April 7, 2025 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) European stocks plunged, dropping to the lowest since December 2023 on the back of Donald Trump’s tariff announcements, with Germany’s DAX Index falling as much as 10%.
(2) President Donald Trump and his economic team dismissed investors’ fears of inflation and recession, offering no apologies for the market turmoil sparked by sweeping global tariffs and defiantly insisting a boom is on the horizon.
(3) China’s objections to new US tariffs stalled a deal to sell off TikTok and keep it operating in the US, President Donald Trump said Sunday.
(4) Bill Ackman and Stanley Druckenmiller slammed President Donald Trump’s decision to launch expansive global tariffs, which have plunged markets into chaos.
(5) UK Prime Minister Keir Starmer said he’ll announce measures this week to support Britain’s economy and businesses amid the threat posed by Donald Trump’s tariffs.
(6) Finance ministers from Italy and Spain cautioned against too aggressive a response to US President Donald Trump’s tariffs, underscoring the European Union’s divide on the matter.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They say is the Bloomberg Daybreak Ero podcast, available every
morning on Apple, Spotify or wherever you listen. It's Monday,
the seventh of April in London. I'm Stephen Carroll and.
Speaker 3 (00:18):
I'm Valerie Titel. Coming up today.
Speaker 1 (00:20):
The global stock market meltdown is getting worse as tariffs
for session fears and growing retaliation concerns send investors fleeing
from risk assets.
Speaker 2 (00:29):
Donald Trump projects the reaction from traders as he remains
defiant on his global tariff barrage.
Speaker 1 (00:35):
And the only certainty is uncertainty. Bill Ackman warns of
an economic nuclear winter, as Cure Starmer says, the world
as we knew it has gone.
Speaker 4 (00:44):
Let's start with a roundup of our top stories.
Speaker 1 (00:46):
Global equities are plummeting again today as investors continue to
fear Trump's tariff salvo could lead to a global recession.
European shares have opened sharply lower. The eurostock six hundred
is down five point eight percent. In Asia, Japan's nick
I two two five entered a bear market, falling twenty
percent from its high end December. The MSCI Asia Pacific
(01:08):
Index having its worst session since October two thousand and eight.
Futures are pointing towards heavy losses on Wall Street SMPE minis.
Speaker 3 (01:16):
Down three point eight percent.
Speaker 1 (01:18):
The head of Economics a Renaissance Macro Research, Neil Dutta,
says markets are sending a clear message.
Speaker 5 (01:24):
You're getting to a point now where I think the
market will take on more of a role of like
an active informant, where it begins aggregating macro risk factors
and outcomes and it tells you about the future, and
then the stock market does kind of take on this
macro role, and that's kind of where we are. So
if the stock market goes down, that creates a way
of tightening financial conditions, exacerbating the uncertainty that's already out there,
(01:44):
and you continue to have a negative feedback loop until
policy gets investors to shift their attention.
Speaker 1 (01:50):
Neil Dutta was speaking as the global route inequities was
matched by a surge in the so called fear index
the VIX, which is now at levels not seen since
the pandemic and cross the sixty level at the open.
Speaker 2 (02:02):
President Donald Trump and his team are doubling down on
their tariff plan as he and his economic team dismissed investors'
fear of inflation and recession. Speaking on Air Force One yesterday,
the US leader struck a determined tone and repeatedly defended
the measures unveiled last week.
Speaker 6 (02:19):
I don't want anything to go down, but sometimes you
have to take betterson to fix something.
Speaker 2 (02:24):
In comments that may fuel further market fears, Trump said
he wouldn't strike deals to cut the highest tariff rates
unless countries eliminate their trade deficits with the US.
Speaker 6 (02:33):
I spoke to a lot of leaders, European agent from
all over the world.
Speaker 5 (02:39):
They're dying to make a deal, but I said, we're
not going to have deficits with your country.
Speaker 2 (02:44):
Trump's insistence the trade deficits need to be balanced to
gain tariff relief will cause concern in many countries, as
delivering on that aim would be entirely separate from eliminating
any trade barriers or tariffs they may have on the US.
Speaker 1 (02:57):
Trump's comments are the latest in a parade of def
fiance signals from the President and his top economic advisors.
The US Treasury Secretary Scott Besson, speaking on NBC's Meet
the Press, rejected the idea that they would cause a
protracted US economic contraction.
