>> welcome to bloomberg markets. i am scarlet fu. mexico and canada granted an extension before president trump's tariffs took effect but china has become their tariff to protect. stocks are actually taking it in stride at least for today. the nasdaq leading the way here. alphabet reporting after the closing bell. we will break that down for you as a crosses. data showed job openings fell to a three-month low, so a side the job market is cooling, which

helps to support treasuries. 4.15% for the 10-year. watching the etf that tracks big cap chinese stocks as u.s. china tensions ratchet higher. chinese stock markets are close for the lunar new year. they will resume treating overnight. in the meantime, this is a good proxy for what could happen with stocks resume treating. gold futures higher by .6%. demand for that safe haven in play. gold at a record high. stocks are positive but jitters remain as investors one for any news out of washington especially when it comes to tariffs. earlier today, mike wilson of morgan stanley explained his approach to the current climate. >> the dollar is strong and that is another headwind for producing better sales growth. staying away from some of the multinationals that have currency exposure, translation

risk, as well as goods and export risk. staying away from goods affected by these tariffs. it is just a straight hit to the bottom line. scarlet: for the latest between the u.s. and china, let's bring in enda curran. you heard mike talk about how you can position yourself around some of the companies vulnerable to tariffs but when you look at the actual tariffs beijing has announced in retaliation for what the u.s. will do, beijing has retaliatory tariffs on 80 products but not until later. this is a sign of how much things have changed since the first trump administration. enda: not a dollar for dollar response. there is an entity list. there are tariffs on farming machinery, farming machinery into china. minerals like tungsten.

none of that is on the scale of the blanket 10% tariffs that president trump put on all goods coming into the u.s. it signals for now that china is willing to come to the table, that it wants to move this conflict to the next level. they are willing to talk. the administration here says they are willing to talk to trying to terms with that. it is also a signal from china that even if they are in a weaker position when it comes to dollar reaction, there are ways to retaliate, and they are giving their response so far. scarlet: maybe one way to do it is to target u.s. companies like alphabet but a little curious because google's services are not really accessible inside china. i want to ask you about this other thing, according to the wall street journal, trump and xi jinping are not speaking today.

trump has said that he wants to speak soon and will look to make a deal. we don't know what concessions president trump is seeking but they do cover some pretty familiar ground, don't they? enda: it is notable if both leaders are going to pick up the phone and speak in and of itself. that might suggest a coming of a meeting of ways in this. nonetheless, the china story is different from canada, mexico, colombia. president trump has been hawkish on china, all of the humanitarian and other issues that stoked division between china and the u.s. there was surprised that he pushed so soon with tariffs on china across the board given the executive orders that he put in place. nonetheless, everyone will be waiting to see what comes out of the call. i would say some skepticism

might change his overall views on china. scarlet: we know that he wants a smaller trade deficit with china, looking for china to perhaps do something with tiktok, something that will allow it to stay alive in the u.s. when it comes to geopolitics, washington is also putting on pressure to beijing with things like the panama canal, as well as russia. enda: there is a lot on the table. on the one hand, you have the merchandise goods deficit. china can say we will renew our purchases of farm produce and then maybe we can come to a meeting of ways on the merchandise goods side. when it comes to the national security side, efforts to control china's technological development, worries over human rights, that is much more complicated. the panama canal thing is interesting because it is an indication of the broad pressure that president is willing to use, tariffs and the threat of

tariffs, when it comes to geopolitical sway over the country. that is a much thornier side of things. there might be some middle ground with merchandise goods but it is hard to see any of the other issues being resolved anytime soon. scarlet: thank you for giving us the latest on china-u.s. tariffs. let's go back to company news and check in on individual equity movers. for that, we go to emily graffeo. emily: we are looking at a huge stock pop in palantir, up 21%, all coming from the company's earnings where they touted demand for their ai products from u.s. businesses and also u.s. government contracts. co alex karp describing demand as untamed organic growth. they also said full-year revenue will also be $3.75 billion, all things to that demand.

the earnings prompted an upgrade from morgan stanley, raised their price target on the stock, reading to equal weight, saying fundamentals are getting better and there is a lack of a clear downside catalyst. the stock did have a big surge last year, up something more than 300% in 2024, but the gains are still continuing. also looking at shares of spotify. the streaming company posted user and revenue forecast that beat estimates. the stock is up about 10%, all coming from these upgraded forecasts. they say they see 675 million total active monthly users. the company also posted its first ever annual profit, so investors are really cheering strong earnings. finally, google has earnings after the bell. the stock is actually higher today despite what some investors are calling some retaliation from china onto

google in response to tariffs. we saw today right after the chinese tariffs went into effect, beijing announced they are alleging that they will be investigating the google parent for alleged antitrust concerns. but investors don't seem to care and all the focus is now on the earnings, not only what the company will be able to say about ai in response to the deepseek news, but also how resilient are alphabet's other business is, cloud segments, areas that are more insulated from the ai-related volatility, how strong can those be. and in one to watch for google, revenue growth, expected to accelerate to 17.8% next year. scarlet: emily graffeo with a look at alphabet. with more, i want to bring in ryan from bloomberg news.

