>> very good morning, everyone. >> happy friday. >> and welcome to street signs. i'm sylvia machado. here are your headlines. european markets look to close out a. >> frantic week on. >> the front foot, driven higher by tech stocks as. investors pile back. >> into the sector. >> after the. >> deep six sell off. >> novartis shares rise as the pharma giant posts. >> a. >> solid fourth quarter beat. >> and issues optimistic. guidance for. >> the. >> year ahead. the ceo of narasimhan. >> tells cnbc europe's pharma sector must also.

>> step up. >> to. >> its american rivals. >> one of the challenges for. >> our industry. is to get europe to really pay for innovation and keep europe competitive, especially in a world where the united states is prioritizing competitiveness. >> apple shares rise. >> in extended trade. >> boosted by strong services revenue, but iphone sales missed forecasts, while the. >> tech giant's. >> china china business. >> takes a hit. >> and president trump pledges to slap tariffs of 25% on canadian and mexican. >> imports from. >> saturday, but weighs up whether to. >> exclude oil from the measures. >> we're going to make that determination probably tonight. >> on oil. >> yeah. >> because they. >> send us oil. >> we'll see. it depends on what the price is. >> if the oil is properly. >> priced, if. >> they. >> treat us properly. >> very good. >> morning everyone. >> we start. >> today's show looking. >> at. all of the action.

>> across the equity. >> markets on the european continent. >> as you can. >> see on your screen. >> we have green across. >> all of the. >> major european. >> bourses at. >> this stage. looking at the ftse 100. >> up. >> about 4/10. >> of a percent. >> similar moves over. >> in france. but all in all it is friday. i want to give you the context. >> here and. >> show you the week to. >> date performance. because what. >> a week. >> it has been actually. >> for european equities. we are on track to see. >> the ftse 100 ending the week up by more than 2%. >> over in germany. >> the dax. >> is also on. >> track to. >> finish the. >> week. >> up about 1.7% higher. yes, the italian market, the. >> hunt as. >> well are also on track. >> to finish. >> the week on. >> a positive note. >> but look at the outperformance at this stage for the. >> ftse and the. german market as well. this brings me to my next point, which is actually showing you the. >> month to date performance. >> january has been. such a strong month for european

equities. >> we could. >> see gains of about 7% in the month of jan. >> let's see. >> how. >> we will. >> close at the end. >> t been driven mostly by the performance in germany and. >> over here. >> in the uk as well. analysts suggesting that the stronger season reporting season has therefore boosted. >> a little bit of. momentum for. >> european equities. we have seen a. >> weaker euro. >> as well, but all in all, it's important to keep this performance in mind, particularly when we saw two key. events of market. volatility this month the rise in bond yields earlier this month and of course, earlier this week, the concerns. >> around ai. >> now i want to take you to the different sectors to. >> so we get. >> also a better idea. >> of what's happening on. >> the corporate front. >> looking at the best performing. sector we have tech stocks. we're up almost 1.5% again. yesterday was already a strong. >> day for this. >> part of. >> the market. >> we are. >> recovering really from those. >> losses that. >> we had seen at.

>> the start. >> of the week. health care also up about 1%. >> off. >> the back. >> of strong earnings. >> let me show you. >> the worst performing. >> sectors too. so you get. >> a full picture of. >> what's happening in. >> the corporate world. >> we have telecoms under pressure. >> the worst performing sector. >> we're down 6/10 of a percent. some of the moves behind. >> this are. >> also related to earnings, particularly. >> some weak guidance within this sector. but i want to focus on healthcare. what a strong performance we have seen. >> for novartis. >> this morning the. >> company posted a top. >> and bottom line beat for the fourth quarter. the company reported a 26% rise in adjusted net income, while net sales jumped by 15%. and carolyn has been speaking to the ceo, joins us now. >> from basel. >> as well. carolyn, i was actually having a conversation. >> with an equity. >> analyst earlier. >> this week about. >> novartis. >> and the. >> analyst was. >> suggesting that in 2024, novartis was this healthcare company that. just went. >> under the radar. >> but every time they reported,

they managed to beat expectations. and once again, it seemed to have been the case. >> absolutely. sylvia, you and. >> the analyst, you're spot on. >> because what novartis has delivered. >> over the past. four quarters and even beyond that was sort of. >> a beat. and a. >> hike strategy. >> meaning beating expectations across. >> the board and then. >> hiking its guidance. and once again, it delivered on the same premise. >> today we saw very. >> strong guidance. >> very bullish guidance. >> for the rest. >> of the year. this is driven. >> by the. >> performance of a number of its key drugs, and this is also what drove. >> the operating. >> performance in the past quarter. >> and we did. >> in fact, see an acceleration of the. >> sales trend for. >> those key drugs. i'm talking about the blockbuster heart. >> drug. >> and i'm talking about an. >> ms. >> drug and a breast cancer drug. so the momentum is definitely there. >> but at the same time. >> sylvia, there are. >> a lot of question. >> marks about. >> the future pipeline. >> and the fact that this. >> company, more. >> so than others, more so.

