sen. graham: >> tariffs are probably the biggest thing distracting everyone. >> markets do not see much permanence and that is where we feel that it might be a miscalculation. >> money will flow out the door. >> the bond market is more vulnerable at this point. >> i do not think tariff announcements are the reason to sell stocks. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning and good morning.

for our audience worldwide bloomberg surveillance starts right now with equity futures elevated up .13 after snapping a losing streak. the nasdaq we are higher by 0.4%. top u.s. and russia officials meeting in riyadh without anyone from kyiv and brussels left out in the cold. lisa: and a real sense of resentment by not being included in these talks. in some officials are saying hold your horses do not protest too much do not give them the credence that they have some import that they could otherwise have if we are at the table. annmarie: it is a significant moment and it has been years since we have had high-level meetings between u.s. officials on the russian counterparts. the question is is this to improve a relationship between washington and moscow where can they really come out of the meeting paving the way for a summit that we reported over the weekend that trump once by the end of the month. jonathan: i spent the whole

weekend reading about how upset the europeans were. scathing words, a wake-up call for the continent. they did not come from jd vance but from mario draghi and "the financial times." they were powerful. forget the u.s. europe has put tariffs on itself. the challenges coming from within, not just from outside. lisa: that was highlighted by the fact that nothing like anger can galvanize an entire country or region which is why there are a couple of summits over the weekend held by emmanuel macron and other european leaders. the problem was i could not get everyone the same room because schedules were misaligned and they could not agree on a plan which highlighted the challenges and obstacles that jd vance was referring to. put aside the subtext and the context in terms of what social media does does to free speech. there is a challenge of what will unite you guys and when will you get your act to debt --

together and decide what you want. jonathan: maybe the trump administration would push the europeans to do things that are good for them. the bonds are down and yields are up. defense spending expected and defense stocks are rallying. european equities are outperforming. we talked about the tariffs. the stocks over in europe had been rallying and not declining. they picked up through last week. lisa: how much can some of these politicians stand in their own way especially as we lead to pivotal elections in germany on sunday. is this a moment where we have hit the trough of european pessimism? could we see a plan on the other side? there is a question of how u.s. exceptionalism has peaks because europe as hope or has -- or have people underestimated the barriers. annmarie: trump is forcing their hand to where many european leaders have been wanting to go. it is not just mario draghi. the irish premier talking about

how they need to innovate more and that is what america has been telling europe for decades. and maybe they will finally do it. jonathan: they talked about the risk in the bank of america fund manager survey. long stocks and cash levels are at 15 year lows. fear of a global recession at a three year low. equity futures positive by .3%. coming up we catch up with brian on invesco about why investors might need to brace for volatility. tyler kendall and the ihg ceo on the state of travel. we kick it off with stocks. ryan levin -- brian levitt what writing "market drawdowns and volatility are almost always the result of policy uncertainty." he joins us for more. is peak uncertainty behind us yet? ryan: i do not want to be overly

negative, i am reflecting over a period of volatility where it has been quite low. ultimately it is a good environment for stocks but it will be a little bit more difficult. inflation at the upper end of the comfort zone which is not terrible unless the federal reserve things they might have to take a different approach and you have to deal with the uncertainty around trade and industrial policy. there is more to come on this. investors probably looked at what happened with canada and mexico and said all good? i suspect that is not the case. we will have volatility and that does not change the fact that it is a good backdrop. jonathan: we are just eating into consensus trades before starting 2025. in the bond market the yields are lower and not higher and if we look at equities, europe is outperforming the united states. do you want to fade that or pilot and? brian: pile in. we have had a prolonged period

of u.s. outperformance but what we have been wanting is some broadening out. some things like small caps or european stocks were cheap, that did not mean that they would outperform. you needed catalysts. you have right now is easing in different parts of the world. you have valuations a little bit more extended in the united states and higher nominal growth improving expectations in europe. it is a better backdrop. you remember that period and 2009 through 2019 where nothing could perform but u.s. growth stocks. we are in a very low nominal growth real -- normal growth world. lisa: the story that you told is not as exciting. this is the beginning of actual stimulus in addition to a disinflationary trend that could eventually allow ecb rate cuts. are you saying that you do not buy some of the optimism that

this is the moment that europe could join together, issue eurobonds to support defense stocks and inject stimulus and the overall economy? brian: we have seen this before. for me once, shame on you and for me twice, shame on me, so i am not ready to say this is the moment. the way i look at europe it is not clutter bad or better and worse. things are getting better. we had this long environment where things were getting worse, the fact that floating rate mortgages exhibited -- existed was not helpful. we have this easing environment and sentiment is picking up and we look at it more as a cyclical recovery and sentiment and better policy environment rather than necessarily viewing it right now as a bigger structural story. we need proof on that. lisa: on one hand if you have growth improving doesn't that tie the hands of central banks in terms of how much they could

cut rates leaving benchmark borrowing costs to the higher pace witchcraft or stocks? brian: different parts of the world have different answers. in europe and the u.k. you would need to see interest rates moving lower. the point in the united states, i'd like inflation at the upper end of the comfort zone. people have been wanting rates to come down in september. the fed said that rates would be below 3% at the end of this year. what would've happened between then and the end of 2025 that rates had to be below 3%? that is a bad outcome. the fact that we have reassessed that, we have just backed out the rate cuts, suggesting that this would be a good growth environment. inflation at the upper end of the comfort zone is a better environment the end we were for a decade when we could not get it into the comfort zone because higher nominal growth accrues to

corporate profitability. the risk for all of this is if inflation jumps and the fed has to tighten. we are clearly not priced for that and that is where equity valuations get hit. i still think inflation will moderate. we sought a bit with the producer price index and it seems like wages and shelters are moderating. cpi moves that last monday was a bit of an overreaction in the markets were covered. annmarie: could the tariffs be a hit to inflation above the range that you are comfortable with? brian: they could be. it is a little bit of a different environment than 2018 but if you use it as an example you saw one-off price shocks rather than broad-based inflation. and actually you started to get a hit to sentiment and that actually caused markets to start to think about a recession by the fourth quarter. most people do not remember is that the fed was easing in 2019 not raising rates.

it is different because inflation is at the upper end of the comfort zone rather than in a deflationary environment. historically, tariffs do not lead to broad-based inflation. annmarie: what causes more angst, the actual tariffs or the continued policy uncertainty about tariffs might be coming every single week? brian: uncertainty. that was the story of 2018. it was sort of a tariff or trade policy by tweet at that time. and each week we got something new and it was very difficult to know how to respond and business sentiment really got hit. capital expenditures in the beginning of the trade war they were positive. by mid-to-late 2019 they were negative. that is the challenge, the risk so this is a prolonged period of policy uncertainty. tariffs lead to a less optimal

economic outcome, almost by definition. we can deal with that. businesses need to know the rules to proceed with confidence. jonathan: chris waller does not seem too worried at all. "my baseline view is that any imposition of tariffs will only modestly increase prices in a nonpersistent manner. i favor looking through these effects." he alluded to this before. lisa: some people have agreed with him as he is an outlier as he seemed more hawkish last september and seems to have shifted his tune. some people are talking about in addition for fed chair. other officials have accurate -- echoed this. saying that essentially in the past they have been more of a suppressor of growth than they have been an ignition of inflation. jonathan: he is running. a lot of people believe that is the case. equity futures on the s&p just about positive by .1%. with an update on stories with

your bloomberg brief here is dani burger. dani: the u.s. and russia are all holding talks to end the war in ukraine is not represented. it is headed by marco rubio. and the russian foreign minister in riyadh. volodymyr zelenskyy reiterated that he will not recognize any agreement reached without his country. the financial times reporting that honda is really -- is willing to resume takeover talks with nissan if the ceo steps down. honda would be prepared to revive negotiations under a new boss who could better manage internal opposition. a delta airlines plane flipped upside down while landing in windy conditions into walk -- in toronto. it was flying from minneapolis to st. paul had 80 people on board. 15 people were injured, three critically and it is the latest in a series of plane crashes so far including the deadly crash in the potomac river late last

month. jonathan: thank you. that is some scary stuff. more in about 30 minutes. up next, negotiating an end to the war. >> i saw your conversations with president putin. what do you think he wants? >> i think he wants to end it and they want to end it fast. both of them. zelenskyy wants to end it too. jonathan: we will catch up with tyler kendall and oliver cook. good morning. ♪

jonathan: live from new york city and welcome to the program. equities futures positive by .3%. the nasdaq up by 0.4.

one of the biggest movers is gold up 0.5%. back through 2900 all over again. goldman sachs looking at 3100 and saying that should economic policy uncertainty persist here looking at 3300 on gold. lisa: which represents a 26% upside echoing what we have heard from dan last week when he came on the show and said that there is a fundamental buying base as well as the hedge. they love gold. jonathan: up another 0.5%. under surveillance negotiating an end to the war. >> we are moving along and trying to get a piece with russia and ukraine and we are working hard on it. it is a war that should have never started. >> do you expect zelenskyy to be involved? >> i do. he will be involved. >> based on your conversations with president putin, what does he want? >> he wants to end it and they

want to end it fast. both of them. zelenskyy wants to end it too. jonathan: u.s. and russian officials meeting in saudi arabia to discuss the ending of a war. president zelenskyy is not part of the discussions and said he will not recognize any agreement without his country's involvement. we start with tyler kendall in washington and oliver crook in berlin. what is the objective for these talks? tyler: the state department says that these preliminary talks is to make sure that russia is serious and that everybody is on the same page. yesterday marked four weeks since president trump took office and things have moved quickly including with ann marie's reporting that officials are looking for a date to be locked down for a leader summit between president trump and vladimir putin. as ukraine has raised concerns about a direct talk between the u.s. and russia talk rivera sing

the policy, resident trump confirmed -- president trump confirmed that zelinski will have a state -- a seat out the table. another leader not at the table is we are looking for participation from europe after ukraine called for a leader level envoys to be involved as well, just yesterday. big questions remaining especially about what the future of u.s. aid to ukraine will look like. president from confirming that he would be interested in europe buying u.s. weapons to supply them to ukraine because as security assistance has divided washington, this has been one pointed bipartisanship. additional aid to ukraine, particularly on it comes to military and shipping weapons has helped boost the u.s. domestic industrial base. all of these talks happening in parallel to these conversations. the state department confirms that at 6:00 a.m. eastern they

broke for working lunch after meeting for 2.5 hours earlier. lisa: oliver, tyler is right europeans want a seat at the table and they had a big meeting. macron spoke to president trump, will they get a seat? oliver: i do not know if they will get a seat at the table immediately. it might be further down the line. i think the approach when you think about what we are trying to get out of every participant is sort of the real question because the trump administration in the united states knows that they hold most of the cards. russia hold some of the united states hold most of them. as far as the europeans are concerned, what did they want from europe, ukraine and russia. they want to europe to take more responsibility for security guarantees. we saw the first steps of that happening that would not have happened had we not heard from president trump and jd vance. u.k. saying that they are willing to commit troops to

