>> tariffs are the wild this year. >> policy is sort of rolling out and consequences and decisions are happening in real time. >> the question is, are there any carveouts? the inflationary effect will be less the more you get carveouts. >> if we see begin please -- big increases in inflation that is going to be disturbing. >> maybe we need to be more rational. there is a lot of devil in the details. >> this is "bloomberg surveillance." jonathan: let's get you to the

weekend. liver from new york city this morning, good morning, good morning. "bloomberg surveillance" starts now. set to snap a two-week losing streak on the s&p, your ex cash your equity market bouncing back. this morning negative by .1% on the s&p 500. on the nasdaq we are down about .1%. through the week, this market not trading on what this president has said. this market is treading on what he didn't do. lisa: but he didn't do was exercise some sort of massive tariff plan on a lot of governments people are worried about, just why you are seeing a relief rally and the dollar fall to the weakest going back to mid-december. at the same time we have to wonder if this is a market that is trading on trying to take out tail risks. look at the possible upsides rather than anything else, whether it is inflation or removal of the terror threat. jonathan: there was an uncomfortable calm gripping this market. you can feel it.

tim bianco says, the president was talked down. 0 annmarie: annmarie: some of those advisors are not in place yet. you have howard lutnick in the room where he has not even had his confirmation vote. but trump needs to wait for his ambassador, his commerce secretary to be in place. and i saw yesterday was almost a copy and paste of the executive orders he put out in his first term, except put in every single country instead of china and it is a directive to go investigating. there were no tariffs yesterday. not a single tariff was put on and that is why this market ended up rallying. jonathan: let's go to the schedule for today. at 8:30 eastern time we will get u.s. retail sales. at some point you will hear from vice president jd vance at the munich security conference. on any other day this headline from this president would be front-page news. many other president this headline would be front-page news.

i would love to have putin back in the g7. russia should be sitting at the table. some of the headlines at the news conference yesterday were stunning. we will meet with russia and china on military spending. we want to cut the budget in half. lisa: he's talking about the possibility of russia and china helping to end conflicts and create a more stable backdrop, which is exactly antithetical to what we have heard out of the european union leaders, as well as president biden. there is a real question here about whether this brings us closer to peace or further away. you have a lot of analysts saying this probably opens the door to more negotiations. then you have the europeans that say, this pushes us further away. at the same time it shows how much the vibe has shifted. lisa: annmarie: it's going to be an incredibly tense munich security conference when jd vance and general keith kellogg meet with their european counterparts. many will say, why is trump being a bit warmer or softer towards president putin?

the wall street journal this morning, editorial board, scathing. trump is treating russia like any other negotiating partner. but some of them will maybe say he is giving putin an offramp because his end goal is peace. jonathan: we will hear from the vice president later on this morning. if you are joining us, welcome to the program. equity futures a little bit softer. coming up this hour we will catch up with jim bianco of bianco research as stocks looked through to trade threats. jeannette lowe as trump takes aim that europe. and dean striving as -- on energy markets. jim bianco of yunker research is watching 10 year bond yields and writes the following rates are steady than 10 year bond yields should continue sideways before heading above 5% and the curve will steepen. i want to go to a quote from bank of america and get your

thoughts on this take. we say hot 3% uscp i january is a blessing in disguise. writing inflation must mean trump goes small, not big on tariffs in the coming months to avoid fanning a second wave of inflation. would you agree with that take? jim: no, i would not. we all know the phrase is, you are supposed to take trump seriously, but not literally. i think that is what we have seen in the last 24 hours. they are torturing themselves to basically micro-read what trump has said. he intends on doing tariffs and we are going to get tariffs and they are going to come. as much as we want to talk ourselves out of it they are coming later this year. i might add, markets get things wrong all the time. it convinced itself in january 2020 covid was not going to be anything, and it was. it convinced itself in august 2020 that the trade unwind was the biggest deal we had ever seen, and it wasn't.

it gets things wrong a lot, and trait -- and take trump seriously. jonathan: look at bond yields near the low end of the range for the year so far. which do you think is more vulnerable? jim: i think the bond market is more vulnerable. the hot cpi number is still a tell that at least at a minimum the road to 2% is now -- we have been talking about the last mile for two years and we're probably going to have to talk about it for another two years before we get to 2%. if we have sticky inflation the fed is probably going to be done cutting rates if not maybe one more this year -- although i think there might be done for the year, meaning the funds rate is still going to end the year with a four handle on it. and if the yield curve continues to steepen and we see some sort of normalization of the curve, which we have been seeing, you could be pushing the 10 year yield above 5% later this year

and i think that is in the cards. lisa: you take a step back it feels like it is a numbing environment. there is so much noise you have on one hand about three days ago we were talking about that inflationary risk and you would have had a lot of compatriots talking about five percent treasury yields. at the same time you got inflation data that looked bad on the surface but got enough comfort from the details to say, actually this means disinflation is intact. how do you have conviction about inflation call and the possibility of expectations getting truly on mort? jim: if you look at the way markets have been trading, start with the s&p, it is that the higher end of the range it has been since the election. it is just at the top end of the range. the same thing has been happening with the bond market too. we ended the year at 4.56%.

there is a lot of noise and the markets move around a lot. yesterday was a big individual day, but the trend is still sideways. that says that is a market that is, no, has little conviction or is unsure of where to go next. it sees all of the news and it is not really reacting to it other than having days here or there about moving sideways. i think ultimately it is going to give away to my there is going to be tariffs, one inflation, and interest rates are going to go higher. lisa: when you talk about the inflationary impulse are you attributing that policy? for some sort of pressure everyone is closing their eyes to? jim: i see something in the data. every time we have a financial crisis or recession the economy changes. change is not worse. it is not dystopian. change that happened in the economy in 2020 was remote work

over a quarter of the country is now doing remote work, and we know what jamie dimon feels about that. he doesn't like it at all. [laughter] but it is not going way, and that is a fundamental change not only to the way we work, but also to the way we live our lives. i think that is building access pressures on prices and leaving us with higher inflation. not zimbabwe inflation, but maybe 3% to 4% inflation, and core cpi just finished its 45th month in a robe -- above 3%. we have been seeing that pressure, although we continue to try and tell ourselves that we are going to go back to 2%, that we are going to return, as jay powell says, to a pre-pandemic environment. we are on a different cycle right now. annmarie: i would love to quickly get your thoughts on what you actually think is going on with tariffs. he said the market should be taking trump seriously and they didn't, but he didn't actually sign anything formidable

yesterday. it is an investigation into these countries. there was not a single tariff place yesterday and my read is he is in negotiating mode to get some sort of concessions, especially out of the european union. we do not agree with that? jim: yeah, i think tariffs are leverage. and when it comes to negotiating with our partners, whether it is canada, mexico, or the european union, trump holds more cards than they do, and these tariffs are a threat and he wants something else. in the case of europe i think what he wants is more security arrangements. he wants them to spend 5% of the budget on defense. he said yesterday he wants them spending to buy more stuff from defense makers in the united states. i think all of this is more leverage than an external revenue service to raise revenues. i think he wants that too, but i think it is about negotiating and we need to understand that is what he wants to do. jonathan: jim bianco there of

bianco research. we will talk about jamie dimon later on in the program. the comments this week absolutely skating. there is no chance i will leave it up to managers. the abuse that has took place is extraordinary. lisa: with respect to? are you talking about work from home or some other things? he doesn't like to work from home. he thinks that younger workers have a harder time getting up to speed. we saw a waffling back and forth at citigroup, a whole host of organizations are saying, back to work, and they have the leverage to do so now because many people suggest they have more of the upper hand than they did two years ago. jonathan: we will get to that story in about 20 minutes time. we also have to spend time unpacking that news conference yesterday. there was one piece that jumped out to me. the president turned around and suggested the europeans had offered to drop their tariffs on autos. it is kind of bizarre. then he looked to his side to

confirm the news. no one followed up. i have seen reports about the europeans offering to do that, but i haven't seen any confirmation of it. annmarie: there was one journalist who did ask the white house about it and what i got back was an ft story from a week ago where european parliament committee told the financial times the block was willing to lower its 10% tariff and put it closer to 2.5%. potentially when we say trump is in negotiating mode, this is what he is talking about. he wants to make that cap much more in line. jonathan: did you get any clarity on whether the president was referring to the report? annmarie: i didn't get much clarity, but i believe the president thanks this is where there is potential to do a deal on autos. lisa: this is the reason a lot of people are numb to this and why this is increasingly noise. because it sounds like it's the big one, guys. and it comes out with zero

details and a sense that we are going to study something and people take it as being a positive because it is not a blanket tariff. you get into the details of what may or may not be negotiated, it is all fungible. this is why this is a market trading sideways and is looking how to cut out the noise and look at the positives. jonathan: stocks very close to all-time highs. equity futures down .1%. with your bloomberg brief let's cross to dani burger. dani: i want to give you the details of what we heard. president trump ordering his administration to impose reciprocal tariffs on u.s. trading partners. specific tariffs would be customized for each country and might take months to complete. the terrace would go to -- go into effect april 1, with the date seen as a potential opening bid for negotiations. tiktok is available to download in the u.s. once again after apple and google restored it in their app stores. the decision follows a letter

from u.s. attorney general pam bondi that said a tiktok and -- a tiktok band will not be immediately enforced. there is still no guarantee it will survive in the long run. her maze sales are surging. sales exceeded expectations in the fourth quarter. hermes also outperformed its peers, retaining strong pricing power and demand among the wealthiest consumers. jonathan: more in about 30 minutes' time. i think annmarie said it, hermes is not gucci. annmarie: they are in a league of their own. people line up to buy those bags. jonathan: up next on the program, trump taking aim at europe. pres. trump: you think the european union is wonderful? we all of europe, the countries in europe, but european union has been absolutely brutal

entree. you know, they are doing something else. european union has been very tough on our countries. jonathan: we will catch up with jeannette lowe of strategas. from new york city this morning, good morning. ♪ ♪ this

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jonathan: check out the euro. it is on the longest winning run of the year so far. could be day four. euro-dollar, 1.0468. under surveillance, trump taking aim at europe. pres. trump: think the european union is one of. we all love europe, the countries in europe, but european union has been absolutely brutal entree. have a 20% tax which will considering to be somewhere the same as a tariff. plus they charge lots of fees.

the european union has been very tough on our companies. jonathan: here is the latest this morning. president trump calling out europe as he moves to impose reciprocal tariffs across the globe as april. european commission president ursula von der leyen saying the eu will react against unjustified barriers to free and fair trade. our team coverage starts now. tyler kendall in washington, ali crook in munich. as the security conference kicks off, what are the europeans saying to some of these headlines? >> half of the people i'm interviewing i am informing them of the latest developments coming from donald trump. even people running major companies within europe in the defense sector. when you have trump talking about budgets for the united states, china, russia, this is a firehose of information the

people here are trying to make sense of. and they are having a different -- difficult time doing it. i was speaking to a senior official who characterized the negotiations as -- i can't say on air, but it was negative, saying basically jd vance and his speech might have to dollar back and it sounds as if it was written by the kremlin itself. i think many people are expecting jd vance not to be dialing anything back, but expecting something of a wrecking ball speech. that really says europe, you are on your own. these are the conversations here. zelenskyy just walked in. the meeting between zelenskyy and jd vance was still delayed because the u.s. is still reviewing what they are hearing from scott s and in terms of the economic program that could be rolled out between ukraine and the united dates. there is a firehose of information these people are trying to metabolize. annmarie: jd vance gave an

interview to the wall street journal last night and said there are any number of formulations talking about this peace agreement, but we do care about ukraine having sovereign independence. have you seen the administration walk back some of their more conciliatory remarks towards russia? tyler: not necessarily. also important for context, we are looking at how jd vance has come into this position. he was one of the staunchest opponents of aid to ukraine. exactly one year ago today was trying to debate additional supplemental security assistance to the country. he was the one that ended up leading that charge that kept it stalled until about april. but interesting to watch here, particularly after we saw president trump suggesting that russia should be brought back into the g7 to remake it into the g8, clearly as you seek euro

schism out of washington this clears to be a big reversal in u.s. policies, as you have been covering closely with direct talks between russia and the united states. and how ukraine fits into this. we are going to be watching closely jd vance's remarks shortly. jonathan: we will catch up with you once we get those remarks. we have to get back to that close from ursula von der leyen. -- that quote from ursula von der leyen. the case is that in europe it is not free, that in europe it is not fair, in europe there are barriers to entry. that is the case the u.s. is building against europeans. lisa: and the automakers are front and center. where the water gets a bit muddy is the vat tax and some of these other issues.