Speaker 7 (03:12):
I reject that the assumption there doesn't have to be
a recession.
Speaker 3 (03:20):
Who knows how.
Speaker 7 (03:21):
The market is going to react in a day, in
a week. What we are looking at is building the
long term economic fundamentals for prosperity that I think the
previous administration had put us on the course toward financial calamity.
Speaker 1 (03:35):
Treasury Secretary Scott Bessant, speaking to NBC's Meet the Press,
Besson said more than fifty countries had called the White
House seeking talks, but that any negotiations are going to
take time.
Speaker 2 (03:46):
Prominent investors and traders have also been posting on social
media to make their views on the tariffs clear. Bloomberg's
Ewan Potts has more.
Speaker 8 (03:54):
Off the two trading sessions, which saw five trillion dollars
wiped off the value of US stocks. America is a
vescal is coming to terms with its new diminished status
in the era of President Trump's trade offensive. Bill Lackman,
the founder of Pershing Square and vocal Trump supporter, posted
on x that he strongly believes launching tariffs against the
entire world is a mistake. Ray Dalio, the founder of Bridgewater,
(04:17):
the world's largest hedge fund warns the tariff package will
be significantly stagflationary for the United States. Ackmann went on
to say the White I should call time out on
the plans. He says, otherwise we're heading for a self
induced economic and nucular winter in London. I'm une pots
s Bloomberg Radio.
Speaker 1 (04:33):
After the events of recent days, economists at Goldman Sachs
have raised the probability of a US recession from thirty five.
Speaker 3 (04:40):
To forty five percent.
Speaker 1 (04:41):
They now expect the FED to deliver three consecutive twenty
five basis point insurance cuts starting in June, but Warren
the Central Bank could deliver much deeper cuts in the
event of a recession. Here's Bloomberg Opinion columnist Mohammed Elarian.
Speaker 9 (04:55):
I think the hardest thing for the markets right now
is not only to try to evaluate where the destination is,
but how bumpy will the journey be. And I'm saying
that because we have technicals playing in margin calls are there,
people are in fact reducing winners and losers across the
board to waste cash. Fund managers are worried about actual
(05:18):
and expected outflows.
Speaker 1 (05:20):
Mohammad el Arian, speaking there as Goldman Sachs economists said
their baseline forecasts for some growth still rest on the
assumption that US tariffs will be reduced from their current level.
Speaker 2 (05:31):
China's policymakers are discussing frontloading stimulus to counter the hit
from Donald Trump's tariffs, Bloomberg has learned. Senior officials discussed
new exports subsidies and a stock market stabilization fund. State
run media also talked about domestic demand becoming the long
term strategy for economic growth, and The Securities Times reported
that Chinese sovereign fund Central Huejin is actively carrying out
(05:54):
market stabilization operations today, as the onshore CSI three hundred
index of share so its biggest declines in more than
five years.
Speaker 1 (06:02):
UK Prime Minister Keir Starmer says he'll announce new measures
to support British businesses in the face of the global
trade war. Writing in a newspaper over the weekend, he
said the world as we knew it has gone. Treasury
Minister Darren Jones says the support package will involve investment
in industrial policy and public services.
Speaker 10 (06:22):
Globalization as we've known it for the last number of
decades has come to an end. That's why we need
Britain to be strong and resilient, also build out our
relationships with our allies and partners around the world. But
also why we have to invest in the domestic economy,
both the UK businesses but also our public services, so
that we have workers and communities who are well skilled
(06:43):
able to take advantages of jobs.
Speaker 1 (06:45):
Jones gave no details, but after he spoke, the UK
government announced it would ease it's green targets for carmakers.
Britain has so far said it won't retaliate against Trump's
tariffs as it hopes it can secure a deal with
the United States.
Speaker 2 (07:00):
Finance ministers from Italy and Spain have warned against reacting
too aggressively to Donald Trump's tariffs. There Our mars contrast
with a push by France and Germany for more forceful reaction.
Miguel Berger, the German ambassador to the UK, says trade
ministers are drawing up a list of potential countermeasures.
Speaker 6 (07:16):
I think it's the biggest assault we have seen since
the end of the Second World War on global trade.
We all will have to find a way to deal
with it, and European trade ministers going to meet on
Monday and then take a decision on how to react.
