WEBVTT - Global Market Meltdown Deepens; Trump Retains Tariff Stance 0:00:00.160 --> 0:00:07.080 Bloomberg, Audio Studios, Podcasts, radio news. 0:00:10.080 --> 0:00:13.240 Good morning, I'm Nathan Hager and I'm Karen Moscow. Here 0:00:13.240 --> 0:00:15.600 are the stories we're following today, Karen. 0:00:15.640 --> 0:00:18.160 Markets around the world are headed for a third day 0:00:18.160 --> 0:00:22.200 of deep selling after President Donald Trump's tariff announcement on Wednesday, 0:00:22.520 --> 0:00:25.680 but the President and his team appear undeterred by the 0:00:25.720 --> 0:00:29.920 investor reaction. Trump says his trade policies are already paying 0:00:29.960 --> 0:00:31.960 off because of the tariffs. 0:00:32.000 --> 0:00:35.879 We have seven trillion dollars already committed to be invested 0:00:36.040 --> 0:00:40.840 in the United States, building auto plants, building chip companies, 0:00:40.920 --> 0:00:44.440 and all sorts of companies are coming into our country 0:00:44.440 --> 0:00:46.159 in levels that we've never seen before. 0:00:46.320 --> 0:00:48.879 President Trump spoke a board Air Force one last night, 0:00:48.960 --> 0:00:52.080 as heard here on Bloomberg, and his economic team fanned 0:00:52.120 --> 0:00:55.720 out across the Sunday political shows to defend tariffs. Treasury 0:00:55.760 --> 0:00:59.840 Secretary Scott Besson said he's not worried about the selloff. 0:01:00.200 --> 0:01:05.200 Record volume on Friday, and everything is working very smoothly, 0:01:05.240 --> 0:01:08.760 so the American people they can be very. 0:01:10.760 --> 0:01:12.280 Take great comfort in that. 0:01:12.600 --> 0:01:16.440 Treasury Secretary Scott Bessen appeared on NBC's Beat the Press. 0:01:17.120 --> 0:01:20.720 Well Nathan on ABC's This Week National Economic Council Director 0:01:20.800 --> 0:01:24.280 Kevin Hasset acknowledge that tariffs could boost inflation in the 0:01:24.319 --> 0:01:24.959 short term. 0:01:25.120 --> 0:01:27.200 Well, there might be some increase in prices, but the 0:01:27.200 --> 0:01:29.039 fact is that if there were going to be a 0:01:29.080 --> 0:01:32.360 heavy burden on the US consumer, then this trade deficit 0:01:32.400 --> 0:01:35.000 that for thirty years we've seen, really since China entered 0:01:35.000 --> 0:01:38.280 the WTO would be something that would have gone down. 0:01:38.720 --> 0:01:41.559 And on CBS has faced the nation. Commerce Secretary Howard 0:01:41.640 --> 0:01:44.880 Lutnik said the so called reciprocal tariffs on some sixty 0:01:44.959 --> 0:01:47.440 nations will arrive on schedule this Wednesday. 0:01:47.800 --> 0:01:50.600 The United States of America is going to protect the 0:01:50.640 --> 0:01:54.640 people who invest in America. This is the economy of 0:01:54.680 --> 0:01:57.800 the world. We are the consumer of the world, and 0:01:57.880 --> 0:02:01.000 companies need to build it here and we will protect 0:02:01.080 --> 0:02:02.200 them from building it here. 0:02:02.640 --> 0:02:04.560 And you can hear face the Nation this week and 0:02:04.640 --> 0:02:07.640 meet the Press every Sunday on Bloomberg Radio. 0:02:07.640 --> 0:02:10.240 And Karen As the White House continues that defiant tone 0:02:10.320 --> 0:02:14.040 markets continue the sell off, and several experts are weighing in. 0:02:14.080 --> 0:02:18.119 This morning, Bloomberg's John Tucker begins our global team coverage 0:02:18.320 --> 0:02:18.880 in New York. 0:02:18.960 --> 0:02:21.519 John, good morning, and good morning, Nathan Limmy Cantrell of 0:02:21.639 --> 0:02:25.400 PIMCO says tariffs aren't going away. As she puts it. 0:02:25.440 --> 0:02:28.120 They are high and they will be high for a while. 0:02:28.440 --> 0:02:31.560 There's going to be stickiness to these tariffs, and even 0:02:31.600 --> 0:02:35.079 if there are some negotiations and some concessions along the way, 0:02:35.480 --> 0:02:38.320 I think the direction of travel here is very clear. 