>> having donald trump come into office is a very welcome change. >> he is looking to stimulate investment in the united states and foster more innovation and growth. >> a lot of americans are saying i only want to be in the u.s.. >> every market is looking at the u.s. as opportunity. >> it is a good thing for the world and the world economy. announcer: this is "bloomberg surveillance" with jonathan ferro, annmarie hordern and lisa abramowicz. lisa: good morning for our audiences worldwide, this is "bloomberg surveillance."

i am joined by dani burger. i am annmarie hordern. john and lisa are making their way back from davos. all of the policy uncertainty is emanating but donald trump touching basically every part of the global financial markets. futures this morning are a little softer but this comes after the s&p 500 yesterday hit a record high. the first time u.s. stocks had an all-time high for the year. the first time we had that record for 2025. this morning a little bit softer on equity futures. this comes as president trump seems to be taking a step back when it comes to tariffs. he seems to be negotiating the tone when it comes to tariffs and persuasion mode when it comes to interest rates. killing the federal reserve -- telling the federal reserve that

he wants lower interest rates. dani: not just rates but also oil. telling opec that he wants them and he will ask them to lower prices. if we had said two weeks ago we would have this from trump and it would be the first week of his presidency, we would have expected extreme volatility. the bond market would have had a bigger reaction of him trying to jawbone the fed. instead it has been calm. there has been choppiness, yes. i think they really nailed this, that markets saw the inauguration as an event risk and he needed to get past it and when we get past it, we can continue and we did. we reached all-time highs. annmarie: the dollar is lower around the world, currencies are taking this breath of relief that he is really starting to tone down the rhetoric when it comes to tariffs. >> it is interesting is to think that the euro stoxx is up a lot more year to date than the s&p 500.

certainly there is a lot of classic trump trades coming out of the election that work for a little bit and now they are back to where they were just before. i think you will be very interesting. one of the things i am focused on is, he will softer on china yesterday but he is never going to go completely clear because then he uses -- loses his negotiating leverage. annmarie: here is the quote, "we don't want tariffs and i would rather not have to use them." he is full in negotiating mode. michael: but he cannot lose that power. will we ever have clarity with tariffs? he always has to keep something back. president trump can pivot very quickly. how does that uncertainty principle in a world where the

markets want clarity, the ceos want clarity, how does that uncertainty principle filter into things like bonds? dani: there is so much uncertainty and this is the irony. the market is concentrating on this big business growth environment we will be getting. that seems to be the concentration. do we get this roundabout thing where because markets are calm, it allows trump to go harder on tariffs because markets are giving him the green light. they are not sending yields higher. michael: absolutely. these first few weeks of the trump presidency what we will experience is president trump needs to test the boundaries of the markets. you can say this and that but he needs to understand the reaction function of the bond market and the stock market. the tricky thing is right now we have a great -- let still say we had biden as president and there was not an election in november.

we are looking at a strong economy, strong employment, a pretty healthy consumer, looking great strong corporate earnings. you have to take that away from the new animal spirit and dissect it. if those fundamentals change a lot, it is nothing to do with trump policy. if they get weaker, that is where we will have to see another way of where the reaction function is in the markets. it is a moving target. annmarie: let's look at where they are trading this morning. happy friday. we have the s&p 500 futures softer. this as yesterday u.s. stocks hit its first all-time high of the year. global stocks are really liking when it comes to president trump testing the market. they like this idea of signaling that tariffs are being used as a negotiating tool. the euro-dollar, zero point --

1.04. 10 year yield, basically what is happening with the 10 year yield is nothing. the u.s. bond market ending the first week of u.s. president trump's presidency where it began. crude. donald trump drawing down the crude market. oil is set for the first week. he is telling opec to put more barrels on the market. coming up on this program, margaret patel of allspring. terry haines, and steve englander. we begin with stocks at record highs after president trump said he would rather not impose tariffs on china. margaret patel of allspring writing, "the trump administration has announced many changes and initiatives.

it is too early to judge their effects on the economy but we believe many will reinforce the economy which we have expected strong growth. she joins us now. thank you for joining us. i would love to get your reaction to the past 24 hours. what surprised you the most about what we have heard from the 47th president donald trump seemingly touching every part of global financial markets? margaret: i think that is really coming out strong and stating a lot of his positions and positions that may be he does not expect to be achieved but it is a good place to negotiate from. i think the most important thing frankly is the idea of higher taxes is totally off the board. that was a big risk to the market last year looking into 25. that is the number one important thing, no increases in taxes and may be even lower taxes and lower regulation which will be

positive for markets. dani: you are describing a status quo, an extension of tax cuts. annmarie got to this when she was reading your thoughts. how do you disaggregate the strength this market is pricing in and the strength of equities being a good business environment from a strong starting place versus policy? how dominant will politics be for risk assets? margaret: i hope not too strong. i hope the changes that are made will reinforce the years of strong growth we have seen. i think this year will be another year of continuing trends where technology is very strong, data center investments is very strong, improving the electrical grid is strong and we will see more investment in the domestic energy sector. those were in play last year and they will continue and this will be another year of good profits and surprisingly good equity market. dani: there has been a shift over the past month since mid december.

we have seen energy, utilities, industrials and financials outperform. cyclical parts of this market that are sensitive to growth. it is this optimism we are pricing in. does that continue or do we have an event that makes us run back to the safety quarters of the mag-7? margaret: i don't think it is extreme optimism. putting aside the politics, the u.s. economy is really in good shape. we are growing at a sustained level of 2.5%. there are signs the growth may be stronger come closer to 3%. that is very positive. that would allow the stock market to be up 10%, 12%, maybe higher. the surprises might be continued growth that might be stronger than expected. maybe the market is telegraphing continuation and further strengthening. we will need to see these other

areas broadened out a little bit. michael: one question for you. we are dealing with a very high valuation on the s&p 500. it is about the top 2% valuations here. do you see multiple compression as something that will happen or do you think the earnings will be so explosive that it will bring the multiple down to more normal levels? margaret: i don't think the market tells you the whole story. you have a relatively small number of stocks that have very high growth, earnings growth of 20%. those are the ones trading at big premiums. in a lot of the market, there is very low growth and more modest. when you put it together, it looks higher. i think the market is fairly priced. i think the uncertainty that we have has really gone now.

there is a more positive outlook. i think last year we had a lot of our total returns was due to expansion of the price-to-earnings multiple. this year we will probably see more companies with high earnings, a higher stock price and look more dependent on the profit growth of the company's. michael: are you bullish on the rotation away from big tech into more cyclical parts right now? margaret: i think only those cyclical parts that are part of this more secular change and growth which is the re-shoring back to america which i think is real and will continue. the investment we need is a decade-long process. the electrical grid which looked very stable for a long time suddenly looks as if we will have growth and demand for power

and we need to strengthen the grid expanding it. that is a lot of additional revenue for the industrial sector and technology as part of that. domestic energy looks now as if there was a cloud over that energy sector. i think it is actually more positive. we may see more investment from the energy sector. annmarie: it is something washington, d.c. is focused on whether it is data centers or unleashing more when it comes to american energy. margaret patel, thank you for your time, allspring global investments. let's update you elsewhere with your bloomberg brief. sonali: the bank of japan raised its policy rate to the highest level in 17 years fueling expectations for future high rates. the central bank warned that inflation will move at a faster pace compared to the previous forecast. shares of burberry are surging after a pick in u.s. demand raising investor hopes for a luxury market recovery.

retail sales fell 4% with the drop was less than expected with analysts expecting 13%. the label warned that the economic environment remains uncertain and that the transformation is in early stages. jp morgan and jp dimon -- jamie dimon got a pay bump. he earned $39 million, up 8.3% compared to the year before. jp morgan beat its own record for the highest annual profit in the history of american banking. that is your bloomberg brief. annmarie: he is not the only one, right? $39 million seems to be the magic number. sonali: david solomon as well. annmarie: up next, a softer approach on tariffs. pres. trump: we have one very big power over china and that is tariffs. they don't want them and i would

rather not have to use them but it is a tremendous power over china. annmarie: he rather not have to use them. that conversation is coming up next. you are watching "bloomberg surveillance." only the servicenow platform connects every corner of your business,

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annmarie: happy friday. futures are softer but yesterday we had u.s. stocks make their first all-time high for the year and really around the world. just taking a sigh of relief after comments from president trump basically saying that he would not really want to use tariffs. he could but he does not want to do that. that is where we begin our political discussion, under surveillance and a softer approach on tariffs. pres. trump: we have one very

big power over china and that is tariffs and they don't want them and i rather not have to use it. china is already paying a lot of tariffs. when you add them up, they are paying a lot. they have paid hundreds of billions of dollars. they have already started at a higher base. annmarie: president trump revising his message on tariffs saying he would rather not have to use them. he previously threatened 10% tariffs as soon as february 1. terry haines writing that tariffs will happen for three reasons, economic unfairness, not producing in the u.s. and to help achieve u.s. political goals. is tariffs management in full on negotiating mode? terry: my advice is this is never all one thing or the other. the approach will vary by country and product for the

three reasons you put on the screen. basically what trump was wanting to do with regard to china might be very different than what he wants to do with canada and mexico. with china what this is about is about an outstretched hand saying you deal with your proxies. deal with iran and russia and the mexican cartels coming across. we can reach deals and accommodations here. but if we do not do that, i've got some powers and abilities to bring pain upon you. this is not the all one or all the other decision. dani: help market participants that are watching this and confused. the executive order talked about a review for april 1 but then trump talked about enacting tariffs on february 1. that is next week. how do you view the timeline of potentially what will be his tariff policy? terry: i would encourage markets

to look at both dates. the question probably revolves around tweaking existing tariffs , making sure that china understands the sincerity of intent with the idea that in a couple of months what might happen is something larger and more systemic. dani: the facts of this first week has been so much more carrot than stick. giving tiktok a reprieve, inviting a high level chinese official to the inauguration, threatening 10% tariffs instead of 60%. why soften? why go after this approach instead of the hardball negotiation that he said he would do on day one? terry: i do not think it has been all carrot or all steak. it has been some of both. you can look at the ai announcement as a perfect example.

