>> we continue to think the u.s. will outperform. >> there is more to be hiding gain from the rest of the market. >> there is massive enthusiasm, but investors have been expressing skepticism. >> i embrace the idea that i know i don't know. >> volatility is back in you have to know you cannot react everything. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's get your week started. live from new york city, good morning, good morning. "bloomberg surveillance" starts right now. coming into monday on a two week

losing streak on the s&p 500, equity futures on the s&p just about positive by 0.4%. the nasdaq 100 up 0.6% in the face of more tariffs and additional market threats, this market doing ok. a double dose of chairman powell through the week tuesday and wednesday, some cpi data wednesday morning. friday, retail sales to close out the trading week. lisa: the big story, in addition to all the x and truth postings from the president, have to do with the consumer. we will get cpi, ppi, and a host of retail companies reporting in a time of real question about tariff talk impeding the confidence of consumers. is it or isn't it? some surveys have had inconclusive results. jonathan: if you look at the price action at the end of today, it had pretty much nothing to do with a payrolls

report, apart from maybe the hotter wages. expectations of higher inflation up as well. that is the wrong kind of miss. lisa: especially as these are republicans lose confidence and start to have a deteriorating outlook. it was not just democrats. a lot of people dismiss the university of michigan consumer sentiment survey as to be so comical, basically democrats seeing a 5% inflation rate for the your head, republican seeing 0% for the year ahead, but you have seen deterioration among republicans. jonathan: we spent the weekend talking about tariffs. we are about to spend the whole we talking about tariffs. annmarie: because president trump said today, 25% tariffs will go into effect -- more details on when they will actually take effect -- on aluminum and steel. then he said he would be announcing reciprocal tariffs on

other countries that have been unfair, i.e. likely coming down the pipe, based on what you hear from a lot of his advisors, talking the european union. jonathan: in that very same conversation, there is this quote here -- let's try and make sense of this. "there could be a problem, you have been reading about that, about treasuries. it could be a lot of these things don't count, therefore, may be, we have less debt than we thought." what's that about? lisa: nobody knows. you have a lot of speculation. you would expect yields to be spiking if people were truly concerned this president was going to simply eliminate debt with a stroke of the pen. that said, it raises a real question when we have options across maturity lines, 3's, 10's, 30 year being sold.

annmarie: yet that is counterintuitive to what scott bessent said, that the treasury secretary and the president are squarely focused on the 10 year yield. was trump talking about government debt or payments processed through the treasury? what i will say is my twitter messages, my personal text messages, my signal were blowing up for any sort of clarification, which hopefully we will get today. jonathan: we view these comets as referencing specific payments, for example, usaid line items, rather than outstanding u.s. treasury securities. if you look at the bond market, yields down by about a basis point. this bond market seems to agree. no drama here. lisa: because it goes exactly again scott bessent. it seems as if it would be counterintuitive. at the same time, when you have a sitting president saying maybe we have less debt than we can imagine in their could be screwy

things going on with treasuries, people take notice, and it puts everybody a little on edge, which is the reason why we all got notes from a whole host of people trying to explain it. jonathan: big week ahead about to get bigger. a lot of tariffs to come. coming up, we catch up with marvin low of state street on uncertainty in the trade secretary, tobin marcus of wolfe research, and erika najarian of ubs. we begin with stocks steady as traders way fresh tariff uncertainty. marvin loh writing the tariff genie is out of the bottle now. welcome to the program. when you say thou market premium associated with tariffs, where are you seeing that at the moment? marvin: ultimately, stocks have been a bit unsteady the last couple of weeks. we are still reacting to this

tariff news, so volatility is part of that discussion, and yields, which have been somewhat mixed, is capturing some of the ultimate uncertainty you're talking about before. jonathan: lisa was talking about the data. the data looks like a harder -- hotter inflation story and a cooler look story. that stagflationary mix, if we can call it that, how do we expect that to play out in fixed income? marvin: it is absolutely stagflationary mix. it keeps the front end of the curve somewhat locked in, potentially firms people's view the fed has to look at cuts as a potential outcome. the long end is still a jump ball. there have been a lot of questions around term premium. we have had a bit of performance with duration, but this 4.50 is a debar make his -- mark asian

line -- this 4.50 is a demarcation line. lisa: we saw last week with the short end, yields up, the long end, yields down. at what point is that a red flag? marvin: ultimately, we have pushed back towards levels we have not seen in a while. if we start talking about a mutual curve again -- granted, i do not see that kind of movement -- it would signal their something broken in this economy. lisa: at this point, you have seen a little bit or rejiggering in the equity market in terms of leadership, with big tech losing out as we talk about tariffs, and there is this potential for rates to remain higher. is that a good, positive signal of broadening out, or is that something more pernicious at a time people are much more overweight equities now than in 2017? marvin: overall, i think it is a

good thing. we broadly look at risk performance, equity performance the last couple weeks, it is not that unquestionable, given where valuations are. the broadening out is good. we are still nursing fairly good gains over the course of the last year. annmarie: it's tariff week, as jon started with your note, the tariff genie is out of the bottle. can the u.s. remain exceptional in this environment? marvin: it can, for the moment, for sure. we see a continuation of the stresses between other economies and the u.s. we are still talking fairly aggressive response in the u.s. compared to the rest of the world. if we reorder tariffs, and the worst case, which the market is not pricing, 25 percent

across-the-board the board, then the exceptionalism becomes harder. it makes our debt much less attractive, just because there are not as many u.s. reserves floating around the world. that is a second derivative kind of discussion, but it can be challenging if it pushes through the way he promised. lisa: -- annmarie: if tariffs start to hurt what we are seeing in terms of your idea of u.s. exceptionalism, at some point, do we have to see tax cuts, or can this actually be a little more aggressive? marvin: it will be hard for the markets to digest for sure. we are still talking about a pile of debt. it is interesting how bessent and this treasury payment system discussion is evolving. i tried to pull the layers behind, and it is definitely a deficit type of discussion they are getting out through all of these hidden signals, so if he

really does want the extension of the tax cuts, there has to either be a very accepting treasury market, or one we start to see at least a little bit of fiscal responsibility. jonathan: do you think the price action we have seen so far is a reflection of his sequencing from the administration, that they have talked about mainly tariffs and not much about tax cuts? and when that conversation shifts, you expect the market to shift? marvin: absolutely. 2025 was 100% going to be about fiscal. certainly, getting out of the box early with tariffs, getting out of the box early with immigration is something he could do, but the fiscal hurdle he has is incredibly hard. it is the bond market, treasuries, and duration that will define whether there is cut ability with that. jonathan: marvin loh of state

street. very different stories, the way we closed out 2024 and started 2025. closed out 2024 with a steeper curve, selling off on the long end, starting 2025 with a flatter end. the long end started to fall a little bit. that is how we started 2025. i get from marvin loh there, that is not how few things we finish it, with tax cuts in mind. lisa: there is huge disagreement about how much progrowth initiatives can change that with inflation longer-term. right now, people are looking at short-term inflation going up, the reason at 11:00, we got the one year inflation outlook. can that continue this feeling that the fed cannot cut rates anytime soon? he starts talking about fiscal responsibility, marvin loh. is it fiscal responsibility, when you say, we look at the

line items, some of them can be canceled? jonathan: based on the bond market now, there is no concerns. perhaps that can change. maybe no one is at work after the super bowl weekend, but the tenure not doing much at all. lisa: right now, people are not particularly concerned, because it seems to go against what the adults in the room are talking about. it is hard to understand what is the signal from the noise, and that is what people are trying to figure out. right now, it seems like people are seeing the structure of the legal system and of the normal treasury operations as being the status quo that will continue. jonathan: bond yields just about unchanged. let's get you an update on stories also are with dani burger. dani: president trump announced he will impose 25% tariffs on all imports of steel and aluminum into the u.s. he did not clarify if metal imports from china would face double tariffs after he imposed

a blanket 10% charge last week. activist investor elliott management builds a significant stake in british oil major bp. sources tell bloomberg elliott wants to boost value by pushing the giant to consider transformative measures. it comes after bp's struggles with the deepwater horizon disaster. the philadelphia eagles are the super bowl 59 champs, beating the chiefs 40-20 two. the chiefs were denied an unprecedented third straight win. this was the eagles' second franchise win. that's your brief. jonathan: thank you. more from dani in about 30 minutes. up next, trump's tariff plan. >> i will be announcing tuesday or wednesday reciprocal tariffs. if they charge us, we charge them.

we will also be announcing steel tariffs monday. jonathan: tobin marcus of wolfe research joining us next. live from new york city this morning, good morning. ♪

