tom: this is bloomberg daybreak: europe. these are the stories that site your agenda. tariff turbulence ahead. president trump doubles down on

his trade policy but admits tariffs will cause disruption. the u.s. commerce secretary hits -- handset relief from mexico and canada. >> the tariffs will go on agricultural products coming into america and our farmers starting on april 2, it may be a little bit of an adjustment. tom: germany vowing to do whatever it takes to defend the country. plus, china pledges to support domestic demand in the face of u.s. tariffs, setting a bullish target for growth and lifting borrowing to the highest level in more than 30 years.

happy wednesday. a huge day for the markets with the commerce secretary in the u.s. suggesting that there's relief in the pipeline, potentially as today for mexico and canada. does that signal that the trump is back in play after two days of losses, the longest, the most pronounced drop we've seen in u.s. stocks since december. the s&p 500 back below levels prior to president trump winning that election. european futures pointing to solid gains. largely on the commentary from the commerce secretary but also this momentous decision for germany to scrap its debt break to fund defense and infrastructure. 2% drop across european stocks yesterday. today, very different picture. looking to gain 2%. up 1.8%. ftse 100 futures pointing to gains of seven tents of 1%. s&p futures looking to add 37 points. mastec 100 futures pointing to

gains of seven tents of 1%. let's have a look cross asset. the focus on the benchmark 10 year. expectations building that the fed will have to cut more than some had expected. mohamed el-erian expecting -- expressing that the odds of a recession have moved up from 10% to 30%. the two-year, tenure yielding. euro-dollar surging yesterday on this decision by germany. currently at 106. going saying that the euro could test 110. strength being flared by some strategists out there now on the fiscal stimulus out of germany. you are looking at a selloff again. yields expected to be higher once again in german sovereign debt on excitations of greater issuance. brent down three tents of 1%. now tariffs are making america rich again. quoting from president donald trump. defending his use of tariffs and a primetime presidential address to a joint session of congress. trump warned of a little

disturbance from the levees after his tariffs against the largest trading partners sent markets swinging. >> you don't make your product in america. under the trump administration, you will pay a tariff. in some cases, a rather large one. countless other nations charge us tremendously higher tariffs than we charge them. april 2, reciprocal tariffs kick in. tariffs will go on agricultural products coming into america. our farmers starting on april 2. it may be a little bit of an adjustment. i will also impose a 25% tariff on form -- foreign aluminum, copper steel. tariffs are about making america great again and it's happening and it will happen rather quickly. there will be a little disturbance. we are ok with that.

tom: let's bring in bill for reaction. trump apparently doubling down on his tariff threats. he mentioned european union as well. the eu is next in line. yet his commerce secretary suggesting that mexico and canada tariffs could be backed in some form as soon as today. bill: yeah. that was a very interesting development with less than a day of those new tariffs being in effect. you had the commerce secretary saying, maybe we can start rolling them back. i've been on the phone with officials from mexico and canada and they are doing a lot to try to meet our demands. if you were looking for some clarity on what that mentor the timing, you didn't get it. what you did here is a doubling down on his view that tariffs are a very effective tool for bringing in revenue for the united states and getting manufacturing and production moved into the u.s..

even bragging about the upcoming tariff schedule. i don't think it's clear at all that there's any tariff relief coming. we've been pushing the white house for more details on the commerce secretary's comments. we will have to wait to see what plays out. obviously there has been a strong market reaction. president trump is known as someone who watches the markets. maybe the pain point hasn't been reached yet. maybe they do have a more formal schedule in the works that we just don't know about yet. we will have to wait and see. tom: we will see what that pain point is when it comes to the equity market reaction to these tariffs. on the geopolitics and the focus on the war in ukraine, president trump speaking about his efforts to end that conflict. he said he's received a letter from president zelenskyy saying he's ready to negotiate and sign a deal on natural resources. let's take a listen. >> is time to stop this madness. it's time to halt the killing.

