♪ >> it's that consumer element that has changed that is giving us more concern especially with potentially more tariffs coming. >> especially if your market call is tied to anything trade or tariff related which almost has to be. >> it's not necessarily about tariffs or inflation, it's about inflation expectations. >> once the market understands that this is actually coming through that uncertainty starts to go away. but that doesn't mean volatility goes away. announcer: this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: let's get your very, very long week started. live from new york city this morning, good morning good

morning. "bloomberg surveillance" starts right now. coming into monday firmly focused on wednesday. >> the tariffs will be far more generous than those countries were to us. they ripped us off like no country has ever been ripped off in history. jonathan: the post reporting the president is pushing to go big on tariffs, calling april 2 a generational opportunity as business leaders look for clarity, politico suggesting even those closest to the president have indicated they are unsure what people do. that uncertainty helping to sink consumer sentiment and sending long-term expectations to a 32 year high. investors will be getting a big dose of hard data with payrolls on deck this coming friday. annmarie: it's liberation day on wednesday and reporting over the weekend, even the past 24 hours with the starts to show a shift in mood.

also from what i'm hearing in washington, just two weeks ago, the president might be more lenient, more flexible. someone turned around and said more lenient from what? maybe a 50% tariff rate that will come down. it looks like is going to be a little more aggressive. the big question, is that set in stone or is that the opening salvo for negotiations down the road? jonathan: equities are down by nine tens of one person on the s&p. like wilson joins us a little bit later for morgan stanley. the top of his note over the weekend, this week's reciprocal tariff announcement is likely a steppingstone for further negotiations as opposed to a clearing event. annmarie: if it is going to be a steppingstone for negotiations that mean that uncertainty will be more pervasive in this market for the next few weeks and even months. something interesting is also happening tomorrow. when trump came and he directed his trade agencies to look into trade imbalances. that report is due to the president tomorrow, april 1.

a key question everyone in washington is talking about is whether or not the administration will make that public or we could get some leaks. a little bit more understanding of what the base case is that the president is thinking about when it comes to trade. jonathan: this is a massive week for economic data. you will hear from chairman powell as well on the very same day. friday feels like a long way away, talking about what these tariff mean for prices, higher prices. the president over the weekend says he does not care if prices go up. i hope they raise their prices because if they do, people are going to be buying american made cars. comments in the president over the weekend. one >> thing the administration wants to correct when it comes to this comment is not that americans are going to be paying higher prices for cars or automobiles in general, that is not the message. but they are leaning on the fact that for foreign cars, he wants americans to buy american-made cars.

the issue is you have american brands that import some of the cars into the u.s. especially if you consider mexico and canada outside the u.s. >> some big moves over at goldman sachs. these are the latest calls. three fed cuts, pce at year-end, gdp cut to just 1%. 1% of the 2025. new target, 5700. annmarie: and we are only in march and if you are taking direction from washington the policy has been squarely focused on what president can do unilaterally, and that is tariffs. we have yet to get to the end of the year when maybe there's going to be a more holistic approach when it comes to their proposal. i'm talking about the deregulation and extension of tc j and babies in extra tax cuts. jonathan: equity futures down by one person on the s&p 500.

yields lower across the curve, a big hour coming up. lori kelby see no, robert sucking -- robert sopckin and lori writing with the s&p ending the week down more than 9% from the february high, the next few days are once again pivotal when it comes to the path of the u.s. equity market from here. i'm pleased to say that she joins us now for more. >> thanks for having me. jonathan: just to clarify, the target now on the s&p 500 for goldman is 5900. where are you and the team now? >> a couple weeks ago we took our number down at year-end. that is the base case. we've also been running a bear case which you can think of as a shadow target. it doesn't have to be 10% on the dot. but if we break too far below

that, we think that bear case probably kicks in. i will say in terms of my base case modeling there's a very wide range of outcomes implied. at the five different models we use, it's a very quantitative approach. my sentiment indicator tells us to calm down a bit. that is one of the median outcomes. it gets around 6200 on the s&p and basically looks at the bull-bear indicator which is down around lowe's and typically on a nine-month forward basis you are up more than 10%. putting that aside, two of my more bearish models are coming up with similar numbers, weighing down that basecase forecast. you typically are down about 3.4% in the equity market and here is where that happens. that gets us south of 5700. if you look at my valuation modeling which bakes and weaker 10 year yields coming down a

bit, no cuts from the fed yet, that along with my new earnings number will get us around 57.50 on the s&p. so there is a wide range of outcomes and is annmarie mention, it's early in the year, a lot can happen. things do tend to feel pretty terrible at the bottom. jonathan: liberation day wednesday, payrolls friday. it just kind of goes back to this is what bottoms feel like an bottoms do tend to be a process. and i will caution you that when you look at those times when aai has been this bad, we tend to get stuck there for a while. we don't necessarily bounce right back up. i forget which sentiment survey it was, we had so many of these things, the duke cfo survey showed that tariff concerns and really increased, but monetary policy concerns were actually pretty low. so i do think it is nice to hear from the fed speakers and get a read on things even when they are saying things are uncertain.

i think it resonates pretty well with washington. annmarie: how are we thinking about wednesday, as a clearing event, or more uncertainty depending on the the president does? maybe >> we get more clarity on this particular tariff battle, but one of the things my colleague keeps reminding us about is that this is an administration that approaches foreign policy and economic policy in a different way. this been more unity and more intersection between those things than what we can use to on wall street in the past. i feel like i'm holding out hope that we will get some clarity and businesses can start figuring out how to adjust their supply chains. but even beyond that i do think we are in a bit of a new world here and it is going to continue to be tricky for people to navigate. annmarie: if it is an opening salvo and there's going to be negotiations, is that just mean corporate america has to remain on the sidelines, they can't make decision? >> i think that's fair. i spent some time trying to see what companies are saying about

the current environment and kind of got sucked into a tariff discussion. that's not why i took up the project that they started talking about guidance and what is baked in. some companies are putting china in, not too many putting mexico or canada but there's just not really a lot of clarity on how to even think about this stuff. so when i look at the rate of upward revisions, we are still getting 40% to the upside. that's unbelievable to me. i think it's because companies haven't really been talking to analysts and analysts don't know how to adjust their models yet. jonathan:jonathan: we further consumer sentiment models, they are dreadful. the chairman of the fed says he's not putting much weight on it at all, and then the number comes out on friday and it's even worse. what do you do with those figures? >> we are siri -- seeing a deterioration in corporate sentiment, three different surveys that came out in the month of march. nsib has moved significantly lower. and they are also in the same

thing which is that there's concern starting to emerge on the employment front both from a bottom-up aces from the consumers looking for jobs and companies also signaling a little bit of softening. if it was just one survey we could dismiss it as an outlier. surveys are only as good as the people actually poll, but this is widespread. this is every survey. jonathan: that headlines coming from your pre-awful. consumer sentiment at a two-year low, long-term inflation expectations 32 year high. two thirds expecting unemployment to rise in the year ahead. if that anxiety starts to take hold i imagine people aren't going to spend in the same way they were. do you think we've discounted enough? >> even other earnings numbers that are out there i'm not releasing ended -- anything in the industry modeling telling me i've got a group with both significantly cheap valuations and decent earnings revision trends. i've got a handful of groups slightly cheap on earnings that

probably need to still come down a lot more. i don't think you've opened up enough opportunity yet. i think it is the right place to look for a rebound but i think there's too much confusion about what those earnings estimates actually have going forward. annmarie: expectations for high income consumers also sank. so is any company safe out there? >> if you look across the consumer company landscape they are not really talking too much about high income consumers at this point in time. i did a similar exercise at the beginning of march and found one of the tailor who said they were seeing and weakening across income cohorts but for the most part, general softness. i do think what is interesting is they are not planning on the low income consumer as much as they were in the past which is probably telling me they don't have a clear read that something is going on. hedge funds in particular, it's been a battle because they have said look, this is post-election, democrats are feeling worse, republicans are

feeling better. if you look now, every cohort is coming down. independent, republican, democrat. something has changed and we noticed particularly in february that consumer companies were seeing something happening as well. jonathan: equities at the moment near session lows as we kick off a major trading week stateside. equity futures down 1% on the s&p. with your bloomberg brief, here's yara hack us. yahaira: that of france's national rally party was convicted of embezzlement by a paris court and has been banned from running for office. she and her party were found guilty of diverting millions of euros in e.u. funds to finance activities related to the domestic agenda. she denied wrongdoing and claimed the prosecution is seeking her political death. meanwhile here president trump says he expects consumers to move the u.s.-made cars if

automakers raise prices in response to 25% tariffs on imported vehicles and parts. the president saying with nbc news that he couldn't care less if carmakers hike prices. in the death toll from myanmar's earthquake is expected to rise from over 1700. more than 3400 people are injured and over 300 are still missing following friday's seven point seven magnitude earthquake which was the biggest in a century. the country declared a week of national mourning starting this morning. jonathan: appreciate that. more later on this hour. we are down 1%. up next on the program, counting down to liberation day. >> the tariffs will be far more generous than those countries were to us. meaning they will be kinder than those countries were to the united states of america. let's see what happens. jonathan: two days to go.

let's see what happens next. laura davison joins us next. ♪ ♪ [suspenseful music] trains. [whoosh] ♪ trains that use the power of dell ai and intel. clearing the way, [rumble] [whoosh] so you arrive exactly where you belong.

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♪ jonathan: so here's a snapshot. three-day slide on the s&p could become day four. equities right now negative by about 1%. on the nasdaq 100, down by 1.3. in the bond market, yields are lower across the board. 10 year bond yields down by five basis points. tons of economic data coming up this week. of course, liberation day is wednesday. after that you are going to year from jobless claims, adp,

payrolls on friday and chairman pal speaking. under surveillance this morning, we are counting down to liberation day. >> the tariffs will be far more generous than those countries were to us, meaning that they will be kinder than those countries were to the united states of america. let's see what happens. i have heard a rumor about 10 or 15 countries. >> your starting with all countries? >> essentially all of the countries we are talking about. we would be talking about all countries. jonathan: trump pressing forward with reciprocal tariffs on all countries. the president tamping down speculation he could narrow the initial scope of tariffs set for wednesday. laura joins us now from washington for more. what do we know about what we might hear in today's time -- two days' time?

