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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the.

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Speaker 2: Bloomberg Day BAQ podcast, available every morning on Apple, Spotify

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Speaker 2: or whatever you listen. It's Friday, the fourteenth of March

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Speaker 2: in London. I'm Caroline Hepkiff.

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Speaker 3: And I'm Stephen Carroll. Coming up today.

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Speaker 4: The ECB's Christine Leguard warns of the severe consequences of

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Speaker 4: a global trade war as Trump threatens the EU with

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Speaker 4: two hundred percent tariffs on wine.

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Speaker 2: Hope, so the US government shutdown will be averted, give

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Speaker 2: market some respite after the S and P five hundred

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Speaker 2: enters correction.

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Speaker 3: Territory plus Putin's pitch.

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Speaker 4: The Russian leader says he's ready to negotiate with Trump

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Speaker 4: on Ukraine, but stops short of accepting a temporary ceasefire.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 4: The president of the European Central Bank is warning of

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Speaker 4: a severe global fallout from a trade war with the

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Speaker 4: United States. Here's what Christine Leaguard told the BBC's Hard

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Speaker 4: Talk program, hosted by Steven Saccor.

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Speaker 5: If we were to go to a real trade war

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Speaker 5: where trade would be dampened significantly, that would have severe consequences.

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Speaker 3: It would not be calls for concern.

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Speaker 5: It would be severe consequences growth around the world and

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Speaker 5: for prices around the world, but particularly in the United States.

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Speaker 6: But also in Europe. It would push Europe into recession.

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Speaker 5: Wouldn't they You know what it's doing at the moment,

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Speaker 5: stirring European energy.

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Speaker 3: It's a big wake up call for Europe.

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Speaker 5: Maybe this is a European moment yet again.

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Speaker 4: The Guard also told the BBC that Brussels had no

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Speaker 4: choice but to retaliate against the US following its decision

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Speaker 4: to implement twenty five percent tariffs on global steel and

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Speaker 4: aliumillium imports. Her comments came ahead of President Trump threatening

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Speaker 4: to enactate two hundred percent levy on European wine, champagne,

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Speaker 4: and other alcoholic beverages. The US president made the threatened

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Speaker 4: response to the EU's countermeasures targeting American whiskey, among other products.

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Speaker 4: US Commerce Secretary Howard Lutnek has told Bloomberg the EU

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Speaker 4: duties are disrespectful.

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Speaker 7: If you make him unhappy, he responds unhappy.

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Speaker 6: But come on, let's.

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Speaker 7: Get back to the core basics here, which is a

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Speaker 7: trading policy that says America has allowed the world to

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Speaker 7: lean on us, to take from us, to grow off

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Speaker 7: of us, and now it's time for a little balance.

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Speaker 7: We've got a two trillion dollar budget deficit. We want

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Speaker 7: to bring certain jobs home. Let the President do the

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Speaker 7: right thing for America.

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Speaker 4: It's the US Commerce Secretary Howard Lutnik. Trump also said

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Speaker 4: he would not repeal tariffs on steel and aluminium that

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Speaker 4: took effect this week, nor would he back off on

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Speaker 4: plans for sweeping reciprocal tariffs on global trading partners set

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Speaker 4: to start as soon as the second of April.

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Speaker 2: The growing trade tensions come as the European Unions foreign

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Speaker 2: policy chief has warned that China could be the main

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Speaker 2: beneficiary of growing USU hostilities. Here's what Kaya Kallas told

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Speaker 2: Bloomberg on the sidelines of a G seven meeting in Canada.

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Speaker 1: We are not interested trade wars. There are no winners

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Speaker 1: and trade wars. So who is laughing on the side

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Speaker 1: or looking at the side is China Who's really benefiting

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Speaker 1: from us having a trade war with Europe. But it

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Speaker 1: is also clear that if these tarrifts are put on us,

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Speaker 1: then we are also defending our interests.

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Speaker 2: The comments from the EU's top diplomat come as Chinese

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Speaker 2: economy is expected to have shown resilience so far in

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Speaker 2: the face of growing US tariffs. According to economy surveyed

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Speaker 2: by Bloomberg, consumption dated you out on Monday will show

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Speaker 2: retail sales picking up and investments staying steady from last

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Speaker 2: year's full year figures.

