>> may be the mag 7 are not as dominant as they have been. i don't know that that's a bad thing. >> the game will change as far as the ai ecosystem is concerned. >> 34% of the s&p. we are tied to the seven stocks and in particular to nvidia. >> it's a threat to the expectations we had coming into this year. >> u.s. exceptionalism can persist, but perhaps not to such a degree. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jon: good morning, good morning.

bloomberg surveillance starts now. coming into tuesday following a steep deep seek inspired selloff in the market. from the biggest one-day selloff of the year so far, nasdaq 100 futures are posited by .6%. the main event yesterday, nvidia. nvidia getting hammered yesterday, down by 17%. a record 593 billion dollars taken off of the market cap. this is your very small bounce in comparison to the big selloff. up 5% in the premarket. lisa: there are real questions about if we have overplayed how much investment in chips is necessary to generate some of the large language models people are talking about that could be transformative. it is interesting that this is a reversal of everything we've seen over the past six months. big tech sold off, nvidia, the former leader was the big selloff. everything else did ok. the s&p equal weight was pretty much flat.

jon: slightly positive. kind of bizarre that the rest of the equity market was ok, had a decent day. what yesterday gave us was a decent read on the scale of how much is in the price, not just the tech players but elsewhere. nat gas producers, down 10%. pipeline operators, down by 9%. utility companies, constellation energy, was down by more than 20% in yesterday's session. lisa: it highlights how everyone jumped on the narrative that the buildout was basically the more the better. the more you spend, the more chips you bought, the more you invested you would get those returns. that happened until yesterday. now you have research affiliates, ray dalio, saying this was a bubble. it is 2000 all over again and welcome to the new reality.

jon: a few stories already this morning, and not just this one. also the trade story. euro-dollar last week had its biggest weekly game going all the way back to 2023. the euro strength and dollar weakness, reversing some today. the euro down. the trade is back on the agenda in a big way. annmarie: i don't think it went anywhere. yesterday, the market became aware that this potential threat of tariffs is real. donald trump was in miami talking about items he would want to put tariffs on like aluminum, copper, and steel/ when asked on air force one what he thought about a report in the financial times about the newly elected confirmed treasury secretary saying maybe we would do 2.5%, this is what the report said scott bessent would like when it comes to tariffs, trump said we would go bigger. that threat is keeping the

market on the edge. lisa: it goes back to the initial week after donald trump was confirmed and inaugurated. this is really the guinea pig for all trade policy. the dollar, the currency markets, and how much they can get whipsawed by competing reports at a time when trump is saying i have in mind the amount but i won't tell you. google has changed the gulf of mexico to the gulf of america. you can see that on select programs. annmarie: select programs in the united states. you can see both of them if you are international. trump says, i have it in my mind. he has concepts of a plan, the market just doesn't know what they are yet. jon: core uncertainties have yet to be resolved. it is january 28. core uncertainties have yet to be resolved and they may not be resolved in the next few weeks either. lisa: why does it elicit such big responses in the currency

markets when we have seen with columbia that it can be used as a negotiating tool and quickly unwound? jon: equity futures on the s&p up 5.4%. coming up, we will catch up on the ai-fueled selloff. and matt bryson following nvidia's market wipeout. the nasdaq 100 coming off of its worst day in six weeks. deep seek challenging the high valuations of u.s. tech stocks. i remain skeptical of cheap ai claims but this moment could be as important as the unveiling of chatgpt. kicking off the program with a statement from nvidia to get your thoughts. deep seek's work illustrates how new models can be created, leveraging widely available models and compute that is fully export control compliant. why did you make of the last line? do you believe that it is fully export control compliant?

>> have they subverted some things they are supposed have access to indirectly or directly? there is compute you can borrow. did they figure out ways to get that? or more scary, have they been working on their own chips? you can make smaller nanometer chips without the technology, it is just inefficient. and speed coming with how they package semiconductors in a chip and how they stack them. that is a lower technology requirement. maybe this is just coldfusion and it doesn't exist. maybe there are workarounds. maybe they've been developing something that will be important from a geopolitical strategic standpoint for president trump to deal with. lisa: what the implications are and why it matters. if this is something that really did use export compliant chips and shows a new innovation in terms of efficiency and scale afoot you can do versus a new front on the cold war

technology between the u.s. and china? nikos: even if it is export compliant, many companies won't be using chinese-based ai. this is open-source. we should expect these efficiencies, if true, to rapidly evolve and develop in the u.s.. it is open source, the u.s. can figure it out and develop it. i wouldn't recommend any u.s. corporation to use chinese ai and give your data to china. we are worried about tiktok. this would be far worse. tiktok has a scrolling through random stuff. this would be what questions are you asking and what is important to you. i wouldn't touch that, export compliant or not. lisa: i am wondering, you mentioned openai, this is a similar type of development is openai.a lot of people said openai was responsible for the u.s. not falling into a recession post-pandemic. is there a similar transformative moment here that

marks the gap between investing in chips and the broadening of tech use? peter: you almost have the reversal. whatever happened after chatgpt you saw ai stocks do well. it may spread to the rest of the world. if ai is cheaper to access and develops cheaper, why not use it more? why can't more people get involved? even with the mag 7, meta and apple did well because this would potentially reduce their spend. this is probably good for the economy if true as the efficiencies will get developed. it is probably less good for ai chip manufacturers. intel did well because this is more bread and butter. my biggest question yesterday was all of the energy selloff related, is that overdone? i don't see this being the end of ai. i haven't done the work, we are trying to assess is this a cheaper version that's less energy dependent or is the energy dependence going to be

the same or increase as people adopt? the energy selloff is where i'm looking for opportunities today. annmarie: trump called it a wake-up call that the u.s. needs to be laser focused in this geopolitical race. if the u.s. will be more laser focused, he announced stargate wanting to put more money into this with public-private sector partnerships, is now the time to buy chipmakers? peter: yes, the more basic ones in particular. we will see a broader extension of the chips act. that had a lot of strings attached, environmental issues and other issues attached to the money. i think trump will go all in and say that we need to make chips domestically. how many chips are being made in taiwan and being shipped past china? we did potential black swan events this year. what happens if china doesn't embargo around taiwan? our chip industry would be crippled. that is a huge focus and it

makes a ton of -- and makes a ton of sense. jon: is it commodity, commodity producers, where do you look first today? peter: not commodities themselves, necessarily. i think drill, baby, drill or better yet refine, they become a refined will be the mantra of this administration. we will pull things out of the ground. when we take oil we have to ship it overseas to turn it into something useful like diesel or gasoline. i don't like that, but i like the producers. anything that's heavy equipment, part of the logistics and in the structures, i think that it will be good. i like the utilities. be careful and pick around, but i think some of it will do well. it will be a little regional. utilities will benefit from putting data centers in sparsely-populated areas. if you look at where bitcoin mining went, they use things

that were flaring and they can put the bitcoin mining at the source of the energy. i think that you will see a lot more of that going on because you don't need more people for the data center. you need the energy. jon: talking about the data centers, the chips, the energy providers, window we talk about the adopters? is it time to make the shift that the perceived value might be somewhere else? peter: this should help u.s. efficiency and be good for the broad markets. i said that the russell 2000 might be too small, but the s&p 500 equal weight is where the benefits should come. some of the innovative companies come this is the first time we've seen a small start up to something. going back to 2000, everyone was looking at the innovators. who will be out there searching for efficiencies and stop looking for the people with the most amount of cash? look for who has the opportunity for the real multiples of growth. lisa: we didn't talk about the fed yesterday.

the fed decision is tomorrow. no one is particularly excited for it. they expect it to be no change and not a lot of insight. there was a move in the bond market yesterday on the heels of what we saw on the tech space, which was i bonds, yields lower, expectations of growth lower. do think that that has legs? is that telling us something about what the ramifications of the tech developments are? peter: it is telling us a little about that. we are seeing a lot of chatter that the rent is coming down. that has probably been the last outlier of cpi. what will they be looking at on the jobs front? i think some data has overstated the health of the jobs front. the put rate is like a crowd source where people actually decide if they want to put or not. you look at the impact of immigration, i don't think that it's a problem because the lower paying jobs are not that robust. does powell stick with the official data and not talk about

cutting come or does he hint that the labor market is soft and that puts cuts back on the table? there is that potential and i think trump would be all over that. jon: deutsche bank came out with a note yesterday that i'm not sure if you saw it, but gains likely contributed a percentage point to consumer spending in 2024. lisa: when you have a 401(k) plan or investment portfolio doing well, people spend more. that is why openai and the boom in tech, some people say that it was single-handedly responsible for the u.s. avoiding a recession. jon: econ 101, the efficient allocation of scarce resources, if we can demonstrate we are able to achieve gains without the energy we thought that we would need, that is good news, isn't it? lisa: that is what everyone was saying, even sam altman. we welcome this. it is wonderful to have a robust competitor. that is why the whole weight performance was so instructive for so many people. annmarie: it is why president

trump said yesterday that it's positive that we can do this on a cheaper front and be more efficient. i'm curious when this seeps through into the real economy. peter: they underestimate probably the impact of cryptocurrencies on spending. crypto has been on a tear. people underestimate the political influence it has and spending. i don't think that the cell over is done. what scared me yesterday is nvidia, the double levered etf had influence. people were buying the dip yesterday. it will bounce a little today, it's natural, but i don't think we've seen a washout by any stretch of the imagination. as it settles and there is more downside. the settles etf's, horrible investments due to how they trade. i think basically the rebalancing causes adrift and you will lose money over time relative to the performance of

the underlying stock. open a margin account and do it properly, don't buy crazy things with the daily leverage. yesterday, clearly, record inflows tells me that the froth is still there. jon: tell me what you really think. if you're joining us, welcome, equities bouncing back attached. we are up on the s&p. an update elsewhere, here's your bloomberg brief. >> president trump said that he wants to enact across-the-board tariffs that are bigger than a 2.5 percent reportedly suggested by his treasury secretary, scott bessent. speaking to reporters on air force one last night, trump said that i have in my mind what it's going to be, but i won't yet be setting it, but it will be enough to protect our country. the president pledged tariffs on sectors including semis, pharma, steel, and aluminum. a next-generation defense shield to protect the u.s. against ballistic missiles and long-range attacks. the order will commission a system similar to the israel iron dome. the white house says that an attack by missiles is a

catastrophic threat facing the united states. the world's 500 richest people lost a combined $108 billion on monday due to the tech-led selloff. billionaires tied to ai including jensen huang and the oracle co-founder where the biggest losers with losses totaling $94 billion. jensen huang saw his fortune followed by a 20% drop. that is your bloomberg brief. jon: i have a song to play. lisa: on my violin? jon: a really small one. lisa: no one will cry, but the magnitude is impressive. jon: next on the program, tariff threats back on the agenda. pres. trump: we will protect our businesses and country with tariffs, and we will look at pharmaceuticals, drugs. we will look at chips, semiconductors. and we will look at steel. jon: that conversation is next. live from new york city this