it's time to end the senseless war. if you want to end wars, you have to talk to both sides. tom: are we now moving closer to a deal on minerals with ukraine and a deal that can get us closer to the cease-fire? bill: it certainly sounds like it when it comes to that mineral steel. of course that all blew up last friday in the oval office. the real incentive behind the deal was to keep ukraine if not at the negotiating table at least somewhat close to the negotiating table as the u.s. and russia primarily seem to move forward on trying to end the war. without that deal, it seems like there's almost no way the trump administration will keep ukraine or even potentially europe really informed of what's going on or take their views into account. i think in terms of ukraine, this is probably in its best interest to find a way to narrow the rift that erupted last

friday. it does signal that this acceleration in p stocks between the u.s. and russia will continue. tom: president zelenskyy without social media post yesterday, saying he regrets what unfolded in the oval office and does not want to see a prolonged conflict. bill faries, thank you very much indeed for the latest. president trump speaking in the last hour or so. u.s. commerce secretary howard lutnick has reiterated that president trump may offer tariff relief to canada and mexico, potentially as soon as today. he discounted the notion that the levees would be rolled back. he spoke to fox news ahead of the address. >> now both the mexicans and the canadians were on the phone with me all day today trying to show that they will do better and the president is listening because you know he's very fair and very reasonable. i think he's going to work something out. it won't be a pause. none of that pause stuff. i think is going to figure out,

you do more and i will meet you in the middle somewhere and we will be announcing that tomorrow. tom: for the market reaction, let's bring in valerie tytel. what a day for these markets. what's the reaction so far? valerie: that's confirming the market suspicion that these tariffs might not be implemented for very long. there's a deal in the cards. we saw the canadian dollar actually strengthen on the day after those comments. so did the mexican peso. we await more details from the treasury secretary and from the trade secretary howard lutnick on just what deal is announced. it's also helping the equity market turnaround from its slide yesterday. the equity market was down some 2% before these comments. we did bounce strongly into the close. some attention on a large treasury block trade, one of the largest ever. look like a rotation from treasuries into stocks. that also helping risk on sentiment in the overnight session in asia. we also have our eye on european

assets after the late announcement from the german government that they intend to spend $500 billion on defense. euro-dollar sustained a break of 105 finally and it did it in style, trading above 106. it broke above the 100 day moving average and sustained the rank of 105 finally. keep your eye on german yields. especially in the long end. bustle futures really collapse in late trade yesterday. pointing to a near 10 basis point rise on the open. just how much demand will there be for this extra issuance coming from the german government to fund this defense spending? keep an eye on how the cash bonds open in just over an hour. tom: remarkable day for the euro. deutsche bank analyst saying it's the biggest change to fiscal in germany since reunification. the market reaction to what's transpiring in germany on the physical impulse around defensive infrastructure and the reaction to what we've been hearing around tariffs from the

commerce secretary. let's cross over to asia. some upside, green on the screen. is this a tariff story or a china growth story? >> i think it's a bit of both. as you heard, trump wrapping up his speech. it was interesting to see how the region benchmark extended gains. shrugging off the tariff risk for now. they are running on hope. ahead of that, the chinese mpc. we know what their economic goals are. there's going -- the stimulus approach is going to get them there. they had a record in terms of their budget deficit target. there will be special government bond issuance is as well. there's a focus on some of these tech sectors including ai. along with ev's spurring growth. overall, very positive for stock markets. the hang seng hit the highest level in about a week. doubling down as well. if you take a look at some of the special mentions that we heard in the speech, it also

included robotics, computing, chipmaking stocks. those are the ones that are doing well today. special bonds as well for the big banks. these are the lenders that have been doing heavy lifting in china the past couple years. their margins have been coming under pressure. some fleshing out of the recapitalization plans. also leading gains in china. tom: the stock market reaction, individual names on the move on the back of that report. the details coming out of beijing. we will stay on that story and get the details in terms of what has been announced more broadly. china setting its economic growth goal at about 5% for 20 to any five amid the opening salvo of that trade war with the u.s.. the premier announcing the target at the meeting of the national people's congress. one day after president trump doubled tariffs on china. >> the target of gdp growth of

