Trump Open to Tariff Negotiation; Investors Await Labor Data and Powell
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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 global market sell-off continues as investors continue to digest the impact of President Trump's sweeping tariffs around the world and their effects on the U.S. economy. Concern is building that the duties will hammer America's growth, but the president now says he is open to bringing the tariff rates down. It's a

China will

probably say we'll approve a deal, but will you do something on the tariff? President Trump spoke aboard Air Force One last night, a day after reviewing a TikTok takeover offer from Oracle, Blackstone and Andreessen Horowitz. The Chinese-owned video app has until tomorrow to find a buyer or face a ban in the U.S.

Well, Nathan, despite yesterday's deep sell-off extending into this morning, President Trump is predicting the market will boom once the tariffs kick in. Vice President J.D. Vance is echoing that in an interview with Newsmax. I frankly thought in some ways it could be worse in the markets because this is a big transition. You saw the president said earlier today, it's like a patient who was very sick. We did the operation and now it's time to make the patient better. And that's exactly what we're doing.

Vice President J.D. Vance told Newsmax last night that the stock market will boom for a long time because we're reinvesting in America. Well, Karen, we continue to see the fallout from Trump's tariffs in Europe. Let's go to London, get the very latest with Bloomberg's Ewan Potts. Good morning, Ewan.

Nathan and Karen, no sign of the promised stock market boom in Europe today. The stock 600 is sliding as much as 2%, reaching its lowest since January 15th. While markets react to the tariff bazooka, Europe's political leaders are weighing their response. President Macron of France saying there must be collective solidarity, urging European businesses to reduce investments in the United States.

The EU's biggest economy, Germany, also pushing for a more robust response to the U.S. president's threats. In London, I'm Ewan Potts, Bloomberg Radio. All right, Ewan, thank you. Well, let's turn back to the markets here in the U.S., where futures again are falling following yesterday's massive sell-off on Wall Street. The Nasdaq plunged 6%. The S&P 500 dropped 4.8%. Well, the Dow fell almost 1,700 points, or 4%.

So what should an investor do? We have a couple of calls this morning and we bring in Bloomberg's John Tucker with the latest. John, good morning. Good morning, Karen. Let's start with what investors are afraid is going to happen. Bob Michael is with J.P. Morgan Investment. How tariffs stand as they were announced.

that's going to push the U.S. economy into recession. The market was caught off guard by the severity of the tariffs. They're even bigger than the Smoot-Hawley tariffs at the beginning of the Great Depression. Jane Foley is with Robobank. These are at the top end, really, of many market forecasts that we had. Seema Shah, principal global investors, sees the threat of higher inflation and slower growth, the dreaded stagflation.

And we know from looking at previous regime, previous market movements over history that stagflation is typically the regime where rarely does any asset class do particularly well. UBS downgraded U.S. stocks, warning of prolonged market volatility. Legendary investor Bill Gross warns potential dip buyers this is an epic economic and market event and don't catch a falling knife.

So what stocks do well in such an environment? Tobacco and household products. As Bloomberg columnist John Authors points out, people will always smoke and go to the bathroom. In New York, I'm John Tucker, Bloomberg Radio. Yes, indeed. Thank you, John. While all investors took a big hit to their portfolios, some of the rich and famous were particularly hard hit. Bloomberg's Lisa Mateo.

JOINS US WITH THAT ANGLE ON THE SELL-OFF. GOOD MORNING, LISA. GOOD MORNING THERE, NATHAN. YEAH, THE WORLD'S 500 RICHEST PEOPLE SAW THEIR COMBINED WEALTH PLUNGED BY $208 BILLION YESTERDAY. NOW, IF THAT SOUNDS LIKE A BIG NUMBER, WELL, IT'S BECAUSE IT IS. IT'S THE FOURTH LARGEST ONE-DAY DECLINE IN THE BLOOMBERG BILLIONAIRES' INDEX'S 30

