♪ >> this obviously a lot of fear out there in the market and the fear is centered on uncertainty. >> so long as we are in this environment where consumers don't know the rules, businesses don't know the rules, you're going to be challenge for a while. >> size and the speed of the tariffs would be dwarfs anything that we saw last time around and i think markets are reacting accordingly. >> it will take a few months to see how these policies pan out. announcer: this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: for our audience worldwide, "bloomberg surveillance" starts right now.

coming into wednesday following another volatile session on wall street, equity futures pushing higher this morning after briefly dropping as much as 10% from all-time highs. once again waking up for more trade headlines, 25% of on steel and aluminum with the threat of much more stilted,. latest moves leading to more downgrade on wall street. golden cutting its forecast to 6200 from 6500, pointing to a recently reduced gdp forecast, a higher tariff rate and a higher level of uncertainty that is typically associated with a greater equity risk premium. another read on u.s. inflation. lisa: the increasing fear right now is stagflation or trends, this idea that you get gdp they get downgraded to goldman sachs but inflation that is sticky, that is producing the reaction function of the fed and that if the reason why yesterday we saw markets respond or at least bond markets to the data more than

the uncertainty of tariffs. jonathan: earlier this morning, the ecb president christine lagarde delivered a speech and had this quote. the trouble with our times is the future is not what it used to be. how may times to the future change in the last 24 hours? annmarie: it was a roller coaster of tariff headlines and honestly one that is very difficult to see a lot of his the visors signed up for that ride based off some of the reporting trying to push back and regulate trump and some of his approaches when it comes to trade, especially when it comes to canada. the wall street journal editorial board says at the end of the day, the two sides did start talking. there is a temporary truce, but who knows which side of the tariff bed mr. trump will wake up today, and that is the uncertainty bleeding into this market. jonathan: if you want clarity, you are not getting it right now. you certainly didn't get it yesterday. tariffs changing multiple times, and this is the confusing part for businesses who sat down with

the president yesterday in the business roundtable. when is that clarity coming come if at all? lisa: what is the goal? it's one thing if you don't have clarity about the method. it's another if you don't have clarity on the goal. what was the goal of upping tariffs on canadian steel and aluminum to 50% as simply say that the more that you reciprocate, the more we are going to amp the anti-here? how much does that achieve a goal that we understand and without that in mind, the uncertainty is existential because it's unclear whether tariffs are just tariffs for tariff sake. annmarie: the president will constant -- consulate take in maximalist approach. if the goal was just have doug ford come to d.c. and meet with howard lutnick i don't think you need to put out a tweet saying we are going to have 50% now. at the end of the day there was a truce but you can see the writing on the wall. regardless of what country and industry it is, this is going to be the playbook for the trump 2.0 administration. jonathan: s&p futures positive

for now. we will see if that sticks. coming up on the program for the next 60 minutes, trade headlines whipsaw markets worldwide and adam posen of the peterson institute. in sheila caillou as airline signal a dire outlook for the consumer. stocks inching higher, looking to snap a losing streak. markets whipsawed by tariff headlines. from golden, from city and from hsbc. joining us now, max kenner. welcome back to the program. the facts change. talk to me about how the outlook might have changed as well. > we are still tactically quite cautious particularly in the u.s. this is the kind of time where you need to update your framework, there indicators on an hourly basis because like you guys were just discussing even

yesterday, things were changing pretty much three times during the day. we look at our indicators at the moment, particularly from a systematic perspective, there has been quite a bit of systematic spelling but what we've not yet seen is this final puke. they are bearish, they flip from maximum bullish to bearish. to buy the dip, i think we need a bit more of a moment and equities to release a this is the all clear, now positioning is clear enough. what has changed and the outlooks of the stuff that you are leading to, there is some sort of put from the new u.s. administration. it is down to the fed but of course with data like yesterday,

or payroll still pretty ok, in a normal environment that would be really bullish for equities and for risk assets overall. for the current environment, it just puts the fed put even further away. remember what powell was saying friday, the are in no hurry at all. so what we would need the fed to get some not to get some not tightening financial conditions, that they are monitoring market involvement. but as they said friday i think we are still quite a bit off. jonathan: a lot to unpack, let's start with the technical term puke. what is the cathartic puke look like? if it is not that, what is it? >> what we need to see is broader based. it wasn't like it was all amid stocks going down. it was still pretty focused and pretty concentrated on some certain sectors and the high multiple sectors. what you would want to see is the final broad-based puke where it is not just tack and the high

multiple stuff that gets hammered, but really the broader market or perhaps even the people waited s&p underperformers. what you would want to see is that spilling over into credit spreads as well, where we haven't really seen, and maybe even spilling over into other equity markets where then people say you know what, so far we've been hiding out in european equities, thinking that this is a completely different story but now we are really playing u.s. recession fears. once we've got that, i think that is then sort of the final puke. and another queue to watch as factor. u.s. momentum, that factor has been absolutely slaughtered the last three or four weeks. any kind of bottoming, any sign of reversal i think is another sign will can start buying the dip. lisa: i think this conversation needs a bit i am curious whether we are talking about the market

equivalent of the economic debate here, whether we are pricing in stagflation or something more like a recession. that was something julian emanuel was talking about. what would you take more seriously right now at a time where there are a lot of anxieties, there are still people who are hopeful that we could emerge from this? max: i think stagflation fears were about a month ago. that was basically willie we had january cpi, particularly underlying inflation much higher than a lot of people including myself expected. super court inflation was coming in quite a bit hotter. that really was a month ago. the amount of selling that we see encyclicals vs. defensive's the u.s., the amount of decoupling between u.s. cyclical offensives against european cyclical defenses or really rest of world defensive performance clearly tells us what the market is playing now is increasingly recession fears.

so i think we are getting closer to the point where you want to start buying that correction. we are just not quite there yet because again, it would be different if it was just the high multiple stuff, but we are starting to see that spill over into other part of the market. it's just not quite there yet where we can really sound the all clear on the systematic positioning unwind being completely over. lisa: it's not just about recession fears in the u.s., it is also about relative valuation and the fact that suddenly there is an alternative and the fact that europe writer especially with the likelihood of sums of the fiscal package being passed. how much do you lean into that and how much do you say what a lot of people have said which is it is looking pretty expensive? it is looking pretty broad? that is already over. max: for one, what is amazing is think if at the beginning of january if we had said i think german small and mid-caps or european small and mid-caps are the relative safe haven in

global equity. i think you guys would have thrown me out of this room and said maybe don't come back again. so it is quite funny have things have changed only within a couple of weeks. and i do agree with you this perhaps the dax is not the right place anymore. perhaps in europe maybe the small and mid-caps should benefit the most. the fiscal package in germany getting over the line, any positive news, although that is particularly beneficial for the small and mid-caps but also for other part of the market. we look at china, that still has some room. so it is not like we have to throw in the towel and equities entirely but it is so far mainly a u.s. story and in europe, the stronger euro is starting to get felt and the larger caps, particularly in the german equities given that they basically generate less than 20% of the revenues inside of

germany and about 80% outside of germany. so the stronger euro will start to weigh on the performers. of the small the mid-caps i think are really the ones you want to look at. also, european banks, european insurance. there's a lot of stuff even within europe that is worth looking at. max: potentially one step closer to peace on the continent. at the same time you see this retaliatory counter to u.s. tariffs. what narrative do you think will prevail? max: the narrative clearly for the u.s. is that that put that we thought was there from the u.s. administration, either the strike price is much further away, or maybe that puts doesn't even exist because they want to force the fed. that narrative particularly for u.s. risk assets and frankly at some point also globally for this assets more broadly will really prevail in the next couple of weeks because ultimately for a sustained

reversal higher, we will need to see some kind of nod from the fed to say ok, we are monitoring financial conditions, we are monitoring market developments, and let's remember that was actually already enough in december, january. in january you already had bullish reversal because all the fed had to do was say financial conditions are notably tighter than they were in september. that's all they had to do. they only had to say notably tighter and already markets were saying that is it. so we are not talking emergency rate cuts. what i'm talking about is literally a verbal nod from the fed that we need and that already within change that narrative that we've just been talking about. jonathan: appreciate it, thanks for the update. the federal reserve decision a week today. u.s. cpi, so look out for that, that, better data point of the morning.

news elsewhere this morning with your bloomberg brief, here's dani burger. dani: just hours after the 25% tariffs on steel and aluminum imports went into effect, the e.u. launched countermeasures against new u.s. metal tariffs. they plan to impose duties on more than $28 billion of american goods. they will immediately begin consultations with member states. tariffs are expected to start next month. houser publicans passed a bill to keep the government a saturday shutdown deadline. the bill will likely need the support of at least eight democrats in the senate to become law. if a shutdown goes ahead the white house budget office would decide which federal workers are furloughed and which essential staff must continue without pay. elsewhere chinese authorities met with walmart executives to discuss the company's negotiations with suppliers in china over price cuts due to increased u.s. tariffs. authorities one that walmart's demands could fracture the global supply chain, hurt the interest of both u.s. and chinese companies, and affected

american consumers. jonathan: more later on this morning. up next, the president doubles down. >> we think treated very unfairly by canada and mexico. we've been treated very unfairly by every country all over the world. the european union is horrible. >> do you think there will be a recession? >> i don't see it at all, i think this country is going to boom. jonathan: adam pozen live from new york city this morning, good morning. ♪

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪ ♪ jonathan: equities bouncing back by 0.5%. we seen some changes, some downgrades. hsbc downgrading u.s. stocks to neutral. goldman cutting his s&p 500 forecast, the first big bank to do so.

they drop that from 6500 to 6200. we've got a president doubling down. >> we've been treated very unfairly by canada, we've been treated very unfairly by mexico. but we've been treated very unfairly by every country all over the world. the european union is horrible. >> do you think there could be a recession? >> i don't see it at all, i think this country is going to boom. but i could do it the easy way or the hard way. the hardware is exactly what i'm doing but the results are going to be 20 times greater. jonathan: trump's 25% tariffs on steel and aluminum going into effect after he walked back a threat to double levies on canada. team coverage starts right now. i think we have to take a step back and just think about the last 24 hours. can you summarize the tension between the americans and the canadians? >> this really caps off the latest on off-again trade policy for this white house and we should also mention that in

those comments yesterday, trump went on to triple down that he is not watching the stock market in response to any of these tariffs moves. howard lutnick led those negotiations with the ontario premier in order to have him drop that 25% electricity tax that was threatened and caused president trump to say that he was going to of the tariffs on canada today to 50%. once those negotiations happen, the u.s. ended up dropping that tariff back down to the original 25% for canada. importantly, this will hit canada particularly hard since it is the top exporter of the steel and aluminum to the u.s., but the white house confirming that there are no exemptions for any countries to the tariffs. domestic steel producers and aluminum producers have largely applauded this move, but we have to keep in mind that this does apply to those other downstream metal products like car bumpers and wires, we have to be

watching manufacturers closely on whether or not a signal that they could up consumer prices. the auto sector in particular already sounding the alarm that the majority of their supply chains are concentrated in north america and this could cause severe disruptions. annmarie: what is the status of this relationship right now, at the president even gotten on the phone with mark carney? >> we definitely haven't heard of them having any conversations yet. if you think about mark carney, he does have a whole bunch of things going on, including the fact that they need to be elections. but the fact that trump is just talking about how terrible canada is to the u.s. and all of these tariffs are still in place, it clearly shows you that the relationship is fraught in a sense. you have seen a little bit of a better relationship with ontario's premier, but with mark carney, i think we are waiting for that conversation to happen just to see where this will go. canada still has to add-on a few more tariffs in about two weeks.

