Bloomberg Daybreak: Europe Edition‘Severe’ Trade War Fallout, S&P 500 Correction & Putin Wants Trump Talks
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) European Central Bank President Christine Lagarde warned that an escalation of disputes over trade levies kicked off by US President Donald Trump may have a detrimental effect on the world economy.
(2) President Donald Trump threatened to impose a 200% tariff on wine, champagne and other alcoholic beverages from France and elsewhere in the European Union, the latest escalation in a growing transatlantic trade war.
(3) China stands to gain from the ongoing trade wars between the US and its allies, the European Union’s foreign policy chief Kaja Kallas said in an interview with Bloomberg Television.
(4) Tariff worries rattled Wall Street again Thursday, pushing the S&P 500 into a correction that left it at the lowest in six months.
(5) Senate Democratic leader Chuck Schumer had two choices as the clock ticked down to the government funding deadline: drop his threat to block the Republican bill or force a disruptive March 15 shutdown.
(6) More than half of UK Prime Minister Keir Starmer’s cabinet have urged his chancellor, Rachel Reeves, to rethink her plans to scale back welfare and spending, in an extraordinary sign of growing concern within the governing Labour Party over the scale of looming cuts.
(7) Russian President Vladimir Putin said he wants to discuss a proposed ceasefire in Ukraine with his US counterpart Donald Trump, though he warned that any truce should lead to a long-term resolution of the war.
Bloomberg Audio Studios, podcasts, radio news. This is the.
Bloomberg Day BAQ podcast, available every morning on Apple, Spotify or whatever you listen. It's Friday, the fourteenth of March in London. I'm Caroline Hepkiff.
And I'm Stephen Carroll. Coming up today.
The ECB's Christine Leguard warns of the severe consequences of a global trade war as Trump threatens the EU with two hundred percent tariffs on wine.
Hope, so the US government shutdown will be averted, give market some respite after the S and P five hundred enters correction.
Territory plus Putin's pitch.
The Russian leader says he's ready to negotiate with Trump on Ukraine, but stops short of accepting a temporary ceasefire.
Let's start with a roundup of our top stories.
The president of the European Central Bank is warning of a severe global fallout from a trade war with the United States. Here's what Christine Leaguard told the BBC's Hard Talk program, hosted by Steven Saccor.
If we were to go to a real trade war where trade would be dampened significantly, that would have severe consequences.
It would not be calls for concern.
It would be severe consequences growth around the world and for prices around the world, but particularly in the United States.
But also in Europe. It would push Europe into recession.
Wouldn't they You know what it's doing at the moment, stirring European energy.
It's a big wake up call for Europe.
Maybe this is a European moment yet again.
The Guard also told the BBC that Brussels had no choice but to retaliate against the US following its decision to implement twenty five percent tariffs on global steel and aliumillium imports. Her comments came ahead of President Trump threatening to enactate two hundred percent levy on European wine, champagne, and other alcoholic beverages. The US president made the threatened response to the EU's countermeasures targeting American whiskey, among other products. US Commerce Secretary Howard Lutnek has told Bloomberg the EU duties are disrespectful.
If you make him unhappy, he responds unhappy.
But come on, let's.
Get back to the core basics here, which is a trading policy that says America has allowed the world to lean on us, to take from us, to grow off of us, and now it's time for a little balance. We've got a two trillion dollar budget deficit. We want to bring certain jobs home. Let the President do the right thing for America.
It's the US Commerce Secretary Howard Lutnik. Trump also said he would not repeal tariffs on steel and aluminium that took effect this week, nor would he back off on plans for sweeping reciprocal tariffs on global trading partners set to start as soon as the second of April.
The growing trade tensions come as the European Unions foreign policy chief has warned that China could be the main beneficiary of growing USU hostilities. Here's what Kaya Kallas told Bloomberg on the sidelines of a G seven meeting in Canada.
We are not interested trade wars. There are no winners and trade wars. So who is laughing on the side or looking at the side is China Who's really benefiting from us having a trade war with Europe. But it is also clear that if these tarrifts are put on us, then we are also defending our interests.
The comments from the EU's top diplomat come as Chinese economy is expected to have shown resilience so far in the face of growing US tariffs. According to economy surveyed by Bloomberg, consumption dated you out on Monday will show retail sales picking up and investments staying steady from last year's full year figures.
Democratic Leader of the US Senate Chuck Schumer has paved the way for lawmakers to avoid a government shutdown, just dropping his threat to block a Republican spending bill. The decision was made despite a growing number of Democrats wanting to use their limited leverage to restrain Elon Musk's cost cutting efforts. Addressing the Senate, Schumer explained why he decided to walk back the threat of a shutdown.
A shutdown would give Donald Trump an Elon Musk cart blanche to destroy vital government services at a significantly faster rate than they can right now.
Schumer indicator that Democrats would vote with their conscience on the legislations rather than as directed by leadership. However, the longtime leader carries significant influence within the caucus, and he's likely to amass enough support to avert a shutdown well.