>> than, for example. >> its crosstown rival roche, is facing a. >> pretty steep patent cliff. >> very soon for its blockbuster drug. >> the heart. >> drug entresto. it's facing that patent. cliff generics. >> entering the. >> market at the middle of this year. >> and this. >> is pretty important. >> but the. >> ceo, when i spoke to him this morning. >> he was very. >> optimistic about working around that. >> now. >> obviously. >> the talk of the town. >> not just here. >> well, the talk of the town or the talk of. >> switzerland really. is what does trump mean for switzerland and the for. >> the pharma. >> industry at large? and yesterday we spoke to. >> the. >> ceo of roche. >> about it. >> he was. >> pretty relaxed and a very. >> similar tone. >> i. >> feel was. >> coming from the ceo of novartis this morning as well. >> when i look. >> at. the opportunities. >> to fix some of the key policy issues. now, there are challenges with this administration. of course, we need to make it clear vaccines are an absolutely critical public health tool and one of the most impactful medicines and technologies we've ever created as an industry. i actually spent 12 years of my career only working on vaccines, so i'm a big believer in the power of

vaccines. we need to also fight for the power of good information. but overall, i see the opportunity to fix three big policy issues we have in the us. one is the ira, which was hugely damaging to small molecule drug innovation. the second is the pbm middleman issue that we have in the us. most companies in the us, including novartis, pay 50% or more of their gross sales to the middlemen. and the question is, how can we fix that system? and the third is the drug pricing around a program called 340 b, which has become a huge issue in the us. if we can fix those three policy issues, manage some of the challenges that clearly the new administration also brings, and then leverage the fact that the whole movement is towards non-communicable diseases, which is certainly a sweet spot for a company like novartis. i think we can thread the needle and really make this a positive thing for novartis and for the industry. >> so i take everything you say on board in terms of the positives. i want to spend a little bit of time. on the. >> negatives, though. >> immigration all over. >> the world is hugely important to you. >> in the us. where you have

your. >> biggest footprint. also here in switzerland. >> the us immigration reforms. >> and the. >> plans, executive orders. >> by the new administration. >> what does that do to the. talent you can acquire? >> well, i think one of the most important things we need to protect is in being able, as you, as you know, to get talented people around the world to be freely moving. of course, you know, there's a whole set of other immigration policies that are getting rolled out which don't have an impact on novartis. but most important for us in switzerland, in the united states and other places that we operate, we need to get the most talented people in the world to the right places where we operate. so far, that's not been an issue. i mean, we've always been able to navigate that, despite kind of the anti-immigration rhetoric that you hear around the world. but that's something that's really key for us. and we always highlight that to policymakers. >> and. >> sylvia, one more. >> nugget i want to leave. >> you with. >> in that wide ranging. >> interview i. did with. >> the ceo of novartis this morning. we. >> of course, also. >> talked about m&a. >> this company really. >> has been at the forefront of. the biotechnology m&a. >> over the past year. >> they've done roughly 20 to 30

deals. but they were pretty small deals. >> and that. could continue or even accelerate under a more permissive. >> ftc in the united states. so the ceo. >> pretty positive and pretty excited about the opportunity of more bolt. >> on acquisitions. >> nothing too big, he said. that doesn't usually. >> create value. >> he says. >> but probably. >> more bolt on acquisitions. back over. to you, sylvia. >> thank you. >> caroline, what an interesting. conversation with the ceo of novartis. i want. >> to take you. >> to. u.s. futures. >> as well. >> so we get an idea of what's. likely to happen. >> on wall. >> street later today. let me show you what. >> we are seeing there. they indicate. >> a positive start to the trading day. >> later today. >> this after a positive day also on thursday, in terms of what. >> the investors. are monitoring today. >> yes, we're still following. >> the. >> earnings season. >> today. we're going to hear from chevron exxonmobil. >> as well. let's see what they will. >> tell us in terms. >> of how. >> they've performed in the last quarter. >> what is the. >> outlook as well. and this after we've heard from apple. >> yesterday. >> let me run you through their