5% takes into account the need to stabilize employment, prevent risks, and include people's well-being as well as the potential for growth and condition supporting growth. so it underscores our resolve to meet difficulties head on and strive hard to deliver. tom: ok. for more, let's bring in bloomberg's chief north asia correspondent who is on the ground for us in beijing. this is not your first rodeo when it comes to the mpc and the work report. is this 5% gdp growth figure achievable? >> yeah. that's the big question. obviously it's a very ambitious growth target. keep in mind that was the same's -- same target they set last year. they met it by the end of the year. however, they were not faced with a trump trade were then. they are now. they are also faced with the issues, prolonged issues of the housing sector and trying to

stabilize that. also restore confidence and boost domestic demand and domestic consumption. all of these policies that we heard today as the roadmap for the provinces and the roadmap for policymakers over the course of the national people's congress which will last until march 11. then they will go back to their provinces and try to carry it out. how are they going to do it? they will be opening up the physical tabs that the market has been hoping for. they are going to raise the bus a definite -- budget deficit target to 4% from 3%. that's the highest since 1994. the highest in three decades. it's the highest even during covid and covid zero pandemic response. they are also going to be issuing a number of bonds to help out the local governments. the central government will be shouldering this. special local government bonds to the tune of 4.4 trillion yuan . that is the highest ever.

the question now is, will the local governments properly and efficiently and effectively tap into that quota and provide the growth, the domestic growth that the central government so badly needs? obviously as experts could potentially be weaker in the face of the trump trade war. tom: what's our understanding of the potential tariff effects on china hitting that growth target? stephen: well, there's always unforeseen shocks that could potentially derail the plans to hit the growth target. i've been covering this a long time. i've been out here 35 years. i've been covering china for bloomberg for 22 years. i've never really seen the government miss its growth target unless there were major shocks to the unforeseen shocks to the system. so they seem very confident. there was headwinds last year. obviously. they overcame that. they had stimulus in september.

they met the target. but again, the unknowns are greater this time around. they do not know necessarily how far these tariffs are going to go. there's been no negotiation between donald trump and xi jinping since the first 10% tariffs. now it's been increased to 20%, on top of the legacy tariffs already in place in the first term and carried through by the biden administration. trump has promised 60% tariffs. we are not even there yet. only about a third of the way there yet. there's a lot of potential shocks to the system as well as domestically, we don't know if this economy is willing and ready to spend and invest. do they have the confidence? we will have to see. the marching orders are in place. tom: the marching orders are in place. stephen engle on the ground for us in the forbidden city. president trump's tariff threats and china sluggish growth way on

investors. green in the asian session so far today. we discussed next how they are positioning around the growth target and tariff risk. an ai startup raising $3.5 billion in a fresh fundraising round. very pete -- pleased to be speaking to the cofounder on the show later this hour. this is bloomberg. ♪

tom: stockmarket staging a relief rally after the u.s., secretary said the trump administration may lock back some tariffs. china meanwhile has said its growth target for this year, spurring bets of more stimulus. let's bring in the managing

director and chief china equity strategist at morgan stanley. thank you so much for your time. your reaction to the targets being set out of beijing on growth, your expectations about stimulus, how does any of this change your view on the chinese equity story? >> thank you very much. i think the target settings are perfectly in line with what we were expecting coming into the meeting. the government had announced a 5% gdp growth target for 2025, 4% fiscal budget deficit on an official basis. overall, an additional 2 trillion rmb worth a fiscal stimulus package. all of those are exactly what we were expecting if you look at our previous reports published before the mpc. what i was hoping to hear as i walked into my office this morning was some further emphasis and restatement of a very strong message that the government was trying to send to the economy and the market lately. which is its support for the

