♪ >> we are clearly engaging in a trade negotiation deal. as much as we want to know the answer we've got to go through the dance. >> it is all about figuring out what the market is pricing. >> there are companies that are going to be winners in all of this, and companies that are not going to win. >> there is going to be a zigzag back and forth and i think it is hard to pin that down. >> it is impossible to know what is going to happen. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: each training week is just like one long day, never-ending.

just one very long day. good morning, "bloomberg surveillance" starts right now. with equity futures down by 0.5%. the nasdaq 100, down by 0.9%. let's start with apple. according to reporting of bloomberg, china's antitrust watchdog has laid the groundwork for a potential rope into apple policies and the fees it charges after developers. lisa: they take about a 30% cut of inapt spending. this is something that has been probed elsewhere. with be very clear, the other notable thing about this investigation is it started by chinese authorities late last year, so not necessarily one to put into the tit for tat that we see with respect to china and the u.s. nonetheless another dent in sentiment eroded with shares lower in premarket trading at a time when people are really questioning whether the biggest winners could keep on winning. jonathan: they've now got a target on their back.

back to the inauguration we said just a day afterwards that that was a celebration of everything that was great about american corporate america. american champions of tech. they've now got a target on there as well and you can see that foreign countries, nations and allies see that as a potential pressure point for this administration. we saw that when the threat of tariffs on canada came about. what was the first thing candidate? said we will cancel the starlink contract and go after elon musk. this is just the first or second time we seen this. i think you could see more in the year ahead. lisa: we saw that already with tesla sales plumbing more than 60% in december, maybe in response to some of the back-and-forth between the government. the key issue is how long-lasting is this vs. get it all out of the way, come out with a bazooka of pretty radical suggestions and see what sticks. jonathan: here is the second punch, it comes from alphabet. 75 billion dollars in 2025 capex.

the estimate was 57.9. cloud revenue sliding as well, taking some wind out of the stock. lisa: to me i look at these numbers and it was a disappointment. it wasn't that big a disappointment but it highlights that the expectations are very high for a lot of the big tech players and their ability to meet those expectations is getting lower because of capacity. the fact that they are still saying that is the way to go and that it was so much higher it will be so much higher than people expect highlight how they don't think that they can win unless they spend that money and they are still being penalized for it. jonathan: amazon results just around the corner as well. stacked day ahead for you. economic data a little bit later. job openings came out a little lower than expected yesterday. services data, look out for that as well.

lisa: a bit of divergence. philip jefferson came out and said he continues to see gradual rate cuts throughout the year whereas mary daly of the san francisco fed came out and said we have to make sure that we get our inflation down. 100% of my energy is devoted to getting inflation target. jonathan: we can take our time. we've got no idea what happens with tariffs and changes in policy down in washington, d.c. equity futures negative, the losses bigger on the nasdaq. we will catch up with aaron ken non, michael townsend, and stephan slowinski following disappointing results from alphabet. donald trump saying the united states should take control of the gaza strip. trump: i don't want to be cute, i don't want to be a wise guy that the riviere of the middle

east, the u.s. will take over the gaza strip and we will do a job with it. we will own it and be responsible for dismantling all of the dangerous, unexploded bombs and other weapons, that will supply unlimited numbers of jobs and housing for the people of the area. jonathan: joining us from d.c., here is bloomberg's annmarie hordern. that one was unexpected. annmarie: unexpected, although trump has flirted with this idea last week and even earlier in the oval office but he was pretty serious and firm last night and that press conference saying this is his vision for the middle east and for gaza. it was unorthodox, way out of the box. some in israel who are looking well on this think it is a bold vision. what i would say this morning's adversaries will look at what the president of the u.s. said last night as a landgrab, but at the same time, this could spark fierce debate which may need

other individuals may actually come to the table with ideas because at the moment, what is the solution when it comes to gaza? the issue is the president policy last night, it kind of undermines his big picture of what he wants to get done in the middle east. i'm talking about normalization between israel and saudi arabia. trump 1.0 brought normalization with a number of coast states and saudi arabia last night put this statement at. the foreign ministry affirms saudi arabia's position on the establishment of palestinian state is firm and unwavering and it continues to stay. they will not establish diplomatic relations with israel about that so i talking about what he wants to do in gaza he undermined his big goal for the region. lisa: do we have a sense of in

back channels what this discussion is like with allies in the region, middle eastern powers that could potentially prolong the cease-fire in getting some sort of solution? annmarie: whether it is egypt, whether it is jordan, a really important meeting next week is going to be president trump sit-down. that is going to be incredibly important because jordan and egypt are very reluctant to take in more refugees and none of the arab states want to, either. part of this is because they want to make sure that israel does not just take over palestinian land in gaza. i've not seen a single country in the region move on their willingness to take in palestinians. so this is going to spark a tremendous amount of debate.

we are not talking about the second phase of the cease-fire and seems like primitive benjamin netanyahu, this is something they wanted to see, the envoy for the middle east wanted to see the israelis really commit to. netanyahu is dealing with a very white -- right-wing government that potentially doesn't want to see a second phase and wants to make sure they can go back into eradicate hamas. jonathan: we will catch up with amh in about 10 minutes. those of you just tuning in, equity futures down across the board. we continue to believe equities will outperform other major asset classes, however more tempered expectation for future returns. he concerns include if tariffs bite instead of just bark. welcome to the program, good to see you. let's talk about sentiments

going into 2025. is that bark sufficient? >> certainly the first sort of volley around tariffs has been more bark than bite. mexico and canada will have to see, and there is that silver lining in all this which was alluded to a little bit with the middle east, which is tariffs 2.0 is very much not just about trade, they are about foreign policy and border policy and so we will have to see how he uses that tool and whether he is effective in using that to affect some foreign policy outcomes. the issue in ukraine, the spat with china on multiple fronts including covering the back of vladimir putin could all come

into play on tariffs. and i think that is part of sort of the potential bargain that we could see across multiple fronts which could boost the risk on trade. no one wants to lever off, they want to take the risk off, so we will have to see. lisa: you talk about some of the unknowns with tariffs and global policy. some of the earnings we've gotten in particular from alphabet, from amd showing a very high bar and inability to clear that very high bar. essentially this is the moment of either transition away from some of the big winners last year to everyone else, the adopters this year, or if it really just, maybe valuations are just too high? >> certainly the last two years the narrative has been and i growth. nvidia has been the poster child but statistically the driver about outperformance.

massive technology outperformance in the s&p 500 last year. this year it is the leading underperformer of all the sectors through yesterday and i think the market is rethinking how the evolution of ai is going to play, who are going to be the winners? will it be the hyper scalars or the future winners, maybe data storage companies and segment are of data storage and the like. so it's going to be quite interesting, but for sure if you look at people late this year in the s&p 500, its outperforming market cap weight and we think there's plenty of opportunity outside of technology right now to take advantage of some of the themes. i would also just say that ai and the discussion of bullishness around ai accrued over the last couple years not just in public technology but to private equity. every pitch book that i saw come through my office, they are about infrastructure, but it was

digital infrastructure, it was ai, data centers, the utility buildout. i am sort of curious to see in the coming weeks how those will change. lisa: it's unclear whether they will get the same benefit. putting together the geopolitics as well as the tech story, something john brought up earlier with respect to apple, how much of a liability is it to be a national champion in the united states any moment where suddenly this becomes a potential negotiating chip on the other side by potential governments that are looking over at the trump administration and trying to get attention? >> certainly it is a risk. we see some of that play out in apple numbers, we see some of that play out in the headlines with china and apple but i will say smart people at apple strategically thinking about their supply chains, not just the demand-side which is partially out of their control in china depending on

geopolitics as you just alluded to, at the good news with apple is they've moved a good deal of their production to places like vietnam and india and elsewhere, so we are hopeful that this is really just a diplomatic sort of move on the part of china ahead of tariff conversations with trump and xi. jonathan: that friction goes beyond just tariffs and i think we are finding that out quickly this morning. energy was part of the story over the weekend as well. one sector you like is energy. we will catch up a little bit later this morning. what is it that you like about energy right now? >> there are components of energy that we like. we think the lng demand from the united states will continue to remain relatively strong. we think natural gas demand will remain as a result relatively strong, so you want to be in the right basins geologically. you want to be close to export

facilities in that regard. we think there's probably going to be a little bit of a re-think around pivoting a little bit to utilities on this point, but the degree to which electricity demand is going to be required around ai. yes, constellation energy is up a great deal year to date, but we will have to see how this all plays out with data center growth. but we do like the natural gas side of things to the extent that we see global growth pick up on the margin. we could see the price of oil pick up as well. we also see huge opportunities in europe and internationally. we talk about ford multiples in the united states. they were quite expensive. you look at japan, non-japan asia and europe, and there are a lot of opportunities there trading at 9, 10, 12 multiples. and it is not just because they are exposed to sectors that tend

to be cheaper, there are also some opportunities there as well. jonathan: that was true 10 years ago and it was a long decade of underperformance. >> that's a good point. i think part of this potential for sentiment is very weak right now in europe. and i would argue that if you look at the banking sector, the growth opportunities are there with the price-to-book valuation is not. at the end of the day, i think that industrials in particular in europe are going to be probably more positively impacted by the nato buildout, the demand for european countries to spend more on their defense. that will not just accrue to defend manufacturers but to countries like norway, sweden, the u.k., france, germany. but then again, the headwind remains in the auto sector for example, and that is a big component, so you want to be a little careful.

jonathan: let's do it again soon. teachers negative by 0.5% on the s&p with an update on stories elsewhere. yahaira: alphabet shares are trading lower in the premarket, down 7% after the tech giant behind google reported earnings that fell short of expectations. revenue came in lower than estimates after growth in the cloud business slowed. still, alphabet plans to invest $75 billion in this year, far more than expected. meanwhile the u.s. postal service is temporarily suspending and been parcels from china and hong kong. letters and packages from the region will not be impacted. the move comes after president trump imposed a new 10% tariff on all chinese goods. now the latest on the midair crash between an american airlines jet and army helicopter. the remains of all 67 victims have been recovered from the collision. the latest data shows that the

black caucus flying about 300 feet at the time of the accident, about 100 feet higher than allowed in the area. jonathan: more in about 30 minutes. up next, holding firm on a trade war. >> we are doing very well against china and against everybody else. >> i will speak to him at the appropriate time. i am in no rush. jonathan: that is one call that did not happen. the conversation up next. live from new york this morning, good morning. ♪

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later on this morning, 8:15 eastern, the jobs report. we will talk about that little bit later. holding firm on the trade war. trump: we are going to do very well against china and against everybody else. i've never seen the deficit with china, $1 trillion. think of it, $1 trillion. we are respected again as a nation. maybe at a level that people haven't seen for many, many decades. i will speak to him at the appropriate time. i am in no rush. jonathan: president trump downplaying china's retaliatory tariffs against the united states saying he is a no rush to speak for xi after previously saying he would have a call with him and 24 hours. annmarie: so far no call, but potentially there will be one and i'm joined now by michael townsend of schwab, managing director of legislative and

regulatory affairs to break down all of this. we are entering the third week of the administration. what are you telling clients when they see these tariffs and trade headlines, almost whipsaw within 24 hours. when it comes to china, they stuck. >> i'm telling clients you can overreact to everything. there is so much going on right now that you can't jump at every noise. but you are right. china is different than columbia and canada, mexico where the threat of tariffs was there and almost immediately talk started happening. china is going to be a longer game. when he says i'm not eager to make that happen in the first 24 hours, although he did originally say that he was going to, i think that is where he is coming from, he understands this is a much longer game. annmarie: what is the ceiling when it comes to tariffs on chinese goods? >> i don't know if there is a ceiling.