numbers. >> in fact they. actually moved the higher they are moving higher in extended trade after sales were actually. on a on a positive. >> note. let me share the numbers with you. wall street estimates. were at $124.3 billion. for the fiscal first quarter. >> it was also a beat. >> on the bottom. >> line, with earnings per share of $2.40. however, look at this. >> iphone sales were slightly lower on the year and missed estimates with the company's inability. >> to roll out. >> its new. >> ai powered. >> device to all markets posing a headwind. nevertheless. the ceo. >> tim. >> cook. >> told analysts. >> on the. >> call that iphone 16 sales outperformed in markets where ai features are. >> available. >> and the company gave a positive growth forecast. apple has outperformed its peers in a bumpy week for. u.s. tech after deep six. ai model release put. >> firms mammoth ai capex under scrutiny, the world's largest company devotes only a fraction of what its peers.

>> do to. capital expenditure. the figure came. >> in at less than a fifth of what. >> microsoft spent in. >> the latest quarter. >> argent, of course, has been following all of these numbers. >> all of this comment. >> argent just. seems that we are perhaps witnessing a bit of a change in narrative here from for apple. if i look at. >> some of the conversations. >> we. >> had in 20. >> 2024, the indication was. >> more on. >> the negative side rather than on the positive side. it seems like there's perhaps a new chapter here for apple. is that concrete? is that here. >> to stay? >> yeah, a. >> few. >> a few. >> things. >> have changed and. >> a. >> few things haven't. >> i think. firstly, iphone sales fell in the quarter and that's been a challenge for apple for a long time. the iphone sales, but actually some of the other products picked up the slack, the mac, the ipad. and i think the most important part of the equation was the fact that services revenue grew. and that was a more than $26 billion business. to put that in context, microsoft's. intelligent cloud segment, one of its core segments alone, is worth less than that. and so

just just. >> put a bit of a finer point. >> on it, about the size of the services business. and that is the story that people who are excited about apple, investors who are excited about apple and also excited about apple, say this is a hardware business. yes, they sell iphones and macs and ipads and everything else. but actually the key is that massive iphone, very loyal user base that actually is able they're able to monetize through services by selling them icloud by all of the other services apple offers as well. and you're really seeing that story play out here. and that led to a record gross margin in the. quarter of nearly 47%. >> the services. >> business is responsible for a lot of that. the services business accounts are roughly 75% margin as well. so you're seeing that strength there, i guess where the difficulties lie for apple at this point is how quickly it's going to roll out apple intelligence to the rest of the world. and also china sales fell 11% in the quarter. it's facing challenges there, in

particular from the local domestic players like huawei and others who are producing very high end phones now at a much cheaper price, and who are already rolling out ai features in china. >> and then those were concerns that they were already on the table for, for a. >> long time, really. >> but perhaps now the focus seems. >> to be. >> on actually. >> capex. >> particularly on ai capex. >> arjun. as always, thank you for breaking it down for us. meanwhile, i've told you this already. you know it. it is friday. however, it is a moment for us to look back really at our moment of the week and this one could potentially prove to be historic. last week, chinese ai firm deep seek revealed its latest r1 reasoning model with claims it outperforms. openai's most advanced chatgpt version and at. >> a fraction. >> of the cost. the reaction in the market was devastating. ai darling nvidia, whose processors dominate the market for data center chips, suffered the biggest one day wipeout in us

history. the stock fell 17% on monday, shedding some $600 billion. >> some of silicon. >> valley's biggest names were also hit as investors reevaluated. >> their own. >> multi-billion dollar ai spending plans. microsoft, alphabet and amazon were all suffering deep declines at the start of the week, although. some have managed to recoup some. >> of thoseses. deep sea, with the chip equipment maker asml led the declines in europe. however, it managed to claw back those losses on wednesday when it reported earnings. the ceo told cnbc that cheaper ai costs will ultimately be good for the industry. >> we need ai to. >> address two things. >> cost and. >> energy consumption. >> we believe. >> that anything. >> that will go in the direction. >> of. >> lowering costs of ai. >> is. >> in fact, most. >> probably good news, because. >> this will allow. >> the application. >> to go to.