peacekeeping operations and ukraine after a negotiation and after a cease-fire. i have spoken to the germans who are very resistant to that sort of thing and those conversations. does that evolve in the new reality of what this conflict and security umbrella looks like? there is a question of buying more arms from the european side. we are opening the conversation about joint debt which is something that there has been a lot of resistance to. we have asked about it and now that is coming to the fore. we will have an e.u. leaders meeting where that will be on the table. for the europeans they are grappling with the question of their lifestyle that they have built since the end of the cold war and what is it built on and how that is defended. they need to answer that question. jonathan: you were in the room in munich on friday, how did the europeans respond and what did they say to you after the address from the vice president? oliver: listen, i think the thing that we kept hearing was

shocked. some of the people who were more clear eyed were saying this is not really a shock but what we have been anticipating for a very long time. on the one side there is the idea that the u.s. would step back is not something that anyone totally believed. they thought of the first trump administration as a bit of an anomaly. we have heard trump talk about russian gas dependency and under spend. this is reality for these european leaders and that is a reality they need to come to grips with. i spoke to the highest ranking general of the german military just before the munich security conference to talk about spending the money. this is the military in germany, probably 30th biggest military. they have 180,000 troops and they want 460,000. that is a huge shift in what will happen on spending money but actually re-creating the economy is to deal with the new military reality. and that is what the europeans

need to grapple with and that money will come from somewhere and that is the difficult political discussion. jonathan: appreciate it. they have a lot to work -- a lot of work to do. oliver crook and tyler kendall. the markets picked up on this. we started the week with bonds lower and defense stocks rallying. lisa: i know this is getting a bit too derivative. can you get the expansion in europe if you do get the borrowing that a lot of people are expecting. does it tie the hand of the ecb at a time where they have to re-leverage in order to finance the growth? something that the u.s. did a couple of years ago and then deal with the volatility? jonathan: i do not think it is anyone's baseline that things will be fantastic but that they are moving at the right -- in the right -- in the right direction. the bank of america put a european peace and that where market change is more important than levels.

45% expect stronger european growth. it does not sound like a lot but change, not levels. up from 9%. brian levitt is with us. what is behind that swaying in sentiment in the last couple of months? brian: if you look at the leading indicators you see them bouncing into a recovery phase and that is a risk on environment. it is a handful of things. things were depressed and sentiment was low. incrementally things are getting better as we have seen stimulus come forward and interest rates come down. the united states has a better nominal growth backdrop which is better for things globally. so, yet it is more of a synchronized recovery. some might say what do you mean recovery? we have been this nice environment. the rest of the world has been struggling and we are seeing support from china, europe and the u.k.. we are getting this synchronized

balance into more of a recovery phase. lisa: not to be negative because a lot of this is positive, except for bonds, there is a feeling that fiscal injection will come at the expense of bond markets which is being discussed with joint issuance. at what point is this a different point in the cycle where real leveraging will get growth but also inflation away that will not allow central banks to cut rates in a way that is necessary to have confidence in europe? brian: we are not there yet. we are coming off a low growth environment and low interest rate environments and a lot of the parts of the continent. this has been more of a we hope so moment rather than as soon as rates move up. so, there is room to go. we prefer this to the environment that we saw which was a perennially low interest rate environment, low-inflation environment and no ability to

stimulate activity. lisa: meanwhile china is getting in on the action and xi jinping was celebrating tech champions previously thrown out of the arena. a question if that means that china is pro-business and a good place to invest. are you getting on board that train? brian: china was deemed on investable which made valuations quite attractive. the market was waiting for some stimulus. we saw it probably not to the level that we would have liked to seen, the deepseek news comes and people reassess where they are in the technological way. there are opportunities and a lot of great tech business is that were trading historically very cheap to the united states. and what you needed was a little bit of a catalyst. it looks like we have that catalyst. investors had forgotten that there are good companies that are well-positioned because she went through a period where the

chinese government seem to be more involved. i think there is opportunity. jonathan: echoes of president trump's inauguration in china. lisa: the idea of bringing jack ma into the fold after previously ejecting him and talking about the importance of chinese technology and technological innovators. it resembled some of the people in the front row. jonathan: from on investable -- uninvestable and then back again. lisa: at this point people will take what they can get and they are concerned about overvaluation in the u.s.. jonathan: it can change just like that. thank you, we appreciate it. elie coming up in just a minute. this is the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution

for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

jonathan: equity futures posited by one third of 1%. up nicely on the nasdaq 100 in the last week or so. the nasdaq last week, the best week of the year so far. big tech bouncing back in a big way. focusing on the 10-year maturity. yields lower on the 10-year for the last five straight weeks. we have not seen that going back to 2021. down just a little bit on the front end.

even with hotter cpi and ppi. weaker retail sales. there should -- that should mean the federal reserve will not get too excited. lisa: we are getting disinflation and therefore people can continue to pile into bonds. there is the feeling that maybe that trade has gone a little far with the idea that maybe we got excited about the potential for rate hikes last year. you are hearing people start to worry about inflation once again. jonathan: consensus views across the board. the euro through last week on a four day run of strength. dxy, back to back weekly losses. euro-dollar, 104.64. you have to pay attention how the market responds to incoming information. the threat of tariffs. here is a stat.

80% of vw's sales are recorded, last week up almost 7%. autos in europe, six-day winning streak through monday. lisa: he has seen different efficiency measures and a real reckoning with how to compete in a new environment. do we get to this pessimistic level where suddenly it's easy to jump over the threshold? a lot of people are saying that is what you are seeing in europe. jonathan: the euro weaker by .2%. our top story. u.s. and russian officials meeting in saudi arabia to discuss how to win the war in ukraine without anyone from kyiv taking part. lisa: this is significant. it's been through the end of 2022 high-level individuals from the u.s. meeting their russian counterparts.

both are trying to feel each other out, basically seeing where they can maybe make a deal. whether or not that is peace or or with the chief policy advisor to the kremlin, walking off the airplane last night from moscow. he said the main thing is to begin real normalization relations between u.s. and washington. it's also about the bilateral asian ship that has been on ice -- relationship that has been on ice. lisa: or if russian wants to normalize and the u.s.'s goal is to get a win around a peace agreement and where those two things have friction, i'm curious. around the rare earth minerals the u.s. expressed interest in in ukraine territory that is largely not controlled by russia. jonathan: those talks are ongoing. some headlines from them, we will bring them to you. a delta airlines jet

flipping upside down in toronto yesterday. 76 passengers and four crew on board with no fatalities. it injured 15 people, including three critically. lisa: we just had the worst crash since 2009 on january 29. we still are asking what happened in that crash. this one is more of a mystery. if you look at with that's what the toronto fire chief said, it was not clear what caused the airplane to crash. he noted the runway was dry and there were no cross wind conditions. people speculating it was because of massive winds and ice. annmarie: it feels like a miracle these people could leave the plane and there were no fatalities. you are scared to fly, that was my entire inbox this weekend from friends and family. i'm scared to fly throughout the continental united states or potentially close neighbors in canada.

the national transportation safety board is sending a team to assist but this is under the faa in canada. jonathan: george ferguson will be joining us later. are we seeing domestic amounts soften? lisa: my hunch is no. what happened is people say that scares me, but that is such a pretty picture and i'm going to going vacation anyway. jonathan: people keep traveling. with an update later this morning about 8:15 eastern. let's pick up on this. xi jinping meeting with some of the country's top tech ceos, with jack ma. the guest list included the ceos of byd and deepseek. a show of strength of chinese tech. a big push on that front. lisa: people are saying this is a reason to vitac -- buy tech.

probably more than the stimulus because this could signal the embrace of a more pro-business approach from china. you said it echoes trump. you are right. there are 70 governments that are trying to emulate the same tone you have heard from donald trump. back in 2018, 2017, they were highly critical of it. annmarie: it's a highly symbolic moment, especially jack ma who has been absent for years. citigroup says it has positive locations for china's tech sector. people want to go and invest even though we are seeing more hot rhetoric from the u.s. and export controls and concerns about semiconductors. jonathan: this will support the sentiment shift. are we seeing a fundamental shift? there were some green shoots. it will take some green shoots given the struggles the economy has had in the last two years. lisa: does this end up spurring some of the demand we had been

expecting? green shoots are great shoots. let's see how it translates because it's beneficial sentiment when it comes to chinese tech companies. jonathan: another read on china and more. shares of ihg sliding this morning. we can catch up with the ceo elyas galou. if we can get a regional breakdown and how you read the global economy at the moment and then into some of the operational issues and the company. let's start with china. are you seeing things bottoming out or not? >> first of all, great to be with you on this earnings day. we had an excellent performance in 2024. operating profit up 10%. eps of 15%. over $1 billion return to shareholders and more planned for this year. i traveled a better business,

started off in china, shanghai, call that hong kong, tokyo, the europe, back to your. -- europe. i'm enthusiastic about what i saw. we talked about china earlier. i heard you on your piece. there are some segments in china like the residential real estate that have an overhang. some segments are doing pretty well. not all segments move in the same way. you have accessible apparel doing well. health care is doing well. travel and leisure are doing. we had record hotel signings last year. hotel openings. we inaugurated our 800th hotel in china. we have 550 under development in fun of and those are good going forward. the economic situation, let's not forget last year the bottoming out on the residential real estate. here's an ironic circumstance. because saving rates are high in china, 40%, 45%, they have

actually more money to spend on experiences, which is a global trend. people are spending more on experiences, less on products. lisa: how much is this coming from domestic demand at a time when international demand, particularly from the u.s., has been reported as falling significantly and china? -- indochina? -- into? o china? elie: you see that. it has still not recovered back to what it was in 2018. most of our business in china is domestic. let's not forget it is 1.3 billion people with a $2020 economy -- $20 trillion economy. another trend you are seeing in 2024 and early in 2025's strong outbound from china to nearby asia-backed markets.

japan, south korea, vietnam, singapore, thailand, indonesia. very strong double-digit growth last year. it is continuing into this year. we are strong in china to be strong outside of china. lisa: you are seeing the strength in the united states and in some places the european travel sector start to wane a little bit as you are seeing some of the travel over in southeast asia and more broadly in asia pick up from steve lows. -- steep low. s. elie: not every region does perfectly well every quarter. the u.s. economy a strong. employment, which is what we watch, is at a record.

it has stabilized. consumer confidence is strong. corporates will travel more in 2025. those of the underpinnings that are strong for travel outlook. europe. the irony is while gdp growth has been muted, it is never as bad as people predict. travel was strong. accelerating to 4.8 in q4. in the u.s., the highest and q4 -- in q4. the exit rate is pretty optimistic. annmarie: how much of that growth and demand in europe is from outside travelers wanting to go vacation or holiday in europe? elie: there is no question that europe -- i group in italy and i spent quite a few weeks in a tiny village north of rome this last summer. europe has unequaled

destinations. unique destinations that will always be great draws for culture, for history, for climate. it's also a dynamic, strong business climate. not growing as much but still pretty strong. there's lots of inter-european travel. with a strong dollar you had a lot of inbound for two summers in a row. if you look at the airline projections, they expect another strong inbound summer. you have had some asian travel starting to come back. chinese travel coming back to europe. in total, while gdp growth is low, we had solid mid-single digit revenue growth in europe for the second year. the outlook is good for this year. think about large economies like europe, china, u.s., not all segments move in unison. some do better than others. right now travel and tourism is doing well. jonathan: i think i can speak for all three of us that we intend to be part of the inbound later in the summer.

