US-China Possible Trade Talks; Apple & Amazon Disappoint
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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 move we're seeing in markets this morning comes on optimism that trade tensions between the U.S. and China may be easing. China says it is assessing the possibility of trade talks with the U.S. It is the first sign since President Donald Trump hiked tariffs last month that negotiations could begin between the two sides. We get more from Bloomberg News Senior Editor Bill Ferrys.

It's really hard to know what's happening here or if it's the market really looking for any sign of a potential change, any sign that one side or both sides are simultaneously starting to blink here. I mean, China's commerce ministry said on Friday that it noted the willingness of some senior U.S. officials to talk about

about tariffs. On the other hand, you've had the U.S. saying that they want China to reach out, that China can't sustain these tariffs for very long. This latest statement doesn't seem that different on the Chinese side, but it is being taken as perhaps

an olive branch that could allow both sides to maybe save some face and start talks, even if that's at a lower level. And Bloomberg's Bill Ferry says the economic fallout from the confrontation may be giving new momentum to efforts to bring both sides to the table. The U.S. economy contracted at the start of the year. China's factory activity slipped into its worst contraction since December of 2023.

Let's turn to politics now, Nathan. The White House is set to release its first budget request to President Trump's second term. The so-called skinny budget will call for $557 billion in non-defense spending. That's a nearly 23% drop from current levels. National security spending, meanwhile, would rise to a record $1.01 trillion, a 13% increase.

Administration officials say the budget includes significant cuts to environmental programs, foreign aid, the education department, national institutes of health, and housing and urban development. The military boost would pay for the Golden Dome missile defense as well as shipbuilding border security and a military pay raise.

It's not clear how the budget request would handle entitlements. They represent the bulk of federal spending. And, Karen, the president has signed an executive order to end federal funding of public broadcasters NPR and PBS. Bloomberg's John Tucker joins us with that part of the story. John? Yeah, Nathan, the move shouldn't really come as a surprise. Back in March, President Trump was asked if he had any plans to yank funding for NPR and PBS.

I would love to do that. I think it's very unfair. It's been very biased with the whole group. I mean, the whole group of them. Republicans have long sought to eliminate funding for NPR and PBS, and President Trump has repeatedly criticized press coverage of his administration. Both public media outlets do receive a small portion of their funding from the federal sources.

PBS is set to take the larger hit. The broadcaster relies on federal funds for about 16% of its overall budget. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. While the other major story out of Washington is a shakeup in the West Wing, President Trump is naming his national security advisor, Mike Waltz, to be the next U.N. ambassador. Back in March, Waltz admitted he mistakenly added Atlantic editor Jeffrey Goldenberg to a Signal Group chat about attack plans in Yemen.

Now, if confirmed by the Senate, he'll be moving out of the Oval Office to U.N. headquarters in New York. We get more from Bloomberg Washington reporter Tyler Kendall. In terms of a promotion versus a demotion, the national security advisor is in the West Wing. He sees the president every day. He gets a security detail, much like the chief of staff, that other members of the administration don't necessarily get.

He also has been at the forefront of most of, if not all, of these foreign policy negotiations, particularly when it comes to Ukraine and Russia, as the administration tries to push forward that they are making progress. They're announcing that critical minerals agreement just the other day. He was the one that went to Saudi Arabia to kick off those talks.

And that's Bloomberg's Tyler Kendall. The president says Secretary of State Marco Rubio will serve as interim national security advisor. Rubio is also leading the U.S. Agency for International Development after it was targeted for cuts, and he's also acting head of the National Archives. And Karen, President Trump is putting new pressure on Iran. He says he will impose secondary sanctions on nations or companies that buy Iran's oil.

The president posted on social media, quote, they will not be allowed to do business with the United States of America in any way, shape or form. Negotiations over Iran's nuclear program hit a wall this week. A meeting that had been set for tomorrow was postponed and U.S. officials said they never agreed to take part in the latest round of talks in the first place.