>> trump has repeated multiple times that he's going to apply these tariffs to all countries. beyond that, we don't know for sure. the administration's been debating a bunch of things, whether to expand the aperture of these or narrow them down. he's getting pressure to narrow the scope here where he is pushing them to say let's go with the most maximalist approach year. we got a little bit of a glimpse of what the size and scope could be over the weekend. peter navarro said that auto tariffs in particular could bring about $100 billion a year and those reciprocal tariffs, another $500 billion for a total of $600 billion annually. that gives you a sense that what we saw last week, times five for what we could see coming later this week. jonathan: we also heard from kevin hassett. i can't give you any forward guidance on what is going to happen. the president has got a heck of a lot of analysis before him and is going to make the right choice i'm sure. does everyone in the administration know what he is

planning to say or do on wednesday? >> they don't, and there's a bunch of different options here. it could be an announcement of some sort of study or it could be anything up to there are tariffs going into effect here in just a couple of days. the thing the administration is trying to do, this reciprocal tariff plan of looking all of the tariffs as well as what they are calling nontariff barriers, things like digital service taxes and come up with some number, that's a very complicated task. this would be a bigger task than the u.s. trade representative has ever done in the past so there is some concern that logistically they may not be ready. annmarie: and of course we get that strategic document, at the president wanted done when he came into office looking at all the trade imbalances between the u.s. and other trading partners and on top of that, the senate is also expected to have a vote when it comes to canada. what does this all mean in terms of politically for republicans in washington? >> it means they are trying to

build this case to take to voters. there's already concerned that farmers are getting very worried and that they could bear the brunt of this. we also see that they are going to take initial steps on advancing that tax cut bill, so you're kind of seeing that the senders a very worried about tariffs, looking to make sure there are some counterbalancing measures to reduce the stock market and grow the economy. jonathan: appreciate the update as always. anticipating liberation day, just two days away on wednesday and a massive week ahead in terms of economic data. if you are just joining us, welcome to the program. negative five 1% and some big changes on wall street as well. some revisions to the forecast. goldman sachs now anticipate three cuts from the federal reserve for 2025. on the inflation side, the forecast pce, 3.5%. gdp, just about 1%. lori, i would love your thoughts

on those forecasts from goldman. let's just assume this is how things turn out. what on earth you market participants do with numbers that look like that? >> on the pce number if we were to get something like that, that is a direct input into my valuation model. the higher the pce, the lower the multiple. what i found is that movement in the inflation number offsets the movements in the 10 year yield. 10 year yields come down, that helps offset but it doesn't completely take away all that damage. jonathan: particularly the front end, and this is the interesting thing. the federal reserve is able to respond in an environment like that one declining unemployment. >> i think they are going to have to look at their mandate because they got these twin pressures. they need to fight inflation. but the word transitory has been coming back into the conversation. i don't think anyone wants to hear that word. my guess is maybe the air on the

side of going with the labor market but we are going to have to see what they say. annmarie: at the same time, long-term inflation excitations at a 32 year high. so how does the fed do both? >> it's tough. even if tariffs weren't an issue, there are plenty of economists still concerned that the inflation genie had not been put back in the bottle. that is one thing we saw looking at the corporate earnings analysis, with that inflation was something the companies were still complaining about at the end of last year when people weren't even all that concerned about tariffs. annmarie: so if consumers are concerned about going out and spending and also about prices going up higher, than companies need to basically make ends meet elsewhere. are you expecting layoffs? >> it does look from the survey data whether you are looking at the corporate side, and i stress the corporate side, not just the consumer side, that seems like 11 they want to pull. there was a big discussion about

expectations when everyone said well, is this going to make companies scale back? where we are getting the colors on the layoff side and i think what you're seeing in consumer surveys is even if that fear is overstated, that fear is absolutely bear. you're starting to hear discussions, is the consumer shifting, i they retreating? jonathan: this has only been one part of the story. we focused on trade for the first 20 minutes but big tech has been absolutely hammered. some of the biggest stocks on the planet are in the bear market and that has got to do with other capacity. capex is part of that story. let's think about the last week or so. we could be in a bubble, speculating about overcapacity and data centers. microsoft pulling back in both europe and the united states as well. it is just pressure, pressure ever since deepseek. how do these stocks bottom? >> we did see that companies

after that came out did a pretty good job of answering those concerns and we of course you're always concerned about capex and the bubble issue. but i think what is really going on is that you got money coming out of the u.s. from european investors pulling it out. and every time i go to europe or get on the phone with a european investor, all they want to talk about is tech. if you are pulling money out of the u.s. in terms of what their interest has been and in terms of the market capitalization of the indexes, you are pulling money out of those names. so until we get that pressure on money coming out of the u.s. from european investors in particular, i think it's going to be very, very hard for that part of the market to work. jonathan: any reason to believe that stops anytime soon? >> they have some data that will let you sort of isolate by geography, and we did actually see in last week's update the money in europe sort of eased in terms of that outflow that we were seeing coming out of the u.s.. but what was interesting is when

we looked on the u.s. side, u.s. investors started taking money out of the u.s. the europeans may have calmed down for a little bit and then the u.s. investors kind of stepped up and took over the selling pressure. jonathan: wonderful to catch up with you, massive week ahead. breaking down expectations. amazing sentiment shift so far this year from the united states back toward europe. can that stick in the face of the counter tariffs we might see in to days? annmarie: remember, the v18, you could be looking at a tariff rate on european imports of potentially minimum 15% and as high as 20% or even more. so at that point, do you see the flow start to reverse and the stories start again with u.s. is the cleanest dirty shirt in town? jonathan: we are all waiting for reciprocal tariffs from the president of the united states. he stressed over the weekend those tariffs the on all countries, not just a select you. equities are down by one person

on the s&p 500. nobody has any idea where we are going to finish this week. at the moment, down across the board on the s&p. with that risk aversion, yields down across the curve on the bond yields. joining us in just a moment, global economies brace for a fresh round of trade tariffs. good morning to you all. you're watching bloomberg tv.

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jonathan: three-day slide on the s&p. down .9%. the s&p, five losing weeks out of the last six. friday the second worst day of the year so far. down on the month by 6%, the worst going back a couple of years. on the nasdaq down 1.3%. let's get you some morning movers. yahaira: tesla shares down 4.6% and leading the mag seven lower after elon musk had sobering words about his role on president trump's doge team and

how that is affecting tesla. he spoke at a town hall and said the doge job is costing him a lot and pointed to the shares plunging. they are down 45% since december. oracle shares are down 2% after a report the fbi is investigating a cyber attack at the company that led to the theft of patient data. the hack happened in late january but it did not start notifying health care customers until this month. we do not know how many people were affected. coreweave -- meant to test investor appetite for a pure ai play company but it seemed to fall short at a time we have seen tech struggling. today not looking any better.

jonathan: the hits keep coming. futures down across the board. bond yields lower. president donald trump saying reciprocal tariffs will target all countries. his comments tamping down speculation he could limit the initial scope of tariffs. annmarie: the tone shifted from universal tariffs on the campaign trail, the last two weeks this word reciprocity, we will look country by country and the scope will only be the dirty 15. the president put that debate yesterday saying i'm looking all countries. reporting you're seeing looks like this universal tariff is back in play. the question is how high is it going to be in the bigger question for this market is is this an opening salvo for deals or is this going to be the new way of trade when it comes to trump 2.0? jonathan: negotiations are clearing event.

that is wishful thinking. the president said this over the weekend, tariffs will be for more generous than those countries were to us. is there any substance in that line? annmarie: i think we are saying -- i think he is saying we will be kind and lenient and flexible but you need to think about where the base case is. we will be kinder to european autos than they have been to us, one of his biggest grievances. what someone put to me over the weekend is what i said the president said he will be lenient and flexible but from what? he was thinking about 50%, maybe now he is thinking about 20%. jonathan: we are looking at crude as well. brent and wti up to .6%. secondary tariffs, president trump threatening secondary tariffs on russian oil. nbc news reported trump said he was "pissed off" at vladimir

putin for casting doubt on cease-fire negotiations. not the first time we have heard about secondary tariffs, we heard about venezuela. i am losing track of everything. now russia in focus which would mean china and india also in focus. annmarie: china in india in focus because that is where all of the russian crude goes. that would mean if they wanted to still import that russian crude they would have to pay a fee. when the president was talking about this, when you read the transcript from nbc news a pre-much interchanges tariffs or sanctions. at the end of the day what he is saying is if vladimir putin does not come to the table, and i have reporting he wanted to see a full cease-fire by april 20, if putin does not come to the table there will be penalties. jonathan: he played golf with the finish leader over the weekend. annmarie: there was a meeting

between these two including an hour of golf. what the finnish resident said is the u.s. president was "running out of patience" with vladimir putin over the cease-fire. european sources are concerned the president is moving at this aggressive pace and vladimir putin is trying to drag it out. jonathan: they changes that goldman sachs. a busy research team. goldman raising its forecast from two to three come expecting president trump's tariff to weigh on economic growth. this is goldman cuts its year end target for the second time the last month. on the growth site now looking for 1% gdp growth at year end, 3.5% on pce, that is an ugly mix for the economy. annmarie: what stuck out to me is goldman sachs increasing their tariff assumptions for the second time this month. on top of that, raise their

twelve-month recession probability from 20% to 35%. that r-word is something the administration does not want to see circulate. jonathan: goldman offering a three month forecast, nine month forecast, 12 month forecast. 5300, 5700, and 5900. i believe we were at 6300 only a few weeks ago. annmarie: and we are only in march. can this story changed by year end? is it an opening salvo to negotiations? will there be carveouts or exemptions when it comes to tariffs? there's only one pillar of this triangle when it comes to the trump administration economic agenda. what happens with the regulation and what we get on the tax front? jonathan: futures down .9%. global economy is bracing for president's "liberation day."

the bubble economy is feeling the effects of a -- we see global growth at 2.6%, down from 2.7 presenter previous forecast. robert joins us for more. bigger changes elsewhere. why the small change? robert: a couple competing factors. even though china has been facing risks and headwinds, we raised our forecast from 4.2% to 4.7% on the back of signs momentum is picking up there. a little bit of the ai story as well. at the same time we lowered our u.s. forecast by 50 basis points due to an increase in expectations for higher tariffs by you yet death by year end. the risks are distinctly to the downside. jonathan: you talked about the downgrade. where are you now? robert: they are 1.9%.

about 50 basis points less. also about 50 basis points higher inflation forecast, somewhere in the higher 2% range by year end. that is in a one month change. the tariffs could get even higher than we are expecting. growth could get even lower. that is where the risks are. annmarie: what is your base case for tariffs? robert: before trump came to office the u.s. effective territory -- effective tariff rate was 2%. we are expecting that to rise to about 10% to 15%. if we get the lower end of the range that is the highest rate since the 1940's. i think the risks are we get to that 15 point rise. annmarie: you're looking at universal tariff, not country by country reciprocal tariff. robert: we do not expect large

tariffs on canada and mexico. we think they are moving towards a deal in that space. our base case is a mix of the china tariff sticking, reciprocal tariffs defined traditionally which will that emerging markets. which countries have higher traditional tariff plates that we do? things like the car tariffs we saw. pharma and other major products. that is how we get to that range. annmarie: how do you price in the retaliation we can expect from all these trading partners? robert: that is a big question. right now that half-point off u.s. growth i mentioned is assuming minimal retaliation from trading partners. what we have seen from a lot of different counterparts is they are hesitant to put large-scale tariffs on their own consumers and get to a large-scale fight with the trump administration. if you were to get tariffs of

similar sized by other countries you could get three times the effect we have a track on the u.s., not half a percent but something like 1.5%. jonathan: let's get to the calendar this week. schulz, ism, payrolls, and a lot more. the survey data is convincingly bad. you expected to show up in the hard data as soon as this week? robert: that is the key question. there are two worlds and the u.s. data. all of the soft data have all retreated significantly as the trump administration policy uncertainties have played through. hard data is more mixed, holding up well, especially the labor market come unemployment rate still low, jobless claims very low, even in areas more concerned like around the d.c. area with the layoffs, so we think the data will hold up well now. we are not seeing that bleeding yet. the risks are you start to see that more significant risk.

jonathan: it is stunning to see the data where it is. we are talking about levels exceeding where we were when inflation was approaching double digits in the fed was hiking by 50 or 75 basis points at each meeting. are things really that bad compared to where they were in 2022? robert: it is a good question. we have to take it with a grain of salt because some of these surveys, there is a big difference in political affiliation with respect to the economy. as we saw in prior years in the cycle, consumers were very upset if you look at consumer confidence measures and the consumer performed very well. this is a big risk for the fed that they have to monitor. a lot of the soft data are telling them things will get worse. hard data is mixed. they will have to see how that balances out and monitor all these closely. it is a difficult time to be

forecasting the economy. annmarie: how concerned are you this becomes a self fulfilling prophecy? robert: that half a point of growth i mentioned i would describe as the pure tariff effect, not baking and a lot of that uncertainty spiraling into a self fulfilling prophecy. i think that is a big risk, especially because what we have seen in the u.s. is it has been increasingly upper income consumers driving the consumption cycle. not only a resume things like confidence, off but with equity prices coming down that could have a negative wealth effect and this could feed into, even though those consumers still have a fairly good labor market prospects and still have jobs, that could feed into them pulling back. i think that is another huge risk on top of how high do tariffs go. jonathan: we have spent times talking about the stagflation forecast out of goldman sachs. i would love to know from your perspective whether that is a mix this federal reserve can respond to?

if you have growth coming down to one and pce at 3.5%, can the fed cut rates? robert: that is a really difficult balancing act. if you end up with a forecast where growth is in the 1% range, risk to the downside, inflation in the upper 2%, that is a spot where the fed can focus more on the growth side of its mandate and less on the inflation side and really cut rates. once inflation starts to pick up above 3%, especially if it is broad-based and you see things like the tariffs spilling over into services inflation, it will be very difficult for the to cut significantly. when you get above 3% is when it gets dicey. michael: -- jonathan: the central bankers done,, the central bankers nightmare, if we get it hard to see how they will respond to it. robert sockin of citi.

equity futures recovering slightly. with an update on stories elsewhere, your bloomberg brief. yahaira: ck hutchinson shares fell on reports that billionaire lee cushing may delay a deal signing the company's panama canal ports to a consortium including blackrock. trump has touted the win but beijing has ratcheted up criticisms of the deal. more on elon musk's rally yesterday in wisconsin. the billionaire questioned the relevance of the federal reserve , say why are there so many people at the fed and what to they do? elon musk went on to say he thinks a magic eight ball could do a better job with interest rates than the fed. president trump is not ruling out running for a third term as president. he told nbc news there are methods that would allow him to run again. the 22nd amendment to the constitution enacted after fdr

was elected to a fourth term prohibits presidents from being elected more than two terms. it is your bloomberg brief. jonathan: can we squeeze some baseball in? animate -- annmarie has thoughts. annmarie: it is mlb approved. if you think it is helping you so much i'm for it. all team should be using it. jonathan: the yankees are cheating? annmarie: it is more exciting if there are more home runs in a game. jonathan: i agree. i thought i might get tickets if it is that exciting. more on baseball in the next hour and we can debate whether the yankees are cheating or not. apparently they are not. maybe they are. equity futures down .9% on the s&p. up next, a cautious consumer. >> there are some any red flags that tell us we should be in a recession. it is the consumer element giving us more concern, especially with more tariffs.

jonathan: a conversation about retails in just a moment. you are watching "bloomberg surveillance." ♪

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they don't belong on your noggins. with godaddy airo, it's like you know what you're doing. jonathan: equities down. down .8% on the s&p. cuts on that target from goldman and rbc and barclays. goldman started the year at 6500. that was the original forecast. cut to 6200, now reduced to 5700 on the s&p 500. the nasdaq lower. under surveillance, a cautious consumer. >> there are so many red flags

that tell us we should be in a recession but the consumer it was always there. we talked about the fed put or the trump put but it was the consumer put for the longest time. consumers are starting to pull back and you get in the negative feedback loop. it is the consumer element that has changed that is giving us more concern, especially with more tariffs. jonathan: concerns about the consumer mounting after u mich consumer sentiment tumbled. sucharita kodali writing retail is holding steady but around the same place -- around the same pace as inflation. this suggests consumers are more cautious. you believe we are in the negative feedback loop? sucharita: for sure. the consumer has had very negative sentiment for some time. the big difference is they are

spending lower now. there was a lot of cognitive dissonance following the pandemic where consumer sentiment was low because of inflation numbers. the spending numbers were high and they were outpacing inflation. we are not seeing that anymore. we are seeing sectors like food and beverage, which were doing really well and typically is the signal people are still able to spend discretionary funds, they have discretionary funds, though seem essentially to have evaporated and the consumer is spending less. that is the signal everyone will be looking for. consumer sentiment was a concerning factor that certainly affected elections and things like politics but they did not affect business. now we will see that in retail. jonathan: the numbers we have seen have been shocking. we have heard from a handful of

companies, we have heard from delta airlines, from lululemon just last week. going into earnings season do you believe we have reset expectations were not yet? -- or not yet? sucharita: i think there is some degree of a correction coming. many of these retailers are down to their lowest level in the last 12 months. there their -- there may very well be more to come. i do not expect they will improve expectations in future earnings calls and we also have the challenge with consumers pulling back. if consumers are going to be spending less their numbers will be much softer than they were last year. i think that could really have negative repercussions for everybody's valuations. annmarie: when it comes to the c-suite and expectations how much will they blame this on

policy out of washington and the tariffs we are expecting on wednesday? sucharita: they have been blaming tariffs and an uncertain political environment. they are going to continue to do that. that is a very easy target. to some level for a number of these businesses they do do business with china or they are using suppliers from china or they have factories in mexico. those are issues that are problematic. you will also have a number of services businesses that have nothing to do with tariffs that will say the same. that is likely because of the overall impact of tariffs impacting consumer sentiment, impacting consumer unwillingness to spend. the challenges with employment rates or challenges with wages. those have been good numbers in the last few years and those are the concerns.

if those large macro metrics start to soften we may be we -- we may be headed to a recession. annmarie: have you heard for many companies willing to bring production back to america? sucharita: what we have scenery number of different things. we have seen other types of near shoring, we have seen the diversion of goods to other asian countries. in some cases you may have certain components being manufactured in the u.s.. for the most part i have not seen any significant investment in manufacturing in the u.s.. if it is it would be heavily driven with robotics. you see that in some automotive companies like bmw or volkswagen. jonathan: good to catch up. sucharita kodali of forester following the dreadful consumer sentiment number on friday. looking out for what it means for retailers following additional tariffs from the president and more this wednesday.

breaking news out of paris, france. this is the latest from our team at bloomberg. right wing leader marine le pen convicted of embezzlement and barred from running to be france's next president. we heard but judges of the criminal court in paris found marine le pen and her party guilty of euros to finance activities related to their domestic agenda and this is the punishment, two years in prison, two more suspended, and an immediate five year election band which would take out any potential of running in 20 37. annmarie: that precious her ambitions of overtaking emmanuel macron in 2027. we have seen her really start to rise when it comes to polling in france but this means that only will she be in jail according to the sentencing, but she can no longer be president. i'm curious what kind of backlash we may see from far-right supporters in france following this court ruling. jonathan: and also what we might

hear from this administration in washington, d.c. annmarie: i think they will say this is "a witch hunt." i think marine le pen has used that phrase taking from donald trump when talking about this case. i mention that even though donald trump does have a somewhat warm -- many would call it a bromance between emmanuel macron and himself -- i mentioned this a ministration will come out in support of marine le pen. jonathan: more updates throughout the hour on that subject. coming up we will catch up with mike stanley -- mike wilson of morgan stanley, henrietta treyz. payrolls on friday, lots of data in between. the main event is on wednesday, april 2. so-called liberation day in america. the second hour of "bloomberg surveillance" is up next.

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if private assets are going to eat the world the equity market having that number of names, you come to her world that is increasingly and echo chamber. imagine public assets and private assets, if you see your public assets in a guy going down by 20%, you will think deeply about what you private assets are worth. >> there is a scarcity of certainty. >> after april 2, as long as we stick to that date, a lot of that uncertainty is now behind us. >> who is to say that april 3 it does not all change? uncertainty is the policy. >> there will still be uncertainty and volatility. >> a deep fog, pull over with your blinkers on, kind of uncertainty. >> this is "bloomberg surveillance." jonathan: the second hour of "bloomberg surveillance" starts

now. equity futures on the s&p 500 negative by .9%. nasdaq looks like this, nasdaq 100 down by 1.25%, russell down by 1.2%. bond market, done by six basis points on the front end, down by five on 10's and 30's. your week ahead is stacked full of economic data, including payrolls on friday and an address from fed chair jay powell going into the weekend. but wednesday is liberation day, april 2. annmarie: and it feels like the mood has shifted. the president said he will be lenient and flexible. reporting going back to what he has been speaking about for months on the campaign trail, honestly for decades, when it comes to tariffs, universal tariff. the question is, is wednesday the start of a negotiation when it comes to u.s. trading partners, does trump come in

with a maximalist approach, or will this be a new trader rules of the road for this administration? jonathan: more tariffs is happening. on wall street, more -- david coston at a 5700 year end, started at 65, back to 62 a month ago, 5700 is the year end outlook. goldman sachs looking for stagflation, 3.5% on pce, just one percent of gdp. annmarie: and for the second time this month, goldman sachs raised where they expect the tariff barriers to go. so they are expecting higher walls to go up when it comes to this administration. not just on wall street come over the weekend cbs polling majority of the americans saying they want this president to bring inflation down, costs down on goods and services, and focus less on tariffs.

jonathan: the washington post saying the president wants to go big. politico reporting no one in the administration knows what the president is going to do in two days time. and great on fox news, they said i do not have forward guidance on what will happen this week. the president will make the right choice, i am sure. the president has made a decision, is that what that is, but i am not fully on board, or is it that we do not know what the president will decide? there is a key report coming out tomorrow. a question i am talking to folks about and washington is whether or not the report will be public. trump told his trade representative he wants a full analysis on how the u.s. is dealing with other trade partners when it comes to trade deficits, reciprocity, everything under the sun. that report goes in front of the present tomorrow, and then i think he will make the final decision. jonathan: people do not want to belong going into that event. coming up, mike wilson of morgan stanley. henrietta treyz of veda partners

as the world prepares for liberation day, and vikram malhotra of mizuho. we begin with stocks softer as trade uncertainty hands over markets. mike wilson of morgan stanley sing the tariff announcement this week is circumstantial further negotiations as opposed to a clearing event. mike joins us for more. did morning. why's is that distinction important? >> i think everybody is looking for the final piece here. it is not unlike a lot of the other policies that have come out this year. this is what we kind of signed up for. i do not think with the president has done so far has been surprising. all of the policy changes so far have been growth negative. we have likened it to a new ceo coming in and they want to restructure the company. they are going to kitchen sink it. then they're going to try to make their plan work for next year. this will take some time.