private economy as well as for technology innovation. i think both of those messages got delivered perfectly this morning. so if you listen carefully to what the government speech has said, they actually pledged to further support the development of technology as well as to provide support for ai application and to new generations of intelligent terminals including the electric vehicles, humanoids, and ji devices. those are very encouraging. they've also emphasized the importance to provide a very healthy environment for platform economies as they are crucial to stabilized the job market and also boost consumption. that's exactly what the economy needs to meet the 5% growth target for this year. tom: ok. yes. not just about the growth target. also the focus on innovation. what does it mean for your price targets at an index level as you look towards the second half of the year? laura: yeah.

i think this morning's mpc speech hasn't really changed our view for this year negatively. we are seeing a number of important structural improvements that made us comfortable. increasing your allocation to chinese equities. i think china is actually bottoming out from a return on equity investment perspective. this is not because of any potential sort of top-down fiscal policy stimulus or because of any sudden signal of deflation coming out. this is a lot more driven by idiosyncratic companies. basically, the companies have been self helping themselves over the last several years. paying out more dividends, codding costs aggressively, and increasing share buybacks.

so we are very confident that china's r.o.e. will continue to increase over the next couple years and potentially cross the overall emerging-market. tom: ok, how do you invest around the tariff risk that's coming through from the trump administration? laura: that remains as one of the big risk factors for our view about chinese equities for the remainder of the year. as i mentioned, we move from underweight to equal weight. we want to be very clear that the tariff risk and the u.s. china confrontation remains one of the biggest uncertainties before we can actually further and -- increase our confidence level and move china to an overweight position. of course when we talk about the tariff debate, it brings back some old memories when president trump was in office the first time. if we recall what had happened during the year of 2018 to 2019, actually the weighted average tariff against chinese imports

into the u.s. had gone up by an average of 10.3% during the course of seven quarters. if you look at what has already happened so far, actually the tariff has already gone up by 10% followed by another 10% in less than two months. so i would say in terms of magnitude and speed of tariff hike implementation, this time we are being challenged with a much worse situation. then of course, china is also fighting against the deflation. i think the tariff debate and uncertainty actually caused further cloud over the overcapacity issue which could slow down china's growth potential and momentum this year because it slows down export growth. that being said, i think one more comment i want to make on this subject is that i think this time around, the impact on the market surprisingly or not so surprisingly should be milder than the previous round. this is because over the last

seven years, the global multinational corporations as well as the chinese manufacturers actually have rewired a lot of their supply chain so they are much better prepared. i will just give you one number. so the total representation of exports to the u.s. from china, in terms of the total china exports, has come down from close to 20% back in 2017 down to around 15% now. i think the manufacturers and embassies are better prepared. the market also walked into this year with a more harsh expectation for tariffs against china. the reciprocal tariff puts other trade partners in an even worse situation. so let's see. tom: we run out of time. appreciate your insights on the back of the mpc. laura wong at morgan stanley, thank you. coming up, president trump urging congress to pass tax cuts as part of his agenda to get america back on track. more analysis of his speech to

congress later in the program. this is bloomberg. ♪

tom: bloomberg has learned that goldman's taxable start it's round of job cuts moving earlier in the year after previous productions took place. the lender said to be cutting between 3% and 5% of staff in line with 5 -- prior most. fiscal shackles and a drastic shift to transform europe's defenses. we discuss the significance of that move, next. this is bloomberg. ♪