maybe if there is no progress you see that go up a couple percent, something like that. we will have to see. annmarie: what makes this go around different than phase one? >> it is a continuation and a lot of people don't even remember that the tariffs from 2018 and 2019 are still in place. so this is on top of that. i think the president probably feels stronger than he did the first time around and i he is willing to play a longer game with china. we will have to see how it all plays out. annmarie: i wall so want to talk you about what is going on on the other side of pennsylvania avenue. everyone is focused on the oval office. we are almost a month away from a government shutdown. we are going to hit the debt ceiling all before we get with the market would call the good stuff of tax cuts. how do you see the sequencing of this going down because the republicans have the slimmest majority they'd ever held historically. >> and it is going to get

slimmer when elise stefanik resigns, it will be one seat in the house of representatives. . we are already seeing signs and it is difficult, house of representatives, republicans plan to consider a budget resolution, the very first step in the gigantic package that is going to include taxes and lots of other policies. they are still negotiating internally. i think the senate is eager to get going. we may see the senate take the lead here before the house of representatives in the coming weeks. annmarie: if the senate takes the lead does that mean this one big powerful bill becomes two? >> it increases the chances. this senate is looking at it as we can do things like energy policy, water policy, if we start putting taxes and debt ceiling and some of these really complicated things into it. will trump have the patience to wait that out? i think that is where the senate

is coming from. let's get something on the board may be little early. i don't know whether the house of representatives would agree to that but i think that is where this is a divide. annmarie: you say bond market investors are very uncertain and very uneasy. what a pain most attention to? >> they are trying to pay attention to everything. annmarie: the market can only focus on one thing at one time. >> what we've been telling people is that this kind of uncertainty is going to continue to happen. we think there are going to be tariffs, and then they are pulled back. but they could come back on march 4. this is a 30 day pause. i think there is a little bit of whipsawing that is going to go one year and bond investors who traditionally want to see them longer-term and have a clear path may not have that opportunity here. to me it is the debt ceiling. the debt ceiling is going to be very complicated.

you've got a bunch of republicans you have never voted for a debt ceiling increase and democrats don't at the moment have any incentive to help out in that situation. i think it is going to be a real challenge. annmarie: michael, thank you so much for your time this morning. he says the biggest underrated item to watching washington right now for the market is the debt ceiling and potentially we could hit that this summer. annmarie:. jonathan: thank you. let me bring you the latest from the middle east. donald trump posting on social media this morning reiterating something we've heard before. i want iran to be successful but it can't have a nuclear weapon. i prefer a verified nuclear peace agreement. lisa: and then he says god bless the middle east after he says some of the reports are greatly exaggerated that the u.s. and

israel are going to blow iran to smithereens. this is interesting because of all the things that he said, it seems maybe that is gaining the most concern in the middle east at a time when there are some pretty complicated negotiations going on. watch this space because the conversations are continuing and pretty robust forms behind the scenes. jonathan: look out for that conversation, about 45, 50 minutes away. up next, alphabet cloud sales fall short of expectations and the numbers come in big. that conversation up next. ♪

jonathan: equity futures declining. down .5% on the s&p 500 after snapping a two day slide. on the russell, just about unchanged. the moves today all about tech. the bond market, the yields look like this. two-year down two basis points. last week falling for a third consecutive week. we have not seen week four for a long time. we have not had a four week streak through the whole of 2024.

quite impressive given what we saw in the run-up to it. lisa: some might say this is the opposite of a risk on move. it is logical to see some gains in the bond market. it goes to the fact there is a cutting bias among some members of the federal reserve. the jolts number came in lower than expected. you have commentary from chipotle saying after raising prices last year, they will not raise prices this year. even with the tariffs they have to be careful before raising prices on consumers they don't have the same tolerance for it. jonathan: this could be different. how quickly can they pass them on to consumers? are they knocking on the door to the limit of consumer price confident? if companies have to cut costs elsewhere, you destabilize the labor market. this could have a bigger impact in terms of demand and maybe not on inflation which is where the market is slowly moving its focus to in the past few days.

lisa: 10-year declining on the idea of this being a disinflationary type of measure rather than one that is purely inflationary. jonathan: foreign-exchange. i want to focus on dollar-yen. some inflationary numbers out of japan today. wage growth. look at the yen strength off the back of it. that is some yen strength on the prospect the boj light have to go and hike interest rates again. lisa: this move was in place because the dollar is generally weaker versus everything as people rethink how quickly tariffs will go into effect. you see that with a canadian dollar and the peso. with japan this highlights how much they continue to diverge from the rest of the world and how far the yen has to go. that's why you're seeing portfolio manager say they like the rest of the world because the bar is so low. jonathan: labor cash earnings

year-over-year, 4.8% for december, much higher than a citations. president trump -- expectations. president trump says the u.s. should take until of the gaza strip and turning it into the riviera. arab nations pushing back. lisa: saying this is exactly what we have been trying to avoid. this is their homeland. because against protocol. before we get into the analysis of exactly what this looks like, i want to point out something that happened in 2018 when donald trump visited kim jong-un in north korea to talk about denuclearization. he started to say look at this property on the beachfront. it would be fantastic as condos. fantastic as hotels. he said if kim agrees to take -- give up his nuclear arsenal, they have great beaches. whenever they are exploding their cannons into the ocean. boy, look at that view. wouldn't that make a great

condo? jonathan: he's a real estate developer. lisa: is not surprising. but the u.s. does with this policy and does to jump start negotiations, how offended nations are, all that we shall see. this is a playbook we have seen before. he's a real estate developer. jonathan: we will hear from the administration later sitting down with annmarie. amh made this point. this proposal might seem out there, but perhaps it will inspire proposals from elsewhere. at the moment there are not too many. lisa: when there is complete rubble in the gaza strip. there are 2.2 million people who want to find their homes and they may not exist and probably don't. how do you rebuild while providing services to people in a demolition zone? that's a viable question and so far there have not been solutions. jonathan: great difficulty. let's turn to china. a probe and apples policies. the country's anti-trust

watchdog is investigating taking a cut of 30% on an app spending. apple declining in the premarket. lisa: this inquiry began last year. unclear how much this has to do with trump and how much there's an arsenal of tools china has been developing to go after u.s. companies, particularly those in direct competition with their national champions. this just highlights how much they are watching this space and they have been for a long time. this could get ugly and why it is a potential liability to global companies from the u.s. that do business in china. that is what i'm listening to for earnings calls. jonathan: this goes beyond tariffs. some of these companies are the poster child for american commerce. we will catch up with one of them later, the walt disney company and speak to the cfo you johnston --hugh johnston. you are one of the flag bears,

the definition of american inc. any pushback on the line? lisa: the resorts in asia and china have done really well. have they seen people pull back from some of those experiences because they are less than pleased with the american situation? jonathan: who will talk about disney later. alphabet delivering disappointing fourth-quarter results. revenue missing because of slowing growth in the cloud business. the company projecting higher forecast capital expenditures for 2025. the stock is down 7%. they are increasing by the same amount as meta-increased capex -- meta increased capex. they are in one of the core parts the business and that gets people's attention. you can spend more but you have to show the money is coming with it. lisa: where are they spending it? they are expecting to spend $75 billion in capital expenditures. the expectation was $57.9 billion.

that is a huge delta when they say this is deriving revenue to get cloud consumers into our company. there are -- they are number three in the cloud computing space and have not seen the same growth in sales a lot of people were expecting. people are losing patience. we are seeing it in the numbers. jonathan: is happening with this name. down by 7% in early trading. stefan slowinski of bnp paribas, and outperform rating on the shares and a $225 price target. welcome back to the program. good to see you as always. what you make of the numbers? stefan: the search business, youtube expectations. search beat by 150 basis points. you two by 270 basis points on healthy advertising.

google cloud, they are seeing capacity constraints. it is not a problem around demand. large commitments are up twice ask over the year. we saw the license business pull forward. some business into q3. non-advertising businesses were weaker than expected. google is being punished for success in diversification. from subscriptions, enterprise cloud. you mentioned the capex, $75 billion. that is "19% of revenues." capex is 37% of revenues. it's a more minimal amount for google relative to its size. lisa: meta positioned it in a different way. you heard about them driving efficiencies, creating profitability in their advertising by giving their customers a better proposition in terms of directly targeting the tensile consumers. why was google unable to give that type of promise of application of some of these

tools that meta did? stefan: you have a communication issue at google. the company does not give guidance and does not quantify the impacts by potentially negative or positively one-offs or long-term investments. the advertising business eating expectations. when you look at ai, the genai powered search is now in 100 from companies and the monetization is at least on par with traditional search. when you look at the ability to take pictures to search, 20 billion are being done every month. when you look at circle, the search of the people using that, they are using that for 10% of all searches. google is being successful in innovating within search and successful innovating using ai beyond search. look at youtube which is

crushing it in the u.s.. they don't articulate that very well. that continues to hold back the multiple. lisa: the narrative is moving on. seems as if people are saying last year was the year of big tech and the cloud providers. this is the year of the adopters. meta made a good story about why they were an adopter. is that premature? that people are shortsighted when it comes to how much more spending has to go into cloud computing at a time when demand is far outstripping how much supply the risk? -- supply there is? stefan: when you look at what google said, what meta said, they are delivering on a huge amount of demand. microsoft has a commitment of $300 billion. meta has 3.3 billion daily active users. google has seven applications with two to billion people -- two billion people powered by

gemini. we are seeing monetization. microsoft's $13 billion run rate . with google, they are monetizing ai at the same rate as core search. they are having to it invest and deliver on the demand. there's talk about deepseek and innovations like that helping but there's a massive amount of build that needs to be done to meet demand in the market already. jonathan: earnings from elsewhere. disney coming up with a big first quarter adjusted eps of 176. a first look. the stock is up by 2.5%. now 3% higher. i wanted to fit in one final question. high sound look a broken record because i hate bringing it up. when it comes to tesla, all we talk about his full self-driving. when we talk more about waymo and the alphabet stake in it? stefan: it comes back to communications. waymo has taken outside

investment, which is the second time it has done that, i signaled maybe they are willing to monetize that more aggressively. last night they talked about rolling it out in more u.s. cities. in japan as well. is another example of how they continue to execute on using ai and using their software development skills to enter new areas. we continued to see that as an upside opportunity for google and that said, in the multitrillion dollar market caps of these companies it might not be enough to move the needle. it should drive confidence and hopefully drive more of a multiple rewriting. when you look at -- re-rating. when you look it matches the earnings growth. communication is quite poor but the stock will recover in line with the earnings growth. if they can communicate better on these opportunities, maybe we get multiple expansion. jonathan: appreciated, sir. stefan slowinski of bnp paribas. if you missed segment of

revenue, it is difficult because it turns attention to spending. over at alphabet and you come up with numbers like $75 billion when the market was looking for $57.9 billion. maybe you have a communication problem. the stock is down by 7% in the premarket. disney, 176. estimate was 142. lisa: when you look into the details, the experience revenue outperformed. 9.4 billion dollars versus the estimate of $9.3 billion. they missed on entertainment revenue but otherwise this is a really positive look. i wonder how vulnerable that is to some of the things we were talking about. the international disney footprint. do they start to see pushback if that also is viewed as americana incarnate? jonathan: speaking of pushback on pricing, look at the headline. second-quarter modest decline in disney plus subscribers quarter on quarter. we catch up with the disney cfo this morning.