is that going to happen? there are still a lot of questions out there. jonathan: to extend the conversation, adam, let's take a step back and think about things. the economic consequences of weaponizing uncertainty, what are they? >> they are bad. the basic idea that president trump came in with was demonstrated with this tariff approach toward canada, that if you are the big bully on the block, you threaten people and you say you don't know if i'm going to do this or not, and various people have said it is just a negotiating tactic. but it is not like negotiating with the soviet union in the arms race where you are dealing government to government and they can't afford to risk nuclear weapons. in economics, you are dealing with billions of decision-makers making hundreds of lesions of decisions, so even if you're

scaring the canadian government, which you are not, then all kinds of people, businesses, investors, households react. and what you get instead is just this general miasma of uncertainty we've seen. and when it wrote about this last october, morning that this was the core of the trump economics program on migration, on taxes, some people said i was overdoing it. and i admit i thought it wouldn't go this bad this quickly. but it was clearly the dynamic at work and when you see the outsized shilling of investment, the outsized chilling of consumer spending and also the retaliations we are seeing from canada and europe, it is clear that this policy is backfiring. annmarie: is the uncertainty worth in the tariff themselves? could that push the united states into a recession? >> it's a fair question but the

uncertainty of the more immediate threat. i do think the uncertainty could possibly push the u.s. into recession. i think it's more likely we come out of this with just a slowdown. the reason i'm being on sure is that the uncertainty does hold, and it does affect investment behavior, consumer behavior, willingness of others to trade with us, but at the same time there are things fundamentally resilient about the u.s. economy. and so if -- if the uncertainty gets amped up because they do more aggressive actions on deportation or because the fiscal policy becomes very uncertain, or because they start talking about tariffs as a replacement for income tax and thereby increase the uncertainty about working cuts, all those channels could get you the recession in the u.s. it's always been if they overdid it on the tariffs, on the fiscal

policy, it would sow demised. lisa: eufinance front saying tariffs are inflationary and a lot of people in markets have agree with you. the emphasis is now on the recession potential or sums third of downshifting growth vs. the inflation. we get cpi in a little more than two hours. how are you viewing this offset of inflation and slower growth and which is to win out at a time where a lot left rankly, based on market activity, confused? >> it's right for people to be confused, that's what uncertainty means. there's legitimate reason to be confused. that is opposed to risk which shouldn't be confusing. in my view i think that what is baked in is the inflation. that weather begets stagflation meeting recessionary forces of the kind you're talking about along with the inflation or whether we continue to get growth along with inflation, i think the inflation comes either way. this is not just because of

tariffs. what you are seeing is a real income loss for american families, american households, and a real income loss for the vast majority of small businesses that rely on imported goods. and imported inputs like canadian energy, canadian steel. and so when there's a real income loss, people try to adjust. they have to. so part of it is recession, they cut back. but part of it as they raise their prices, demand higher wages. and the balance of those is affected by the monetary policy. and since we are in a period where the fed was to loose, in which the economy had not gotten back down to a stable, low level of inflation to the full extent, and in which we are at close to full employment, because we estimate 4% unemployment, the risk of inflation accelerating are quite high. so i think you are going to get

the worst of both worlds. you get inflation either way and if a recession comes, it's going to be stagflation, not slowing down prices. annmarie: how much consensus among the people who speak to behind closed doors is there that maybe uncertainty has gotten away from itself? >> not enough. it's very evident, but there's a lot of pushback, and a lot of people saying it relating to what annmarie just said that well, in the end we are going to have this wonderful outcome. i'm reminded of brexit when the u.k. did something similar to itself declaring a trade war on itself, and people were saying investment in the u.k. has been flat basically for 6, 7 years. i don't think we are going to get that in the u.s. that you are going to get something smaller. but in washington there are ideologues, there are wishful thinkers, there are people who

have self-interest in denial. that is why i'm glad to talk with you because the markets and the people who have money on the line have to make it clear this is a destructive policy. jonathan: i was happy to talk to you until you brought up brexit. this is a brexit-free zone. good to see you as always. lisa: it's come up in other ways. jonathan: place plenty of other alternatives. coming up on the program, weakening consumer demand weighs on the airline industry with some big changes in the past 24 hours. we get into them in just a moment. from new york, this is bloomberg. ♪

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jonathan: following two days of losses on the s&p 500, futures positive by zero 55%. the nasdaq 100 up by .70 percent, yesterday briefly dropping, down almost 10% from all-time highs now, down around nine. that record high is not even a month ago. feels like a lifetime ago. sonali: when you look at -- lisa: when you look at valuation declines, 16% or more. we look at the nasdaq and the correction there, the question is, what is going to create to max kepler's point, the cathartic moment?

i wonder how much we are looking at a potential for true recessionary fears coming through. it happens if it is a grind lower in the face of uncertainty that doesn't resolve. that is something people are grappling with. jonathan: we are heading toward four weeks of losses on the s&p 500. we saw the hard data in august, we saw the federal reserve start to get nervous about things going into jackson hole when chairman powell delivered that speech. this is not about policy, this is about policy and certainty, and there is a difference between the two, this is about max uncertainty, unnerving people. lisa: we have talked about how companies have pulled back, individuals have pulled back, the idea that suddenly on a dime, all of the appetite to spend has shifted. there is question about why we for the same warnings from mark and best buy. at one point does this have the longer-term effect that shows up

in the hard data. when you talk policy uncertainty, how does the fed respond by not going down? jonathan: there is an extra wrinkle in the story, the president doubled on yesterday on things with of america's largest trade partners, and the bond market did not offer comfort. yields were all over the place, and this is what is hard about this moment for financial moments and allocators. the bond market is paved and a difficult way day today, and you can have the same catalyst and respond to different ways and that's problematic for a lot of people. lisa: yesterday it was the jolt static, which is backward looking, but the fact that the >> rate and the indicator of how much mobility of individuals think they have the >> rate went up to a six-month high this indicates strength. if this is another way strong market and you have an inflationary shocker and one time price adjuster as scott bessent would say when it comes to tariffs, how much does that trickle in at a time when there

are pressures. see this on walmart, about how much they can pass it on to consumers. jonathan: president donald trump downplayed recent market turmoil as tariff headlines whipsawed markets. >> markets are going to go up and down, but we have to rebuild our country. our country has been stripped of its jobs and factories. some people are going to make great deals by buying stocks and bonds, and all the things they are buying. i think we will have an economy that is a real economy. jonathan: i think we understand the president's plans, and they have been articulated by scott bessent clearly. also government on the border, a lot less government inside the border, doge, tax cuts, so if you like to rebound the economy from the private sector, pulled back on government spending, and announce instruction in the near term, got it, that will be a better place.

that is the goal. let's focus on tariffs. said this moments ago, i'm prepared to be open-minded about the consequences, how people respond, how to respond, but at the moment, we don't know what the policy is. it is the policy uncertainty that is problematic. 10% tariffs, 15, 25. they will adapt and adjust. if you tell them one minute it is 25 in the next minute it is 50, then we have a problem. lisa: especially because that increase to 50, are we responding to fentanyl now? i we responding to retaliatory tariffs? this is going to the bucket we learn about april 2 or is distal and we heard about a couple of weeks ago? -- or is this the one we heard about a couple of weeks ago? this is a question of ultimately how you are going about really separating the u.s. economy from the rest of the world. what can canada give us? would we like to separate it

entirely from a market? if that is the goal, it is important to understand why that is helpful. annmarie: it does not sell executives left the business table having understanding from the president with the plan was going to be. you talk about scott bessent, the treasury secretary said wall street has done great, we are trying to move to mainstream. when you look at mainstream press this morning, there are headlines like what does this mean for your 401(k)? this is becoming a problem for the president with individuals were in his face politically. jonathan: you are waking up to more tariffs, we got the 25% on steel and aluminum, and response from the eu, retaliating, planning to impose them on $28.3 billion of u.s. goods, snapping back almost immediately and they are sent to continue to do the same in the next month or so. annmarie: april 1 and then the middle of april for a bit more tariffs in retaliation with the u.s. is doing, something that

stick out to me from the europeans talking this morning, the eu plans to raise it on poultry, and they will look at tariff retaliation to include house speaker mike johnson state, so what do you think when you think louisiana? agricultural, energy, they will find other places to send a message to the president, we will hit you where it hurts. jonathan: if you are worried about inflation, there could be good news coming from ukraine, accepting the u.s. proposal for a 30 day cease-fire with russia, and then russia will lift the freeze on military aid in intelligence, it the administration can do something about energy story, not just in america but worldwide. think about what happened to the price of energy since the war started. then you have a better picture for energy, not just in america but europe, too, and then maybe you can paint a better picture of inflation, as well. lisa: this is the point the treasury secretary talked about,

the idea to bring down energy prices and to generally reset trade, they will be a detox time, and then be ok. this is also interesting because it shifts the onus for the u.s. cannot pressure russia to really accept the deal, and now the real leverage has to come from how the u.s. goes about doing that when russia really hasn't been as much a part of some of the contention the past couple of days. jonathan: we will bring you another update later. let's talk about stock moves we've seen the past 24 hours, weakening consumer demand leading to a selloff in airline stocks. they cut their profit forecast in half. sheila kahyaoglu joins us. what happened with airlines? sheila: we have a data series that attracts traffic on apps and looks at pre-booking. that data fell off 10% over the last three months, so trailing we months, but three weeks

really fell off and hit the cost carriers the most. it is in the heartland of where we are seeing the demand fall off, but delta signaled a 50% revenue cut. got q1 to 79% and they cut it three to four, so still positive. we are not in recession territory, but january and february, the last time we heard from them three weeks ago, was positive growth, so that means last three weeks really decelerated so qt will be important because it is 40% of airline earnings. lisa: as worcester about motivating reasons for why we saw a deceleration in demand, can you track the falloff in airline ticket purchases to some of the safety issues that are raised? sheila: that was cited by american and delta yesterday but it was across the board. it was delta, so people book airfares closer to when they are actually going to travel, and there's also corporate demand, and we see that in the data, as all for february, and then

third, it was demand across government, which united has 4% of asms and america has 1.5, so it was across the board, trump's policies and doge impacting government employees and corporate slowing down, and then leisure demand slowing, as well. lisa: we heard from delta that they plan to cut capacity to meet so demand, adding into the summer, what does that indicate to you about how temporary this is, or potentially some of the airlines preparing for the follow-up to continue for a longer time and hoping to increase prices to compensate for it? sheila: domestically, the u.s. domestic capacities already tight. it grew 6% to 7% and then we exited the year about flat, and tsa volumes are flat year over year, so his capacity, so capacity is already fairly tight, so that is a soft,. we have to seek demand come in,

and the next four weeks to six weeks is critical. annmarie: where does the demand come in? we were all shocked when united said a 50% drop in government travel, who fills the void? sheila: it's hard, it is a small percentage but then delta also cited. as well as leisure, so it was not only one thing, and i think that is what is more concerning about the reeds, but, again, it is early and that can change if s&p goes up the next four weeks, i'm sure people will book travel again. annmarie: what's more challenging, domestic or international travel? sheila: domestic. domestic has always been because you have low cost carriers. the price down, you see tickets from spirit, other low-cost carriers were cheap. the good news is, they are very slow on the deliveries, so we are not seeing a lot of capacity

coming to the market and that market is very constrained. jonathan: i might suggest that it is duege dependent -- doge dependent, if you have to raise a family the moment and you are dependent on the federal government for your annual salary, i would be nervous about the rest of the year, how is that showing up on the numbers already? sheila: it is a small percentage but the headlines covering defense talk is scariest. some of the headlines they put out are not the reality of what they're cutting, so it goes back to the uncertainty of a big headline and the reality. jonathan: what are the actually cutting? sheila: it's interesting to me because i thought they would go after larger more bureaucratic issues, but they are going after i.t. services and contractors which comprises of three of the largest programs, so i thought they would aluminate more waste, but they seem to be cutting quickly and abruptly, so without any precision which creates problems, as well.