14-year history. It's also the largest since the height of the pandemic. Billionaires in the U.S., they were affected the most. Meta's Mark Zuckerberg at the top. The company's 9% slide, well, it cost him $17.9 billion. Amazon's 9% plunge, well, that cost Jeff Bezos $15.9 billion in personal wealth. And Tesla's Elon Musk, he lost $11 billion. The only region where the rich saw net gains on the index was

the Middle East. Lisa Mateo, Bloomberg Radio. All right, Lisa, thank you. While the Trump tariff continues to impact global markets, Joe Livornia, chief economist at SMBC NICO Securities and a former Trump economic advisor, says let's see how things play out long term. We could disagree on the approach and the implementation. We could debate that. But

But ultimately, where is the economy next spring and summer? If it's turning up and turning up powerfully and it looks like the administration and its trading partners are moving back to the center,

then maybe all this is just a lot of noise and things have settled down. We have some minimal level of tariffs. There's some protectionism, but generally speaking, cooler heads prevail and things work out. SMBC NICO Securities' Joe Livornia says Trump's tariff announcement was more aggressive than he anticipated, but he has not yet changed his outlook for U.S. growth in 2025. Well, Karen, New York Governor Kathy Hochul says tariffs have already hit her state's economy. She spoke with Bloomberg's Balance of Power.

This is the 10th largest economy in the world. We have Wall Street, we have farms, we have a border 450 miles with Canada. So we have a trade relationship with Canada over $50 billion. So already here's what we're seeing. Droppings in bookings from Canadians coming to New York State, a huge source of tourism all the way to New York City, but certainly my hometown of Buffalo where Canadians come over all the time and they go to our sporting events, they shop in our stores.

New York Governor Kathy Hochul called the tariffs an unforced error and said the state may have to adjust how it funds various social programs in the coming year. Hear the full conversation on the Bloomberg Talks podcast. Watch it on the Bloomberg Podcasts page on YouTube.

Well, Nathan, in addition to the tariff-fueled market sell-off, investors will have another economic report to digest. At 8.30 Wall Street time, we'll get the jobs report for the month of March, and we get a preview with Bloomberg's Michael McKee. The Trump fallout is visible in the markets, but maybe not so much in today's jobs numbers. Federal hiring may have slowed or may come up slightly negative.

But most Doge job cuts came after the March survey week, and there's still a lot of confusion about who is actually fired. What the Fed will want to see is the unemployment rate, which they are viewing as a proxy for the overall economy. Again, the issue is that, too, is pre-tariffs. So absent big moves in either job creation or joblessness, today's jobs figures won't have a long-lasting impact on investor or central bank thinking. Michael McKee, Bloomberg Radio.

All right, Mike, thank you. Bloomberg Surveillance with Tom Keene and Paul Sweeney will bring you full coverage of the jobs report. Again, that's 830 Wall Street time right here on Bloomberg Radio. And, Karen, investors are also going to hear from Jay Powell this morning. The Fed chief is getting ready for a speech on the state of the U.S. economy.

Powell's address and that jobs report come as traders increase bets on rate cuts. Money markets now show 100 basis points of reductions by year's end. That's up from about 75 before the tariffs were announced this week. Catch Powell's full remarks at 1130 Wall Street time on Bloomberg Radio, Bloomberg Television and the Bloomberg Podcast YouTube page.

Well, Nathan, in other news this morning, Republicans are considering a new tax bracket for millionaires. And Bloomberg's Amy Morris has more from Washington. The goal is to pass the tax bill to renew the 2017 tax cuts, but they have to pay for it somehow. So sources tell Bloomberg in a departure from decades of opposition to such tax increases, Republicans are weighing a new tax bracket with a top rate of around 39 to 40 percent.

Another option being considered, raising the top tax rate from 37 to 39.6 percent for incomes above $626,350. That reverts back to the rate that was set by former President Obama. In Washington, Amy Morris, Bloomberg Radio.

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. President Trump has removed General Timothy Hawk from his position as director of the National Security Agency. That's according to two top Democrats on the Senate and House Intelligence Committees. One lawmaker says it makes us all less safe.