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jon: equities bouncing back on the s&p up by .4%. the bond market yields are little higher, reversing some of yesterday's move about three basis points. on surveillance this morning, tariff threats are back on the agenda. pres. trump: remember the word tariff. we will protect our people, our businesses, and our country with tariffs. tariffs on steel, aluminum, copper, and things we need for our military. we need to bring production back to our country. the incentive will be there because they have no tariff whatsoever. we will look at pharmaceuticals, drugs. we will look at chips, semiconductors. and we will look at steel.

jon: the list gets longer. president trump reigniting threats on universal tariffs on k sectors. pushing back, scott bessent favored a 2.5% tariff rate. we're joined now for more. these are the threats. on mexico and canada, 20 5%. china 10%. a warning for europe, the prospect of a universal tariff is bigger than 2.5%. what are you taking more seriously out of everything you've heard over the last month? john: i think that you have to look at the behavior of the trump people so far. they aren't afraid the way that they have approached foreign aid, the way they they are aggressively approaching countries like columbia were over the weekend they announced they would slap 25% or 50%

tariffs on them. you have to take all of the seriously. it would be surprising to me if they put tariffs on canada and mexico on february 1, but they've laid out the process that they can increase these tariffs by april 1. the april 1 deadline will be important to watch, because that is the day that we will get a number of reports from the u.s. trade representative and across the government to give us clear signals as to which countries he will go after and what the tariff rates may be. the challenge is, you have to take everything that he says seriously. while it seems unlikely that canadian oil might be subject to a tariff, you never know with president trump. annmarie: how much is it with canada and mexico trump is trying to bring forward the usmca renegotiation? jon l.: i think that a lot of it is that, but he doesn't need to do as much as much as he has done to get there.

the canadians and mexicans have signaled renegotiating the deal in a way that is favorable to the u.s. mexico already responded by signaling the willingness to take deportations out of the u.s. i think that's the way that trump has talked about tariffs over the past two years and the signals he is sending suggests that he sees values and tariffs above the negotiating leverage. using them to bring production back to the u.s. and punish these countries. it is on the table. not to say that it will definitely happen. annmarie: scott bessent, there is a report in the financial times that he's pushing for a gradual increase in tariffs, and it sounds like him. in august on this program he talked about that. xi jinping, you want to get to 60%, 2.5% for 24 months and you tell us when it starts to bite.

trump said it would be bigger than 2.5%, but not that it would be gradual. how do you see the team of rivals around him, how do you see these competing groups win over his favor for what we could potentially see if it is february 1 or april 1? jon l.: the dynamic is a lot like the first trump administration where you had different advisers with different stories depending on the days signaling the direction we would go the group of advisors now is more aligned behind the president's vision. the notable thing about scott bessent's comments, is gradual implementation of a universal tariff is considered the moderate position in this administration. that tells you something. something that these policies are being talked about in a serious way. that tariffs are likely going up. even if it doesn't end up being universal at the end of the day,

scott bessent has talked about this before. associated with the plan to do gradual tariffs in the past. they're trying to find a way to do the trump agenda in the least disruptive way possible, but at the end of the day it is still the trump agenda. i think that is what we are getting. lisa: the initial conversations, talking about mexico, canada, panama, and denmark. why not china? jon l.: china is a confusing one right now. the chinese have a lot of leverage to get a deal over president trump if you think that he prioritizes saving tiktok, which he does. that is one of the big signals from the early days of the trump administration. they will delay some of this competition with china. trump is trying to make overtures to xi jinping. we don't think a deal is possible, but we think that is plausible that the chinese could string the president along for long enough that the tariff hit

is worse than it might have otherwise have been. it doesn't mean that it won't happen. the april 1 deadline, we will see more aggressive trade action. jon: i appreciate your view as always. taking everything seriously and potentially literally. part of the reason why we have the big selloff, the reason we have the selloff from the dollar, was the euro going back to 23. the first week of the trump presidency we did not get tariffs. a lot of people are trying to read between the lines and may be reading into it too much. lisa: the conversations initially have been closer to home. canada and mexico. canada saying, why are we being targeted? mexico saying, are you kidding with the gulf of america? is it going to china, is it going to europe? it is surprising how big some of these moves are. annmarie: we didn't get the exact tariffs on the campaign trail, but we got a review of wanting to look at the trade

deals with partners by april 1, meaning that this team needs to come up with a plan. trump is saying that he has a concept of what he wants to do but he doesn't have it yet and he doesn't have his team fully through the door. last night scott bessent was confirmed. we are waiting for the commerce secretary to get there. he needs all of the men in the room to decide what he is doing on the tariff plan. jon: we are only two weeks into this. nvidia in the premarket up by little more than 5%. equities are bouncing back in touch. next, following nvidia's record market cap wipeout. ♪

jonathan: stocks bouncing back. equity futures up around one third of 1% on the s&p 500. the biggest single the decline of the year so far. bouncing back by .5%. if easter about big tech and nvidia makes up about 5% of the market cap waited s&p 500, a lot of us noticed yesterday the eagle weight s&p was basically unchanged on the session -- equal weight s&p was basically unchanged on the session. nvidia bounces back by 5% after the big decline yesterday.

a move of 589 again dollars of market cap. absolutely unbelievable -- 589 billion dollars. yields higher by three basis points on the 10-year. 456.67. let's get some single name price action. numbers from gm. lisa: it seems to be a beat across the board looking at the 2025 adjusted earnings-per-share forecast. the estimate was $10.60. across the board, free cash flow, net income, that also rising. net sales increasing. the only miss was north america. that can be tied to a charge with the removals from china in terms of closing out the joint ventures. looks like a beat across the

board. i'm curious to see how the stock is performing right now. jonathan: on the outlook for 2025, yesterday it was $10.60. the stock is up, erasing the decline. positive by 3.5%. joining us now is bloomberg's craig trudell. they look decent on first look. craig: solid numbers and i think the outlook for this year's for more of the same. there's a cadillac escalade caveats all this which is the forecasts -- they don't take into account potential risk of tariffs from the trump administration. that will be something that gets talked about quite a bit today. trying to get arms around how much risk there is here, particularly on the tariffs that trump has threatened canada and mexico with. that would be a disruptive --

even he was carmakers -- to u.s. carmakers. reluctant to dip into the stocks until they are more comfortable with how much risk there is. lisa: paul jacobson has a tall task as he says we have been preparing. we have an extensive playbook. there's a risk of autonomous driving and the valuations with tesla and questions about how general motors competes when a lot of people say this will be the vanguard. how do you see them discussing that where it could be a loss? craig: they took states last year -- steps last year to wave the white flag and decided to pull the plug on trying to make the robotaxi business work, which is remarkable to see. tesla continued to have a valuation premium despite the fact they were quite a bit

behind gm's unit in terms of getting cars on the road and proving the technology. gm managed to make progress in terms of commercializing the business, getting it to where they were starting to collect fares. there is little forgiveness for mistakes when you have a robot in control of a car and something bad happens. in this case it was another car hitting a pedestrian. that pedestrian -- glancing off a vehicle into a cruise vehicle and lead to a crisis that forced gm cruise cars off the road and it was the undoing. they decided to fold the business into gm and focus on driver assistance systems and put off the question of robotaxis, betting this will be something that is going to be a

loss center for other companies and may a decade or more to really reach scale. jonathan: appreciate the update. craig trudell on general motors. the numbers been unexpected. the stock up by about 2.5%. how much weight can you put on the outlook? this came from bernstein in november. gm and still it is important 55% of trucks sold in the u.s. from mexico and canada. how much weight can you put on the outlook when it is a simple tariff change when the president can upend this whole business? lisa: gm has really beat consistently and turnaround in performance in a number of different units. jonathan: under surveillance, the one stop to watch. nvidia recovering after the worst day since march of 2020, wife and got almost $600 billion in market cap, the biggest thing of the drop ever for a u.s. company after deepsteek's

model. lisa: it was compared to more than the total market cap of exxon mobil and mastercard. the biggest one-day drop, surpassing in some capacity. it says how high valuations have gotten and it talks about consensus traits, which is why you hear about bubbles and all sorts of studies. i expect the histrionics to die down but there's been a mentality shift that may not go away so quickly. jonathan: donald trump addressing concerns about deepseek, calling the progress in ai a positive and delivering a warning, saying the company's breakthrough should be a wake-up call for u.s. companies. annmarie: he wants u.s. companies to be laser focused on this. we should be out in front of china. he said chinese officials told

him the u.s. has the best scientists. also weighing in with the new ai crypto czar david sachs. he was talking about how trump was right to rescind the by an executive order which he says hamstrung american ai companies without asking if china would do the same. obviously not. he's confident the u.s. will not be complacent. this goes back to trump's push with stargate. jonathan: we will catch up with bernstein later. they said we believe deepseek did not build openai for $5 million. two, the models look fantastic but they don't believe they are miracles. three, the panic over the weekend seems overblown. lisa: that is what you see a little bit of a bounce today. there has been a denial of the shift away from an investing in chips to the broadening out. this may open up that discussion a little more. jonathan: you will notice some

dollar strength. president trump saying he wants to enact across tariffs that are "much bigger than 2.5%." the financial times reported that scott bessent is backing universal tariffs starting at 2.5% and may be rising over time. stocks are raising -- erasing some of yesterday's losses after deepseek started a route and u.s. tech stocks. matt bryson writing, "the ai race is still more about being the first to create models. software efficiency yields historically led to more hardware spending and not less, because the roi of investing in hardware only increases." welcome to the program. i shared a quote from nvidia and get your thoughts on it. when we say deepseek's work illustrates a new models can be created, leveraging models and compute that is fully export

control compliant, do you believe it is fully export compliant? matt: it is really hard for me sitting here in austin to say what resources deepseek used. we have all seen the speculation that they had processors there were not export compliant in using processors they had before the export restrictions went into place, cost of their motto was a lot more than $5 million -- model. lisa: is there a take we have changed the mentality and maybe companies will not be investing as much in capital extend teachers to build that ai because there's an example of how things could be done more efficiently going forward? matt: i stick by what i wrote, which is -- the question is -- the thought process is ai changes how technology works.

if you think ai will enable a great new technology like autonomous driving, it is not that it is too expensive, but it doesn't have the capabilities. the investment you are putting into data centers is to enable the technology and you want to be first of the technology. we have seen when you have leaders in technology, they tend to stay leaders. microsoft, google, amazon. you can go down the list. lisa: marc benioff said this is classic in the industry. the pioneers are not the ones who end up being the victors. how much of relearning that some of the biggest gainers on the ai craze are not necessarily the big gainers? is this the cisco moment for the likes of nvidia? matt: the question is did we overbuild? you look back to 2000.