lisa: how much of the story is this? yesterday i saw comments of their like of government spending was the main pillar of support for the u.s. consumer, that we had a pretty weak consumer, aside from the stimulus that was injected into the government. can you talk about what we have seen in terms of consumer spending habits leading up to this and the aftermath and how connected to the federal spending it is versus the overall? it's hard to parse out, but it gives a sense of where we are coming from. sheila: i think it is the government employees. if you are an employee of the government, you probably will not travel and that's a small percentage. some of the agencies they're cutting from already had trouble recruiting. we got back to pre-pandemic levels six years ago, so it is problematic cutting abruptly. i do think that airline cuts go back to consumer sentiment on the overall market, as we have all seen our stock prices have. jonathan: what's your favorite name this morning? sheila: i'm going to pitch

boeing. i think outside the lines, the macro, we have not delivered a single plane in six years, the skyline is oversold, and i think investors have capitulated on demand. they think we will see demand destruction because the market softened the last three weeks, but i think everybody is still waiting for their plane and it will knock it out of line. jonathan: thank you. equity futures up by 0.60% on the s&p. here is your bloomberg brief with dani burger. dani: the department of education is cutting its workforce by roughly half. the department said it is cutting 1900 50 staff positions, including more than 200 federal workers. it is the trump administration's first step in dismantling the agency. staff at the fed met with elon musk stte doge team in january, showing that staff cooperated

and discussed access to federal payment systems. the meetings took place two weeks before powell's testimony to the house financial services committee in mid february where he said the fed "had no contact with doge. liverpool was beaten a penalty shootout. psg evened up the aggregate score with one goal in the 11th minute and then they were scoreless the remainder of the match. they join our soluna and inter-milan in the next round. jonathan: absolute beast, thank you. next on the program, president trump backing the first buddy. >> because he's able to find billions and billions and billions of dollars of fraud and waste and all of the things, our country is going to be very strong very soon. jonathan: we are joined by daniel ives. you are watching bloomberg tv. ♪

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jonathan: here is the bounce, equity futures up by 60% -- .60%. the 10 year, 4.2798. president trump back in the first buddy. >> because he's able to find billions and billions and billions of dollars of fraud and waste and all of the things, i'm in, our country is going to be very strong very soon because of a lot of the things he has done and a lot of the things i'm doing. there's no better key, but there's nobody like this and he should not be penalized. jonathan: president trump expressed confidence in elon musk, but shares of the ez maker

giving back all of their postelection gains. "we believe this is a moment of truth for elon musk and tesla, if he continues to go to down the doge path, 100%, because it will become more pervasive." dan, what changed? dan: we have talked about a ton from this deregulatory, and that continues to be the case. it will be the key for tesla, but no one, including us, expected that elon musk was essentially living at mar-a-lago in the white house. this has been -- this is now at a point where it is a tipping point where elon musk needs to focus back. we have been here before, but this has tipped the scales and we are seeing it in the stock.

jonathan: we have been here before. we used to talk about this with regard to spacex. it was not the problem then, so why is it a problem now. what is happening at tesla that says it is missing its bus? dan: because of the brand. the last thing you would like is for tesla to become a political symbol, doge, trump, whatever you would like to say, whether it is, stations and some of the concerns and protests we have seen globally, that could all feed, and that is still contained at this point. it is the best car, and in terms of last year, the 2024 model, why? the issue now is they have the biggest technology innovation head when it comes to a new model coming out in the summer, but now, you need muska to lead, it is time to come home, and to

focus back on tesla, that has been a huge issue here. investors are giving some sort of flexibility but now it is the tipping point. you have seen in the stock that frustration is building. lisa: you said it is time to come home and we heard from elon musk saying that he will be with the doge effort at least another year. is that enough or does that make you think you need to downgrade your outlook? dan: i would be surprised if that happened, and my view is that i think he going have to see the writing on the wall. we have talked about this, whether it is spacex, twitter, i think he is going to start to get the message, and it could take some time, but i believe he's going to have to start the balance of time. he can still be focused on those dge but you have to bc -- doge

but you have to be the ceo tesla. and i think that is the frustration here when it comes to elon musk and tesla. annmarie: less than a month ago, you said the best is yet to come, you said you think is going to be a bet for the ages in terms of elon musk and trump, and that continues to be the golden goose and it is what they are focused on, you thought his proximity of power would unleash an epic demand for tesla. what happened? dan: medium and long-term, it is that. i believe the federal roadmap will be there and that ultimately, all of this will be noise relative to what could happen, but that is why i think this is probably the biggest ai layout there, but that said, this near-term situation is unsustainable, and i think no one expected he would dive so

deep into the pool when it came to doge. that is where he spending all of his time. and i can tell you that he needs to change, he needs to challenge, otherwise everything we talked about, this brand issue, that actually starts to taint some of the long-term impact and that is where we are really communicating that to tesla and the board. lisa: i don't think i've ever heard you as unenthusiastic about a u.s. tech stock ever. next time we see you, you might be wearing a black suit. can you look back in your history of calls if you've ever felt this uncertain about a name were quite enthusiastic about just a couple of months ago? dan: we did it with tesla during the twitter situation, go back to 2018-2019, sometimes it is

tough love. and i continue to believe tech is way oversold, but you have got to speak out because i talk to thousands of investors around the world, i need to communicate what i believe elon musk needs to do now for the long-term story to play out. that is what needs to happen. silence cannot happen. you cannot be less half-full given what is happening here with doge, the brand and the worry about where he needs to be focused on with his efforts. jonathan: you do sound like a member of the 550 price target at a stock that trades at 230, so what's gonna get us there? dan: he starts to get more dialed into tesla, and that we are sitting there in the summer and that golden case is there, in terms of autonomous, unsupervised, and the long-term

story, you have to get through this near-term turbulence to get to the gold at the end of the rainbow and i is the time. it is the moment of truth and elon musk needs to step up. jonathan: if we get to the summer and nothing has changed, does your view change? dan: if nothing changes, then obviously, brand issues would be a lot bigger, and that is something that could change the story. i believe the longer term story is going to be the two, $3 trillion cap, but he needs to get through this time because this is not serving anyone well, and i think that is a message from tesla shareholders. jonathan: daniel ives on tesla, big drop. big change for tesla stock. annmarie: big change, and a lot has to do with the brand destruction and the time spent at the white house. dan is right in the sense he's always by the president tsai. he's at mar-a-lago, the white

house, and he said to fox news this week with great difficulty he has running his companies. jonathan: what do you make of the outrage, the president, tesla, nobody did this with gm? annmarie: it look like with joe biden did, and i was there when he took that hummer spin august of 2021 and everybody talked about worst tesla, why did you snub them? lisa: if you have an outreach bucket, fill it was something else. jonathan: if the president does it, it is bad, if president biden, it is good, it is fine, no problem with gm. annmarie: i actually think trump bought the car though. i do think biden was. jonathan: just getting free marketing to gm. lisa: ok. jonathan: anyway, next on the program alecia levine, rick wurster and then the brown -- lynlee round.

up next. ♪

>> the market is in a show me state, and the only way to get there is clarity on inflation. >> the consumer right now is tightening their belts a little bit. >> there is still a good amount of spending and borrowing power. >> the u.s. consumer market is simply not driving the economy. >> inflation will not be as strong as they think. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of

"surveillance" starts out equity futures positive by a .07%. the main event is 90 minutes from now as uscp i, later this morning, the last major datapoint coming into the federal reserve next weekend that decision is today. lisa: it is taking a minute importance as people try to figure out should they weigh more the idea of a recession fear or stagflation fear? it matters one potentially the fed could offset uncertainty around their policy but none of their hands are tied with how to than expected inflation. jonathan: 0.7% on the effort -- on the s&p 500. this morning from goldman. dropping the price target on the s&p 500 from 6500 to two, and pointing to what most people are pointing to, policy uncertainty. annmarie: the uncertainty is what is hurting the market, if trump comes out with tariffs, at least you know the direction of travel but the uncertainty

whipsawed within one day a roller coaster of tariffs on it comes to aluminum. this is going to increase the price of things like beer cans for consumers and that's the problem we have, especially on a day like cpi. jonathan: you will not get clarity anytime soon. the administration is counting on you, the big one comes april and this is not it. lisa: and it will lead to more of the tit for tat with responses from europe or canada, going back to what goldman sachs was saying, when you have uncertainty, you have a greater implied volatility, and we are seeing that with the vix. that alone means you need to take some of the valuation off risk assets because volatility is a cost, and you cannot be as reliable or rely as much on those assets, and that is what people are increasingly trying to figure out. annmarie: when it comes to april 2, a lot of analysts say that

his peak uncertainty but april 2 we might get the announcements and that it could be 3, 4, 5, 6 month before the tariffs come into play, which means we could be dealing with this paralysis and uncertainty for months. this tech out to me today from the wall street journal, the president's advisors have warned them tariffs can hurt the economic growth but he's largely been undeterred. jonathan: two months ago, the golden age of volatility. that's what we've seen. session highs on the s&p 500, higher by .75%. coming at this hour, fresh u.s. inflation data. new tariffs are going to take effect, and rick wurster following trump's meeting with business leaders. stocks are looking to stop a two day losing streak with cpi at 8:30. alisha levine of bny writing "we think the growth scare for now remains a scanner and is

consistent with a soft patch." good morning. it is a you. what would you suggest people do given the correction we've seen? alicia: we saw it yesterday when the s&p 500 hit that correction mark and we saw buyers coming to the market. for the most part, if there is no recession, the market down 10% tends to have pretty positive returns going forward, so that is part of what we saw the market rallied was ended the day because it was a magic point in the market, and when they come down this quickly, it has been so fast, no time to breathe. you are right for a bounce, at least, so that is part of what we saw yesterday. jonathan: there are s&p people out there who suggest this is not just about tariffs, but we are seeing big moves, things that are not associated and typically be considered to be associated with tariffs. what is the overall price action? alicia: there are a couple of things going on. the interesting observation is if this were only about tariffs

and the impact of growth and inflation, kind of a stagflationary mix like you talked about, we would not see europe outperform, we would not see mexico outperform and we would not see canada outperform is in the end, the trade deficit the u.s. has with trading partners that would make the u.s. more immune to the impact of tariffs and trade partners, yet, those markets have outperformed, so clearly there's something else going on, it's simply not about fear of tariffs in the cross asset trade. there is a momentum unwind here. the multiple was high, not terribly high, but terribly high to unwind, and as you know, we talk about this all the time, the markets live in a second derivative, so u.s. performance and earnings are slightly less unexpected and slightly better. that is enough to have you outperform in a world for 15 years, it has underperformed, trading at lower multiples and seems like a more interesting

place to park capital right now as the u.s. has a resume for -- it. lisa: it seems a lot more portable than peak uncertainty that could not resolve and could slow growth in a significant way. how can you tell if it is just a momentum unwind versus something more entrenched that will have real economic consequences down the line? alicia: if this was only about the fear of a growth slowed on, you wouldn't see the rest of the world doing so well because when the u.s. has a cold, the rest of the world has a flue. this is a bit of evaluation unwind, and perhaps the tech trade, deepseek i think was a large break, and that is the beginning where you saw all of this come down. that was early january. those stocks have really been on a slowly downward since the deepseek announcement, so this is more than just a growth scare

