>> a lot of the reasons germany and europe is rallying is because the mag seven has underperformed. >> its earnings that will drive the markets. >> the potential for growth scare is hard to see the market moving up 10%. >> would rather own big tech. obviously there's regulatory risk. that continues to be at the top of the value when it comes to the ai revolution. >> a lot of uncertainty, fear and doubt for good reason. >> this is bloomberg surveillance. jonathan: live from new york city, good morning for audience

worldwide, bloomberg surveillance starts now. coming into wednesday on a four-day slide on the s&p 500, scores look like this. equity futures bouncing back by 0.5% on the nasdaq up by 0.8. mag seven stocks down from all-time highs. the big one a little bit later this afternoon earnings from nvidia. lisa: a lot of questions they have to answer from deepseek and what the application will be, whether it reduces some of the desire for their chips. people are wondering is demand still insane and the man in the leather jacket will have to come out with some really interesting superlatives to change this fear that's been invading markets. >> before we get there we still need to talk about the economic data we have had a basket full of weaker than expected economic data. yesterday consumer confidence low or paid the biggest since august of 2021. lisa: everyone seems to be worried -- annmarie: everybody

seems to be worried about the confident -- the economy. consumers called about this continuing to write in responses most notably comments on the current administration and its policies dominated responses. what you hear is a consumer that's hesitant right now to spend. jonathan: feeding the five day move in the department a 25 basis point move lower on the 10 year maturity. yields by two basis points. lisa: this to me is a fascinating push poll. on one hand you have fears of some sort of negative growth shot. talking about consumer confidence following the most since 2021 and people are saying plentiful versus hard to get following the lowest since october. on the other side you have a budget and you have something that was passed in congress that basically paves the way for $4.5 trillion of tax cuts that are

offset to the tune of about $2 trillion of cuts elsewhere but additional spending in other parts. the story that the deficit is expanding is not going away and that is the push pull in bond markets. annmarie: calling this one the biggest success story speaker johnson has had. it will be weeks, months of wrangling between congress and the senate to get to the finish line. you know why a lot of people will see this last night think this gets done. amongst these holdouts only one ended up voting no in the end because they cap the vote open for hours and what did they do, donald trump was calling from the oval office. jonathan: they have to do something about what's taken hold in consumers in america. soft retail sales were weaker. see the outlook from home depot. we are from two's. and of america and bmo suggesting to a extent clients are just sitting back. >> remember a couple months ago

we were talking about how this there be a boom in deals suddenly this m&a crashing wave and all the activity has not been there. people are saying it's because of a lack of uncertainty. a key question if this will be enough to really overwhelm the concerns about tariffs. again that push pull. how much are people using the tariff talk to justify some weakness that was creeping into the economy even before some of those discussions. jonathan: equities up by zero point 5% on the s&p 500 joining us this hour, downgrade stocks to neutral. the house paves the way for tax cuts as consumer confidence rolls over. we begin with stocks looking to snap a four-day losing streak awaiting nvidia results after the closing bell. keith lerner downgrading equities to neutral saying we've seen modest deterioration in earnings technical economic trends with equity posture and

slightly higher cash. welcome to the program serpent always good to hear from you. we had a 10% correction on mag seven names. why is it not an opportunity for you on the team? >> our overall calls for the market we've been over the last year we followed the weight of the evidence as just mentioned and the weight of the evidence has shifted off to a mixed backdrop when we make that shift earlier this week. let me walk you through a couple things we are looking at and keep in mind the s&p 500 was only about two or 3% from an all-time high. but the first thing is you mentioned the economic data we are seeing a little but of softening, the surprise index is the lowest since september so on the market we have seen the economy slow down somewhat. a key pillar of this market has been the resilience of corporate earnings and what we have seen in the last month is the forward

earning estimates for the s&p 500 start to move sideways. that may refresh but on the margin it's a shift and on the technical side even though the market made a new high last week , we only have about half of the stocks as defined by the 50 day moving average. we put that together and with the fed likely on the sidelines boxed in here seeing some fiscal tightening we just said hey we are not saying this is catastrophic but we are seeing a more neutral posture at this point. jonathan: doesn't change anything about how you see the world 12 months out. scaling where it needs to be about one year from now. it won't be about trade it will be about tax cuts. has a one-year view changed at all? keith: not that much pride are thought act than the market was focused on the positive aspects or the perceived positive

aspects of the trump administration. tax extensions, deregulation, we thought earlier in the new year we had seen some more focus on tariffs. now it seems we are only focused on the tariffs and negatives and as we move later into this year there's a potential we will see some type of jolt to the upside is some of this uncertainty gets online. and there is more focus on these positives. i will say on a short-term basis, some positive offsets we are seeing the 10-year treasury yield, down about 50 basis points, oil prices have come down, so fiscal conditions -- financial conditions are easing somewhat as an offset. i think we have to get through this event to march and april and probably closer to the summer is the markets are focusing again. >> you mentioned you don't think the fed will be in play for most of this year as well as the potential headwinds to the s&p outperformance and yet as we get

some of this negative economic data you see to rate cuts being priced in through year-end. if that continues to build that sentiment, will that change your view on equities? keith: we are in the two rate cut camp this year. we think it is more likely i think the fed is boxed and it is more negative rate even if the economic data weakens near term i think the uncertainty will keep them on the sidelines unless we see a more significant move now in the economy which if that happens the fed cuts rates i don't think that will be a big overall backdrop for equities if the economic growth outlook is also there. they are boxed in and the first half to ensure us so they are not coming to the rescue right now. eventually we think inflationary -- will come down to allow them to cut rates. we don't think we will see a big posture shift in the fed.

lisa: talking about how one sort of plus has been the 10 year yield has come down. that's offered a bit of a combination to the market. i wonder how sustainably you see that. on the flipside yesterday we had a $4.5 trillion tax cut potentially in the works and at the same time deficit concerns, back to the table. at what point do you think this push pull keep the 10 year in this range versus continuing to drop? keith: we think it is more likely to stay in a range. the downside of the 10 year is probably for 10, -- 4.10 so i don't know if there's a tremendous amount of downside but if you remember in early january the market was having difficulties because there were concerns we go 5% or five-and-a-half and now they have come back down. to kind of zoom out i think we

will have more of this back and probably moving closer to fair value may be a little bit more downside on the 10 year. one thing as well, the yield curve that's another thing going back to the growth aspect. we see that quite a bit. annmarie: if you take a long-term view, would you be where you are today say if the sequencing was swap. if we didn't really hear anything about the executive branch about tariffs but we got to lisa's point this budget passed last night that is the starting gun for massive tax cuts or this extension. keith: i think that's part of the reason why we are more neutral. the question saying why not become even more negative. i think those things are out there. i think the president is also focused on the economy, a recession in the first year even the second year and focused on the stock market. there will be some inherent buffers against the stock market

moving to low but even if i take away what's happening there is so much noise i go back to the way this was approached. we are seeing earning estimate's move sideways where valuations for the moment already at the high-end of historical levels. if we don't have earnings moving up in a meaningful way it's hard to see we'll have a big upside to the overall market. the economies becoming a little bit weaker on the short-term and we are seeing a split market below the surface. those are the indicators we are looking at to try and deal with all the financial news out of washington staying focused on what matters. annmarie: when you see this uncertainty is the consumer is hesitant, you say you have slightly higher cash levels. else do you think it should be doing? keith: at some points part of this is to be patient and not be driven so much by the data headlines. the other thing we've done for the last year, we have been overweight large caps relative

to small caps. we have moved to small caps one notch down. the reason being in that backdrop small caps needed an accelerated economy to outperform. we are seeing some deceleration, some softening and cooling. if the fed will keep rates higher at least till the middle of the year, the small-cap companies have a lot of floating-rate debt so they won't get that relief. we seen a 52-week low on relative price trends. and relative earnings going down as well. so that's another area we would remain more cautious. jonathan: keith lerner there with the latest. the earnings and the data yesterday consumer confidence came in softer in the past few weeks. you've looked to the earnings we have outlooks from walmart, home depot. both of those a little bit tepid. just got lows moments ago. lisa: a similar type of line

saying total sales for the full year will be below with the street was expecting. again, uncertainty about near-term home projects whether people want to do that based on mortgage rates or whether they want to do that based on lumbar tariffs. is this them setting a low bar that they can leap across later or is this indicating a true feeling it things are shifting in a shaky path? jonathan: also waiting for clarity on the outlook for policy. equity futures bouncing back by 0.5% with an update on stories elsewhere with your bloomberg brief. >> starting in washington dc, house republicans have passed a budget blueprint that would make deep cuts to safety net programs like medicaid. it tees up 4.5 trillion dollars in tax cuts. it passed with a 217 to 200 15 vote along party lines with just one republican opposing. the bill heads to the senate were more changes could be made. ukraine has agreed to a deal

with the u.s. can to create a joint fund with the natural resources include critical minerals oil and gas. the deal does not spell out future security guarantees for ukraine but may help ease tensions with president trump. ukraine's president zelenskyy is set to visit washington on friday. a check on stellantis shares, the automaker offered a lackluster forecast for the rest of the year. demand for cars in europe and terror threats are weighing on the company. stellantis said it will evaluate share buybacks and expects to generate positive rate cash flow in the second half of the year. jonathan: more from dani burger in about 30 minutes time. so difficult to look for guidance now. the fed has to do that in about two or three weeks time. they have to put out a dot plot and forecast. lisa: you have to wonder what the usefulness is and if they are exposing themselves to accusations if they say

anything. if they give us a blank sheet of paper and say your guess is as good as ours, pick your own adventure. i think that would probably be advisable. >> up next on the program delivering on trump's agenda. >> the first important step in opening up the reconciliation process. we have a lot of hard work ahead of us we are going to deliver the america first agenda. we will deliver all of it and this is the first step in that process. jonathan: we will catch up with his view and just a moment. live from new york city, good morning. ♪ only the servicenow platform puts ai agents to work across your company.