you were previewing their earnings in a story, talking about the valuation of this company, how a lot of investors see it as a bargain compared to other tech names. i what measures? >> alphabet is a bargain relative to the other magnificent seven names based on estimated earnings. roughly in line with its average over the past 10 years but that is a discount to the broader market which makes it pretty rare among the companies that are in the ai space, in the high-growth tech space right now. you mentioned the acceleration expected in alphabet revenue, continues to perform well in terms of google search, youtube, all of these different kinds of businesses. waymo, processing chips that are seen as a growth driver for them. there is a lot going on that is seen as positive. as the stock keeps rising, we have seen the multiple move

lower over the long term. the fact that it is still a bargain makes it something of a unicorn within the mag seven. scarlet: certainly an outlier. it is the last of the mag seven not counting amazon to report results. i'm curious whether we got enough of a read from other mag seven companies when it comes to key parts of their business. what did we learn from those companies that may give us a read into how alphabet will perform? ryan: meta's results were pretty strong in terms of advertising and then at alphabet are the strongest players in this space so far. that of course impacts youtube, google search, so on and so forth. microsoft's cloud results were a mixed bag, didn't grow quite as much is expected but the growth was pretty strong by any objective measure. one of the bigger issues impacting microsoft was the

capacity constraints. so much demand, they don't have data centers online to handle all of that, so that is a good reason to see a little bit of a disappointment, suggest that alphabet, their cloud business which has been strong, maybe we see another strong read there. amazon comes out later this week. it seems like a lot of the signs are pointing positive for alphabet. scarlet: anyone with an elderly parent or child knows how popular youtube is. how much detail does alphabet disclose when it comes to youtube, where their viewers, revenue generated, any numbers we can get our hands around? ryan: not a ton of detail out there but people just don't appreciate just how big youtube is. there is an estimate, if it was a standalone bank, would be worth more than 500 billion dollars. people consider netflix to be the leader in streaming but they

are actually smaller in terms of the over audience, time spent. i think that is an underappreciated business. certainly if it was on its own, it would be considered a tech giant in and of itself. scarlet: interesting that within alphabet it becomes an afterthought where everywhere else it would be the primary growth driver. thanks for joining us today. coming up, teedo pharma giants reported earnings today, pfizer and merck. chris should tani from goldman sachs will be joining us with the details. this is bloomberg. ♪ no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management best thing i've ever done... that's what freddie told me. it was the best thing i've ever done. really? yes, without a doubt!

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scarlet: this is bloomberg markets. i'm scarlet fu.

time for our stock of the hour and it is merck. shares are sliding to their lowest level since 2022, this after the pharma company halted shipments to china of its cancer preventing vaccine. for more on the farmer environment overall with the trump administration, i want to welcome chris shibutani. it's a pleasure to speak with you. we mentioned the gardasil story and how merck is halting vaccines to china. this decline in demand for vaccine. how close are we to finding a bottom on this? chris: that is a key question and one that the management team tackled head on today. their decision to halt shipments acknowledges the fundamental problem here which is that the man starting in china, consumer. product, have been very difficult to forecast.

from the standpoint of their partners in china who do the commercial distribution, this is a prudent move. however, it has reduced concern for the company and investors thinking about longer-term growth here. gardasil has been such an important foundational product and this challenge they have had over theastf quarters, they are resetting sitting, the way they characterize it. scarlet: mark still says it sees a long-term opportunity for gardasil in china. because the demand is not quite there might now, does that make merck vulnerable to chinese tariffs? not that any have been placed on it, but just wondering. chris: many are trying to sort through the information, tariff prospects, so would it would be difficult to quantify from that prospect. the u.s.-china relationship, particularly with merck and vaccines, have been long-established. we will have to wait to see how some of the proposed policy

changes and tariff related issues will play out. this is more about a fundamental supply and demand dynamic as well as from a clinical standpoint well established for this product here. too early to make a conclusion, however. scarlet: let's talk about their top-selling medicine keytruda. what is your confidence that merck will come up with ways to not give up that market share to generic drug makers? ? chris: certainly has changed the ings. the challenge for pharma as these products approach their patent dates and loss of exclusivity, to navigate through that. merck has characterized this more as a hill than a patent cliff. multiple strategies are being invoked including those that build upon the keytruda