, and on the other side, the bond market, yes, the bond market priced in more of a slowdown with 3.5 points expected but you are not seeing the two-year collapse, so there's something more going on. it is a slowdown, and there is some reversion to other equity markets. clients say the last few years, why are we diversifying? why do we own bonds and the rest of the world? why am i not piled into u.s. equities? we say there will be a day will are -- where you will recognize the power of diversification to smooth out returns. lisa: i love this, you are calling clients and saying, guess what, it is now here are your returns. there was a question we heard from goldman sachs, which is the degree of uncertainty requires higher risk premium naturally. if you have the same kind of risk-adjusted return, then you have to account for that. how do you weigh that in?

alicia: i think that is right. we think there is a soft patch here, and the question is whether all the market turmoil helps push it into something more because what we have known is that the wealth effect and the $50 trillion that households have accumulated the last five years, since the beginning of covid, has really helped to cushion spending. if you take next to that, meaning that the market sells off, do you create a negative wealth effect and do you dentist the consumer? that is the question, so, yes, there is some risk premium you have to think about. we get this through the diversification, bonds adding to work this year is balanced to portfolios, but i think the observation is correct, earnings have to come down in the multiple has to come down. even with earning estimates coming down, the multiple has to come down from 22 times forward to 20. you are getting to a place where it is more interesting to put

your toe back into u.s. assets. if you're going to bet on growth the next few years, is it european or u.s. question mark that's the question we ask ourselves every day. annmarie: you don't think u.s. exceptionalism is dead. alicia: i think it's taking the pause, but how long is it? this concept of short-term pain for long-term gain, i like to say that long-term is made up a lot of short terms, and none of this is linear, so the longer this goes on with tariffs here and there, well, we are going to take it back, that cohabit's negative feedback. for now we think this care is for cicely that, but we are open to the thought that it might unwind further. annmarie: there is a line in your notes i love, market is trying to force a policy response from the federal white house. you think they do it? alicia: i think you are starting to see it fed side, we have one week from today, the white house is trying to signal, and i think

they are using the market to signal they are serious and that is a negotiated tactic. annmarie: do you think the white house is trying to engineer a fed cut? alicia: i think they are trying to get the 10 year down. i'm taking the words of the treasury secretary very seriously. he said it on your program february 6, we are focused on the 10 year, that was a signal to the market and i take it seriously, i think the whole market does. jonathan: you mentioned u.s. cpi, how relevant is that data point? alicia: terribly relevant because it either reaffirms the concerns about a stagflation trade, so i think you will see volatility around it. if it comes in slightly better than expected all the 100th decimal point, they will have a massive rally here. quick line is off the charts. jonathan: stretch, a word i have heard a lot. look out for u.s. cpi, one hour and 25 minutes from now. let's get an update with your

bloomberg brief. here's dani: to u.s. stocks, goldman cut its s&p 500 target for 6200 from 65 and said that the magnificent seven have become maleficent seven. they cited were gdp growth, and higher level of uncertainty. they also listed the view on european earnings. ukraine has accepted a u.s. proposal for a 30 day truce, in exchange for eight and intelligence. that followed eight hours of talks in saudi arabia on tuesday, including prisoner swap's ukraine mineral development. the u.s. will seek agreement from the russian president. elsewhere, uber terminated its deal to acquire delivery heroes business in taiwan after the islands' antitrust relator rejected it. they have to pay a termination fee estimated to be $250 billion and will not pursue an appeal. jonathan: next on the program,

doubling down on tariffs. >> the president is unwavering in his commitment to restore american manufacturing and global dominance, and i think he doubled down on that with his new statement, and the tariffs that will be implement it on steel and aluminum. jonathan: 25% tariffs on steel and aluminum overnight. reaction from adam hodge. from new york city, good morning. ♪

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jonathan: tariffs go on and the sun still rises in the morning. what a beautiful morning here in new york. equity futures on the s&p 500

positive i 0.8%. under surveillance, doubling down on tariffs. >> president is unwavering in his commitment to restore american manufacturing and global dominance and he doubled down on that with his new statement, and the tariffs that will be implemented on steel and aluminum. jonathan: president trump's 25% tariffs on steel and aluminum taken effect, and the eu is fighting back. >> the administration opted to pursue a course of tariffs, leading us with no choice but a response on that is exactly what we are doing. jonathan: joining us is tyler kendall from washington, d.c. how does this set us up for april 2 going into next month? tyler: exactly, the white house has often brushed aside retaliation, saying it will get factored into those april 2 reciprocal tariffs calculations. we are going to have to see how

long that defense lasts because well we are still waiting on the final list from the european union, we expect up to 28 billion dollars worth of u.s. goods to be terrorist, and a senior eu official told ruberg news that the eu is going to target politically sensitive items in republican states like soybeans in louisiana, home to house speaker mike johnson, and it continues a recent trend we've seen from china this week, announcing they are going to retaliate with tariffs against u.s. agricultural products, and if the payo line keeps coming for u.s. ag, that could be a pressure point for republicans in congress that have been crazy about the potential impacts for farmers. one statistic i pulled, the u.s. agricultural industry lost $26 billion to 2018 and 2019 during the height of president trump' at tariffs. at the time, they gave payouts to farmers but this time it might be a little more politically difficult

considering this u.s. government has spoken a lot about pulling back on government spending, so we will have to see how negotiations go from here. one eu number state will be at the white house today and president trump is set to meet with the leader of ireland. annmarie: they have a massive trade deficit when it comes to the u.s., the biggest when it comes the eu but when it comes to this week, what could we expect on the trade front before april 2? we do know that canada is extending officials to washington. tyler: we will have to see where negotiations go from here, particularly as the rhetoric continues. we saw those on and off-again plans yesterday with president trump taking to true social to threaten that today's tariffs could have fit up to 50% but this white house really doubled down that this is about a long-term impact here that they would like to sustain, longer-term growth, and they appear to be asking consumers and investors to remain patient,

but it spurred recent reporting from bloomberg news, indicating this pushes the white house and congress to try to get president trump's tax agenda off the ground quicker, trying to get more cash into consumer pockets as quick as possible as they counteract what has been a response to tariff plans, that means when we talk about negotiations on the tariff front, there are not exemptions could come out, and we will see side-by-side negotiations as they try to push republicans on capitol hill to get moving on implementing the broader physical agenda. jonathan: tyler kendall and washington, d.c. adam hodge joins us now of bully pulpit international. what do you tell a person to understand this, the president says he's focused on the long game but he does not have to run for election again. there are members of congress will have to do that the next 18 months or so when they face the midterms and have to campaign, what is congress going to do between now and then? adam: there are a couple of big things on the horizon, including

the tax bill you talked about, but the point you have seen with what democrats are trying to do is make the republicans in the house own this. yesterday on the budget bill, they put together one of the amendments that would have forced the republicans to take a vote on the wisdom of the tariffs. that is making the pain acute for all the members of congress, and it is something you will see, cuts trying to do, and that issue on the agenda and the midterms over the next few months, the uncertainty in the market is the thing that is driving a lot of the additive in washington, so we will see how much that tail wags the dog over the next few months. annmarie: when it comes to democratic pushback, are they struggling because biden did keep some of trump's tariffs on when he was in office. adam: i think there is a key distinction, the tariffs put in place during the biden administration were coupled with huge investments to increase american competitiveness, and

what we have seen from doge and the trump administration is a pullback, so it is creating uncertainty, certainly on the structure side, and people who are counting on major investments in batteries, and with a lot of foreign partners, investing in that space, as well , so that is where democrats have to try to find a way to articulate the smarter message, that it is yes, we can be strategic about the tariffs, but we also have to couple that with smart investments at power economic growth, and the pullback is what democrats have had the opportunity to harp on over the next few months. annmarie: from a sequencing perspective, you worked at ustr under the biden administration, when trump says april 2 we will get tariffs, how do you read that? or will there be months of public commentary that everybody needs to basically listen to before they come into play? adam: you are absolutely right.

there will be an initial announcement that we will be a process, and then folks have a chance to weigh in with public comment and at some point down the road, you are going to get an announcement on tariffs, but that uncertainty is really what weighs on business is the markets. but i think the steel and aluminum trade is particularly important because you have seen companies and businesses try to get around them. i did a little homework for you. the commerce department in january said steel imports increased 43.5% in january, so you have already seen businesses try to get ahead of what you think tariffs can be, and over the course of the next few months, we will see more of that as a try to get ahead of whatever scientific come from the trump administration. lisa: there's a real challenge for the democrats, including how the resolution was passed by house republicans where they have to decide whether or not they will be the obstacle that

potentially leads to a government shutdown next week if they don't allow to get through the senate. how do they tackle that in a way that does not shutdown the government? adam: it is important to remember, republicans have control of the house, senate and white house. they control the senate, the idea that they are part of the senate doesn't pass the smell test. people are more likely to blame republicans for a shutdown rather than democrats. what the democrats have focused on other painful cuts republicans have put in the bill, center overwhelmingly popular, like nutrition assistance and clean water programs and veterans benefits. that is where you have seen the democrats try to focus the agenda and focused agenda on with the cuts mean to everybody, but i think the bottom line here is that all of the republican

budget plan belongs in some of the doge process which has poisoned the well with democrats in washington, so i think you are going to see a really united front for democrats, and if the government shuts down, it would not surprise me, and the republicans will shoulder the blame on most of that issue. lisa: an op-ed was written in the washington journal where they said for a robust democracy, it is important to have strong parties on both sides, and she is concerned that democrats are not pulling it together to present an opposing message, and instead there is a lack of a leader and a lack of certain parts of this makes sense, but these are the methods you don't agree with. are you seen coalescing around that type of message from the opposite party at a time where people are concerned about what you just put out there? adam: i think that is a smart point to, and keep in mind, the budget fight this week is just a preview for the main event this

year and that is where democrats have already honed a message around medicaid cuts, and the potential tax cuts for billionaires and the wealthy corporations. they feel that is a strong argument for the midterms and throughout the next months, and it coalesces around two simple ideas, medicaid cuts and tax cuts, that is something they feel strongly about, a strong contrast with republicans on the hill, that is where they could speak to working-class voters, and the key is to be disciplined and focused on those issues. that will be the whole ballgame, so we will see that play out, and the tariffs will be a part of the backdrop. the real key for this year is the budget fight. jonathan: can you give us to democratic respected with how they manage things in regards to doge, do you think they are doing the right thing? adam: look at elon musk's

popularity's dent. those are all down from the beginning of the year, so there has been some progress, but, again, nobody but democrats have to be careful here. that is bad for democrats, republicans and the global economy, so you have to focus on what are the key issues that resident with working people and what is your plan or your idea? jonathan: one key issue might be to agree that sending thousands of dollars to put on dance classes and china might not be a good use of taxpayer money, start there and then we will do things better. adam: what you heard democrats focus on the cuts to nuclear bomb specialists, or veterans. those are much more politically salient points the democrats can

focus on. there's no question that there is waste, abuse and fraud in the government. the question is do you have a strategic approach to really strengthen the size of government? so far, you have not seen any strategic process so far. jonathan: i appreciate your time. thank you very much, adam hodge, with the democratic perspective on a range of initiatives in washington, d.c. lisa: a question of if your enemy is making a mistake, do you stand back, or do you present a counter message? jonathan: session highs up by 0.80% s&p on the -- on the s&p. next, we catch up with rick wurster. this is bloomberg. ♪

jonathan: we are heading towards four weeks of losses on the s&p, something we have not done since last august. equity futures positive i zero point 8%, the nasdaq 100 up by one full percentage point. u.s. cpi, let's get you some morning movers. we can do that with yahaira jacquez. yahaira: intel getting a jump, up nearly 8% after raters reported that they have approached nvidia and broadcom with a joint venture to operate, and under the arrangement, tsmc