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jonathan: double dose of chairman powell to start this week. tomorrow, the chairman of the federal reserve in front of the senate. wednesday, in front of the house. wednesday morning, 8:30 eastern time, cpr. so far, so good, up 0.4% in the s&p 500. the bond market totally unchanged in the face of a lot of headlines that shift the bond market one way or the other based on what you would have heard of. the president of the united

states making comments that could be a problem, that we have been reading about with treasuries, that could be a problem because maybe we have less debt than we thought of. now we are trying to explain what the president meant. lisa: he said treasuries, the treasury market saying there is no way he could mean treasuries. if he means treasuries, he is saying the u.s. government will not pay all of its legal debts that are the full faith benchmark rate for all of the world's securities, so people are saying it cannot possibly be that. it has to be the line out from the treasury department that d.o.g.e. has been going after. i'm inclined to agree, because it seems like it is and a prudent thing to do for the treasury market, so the market is just dismissing it. jonathan: the 10 year totally unchanged. under surveillance, trump's tariff plan. >> i will be announcing, probably tuesday or wednesday, reciprocal tariffs. very simply, if they charge us,

we charge them. it will be great for everybody, including the other countries. but if they are charging us 130% and we are charging them nothing, it will not stay that way. we will also announce steel tariffs monday. any steel coming into the united states will have a 25% tariff. >> what about aluminum? >> aluminum too. jonathan: president trump to impose reciprocal tariffs on countries that tax u.s. imports, in addition to announcing 25% tariffs on all imports of steel and aluminum into the united states. tobin marcus of wolfe research writing imposing a schedule of verse a pickle tariffs will be much more operationally complex than across-the-board tariffs trump imposed on china last week and threatened against canada and mexico. so just what is a reciprocal tariff? do you take the average ewighted tariff on one place and level it, do you go product byproduct? tobin: it is ambiguous whether

reciprocity is supposed to apply for the weighted average tariff on the whole country or in any particular product category. the main legislative proposal on this topic from house republicans, that has been around for a few years, usually cosponsored by sean duffy, now in trump's cabinet, would go product byproduct. if that is the case, it would require real elbow greece from ustr and commerce, rather than something you can just implement with the stroke of a pen. my guess is we see an announcement, directives to the agencies to work this out, with a delayed effective date. annmarie: didn't the president already do that with his memorandum to look at reciprocity by april 1? what is the difference with that and what he announced? tobin: studying it and implementing it is different. there is interest in his day one

memo on america first trade policy, but that did not actually tell the agencies to start implementing any of the policies we are looking at. at his word, based on how he talks about it, this could be a directive to say we are doing this, this is now the policy of the united states, and ustr and congress need to come down with it. annmarie: if he's looking for rep -- reciprocity, is this a negotiation tool for these countries to come back and say let's do a deal? tobin: if it applies globally, or even if not, it certainly is a negotiating tool, because there is an obvious way to lower the reciprocal tariff rate, if you just lower the rates you are charging on the u.s. whether or not that would mean a grace period is less obvious. these tariffs, unlike a 25 percent across-the-board on canada and mexico, will not necessarily be so drastic that i think the administration will be

all that wary about having a temporary period where they are in effect. having the threat out there, having it be implemented once they are ready to do that implementation, than offering countries the offer of relief if they subsequently bring rates down is plausible. lisa: when you zoom out, there's a real question of why these tariffs are being threatened in the first place. in a note over the weekend, "tariffs remain a to a public policy." that tariffs are a bargaining chip. do you agree? tobin: there are different -- secretary bessent distinguished between these in his confirmation hearings. there was one category that is a negotiating trip here that is what we saw in the canada and mexico case. but they talked about tariffs as a revenue source, as redress for unfair trade practices, as a structural force to address the

trade deficit and protect certain industries in the u.s. at some level, any of these things could be bargained off based on some set of trade and non-trade concessions. but i do not think that is the goal. lisa: do you have a sense that trump's administration is trying to get tariffs in some of the more -- and some of the more strict of trade policies out of the way before going to tax cuts and some of the more progrowth policies? tobin: i do not think they are sequencing it that way intentionally, although it is working out that way. the sequencing we are seeing is largely based on what the president has the authority to do quickly versus what he needs congressional cooperation on, which inevitably moves slower. if you could have done an exec of order implement in tax cuts, the same way he has on immigration or tariffs, we would have seen that already. the reality is congress move slower than the exec at a branch, so we are seeing him move quickly in areas he has authority. jonathan: we would love to hear

your thoughts on europe and taxes. we keep hearing from the administration they are unhappy with how american products are taxed in the european union. we heard from kevin hassett friday when he spoke about the same thing, american products getting taxed more than we tax european products in the united states. how do you address an issue like that? tobin: i think the e.u. has been the most significant target for possible bilateral tariffs, other than china. we have seen those threats in the canada and mexico case as well, although i've always been inclined to look at those a little more as negotiating tactics, but the e.u. along with china are the major trading blocs, where there are significant serious grievances about bilateral trade practices and the way the trade relationship looks, and i could absolutely see higher tariffs on a variety of product categories, auto being obvious. annmarie: because that cap --

gap is so large. when it comes to taxes, do they need to get the corporate tax rate down for companies to be willing to produce more in the united states? tobin: getting the corporate rate down to 15%, specifically for domestic production, that is quite likely to happen. that is a relatively affordable policy to fit in the tax bill, much more so than some of the things he has been rooting -- reiterating support for recently. they will probably managed to get that done. i do not know if it is that critical for competitiveness, because the base will be fairly narrow, and the u.s. has other advantages as a target for investment. jonathan: appreciate your time. tobin marcus of wolfe research. if the focus is on the average weighted tariffs, e.m. is in trouble. if they focus product byproduct, it is all about european autos.

but when it comes to taxes, taxes are a lot more complex. do you tax their products more, do something with the corporate tax rate? it will be interesting to see how they will do this. annmarie: and definitely they are focused on it. kevin hassett told us friday, when it comes to value added when it came to europe, where multinational firms based in the u.s. pay just 57 billion dollars. this is something they want reciprocity on, but it is difficult to see how they get there. lisa: especially because this is not some thing that can necessarily be passed by executive order. it is so messy to decipher what the president has the authority to try to do and what the president does not have the authority to do. then you look at the lawsuits, and you hear jd vance say if a judge try to tell a general how to conduct a military operation, that would be illegal -- justices are not allowed to control executive's legitimate power.

jonathan: speaking of timing, the vice president in europe at the munich security conference, so this would be quite a time to drop these tariffs on the europeans. annmarie: he will be right there in the middle of the storm, dropping these tariffs, telling europeans what they have done wrong and potentially how they can have reciprocity, which is really the word for the trump administration. lisa: it will be noisy, and that is the issue for the market, what can actually get through. jonathan: i say this every single time. watch this space. next on the program, nela richardson of adp on the strength of the u.s. market. you are watching bloomberg tv. ♪ 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: live from new york city, welcome to the program. s&p futures doing ok. following a second week of losses. last week, start of the week focused on trade jitters, end of the week focused on inflation jitters. yields falling for a fourth consecutive week, that curve is starting to twist in different directions. 4.2831. lisa: what tariff discussions could dampen consumer confidence

and potentially corporate confidence. based on the university of michigan sentiment survey, this is the reason why i'm serious as we get this, we get a whole host of consumer facing, mcdonald's, dunkin' donuts, doordash, all of these give a sense of if the consumers are pulling back and if they are concerned. jonathan: for the broader economy financials have been absolutely fine. if you were worried about the economy you wouldn't expect the banks to trade the way they have been trading the last month. lisa: we heard earlier this year in davos, all the deals will get done, all the deals have been put on pause because of the uncertainty. that is something else we need to see. the idea that more volume and volatility could be there. jonathan: trying to make it really simple.

we were focused on the good stuff, the tax cuts and less focused on the trade. came into 2025 and we have been more focused on trade and in deregulation. we are only just completing week three of this second term of the president of the united states. trump has promised tax cuts. households will see a squeeze with tariffs in price impacts. lisa: how much time do they have? we have to keep going back to this. the sentiment could move quickly. at a certain point the president has to wrangle together both houses of congress. it's what could he do alone versus the consensus. jonathan: dollar-yen, 1.5213, that has not been the trend in

past month. the longest run down back to august last year. staring down the barrel of tariffs later this week. on our radar this morning, president trump plans to impose 25% tariffs on steel and aluminum imports without providing a timeline. he will announce reciprocal tariffs on countries that tax u.s. imports. annmarie: the genie is out of the bottle, the question is there is a lot of questions surrounding this. candidate, uae, mexico are some of the biggest suppliers of aluminum. he has a pause on these tariffs. are they going to be involved? what comes to reciprocal tariffs it looks like the european union, will there be a grace period or will he be a blanket

tariff? the president remains steadfast. this is one pillar he wants to deliver on. lisa: you just explain the back story to what one commenter called the most passive-aggressive super bowl. you're allied to the north, and -- ontario, we are stronger together, it shows you where we are. jonathan: i thought everyone likes canada? the country to the north of this country everyone seems to like already. lisa: there's this one political cartoon where you had your entire army from the u.s. heading towards canada saying surrender and then there was someone in a tower saying to his mate should we offer him biscuits? the question as to why canada seems to be in the targets. annmarie: in the pre-super bowl interview he was asked if he was serious if you is making canada

the 51st state. he said i'm dead serious it would be a lot cheaper for us. doug ford tweeted this is the next four years, shifting goalposts and putting the economy at risk. canada is confused about what might be coming down the pipe this week. jonathan: did you know the canadians have an ingles action? -- english accent? i didn't. not going to ask you to do that again. [laughter] the latest suggesting an investment in u.s. steel instead of a buyout without offering details of what a deal would look like. annmarie: how would this be structured is the question a lot of people were asking. trump said i don't want u.s. steel being owned by a foreign country. if this becomes an investment

does it go under review again? he doesn't want it owned because this -- what this could mean for pennsylvania steelworkers. they need a capital injection. jonathan: this is not going to be one of those examples. we will turn to this story. i want to hear the president's words himself. president trump suggesting elon musk's job's team have found the irregularities that may lead the u.s. to disregard some payments. president trump: you have been reading about that with treasuries. that could be an interesting problem. a lot of those things don't count. some of that stuff we have been finding is very fraudulent. jonathan: lisa is thinking about that, translate, please. lisa: you were talking about

isaac coming up later in the show. it's important to take a president seriously. we viewed these comments referencing specific payments rather than outstanding treasury securities. the market is treating it as the same. it is notable the president said treasuries and the market is not taking it literally. this market is getting very accustomed to ignoring certain aspects of them. annmarie: his words were there could be a problem, we have been reading about it with treasuries, pause. the market reading this as the payment process does has been looking into. financial twitter was on fire saying is he putting into question the full faith in credit of the united states. jonathan: based on the price action this morning there is no problem with treasuries. investors looking ahead to inflation.