0:02:38.600 --> 0:02:42.800 Mohammad l Arian, president of Queen's College, Cambridge, says uncertainty 0:02:42.919 --> 0:02:45.799 dominates the markets. The hardest thing for the markets right 0:02:45.840 --> 0:02:48.880 now is not only to try to evaluate what the 0:02:48.919 --> 0:02:52.679 destination is, but how Bumpyle the joining edge fund billionaire 0:02:52.680 --> 0:02:55.679 Stanley Drunken Miller and Bill Ackman are slamming the tariffs. 0:02:55.919 --> 0:02:59.919 Ackman of Pershing Square, a vocal Trump supporter, says bluntly, 0:03:00.120 --> 0:03:03.120 the new trade regime is a mistake. He added, this 0:03:03.200 --> 0:03:06.320 is not what we voted for. Karen George's, an equity 0:03:06.320 --> 0:03:09.400 fund manager at Echovi, says it may feel like COVID again, 0:03:09.440 --> 0:03:12.520 but this sell off is man made. A strategist at 0:03:12.560 --> 0:03:15.280 Morgan Stanley say investors should be prepared for the S 0:03:15.320 --> 0:03:18.040 and P five hundred to drop a further seven to 0:03:18.160 --> 0:03:21.000 eight percent. If the S and P five hundred falls 0:03:21.000 --> 0:03:23.880 another five percent today, this will mark the worst stretch 0:03:23.960 --> 0:03:27.680 since the market meltdown of nineteen eighty seven, and futures 0:03:27.720 --> 0:03:31.320 do indicate last week's five trillion dollars wipeout isn't over, 0:03:31.600 --> 0:03:33.560 you knoww York. I'm John Tucker, Bloomberg Radio. 0:03:33.880 --> 0:03:36.080 All right, John, thank you. Checking some of the stocks 0:03:36.080 --> 0:03:38.640 on the decline this morning. Shares A Tesla down about 0:03:38.640 --> 0:03:41.600 seven percent, in Video off by four and a half percent, 0:03:41.920 --> 0:03:45.400 and shares A Microsoft, Meta, Amazon, and Alphabet down roughly 0:03:45.480 --> 0:03:46.120 four percent. 0:03:46.320 --> 0:03:48.480 And Karen Betts are increasing on Wall Street that the 0:03:48.480 --> 0:03:51.560 Federal Reserve will need to take action and cut rates. 0:03:51.600 --> 0:03:54.880 Sploomberg's Lisa Matteo continues our team coverage. 0:03:54.880 --> 0:03:56.440 Lisa Hi, Good morning, Nathan. 0:03:56.480 --> 0:03:59.440 So, traders now expect policymakers to slash and just rates 0:03:59.480 --> 0:04:03.800 another five times this year. According to overnight interest rate swaps, 0:04:03.840 --> 0:04:06.360 markets pricing in one hundred and twenty five basis points 0:04:06.400 --> 0:04:09.480 of easing by year end, which is equal to five 0:04:09.600 --> 0:04:12.880 quarter point moves now. Bob Michael, global head of fixed 0:04:12.920 --> 0:04:15.880 income at JP Morgan Asset Management, says the Fed can't 0:04:15.920 --> 0:04:18.599 sit on the sidelines. He also added that they may 0:04:18.640 --> 0:04:21.440 have to cut interest rates before the next meeting in May. 0:04:21.920 --> 0:04:26.200 We already know that businesses in the lower rated end 0:04:26.279 --> 0:04:29.240 of the quality spectrum have been struggling. When you look 0:04:29.279 --> 0:04:32.360 at private credit and look at the percentage of amend 0:04:32.400 --> 0:04:35.520 and extends, it's very high. What happens when their cost 0:04:35.600 --> 0:04:39.320 of funding just ratcheted up another couple percent and they're 0:04:39.320 --> 0:04:42.040 going to see top flying growth come down as well 0:04:42.080 --> 0:04:44.800 as their input costs go up. I think this is 0:04:44.839 --> 0:04:46.040 a serious moment now. 0:04:46.080 --> 0:04:49.919 TD Securities also pulled forward its policy easing expectations. In 0:04:49.960 --> 0:04:53.039 a note, strategist Oscar Munos wrote that the brokerage is 0:04:53.120 --> 0:04:56.200 advancing its forecast for the rate cut to June from 0:04:56.360 --> 0:04:59.240 July and now expects the committee will ease rates at 0:04:59.240 --> 0:05:03.000 each meeting through May twenty six. But at all experts 0:05:03.000 --> 0:05:04.479 feel the same way you have. In a post on 0:05:04.640 --> 0:05:07.760 X Double Line Capital's Jeffrey Gunlock, he said he does 0:05:07.800 --> 0:05:11.679 not see a single cut anytime soon unless the losses 0:05:11.720 --> 0:05:15.840 and risk assets greatly increase. Lisa Miteo Bloomberg. 