April 7, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) A flight from global equities accelerated Monday and investors piled into haven assets as the fallout from US President Donald Trump’s tariffs deepened after China announced retaliatory measures.
(2) President Donald Trump and his economic team dismissed investors’ fears of inflation and recession, offering no apologies for the market turmoil sparked by sweeping global tariffs and defiantly insisting a boom is on the horizon.
(3) China’s objections to new US tariffs stalled a deal to sell off TikTok and keep it operating in the US, President Donald Trump said Sunday.
(4) Bill Ackman and Stanley Druckenmiller slammed President Donald Trump’s decision to launch expansive global tariffs, which have plunged markets into chaos.
(5) UK Prime Minister Keir Starmer said he’ll announce measures this week to support Britain’s economy and businesses amid the threat posed by Donald Trump’s tariffs.
(6) Finance ministers from Italy and Spain cautioned against too aggressive a response to US President Donald Trump’s tariffs, underscoring the European Union’s divide on the matter.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They say it's the Bloomberg Daybreak. Youurate podcast available every
morning on Apple, Spotify or wherever you listen. It's Monday,
the seventh of April in London. I'm Stephen Carroll coming
up today. The global stock market route deepens as reciprocal tariffs,
recession fears, and growing retaliation concerns sent investors fleeing from
risk assets. Donald Trump rejects the reaction from traders as
(00:33):
he remains defiant on his global tariff barrage. Plus, the
only certainty is uncertainty. Bill Ackman warns of an economic
nuclear winter, as Cairs Starmer says, the world as we
knew it has gone. Let's start with a roundup of
our top stories. Global equities are plummeting again today as
investors continue to fear Trump's tariff salvo could lead to
(00:55):
a recession. Hong Kong's benchmark index has seen its biggest
intra day drop in more than sixteen years, and the
losses on Japan's main index triggered it's circuit breaker. The
MASCI specific index is set for its worst drop since
the financial crisis. Futures are pointing to heavy losses in
Europe and in the United States with drops of more
than three percent ahead of the market open. Head of
(01:17):
economics at Renaissance Macro Research, Neildutta says markets are sending
a clear message.
Speaker 3 (01:23):
You're getting to a point now where I think the
market will take on more of a role of like
an active informant, where it begins aggregating macro risk factors
and outcomes and it tells you about the future, and
then the stock market does kind of take on this
macro role, and that's kind of where we are. So
if the stock market goes down, that creates a way
of tightening financial conditions, exacerbating the uncertainty that's already out there,
(01:43):
and you continue to have a negative feedback loop until
policy gets investors to shift their attention.
Speaker 2 (01:50):
L Jetta was speaking as the global right in equities
is matched by a surge in the so called fear
index the VIX, which is now at levels not seen
since the pandemic. After the events of recent days, economists
that Goldman's sacks have raised the probability of the US
recession from thirty five to forty five percent. They now
expect the FED to deliver three consecutive twenty five basis
(02:12):
point insurance cuts starting in June, but war in the
Central Bank could deliver much deeper cuts in the event
of a recession. The analysis underscore is the heightened concerns
across markets as Trump attempts to reshape global trade in
Washington's favor. Here's Bloomberg opinion columnst. Muhammadalarian.
Speaker 4 (02:30):
I think the hardest thing for the markets right now
is not only to try to evaluate where the destination is,
but how bumpy will the journey be. And I'm saying
that because we have technicals playing in margin calls are there,
people are in fact reducing winners and losers across the
board to waste cash. Fund managers are worried about actual
(02:53):
and expected outflows.
Speaker 2 (02:54):
Maminalarians, speaking there as Goldman Sachs economists, said their baseline
forecast for some growth still rests on the assumption that
US tariffs will be reduced from their current level. Meanwhile,
President Trump and his team are doubling down on their
tariff plan as he and his economic team dismissed investors'
fears of inflation and recession. Speaking on Air Force one yesterday,
(03:17):
the US leader struck a determined tone and repeatedly defended
the tariff barrage unveiled last week.
Speaker 5 (03:25):
I don't want anything to go down, but sometimes you
have to take meticine to fiction something.
Speaker 2 (03:30):
In comments that may fuel further market fears, Trump said
he wouldn't strike deals to cut the highest tariff rates
unless the countries in question eliminate their trade deficits with
the US.
Speaker 5 (03:41):
I spoke to a lot of leaders, European agent from
all over the world. They're dying to make a deal,
but I said, we're not going to have deficits.