>> many, many more devices. >> stephen yu, cio at blue whale capital, is joining us this morning. stephen, always great to speak with you, particularly when big tech was such a huge topic this week. first and foremost, before we dive perhaps into some of the stock specific conversation, i just would like to understand what did you make of the whole event around deep seek? is was this a moment for you to be concerned about what is happening on the ai front, security risks and so on? or was actually the developments in china a positive showing that we can do this cheaper and faster? >> yeah. >> obviously we. >> would be on the latter side. >> in terms of the development for ai that is basically solved two bottlenecks. >> one was. >> the cost of training the model and ultimately the. >> price that consumer. >> or enterprise. >> users are going to pay for. and the second would be the energy intensity. so what. >> deep sea. >> managed to. >> solve, we think, is that they have lowered the cost and the

price at the same time, the energy demand. so it's going to welcome or empower a lot, many more smaller players to come in, let's say the startup ai companies to develop newer applications in terms of us. yeah, having more access to it. >> what i would like to understand is whether a major change some of the positions in the portfolio. did you sell? did you buy anything as a result of what. happened on monday? >> so we have not changed our stance based on our late last year conversation, that we are still very much pro ai infrastructure companies such as nvidia or broadcom, and we remain. >> very. >> cautious on the magnificent six, the company who is spending a lot of money on ai such as microsoft, which we can come back onto. and i think that on a very high level, what we have been seeing is broadcom is actually seeing a decent benefit on the back of this because of the big tech company going to embrace more of the in-house gpu. but at the same time, we would expect enterprises to come in to become customers of nvidia because they would not be able

to do the in-house gpu like the big tech. and so i think what deep sea has managed to do is to solve quite a few bottlenecks, and it's going to be very beneficial to the industry. >> so who gets to. >> benefit from this? >> because obviously there's some investors out there that are concerned about how much money has been promised into some of the ai projects. here are some companies likely to lose as a result. who stands to benefit here? >> so on a very high level, if you look at what deep sea has managed to do, obviously the algorithm is probably quite, quite advanced and they managed to run it at a very low cost or train it on. >> a very. >> low cost number of gpus, but then you still need to run it on some sort of gpu to start with. right? like deep sea is not managed to get to where they are running on your laptop or pc. so i think one thing is very clear that if you do believe that generative ai is going to change the world, which is our view, and that's going to be a lot more applications to come. and i think one thing that we haven't yet explored is called ai

agents. so if you come across all the ai applications today would be the likes of chatgpt. summarizing, essay transcribing like a real time conference call, or maybe image generation. but that is not where we are heading. i think the ai agent is going to change quite a few things going forward. and of course, to be able to train those agents, you would need to have a lot more gpu to do that. >> of course. talk to us about microsoft. of course. they reported this week. i was wondering whether you see any potential source of concern when you look at their numbers for the cloud business, of course, you have to put everything into context of ai these days as well. what do you make of the numbers? >> so we are not very happy with the numbers. and i think based on our last year's conversation, that we have been reducing our position in microsoft quite significantly and we further reduce it further just before the results. and currently it's only a percent position in the fund, which is relatively small. and i would be really surprised if we still would have a position in microsoft next time we chat in the next few months.

so i think what they have been doing is obviously they have spent a lot of money in ai, but at the same time our concern which has started to come through is that they're not able to capitalize on monetize those ai spending as quickly as they want to be. and ultimately, there's a price to pay, right? if they are charging us about $30 a month for the office 365 copilot, we need to see enough productivity gain. and ultimately the price could be 100 or 200. and at the moment, i don't think people are willing to pay for that price yet. >> let's talk. apple as well. the latest earnings reports came in above expectations, but i'm wondering what sort of elements were you most focused and monitoring? the most really from this report? was it the fact that sales in china were disappointing? is this a positive story because they're not spending so much on ai? how are you thinking about apple? >> so we do not currently own apple. i think our view on that is they obviously they have done well recently on the back of

underexposure to ai. i mean, to us it's actually quite negative stance going forward, because if you believe that ultimately the value would lies into which company would can actually crack ai or become the dominant power, just a bit like google search many years ago, that we become overly dependent within the google ecosystem, and ai is going to be the next leg for that. and at the moment, it's not clear who's going to win that race. so as far as apple is concerned, i think they have received a lot, a bit of benefit not being exposed to ai as much. hence they the shares are actually a bit boring in terms of not not being exposed to that. so they they have done relatively well this week, but over time they still need to do something on ai. and at the moment, i think as far as the apple intelligence is concerned, it's not there yet. >> it's not quite there yet, but we have to agree. it has been an eventful start to the year for the big tech. thank you for your thoughts today, stephen. you, the cio at blue whale capital, coming up on the show. uk chancellor rachel reeves lays

out her plan to combat sluggish growth, including backing a controversial project. we'll have the details after this break. 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. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find out if your policy qualifies. or call the number on your screen. coventry direct, redefining insurance.