that is going to be some of the hair around this discussion. jonathan: let's get to jeannette lowe. what do you say to clients who ask you, what do you think is going to happen on april 1? what do you tell them? jeannette: i think the one thing we have noticed is it is important to have a difference between tariffs on china and tariffs on the rest of the world. we have noticed that trump has proposed tariffs several times, but only the tariffs on china, the additional 10%, have gone into effect. everything else seems to be up for negotiation. we did have canada and mexico negotiate. we did have: negotiate. they are setting up a timeframe, saying you have until april 1 to start making offers. you had prime minister modi coming into washington yesterday ready to offer some things to fix that reciprocal trade relationship. and also the fact these tariffs were announced while jd vance is in europe for the munich

security conference is in -- is important to say, europe, you need to do something to change the relationship with the united states. annmarie: we have the head of the european trade committee saying they are ready to lower the tariffs when it comes to autos. what else could europe give the united states in these negotiations? tyler: i think autos has been a thorn in trump's side, so getting that rate down would be quite important. obviously u.s. lng has been important during the entire you can -- ukraine conflict. i think trump is definitely looking for europe to buy more lng. and also defense. one of the things that plays into trump talking about lowering u.s. defense spending is having other countries, including india, including europe, by more u.s. equipment. that also goes into this piece where they are trying to get you up to pay more for its own defense and be less reliant on the united states, but still

purchase more things from the united dates. lisa: we have been speculating. what did we learn yesterday from a proposal that was light on details? tyler: one of the things i thought was interesting is trump did say this might be a replacement for his universal tariff he proposed to do a 10% tariff on all countries. this is the way they have a new trade law they are using. it is an old law that has not been used, but that is where they are looking to apply this. they are saying this is more of a one-on-one basis, saying whatever their country's tariff rate on the u.s. is, if lower it that is an ability to avoid tariffs or other barriers impeding u.s. trade. it shows there is a lot of room for negotiation and changes to avoid these tariffs him going into effect and shows it could be done on a more one-on-one basis rather than a broad, universal tariff. trump is trying to focus on countries with which u.s. has

large trade deficits. those are countries like china, south korea, thailand. was aware he is going to be focused. india as well. and he can kind of move on to other countries. i think that is what we saw, is a change their, what you see you could be less brought in the sense of going after the entire, all imports coming into the united states, but shows there is this room for negotiation. lisa: markets are taking this as an idea that maybe this president does not want tariffs for iteris' sake to raise money. do you think it is fair to discount -- discount that at this point? tyler: i think he does want tariffs for revenue purposes. congress is not going to legislate on tariffs, but having that revenue come into the treasury is something he can point you to say that this is not going to cost as much as it has been perceived. especially when we are looking at the deficit concerns coming out of the house conservatives.

but i also think it is not that he wants to have tariffs in place just to have tariffs in place. he wants changes. you wants other countries to make changes that are beneficial to the united states, saying repeatedly he thinks the u.s. has been treated poorly. i think that is ultimately his goal. jonathan: appreciate the up. check out the autos on the stoxx 600. higher for five consecutive days. up next on the program, eric nelson of wells fargo with risk appetite with tensions on the rise. from new york, this is bloomberg. ♪ ♪ 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

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jonathan: the all-time high, the intraday record high on the s&p 500, yesterday at the close, 6115, really close. equity futures this morning -5.2% on the s&p. on the nasdaq we are down by .25%. what a couple of days in the bond market. let's focus on the 10 year maturity. yesterday 10-year yields were up by about nine basis points. yesterday they were down by about nine basis points, even though ppi came in hotter than expected. it was these individual components of ppi that feed into

pce that people took comfort from. lisa: if you want to know why the bond market rallied yesterday it was because airfares and financial services and insurance inflation came in below expectations. thank you to those sectors because that is the reason why a lot of people in the bond market made a lot of money. those feed into the core pce. this is morgan stanley saying before that ppi came out they had an expection of pce -- core pce -- at .4%. they downgraded that to .3% because of these components. that explains the bond really that kind of defied our understanding on the headline level. jonathan: the bmo says ppi trump cpi, to make it short. the ecb this morning, roses are red, violets are blue, inflation is on track to settle around two. you sent me that. that was a beautiful card from the european central bank. annmarie: that was my valentine

to you. they are using valentine's day to push their agenda of inflation to 2%. jonathan: is that wishful thinking? lisa: it's not necessarily wishful thinking, but the time horizon matters. this, i think, is the important question, and i think jim bianco put it really well when he said this is the 46-straight reading above 3% when it comes to inflation in the united states. in europe will there be the same tolerance to inflation remaining above that 2% for a long time? jonathan: the euro close to a fourth consecutive day of strength. this morning president donald trump ordering his administration to consider a strip book will -- to consider reciprocal tariffs on country by country basis. eric nelson writing trump could act immediately afterwards. annmarie: there were no tariffs put in place. the only tariffs we have in place right now is those 10% additional tariffs on chinese

imports. trump is not full -- trump is in full on negotiating mode. these are not actual tariffs, which is why the market shrugged it off and a lot of this was copy and pasted from what he did in 2016. but it might be working if trump is accurate when he said he saw a reporting that europe is starting to think about lowering their auto tariffs. all of these threats might get him to where he really wants to go, which is the line i hear constantly -- reciprocity. lisa: jeanette said this seems to replace that link it across the board tariff. that seemed to give people comfort as well. jonathan: at 1:00 a.m. he is signing more executive orders, right? lisa: he is producing a show. jonathan: did he sign anything yesterday? did we get anything signed on tariffs? lisa: of course we got something signed. annmarie: it was a directive, an investigation. to the men behind him, who are not confirmed.

lisa: he held up the signature. jonathan: that we might do something in the future. that is a big difference from actually saying tariffs are going on. annmarie: the individuals that can look into 301 and 232 are not confirmed yet. so he is directing them to do this when they get into the office, which is why he just has to punt this all. jonathan: two months is going to feel like a lifetime. munich security conference kicking off today with the future of ukraine the top item on the agenda. resident jd vance set to deliver marks this morning. he is also expected to meet with ukraine president volodymyr zelenskyy later today. annmarie: jd vance set down what the wall street journal before he is going to make this speech and there is one comment that stuck out. it seemed like pete hegseth might have went a little over his skis in that nano comment because we have vance saying, trump could say, we are willing to put it back on the table if

the russians are not being good negotiating partners. basically saying, we might have more threats and warnings we are willing to put back on the table to deal with russia and we are not going to make some big concessions. lisa: i'm curious to see what the european response is, given that in the wall street journal he said the european union is taking away freedom of speech by suppressing far-right parties. he said, you have to listen to what they're saying with anti-immigration feelings. he also seemed to back elon musk, who has taken it a step further. he hasn't just said free speech, he has backed the extreme right group alternative for germany. so there is a question of how this will be perceived in europe. jonathan: the vice president set to turn up the heat this morning. peaking of, jamie dimon also turning up the heat, saying his company will scale back spending on diversity programs he sees as a waste of money, calling some of the initiatives stupid. jamie dimon also reiterating the

come meant to work with lack, hispanic, and lgbt communities. the chairman of jp morgan said this. i saw how we were spending money on some of this stupid -- and it really -- me off. just going to cancel them. i don't like wasted money and bureaucracy. lisa: he was talking about biased training he pointed to in specific. this was something he emphasized he would have done with or without some of the directives from president trump. he says he doesn't like doing things he things are wasteful. he has been talking about this for a while. how much is there just sort of a more openness to discuss this in public at a time where there definitely has been a vibe shift at the top? annmarie: jamie dimon is doge-if ying. another thing he said, i don't care how many people sign that

-- petition about working from home. once everyone back in the office five days a week, which i still cannot believe in 2025 that is actually a conversation in c-suite's. jonathan: i would step away from jp morgan and say, there appears to be a difference between the culture that leadership wants from the ceo and the culture that actually exists within their company. it feels like beyond jp morgan -- and we can talk about a number of examples of this, that they have lost control of the culture within the company. have talked about this around the table. feels like human resources took over over the last five years and what these ceos would like to be seeing is not what was happening. lisa: there is a sense that virtue signaling is not good enough. they need to understand something is working toward achieving a goal. he is saying they are not stepping away from the ultimate goal, what has been put in place is an effective then achieving that end result. jonathan: we will have plenty of time to talk about this topic, because we are going to see more

changes in the months to come. let's turn to foreign exchange. eric nelson writing, tariffs enacted alongside tax cuts would likely keep excess demand elevated, increasing upside inflation risk and necessitating a sharper crowding out of the sector and stronger u.s. dollar. you are not throwing in the telnet stronger u.s. dollar store? erik: let's consider what we are. we have done 1.12 on the euro-dollar down to almost. it. are we going to get back to 1.09? probably not. could we see 1.06? maybe. all of this back-and-forth on reciprocal tariffs. i think at the end of the day, you know, it is a lot of noise and markets are saying, need to see something actually happen here. maybe there is a little bit of tariff fatigue and long dollar

fatigue in the short term. tariffs are probably coming. particularly on china. auto tariffs are probably coming. this stuff is going to be really negative for global growth and probably negative for europe in particular. i think euro can see a retest of some of the recent lows in the next months. to really see a significant $.95 or lower you have to see universal tariffs. they could still happen, but we need to see it put into practice. lisa: against that case some people say if there is peace between ukraine and russia that is a game changer. suddenly you end up with euro strength we have not been expecting. do you reject that? erik: i don't really see this sustainable case for peace -- or rather, for euro based on peace between russia and ukraine. one exception is if you actually see nord stream turned back on and natural gas start flowing back from russia to the eu.

i think it is a longshot, but it is technically possible. outside of that you are not going to see a substantial decline in natural gas prices over any sustained timeframe without that. i think that is the only thing that matters in terms of euro strength coming from that. the other issue here to keep in mind is, these peace talks, europe as far as i can tell is not involved. that is not great for long-term security in the region. lisa: people say it might push the european union to spend a higher proportion of their gdp on defense. on investing in some of these other projects would -- which could spur the growth that had been lackluster, especially at a time when we just got a gp print out of europe that exceeded expectations. you push back against that idea? why are you laughing? jonathan: off by 10 basis points instead of .01? ok, you are playing it up time. lisa: this is the game.

we have said it was a low bar. jonathan: we said how little needs to go right in europe to generate outside gains? i'm with you, carry on, please. it's just funny how you? that in there. if i just tuned in and heard that i'm thinking, europe is back. [laughter] lisa: this is ridiculous. erik: i think you are absolutely right. the bar has been low for the euro. on the military spending thing, what concerns me is this probably will come in the 2028 european budget negotiations. 2028 is a long way away. what about germany's election? maybe you get some modest reform. it is probably not coming until later this year. it is probably a 2026 story. even if you get to budget negotiations, how are we going to allocate this money? whose national defense contracting are we going to be choosing?