Speaker 2 (07:31):
Germany's ambassadors to the UK micguil Berger, speaking there ahead
of the meeting of EU trade ministers today in Luxembourg,
focused on the levies. His comments come after European Center
Bank executive board member Isabelle Schnabel suggested that US tariffs
may signify that the era of free flowing global commerce
is over.
Speaker 1 (07:49):
Those are your top stories on the markets. The eurostock
six hundred, in its first hour of trade is down
five point one percent.
Speaker 3 (07:56):
Losses are being.
Speaker 1 (07:56):
Felt across all sectors. The EU stock six hundred, banking
sectors down nearly six percent on the session. Over on
Wall Street, SMP futures down three point six percent, Nasdaq
futures down four percent. In effect, the Bloomberg dollar is
a tenth of a percent weeker versus peers across fixed.
Speaker 3 (08:12):
Income, a big rally in the front end.
Speaker 1 (08:14):
Two year yields in the US down thirteen basis points
down fifteen basis points into your Germany.
Speaker 2 (08:20):
Okay, so, Valerie, we are very lucky to have you
with us for this hour on Bloomberg Radio, as you.
Speaker 4 (08:24):
Are, of course, are our market's voice.
Speaker 2 (08:26):
During the program, across Bloomberg Radio and television as well.
And this is the day to be thinking about the
scale of the moves that we're seeing, looking at the
stock six hundred being down and in fact all of
the European markets down over five percent as well, looking
ahead to what's happening on Wall Street as well, where
we're in for another pretty bruising day ahead.
Speaker 1 (08:46):
Yeah, if this move in the futures market holds until
the closed, Stephen, we are looking at the worst three
days for the US equity market since Black Monday back
in nineteen eighty seven. Even the two day move though
from Friday and Thursday of last week, stands out as
one of the worst two day slides that we've seen.
It joins the board with the slide of nineteen eighty seven,
(09:08):
with the slide of the global financial crisis and the
COVID slide back in March twenty twenty. And what a
pummeling session when it comes to Asian equities. A lot
of these Asian indices had their worst session since October
two thousand and eight, and they closed at the lows.
Speaker 2 (09:24):
Yeah, I mean, look, the hangsanging down thirteen percent. Pretty
astonishing there. Let's dig into some of the other sides
of these trades though, as well, as investors have been
looking for haven assets and a big rally in bonds
we're seeing as a result. Our managing editor for FX
and Rachel Evans, is with us as well.
Speaker 4 (09:39):
Rachel looking at the moves.
Speaker 2 (09:41):
On European yields first of all this morning, I mean,
Germans to your yield down sixteen basis points. This feels
like it's accelerating from last week.
Speaker 11 (09:49):
Yeah, I mean we're trying to get that feeling that
you know, this isn't going to be necessarily contained to
a few days, you know, with the moves kind of
very much going far beyond US assets. I think like
last week, you know, the US was very much kind
of front and center and that was really where the
worst of the action was. That still kind of holds today,
but we're starting to get you know a little bit
of a bigger move kind of coming through into European
(10:12):
assets as well. So we did see ye that the
two year yield on the German burn actually falling twenty
basis points at one point, and I was really taken
last week by the fact that, you know, by the
end of Friday we'd actually seen all of the big
yield surge that we saw in the wake of that
fiscal plan that that Germany announced at the beginning of March, Yeah,
just a little over a month ago. That it feels
like a lifetime that's all gone and we're kind of
(10:32):
back here on the ten years to yielding basically the
same before that that that fiscal spending plan was announced.
Speaker 2 (10:39):
But we're seeing these big moves in yields, but not
equally spread across the European economies either. I note that
that as of these eels aren't moving anywhere near the
same size and the spread they're really blowing out between
German and Italian yields.
Speaker 4 (10:53):
What should we be reading into that?
Speaker 11 (10:55):
I think it's really just at this point kind of
a sense of you know, risk on versus risk of asset.
You know, bums are definitely getting a bid because they
are seen as kind of the safest asset in Europe.
So if you're not interested in treasuries, and maybe the
appeal there has diminished somewhat given that, you know, the
US sort of framework for treasuries and for for U
stock seems to have weakened. You know, you can't necessarily
(11:16):
rely on the US in a way that maybe you
once were. That whole US exceptionalism story is kind of
fracturing a little, you know, maybe you'd go into buns instead.