franchise, delivering subcutaneously under the skin versus in infusion. also strategic partnerships with the company had been planning and executing upon. finding drug conjugates, new drug modalities. they had described potentially $20 billion in revenue for their cancer business where they are among the industry leaders based on new mechanisms of action. like anything, certainty about the declines is typically more dialed in by investors that it is for prospects for pipeline. scarlet: any time something goes off patent, it cannot be. we also have to address the trump white house's relationship with the pharma industry overall. the nominee for secretary of health and human services has faced scrutiny over his vaccine skepticism. >> i believe that vaccines play a critical role in health care. all of my kids are vaccinated, i have written many books on

vaccines. my first book in 2014, the first line of it is i am not anti-vaccine, and the last line is i am not anti-vaccine. scarlet: we should note that he has been cleared of the committee level and is due for a full senate vote but it is not clear his stance on vaccines, even though in the past we have known his stance, and today he says something otherwise. is rfk good or bad for a company like merck? he has this ongoing lawsuit, tied to this ongoing lawsuit against merck over injuries from products like gardasil for instance? chris: it is unclear. uncertainty is not a friend of investors. so much has been said and captured versus what actually might be possible. from a vaccine standpoint specifically, there is a lot of foundational science, and clearly from a public health and business standpoint, many

aspects of this structure that clearly map it out. in terms of whether it is good or bad, unfortunately, it is quite nuanced. it is uncertain and quite volatile, so i think it's a matter of staying tuned. being aware of what the headlines are generating versus what can actually tactically, operationally be modified in changed in the future. scarlet: 30 seconds. we didn't get to pfizer yet, but if you had room in your portfolio for just one, which would you go for right now? chris: at the current levels, merck appears to be quite punished at these levels. it is clear they have the capacity to address some of these challenges, particularly about capital allocation and business development. they have the therapeutic pillars in their business to build. the commentary from management today suggests they have some dry powder in our thinking very thoughtfully about how to

address the challenges with the keytruda coming up. scarlet: chris shibutani with goldman sachs, thank you very much. coming up, pepsico is seeing sluggish sales. the company gave guidance on how it plans to spice things up. that is next. this is bloomberg. ♪

scarlet: this is bloomberg markets. i'm scarlet fu. shares of pepsico tumble income of the worst one-day drop since october 2023 after sales missed estimates and the company forecasts sluggish full year growth. joining us now is deena shanker. is this a cost driven story or a growth story where they are trying to convince investors about the growth? >> probably the latter. the company needs to accelerate its sales.

i think a lot of people would like to see some more price cuts but the company is saying they do not expect across the board they will be doing that. they are going to offer value in other ways, they say, basically going to offer a variety of package sizes so you can spend fewer dollars. on the other side, they will boost their healthy snacks, in line with a lot of consumer demand. scarlet: focusing on value, not cutting prices but may more variety of sizes. that sounds like tweaking around the edges. pepsico says it sees a much bigger opportunity in international markets, although i have to imagine the strong u.s. dollar has to be painful there. deena: they are also talking about geopolitical tensions which is usually a reference to boycotts against american companies because of the war in israel and gaza.

there international markets definitely showed a lot more strength than north america but it will still be challenging there, as well. scarlet: did they say anything about glp-1 drugs, impact on their products? deena: interestingly they did. the ceo said they had not seen the impact specifically from glp-1s, but he also noted that consumers are broadly moving in a healthier direction. sometimes it is hard to tease out what is a broader consumer trend and what is being driven by glp-1s, but they are both going toward healthier, usually high-protein snacks. he talked about a sense of urgency in terms of getting into the protein drink market. definitely expect pepsico to try to make some better for you snacks. scarlet: i appreciate that.

the pivot toward health, tells you everything you need to know. tomorrow, jim jane doe's will join us at noon to give us his take on the markets and u.s.-china relations, and opportunities there. this is bloomberg. ♪

>> from the world of politics to the world of business, this is balance of power.

live from washington, d.c. joe: china reciprocates. welcome to the faster show in politics as beijing answers washington with tariffs of its own after president trump struck deals yesterday with candid and mexico to delay their tariffs by a month. anything could still have been. i'm joe mathieu alongside kailey leinz in washington. welcome to the early edition of "balance of power." this is the start technically with a second trade war with china. just a question of how long it lasts. joe: maybe that depends on when president trump speaks with xi jinping. according to the press secretary, they are working on scheduling that. just unclear whether it will take place and whether the conversation can result in a pulling back of tariffs like we saw in the case of mexico and canada. donald trump today seems to be focused on