>> very interesting to see with the earnings reports will be like. >> it really does accentuate the need for diversification. >> when you have leaders in technology they tend to stay leaders. >> you've got growth at a reasonable price. i'm not worried about the valuations here. >> these big tech names are not an obvious loser to me. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning, good morning. for audience worldwide. bloomberg surveillance starts now. 1% of all time of the s&p 500.

equity futures continues. on the nasdaq, up by 0.4. going into a monster day, a first fed decision of 2025 later this afternoon 30 minutes after that you will hear from chairman powell and then the earnings. microsoft, meta and tesla. lisa: i thought you're going to say and then the main event which is earnings with microsoft meta and tesla. as much as we want to hear from fed chair jay powell and is much as people will parse through the nuances of how he carries himself and discusses donald trump and what kind of facial expressions he has really it's always going to be about big tech, how much they plan to spend on capital expenditures and adjust and adapt artificial intelligence spend and development. >> how they defend this on the earnings call will be intriguing. it's going to be a big one. then meta only last week talked about spending $65 billion on projects linked to ai.

there was a they intend to bring in the data center so large that would cover a part of manhattan. >> they will have to justify that and give guidance about whether that spend is more of a one-off in terms of infrastructure or whether it's the idea of you cannot throw enough money of the infrastructure tied to artificial intelligence. this is the distinction that the spend so far has been on the chips and data sectors. are we shifting into a world we are putting it into something else about the applications more broadly and is that what we will hear potentially from the executive branch of these companies. >> we've talked a lot about deepseek coming out. we haven't talked much about earnings themselves. demonstrating the power of earnings. asml over in europe. reported bookings of 7 billion euros, the estimate was for around 3.5. the stock is up in european trading close to 9%. >> a fascinating story on

several fronts. this company makes the equipment to manufacture chips. tsmc is on the biggest customers and china was one of their biggest customers for most of the past number of years. that has shifted and the question is given the shares are down 25% since the july peak how much are we looking at the rest of the world taking over market share where china can no longer play. the idea that these players given their equipment is in so much demand should continue to do well. jonathan: should we do some tech earnings and federal reserve? i think there is a difference between the skip and a pause. i wonder how they navigate that issue. a 50 basis point reduction, a 25 and a lot of people think they will skip today's meeting. lisa: the distinction here being the skip implies there is a downward structure in rates.

applause means we have no clue. it would basically give a sense that maybe they are done and would edify would a lot of people are saying. whether he indicates that his goal is to basically not address this question not do anything. say as little as possible. will he do his inner dove. this is what a lot of people here listening for pretty >> the consensus seems to be closer to maybe a pause than a skip. we will see if that changes this afternoon. we catch up with julian emanuel of evercore on the ai revolution. michael widmer at bank of america and malik khan at morningstar. trends away fed decision from dutch and big tech. overweight tech while the dust settles many of these names, particularly the semis, may remained pressured. on a three-quarter and three year view you want to buy these. i can't believe it is only wednesday. let's get into these earnings.

you say may be by over three quarter multiyear view. why? annmarie: -- julian: essentially what we saw over the last three days tells you that the importance of ai as a revolutionary technology that's going to advance the world is not only robust but is an absolute imperative. the stocks reacted the way they did because of this psychological displacement with regard to deepseek. what it really means is the race is on to implement and from our work 2025 in the work we did almost two years ago now when ai was first introduced is 2020 five was going to be the inflection year in adoption and this catalyzes it. >> what does it make for references as it shifts away. what does that look like.

annmarie: there has been -- julian: there has been over the last year or two a swathe of companies across industries who constantly speak to the idea of ai and again a lot of it is largely anecdotal because i think there's been a reticence to talk about what cost savings looks like versus things that drive revenue and frankly companies are still trying to figure out what that mix looks like. but those are the companies that are forward about it and we will hear a lot more. it's not just the earnings calls of the mag seven that matter it is the earnings calls of the other companies and those that are talking about it and telling you how they are deploying. >> do you think this is the tipping point that so many people are waiting for. where suddenly some of the biggest winners, it's also the power generators which did not recover yesterday are not going to necessarily benefit in the same way they did in 2024. >> there is a bifurcation going

on and you know, actually if you are jay powell and you are donald trump, you like the fact that yields have come in over the last couple of days because the implication is the news over the weekend in terms of deepseek is actually a disinflationary impulse. but the downside of that is a power producer is much more difficult to see what the next three years looks like and whenever you have a company or a theme that one moment had sort of this concept of infant growth , whatever that number was and then all of a sudden it's infinite minus a handicap. that is punishing for the stocks. >> is that the right way. that it was an expression of greater disinflation as a result of technological advance or was it a risk off move meijer by bonds. julian: you would've said that

except for yields ended up on their lows yesterday unchanged with the market recovering. so i think there was certainly an element to that on monday. but the other message and again obviously overnight we have seen more rhetoric about the intention to reduce the size of government, all in this is calm the bond market down and from our point of view talking about the names in the sectors like the bull market leaders yields remaining calm is a very important part of that thesis. >> the conference board numbers yesterday went great. is it just good stuff or is it about stuff in there as well that is there bad >> stuff in there as well. >>even when things are going gangbusters in an economy you can always find the 1, 2 or three items that are unsettling. you look deep enough and we find them. but frankly from our point of

view, you are in a mode where, and i will go back to your introduction, we think it is skip not pause. >> why? >> basically the trend towards inflation if you think about it, the last several months very much like the spring of 2024. you had a couple of months in there where the thesis was questioned about the trend of travel and inflation. you paused and yet it kept going. and the weakening of some of those data elements continuing claims moving into new multiyear highs among them. telling you that the trend of inflation moving lower isn't there. >> is that trey-dependent prayer we will head down to washington to catch up with anne-marie in about five minutes time. is that call trade dependent on what happens this weekend avoid tariffs or implement them? >> a very good question and i

think the answer there is if you look back, donald trump learned a lot from his first term in office. and one of the things he learned was that the bond market really could call the shots for the degree of policy implementation and how far you pressed once things were announced. so in that respect there is an element of that to it. but we do think you go back to the original appointment of besson, there is an acknowledgment of the importance of financial markets and the desire not to disrupt that narrative, to be able to long-term implement policy. >> we will get into the details when we speak with anne-marie in a moment. but you said just in general is a stock analyst as an equity analyst more broadly looking at the path of policy it looks like basically a repeat of 2018 and yet in 2018 the s&p ended the

year down six and a quarter percent. why is this time different? >> the path in 2018 was very volatile and actually at midyear you are up substantially almost double digits. and then what happened was you got to a point where the bond vigilantes stepped in in 2018, 3% on the 10 year yield was the equivalent of 5% on the 10 year yield right now and we've already seen whether it is the last couple of months we are going back to the start of this bull market cycle that once you get towards 5% the markets do not like that and so that is well known. lisa: which is a reason why the commentary won't necessarily be from mark zuckerberg or satya nadella, not even jay powell. it will be from donald trump in response to jay powell but regardless of what he said if there is a pause and not a skip,

an indication and there's a chance of them hiking rates again how big would the tantrum be in markets? julian: pretty substantial. jonathan: i thought juergen essay how big of a tantrum would be at the white house. lisa: we already know that. this is par for the course so they already have it they basically just press go. julian: the point being here that the valuations where we are in the market, less than perfect and or very good news is met with violent reaction. basically we have deepseek on monday, three substantial selloff but that was preceded by 10 days of literally parabolic gains given the fact the inflation news was so good. where is the next three to 5%? let's see what we hear from the white house and let's see what the corporate dialogue around

deepseek is in these reporters this afternoon for the long term trend of travel is still higher. >> julian will be sticking with the spread equity futures on the s&p positive by close to 1/10 of 1%. we will catch up with anne-marie in a moment. let's get an update on stories elsewhere. here is your bloomberg brief. >> bloomberg has learned microsoft and openai are investigating whether chinese ai start of deepseek obtained unauthorized data output from openai technology. sources say microsoft had observed individuals they think might be linked to deepseek taking a large amount of data with the openai application program interface. earlier the white house ai chief david sachs told fox news there was evidence deepseek had leaned on the output of openai's models to help develop its own technology. bloomberg has learned apple has secretly worked with spacex and t-mobile to add support for the

starlink network. in an under the radar move the smartphone's latest software update released this week now supports the technology. the initial version is exclusively for texting but spacex and t-mobile had previously said they plan to expand into data connections and voice calls in the future. you mentioned this at the start, shares of asml are surging nearly 9%, the most since 2020. the dutch company said bookings were more than twice as much as analyst had expected with the ai boom fueling demand for chipmaking machines. the asml ceo said ai will bring more opportunities to the industry. the company expects china sales to fall about 20% of total revenue this year. that's your brief. >> more from danny in about 30 minutes time. asml absolute crushed it. if you get similar performance later from meta and microsoft we won't be talking about monday for a long time. absolutely amazing numbers from

asml. >> especially if you get the sense they are monetizing ai. the details will be important in terms of that expenditure. thing about what happened gm yesterday. putting up great numbers in than people said what about the tariffs and their stock tank. >> how much weight can you put on the outlook when it so dependent on what happens over the weekend. counting down to the tariff deadline. >> the president has made it clear again he expects every nation around this world to cooperate with the repatriation of their citizens and the federer a first state for canada and mexico still holds. jonathan: we will catch up with anne-marie in washington dc. good morning. ♪