They've always been kind of europe safe haven, whereas you're
on the Italian side, that's very much still counts as
as a risk asset. Were Obviously, Italy has had a
lot of debt issues over the years, so investors tend
to get out of those sort of bonds more quickly
(11:39):
than they would something else. So I think that's what
you're seeing. Really, there's kind of just sort of this
preference for safe havens and flight away from risk.
Speaker 4 (11:46):
Effet Valerie.
Speaker 2 (11:47):
The question of volumes kind of key to watch here
when we're thinking about the context for these size of
moves that we're looking at.
Speaker 1 (11:54):
Yeah, it's interesting to note that in Friday's s and
P five hundred slide, there was a healthy volumes going
into that. So this is a market that is still
functioning properly. And that's one thing to note because one
thing about the COVID slide, I mean, that was nasty
on all levels. Because the treasury market essentially broke, We're
not necessarily seeing markets breaking in that terms. Even in
(12:16):
the Asia session overnight, you know, the Hong Kong stock
index saw a record amount of turnover. To me, that
a healthy market slide, if that makes sense. We're not
seeing these gaps lower on no volumes. So in that way,
maybe is one thing that can make us feel a
bit more positive about this move, is that we're not
necessarily seeing a massive gap one way or the other.
Speaker 2 (12:39):
You've been looking at the European banks moving this morning,
because that's been kind of one of the dramatic sets
of moves we've seen among many. We should say, but
does that necessarily translate into the Wall Street session later?
Speaker 1 (12:49):
I think so because the banks, the decline in the
eurostocks banks is basically a reflection of credit spreads widening
and the market positioning for a slowdown where you know,
we see bankruptcies, so those high yield.
Speaker 3 (13:03):
Junk credit names, you know, the.
Speaker 1 (13:07):
Probability of bankruptcy goes up, which means that banks will
be holding more losses on those loans.
Speaker 3 (13:12):
That was something that was mirrored in the US session
as well.
Speaker 1 (13:14):
So the dynamic isn't just isolated to hear in Europe
credit spreads or widening globally We even saw it in Asia.
Even the CDs spreads on some of these Asian nations
blew out as well. That's just you know, the market
really questioning the business model of some of these nations
if these tariffs are to stay in, you know, for
some time for a matter of months. The Eurostocks Bank
(13:36):
INDECKS that's SX seven E is down nineteen percent in
the last to three days. That's definitely something that I'm
sure the ECB does not want to see.
Speaker 2 (13:45):
Rachel thinking about where we go from here, what sort
of catalysts do markets need to see, any reversal of
the sentiment that's driven us to where we are now.
Donald Trump says to forget about the markets.
Speaker 4 (13:58):
Will they start looking else for catalysts?
Speaker 11 (14:01):
And I think, you know, there was a lot of
attention on sort of drown Poals speech on Friday kind
of this hope that, you know, if there wasn't going
to be a trumpet, if Trump wasn't going to come
in and save the market, then maybe there might be
still the lingering hopes of a FED put And certainly
your Powell's kind of comments on Friday suggested that they're
very concerned still about inflation. And whether tariff brings you know,
(14:21):
an inflation reimpact, whereas I think the market is more
focused on the growth impact. I think if that starts
to change, that's the sort of thing that could go
either way. You could see that as you know, a
sign that all things are so bad that the FED
has to kind of change its stance at panic time,
or you could see people taking some reassurance from the
fact that the Fed will step in. You know that
the market is starting to kind of price in a
(14:42):
May cup more seriously, we now see that as more
than fifty percent likely. And there are also the beginnings
of bets on the potential for an emergency rate cut.
Now that's definitely not the base case scenario, particularly as
we don't have a May cut fully priced in yet,
but those are the sorts of bets that are starting
to be placed because I think everyone is so in
need of some sense of stability and are looking to
(15:03):
try and find it kind of any way they can.
Speaker 2 (15:05):
And just on the question of volatility, while we have
seen that spike in the Vicks this morning, you know,
a pretty significant move in that that gauge of volatility,
I mean, how rough is today going to be?
Speaker 4 (15:19):
On Wall Street.
Speaker 1 (15:20):
Yeah, the Vicks when it did open up, which was
just an hour ago, across the sixty level mark, which
is something we haven't seen in some time. And you know,
it goes back to saying that the three day slide
that we've seen in the acuity market.
Speaker 3 (15:32):
Is lining up just to be one of.
