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- [00:04]
Luke Vargas
Markets brace for a big week of trade announcements as the US Puts universal tariffs back on the table.
- [00:11]
Caitlin McCabe
So what we're seeing is what the world's largest banks have been doing really for the last several weeks now, which is essentially escalating their warnings about the American economy.
- [00:22]
Luke Vargas
Plus, President Trump threatens sanctions on Russia as Ukraine peace talks stall and Apple's satellite expansion plans land it in space crosshairs. It's Monday, March 31st. I'm Luke Vargas for the Wall Street Journal and here is the AM Edition of what's news, the top headlines and business stories moving your world Today. Tariff week is upon us. President Trump has set Wednesday as Liberation Day when he'll pull back the curtain on a range of new levies. And even as that deadline nears, we report that the administration is still scrambling to nail down the specifics, including whether to impose individualize tariffs on specific trading partners or reach for across the board tariffs potentially as high as 20%. That would affect virtually every country doing business with the U.S. that's according to people familiar with conversations between the president and his team in recent days in which he's pushed them to be more aggressive. Trump for months promoted the idea of universal tariffs during his campaign, but later ditched the idea in favor of a so called reciprocal tariff plan. Administration officials said that that reciprocal plan is still on the table, but that whatever is unveiled on April 2, Trump wants the policy to be big and simple. Well, suffice it to say market watchers care a great deal about where the president lands on his tariff strategy. And here to parse the news heading into a pivotal week, I'm joined by Journal reporter Caitlin McCabe. Caitlin, I see Goldman Sachs and Barclays are both out with new growth forecasts that really feature the growing risk of a global trade war front and center. Walk us through what they're saying.
- [02:06]
Caitlin McCabe
So Goldman raised the probability of a recession in the US economy in the next 12 months to around 35%. And that's the second time that Goldman has done this in the past few weeks. In addition, the bank said it is expecting an increase in pricing pressures, a decline in GDP, and that it is expecting an increase in the year end unemployment rate. And basically in calculating this stuff, Goldman's looking at the deterioration in in business and consumer confidence. We saw some of this come through last week with the University of Michigan sentiment survey. It also said it's doing it because of comments from the Trump administration that it's willing to tolerate some economic weakness in pursuit of their policies. Meanwhile, we also have Barclays saying something similar. It says that for the first time in years it finds itself, quote, genuinely worried about risk assets and it says that cash allocations for investors should be higher.
- [03:06]
Luke Vargas
Alright, so Barclays and Goldman there both seeing the risk of a trade war increasing based on actions likely coming out of Washington. But this does go both ways. Yesterday we heard from German Chancellor Olaf Scholz who pledged that the EU was ready to hit back against existing US tariffs. Though as you'll hear, he didn't exactly sound thrilled about it. We know that free global trade, which has created so much prosperity, is at risk because political movements of protectionism are becoming fashionable all over the world. We also know that this benefits no one, that there are only losers if we all carry this in front of us. Caitlin I guess we can see that sentiment kind of rippling through into market behavior today. Asian stocks falling and European markets opening lower as well.
- [03:52]
Caitlin McCabe
Yeah, it's been pretty ugly this morning in Asia and Europe and we're already seeing that bleed through in US Pre market trading where US stock futures are lower. And I think this speaks to concerns about just not US growth, but global growth too. Of course there are expectations that tariffs will hit these economies and some of their important sectors very hard. And I think it's worth noting that a lot of these areas and countries were already at a disadvantage in terms of economic strength even before all of this started. And so in terms of market action, what we're seeing this morning is really a flight to safety. Everywhere Gold, which has had a pretty stunning rally this year. It's up again this morning. US Bond prices are up again, sort of considered another flight to safety. Other risk assets like Bitcoin is falling again. And I think what investors are saying right now is riskier assets are not where they want to be and so instead they're hanging out in cash or other cash like products.
- [04:52]
Luke Vargas
Right. Sounds like investors are preparing for volatility this week.
- [04:56]
Caitlin McCabe
I think that's exactly right. And I think a really key place that we can look is the vix. It's also known as Wall Street's fear gauge. And this is a metric that people really look to quite closely when things are starting to get choppy in markets. This the VIX is trading around the 23 range. And when we think about the Vix, anything over 20 indicates that nervousness and expectations for volatility are increasing pretty markedly in markets. So to see the VIX trading around the 23 range this morning is something that is important to pay attention to, especially given where it was trading last week. Last week we were seeing it in the 17 to 18 range. So we are definitely seeing a noticeable leg up in expectations for volatility today.
- [05:44]
Luke Vargas
That was Wall Street Journal reporter Caitlin McCabe. Caitlin, thanks for stopping by and for the Vix crash course there.
- [05:50]
Caitlin McCabe
Happy to. Thanks for having me.
- [05:52]
Luke Vargas
And coming up, we've got the rest of the day's news, including frustration in Washington as Vladimir Putin appears to drag his feet on peace talks with Ukraine. That story and much more after the break.
- [06:07]
Caitlin McCabe
High mortgage rates, low inventory, unaffordable prices. A lot of potential home buyers have been left on the sidelines.
- [06:15]
Luke Vargas
My wife and I have been smart about our savings and we always thought once you save up and then you're good and then you'll get something. It's just not the case anymore.
- [06:22]
Caitlin McCabe
But is this your year to buy? Catch our series Buying a home in 2025, navigating the crunch, running Sundays in March and April. On the youe Money Briefing podcast from the Wall Street Journal.
- [06:42]
Luke Vargas
We are exclusively reporting that Apple has clashed with Elon Musk's SpaceX in its push to eliminate cell phone dead spots with its satellite technology. The iPhone maker is investing heavily in satellite based communications, while SpaceX has launched more than 500 satellites that provide cell phone connectivity through Starlink. Now the companies are competing for the limited supply of spectrum rights, the airwaves to carry their signals, with Musk pushing federal regulators to stall an Apple funded satellite expansion effort. People familiar with the matter said the conflict has intensified in recent months after SpaceX and its partner T Mobile asked Apple to offer Starlink on iPhones. After tense discussions, the sides reached an agreement that allows the SpaceX and T mobile satellite cell phone service to be offered on newer IPH rollout this summer. President Trump is threatening new economic penalties on Russia as talks have resulted in little progress toward a real ceasefire in Ukraine. Speaking yesterday, Trump expressed anger at recent comments by Vladimir Putin where he called for interim governance in Ukraine under the auspices of the United nations, which would essentially push out Ukrainian President Volodymyr Zelensky.
- [08:02]
Donald Trump
I was disappointed in a certain way, some of the things that were said over the last day or two having to do with Zelensky because when he considers Zelenskyy not credible, he's supposed to be making a deal with him whether you like him or you don't like him. So I wasn't happy with that.
- [08:19]
Luke Vargas
Trump said that if a deal isn't reached, then it was, quote, Russia's fault, end quote, and said he'd impose secondary tariffs on Russian oil. Without providing specifics, Trump added that US Officials had conveyed his frustration to Russia and that he expected to speak to Putin later this week. Despite this, the president reiterated that he and Putin have a good relationship before shifting some of his criticism to Zelensky over negotiations for the US to access critical minerals in Ukraine.
- [08:49]
Donald Trump
I see he's trying to back out of the rare earth deal, and if he does that, he's got some problems. Big, big problems.
- [08:58]
Luke Vargas
Rescue workers in Myanmar are continuing the increasingly desperate search for survivors after Friday's 7.7 magnitude earthqu earthquake that devastated parts of the country's second largest city, Mandalay, and the surrounding areas. Myanmar's military government has said that more than 1700 people are confirmed dead and more than 3000 have been injured. While making a rare appeal for foreign aid, early modeling from the US Geological Survey suggests that the number of deaths stemming from the earthquake could rise above 10,000 and that economic losses might surpass the value of Myanmar's GDP. Back in the US Elon Musk has given out $1 million checks to two Wisconsin voters ahead of the state's Supreme Court election tomorrow that Musk sees as critical to President Trump's agenda. Just minutes before the Tesla CEO took to the stage at a town hall in Green Bay last night, the court rejected a last minute attempt by the state's Democratic attorney general to stop Musk from handing over the checks. Musk and groups he supports have spent more than $20 million to help conservative favorite Brad Schimmel, who's running against liberal candidate Susan Crawford for a seat on the state Supreme Court, which is currently controlled 4 to 3 by liberal justices. Tuesday's tightly contested race will determine the ideological makeup of a court likely to decide key issues in a perennial battleground. And finally, if you've heard a one time climate startup talking about jet fighters or AI lately, there's a reason for it. The Journal's Ed Ballard says that following a third consecutive year of declines in equity funding for climate tech startups and a new administration intent on canceling the prior one's green funding programs, a number of small businesses that just months ago were touting the green benefits of their work are making a handbrake turn. Among them Magrathea Metals, a California company that Ed told me is developing a process for extracting magnesium from salt water and which until recently had a sales pitch that was focused on the climate benefits of its technology.
- [11:11]
Ed Ballard
So now it says there is zero magnesium production in all of NATO, this is a national security emergency, and the website Sort of reels off various things that magnesium can be used for, including fighter jets and drones. A slightly different case is a company called via, which makes these superconducting wires. And originally they were saying that these wires were going to help prepare the grid for all the extra power demand that was going to be coming from things like electric vehicles. And recently that changed because while the EV rollout has slowed down a bit, there has been this whole new boom in artificial intelligence. And so now they're redesigning their technology to make a slightly different product that will be used to help data center operators deal with the massive power demands of AI. So they started out with this climate mission, and now they've sort of taken a bit of a sidetrack.
- [11:58]
Luke Vargas
Ed told me that not all businesses will be able to pull off that shift, but some will.
- [12:05]
Ed Ballard
I think there's two different ways of looking at that. Firstly, lots of these businesses are helped along by government subsidies. So if those subsidies evaporate, then, yeah, you can definitely see crucial technologies falling by the wayside. On the other hand, the message I heard from a bunch of venture capitalist investors was a bit more along the lines of, well, look, if these technologies are going to take off, they have to be competitive, they have to actually be able to make money. And so there was almost a feeling of like, well, this might be a healthy refocusing of minds towards what's the market that's actually going to make you money. And if that means you end up cutting emissions, that's great. Into the bargain.
- [12:37]
Luke Vargas
And that's it for what's news for this Monday morning. Additional sound in this episode was from Reuters. Today's show was produced by Kate Bullivant and Daniel Bach, with supervising producer Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.