>> equity futures on the s&p

positive by about a 10th of 1% on the s&p 500. some stability, 4.5263. earnings this afternoon the federal reserve decision talking about and then the trade deadline a little bit later pray the federal reserve i think it's important to try and recognize is this a skip or a pause and imagine chairman powell will be challenged on that. >> one moment on a path downward for rates? if this is a fed that indicates they are done whether there is a high likely hood of them being done for the rate cuts, expect a pretty big move in the market that right now is sort of anticipating three rate cuts at a time where some people are seeing the idea of disinflation continuing to take hold. >> let's see if we can get through the fed quickly. under surveillance we count you down to the tariff deadline. >> february 1 day for canada and mexico also the china tariff he

has discussed he rejected the 2.5% tariff saying it was too low. he wanted to be higher. the president has made it clear he expects every nation in the world to cooperate the repatriation. specific statements in canada and mexico when it comes to what he expects in terms of border security. the fed refers state still holds. >> the saturday deadline fast approaching. president trump repairing to slap canada and mexico with 25% tariffs and still a consideration to put 10% tariffs on china. part of the effort from the president to address illegal border crossings in the use of fentanyl. anne-marie joins us for more. that deadline fast approaching. >> the press secretary says it stands so potentially on saturday we could see tariffs as high as 25% from both border countries mexico and canada and maybe even 10% when it comes to

china or do we see something like we saw over the weekend where trump threatened all the sanctions and tariffs, said that they were in place and then we saw moves very quickly by the colombian government and then those tariffs, those sanctions will now be on reserves. i think the market has a lot to learn this weekend. how high those numbers are, how quickly they get enacted and potentially used as a negotiating tool to trying get canada and mexico to the table earlier to renegotiate usmca. what exactly will he get asked or by coming out earlier on these tariffs. his first day in office he signed this executive order to have a memorandum to look into and have a review on trade when it comes to america's trading partners worth billions of dollars. that day is for april 1 bread regardless of what we get on saturday i think we will learn a lot. we know with tariffs they can be enacted immediately but in the past we have seen governments

given a 90 day ramp-up periods so potentially we are going to learn a lot depending on how these tariffs are enacted and what level they are and whether or not importers will get a leeway of 90 days. lisa: not just on the u.s. side but what kind of retaliatory tariffs might be put into place by the likes of canada and mexico paid what we heard so far on that front. >> they have this nuclear option when it comes to oil because the united states imports the heavy crew that viscous oil from canada that's really hard to get from other places unless you want to say open up more trading with places like venezuela. that's not going to happen under this government. potentially what trump is trying to do here is remember the first talked about tariffs. we saw immediately justin trudeau fly to palm beach go to mar-a-lago. likely what will happen is this will lead to some sort of negotiation and potentially bring up those talks that are supposed to happen at the start

of 2026 when it comes to usmca. jonathan: questions about what a president can and cannot do. what's the latest on spending writing >> we had a judge last night block what they were doing in terms of a federal freeze but the president was trying to do the office on budget and management was freeze a lot of federal spending grants and loans especially when they say it comes to ideological positions. diversity, equity and inclusion. they had to put out a memo after this because people were panicking and it wreaked a bit of havoc and reminded people that you want to make sure you still get maybe your student loans or social security or medicare payments. so there's been a lot of confusion on this but i think what you can take from this signal is donald trump is acting like a ceo that wants to downsize the federal workforce and we saw that again offering buyouts for some federal

employees they need to let them know the next few days if they want to take it or not they will get a buyout. >> appreciate the update. more from annmarie later. we were basically seeing from donald trump a similar approach than we've seen from elon musk the ceo but this time the federal government and not to a private company. >> i would say the same approach in fact the email sent to federal workers yesterday had the subject fork in a road. that is the same email subject that elon musk used in an email to twitter when he was talking about downsizing the staff there. can you do the same at the federal government? the courts will decide. >> a lot to unpack here. let's start with trade. lisa is right to pick up on general motors. nothing wrong here. stock was down by close to 9% of the close. how investable are some of these

stocks without getting that clarity on trade. >> the share price reaction yesterday spoke for itself. but again a similar to how one was thinking about the share price reactions in the mag seven etc. on monday, these are the kinds of things but if you are long-term investor you know that whatever comes out in the beginning whether it is 25% across-the-board, we know that the automobile industry is going to be the most impacted if that kind of tact is taken towards mexico. but it is not likely to sustain itself infinitely. it sort of never has. and those of the kinds of times particularly in valuations when you're talking about four and five times earnings, granted the earnings will be handicapped. but that is where long-term investors find value. >> are you saying you bought gm

yesterday? julian: i'm not saying that. lisa: is it too early, is it basically this right now is noise and you can really get involved in it. at a certain point you can say now i can start picking up the pieces. >> it is a valuation sensitive thing, a lot of these companies if you look at it, we like five-year average valuations. a lot of these companies are trading it substantial discounts for their five-year average valuations so i have a numerical advantage coming in that allows me to sort of ride out the volatility even if it is multiple quarters for that kind of potential change in earnings. >> certainly of volatile week that's for sure over the past few days. julian emanuel of evercore with equity futures just about positive on the s&p 500. i cannot believe we are still through january. this is felt like a lifetime.

lisa: we have 11 more months and this is just the beginning. you can expect this, it will be shifting narratives happening that much quicker. they change day today. >> on the east coast it feels like a grind getting through january. i struggle with the first quarter. >> you wanted earlier day, i get it. >> in new york you get the promise of that. in the u.k. you don't get the promise of the summer. and then summer never comes. >> it will be good. >> from new york this is bloomberg. ♪

jonathan: decent bounce in yesterday's session. we are up by .8%. a decision from the federal reserve for the bond market. just about unchanged on the 10-year. the front end of the curve, two-year, 419.29. a tug-of-war between the ecb and the federal reserve and the next 24 hours. let's call this 104. is it a skip over a pause? for the ecb, do they just keep on cutting? lisa: it doesn't matter what the

fed or ecb says. it's up to the white house what type of tariffs get announced that determines currency pair. you think it is a race to the bottom and maybe the ecb could win, but now they are both backing away from it. the dominating force has been tariff talk. i can't really make predictions right now. jonathan: compared to the federal reserve? lisa: you would think so but there has been stickier inflation. there one mandate is inflation. they don't have the dual mandate. this is why people are backing away from the potential to cut rates even though that might be the right thing to do. jonathan: it has not been great when you speak to ecb officials. that make the point we are making our way back to neutral. we will see if that changes tomorrow morning. lisa: that is the key question. one to they talked about generating growth and not just sticking to the idea of the new role on the back of 2%.

jonathan: the federal reserve first. shares of asml surging the most since 2020. more than double what analysts had expected. the stock is higher by close to 10%. lisa: this is fascinating. the company has been hammered by the orders by the u.s. to not sell some of their advanced chip making equipment to china. can the u.s. take over that potential share? the answer is yes, along with a host of other countries. it's been affected by some of the u.s.'s borders pre-trump and adapting to what ford when this is very much in demand. jonathan: on monday they were down by 7% at the close. they closed last friday at 700. 705 now. it is like deepseek never happened. lisa: people have reassessed how

much chipmakers will get hit if there is a greater efficiency. if you have greater adoption, you will have greater uses of chips. it is not that chips that have gotten was hammered. it is the power generators. that has been the take away. jonathan: did not see a convincing bounce out of constellation energy. i was looking at the same thing yesterday. did not see a convincing bounce. lisa: jp morgan indicated this was the one area they are rethinking as a result of some of the efficiency -- not necessarily the chipmakers or the big tech players. that is what we saw play out yesterday. jonathan: asml positive by 9%. a federal judge blocking the trump administration from enforcing a new directive to hold trillions of dollars in federal spending as president trump is offering buyouts to federal employees that will not comply with his demands that they return to the office.

this could have big economic consequences. lisa: and constitutional once too -- ones too. the president wants to establish constitutional precedent ahead of big changes. i was looking back to the 1970's were nixon came out with a host of different campaign issues, different budgetary issues he passed. congress passed something saying we have the power of the purse, not you. this is something donald trump says he wants to challenge. you can imagine he will implement a lot more sweeping changes to come. jonathan: there's a new wrinkle in the federal reserve's outlook. 30 minutes later, a news conference with chairman powell. the central bank expected to hold rates steady, giving themselves time to lower inflation and assess president trump's policies. we are policy depended at the federal reserve. i mean white house policy dependent on the fomc. lisa: each member has a

different take on exactly how those policies have potential to reverberate through the economy. chris waller coming out and basically saying a lot of the tariffs be disinflationary and they do nothing to really interfere with the ongoing trend downward. you have others that feel differently. where does fed chair powell stand? how much does he want to ignite the fury of the white house? -- to ignite the fury of the white house? jonathan: -- lisa: i think people would be surprised given this is donald trump who came out and said he knows interest rates better than jay powell. he thinks they need to be lower, much lower and let's go. there's a feeling that he is going to continue to -- jonathan: i would be disappointed if we do not hear from the president later this afternoon. gold rebounding from its monday drop amid uncertainty over the proposed tariffs and head of

today's fed decision. now $30 high of the all-time -- $30 shy of the all-time high. michael widmer joins us now for more. what did we learn about the relationship between risk assets, equities and gold? michael: that is not always a key relationship. i think generally why look at what happened on monday and the volatility we had on the equity side, gold has been very resilient. we have stuck to our price target for this year because everything you just said. there's a lot of tension in the system, in the markets at the moment. it's about trump, about the relationship with the fed. that is one of the factors that should attract gold buyers. jonathan: you believe it has risk mitigation characteristics with monday's move? michael: it does. there is a more structural element. it is not just equities going down and you have to look for a

safe haven asset. when you look at the environment the tension between the fed should keep rates higher and trump wants to keep it lower. that can cause apprehension. when you are a non-us central bank and you hold a lot of assets in u.s. dollars and treasuries, deficits at 6% to 7%, the risk of increased volatility on that front as well, do you want to keep a very large share of your holdings in treasuries? look at china last year. gold hoarding increased. that is a good guidance on how popular gold actually is with some of the sentiments. lisa: gold tends to be a haven asset and get bid up when economic activity goes down. there are people getting increasingly bullish on a lot of industrial metals that typically do better when economic activity goes up. how much of that is a tariff

play and how much of that is something that speaks to the expected buildout of the real economy of the real asset world? michael: there are two parts. the first is supply-side. we have underinvested in the industrial metals on the supply side for the last 10 years. miners tightened the belt. there was a misallocation of capital during that time. now you have that push for the energy transition, a structural trend. china's spending carried the global market for the last two years. now you have the u.s. and europe coming and you don't have the times available -- tons available. the demand just keeps going higher and keeping the market -- on top of all of that, you have potentially a blotting out -- bottoming out. lisa: is the u.s. taking over

where china once lived when it came to demand for these industrial metals? michael: the u.s. has exported a lot of its metals demand to china. from china it is 50%. the u.s. is trying to get some of that metals demand back by rebuilding some of the domestic supply chain. it is not necessarily taking over china but the u.s. becomes an additional factor. rather than a decline that we have seen in the last 20 years, demand is coming back in increase in add to the tightness. jonathan: copper, rio has the

opportunity of running the meeting, do you see the making the move on the demand side story? >> you talk about tariffs and copper in the last few days to rebuild the supply chain. there is an awareness would like to increase domestic supply, particularly -- there's a handful in the u.s. that with all the best intentions did not make it to the market because you have local resistance to the operations. permitting has been difficult. you need to change the operating environment to help the miners bring that to market. rio tinto is optimistic getting the mine through. jonathan: how would that change things? michael: you have a global project pipeline. we need everything that we see coming on now. it would not change the underlying dynamics. lisa: it is not just with respect to a shortfall in supply. is the potential for tariffs.

