tom: [indiscernible] japanese yields sore to their

highest in more than a decade, german bonds tumble, trump gives carmakers a one month tariff exemption. a nuclear shield for europe and emergency summit in brussels, european central bank cuts rates, economists are divided, live in frankford for decision day. ♪ tom: earnings crossing from lufthansa. 2025 earnings were higher year on year, labor strife last year.

decent demand for logistics but a challenge when it comes to chinese airlines eating babies -- eating may be into that. 8 a.m. u.k. time the stock is up , let's get to the bond selloff, my goodness. 10-year yielding 1.5%, 30 basis points yesterday rippled across the euro zone and asia. in terms of futures on bonds pointing to upside in yields. european future defense play began, paring the lead in

equities. outperformance of european stocks, s&p is the most pronounced, u.s. futures point lower, jobless claims out later today, let's flip the board, the dax put in a stinker of a performance. bonds moved higher yesterday, the selloff will continue today on german debt, the benchmark 10 year stateside at 431, euro-dollar look at the

strength, back above 108, to what extent will the ecb pull back? sales of automakers jumping after tariffs on mexico and canada to ask for a reprieve. >> we will give a one month exemption through usmca and at the request of the company is the president gives them a one month exemption. tom: katrina nicholas joins me

now, pressure on a tariff that would be damaging, what has the reaction been? katrina: relief, investors pushing up shares, stellantis rallying but really this buys them time, time to shift production from canada or mexico, the point of the tariffs is to bring investment to america, automakers have a month to shift supply chains and

production, it is not something that can just happen. tom: what does it mean for the sector if they are not able to derail the tariffs? >> the impact will be felt by consumers, supply chains will seize up and average car prices could go up by thousands of dollars, about $12,000 per car, huge impact to consumers feeling the squeeze already and some models might stop.

that is before the impact in an industry where automakers struggle, losing billions. the impact will be severe and significant. tom: asia transport team leader katrina nicholas, thank you. tariffs postponed for a month. standing by in asia is avril hong. a reminder ai lifts stocks in hong kong. >> yeah, particularly for b

aba. no reprieve for china in tariffs but there were enough positives to keep the momentum going. thanks think tech level since december and the focus is on consumption, big briefing from top securities finance chiefs but as you say ai is the boost. great timing because we hear they are unveiling and ai model to rival deepseek at a fraction of the data.

there could be more easing in china, flip the board. when we look at terror of reprieve for tariff skepticism the stock mood is good but the german bond market has spread to this part of the world. australia yields moved today. one portfolio manager said trump kick started this move and until we see clarity it will be difficult to be bullish on bonds. tom: we will stay on the shift on defense spending because eu leaders are discussing ramping up spending and mobilizing 800

billion euros after emmanuel macron said he would use france's nuclear capabilities to defend allies. >> are nuclear deterrent is complete, sovereign and french. it plays a role it peace and security but i decided to open the deterrent to our allies in europe, whatever happens. the decision will be in the hands of the head of the armed forces. tom: oliver crook is standing by.

seismic changes in europe, what is expected today? ollie: this is a historic moment and a lot of it is under the leadership of the chancellor who unleashed spectacular package here in germany. 1 trillion euros on defense. bond market is feeling historic and eu leaders are discussing unleashing 800 billion euros at the eu level. 150 billion in loan extensions,

easing rules on the members to spend on defense and the germans are lobbying to ease these rules. they will face resistance from hungary to this, but will circumvent him. 2 areas we are watching, joint debt, joint bonds. is this a conversation that will

start now? frozen russian assets as a way to get money to ukraine, will they touch those assets under this revolution for europe started by trump. tom: what about intelligence sharing? to what extent is that a wakeup call? ollie: it is one of many, but eu has been awake since november and there is lag time to bear fruit. the u.s. stopped aid to ukraine,

everything is frozen and they are freezing intelligence sharing except defensive that could threaten troops. the blowup in the oval office, trump truning the screws. zelenskyy made an appeal to say we will sign the minerals deal.this may be too late ffor ukraine, but eu will want to put forward all that they can to

deliver hardware and weapons. jennifer: ollie crook indeed ahead of a curcial meeting, bonds under pressure after germany jumped the most in decades. valerie, what a day for bond markets. valerie: historic day, a sea change in german bonds. was the overblown? bond losses and yield rises,

looking at france and italy, similar jolt by the german infrastructure plan. euro rose 4% in three sessions, moving the most since 20215. options positioning is bullish, the biggest since covid times in five years. add a dovish ecb and volatility in u.s. markets, equities had 5 straight sessions of 1 percent

