Trump Readies Tariff Cuts in Affordability Push; Fed Rate Cut Doubts Grow

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:02Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest on the global trade war. President Trump is planning substantial tariff cuts in an effort to fight high food prices. We get the details from Bloomberg's Monica Riggs. President Trump's tariff cuts would address high food prices and unveil new framework agreements with Argentina, Guatemala, El Salvador, and Ecuador to help reduce tariffs on common grocery items like beef, bananas, and coffee beans. The Trump administration claims lower trade barriers in Latin American countries will help boost U.S.

1:46businesses and expects retailers and wholesalers to pass any benefits, including lower prices, onto American consumers. The push follows big Democratic wins last week in a number of key state and local races where candidates focused on affordability. Monica Ricks, Bloomberg Radio. Monica, thank you. On Capitol Hill, the Jeffrey Epstein files are about to be front and center. The House is heading for a vote next week on a bill that would require the Justice Department to release its documents on the late sex offender. Republican leaders have resisted the bill since it was first introduced in July.

2:19Newly sworn in, Congresswoman Adelita Grijalva was the deciding signature on a petition to bring it to the House floor. I hope that it passes the House without any issue and that the pressure then goes to senators because regardless of who is implicated, no one should want the label of protecting pedophiles. Democratic Congresswoman Adelita Grijalvo was a guest on Bloomberg's Balance of Power. Catch the full conversation on the Bloomberg podcast page on YouTube. This vote comes after Democrats released emails from Epstein that suggested President Trump quote, knew about the girls. The White House says Democrats cherry-picked the documents to smear the president.

3:00Well, Karen, now that the government shutdown is over, the nation's airlines hope to get their schedules back on track by Thanksgiving. The FAA has frozen flight cutbacks at 40 major airports at 6 percent. It's not saying when that order will be lifted. Homeland Security Secretary Kristi Noem is saying that transportation security workers who worked through the shutdown without pay are getting a$10 ,000 bonus. What that means is that we are going to not only continue their paychecks like they should have received all along, but also they're going to get a bonus check for stepping up, taking on extra shifts, for showing up each and every day, for serving the American people.

3:36Homeland Security Secretary Kristi Noem made the announcement at George Bush Intercontinental Airport in Houston. The airlines say they should be back to full capacity within three to four days once the order to limit flights is lifted. Well, Nathan, the cancellation of flights is not only having a big effect on passengers, it may also have a major impact on the economy. Hannah Wong is chief U.S. economist for Bloomberg Economics. If Sean Duffy, the transportation secretary and FAA indeed pushed through this, you know, over 10 percent cancellation of flights in Thanksgiving, we could have an additional permanent GDP loss of 0.2 to 0.3 percentage point for the quarter.

4:16And Bloomberg's Hannah Wong says Americans are estimated to spend around 60 billion dollars on travel this Thanksgiving. Well Karen doubts are growing on Wall Street this morning on whether we'll see a December rate cut. Minneapolis Fed President Neil Kashkari tells Bloomberg he did not support the central bank's last cut and he's still undecided on the best course of action for next month. That's a point echoed by San Francisco Fed President Mary Daly. To my mind, it's premature to say definitely no cut or definitely a cut. What's more important is to say the direction of change in policy is looking like it'd be towards neutral.

4:56San Francisco Fed Chief Mary Daly and the rest of the central bank's next rate decision comes December 10th. Right now, traders are pricing at about a 50-50 chance of a cut. Nathan concerns the Fed will stay on pat next month. They're taking their toll on stocks. futures are lower once again following yesterday's tech-driven sell-off. The Nasdaq dropped 2.3%. Still, Mike Wilson, chief U.S. equity strategist at Morgan Stanley, sees good signs in the stock market. We are now seeing double-digit earnings growth on the year-over-year basis for the median stock, and that's the first time we've seen that kind of growth in four years.