The Washington Post, who first reported the story, also says Hawke's civilian deputy at the NSA, Wendy Noble, was reassigned to another position within the Pentagon. Storm systems moving across the Midwest and South could bring 10 to 15 inches of rain in some areas. Bloomberg meteorologist Craig Allen has the latest. This is a wild, frightening, immovable setup right now. And so the same areas continue to get pummeled.

By torrential rainfall, thunderstorms that reach severe levels and spawn tornadoes, we've had over four dozen tornadoes reported already, and the same areas will be affected over the next 24 to 48 hours and perhaps right on through the rest of the weekend.

Bloomberg's Craig Allen. At least seven people were found dead after tornadoes tore through the South and Midwest. Five of those victims in Tennessee. That includes a massive EF3 Wednesday night in Selmer. Tennessee Governor Bill Lee. Entire neighborhoods that were completely wiped out. Apartment complexes that were destroyed by the tornado.

Many, many families displaced, loss of life. Governor Bill Lee. In Bristol, Pennsylvania, three people were killed when they were struck by an Amtrak train heading from New York to Philadelphia. Police Chief Joe Moores. When our officers arrived, the sergeant was starting to head up.

to the subjects up on the railroad tracks when an Xceler high-speed train traveling southbound towards Philadelphia struck all three subjects that were up on the track. Service between New York and Philadelphia was temporarily suspended. Finally, the Trump administration is poised to block $510 million in federal grants and contracts for Brown University due to the school's response to anti-Semitism on campus.

The potential freeze follows similar moves against Columbia, Harvard and Princeton. 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.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.

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Time now for the Bloomberg Sports Update. Here's John Stanshauer. John, good morning. Good morning, Karen. The Mets are back at Citi Field. Home opener starts at 3 o'clock. Tyler McGill on the mound against Toronto. The Pirates have their home opener just after 4. Yankees arrived in Pittsburgh late last night. Tough turnaround. The Yanks finished the season-opening homestand with a quick start against Arizona. First inning, a double, a walk, and Aaron Judge at the plate. Driven out to right center field and deep. There it goes.

Goal!

salvaged a game in the series. The Red Sox won 8-4 at Baltimore. Alex Bregman, his first Boston home run. Sox and the Cardinals this afternoon at Fenway. In Brooklyn, Mets lost to Minnesota 105-90. And Milwaukee's win at Philadelphia, Giannis Antetokounmpo, 35 points, 17 rebounds, 20 assists.

Nick say Jalen Brunson will practice. They could return from his ankle and dream tomorrow's game in Atlanta. The Rangers tomorrow visit the Devils. Montreal won last night. The Canadians have a two-point lead on the Rangers for the last playoff spot in the East. The NCAA Women's Final Four starts tonight in Tampa. And for our listeners on 99.1 in Boston, 1130 in New York, you can hear the games tonight.

Starting at six, the men have their semifinals tomorrow in San Antonio. The Patriots have traded quarterback Joe Milton to Dallas for a fifth-round draft pick. John Stasch, Bloomberg Sports, Karen 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 are coming off their worst day in nearly five years. Roughly $2.5 trillion wiped from the stock market.

after President Donald Trump unleashed new tariffs on roughly every country in the world, and the losses continue into the early morning hours. But the president says he's not worried about the market reaction. The markets are going to boom. The stock is going to boom. The country is going to boom. And the rest of the world wants to see, is there any way they can make a deal?

That was the president speaking after the S&P 500 fell 4.8% the day after his tariff rollout. Joining us this morning, Ben Laidler, head of equity strategy at Bradesco Securities. Ben, have you seen anything like this in your career? Good morning. My background is in emerging markets, so unfortunately I have, but we certainly haven't seen it in a while. And this is early days of markets, right?

trying to price in what was a near worst case scenario with higher tariffs than expected, more opaque tariffs than expected, and more open-ended tariffs than expected. So this has sent U.S. recession risks through the roof, and the market is grappling with that and starting to try and price this in. Is recession turning into a base case for you?

So recession probability risks were probably 30% last week and rising. Now they're 50 and rising. So that's uncomfortably high. The big debate in markets right now is, are we going into a real recession or is this just a growth scare? I'm leaning towards growth scare, but I frankly wish I had more confidence in that opinion than I do.