Speaker 1 (15:33):
The worst that we've seen since World War Two.
Speaker 2 (15:37):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 12 (15:43):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (15:49):
You can also listen live each morning on London Dab Radio,
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Speaker 12 (15:55):
Our flagship New York station is also available on your
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Speaker 4 (16:02):
I'm Caroline Hepka and I'm Stephen.
Speaker 2 (16:04):
Carol. Join us again tomorrow morning for all the news
you need to start your day right here on Bloomberg
Daybreak Europe.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They say is the Bloomberg Daybreak Ero podcast, available every
morning on Apple, Spotify or wherever you listen. It's Monday,
the seventh of April in London. I'm Stephen Carroll and.
Speaker 3 (00:18):
I'm Valerie Titel. Coming up today.
Speaker 1 (00:20):
The global stock market meltdown is getting worse as tariffs
for session fears and growing retaliation concerns send investors fleeing
from risk assets.
Speaker 2 (00:29):
Donald Trump projects the reaction from traders as he remains
defiant on his global tariff barrage.
Speaker 1 (00:35):
And the only certainty is uncertainty. Bill Ackman warns of
an economic nuclear winter, as Cure Starmer says, the world
as we knew it has gone.
Speaker 4 (00:44):
Let's start with a roundup of our top stories.
Speaker 1 (00:46):
Global equities are plummeting again today as investors continue to
fear Trump's tariff salvo could lead to a global recession.
European shares have opened sharply lower. The eurostock six hundred
is down five point eight percent. In Asia, Japan's nick
I two two five entered a bear market, falling twenty
percent from its high end December. The MSCI Asia Pacific
(01:08):
Index having its worst session since October two thousand and eight.
Futures are pointing towards heavy losses on Wall Street SMPE minis.
Speaker 3 (01:16):
Down three point eight percent.
Speaker 1 (01:18):
The head of Economics a Renaissance Macro Research, Neil Dutta,
says markets are sending a clear message.
Speaker 5 (01:24):
You're getting to a point now where I think the
market will take on more of a role of like
an active informant, where it begins aggregating macro risk factors
and outcomes and it tells you about the future, and
then the stock market does kind of take on this
macro role, and that's kind of where we are. So
if the stock market goes down, that creates a way
of tightening financial conditions, exacerbating the uncertainty that's already out there,
(01:44):
and you continue to have a negative feedback loop until
policy gets investors to shift their attention.
Speaker 1 (01:50):
Neil Dutta was speaking as the global route inequities was
matched by a surge in the so called fear index
the VIX, which is now at levels not seen since
the pandemic and cross the sixty level at the open.
Speaker 2 (02:02):
President Donald Trump and his team are doubling down on
their tariff plan as he and his economic team dismissed investors'
fear of inflation and recession. Speaking on Air Force One yesterday,
the US leader struck a determined tone and repeatedly defended
the measures unveiled last week.
Speaker 6 (02:19):
I don't want anything to go down, but sometimes you
have to take betterson to fix something.
Speaker 2 (02:24):
In comments that may fuel further market fears, Trump said
he wouldn't strike deals to cut the highest tariff rates
unless countries eliminate their trade deficits with the US.
Speaker 6 (02:33):
I spoke to a lot of leaders, European agent from
all over the world.
Speaker 5 (02:39):
They're dying to make a deal, but I said, we're
not going to have deficits with your country.
Speaker 2 (02:44):
Trump's insistence the trade deficits need to be balanced to
gain tariff relief will cause concern in many countries, as
delivering on that aim would be entirely separate from eliminating
any trade barriers or tariffs they may have on the US.
Speaker 1 (02:57):
Trump's comments are the latest in a parade of def
fiance signals from the President and his top economic advisors.
The US Treasury Secretary Scott Besson, speaking on NBC's Meet
the Press, rejected the idea that they would cause a
protracted US economic contraction.
Speaker 7 (03:12):
I reject that the assumption there doesn't have to be
a recession.
Speaker 3 (03:20):
Who knows how.
Speaker 7 (03:21):
The market is going to react in a day, in
a week. What we are looking at is building the
long term economic fundamentals for prosperity that I think the
previous administration had put us on the course toward financial calamity.
Speaker 1 (03:35):
Treasury Secretary Scott Bessant, speaking to NBC's Meet the Press,
Besson said more than fifty countries had called the White
House seeking talks, but that any negotiations are going to
take time.
