>> i am tom mackenzie in london and these are the stories that set your agenda. chinese stocks whipsaw after the pentagon blacklists tencent and ca tl for alleged links to china's military and nvidia

unveils new chips and software to stay ahead in the race for ai supremacy. semiconductor stocks served. and canada's ruling party begins the search for a new leader after justin trudeau steps down. mark says he is considering a run. >> so it was the tech momentum that fed into the gains on wall street last night, gains of 100% for the nasdaq, around .5%, close to .6 for the s&p 500. you saw the upside for european stocks yesterday but the picture today in terms of the hand over to europe a little saw year.

we have data on the inflation front later today that could inform views around the next steps for the ecb with markets expecting another cut from them later this month. ftse 100 futures down .4 percent, an important option and selloff of gilts at the 30 year level that will test markets as yields are comfortably above 5% on the long end in the u.k.. s&p futures lowered by .2% and nasdaq futures also off, maybe profit-making -- profit taking the gains yesterday, some powered by expectations around nvidia. let's lacrosse asset. we have heard from lisa cook reiterating what seems to be a consensus view from fomc officials now that there is need for caution in terms of next steps on rate cuts for the fed. a bit of money moving into treasuries after yields spiked

higher in recent days. the japanese yen in focus. the finance minister they were focused on fx moves. paring some of the heavier losses, down .1% versus the dollar. brent at $76 a barrel, bitcoin back over 100,000. let's get across now i'm once happening in the asian markets. avril hong standing by in singapore. >> the asian stock gauge running higher but it's a mixed picture if you look under the hood. the chip names are doing well thanks to jensen huang and nvidia, the likes of tokyo electron surging and helping the nikkei to these out performances as we see the bank stocks also lifting the gauge helped along by the export related counters given the week yen but on the hong kong benchmark it's the underperformance as two of the

biggest stocks in the greater china region get put on a u.s. defense department blacklist and have denied any links with the chinese military but down to the lowest level since mid-september and it's a benchmark heavyweight so is dragging. the hong sing responsible for the 2% decline. the japanese yen had its weakest level against the greenback in six months, some of this blamed on portfolio repositioning and it is approaching levels that last true intervention from japanese authorities. we got some job owning from the japanese finance chief but it looks like the direction of travel still for dollar yen is higher. >> avril hong in singapore. now the released -- the race to replace justin trudeau is off -- is on after he said he is resigning after more than nine years in the job.

mark carney says he's considering a run. other potential candidates include christie of freeland and dominic leblanc. trudeau will remain as prime minister until a new leader is selected one parliament -- with parliament suspended until march 24 while the process is underway. >> i have always been driven by my love for canada, by my desire to serve canadians and what is in the best interest of canadians and canadians deserve a real choice in the next election and it's become obvious to me with the internal battles that i cannot be the one to carry the liberal standard into the next election. >> for more on this let's bring in bloomberg executive editor derek. the speculation had been there for a long time that trudeau

would ultimately be forced to step down. we are at the point now where we are thinking about who replaces the canadian prime minister. who is most likely to step into the breach? >> the biggest names are obviously mark carney, the former governor of the bank of england, the former governor of the bank of canada, a man with a big reputation around economic issues and the other big name is christie of freeland potentially , long-time deputy prime minister who set the ball in motion for today's events when she resigned and says she was at odds with the prime minister and that the prime minister was not taking the threat of a trade war seriously enough. that was a blow from which trudeau could not recover and freeland because of her long-standing in the liberal parties, is going to be a player if she chooses to run but there are others too.