Speaker 2 (03:51):
With your country. Trump's insistence the trade deficits need to
be balanced to gain tariff relief will cause concern in
many countries, as on that aim would be entirely separate
from eliminating any trade barriers or tariffs they may have
on the US. Trump's comments are the latest in a
parade of defined signals from the President and his top
(04:12):
economic advisors. On Sunday, US Treasury secretaries got Besson struck
a defiant tone in the face of sharp declines in
global financial markets. Speaking to NBC's Meet the Press, he
rejected the idea that they would cause a protracted US contraction.
Speaker 6 (04:27):
I reject that the assumption there doesn't have to be
a recession. Who knows how the market is going to
react in a day, in a week. What we are
looking at is building the long term economic fundamentals for
prosperity that I think the previous administration had put us
(04:48):
on the course toward financial calamity.
Speaker 2 (04:51):
Treasury secretaries got basin. Speaking there to NBC's Meet the Press,
Besen said that more than fifty countries had cold the administration,
but any talks are going to take time. Prominent investors
and traders have also been taking to social media to
make their views on the tariffs clear. Bloomberg's Ewan Parts
has more.
Speaker 7 (05:10):
After two trading sessions which saw five trillion dollars wiped
off the value of US stocks. America's of S class
is coming to terms with its new diminished status in
the era of President Trump's trade offensive. Bill Lackman, the
founder of Pershing Square and vocal Trump supporter, posted on
x that he strongly believes launching tariffs against the entire
world is a mistake. Ray Dalio, the founder of Bridgewater,
(05:33):
the world's largest hedge fund, warns the tariff package will
be significantly stagflationary for the United States. Ackmann went on
to say the White I should call time out on
the plans. He says, otherwise we're heading for a self
induced economic nuclear winter in London, I'm une pots Bloomberg Radio.
Speaker 2 (05:50):
The UK's Prime Minister Kris Starmer says he'll announced new
measures to support businesses in the face of the global
trade war we Writing in a newspaper over the weekend,
he said the world as we knew it has gone.
Treasury Minister Darren Jones says the support package will involve
investment in industrial policy and public services.
Speaker 8 (06:08):
Globalization as we've known it for the last number of
decades has come to an end. That's why we need
Britain to be strong and resilient, also build out our
relationships with our allies and partners around the world. But
also why we have to invest in the domestic economy,
both the UK businesses but also our public services, so
that we have workers and communities who are well skilled
(06:30):
able to take advantages of jobs.
Speaker 2 (06:33):
Jones gave no details, but after he spoke, the UK
government announced it would ease its green targets for car makers.
Britain is so far said it won't retaliate against Trump's
tariffs as it helps it can secure a deal with
the United States. Finance ministers from Metally in Spain have
warned against reacting too aggressively to Donald Trump's tariffs. Their
remarks contrast with a push by France and Germany for
(06:56):
a more forceful reaction. Miguel Berger, the German ambassa to
the UK, says trade ministers are drawing up a list
of potential countermeasures.
Speaker 9 (07:06):
I think it's the biggest assault we have seen since
the end of the Second World.
Speaker 10 (07:10):
War on global trade.
Speaker 9 (07:11):
We all will have to find a way to deal
with it, and European trade min iss going to meet
on Monday and then take a decision on how to react.
Speaker 2 (07:21):
Germany's ambassards to the UK Mcgilberger. They're speaking ahead of
the meeting of EU trade ministers in Luxembourg today. His
comments come after the European Central Banks Executive Board member
is about Schnabel suggest that the US tariffs may signify
that the era of free flowing global commerce is over.
And those are your top stories on the markets. The
MSCIASA Pacific Index seven point seven percent lower, then Hangsng
(07:45):
in Hong Kong, eleven point four percent lower, eurostocks, fifty
futures four percent lower, SMP Miani's on Wall Street three
point three percent lower. The Brent crew to price bren
Crew down by two and a half percent to sixty
three dollars and ninety three cents barrel. The ten year
treasury yield down seven basis points to three point nine
two percent. On currency markets, the Japanese end strengthening six
(08:08):
tenths against the dollar. The euro is a touch stronger
today at one oh nine to eighty three, the pound
at one twenty nine going into Monday's trading session. With
continuing full coverage of the market reaction to Donald Trump's
tariffs today, we'll get into details of that in a
moment and tell you more about how major economic powers
are thinking of responding. But if you want to take
(08:31):
a step back and perhaps think about how to understand
everything that's happening at the moment, I'd recommend Sean Donnan's
weekend essay from Bloomberg, looking at the title the Chaos
is Not Going to End, and looking at how the
effects of life, as he puts it, in what it
describes as the perpetual uncertainty machine. So that we've had
this blizzard of policy moves. It seems like every day
(08:52):
the global policy sands are shifting and they've created a
situation which is one exhausting and two has no end
in sight. As Shawn points out, if you're managing money today,
you're looking at a fracturing global economy where it's hard
to find a pattern. If you're building a business, you
need to be nimble, and if you're waiting for the
uncertainty to end, where he could be waiting for a
(09:12):
long time as well. Looking at how economists are trying
to deal with this as well. What Seawan Donald's writing
about is because the policy itself keeps moving makes it
very difficult to try and make predictions, which we're already
getting very tricky given the complexity of the global economists,
and hats off to our economists here at Bloomberg have
been doing their best to give us an assessment of
what the economic damage is from these tariffs as well.