0:05:15.360 --> 0:05:17.920 Radio, all right, Lisa, thank you. Both stocks are selling 0:05:17.920 --> 0:05:20.279 off around the world. The hardest hit this morning is 0:05:20.279 --> 0:05:23.120 in Asia, where stocks in Hong Kong plunged and stocks 0:05:23.120 --> 0:05:25.800 in Japan fell into a bear market. Let's get the 0:05:25.920 --> 0:05:28.400 very latest and check out with the Bloomberg steal thesis. 0:05:28.440 --> 0:05:31.560 Who continues our global team coverage in Hong Kong and 0:05:31.880 --> 0:05:34.080 Jill please give us an update on the carnage. 0:05:34.160 --> 0:05:37.159 Good morning, Karen and Nathan. Yes, it's been an absolute 0:05:37.160 --> 0:05:40.919 bloodbath in Asia this morning, throughout the entire day, really 0:05:41.040 --> 0:05:44.040 the NIKA two two five stock average and Japan slid 0:05:44.040 --> 0:05:46.880 into a market. As you mentioned that blue chip indecks 0:05:46.880 --> 0:05:50.520 closing down seven point eight percent, experiencing its first bear 0:05:50.560 --> 0:05:53.360 market since August. That's back when the Bank of Japan 0:05:53.760 --> 0:05:57.320 unexpectedly hiked rates. We're also seeing quite a lot of 0:05:57.360 --> 0:06:00.839 fallout in China. That's where closely watched gage Chinese shares 0:06:00.839 --> 0:06:04.159 in Hong Kong A tumbled nearly fourteen percent. That was 0:06:04.240 --> 0:06:07.560 also entering a bear market. We've seen some similar stories 0:06:07.560 --> 0:06:12.640 in Taipei where TSMC really led losses. India has also experienced, 0:06:12.800 --> 0:06:16.000 you know, some fallout today. I mean, really, what investors 0:06:16.000 --> 0:06:18.799 here in Asia are experiencing. What they're trying to gauge 0:06:18.839 --> 0:06:21.640 here is not just the impact from these tariffs, the 0:06:21.640 --> 0:06:24.520 Donald Trump tariffs, but also what kind of reaction we're 0:06:24.560 --> 0:06:27.000 really seeing in region it's really China. I think that's 0:06:27.120 --> 0:06:29.599 really kind of you know, led this region here. Just 0:06:29.640 --> 0:06:32.640 a couple of days ago, launched a bunch of retaliatory efforts, 0:06:32.640 --> 0:06:36.120 including measures to introduce a thirty four percent tariff on 0:06:36.160 --> 0:06:38.680 all American goods starting April tenth. That sort of led 0:06:38.680 --> 0:06:41.680 to fears that this trade war is really just going 0:06:41.680 --> 0:06:44.560 to escalate. Donald Trump has really sort of hit back 0:06:44.560 --> 0:06:46.839 against that, you know, ended up sort of calling off 0:06:47.040 --> 0:06:49.320 what he said was a deal to reach a sale 0:06:49.400 --> 0:06:52.520 for TikTok. So you're really seeing a lot that's developing there. 0:06:52.680 --> 0:06:54.720 We'll have to see whether this continues to spread out 0:06:54.720 --> 0:06:56.200 through the rest of the week. We're still waiting to 0:06:56.240 --> 0:06:58.839 see how other governments in Asia are ultimately going to 0:06:58.880 --> 0:07:01.920 respond here, Hong Kong, Jill Esis, Bloomberg News. 0:07:01.920 --> 0:07:04.520 Jill, thank you. Stacks in Europe are feeling the pain 0:07:04.600 --> 0:07:07.720 as well. This morning, Bloomberg's U and Pods continues our 0:07:07.760 --> 0:07:09.800 global team coverage from London. 0:07:10.040 --> 0:07:13.280 You and good morning. What's the latest there, Nathan and Karen. 0:07:13.320 --> 0:07:15.520 European investors will have had a heads up from trading 0:07:15.520 --> 0:07:17.800 in Asia that today was not going to be a 0:07:17.800 --> 0:07:20.280 good start to the week. Stop markets around the region 0:07:20.320 --> 0:07:23.440 opened in the reds and the stampede from global equities 0:07:23.480 --> 0:07:26.480 gather momentum. The stocks the ten hundred currently down five 0:07:26.520 --> 0:07:28.880 point nine percent in the next now less than three 0:07:28.960 --> 0:07:32.440 percentage points away from a bear market. Surveying the damage 0:07:32.440 --> 0:07:34.600 around the region, the Dacks in Germany off six point 0:07:34.600 --> 0:07:37.360 four percent, the CAC in France down six point three percent, 0:07:37.600 --> 0:07:39.760 and the foots are here in London down four point 0:07:39.880 --> 0:07:43.520 eight percent. All twenty industry groups trading lower. Defensive sectors 0:07:43.600 --> 0:07:46.240 not proving a place to hide out this morning. Worst 0:07:46.320 --> 0:07:50.280 hits as things stand, energy, industrial goods, and technology stocks. 