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Speaker 4: Democratic Leader of the US Senate Chuck Schumer has paved

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Speaker 4: the way for lawmakers to avoid a government shutdown, just

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Speaker 4: dropping his threat to block a Republican spending bill. The

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Speaker 4: decision was made despite a growing number of Democrats wanting

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Speaker 4: to use their limited leverage to restrain Elon Musk's cost

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Speaker 4: cutting efforts. Addressing the Senate, Schumer explained why he decided

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Speaker 4: to walk back the threat of a shutdown.

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Speaker 8: A shutdown would give Donald Trump an Elon Musk cart

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Speaker 8: blanche to destroy vital government services at a significantly faster

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Speaker 8: rate than they can right now.

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Speaker 4: Schumer indicator that Democrats would vote with their conscience on

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Speaker 4: the legislations rather than as directed by leadership. However, the

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Speaker 4: longtime leader carries significant influence within the caucus, and he's

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Speaker 4: likely to amass enough support to avert a shutdown well.

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Speaker 2: The prospect of avoiding a US government shutdown has boosted

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Speaker 2: market sentiment. After another bruising day on Wall Street that

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Speaker 2: drove the S and P five hundred to a six

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Speaker 2: month low, Thursday's one point four percent draw pushed the

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Speaker 2: three week route past ten percent, and it means the

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Speaker 2: US benchmark is now in correction territory. The slump has

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Speaker 2: also eraised five trillion dollars from US stocks as investors

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Speaker 2: paired risk, but President Trump's former Treasury secretary, Stephen Minouchin

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Speaker 2: says that sentiment is is overly bearish.

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Speaker 9: I know there's some talk about are we going to

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Speaker 9: go into a recession. I don't see us at all

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Speaker 9: going into a recession. I think we could have a

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Speaker 9: little bit of a slowdown in the economy as we

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Speaker 9: pull back on government spending. But I don't think investors

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Speaker 9: should be concerned about a recession.

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Speaker 2: That was the former US Treasury Secretary Stephen Mnusian speaking

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Speaker 2: there to Bloomberg. Asian stocks and US and European ecrity

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Speaker 2: futures have rallied on Friday as signs that the US

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Speaker 2: will avoid a government shut down have helped to boost

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Speaker 2: market confidence.

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Speaker 4: More than half of Britain's senior ministers have verged the

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Speaker 4: Chancellor Rachel Reeves to rethink her plans to scale back

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Speaker 4: welfare spending. Bloomberg has learned that a cabinet meeting turned

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Speaker 4: into an intervention over the planned cuts.

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Speaker 3: James Wilcock has the story.

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Speaker 10: One person at the meeting openly warned ministers were considering resignation.

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Speaker 10: Are They'd be backed up by a second and then

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Speaker 10: a third added the cuts go beyond anything seen under austerity.

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Speaker 10: We report the Prime Minister had to extend the meeting

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Speaker 10: so all twenty seven ministers at the top of government

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Speaker 10: could vent It's an extraordinary sign of the growing concern

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Speaker 10: at the highest levels of the Labor Party. It's unlikely

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Speaker 10: to change the policy. The Chancellor has already sent her

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Speaker 10: plans to the Independent Forecaster. But the question number ten

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Speaker 10: must be wondering after the backlash is will that policy

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Speaker 10: get enough votes in London?

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Speaker 6: James Wilcock Bloomberg Radio.

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Speaker 2: Russia's Lasimir Putin says that he wants to discuss a

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Speaker 2: proposed ceasefar in Ukraine with Donald Trump. Speaking at a

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Speaker 2: news conference yesterday, Putin said that his administration supports the

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Speaker 2: idea of a peaceful end to the conflict, but warns

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Speaker 2: that any truth should lead to a long term resolution.

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Speaker 2: Following the news, US President Trump told reporters at the

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Speaker 2: White House that negotiations are progressing.

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Speaker 11: We're getting words that things are going okay in Russia,

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Speaker 11: and doesn't mean anything until we hear what the final

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Speaker 11: outcome is. But they have very serious discussions going on

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Speaker 11: right now with President Borden and others.