i want to talk about the united states briefly. this is a place where you want to expand. share briefly some information on this acquisition in europe, this hotel operator ruby. how do into the united states? and employment. you talked about the labor market. could you walk us through how you anticipate having some difficulty attracting talent at a time where numbers become scarce in the u.s.? elie: our position is strong. it is our largest market. over 4200 hotels. a strong pipeline of hotels to open. we had strong signings last year. our openings are up 60% from the previous years. our applications were strong. new construction starts were up 13%. everything looking good in terms of gradually increasing development in the u.s. we announced we acquired the premium upscale urban brand ruby

that has a strong position in europe. 20 open hotels and 10 underdevelopment. we think it is the best play in the segment, the urban micro segment. we have been looking at that segment for years. while the sellers will keep the hotels that they own and continue to grow with us, we plan to internationalize the brand to the u.s. by the end of the year and then take it to the mideast and asia. that is the lien luxury, affordable luxury, urban, micro, you get a great destination where the it is berlin or rome or florence or paris or london. have it from there you can explore, a well-designed room, but not too much in rate. that is a space with a lot of runway around the world. jonathan: on that point, the u.s. and employment, the would dissipate problems attracting

labor -- do you anticipate problems attracting labor? elie: it has gotten better as more people have joined the labor force. it has still been tight. low population growth. you have high employment to begin with. it has been tight. i think in terms of the new policies we have to wait and see. it is very early. let's wait and see with the in-state will be and what effect it will have. not seeing an effect right now in the business. we are brotherly -- broadly distributed across many sectors. we'd out seeing in effect right now. we have done well in the last four years post-pandemic in a tight labor market. we think we continue to prosper. jonathan: we appreciate the update and hopefully we can do it again soon. the breakdown between china, europe, and united states. lisa: i'm curious about the strength in china with the high savings rate. especially at a time when that

rate has falling in places like the united states. europe has its own situation. it raises the question whether the momentum is shifting at all in the world right now. jonathan: certainly in the market it is. equity futures on the s&p 500 stateside about positive by one third of 1%. dani: bloomberg learned elon musk's government efficiency team is try to access a broad range of taxpayer data. that includes data on individuals. democratic lawmakers raised concerns over privacy issues. the u.s. has strict laws that prohibit disclosure of taxpayer data with some exceptions for law enforcement. goldman sachs has raised its goal targeted $3100 an ounce. analysts cited central bank buying and inflows into gold backed etf's. if uncertainty over economic policy persists, gold could hit $3300 an ounce.

in travel, southwest airlines cutting more than 1700 jobs in his leadership ranks. that will impact 15% of corporate positions. if the first layoffs in the u.s. carrier's history. the reductions will start in late april and will be substantially complete by the end of the second quarter. that is your brief. jonathan: appreciate it. more in about 30 minutes time. up next, the waiting game. >> we are trying to sort through potential for stronger growth, the potential for geopolitical shift. we are in this waiting game for further development. jonathan: people are super bullish and that is captured by the global fund manager survey from bank of america. more on that in just a moment. elyas galou of b of a of next -- up next. ♪ ♪

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jonathan: about the snap at losing streak and we kick out this week with stocks a little firmer. adding some weight to the rally. under surveillance, the waiting game. >> we are trying to sort through the potential for stronger growth, the potential for geopolitical shift versus the potential for some of the policies being considered to increase inflation and downside growth. the net out of it is we are in this waiting game for further development. jonathan: investors climbing the wall of worry. bank of america's fund manager survey found sentiment is bullish, cash levels at a 15-year low. elyas galou joins us now more. let's get to the cash level point. 15-year lows. is that a bright red flashing light saying maybe this is a contrarian signal? elyas: good morning.

this was clearly the most bullish development in this month's survey. to put things into context when we talk about the cash level, the less time the fms cash level the s&p 500 was barely above 1000. there was no company with a market cap above $500 billion. china was enjoying double digit economic growth. it is rare the intermission -- the cash flows is below 2.5%. it has remained low for percent for much of the past two months. there is a sell signal from the cash rule. it seems risk assets are topping in the past two months since the cash level remained below 4%. u.s. equity indices are roughly flat. when you look at other big and

important measures from the survey, it does not mean positioning is contrarian negative. the overall survey is bullish. there is enough scope for further ultimacy. lisa: how does this survey compared to the american association of individual investors which showed the most bearish sentiment going back to november of 2023? can you square these conflicting narratives? elyas: it is a great point. what we see in 2025 is pretty much the opposite of what prevailed in the past two years when we used to see of bullish retail investor and bearish institutional investors. it seems the optimism has flipped. retail investors are now a little more bearish. institutional investors a bit more bullish. the number one reason is because of the valuation of u.s. equities. the fms shows u.s. equities valuations -- u.s. stocks are

overvalued. there is a -- that's why maybe retail investors are flipping a little more on the bearish side. when you consider the three big pillars of conviction from institutional investors, number one, the fed will cut. number two, they will not be revision. number three, trade wars, which is more of a tail risk than a concrete reality, this explains the gap between retail and institutional investors. annmarie: when it comes to the european fund survey the quote is falling in love with your. i we passed peak u.s. exceptionalism and there's a pivot to the european continent? elyas: there is evidence the u.s. exceptionalism has peaked. if you look at the crowded trade for the past two years, it is

all about long magnificent seven. if you consider the long u.s. dollar option we have often offered investors, u.s. exceptionalism pete last month -- peaked last month. to say we are past the theme we would have to see further evidence of rotation. we saw the first signs of a rotation if you look at the survey at the end of last year, european exposure was a big underweight. he went to a net nice overweight in february. last week we saw the first inflow into european equities and five months. yes, there is the first signal or sign of a rotation but we pas sed u.s. exceptionalism would need further clarity from the flows data. jonathan: the final word on a know you put out last week.

cpi was a blessing into size. could you explain why you believe that is the case? elyas: when it comes to trade wars, the number one tail risk according to investors, there is clear a risk -- clearly a risk to global growth if the narrative worsens. for now the investors perceive it as a tail risk. counterintuitively, the hot cpi print from last week may temper any worsening of the trade war narrative. what is important for u.s. policymakers is that inflation remains under control. for now it is trending towards 4% at the end of the year. the fact that inflation is quickening in the u.s. means in the short term we may see the trade war narrative. jonathan: appreciate your time as always. elyas galou of bank of america

on a bullish fund manager survey. up next, scott chronert of ihs, scott lincicome, john lovallo and nela richardson of adp. ♪ a sleep number® smart bed is perfect for couples the climate360® smart bed is the only bed that cools and warms on each side and all our smart beds adjust the firmness for each of you. and now, save 50% on the new sleep number® limited edition smart bed. shop a sleep number® store near you. susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management

>> i think the economy has proved enormously resilient. >> even with prevailing interest rates. >> i do think the fed should be raising rates. i think the fed is in a good position right now. >> if we have sticky inflation, the fed will probably be done cutting rates. >> what you need to get the fed the hike rates is the un-implement rate to move significantly below --

unemployment rate to move significant below 4%. >> this is "bloomberg surveillance." jonathan: the second hour of "bloomberg surveillance" with equity futures positive by .1%. it is scheduled to be a quiet week. that can change but look at this. some executive orders a little later this afternoon, fed minutes on wednesday, summer earnings, and pmi on friday. the schedule suggests it could be quite. i have no idea what happens. lisa: it could be quite on the economic level, less quite on the geopolitical level. people are coalescing around the narrative that u.s. exceptional has peaked. there is no other economic data people are going to be focused on. annmarie: definitely not quite when it comes to the kingdom of saudi arabia. you have for the first time in

years high-level u.s. officials sitting across the table from russian officials. the question i have out of this meeting, this is just to feel each other out? how to potentially bring back bilateral relations between washington and moscow? or, will this lead to a summit by the end of the month which is next month? jonathan: european leaders are upset. i'm looking at the market. let's park that and focus on the price at the story. equities like what they hear. the euro stoxx 50 is up 50% this year -- 15% this year. can frankfurt, the dax is up by close to 15%. it is february 18. lisa: there is nothing like anger to galvanize action. maybe the anger from the european leaders, the defensiveness, is turning into action to meet to discuss what jd vance was talking about. not necessarily discussions about free speech as much as

what are we going to do? are we going to defend ourselves? how can we raise money to support the defense industry which people are baking into market prices? annmarie: look at the european data. investor confidence in germany improved by the most in two years. they potentially will have a new german government but they are being forced by the u.s. administration to change to spend more on defense and to innovate and regulate less. that has been crystal clear from donald trump, not just this time around but also trump one pino. -- 1.0. jonathan: they are less pessimistic. the change matters. it is not about the level. the levels aren't great but the change matters. lisa: the fact people are encouraged they will be some leadership and action taken and there will be investments as well as officials coming out and talking about lessening the regulations on banks, about taking a page from what they see

over the united states, doing what people have said essentially should have been done along time ago. the u.s. innovates, your regulus. -- europe regulates. jonathan: the dollar is weaker, not stronger. we are seeing it in the bond market. two-year lower, not higher. five weeks now the yields have been falling and equities in europe over the u.s. pretty stunning in the first six weeks of 2025. lisa: this is why we talked about whether at davos or the main narrative, everyone was peak u.s. optimistic. u.s. dollar is the place to be. that has been unwinding. how much have we unwound the consensus and how much higher is the bar to push forward with something more concrete to get those traits in the broadening up to take hold? jonathan: take everything you hear here with a massive grain of salt. lisa: that is typically how it

pans out. jonathan: it has for the first six or seven weeks. coming up next, scott chronert of citi. we will speak to scott lincicome of the cato institute as trump doubles down on reciprocal tariffs. andy will catch up with nela richardson of adp on where cracks are forming in the labor market. u.s. stocks hired to start the week. scott chronert says we characterize ourselves as fundament optimists but recognize important macro tailwinds need to unfold to transition from a no cycle regime to something more like an early cycle backdrop. welcome to the program, sir. i want to pick up on a know you put out last week. you said tamer tariff talk. i wonder if you believe this will be in the driving seat of what we see take place across stocks, bonds, and foreign-exchange? scott: we keep going from a threat to pushing things out and step back and better analyze the

tariff situation. that has been ongoing for the past several weeks. what i think is important here is that the market has been concerned regarding trump, red wave and tariffs for months. it's been preparing for it psychologically but not in an actual positioning angle yet. that is still out there but all told what is happening is you have ongoing tariff rhetoric but at the same time we see a little more movement in terms of cost-cutting initiatives which are apparent now. what that does is begin to give you a more balanced affect of the aggregate trump policy versus what we were looking at a few months ago. lisa: translate that into positioning. how much do you see less growth from some of the cost-cutting versus the progrowth measures some people were talking about from the trump administration? that still needs to get priced into equities. scott: good question.

what we are looking at here looking at the s&p for performance, up about 4% year-to-date, look at where leadership is coming. where is it not coming from? it is not coming from tech and consumer discretionary. you are seeing it under the surface. the s&p top 50 for the first time in quite a while are no longer leading the charge for the s&p. broadening is happening. what this reflects as a couple of things. an ongoing positive sentiment around the underlying economic direction, a little less concerned about tariffs in their own right, and what that does do is begins to set up for a healthier s&p outlook into the balance of the year. lisa: do you believe as we were talking to elyas galou about that the faster inflation today than what we saw and 2017 and 2018 effectively ties the hands of the trump administration to

go tit-for-tat into a full-blown trade war? scott: potentially it does. it is too soon to make that call. there is no doubt that when you look at tariffs, the part of the bigger program is that you at some point will need revenue offsets to deposit to contend with what happened from the deficit math as you go to extend dcja. what is happening is that you have a combination of forces at work that need to be addressed. inflation, it is going to be a hand tier, but our view is it is less about the concern with inflation, more about the concern with gross margins and supply chain disruptions. in argue view there's a moving conversation around where the inflation dynamic fits in here. we are comfortable with the current backdrop right now.

comfortable with fed funds and the expectation for a cut or two this year. we are accountable 10 years in the 450 range. annmarie: howdy price and the rotation from other countries -- retaliation from other countries? if the ones he has talked about actually come into effect? scott: i think we will have to get there. that's an ongoing concern. paul told, we have to it -- all told we have to expect retaliatory actions. when we are looking at the aggregate tariff set up, the careful here. when you look at a tariff on mexico and canada, that probably is a negotiating tool towards accomplishing some of the purpose -- other purpose. 10% across-the-board, that maybe gets dialed back to some more balanced number like 5% or so. what ends up happening is the

importance of that is number one in our view how it fits into the revenue generation deficit math. the retaliatory part comes into play. here is where you have to begin to factor in the fact that a strengthening dollar in the past couple months may at some level begin the price, this in. -- some of this in. we are at the margins concerned about it. trying to make a point that identifying tariffs alone is an issue probably is the wrong way to look at this. the right way is that it is part of a bigger trump package that is working its way through the system and through congress right now and the markets. what the market is telling you is that it is pretty comfortable with the balance we are seeing between tariffs, potential tax reform, and what's happening on the cost-reduction front. annmarie: the keyword is potential.

they might take months to see those tax cuts get on board when it comes to the house and the senate. how important is it that have both of the same time? the tariffs and also the tax cuts? scott: tariffs presumably can hit sooner. tax reform probably is a 2026 issue. for several months now we have said trump and red sweep. you need to see some focus on the spending side because the deficit math continues to linger as an issue for this year. we have been talking about the bond market vigilantes coming back into the picture. we have not seen that yet. i think the key point here is that the market is beginning to price forward aggressively where we think underlying earnings expectations go. that's a bigger concern than the tariffs. the market is already pricing in fairly heady earnings growth

presumptions for the next several years. that in our minds is not necessarily negative. what it does do is put a big focus on earnings growth to continue to deliver as we go into 2025-2026. there are still many things we have to navigate. expect volatility. it will be a persistent feature of the market. at this point we don't want to be conditioned to be buyers into said volatility. jonathan: appreciate your view. scott chronert of citi, not the only one looking to buy into that volatility. over in saudi arabia, top officials from russia and the u.s. sitting down for preliminary talks, potentially a meeting between the two leaders, president putin and president trump. headlines from russian news agencies. they suggest the following. russia and united states have

serious talks citing an aid to the russian president, saying the prudent-trump meeting -- putin-trump meeting was discussed. it is hard to say that the u.s. and russia are getting closer. annmarie: this is just preliminary talks. there is no russia -- rush on the russian side to have vladimir putin sit down with donald trump. it is that she has been by putin 's side for decades. he was a former ambassador to the united states in the late 1990's, early 2000. p deafly knows how washington talks. interesting he's the one giving this readout. no decision on a date and hard to say they are getting closer. for me that is the main headline. lisa: it highlights how russia has a lot of grievances they want to air. the u.s. wanted to talk about ukraine-russia in the war. you can feel the tension in the headline. jonathan: a meeting between

putin and trump is unlikely next week. an update on stories elsewhere with dani burger. dani: hamas says it is willing to stop governing gaza after the war ends. it is not necessary for the group to be part of the political arrangements in the next chapter as long as it serves the interest of the people. the concession would fulfill one of israel's demands for the second phase of the truce was is under negotiation. the acting head of the social security administration resigned over the weekend. the washington post reporting that michelle king left following disputes with elon musk's doge over attempts to access government records. king spent decades of the agency before being named acting commissioner last month. taiwan semiconductor and broadcom are reportedly exploring separate deals that would break intel into separate companies. the wall street journal reporting that broadcom is interested in the design and marketing business. tsmc has control over

plants. those toxins eliminate stages. that is a brief -- those talks are in preliminary stages. that is your brief. jonathan: up next, negotiating with russia. >> what do you think he wants? >> he wants to end it. they want to and it fast -- end it fast. zelenskyy wants to end it too. jonathan: scott lincicome to come next. ♪ 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. you know, it's kinda like when you bring a really big cake for your birthday, and then there's only a little, tiny sliver left for the birthday girl.

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jonathan: here is a snapshot of the price action. equity futures falling by one

third of 1%. 10-year, 451.32. under surveillance, negotiating with russia. >> we are moving along, trying to get peace with russia and ukraine. it is a war that should have never started. >> do you expect zelenskyy to be involved in the conversations? president trump: i do. he will be involved, yes. >> what do you think he wants? president trump: i think he wants to end it fast. both of them. zelenskyy wants to end it too. jonathan: top u.s. and russian officials discussing and into the war and ukraine. that meeting happening without participation from kyiv. allie, what is the latest from your side? oliver: it's interesting we are seeing he will set the cadence of the conversations. there's a little bit of cold

water on the speed at which the talks will take place. we heard as early as next week for putin and trump. that is unlikely to happen according to a few sources from the russian media. this will be fundamentally the meeting today for the trump administration trying to fact find and figure out what they can extract them every participant in the conflict, whether it is the russians, the europeans. they are sketching out what they want to get out of europe. they want the security guarantees for europeans, more hardware purchased from the europeans from the united states. we started to see that. we are seeing the united kingdom for the first time committing to sending troops potentially in a postwar situation to ukraine. something the french had talked about. the germans are opposed to that sort of thing. that is something that may have to progress under this new security reality the europeans are dealing with and scrambling with these emergency summits. there is questions about what the united states wants out of ukraine. that could be in the form of

mineral deposits. the united states is trying to position itself to figure out what he can get from everybody before bringing everybody into the conversation, even if they decide to bring everybody into the conversation. president trump wants to bring zelenskyy to the table. will the europeans be there? annmarie: looking at what the kremlin chief foreign policy aide has to say, hard to say u.s. and russia targeting closer. how could europe help potentially bridge some of that cap? -- gap? oliver: the europeans are trying to figure that out. they had an emergency summit in paris that was not conclusive in terms of figure out what they will be willing to commit in terms of buying more military kit or sending more troops. that is what they are trying to figure out. they will be eu leaders meeting at the end of the month. that is far away at the cadence of which these negotiations are happening. what you have now and are seeing

is a conversation around joint debt reemerging. this is something everybody -- we have been asking officials for months. this is something the new reality of the european security is something that will have to fully face. there's also a german election coming into this weekend. there is another thing, not just the german chancellor job that is vacant. the leader of europe job is vacant. that is not a formal position. emmanuel macron tried to be the man of destiny but that has not gone well. could you get a stronger mandate from the european -- the german chancellor going into this weekend and reset? could frederick mertz grab that and be one of the people that has credibility from europe's biggest economy and be a negotiator on behalf of europe? we will figure that out soon how strong his mandate is and how much of a presidency can commit on the european stage. jonathan: oliver cook out of

berlin on the latest for germany and the continent on foreign policy. we have to talk about trade. how figure the tariffs going to be on the europeans? lisa: we will find out if the commerce secretary will get confirmed today. let's see who the people are on the ground with howard lutnick. jonathan: scott lincicome joins us now to talk about this. welcome back. let's talk about trade and the tension between the u.s. and europe. the focal point is them, taxes. that is not something we talked about years back. how big of an effect is that going to be? scott: it seems like it's a big factor if you listen to the trump administration. they have bought into the idea that the vat is discriminatory against trade. most economists will tell you that is wrong. vats are generally trade neutral or depressed exports a bit. the trump administration is

hammering the idea that vats will be discriminating against american expects words -- exports in europe. you create a whole new playing field of potential nontariff barriers. it seems like a big mess one the --when the negotiations get started. annmarie: what is going on with the autos? president trump said they had a deal with auto tariffs. the 10% your puts on u.s. cars coming out to maybe 2.5%, with the u.s. puts on european autos. scott: you have seen early reports that the europeans are willing to give on this auto tariff. then again, you saw president trump say new auto tariffs are coming on april 2. right now it is difficult to parse what is being rumored in the news and what is actually concrete. if we go down this road of new auto tariffs we could see the

resumption of an investigation like we had in 2018-2019. a national security related investigation. that would take some time to play out. but now there is this new international emergency economic powers on the table that could have tariffs instantaneously in april. lisa: i want to put these ideas together, the auto sector and the vat tax. economists say that is not something this truly a trade negotiating tool. there are many economic policies that affect trade but are not unfair trade practices. how much is donald trump rewriting the script when it comes to the structure of what we are talking about when negotiating trade? scott: he is very much doing that. look at the reciprocal tariffs study they commissioned in the united states. they are going after a lot of

things like value added taxes, subsidies, other things that have not been standard practice. along with this whole reciprocal idea of line by line matching tariffs. that is a big break from the world trade organization. when you pull these other things in, it tremendously complicates trade negotiations. it is difficult to administer. it is difficult to calculate what the tariff equivalent of a nontariff barrier is. you are plowing into domestic policies that typically are on the sidelines of trade negotiations. that brings and political sensitivities, legal sensitivities this emily cannot be negotiated or negotiated easily. it will make it a big mess, that's for sure. jonathan: appreciate the update.

scott lincicome of the cato institute. there are plenty of bears to entry in the eu, that's for sure. plenty of legitimate targets. vat feels like more of an issue with companies getting taxed more than european companies. it feels like a fiscal issue and not a trade issue. lisa: which is why this complicates things. it is something has been decided on to raise revenue that all companies have to pay. jonathan: this conversation will continue through to early april or maybe beyond. up next, john lovallo on potential impact of tariffs on the housing market. from new york city, you are watching bloomberg tv. ♪

jonathan: coming off the back of the biggest week of gains on the s&p 500 and about a month. .4% on the nasdaq. the best week of the year so far. big tech getting it done. let's get some morning movers with manus cranny. manus: big tech leads again. intel, the story that splitting of the company is on the table because of two different bids. one from broadcom. tsmc looking at the foundry business.