there is lots of considerations here. it is going to be a bit messy. long-term i see it, it over a tradable horizon i'm not sure it is a reason you get long euro. annmarie: when you talk to people they say defense spending is one of those levers europe might pull as a concession to trump on tariffs, because he has been hammering them about higher defense budgets. couldn't you see that happening this year or 2026? erik: i could see commitments. nato was already talking about raising its defense spending target as a percent of gdp. i'm sure the eu will say the right things to appease mr. trump as part of a broader negotiation package. defining ways to convince mr. trump that they will be buying more oil and gas. they know they can't do it themselves. we talked earlier about the sort of show being put on. i think europe knows how to, from 2018, how to play that game. is he going to manifest in significant spending increases? i'm less convinced. the other point i would make is

the multiplier. the economic feedthrough and knock on positive impact from defense spending, especially on equipment, not that high. annmarie: when it comes to something jonathan mentioned, inflation in the united states, decide that price pressures are a blessing in disguise, do you think price pressures could be a check and balance on trump's impulses when it comes to tariffs? erik: i'm less convinced. put it that way. to the extent you get real pressure on the bond market, then maybe that is something of a break on spending plans or whatever it is he has perceived to be driving the bond market reaction. at the end of the day the equity market may be the best break on those plans. so far because we have not had significant action there is not a lot of reason for him to stop. jonathan: eric, it is good to see you. eric nelson of wells fargo. people are so scared about the tariff effort.

equities close to all-time highs. we have had this rally in europe. you tell people tariffs could come on april 1, they will say, we will see. a lot of people don't believe in this push. lisa: because we don't understand the framework it is operating in. we don't understand what the goals are. we know tariffs are the most beautiful word in the dictionary and this was a parity for the president, but beyond that what do we know about what he wants this world to look like in two years' time? on a tradable basis it is hard. jonathan: one thing we do know is how we are priced relative to the threat. right now equities are priced nicely. lisa: i keep going back to what tom ryan said yesterday, which is if you have negative here and then plus 10, if you average it out you get negative infinity if you believe that negative infinity is an actual number. if you don't you have something that looks decent. so why factor in negative infinity? jonathan: equity futures very

close to all-time highs. it's get you an update on stories elsewhere. there is dani burger. -- here is dani burger. dani: ukraine's president zelenskyy says his recent phone call with president trump was positive. he said his country is ready to discuss any means necessary to stop russia's aggression, maintaining that president putin does not want peace. the linsky also reiterated that support from nato is the cheapest way to protect ukraine. u.s. transportation secretary sean duffy said that he asked the boeing co2 provide an accounting of the playmakers actions to improve safety. death he says he plans to visit boeing himself to ensure its planes meet the highest safety standard. boeing has not responded yet to the post. apple will bring its ai features to china by the middle of the year, launching as early as may. sources telling us the iphone maker has teams in both countries adapting its apple intelligence platform for the country.

china apple will use its own ai models with alibaba software as a layer to censor materials the government objects to. apple does face regulatory hurdles. as your brief. jonathan: thank you. or in about 30 minutes' time. up next, pushing for peace in ukraine. pres. trump: russia has gotten themselves into something that i think they wish they didn't. if i were president a would not have happened. absolutely would not have happened. i think that when you look at ukraine and when you look at the mess they are in, it has got to be ended and it has got to be stopped. jonathan: what do those comments mean for the gym market? from new york city, you are watching bloomberg tv. ♪

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jonathan: equity futures right now on the s&p -5.2%. lots of economic data through the week. later on this morning, one to watch at 8:30, u.s. retail sales just around the corner. under surveillance this morning, pushing for peace in ukraine. pres. trump: russia has gotten themselves into something that i think they wish they didn't. if i were president it would not have happened. absolutely would not have happened. i think that when you look at ukraine and when you look at the mess they are in, it's got to be ended and it's got to be stopped. but as far as the negotiation it is too early to say what is going to happen. maybe russia will give up a lot. maybe they won't. it is all dependent on what is going to happen. negotiation really has not started. jonathan: energy markets watching for progress on peace talks in ukraine. vice president expected to speak at the munich security

conference later on this morning. the u.s. would hit moscow with shank -- with sanctions and military action if ukraine does not get long-term independence. daan struyven of goldman sachs joins us now. hearing from the secretary hearing that if trump directs we will further sanction russian energy. it is hard to work out what is going to happen. do i price in peace or escalation? what are you telling clients? daan: our base case is that russian oil and natural gas volumes for europe and the rest of the world are not going to change significantly as a result of any change in sanctions. if we were to see a peace deal we think it is likely that part of the peace deal would involve a pickup in natural gas flows from russia to europe, because it makes sense for all of the parties. it makes sense for russia from a revenue perspective. ukraine would benefit from transit fees, and europe would benefit from significantly lower gas prices.

we estimate that if you were to see a return in russian gash -- gas flows through ukraine to pre-war levels that alone would be enough to reduce european natural gas prices by up to 56%. and in a since the european energy crisis would end now, or base case is that it and in 2026 and 2027 with the arrival of all of those cargoes. if we were to see a normalization in cash flows from russia to europe we would expect a large drop in european natural gas prices. annmarie: what if this goes the other way and this administration has to escalate with the end goal of de-escalation? what happens if they outright sanction russian gas and oil, not doing what the biden administration did? daan: the natural gas market, russian flows are down 88% since the war. if you were to see a tightening

in sanctions it would cause upside to their oil prices, but limited impact on the natural gas market. if you were to see a one million barrels a day drop in the oil supply from russia and also one million barrels a day in oil supply drop from iran, where the government has said we are going to return to maximum pressure, we ask him -- estimate that brent would elevate to just over $90 a barrel. over time, however, the assumption is that saudi arabia and the you we would offset that tightening shock. there is clearly some uncertainty about the reaction function of opec as well. annmarie: but at this moment right now the administration is saying, we could go either way. what do you price for? daan: i think the oil market is really pricing the risk of higher supply and lower prices. we think in the short-term the risks to oil prices, our base case is that you have rent at

$70 per barrel this year, we think there is upside, especially relative to market pricing. we think oil prices are about eight dollars per barrel undervalued if -- if you look at global inventories. they are down to may 22 levels. they have dropped a lot in part because of opec compliance. market is really not pressing any significant upside to oil prices. we think the risks in the short-term are skewed to the upside. in the gas market, the gas market is not really pricing downside risk to prices. very different from bond markets and equity markets, where we have seen big rallies in assets that would benefit. lisa: so we could potentially see some sort of selloff in a good way for natural gas? i want to lean into this idea of the upside risk in oil markets. how much is that derived from what you said, which is that supplies have been cut off due to compliance with opec's directives versus demand really picking up?

daan: we think the main reason we have seen withdrawals in global inventories is opec cuts. saudi arabia is producing only 91 million barrels. demand has been fine, growing at about one million barrels per day, with disappointments in places like china, but strength in places like the u.s., india. jonathan: the prospect of energy prices going down, what is that about? daan: gold continues to be our favorite long-run structural commodity. both because in the base case we expect a lot of additional support from higher central-bank purchases, and to tie back to what happened in russia in 2022 we think reserve managers have learned that treasuries are not necessarily completely risk-free. in the long run and even if you were to see a peace deal, i think we crossed the rubicon and

central banks in emerging markets will continue to buy a lot of gold. that is the structural story. but the beauty of gold is it is a hedge against the three most important risks to global markets. tariff escalation, concerns about rises in u.s. debt. and third, some uncertainty about leadership at the fed in the future. base case is that inflation expectations will remain well anchored, but if you are worried about that gold is your go to asset. jonathan: daan struyven there of goldman sachs. all-time highs uncle this morning. lisa: there was a wall street journal article about how gold bars were coming to new york. i want to know what the suitcases look like. do they put them through security? do they have to lift weights ahead of time? jonathan: just sort of thrown out there. no one knows. really pulling that thing off the belt. [laughter] up next we will catch up with

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>> people are very quick to sell. the market bounces back. earnings will grow by 10%. >> you will get auto correction. >> the idea that baseline volatility is higher just because trump is in place i don't think is correct. >> because companies are delivering earnings, it is a solid foundation for the stock market. >> bringing more capital into

the market is just more possible. announcer: this is "bloomberg surveillance." jonathan: live from new york city, the second hour of "bloomberg surveillance" starts right now with equity futures close to all-time highs on the s&p. we are down 0.1%. on the nasdaq we are down by 0.2%. there is a very big morning coming up. it is wearing thin but it is another one. at 8:30 eastern we get retail sales in america. we should hear at some point from the vice president so look out for that. later this afternoon, this is becoming a daily event. executive orders from the president of united states will be hopefully more comments. lisa: more comments about tariffs an clarity for what we can see. yesterday it was the big one an we got it but it was on the investigation into what could come down the pipe. the take away was it seem to for the moment remove the chance of

a blanket across the board tariff an go for negotiations with each company. jonathan: i am always looking for signal in the stock market an i'm getting it from europe on the stoxx 600. the fact that autos are up for five consecutive days in europe speaks to how the market feels about the tariff headlines. they are focused on what the president is not doing, putting tariffs on europe, an elsewhere. they are focused not on what he is saying. if you focused on what he said yesterday, you would walk away with stunning headlines particularly on geopolitics. the headlines around geopolitics. i will share them with you. just to go through them. "i would love to have putin back at the g7. we will meet with china an russia. i want to cut the military budget in half. i want to reduce nuclear weapons." that should be front page news but barely featured. annmarie: he says what he is

thinking. he is a regular citizen an does not realize he is behind the desk. you have said this before. it is why you see the wall street journal come out with a piece that says "peace through weakness in ukraine." skeptics are saying he is showing his hand will be willing to give potent as concessions for coming to the table. jd vance did seem to put more back on the table an say they want a sovereign ukraine. maybe things like nato will come back on the table, more of a maximalist approach. president trump was saying he is willing for them to come back to the g eight. that will send shockwaves through europe which we will see throughout the weekend. lisa: this is an exercise in becoming a trump whisperer at a time where a lot of things he has said could be incredibly disruptive. was it this week, last month, two years ago where he was talking about treasuries, not having to pay them all back an then that had to be walked back?

it jonathan: was earlier this week. lisa: in europe already had that massive upside surprise in gdp. that is getting some real encouragement. annmarie: he says so much it is like a fire hose so you have to decipher what is important an what will become reactive -- reality. yesterday what we saw was a lot of bark an no bite. not a single tariff was put in place even though every day has been a big tariff day. the only tariffs in place right now are the 10% on china. jonathan: from a markets perspective, this is what it is about. it is the most fascinating time of financial markets in the last five years. the last administration was a snooze. you barely heard from the president. we are hearing from him every day. they are trying to push a monster realignment across several dimensions. financial markets will reprice that story every day. lisa: this is really the key

point an you hammered it. this is a president who wants a complete realignment of trading agreements that had been agreed to under the wto which he has talked about leaving. there is a will question of what the post donald trump economic order looks like an how does this market respond to something they cannot quite vision? it will look different over that is relevant. jonathan: let's get into at this hour. daniel skelly of morgan stanley with stocks close to all-time highs. we will check in with henrietta treyz an speak to haidi crimo read occur. we begin in president of orders his administration to in place reciprocal tariffs. there is a sigh of relief from wall street. we did not get the tariffs. what is the message in from the white house? tyler: this is the first step

ahead of potential tariffs. we know that commerce is tasked with studying 200 trade relations ahead of putting together these tariffs country by country calculations. it will take into account individual countries, tariff rates an schedules but also what the white house is calling a nontariff barrier like subsidies , value tax, even ip protections will be folded into this as they try to put forward exactly what tariff rates could come in we are looking at each of these countries individually. you mentioned that april 1 deadline. we heard that from howard lutnick yesterday. just yesterday passed a key procedural hurdle in the senate but he is not commerce secretary quite yet. he did address reporters in the oval office saying that april 1 will be the timeline an from there they will look to see if they are off to the races depending on how the countries come to the negotiating table. i will quickly mention there seems to be some leeway here.

president trump's senior counselor on trade peter navarro was on "balance of power" yesterday dodging questions on whether or not the angle is zero tariffs or equal tariffs which opens up the possibility that there likely needs to be many more negotiations to get to their final goal. jonathan: tyler kendall with the latest in the nation. joining us now, daniel skelly of morgan stanley. your outlook of 2025, you want to reflect this goldilocks view. how much of a challenge is coming from potential policy changes? daniel: good morning. we've been thinking about policy changes for a long time. the mantra we have been working with his fast announcements, slow implementation. not much has changed an you are seeing in washington a lot of theater in terms of how slowly things could actually play out. more broadly we are seeing rotation in the equity market

that we expected based on a host of fundamental factors that really trends in fiscal policy. lisa: like what? what are the macro factors that are much more important to the market than what the fed does or what president trump does? daniel: good morning, lisa. happy friday. a host of things burst after a lot of volatility an debate around the path of the fed last year proactive versus reactive fed. we have the 95 soft landing proactive fed scenario. the fed has said -- sent the invitation to the market. people are still debating one or two cuts but it is really marginal in terms of risk factors. secondly we are seeing earnings broadening. we are 80% through earnings reporting season an you are seeing almost every sector report positive earnings growth an it is a very different spectrum of results versus what we saw two years ago. last but not least the news has

exacerbated the overhang or the specter of what is the roi on ai. you are seeing that spending mag-7 enabler cohort in the penalty box for the moment. lisa: at this point all of those things sound like a really good story and then someone says what if tariffs up in the auto sector and what if they after the inflation story and prevent the fed from being able to cut and stymie the ability for the broadening out to continue particularly an some of the smaller stocks? how do you dampen those fears of that type of tail risk at a time where we have a lot of noise coming from washington, d.c.? daniel: extremely well said and it is all out there frankly and you stay diversified. we have been saying to folks that you don't want to chase some of the extreme leadership of the last two years. you want to think more broadly of the other asset class selections and real assets and

real sources of income if we get that, taking inflation even higher which would dampen tradition fixed income. we have been advised -- we have been advising clients about these risks for many months now. i would lastly say in terms of that risk factor, look, it may cap the upside this year. the s&p is trading at 21 times. but at the same time we don't see a bear market or a huge downside scenario because we do not see recession. we do not see an earnings recession and we do not see the fed hiking. all three of those variables were in play in 2022 when you did have a 20% drawdown. annmarie: you say in your note that there are key variables challenging the force of american exceptionalism. if you want to invest in america -- if you don't want to invest in america, where else do you go? daniel: let me clarify.

american exceptionalism was not consensus two years ago. we had a recession. we had to get the benign fed scenario, and we had to get through the election. a lot has happened on the way to the 70% rally as of the last 10 years -- two years. in the u.s. market this year we are saying be more diversified and lean into some of the broadening out that is going on vis-a-vis industrials, software, a i a adopters, financials, banks, etc.. outside of the u.s. we have been thinking more about japan from a bottom-up standpoint and that has been a bottle market as of the last six or seven months after being a really strong structural trend. we still see really profound corporate reform and company specifics catalysts as well as opportunities. japan remains one of our favorite ideas internationally. jonathan: it is good to catch up. daniel skelly of morgan stanley. mohamed el-erian in the

financial times, amounting risk to u.s. exception list -- exceptionalism. a really great note from michael will be the team, geopolitical conflict is positive for u.s. stocks. geopolitical peace is positive for international. we are long international in 20 five. no imposition for the rest of the world equity outperformance. he goes on to say this, that the squeeze running a piece trade is to be tested by german elections will be will end -- and will end when peace is elected. lisa: michael harnett likes u.s. bonds. he does not like equities and he likes europe. this is the antithetical view of a lot of people on this program who don't like bonds, like u.s. stocks and do not like the rest of the world. you can make an argument for either. that is compelling to me. jonathan: what is the old sharing -- saying? price shapes narrative. that's for sure. lisa: you feel it everyday with

the flipping an flopping of the narrative. two days ago we were worried about inflation. now we are worried about the loss of u.s. exceptionalism. jonathan: let's update stores elsewhere this morning. here is dani burger. dani: jd vance telling the wall street journal that the u.s. will hit moscow with military action if president putin does not agree to long-term independence for ukraine. his remarks ahead of his meeting with ukraine president zelensky. president trump and elon musk are accelerating their purge of the federal bureaucracy. thousands of probationary employees and several government agencies have reportedly been laid off. the office of personnel management told them to lay off most of their probationary workers. robert f. kennedy, jr. was sworn in as president trump's head of health and human services. the one-time presidential hopeful was sworn in after winning senate approval 52-40 eight mostly along party lines.

former senate majority leader mitch mcconnell was the only republican to vote against him. and that is your brief. jonathan: thank you. up next on the playing field, -- up next on the program, leveling the playing field. >> we are just going to say whatever you charge, we charge. jonathan: that conversation up next with henrietta treyz of veda partners. live from new york city this morning, good morning.

jonathan: plenty of drama in the last 24 hours. not in the stock market. equity futures down by 0.1%. in the bond market yields

unchanged. it is valentine's day. this is for any gentlemen out there, if you have not done it yet, do it. do not ruin it for yourself. buy the flowers. lisa: just take a snapshot of the screen. happy valentine's day. jonathan: happy valentine's day to all of you. lisa: that was lovely. i think it is a random act of kindness throughout the year. you don't have to lean into it. jonathan: do not take that risk. under surveillance, leveling the playing field. >> right now we are a reciprocal nation. if it is india or someone else with low tariffs, we will have the same. whatever india charges, we are charging them. whatever another country charges, we are charging them. it is called reciprocal which i think is a very fair way. we will just do it the easy way. we will say whatever you charge, we charge.

jonathan: president trump ordering reciprocal tariffs on u.s. trading partners already country by country basis. they will launch as soon as april 1 opening the door for negotiations. henrietta treyz writing, "tariffs will be an essential revenue stream an investor should take the president seriously will be literally where they are concerned." welcome to the program. lisa has been talking about this all week. what are the objectives and how easy is it to avoid some of this? the market has taken a clear view that some of this might be avoidable. what is your message this morning? henrietta: first of all, happy valentine's day. great to be here. i would say generally what we are looking at in congress and the way i approach tariffs is through the lens of taxes and deficits. the tax bill that house or public is unveiled last week is a $4.5 trillion package. $3.3 trillion of which is deficit financed. the way that you get massive

deficit hawks like chip roy and ralph normand to be on board with this package is to promise them revenue from the white house via tariffs. they are incorporating tariff revenue into their tax package. as they are writing this bill which i suspect will take months from now to actually hammer out the details, tech is due march 27th. the president needs to make it clear to these members that there will be revenue from tariffs so that they do not end up focusing on the massive cuts that will have to come to medicaid in order to get this bill through. there is $880 billion in this tax package associated with medicaid and cutting from there is a basket of revenue that they will have a hard time getting to the house and the senate. the tariff revenue is essential to get this bill passed. lisa: at the same time the president wants reciprocity. so far the only tariffs we have are the 10% on china.

it seems like he is a negotiating mode, net revenue raising mode. henrietta: exactly. a lot of this is to do with stepping up. howard lutnick is not there yet. they are talking about the trade agenda. they discussed how all of these items from the section 301 investigation into china to the 232 tariffs will be reviewed will be the review is april 1. secretary latin x confirmed that yesterday. the tariffs will be ready to go on april 2. there is a period of time where the congressional budget office will have to review them. they are delays here but what is coming is a need for revenue and at minimum investors should take this as something that they expect from months at least the threat. lisa: how important is it for clients that both of these actions on pennsylvania avenue happened at the same time, tariffs and tax cuts? henrietta: it is the playbook

from 2017. that is a great point. one of the things we talk about a lot is how the first round of terrace for inflationary but we got the corporate tax rate by 14 points. just months before the tariffs started coming into effect. they rely on a whole of government economic policy. by the way, this will come with some secession of domestic farmers and other domestic industries. they are talking about subsidizing the pharmaceutical industry, the shipbuilding industry. there is money that will flow out the door while these tariffs go on just to try to minimize the very negative response that we will get from the prices being at the border and retaliation from other nations. annmarie: since tariffs are a must for reconciliation, where are we in the reconciliation process? henrietta: as i say to clients, the fat lady has not sung. there is a disparity between the house and senate. the senate has a $342 billion

package associated with immigration and military spending. senator graham wants the bill out the door. the senate might vote on it as a whole chamber next week while the house is on recess. meanwhile last night the house passed a very massive bill that has all of those things on military immigration plus a $4.5 trillion tax bill. the real issue is that $4.5 trillion will not cut it. we need more than that to do anything that president trump promised and to make sure there is not those cuts medicaid. there is an incredibly long way to go and the two chambers are at war trying to get something throughout while the president promises tariffs. lisa: you mentioned medicaid twice. is it on the chopping block? henrietta: it is on the chopping block. $880 billion from the energy and commerce committee means that medicaid is on the chopping block. it is the single highest

revenue fraser. lisa: an interesting result for a lot of people to digest. bank of america came out and said it is a blessing in disguise that we have inflation that seems to be going upward because it will tie the hands of this president for how far he can go with tariffs. i want to argue that does apply somewhat to the budget as well given the reaction you see in the bond market. do you agree? henrietta: i respectfully disagree. one of the things i stake my name to is the expectation that the house will bed -- the house and senate were public in congress will have deficit over half $1 trillion larger than anything we ever passed before. the number came in at 3.3 trillion dollars in deficit finance spending. they are assuming that the extension of existing tax rates, not new cuts, extension of existing tax rates will generate

over $2.6 trillion in economic growth. so they are relying on math that the joint committee on taxation does not agree with. the congressional budget office will not agree with. they are assuming that there will be massive economic growth from the deficits that they incur. there is no restraint here. they have a larger appetite for deficit increases than i anticipated by over $1 trillion than has ever been done before. i do not think they are bound by inflation at all. jonathan: appreciate your insight and opinion. henrietta treyz of veda partners on the latest trade efforts. i can tell you what the market is thinking. it is taking this is avoidable. it will not be as bad as you think it will be. autos in europe up every single day. they are up more than 7% on the week. there are some people out there who believe that this will not be as bad but also that maybe

tariffs go the other way. they might come down and the president alluded to that on european autos yesterday. lisa: if you take this president at the latest word, it would signal that you could get some sort of negotiation where if they lower their tariffs, we will not raise our tariffs. that could lead to a more free-trade scenario. we were talking yesterday with adam pozen and he said that would be fine. if it is a reordering of trade partners, great. as long as that allows some sort of trade paradigm that does not put up the barriers. annmarie: this is what trump had to say about the eu. i believe they lowered the tariffs for their cars to 2.5% because that is what we charge an they lowered it from 10%. he is basically saying this is a huge win. then you go back to the reporting from the financial times a week ago saying this is what the european union is discussing. they would have to go to the wto. this may cause problems. that means for china it would be the same tariffs. they are looking at lowering the threshold when it comes to

autos. this is one of the biggest grievance is this man has when it comes to the european union an germany specifically. jonathan: six weeks is a long time in this market and you have to wait six weeks to find out what happens with tariffs on april 1. in the meantime the squeeze continues. european equities close to all-time highs. stateside we are very close to all-time highs too. lisa: people are looking at the fundamentals that daniel skelly was talking about. they are positive. we looking at -- when looking at healthcare, there is some disinflation. jonathan: we will take that. up next the program, heidi crebo-rediker of international capital strategies as the munich security conference begins. from new york, this is oomberg. 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

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jonathan: 8:30 eastern u.s. retail sales 60 minutes from now. later this afternoon at 1:00 p.m. you will hear from the president of the united states more executive orders. somewhere in between we could hear from the vice president jd vance at the munich security conference. we will bring that address to you right here on bloomberg tv. futures on the s&p negative by 0.1%. on the nasdaq, we are down by close to 2%. here is dani burger. dani: airbnb off to the races,

up more than 14%. not only was the holiday season strong for them, they said the current quarter strength is continuing, showing stability after we wondered if the post-pandemic boom had gone out and whether things were starting to look dire. this suggests they are not. we have a earnings on the other side of things. demand for ai making equipment was strong. the issue was export controls. 40% of their business is in china. they are having a hard time selling given the policies coming from biden will be now trump. those shares are down 4.5%. wrapping up with intel. up another 2% this morning. they will continue throughout the day, the biggest weekly rally for intel since 1980 two, up 26%. jd vance at a summit saying he wants to build the most advanced

chips in the u.s.. analyst said maybe there is a deal in the works. intel did lose more than half of its value last year. jonathan: thanks for the update. intel absolutely flying. just keeping track of what is happening with meta-. 19 consecutive days of gains. that is still going. we are going for day 20. lisa: they said the right stuff when it came to ai and delivered the earnings to prove they can monetize this with intel, people left it for dad because they believed donald trump would not make it this national champion that biden tried to. it seems like they will lean into those production efforts as well. jonathan: tech stocks stateside, some top stories. more hostages will be freed tomorrow. hamas backing down from its previous threat of a delay. the durability of the initial six weeks since fire -- cease

fire. lisa: trump said that all hell would break loose if this don't happen by noon on saturday. at least three israelis are being held by hamas and they will be released the next round. what is interesting is what will happen to phase two of the cease-fire agreement because in the midst of all this, trump has said he wants to redevelop gaza. that has infuriated a lot of arab leaders. trump is putting it on the egyptians to figure it out. egypt is working on a plan. jonathan: let me get those comments from jd vance later on this morning. when we get any comments on the middle east because the focus has shifted back to ukraine. annmarie: there will be one comment and it is the fact that saudi arabia will be the place where trump and putin will meet. trump said next week there is a meeting in saudi arabia with top officials. i have been told that this meeting next week is the first set of meetings to prepare for that summit. one individual i spoke to said

it could be at the national security advisor level. we will wait to see who they send. jonathan: interesting. we mentioned some tech names. apple is planning to launch its ai features in china by mid year. sources telling us here at bloomberg the company is aiming for a may launch date. the rollout of apple intelligence in china facing regulatory an tech hurdles. it is a high-pressure situation for the company which continues to see sales decline in the chinese market. lisa: this is one of the most fastening stories especially in light of the partnership they have been forming with alibaba to roll out some of this technology. this has forced apple to make much closer partnerships with the tech giants and the tech champions in china in order to do this in a way that complies with both regions rules which raise the question, ambassador tim cook. how does he play the increasingly fraught relationship between u.s. and china in general but more in particular about how he deals with two polar opposite development spears -- spheres

of intelligence. annmarie: how does he filter outlook that the chinese government says you cannot look up in china? that will be challenging. jonathan: that is the challenge that all tech firms face if they want to operate in the world's second-largest economy. let's talk about apple and google restoring tiktok to their app stores with the attorney pam bondi assuring the tech giants that the ban will not merely be enforced. president trump giving tiktok another 75 degrees period that began on january 20. lisa: bytedance keeps saying tiktok is not for sale. this has not given clarity to the future of tiktok. nonetheless, what is very clear is this talks about the gulf of america or we talk about this, tech companies are taking him literally and they are complying with the orders as they are prescribed. annmarie: the information yesterday said the tiktok ceo

talks with the trump team. i was told that jd vance will be directly dealing with them. they have a short amount of time. everything is happening in april. they have to figure out tiktok. the tariffs. that will be after the march budget. they are trying to get through tax cuts and reconciliation. april will be a huge month. jonathan: they are moving quickly. it is week four by the way. president trump looking to reshape foreign policy from the oval office. >> the ukraine war has to end. the young people are being killed at levels no one has seen since world war ii. it is a ridiculous war. we had a good talk with president putin. we had a good talk with president zelensky. a very good talk. it is not a question of liking or not liking russia. it is the g8.i said , what are you doing? all you talk about is russia.

they should be sitting at the table. i want to talk with president xi jinping of china and the president of russia and let's cut the budget of the military in half. jonathan: vice president jd vance will be talking at the munich security conference later. we are and is putting the words of the vice president of the united states. can you walk us through with the conference is expecting from him? oliver: it is a divisive opinion. i spoke to one single member of the commission who like into the trunk call with putin to an american approach with the russians. he basically said that it was close to being authored by the kremlin and he expects jd vance to dial some of that back in the speech. if it were my money, i would not put it on that because most of the people i speak to are expecting a wrecking ball level speech from jd vance when he takes the podium. just to give you an idea of who

is in the audience, we have world leaders, we have everyone at the eu commission level. we have ceos of different companies and all the companies around europe who come here to hear from the horse's mouth and potentially this new regime of foreign policy from the united states. the europeans are slowly waking up to it will be figuring out how they will have to deal with it. that is what they will be watching for. i have spoken to defense ceos who will be listening very closely in terms of what the u.s. posture will be going forward. all of this stuff will reorder how these ceos think about their business. from the european policy level, they have really not caught up with the new reality that at least for four years, maybe for longer, multilateralism is dead. we are talking unilateralism under trump. annmarie: when it comes to the peace agreement, where is europe? do they have a seat at the table? oliver: it seems not. when you have these officials coming here and we were talking about this last week. the idea that maybe keith

kellogg will come here to present these ideas to the european, look for their input. it seems to me from what i can tell the americans are here to talk. they are not here to listen. they are here to present their plan o send the bill to europe -- they are here to present their plan and send the bill to europe. this is a real fear for europe that this train is already leaving the station. trump has not been president for more than a month. it has been less than a month. imagine the flow over the cadence -- imagine the flow and the cadence of what is happening in ukraine. more has moved than has over the last few months, the last year. jonathan: incredible how things have moved quickly. we all are waiting for those comments from the vice president of the united states jd vance later this morn. this has moved so quickly in just a few days. he put it right. we have seen more movement here in the last week or so on this front than we have in the last year. lisa: it raises questions about what barriers have come down, why suddenly people are so

willing to come to the negotiating table. clearly donald trump has taken the reins and he is getting aggressively involved and saying you cannot negotiate if you are not talking. he is opening those discussions. there is a lot of pushback. at this point he is trying to bring china into the fold to help make this come together. a lot of pieces in this mix. jonathan: let's extend the conversation with heidi crebo-rediker of international capital strategies. welcome to the program. war has a price. peace does too. can we talk about the price debate for peace? heidi: the price is on the table right now. very good questions with trump opening about the charm offenses and not inviting europe to the table. this is essentially what president putin wanted to begin with, to basically have a bilateral with the president of the united states to negotiate without ukraine but without

europe at the table as well. i think the price to pay is what europe is willing to actually bring to the table in terms of finance for the war going forward. i don't actually think that a lot of the comments coming out of president trump and putin and zelensky especially with what the secretary of defense pete hegseth said. i don't think it increases the likelihood of an effective cease-fire. the question was not putin's willingness to come to the table. it was can he deliver a cease fire on what terms that russia wants are certainly going to be very different than the terms that ukraine wants. annmarie: for trump, is this him trying to offer an olive branch or an off-ramp to at least get

putin at the table? heidi: sure. as i would look at it, it is not only an olive branch but it is the opening with the charm offensive to try and talk the language that putin talks which is great powers talk to one another. and that is another reason why i think that president trump invited xi jinping to the negotiating table. at the same time you are building this leverage in the background with secretary scott bessent going just ahead of these meetings at the munich security council in these conversations to negotiate an economic agreement of sorts that would help align some of the economic incentives with what ukraine has on the ground which are significant resources. annmarie: i am glad you brought that up.

you were prescient on this issue. you worked on a magazine article about this, you said how trump should be talking to ukraine specifically about critical minerals and how it could be one huge pillar they could use to get a peace agreement. how could you see the contours of a critical minerals deal between the u.s. and ukraine working out? heidi: at this point you have to bring it out to a larger geopolitical context. the geology these days, i.e. who has access to some of the critical minerals and rare earth is entirely geopolitical. you have borders between ukraine and russia that actually cut through some of the richest rare earth mining grounds. the production capacity as well. where those lines are drawn actually matters. even in ukraine proper you have

come within ukraine's territory, some of the largest titanium reserves, lithium reserves, natural graphite. and you have to keep in mind that china has been tightening the screws the past year, specifically restricting some of the critical minerals that ukraine has an abundance. looking at economic security and aligning the america first interest of the united states with ukraine is actually a very good part of ukraine's potential leverage and a good way to make sure that russia and china do not have access to those strategic materials moving forward. jonathan: i am surprised how surprised the europeans appear to be at the munich security conference. we caught up with the then prime minister -- dutch prime minister who said that trump was right to push them to spend more on defense and they did not do enough. why are they so shocked by some of the words coming from the a

administration when so much of this was telegraphed for much of the last 12 months? heidi: it is longer than 12 months. you knows it needs to actually become a lot less fragmented defense industrial complex. they need coordination. they need to ramp up their spending in a very big way. at this point it looks very unlikely that you will have the u.s. administration foot the bill in the way that we saw over the past three years for the military support that ukraine will continue to need. the good news for europe is that if they focus on a lot of the drone technology which is really ukraine's calling card right now and how they are achieving with less manpower success on the battlefield, that you can actually do it at a lower cost. to the extent that the europeans

can actually look at what the future of warfare is bringing to the battlefield right now in ukraine's favor, that i think that they can actually foot the bill. they just need to step up to the plate and do it. jonathan: appreciate your insight and your opinion. heidi crebo-rediker of international capital strategies . let's get an update on news elsewhere with stories this morning from dani burger. dani: a manhattan u.s. attorney ordered by the doj to drop the corruption case against new york city mayor eric adams has resigned. daniel san soon a letter to attorney general pam bondi defending her office is handling of the case. she said she saw no good-faith reason to drop it. she was joined by other senior justice department officials who also submitted resignations. three veterinarians have tested positive for bird flu infections, suggesting a potentially wider spread of the virus. a study found the virus reached unknown places, animals will be people, with more than a dozen

u.s. states reporting infected cattle. health officials have updated testing guidance for farmworkers and advised people to take preventive measures. elsewhere in sports, aaron rodgers 10 year with the jets has come to an end. the team informed the quarterback he will not be returning next year following their five and 12 record last season. he started all 12 games in 2024 after his injury shorted his debut season throwing touchdowns and 4900 yards. jonathan: up next, making u.s. manufacturing great again. >> in pennsylvania u.s. steel is through the roof. they are all through the roof. we have to have chips made in this country. everything is made in taiwan. we want those companies to come to our country. jonathan: sarah bianchi of evercore coming up next. you are watching bloomberg tv.

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jonathan: sales -- retail sales in 40 minutes. equity futures negative on the s&p. the 10 year unchanged. under surveillance, making u.s. manufacturing great again. >> in pennsylvania u.s. steel is through the roof. they are all through the roof. i think it will be great. more than anybody else, the steel companies, the aluminum companies are on board what is -- with what is happening. we have to have chips made in this country. everything is made in taiwan practically. a little bit in south korea. we want those companies to come to our country. jonathan: u.s. trading partners preparing for reciprocal tariff plans after signing a measured issue customized levies for each country. sarah bianchi writing, "trump is launching the plank of his trade policy that is a structural reform designed to rebalance trading relations and

incentivize re-shoring of production. we still think tariffs are headed higher but not as high as trump threats." in many ways that is why this equity market has rallied. when you say rally, how high and on who? sarah: it is hard to say. we have a long way to go. president trump took tariffs in china from 3% to 10% in his first term. we think those could go higher over the period, as high as 20%. we do see things going higher around the world. i think the equity markets are delighted to see that this is going to take time and subject to negotiation. this is not like the first tariff thing that we saw on canada and mexico where it is used for a different purpose around fentanyl and immigration. this is an attempt to make a structural change.

annmarie: the bark does not match the bite. we are hearing tons of grievances from places like the european union. he is less so listing all of his irks with china get china is the only tariffs actually in place. why is that? sarah: it is a little strange that he has started so quickly with u.s. allies like canada and mexico and the eu. i think there is a lot of complexity in the china relationship that needs to be addressed. he is obviously trying to get a deal in and around tiktok. he needs help on the foreign policy front. that is a longer conversation that may need to happen. i do expect the steel tariffs will go in. that is something that is also always mentioned to him. we are only at step one even though it seems like there has been a lot of activity.

there is a lot more to come from president trump on tariffs. lisa: i want you to elaborate on how you see tariffs pushing this re-shoring agenda which would run contrary to this theory that has been put out recently that maybe he actually wants to bring the walls down everywhere and take him at his word. he wants fair trade. if europe removes those tariffs, then the u.s. will not implement the extra ones. why do you reject that concept of negotiating tactics and what the ultimate goal is? sarah: trump has so many different goals with tariffs it is often hard to sort them out. one of them is fairness. another one is a re-shoring. i think it would answer your question by saying mostly we are getting a bad deal from some of these countries and that the reciprocal tariffs will be to our benefit in some way, particularly if he will count

other things that could have an impact here. my guess is on his mind reciprocal tariffs does lead to higher tariffs in other places. to your point, there is a lot of skepticism among investors and economists that these actions are going to lead to re-shoring. i think a lot of people are much more concerned about it leading to a high -- about it leading to high prices. you saw the ford ceo speaking about that yesterday. steel and aluminum, these are inputs. mexico has a lot of production. there are a lot of different impacts here, not always unfortunately as simple as perhaps the president implied in his remarks. annmarie: you most recently served as a deputy ustr. when you have a president putting out a ton of different ideas when it comes to reciprocity and trade, how much leverage to these individuals in

the room have? sarah: the united states always has leverage. certainly it is going to be challenging for the united states trade representative's to negotiate with every country at once. i think it is a little bit challenging to imagine that we will get a series of great deals on reciprocity. i have worked with jamieson greer. he knows the space very well. the ustr will be ready to go. it is certainly hard to solve for this many things at once. jonathan: appreciate it. sarah bianchi of evercore. the bark does not match the bite. the squeeze on equities continues this week. up next, peter tchir, amanda

lynon of blackrock. the next hour of surveillance just around the corner.

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>> tariffs are the wildcard. it's what everyone is talking about. >> policy is sort of rolling out

and the consequences and decisions are happening in real time. >> are there any carves out to the tariffs? >> if we see some really big increases in inflation, that's going to be very disturbing. >> there seems to be a lot of panic about it, but maybe we should be more rational. there is a lot of devil in the details. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jon: equity futures down 5.1% on the s&p. in about 30 minutes we will get you some economic data. u.s. retail sales at some point this morning. perhaps in the next hour. we are going to hear from the vice president of the united states, jd vance, addressing the munich security conference. this could be a big address from him. lisa: the expectation is he will be speaking to the european union in terms of free speech.

in terms of some of the recent political developments in the region. and of course, on how to achieve a you carrying-russia piece at a time when they don't seem to be at the table. this is something that oliver cook of bloomberg news cap talking about. a lot of people are expecting a harsh speech throwing down the gauntlet. how much more can he lean into what donald trump was talking about? annmarie: he will lead with america first, this administration's northstar, but he gave an interview with the washington journal. vice president jd vance vowed the u.s. would hit moscow with sanctions and military action if putin wouldn't agree to a peace deal. pulling back slightly on what peak headset that's what pete hegseth said about nato and a maximalist approach and it comes to putin. jonathan: encores potentially for a second consecutive day of euro strength. and the tariff story. i think that you put it

perfectly. the bark has not matched the bite. it is that kind of spread still exist in that market and squeeze higher continues. lisa: at this point people are looking for some sign up with the goal is. we talked about, and sarah highlighted this, there are many different goals. it seems that the goal of reciprocity is easier for this market to digest than reshoring and isolating the united states. they aren't compatible. if they drop their tariffs to be fair and reciprocal, ideally come this goes to free trade. jonathan: equity futures down .1%. european autos keep creeping higher. every day so far this week on the stoxx 600. coming up, markets navigate white house headlines, reacting to this week's hot inflation data, and the fed's higher for longer regime. we begin with stocks higher and investors breathing a sigh of

relief as president trump decided not to implement reciprocal tariffs right away. maybe we need to squeeze some shorts, but i suspect we are going to see tariff-related headlines that spook the market as early as next week. pete, good morning. what happened yesterday? pete: i feel like it wasn't really donald trump speaking. i feel like he got sucked into his advisors to come up with a mellow message. trump is we are going to take over greenland, canada should be the 51st state. he doesn't like ontario. he is very aggressive, even on the initial set of tariffs. the rest of the world is like, what was really said? tariffs and trade protection resonates with people. i think sometime next week he is going to say no one is taking this seriously, i'm not going to listen to my advisors, i'm going to be myself and send a clear message.

jonathan: russia should be sitting at the g7 table was the restrained version? peter: why russia was brought in at the time is, maybe if they work with us we will move forward. i think it's a little incorrect right now because there should be some punishment for the invasion, and surely this will stand europe into a tizzy. europe is not comfortable with any form of peace right now, let alone bringing them back. there is all of this friction. jonathan: europe is not comfortable with any kind of peace right now? can you translate that? that sounds shocking. peter: europe, more than us, is worried about if you give putin an end you have given him a mile. that is any accord that gives putin time to take his win, consolidate, leaves him coming back for more two years down the road. that's prevalent in europe. it's a thought that's more concerning to them. they are closer to the front lines. their view of peace is different than ours.

lisa: which is why a lot of the commentary that we hear out of the european union and analysts in the united states is come this doesn't really move the needle further towards some peace agreement that is viable and long-lasting. new have a lot of generals at academy securities, do they agree? do they think having conversations is a really solid step, just like the market seems to imply? peter: we think there will be a deal done this year whether europe likes or not. we think that the russian frozen dollar reserves will play a big part of that. that will be the carrot and stick. we can fight you and keep the dollar reserves, or we can give you some back. with ukraine come you get a lot back if you do some rebuilding. there is a path for ukraine to head towards nato that putin probably won't believe in. there is a chance that if you pull people together -- our generals think the more innocent question is, what would you do most as a general to ensure peace for the u.s.? fund the state department more. talking and engaging with

countries is a way to pull it together. i don't know that there's an obvious, lasting peace, but if you stop the war and you get people talking, there is that potential. lisa: markets are sniffing this out and there is the question of how much that's giving a turbocharged affect to the optimism we heard about the euro. maybe things have gotten so bad they can't get any worse. do you lean into that? not only with europe but with china that if if there is discussion and some semblance of dealmaking that could reignite some of the growth and the rest of the world not just the u.s.? peter: at the start of the year we called it geopolitical opportunities and risks. we felt that there would be some resolution this year in ukraine-russia, some resolution with iran-israel. those will be positive for those regions. this could help germany out of the slump if ukraine is given dollar reserves to rebuild. poland will be a huge beneficiary. poland's importance will grow more and more. when vance talks about pulling

troops out of germany, the past trump administration was putting them in the baltics and poland for two reasons. closer to russia and, this goes back to trump, having a u.s. military base in your country provides huge economic benefits. the military and the people spend money. if germany is not spending their 3%, give it to the baltics who are. give it to poland who has done a lot. i think there will be a lot of thought about this. it is not simplistic. lisa: do you think that maybe the long dollar trade is crowded? right now what we are seeing is a push towards the rest of the world. get your house in order. peter: right now, the portfolio, it is very contrarian but we are recommending, despite all of the friction with china and china as national security threat number one, they will do well. they are heavily under owned. china is trying to do their own thing and trump seems to back off of them periodically.

and i like the chipmakers in the u.s., but the ones who could be domestic. we have been talking about it since day one of trump, he wants a domestic chip industry. we need to be able to make chips. that will be part of national security. that is just starting to take off. we've seen single stock reactions that are just the beginning of what can come. annmarie: everything you are saying i keep thinking, trump is very transactional. pulling troops out of germany but not out of europe but to put them in the baltics. isn't that what the europeans are? trump said that he would like to see putin back at the table to the g8. russia was kicked out because of the illegal annexation of crimea. at the same time germany was willing to build nord stream 2 years later. peter: one thing that europe is getting ahead of itself, i don't think that russia is coming back to deliver cheap gas to germany anytime soon. russia has moved on. china and india will be better customers. they will be buying fossil fuels for 50 years. germany wakes up every day

saying we aren't going to use fossil fuels ever again and then uses fossil fuels. you won't see it return to what it was. that switch has been broken and it's not coming back. the u.s. has a better chance of establishing relationships with this. tariffs, trump will be carrot and stick with everyone. it may work and it may backfire. annmarie: what you think that he wants, his major concessions when it comes to tariffs? peter: something that allows u.s. manufacturing to grow. something that makes it easier to build things here. the one that he is the most committed to and we might get subsidies is the chip industry. everything else will be nice. everything else is a must have. must have come the chip industry. jonathan: you said the g8. annmarie: you think canada will be kicked out so they are the 51st state so it is still the g 7?

jonathan: the pressure was building in the news conference on canada yesterday. what was that about? peter: that is why what i found about what he said about canada versus global tariffs interesting. canada and china you are facing the first round of tariffs and fentanyl negotiations. then 25% on aluminum and steel. now big talk about reciprocal sand vat. i think his message was too muddled. the markets took a comfortably because this isn't going anywhere. that's where he gets disappointed were people don't show up to kiss the ring, don't say, hey, president trump, what do we do? that is when he ups the rhetoric. he wants to bring people to the table but yesterday's message doesn't bring people to the table. jonathan: the market not taking it seriously, for sure. the headline, saudi arabia expressing a welcome to host the putin-trump summit. lisa: we were saying that this could be a game changer we get

some sort of sit-down between these two. it looks like they are willing to make this happen. annmarie: not even willing. it's happening. next week you will have possibly the highest level of security advisors meeting between all four countries, saudi arabia, russia, the united states, ukraine in saudi arabia to start to set the table of what a peace agreement and summit will look like. jonathan: let's get you an update on stories elsewhere. here is dani burger. dani: i will save you both from this conversation. hsbc kicking off job cuts at its investment bank monday. people familiar with the matter tell bloomberg that the latest phase will start in asia but ultimately affect employees globally. hsbc will provide more clarity on the scale of the reconstruction when it provides scale. president zelenskyy's phone call with president trump was positive. maintaining that president putin

was one piece. zelenskyy reiterated that continued support from nato is the cheapest way to protect ukraine. starbucks is set to open 500 stores in the middle east and the next five years. the chain is looking to bounce back after challenging conditions and consumer boycotts. the cl brian niccol tells bloomberg that the company is also ready to adapt to possible tariffs. >> has environments and regulations and laws change, obviously, our job is to figure out how to navigate successfully through all that change. i think we demonstrated over the history of starbucks, we are pretty resilient when it comes to dealing with change. that will continue to be the case moving forward. dani: starbucks plans to add a few stores in china despite a competitive environment. jonathan: more from dani in about 30 minutes. next, the morning calls plus dan ives with tesla under pressure to start the year and meta absolutely flying, up for 19

consecutive days. we will get into that in a moment. from new york, you are watching bloomberg tv. ♪

investment opportunities are everywhere you turn. do you charge forward? freeze in your tracks? or, let curiosity light the way. at t. rowe price, we ask smart questions about opportunities like advances in healthcare and how these innovations will create a healthier world tomorrow. better questions. better outcomes.

jonathan: the last big data point of the week is coming up in a bit, 50 minutes away. u.s. retail sales around the corner. the 10 year, 4.5269. back-and-forth, wednesday up by nine basis points. thursday down by nine basis points. cpi and ppi coming in hot, but the components that go into pce means that the fed don't have to be too worried. what do you make of that? lisa: people are looking at what the fed looks at. jay powell said inflation is running at 2.6% after we got an incredibly high cpi print above

that. the question i have is, does this mean that people are dismissing some of the hotter than expected prints as noise when they should be taking them seriously if not literally? jonathan: it seems the federal reserve might be and that is why gold is at another all-time high. lisa: it is why jane thinks we could get -- we will get a lot of people who come on and tell us why it is just noise. if you're feeling a little bit nauseated by all of the volatility, join the club. it's going to be listening to what the companies have to say, how much pricing power they have, and how much confidence they have. jonathan: very close to 3k. you are summarizing what everyone is going to say over the next hour or so. lisa: we will get a negative read and people will say it is just noisy and let's look forward. jonathan: all-time high at a close is what they might say. bank of america cutting its price target on applied material

citing a more cautious view on china. the stock is down by close to 5%. the second call from goldman is upgrading airbnb to neutral pointing to the potential for margins to stimulate growth. jp morgan raising its price target on roku to 115, saying that it's your monetization is off to a strong start. the stock is a big-time come up by 14%. autos, tesla's down 11% since the start of the year. dan ives reiterating his overweight waiting on the stock. that name is up in the premarket a little bit, but how to struggle recently. what's behind the struggle? dan: i think it is worried about distraction with doge as well as some softer numbers that have come out of china. as well as europe. i think there are worries about distraction, musk -- is there brand deterioration?

we disagree. it's a bet for the ages in terms of musk on trump. when it comes to autonomous, that is worth $1 trillion. that is the golden goose, what they are focused on. any of this is near-term noise. to me, a massive period of growth for tesla. jonathan: let's get to some of the signal. the challenge to autonomous driving, the challenge posed from not just waymo but from byd. how strong is that challenge? dan: it is a challenge, but the bigger issue is that in the u.s. there's no federal roadmap. the point and why we are so bullish in terms of trump and musk, this will lay out on the federal side roadmap for autonomous. there are challenges in china as well. ultimately, tesla will be massively competitive when it comes to everything in china. that will be a huge, strong market for them. there is nothing that makes me

view this as a zero-sum game. we are in the beginning of what will be trillions of dollars spent. lisa: this might be a hypothetical and might be real, byd is subsidized by the chinese government to make enough inroads that they can offer cheap data and cheap technology to achieve some of what elon musk is promising at a much lower price point. why wouldn't that cannibalize from his potential demand significantly in one of the biggest markets? dan: is that a headwind? no doubt. is there some cannibalization? i think it comes down to they produce the best product out there. when it comes to tesla and ultimately what they will have when it comes to autonomous, that is a brand that i think will go through all of that noise. i think they will continue to ultimately gain share in china. when i look at the u.s., despite some contained brand issues, when i look at autonomous and

robotics, that is 90% of the story going forward. any of the near-term worries, i think the bark will be worse than the bite in terms of where the broader innovation is going. i think the best is ahead for tesla, not in the rearview mirror. lisa: contained brand issues is the most interesting way of saying that people don't like elon musk. there are number of people who love him and a number of people who hate him. he is very much in the public sentiment. how can you dismiss that when you have oppenheimer analysts saying that frankly the negative downturn in consumers' perception of elon musk could result in a headwind for sales. why is that just a contend perception risk? dan: haters always hate. they will grasp on to something negative for tesla. when i look at ultimate numbers i think it's contained. will there be some brand deterioration? there could be some, but the reality is the reasons it is

known for the bet of the ages is musk having a front row seat to the trump white house is significant for autonomous deregulatory environment. that's key. any small brand issues, which i believe are contained, it's still what i view as far and away and not even close to the best ev and one of the best automobiles in the world. lisa: who is running tesla? dan: musk continues to run -- and we talked about it on the show. if you go back a few years in terms of x and twitter, i think that this is an engaged musk behind the scenes in terms of tesla. there's a much stronger bench. jonathan: i have to jump in. how does he make the time to do that? where does the time come from? dan: first up, he has more of what i view as a bench at tesla to run a lot of these products.

maybe a few years ago he was doing it all -- i won't say himself, but now there is a lot more activity that goes on without him. that said, most of the innovation that has come to tesla over the next six to nine months, there is so much more innovation ahead than behind and musk will be key to driving it. doge as an added distraction, will that cause negative brand issues? it could. the reality is, in terms of the benefits outweighing the negatives for the broader tesla story. jonathan: i remember when people complained about jack dorsey being across square and then twitter. elon musk is phenomenal how many companies he is across right now. lisa: he has x, x ai, x increased revenues according to new york times by 40%, you have to think that he has sleeping pods. jonathan: the energy of him and the sitting president are incredible. lisa: how much can he be on

top of innovation if he is doing 10 other things? humanity has its limits. annmarie: he is apparently sleeping on the floor of the doge offices. jonathan: he slept at tesla to turn the company around. amazing. meta is on a 19-day run. stunning. unheard of. a record for the stock in the company. what is behind that? the insatiable appetite for that stock? dan: if you look at what they been able to do, it is now about monetization of the billions of users. they are doubling down on ai. advertising looks strong. they are in what i believe will be a massive period of growth. it is just starting in terms of the new zuckerberg and new meta. when it comes to ai they will be one of the bigger winners in advertising. this stock could be four digits.

jonathan: i hear you, i know where you're coming from. the latest on meta and tesla. what are run by meta. lisa: it comes after they explained how they will continue to monetize their billions of users with more targeted advertising that they can charge a higher cost for with artificial intelligence. to me, this is the monetization a lot of people have been waiting for and why it is being rewarded. jonathan: we talked about how the trade issue and how the market might be underestimating how serious they are about tariffs. we need to talk about if the markets are underestimating the doge effort. the president and this administration are serious about cutting costs. when you hear him talk about monetary spending come i don't think he's joking. i think he's for real. we are running the budget deficit north of 6%. last year i think 6.5%. $800 billion, north of $800 billion going to defense. if you want to do something on the deficit you have to do something about defense spending. if you want to do something about defense spending, you have to go to the other big spenders

and say, we are spending money because of you and you are spending money because of us. that is the argument the president was presenting yesterday. lisa: the reason people aren't paying a lot of attention to the tariffs or the doge effort is a lot of the proposals are at cross winds with each other. it's hard to pick up which ones to pay attention to. which is why a lot of people keep looking at specific companies and saying these numbers make sense, i will buy that. jonathan: that is the judgment call, the logic behind the argument coming from the president at the moment. next, breaking retail sales plus awaiting comments from vice president vance at the munich security conference. when they begin, we will bring them to you. ♪ a sleep number® smart bed is perfect for couples

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jonathan: happening now at the munich security conference, the eu commission president ursula ventolin --ursula von der leyen saying -- live from unit get a moment. we will bring that to you. we await u.s. retail sales of the numbers. michael: let's see what we have here. bad month on a headline basis. we will have to look at the core retail sales advance.

down .9%. autos down .4%. retail control has not come through yet. i will get that for you soon as it does. the import price index up .3% on the month. take a petroleum, only up .1%. the inflation concerns we sometimes see are not coming through. it looks like retail sales are a disappointment. if you take out cars, still a disappointment. we will have to see where the problem is. i will dig into the numbers and get the details for you. jonathan: the control group comes in at 2025.8%. -- -.8%. that is bad. yields are down by three or four basis points. 10-year, 449.37. two-year down to about 426.

heading back to the low end of the range for the 10-year. very low for 2025. the high around 480. in the fx market, let's check out euro-dollar. a three-day run of euro strength. approaching once again 105. 104.94. we can't get onto the opening bell a check of the equity market. equity futures soft on the session but no real drama. down by about .1% on the s&p. that is a downside surprise on u.s. retail sales. lisa: when you strip out autos, which we thought would be noisy, you have the downside surprise. the one caveat and why you're not seeing a bigger reaction is because the revisions to the prior month were significantly higher than previously reported. that was revised up the same amount that some of these metrics were revised down or close to it.

it is a push-pull of the internal dynamics of this data. jonathan: mike, any detail on what is behind this number? michael: the census bureau website was not working particularly well, which is not a surprise. let me pull up the table. in terms of import prices, import air passenger fares for the month were down 1220%. devil put -- 12.8%. that will put downward pressure on the pc number. we will get some good news out of the overall pce. the fed will be in better shape. here is the breakdown for the numbers on the retail sales. motor vehicles down 2.8%. furniture down 1.7%. building materials down 1.3%. food and beverage stores down .1%. groceries up .2%.

not much help there. sometimes we get that. gasoline stations were up .9% on the month. department stores up about .8%. non-store retail, this is where the weakness appears to be. down 1.9%. the one caveat is the retail sales control group for last month was revised up. over the two month, they were flat but they are in two separate quarters. this starts on a bad note for the first quarter. jonathan: appreciate it. joining us now is lindsey piegza . a bunch of headwinds held back the consumer. consumer sentiment hit in the last month or so. is it hurting spending? lindsey: clearly. the number post holes into the thesis we see this ongoing resilience of the consumer. we continue to see the consumer spend in the marketplace on goods and services but it is the loss of momentum, the second

derivative decline, the slowing pace of positive extenders. lisa, a lot of the weakness is offset by earlier upward revisions to prior months. that said, there are still challenges facing the consumer in the environment of higher prices, higher borrowing costs, resumption of student debt payments. there's a lot of challenges facing the average american and household balance sheet. lisa: i feel like we are whipsawed every day. one day it is weakness that could be the biggest headwind this year. the other could be inflationary and an upward growth shock. which is it? lindsey: inflation is one of the biggest challenges we are seeing weigh on consumers. they are forced to face this burden of elevated prices as they have been for years. that will continue to erode the ability to spend in the marketplace. we have seen consumers turn to many one-off scenarios. by now, pay later.

-- buy now, pay later. as that burden continues to increase, that is going to admit your eight their ability -- ameliorate their ability to spend at this pace. we have gone from double digit spending to under 3%. that is indicative of a solid 2% gdp pace, but if we slow further, that could start to add to the momentum of a stagflation storyline. lisa: the pushback from the stagflation fears is if you look at the data inside of some of the nation metric, it is not that bad -- inflation metrics, it is not that bad. core pce is fine. do you agree? lindsey: we have seen a lot of improvement from earlier peak levels. we are not in a clear disinflationary environment at

this point. as of last year a lot of noise, a lot of volatility in the metrics. more recently we have seen not just a move sideways but upward acceleration for four consecutive months and the ppi, the cpi, some of the core metrics. the super court cpi. housing alone doubled the 2% target. we expect the pce and the core pce to remain closer to 2.5%, which perpetuates the concern of choking off upside potential for growth. lisa: we are dominated about policy changes that could be coming down the pike. we are awaiting a discussion from jd vance. how quickly some of what is being discussed can percolate into the economic data and backdrop you are seeing? lindsey: they can add to uncertainty in the marketplace and uncertainty we see in consumer confidence. that is behind the drop we saw the start of the year. in terms of filtering the actual price data, that will be

extended out probably about six months because businesses have already responded in anticipation of the tariffs and higher prices. a lot of the inventory has been taken into account. we are not going to see that filter into the price metrics for some time. it will continue to cause near-term volatility and uncertainty. jonathan: great to catch up with you as always. lindsey piegza there. u.s. retail sales with a downside surprise for the month of january off the back of the bond yields lower by four or five basis points. 10-year at 448.40. let's head over to munich. a moment ago, we heard from ursula von der leyen. in a few moments, the vice president jd vance. we need to spend and spend on defense. annmarie: trade wars and punitive tariffs make no sense, she said.