did we simply build to much infrastructure like we did back in 2000 and will never use it? i would be surprised. the differences is in 2000 we created the backbone of the internet. the internet was working. with ai we have not really realized what the benefits of ai are. until we see a great need chatbot or new personal assistant and i'm buying a new iphone because it is changing my life with this personal assistant, until then it is hard to say we have invested enough. annmarie: is there a chance it is over invested? matt: there is a chance the next technology takes longer to show up. we get to the end of the year and there isn't a breakthrough on autonomous driving, and personal assistant, so company say is the goal we have been

shooting for really achievable the way we are going about it and people rethink that. that has been the concern with nvidia heading into this year. that at some point you can't justify the investment. i don't think it changes the amount people are willing to invest into that goal because if you create autonomous driving, the returns are amazing. if you become dominant in the search market -- as if you became dominant in the search market back in the 2000-2001 timeframe. annmarie: if it is more efficient ai from deepseek, we could see increased adoption. what does that look like? matt: if you think about ai, part of it is the expense. in search, people said a search

using ai is 10x a traditional google search. if i can bring the pricing down by 90%, you know, maybe i move my infrastructure from traditional search to ai search. moving beyond that, i create this new app. let's say it is a personal assistant on my phone. if it is easier, if it cost less to support the up from a hardware perspective on my phone, they will be quicker adoption that will lead to a faster refresh cycle, more semiconductor sold. -- semiconductors sold. we have seen server virtualization. it leads to faster adoption. jonathan: this is not -- does this not raise questions about

valuations? even if you can be optimistic about the future. matt: i think the valuation question is always a fair question. markets have recently fluctuated wildly. no. i think the value of the firms is what we might be able to change in the future, not how much it costs to get there. jonathan: matt bryson there. a constructive view. lisa: we have not really seen the broadening out. there is a theory the more quickly you can broaden out, the more demand, you have a real valuation and it can keep growing and that is what people are betting on. there are still people calling it a bubble. jonathan: if you had a chance to listen to chairman powell or the call with microsoft and meta? lisa: jay powell.

[laughter] jonathan: without a doubt. lisa: i'm curious about what jay powell's response is to some of these ai developments. how are they modeling out something the market is single be transformative to the employment market at a time when they have been flipping and flopping. jonathan: 1:30 eastern time. an update on story elsewhere -- stories elsewhere. dani: scott bessent has been confirmed as the next u.s. treasury secretary, winning the senate vote. get included support from 15 democrats. policy objectives include 3% gdp growth and a 3 million barrel per day increase in u.s. oil production. benjamin netanyahu is planning to visit washington next week to meet with president trump. they say he will speak with trump about maintaining the cease-fire in gaza. israeli media is reporting

trump's middle east envoy steven witkoff is expected to travel to israel this week to discuss longer-term solutions to regional conflicts. gm shares are rising, just about .7% in the premarket. the automaker reported better-than-expected for third earnings -- fourth-quarter earnings. the upbeat forecast does not account for potential tariffs on canada and mexico. the company insured investors it has a playbook for that scenario. that is your brief. jonathan: i would love to know with the playbook looks like. what is it if you come up with 25% tariffs on canada and mexico? lisa: run, hide, cry. jonathan: hopefully they reveal some of the playbook for us. , u.s. dominance -- up next, u.s. dominance under threat. >> across the board outlook theme was u.s. exceptionalism.

a lot of this has already had the potential of being rewritten in 2025. u.s. exceptionalism can persist but not to a significant degree. jonathan: you are watching bloombergtv. ♪

jonathan: equity futures on the s&p bouncing back. only by one third of 1% on the s&p 500. and the bond market, the yields at 456.37. nvidia off session highs. up by 4.5% so far this morning. under surveillance, u.s. dominance under threat.

>> we came into 2025 and i think across the board with theme was u.s. exceptionalism. we are at the end of january and a lot of this has been rewritten for 2025. it reminds investors these companies are not completely -- there is a longer-term story where u.s. exceptionalism can persist, not to such a significant degree. jonathan: investors reassessing u.s. ai dominance after chinese's deepseek new model triggered a selloff in global equities. max kettner saying yesterday was not a game changer. "it has been quite positive. the equal weighted index went up yesterday, not down. you might see more broadening of the market, also have the ai theme to enablers and users." welcome to the show. we talked a lot over the last

year about chips and data centers and energy providers. do we need to talk more about who will benefit? the adopters? max: when we look at the last year or year and a half there were question marks on the ai theme. we talked to clients around the monetization of ai. number one, we are already seeing on an index level some productivity gains, efficiency gains. there is a bunch of sectors already clearly deploying ai and having some beneficial factors from that. most importantly, we had the feeling it is really nvidia or maybe two or three but he missed -- behemoths making money office this. i don't get the reaction.

the u.s. exceptionalism case is under threat, because we have been moaning about it for more than a year. this is not a broad-based story. across all the names it is highly questionable whether anyone can make money off that. what you are seeing now is if that really comes to fruition, it is much cheaper. again, that remains a heavy question mark behind that. if that is a theme, this is a game changer for the broader sectors to put ai into practice and really get some gains from that. it should shift more to the ai enablers that clearly have been lagging the trade over the last 12 the 15 months. lisa: you sound optimistic considering you're taking a good dose of goldilocks on steroids. you talk about it might be a game changer but not the game changer and not with a respect attack. tariffs, immigration, eh.

the real game is disinflation. how do you separate out disinflation from the other ideas that are web song the markets? whether it is tech advancement or tariffs? max: on the tech side -- the ai side specifically, different means to be seen if it is that big game changer. i think it will be something we see panning out in the next for years. not instantaneously in the next three to six months. the same on tariffs. we do not know how that will pan out. same on immigration or any kind of big immigration flows. we have already seen a peak in immigration flows of the second quarter last year.

ever since it has clearly gone down. whether that will be inflationary that is the story for age 12026. the story now is the disinflationary impact from things like super core inflation and the underlying inflation measure from the fed and some of those insurance components that were artificially inflating those baskets last year. perhaps not repeating at least to the same magnitude like we had in the first quarter of 2024 and 2023. that is the bigger story from a timing perspective. how do you separate them? people are confusing the timelines a bit. we are discussing tariffs, immigration -- annmarie: the president talked about tariffs as soon as the saturday -- this saturday. do you not taken literally? max: a lot of it might be tactics. we saw that last sunday with columbia.

i think the number one mistake we can make on a portfolio basis and even on a trade by trade basis is trade off everything a headline day by day. sunday evening we would have said bad on em. 12 hours later, actually, scrap that. let's go in the entire opposite direction. you are risking flip-flopping around in terms of your views and trading off everything a headline rather than trading the bigger picture, the underlying inflation and growth picture which really is outweighing those headline risks we are facing in the next three or four months. jonathan: max kettner of hsbc. goldilocks on steroids? big-time. up next, the second hour of "bloomberg surveillance." ed mills, sarah hunt, shahriar pourreza and a lot more.

this is bloomberg. . ♪

>> the consensus is a little too optimistic about growth, a little too pessimistic around inflation. >> we will see more volatility in that will give the fed more time to pause. >> the fed is somewhat irrelevant. >> president trump will disparage them. >> it is possible they will have to take the cuts back this year, because inflation is at best stuck at these levels.

>> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and in record turn -- and record turn. -- annmarie hordern. jonathan: a small bounce. only up by .2% on the s&p and nasdaq 100 after yesterday's selloff. speaking of big selloffs, $600 billion of market cap lost on nvidia yesterday. 4% this morning. the bulls are still bullish on this name. pick a firm. we see this as progress, a positive. deutsche bank, cheaper ai means more ai. another golding buying opportunity and not a time to panic. lisa: the reason people panicked is it because it challenges the assumption that has driven so much of this rally, that any kind of ai advancement would

come on the backs of huge investment. if you undermine that, you undermine the buffalo on the plain. we get influenced by the narratives around us. this is how bubbles take shape and that fear is evading the market -- annmarie: he calls this an ai head fake. now is a buying opportunity. the president was talking about the fact this means the u.s. needs to be even more laser focused. maybe it means the united states is going to double down when it comes to investing in this space and wanting to build it out. jonathan: does it upend the narrative? you have to believe -- the capex narrative? i can't answer that question. that is one of the most important questions. lisa: the either cannot or if

they try to they dispute it. we are speaking with an analyst this morning, stacy rasgon. deepseekdeepseek we believe -- we believe deepseek did not build this ai for $5 million. maybe people have not woken up to the broader adoption story. that seems to be what we saw yesterday. jonathan: speaking of export controls and trade and tariffs, the dollar is stronger. the euro is weaker. euro-dollar back down. the trade is on the agenda. i do think it ever left. i think the president is doubling down. annmarie: it has not left. it is just a matter of times potentially he talks about it and adds a little bit more weigh t to what he plans to do. there was a report that the newly confirmed treasury secretary is talking about this

gradual approach to tariffs. trump said it will be much bigger than 2.5%. in his mind he has a number it is not ready to share it yet. what the market is trying to figure out is what is the number and when will we see it? at one point he was talking about this saturday, this week, potential tariffs levied on canada, mexico and china. although in writing the eo calls for april 1. lisa: it feels like trying to hold water. i'm trying to figure out why markets are getting whipsawed and i'm looking forward to the tech earnings. i feel like you can hold onto that more than tariff proposals. jonathan: microsoft and tesla coming up in the next 24 hours. can they justify that big capex spin for the year ahead? i go back to google. the risk is under investing and not overinvesting. coming up, sarah hunt.