this is a national security question. it's a next ordinary complex -- an extra nearly complex company -- extraordinarily complex happening. southwest airlines, 1700 jobs. they have five seats on the board. constellation brands, what is your favorite beer? modelo is the number one brand in the united states. constellation brands has a new investor, berkshire. a $1.2 billion stake. a 1.5% dividend yield. long-term compound growth. jonathan: thank you. the stock is up by with an 8% in the premarket. --more than 8% in the pre-market. u.s. and russian

officials meeting in saudi arabia. the ukrainian president volodymyr zelenskyy sank his country will not recognize any agreements about us without us. annmarie: it feels like the russians are slowing down the process of how quickly donald trump wanted to move. a group of reporters were first to report about this exact meeting and that trump wanted a summit with putin by the end of the month. then you have them saying it is hard to say we are getting closer but there was a conversation. that feels like what this was, a first step, a conversation and they are slowing things down. it feels like cold water poured on this from moscow. lisa: a conversation about what? the war or something else that russia wants to change the conversation toward? that will be key. jonathan: we were talking about a meeting taking place next week between the leaders and now maybe not. the u.s. -- a u.s. judge

expecting a ruling for protecting systems from elon musk's doge team. 13 attorneys general saying it's a risk as doge slashes funding and jobs. from torsten slok, "the number of people who file for unappointed benefits in washington, d.c., maryland, and virginia. many impact several government layoffs on nationwide jobless claims." look at for claims at 8:30 a.m. eastern time on thursday. lisa: there's a question of how any layoffs have taken place at certain places. there are reports about emails. a real question about how quickly doge is acting. everyone can coalesce around cutting waste from the government. that is not the question. the larger discussion is how quickly it's being done and in order to do so how much is raking rather than being done surgically? a lot of people are wondering. annmarie: democrats say they are

moving way too fast even if they agree there needs to be a cutting of the bloat. this was a headline from the weekend. trump fired and then unfired the nuclear security administration employees, individuals that look after the nuclear stockpile at the doe. another one that will probably come up with the judge's they are getting access or trying to get access to a range of taxpayer data. that is one that does not uphold potentially. jonathan: i'm interested in the data, whether that is sinister. let's wait and see. lisa: especially since government hiring was a big component in the last four years. we have seen the private market really take over. nonetheless, there's a huge component of the u.s. economy stemming from the government. jonathan: southwest airlines will cut about 15% of its corporate positions. 1750 jobs as part of the first ever layoffs in the company's history.

the pullback affecting senior leadership. productions beginning in late april and wrap up by the end of the second quarter. the stock not doing well to start the year. lisa: this highlights the difficulty of trying to have a very nice environment. southwest prided itself on not having a voluntary layoff -- involuntary layoffs and 50 years of history. manus mentioned elliott management. there are questions around the business model of low-cost airlines at a time where we have seen tieups from down and not been able to come up with the efficiencies of scale of the larger airlines. jonathan: that is the latest on southwest. we promise updates about what we may or may not hear out of saudi arabia as we get two top teams from russia and the united states meeting to have talks for the first time in a couple of years at this level. we had a readout for the russian side, and aid to the russian president. a spokesperson for the u.s. side. what are we getting from the u.s. side? annmarie: more meat on what

conversations took place. what actually happened. the u.s.-russia appointed teams to end the ukraine conflict. that sound like you're moving towards this direction of a peace or a cease-fire, something we do not hear from russia. steps to normalize diplomatic operations. potentially this means a little more leeway when it comes to each embassy in moscow and washington and maybe potentially a path for another meeting. maybe it will not be putin-trump but maybe with rubio. jonathan: not enough for enduring peace. if you thought this would just be this meeting in the next week, -- and then next week, some cold water in the last 30 minutes or so. lisa: this whole exercise has really galvanize european leaders to have a conversation. that might be the biggest of element from this whole thing. it does not seem like the u.s.-russia will come together

and in this. certainly not by next week, which could have been a possibility for jonathan: the latest on the meeting between the u.s. and russia and saudi arabia. traders looking to a first read on housing with homebuilder giant toll brothers reporting earnings after the closing bell. john lovallo writing, "we believe market sentiment has rapidly shifted towards pessimism which creates the most attractive buying opportunities." john, good to see you. let's start with interest rates and then tariffs in the rebuild efforts on both sides of the united states on the west coast and the southeast. 4% policy rates at the federal reserve, north of that at the moment. 6% to 7% mortgage rates. how has the housing market functions with that as a backdrop? john: thanks for having me. we talked about this in the past. what's interesting about the public builders positioning,

when you are buying from a public builder, you are not paying 7%. a tremendous catalyst for the unleashing demand out there which we think is still strong. from an existing home sales market, higher rates would keep some of that inventory contained an activity contained. the public builders should be able to at least it with the use of those incentives. lisa: how much confidence can investors and public homebuilders have that valuations are adequate or actually accurate at a time where we are not getting price discovery? john: valuations on the housing side? that's a good question. there is always some question of what is going on when you don't have a liquid market. that makes it more challenging. the public builders are doing about 15% of the volume on the new construction site. on the existing home side, it is more contained. that is the reality of the situation today. jonathan: let's turn to trade. lumbar.

how much do we get from canada and do we have capacity to handle our residential construction needs of their lumbar does not come from canada anymore? john: maybe we will start from a high level. the national association of homebuilders estimates only 7% of materials and equipment used in residential construction comes from overseas. that's a starting point. for lumbar specifically, 25% of framing lumber and structural panels come from canada. what is interesting is the u.s. lumbar coalition estimates 95% of demand in the u.s. could be handled domestically. a lot of this could be resourced without much trouble. keep in mind canadian lumber is levied at this point. 14.5% tariffs as of today. annmarie: what do you inspect the readthrough to be at the 25% goes on? a friend is doing a refurbishment and said thank god i ordered my canadian wood floors before the tariffs come on in march.

what could the impact be if there's is an additional 25%? john: it remains to be seen. our view is because they are heavily levied, if you shifted the capacity for demand domestically and we could absorb it, the cost impact may not be that material at all. to your point, one thing that has helped is the fact that repair and remodel activity has been sluggish. nonres activity has been sluggish. annmarie: what about the retaliation side? what could canada do for u.s. products going into canada? john: a lot of the building and products e-minis sell into canada -- companies sell into canada. good though shipment be diverted elsewhere? yes. there's a lot of tariff mitigation actions and resourcing efforts put in place where the the effect across the housing complex is going to be very manageable.

it will be bumpy. lisa: i want to crystallize this. the housing market is a great example of how these tariffs could potentially work or what the goal essentially is. if you have a lumbar association coming out -- lumber association saying it to be met by domestic production, why is it a problem? quality? price? canada is able to offer lower prices? if that was not available or a higher price, you would see people charge u.s. to mystic production? -- domestic reduction? john: douglas for comes from canada -- fur comes from canada and seems to be higher quality than southern pine. is it good enough? yes. cadet suffice for what we have here in the u.s.? yes. it is good enough but there are higher quality lumber that

comes from canada. it depends what you are situated in the u.s. that makes international importing and the trans-rotation of the lumber more palatable. lisa: if you get it from winnipeg in north dakota, that makes sense. just going forward whether you see homebuilders more constrained by the trade policy or by the rate policy going forward? john: the trade policy remains to be seen. the rate policy is front and center for now. the bigger question would be what happens with labor. if there is mass deportations were things of that nature. we were looking at a 400,000 person shortfall in u.s. construction today in terms of labor. 30% are immigrants. the actual number of illegal immigrants is unclear. it is relatively important.

that could be a pressure point. jonathan: margin pressure? john: it could. 25% of the cost structure of a homebuilder, of the sale price is attributable to labor. it is something we need to keep an eye on. jonathan: when we are trying to rebuild in certain parts of this country on the west coast, around l.a. the wildfires of the past two months have been a massive concern. and the southeast of the country as well. the hurricanes. how is the rebuild effort going? do we have access to building materials, to labor? john: in the southeast it has been as smooth as it could be. there are always difficult situations. the southeast was very much a water event. those things take time in terms of insurance claims and policies coming through. there's been no shortage of materials. there has been adequate labor. our companies report the efforts are moving along pretty well.

the california wildfires are different story. still tbd. builders don't have much exposure out there. building products certainly well. annmarie: in california they are working on clearing debris and making sure it is safe. how long is that rebuild effort going to take? john: great question. he will be longer than i think people would hope. these things take time because of over processes in place and the insurance claims going through. it could be a number of years before we actually get back to where we were. jonathan: the top pick right now and housing? the senate bullish at the start of the conversation. john: meritage homes. they are an entry-level builder but one of the fastest growth profiles. they are in phoenix. same sort of favorable footprint across the golden horseshoe that

many builders have. jonathan: good to see you as always. john lovallo of ubs on homebuilders. futures on the s&p positive five .4% -- by .4%. dani: the trump administration has begun firing hundreds of the faa employees. the trans-rotation secretary duffy said zero air traffic controllers and critical safety personnel were let go. some of the personnel who were laid off or hired for radar, landing, navigation, maintenance and an early warning radar system. tesla is hiring in india after elon musk met with prime minister modi last week. tesla and india have engaged on an offer years. the company stayed away because of high import duties. that has changed. india reduced customs duties on cars earlier this month, getting ahead of any reciprocal tariffs. argentinian president is denying any wrongdoing after he seemingly promoted appoint on

social media that went on to soar and then crashed. he met with the people that proposed and launched the coin but said he did not post within intent of persuading people to buy it but to support argentine business using crypto. that is your brief. jonathan: thank you. more from dani and 30 minutes. -- in 30 minutes. >> i think the policy is in a good place. allowing the committee to be patient and pay closer attention to the inflation data as it evolves. jonathan: we will get the view of nela richardson of adp. from new york city, this is bloomberg. ♪ ♪

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jonathan: equity futures firm or by .4%.

bond yields a little higher. up by three or four basis points. under surveillance, the fed's inflation fight. >> i think the policy is in a good place, allowing the committee to be patient and pickler's intention to the -- closer attention to the inflation data as it evolves. the u.s. economy remains strong with solid growth and economic activity and the labor market full of employment. core inflation is elevated but it appears to resume its downward path. my baseline expectation has been that it will moderate further this year. jonathan: more ecodata after recent inflation whipsawed traders in the last week. nela richardson writing "consumer strength is due to the solid market. cracks are forming between the surface and threatened to spill over to the consumer." good morning. good to see you as always.

