>> welcome to bloomberg markets. let's check on markets right now. the s&p 500 really wavering as more economic data coming in below analyst expectations. this time it is ism manufacturing. yields moving up just a hair for the two-year. of course it was wavering around those levels last week. the dollar is lowballer -- is lower, based on expected tariffs

to mexico and canada due to take effect tomorrow. keeping an eye on european stocks, the stoxx 600 climbed to a record high and is now up 11% on the year, outperforming the s&p 500 and the nasdaq. a lot of movement behind defense stocks as europe plans to boost defense spending. let's get back to the economic data because the reading on the ism manufacturing survey was only slightly disappointing that the devil is in the details. look at the prices paid part, that rose more than expected, the highest since june of 2022. unemployment -- here to break down why markets are impressed with these numbers is stuart paul with bloomberg economics. stuart, when you have a contraction in new orders and an increase in prices paid, that has whiffs of stagflation.

stuart: that's right. about employment, you are right, the employment index contracted. manufacturing employment in january helped boost payrolls. on friday we are getting our february payrolls and this is an indicator that we should start revising down estimates of what february nonfarm payrolls are going to look like and as you mentioned, the prices paid index reach the highest levels since june 2022. that is when headline cpi inflation was peaking so we do have these pipeline price pressures that are mounting. if the labor market is cooling, if consumer spending is cooling, are producers going to be able to pass along those higher input prices to their customers? with demand starting to cool, it's going to be difficult for producers to pass along those price increases. scarlet: the thing we have to keep in mind is that there are a lot of different ways of looking at manufacturing and s&p global came out with a manufacturing

survey which showed expansion, an increase to 52.7. how do you square that with what ism and you factoring told us? stuart: different surveys speak to different customers. the s&p index showed new orders and output increasing. we saw the exact opposite in ism. we should rope in things like the regional fed surveys. they look a lot more like the ism index than the s&p index. industrial production tends to move closer to the ism index. if i'm going to be indexing on one of them, i'm going to focus on today's ism numbers. as you mention, still a touch in expansionary territory but the details of today's report were pretty dismal. scarlet: whenever we talk about manufacturing surveys, they are soft data points. they kind of need to be confirmed by hard data later. wind we get the actual hard data? stuart: the next couple of

months we will start to see the hard data, things like industrial out but, things like gdp, fixed investment, durable goods orders, start showing what we are seeing in the survey data. it will take just a little bit of time. before we get to that point, there are still a lot of factors getting incorporated into the data so there are a lot of factors at play, things like tariffs, hoarding in advance of tariffs being implemented. all of those will have ripple effects. the hoarding of imports is going to end up weighing on gdp. it's going to be difficult to get a full read from the harder data, so we will keep in mind what we are seeing in soft data which was some weakness. scarlet: it contribute to the citi economic index falling. we appreciate you joining us and giving us a heads up on what to look for in the jobs report on friday. let's highlight a couple of individual equity movers. let's bring in isabelle lee.

isabelle: paring back some of those session highs but this comes after the company moves closer to a sale of versace to product for as much as $1.6 billion. a potential acquisition of for sachi would allow product to create a larger italian player to compete with luxury groups. next up we have tsmc shares under pressure by about 2% after the company announced plans to invest $100 billion in chip plants in the u.s. over the next four years. this is a move that president trump is set to announce at the white house later today. they would help close -- help bolster trump's pledge to make the u.s. a dominant space in the ai space. this comes after piper sandler cut their title -- cut -- from $34 but they maintain an overweight rating, so the new price target implies around 100% increase from the last and it is

a good day for crypto stocks because they are rallying after president trump once again talked up his plans to have a strategic crypto reserve. scarlet: thank you so much isabelle lee. let's move on to our next guest. we are going to talk about crypto because when it comes down to it, you look at those crypto stocks and they are moving on news of a possible u.s. strategic -- strategic crypto reserve. the news on sunday lifted the sector before giving way to skepticism. investors are questioning the merits and those picked by the administration. you can find the skeptics all over social media. tyler winklevoss tote -- posting i have nothing against sol or ada but i do not think they are suitable for a strategic reserve. only one digital asset meets the bar and that digital asset is bitcoin. another example was from michael bentley who said in part, strong chance that this is abandoned