noting the positivity in the u.s. jobs market saying the strength of these numbers matched sector level weakness. until we get to friday, a.m., how concerned should the federal reserve be about that expected inflation rate? >> in a word, very. to see a percentage point increase in expectations for the year ahead is concerning. it shows how quickly consumers could change their view of inflation. expectations are a key input we don't talk about. i would be very concerned about keeping it anchored not at the 4.3 percent, which is what the michigan survey said but at the 2% target. that is around where consumers

anchor inflation before the pandemic. now to see it rise higher after a well-deserved battle to reduce inflation is a concern. lisa: i have a number of notes saying please disregard, this is a political instrument that measures how much democrats are displeased with the trump presidency and republicans seem to be just fine. there was a slight deterioration among republicans who were polled. did they get valid to discount the university of michigan because of the small sample size in the political leanings it represents? nela: it is valid to look at another source. we will get expectations data from the new york fed. i don't throw away any data points at this point. they are all well worth considering but not in isolation. if you have the new york fed

corroborating the english survey, then there is some tea in that too. lisa: especially with the revisions that we saw that were lower than people expected in terms of removing jobs from last year's tally, do you see something happening specifically in real-time that is making you more concerned about the health of the labor market? nela: absolutely. it is a lopsided hiring market. there is a lot of strength. the three-month averages for the adp numbers. you are seeing private sector hiring average around 200,000, it is all focused on consumer facing industries. whether you are looking at leisure and hospitality or longer-term health care needs and health care industries.

you're not seeing gains in manufacturing, construction. that is a concern if you are looking at possibly more tariffs in the future. annmarie: a cause for concern of the trump administration, he said the benchmark from last year, it was the biggest downward revision since 2009. is he inheriting a worse labor market than many were predicting? nela: january is a special month. not to bore your listeners with the details of that, it causes revisions. it did revised down that hiring rate from last year. not as much as they told us that it would. it is a softer labor market than the first print.

it is still very solid, especially in the fourth quarter. you saw the unemployment rate edged down last month. there are pockets of weakness that could overwhelm the pockets of strength if it proves to be less resilient than it was last year. annmarie: when it comes to bls, everyone is concerned that these numbers are not accurate. what else do you look at? how else do you get a better picture? nela: jobs are important, jobs creation is important. one data point, one month, you have to look at the trend on the bls and adp numbers as the sector is weak. that is a consistent trend. you don't have to be a true believer in government data to believe that trend.

also, i look at wages. you saw an increase on hourly earnings in january, we still see that stickiness in the adp number looking at real paychecks, administrative data. if wages are sticky, maybe that is good for the consumer but only if inflation continues to go down and wages are one of the firm's highest input prices. you are looking at tariffs and higher labor costs, that puts small firms behind going into this labor market. jonathan: if there is some congressman listening this morning, what would your advice be, what date -- what should they ask later this week? nela: i think they should ask how powell is thinking about the labor market in terms of verticals, not just overall, not just the solid hiring that he's

seeing. how different parts of the economy are working. how is manufacturing producers versus small firms in large firms? we need to get into the nitty-gritty. that's where policy action will take place. the headlines look good, it is underneath the surface where the questions are. jonathan: what happens on capitol hill? nothing. i the time we get to date two i'm exhausted and don't want to watch anymore. lisa: have you watched the whole thing? jonathan: house and senate? yes. lisa: i'm impressed. one thing i want to know is how much are they modeling immigration into their forecast? how much of the parameters is depending on how much immigration is limited or deportations. people talk about that being the bigger economic impact than even tariffs. jonathan: big week ahead,

economic data wednesday morning, chairman powell tuesday and wednesday, ppi and retail sales later this week. dani: on his way to the super bowl yesterday president trump named sunday, february 9, the first gulf of america day. data from china's marital affairs so -- shows marriages hit a record low. the decline is a setback in the government's efforts to address a sharp drop in birth rate. starbucks is giving away free coffee today. the company said with the big game on sunday, americans will spend the day going big, which may lead to a long monday. your post game coffee is on us,

us being starbucks, not bloomberg. customers could stop in for a free tall hot or ice brewed coffee. jonathan: up next on the program, big expectations to banking. >> two things we need to watch, financials and credit. it's so consistent for the last 18 months. credit conditions have been remarkably be nine. jonathan: we will get the thoughts from erika najarian next. you are watching bloomberg tv. ♪

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4%. the 10 year, let's call this one or .50. under surveillance this morning, banking. >> i think we are ok at the moment. i want to be vigilant here on the growth side particularly with bonds. you need to watch financials and credit. it is so consistent financials have been your leadership. something is changing. that is ground zero. jonathan: here is the latest this morning, financials leading the s&p 500 anticipating looser regulation out of washington. the macro and policy crosscurrents from the current administration has emerged. the deregulatory momentum in washington has been stronger than expected. i know you are down in florida for the financial services conference, share a little bit about that with us. what you will be focused on through the week after this big

run-up we have seen. erika: great anticipation. i think what a lot of investors want to hear about from the institutional side lending growth or engaging activity. telling you that january activity has been the slowest has been -- it has been for a decade. are we delayed because of these policy crosscurrents? or is this something -- saying something more about maybe activity levels won't be so high in 2025. the consumer had a really strong fourth quarter. whether or not that has lasted this year, keep in mind

-- lisa: can the financial sector do well even if you don't get necessarily this incredible activity that a lot of people were thinking about? erika: no. we are sort of at the neutral rate, bench firms and interest rates. we are not going to see these big rates of changes in interest rates. if we are, it is not doing too well. if the fed is cutting significantly something is wrong with the economy. if the 10 year backs up because of inflation, everybody will be worried about what that means for bond losses and the economy. given this steady state that we have in interest rates and how that is not going to be a driver for change, you really need those activity levels in fees in

order for stocks to continue to work. the deregulatory momentum may be enough to support this from the tail end perspective so we wait for that activity level to rejuvenate itself. lisa: you talk about how deregulation has been more aggressive, over the weekend it was clear the protection bureau had closed its supervisory efforts or at least put them on pause and close the headquarters . is that a positive tailwind for the financial sector? because of the mercurial backdrop? erika: i think it's going to be a positive. keep in mind we still have that work that occurs with late fees being capped. if they are capped at eight dollars versus 30 or $35 right

now, the card issuers will find ways in terms of mitigating that , whether or not it is less for the consumer or higher apr and interest rate. i think what happened over the weekend should be taken as a net positive. annmarie: when it comes to the start of m&a, you're talking about crosscurrents of policy, some uncertainty in washington, that might last the next four years. what do you expect the pickup to be for activity? erika: are we at a steady state in terms of the volatility? especially on the tariff issue. i don't know. that is actually why we are curious to hear at the conference. we want to hear what their clients are telling them. what do they need to see from a policy perspective when they get

together? this conference is coming at the right time. jonathan: good luck with the conference. looking forward to seeing headlines from you. the head of ubs. conference kicking off a little this morning. thanks on the s&p 500 up by around 12%. we are 15% on jp morgan, little bit more on citibank. sentiment holding up. we are waiting and waiting for activity to follow in the months to come. lisa: a lot of people expect until we get some certainty. already, at the same time if they don't come and erika was just talking about this you can't see the follow-through. that really justifies current valuations. annmarie: how do you expect certainty from an administration that wants to use uncertainty?

it wants to keep allies and adversaries on their toes when it comes to things like trade and tariffs. trump has an idea of where they want things to go. he's not sharing that with everyone. jonathan: i think we could all sit here and agree the regulatory burden is not going to get bigger when it comes to the financials. we could all sit here and say m&a domestically should be easier, not harder. a whole bunch of reasons as to why people are buying these banks right now. lisa: there's no reason right now to believe these deals will not go through. if the uncertainty persists, people might have to think that. if you close the doors of the financial protection bureau it is more of a deregulation as previously expected. jonathan: people would say less warren is a good thing for the price of financial stocks. equity futures right now positive by 0.5%.

we catch up with victoria from cross mark, francisco of bank of america. so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management.

>> overall the economy seems to be indifferent. >> the tailwind continues to be strong. >> the labor market is ok and the fed doesn't need to do anything. >> we are doing ok but there is the concerns as we head into 2025, do we stay where we are or is there further softening to go? >> if we have policy uncertainty, that is negative for growth. >> this is "bloomberg

surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: doing ok, of 0.5 percent on the s&p 500. nasdaq positive once again by 0.7. meda is on a 15 day winning streak. potentially looking at 16. that is a record run for that stock. lisa: what it highlights is how much bifurcation there has become in the tech sector when you have the winners like meta, who could say the right things like ai and the losers like google who are not able to ask lane away their capital venture -- explain away their capital venture. jonathan: take a look at the calendar, chairman powell, two days on capitol hill, senate tuesday, house wednesday. we work our way through the

week, bpi, jobless claims, friday, retail sales. we will file -- will we find out these higher prices are hurting consumers? lisa: that will be one of the biggest questions. it alone doesn't really turn the tables. you see a higher bar for cpi to clear. u.s. sales were the weak spot, they beat global, u.s. sales week, at the same time they are trying to make it seem cheap with the five dollar promotion. do you see a different story from different consumer brackets? jonathan: the premarket up 0.6%, tariffs are the focus through the week. 25% on steel and aluminum. reciprocal tariffs, something you hear repeatedly from members of this administration. annmarie: it's a huge week when it comes to trade for this administration. trump putting 25% on aluminum

and steel. when it would take into effect, we don't know. then reciprocal tariffs, really, all direction is pointing towards europe. we heard that from stephen miller on fox news and ed mcmullen said that to you guys in davos. you have to look at the gaps between the united states and europe. trump says it's an atrocity. sounds like those tariffs will be introduced this week. lisa: i don't understand why the tariffs are being used, is it just a negotiation tool or to raise money to plug holes in the deficit? structurally the u.s. and this administration wants to isolate manufacturing so they could bring jobs home? which is it? annmarie: it depends on the target. if it's mexico, canada, trump wanted to come out and use a negotiating tool to get something when it comes to fentanyl. when it comes to places like

europe, you will continuously hear reciprocity and they are unfair to american companies when it comes to the auto industry. jonathan: precisely. when we talk about reciprocity, it isn't the average weighted tariff, when it comes to the european union it is probably byproduct. it has to be about autos. there is a consistent complaint from this president on autos. europeans charging a 10% tariffs, the americans charge 2.5%. that is something that jumps off the page. the extra wrinkle is this tech story and just this week alone if they can, i'm interested to see if they could do that. annmarie: you're saying u.s. companies are spending billions more in europe than those companies with multinational spending and the united dates. how they address it remains unclear. jonathan: equity markets doing

ok, positive by 0.4%. this hour we catch up with victoria fernandez and i just another round of tariffs. trump pledges 25% levies on steel and aluminum imports. we will speak to robert fishman as we await the latest super bowl ratings. markets digesting another round of trump tariffs. victoria fernandez saying we should experience trumpiness. shouldn't be surprised to have a 5%-10% pullback. be ready to step in on weakness. what would drive that weakness to begin with? victoria: i think obviously you guys have been talking about the uncertainty we have going on in a country right now. obviously tariffs is one of the leading issues. there's a lot of elements coming out of washington that were continuing to put that uncertainty at play. the question is what side of the economic balance sheet does this

put us on? there is such conflicting stories whether you look at the labor market, numbers, consumer spending and savings going down. there are so many different stories out there. it tells us the fed is probably going to stay on hold because they don't have a clear picture of where that is going. businesses will stay on hold until they get a clear picture of what is going on. with all of those elements together, it gives us a money picture. we could see investors step back a little bit. that may give you an opportunistic time to come into the market and step into that weakness. jonathan: let's take last week's data, everyone is focused on friday. it wasn't too bad, would you put more weight on that? victoria: i'm not sure i would weigh one more than the other.