let's start with the cracks. nela: they are in the debt sector. bigger picture, bigger level here, the consumer and the worker have been in lockstep. the consumer has done well. the labor market has done well and vice versa. consumers are driving the labor market higher. if you look at where the industries are taking off, it is health care and leisure and hospitality. these are consumer oriented and consumer facing industries. yes, there are cracks. we saw it with the retail spending. if the consumer starts to falter, what does that mean for hiring and labor market? lisa: that sector, the experiences sector, it's a labor market that is turning over? nela: it is one of the tells. when they look at what else is happening in the labor market, services are not performing the way they did in the first half of 2024. we have seen a sluggishness in professional business services. what carries the torch for the

market of the consumer is under pressure? there is nothing to take up the slack. that is the issue. it is not goods, not manufacturing, not professional services. lisa: it is not tack. -- tech. we have seen layoffs consistently across the board. southwest with their first layoffs in their 50-year history. are these just one offs or something growing to become a trend you are watching a terms of efficiencies and turning to job cuts? nela: i have consistently said that the labor market is solid. you are seeing solid overall growth. it is the cracks beneath the surface we are watching. for example, new hires. we tend to match individuals but it's great to look at the cohort of new hires this year versus last year. there has been no pay growth in this crop. why? companies are hiring less tenured, less skilled workers

now than they did last year. is that a signal of a trend that more highly skilled workers are not as an demand as they were the year before? that is definitely something we are watching and we see that across industries, especially in financial services and information. these are typically highly skilled industries. annmarie: 60% of u.s. workers with paycheck-to-paycheck. last week we find out inflation is still quite high. at what point do we see the workers, these consumers pushing back? nela: exactly. we have been waiting for this, for consumer resilience to turn to consumer reluctant because of higher inflation. it has not happened, except last week we saw the beginning of that. he could just be a cold-weather month. the broad-based slow in retail sales suggest it is more than just a really cold january. something else could be a foot. these higher price levels are starting to finally make a dent. we will not know until we get more data. lisa: you say the prices for the

wages people are earning when they come in are the same for the incoming class this year as it was last year. how much could that be due to the use of certain efficiency tools? i'm talking about machine learning to offset some of the roles some of the highly skilled individuals coming in would have to hold. how messy is the data because of the bigger trends forming in the labor market? nela: when you think about where the slowdown is happening, entry-level jobs cannot be automated. this is new for the knowledge worker skill base. that trend is something that could have a through line from cyclical to structural. that is what his heart about the labor market. with all these technological advances and the demographic changes we don't know how much of this is sticking and how much of this is just, you know, because interest rates are higher than we would like them to be and that is weighing in on hiring decisions. lisa: we were talking about the fund manager survey out of bank of america. the lowest number of people are

expecting recession at least three years. based on your observations, should it be higher percentage? nela: recession timmy -- to me is like the rain. unless you tell me the time and location it is meaningless. they happen at a pretty regular heartbeat when you look at history. the last economic expansion was way longer than historical norms. i don't think there is anything that suggests a 4% unemployment rate we are heading to recession. there could be some slowdown in hiring. there is uncertainty and policy that would cause employers to maybe take a step back and not hire as robustly and as aggressively as they have in previous years. jonathan: we will see if this shows up on thursday with the government layoffs. good to see you as always. nela richardson of adp.

some reporting from fox news from some of the reporters. the u.s.-russia peace proposal would have a three stage proposal enforce ukraine collections in ukraine according to foreign diplomatic sources. allow me to share that again. the u.s.-russia three stage peace pozo would force ukraine elections. annmarie: ukraine has not had elections because of the fact they are a wartime country. they have been status quo. potentially this is a concession that the u.s. would have to bring to ukraine and they would have to agree to but russia would want to deal with a new president and not deal with president zelenskyy. that would be quite something europe will have a lot to say about. jonathan: we will build on that and just a moment. equity futures positive by .4%. , kevin gordon, george ferguson, tiffany wilding and kristina compmany of invesco. the third hour of "bloomberg

surveillance" is up next. ♪

>> tariffs are probably the single biggest thing that is

distracting everybody. >> markets don't see too much permanence in the tariff impact yet and that is where we fear there might be a miscalculation. >> there is money that will flow out as the tariffs go on. >> the bond market is more vulnerable. >> i don't think the tariff announcements are the reason to sell stocks. jonathan: the third hour of bloomberg surveillance starts now with 90 minutes until the opening bell. futures up .3% on the s&p. the nasdaq last week the best week of 2025 so far. the week ahead, fed minutes coming later in the week. more executive orders, earnings and a little bit of economic data. pmi on friday. look out for jobless claims thursday morning. one from apollo making the point, focus on the washington, d.c. area and see if we see any spillover from the job cuts. lisa: there been reports of how many people in the d.c. area are

seeing their jobs cut, anecdotes about people who have lost their job and what are they going to do. but it will be important in a time where you get misleading reports on all sides. how much has this been fueling the u.s. labor market at a time are we just heard that there are cracks forming under the surface. jonathan: folks on foreign policy. in saudi arabia, a meeting from top officials in the united states and russia and we had a read out and will bring headlines in just a moment. getting a better feel for possibly a three stage peace plan coming from fox news this morning and that proposal would force new ukraine elections according to foreign diplomatic sources reporting from fox news. annmarie: there has been martial law in ukraine and part of that would force their hand to hold fresh elections looking at this reporting from fox news the plan includes a cease-fire, elections in ukraine and the signing of a final agreement.

what i take this over the weekend when i heard from sources along with my colleagues in washington at the security conference was the united states wanted it signed as soon as the end of the month. russia through a ton of cold water on that and it will be a longer and more drawn out process. lisa: my take away is the u.s. wanted to talk about ukraine and russia and russia wanted to talk about a lot of things it came to the table with different issues and didn't have them meet and they were trying and then they try to make it seem as though they were in the driver's seat. put in will decide when there will be a summit next. annmarie: what does russia really want? they want sanctions relief and want to set up some sort of bilateral relationship with washington that has been put on ice for years had last time we saw a meeting like this was at the g20 in 2022. so this was a first high level meeting even just to feel each side out.

where this goes from here, potentially a three-part peace plan. jonathan: top stories here on bloomberg. equity futures right now on the s&p positive 5.3 percent. coming up, kevin gordon with charles schwab. tiffany wilding of pimco and kristina campmany on the challenge to u.s. exceptionalism. u.s. stocks inching higher. kevin gordon says, one of the hallmarks of the u.s. stock market run last year was minimal starting at the index level and that is unlikely to continue this year. kevin joins us this is a conversation we have had appear beneath the surface, started to see real dispersion taking place. you wrote last week about some of that dispersion in tech and now the moves in meta and now you say the moves in tesla. what makes sense as to why? kevin: within some of the themes for a group like the magnificent

seven looking at on a sector basis, their consumer discretionary, consumer, tech. one of the things we have been pounding the table on in the last few years is not looking at that as a monolith. a lot of that is starting to show and you can date it back to last summer when there were more concerns when it got to earnings season in the late summer period . but from a tree work and the geopolitical perspective, there is probably a lot more being reflected in the price they are because if you look even at the split between consumer discretionary and tech versus communication services, to the likes of meta doing well or tesla and some of the hardware names whether nvidia or apple in the tech space, not doing as well. some of that is maybe reflective of the exposure to china or the rest of the world and what a potential tariff war or trade war could mean for those companies. jonathan: how do you expect this at the index level? this is that the service but what about index? kevin: if you look over the past

couple of months, the s&p 500 hasn't moved much, a tough grind higher. mostly a grind sideways but there have been other sectors that have been leading the charge in picking up the slack. financials has been the stand out there. so i think from an index standpoint, you may not see as much excitement this year, but at the end of the individual stock level or industry level you can see more excitement. it is to the quote you pulled at the beginning of the segment, a retheme around maybe not as much excitement as you saw last year because the index level was great, max drawdown and the member level was 21%, maybe that gets flipped this year, not that we expect some 21% correction for the index, but more of a churn at the index level if there is not as much participation from mega caps. lisa: if this is sorta continued, i wonder how much that is the reason for the split we are seeing in surveys where

you have the greatest degree of pessimism among retail going back three years and at the same time, institutional investors have the greatest degree of optimism in years. you have the lowest rates of cash going back to 2010. how do you put this together with a conclusion? kevin: this has become a post-pandemic phenomenon, especially when we talk to investors and about 40 million people and we have a good gauge of what it is like but what we have seen post-pandemic is the attitudinal metrics are sometimes much more skittish and jumpy and don't necessarily reflect what is going on in positioning. to talk about those high side-by-side, yes, a huge pickup in bearishness for something like a but not reflected in equity positioning.

and when the market can pick up and get back up on its feet over the past several weeks which we have seen. from a behavioral standpoint, it shows you over the long tone wearing frothy territory. the health of exposure to an the fed data go back a century, you are still at near record exposure for the other time was in 2000. lisa: how much of headlines from policy changes affecting retail rather than institutional investors? kevin: for the first time i can really remember, especially leading up to the election when we were talking to clients and doing events and i was just speaking to clients last week, the first event ever where tariffs were not at all a part of the question. it was all about immigration policy. there is this interesting shift at play where there is more meat getting put on the bones as to what the potential growth hit is

from a labor standpoint. a lot of focused tends to be or has been on the inflation impact for tariffs but now shifting to what does this mean not only from inflation from a labor standpoint but the potential hit to growth. an interesting shift where clients are starting to ask, what are the fundamental issues maybe if you go to the extreme end for immigration. annmarie: do they want to see tax cuts alongside potentially the hit from immigration and tariffs? kevin: it is a mixed bag peer tax cuts at the outset or at a headline level garner a lot of attention and support generally. the tough part about this is the struggle right now in washington is just to get the extension and just maintaining the status quo. it is not initiating a new wave of tax cuts. the other hard part about this and this is where i struggle and scratch my head from a policy standpoint and what is contradictory out of washington is tariffs and tear of revenue is being poised as the driver of

a revenue to offset the extension of tax cuts. but every time the tariffs get either delayed or peeled off, then the market cheers it but then i'm asking myself, where is the suppose it revenue for the tax cuts. it is a vicious circle at play where you can have excitement for something like fiscal policy continuing to be relatively expansionary and accommodative but at the same time you also have potential restrictions coming from aggressive tears policy. -- tariff policy. annmarie: you put projecting any tariff related to hit the stocks come the drift decision -- precision isn't possible. what do you project? kevin: you can't make a projection almost because it changes every day. annmarie: how much of a hit to the market is the uncertainty? kevin: i think that is where a lot of the hit resides. a lot of the focus gets put on the actual policy and what is the dollar amount for the tears

and who gets hit and when does it happen and how is it phased in over time. i think that is important but misses the point of the nature of this policy is what creates this and i mentioned it the last time, the thick fog of uncertainty where it is harder for businesses to operate in that environment. lisa: one thing that has been less uncertain is one of the cost savings is going to be driven by cutting jobs and with cnet across the board with the efforts of doge. do you see that being factored into market valuations of companies that have contracts with the government or any other employer base that might be looking at this and taking its cues? kevin: it is early days to see the federal hit, especially if you're going to look at the overall labor market, the share of the workforce for federal workers is small, low single digits. what i think is becoming a more material risk, and it is not