0:07:50.560 --> 0:07:52.520 If any trader who can take their eyes off their 0:07:52.560 --> 0:07:56.040 plummeting investments this morning worth watching for. Headlines today coming 0:07:56.080 --> 0:07:59.600 from Luxembourg. European Union trade ministers are meeting there to 0:07:59.640 --> 0:08:03.560 discuss us their response to President Trump's tariffs, Spain's economy 0:08:03.560 --> 0:08:05.960 minister telling Bloomberg today that the EU needs to be 0:08:06.040 --> 0:08:08.720 open to all potential means of retaliation. 0:08:09.240 --> 0:08:10.640 In London, I'm youw in pots. 0:08:10.360 --> 0:08:12.760 Bloomberg Radio, all right you and thank you. But we're 0:08:12.760 --> 0:08:16.120 also seeing some big moves in the commodities markets this morning, 0:08:16.120 --> 0:08:18.600 and checking oil right now, and I'm exscurute oils down 0:08:18.640 --> 0:08:21.880 three point eight percent. It's at fifty nine dollars sixty 0:08:22.000 --> 0:08:24.640 cents a barrel. Goldman this morning cut its oil forecast 0:08:24.680 --> 0:08:26.680 for the second time in less than a week, as 0:08:26.720 --> 0:08:30.280 the escalating trade war raises recessionary risks. It's been a 0:08:30.360 --> 0:08:32.720 very volatile morning for copper. At one point, the metal 0:08:32.760 --> 0:08:34.720 was heading for its worst three day routes since the 0:08:34.760 --> 0:08:37.960 Great Financial Crisis. It was down more than eight percent. 0:08:38.000 --> 0:08:40.520 It has since trim those declines, and we're seeing more 0:08:40.559 --> 0:08:43.720 stability in the gold market. Right now, gold or Comax 0:08:43.760 --> 0:08:45.960 gold is up a third of up percent. It's at 0:08:46.200 --> 0:08:53.040 three forty six dollars twenty cents an ounce. Time now 0:08:53.080 --> 0:08:54.720 for a look at some of the other stories making 0:08:54.720 --> 0:08:56.520 news in New York and around the world, and for 0:08:56.559 --> 0:08:59.240 that we're joined by Bloomberg's Michael Barr Michael, Good Morning, 0:08:59.280 --> 0:08:59.760 Good morning. 0:08:59.760 --> 0:09:03.199 Care and rivers rose and flooding worsen across the South 0:09:03.280 --> 0:09:08.240 and Midwest, threatening communities already water log and badly damaged 0:09:08.280 --> 0:09:11.160 by days of heavy rain and storms that killed at 0:09:11.280 --> 0:09:15.600 least eighteen people from Texas to Ohio. Utilities scrambled to 0:09:15.600 --> 0:09:19.280 shut off power and gas, while cities deployed sandbags to 0:09:19.360 --> 0:09:24.040 protect homes and businesses. Forecasters warned that flooding could persist 0:09:24.080 --> 0:09:28.600 for days, especially in Kentucky, Tennessee, and Alabama. De Wi 0:09:28.720 --> 0:09:31.880 West is the public information officer for Bowling Green, Kentucky. 0:09:32.320 --> 0:09:35.920 This is yet another heartbreaking weather event for the city 0:09:35.920 --> 0:09:38.560 of Bowling Green and Warren County. While we have had 0:09:38.559 --> 0:09:41.840 no loss of life reported, loss of property is expected 0:09:41.840 --> 0:09:42.959 to be substantial. 0:09:43.400 --> 0:09:47.600 Some rivers that innundated towns rose to near record levels 0:09:47.640 --> 0:09:51.640 and were expected to cress today. Israeli Prime Minister Benjamin 0:09:51.640 --> 0:09:53.760 at Yahoo will visit the White House today to meet 0:09:53.800 --> 0:09:57.319 with President Trump. They are expected to talk about Gaza, 0:09:57.400 --> 0:10:00.800 tariffs and other issues. Bloomberg will bring you comments to 0:10:00.880 --> 0:10:03.840 reporters with Trump and det and Yahoo starting at two 0:10:03.840 --> 0:10:07.200 thirty pm Wall Street Time. Among the more than two 0:10:07.280 --> 0:10:10.520 hundred people the Trump administration deported to an Il Salvador 0:10:10.600 --> 0:10:14.920 prison last month is Kilmar Abrego Garcia of