scarlet: welcome to "bloomberg markets." we have a selloff underway as tariff talk continues to weigh on stocks and the u.s. dollar. there is the s&p 500, lower by 1.8%, open with a 1% drop. it made a 180 degree turn. we are now right around session lows. look at the treasury market, u.s. treasury yields are higher right now, especially the long end of the curve. this comes before tomorrow's jobs report as well as paul's remark at midday. in terms of currencies, the dollar is weaker versus the loonie and the peso. this is after commerce secretary howard lutnick said president trump is likely to defer the 25% tariffs on canada and mexico for

all goods and services covered by the u.s. and ca which itself was the sequel to nafta. the exemption would last until april 2 and then we can start this dance all over again. take a look at the chip sector and in particular the tech sector because we do have broadcom reporting results after the closing bell today. we had more bell technology reports and they were a big disappointment if you look at the share price reaction and that is helping to be a weight on the chip sector and on the nasdaq overall. not just here in the u.s. but also in asia. the decline is in outperformance relative to the u.s. peers but nevertheless, a lot of red arrows in the tech sector. let's turn to the latest on tariff tensions and other news from the trump administration that is moving markets. kailey leinz is in washington. we started the week with a 25%

tariffs on canada and mexico. yesterday we heard the commerce secretary they were going to perhaps exempt carmakers or carve out carmakers from the terrace. today we getting word of another possible exemption. walk us through where we are right now. kailey: the exemptions are widening. tariffs have not last very long although the exemption is temporary. we got the announcement from the white house press secretary yesterday when it came to a automaker specifically and then today after a call with the mexican president president trump on true social confirmed this exemption will apply to all mexican goods that fall under the usmca trade agreement, applicable until april 2. this is a temporary reprieve out of respect for president sheinbaum. two things i would note, this is a reprieve but it only goes until april 2 when we are expecting more supercold tariffs on trading partners as well as a few specific sectors like chips and pharmaceuticals and autos

could kick in. also the president did not say anything about canada also having these exemptions. right now this is only confirmed to apply to mexico. howard lutnick earlier this morning to suggest this could be for everything under the usmca. this doesn't apply to most goods coming from canada and mexico provided they actually follow the certification of origin rules under that trade agreement. basically, they had to have originated in north america. they cannot have come from another country to mexico or canada and then try to pester the u.s. canada is when we are waiting for to see if the president is willing to allow a few more weeks of reprieve for that country as well. scarlet: given that we know president trump did speak earlier with the canadian prime minister justin trudeau, if anything was going to come out of it, the fact it hasn't is interesting. we also hear there's a lot of noise about perhaps restarting the mineral deals with ukraine.

what is the latest on that? kailey: bloomberg reporting the president is pushing and his team is pushing your pain too quickly agreed to this deal and terms potentially for a cease-fire. there has been reporting from other outlets including axios and fox that next week in riyadh, senior administration officials including the secretary of state rubio, national security adviser walls, as well as special envoy would cough would be meeting cash witkof beating in saudi arabia. we are waiting for confirmation on that front but it was signal progress forward after what had been a disastrous meeting at the white house last week as things fell apart of what was supposed to be the setting of the minerals deal with zelenskyy and trump but did not happen. we don't understand there is a reigniting of the effort to make sure that gets done as it is still a deal to this point that the president seems to want and he alluded to that in his address to a joint session of congress earlier this week, talking positively about a letter he received from

president zelenskyy indicating he wanted to move forward with peace and was willing to sign the deal. this is the story we are tracking closely. scarlet: thank you so much, kailey leinz, washington. you could join her at the top of the next hour for "balance of power." let's move on to the bond market coming german bunds are extending their route in the wake of berlin's historic route to unlock leads of euros for defense and infrastructure. this has been the worst german bond rout since 1990 in the wake of the fall of the berlin wall. earlier european central bank president christine lagarde spoke about how that spending might affect europe's economy. >> this is work in progress. we have to be attentive, vigilant. we have to understand how this is going to work, what the timing will be, what the financing will be. so that we can then draw the conclusions and appreciate how much it will contribute to growth and what impact it would have eventually on inflation. scarlet: christine lagarde of

the ecb. in the u.s., fed chair jay powell is such a speech tomorrow at this time. for more on what that might mean for the u.s. bond market and the recent moves we have seen, let's bring in lisa hornby from schroder investment. great to speak with you. i just want to get your take on the german bond rout, whether that is really spilling over in any way even in terms of sentiment to the u.s.? >> i think the spillover has been surprisingly limited considering the fact that markets are fungible. people can choose to allocate capital in different regions of one region is seen yields rise as dramatically as we did yesterday, the other regions should be susceptible to that as well. i think in the context of broader bond markets, there the context of credit. we think about the demand that has come from european investors for u.s. dollar denominated corporate credit because yields here were so much higher,-year-olds were more attractive, that relationship becomes a little more tenuous now with bunds having moved 30

basis points. and that aftereffects hedging costs were yield differential that you can pick up is now less than before. i do think it has implications for our u.s. markets. scarlet: ripple effects can be large. what is interesting when you bring up credit is i have been reading about how some people are saying corporate bonds are replacement of treasuries, safe havens. investment-grade credit is seen as less volatile, certainly when it comes to price action the treasury is less acceptable to policy headlines. treasuries. do you see that? is that something your clients are telling you are treating it that way? >> i have certainly heard that sentiment before. i think there are some companies i do have fortresslike balance sheets where you do question should this trade through u.s. treasury? by a march when we think about credit markets and we think about the taxing power of the federal government, we think there should be a risk premium associated with credit.

frankly, that risk premium and our view has come down until the last couple of weeks, had come down too aggressively. we were at 20 or tighten credit spreads, corporate spreads and we think about the outlook from here and you have fundamentals are at the margin deteriorating a little bit. we have strong corporate fundamental's, strong balance sheets but a little more shareholder friendly, more proclivity for m&a. that could be leveraging. a bit of a deterioration on that front. the microeconomic facts are probably slowing from here. i guess the last piece of the puzzle is the demand. demand has been very elevated because you also have been high keeping credit spreads contain. i think you have some questions here if first of all yields are falling, what does that mean for credit? if they are rising abroad, what does that mean for u.s. credit? when we sum it up, we think you need a bit more risk premium rather than less. those spreads at 20 or tighten or not attractive. that doesn't mean we don't like

in a corporate credit adjustments with a bit little more judicious in terms of how we allocate. scarlet: doing your homework. this talk about the wider treasure market. i'm curious on your recent moves in yields. two year yield falling rapidly the last three weeks, not just above the long, that 4% level. the 10 year making 2025 lows at the start of the week and coming back up since then. what is the narrative driving these moves? is there a narrative? >> i think the narrative is clearly one of stagflation is the one the markets grappled on with right now. the stag part is probably the more important part in today's market. people are concerned about growth. you've seen another three cuts now priced into the front end. scarlet: does this sound appropriate? >> i think that market is probably got a little too far. there are certainly going to be growth implications to these policies but first of all the policies are not finalized as we see every single day. >> moving target.

this is a deep, brought economy. there are a lot of factors. some of the policies are contradictory in nature. we cap say for sure which what is going to dominate or win. i think this is a market where there will be a lot of volatility which means there will be opportunity to take advantage of the swings and sentiment whether they be one way or the other. i think we're are probably gone a little too far on the discounting of rate cuts. inflation is still a question mark. don't know if the fed will be able to deliver on what the market is expecting. i think that is what is driving it. scarlet: there has been reporting that the data show there's a lot of bullish positions on treasuries, 10 year yield falling below 4% increase in. what is going to provide that catalyst? will it be the jobs report or something with their jobs report? will it be jay powell's remarks tomorrow? >> i think the data is one part of it. i also think we probably should note the new administration has recently changed its tone with

regards to what they want to happen interest rates. it seems very clear they do want lower interest rates. secretary bessent has said it in a variety of forms when he is talking about his 3, 3, 3, they went to contain the deficit, what growth to increase -- i think -- and of course the president mentioned it in the address to congress the other day, big beautiful drop in interest rates. i think they are targeting this. the more the market gets a hold of that narrative and see some start to deliver, i think that could have an impact as well. scarlet: thank you so much for joining us today, lisa hornby with schroder investment. we have more coming up on "bloomberg markets." there is a headline which is from the spacex oration, intuitive machines, it is trying to determine the status of its main lender. it was said to make it second landing today and this headline indicates it is trying to figure out the status of that main lender. the stock has risen about 172% over the past 12 months.

right now you can see it is down about 7.4% in today's trading. this is "bloomberg." ♪

scarlet: this is "bloomberg markets." our stock of the hour today is intuitive machines. we are monitoring and attempted moon landing underway by the u.s. space exploration company. you might remember intuitive machines was the first company to make it successful landing about a year ago. let's bring an bruce. we are looking at an extra date chart of the stock, down quite a bit, 9% most of their have been some headlines crossing, the latest one is that the status of the spacecraft is unclear.

what we know about what happened with this spacecraft? >> we know this spacecraft is on the lunar surface. we are waiting to hear what the status is on that. scarlet: how would you read the decline in the share price? >> landing on the moon is hard. a lot of jitters about whether they pulled it off or not. i think it is too early to say at that moment. we're just waiting to hear on what the status is of the spacecraft. scarlet: this is a stock which has climbed about 172% over the past 12 months. what was driving the rally? >> as you mentioned earlier, this is the first company that successfully landed on the moon. and this is their second attempt. to follow-up on last year's landing. there are other companies that are also trying to do this. a texas company firefly landed on the moon the other day.

japanese companies attempting to get there. intuitive machines has established itself as a leader in the area. dollar scarlet: this is a company, his financials did not have to go to the usual pipeline of making sure that it matched up and regulators had to prevent the way a company that traditionally would. >> there were several space companies that went public through that way. there was a wave of popularity obviously for a lot of industries, space is one of them. intuitive machines has shown they have the chops. they pulled this off last year after several other companies tried and failed. they have demonstrated they have the ability to do this and now we just waiting to see where

things stand today. scarlet: they do have contracts with nasa as well? >> so nasa has contracts with a lot of companies as part of nasa's effort to, one, up support private sector companies going to space but also reduce costs as the return of the moon. intuitive machines, one of several companies that nasa is helping to support. scarlet: bruce, thank you so much, covering the space industry for us. just to recap the headlines from intuitive machines, the craft is generating power and communicating. they are in contact with the moon lender. the engine is off on the spacecraft after he does appear the craft is on the lunar surface. we want to bring you back to the action in the stock market because this is an intraday chart of the s&p 500. new lows on the day with the s&p lower by more than 2%.

we have a big jobs report tomorrow as well as jay powell speaking at midday as well we will bring you tomorrow when we can. clearly, a lot of concerns about tariffs, the latest headline being the white house is now delaying the mexico tariffs on goods covered by the u.s. into -- usmca until april 2. a one-month reprieve. after that, everything is back on including the reciprocal tariffs. no word on the status of the canadian tariffs. the equity market lower by 2%. this is "bloomberg." ♪

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scarlet: this is "bloomberg markets." retirement fund managers are more optimistic about private markets and public equities but public equity requires its own tactics. retirement.

three chief investment officer's from wisconsin, texas, new york city spoke at the bloomberg invest conference yesterday. here is part of their conversation. >> we are beliefs and private equity and we like it and we do think it will continue to outperform public equity over the next 10 to 15 years. that said, the next 10 to 15 years i don't think are going to be as good as the last 10 to 15 meters private equity -- 15 years. the cost of debt has come down. yet these huge tailwinds that really benefited private equity. the gross returns were really good and then we were maybe a little less discerning on how much of that growth to net we got. as we go forward, if i'm correct , multiples want to go up. like i bought it at 10 times, sold it at 15. if that goes away, divide at 15

and fix it and then sell it at 15. if that goes away and then also the cost of capital goes away, the gross return is going to be lower and in order -- again, we want all of our managers to get very wealthy but only if we are getting the returns for our beneficiaries. so as long as we are aligning those interests, we are happy to work on it. i think going forward, we are going to all be more discerning about the fees we are paying. >> you are nodding your head. private outperformance public. >> yes. also we've had incredibly return on u.s. particularly large cap equity so global financial crisis. the u.s. exceptionalism is driven by you can call it mega cap exceptional's or large cap tech exceptionalism. i don't know that that continues not if you look at the next 10 years, the average returns probably high to mid single digits for public equity.

you think you will see a rebound in private equity. i think private equity is a better business model, better alignment of incentives, longer-term looking. there is a lower reporting requirement. it seems like a better way to generate alpha over time. to your point earlier, have to be selective in terms of the manager you pick. you want to pick those that have demonstrated the ability to drive value creation. not simply buying something and hoping for multiple expansion. of those that are more strategic and post efficiencies into their companies. >> i do think the quality of data going forward might -- i think the opportunity for alpha in the next 12 to 18 months is tremendous. i think we have to take a deep breath. remind ourselves we have partnered with world-class investors who will make the decisions on m&a, supply chain

management, on all of these things. scarlet: that was thanks to romaine bostick speaking with three cios and state pension funds. let's bring you back to the markets right now because the s&p 500 remains at session lows. it is fallen below the trendline, 200 day moving average and holding at its lowest level since november. what you are seeing are etf's tracking canada and mexico. what is noticeable is the canadian etf's down by nine tencent 1% while the mexican etf is up by .4%. that a large part president trump's decision to delay mexico's tariffs. he has not made a decision on canadian autos and auto parts post also unclear if you will extend the full usmca pause to canada. let me rephrase. you'll exempt canadian autos and auto parts imported under the trade deal but as for the rest of the goods, that has not been

decided yet and that is why canadian stocks as reflected by the etf are underperforming here . we are seeing moves in the treasury market as well with yields at the long into climbing , up one basis point before tomorrow's jobs report as well as jay powell's comments at midday. and scarlet fu and that does it for "bloomberg markets." more coverage of what is happening in washington with "balance of power" of next. this is "bloomberg." ♪

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>> from the world of politics to the world of business, this is "balance of power." ♪ >> live from washington, d.c. >> tariffs come and go but

welcome to the faster show in politics as president trump says he will exempt texaco from 25% tariffs under the usmca, also exempting autos for canada. what is left? i'm joe mathieu alongside kailey leinz in washington. thank you for being with us on the thursday edition come early edition of "balance of power." kailey, they have an allergy to tariffs and uncertainty. kailey: we are right around the lows of the session, down nearly two full percentage point on the s&p 500. more on the nasdaq 500. we think about the equity market, forward-looking, if they're saying let's have an exemption for now but only until april 2 when much wider tariffs are set to kick in, what is a good news will we know that news is coming? joe: a lot of concern about front running tariffs that could result in a pretty lackluster second half of the year. we ha