(09:36):
There is, as Sean Wright's, no longer a sleepy technocratic
middle ground or any order to lean into in moments
like this, well worth the read. You'll find Sean Donald's
essay on Bloomberg Dot com or on the terminal. Well,
let's get back to that traumatic sell off on markets,
equities and Asia plunging futures pointing to a sharply lower
open here in Europe and on Wall Street investors continuing
(09:57):
to flee risk assets. Let's get too our market's live stratus,
Mary Nicola for the latest. Mary, give us a sense
of today's session. Where are we seeing the biggest moves
and how do they fit into the cell off we've
seen so far.
Speaker 1 (10:11):
Yeah, it's been a really ugly day in Asia. We've
seen MSCI Asia Pacific having its worst day since October
two thousand and eight. China equities are really getting hammered
this morning, almost catching down to the route that's already
had the fallen equity markets. Remember they were closed on Friday,
so they're sort of catching down to what we've already seen,
(10:31):
but are also reacting to the retaliation that we've seen
from China and they've been severely hit by it. And
I think sentiment is likely to remain under pressure, especially
across Asia, as investors just take go move to the
sidelines for now in terms of how and see how
(10:52):
this really plays out.
Speaker 2 (10:54):
The message from Donald Trump that we heard is that
we should forget the markets and focus on the potential
benefits down the line. That doesn't seem to be a
message that investors are listening to, at least for the moment.
Speaker 8 (11:05):
No, not at all.
Speaker 1 (11:06):
And the problem is that President Trump seems resolute about
his tariff's tariff plans, describing the recent moves more as
medicine to fix something. So, but all this is creating
is fears of escalation, and these punitive tariffs are raising
fears of a global recession and obviously spurring this broad
global route. And then, of course what's adding to it,
(11:28):
unlike let's say in two thousand and eight or the
route in twenty twenty, in twenty twenty, is that there
seems very limited support on monetary and fiscal side to
stem these declines. So it's making it more difficult for
investors to catch this falling knife.
Speaker 2 (11:46):
Mary, where are they going? I suppose we're seeing the
huge moves in bonds as well. I mean, what does
that choice from investors tell us about the perception of
recession risk.
Speaker 1 (11:59):
Yeah, it's we've seen a massive deploy into haven asset.
So waking up this morning in Asia, the biggest outperformers
where the yen and where the Swiss franc. So clearly
people are looking for a haven. What we've also seen
is Australian bonds we're outperforming at the start of the
morning and that's likely to continue because at the end
(12:20):
of the day, no one is looking to deploy cash
with deploy assets into into risk assets, especially with all
this uncertainty. So what you're likely to see is more
support for the bond markets and more support for havens
across the board.
Speaker 2 (12:38):
Mary talk us through some of the policy action that
we're seeing as well, because there's some talk in the
markets that China could be moving to d valley the yuan.
They've also then some policy moves today.
Speaker 1 (12:49):
Yeah, it's interesting to see the rising speculation of a
sharp devaluation on the Chinese yuan because what we've seen
in terms of how they've played the fixing is that
it's been stay and we've seen that the currency has
been slowly weakened, but a lot of that has already
been warranted by domestic conditions, whether it's weak domestic demand
(13:10):
or deflation. And I think a sharp devaluation risks further
escalation and trade tensions with the US, and of course
further instability, especially when you have capital flight out of China,
so that any sharp devaluation seems unlikely at this point,
especially given the volatility in the market. And the key
(13:32):
thing is too, is to also look at how the
you want has been trading against its trading partners, and
since the start of the year it's actually been depreciating,
so it does offer some level of support for exports,
but obviously doesn't cushion the blow given how punitive the
tariffs are on China. So I think for now we're
going to see a lot more stability in the.