Maryland. Trump 0:10:15.000 --> 0:10:18.640 officials admit he was deported due to an administrative error, 0:10:18.960 --> 0:10:21.720 but have signaled they may not comply with a separate 0:10:21.800 --> 0:10:25.040 judges order to return Garcia to the US by eleven 0:10:25.080 --> 0:10:28.280 to fifty nine pm tonight. Arguing the judge does not 0:10:28.360 --> 0:10:32.440 have jurisdiction, and the President says Garcia is a gang member, 0:10:32.800 --> 0:10:33.800 just not with TDA. 0:10:34.320 --> 0:10:36.480 They say, oh, we made a mistake because he's not 0:10:36.679 --> 0:10:38.880 with them, He's with MS thirty. 0:10:39.400 --> 0:10:42.800 Bring him back, Bring them back. Ms RT's a very 0:10:42.840 --> 0:10:43.400 bad group. 0:10:44.000 --> 0:10:47.520 Garcia's family says he is not with any gang. Health 0:10:47.559 --> 0:10:51.199 Secretary Robert F. Kennedy Junior now throwing his support behind 0:10:51.240 --> 0:10:54.880 the vaccine. It comes after he attended the funeral over 0:10:54.920 --> 0:10:57.360 the weekend of a child who died from the measles. 0:10:57.960 --> 0:11:00.120 The US has now seen more than six hundre it 0:11:00.240 --> 0:11:04.520 confirmed measles cases across twenty one states. Global news twenty 0:11:04.520 --> 0:11:07.000 four hours a day and whenever you want it with 0:11:07.000 --> 0:11:09.240 the Bloomberg News. Now. I'm Michael Barr, and this is 0:11:09.280 --> 0:11:10.120 Bloomberg Kron. 0:11:10.320 --> 0:11:12.319 All right, Michael Barr, thank you all. Coming up, We're 0:11:12.320 --> 0:11:14.679 gonna have more on the market sell off. We are 0:11:14.720 --> 0:11:23.440 speaking with Morgan Stanley's Andrew Sheets. But first it's time 0:11:23.440 --> 0:11:26.280 for the Bloomberg Sports Update with John Stashauer. 0:11:26.360 --> 0:11:27.720 John, Good morning, Good morning, Karon. 0:11:27.760 --> 0:11:31.160 They call kennetick it they capital of college basketball. Why 0:11:31.240 --> 0:11:34.319 not eighteen national championships for the last thirty years. The 0:11:34.400 --> 0:11:37.520 Yukon men won the NCAAs the last two seasons. The 0:11:37.520 --> 0:11:39.600 women at one them since twenty sixteen, but they would 0:11:39.600 --> 0:11:42.679 dominant this tournament, six wins by an average of thirty 0:11:42.720 --> 0:11:45.920 three points, final four wins by thirty four and twenty 0:11:45.920 --> 0:11:48.720 three points in Tampa. They did throned in South Carolina. 0:11:49.000 --> 0:11:52.480 It's the twelfth title for their legendary coach, Gino Orima. 0:11:52.920 --> 0:11:54.840 Stan Anthony and I went for a walk right, and 0:11:54.880 --> 0:11:59.560 as I'm walking outside the hotel, at one point, I said, 0:11:59.600 --> 0:12:05.920 you know, hey, dear God, you know like I don't 0:12:05.960 --> 0:12:08.240 need one of these damn my players do man? Can 0:12:08.240 --> 0:12:10.120 you can do it for them? 0:12:09.920 --> 0:12:13.400 The men's title game tonight in San Antonio, Florida against Houston. 0:12:13.480 --> 0:12:16.199 Who comes off that remarkable rally against Duke at Ubs 0:12:16.240 --> 0:12:18.079 Arena Hockey history. 0:12:18.840 --> 0:12:20.760 Oh that skin has any stares. 0:12:21.360 --> 0:12:27.160 He stares Alex So that's kid Store Saint ninety five. 0:12:27.920 --> 0:12:33.920 There's a goal scoring champion w JFK. Move over, Wayne Gretzky, 0:12:33.960 --> 0:12:35.959 who was there to see actually the Capitol's only goal. 0:12:35.960 --> 0:12:37.319 They lost to the Island. It was four to one 0:12:37.320 --> 0:12:40.520 at the Garden. Welcome back Jalen Brunson missed fifteen games 0:12:40.520 --> 0:12:41.240 at injurn ankle. 0:12:41.280 --> 0:12:42.440 The next win nine and six. 0:12:42.480 --> 0:12:45.480 With the captain back, they beat Phoenix one twelve ninety eight, 0:12:45.520 --> 0:12:48.040 their fiftieth win. The Nets lost it Toronto. The Celtics 0:12:48.040 --> 0:12:51.240 blew out Washington late last night big baseball news, it 0:12:51.320 --> 0:12:54.240 was believed that Vladivier Guerrero Junior would be the next 0:12:54.240 --> 0:12:56.920 winter's big free agent. He's staying with the Blue Jays 0:12:56.920 --> 0:13:00.320 a fourteen year deal for half a billion. The Mets 0:13:00.320 --> 0:13:02.680 finished the sweep of Toronto two one at Cityfield. 