Part of the debate as well is what to do about this ongoing dip in the market. We heard Bill Gross warn investors not to try to catch a falling knife. Ed Yardeni of Yardeni Research says this is a buying opportunity. Which way do you swing with this kind of uncertainty?

Yeah, as I said, I'm leaning towards growth scare, not recession. If that's right, then I think you gradually dribble money into this market. You dollar cost average it. You don't jump in with both feet. This is probably more than a one-day repricing event. I guess the three things to watch, one, economic uncertainty in the U.S., absolutely sky high right now. One hopes that that gradually eases and comes down from here, maybe as we get

sort of more visibility on some of these tariff deals two the underlying data does need to stay resilient and we have a jobs number today and three some of this depends on the rest of the world the degree of tariff retaliation we get do we go down this um you know into a full-blown trade war or is there some restraint those are the three things that i'm watching i'm modestly optimistic that

they all turn out to be a little bit less bad than expected. But as I say, early days. Yeah. To that point, we heard the president just last night saying on Air Force One that he's willing to lower tariff rates as if he gets some kind of phenomenal deal from other countries. What does that tell you about what the tariff outlook could be coming from this White House?

It tells us that it may ease that this is transactional, but that's sort of part of the problem. It's uncertainty that markets and investors hate. And this is just prelongs that uncertainty. But again, against the terrible backdrop, this maybe becomes a little bit less bad. And, you know, that may be all you need when markets have got this stressed.

We do have a speech from Chairman Powell coming up as well. So many potential catalysts for this market. Could the Fed chair change the narrative here later today?

He may, but it may not be for good reasons. If he talks and starts talking about the necessity for more cuts, then I think, you know, that may make a bad situation worse because he's not he's only going to be doing that if, you know, the growth risks are spiking. Having said that, you know, I do think there is still a Trump put out there just maybe further away that we would like. Ultimately, I think there is still a Fed put out there. Yes, there's a lot of talk about

sticky inflation and everything else. But in the Fed's dual mandate, they've always prioritized slower growth over higher inflation. And we are going into a growth slowdown. It's just a question of how big. So the market's now pricing five cuts over the next year or so rather than three. So, you know, the market's certainly hoping and, you know,

Maybe we get a little bit of help from Fed Powell, from Jeff Powell later today. We're going into another earnings season later next week as well. How could all this play into earnings as we start to get those reports coming out?

So I think this is all, you know, earnings per se will probably be fine. I think the focus is all going to be on the guidance where there is now just complete uncertainty, especially for anybody that's doing business outside the United States. So I think people are going to be very focused on the guidance, companies trying to grapple with what this means for earnings. Guidance is absolutely going to be coming down. It's coming down from sort of double digit levels. So it's from a good place.

But again, the risk is all on the downside. That's what we're pricing in right now. All right, Ben, really appreciate you coming back on with us this morning. That is Ben Laidler. He is head of equity strategy at Prodesco Securities. Karen. Nathan, repeating some of our top stories this morning, President Trump says he's willing to cut tariffs if other countries offer something phenomenal. The world's richest lost a combined $208

billion in yesterday's global stock sell-off. New York Governor Kathy Hochul tells Bloomberg the tariffs are already hurting state tourism and sales tax revenue. She says the potential silver lining of boosted manufacturing could take years. And economists again have a speech from Jay Powell and a March jobs report to consider today. The consensus calls for

140,000 new jobs and the unemployment rate steady at 4.1%. And we have more on those stories coming up. Nathan. All right, Karen. Thank you. Matter of fact, we have more coming up right now when it comes to the economy. Let's bring in U.S. economist at Citi, Veronica Clark, as we assess the tariff impact and look ahead to March jobs. Veronica is with us this morning in our Bloomberg Interactive Broker studios. Good to have you with us.

On the scene, Veronica, where are you putting recession odds after the tariffs? Good morning. Yeah, good morning. Thank you for having me. I mean, we had already been seeing a lot of slowing in the economy even last year, headed into the start of this year. We've had a particularly soft start to consumer spending the first couple months of the year. So we were already expecting growth to be pretty close to flat for a couple quarters for the year.