Speaker 2 (13:52):
C and y Mary talk us through the indications that
we have for the session ahead in Europe and in
the US. What are the volatility indexes and other signs
telling us about what to expect.
Speaker 1 (14:02):
Yeah, I think you pointed this also out earlier, is
that we're seeing that the VIX is now back up
to levels since the global pandemic, and of course when
you have those levels is just going to create and
ensue this negative sentiment that has already gripped the market.
So it's unlikely to see any sort of signs of reprieve,
(14:23):
barring any sort of you know, big announcement from the
Trump administration, but for now it looks like tariffs are
going to remain the key driver and concerns about a
global recession and the impact of these punitive tariffs are
going to remain in the driver's seat. So I think
in that sense we're going to see, as we're seeing
now just how European equity futures are lower, and that's
(14:47):
likely to persist.
Speaker 2 (14:49):
Okay, Mary Nicole, our Market's Live strategists, Thank you very much,
thank you your opin union. Trade ministers are meeting today
to discuss their response to Trump's tariff moves, which we'll
see a twenty percent blanket levy applied to EU goods
from Wednesday. Our Porte Jorge Valero is in Luxembourg for that, Messiah,
good morning, thank you for joining us. What options will
ministers there be discussing today.
Speaker 5 (15:11):
Well, first of all, what the ministers need to do
is to forge unified messages as the negotiations starts with Washington.
Speaker 10 (15:18):
There was a first call on Friday.
Speaker 5 (15:20):
Between Seph Covich and his American quarter parts, and as
sef Covich set up after that call, the trade relationship
with the US NISSA fresh approach. And as you said,
one thing that they need to focus and to narrow
the differences is what countermeasures they could agree upon to retaliate.
But we are not there yet. First the ministers want
(15:42):
to focus on the negotiations and here what they need
to agree on, what concessions they are ready to give
to the Americans to get rid of of these studies
or our at least to reduce the tariff rate.
Speaker 2 (15:55):
Do we have any idea of what that could look
like when we talk about the concession.
Speaker 5 (16:00):
The issues that are especially targeted but the US administration
by the Trund team is both of the tariff rates
that they see on the European side. I mean, we
heard many times that the car tips between the EU
and the US.
Speaker 10 (16:13):
There's a big difference.
Speaker 5 (16:14):
They said that the Americans imposed are two point five
percent while the Europeans were ten percent. But what is
especially irking for Washington is what they called or what
is called the non tariff barriers. And they have mentioned
many times. They agree food regulations, they have mentioned the
European tech regulations. They even mentioned the vi T, the
(16:35):
European value added tax, which of course the Europeans insist
that this is a non discriminatory tax both for the
European makers and for American companies. So it's remains it
remains to be seen whether the Europeans, besides.
Speaker 10 (16:52):
The trade part, they are willing to give.
Speaker 5 (16:53):
Concessions on those non regular or non tariff regulations, which
I think really it's more complicated, especially for example, when
it comes to the tech part or to the vi
t Of course.
Speaker 2 (17:06):
This question of unity that you've raised, for how much
divergence is they're among EU members about how they should respond.
We've talked about how some countries are pushing for something
more forceful whereas others are more recessance.
Speaker 10 (17:19):
Exactly.
Speaker 5 (17:20):
So, Moles, what you hear from sources is that there
is a sort of agreement on the overall strategy that
we need to first to negotiate, but then to stand
ready to hit back if the talks disrail, but also
for example, to strengthen our hand at the negotiating table.
But then, of course the devil is on the details.
(17:41):
And as you see, as you said, there are countries
that are more let's say, willing to speak about this
firm and robust response.
Speaker 10 (17:49):
For example, we heard the remarks from France.
Speaker 5 (17:52):
We heard remarks also from the from Habek, the German
Trade minister, while others are more conciliatory and emphasizing they
need to focus on the negotiations to de escalate.
Speaker 10 (18:04):
For example, this is the case of Italy.
Speaker 5 (18:06):
So it really remains to be seen how far the
Europeans are willing to go with these counter mersial There
is this so called BASUCA in the Trade arsenal of
the EU, the Antiquestion Instrument, which offers a broad set
of possibilities for the Europeans to retaliate, targeting not only
let's say goods and services, but also what we were
(18:29):
talking about, services of the American side, which is of
course for the Europeans really the easier target because that's
where the Americans have a trade surplus with the Europeans.
