and that is we want to deliver the one big beautiful bill.

Time is running out. Members are slated to go on recess tomorrow for over two weeks. The death toll from Tuesday's nightclub roof collapse in the Dominican Republic is now at 184. The search for survivors is over and victim recovery efforts are underway. Heavy machinery, cranes and crews are on top of what used to be the jet set nightclub across the street. Hundreds of family members are desperate for word on their loved ones who are still missing.

There's more support for the Maryland man who was allegedly deported by accident to El Salvador by the Trump administration. The family of Kilmar Abrego Garcia and the members of the Hispanic Caucus called for his release and return to the U.S. on Capitol Hill as the case works its way through the courts. His wife, Jennifer Vasquez Sura, was among the speakers. Kilmar, if you can hear me, I'm still fighting for you. Your brother...

Your mother, our children are still fighting for you. Maryland Senator Chris Van Hollen joined Abrego Garcia's family. We demand that Kilmar be returned home now.

What has happened here should never happen in the United States of America. Abrego Garcia was taken into custody nearly a month ago. It comes as the Department of Homeland Security confirms that the Trump administration will keep deporting alleged gang members to the notorious prison in El Salvador. 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.

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where money means more. Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. The Masters, 89th edition, tees off this morning at Augusta National. Clear skies in the forecast. Another chance for Rory McIlroy to win a major. He won four in four years, but now none in the last decade, despite so many close calls. 21 top 10 finishes, seven of them at the Masters. He's become an expert at trying to overcome coming up short.

It's something that I'm really proud of. You know, yeah, look, you have setbacks and you have disappointments, but as long as you can learn from them and move forward and try to put those learnings into practice, I think is very, very important. I feel like I've showed that quite a lot over the years.

the course of my career. Rory tees off 112 this afternoon. Scottie Scheffler, 1015 this morning. He's trying to join Jack Nicklaus, the only golfers to win three green jackets in a four-year span. Mets and Yankees had series-ending matinees. Mets held the two hits, suffered their first city field defeat. Miami won 5-0. Mets play tomorrow in Sacramento against the A's. Yankees will be back home for the Giants. They salvaged one in Detroit, 4-3. The new Yankee ace, Max Fried, superb seven scoreless innings.

The new Yankee closer, Devin Williams, not so good. Gave up three in the ninth. Had to be taken out. Toronto for the third straight night. Won in Boston. 2-1-11 is the Dodgers. Salvage won in Washington. 6-5 at the Garden. Rangers lost to Philadelphia. 8-5. There were nine goals scored in the third period. The Flyers' Tyson Forster had a hat trick. In Dallas, the return of Luka Doncic. He scored 45 points. 31 in the first half. The Lakers beat the Mavs. John Stasch, Edward Bloomberg Sports.

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All right, it's coming up at 5.13 on Wall Street. President Trump's dramatic U-turn on tariffs sent equities soaring yesterday. The president says he's bringing countries to the table for negotiation while signaling out China as his administration exerts maximum pressure on the world's second largest economy. They all want to make a deal. Somebody had to do what we did. And I did a 90-day pause for the people that didn't retaliate because I told them if you retaliate, we're going to double it. And that's what I did with China because they did retaliate.

All right. For more on the next steps for President Trump's tariff strategy, we want to bring in Bloomberg News trades are Brendan Murray. Brendan, thanks for joining us this morning. I want to start with this 90 day pause. I mean, what do you think pushed the president to pivot? You had Treasury Secretary Scott Besson said it was driven by strategy. I mean, where who is he facing this pressure from?

It was mainly the financial markets that were flashing signs that this was going to go from a stock market collapse and a problem for Wall Street to a problem for Main Street, a credit crunch. The Treasury market was throwing off signals that things were getting a little bit

disorderly, and that spells trouble for all sorts of ways that finance is transmitted through the banking system. So, the President surely listened to some of his advisors who said, look, we might have gotten out ahead of our skis on this, bitten off more than we can chew when it comes to doing trade wars with pretty much everybody in the world. Why don't we scale it back? Let's focus on the

the real target here, which is China. And that's what they did. And they rolled back all these high tariffs for everyone else except for China. China's tariff went to 125%, which over time will essentially decouple the U.S. economy from the Chinese economy if they're allowed to persist. So, there's a lot of pressure on China.

economically to try to defuse the situation. But China says, hey, look, we don't respond to threats. You want to talk with us, you have to come to the table with a more, as they would say, respectful attitude. So, we're at a real impasse here. And there's no telling what the next

what the next shots are going to be fired economically between the two. But it portends a rough couple of months if neither side is willing to budge. So how is this going to weigh on the Chinese economy specifically?