5:32So I think there are early signs that we're seeing a broadening of the earnings story, and that's what ultimately will lead to better, broader performance in the stock market next year. Morgan Stanley's Mike Wilson's bull case for stocks next year sees the S &P 500 hitting 7 ,200. That's more than 6 % above current levels. And Karen, the head of Citigroup is weighing in on the markets and the economy. We spoke this morning with CEO Jane Frazier on the sidelines of the Citi-China conference in Shanghai. I don't think we're out of the woods yet. And there's a sense that there may be another shoe to drop.

6:05It could be in tariffs or in the labor market. could be in the asset prices that are quite high in the states. But all of that said, we're quite optimistic about 26. Citigroup CEO Jane Frazier notes one of the biggest challenges for the Fed will be dealing with the fallout from the government shutdown. You can get our full conversation with Citigroup CEO Jane Frazier on the Bloomberg Podcast channel on YouTube. In company news this morning, Nathan, Verizon Communications is discussing plans to announce job cuts that could downsize the company by as much as 20 percent. This is a major step in a transformation led by new CEO Dan Schulman.

6:41We're told that the plan cuts could impact 15 ,000 to 20 ,000 workers. This morning, Karen, there's labor peace at Boeing. Factory workers in the St. Louis area voted to end the longest strike at the planemaker since 1948. The accepted terms will increase average wages by a total of 24 percent and give workers a six thousand dollar signing bonus, average base pay will go from$75 ,000 to$109 ,000. And Nathan, Jeff Bezos' Blue Origin successfully launched its second flight of the New Glenn rocket from Cape Canaveral, Florida, with no humans on board. It carried two rocket lab-built spacecraft and a trajectory toward Mars for its first NASA mission.

7:27And the rocket's booster separated from its upper stage, descended back to Earth, and landed on a barge in the Atlantic Ocean after firing engines to slow itself down. The successful mission puts Blue Origin on track to challenge SpaceX's grip on the launch industry.

7:49Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Lawyers for former FBI Director James Comey and New York Attorney General Letitia James teamed up in federal court on Thursday to ask a judge to throw out the criminal indictments against their clients. They say the appointment of Lindsay Halligan as U.S. attorney for the Eastern District of Virginia was illegally installed. Halligan, a former personal attorney to President Trump, was named to the post after her predecessor, Eric Siebert, stepped down after resisting pressure to bring charges against Comey and James, citing lack of evidence.

8:30The judge has promised a ruling before Thanksgiving. Prosecutors allege a mobster made a family business out of targeting Gen Z gamblers. New Jersey Attorney General Matthew Platkin announced the arrest of 14 people as part of a multi-million dollar betting ring that included college students and athletes. Organized crime families seem to have a hard time breaking this old habit, so we're going to break it for them. Prosecutors say a Lucchese crime family soldier financed his son to enlist his college and high school friends in the gambling ring that made more than two million dollars. More lawsuits have now been filed in the infant formula botulism outbreak, The parents of two infants who got sick are suing the makers of Buy Heart Baby Formula, which issued a nationwide recall, claiming the company was negligent.

9:22Stephen Dexter of Flagstaff, Arizona, told the FDA about his four-month-old daughter. She was getting more weak, but then I came home from work, and she was sleeping, and went to pick her up to feed her, and I couldn't wake her up. She was breathing, but she just, she wouldn't wake up. At least 15 infants have been hospitalized in 12 states. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. Thursday night football will begin week 11.

10:00The Patriots stay red hot. They won their eighth game in a row, beat the Jets in Foxborough 27-14. Three touchdowns for New England's rookie running back, Travion Henderson. The MVP is the same as last year. Shohei Otani winning for the fourth time. It was unanimous. And Aaron Judge's third AL MVP award in a closer vote with Cal Raleigh, who hit 60 home runs. Judge hit 53 and he won the batting title. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. This is Tom Keen inviting you to join us for the Bloomberg Surveillance Podcast. It's about making you smarter every business day.