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jonathan: four day losing streak on the s&p 500.

down about 3% on the s&p. a similar move on the nasdaq 100 down about almost five percentage points. the pain has been in big tech. nvidia reporting after the closing bell appeared the bond market yields are higher up by two basis points, after five days of lower yields, a move around 25 basis points. under surveillance, delivering on trump's agenda. >> we had the requisite number of votes to move this process along and now passing the budget resolution will go to the senate. it's the first important step in opening up the reconciliation process. we've a lot of hard work out of us and we will deliver the america first agenda. we will deliver all of it not just parts of it and this is the first step in the process. >> house are republicans just about passing president trump's one big beautiful bill. it leads to a showdown in the senate. tyler kendall joins us from the

nation's capital for morbid what's next? tyler: this was a key early test there is a lot of work to be done and to be sure president trump had to make a flurry of phone calls in order to get this over the finish line. when you look at the details of this house planet calls for up to $2 trillion in spending cuts which is not enough for many fiscal hawks although we are learning they have been promised more spending cuts could be tied to the house bill. within those spending cuts this plan directs the committee that oversees medicaid to find $880 billion worth of savings. for the sake of the exercise all of that went towards slashing medicaid it would cut the program's annual budget by 10% over the next 10 years so politically fraught issue republicans will have to deal with going forward. then there is the tax fight. where we are expecting the most friction when it comes to the senate. it calls for $4.5 trillion in tax cuts which is likely only enough runway to extend

president trump's tax plan. it means many campaign promises like no taxes on tips, overtime pay, social security but lowering the corporate tax rates for those who move the corporation production to the u.s.. lisa: the biggest fight will -- annmarie: the biggest fight will go to tc ga is should they be made permanent. that's what senate republicans want to do. how difficult will this process be between house republicans and senate republicans? tyler: we got a preview from lindsey graham who said this bill is neither big nor beautiful it comes to tax cuts we are expecting them to move these requirements that the house has put forward around and the white house is expected to be heavily involved. we are expecting house and senate republicans to make their way over there later today and we've learned treasury secretary scott bessent is starting weekly meetings on the hill to try and figure out how they can negotiate this. jonathan: tyler kendall from the

nation's capital in washington dc building on this. for people just waking up this morning can you walk us through where we are at the moment and how much longer this might take. >> spring training for baseball let's put in baseball terms. in terms of a nine inning game. early in the first inning. it is very early in the process. this is important step last night, a prerequisite for the rest of the debate that will play out through the rest of spring may be into the summer and fall or deaf we are really early in the process. >> what does it say to you that to get over the finish line we had to have president trump act like the speaker of the house basically whipping votes last night. brian: i think it is a rhetorical question i think he answered it yourself. the fact what should be a fairly easy vote just to get the

process started and moving was essentially root canal last night and very difficult to get enough votes to switch from a no to yes. and it kind of belies the difficulty that will be down the road. because among the yeses were a lot of members who have concerns over the medicaid cuts, there is nothing formal in the bill yet. but they have been speaking to the leadership and the white house, they are -- their concerns are out there and if those start to materialize and become part of actual legislation, those yeses are really at play and on the flipside is your reporter mentioned, the fiscal conservatives went along with it but they want more cuts. if they get more cuts you will lose some of the yeses concerning about the deepness of the cuts. it is a very difficult -- the

political calculus is very difficult. annmarie: and a razor thin majority. you talk about these medicaid cuts it is not outright that they are talking about medicaid but we're talking 880 billion dollars from the energy and commerce committee. what else could it be if it is not medicaid? >> that is the issue. people who don't understand last night they did what they voted on just off of top line numbers. there's no policy language in that document. but it assigns $880 billion in savings to the energy and commerce committee. will you look at the energy and commerce committee and see what their jurisdiction is and you get to medicaid. where can we find offsets elsewhere? maybe even outside of the committee. what i pointed out to clients is you look at the tax cuts, there may be some tough decisions coming down the road on may be some items not being extended or some current policies such as

may be a cap on the corporate salt deduction. maybe that comes into play. maybe a stock bypass -- maybe that gets an increase. there'll be very intense negotiations that have market impacts over the next couple of months. >> the estimate from the committee for responsible budget says the current proposal will increase the federal deficit by nearly $3 trillion over the upcoming years. is that the base case for you going forward that this is essentially any kind of bill will increase the deficit. >> roughly. i think one thing that is happening which i think is a positive is we are getting back to a sustainable trajectory on debt. it's not going to come down. we are certainly not getting to a balanced budget but we are getting back to a historical norm because we have been out of culture with that during covid. scott bessent mentioned this in the interview earlier in the

week which was fantastic. they are just getting back to a sustainable trajectory on debt and deficits and then dealing with longer-term problems after that because longer-term debt solutions have to include social security and medicare and those are off the table for right now. jonathan: october. ok. >> the speaker in the leadership that a good run last night let's not diminish that. they've been talking about a very aggressive timeline of having this all wrapped up. in the spring. i've always been a little bit skeptical about that. if they can do it, hats off to them. it would be in a norm as accomplishment. because of the negotiations i think we will go on in the summer and i think jonathan will be back here in september looking towards the playoffs at that point still be talking about this as it gets closer to the finish line. jonathan: appreciate it sir.

still very early days. >> very clever. bring it full circle. the game to the ninth inning where we can really see the final potential. jonathan: i remember some very aggressive timelines coming out people were thinking in the spring we could have it as soon as then. >> if it does what does that do to the market that is getting accustomed to what can get done quickly versus what will be done something more the whole season which is a lot of games. jonathan: just waiting for those aren't they. i love baseball. sometimes. coming up next, consumer confidence in america. ♪

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jonathan: the big one comes a little later, earnings from nvidia after the closing bell. a losing streak on the s&p and nasdaq. down around 5%. equity futures bouncing back this morning 5.5%. on the nasdaq 100, up 5.76%. -- by .76%. lisa: there's an overwhelming desire to buy chips they cannot produce quickly enough or are you saying that tepid cement

bleed in -- tepid demand bleed in on the heels of deepseek? jonathan: general motors with an overwhelming desire to buy back their own stock. the board approves a $6 billion buyback. gm up in the premarket by 1.5%. the cfo with this to say. "the company will be agile in response to public policy changes." lisa: we were talking about the significance of some of these auto companies, how they can maneuver ahead of tariffs. this is an interesting one. is a basically a vote of confidence in their own shares? is it saying stick with us and we will give you a little bit of a sweetener so come along for the ride even if you think we are unviable? jonathan: thank you met with a decent outlook and the market did not believe it. the stock was down from 20% from november of last year.

the company saying we believe in the outlook and we think our stock might be undervalued so we will buyback more? the bears might say this is a terrible time to do share buybacks. you can see a different industry. lisa: if you have to transform your supply chain, you will want extra cash on the sidelines. they are saying we have enough confidence in what we are doing that we will give you a sweetener to stick with us. let's see if it sticks with the stock price. jonathan: general motors' board approving a share buyback. the company will be agile and responsive to public policy changes. the stock is higher by close to 2%. the bond market. what a move we have seen over the previous five days. 25 basis points lower on the 10-year yield. this morning, we are up two. lisa: a lot of people are talking about growth fears. that is confirmed by the negative economic surprises and

the consumer sentiment falling off. it is not because of current conditions. it is future conditions. yesterday, with respect to the labor market. we have to go back to the question we were asking last year. is this normalization or true weakness? some of this is just going back to what we saw during relatively normal periods. that has to be a question as people get carried away with the question of is the recession upon us. it's been a long baseball season of analogies. jonathan: it hasn't even started yet. annmarie: spring training. lisa: it carries over the whole year. jonathan: two-year of this morning. we will talk about consumer confidence in a moment. the conference board is harder to ignore. nvidia reporting its highly anticipated fourth-quarter earnings. investors eager for an update on

deepseek's low-cost breakthrough in the past month. lisa: a couple of questions about demand. how much companies are questioning their investment as a result of some of the inefficiencies. the larger question is about how their countermeasures -- customers are deploying technology. is a revolutionary in the same way that was expected? if they cannot show profit gains from using their chips, is a going to be the same kind of demand going forward? annmarie: i'm curious what he has to say about what chips he thinks was used when it comes to deepseek and the large language model. what chips were used to because you are probably going to see more export controls, similar to what we saw with the biden administration carry through to the trump administration. jonathan: for the export compliant? the company says it was. nvidia positive, up by 2.4%. house republicans just about passing a budget blueprint for president trump's agenda, calling for deep cuts to safety

net spending programs like medicaid that would pave the way for $4.5 trillion in tax cuts. annmarie: this is as close as you can really get when it comes to how they were able to get this over the finish line. i was only half joking. it felt like president trump last night was actually the speaker. whipping the votes that is really reason why this budget got over the finish line. it's only the first step. this whole idea of spring training. to your point, there will be months until the world series and there's going to be a ton of back-and-forth between congressional republicans, senate republicans, and they do not see i die on the basic provisions of this reconciliation process. -- do not see eye to eye on the basic provisions of this reconciliation process. lisa: this is the extension of existing tax policies for companies. that is very much on a table went the deficit is increasing by 2.8 trilli -- 2.8 chilean

dollars with this proposal. -- $2.8 trillion with this proposal. the sweeteners are looking as feasible as some of the sticks when it comes to tariffs and other measures. jonathan: president trump signing an executive order on copper. the levees would address a national security issue. there's already 25% tariffs on steel and aluminum in a few weeks time. annmarie: what's another metal? trump recognizes number lar -- an over reliance on foreign copper. it's about shoring up supply chains. this has to go through countries they think are dumping on the global stage and the fact the processing is dominated by china. all roads lead to beijing at the moment when you look at a lot of the tariffs that are in place or thinking about putting in place. lisa: a lot of the miners were

talking to how china is making a huge investment in south america, and their copper mines, in their metal minds. they have huge amounts of resources. that is the number one exporter to the u.s. that is where the u.s. gets most of his copper. how do you shore up the supply chains while sticking more blanket tariffs? these are questions they will have to parse out. in the meantime, are they going to strengthen some of the ties between china and some of the big producers? jonathan: all roads lead to arizona. there's a joint venture between rio and bhp. it has been held up in courts for more than a decade by politicians across administrations. if they did something about it, if they managed to approve it, you would have a copper deposit that could meet 25% of annual copper demand for this country. chinese demand is a massive factor. we have a deposit here the

united states. annmarie: i wonder if this will get fast tracked under the trump administration. if you invest in united states, the process to get the regulation will be easier. this is something that potentially we finally see a lot more done when it comes to resolution copper. for years this has been on the sideline because of environment of concerns. jonathan: rio was about the prospect of the story changing. the u.s. consumer confidence seeing its biggest drop in nearly four years. the confidence board writing, "consumers became pessimistic about conditions and less optimistic about future income." yelena shulyatyeva of the conference for joins us for more. yelena: good morning. jonathan: the conference board consumer confidence figure does not usually move markets as much as it did yesterday. people are nervous about where the consumer is at the moment. yelena: probably the market move comes after both the michigan

survey and the consumer conference survey -- confident survey show the same thing. that is telling you the you is more broad-based. the important thing is that expectations failed significantly. what concerned me in that particular survey is that consumers are respecting fewer jobs available six month from now. that is probably at the highest level in more than a decade. that index is telling me that consumers don't see much availability in the job market. we know the turnover is lower than it used to be. when you get laid off, fired or whatever, you are finding fewer possibilities. consumers are concerned about that. lisa: what is the difference between normalization and all right cooling -- outright cooling? yelena: this is something like 2% growth in gdp by the end of the year.

if we see tariffs, and this is something we model at the conference board, we seek quite a big hit from the tariffs if we get a combined impact from china, mexico, and canada tariffs that have been discussed of about one percentage point on growth. that would be a significant slowdown to a stall speed in the economy around 1%. that would be a disaster. lisa: upon one hand you could say these numbers are pretty negative. go to cash. on the other hand, we have been in a robust growth scenario with jobs created in a significant way. this reduces some of the inflationary risk we heard about late last year. why is it the former more than the latter? yelena: the numbers are not catastrophic.