it gives you conflicting elements. you look at ism as a whole, manufacturing finally went above 50 for the first time in 26 months we saw the positive. you did see the prices a little bit higher on the surfaces. at the same time on friday you see inflation expectations go up on the one-year element and you see consumer confidence come down. it is this balance we are trying to put together which tells us there is not a clear path going forward. we haven't seen a catalyst that is going to change the leadership. you guys have been talking about the financials and how they have been leadership in this market. nothing out there changing that or causing spreads to go wider. it looks like all of this data coming out, people are taking a step back and not making big decisions or at least the market is not at this time to make a change in leadership. lisa: the amazing thing is the

market has been fairly steady but under the hood has been incredible volatility. how much dispersion there has been. kevin gordon writes how meta is up 20% year to date. google, alphabet is down 2% year to date. do just chalk that up to corporate stories that may are justified? victoria: we are seeing this bifurcation in utilities. you are seeing it in discretionary, textbased, there are multiple sectors that see this happening. financials is probably the only one that has 90% of the constituents above their 20 day moving average. everywhere else including industrials, there are opportunities there.

who has the strongest balance sheet. we look at debt to cash ratios. these are the things you say about looking at the hood that investors need to do right now. it is opportunistic from a stock picker standpoint to find those opportunities that are therefore you. lots of bifurcation across the board in the market that you could use to your advantage. lisa: every know i have read has talked about 2025 and how you could expect it to continue which is why you see gold at a record high. victoria: with all the volatility you are talking about, it does make it a little tricky with yield. look at what we have seen. the fed cut 100 basis points. now they have come back down

some. the key in determining where you want to work in the fixed income market, looking at spreads obviously. why are yields coming down? are they coming down because there is this support for a cyclical economy and things are looking good? or are they coming down because there is this growth concern out there? the premium has been driving yields up and down. there is a growth problem. you want to put some safe haven elements in your portfolio. short-term treasuries could be one of those, really strong credit could be another. i would stay away from lower quality. maybe it is gold that is there. the liquidity issues we will see in this market tell us gold could continue to be a strong component of your overall portfolio. annmarie: last night he said there could be a problem with

treasuries, does that concern you at all? victoria: i'm not concerned right now. you talked about how this administration likes to use uncertainty to its advantage. you are 100% correct. you have these statements come out and you are very concerned and then they get walked back a little bit. i feel pretty confident that he will be able to take things in stride. i'm not making changes to my portfolio based on these comments. i would be listening to bessent and see what he has to say. jonathan: appreciate your time on this equity market. the leadership, sector wise, the financials, the banks and s&p 500. the deregulatory effort most people are expecting. the prospect of m&a picking up.

we are looking for deals, i think we have a deal. lisa: we have hyatt in agreement to buy playa hotels at $13.50 per share. maybe it is just the beginning. the fact that there could be a hotel deal at a time where there is concern about property valuations shows that maybe things have thawed a little bit. jonathan: they expect to fund 100% of the deal with new debt financing. lisa: this market is wide open and people have been expecting this and raised a lot of money to buy public debt. you talk about uncertainty. it isn't being expressed yet. certainly in the credit markets which traditionally have been a harbinger of what is to come. jonathan: equities more broadly doing ok as well. not much concern there.

up by 0.4% on the s&p to kick off the trading week. here is dani burger. dani: president trump suggested that the government efficiency team found irregularities at the treasury department. it's unclear if this stems from government debt or payment process. the so-called department of government efficiency has been seeking access to treasury payments data. mcdonald's shares rising 1% in the early trade. stronger fourth-quarter sales. despite reporting shrinking order sizes. declining sales in the u.s. were balanced by strong results in japan and the middle east. sales in those regions rose 4%. nike returned to the super bowl for the first time in three decades. they ran a 60 second commercial including caitlin

clark and jordan childs. they last ran a super bowl ad in 1998 featuring david robinson and other athletes playing in the nude. jonathan: more in about 30 minutes. the official commercial review starts right now. what do you have? lisa: i liked the nike one. i think the ontario one was right up there. i'm going to be really honest. a lot of the ads fell kind of flat. jonathan: will you do a comment on this later? up next on the program, doubling down on tariffs. president trump: we have $36 trillion, organizations take advantage of us. 200 billion with canada, we have a deficit with mexico, $350 billion. jonathan: isaac boltansky from

btig joins us next, good morning. ♪

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save up to $1,000 and get a sandal-lit dinner for two. jonathan: the bond market unchanged here, 10 year yield, 4.4947. under surveillance this morning, doubling down on tariffs. president trump: we are not that rich right now. all of these nations take advantage of us. same thing, 200 billion with canada, we have a deficit with mexico of $350 billion. i'm not going to let that happen. jonathan: president trump promising reciprocal tariffs against everyone this week along with 25% on steel and aluminum imports. isaac boltanksy saying it could

be part of the broader reconciliation effort. we continue to view it as a bridge too far given the economic implications. lots to impact including -- unpack. what are your thoughts first of all on reciprocal tariffs? when the president talks about reciprocal tariffs, what is he getting? isaac: we are all looking for frameworks. on the tariff front i think about it as on one extreme you have the escalate to de-escalate framework. you have the full speed ahead on the other side. on that part of the spectrum it is generally focused moron areas where he thinks there is a structural imbalance that needs to be addressed. whether it is the steel and aluminum tariffs or it is the targeted reciprocal tariffs,

those are areas where we should expect meaningful, sustained action. the president thinks there is an imbalance. if i'm canada and mexico with those 25% tariffs, those skew much more so towards the escalate to deescalate. annmarie: is it fair to assume if you have a trade surplus with the united states potentially you are protected? isaac: for now. it is part of the shifting sands of trump 2.0. for now, absolutely. the caveat we have, what other issues come into play? we now understand that where the presidency has a structural imbalance, the trade deficit has a measure there. there will be areas of acute action as well based on other political dynamics. lisa: we've been waiting all morning for this, we want to understand your interpretation of the trump whisper that there

could be a problem with treasuries. a lot of those things do not count. maybe we have less debt than we thought. why is this not concerning to you? isaac: everything is concerning to me. we could all be honest at this point. i was following annmarie's twitter. we have to take trump seriously if not always literally. i think his reference there was about specific budget line items leading to spending that the doge team has overturned with u.s.aid. that is what my channel checks have suggested. that is what we should take it for at the moment. we will hopefully get a little bit more clarification from the trump administration over the next day or so. they were all looking to

treasury secretary bessent just to make sure. lisa: there's a fundamental question about how much ripping up the script and destroying some of the status quo to have more efficiency. whether that inroads some of the framework that gets people confidence in the u.s. structure, is there anything that makes you get the sense that maybe something could undermine people's confidence? we are not seeing it in the market in any way, shape, form? isaac: all of us were concerned when we saw the comments. speaking with clients right afterwards there was a focus on the fact that a firm belief that he would never question the validity of debt. they were heartened by the 14th amendment. i think investors are looking for reasons to be somewhat sanguine. it has been incredibly volatile

few days. since the president has taken over. annmarie: if this was the first month of trump 1.0, with the market have responded differently to these treasuries and irregularities? isaac: if we haven't seen all the action we have seen from doge where everything is being questioned, we would absolutely be terrified by those comments. if it happened during market hours we would've had a more dramatic response. thankfully it happened on air force one over the gulf of america and everyone had some time to digest. i think that is a positive. i hope for more clarity from the treasury department just as a reaffirmation of what we all know. annmarie: this week is really going to be about tariffs, what is your base case besides the 25% on aluminum and steel? what will we see in terms of

reciprocal tariffs? isaac: i don't think it will be one big announcement. i think there will be a steady flow of news throughout the week. i have heard a fair amount about exemptions being part of this. that is something we need to start laying into our cal -- count. also within the broader canada and mexico conversation, when you hear about something at the homebuilders have been pushing for, one example of the myriad of fronts of exclusion battles we are having in town. i think it's going to be a fierce focus on steel and other metals. we go back to the facts here that the president is going to go after grievances aggressively . steel is one he has had a grievance with for decades. he has a personal grievance with europe and autos. when we do our risk framework that should guide us to putting

those items high on the list. lisa: when it comes to angela merkel and her book she would say trump always complained there is not enough american cars in europe, especially germany. you look in new york and there are mercedes everywhere. what could we expect based on what we saw in trump 1.0? isaac: i think the building industry has the president's ear so far. lumber and homebuilders is what i'm focused on. just for mexico and canada in general my sense is there are numerous off ramps to let some pressure out of those conversations, especially since the focus is on usmca renegotiations taking place in the background. i think ultimately that the president wants a grand bargain with china. i think on that front we will see a steady escalation. they will expand their playbook. use other parts of their tariffs

to go after different sectoral tariffs to slowly turn up the pressure on china with the hopes of a grand bargain. jonathan: appreciate your thoughts as always. we have said it a few times, they are moving really quickly. we go into week four, they have a lot already. lisa: we have heard about sleeping pods at the doge office and sleepless nights as they go through one by one targeting each of these facets. what will stick, a big question, what comes next? a big question. the list of grievances, it sounds like something in my household. annmarie: he hates trade deficits. a lot of meetings start with a topline sentence, you have the trade deficit in front of you between america and that specific country. this is what is driving him. this is off the bad news that the market did not want.

tariffs, how long will it take for congress to get their act together and get tcga together and the other cuts the president promised on the campaign trail? lisa: that's a great idea. extra trash taking out. jonathan: you repay that deficit in time as a child. lisa: i love this airing of grievances. annmarie: reciprocity in the household. jonathan: i have always been in a deficit with my mom. i couldn't issue enough debt to close that deficit. francisco blanch of egg america securities as president trump promises tariffs.

