>> morning. good morning.

a 25% tariff of all u.s. imports of steel and aluminum. president trump widens his trade salvo. the dollar gains while asia stocks selloff. germany's election face-off. no knockout blow in the snap election. we will bring you the latest live from berlin. and activist investor elliott has built a stake in bp, a potential step in forcing change in the struggling british oil giant. good morning morning. happy monday. today appears to be the week donald trump's trade wars touch every corner of the globe. the president already having announced over the weekend that

he will bring 25% tariffs on steel and aluminum imports and yet equity futures on both sides of the atlantic are higher. do we see tariff fatigue? cross asset, you can see more of a bleed through from this story. you have the dollar advancing against most major currencies this morning, reflecting these inflation fears. those same inflation fears keeping the 10-year yield elevated. we are currently at 4.48% ahead of this treasury auction this week and of course chair powell's testimony to congress as well. that news also pushing gold to a record high, again a haven bid and giving oil a boost after a string of declines. we are at $75 a barrel currently. let's also have a look at asian markets. we have the asia index currently

weaker a quarter of a percent, down for the first time in a week, so you are seeing investors shunning risks in terms of asian equities but the hang seng tech index bucking the trend amid this wave of optimism about ai. that index at its highest since october on an intraday basis. the yen weaker on the flipside of dollar strength and iron ore up. the world's biggest importer of the metal is china. stimulus to offset tariffs could support demand for steel and aid iron ore. iron ore slipping into the red. let's dig into the tier of story more deeply now. president trump says he will impose a tariff on steel and aluminum, an announcement he made as he was speaking to reporters aboard air force one. >> any steel coming into the u.s. is going to have a 25%

tariff and aluminum. 25% for both. >> let's bring in kriti gupta. universal tariffs on steel and aluminum, who does that affect most? >> it affects the u.s. significantly given though -- metals and commodities is not something -- even though it makes some metals and commodities steel is not one of them. the acquisition of u.s. steel has been a struggling company back in the old days of the 1940's and 50's. this company used to build the steel that created skyscrapers and helped with the war effort in europe and has since gone into decline. attention from international players in addition to not having the capacity to build steel.

these are the things donald trump is trying to address with international tariffs and it also helps in terms of raw materials getting to american carmakers. we should keep in mind this is very much a china focused move and china is the biggest manufacture of steel at the moment. they do so at a fraction of the cost to its competitors including russia and japan, the second and third largest creators of steel. this is an additional tariff and trade war component specifically for china. >> u.s. steel remains u.s. steel, not japanese steel for now. we need to talk about the u.s.-russia relationship. speculation about whether putin and trump had a call, who may have called whom. what do you read into this? >> on air force one donald trump himself said in that same phone call you played that they had a

talk with the kremlin. the kremlin spokesperson saying he himself is not aware of any phone calls but he may not be privy to that information. we do not even know if this phone call has been fully briefed within the government itself but we know we are four days away from the start of the munich security conference and kellogg, one of the major envoys, will show up. donald trump may or may not be in attendance to potentially put forth a plan. that is something he has campaigned on and talked about creating so this might be one step towards the ultimate goal. >> interesting and we will have full coverage. we also heard the president saying elon musk's government efficiency teams found irregularities at treasury. >> your guess is as good as mine on that one.

it is tricky because we also know that scott bessent specifically said that this is just a handful of people trying to understand where the inefficiencies live so this is not necessarily new information we are getting. the big concern around this was does the d.o.g.e. and elon musk have access to that fundamental system? scott bessent said that was not happening. in terms of finding regularities, this is coming down to the government and efficiency story. he has also made comments that he has issued the treasury to get rid of the likes of pennies, for example. we know this is common in terms of every smallest currency everywhere around the world. it will always be more expensive to make than to earn but these are the kinds of inefficiencies

we are talking about. we are still waiting on the details but we know elon musk and his colleagues are participating and evaluating what is going on with treasury. >> kriti gupta, thank you. kriti gupta will be back with the opening trade. let's dive more deeply into how markets are reacting to those trump tariff announcements. valerie tytel joints me. what are the markets saying? >> some volatility this morning but not the kind of craziness we saw last week. we had this air force interview. they import about 25% of their steel from canada. canada is vulnerable to these tariffs. also mexico and brazil so keep an eye on those currencies on

the back of tariffs but lastly the most important thing we heard is that he is still eyeing reciprocal tariffs and says the announcement could come as early as tuesday or wednesday. watch out for how u.s. assets react. friday, there was a slide in the equity and treasury market on threats of reciprocal tariffs. >> we got the u.s. jobs report on friday ahead of powell's testimony this week. was a good news, bad news, or another excuse for the fed to sit on its hands? >> it's a mixed picture from the nonfarm payroll report. one thing that did jump out of the markets was the university of michigan can sentiment data there was an unexpected jump in the year ahead inflation expectations rising to 4.4%, the highest since november 2023.