Well, it's going to hurt their exporters, number one. Their exporters already operate on very thin margins, and they're going to have to find other customers if the American market is closed off to them with these high tariffs. So, China is already actively trying to

to develop better ties with countries in Latin America and Africa and Europe. They're already less dependent on the U.S. market than they were, say, five years ago during Trump's first term, but they're going to have to diversify a lot more very quickly if they want to avoid any big economic headwind from the tariffs that President

Trump has put on them. Now, they haven't stepped up to the negotiating table yet. Will they? I mean, dig more into how much leverage China does have.

Well, China can cause a lot of pain, but separate from tariffs. They can limit the amount of raw materials and machinery and critical minerals that American companies need to produce what they produce. So, that would be one way they could cut things off. They could target U.S. companies that operate in China. They could make life difficult

through regulations and taxes and other ways to make life difficult for American companies in China. Generally, they can try to negotiate with other countries to team up with them rather than with the U.S. Whether you support President Trump's trade approach or not, he's made a lot of enemies

of former friends in the first two, three months when it comes to trade. So, China will be going around saying, "Hey, look, we're the reliable partner now. You can trust us. The U.S. is unpredictable and unreliable. So, team up with us." And that's another way that China can hit back.

Yeah, I want to get more into that. So is there this deeper meaning to this isolation? I mean, is it putting the pressure on other countries and their relationship with China? Well, I think that's one of the reasons among many why the Trump administration did the U-turn that it did yesterday. It said, look, we need our allies if we're going to stand up to China. And if we put these high tariffs on everybody, then we're just kind of

We're working against ourselves here. So, as Treasury Secretary Besson said, you look if we can put together some deals with our allies. That way, we could stand up much more strongly against China than we could if we're going it alone. Yeah, and Besson did say, you know, we can probably reach a deal with our allies at the end of the day. Is 90 days enough?

90 days is a flash in the pan when it comes to negotiating trade agreements. Trade agreements take, I think, the renegotiation of NAFTA, which was really just a rebranding exercise, took two years. So, that was the trade deal, the North American Free Trade Agreement. It was renegotiated in Trump's first term.

That renegotiation took two years in itself. Trade agreements take years and years. Some take decades. Because there's just so much detail that needs to be hammered out. There are thousands and thousands of pages of legalese. And so, if the president likes to say that he operates at warp speed,

So we'll see if that can be done in any meaningful way with trading partners who are first in line. Those are Japan, South Korea, Vietnam, and India are keen to sit at the table first.

All right. Thank you very much. Bloomberg's Brendan Murray. Let's bring in our next guest this morning to set you up for the trading day. We saw a 9.5% surge in the S&P 500 after the tariff pause was announced by the president. This morning, though, U.S. futures point to a lower open. Let's join Dan Morris now, the chief market strategist at BNP Paribas Asset Management. Dan, first off, let me just get your reaction. What was going through your head yesterday? Well,

Well, you know, you don't want to be able to say you expected it all along. Nonetheless, our view initially had been that the tariffs were a negotiating tactic, which adjusted at some point. Depending on the response that you had from the U.S. trading partners, there would be a response from the administration to just exactly when or what or how. But the fact that we did get one eventually from that point of view wasn't necessarily a surprise.

Is the market reaction a reflex or a return to risk appetite? I don't think we're quite that far yet. I guess if you think about what's happening in the futures right now for all the reduction in the reciprocal tariffs that we have for most countries, of course, you still have 10% tariffs, which is a non-trivial change that the market still needs to assess. There's all the uncertainty about how these negotiations go. As your previous guests mentioned, this is not going to happen overnight. And of course,

There's China, which is still a significant trading partner for the U.S., even if we know the size of the trade isn't commensurate on both sides, it still matters, and this is going to have an impact on companies in both markets. Yeah. Well, let's talk about the impact. With the first quarter results coming through, what are you going to be looking for, for the results of companies?

