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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak, your podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Friday, the

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Speaker 2: fourth of April in London. I'm Caroline HPKA.

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Speaker 3: And I'm Stephen Carroll. Coming up. Today, stocks plummet. The

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Speaker 3: SMP five hundred suffers its worst drop since twenty twenty

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Speaker 3: as investors flee risk assets.

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Speaker 2: Economists forecast that President trump so called reciprocal tariffs will

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Speaker 2: lead to a recession in the US.

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Speaker 3: Plus trading blows. French President Emmanuel Macron calls on European

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Speaker 3: businesses to stop investing in America.

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

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Speaker 3: A global sell off in stocks is deepening this morning

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Speaker 3: as Trump's tariff drive pushes investors to slash risk and

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Speaker 3: pile into safe haven assets. The SMP five hundred and

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Speaker 3: Nasdaq one hundred both posted their biggest one day drop

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Speaker 3: since twenty twenty yesterday, being around two and a half trillion.

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Speaker 4: Dollars off US stocks.

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Speaker 3: I Meanwhile, Asian shares have now fallen to the lowest

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Speaker 3: level in two months, with futures in Europe and the

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Speaker 3: US pointing to further losses. The Bloomberg Dollar Spot Index

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Speaker 3: also suffered its sharpest intra day decline since it's launch

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Speaker 3: in two thousand and five, tumbling by as much as

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Speaker 3: two point one percent on Thursday. Evercore ISI's head of

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Speaker 3: technical analysis Rich Ross says the selloff is turning into

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Speaker 3: a crisis.

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Speaker 5: Whatever signs of optimism you've seen have been dashed. In essence,

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Speaker 5: they've been both traps. So I don't want to say

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Speaker 5: that all is lost, but most is lost for the

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Speaker 5: time being. And I think it's clear at this stage

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Speaker 5: of the drawdown that this is not a garden variety

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Speaker 5: ten percent correction off the top, that clearly there are

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Speaker 5: bigger forces to play here.

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Speaker 3: Rich Ross's sentiment is shared by the legendary investor Bill Gross,

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Speaker 3: who's urging perspective dip buyers to stay on the sidelines

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Speaker 3: rather than trying to, in his work words, catch a

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Speaker 3: falling knife.

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Speaker 2: Meanwhile, credit markets have also convulsed. Gauges of corporate bond

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Speaker 2: risk surged. On Thursday, US corporate junk bonds led the

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Speaker 2: biggest slump in global high yield debt since twenty twenty.

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Speaker 2: The risk of spike is also affecting better rated debt

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Speaker 2: for global investment grade bonds, risk premiums rose to their

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Speaker 2: highest level since September, as fears grow that the steepest

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Speaker 2: US tariffs in a century could hammer economic growth. New

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Speaker 2: American corporate debt issuance is also largely on pause. Meanwhile,

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Speaker 2: traders are debating where the foreign buyers may scale back

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Speaker 2: treasury purchases. China and Japan are the largest overseas owners

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Speaker 2: of US sovereign debt.

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Speaker 3: Markets have been on edge for weeks ahead of the

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Speaker 3: planned tariff Rolous the trading day that followed the announcement

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Speaker 3: turned out to be even more frenzy that expected. Boomboogs,

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Speaker 3: EU and Parts reports on a momentous day for trading desks.

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Speaker 4: All across the world.

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Speaker 6: Sell orders lit up on screens on trading floors from

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Speaker 6: Tokyo to London and New York, investors realizing the sobering

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Speaker 6: reality that Donald Trump really is serious about up ending

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Speaker 6: global trade. The Gold and Sax Trading dest said it

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Speaker 6: was nine point five out of ten in terms of

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Speaker 6: activity levels, with the heaviest selling from asset managers concentrated

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Speaker 6: across technology and financial stocks. Hedge funds also offloaded long

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Speaker 6: positions in bank stocks after pilely into the sector ahead

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Speaker 6: of the tariffs announcements, and perhaps unsurprisingly, it was a

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Speaker 6: bad day for those with lots of assets. The world's

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Speaker 6: five hundred riches people saw their combined wealth plunge by

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Speaker 6: two hundred and eight billion dollars. That's the fourth largest

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Speaker 6: drop in the Bloomberg Billionaires Index in its thirteen year history.

