>> this is bloomberg daybreak: europe. these are the stories that set your agenda. stocks rise, more chinese government support for the

private sector. u.s. futures pointed to gains of the open after the presidents' day holiday. u.s. and russian officials meet to discuss ukraine but without key that the table. european leaders attempt to find a common voice in dealing with president trump. chancellor olaf scholz and the conservative front-runner rule out working together after sunday's vote. the latest on germany's election. tuesday. european futures pointing lower, down by 0.1% after record highs yesterday powered by defense stocks, lifted by expectations of spending to support defense. european futures, taking profit.

we will see how it evolves as we lead up to the open. ftse 100 lower by 0.1%, you data on the labor market later today which we will break. cpi and inflation data, crucial for the bank which comes through wednesday. benchmark 10 year 451, chris wilder saying he is comfortable pausing at this point and continues to watch the dynamics around inflation. if inflation evolves as it did in 2024, there is scope to cut rates later this year. the pound in focus. 1.25, weaker by 0.2%, largely a dollar strength story will stop brent $75 per barrel, opec-plus considering pushing back output. gold 2900 per troy ounce. they have raised their forecast,

goldman sachs comerford gold. and that is about moves into the safe haven. a lift for stocks in hong kong, hstech index a solid session, up 1.4 percent on expectations there may be support from xi jinping and beijing for the private sector after a meeting yesterday that included jack ma of alibaba. across the region, gains of zero point 1%. the nikkei up 0.4% and rba cuts for the first time in four years. 25 basis point cut coming through from the rba. u.s. and russian officials are meeting in saudi arabia today to discuss ways to end the war in ukraine. without any representatives from kyiv. the talks come after a phone call last week between presidents trump and putin. president macron hosted leaders

in paris to discuss that you defense capacity as well as the war. the leaders did find some common ground. >> there was agreement and unanimity that an increase in defense spending is necessary and there is no need to get irritated if an american ally says spend more. his words are definitely justified by fact -- those words are definitely justified by fax. tom: greg has been following this with a focus on talks in saudi arabia today. what can we expect from the conversations between russian and u.s. officials in riyadh? >> first of all, this is a lot about establishing communication, a major policy reversal from the biden restoration which sought to isolate russia and issued a high with them. there was little communication

between the biden administration and russia and know you have face-to-face talks and potentially a summit. we will look at what comes of such a summit, can they arrange a meeting between trump and which the u.s. as they would like to do before the end of the month. people will be watching the contours of any possible cease-fire agreement russia and the u.s. see as viable and would that work for ukraine or others? that is what we are watching with the meeting today. tom: we have heard from the german chancellor scholz making his views clear in terms of ukraine's absence from the negotiations. >> this is completely premature and the wrong time to have this discussion now. i'm irritated by these debates, i have to say. this is highly inappropriate departed honestly -- to put it honestly. tom: direct comments from the german chancellor around negotiations in saudi arabia.

what else have we heard from european leaders? is the trump administration open to listening to european concerns to taking on board some of these concerns? >> you see a worry among european leaders the trump administration thinks they don't need them, they can talk directly to russia or others and europe isn't necessarily a player. they are scrambling to figure out a way to convince the trump administration they need to be present in dialogues on european security and they deserve a place at the table. one sticking point, defense spending. can europe step up, provide security guarantees for you brain and provide for their own security? trump has been critical of nato spending among other members, defense spending so that is a sticking point. we have the sense europe is scrambling to formulate a response to a trump administration base you as

moving quite rapidly -- they see as moving quite rapidly. tom: europe scrambling, the u.s. and russia set to meet today. the ukraine war looming large over the german election. what a campaign. europe's biggest economy heads to the polls sunday. defense policy has become a dividing line between chancellor scholz and the frontrunner of the cdu. let's bring in are reported with the latest. how do they differ, the two potential candidates for chancellor, the current chancellor and the candidate who wants to take his place? how deep is the division? >> good morning. scholz is always been, when it comes to ukraine, reluctant, careful.