would own 50% of the business, and the reason that is important is it aligns with u.s. interest to revitalize intel without handing over ownership to a foreign entity. next, we have walmart, those shares are up slightly, paring their losses from earlier after the retailer got blowback from china for reportedly asking suppliers in the country to reduce prices to offset the cost of tariffs. that way, americans would not have to pay more for their products coming in from china, so in response, chinese authorities and walmart executives say that is not ok, and i know you will have more details on that later, and we end on a high note, groupon shares up 20%, with an outlook that beat analyst estimates. what i find interesting is what it says about the consumer. this is an online coupon company focusing on services and experiences, so it is time when

the consumer seems to be on shaky ground, groupon may stand to benefit. jonathan: they are up by 20% in the premarket. president donald trump downplaying the recent market selloff, saying he does not foresee the u.s. going into recession. >> do you think there will be a recession? >> i don't see it at all. i think this country will boom. i could do it the easy way or hard way. the hard way to do it is what i'm doing, but the results will be 20 times harder. jonathan: what do you think of the market action? do you think we face a recession but he's not biting. stocks go up, down, he's not interested at all right now. lisa: the message is heard loud and clear that to the extent in the first term he was related by stocks going down, this time they have to go down a whole lot more to get his attention, and that is one reason why people say likely this uncertainty is a new normalcy, something people are trying to work into their analyses. annmarie: if you look at what

that ministry should would like to see go down, it is rates and synergy, and on that front, they are doing a good job. the issue with the stock market as it will start to bite him when it keeps coming up in places like usa today front page, what do you do with your 401(k) money? this will hit his maga base and that's the problem. jonathan: it's difficult to understand how cost overly distributed and how certain countries respond. chinese authorities summoning executives after the company asked suppliers for offsets to -- suppliers asked how it would offset cuts. so the administration says the exporters will eat it. walmart tries to get exporters to eat it and china steps in. lisa: they slap their hands and says, really, you will have your sam's club and drum up business here in china and make all the products? well we can play ball to. this highlights how it will be difficult for companies to say to the countries that are

getting tariff to buy the u.s., ok, you eat this and they are light, no, take it back, so it goes back to the question of how this raises prices for consumers who demonstrated a general weakening trend, and they have to deal with that. annmarie: clearly, this shows walmart's potential he struggling when it comes to tariffs and they have to pass it on to consumers so they that maybe they could get china to take on some of that. i wonder how much this is chinese officials getting a message to washington by arkansas and saying we will call in your ceos and we are not doing this. this is your president, you guys handle it. jonathan: apparently, that eu will play the same playbook. annmarie: they're going after states with agriculture, energy, louisiana. they are talking about going after the speaker of the house' state to get a message to donald trump about the tariffs. jonathan: house republicans passed legislation to keep the u.s. government open past the shutdown deadline.

the bill will likely need support from eight democrats in the senate to become law. annmarie: jake sherman says eight democrats will have to walk the plank. they had a lunch yesterday and the prevailing belief was a shutdown would be a lose-lose situation for democrats. they don't want to be seen as signing up for trump's continuing resolution to keep it open, but is it intentionally worse to be the party that shuts down the government? especially as you try to go after doge for causing jonathan: havoc across agencies. i don't even want to talk about the potential of the government shutdown. session highs up by 09%. with 44 million accounts, we have a polls on how investors feel about markets with increased engagement and outreach from retail and institutional clients. joining us in new york, the president and ceo of charles schwab. rick: thank you jonathan: for having me. jonathan: approaching 100 days.

rick: it has been a busy time. we have been supporting our clients, helping them get to where they need to be, so probably not as much sleep as i would like. jonathan: you probably will not catch up on sleep anytime soon. looking at the 44 million client -- accounts, how are they responding to all of this incoming information? rick: our clients are actively engaged. we did about 6 million on average, and we are doing even more the last six weeks. clients are engaged. we are not seeing any signs of significant nervousness. we have seen margin levels over the last months stay actively flat. those with margin have been leaning into equities the last week. i visited five of our retail branches in north carolina and i walked into our raleigh branch and met gloria and asked her, what our clients say when they come in our doors? are they nervous? she said, we had a couple who

are nervous but more than anything, they would like to get more money into the markets, so i that there was a good sign. lisa: this is fascinating and wall street analysts are saying we are looking for the right levels to buy the dip, and it seems retail investors have been conditioned in the same way. at what point are you going to get worried that maybe they are getting conditioned the wrong way and say there is not that bounce we have become used to. rick: it is all about taking a long-term view of markets, being diversified, having a plan and sticking with it, but when markets go up or down, those are the principles would come back to. it is hard to have a view on short-term what happens to markets but investing principles work, and you are saying that we are diversified portfolio, gold is doing well, assets are performing well, so our clients taking the advisor hanging in there. lisa: retail investors are painted with a brush with a by bitcoin and tesla and amc and

gamestop, and then they keep buying when things go down. what is the picture of the retail client of charles schwab that you're going after? rick: this is 7 million plus trades a day. we see more than any brokerage, so if you like we do have a polls on how retail investors trade, anything they trade very thoughtfully. we have a range of investors, some who are buying tesla, some who have made a lot of money doing so, but we also have a lot of investors who play for the long term. i think our investors are thoughtful, they are engaged, they listen to your show, and they are trying to make the right long-term decision for them and their financial plan. annmarie: your investors are not concerned about the uncertainty emanating from washington, d.c. rick: we try to coach our investors to take a long-term view. i'm sure we have clients who are nervous about whatever the

policy may be or the news flow of the day, but in large part, one of the great things about schwab's we have different ways to engage clients. you have spoken with over 600,000 the last week, and we remind them that they have a plan, and this is the time to stick to their plan and we tried to remove them from the news cycle. jonathan: let's talk to you as a business leader. we heard from a lot of companies that they are just waiting to get clarity on policy. i imagine you are not, can you walk us to what your plan looks like? rick: we are not hitting pause at all, 2025 is a lift off year, we integrated industry into charles schwab and now we have the best of everything charles schwab has on the best for our clients, so the future is about growth, and we are seeing it accelerate to the first quarter with significant levels of engagement, so from a business standpoint, we are thriving. lisa: so you are not cutting

down on travel and forcing everybody to come back to the office and say, it is time to tighten the ship? rick: we have not taken those actions. lisa: we wondered how much was trickled out, although it could counter cyclical business. as you expand, who are you going after at a time when the big private asset firms are trying to broaden out into private markets for retail clients and that is the increasing holy grail for a lot of the big banks, as well? who are you going after and he was your competitor? rick: in terms of who we are working with, we work with clients across all a general spectrums and of all sizes. one out of every six american households with more than $20 million in our country works with charles schwab. at the same time, we are question it with younger investors, 60% of new investors last year were under 40 and one third under 30, so we are thriving across age and wealth spectrums.

there's a lot of demand for alternative assets and we are working with great firms and others who are bringing their capabilities to the retail investor, and i think that is a great thing. historically, that has been are institutions only and now we can bring it to retail clients. lisa: our other business leaders as confident and excited as you are? rick: their business has their own dynamics. lisa: the reason why i'm asking is because we have talked about uncertainty and whether it is small business confidence, resist confidence more broadly, are you saying you just don't see it or your business is somewhat immune to it? rick: we feel like we have an all weather business model. it drives activity and engagement and it brings investors into the market. we have had 7, 8 million more trades a day, which is a lot for a business and drives are economic. it is a good thing for us. at the end of the day, what is most important is our clients

are doing well, and that is where we put our energy, making sure we can help them get to where they would like to be in the financial life. when our clients do well, we do well. annmarie: what is it like working with the president? you are advising them on the off spin of this truce five, associated with trump media. rick: we have worked with administrations for 50 years, and we try to work with clients across all aisles. we are supportive of our country, we support 44 million american client accounts, and we would like investors of all types to do well. jonathan: the financial services industry might have a new regulator, according to a person familiar with the matter, the trump demonstration will nominate mickey berman. mickey bowman, of course, nominated by president trump and

his first term to become a governor after federal reserve. a lot of people don't see this as a surprise, this is a name we had in the hat for the fed chair role that might open up further down the road. annmarie: this is some of the trump administration has looked kindly on, first people to put her there in the chair, so this is not a surprise, but we are getting clarity as we talk about uncertainty out of washington, this is one place we have a name and clarification. lisa: it also mean she will not be nominated which opens up the seat to potentially someone else seems to may be want to be fed chair. jonathan: have you got everything you want? rick: i think she will be a great choice. she's a thoughtful person. it will be great for supervision. jonathan: i imagine a lot of people will agree. appreciate the update. thank you for being a good friend to the program. rick wurster, the charles schwab ceo.

here is your bloomberg brief with dani burger. dani: the militant group in yemen said it would resume attacks on israeli ships the first time in two months, demanding the country and a ban on eight entering gaza. it will deter container ships and tankers sailing through the canal and southern red sea and may lead to a rise in global freight rates. greenland voters unexpectedly picked up already that has a sober approach to from denmark. it is the expressed desire for president trump's desire to take over the island. they distanced themselves from trump. shares are trading lower, german trade by 4.7 percent, cutting the medium term target, porsche is so we went demand for lower ev's and europe. we will start extensive rescaling. it will impact this year's financial results. that is your bloomberg brief. jonathan: about 30 minutes away,

next, a tremendously positive impact. >> hundreds of millions of dollars is being invested, which would not happen if i had not won the election, and the tariffs are having a positive impact. jonathan: the president sitting down with the business roundtable. we will get the view on that with lynlee brown of ey. this is bloomberg. ♪

jonathan: equity futures on the s&p 500 up by 0.80%, 25% stair -- tariffs on steel, under surveillance, a tremendously positive impact.

>> hundreds of millions of dollars is being invested, that would not have happened if i had not won the election, number one, number two, they're having a positive impact. we have car companies that are building in the u.s., 25% or whatever it may be, it may go up higher the higher it goes, the most likely it will build. jonathan: president trump highlighting the positive impact of tariffs as they join a list of companies raising concerns about the health of the u.s. consumer. target, best buy and macy's morning they have to raise prices. billy brown of -- lynlee brown of ey joins us. when will we get clarity on the situation? when can we move beyond uncertainty? lynlee: that is such a great question. the hope is maybe early april

when we get the administration reports about a reciprocal trade acts, maybe early we get some clarity on the roadmap and maybe less of a ping-pong match. annmarie: you write something interesting which is that history tells us that potentially besides china, tariffs have only been in place a few weeks, do you take trump 2.0 on full on negotiating mode when it comes to most trading partners in the comes to beijing? lynlee: i certainly do, we had full-blown x echo canadian tariffs and 25%, 10% on canadian energy two days before we had the reprieve under usmca, so i see this as a negotiating tactic to change behavior. annmarie: if you are sitting in the c, why would you make any decisions on which sectors with this hurt the most? lynlee: that is probably what we are seeing number one across clients, depending on a sector

perspective, do you wait and see? industrial products are one, i saw something this morning where we are not going to make that move in mexico for a big plant, we are just going to stay put for a while and continue what we are doing in china. we saw the tech industry deal with this in the first trump administration, retailers and consumer products deal with this in the first administration for most of the companies with manufacturing in the north american trading block. there is considerable amount of uncertainty and from the life science element, when you think about the importance on the transatlantic trade, that is a big element of ambiguity, uncertainty that does stymie activity. lisa: this is probably a stupid question but as i did my taxes recently, i thought, how do you even begin to account for all of the changes in the tariff policies and real-time as they come down while trying to reanalyze supply chains?

lynlee: that is, eight, not a stupid question, it is real life. the questions that we got that are indicative of this are certain companies that maybe this is relatively new to them, particularly if they have had free trade agreement benefits. the question was, i imported something within the two days that the tariffs were in place, do i have to pay them? yeah, you already incurred the liability, well, how do i model that on a go forward basis and what will the detriment be? that is when you put in a range, worst and best case scenarios, and you hope for somewhere in between. lisa: are companies canceling travel as they try to figure out what's going on among employees and saying, get bacteria desks, prepare for headlines and battened down the hatches? lynlee: great question, even the

tariff impact is relatively sideload. they have a task force which is wonderful to kind of deal with what are the impacts across the institution? but from the numbercrunching piece, you can numbercrunching what happens today but nobody knows what will happen tomorrow. when we woke up this morning, i don't know we thought we would look at potential retaliation from the eu. people may not have had that in their forecast so they put their head on the pillow last night and now they do. annmarie: reuters is reporting about canada having to telly asian, as well. how difficult is the tit-for-tat to model out? lynlee: that's a really great question. you can get pretty deep in that, country by country modeling out on an overall aggregate basis, that is algebra, but when you

think about it product by product, that gets hairy because you have different tariff amounts on different projects, even sometimes within the same subchapter of what that product is. you could drive yourself crazy trying to get as exact as possible, but on the tit-for-tat base, most companies have developed modeling certain areas that have allowed them to be flex, is it going to be 25 or 50? it doesn't allow for the sensitivity within product levels and across jurisdictions, that's more complex. jonathan: how does taxes in the middle of march? who does that? lisa: that is really your only take away? are you actually scolding me for doing it too late? jonathan: this is early, mid-march. i wait until at least the first week of april. lisa: i like how i was going to

pretend i didn't a long time ago. annmarie: i'm just shocked to do them yourself. that is something you have to outsource. jonathan: why? annmarie: it is easier. jonathan: how complicated are your taxes and what deductions are you getting? lisa: we have enough drama. jonathan: thank you so much. later this morning, 8:30 eastern, cpi, big event, big data point. if you have any downside surprises in the economy, tariff uncertainties, obviously, you will see of the federal reserve response to that. the ability to respond may come down to what inflation looks like going into the meeting. i will give an inflation report the next hour. lisa: what's interesting to me as if you get a downside surprise and it comes to inflation, you could get a huge rally in equities and bonds because it basically opens up the fed to potentially get some

sort of reprieve and be able to cut annmarie:. i'm interested in ppi tomorrow because that is the potential inflation we see on the companies and products. she talked about the matter of uncertainty, potentially 2, 3 weeks before tariffs come off, but you still pay the tariff. the computers change the border and it comes to collecting the tariff, so how do you model that and pay for it? that could be passed on to the consumer immediately. jonathan: when you it was complicated going into it, but seeing how countries respond to this in unpredictable ways, walmart is a great example, they say they will pressure exports as china steps in. you are stuck between a rock and a hard place. lisa: good luck, have fun. jonathan: is that the promo? i don't mind. the flex port ceo joins us

shortly, mohamed el-erian, and more, coming up next. ♪

>> there is obviously a lot of fear in the market, and the fear is centered on uncertain. >> as long as we are in this environment where businesses

don't know the rules you are going to be challenged for a while. >> so far the threat of terrors has been a blunt instrument. >> the size and speed of them dwarfs anything we saw last time around, and markets are reacting accordingly. >> it will take a few months to see how these policies pan out. announcer: this is "bloomberg surveillance." jonathan: waking up to new tariffs in the united states of america with the promise of more to come. 25% tariffs on steel and aluminum, and according to the white house we are still waiting for the big one in early april. typical terrace. this morning we are focused on the data. the data point of the morning, cpi in the united states. lisa: which raises the question, how high is the are for the fed to signal they are open to cutting rates in the face of potential weakness we see bleeding into the soft data? alicia levine was on earlier and said if you get the width of disinflation people were talking

about earlier, even if it is backward looking, it will unleash a rally in bonds unleash the door to being supportive of a fed put. jonathan: this is what we need. what is worse than an economic slowdown? an economic slowdown the federal reserve cannot respond to. the federal reserve would be in a position to cut interest rates. at the moment you are not seeing anything like that from the ministrations. we came into 2025 talking about the trump put. everyone is asking the same question -- what trump put? annmarie: he is not looking at equity markets and he says it is a great buying opportunity for a lot of people. what they are focused on is bringing energy down. which is why i think today is so important. he ran on inflation, bringing prices down. what did we hear from bank of america institute yesterday? grocery prices are going up. if you have tariffs on your main trading partners prices may go up even more. jonathan: some pretty tepid

outlooks for 2025. have no visibility, but they might have to push up prices. lisa: if you look at the internals of the small business survey yesterday what you found was that the largest share in nearly a year of these businesses is that they plan to raise prices in the coming months as a result of the policy shifts. it raises the question of what the fed will be looking at and how high that r is for them to respond at a time where a lot of people seem to be predicting much slower growth. jonathan: small business confidence at a four-month low. it is hard enough working out what these tariffs will mean for the economy. working out how other countries will respond is not easy either. annmarie: canada this morning is saying they're going to respond to the 25% aluminum terrace and steel tariffs. europe also suspending some of the tariffs they had on goods like whiskey and bourbon, motorcycles. then they are going to meet in

mid-april and we could get another response. although it does seem they are offering up a path for negotiation. what i find so striking is, taking a playbook for china, they are going after red states. lisa: wall street took a look at all of this and last week started to make their downgrades. this week it is accelerating and we got that from goldman sachs. was not the tariffs. we were talking about, which ones, the retaliation, with the goal is? if you have done uncertainty you need to hire a risk premium on your assets. jonathan: it is the economy too. downgrades on both. hsbc downgrading stocks. lisa just mentioned goldman. goldman have done and on the economy as well. morgan stanley downgrading growth, upgrading inflation. deutsche bank warned about the same thing. considerable downside risks are mounting. lisa: julian emanuel pointed out he sees the market pricing in more of a stagflation-type of

environment, which has a downside on stocks of about 10%. they are not taking the recession calls fully seriously yet. should those coming to play you have a much bigger potential downdraft. jonathan: equities doing better this morning. snapping back after two days of losses on the benchmark in america. coming up, we will catch up with craig johnson of piper sandler as a new round of tariffs takes hold. we will talk to ryan patterson and how levees will impact supply chains. and speak to mohamed el-erian, reacting to the latest read on inflation. begin with stocks rising as president trump downplays the risk of recession. craig johnson writing, another round of distribution pushes the stock market into it deeper oversold condition, from which a meaningful rally of 3% to 5% can occur soon. investors should be very selective. buckham to the program. let's talk about the so-called technical damage. how much damage have we done? craig: we have done a lot of damage.

we have done a lot of damage over the last 19 to 20 days. we have seen the s&p pullback close to 10%, and below the surface of this market you see you have a lot of stocks that are off more than 20%. in fact, if you look at a market cap range between 20 -- $20 billion and $80 billion you have one third of the stocks that are 20% off of their 2020 highs. the damage has been swift, broad, and at this point in time this market is setting itself up for a pretty good relief rally. could be 3% to 5%, back toward the 200 day moving average on the s&p, but clearly the conditions are ripe for a relief rally. i will say that relief rally may be more. jonathan: fully talk about single names can you say, we spent a lot of time above the 200 day moving average. where do you find support now? craig: support right now could

be as low as 5400 when you are looking at the s&p 500. but again, the relief rally is setting itself up and there has been a long upward trend coming off of those 2022 lows, and that price channel was violated just a few days ago. you have to keep in mind, from a technical perspective sometimes you break that level, as long as we are not going to break it for 3, 4, 5 days and you snapped back, sometimes the computers kick in and say, now is the time to buy. it has been a lot of investors out there waiting for a pullback through much of 2024, never got it. now you have a 10% pullback. they're going to start looking at that as a potential buying opportunity for select names. to that point, when you look at what happened yesterday we saw our mother's favorite index, the dow was down meaningful yesterday. but when you start looking at small-cap growth names, they were up materially yesterday in

what looked like a pretty heavy tape. there are some select opportunities out there investors are looking for. lisa: just to build on what you are talking about, do you still have that year end target of 6600 if you do break low that level for a longer period of time, or is not a broader participation outside of those select opportunities that you see? craig: we are sticking with our 6600. we established that in november 2024. certainly we don't think 2025 was going to be a great year to begin with. typically the third year of most bull markets you only get an average return of about 5.2%. that was sort of in our thinking as we were thinking about 2025. we sort of laid out a high-single digits price target. now it is certainly higher than where we are now. it is 12 to 13% from where we are now, but i think that is a reasonable objective. i'm not in the camp right now that we are going to see

stagflation or a recession. need to see more evidence of that. i'm not the economist, i am the chart guy. as a look at all of the charts there was a lot of stocks pulling back to sort of identifiable support levels that i think investors are going to probably want to step up to. lisa: let's talk about some of those. you have a range of different sectors represented, whether it is financials at morgan stanley or tech and oracle. what kind of technical levels are you looking for? is there something fundamental happening that is giving you optimism? craig: i take the stance that a lot of the fundamentals are going to get priced in through price itself. if you look at something like a morgan stanley -- let me just step back and say where we think investors should be right now is overweight tech, just not the mag seven. we think the mag seven is going to be the lag seven in 2025. should be overweight financials and services companies. one of the names we did call was morgan stanley. if you step back, not looking at

daily charts, but step back and look at a monthly chart you can see stocks like morgan stanley have corrected materially, but you are back to long-term support levels that is where these kind of stocks can find their footing. whether it is oracle on the tech side, morgan stanley, or some of those kind of names. that is what a lot of our investors are asking us for. find me stocks that have pulled back the material support that still look constructive. jonathan: good to catch up. craig johnson there of piper sandler on some of the technical damage we have seen over the past week. finish on financials there. thank set had a tough right of it on a handful of names over the last week or so. we talked about wiping out all of the gains post-election on the bank index since early november. a lot of that has come from some big names and it goes beyond the traditional banks. it goes to the apollo's, the asset managers as well. lisa: you could argue it was the ones that was the highest-flying in the wake of the election are getting the most beaten up.

it goes to this point we were talking about earlier. how much of what we are seeing is a momentum unwind versus some fundamental shift in overall trajectory of the economy? right now it seems like people are looking for gains. let's see how much those dollars can take hold. we are hearing from a number of retail investors that that is the case this year. jonathan: bank of america so far the sheer down about 10%. deutsche bank, up about 25%. lisa: if you take a look at the european banks, they are flying. jonathan: it is absolutely mental. let's get you an update on stories elsewhere this morning. here is dani burger. dani: the trump administration is set to nominate fed governor michelle bowman as the next vice chair for supervision. a person familiar told bloomberg the announcement could come as soon as today. previous vice chair for supervision michael barr resigned last month. elsewhere canada is suspending plans to add a 25% surcharge on electricity exported to

minnesota, michigan, and new york president trump tao back his threats to double terrace to 50% on canadian steel and aluminum. ontario's premier doug ford and u.s. commerce secretary announced a meeting tomorrow. elon musk is appealing to have his $56 billion pay package restored. the tesla ceo is claiming a lower court made alterable legal errors in rescinding his 2018 compensation package. last year a judge revoked the pay package, calling and unfair because the directors were beholden to muscat the time. that is your brief. jonathan: next -- up next, the morning calls, plus we will speak to ryan petersen as shapers brace for tariffs. and maybe lower tariffs and higher terrace. then who knows? u.s. cpi 18 minutes away. ♪ ♪

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jonathan: 16 minutes from now inflation data in america. u.s. cpi just around the corner. we are off the back of two days of losses on the s&p, set to snap that if we hold onto these gains. we are up by .75 percent on the s&p. the scores in the bond market shaping up as follows. yields higher by three basis points. the two-year pushing 4%. we are in the quiet period for the federal reserve, but the chairman had the final word going into the weekend and he said we are not in a hurry. but wouldn't give him some space if we got a downside surprise on cpi? lisa: that seems to be what the market is expecting, that the market will dictate and data

will dictate how quickly and how long the fed can wait before responding. the difficulty is, it is backward-looking. and not only that, when we look at the surveys that show fast-moving trends it shows companies are planning to raise prices at a rapid pace. that is potentially problematic at a time where the fed has a dual mandate and has inflation that is hotter than that 2% goal. jonathan: the ecb president was speaking this morning at what they call the ecb-watchers conference. there is a lot of them. they do this in frankfurt every year. it is very boring but you do hear from the ecb president and they talked about an era of shocks. she talked about the difficulty of many -- maintaining stability. i do have sympathy for them. they don't know what the policies are going to be. they don't know how other countries will respond, so you cannot offer forward guidance in that environment. lisa: and it is difficult to act with agility if what you are trying to move is a massive train.

frankly, each of the calibrations to policy take time to come through. again, it is a mismatch of time frames. if you can slap tariffs on, take them off, how do you respond to a growth stock that may or may not come through if you or someone working on a six to two year time horizon? jonathan: which is kind of the point goldman were making this morning. the point you are making too. lisa: the idea that if you have higher volatility that means the risk-reward changes because the risk goes up a the reward might not be -- it has to be even greater few you to get in. jonathan: equities up this morning by .8%. let's get you some morning calls. jeffrey's upgrading pepsico, saying the stock offers limited upside. your second call from ubs, lowering its price target on kohl's. the firm seeing a challenging and -- challenging consumer environment that is likely to persist. morgan stanley lowering its

price target on apple to 250 two dollars, expecting a flatter upgrade cycle and bracing for the impact of china terrace. that really is one to watch. goebel supply chains bracing for the impacts of president trump's levees. ryan flexport -- ryan petersen of flexport writing, if imports become more expensive it could indirectly boost u.s. manufacturing. but if u.s. exports become too costly manufacturers will struggle to compete globally. it is good to catch up with you. it has been a number of months since we last spoke with you. walk me through yours -- your thoughts on the latest changes, and they change often. ryan: that is the hardest part for supply chains. they take a long time to plan, so if you are in a position where you don't know what is going to happen next week, next month it is a bit of a paralysis that can set in. it is very clear that the administration and also the prior administration has been very clear that trade with china

is going to be faced with higher duties. what is less clear is that is going to be true for vietnam, malaysia, india, and many other trading partners. we have to wait and see but if they are putting tariffs on canada you can expect there is no safe haven other than manufacturing in the united states. jonathan: we have seen some evidence of frontloading in activity to start 2025. are you seeing the same thing in your business? ryan: we saw a lot of that at the end of lester. even though the biden administration, when they put in higher tariffs on steel and aluminum there was a big push if you could move the goods in beforehand you did. have seen quite a bit of that, although at this point, you know, april 1 is the deadline for the treasury secretary to present a report to the president on unfair trade practices by china. and that is when we would expect more tariffs to come out. april 1 is around the corner. it is a little too late to get at this point to keep

frontloading before that happens. annmarie: given what you saw during the pandemic do you think companies are more prepared now than they were in trump 1.0? ryan: well, on some level the executive leadership teams of companies has a lot more experience dealing with logistics and tariffs and they are more in the weeds than there were a few years ago. they sort of just took this for granted, didn't pay attention to these logistic departments, transportation departments of their companies. now our customers, which are these transportation departments, as one of the largest freight providers in the world we work with these people everyday, they are in the hot seat. the cfo is breathing down their neck trying to understand. in that sense, but not a lot has changed. ports don't have a higher throughput than they did five years ago. about the same. there are not larger safety stocks of inventory for the most part. i don't think we are a lot more prepared than we were in the past. annmarie: the president

continues to say that you need the terrace to bring manufacturing home. he comes to supply chains do you see any evidence that is happening right now? ryan: there is a lot of manufacturing happening in the united dates, and it is re-industrializing relatively quickly. it is too soon to say it is happening as a result of the trump administration, but there is a lot of tailwinds for manufacturing in the united states. you have the carrot and the stick. the stick is tariffs. it's going to be more expensive to import from other places. the carrot is going to be things around the regulation and making it easier to manufacture. on top of that i think there are some tailwinds with robotics that might make things pretty exciting actually and make it less about cheap labor. but those are going to take many years to play out, so it is too early to say. lisa: you made a point in your notes that on one hand it could

increase domestic production, but it could decrease the ability for those manufacturers to export some of those goods if you have a more complicated trade mechanism. how much are you seeing exports from the united states dropping off, if at all? ryan: that has been a long-term secular decline. if you look at containers entering -- we are in the container shipping business. if you look at the containers, if you went back 20 years for every 10 containers we imported it was about eight of exported goods. we're down to about two. you see a container ship leaving the united states, eight out of 10 of those are empty. so i don't think we have a problem of too much exports. that will be a long time before that is the case. one of the rules -- u.s. trade representative office has asked for comment, so you have until march 24 if you are an american business to submit your comments on this. they have a proposed ruling that

would require american exports to travel on american-made ships. that 15 of -- 15% of exports would have to go on a u.s.-made ship under this proposed rule. the reality is there is not a lot of american-made ships. we are making about 28 year total, and that counts oil tankers. that is not just container ships. so, you just don't have enough ships. that would be a pretty disastrous policy, in my view, because government is trying to promote american manufacturing, and if you are limiting the exports as a function of how many and how large american-made ships, that's going to hurt american manufacturers. so hopefully that doesn't get through has an executive order. lisa: one thing we keep hearing from a lot of analysts is that companies can deal with tariffs, they just need to know what they are and then they can plan for them. is that your takeaway too? is that your comment during the comment period, to the administration? ryan: that is one of them.

the reality is no one cares what i think about tariffs. i am very anti-tariff. it hurts our customers. i'm a big believer in free-trade trade and human freedom. but there is plenty of good arguments for it as well. that's fine. but my point of view is exactly what you said. just get it done with quickly so we can get back to planning and set up our supply chains according to the policies. but when it is changing constantly it is much harder to figure out what you should be doing. lisa: do you think you should be able to trade with anyone around the world, even if they are not playing by the same rules? ryan: in a -- in the purest form of it, sure, but i don't believe we should trade with america's adversaries in north korea and other folks committing all kinds of rights abuses or whatever else. we need some rules. i also think reciprocal tariffs is a relatively reasonable policy, frankly. if it country has really high tariffs on american-made stuff,

then, you know, we have free trade on our side, that is not a very good negotiation. i don't think we live in this black-and-white world where it is that simple, but as it -- but as an extreme, i am a free trader. jonathan: ryan patterson thereof flexport. he said china without saying china, right? lisa: i did. jonathan: when we had trump volume one larry kudlow would come on the program and talk about reciprocity and the lack of reciprocity. i think that resonated with a lot of people. when it came to china, it basically united washington, d.c. at a time when washington was very divided. it was the one issue most people agreed on. it feels like the goalposts have shifted in a marked way. you're talking about a host of things beyond reciprocity. annmarie: when it comes to these tariffs that have been put on and taken back the ones that continue to stay our china. potentially what i hear is this is the opening salvo when it

comes to this 20% on china. in washington, d.c. now, following trump volume one, you would be hard-pressed to find anyone who is anti-going after china. those of the tariffs that biden kept in place because national security concerns outweighed the economy. jonathan: coming up uscp i. breaking inflation data in america. working things down, fantastic lineup for you. david kelly of jp morgan, mohamed el-erian, andrew hollenhorst all here to react. and later we will catch up with david rubenstein. the data drops next. futures near session highs. this is bloomberg. ♪

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jonathan: the economic data is 25 seconds away. going into cpi your scores look like this. on the s&p 500, up by .8%. following two days of losses. on the nasdaq, up by 1%. in the bond market, 2-year, 10-year, 30 year, two year, 3.98%. 10 year up to 4.30%. if your economic data here is mike mckee. mike: we come in with better news than everybody was expecting with cpi on a month over month basis up .2% and the core up just .2%.

that pushes the year-over-year cpi down to 2.8% and the core down to 3.1 percent, suggesting that the fed could start making a case for additional rate cuts if they wanted to. and they may have to, given what is going on in washington. we will get to that break down you later this morning. jonathan: this is a very important data point for the federal reserve going into that meeting a week today. the equity response is obvious. like a rocket. equity futures up by 1.6% on the s&p 500. check out the russell. the small-cap is up by 2%. in the bond market, yields lower. we are down three basis points on the front end. pushing through the fx market we unlock 1.09 on euro-dollar briefly. erasing losses so far. it is a downside surprise on cpi. lisa: the reaction in stocks is bigger right now than i am observing in bonds. b are looking for rep -- where

the policy response might be. right now the hope is leaning more toward the fed then maybe to washington, d.c.. jonathan: joining us now is david kelly of jp morgan asset management. how much comfort will this bring the federal reserve? david: only a little. if you look at the numbers we saw 4% decline in airline fares, which is probably going to affect some of the airlines -- some of the things airlines are saying to us about weakening demand. i think the federal reserve is in a difficult position here. until we have clarity on tariffs they don't know how much of an inflation cake we are going to get. as we get some clarity on the budget they don't know how much fiscal stimulus is going to be kicked in next year. they will probably wait and see next week. this economy is beginning to look like it justifies a rate cut. i do think we probably end up with more than one rate cut this year. i think we might end up with a

sequence. it is too early for the federal reserve to make a decision given the uncertainty about policy. lisa: what is fascinating is the reaction in markets. you are seeing a bigger reaction in equities than you are in bonds. a fed put could come back into play even amid policy uncertainty. do you buy that? is that something you think is a correct thesis? david: i think there are some other things on the bond market's mind here. if you look or -- look at the numbers the cbo put out yesterday it looks like we're going to crack $2 trillion this year. the weaker the economy gets the more likely it is we are going to see even more fiscal stimulus kick in next year. so we have a deteriorating fiscal situation here and slow economic growth and tariffs will only make it worse. that may be supporting real yields here even if inflation backs off a bit on weakening economic growth next year.

i think this is more than just inflation and the fed on the bond markets mind. lisa: which is part of the reason why the fed might have a hard time embracing this data and signaling next week they plan to cut rates sooner than maybe they expected. what did they need to see to have confidence in the forward trajectory, even this is backward moving and we have policy pushing companies to act in real time? david: i think the most important thing would be a sort of final story on tariffs for this year and for the next few years. we know obviously as an economist i believe zero tariffs are the correct policy. it is a fairly traditional conservative perspective. but some clarity on that is vital for them to figure out, you know, how is the economy going to evolve? what the fed has said very clearly -- two days after the election jay powell said we are not going to speculate. but they would have to assume, gas, and speculate if they move policy right now. that is what they are trying to

avoid. the administration and congress need to figure out what the policy playing field is going to be over the next few years, then the federal reserve can make some decisions. jonathan: david, thank you. the federal reserve meeting a week away. david painted a picture of what a tricky position this federal reserve is going to be in. it could have been trickier without a data point like the one we just got. lisa: at least they don't have runaway inflation or the idea that potential inflationary shock, although be a one-time adjustment, there is disinflation. that being said, if you have a weakening economy that can lead to more fiscal stimulus and that makes it complicated for bond investors. jonathan: welcome to the program. mitsuko a small downside surprise on cpi. headline month over month, .2%. stepping out food and energy, .2% the estimate. .3%. to discuss this and more is mohamed el-erian of queens

college cambridge. looking back to the program. good to catch up with you. how does this change things, if at all? mohamed: if you talk to economists they will tell you looking back it is good news. looking forward there is very little information content. because of what david just said, what he has been discussing all day is, we don't know what the pass-through of expected and actual tariffs will be. that is where the economists are. for those in the market, having been disappointed on the trump puts, this is better news on the fed put. i think that is why you are getting such a strong reaction on the equities side. jonathan: there has been so much confusion about tariffs in the past 24 hours or so. you where several hats, one of which is you have been a business leader for many years. i think you make the important distinction, you made the point this was not going to be transitory because of what you saw at the corporate level. how companies were acting in

responding. given the threat of higher tariffs to come what do you see now from companies and what does it indicate to you about what data might look like in months and quarters to come? mohamed: two things are obvious to me. companies have gone into a wait and see attitude. and understandably so. you need clarity, so you are postponing decisions because you don't want to make a decision that ends up being a big mistake because the world has changed on you. we are seeing business activity slow down. the second thing we are seeing is people are much more ready to pull, -- pull the trigger on price increases than they were in 2021, 2022. so if these tariffs stick and if we get more tit-for-tat trade issues and things like that, then the pass-through to prices will be quick. and it will come at a time when

demand is softening. so then you bring the third issue, which is the consumer. the consumer is hesitant already. i think -- i take seriously what you have been saying about what is happening to airlines, what you have been hearing from retailers. there has been risk aversion, clarity on the household. put all of that together, it is a wait and see economy that cannot absorb much of a price hit. annmarie: is it an economy that could enter a recession this year? mohamed: my probability is 25% to 30%. it was 10% at the beginning of the year. so, quite a big change. why isn't it higher? because there is a lot of good happening in the u.s. economy as well. but if we get a prolongation of policy uncertainty than that probability will go up. lisa: there is a question about the response from central banks globally if you have this environment where inflationary pressures are going to be stickier at the same time you have slowing growth. christine lagarde called it an

era of shock and said maintaining stability will be a formidable task. if the central banks around the world had to choose what is worse, allowing inflation to be hotter but trying to help growth, or suppressing inflation at the risk of not rescuing growth and allowing it to continue to plummet? mohamed: for both europe and the u.s. it is the former. these economies can get to stall speed pretty quickly. we don't want that, because the damage that creates is significant. so, tolerating slightly higher inflation would be the better choice, the way you framed it. but remember, these are central banks that made a huge mistake. and they may be much more sensitive to inflation then we would be. given the mistakes they made. lisa: the idea of transitory and not may be responding to it in the way that maybe they should have, i'm just wondering if they did say -- if they did take what

you said seriously and they did say we are going to have to tolerate higher inflation for longer and we need to address growth, how may times would you expect them to have to cut this year to officer at some of the uncertainty and consumer demand destruction we are seeing in real time? mohamed: to be clear, if 2% was really the operative inflation target we would not be speculating on how many cuts. we would be speculating on the timing of the hike, because the data has stalled for quite a long time. but because most people believe that 2% is a medium-term to long-term target, there is speculation on how many cuts. i in the one camp. given what we know today we we cut one. now, if the tariff tensions persist and tit-for-tat gets worse -- at some point yesterday with canada we were near tipping points. that would have forced the fed

to revisit what it is thinking right now about rate cuts. so, it really depends where this trade war goes, lisa. jonathan: i want to revisit one of your best calls. you are probably one of the best risk managers i know, that is for sure. i want to talk about february 19. february 19, all-time highs. not the all-time high of 2025. february 19 all-time high of 2020. i remember you came out around that time and you said, don't buy this. the equity market is corrected in 2025, and that is quite a parallel to think about those two dates. what would your approach be to markets now and equities specifically? mohamed: i am ask this all the time. i was ask it this morning by someone here in the college, is it time to buy? it is tempting to buy because with 10% off on the s&p, with 13%, 14% off on the nasdaq.

i respond very simply, what mistake can you not afford to make? most mistakes in the investment world are forgivable over time. and that is the great thing about the investment world. if you have something that defaults that is a different issue. investors need to understand how much tolerance they have for mistakes and how much tolerance what i have for volatility? the probability of both of these things has gone a lot higher than it was at the beginning of the year. jonathan: appreciate your time. you are one of the best. mohamed el-erian of queens college cambridge on some of the latest market moves and latest economic data. 11 minutes ago, cpi dropped in america. michael mckee is back with us for more. what jumps out? mike: obviously this was mentioned. airline fares with the biggest drop, over 4%, and at the same time used rental cars fell. looks like travel cut back somewhat during the month and we

saw that reflected in the airlines yesterday and what they were saying. eggs were up 10%, still rising during the month of february. that contributes a lot to a 2% rise in food. coffee also up. bacon was down. the one good part there. we were looking to these numbers to see if there was any kind of pull forward on tariffs and it doesn't look like at this point, that people were trying to bring in a lot of stuff and that caused the price to go up. toy prices actually went down on the month. that suggested we have to wait until maybe tomorrow's ppi to see any kind of effects like that. jonathan: mike mckee on the latest economic data. a small downside surprise relative to expectations. equities off like a rocket after that print. sometimes these moves do not stick. still positive and near session highs on the s&p. we are higher by about one point 1% on the s&p 500. up by 1.4% on the nasdaq.

yields were lower on the back of the story. at the front end of this curve as well we are back to about 3.97%. back around the table i'm pleased to say, andrew hollenhorst. when you walked into the studio lisa ask you a weston. is the fed still in a good place? we've got an update. is the fed still in a good place? andrew: i'm not sure that they are. i'm not sure they are going to recognize that at the upcoming fomc meeting. but if you think about where they are they have had policy in a restrictive setting because they have been trying to ring the last few basis points out of too-high inflation. and you can do that as long as growth is resilient. but now we have questions about whether or not growth is resilient. would at least want to get back to neutral. jonathan: if i was on an investment committee i would want to be speaking to the economist and the person managing rates. i would not want to know why yields are up after -- off the back of a downside surprise in

cpi. it is the fear here that is dominating things? because it does not seem to be this data point. andrew: i think we are looking to the growth data. on the inflation site it is, is that weakness we are seeing in inflation this morning? if it is in airfares, in some of these more transitory, volatile categories, that is less relevant. what we are really looking forward to is, what is pc going to be at the end of this month? what is that underlying trend in inflation? we really want that under control because we do have this risk from tariffs. lisa: mohamed is saying this federal reserve and the ecb should prioritize addressing growth concerns even at the expense of pushing out the timeline for when inflation will get back down to 2%. it seems like on some level the fed had been doing that and then got burned with transitory. there is this question of, are they going to do something different this time and remain

on hold for longer, not addressing growth concerns? because inflation is sticking and has been? andrew: i think they are trying to develop a framework around, what would be a so called one-time price effect you can look through a price level movement you can look through? if you see underlying inflation in shelter and other categories that will not be affected by tariffs, if those are staying cooler and expectations that stay anchored and you can be cutting even if you are technically above target in terms of core because you have this one-time price level effect. i think that was the mistake they made in the earlier inflation episode, because we saw inflation across categories and we were still calling it transitory. lisa: this is important and goes to this idea of, do they adopt a two point-something and talk about the avoidance of a stalling out that could be much more pernicious for the economy? is that what they are going to have to do to explain some of their actions in a nonpolitical way and in a completely

politically-fraud moment? andrew: i don't know if they are going to adopt that as a framework, but this intellectual development of this idea of, you can have some months where you are running at two point 5% inflation, slightly above the target if you think it is a one-time movement above the target, that is important. lisa: you came out last year and said the economy is going to weaken a lot or than people expect, and you expected the fed to be cutting aggressively. evie seen anything in the data so far that highlights that view? that it has been a weakening economy? going into this period of uncertainty, regardless of the tariffs? andrew: we saw a lot of resilience over 2024, but also signs things were not as healthy as they look. some of the things in the labor market. delinquency rates that were rising for consumers. we knew that underlying softness might get triggered at some point. as we are coming into 2025 this is data before we had a big concern over tariffs and we are seeing consumers, all of the

anecdotes from retailers. it does look like that weakness was catching up with the economy and that was before we were hit with any kind of new shocks. jonathan: so make us a forecast. the ecb has to put out the fsb next week. how hard is that going to be? andrew: the market is pricing a little more than three rate cuts in for this year, so that median. will show three rate cuts. jonathan: do they independently put through forecasts when you look at the median or do they say, you have said this, you have said that? andrew: there are a lot of bilateral conversations. somehow it all works out. jonathan: andrew hollenhorst of cit theyi are real, sideline chats. . we are not going to name names, but they are real. he was your bloomberg brief. let's cross over to dani burger for more. dani: that cpi data coming in

softer than expected in february. it rose at the softest pace in four months. core cpi up 2.2%. that is lower than the estimated .3% in our survey. the bureau of labor statistics said that was due to shelter. house republicans passed a bill to keep the government open past the saturday shutdown deadline. the ill will likely need the support of a democrats in the senate to become law. if it fails republican leaders could pass a shorter-term stopgap later in the week. in sports, tiger woods will likely miss the masters next month. the 49-year-old posted on social media that he underwent a procedure on a ruptured achilles tendon. he said this or to -- the surgery was minimally invasive and went well. woods set a record last year for making the cut the 24th time in a row. jonathan: thanks for the update. next on the program we will set you up for the day ahead. and looking ahead to next week,

the federal reserve has got to get together and put out some forecasts. i do you put out forecasts when you don't know what policies going to be and it can change within the day five times? with great difficulty. futures on the s&p positive by 1%. the opening bell is about 40 minutes away. ♪

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jonathan: the opening bell, 37 minutes away. equity futures holding onto gains post-cpi. equity firma by 1.2% on the s&p. up 1.6 on the nasdaq.

cpi came out at 8:30 eastern, so about 23 minutes ago, and it came in a downside surprise. .2%. that is on headline month over month and core. equities off the back that just a little bit higher. let's talk about the week ahead. he was your trading diary. at 10:45 president trump meeting with the prime minister of ireland. thursday ppi and another round of jobless claims. friday night the u.s. government shutdown deadline. sneak peek of next week for you. retail sales on monday. another big data point going into the federal reserve on wednesday. when they deliver their decision. i want to talk about the bond market briefly. mentioned this early on in the program. this is what is difficult for a lot of investors right now. bonds have been behaving in unpredictable ways. if i said to you what would yields look like if we got a downside surprise on cpi you might say, i want the details. i just want to know, what would

it look like post-cpi on a downside surprise? most people would have said lower yields. and that lasted about 10 seconds. lisa: the bond market is looking ahead, seeing less than three cuts being priced into the market from the federal reserve. they are seeing the forward look as being potentially more inflationary than the past look and saying the fed might have a more complicated decision ahead of it than what they beat the stock market is suggesting. annmarie: you have to think there was a sigh of relief when you saw the downside surprise on inflation come in and all of a sudden, no, we want rates to be lower. a bit of a whipsaw in the minds of scott bessent and the president. i take away from this, the market is desperate for clarity and they are not going to get it with this president. jonathan: it is a policy-driven market and that policy is being driven out of the white house. i spoke to david kelly just moments ago. lisa: they need to look forward. the problem is if you get

consumers that are already retrenching spending do they need to come out and say we are not targeting 2% this year? we have a different framework, this is what it is? jonathan: tomorrow the conversation continues. john stoltzfus of oppenheimer, the former trade official, and dirk wheeler of city. city downgrading u.s. equities in the last couple of days. from new york city, thank you for choosing bloomberg tv. this was bloomberg -- this was "bloomberg surveillance." ♪

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matt: futures flying high and rates rising too. i'm matt miller. sonali: i'm sonali basak. katie: and i'm katie greifeld. bloomberg "open interest" starts now. sonali: coming up, bonds dropped, stocks rally. u.s. inflation comes in lower than forecast and is offering relief after months of stalling progress. matt: the global trade war enters a new and perhaps risky phase. the eu fights back as president trump's steel and aluminum tariffs officially kick in. katie: