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

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Speaker 2: Good morning, I'm Nathan Hager and I'm Karen Moscow. Here

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Speaker 2: are the stories we're following today.

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Speaker 3: Karen, we begin with the new salvo in President Donald

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Speaker 3: Trump's global trade war. So called reciprocal tariffs are now

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Speaker 3: in effect for roughly sixty countries, bringing duties around the

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Speaker 3: world to levels that haven't been seen in a century.

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Speaker 4: They've ripped us off left and right.

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Speaker 3: But now it's our turn to do the rippin'.

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Speaker 5: That's okay. We're gonna make our.

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Speaker 6: Country even stronger, stronger than it ever was.

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Speaker 3: Speaking at a Republican fundraising event, President Trump said tariffs

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Speaker 3: are already bringing in two billion dollars a day, and

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Speaker 3: he said they're leading to negotiations. The President says he

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Speaker 3: had a great call yesterday with South Korea's acting president.

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Speaker 3: He also spoke with this week to Japan's Prime minister,

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Speaker 3: who urged the president to reconsider.

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Speaker 2: And Asian nations are bearing the brunt of the new tariffs.

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Speaker 2: Cambodia is now under a forty nine percent tariff rate,

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Speaker 2: Vietnams is forty six percent, but China is taking the

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Speaker 2: hardest hit with duties on top of existing tariffs running

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Speaker 2: as high as one hundred four percent. President Trump says

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Speaker 2: that'll force Beijing to the table.

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Speaker 7: They don't want tariffs on themselves.

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Speaker 6: And it's very simple.

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Speaker 8: We're making deals and people are paying tariffs.

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Speaker 6: Countries are paying tariffs right now.

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Speaker 9: China's paying a one hundred and four percent tariff.

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Speaker 7: Think of it, one hundred and four percent.

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Speaker 2: And President Trump said he won't stop there. He says

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Speaker 2: he'll announced tariffs on pharmaceuticals very soon. He's also threatened

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Speaker 2: other sectorial tariffs on lumber and semiconductors.

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Speaker 6: Well.

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Speaker 3: So far, Karen, China has not immediately responded to the

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Speaker 3: new tariffs. That's a departure from the last two episodes

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Speaker 3: when Beijing hit back within minutes. For more, Let's go

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Speaker 3: to Hong Kong check in with Bloomberg's Joe Lisis So, Jill,

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Speaker 3: what is the latest.

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Speaker 10: Morning, Nathan and Karen. Yes, so far, we have not

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Speaker 10: really seen any kind of drastic measures out of China.

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Speaker 10: It's really been radio silence. All we've really seen from

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Speaker 10: Beijing is they've released a short white paper on trade

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Speaker 10: with the United States. But this does stand in pretty

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Speaker 10: start contrast to just earlier this year when there were

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Speaker 10: earlier levies that Donald Trump implemented on China, we saw

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Speaker 10: immediate responses in the form of additional retaliations that came

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Speaker 10: with some tariffs on American goods that were sent to China.

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Speaker 10: That also came with some other punitive measures, such as

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Speaker 10: investigations into various American companies that do some operations in China.

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Speaker 10: That doesn't mean, though, that China isn't going to respond. Remember,

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Speaker 10: we did see over the weekend when that initial ten

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Speaker 10: percent tariff went into effect that China came out with

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Speaker 10: its own duties on the United States. That's, of course

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Speaker 10: what led to this massive escalation leading to that total

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Speaker 10: number of one hundred and four percent that Trump is

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Speaker 10: implemented in tariffs on China. So it could be that

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Speaker 10: China is kind of biting its time. Maybe it'll come

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Speaker 10: back with something else. We've also heard there's been some

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Speaker 10: reporting that some within Chinese officials are meeting to talk

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Speaker 10: about some economic measures that they could take to sort

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Speaker 10: of bolster the economy. Right now, obviously, all of that

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Speaker 10: coming against the backdrop of tariffs. We'll have to see

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Speaker 10: what continues to come just over the coming hours. If

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Speaker 10: not days and weeks in Hong Kong, Jilldy says Bloomberg Radio.

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Speaker 2: All right, Jill, thank you. Now it's head to Europe

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Speaker 2: where stocks are selling off on the Trump tariffs, and

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Speaker 2: bloombergs U and Pots joins us in London with the

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Speaker 2: latest Good morning you.

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Speaker 11: In Karen Nathan. After yesterday's bumpy session in Europe, which

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Speaker 11: saw stocks gain before a late selloff, the direction of

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Speaker 11: travel so far this morning is very clear and it

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Speaker 11: is down only sixteen of six hundred shares on the

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Speaker 11: benchmark stocks ex hundred in the green today within next

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Speaker 11: currently down two point seven percent. All twenty industry groups low,

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Speaker 11: with healthcare stocks the worst performers, off more than four

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Speaker 11: and a half percent. Energy and real estate also under

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Speaker 11: performing this morning. Looking across the region, the Swiss market

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Speaker 11: at the bottom of the table, it's going down more

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Speaker 11: than four percent. Live in London, I'm um Pots, Bloomberg

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Speaker 11: radea you.

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Speaker 3: And thank you hearing the US futures are mixed down,

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Speaker 3: futures lower, Nasdaq futures higher. That puts SMP futures right

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Speaker 3: in the middle. That that follows yet another turbulent session

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Speaker 3: on Wall Street for four straight sessions we've seen moves

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Speaker 3: at least four percent from peak to trough. The S

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Speaker 3: and P five hundred is down almost nineteen percent from

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Speaker 3: its February record, posting the worst four day run since

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Speaker 3: March twenty twenty.

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Speaker 2: Well, Nathan, we are seeing major movements in the bond

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Speaker 2: market once again this morning, and we bring in Bloomberg

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Speaker 2: John Tucker for the very latest, John and Karen.

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Speaker 7: Treasuries, which are supposed to be the safest and most

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Speaker 7: liquid assets, they're selling off and when the prices go down,

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Speaker 7: the yields go up. A Calvin yo Muddy, manager at

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Speaker 7: hedge fund blue Edge at Binzer, says this is a

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Speaker 7: fire sale of treasuries. He adds, it's like ice sculpting

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Speaker 7: in a forest.

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Speaker 8: Fire.

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Speaker 7: Grace Peters a JP Morgan Chase sees it this way.

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Speaker 4: You know what the market is digesting this week is

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Speaker 4: that tariffs are not going away. In Volatility is likely

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Speaker 4: here to stay.

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Speaker 7: US government bonds may be losing their safe haven status

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Speaker 7: if it concerns the trade war will trigger stagflation. Hedge

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Speaker 7: funds may be unwinding a popular leverage trade, and investors

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Speaker 7: maybe just be dumping whatever they can to get cash

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Speaker 7: That could signal liquidity concerns, and that's never a good

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Speaker 7: sign for markets. Some investors also speculate that global reserve

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Speaker 7: managers like China could be re evaluating their positions in

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Speaker 7: US government debt. In the US right now, the ten

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Speaker 7: year is now ten thirty seconds in price. That is

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Speaker 7: pushing the yield up four basis points the four thirty

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Speaker 7: three you know, New yorkom John Tucker, Bloomberg Radio.

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Speaker 3: All right, John, thank you for hearing a warning this

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Speaker 3: morning from former Treasury Secretary Larry Summers. He says the

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Speaker 3: US is now likely headed toward a recession thanks to

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Speaker 3: the tariff increases.

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Speaker 6: We'll see an extra two million people be unemployed. We'll

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Speaker 6: see losses in household income that are five thousand dollars

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Speaker 6: of family or more. We're very likely, in the context

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Speaker 6: of a recession, to see markets reach levels significantly below

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Speaker 6: their current levels.

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Speaker 3: Former Treasury Secretary Larry Summers also tells Bloomberg's Wall Street

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Speaker 3: Week and economic downturn would have various other negative effects,

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Speaker 3: including a wider budget deficit. You can get the full

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Speaker 3: conversation with Bloomberg's David Weston on the Bloomberg Talks podcast,

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Speaker 3: or watch it on the Bloomberg Podcasts page on YouTube.

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Speaker 2: Meywell Nathan. Many strategists say Trump's tariff policy should not

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Speaker 2: come as a surprise. Limy Countrilla, as Managing director for

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Speaker 2: Public Policy at PIMCO, this.

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Speaker 12: Is a worldview that President Trump has had for forty years.

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Speaker 12: This is what we keep telling our clients, and he

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Speaker 12: ran on this. He believes he has a mandate to

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Speaker 12: fulfill this. He believes that there's a lot of unfinished

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Speaker 12: business from the first administration. And I think that the

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Speaker 12: market obviously wants to maybe see through this or hope

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Speaker 12: that there is some this will result in a different outcome.

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Speaker 12: But our view is tariff rates are going to be

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Speaker 12: going up and that will have a headwind on growth

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Speaker 12: and likely have implications for inflation.

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Speaker 2: Jim Coos Lebby Cantrell says one of the president's primary

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Speaker 2: goals is balancing the goods trade deficit, and that he

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Speaker 2: plans to use tariffs until that metric is better balanced.

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Speaker 3: Karen, this morning, we have a warning as well from

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Speaker 3: Ray daly O for investors who may be too fixated

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Speaker 3: on tariffs. Let's get the details on that. From Bloomberg's

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Speaker 3: li So Mateo.

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Speaker 9: In a post on X. The billionaire founder of Bridgewater Associates,

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Speaker 9: said investors are not paying attention to underlying conditions the

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Speaker 9: breakdown in major monetary, political, and geopolitical orders, and that

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Speaker 9: failing to do so may blindside them to the biggest

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Speaker 9: disruptions that are still to come. Dalli explained how Trump's

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Speaker 9: tariff policies are driven by too much existing debt and

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Speaker 9: the rate at which new borrowing is added. He said

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Speaker 9: the US is hooked on using debt to finance successive spending,

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Speaker 9: while creditor countries like China sell goods to detornations like

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Speaker 9: the US, and that will lead to a correction of

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Speaker 9: these imbalances and a change in the monetary order. Balio

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Speaker 9: also notes that gaps and education, opportunity and values are

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Speaker 9: contributing to a breakdown of the democratic system and the

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Speaker 9: rise of autocratic leaders, while the US is shifting from

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Speaker 9: a multilateral to a unilateral approach in the geopolitical arena.

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Speaker 9: Lisa Matteo, Bloomberg Radio, all.

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Speaker 2: Right, Lisa, thank you about Bloomberg News has learned the

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Speaker 2: White House's top economic team argued over plans to impose

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Speaker 2: even bigger tariffs. Trade advisor Peter Navarro was among the

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Speaker 2: more hawkish officials who pushed for a flat twenty five

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Speaker 2: percent levy on all countries. The revelation comes as Elon

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Speaker 2: Musk called Navarro dumber than a sack of bricks. That's

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Speaker 2: a quote and truly a moron. On social media, Navarro

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Speaker 2: said the Tesla CEO was a quote car assembler who

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Speaker 2: used parts from other countries. White House spokesperson Caroline Levitt

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Speaker 2: downplay the spat.

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Speaker 13: Look, these are obviously two individuals who have very different

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Speaker 13: views on trade and on tariff's. Boys will be boys,

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Speaker 13: and we will let their public sparring continue. And you

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Speaker 13: guys should all be very grateful that we have the

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Speaker 13: most transparent administration in history. And I think it also

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Speaker 13: speaks to the President's willingness to hear from all sides

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Speaker 13: that he has people at the highest levels of this government,

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Speaker 13: in this White House who have very diverse opinions on

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Speaker 13: very diverse issues.

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Speaker 2: Whitehouse spokes version Caroline love it and must defend a

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Speaker 2: Tesla as the most vertically integrated auto manufacturer in America.

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Speaker 2: It's time now for a look at some of the

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Speaker 2: other stories making news in New York and around the world.

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Speaker 2: And for that, we're joined by Bloombergy's Michael Baher Machael

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Speaker 2: good morning.

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Speaker 8: Good morning, Karen. It's another disturbing milestone in the Texas

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Speaker 8: measles outbreak. Texas has now confirmed more than five hundred

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Speaker 8: measles cases in a little more than two months. The

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Speaker 8: outbreak is responsible for two deaths and more than fifty hospitalizations. Meanwhile,

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Speaker 8: Health and Human Services Secretary Robert F. Kennedy Jr. Now

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Speaker 8: says he is encouraging people to get vaccinated against measles.

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Speaker 14: I'm not going to take people's vaccines away from What

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Speaker 14: I'm going to do is make sure that we have

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Speaker 14: good science so that people can make an informed choice.

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Speaker 8: Kennedy spoke on CDs Mornings. A roof collapse at the

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Speaker 8: iconic jet Set nightclub and the Dominican Republic has killed

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Speaker 8: at least ninety eight people and others may be trapped.

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Speaker 8: Emergency Center director Juan Manuel Mendez says Cruz would search

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Speaker 8: tirelessly for people at the site of the collapse in

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Speaker 8: Santo Domingo. Among the missing is marengue singer Ruby Perez,

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Speaker 8: who was among those performing when the roof collapsed. Those

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Speaker 8: who died include a saxophonist on stage, local politicians, and

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Speaker 8: two former Major League Baseball players, Octavio d'hotel and Tony Blanco.

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Speaker 8: The acting chief of the IRS plans to quit after

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Speaker 8: a deal to share tax data of undocumented immigrants with

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Speaker 8: Homeland Security authorities. Acting Commissioner Melanie Krauss is also said

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Speaker 8: to have disagreed with the agency's direction. A federal judge

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Speaker 8: in New York will hear argument it's on the Trump

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Speaker 8: administration's use of the Alien Enemies Act to deport undocumented migrants.

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Speaker 8: Lee Goerlernt is the American Civil Liberties Union attorney leading

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Speaker 8: the challenge against that use of the Act. He says

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Speaker 8: he believes President Trump has exceeded his authority.

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Speaker 5: We are hoping that the judge will issue a temporary

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Speaker 5: restraining order to keep things in place while the case

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Speaker 5: can proceed further, and then we can provide the court

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Speaker 5: with more briefing and more facts.

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Speaker 8: On Monday, the Supreme Court lifted a DC judges order

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Speaker 8: that prevented the White House from deporting Venezuelan migrants who

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Speaker 8: the government alleges our gang members. Global News twenty four

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Speaker 8: hours a day and whenever you want it with Bloomberg News. Now,

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Speaker 8: I'm Michael Barn. This is Bloomberg Karen.

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Speaker 2: All right, Michael Barr, thank you. Time now for the

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Speaker 2: Bloomberg Sports update. Here's John stash Hour, John, good morning.

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Speaker 14: Good morning. Here the next of the Celtics with a

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Speaker 14: hint of what could very well happen when the NBA

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Speaker 14: Playoffs get to the second round. Height game with the guard,

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Speaker 14: Nick's had a one point lead and the ball.

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Speaker 15: Brunsingle try to orchestrate. With the one point lead, Brunsvill

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Speaker 15: tried cutting hard Brunson, who sins play hearts and he's

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Speaker 15: right on the Celtics. It's Tatum on top, Tatum chip

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Speaker 15: stepping three.

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Speaker 2: For the time.

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Speaker 14: GNT Josh Hart miss the game when he shot out

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Speaker 14: the end of regulation and Boston won and overtime one

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Speaker 14: nineteen one seventeen. The one time Nick Chris TOMPs Porzingis

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Speaker 14: at seven foot three, put on a long distance shooting

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Speaker 14: display eight three pointers, a couple of them from the logo.

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Speaker 14: He scored thirty four points. Jason Tatum scored thirty two.

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Speaker 14: Karl Anthony Towns led the Knicks with thirty four Next

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Speaker 14: beat New Orleans won nineteen one fourteen. The Denver Nuggets

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Speaker 14: only three games ago in the regular season, fired Michael Malone,

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Speaker 14: their coach the past decade. He coached them to the

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Speaker 14: NBA Championship only two years ago. Devils lost to the

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Speaker 14: Ruins seven to two. The Islanders a wild seven six

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Speaker 14: overtime Watson Nashville and talk about while the Vancouver Canucks

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Speaker 14: trailed in Dallas five to two with one minute left,

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Speaker 14: scored three times in the final minute and one in

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Speaker 14: ot make it six wins in a row for the Mets.