something that said to china among other things, game on on ai. i will go big and go hard and track of -- attract a ton of investment whether it be with stargate. beyond stargate, you have the proposed saudi investment. a lot of sticks going on that our deeds rather than words. dani: as you mentioned saudi committing an investment with the stargate venture, we saw similar announcements with the announcement from trump however the follow-through did not come to fruition. you have some of these players learning that you can make announcements to placate president trump without going through. does that change with this iteration? do you see a trump administration that wants to enforce these spending commitments more forcefully? terry: i see an administration

and a president that understands that he has exactly four years and no more and he wants to maximize his impact. there is much greater focus this time. michael: are you reading the tea leaves within the white house that scott bessent really emerging as a very strong and clear voice in the more -- and the more overt trade talks or losing position and is this something that markets can take comfort in or will this be an unstable condition? terry: good morning. a couple of things. annmarie always very kindly brings up that i came out early with this team of rivals concept when scott bessent and others were brought in. i look at tariffs as very much a country-specific issue, specific product sort of thing. i would not look at the early

returns here as a sign of scott bessent winning or losing. it very much depends on all of those things. michael: ok. annmarie: we has not even set foot in the door yet when it comes to scott bessent. he still needs to be confirmed. potentially it will happen this weekend. howard lutnick has a hearing to go through. is that what is also pulling trump back from enacting these broad-based tariffs? he actually needs his team in place and at the moment they are not. terry: there is a little bit of that. nominees can always advise informally. not under the table in secret. they can advise on where they think things should go without having the power to do anything about it or have any letters -- levers in their hands. they are not confirmed, as you

pointed out. it is a good in development state when it comes to trump advisors generally. that may be playing a little bit of a roll here. i do think that with regard to china the main dating is that trump is putting out that they'd much rather negotiate the large geopolitical issues. if china is willing to do that, he is willing to play. at the same time, his patients will not be inexhaustible. annmarie: i want to give it to the fed. i am sure jay powell is happy the fed is in a blackout period ahead of the meeting. not only did president trump say he wants lower interest rates at davos and he needs lower oil, he told reporters i think i know it much better than the one who is in charge of making that decision. if i disagree, i will let it be known. is it too early for him to be jawboning the fed? is there concern about fed independence? terry: too early, not for

president trump certain way. fed independence is not an issue here. it is not going to be an issue. the fundamental reason why is the fed gets to make decisions independently. that is fed independence. the fed is not a creature of the president. the power of the fed derives from congress. the president really does not have the ability to meddle in those things. i am well aware of some times in the past whether it be president truman or president nixon where that has happened. i don't think it will happen here. what will happen is should trump try to cross the line, congress will slide at him pretty hard and congress has shown the ability to resist trump on all kinds of things including the pace of nominees so far. he wanted nominees in two months ago and that they should go

immediately and we have just talked about many nominees that have not even gotten confirmations yet. dani: to stick on the point of the fed, perhaps not an issue for now but should we look at this as a view into what happens when jay powell's tenure is up, that someone like chris waller comes in for someone is put in place that will be cutting rates, that will be more amenable to the jawboning from trump? terry: i would put it this way, the markets have proven to me anyway and the economists who buzz around the fed pretending to be experts and say there will be a big threat when it happens. at the same time i would point out that jay powell very much disappointed the biden administration when he got reconfirmed. they thought they were getting a dove. they thought they were getting more free money. instead they got the fed becoming hawkish most immediately and embarking on the

policy path where we are now. i would look for governor waller or whoever else ends up being there continuing to exercise independence. annmarie: thank you so much terry haines pangea policy of --terry haines of pangea policy. dani: the fed is a bit like a child. you tell them not to do something and they will do it. they might push back even harder. annmarie: trump also urging opec plus to lower oil prices. you are watching "bloomberg surveillance."

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annmarie: good morning. happy friday. this was the first full working week for the newly elected president. he is touching global markets around the world whether or not it is from equities to currencies or the oil market. we have global stocks with a relief rally when it comes to global stocks. they are ending the week at record highs. we had a record high yesterday in the u.s. this morning we are softer when it comes to futures. dani: maybe there is something in this that the action has been an administration giving tariff policy that is not as bad as feared. that being said, there are still

enough unknowns in the market that the interpretation could be rattled. you made the point it is not april 1, about bringing tariffs until trading partners. it is february 1. that is a matter of weeks. we continue to have these risks every time trump changes the goalpost of the timelines of what he wants to get done. annmarie: it is next week. we need to get their personnel in place to enact these policy changes. when it comes to the bond market, no drama as jonathan would say as he makes his way back from davos. the 10 year yield, 4.63% like where we started on monday. dani: that is also after trump said the fed needs to cut rates. oil needs to be lower. you had a little bit of movement on the front end. it was actually long end bonds where yields pushed higher. the opposite of what trump would have wanted. goes to show his jawboning cannot overcome the bond market

vigilantes. annmarie: when it comes to tariffs, the place where we saw the whipsaw back and forth over the course of the past weeks and months is the currency market. a weaker dollar. that is playing out in the euro-dollar. also a weaker dollar when it comes to the yen. dani: the bank of japan, not that different of a reason because they hiked this morning, because u.s. politics allowed them to do so. the reporting was you had u.s. data in their hand and that was calm enough. it was not a big surprise so they could hike. as long as we did not get anything that was volatile coming from the trump administration. they wanted to wait until the inauguration to make this decision. it happened. there is still fragility that might stop the boj in its tracks for the same reason we could see fragility in the overall market depending on what happens from u.s. policy. annmarie: policy moving markets this morning. that is where we will start. president trump telling fox news he would prefer to not impose

tariffs on china, still calling them a tremendous power over the country. this after he threatened on his second day in office 10% tariffs on china as soon as february 1. peter pointed out to this, "it seems this has become a negotiating ploy. he talks about it to rally support is is listening to those who caution about being too aggressive." do you think the market is seeing this as a negotiating tool? michael: certainly. they are looking at it as a pretty good set up right now. that any sort of downside from the campaign promises is not going to materialize and this is the art of the deals and so forth. i think that is a pretty credible thing. there are a lot of good things coming out of the trump agenda in terms of the de-regulatory push. things are set up pretty well. my question for risk assets like

equities, we are treating at 22 .5 times earnings. earnings are looking pretty good. the economy is in good shape but can we sustain? vulnerable to compression at the bond market starts selling off again. that will be one of the big questions. president trump might demand interest rates lower but he will not control the back end of the curve. that is where so much of the discussion will go. to my mind, where is the trump's bond market put struck. that is inherently a volatile process. that is what is looming here. when you have earnings on the s&p 500, that makes everything more fragile here. it will be an interesting winter. some of us, everything is good, nothing is really bad from the trump agenda, it is priced to perfection. what has been lifting the market is really spirits right now.

dani: when everything is good, does that mean we are more fragile? coming back to tariffs as a negotiating tactic, you have to be willing to proverbially shoot the hostage and take the big steps. if the equity market not prepared, how about does it look if he does impose 60% tariffs? on china michael: you are not just a real estate guy buying a building. this is an ongoing dialogue and ongoing relationship. i don't know what percent of consumer products in walmart are made in china. we have the potential of walmart inflationary risk where the consumer goes into the store and has to pay a lot more for something that was made in china , whether it is a bicycle or whatnot. it really is a big thing. there is this ongoing dance that

is filled with friction and tension. i don't know if anyone knows how that friction component of the trump deal gets priced into markets whether it is the vix, whether it is equities or the back end of the treasury curve. annmarie: president trump is questioning jay powell's decision-making on rates and will speak with him about lowering rates. pres. trump: i think i know interest rates better than they do and i think i know better than the one who is primarily in charge of making that decision. i am guided by them very much. if i disagree, i will let it be known. annmarie: shocking. if he disagrees, he will let the world know. you have to think that jay powell is so excited that they are in a blackout period. dani: absolutely. if you look at questions about this and maybe we will get another one right answer. this is the thing. you are talking about this at the break.

let's imagine a scenario that jay powell listens to trump and says mr. president, you are right. he says we are cutting. we heard you. you can still have a scenario where policy gets tighter because the bond market does what it has been doing and that is sending long end yields up higher. perhaps he learned the lesson of the clinton administration when it is vigilantes who set policy and the fed only has so much control. michael: when the fed started the cutting cycle in september with 50 basis points, it was the first time the fed had started cutting with high yield spreads and the low levels that they were and financial conditions were easy. they were making history. they were cutting into low four's unemployment. now you are asking effectively the fed and the markets to embrace this we will run high fiscal concurrently with hot monetary regime.

that is a recipe for all sorts of inflationary risk down the road. if trump was elected to make inflation lower again, that may be a recipe to actually make it higher again or at least to be perceived by the bond market. what is going to happen to trump's approval ratings if mortgage rates go from 7% to 8% because some of those things start playing out. annmarie: this will be important to watch. i think inflation will be one of the north stars. in corporate news boeing delivering disappointing results of posting revenue that missed estimates saying that the strike last year affected the result. they also noted one point $7 billion in charges tied to programs in the defense business and that stock is down more than 1% premarket. president trump vowing to push saudi arabia and other nations to lower the cost of oil. nadia martin wiggen saying that

trump would like to drive a wedge between saudi arabia and russia, pushing them to increase production at the expense of russia. analysts seem to assume any boost of production would be very temporary. a few months but what we see from opec is that they prefer to move slowly. nadia joins us now. thank you for joining us. do you have an idea of what price trump has in mind? nadia: first of all, he just wants the price lower. when we look at a historical level in terms of real prices, we are not even at such a high oil price. $80 is less than what it used to be. he wants to gasoline prices lower for the consumer and he wants oil prices to be lower than what the biden administration had. on the flipside he wants producers to keep producing and especially american ones. that is where we see him in a tough situation because u.s. production is not growing the way it has. there have been enormous

efficiency gains but still results came out lower for the end of last year in terms of u.s. production. we had it in our expectations. producers are not ramping up the way they could. if there are a one billion barrels of additional oil, it is not coming. dani: what incentive could they possibly have because domestic producers are beholden to shareholders. if they start putting more energy into this market, prices will go down and that is bad for wall street. to what degree does wall street dictate this and trump cannot have much of an impact? nadia: when we look at the potential u.s. supply growth this year, we have it up to 400,000 barrels per day. some forecasters have as little as 200,000 barrels per day. if we have oil prices that are higher, above $90 which is very tricky for the trump

administration, maybe we get another 150 thousand barrels per day. compared to the sanctions we are talking about and the 2.5 million barrels of spare capacity that opec can bring online, that is nothing. it is really why he has corrected saying that he wants opec to produce more. michael: just to react to dani's point on protecting shareholder value, with trump, is less regulation and presumably significantly lower operating costs for u.s. producers. how much do you expect that to happen at a per barrel level? is it going to become 62 as the new swing point where a producer might increase or not decrease production? nadia: we hit record u.s. production under the biden

administration. so he has not been holding back the oil side. the biggest difference is about natural gas and things like that. that has been an additional cost. that is where we see this small improvement coming forward. according to the producers, the breakevens, they are fine at $65 per barrel. maybe it breaks down the breakevens for some producers a little. this is when you have support for natural gas prices. it means that you can have more support for the oil breakeven because that associated gas actually makes money. if you add the fact that in some places you can actually flare under trump 1.0, nothing was enforced in terms with minimal enforcement happening that can help with the margin. when we talk about the big numbers, it is not really there. as we saw yesterday, we have the

ceos asking about lng and natural gas. not about oil. dani: because the europeans are also excited that they can make a deal. they came out after trump was elected saying maybe we can buy more lng from the united states. i want to end on potential supply constraints from places like venezuela and iran. what do you think the policy will be? nadia: so far trump looks like he is going to be quite tough on venezuela. he seems to be coming for rubio. on iran he has managed to enforce sanctions in the past but i think he wants the saudi's to play ball. in 2018 he sanctioned iran, he granted six months worth of waivers for a lot of countries including japan that had not touched iran. what we saw is q4 versus q2 production jump 2.5 million barrels per day from opec,

including saudi arabia, russia and the u.s.. then we had a price collapse. the saudi's will be hesitant about bringing back oil in that kind of situation. they want to see what is happening. this is where we think the saudi's will think long-term. that is the question because saudi arabia and russia are very close in opec now but maybe they would like to displace russia as a top three oil producer and take that away into the rest of opec but right now we have no signs of that happening. annmarie: thank you so much for your time, nadia martin wiggen of svelland capital. here is your bloomberg brief. sonali: a judge temporarily blocked president trump's executive order restricting automatic u.s. citizenship at birth for children of immigrants who entered illegally or have temporary legal status. the judge called the order blatantly unconstitutional. the administration is facing at

least six lawsuits over the citizenship order. apple and googled tiktok from the app store since it briefly went off-line. this comes despite president trump's pledge not to enforce a national security law that would punish u.s. partners of tiktok. oracle has kept the apps raising concerns that the cloud company may have opened itself up to lawsuits and fines if the administration decides to retroactively enforce penalties. president trump signed in order to create a working group to advise on crypto policy. it supports regular -- regulated dollar backed and seeks to prohibit digital currency. the group will submit a report to the president including legislative proposals including potentially creating a crypto stockpile. annmarie: actually at the crypto ball at this time last week that everyone said it was the best ball. snoop dogg was there. dani: i don't care what it is.