We turn to the markets now, Nathan, and futures are higher following eight straight days of gains for the S&P 500. As we mentioned earlier, there is optimism the U.S. and China will begin trade negotiations. Two stocks that are not participating in the euphoria are Apple and Amazon. Shares of Apple are down 3%. The iPhone maker's earnings report failed to soothe investor concerns about its biggest challenges.

including escalating tariff costs and a slowdown in China. CEO Tim Cook says sales from China fell more than expected 2.3% to $16 billion in the second quarter. Analysts say that shortfall is an ominous sign for what was once a growth market. And current shares of Amazon are down more than 2%. The world's largest online retailer says it's bracing for a tougher business climate due to tariffs and economic turmoil. Amazon CEO Andy Jassy highlighted the growth uncertainty.

Obviously, none of us knows exactly where tariffs will settle or when. We haven't seen any attenuation of demand yet. To some extent, we've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact. And despite the headwinds, Amazon CEO Andy Jassy reported a 9% increase in first quarter sales.

In addition to earnings, Nathan, investors will have a key economic report to look forward to. The April jobs report. We get a preview with Bloomberg's Michael McKee. The jobs report may be the most important economic indicator going forward, but maybe not this one. The president's big tariff announcements came just ahead of the April survey week, so companies likely didn't have a lot of time to react.

We may see some reduction in federal government employment, but for the most part, the April figures should suggest private sector hiring is on hold. Also, the Fed watches the unemployment rate rather than overall job creation, and unemployment is forecast to hold steady.

Michael McKee, Bloomberg Radio. All right, Mike, thanks. We'll stay with Bloomberg for special coverage as we break down the numbers and get live expert analysis. That's at 830 Wall Street time on Bloomberg Radio and the Bloomberg podcast page on YouTube.

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. Supreme Court Justice Katonji Brown Jackson denounced what she called relentless attacks on the federal judiciary. Jackson says efforts to intimidate judges were threatening the Constitution and the rule of law. She told a group of federal judges and lawyers at a conference in Puerto Rico last night, the attacks are not random.

The Transportation Department is rolling out a new plan to address a shortage of air traffic controllers across the country. The new initiatives include financial incentives to graduates.

National Air Traffic Controllers Association President Nick Daniels says staffing at U.S. airports is nearing a 30-year low. This is a commitment to the dedicated men and women keeping our skies safe. It's a real, tangible move towards building and sustaining the workforce that America needs. It's part of what caused a domino effect delaying air traffic for several days at Newark Airport.

New York Governor Kathy Hochul joined MTA officials and law enforcement to highlight a state budget deal to make subways safer for all riders and transit workers. Hochul, speaking from a subway station, says these major investments increase the presence of law enforcement and make crucial safety upgrades and protective barriers. It may be overstated, but this is the beating heart of this city. This is what sets us apart from all others.

getting people anywhere they want to go within minutes. It's extraordinary. The State Department says Secretary Marco Rubio has spoken with senior officials in India and in Pakistan in an effort to cool tensions. Pakistan's ambassador to the U.S., Rizwan Saeed Sheikh, stresses that they want peace, but his country will stand up for itself. We need a peaceful neighborhood, and any allegations of that sort, they would need evidence.

It comes after a deadly attack on Kashmir. Detailed Army plans for a potential military parade on President Trump's 79th birthday call for more than 6,600 soldiers, at least 150 vehicles, 50 helicopters, and seven bands.

According to the Associated Press, the planning documents represent the Army's most recent blueprint for its long-planned 250th birthday festival on the National Mall June 14th. 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.

Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. Wild game to end a wild series. One where the road team won five games in a row, and each of the last four games were decided by no more than three points. Game six in Detroit. Knicks had a great start, led by 15, but as was so often the case in the series, the Pistons...

responded. They had the lead by halftime. A strong third quarter by the Knicks. They were back ahead by 13. Sure enough, it was the Pistons' turn. A 20-2 run in the fourth quarter. A seven-point lead, and everyone then expecting there to be a game seven back in New York. But the Knicks rallied, had the ball with the game tied. Brunson holding. Knicks trying to wait till the end. Brunson puts up a three. Dylann Brunson hits the three with 4.3 remaining. And the Pistons' call time

And Mike Breen saves those double bangs on MSG for really big shots. This one a series winner by Brunson who scored 40 points as the Knicks won 116-113 to take the series 4-2 and advance to play the heavily favored Celtics. Game one Monday in Boston, Detroit. Still winless in home playoff games since 2008.