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Speaker 6: I'm new and Pot's Bloomberg Radio. Now.

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Speaker 2: As markets off for an instant verdict on Trump's efforts

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Speaker 2: to reorder the global trading relationship, economists are sounding alarm bells.

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Speaker 2: Seventy six percent of the fifty four forecasters who responded

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Speaker 2: to a Bloomber survey after the announcement said that the

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Speaker 2: imposition of sweeping tariffs only adds to the uncertainty about

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Speaker 2: trade policy for business decision making. Some ninety two percent

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Speaker 2: said that it raises the risk of a US economic

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Speaker 2: downturn over the next twelve months. It is a view

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Speaker 2: that's being backed by Bob Michael, global head of fixed

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Speaker 2: Income at JP Morgan Asset Management.

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Speaker 7: As things stand now, we're headed to recession and it's

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Speaker 7: very clear that this is a tax on businesses and households. Yes,

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Speaker 7: Bessen can talk about offsetting it with an extension of

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Speaker 7: the Tax Cut and Jobs Act, but right now a

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Speaker 7: heavy tax has been applied to businesses and.

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Speaker 2: To household Bob Michael, speaking there as traders bet that

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Speaker 2: the Federal Reserve will be forced to cut interest rates

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Speaker 2: and show up a slowing economy rather than holding rates

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Speaker 2: steady to keep inflation at bay. That sent the tenure

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Speaker 2: Treasury yields briefly below four percent yesterday, as markets price

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Speaker 2: in as many as four cuts from the Central Bank

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Speaker 2: this year.

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Speaker 3: Despite the Maltown and markets, President Trump has defended his

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Speaker 3: decision to slap countries with new tariffs ranging from ten

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Speaker 3: to fifty percent.

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Speaker 4: Speaking on Air Force.

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Speaker 3: One, he said he believes that the economic turbulence will

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Speaker 3: settle and left the door open to doing deals.

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Speaker 8: So if somebody said that we're going to give you

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Speaker 8: something that's so phenomenal, as long as they're giving us

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Speaker 8: something that's good. For instance, with TikTok as an example,

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Speaker 8: we have a situation with TikTok where China will probably say,

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Speaker 8: will approve a deal, but will you do something.

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Speaker 3: Under down Donald Trump, They're indicating he would be willing

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Speaker 3: to offer Tara relief for China if Beijing approved the

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Speaker 3: sale of the US operations of Byte dancers TikTok. The

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Speaker 3: video app faces a deadline on Saturday for devestment unless

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Speaker 3: Trump offers an extension as part of his efforts to

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Speaker 3: broker an agreement. More taro on China mean goods heading

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Speaker 3: to the US from the country will face an average

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Speaker 3: levy of well over sixty percent.

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Speaker 2: French President immanue And Macaw has urged EU businesses to

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Speaker 2: holt spending in the US in response to President Trump's

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Speaker 2: tariffs on the block. Speaking at a press conference following

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Speaker 2: an emergency meeting with CEOs from sectors affected by the tariffs,

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Speaker 2: Macua had this to say.

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Speaker 1: What's important is that we pause future investments, or those

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Speaker 1: announced in recent weeks, until we've clarified things with the

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Speaker 1: United States. Otherwise, what message would we send if we

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Speaker 1: have major European players investing billions of euros in the

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Speaker 1: American economy at a time when they are hitting US.

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Speaker 1: So we need collective solidarity.

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Speaker 2: President Macaw, speaking of the of via translator here, is

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Speaker 2: clear that the EU shouldn't shy away from a strong response,

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Speaker 2: and has suggested the possibility of using the EU's anti

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Speaker 2: coersion tool to hit US digital service. The approach is

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Speaker 2: reflected in Germany, where the outgoing Vice Chancellor Robert Harbeck

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Speaker 2: has told reporters that quote, the magnitude and determination of

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Speaker 2: the response to tariffs must be commensurate with the threat.