we get hard data on inflation this week. we have the consumer price index wednesday followed by the producer price index on thursday. >> valerie tytel, thank you. now to some breaking news out of nokia, which has announced a change at the top. it will have a new ceo. the ceo has informed the board he will step down and they have appointed justin hotard as the next ceo and will start in his new role as of april 1. a story we should keep an eye on through the morning. let's get to german politics now. olaf scholz struggling to land a decisive blow. he urgently needs one as the front runner in the german snap election. frederick mertz stood head-to-head with them in the tv election debate just two heads

-- two weeks ahead of the vote. both candidates outlined their strategies for dealing with donald trump. analysis with oliver crook in berlin. who won? >> these are two candidates not known for being the most exciting or best communicators so at certain points it was slow but it kicked off on one of the main debate, immigration, which is where merz wanted to land a blow on olaf scholz, but they quickly moved to this question of afd, a party on the german far-right, scholz saying merz would be willing to enter into a coalition with the

afd, which is something that merz rejected, saying there is no overlap between the afd and cdu. one of the points was debt. that was centered around defense and oil. the defense obligations of germany and what needs to spend to get their defense and military to where it needs to be. olaf scholz says he cannot do this with the debt break in place. merz and the cdu have been sticking to the debt break. they did say they would be willing potentially to look at loosening the debt break, particularly on this question of defense, particular because there is somebody on the planet asking for 5% in germany and across europe. have a listen to what scholz had to say about how he would deal with donald trump. >> we should not delude ourselves. what the ameran president says he also means. people who say it will not turn

out that way, which is why i think it was important and i was the first head of government in europe to say after the discussion about greenland this is not how it works. we are defending ukraine because borders must not be moved by force. that applies all the more to our partners. >> despite the fact that this is the election in germany within two weeks we cannot ignore anywhere on the planet the donald trump presidency. it will be a large focus for the germans, particularly with these questions around tariffs especially as germany faces down what could be a third year of contraction. >> what is merz's plan to take on donald trump and how are the polls evolving? >> it's interesting because scholz has dealt with trump in the past. we know there is no love lost between them.

the question is about how would merz stepping into this role deal with donald trump? have a listen to what he had to say. i guess we don't have the soundbite. i will have to summarize. he is saying donald trump's predictably unpredictable and basically what merz is calling for now is a much more pro-european approach. that is to say much more collective action among the european powers, that you want to see a stronger and more unified europe, and that is basically what he is saying. for viewers in the u.k., he's even opening the door to a

closer relationship with britain, that this will be part of the tactic and what europeans need to do to fight against donald trump in moments where you need to stand up to him. the cdu has dropped basically one point but i have been shocked that despite the fact that we have had a lot of fireworks and voting with the afd by the cdu the polls have not moved a lot. they are still in a commanding position. so as we go into next week it will be interesting because he will have the four main candidates debating, including the afd, the first time they have taken the stage with their candidate. >> you are merz impression is better than mine. thank you. oliver crook. in berlin, we thank you. let's take you to some of the events we will be watching. we will be live from the ai action summit in paris. some of the world's key leaders

on artificial intelligence gathering there. we will bring you interviews with guests. that will include the french finance minister and openai's head of policy. the emphasis more on action than safety. france expected to announce more than one billion euros of investment in ai prices -- own -- in ai stuff. sharon powell give -- fed chair jay powell will give senate testimony. the expectation is he will highlight the resilience of the economy as a reason the fed can wait to cut rates and digest the impact of trump's policies before acting further. on the geopolitical front, friday, we had to munich for the

security conference. the focus is the war in ukraine. elliott takes a significant stake in bp as it looks to shakeup the struggling oil maker. we will bring you the details next. this is bloomberg. ♪

lizzy: bloomberg has learned elliott management has built a significant stake in bp. sources say elliott once to boost value by pushing the energy giant to consider formative measures. more detail with anthony. notably over the past five years bp is down about 8%. shell is up at least 30%.