trump was speaking in miami and said i will be placing tariffs on steel, aluminum, copper, things we need for our military. how much do you expect that to end up adding a booster pricing going forward? michael: it is one of the sectors. you have to assume the metals are available when we need them. defense spending is starting to pick up. energy transition and a lot of countries -- in a lot of countries is turbocharging the metals demand growth. we are just at the start of that happening. we know we don't have enough available. copper last year should have traded a third lower but it was very resilient. look at the issues thrown at the copper market. in the past i could easily justify the bear market. all that spinning you said is coming through. -- spending you said is coming through. lisa: there was 10 years of a bull market where all the metals you covered did really well.

then there was 10 years of death where basically it bottomed out and there was a real rethinking of how important metals were to the physical world that no longer seems to depend on things that were physical. are we now entering a new bull market for the metals that you cover? michael: starting with public events, yes, there is more now that you need those metals to run your economy. governments, all the push on the ai side, realize that. you cannot build data centers without having access to some of those metals. what comes first is the demand will go up, and then more supply into the market. that is what is driving the tightness of the prices we see at the moment. jonathan: $3000 target on gold? michael: yes. jonathan: michael widmer of bank of america on the metals market. your bloomberg brief with dani burger. dani: president trump has invited benjamin netanyahu to a

meeting at the white house next tuesday. clearly sit down confirmed for the prime ministers office comes weeks before the end of the first phase of the pause and fighting in gaza. starbucks reported better-than-expected first quarter earnings. same-store sales fell 4% compared to a 7% slump in the prior quarter. the new ceo brian niccol is focusing on improving the store experience. starbucks brought back ceramic mugs and a condiment bar. it plans to cut 30% of the food and drink lineup to simple if i the menu and speed up service. novo nordisk's popular weight loss drug ozempic has been approved by the fda to treat chronic kidney disease in patients with type two diabetes. studies have shown it can reduce the risk of death in patients with kidney disease caused by diabetes. novo nordisk gaining just under 1% in the denmark trade. that is your brief. jonathan: appreciate it. up next, earnings from the mag7.

>> it's interesting to see with the earnings report will be like this week. the magnificent seven are magnificent for a reason. it doesn't mean there aren't other companies double compete and challenge the dominance, but that world existed last friday as well. jonathan: microsoft, meta and tesla coming up this afternoon. from new york, this is bloomberg. ♪ ♪

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before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com jonathan: equities on the s&p positive 5.1%. they federal reserve decision in the bond market. yields going nowhere. under surveillance, earnings from the mag7. >> it'll be interesting to see

what the reports will be like this week. i do think the u.s. exceptionalism story was built just on chatgpt. it is built on the idea that we are the greatest innovator of the world. the magnificent seven are magnificent for reason. one owns social media. one own smartphones. you can fit on the list. does this mean there are other companies double compete and challenge that dominance? sure, but that world existed last friday as well. jonathan: microsoft, meta, tesla kicking up earnings after the closing bell. results coming as china's deepseek prompt concerns about tech valuations and competition. malik khan has a $590 price target on meta. possible job cuts on the company's call later this afternoon. ahmed, good to get your thoughts in the program.

i want your thoughts on monday. something interest in happen. medical is positive. yourself did not. what is the best way of explaining the difference between the two? ahmed: thank you so much for having here. a lot of investors are worried about what that means. the genai investments going forward. whether that is a good use of capital. with meta, with think investors have a nuanced view. with ai or prices going down, you would see meta benefiting from using that genitive ai throughout its advertising product. i think that was the new ones that was built in with google and microsoft being down. meta is up.

jonathan: from meta specifically, is it easier or harder to justify the capex spend the unveiled last week? ahmed: it is interesting, right? the way we think about meta and google and microsoft and amazon is that you have this commodification. with think of genitive ai or llm's and meta advertising sales as the price of genitive goes down. that means medic can use it, use genitive ai for better content creation tools, better content creation recommendation tools and have better monetization on their app as well. the value goes up. you can make similar arguments for microsoft and google.

they have a variety of products that would be complement every to genai as well. that is the way we think about meta's genai play and it's a smart decision. lisa: a lot of issues facing meta, including what happens with tiktok. i wonder if you are expecting any commentary today about whether meta could potentially bid for it, the potential exit of tiktok from the market we do, and how they are preparing to gain market share after questions swirl over the platform. ahmed: it is highly unlikely that meta would be allowed to bid for tiktok. i know the anti-trump environment will be different under a new administration -- antitrust. if you think about the dominance in social media, it will be tough for them to bid for it. as far as market share, if tiktok was to go away, we have

good data for that. we have india that band tiktok back in 2020. after he saw an increase engagement for both meta and instagram and youtube shorts, the two competition for tiktok. when meta had an actual outage and their applications went down, you saw tiktok and youtube usage increase, showing that effect. if tiktok is banned, we would see instagram, which is owned by meta, to be the biggest beneficiary. that is not include tiktok. lisa: there are reports that mark zuckerberg is looking at properties in washington, d.c. he has one in mind. the idea is to get closer to the president. we saw him at the inauguration. he's a constant presence at mar-a-lago. as an analyst how much does that

influence your view of the company as essentially a greater leg up with this administration and be beneficial to the company as we have seen with elon musk? ahmed: i would like to say companies' lobbying efforts are nothing new. the first thing i would say. second thing, we wrote a piece on the effect of the election, especially as it relates to big tech. we have the view a republican sweep would be beneficial to big tech. not that we were expecting of these companies actually get closer to the new administration, but rather some of the antitrust with moderate. some regulatory headwinds with moderate. we see that going forward as well. jonathan: appreciate your time, sir, and your input. going into numbers later this afternoon. ahmed khan ahead of numbers from

meta and microsoft. there is one thing new about this. these companies have been cloaking themselves and liberal values for years and years to insulate themselves from the regulatory impulse of the left. now they have to do something similar on the right. lisa: it has been a big about-face. we have seen that dramatically. what i'm curious about with the elon musk effect is that it has put a spotlight on this dynamic in a new way. based on the stock valuations and the regulatory structure for automated cars, automated driving. you wonder is there an extra lever you can pull if you are closer and have the ear the president in terms of deregulating certain sectors and moving towards other things. this has always been true. it's a lot more transparent perhaps this time around. jonathan: i think it was transparent last time around. lisa: really? the same public -- jonathan: billionaires making

big donations to the democratic party repeatedly. lisa: that's different than going down and trying to create that connection with the person and talk about how wonderful they are. we don't see that usually. do you hear that from big executives were people with a biden is the best president we could potentially have? jonathan: no one would go that far. have you seen him in the last 12 months? lisa: it seems like there is a shift in town. you could say it is business as usual. ahmed was talking about the trump red sweep would be better because of the regulatory types of constraints we removed. jonathan: we will see what we get and who would benefit. let's be consistent about asking these questions. the complaints i have heard from senator warren, what is it you want? i did not see those complaints and the last 10 years when the money was going give the direction. lisa: that's an important thing to keep calling out.

where is the consistency and complaints with respect to media, with respect to dominance in certain areas? you are right. it is hard to get consistency. whether it comes to tiktok or the question of whether big tech firms are too big, these are all fungible issues that have bipartisan support on both sides. jonathan: you have to call balls and strikes. did you see how hostile the press was yesterday? did not see much of that over the previous four years. lisa: there's a new challenge to legacy media over the past couple of days. jonathan: that challenge gets greater. equity futures on the s&p positive 5.1%. up next, lisa shalett, nicolai tangen, the former senior white house trade advisor kelly ann shaw, and former kansas city fed president esther george. the second hour of "bloomberg surveillance" is up next. ♪ ♪

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>> the underlying impulse has been for this gradual disinflation. inflation is still sticky. >> we have an imbalanced economy. the labor markets are still cooling. >> what the fed is taking link is super important for the rest of the year. >> i'm not inspecting much from this meeting just because there is so much influx. >> the fed has to get more strategic in its approach and stopping excessively data dependent. >> this is "bloomberg

surveillance" with jonathan ferro, lisa abramowicz and and reorder. -- annmarie hordern. jonathan: kicking it off with the scores. equity futures positive by .1%. big afternoon coming up for the nasdaq. numbers from microsoft, tesla, meta. we have a federal reserve decision just around the corner as well at 2:00 p.m. eastern time, followed by a news conference with chairman powell. lisa: this is the one people are not looking forward to that will be incredibly boring and he will say nothing and we can move on to meta and microsoft and tesla earnings. to me, this has one of the more disruptive potentials given the fact if there is an indication by fed chair jay powell they might not cut rates at all for the remainder of the year, that would be a massive risk off event for the entire market. jonathan: skip or pause and how much weight can you put on the forward guidance? this is something we were talking about with regards to general motors.

how much weight can you put on the outlook given how trade dependent the outlook might be? we might get new information on trade over the weekend. d want to get out in front of that if you are chairman powell? lisa: general motors had everything to look pretty good beating expectations, yet they are potentially the most susceptible to tariffs on mexico that could come and play as soon as february. do tariffs have the same economic revocation that the fed has to take into -- ramifications that the fed has to take into consideration? chris waller's take is not really. if you hear from jay powell they could have similar broad-based ramifications for the economy, that would be a potential market moving event. jonathan: we don't speculate but we kind of do. some of us do. let's see if our guest speculate this afternoon. coming up, lisa shalett as investors await the fed decision. nicolai tangen weighing in on

u.s. tech dominance. former senior white house trade advisor to trump kelly ann shaw. we begin with stocks higher in investors catching their breath before the first fed decision of 2025 and big tech earnings this afternoon. lisa shalett saying the surgeon long-term bond yields has created a headwind for u.s. equities, which if -- have written valuations for the better part of 27 months. the narrative is focused on show me earnings achievement. good morning. achievements over in europe absolutely stunning. we saw how stock investors rewarded them. do you look forward to the big tech players over the next week? lisa: tech is under the spotlight. not just given the fact that their performance has been somewhat lackluster since the first week in december. the expectation 425 and 2026 is earnings growth rates are going to decelerate. -- for 2025.