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Speaker 14: They're five to zero on this first home stand. They

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Speaker 14: beat the Marlins ten to five. Francisco Lindora lead off

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Speaker 14: home run four RBIs for Pete Alonzo. Those Yankee Torpedo

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Speaker 14: bats very quiet in Detroit against Tigers Ace Trek Scubel.

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Speaker 14: Yanks had just six singles, got shut out five nothing

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Speaker 14: their third strate Laws all three without a home run

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Speaker 14: being hit. The Nationals again surprise the Dodgers eight to two.

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Speaker 14: James Wood Duomer's five RBIs. Red Sox lost at Toronto

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Speaker 14: six to one. John Stasheward Bloomberg Sports, Darin Nathan.

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Speaker 1: Coast to Coast on Bloomberg Radio nationwide on Sirius XM,

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Speaker 1: and around the world on Bloomberg dot Com and the

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Speaker 1: Bloomberg Business app. This is Bloomberg Daybreak.

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Speaker 15: Good morning.

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Speaker 3: I'm Nathan Hager, and as promised President Donald Trump, so

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Speaker 3: called reciprocal tariffs are now in effect, driving duty rates

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Speaker 3: for countries around the world to one hundred year highs.

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Speaker 3: And even after four straight sessions of market turmoil on

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Speaker 3: Wall Street, the President says tariffs are already a win.

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Speaker 4: We'll making a fortune with tariffs.

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Speaker 7: Two billion dollars a day.

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Speaker 8: Do you believe it?

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Speaker 2: I was sold two billion.

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Speaker 15: Dollars a day.

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Speaker 3: And that was the President speaking at a Republican fundraiser

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Speaker 3: in Washington last night, hours before these new tariffs kicked in.

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Speaker 3: This morning, we were joined by Bloomberg News Global Trade

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Speaker 3: editor Brendan Murray. Brendan, can we start there? Where did

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Speaker 3: two billion dollars a day number come from? How much money?

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Speaker 3: If ed, he is the US taking in from the

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Speaker 3: duties that have already been in effect.

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Speaker 7: Good morning.

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Speaker 16: Well, that's the number he's saying is coming into the

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Speaker 16: US treasury, collected by the Customs Agency. For He started

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Speaker 16: with ten percent on China, then he went to twenty percent,

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Speaker 16: and now we're looking at one hundred and four percent

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Speaker 16: it is starting today, So that's the amount of money

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Speaker 16: he thinks it's generating. He's going to need a lot

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Speaker 16: of money to pay for the tax cuts that he

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Speaker 16: trying to push through Congress to extend as well. So

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Speaker 16: there's both the effort to rewrite US trading relationships, trade

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Speaker 16: deals with countries like China, economies like the European Union,

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Speaker 16: and as well as to generary revenue for the Treasury

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Speaker 16: to help reduce the national debt.

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Speaker 3: Closing sympathis we should talk, Brennan about the scope of

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Speaker 3: these tariffs. You mentioned the one hundred and four percent

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Speaker 3: duty on China. That alone is eyebrow raising. But we're

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Speaker 3: at levels that literally haven't been seen since even before

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Speaker 3: the Smooth Holly tariffs in the nineteen thirties.

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Speaker 16: Yeah, exactly. So the average US tariff rate has gone

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Speaker 16: from something in the mid single digits five seven percent

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Speaker 16: to over twenty percent now with the tariffs that were

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Speaker 16: enacted today. The European Union was hit with twenty percent,

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Speaker 16: the UK ten percent. Countries like in Southeast Asia, like

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Speaker 16: Cambodia and Vietnam are looking at rates in the mid

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Speaker 16: forty percent too, So those were countries that companies had

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Speaker 16: shifted to to get outside of their move their supply

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Speaker 16: chains outside of China. So pretty much there's no place

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Speaker 16: to hide from these enormous tariff rates that the President

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Speaker 16: imposed today.

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Speaker 3: And as the President mentioned last night, he's already been

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Speaker 3: having discussions with the leaders of South Korea, Japan. We

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Speaker 3: saw Israeli Prime Minister natanyahuo in Washington this week. So far,

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Speaker 3: though China hasn't immediately retaliated, does that come as a surprise.