is this the crunch point? >> bp has seemed to be at a crunch point for a while and harkens back to the days of deepwater horizon exploding and the gulf of mexico around 2010. at the time bp was considered a target because the market cap crashed and the unthinkable came out that somebody could buy bp so now with this lagging share price it looks like they could potentially be a target so there is speculation on that but of course elliott is looking at that weak performance, kind of a lack of vision for how the company will proceed. remember we have a new ceo who has not put the stamp on his company yet so that lack of an idea of how to move forward and

deal with this desire on some of these companies to be greener but really those are still coming from oil. >> knowing what you know about bp and knowing the playbook, what is next? >> they are going to push for some changes. we have this new ceo coming in. they have a strategy meeting coming up and there will be focus about what the new ceo will propose in terms of a change. and they set up the plan of getting into this green area, cleaning it up in terms of the emissions but the shareholders never really approved of that kind of approach and we have seen that also take place with

shell while the new ceo has kind of pulled back from some of the green pledges there and are focusing more on investment. shell has a big position on natural gas. and we have seen the difference between shares of bp, shell and other european competitors with u.s. competitors who have done better focusing on oil and gas, some carbon capture. we have the drill, baby, drill mantra but those companies have been doing that anyway so we're seeing the difference between those strategies and what the investors are looking for and what this activist investor will potentially be pushing for, trying to see that new strategy coming out of bp >> so potentially an opportunity to close that gap. we thank you for the latest on that scoop and we are going to

stay with the energy theme in a moment after a bumper 2024 and look at whether the sun will keep shining on solar power. the details next. this is bloomberg. ♪

this is bloomberg. ♪

>> good morning. this is bloomberg daybreak: europe. a 25% tariffs on all u.s. imports of steel and aluminum. president trump threatening ties with top trade partners. and germany's election face-off. no knockout blow in the first tv debate. we will be in berlin. and bloomberg learns activist investor elliott has a significant stake in bp. and those are your headlines. let's get a check on markets because you have futures pointing higher despite the latest in the trump trade war. it looks like this is the week that it will touch every corner of the globe, the president

announcing tariffs on steel and aluminum imports, 25% being the number. so is this tariff fatigue? and are investors open to the idea that the selloff was overdone? that is what the equity picture suggests but you can see more of a readthrough from the tariff news. as you have the dollar advancing against major peers, reflecting inflation fears and those same fears fueling the 10-year yield, elevated still at 4.48% ahead of those options this week. and we have fed chair jay powell's testimony coming and tariff news pushing gold to a record high, so again a haven bid at the moment. oil at $75 a barrel so after a

string of declines, up .6% this morning and if we flip over to the asian picture we have the pacific index down for the first time in a week so you are seeing investors shunning risk at least in terms of asian equities but not so for the hang seng tech index. a wave of optimism about ai pushing that index to the highest since october and the yen weaker on the back of the dollar strength and iron ore up as well. china of course the world's biggest importer of the metal and maybe we will see beijing stimulus supporting the demand for steel and aiding iron ore. but let's get more into the tariff story with president trump lending to impose 25% tariffs on imports of steel and aluminum and china's retaliatory tariffs also taking effect. the disruption looking to intensify.

with the european chief economist saying it is more durable and come with a significant risk of being escalated with time. and we speak to charlotte now. a very good morning. there has been this news since you are with us on bloomberg tv but it feels like the norm with trump back in the white house so let me start by asking you if your outlook has changed since we last spoke? >> i would say our baseline forecast is largely unchanged from a month ago but of course there have been a lot of headlines with regard to tariffs and i would also stretch the uncertainty around it. if you want to look at the implications of tariffs for the real economy we need to dissect them in terms of the negotiating approach, the how, and the policy -- the policy aims. the first is our tariffs used in

a more transactional manner like with canada and mexico, that you try to use tariffs for other foreign policy aims, if tariffs are used more for addressing the tate -- the trade deficit concerns, where europe could be more of a target along with china. in the third area is more from a geopolitical perspective, using tariffs to encourage production more domestically in the u.s. and the fourth is to use tariffs for revenue later on. and depending on the type or bucket where this is, this will also determine the likelihood or impact of tariffs and how durable they are, so to your question on china, they fit more into the third category than in the second and therefore the chinese tariffs will be more durable and a risk of being further escalated.