swings. the fed beige book did not mention recession. tom: voicing concerns about recession, raising the odds to 30%. indeed, market reaction is pronounced. cutting interest rates again today, second time since june. how is the glide path hampered by defense spending? live on the ground, this is bloomberg. ♪

tom: european central-bank poised to cut rates. lizzy burden, a cut today and then what? lizzie: indeed before the news out of germany, anything could happen because governing council is divided, many think interest rates are neutral. some say this will be the last cut and they could cut all the way to one percent. some are worried about sticky inflation, others are worried

about growth. if you look at the recent date or you've got some encouraging signs. inflation is back below 3.9% and wage growth eases. maybe they can get inflation back toward 2%. look out for the word restrictive. tom: watching for the wording. to what extent does frederick's

determination to do whatever it takes for german defense change the calculus for the ecb? lizzie: those words echo mario draghi and market moves are historic with bonds having their worst day since before the berlin wall and traders are paring bets on how many cuts we will see. they see more of a boost of growth than inflation, some see a 2% boost this year or next year, up from 1.8% but the ultimate cap yacht, -- caveat,

how fast can it be demented. news out of brussels, christine lagarde will be asked what is the role of the ecb if you have deficits? tom: what is the understanding as to what extent physical boost could offset tariff threat? lizzie: it is just a threat from president donald trump on tariffs for automotive's and all other things. if you look at whether this will impact projections it does not look like a change, more so it

is high energy cost and a former ecb economist reckons price growth will get back to target in 2026 as envisioned before, you could see a change of language and disclaimer on every page of the ecb communications will be donald trump. tom: lizzie with a fantastic preview from the ecb given the challenges, full coverage from 1:15 a.m. london time with christine lagarde's news conference, do not miss that.

china's leaders are due to speak to the media after setting a bullish target, a preview later in the program, stay with us. this is bloomberg. ♪

tom: welcome back, breaking lines from dhl, they beats modestly in terms of full-year earnings and outlook is softer, cutting 8000 positions to make germany great again not efforts are some way off for the government. pressure across job markets, we

will keep across that. a u.s. ipo for clark, aiming to price in april targeting $15 million with banks led by goldman sachs, j.p. morgan and morgan stanley. we look at possible reprieve for trump's tariffs. that is coming up, this is bloomberg. ♪

tom: these are the stories that site your agenda. bonds selloff, soaring to their highest in a decade after bonds doubled on most since 1990. trump gives carmakers and exemption. leaders gather for a summit in brussels and central cuts rates. leaving economists divided in frankfurt. the dax is putting in the best gain since 2022.

the outperformance versus the u.s. counterparts continues. focus on defense pledge from germany and other nations, gains of 51 points. nasdaq futures as the tech theme continues. we have jobless claims ready in terms of data, further selloff in yields pointing higher, closing at the biggest jump since 1990. hedge funds pile into positions.

108, brent $69 a barrel. president trump is waiting exempting some agricultural goods from terrace on canada and mexico after he gave automakers a one-month reprieve. the u.s. pharmacy secretary telling us u.s. tariffs due in april will go ahead. >> some tariffs will come in right away and some will take three weeks or four weeks, and they will come in in due course. we will announce them and be negotiating with all of these countries they are after, and then they go into effect over eight period of months. once it is in table stake. tom: jill disis joins me now.

the tariff news seems to come fast. is this a concrete plan or flip-flopping under pressure from automakers and farmers? jill: it does seem there was some kind of a negotiation strategy unfolding. i should note this does come after key automaker executives from ford, stellantis, gm met with the trump administration, kind of talking about how precarious these tariffs are. we have seen reports that suggested addition to a supply train -- trdae -- trade crash, you were talking about tariffs that will raise the cost by $12,000. it is kind of designed to help give time for automakers to start moving production back to the united states.

the apprentice -- they have been investing billions of doing this, but it does show you how fast pace a lot of these developments are as you mentioned at the top of the segment. there is this talk about doing carveouts for agricultural products, so we are looking at a more nuanced picture than we were just a few weeks ago when this was about this blanket 25% tariff. there are a lot more developments to come. we might see changes and differences in terms of how these packages are coming together. tom: thank you, the volatility, it takes a little more than a month to take a factory out of mexico in rebuild it in the u.s. president trump warning hamas there will be what he describes as hell to pay if they militant group does not immediately release israeli hostages still being held in gaza.