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jonathan: i am surprised it took this long to receive this message. using the american way of seeing aluminum to get rebooted. lisa: are we really doing this? i will have a foreign accent and say aluminum for you. let's park that one. i will do aluminum. jonathan: equity futures shaping up as follows. on the nasdaq, we are up by 0.7.

mike wilson of morgan stanley publishing long financials, the best performing sector on the s&p this year. we stay longer amid rebounding capital markets activity. strong earnings revisions. lisa: we get a deal this morning which we were talking about earlier, which tells you how open the capital markets really are and speaks to the idea that you are getting deregulation in greater >> bulk than people expected. how much more of this are we going to see? two hours until the opening bell. >> it is rough, so the personification of this 25% tariffs -- on the first day they were announced, they were up by 7.6%. and 8007 hundred jobs created in 2018. have a look at meta on track

for day 16 of the rally. new wearables coming from meta. we will have a look at t-mobile. that is the offer that the big super bowl ad ran yesterday. >> we are going to switch to t-mobile, $15 attached to starlink. annmarie: you can be on any carrier and try out the starlink t-mobile situation. lisa: did you trip -- jonathan: did you try and sign up? annmarie: absolutely not. jonathan: president donald trump plans through -- to unveil reciprocal tariffs on everyone without specifying which measures he plans to take as he is set to impose 25% tariffs on all steel and aluminum imports. annmarie: the announcement will

come today. hopefully we get more details of when this will go through and there ain't going to be any carveouts. tuesday or wednesday, he will announce reciprocal tariffs. we are talking reciprocity. the ministration has made it clear three number of individuals out there, most notably stephen miller, that it is going to be europe next and he is going to be focused on the auto industry. >> i am still thinking about the airing of grievances. if you want to understand with the tariff pathway is going to look like, you have to understand what gets his goat. when you talk about trade deficits, it goes to interesting places in the world, not just canada and mexico and europe but southeast asia, which has taken on a lot of trade from china. it has become something that has crated a lot of angst in a lot of places. >> auto has come up

continuously. i would be surprised if it was spared from this one. lisa: you want a ram truck in versailles. that is the goal here. why do not see fords in gm's on the streets in europe when you see -- >> you do not >> see many in the u.s.. but you do see mercedes and bmw. you do see range rover's. trump has a problem with europe because 10% is what it costs to do the imports from american cars going into europe. 2.5% is the tariff for european cars coming to the united states. when they say reciprocity, this is what they are talking about. >> do you remember the chicken tax from the 1960's? it annoyed the americans at the time so they put a 25% tariff on trucks, which is why the auto situation is more complex,

because there is also a big tariff on trucks. >> do they want chickens? is that what we need to do? jonathan: the point of the chicken tax is once the tariffs go on, for whatever reason they went on, they can stay around for a long time and no one gets around taking them back off. annmarie: biden kept tariffs on when it comes to china and we should note today is when reciprocal tariffs china put on, $14 million of u.s. goods, come into play today. on the china tariffs, that is getting a pause now while they work on how they are going to enforce that at the border. jonathan: stay tuned for the latest on shein. the new york post reported trump said they discussed the war in ukraine. u.s. allies expect the administration to unveil a plan to end the war at the munich security conference, which

starts friday. lisa: the president's national security adviser refused to elaborate and says certainly there are a lot of sensitive conversations going on. then i take you to an individual i used to deal with as well who, if a call happened, he was certainly no. many communications happen through various channels. i may not know something that may not be aware of something. this is why i can either confirm or deny in this case. it sounds like he is unaware of this call. what is the objective? is it to believe that trump is on top of negotiating all these things quickly to get some sort of resolution with ukraine and russia? this is why the market takes a lot of his commentary in stride. it is unclear what the goal was whether it happened. it is hard to verify, so the market moves on and continues as those nothing happened.

jonathan: i mentioned shein. shein is asking some of its top chinese suppliers to set up new production lines. sources tell bloomberg efforts have been in the works for several months but the fast fashion company is looking to avoid trump's tariffs on china. this is what you were getting at a few months ago. >> to me, this is the big story. how much are you going to see not trade cut off but a huge shift toward vietnam, malaysia? the trade deficit with the u.s. in those regions has skyrocketed and a lot of it has come from china with people trying to avoid tariffs. people in malaysia are concerned . when is the focus going to turn on them? the trade deficit is getting bigger and at a certain point they will not be able to avoid the president's scrutiny. jonathan: nobody is spared on

this front. it is only week four. let's stick with tariffs, president trump saying he will impose tariffs on steel and aluminum. the rationale for use of tears has responded from unfair subsidy or advantage to pursuit of political objectives. the trade war is now the continuation of politics by other means. francisco joins us for more. that is quite a statement and a lot of people might agree. the situation feels fluid. what does it mean for some parts of the commodity market versus others? >> thanks for having me again. it is confusing. we have seen a big impact on prices. we saw it last week. canadian crude oil versus u.s. crude oil. we are seeing it today with prices of regional aluminum and

steel premium and in the u.s. but also we are seeing effects on markets because you do not know exactly when they are going to get applied. people across the commodity industry are getting that spike, hoping maybe they can squeeze product in before it hits. it is impacting regional differentials and of course some of these measures are being announced in the morning and taken back in the evening, so we are concerned there might end up being economic -- negative economic effect because of the uncertainty. this is really a negotiation tactic but also tariffs get put on and just stick around for a while. >> which means what could happen

to trade flows? are you seeing trade flows start to shift? >> in the last in 2018 and 2019 we ended up seeing damage to global pmi's and ultimately we ended up with covid in 2020 so everything became very distorted but we have a pretty strong cyclical backlog when all this started, so we are concerned about the negative effects. at the end of the day, a tariff is a tax split between the importer and the clients of the importer. maybe something gets washed out of the effects, but if you're a u.s. industrial buying aluminum you are going to have to find a

way to pass that through and likely it will impact your margins. america buys raw materials but also produces advanced many fracturing and now the question is how deep the supply chain goes. you have aluminum and also aluminum product and last week saw local voices against tariffs come from the u.s. refining industry and say we have this cheap natural gas from canada and we turn it into amazing products like diesel and that is one of the reasons the u.s. is so competitive. so you never know where things are going to come from and it is one of the challenges we are seeing. >> i am glad you brought up 2018 because that is when the u.s. hit's exports with duties under trump first administration and we had this retaliation from europe on things like

harley-davidson motorcycles. what kind retaliation can we expect this time? >> one of the challenges europe has is they have a trade surplus with the u.s. but there is also a large deficit in areas, so tech is potentially involved but i think the european industry -- you're looking at high domestic energy prices as a result of the russia-ukraine warm, cutting off supplies of pipeline gas into europe. you are seeing week demand in china, which has a domestic demand problem, so i am not sure europe is in a great position from an industrial standpoint to cope with rising tides from the

u.s.. growth is scratching 1%. germany has been pretty much in recession for three years running. so it is a tough combination. i think europe is in a tough spot. if the russia-ukraine war ends, things leaves. >> what is your highest conviction amid a model of uncertainty at a time where one of these tariffs could be inflationary or deflationary if it suppresses growth? >> for us, one clear winning area has been the precious metals complex so we have been bullish on gold and silver. today we scratched 2900. so we see that as a leading area in the commodity space with continued diversification.

oil -- difficult to call here between tariffs but also sanctions on russian energy on the way out and there is the discussion around iran, so to us the cyclical commodity complex is around 50 so clear trends are in precious metals and perhaps >> the grains >> market is also complicated here with the forecast shifting quickly and adding to upset pressures. i think we used to be long the whole complex at the same time. in energy, are you starting to notice reasons to be bullish in some parts and bearish others? >> we do. we have been more bearish on

crude oil this year. it has not played out that way. sanctions on russia were unexpected. they created tightness in the market that brought in a surplus we were projecting, so now we think oil is going to be averaging 71 and 72, so we see or range of the market, but the energy complex is vulnerable to cyclical conditions and opec restarting production in april, so we will see. at the same time, you have other factors like potentially iran. so energy is more complex. people are not truly worried but that keeps the market range and that 70, $80 range environment,

so that is the backdrop in energy. we see strong demand for power elsewhere and we have a tight market for power, so it is electrons versus molecules here. jonathan: thank you. crude at the moment, mid 70's up on the session by 1.3%. similar move to start the week, in and around 72. let's keep an eye on stories elsewhere with your bloomberg brief. >> israel has pulled troops out of the gaza strip after the return of israeli hostages. envoys have set off for a new round of talks. the idf said yesterday that israeli security forces expanded a counterterrorism operation in the west bank. elon musk says he is not interested in buying tiktok's

u.s. business and has not put in a bid. he made the comments at a conference in germany but it was first reported saturday. he says he usually builds companies from scratch and does not use tiktok personally. the president made history as the first sitting president to attend a super bowl. the crowd cheered for trump when he was shown on screen during the national anthem. in an interview before the game, he picked the kansas city chiefs to win the game, who went on to lose. he reportedly left the game early. that is your brief. jonathan: what a spectacle. i know audience numbers are bigger for the world cup final outside the united states, but when america puts on a spectacle it puts on quite a spectacle. lisa: you slipped that in nicely where you try to undercut it. we are good at putting on a show. >> trump is also totally

embracing european football. he had the world cup on the back of the resolute desk. jonathan: next, the biggest night in tv. >> how can we tell stories around where sports meets culture? we want to broaden and expand the reach of america's biggest sporting event and a cultural moment to many more people. jonathan: that conversation up next. from new york city, this is bloomberg. ♪

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

jonathan: the trading week starts positive by close to 0.5% on the s&p 500. bond yields going nowhere, your

10 year, let's call it 450. >> we are most interested in how we can tell stories around where sports meets culture, the super bowl being a great example sports and culture. we want to expand the reach of america's biggest sporting event. we have nearly 100 million monthly active users and the majority are not subscribing to cable. the reality is tv has incredible momentum and we continue to invest and do more around the types of content that we put out there. jonathan: viewership figures for the super bowl expected to set new records with data coming in later today. streaming service tubi seeking to set a record. welcome to the program.

how profitable is an event like this for the likes of fox? >> great question. when you think about the prophet, you have to think about how the profit actually gets allocated and how revenue gets allocated. from a pure advertising basis and the viewership you are talking about, these networks do not typically make a lot of profit just on advertising, but when you think about allocation and affiliate dollars they get, these events become very profitable over the length of the contract, but what you are seeing here is the first years of the contract you are going to get less profits initially so it starts to ramp up over the length of the long-term deals that they have here. lisa: how important is it to traditional tv networks to maintain exclusivity at a time when this is one of the biggest if not the biggest, event-based

viewing opportunity at a time when they are losing market share? >> it is by far the biggest event of the year for u.s. television and a worldwide basis. in terms of the u.s., there is nothing that comes close to the super bowl and the reason these broadcast networks and traditional tv companies ensure they have the super bowl is for that reason, to bring audiences together for that one special night, so it is critical that they maintain a slew 70 of these big events and of the super bowl, but, as we wrote last week, this year for the nfl has been a year of disruption. you did have netflix come in and air their first two games on christmas. you had amazon have their first playoff game and even espn plus have an exclusive game, so a lot

of disruption is happening in the traditional media ecosystem. >> and foxwood be a huge winner with ad prices, yet you downgraded fox a few weeks ago. >> we have been a long supporter of fox and it reached our valuation point where we thought the risk-reward was not as substantial on the upside. we still strongly believe in the fundamentals of their business and they have proven they can be a different media company because of the assets they have focused on sports and news, but at the same time we had to take a breather given where the valuation is very much support their management team and company and assets they have, especially tubi. jonathan: we are all on the lookout for consolidation and it could be happening in your space over the next few years. what are you looking out for?

>> that was part of our call. we upgraded warner bros. discovery because of the momentum in terms of consolidation within the industry. as we all know, comcast is looking to spin out there cable networks. warner bros. is looking to restructure and there is pressure on all these companies given the ecosystem around them with advertising declines outside of sports and football to really do something to fix these businesses because they are still under pressure and what they are going to be pushed toward his consolidation. >> a lot of properties looking for a home in the year ahead. lisa: with a complete lack of clarity on what the media landscape is going to be. >> coming up, ups and pimco.

bloomberg surveillance up next. ♪

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>> we continue to think the u.s. will outperform britain >> there is more to be had and gained

from the rest of the market. >> investors have been expressing some skepticism. >> volatility is back in that you have to not react to everything. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: equities doing ok up by 0.5% on the s&p. on the nasdaq up close to 0.7. cpi 8:30 eastern time. chairman powell in front of the senate on tuesday and the house on wednesday per jobless claims thursday. on friday, u.s. retail sales. lisa: do we get confirmation that inflation is sticky or things are gearing upwards at a time when people are expecting inflation to increase. we get to test some of this concern. $50 billion of three-year notes.

25 billion dollars of 30 year notes. jonathan: sec. passage doing a good job i think of doing -- of how he talks of the treasury market. i would say he is doing a questionable job of doing the exact same thing over the weekend. lisa: it's why i find it interesting to see how some of these auctions go. there could be a problem parade we been reading this problem with treasuries, there could be an interesting problem because it could be a lot of those things. therefore mid we have less debt that we thought of. they just look at this president is saying something off the cuff having to do with line items. where is the treasury department to say we believe in the full faith and credit. annmarie: it's not immediately clear what he is talking about. the market is taking this as he is talking about payments processed through the treasury department. what the president said if you listen to his words exactly was

there was a problem with treasuries which is why finance twitter just before you can imagine all the same kind of guys were sitting down ready to watch the super bowl having a little bit of a heart flutter because they are saying is the president actually questioning the full faith and credit of the u.s.? jonathan: we have to draw a distinction between things the financial media care about and the financial markets care about. financial media has a big conversation about tariffs and what he meant by treasuries. equities are up. the bond market is doing nothing. 10-year is about unchanged. nothing to see here lisa based on the price action. >> the only caveat is gold. all these things yes there is still solid earnings we saw mcdonald's beat on the international basis. earnings came in fairly strong we've seen meta-communicate well with their ai strategy. a real question about whether it is getting more under the

surface. right now nobody is paying attention to this as far as tariffs are concerned a lot of people feel this negotiating tactic and getting off of his chest before the progrowth policies. jonathan: coming up this morning in the next hour or so we catch up with liz ann sonders of charles schwab. we will speak to jonathan of ubs looking ahead to wednesdays report. and aaron brown of pimco. we begin steady, investors analyzing the prospects of imposing 25% tariffs on imports but charles schwab analyst six putting further volatility sprayed external and internal choppiness is likely to persist is ongoing tariff news gets digested. welcome to the show. always good to see you. more tariffs and a threat of additional tariffs. the consumer particular after the data for us -- how strongly these headwinds for the consumer

at the moment. >> it depends on the pricing power of the companies being hit by the tariffs and that's what's hard to judge. we can start to look at the 20 18th playbook and you did see a significant pass on to the consumers so there's already been discussion what does it broadly inflationary in 2018 and 2019. if you break out any variety of inflation data particularly cpi a new look at tariff goods versus nontariff goods. you did see the hit not just to inflation but consumption. you saw a big decline in purchases of appliances particularly washers and dryers and now this is a lot of broader obviously so it is going to be a little bit harder to try and subset where they are at the pass-through is still likely to be to the consumer. lisa: how do you read a morning like this one where the

financial media is focused on tariffs. where the market looks sanguine. how seriously do you take some of these things that could be pretty big headwinds to stock and bond markets. liz ann: i think the media is doing its job to trying get tariffs and their impact and say at the extreme which i think generally we are all assuming and maybe the market is assuming that they won't go to the extreme that there is some version of a negotiating tactic to get concessions and whatever that definition means. i think markets are thinking that way but i think the media is right in getting the public to understand not just the broad impact of tariffs but even understanding who pays the tariff. that is still fairly misunderstood after public domain maybe because of the media short handing saying things like tariffs on china.

well it's tariffs on imports from china. the tariff being paid by the u.s. company. i think it's appropriate there's a lot of detail being put forth by the media. for whatever reason right now the market is discounting that saying this is not going to have a broad economic hit. >> you talked about the parallel and i wonder how far that can go and where it diverges at a time where the positioning and markets is completely different than where it was then. the overweight equities is stronger. rate structure is higher. how much is this similar and how much is it not. >> the background conditions are entirely different currently relative to 2018. not least because that was pre-pandemic world and where in the post-pandemic world and those worlds have shifted quite dramatically as it relates to trade and how much shifting was done from places like china to other areas inclusive of mexico as well as other parts of asia.

you were talking about it earlier, vietnam and cambodia and how do those just -- adjustments get made. another important difference between that era is we were in the beginning or the anticipation phase in 2017 of major tax cuts. now we are talking about the extension of those tax cuts. i think the juice on the tax side of this is not quite to the degree it was when they were brand-new tax cuts print i think the deregulation piece is a booster but i do not think you can apply that same tax playbook. annmarie: obviously trump is eyeing europe. that was made clear over the weekend. one thing stephen miller talked about was other nations around the world use the unfair trade advantage against the united states. jonathan has been asking this how will they have a reciprocal tax when it comes to the united

states and europe. liz ann: i wish i had concrete answers to these questions. watching this getting the data and headlines on this is just exhausting bring it really is as we all try to gauge the impact of this. it is a little bit of an apples and oranges when you are at least proposing reciprocal tariffs from within the united states relative to a trade balance procedure otherwise given that structure over in europe. how this all ultimately unfolds i have no idea. >> as you look for the rest of the year a lot of the uncertainty in washington dc what do you do. >> i think the good news is not only has the market been fairly resilient but the brats within the market has been quite impressive.

there's only one sector down year-to-date today and that is technology. every other sector there is a conductivity to fundamentals in the best performing sectors year-to-date are financial communication services. that is where the strongest earnings growth has been so you're saying that at a factor level. if the navigation within asset that becomes important in this environment within the equity sphere of a portfolio. make sure you're staying up in quality, you are looking for the combination of value factors and growth factors almost thinking of the old acronym. that blend of factors that allows you to look for reasonably valued companies but also that growth trajectory. it's important to stay diversified across asset classes. when the best performers among the industries -- indices.