they got a huge applause. she followed up with a threat she talked about, unjustified tariffs on the eu will not go unanswered. something else as we await jd vance. many in the security circles were confused, some worried by the comments made by senior u.s. officials earlier this week. she's not naming names what she's talking about the defense secretary pete hegseth and the rhetoric coming out the incoming -- the new administer asian. lisa: is fascinating to talks about the surge in european defense many. jonathan: the vice president stepping up to the stage. let's listen to jd vance. vice pres. vance: -- for putting on an incredible event. we are thrilled to be here. we are happy to be here. one of the things that i wanted to talk about today is our share values -- shared values. it's great to be back in germany. i was here last year as a u.s. senator. i saw the foreign secretary and

joked that both of us had different jobs than we have now. now it is time for all of our countries, all of us who have been fortunate enough to be given political power by our respective peoples, to use it wisely and improve their lives. i was fortunate in my time here to spend time outside the walls of this conference over the last 24 hours. i have been so impressed by the hospitality of the people, even as they are reeling from yesterday's hernandez attack. -- horrendous attack. the first time i was in munich was with my wife on a personal trip. i have always loved the city of munich and loved his people. i want to say we are very moot in our thoughts and prayers are with munich and everybody affected by the people inflict -- evil inflicted on this beautiful community. we are praying for you. we will be rooting for you in the days and weeks to come. [applause]

i hope that is not the last bit of applause i get. [laughter] we gather at this conference to discuss security. normally we mean threats to our external security. i see many great military leaders gather here today. while the trump administration is very concerned with european security and believes we can come to a reasonable settlement between russia and ukraine, we also believe it's important in the coming years for europe to step up in a big way to provide for its own defense. the threat i worry the most about vis-a-vis europe is not russia, not china, not any other external actor. what i worry about is the threat from within. the retreat of europe from some of its most fundamental values. values shared with the united states of america.

i was struck that a former european commissioner went on television recently and sounded delighted the romanian government had just an old an entire election -- annulled an entire election. he warned the same thing could happen in germany too. these cavalier statements are shocking to american ears. for years we have been told that everything we find and support is in the name of our shared democratic values. everything from our ukraine policy to digital censorship is billed as a defense of democracy. when we see european courts canceling elections and senior officials threatening to cancel others, we ought to ask whether we are holding ourselves to inappropriately high standard. i say ourselves because i fundamentally believe we are all on the same team. we must do more than talk about

democratic values. we must live them. within living memory of many of you in this room, the cold war positioned defenders of democracy against more tyrannical forces on this continent. consider the side in that fight that censored dissidents. that closed churches. that canceled elections. were they the good guys? certainly not. thank god they lost the cold war. they lost because they neither valued no respected all the extraordinary blessings of liberty. the freedom to surprise, to make mistakes, to invent, to build. as it turns out, you cannot mandate innovation or creativity, just as you can't force people what to think, what to feel, what to believe. we believe those things are certainly connected. unfortunately, when i look up at europe today it is not

clear what happened to the cold war's winners. i look to brussels, where the eu, sars warned citizens they intend to shut down social media during times of civil unrest. the moment they spot what they have judged to be "painful content." in this country where police have carried out raids against citizens suspected of posting antifeminist comments online as part of "combating misogyny on the internet." i look to sweden. the government convicted a christian activist for participating in koran burnings that resulted in his friend's murder. as the judge in his case chillingly noted, sweden's loss to supposedly protect freedom of expression do not in fact grant, and i'm quoting, "a free pass to do or say anything without risking offending the group that holds that belief."

perhaps, most concerning late, i look to our dear friends, the united kingdom, where the backslide away from conscious rights has placed liberties in the crosshairs. a little over two years ago the british government charged adam smith connor, a 50 wonderful physiotherapist and army veteran with the heinous crime of standing 50 meters from an abortion clinic and silently praying for three minutes. not obstructing anyone. not interacting with anyone. just silently praying on his own. after british law enforcement spotted him and demanded to know what he was praying for, adam replied simply it was on behalf of the unborn son he and his former girlfriend had aborted years before. the officers were not moved. adam was found guilty of breaking the government's new buffer zones law which

criminalizes silent prayer and other actions that could influence a person's decision within 200 meters of an abortion facility. he was sentenced to pay thousands of pounds in legal costs to the prosecution. i wish i could say this was a fluke, a crazy example of a badly written law enacted against a single person. no. this last october, the scottish government began disturbing letters to citizens whose houses lay within so-called safe access zones. warning them that even private prayer within their own homes may amount to breaking the law. naturally, the government urged readers to report fellow citizens suspected of thought crime. in britain and across europe free speech, i fear, is in retreat. in the interest of comedy, my friends, but also in truth, i will admit that sometimes the loudest voices for censorship have come not from within europe

but from within my own country. where the prior administration threatened and bullied social media companies to censor so-called misinformation. misinformation like the idea that coronavirus had likely leapt from a laboratory in china, our own government encouraged private companies to silence people who dared to utter what turned out to be an obvious truth. i come here today not just with an observation but with an offer. just as the biden administration seemed desperate to silence people for speaking their minds, so the trump administration will do precisely the opposite. i hope we can work together on that. in washington, there's a new sheriff in town. under donald trump's leadership we may disagree with your views but we will fight to defend your right to offer it in the public square, agree or disagree. [applause]

we are at the point that the situation has gotten so bad that this december romanian strata canceled the result of a presidential election based on the flimsy suspicions of an intelligence agency and enormous pressure from its continental neighbors. as i understand it, the argument was that russian disinformation had infected the romanian elections. i would ask my european friends to have some perspective. you can believe it is wrong for russia to buy social media advertisements to influence elections. we certainly do. you can condemn it on the world stage. if you're democracy can be destroyed with a few hundred thousand dollars of digital advertising from a foreign country, it wasn't very strong to begin with. [applause] the good news is i happen to think your democracies are

substantially less brittle than many people apparently fear. i really do believe allowing our citizens to speak their mind will make them stronger still. which of course brings us back to munich, where the organizers of this very conference have banned lawmakers represent and populist parties on both the left and right for participating in the conversations. again, we don't have to agree with everything or anything people say, but when people represent -- one political leaders represent an important constituency, it's incumbent to at least -- on us to at least participate in dialogue with them. to many of us it looks more and more like old entrenched interests hiding behind ugly, soviet era words like misinformation and disinformation who sadly don't like the idea that somebody with an alternative viewpoint might express a different opinion or god forbid vote a different way

or even worse win an election. this is a security conference. i'm sure you came here prepared to talk about how exactly you intend to increase defense spending over the next few years in-line line with some new target. that's great. as president trump has made abundantly clear, he believes our european friends must play a bigger role in the future of this continent. we don't think you hear the term burden sharing, but it's an important part of being a shared alliance that the europeans step up while america focuses on areas of the world that are in great danger. let me also ask you, how will you even begin to think through the kinds of budget questions if we don't know what it is we are defending in the first place? i have heard a lot in my conversations, and i've had many great conversations with many

people gathered here in this room. i've heard a lot about what you need to defend yourselves from. of course, that is important. what seemed a little less clear to me and certainly i think too many of the citizens of europe is what exactly it is you were defending yourselves for. what is the positive vision that animates the shared security compact we all believe is so important? i believe deeply there is no security if you are afraid of the voices, the opinions, and the conscience that guide your very own people. europe faces many challenges. the crisis this continent faces now, the crisis i believe we all face together, is one of our own making. if you are running in fear of your own voters, there is nothing america can do for you. nor is there anything you can do for the american people who elected me and elected president

trump. you need democratic mandates to accomplish anything of value in the coming years. we learned nothing that thin mandates produce unstable results. there is so much of value that can be accomplished with the kind of democratic mandate i think will come from being more responsive to the voices of your citizens. if you're going to enjoy competitive economies, if you going to enjoy a affordable energy and secure supply chains, then you need mandates to govern. you have to make difficult choices to enjoy all of these things. we know that very well in america. you cannot win a democratic mandate by censoring your opponents for putting them in jail. whether that is the leader of the opposition, a humble christian praying in her own home, or journalist trying to report the news. nor can you disregard your basic electorate on questions like who

gets to be a part of our shared society. of all the pressing challenges the nations represent here face, i believe there is nothing more urgent than mass migration. today almost one in five people living in this country moved here from abroad. that is an all-time high. it's a similar number in the united states, also an all-time high. the number of immigrants who entered the eu from non-eu countries doubled between 2021 and 2022 alone. it has gotten much higher since. we know the situation did not materialize in a vacuum. it is the result of a series of conscious decisions made by politicians all over the continent and others across the world over the span of a decade. we saw the horse brought by these decisions yesterday in this very city. of course, i cannot bring it up again without thinking about the

terrible victims who had a beautiful winter day in munich ruined. our thoughts and prayers are with them and will remain with them. why did this happen in the first place? it is a terrible story but it is one we have heard way too many times in europe and unfortunately too many times in the united states as well. asylum-seekers, often a young man, already known to police rams a car into a crowd and shatters a community. how many times must we suffer these appalling setbacks before we change course and take our shared civilization in a new direction? no voter on this continent went to the ballot box to open the floodgates to millions of unvented immigrants -- unvetted immigrants. in england, they voted for brexit. agree or disagree, they voted for it. all over europe they are voting

for leaders who promise to put an end to out-of-control migration. i happen to agree with a lot of these concerns, but you don't have to agree with me. i think the people care about their homes, they care about their dreams, their safety, and capacity to provide for themselves and their children. and they are smart. this is one of the most important things i have learned in my brief time in politics. contrary to what you might hear a couple of mountains over and davos, the citizens of our nation's don't think of themselves as educated animals or interchangeable cogs of a global economy. it is hardly surprising they don't want to be shoveled about or with endlessly ignored by their leaders. it is the business of democracy to adjudicate these big questions at the ballot box. i believe the dismissing -- people dismissing their concerns or worse yet shutting down media, shutting down elections,

shutting people out of the political process protects nothing. in fact, it is the most surefire way to destroy democracy. speaking up and expressing opinions is not election interference. even when people express views outside your own country and even when those people are very influential. trust me. i say this with all humor. if american democracy can survive 10 years of greta thunberg's scolding, you can survive a few months of elon musk. what german democracy -- what no democracy, american, german, or european will survive is telling millions of voters their thoughts and concerns, their aspirations, their pleas for relief are invalid or unworthy of being considered. democracy rests on the sacred principle that the voice of the people matters. there is no room for firewalls.

you either uphold the principle or you don't. europeans, the people have a voice. european leaders have a choice. my strong belief is we do not need to be afraid of the future. you can embrace what your people tell you even when it is surprising, even when you don't agree. if you do so, you can face the future with certainty and confidence knowing the nation stands behind each of you. that, to me, is the great magic of democracy. it is not in these stone buildings or beautiful hotels. not even in the great institutions we have built together as a shared society. to believe in democracy is to understand each of our citizens has wisdom and has a voice. if we refused to listen, our most successful fights will

secure very little. as pope john paul ii, one of the most extraordinary champions of democracy on this continent or any other once said, do not be afraid. we should not be afraid of our people even when the express views that disagree with their leadership. thank you all. good luck to all of you. god bless you. [applause] matt: we are listening to jd vance addressing the munich defense conference. really going directly at germany in terms of their firewall to keep out the afd from power. i matt miller. this is "bloomberg open interest." we are joined by oliver crook.

annmarie is joining us as well. taking direct aim at germany, direct aim at a firewall that probably -- people in other democracies don't understand. jd vance sank democracies have to listen to the will of the people. what do you make of that, oliver? we don't have oliver. i do see annmarie sauntering on the set. fascinating turn of events here because you had elon musk supporting the alternative and far-right party. the mainstream parties have been trying to keep it out of power. sonali: there is on the ground tension and international. matt: an afghan man allegedly drove a car into a group of labor protesters at the munich security conference. definitely tension on the ground. oliver crook, we have you now.

what do you make of jd vance's speech? hello that be received? -- how will that be received? oliver: very poorly from the bundestag. we have an election next week. the next bundestag will be can situated by 20% by the afd, the alternative for deutschland. that is precisely what was at the center of jd vance's speech. we are at the munich security conference about defense. we thought it was going to be about ukraine. that was part of the speculation. he spent little time talking about ukraine and physical defense. he went on a political manifesto about basically the virtues of free speech and promoting not just the america first attitude but values that drive that and saying you need more of that here in europe. he was talking about censorship on social media. he was lambasting mainstream political parties within not