Speaker 2 (03:46):
Prominent investors and traders have also been posting on social
media to make their views on the tariffs clear. Bloomberg's
Ewan Potts has more.
Speaker 8 (03:54):
Off the two trading sessions, which saw five trillion dollars
wiped off the value of US stocks. America is a
vescal is coming to terms with its new diminished status
in the era of President Trump's trade offensive. Bill Lackman,
the founder of Pershing Square and vocal Trump supporter, posted
on x that he strongly believes launching tariffs against the
entire world is a mistake. Ray Dalio, the founder of Bridgewater,
(04:17):
the world's largest hedge fund warns the tariff package will
be significantly stagflationary for the United States. Ackmann went on
to say the White I should call time out on
the plans. He says, otherwise we're heading for a self
induced economic and nucular winter in London. I'm une pots
s Bloomberg Radio.
Speaker 1 (04:33):
After the events of recent days, economists at Goldman Sachs
have raised the probability of a US recession from thirty five.
Speaker 3 (04:40):
To forty five percent.
Speaker 1 (04:41):
They now expect the FED to deliver three consecutive twenty
five basis point insurance cuts starting in June, but Warren
the Central Bank could deliver much deeper cuts in the
event of a recession. Here's Bloomberg Opinion columnist Mohammed Elarian.
Speaker 9 (04:55):
I think the hardest thing for the markets right now
is not only to try to evaluate where the destination is,
but how bumpy will the journey be. And I'm saying
that because we have technicals playing in margin calls are there,
people are in fact reducing winners and losers across the
board to waste cash. Fund managers are worried about actual
(05:18):
and expected outflows.
Speaker 1 (05:20):
Mohammad el Arian, speaking there as Goldman Sachs economists said
their baseline forecasts for some growth still rest on the
assumption that US tariffs will be reduced from their current level.
Speaker 2 (05:31):
China's policymakers are discussing frontloading stimulus to counter the hit
from Donald Trump's tariffs, Bloomberg has learned. Senior officials discussed
new exports subsidies and a stock market stabilization fund. State
run media also talked about domestic demand becoming the long
term strategy for economic growth, and The Securities Times reported
that Chinese sovereign fund Central Huejin is actively carrying out
(05:54):
market stabilization operations today, as the onshore CSI three hundred
index of share so its biggest declines in more than
five years.
Speaker 1 (06:02):
UK Prime Minister Keir Starmer says he'll announce new measures
to support British businesses in the face of the global
trade war. Writing in a newspaper over the weekend, he
said the world as we knew it has gone. Treasury
Minister Darren Jones says the support package will involve investment
in industrial policy and public services.
Speaker 10 (06:22):
Globalization as we've known it for the last number of
decades has come to an end. That's why we need
Britain to be strong and resilient, also build out our
relationships with our allies and partners around the world. But
also why we have to invest in the domestic economy,
both the UK businesses but also our public services, so
that we have workers and communities who are well skilled
(06:43):
able to take advantages of jobs.
Speaker 1 (06:45):
Jones gave no details, but after he spoke, the UK
government announced it would ease it's green targets for carmakers.
Britain has so far said it won't retaliate against Trump's
tariffs as it hopes it can secure a deal with
the United States.
Speaker 2 (07:00):
Finance ministers from Italy and Spain have warned against reacting
too aggressively to Donald Trump's tariffs. There Our mars contrast
with a push by France and Germany for more forceful reaction.
Miguel Berger, the German ambassador to the UK, says trade
ministers are drawing up a list of potential countermeasures.
Speaker 6 (07:16):
I think it's the biggest assault we have seen since
the end of the Second World War on global trade.
We all will have to find a way to deal
with it, and European trade ministers going to meet on
Monday and then take a decision on how to react.
Speaker 2 (07:31):
Germany's ambassadors to the UK micguil Berger, speaking there ahead
of the meeting of EU trade ministers today in Luxembourg,
focused on the levies. His comments come after European Center
Bank executive board member Isabelle Schnabel suggested that US tariffs
may signify that the era of free flowing global commerce
is over.
Speaker 1 (07:49):
Those are your top stories on the markets. The eurostock
six hundred, in its first hour of trade is down
five point one percent.
Speaker 3 (07:56):
Losses are being.