the numbers that we saw the conference board survey. the bottom of the range but within the range the index has been over the last several years and what did we see? consumer spending at quite a solid rate. the problem is that the declining confidence comes at a time when the savings rate is at a low level at 3.8%. this is low by historical standards. what usually happens when confidence declines, the savings rate starts to increase. when your income is the same or declining because of inflation, that means only one thing. that thing is a big declining consumer spending. consumers are the driver of economic growth. at a time when we rely on consumers so much that means a slowdown in economic growth. annmarie: what are the

criticisms -- one of the criticisms of the university of michigan survey is it is political. yelena: it's the same issue. if you look at the breakdown by political party, democrats are more pessimistic. even independents are more pessimistic than republicans. in this conference board survey, the republican sentiment is actually leveling off as well. we saw it across the political spectrum in the survey. annmarie: when it comes to write in responses, you get a sense of what's going on in people's minds. inflation, tariffs. anyone talking about there might be a tax hike if tcja was not extended? yelena: i don't think we're there yet. we see an increase in policy concerns and political concerns. in tariffs, yes.

the things we hear on the news. inflation is a concern but it's being replaced by all this political agenda we are hearing. i don't think the taxes are on the agenda just yet. jonathan: always good to catch up. yelena shulyatyeva of the confre -- conference board. ask people how they feel about the policy. the policies are popular. did you see the harvard poll? it backs of the idea that people are supporting with the administration is doing. annmarie: trump maintains his team would say he won the election on inflation. he thinks he won because of immigration. people are concerned about tariffs. there's only one policy when it comes to tariffs that are in place. tons of rhetoric, a lot of bark. the only thing with bite was 10 percent on china. jonathan: 63% support freezing

and reevaluating all foreign it expenditures. 61% support reciprocal tariffs. it goes on and on and the past few days. lisa: doge, there are questions around it. unless you are losing your job, people like the idea. if there are significant cuts to medicaid, which is what some of the concerns were by republican members who pushed back, do people feel it in a different way and makes it real in a different way? jonathan: give is your neighbor, it's a recession. if it is your job, it's a depression. lisa: it makes it more difficult when you are personally affected. jonathan: plus get an update on stories elsewhere with dani burger. dani: in washington, donald trump says he starting a new path to citizenship. the u.s. will sell gold cards for $5 million to foreigners to create jobs.

it would launch in two weeks and it does not need congressional approval. gm shares up nearly 4.5%. the company announced a $6 billion share buyback. they also raised dividends by three cents a share. the announcement comes as the auto industry faces uncertainty about president trump's tariffs and pledges to rollback support for ev's. let's look at lowe's shares. the fourth quarter earnings beat estimates. adjusted earnings per share and net sales were above expectations. the forecasted forecast lower-than-expected sales growth for the year. there is still uncertainty over home-improvement with consumers having stayed on the sidelines with big housing project. that is your grief. cash -- your brief. jonathan: bonds are surging. >> three things. the realization the global trade

is not going to come to fruition. we are in the midst of what i call a seasonal slowdown. there is a realization the worst case scenario on treasury supply is temporarily off the table. jonathan: we will catch up with jim bianco, get his thoughts on the bond market move in the last six weeks. and, why there could be a so-called mar-a-lago accord. that conversation is up next. ♪

jonathan: equity futures positive. nvidia up in the premarket. higher by 2.3%. bonds surging. >> there are really three things that have driven this drop in yields.

the realization that the global trade war is not going to come to fruition. worst case scenario will not play out. we are seeing now it filtering into the bond market. we are in the midst of what i call a seasonal slowdown. there is a realization that the worst case scenario on treasury supply is temporarily off the table. jonathan: traders hedging for an economic slowdown with yields sliding to the lowest level of the year so far. jim bianco joins us for more. welcome to the program. let's start with the bond market. six weeks of gains into this week. lower yields acrostic consecutive weeks. we are seeing another week of lower yields. five days, 25 basis points. what is behind the move? jim: the big thing no one is talking about is what is happening in europe around ukraine. the president is trying to cut a deal. he wants europe to pay for security, a big part of that

mar-a-lago accord. they can't run to their parliaments fast enough to say they will increase by trillions of dollars in the next 10 years their budgets for defense, which filters back to the u.s. and then we don't need 60,000 troops in europe. maybe we need 20,000 troops. the idea is maybe we have got some kind of debt relief coming or some kind of deficit relief coming. that is what has changed in the last week to 10 days or so. the idea that europe is open to relieving us of a lot of the defense spending burden we have had. bonds are responding to the potential of lower supply. whether that happens, that is for vader this year. whether or not -- that is for later this year. that has been the catalyst that has changed in the last week to 10 days. lisa: let's go right to mar-a-lago. you have told people they have

to think about this type of scenario where this administration looks to allies incest by longer-term bonds at specific yields and we will give you guarantees or deals, etc. a lot of people have really shot this down, saying absolutely not. it would treat it like an emerging market. what makes you think that is anything feasible about this? jim: that the payment opt idea. it's like using a paper check or zelle. the mar-a-lago court is tariffs, a sovereign wealth fund, and payment for security. we have gotten all three. within payment of security, there was the idea floated of a bond swap. you don't like that? they will spend trillions on security so we can relieve ourselves of the burden. that is what the whole point is.

everybody has gotten hung up on this one aspect about payment and security. maybe it happens, maybe it doesn't. the larger issues are happening. why are we doing this? to reorient the world global trade system which we seem to be trying to do with tariffs to bring down the value of the dollar, bring down interest rates, and make the u.s. competitive. at this point it looks like all three aspects of that are underway in happening and we should not get bogged down in just one idea about a payment mechanism. annmarie: when it comes to weakening the dollar, what trading partners is it so important against? jim: very good question. there are two types of dollars. the federal reserve has the trade-weighted dollar index. that has been going up because it is weighted by trade. canada and mexico are the biggest players. the dollar index which we all

look at and you quote every day, that is weighted by flows and half of that is the euro. when you look at trying to weaken the dollar to fix the trade imbalances, it is canada, mexico, china. it is not the euro, not the pound, not this was frank or even the japanese yen -- not the swiss franc. that is why it is not a coincidence the first salvo in the tariff war went to canada and mexico. if you want to deal with it, you have to deal with it with those countries. annmarie: when it comes to the tariffs the president earmarked and the agenda is set for march 4, do you expect 25% to be added on this imports from those two trading partners? jim: that is up in the year. we are talking -- up in the air. we are talking about a president who wrote "the art of the deal." he's trying to get leverage and

reorient the trading system. we will see when we get to midnight on march 4 whether or not those tariffs actually happen. nevertheless, if there is another extension, they are going to stick around. the idea of them as a leverage point. if not, as a revenue point if some version or some percentage of tariffs are put on those two countries. jonathan: your thoughts getting a lot of attention in the last week. appreciate the update. jim bianco. an update at 654 time eastern time on -- 6:54 eastern time. trump tariffs will punish michigan. "it is just the opposite. the tariffs will drive massive amounts of auto manufacturing to michigan, a state that i won easily in the presidential election. they have stopped plants from

being built already in other countries. just let it all happen and watch. it won't be even close." annmarie: are those tariffs going to come to fruition? when you look at the wall street journal editorial board, they quoted the ford motor's ceo jim farley talking about how this would blow a hole in the u.s. auto industry. the concern is how much higher costs can parts be? you look at a single car. how may times does ago across the northern border? six to eight times. this could add a lot more cost to a single automobile. lisa: they are trying to rearrange trade and the massive weight to the degree that people are pricing that in is unclear. jonathan: a lot of action in the last month -- in the next month or so. coming up peter tchir, monica guerra, ted maloney, and andreas utermann. from new york city, the second hour of "bloomberg surveillance"

up next. ♪

>> a year from now, the structure of the economy will be healthier. the path will be extremely messy. >> we are leaning towards the higher possibility of a hike. >> for now, the fed is going to stay on hold. >> the economy continues to -- the challenge is six-month out. >> everyone is expecting things to be fined and they are not, that could create a negative feedback loop. >> this is "bloomberg surveillance."

jonathan: the second hour of "bloomberg surveillance" starts now. equity futures positive by .4%, bouncing back from a four-day slide on the s&p 500. the main event for the nasdaq, this afternoon after the close. earnings from nvidia. you give more executive orders from the president who moments ago said this on auto tariffs. lisa, let it all happen. lisa: he said the 25% tariffs on canada and mexico are going to go through. he talked about how the wall street journal editorial board got it wrong. it will not take jobs away from michigan but it will increase jobs for the auto manufacturing sectors. the ultimate goal is to bring manufacturing back to the united states. he feels like that is being overlooked. jonathan: back to the calendar. next week, 25% tariffs on canada and mexico. the following week, 25% tariff

on steel and aluminum. april, 25% tariffs on autos, chips, pharma, reciprocal tariffs. annmarie: that is able 2. the -- april 2. this means consumers, as we have seen from the consumer conference board, and it's not just democrats and independents saying i'm concerned about inflation, references to prices in general. it is also republicans that might be starting to hit the pause button when it comes to going out and spending. lisa: the problem is if this were to bring back jobs, i'm wondering if it has to happen quickly before people get a negative sentiment about higher costs. sequencing matters in terms of people continuing to fuel the economy. that is what people increasingly are trying to grapple with. jonathan: it takes time to trigger a supply-side response. it can take five minutes to finish demand. you can do that overnight.

to have this great realignment there are genuine goals to increase the dynamism of the u.s. economy. we can talk about it throughout the program. there is a price to pay. are they willing to pay the price? you see that was softer consumer sentiment. mike wilson said something yesterday that got my attention. i have barely heard this administration talk about the stock market. what happened to the trump move in stocks? lisa: you are hearing about the treasury yield. scott bessent was talking about that 10-year yield. how much is the uncertainty in the sense that it dampens the potential inflationary fears enough to create a calm and the bond market that might not be there if they were more progrowth measures? jonathan: that is the genius behind all of this. equities positive by .4%.

coming up, peter tchir of academy securities as investors await results from nvidia. monica guerra as donald trump strikes a deal with ukraine. and andreas utermann on global risk to trade. stocks looking to snap a four-day losing streak with nvidia on deck this afternoon. "we have been concerned about the nasdaq 100. a pullback to pre-election levels would be close to 10% from here. given what we are seeing, that is now my target." peter, good morning. crypto absent in the quote but it's important right now. jim: i'm ashamed to admit but i been watching crypto. it's a pure policy play on trump. as you have seen that go up and down. i think crypto is much more tied or linked to the u.s. stock market. we can talk about correlation but it's more tying in a linkage. on the retail site you see the ets go to $110 billion or

something like that. those used to coldwell let's. you had bitcoin. they were sitting infidelity or schwab. -- in fidelity or schwab. it's hard to separate crypto from stock investments. you have mstr which has become huge. it's a crypto-linked stocks. mstx, a double leveraged stock on the nasdaq 100. it's only .4%. around the 50th biggest holding but it's a direct tie to stocks. jonathan: is that institutional flows as well? jim: it is all flows. you look at qqq charts. mstr is now on qqq. it is starting to move. it moves everything all at once from now -- all that once now.