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11:16And on the West Coast, listen as soon as you wake up. That's the Bloomberg Surveillance Podcast with Tom Keen, Paul Sweeney, and me, Alexis Christophorus. Subscribe today wherever you get your podcasts. Bloomberg Surveillance, essential listening each and every business day.

11:35Coast to Coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. President Donald Trump is putting a new focus on affordability after Democrats' election wins last week, eyeing significant tariff cuts and new trade frameworks with Latin American countries to address voter concerns. National Economic Council Director Kevin Hassett says it's been on the administration's mind for a while. One of the things that people have been talking about just the last few days is, you know, thinking about changing tariffs for foodstuffs.

12:15White House Economic Advisor Kevin Hassett spoke with Bloomberg host David Rubenstein at the Economic Club of Washington. We're joined now by Bloomberg Breaking News editor Alexander Pearson. And Alex, what is it exactly now that the Trump administration is thinking about when it comes to addressing these concerns? Good morning. Good morning, Nathan. Right now, yeah, as you say, the affordability issue is quite large in the administration's mind after the Democrats scored some impressive wins in recent weeks. And what we saw yesterday was the administration come out and say they've signed framework agreements, trade agreements with four Latin American countries, Argentina, Guatemala, El Salvador and Ecuador.

12:54And the idea there is to not lower overall tariffs, but lower tariffs on certain grocery items that have seen pretty high prices in recent months in the U.S. So that includes things like beef, coffee and bananas. Is this a tacit acknowledgement that the tariffs have raised costs on consumers? The administration has sort of resisted that idea for a while. I think so. it's a fair interpretation because before the elections and certainly before, you know, the Democrats won in those elections, the affordability sort of talking point wasn't very strong among White House officials or Trump. And now they seem they're very much mentioning it to the public or when they speak with journalists.

13:41And the timing certainly is very interesting that they've decided to announce these new framework deals within weeks of an election that was very much defined by affordability. Yeah, the timing is very interesting, considering that Democrats might still be looking to keep health care affordability as an issue following the end of the government shutdown. Walk us through the contrast here. How could this play out over the next few months? In terms of, I mean, the Democrats will definitely want to build on the momentum that they had in the elections recently as we move towards the midterms next year.

14:16And certainly, if prices stay elevated on certain gross year items, if inflation stays around that 3 % level that we've been seeing in recent months, then that's something that they think they'll be able to cash in on electorally. And also, yes, as you say, in terms of the healthcare subsidies, that is an issue that has not yet been resolved. There's supposed to be a vote on that in mid December in terms of extending certain subsidies for the Affordable Care Act. And if that doesn't happen, premiums are probably going to increase quite significantly for many Americans. And that's something that the Democrats will also want to certainly zero in on as they look towards the midterms next year.

14:54And when it comes to these trade frameworks that the White House has announced with these four Latin American countries, when we're talking about beef, bananas and coffee beans, I mean, that's just kind of on the margins, isn't it? Overall, tariff rates are still going to be where? Fairly elevated? Yeah, that's right. I mean, in terms of, for three of these countries, including Argentina, it stays at around 10%. For Ecuador, it stays at 15%. So we are really talking about margins. We're talking about very specific products that, you know, a lot of Americans buy every day. But, yeah, in terms of overall trade flows, this is not really going to make a dent.

15:30And certainly in terms of global trade, it's not going to make much of a dent. These four countries are important, but certainly don't compare to the likes of China or Europe as trading partners for the United States. And in our last 30 seconds, Alex, when we're talking about improving access to beef in places like Argentina and Brazil, what could that mean for American cattle ranchers? They probably will not be very pleased. So Trump had already signaled that he would try to get beef prices down, which has, you know, annoyed a lot of people who regularly eat beef. And part of that was to increase imports from Argentina.

16:05That already occurred before yesterday's announcement that they would increase beef imports. and that annoyed the ranching lobby in the U.S., understandably. And so this new framework agreement with Argentina is probably going to only add to their annoyance with this administration. It could set up a fight in the future.

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