On the service side, of course, here the target will
be financial services tech services, and here the options will include,
for example, restricting the access to the European procurement market
(18:54):
or some other regulatory approaches when it comes to take
financial services.
Speaker 2 (19:01):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 11 (19:07):
Look for us on your podcast feed every morning on Apple, Spotify,
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Speaker 2 (19:13):
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Speaker 11 (19:19):
Our flagship New York station, is also available on your
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Speaker 2 (19:26):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They say it's the Bloomberg Daybreak. Youurate podcast available every
morning on Apple, Spotify or wherever you listen. It's Monday,
the seventh of April in London. I'm Stephen Carroll coming
up today. The global stock market route deepens as reciprocal tariffs,
recession fears, and growing retaliation concerns sent investors fleeing from
risk assets. Donald Trump rejects the reaction from traders as
(00:33):
he remains defiant on his global tariff barrage. Plus, the
only certainty is uncertainty. Bill Ackman warns of an economic
nuclear winter, as Cairs Starmer says, the world as we
knew it has gone. Let's start with a roundup of
our top stories. Global equities are plummeting again today as
investors continue to fear Trump's tariff salvo could lead to
(00:55):
a recession. Hong Kong's benchmark index has seen its biggest
intra day drop in more than sixteen years, and the
losses on Japan's main index triggered it's circuit breaker. The
MASCI specific index is set for its worst drop since
the financial crisis. Futures are pointing to heavy losses in
Europe and in the United States with drops of more
than three percent ahead of the market open. Head of
(01:17):
economics at Renaissance Macro Research, Neildutta says markets are sending
a clear message.
Speaker 3 (01:23):
You're getting to a point now where I think the
market will take on more of a role of like
an active informant, where it begins aggregating macro risk factors
and outcomes and it tells you about the future, and
then the stock market does kind of take on this
macro role, and that's kind of where we are. So
if the stock market goes down, that creates a way
of tightening financial conditions, exacerbating the uncertainty that's already out there,
(01:43):
and you continue to have a negative feedback loop until
policy gets investors to shift their attention.
Speaker 2 (01:50):
L Jetta was speaking as the global right in equities
is matched by a surge in the so called fear
index the VIX, which is now at levels not seen
since the pandemic. After the events of recent days, economists
that Goldman's sacks have raised the probability of the US
recession from thirty five to forty five percent. They now
expect the FED to deliver three consecutive twenty five basis
(02:12):
point insurance cuts starting in June, but war in the
Central Bank could deliver much deeper cuts in the event
of a recession. The analysis underscore is the heightened concerns
across markets as Trump attempts to reshape global trade in
Washington's favor. Here's Bloomberg opinion columnst. Muhammadalarian.
Speaker 4 (02:30):
I think the hardest thing for the markets right now
is not only to try to evaluate where the destination is,
but how bumpy will the journey be. And I'm saying
that because we have technicals playing in margin calls are there,
people are in fact reducing winners and losers across the
board to waste cash. Fund managers are worried about actual
(02:53):
and expected outflows.
Speaker 2 (02:54):
Maminalarians, speaking there as Goldman Sachs economists, said their baseline
forecast for some growth still rests on the assumption that
US tariffs will be reduced from their current level. Meanwhile,
President Trump and his team are doubling down on their
tariff plan as he and his economic team dismissed investors'
fears of inflation and recession. Speaking on Air Force one yesterday,
(03:17):
the US leader struck a determined tone and repeatedly defended
the tariff barrage unveiled last week.
Speaker 5 (03:25):
I don't want anything to go down, but sometimes you
have to take meticine to fiction something.
Speaker 2 (03:30):
In comments that may fuel further market fears, Trump said
he wouldn't strike deals to cut the highest tariff rates
unless the countries in question eliminate their trade deficits with
the US.
Speaker 5 (03:41):
I spoke to a lot of leaders, European agent from
all over the world. They're dying to make a deal,
but I said, we're not going to have deficits.
Speaker 2 (03:51):
With your country. Trump's insistence the trade deficits need to
be balanced to gain tariff relief will cause concern in
many countries, as on that aim would be entirely separate
from eliminating any trade barriers or tariffs they may have
on the US. Trump's comments are the latest in a
parade of defined signals from the President and his top
(04:12):
economic advisors. On Sunday, US Treasury secretaries got Besson struck
a defiant tone in the face of sharp declines in
global financial markets. Speaking to NBC's Meet the Press, he
rejected the idea that they would cause a protracted US contraction.