whether we are seeing pushback from consumers or reaching the limits of the tolerance around pricing. interesting to see what he has to say. lisa: every other platform provider has been doing the same. is there a pick and choose process going on that you are seeing more broadly? one of the products continues to attract people to the platform at a higher price like spotify. jonathan: did you upgrade yesterday? lisa: i didn't. silence is like a zen workout. jonathan: disney up by 1.4%. stories elsewhere this morning with your bloomberg brief with yahaira jacquez. yahaira: unions representing federal workers are suing the trump administration for its buyout offers. the unions argue the office of personnel management lacked the legal authority to make the offers to employees to resign. for months, the they --

contradictory information on the rights. amd shares are falling nearly 9% in the premarket after the chipmaker gave a disappointing outlook for the data set of braces -- center business while sales came up short. the report renewed concern amd's push into ai quitman has lost momentum. that overshadowed what would otherwise be solid results. a group of banks led by morgan stanley is set to increase the sale of loans tied to x. they aim to sell up to $5.5 billion of debt instead of the initial $3 billion. there is strong demand from investors betting that elon musk-linked companies may benefit from the relationship president trump. that is your bloomberg brief. jonathan: thank you. up next, paying the price for trade uncertainty. >> the stronger influence from this whole tariff war and tariff situation is the drag on growth.

the drop in yields begins to reflect that longer-term negative impact on growth. jonathan: up next, the brilliant lindsay rosner of goldman sachs asset management. ♪ ♪ corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

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jonathan: equity futures on the s&p -5.5% after snapping a two day slide. the bond market, yields lower by three basis points. 10-year, a break of 450. let's see if we get another read that speaks to a similar theme later on this morning. 8:15 eastern time, the adp jobs report. under surveillance, paying the price for trade uncertainty. >> the stronger influence from this whole tariff war and tariff

situation is the drag on growth. the drop in yields against reflect that longer-term negative impact on growth from longer-term sustained tariff policy, not from these 25%-50% reversed quickly. we are respecting -- jonathan: u.s. traders weighing the risk of possible tariffs. lindsay rosner writing, "the selloff was an opportunity and we continue to think fixed income is a good part of the portfolio." lindsay, good morning. let's start with the tariffs and the price of all of this uncertainty. it raises the hurdle for rate cuts of the federal reserve? lindsay: it will affect the data and it raises the hurdle. you have to be honest about how little was priced in. 45 basis points priced in between now and the end of the year in terms of cuts. there is not that much that can happen in the labor market. we can talk about that more.

inflation seems to be the question. it appears so far that tariffs are a tool for negotiation. they maybe don't have the staying power that people were probably worried about one day into the announcement. jonathan: they are summed a -- some debate about what they can mean for inflation. we had a stress test on monday morning. we have the prospect of 25% on two of the biggest trading partners and we saw yields dropped initially at the long end on the 10-year. did you take any signal from that? lindsay: you have the front and go a little higher, the idea that the fed would not be able to cut. it was just a handful of basis points. yields go lower and the idea was the probability of recession have increased. tariffs are definitely growth reducing. again, we are talking in general terms of what tariffs do. they are not in place. i think we need to all take a little bit of a breather -- i

think it will stress tests all of our hearts in the past few days. understand these are tools. i think you see the result of 10,000 troops on the border to help shows they are kind of working. lisa: the cfos you talk to looking to finance themselves, how do they take a breather at a time when they have to come up with plans? how long can they take a breather? do you get a sense it is filtering into the decisions of when to start raising money in 2025 or how they can plan ahead? lindsay: we don't have a wall of maturity. that is the biggest fear on debt since the financial crisis. the wall of maturity where the company's have to act and they have to act now. they have done a good job i -- this is the ptsd of the financial crisis. never put yourself in a position you are forced to come to market at a specific time or else. companies have set themselves up in a good way. they have cash balances, healthy balance sheets.

uncertainty is not a good thing when you are a management team trying to predict for the future. we have a lot of data now in terms of management speak. so far we are not seeing from a guide perspective tremendously reduced confidence. all of this stuff on tariffs is fresh and new. it is hard to completely get that into your philosophy of how to finance yourself going forward. the markets are wide open for financing. you just mentioned right before the break that x is upping their deal from three to five. there is appetite and the markets are wide open. right now it is business as usual. maybe a little bit of a burden on the shoulder of an -- bird on the shoulder of uncertainty and concern. lisa: does that prompt you to save they are too priced to perfection valuation and the credit market? especially of long-term yields are falling for the wrong reasons? the idea of reduced long-term growth propositions.

lindsay: we think from the spread perspective what is happening in credit markets that they are supported. why is because the economy is strong. we saw that we got are finalized print on gdp for the last quarter. we are seeing it in terms of consumption numbers. we are not seeing a dip tremendously in confidence with every thing going on. in particular, the u.s. economy is really strong. it is strong relative to the rest of the world. we think that continues and supports spreads even at these really tight valuations. on the other side of things, the macro is where it is interesting. that has been ping-pong in the most -- ping-ponging the most. a basis point or two in either direction. historically high-yield has outperformed in the face of tariffs. the riskier stuff may be in a better position given what's happening. on the macro side, there's lots of opportunities. we have used this knee-jerk reaction to policies to take advantage of getting our positions right sized.

jonathan: why did you think the selloff induration was overdue in december? lindsay: it was over done to knock on the door of significant real yields. for a long time there were zero interest rates. there were not real yields in the curve. what happened in december in the backup and part of unwinding of a prior trade was that we started to get real yields put into the curve. we talked to a ton of clients daily, particularly pensions. they are thirsting for real yield. when real yield is out there, it's a great opportunity. the idea of switching also from equities to fixed income really makes sense and they are happy about that. jonathan: it is not just about this becoming self-limiting because i can damage growth. there is a wall of money looking for that number. lindsay: that's true. i feel like we are all a money market watch -- we are on money market watch.

when they are actually going to move. i think we are at a time when it is starting to make sense and locking real yield is convincing. jonathan: appreciate your time. lindsay rosner of goldman sachs asset management. yields have backed down much lower. lisa: when people are looking at potential disinflationary impacts of tariffs. people are worried maybe they got over their skis with the idea of rate hikes this year, especially as the fed seems to still talk about a rate cutting paradigm down the path. jonathan: i totally agree with you. it's about whether the policy changes, if they constrain, we will see. lisa: or they delay them further which could constrain longer yields on the gross site. jonathan: in the second hour of "bloomberg surveillance," tom barkin, mike wirth, and mike

wirth tom barkin tom barkin ---- and tom barkin. that is up next. ♪ ere ya headed? susan: where am i headed? am i just gonna take what the markets gives me? 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 you go to sandals to get really, really close, (giggling) to the caribbean. we should do this every morning. sandals valentine's sale is now on. save up to $1,000 and get a sandal-lit dinner for two.

>> the exceptionalism is firmly in place. the fund metals are at risk -- the fundamentals are at risk. >> they do have an inflationary element. markets will care less about that if it comes with a side of growth. >> the fog is so dense in terms of what this will mean for business capex and for inflation. >> fed gets get pushed down when you see these to tariff increases could implement it.

-- implemented. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and anna record turn. -- annmarie hordern. jonathan: equity futures declining on the s&p 500. on the nasdaq, negative by .8%. a bit of tension between the united states and china captured by couple of stocks. let's start with apple. china's antitrust watchdog lang the groundwork for a investigation. pressure on alibaba, on jd.com as the u.s. postal service to spend in bet international packages from china and hong kong. lisa: this highlights some is businesses are seeing a serious effect from some of the tit-for-tat ongoing. unclear how much of this apple investigation is tied to that.

you can imagine it is not evaded the notice of the chinese authorities that certain companies are the darlings of america and maybe they want to deemphasize them. when it comes to the postal service, they said how do we even understand how to put into effect this tariff concept on packages coming from china, coming from hong kong? now under the value of $800 no longer exempt. we don't know how to put that into effect so we are not going to do it. that seems to be the path. jonathan: that is the problem with tariffs sometimes. if you don't noah to do, you do nothing. -- know what to do, you do nothing. lisa: if you ordered a t-shirt for six dollars and you're waiting for it, you will be waiting longer. how does the u.s. postal service know if that's going to be ok or how much stephen charge and who to charge? this is the uncertainty that can

have a blanketing effect on some activity. jonathan: we need to talk of it the earnings as well. the latest from alphabet overnight. the stock declining after the close. down by 7% this morning in the premarket. capex was huge. $75 billion for 2025. the estimate was $57.9 billion. cloud revenue slowing as well. that will put attention on the spend. lisa: they are not necessarily selling at the pace people were expecting and number three when it comes to cloud computing platform. stefan slowinski was saying it's a messaging issue. they should put on the leather jacket, come out and say we are investing $75 billion because we are planning to use ai in every facet of our advertising and every facet of our existence and we will monetize this and develop all sorts of cool new things and the prophets -- the stock would be up. this highlights the narrative of

how much the shift is driving so much of the market. jonathan: you said they could take a lesson from nvidia. they could also take a lesson from tesla. the storytelling is so powerful. full self-driving. you have to think beyond just selling vehicles. alphabet with a huge stake in waymo, a massive part of the conversation. they have got to get better at communicating their story. lisa: waymo is delivering right services around the world. they have been piloting a host of different things. the revenues from other bets including waymo is $400 billion versus the $500 billion people were expecting. you are right. where is the storytelling? you can see grandma. she doesn't need to get behind the wheel. jonathan: that's perfect. cost of earnings this morning. numbers from the walt disney company. they came up with an upside surprise. eps for the first quarter 176.

the estimate was 142. lisa: it comes from the streaming and moana 2 did really well. i saw that with my kids. not as good as the first one. that's my review. i saw decline in their customers although not as much as was expected on the street. experiences coming in higher-than-expected. disney around the world. disney paris, disney hong kong. how much does that get hit when the american story is being challenged on a couple of fronts? jonathan: look out for that. more data this morning. the adp payroll report at 8:15. stay tuned for that. ism services, 10:00 a.m. that's a big data point. tom barkin is coming up. coming up, the fullest. the middle east envoy. morgan ortagus on plans for gaza. hugh johnston after the media giant beat expectations. and richmond fed president tom

barkin on uncertainty ahead. he joins us in about 40 minutes time. equities inching lower. tom becker writing this. "a qt program that may continue for longer than expected. particularly as inflation is settling closer to 3% than 2%. tom, welcome to the program. you made an important change at the end of last year coming into 2025 for a lot of people were getting balled up on u.s. exceptionalism. you looked elsewhere. explain what you did and why. tom: sure, jon. we believe in the u.s. exceptionalism story on the growth fundamentals, on inflation as well. where got priced into assets over the course of november and december is where we took issue. as we saw exuberance and equities -- in equities and expectations rising, we saw the

opportunity to look abroad to some unloved foreign equity markets. markets in europe, the u.k., sweden, france even where the expectations were quite low. you also had some fundamentals may be shifting in their favor with weaker exchange rates, more dovish central banks, more scope for easing. i think separating what's going on in the macro fundamentals versus what is priced and how investors are positioned can be important in markets like this. lisa: that one out when it came to the first month of this year -- won out. people are looking back to the u.s. as tariff news comes out. is this a head fake or do you think this is the beginning of going back to the u.s. and selling the stocks you made out well within january? -- well with in january? tom: lots of people talk about the earnings stories as strong.

our team is a tactical investment team. that one to two quarter horizon, looking for mispricings, we have been pulling in a little u.s. equity underweight. the news you were talking about in terms of waymo, it's a great service. the expectations are there and a lot of the prices. and some of these foreign markets we see the composition benefiting them. a little more goods oriented. we are seeing broad-based global commodities catch a little bit of a bid. that will help some of these indices that have more exposure to energy, to goods. the u.s. is a little more of a services-based index. lisa: how much is the forward and bet predicated on the idea -- four and bet -- foreign that priced on the idea that the

dollar -- increases the x putting attractiveness of places like europe and japan and even china? tom: that is a fundamental tension. you have the desire to have a weaker dollar, but u.s. exceptionalism on the normal growth side -- nominal gross side -- nominal growth sideways on the foreign earnings u.s. companies report. as q4 earnings come through in the coming weeks, i think the dollar strength also u.s. real rates, u.s. interest rates being higher, the wage bill higher. we got news overnight in the ecb that we check rotations fall sharply. -- wage expectations fell sharply. if i translate into lower margins. that is the tension. jonathan: d.c. that margin

stress in big cap or small-cap? tom: we play at the country level. we are more u.s. versus foreign markets. the s&p 500, the composition, the concentration is shifting over the last year. the u.s. is a mega cap index now. insofar as we go overweight and some of these foreign markets, we do start to take some exposure in that just because of how concentrated the u.s. index has gotten. we were looking -- last year looking at some of the big macro risk days for the s&p 500, we can do this using index -- daily index equity derivatives. three of them, three of the top 15 were in earnings days. the others were the election, cpi days, these macro events

that move the whole real rate curve. you have nvidia earnings, this whole ai ecosystem moving up in the rank ordering of the risk for the entire s&p 500 index. it is definitely more concentrated. jonathan: speaking of dislocations, we had one with nvidia. the stock is down by 21% in about a month or so. a little more than a month. is that a dislocation you what to take and say that's an opportunity or when you stand back from and say this is selling a broader signal -- sending a broader signal? tom: we have been trimming back the u.s. underweight as pricing has moved in our favor. i think the nvidia story is one where maybe the macro positives of ai and productivity growth then all the things that are driving u.s. exceptionalism, how big that motives around the ability of earnings to accrue to

the leaders in the space. to some of the risk return when you have positioning so one-sided. that is something we are cognizant of and portfolios. lisa: when we look at performance there is one performance that continues and has been the stellar one of the year, gold. i want to finish whether there is a tone in the market. gains of almost 10% this year. we are seeing gold again whether the dollar gains or loses, whether stocks are gaining or off. i'm wondering if that is a concern or an opportunity and what the signal is. tom: i think market participants have been really looking for diversification. we have had a number of years post-pandemic when stocks and bonds have been much more correlated than they had been in the previous decades. that makes portfolio construction quite challenging. your ballast is moving up and

down in the same way your growth equities are. i think gold is one of these examples of an asset class that investors look to to zig when other parts of the portfolio are zagging. that is one aspect of it. i think there is the larger worries about de-dollarization in the background where people are looking for hard assets. gold is not the only commodity appeared to date -- help you today -- up year-to-date. you are seeing the slowdown in china moving the broad commodity index higher. i think that tells you global growth is still pretty resilient. it is not just the u.s. driving activity globally. pmi's are bottoming in europe. looking firmer at asia. the u.s. is quite strong. there is kind of an industrial

activity to all of this as well. lisa: if someone was a conspiracy theorist, and i'm not, but i'm throwing this out there. stop laughing at me. there is an issue people say that gold is up, the dollar is suddenly off now for two days because of tariffs maybe not coming through as expected. this is one beginning step to people trying to diversify away from the dollar. you will see that growth throughout the year. that can really challenge both the deficit story in the u.s., the american exceptionalism story. another example of why you would want to be in other countries other than the united states. what would you say to those theorists? tom: i think you can look at the mechanics. not so much a conspiracy. global cap-weighted indices , the u.s. share of those have risen.

bond issuance and indices are issuance weighted as well. the u.s. government issuing more debt in foreign markets means investors have taken on more treasuries and u.s. debt as well. you point to investors looking for alternatives. i think they gained exposure over time. what we do is look at the 25 plus countries that are liquid and we can measure the macro growth, the inflation, the monetary policy sentiment and try to discern where there is an opportunity over the next quarters, the next central bank that might be a little more dovish on the bond side or the earnings side. where maybe positioning is negative but there are green shoots on the growth fund metals. jonathan: let's do this again soon. tom becker from blackrock on the

latest. places like europe at a time when people are so balled up on the u.s. equity market. we are closing that underweight slowly. we talk about nvidia, maybe taking advantage of the dislocations we have seen in the past few weeks. lisa: trimming back our underweight. i need to use language like that at home. the passive and kind way of saying we are buying. beautifully done. how many people are viewing this as a tactical market? we can't have longer-term calls. reviews are your enemies. having a look at measures and being methodical about certain trigger points where you will buy, that is the strategy for the year. how can anyone have a concrete view at a time we have no idea what will happen in two hours time? jonathan: making the trade in europe is different than making an investment. an investment is a trade gone

wrong, something like that. particularly in europe it feels that way. lisa: at the moment it is hard to know. that's a fundamental issue. people say the ecb has to cut more, just follow the money. jonathan: equities negative stateside. the month of january phenomenal. up something by like 8%. let's get an update on stories elsewhere. yahaira: disney shares are rising in the premarket. the company reporting robust first-quarter results led by its blockbuster films. streaming did well amid price hikes, achieving a third straight quarter of profitability. the gains offsetting what was a tough quarter for disney's tv networks and theme parks. president trump said he wants iran to be great and successful

that it cannot have a nuclear weapon. trump posted to true social this morning that he prefers a verified nuclear peace agreement. the post comes after the president signed a directive to raise economic pressure on iran through sanctions and tougher enforcement. the u.s. treasury department says elon musk's government efficiency team has been given read-only access to coded data of the government's payment system. one team member has been given top-secret security clearance. democratic lawmakers raised concerns about the system's integrity due to access by musk's team. that is your bloomberg green. jonathan: thank you. up next, trump's vision for gaza. >> the u.s. will take over the gaza strip. we will do a job with it. i don't want to be cute. i don't want to be a wise guy, but the riviera of the middle east. jonathan: that conversation next. good morning. ♪

jonathan: equity futures negative by .5% on the s&p 500. the drag coming from apple and alphabet. 10-year, 447. later this morning, important economic data. adp jobs report. the appetizer for the big one on friday. important piece is ism services that comes later. i like the adp report but you know how people feel about it. they have mixed feelings. lisa: i'm interested in the adp report. people said we think it is fudged. people are looking at other sources of data.

they are not looking at the government data and saying it's 100% accurate. ism services, that might be the focus. jonathan: the more important data point this morning. diplomatic enough? lisa: we will discuss. jonathan: let's talk about diplomacy. trump's vision for gaza. president trump: the u.s. will take over the gaza strip and we will do a job with it. we will be responsible for dismantling all the dangers, onyx footed bombs and other weapons of the site, level the site and get rid of the destroyed buildings. level it out. create an economic development that will supply unlimited numbers of jobs and housing for the people of the area. i don't want to be cute. i don't want to be a wise guy but the riviera of the middle east. this could be something that could be so magnificent. jonathan: the latest. president trump's proposal to take over the gaza strip sparking sharp opposition from

the palestinians and arab officials. israeli prime minister netanyahu says it could change history. annmarie, she the reactions over the past 12 hours in response to those comments. annmarie: as you said, this is a welcome signal from the israelis and you are seeing a lot of israelis welcome this as a bold movement that could be historic. we heard that from netanyahu and members of his government. there was swift responses against this. a lot of pushback coming from all over the arab world, especially saudi arabia. within moments of this press conference the saudi's put out a statement once again reiterating they want to see an independent palestinian state. they are unwavering on this independent palestinian state and they say they will be no normalization with israel if there isn't an independent palestinian state. trump has this unorthodox potentially bold vision, but fill in the gaps.

how actually could this happen? if the arab world is against this, it undermines the long-term goal he has for the region which is to expand his abraham accords. lisa: there's the idea that maybe he wants to shock and awe with a proposal that seems outrageous to get people to the discussion table and get something that could be feasible. how realistic is this particular proposal doing that given some of the emotions tied around this issue and tied around the gaza strip? annmarie: great point. we have seen trump come out with these maximalist shock and awe approaches. adversaries are going to say this is a sheer landgrab by the united states. it will spark debate. at the moment i'm not seeing anyone else really put forward a feasible plan for gaza. potentially that means others will try to fill the void and have this debate with the president. the fact of the matter is, the

neighboring partners like egypt and jordan have already said and will be very reluctant to take in anymore palestinian refugees. i don't see any other arab countries doing so as well. already this is going to be incredibly complicated if the plans are serious. jonathan: interesting to see how the israeli prime minister responded. i wonder if he was quite relieved. those comments took the heat off him pretty quickly. i didn't hear many pointed questions going his way at all. annmarie: absolutely. he got off pretty easy from the press. everyone was focused on what trump just said about gaza. even though he has flirted with the idea in the past, it seemed serious and he kept coming back to it. no one was questioning netanyahu on whether or not he would agree to a two state solution and whether or not if this was a real solution from trump.

if that would mean gaza would go back to the palestinian authority's. we have not heard about whether or not the u.n. would be involved. i would say that yahoo! --netanyahu did not give a clear answer on phase two of the cease-fire agreement and the talks are being handled right now. jonathan: overshadowed by a handful of comments. good to hear from you as always. we will catch up with amh later. we need to talk disney with hugh johnston following the company's better-than-expected first quarter results. that conversation is just around the corner. ♪ ♪ where ya headed?

susan: where am i headed? am i just gonna take what the markets gives me? 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

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jonathan: stocks lower. down by half of 1% on the s&p. .8% on the nasdaq 100. morning movers with manus cranny. manus: the fifth worst trading day response by alphabet. they wiped out $200 billion in market cap. we missed by a small amount but that's not good enough for this market. they joined -- google joins microsoft with that a i miss -- ai miss. demand is more than we had available.

$75 billion in capex. that has an impact on free cash flow. they look at amd. this comes down to guidance. revenue up six to 9% on the data center business. that's not enough. they are promising the back end of the year is when you see the promises come true. there ai chip business is $5 billion. nvidia, $100 billion. they are back ending the stock. disney, you will have a conversation with the cfo in a moment. moana 2 seems to boost one side but the studios just under $11 billion in revenue, up 9%. they look stable. given credence to the strong operating momentum. for them, it is a blockbuster at the box office. jonathan: disney positive by .5%. under surveillance, president

trump saying the u.s. should take control of the gaza strip in comments alongside benjamin netanyahu. the suggestion drawing sharp criticism from arab leaders. the u.s. postal service is temporarily suspending inbound packages from china and hong kong, threatening to delay shipments from retailers. trump revoked the diminished rule allowing packages under $800 to enter the country duty-free. more than 20,000 federal workers taking the trump administration's buyout. workers will be paid to the end of september. the number expected to climb ahead of thursday's deadline to take the deal. president trump and elon musk are hoping to cut 10% of the federal workforce. we will talk about that later. let's turn to the earnings and focus on disney. first-quarter earnings topping estimates fueled by success of its movie studios and streaming business. the stock positive and joining us is the cfo hugh johnston. welcome back to the program. we will talk about how solid the numbers are in a moment.

one headline we were talking about this morning. seeing a second quarter modest decline in disney plus subscribers quarter on quarter. could you explain that? re: reaching the limit of price tolerance for consumers -- are we reaching the limit of price tolerance for consumers? hugh: i don't think so. that is seasonal decline more than anything else. year-over-year will be up. not concerned from that perspective. the streaming business is doing extremely well. we invested pretty heavily in a couple of years ago. what you are seeing is the benefit of those investments. the expectation is we will continue to grow subs. we will improve margins. we should make more than $1 billion on that business this year. next year, double-digit margins in that business. a ton of positive momentum. why? a lot of it is the great content coming from the studio side of the house, both on the tv and

movie side of our entertainment business. moana 2, deadpool, abbott elementary, show gun, high potential causing viewership to grow. we are seeing churn coming down over the course of the year. we feel like the streaming business will be one of the big drivers for our company going forward. jonathan: you know how much i love "showgun." the content looking good so far. i want to talk about the cost issue. i appreciate the acclamation. the conversation over the last few days is if we get tariffs, can companies pass on the cost? the additional tariffs on the china, how that could impact your business. how are you thinking about things? hugh: based on what has been proposed -- this is a rapidly evolving environment. we will react as we learn

things. the impact would be immaterial to us. from that perspective the walt disney company will be fined based on what is on the table right now. lisa: there's a question about the american brand. there are increasing tensions between the u.s. and china, the u.s. and europe. given the fact the experiences side of your business has been a driver of growth for you, are you concerned? have you seen any pullback in attendance and some of the areas like shanghai, like france, like paris that could potentially have some feelings around the negotiations? hugh: broadly speaking the international parks business did very well. profitability without up 28% for the quarter. attendance was up. we certainly feel good. disneyland paris had a terrific quarter. feeling positive in that regard. in many ways with the walt disney company represents is an

opportunity to get away from all of the things that are happening in the world. our job is to basically bring families joy, bring them together, give them smiles. i think in many ways we are not a part of that conversation. lisa: it is pulling together the idea of experiences and the smiles and the streaming business. how much are people willing to pay for this? more broadly, how much are you seeing consumers push back against some of the price increases weather at the parks where the streaming services simply because of how much prices have already gone up? hugh: we are not to be candid. it's important to remember from a consumer perspective price is what you pay and value is what you get. if you deliver sufficient value to the consumer, they are willing to pay the price. you see that going on broadly with companies these days. companies that deliver a lot of value, they're pricing is being

accepted by consumers. if you look at the value of a disney vacation, the value of the things we are able to deliver on the streaming service, people are willing to pay the price for that. they are getting a lot for. we have not seen pushback in a material way at all in that regard. jonathan: can we talk about hulu a little bit more? where are we with the negotiations with comcast? are we making progress? hugh: we are still in the process. i probably won't go any further than that. i expect we will get some resolution sometime. jonathan: what are the sticking points? hugh: i think it is the usual. people have different points of view on the value of the assets. nothing more than that. lisa: there's a content question about what the driver of growth is going to be from a streaming perspective. whether it is instrumental getting involved in some of the sports world or whether you can lean into existing brands, how

you do content creation at a time when there is a lot of question around what exactly sells other than the legacy brands. hugh: i think when you look at the walt disney company, in many ways we are best position from the standpoint of streaming. we do generate so much of our own content relative to some of our competitors. the way to think about disney plus, he can be the portal into all things disney. something you might want to have on 24 hours a day because if you want news, you will be able to find it through disney plus hulu. if you want sports, the espn just went on disney plus. movie entertainment, tv entertainment, we generate a tremendous amount of entertainment from our own ip. i think more than most we are actually very well-positioned to ascertain what the right level of content is and create that

content for ourselves, which gives us some advantages. lisa: if we talked six month ago you might've started on artificial intelligence and how much you are using that in your content creation at a time when that is increasingly something that's being done. how much of you explored that to lower costs, expedite the process of time to get some of the movies and videos online? hugh: we have a number of use cases across the entire company. from the ability to create content to the ability to manage the company more efficiently, to the ability to manage our guest experiences inside the parks and cruise business. we are in the early days of leveraging all that, as are most companies. we are in the early days of article -- artificial intelligence. we are experimenting to understand where it can best add value to the walt disney company. jonathan: do you see a shift in vibes where the kind of content people want to view is changing?

hugh: not really. it tends to be more based on age demographics and anything else. by and large, if you look at what we are able to deliver by virtue of the broad-based of ip we have, we have the traditional things from the original walt disney company right through to things that come out of marble, out of pixar -- marvel, out of pixar that are contemporary. i don't see dramatic shifts going on. i do see assets actually appealing to a wider array of consumers. jonathan: we appreciate your time. thank you. the disney cfo hugh johnston. i went to pick out a key point on price. it's important for the broader macro story. are we seeing limited consumer price tolerant when we saw the headline about maybe a modest decline in the second quarter

for disney plus? some pushback from hugh. this will pick back up again. lisa: in fairness, the street expected the decline to be more significant. there is a larger question about whether people are going to start looking at the list of services they have and canceling them given how much they have all gone up. he talked about value. people say consumers are willing to pay the price for value. the concept of that is an interesting one to me. chipotle does not want to raise prices because they want to remain the best in the value proposition space. it becomes fudgey about how much there is pushback from consumers and what that means given families spend quite a bit on those tickets to disneyland. jonathan: not worried about tariffs or pushback or backlash against corporate america either. you know where i was going with the content question.

people are watching things like "landman" on paramount, moving away from things that were considered woke a few years ago. lisa: you said i was a huge moana 2 fan. just to be clear, and i could have told him this, it is not as good as moana 1. jonathan: i didn't realize he wanted to be that harsh. lisa: what i was trying to get out was all the successful movies, inside out 2, moana 2, marvel 3, at what point do we have new concepts that come to the fore that have traction and can get people to the box office? jonathan: mike wirth of chevron's with us later. first question, does he has to deal with the cartels on a regular basis? how accurate was that portrayal? lisa: i'm getting worried that

he just canceled. jonathan: we will find out. i would love to know how accurate it might be away from the cartels. futures negative five .4%. -- by .4%. yahaira: uber shares are falling 5.4% after weaker than expected fourth-quarter earnings, overshadowing an 18% year-over-year increase in bookings. uber has set up a waitlist for customers in austin to request a driverless waymo vehicle ahead of a planned launch later this year. a group of banks led by morgan stanley is set to increase a sale of loans tied to elon musk's social media platforms x. they same to sell up to $5.5 billion of debt instead of the initial $3 billion. sources say there is strong demand from investors betting that musk's businesses

might benefit with his relationship with president trump. waffle house will put a 50 said her egg -- $.50 per egg surcharge on each egg. prices are skyrocketing due to bird flu. egg prices inspected to increase about 20% this year. that is your bloomberg green. jonathan: thank you. people are struggling to find eggs. lisa: have you seen the pictures of the shortages? jonathan: not telling you where i buy my ex from in case they start disappearing --eggs from encasing start disappearing. i don't know how much they cost. they have gone up loads. lisa: they probably already were expensive because they are pure organic and free range and given a beautiful bed. your eggs are probably $25. jonathan: not that it commences.

-- expensive. closer to $6. lisa: you might be getting liquid eggs and set of re al eggs. jonathan: that's gross. >> i see a gradual reduction in the level of monetary policy restraint placed on the economy as we move towardsa more neutral stance. i don't think we need to be in a hurry to change our stance. our carefully assessed incoming data, the outlook and the balance of risk will jonathan: live from new york city, this is bloomberg. ♪

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jonathan: equity futures on the

s&p 500 -5.4%. -- by .4%. adp and ism services later on. yields lower on the 10-year. 445.62. under surveillance, the fed's balancing act. >> i continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as a move towards a more neutral stance as the most likely outcome. that said, i do not think we need to be in a hurry to change our stance. considering additional adjustments to the federal funds rate, i will carefully assess the incoming data, the evolving outlook, and the balance of risk. jonathan: the latest this morning. traders bracing for economic data after more clarity needed on president trump's economic plans. richmond president tom barkin

joins us now for more alongside michael mckee. president barkin, good to see you. did you include possible tariff changes in the outcome? pres. barkin: you're talking about forecast from december. seems like a long time ago. i think if you look forward, you have to say tariffs are here, are going to be here. it's incredibly hard to know is what it's going to be. the concept of tariffs, sure, but the reality of specific countries and specific percent on specific goods, we don't know. lisa: the market believes on the margins it means the fed will take its time. you will take your time and assess the data, including all the tariff announcements. you will not be in any rush and may not cut at all this year. do you agree on the margins the tariffs and ramifications and uncertainty would delay you from cutting rates?

pres. barkin: what i'm hearing is elevated policy uncertainty. you mentioned tariffs. the regulation, where will -- deregulation, where will it hit? energy policy, geopolitics. there's a lot of uncertainty and it's hard to know what is happening with growth, with inflation until you get more clarity. michael: what are companies telling you they will do no? is everyone sitting on their hands? what is this imply for the economy? pres. barkin: if you go back to november and december, the richmond fed and the atlanta fed did a survey of cfos. he sought total optimism on the economy went up significantly. optimism about your company flatlined. people are dealing with this uncertainty. we think this will be good but i

don't know how it will play out in my business. small business uncertainty had the biggest jump -- optimism had the biggest jump in its 40-year history. it went up again last month. small businesses are saying they do the hiring, big business does big investment. it is possible we may see another year like 2019 where consumers are spending at people are hiring. investment sentiment is still a question mark. michael: what is your baseline for how you will judge the economy given all of the uncertainty going in a march 19? you have to make a decision one way or the other. the default would be to do nothing. where you see the economy ending up in the next six months while this cloud is over us? pres. barkin: the case for wait and see is you want to wait and see. i start with the baseline economy that the data is favorable.

we had a pretty good growth in the fourth quarter. consumer spending is healthy. inflation the last two months has come down. i expect the 12 month numbers to come down nicely in the next couple of months as we lap last year's elevated first-quarter numbers. the job market seems to have stabilized. i start with a baseline that is favorable for what we are trying to do. then you have uncertainty. it could take us up or down. lisa: d.c. the fed cutting at some point this year? -- do you see the fed cutting at some point this year? pres. barkin: we will see what happens. lisa: could the fed do anything that causes you to contemplate hiking rates? pres. barkin: i never take anything off the table. if you do, you can't take any thing off the table. you have to see an economy overheating and i don't see signs of an economy overheating. i see inflation coming down, i see the job stabilizing but we have the joltt dats -- jolts data that seems to have a coming

down. michael: let me go back to the base case idea. do you think interest rates are suitable for this economy? for a while the fed was saying we need to cut because we are still tight. if you can't, is that ok? are you looking for data to tell you to cut or looking for data that will tell you to hold? pres. barkin: i supported the recalibration we did in the fall. that's because with inflation in the two's and on the plummet weakening -- unemployment weakening, i think that is moderately restrictive. we will learn as we go. if the economy comes back strong, you have to ask questions about how restrictive you really are. if the economy weakens further, you can adjust appropriately. if inflation comes down, yes, i'm having the impact i want to have.

if not, you ask yourself those questions. it's more sensible given where the economy sits right now. it leaves is well-positioned on whatever happens. michael: back to an old fed term. what would your bias be towards cutting? pres. barkin: to see what happens and react appropriately. if you look at the last sep, there is a lean towards cutting. jonathan: that suggest you were equally open to hiking. is that the case? pres. barkin: that's another way to ask the exact same question. let's see what happens. jonathan: so you would be open to doing so? i went to edison have open-minded you are. pres. barkin: i'm always open-minded on what happens with the data. if you see an economy that overheats, you have to respond. i don't see the economy close to overheating. jonathan: there are questions about we are accommodative will restrictive. jay powell, and i'm sure you

watched the new conference, can you square that circle at all? pres. barkin: we are somewhat restrictive. i don't think we are hugely restrictive. less than we were six months ago. we will see as we go. if inflation continues to come down, that would be a positive sign. if the economy continues to perform at a decent but not overheated level, that's a sign. if you see the economy heat up, you have to ask yourself those questions. jonathan: president barkin, thank you. the federal reserve bank of richmond president tom barkin alongside michael mckee. up next, chevron ceo mike wirth and congressman jason smith of missouri. all that is up next. ♪

>> the exceptionalism is still firmly in place. but the fundamentals underpinning this exceptionalism are at risk.

>> almost all of the policies we have heard floated from washington do have an inflationary element. but markets will care less if it comes with the side of growth. >> the fog now is so dense in terms of what this is going to mean for business capex, what this is going to mean inflation -- mean for inflation. >> is sort of gives them cover to not do very much as they sort out what is going on. >> this is "bloomberg surveillance." jonathan: reluctance to offer guidance. you heard if there from kevin gordon of charles schwab. the fog right now is so dense. we just caught up with a fed official. did not want to be pinned down about anything about the future. as for the bias to ease, what bias? a lot of people are in deposition right now. lisa: as i was thinking with all of those comments, how many ways can you say, i have no clue?

that is what everybody is saying again and again, because we have no clue. we have no clue what the tariff regime is going to be and we have no clue where the economy is going to break. at the moment things look strong. consumer confidence is strong. how long does it take for that starts to shift? jonathan: you can have a plan, and then that plan can get overtaken by events. apple softer this morning, reporting that china's antitrust watchdog is laying the groundwork for a potential probe into the company's policies and the fees it charges that developers -- charges that developers. lisa: apple is a target because it is an american company and happens to be a competitor with some of the national champions in china that provide phones. the question is, how much is this part of the tit for tat? we'll interesting to see in the earnings calls how much companies shift away from production and sales in china.

does that continue? jonathan: alphabet is down and down pretty hard at the moment. down by 7%. the earnings came in. on the growth side a little bit softer. i will be careful about what i say because it was the cloud revenue that came in lower. when that happens we shift your attention to spending and then you just see numbers like this. $75 billion in capex against an estimate versus $50.9 billion. shifting the plans of the c-suite immediately. but would it change investors? bidders investors losing a little bit of patience. lisa: 2025 is going to the year of the storyteller. google didn't have the same storytelling capacity here. even though they are spending $75 billion this year versus the 57.9 billion dollars, because they cannot meet the demand.

this is not an issue of them spending into a void. they do not have the capacity to meet all of the customers that want to use their services. how do you spin this? again, maybe they need to put on the leather jacket. untamed demand, untamed spending. i think that might be part of the problem. jonathan: i don't think that is his thing. lisa: put on a necklace. jonathan: if he is watching, take up surfing and all of that stuff. i'm not sure if that is great advice. the broader equity not -- market, -5.4%. we will catch up with the chevron ceo mike wirth. in the congressman jason smith on president trump's tariffs and tech policy. we begin with a look at the energy sector. president trump pledging to expand production and lower prices with the threat of terrorist hanging overhead. the next 30 minutes joining us now is the chevron ceo, mike

wirth. good morning. i promised the first question earlier this morning. i wanted to know whether you have watched "landmen" on paramount. mike: i have. jonathan: how accurate is it? you have to deal with cartels on a daily basis? mike: it is wonderful entertainment. billy bob thorton is a wonderful actor and it is drama, right? you need a little bit of a storyline. there are certain aspects of it that are accurate and others that are probably just a touch exaggerated. jonathan: it sets up this -- this conversation quite well for one reason. i think there has been a vibe shift in this country, captured by the election, and also based on the content people are consuming right now. in "land man," you see a much more pragmatic approach to things like fossil fuels and energy and the kind of work your company does. do you think we are seeing that, a more pragmatic approach to the energy story now? mike: i think there is no question we are seeing that. take a look at this

administration that has come in and rather than criticizing and almost in some ways ostracizing oil and gas is an administration that has talked about energy abundance and using that to the benefit of the american economy, the competitiveness of american business. but not just oil and gas. it is power generation. i think we are seeing more balanced conversation. thing-calling for for years is, you know, in energy there are three for -- the things that matter. profitability, reliable supply -- because that relates to security and national security -- and then environmental impact. we have to balance those three things. the conversation had become very unbalanced and focused on one of the three and not the other two. i think we are seeing a move back toward pragmatic.

that is a very good word for the shift we are seeing. lisa: we definitely are hearing the shift in the conversation. we heard that at davos. i wonder how much that translates into actual changes you are making with how much you are investing, how much you are planning to expand your footprint in the united states and elsewhere? mike: we grew production last year 7% globally. most 20% in the u.s. line largest production we have ever had in our history. largest cash distribution to our shareholders. we are growing. we are also doing it in a more capital-efficient way. you guys were talking a lot about capital this morning and in a capital-intensive industry we have to look for ways to be cap -- as capital-efficient as we can be. we are able to bring new energy supplies to market at a lower capital investment rate than ever before. we will grow again this year

another 10% in the permian. demand for energy is at an all-time high and is only growing up. lisa: plaster you had record production even under an administration that had a very different tone toward the oil and gas industry. i wonder how the vibe shifts will change what your outlook is at a time when the rhetoric has shifted to the positive, but some of the proposals like tariffs might be headwinds in certain places? mike: yeah, so, your point is a good one, lisa. we actually have to see policy, right? some of that is done through executive order these days. a lot of it would be best done through legislation, and we would like to work with both sides of the aisle to implement durable, balanced, and pragmatic energy policy. things like permitting reform, which have gotten a lot of conversation, but we have not seen action on that. it is difficult to build

anything in this country. not just pipelines, but new power generation and grid modernization, and other types of infrastructure. so, we hope, and we are certainly willing to work with parties from across the spectrum to try to turn some of this vibe shift, or more balanced conversation, into what we think is durable policy. jonathan: can you talk to us more about the permitting? could you help us understand how much that has held back your business? mike: it slows things down. it is very difficult. the keystone pipeline is a good example. it was well-documented, where a multibillion dollar investment that would have been good for canada ultimately didn't happen because the permitting process can be hijacked by interests that are opposed to seeing investments in our economy. look, everybody wants to see good protection of the environment and engagement of communities that are impacted by projects. we need lead agencies that can

take responsibility for these processes. we need reasonable timelines to do the work and reasonable boundaries around the ways these things can be litigated in the courts. that needs to be done to enable more investment. jonathan: this president clearly wants to treat -- to change that. we are certainly drilling. north of 13 million barrels of oil a day in this country. leasable say things like, and we will hear it from amory, how realistic is it to get that number much higher? you would know it better than we do. how realistic is it? mike: i think production in the u.s. is going to grow again this year. our permian production will be up 10%. in the deepwater golf we are going to go to three -- 300,000 barrels a day by the end of 2026. there is growth coming, and it is driven by a long-term view on supply, demand, technology, and policy. jonathan: just to jump in, a

long-term view one policy, how difficult is it to make these investment decisions? we talk about this vibe shift now. it could change again. mike: it is very difficult. one of the things our company was criticized for is we were not jumping into some of the renewables as fast as others because the policy was unclear. we doing basic research, investing in pilot plans. but multimillion dollar -- multibillion-dollar investments dependent on policy that could change quickly are something you have to think about when you are looking to deliver strong returns to your shareholders. we would like to see durable, long-term balanced policy because that does make the investment decision easier for companies to make. lisa: one test case is liquefied national gas. you will one of the biggest producers of it. there was a ban on exporting to europe at a time when europe was dependent on the u.s.. that has been lifted. now there is the potential for terrorists being placed on some of those exports. how much can you start to lean into exports versus not to some

of this confusion? mike: the tariff environment is obviously evolving here on a daily basis. energy is a globally-traded commodity and lng, oil, petroleum products for the most part -- canadian oil is different because it is dependent upon pipelines -- but those products can go to different markets. we have seen sanctions reorient trade flows. tariffs are another instrument that can change the economics for producers and for consumers. what you will typically say, there it is lng or oil, is flows will move to different markets as producers seek the highest price. and as long as supply remains in the market you have markets well-supplied, you generally start to see costs go up because there is increased transportation and christian -- and friction in the system.

but are not heavily affected by those prospects, i would say. jonathan: you have a least operated in venezuela, is that the case? mike: we do. jonathan: secretary rubio said the u.s. should reconsider that waiver. are you in contact with them on that issue? mike: we are in contact with the current administration. we have been in contact with the first trump administration and biden administration because the sanctions have been in place for years and we work closely with the government to understand their objectives, to understand the limitations being placed through these licenses. and to stay in full compliance with laws. mike: are you anticipating any changes? mike: the recently was a trip down to venezuela by a special envoy who brought back some americans from venezuela and arranged terms for, i think venezuelan immigrants to go back to venezuela that are here illegally. and that seems to be, you know, the latest, general license we

operate with, unchanged. it has been changed over the years in front ways, and that could happen. try to inform the government of the potential ramifications of a change like that so they are well-informed. jonathan: but would the ramifications be? mike: under the initial trump sanctions venezuelan oil was not allowed to come to the u.s. the biden administration change that. gulf coast refiners run a lot of the heavy grades that come from venezuela. if you see sanctions on canadian or mexican oil that may send some of that oil to other countries. so the venezuelan oil could be more important. it is things like that. how would this work to the system that we really try to help the policymakers understand? jonathan: mike, you're going to stick with us. mike wirth, this chevron ceo. crude at the moment in the 70's. billy bob says that is the sweet spot. you have watched that? billy bob thornton says

mid-seventies makes it work. anything lower than that is a problem. lisa: this is how jonathan ferro does his research. this is the trade secret. jonathan: let's get you an update on your stories with a broom berg -- a bloomberg brief. >> early this morning the u.s. postal service said it will continue accepting all international inbound mail and packages from china and hong kong post. the usps and customs and border protection are working closely to implement an efficient collection mechanism for the new china tariffs to ensure the least disruption to package delivery. honda and nissan said they are withdrawing their agreement on merger negotiations. the carmakers were unable to agree on terms and will consider whether to hold integration talks again were only collaborate in some areas. without honda's backing nissan's future is unclear as the company faces chronic issues. that is why nissan shares ended lower in tokyo trading.

shares of chipotle are falling 5% in the premarket. the company reported sales that missed estimates and says it expects low to mid single-digit growth for the full year. the brito chain said it is preparing for possible terrorist by exploring alternative suppliers for avocados and tomatoes. that is your bloomberg brief. jonathan: thank you. just turning our attention to the adp report. upside surprise. 183 is the number. the estimate was 150,000. i'm going to get you some morning calls as well. later, the house ways and means committee chair jason smith. you are watching "bloomberg surveillance." ♪ ♪ do you charge forward? freeze in your tracks? (♪♪) or, let curiosity light the way.

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jonathan: equities on the s&p 500 negative by close to .5%.

economic data out just moments ago. mike has an update. mike: it was an upside surprise. 183,000 in terms of adp january payrolls. revised up. had a big increase in nonfarm payrolls last month. that was not expected either. the forecast, 150,000. there does seem to be an impact of the california fires on these numbers. it is not mentioned, but when we look at the regional break down of jobs west had the most, 70,000 additional jobs added. if there is a los angeles issue we are going to have to wait and find it in nonfarm payrolls. the only thing that stands out in terms of industry sectors, manufacturing loses 13,000 jobs. leisure and hospitality, trade, transportation, and utilities are the biggest gainers. jonathan: mike mckee, thank you, sir.

183 thousand against an estimate of 150,000. the payrolls report just around the corner. a sneak peek, 170,000 is the median estimate in our survey. lisa: i will also flight that we will be getting a revision to some of the ways they measure the labor market. and you could get some downward revisions to the 2024 numbers for the labor market that make it look weaker. that might be the more interesting aspect of this friday's labor market report. jonathan: look out for that. let's get you some morning calls. mizuho downgrading hilton to neutral, citing limited upside at its current valuation. your second call from j.p. morgan, cutting its price target on amd, noting a muted outlook for data center growth. guggenheim lowering its price target on alphabet, saying slow work crowd growth and its high capex banks are weighing on sentiment. that stock is down by 7.4%. this chevron ceo, mike wirth, is

back with us. that's extend that conversation and pick up on one of those calls. data center growth. it was a conversation two mondays ago about whether we have been overestimating the growth of data center spending we had seen and the amount of energy we might need. did the deepseek story change your outlook at all? mike: it really didn't. if you look at the incredible capital spending you have been talking about and the huge demand for increased compute from all of the big hyperscalers i think they all assume you are to find more efficiency and development of these models in the inference techniques that are used and at the same time we are going to need more computing capacity. two big constraints are gpu's, and interestingly, electricity. haven't seen real growth in demand for electricity in the last couple decades. we have taken a lot of reliable power off the grid as coal

plants have been shut down. we have added wind and solar what -- solar, which are great, but also intermittent. the powergenerating capacity has not changed much and we are poised to see demand from data centers, from the electrification of the vehicle fleet and other parts of our economy. there is a range of estimates but i think nobody would tell you that demand for power is not going to go up and probably pretty significantly over the next few years. lisa: that feels like a year ago, by the way. deepseek? it is amazingly how quickly this goes. how do you get check people's understanding of the energy use required for this? and how are you planning to build out your footprint? what type of vendor -- energy want to invest in and what your budget is like for that? mike: we talked to the people doing the work we are a customer of all of the big tech companies. they help us in many different parts of our business. we are looking to use these

tools to improve our business performance. over the last couple of years the conversation has flipped. they have said, how can you help us make sure we have enough power at scale to deliver the products you are looking for? one of the things that is very clear is the hyperscalers want to move fast. there is a bit of a land grab and you see it in the way capital budgets are going up. things that are at a scale of 100 megawatts are different than gigawatts, which is where their ambition is. we have done recently is announce a venture with ge and a company called engine number one to collaborate and bring four gigawatts of power to market beginning in late 2027. so, relatively soon seven of ge's biggest turbines we have delivery slots on, the intent is to cite those in places that can meet the -- meet these hyperscalers' liable gas supply so they can have long-term

confidence in the energy off the grid so they are not going through the grid and dealing with interconnect cues and reliability issues. and ultimately a desire to integrate lower carbon energy into this. it is hydrogen, geothermal, and other technologies. something we know a lot about. lisa: those are natural gas turbines. how much do you think natural gas could overtake diesel and some of the gasoline that people used to fuel a lot of what currently gets generated? mike: in electricity you are going to see it. we have seen historically good demand for gas and you are going to see more of it. you're going to see demand for gas and exports, for lng. in transportation its use would be more limited. it has certain advantages, but certain disadvantages when it comes to vehicle transportation. i think you are going to see conventional gasoline and diesel, along with electric vehicles, really power the light duty vehicle fleet and heavy-duty vehicle fleet for the

foreseeable future. i think you are going to see gas more in power generation and other parts of the economy. lisa: i know that the hess thing has been messy. i know there is a lot that needs to get work through. once that goes through how in the market are you to consolidate check up a lot of people are saying this is a market in the united states that has a lot of consolidating to be done. mike: we are first and foremost focused on the hess transaction. that will conclude this year. you are always looking to acquire good quality resource that makes your portfolio stronger. we would only do something if it really fit for our company, if the price were right and it would create value for shareholders. lisa: what type of industry, though? you have natural gas, oil, other types of rooms. what would be the area you want to expand in? mike: there are a couple of areas always of interest to us.

one is oil. we do it through exploration. finding new fields. and we do it through acquisitions. the other sector that has robust demand growth is petrochemicals. as we had a larger middle class in this world, as we moved toward more fuel-efficient modes of transportation and lighter weight airplanes and vehicles much of that is -- the materials that go into that are from petrochemical products. they have light weights, they have good durability and other rigidity and mechanical properties. demand for petrochemicals will be strong. that is another sector we would be interested in. jonathan: mike wirth from chevron.♪ 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

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jonathan: equity futures right negative five point 4% on the s&p 500. we are down five .6% on the nasdaq 100. lots to talk about there. alphabet, apple. switch the board, get to the bond market. bond yields are down five or six basis points on tens. earlier we had the adp report. an upside surprise of 183,000. and bond yields, this move sticks in turnaround. lisa: part of that is because what we are seeing is a completely stable market where you see jobs that are being

offered and people can get them, but not a significant uptick in quitting and not a significant uptick in hiring. jonathan: we got you an update on bond supply. certainly pertinent to the discussion we are having this morning. let's get to mike mckee for more. mike: let me mention quickly that one number to rule them all. $40 billion, much higher than last month. these are december numbers. he had that big blowout in goods trade last week. this is goods and services. a little bit smaller but it does have an impact on growth and an impact on politics going forward. to the numbers you were talking about in the treasury department, the treasury says they are going to offer one how to 25 hollande in securities to refund on hundred 6.2 billion dollars in maturing securities, raising only 18.8 hollande dollars in cash. that is the debt limit. auction size foreseen for the

next several quarters, they say. they are going to remain the same, but they cautioned that the debt limit is going to be significant variability in bill is and cash management bills. for now there is no change to buyback plans. the trump administration does not have people in place here, so this was not a refunding people expected them to make changes. there is the numbers. $50 billion in three-year notes week. 25 billion dollars in 30 year bonds. then one caution. the treasury survey's dealers and according to dealers they think the u.s. is well-funded for fiscal year 2025, but there will be significant gaps in funding for 2026. which suggests they are going to have to raise auction sizes. for that they have to raise the debt limit. that is something to keep an eye on. jonathan: lisa too, that is for sure. michael mckee on the latest.

this story is going to change a lot. lisa: and i will be checking it much more than "moana 2." this is the big story of 2025, the auction sizes. scott sent said he wanted to turn out some of the debt to remove the variability some of the borrowing costs the united states pay -- pace. does he go through with that? how does that affect borrowing costs? jonathan: and stephen mirren as well. hudson bay capital, to close out last year. stephen mirren is now in the administration and he complained about the activist treasury issuance under yellen. lisa: they were issuing on the front and where there is a lot of demand to avoid locking in longer-term borrowing costs of 4.5%, given that they expected them to go down, and if they issued it they thought maybe or

costs would go up. now is the test. do they lock in 4.5% borrowing costs? if they do sell debt how much do you see that cost go up? jonathan: you have really got it in for disney this morning, don't you? lisa: i loved "moana" one. i took my kids -- let's just move on -- and i just found it disappointing. it was pulling on the same heartstrings of the first one without the same kind of innovative -- i don't know, just nuance. jonathan: i have not watched either. lisa: it's ok. jonathan: someone wrote in and said, remember when you ruined "shogun?" lisa: you made that up. jonathan: you can read it there. it is addressed to you as well. you see it now, yeah? the two-year down five or six basis points. joining us now, pooja sriram of barclays.