The prospect of avoiding a US government shutdown has boosted market sentiment. After another bruising day on Wall Street that drove the S and P five hundred to a six month low, Thursday's one point four percent draw pushed the three week route past ten percent, and it means the US benchmark is now in correction territory. The slump has also eraised five trillion dollars from US stocks as investors paired risk, but President Trump's former Treasury secretary, Stephen Minouchin says that sentiment is is overly bearish.
I know there's some talk about are we going to go into a recession. I don't see us at all going into a recession. I think we could have a little bit of a slowdown in the economy as we pull back on government spending. But I don't think investors should be concerned about a recession.
That was the former US Treasury Secretary Stephen Mnusian speaking there to Bloomberg. Asian stocks and US and European ecrity futures have rallied on Friday as signs that the US will avoid a government shut down have helped to boost market confidence.
More than half of Britain's senior ministers have verged the Chancellor Rachel Reeves to rethink her plans to scale back welfare spending. Bloomberg has learned that a cabinet meeting turned into an intervention over the planned cuts.
James Wilcock has the story.
One person at the meeting openly warned ministers were considering resignation. Are They'd be backed up by a second and then a third added the cuts go beyond anything seen under austerity. We report the Prime Minister had to extend the meeting so all twenty seven ministers at the top of government could vent It's an extraordinary sign of the growing concern at the highest levels of the Labor Party. It's unlikely to change the policy. The Chancellor has already sent her plans to the Independent Forecaster. But the question number ten must be wondering after the backlash is will that policy get enough votes in London?
James Wilcock Bloomberg Radio.
Russia's Lasimir Putin says that he wants to discuss a proposed ceasefar in Ukraine with Donald Trump. Speaking at a news conference yesterday, Putin said that his administration supports the idea of a peaceful end to the conflict, but warns that any truth should lead to a long term resolution. Following the news, US President Trump told reporters at the White House that negotiations are progressing.
We're getting words that things are going okay in Russia, and doesn't mean anything until we hear what the final outcome is. But they have very serious discussions going on right now with President Borden and others.
Donald Trump speaking there during a visit by NATO Secretary General Mark Rutter. Meanwhile, the US has quietly talented sanctions on Russia by restricting energy payments as it continues to pursue cooperation from Putin during peace deliberations.
Those are your top stories on the markets. After we saw the SMP five hundred and nasdak in correction territory yesterday. We are looking at US DOOC futures hire this morning, up six tens of one percent for SMPT, mine's eight tens higher for Nasdaq futures. European stock futures also pointing higher, up half of one percent, and we're seeing big rally and ation shares at the moment. The MSCI Specific index up seven tens of one percent. The CSI three hundred index in China up by two point three percent.
Those are the markets.
In a moment, more on Donald Trump's tariff threats against the EU, and we'll also be digging into the market reaction. But before we get to that, a nice story on the Bloomberg terminal about how easy it's going to be to trot around the globe and understand everyone.
This is one of those stories that either makes me feel very excited or very old, because this feels like Star Trek coming true. Our two technology correspondent Mark Arman has report that Apple is working on a feature for its AirPod earphones that would live translate and in personal conversation, so you speak to someone in your language and they can hear it in THEIRS.
It's science fiction.
Y if you look at it in one way, but apparently it's actually already been present, and some of the rival products to AirPods as well, including Google's pixel Buds, they've had the option for years, but he says an Apple to be rolling this out from later this year.
Part of my heart breaks for this because, of course, to someone who studied model languages, this was a job. This is once a job being a you know, a translator, and also it's the fact that languages around the world are disappearing very quickly because you know, we're so united, and.
Well, I mean, the other question of this is what is this going to actually be something that's going to feel like science fiction? Or is it going to be like being on a bad phone line with someone where there's a really long delay is when you hear the other person. So I think you can probably dash away your language girls for a bit longer.
Carolina, the great story on the Bloomberg terminal for you to read this morning.
Well, that's bringing more now in the latest tariff threats from Donald Trump, targeting European wine and other alcoholic drinks with a two hundred percent levy. Our EMEA news director Rosalind Mason joins us now for more. Ras Good morning. How much of an escalation is this from Donald Trump?
Well, it is certainly another move by Donald Trump. He's threatening in this case, he's not yet saying he's going to impose this tariff, and in fact he's threatened to impose hefty tariffs on European wine, champagne and other alcoholic beverages before and back down. But this is in the realm, of course of what's been quite a piecemeal approach. We've had a lot of uncertainty in this tariff, in this tariff game bit so far, and there's been reversals by the President, there's been threats, there's been changes in direction.
So it's very hard.
To know what to make this and that very hard, I guess for the people on the other side to know how to respond. Certainly, the French Trade minister said that this is Donald Trump, quote escalating a trade war he chose to unleash and saying that you will not give in to what he called threats and will protect industries. So certainly Europe's still got more in the bag if Donald Trump does escalate further with Europe. We know that the tariffs that are due to snap back obviously at the end of the month, but there's a lot more that we know that Europe has prepared, and so certainly we're just in this realm of tit for tat. So if Donald Trump does indeed impose this tariff on booze from Europe, that Europe will respond.