tom: good morning this is bloomberg daybreak: europe, i'm tom mackenzie in london, these are the stories that set your agenda. terror of turbulence ahead. president trump doubles down on his trade policy but admits tariffs will cause disruption. the u.s., secretary admits the relief for mexico and canada. >> the tariff will go on agricultural product coming into america and our farmers, starting on april 2, it may be in a little bit of an adjustment. tom: releasing the debt break. germany relaxing its borrowing rules to boost spending, vowing to do whatever it takes to defend the country. plus, china pledges to support domestic demand in the face of u.s. tariffs, setting a bullish target for growth and lifting borrowing to the highest level in more than 30 years. some consequential changes then on the terror front, in china around growth targets, and of

course this momentous decision by germany to rapidly step up spending on defense and infrastructure. all of this feeding into the picture as we pulled up to the open, 8:00 a.m. u.k. time. futures point to 1.6 percent after dropping a little over 2% yesterday on the terror threat, weighing up our commerce -- comments from the commerce secretary ross potential relief possibly from mexico and canada. ftse 100 futures put in gains. s&p futures after posting the biggest to decline since december currently point to gains of .5%. but that index back below levels it was prior to that election win for president trump. what is the trump put at this point for these markets? nasdaq 100 futures pointing to gains of 120 seven points. let's flip the board and have a look across assets. benchmark u.s. 10 year currently yielding 4.23, yields moving just one basis point, euro and focus, currently at 106. deutsche bank saying the single currency could test 110 on

hundreds of billions of dollars of new spending coming through from this german government as they look to relax that debt break. expectation yields will creep higher of course, more issuance when it comes to the sovereign german debt market. brent at $70 a barrel down .3%. to the earning story right now. redhead crossing the terminal in the last couple of minutes from adidas docking of germany, this is a mists in terms of its operating profit forecast for 2020 five. expectations from adidas they will be racking in between 1.7 billion and 1.8 billion euros in terms of operating profit for 2025, that is below estimates of above 2 billion euros. in terms of the fourth quarter, the gross margin came in above the year on year, 49%, close to 50% was a gross margin in the fourth quarter. operating profit in the fourth quarter came in at 57 million euros versus a loss of 377

million euros year on year. so the progress has been there for this dog, currently up around 28% in the last 12 months. unchanged year to date though there would be disappointment you would expect from investors at the operating profit target for 2025 is coming below the estimates. let's turn to another german company, the chemicals and agate space 2025 adjusting 9.5 billion euros to 10 billion euros at the top end of the great, that is above the estimates at the top end of 9.5 3 billion euros. this stock up 21% year to date. focus on the outlook for the year, which we just bought you, tariff commentary from officials and executives at the country -- company will be in focus. currently looking at revenues for 2025. this is the expectation of 45-47 billion euros, slightly above the estimates, at least the top end of that range. two stocks to watch at the open. donald trump is urging congress to pass tax cuts to boost the

u.s. economy to help americans hit by inflation. the president made the remarks in the longest ever presidential address to a joint session of congress. >> the next phase of our plan to deliver the greatest economy in history is for this congress to pass tax cuts for everybody, we are seeking permanent income tax cuts all across the board, and to get urgently needed relief to americans hit especially hard by inflation. i'm calling for no tax on tips, no tax on overtime, and no tax on social security benefits for our great seniors. and i also want to make interest payments on car loans tax deductible, but only if the car is made in america. we want to cut tariffs -- texas on domestic production in all -- oil manufacturing. i'm just as we did before, we will provide 100% expensing.

tom: let's bring in bloomberg senior editor bill faries joining me now. the list of tax cuts that this president wants is long. is he going to get them? bill: he's unlikely to get all of them. even during the campaign, almost every stop donald trump seem to talk about a different kind of tax reduction, whether it was for tips for wait staff at restaurants, whether it was on social security payments for older people, he mentioned all of those again. economists have added that up, it's a huge amount, it's not really showing up in its entirety in the budget bills and budget resolutions going through congress. at some point i think he will put the pressure on lawmakers to have to decide what gets past and what gets held off for the future. the big looming deadline for donald trump right now are his signature 2017 tax cuts, those are set to expire later this year. he is called to make those

