>> from an index standpoint, you may not see as much excitement this year. steve: markets have been resilient so far. nadia: there is in spurgeon happening. brian: ultimately it will be a good environment for stocks, but it will be more difficult. meera: is about being more diversified. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's get your week started.

live from new york city this morning. good morning, good morning. for our audience worldwide, good equity futures bouncing back, your scores look like this, up .5% on the s&p from part of an early growth spark in november. consumer confidence down, inflation expectations up, existing home sales lower, and the worst pmi going back 17 months. lisa: especially when it has to do with services come not necessarily manufacturing. growth concerns front and center at a time where if you take a look at the u.s. economic supplies index, it is at the lowest level, negative for the first time going back to september. jonathan: i think this will be a bearish start to the program. six consecutive weeks of lower 10-year bond yields. is that good or bad? weaker than expected outlook

from the likes of walmart. the week before, weaker than expected retail sales. it is not the mix you want to see at the start of the new year. annmarie: especially for an administration that one of the reasons why they won as they were concerned and were listening to american voters when it comes to inflation, and the michigan survey on friday showing inflation expectations going up, especially a threat of tariffs coming down the pipeline this year. jonathan: actually pretty negative for the first time in a while. tariffs cannot be positive. put his name together with ken griffin, a very big name in this world. lisa: some of the more bearish prognostications, warren buffett talking about american dominance an incredible gift of being born in the united states, a very quick quote over the weekend. they might be saying the quiet part out loud. a lot of people are trying to justify surgical use of tariffs, being used in a whole host of different manners, threatened in

a blanket type of way. i want to say, some people might say on a surgical level, tariffs are good and they can be used well. right now, there's not a sense of what the ultimate goal is, and that level of uncertainty is making it difficult. jonathan: a couple things to watch, earnings and the data point. earnings from nvidia in the middle of the week. later on the week, the fed' inflations date, corporation ecu. do you think we get a pass on pcu because of how cpi is, ultimately it will not be a big supplies -- surprise? lisa: that's what a lot of people seem to think could we get spending alongside core cpe. you can imagine people respond much more significantly to. but right now, it does not seem like people are worried about longer-term inflation. right now, they are worried about the gross hit we can see with some of the data that is coming in less positive from a growth perspective. so at this point, i'm not sure how even the bond market response other than lower long

and. annmarie: the fed seems to be positive, and that is critical. he was asked about the university of michigan survey and the fact that consumers do seem to be concerned about inflation. he said this, it was not a great number come of age only one month of data. you need at least -- number, but it is only one month of data. you need at least two or three months. jonathan: planning to invest at the $500 billion in the united states over the next four years has put some jobs on that. they will have 20,000 u.s. jobs to begin producing apple intelligence service in texas. lisa: and maybe trying to insulate themselves, something like the fire for their large presence in china where they are increasingly partnering with local companies to try to rollout their artificial intelligence. the real question about how substance is -- substantive this

is, by clearly looking for a transactional win. annmarie: i'm not surprised by this statement here on friday, president trump told us all of this. he said he will be investing all of this money into the united states. guess what? here it is. what tim cook said in his statement is bullish on the future of american innovation and proud to build on our long-standing u.s. investments with this. this is what you're going to see from a number of ceo's who are trying to make sure they are blending the threat of tariffs as well. does apple get a carveout may be somewhere else? jonathan: the premarket down by a little more than 1%. coming up through this hour, we will speak to bob doll of cross mark, ed mills of raymond james as doge needs more resistance in washington. we begin this hour with stocks pushing higher, looking to bounce back this year. bob doll of crossmark saying

trump has so far done the opposite of trunk 1.0 and policies potentially threatened risk. make a constructive, will you? on friday, is this the start of a justify, legitimate growth start in this country, or too much too soon? bob: i agree with you, potential for a growth scare is sadly surreal, enumerated in retail sales, housing stocks, manufacturing production. the university of michigan survey. all of these things that say, hey, just a second or two. we've had some pretty good growth over the last few years. maybe we will take a little pause here. the only thing you did not mention, in my view, from an investor standpoint is, oh, and evaluation, 22, 23 times earnings, discounting a world that should be nearly perfect, and it is not. i suspect we have some risk. lisa: you say we have some risk

based on the fact that we have high valuations and earnings that are not keeping pace. how much of this has to do with where we are in the cycle and how far we've come versus some of the policies that are coming? bob: it is a combination of both, sadly. you mentioned the policies. look, watching the opinion polls, a lot of people who voted for trump, believe in his policies, are struggling with the pace and method of implementation, so the polls, i suspect more of that to come. lisa: over the weekend, cohen saying tariffs cannot be a good thing. damon -- jamie dimon saying tariffs can be a good thing, and you hear business leaders taking it in stride, saying they can manage through it. where is the truth here? bob: great question. it depends on how they are used. one thing one day, another thing

another day. friday, a week ago, remember the word "reciprocal tariffs" came up. i got encourage, because if you and i are trading with each other, you have a tariff on me, i don't have one on you, reciprocal means i will put a tariff on you. that word lasted about a day and a half, then talks to other things. annmarie: the list is very long. we have march 4 when it comes to the pause between canada and mexico, march 12 when it comes to another. we get the report of april 1 from ustr, commerce april 2, auto tariffs. all of this could potentially be a negotiating tool. what happens if this is perpetuity of uncertainty when it comes to tariffs? bob: well, you use the word uncertainty. we all know that.

i come back to, "it's complicated," it is requiring further study, it gets pushed out in time, and all types of trial blues put up. it is about conversations and not just throw all kinds of stuff against the wall to seize what will stick and what will not. annmarie: this morning, we get news that apple will plan to spend $500 billion domestically over the next four years, really a nod to president trump. do you think is carrot and stick approach is working when it comes to tariffs on one hand but maybe better taxes and deregulation in the united states? bob: it's possible. if intentions are good, in my view. the problem is, the world, american businesses cannot move on a guy like that and go this way today and that way tomorrow. -- move on a dime like that and go this way today and that way tomorrow. lisa: all of this sounds very bearish.

bearish prognostications. you have the likes of michael wilson from morgan stanley talking about how, given all of what you've heard, the u.s. is still pretty good. it's pretty much going to include the rotation away from the u.s. is sustainable. jp morgan having a similar kind of discussion over the weekend. do you think that everything you've laid out in this uncertainty really undermines the idea of american exceptionalism, especially at a time when you have europe, that still has not gotten his leadership coalitions fully intact? bob: i agree with your premise, that is, this does not get rid of u.s. exceptionalism. what it does is say there are cycles, and perhaps we are in be part of a slowdown in a cycle with all the things you enumerated at the front of the show yahaira: accompanied by -- the show, again, accompanied by high valuations. we probably have consolidation and maybe some pullbacks. hard to see the market moving up 10% from here. jonathan: bob, appreciate it as

always, bob doll from crossmark. some data from nvidia, home depot. has it been -- it has not been a quiet start to things over the last month. yields lower for six consecutive weeks. we asked this question earlier on in the month, whether that supports cyclicals in equities or something we should be worried about, worried about the cycle. based on what the stock market is now telling us, maybe we should be worried about the economy. lisa: when you take a look at the actual data, you can see that consumer confidence has been falling. to the university of michigan sentiment survey, that's why tomorrow's sentiment data will be important to does that confirm that? on the flipside, there has been concerned that we priced in the good news, and that we are getting some of the anti-growth, sort of the bridge to growth policies coming out of the white house, without a clear sense of how long it will take for them to get through tax cuts on a progrowth policy through. jonathan: this can change,

february 24, to keep us all up to speed. it's week five? the fifth week of the trump administration. big news out of apple this morning. with your bloomberg brief, here's dani burger. dani: starting in germany, where friedrich merz emerged as the leader in the german election. they won almost 29% of the vote. merz says they will form a new government in two months. 2 million federal workers, ordering them to report what they did last week or be forced to resign. elon must said the directive came from president trump. several agencies, including the fbi, nasa, the pentagon have asked employees to hit pause on acting on the directive. to that breaking news, apple said it would add 20,000 new

workers and produce ai servers in the u.s. the company plans to spend 500 billion dollars domestically over the next four years. that will include work on a new server, manufacturing facility in houston, and a supplier academy in michigan. that announcement coming days after apple ceo tim cook met with president trump in the oval office. that is your brief, jon. jonathan: thanks for that. more from dani in about 30 minutes. more from tim cook morning. long-standing u.s. investments with the $500 billion commitment to our country's future. lisa: with 20,000 new jobs over the next four years, is the biggest u.s. commitment today to a new reporting just out this morning, the key question here, is this the beginning of more? how much is this by concerns from donald trump? jonathan: equity futures this morning up by .5%. up next on the program, doge in d.c. elon: i think that -- sec. bessent: i think that

there are many fine public servants, and if you don't move quickly, then the lobbyists get involved, and it is impossible to get anything done. jonathan: can we get anything done? we ask ed mills of raymond james on the program next, live from new york city this morning, good morning. ♪

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jonathan: equity futures positive here come up by 0.5%, bouncing back from the biggest one-date loss of the year so far in friday's session, driven by much weaker than expected economic data. in the bond market, six weeks of lower volunteer on a 10-year -- lower bond yields on a 10-year

maturity. on "surveillance" this morning, it is doge vs. d.c. sec. bessent: i think that there are many fine public servants, if you don't move quickly, then the lobbyists get involved, entrenched interests, and it's impossible to get anything done. anyone who is experienced in financial hardship, any kind of the mental duress, i'm sorry for them, but that is also what the average american experiences every day. jonathan: here's the latest this morning for special agencies, including the pentagon and the doj, telling workers to ignore demands from elon musk's doge team to justify their jobs, after sending mass emails, "failure to respond will be taken as a resignation." bloomberg's tyler kendall joins us now. how much confusion was in d.c. over the weekend?