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Speaker 16: It's a little bit of a surprise. Though China likes

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Speaker 16: to wait until rate before the US stock market opens.

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Speaker 16: It has done that in the past to maximize the impact,

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Speaker 16: the economic impact, the financial impact on the US. So

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Speaker 16: China has been quiet for the past several hours. The

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Speaker 16: government hasn't said anything publicly, but that can't last, and

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Speaker 16: they have said that they will they will fight to

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Speaker 16: the end on this in this trade war and not

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Speaker 16: cave to pressures. So it's only a matter of time.

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Speaker 16: There's only so much imports that China can hit imports

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Speaker 16: of American products, so they're going to be looking at

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Speaker 16: other other things like export controls, cutting off American access

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Speaker 16: to raw materials, things needed to make high tech gear.

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Speaker 16: And they've also got big, big US tech companies there

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Speaker 16: a big US automakers including Elon, Musk Tesla. So if

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Speaker 16: you're an American company in China right now, you know

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Speaker 16: you're potentially a target for the government's retaliation.

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Speaker 3: Really appreciate this. Brendan again, thanks so again for being

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Speaker 3: with us this morning. That is Brendan Murray, Global Trade

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Speaker 3: editor for Bloomberg News.

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Speaker 2: Karen Nathan, We're just watching the markets this morning as

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Speaker 2: treasuries extend their decline. Stocks in Europe or lower, and

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Speaker 2: futures this morning are mixed s and P futures they're

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Speaker 2: up to tens of a percent of eleven points down.

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Speaker 2: Futures are a little change now. Future is up six

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Speaker 2: tens of percent, or one hundred and six points. The

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Speaker 2: decks in Germany is down two point two percent, so's

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Speaker 2: the CAAC in Paris fort C one hundred down two

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Speaker 2: point one percent. Then EK two twenty five in Japan

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Speaker 2: it was down about four percent. The ten year treasury

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Speaker 2: down twelve thirty seconds, seeal four point three four percent,

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Speaker 2: yield on the two year three point seven eight percent,

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Speaker 2: the thirty year yield four point seven nine percent. NIMEX

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Speaker 2: scrude oil is down three percent, down a dollars seventy

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Speaker 2: seven at fifty seven dollars eighty five cents of barrel

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Speaker 2: comecs Gold up two and a half percent. It's seventy

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Speaker 2: three dollars ten cents at thirty sixty three and ounce.

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Speaker 2: The Blueberg Dollars Spot index it's lower. It's down half percent,

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Speaker 2: with the euro one point one zero three zero against

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Speaker 2: the dollar, the n one forty five point three eight

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Speaker 2: and Bitcoin up a quarter percent.

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Speaker 3: Nathan Okay, Karen, thank you for more on the market impact.

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Speaker 3: We are joined now by Sema Shah, chief Global Strategist

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Speaker 3: at Principal Asset Management. Seema, it's great to have you

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Speaker 3: with us this morning. Where do you see risk assets

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Speaker 3: in particular going now that these new tariffs are in

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Speaker 3: effect around the world.

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Speaker 4: Good morning. Well, look, with the new tariffs, particularly the

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Speaker 4: escalation of China's tariffs, we are looking in a slightly

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Speaker 4: I mean, I think, a very concerning global economic picture

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Speaker 4: and also for the US from our perspective, unless there

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Speaker 4: is I guess a release of those tariffs, or you

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Speaker 4: have some kind of positive news with regards to tax

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Speaker 4: cuts or deregulation, it is quite likely that the US

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Speaker 4: would slide into recession. There is still I think a

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Speaker 4: lot to be seen over the last next couple of

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Speaker 4: months from the administration per Certainly that is the direction

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Speaker 4: that things would move without any kind of action to

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Speaker 4: reverse some of the things have been playing out over

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Speaker 4: the last couple of weeks. So from that perspective, I

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Speaker 4: think it seems likely that you're going to have risk

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Speaker 4: of sentiment lingering for a little while longer. At least,

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Speaker 4: we need to see a rerating of valuations to a

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Speaker 4: point where investors are want to get interested, and to

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Speaker 4: have that, you're need to see another downward revision of

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Speaker 4: the earnings forecasts to slightly more realistic level, one which

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Speaker 4: is more reflective of a weaken economic picture.