the element has been math that is baked in. people are looking for that guidance more than what they do for the fourth quarter. looking for the guidance to see are tech companies more measured or more optimistic. i think it is that guidance -- the forward guidance that will carry the day. coming into 2025-2026, for tech companies some expectations were a little more realistic. jonathan: does it get harder to justify the big spending following the news of the last week and the price action on monday? lisa: it raises the question on what is your capex efficiency. do you really need to spend as much capex and build as many data centers with as many gpu's that use as many chips? are you going to be able to through software engineering do

things cheaper and faster? especially if you are willing to use an open source chassis. these open source chassis will get more sophisticated, and they are free. that is the magic here we will have to watch. i don't think this is new news to sam altman or to the folks at microsoft and google. i think they are going to have to talk about it. lisa: earnings season used to be launched by the big banks and now it's the tech players. there's a broader economic readthrough depending on what happens there. we have been talking about whether we are reaching the tipping point at which investment nai is moving -- in ai is moving into broader application. what would you have to hear at today's earning reports to think this is truly that tipping point? lisa: it is them not taking up the guidance on capex.

it is them answering the questions. we have put the number out there at x. that is our number, right? being somewhat combative with analysts on that. that would scare people if they suggested there is, committal upside to their spend. -- their capex spend. that's the great question. there are two things. there is one among the mag7 themselves who are going to be the ones who actually grab onto this. you know what? we have been studying this. we do think we will be able to be more effective, more efficient and spend 20% less. then there are going to be the folks who are the adopters, who are apps guys actually developing tools that are using

a genai -- agent ai. the next wave of companies that are going to say, hey, we are driving efficiencies and effectiveness. we know how to do this. they are the next market leaders in this tech diffusion cycle. jonathan: is it too early to jump on that theme? lisa: i think the starting gun was probably fired in the fourth quarter of last year. you look at the stocks. they have started to move. for them we think it is bottom of the first inning, top of the second. jonathan: when do we see efficiency gains in financials? the banks could benefit big-time. you can see them become really efficient. each additional dollar revenue becomes less and less labor-intensive. are we close to that? lisa: i want to define close. a lot of effort is being

expended. a lot of money and consulting dollars are being expended here. i think that in terms of moving the needle on margin, you are still probably two to three years away from seeing companies truly be able to say we are hiring fewer people, our productivity has gone up by x, y, z. most of these businesses, the stakes of getting it wrong are so high that before you start pulling people out and relying on machines to do your client service or customer interaction or building or whatever you have to know that it works. lisa: this is very nuanced. a lot of your clients are probably thinking, our markets going up or down? if there is some sort of macro theme it comes down to the yield space. you see some of the stories potentially constructive. earnings growth is potentially

positive. yet it all hinges on what happens today with fed chair jay powell and generally with the bond market. can you talk about that relationship? lisa: what we have seen is the magic number has been 4.5% when we get yield through on the 10-year. we have seen positive correlations between yields and stock prices. the quote that jonathan started with, that starts becoming a headwind to valuations. why is 4.5% a magic number? i constantly explain to people we have been in an economy that has been nominally growing at more than 5% per year. as long as you are growing faster in your cost of capital you will be able to cover your interest payments. as those interest rates get closer and closer to that nominal growth rate of 5%, that ability to cover interest payments gets harder.

you start thinking, well, are some of these companies going to have dent in margins because the cost of capital maybe 6% and gdp is only 5%? we are watching the direction of the long end. what we have observed is a lot of the movement on the long end is driven by two things. not inflation expectations. we have had positive economic growth surprises. that has taken up the real component. we've had an increase in the term premium. as i know you know, having studied fixed income for a long time, over the last 80 years term premiums on the long end have been as wide as 150 basis points. term premiums for listeners who may not know this are basically just the extra risk premium investors demand for policy uncertainty. for the fact that time -- over

time things change. anything from policy to technology to etc. what we are looking at is the drivers of those interest rates. what has been interesting is fat expectations got crushed -- fed expectations got crushed in the fourth quarter. over the last six to eight weeks is it has not been that much about the fed. i think powell today will be very measured. i think he is going to say very little in this press conference. i think he will try to say as little as possible about anything that has to do with the white house. anything about tariffs. anything about debts and deficits. he will really walk a very fine line. he will stick to the script of we are data-driven. that's it. we've had stronger data. we think inflation is under control. we are watching and waiting. lisa: if the fed is no longer

the driver, the policy uncertainty is in the driver seat. what kind of move up -- looking at the 10-year at 4.53% -- what move would you have to see real serious declines in equities? lisa: if we search back -- surge back through 4.75%, that will stop stocks in their tracks again. jonathan: just 22 basis points away. lisa shalett of morgan stanley on the federal reserve. this one apparently is easier because they don't have to put up forecasts. take it harder on march 19 because they have to put out a forecast. lisa: and they have room to discuss these policies. they will have come into effect or we will have seen some of the agenda and the first 100 days. it becomes much more difficult to just say we don't necessarily -- we don't speculate because you don't have to speculate. you can see with the proposals

are, the potential ramifications trickling in. jonathan: by the time we get to march it is still a threat hanging out. lisa: if that is the case, that would be interesting. people bringing forward orders and potentially ratcheting down some of their supply chains. that would be interesting. jonathan: stimulus. the federal reserve decision coming up later on this afternoon. an update on stories south well --elsewhere with dani burger. dani: president trump is offering buyouts to federal agencies who do not want to work to the office. it was offered in a nemo that one did mistreat -- and, memo that said -- in email that said the federal -- it is designed to scare staff in equating. chinese tech giant alibaba has released a new version of its ai model. the company is claiming the model outperforms openai, microsoft and deepseek. alibaba is engaged in a contest to accrue developers to use

tools. it's last prices to win over more users -- it slashed prices to win over more users. fashion and leather goods sales fell in the fourth quarter. despite the declines, tiffany sales were up and louis vuitton hundred strong start with double-digit growth. the ceo says he predict a booming u.s. market. that is your brief. jonathan: thank you. more from dani in 30 minutes. up next, tech earnings. >> what causes u.s. exceptionalism? it is tech innovation. the highest earning companies are in america. please big names are not an obvious loser to me. the top five names have access to the software and the interaction with their clients. volume can actually sustain them. jonathan: in just a moment we will catch up with nicolai tangen, ceo of the norwegian sovereign wealth fund on tech concentration.

that conversation is just around the corner. live from new york city, and good morning. ♪

jonathan: a snapshot of the price action. equity futures just about positive. big afternoon coming up. we will hear from the federal reserve at 2:30. a decision at 2:00 p.m. and big earnings later from microsoft, meta, and tesla. under surveillance, tech earnings on tap. >> what causes u.s. exceptionalism? it is tech innovation. we have the highest earning companies in america. tech, industrials, utilities. we like those sectors at a price and you just got a better price. the big tech are not an obvious loser. the hyperscalers, the top five names, have access to the software and interaction with clients. volume can sustain them.

jonathan: here's the latest. meta, microsoft and tesla reporting after the closing bell. tech stocks fueling it 13% return in 2024. it missed for the second unit row. pleased to join us is a good friend of the program over the years, nicolai tangen. welcome to the program. i wanted to kick off with concentration risk in the united states and how you perceive things at the moment given what we saw in mondays price action. is this heavy tech waiting and global equities a desired feature or a bug from your standpoint? nicolai: it consists of fantastic companies. it is absolutely a great feature. we have big gains from the companies. many are very large holdings in the fund. jonathan: one thing you said is maybe the contrarian investor might consider pulling back from the united states and leaning in

the china. those comments timely given the events of monday. how are you positioning around that, if at all, into 2025? nicolai: we are not positioned around that theme. we just talked about the contrarian thing to do. that is to reduce u.s. tech exposure. i'm not saying it is a simple thing today. it might be way too early although on monday it seemed clever. jonathan: is at the prudent thing to do? can you tell me if you think it is the prudent thing to do to maybe rebalance some of that exposure to elsewhere? nicolai: it's a difficult question. any of these large tech companies, it is the same driver. the same geopolitical risk. the same world hotspots. if you get correction and one of them you can suddenly see very much of your portfolio going down at the same time because we are seeing top 10 companies in are in excess with 20 percent of

the market. lisa: are you adjusting your diversification after last year's missing of the benchmark to be more concentrated since that is where the gains have been? nicolai: no. we are long-term investors. we are widely diversified across the world. we on part of 9000 companies, 1.5% of all equities in the world. we continue to be diversified. lisa: how much are you thinking about real estate as a potential holding or real assets in general since they were and part of your portfolio? do you see that as potentially being a good diversifier at a time when some people are talking about structurally higher benchmark yields? nicolai: we think real estate is becoming increasingly interesting. we have been quiet in the real estate market in the last for years. in the last three to six month we have added to our exposure. both in real estate but also renewable infrastructure assets. lisa: is there a particular

location for you have been expanding some of your footprint? nicolai: over the last couple of months we have been expanding in london and the main cities in the u.s. jonathan: we would love your thoughts on the new trump administration. you have experienced this before. do you have a base case on the changes you are expecting this year? nicolai: yeah. we are a nonpolitical entity. we really don't have a view on the politics generally. it is tough for me to answer that. jonathan: just policy. do you expect trade changes or changes around the fiscal deficit? can they cut that back? do you expect it to be increased because of the tax cuts? forget the politics. nicolai: ok. what we are seeing as a global investor is that some of the climate initiatives are being rolled back. we think climate risk is a

financial risk. we see tariffs which are hitting european companies. we are seeing a bit more risk for inflation. at the same time, when we speak to u.s. ceos, they are very, very optimistic about the outlook. positive backdrop for u.s. companies. lisa: he said there is a risk of inflation. you have warned about the deficit, how much it has been increasing. i wonder how that is colored your view on bonds as a diversifier at a time when potentially if yields stay where they are or go up, they don't offer the same hedge they have in the past. nicolai: i think that is correct. it is difficult to know it's going to happen with the long end of the yield curve. if you do get significant deflation, you could have a moment where investors say we want to have a higher coupon to finance the government debt. that is not only in the u.s.

that is many places in the world. the imf says there's a combined world government debt of $100 trillion. these are significant numbers. lisa: how has that colored the view of how you want to allocate some of your assets? at one time it was thought equity allocation should come down in favor of private markets or real assets and bonds would stay the same. is that changing were suddenly bonds become as much of a risk as equities? nicolai: i think it is a case for being very broadly diversified in taking in longer-term -- a longer-term look at what you are doing that before. jonathan: a final question. given the price action we saw on monday around the innovation of deepseek, as he sat with the team did you believe some of the claims that were being made? that this was somehow export complaint with regards to the chips they were using? they managed to develop this for around $5 million?