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Speaker 2: Donald Trump speaking there during a visit by NATO Secretary

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Speaker 2: General Mark Rutter. Meanwhile, the US has quietly talented sanctions

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Speaker 2: on Russia by restricting energy payments as it continues to

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Speaker 2: pursue cooperation from Putin during peace deliberations.

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Speaker 4: Those are your top stories on the markets. After we

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Speaker 4: saw the SMP five hundred and nasdak in correction territory yesterday.

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Speaker 4: We are looking at US DOOC futures hire this morning,

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Speaker 4: up six tens of one percent for SMPT, mine's eight

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Speaker 4: tens higher for Nasdaq futures. European stock futures also pointing higher,

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Speaker 4: up half of one percent, and we're seeing big rally

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Speaker 4: and ation shares at the moment. The MSCI Specific index

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Speaker 4: up seven tens of one percent. The CSI three hundred

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Speaker 4: index in China up by two point three percent.

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Speaker 3: Those are the markets.

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Speaker 2: In a moment, more on Donald Trump's tariff threats against

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Speaker 2: the EU, and we'll also be digging into the market reaction.

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Speaker 2: But before we get to that, a nice story on

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Speaker 2: the Bloomberg terminal about how easy it's going to be

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Speaker 2: to trot around the globe and understand everyone.

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Speaker 4: This is one of those stories that either makes me

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Speaker 4: feel very excited or very old, because this feels like

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Speaker 4: Star Trek coming true. Our two technology correspondent Mark Arman

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Speaker 4: has report that Apple is working on a feature for

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Speaker 4: its AirPod earphones that would live translate and in personal conversation,

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Speaker 4: so you speak to someone in your language and they

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Speaker 4: can hear it in THEIRS.

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Speaker 3: It's science fiction.

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Speaker 4: Y if you look at it in one way, but

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Speaker 4: apparently it's actually already been present, and some of the

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Speaker 4: rival products to AirPods as well, including Google's pixel Buds,

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Speaker 4: they've had the option for years, but he says an

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Speaker 4: Apple to be rolling this out from later this year.

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Speaker 2: Part of my heart breaks for this because, of course,

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Speaker 2: to someone who studied model languages, this was a job.

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Speaker 2: This is once a job being a you know, a translator,

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Speaker 2: and also it's the fact that languages around the world

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Speaker 2: are disappearing very quickly because you know, we're so united, and.

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Speaker 4: Well, I mean, the other question of this is what

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Speaker 4: is this going to actually be something that's going to

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Speaker 4: feel like science fiction? Or is it going to be

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Speaker 4: like being on a bad phone line with someone where

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Speaker 4: there's a really long delay is when you hear the

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Speaker 4: other person. So I think you can probably dash away

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Speaker 4: your language girls for a bit longer.

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Speaker 2: Carolina, the great story on the Bloomberg terminal for you

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Speaker 2: to read this morning.

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Speaker 4: Well, that's bringing more now in the latest tariff threats

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Speaker 4: from Donald Trump, targeting European wine and other alcoholic drinks

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Speaker 4: with a two hundred percent levy. Our EMEA news director

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Speaker 4: Rosalind Mason joins us now for more. Ras Good morning.

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Speaker 4: How much of an escalation is this from Donald Trump?

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Speaker 12: Well, it is certainly another move by Donald Trump. He's

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Speaker 12: threatening in this case, he's not yet saying he's going

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Speaker 12: to impose this tariff, and in fact he's threatened to

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Speaker 12: impose hefty tariffs on European wine, champagne and other alcoholic

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Speaker 12: beverages before and back down. But this is in the realm,

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Speaker 12: of course of what's been quite a piecemeal approach. We've

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Speaker 12: had a lot of uncertainty in this tariff, in this

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Speaker 12: tariff game bit so far, and there's been reversals by

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Speaker 12: the President, there's been threats, there's been changes in direction.

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Speaker 3: So it's very hard.