0:13:02.679 --> 0:13:04.800 The Yankees in Pittsburgh rallied. 0:13:04.480 --> 0:13:06.480 With two outs of Nineteenning scored three months to tie 0:13:06.520 --> 0:13:08.520 the game, but the Pirates won five to four and eleven. 0:13:08.920 --> 0:13:11.439 The Nationals won the Red Sox at doubleheader sweep of 0:13:11.520 --> 0:13:14.640 the Cardinals first and tennans and then last night eighteen 0:13:14.720 --> 0:13:16.400 to seven. The Socks had went five in. 0:13:16.320 --> 0:13:22.120 A row coast to coast on Bloomberg Radio, nationwide on 0:13:22.320 --> 0:13:25.960 Sirius XM, and around the world on Bloomberg dot Com 0:13:26.000 --> 0:13:29.360 and the Bloomberg Business app. This is Bloomberg Daybreak. 0:13:29.480 --> 0:13:30.800 Good morning, I'm Nathan Hager. 0:13:30.880 --> 0:13:33.680 The global stock sell off that is greeted President Trump's 0:13:33.720 --> 0:13:36.800 Tarff announcement is reviving Black Monday memories from any on 0:13:36.840 --> 0:13:40.320 Wall Street, But the President is rejecting market concerns that 0:13:40.360 --> 0:13:43.320 his trade barrage will send the US into a recession. 0:13:43.679 --> 0:13:45.080 What's gonna happen with the market. 0:13:45.080 --> 0:13:47.040 I can't tell you. What I can tell you our 0:13:47.160 --> 0:13:52.360 country has gotten a lot stronger, and eventually it'll be 0:13:52.400 --> 0:13:54.920 a country like no other. It'll be the most dominant 0:13:55.000 --> 0:13:56.920 country economically in the world. 0:13:57.040 --> 0:13:59.240 And that was the President speaking of Board Air Force 0:13:59.280 --> 0:14:01.760 one last night. This morning, we were joined by Bloomberg 0:14:01.800 --> 0:14:06.000 Markets reporter Valerie Titel as we watch the selloff extend 0:14:06.120 --> 0:14:10.559 into a third trading session following the rose Guard announcement. Valerie, 0:14:10.600 --> 0:14:12.680 the President says he might not be able to predict 0:14:12.720 --> 0:14:15.560 what the market's doing, but the market seems to be 0:14:15.600 --> 0:14:18.400 sending a pretty loud message to the President this morning. 0:14:18.760 --> 0:14:21.720 Oh yeah, and I want to echo the flashbacks to 0:14:22.200 --> 0:14:24.520 Black Monday. If this move in the S and P 0:14:24.600 --> 0:14:27.760 five hundred futures holds into the clothes, we are looking 0:14:27.880 --> 0:14:30.800 at the worst three days for the US equity market 0:14:31.040 --> 0:14:34.240 since nineteen eighty seven, when it dropped twenty four point 0:14:34.280 --> 0:14:36.680 six in a matter of two days, So keep an 0:14:36.680 --> 0:14:39.200 eye on those kind of superlatives. That just really puts 0:14:39.240 --> 0:14:42.560 it into perspective. Black Monday, GFC, COVID, that is what 0:14:42.600 --> 0:14:46.320 people are comparing the last market drop to. And Nathan, 0:14:46.680 --> 0:14:49.760 the one thing that's in stark contrast to what's going 0:14:49.800 --> 0:14:53.440 on now versus those other instances in the past is 0:14:53.760 --> 0:14:58.280 during those other instances you had the monetary easing floodgates open, 0:14:58.320 --> 0:15:01.600 the fiscal easing floodgates open after Black Monday, during the 0:15:01.600 --> 0:15:04.360 Great Financial Crisis, and during COVID. But what stands now 0:15:04.480 --> 0:15:06.520 is a start contrast, so that we have a FED 0:15:06.920 --> 0:15:09.040 who says that they are going to be patient and 0:15:09.080 --> 0:15:12.680 wait for further clarity. Mike Wilson over at Morgan Stanley 0:15:13.000 --> 0:15:15.120 noting that the S and P five hundred could drop 0:15:15.160 --> 0:15:19.040 another seven to eight percent if the FED remains on 0:15:19.240 --> 0:15:21.920 hold and these tariffs continue in the market. 0:15:22.280 --> 0:15:27.160 But while we're seeing these selling continuing here on Wall Street, 0:15:27.240 --> 0:15:30.120 it looks, at least at this point this morning, like 0:15:30.200 --> 0:15:32.280 the sell off is even worse overseas. 