challenger is much more assertive. he wanted to send missiles to ukraine. now, since the munich security conference, they are pretty much on the same position, meaning they will continue military aid for ukraine and beef up defense. so if you have a common enemy, if you want to put it that way, you more or less unite but definitely the challenger is more assertive on beefing up defense. tom: there is an expectation that we get a coalition on the back of this vote on sunday. the shape remains a question but it seems like they have ruled out governing together. what do we read into those comments?

exit is not a huge supply -- surprise. they are running for the same job. people expect if scholz loses the election, which it looks like it right now, he will probably leave the public stage. merz and scholz are not really getting along really well. others in the social democratic party will move forward and probably operate with merz. tom: thank you. the impact of the discussion when it comes to ukraine on german elections. ruling out merz and scholz together. the european council on foreign relations will join us to discuss europe's security concerns i had of germany's election.

someone with deep experience of the defense space when it comes to germany. news, analysis and market moves as we build up to the german elections this week and a program one polls close february 23 live from berlin. european bonds slipped and shares in defense companies rallied on the likelihood of greater military spending. let's bring in our reporter. will gains continue is the question. >> the big question, 2020 five is the year for european stocks. another record close for euro stocks. the second in three sessions. driven by optimism around defense spending on defense stocks. this stock closed strongly at the highs of 14%. if we look at how this sector performed year to date,

rheinmetall 50%, the broader defense industry up 22% so industrials are powering the next leg of the european stock rally. tom: we heard from a fed speaker talking about inflation and comfortable holding rates at these levels. when did you take away from the fed commentary? does it change expectations about where the fed goes? >> it was interesting to hear why he is calling for the fed to go on pause, saying he needs to progress on inflation. he saw the january cpi figures that came in hot, calling them mildly disappointing but viewed them with skepticism saying the cpi figures for the last few months running have been-weighted the seasonal factor so perhaps the job he sees as seasonal, not having a base effect the fed should be worried about but he wants to see more progress on inflation before the fed cuts again.

a note on terrorists, he reiterated he doesn't the tariffs as inflationary as the curve opens lower this morning, reopening after the holiday yesterday, following the european yield rise yesterday, 10 year yields back basis point higher this morning. tom: doesn't see tariffs as inflationary. interesting. valerie, thank you. 7:00 a.m., labor market data. criswell are critiquing or putting our critical eye on the inflation data how -- out of the u.s. there is question about u.k. data validity. we will break that for you. 7:45 inflation data france as we think about the ecb reaction and 10:00 a.m. we lead up to the german elections on sunday, that is ew survey. are we seeing green were to be

economy that has flatlined for two years? get a roundup of the stories you need to know in daybreak. the bloomberg terminal. rally in chinese stocks linked to support from xi jinping and ai enthusiasm front of page. elon musk says the latest version of his x ai start up the smartest day i honor -- ai on earth. how his limbs measure up. before we go to break the french payment and services platform operating revenue. we will speak with the red ceo later this hour. this is bloomberg. ♪ you think those phone guys will ever figure out how to keep 5g home internet from slowing down during peak hours? their customers have to share a wireless signal with everyone in their area. oooh.

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tom: back to bloomberg daybreak: europe. elon musk ai startup showed of its updated model, technology that they say is the smartest a high honor. is the claim true? how big is this moment for the release in terms of ai and moving things forward? has barack moved -- grok the dial? >> it has moved the dial, but how much? we will wait and see. this is an early stage. he was old -- it was only launched within the next couple hours and access will be limited to subscribers on the x platform. some claims they are making in the devon duration are impressive -- demonstration arm impressive -- are impressive.

a rocket from earth to mars and back again. keeping things relevant to spacex. they are claiming and matches in be other popular models -- and beats other popular models like chatgpt on calculations and complex reasoning. tom: we will have to see whether independent assessments verify the claim that elon musk is making that it beats its competitors. speaking of which, openai is among them. does this put sam altman on the back foot? is he playing catch-up to elon musk? >> a little bit but i think this is a bit like a multidimensional game of ping-pong. somebody hits the ball and the next person takes things forward. we saw that with deepseek and

now we have grok three. there is a chatgpt update in the pipes. i'm sure we will see updates from google gemini. this is the world of generative ai. these chatbots, there is more to come from mosques competitors -- musk's competitors on this pivotal software technology. tom: multidimensional ping-pong. i like the characterization. matt, on the latest chatbot from elon musk and x ai. bloomberg learned a cofounder of openai is raising more than $1 billion for his ai startup with evaluation of over $30 billion. the company is among the world's most valuable tech companies,

reported as well, switching focus to the car space, honda is willing to resume take a protective nissans ceo -- plex if nissans ceo steps down. at least 15 people have been injured after a delta plane flipped and came to a rest upside down after landing in toronto. the plane went from minneapolis with 76 passengers and four crew on board. according to paramedics, three passengers are in critical but none life-threatening condition while another 12 sustained mild-to-moderate injuries. southwest airlines says it will got more than 1700 jobs in its leadership ranks, impacting 50% of corporate positions, the first layoffs in the carrier's history. this extends upheaval that gripped southwest for the past

year including a battle, a board overhaul and operational changes. we will hear from the bhp ceo after they posted a 23% drop in first half profit on lower chinese demand. that is next. this is bloomberg. ♪ the way i approach work post fatherhood, has really trying to understand the generation

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>> i will start with the last half performance, another solid operational and financial per ends for the company. good cost control within the business and production firing on all cylinders across the business. look at our iron ore business with record shipments for the first half, notwithstanding pressure is in the market. production in our steelmaking

cool business in queensland up 14% and the exciting story, copper production of 10% which keeps us on track for four -- 24% growth over a three-year period. what are we seeing it by way of near-term commodity demand? there has been overall economic challenges or headwinds in china but the sectors of the economy that are important to bhp's commodities have been performing strongly for the most part. the exception is the property sector which has been under pressure but starting to see green shoots by way of increased new starts, property price rises in some sectors so i think we will see momentum in 2026 and we expect with a progrowth stance reiterated in china, they will calibrate their policy measures to ensure the domestic economy stays on track or continues to gain momentum and they will calibrate measures based on what

they see in export markets, which there is heightened uncertainty given policy settings in other jurisdictions. >> what is your forecast and level of preparedness when it comes to tariffs? on china and potentially global tariffs, threatened and expected but not fully into play. how does that affect demand-side but also across supply chains? >> obviously getting a lot of attention on the part of everybody in the markets currently has to to that lands end the reality is we don't know. willie weeks or months before we know tariffs and counter tariffs settle? bhp is a business. given our portfolio, we are positioned for all worlds including heightened uncertain tea. we have commodities not dependent on the individual the maddox so broad-based in terms of demand by the markets they sell into as well as end-use and

within those, we have assets that sit at the low end of the cost curve which gives us resilient margins, 10 percentage went ahead of the competition when it comes to average margins. that places us very well for a period of heightened uncertainty. given growth options, if the global economy stays on track and continues to grow, the world will need more minerals bhp produces and we are at the forefront to meet the demand. tom: that was bhp's ceo speaking to haidi stroud-watts. iron ore gating -- gaining after he talked about the chinese housing markets. martin has his finger on the pulse of commodities. what stood out from what mike henry said in terms of demand around iron ore? he was bullish on copper and

seeing green roots in the housing market in china. >> i would say very cautious optimism there. the iron ore market is cooling after many years of growth from china and china's industrialization and urbanization. we have seen steel production peak and bhc -- bhp recognizes that. he did say there is demand growing from other sectors, manufacturing and infrastructure. which is offsetting some of the property malaise in china. so he said this year, he sees iron ore supply tightness sort of start to come back a little again, narrowing the surplus, which has dragged in prices but

still pointing to the longer-term pressure on iron ore from major new projects like one by rio tinto in africa, china's slowdown on demand and uses of scrap. there wasn't anything hugely new here. it is reiterating a broad picture for bhp. they still make a lot of money from steelmaking material. the boom days are behind us. tom: the boom days are behind us. profit falling 23%. the broader read across to the mining sector from what we heard from bhp? >> i think so. this comes i had a busy few days of mining earnings. bhp today coming up later this week, valley, glencore, rio tinto reporting this week. bhp cut its interim dividend to the lowest in several years.

bhp and mining is focused on capital allocation, going for growth over coming years rather than paying back to shareholders as they have over the last decade. tom: martin, thank you very much. on the bhp results ahead of the earnings. europe's security ways on germany's election i of the vote. the challenges ahead. with the senior policy fellow at the european council on foreign relations. that is coming up. this is bloomberg. ♪ i've been driving a truck lif a bear ran across the front of my truck and i had to avoid him, instead of hitting him. i got a good settlement for it and everything, and that helped me to go out and acquire gold and silver.

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>> good morning.

these are the stories that set your a gender. chinese government support, u.s. futures .2 gains. u.s. and russian officials discuss ukraine, what one top diploma -- diplomat had to say. let's check in on the markets after another record yesterday powered by defense and gains on expectations europe will step up spending. ftse futures as we await dana --

data, s&p pointing to gains after presidents' day holiday adding 2/10 of 1%. nasdaq up 3/10 of 1%. we have been hearing from fed chair of course or fed governor chris waller suggesting he is comfortable with rates. the door is still open for cuts later this year. 450, 10 year yields are up, pound in focus ahead of the dater. brent holding onto gains, opec-plus considers pushing back additional ... barrels onto the market. currently the yellow metal is up

. let's check in on asian markets on a hawkish cut, yes, cutting rates but the aussie dollar is unchanged. the broader benchmark is flat across asia, optimism around beijing. nikkei is up. officials meet to discuss the ending of the war in ukraine, coming after france's emmanuel macron hastily convened with leaders to discuss possible ways to boost defense spending. i'm joined by yana bugerin.

thank you for your time. will europe meet the moment? yana: i have heard this is the time and i'm very tired, i was hoping we would see more results. it became clear europeans are not on the same page. tom: ... is is russia exploiting that division? is the u.s. exploiting that? jana: jd vance gave that speech, that very special speech that rang a bell, struck the time with right-wing populists in europe. we've seen a new alliance

between the afd and trump administration and what they have in common is the testing that eu, the bureaucracy and they have that in common with vladimir putin, so it feels as if europe was under attack and disruptive forces were fueled from the outside. tom: yesterday the munich conference was a byword for the abandonment of transatlantic relations. let's take a listen to some of what jd vance had to say. jd vance: vis-à-vis europe, it's not russia, it's not china, i

worry about the threat from within, retreat of europe from fundamental values with the u.s.. tom: uh, the threat from within is a term used by -- by autocrats. what do you make of the comments and whether this will be catalytic and a catalyst to get cohesion and defense spending? jana: not everyone in europe was so negative about the comments. look at viktor orban, the afd, so there is a reason why emmanuel macron just gathered european countries, the eu is

not able to act because of many issues that vance addressed, issues fueling a culture war, a cultural war that already existed. same situation. tom: just, yeah, jana, do you think there will be no agreement on joint defense? jana: so i am hoping for something that connects the eu as a powerful incident but what is debated is the budget because there is no agreement, that

could include the u.k. and norway. tom: what should security guarantees for ukraine look like and should we have boots on the ground? jana: we need something that deters russia and many are convinced the only thing would be american troops for guaranteeing that america was with us if european troops get attacked but that does not seem likely. pete hegseth said no article five, no boots on the ground, but europeans have made their own contributions in ukraine conditional to american support so we are in a trap. tom: how do german elections change the dynamic? >> actually less than one would

hope or think. yesterday the chancellor candidate more it's -- moritz echoed that now is not the moment for boots on the ground but germany needs to prepare for such a situation. the chancellor was not open to defense spending, he said this needs to be a decision amongst nato makers and germany will have problems meeting 2% wants the special fund from 2022 runs out. tom: what is the gap that we are

talking about in spending needed for europe to have its own capabilities? >> it is hard to say because regional plans are based on the assumption that american troops stay in europe and we have not heard about withdraws -- withdrawals but this is to be expected and europeans have to pay more than they thought and the 2% goal is a thing of the past. some countries are there, some are far away. like italy or spain. tom: ok.

senior policy fellow at the council on foreign relations with that assessment and analysis in the current context, indeed. we will build up to the german elections including a special program on february 23 live from berlin. will get the read on the labor market after bank of england governor and you bailey warned the economy is static. i'm joined by lizzy burden, will the numbers out of the u.k. move the dial? lazy: these numbas have been the bane of policymakers lives because people are not answering the door when statisticians want to know the latest on jobs data

but a hot paper and will not move the needle, not stop it from moving more because the bank of england revised up its forecast. we heard from andrew bailey yesterday, pouring cold water over strong figures, not quite 1% but not a recession but look, bailey echoed catherine man. even if he did not get to the same jumbo cut, actually it's not likely to knock the boe off the careful cuts. tom: bloomberg sees an

additional three cuts, don't they? in terms of what this means there is further pain, is defense spending taking money? >> it looks like it might do. the treasury asked departments to cut boodgets, about 5% cut or 11% cut as worst case scenario. now because of the need to spend more because of the push to europe, the worst case is looking more like a base case and defense argument could be a cover for austerity, it really speaks to the difficulty rachel reeves is in. as we head toward a spending review, but also, another blow

to rachel reeves, the supreme court refused to let the treasury intervene in this landmark court case on car financing. i know that you know that this is important, it is a blow to her growth agenda. shares were down 4%, this is a major thing for consumers and banks. tom: lizzy burden indeed. tying in indeed the challenges for rachel reeves. we will continue to watch those movers, potential movers indeed. now the u.k. supreme court made a decision then rachel reeves will respond. coming up, french payments, payments -- full year operating

revenue, we speak to the ceo next. this is bloomberg.

tom: welcome back. revenue missed analyst estimates, joining us now is the ceo of the company, birch rand. >> good morning tom.

i'm very pleased by results in growth, we posted a record here and earnings-per-share increased. when we look at expectations in 2025 thanks to the good momentum it is our commitment of more than 10%.

tom: what gets -- how -- how -- what's -- what's your confident above -- confidence above -- above -- above 10% and what gets you to that level? >> one thing is economic uncertainty for the reasons you know, but we can say latin america is doing well. our confidence is coming from the fact that our activities are doing well. we have all the other elements in terms of digital services,

engagement and mobility thanks to the momentum we have and then there is one last thing. if things don't go as well as expected we have leverage. until 2020 five being cautiously confident, if things do not go as expected we can play with the lever of expenses so the lever will grow but it will depend on meeting the target. tom: and -- and the political -- the political uncertainty

continues but there are -- there are serious challenges. do you -- are you accounting for the tax increase? how much of a tax burden increase will -- will that be? >> it will be moderate because our activities are worldwide. so the impact on the citizens and companies, we need to make an effort to allow a budget that is moving towards the right direction. due to our activities the impact will be limited. tom: the u.s. is a big market for you, what -- what are you seeing, how concerned are you about a trade war between the u.s. and european union? >> the market is the number one

market in the number one economy and it will be like that for very long years. we are very local, not a manufacturing company. we are importing services, thinking about tariffs the only thing we are concerned about is if democracies don't find a consensus so we are more concerned about the level of impact. tom: ok, thank you for your time. reporting full year of 1.2 billion euros.

we appreciate your time in your response. plenty more coming up, stay with us. this is bloomberg.

>> welcome back. continuing to monitor the european markets. the defense space playing a huge role with stocks with double digit gains for defense technology expected to be needed

increasingly urgently. futures are flat, awaiting data. s&p after the holiday with decent gains. let's flip the board. he does see the door opening but chris waller is comfortable with rates on hold and this is how expectations for inflation are starting to evolve. let's look around u.k., we know the dater is muddy. lizzy burden will break down the details. since we are expecting cuts,

potentially 55 basis points. the economy is looking stagflation every and we are going to lead up to the opening trade, keeping our eyes on developments with a meeting and european response to it. the opening trade is next. this is bloomberg.

kriti: good morning, i'm pretty grouped up in here is what you need to know.