we will catch up with ed mills as president trump calls china's deepseek awake of call. and shahriar pourreza of guggenheim as doubts creep in about the expansion of ai infrastructure. stocks steady, looking to bounce back after deepseek caused a shakeup, sparking concerns about sky high-tech valuations. sarah hunt says there is an argument to be made this is a healthy pullback. the projections on power and data center growth were in question in terms of feasibility. sarah, good to see you. let's talk about the energy stuff. nat gas producers down yesterday. pipelines down yesterday. utilities down yesterday. would you jump in today? sarah: that was a little over during -- overdone but they will never get the same valuations as tech. there was a lot built into the utilities side how much could happen because of the data

centers. they will get built. capacity in the country is constrained. we talk about brownouts over the summers. you can't now locate data centers because you don't have the power. to the extent there is a possibility we could use less power, i don't think that's a bad thing. jonathan: do you believe the perceived value migrates beyond just one thing only, nvidia? -- one single name, nvidia? sarah: that was driving earnings and stock price. if i needless chips, is that going to be a problem for them? i don't think we know that yet. here's a bunch of things we did know about understanding the back of that and what other language models they were using to help generate some of this, i'm not sure we know whether or not we needless chips. i don't know if that is clear yet. we are still building some of those things and not going to

change the capex tomorrow on a dime because the story came out. i don't think it changes a lot. the question is for a longer-term perspective and that capex build has been moving the market. lisa: i think about things i want to know more about. i don't how much i can understand what to buy or what is bubble valuations. is it just a bump on the road to a greater efficiency and adoption? is it indicative of bubble-like mentality bacon to the top flying ai names? how do you know? sarah: what you saw yesterday -- the equal weight is better than the s&p because the tech giants are having the problem. there is some air coming out of that because people have been chasing it like it will go to the sky. we know that but we don't know when the growth stops. we have taken some of that premium valuation down a little bit. i looked at the pipelines

yesterday and they got hit pretty hard. we like infrastructure on the energy side but some of that was creeping up to valuations that were a little high. if you look at where the market started this year, valuations were high. the idea we can get a pullback early in the year is not a bad thing. lisa: what were you buying on the pullback? sarah: nvidia is a question we don't know enough about yet. we own some nvidia. we have been talking about the 'and'all the time -- all the time. you have some in your portfolio. sometimes you are underweight in the market and you don't go chasing it to understand better why that just went down and where you think you are going from here. there is a pop this morning, not a huge pop. there is still time for it to work through and we don't know enough to answer that question yet. jonathan: we have challenged

aggressively consensus positioning coming into being 25. yields lower, not higher. and then tech starts to collapse. what do you make of that more broadly? sarah: what has been interesting is starting up every year we did up with a very different story by the end of the year. the theme has been happening because stuff on the ground is moving quickly. something that upends the story is part of that moving quickly. we don't really know, just like we don't really know what will happen with tariffs. it makes it difficult to have a theme you can absolutely stick to and say i will do x, because you don't know. jonathan: one week of the trump administration and people have decided maybe he is not that serious on trade. sarah: i think he is serious but the way he will go about it is these loops where it starts off this way and ends up that way. that is a lot of what he does

have a different things he's trying to do. i will put this crazy thing out there and bring it back to something you have said was crazy because the crazier thing was out there, this seems reasonable. annmarie: unpredictable by design. a lot of people really ignore it and say this is just a negotiating tactic. sarah: something is going to come into sectors and we are not sure how they will be affected. it will be things we have to take into account. if you end up with a 2.5% for most things as opposed to 25% or 30%, that becomes manageable. that is not so bad because we were throwing around 35% or 50%. they will be some affect. we don't know what it will be yet and we have to look for that. annmarie: with the president said yesterday is he knows what the number will be in will be more than 2.5%. taking all that together, do you have a base case or is that dangerous? sarah: you have a moving case.

you are trying to figure out what will happen six month or 12 months down the road. the stoxx react quickly like yesterday. -- stocks react quickly like they did yesterday. the idea of a baseline in some targeted areas is easy for people to start to think about and model when we get the information. we know it is coming. lisa: i keep explaining how i know very little and it feels like i'm in a black box where i'm trying to feel my way around. there was something constructive about what we saw yesterday, that bonds acted as the release mechanism. they performed as they were supposed to win a downdraft. is that a rosneft or what is to come? do you think -- is that a roadmap for what is to come? sarah: i think that was good news to the extent people have started to put bonds back in their portfolio. for the government, that is good news.

we have an auction coming up and that's a good thing. it should work that way. we've had some correlations in the last couple years that were very unusual. coming back to something that makes more sense is not a bad thing. lisa: can you rely on that being back to normal for the rest of the year, especially given the uncertainty? sarah: i'm not sure i know what normal is. you are always looking at what is going to happen next, looking at what you think is going on whether or not the story takes the wind out of the sales of the equity markets or a blip. you think about where the allocation goes. i'm not sure you can cookie-cutter anything right now. jonathan: sarah, always good to see you. the move in equities fading on the s&p 500. only positive by not even .1%. on nvidia, that ain't is only up by 3.5%. this is not much of a bounce and it's fading by the minute. lisa: we have not got much

clarity. if we don't have clarity, how can people have conviction? we will not see more the same given the washout has potential legs if there is validity to this. jonathan: with your bloomberg brief, here is dani burger. dani: keir starmer says the country's economy is starting to rebound. he said his labor government -- labour government is prioritizing growth. >> a huge amount of trade between our two countries. that is to our great advantage in something we can build on. i was pleased with the engagement we've had with president trump. we will build on that. dani: the chancellor of the exchequer is giving a speech tomorrow outlining the government's strategy for growth. shares of jack lew getting whipsawed between gains and losses -- jetblue. the airline reported a loss per

share of $.21, beating estimates for a loss of $.31. operating revenue came in slightly better than forecast. google maps users in the u.s. will soon notice a change. the gulf of mexico will be named the gulf of america. it will take place when government official sources are updated to reflect the change ordered by president donald trump last week. the gulf of mexico will remain in use in mexican versions of google maps. international users will see both names display side-by-side. that is your brief. jonathan: news that you can really use. i don't hate it. lisa: i checked it today. it was still gulf of mexico. jonathan: did you feel patriotic about it? lisa: i think it is hilarious. annmarie: i think it is serious. jonathan: an ai wake-up call. president trump: the release of deepseek ai should be a wake-up call for our industries that we need to be laser focused on

competing to win. jonathan: live from new york city, good morning. ♪

jonathan: this move is not sticking. positive by not even .1% on the s&p 500. bond market yields a little higher following yesterday's decline. 456 on 10s. nvidia bouncing back by just 3.5% after a big percentage point decline yesterday. under surveillance, an ai wake-up call. president trump: if it is true and nobody knows if it is, i view that as a positive. you will not be spending as much and you will get the same result hopefully. the release of deepseek ai from

a chinese company should be a wake-up call for our industries that we need to be laser focused on competing to win. jonathan: president trump addressing concerns about deepseek after the chinese company's latest ai model rattled global markets. ed mills saying, "it places a spotlight on the effectiveness of u.s. tech export controls. president trump ordered a review on his first day in office. we expect that review ended deepseek announcement to be a catalyst for further restrictions in 2025." welcome to the program. let's go straight to that line. what kind of restrictions would you expect? ed: in december and january, the biden administration put out rules that put country by country caps on some of the chips that are allowed from nvidia to go to those countries to build up the data centers and

go into the llm's. my expectation is that those rules could get tightened. there's a lot of questions i've gotten whether or not donald trump is going to overturn those rules. i do think that is going to happen. you look at his administration, marco rubio, mike walls, hawkish individuals on china. do the rules say there are certain equipment that could make chips that are less than what nvidia can do? some things that went into deepseek? do we see that semi cap equipment not going to china because the government does not want china to have the ability to make them and build that other models? annmarie: when it comes to trade and tariffs, will chips be used as negotiating leverage as well? ed: absolutely, annmarie. the rules written by biden, in many ways we thought those were things that were written with donald trump in mind.

they are country by country caps. to have donald trump say, do you want that cap to go up or go down? what are you going to do for me on trade? when it comes to china, this will be front and foremost in the negotiations. donald trump wants china to adhere to their phase one trade deal that they inked back in 2020. he will add restrictions on semi cap equipment that they want today. annmarie: what do you make of the fact that the rhetoric coming out of the oval office has been really about other countries? more about canada, mexico, colombia. he's been more reserved when it comes to beijing. ed: annmarie, the things i hear from folks in and around donald trump is because you did not hear it on day one does not meet is not really important. i think that he feels as if he has a baseline of tariffs he put

in that were maintained with china. that gives him more flexibility. he is looking to see what he can get from other countries where he has arguably more leverage than with china. here at raymond james we are telling folks do not sleep on the fact we could get universal tariffs plus these country specific tariffs, plus a trade fight with china. most clients tell us it is not going to happen. i think that is a mistake. annmarie: why do you think clients and the market are so overboard on one side of the boat when it comes to negotiating? he's not going to pull the trigger. ed: i think there is a trump put on the market. a view that donald trump use the equity markets as a barometer of success. we have seen a little bit of crying wolf so far. we look at what happened with columbia. the take away is if he uses the

economic power of the united states, the other country is going to back down. that is probably true in the near-term. as i look through the year, by midyear we are going to have a whole bunch more tariffs on board that we have not today. and, what the market is thinking is once tariffs are on, that is when trump the dealmaker starts. finally, there are other parts of the economic agenda they think are potentially positive. extension of tax cuts, deregulation, more incentives to make things in the united states. it is a balance but i think they under appreciate the tariff risk -- underappreciate the tariff risk. lisa: people are trying to understand what the framework is that the administration is using to achieve these goals. when it comes to tech dominance,

how do you dovetail that with immigration policy? a government study showed that foreign born workers make up about 20% of the workforce -- tech workforce in the united states. are we hearing anything about constructive immigration reform when we see the mass deportations donald trump promised? ed: you are bringing up the argument that vikram ramaswamy kicked out of doge. there is a desire in the industry, especially those in a very close to donald trump who say let's do something about expanding h-1b visas. as you are dealing with illegal immigration, bless you more on legal immigration -- let's do more on legal immigration. when there was a conversation brought up about expanding h-1b or reforming h-1b, the base of donald trump in a number of the elected officials who are in

charge of changing immigration policy in washington, d.c. came out at emily opposed to that. -- adamantly opposed to that. is it possible? maybe. i think they are focused on the near-term goals of donald trump to say there is an increase in deportation of individuals in the country without documents who have committed crimes. they would say there is a long way between that and impacting the tech industry, which has relied upon a lot of non-us citizens with high-tech degrees to have that u.s. dominance. lisa: he raises an important point. are relearning about where the gravitational force will be for the remainder of the year in terms of which voices are going to get most heard in donald trump's oval office? ed: it is a combination. we look at emergency powers and executive action, tech is going to be at or near the forefront. they had a seat at inauguration

front of the cabinet. that was not by accident. when we look to capitol hill, when margins are so small, there will always be individuals who are unwilling to vote for a bill. that is where they need to keep that coalition together. they need to pass the trump agenda with only republican votes. you can only lose one or two of them. you are not going to upset the voices on capitol hill until the agenda is completed extending the trump tax cuts, getting something on immigration, for funding of the wall, defense spending, energy permitting reform. that is their priority. jonathan: ed mills of raymond james. did you notice the tiktok boss was alongside the nominee for director of national intelligence, tulsi gabbert? -- gabbard? should we be worried about

deepseek? that was the conversation we have with peter this morning. lisa: you suck questions around capacity. didn't shut down capacity? -- you see such questions around capacity. didn't it shut down yesterday? awkward between the tiktok ceo and tulsi gabbard. jonathan: you are probably looking for a bounce but you not getting one. we will catch up with shahriar pourreza of good harm -- guggenheim about deepseek and usa ifrastructure --ai infrastructure. ♪

you go to sandals to connect on a deeper level. i've been waiting for this... [wind blowing] [zip up] time to get wet! thanks. with the caribbean sea. ♪♪

jonathan: annmarie'birthdays is coming up. annmarie: you are such a brat. age of aquarius. jonathan: what is wrong with it being your birthday? everyone thinks it is your birthday now. lisa: you should really enjoy the day. jonathan: happy birthday. equity futures just about unchanged. we are not getting the balance. on the nasdaq 100, higher by not even .1%. two hours until the opening bell. morning movers with manus cranny. manus: where were you on the day

that 580 $9 billion was wiped off the value of nvidia? -- $589 billion. patrick armstrong saying the question you must ask yourself is the margins. how much of the margin dissipation is going to be recalculated here? he's writing 110 put options above this. it is overdone. too aggressive. you have to accelerate the timeline to competition and margins. you have a $200 billion bounce back. the energy factor, 97% less energy per query. that was the narrative from deepseek yesterday. the stock was destroyed, down 28%. jeffries says some --ai will be 75% of the overall u.s. power demand. 75% in the united states of america. it was theoretically down to ai. do you adjust that?

to gargantuan estimates -- the gargantuan estimates. gm, the numbers across the tape. strong guidance with the murphy ev outlook. a $60 target on this. the guidance from gm is we will make between 13.7 to 15.7 this year. they have not accounted for the risk of tariffs at 25% on canada and mexico. they have a playbook for tariffs but what is the risk? tariffs. it is like the old barbell. good morning. jonathan: are you going to wish annmarie happy birthday? manus: she will be lucky if i don't sing "happy birthday" to her later. annmarie: it is not my birthday yet. jonathan: 17% plunged sparked by

worries of china's deepseek. the biggest drop in market history, the eclipsing of record set by the chip giant. lisa: at a certain point this tells us more about how over positioned people were to nvidia being the big winner going forward in perpetuity regardless of the fact we were supposed to broaden out. i'm more curious to answer questions we have been asking. how realistic is it that deepseek was financed by $5 million? did they use the subpar non-blackwell chips? how does it increase efficiency on the energy front and chip usage? annmarie: nvidia said the work of the three top models can be created leveraging why the available models and compute that is fully expert control compliance -- export control compliance. a lot of people say this is china.

do we know what is going on in terms of where the funding is coming from? is the ccp pouring money into deepseek? could we see another version of this? how are they being built? jonathan: if they have done this with a lot less and achieved more, it is tremendously impressive. you will have people asking questions about capex from the big players. four leading hyperscalers expected to surpass around $200 billion in ai capex. phenomenal numbers. lisa: most of it has gone to building out data centers and acquiring blackwell chips on preorder because they cannot make them fast enough at nvidia. do they retrench with their spending or redirect it to new efforts that have other beneficiaries? those are the questions we are looking for. jonathan: not the only headwind we are facing at the moment. trade is a big factor.

the dollar is a lot stronger against the euro as the president says he wants people to mid across the board tariffs much bigger than 2.5%. "i have it in my mind what it is going to be but it will be more than 2.5%." annmarie: reporters were asking about the report from the ft talking about the fact that beth ssent is pushing for the system. trump said i have concepts of a plan. momentum is growing for them to levy these tariffs on canada, mexico as soon as saturday. is this administration going to wait for the april 1 review? that was the executive order. while they may be match with the president said last week, saying maybe february 1 you will see some of those tariffs. the wall street journal says that is potentially what they are working towards at the moment. lisa: it highlights the level of

uncertainty that keeps getting implement it when we are wondering what the tariff policies are. there are pretty big changes going on in washington, d.c. doing with funding, caused, things -- paused, things with respect to career employees. a decipher the noise when it is pretty noisy? -- how do you decipher the noise when it is pretty noisy? jonathan: microsoft is in talks to acquire the u.s. arm of tiktok. trump proposed a ban during his first term. lisa: it seems like satya nadella had his seat at mar-a-lago. x is no longer necessarily the the dominant player. this highlight something we saw at davos. they think a deal will get done and probably will stay operational in the united states. annmarie: you said x.

our underreporting is saying china, which has to sign off on this divestment is saying they would like maybe elon musk to be the individual that shepherds the company through. they mentioned no other individual. trump said yesterday i like bidding wars because you make your best deal. i think he's going to allow everyone to call him and allow everyone to throw their name in the ring when it comes to tiktok. jonathan: the microsoft call will be one third of the earnings? one third on deepseek and one third on tiktok? lisa: don't miss that. after the bell tomorrow when no one is talking about the federal reserve anymore even though the decision happened a couple of hours earlier. what kind of guidance are they going to give? jonathan: we have lowered the bar for him. lisa: it raises the question of a surprise that he will invoke

the ire of the sitting president. annmarie: until the president said it is a fed decision. jonathan: the journalists could ask the questions which would be perfect. great tv. equity futures positive by around .1%. let's turn back to deepseek's market impact. losses extending beyond ai and chip giant as global investments assess the list pending of the sector -- endless spending of the sector. we are joined by shahriar pourreza. sahriar, i wintered to stand how you reacted to the past week or so and whether it opens your thesis for 2025? sahriar: we believe the reaction was a knee-jerk

reaction in the utility and power space. one think we have been highlighting to investors and clients is this is some of the strongest power demand environment we have seen in over 20 years of covering the space. the u.s. is essentially decoupling from china. we don't quite agree with our competitors. 10% to 13% of power demand today is coming from ai on average nationally. the demand for energy and power continue to grow. it is a super cycle. it is structural. whether you are looking at domestic manufacturing, looking at the on shoring and re-shoring of the manufacturing sector and electrification of the system, trump's focus is on energy policy, lng, petrochemicals. everywhere you look it will push power demand materially higher. industrial growth is extreme he healthy. that is the key driver of infrastructure needs. we believe yesterday's selloff

was -- lisa: an interesting nugget people have been talking about. if you had the bill that in the pace of the buildout of ai with the current capacity for the next five years, there's no way the energy infrastructure with additions could support that. give us a sense of even if you did reduce the energy demands significantly going forward of ai adoption, you have to increase the energy production globally. sahriar: that's a fair point. u.s. infrastructure has not kept up with demand. you think about electricity consumption for the past 15 years, it's been a decelerating commodity. out of nowhere there is this energy revival, this industrial revival. the infrastructure has not kept up with the demand needs. this is why many utilities, the power companies, the ones we cover our building a massive

amount of transmission systems. they are building generation. we have seen the retirement of coal assets delayed because of this type power supply demand environment. infrastructure has not kept up with the demands. we do not believe the news around deepseek is going to impact any of those fundamentals. lisa: one of the potential headwinds to the entire energy sector is that commodities are getting cheaper when it comes to oil prices. people are getting efficient at producing a lot of energy. how do you dovetail that into your optimism at a time where we see the actual commodity prices coming down for a host of different reasons? sahriar: the commodity coming down is not necessarily a bad thing for consumers. one of the arguments is to meet the needs of u.s. infrastructure, small modular reactors likely not a viable option. you are not building any more coal plants. offshore wind is having hindrances. what will satisfy the needs of

the near-term as a bridge to another technology is natural gas. the more the commodity curves come down, the more it becomes economic to build the infrastructure that is needed to meet the power demands. the drop in the commodity, the drop in natural gas which is d consolidati -- deconsolidated is consumer friendly. annmarie: is there a line in the sand where it is still making sense for company to go out and create new utilities to make sure they can drill and get the products to market without losing money? sahriar: the entry into the utility industry is one of the most capital-intensive industries there is. there's a barrier to entry to get in there. the point we are bringing up is talking to many of these hyperscalers you mentioned, talking to the utilities.

there is a need for speed to market. as microsoft told us on a client called, we are in a race to be china, a race to beat -- beat china and the three or four hyperscalers. the meta-spending on infrastructure, whether it is ai , the energy space, industrial manufacturing, etc., it has to be met with a generation source. there's a lot of money being put into it, natural gas. it is the bridge fuel to meet those needs, which is why there is so much investment going into the natural gas space. one of the largest renewable developers in the country is now doing a ge deal. constellation energy acquired cal pine, the biggest gas operator in the country. the shift from decarbonization

to reliability is starting to take shape. i agree that looking at the demand outlook the infrastructure has not been able to keep up with it. annmarie: how much of this is jevon by politics? trump -- driven by politics? trump lifted the lng freeze put in place by the biden administration. sahriar: politics is certainly part of it. under the trump administration, when you think about carbon rules for natural gas, thinking about pipelines, thinking about the lng markets, there will be a push to drill, drill, drill. the focus is becoming energy independent. part of this is policy. even before the trump administration took the helm our viewpoint was the demand picture was not going away. there's a big focus on shifting manufacturing back to the u.s. there is such a big focus event electrifying the system -- focus

on electrifying the system. that was even before the trump administration took the helm. post trump, it adds additional drivers like you highlighted. there will be a major ease around permitting, etc. this will push power demand growth higher. it will prompt utilities to build the infrastructure to meet the needs. jonathan: sahriar, appreciate your input. shahriar pourreza of guggenheim. constellation energy up by 91% last year. lisa, yesterday there were down by 21%. lisa: the unraveling of the thesis that drove up utilities. at what point do we get clarity to understand valuations in terms of energy needs and how quickly ai will be spread? sahriar: many of these guys are not -- jonathan: equity futures positive by .1%.

dani: president trump says he wants to enact across-the-board tariffs that are much bigger than 2.5%. those comments after the ft reported scott bessent's backing universal tariffs on u.s. imports, starting at 2.5%. the president pledged tariffs on sectors including semi's, steel, copper and aluminum. they reported their six consecutive annual loss. the ceo says he will set in motion a portfolio overhaul after the company reported a deeply unprofitable quarter. clearly manufacturer noted the 737 program resumed production. the plans to gradually increase its production rate. coca-cola recalling a range of soft rings in europe over higher levels of chemical chlorine. the company's bottling partner says cans and bottles have been distributed in belgium, the netherlands, the u.k., germany, france and luxembourg since

november. that is your brief. jonathan: more from dani in about 30 minutes. up next, higher for longer. >> the 10-year is not priced for a higher for longer inflation. it is a much priced for a 2% world. jonathan: that conversation is up next. you are watching bloombergtv. ♪

jonathan: the biggest one-day loss of the year on the nasdaq 100 and not much of a bounce back on the s&p 500. higher by .1%. yields declining yesterday. 10-year, 455.86. under surveillance, higher for longer. >> it is possible the fed is

going to have to take some of their cuts back this year because inflation is at best stuck at these levels. the 10-year is not priced for a higher for longer structural inflation. it is a much price for a 2% world. jonathan: investors turning to the fed'd meeting kicking off this morning when they wake up in washington, d.c. greg peters joins us now. lisa: the shade. they do go to bed at 6:00. jonathan: greg, welcome to the program. i want to go back to the quote that came from oksana. we are still very much priced for a 2% world. should we be? greg: yes and no. there has been a radical shift in pricing. if you look at the option pricing, a 30% probability of a rate hike this year.

that is much higher than where we were before. i think it is a worry but the markets are reasonably priced today. last year i cannot say the same thing. this time last year rate cuts were all the rage. investors were pricing in quietly 50 in march of last year. we are more reasonably priced today. it's representative of the balance of risks from the options standpoint. i'm not sure i totally agree with that statement. lisa: there is a 0% chance of any movement at the fed meeting tomorrow. do you care about it? greg: well, you know, it is still only january. we are all hyped up in the first week postelection, post inauguration. we have a lot of runway. what investors are focused on is that the runway is shortening

again. i'm a little is concerned about that. i am not expecting much from this meeting just because there is so much influx. that is the challenge for fed officials and investors. there is so much uncertainty. it will be a long road ahead. lisa: how do you get an edge? how do you have a thesis you can have any conviction with the say buy longer-term bonds simply because you think inflation is going to come down with a backdrop that is so highly uncertain? greg: i think you have to react to the action, not the rhetoric. he have to take a longer term view. our longer-term view is there is value in the bond market. i'm somewhat in different as to whether bond yields rally are not. i like the carry component of bonds. i think that is the story.

that is what bonds are supposed to provide. many forgot that in the zero interest way world. you got a preview -- interest rate world. you got a preview yesterday. what you see is the flight to safety is beneficial in a balanced portfolio. what bonds provide, treasury bonds, is the protective measure. with valuations as stretched as they are, bonds really do their job. jonathan: which piece of the price action to do not agree with? greg: if you unpack yesterday around ai, ai for the masses out of china or not, all else equal, it is stimulative. i would have expected real rates to move higher. bond yields move higher. there was this flight to quality mechanism.

the selloff was really narrow but the bond market should have been more reflective of what we saw coming out from the data perspective. we got reasonably positive data news from new-home sales and manufacturing. that was cast aside. follow the data is the real message here. jonathan: make it simple. if you believe the risk aversion distorted the move in fixed income that we otherwise would have seen? there's an argument for higher bond yields off the back of the data? greg: exactly. the credit markets were unaffected. it was literally a nonevent. all the movement was in the treasury market. if you take the data on bounce, that suggests higher, not lower bond yields. it was a risk aversion trade that won the day. jonathan: greg, thank you.

interesting final point on the bond market. lisa: if you look at the data you would had a selloff with yields higher and the risk aversion around the potential selloff of nvidia he sees as being misguided. essentially greater efficiency will lead to greater productivity which will lead to faster growth which potentially could send yields higher. jonathan: good news for chairman powell. lisa: no forecast. they don't have to say anything. i wonder if they will give a hint about maybe they could raise rates at some point again. if that is the case, that would be a big shock to the market. jonathan: that conversation is just a moment. we will catch up with tom kennedy, stacy rasgon, lauren goodwin and matthew diczok. all that and more coming up next. ♪

>> maybe the mag seven are not as dominant as they have been and that is not a bad thing. >> the game will change but as

far as he cut -- the ai ecosystem is concerned. >> we are all tied to the seven stocks and nvidia. >> i think it is a threat to the expectations we had coming into this year. >> it looks like a very tough year for investors. not to a significant degree. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: let us start with the equity market. backed by just .2%. up point 25%. -- .25%. a mega selloff on nvidia, losing almost $600 billion in a single session. this morning bouncing back by just 5%. lisa: i want to sit on a point you made earlier and a question you thought -- i thought was important. a lot of the commonplace narratives into 2025 were upended.

there is this question around ai dominance and how much it would really be about financing. a question about how we get runway growth and inflation and then a question about the dollar and if it would strengthen. that is the biggest take away, how fragile some of the consensus positions are at a time where some people are worried about just how concentrated gains have been. annmarie: and a time with so much bill lithic political uncertainty. that is because the situation seal -- feels fluid. the president says he has a number in his mind it is not ready to set it. unless you can read minds it is difficult to have a base case or timeline on when we could see tariffs levied at canada, mexico or china. jonathan: universal tariffs are about 2.5% and above an individual tariffs are 25% and this is the threat on mexico and cannot, 10 percent on china and what we have heard from europe is that europe will get it because of the trade surplus.

what it means in practice i do not know. lisa: mexico is importing things china and that is bad. and it is also the immigration issue. canada is canada and you can beat up on them. columbia has to do with immigration. what are they being used for and how they are being implanted are not consistent which is why it is hard to come to any real conclusions. annmarie: we did get more color on what he was thinking when he was talking to republican congressman and woman, the fact that he wants to go after aluminum and copper because of the u.s. industrial base. he wants to make sure we have all this production in the united states. he also talked about the fact that you need tariffs to play -- to pay for tax cuts. jonathan: donald trump when he came into washington, d.c. this was not a bipartisan issue. donald trump completely change the conversation and anyone who is saying he will not go through with some of the stuff, i would pour some freezing cold arguments. there are many reasons to go at

china and lack of reciprocity and europe and it has been a protectionist trade block. as have many countries and companies and they will give you a decent opinion. in mexico, that is a massive issue and he wants to do something about it. lisa: those are all completely correct given the fact that the tariffs put under the trump era stayed on under the biden administration and there is a lot a bipartisan support for levys on china which is why people are wondering why denmark and panama are in the crosshairs and canada rather than focusing on the other players. jonathan: greenland has geostrategic importance. everybody gets confusing when you try to throw everything. lisa: it is like gulf of america, panama canal, what is going on denmark. annmarie: the panama canal is about china. china has ports and they are controlling the canal and greenland is not just about canada but about russia and how important the arctic is to both

countries. jonathan: we will see what the weekend brings. equities close to .2%. coming up we will talk -- we will catch up with john kennedy as that rattles markets. and stacy rask on on why the panic is owner -- overblown. and why the goldilocks economy is the fed's to lose. tech is getting a brutal wake-up call as deepseek is calling into question of u.s. leadership. john kennedy -- tom kennedy is saying that we are moving fast. the winners, mainstream and big tech in china and the losers are ai infrastructure spending and u.s. especially as i'm -- ask -- exceptionalism. we saw that play out. is that a short to medium call or something over the long term? tom: this movement through the ai adoption phase is moving faster. if you break up it in three

simple phases. one is proof of some -- proof of concept. and then we thought we were in a multiyear buildout of the infrastructure to support it and deepseek accelerates us through that. the next three your look is you have to rotate more towards application. what that looks like remains to be seen and we are figuring that out, the vc community is focused on robotics. from an investing perspective the middle phase is shorter than we thought. jonathan: is there a preferential sector for you? tom: you are going to get the broadening out as that first take away. the u.s. exceptionalism, these really consensus views walking into the year. we were u.s. exceptionalism but this is a dent. they are broadening out to main street as a winner and potential for europe if you are getting mass ai production. the preferred sectors are still tech, industrials and utilities. this is a real question.

the intensity or bottleneck of the infrastructure eases a little bit. but if we will get adoption a lot quicker, volume picks up and you will need infrastructure. we still like those sectors at a price and you just had a better price. lisa: you are not buying nvidia in the dip? tom: the infrastructure plays more than just chips. and it starts to circle around other topics. infrastructure build out for immigration, separation from china and the picture is more ways to win in an infrastructure build. i just do not think the chip build is there at this moment. lisa: there is something else you said, do you think that the dollar will weaken from here? tom: no. but the notion that ai innovation and exceptionalism in america will push the dollar higher is unlikely to be there. i think we do not often think

about what causes u.s. exceptionalism. it is tech innovation. we have the highest earning companies in america. it is immigration, people want to move. over 200 years we have had net immigration. a common on system in a world where people will inflow capital. there are many ways it still works. in america, the productivity is unmatched elsewhere. jonathan: i want to understand what you believe about deepseek. do you believe it was built for five or $6 million and that they did that and i will quote nvidia directly when nvidia turned around and said "they leveraged modly -- widely available models and it is fully export control compliant." what we relieve -- believe shapes your investment faces. do you believe all of that? tom: i do not know what to believe, how exactly they did

things from what we are told this was the final leg of training was done with low-cost, older chips and leveraging prior best in class models. the legality of that is not necessarily my concern. what it does do is open up the opportunity to scale ai quicker than we thought. if we do not need the computer power and the infrastructure, another perceived bottleneck, i can accelerate the option. that means that productivity can pick up. it benefits the players in the space that do not have the capacity to spend big. jonathan: productivity picks up and what does it mean for your call on the economy? tom: there is upside skew to our view on growth and downside skew to our view on inflation. all else equal. as we figured out it is a higher for longer world. jonathan: that is what i am thinking about. are there questions to be asked of chairman powell tomorrow?

tom: the two most important questions that i want to ask if i am sitting there in the audience, are we still meaningfully restrictive and what does that really mean. and can you cut rates in and of itself with just inflation calls? is that sufficient? those are the two questions i would ask and maybe those are the only ones that we will get intelligence on. lisa: there is a feeling that there is an opportunity for jerome powell to open the chance for risk the hike or cut at some point this year. do you think that would be appropriate given some of the technological transformation and uncertainties? tom: no, it is quite unlikely he will do that. lisa: do you think he should? tom: i do not think he should mostly because the labor market is what matters the most in america. and momentum is still cooling. some could argue stabilizing but it is very hard to argue that the labor market is tightening,

in my opinion. so if you look at quits, hires, initial claims as a way for stabilizing and the acceleration itself. until you see a tightening i do not think hikes are necessarily. annmarie: drawbar carrying out -- trump is carrying out deportations which could mean a tighter labor market. tom: the biggest risk is that he reduces supply in his first term. he ran on deportation in the first term and it was about half of that of obama's. using history as a guide, i think there is a big risk but a low probability that mass deportation changes it. annmarie: if we were to see that, would you consider a hike on the table? tom: without question. it is hard to argue that the soft landing would have been possible without the immigration search, so the opposite would be a risk for sure. lisa: going back to beginning, yesterday you questioned some of the holdings that you have.

have you taken action and what are you waiting for to decide if you have to shift some of your views? tom: the things that we talked about the winners and losers. main street is a winner and the big tech names are not an obvious loser. the big tech hyper scalars have access to the software and interactions with their clients so volume can sustain them. from a loser perspective we have to question infrastructure and it is about chips and power construction -- consumption, power generation, water, cooling and land. jonathan: these moves, pipeline operators and utility providers, they were huge moves in yesterday's session. lisa: it came off the heels that everyone was believing the story that there will be a definitive use and infinite amount of demand from energy and infrastructure as a result of intel -- artificial intelligence.

it speaks at how high valuations had gotten at a time where there were so many different stories. jonathan: there is a forecast for warmer weather and it is hard to divide the two issues. to see natural gas down. lisa: do you think we are not at two degrees fahrenheit? jonathan: there is a well or ella -- whether element in futures but further out the move you could see, that is about energy use. that speaks to a part of this being good news, if it is real. lisa: it could be good news because you could not have the adoption with the energy that we had. this is a positive and disinflationary which is a reason why we hope that jay powell addresses the nvidia question tomorrow at his conference. jonathan: mike mckee will ask and we will make it happen. we appreciate it and thank you. let us get you an update on stories elsewhere with the bloomberg brief. here is dani burger. dani: scott bessent has been

confirmed as the next u.s. treasury secretary. winning 68-29 including support from 15 democrats. his policy objectives include pre-percent gdp growth and a 3 million barrel per day increase in u.s. oil production. president trump weighing in on the future of tiktok saying that microsoft is interested. microsoft declined to talk about any involvement. perplexity has submitted a bid to merge with tiktok u.s. while the former owner of the l.a. dodgers made a former offer to buy the company. shares of jetblue are tumbling 8.4% in the premarket and it posted a fourth-quarter loss per share of $.21, better than a loss of $.31. it was the cost outlook higher than expected. they are expecting it to rise 7%. it is a setback for jetblue who had been focusing on reducing costs and improving operations. jonathan: we appreciate it.

more from her in about 30 minutes. up next the morning calls plus stacy raskin of bernstein saying that market hysteria is largely overblown. that conversation up next.

jonathan: lots to get through as we approach the opening bell, one hour and 13 minutes away. let us get you some morning calls. morgan stanley trimming its price target highlighting a lack of start -- short-term momentum. the second call upgrading amd to

hold, citing increasing competition from nvidia. that stock is unchained. jp morgan reiterating its overweight saying ai efficiency gains shown by deke -- deepseek should show innovation. let us take with nvidia. they were erasing some losses after deepseek triggered a route. stacy o'byrne same writing the following -- of bernstein writing the following. "the resulting panic over the weekend seems overblown." he joins us for more. you addressed my first question before but i want to repeat it and ask it to you just so the audience can gauge where you are coming from. do you believe this cost over -- under $5 million to build? stacy: it says so in the papers. i do think that part of the problem with the stock and the

whole space yesterday is that the headlines emerged from the circus over the weekend was basically they built openai for $5 billion and it is clearly not true. i have to say, there are two models, a base model and then a reasoning model which is the one that everybody is adding angst he over. v3 was trained on fairly high end nvidia gpu's and they had tens and potentially hundreds of millions of dollars of work that went into it, work on research algorithms and they say that in the note. they do not include that. that was just for that model. they took the v3 model ended reinforcement learning to develop the reasoning model. they did not actually disclose what they did to train the reasoning model. so i do not know like how efficient it was to do that.

i do know that thev3 model was efficient and there were some reasons for that. in the paragraph you just read, the models are actually really good and i do not want to discount that they are fantastic. the types of things that they did were not miracles or unknown to the rest of the community. and none of this was secret. their implementation was clever because they are under constraints due to export controls. they have to work well and efficiently. they have a bunch of really crack engineers that did a good job. the whole thing, the 5 million number just caused a complete and total panic which i do think was overblown. we saw that across the board and it goes beyond the chipmakers from natural gas provide -- prices and energy providers and pipeline companies. there is this line from nvidia that we kept bringing up and we would love your input.

they say it is fully export control compliant. i wonder how we even know that and how would we know that? stacy: i do not know what they are running on. they stuff -- the stuff that they trained v3 on is no longer export compliance. they train them on h800 chips and it is a derivative. it is the exact same compute and lower bandwidth and those parts are no longer export control legal. 2023 cut that off. i do not know what the new stuff is. my interpretation was whatever they are doing is running on our stuff or it can run on our stuff. this gets to a broader question because the biggest question is the near-term questions, will this cause a pause in shipments and orders and then do we structurally need less compute in order to do this?

i am not a believer. compute growth, like installed compute in the data set even before ai was growing leaps and bounds every year, people have been spouting it for the last all over the place and everybody has been talking about a paradox, the idea that as costs come down demand goes up and more that offsets the cost reductions. i am a semiconductor guy. they -- the cost got cut in half every day for two years. it was not bad for semiconductors so i am biased. i am not of the opinion that we can never have too much compute or that the compute that we do have was close to the limit of what we will need if ai takes on the potential and the industry thinks we can. i think we actually need efficiency improvements and even on the gpu side the performance is improved by more than 10,000

over the last years. nvidia wants to improve by one million. these are the type of efficiencies that we need if we get to where the industry wants to go. lisa: it will be a bumpy path and the concern is that the big tech players that have been spending significant amounts, billions of dollars on gpu's from nvidia will feel pressured to direct that back until they understand what kind of models they need to follow. there is a feeling that that is the near-term that we will be looking at. why do you disagree with that? stacy: the worries about air pockets and digestion is not new worries. those were concerns. last week in the month before in the month before and the year before. this is not unknown. i do think in the near-term the biggest question for nvidia this calendar year is blackwell. and i would be shocked if anybody is canceling that. what we talked about even last

week was purchase intentions in general going up and meta drops the cap acts by a massive amount. even china announced a 140 billion u.s. dollar investment program in ai. we are seeing purchase intentions go up. i would be shocked if people are canceling their orders. people will be wondering what it means for next year as rubin rolls out and will people rethink their trajectory for rubin. that is a concern before and not new. we would probably learn more about that in march when they have their a vent where we will get more color and we will see partner announcements. we will be able to engage more. this is part of the reason and one of the issues with the stocks in the near-term, there is more in certainty, clearly. even if you think this is not an issue, it is impossible to prove a negative. people will be free to worry and it might sit on the space for a

while and i am not saying it will not. we have to see how things evolve. i am pretty positive long-term on the prospect, is there near to medium term potential digesting or anything, there always is but that is true before. i do not believe the idea that is new because all of a sudden we have heard of deepseek. lisa: i am wondering if it indicates that china is further along in this development and potentially could be a competitor in the chip space, which we know they are trying to make headway in. stacy: this is one of the consequences of export controls. sometimes people do their best work under constraint. it is not like the chinese are stupid. they have fantastic engineers and talents. and you can look at some of the things that they did. some of the things they did were because they were constrained on what they could run on. they had to make choices that

you ordinarily would not want to do. but had no choice but to do it. we have seen this just on process technology. they cannot buy tools but they can do leading-edge. while way -- while way is making -- huawei are making chips, but they are using techniques to do that which will not be cost-effective and things he would not want to do. if you have no choice he will do them. we the -- we do the same thing on the semi cab side and local players are gaining share because they have no choice. jonathan: i could talk to you all day and this was fantastic. thank you. up next, we will get some economic data and reaction from lauren goodwin. ♪

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jonathan: the opening bell 60 minutes away. equity futures just about positive. on the nasdaq 100 up by 0.4. on the bond market yields down across the curve of the risk aversion. yields are a little bit higher by two basis points. 4.55 as we kick off the fed's two day meeting. with the economic data let us go over to mike mckee. mike: these are the numbers we want to see but not the month we want to see them. we want to see what impact the

policies are having on business investment but this is december data when joe biden was still president. capital goods has a number that is a proxy for business spending up .4% after a .4 rise in november that had originally been .7. durable good headlines down to .2 but that is usually heavily influenced by the boeing and auto company results that we see. so, we will look at exautos up .3%. and capital goods shipments up .6, which would be good news for the gdp numbers in the fourth quarter. right now, it is the capital goods orders non-defense and exaircraft that people worry about. that is up more than anticipated and we will see if that continues into the trump

administration. jonathan: given the constant threat of tariffs and given that we are aware of the constant threat of tariffs back in december as well. would you expect frontloading of orders? mike: you would and, perhaps people were trying to get some frontloading. we just got a revision to those orders up .9% in november and .5 in december. there is some frontloading, and a study out from the chicago booth school suggesting that consumers are doing the same thing. they were stocking up ahead of potential tariffs. we might see a stronger than gdp number because people were worried about it. jonathan: we appreciate it and we will touch base in a few moments time. it is an intriguing way of doing stimulus, the constant threat of tariffs. lisa: it does lose its potency if you keep using it. that seems to be what a lot of people were talking about, that

retailers in particular were getting ahead of any tariffs by stockpiling, let us hope they did not do the same things when they got a lot of lululemon pants and sweatpants. jonathan: it sounds personal. lisa: the retailers all had trouble because of sweatpants. jonathan: a lot of finance pros were buying lulu. annmarie: i thought poa was a good thing. jonathan: to go with the best. lisa: did you see him wearing leggings? jonathan: they do not wear leggings. that is not what i'm suggesting. lisa: it is the best. that change. jonathan: let us go back to the federal reserve and their away. but the two day meeting has started and i just got a confirmation of that. joining us is lauren goodwin. good to see you. lauren: thank you for having me. i like those pants for what is worth. jonathan: i really enjoy them. so soft, comfy, and great colors. i do not know if chairman powell

is into it as well. what do you expect tomorrow? lauren: nothing and it is his expressed goal to say as little as possible. the fed is sitting on a perfect goldilocks moment and it is probably not going to last. if you look across the market financial conditions are good. the two year yield has been sitting on top of the fed funds rate. labor and inflation is in good balance. there is nothing they should do to wait on more information which includes on how policy will impact their two mandates. jonathan: which speaks to what you said earlier, it will not last. what disrupts it? lauren: i do not know. there are so many things. if you look at the underlying impulse used to have seen that the disinflationary process is pretty much intact. i really hate what it happens that i agree with max with who you had and disinflation being more important for the markets that may getting attention.

you also have the labor market looking strong and a lot of runway for the fed for the growth moving back closer to trend without doing a whole lot. the types of disruptions we could have our the policy pull forward that we are seeing not only orders pulling forward but inflation expectations moving higher. these are the disruptions that are just sentiment. but as they transition into reality over the next three to six months that is very much in the timeline. jonathan: do you think that the most -- lisa: do you think the underpriced reality is the fed cutting more rather than less? lauren: i do not know if that is the case. the underlying impulse has been for this gradual disinflation. inflation is stinky and the fact that market rates are sticky is telling me that investors are concerned about what that future path looks like. and so, i take the fed and market at its word where 25

basis point cuts are a reasonable base case. when you are looking at a statement of economic projections that says that growth will come down closer to trend, but inflation not so much. lisa: tomorrow when we talk about the fed meeting we will be talking about inflation and rate cuts but everybody will want to know how politically influenced as the federal reserve and what is donald trump going to be saying and how much will there be a shadow fed. how much does that factor into your base case for markets at a time when we know all of that will happen to some degree or another? lauren: it does not because it is not something that i am worried about. i do think it will be part of the conversation and it is an important conversation. the line the fed will have to walk because there is already we have seen this attempt at interference. the line is that we have seen this movie before. we have not only the period in

the 70's and 80's but the postwar. -- postwar period and interference was a big part of that. they have seen that movie before and they do not want to play into that again. that is a message that we have seen the chair in rate in strong and funny language. and press conferences before. but they will have to keep doing it and it will be a part of the conversation. annmarie: didn't he open the door to that when he said we do not assume, or speculate or guess or speculate? lauren: it is a really good point and this comes down to these are economists or in chair powell, not a phd economist sitting around and looking at data and conditions, just the same as all of us where you do not want to make bold assumptions about policy or trajectory of the economy when you do not have good information

but you have to because you are trying to shield the business cycle. annmarie: not everyone on the committee assumed so then you are left uncertainty of trying to understand who was approaching what the economy is doing now or in the future. is that the fed being uncertain? lauren: it is. and then from an asset allocation perspective some of the lessons or through lines that we can take is that we are dealing with a really quite constructive economic backdrop. with a lot of uncertainty. one of the reasons we have seen such resilience along with market related uncertainty is because of that economic resilience. and when you are thinking about how to allocate a portfolio we can feel confident in areas that have not been discussed like credit. if you have a federal reserve who is on balance, in the process of cutting, even if it is not very much and an economy that is strong and an impulse

that is looking quite positive. that is an environment where staying invested is more valuable than not. jonathan: it was easy to say we do not assume, guess and speculate in november in the november you have to put out forecasts. it makes it a little bit easier tomorrow or tomorrow afternoon. lisa: they do not have to give transparency on who is assuming and really planning to incorporate what we have heard so far. that said, there is a feeling looming over the fed which is that donald trump will call them up and tweet at them and x at them and say guys rates have to go down and then they have to dovetail this very sensitive historical lesson, maybe at a time of potential transition. jonathan: some commentary from the strategist donald trump would be perfect. in the news conference. just perfect. annmarie: i think he will be truthing life.

jonathan: mike mckee will be in the news were -- in the conference room. what will president trump say? mike: he will try to make no news at all. there will be a question or two on donald trump. the issue for reporters is how do you ask something when you already know that he is not going to answer. we sort of have to get him on the record saying we do not know what will happen so we will not make any assumptions. but right now we also know that that is what he is going to say. i am not sure we get a whole lot of clarity. as far as what they do going forward he will dodge that as well saying we will wait and see and see what happens. unfortunately for the markets we will not get a lot of direction. jonathan: we can only hope and good luck tomorrow. mike mckee heading down to the meeting. look out for that news conference and special coverage starting about 1:30 eastern time.

the news conference begins 30 minutes later. lisa: i feel like every person is saying you do not have to watch it and you can turn it off. i am curious if the bar is so low for the fed chair to basically say nothing. will he embrace that bar or mess up? will he do nothing, or will he say something that he thinks or feels will be negative? jonathan: matt can answer that. how low is a bar for chairman powell? matt: pretty low. we are not expecting much, steady as she goes and watch the data. that leaves a possibility that people get surprised. chair powell said that rates were meaningfully restrictive at the last meeting and that point the 10 is at four point 25 range. -- 4.25 range. he has not put the tenure that much higher. he has possibly said something

to take a dovish implication. jonathan: do you believe we are meaningfully restrictive? matt: i do not. i think the idea of the neutral fed funds rates die voice -- diverse -- divorced from the markets. you cannot have a deficit i -- a deficit two to three times the normal level. so 4% of a 7% deficit is closer to neutral. but, it has to be calibrated relative to the economic environment and we think restrictive but meaningfully restrictive would be faded a little. lisa: haven't they been given a pass by the fact that we saw this rally and concerns about nvidia where we do not have to take a look at the long end that much and there is nothing to see here. candidate ponds on that cost -- kant -- can't they ponds on that. matt: i do not think they will look too much into one day or

one company. the 10-year is important. the fed funds rate does not affect the economy as much as longer rates. what they expect and what really drives long rates higher. they are probably on hold for the rest of the year but the rest of that will be another cut or two. lisa: as someone who has to invest, how much do you care about the tit-for-tat between donald trump and jay powell? matt: the idea of central-bank independence is important. that has been place for a while. but there is nothing new under the sun and politicians and central banks having different points of view always makes sense. you go back and financial reserve history. there were times that there was a lot of discussions between the central bank in the administration. lbj taking a fed chair down to texas and backed him up against the wall and poked him in the chest. there were times where there are

disagreement between the fed chair and the administration. we believe that the fed is independent and they will do what makes sense for the economy. annmarie: how difficult might it be when you start really hearing more news reports about trump coalescing his ideas and thinking behind the next fed chair. we know some potential lists that he might appoint. but by midyear, you might hear more about that one individual and that person speaks and they will carry more weight. matt: i think the structure is set up so they have different governors in different terms and people rolling over at different points. it is not that unusual to have a change. while chair powell is quite important, he has one member of a broad committee. and the chairman will have a major impact with everybody at the fed and the entire committee which has a very important voice. annmarie: when it comes to what we saw with the tech stocks adding absolutely hammered. $600 billion wiped out for

nvidia, you still say the best game in town and terms of growth. do you think that u.s. exceptionalism reigns? matt: especially in asset allocation the u.s. is the place to be. we have seen a number of high flyers especially in the tech sector. if you strip out those valuations from the market the rest of the best, valuations are not extended. we are not overly concerned about the high flyers not flying so high. we see the market broadening out and it is too early to call it a trend but we have seen the equal weight start to outperform and that is our belief. we have tilted and more diversified and we are not getting to overweight so we do not mind a little bit of volatility, that is to be exact -- expected. we do not expect valuations to extend but that the equity market will follow earnings. the deficit picture is a big part of the story so we are not

overly concerned. the rest of the market is appropriately valued to deliver reasonable returns. lisa: 60-40 is back with middling returns. matt: we never thought it was gone. we like it. we do feel better because it is not that difficult. do not tell anyone else. being a fixed income strategist is not different. you look at the yag, you can get 5% on high-quality fixed income meaning that you will get 5% year in and out. that is how fixed income diversifies, steady yield year in and out. let us say that the fed hikes five times. let us say the curve moves up in a parallel fashion and that is a pretty conservative assumption. in that instance, you will basically get over the next year or so a -2.5% total return. if rates move lower, you will

earn approximately 13%. the risk-reward when yields are higher or so much more favorable. that is not the case when the tenure was 1%. the symmetry is pretty much one-for-one. it is a good place to extend cash to get longer fixed income and more favorable duration. we are still neutral and slightly long. if you have slightly longer here and then added above 5% we feel like that will work. you can just be strategic. fixed income will do a good job of getting you additional returns. lisa: what is the one thing that could up end your view -- upend your view? matt: a sustained increase in inflation. the fed once a better labor market. that is not a problem. our belief and we believe the consensus belief is that tariffs are not overall inflationary. they will lead to a one time bump upwards but people will change their behavior.

tariff is a tax and what do you get when you tack something, less of it. as long of -- as long as that is the case we are in the right range. it would take a sustained increase to changed her just change trajectory. and without the fed financing those deficits, major inflationary impulse is unlikely. jonathan: it is good to see you and catch up with you. fixed income. still need to resolve core uncertainties around the policy of the new administration. lisa: and the ramifications. with the tariff policy and the idea of scott bessent talking about 2.5 percent is low. some people believe that is more -- more inflationary because that would not increase costs enough to restrict consumption but would bump prices up at a time where consumers have gotten used to fungible prices. jonathan: you have to understand the tit-for-tat and the fx channel, nothing is obvious.

2.5 might be seen as a starting point or the end point. nothing is obvious about this. lisa: how may times do i have to say i have no clue. jonathan: let us give you an update on stories elsewhere with someone who knows everything, dani burger. dani: that might be a slight exaggeration. the israeli prime minister is planning to visit washington next week to meet with president. people familiar say that he wants to speak to trump about maintaining the cease-fire in gaza. israeli media is reporting that his middle east envoy is expected to travel to israel this week to discuss longer-term solutions to regional conflicts. ray dalio says the ai frenzy looks like the.com search of the new millennium. he told eft that pricing has got to levels at hot docs that are high at the same time there is an interest rate risk which could break the bubble. the nasdaq one humble -- 100

double in 1999 before falling in 2022. it has doubled since the start of 2023. google map users will soon notice a change. the gulf of mexico will be named to the gulf of america. it will change place once official government sources are updating to reflect that order by president donald trump. the gulf of mexico name remain in the mexican uses -- names and international users will see names displayed side-by-side. jonathan: thank you and appreciate it. we will set you up for the day ahead and bring you the calendar. a big 24 hours. a federal decision returns after those numbers from microsoft, meta, and tesla. from new york city, this is bloomberg. ♪

jonathan: equity futures are barely positive, .1%. on the nasdaq after the losses, the biggest one-day loss and we are positive by .2%. 36 minutes away from the opening bell. here is manus cranny. manus: on the back of that nvidia story, that has dissipated through the morning. it was up 5% and we have given a little bit back. this is about reappraising the margin. general motors, they got a boost from the u.s. and china and they are making brave assumptions.

they are saying the first forward guidance we will earn between 13.7 and 15.7. that is not assuming the tariffs. and we are looking at jetblue. we have a supply problem. fewer flights in the first quarter and a potential loss of half a percent to 3.5% which is under the estimates. this is about capacity constraint. jonathan: they are having a difficult time. they are down by close to 9%. a big 24 hours coming up. a sprinkle of economic data and at 10:00 a.m. we get the consumer confidence. tomorrow it starts. 2:00 p.m. the fed decision followed by a news conference at 2:30. then earnings from microsoft, meta and tesla on wednesday. an ecb rate decision and then on friday, pce. is that enough for you? lisa: my question is what is the most important thing and everyone will agree going into

that without knowing more information, the tech earnings. apple, meta and microsoft. how much do we get a sense they are adjusting their spend on capital expenditures based on some of the advancements? jonathan: one thing missing, february 1. annmarie: on saturday there is a potential we will get tariffs on canada, mexico or china. we might not but we could. jonathan: the weekend is a continuation of the trading week because that could be a big weekend. annmarie: we work all the time. lisa: can i just say, are you going to say let's not get to the weekend, let us get to february 1. maybe that is where we are going to be. jonathan: julian emanuel of evan corcoran. look out for that and the former kansas city fed president. how many days until the weekend? lisa: it is only tuesday.

jonathan: it is the trading day of the single month or year. from new york, thank you for oomberg tv. ♪

>> trying to bounce back after a brutal monday. 30 minutes into the start of trading. i'm katie. and i'm scarlet. scarlet: bloomberg open interest starts right now. >> coming up, that trillion-dollar wipeout. black swan author warns that yesterday's selloff, just a taste of what's to come. scarlet: and even still, that market faces a big earnings test this week with investors hoping and praying that results from the magnificent