there's melanie julie, the replacement finance minister who stepped in and is a long time liberal and friend of justin trudeau and a dark first candidate is the former premier of british columbia, less well-known but somebody with a reputation within the country. >> so those are some of the key contenders and their backgrounds. what are you and the team watching for in the days and weeks ahead and to what extent will some of these candidates consider this a poisoned chalice given the lead versus the conservatives? >> there was polling taken in december that shows the conservative party something like 25 points ahead of the liberals. that is a mountain to climb for anybody and there's not a lot of time to put your own stamp on this government. it is highly likely we will have an election by may so a new liberal leader will have only

weeks to establish what they want to do before being thrown into an election campaign possibly so the liberal party needs to have its contest quickly and these candidates will have to decide quickly whether they are in or out because there is not a ton of time cysts -- establish a platform and message and try to rebrand the liberal party is any new leader would have to do. >> derek on the details there. we look to who will replace the outgoing canadian prime minister, justin trudeau. and bloomberg's executive editor is the chair of bloomberg's of directors. and traders are grappling with the prospect of rising trade tensions and that was one of the factors that led to the downfall arguably of trudeau after donald

trump denied a washington post report that he's considering a more targeted approach to tariffs. he denied that. let's dive deeper into the action with valerie tytel. a reminder of the whipsaw effect of speculation around from's policies. >> what a whipsaw we had especially in the fx market around these headlines. the original reaction to that washington post article saw the dollar really erase a lot of its gains and against that the euro a big leg stronger versus the dollar on those original headlines, moved over a percent which i think showed there were a lot of euro shorts they got squeezed. we had reports of traders talking about the surgeon option volumes. a lot of them seem to be getting stopped out over these headlines yesterday but it was not just the tariff headlines we had to deal with but also some

headlines about resignations when it comes to the fed. we can talk about the reaction to bank stocks. we had news from the fed that michael barr is stepping down for vice chair of supervision. that's bank stocks rally. michael barr is known as being tough on capital rules and his resignation maybe opens the door for looser regulations going forward and bank stocks did cheer that. we get some more news out of the u.s. this time on the jobs market. we get the jobs data and ism services. keep an eye on how many job openings per unemployed person, that ratio the fed keeps their ion. lastly, this rise in yields. it is not just in the u.s. but the move has gone global. we have seen rises in the u.k. long end and overnight jgb 30 years also hit a new high they had not seen for 25 years.

>> the u.k. 30 year settled at 517, levels we have not seen since 2023. valerie, thank you very much indeed. let's get to one of the big cory -- the big corporate stories. they have announced a raft of new software and services. he presented the lineup during the ces show in las vegas. >> we used g4s to enable artificial intelligence and now it is revolutionizing geforce. today we are announcing our next generation, the rtx blackwell family. >> let's cross over to ed ludlow , who joins us from las vegas. this is a company you know well and a ceo you have interviewed a number of times. talk to us about what he outlined with a particular focus

on the new graphics card. >> it is kind of them going after everything left in the world of ai, going back to their roots. their history is in gaming gp used so if you're a nerd that likes to build your own high-performance computer you would likely have an nvidia gpu. we got used to the idea that they are this stalwart provider of gpu's and data centers and what they announced and what these images are showing our them taking that work and making high-performance gp use for the consumer and for developers that are a fraction of the price of the prior generation. data centers are like 100 billion for the full year but in a future where ai is everywhere i think he has his eye on other markets. >> it's fascinating as a diversifier. does that speak to concern for

you amongst nvidia that maybe it is overexposed and this is a key test for analysts in terms of what one has to say about the push out into other segments >> it will be interesting to see the wall street mood tomorrow, whether they got any of it. it was not much focused on this is the brain the strange the ir model but everything else. what jensen means is the next phases in the physical world. nvidia has a hold in the corner of that market which is that the data centers are being used to train the underlying models that support that technology but there are many more steps to calm to build robots that can do things and they are starting to show us through new models, one they call a world foundation model, better ways of taking data other than tech and finding

ways to make things actually useful and i will see him tomorrow and i will sort of zero in on that because the market has not really been quantified by him. where did that leave them? >> a key question. ed ludlow joining us from las vegas. he will be speaking with jensen in las vegas on bloomberg technology at 4:30 p.m. u.k. time so of course tune in for that interview. here's what else to be thinking about in the day ahead. we will get inflation prints from france at 10 a.m. u.k. time and euro area inflation data as well. markets are fully expecting that inflation will slide in the euro zone and that gives the ecb space to cut. traders expect as much as 1% by the end of this year. we will see if the inflation data adjust that.

and then it is the u.s. jolts data that comes out as we build out a pitch and by the end of this week more clarity in terms of the labor market of the u.s. with nonfarm payrolls friday. and trade tensions between beijing and washington are ramping up after the u.s. blacklisted tencent and ca tl for alleged links to the chinese military. it's a move with implications that could be broad. this is bloomberg. ♪

>> welcome back. shares in tencent and ca tl are plunging this morning after the u.s. blacklisted them for alleged links to the chinese military in a surprise move just weeks before donald trump takes office in the u.s. during let's bring in rebecca wilkins for the details, the implications. bring us up to speed on the latest black list some prominent names on this list. we mentioned a couple of them but also the shipping firm costco and a major energy giant backed by the chinese state. what are the details? >> this news has been dominating asian trading floors and a lot

of this has taken people by surprise. some investors bemused by the inclusion of the likes of tencent, which is generally considered a consumer facing tech name, as well as the car making battery maker. it's important to note that the list, this pentagon list of companies with these alleged links to the military does not necessitate any sanctions or immediate restrictions on these companies but is essentially a form of discouragement to u.s. entities and companies from doing business or trading these names so we will wait to see whether the long-term consequences follow through. important to note that tencent among other names have pushed back firmly on this allegation and say their inclusion on this list is a mistake and that they are going to push back and try to work with the dod to have

themselves removed. >> and we have seen examples in the past of chinese firms successfully pursuing legal action and getting themselves removed from that list. talk to us more than about the equity market reaction to this news. you have talked about some traders in the region being before told by this decision around, for example, tencent. what is the broader read across equity markets? >> quite a sharp selloff. tencent around 8% down there and ca tl somewhere in the three to 4% down. and it goes for most of the names trading down. that is then following through for both the offshore and onshore chinese indices and it's mainly because that tencent for example is the heaviest waiting name in two of those key indices

that we monitor, ca tl undimmed alert heavyweight disproportionately represented so we are seeing that spillover effect into things like the csi 300 and we were already sort of in the red. we had four days of declines basically since the beginning of 2025 for onshore trading. there's been quite a bit of pessimism. we do have this potential meeting tomorrow of these three heavyweights of the authorities including the mof for example talking about this potential expansion so maybe some details of the expansion of the trade and. this is sort of china's cash for clunkers with chinese characteristics style program but by and large concern about the expanded ways in which chinese companies have been

caught in the cross hairs between u.s.-china tensions. rebecca, thank you very much indeed. whether some of that domestic policy process and support can actually offset the international pressure that seems to continue and we will see how that continues in the trump administration. ai has dominated tech developments. what to expect from the technology and 2025. this is bloomberg. ♪

it's >> chips -- >> chips, data centers, energy

and spending from big tech have been key metrics to understand demand around ai. now the focus may broaden beyond infrastructure and chatbots to new users, including scientific discovery. >> scientists are starting to use it as a tool and apply it in their technology and by doing that their is probably going to be more breakthroughs that you will hear about. i think that we have, from a public perspective, done a bit of over indexing on large lung which models. >> 2025 could market further shift to small language models instead, especially as concerns build over the huge strains ai is placing on power grids worldwide. that's placing a spotlight on a novel approach to training ai tools that could democratize access to technology. >> the new paradigm will be open models. what we are talking about is small language models for a specific domain, a decentralized

version. many more people, more researchers will be involved. >> such an approach could also be critical for integrating ai further into personal electronics like phones and pcs. >> i would consider this technology to be the foundation for the future they can people can have their personalized models. >> there's also said to be a greater focus on agentic ai. >> you will cai being able to do more multimodal, multi-capable things and i think the individual might start to feel that more. they might see it in their product. >> president-elect trump could mean less red tape for u.s. tech giants though that does not mean any lead for china nai will be

sustained. >> what we see at the u.s. level is this frontier area of where a select few companies are running away with it and look like there if can we in the lead, but throughout 2024, what we are starting to see in china is a lot of big, powerful models coming out in a more open source community and the base in china is wider. >> the race for ai supremacy is by no means settled as we head into a new year. annabelle droulers, bloomberg news. >> ok. some other stories making headlines this morning. congress has certified donald trump's presidential election victory without dispute. his democratic opponent kamala harris was presiding. it comes four years after a mob attack on the u.s. capital marred the vote count with violence. the legacy of the events of 2021 saw extra security around washington this time.

federal reserve vice chair michael barr is pointing to step down next month more than the year before the end of his term. the decision bypasses a potential battle with president-elect trump over his position. the departure raises questions about plans to force u.s. banks to hold more capital. the fed says he intends to stay on as a member of the board of governors. coming up, traders are dialing back bets for ecb rate cuts this year. we will discuss the outlook for inflation in europe and other risks ahead with swiss re cheap euro area economist ne lock in let's go. rated e for everyone. [rock and roll music playing] xfinity. made for gaming. rewards members, get early access to an ea sports fc25 kit.

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♪ >> good morning this is

bloomberg to break up on, because he london these are the stories at your agenda the pentagon blacklists see atl to stay ahead in the race for supremacy, asian stocks surge in canada begins the search for a new leader after their prime minister steps down. you have optimism and our team will be interviewing him. european futures lower, solid

day with s&p closing higher, ftse lower, flipped the board. money is moving, down on the benchmark, future cuts and japanese yen currently down versus the dolla, $76 a barrel. bitcoin up so far. inflation date or from the euro area, numbers remind

policymakers 2% is not within reach. let's bring in bloom bugs editor zoe for a preview. how much consent will there be when this dater -- dater -- data drops. zoe: there will be an uptick, policymakers it in december, inflation will fluctuate and the uptick is because of base effect. now they work in the other direction, we were below 2%

earlier and it has been inching up, not the newsday one but something they expected. tom: what -- what -- what -- what -- what is the expectation around -- around the rate path of -- of the ecb? zoe: there will be four rate cuts, that means that will take us through the june meeting. that should get us from 3% to 2%. one uncertainty is donald trump. tom: you touched on trump,

clearly, clearly a major risk. what -- what are the other challenges? zoe: slow growth in germany which flatlined so those are things that were re--- worry. we face elections and a change, schulz is not popular, still a packed will take a wild to just implement, implement policy.

uncertainty is one thing that never helps. tom: yeah well, in -- indeed. bloomberg's editor zoe, thank you indeed. let's stay on europe indeed. let's start on europe and bring in the chief european economist. we -- we saw some data yesterday when it comes to spain it seems to -- to outpace rivals or dashboard -- 4 -- 4 -- or france. >> happy new year first of all. in europe you cannot give blanket statement but you have the periphery doing better than

germ on me for france, now the big problem is the core, we had the composition in contractionary territory, if we look down see roth or mutated growth forecast for europe, for eurozone, that's less -- if you compared to u.s. u.s. would have more than double growth rate so underperformance will continue with more easing, as you recall take mentioned there could be

tailwind but domestic policy will wake on the euro zone. tom: the -- the data, how much more complicated does it make the job of the ecb? >> the baseline is looking at inflation we expect all rate cuts until june so yes, cpi increased. however you will see quite a sharp reversal down and like your colleague mentioned services inflation and wage growth.

the ecb said we think the rate will be 2% and risks park for even further rate cuts. tom: ok, 2% and -- and below that by the end of the year and prediction is you will see divergence between, between europe and the u.s.. >> yes, one thing we were hoping for was increase in consumption, still getting consumer sentiment up will be the key for europe and in china and a lot of stimulus, how will the recovery

be? property market and longer-term structural issues and also trade tensions could way regardless of stimulus europe and china struggle whereas u.s. will be the key, depending on the scope and the sequencing of policies, specifically tariffs. tom: you've got some views, and a lot of uncertainty in the last 24, 48 hours. trump plans broad tariffs and we will see but clearly they are coming in some -- in some form.

guest: yes. monitoring is key, baseline assumes some sort of escalatory tariffs, there is needed impact for the u.s. and big pain will be for china. full-blown trade war you can have inflation rising and growth declining but if you assume staged most of the pain will come second half with reasonable growth. tom: we've seen another reminder , seeing it with 519 on -- on --

on the 30 year and japan, high yield risk, where are you watching? charlotte: geopolitics and on markets, not just u.s. but elsewhere could pressure mortgage rates and if you step back and look you have u.s. 10 year rising since the fed cut since september, the only time that's happened was 1981 so i don't think this is a direct

rejection, it's more about sticky inflation but could be rising debate if economy starts to weaken but inflation stays sticky. tom: excellent, charlotte. on yield and bond market risks and a few with monetary policy. we will speak with stephan, commissioner for prosperity on europe's political and economic headwinds. france is aiming to reduce the deficit slowly after lore makers reject plans, targeting a deficit between five and five

and a half percent containing tax rises and spending cuts, less than the last government proposal. bloom bug learned people have urged donald trump's allies to reconsider his relationship with elon musk after musk made inflammatory remarks calling for starmer's and. some suggested posts where damaging trump's reputation among supporters. coming up, justin trudeau stepping down, we discuss what it means for canada as the country looks to be moving closer to right wing, we will see how that plays out, this is

bloom bug- s is bloomberg. ♪ ♪♪ ♪ three little birds ♪ ♪♪ ♪♪

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♪ >> welcome back. surprise blacklisting, the pentagon put them on a blacklist for ties with china. tencent is on their and also they are a major gaming produce a, currently the stock dropped 8% to session lowers. on the back of this news, awaiting the hsi in hong kong,

see atl the may jamaica with a 37% market share on the blacklist given the shed drop we will cover for you. justin trudeau's resignation has come in, not a major surprise but it sets the stage for a shift away from progressive policies toward a conservative approach. let's bring in jill, let's start with what led to justin trudeau's downfall, one of the ingredients is -- is what led to

a number of leaders and that is inflation. jill: what you saw is not different to what we saw across the world, nearly every major uh leader was either toppled out of government or lost support to do with post-pandemic surge of inflation, you had people with issues with growth, something that led to consternation,

really exacerbated consternation , one of the most loyal sort of uh uh advisors step aside over disagreements, trump went on the attack. general dissatisfaction among the public led to what we saw. tim: maybe you can touch on the key -- key names, also what this means for -- for -- for -- 4 -- 4 -- 4 -- for policy? jill: what we will see is jockeying for power within the

parties bloomberg chair and bank of england governor in the running as well as finance minister and current minister so you have several names in the running but conservators were up , there will have to be an election to replace trudeau and conservatives are likely to become prime minister and abandonment of progressive policies around immigration and if you have someone in this position they may try to emulate

that trump strongman energy. looking at a shift in canadian politics in this election. tom: bloomberg's jill thesis on the shift, dependent on elections, who will be new leader? plenty more, stay with us, this is bloom bug -- this is bloomberg. ♪

♪ >> they're having trouble communicating, tariffs are

targeted, it adds a different implication. tom: bill dudley there on uncertainty around tariffs, the wall street or the washington post report i should set around trump, he pushed back. uncertainty around tariffs priced into of course the bond market. not a new phenomenon, above longer-term rates coming through at the highest level, leading to longer and premium being

demanded on concerns about tariffs, let's with the board. similar story around the u.k., big auction, 10 year yield up 40 basis points since october highest levels in the quarter of the century, yields of around 5% for the first time since gordon brown. flip the board, jensen wall giving a speech and you soared the stock closing in on fresh

records around chips and software and automakers, we have an interview with jensen long and tomorrow we speak with gary gensler. that interview will be fascinating. up next is the opening trade, they are coming up. this is bloomberg. ♪

kriti: we are one hour away from the opening