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Speaker 2: The EU's trade chief Marasefkevich, will speak with his US

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Speaker 2: counterparts later today.

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Speaker 3: The UK is receiving mixed signals from the US on

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Speaker 3: whether the ten percent tariff on British goods will be permanent,

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Speaker 3: According to British officials, US representatives have told UK counterparts

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Speaker 3: they'll discuss Britain's proposal to reduce tariffs, but added that

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Speaker 3: the president may make ten percent an indefinite global baseline.

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Speaker 3: UK Trade Sechergy Jonathan Reynolds told Bloomberg that talks are ongoing.

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Speaker 9: We will continue our work on a trade deal to

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Speaker 9: remove the need for these tariffs and actually to deepen

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Speaker 9: the existing relationship that we have and that will remain

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Speaker 9: the focus of our work here in the UK.

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Speaker 3: Jonathan Reynolds there speaking as conversations about a US UK

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Speaker 3: economic partnership, an idea previously backed by Trump, are expected

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Speaker 3: to continue. Meanwhile, the threat of a global trade war

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Speaker 3: looks set to push the Bank of England towards more

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Speaker 3: rate cuts. On Thursday, traders ramped up rate cut bets

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Speaker 3: and put the odds of another quarter point reduction in

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Speaker 3: May at almost ninety percent, up from fifty five percent

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Speaker 3: only a few weeks ago.

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Speaker 2: Now those are our top stories for you this morning.

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Speaker 2: So thinking about the markets right now. The S and

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Speaker 2: P five hundred was down about five percent yesterday, the

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Speaker 2: Russell two thousand smaller firms in the US plunging from

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Speaker 2: its twenty twenty one all time high. USTOP futures this

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Speaker 2: morning are down again, the Nasdaq slumping nine tenths of

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Speaker 2: one percent. UBS's Wealth Armors cut is sm P five

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Speaker 2: hundred year end target. European stock suffered their worst date

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Speaker 2: in eight months yesterday, the US stock six hundred sinking

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Speaker 2: two point six percent. Against futures are down seven tenths

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Speaker 2: of one percent, for the fifty one hundred down four

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Speaker 2: tenths of one percent. The topics over in Japan down

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Speaker 2: five percent, more than five percent this morning. The dollar

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Speaker 2: also tumbled the most in at least two decades, and

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Speaker 2: again the dollar is down three tenths of one percent.

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Speaker 2: Looking at the bond markets. US tenure yields are again

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Speaker 2: below the four handle this morning, trading at three ninety seven,

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Speaker 2: down by six tenths of one percent. Those are just

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Speaker 2: some of the markets moving today.

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Speaker 3: Well at a moment. We'll have more on the continuing

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Speaker 3: sell off today and also look at how countries are

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Speaker 3: scrambling to formulate their response to the moves by the

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Speaker 3: United States. But plenty to read across Bloomberg today on

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Speaker 3: the tariff story. We're continuing to watch the reaction and

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Speaker 3: an awful lot of writing about the formula that the

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Speaker 3: US Trade Representatives Office used to try and come up

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Speaker 3: with the how much are the rate rather of tariffs

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Speaker 3: being applied to certain countries?

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Speaker 2: Yeah, absolutely, there was a formula that was published by

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Speaker 2: the Trump administration to sort of justify that the tariff

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Speaker 2: in position. Bloomberg reports that it is quote a formula

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Speaker 2: that divides the country's trade sert plus with the US

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Speaker 2: by its total exports. I pretty simple. They chose to

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Speaker 2: print in the formula though, according to Bluemberg's Matt Levine

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Speaker 2: by also sprinkling in some Greek letters on their work

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Speaker 2: to add visual interest. So this has kind of prompted

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Speaker 2: quite a lively debate about this visual interest. Is it

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Speaker 2: sort of a way of bamboozing people with a formula

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Speaker 2: that looks more complex? You know, does it really?