Well, I think at this point, you know, it's going to be nice to know how things were in the first quarter, but it's not going to tell us too much about the future. You're going to want to be looking at the guidance. And in fact, already over the last couple months, guidance has been a bit weak, though historically that tends to be the case around this time of the year. So it's hard.

To say that it's necessarily any worse than it has been historically, I think the dilemma is going to be both for investors and for companies is, you know, no one's really going to feel like they have a clear view on the future. So the guidance, you know, may be a lot of wait and see as opposed to a definitive view on we think profits are going to go up or we think they're going to go down. As in so many cases like this in moments of crisis, it is the bond vigilantes who kind of ride to the rescue sometimes.

in quotes there. Is that the case that we saw yesterday? I don't know that it's so clear that it was triggered by the bond market. I mean, even with, you know, we've had obviously big moves in Treasury yields. But if you look at the absolute level of yields, they're not all that extreme. And we obviously had fallen quite a bit previously when you were more worried about the growth impact. But at the same time, you know, Treasury yields had gotten up to nearly 5 percent not so long ago. So we're still honestly within that range. So I think the

The impact of the market on the decision, I think, is debatable. Who knows what the actual mental machinations were? But so far, again, we're in that range. It's trying to assess the impact on growth, the impact on inflation. Policy moves from the Fed, but compared to where you were prior to the election, it's not so different. All right. C plus G plus I. That adds up to growth in GDP. Each of those components, what do you see?

Well, consumption, clearly, always for the U.S., is the key one. I think it was important that retail sales in February bounced back. Of course, now we're in April, and February seems like ancient history. But we certainly do want to keep an eye on how we see consumer demand holding up, what is going to be the impact, again, even of those 10 percent tariffs. Now, of course, that doesn't mean everyone pays 10 percent more. You're going to have people looking for alternative products and so on. But clearly, that's going to be crucial.

The investment honestly should pick up, but I also appreciate that's not immediate. And we all know building a new auto factory in the U.S. isn't going to happen next month. So, perhaps more positive for the outlook in the medium term, for a second quarter, first quarter GDP is not going to be too meaningful. And what is the signal from the markets this morning? I mean, futures are lower after yesterday's surge.

Well, gosh, volatility is the name of the game. So at any point, you can see things swing quite a bit. And I think it's now trying to assess, on one hand, the relative improvement in the outlook with the suspension of the reciprocal tariffs, but one, trying to assess not only the impact of the current level of tariffs, both from China and the U.S.,

But how long are these going to stay? There is their scope for negotiation. How is that going to come about? And again, there's just as much uncertainty today as there was yesterday. Is 90 days even a realistic timeframe?

In terms of getting actual deals, probably not. But then I don't think that necessarily is going to be the factor that Trump is going to look at in terms of determining how the tariffs regress from here. I think he's going to be looking for dialogue. And if he would imagine one doesn't want to conjecture, but one would, I guess, at least hope that if there's a dialogue, that's going to be sufficient, hopefully, to mean the reciprocal tariffs stay off the table.

And at this point, what are you telling clients? Is this a market you can get into or was it a false dawn yesterday?

Well, in our multi-asset portfolios, we're still a bit cautious. I think we would like a bit more certainty and a bit more sense of how things are going to evolve with China. I mean, you can't dismiss it and assume that everything is going to be positive now. So we're still pretty neutral in terms of allocations between equities and bonds before feeling we have enough certainty to take a more leveraged, excuse me, a higher risk position in either market.

Is there enough certainty at this point to give us some sort of recession call or non-call? We weren't too—I mean, there was always a possibility of a recession, but that was under the assumption that the previous tariffs stayed in place indefinitely. And we always thought there was a low probability of that, if not zero. So, given that that's not the case, we wouldn't anticipate that they come back. We don't see a meaningful recession risk. And as far as year-end call for the S&P 500, I know that's unfair, but I'm going to put you on the spot nonetheless. Yes.

If we do come to an agreement with China, I think you would anticipate U.S. growth in the Canadian to be positive, and that should lead to higher earnings and overtime higher equity prices. 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.

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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. ThriveVent can help you plan your finances for the people, causes, and community you love.

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