Speaker 1 (07:56):
Felt across all sectors. The EU stock six hundred, banking
sectors down nearly six percent on the session. Over on
Wall Street, SMP futures down three point six percent, Nasdaq
futures down four percent. In effect, the Bloomberg dollar is
a tenth of a percent weeker versus peers across fixed.
Speaker 3 (08:12):
Income, a big rally in the front end.
Speaker 1 (08:14):
Two year yields in the US down thirteen basis points
down fifteen basis points into your Germany.
Speaker 2 (08:20):
Okay, so, Valerie, we are very lucky to have you
with us for this hour on Bloomberg Radio, as you.
Speaker 4 (08:24):
Are, of course, are our market's voice.
Speaker 2 (08:26):
During the program, across Bloomberg Radio and television as well.
And this is the day to be thinking about the
scale of the moves that we're seeing, looking at the
stock six hundred being down and in fact all of
the European markets down over five percent as well, looking
ahead to what's happening on Wall Street as well, where
we're in for another pretty bruising day ahead.
Speaker 1 (08:46):
Yeah, if this move in the futures market holds until
the closed, Stephen, we are looking at the worst three
days for the US equity market since Black Monday back
in nineteen eighty seven. Even the two day move though
from Friday and Thursday of last week, stands out as
one of the worst two day slides that we've seen.
It joins the board with the slide of nineteen eighty seven,
(09:08):
with the slide of the global financial crisis and the
COVID slide back in March twenty twenty. And what a
pummeling session when it comes to Asian equities. A lot
of these Asian indices had their worst session since October
two thousand and eight, and they closed at the lows.
Speaker 2 (09:24):
Yeah, I mean, look, the hangsanging down thirteen percent. Pretty
astonishing there. Let's dig into some of the other sides
of these trades though, as well, as investors have been
looking for haven assets and a big rally in bonds
we're seeing as a result. Our managing editor for FX
and Rachel Evans, is with us as well.
Speaker 4 (09:39):
Rachel looking at the moves.
Speaker 2 (09:41):
On European yields first of all this morning, I mean,
Germans to your yield down sixteen basis points. This feels
like it's accelerating from last week.
Speaker 11 (09:49):
Yeah, I mean we're trying to get that feeling that
you know, this isn't going to be necessarily contained to
a few days, you know, with the moves kind of
very much going far beyond US assets. I think like
last week, you know, the US was very much kind
of front and center and that was really where the
worst of the action was. That still kind of holds today,
but we're starting to get you know a little bit
of a bigger move kind of coming through into European
(10:12):
assets as well. So we did see ye that the
two year yield on the German burn actually falling twenty
basis points at one point, and I was really taken
last week by the fact that, you know, by the
end of Friday we'd actually seen all of the big
yield surge that we saw in the wake of that
fiscal plan that that Germany announced at the beginning of March, Yeah,
just a little over a month ago. That it feels
like a lifetime that's all gone and we're kind of
(10:32):
back here on the ten years to yielding basically the
same before that that that fiscal spending plan was announced.
Speaker 2 (10:39):
But we're seeing these big moves in yields, but not
equally spread across the European economies either. I note that
that as of these eels aren't moving anywhere near the
same size and the spread they're really blowing out between
German and Italian yields.
Speaker 4 (10:53):
What should we be reading into that?
Speaker 11 (10:55):
I think it's really just at this point kind of
a sense of you know, risk on versus risk of asset.
You know, bums are definitely getting a bid because they
are seen as kind of the safest asset in Europe.
So if you're not interested in treasuries, and maybe the
appeal there has diminished somewhat given that, you know, the
US sort of framework for treasuries and for for U
stock seems to have weakened. You know, you can't necessarily
(11:16):
rely on the US in a way that maybe you
once were. That whole US exceptionalism story is kind of
fracturing a little, you know, maybe you'd go into buns instead.
They've always been kind of europe safe haven, whereas you're
on the Italian side, that's very much still counts as
as a risk asset. Were Obviously, Italy has had a
lot of debt issues over the years, so investors tend
to get out of those sort of bonds more quickly
(11:39):
than they would something else. So I think that's what
you're seeing. Really, there's kind of just sort of this
preference for safe havens and flight away from risk.
Speaker 4 (11:46):
Effet Valerie.
Speaker 2 (11:47):
The question of volumes kind of key to watch here
when we're thinking about the context for these size of
moves that we're looking at.