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Speaker 3: Tom tongue in cheek says is a popular product in

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Speaker 3: the financial industry, and adding a few Greek letters to

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Speaker 3: spice things up.

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Speaker 2: Yeah, and that also, you know, does it come with

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Speaker 2: a kind of credible economic pedigree? Anyway, there's a whole

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Speaker 2: debate around this, and you know how and why the

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Speaker 2: tariffs are really being imposed. There's also actually it's also

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Speaker 2: on social media, so if you want to see it highlighted.

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Speaker 2: I had to look at the social media post to

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Speaker 2: really understand the formula, to be honest.

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Speaker 3: You can read more from Matt Levine and from many

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Speaker 3: of our colleagues writing about the subject across Bloomberg This Morning,

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Speaker 3: Bloomberg dot Com, Ford Slash Opinion as well. You'll find

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Speaker 3: a lot of our best writing on the subject.

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Speaker 2: Now, a global stock sell off continues amid phis of

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Speaker 2: economic havoc as a result of Trump's taris, but the

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Speaker 2: President says that he believes the markets will boom given time.

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Speaker 2: Joining us now, is Bloomberg's markets support a value Titel,

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Speaker 2: Good morning. How big a cataclysm is this for equity markets?

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Speaker 10: Firstly, the U S secuity market had a historic drop yesterday,

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Speaker 10: with the S and P five hundred dropping nearly five percent,

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Speaker 10: its worst session in nearly five years. And if we

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Speaker 10: compare it to maybe some of the worst sessions from

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Speaker 10: previously this century, you know, it stacks up to maybe

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Speaker 10: one of the worst days in the dot com bubble,

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Speaker 10: that was a drop of five point eight percent after

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Speaker 10: the September eleventh attacks, that drop was over four percent.

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Speaker 4: Even when the US.

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Speaker 10: Was downgraded, That drop was around six percent when they

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Speaker 10: were downgraded their credit rating. Even the worst days during

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Speaker 10: the global financial crisis, you know, one of them was

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Speaker 10: in January two thousand and nine, that was a drop

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Speaker 10: of five point three percent. So this is really a

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Speaker 10: historic tumble for the US equity market, and I guess

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Speaker 10: the bad news looking on the screens this morning is

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Speaker 10: that it does appear to be continuing, with S and

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Speaker 10: P five hundred futures down eight tens of one percent.

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Speaker 10: Sectors wise, it was the worst day for the banking

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Speaker 10: sector since the regional banking crisis. A lot of this

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Speaker 10: also has to do with growth worries impacting banking stocks.

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Speaker 10: We saw those credit spreads widening. Yesterday, chip stocks had

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Speaker 10: their worst day since March twenty twenty, and if we

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Speaker 10: look at the mag seven, it's now entered a bear market.

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Speaker 10: It's down over twenty percent from its peak. We also

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Speaker 10: saw small caps enter a bear market as well. That's

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Speaker 10: just another reflection of growth worries in the US.

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Speaker 3: Yeah, and the sentiment picture are not much better looking

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Speaker 3: at today's picture either. One of the questions though, that

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Speaker 3: markets are asking is is what are the broader economic

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Speaker 3: effects of the goal of all of this, which is

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Speaker 3: an hour trade deficis.

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Speaker 10: Yeah, I think this is going to be chewed over

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Speaker 10: now for quite some time. I know you guys mentioned

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Speaker 10: that formula that Trump used to apply these reciprocal tariffs

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Speaker 10: was basically a product of the trade deficit with the US,

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Speaker 10: and that is a clear sign to the market that

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Speaker 10: he wants the trade deficit narrowed. And there can be

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Speaker 10: many economic consequences of this, but one of them could

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Speaker 10: be is that people will demand less US assets. If

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Speaker 10: we think about how dollars are recycled across the globe,

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Speaker 10: the US buys a lot of goods, sends a lot

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Speaker 10: of dollars abroad. When they do that, those dollars abroad

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Speaker 10: are then held in dollars and invested into US assets.

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Speaker 10: That is one reason why we have a government who's

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Speaker 10: able to borrow so much money.