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Speaker 12: To know what to make this and that very hard,

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Speaker 12: I guess for the people on the other side to

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Speaker 12: know how to respond. Certainly, the French Trade minister said

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Speaker 12: that this is Donald Trump, quote escalating a trade war

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Speaker 12: he chose to unleash and saying that you will not

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Speaker 12: give in to what he called threats and will protect industries.

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Speaker 12: So certainly Europe's still got more in the bag if

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Speaker 12: Donald Trump does escalate further with Europe. We know that

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Speaker 12: the tariffs that are due to snap back obviously at

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Speaker 12: the end of the month, but there's a lot more

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Speaker 12: that we know that Europe has prepared, and so certainly

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Speaker 12: we're just in this realm of tit for tat. So

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Speaker 12: if Donald Trump does indeed impose this tariff on booze

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Speaker 12: from Europe, that Europe will respond.

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Speaker 2: The last time that Trump imposed tariffs though on these products,

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Speaker 2: he reversed course. He reached a deal with a Manu

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Speaker 2: in Macon, does that say that there is a space

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Speaker 2: maybe for negotiation here as we do see the kind

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Speaker 2: of temperature and the rhetoric beginning to get more tense.

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Speaker 12: Well, certainly, as this trade war has shown us, there's

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Speaker 12: one hundred percent room for negotiation in all of this,

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Speaker 12: and that, in a way perhaps is part of the

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Speaker 12: tactic of the US administration is to come out hard,

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Speaker 12: to threaten things, and then to see if they can

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Speaker 12: negotiate the way back out of it again and get

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Speaker 12: something that they can claim as a win. And as

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Speaker 12: you say, Emanuel mcron was key last time, perhaps again

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Speaker 12: and call from him to Donald Trump might just do

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Speaker 12: the trick. We do know that the US Commerce Secretary,

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Speaker 12: Howard Lutnik was due to have some cause with different

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Speaker 12: EU officials last night. We're not exactly sure what came

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Speaker 12: of those as yet, but there are those conversations going on,

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Speaker 12: and we can see that's very much the case with

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Speaker 12: every country around the world. There are trade ministers, for example,

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Speaker 12: from different countries in Asia over in the US this

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Speaker 12: week having conversations directly with US officials. So it does

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Speaker 12: seem that at least the US administration is willing to

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Speaker 12: talk mostly though they just want to see what they

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Speaker 12: can get for them themselves out of those talks.

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Speaker 4: Okay, roslad Mats and our amaa news director, thank you

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Speaker 4: very much.

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Speaker 1: Well.

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Speaker 2: Markets have been rattled by the trade tensions, but US

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Speaker 2: futures have been boosted by news that a government shutdown

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Speaker 2: has been avoided in Washington. Our Market's Live executive editor

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Speaker 2: Mark Cadmore joins this now in person in the London

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Speaker 2: radio stud Good see Mark. In terms of the shutdown news,

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Speaker 2: do you think that that reignites risk appetite given all

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Speaker 2: the uncertainties?

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Speaker 6: No, not really.

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Speaker 13: I think there's enough kind of negative catalyst next week

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Speaker 13: or sorry, potentially negative catalysts. I think, you know, we've

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Speaker 13: always got the fed upcoming. What I think the bigger

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Speaker 13: bachelor peers that we've had a really rapid correction from

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Speaker 13: record highs and so you no, the market is just

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Speaker 13: it was ready to consult it. I mean many people

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Speaker 13: are looking for a relief rally Earlier this week we

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Speaker 13: actually enter in some of the best seasonality for the

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Speaker 13: US stock market actually from March fifteenth of traditionally, So

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Speaker 13: I think this is a little bit like, yeah, it's

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Speaker 13: a positive story, don't get me wrong. And that, but

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Speaker 13: it was a market that was ready for a little

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Speaker 13: bit of a bounce. Actually, the way I see this

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Speaker 13: week is I'm surprised how negative the price action has

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Speaker 13: actually remained, how rapid the fall has been, how little,

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Speaker 13: how tepid the bounces have been, And so I just

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Speaker 13: I just worried to have one more kind of uh

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Speaker 13: kind of clean out before kind of maybe even before

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Speaker 13: the weekend or into next week, before we get you know,

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Speaker 13: then a couple of weeks consolidation. The longer term, I

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Speaker 13: still think there's a market where people are selling rally.