[inaudible] jonathan: i think we've lost that audio. tyler kendall and washington, d.c., who you can see but not here. there's some confusion over the weekend regarding doge. they sent out in email, something like tell us five things you've done over the week. if you're in a particular part of the u.s. government, working out over the past lisa: week. especially if you work in banks -- past week. especially if you work in things like intelligence, if you are doing things that could legally be an issue. i will say this is reminiscent of elon must did with twitter, which is why you have a number of people like those at the doj, kash patel telling employees the listed on this, do not respond to the subject line over the weekend, believe me, if

you want to see the confusion of a look at the text message i received on my phone, "what did you do last week?" that's what trump and elon must want to know. lisa: the directive from doge also said don't necessarily respond to these emails. a lot of people are worried that they are going to lose their jobs. look, to the uncertainty we are having, it is important to strip away ways. the question is, how do you do it, what is the ultimate goal, and whether you do it with some degree, as you pointed out, of compassion. jonathan: ed mills of raymond james joins us. we are going to hear more. there you are, perfect. let's talk about the doge effort over the weekend, that email know that when i appeared with the consequence of all of this going to be? -- went out, what is the consequence of all of it's going to be? ed: john, i want you to send me

a emailed tonight, if i don't respond, i get $1 million. i think that is one of the responses in d.c. the question i have in this come as you go to the executive order that establishes doge, this is not within their charge. so you are going to have a series of things, and this is a real issue here in d.c. as to who are you actually reporting to come and if you don't report, are there some legal consequences? certainly everyone who wants to keep their job is looking for guidance of exactly what they are supposed to do with this come under the executive order. doge is supposed to be working on an upgrade to the i.t. system for the chief of staff, to the president, susie wiles. doge does not set this out in the executive order. we see an expansion of that until we get some of the legal infrastructure around that. i think there will be a lot of "trauma and uncertainty" here in

d.c. if you want to strengthen the federal government, you could do that. we've done that in the past. there are processes in place. clearly you want to move fast, as you saw secretary bessent say with your interview, but it's unclear, if we move fast, if it is more effective or not. annmarie: ed, we have several government agencies, people that trump put in place, people that the mainstream media were calling "serious loyalist," telling them to leave the emails on read, at the meantime, sending out memes, one with spongebob squarepants, saying, this is what i got done last week, crying about elon, crying about trump. what do you do? ed: you listen to your manager, because ultimately that is going to be what you have to work with. but there is a lot of uncertainty, and i think that when we look at kind of some of the, you know, we discuss the

national security issues, you know, the classified issues, it is very kind of appropriate to have the director of national intelligence tulsi gabbard come out and say, the entire intelligence community, don't respond. when you hear from elon musk, some of this is, are there government employees who are not under email, are not responding to things? that is an appropriate thing, to get a pulse check for individuals, whether or not they are engaged in their job. there have been individuals who have been told not to do their job. you look at the consumer financial protection bureau. there have been a number of folks told, stand down, don't work. so in that position, how do you respond? but i'm also really looking at what's going to happen here in d.c.. we have a lot of to do's in congress this week. did they pass a budget? are we moving forward with the

tax credits? are we move forward with the defense and immigration spending? annmarie: do you think the house will pass a budget this week? ed: i'm really skeptical. i think we have a situation where one or two members can sink the entire thing. we already have one hard no out there. when we look at this bill, i don't know if there's enough of a crisis or a deadline to get this done just yet. i would not expect this to go clean on the first start, but almost nothing catches clean on the first to start. i am expecting that more attention is going to go to the senate passed a budget. maybe that provides a quick win for the president on defense spending, on immigration spending, if they need a backup plan, if the house just cannot get everyone on the same page just yet. lisa: how much spending that you see being cut from the u.s. government is real versus just theorized about? in other words, how much oxygen have they really saved by making some of these cuts to the special workforce, custody

defense department. ed: at this point, it is very low. a lot of the savings that have been announced are contracts that have actually already been paid, so i want to see more kind of on a go forward basis, how much that is going to kind of take into account. when it is coming short of budget cuts, how much of those are paper savings, how much of those are real savings. i do think, though, there is a lot of momentum of making the tax cuts that passed in 2017 permanent, and i don't think they're going to be able to get $5 trillion worth of pay-fors either through doge savings or through some of the savings that congress chooses. so having this conversation about how aggressive doge is being, how aggressive we will be on tariff policy is providing

political cover and groundwork to add to the debt and deficit over the next 10 years, even when you have this narrative that there is such a significant reduction in staff, savings of the federal government, lisa. jonathan: thank you. we will leave it there. ed mills of raymond james joining us on the latest doge efforts in washington, d.c. and a sprinkle of a little bit more. those who ignored president trump's executive orders to return to work have not received a month's warning. this week, those who still fail to return to office will be placed on administering of leave, the latest from elon musk this morning. lisa: this is the threat that if you don't get back to the office, you will not have a job. i think about 60% of current employees, federal employees are already back to the office. there have been others that are part-time in the office and part-time not. a key question about how much resistance as is and also what kind of growth period if people

are not working near their offices? annmarie: they've made a mandate that they want everyone back in the office appeared work from home is not going to work under this administration, and you hear that time and time again from the oval office but also the head of his agencies. they want to see their employees, especially if you are dealing with national security concerns, they want to see you using the computers that they have control on inside of government buildings. jonathan: up next on the program, holger schmieding of berenberg as germany's conservative leader frederick words clinches a win. the euro -- frederick -- friedrich merz clinches a win. you are watching bloombergtv. ♪

jonathan: welcome to the program. equity futures bouncing back from friday's losses. the russell is where the big losses work. positive by .9%. closing out last week on the s&p with the worst day of 2025. the biggest weekly loss going back to january 10. friday delivering a host of economic data. boosting the bond market's fortunes. the 10-year maturity, yields dropping for six consecutive weeks.

the longest streak going back to june of 2019. two-year yield lower last week for the second consecutive week. two-year, 421.51. lisa: deals are falling for the wrong reasons. that is why you saw the russell 2000 underperform and the worst day of the s&p 500 going back to late last year. a question about the services component, the pmi coming in in contractionary territory for the first time since the beginning of 2023. pay increasing the most since 2022. a question of how much realistic read this is for the economy in the month ahead. jonathan: the dollar story has been a weaker one. three weeks of weakness for the first time since september. euro-dollar bouncing a little bit since the german election. a lot of people stateside have a simple question. does it mean they can spend more? based on sunday, that will not be easy.

lisa: they don't have the full mandate. they have to get some fringe groups on board to pass some new amendment that removes the debt from the constitution -- debt brief from the constitution with concessions that are potentially unpalatable for the coalition. jonathan: oliver crook on the ground in berlin. federal agencies advising employees to ignore emails from elon musk's doge team demanding they justify their jobs. the pentagon, doj, and hhs telling workers to pause. annmarie: elon musk has a subject line, "what did you do last week?" he wants five bullet points to justify your position. if you want to give credence to what they are doing, they can look at what everyone else is doing and see where there is overlap in the government. a lot of people in the u.s. government, if they respond it can be illegal.

maybe they can get away classified information. the heads of the agencies are saying stop. this has gone too far. we need to recalibrate. it remains to be seen what comes next. lisa: senator john curtis, republican of utah, and i want to quote his words. he is a supporter of donald trump. "these are real people. real lives. real mortgages. it is a false negative to say you have to cut and be cruel to do it. there are ways to improve the efficiency without being arbitrary and somewhat mean about it." jonathan: we talked about it with the treasury secretary. are we doing this with dignity for these workers? i have seen some pushback from both sides of the aisle. lisa: at this point there's a question of what the ultimate goal is and the consistency. the concept of due process. how do you apply that where there is a predictable framework for the ultimate goal in the process will be administered? jonathan: headlines from

washington through out the morning. emmanuel macron set to meet with president later today. the u.k. prime minister heading to the white house later this week. european powers trying to secure a role in the european peace talks between ukraine and russia. annmarie: i think we will see these two men were coordinating their objectives with a phone call yesterday before they went to washington. they spoke about what they want to hammer home in the oval office with president trump. it will kick off very soon, the next 90 minutes. macron will join trump as they talk to g7 leaders. this comes marking three years of the war in ukraine. lisa: i'm curious what the relationship will be with teen donald trump m&a omicron -- between donald trump and emmanuel macron. this has not been a government that embraced some of the stalwart leaders in europe, especially if they are on their

way out. there's a question about what this will like. jonathan: we need to put together a government in germany. they will try to do that quickly. by easter. on everyone else's clock may be out that quickly. annmarie: i was talking to oliver crook. i said, to doubt months? -- two months? they have tariffs and a peace agreement on ukraine asap. they will be very far behind on where trump is on his timeline. jonathan: the continent could look very different in two months. these are the result. germany's conservative leader frederick mertz and his party emerging as the winner of sunday's snap election. mertz seeing a narrow path the power. joining us now is oli crook out of berlin. any surprises whatsoever? oliver: i think overall this came in accordance with what

we were expecting. the polls had been unchanged since september since they pulled the plug on the government. there was a little bit of move around the margins. i was at cdu headquarters were frederick mertz give a victory speech. the numbers came in around 20%, two -- 28%, two points below what was anticipated. not a lot of excitement in the room. they are going with a strong mandate but the reality is they can build a government with only two parties. this was a big concern for the market. you could end up with a three party coalition that is clumsy and not as ideologically in-line as the last one and it would have to dissolve the government. now they can do it with two. the reality is, for those waiting for a fiscal shock and awe, they could be waiting a long time. this is not straightforward with the cdu getting its pro-business agenda through. the spd, despite doing the worst

it's ever done, is holding quite a few cards. they are the only viable coalition partner for the cdu. we were talking about a moment where in united states donald trump has been president for only about a month. think about what another two months means. that is a matter of time it will take to get a government in europe's biggest economy. annmarie: and mertz sang this american government are largely indifferent to the fate of europe. he says the world will not way for us. why are they waiting two months? two months in a trump new cycle is basically a lifetime. jonathan: -- oliver: you can take this as emblematic to larger problems in the german economy which is sitting further back and not proactive. you see it with the auto industry. why wasn't the german auto industry not ahead of the curve? this is the story politically for europe. it could even take longer.

this is the optimistic timeline for them. for frederick mertz, despite the fact he tacked more to the right to pull support from the afd, as far as solidarity within europe, frederick mertz is pro-europe. he's been emphasizing that, saying europe need to try to get a seat at the table. they can't ever get that seed by begging. those were his messages yesterday. you need to have a much more unified europe and strong europe. the question is how do you achieve that if you're not willing to move on some stimulus domestically? will he eventually be forced to go to brussels, talk about joint debt to get that defense spending up? that seems like a distant prospect but it could be way to make a major step forward. for germany to have a very large hand in shaping the future of the european union. jonathan: appreciate the update and berlin following the election results yesterday. drug is now is holger schmiedling.