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Speaker 4: There's a huge demand for treasuries.

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Speaker 10: That is another reason why, frankly, the US equity market

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Speaker 10: is overvalued, because people want to hold on to these dollars,

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Speaker 10: so they have to invest it in some way into

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Speaker 10: US assets. If we have that cycle slowing down at

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Speaker 10: a certain pace, that really poses big, major questions to

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Speaker 10: just the basic valuations of the US equity market. If

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Speaker 10: with this trade defici sit also closes the current account.

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Speaker 10: I know that this is like a big economic theory

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Speaker 10: to chew over, but I think yesterday was a big

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Speaker 10: evidence of that because we did not see the dollar

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Speaker 10: strengthen in this risk off move.

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Speaker 4: It was almost a very hint of a beginning.

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Speaker 10: Of the fact that US assets have been so over

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Speaker 10: owned for so long, and now we could start seeing

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Speaker 10: the unwind of that happen over maybe the next decade.

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Speaker 2: And whether or not reducing that trade deficit is actually

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Speaker 2: a good idea, because the trade deficit is, you know,

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Speaker 2: a reflection of the power and the high quality sort

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Speaker 2: of exports that the US has, you know, versus let's say,

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Speaker 2: the kind of consumer goods and maybe other countries sell

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Speaker 2: to the US. So whether there's a big question mark

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Speaker 2: about whether that goal in and of itself is kind

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Speaker 2: of a good one in terms of other market moves.

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Speaker 2: There is also a concern about the growth picture for

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Speaker 2: the US now.

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Speaker 10: Oh definitely. I think we saw that yesterday. Economists are

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Speaker 10: umping up their percentage chance of the US entering a recession.

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Speaker 4: I think the key thing for the.

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Speaker 10: Market moving forward, though, is, frankly, what we hear from

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Speaker 10: Powell later today. Is he going to echo any of

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Speaker 10: this pessimism, because it was only a few weeks ago

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Speaker 10: he in his press conference he was talking about the

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Speaker 10: resiliency of the US economy, about how the US economy

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Speaker 10: is still solid.

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Speaker 4: Will he in some way tamper that language.

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Speaker 10: The market is going to be parsing over every word

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Speaker 10: he uses and comparing it to the previous press conference.

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Speaker 10: If there's any hint that maybe Powell himself is worried

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Speaker 10: about the growth trajectory of the US economy, that might

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Speaker 10: embolden the market to think that they could cut rapidly

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Speaker 10: at some time this year when we do see evidence

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Speaker 10: of a slowdown show up in the hard data, which

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Speaker 10: is something we haven't seen yet. It's seen in the

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Speaker 10: softer survey data, but we've not actually seen it in

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Speaker 10: hard data. And many people think that it's too early

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Speaker 10: to even show up in the payroll print today. But

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Speaker 10: an unexpected rise in the unemployment rate today could definitely

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Speaker 10: be something that the Fed could hang a tad on

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Speaker 10: in claiming that they need to do cut sooner rather

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Speaker 10: than later. So I think that's the big risk for

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Speaker 10: the market today is a weak payroll print.

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Speaker 3: Okay, Balerie title our market supportso thank you.

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Speaker 2: President Trump has defended his TWERFF plan, saying that it

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Speaker 2: gives the US great power to negotiate to wels in Europe.

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Speaker 2: For Francis, President of a Manam macull has called on

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Speaker 2: European businesses to stop investing in the US or pause

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Speaker 2: joining US now is IAA News director Rosley Matheson rolls

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Speaker 2: good morning. So the shockwaves are spreading really far and

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Speaker 2: why not just in markets but everywhere?

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Speaker 4: Really?

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Speaker 2: How likely though, is negotiation? What does President Trump want

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Speaker 2: and what's the likelihood of a possible deal?