0:15:32.360 --> 0:15:33.400 Valerie, Yeah, that's right. 0:15:33.440 --> 0:15:35.960 And the European open, Nathan, was quite shaky. We had 0:15:35.960 --> 0:15:39.360 the dacks drop ten percent at the open that's its 0:15:39.440 --> 0:15:43.200 third biggest gap lower in history. We're also seeing credit 0:15:43.240 --> 0:15:47.440 spreads widen across a high yield and investment grade in Europe, 0:15:47.440 --> 0:15:51.120 and that's leading to a very punishing session for European banks. 0:15:51.240 --> 0:15:54.600 SX SEVNY is down six point seven percent and over 0:15:54.600 --> 0:15:57.440 the last three days, Nathan, it's nearing a near twenty 0:15:57.520 --> 0:16:00.880 percent slide in European banks in the last three sessions. 0:16:01.280 --> 0:16:03.640 It's hard not to notice Valerie. 0:16:03.680 --> 0:16:06.920 This more than thirteen percent close for the Hangsang in 0:16:07.000 --> 0:16:10.880 Hong Kong. The Asian session has been absolutely brutal. As 0:16:11.320 --> 0:16:14.200 China sounds like it's not willing to back down either. 0:16:14.480 --> 0:16:17.240 Yeah, it was a bloodbath that HSI index, the Hangksang 0:16:17.280 --> 0:16:20.280 in Hong Kong dropping thirteen percent, Nathan. That's its worst 0:16:20.560 --> 0:16:24.240 one day drop since the Asian Financial Crisis of nineteen 0:16:24.480 --> 0:16:28.440 ninety seven. The Broader Asia Index, the MSCI Asia Pacific 0:16:28.720 --> 0:16:31.960 had its worst one day drop since October two thousand 0:16:31.960 --> 0:16:35.280 and eight. We had the Nicky entering into bear market territory, 0:16:35.320 --> 0:16:37.880 and the eight shares that trade in Hong Kong also 0:16:37.960 --> 0:16:41.280 down more than twenty percent from peak. The one thing though, 0:16:41.360 --> 0:16:44.720 that may be a solace for those em Asian nations 0:16:44.800 --> 0:16:47.120 is the fact that we are not seeing a rip 0:16:47.240 --> 0:16:50.840 roaring rally in the dollar, and that could be you know, 0:16:51.000 --> 0:16:55.320 one aspect of perhaps positivity for these nations who in 0:16:55.400 --> 0:16:59.600 normal times of economic instability they have to deal with 0:16:59.640 --> 0:17:03.680 capital flight and their currencies depreciating strongly versus the dollar. 0:17:03.720 --> 0:17:06.000 We at least are not seeing that as yet. 0:17:06.440 --> 0:17:09.399 Bloomberg Marketers reporter Valerie Titel, thank you for this as 0:17:09.440 --> 0:17:11.720 we continue to watch the global market sell off. Where 0:17:11.720 --> 0:17:15.840 you're joined now by Andrew Sheets, chief cross assets strategist 0:17:16.160 --> 0:17:18.879 at Morgan Stanley. Andrew, thank you so much for joining 0:17:18.920 --> 0:17:21.680 us this morning. And Valerie mentioned the call from your 0:17:21.680 --> 0:17:25.080 colleague at Morgan Stanley, Mike Wilson, the chief US equity strategist, 0:17:25.440 --> 0:17:29.720 saying stocks could fall another seven to eight percent if 0:17:29.800 --> 0:17:33.000 the tariff risk doesn't subside in the FED stays on hold. 0:17:33.080 --> 0:17:35.800 Is that your call as well? Good morning, Yeah, good morning. 0:17:35.880 --> 0:17:39.520 So I think, unfortunately you do have the confluence of 0:17:40.440 --> 0:17:43.679 a number of quite negative factors where it is hard 0:17:43.800 --> 0:17:48.399 to see enough offsets you had before the tariff announcement. 0:17:48.440 --> 0:17:52.480 I think already a deteriorating earnings picture in the US 0:17:52.480 --> 0:17:56.680 with negative revisions, You had deterioration and leading economic indicators 0:17:57.240 --> 0:18:01.000 like consumer confidence, and then you also had signs of 0:18:01.000 --> 0:18:05.320 inflation rising. You know, recalled that the last three prints 0:18:05.359 --> 0:18:10.040 for core PC, the Fed's preferred measure, have increased for 0:18:10.400 --> 0:18:14.200 three straight months. So we walked into this tarif announcement, 0:18:14.240 --> 0:18:16.720 I think, with a quite challenging macro backdrop. And then 0:18:16.800 --> 0:18:19.840 the tariffs that we got were much larger than expected. 