Speaker 1 (11:54):
Yeah, it's interesting to note that in Friday's s and
P five hundred slide, there was a healthy volumes going
into that. So this is a market that is still
functioning properly. And that's one thing to note because one
thing about the COVID slide, I mean, that was nasty
on all levels. Because the treasury market essentially broke, We're
not necessarily seeing markets breaking in that terms. Even in
(12:16):
the Asia session overnight, you know, the Hong Kong stock
index saw a record amount of turnover. To me, that
a healthy market slide, if that makes sense. We're not
seeing these gaps lower on no volumes. So in that way,
maybe is one thing that can make us feel a
bit more positive about this move, is that we're not
necessarily seeing a massive gap one way or the other.
Speaker 2 (12:39):
You've been looking at the European banks moving this morning,
because that's been kind of one of the dramatic sets
of moves we've seen among many. We should say, but
does that necessarily translate into the Wall Street session later?
Speaker 1 (12:49):
I think so because the banks, the decline in the
eurostocks banks is basically a reflection of credit spreads widening
and the market positioning for a slowdown where you know,
we see bankruptcies, so those high yield.
Speaker 3 (13:03):
Junk credit names, you know, the.
Speaker 1 (13:07):
Probability of bankruptcy goes up, which means that banks will
be holding more losses on those loans.
Speaker 3 (13:12):
That was something that was mirrored in the US session
as well.
Speaker 1 (13:14):
So the dynamic isn't just isolated to hear in Europe
credit spreads or widening globally We even saw it in Asia.
Even the CDs spreads on some of these Asian nations
blew out as well. That's just you know, the market
really questioning the business model of some of these nations
if these tariffs are to stay in, you know, for
some time for a matter of months. The Eurostocks Bank
(13:36):
INDECKS that's SX seven E is down nineteen percent in
the last to three days. That's definitely something that I'm
sure the ECB does not want to see.
Speaker 2 (13:45):
Rachel thinking about where we go from here, what sort
of catalysts do markets need to see, any reversal of
the sentiment that's driven us to where we are now.
Donald Trump says to forget about the markets.
Speaker 4 (13:58):
Will they start looking else for catalysts?
Speaker 11 (14:01):
And I think, you know, there was a lot of
attention on sort of drown Poals speech on Friday kind
of this hope that, you know, if there wasn't going
to be a trumpet, if Trump wasn't going to come
in and save the market, then maybe there might be
still the lingering hopes of a FED put And certainly
your Powell's kind of comments on Friday suggested that they're
very concerned still about inflation. And whether tariff brings you know,
(14:21):
an inflation reimpact, whereas I think the market is more
focused on the growth impact. I think if that starts
to change, that's the sort of thing that could go
either way. You could see that as you know, a
sign that all things are so bad that the FED
has to kind of change its stance at panic time,
or you could see people taking some reassurance from the
fact that the Fed will step in. You know that
the market is starting to kind of price in a
(14:42):
May cup more seriously, we now see that as more
than fifty percent likely. And there are also the beginnings
of bets on the potential for an emergency rate cut.
Now that's definitely not the base case scenario, particularly as
we don't have a May cut fully priced in yet,
but those are the sorts of bets that are starting
to be placed because I think everyone is so in
need of some sense of stability and are looking to
(15:03):
try and find it kind of any way they can.
Speaker 2 (15:05):
And just on the question of volatility, while we have
seen that spike in the Vicks this morning, you know,
a pretty significant move in that that gauge of volatility,
I mean, how rough is today going to be?
Speaker 4 (15:19):
On Wall Street.
Speaker 1 (15:20):
Yeah, the Vicks when it did open up, which was
just an hour ago, across the sixty level mark, which
is something we haven't seen in some time. And you know,
it goes back to saying that the three day slide
that we've seen in the acuity market.
Speaker 3 (15:32):
Is lining up just to be one of.
Speaker 1 (15:33):
The worst that we've seen since World War Two.
Speaker 2 (15:37):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 12 (15:43):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (15:49):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 12 (15:55):
Our flagship New York station is also available on your
Amazon Alexa devices. Just Alexa play Bloomberg eleven thirty.
Speaker 4 (16:02):
I'm Caroline Hepka and I'm Stephen.
Speaker 2 (16:04):
Carol. Join us again tomorrow morning for all the news
you need to start your day right here on Bloomberg
Daybreak Europe.
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