a lot of investors have one question. can germany spend more? with the result of the weekend, will that, look at that effort? -- will that complicate that effort? holger: we have the parties and the extreme. we have the right wing fringe and the left-wing french. afd in the left party with more than one third of the seats in the federal parliament. these two parties can veto any change to the constitution. can veto any change to the german debt rate. this is the result that was possible. according to opinion polls, they did not look like the most likely outcome. it doesn't really matter that much if mertz and his mayor scott 28% or 30% -- and his party got 28% or 30%. that is more difficult than it

seemed before. either the afd, the party to which no one else wants to talk, or the left party to agree to the reform of the debt break would be difficult. the left party would love to issue more debt, yes. exactly for the wrong purposes. for more welfare. they would like to keep the opposite of what mertz wants. they want to cut defense spending, the opposite of what germany needs. trying to get an agreement with more than two thirds of seats in the bundestag to actually vote for reform debt break will be very difficult. annmarie: without the reform of the debt break, what kind of physical space does germany actually have? -- fiscal space does germany exley have? -- actually have? holger: the problem is that

national emergencies are by their nature temporary. you cannot put the long-term secure funding of the military on the same basis by having an emergency. there is a small chance if the germans are really moving fast, the outgoing parliament, where they would be a majority for the parties that might possibly want to reform the debt break, that parliament does it but there are technical hurdles ahead of that. as mentioned, one way around this would be to have the european finance more but that the unchanged german constitution will not be easy or would have to be very specific, limited. otherwise, there's a lot of -- judging by how the public is ruled in the past would say no. it is complicated. there are ways to raise

spending. it is not easy. lisa: what are some concessions the ruling party would have to make to get some of the friends parties on board to -- french par -- fringe parties on board or achieve independence from the u.s.? holger: well, to change the debt break you need the two thirds majority. as i tried to say, to get the left party on board is very difficult. they would like to ditch the debt break, unlike mr. mertz who might want to just reform it. the left party wants to do exactly the wrong things with the money. to get them to agree to do the right things with the money, that is to have a pro business party agree to a lasting rise in military spending and then confronting russia and ukraine, the left party would be

difficult. if mertz had that compromise on his progress reforms, more welfare, higher taxes on the rich rather than the opposite, that would compromise his progrowth agenda. once again, it is possible. there are ways around the debt break issue but it is going to be complex and not easy and probably not fast. lisa: are you more optimistic or last optimistic than you were on friday about the german economy in the years ahead? holger: relative to what the opinion polls predicted on friday, i'm slightly less optimistic. i'm slightly optimistic mr. mertz can institute reforms put it would be difficult for him to get the fiscal space for the things that need to be done. these are serious questions. jonathan: appreciate your input, sir. holger schmiedling.

donald trump has been consistent for much of the last decade. he's been justified making the push for the europeans to do more for themselves. the outcome of that election will complicate that push. lisa: it is going to be that much more difficult to remove the debt break. i love what mario draghi said a couple of days ago. you can say no to public debt, no to the single market, no to create a capital market union, but what are you going to do? i have no idea but do something. i think that is what people are wondering how that will happen. annmarie: it sounds like it will be harder for them to then increase military defense spending. that is going to infuriate donald trump. p has made it crystal clear in trump 1.0 and now 2.0 he wants hired nato defense spending to these countries. maybe as much as 5% of gdp. how does germany do that if they don't have the fiscal space? jonathan: welcome to the program.

equities bouncing back from friday's losses. with an update on stories elsewhere, here is dani burger. dani: shares of berkshire hathaway are higher by 1.1% in the premarket trade. it reported earnings with operating earnings surging 71% in the fourth quarter. buffett's cash grew for a 10" in a record $334 billion. volodymyr zelenskyy says he's willing to step down if it means peace and nato membership for his country. he says it is clear he would be in power for decades and would happily make the trade if the offer was made. pope francis remains in critical condition as he continues to battle severe pneumonia. the vatican says the 88-year-old pontiff is still receiving high flow oxygen to help his breathing. some blood tests show an initial mild renal failure which is under control. the vatican says the pope continues to be alert and well oriented.

that is read. jonathan: thank you. more from dani in about 30 minutes. up next, bracing for higher prices. >> tariffs raise inflation by half a point, plaintiff with 2.9% inflation. maybe americans are not really noticing it quite as much as they did a couple of years ago. but the fed will certainly be noticing it. jonathan: we noticed on friday and the image survey. how reliable is that economic data? we will get to that with nela richardson of adp is just a moment. from new york, this is bloomberg. ♪ ♪ i can't believe you corporate types are still at it.

just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

jonathan: good news if you're working for andrea child.

he's lifting the managers bonuses by 11% after a record year. a sprinkle of good news out there. lisa: like five people with celebrity way hats. jonathan: equity futures posited by .5% on the s&p 500. yields just about unchanged. 443.90. this run of gains. six straight weeks lower. that contributed into the move over the weekend. bracing for higher prices. >> if tariffs raise inflation by half a point, it may be

americans are not noticing as much as they did but the fed will be noticing it. that it -- the fed is not cutting rates with inflation like that. it might be raising them. >> consumer inflation expectations jumping to the highest level in almost three decades. the survey responses mostly along party lines. new concerns about president trump's tariff policy. here to break it down for us is nearly richardson. how reliable is the economic data? how much weight should be put on that? nela: it should give you good situational awareness. in terms of where the consumer is going and what they are thinking and tracking that everything on month, to gives you a benchmark or some context for how consumers are feeling. we can't interview every person on the street or we would get more real-time data. it is a survey. there are other things from the fed about consumer expectations from the new york fed and other banks that we can also use to support this data. if we take that consumers are still feeling inflation and it is dampening their sentiment, that is a great piece of information to think about the

economy in a broader context. lisa: i have gotten a couple of emails. this is coming back? on the flipside, there is optimism along businesses of actually being positive here. even though you have consumers that feel negative, consumer optimism -- optimism among small business has skyrocketed. if people have jobs, what they do and say are different things. nela: what they do and say are different things and i think it's a matter of timing. feelings do translate into action. if consumers are feeling bearish about the economy, it matters for hiring. it is a consumer driven economy. consumers are driving the industries being -- that are surviving and thriving now. leisure and hospitality, health care which includes a lot of discretionary procedures as well like dental work. we cannot discount the consumer mood and consumer vibe. it is encouraging to see small

firms feeling optimistic, because small firms are the engine of growth for the economy. whether they are optimistic, perhaps about slower interest rates or financing costs. may an easier hiring environment vis-a-vis larger firms that outmanned them in recruitment. maybe there is a feeling of less regulation going into this new year and new administration that gives them some tailwind to their spirits. lisa: is there a sense the negativity and consumer sentiment can persist for a long time and not be felt in the broader economy? there is data out of moody's that's at the top 10% of earners now account for half of all consumer spending. in the year ending september 2024, they increased spending while the rest of earners decreased spending. can this continue for a while because people at the top are feeling good? nela: as long as asset prices

hold up. if you are a wealthier consumer, some of your optimism and spending patterns are based on the fact that assets have been stronger over this time period. while lower income consumers are feeling in a visceral way -- i was in louisiana with the price of eggs was over $10 because of the bird flu, you will feel that because of a low income consumer. if asset prices stay strong, you may not feel the same pension as a high-end consumer and can keep that fluidity in the spending. the fact that this is a lopsided consumption market is a real thing. if asset prices turn sideways, that changes the dynamic for the economy. annmarie: that is a tough anecdote and something this administration, any administration, it is tough to do because of bird flu. something that struck me with the universe of -- university of michigan servey, do consumers

think they might be out of a job? nela: we are seeing that in the turnover rates. there is anxiety perhaps on the workers' side. everyone is seeing the headlines in the federal government but we don't really talk about with that can mean for the private sector. from what i'm hearing anecdotally and seeing in the adp data, before the new year and the new administration, people and workers are staying put. there is a sense the economic prospects come the job opportunities are not as plentiful as they were two years ago. it is taking longer to get a job. taking longer to find a white-collar job. we have seen business services retract their hiring. new college graduates are taking longer to get a job. there is a sense i should stay with the employer i have. also with the great resignation, people switched and they were not ready to move. that turnover is having an effect on the labor market. it is leading to a stasis we are seeing.

like the quiet before the storm in some senses. jonathan: this low churn dynamic they think is inconsistent with the healthy labor market. lisa: if the market is strong, you should be able to quit your job. that is why people are watching quits coming down to the lowest level since the pandemic and why some people are saying it could portend something less positive. jonathan: focusing on jobless claims. the index level, things are ok. focusing on virginia, washington, d.c., certain places where things are starting to break. lisa: a proportion of federal workers that work in the d.c. area is about 20%. people are looking at specific counts and counties to understand how this is trickling into numbers to get a broader sense of how to frame this in conversations. jonathan: the estimate on thursday morning was 221,000. nela richardson of adp. up next, matt stucky, henrietta treyz, the former senior advisor

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>> the starting level of the yield is quite attractive. chris gaskets are still quite rich. >> we believe the fed is more sensitive to labor market weakness. >> we would respect the fed to react in a strong way. >> this is the most important economic data point, unemployment claims. >> the labor market still looks really good. >> this is "bloomberg surveillance" with jonathan

ferro, lisa abramowicz and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" starts now. the week ahead looks like this. it concludes with the fed's preferred rate of inflation, pce. two big ones. nvidia on wednesday. look for home depot on tuesday. reads around the u.s. consumer, disappointing on friday. let's see if that continues. that was reinforced by the weaker outlook from walmart. the biggest one-day loss on the s&p 500 so far this year. equity futures bouncing back by .5% of the s&p 500 this morning. big losses on the russell going into the weekend. we bounced back by .8%. lisa: i like how you framed home depot and nvidia. two pillars of the american exceptionalism story exemplified. you have consumer spending, i'll be in the housing sphere with home depot and the renovations. then nvidia.

how much can ships and the ai hope and dreams we have seen really power that u.s. exceptionalism? to me, that might be the key moment for markets that are still hinged on the idea that u.s. tech can keep outperforming. annmarie: how much is the consumer concerned with the tariffs? the louvre think that a certain is the 10% on chinese imports. there is a long list of diary dates. walmart acknowledged they are and -- there are uncertainties with global economic and geopolitical conditions. without saying it they said it. they are unsure about what the tariffs can mean if it is a one hit on inflation and prices. jonathan: sentiment skyhigh coming into 2025 for small and large businesses. for the ceos, we have said repeatedly we don't want to see that squandered. i want to see investment decisions, hiring decisions. we got some of that from apple this morning.

apple will hire 20,000 new workers and produce ai servers in the united states. the company will spend $500 billion domestically over the next four years. how does this compare to previous plans? apple going from $86 billion a year to $125 billion and hiring 4000 employees a year to 5000 based on its prior five-year commitment compared to the new four year commitment. lisa: and 2021, apple said they would invest about $500 billion and hiring 20,000 people in the u.s. it sounds like it is bringing it forward. how much does this really highlight what we will see on an ongoing basis? companies just seeing up ideas -- gussiing up ideas for the president. jonathan: who is the audience

for the announcement? investors or politicians in washington? annmarie: given they announced a big chunk of this years ago, this feels like icing on the cake with that audience of one, donald trump. he told us on friday when he was speaking to the governors he left the meeting with tim cook and plans to do this. why is apple doing this? probably because they are looking for carveouts when it comes to tariffs. lisa: the wall street journal wrote an editorial that's applicable to announcements we have been hearing. the trump administration is moving so fast it is hard to know what is real and what is media panic. it is hard to know what is concrete and different from before versus something that is signaling. that is what we will be trying to figure out for a while. jonathan: there's always panic. always. panic and just about everything. lisa: at this point it is hard to know what is real and how much this is actually going to be carried through on all sides.

whether it has to do with job cuts or investments. jonathan: we are getting into week five. it is like we have been doing this for months. coming up, matt stucky. we will catch up with henrietta treyz on the odds of one big beautiful bill. and the former senior advisor to president biden amos hochstein on securing peace in ukraine. we begin with stocks looking to recover the worst day of the year. traders awaiting nvidia earnings on wednesday and core pce on friday. matt stucky writing, "mega caps are plowing into ai. it's a tailwind for a near economic activity and long-term productivity." matt, welcome to the program. is it a big tailwind for nvidia? matt: it certainly is. if you look where they are spending money, it is nvidia chips. ratcheting up capex expectations as you look to 2025 and what has been happening has fallen into nvidia's revenues.

lisa: how crucial is the nvidia report on wednesday to give fuel to the story we have seen about big tech being the center of the ai dreams and hopes and continuing its meteoric rise? matt: it's a large piece of the s&p 500. when i came in this morning i was looking at the eco function of my bloomberg terminal. i did not see the earnings report listed what it might as will be on that number in terms of the importance within the u.s. economy and its overall impact and what separates the u.s. economy from the rest of the world. in terms of the earnings story of the united states relative to the rest of the world, it was driven by big tech. nvidia is a huge component of that. lisa: we started the show in a bearish note. what happened on friday with some stagflationary data. momentum was hitting a pause

button. how much do you see this as a momentary blip versus a real shift in narrative affecting how you plan to position going forward? matt: i think i would classify this morris ch -- more as churn versus trend. if we are on the lookout for sources of corrections, there are two i would point to. higher interest rates or a ratchet up in unemployment. with the labor markets somewhat resilient and the forward indicators, small business confidence or overall the consumer spending profile, which has been firm outside of some softer retail sales in january, looking at what is left in terms of correction possibilities, it is interest rates. in my mind, if we have a softer

start here in q1 that helps keep the interest rates and upside breakout potential more muted. this is more a churn dynamic versus a trend. looking ahead i would say january -- one of the coldest january's we have seen in more than 130 years. that will impact the numbers we have seen so far. annmarie: there was a note about microsoft canceling leases for a substantial amount of data center capacity in the u.s. that begs the question potentially are you cautious about this, about the outlook for demand when it comes to ai? matt: nvidia timmy has a large list of customers. microsoft being a big spender in the ai story. in terms of what else is out there in terms of the overall investment, we heard from meta,

google, amazon. ratcheting up capex expectations. dns men from apple confirming their desire to continue to build out ai compute capacity. you will have to look at the risk there is some cyclical correction in terms of ai compute demand if or whatever reason we don't see the follow-through in terms of productivity enhancements in the broader side of the economy. where it stands today, the nvidia quarter was strong. the product transition from hopper to blackwell is moving forward well. lisa: is a nervousness or angst in the ai space when it comes to what china is doing? the money they are throwing at their ai development? matt: it is certainly a risk that is out there. not as much of a direct risk for nvidia's revenues. with export restrictions in place for u.s. semiconductor companies going into china,

higher competition there means u.s. companies also need to be aware of the competition and spend more on their own ai roadmaps to compete with china. i don't think that is necessarily a direct negative for the overall ai story. it means there is more competition which means more spending. jonathan: matt, appreciate it. looking forward to earnings on wednesday. matt stucky. results dropping on wednesday after the close. looking at her jobless claims later this week and pce. the inflation rate on friday. i pick up on the bond move over the past six weeks or so. six consecutive weeks of falling 10-year yields. i will go back to the question, the lower bond yield supports cyclicality or suggest growth is slowing? on friday i think we got a definitive answer. lisa: which is unfortunate when paired with a sense that maybe inflation will be a bit more sticky which is why you're seeing yield curve flattening.

if you get that continued since it's a negative thing for a lot of equities, which is what we saw with the russell 2000. jonathan: the complete opposite of what people were expecting closing out 2024. yields down every week of the presidency so far. lisa: this has to do with two things. we are getting some of the tariffs and the less growth focused policies from donald trump to start the year. we are just entering a later cycle of this economic period. there is a real question here of what the offsets will be, what the investments will be, and how much people can make those given the uncertainty. jonathan: bond yields up a touch this morning. 421 on a two-year. 10-year unchanged at 444. an update on stories elsewhere with your bloomberg green. dani: ukrainian president volodymyr zelenskyy said the u.s. dropped his demand for kyiv to pay $500 billion to compensate for prior u.s. support.

that demand had been part of a talk to give washington a cut of ukraine's mineral wealth. he insisted military support must be part of any deal. he rejected the u.s. argument that american companies doing business in ukraine would serve as a form of security guaranteed. at unicredit, the bank's increasing bonuses for top managers after record year. the bonus pool for so-called material risktakers will increase by 11%. italian lenders are planning to raise the average bonus for staff by 20%. researchers at the wuhan institute of virology say they have discovered a new coronavirus in bats with the same gateway of the virus that caused covid-19. the finding raises the possibility this new virus could spread from animals, although it has not yet so far been detected in humans. that is your brief. jonathan: thank you. appreciate it. kinder, with the exception of the last story.

how any people said nope, not doing that? lisa: mild the sunset if there's another lockout, not doing it. annmarie: don't want to read about it. don't want to know about it. lisa: we can't do this again. jonathan: we will talk about in about 60 minutes are now. may be turned on the volume. the latest story out of china. up next, attempting to secure peace. >> standing here and saying you are good, you are bad, you are a dictator, you are not a dictator, it is not useful or productive. president trump is not getting drawn into that in unnecessary ways. we are closer to peace today than ever before. jonathan: tyler kendall will join us next from the nation's capital. this is bloomberg. ♪

jonathan: this right here is your bounce back in equities. in the bond market, yields just about unchanged. 10-year, 443.71. under surveillance, attempting to secure peace. >> my question is, this all the finger-pointing and pearl clutching make peace more likely? saying you are good, you're bad, you are a dictator, you are not a dictator, it is not useful. nonproductive. president trump is not getting drawn into that in unnecessary ways. we are closer to peace today than ever before. i have been privy to these conversations. great progress is being made. zelenskyy should come to the table because the economic partnership is an important thing for the future of his

country. jonathan: pete hegseth avoiding calling rush of the aggressor in ukraine. the united nations voting on resolutions to stop the war drafted by ukraine and the united states. tyler kendall joins us for more. it is a new approach from a new administration. tyler: right. it's also the latest example of what has become strange transatlantic relations with washington. we could see one of the first meetings here in washington today from these rising tensions with the french president emmanuel macron visiting the white house. president trump criticized the french president as recently as friday, calling him a friend but he's had a seat at the negotiating table when it comes to ukraine for the last three years. the sentiment that was met with widespread criticism among european allies. the french president did preview what he might tell president trump, sank any concessions to russia could be viewed as a sign of weakness and he would tell president trump that is not your trademark style. we know he's expected to tie

that's what it could be for and embolden china, another one of the white house's priorities. the trump administration looking for firmer european-led security guarantees and a boost to nato defense spending. if we keep on france as example, france spends 2% of gdp on military spending. annmarie: we have seen emmanuel macron fail in the past with trump to keep trump 1.0 and the paris climate accord and in the jcpoa when it comes to the iran nuclear deal. what is his strategy going into this meeting with the president? tyler: we did see the french president invite president trump in one of his first visits after he was elected to paris for the reopening of notre dame. the french president coordinated closely with his u.k. counterpart keir starmer, also expected to be here in washington later this week. we are respecting the pair to put forward they are ready to up

security guarantees. you heard that sound played earlier, the white house is looking for ukraine to sign that deal when it comes to an economic cooperation agreement and opening up ukraine to be able to get their critical minerals. that is something we are expecting to be discussed this week in washington as the european allies try to push the trump administration to give forward to guarantee they will remain in the region moving forward. it is something we solve that became a big point of contention during the polish president's visit over the weekend when he met with president trump on the sidelines at cpac. he emerged from the meeting saying he had a since president trump was not going to pull troops out of poland. the closest ally to the ukraine border. jonathan: tyler, appreciate the update. here's an update on the latest from apple. some news about one hour and 20 miss ago that apple will hire 20,000 new workers and produce ai servers in the united states, planning to spend $500 billion

domestically in the next four years, including work on a new server manufacturing facility in houston and spending with additional suppliers. mark gurman bloomberg saying apple is going from investing $86 billion a year to $125 billion a year in the u.s., and from hiring 4000 employees to 5000 based on its prior five-year commitment compared to the new for your commitment announced this morning. the president responding. "apple announced a record $500 billion investment in the united states. the reason, faith in what we are doing. thank you tim cook and thank you apple." lisa: how much of this is a massive ramping up of plans versus signaling to president trump ? no you cnnot penalize us for doing business outside the u.s. and having production in china. annmarie: this is a slight

acceleration of prior investment. from their april 2021 announcement of how much they were going to move some jobs and investment into united states. for donald trump, he will sell this as a record brand-new investment. it's not. there's a little bit of nuance and caveat in the truth which we are not getting. jonathan: henrietta treyz joins us for more. they were going to make life very easy and simple if you invest in america and difficult if you try to export into america. apple is making an investment decision to invest more on the margin, to hire more on the margin. to help them more they talked about lowering the corporate tax rate. where are we on that front? what is the timeline for the tax bill now? henrietta: great segue but happy to talk taxes. the corporate tax rate reduction scores well from a dynamic perspective, meaning when the house republican conference released its budget they are

telling the american public keeping taxes at existing rates for individuals will boost the u.s. economy by $3 trillion, they will not get a score from any government official or cbo that suggests that is remotely true. the real number is around $379 billion. if you're able to cut the corporate rate or tax preferences for businesses, you generate more dynamic scoring. it's expected you with you -- you would hear jawboning about the corporate tax rate. they are half a trillion dollars short of where they need to be. my expectation is low. annmarie: if they want to get to the corporate rate cut they have to start somewhere to lower it. will we see this budget deal that mike johnson will be back in congress this week -- will he put it on the floor and will it pass? henrietta: that's the question of the week for sure, annmarie.