The last time that Trump imposed tariffs though on these products, he reversed course. He reached a deal with a Manu in Macon, does that say that there is a space maybe for negotiation here as we do see the kind of temperature and the rhetoric beginning to get more tense.
Well, certainly, as this trade war has shown us, there's one hundred percent room for negotiation in all of this, and that, in a way perhaps is part of the tactic of the US administration is to come out hard, to threaten things, and then to see if they can negotiate the way back out of it again and get something that they can claim as a win. And as you say, Emanuel mcron was key last time, perhaps again and call from him to Donald Trump might just do the trick. We do know that the US Commerce Secretary, Howard Lutnik was due to have some cause with different EU officials last night. We're not exactly sure what came of those as yet, but there are those conversations going on, and we can see that's very much the case with every country around the world. There are trade ministers, for example, from different countries in Asia over in the US this week having conversations directly with US officials. So it does seem that at least the US administration is willing to talk mostly though they just want to see what they can get for them themselves out of those talks.
Okay, roslad Mats and our amaa news director, thank you very much.
Well.
Markets have been rattled by the trade tensions, but US futures have been boosted by news that a government shutdown has been avoided in Washington. Our Market's Live executive editor Mark Cadmore joins this now in person in the London radio stud Good see Mark. In terms of the shutdown news, do you think that that reignites risk appetite given all the uncertainties?
No, not really.
I think there's enough kind of negative catalyst next week or sorry, potentially negative catalysts. I think, you know, we've always got the fed upcoming. What I think the bigger bachelor peers that we've had a really rapid correction from record highs and so you no, the market is just it was ready to consult it. I mean many people are looking for a relief rally Earlier this week we actually enter in some of the best seasonality for the US stock market actually from March fifteenth of traditionally, So I think this is a little bit like, yeah, it's a positive story, don't get me wrong. And that, but it was a market that was ready for a little bit of a bounce. Actually, the way I see this week is I'm surprised how negative the price action has actually remained, how rapid the fall has been, how little, how tepid the bounces have been, And so I just I just worried to have one more kind of uh kind of clean out before kind of maybe even before the weekend or into next week, before we get you know, then a couple of weeks consolidation. The longer term, I still think there's a market where people are selling rally. So I think, you know, you might get a bounce of four or five percent over the rest of March, but ultimately, you know, I think people are going to sell into this.
They're not going to wait for any record hise this.
This is a US stock market that is going to underperform for the long term.
Yeah.
And indeed that's part of the sentimens being infected in the latest markets Live Pull survey as well that investors are most bullish on treasuries roused to stocks for at least three years.
The flip side of this.
Yeah, absolutely, and you know, it's it's it's interesting to see that kind of short term trend because that survey, we've kind of run about that question. We've asked about monthly roughly for about the last three years, and normally normally over on that three year basis. First of all, there's quite often ben a skew towards stocks, but normally both are pretty close to the fifty percent mark.
It's quite a large skew.
It shows as a real change, like a dramatic change center, but we've not seen anything close this. Not only is this the highest level of kind of pro treasures over stocks, but we've not even seen anything close to that. And there's a general kind of theme that, you know, people no longer expect US stocks to reassert that exceptionalism. So US stocks is as a share of global market cap, reached a record of fifty point eight six percent on February third.
They're now down.
I'm not sure exactly there are today, but I'm going to say they're down about forty eight percent. They fall in a few percent from there, and only nine percent I think it was in the survey expect us to kind of go back to that record high again. And you know, I'm not saying everyone expects the ongoing US underformance. But certainly the market's already convinced US is going to stop out performing. I am very firmly in the camp it's going to underperform.
Okay, we also saw that European drinks company slumped yesterday on the back of the latest tariffs threats. Is that going to be a kind of wake up call for European markets.
I don't think they need a wake up call.
I mean, this is a dramatic times, but I mean I think to you to your point of you're saying, like, you know, your European stocks have done really well relatively until they get a bit more of the term well, and I think that's absolutely right. I think you know that there's a paradigm shift in Europe, which I completely buy into, and I think it's just a massive story.
And I think paradigm shifts are hard.
To build a trade because you know well that they change everything they've learned, you know, of the whole European crisis. But the point is is that defense spending is not particularly pro growth infrastructure spending years. In fact, many the recipients of defense spending will be US firms. And I'll come through very slowly, But it doesn't matter. The story is there, there's a paradigm shift in Europe. Maybe stock markets get a little bit ahead of themselves in a market that's set to be volatile. So yes, I guess to answer to the question, I do expect, you know, European stocks to struggle a little bit more. And you know, while I very deeply believe in the end of US exceptionalism, from US market's point of view over the longer term, the next few weeks, that doesn't necessarily matter, you know, we can always just consolidate recent trends.
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