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Speaker 3: Is that what we're seeing in the treasury market right now,

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Speaker 3: with the sell off across the curve this morning, a

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Speaker 3: repricing four recession.

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Speaker 4: I think the seller for in the treasure curve is

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Speaker 4: actually quite confusing. It's quite opaque. There's a number of

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Speaker 4: different possibilities that could be playing out over here. It

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Speaker 4: could be down to inflation concerns, it could be concerns

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Speaker 4: around tax revenue, with a weaker economic outlook then starting

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Speaker 4: to create additional fears around the budget deficit. And of

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Speaker 4: course there's the key risk out there which investors are

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Speaker 4: increasingly talking about, which is a loss and interest of

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Speaker 4: the US as a safe haven. As I said, it's

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Speaker 4: very unclear exactly which one of those is really the

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Speaker 4: key driver. Per certainly it does make the economic outlook

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Speaker 4: that much more concerning if you have interest rates which

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Speaker 4: are spiking at a time when they should ideal be falling.

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Speaker 3: If the US is losing its status as a safe haven,

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Speaker 3: where is a safe haven at this point?

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Speaker 4: Well, it's been interesting today when you look across across

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Speaker 4: the global market, then you can see that there are

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Speaker 4: some traditional safe havens still playing out to the Japanese yen,

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Speaker 4: German burns, So there are still places in the world,

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Speaker 4: and that gives us an indication where if investors were

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Speaker 4: really to start losing interests, and I have to I

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Speaker 4: think it is still quite premature and there's a lot

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Speaker 4: to be discussed and read into to understand exactly what

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Speaker 4: is going on. But the alternative to a US dollar

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Speaker 4: it's not entirely obvious at the moment. There is potential

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Speaker 4: maybe over the next couple of years for the euro

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Speaker 4: to show growing prominence. If Europe can show closer integration,

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Speaker 4: you see additional fiscal spending for shure to spend, but

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Speaker 4: that is still a big question mark, so I think

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Speaker 4: the jury is still out. But of course the developments

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Speaker 4: in the last I think twenty four hours are an

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Speaker 4: additional concerent on top of what was already worrying markets

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Speaker 4: point and I want.

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Speaker 3: To imagine there are some questions as well as what

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Speaker 3: as to what could tariffs could mean for the European

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Speaker 3: economy at a time when they've been looking to increase

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Speaker 3: defense spending. What's the outlook for Europe now?

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Speaker 4: Yeah, I think after the Wednesday announcement Liberation Day announcement,

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Speaker 4: we did lower our forecast for Europe even further. For

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Speaker 4: Germany we now see recession as quite likely, so that

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Speaker 4: was a shift down from point three percent growth in

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Speaker 4: twenty twenty five. And for Europe we've lowered our forecast

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Speaker 4: from er point eight percent this year down to point

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Speaker 4: three percent, so they're still skirting recession. But of course

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Speaker 4: these are really based on what are the sensitivities to

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Speaker 4: terrass So there's going to be any substitution, and of

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Speaker 4: course a question around retaliation still there, so there is

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Speaker 4: a risk that this is even deeper concern than we're

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Speaker 4: already seeing.

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Speaker 2: Now.

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Speaker 4: The good news is is that the fifth or stimulus

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Speaker 4: from Germany, it will start to positively impact the economy,

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Speaker 4: but not until twenty twenty six, and at that point

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Speaker 4: we would start to see a stronger picture. So right

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Speaker 4: now now twenty twenty five is looking particularly tough, but

440
00:23:04,000 --> 00:23:06,520
Speaker 4: brighter times ahead from twenty six when the fiscal stem

441
00:23:06,640 --> 00:23:08,440
Speaker 4: starts to bleed through to the real economy.

442
00:23:08,800 --> 00:23:10,639
Speaker 3: To bring things back to the US, there had been

443
00:23:10,680 --> 00:23:13,360
Speaker 3: a question before these new tariffs kicked in about whether

444
00:23:13,440 --> 00:23:15,640
Speaker 3: the Fed could step in at some point if we're

445
00:23:15,640 --> 00:23:19,680
Speaker 3: heading into a stagflationary environment, where is the Fed?