Speaker 6 (04:27):
I reject that the assumption there doesn't have to be
a recession. Who knows how the market is going to
react in a day, in a week. What we are
looking at is building the long term economic fundamentals for
prosperity that I think the previous administration had put us
(04:48):
on the course toward financial calamity.
Speaker 2 (04:51):
Treasury secretaries got basin. Speaking there to NBC's Meet the Press,
Besen said that more than fifty countries had cold the administration,
but any talks are going to take time. Prominent investors
and traders have also been taking to social media to
make their views on the tariffs clear. Bloomberg's Ewan Parts
has more.
Speaker 7 (05:10):
After two trading sessions which saw five trillion dollars wiped
off the value of US stocks. America's of S class
is coming to terms with its new diminished status in
the era of President Trump's trade offensive. Bill Lackman, the
founder of Pershing Square and vocal Trump supporter, posted on
x that he strongly believes launching tariffs against the entire
world is a mistake. Ray Dalio, the founder of Bridgewater,
(05:33):
the world's largest hedge fund, warns the tariff package will
be significantly stagflationary for the United States. Ackmann went on
to say the White I should call time out on
the plans. He says, otherwise we're heading for a self
induced economic nuclear winter in London, I'm une pots Bloomberg Radio.
Speaker 2 (05:50):
The UK's Prime Minister Kris Starmer says he'll announced new
measures to support businesses in the face of the global
trade war we Writing in a newspaper over the weekend,
he said the world as we knew it has gone.
Treasury Minister Darren Jones says the support package will involve
investment in industrial policy and public services.
Speaker 8 (06:08):
Globalization as we've known it for the last number of
decades has come to an end. That's why we need
Britain to be strong and resilient, also build out our
relationships with our allies and partners around the world. But
also why we have to invest in the domestic economy,
both the UK businesses but also our public services, so
that we have workers and communities who are well skilled
(06:30):
able to take advantages of jobs.
Speaker 2 (06:33):
Jones gave no details, but after he spoke, the UK
government announced it would ease its green targets for car makers.
Britain is so far said it won't retaliate against Trump's
tariffs as it helps it can secure a deal with
the United States. Finance ministers from Metally in Spain have
warned against reacting too aggressively to Donald Trump's tariffs. Their
remarks contrast with a push by France and Germany for
(06:56):
a more forceful reaction. Miguel Berger, the German ambassa to
the UK, says trade ministers are drawing up a list
of potential countermeasures.
Speaker 9 (07:06):
I think it's the biggest assault we have seen since
the end of the Second World.
Speaker 10 (07:10):
War on global trade.
Speaker 9 (07:11):
We all will have to find a way to deal
with it, and European trade min iss going to meet
on Monday and then take a decision on how to react.
Speaker 2 (07:21):
Germany's ambassards to the UK Mcgilberger. They're speaking ahead of
the meeting of EU trade ministers in Luxembourg today. His
comments come after the European Central Banks Executive Board member
is about Schnabel suggest that the US tariffs may signify
that the era of free flowing global commerce is over.
And those are your top stories on the markets. The
MSCIASA Pacific Index seven point seven percent lower, then Hangsng
(07:45):
in Hong Kong, eleven point four percent lower, eurostocks, fifty
futures four percent lower, SMP Miani's on Wall Street three
point three percent lower. The Brent crew to price bren
Crew down by two and a half percent to sixty
three dollars and ninety three cents barrel. The ten year
treasury yield down seven basis points to three point nine
two percent. On currency markets, the Japanese end strengthening six
(08:08):
tenths against the dollar. The euro is a touch stronger
today at one oh nine to eighty three, the pound
at one twenty nine going into Monday's trading session. With
continuing full coverage of the market reaction to Donald Trump's
tariffs today, we'll get into details of that in a
moment and tell you more about how major economic powers
are thinking of responding. But if you want to take
(08:31):
a step back and perhaps think about how to understand
everything that's happening at the moment, I'd recommend Sean Donnan's
weekend essay from Bloomberg, looking at the title the Chaos
is Not Going to End, and looking at how the
effects of life, as he puts it, in what it
describes as the perpetual uncertainty machine. So that we've had
this blizzard of policy moves. It seems like every day
(08:52):
the global policy sands are shifting and they've created a
situation which is one exhausting and two has no end
in sight. As Shawn points out, if you're managing money today,
you're looking at a fracturing global economy where it's hard
to find a pattern. If you're building a business, you
need to be nimble, and if you're waiting for the
uncertainty to end, where he could be waiting for a
(09:12):
long time as well. Looking at how economists are trying
to deal with this as well. What Seawan Donald's writing
about is because the policy itself keeps moving makes it
very difficult to try and make predictions, which we're already
getting very tricky given the complexity of the global economists,
and hats off to our economists here at Bloomberg have
been doing their best to give us an assessment of
what the economic damage is from these tariffs as well.