lisa: there's now suddenly this fear of a growth shock more than inflationary search. how much do you lean into this? you can see a 10% downside in big tech. that could be in a valuation play or something more fundamental. jim: probably more of an evaluation play. we are so dependent on these large index stock flows. if you see outflows, it will hit the big mag7. that is what dominates that. the other part is we are getting all these headlines. tariffs this and tariffs that. i'm not sure if are getting a good outcome are great outcome. they will be a lot of noise between now and then. it is unclear what we are headed. you also have the government laying off people potentially. i don't think the private sector is hiring that much. if you get these job losses not

getting picked up in the private sector, you get more bad than good in the near term. it is unclear if these policies turn out to work out great for the u.s. economy or our tester mental. lisa: it raises a question about whether the fed is the ultimate lever to support the economy given they have rates of 4.5%. why not just cut rates in response? are they that hampered by the fears of tariffs and inflation? jim: i met two cuts this year but in leaning towards three or four. the data is coming in weak enough. all of a sudden, traditionally, everyone was so excited when we cut in august. whatever the fed intends, cutting rates will be a clear signal to the market things are not working. deglobalization accelerating, i don't see how that is good for the u.s. stock market. annmarie: one of the cut? -- when do they start? jim: i think in may.

if you start to see a weakening in the data, probably as early as the next meeting with the one after that. annmarie: part of this could be was happening in terms of the policy uncertainty. you talk about tariffs. do you think trump will put them all in place on his diary starting at week? jim: i don't think so. he puts them off. it's already impacting people. if you are a business, you are unclear where this is going. you are not about to hire. when you look at the quits rate, it is hard to get a job. corporations are saying we are not sure where this is all headed. what do we do? you are seeing first science maybe the ai build out was a little too much. i have been treating the ai buildout like fiber back in the late 1990's. all these companies, it was a disaster when they realized it was overbuilt. i feel like we are at the stage looking around. are there too many data centers?

what are we getting out of this? all those things to me work against the stock market now, even if the fed will be more aggressive. i like -- the nice part is you can take a lot of that up on the nasdaq 100 because it is so top-heavy waited. jonathan: nvidia later. we have to rethink that after deepseek? jim: you have everywhere you turn. it feels like just as you learn whatever chatgpt 2.0 and 3.0, the model proliferation is huge. you are fusing different ones. i will test this. i will use that. it is unclear with his heads. you are seeing more hallucinations. what do you use it for? how much do you trust it? i feel like that hype got ahead of itself and we are potentially at consolidation and the earnings will be important. my sense is earnings already

built in as the stock is declined. it will be hard for this to turn the market around. sentiment has shifted. we might get an update or two. i'm watching crypto. i'm more comfortable we get the pullback to the pre-trump election. lisa: microsoft and alphabet is the answer i would give you to your question. both down about 8% since december 17. they are the main spenders on a lot of this. there's a question of them spending too much and if they are able to supply deliverables to a lot of their companies. at this point that really is going to be the tell in response to nvidia. jonathan: peter, good to see you. jim: i like ai. jonathan: don't worry. we are not running away with the wrong idea. appreciate it, sir. let's cross over to dani burger for more with the bloomberg brief. dani: president trump signed an executive action for the commerce department to which for a levy on copper.

administration officials say it is a national security issue. dumping and overcapacity left critical product dependent on foreign copper. it is too soon to discuss a rate for the tariffs. more than one million federal workers replied to the elon musk doge directive to justify their positions and productivity or be fired. that's less than half the roughly 2.4 million civilian federal workers. the white house press secretary said agency heads we determine best practices regarding the responses to the messages. apple investors have rejected an outside shareholder proposal to when the iphone maker's diversity, inclusion and equity efforts. tim cook says the company may make some adjustments to its program. investors rejected requests for reports are related to ai risks, child sex abuse materials, and charitable giving practices. that is your bloomberg brief. jonathan: more from dani and 30

minutes. of next, striking a deal with ukraine. >> i want to reiterate his position. it is critical that deal is signed. he expects president zelenskyy to sign a deal. this is to recoup american tax dollars that have been funding ukraine's national defense. jonathan: the latest on that front with monica guerra of morgan stanley and a moment. live from new york city, good morning. ♪

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visit sandals.com. jonathan: equity futures on the s&p 500 bouncing back from four days of losses. coming up, earnings from nvidia this evening. this from the president this morning on auto tariffs.

let it all happen. the president saying tariffs are going forward on time, on schedule. lisa: the tariffs on mexico and canada. a question how much donald trump can sell the idea that all these tariffs will shift jobs back to the u.s. and boost the economy at a time where there are a lot of questions. jonathan: foreign policy as well. striking a deal with ukraine. >> i want to reiterate his position. it is critical this deal is signed. he expects president zelenskyy to sign a deal. this is to recoup american tax dollars that have been funding ukraine's national defense. it is great for the ukrainian people who have been put through hell because of this war./ it will create a lasting economic partnership is ukraine will need to rebuild their country because of this brutal war. jonathan: ukraine agreeing to the terms of major minerals deal with the united states according to people familiar with the matter. president zelenskyy will visit

the white house on friday to sign the agreement. tyler kendall on capitol hill alongside oliver crook in berlin. what changed for resident zelenskyy? oliver: i deal needs to be signed. trump will not move on it. what changes are the details that are left fairly ambiguous in terms of what they entail. something might be brought enough to be considered a win for the training and trump side while continuing to get the momentum within the deal. from the european side, we have talked about this for many months. the wake-up call of trump. now the europeans are finally beginning to wake up. we had a video call among european leaders. emmanuel macron briefed the leaders about his conversations with trump. we are getting another meeting on sunday by eu leaders. that culminates next week on thursday with an emerging -- emergency eu leaders meeting to have a concrete ukraine strategy.

what does it mean in terms of troop commitments within ukraine? above all, if those are going to have credible security guarantees from the europeans, they need to find the money to pay for it. that is the nitty-gritty of what they need to figure out. annmarie: when it comes to eight win for the --a win for the president, they talk about this durable economic partnership. domestically, how much is this a win to say the american people are getting something back for the billions we sent over? peter: one of the biggest questions is what the security guarantees would look like. that could give the president a little wiggle room when it comes to his rhetoric on the issue considering that is something that zelinski had been looking for. we have seen this administration say the guarantees would be implicit considering the u.s. had a vested economic interest. president trump is pushing the idea it is critical for the u.s. to get back on its investment. zielinski remained firm the

conditions for this negotiated under the lesson administration do not amount to a debt that needs to be repaid. congress has appropriated $174 billion in security assistance to ukraine since the three years since russia invaded. $84 billion of that has been dispersed. those numbers align more closely with what president zelenskyy says he's been tracking versus the cost the white house has been talking about. jonathan: tyler and oliver with the latest, thank you. monica good to see you. this administration seems to be more focused on the bond market than the equity market. a lot of roads leading to the deficit and spending. what can they do about the deficit? monica: not much. they can reduce deficit spending. i went to for size that is different than cutting the deficit. those are two different issues.

as we stand now today, if you look at extending tax cuts, current budget as is, it's about $4 trillion added to the deficit. the deal last night added $4.5 trillion in cuts. they are looking at for cholla dollars in spending cuts -- $4 trillion in spending cuts and raising the debt ceiling. where that lands us is about a $2 trillion addition to the deficit. it does reduce the total spending amount. it reduces the total burden but it does not completely offset deficit spending. annmarie: can they get creative? the treasury secretary was talking about monetizing the asset side of the balance sheet. can they find other ways? monica: there could be other ways, absolutely. the external revenue service with tariffs potentially a pass-through. if you think about accounting metrics for ways to account for revenue raisers, there are

different ways to get there. is it on a net-net basis a tradition? not necessarily to the u.s. economy. how does it look for a and deficit? -- debt and deficit? you can offset that with an accounting perspective. the deficit is over $36 trillion. we are looking at over 100% of u.s. gdp. the measures need to be taken. for us, where can they get those revenue raisers? can they knock it down further over time? annmarie: how much do you incorporate doge? monica: doge, not much. i think it's incredibly important when we think about the broader resizing and restructuring of government. the way i think about 2025, it's a restructuring and downsizing of government year. it is something that does need to happen, especially when you think about debt and deficit.

it is something we have done previously. ponder the clinton administration, over $200 billion in savings and one year. that is what we are talking about with this budget bill. it is palatable by the economy and the consumer. we will have risks with doge, specifically on the venous civil and local level where there are high concentration of government workers. where local communities can be impacted. it does not necessarily filter into a broader economic downturn. lisa: do you believe that tax cuts will be revenue drivers down the road? monica: they could be. they would be supported more directly of -- supportive or directly of market performance and the economy. maybe not a revenue driver. a tax cut is literally a revenue loss. it's important to separate the issues. if you're looking at tax cuts, they will go into effect in 2020 6.

unlike 2025 which is restructuring and downsizing, 2 026's agenda setting for the trump administration, thinking about his legacy long-term as the progrowth president. the tax cuts play a critical role in that. it is not the only driver of the growth story. lisa: a lot of times when we hear about the headlines or announcements it feels haphazard. we talked of policy advisors. there is a clear structure of the reordering of global trade and the u.s. economy and shrinking the government that is not chaotic. which is it? monica: chaotic or not chaotic? it's important to acknowledge it is normal to feel overwhelmed by the amount of executive actions out of the white house. that is where the chaotic and peace comes in. over 70 executive orders and over 300 executive actions. that is a flood of information for folks. that does feel chaotic. the plan is pretty clear.

he's focused on getting that budget bill through. he is actively involved in whipping congress, helping get the results. this is the number one priority. then there will likely be a pivot on a policy agenda. doge becomes less important once we have a budget and we understand what the cuts are. then it's about what happens with national defense contracting. how do we think about spending in 2026? even though we are focused on cutting now, that does not mean we will not spend in the future. jonathan: we talked about this yesterday. a lot of government at the border, less government inside the borders. they want to treat investors well and her people trying to export to the united states. how this works out, i don't know. they are the goals. lisa: that is why donald comp's -- donald trump's comments on

truth was telling. keep manufacturing coming back gets lost. jonathan: we are trying to work out what people think will and will not happen. of the tariff proposals on deck, what do you think actually goes on? monica: you have to take mexico and canada seriously. in our assessment we found if we do actually levy those tariffs they could hit the economy over the long run by about 1%. there's an opportunity to renegotiate with the usmca. you have to consider the longer run play. even if it does go into effect, which i don't have a crystal ball but if it does, there's an opportunity to revisit and rewrite the economy around that issue. i'm not as concerned about mexico and canada because of the usmca negotiations. that is a piece people are not talking about. china, other countries, industry and sector specific, those are serious.