adp out with an upside surprise. are you getting a clearer picture of where the market is? and what does that picture look like? pooja: good morning. we have been seeing that the labor markets have been holding up pretty well. sure, there has been some easing, but it has been pretty disciplined, pretty consistent. and looking forward to fridays data, and after looking at today's adp it does look like we are going to get a decent print on friday. our own forecast is for a one hunted 75,000 increase in nonfarm payrolls. expect the unemployment rate to be at 4.1%. labor markets still looking in decent shape. lisa: one question people keep having is, or are we going? one thing we are going to get on friday is the revisions to the methodology the bureau of labor statistics uses to estimate the employment rates. how concerned are you about an

inferred downgrade to the number of jobs that were created last year that really reduces some of that optimism about where we are and the strength of the labor market currently? pooja: that is a good question. we are going to get a lot of new information on friday. one is the benchmark revision to the nonfarm payrolls data. as you know, that is to the level of employment for the last 12 months. really we are looking at last year. the picture could look softer, where we see the average monthly gains in payrolls looking somewhat smaller than what was reported previously. now, you know, if you look at that and, you know, pan in to what we have seen in the past couple of months, it will look like, you know, fairly disciplined, gradual slowing. nothing to be too concerned about. the one bit that is tricky for us to forecast but we will see details of that on friday are

the birth and death rate adjustments. that is the one that will affect the household, potentially estimates of the unemployment rate as well. it is hard to quantify that. we don't know which direction that will go, and i think that will be the key data points we would be looking for. lisa: i'm surprised that the measure of revisions we have seen recently. it has raised this question about the accuracy of government data coming out. bloomberg intelligence expects that job growth did not really increase enough last year because the employment rate to be where it was if you take into account some of the expected revisions. how much more are you using data from adp or indeed more one of these other job search engines rather than the government to get a true gauge on what is going on? pooja: i think that is a great point, lisa. sponsor rates have been on the decline. it has raised concerns about the

data itself. so, you know, this is the way i would say it. we are looking at what the government puts out. they have a good track record of doing what they do. at the same time i think it is useful for us to look at an alternative measure. indeed, for us a good measure gives you a sense of the dynamism in the labor market. and camino, adp as well adds some good color. i think right now rather than looking at a particular metric the approach we are taking is to look at a dashboard of indicators to get a sense of where we are. jonathan: appreciate your input this money. pooja sriram of barclays. going into payrolls friday. andrew hallman horse made the point that this low churn dynamic, these low churn dynamics in the labor market, just not much hiring, not much

firing, is inconsistent with a healthy labor market. if that is inconsistent with a healthy labor market and the federal reserve should be can sit a ring reducing interest rates but they are not because they are worried about the policy outlook, not cutting when you might should be cutting, it is slightly problematic. lisa: it might be the reason why you are seeing this. what that means is essentially high short-term rates with the long end of the yield curve, long-term borrowing costs going lower. what this indicates is that maybe people believe that this fed policy rate is getting increasingly restrictive if the labor market does not have the same dynamism. as one argument. there are people with exact document -- exact opposite argument and we will have them on. jonathan: on friday we will not be talking about that anymore. i just got an email, from terminal subscribers. agree with lisa. "moana 2" what a clunker.

stick with rugby. lisa: we all got dragged to it, some of us dragged their kids to it. he enjoyed it more than i did, frankly. but it was not a very sophisticated storyline. it kind of -- [laughter] jonathan: every time you review this movie the review gets worse. lisa: let's move on. jonathan: lawmakers reacting to trump's tariff plans and their implications. annemarie there is with a special guest. annmarie: there is a lot of debate, they be not as much as what is going on with lisa, but a lot of debate on how congress is going to enact trump's package when it comes to his agenda. i'm joined by jason smith, chairman of the house ways and means committee. i'm sure you have seen all of the reports that a lot of house republicans are actually talking about now the budget committee may be going for a two-track approach. is the one big, beautiful bill

just too heavy for congress? rep. smith: for the one big, beautiful bill is the quickest approach to get as many of the presidents priorities delivered to his desk as possible. the house is focused on one big, beautiful bill. it is the senate that continues to say they are going to do two. i would just remind all of my colleagues, look at history. it has been 38 years since two different reconciliation bills were signed into law in the same year. we have smaller majorities in the house of representatives now . why do we think we can defy those odds? it is beyond me. if they do two different bills, the first bill has to have tax policy in it. annmarie: you talked about the senators. they are going to be having dinner this weekend at mar-a-lago and they are going to pitch them on this approach and they are ready to go, or as the house does not seem ready to go. do your colleagues need to stop

focusing on process and actually get a bill to the floor? which seems like this and might be? rep. smith: the ways and means committee is ready to deliver the tax policy now. unfortunately we have several members that are putting their agendas above the agendas of the american people. that includes senators who are wanting to get a skinny bill to get some of their easy wins. we need to deliver to the american people. they want certainty. there is 26 million small businesses out there making the decisions now of how to invest, how to hire for next tax year, not knowing, is our tax rate going to be 43.4 percent or 23.4 percent? congress needs to act quickly. deliver and put it on the president's desk now. annmarie: is your fear if you go toward this two-tech approach that the tax policy gets pushed back?

rep. smith: that is my fear, that they are trying to push the tax law to the fall and later. there will only be one reconciliation bill signed into law this congress. one. if they want tax to be included they had better make sure it is included. that is what i tell my colleagues over the united states senate. we need to act now. do not wait for a later date. problem with congress and why american people get upset all the time is they are tired of politicians kicking the can down the road to worry about the issues of today for tomorrow. let's get our job done now, stop kicking the can and deliver for the american people. annmarie: senators would say they want to ask -- act swiftly because donald trump was elected on one key issue, and that is immigration. potentially do you think trump is going to see that that is the right path forward if he wants to get a quick win? rep. smith: president trump has said he favors a big, beautiful

bill, but he will take whatever it takes to get his priorities enacted in law. the senators, i would say, would be wrong on the statement to say that president trump was elected because of the immigration issue. president trump was elected on two different priorities, and that was securing the border and creating economic prosperity. part of economic prosperity is to make sure americans are not facing the largest tax increase in the history of america on the watch of a republican senate and republican president. annmarie: with a slim majority. when it comes to the house you were going to need some of those new york republicans to get this over the finish line. i would love to get a sense on where you are with the republicans from new york and other districts that have high taxes and are concerned about this salt debate. rep. smith: first off, to get one big, beautiful bill across the finish line is going to require everyone working together and sticking together.

it's not going to be easy. if people think it is going to be easy they are mistaken. we have been working with all of the different members of the conference, whether they are salt members, whether they are debt deficit hawks. whether they care about various green credits in the ira. we have a very diverse conference. we cannot lose one member. we have a 217-215 seat majority after elise stefanik is confirmed. we have to thread the needle and that is what we are doing with the salt. everyone has to give. you are not going to get everything you want. it has to be a balance, and that is the only way that we can be successful and deliver for the american people. annmarie: on salt specifically at sounds like you might be close to clinching a deal? raising that cap? do you have a ceiling of where that can go? rep. smith: we definitely have to raise the cap. there is no question that the

$10,000 cap put in in 2017 would be tolerated amongst our salt members in new york, california, new jersey. we will definitely raise it. i'm not going to give that number but we are going to find a good balance that is going to provide a lot of tax relief for the majority of their constituents. annmarie: as you are debating tax policy the president is coming out with a number of directives when it comes to tariffs. china went into place this week. whether or not it is one bill or two when it comes to reconciliation, how contingent are tariffs as a revenue-raiser for what you are trying to get done in congress? rep. smith: because of the process arguments and the rules of reconciliation the revenue from tariffs cannot counted that the president implements by executive order. when you look at the fiscal health of the nation, which every lawmaker should be

concerned with, absolutely tariffs will bring in millions of dollars of new revenue. what the president proposed on saturday at minimum according to the tax foundation says would bring in $1.2 trillion of new revenues. then, of course, the president on day one of his presidency signed an executive order demanding treasury, ustr, commerce to look at trade practices throughout the world and report back to him on april 1 of those actions. i think you will see additional tariff actions after april 1 based on that research. annmarie: given that, does the tax bill need to take shape after april 1 when you and your colleagues have a better understanding on the revenue raises it can bring in? rep. smith: not at all. if you pay attention to what president trump has been saying you know exactly the direction he is going. he has campaigned on this. and that is what we are going to do. we know of the economic

pro-growth tax policies that need to be in place to help our economy. grow our economy and help provide relief to working families. annmarie: trump also announced a plan to create a new agency when it comes to tariffs and collecting these revenues. there hasn't been a lot of talk about it, but you know this would require an act of congress. do you see this taking shape? rep. smith: i think it is a really good idea. annmarie: but doesn't it already exist, congressman? with the customs and borders? rep. smith: that is very debatable. some people would say it is. others would say, no. what president trump is, he's deftly going to focus on america first trade policy. he has done more in the last 16 days when it comes to international trade than what the biden administration did in the prior four. biden administration was out to lunch when it came to trade policies. that is why we saw, for example,

the agriculture trade deficit rise to over $35 billion under the watch of joe biden. but when president trump was in office we had a $5 billion agriculture trade surplus. president trump cares about fighting for american farmers and workers and that is what he is doing. the external revenue service is another tool he is going to be pushing forward to do things differently. he renamed the gulf of mexico the gulf of america. president trump. expect the unexpected. is going to deliver real results for the american people. annmarie: that is certainly a certainty. congressman jason smith, thank you so much for your time this money. jonathan, that was chairman of house ways and means. he has been pushing for this one reconciliation package. this debate is not going anywhere because senators are having dinner with the president this weekend and they are going to get him on side for a two-track approach. jonathan: watch this space.

the gulf of america was not lost on you, was it? mike wirth just dropped it in there. very naturally. lisa: very smooth. he has actually come out and done that on the earnings call. exxon has not done it yet. pick your battles. jonathan: they will follow. he will say. let's get you an update on other stories this morning. here is your bloomberg brief with you yahaira jacquez. yahaira: disney shares down in the premarket even though first-quarter results came in strong thanks to hits like "moana 2." a 31% gain in operating income in the quarter. those gains offsetting what was a tough quarter otherwise for his needs tv networks and in parks. president donald trump says the u.s. should take control of the gaza strip, speaking at the white house alongside israeli prime minister benjamin netanyahu. trump said the u.s. would dismantle weapons and turn gaza

into a riviera displacing its residents to other countries. trump's proposal was met with sharp opposition from palestinian and arab officials. switching gears here, president trump announcing he will become the first sitting president to attend the super bowl in person. a spokesman for the secret service says extensive planning and coordination has taken place for trump to attend the game in new orleans. jonathan: thank you. thanks for this money. up next, we will set you up for the day ahead as we count you down to payrolls friday. just a few days away. live from new york, this is bloomberg. ♪

jonathan: the opening bell, 30 six minutes away. equity futures recovering just a touch.

lots to watch, particularly in tech. here is manus cranny. >> you've been talking about this through the morning, alphabet. what is the takeaway? cloud, search, and ai. we have a capacity constrained, therefore who is winning the other parts of that business? in terms of the cfos message it is about the available capacity. and they are doubling down on their capex, $75 billion. clear message. amd, a company in transition. product transition. their high-end chips, $5 billion business. nvidia, it is a $100 billion business. you have to close that gap. they are saying, our data center business is something we will deliver at the back end of the year. the disney cfo, subscriptions business will be a billion-dollar business. turn is down. those are the takeaways and i have actually seen "moana 2."

jonathan: of all of the things we have done this morning the big takeaway is "moana 2." does this come out? lisa: it came out a long time ago. the takeaway should be mike wirth had some interesting thoughts about the expansion of energy and just how much demand there is going to be coming from ai and that the deepseek story was ahead fed. also tom barkan basically taking no stance, but looking forward to equal weights of potentially moving on either side. or are other things we talked about other than "wanted to." -- moana 2." jonathan: some data this morning too. look out for ism services. amazon coming after the close tomorrow. the main event on friday, payrolls friday just around the corner. tomorrow morning, jack caffrey of jp morgan, gene seroka, and the linkedin cofounder reid

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katie: alphabet and amd sinking futures right now with 30 minutes to go until the start of trading. i'm katie greifeld. tim: and i'm still -- and i'm tim stenovec. bloomberg "open interest" starts right now. katie: coming up, a tough day ahead for tech. alphabet and amd tumble after disappointing earnings. qualcomm up next. and beyond tech, earnings abound. from disney's streaming success to