446
00:23:19,960 --> 00:23:20,120
Speaker 2: Now?

447
00:23:20,560 --> 00:23:24,439
Speaker 3: What kind of response could they pose here with these

448
00:23:24,520 --> 00:23:25,080
Speaker 3: new tariffs?

449
00:23:26,240 --> 00:23:29,080
Speaker 4: Right well, so from a traditional standpoint, when you're just

450
00:23:29,119 --> 00:23:32,240
Speaker 4: thinking about interest rate cuts, we are expecting the Federal

451
00:23:32,280 --> 00:23:35,080
Speaker 4: Reserve to be able to put more emphasis on the

452
00:23:35,119 --> 00:23:37,280
Speaker 4: employment side of their mandate. So even if you were

453
00:23:37,359 --> 00:23:40,320
Speaker 4: and we are expecting inflation to increase, our forecast is

454
00:23:40,400 --> 00:23:43,439
Speaker 4: for core PCE to hit around four percent by year end.

455
00:23:44,200 --> 00:23:47,840
Speaker 4: But even with that and assuming that inflation and expectations

456
00:23:47,880 --> 00:23:49,960
Speaker 4: remain fairly and could. We do think the Federal Reserve

457
00:23:50,000 --> 00:23:52,280
Speaker 4: will start to cut rates within the next meeting of

458
00:23:52,359 --> 00:23:55,840
Speaker 4: the second in June, and cut maybe by three to

459
00:23:55,920 --> 00:23:58,600
Speaker 4: four times. The only scenario that we see hikes at

460
00:23:58,640 --> 00:24:01,640
Speaker 4: this point is if actually the economy were to return

461
00:24:01,680 --> 00:24:04,440
Speaker 4: to significant strength. So we do think even in stagflation,

462
00:24:04,560 --> 00:24:07,680
Speaker 4: the Fed emphasizes the employment side of their mandate. The

463
00:24:07,720 --> 00:24:09,520
Speaker 4: bigger question I think at the moment, which is really

464
00:24:09,560 --> 00:24:12,440
Speaker 4: being discussed in circles, is if you were to see

465
00:24:12,440 --> 00:24:15,720
Speaker 4: a continued sell off of US treasuries, is there a

466
00:24:15,800 --> 00:24:17,560
Speaker 4: role for the Federal Reserve to come in with some

467
00:24:17,760 --> 00:24:21,760
Speaker 4: kind of emergency action. We're still far from that, but

468
00:24:21,840 --> 00:24:23,600
Speaker 4: I think it is something that we need to keep

469
00:24:23,640 --> 00:24:26,040
Speaker 4: watching that. If there is a concern around the financial

470
00:24:26,119 --> 00:24:28,520
Speaker 4: plumbing of the system, is there something that we can

471
00:24:28,600 --> 00:24:29,400
Speaker 4: expect from the Fed?

472
00:24:30,119 --> 00:24:30,760
Speaker 6: On that count?

473
00:24:31,520 --> 00:24:34,320
Speaker 3: Got about thirty seconds left, Seima. Are we in a

474
00:24:34,359 --> 00:24:37,520
Speaker 3: game of chicken between the market and the president? If so,

475
00:24:37,920 --> 00:24:38,800
Speaker 3: who blinks first?

476
00:24:40,400 --> 00:24:43,640
Speaker 4: I think that's exactly what we're in. Trump has focused

477
00:24:43,720 --> 00:24:45,680
Speaker 4: a lot of bond deals, That's what he's been saying.

478
00:24:45,920 --> 00:24:49,280
Speaker 4: So if he's watching this picture, He will be likely

479
00:24:49,520 --> 00:24:51,719
Speaker 4: quite concerned about what is folding in front of him,

480
00:24:52,240 --> 00:24:54,720
Speaker 4: and if this continues, then potentially we could see a

481
00:24:54,760 --> 00:24:56,960
Speaker 4: step back from the administration with regards to the policy

482
00:24:57,040 --> 00:24:58,080
Speaker 4: that they've already introduced.

483
00:24:58,560 --> 00:25:02,000
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484
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