do you believe that? nicolai: there are cleverer people than me that can make that judgment. when we speak to ceos across the world, the innovation power of china is tremendous. we have seen it and batteries, electrical vehicles, pharma, in mobile phones. we see it across the board. very strong innovation power. i think that is the lesson to draw from that. jonathan: whether you believe in that are not, it would go some way whether you decide to push back against the big decisions the big tech players located in united states. do those big outlays of cash make sense? nicolai: i have not got a strong view on that. what i think is that cheaper models will lead to better democratization of artificial intelligence and that is generally good for the world. we did a survey in our company just before christmas. we asked our colleagues how much

have you improved your efficiency in the last 12 months on the back of these new tools? the average was 15%. these are huge gains. jonathan: it is happening. nicolai, appreciate your time. nicolai tangen on u.s. tech concentration, dominance and innovations out of china in the past week. lisa: it could potentially be the tipping point for people to really understand the adoption. that last point was interesting. each of his staff increase their efficiency by 15%. how do you quantify that? this is happening but how to companies quantify this when you are seeing adoption? it is stealth. jonathan: i watched mike wilson's interview from morgan stanley a couple of month ago talking what the shift on enablers to adopters and how close we were to making the shift. looks like we are closer after what took place on monday. lisa: they might already be happening but there hasn't been

this moment, like chatgpt was not first time a large language model has been used in this capacity but it was the ah-ha moment where people understand the degree of efficiency already are having a different companies. jonathan: equities on the s&p just about positive going into a big afternoon. up next, the former senior white house trade advisor to president trump's first administration. we catch up with kelly ann shaw in washington. you are watching bloomberg tv. ♪ ♪ - achieving my goals as an adult was challenging

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♪ jonathan: two hours away from the opening bell. equity futures on the s&p 500 just about unchanged. some morning movers, let's cross over to manus cranny. >> 29 days into the year of 2025 on the question is, is it evolution or revolution when it comes to ai? alibaba don't want to be left out. dave delivered a new update to their ai product. this is about standing shoulder to shoulder with american ai. is it china versus america or open source versus closed source? bi have now said the question is

the monetization challenges are still there because there is cutthroat competition in china relative perhaps to the monetization proposition in the u.s. that's alibaba. asml, their lust 19 billion euros in market cap on monday, we have this bounce back. the order book a swelling, over 7 billion euros. this stock dropped the most in 26 years because they cut the guidance for this year. they say d.c. the opportunity towards the highest part of the full-year guidance. emergence of deepseek is good news and their reliance on china will drop, i think partly due to regulation and demand. when it comes to superlatives, we've got to handed over to the ceo of t-mobile, a monster fourth-quarter. i love that. smashing all expectations, $2.57, up 50% year on year.

they have had the best start of the year in terms of the guidance ever. superlatives. jonathan. jonathan: love it. stock up nicely, up by 8.5%. microsoft and openai are investigating whether deepseek accessed unauthorized data from openai. sources telling us that microsoft observed the visuals they believe may be linked to deepseek export trading a large amount of data. lisa: this links with what david sachs yesterday in an interview where he said there is good evidence of deepseek doing something called distillation where basically they take the output from an openai and use it to re-create the model that they are using. openai tries to prevent this with the different types of protections for their ip. if this is true, does that change the store to basically make it less impressive because it was not necessarily a 5 million effort to re-create

openai? jonathan: we saw some big news on wednesday and now we are asking the right questions. i want to know how the hedge funds associated with deepseek ferd on monday, whether it did well on the back of the selloff or not. because there was a heck of a lot of money to be made given the selloff. lisa: that's next level conspiracy theory. i got a feeling the chinese will not release that report publicly but it's a good question. the moves in the market have been interesting. what stuck and did it stick. nvidia walked a lot it back. meta and microsoft walked a lot of it back. the ones that didn't was the infrastructure place. i think that points to a larger issue regardless of deepseek. jonathan: shout out to our colleague, joe is fantastic on these things. joe one of the early people to ask the question if this is real, it raises big questions about what's happening as an

investment thesis in things like nvidia and other tech plays. that bust we saw over the weekend was almost exclusively on x. a lot of sophisticated people giving their thoughts on what would happen monday and it was like back to back, monday or rather saturday through sunday. i woke up saturday, it was all anybody was talking about. lisa: we knew about deepseek for a while. what catalyzed this moment were suddenly this was it and everybody realized this could change the model? jonathan: number one in the download charts change to pre-quickly. apple has been secretly working with spacex and t-mobile to add starlink support to iphone software. the latest iphone update rolled out monday now supports starlink service. lisa: this is such a boon for t-mobile. members of my family and myself have t-mobile, i have verizon. when we go on a hike or we are in a remote place, they lose access right away and i don't.

this is t-mobile saying we've got your back because you can get your texts, read your news, if you are in the united states, and the remote place by using starlink. that's the most interesting aspect, is how this could potential he change the game on a competitive level -- potentially change the game on a competitive level. jonathan: did you warn family members about self-service. is that what you do? is that what actually happens on your hikes? lisa: if you are on a hike and want to know where you are going and how much further you have, so i can do it, they can't. if we are in a car and we are in a rural place, i am in control. i can look on maps, they cannot. lisa: as we carried on to president trump's tariff deadline, the white house think it's prepared to slip 25% terms on mexico and canada. christie friedland running to replace justin trudeau telling us she sees trump's tariff threats as a pathway for tougher

policy on china. lisa: some of the rhetoric was quite colorful from her in this interview. trump has come to the conclusion if a cash or -- can show the rest of the road how mean and tough he can be with his closest allies, how much she is willing to beat up on those canadians, how do you think he's going to make china feel. they are looking at this as, ok, we are being used as a negotiating pond, but we are you're not -- negotiating pawn, but we are your nice allies. if you do do this, we will also put all these tariffs on. because we know, just like any kind friendship, you disrespect us unless we actively fight back, so thanks. lisa: we will stash jonathan: we will see how this works out this weekend and beyond. annmarie joins us from washington with a special guest. >> i am with someone who has been in the room prior with trump 1.0, kelly ann shaw,

former senior white house advisor under trump. we are counting down to this deadline trump just kind of threw out there. it's on saturday. do you think he follows through? kelly ann: i do. i think the most important thing about negotiating with trump is when he says he's going to do something, you have to take it seriously. it was back in november when he originally said he was going to impose these tariffs on canada and mexico for immigration and fentanyl. now he has doubled down and said he is moving forward. lisa: do you think we will see 25% or do you think it's going to be more of a gradual approach? will he give importers 90 days? what are some of the details? kelly ann: at the end of the day, it is the president and the president alone who makes the final determination on tariffs, including tariff levels and product coverage. i saw that many times that this was his decision to make. he has said several times it is a 25% on ended and mexico so

that is what i am expecting. from a practical perspective, in terms of implementing tariffs, he often need a couple of days of delay, if not a week to 10 days to give importers notice, let brokers know, update some of those logistical issues before they go into effect but i am expecting him to announce tariffs that go into effect pre-soon. lisa: and they stay or this is a negotiating tool? kelly ann: i think there are different types of tariffs when it comes to president trump. there are the tariffs that may be used to address the u.s. trade deficit, to some of the economic concerns, supply chain issues, and then there are tariffs for non-economic reasons like columbia, canada, mexico, immigration and fentanyl. and those, it's purely about putting pressure on another government to take action so i am not expecting those tariffs to stay in place very long if mexico and canada come to the table. lisa: we have not mentioned china. does he announce 10% on china on saturday? why have they been so quiet on

beijing? kelly ann: he's been a bit ambiguous. at one point, he said he's going to move forward with it another point he said he still considering that. the press secretary said it is still on the table but she was not certain or definite about whether china tariffs would go into effect. i think there's a longer play here. if you look at the memorandum the president issued, he's directing the ustr to do a review of the phase i deal, to look at the tariff increases president biden put on. and i think he is teeing up for a broader negotiation. it could be let's not muddy the water in the short term and wait until after april 1. that's the most consequential economic relationship in the world. lisa: you negotiated phase i trade deal. how much further do you think trump 2.0 will take it? kelly ann: that depends on china. when we negotiated phase i,

there were very focused on a number of issues at stake in that section 301 report. the president wanted us to get china to stop stealing u.s. technology, engaging in unfair trading practices and stop subsidizing certain industries that made u.s. exporters less competitive around the world and we got china to agree to a number of substantive provisions, as well as purchasing commitments, but china has not lived up to that deal and i think that's pretty clear. low china be willing to come to the table with the second trump administration? not only fulfilling the obligations of the first deal, but seeing if there's a possibility to take it even further? that's going to be up to the president to see if you want to negotiate a phase ii two deal or just keep china accountable to phase i. lisa: where's congress' role in all of this? or this trop do everything on tariffs unilaterally. kelly ann: the tariff authority -- does trump do everything on n tariffs unilaterally. kelly ann: it's hard for me to

see a republican controlled house and senate passing legislation to push back on trump's tariffs. a better question is, are they going to give the president more authority or lock in some of the china tariffs by revoking pntr? are they going to give the president authority to do what he's talked about in terms of a universal baseline tariff? that is a question that will be negotiated as congress considers the tax cuts and jobs act and some of the other legislative priorities over the next year or two. lisa: it definitely sounds like some level of tariffs are here and here to stay for the next four years under this administration. what should the business community be looking out for? i know a lot of them are just on edge because there is no clarity yet. kelly ann: and that is the thing, too, like as a former negotiator, your currency is ambiguity. which is effective. it's really effective when negotiating with other trading partners but it gives less certainty to the business community who is trying to figure out where all of this is going.

during the first administration, trump landed the plane in terms of these negotiations. hopefully, he lands it in a second administration as well. but i think for my clients, what i am advising is make sure you know where your supply chains are, try to understand the transparency in your supply chains. where are you vulnerable? where do you have alternatives? and buckle up because i think this is good to be an interesting ride as we see some of these negotiations unfold. lisa: let's and on that, buckling up. what types of retaliatory measures you think we could see? kelly ann: i think canada has talked publicly about some of the retaliation it intends to implement. and there, what i would say is i don't think that's necessarily the most effective strategy. it is not going to get the president to back down. he's very focused on resolving fentanyl, resolving immigration. i think the sooner that canada comes to the table on that issue, the sooner that this particular trade row goes away. but certainly canada, mexico and

china will retaliate with tariffs. there may be other types of measures they are looking at doing. the european union has spent quite a bit of time looking at potential retaliation. i think there will be a flareup of some of these tariff moves forward, not just in terms of what the u.s. does but what other countries do. lisa: if there's going to be retaliatory measures, at the end of the day, does trump just want better deals, to have fairer trade? kelly ann: it goes down to the two purposes for tariffs. it is to exert pressure on other governments by using all the tools in the u.s. toolkit. but when it comes to resolving some of these unbalanced trading relationships and the fact that the u.s. has some of the lowest tariff rates in the world for the past several decades, are trading partners have maintained higher tariff rates and barriers to trade. he wants to see those barriers and rates come down. ultimately, hopefully, that's where we land but we will have to see. it is two parties at each end of the table. lisa: thank you so much for your

time. that was kelly ann shaw, former senior white house trade advisor. she is now at hogan lovells. what i find so interesting from that conversation is of course she says it is happening on saturday, trump is serious when he talks about these tariffs. and really when it comes to saturday's decision, it seems like it is really being driven by fixing immigration and fentanyl. jonathan:jonathan: we have seen that on repeat over the past few weeks. thank you. she is taking it seriously. i am not sure this market is just yet. lisa: especially because a lot of people are saying this is just a negotiating tool. . if it goes into effect and you get retaliatory tariffs, just how big could the reaction be, particularly on those auto manufacturers? jonathan: we saw a hint of that yesterday with gm down hard, even with some decent numbers. let's get you an update with your uber brief. here is dani burger. -- bloomberg brief. here is dani burger. dani: [no audio] jonathan: i would jump in here.

i believe your microphone was unplugged. i will bring you the bloomberg brief. shall we do that? white house ai czar david sachs there's substantial evidence deepseek leaned on openai's models to help develop a stick. he said they used a technical distillation where one ai uses the output of another for trade purposes to -- training purposes to develop similar buildings. openai is investigating whether deepseek used distillation or independent research. remy cointreau shares are lower in european trading after the company reported a major dip in sales in the fiscal third quarter. sales expects full year sales to fall close to 18% with u.s. consumers pulling back on pricey spirits and the ongoing china downturn. remy will implement a wide-ranging new cost-saving plan and expect to see improvement in the fourth quarter. drink more cognac seems to be the message coming from them. lisa: you saw that with hennessy

coming out of lvmh, also really struggling. how much of it is china? jonathan: are you into cognac? i've been to hennessy. lisa: you are not a drinker. did you actually taste anything or just admire the scenery? jonathan: i was 10 years old. what do you think i was up to? my dad was super into these things. at the time, i was not. emmanuel macron announced a major renovation and expansion of the louvre museum. the project will take up to a decade and it is estimated to cost over $800 million. a major change will be a private room dedicated to leonardo da vinci's "mona lisa" that will be accessible through visitors there a special ticket. lisa: for those who have seen the lines for the mona lisa, you have to wait to get into the room and there are all these crowds around, so you start looking at the other paintings. jonathan: how much is it going

to cost to get the extra ticket? what is the price going to be? lisa: enough for them to pay for some of those renovations. jonathan: are you a big fan of paris, france? lisa: i like a to museums. jonathan: it's always italy. up next, squeeze that in everything good time. there was so much france and french stuff in the newsfeed. macron. lisa: in fairness, mona lisa. jonathan: the fed's first move under trump. >> the fed, and you have heard me sing this for a long time, has got to get more strategic in its approach and has to be stopping excessively data dependent. jonathan: that conversation up next. live from new york city, this is bloomberg. ♪

jonathan: big trading day coming up, lots of earnings after the closing the, microsoft, meta, tesla. major fed decision at 2:00 p.m., just trying to promo our coverage. it is not a major decision but we would love to catch up with you. news conference at 2:30. is it a skip, a pause? lisa: you are really selling it. jonathan: could he consider a rate hike? lisa: absolutely not. jonathan: will donald trump phone-in? it would be really interesting. lisa: leading the witness. jonathan: i know the president tunes and sometimes it so if you are listening this morning, you should do that. wouldn't that be great, the president writes in? that's how you make this interesting. lisa: you're doing a great job. keep going. jonathan: under surveillance this morning, the fed's first move under trump. >> the fed, and you have heard

me say this for a long time, has got to get more strategic in its approach and has got to stop being excessively data dependent. they have been confusing their analysis, confusing their communication, they have been confusing their approach. when you are data-dependent and you're just looking at the future through the lens of the past, you will get more and more confused as we go through these changes. jonathan: here is the latest. the fed expecting to announce its first interest-rate decision of the air and its new first under the new trump administration. the consensus widely expecting a pause. the former kansas city fed president, esther george, joins us for more. welcome to the program. how boring can chairman powell make this an is that the objective later on this afternoon? >> i think he would love to make it just as boring as he can, in the sense that it does not stir up news speculation, so we will see. he has got a tough job. lisa: what do you think, asked her, the idea -- esther, the

idea right now that markets are concerned the fed might be on the path to hold rates here for the rest of the? how would you characterize not doing anything today, a pause or a skip, how will he answer? esther: i think we got a clue from the december meeting. the minutes have told us that there was a sense that inflation was not coming down quickly enough, that that disinflationary process may have stalled out. and so, for their mandate, they have to be cautious at this point i think and watch to see how things will unfold. the challenge for them, of course as it is for many people today is a saying how do you manage to this uncertainty? how do you look at the risk on the outlook ahead when you don't have clarity in the moment? and the truth is you really have that clarity.

[audio drop] would be unusually high right now in terms of uncertainty which means you have to pivot in my view in the long run. that's where we hear the focus, not so much on next month's data and the next but really where we are coming out in the long run with inflation. lisa: there is the added complication that we have a really disparate fed. the different fet members seem to be pretty split. is this a unique -- fed members seem to be pretty split. is this a unique feature right now than when you were there or in previous administrations? esther: i think there is always a diversity. that is the design of this committee. i think what creates what may sound like dissidents right now comes out what i call turning points. there are times in the economy when the decision-making is less clear, when the path ahead is less clear, and that's when you will tend to see surface in this discussion, a range of views.

and depending on how strong those voices are, the chairman has to bring those together, because you have to make a decision. and sometimes, that decision is to wait and see, and i think today is going to be one of those times. lisa: i would love your view on what you would be doing. how was your balance the evolving data with expected policy changes? where was your put the most weight? esther: for me, the weight is always on thinking about the inflation because that is the most direct influence that the central bank has on its mandate. and having seen the disinflationary process slow down, we are now in a fifth year of inflation running well above the fed's target. i would be in a position myself to say we can wait, we should wait. the economy is performing well. we have a number of risks that are evolving in terms of telling us what the outlook might be and

now seems a particularly good time to sit on the sidelines and wait for more clarity. jonathan: it is good to hear from you. as to george there, the former kansas city fed president. esther george. the argument she put out is probably the strongest one on the fomc. lisa: the idea you have to wait and not call it a skip or pause and just say we don't know, we have to wait. what are you waiting for? do you place the emphasis on inflation? how much has the recent decline in long-term yields actually given some breathing space to a fed that previously was being accused of making a policy error? jonathan: this is what some of them seem to be fighting difficult. how much weight do you put on the data, on expected policy changes? apparently none of them were going to do that in november, some did in december and we will see where they are in january going into march. chatter on deutsche bank.

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>> will be very interesting to see what the earning points will be like. it is not great with the entire capital in seven names. >> it does accentuate the need

for diversification. >> when you have leaders in technology, they tend to state leaders. >> i am not worried about valuations here. >> big tech names are not an obvious loser to me. jonathan: trying and failing to pace myself this week. it continues later today, earnings from microsoft, meta and tesla. and then the big one, the federal reserve. the federal reserve decision, chairman powell news conference 30 minutes later. will they or won't they? lisa: as they get to the podium.

jonathan: will they keep interest rates unchanged, skip or pause. how will they characterize the move? lisa: a plus to try to make it interesting at a time where jay powell will do everything to make it as boring as possible and to not provoke the presidential rating. jonathan: do you think he is tuning in to our coverage? lisa: it has been a long week because the markets have been exciting so that is what we live for. but there is the larger question of everyone is expecting the fed to be boring. could it be the self disruptor when lisa from morgan stanley was talking about the reason why multiples have not been expanding for stocks has been bond yields, and they have been the main driver for broader value -- broader equity

valuations. jonathan: last time the fed met on december 18, the closing was about 4.50. the 10 year at 4.52. that is what we point to. lisa: you are crushing it in trying to make it exciting. jonathan: i will say this, language manners. -- matters. lisa: i am curious how jay powell communicates the dissent that seems to be growing on the fomc. esther george former of the kansas city reserve talks about how this happens in periods of this dish uncertainty but there is a political overtone at a time where jay powell's term comes up in 2026 and are some people going to look through the policy proposals. jonathan: the ambition of some on the fomc who would like to fill that seat at the federal reserve and how much that will

complicate communication over the next several months. lisa: could you imagine one of them come to the podium and sat next to him? we are trying to make this exciting. jonathan: for governor waller, it has been a change. and when you speak to people privately they are much more willing to say it sounded like an audition. they basically said it in a note. lisa: there is a sense of him coming out and saying vocally that some of the tariffs would not affect the downward trajectory of rates and still sees a dish inflationary process well under way was clearly playing into the hands of a policy that this president has in play. that said, there are people who would agree it all depends on how the tariffs are implemented. jonathan: we just talked about the federal reserve for four minutes more than we have throughout the whole program so far. coming up, stocks moving higher ahead of the fed. pierre ferragu with a review --

preview, and blerina uruci. a fed decision this afternoon from meta, microsoft and tesla. and also keeping an eye on trump's tariff policies saying equity markets at record highs will be tested by more trade escalations. equity positioning is elevated and will continue to whip shot. thank you for sitting through that. a key deadline. are you expecting a change? bankim: it is close to 50-50. i would put the odds of putting something big below 50. the note you read out from friday, we did have a peak in the market and script from the last trade war was markets do well and it emboldens the stance

on escalating on trade and it changes the dynamic. jonathan do you think it caps multiples of companies exposed to that story and is gm a decent example. gm came out with fine numbers but people find it difficult to put weight on the outcome. how does that complicate valuations forward for those sectors? binky: silver in general, going back to the note on friday, things moving fast but if you take a look basically at the market down and recovery, basically what you are seeing is the most tariff expose sectors outperformed the market lately. so they are moving with the market. i would argue right now the equity market has not really priced in anything for tariffs.

we can debate whether that is reasonable or unreasonable. i would argue tariffs are going to come in are in the house economics and. the precise numbers is subject to timing and that can be different but we are still one of the basic high macro forecasts the street for what growth is going to do this year. i would argue it matters for equities at the end of the day is what that does for growth. it is just a little unclear. not just tariffs but plenty of other things happening. i will also point out in terms of thinking about the tariffs, there are a number of things that are different this time relative to the last time. last time around i would argue the tariffs were really a big surprise. this time around, it is arguably the most anticipated, talked

about policy change that is coming pretty dynamics are going to be very different when something is a surprise and anticipated. lisa: you said that on one hand it is not being priced in and on the other hand it is not a surprise. can you reconcile those two things in terms of which sectors which have been relatively immune to concerns about tariffs could potentially see the biggest drawdowns if we do see on february 1 the tariffs implemented. binky: i would add two more things before i answer your question. if you talk to companies and listen to companies and one of the reasons why things are not priced in on the tariff front is they tell you that since the last trade war, we have had basically a lot of experienced courtesy of the pandemic and geopolitical issues on managing our supply chain. as we say, companies say they are basically ready and bring it on but this is about a change in

u.s. trade policy and higher tariffs. as one company put it, we have tariffs in every country and they change around all the time and we have to deal with it. there is a shock impact the fast -- fact of the was doing it but it is diffused by being highly anticipated not the precise magnitudes and direction, but i would say otherwise, the markets are in a reasonable place on tariffs. lisa: the market might be in a reasonable place, but you also point to how high valuations are and that people are feeling jittery and that tariffs being announced or what happened over the weekend with deepseek and how much that rattled the tech industry is indicative of where we are in the market cycle in the nervousness about valuations. how are you adjusting the outlook based on that kind of dynamic loan?

binky: a review for the year is there are good reasons for why multiples have gone up in the bottom-line is multiples are likely to stay here if not squeeze higher is the way i would put it. i would say at least there are reasons why multiples have gone up. one is an older reason, everybody talks about 15 times is the historical average for the s&p 500. if you take a look at the trailing multiple for the s&p 500, we have not spent much time below 15 times since the late 1980's, so multiples moved up earlier and that i would describe to inflation moving to the 2% what it used to be. number two, take a look at total payout ratios in the u.s.. these to be between 50% and 60%. at the tail end of the post

global financial crisis, we ran up to 85% and ran there for a while. it is huge change in payout ratios, 40% increase, from 55 to 80%, 40 45 -- 45% increase that goes to shareholders. if you do a present value calculation it would tell you the payout ratio goes up by 45%, fair value multiple should go up by 45%. two more reasons. what is trend to earnings growth for the s&p 500 over the last 100 years, it is 6.5%. if you take a rolling 10 year read on what earnings are doing, you are running at 9%. and when was the last time we had as high a number for rolling

10 year earnings growth in the second half of the 90's. then i would say, take a look at , the risk in equities at a fundamental low comes with earnings and big drawdowns in earnings and those have generally been associated basically with recessions. if you take the crudest metric, how long has it been since it 10% drawdown in early and what you will see is that is multiples following that and follow that in the second half of the 1990's. that is why i say it multiples could squeeze higher. they pointing higher. jonathan: we appreciate your time and explanation. without her interruption. lisa: i'm sorry. i feel rude. i was excited. there was a lot baked in there and i wanted to develop but we don't have time. matt: good to see you.

-- jonathan: good to see you. equity futures down by close to 2% -- .2%. >> the u.s. navy has been instructed not to use ai deepseek according to cnbc. they say the deepseek ai is not to be used to potential security and ethical concerns associated with the origin and usage. it follows the release of deepseek model after the company announced the tech rivals openai and meta. president donald trump and elon musk -- elon musk said they will get the astronauts from the space station as soon as possible for they are talking about the astronauts who have been living there since early june. the estimates are scheduled to return on the spacex capsule in march. the castle for the return journey is docked to the iss and

nasa has not commented on any changes to the mission. you cannot use the official trump named claim to buy watches and seekers. mean coin total market cap -- the mean coin -- meme coin is already being accepted in several places. jonathan: research previewing numbers from tesla, that conversation is next. this is bloomberg. ♪

jonathan: are you looking for vacations? lisa: i am exploring to understand the currency. you can do cryptocurrency it but the prices are somewhat higher and it is slow. i had never heard of it before. it is a lot slower and has cryptocurrency accepted. jonathan: what about the range of hotels? lisa: i can't do that much research. i'm trying. things are expensive. jonathan: welcome. equities look like this. down by .1%. remember they put the stickers by the gas pumps saying biden did this. crude is lower.

let's get morning calls. he make raising meta target sing open-source technology will drive cost savings for the second call from oppenheimer downgrading apple sing reduced iphone sales and competition in china, down by 1.2%. earnings from them tomorrow. and wells fargo hiking the price target on gm to 37, citing potential tariff impacts on the bottom line. investors pricing for tesla earnings after the bell. they recently upgraded tesla to apply and raise the target. welcome to the program. let's start with the upgrade. why it monday? >> our view was looking at the auto business quarter after

quarter on volumes in gross margin. we see a situation where we are very close to the bottom. so at some point there will be a newer and lower price point and pricing will be the pressure. things look nice on that one. and then there is a turning point. even if we still see that many years before you see a large number of robotaxis, we think the evolution will be sentiment

on the name. what we will see is the idea that you can write a room and not have to give and a night essentially on the technology to see it being deployed we expect that to happen. this vision were tesla becomes the company that can produce millions of robotaxis every year and re-deploy across the country and the globe, it is convenient to get more and more tangible. it is training -- trading on a hundred times earnings and when the market started focusing on the long-term vision and that is

becoming more tangible and that is what we expect. jonathan: if we can get thinking about the last quarter. what did we learn yesterday from general motors about how sales are developing and whether pricing power is sticking? pierre: we have heard the same story that we have heard and that is auto demand is not recovering, still at a low point. i wouldn't be too demanding on what to expect. we know deliveries are slightly down year over year. they were at a 20% to 30% run rate and tesla will be able to

expand. but the gross margin, we expect pressure. what we have seen in q4 is tesla has been aggressive. the key question is can tesla continue growth for 2020 five and i would say if we closed 2024 on the run rate of 20% to 30% of where it was at the beginning of the year, we are in a position to do that and what we need to 2025 to be a growth for tesla is more insight of what comes next this year.

in october, we are facing an extremely elastic market. if you can get in with the lower price points, you massively instantly expand your market. and that could lead to a very strong quarter. lisa: the actual numbers in terms of deliveries and sales might not matter as much as the longer-term story you are talking about. we are going to be hearing from apple and microsoft, do you think their earnings will be more important than even tesla's in giving the sense of direction for the stock but also for how they are going to invest? pierre: yes, i think we will have way more attention on microsoft and apple than tesla for the reasons you just mentioned, with the market wondering who is going to invest

in ai and that is going to be much the focus on the markets. it is going to be very on the earnings call tonight. lisa: you have a neutral on apple and have had it for quite a while. what would you have to hear this afternoon to make your more bullish at a time when some people are saying apple actually looks like they were wise not to throw as much money into ai development at the earlier stages of adoption? pierre: it is a good question. it is actually very difficult at this level of valuation. there is it really accelerated earnings. it is reflected in the stock

price. when you have the earning growth potential at single digit, it is difficult to get excited about the stock. my neutral rating for several years has been the rating waiting for a better opportunity to get into. you see it more downgrades and that is something we have been seeing the outlook for the them is not good and ai in the near term and dish here -- and this year,.

-- has been strong the last couple of years. i would expect a bleak outlook and maybe stock reacts. it is really valuation. jonathan: thank you. pierre ferragu on apple. apple and tesla is similar that the core business is not seen growth. tesla has the grand vision of the future that apple doesn't have. lisa: some people are saying they benefited from not investing as much in some of the chips and data centers if what we saw is true. jonathan: next, a sprinkle of economic data. from new york, this is bloomberg. ♪

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jonathan: 16 minutes away from the opening bell with equity futures down by a quarter of 1%. softer the bond market. to year, 10 year, 30 shaping up as follows. economic data in just a moment and the federal reserve decision this afternoon. the 10 year at poor -- 4.518 three, close to where it was at the close when the fed met on december 18. the two-year now at 4.1 -- 4.187. michael: we are not talk much

about trade in recent years but it is a way donald trump keeps score. let's look at the trade balance that just came out, -$122 billion, far, far higher than the previous 102 billion dollars and certainly above the 105 billion it was forecast. this did not include services. we look at the toll trade balance plan say but starting off on a bad foot. these are the december numbers coming into the trump administration with the trade deficit widening. he is not going to like that and that will probably feed into whatever happens this weekend. jonathan: how much of that is front loading orders i had a possible terrace? michael that is what people were saying that people may have been trying to stock up. joanne chu said when they call people for the survey, americans have said they wanted to buy things like cars and refrigerators ahead of time because they are afraid prices

are going to go up. we will have to watch that as a possibility and see if was we get to the january numbers that comes back a little bit. jonathan: stayed close. michael mckee in washington because he will be in the conference for the federal reserve this afternoon. we expected some frontloading but it seems like we got a bit of it. lisa: what is interesting to me and i don't know much insight into why but i would love mike's thoughts on a wholesale inventory actually falling and expected to rise. if they are stockpiling, it is not showing up in inventories which is interesting how much we see stockpiling versus how much people are buying ahead of any potential terrace given it is filtering into the zeitgeist. matt: think -- jonathan: i think mike is still there. lisa: what you think about wholesale inventories declining. if we sought stockpiling, wouldn't we expect that to go

up? michael: we would and it is an interesting question. it is hard to pull out a wholesale inventories and retail inventories showing a decline because of the holiday season. it is possible stuff came in and went right out the door and we don't know exactly the composition of that but i will look into it and see if we get enough of a breakdown to be able to tell. jonathan: we will so these can get an answer. blerina uruci is here. how do you see this? blerina: we are seeing any indication that we have an inventory buildup. when you look at contributions come inventories are the only component that is a drag to growth in the fourth quarter. i think the trade date are

basically telling you strong consumer spending in goods and we do indeed import most of that. i haven't seen evidence in the data of a stockpiling. that doesn't mean there won't be some bringing forward of spending by companies but it is not in the q4 data. going back to the consumer in the labor market supporting that spending. lisa: to broaden that out, there has been the push-pull and when we are we accelerating or seeing weakening in the overall economy that will be the fed to keep cutting through the remainder of the year. yesterday we saw consumer confidence take a hit, coming in much lower than expected. there has been an increase in expectations of job insecurity. do you reject that and focus on the consumer and consumer spending as being the more dominant towel of the strength of the u.s. economy? blerina: i have to say, i remain quite positive about the u.s.