Obviously, an added tariff risk could certainly push that over into something like a couple quarters of negative growth. Are you putting specific numbers on where inflation could go, where GDP could go? Yeah, I mean, this, of course, is going to be more inflation in our forecast just mechanically than we were expecting. Of course, the tariffs themselves were a lot bigger, adding something like another percent maybe to CPI, PCE inflation.

maybe getting close to 4% for the end of the year. We are expecting that that's just somewhat mechanical. You'll see it in goods prices. Maybe the spillover isn't as broad because it will also shrink growth. You know, something maybe close to a percentage point, you know, drag on consumption, investment off of growth for the year. You're hinting at the box that that could put the Fed into if we do see at least a short-term rise in inflation along with

slowing growth. What does the Fed do in a scenario like this? Yeah, it's a very tricky situation, of course, and seeing a stronger inflation data can, of course, be uncomfortable. But it is interesting that the Fed is going into this tariff inflation period, expecting that tariff inflation will be transitory. And I do think that's somewhat the right way to look at it. You know, if growth is much softer, then, yeah, you'll see goods prices increase, but you won't see the spillover necessarily to services or

Obviously, long-run inflation expectations will be an important part of that. But I think the growth risk will really be what is new and concerning for them. That was a risk that was not as evident to Fed officials maybe six months ago. And I do think they'll be reacting to that and they'll be cutting a lot.

more this year. You know, when you use the word transitory, I'm sure a lot of listeners goosebumps go up. What is the risk that this could be something less than transitory, that we could see a more structural change to inflation going forward? Yeah, it was a bit interesting to hear Powell use that word a couple of weeks ago. I

I think this is just a very different economy than 2022, a different demand backdrop than 2022. The labor market has already been loosening. We've already seen the unemployment rate gradually rise. Hiring rates are very low. Wage growth is slowing. And so this is not...

an economy that's as prone to those self-fulfilling kind of inflation wage price spirals that we saw a couple years ago. Okay, since you mentioned the coolness that we're seeing in the labor market, let's transition to that. The March nonfarm payrolls report coming up in just about three hours time. What's your expectation, what we're going to see

from the Labor Department later this morning? Yeah, this one, the risks for the market, I think, are very asymmetric because if it's strong, it's before this period where all these risks from tariffs have escalated. But if it's weak and we do think we'll see more slowing, we have 95,000 jobs for March.

the unemployment rate rising to 4.2%, well, then that's a labor market that was already slowing before these new headwinds. Is it slowing because of government layoffs? Are we going to start to see that filter into these numbers? There were...

more layoffs that happened in February. I think the tricky part, though, is that there was a court order to rehire some of these employees in March, so maybe they don't drop off of the payroll number right now. Maybe that's really more in the summer when we're getting those big government layoffs. I think this report and maybe even the next one, though, the weakness will maybe be driven by weak hiring. This is a time of year when hiring is supposed to pick up, and uncertainty, of course, could constrain hiring even more, and that alone can slow job growth. Yeah.

Speaking of that uncertainty, what could the implementation of tariffs mean for labor demand? Yeah, I think the normal expectation would be that businesses are not going to be hiring right now. Of course, you're going to hold back on adding any extra costs if labor demands.

Costs would add to tariff costs. So I think the first response is to pull back on hiring. But eventually, if your tariff-related input costs are going up, you might start to see layoffs. There was a small uptick in the Challenger job cuts by reasons being tariffs in the report that we got from Challenger yesterday. We might see that rise more as we get into the summer.

What should the bigger focus be for the Fed's dual mandate, maximum employment or the inflation outlook, given these new tariffs? And we've got about a minute left. Yeah, I think they'll obviously have to balance both sides of that mandate. And we are coming off of a period where inflation was the main concern. So they will be sensitive to that. But again, I think it goes back to how they're thinking about this kind of inflation and

They're expecting to see it in goods prices and the data temporarily, but that it would be a one time level shift higher in certain prices. And it would not be a broad base necessarily. I think if you're seeing softer wage inflation, services inflation, they're going to be much more worried about the employment side of the mandate.

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.

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