if snoop dogg was there, it was the best ball. annmarie: up next, tariff worries. >> probably more functional in the u.s. than japan. the question if people think trump will be aggressive on tariffs, if people think inflation will be high in the u.s., if people think that the fed will be tough, then probably the dollar will stay strong against again. -- against the yen. annmarie: that conversation coming up next. you are watching "bloomberg surveillance."

annmarie: markets around the world reading a sigh of relief as president trump signaling his plan for tariffs. tariff worries are not as big as they were before he came into

office. >> japan is a lot more comfortable with the economic growth and concerned about inflation. the trend will continue in terms of higher japanese rates. dollar-yen is probably more functional in the u.s. than japan. the question is if people think trump will be aggressive on tariffs, people think inflation will be high in the u.s. and people think the fed will be tough, then probably the dollar will stay strong against the yen. annmarie: investors expecting for the rate hikes after the central banks lifted its policy rate to the highest level since 2008 and projections. the boj saying he concerned around president trump's tariff policies will weigh on foreign exchange. steven englander joins us now. thank you for joining us. this was pretty much baked in but really depending on where u.s. policy goes, will that be the deciding factor for this boj? steven: if you read and watch

what the boj is saying, yesterday they lifted their inflation forecast and talk about upside risk. a lot of this is driven by what's happening in japan. the timing is dictated by concerns over is it going to be full trump or mini trump in terms of the disruptions that he charges. the big surprise because a lot of people thought the boj was going to hike and then say we can afford to wait. they have more intensity about further hikes. we think they will hike twice more this year. annmarie: yet, it is a yen with a reaction that has disappeared from the market. your interpretation seems to be

more hawkish than this market was expecting. are you surprised we are not seeing more strength at this moment from the yen? steven: i am doubly surprised. it is not responding to the rate differential story at the short end. in addition in the past it has been well correlated with cmh and the fact that the cmh is strengthened but has not done much this week remains a prize. if the market thinks the boj is serious about hiking, we will see rate differentials close. the rates gap between the u.k. and switzerland is actually much wider than between the u.s. and japan. that story over time will evolve. annmarie: maybe we can add tripoli surprised at this. most asset classes have been

trading in a range. the place we have seen the most volatility has come from the currency market whether it be dollar masks, the canadian loney, that is where we have seen the action. what do you make of the fact that it has been fx that has seen the most reactive miss to the things coming from the trump administration? steven: if you look at what happened from the beginning of october to say the middle of last week, the dollar strengthened way ahead. we think a lot of that was risk premium. markets are going into the inauguration thinking 60% tariffs on china, 25% on the u.s. credits in the world. a lot of risk premium. the focus was the fx market because that was ground zero for where all of this would play out. what we are seeing is an unwind

of that. there is still a bit to go but euro could go up 1% and you could say risk premium. if it went up 3%, it would have to be something beyond that. michael: michael purves here. do you think trump can make europe great again? what i mean by that is if he goes aggressive on europe, will it put european countries, germany, in a place where they will be more fiscally expansive than they have been in the past and maybe even put some reforms into their economy? is that a scenario we should be looking at? steven: it could be. i worked at the oecd 30 years ago and at the same structural issues exist existed then.

there is a chance that if we have a change in government to the center and stronger centrist government, that they will ease up on the debt situation and do more fiscal expansion. if i had to bet on europe changing policy for whatever reason they may change macro, they seem determined not to do the things that we would call fundamental micro structural reforms. annmarie: steven englander, thank you for joining us, standard chartered bank. michael, thank. francis collins free reworking -- france calling for reworking. dani: both bringing up trump in the context of it should be a wake-up call for your. policymakers are already talking

about the point you are making. annmarie: he is pushing against the wall and they will have to react. dani: they will have to compete against each other in europe. do you think now is the best time to invest in europe? michael: not yet. dani: they are forcing them to get out of their own way. it is what you will hear from trump administration officials. they may be the ones who get hurt the most because china will have nowhere else to go. annmarie: christine lagarde saying it would not be pessimistic to say that europe was in an existential moment. she talks about the reforms that they need. we have the draghi report. maybe this is the thing that gets them to act. dani: another hour of "bloomberg surveillance." sarah kunst and norman roule. u.s. stocks yesterday hitting an

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>> the 10-year right now is giving the right signals. >> the market has digested where we are now. >> optimism is priced into the market. >> people want to allocate to more risk but get beyond the index level. >> i believe they do not want to tread. >> this is "bloomberg surveillance." annmarie: good morning, good

friday morning. this is "bloomberg surveillance." i am alongside dani burger. it is dani burger. sarah hunt also joins us this hour. jon is on his way back from the swiss alps. futures this morning a bit softer. yesterday, the s&p 500 notched its first record high for 2025. a mixed picture. but this comes as we are seeing the president of the united states in his first week of office pretty much touch, take your pick, what you want to trade, what you invest in, pretty much touched every aspect of the market. dani: he talked about the fed needs to cut rates, you can say he tried to jawbone, i guess successfully, this oil market, saying opec needs to lower prices. overall, it is a pretty calm market. some say markets are serial

monogamous's, can only concentrate on one thing at a time. they need to concentrate on a softer tone when it comes to china. trump talked about tariffs, floating 10% instead of 60%. perhaps this is what the market is concentrating on. >> here is the quote to fox news last night, we have a big power over china, tariffs, they do not want them and i would rather not have to use them, a tremendous power over china. as an individual in the market place talking to people, is that giving the markets a little certainty that this is a negotiating tool? we're not going to use broad-based like it tariffs. whether it is trump briefing with the press, talking to the world global elite at davos, what have you taken on and said this will be good for us in 2025? sarah: i think looking for certainty at this moment, you're

not going to get a lot of it. i think there was a lot of relief that there was nothing immediate we're going to drop a bunch of tariffs on china. i think it was clear from the beginning that it would be a negotiating tool, but i think there was concern that we would start with something a little more punishing. i think that is helpful. i think the general feeling of we are going to be pro-business, pro-this, it gives you de regulatory push that makes people feel better about prospects for growth. that is the overall arching people -- picture, but from a small thing, they will continue to change around. dani: i and convinced everyone on the east coast have been too cold in there fingers are frozen so they have not been able to trade things. you're right, nothing concrete and uncertainty. but we're still at all-time highs. but what happens in a weeks time? to the point you have been making, when it is february 1, the new deadline trump has set for himself -- and great but the -- annmarie:

the eeo since april 1 for some of the trade policies. but they are trying to project to the business community, talking about this golden age and deregulation. markets are still at all-time high, although futures this morning are touch softer. targets are leaning into this idea that trump says he does not want to have to use those tariffs. of course, that has been huge in the currency market. euro-dollar this morning 1.04, massive for global currencies. not as good as the dollar. 10-year yield 4.63%, exactly when trump came into power on monday, now ending the week. crude just under $75 a barrel. crude set for the first weekly loss this week, trump job voting the saudis -- jawboning this saudis and other members of

opec. coming up, sarah kunst of cleo capital, savi syth of raymond james, and norman roule of csis, as president trump continues to pressure russia to end the ukraine war. stocks mixed come on track for a second week of gains as trump softens his china tariffs stance. some investors breathing a sigh of relief on signs that president is open to trade negotiation. sarah kunst of cleo capital joins us now. tliv for joining us. is that what you take on from this first full working week we have at the new administration, that they are in negotiating mode and not full on put up the walls mode? >> think with trump, as long as there is money, there's negotiations to be had. he is a new york guy and has come up understanding that the best way to get things done, he thinks, is to come in with a really big threat, and then when you walk it back -- you know, 60% tariffs makes 10% look ok

and 5% even better, and he probably hopes china will offer a sweetener, and we are that with saudi arabia, hey, we have another 600 billion to give you, do not look at us for tariffs. it is a negotiating tactic, and i am surprised how much the global community blinked while playing chicken with that trade. but it seems to be working out not as bad as people feared. annmarie: i know you are focused on ai, and we saw saudi arabia talk about the fact that they want to invest a ton in the united states, 600 billion dollars, and trump went to davos and said $1 trillion would sound a lot nicer. a lot has to do with ai and data centers. trump said yesterday he could sign the executive orders himself in terms to get the regulation approvals quicker to make these data centers. what is the new investment angle to something like ai that we have been talking about for years? >> i have a really boring take

on ai, which is give me a tech company that has been around at least two decades doing foundational work in ai and has been public for years, and i am interested. that is nvidia, taiwan semiconductor's arm, intel, oracle certainly on the data center news is part of that. so i do not think when you are talking about multi-billions of dollar investments that you are necessarily going to look at the earliest start ups, although there are certainly interesting early stage ai startups, names like grok, which are doing interesting things around ai chips. but the reality is a lot of that trade near term will be in the legacy tech names who have been doing ai and building these chips and semi conductors. dani: i love that you mentioned intel, because i thought, even until? but yes, to your estimation, even intel. there has been a lot of chatter

about deep seek, this new model the chinese have put out and put out for everyone to use on ai, and it is really advanced and looks really good. china, by the way, tsmc right around the corner from them, the u.s. was supposed to have really advanced ai and be the leaders here, but we do not even have some of the production capacity. so what becomes the u.s. mote in ai? it looks like china is rapidly enhancing. >> i would say, get your ai news from white papers, from phd's, not from twitter. the reality is that, yes, there are really smart technologists in china. you have seen with deep mind, that is a u.k.-based company. and the person running ai for microsoft is a british immigrant that has moved into the u.s. so we will not have a chokehold on every single talent, the u.s. is not going to be the sole