economy. we are seeing some signs of loosening in the labor market and deceleration in growth. i think growth in 2025 is going to be slower than last year but not going to be weak. employment growth is solid. there is job security. no signs of massive layoffs that would make workers worry about the outlook of employment. we are hearing now about the federal government employment but the majority of employment in the economy is provided by the private sector. i think we still have a strong economy and i don't see, even though there may be some wobbles in terms of consumer confidence, i don't see consumers holding back so far. lisa: we talk about the pause or skip which will be the exciting moment of the news conference with the federal reserve, will they indicate this is just a break in a downward path of

rates or potentially this is it? what are you looking for in terms of where the emphasis is and where would you land in terms of that debate? blerina: i expect to learn nothing from this press conference, and i think that would be a measure of success for powell that he doesn't give anything away. but that does is to leave us watching the data. when the fed started cutting interest rates back in september 2024, they were really worried about the labor market cooling rapidly, the unemployment rate increasing. what we have seen since then is a pickup in employment growth and a decline in the unemployment rate. so that reason that pushed them to cut by 50 basis points in september of last year seems to have moved in the opposite direction. maybe they want to take credit that they help stabilize the labor market by easing policy and financial conditions or maybe there is underlying strength in the data over the

summer was just a bit noisy. we will see. i think essentially the only reason the fed might have for cutting interest rates is this idea that where we are right now, monetary policy is restricted and we want to gradually move towards being neutral because you don't want to stay restrictive for too long especially with inflation coming down quite significantly from the 2022 levels. the problem here is, if the economy is not weakening and progress on inflation is relatively slow, what is the rush? that leaves me with the fed is wanting to cut interest rates and has a dovish bias but the economic developments don't support it to cut rates in the near term and then we have all of the policy uncertainty coming from the new administration. so i have to give in easing bias in my rate forecast but i am thinking at the earliest,

interest rate cuts will come in the second half of this year. jonathan: the build up to the news conference. lisa: you start the show thing we are excited and it is going to be an incredibly important fed decision. we have gotten so beaten down in 37 minutes. jonathan: i don't think i ever said that. lisa: you did go there. four minutes we spent talking about it. jonathan: four minutes too many. blerina, thank you for being here. lisa: i took you seriously. jonathan: i think he could flub this one too. lisa: it is expected to be incredibly boring and that would be the successful way.

jonathan: i can log into my paramedic -- paramount account and we can watch it. michael mckee will be in the room. for michael -- jay powell, what do you expect them to do? michael: what time does the football game start? jonathan: 3:00 p.m. eastern time. michael: we might watch it in the briefing room. [laughter] the fed wants to get in and out of this without making any news. they have enough headaches without provoking the president more. you know jay powell will be asked we dodged the question. the only thing markets might get out of it or they are really for is any kind of hint of what might happen in march and i suspect we will miss that too. there is one area in which they could make news and that is the fed balance sheet.

they are expected to stop qt sometime this year, and they haven't given any clues to anybody about how and when. with nothing else on the agenda, they might be able to put something out on that today. we will take a look for that and that might be the best that you get, unless the football game is exciting. jonathan: it will be. they could got the champions. this is a big deal. lisa: i am going to look at the balance sheet. jonathan: krishna memani follows that closely. can you make this interesting? krishna: from the fed perspective, everything is working out according to plan the way they laid out the plan in the last meeting and nothing has really changed, which is growth is really good and inflation is coming down but at

a much slower pace than they would probably like but they are worried about the labor market. what they are not worried about is significant pickup in inflation and therefore the need to tighten. that is the one point if i could see anything come out, that would be it. jonathan: so skip or long pause, sounds like skip for you? krishna: skip is the right way to think about it. you can talk about the market softening, but at the aggregate level, it isn't. they want to cut but they don't have the opportunity to cut and that is where we are. lisa: so you expect them, and this would be news coming to completely remove the possibility of an additional rate hike from the table at a time were some people are saying, that could potentially be the big issue later this year? krishna: i would say that they would never kind of take it out altogether, but if there is some

tamping down to be done, it probably is on that front so people don't expect they will pause for a very long period of time with the possibility of rates going up. that doesn't serve their purpose. they are focused on the labor market and not seen the weakening but they are worried about it. lisa: it seems like we can't get forward guidance at a time when the fed is not in the position to understand the trajectory of inflation or when it comes to policy, so how potentially disruptive could they be if they take a decision that is counter to what the markets basically are implying? krishna: i don't think they can be very disruptive. the markets today are being driven by other things than the fed. the fed is a larger context in the market but what you are dealing with right now is what happens in the equity market with ai and other stuff in that thinking is dominating everything and that is probably going to be there for a while.

if about the market convexity, the convexity profile is highly negative, the upside is broken because of the break in the downside is significant. ponce moved a lot, it would be because of fundamental data, it would be because equity markets in the fed will be turned by what happens in equities the way it happened earlier this week and that will be the driver rather than the fed or even earnings for that matter. jonathan: i have known you and since i have been in this country the last decade, i sat down with lunch and you've gone through what is going to happen. in your track record has been absolutely phenomenal on that front. do you believe that was a turning point for equities on monday? krishna: absolutely. jonathan: why? krishna: people talk about ai progressing and the price coming down. all that is in place because

deep sleep and come down with the lower price, that doesn't change things. the super premium you are willing to pay because you thought it could run even more, that is what you are questioning and it is not because of any technological development but more about market sentiment and how they feel about paying 100 times or whatever on various stocks that they are willing to pay. jonathan: do you mean the whole universe out equities or certain pieces of the ai story? is it the energy piece? krishna: there is a lot of stuff on the back of ai, energy, quantum computing, cash flow producing entities, the downside on them is much less. on the other hand, anything that was based on capital spending on the back of the ai wave, i think

you have to question that. it is not that meda is going to become less profitable -- meta is going to become less profitable, it is the data centers and demand for electricity and nuclear producers, those are the things you have the question. lisa: how much did you ship the allocations you had as a result of that potential tipping point some of the nuance of the ai adoption cycle? krishna: we didn't shift much because we never lose it earlier. what we did was to not rebalance the portfolio and let the equity market run. what we are thinking about now is to rebalance the portfolio on a consistent basis, far more than what we would have thought earlier because now it is about risk management, protecting your downside, because the convexity profile is very negative at the moment. lisa: you said something that the bond market is going to move more responding to earnings then it will to the.

what do you think could happen and what is your interpretation of the fact that bond yields went back on monday? is it the idea that potentially broader adoption of ai would be disinflationary, or a risk off trade that bonds have the same relationship as they used to have pre-pandemic? krishna: i don't want to oversell that particular idea. i think the fact that bonds only went down 10 points when nvidia lost $500 billion sort of gives you an idea as to the magnitude. bonds have headwinds too. when you have 3% growth, expecting the 10 year to get to 3.5% and that becomes very challenging. the point that i would like to make is, if you don't have a view that is not helping you at the moment. second, if you have a view come have a view on the downside of bonds where the than upside on equities. that is how i would characterize

it. jonathan: so do you remember bloomberg real yield's rapidfire, what do we hit first on tens? krishna: for rather than five. jonathan: i appreciate that. good to see you. there is lot where you think that is going. lisa: you miss it. we should do rapidfire. jonathan: it is too much. lisa: i hear you. you could have said for 44.75. jonathan: district sheet -- fou r or 4.75. dani: microsoft and openai are investigating whether deepseek obtained unauthorized technology good sources say microsoft had observed individuals they think might be linked to deepseek taking a large amount of data and using the openai api.

the white house ai chief told foxnews there was evidence deepseek had leaned on the openai models to develop its own taxpayer bloomberg has learned that apple has been secretly working with spacex and t-mobile to add support for the starlink network in the latest iphone software. the smartphone's latest software update released now supports the technology. the initial version of starlink is exclusively for texting. spacex and t-mobile had previously said they plan to expand into data and voice calls in the future. the popular weight loss drug ozempic has been approved to treat chronic kidney disease and those with diabetes. tests showed reduced deaths with kidney disease. they got a boost on the trade. that is your brief. jonathan: up next, we will set you up for the trading day and catch up with manus cranny and

movers and then head to washington, d.c. to catch up with dani -- with annmarie. that conversation is up next. ♪

jonathan: equities just negative by one third of 1% on the s&p 500. here is manus cranny. >> this is djt, up 16%. they have developed the financial services strategy in conjunction with charles schwab and it is a lot a fund, new

company called truth a fight about america first and investing in vehicles and etf's. this reminds me of the apple pay at moment from many years ago when people were trying to understand what is apple doing and why do they want to get into financial services. this is the wallet everyone is going after. alibaba, let's give you a snapshot. having to expand to f1, all of the ai names are going to have to be learned more about for this is alibaba delivering an upgrade ai. a superior model to that of deepseek. this is not about china versus the united states of america, this is about open source versus closed source and at 3% unchanged. jonathan: plot the week. the most essential bank decisions, fed rate decision

followed by a jay powell news conference. thursday, ecp rate decision, jobless claims and result from apple. friday, pce. saturday, president trump's tariff deadline. let's head to washington, d.c. and catch up with annmarie. will the post began on x? annmarie: potentially and if history is any guide we could see that as jay powell has his first press conference today under trump 2.0. we were in 2019 when he didn't lower rates, donald trump blasted powell and said potentially the chair of the fed was even a bigger enemy than xi jinping. here is what we know already that president trump has said, this is a commander-in-chief who thinks he should be a fed chair. i know rates better than they do and i think i know them better than the one who is primary in charge of making the decision.

i would like to see interest rates come down "a lot." we know where his mind is and we know the fed is not going to deliver where his mind is, so you can't expect there will likely beat tension today. lisa: i think a lot of people are expecting that. he is a real estate god, that is what we expect. what we are looking for to know how real this is and what this is in terms of tariffs? annmarie: a self-imposed deadline. the new press secretary had her first re-think yesterday with reporters and said it is still on the books every first when it comes to china and mexico. i thought the kind -- conversation was telling. one said that i believe these are real especially on canada and mexico because trump is taking what he calls america

first agenda and when it comes to canada and mexico, a lot has to do with immigration fentanyl cost of orders. -- across the border. he has talked about 10% on china. regardless if we get them all this week or not, there is a memorandum looking into things like currency manipulation, trade deficits, who is playing fair rules when it comes to trade for a boat first and his entire team is yet to be in place. the direction of travel is very clear but i think the timeline is murky and he has been more ambiguous in places like china. jonathan: we appreciate it. coming up later, jointly set at 1:30 eastern time. it is going to lisa: it is going to be an awesome lineup. jonathan: from new york city, this was bloomberg surveillance.

this is bloomberg. ♪ (grunting) at morgan stanley, old school hard work meets bold new thinking. ( ♪♪ ) partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley.

dani: fed date is here. sonali: bloomberg open interest starts right now. kicks off just days after

deepseek