earlier this week israel's minister of economy spoke to us about trump's impact on the war. >> what has changed is the attitude of the trump administration. if biden was was renting israel, the trump administration is very supportive, so the ecosystem has changed. tom: let's bring in and williams for how the warning from trump could tie into ongoing negotiations. what is your expectation? what are we hearing about the impacts of this trumpet warning? >> so far the response from hamas has been quite measured. it wants to enter talks in phase two, talks on its terms. the sides given that israel wants to see phase two leading

to a gaza without hamas. hamas is not open to that position. what we are seeing with trump is the vice president making it clear he is taking this personally. he threatened the gates of hell being open on hamas over what was then a hold up in a hostages. now if you make this latest post having met surviving hostages, having heard their plight, having heard their appeals to get the rest of the hostages out, nt is telling hamas on an individual level dead he intends to see them dead unless they deliver the hostages. when he also says is that the u.s. is providing israel with everything it needs to finish the jobs as trump would put it, so there is indication that if they do resume this war in gaza it would have the full support

of the united states. tom: danny williams on an important update out of the region. thank you. now to china where the national people's congress is continuing in beijing. we are expecting more news today. the country's economic head's had to give a news conference. stephen engle has been on the ground covering all of this. it joining us now from the media center in beijing where the press conference will take place. what are you expecting to hear? >> well we have top economic leaders in attendance. the commerce ministry, because that could be -- that could be interesting because those are the ones that imposed retaliatory tariffs on the trump terrace. the central bank governor is here as well, and it is just

going to be our one opportunity each year to hear directly from them. last year that talked about belt-tightening and more belt-tightening. this year we will probably talk about how we will reach of the fairly ambitious growth target of around i percent -- 5 percent. that is what they set last year but they did not have a trump trade were going on. many economists i have heard from say it is going to be a tough task to meet that target a given the external shocks and that there could be more stimulus needed throughout the year. tom: on that point, given to people you have been speaking to and hearing from in beijing what is the expectation the ambitious growth goal will be challenged by potential additional tariffs?

stephen: so larry hu, the chief economist for mccoury group says it distinctly. he says if the trump administration brings this tariffs up to 60% as threatened on the campaign trail, that could not two percentage points of china's gdp, so we are talking in victory territory, but that points to the need for progrowth stimulus here and pro-domestic demand stimulus, and that is the number one priority. that is the merging of jurors -- marching orders to the agency heads. boosting domestic demand and stabilizing the property sector. i have less paper wealth, considerable paper wealth. the wealth negative effect is sizable and translated to less consumer spending by people. tom: stephen engle on the ground

for us ahead of another crucial meeting. coming up, i will be speaking exclusively to the ceo of french satellite provider eutesat who shares have triple. back conversation coming up next. this is bloomberg. ♪

tom: let's return to the eu where leaders are mobilizing billions after the u.s. providing intelligence ukraine. oliver crook is in brussels ahead of another key meeting. could we expect? >> there will be a number of different facets, zelenskyy will

be speaking with european leaders convene for this emergency meeting, but that has been the story about what it would been in for the last three-month that this is a historic wake-up call, and it is finally beginning to feel like one. we got a huge impetus from the eu in terms of defense spending. they said they want to liberate 800 billion euros. which is a may be the most significant thing is the easing of fiscal rules in order to allow for more debt to finance defense has been coming from no one other than the germans. the germans for their part led by frederick merz and waiting as the chancellor to be talking about reforming the debt break, and losing hundreds of billions of euros, so this is beginning to feel like the historical moment we have hearing from

other leaders. what will be interesting is al viktor orban will respond. the question of joint debt, out interactive is this conversation. it is an inevitable conversation. and also the question of russian assets that are being held in your. are they going to consider tapping them? tom: oliver crook on the ground ahead of the meeting. let's stay on the defense space and bring in an executive. shares in the french satellite provider sword -- soared, tripling on the prospect of replacing starlink as the internet provider in ukraine. they gained further momentum after writers reported it is in talks to provide satellite communications for the italian government. the ceo joins us.