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Speaker 11: I'm not sure I can answer the question of what

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Speaker 11: he wants, But what I can say is that yesterday

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Speaker 11: we had the officials in his in a circle saying,

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Speaker 11: you know, found out really being clear. They're saying Donald

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Speaker 11: Trump is standing firm on this, He's not ready to

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Speaker 11: change anything. But then Donald Trump himself saying that yes,

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Speaker 11: if there was quote a phenomenal offer, he'd be willing

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Speaker 11: to look at it. And what we do know is

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Speaker 11: that we've got a lot of leaders around the world

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Speaker 11: lining up to try and get on the phone to him,

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Speaker 11: still thinking that maybe if they can just chat with

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Speaker 11: him directly and make their case, perhaps they can persuade

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Speaker 11: him to give them some relief from some of the

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Speaker 11: tariffs that we're seeing coming on the reciprocal side. And

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Speaker 11: so there does seem to be a window for that,

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Speaker 11: and Donald Trump always leaves a.

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Speaker 4: Bit of leeway for a deal.

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Speaker 7: I mean.

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Speaker 11: The interesting thing is that the one place he's singled

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Speaker 11: out in particular was China, saying that maybe if Beijing

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Speaker 11: approves the sale of the US operations of TikTok, which

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Speaker 11: is of course Bite Dance, their social video app, that

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Speaker 11: he might be willing to give them some tariff relief,

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Speaker 11: and we know that he did come out pretty hard

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Speaker 11: in terms of the tariff rates on China, and so

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Speaker 11: that's one country that he's definitely signaled he's willing to

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Speaker 11: make a deal with. But there does seem to be

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Speaker 11: at least a window for some converse whether he'd be

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Speaker 11: willing to drop the floor below ten percent. That might

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Speaker 11: be the bottom level of where he's willing to go.

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Speaker 11: And again, if he does drop tariffs too far, then

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Speaker 11: he's given too much away. So he needs to find

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Speaker 11: that balance between maybe being willing to negotiate, but also

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Speaker 11: holding some kind of line here on what he says he.

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Speaker 4: Needs to do.

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Speaker 3: The conversation also happening among European Union countries about how

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Speaker 3: they plan to respond, and we've learned that France and

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Speaker 3: Germany are pushing for a tougher response.

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Speaker 11: Well, that's right, and we saw that yesterday with France

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Speaker 11: coming out and urging the EU to look at potentially

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Speaker 11: an EU wide digital attacks. Digital services attacks are coming

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Speaker 11: for US big tech in a slightly asymmetrical way. And

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Speaker 11: then we had the French President Emmanuel Macron coming out

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Speaker 11: and urging EU businesses to pause their spending in the US.

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Speaker 11: I mean, it's a bit of a warning there obviously,

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Speaker 11: between Macron and Trump. You imagine that realistically companies would

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Speaker 11: pause their investment plans simply on the back of what

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Speaker 11: the French president said. But it does show that the

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Speaker 11: EU is being a bit compative here. They're gearing up

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Speaker 11: potentially to do retaliation, and France and Germany in particular

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Speaker 11: are pushing hard on that front. The question is can

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Speaker 11: they bring all the other European states along with them.

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Speaker 11: We're already seeing some murmurs of difference which within the

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Speaker 11: EU about how and how strong to respond, So that's

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Speaker 11: going to be the question is can we maintain EE

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Speaker 11: unity in this minute.

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Speaker 2: Meanwhile, President Trump says that the UK is happy with

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Speaker 2: its treatment, but of course Britain does want to try

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Speaker 2: to carve out that exemption. A word on the UK.

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Speaker 11: Well, that's right, So the UK's probably really that they

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Speaker 11: got ten percent. Well, the EU certainly got a lot higher.

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Speaker 11: But they are still pushing to have this discuss. They

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Speaker 11: are pushing to have a broader trade deal perhaps to

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Speaker 11: replace this this kind of tariff relationship, and Prime Minister

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Speaker 11: Kiir Stamer is saying is confident he can get somewhere.

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Speaker 11: What we do know from our own reporting in the

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Speaker 11: conversation so far, it's still very wooly. It's unclear whether

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Speaker 11: the UK is going to be able to get anything better,

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Speaker 11: but absolutely they are amongst the countries that are trying.

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