And the Clippers headed to a game seven. LA won 111-105. Three teams moving around. Two of the Stanley Cup playoffs. Toronto, Vegas, and Edmonton. Colorado beat Dallas. They'll play a game seven. It appears the Rangers have their new coach. Contract talks said to be advanced.

with 57-year-old Mike Sullivan drafted by the Rangers in 1987, though he never played for them. He got fired by Pittsburgh three days ago after spending a decade coaching the Penguins, winning two Stanley Cups. Just a second two-game losing streak for the Mets. Arizona won at Citi Field 4-2. The two Mets runs were solo homers by Juan Soto.

His first two homers hit at home. Mets play tonight in St. Louis. Yankees are home for Tampa Bay. Toronto beat the Red Sox 4-2. The Nationals won 4-2 in Philadelphia. John Staschauer, Bloomberg Sports, Karen Nathan.

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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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. On a morning we may be seeing the first sign of a thaw in the trade freeze between the U.S. and China with 145% tariffs still in effect on Chinese exports.

The Chinese Commerce Ministry now says it is evaluating the possibility of trade talks after getting messages from the U.S. through relevant parties. John Gong is a former consultant to the Commerce Ministry. We've been waiting for this for a long time. I think the statement that the Ministry of Commerce is evaluating really means that, first of all,

there's a go-ahead from the very top of the leadership in China. John Gong, now with the University of International Business and Economics, spoke with Bloomberg from Beijing this morning, and we're joined now by Bloomberg Radio and TV anchor Kriti Gupta. So, Kriti, how to take this statement from the Commerce Ministry that they're thinking about, thinking about talks with the U.S.? It almost feels like

how the Fed used to talk about thinking about doing something with interest rates. Good morning. Good morning, Nathan. Yeah, it's a tricky one because, of course, we know that CCTV, which is media in China associated with the government of China, earlier reported that that was kind of happening earlier this week. So this is a confirmation now from the government itself that this is bad.

largely being considered. I think one guest this morning that I think summed it up perfectly said that this is a drizzle in what's been a drought for weeks, if not months. And I think that's one way to kind of assess perhaps the early thawing that we're seeing in this terms of relationship. But really,

We should remind our audience that this is just what we're hearing from China. It's coming amid a backdrop of what Donald Trump has repeatedly emphasized. It needs to be the first step that comes from China and not from Washington, D.C., whereas he's also said in previous iterations that Xi Jinping needs to contact him directly in order to begin talks. Scott Besson saying something similar, and that's up to Beijing to take the first step to de-escalate the dispute. So we will actually see if China does that when they've repeatedly asked for respect for

when it comes to taking that step. But you got to think, Critty, that both sides have, you know, sort of motivation to get to the table after the GDP read we got here in the U.S. and the shrinking in factory activity that we saw out of China.

absolutely have motivation. I would argue that the push from the American side may have to do with some of the early readings on the tariff impact that you're already seeing. And I think a great example in just the last 24 hours of that has been coming out of Apple and Amazon, who are already seeing pressures that are going to ultimately fall on the consumer. Nathan, if I can go there and drive some numbers around this. Apple is a great example. They're talking about a $900 million cost in the current period when it comes to the effect of the planned tariffs. And that's just

on one quarter. This still hasn't fully had the full effect, not to mention what happens when the 90-day reciprocal tariff kind of extension happens as well. Amazon is another great example, really talking about headwinds when it comes to tariff-related turmoil. We know that this week as well, that was something that became a bit of an issue, as you know, in Washington, D.C. as well, where it was reported and then later denied by Amazon that tariff prices may show up in some of the kind of

the number you see at the checkout, for example, when you buy something from Amazon, something that did, of course, get the ire of Washington and the Trump administration. Of course, Amazon pulling back on those comments, saying that it was never going to happen. But I think it really highlights the uncertainty that a lot of these corporations are dealing with when it comes to keeping the consumer engaged while also adding pressure to the Trump administration. So just quickly, Critty, what's the signal we could be taking from the market with the broader market moving higher while these big tech

names are still moving lower on some of these ongoing trade concerns. Well, if you do start to see green on the screen in today, sustain into the weekend, it would be the nine straight winning day for the S&P 500. That is the biggest winning streak going back to 2021. So we'll see if that is ultimately a sentiment change. But again, we're going into a weekend. Anything can happen. 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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