(09:36):
There is, as Sean Wright's, no longer a sleepy technocratic
middle ground or any order to lean into in moments
like this, well worth the read. You'll find Sean Donald's
essay on Bloomberg Dot com or on the terminal. Well,
let's get back to that traumatic sell off on markets,
equities and Asia plunging futures pointing to a sharply lower
open here in Europe and on Wall Street investors continuing
(09:57):
to flee risk assets. Let's get too our market's live stratus,
Mary Nicola for the latest. Mary, give us a sense
of today's session. Where are we seeing the biggest moves
and how do they fit into the cell off we've
seen so far.
Speaker 1 (10:11):
Yeah, it's been a really ugly day in Asia. We've
seen MSCI Asia Pacific having its worst day since October
two thousand and eight. China equities are really getting hammered
this morning, almost catching down to the route that's already
had the fallen equity markets. Remember they were closed on Friday,
so they're sort of catching down to what we've already seen,
(10:31):
but are also reacting to the retaliation that we've seen
from China and they've been severely hit by it. And
I think sentiment is likely to remain under pressure, especially
across Asia, as investors just take go move to the
sidelines for now in terms of how and see how
(10:52):
this really plays out.
Speaker 2 (10:54):
The message from Donald Trump that we heard is that
we should forget the markets and focus on the potential
benefits down the line. That doesn't seem to be a
message that investors are listening to, at least for the moment.
Speaker 8 (11:05):
No, not at all.
Speaker 1 (11:06):
And the problem is that President Trump seems resolute about
his tariff's tariff plans, describing the recent moves more as
medicine to fix something. So, but all this is creating
is fears of escalation, and these punitive tariffs are raising
fears of a global recession and obviously spurring this broad
global route. And then, of course what's adding to it,
(11:28):
unlike let's say in two thousand and eight or the
route in twenty twenty, in twenty twenty, is that there
seems very limited support on monetary and fiscal side to
stem these declines. So it's making it more difficult for
investors to catch this falling knife.
Speaker 2 (11:46):
Mary, where are they going? I suppose we're seeing the
huge moves in bonds as well. I mean, what does
that choice from investors tell us about the perception of
recession risk.
Speaker 1 (11:59):
Yeah, it's we've seen a massive deploy into haven asset.
So waking up this morning in Asia, the biggest outperformers
where the yen and where the Swiss franc. So clearly
people are looking for a haven. What we've also seen
is Australian bonds we're outperforming at the start of the
morning and that's likely to continue because at the end
(12:20):
of the day, no one is looking to deploy cash
with deploy assets into into risk assets, especially with all
this uncertainty. So what you're likely to see is more
support for the bond markets and more support for havens
across the board.
Speaker 2 (12:38):
Mary talk us through some of the policy action that
we're seeing as well, because there's some talk in the
markets that China could be moving to d valley the yuan.
They've also then some policy moves today.
Speaker 1 (12:49):
Yeah, it's interesting to see the rising speculation of a
sharp devaluation on the Chinese yuan because what we've seen
in terms of how they've played the fixing is that
it's been stay and we've seen that the currency has
been slowly weakened, but a lot of that has already
been warranted by domestic conditions, whether it's weak domestic demand
(13:10):
or deflation. And I think a sharp devaluation risks further
escalation and trade tensions with the US, and of course
further instability, especially when you have capital flight out of China,
so that any sharp devaluation seems unlikely at this point,
especially given the volatility in the market. And the key
(13:32):
thing is too, is to also look at how the
you want has been trading against its trading partners, and
since the start of the year it's actually been depreciating,
so it does offer some level of support for exports,
but obviously doesn't cushion the blow given how punitive the
tariffs are on China. So I think for now we're
going to see a lot more stability in the.
Speaker 2 (13:52):
C and y Mary talk us through the indications that
we have for the session ahead in Europe and in
the US. What are the volatility indexes and other signs
telling us about what to expect.
Speaker 1 (14:02):
Yeah, I think you pointed this also out earlier, is
that we're seeing that the VIX is now back up
to levels since the global pandemic, and of course when
you have those levels is just going to create and
ensue this negative sentiment that has already gripped the market.