we have to see what comes out on april 2 with the full reassessment of reciprocal tariff issues, etc. jonathan: that speaks to what people think on reciprocal tariffs. you will see something happen with europe. maybe more on china. when it comes to steel and aluminum, something will happen on that front. canada and mexico, there is a huge amount of doubt they go that far. lisa: he would torpedo certain industries, in particular car companies. that is why maybe general motors have the conviction and confidence to do a whole host of share buybacks and dividend creases. they are saying this cannot feasibly go through. at the same time, you have to take him seriously. he has followed through on a lot of what he promised. let's see. annmarie: we are less than a week away from canada and mexico. bloomberg reporting that there are talks with mexican officials about putting tariffs on chinese imports into mexico. peter navarro internally trying

to get the trump administration to make sure canada is no longer part of the five i's, the intelligence services amongst these groups of nations. how much is that i negotiating a tactic -- a negotiating tactic? monica guerra of morgan stanley. the stock in the premarket higher by 4%. up next, ted maloney on opportunities outside of big tech. the big one coming later, nvidia after the close. ♪ ♪ [dramatic music]

[engine starting] ♪ [car crashing]

jonathan: a four-day slide on the s&p 500. the longest since the beginning of this year. earnings from nvidia later. on the nasdaq 100, up .7%. yahaira: lowe's getting a boost in the premarket. like come devo come depot, it expects sales to finally rise this year. marking a good sign for the consumer. they have been putting up the home renovation projects due to high rates and affordability

issues. lowe's telling us they finally may be getting past that. we have a big mover here in super micro computer. shares of 23%. that's because the ai server maker finally filed its financial results. he will not be delisted by the nasdaq -- it will not be delisted by the nasdaq. it was accused of accounting manipulation and the auditor resigned two months later. a lot have been weighing on the stock but not today. last up, gm. shares rising here 4%. just this morning it announced it is raising its quarterly dividend to $.15 and a $6 billion buyback program. the stock is up because obviously this shows gm is confident in its balance sheet amid uncertain times for the auto industry. jonathan: a very uncertain time. thanks for that. on the radar, the united states in ukraine reaching an agreement

on a minerals deal. ukrainian president volodymyr zelenskyy is planning to travel to the united states on friday to seal the accord. lisa: yesterday -- annmarie: he said if you want to be here and sign this, great. this is critical for trump to get both zelenskyy and putin at the table. the question is, there are questions. what actually is going to be in the mineral deal? our colleague in london, how many minerals are in ukraine? are there these rare earths the draft is talking about? what does ukraine get for it? you hear ukrainian politicians talk about we will get actual military security agreement with united states or some backing. that remains unclear. lisa: i want to know if zelenskyy and donald trump will be in the same room and shake hands and seem cordial and if that paves the way for people to be optimistic about a deal going

forward. it will be a messaging and terms of body language. jonathan: you think zelenskyy might want a golden visa? lisa: probably -- i don't know. it depends on how this meeting -- jonathan: president trump announcing a so-called gold card program, offering residency and a path the city ship to investors who pay $5 million. it will launch in two weeks and should help pay down the deficit. i assume this is different to the investment visa available for investing in america. lisa: this will go directly to the government as opposed to the e-5. i'm not clear on the vetting process. i was trying to understand. there are vague concepts about what vetting would happen. is it anyone can pay $5 million? who is this targeting? very specific people? what are the barriers? annmarie: they are at this stage of a concept of plans.

the new commerce secretary talked about we will have to go through vetting to make sure they are wonderful world-class global citizens. let's see what names come to mind for that. to your point, jonathan, this is similar to the program congress developed in the 1990's. that was $1 million, investing in a business that created a dozen jobs or so. this is $5 million, bring down the deficit, or maybe this goes to the u.s. sovereign wealth fund they are trying to create. jonathan: golden visas are a part of countries around the world. portugal. it is difficult to put a price on these things. portugal was around half a million euros. you know how popular things became. they had to tighten restrictions around that program. lisa: it increased the housing prices for locals to such a degree. taking a step back, are you trying to lure people in or push them out? are we trying to get rich people to come to the united states and spend their money or is it a matter of skilled labor?

a matter of the vetting process? i'm looking for an overarching concept of a plan and terms of the ultimate goal. annmarie: the president made his money in business, in real estate. he thinks transactionally in real estate deals and money talks. jonathan: bank of america rolling back representation targets and replacing references to diversity. the bank will no longer have aspirational goals for diversity and inclusion. it is those words where they get themselves into legal trouble. they want to avoid quotas. when you go from the communication from bank of america, they stressed the word opportunity. we want to go back to equality of opportunity, not outcome. that is the shift of the past few months. lisa: if you talk to executives, they say the ultimate goal of increasing diversity is there, get is how you go about doing it with having opportunities for

everyone and not having certain training programs that try to get people to speak in a certain way. that is the shift rather than wholesale change away from the goals of the program. jonathan: the banks have been drowning in bureaucracy for the last four or five years. we heard from one of the last week about the amount of committees some people had to attend. they were not focused on their job. a return to core competency. attempting to get away from drowning in bureaucracy. for a lot of companies you can see what is happening. slashing corporate jobs at southwest and startbu -- starbucks. lisa: training classes don't fit into that. at a certain point you wonder how much this is being you send an excuse to do a lot of corporate executives -- do what corporate executives want to do and adhere to some sort of shift at the top of the country. jonathan: a huge shift. to the top story and wall street.

awaiting results of nvidia after the closing bell. ted maloney seeing high quality companies outside of tech. "market concentration is the most important theme in today's market. prolonged periods of concentration are followed by ink really long diversification cycles. opportunities and often -- can often be found in recent laggards." are we moving out from a prolonged period of concentration towards the beginning a long period of diversification? ted: it's almost impossible to think about specific timing. i would have been wrong think of the concentration was already get dangerous levels and due to unwind. the last couple of months, we are sure the level of concentration is dangerous. that is not a disparaging, devout companies. they are wonderful companies. in some cases with reasonable valuations. when you put them together, the

level of concentration and look at history when we have been close to this, it ended badly for investors over concentrated in the space. jonathan: on the stock goes up into the right a lot of people do not think it is dangerous. when you think about diversification, what does that mean in practice? ted: if one thing goes wrong for what of those companies, because they are so interconnected it will likely be a chain reaction across the companies. not just the companies but the equities that are incredibly highly valued. diversification is famously one of the free lunches and investing. i -- in investing. people get enamored by up into the right. basement easy to make money on the seven stocks for the last couple of years so i will keep doing it. it is hard to predict what will unwind it. reasonably high confidence it will unwind at some point. lisa: there spend the sense you are punished if you are necessarily half weighted in

that. i'm wondering how you position around that. whether you expected to be violent as it was in the 2000 period of time or what we saw over the past couple of months? a correction. it has happened with the rest of the market has done fine. ted: exactly. one. bottoms up. finding a number of other stocks and bonds you can buy to balance your portfolio would have long-term returns. talk do -- top down, they tend to own a decent amount of the mag7. we are not negatively on the individual stocks or the space. we are concerned about a risk-management question. managing risk at a portfolio level and looking at a small number of stocks driving all the returns and most of the risk in a portfolio is dangerous. lisa: since december 17, you can see the correction in the mag7. the s&p equal weight is up on

the period. you made a point that was interesting. liquidity ideas can shift at a time when everyone is talking about private markets as being the bastion of hope in returns. you challenge that and think in public markets there potentially is opportunity. why? ted: over time liquidity is a feature, not a bug. you have moments where all the money will chase illiquids because of an appearance of higher returns or a value proposition that looks compelling, until people want their money. it depends on who the investor is. large sophisticated institutional investors with large pools of assets should have a meaningful part of their portfolio in privates and alternatives. as it becomes mass-market, we worry about what that means for a mass-market investor who might need access to his or her liquidity and might discover at

the worst possible time they don't have it. jonathan: we talk about the united states and diversifying across asset classes. how do you think about things internationally when europe is starting to outperform to start the year? ted: having a global lens is the best way to invest. you have opportunity to invest across the world. u.s. exceptionalism, regardless of whether or not you believe it is durable or not, it is priced in. if you look around the world, you are paying for the u.s. exceptionalism to work out. paying significantly less in various pockets around the world and that is across asset classes. we think there are lots of opportunities outside the u.s., plenty inside the u.s. as well. probably never been a better time to be a skilled manager thinking about risk in a portfolio level and make those trade-offs around the world. jonathan: ted, good to catch up with the. ted maloney. speaking of what's happening in the united states, lots of

retail earnings in the past two weeks. walmart gave a softer than expected outlook. similar from home depot yesterday. from lowe's this morning and tjx moments ago. lisa: shares are responding out to the fact they performed better than expected in the fourth quarter with sales beating expectations. there fourth quarter for sales came in below expectations. it is the forecast that is really the issue. stocks have turned around. they were negative. the question i have is in the calls. how much conviction do they have in terms of where consumers are going to be going given the uncertainty we have seen? jonathan: for the retailers, i'm thinking target, how do you manage inventory in a moment like this? companies had to diversify away from china eight years ago. they have done more work than that to improve their supply chains. it is particularly coming through the pandemic. target had a massive inventory landmine. you have to seize that

somewhere. i don't know who will step on the landmine but we will see it at some point. lisa: probably more significant in the retailing segment. not necessarily the grocery segment. how many of these are leading into areas somewhat immune to those threats. jonathan: tjx saying first quarter sales plus 2% to 3% of the estimate. a slight mist on the outlook for the first quarter. an update on stories elsewhere with dani burger. dani: hamas says they reached an agreement to free palestinian prisoners from israel. the group refused to continue talks for a second phase of the cease fire on till they were freed. israel suggests it wants to extend the gaza cease-fire when it expires on sunday. israel's foreign minister his european counterparts the extension will not happen until more hostages are freed. deepseek reopened access to his core programming interface after three week suspension. the chinese ai company says it

is allowing users to top off credits for use. deepseek suspended the service earlier this month due to capacity shortages. alibaba has also previewed its own model. the white house says it is taking control of picking and choosing the group of reporters to cover president trump and places including the oval office and air force one. the decision came a day after a federal court declined to request -- a request by the associated press to will halt efforts to block them from the press pool. that is a brief. jonathan: more from dani in 30 minutes. up next, donald trump's favorite word. >> the guy ran on tariff being his favorite word in the dictionary and how you were surprised he wants to go through with it? it's crazy. jonathan: andreas utermann joins us next. you are watching bloomberg tv. ♪

jonathan: the main event later this afternoon after the closing bell. nvidia. bouncing back from recent losses but higher by 2.6%. broader equity market on the s&p 500 bouncing back from a four-day slide, the longest since the beginning of this year. higher by .5%. the move on the 10-year yield, five days, 25 basis points lower on the 10-year. 430 this morning. under surveillance, president trump's favorite word. >> i find it amusing how everyone is basically using tariffs and policy uncertainty as a rationale for their forecast adjustment.

it is a bit rich. as if -- if you thought that, why didn't you make your changes in november after the election? the guy ran on tariff being his favorite word in the dictionary and now you're surprised he wants to go through with it? it's crazy. jonathan: president trump signing an executive order to direct the commerce department on copper tariffs. andreas utermann writing, "while tensions create short-term disruptions, they also reinforce the importance of being able to move swiftly and allocate capital where risk-adjusted returns remain attractive." welcome to new york. andreas: good to see you too. jonathan: let's start with a tariffs story and the dislocations across markets around the world. dislocations you would like to take advantage of. andreas: i think we have seen lots of dislocations. i'm invested in some start ups and two have gone bust as a result of some of the executive

orders signed by the president. it is very interesting. the world is changing. annmarie: there has been more than 70 exec of orders. -- executive orders. andreas: usaid. i was involved in water sanitation in the philippines. the other is a company that was featured in some marvel movies with their coffee machines. they were being produced in china. with the tariffs, that's it. annmarie: what opportunities do you think the tear headlines, executive orders, executive actions could lead to if on the other end you are dealing with busts? where are the opportunities? andreas: it is difficult to predict. there is so much going on. it's impossible to keep track of it. whatever announcements are made, within 24 hours they are rescinded and changed. it will be wrong with this tsunami of announcements to try to make productions and change

your strategy accordingly. what is really important is to be maximally diversified. that is the only way you're going to. you can lose a lot of money. diversification is the name of the game. it is the only free lunch in town. lisa: that is what we were just hearing. we were just hearing the exact same bit. andreas: it's true. lisa: the question is, what is diversification? how you diversify when you have polar opposite risks of inflation picking up or inflation going down, of tariffs going on or the end of the ukraine-russia war leading to a boom in europe? what is it mean to you to have all the? -- all of those at play? andreas: we had a meeting yesterday interested to hear exactly that. how do we diversified?

one with the u.s. person can diversify is ask the question, is the u.s. dollar going to be worth as much as it is today in five years time? if you look back to 1970, against the swiss franc it was 4:1 and now it is 1:1. similarly, if the policymakers worldwide are so focused as they seem to be on getting the capital into the ground, that typically with main value shares are going to have a recovery and are very cheap compared to the magnificent seven. you might ask yourself if you are looking at the proportion of the u.s. equities as a portion of the msci world, it's an all-time high. how sustainable is that? unlikely to be sustainable. you have to diversify into emerging markets.

i don't know. lisa: we can go into emerging markets. that is what you are seeing in the markets this year. the magnificent seven really have a correction. you are seeing equal weight outperform an age of adequate. the dollar weaken. europe has been outperforming. how far is it? has it gone far enough where people are putting their chips on the table or are the trends here to stay for the remainder of the year? andreas: trends typically are multiyear and markets -- in markets. if this is the beginning of the trend, we could have another two or three years of what we have seen in the last 10, that would be interesting. it is not so much the timing of getting the trend right. once you think a past trend or existing trend is coming to an end, a little long in the tooth, you need to act and make a change notwithstanding what might happen in the next six to 12 months. if you are concerned today, it

might be wrong in the next six to 12 to 18 months. jonathan: the bond market. there were concerns about a fixed income would be a source of risk, specifically treasury markets. in the past six weeks the yields have dropped aggressively. i talked about the last five days. a 25 basis point move. our bonds going to be a source of risk or provide mitigation that people typically go to bonds for? andreas: particularly treasuries. u.k. guilt can be a source of risk. since we don't know what policy -- where policy is going to end up, that is a source of risk. i think inflation is relatively under control. it is not going to go back to 4%, 5%, 6%. interest rates pretty much every major bond market are about the right level. if you are invested in bonds, you will get the benefit of a

roll down. on a risk-adjusted basis, it might be quite good. lisa: this raises the question of credit. credit has gotten ahead of its skis as everyone searches for income. government debt is the best bet here given how far credit has already rallied around the world and the fact there could be more wobbles going forward? andreas: i'm the chairman, not the fixed income specialist. if you're asking me personally, i think government debt in many markets is relatively good value. not particularly tips. if you look at the real yield on tips in the u.s., it is 2%. if you're worried about inflation, that's a good real return. jonathan: asking about fixed income. appreciate your time. thank you for being here. andreas utermann on the diversification effort in the new year. lisa: he is saying someone below me does that.

i don't do that anymore. sure, i will humor here. annmarie: scott bessent talked about trump's policies to naturally drop. that should make 10-year yields naturally drop. jonathan: driving the yields in friday and yesterday's sessions. up next, stephen auth, chris caso, lydia boussour and meghan robson. the third hour of "bloomberg surveillance" is just around the corner. the s&p 500 positive 5.4%, bouncing back -- .4%. bouncing back from four days of losses. nvidia will be the big one later. positive by 2.4%. the big one reports earnings after the close. from new york, this is bloomberg. ♪

>> a lot of the reasons why germany and europe is rallying, even china, the mag seven has underperformed. >> the market is ending around

6600. >> potential for a growth scare is sadly here. >> more investors would rather own big tech. there is regulatory risk that continues to be at the top of the mountain when it comes to the ai revolution. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: 90 minutes away from the opening bell. equity futures positive by 0.5% on the s&p 500. on the nasdaq 100, bouncing back, down by about 5%, up this morning by about .7%. later this afternoon, the most important earnings report on the planet, nvidia coming after the close. annmarie: it is that much more important because you seen a correction in the magnificent seven since december 17 when

they reached an all-time high. lisa: what we have heard is the importance of diversification. it is that correction just diversification or the beginning of a new trend that nvidia solidifies by showing some of the demand an application is not as exciting as people thought? jonathan: driving this equity market has not been big earnings stories from the likes of nvidia, it is small data points, consumer confidence. that is where the jitters are at the moment. lisa: whether it is inflation or growth that should be your main concern. right now it is growth. that is why yields are going lower. at the same time, it is not consistent. the equal weights still outperforming, so it doesn't make sense that this is truly a growth shock, as much of an opportunity to diversify ahead of a great degree of uncertainty. jonathan: if you look at the internals of the equity markets, cyclicals versus defensive,

growth is slowly coming to the surface. same thing in the bond markets, six consecutive weeks of declines. there is some nervousness out there, some inertia. people are pausing, waiting to see what happens with policy. the president couldn't be clearer, he already said this morning tariffs are coming up. annmarie: he says let them happen, referring to the auto tariffs. you see this in the survey data. individuals are concerned about inflation, prices going up. we heard it from lowe's this morning. how many consumers are waiting for that certainty? but to jonathan's point, it is happening. lisa: what happened with canada? i am serious. i have gotten a lot of hate mail. you see the booing but there is

a feeling of betrayal. i am just trying to figure out what the endgame is, if i should cancel my trip to montreal. jonathan: 25 percent tariffs on canada and mexico, it's a week away, literally around the corner. annmarie: coming down the pipeline is 25% on aluminum. we also got a memorandum on how the commerce secretary needs to look into copper. april 1 is really important because that is when they will report back to the president, preliminary data about what we may find out on april 1. this is across the board about where this administration sees trade practices that are unfair and wants reciprocity. jonathan: equity futures right now on the s&p positive by 0.4%. we will catch up with stephen auth of federated with stocks bouncing back, chris queso with

a preview of nvidia earnings, lydia boussour on why she is still constructive on the u.s. consumer. stocks looking to end a four-day losing streak. stephen auth writing the data is far from conclusive. the intermediate term picture remains so promising that we are unlikely to be steered out of our overweight stock position and we have not changed our 7000 year end target on the s&p. good to see you, stephen. i said earlier you have to skate where the puck will be, 12 months out, where will we be a year from now? stephen: that is where we are trying to be focused on. i wrote a piece a week ago, trying to navigate the streets and the sirens, and nobody had ever done it. he put wax in the ears of his sailors and through. that is kind of where we are.

we are hearing the sirens call into the rocks here on all fronts now and we think we are heading into a soft patch. our take from the earnings season, yeah, the beats were great. nvidia tonight will be a beat and raise. everyone knows that. the issue is they will not be able to decrease uncertainty about the out years because of deepseek. in general the take away from earnings was, cfos are saying we cannot give you guidance here. we have too much policy uncertainty, we don't know what the regulations, tariffs, what the taxes will be. there is a slow down on the business side happening now. the consumer is starting to run out of gas. then you have a kind of systemic -- job cuts going on not because of a banking system problem but because of the doge tax cuts.

it can have a more powerful impact than just pure numbers of it. jonathan: we talked about this, that maybe doge's austerity, think of tariffs as a tax hike. i wonder if you think the mix is still progress, progrowth? we are focused on one or two dimensions. is it still pro risk, progrowth? stephen: it is progrowth. that is what we are strapped to here. near term we are heading into a soft path, but intermediate term, a lot of these uncertainties are going to be lifted. we will know the tariff thing, the tax thing will be further along, a lot of the doge activity will be over. they will be a burst of enthusiasm on all those fronts and got us to higher earnings by the end of the year, and next year even higher still. $300 in earnings in 26.

we think 350 in 2027. we are coming into a soft patch here. we have overweight stocks, overweight cash. we have an emerging markets play. those are undervalued markets. we talked in the break about how trump goes global here. he is having a very powerful effect in europe and asia of people wanting to imitate him in terms of deregulation and tax cuts. europe, talk about a dry desert that could use anything. stocks are cheap. lisa: we can talk about the desert in a second, but i wonder about the progrowth impulse, where it will come from later this year. is it going to be from tax cuts, from more efficiencies, will it be from the deals that people said it would get done this year and have been put on hold? stephen: all of the above.

you just made the whole list. that is the power of the thing. the whole program is pretty powerful, and he does seem pretty determined to get it implemented. you asked scott bessent on your show earlier this week, he is a serious guy, and they are marching forward at of these fronts, in an alarmingly, for some people, fast way. it will be a lot clearer. most of it will come through. annmarie: why do you think it will be clearer? when it comes to china, we are just at the beginning stages. stephen: we will get past april. we will see where we are with mexico and canada. our guess is he tries to solve something there first. that is where i would try to make sure i got resolved. china, he thinks we have a very unfair deal with china. everyone else sees that, too.

we were already seeing manufacturing go back to the u.s. that is likely to continue. annmarie: that is a bipartisan issue. you mentioned europe. how much is europe stuck between war and peace, a trade war that could hurt them, a peace deal in ukraine that could help the continent? zielinski is coming on friday. stephen: there could be a peace dividend in europe. we are looking at something much larger than the marshall plan. our estimates are half $1 trillion of costs to rebuild ukraine. that will stimulate a lot of activity. where is all that stuff going to come from? some from the u.s. but a lot from germany, who has been dead in the water. after this election, they are

you are potentially looking at a rereading of european equities. a lot of people have made that argument over the last 10 years. look at the valuation gap between the u.s. and europe. do you really see earnings picking up on the continent anytime soon? do you see good reason for that? stephen: it is a cyclical economy and a financial driven economy, a lot of banks, materials. if there is a peace dividend and you get deregulation, you let them do mergers, cost-cutting, you could see a pickup in europe, absolutely. jonathan: you would have to see a cultural shift. stephen: we are not heavy on europe but we are watching to see that. we are overweight emerging

markets, where they have more levers to pull more quickly. jonathan: what do you like about em? what are the policy levers they can pull? stephen: china, for one, they have more money than god. they have been holding back to stimulate because they are waiting to see what trump does. that will be there counter. you have the cheapest market in the world there, a lot of tech companies there. he is also pulling back the press down on the tech sector. jack ma has resurrected. jonathan: quite the statement. stephen: it means a lot to people in china. there are some good things going on there that are not fully discounted. jonathan: some good things going on in your life as well. new book coming out. stephen: "visions of the divine." you can get it on amazon.

humility at the highs, confidence at the lows. jonathan: looking forward to it. stephen auth of federated hermes. let's get you an update on stories elsewhere this morning with dani burger. dani: president donald trump signed an executive action for the commerce department to explore a levy on copper. senior officials say it's a national security issue, that dumping it overcapacity have left rid products dependent on foreign copper. officials say it is too soon to discuss a potential rate for the tariffs. president donald trump has criticized apple's move to keep dei policies. trump posting that the company should get rid of rules, not make adjustments. apple investors had rejected an outside shareholder proposal to end the diversity, equity, and inclusion efforts. however, tim cook says the company may make some adjustments to its programs.

after 20 seasons, three titles, and six olympic gold medals, wnba superstar diana taurasi has announced her retirement. she joined the league in 2004 as number one draft pick after leading uconn to three straight national titles. jonathan: thank you. next on the program, morning calls, plus you will catch up with chris queso of wolf research. looking ahead to nvidia earnings. this is bloomberg. ♪

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hour, 14 minutes away. equity futures just about positive by zero point 5%. in the bond market, sub 4.30 on 10's. later this afternoon, potentially some executive orders from the president, and then nvidia earnings. hsbc upgrading home depot to a hold, noting positive same-store sales. morgan stanley upgrading intuit to overweight citing building momentum in small business. the stock is up in the premarket by more than 8%. bernstein upgrading alibaba, citing its potential. nvidia earnings do later today, the numbers will be a crucial indicator of where artificial intelligence currently stands. the report comes after the emergence of deepseek caused a shakeup in the outlook for ai

infrastructure. chris caso of wolfe research joins us now. welcome back to the program. walk me through what you were expected to see after the close. chris: for this quarter we are expecting an in-line report, guidance, which is a little bit of a departure of what we come to expect with nvidia with pretty significant beats and raises. we came to this view after being in asia in early december, got some indication of what was happening in the supply chain. they are now ramping our next generation blackwell systems and it is pretty complicated, moving to full systems. it will take some time for that to go. we don't think it has anything to do with demand. what makes us feel good about the year, my we are still positive on the stock, you are seeing the very strong capex pledges announced by most of the cloud providers this year. that money will be spent somewhere, we think a lot of it with nvidia. lisa: his demand still insane?

i know that is tongue-in-cheek, but jensen huang was talking about, you cannot get enough. are there some questions that i might be reflected in earnings, about how long the spending can go on without significant gains? chris: they are good question and that is why the stocks reacted to deepseek. things are growing so fast, and kind of speed bump the road is important. what really gets us is those budgets. what you are seeing at least for this year's there is still a race to be first with the most innovative ai features. you really need nvidia to do that. over time, and this is not for this year and beyond, the question is how much return are you getting on the mass money you are spending?

that has not been answered yet. that will determine budgets in 26, 27. based on the data now, people are still spending. lisa: these game changing developments that people have been looking for in artificial intelligence, chatgpt is grading homework, i can get school results more efficiently. are you seeing any signs of there have been game changing technologies, uses to artificial intelligence that can prolong this in a way that can overwhelm some of the concerns about being more efficient, i.e. deepseek? chris: in many cases, yes. for example, in software, a lot of code is not written by ai as opposed to humans. massive productivity gains. things like drug discovery, things were not able to be opened before. that is why there is another important event coming at the

nvidia developer event, some investor events around then. we think a big portion of that event will be dedicated to showing people what can be done with ai, what can be done with the overall. it helps to answer some of these questions and also to address the concerns that came around deepseek. jonathan: what is this company's exposure to china currently? chris: it's a lot less than what it was. as you know, they were restricted in what they could sell to china in one product. it is much smaller than it had been in the past because they cannot sell everything to china. what they can, a reduced version of the leading edge chip, asp's and that are just lower because of the lower capabilities of the trip. that is why revenues are down.

this came around deepseek as well, for some of those chips coming into china by a backdoor? that is one of those things that is also a concern. some of these loopholes, if they are closed, could that have an effect going forward? right now, china is a very small part of the revenue because of restrictions. jonathan: i want to do a little bit of scenario analysis. you know the name better than i ever will. if this administration did everything it could to make sure that anything that nvidia cells does not go to china, what would it do to this name? chris: the stock would be initially down on that, for sure. right now, the h20, the product they can sell to china, was designed to make the capabilities equal to what china could do locally. the huawei chip. they can do an ai chip, just not

leading edge. the problem is if you would the capabilities of the h20 or you tell nvidia they cannot sell anything into china, you will just drive business to huawei. that doesn't advance anyone's interest either. the way the controls have been set up already, nvidia can ship into china at an equal capability to what china can do on their own, is the right approach. annmarie: how do you view huawei right now in terms of how they mark up their most high tech version, compared to nvidia? chris: orders of magnitude less than what nvidia can do. the reason is because of the export controls on semiconductor equipment that goes into china. huawei cannot use tsmc to produce chips, local suppliers cannot get access to leading edge manufacturing equipment. huawei's semiconductor menu is

kinda frozen in time on an older node. they are doing their best to keep up with, a lot of restrictions that make it difficult to do so, and those export control restrictions have been very effective in reducing their capability to keep up. jonathan: appreciate your time. looking forward to results later. chris caso on nvidia. based on what we have heard from their customers, their earnings, they will still spend a lot of money in the years to come. lisa: is it enough to spend a lot of money this year and next year, or are investor looking at the longer-term plan, how much they need to be building out for some of the infrastructure that people have promised for machine learning? jonathan: getting some comments from the ukrainian president on the national resource deal with the united states. says he has received an invite from the united states to visit but needs more time to examine the u.s. deal draft, going out

to meet with european leaders in london. annmarie: sounds like he is going on a world tour, the most important, that office meeting with president trump. interesting that he says he needs to examine the deal. reports on that they have potentially signed up on this. he is expected to be in washington on friday. jonathan: sec. bessent told us last week that they were essentially upset about the way that he behaved in munich. thinking the deal is done, and now hearing from ukrainian president, maybe it is not. annmarie: i would say a lot of what you are seeing in the press is negotiations. i am sure, following these headlines, we will have a truth social today or in the cabinet meeting when president trump convenes, we will hear potentially more about this. lisa: i think it's interesting that he is going to london first, trying to figure out what

the europeans are willing to give before finding out what their negotiating position is in the united states. jonathan: i have no idea, we will see. annmarie: london would make sense because emmanuel macron was just here. unclear on the order but the most important meeting will certainly be the one in washington. jonathan: we will catch up with lydia boussour of ey, and meghan robson of bnp paribas. an important day for financial markets worldwide. nvidia earnings after the close. ♪

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jonathan: the opening bell, 60 minutes away, near session highs on the s&p. bigger gain on the nasdaq. nasdaq 100 up by 0.8%. let's get an update on some morning movers. here is yahaira jacquez. yahaira: t.j. maxx shares are getting a boost, up 3.4%. it had a solid holiday quarter but it gave a cautious outlook, both in the current quarter and also for the current fiscal year. shares are up potentially because i'm a like gm, it will

raise its dividend and announced a new share buyback program. workday shares are up 10% after the hr software company beat on both the top and bottom lines. analysts at evercore isi say the results reflect what they were hoping to see, solid outlook on subscriptions and a tick up in operating margins. they say workday remains one of their top rebound ideas. last, we have the popular lunch group cava, beating on both the top and bottom lines. analysts said they capped off a stellar year for the company but did note the proper guidance was a little shy from what they were expecting. jonathan: appreciate the update. investor looking ahead to jobless claims tomorrow morning and pce data on friday after consumer confidence fell last month by the most since 2021.

michael mckee, policy correspondent joins us now for more. what is next for the conversation? mike: it is interesting, there is a discussion underway on blue sky about how people will take nvidia today. will it be something just about nvidia or does it fit into a vibe about the overall economy being in the doldrums these days? we look at the confidence numbers, consumer confidence fell by almost seven points, the biggest since 2021, and the expectations index six months from now goes below 80. that is usually a signal that there is a possibility of recession ahead. how close are we to that? that is the question we are looking to answer in the data that comes out over the next week. getting to the end of january data. that would will be february which is reflecting what has happened since donald trump came into office. we will see next week with

payrolls, that will be a big one, and ism, what is manufacturing doing. before we get there, pce numbers on friday. people will want to know if people are spending. the forecast was that spending dropped a lot in the month of january. some indications from tjx, home depot yesterday that people are still spending. are they? that will be a key factor for the feelings. the good news, we are supposed to see a decrease in inflation in pce, and if the fed can cut rates again, that might turn the markets around. jonathan: things are changing quickly, appreciate the update. there is no blue sky over on blue sky. very dark place when it comes to the economy. annmarie: i have not merged over there either. jonathan: it is darker than bramo's outlook for markets. lydia boussour says the consumer

looks fundamentally healthy but we expect spend momentum will cool further. lydia, welcome to the program. we are getting a lot of noise so to speak. we had umich, conference board, confidence not great. we see it in retail sales, outlooks from several retailers. where do you get the signal from? lydia: good morning. yes, we get a lot of noise in the data and that typically happens at the beginning of the year looking at retail sales numbers which were quite weak as well. but there are some signs that the consumer is downshifting from that strong momentum we have seen at the end of last year. we look at the soft data, consumer survey data as an indication of where things are heading. i think it's important to also keep in mind how consumers are feeling is not necessarily a gauge of what they are doing and how they are spending.

when we look at the consumer fundamentals, the labor market is cooling, we see a slowdown in real disposable income growth which is key in terms of spending trends. that means more moderation in spending ahead. of course, we have some risk on the horizon, policy uncertainty, and that can lead consumers to adopt a wait and see approach. lisa: i keep on thinking about what neil dutta was singing, this was the trajectory for a while, didn't have to do with the tariff fears and other headline risk that people were talking about. do you agree with that, this was just the trajectory of the economy that a lot of people were looking past last year? lydia: i do. when you look at the labor market, the pillar of strength for the economy, it's fun on a cooling trend the past two years. the economy has been moderating but quite robust when you look at overall gdp growth, the economy has been outperforming

its peers across advanced economies. but we see some moderation. when we look at the consumer on aggregate, spending continues to move forward at a solid pace. but we still have high interest rates, elevated prices. that is putting downward pressure on consumers' willingness to spend, especially in the lower income brackets, feeling a pinch from these elevated interest rates. lisa: sometimes consumer sentiment doesn't match consumer spending. sometimes what they say and what they do are two different things. the usefulness of these consumer sentiment surveys that right now are what song the markets, as we saw yesterday? lydia: i think they are complementary. we look at the soft data to get a sense of what business sentiment is, how consumers are feeling, how they are reading the economy backdrop.

consumer confidence data has an important gauge on the labor market, labor market differential which is a gauge of how they are seeing opportunities. we do get some good indication of how things are in the economy when we think about consumer sentiment, we have inflation expectations, which are an important gauge that the fed is also looking at. it has been moving up, so it tells you that consumers are looking at these tariffs, thinking about the potential inflationary impact. the soft data is important but the totality of the data is what we are looking at for the fundamentals for the economy. annmarie: one thing that stood out to me was the share of consumers planning to take a vacation in the next six months the clotting to the lowest level since 2021. do you think service inflation could conduct quicker than others we are expecting? lydia: when we look at the

inflation picture, our view has always been that this economic environment we have been in, this cooling trend we have seen in the economy is this inflationary. consumer demand has been moderating, pricing power has also decreased from a year ago. when we look at housing inflation, it has also come down. when we look at services inflation overall, it has been on that moderating trend. looking ahead to the next few quarters, we expect the economy to ease back to that 2% trend pace. that means inflation should remain on the moderating trend, at least in the near term. as you have been talking about, we have tariffs that are looming, will have an impact on inflation. inflation is likely to remain somewhat sticky on the back of these tariffs. but looking at the economy, the fundamentals are still

disinflationary. it is just that we have that side risk to the inflation picture, stickiness we have seen in recent months that are really leading the fed to be on the sidelines for the moment. jonathan: they might be brought back in before they know it. thank you, lydia boussour. this administration is moving so quickly, everyone else's hitting pause. we heard that from bank of america, bmo as well. the bmo ceo saying that clients are hitting the pause button on the commercial activity. the head of global markets at bank of america, listener of this program. people are waiting to get more information to make further adjustments to their portfolios. a lot of people are hitting pause. and the consumer to some extent is, as well. lisa: which is why there has been some modicum of caution by these executives. where they are not pushing pause is at work. i wonder how much vacation time will suffer given that things

are moving quickly and everyone is trying to keep track of them, not miss anything. i wonder what the head of marriott thinks, some of us hitting the pause button on those plants. annmarie: i would like to take some time off but seems impossible with this administration. it is not just the high end individuals invested in portfolios, the ceo of lee and wrangler jeans saying this is a consumer that is confused. they don't know if they are should go out and spend. they are also worried about their job perspectives. that begins to change the conversation more. jonathan: meghan robson of bnp paribas joins us now. some nervousness in equities. several percentage points away from all-time highs. are you seeing any concern in credit spreads? meghan: in aggregate, no concerns in credit. we have been extremely range bound since the election, within

five or seven basis points with u.s. ig. the key drivers despite all the headlines we have seen, you still have, one, very strong picture, yield buyers are in the market, preventing the supply from rising too much, and fundamentals are still solid. fourth, double-digit earnings growth for ig issuers. investors for now are focusing on those two features rather than tariffs. jonathan: let's talk about fundamentals. what is the greatest threat to fundamentals at the moment? meghan: we think a drop in earnings. in order to see high-yield interest get to a problematic level which we think is around 3.5 times, it doesn't take just higher rates, you need that drop in ebit. up 10% or so. the combination would be the perfect storm of having higher rates and also a drop in earnings but we think the growth slowed down is a bigger threat for credit than elevated rates.

lisa: i thought your point was interesting that rates were high enough that you wouldn't see the supply stock that could potentially send yields or spreads higher. i wonder about the demand side, whether you see potential buyers from japan wall off the map because yields are rising there. interesting divides reversing the trend that have been in place for many years. has that started to ebb, the foreign demand? meghan: foreign demand is a risk this year as you continue to see the front end of the u.s. rates curve elevated. hedging costs, those japanese investors are still quite high. jgb's are rising. that trade off between u.s. ig and local japan bonds is shifting a bit in favor of japan, but for now, we have not seen selling of u.s. ig. it is a risk to watch but not a trend taking hold. lisa: one thing we've been

talking about all morning is sequencing of policy, talking about tariffs, some of the potential cuts to government later this year. people expecting maybe the reprisal of those deals put on hold, that may come back to the four. do you think that could introduce a lot of supply, if there are mergers and acquisitions getting done, will that be funded through the credit market? meghan: it could be. one interesting point in your discussion earlier about the negative sentiment, credit markets are not pricing in the risk of this, but you are seeing uncertainty play out in some areas. id supply in february, this could be the first month where we are below consensus expectations. what is really interesting, following the election, you saw this boost in optimism, you thought you would see animal spirits, tons of m&a, and that has not happened yet. treasurers and ceos are holding back on that activity. should we see more certainty

later in the year, that could pick up, but for now something we have not seen so far. annmarie: people wanting certainty when it comes to tariffs, the president this morning just saying just let them happen when it comes to the auto sector. what industry do you think will be the most vulnerable? meghan: we think it will be a sector story. our base case is 40% on china, 5% the rest of the world. those would be implemented gradually. in aggregate, we think that is manageable for credit but certain sectors really stand out. in u.s. ig, we think autos are very vulnerable. very intertwined with canada and mexico. in the high-yield market, building products. think about tariffs on things like steel. it could be a tremendous challenge not in the price at the moment. jonathan: can we continue on autos? i would you feel if an auto company came out and sanctioned

a big buyback on the equity side? meghan: definitely not my area of expertise. jonathan: someone nervous about investing in auto credit, would that make you more nervous? meghan: if we see re-leveraging, people increasing their balance sheet in a way that is concerning, it just as to the list of worries for the auto sector. jonathan: not trying to get you in trouble. gm earlier this morning -- lisa: you said the name. jonathan: coming out with a $6 billion buyback. the stock was up 3% the last time i looked in premarket trading. lisa: your question is a good one, longer-term, how will this be perceived by investors one potentially a stockpile of cash might be useful? historically an active time for share buybacks, companies getting rewarded, but it leaves questions about vulnerabilities. jonathan: they believe in the

plan and the outlook. down about 20% from last year. they want to buy the stock where it is. lisa: maybe they don't believe the mexico and canada tariffs will not go on. jonathan: i don't think many believe those tears will go on based on the conversation we are having. specifically sicko and canada of 25%. annmarie: you have to remember that usmca is up for negotiation at the start of next year. that is why everyone thinks this is the start of a process for conversations on a trade deal that trump himself signed off on . jonathan: those tariffs set to go into place next week. let's get your bloomberg green brief with dani burger. dani: president trump says he is starting a new path to citizenship. the u.s. will sell gold cards for $5 million to foreigners who create jobs. he says the plan would launch into weeks and he doesn't think it needs approval from congress.

bank of america is rolling back workplace representation, diversity references, adding things like talent and opportunity. it cited new laws, court decisions, and trump executive orders. just one of the latest wall street firms to cut back on dei initiatives. more trouble for airlines. a southwest airlines plane nearly avoided a collision at a chicago airport, as a smaller jet crossed the runway on tuesday. and a united airlines flight carry more than 200 people was forced to make an emergency landing due to mechanical problems in new jersey. that is your bloomberg brief. jonathan: thank you. we will set you up for the day ahead, go through the day ahead, look at the latest from nvidia from washington, d.c. you are watching bloomberg tv. ♪

jonathan: 40 minutes away from the cash open. equity futures positive by 0.4%. we are on a four-day slide, let's see if we can snap that. today, president trump signing executive orders at 3:00 eastern time, and then nvidia earnings after the closing bell. thursday morning, another round of jobless claims, u.s. gdp, durable goods. u.k. prime minister keir starmer visiting the white house. friday, but core pce. let's go down to the nation's capital to catch up with tyler kendall. what is on the agenda? tyler: 11:00 eastern, president trump will convene his cabinet for their first meeting and caroline levitt confirms elon musk will be in attendance. she did deny some reports that some of these officials were caught flat-footed after the department of government

efficiency put out that email over the weekend asking federal employees what they did last week. she gave us some detail, said one million workers had already replied to the request, about 40% of the federal workforce. what happens to the rest of those workers will no doubt be a topic of discussion at the meeting today. while this cabinet level meeting typically includes those 15 cabinet level officials, it is not unusual that a special advisor would be there. we also expect chief of staff susie wiles to be in attendance as well. annmarie: when it comes to this ukraine minerals deal, the president expected to be in washington on friday, caroline levitt saying the deals will be signed this week. load mayor zielinski says they are still mulling it over. what is going on right now when it comes to this relationship and is deal in particular? tyler: we know negotiations are still coming. bloomberg reporting saying that ukraine really looked at this original framework as the first

step. we know something they are looking for is more concrete security guarantees. it pictures forward to tomorrow where we expect u.k. prime minister to also come to the white house, considering we know that europe would also like to see some sort of guarantees from the u.s. as they put forward their own plan, framework when it comes to european peacekeepers on the ground. still a lot of different negotiations happening here as these two sides try to come together on a deal. annmarie: how challenging has it been for some members of congress, particularly republicans who were so staunchly backing ukraine, really calling putin and aggressor, now dealing with a trump administration that wants to push putin to the negotiating table? tyler: you are exactly right. when we have seen some of these more defense policy hocks criticizing this, they are not necessarily criticizing the white house but vladimir putin. we are seeing them walk this

careful tight rope here. we have to remember that ukraine eight has long divided the house conference here on capitol hill. this past year, spearheaded by then senator jd vance, who is one of the staunchest opponents to supplemental security assistance to ukraine. jonathan: i appreciate the update, tyler kendall in washington, d.c. this market very focused on the economic data at the moment. umich to consumer confidence sentiment. those data points typically don't move the bond market around the way that it has been. in friday's session and then again yesterday. jobless claims, really important. are we seeing any weakness there? so far it's been pretty decent still. lisa: the noise will be parsing through which counties got particularly hit by the layoffs. the signal is if there was material creep upward in the unemployment claims as well as ongoing claims being paid out.

if that is the case, it fits the narrative to well for people to ignore it and probably will have a pretty significant effect. annmarie: i still think about the average of last year per month, north of 35,000 individuals added once a month on friday because of the federal workforce. interesting what virginia is doing. the governor coming out with a portal to say here are the private-sector jobs, if you lose your job in the federal government because of doge, you can apply for. jonathan: payrolls just around the corner, getting more important. lisa: people are seeing consumer confidence going down. that is what caught people's attention yesterday, and we heard that earlier, the people who believe they could get a jump versus not went down significantly based on previous responses. you put this all together and it goes to weakening but not week, softening but not soft. what inning of this baseball game are we in? jonathan: cooling but not cool.

we can go on and on. we are against the clock. jobless claims tomorrow morning, 8:30 eastern time. looking out for more executive orders from the president of the united states. after the close, the big earnings report, nvidia. look out for that. the team will run you through the close later this afternoon. coming up tomorrow, catching up with christopher verrone, lauren saidel-baker. lisa: not only payrolls and jobless claims, nvidia. are we going to come in tomorrow and say, hold on, everything is over because nvidia came out and didn't raise earnings? jonathan: they always beat and raise. lisa: what if it is not? jonathan: look out for that after the close. from new york city, thank you for choosing bloomberg tv.

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katie: it is finally here. nvidia earnings coming up after the bell. 30 minutes into the start of trading. i am katie greifeld. sonali: i am sonali basak. bloomberg open interest starts right now. ♪ katie: after four days of declines stocks face of critical earnings test. will nvidia reclaim its aura of invincibility? in