proprietor of smart people in ai, and that is fine. the question is, how do we make ai work for our economy? we know often with tech, china and the u.s. are very separate. great, let them have their developments. we are doing similar things. i think the real question is, how do you actually make it make money? because you can build these data centers and pour a ton of money in, but until you see and make a difference in, hey, is it easier to file my taxes are due what i have to do, do less grunt work and bureaucracy in my job daily? and you are really saying gains there, you're sort of just throwing more money on the fire in this sort of arms race with the rest of the world that really benefits the sam altmans of the world but also the average mom-and-pop retailer consumer. dani: i promise, i get more of my news sources than just x. let me said that record

straight. >> i know. dani: on this point, it brings us back around to the announcement of this money being poured in with oracle, openai, softbank coming in. oracle up 16% on the week. what do you understand as the ultimate goal, what is it actually accomplishing and what does it look like? is it worth the excitement starting to be priced in? >> i think a lot of these legacy tech names, they have had too little excitement priced in. the world was focused on social media, social networking, deeply consumer, not sort of tech driven names, and i think a lot of these names got overlooked. so i would look at the pricing and price movement, something different than what they are building and doing. with ai, you do need data centers. one thing i like, a little different from what oracle is doing, but one thing i like about this is we are bringing nuclear back online, looking

more at energy, and that is something that is important in the u.s. when you look at how cold everyone is and how high electric bills will be from this month, but it is also important in places like europe, energy independence for places like russia. but you look at the prices in the u.k., too. but if ai spurs this revolution in clean energy and infrastructure, i think that is good. i think over time, ai will be really important and useful for us. i do not think we're there yet. i do think these companies need a new story to tell the street after the last couple years of everyone just being thrilled -- i think one quarter papa john's said the word ai like 30 times in their earnings calls and they're stuck with through the roof, that does not work as well anymore. >> i agree with you, and it is interesting you mention the use cases, because we have to show that there's productivity, which is the big promise of ai. to the energy side, what is

interesting to me as you can have this putsch about permitting data centers, you have to change the energy because that is a bottleneck. that is where we are starting to see some expansion. is there an area you are looking at that ancillary piece off of ai that you think is most interesting? >> i think there will be a lot of foundational, sort of, shift of energy, things we have sort of written off. we all heard about cher noble and said, ok, i guess we do not want frocks with 20 heads. ok, that was a long time ago, the technology has moved forward, and this is not something that needs to curtail how we think about developing energy. so i am interested in nuclear and in bringing more renewables to the grid. i also think things like hydro ob interesting and important, and you see that as a big piece of where people are going with big energy. so i think it is in everything thing. and it is good for far beyond

just ai, but we have to have that to be able to make ai development sustainable, both cost-wise and as a cost to society. >> that is a big issue, the cost problem, and i think that is also someplace where building everything is very expensive. we think about something positive and get the market excited, if you bring some regulatory issues back and allow things to get built for less, because building nuclear is now insanely expensive. i think that is some place that has to change, and that is non--- that is on a technology level, and they can use smaller reactors like they use in lots of europe, as opposed to the larger one off areas we are using now. or the other sectors you are fascinated by as we go through this -- just picking your brain, from one stock picker to another, what else do you think is interesting here as we see what this new administration brings? >> my inbox has been flooded, i am a product company investment

in venture, and flooded with people buying and selling secondaries right now in private names. i have not seen this level of it for years. i think we do not know when that ipo window is going to open. the filings have not quite ramped up. i think people are waiting a little bit to let this administration settle in. but the reality is that the last cc and cftc heads made it hard for companies to buy and selling go public. so while we have not seen the stripes of the world commit to any firm plans, we see names like pharma that have raised their hand and say they are going to go public soon. i think we are soon to see a dam break there, and we will see a ton of really interesting companies come to market, buy and be sold. right now, those secondary trades are ramping up at a really crazy rate, which, to me, indicates that people expect that this year we are going to see a lot of filings.

annmarie: great point. on this program, the jetblue ceo said it cannot be any worse when it came to the ftc and the regulatory environment and wanting to do deals. thank you for your time, sarah kunst of cleo capital. dani, how much more will it cost to heat your homes? it is so cold, and at the smallest violin for anything jon and lisa say for how tough davos was because it is actually colder now on the east coast than it is in switzerland and the alps. dani: and you could argue that there is more snow in new orleans and texas than there now. you want to run away to somewhere warm, but i have gotten so many people saying we're doing a conference in miami this week, want to come, so for all the boss is listening, let me go to conferences in miami. annmarie: and talking about president trump, i can only imagine at some point there will be a conference in palm beach.

an update on stories elsewhere. here is sonali basak with your bloomberg brief. sonali: hate to say it, i will be in miami this week. leaving tomorrow morning. for now, watching verizon shares, they were higher in premarket but now dropping by 2.3% after the fourth quarter topped estimates here at verizon cell big gains in new boat -- mobile phone and broadband customers, adding over half a million monthly subscribers, and they did top expectations by about 70,000. broadbent was a bright spot, adding over 400,000 net subscribers, nearly double the amount analysts had predicted. also watching boeing, more trouble for them, suffering more losses and charges and preliminary fourth-quarter revenue report. in a surprise announcement, they said sales missed expectations, last year's strikes had impacted results. boeing set to deliver full earnings on tuesday. tesla unveiled an update to its best-selling model y in the u.s.

and europe to revive sales. the redesigned car has elements from the cybertruck, including full with led bars and improved aerodynamics and better soundproofing. the ev maker looking for a turnaround after reporting its first annual sales decline in over a decade. that is your bloomberg brief. annmarie: next, trump versus the rest of the world. pres. trump: my administration is acting with unprecedented speed to fix the disasters we have inherited from the totally inept group of people. my message to every business in the world is very simple, come make your product in america. annmarie: make your product in america, he says. a 15% corporate tax rate, not sure congress is on board with that yet. that conversation coming up next. you are watching "bloomberg surveillance." ♪

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annmarie: good friday morning. equity futures a little softer this morning, though we did have our first record high yesterday with the s&p 500 you'd we are down just slightly. i will say, global markets and global currencies are taking a huge relief off the fact that trump is basically sending a signal when it comes to tariffs, at least at this moment. this could change. but at least at this moment, looks like he wants to be in the negotiating chair. under surveillance this morning, trump versus the rest of the world. pres. trump: we are also going to ask saudi arabia and opec to bring down the cost of oil. i am surprised they did not do before the election, that did not show a lot of love. i will demand that interest rates drop immediately. likewise, they should be dropping all over the world. it is very unfair, very bad. my administration is acting with unprecedented speed to fix the disasters we have inherited from a totally inept group of people.

my message to every business in the world is very simple, come make your product in america. annmarie: a wish list and grievance list yesterday. trump laying out his "america first agenda." today he is set to visit north carolina and california while his cabinet continues to take shape in washington. wrap this up for us, tyler kendall. basically, donald trump leaving the white house for the first time he is in office for the second time around, and he is making a push domestically. what is in store for this trip? tyler: president trump expected to take off in about two hours, first to asheville, north carolina, where he will tour damage from the hurricane's that hit that region late last year, then heading to california to see the ongoing devastation from the wildfires, the l.a. fires expected to be some of the costliest in u.s. history, economic loss anywhere between $52 billion and $57 billion here

and president trump has threatened to withhold federal aid from california if the state does not make some changes to its water policy, alleging they can divert more water from the northern part of the state. california officials said that is not possible, nor is that the problem. i was catching up with a republican aide on capitol hill yesterday who said the general consensus is that supplemental disaster assistance will ultimately be passed, but this idea on conditioning it on unspecified policy changes are tying it to a vote on the debt limit, something that has been floated in washington, will prove politically difficult. a democratic leader yesterday told reporters that any such provisions would be a nonstarter for his party. dani: speaking of political difficulties, these nomination hearings have been running quite slow. democrats have been successful at trying to slow down the process. heck seth surviving the procedural vote, but to what degree is it indicative, the slow pace we are going at -- hegseth surviving the procedural

vote, but what degree is this indicative of the slow pace? tyler: we will be waiting for pete hegseth, and he narrowly passed a procedural vote. for final confirmation, the nominees need a simple majority in congress. republicans have a 53 seat majority, which means that pete hegseth, who lost two republican votes yesterday, could really only afford to lose one more vote, that would even put it in dicey territory, leading to a tiebreaker and potentially jd vance casting his first ballot in the chamber that way. but it is raising questions for next week as we start to get some a firm confirmation dates for some of the more controversial nominees, including tolson gabbard, kash patel, and rfk. sarah popped what is the strategy and how does it help the democrats right now? how does it play out, and what do they think they are getting for that?

tyler: exactly, senate i nordea leader chuck schumer has said this needs to be the way forward for democrats so they can both make the point but also kind of muck up the process. we know president trump has floated this idea of potentially during recess appointments, something the senate majority leader has indicated he would like to avoid as he tries to take control of the chamber is the new leader. republicans have a lot on their agenda. there also trying to get their reconciliation package to tackle some of trump's bigger priorities, including bigger energy and tax cuts a bill. so this idea to slow down the chamber as a whole could pose larger problems to republicans as they try to tackle their agenda. annmarie: tyler, thank you so much this morning. that is bloomberg's tyler kendall. she ended on reconciliation, and i was struck by what trump said yesterday at davos, if you make the products in the u.s.,

repeating what he said on the campaign trial, you will get a 15% corporate tax rate. if not, you basically get punished. do you start baking in a 15% corporate tax rate? sarah: i think that is another one of those areas where this is a good start to say, hey, do this and we will give you a break. i do not know if he can do that without congress. so i think there is a lot of information that needs to come through there. but i think the idea of saying come in here, almost saying u.s. will be a tax-free zone, like certain states, i think the idea is we would like to get more manufacturing back, like to get more things back here. i do not know that you would ever bake in those numbers at this time, but you have to ultimately see where it goes and whether or not the strategy is successful. dani: the thing you cannot take as you can take solace in is that sequencing matters. we have a lot more chat on this idea of taxes, come in, we will lower your taxes, versus tariffs, talking on fox saying

he will rather not use them. in terms of priorities, even if we do not have taxes in hand at this moment, even if it requires congress, seems that the list of things they want to get done perhaps comes above tariffs. annmarie: and a lot of spaghetti being thrown at the wall. great point on the tariffs, potentially they know the sequencing, have to get the tax cuts done before you can put the laws appeared coming up, we continue this conversation with safi said that raymond james as airlines see strong demand at the start of 2025. you are watching "bloomberg surveillance." ♪

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has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

annmarie: good morning. welcome to "bloomberg surveillance." two hours away from the cash open. futures this morning, as jonathan ferro would say as he makes his way back from switzerland, no drama here. s&p 500 with its first record high for the year. a lot of policy coming out of washington, d.c., that the markets like, especially when it comes to traders taking a sigh of relief because of signaling from the white house that right now donald trump does not want to use tariffs. he will if he has to but does not want to go there.

let's get you some of the other individual morning movers this morning with manus cranny. manus: do not forget about boeing, a big tech story. the numbers are so bad they decided -- it is a mini kitchen sink, a graveyard of charges on commercial, defense. they still have $30 billion on cash, stock down 1.4%. yes, they raise capital, but will that see them through the year? what will they do with some of the defense contracts, do they need to offload them? have a look at texas instruments, this company made a mammoth amount of chips, 70% of revenue comes from industrial equipment. $4 billion, way ahead of the street, but it was about the guidance. even if you take the middle, it

is still way below the estimate for the first quarter. this is about the signals, nine straight quarters of a drop in sales. they need that magical ai chip that can take them to the heavy levels of nvidia. novo, all about weight loss, their new drug is experimental. you take a shot over 36 weeks, if you take the maximum dose, you lose 22% weight loss. a placebo, you gain 2%. this reinvigorate's the head to head challenge between themselves and eli lilly. so they are building the mote again around ozempic for them at eli lilly. and great thank god you got a placebo, that is something you do not need.

under surveillance, president trump reiterating "massive tariffs on russia" and "big sanctions if president vladimir putin does not end the ukraine were." he also told world leaders at davos he is looking to partner with china divorce settlement. interesting here, trump is not backing down. he wants to meet them at the table but says the onus is on you, putin, and seems he wants to use china, which may be why the tariffs story is so interesting this morning. he wants to use china to put that rusher not just on putin but also on iran. sarah: because he cannot tell china we're slapping you a 60% tariffs, shutting down tiktok, and then asking for help with russia. it is a different tone not just on the china front, the fact he is placing the onus on russia. a campaigning trump would have said i could stop this war on day one, and a lot of that rhetoric surrounded ukraine may be giving up more territory, may be more meaningful to what

russia would have wanted. instead, it is a different scenario, one where trump is looking at russia to end this war, instead of ukraine. sarah: i think it is one of those things where he flips the script a lot. you start with this, then go to that. that keeps people guessing. on the positive side, the idea is your negotiating and moving so fast that people have to keep reacting to you. on the downside, it means no one knows what is going to happen and when it is going to happen. you say you can fix x, how do you do that when you are now flipping this? so it is part of what we're saying now but part of the beginning of this, the firehose of information. annmarie: coming from trump 2.0, trump white house, 715 news cycles today. but unpredictability when it comes to trump for policy is a teacher, not a bug, he does it on purpose. and republican senators are still working to get trump's

cabinet picks confirmed, votes expected on pete hegseth, and if lawmakers stick around through the weekend, treasury picked scott bessent and homeland security picked kristi noem, several up for nomination hearings next week, including rfk, kim bondi, kash patel, and howard lutnick. for some, it has been easy. senator marco rubio quickly became secretary of state. scott bessent will be confirmed. but then you have someone like howard lutnick and division and play, how will he enact his tariff policy? dani: certainly, and maybe february 1 looks like less of a realistic deadline here and maybe it is april 1, because he needs those people in place. in the confirmation hearings of people like howard lutnick will be interesting. the narrative has been the adulterer in the room. it is scott bessent that has the ear of -- the narrative has been the adults are in the room.

it is scott bessent that has the ear of the president. do we hear from the team of rivals and maybe in some different color we could get from trump come next week or even closer to april 1 that, again, it is not just at the bark is worse than the bite, but actual some bite that he will have a new era once these people get confirmed. sarah: while they are waiting to get confirmed, they can certainly be talking. that is part of what is going on. yes, the official confirmations are going on and they cannot be talking and advising and doing whatever, but if you look at february 1, maybe that is a now i have determinations in here as what i want as opposed to this is when it will happen. the timeframe pushes people to act faster. it is hard to tell. again, the unpredictability is the base case. and great you are right though, dani, to say a lot of the onus is put on scott bessent as the adult in the room. every conversation jon and lisa

had, whether it was ceo's, when asking about trump 2.0, they said they will folk confident that scott bessent will be running the treasury department. hopefully, potentially he will get confirmed this weekend. but when it comes to the cast of rivals, how much is he going to potentially have to fight the peter navarro's or the howard lutnick's when it comes to policy? dani: it works until it doesn't. the reason we say the adult is in the room is because what we heard from trump is different than a campaigning trump, different from trump on a campaign when he said day one he will take action and slap on tariffs, the fact it has not happened quickly has pointed to this, that scott bessent is having the ear. so it works for these markets until it doesn't. annmarie: under surveillance, tesla and filling an updated version of its model y in the u.s. and europe. tv maker reporting its first annual sales declined in over a decade earlier this month.

elon musk does a lot of business in china, but they are also making a lot of competition for him in other places. dani: it is so interesting that he is posting -- focusing efforts on the u.s. and europe, but doesn't show shift to focus more on u.s. and europe than china, a place where he has an ear of policymakers? he came for the inauguration. but he is in this scenario where help from policy from the chinese will get you so far. you have to look at who is really eating tesla's lunch, and even if you have the favor of china or get fsd more quickly into that market does not matter when china is so advanced and more cheaply priced at this moment. maybe you have to concentrate on american and european markets. sarah: tesla had not refreshed a lot of the models, especially in the u.s.. yes, byd is everywhere in the cars are beautiful and much less expensive. there is that aspect, too.

but to the extent that you need to refresh that and you had a massive fresh wave of adoption for people who really wanted in ev, but absent both government help and/or regulation, there is a limit to how many people want a pure ev as a new vehicle or their first vehicle, and you have to make that more palatable. this is where hybrids come in. but just a has to have something a little bit more exciting. at first, it was very exciting, than other people started to get in there, and you lose the first adopters. annmarie: especially they want to hit the cells target they talked about in the fall, 20 percent, 30% for growth and tesla vehicles this year. remains to be seen. turning to airlines, united and delta with better than expected demand, boosted by european travel and customer demand for premium options. but american still working to win back business customers as it struggles with high operating

costs. savi syth of raymond james saying strong revenue trends to close out 2020 four and improving further into the first quarter of 2025, an uptick in corporate travel, capacity, discipline appears to be driving this strength. you have a lot of optimism this year when it comes to airlines, but i want to start with the challenges of 2025, especially with things like the weather. how much has this heard the main carriers? >> it has definitely been a challenging start to the year. if you look at across the board, you probably have roughly 5% cancellations on average. that compares to 1% to 2% cancellations in the fourth quarter. and 1% cancellations last year. it is still early, and we will see how the rest of the quarter progresses. the silver lining is it is january, not a lot of travel happens. there are disruptions, but the

airlines also have the ability to re-accommodate passengers more because the planes are not full. a rough start to the year, and you put the l.a. fires on top of that. still pretty early. dani: apparently the good news is we are all getting on a plane to go to a conference in miami for whatever. at least sonali is. there was some confidence coming from these airlines, especially the ones that are international and have a really solid premium offering. so what went wrong with american? >> if you look at american, their revenue guidance beat expectations just as much as you side united and delta, so i think they are saying the same strong revenue benefits that competitors are seeing. domestic, transatlantic, really strong, and premium doing really well for them. i think with america, it was a little bit on the cost side where the miss came in.

we all expected costs to be a little higher, but it was a lot more concentrated on the first quarter. if you look out to the full year, it is a lot closer to expectations. so i think with america, it was a little more timing, but the topline line still very encouraging. sarah: if i think about the cycle and problems with airbus and boeing on delivering planes for a variety of issues, what is the point at which that stops and you see that capacity come in? some costs may be maintenance costs because we have planes that are older. what happens to both pricing and capacity when that bottleneck starts to ease? >> you are right, the maintenance costs have been a burden, not just maintenance costs but the uncertainty around the timing of when you're aircraft will return with maintenance, taking longer than in the past. the biggest pressure is labor costs.

even if you see oem's catching up and deliveries starting to come online, i think you are going to see good discipline in the u.s. end of the day, all these airlines need to pass through the higher labor costs, and that is what we are seeing today, just the supply environment being reject to being able to cover the costs -- being re jigged to being able to cover the costs. dani: you get this commentary during earnings that it is a kitchen sink moment. we expected it to be bad, putting it all out there. how many of these can we have? at what point can we expect boeing to actually start turning around cash flow? >> it is a big task, and i do not cover oem's and do not have a view on when they might stop taking charges, but it is a big task on hand. i would say talking to the

airline management teams in the u.s. and europe and north america, there's a lot of confidence in the new ceo and his ability to turn things around, but it does take time. so this does feel like maybe the low point, but how quickly we get off the bottom is more the question that everybody has and i do not think we have a clear answer yet. annmarie: how much is the currency market dictating where people are going and traveling to? >> it is definitely benefiting trans electric travel. japan has been a very popular destination, and i think the u.s. dollar has been a big driver of that. the u.s. dollar remaining strong is good for airlines in long-haul international travel and supporting some of these strong margins in those regions. and great totally, europe looks so cheap this summer. savi syth of raymond james, thank you for your time.

let's update you on stories elsewhere this morning. sonali: looking at american express posting a 12% increase in profits for the fourth quarter. consumers spent more than expected over the holidays, with transaction volumes on credit cards and other products issued by the firm rising by 8%. fourth-quarter net income came in at 2.1 7 billion, slightly missing estimates the company expects full year revenue to grow between 8% and 10%. watching novo notice, rising european trading after the pharma company reported strong results for its weight loss injection. new experimental shot delivered as much as 22% weight loss in an early stage trial, boosting investors hopes for the drug pipeline. the shot combines two mechanisms for weight loss in a single molecule, unlike the previous treatment. novo is also studying a pill

version. and kendrick lamar will have company during the super bowl halftime show. he revealed that frequent collaborator sza will join him during his super bowl performance. this will mark sza's first appearance during the halftime show, but lamar debuted alongside mary j. blige in 2020 two, and snoop dogg, dr. dre ,eminem, and 50 cent. and great i believe he got best -- annmarie: i have seen kendrick lamar in person and am a fan of sza. this will be an exciting halftime performance. dani: unfortunate for drake. drake has lost the battle. kendrick lamar is reigning supreme. i am excited. and rape first -- annmarie:

first rapper to be awarded that prize. pres. trump: investing in $600 billion in america from saudi arabia. and i will ask for that to be rounded out to run $1 trillion. annmarie: $1 trillion maybe coming from riyadh. that is next. you are watching "bloomberg surveillance." ♪

investment opportunities are everywhere you turn. do you charge forward? freeze in your tracks? or, let curiosity light the way. at t. rowe price, we ask smart questions about opportunities like advances in healthcare and how these innovations will create a healthier world tomorrow.

better questions. better outcomes. annmarie: under surveillance, investing in america. pres. trump: it was also reported today in the papers that saudi arabia will be investing at least $600 billion in america, but i will be asking

the crown prince, a fantastic guy, to round it out to around one trillion dollars. i think they will do that because we have been very good to them. my message to every business in the world is very simple, come make your product a link america and we will give you among the lowest taxes of any nation on earth. annmarie: president trump telling world leaders at davos he will push for a bigger u.s. investment from saudi arabia. the kingdom's estate when news agency saying the crown prince made a six and a billion-dollar pledge to trump on wednesday. a former senior u.s. intelligence official, norman roule, saying it is powerful evidence that riyadh believes the u.s. will remain its foundational security and economic partner for decades. thank you for joining us this morning. he is also part of csis. when it comes to the saudi's investing this kind of money in the united states, and trump now upping the ante, at the end of the day, is this riyadh choosing washington over beijing? >> good morning. in part, this is riyadh choosing

washington over the world. but this is also riyadh choosing the american high-tech sector over the world. saudi arabia's drivers or the success of the vision 2030 transformation of its society and economy. it believes that artificial intelligence will accelerate that process, provide jobs, transform the kingdoms industries. and all of that goodness, all of that power, will come from a long-term relationship with the united states. dani: it is not the only case that trump made headlines when it comes to saudi. he said he would ask saudi to lower the price of oil. is that relationship strong enough, is what saudi it's out of the u.s. when it comes to economic security and the things you talk about enough of an incentive for them to act in a way that might be against some of their economic benefit? >> it becomes more complicated.

first, this is an opec-plus decision. there are some opec-plus members that might be willing to produce more but some are at capacity. so this leaves saudi arabia, emirates, and kuwait. there is a tension that lower oil prices become the less revenue saudi will have to invest in its vision plans but in the united states itself. so i think you are looking at oil prices that reach the 60's, really cutting into the amount of money that saudi arabia would have to put in to meet its investment promises to the trump administration. sarah: that is a contradiction for asking more production if you think it will lower prices. you end saying, ok, where is that volume versus price argument? i think they probably have the capacity, but you could also envision there might be a small gift back on production because they are holding some back as

opposed to a major gift back on production. do you have a thought on how that plays out in the real world as opposed to just a request? >> the kingdom has two primary goals, market stability and maintaining the capacity to be a swing producer, driver to prevent any setting -- sudden shifts in the market. that would drive the relationship with russia because the capacity to impact the market. but the kingdom has less control over what happens in the united states in terms of its markets. so we are sort of reaching the high point of what fracking can do. the kingdom can produce probably another one or 2 million barrels on the market, emirates can do the same thing, and some from kuwait. in the end, stability in the market will be the driver of where opec-plus goes. annmarie: when it comes to the three big adversaries in the united states, china, russia, iran, president trump has really focused in on russia, putting

the onus on putin to get to the table. what is the strategy when it comes to ending this war? >> i think the strategy is clear. first, he assigned keith kellogg, and experience national security official, to work this, and general kellogg's work is continuing. second, he has gone to the ukrainians and has said you need a deal. but at the same time, just as trump encourages nato to increase spending against russia, he has encouraged ukraine to enlist 18 to 25-year-olds in its army. i think ukraine is ready for a deal, but russia has yet to come to the table in a meaningful way. that explains the president's comments on russia, russia's economy. russia is spending a tremendous amount of money on this war, talking over 40% of its budget now devoted to military issues. its labor market has been squeezed to the limits.

you are looking at a collapse of foreign investment. it has lost markets. this is really a tremendous blow to any of the world's economy. i think the president's views of putting more pressure on that economy is how he plans to bring this forward. annmarie: thank you for your time, norman roule of csis, former senior intelligence official. sarah hunt, thank you for joining us this hour. norm made a good point, he is also telling the ukrainians they need to do more. what did they say last night was sean hannity, said liz -- said zielinski is no angel. dani: zielinski has changed his tone when it comes to the u.s. and making a deal, so i think he understands. annmarie: next 100 days will be fascinating. coming up, kathy bostjancic and others. you are watching "bloomberg surveillance." ♪

>> having donald trump come at the office is a welcome change and we will let market forces

drive. >> he's looking to stimulate investment in the united states and foster innovation and growth. >> i only want to be in the u.s. >> every market is looking at the u.s. as a significant opportunity. >> it's a good thing for the world and the world economy. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and and reordering. annmarie: good morning. "bloomberg surveillance" alongside dani burger. also jay polaski joining us this morning. it is friday so we have to get you to the weekend. jon and lisa will be back with you on monday morning. markets relatively smooth sailing. we had a fresh record high yesterday, the first 425. a -- first for 2025. we're back in the fresh record mode. while jay polaski does not

totally agree with you and i, dani, nonstop policy proposals, darts being thrown when it comes to potentially but we could see out of this white house on everything from jay powell and interest rates to a realignment in trade. potentially a softer tone when it comes to those tariffs. dani: maybe this is a market that is a serial monogamous and can only concentrate on one thing at a time. the softer tone when it comes to china or this week was all about inauguration and the many executive orders we could see coming from donald trump. there was an expectation to get something extreme. we did not get that so maybe the market is just sighing with relief. annmarie: do you like what you hear out of the white house? jay: i have not been paying a lot of attention. it's working great. it's a great start to the year for us.

what the president says -- many different things at many different times. that's a fact. the jawboning with powell dropping back six or seven years. i've heard this before. i know interest rates better than anyone. some people can pay attention to that. what is of interest to us at tbw advisory is the melting together of two main themes. the global long cycle. the long cycle of economic growth. the second is the world of competition between europe, asia and the americas and the three critical areas of ai, climate and defense. annmarie: trump said we have one very big -- tremendous power over china. is that music to you and your firm's ears? jay: the way we view the world is this tryopova competition -- china has led the way in climate

with its industrial policy. now dominates the space. the west tried to respond hunter biden -- under biden. one of the new president's first rules was to cut the infrastructure act. now we are looking at europe to respond. our view is that with the german elections coming up germany will respond because it has to. it has been stagnating for two years. we expect to china in march to provide further stimulus. it has to. not because of trump. not because of trump but because it faces deflation. it understands it has a massive trade surplus. they have done a great job of diversifying their exports away from the united states. we have read estimates that even with 60% tariffs the impact on china will likely be roughly 1% of gdp.

60% tariffs are not going to happen because i was sent inflation through the roof and blowup the budget deficit. the things that matter are fiscal space. who has the physical space to compete in ai, climate, defense? who has the governance capacity to do so? the u.s. has neither in this administration. fiscal space, governance capacity. we are looking for a broadening out geographically of the growth cycle. germany is stimulating. china is stimulating. commodities are breaking up. super bullish for our thesis. what we are looking for next, non-us equities break above their resistance levels and signal the global market -- the equity market is broadening out. annmarie: yesterday the first

record for 2025. another for the s&p 500. futures are relatively unchanged. the global bond market, the u.s. 10-year yield, basically starting off where -- talking a. we are higher on crude even though the president is telling opec at darrell to the market. coming up, jay polaski sticking with us. we will get more of his thesis. kathy bostjancic looking to the first fed decision of the year. libby cantrill of pimco on president trump's economic agenda. we begin with stocks mixed. on track to close at a second case negative week higher. some breathing a sigh of relief as president trump seems to back off aggressive universal tariffs. jay polaski saying we anticipate year three of bull market type u.s. equity returns.

much tariffs risk has been priced in. we are focused on the dollar. tariffs are usd bullish. we are not so sure." jay joins us now. even if you're not listening, the one place listening to trump loud and clear is the currency market. jay: yeah. the dollar is key to us. if it rolls over, that is bullish for the non-us equity exposure we are focused on for 2025. as we wrote, the u.s. will be single-digit type returns for this year. that is what typically happens in year three. a bull market needs to rest. no room for expansion. american exceptionalism at risk. there is no room for mistakes in the u.s. that is the main thing to take away. where there is room is the rest of the world. the dollar rolling over suggest to us it is starting to think about where are there opportunities elsewhere?

germany has done nothing for years. if the policy makes improvements in china and growth continues to pick up, no one is invested there. china is "on investable -- un investable." fxi has massively outperformed the s&p over the last year. massively outperformed. 45% in the last year versus the s&p up 27%. kweb has outperformed the nasdaq over the last year. nobody talks about it but it is reality. whether or not there are tariffs put on china and mexico and here's the thing, he has talked about tariffs in the last couple weeks. mexico was up over the last month. china is up. the dollar is down. what does that tell you?

we like to pay attention to the markets. we want to follow the reaction to the news. as you pointed out, annmarie, trump is talking about asking people to produce more oil. what is the brent doing? it is up on the day. it is brushing that of complete the. dani: there is so much to unpack but is it ignoring the wholesale completely or ignoring but also have something in your back pocket if it is not just bark worse than bite? if there are big tariffs put in place? or do you discount that completely? anything coming on the white house, i don't need to pay attention to it all? jay: earnings is key and earnings will be good. the thesis is the global growth cycle provides the underpinning for the global equity bull market through the earnings channel. earnings and growth come from the spending and the competition

amongst europe, asia and the americas. ai, climate and defense. they are huge and therefore that is what drives us. if there is 60% tariffs on china, yes, china will be affected. anybody worried about tariffs in china is not invested in china, period. that is why the market does not react to the news. secondly, 60% tariffs would destroy the u.s. economy. it is not going to happen. president trump knows. he was elected because people were upset about the inflation. he knows and his advisors know . scott bessent is a global macro guy. when was the last time we had one of her own is a treasury secretary? that's great. they understand there is very little room to maneuver in the u.s. 6% budget deficits.

interest rates at 5%. the dollar at an all-time high. our view is u.s. assets have been the only place to be in the last 15 years. all the world's money is here. it is priced for exceptionalism. massively priced relative to the rest of the world. we want to say you can have that and we still have positions in the u.s. our focus for 2025-2026 is the u.s. led the way. now the rest of the world will catch up. the rest liberal trades at 13 times forward earnings. the u.s. trades at 22 times forward earnings. earnings at savio's are respected to be better than the u.s. in 2025 and 2026. nothing is priced in in terms of better policymaking. they have the physical space -- fiscal space. germany and china, growth to gdp

in the 60% range. the u.s., 120%. dani: it is the idea that michael purves talked about. trump making europe great again. we heard from other people the bar is low. i go back to conversations at davos. christine lagarde said he would not be pessimistic to say europe is facing an existential threat. you heard from the ecb saying trump should be a wake-up call for europe to push structural reform. europe's competitive problem will get bigger with trump's economic policy. how much of this the barlow versus who actually needs to see europe come together and put in some structural reforms? you were talking about germany and what they can do but how much does it need to be europe whole project to make the region attractive? jay: that is why we talked about regional competition. it is not germany, the u.s., china. it is regional. the president in talking about america first is going against the tide.

that is his brain and that is what he does and has worked for him. -- his brand. no country has what it needs to be successful in today's day and age. it is regional. it is who are your friends. europe has a good position but it has not used its weight. it has not made that move to say we are fully european. we need to joint spend and joint tax. they did it a little bit with climate and a little more with defense. they are not a bracing it. they are nowhere on climate. the auto companies are getting destroyed. germany's auto industry is in shambles. they are nowhere on ai. nowhere. they are thinking about spending more on defense. here's the thing. what happens if there is peace in ukraine? is the reconstruction bullish for europe, bullish for the euro? is that bullish for rates? it seems like it would be.