So it's unlikely to see any sort of signs of reprieve,
(14:23):
barring any sort of you know, big announcement from the
Trump administration, but for now it looks like tariffs are
going to remain the key driver and concerns about a
global recession and the impact of these punitive tariffs are
going to remain in the driver's seat. So I think
in that sense we're going to see, as we're seeing
now just how European equity futures are lower, and that's
(14:47):
likely to persist.
Speaker 2 (14:49):
Okay, Mary Nicole, our Market's Live strategists, Thank you very much,
thank you your opin union. Trade ministers are meeting today
to discuss their response to Trump's tariff moves, which we'll
see a twenty percent blanket levy applied to EU goods
from Wednesday. Our Porte Jorge Valero is in Luxembourg for that, Messiah,
good morning, thank you for joining us. What options will
ministers there be discussing today.
Speaker 5 (15:11):
Well, first of all, what the ministers need to do
is to forge unified messages as the negotiations starts with Washington.
Speaker 10 (15:18):
There was a first call on Friday.
Speaker 5 (15:20):
Between Seph Covich and his American quarter parts, and as
sef Covich set up after that call, the trade relationship
with the US NISSA fresh approach. And as you said,
one thing that they need to focus and to narrow
the differences is what countermeasures they could agree upon to retaliate.
But we are not there yet. First the ministers want
(15:42):
to focus on the negotiations and here what they need
to agree on, what concessions they are ready to give
to the Americans to get rid of of these studies
or our at least to reduce the tariff rate.
Speaker 2 (15:55):
Do we have any idea of what that could look
like when we talk about the concession.
Speaker 5 (16:00):
The issues that are especially targeted but the US administration
by the Trund team is both of the tariff rates
that they see on the European side. I mean, we
heard many times that the car tips between the EU
and the US.
Speaker 10 (16:13):
There's a big difference.
Speaker 5 (16:14):
They said that the Americans imposed are two point five
percent while the Europeans were ten percent. But what is
especially irking for Washington is what they called or what
is called the non tariff barriers. And they have mentioned
many times. They agree food regulations, they have mentioned the
European tech regulations. They even mentioned the vi T, the
(16:35):
European value added tax, which of course the Europeans insist
that this is a non discriminatory tax both for the
European makers and for American companies. So it's remains it
remains to be seen whether the Europeans, besides.
Speaker 10 (16:52):
The trade part, they are willing to give.
Speaker 5 (16:53):
Concessions on those non regular or non tariff regulations, which
I think really it's more complicated, especially for example, when
it comes to the tech part or to the vi
t Of course.
Speaker 2 (17:06):
This question of unity that you've raised, for how much
divergence is they're among EU members about how they should respond.
We've talked about how some countries are pushing for something
more forceful whereas others are more recessance.
Speaker 10 (17:19):
Exactly.
Speaker 5 (17:20):
So, Moles, what you hear from sources is that there
is a sort of agreement on the overall strategy that
we need to first to negotiate, but then to stand
ready to hit back if the talks disrail, but also
for example, to strengthen our hand at the negotiating table.
But then, of course the devil is on the details.
(17:41):
And as you see, as you said, there are countries
that are more let's say, willing to speak about this
firm and robust response.
Speaker 10 (17:49):
For example, we heard the remarks from France.
Speaker 5 (17:52):
We heard remarks also from the from Habek, the German
Trade minister, while others are more conciliatory and emphasizing they
need to focus on the negotiations to de escalate.
Speaker 10 (18:04):
For example, this is the case of Italy.
Speaker 5 (18:06):
So it really remains to be seen how far the
Europeans are willing to go with these counter mersial There
is this so called BASUCA in the Trade arsenal of
the EU, the Antiquestion Instrument, which offers a broad set
of possibilities for the Europeans to retaliate, targeting not only
let's say goods and services, but also what we were
(18:29):
talking about, services of the American side, which is of
course for the Europeans really the easier target because that's
where the Americans have a trade surplus with the Europeans.
On the service side, of course, here the target will
be financial services tech services, and here the options will include,
for example, restricting the access to the European procurement market
(18:54):
or some other regulatory approaches when it comes to take
financial services.
Speaker 2 (19:01):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 11 (19:07):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (19:13):
You can also listen live each morning on London DAB Radio,
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Speaker 11 (19:19):
Our flagship New York station, is also available on your
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Speaker 2 (19:26):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
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