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Speaker 13: So I think, you know, you might get a bounce

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Speaker 13: of four or five percent over the rest of March,

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Speaker 13: but ultimately, you know, I think people are going to

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Speaker 13: sell into this.

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Speaker 6: They're not going to wait for any record hise this.

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Speaker 13: This is a US stock market that is going to

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Speaker 13: underperform for the long term.

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Speaker 6: Yeah.

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Speaker 4: And indeed that's part of the sentimens being infected in

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Speaker 4: the latest markets Live Pull survey as well that investors

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Speaker 4: are most bullish on treasuries roused to stocks for at

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Speaker 4: least three years.

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Speaker 3: The flip side of this.

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Speaker 13: Yeah, absolutely, and you know, it's it's it's interesting to

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Speaker 13: see that kind of short term trend because that survey,

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Speaker 13: we've kind of run about that question. We've asked about

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Speaker 13: monthly roughly for about the last three years, and normally

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Speaker 13: normally over on that three year basis. First of all,

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Speaker 13: there's quite often ben a skew towards stocks, but normally

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Speaker 13: both are pretty close to the fifty percent mark.

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Speaker 6: It's quite a large skew.

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Speaker 13: It shows as a real change, like a dramatic change center,

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Speaker 13: but we've not seen anything close this. Not only is

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Speaker 13: this the highest level of kind of pro treasures over stocks,

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Speaker 13: but we've not even seen anything close to that. And

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Speaker 13: there's a general kind of theme that, you know, people

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Speaker 13: no longer expect US stocks to reassert that exceptionalism. So

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Speaker 13: US stocks is as a share of global market cap,

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Speaker 13: reached a record of fifty point eight six percent on

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Speaker 13: February third.

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Speaker 6: They're now down.

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Speaker 13: I'm not sure exactly there are today, but I'm going

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Speaker 13: to say they're down about forty eight percent. They fall

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Speaker 13: in a few percent from there, and only nine percent

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Speaker 13: I think it was in the survey expect us to

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Speaker 13: kind of go back to that record high again. And

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Speaker 13: you know, I'm not saying everyone expects the ongoing US underformance.

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Speaker 13: But certainly the market's already convinced US is going to

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Speaker 13: stop out performing. I am very firmly in the camp

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Speaker 13: it's going to underperform.

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Speaker 2: Okay, we also saw that European drinks company slumped yesterday

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Speaker 2: on the back of the latest tariffs threats. Is that

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Speaker 2: going to be a kind of wake up call for

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Speaker 2: European markets.

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Speaker 6: I don't think they need a wake up call.

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Speaker 13: I mean, this is a dramatic times, but I mean

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Speaker 13: I think to you to your point of you're saying, like,

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Speaker 13: you know, your European stocks have done really well relatively

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Speaker 13: until they get a bit more of the term well,

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Speaker 13: and I think that's absolutely right. I think you know

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Speaker 13: that there's a paradigm shift in Europe, which I completely

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Speaker 13: buy into, and I think it's just a massive story.

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Speaker 6: And I think paradigm shifts are hard.

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Speaker 13: To build a trade because you know well that they

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Speaker 13: change everything they've learned, you know, of the whole European crisis.

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Speaker 13: But the point is is that defense spending is not

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Speaker 13: particularly pro growth infrastructure spending years. In fact, many the

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Speaker 13: recipients of defense spending will be US firms. And I'll

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Speaker 13: come through very slowly, But it doesn't matter. The story

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Speaker 13: is there, there's a paradigm shift in Europe. Maybe stock

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Speaker 13: markets get a little bit ahead of themselves in a

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Speaker 13: market that's set to be volatile. So yes, I guess

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Speaker 13: to answer to the question, I do expect, you know,

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Speaker 13: European stocks to struggle a little bit more. And you know,

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Speaker 13: while I very deeply believe in the end of US exceptionalism,

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Speaker 13: from US market's point of view over the longer term,

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Speaker 13: the next few weeks, that doesn't necessarily matter, you know,

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Speaker 13: we can always just consolidate recent trends.

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