when it becomes apparent u.s. taxpayers are just exit liquidity. awful policy, massive fumble. let's bring in zeke fox, the offer -- author of number go up. always good to speak with you let's step back because what is the rush behind a strategic crypto reserve to begin with, before we even branch out from bitcoin to the others? zeke: this plan does not make a lot of sense. it was a policy that was pushed by bitcoin or's -- bitcoiners who promote this is an idea that bitcoin is like digital gold and therefore the price is going to go up a lot and the u.s. should get in early before other countries by up all the bitcoin. this was a far-fetched idea. the only country that had pursued it was el salvador, but last year, at the bitcoin conference in nashville, then candidate donald trump gave this big speech where he announced he

was supporting a lot of the industry priorities including this going reserve. scarlet: so a bitcoin reserve is one thing but he is now adding these other coins ike xrp, sol and ada. is that something people in the industry want? zeke: the uproar about this just illustrates why the original plan and this plan are such a huge conflict of interest. the plan of a reserve basically means spending u.s. government taxpayer money to buy up cryptocurrencies. if you already have the cryptocurrencies, that's good for you because that will make your investments go up. these guys who are complaining, they probably have bitcoin that they don't have that much of the other cryptocurrencies. scarlet: so it goes back to the name of your book. there is going to be a big crypto summit coming up, hosted by david sacks, the new crypto czar. what are you anticipating from that event? what should we be looking ahead

to? zeke: people are being kind of polite about their reaction to this plan because they want to keep trump on board but behind the scenes, i'm sure people are up in arms and there is going to be all kinds of infighting between these players about what gets in the reserve. the crypto czar said that he sold his crypto positions but in the past he was a big investor in sol. is that why it might be in the reserve? we don't know. eric trump has promoted if your he him as a investment on twitter. it raises so many questions. scarlet: and the president launched his own mean coin. is that going to be part of the reserve? zeke: he didn't mention it but you never know. scarlet: good point. these are all things that are openly questioned at the moment. when is that summit again? zeke: it is on the seventh, at the white house. we don't know exactly who was invited yet but that'll be a

first sign. scarlet: zeke fox, thank you so much. bloomberg news reporter and also the author of number go up. a reminder that bloomberg crypto is on thursday, this week and we will focus on that crypto summit in washington. coming up, we turn to a busy week for u.s. retail earnings. target expected to report before the open tomorrow. this is bloomberg. ♪

scarlet: this is bloomberg markets. it is time for the stock of the hour. target is scheduled to report quarterly results tomorrow morning. investors awaiting guidance on

how much target anticipates tariff uncertainty and inflation to affect spending. -- with a hold rating on target. we know that target raised their guidance for quarterly comp sales in mid-january because of a pretty good holiday season. how much of a surprise are we likely to get when they do report results? daniella: good afternoon and thank you so much for having me on. we have seen some positive surprises from the retailers in the latest earnings report. we saw that from walmart, home depot, lowe's. all of them, including walmart provided very conservative guidance for 2025. either they are seeing some

consumer softness, still ongoing, or they really want to start from a low base and build up from that which is what we saw from target last year. scarlet: so under promise and over deliver. we know target has been looking to boost sluggish sales by increasing its assortment. what is your understanding of how well this strategy is working? daniella: they lowered the price on 5000 skus back in may, but they felt the may -- the need to do an additional 2000 skus in october. this back to growth strategy is what the turnaround of target is built on. it is important to get the top line momentum back, because target customers continue to feel the pinch on their budgets.

and that, everyone has been saying, we heard from walmart, home depot and lowe's, last week that they have pulled back on discretionary spending. but things look a little bit better, as all of these retailers i mentioned, positively surprised on the sales front. scarlet: i know that you mentioned walmart a couple of times projecting slower 2025 net sales because of that uncertainty over geopolitics, tariffs and consumer behavior. another thing that target has in its back pocket is its marketplace business. what do we know about that? this is an area that could be a growth driver that could boost sales and advertising. daniella: absolutely. that is one of target's -- they have a very good strategy online.

it is probably the retailer with the most penetration of online sales of the group that we follow, the 10 names we follow. yes, they can positively surprise on that front, and like you said, they also reignited and relaunched target circle, which is a good source of ad revenue for them. scarlet: i mentioned you have a hold rating on the stock. what is your biggest worry when it comes to target? is it profitability because foot traffic seems to have decelerated and we know that price cuts and increased assortment do not necessarily boost profits. daniella: that is a very good point that you brought up, because target has very large

exposure to discretionary spending, or discretionary categories. those are the areas where consumers have pulled back. in addition to the fourth quarter, which they already guided to flat sales, they also cut the four-year profit outlook. i think the market, rather than the results itself because that is a bit of backward looking, i think the market will look for the guidance for 2025, to see if target joins the rest of the pack in terms of conservative guidance or if they feel that their strategy is working, so that they can raise the guidance. let's see what the guidance will look like tomorrow. scarlet: all about the guidance as with all of the other retailers like walmart. thank you so much.