happening right now, but what it's worth watching for a material risk is the eventual hits state and local employment. that is a much larger share and you're getting into double digits in terms of the percentage of workforce. you talk about the big driver of job growth but also a big part of the total labor force in the country if there is not connection and eventual follow-through from what is going on at the federal level and then i think you get two more of a worrisome situation. urgently is not something happen right now imminently but it is moving quickly so you have the potential of that showing up maybe relatively soon in a jobs report. jonathan: can we finish on your, six weeks of gain on the euro stocks. our clients getting interested? kevin: it has taken a long time coming years for clients to get fully on board with it. but especially if you are talking about factoring in some of the risks from a policy standpoint, my colleague talks

about that being more exposed to japan and the u.k. to the extent you want to look at those areas of the world that are maybe less exposed to maybe a trade or tariff risk from the u.s. side of things. maybe there is a little bit more of a benefit. we have been very vocal about balancing things there and not just backing up everything u.s. and then loading up on x u.s.. it has taken a long time for clients to i would say latch on. jonathan: it is still early days. but so far come up double digits on the euro stoxx 50. kevin gordon, always good to see you. now a meeting taking place in saudi arabia this from secretary rubio, everyone involved in the conflict has to be a part of the talks. annmarie: it is an olive branch to keefe -- kyiv and brussels. the national advisor said trump

is determined to move very quickly on ukraine and the russians through a ton of cold water on that idea that there could be a summit between trump and put in by the end of this month. sources texting and saying, putin is taking a very maximalist approach the same way trump does come coming in with high demands like the ukrainian election and then potentially negotiate from there, the top level maximus approach. jonathan: rubio said trying to solve it in a fair and enduring way. equity futures on the s&p just thought positive five point 3%. with your bloomberg breeze come here is dani burger. dani: i just want to give you the over by view -- the overview. they have ended the talks in saudi arabia. they did not set a date for a summit between president donald trump and putin. ukraine was not represented at the meeting headed by secretary of state marco rubio. president volodymyr zelenskyy warned his country will

recognize any agreements about us without us. elon musk's ai startup releases a model in the company said the model be google in openai across math, science and coding. it is rolling out to premiums x subscribers immediately and others as soon as it is fully mature. in sports, u.s. hockey fell to sweden for the first defeat in the four nation face-off. sweden came back after surrendering a goal in the game process final minutes. elsewhere, canada beat finland behind two goals from nathan mckinnon. the u.s. and canada now meet in the final thursday. that is your brief. jonathan: it will be must watch for many reasons. up next, the morning calls plus george ferguson of bloomberg intelligence following another major airline incident. that conversation is up next.

this is bloomberg. ♪

[laughter] you go to sandals to get really, really close...

to the caribbean. we should do this every morning. ♪♪ jonathan: one hour and about 13 minutes from the opening bell with equity futures positive by .3%. bond yields higher by four basis points. 4.5171. vaccine policy recited and a lack of other major clinical catalysts, the stock on maternal positive by 1%. hyper standard raising the price target on walmart saying a positive sales backed out in market share gains. that is up by one third of 1%. also strong market positioning citing for you and ch.

a delta airlines jet flipping over -- unhc. a delta airlines jet flipping over. joining us to discuss is george ferguson. from your perspective, what happened here over the long weekend? george: it looks and canada when the airplane was trying to land and probably the pilot was going a little fast. i am in an accident specialist but it looks like they bounced the airplane hard and post the bounce the wind probably got under the wing and flipped it over. thankfully, everyone is ok. i would still point out that airline safety is still better than what you get on highways and such, so there are problems this year so far. lisa: this is what everyone has always argued, it is safer than

crossing the street but statistically you have a greater chance of getting hit by a car. doesn't concern you and people in the airline industry that we have an increasing tally of headlines talking about accidents including the worst and most fatal accident since 2009 in the united states? george: lisa, i'm smiling because you got me. i wanted to make at least the safety comment but it does. i think the issue here is there has been a big turnover in aviation employment since the pandemic and we are bringing a lot of people into the industry, a lot of younger folks new to the industry. this was a regional carrier, which is endeavor which operates airplane on behalf of delta. they traditionally have some of the younger pilots in the industry building their experience. so the big turnover we have had requires a lot of training and training and sifting of people's talent. some are cut out to be airline

pilots and some are not. i think it is leading to some of the problems we are seeing in the crashes and some near misses and it is concerning so aviation is going to have to get all over the training and the sifting the portion of this business in the next bunch of years because a lot of air travel going on the regional side, that has been depleted of pilots and just starting to get some of the schedules really flowing, so a lot more junior folks applying airlines. lisa: this is not a new discussion, why is it taking so long for some of the changes to be implemented so we stop getting some of these headlines? george: training takes a while. like i said, it is an everyday kind of occurrence in an airline where there should be constantly training going on for pilots. on the regional side, a lot of the regionals couldn't even fly

the schedules they would have liked to because they couldn't find pilots because the pilots were all being hired by the majors and getting pulled up into the delta, united, american, southwest great now that things have combed down a little bit and -- calmed down a little bit, they have more policies and it becomes more of an issue now that they have to get back to focusing on training the pilots well and managing who is in the cockpit and who is not. one thing i would also say is the d.c. crash really wasn't about the regional pilots, right . what i looked at what happened in the d.c. crash and i met an accident investigator, but the preliminary information was at the helicopter was at the wrong altitude. that should not have been about 200 and they were up at 300. the see rj was working on a final approach. they looked like they were right

where they were supposed to be, so that is not a regional pilots problem. that is an army training program problem and frankly it shouldn't even be training anywhere near reagan because it is too busy. annmarie: talking about the roots and some of the airlines that had to pull back, could we see more back of the regional routes being taken off flight tracks because there is this concern and new push to making sure they have the right pilots and safety precautions before the planes take off? george: i don't think the big carriers want to take them off. typically some of the regional routes can be lucrative could you go into smaller cities and you get higher fares went really one of the laggards we see in the business is that this is travel had not bounce back as quickly. lots of times business travel is going to the smaller cities on the smaller airplanes, so i don't think they want to pull that back.

they want to be able to offer the full product offering in the full route complement. i don't see a pullback. could i see a lot more work on safety, making sure training is appropriate, making sure they are scoring the pilots and folks that maybe aren't being cut out to be pilots are being pulled out of the cockpit i do see a double down but i don't see a pullback of routes. lisa: always great insight on the plane safety and i hope we don't have to have another conversation about it. i want to get your take on what we are seeing in europe where there is an increasing amount of optimism that the european region will borrow money to invest in the defense sector possibly to the tune of $3 trillion. help much with a need to invest in their air system in order to bring it up to speed? george: so to invest in defense?

we see them being lagged behind in a lot of different areas. we think that the european union made members spend less than 300 billion a year in the u.s., close to 900 billion a year. we think the europeans need to bring it up to 700 billion or 800 billion, so they need to add another 400 billion or 500 billion per year for decades. they are well behind with the u.s. is in military. if the europeans really want to carve their own foreign policy, if they want it to have any level of teeth, the europeans have to start to invest significantly in defense so they are taken seriously. as part of what you are seeing with the u.s. and russia meet in the middle east in riyadh and

the europeans are invited, they just don't have the capabilities to project power and without that, people care less about what you have to say. again, it is not just an air defense for they do a decent amount in fighters. there are no bombers in their portfolio. there is a lot of underinvestment in ground forces. there is a lot of money to spend from the europeans. jonathan: george ferguson there of bloomberg intelligence. slowly demonstrating the willingness to do something about this and that will come down to money and how to issue debt. lisa: bond investors preparing for that ability with raising the cost of borrowing that debt. jonathan: up next, tiffany wilding of pimco and kristina campmany the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution

for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

jonathan: 16 minutes away from the opening bell with equity futures positive by .4% on the s&p 500. the nasdaq coming off the back of its visited asked -- biggest weekly gain, up close to 0.5%. here is manus cranny. >> intel up over five and 1/8 percent. on assets of the ships and put on 23.5 percent in equity value last week.

these are the stories that both companies may be looking to take part of intel. picking apart intel is the narrative. southwest taking unprecedented moves, cutting 15% of the workforce. this is i suppose one could say a culmination of investment management. they have five seats on the board and pressure to deliver change. they have a new shareholder on the roster at constellation and has a $1.2 billion position. 1.5% dividend yield. and modelo taking advantage of an upswing. jonathan: your today the stock is up premarket. it is clearly not bud light. lisa: i thought you were commenting on the price -- on the taste. jonathan: i am not doing that.

this week, fed speak. michael mckee will break it down. michael: we start within indicator, manufacturing rising to 5.7 to -12.6. it doesn't tell you about the economy except that the highest prices paid it number of 14.5 points in more than two years, something to keep an eye on peer we will watch for fed speak. we don't have a lot of indicators, housing starts in fed minutes tomorrow and the vice chairman speaks tomorrow. thursday is the day i think everyone will be interested in because we get jobless claims and how many federal workers fired up will start showing up. you have the southwest employees who might show up who we might see some interesting increasing in jobless claims. and for fed speakers for

friday's highlight of the michigan sentiment and mr. jefferson will be speaking again and this time about that communications. this will be interesting to see if he is proposing any kind of changes. we did have some fed speak over the weekend basically saying we are on hold for now. parker and waller noting the disappointing january cpi might just be seasonal distortion with the exception of the pandemic, cpi comes in hotter than forecast in seven of the last 10 years. and if that's the case, it bolsters waller's idea for cutting rates later this week. not a lot of market moving numbers but may be some market moving fed stuff. quieter and the economic front but i'm sure the president will take care of the news for us. jonathan: looking forward to that. michael mckee on the latest. let's pick up on what mike was

talking about, the, jobless claims, for thursday. would we see the latest at the federal level start to show up in the data? we will look for that. and also fed speak, he was talking about governor waller. let's start with policy, if the wintertime lull, but they are alluding to the q1 had fake in 2024 and will we see that in 2025. lisa: it was people looking at the components and said it didn't fit into the other alphabet soup of inflation which was pce and it wasn't going to necessarily mean there was an overheating in inflation appeared this to me is key. people have been talking about a soft landing. if you get any rock in that kind of narrative were either growth

is a slowing or inflation isn't coming down as much, at what point does that disrupt some of the goldilocks people? jonathan: kristina campmany saying we live in a world with more risk both with tales of a note landing or a risk off the materially wider. christine is joining us. always great to catch up with you. the components of ppi that go into pce came in softer than expected. how comfortable should fed officials be with the data? kristina: the data tells you last week that we will be living in much noisier, we had cpi and there was concern and then ppi backtracked and then we left with tracking unchanged on the week. i think it leaves the fed with all of this data saying there is so much uncertainty and so much being cranked into the market from a policy standpoint that you almost have to sit on your hands and say, we need to wait

and see how this feeds in and what are the driving doses of all these policies and how they respond. jonathan: we also want a decent idea of how they would respond to policy changes. governor wally said, my baseline view is any terrorists would modestly increase prices in a nonpersistent manner so i favor looking through these effects. does he have company? kristina: i think baseline for central banks and the fed to say the impact of tariffs we look at as a one-time shock and see-through and the big question with tariffs is, what is the growth impact and what is the negative growth impulse and i think for us the way we think about it is it is really harlow large -- how large art tariffs and then it becomes a linear response. if you have just a tariff on one company, we are talking global and at some point it becomes

much more negative growth shock. lisa: the growth shock story has taken on a greater shuri -- story. last year we had a massive selloff particularly at the long end and today a massive rally, gains in the market. do you see that continuing or is this the top blowing off and resetting expectations, the contrarians are having their day in the sun and now we go forward with a different narrative altogether? kristina: we keep saying that 2025, a lower shock ratio world and a lot more volatility. we said in december, maybe at the reasonable trading range for tens is 4.25 to 4.75 and then we had a bank selloff in january and everyone was talking 5.0 or 5.5. you have to step back and say we still have noise and we are within the range and will probably go from one extreme to the next in traded stories as we get this information.

i think that is the dynamic that this is the story. lisa: do you basically say, this is going to go to 4.25 before 4.75 and let's buy into this into week that level? kristina: i think so. when we think about structuring portfolios, duration can be traded more tactically and then the overall portfolio we say, where is there value in the market and there is a lot of value in the front end and with policy rates close to where to your rates are in gotten rid of negative carry and canoe structure portfolios around that. in the long end, it has to be more of a trade as trading headlines and what is driving things and there is so much coming out of the sea lisa: the u.s. -- coming out of d.c. lisa: we saw a selloff in european bonds over the weekend in large part because of the expectation that there would be at least talk of borrowing

collectively to invest in the defense complex. how much does that stymie some of the long european bond but that so many people had been piling into? kristina: i think that we have said for a number of years that there is need for more consolidated across europe borrowing and issuance and spending on defense, and think there is a lot of talk with russia and ukraine and change the oil dynamics in where you get the energy supply. i think there is more to come and as we live in this tariff aggressive in regime globally, we have just what can we do for ourselves and that will be that europe will spend more and how we think about policy and the op-ed talking about the biggest problem is of the tariffs we are putting on ourselves and do you see global deregulation because the u.s. is leading. annmarie: the irish premier saying we get to -- need to get

rid of regulation. tariffs is one part of the policy in the united states and kevin gordon was talking about how clients are worried about immigration. last month the u.s. government added 38 thousand positions. how concerned are you about the labor market potentially getting hit, not just for deportations but the doge effect and the layoff of workers? kristina: we just don't have clarity in what is the timing. from immigration and deportation, what are the real numbers. we have had periods in the past of the obama administration and others that you had consistent deportations. are you losing people from the labor force and can you refill those. i think the labor market is certainly something that has been very well balanced and the fed is watching and something they will be very careful to react to weakness or changes there. annmarie: you said as an investor with uncertainty, you

sit on your hands. i imagine the fed might as well. but if there is concern about the labor market they might want to cut but inflation, we've had people coming in saying to hike paired where is the balance of risk? kristina: it is very asymmetric at the bar to hike going forward is much higher than to ease. but i think the base case, they would be happy to at least wait until june if not longer paired with said this before, when data print doesn't do it, three they can maybe react. so many things coming on the pipeline that it feels like june is the absolute earliest they can see where they have the same inflation surprises of last year, the seasonals that make them be cautious to react quickly. lisa: people are bullish on equities and they have been bullish and the prospect that the u.s. economy can grow regardless of what happens in volatility and inflation. you still feel that incredible rush to credit, in particular

riskier credit at a time where the economy has to slow or the fed has to remain on hold for these foreseeable future? kristina: i think the market has been very bullish credit and you have tremendous amount of supply. we have been a little bit more within our own funds and we run global money and invesco has their own credit dedicated, but we have been more cautious credit. but we think about where the shorter duration, where there is still value and i think the underlying fundamentals of the u.s. economy are strong and we have had the u.s. exceptionalism story but also the relative exceptionalism. is it that the u.s. is doing on a go forward basis so tremendously well where you are seeing mediocre growth elsewhere? that is what we have to think about also. lisa: brings us back to where we were saying, have we seen peak u.s. exceptionalism based on the bank fund managers and based on

the optimism we are seeing in europe and the investments there? from your perspective, is that the correct narrative at a time where people are wondering if maybe they are -- are better horizons elsewhere? kristina: we are coming from a point of this finely balanced u.s. growth story. so where we start, we have a lot more risk injected in with all of these policies and how do they balance out and do we get a boom bust or which is at first? what is the ordering? i think there is still certainly the case for the u.s. going forward and it will be how do all of these things drive. the other thing that we think about the consensus trades is the consensus is that this administration policy is strong dollar policy and we have not seen that played out. we would come true to that maybe you would see a weaker dollar. if you have a growth stock or a weaker dollar plus the combination of lower equities,

certainly that challenges a lot of positioning out there. jonathan: what is happening with the bond market, what is behind the decline in 10 year yields over the past five weeks? what is the driving force behind that? kristina: bring into the narrative what are the negative growth potentials from tariffs and we think about what are the four policy initiatives, immigration, deregulation, taxation, and tariffs. and we have seen immigration and tariffs and not as much with the deregulation and the taxation, which would generally be thought of as the more positive growth momentum ones. so that is part of it. i think it is uncertainty and where we swung in the range. we had a pretty sizable selloff from mid december into january, and i think it is anchoring that without a lot changing underneath. jonathan: the longest run since 2021 on a weekly basis. the 10 year is up by at basis

points. lisa: i wonder about the contrarian trades and you get a weaker dollar and the european exceptionalism, what that does in terms of where people invest and how much money would have to shift on the heels of that. that to me is a compelling point as we head into whatever the next story is. jonathan: a long position build up in dollar a decade plus. i remember back in september people were talking about the beginning of a rate cutting cycle that would push the money elsewhere and we would see a massive move in the u.s. dollar, a much weaker u.s. dollar and months and now it is starting to change back again. lisa: to me the question is, if we do get some reversal, are we back to what we were talking about or can we get a real meaningful shift into the european story of this is a new cycle where the u.s. is not alone. jonathan: it is good to see you.

kristina campmany with the latest. let's go to dani burger. dani: this is your bloomberg brief. israel will start negotiations on the second phase of the cease-fire with hamas as early as this week. the foreign affairs minister in israel said discussions extending the sick week -- six week truce will begin next week. the goal is to remove all hostages. record trips, 30% growth in bookings for alignment. they pledged to sustain double-digit growth and plans to follow through on a long expected ipo but did not provide a timeline. new york governor kathy hochul set to meet with leaders today to discuss a possible word for eric adams after his serious allegations of quid pro quo with president trump. this after they called on

manhattan prosecutors to drop the pending bribery case against adams sparking concerns he is beholden to the president. jonathan: thank you. if you're just joining us, welcome back, equity futures advancing by 0.4% on the s&p 500 after snapping a two-week losing streak just last week. the nasdaq was fined last week, the best week so far in 2025, up by 0.5 percent. developments in the bond market, last week yields down on a 10 year maturity for five consecutive weeks. this morning, yields up by four basis points. this week, economic data on friday, pmi on thursday morning. jobless claims and lots of questions to start the week. will we see some disruption in the data following the layouts in the nation's capital. we will catch up on the other side with that. this is bloomberg. ♪

jonathan: the opening bell about 14 minutes away with equity futures positive by 0.4%. let's get a snapshot for the week. later this afternoon at 4:00 p.m., president trump signing another round of executive orders. tomorrow, data, housing stats and fed minutes. thursday, warmer earnings and another round of jobless claims becoming a big focal point for the market early in the week. friday, u.s. pmi and the university of michigan sentiment. looking back to the week ahead and the last few hours in saudi arabia, joining us is tyler from washington, d.c. what took place in riyadh?

taylor -- tyler: there is no official date for a potential u.s. russia leadership, something officials were hoping to get pinned down by the end of month. secretary of state marco rubio gave a rate out afterwards where he said importantly high level discussions will continue and that a specific team will be appointed, sorted indicating this would progress into the next phase. he also indicated that the european union will be involved in these discussions which does come after we have heard criticism by european leaders as well as ukraine that they haven't had a seat at the table during the reversal of u.s. policy with direct coordination with russia. we know ukraine at asked yesterday that a top level leader at level envoy be appointed as the peace talks continue. another thing that struck me from the readout from the state

department spokesperson if she said during the discussions they discussed a mutual geopolitical interest and historic economic and investment opportunities that will emerge from a successful end of the conflict in ukraine. we have been watching this economic cooperation with foreign particularly as the u.s. floats to ukraine a potential operation agreement that could p -- could be with investments. a bunch of themes we are watching here as we continue to get the developments out of saudi arabia. annmarie: it seems like trump 2.0 will have close ties with the kingdom and trump will speak at this event in miami. do you know what potentially he may say at this meeting when it comes to the investments? tyler: we have seen a president trump previously call for up to a trillion dollars in foreign direct investment from saudi arabia into the u.s.. that could be a u.s. potential

point here as he tries to strengthen ties between the two nations. his first foreign trip of his first administration was to saudi arabia. we are also watching closely for oil output. opec signaled they might not be restarting the april supply that was set to restart even as a push from president trump comes for them to restart the supply in a bid to try to lower energy prices. that is another thing that could emerge as the talks continue and president trump pushes forward the potential leader summit as officials try to get a date on the books. annmarie: he wanted the leader summit by the end of the month. how quickly do you think that the readout says we could see that happen? tyler: a remains to be seen. the past four weeks marked for weeks he has been in office and things are moving at a rapid pace. we know that secretary of state marco rubio it was there as well

as the envoy and the national security advisor, michael waltz. they are trying to push forward negotiations and we will see how the timeline comes together. this is something president trump campaign heavily on, trying to end the war in ukraine and this will be one of the promises he is trying to make good on but there are a lot of other mitigating factors, particularly as he tries to turn this into a domestic issue for american voters saying he is trying to focus on helping to bring investment to the u.s. as he tries to pivot the corner here. jonathan: looking forward to your coverage throughout the day . it is all relative but things are quiet so far. lisa: in terms of what investors care about, and i was just thinking, this whole morning it seems like what we have gotten of the past week has left investors looking more at the potential growth hit, giving

some suppression to yields which is giving people more optimism about a soft landing which is why people are all in as the bank of america fund manager survey shows it is hard to pay attention to a lot of noise. right now, it feels very noisy. annmarie: the fact that you're having high-level discussions, investors view that as a positive. there are two hot wars in the world and potentially one of them could end at a piece negotiating -- at a piece negotiating table and this could happen. jonathan: european stocks are up and not down for plenty of reasons and that is one of the reasons over the past few weeks. of next, we will catch up with oliver chen and met liz eddie -- and matt lizette.

this is bloomberg. ♪ where ya headed? susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management

matt: good tuesday morning. 30 minutes until the start. katie: bloomberg's open interest starts right now. sonali: the u.s. and russia agreed to more talks on resolving the war in ukraine. they set no date for a summit meeting between donald trump and vladimir putin. matt: legacy tech bat, cisco, ibm and or