the excitation is tomorrow night beginning somewhere after 6:00 p.m., he will bring the house budget as it stands now to the floor. the budget is going to need to go to the rules committee what have members who have heard and your full from constituents all week long. that is from texas to pennsylvania. members that are very concerned about the $880 billion in medicaid cuts. we have representatives from minnesota, 21% of their constituents are on medicaid. $880 billion worth of cuts will hit them. there is massive cuts to pell grant and snap. members have serious heartburn in both the house and senate on this legislation. the public outcry from members is what you want to watch. there have been members that have been very willing to go on the record, from susan collins to john curtis of utah saying this bill is not ready for prime time yet. annmarie: can they cut from the commerce committee without hitting medicaid? henrietta: not at hundred $80 billion.

there is not a way -- not at $880 billion. my colleague is a health care expert and thinks the work requirements are the lowest hanging fruit. that's about $120 billion in revenue. you will need more than that to get $880 billion. they will need to be looking elsewhere. the senate republicans are saying i have a better solution. increase the deficit by more. we will see of the house republicans can address that. lisa: they were reports about presented is getting angry responses from constituents. i looked at the popularity of donald trump and some of his policies at some of the highest levels of his administration and much higher than going back to his previous tenure. where is the truth here? henrietta: cuts for thee but not for me. trump remains extort nearly popular. people like the disruption he's bringing. the culture wars are very much a

part of his appeal. you saw in maine early this weekend, talking about transgender sports. there is an incredible salesmanship that goes on in trump's ability to connect with voters. it is distinctive his legislative policies and the republican platform, which across many provisions, including these cuts is unpopular with constituents. reducing the deficit is popular. cutting spending is not. that is something they will have to take the tough votes and it's hard to be house member. jonathan: framing matters. henrietta treyz with the latest on the tax bill. he is doing what many voted for him to do. wall street is spooked. we are close to all-time highs on the s&p. talking about friday directly. wall street was spooked because of sequencing. tariffs before taxes.

if we did it the other way around i think would have a different result. lisa: which is why he's doing the opposite of his first term. we had walmart and expectations for them coming down, dampening because of tariffs. do we get the same from other corporate executives? jonathan: the housing data has been awful. that's for sure. including the numbers on friday. coming up, i saw him walking moments ago and already looking 10 years younger. amos hochstein, former senior advisor to president biden for energy and investment joins us in a moment. from new york, this is bloomberg. ♪

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jonathan: equity futures bouncing back from friday's losses. positive this morning by zero point 5% on the s&p 500. losses on friday on the russell. two hours until the cash open. let's cross over. >> we start with the big story here, apple investing big in the u.s.. shares are lower. i asked earlier why this is happening. he said this knee-jerk reaction is on the premise that apple

will diversify away from china but he says it is the wrong reaction because it is just doubling down on the u.s., a way for apple to get on the good side of the trump administration . we have seen shares recover a bit so maybe the market is coming into that view, as well. nike shares are up 2.2% after analysts at jefferies upgraded the stock to a buy. they see the new ceo has the right playbook, not only engaged with current and lapsed retail partners but he also says they see he is driving innovation. you saw that last week with the announcement of their skims partnership. dominoes getting hit in the premarket, down 4%. same-store sales missed estimates. it just shows how difficult it is to entice those budget

conscious consumers that dominoes is targeting. jonathan: more later on this morning. lululemon and lewis hamilton partnership as well. lisa: are we really going there? increasingly, it needs to have the star power. annmarie: jon loves him now that he drives for ferrari. jonathan: for ari first, and whoever sits in the seat, you back them. with lululemon. several government agencies telling their employees to ignore demand from elon musk's d.o.g.e. team to review their jobs or face resignation. annmarie: legal pitfalls as well as national security issues. what if you work at the cia or fbi, according to kash patel,

also telling employees, please pose any response to musk's not e. i will say, my phone was blowing up over the weekend. there are more than 2 million federal workers who received the email with the subject line, what did you do last week? and then they felt like that they were being trolled by trump because of a meme. some are asking, is this being done with dignity? lisa: putting aside those questions, even by republicans, how is this going to trickle into the data, how are people leaving the government? that is why people are looking at some of these counties around the d.c. area. jonathan: they are really good at managing up and not good at managing. let me turn to this story.

microsoft has canceled leases for a substantial amount of data center capacity in the united states, amounting to a couple of hundred megawatts. this as alibaba promises to spend $50 billion on infrastructure over the next few years. lisa: this story out there, that microsoft is canceling due to center leases, gives me reason to believe that a stock market regime change is upon us, where the ai trade no longer dominates and deepseek was a game changer. a question about whether you invest in the infrastructure. microsoft said we are still investing the $80 billion, we still believe they will be sufficient demand to meet the supply. that will be the real question. jonathan: i want to hear from nvidia on wednesday. they said that effort was export compliant, deepseek. lisa: how much is this the high

powered ships that fueled this, how much do you see a move to a more efficient way of programming these algorithms? jonathan: look out for that on wednesday. ukrainian president volodymyr zelenskyy says the u.s. dropped its demand for kyiv to pay $5 billion as part of a minerals deal. he says terry support must be a part of any deal. annmarie: they want to see that military security. we heard from scott bessent. they are talking about economic security and basically tether kyiv to washington when it comes to investment in commodities and raw materials. this steel deal is still being worked out. it seems like the administration and president zelenskyy are using the media to dictate clear terms.

you have keir starmer and that emmanuel macron with the president. jonathan: he is 10 years younger, without a tie. amos hochstein, welcome to the program. you seem happy. we can get into that are in the program. this came from javier blas. surprisingly, many people, not least president trump seem convinced that the country has a rich mineral endowment. it is a folly. what is your view on this? amos: javier has done a lot of research into this. i have not seen any evidence of rare earth in ukraine. there are probably minerals that are different in ukraine, but not at a stage where they have been identified, has been any exploration drilling, not in any of the commercial quan tities we are aware of.

there may be, i'm sure there is some data to suggest there is, but going from a greenfield to discovery can take many years. this is not expanding existing deposits. i think this is a worthwhile conversation to have about ukraine about how to develop their mineral resources. we should talk about how to redevelop their gas resources, green power resources. ukraine, i believe, can be a major supplier of power to europe. regardless of how this turns out, it will be many years away. annmarie: was in a discussion like this on the table when you were working under biden? amos: this has been under discussion since i was in the obama administration. we have always wanted to see ukraine develop its resources because that would give them economic boost that would allow them to be more independent from russia, grow their economy.

the corruption was the issue. the resources were there. the issue is we shouldn't be taking the revenues from it, they should have it so they can invest in their country and ukraine into had to flee can come back and they can rebuild their country, security apparatus. annmarie: i am reminded of an opinion piece in 2020 that you wrote, you have done a lot of work in this sector. you think the corruption has gotten better since then, tackling corruption? amos: not really. i think there is a lot of corruption that predates zielinski. it was a corrupt society before the revolution. the idea was, let's make it better, it did get better, but then some of those efforts stalled. when there is stress in a government, they will use that

moment to rob the kitty from state owned enterprises. that is a problem that ebbs and flows. i think it continues with the state control, and during the war, it is hard to criticize when you're having your cities bombed regularly. there is a lot of temptation there. but i think it's a systemic issue that the international community should tackle. lisa: ignoring the heated rhetoric around the russia-ukraine war, because of the lack of accountability aware funding is going, it is there validity on pushing back on just how much the u.s. and european nations are contributing to the ukrainians in this war? amos: you have to separate a couple of things. we need to support ukraine because another country invaded. you can argue whether or not what they did was smart or not. nothing gives you to the right

to invade another country because of what their leader said. we should support them. they invaded georgia in 2008. if we had not convene, they would control georgia and ukraine today. we talked about this in the biden administration. a lot of talk about where this money is going, who is controlling it. this came up in many conversations. what you should do is tighten the controls on the money and put the oversight in place so you know where the money is going. but you cannot do it and also say because of that we are going to let the russians take a bunch of territory and when the war. lisa: when you left the government, where was the ukrainian situation in terms of how much territory russia had taken, the sense of the balance of power at a time where it seemed like russia was making

some inroads? amos: russia was making some inroads but the conflict was largely frozen for a long time. on a net-net basis, russia was making some gains, but it was largely frozen. that was in order to get to the negotiation. i agree with the trump administration, enough is enough, let's get to a negotiation. you have to for some tough choices on both sides. freezing the war in place and saying we are done, let's call this a border, is really tough, because hundreds of thousands of people have been killed, to allow parts of the country to go away? is there a disarmed russia on the other side? i don't think so. they may invade again. you have to create a negotiation that has both sides of the table

that allows for some kind of resolution that both sides don't like but ends the war. jonathan: some are arguing that president trump is trying to shock the europeans into action. can you walk us through your experience with european allies, how frustrating was that? amos: for the u.s., it's always a little frustrating. we always like to go faster and do things more aggressively when it comes to areas of conflict and negotiations. on the economic side of the policy, we tend to go slower. we were a pro green administration, frustrated by how far the europeans would go without thinking through the consequences of where they were going. that they would suffer the consequences which affects us, create high watermarks that we have to deal with. in a few years, you will see why we are not doing what europeans are doing.

there are always frustrations there. we tried to do trade policy in europe, same in the obama coming trump administration. it is built into the system. but at the end of the day, these are our allies. we have to recognize that this is the argument inside the family versus argument with others, outside the family. annmarie: don't you sometimes need to shake them up? you were told germany not to go ahead with nord stream 2 but they did it. amos: if they didn't do it, large part of their now declining economy would have been avoided. they bought into the argument of your heroin dealer, the first hit is free, and then you pay a price. i went to germany before the ukraine war and said something is wrong in europe, you are in trouble. they insisted they were not. the russians were playing their

game of filling their own storage during the winter. i said, your pipeline is empty but your storage is filled. annmarie: what took the european so long to see the intelligence that the biden administration was seeing, jake sullivan was telling the press from the podium? amos: they had the exact same intelligence we had on the invasion. we were saying the invasion is coming on this day, at this hour. they refused to see it, this is just an exercise. i think, sometimes being the neighbor, you cannot see, us being an ocean away, we see it with clear eyes. we have missed plenty of intelligence, i don't want to get it wrong. but i think they were just too close to the russians, always making the excuses for it. that was the problem with angela merkel and others, he doesn't mean it. i think we have to learn

lessons, and i think they have learned the lesson. they don't want the war to end this way because they are worried it doesn't end here, and in five years, he invades another country. jonathan: somewhat joking, but 10 years younger, without a tie. we spoke to secretary scott bessent. i worry more and more as the years pass by that those people will not want to go into u.s. government. i consider you part of that. really intelligent individuals. you may disagree with their politics, but they are really good at what they do. amos: the hours are terrible, the stress is high, i have seen some people have so much damage

to their families, especially from the senior levels in the government. the problem is, if you are not already wealthy, it is becoming harder. it is higher than the average american salary, but it is lower than the earning potential for people in those jobs. and the stress on it, the amount it costs you to manage your life, which the government doesn't pay for, and the scrutiny. i had protesters outside of my house accusing me of genocide, putting my daughter on instagram, my 13-year-old. it was not like the secret service or the cops were there to help me. the blowback that you get, the management of your life, is really difficult. the process for confirmation by the senate is out of control. and for relatively low level positions.