that company reports earnings tomorrow morning before the bell. coming up, it is the mark of a new era. the friday clash between president trump and ukrainian president zelenskyy had allies in europe reacting over the weekend. and now zelenskyy says he is open to meeting trump again, but only if it is for a quote, serious talk. this is bloomberg. ♪

scarlet: this is bloomberg markets. let's rewind back to friday. we all witnessed the historic moment, president trump and vice president vance and ukrainian president zelenskyy, all meeting in the oval office. their conversation devolved into a shouting match. zelenskyy and his team were

ultimately asked to depart the white house and a deal over natural resources in ukraine was never signed. over the weekend the fallout reverberated across the globe with many in europe taking note. u.s. posture in the region has changed. european leaders held a summit in london where they reaffirmed their commitment to support ukraine militarily. >> we are at a crossroads in history. this is not a moment for talk, it is a time to act, a time to step up and lead and unite around a new plan for a just and enduring peace. scarlet: for more on what this means for the u.s., europe and ukraine, let's bring in angela stud, senior advisor at the center for eurasian, russian and east european relations. thank you so much for joining us. how would you grade the european summit? how well did they do in terms of

coming to something concrete that they can move forward on? angela: they tried their best. not all of the european countries were represented but the ones that were agreed to support ukraine financially, to continue to support it militarily to the extent that they can, and to try and help enforce a peace treaty if there is one, to provide their own security guarantees to ukraine because the trump administration has said that they are not willing to do that. in that sense it was very important to show solidarity with ukraine after what happened in the oval office on friday and that they weren't going to make huge concessions to russia. i think the problem here is how does this go forward because the negotiations between the united states and russia, the europeans and the ukrainians are still excluded and it's not clear how much the trump administration will take their interests into account.

scarlet: you said something critical, which is to the extent that they can. european leaders agreed to support ukraine. what is the extent that voters will bear? angela: european voters are also concerned about what is happening in their own domestic economies. in terms of financial assistance, some more has been promised but that is an issue domestically. don't forget that $300 billion of russian frozen assets which the europeans could use to support ukraine, but they have not agreed on whether they are going to do that and certainly the french president has been willing to do that. that is a limitation on what they can do financially and in terms of weapons, they just don't have the stockpile of weapons, all the advanced weaponry that the u.s. has, so that limits what they can do. scarlet: this feels like it is keir starmer's moment in his effort to lead because a crone will be out of office soon,

germany's government has yet to form a coalition. all eyes are on starmer to see what he can do. angela: and he has certainly taken the lead. he came to washington and met with president trump just before zelenskyy came. it looked like they had a good meeting. he gave the invitation to president trump from king charles to have a state visit to england and i just saw secretary rubio has said he had a conversation with prime minister starmer and the foreign minister of england and that they agreed to coordinate to work together. that is a somewhat positive sign from the u.s.. scarlet: so what happens next, particularly when it comes to russia? the u.s. wants to negotiate some kind of end to the war, and at this point it doesn't look like it includes ukraine. how is vladimir putin looking at the developments of friday? angela: the russians can't

believe their luck when they saw what happened on friday. as they themselves said, the u.s. looks as if it sees things our way. what vladimir putin is interested in is normalizing relations with the u.s., getting sanctions lifted, getting u.s. investment in russia, all of the things that president trump has talked about. he is not interested in a cease-fire unless the ukrainians agree essentially to russian terms and they surrender. i think what you're going to see is there will be the start of negotiations but they could drag on for a long time but the russians will be trying to get the u.s. to lift the sanctions, to normalize relations and and the isolation from the west. scarlet: really appreciate you joining us. angela stent with the brookings institution. a special edition of balance of power tomorrow night ahead of president trump's aggress to congress. that comes in for bloomberg -- that does it for bloomberg markets. balance of coming up next. this is bloomberg.

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>> from the world of politics to the world of business, this is balance of power.

live from washington, d.c. joe: president trump says president zelenskyy does not want there to be peace. welcome to the fastest show in politics as the rhetoric over ukraine continues to heat up after friday's meltdown in the oval office. joe mathieu alongside kailey leinz. donald trump is not reacting well to some comments that president zelenskyy made about an end to the war, he said quote, is very far away. kailey: saloons key making that statement yesterday after meeting with european leaders in the u.k. following that trip to washington at the end of last week and that quote, very far away does not sit well with president trump who said this is the worst statement that could have been made by zelenskyy and america will not put up that for much longer. perhaps zelenskyy paying attention to that response he