track that had been doused by rain. jett lawrence able to battle pass jason anderson and get the win. reminder some insider post-race show is next. stay with us. >> for game week. >> very good morning. welcome to street signs. i'm sylvia moreddu, and here are your headlines. deep sea causing deep concern on wall street with nasdaq seen opening more than 3% in the red as the chinese budget i model forces investors to reevaluate big tech spending on ai. european equities are caught in the sell off, with all majors in the red. chipmakers and data center providers suffering the bulk of the pullback. thousands

of palestinians returned to their homes in the northern gaza strip as a fragile ceasefire holds, while the us president proposes a clean out of the area, calling on egypt and jordan to take in. 1.5 million people. and ryanair cuts its. passenger number forecast once again amid delivery delays from boeing, but notches. >> a post-tax. >> profit beat in the third quarter. the cfo, neil sorahan, walked cnbc through the quarter. >> disappointed that we're not going to hit the traffic numbers that we. would have hoped for next year, 210 down to 206. but, you know, myself and michael were in seattle a couple of weeks ago. we've seen massive improvements on the factory over the past number of months. >> good morning everyone. we start today's show looking at us futures. there's a major market story to monitor here. so i want to show you in particular how the nasdaq is moving. perhaps

we'll share that in just a moment. but indeed when you think about what the us futures are telling us today, they are highlighting significant concerns within the tech sector. why? let me show you why. because the story we are monitoring today, and now you have the nasdaq futures on your screen right now, pointing to a sell off later today. let's see how wall street will open. but this as investors are tracking deep sea. their latest release is a newest reasoning model. only a month after it touted its free open source large language model, which it said took just two months and cost less than $6 million to build. the company's ai assistant has today become the top rated free app on apple's app store, overtaking chatgpt again. this is having massive ramifications within the tech sector, so i want to show you the magnificent seven in pre-market trade. look at these moves. we are down across the board regardless of where you

look. we have nvidia shares in pre-market down more than 8%. thinking about broadcom also tracking lower about similar levels. let's see what will be the actual moves when wall street opens in a couple of hours time. but nonetheless this is a market narrative that is important to monitor today because it is already having significant repercussions across the board. let me show you the chip makers in more detail as well, looking at their pre-market moves. then again, we're looking at nvidia, micron, qualcomm, all of them tracking lower at this stage. and of course, when you think about what this means for european companies, do i want to take you to the heat map in the european union to in europe bourses too, because this story is one of the main market narratives today for european investors too. at this stage, we have the stoxx hundred down about 7/10 of a percent. yes, that could be telling you about how the fed is meeting, how the ecb is meeting, meeting later this week, how investors are also tracking earnings. but

no doubt the deep six is the main story today. investors assessing concerns here about what their announcements could mean for the big tech players. because at this stage what we are looking at is perhaps having an ai solution here that is cheaper to build and also quicker to build. there's also question marks about we don't know yet what sort of chips actually deep seac has been using, but there is a question mark here about whether they actually manage to overcome some of the chip restrictions from. the united states. we'll be discussing this story, this story in detail across the show, so stay tuned. in the meantime, let me show you how the different bourses are also faring. so we get a better idea of what's happening on the european continent today. we have significant pressure. over in germany, the dax is down by more than 1%. the hunt. it is also lower by about 9/10 of a percent. this actually the hunt was the outperformer last week but is also under pressure this morning. let me take you to the

different sectors too, so we get a better idea of what's happening in the corporate space. utilities is the best performing sector. we're up almost 1.5%, real estate up 1.2%. but i want to take you to the worst performing sectors because there is where the most important market story is today. look at it. tech, the worst performing sector. we're down almost 5% at this stage. so let's take a deeper look into this and look at the european chip makers at this stage. look at these figures asml, asmi. all of these european chip makers are tracking lower ed to this stage, suffering really some of the ramifications from this story with european investors also posing the question here about what the developments from deep sea could mean for some of these european companies. it is the same story when you look at the data center providers. they're also facing pressure in market rates today. look at some of these names. we're also seeing a lot of pressure across

the board though. so this story on big tech could have ramifications also for how european investors are feeling more broadly. that is the case at this stage when you think about the stoxx 600. but again, there's a lot on the minds of investors that is the main market story. but i want to take you to the economic data too, because that is also an important story for investors today. we just obtained the latest figures from the ifo business climate index, and i want to share them with you. the number that we obtained came in at 85.1. that's actually slightly lower from what analysts had expected going into these figures. in terms of the expectations, they also came in at 84.2, just in line with economists at this stage. this is important because this latest these latest figures come off the back of the latest pmi figures last week as well. and they're very much we actually saw a little bit of upside really in terms of what economists had expected. the german economy not doing as

badly as some feared. however, though it is still in that very delicate moment, we are, of course, approaching the election late next month as well. so let's see what will happen there. but let's discuss these numbers in more detail with clemens fuest, the president of the ifo institute. clemens, great to have you on the show. first and foremost, i just would like you to give us the key takeaway from these figures. the business climate figure coming in slightly above what economists had expected. tell us what's driving this. >> yeah. >> so we have an improvement. it's a. small one. >> but still an improvement. >> it comes from improved assessments. >> of the current. >> business situation. and it comes in particularly from the service sector sectors like it. >> and others. >> have improved real estate administration. >> things. like that. >> unfortunately. >> manufacturing has declined. >> again. >> this is. >> the sort of. >> critical area and has. been

critical. >> for some time. >> what's a little worrying. >> is that expectations have gone down. so this pessimism, which does have an impact. >> on all sorts of. >> things, in particular capex spending, this pessimism doesn't go away. it's probably related. >> to. >> the uncertainty regarding the. political situation in germany. and of course, donald trump and his economic policy. so it looks like the stagnation we have in germany and continues. >> talk to us a little bit more about that pessimism that you've noticed with these latest figures you've highlighted there. you know how we're approaching the election, how companies are also monitoring what donald trump is saying, but give us more color on what is driving that pessimism and whether there's expectations that that pessimism is actually here to stay. >> in particular, if we look at incoming orders in manufacturing, they continue to

decline. and what's going on here, is. that a difference to just a couple of years ago? is that the german economy, german manufacturing doesn't benefit from a world economy which isn't going so bad. so it looks. like competitiveness of german products attractiveness has gone down. maybe they are too costly. may maybe there is a lack of innovation. so export demand doesn't keep up with. >> the global economic development. >> and that's. >> a. >> problem for an export oriented economy like germany. and the domestic economy cannot compensate for this. so we do see rising disposable incomes. but that doesn't translate into consumption. construction is weak. so overall the outlook is pretty bleak. we are, you know, just not getting out of this stagnation. >> interesting. at clemens, we my colleagues actually had the chance to speak to the german finance minister in davos, and

he had some comments around trade as well, that i would like to show those comments to you, and then we'll get a brief comment on from you in terms of what could happen here. >> i do. think and some of the statements. >> that we've heard. >> also indicate that there's also interest in actually strengthening the trade. >> ties. >> because both the us and germany have a lot to offer to each other in terms of energy, digital services, machines, cars, the trade relationship between the us and germany is much more complex than only. >> one product. >> so his comment there that there's an interest in actually strengthening the trade ties between germany and the united states. how feasible is that? is this a realistic comment, do you think, clemens? >> one would hope it is. i think it's correct to say we need to talk to the new administration in the us and try to avoid a trade war and maybe even deepen trade relations. at the same time, i think it's very important to diversify trade relations. this is going on to some extent. there is the

eu-mercosur trade agreement. so i need to i think we need to work on all of these fronts. still, companies are worried and they are not very optimistic regarding trade. but i mean, there may be positive surprises. let's wait and see. >> let's see what will happen in the end. but i also want to get your thoughts on fiscal policy. a lot of conversations around whether we're going to see germany reforming the debt brake. tell us how businesses are feeling about this upcoming election from a fiscal policy perspective, what would they like to see from the new government? >> i think what they would like to see from the new government is above all structural reforms. it's not so much about fiscal policy. fiscal policy does play a role. and indeed there will be some elements of more debt financing. as a matter of fact, we've also seen that in recent years we have the debt brake. but at the same time, we have a special fund for defense of 100 billion completely debt financed. so debt financing is not so low in germany, but it's

more complicated than in other countries due to the debt brake. so i think what companies expect above all is a consistent strategy for economic reform. and part of that strategy could be new vehicles for debt financing. but the consistent overall strategy is the most more important part. >> and clemens, we also heard over the last 24 hours from who is likely to become the next chancellor, according to the polls at this stage, friedrich merz, outlining plans in terms of immigration and policy. i just would like to understand from an economic perspective and from what you're hearing from businesses. what do you make of his proposal regarding immigration? >> well, there's always a concern that border controls may also inhibit trade. that depends on how this is organized. it is clear that after various criminal acts in germany committed by refugees, often

people who are mentally ill, that something needs to happen. at the same time, this has to be organized in a way that doesn't impede trade across borders. so we'll have to see what that means. for german companies, what's very important is that immigration into the labor market continues, because the number of domestic, the domestic labor supply is declining. so it's important to continue immigration, immigration of employees. >> right. well, clemens, we'll see what will happen post election. in the meantime, we appreciate your thoughts today. clemens is the president of the ifo institute and staying in germany with less than a month to go before germany heads to the polls, elon musk has given a ringing endorsement to germany's far right alternative for germany party. in a video statement at a party event in eastern germany, the tech billionaire said afd candidate alice weidel would be the best

option to lead germany, especially if it helps the country push itself away from the eu. thousands of demonstrators took to the streets across germany over the weekend to protest against the afd, as well as immigration proposals from the christian democrats. chancellor candidate friedrich merz. the cdu says it intends to submit a bill which includes permanent border controls and accelerated deportations, for a vote in the bundestag, and that it would welcome votes from all parties, including the afd. critics say that would throw the so-called firewall between germany's mainstream parties and the afd into doubt. the cdu's call for an immigration overhaul dominated talks at the greens party conference over the weekend, as well their chancellor candidate, robert habeck, said merz's proposal showed the cdu was more interested in aligning with the far right than the center, and urged him to roll back the proposals. annett, of course,

has been tracking all of the twists and turns in german politics and i would like to understand here is that comment around a potential move to the to the right, to the extreme right from the cdu ultimately, is there a sense here that actually the next german coalition could actually be supported by the afd, given that they now seem to be aligned on immigration policy? >> well. >> i. >> think this sort. >> of. >> firewall to form. >> a. >> coalition with. >> the afd, that. >> is. >> something which is. >> very much intact. >> so i don't see an. austrian scenario yet for. >> germany. >> but that this. >> is going. >> to happen in the future. >> at. >> some point in time. >> nobody knows. >> but what schulz's spd and also habeck. >> is alluding. >> to now is that. >> friedrich merz wants to push through. >> a tougher immigration bill through parliament, with. also potentially the help of the. >> afd. >> meaning that if they vote in.

>> favor of it. >> it. >> gets through. >> so that's like literally one on one democracy. and of course, the afd is. represented in parliament and nobody can prevent them. >> from voting in. >> favor of. >> a bill. >> but of. >> course, it's a. major concern. >> to the greens who favor open borders, who favor migration. and that is why robert habeck went out and actually told his voters that this is not the way forward with him. so let's take a listen to what he had to say during the greens party convention on that. >> night. >> ladies and gentlemen, my dear friends, there's nothing. >> harmless about this announcement. one shouldn't see this as a strategic. >> misreading. >> because we see in europe. >> how things. >> can quickly slip up in democracies, whatever it is that splits. >> us. >> the common ground among the center. >> must always be closer. >> than. to far. right populists. and that's been forgotten. not without its intentions. it is a decisive. >> political pivot of recent

years. >> and must be framed. >> for what it is. >> so, friedrich, so-called crusade against illegal migration. >> is actually quite. >> popular with voters. so there's a poll commissioned by bild zeitung from yesterday, where it actually finds that 66% of voters, or. of germans do favor tougher migration laws and do. favor that that matt's proposal and what is most interesting, that also more than 50% of social democratic voters do favor it. >> and roughly. >> 30% of the green. so there is, i guess one. >> has to. >> say that migration and tougher migration is a topic also for the center of the political spectrum. it's not just for the far right. what the afd is portraying it to be. so it is a political gamble what friedrich schmidt is currently doing. but i think it has the

potential for a titanic shift of voters who do think that enough. >> is enough. >> we have a lot. of migration, or we have a lot of migrants in the country who don't yet are integrated. and i guess this integration process needs to be key for the next government as well. so bottom line. >> is it seems. >> that we have two big. >> topics now. >> heading in. >> that election. of course, it's a the economy, which is very poorly performing. and then we have migration. and friedrich merz tries to take away the topic of migration into his camp as well. on wednesday, there is the first vote on the bill, and that will be crucial whether we see a two thirds majority of it or for it or not. >> very clear. and at least we're not too far now from that vote on the 23rd of february. thanks, anita. coming up on the show, we'll discuss more on what's deep six reality means

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>> smalls for me. >> squawk box is breakfast. >> with the most interesting. >> people in the world. >> it's a privilege to get to talk to them every day. >> it's more entertaining than any other morning show, but you might get some useful information. >> squawk box weekday mornings, 6 a.m. eastern. cnbc. >> welcome back to the show. another check on how we're moving across the equity markets on the european continent. this as the investors continue to focus on the deep sea story. what are the ramifications here for other parts of the equity world at this stage? we have pressure on all of the major bourses on the european continent. but let me show you the chipmakers, because that is where the story is today. we have also further lower moves for some of the european chip companies. look at the smi, asml, the semiconductors were all moving lower at this stage. this indeed, as investors are

monitoring what deep seek is doing in china, whether they will actually be moving to a world where it could be cheaper to develop these ai models and also faster. so let me show you the magnificent seven in premarket trades as well. these companies are now under once again pressure. exactly. because there could be fierce competition coming from china. we have nvidia down almost 8% at this stage and also broadcom down about 8% as well. let's discuss this in more detail with our next guest, carson young the head of macroeconomics and ai at ipp are carson. great to have you on the show on such a topical day for ai. but i would like to understand here is whether these concerns we are seeing in the equity world today are actually fundamental. should we all be concerned about what the announcement from deep sea is could mean for the big tech going forward? >> i think.

>> we shouldn't. necessarily be concerned. what it means. >> though. >> is that. >> there will be. >> continued huge dynamism in the in. >> ai markets. >> and in. this case. also in. >> the. >> chip maker markets. >> i think it's. >> useful actually. >> to zoom out a little bit where we are on artificial intelligence. >> so people. >> thought that after. >> big increases in. >> performance in. >> 2023, in 2024, ai development. >> might slow. >> down that. >> we've made. >> big. >> advances and. >> that it. >> will become harder. to. >> find improvements. >> but if. >> anything. >> what we saw in 2024 is that developments. accelerated and we get more. >> performance gains. so this. >> idea that there is a. >> wall and that. >> makes it harder. >> perhaps due to lack of data. >> to improve. ai developments. and that. >> turned out not to be true. >> and the deep. >> sea is just the. >> latest sign that. even if you

don't. >> have very many. >> cutting edge computing chips, you can. >> still build a. >> leading ai model. so if anything. >> the last week has shown. that ai progress. >> will accelerate. >> more in. >> this. >> year and we. >> need to prepare for it. >> so guy this through that. we are now looking at perhaps having ai solutions that are quicker and cheaper to develop. what's next? where do we go from here? >> so one. thing that. >> has been. >> expected for a while, but. >> it's come into life. >> last week. >> is ai. >> agents, so. >> we already. >> know that advanced chatbots. can often give. >> answers that are on par with undergraduate. level humans and with the latest. >> model, even graduate phd. >> level humans. >> so it's worth pausing.

>> a little. >> bit just to appreciate that. >> that's really an. >> incredible, incredibly. >> fast advancement that you. >> have. >> chatbots that can give us good answers. >> as a. >> phd trained humans. >> but what's coming. >> on now. >> is these ai. >> agents. >> which can not. >> just give good. >> answers, but also take actions. >> and openai has. released a model, but. others are following. >> very swiftly. >> such as anthropic. and i think. >> google and. >> others will as well. and those can. >> actually basically. >> go online. >> and. >> do tasks. >> for. >> you and. >> do data. >> work for you. and a human. >> can just. >> sit back and watch. >> and this is really. >> what will probably. permeate through the. >> economy more. >> and we. >> estimated last. year that up. to 59%. >> of tasks. >> in the economy could. >> be. >> aided by such models. >> that can sort of.

>> mold into. >> day to day workflows. >> and that's. >> a big deal. >> totally. what i would like to understand as well. and we are seeing a lot of pressure in pre-market moves for some of the big tech names stateside, is whether the us superiority that we have witnessed thus far in this field has definitely come to an end. well. >> i wouldn't say. >> it's come. >> to an end. >> but it. >> definitely showed. >> that you can build cutting edge models. even if you don't have. access to. >> the best chips. >> so let's remind. >> ourselves. >> deep seek says they build their most cutting edge model, with. only 2000 of the most advanced chips. that's only. >> a fraction. >> of what. leading ai companies like openai and google did. >> so it definitely showed. >> us that. showed us. that compute isn't. >> everything. >> but it's. >> still hard. >> to build. >> these models, right? this is one of. >> the best. >> labs in china that has built this model. and it also, it

doesn't. necessarily mean that. compute or high end computing. >> chips don't matter. >> and us. >> tech firms have are building the next ultra big clusters of compute that they train their next models on. so we might what we might see over the next months is another big performance. hit increase in the in by us companies. and it might be hard for chinese companies to catch back up, given they don't have. access to. some of the most advanced chips. so we might we see, i think, more competition, but it definitely doesn't mean that leading ai firms in the us don't have an advantage. and finally, also. you know. we saw chip chip. >> stocks fall. >> by about 5% this morning. and that needs to be put in the context of more than tripling in

many. cases over the last two years. so these are small drops. it means more competition. but i think the fundamental. >> situation hasn't changed. >> it's important to have that context in mind that no doubt, but the moves today alone are actually also quite significant. so what i would like to understand here as well is whether the announcements from the united states, in terms of chip restrictions and export restrictions, i should say, are actually effective. is there any evidence, actually, that these measures are having an impact in the industry, or are players perhaps like deep seek actually somehow overcoming those chip restrictions. >> so there's. >> definitely anecdotal. >> reports that there's a smuggling of chips of advanced chips into china. it is unclear how many, how many these are. i'm not an expert on this, but but the sense i'm getting is that it's definitely working. it's much harder in china to get

hands on some of the most advanced chips. so that's why deep seek had to work around this and build more efficient algorithms. and another way of looking at this, the way to run their most advanced algorithm. you can run this on your local machine, whereas the advanced models by openai, you need to run it on on a big compute cluster, so much more efficient. so they had to work around this because it's just harder to get hands on chips. but how, if no chips at all get into china? we don't we don't know for sure. and perhaps the final thing also to add is that given that it's more easy or more efficient to run some of these models, i think the onus is switching a bit more onto deployment because that is still the bottleneck in many cases. >> we have. >> these really advanced models, but the innovation that's now

needed, including in the uk but across the world is, well, how do we actually make use of these models in the economy and actually deliver on some of the promises that ai is bringing, including solving some of the big challenges that we face in our economies? >> carsten, we appreciate your time today to discuss all of these important developments in ai. thank you for your time. carsten jung, head of macroeconomics and ai at ipr. and for more on how china could be threatening the us ai dominance, check out cnbc.com. coming up on the show. trump's had a busy first weekend back in office. we'll walk you through the latest after this break. >> hello welcome. >> to t-town. >> black men over 40 everywhere. these guys experience a drop. >> in testosterone. don't worry. it happens to all.

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sylvia marrero. and here are your headlines. deep creek causing deep concern on wall street. with the nasdaq seen opening more than 3% in the red as the chinese budget i model forces investors to reevaluate big tech's spending on ai. european equities are caught in the sell off with all majors in the red. chip makers and data center providers suffering the bulk of the pullback. german business sentiment rises more than expected in january, while ifo president clemens fu says it's paramount that berlin avoids a trade war with the united states. >> we need to talk to the new administration in the us and try to avoid a trade war and maybe even deepen trade relations. at the same time, i think it's very important to diversify trade relations. this is going on to some extent. >> thousands of palestinians return to their homes in the northern gaza strip as a fragile ceasefire holds, while us president trump proposes a clean out of the area, calling on egypt and jordan to take in 1.5

million people. welcome back. a fresh look at how we're moving on european equities this morning. this as investors are very much focused on the story, on the ai story after the developments from deep tech in china, basically putting us facing is this the fact that they could actually be building ai that is done quicker and cheaper way. so there's question marks here about what this will mean for the big tech, which is investing heavily on ai. so that is the main market narrative. this morning we have the stoxx 600 down about 6/10 of a percent. changing the narrative here from what we witnessed last week when the benchmark ended the week up 1.2%. let me show

you the different bourses too, so you get a better idea of what's happening on the continent. at this stage, we have more pressure. over in germany, the dax down by more than 1%. the hunt, which has been the outperformer within the european bourses last week, is also down almost 8/10 of a percent. but i want to take you to the different corporate stories that we are also looking at today. ryanair has cut its passenger forecast again on the back of boeing delays, down 4 million to 206 million, the cfo, neil sorahan, told cnbc that while the delays are disappointing, the company has seen a big improvement. improvements at boeing. >> i was there in january at this time last year and i've seen huge improvements in relation to supply chain and everything else. so while i'm disappointed that we're not going to get more aircraft for this summer, i have a high level of confidence that the remaining nine aircraft that we need to get to 181 game changers, along with the existing fleet, will

come in. i saw a number of them myself in the factory. others are either on rail carts from wichita or are already built elsewhere. >> full year ebitda at basf came in more than ■k71 billion, lower than expectations. the german chemical maker was weighed by impairments on battery materials as well as restructuring costs. shares a little below the flat line at this stage. elsewhere, anglo american shares are on the move today after reports in the financial times over the weekend that rival bhp will not make a fresh offer for the london listed miner. anglo american rejected a $39 billion takeover offer from the australian miner last year and launched a restructuring plan aiming to dispose of its coal, platinum and diamond businesses. i want to take a fresh look at us futures. as i highlighted earlier, we are seeing a lot of pressure, particularly for tech names. the nasdaq is called significantly lower at this stage in comparison to the s&p

and the dow, as investors are very much focusing on what the announcements and the developments from deep sea will mean for ai players. also in the united states, elsewhere in the markets, we're also keeping an eye on oil prices. they are ticking lower. after donald trump repeated his call for opec to cut them, a move he says would help expedite an end to the war in ukraine. putin said friday he and trump should meet to discuss both topics. donald trump has sparked widespread condemnation over his language concerning the gaza strip, suggesting it could be possible to, quote, just clean out that whole thing and its near 2 million population. his comments have been criticized as an endorsement of ethnic cleansing. take a listen. >> i'd like egypt to take people, and i'd like jordan to. >> take people i could. i mean, we're. >> talking about probably. >> a million and a half people. and we just clean out. that whole thing and said, you.

>> know. >> it's over the centuries. >> i've had. >> many, many conflicts. >> outside right now. and so. >> something has to happen. but it's literally a demolition site right now, almost everything is demolished. but people are dying there, so i'd rather get involved with some of the arab nations and build housing. >> in a different. >> location where they could. maybe live in peace. >> okay. >> the danish leader mette frederiksen, reportedly met with her nordic counterparts last night after trump reiterated his belief that the u.s. will take control of greenland. that's according to the danish state broadcaster, and comes after what's been reported as a horrendous phone call between the two. on sunday, trump claimed greenland's near 60,000 residents want to be with america. the white house has forced columbia to retreat after it refused to accept deportation flights. trump has threatened tariffs of up to 50% on the

country unless it accepted the flights from the us, but the administration now says the tariffs and sanctions will be held in reserve and not signed unless columbia fails to honor their agreement. there's a lot happening on the geopolitical front, as you can see. meanwhile, i'll bring you back to europe. european foreign ministers will meet in brussels for the first foreign affairs council of the new year, with two items set to dominate the agenda. relations with the us and the president. trump and the future of ukraine. the vice president of the european commission said she expects sanctions on russia to continue. >> i expect a decision to roll over the sanctions. we are we. >> have then. >> of course it is. >> it is good. >> that we discuss what more can we do, putting pressure on russia to end this war. it's also good that president trump has has put the pressure on russia. to say that it's in their hands to end this war.

>> i'm pleased to introduce gabrielius landsbergis, the former minister for lithuania. great to have you on the show, gabrielius. not too long ago you were in these meetings that are happening now in brussels with other foreign affairs ministers. what i would like to understand here, from your experience, what do you think is the most likely scenario today? because carlos was suggesting that perhaps we will see those sanctions on russia rolled once again. >> well. >> well, first of all, it's. >> a pleasure to be to. >> be on. >> the show. thank you so much for having me. >> well. >> a little bit. >> about the. >> way that meetings work. these foreign affairs councils. in most cases. the. meeting is. >> the things that are being decided during the meeting. in most cases, it is already being decided. >> so if. >> if carlos says that most likely. >> the sanctions will. >> be rolled. >> over, it is, you know, 99% that it's already agreed. what

happened. >> was that hungary. >> has held a block on on that decision for a while, and. >> prime minister. >> orban was actually campaigning. >> actively on social networks in order. >> to. to block. >> the sanctions. but that changed the. second that when president trump. suggested that he will increase. sanctions on on russia. that put hungarian prime minister in a very. >> tough spot. >> and this is when. >> he relented. >> but that tells you. >> also how. difficult it will be going forward for european union to decide every single. >> time, every half. >> a year. >> to roll over the sanctions. so it will. >> not be an easy path going forward. >> yeah. so we might see that happening now, but maybe not necessarily in six months time. six months time. i would like to understand as well the perhaps the rationale. i mean, you've had to deal with your eu counterparts for so long. what do you make of the comments coming from hungary, which at one point was suggesting that what they would like to see is

to have more gas flowing into the eu from russia? >> well. >> the way. >> that hungary works is actually. >> as a. >> disrupter. >> a major disrupter. >> of any. policy in, in eu, you know, holding back. >> on almost half of the decisions. >> that europe could. >> have made on ukraine, on. other eastern partners, countries such as armenia or. >> georgia or moldova. >> so it's. >> a it's a. >> you know, basically. >> it is safe to say that that. hungary is playing in. >> moscow's court. >> so it is i. >> think that. >> there has been a conversation. >> in eu last. >> year about how to deal with an actor that is so. disruptive and goes against every. >> everything that eu. >> stands for. and there is an article in eu treaty in article seven that actually, if went through the whole procedure, that. >> article seven. >> describes that. >> a right to. vote could be.

>> removed from. >> from that disruptive member. and i think that europe has to start thinking. >> about ways how. >> to how to approach that question. >> again. >> because, you know, it is unavoidable basically, in the whole geopolitical environment, you know. with increasingly, well, aggressive china and russia still waging war. in ukraine. and now united states actually also asserting some ambitions of their own onto european continent for europe to be unable to make decisions. it's basically inconceivable for europe to survive. >> this. >> this. sort of environment. >> interesting. i would also like to get your thoughts on the comments from donald trump about potentially imposing sanctions on and tariffs. actually, i should say tariffs on russia as a way to end the war in ukraine. what do you make of that plan, given that the us imports from russia are actually quite limited? could that be the way to actually end this war? >> well, united states, the. way that the sanctions work in the

united states is that they can impose what is called secondary sanctions. so, you know. all chinese, indian banks of turkey, you know, all companies that help russia circumvent the western sanctions. you know, they could also appear under sanctions that. could really. bite russia's economy, because now the way that it survives is basically just having all these subsidiaries where, you know, which help russia to bring in the goods and finances that, that it, that it needs. so president trump, i you know, in my belief he made a right step asserting power and really putting putin in a very in a very tough spot where he has to either agree that, yes, his economy is not doing so well and he needs to accept this ultimatum by the united states, or actually prove the point that we've always been making, that he's actually not interested in peace. so that is a, you know, a right step. the question is whether that's a sufficient step. and i this is here where i believe that unfortunately it won't be a sufficient step.

russia is continuously escalating. you know, just yesterday we've seen additional cable has been cut between latvia and sweden. so that's, you know, part of shadow war in the baltics. but same goes for ukraine, right? every day more attacks, more civilians killed. so russia is definitely not interested in peace. so how do you bring ukraine to a stronger position. you know, sanctions is one thing. but second thing is weapons. unfortunately, there is no other way. we have to guarantee that ukraine is stronger on the battlefield, and without the weapons, we cannot achieve that. >> speaking of which, i would like to share these comments from president zelenskyy. he was addressing the world economic forum last week, and then we'll return to the conversation. >> will president trump even. notice europe? >> does he see nato. >> as necessary and will. he respect. eu institutions? ladies and gentlemen, europe cannot afford to be second or. third in line for its allies. if that. >> happens, the world will.

>> start moving forward. >> without europe. and that. >> is a war that will not be comfortable or beneficial. >> for all. >> europeans. >> gabrielle, it was a very sobering conversation. this speech from zelensky last week. the world will start moving forward without europe. do you think that officials in europe are actually aware of that risk? >> well, many are, but unfortunately we're not there where we would agree that this is a monumental crisis moment for europe. still, there are many officials, representatives in the european and brussels corridors who think that it's just, you know, it's just another day at the office. well, we've we've been through worse, but actually we haven't, you know, as president zelensky says, he says politely that the world will move forward. actually, i believe that the world has moved forward. when you see, you know, how far advanced technologically, you know, our main competitors, the united states and china, are how

you know, how advanced, how far advanced us economy has during the last, you know, ten, 15 years, you know, compared to, compared to ours, all the industrial woes that we face in, in, in eu, i mean, the pressures are such that we are actually approaching a point of really non relevance. and with that we are just not that we are not relevant, but we're unable to defend ourselves first of all from russia's aggression, then china's economic aggression, then, you know, being a serious partner with us. so this is a you know, you could call it a perfect crisis that we are approaching. and or we almost approach. and by admitting it, we would find we should be able to find a way forward. but the biggest problem today is that we aren't we aren't able just to admit that we're in the midst of it. >> let's see whether that is going to change as we appreciate so much your time today. thank you for your time. gabrielius landsbergis, former minister for

foreign affairs for lithuania. coming up on the show, major trading relations are reconfiguring as president trump begins his second term in the white house. we'll take a closer look at where global trade is headed after this break. >> when a cyber thief transfers the. >> title of. >> your. home out of your name, it's a race against time to stop the theft of your hard earned equity. many people don't know. >> this has happened. >> until long. >> after it's done. >> you. >> as a homeowner. >> think you still own a house. >> three months. >> later. >> you start. >> getting foreclosure. >> notices and you realize. >> you've got. >> four mortgages. >> on your house that you didn't even. >> know existed. >> so when's the last time you. >> checked on the title to your home? >> find out if you're already. >> a. >> victim at home. >> title lock com.

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thoughtful living. >> therma overtime is about. understanding what. >> just happened in the markets. >> that. >> day and preparing for tomorrow. >> i'm looking. >> to talk. >> to all investors. sophisticated investors. beginning investors. >> i'm always learning. >> closing bell overtime for eastern. cnbc. >> welcome back to the show. now relationships between major trading partners are reconfiguring. and the changing geopolitical environment could be behind it. that's according to our next guest who says major economies are still connected, but new alliances are emerging. please introduce sven smith, chair at mckinsey global institute. sven, great to have you on the show. perhaps just explain to us what your research is telling us at this stage about where global trade dynamics are actually heading. >> thank you for having me. it's

a privilege. >> the first point that we want to make, indeed, is. that trade will continue to buy. >> the. >> economies around the world, because. >> no region can be an island. >> we depend. >> on stuff. >> from each. >> other, whether it's metals, whether it's. >> oil and gas. >> and products being produced at the same time. we see very significant shifts already happening. >> china has gone. >> more domestic, has reoriented more to trade with asia. >> the us has shifted. >> its. >> supply a bit more. >> to mexico, vietnam and other places. and in a way, you. >> could. >> say that the geopolitical distance. >> of trade is narrowing because. >> people are moving. >> a little bit more into blocks. the third trend. we see. >> is that. >> many of the relationships are. >> shaped by. >> more bilateral conversations. >> or smaller group conversations than. >> sort of larger. global frameworks. >> is there a sense, whether moving towards more bilateral relationships, less efficient for the global economy?

>> i think. >> for the. >> largest flows. >> the efficiency. >> argument, i'm. >> not sure is fully there. >> but for the. >> smaller flows. >> it might be, and the. >> smaller flows. >> have not yet been addressed by. these shifts. but as the world settles on new flows, there will be some inefficiency. but there will. >> also be some. >> time lags. you can't move major production all. >> around the. world just in a. >> in a fluke. semiconductors in some parts. >> will take ten years to move it in a in a proper way. >> so we also have to find a time match in a proper way. >> give us a little bit more color in terms of how this trend towards growing protectionism is actually reshaping how global trade is done. what sort of blocks are emerging as a result of this growing protectionism? >> i think clearly the united states. is pulling towards itself with. supply partners around the world, but also with an attempt to go more. domestic in manufacturing. you will see similar things happening in

europe where you will have. >> to find ways to get. >> access to materials. >> and of course. >> china is reorienting. china has already gone a bit more domestic. >> and then. >> it's reorienting to asia a little bit. >> and i think. >> what you will see. is on certain flows, countries need to choose which side. >> in a way they're. >> taking on. others maybe can still stay a bit mixed. you see countries trying. can i be different by trade? can i do energy with one partner and materials with another partner? and we'll see how that develops. that's of course for. >> the politicians. >> to decide. but it's a complex territory. >> it's very interesting how some of these trends are actually changing as a result of growing protectionism. what i would like to understand is i also believe you have done some research in terms of demographics. tell us what are the main takeaways from that point of view, and where are the pressures coming from for in particular, the european welfare state? >> yeah, i would say the discussion.

>> on demographics. >> has always been about aging, but we looked. >> at the wrong. >> side of the curve of aging. we looked on the side where we looked. >> at us getting older. >> and sort of. >> say. >> that's bad news for healthcare, pensions, all that kind of stuff. but we actually didn't look as much at how much fewer children we get. the fertility rate in the west is heading towards something like 1.4. but what we found very surprising is when we looked at the comprehensive set of data across the world, is that the fertility rate for the whole world is heading below replacement rate. if you take sub-saharan countries out, we are already at replacement rate for the entire world. so we are heading towards something of an age of dependency and de-population. if you imagine that you, like korea, are at 0.9 or something like that fertility rate, that means you do three generations of that and you kind of decimated the population. so that's de-population. but from a dependency perspective, we've moved from 1990 of 4.9 people working per non-working elderly

towards what might be in 2050, less than half of that, which means we have double dependency, which threatens pension systems and so on. now, we might be lucky that productivity will be rising due to robotics and ai, but we need 4 to 5 times in europe to actually fix this dependency. we might. >> have to. >> work 5 to 10 years longer, and you can imagine that you might have to work out more hours per week. >> that's how. >> the numbers. >> are much bigger than. >> we thought, because obviously we hear a lot of conversations on how to develop growth from an ai perspective, but perhaps a less focused on family policies. we appreciate your time today. sven smith, chair at mckinsey global institute. and before we let you go, here are the four things to get you up to speed ahead of the open on wall street. on the economic front, we'll get new home sales data and the dallas fed manufacturing survey as well. in terms of earnings, we'll get numbers from at&t today with big tech set to dominate the headlines later this week. central bank policy

decisions are another key topic for the week ahead, with the fed starting its two day policy meeting tomorrow. and on the corporate front, the wall street journal is reporting activist investor and core holdings in. ted intends to rally shareholders around the plan to oust u.s. steel's chief executive. and the final look on us futures. this on a very important day for markets we are seeing today. it's likely to be a negative start to the trading day on wall street. let me show you one of the reasons why we have magnificent seven under pressure. after investors are focused on this. these developments from deep sea. that is it for today's show. i'm silvia mauro. stay with cnbc. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our

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