to be an assistant secretary in some random agency, you are now supposed to hire lawyers, accountants, do a forensic auditing of your life. it is too much. i worry that, outside of it being, i made a lot of money and then i will go into government -- and that happened with both parties -- i worry that it gets harder and harder to get good people to come in. jonathan: a lot of people sure that worry. hopefully we can catch up soon. the former advisor of energy and investment to president biden. let's get more on your bloomberg brief with dani burger. dani: tiktok's valuation has been brought up to over $400 billion. softbank's vision fund factored in the potential for the ai business. fidelity investments and t. rowe price also increased bytedance.

elsewhere in china tech, alibaba plans to invest $53 billion on ai infrastructure including data centers. the investment will be used to support the company's ai ambitions. it also plays into alibaba's goal of being a key partner to companies applying ai. in sports, liverpool is moving closer to another title after beating manchester city. liverpool no holds an 11-point lead over second-place arsenal. that is your brief. jonathan: happy weekend for lisa. lisa: it was. annmarie: and mohamed el-erian. jonathan: next on the program, underpriced. >> in my mind, the fed is underpriced at the moment. we have two cuts in the next 18 months or so. in my mind, pricing skews in favor of them doing more, not

less. jonathan: earl davis of bmo joins us next. you are watching bloomberg tv. ♪

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jonathan: equities bouncing back positive by zero .5% on the s&p 500. 10-year, 4.4487. under surveillance this morning, underpriced. >> in my mind, the fed is underpriced. two cuts in the next 18 months or so. pricing skews in favor of them doing more rather than less as the year progresses. 10-year, a little bit too high right now. i would be shooting closer to 3.5. jonathan: defining for six

consecutive weeks, the longest decline. some expecting the 10 year to grind lower. lower yields will be supportive of risk assets. peter tchir says this only makes sense if the economy is weakening. does it only makes sense if the economy is weakening? earl: no, it doesn't, we actually see the economy strengthening. the reason it doesn't make sense, the simple laws of supply and demand. demand is there, let's assume it is constant for u.s. treasuries. supply is controlled by the treasury. even if they need to raise more funds because of deficits, they could control where the issue. now with the yield curve being not inverted as it was, it is less expensive for the fed to issue more t-bills, shorter maturity. we have a sense that this is

where sec. bessent is leaning toward, about maintaining longer-term yields at a lower level. that will help growth. lisa: you are saying the story in the 10-year is a supply story, not with growth expectations? earl: the reason why that is correct, we see growth continuing to accelerate. a few reasons why we see that. one is, the only thing the fed is easing right now is stress test standards. by easing those standards, that is easing financial conditions, which helps to stimulate the market. more importantly, the senior loan officer survey that came out for the first quarter of 2025 showed an easing of lending standards for the first time in three years. that will support small and medium-size businesses and support growth underneath.

although our base case is for no hikes, and eases this year, we are leaning more toward the possibility of a hike, given what i just spoke about. lisa: if you see a hike, how much does that increase the chances of a weakening economy? as people start to think about stagflationary-like environments, is that what you see later on? earl: it will weaken the economy but will still be at potential. the reason they would hike is two fold, the second being more important. first, the economy is running about potential. they will hike to get within the realm of potential. the reason is because inflation in this environment can really pick up. when you have small and medium-size businesses having increased access to loans and leases from banks, they are the ones that drive the economy.

combine that with less individuals to hire because of the immigration policy, you could see inflation come through in two ways. we are looking at wage inflation which is slower in regard to the releases, but as important, service inflation. where undocumented immigrants typically work is in the services industry. with less immigration, we may see that accelerate and keep inflation higher. the fed will hike because of that. jonathan: appreciate the perspective, earl davis of bmo. doesn't reflect slower growth or does it support faster growth? lisa: he believes that the fed will have to hike rates again. a controversial view when a lot of people are discounting the chances of a rate hike. jonathan: coming up, abigail yoder of jp morgan, geoff meacham, kathy bostjancic.

that is the third hour of bloomberg surveillance up next. ♪

>> from an index standpoint you

may not see as much excitement this year. >> markets have been may be more resilient in the second have. >> there is dispersion and that is what is dampening volatility. >> ultimately a good environment for stocks but a little bit more difficult. >> it is about being broadly diversified. >> this is bloomberg surveillance with jonathan ferro, lisa, and annmarie hordern. jonathan: good morning. 90 minutes away from the opening bell. equity futures on the s&p 500 lower by 0.5% -- higher by 0.5%. nasdaq 100 up by 0.4. russell up by 0.7. economic data including jobless claims on thursday, the feds inflation read on friday. we all want another read on the consumer. look out for home depot

tomorrow. lisa: especially because you have these fears of inflation. how much is that impeding some of the outlook for consumer facing companies? we saw that from walmart. consumers need to hold in to hold into keep the economy going, and there has to be the hope that some of the investment in ai is useful and not necessarily going to be over supplying, rather than moving to the next phase of adoption. jonathan: six consecutive weeks of lower 10-year bond yields. about 4.45. the data on friday is difficult to ignore. consumer confidence was lower, inflation was higher, existing home sales, not impressive. altogether, not a great story to tell. annmarie: it comes at a time when you see consumers and companies concerned about the uncertainty in washington, d.c., when it comes to tariffs.

a number of dates on the calendar, we are waiting to know what kind of tariffs will be put in place. the only one that is sticking, 10% on china. on top of that, the unemployment rate. that is something that these consumers are also concerned with. lisa: it sounds uncertain, it sounds scary. annmarie: i sound bearish. lisa: then you look at what is happening in europe, struggling to get a coalition together in germany, a question of whether they can increase spending. that is why, even with all of this uncertainty coming from us, you have people like mike wilson saying something like that. a real question of, all those things are true, but the u.s. is still a brighter spot than other areas. jonathan: record highs on both sides of the atlantic, s&p 500

and on the decks. -- dax. lisa: ultimately, the economy is working fairly well. in europe, a little bit of optimism could ignite things especially because of the funds coming from the united states. jonathan: coming up this hour, catching up with abigail yoder of jp morgan. we will speak to geoff meacham from citigroup as vaccine stocks rally on the reports of a new coronavirus. kathy bostjancic of nationwide looking ahead to pce inflation data. nobody want to talk about that story from friday. lisa: are we really going to speculate about another pandemic which we have no vision on? people are worried about the bird flu, egg prices going up. how many people send me messages over the weekend? i delete them, but you pay

attention. jonathan: i really just don't want to deal with this again. stock looking to bounce back from friday's selloff. abigail yoder writing it could be contributed to weaker retail sales, weaker than anticipated sales from retailers, stoking concerns about the consumer. we confirm our year end price target of 6400. welcome to the program. lots of economic data to get through on friday. what stood out to you, what was most concerning? abigail: the confidence numbers are what people were gravitating toward in terms of the headline numbers, longer-term inflation expectations hitting a 30-year hi. you have all been talking about it this morning. if you dig into the details, there are political leanings driving all of that. this was the highest level of unsolicited feedback around

uncertainty as it relates to the political economy, environment. that is interesting for that survey in particular. that is driving a lot of what is happening in markets. we also got data that was less than rosy over the past couple of months, but the picture on the consumer is about the same. it is uncertain but still really strong. i think what we are seeing is a momentum unwind, dollars gravitating toward areas that people were not loving over the past couple years. jonathan: at the index level, we mentioned the s&p hit a record. internals speak to that growth slowdown down that maybe the market is playing off of? abby: you look at the top of the leaderboard, staples, health care, utilities, really risk off moves. you have seen this very stark rotation from cyclicals, out of cyclicals into defense.

that is in the u.s. in particular. then you also see money move to europe and china, which you would argue is cyclical and lower risk on. i'm not sure what this is about where the dollars are flowing. lisa: do you think what we are seeing in the bond market is supportive of an equity rally? it is on the heels of slower growth fears. abby: i think it will ultimately be a positive for the market. the market is quick to react to a scenario, goldilocks scenario, and then recessionary. we saw that last summer very quickly. i think we will see we are in a moderating growth environment, but at a fine level, at trend, 1.5, 2%, which is fine. when you die just that alongside lower rates, that is ultimately a positive. lisa: we were worried about the consumer, some sort of a reality

check. you say that is overdone. also a question about nvidia, a shift away from some of the picks and hammers and shovels to some of the applications, and how much that could pressure, given how much nvidia has been a driver. what are you looking to understand from that? abby: hyper scalars are even increasing their spend. we want to know where the like for like dollar is going. is it going to the picks and shovels or elsewhere, where it will be spread out more? or are those dollars stay more internally in terms of r&d? for us, the news out of china a couple weeks ago coinciding with the inauguration was something we were expecting, the change in a narrative in terms of the ai theme. it just happened quicker than we thought. that is not necessarily a bad

thing, these things happen. your point around concentration, that is something that investors have been concerned about the past couple years. i don't know that it would be a bad thing to see that broadening out in terms of performance. what it means is maybe you don't see the market move as swiftly in each direction, selloffs are more extreme, recoveries are quicker. maybe that is the end all, be all in terms of the index. annmarie: you made a point that the consumer survey could be political, but there could also be an impact on companies. how much do you look at earnings-per-share, how much could be hit given the tariffs that we get? abby: that is an exercise because we don't know what is happening, what is written in stone versus what is being talked about. we will not know for another month or so. the worst case scenario really

would be those 25% tariffs on canada and mexico. those are our real trading partners at the moment. from a relationship standpoint, that would be burdensome, as well. but at face value, 25% across-the-board the board on those trading partners, universal tariff in europe, incremental in china, that is a major hit to earnings. let's say we have $30 of earnings expected to increase from 2024 to 2025, you could see two thirds of that wiped away because of tariffs. annmarie: would you have to edit your year end price target? abby: you would, but we are maintaining that 6400 because we don't see that coming to fruition. but it is a risk out there. we have heard this during earnings season. by the way, 60% since q4,

highest level of growth since 2021, you are not getting the enthusiasm around the outlook because it is uncertain. what happened after the election, these animal spirits, risk on moves, but is being outweighed right now because of the concern about the tariffs. jonathan: your preference is the u.s. over the rest of the world. double-digit returns in places like germany and france. what is behind that move, do you think it is sustainable? abby: you have seen a move from the multiples. we are above average in terms of what we are seeing in terms of the multiple. you have not seen it move on the fundamental side in terms of earnings. it is really a matter of china is a little better than expected, u.s. is really what is holding it up. to see a sustained outperformance, we cannot get more expansion in our view, so

we are still on the sidelines. jonathan: lisa wants to know if you are worried about bats, whether that changes the story, coronavirus. abby: when you were saying, let's not talk about the coronavirus, aren't we still on the bird flu? lisa: isn't that what everyone sends you messages about? did you hear about the person killed over the weekend who was a dairy worker? are my friends just crazy? do not disturb over the weekend. jonathan: i appreciate your time. we believe that there. abby yoder of jp morgan. let's get your updates elsewhere this morning with dani burger. dani: israeli prime minister benjamin netanyahu says the new seer and regime must demilitarized southern syria.

israel advanced eastward into syria creating a buffer zone after the former government was overthrown by rebels. apple has said it will add 20,000 new workers and produce ai servers in the u.s. the company planned to spend $500 billion over the next four years. it will include work on server manufacturing, facilities in houston, and a supplier academy in michigan. new york city's congestion pricing program raised $48.6 million in its first month. the program has reduced traffic by 10%. mta plan to sell bonds next year to finance infrastructure upgrades, repayment, and has seen increased ridership on commuter lines. jonathan: appreciate it. you two done arguing over that? annmarie: governor hochul went

to the white house and try to make the case that congestion pricing works, they need the money. i think trump says that he is not budging on this one. lisa: my evaluation will not focus on the bird flu. jonathan: i got a message from management. annmarie: i did not do one, but we don't need to do one. you can watch us every day at 6:00 to 9:00. if elon musk were to send us those bullet points, just tune in. jonathan: have you had your evaluation? morning calls, plus geoff meacham of citigroup, on concerns of a new coronavirus out of china. that conversation is next. this is bloomberg. ♪

jonathan: the opening battle is one hour, 14 minutes away. equities positive by 0.5% on the s&p. 10-year, 4.4351. jeffries upgrading nike to a buy, seeing the new ceo has the right flavor. bank of america downgrading rivian to underperform, saying its volkswagen partnership is complicating earnings forecasts. down about 3%. morgan stanley downgrading alibaba, currently 3%. let's turn to pharmaceuticals. vaccine makers rallying after researchers in wuhan, china says they discovered a new coronavirus in bats similar to

coronavirus. joining us now is geoff meacham of citigroup. welcome to the program. i said this to you in the commercial break, happy to see you but we don't want to talk about the subject. news out over the weekend, how serious is this? geoff: thanks for having me, and i'm with you, nobody wants to talk about covid going back to the 2020 era. i don't think we will. when you look at the seriousness of this, there are billions of folks that have been vaccinated, boosted. i think that protects against if there is bat-to-human spreading. just in case, there is the pfizer paxlovid which could address some of those more severe symptoms. don't fret yet the comment.

lisa: very excited to hear more of this sort of soothing rhetoric. curious how much vaccine makers have the capacity to ramp up production, innovate new vaccines with some of the new technologies they are using? are they more capable than they were five years ago to really stave off a pandemic? geoff: for sure. if you look at pfizer and moderna, the manufacturing investments they have made over covid, obviously, they have had to redeploy some of that as demand has gone down. whether it is a new variant or a meaningfully different look of covid, the capacity, r&d, investments are there. in general, may be a nexgen paxlovid would be helpful, just

to have an oral drug to address signs and symptoms. that is pretty good for getting rid of some of the patients that are most at risk, immunocompromised, etc.. lisa: on friday, there was a risk off mood. some people said it worked because they got emails about bats in wuhan, which is traumatizing for people. how do you gauge whether something is a threat or not, where they will boost sales of vaccine makers or not, more importantly, cause real havoc? geoff: we have looked back at what company said in the fourth quarter, what they assume for 2025, in general, we have been in a market of stability for the drugmakers. there has not been a lot of new changes to demand. supply can be there, if a new

variant for example comes out and has a massive infection wave. in general, i don't know if you will see that from vaccine makers. i would be worried if there was a new variant that was extremely virulent, more than this one, but we have not seen that yet. jonathan: i don't think people would comply the same way they did. i don't think they would be able to mandate it. i hope we don't have to talk about this in the next couple months, but you can feel the mood, based on the conversations you and i have had. lisa: i don't think i could mandate it with my family. it was deeply traumatic for a generation of kids. i .2 kids in particular because the socialization was so important. at a certain point, you have to think of tools will come from the medical community. it raises the questions about the developments of using

machine learning to speed up the process for vaccines. jonathan: geoff, i know you don't cover moderna, but they have struggled the last 12 months. if you are a company waiting for the next pandemic, some would say that you don't have much of a business. what is pfizer doing? they are not waiting for the next pandemic. what kind of offering do they have right now away from this conversation? geoff: from a moderna perspective, and they have moved on from the primary focus of vaccines to things like oncology, rare diseases, which is a good application of the mrna technology. i wouldn't say pfizer has taken the mrna technology to the next level. biontech is mostly oncology. but pfizer has done a number of things in cancer. the acquisition is super helpful

when adding to their portfolio, pipeline. they are investing in other segments. by no means are they doubling down on vaccines. lisa: how do you take into account some of the things we are hearing from the administration, given there has been a crackdown on spending with medicare and medicaid, with rfk junior in office talking about vaccines, raising questions? has that affected any of the outlooks, investment profiles of the pharmaceutical companies you have covered? geoff: for sure. a lot of investors are looking at pfizer, to some degree merck, moderna, on a dollar basis, with less robust pipelines. in general, it is unlikely that you'll see company doubled down on their vaccine portfolios in

terms of new vaccines needed. most investors are worried enough about the risk, they are looking at more easily understood markets like glp-1, oncology, other infectious diseases. i just don't get the impression that we are hearing from a lot of leadership that vaccines are the way to go. there is a bit of a reactionary approach to some of the uncertainty from rfk, for example. annmarie: we also see the cdc's disease detectors, going out to find out about an outbreak of ebola in africa, how much of a data gap could there be for these companies if they are not getting that from the u.s. government? geoff: it's a good point. the good thing is you have technology like mrna which can react very quickly to a lot of

the viruses we are talking about. could be bird flu, historically it's been zika, norovirus. the technology is there to react quickly to a new and emerging virus. i feel pretty comfortable in the safety profile of that technology. that is why i can rest somewhat easy, knowing the speed of addressing a potential emergent variant could be pretty fast. jonathan: you have made us all feel a little bit better. geoff meacham, thank you. when the news dropped thursday or friday morning. i just sat there shaking my head. my phone getting the messages on repeat. not doing this again. lisa: you were saying, turn down the volume. it will be scary.

basically he says, is it that really big of a deal? we have vaccines, we can handle it. jonathan: talking about the economic data. kathy bostjancic of nationwide, krishna memani. that data on friday, how reliable is it, will it be confirmed with economic data? jobless claims on thursday, core pce on friday. equity futures on the s&p 500 firm or 0.5%. in the bond market, 10-year, 4.43. from new york, this is bloomberg. ♪

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jonathan: equity futures positive by zero point 5%. the opening bell, 60 minutes away. let's get your morning movers with yahaira jacquez. yahaira: tesla stock have been feeling pressure lately. this is dominoes, not tesla. tesla shares have been feeling pressure and it is no different today. some of that has to do with investors feeling -- tesla now up. that is on the news that tesla's

premium cars will be getting a refresh. there was an interview with a company executive who said that the refresh will be coming later this year. all over the map now. next, coinbase shares, those are recovering. it has been whiplash for the shares ever since the announcement that u.s. regulators are planning to dismiss a legal case against them. hours later, we got news there was a massive hack were about $1.5 billion worth of tokens were stolen from another exchange called bybit. coinbase shares fell on that news but it appears the happy news is back in crypto. next, fresh pet shares are getting a boost after analysts at jefferies upgrade the stock to a by, up about 5% now. not only do they see positive revenue trends because people

keep on spending on their pets, they say the stock is 50% from where it is trading now. jonathan: appreciate it. t.k. used to play the game, foreign-exchange roulette, i would get on, talk about markets. argentina, go. it was like foreign-exchange roulette. i had no idea what was happening. these graphics would come up on the screen and i would have to respond to whatever what was coming up. hungary. yeah. loved fx roulette. investor looking ahead to key data this week. core pce due out on friday. mike mckee joins us now. what tops the pile for you? mike: friday because we are looking at pce, also personal

consumption. we will see whether consumers continue to spend. we expect a mild pce inflation number on friday, just 2.6% on a year-over-year basis, suggesting the fed is still making progress. consumer confidence tomorrow after the michigan numbers upset the markets on friday. durable goods. our company still investing? and then jobless claims, looking for signs if any federal government workers have been laid off. the deadlines for donald trump's tariff announcements are not until next week and the week after. the fed is basically in the same position as it has been. we just don't know what the president will do, so we cannot make any decisions on what we will do. i will finish by noting that argentina has an economic activity index coming out tomorrow.

that will be the news of the day in argentina. jonathan: i am pleased that you are still on top of things because i am not, not in the same way. jobless claims on thursday. starbucks cutting 1100 jobs from corporate worldwide. lisa: question about whether this is simply trimming the fat or whether it is something more significant. starbucks says they will notify employees by february 25, eliminating several roles. is this a time for people to make efficiency reductions or is this in response to something more? annmarie: i have to shake my head when i see this headline drop. north american vps need to be in the office three days a week. meanwhile, you are cutting a number of corporate jobs worldwide. it just feels like this is stale and outdated. jonathan: part of the shakeup.

i think this is brian putting his stamp on the company. lisa: speaking of, isn't he remote? annmarie: he has access to a gulfstream and goes back and forth. jonathan: different access to travel than others at starbucks. lisa: we are seeing a number of job cuts particularly at big tech. you wonder how much this is an increasing efficiency play. jonathan: kathy bostjancic of nationwide expecting consumer confidence to reflect caution and optimism, income and spending advancing at a slower pace. i want to look back a little bit. umich consumer sentiment gets a lot of attention, does it deserve it? kathy: what i find most useful

is the inflation expectations component, particularly the five to 10-year portion of that. we know that is what the fed pays attention to. the sentiment index, if you break that down along political leanings, it is -- when republicans are in power, there optimism is very high. democrats in the dumpster. vice versa. it is very sentiment-based, maybe not based on the economic reality. as you know, consumers continued to spend even when sentiment was low. lisa: it is getting harder and harder to understand what the fundamentals are as we get a lot of noise. consumer sentiment, how it is being politically driven. we talk about the jobs market and how that is politically driven. apple, 20,000 u.s. jobs with a nod to donald trump.

starbucks, job cuts. which is it, jobs created or paired back, which should we pay more attention to? kathy: good question. there are always jobs created and loss. always tremendous turn in the u.s. labor market. what we see is the net payroll number, household employment number. but this turn continues to go on and on. all indications are, the labor market is very strong right now. there could be announcements here and there but jobless claims continued to be incredibly low. i don't get a sense that we are seeing a big change. of course, we have to be nimble. the economy can operate on the margins, changes can occur, but we are not seeing that at the moment. lisa: you were talking about brian niccol. his offer letter imputed a small

remote office at his home in newport beach, expected to be in the office three days a week, which is what they are saying to other people. jonathan: can they offer me an office in newport beach? lisa: i don't know if that is the official office but that was part of the future. talking about the idea of coming back to the office, certainly seeing that with the federal workforce being demanded back to the office. we wonder how much this highlights companies getting the upper hand with workers in a new way than three years ago where they could not have mandated this in the same way. do you view this as that? kathy: i think it comes down to different companies making their own decisions for their workforce. i would say there is perhaps more leverage for companies, may

be more of a need to bring people together. it is idiosyncratic. businesses have to decide what model works best for them. as you talk about starbucks, that is a very different company. i wouldn't say it is cyclical at all. it has its own struggles that are really separate from the overall economy, which up until this point has been booming actually. annmarie: we have been talking about the effects of the federal workforce, what d.o.g.e. is doing. last year, we saw the u.s. government at about 35,000 people once a month. do you expect the hit on the federal workforce to impact the jobs report? kathy: we are watching it, aware of the announcements, the work being done. we are trying to keep a tally of that. not easy. remember also in that break down

half is state and local, actually probably more state and local than federal. that is something to keep in mind. also with these announcements, it was not clear how many people would be retiring anyway. all told, it may be the negative hit to employment is slower to unfold, may be ultimately less than 10% they were initially talking about. and then people on deferred contracts. my sense is we will see the hit at some point but it will be more of a drip rather than a big drop. jonathan: i appreciate it, kathy bostjancic from nationwide. a bit of a scare on friday. i think we need to get some perspective. unemployment still around 4%. jobless claims in the low 200,000's, but i understand why people are jittery.

cuts to washington in the long term might be a good thing, in the short-term, disruption to the economic data. but we have to think about this. what is worse than economic slowdown? an economic slowdown that the fed is unable to respond to. neal dunn is saying that, the fed doesn't have your back right now. lisa: it is a time where people are worried about inflation still. it raises the question, is inflation as a concern overblown? you cannot have an inflationary shock if the housing market is flat on its back. or is this a fed that has its hands tied because we are in a more stagflationary environment? that is one of the key debates right now. jonathan: here is the take from krishna memani. he goes on to say, what we have is a potentially softening economy being hit over the head

with two by fours of policy uncertainty, instead of being nurtured. my question is, why are we still close to all-time highs on the s&p 500? krishna: the underlying economy is still good as you said, income growth is substantial, consumers continue to spend. the challenge is really not now. the challenge is six months out. if you are a corporate executive, try to make an investment decision as opposed to a consumption decision, groceries or whatever, your investment period is for five years, do you just jump in and do all the things that you were planning on doing, or let see how this works out? the risk is not the current state of the economy. we may be potentially slowing

down, the fed cannot do anything, and on the policy front, we are getting hit every day twice a day. jonathan: maybe that is reflected in the labor market, this low churn dynamic. what is most at risk in the equity market? krishna: in the equity market what is most at risk are the things that have extraordinarily high valuations, rather than the near term impact of a slight slowdown would be substantial. it is really the tech sector that is vulnerable. there valuations are too high. lisa: you wrote in your note, not having a view is still the best strategy. how do you not have a view as an investor that has to actively put money to work? krishna: you have a long-term target and then you move around that target.

you can adjust that target on a tactical basis. not having a view like somebody like us, doesn't mean that we get out of the equity market, it just means that we don't overweight a particular sector of the equity market. lisa: do you have a view on the equity-bond mix? one of the questions right now is whether the structural changes occurring right now in washington, d.c. will change the trajectory for u.s. debt markets going forward, whether it has to do with reducing the deficit or things like the mar-a-lago accord which had all sorts of excitement over the weekend? how do you view that in terms of longer-term balance? krishna: i think reducing the deficit is a very noble goal, however, when we are talking about large tax cuts at the same time, from a realistic standpoint, that does not reduce the deficit in any meaningful

way. if the structure of the market is going to change, it is not going to change because we have felt a magical way of reducing our deficit from a very high level. as far as the mar-a-lago accord is concerned, i shake my head, as somebody said earlier. this is third world thinking as opposed to first world thinking. if the u.s. goes down that path, i don't know what to say. there will be hell to pay, it seems to me. annmarie: when it comes to this policy uncertainty, you say you need to be nurtured right now. what would you want to see from the administration from a market perspective? krishna: the administration has some really nice goals. rebalancing trade, creating jobs in the u.s. all of those would be very good objectives, are going to help the u.s. economy in the long run.

it is just the way they are coming, the volatility, doing something one day, take it back. we say we are going to do something and then postpone it. that is the issue, we don't know how things will shake out, the timing of all of those things. jonathan: always appreciate your views. i want to finish up with this. what would you do right now in markets, what are you doing? krishna: we are keeping ourselves very close to our long-term targets. if i have any spare money i want to invest, i would invest more in bonds and equities. that is not a message the market is taking to heart right now, but the risk is more on the downside with respect to the economic picture, growth and employment. jonathan: thanks very much, krishna memani. neil dutta will be with us

tomorrow. he says much of what we see in the tariffs and uncertainty is a red herring. rationalization for economic slowdown that was already in motion. i would anticipate a decline in long-term interest rates, selloff in prices as risk appetite wanes. expect conditions to deteriorate in the jobs market. lisa: this is why some people don't think that a decline for the 10-year is positive for equities. think about what you just read versus earl davis, who said the reason why 10-year treasuries were going down is because the treasury department was not issuing long-term debt. it just highlights how you can give two people the same information and they can come to diametrically opposed rationales or what is going on, and that highlight the uncertainty of this moment. jonathan: you know who may have some sympathy for what he had to say? kevin hassett.

he suggested that maybe this labor market was not as strong as some people thought it was coming into 2025. lisa: this will get tested in six months when they cannot attribute that to the previous administration. but you are right, how long can that carry through before those progrowth policies give a tailwind to a different narrative? jonathan: let's get an update on your stories with dani burger. dani: the trump administration sent emails to more than 2 million workers ordering them to report on what they did last week or be forced to resign. the deadline is just before midnight in washington. elon musk said the directive came directly from president trump. however, several agencies have asked employees to hit the pause on acting on the directive. ukrainian presidents of volodymyr zelenskyy says he is willing to step down if it means nato membership for his country. he says it is clear he wouldn't

be in power for decades and would happily make the trade. pope francis remains in critical condition as he continues to battle severe pneumonia. the vatican says the 88-year-old pontiff is still receiving high flow oxygen to help with his breathing. some tests show a mild renal failure which is currently under control. that is your brief. jonathan: next on the program, setting you up for the week ahead. you are watching bloomberg tv. ♪

jonathan: equities positive by zero point 5% on the s&p 500.

bond yields higher by just a basis point. 10-year, 4.4468. the week ahead looks like this. earnings from home depot. wednesday, the big one, nvidia. thursday, another round of jobless claims, durable goods. friday, core pce. also watching out for a midnight deadline for federal workers. d.o.g.e. sending a mass email over the weekend demanding they defend their work. tyler kendall joins us now from d.c. what's next? tyler: still conflicting messages as agencies told their employees not to respond which means they didn't get a heads up. it is still unclear what sort of legal basis elon musk would have determinate federal workers but president trump made clear he wants to see d.o.g.e. get more aggressive. we are seeing the largest union

representing federal workers to contest any firings that come if people don't respond to this email. remember, this could be widespread. only 20% of the federal workforce is in the nation's capital and the surrounding areas. often we talk about president trump trying to shake up washington institutions, but this could go much broader and across the country. you been talking about consumer sentiment all morning. when we talk about the university of michigan's gauge on friday, more than 50% of respondents said their long-term unemployment expectations had risen, one of the highest numbers we have seen since april 2020 when we were in the height of the pandemic. annmarie: the president has a busy day when it comes to the international space. emmanuel macron is with him, on a call with g7 leaders. one is on tap for these two leaders today? tyler: they will have a

bilateral meeting followed by a lunch, press conference. we will see what sort of headlines, when it comes to security guarantees in europe, come out of that. also watching to see how tariff negotiations are going. we know that could really hit the european union. i would just point out some interesting timing, late friday night, president trump opening the door to potentially implementing paragraphs as a way to counteract a digital services tax. france is one of the first to implement that in 2015, something that trump tried to get rid of him during his first term in office. of course, this hits some of the biggest tech companies like meta and apple. it appears that tech is someone on president trump's mind. jonathan: i appreciate it, tyler. have not talked about it much but pushing mexico to put their own tariffs on china to prevent the goods coming in the back door to the united states. lisa: this is the one you have

to pay attention to. there has been a long-standing gripe crossing administrations about mexico being the back of chinese products into the united states. if you want to isolate the two economies, how do you do so without the allies participating? annmarie: it is a warning shot for those that want to do near shoring, you still have to isolate china, if you want your products welcomed in the united states. jonathan: equities bouncing back. coming up tomorrow, mike wilson of morgan stanley publishing earlier, the debate turns to growth. bond yields now for six consecutive weeks coming in this week, longest weekly run since 2019. thomas kennedy will respond to that. neil dutta on why he is not constructive on this economy, and hasn't been for months. thank you for choosing bloomberg

tv. this was bloomberg surveillance. this is bloomberg. ♪ (♪♪) ♪ three little birds ♪ ♪ (steel drums playing lightly) ♪ (♪♪) (♪♪) (♪♪) (♪♪) (♪♪) (♪♪)

matt: all right, the biggest drop of the year on friday, we are bouncing back a bit in terms of futures. 30 minutes to go into the start of trading. katie: "bloomberg open interest" starts right now. sonali: coming up, stocks attempt to come back after the worst session of the year of the s&p 500 on friday. investors shaking off tariff fatigue and bracing for pivot earnings. matt: