scarlet: welcome to bloomberg markets. we just heard from the fed chair in his first public remarks since a new round of tariffs was introduced. so, how is it shaking out in equity markets and across asset classes. the s&p 500 losing 4.7%. stocks are off of their lows after president trump said that cambodia and vietnam want to cut their tariffs but the s&p 500 is headed for its worst week since march of money 20.

the vix spiking to as high as 45. we are also seeing treasuries giving back some of their gains. the two year yield down as much as 22 basis points as traders pricing up to four basis cuts. crude so -- crude going low as opec-plus plans to increase production in may. that us look at sectors and for that we bring in our reporter. >> let us start with the magnificent seven. the nasdaq is falling into bear market territory. tech stocks are under so much pressure and the magnificent seven is down. we saw tesla and nvidia leading the downside. what we saw is that china is threatening more tariffs on the u.s. and, of course a lot of the manufacturing for the chipmakers

is happening there. a lot of the labor and supply is coming from there. clearly that is putting a lot of pressure on all of those names. we can see tesla is down 10% and it had a downgrade today. so really one of the hardest hit stocks this year. then, we can locate consumer stocks. that has been an interesting trade where we saw a really rough start. but obviously as negotiations evolve we have good news coming from vietnam, and the president saying he is negotiating with them. nike and lululemon is getting some relief. nike is getting about 50% of its production from vietnam which could explain the relief. it is up 4% and the u.s. is deep in red territory before the announcement. we are seeing a lot of pressure for consumer stocks like walmart . we have that cocktail of weakening consumer on top of so

many tariffs and that is definitely putting a lot of pressure. another place with a lot of pressure is chinese stocks. we can gauge that through etf's but this is a country that has retaliated against the u.s. and we can see that being reflected pretty badly in the stock market, especially looking at the internet stocks and we can look at the ets being down 10% today. earlier in the day they started with not so big losses. as the news is evolving people are worried about the u.s. continuing the measures towards china. and things escalating even further. those stocks are under a lot of pressure. we keep looking at them down about 10%. scarlet: pretty steep. they had been gaining earlier so there is some context. thank you so much. as we mentioned, we heard from

jay powell and he spoke on how the strong impact of president trump's tariffs is likely shaping up. chair powell: uncertainty remains elevated but it is clear that tariff increases -- uncertainty increases will be -- in the same is true of the economic effects. the size and duration remains uncertain. scarlet: those were his remarks of course, he cannot say much because he has to wait to see what the data shows. when you look at what analysts and economists are thinking, it is split. some believes that the fed has to cut as much as four times. others believe that the fed needs to hold rates where they are until 2026. lindsay is the chief economist at steve and she joins us now. how do you reconcile that ubs

believes that fed's needs to cut rates while others say the fed needs to wait to cut rates until next year because of concerns? lindsay: it is about the perceived impact of fiscal policy. even before the trump stepped into the white house, price stability was not a foregone conclusion. prices were proving stubbornly stake he had with several months of acceleration. so, we have not really reached a point where the fed chairman can comfortably say we would have been at the 2% target without the implications of tariffs. later on, the uncertainty from tariffs, and now you have further upside risk. i think the fed needs to err on the side of caution as to watching the inflationary implications. that is not necessarily what the fed will do. it has proven in the recent past that they are can -- that they

are concerned about the downside risk to growth even at the expense of maintaining above trend inflation. i would like to see them focus more on the price stability components. scarlet: what does the fed do with president trump's latest post on truth social that now is the perfect time to cut interest rates and an admonishment to stop playing politics. lindsey: every administration in history would like the central bank to lower policy in order to further support domestic growth. but in today's social media environment that is more at the forefront for investors and fed officials themselves. the fed makes policy of -- independent of any market. they will focus on what they think is the most appropriate pathway and dictate their decision as needed. scarlet: do you see the tariffs

announced as resulting in a one time price shock or something that is transitory? certainly on prices and on growth. or, do you see something more recurring given the threats and action that countries are engaged in? lindsey: a one time price increase is not inflationary as it lacks the upward perpetual momentum. but, this back-and-forth and varying layers of tariffs being put into place can result in this tit-for-tat relationship which absolutely risks upside inflationary pressures. i think at this point it remains to be seen. but the risk is more prolonged upward pressure on prices, which the fed needs to remain vigilant and focusing on despite the fact that we might see temporary bouts of weakness, particularly in the first quarter as businesses and consumers pull

back in anticipation of hardships. scarlet: we also got a headline out of california. gavin newsom says that california is ready to talk with trading partners urging them to exclude california made products. is that possible for california to pursue strategic relationships outside of what the federal government is doing, independent of policy? lindsey: that is a pathway that california will pursue. i am confident that there will be a number of legal challenges that they will face. scarlet: when it comes to the federal reserve, we know that jay powell has stressed that it is data dependent. on what data? there is a lag effect and it comes to hard data. the survey data is all over the map depending on what headlines crossed or what series of headlines. what combination of current data

does the fed need to determine if the economy is in a good place or not? lindsey: the fed is somewhat dismissing the near term implications. when we look at short-term inflation expectations rise from consumers reporting 100 basis points and an additional 70 basis points, the fed is saying we need to look beyond that and look at the longer-term expectations. we need to look at the underlying hard data suggesting that despite businesses and consumers vocalizing this oncoming concern about the potential impacts of tariffs. the real action and the real activity has shown and only moderate decline. the fed is still posing a relatively positive characterization and positive assessment of the real economy, perpetuating their decision to remain on the sideline until they have further evidence in one direction and the other that these fiscal policies are

undermining growth or having a more minimal than expected impact on domestic activity. scarlet: i mentioned the jobs report earlier. the whole report was backwards looking. no matter the fact that jobs growth was better than expected we have a world in which doge have directed job cuts and tariffs where companies might cut jobs. is there any takeaway that helps set us up or you up for the future? lindsey: when we look at the details, trade and transportation were one of the areas of strength. we might've seen a ramp-up inactivity ahead of these tariffs coming into play more in the second quarter of the year. we saw the federal government lose 4000, but not a reflection of doge as those payments continue until year-end so they will not show up in the payroll number until sometime next year. there is going to be some

varying time lags and volatility in the data. the takeaway is relatively resilient labor market at this point. with 180,000 jobs added. supporting the notion that the economy was on solid footing going into these new initiatives and suggesting that it is going to be difficult for the fed and economists to try and dissect the actual impact of fiscal policy as opposed to the loss of momentum already in place from a more robust economy and the second half of last year. scarlet: we really appreciate you joining us and sharing your perspective. she has the chief economist. we want to give you some headlines that there is yet another company donate -- del its ipo. chime is the latest one. klarna and stubhub will pause their plans. chime, klarna and stubhub

pausing their plans. coming up the clock is ticking as the deadline to find a buyer for tiktok in the u.s. is fast approaching. we will discuss that next. this is bloomberg. ♪

scarlet: this is bloomberg markets. it is time for the stock of the hour with saturday being the deadline for bytedance to find a buyer for tiktok. president trump is seeking buyers to reach a deal. amazon is the latest to join the bidding war. the shares are on the move today along with other big tech companies. joining us with more is kurt wagner. who else besides amazon is in

the bidding war for tiktok? kurt: i think everyone expects oracle will be involved in whatever proposal. president trump ultimately submits or you might remember that oracle is already a partner on a cloud services and data storage. oracle with his relationship with trump seems to be a good fit. it is a lot of american investors. blackstone and horwitz and sequoia capital. folks who have stakes in bytedance and others that would love to have their hands on a property like tiktok if they can. my guess it is some consortium. oracle is the biggest name out there that is not amazon. scarlet: what are these companies bidding on. there are reports that there is a way to structure the deal so the chinese company, the parent company holds onto the algorithm

, although that is the most valuable part of the business and one that had the u.s. concerned. kurt: yes. this is the unknown part because you are right. part of the deal that has already been reported on including our colleagues at bloomberg is that the algorithm would still be owned by bytedance and would be licensed to the u.s. investors. that does not necessarily follow the law set but that says clearly that bytedance and the chinese government cannot be involved in the algorithm at all. part of the tension is exactly what these people are buying. they would love the algorithm that determines what people see and it is known but as the sacred -- the secret sauce. the chinese government does not want to hand out over and neither does bytedance. that is the hold up, what is exactly for sale. scarlet: we mentioned the saturday deadline and then what are the odds that the deadline

will be extended and this continues to be this ongoing negotiation? kurt: that is the most likely scenario if there is not a deal proposed. even if there is not, my guess is that there is an extension to work out the specifics and details. president trump said that he is likely to issue an extension. it is hard to imagine that we will get to the end of the day without anything done. i imagine we will hear something on that. scarlet: thank you. kurt wagner, thank you for joining us from the west coast. a quick recap on where we are with the financial markets. the s&p 500 losing 4.9%. not the worst levels but certainly anything close to 5% is an indication that they selloff has extended. the s&p is headed for its worst week since march 2020. crude oil is also sinking quite a bit. this is bloomberg. ♪

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scarlet: this is bloomberg markets, i am scarlet fu. while markets rallied after the u.s. election one analyst was sounding an early alarm. peter berezin said that a new trump residency would introduce more dramatic tariffs and the stock market would fall dramatically and he was right. and now he predicts we are far from the bottom saying that the s&p 500 could drop another 18%. for more on what he has to say let us bring him him -- bring him in. thank you for speaking with us. your forecast was for the s&p 500 to fall so 4450 by year end. is that your base case or worst case scenario? or are you changing that up? peter: base case and i am not

changing it because what has transpired are very not -- very much in line with expectations. 4450 is not that dire. to get to that all the s&p 500 needs to do is trade down to a forward multiple of 18 and for earnings estimates declined decline by 10 percentage points. 18 is not that low. the average ratio between 2015 and 2019, which did not include a recession and in compost -- and had much of trump's first turn was -- a typical is closer to 20%. i might be a little bit too bullish. scarlet: do you think we are going to get there at the end of the earnings season for en route to that when it gets to those

estimates given that companies do not have a lot of visibility and will want to play it safe? peter: i think the selloff has unfolded in three stages. the first part was largely driven by the mag seven stocks. up until so-called liberation day, the other 493 companies were up slightly. that of course is changing because of the prospect of a trade war. but we still have not priced in a recession. that will be that third shoe to drop. once we price in a recession the s&p is going well below 5000. scarlet: so, that is quite a statement. is that u.s. more vulnerable to recession now because the economy had been holding up so well until recently? you talk about a negative feedback loop that you see unfolding where people are worried about their jobs so they

spend less therefore companies make less money and they pull back on hiring and it goes in a big circle. peter: the economy was not holding up that well. if you look at wage and salary income in real terms, it was only up 1% in february, year-over-year. if you look at the cpi swap market it is pricing and inflation up at 3.5%. that is more than 1%. if you have real income growth of 1% and you get this additional inflation, that is negative income growth later this year. and households do not have the ability to borrow. delinquency rates on credit cards and auto loans were back where they were in 2011, a year in which unemployment rate was 8%. we are at 4.2% now. they have run out of pandemic

savings which totaled over $2 trillion. income and spending growth will slow and we will end up in a recession. when is not clear. the best bet is that it will start in the second quarter of this year, so it is imminent. scarlet: how are you thinking about the tax cuts that the republicans are determined to cut. they have made clear that they will endure short-term pain but they see things recovering by the second half of this year because of the other policies they will deploy? peter: these tax cuts will just extend the existing tax rates and now there is some talk about maybe not extending the tax cuts for the very high income groups. so, we will not get a lot of new tax cuts. maybe no taxes on tips and minor stuff like that. it will be offset by spending cuts that doge is orchestrating. fiscal policy will not be stimulative.

monetary policy will not be stimulative because the fed is worried about inflation. so the usual policy response, monetary or fiscal easing will be absent, and that will deepen and lengthen the recession. scarlet: one thing that strikes me is that you are based in montreal, to bring you physical and cultural distance from the groupthink of new york and washington. what do you observe that others in the u.s. have yet to notice let alone digest? peter: it is funny. up until a day or two ago, the consensus was still that trump is just using the tariffs as a negotiating ploy and he has not serious. this despite the fact that for three decades he talked about how he loves tariffs and he wants to erect this protectionist wall around the u.s.. i do not know where that came from. but, it turned out to be pretty

clearly wrong. scarlet: really appreciate you joining us. he is the chief global investment strategies at pca research. that does it for bloomberg markets. ♪

>> from the world of politics to the world of business, this is "balance of power."

live from washington, d.c. joe: president trump said his economic plans are already working, even as stocks tumble again. welcome to the fastest show in politics. i am joe mathieu, alongside kailey leinz in washington. thank you for being with us for the friday edition of "balance of power." the s&p 500 on track for its worst week since the depths of covid. kailey: the worst two day selloff since 2020 after china decided to retaliate against u.s. tariffs by placing a 34% levy on u.s. imports into the country. president trump suggesting he will not change his policies. fedfed the is not signaling a change anytime soon. chairman powell said tariffs may