permanent. that will take a lot of money off the table. i think from there he will probably have to pick and choose between the other options he's talking about. tom: bloomberg senior editor bill faries on the call for tax cuts from the trumpet ministration and to what extent how many will actually get passed in that bill that's working its way through in terms of congress and how they are tackling this bill. now to it momentous decision coming through from europe specific -- biggest economy taking a step to bolster its capabilities. burling and amending its constitution to exempt defense and security outlays from limits on fiscal spending. germany's chancellor explained the need behind the move. >> i want to be very clear here, whatever it takes must also go for our defense now. in view of the threats to our freedom and to piece on our continent.

tom: for the details at spring and bloomberg opinions chris bryant who is in berlin for us. how significant is this move? chris: it's usually significant, international partners and investors add to concerns about germany, one, it's not spending enough on defense and to its economy is flatlining. 10 days after winning his election he comes out last night and says, we are going to have a 500 billion euro infrastructure fund to repair our decrepit infrastructure and we are going to free the defense sector from limits that germany has imposed on itself in terms of new borrowing. that's very important. germany currently spending only two percent of gdp on defense, realistically it has to spend 3%, maybe more, right now has a fiscal straitjacket that prevented from doing so, henceforth it can spent effectively as much as it wants on defense without reaching those limits. i thing international partners will be looking to germany saying, finally germany has

recognized the seriousness of the situation it found itself in with trump essentially washing its hands of europe and also of ukraine. germany ready to step up in a big way. tom: deutsche bank's analyst saying this is the biggest fiscal change for germany since reunification. chris, what we watch for next, is this a done deal? chris: not yet, this deal, and that is the slight difficulty of it, needs to be put through the old parliament. to change the constitution it requires a two-thirds majority due to the success of the far right and far left in recent elections, it needs to go through the old one, that's controversial. german voters have just voted for something different. he wasn't exactly a fan of extra borrowing during the campaign. nevertheless, it's exactly what needs to be done and therefore i think it will all happen now. tom: chris bryant from bloomberg opinion, really appreciate the context on a huge decision coming through for the lawmakers of berlin and we watch to see

how that progresses. let's get back to defense base that ties into what we've heard in terms of defense been. this continuing to give tailwinds to the defense story out of europe. just look at -- that is the move over one year, 85%. higher on trade gate. by 16% on expectations that germany will be able to release hundreds of billions of euros for additional spending on defense. rheinmetall called higher as well. saab called higher, the defense story in europe in terms of the equity moves, higher, year to date, that continues. just another catalyst at a significant one at that coming through around this decision to relax the debt break to increase additional funding for defense and infrastructure. so again, the catalysts of defense will be a late for these european equity markets with futures pointing strongly higher today and this is a key component in that story. we get the view from the german defense sector later this morning. the ceo will be speaking

exclusively to bloomberg on the opening trade, do not miss that interview, a: 15 london time. china has once again set its economic growth goal for this year at about 5% at the national people's congress. that has started officially. had its first day in beijing and targeting a fiscal deficit of around 4% of gdp. this the highest in three decades. a sign of stimulus spending to come. bloomberg's china correspondent minmin low joins us from the chinese capital. china says they will loosen monetary policy, what impact will this have, how much stimulus should we be expecting? minmin: looser monetary policy isn't exactly new. the pboc governor had flagged that late last year. what that means is that the pboc will cut interest rates and rrr at inappropriate time in a timely manner this year. that was stated in a government work report that was read up by premier -- the premier.

economists expected 30 basis point cuts to the interest rates and a 100 basis point cuts to the reserve requirement ratio. the question is when are they going to do this because your to date so far you look at what the pboc has done, their focus had been laser sharp on supporting the value of the u.n.. the pboc has been withdrawing liquidity from the financial system to defend the u.n. and it looks like at this point they wouldn't want to be accused of being a currency manipulator or to devalue the u.n. -- yuan to offset tariffs, especially giving trump's recent, specifically naming the yuan in the yen in its currency watchlist. so it looks like the pboc is still in a holding pattern here as they assess what the final impact of tariffs are going to be before they modulate their final response, then the question is, how fast they will move when they shift the stance towards this looser monetary policy to ensure sufficient liquidity in the financial system. in the meantime the government has pledged his 500 billion yuan

in special sovereign bonds that will be used to inject capital into the big state banks to help bolster their ability to lend to the real economy and to protect against financial risk, given that the state banks have seen their profit margins being squeezed to record low levels after they have been enlisted by the government to provide cheap lending to risky borrowers like the real estate developers are the cash-strapped local government financing vehicles, so the government now pouring their weight behind big state banks to support and to stabilize the financial sector. tom: bloomberg china correspondent minmin low on the ground. giving us optionality as they adjust to these additional tariffs of the u.s. a ministration. setting a growth target of about 5%. coming up, ai start up raising $3.5 billion in fundraising. the latest round led by lightspeed venture partners, very pleased to say i will be joined by lightspeed's cofounder next year in the studio. stay with us.

this is bloomberg. ♪

tom: welcome back, the ai start up that rivals openai is now worth more than $61 billion after its latest round of fundraising. among the investors is lightspeed venture partners which contributed $1 billion of that $3.5 billion raise in the latest round. with me in the studio's cofounder and partner at lightspeed. thanks for coming to the studio. what is the rationale behind this additional bit. how do you see this business evolving in the next 5-10 years, what is anthropic look like? >> thank you for having me. lightspeed has been invested for more than two years in the company. our latest round of investment in the company is really based on our conviction in anthropic's

focus on the frontier of artificial intelligence, this is really scaling intelligence itself, making model smarter, not developing small features. so things like creating models that have the ability to be their own independent agents in the world is creating models like the most recent model, which is world-class writing very complicated software code. it's also importantly technology that relates to making model is trustworthy, so they get more and more sophisticated. if large businesses were of governments are going to take these capabilities and deliver them to their constituents, we have to have a way to understand predictably that the models are working in a way that is friendly to people in friendly to humanity. so all these technology really relate to scaling intelligence itself and bringing these models closer and closer to being, in some ways, intelligent or more intelligent than people. we think anthropic's focus on that is where a lot of value

over the long-term, society, for people, for businesses, for the economy where there will be a real impact. tom: anthropic has focus on enterprise, can you give examples of enterprises that are seeing real and tangible return on investment by backing and investing and embedding some of these models? i'm struggling to point to it. i can point to start ups, i can point to where they are not having to have as many employees because they aren't betting ai's but in terms of big enterprise -- enterprise. >> the first place we see that activity happening in software development or coding, it makes logical sense but in many large enterprises, the ability to let software developers be 10 times more productive just because the models are smart and capable enough to write a lot of the mundane software and do some of the tasks that you take a really valued software engineer, they have to spend time on low-level tasks that may not be the best use of their time.

there we already see a massive change in what artificial intelligence can do to make people more productive. ever -- other areas in certain verticals we see in the legal field. in certain stages of the medical field where these models are able to offload tasks, which have to do with sometimes writing summary brief, sometimes listening to a how a patient communicates to a doctor in just transcribing those notes. a lot of tasks that people who are working in the knowledge economy, people who have task where in addition to thinking they have to do administrative tasks. the artificial intelligence can offload an enormous amount of that work, even today. this is before we got to the most intelligent models that we will see and probably just a few years. tom: the cofounder of anthropic has said recently, about a month ago or so that he expects artificial general intelligence to be here in 2026. so essentially computers or algorithms were models that are as intelligent as the most intelligent humans. do you align with that view in

terms of the timing, what is that mean for society? >> i think the good news is when we talk about agi it's a little bit of an over rotated term, but models that are highly capable, we don't think that there will be the singularity where a model pops out and it is all-knowing, all seeing, and just smarter than a human being in every way. but what is happening is if you take a very specific area of domains, maybe it would be transcribing voice to text because lots of people need to take notes, maybe it will be in writing certain kinds of software. if you take the specific problems, we will get to computers with artificial intelligence i can do the task better than people can. on the nice thing is once that happens in those domains, and a very specific way we can say, if my responsibility includes this task, i can offload it and i can focus on things that are higher level tasks. so we are going to see that happening, we are starting to see it and within a couple of years we will start to understand what it means when you really have a computer in

artificial intelligence i can take certain areas of work responsibility and do them completely. and what does that mean for our ability and for society to spend our time on all these things, we will absolutely see that. tom: is that a bet that anthropic wins out versus openai when it comes to the race for agi? >> ark investment an investment stems from their focus on the frontier and the fact that there are a variety of important technologies. these are in futures, this is scaling intelligence itself, this is creating a way for computers to act independently, which is what we call agents. this is technology to ensure they are trustworthy and understandable. all of those technologies together, those are the things that we believe anthropic and focusing on advancing the artificial intelligence are going to happen. those are the things of businesses, if governments, if we will take these intelligent computers and let them act in society and some independent way

and affect our constituents, these things all have to be there in anthropic has a very maniacal mission to make sure that artificial intelligence is deliver that way. tom: before we let you go, correct me if i'm wrong. there were reports you raise another 7 billion dollars and you were in the process of doing that for your lps, where are you and where do you plan to put that money to play? >> are not allowed to comment on fundraising cycles, but as a firm we invest in the most transformational technology trends. that's what has been lightspeed's 25 year history. we are looking for places where technology can be transformative for society. tom: does europe excite you as a proposition? >> europe absolutely excites me, we have been active in europe for many years and we see extremely strong technological talent. we see a lot of strong artificial intelligence companies, people with deep research backgrounds, so europe is a place we are actively investing.

tom: lightspeed's founder, cofounder and partner at lightspeed venture partners on the back of that one billion dollar investment in anthropic. we appreciate your time. plenty more coming up. stay with us. this is bloomberg. ♪

>> i do factor in some of that tariffs now of inflation and on prices. >> we have not seen this level of tariff, at least in modern times. >> there's an adverse effect with respect to inflation and affecting growth and productivity. >> the opinions on tariffs vary from their incredibly inflationary to they are potentially contributing to a recession. >> you have to take that longer-term approach hope, or maybe expect at some point that

they will get to outcomes, markets will come. >> i think what you can't control is consumer confidence in corporate confidence, and i think that is what is falling off a cliff right now. tom: bloomberg investigates including federal reserve bank of new york president, john gray and fund management reacting to the news on tariffs, and here's the equity market reaction, since inauguration day president trump, you are down on the s&p about 2% since that time, consumer sentiment has been hit, jog us -- jobless claims are up. tariffs are potentially inflationary and perhaps a cap. when does a trump put come into play, is it a 10% corrupt -- it remains a key question for the markets. the change is coming through in germany. ripping up the dead break, that's the plan to release hundreds of billions of euros in

to investment for defense and infrastructure spend. the euro getting a 106. expectations from deutsche bank, you can get to 110, deutsche bank analyst on the effects team suggesting this is the biggest fiscal change for germany since reunification back to the late 1980's, 1989. watch the euro, watch the defense stocks, another huge day for these markets when it comes to how we think about the tremendous defense spend that seems to be in the pipeline now for germany and europe as well. the opening trade is up next. they will walk through all of this for you. a market reaction to the tariffs on the commerce secretary suggesting there could be relief as soon as today for mexico and canada. the open trade up next. this is bloomberg. ♪

anna: good morning from london, i'm anna edwards alongside guy johnson and liddy -- lizzy burden. an hour away from the opening trade. tariff turbulenc