>> but when you add those buckets, how are you thinking about and modeling the impact on u.s. growth? >> for u.s. growth, we look at it both in terms of the direct and indirect impact. so the direct impact is also just generally economic growth being hurt but also lower or more expensive goods that can also her demand. on the other hand, if you look at the inflation perspective, that is going to be quite balanced so you could have an equal amount of impact on growth as on inflation and they are, if you look at our scenario analysis of a severe trade war, you could have growth hurt by one point and also inflation being added up by a full percentage point. in europe, the impact is more eat asymmetrical and there you would have a greater impact on growth so the demand shock would

be greater on inflation. of course, it all depends on retaliation measures too. >> in terms of where that leaves the fed, we will hear from jay powell but do you see the next move being a cut? >> for now we expect the fed to stay on pause in the next move to likely still be a cut but it would come at the earliest at the end of the second quarter may be, so around june at the earliest. what is key with the fed is it's shifted from being in data dependency mode to policy dependency and i would say that's also kind of a risky strategy in general, especially if you think about how tariffs can be used for a way to potentially create confusion or threaten opponents, which will

make policymaking for the fed much more challenging also. >> policy and not data-dependent. >> i wonder whether powell will admit that. if we think about the flipside for european central banking and how the ecb will respond to the growth threat from trump tariffs , do you think they will cut beyond neutral. will terminal be below neutral? >> we had the updated estimates of the neutral rate pushed down to 2%. and i would say ritual -- neutral does not mean that has to be the terminal rate in my estiate is the ecb can cut below that and further. we have 1.75% this year with risks skewed to further rate cuts and i would say when you look at it with growth still staying week and risks of inflation also undershooting,

especially if the demand shock is greater with regard to tariffs. the only offsetting factor could be fiscal policy coming if we see movement but i don't think that is a story for 2025. >> and briefly, how is the boe? >> we expect one more cut in march but it always depends on the inflation backdrop but relative to the ecb we don't expect as many cuts in the u.k. versus the ecb, especially with greater fiscal spending in the u.k.. >> but possibly slipping out of that quarterly cadence. charlotte, thank you for those insights. and now to some other stories making move. she and is said to be offering

incentives for apparel suppliers in china to open new production lines in vietnam to reduce the impact of president trump's tariffs. we are told they are offering up to 30% higher procurement prices to help to build facilities. a spokesperson confirmed plans without elaborating. while they have set up supply lines in brazil and turkey, the bulk of the operation remains in china. and a former credit suisse chief executive has given up his french citizenship as he prepares to run in the ivory coast's presidential elections. one of the conditions to qualify for presidential candidates is exclusive ivorian citizenship. and france will announce 109

billion euros in investment and artificial intelligence products. speaking on the eve of an ai summit, he also mentioned investment from the ua between 30 and 50 billion euros. we will be live from the ai action summit in paris, were some key leaders in the world of arificial intelligence or gathering. we will be bringing you interviews with guests and openai's head of policy as well so plenty of coverage from our own tom mackenzie on the ground in france. in the u.s. president's tariffs have fired up volatility in the currency trading market, leaving banks and hedge funds scrambling to re-get -- rebuild teams, something our reporter has been watching closely and alice joints me now. good morning. >> good morning.

talk us through how the tariff announcements are impacting currency announcement. you have been in the weeds of these moves. >> it is a good time to be an fx trader. there's a lot of focus on fx markets given they tend to be the first to react to geopolitical news and we have seen the dollar reacting stronger. we have seen intraday moves in the canadian dollar and mexican peso so there has been more volatility and it is stacking up to be a busier time in terms of trading volumes and how hedge funds have been increasing their exposure in hope of some sizable moves and banks look to boost staffing. >> how does it compare with the return of carry trades in recent years, the blowup in the yen? >> you are right. interested comeback as central banks hiked rates aggressively after the pandemic. the industry had a tough time

during that period because to make those differentials really crucial, a lot of specialist funds did shut down but because the central-bank action we saw after the pandemic was fairly synchronized, it meant volatility was still fairly low and for banks that is crucial in terms of profits because it's a lot more trading activity and people switching up positions and we are already starting to see them benefit from more volatility since the election looking at fourth-quarter earnings. >> so that uncertainty helping to keep things up. thank you, alice atkins. it will be a busy week for european earnings as some of the biggest hitters report. we will preview them next so stay with us. this is bloomberg. ♪

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lizzy: it is 6:45 a.m. in london and it will be a busy week for banking and luxury earnings. an idea of what to expect with chloe all over it. i want to start with the banks

because so far in european earnings, the theme has been mergers and acquisitions, so when we hear from commerzbank and unicredit, what are we expecting in terms of this unfolding saga? >> unicredit starts off with earnings but the focus is more about its capital position and the balance it decides to strike between using that cash to pursue deals or using that cash to fund shareholder returns, so that will be the key theme tomorrow for unicredit. a couple days later, it will be commerzbank and the focus will be on the m&a side and trying to convince shareholders it can deliver value as a standalone entity. there's an economic slowdown and recession in germany and lower interest rates as well, so that is dragging down earnings and pushing up risks so it is

complicating this. >> we have this slower pace of rate cuts from the bank of england and u.k. banks reporting. how is that expected to feed into their earnings? >> we have banks this week and next week and it is expected to provide a boost because that reduces margin pressure and for barclays there's also a boost from the investment bank so they should have a good quarter that is expected to be on revenue and be quite solid across the board. that is a similar tailwind expected so it should be a good quarter for the u.k.. >> we have to discuss our favorite subject, luxury. reporting on tuesday that is interesting in light of the surprise departure of the future director. >> they usually sit at opposite

ends of the performance spectrum when it comes to the market. whereas they are usually more vulnerable to lower demand but it should be expected to start turning a corner and this may be an indication of that, but as you said, we have to take in mind that the director did depart so is the flagship band -- brand of carrying gucci going to be able to deliver on this vision? >> our ever fashionable chloe, thank you. we look ahead to those earnings. liv golf is closing in on more places for its star golfers at the world's premier competitions. and joumanna bercetche has been speaking with scott o'neill as he attended the season opener in riyadh. >> we have been for and about growing the game about --

growing the game of golf and there are many new and exciting leaders. if you look at derek of pga and mark at the rna and i am new at liv and i know the pga is working along -- is looking for a new executive and that provides us an opportunity to step back and appreciate where we are at this moment and move forward in the fact that the root -- the leader of the free world and the president of the u.s. validates how important this game is and i still believe it is one of life's great teachers and just as important as we could possibly find today, so any news that brings us closer to that is welcome for all the golf fans around the world. >> have you spoken to the president directly yourself? >> no. in a few weeks we will be in miami playing at a trump course

and i imagine he will make an appearance but in these first 30 days i have had the time of my life getting to know these incredible stars like brooks and dustin and bryson. we have the best players around the world -- from around the world. getting ready for this incredible event season and getting our feet under us. >> i know you are not in a position to give us the contours of the deal but is it your expectation that if a deal comes to fruition it would allow for more coexistence between liv players and the pga tour? is it your expectation that liv players could ultimately participate in the pga tour without being penalized? >> our position now, it's a deal at a construct we have been working on for some time and we are focused on the same goals and objectives and that is to

grow this game, put as many of the greatest players on the biggest stages of the world, and while i would love to walk chapter and verse into the deal, i will tell you anything that is good for this game is good for us and we are thrilled there is progress being made. >> one recent development earlier this week, the u.s. open became the first major to create an exemption for liv golf players. do you expect other majors to follow suit? >> i'm appreciative of the leader of the usga. we heard today from mark darvin, who runs the championship, that they will be following suit and in at least the early conversations with pga of america they are positive as well so it seems as if the headwinds are becoming tailwinds. there seems to be this incredible arc of momentum and whether that's our deal with fox

or itv or all the incredible partners we have had, that is our partner here and he just came on board, so we are starting to get momentum in terms of the business so it's quite expected in terms of where we are heading. >> that was the liv golf ceo speaking to joumanna bercetche from riyadh. philadelphia eagles fans are celebrating after their team won america's super bowl, beating the kansas city chiefs 40-22. president trump was at the final, becoming the first sitting president to attend the super bowl in the events history. plenty more coming up so stay with us. this is bloomberg. ♪

>> we reduced our policy rate by 100 basis points through december but the recent progress on inflation has been slow and uneven. inflation remains elevated. there's also considerable uncertainty about the economic effects and proposals of new policies. lizzy: a federal reserve governor speaking there, echoing perhaps the message we expect to hear from chair powell later this week, the resilience in the u.s. economy perhaps giving cover for the fed to hold off on cutting rates as it digests trump policies, particularly on tariffs, and we had that announcement that trump is planning 25% tariffs on imports of steel and aluminum and you can see who that affects the most. the majority coming from canada but if we flip over the board, in terms of trump's view of fed

policy, he in fact endorsed the last cut but the fed cannot breathe a sigh of relief yet because you can see must's verdict, which is the fed is absurdly overstaffed so powell staying on his toes, but if we flip the board again, we are going to get the latest read on u.s. cpi. here is what we are expecting but that is all we have time for on daybreak europe this morning. the opening trade is next. they will take you to the start of the cash session. that does it for bloomberg daybreak: europe. this is bloomberg. ♪

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anna: good morning from london, i anna edwards alongside guy johnson and kriti gupta.