it is really the competition sharpening. it is existential. it is ai. you have got to have it. it is climate. it is defense. you have to be able to defend yourselves. that is the world we are in. who has the physical space and governance to do it well -- fiscal space? look at ai. all the talk about ai in the u.s. china just launched its large leg was model deep seek. as good according to independent experts pretty much as anything the u.s. has. done at a fraction.of the price and we could spend years trying to block china from the high level of the semiconductor space. that is why we are in k web. yes, the u.s. is walling off its tech space from china. china is doing the same. look at apple.

perfect example. annmarie: we will talk about apple in the next block. jay: the market share is declining rapidly. therefore they are suffering and their stock is suffering. china is going to compete. asia is competing. china net exports more to southeast asia than it does to the u.s. it is in a better shape than it was for five years ago to deal with president trump and president trump probably understands that. for us, global growth cycle. we are in year two or three. they can go another two or three years. bull equity market for another two or three years. the u.s. has been the lead. now the rest of the world is catching up. we want to play in the laggard opportunity space. we think emerging markets will do very well. we think china will lead. no one is invested there. 12 times earnings. the opportunities are really significant. commodities breaking out is a

key to us. it is telling us the global economy is going to be fine. one the non-us stocks breakout, it is everybody in a food fight and we are already there. annmarie: you are sticking with us. jay pelosky of tp to view advisors. stories elsewhere with sonali basak. sonali: firefighters in southern california are making progress battling new wildfires with much-needed rain. up to an inch of rain is expected as early as saturday, which may bring an end to the drought conditions that have worsened in recent months. several blazes are burning across the state with the hughes fire at 36% contained. more trouble for bowing. they suffered more losses and charges in the preliminary fourth-quarter revenue report. in a surprise announcement, the aerospace giants said it sales

missed expectations as last year's strikes impacted result. boeing is set to release full earnings on tuesday. novak djokovic shocked fans of the us really open after retiring from the tournament and his semifinal match against alexander zverev. he had to leave due to a muscle tear in his left leg. zverev faces janik sinner in the final. madison keys shocked her ranked opponent moves on to the final where she will take on arina sabilanka. annmarie: the morning calls plus mandeep singh as we look ahead to big tech earnings. that is next. you are watching "bloomberg surveillance." ♪

annmarie: good morning and welcome to "bloomberg surveillance." bernstein upgrading netflix outperform, citing its subscriber growth and rising operational leverage. we have td cowan raising its price target on alaska air to $110, upside in the hawaiian airlines archer -- merger. finally, bank of america, cutting price target on apple to $253, citing the week macroenvironment and staggered loss of apple intelligence. we want to stick with tech. bracing for earnings week. meta, microsoft, tesla and apple set to report. bring the tech earnings up. you should have been the first week of the earnings period nvidia at. the end is annoying. dani: do they get a

downgrade? annmarie: i agree with jon. i like that they come after the bell. you can read through what you want instead of this firehose in the morning. mandeep, what you focused on when it comes to earnings? mandeep: there are two pockets. tsmc results were strong for ai. the price increase to the pop line. google and meta should do well in light of that. google, because of clout acceleration last quarter. microsoft is the same thing. 0 billion this quarter should be a stronger gain. all the signs are the cloud segment is what is accelerating on the add side, the tiktok uncertainty should benefit the likes of meta or youtube shorts. that is were i think the set of looks really strong. microsoft with all the drama going on with project stargate

and them not being a piece of it, they are disciplined on capex. they are not going to go big on the capex side. if they show revenue acceleration on the cloud side, it should be a strong quarter for microsoft as well. dani: what happens with apple? there is stream pessimism over the last week and over the past month or even more than that with shares down 11%. what is going on? mandeep: a bunch of things but the biggest factor is the tariff situation. they are the company that is most exposed to china tariffs. 10% universal tariff or some other number, they get half of their cogs related to china. any sort of import on the tariffs will impact them. not so much google and meta, although i would argue it would impact the data center buildout. they're all these dynamics.

apple doesn't have their own barge language model. there are uncertainties on the software side and that is what is playing up. jay: it is interesting what is going on in china. apple is losing market share rapidly in china to domestic producers as china starts to wall off its tech space from the u.s. companies, much as the u.s. has done to china. mandeep: that is not a new story . the whole thing came about in the last year. they were losing some share and a quarter and then the stock ripped higher. when it comes to apple, people realize it is hard to move out of their ecosystem. you can delay the upgrade but you will not come out of the apple ecosystem. yes, they are not signing up more people in china but -- the install basis is so sticky that it's hard to argue that apple is losing share anywhere. i would say the same holds true for china. the numbers have been steady.

they have not been growing as much as other regions but to my mind it is more with the tariff uncertainty and the apple intelligence launch. annmarie: tim was at the inauguration. is he asking for a carveout? mandeep: the whole tariff situation is so uncertain. yesterday there was news there won't be any tariffs on china. it is hard to really pin assumptions down heavily impact their costs. the companies that manufacture their goods in china -- apple is not the only one. gm or even tesla, they are exposed as well. they are companies building the data centers, even those of exposed the some level. apple is the most exposed. annmarie: yesterday trump blasted the european union in terms of their regulation on tech firms. do you think these tech giants will have a friend at the white house when it comes to regulation in europe? mandeep: if trump place tough,

which he is with the regulators there and does not want the regulators to find these companies -- fine these companies, that has been an ongoing problem with the rollout of ai. it involves using data for training. meta told the eu they will not even roll out there ai over there because they can't use the data. i think it is a positive for big tech if he is acting tough. annmarie: mandeep singh, thank you for joining us. that is mark zuckerberg's focused. . dani: you see what they have done with the fact checkers. they got rid of them in the u.s. but notably they have had to keep them in europe because of regulation out of europe. it's an uneven application to have around the world. perhaps by becoming closer with the trump administration they have a champion in the white house that can turn to europe, and to trump's point, europe has been unfriendly and he's going

to threaten economic consequences unless things change. annmarie: jon and lisa said the u.s. innovates, china replicates come europe regulates. i think we will see more that this year. up next, kathy bostjancic of nationwide. you are watching "bloomberg surveillance" this friday morning. good morning. ♪ ♪ (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place.

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annmarie: tgif. happy friday. first full working week of a new president. we think he is kind of touching, or talking about rhetoric hitting basically every part of financial markets. we saw that yesterday in davos. this morning futures a little bit softer, but yesterday we did have u.s. stocks hit their first record high of 2025. we are one hour away from the cash here is your morning movers with mr. placebo, manus cranny. manus: the numbers were so bad

kelly told the market, i have lost five dollars $.46. the market. i was going to lost $1.55. by kelly ortberg. this is a graveyard of one offs. commercial, airline, defense part of the business. what are you going to do, how are you going to turn it around? the transportation secretary nominee has given a written statement. i'm not taking the cap off of the mag seven 37 production until those people who are qualified inaa have given me the confidence to do so. until you release the cap on the 737 max this narrative is going to be hard to change. it is a graveyard of one-offs. dreams go to die. texas instruments. you produce for the industrial base and you don't have this you get sauce for the ai chips that you can really squeeze the margin on, that is the story in

texas. what you have is going to be a bumpy road in the first quarter. way below the estimates of $1.17. you had nine straight quarters of the sales dropping on these big industrial chips. therein lies perhaps a red flag to the overall momentum in the economy. 20% of their revenue is industrial and vehicle chips. you need high revenue chips to deliver. novo nordisk, it comes to glp-1's they have a new drug and it is doing well. it is experimental. take the high-dose, you lose 22% white in the six weeks. if you take the placebo, of course i was joking that i get the placebo, you gain 2% over the same period of time. this is reinvigorating the head-to-head challenge with eli lilly and southbound. it is about doing that mode in glp-1's. never mind the mode in chips.

henry, good morning. annmarie: thank you so much. looking ahead to next week the fed's first rate decision of the year is coming on wednesday. kathy bostjancic writing, unwavering consumer resilience reinforces the consensus that the fed will hold off on policy changes in the near term. however, we see the fed resuming rate cuts in the second half of 2025, lowering the fed funds rate a total of 50 basis points this year. kathy joins us now. i could be cute and say this is because donald trump is telling the fed to lower interest rates. tell us what you see that you think the fed is going to be able to resume those rate caps. -- rate cuts. kathy: good morning, annmarie. see strong disinflationary impulse in prices. particularly we have been encouraged that service inflation, which has been stickiest, is showing some retreat and improvement. particularly rental inflation. given that it comprises such a

large share of overall inflation we think that, you know, it is really encouraging and does allow the fed and gives room to start to cut rates in the second half of the year. there are some caveats around that, and one reason we think the fed is going to wait out the first half of the year is become -- because of some of the uncertainties we have spoken about on tariffs. we have seen inflation still out over the, -- over the last couple of months has been the goods portion of inflation, core goods are still falling, but at a slower rate. if tariffs are implemented and sizable that is going to hit goods prices notably. i think the federal reserve wants to wait and see. it is not just tariffs or changes to immigration, but also the strength of the economy as we go through the first half of the year. i the second half of the year it gives them room to start to cut rates. dani: if they are waiting until the second half of the year i want to go where annmarie hinted at.

a donald trump who said he would demand lower rates. what happens? what happens when you have a fed that essentially as soon as president trump is inaugurated, they put the right cycle -- the rate cycle on pause? the rate cutting cycle? kathy: he upped the rhetoric and the pressure on the federal reserve, but chairman powell has been really steadfast in trying to maintain the fed's independence, and i expect that to continue. there is no opportunities, really, for new chairman in the next six months, or even fed governors, frankly. i think the fed is going to be pretty immune to that pressure, which will be ratcheted up. but one thing i think the administration has to keep in mind is if the fed cut rates and let's say inflation was picking up the economy was strong you could get an adverse effect. what we have seen his long-term

yields rise. that is really what matters for corporations and things like organs rates. i think you have to be careful what you wish for from the federal reserve. >> do you worry at all about tariffs leading to inflationary pressures that force the fed to hike rates rather than cut rates? do you have any sense of the odds of fed rate hikes over the course of 2025? kathy: this is a good question and i know it is gaining some attention here. my sins, or our assumption is that the tariffs will -- that are enacted will have a moderate impact on inflation, meaning they are going to be strategically-placed and it will have a price level change, but not necessarily inflationary, winning it is not year after year prices are going up. to put that in perspective if we

had 25% tariffs levied against canada and mexico, which is not our baseline and may not come to fruition, even then you are getting half a percent added to inflation. that is a lot, but it would push us a little bit above 3%. i think the fed would also look through that. as long is it is not year after year increases the fed would say, this is a price level, it is actually a tax on the consumer and economy, but not inflationary. so they would not raise rates because of that. dani: perhaps we need to take a page out of jay's book and stop listening to the president to make our market-trading decisions. is the more important thing to listen, not just listen but see the action and consequences, is immigration? open up your econ 101 textbook you learn something that was along the lines of, wage price inflation is you get that concern about wage-inflation spiral. is that more concerning than tariffs? kathy: i would say that certainly the impact would be

higher wages. if we have a dramatic change to immigration flows, yes. but if it is targeted to the undocumented workers it tends to hurt sectors more tha the overall economy -- then the overall economy. it would impact agriculture and construction that is where the bulk of the undocumented workers are right now. but overall i don't think it is going to have a huge pickup to wage growth. even though we have a tight labor market it is going to be centralized. so not overly-worried now if we had a complete stoppage of immigration inflow, which is very unlikely. that would be a different story, but that doesn't look to be the path you're headed towards. annmarie: thank you so much for your time this money. kathy bostjancic of nationwide. ashok bhatia of neuberger berman making two bold calls. the first, that the u.s.