let's start with the stock price rally. it has been remarkable. is it rational? what do you make of the moves in the stocks and whether it has further to run? >> thank you for the question and thank you for having me. it is clear it has been a crazy week following weeks of discussions across europe about stepping up our defense, stepping up our general spending to defend ourselves. it has taken a positive turn for all stocks linked to defense and eutelsat so that this week after the discussion about potential pullout of ukraine by starlink. starlink has been there since the beginning and provided a lot of communication, and we are also together with a german

distributive providing a lot of capacity to ukraine, and it is a key element of modern warfare two have strong communication capabilities from space. sat coms has alway sbeen a military weapon, but now with low earth constellation it is key in keeping communication open and providing intelligence to armed forces. tom: have you had conversations with european leaders about replacing starlink in ukraine with 1 web? >> yes, and they have intensified over the last couple of weeks. everyone is asking us today can you replace the large number of terminals of starlink in ukraine, and we are looking at that. tom: i believe starlink as what

he thousand terminals in ukraine. right now you have about 1/10 of the number. how do you ramp up and how quickly for ukraine? >> we have multiple terminal suppliers. we have stock we are looking at because that would be the fastest to deploy to ukraine, the stock that we have already and setting priority to providing this ukraine, and then conversations with various terminal suppliers, both the military grade, and ukraine might need a mix of both, so that is something we are looking quite actively at. tom: will it involve partners with other providers? material support from european governments? >> it would require financial support and logistic support. we are already working with ukraine, so we believe they are strong to handle that.

we do not manufacture our own terminals. it would do that through partners, and that would be a conversation with all of these in order for them to potentially ramp up if we were to get up to the 40,000. we can get to it couple of thousand, and that is what we are looking at in the very short term. tom: on specifics, on that question, how many units do you have in ukraine right now, and when you get to that couple of thousand? >> we have a couple of thousand in ukraine today. some of them of course need to get on the network, but we are talking several tens of times of that. tom: what is the realistic timeframe to getting to 40,000? >> 40,000 is probably a couple of months, but we could at least double or triple within weeks of time, mainly logistics to get there. tom: can you confirm that you

have been in talks with the italian government about potentially providing these services to that government instead of starlink? >> it is clear that there is been a lot of discussions across newspapers around italy. the discussions we've been having with the italian government, it is clear the italians have realized the need for low risk constellations, and they value the options for italy . there has been studies on providing a consolation purely for the italians. what is key around low earth consolation is it is not valid for a single country. they circled the entire globe, and you need to start with $6 to $8 billion. what a makes a ton of senses collaboration. we have the european secure

consolation where italy is a key part. there are other partners in that, but what to be due until they get there? what the italians are looking out, and we are in discussion with them because right now there are starlink and us, so the choice is not passive if you want to of capacity there. we have had a very long-standing collaboration with the italians, so we are deep in those dialogues. tom: you are closing in on a deal with italy it sounds like? >> we are in very good discussions with italy and we have been a good collaboration with them, so we hope that will continue. tom: ontario have scrapped their potential deal with starlink. are you in conversations with ontario about replacing that service? >> canada is interesting, because of the canadian operator

has their own plans for lightspeed. that will probably only get there in 2027, 2028, 2029, so we can provide them in the short term. there is conversations we will have with telesat, while they launch their own consolation what we do in the short term. tom: you talked about the need for additional funding to it comes to supporting ukraine and the rollout of 1 web. how much additional funding would you need to ramp up capacity to replace starlink? >> this is mainly a question of terminal because, because the capacity has already provided. this is in the multiple tens of millions rather than the hundreds of millions, but terminals because typically between 5000 and 10,000. very secure military terminals

are a multiple of that, but again, when you talk defense that is a reasonable amount for the needs that are served with having a stable and sovereign communication forum. tom: appreciate your time. what a consequential moment for the defense space. eva, the next ceo of eutelsat. to the earnings story around the airlines right now, air france klm coming through with the beat in the fourth quarter. revenues coming in at 7.88 billion euros marginally above estimates. operating income in the fourth quarter comfortably above estimates, so it is it beat in terms of the fourth quarter, and they see at least eight 300 million ebitda improvement, so seeing at least a 300 million

euro improvement. the ceo is on the opening trade later. there is plenty more coming up. stay with us. thisoomberg. ♪

>> these tariffs are a self-inflicted supply shock wound. higher prices, less competitiveness, because businesses are having to pay more for all of their inputs, and because they have to pay higher prices less purchasing power for consumers, which means fewer jobs on the road. tom: larry summers there. here is the historical context in the u.s.

the highest level since the 1940's. pretty ominous for some, but that is where you are in terms of the terror of low to imposed on the u.s. economy and its trading partners. let's take a look at german sovereign debt, because there was a linkage. to what extent will the spend all on defense offset the tariff impact? here is what is happening in terms of the yield jump we have not seen since the 1990's. 2.7% on the benchmark 10 year. there is plenty more coming up. stay with us. this is bloomberg. ♪

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anna: good morning from london. i am anna edwards alongside guy johnson and tom mackenzie.