0:18:20.640 --> 0:18:22.679 They were, you know, I think, much more severe than 0:18:23.080 --> 0:18:26.760 our forecast than many forecasters has penciled in. And so 0:18:26.880 --> 0:18:30.960 that creates additional downside risk to growth, additional upside risk 0:18:31.040 --> 0:18:35.639 to inflation, and also this challenging dynamic where it's not 0:18:35.880 --> 0:18:41.440 clear that either valuations or a policy change is right 0:18:41.480 --> 0:18:43.560 there for support. So I thought, your colleague, you know 0:18:43.840 --> 0:18:47.359 what they just mentioned about. You know, previously under some 0:18:47.400 --> 0:18:50.920 of this weakness, you had fiscal stimulus or you had easing. 0:18:51.560 --> 0:18:53.680 We think that's going to be much more more difficult. 0:18:53.680 --> 0:18:56.960 The FED is missing much more on their inflation mandate 0:18:57.000 --> 0:18:59.719 than they're missing on the jobs part of their mandate. Right, 0:18:59.760 --> 0:19:03.000 we had actually a pretty good payroll number on Friday, 0:19:03.040 --> 0:19:06.399 whereas core PCE is two point eight percent in the 0:19:06.480 --> 0:19:10.040 US we think that makes it quite difficult for the 0:19:10.080 --> 0:19:12.359 FED to cut. We think that the FED will cut 0:19:12.440 --> 0:19:15.480 far less than the market is expecting this year at 0:19:15.520 --> 0:19:19.320 Morgan Stanley, and valuations still remain elevated. The S and 0:19:19.359 --> 0:19:21.240 P is still at nineteen times. So I think you 0:19:21.280 --> 0:19:23.879 put all that together, and while it's always difficult to 0:19:23.880 --> 0:19:27.120 be too precise, that still means that there's potential for downside. 0:19:27.320 --> 0:19:29.640 So then, Andrew, what do you make of the move 0:19:29.680 --> 0:19:32.160 that we're seeing in the money markets. The money markets 0:19:32.160 --> 0:19:35.959 pricing in fully five FED rate cuts this year and 0:19:36.040 --> 0:19:39.119 even some calls now for an emergency cut before the 0:19:39.160 --> 0:19:40.280 next meeting next month. 0:19:40.720 --> 0:19:43.600 Yeah, we disagreed with that. We do think markets are 0:19:43.600 --> 0:19:46.640 looking at the equity weakness. As you mentioned, this is historic. 0:19:46.720 --> 0:19:50.280 It's one of the largest three day drawdowns that we've 0:19:50.280 --> 0:19:53.040 seen in a very long period of time, and you know, 0:19:53.119 --> 0:19:56.679 I think markets are understandably saying, well, a drawdown of 0:19:56.720 --> 0:19:59.800 that measure would naturally invite a response, But our view 0:19:59.840 --> 0:20:03.280 is that that will be much more difficult that inflations 0:20:03.359 --> 0:20:07.600 in a more difficult place. And because it's I think 0:20:07.600 --> 0:20:11.240 it's also not clear that FED rate cuts would necessarily 0:20:11.280 --> 0:20:14.560 address the issue. The uncertainty from tariffs. The costs of 0:20:14.640 --> 0:20:18.040 tariffs are not easily offset by say, you know, an 0:20:18.080 --> 0:20:21.080 emergency twenty five or fifty basis point rate cut. The 0:20:21.760 --> 0:20:24.199 issues go deeper. So you know, we think that the 0:20:24.240 --> 0:20:28.920 Fed will will need to and ultimately stay more focused 0:20:28.920 --> 0:20:33.080 on its mandate unless we see more seizure or tightness 0:20:33.080 --> 0:20:36.520 in say credit issuance markets, which we just haven't seen yet. 0:20:36.600 --> 0:20:39.040 Well, what do you make of the widening and credit 0:20:39.119 --> 0:20:41.360 spreads that we've started to see now in Asia and 0:20:41.520 --> 0:20:42.280 in Europe. 0:20:43.200 --> 0:20:45.680 Yeah, So, I think what's fascinating is that I think 0:20:45.720 --> 0:20:48.240 credit has a reputation, I like to think, a well 0:20:48.240 --> 0:20:52.600 earned reputation of usually being an early indicator. But in 0:20:52.640 --> 0:20:55.520 this cycle that has not been the case. Credit has 0:20:55.560 --> 0:20:59.320 been quite slow to catch up to weakness that has 0:20:59.359 --> 0:21:01.919 been in the equity market for some time. And I 0:21:01.920 --> 0:21:06.480