government delivers above-trend growth while containing inflation. the second is that the bond market shifts focus to growth and fiscal policy. i'm just getting back from washington, d.c.. you think they can contain inflation, but all of this fiscal policy they are talking about, tax cuts, deregulation, this is one to be a lot of spending. isn't it almost a vicious cycle? ashok: well, we are in a bit more of an optimistic camp. what we are going to get is immediately these discussions on tariffs and immigration. then as you noted we are going to turn to the budget and spending and tax cuts. our sense is that what we will get is a package where the market concludes this spring that the deficit is being stabilized. we are running about a 6% 6 -- 6% fiscal deficit and our view is as long as we have this package of policies where the market can conclude it is stabilizing we don't need that

reduction, we just need stabilization. that is going to be enough of a support for bond yields. bond yields have started -- and you spoke about it -- pricing in term premium and some of these risks. i think if we get some incremental good news on this the bond market will take it as a positive and as a shift in the expansion we have all been seeing of fiscal spending. dani: there has been so much volatility. is there not a degree that even if what is accomplished, because of the volatility there needs to be a higher term premium, especially on duration? ashok: i agree with that. i think the end game of this is a steeper curve with term premium. we have seen term premium move from deeply negative levels. you know, this was when we had very flat, inverted curves, and central banks buying government bonds. and even more external central banks buying treasuries.

it is coming back up and i describe it as we are in moderate levels of term premium. if we are wrong and all we get out of the budget is tax cuts and more spending there is scope for it to go higher. on volatility, there is -- and i think our central case is that -- and it is similar to what kathy was saying. this is going to be a year of relaxation of inflation. it's going to be a year where the fed can reduce interest rates twice, maybe once. we are priced for a reasonable terminal rate. if you get that from the fed plus a little bit of deficit stabilization, that is a pretty strong outcome for the bond market and i think we would see a little less volatility compared to what we have been seeing the last couple of years with term premium and the central banks in motion. jay: which do you expect to see first, and a 10 year over 5% or below 4%? ashok: low for .4%.

-- below 4.4%. we think it is more likely at this point that you will see some evidence of -- you know, we saw the cpi print last month, and i think, coming back to what kathy said, i think there are important comments about what is going on with services, inflation. we would add in what is going on with shelter inflation as well, going to push inflation down. but we think it is more likely the next few months, ringing a little bit more stability in the jobs market, coupled with lower inflation numbers. given where we are that is probably worth adding 25 basis points more lower 10-year yields. jay: so, 4.4 percent is in the picture. where do you see it going to? is it 4.25 percent? is it 4%? i'm curious how far you think this can really go? ashok: our view is that the

terminal rate -- and this could be this year, he could be next year. the timing of this is tricky but ultimately we think the fed is going to get down to about 3.5%. if the policy rate, the fed funds rate ends at the .5% that kind of says the 10 year rate should be 4.25%. i think that is a good intermediate term fair value, and recognizing that bond markets often overshoot one way or the other. if you do see it down to 4%, but this is still -- you know, rates are positive. they are going to stay positive and i think broadly speaking this 4% to 5% zone is, we are going to spend a lot of time over the coming years in this range. dani: i also feel like what you are saying is music to people who have to put together a cross-asset portfolio. is it your estimation that we are going to have a bond market that is calm? that you can finally prop up

against risk assets for the thing that protects your portfolio? are we getting back to some sense of normalcy? ashok: it is our view. you know, i think you are going to have a limit, just given the amount of rates that they could potentially decline. there is going to be a limit to these diversification benefits, but certainly, you know, coming back to 2022 and the hiking years, fixed income can have hedge properties against risk assets. i definitely agree with that. picking up on one thing you said, on multi-asset portfolios, we are paying -- one thing we are paying a lot of attention to is the dollar, obviously coming off a very strong levels. we are starting to see this and it is a little bit her message on tariffs. some of the strength in emerging market currencies a little bit, movement of the dollar, weaker against the euro. these are tentative moves, that

in addition to rate stability if you can get the dollar to stop appreciating and contain weakness that is something else that introduces some new dimensions to these multi-asset portfolios. annmarie: thank you so much for your time this morning. ashok bhatia of neuberger berman. up next, we are going to set you up for the week ahead and donald trump hitting the road. you are watching "bloomberg surveillance." ♪ ♪ i can't believe you corporate types are still at it.

just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

annmarie: good morning. we are going to count you down to the opening bell. he was the trading diary for the week ahead. at 10:00 a.m. we will get you you mission sentiment. wednesday, of course a fit -- a fed rate decision followed by a chair powell press conference. we already know what those questions are going to be. probably what the president said yesterday, that he knows

interest rates better than him. did not name him, but we know who him is. earnings from microsoft, meta, and tesla. and thursday apple and intel report. president trump traveling to fire-damaged areas today. march the first trip of his second term. joining us now is libby cantrill of,". he is making a ton of news. it is the first full working week of his administration. a slew of executive orders. telling the saudi's to add more barrels to the market. last night seemingly signaling to china that he has the power to tariff them but does not want to use them. libby: it has been flooding the zone. it was drowned out because of all of these executive orders. our clients are focused on tariff risk.

taking some comfort in the fact that president trump has not done anything definitive on china or other countries. we think it is a little premature to start celebrating. they did issue an american first -- america first trade example. it goes from everything from rewriting free-trade agreements to looking at currency relationships, to looking at out on investment. i think what we are telling our clients and telling our traders is, let's not celebrate this too prematurely. this is a deep-seated ideology. there is a revenue component here, but also he believes in tariffs. he believes in tariffs in terms of reducing the trade deficit. in regards to china it is complicated. there are other things the president wants from china as it relates to the ukraine war, for instance, and i think is intentionally slow-walking

tariffs or actions on china. we should not conflate that with no future action because i do believe that terrorists will be increasing, probably across the board, but also on china. annmarie: when it comes to the signal he is sending that has been a huge relief, even just today in asia, in europe, in global currencies. the dollar is much weaker. when it comes to china it is not just the war in ukraine, it is also take back. where does all of this -- also tiktok. where does all of this stack up? libby: that is an open question and i you think these are our different dimensions. if an advisors care about different things here. as we have talked about, he has a cadre of folks advising him under trump to point out that are also -- there were also there under trump 1.0 that do not trust the chinese. they view that the chinese did not honor the phase i one trade agreement. there is going to be a real review. in this memorandum there is an

order to look at the phase one agreement to create a scorecard around that and publish that. i do think actions are likely coming on china. i think the market should celebrate the fact that it is going to be intentional. it is going to be strategic and maybe not the worst fear that the market was predicting. dani: can i go back to where we started? this fact that we got so much this week? it was a reminder that you have him talking to reporters making news, posting things on social media, making news, giving different speeches. it is a lot. what is your advice to your clients in how to sort through all of it and what to pay attention to and what you can more? libby: great -- what you can ignore. libby: great question. what drives bond yields, growth, inflation, currency at the end of the day in terms of the u.s., anything that will have a tangible impact on those drivers. a lot of these executive orders,

i called them more sizzle than steak. -- i called them more sizzle than steak. a lot of them will be more substantive. i think on the federal workforce, some of the things he has done in terms of the hiring freeze, rolling back di, while that might have a long tail, that will have an impact and potentially incrementally on the budget. at the end of the day the big things that drive the markets big mac removers. a lot of that has to do with congress. -- big mac removers. a lot of that has to do with congress. navigating incredibly narrow majorities. and so, i think the focus will probably turn away from him a bit and onto congress once they start proceeding with this reconciliation bill and taxes and spending cuts and what have you. jay: i'm curious as to how important the foreign investor base is for treasuries. we have a tremendous amount of treasury issuance coming this

year. the dollar starting to weaken. for an investors very heavily invested in u.s. assets. is there any concern that perhaps this could build on itself and foreign investors could become less interested in treasuries and pushing the yields up and prices down? libby: this has been a concern around the dollarization, around central banks diversifying away from dollar-based assets into a basket of other currencies and other sovereign assets. i'm not sure we have really seen a lot of data that supports that. in fact, when you did see some foreign buyers pull away over the last few years you actually saw some domestic pension plans and institutional investors fill that gap. it looks like there has been more activity in terms of foreign central banks. that is probably because yields look nice, right? it is the u.s. bond market

actually looks pretty attractive right now from a nominal yield, but also really yield perspective. if you think that maybe he is going to do something on terrace but it will not be the full monty on tariffs, then maybe you are starting to curtail and -- dip your toe into the waters. don't see that as a real concern and there seems to be a lot of domestic demand that has supplemented that. annmarie: does he wait for tariffs because he wants the good news that can happen with a reconciliation, what he calls one big, beautiful, power for bill to come out? bake in the good news first in the markets and potentially add in some of the not so great stuff? libby: there is going to be a consideration about eating your vegetables, and i think giving both to the market so they are not just trying to chew on one and not the other. again, as we all know, folks in this administration our markets-oriented. president trump views the economy under trump 1.0, the s&p

under trump 1.0 as part of his legacy. i think they're going to be mindful of all of this. i would not confuse this with the fact we are not going to see tariff action. i think maybe something in the marketplace that is not being taken as seriously is the threat on canada and mexico. usmca review is coming up next year. it sounds like president trump might want to pull that forward and the terror threat might be associated with that. annmarie: the review started. he is negotiating, libby. it is on. libby: who will be negotiating that on behalf of canada, tv -- tbd, obviously, but that is part and parcel of this. we have been focused on the potential china actions. they might be much closer to the united states, our neighbors up north. jay: annmarie: libby cantrill of pimco and jay pelosky, inc. you for joining us for this hour. jon and lisa will be back with me. seema shah of principal asset

management, victoria fernandez, neil dutta, and oksana aronoff of jp morgan. this was "bloomberg surveillance." ♪

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katie: a little bit of a dip in futures after hitting all-time highs yesterday. happy friday. dirty minutes until the start of trading. i'm katie greifeld. sonali: and i'm sonali basak. matt miller is off today, and bloomberg "open interest" starts now. katie: coming up, a softening stance. president donald trump says he would rather not put tariffs on china. the dollar drops. we round out this week with insight from the c-suite. the ce