at this level we are in now, it is critical from a market standpoint, not so much from the administration standpoint. annmarie: it is also on brand for trump to take a maximalist approach at the beginning. how messy could it be if he comes in with this maximalist, aggressive approach, then we have retaliation from trading partners? >> it is classic negotiation tactics, coming in way over to the right, then settling in the middle. i do not think it is unusual either. the response from trade partners is that they are engaging. that is how you get people to engage in your discussion. you come up with a big splash, then you you have to go to the table and negotiations begin. we are not even at the table yet. annmarie: i think some countries think they are at the table because they sent a few representatives, but i agree, it has not started. what do you do if you are an

investor? >> avoid areas most affected. consumer discretionary has been hit the hardest, maybe a little bit extreme. i would say defensively position, high quality. that has been our corporate folio. some trading calls have gone against that and some have worked in some didn't. you want to be in businesses that can mitigate these concerns. you have pricing power and the ability to move production around. you can take inventory onto buffer this for 60 or 90 days. you see those negotiation strategies in our note today. i believe there will be a clearing event at some point this year, but we are not there yet. jonathan: some changes come international, dax this morning down 2%. nikkei overnight down 4%. international starting to turn. subtle change from the last month or so. what is changing? >> last week, the we made the call that u.s. does better than

these other regions. end of the day, those regions are most sensitive to global trade, particularly japan. nikkei down for percent is another sign that the market is laser focused on this tariff retreat issue as opposed to some of the other issues it has been worrying about. so relative to value, it looks good to us. it may happen in a down take, which is also something we consider because the u.s. is still the highest quality market in the world. in an uncertain world, high quality will outperformer your jonathan: you think europe might be in trouble here? >> i think there is a little extension. our european strategy team is on the same page. there are some good things going on in europe that have been happening for decades potentially. but, boy, that will take even longer than this tariff negotiation. you are talking about countries spending more money on fiscal deregulation, and this is a multiyear transition. in the stock market, in some cases, up 15%, 20%.

annmarie: industrial military companies in europe, do you like anything there? >> i think financials are still the place looking for benefits. once again, these kind of got extended. from my standpoint, i think there's better value now in the u.s. in some of these areas. jonathan: i am sure you saw the new numbers from goldman sachs and the team. 1% on gdp. 3.5% on pce. that is a stagflation remix. what are your clients asking about how to trade stagflation america -- in america? >> we are more in the camp that expectations are not where reality is, which is that growth is worth and -- growth is worse in their stagflation. we are in that 5500 to 5859 now, chomping off the upper end of that for the first half of this

year. i'm not willing to throw in the towel completely on the full year. the good stuff, the policy changes we expect, could feed into the equity markets by year end. if we could push that timing out three, six month, sure he right now, we're still in that 5500 to 6100 range with a truncated upper band. and now talking universal tariffs, the net lower end of the band maybe comes down. if we break down this week and universal tariffs are the reason, we could see something even lower than 5500 in the short term. jonathan: can we talk about the rebalancing and the ultimate vision of this administration and why you think the policy makes is still bullish? >> i think it is constructive, not sure it is wildly bullish. i think it is bullish for a lot of parts of the market that have under poor -- underperformed the last three or four years. our vision is simple and the

administration's vision, they want to affect a slowdown in the government, liberate the private economy, keeping tax rates lower, maybe tariffs are part of the story. that's transition from public government allocation of resources to private price allocation of resources leads to a broadening out, something that has been absent for the last two or three years. something we have talked about mending times is the crowding out future, the government crowding out small businesses in the consumer. i think that been crystal clear in their messaging, it is not going to be fun for a period of time. we have to sort of detox, as the secretary of treasury mentioned. an adjustment period, as the president has said. annmarie: when it comes to the dessert, weird only talking about current policy extension. -- we are only talking about current policy extension. >> you're are talking a fiscal stimulus, and that is where we

have to get tax from. we need less fiscal stimulus. we need to private enterprise in america doing organic growth. annmarie: taxes are going about sells goods, do we need more tax cuts for individual -- >> that is the idea, that we are going to keep taxes lower if tariffs bring in revenue and there is negotiating. we will see. this will be very messy. this is not going to be easy to transition. jon asked, what is the bullish story over the next 12 months, i think it is that. it will be a lot of uncertainty. i still think that is the plan. what i see so far is that direction in that area. look to stock operators and financial operators, they will have to deal with this adjustment. that is the consternation right now. jonathan: good to see you. mike wilson of morgan stanley. equities near session lows, down 1% on the vice end. underperformance on the international stage, asked down

2%. nikkei i down by four percentage points. here is your bloomberg brief. yahaira: french far-right leader marine le pen has been barred from running in the 2027 presidential election she was convicted of embezzling millions of euros by a paris court this morning and now faces two years in prison. judge suggested she may serve her term under an electronic bracelet. meanwhile, the israeli prime minister's office says it sent a counter offer to mediators after reports hamas had agreed to a proposal for a new truce. israeli media say hamas agreed to release five living hostages in exchange or a 50-day cease fire. meanwhile, israel has started ground operations in southern gaza while continuing airstrikes throughout the strip. in sports, the yankees are off to a blistering start to the season after sweeping milwaukee over the weekend. the bronx bombers lived up to their nickname, exploding for a

franchise record setting nine home runs game on saturday, including three from captain aaron judge. 236 runs through the 36 games are the most in yankee history. that is your bloomberg brief. jonathan: thank you. mike, do you want to settle this? are they cheating? >> they are not cheating. they are finding a better way to hit more home runs. we will see what happens. annmarie: aaron judge is also not even using this torpedo bat everyone says they are cheating with, and people use it last season, and it is mlb approved. haters want to hate when it comes to the yankees. jonathan: case close come apparently. next, counting down to liberation day. pres. trump: the tariffs will be farmer generous than those countries were to us, meaning they will be kinder than those countries were to the united states of america. starts with all countries. we will see what happens. donath end henrietta treyz of

veda partners joins us next, and more from mike wilson of morgan stanley. from new york city this morning, good morning. ♪ something amazing is happening here. more companies are turning to mac. from finance to fulfillment. cdw supports mac integration across your organization. with the power of apple silicon, best in class security and compatibility across devices and applications, there's a mac for every job. make amazing happen. ♪♪

jonathan: what a month for downgrades, downgrades from hsbc, citi, price target cuts from rbc, barclays, goldman sachs twice in the last month or so. equities down again this morning, by 1% on the s&p, negative 1.4% on the nasdaq. losses worse in europe. equity benchmark in frankfurt, dax, down by close to 2%. under surveillance, we're counting down to liberation day. pres. trump: the tariffs will be

farmer generous than those countries were to us, meaning they will be kinder than those countries were to the united states of america. it starts with all countries, so we will see what happens. many countries. i have heard a rumor of about 15 countries. essentially, all of the countries we're talking about, we will be talking about all countries. jonathan: the latest, president trump planning to start his reciprocal tariffs push on, tempering hopes at the initial scope could be limited on wednesday. henrietta treyz of veda partners joins us with more. what happens on april 2? >> april 2, lots of tariffs start going on. it will be a really long day. we will get the reports from ustr, commerce, and treasury on april 1. there will be advanced warning.

we have trade agreements with 20 different countries. when the president says we're going to terrify everybody we're talking about, he means those 20 countries -- when the president says we're going to tariff everybody we're talking about, he means those 20 countries. these tariffs cover over 350 billion dollars worth of goods from china that will go up. we will see new tariff investigations start on india, for example, pharmaceuticals. i think there will be new tariffs across the auto sector. i am very wary about auto parts. i think that will be secondary, happening in a couple months. should any nations like the eu not come to the table efficiently takes a long time to get there, like coming. annmarie: what do we see that could happen almost immediately when it comes to iepo or 338? is that going to specific countries or industries? >> iepo is countries or industries, but then there are

sector specific ones like lumber, copper, dairy, things along those lines would be section 232 tariff. my biggest concern with any rationale is that there is no time horizon to take them off. section 232 tariffs on steel and aluminum have been affect for almost eight years. once those tariffs come on with the rationale, like the auto investigation they completed during trump's first term, those tariffs do not come off here those are the most pernicious. the ones on canada and mexico theoretically come off in three to six months. the others have very serious staying power. annmarie: when it comes to how the president is approaching wednesday, he said we're going to start with all countries. is that where he is going to end? >> that is a fair question. i think we start with about the 20 countries we have trade agreements with. that is what the agencies have been tasked with doing. i see the potential for

expansion before we see any pullback. for example, there is no investigation into india. i think we have had a lot of issues within the act from trade in pharmaceuticals, genetic drugs, to -- generic drugs, excuse me, the trading services deficit. those are institutional issues that were looked at during trump's first term, and i expect a long drag 20 approach to india. so i think a lot more will come on in the next four years of trump's term at then will necessarily come off, although canada and mexico should be excluded. that trade deal needs to be re-agreed to by next summer. annmarie: when it comes to what the senate is going to do tomorrow, there is supposed to be a vote on a democratic resolution blocking trump's use of iepa when it comes to canada. how difficult will that be for some republicans, whether they say yes or no? >> think about it, there is already reporting we will see a bailout for the farmers, which is widely representative by

republican lawmakers in the u.s. senate, including the majority leader john thune. i think it is fascinating to see tariffs go on our closest trading partners, and republicans who were a party of free trade and 0% tariffs a couple years ago, they now have to get behind the president's justification for fentanyl them canada being an international economic emergency. so you are going to see some serious backpedaling, which is compounded by the election losses that republicans are seeing across the country. obviously, with at least a phonic in upstate new york and this past weekend on four amendments in the deep red state of louisiana democratic voters turned out after being sleepy for six years and crushed four amendments. we will see that in florida in two different districts, the first and the sixth, to see what the margins look like here it is a still trump plus 30, plus 40, or is it something republicans should be more concerned about going into the midterm? annmarie: how much pressure a republican senator to make sure

they get to see extension sooner than later? >> tons of pressure, it has to be done. i think the best mechanism is the x date for treasury. we know we have estimates from outside advisors at cbo that suggest late july, even mid-october him as the time horizon. that all staff on the hill, which i used to be one, are making sure we're hearing from the treasury secretary, and he will not report that until may. it will depend on tax receipts. it is disconcerting when doge is firing irs employees, this expands the tax gap. so that will determine that date. so that is part of the tax bill, just an extension of the status quo. there are not and will not be tax cuts and the spill. jonathan: two days to go. we have so much to get through before the end of 2025. annmarie: many think this is trump coming in with a maximalist approach and he wants deals in negotiations, which

means we could be talking about the uncertainty of trade for the rest of the year. jonathan: mike wilson of morgan stanley still with us. >> i have taken the view it is probably the fed because growth is deteriorating further. i think the concern around tariffs and what it is doing to inflation is we kind of give the fed an excuse to take a break. the fed cut 100 basis points last fall in absence of labor issues. we are digesting it. and the back end of the bond market, rates went up during that period. i think tariffs provide a nice excuse for the fed to pause here. i have no doubt that if we saw major deterioration in the labor market, the fed would act. i do nothing the president is in a hurry to blank because, as we were discussing off camera, they have to do things quickly here. you have to do as much as we can the first six months, for a

couple reasons. you will get dragged back into the quicksand of the policymaking here and secondarily, midterm is in two years or the last guest was talking about political ramifications. i think that is not a concern now but will become one later this year. annmarie: looking at political ramifications, it does come up in polls. people are still concerned about the cost of goods now and are concerned about tariffs adding to that. what is going to regulate trump if it is not the politics? >> look, he is really trying to follow his agenda, check the boxes on the things he promised he would do for the american people. a lot of those things are market unfriendly. that is what we're discussed -- discussing here. is he worried about the market are worried about his agenda? i think he is more worried about his agenda. that was a big adjustment here. in january and february, people were complacent to the idea and the markets focus, and that is really when the stock market in the u.s. started having problems come up first when the treasury

secretary said it and then the president supported the view. that is the big adjustment for the markets. not the economy, not jobs, not confidence, but the markets. the problem is we are so financial as an economy that the markets are the economy. that is weighing on consumer sentiment. jonathan: my credit to you, i remember that morning. you came on and said he is not talking about the market. he has continued to ignore the stock market. the focus we have heard, is main street wall street? annmarie: main street over wall street, that is the term the treasury secretary has used time and time again. he sat at the economic club of new york a few weeks ago and said wall street has done very well, i was one of you, our focus is squarely on main street and make sure every day americans are doing better. which means bringing jobs back to the u.s. heartland. >> i want to add something here that i think people are more aware of, and they trump's first term, we had massive slack in

the economy, coming off secular stagnation. reflationary policy, which is what trump came in on the first time, made sense. this time we came in they would slack, and negative out gap. it is a very different set up. even if they wanted to be progrowth, there really can't. that is why i think they are focused on the bond market, back end yields, as opposed to the stock market. that fits with the set up that we had that had nothing to do with the election. it is just a set up we're in. jonathan: mike, good to catch up. mike wilson of morgan stanley. , vikram malhotra of mizuho on record demand for data centers. from new york, this is bloomberg. ♪

jonathan: this has been a long first quarter or the final month, final day of the first quarter, down so far in march by something like 6% on the s&p 500. heading towards the biggest monthly loss since 2022. on another 1% this morning on equity futures are nasdaq down by 1.6%. here are your morning movers with yahair jacquez. robinhood falling 6.8% as we see a brighter selloff among crypto-linked stocks that is because bitcoin prices are falling and there is an overall risk off mood in the market. as we know, robinhood does get a big chunk of its revenue from

those cryptocurrency trades. next up, shares of mr. cooper soaring in the premarket, up 25% after it was just announced that rocket companies will require mr. cooper in an all stock transaction for $9.4 billion. the company saying that the combined firm will service more than $2.1 trillion in loan volume. the deal is expected to close in the fourth quarter of 2025. some m&a action there. also, tesla shares down 6%, leading the mag seven lower. this is after musk opened up about how his role on the doge team is impacting tesla. he spoke at a rally in wisconsin and said that the doge job is costing him a lot and pointed to the shares plunging. in the last hour, we got word from c4, they're cutting the price target on status -- from

stifel, they're cutting their price target on tesla. jonathan: thank you. equity futures done by one full percentage point. bond yields down across the board. the two year at 384. 10-year at 4.1%. trump threatening tariffs on all countries a liberation day this wednesday. trump responding to reports only 10 to 15 countries will be targeted. annmarie: he says that is not true, we're starting with -- and i think that starting with us a key point of what the president said yesterday, we're starting with all countries, which makes me think trump is going to come in with a very maximalist, aggressive tone when it comes to tariffs and then potentially you will have weeks or months of either reports and investigations underway when it comes to trading partners and potentially negotiation. jonathan: this is the decision investors have in front of them. do you think this is the beginning of further

negotiations? mike wilson of morgan stanley thinks it is the continuation of further negotiations. starting gun for more of the same on wednesday. annmarie: this president likes to use uncertainty in all forms of policy. why would you think wednesday would be a clearing event? tomorrow is important we will get the report from the treasury secretary your doll of his advisers have put together a report looking at trade imbalances. they do not need to make it public. will they, or will it be leaked? that will give us a sense of what to expect on april 2, liberation day. jonathan: the weekend was full of headlines. president trump was threatening to bomb iraq and start secondary tariffs of the country does not come to a deal over the nuclear program. trump making the comments to nbc news over the weekend. more big headlines in foreign policy. annmarie: again, a maximalist approach, how trump likes to start deals, how he likes to start negotiations.

iran had written a letter back to trump, and they said they will not engage with the trump administration directly when it comes to potentially having a negotiation on nuclear. this says to me that iran is willing to maybe engage but not directly because they would prove very weak domestically because they would be sitting down with trump and his team, who went after someone they want to avenge. but it means the door is to negotiate with maybe a third party. jonathan: secondary tariffs, iran, russia, venezuela. what do they all have in common? china. annmarie: they'll have china in common, because where is the oil coming? a ton when it comes to a russia and a lot when it comes to iran keeping them somewhat afloat when it comes to those fx reserves. all of this oil is going to china. we do not have tariffs on these countries, we have sanctions on these countries.

would trump then have to put tariffs on these countries and the oil? i'm confused how this would play out logistically. i think the bottom line is he is willing to use economic state then more craft, like the biden administration, to go after woes. jonathan: tesla down this morning by 6%. elon musk admitting doge and his political activism is weighing on the stock at a town hall in wisconsin. >> it is costing me a lot to be in this job. they are trying to put massive pressure on me and tesla, i guess, to, i don't know, stop doing this. my tesla stock and the stark everyone holding tesla went roughly in half. it is a big deal. jonathan: it is a big deal. he was going to hand out checks to political volunteers. annmarie: he have stone $14 million to this wisconsin state

supreme court race -- he has thrown $14 million to this wisconsin state supreme court race. in november of last year, he put out a twitter poll asking what would do a better job deciding interest rates, federal reserve or magic eight ball? i think he is tactically realizing the consequences of what it means to be the " first buddy" to the president of the united states and it comes to tesla stocks. but he is still willing to put his opinion out there and be controversial. jonathan: florida over the next 24 to 48 hours will be fascinating. struggling to see how it affects the midterms 18 months out, a year or two years out, it is difficult to do. but we get a flavor of things in a republican homebase over the next few days. annmarie: the most important when you want to look at is michael waltz's district. you had the republican leading by a time, bringing in attentive political donations. it has got a lot tighter now, a

concern for the republican party. they think he will win, but it will be tighter than they expected. jonathan: one to watch. investors gauging demand for ai and data centers. vikram malhotra of mizuho writing data center bookings are likely to continue at a strong pace, but there is an increasingly split view on whether pricing power is strong or waning second derivative. vikram, welcome to the program. we had the deepseek revelations at the start of the year, and last week we heard speculation about a bubble and overcapacity data centers. then we heard a report suggesting microsoft pulled back on projects and europe and the united states. a lot of people are stepping back and saying, what on earth is going on here? what do you see? >> our channel check suggests near-term demand, likely record, and there is chatter, 700

megawatts deal likely to hit this quarter or next. near-term demand is very strong. the question is how long this will continue and does it morph into a more specific demand as we go into inference, but i think the key will be pricing and what it means for cash flow. annmarie: there was that note that microsoft was pulling back potentially a data centers. what does that say to you? >> some may say this is a new phenomenon, we have not seen microsoft pulled by greatest pulling back after four years of record demand. i think pulling back away from loi's, as they're called, is more common than you would think. it is more a resetting the growth, rather than assign demand is not there. also supply chain issues. if you want to open up a 50 megawatt data center but chips are not coming for 12 must, then they would it enroll back. -- they would dividend rollback.

jonathan: pricing power, are there some games going on here? >> i fascinating question. i cover real estate, and pricing power is key for reit stocks. could be game theory. could be say we are pausing or slowing and see what everyone else does. end of the day, in any real estate asset class, if you are in 2% vacancy, like in data centers, you definitely have record pricing power. you have five or six real buyers of the space, you probably have 30 different landlords. the question is, do they have any power? jonathan: one of the buyers of that space is alphabet. the ceo of alphabet said, it is better to overinvest in this space then underinvest. do you think that is still the case? >> i think so. near-term, and makes sense. what we were talking about

earlier, it is like when we got the first iphone, it was magical, game changer. it was not until iphone nine or 10 or 11 that it was truly a game changer. i wonder if it is still that we need that app or, let's say, foundational model that is truly game changing? near-term, i think demand is strong. the question is, does it sustain itself over the next few years. annmarie: is there enough power to supply this? >> in the u.s., we probably have the power but maybe not the right transmission, getting the power to the right places. if demand picks up further, we need alternatives, perhaps nuclear, perhaps something modular. there is a lot of debate around on-site generation, linking into the utility itself near-term, the question is if demand continues at the record pace we saw, we probably run into a problem. jonathan: do you think some of the buyers are getting more comfortable with off grid power solutions than in the past?

>> i think so. i think there is a desire to be off grid. there's also a need. but some big buyers also want to be green. they are finding ways like solar, for example, wind turbines. can we do things that will make us more green, as well? they also want control over their facilities. that is why they would be more comfortable on campus. annmarie: feels like they will need deregulation, transmission lines, all of that to happen from this administration. you see that as the direction of travel? >> i think so. i think we also need another band of pricing. we do not know. we have commercial, residential, industrial, but we do not have something called data centers. we probably need that. it all comes down to the hyperscalers and what they view as critical. and how much control they want. i think they will move direction. jonathan: good to get an update from you. lots to think about.

vikram malhotra of mizuho on data centers. down across the board on the s&p, down by one percentage point on the nasdaq 100 done by more than that. in europe, the equity benchmark in frankfurt, dax lower something like 2%. bond market receives a bid, so yields lower across the board. down to about 3.84% on the front end of the board. risk-averse, two days away from liberation day. an update on stories elsewhere worth your bloomberg brief. yahaira: president trump threaten secondary tariffs on buyers of russian oil if president putin refuses a cease-fire with ukraine. russia is one of the world's three largest oil producers, meaning any attempt to hit purchases of russian supplies could have a far-reaching effect on the oil market and any disruptions could add to inflationary pressures. and apple is preparing its biggest health care push to date with the revamped health app and

ai dr. service, which would be powered by a new ai agent that would replicate, to some extent, a real doctor. the plan would see the health app collect user data, then the aa coach will use that information to offer tailor-made recommendations -- the ai coach will make tailor-made recommendations. gold shining, starting with a fresh record high, topping re-thousand 115 dollars an ounce, beating its previous record set on friday when it recorded a fourth weekly gain. prices have been supported by growing safe haven demand amid a risk off mood and markets which we are seeing today. that is your bloomberg brief. gold poppe -- jonathan: next, global trade. >> i think the first thing i am hearing is certainty and just lay out the plan on how you want to use tariffs to open up more markets. it is best to tackle the canadian and mexican issue inside a newly revised u.s. mca.

jonathan: live from new york city this morning, good morning. you're watching bloomberg tv. ♪

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪ jonathan: new forecast from government getting tons of attention, year in price hike on the s&p, now 57. a month ago it was 6200. start of the year, 6500. coming down. equity futures coming down. down by more than one full percentage point. outlook for growth at goldman just 1% gdp for 2025, core pce 3.5%. that is a position this federal reserve probably doesn't want to be in. annmarie: absolutely not, this is stagflation air fares many are concerned about what does the fed do with that? this is driven by the fact that

goldman sachs come up for the second time this month, are increasing their tariff assumptions. basically, they are saying tariffs will go up, it will be inflationary and potentially cost on the growth side here you have to think come if you are the federal reserve, you might be worried about using the t- word in the press. jonathan: they did use that word, transitory. morgan stanley suggested in research over the past you weeks that it is easier said than done. in the bond market, yields are lower, down another seven basis points on the front end of the curve, 3.84%. under surveillance, reshaping global trade. >> the first thing i am hearing is certainty. just lay out the plan on how you want to use tariffs to open up more markets for americans, have reciprocity unfairness and certain markets that are highly disproportionate. when it comes to north america,

let's renegotiate usmca. if you want to limit certain inputs from china into canada, mexico, or the u.s., you can do that in the agreement. best to tackle this canadian and mexican issue inside a new and revised usmca. jonathan: the latest, canada and mexico gearing up for 25% tariffs on non-usmca goods on wednesday, followed by 25% on thursday. nur cristiani of jp morgan writing mexico is the u.s. main trading partner, and they are deeply intertwined. it could be challenged further. this situation is tense, but we believe pragmatism will prevail. nur joins us. good morning. you spent some time in mexico recently. give us the idea how things are playing out there versus here. >> i have to say that the clients we met with last week are certainly very concerned. beyond the tariffs, in general,

the economy is looking quite challenged this year as it was. the risk of tariffs definitely do not make it any better, especially in the northern part of the country. clients were maybe over prepared for the near shoring boom that was coming. not that it is not happening but it will probably be more gradual now that they are penciling in. that means there is a big amount of overcapacity that was built that right now they are having a more challenging time finding who to lease it to or maybe renegotiating some contracts. that is meaning someone will have to pull back on investments. that is leading most economists in the industry, they say we are already in a recession and mexico, so that is a challenging environment. so that is even without tariffs being implemented. annmarie: when it comes to trump and his rhetoric on usmca and

mexico, do you think it is to bring those negotiations up for trade deal that are supposed to start the start of next year and have them now? >> as jonathan mentioned, we believe the two industries across both sides of the border -- of course, we cannot leave canada out of the picture -- let's say the two sides of the two orders, industries are closely intertwined. so it is hard to separate one from the other. of course, all countries need each other, and we believe pragmatism will prevail. having said that, usmca was bound to be revised during 2026. we believe that will be brought forward. that revision will probably become a full renegotiation, somewhat like nafta. we cannot rule out that scenario. one other thing we need to consider is the possibility that maybe usmca will break in 2, 2 bilateral agreements. the administration has been openly saying they are much more

open to the possibility of bilateral agreements instead of multilateral agreements. there could be an option. it could be somewhat disruptive not necessarily totally reeking half it as long as the terms are maintained -- not necessarily wreaking havoc. annmarie: what do you think the biggest concession mexico connect to early have a better trading relationship with united states? >> i think the most important thing we have seen so far is that both administrations are very open to talks come open to negotiating. i think both sides recognize the importance of each of their partnerships. having said that, i think the mexico administration has been very consistent on making sure that they prioritize trade with the u.s., and we do nothing that will change. annmarie: does that mean shutting out china? >> it is hard to say they will shut out china.

it is more so prioritizing commercial relationships that have a bigger representation for the mexican economy. jonathan: at the start of the year we expected tariffs but we thought it would lead to a stronger dollar. it has led to a weaker one. the mexican peso is slightly stronger now on the year relative to the u.s. dollar. how are clients managing foreign exchange risk? >> that was one of the most consistent questions we got across the board, why was the mexican peso so strong? our answer was it was much more about the weakness we were seeing in the dollar. the way we see that playing out is mostly against the euro, given everything that has happened, the announcement of the german baggage, upward revisions we have seen here at we have also increased our expectations for european growth, especially everything after the last couple weeks. we found the weakness in the dollar has translated into strength where we were liking,

the mexican peso is one of them. it is not just the mexican peso. one important thing we have to get us the rate differential. rates and mexico are still somewhat high. jonathan: used think, given the capacity you indicated, space for mexico to reduce interest rates may be more aggressively in the year ahead? >> yes commode we do expect the central bank -- yes, we do expect the central bank to cut, 50 basis point increments. annmarie: when it comes to overcapacity, what do expect these companies to do while they wait for potential renegotiation of usmca, which could be six month to a year? >> the overcapacity, some of it is ok. we're closing into the next renegotiation. at first i thought i had all the cards in my hand, now maybe i will have to reel some of the power to my counterparty.

we think there will be a new equilibrium. jonathan: who is the winner? first round, it was mexico. after china, we had conversation about near shoring. mexico wins. who now? >> i think everybody should win. it is possible things could go sour. we do not expect that. end of the day, the conclusions we have for most conversations with mexico and with mexico industrials were that, at the end of the day, business people tend to find a way out. we do not think this time will be any different. one interesting, specific example, back after renegotiations turning to usmca, the domestic content requirement moved up from 60% to 75% for key industries. everybody was freaking out and mexico because they did not have that capacity. where did that lead us? capacity was installed and there

were new factories, new production facilities, more r&d. we do not think this time could be different. we do not know where it will lead, whether it is a new usmca, and new bilateral agreement. end of the day, the fact that, as long as the importance of the commercial relationship between the two partners is maintained, there is space for increased productivity. jonathan: this was a refreshing conversation. pragmatic approach for the mexican side. annmarie: if they want to prioritize the united states, does that mean putting up the walls the u.s. would likely want to see when it comes to tariffs on china? jonathan: nur cristiani of jp morgan bank, thank you. equity futures on the s&p down by more than one full percentage point. next, darrell cronk of wells fargo and john murphy of bfa. from new york city this morning, good morning.

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>> it is that consumer element that has changed that is giving us more concern, especially with potentially more tariffs coming.

>> it is tough, especially if your market call is tied to anything trade or tariff related. >> it is not about tariffs, it is about inflation expectations. >> once the market understands this is coming through that uncertainty starts to go away. that does not mean volatility goes away. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: third hour of bloomberg surveillance starts right now. equity futures off the lows, still down 1% on the s&p, on the nasdaq 100 we are negative point -- -1.45%. the nikkei overnight closing lower four percentage points. bonds are lower. further out along the curve on tens we are down six's base -- we are down six basis points.

if you do not like weeks like this you are in the wrong job. jobless claims on thursday. payrolls on friday. liberation day on wednesday. annmarie: tariffs in the data are in focus. for me it will be wednesday. policy has been the main focus for every investor. what does wednesday mean? will the uncertainty finally made we will have certainty in the form of what these tariffs may look like? what trading partners the american ministration is trying to recalibrate with? i don't think so. try is coming in with a maximalist approach. how will he structure of this legally and it is the opening salvo for negotiations down the road? jonathan: i will give you three takes. next kutner, turquoise likely to extend beyond april. dan skelly, likely to be a starting point for negotiations than a conclusion. julian emanuel, a peak, not an

end in uncertainty. jonathan: the problem is -- annmarie: the problem is how damaging will that be when you see consumer sentiment or a pole over the weekend that show people are concerned about going out and spending because of the tariffs that are emanating from washington, d.c. and then you have to think this makes the fed picture for the future so much harder. jonathan: jonathan: upside risk to inflation, downside risk to growth. what does the fed do? right now they could do it they have been doing, sing soft data bad, hard data ok. long-term inflation expectations 32 year high. two thirds expecting unemployment to rise in the year ahead, the highest reading back to 2009. let's stay in the soft data or spill over to the hard data? that is why this week is so important. adp, jobless claims, payrolls on friday. annmarie: does it bleed into the

labor market? i thought that was a fascinating line on friday. labor market worsened considerably across demographic and political use -- and political groups. we've been talking about the high end consumer lifting all boats when it comes to the u.s.. expectations for high income consumers also sank. jonathan: equities down across the board, down 1% on the s&p. coming up this hour darrell cronk of wells fargo. john murphy of bank of america and neil dutta on whether there is light at the end of the tunnel. stocks on course to wrap up their worst quarter since 2022. darrell cronk of wells fargo writing "tariffs hurt the economy by complicating decisions about the future but today the issue is mainly price increases which we foresee as incremental."

that is a more constructive view from you. what underpins that view? darrell: we are looking at it through three lenses. what is the universe? i am really focused on things like the vat. then you have nontariff subsidies, when you subsidize an industry. you can also have some noise around currency manipulator's, countries labeled by treasury as currency manipulator's. i think what we really want to focus on wednesday is what is known versus unknown. we know the autos at 25%, imported autos and auto parts. we know we will see the additional tariffs on venezuelan oil. we know there will be some impact on mexico and canada. usmca coming back, maybe 25%,

maybe less. the key is to we buy another month of negotiation time and escalate to de-escalate or do we just on april 2 let them have it and implement those tariffs? annmarie: do you think it will be reciprocity for each country or universal? darrell: i think it is country by country. i know there was a lot of banter about universal over the weekend. annmarie: and the entire campaign trail. darrell: i understand. it is part of that escalate to de-escalate. i think what the president at the administration is really interested in doing is negotiating country by country on very specific things. what we still have not seen is tariffs on pharmaceuticals, we have not seen tariffs on semiconductors, not on copper come on timber, lumber, all of those elements people are talking that are still forthcoming.

whether we get some of that on wednesday or not is important. i do not know that i would look for broad-based universal tariffs. i think is a negotiation. annmarie: some country so they have a massive export of copper come they will face both? they will be doubly tariff? darrell: very interested in closing trade deficits. the top three trade deficit, china runs at 200 for a $5 billion trade deficit, mexico number two, vietnam number three. canada is number eight on the list of actual goods trade deficit. if you close that and only close that at the same tariff rates as what they charge us it is $50 billion for the tariffs. if i add in the vat, now i am tapping three times that number. $170 billion by our math. the vat matters and how they

will play this out. jonathan: this is a relative game of who wins and who loses. what is interesting from the call about you and the team is you are sticking with u.s. economic leadership. that is a theme coming into the year and your stay with it as other people change their forecast. what is interesting about this morning, yes you will see equity futures down across the board on the s&p down 1%, but check out japan, down 4%, germany down 1.8%. i know it is very early days and we have seen massive outperformance over the year so far, i think it is about to change. darrell: i think there's a lot of chasing that happened earlier this quarter. it's pick on europe and the german fiscal spent on defense and everything else. since 2007, almost 20 years, the time period of sustained european outperformance relative to the u.s. shows it is on

average about 90 to 180 days and then it fades. why does it fade? because you need a sustained lower dollar for that trade work over any period of time and you need earnings to deliver. if i look back at that same time period insatiably aggregate u.s. s&p earnings, 175%. show me aggregate euro earnings? 7%. that is the differential. if i do not get earnings growth and i do not get a weaker dollar, that trade fades. jonathan: so far the trade story has led to a weaker dollar. do you believe that reverses? darrell: we think it stabilizes. i would not look for 110 across the broad back skits but i think you can go back to the 106 or 107 range and stabilize. i would not look for continued weak dollar. if we are, that flies in the

face of this growth scare. obviously if you'll get a growth scare what will happen? flight to quality, u.s. treasuries rally, the dollar rallies, that does not make sense to us. annmarie: do you think this administration once a weak dollar because they want to see rejuvenation of exports? darrell: i think they are quintessentially the same as a lot of administrations that say they want a strong dollar but actually want weak dollar because the weak dollar favors economic growth to an extent, as long as it is not a debasement of the currency, it is just a sustained steady weakness, i think you can live with it. what people miss in the economic story in the near term is we do have rates coming down, you do have the dollar that has come down, labor markets are still ok. we're just about ready to roll into q2 or q1. today is the end of the quarter. we will see what people say about earnings. jonathan: do you think we have

reset expectations for earnings low enough? darrell: not yet. that has to come down. if you look at the growth drivers for the u.s. economy it is ai capex, the high end consumer, and it is the fiscal impulse. if i lose those engines, am i losing ai capex for the high end consumer or the fiscal impulse? something else has to step into that void. it means growth will be anemic and it will be hard to generate it. jonathan: questions overall three. which are you most concerned about? the one i don't think it's talked about enough is the ai story. we are obsessing over the trade headlines but over the past few weeks we have had damaging headlines for that part of the market and it is important mark -- it is an important part of the equity market. darrell: the top 10 names in the

s&p 500 comfort 50% of the growth in the index. the broadening out of that. what is not discussed his will probably put at the end of today one of the weakest quarters as a whole for technology as a sector in 30 to 40 years. energy is up 7%. financials and calms services a relative basis are doing well. it is centered in tech and consumer discretionary. i agree with you on ai capex. i watch closely that high end consumer. consumer spending expectations have dipped below the middle quintile tears. it is coming down harder than even the low and middle quintile. that is where your discretionary spend comes from and the question is not are they able to

spend, it is are they willing to spend? jonathan: i have some good news. bonds are working. this is been the allocators dilemma. we have said repeatedly on down data in the every market, bonds have not behaved in protectable ways. yields are down this morning by six basis points. can you depend on that in the year ahead? darrell: what happens is eventually we get a low bid past the growth scare in the near term and the inflation narrative starts to come back to the table. when you look at the long side of the curve it is three premiums, it is a term premium, it is an inflation premium. if i hold term premium even and bring growth premium down and all is equal and that is what is driving the long side of the curve down, but i am pushing up on inflation expectations and premiums, the question is which one wins the day? does the growth scare carry the day and that is why you see the dilemma that happens?

if a piece of economic data suggests the growth scare is a problem you get a flight to quality, rates are down. you get a bad inflation reading like last week -- not bad behind than we thought -- all of a sudden rates move higher. jonathan: darrell cronk of wells fargo, so much to think about. tons of data, lots of fed speak. then you will have liberation day on wednesday going to earnings season. good luck to you all. annmarie: liberation day might be an excuse for a lot of c-suite executives to say this is why the consumers not spending, because of the tariff policy. is that what is really happening or is that just easy access excuse? jonathan: we've seen that from some of the retailers. in the bond market yields are lower by six basis points. your 10 year just below 4.20. an update on stories elsewhere

this morning. yahaira: iran's president says iran will not engage in direct negotiations with president trump. the president said the decision was made by iran supreme leader in response to a letter trump sent earlier this month on the prospect of talks over the country's nuclear program. he did say direct communication -- he did say in direct communication with the is a possibility. elon musk has acquired the social network formerly known as twitter for the second time in three years because he used his artificial intelligence startup to purchase x in an all stock deal that values the company at $33 billion. the new entity has a value of more than $100 billion. trump media it will become the first new stock to list on the new york stock exchange texas. the operator of truth social will trade under the ticker djtw w.

new york stock exchange president saying the exchange announced last month will allow companies to capitalize on pro-business dynamics in texas. that is your bloomberg brief. jonathan: thank you. up next, the morning calls plus john murphy of bank of america securities on looming u.s. auto tariffs. your opening bell is one hour and 15 minutes away. your equity market is down 1%. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

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jonathan: the opening bell is one hour and 12 minutes away. three-day losing streak through friday. about to become day four unless this turns around. down 1% on the s&p, -1.6 on the

nasdaq. imo downgrading u.s. steel to market perform pointing to uncertainty over a deal with nippon steel. wells fargo learn its price target on alphabet, seeing ongoing disruption in the search business. finally, steeple cutting its price target on tesla. setting lower sales and headwinds from the anti-elon musk crowd. that stock is down again this morning. -6%. the auto industry bracing for 25% tariffs on imports setting to take effect thursday. donald trump nbc news he could "not care less" if automakers raise prices in response. john murphy writing "vehicle prices could increase as much as $10,000 if people manufacturers pass on prices in full." it is good to see you. i'm am sure you are exhausted. john: a lot going on.

jonathan: 25%. how much of a pass-through are you and the team expecting? john: it is unclear. $10,000 on imported autos. some outside the u.s. would be subject as much is $10,000 if they decided to pass through the tariffs completely. if they decide to break even, we will keep making vehicles and try to maintain our market share they may pass through about $4500 or if they do something even more extreme they might decide we are not going to be able to make money on these vehicles, we will not import any , and we have the risk of the 7.6 million vehicles imported into the united states being at risk. there's a lot of layers on how this kid could best -- on how this could get passed through. jonathan: the management teams are not standing still. tesla limited impact. of the other three come how are they preparing for thursday. what do they do? john: i think we got the answers

for thursday. we do not necessarily have the answers for friday. the volatility in what is going to happen come the uncertainty is extreme. when you look at this you are making a product decision about three to four years out. we are going to live with that for about seven years out from that as the product is launching in the market. you have a 10 plus year window of capital. it is difficult on a weekly or annual basis for them to make significant shifts. at the moment we will look at increasing some employment in the u.s., trying to ramp up the utilization of their plans in the u.s. to offset this. for a large degree they are not doing anything just yet because they do not know the rules of the game. annmarie: who is best positioned going into wednesday? john: if you look at the start up eb names in the u.s. they are largely unexposed except for electronic components they would import.

ford does in a pretty good position, only importing 20% of their vehicle volume, none of that is the big ticket items like the expedition from navigator, f-150. gm is about 50-50 imports to the u.s.. then you have companies like nissan, mazda, subaru, other names that are reasonably well exposed. there is a lot of bid to long-term game three you have to play of where the market will go and i think most of the manufacturers will produce higher end vehicles to offset this incremental cost. it is important to recognize the low indeed consumer will not be served so basic transportation be less available to the american consumer and is available in a higher price. this is the door opening to the chinese at the entry level and potentially coming here and building plants, employing americans, bringing their entire

supply chain here and entering at the low end. if you run this forward a couple years that is a thing we need to think about. annmarie: are you talking about chinese companies doing what japanese companies did two were three decades ago? john: correct. we saw the japanese do it in the 1970's and 1980's, we saw the koreans do it in the 1990's. that's what we are staring down the barrel of if this holds. jonathan: think about what the last two years look like. we were talking about a price war in china. we were talking about automakers cutting prices because the demand was not there. when the president says things like i don't care if they raise prices, is the consumer price tolerance there for them to raise prices? john: we are already drifting off of all-time highs in order prices over the last couple of years. if we look at this and spread everything we know right now we are talking about a 5% to 15% on average price increase in vehicles. the consumer is not there for that.

we're assuming it is a 2.5 million unit to 3 million hit based on price pass-throughs. that is a big hit to the market that is 16 million units right now. annmarie: i would like to go back what the president said, he said i cannot care automakers would raise prices because then they will start buying american cars. the number one car sold in america is a toyota rav4. it is produced in america. would it get a car about? -- would it get a carve out. john: everybody is still digging through this. it might be non-us companies but u.s. workers that would benefit. that is the end game. our estimate is you could have 105,000 direct jobs if you brought all of production back to the u.s. another million indirect jobs.

there is a big focus on created jobs but there is greater and greater automation. will that be a net job gain or will just be bringing the manufacturing to the u.s.? annmarie: you mentioned when it comes to the american producers ford is a more decent shape than gm. the issue with gm is therefore an components are from canada and mexico. will there be a usmca carveout for these autos? john: what we know is on parts imported from canada and mexico come as long as they are usmca compliant, 75 percent of their content is north american, then the percentage of the components that are produced in the u.s. would not be tariff. going through that right now is mindnumbing. no one has the exact answer on that at the supplier level and that is why we have a tape delay on the tariffs being put on usmca compliant components. jonathan: this was not

mindnumbing. this was thoughtful. john murphy of bank of america on what the future of the car industry in this country could look like. annmarie: it is frustrating when you're getting different parts from different areas of the world even under the usmca, you still might be in the crosshairs on wednesday. jonathan: futures on the s&p down about 1%. bond yields lower. the opening bell is one hour and five minutes away. wednesday is liberation day. this week is full of data. we will get the view of neil dutta and deborah cunningham. from new york, this is bloomberg. ♪

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jonathan: three-day slide on the s&p, about to be four. the final trading day of the month of march, the final month of the first quarter, and we are down heading toward the biggest month of decline since 2022. down 6% so far. here's the good news in the bond market. bond yields are actually lower. we are down five basis points of the 10 year, and on the 30, we are down five to about 4.57.93. over in europe, i will tell you what the equity market is doing there. the euro is weaker, -1/10 of 1%

and the equity market is much lower. underperforming, and in japan overnight, down by more than 4%. the underperformance on the equity side of things through today, there's internationals in europe. this is a massive we cannot just because of liberation day on wednesday but because economic data including payrolls on friday. mike mckee has more. >> i thought i was going to be a downer but following you on the markets, this is a little bit like miracle max in the princess bride. the economy is not all dead, it's just going to be mostly dead because of import tariffs perhaps. not much is going to have a relevance by friday, except for maybe the jobs report. ism manufacturing tomorrow, adp employment on wednesday.

thursday, the trade balance claims and services, friday those payroll reports. but all of those generally give both the idea or insight into what is coming up but because of the tariffs on wednesday we aren't going to have any idea until we know more about that. it's going to be hard for anybody to get excited except for payrolls and you can see we are expecting a downshift that probably would have happened anyway as fewer people are entering the labor force and payroll is moving down to a replacement level. no change in unemployment or average hourly earnings. it isn't clear whether people think this is because it is the natural progression or they are projecting a slowdown, but it doesn't tell as a whole lot about where we are going and that is going to be a problem going forward. jonathan: mike mckee, thank you, sir. just to remind you all on friday you will hear from the chairman of the federal reserve to get the benefit of waiting to see we get on wednesday and waiting to see what friday morning looks like we get payrolls and then

some speech editor can get a hold of the thing and rewrite it, maybe. annmarie: wednesday if trump comes in maximalist approach and you basically see this opening salvo of negotiations and uncertainty may be pervasive, it may take weeks or months. it's he going to think i probably shouldn't have used the word transitory when it comes to inflationary impulse? jonathan: we will get into that and just a moment. looking ahead to so-called liberation day, writing the overall strength and corporate earnings suggests companies may have the capacityoso some impact of tariffs without significantly impacting their bottom line. neil, good morning. >> good morning. jonathan: let's talk about how corporate america is set up, how resilient this economy is going into this announcement. neil: if there's going to be one party that has more ability to abort the cost of tariffs, its corporations because margins are very high. margins are high not only because of the tech industry, but even when you look at

manufacturing companies, margins are high for manufacturing companies. what we know about tariffs is tariffs increase costs. how much the increased consumer prices remains to be seen, but what we know about the consumer is that their budget constraint is getting weaker. if you look at what happened last friday, private sector wages and salaries are up barely 3% over the last year. and whenever you have a situation where compensation growth is running below the rate of the overnight fed funds, that is a sure sign that monetary policy is too tight. been saying the passive tightening with dominant risk for market, and this wait-and-see approach is just going to continue to create a sort of negative feedback loop. jonathan: it was implied in the forecast that it would be temporary. chairman powell reinforced that

in the news conference. but there is one data point you repeatedly singled out and received in consumer surveys. anxiety around unemployment. why is that so important when you consider what this might mean for second round effects? >> to me, inflation ultimately boils down to the household budget constraint. and his consumers are not seeing their income grow and you put tariffs on something, so the price of a cargo go up, they will have less left over to spend elsewhere and they will have to cut back on the purchases of those goods and services which will ultimately drive down the prices. ultimately it comes down to where is the non-metal economy? the fed isn't changing the nominal anchor. the government is not spending more money. to me, that is why i'm a little bit more sanguine on inflationary consequences but i think growth consequences are

more dominant as something to worry about. annmarie: how difficult would it be for the fed to cut in an environment where they are saying we had such high expectations for inflation? neil: they have such low expectations for the comp. everyone is talking about inflation expectations and admittedly, powell is kind of sometimes the is serious, sometimes he doesn't do anything. i understand why people focus on it, but if you look at that survey, look at what people are saying about their income. how would inflation expectations work? you would expect to see people pulling forward and spending to be a higher prices are they doing that? no. are they going to ask their employer for a raise right now? no. one way it has had an impact is that it has created an overall sense of caution. if you see a lot of people getting fired you might the little bit more reluctant to quit. and that just tips the scales in

the labor market dynamic toward the businesses away from labor. jonathan: two thirds expecting unemployment to rise. speaking to your point, the soft data has been soft. this is a big week for hard data. would you expect any spillover whatsoever? neil: the sausage making up a high-frequency data is tough to forecast these data points. you could easily make the argument that may be the jobs number on friday surprises to the upside because the weather was a actor weighing the numbers down in january and worry. if that normalizes in march, maybe you have a big report relative to upside surprise, relative to underlying trend. that's why i say it is like the sort of over data dependence. think about the overall fundamentals. what we know is that income growth is slowing and labor markets continue to cool. so the likelihood is that until the fed pivots, that will continue. everything that has happened in the trump administration with

the uncertainty, that makes a bad situation worse. jonathan: you'd be the first one to say there is a big difference between what the fed should do and what they will do. what i'm hearing from you is you think they will be thinking about producing interest rates pretty soon. do you think they can hold onto long? neil: i think they already have. i think the pivot in december was a mistake. they've kind of invited the scheme of chicken with the administration. they said that they wouldn't prejudge policies, and they did. in their defense, trump has given them every reason for that pivot with the tariff policies. but i do think that as the kind of wait and see, this wait and see and kind of not focus as much on the incoming data, to me that is a mistake. annmarie: you say we should take trump literally. do you think the fed is? neil: i do think we should take trump literally because we had this now with the tariffs. every iteration of what besson

ent said at his nomination. we got fentanyl use for it. now we are seeing the reciprocal use for it. this is a way to level the playing field, we are going to put tariffs on to escalate, to de-escalate. and now journal article today talking about well, we are thinking about a 20% tariff which means they are using it as a scheme for other parts of their agenda. they get 20% universal tariff races a little over $3 trillion over 10 years, which would help the math for what they are trying to do. annmarie: if they go to 20% universal tariff that is a very maximalist approach. do you think that is the start or the end? neil: i have no idea. annmarie: i know they read your research. jonathan: what are you telling them to do? annmarie: what would your advice be? neil: my advice is to tell them -- i mean, look. they should have been talking the economy down more on the way in and the fact that they didn't

has opened themselves up to some problems. jonathan: you said this early on this year. you think there were problems already in this economy that predate the tariff announcements, correct? neil: absolutely. total hours worked contracted in the three months ending in february. how are you going to pin that on uncertainty? i do think the uncertainty thing is a little bit over-sold. we would be facing uncertainty if the shoe was on the other foot. so we've traded a lot of uncertainty in the short run for maybe uncertainty that we may not get later. but to me, i think the big issue is the fed. don't be surprised if a certain someone starts saying feel the market in the next couple of weeks. jonathan: he's said that a few times already, hasn't he? neil: i do think that one of the overriding issues here is that for years, republicans talk

about austerity during the obama years. donald trump, we need to prime the pump. and in many respects, last year some of his advisers were saying the fed goofed by going 50. this was a really strong economy, and along comes donald trump and says i think we ought to be cutting interest rates. so a lot of the people around him are not ideologically aligned with him in some important ways. he is his number one advisor. don't be surprised if he starts taking to truth social or twitter or whatever else and saying feel the market and cut interest rates. if you look at the way the markets are going, he has a point. jonathan: stay there, we will give you the final word in just a moment. i want to bring in deborah cunningham into the conversation. deborah, we have to start with the question. just the base case for you and the team, what are you expecting

on april 2? >> our outlook at this point continues to be for a growth slowdown, not necessarily a recession. we think april 2 will have ramifications that are unknown yet at this point, and ultimately i think in the short run will be inflationary which is why our expectation from the fed perspective is to be pushed off into the second half. but the short run inflationary expectations necessarily don't hold true for the longer run. if in fact we can get some productivity enhancement, if in fact we can have more hiring done within the u.s., then the potential for april 2 could be that long-run inflation is less than what the short run aspect of that will be. so all of that points to higher rates for a little bit longer for now and probably a terminal

rate that is a little bit higher, but not necessarily anything that is a recessionary type of impact at this point. jonathan: but you still believed by the end of the year the fed would be in a position to respond to downside risk do materialize. >> absolutely. they seem to be poised to do that now. i think maybe the previous speaker, neil was talking about the 50 basis point move in september. i feel like it that would have, the end of the year would have turned out a little bit differently had they not started the process with that 50 basis point move but as we are right now, i think we are on hold, but with the federal reserve quite poised to go lower in anticipation or in response to some sort of a further slowdown and especially one that might be a little bit more than expected at this point. annmarie: what if we don't get

the endgame when it comes to tariffs and there is uncertainty in negotiations for months? then when can the fed start cutting? >> i think the fed is on hold until there is a little bit more clarity. it certainly seemed like every time something is expected on a date or on a day of the week, within hours, days or weeks, it is negotiated away into something that is maybe less or different. so i feel like for that reason, the market has had a lot of volatility associated with it. short-term markets, long-term markets, equity markets all being up and down with the broad trajectory. and in our estimation where there is volatility, there is opportunity. so for our own short-term products, ultimately if we can undertake longer-term securities, purchase longer-term securities into those portfolios

at a point in time when they are 30 basis point wider than the week before just simply because of the volatility that is present in the marketplace with the various changes in expectation given what is the current scenario which may be different than yesterday's scenario and different from tomorrow's scenario, then you end up with some opportunity. so that as we are looking for, opportunity at the right time. jonathan: might find a few of them in the next few days. deborah cunningham on the week ahead. neil duttra still around the table. the forecast, gdp cut to just 1%. they still believe the fed could cut three times. what do you make of that mix of things? neil: i mean, price has an interesting way of leaving the narrative. if you look at a chart of corporate credit spreads and tried to determine what that

implies for a session of probabilities in the next 12 months, 35%, 40% makes sense. i think that is what they are largely doing. 1% real growth, yeah. if real incomes are basically growing 1%, we saw last friday over the last three months, it is up just 1%. if you assume a stable savings rate that is more or less your consumption forecast. 1% consumer spending growth and things like state and local governments contracting, fresnillo -- residential investment contracting, where is the growth coming from? you could easily come up with a scenario where growth is 1%. that is putting upward pressure on the unemployment rate. annmarie: they also increase tariff assumptions for the second time in less than a month, and that seems to be driving a lot of these downgrades in the s&p 500, upgraded potential without -- recession fears. i know you think the underlying economy is weak even before the

tariff policies. neil: i understand why people are adjusting those estimates. let's say wednesday comes around and it is not as bad as feared, maybe we get a relief rally and then we go back. remember, people relighting their hair on fire over brexit and then a week later we were back to making new highs. you have to be sort of careful, but i do think if there is a calm with respect to tariff policy because it is not an on-off switch, it is a dial, that might mean that people start focusing back on economic data which would still be quite sluggish. so you can see a relief rally, maybe it goes back down. jonathan: expectations for friday payrolls, what are you looking for? neil: i don't know. to me, focus on the unemployment rate. focus on the household survey. that's going to be less affected by the weather and stuff, and if things like employment rates are

going down, which they have been, you should be dialing up your concern. jonathan: good to see you in person, thanks for dropping by the studio. in a shirt and tie as well, thanks for making that happen as well. that is a payroll survey, a sneak peek at our side of things. the median so far, and he can change of course, 138 of the median at the moment and the most bullish forecast, and of course this can change, is bank of america. get you an update on stories elsewhere this morning. here is your bloomberg brief. yahaira: uber and opentable have announced a new strategic partnership, a first of its kind collaboration integrating apps to offer dining reservation access and transportation options. the partnership is expected to roll out in phases throughout the year. meanwhile in march madness, the men's final four is set and for the first time in 17 years, all

four teams are number one seeds. florida returns to the stage for the first time in 11 years. they take on auburn. houston will face duke. houston is looking for its first ever title as duke aims to end a 10 year drought. and in the women's tournament, top overall seed ucla reached its first final four with a 72-60 five victory over lsu. ucla will face the winner of tonight's game between south carolina and yukon. final four is friday night in florida. jonathan: thanks for this morning. here it is, congratulations, just phenomenal to watch him win over the weekend, great to see gary woodland up there on the leaderboard as well. annmarie: i don't care about golf when the yankees are just crushing. jonathan: we've done the yankees already. up next, setting you up for the day ahead. you are watching "bloomberg serveillance." ♪

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♪ jonathan: the opening bell around 38 minutes away, equity is down by 9/10 of 1%. this is day four potentially. can change, down on the nasdaq going into the cash open. lots of economic data tomorrow morning. valves plus pmi and manufacturing data. wednesday, liberation day plus adp and durable goods. thursday, another round of claims and ism services. friday, and address from jay powell. with head down to washington, d.c. and catch up with lori davison in the nation's capital. just a final word, what does the schedule look like for the next

24 hours? lori: so trump will sign two different batches of executive order today, this latter batch around 5:30 in the evening, inviting reporters into the oval office where he is sure to get a barrage russians about tariffs and tax cuts. scott bessent and senior leadership are set to be tomorrow about how to advance this bill. senate leaders are looking at a perimeter tax cut bill as soon as this week. jonathan: thank you. thank you very much. on the week ahead, coming up tomorrow, jonathan stops, emily, and tiffany. a stacked lineup for you going into what is an important week. annmarie: liberation day wednesday. i'm already getting lots of messages this morning from people down in washington trying to gain out what wednesday is going to be in terms of will this just be an opening salvo for trade, will there be tariffs day one using 338 or is a

potentially going to be a slow rollout meaning there have to be investigations when it comes to trading partners and potential if they are going that route, it means they are concerned about the legality of all this. this may take a lot longer. this clearing event may not be happening this week. jonathan: based on your reporting, all of the above, potentially. annmarie: yes. you have to look at what some of his advisers have said over the weekend whether it was peter navarro or kevin hassett. kevin hassett, i can't give you any forward guidance on what is going to happen this week. the president got a heck of a lot of analysis before him and he's going to make the right choice i'm sure. that says to me that there is still some discussion about what they might announce on wednesday. key tomorrow, this report of the president asked for an executive order after inauguration day is going to present it to him. this is from jamieson greer and they are going to be looking at the trade imbalances of all of these partners. after he gets a briefing on that, i think they make some final decisions. do we get to see that report is

a key question people are asking themselves this morning. jonathan: lots of trade, concludes with liberation day on wednesday. lots of economic data. look out for jobless claims, look out for payrolls on friday, and then that man right there gets to talk about it all going into the weekend. equity futures on the s&p negative by 0.9%. we are down across the board. over in europe, the dax is lower. it is down by 1.8%. over in japan, a brutal session to kick off the trading week, down 4% on the t 25. the good news in the bond market is bonds are rallying. he'll die down across the board, down five basis points. from new york city, it is day one, a big week still to come. two days away from so-called liberation day. looking forward to being on that journey with you. thank you for choosing bloomberg tv. this was "bloomberg serveillance." ♪

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katie: all right, it's shaping up to be an ugly end to an ugly quarter. i'm katie greifeld. sonali: i'm sonali basak. matt miller is off today. "bloomberg open interest" starts right now. katie: coming up, a sinking feeling in the markets. a critical jobs report looms on friday. this comes as a roller coaster for investors comes to an end. the s&p 500 on track for its worst quarterly performance