i think that broader diversification across asset classes if those traditional disciplines, not very fun to talk about but across asset classes taking the high quality approach at the factor level i think is the best way to navigate through this spring -- this. lisa: is this a traders market more than investors market. >> i don't think it's ever not investors market. the distinction has to do with time horizon. arguably it's trickier to be a short-term trader in this backdrop because of this policy unrelated -- this policy related uncertainty and the way we get announcements. i think it's a better backdrop for longer-term investors. we have price discovery again, the return of the risk-free rate. i think it's the benefit of not just longer-term investors but also leveled the playing field for active relative. i think that's good from an

investor's perspective. >> always good to see you and catch up with your thoughts. liz ann sonders of charles schwab. a fastening time to be in the market. banks are still doing well. you mentioned this over the past 30 days is see met a closer 20%, tesla down by 16%. there's a lot to get your hands around the moment. lisa: this is a storytelling market everybody is telling a different story and each company has a different reason for it to do well or not. and you are seeing that dispersion increasing. who was it that said investment is a trade that went wrong. i kept thinking about that. jonathan: he is like a hedge fund legend. lisa: if it is a trading market it will be a need for a long-term. >> i will say this i have heard some great tactical calls print the likes of blackrock getting long europe and taking the

overweight off u.s. equities to close out 24 into 25 that's already a call to the far. >> it is going to be inflationary with tariffs, it's going to be deflationary with tariffs and you see it shifting in real time. you can understand the shelflife and if you don't know how to read trump maybe you can win big. >> equities on the s&p up by 0.5% with an update on stories elsewhere print here's your bloomberg brief with dani burger. >> t-mobile shares are higher in the premarket. the wireless carrier announced its partnership with starlink satellites last night. it will cost $15 a month for most t-mobile plans and will launch in july. td bank is set to invest -- sell its entire investment. the secondary stock offering. schwab has agreed to repurchase one half million of its shares

conditional on the completion of the -- the bank will continue to have a business relationship with schwab. she and is asking top suppliers in china is a set of new production in vietnam. they hear the company is looking to avoid the risk of new tariffs on chinese goods. they insist that offer higher procurement prices of 15 to 30% while promising bigger orders. that's your brief. >> that's one of the underrated stories this morning. if all that business starts going to the unknot duster vietnam are the next in the firing line for trump's tariffs print -- trump's tariffs. lisa: we have seen this over the past five years the increase in the trade deficit the u.s. has with vietnam and malaysia and the philippines. these other southeast asian nations who have taken a lot of the business from china. they know it is only a matter of

time to choose between china and the u.s.. jonathan: do you just put on a blanket universal tariff. is that where you end up. lisa: if it does, that will increase the price pretty significant he across the board particularly for retailers with complicated supply chains. it will create a real issue and will be felt by some people who are in his base. annmarie: deja vu two at the u.s. experience vis-a-vis china and mexico. the backdoor door of cheap chinese goods coming to the united states. this is china's version of -- jonathan: the unintended consequences of those and 2018. reacting to mcdonald's earnings and the state of the u.s. consumer print that stock is up by 1.8%. ♪

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jonathan: the opening bell is one hour and 12 minutes away. equities doing ok on the s&p 500 in the bond market the tenure going nowhere. as lisa noted a few times already, gold at all-time highs, another all-time hybrid 2900. >> which is double where it was five years ago. at a certain point you have to wonder what is the message gold is telling us. this is the ultimate volatility hedge at a time when you have central bank buying and the potential for inflation and deflation and it's everything all at once. >> let's get some morning calls.

evercore isi adding to its outperformer saying recent weakness is a buying opportunity. the stock is up by .15%. the second call downgrading merck to hold. no longer sing viable arguments for outperformance. the stock is down. jp morgan raising its price target on home depot citing solid west coast and high-end housing trend. mcdonald's beating fourth quarter expectations international growth in u.s. sales per joining us to discuss. welcome to the program. it's good to see you. talk about the difference between what's happening domestically in the united states versus internationally abroad for this company. >> it was the e. coli breakout in late october. it hit the newswires in early november. mcdonald's had a lot of momentum in october, of the five dollar meal deal had brought some

low-end consumers back into the fold. traffic is positively thing for the first time in 2024. and then the e. coli outbreak put the brakes on the progress they had made in the states. and that's really what the difference is. it is nice to see international sales to a little bit better than expected. investors are really interested in seeing some improvement in the u.s. they want to see the cadence of comps throughout the year and we get to hear some information about how they have done so far in january. >> i'm curious about the consumer and how much tolerance there is a time when it was successful. is there any take away from the e. coli issues with respect to bird flu and what we are seeing with eggs and how that could affect a whole host of different fast food places in the united states? >> you can see a breakfast

sandwich prices go up for sure. mcdonald's is fully franchised here in the united states. it's not going to impact their results moving forward but it could impact franchising and profitability low income consumers are continuing to be strapped due to the inflation they have encountered here over the last four years or so. we are bullish about the restaurant space in the united states in 2025. 2024 was basically a restaurant recession. economic indicators however are improving preyed we are seeing assets like the gold, the s&p 500 crypto home prices near all-time highs so we think that will motivate high and middle income and upper income consumers to spend more and we've seen that a results postelection so there could be some animal spirits that could

be more confident about the future and it's getting a little more. >> are you saying you don't think they can pass low prices or they do the higher prices that they will meet at the consumer that still has money to spend and is willing to do so. are you saying consumers are less price sensitive. >> it depends on who your customer is. for chains like chipotle or shake shack that have less exposure to low income consumers they are in a better position and are more able to easily pass off price increases. quick service are and by low income consumers. so because of that there are going to be a lot more care for this. their customers are the ones that are going to be pushing back. >> we saw trump on the campaign trail really embrace mcdonald's, embrace the big mac. he also serves it on his own air force one with some of his

nominees there is the picture they're flying up to new york. has there been a trump affected all when it comes to mcdonald's sales. >> we have been focusing on the e. coli issues. i don't know if there has been any trump effect. if there was maybe they will talk about it on the call. those pictures were pretty funny on air force one. i appreciate the one with rfk. looking super uncomfortable. jonathan: rfk in the mix, the challenge with glp-1's, can they faced down the challenge of rfk. what could that mean for the business. >> listen, i think it is a bigger issue for the companies that provide the food. will there be some re-formulations necessary for some of the food, yes. but mcdonald's does not manufacture that food. so i think there's going to be a bigger emphasis on the food service manufacturers.

if any change. >> could they make mcdonald's u.s. a little bit more like mcdonald's italia. could they make that change? the food taste better. and they make that shift. >> i don't know. the italians have more discerning taste so i guess they had no choice over there. but i don't know. it's a tough one. lisa: you have never eaten at a mcdonald's. jonathan: in italy, they have perrone on tap. >> i'm going to have to call mama ferro to validate. annmarie: mcdonald's in europe do have -- they do cater a little bit to people who are not eating the generic mcdonald's meal. jonathan: they try harder. annmarie: in italy according to my italian family it is very cool to go to a mcdonald's and

it is seen as a treat where in the united states it's this every day fast food. jonathan: a very different meal. lisa: it is america. you get the fries, you get the nuggets. and the hash browns for breakfast and by the way the last time you went to mcdonald's in italy you were a kid. you said your mom was there. when was the last time you went? jonathan: not in italy. for a long time in italy but in the u.s. yes. annmarie: i went for the one at the g7. jonathan: mcdonald's breakfast palm springs preyed i can give the day. >> receipts. >> too early for this. sarah brown of pimco. here's an extended market check. equities higher by one half of 1%. a distinction between what it's been about this morning and what the market is trading on. it's what we've been talking

about all morning. the threat of tariffs and the issues around the debt and treasury market. we are not trading on any of that this morning. >> we keep getting upside surprises and a host of economic data. a lot of the companies that have accrued earnings are still doing well like mcdonald's. but i will say it really comes down to the nuts and bolts. >> it is noise right now. until he sits in the oval office and maybe signs something and it becomes executive order, of the market doesn't need to pay attention to it. jonathan: mcdonald's breakfast is the superior meal at mcdonald's. annmarie: the fries are the best. jonathan: absolutely. ♪ 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

jonathan: 60 minutes away from the first trading day of the trading week. equity futures doing ok. 0.6% on the s&p. nasdaq 100 up by 0.8. manus: dust off your 2018 playbook in terms of u.s. steel and aluminum. cliff's sword by just over 8%. pretty much at that level. in 2018 imports dropped by 11%. 8700 jobs were created.

downstream, 75,000 jobs went. could we extend that? the cto put out a memo. elliot had such a good performance last week when they yielded from honeywell the extraction that they wanted. they understand they have a sizable stake, what will they push for? let's see what they extract from bp. jonathan: aluminum. see ya there manus. lisa: just to be clear, he's leaning in. jonathan: they say sidewalk and they are like who is with this? lisa: adidas. jonathan: the one i have shifted on, i was never into that. that is ridiculous. the one i have shifted on is

nike. as a kid it was nike. wasn't this a commercial last night? i'm sure it was. lisa: with nike? jonathan: orlando bloom was in it, for cruises. lisa: is there any other grievance from your childhood you feel embarrassed about? i think it's worth saying aluminum because it is more efficient. jonathan: let's get to michael mckee. i'm agreeing with you. data this week, what are you looking forward to? mike: powell will be the highlight of the week. he testifies before the senate. what could he really say? he said at his press conference. we don't know what the trump administration will do. it will be tough for him to have

much of an impact tomorrow. both sides will try to get him to opine on it all. wednesday would normally be a big thing. we are expecting really no change in the cpi numbers from the month of december. we are in the last days of the biden administration as far as data. all of this stuff is january data. trump didn't take office until the very end. jobless claims thursday won't be very interesting this time but something to watch going forward. with elon musk and donald trump laying off thousands of federal workers we might see those jump a little bit. we have some other fed speak besides the chairman, we get on tuesday, beth hammett, john

williams, michelle bowman. very few of those speaking on the economy. chris waller talking about stablecoins, which isn't going to give you much clue about where they are going. everybody at the fed is sort of on hold. we didn't have on the list there, thursday, ppi, we will find out what prices are. jonathan: just wanted to follow up, university of michigan has spooked chairman powell when they were at the start of their hiking cycle. how much weight would they put on this number? mike: it will scare them a little bit. so much of that was based on headlines of what might happen, we didn't really get the tariffs. does that mean they will continue to think inflation will

get out of control or does it start to fall back if the tariffs don't get imposed? jonathan: cpi on wednesday morning. uncertainty is high, the range of possible outcomes and reasonable forecast is considerably larger than recent months. welcome back. why is that the case? jonathan: you see a lot of price changes, pricing behavior. it is understandable. this is not unseasonably adjusted data. it is the case that the vast majority of price increases take place in the economy tend to come in the first quarter. the information we will get in this report on wednesday, quite a wide range of uncertainty. do we repeat what happened last year?

pretty wide range potential outcomes. high degree of uncertainty. going back to what lisa said, it is going to be the least impactful thing of the week. jonathan: i think reinforcing that was the data we got on friday. the umich, maybe that is the difference between now and the head fake of last year in the first quarter that we have the additional threat of tariffs. at least for now it appears to be weighing on consumers. how much weight do you put on that survey? jonathan p.: it was the preliminary data. we have seen this pattern where those numbers have revised down in the final release later in the month. i do think it's important to watch those. i think that is the key concern over the tariffs. a lot of the numbers we are

talking about with china put in place or what has been proposed on steel, they could add up. you are not talking about large changes inflation outlook. if this is something the consumer starts to expect and feeds into wage demand and how they think about spending, it is worth watching, that could be a bigger impact on the economy. lisa: where are we coming from, we gotta read from now on the nonfarm payrolls report. one thing i keep noting his consumer spending is holding up but savings keep declining. what is your take away from that? jonathan p.: there still a lot of wealth sloshing around in the economy. certainly stress, we have seen delinquency rates rise. if you look at the top 20% of

income distribution with a wash in cash wealth and liquid assets , giving them plenty of ability to continue to spend. that is what is making household balance sheets looking so good. consumer spend is probably likely to cool. there has been a big boost to real and falling inflation. a lot of those benefits are in the rearview mirror. consumer spending has been strong, momentum has been good. it is the brightest spot in the economy at the moment. lisa: the tariffs that might be coming on in different variations, are you seeing a little chance the federal reserve will cut rates this year? jonathan p.: this goes back to how much information we will get on wednesday.

what we look at what we are expecting, we are expecting 30 basis points increase. we are a little above consensus on headline. after we get the run of cpi, import price data, when we look at the pce deflator, year-over-year rates should start moving down more obviously in the next few months. even with the inflation from the tariffs we put in our baseline, we think or inflation will be below 2.5% by the time we get to the spring. if we start to see dents in growth, that will motivate some further normalization by the fed . if we will get universal tariffs or a significant inflation shock , it will be really tricky for the fed. lisa: i think a lot of people are trying to figure out what compass to use, one aspect that

keeps coming up is the immigration component that might be more potentially impactful on the economy than even the tariffs side. is that how you see it as well? jonathan p.: the way we look at it, tariffs depend on where they go, how big they are. the immigration will matter over time. we essentially took down our speed limit for the economy by half a percentage point because of what we expect to see in the slowing of international migration between what we expected to look like in 2026. that certainly matters. from a consumer expectations, what you are talking about with michigan i think is exactly right knee watching. we think about the potential for price impacts from something like a universal tariffs, it

could be quite large. in my 12 month ahead worry, it is much more front and center than what the immigration impact will be. jonathan: good to hear from you on the week ahead. looking ahead to inflation data when we get cpi. friday, chairman powell twice, once on tuesday and again on wednesday from the senate and again on capitol hill. trade and tariffs. we were told by the president on the weights of the super bowl that we would see tariffs on steel and aluminum. we were also told that maybe we will get those reciprocal tariffs later this week. 1:00 p.m. eastern time learning that the president will be signing executive orders which is often an opportunity to ask some questions. if we don't hear anything about trade. annmarie: we will see him talk

about steel and aluminum. it's interesting because the white house says it is closed rest. what happens is usually it is close press and the president decides bring the press in. i'm sure at some point he will discuss what he's going to be signing. he said today is 25% when it comes to steel and aluminum. lisa: he has signed executive orders almost every single day. it has been a record-breaking case. every single day it is a new slew of executive orders, which ones will stick? jonathan: the last one was a sleepy white house for many reasons. this one is not. an appointment almost every single day when it comes to policy. lisa: every day he has signed one, if not many. how many will stay? annmarie: it is an aggressive

administration when it comes to policies and orders. some of them really do matter. the president also said he will sign an executive order this week when it comes to banning paper straws. there are some executive orders that are just out there for politicking purposes. jonathan: equities up by 0.6%, near session highs. recent macro data and earnings report indicate the u.s. economy continues to outpace other developed markets. we maintain an equity overweight concentrated in the united states. welcome to the program, let's start with that. more broadly as well with positions coming into 2025. the u.s. versus europe, there has been plenty to think about. is that just position squeezing or something more?

erin: coming into this year the markers were broadly speaking, putting long dollar, short bond come along equities over the rest of the world. none of those trades have really panned out. europe has outperformed the u.s.. i think a lot of that is just a little bit of position squeezes going into what was fairly crowded positioning. when you step back i see very little reason for the rest of the world to outperform the u.s. particularly under the policies that they are pursuing. if you look at growth dynamics and inflation dynamics across the world the u.s. is clearly continuing to outpace and outperform the rest of the world which would give way to the u.s. equity market outperforming the rest of the world as well. certainly the fed has paused

relative to other central bank what you are seeing now is probably more fiscal out of the u.s. which is what will drive the economy more so than central bank rate cuts at this weight. the u.s. is still front and center the main outperformer with an equity market. u.s. to mistakes particularly particularly is what will outperform this year. jonathan: this from j.p. morgan in europe did a similar point. for this to work the way it has been working you need to close growth differentials. it takes us back to the u.s., let's sit on the equity market about what is working, banks, what is not, certain parts of tech. what you think will work in the year ahead and why? erin: staying as domestic as possible will work. the power utility names,

particularly those that are leveraged to the ai trade, those still work. they took a little bit of a breather early in the year. it is attractive to reenter now. i think some consumer cyclicals will work. i really stay away from any cyclicals that have international exposure. the energy sector i think will do quite well this year. what won't work? industrial issues continue to stall capex investment. business is underperforming relative -- business sentiment is underperforming relative to consumer sentiment. i think anything with international exposure that is going to be front and center is likely going to underperform. some of the more deep, cyclical materials like mining, the

industrial sectors are likely in that bucket. the ones more leverage to the consumer are likely the ones that will outperform this year. lisa: if the risk is actually an outperformance in the u.s. economy to pupils relative expectations right now, does that challenge the idea of rates remaining where they are? it is almost necessary for some of the domestically focused companies to do better. erin: i wouldn't go so far down the line as investing in small caps, i will not make that call. i still think large to mid caps are really where you want to invest. rates are still restrictive, absolutely. they have come down meaningfully since the third quarter of last year. we think the fed is likely not done with its rate cutting path. there are more rate cuts to

come. they have probably been pushed out to the back half of the year and into 2026. we are likely to see the fed take a little bit of a breather and see the impact of the rate cuts and the impact of tariffs and other executive orders that you have mentioned. the fed is in a wait and see mode. still more to come. in order for those small caps to meaningfully outperform, i think you are right. we need to see rates significantly lower from here. we will likely not get that in the first half of this year meeting the large and mid caps will outperform. lisa: they tend to be most pressured by a strong dollar. i'm thinking about these america first stories and how they trickle out and how they rebound back to corporate fundamentals, how much is that headwind versus

something that is going to be felt through as we get earnings? erin: with respect to fx, you are seeing significant impact on the impact side. we still have a number of consumers left to report. they are seeing headwinds 3%-10%. that is a sector we are more cautious on because of it. if you see the impact of tariffs also having a double whammy in terms of the hits, that will hurt that sector. i think any sectors with significant international exposure are ones that you likely want to stay away from. that said, going back to the u.s., going back to the consumer , the u.s. consumer as a standalone is very strong right now.

what we are hearing out of companies coming out of the fourth quarter is they saw strengthening into the fourth quarter and at the end of the year that sort of recent cyclical highs in sermons -- in terms of what they are seeing. ultimately, fundamentals trump what you are seeing in some of the noise in washington. ultimately, investors will go back to fundamentals and what is working. you have seen several themes emerge in the last three months or so that will likely continue into the rest of 2025. jonathan: a clinic there on trump 101. let's take a step back, we have talked about it repeatedly, if you export into america, life might become difficult. if you are invested in america the administration is to make life as easy as it can for you. maybe you disagree, that is your judgment call.

the domestically exposed big names on the stock market she is getting long. annmarie: it might be better if congress is able to enact a lower corporate tax rate. what is also interesting is it is not just the tariffs and the walls going up, it is the retaliatory environment we could see. think about in europe what happened to harley and levi's. jonathan: more on that still to come, here is dani burger. dani: president trump has directed the treasury to stop making the penny through a broader effort to cut waste. the u.s. mint said in its annual report it will cost 3.7 cents to produce and distribute the penny. that is up 20% from the previous year. higher costs are due to the rising cost of metals like zinc and copper. deepseek is hiring.

they are recruiting specialists to expand tech ambitions. the company advertised at least half a dozen jobs focused on ai. deepseek is trying to continue to be at the forefront of chinese ai. philadelphia will hold a parade to celebrate the eagles victory over the chiefs in super bowl lix. it remains to be seen if they will be invited to visit the white house. the team did not visit after their 2018 victory. that is your brief. jonathan: thanks for this morning. we will set you up for the week ahead. from new york, you are watching bloomberg tv. ♪

jonathan: equities on the s&p at session highs.

your trading week looks like this tomorrow. fed chair jay powell kicking off his congressional testimony starting in the senate and moving to the house wednesday. thursday, ppi and another round of jobless claims. on friday, retail sales. the vice president, jd vance heading towards that. coming up, president's day next monday. lisa: i'm watching the options. we have some options, i will be watching them. annmarie: auctions are interesting. they are a key point this week, i am interested. jonathan: coming up tomorrow morning, bnp paribas, sarah

malik. from new york city, thank you for choosing bloomberg tv. this was "bloomberg surveillance." ♪ feeling under the weather after the big game?

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>> good morning. >> bloomberg open interest starts right now. matt: president trump says tariffs are coming for aluminum and deal. the president plans to enclose -- impose 25% lebanese. that news is boosting steel stocks, the dollar,