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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. the uk chancellor, rachel reeves, has promised to go further and faster in pursuit of economic growth, announcing a string of measures to invest in new infrastructure projects. the plans include confirming the government's backing for a controversial third runway at heathrow airport and making europe's silicon valley by developing the oxford cambridge corridor. ahead of the speech, the government unveiled planning reforms as well, including streamlining national policies and easier approval for developers to help achieve their goal of building 1.5 million new

homes over the next five years. i'm very pleased to introduce helen gordon, the ceo of granger. helen, very good morning. thanks for joining us today. first and foremost, perhaps just explain to us what will be the impact on your business from the this latest announcement from the uk government in terms of planning reform? >> well, the government. >> have a great. >> ambition, which is to build. >> 1.5 million more. >> homes in. >> the uk. and granger has this great. ambition to build. >> many tens of thousands of rental homes in. >> the uk. and the. thing that we. >> were particularly excited about is that for. >> our customers, a good place to live. >> is where. >> near transport modes and actually the chancellor is. actually now putting the emphasis on development around good. >> transport links. >> and that makes sense for. >> a lot of reasons. >> and so we're quite. >> excited about this. >> it's an ambitious target, but

ambitious targets do drive growth. >> what i would like to understand as well is what is the state for competition here? because if we see these these planning reforms actually bearing fruit, surely you and your company will be facing more competition in this space. >> yeah. >> we have a. >> shortage in the. >> uk of. >> 4.3 million. >> homes. and we have less than 2% of the sector is professional landlords. so i. think we have a. really good growth. >> story. >> and the. >> uk needs. >> good rental homes. it helps. it helps growth. it helps labor mobility. it helps people to. migrate to places where. there are jobs. and so actually. >> we're not frightened. >> about the competition. we think this country deserves good housing and good rental housing in particular. >> and helen, i'm aware you'll be updating the markets in a couple of days time. so i know we can't discuss numbers in

detail, but what i would like to understand here is the outlook for rental growth, particularly when we are seeing politicians still addressing the renters rights bill. what i would like to understand is what is the outlook here for rental growth given this bill and the impact it could have on your business as well? >> so the. >> bill itself. deals with more about the quality of homes that renters have and their ability to stay, and that's completely aligned with the granger model. we've been around for over 100 years. we want people to rent and stay with us for longer. so the renters rights bill is absolutely aligned. in terms of affordability. in granger homes, on average, people pay 28% of their income on rent. that compares to the nationwide numbers that were out this morning. that said 36% on mortgages. so you can still see that renting is cheaper than

owning. and actually the affordability. we've had good wage inflation over the last few years and rental growth outlook more or less follows wage inflation, of course, because that's people's ability to pay. >> i would like to understand, and you've highlighted the point of affordability there. i would like to understand how do you strike the balance here between affordability and rental growth at the same at the same time, particularly when consumers are still facing the cost of living crisis? and at the same time, there's higher rates for the sector too. so how do you strike a balance here? >> so for. >> granger. >> we've we've done this by purposely focusing on the mid-market and making sure that our, our homes are affordable to people. on average wages. and then our rental increases, we do all of our own leasing. we do all of our own rental increases. and we really get to know our customers well. and so therefore

our rental growth is very much aligned around ability to pay. >> i would also like to understand what sort of what what consumer really are you targeting here? i was reading not too long ago. there's this school of thought, and i believe granger is also supportive of this argument of targeting people above 35 years of age. as your main consumer going forward. what? is that still the approach of your business? >> so granger focuses on the mid-market renter, but we also focus on the age group that want to rent. people are buying houses later now. and so we focus on the sort of we do family homes. we do sort of professional people's homes, but we focus on that age group that's really 24 to late 30s. so that's our main demographic. and actually their their salaries

are obviously usually going up slightly ahead of inflation as they progress in progress in their careers. but granger rents to all, all age groups. >> and going back to the point of rents, you know, we're still time, as i highlighted earlier, the cost of living crisis is still is still a reality for many people as well. so ultimately, how are you planning? perhaps how are you supporting? how do you see rental growth developing going forward? >> so we've over the last three years, rental growth has actually been the equivalent of about 20%. it's very aligned with wage inflation going forward. we think it will slow slightly, but i think it will still stay along the slightly higher than the long term average and the long term average in the uk on rental growth is 3 to 3.5%, and that actually is just slightly above the long term inflation rate.

>> helen. and before i let you go, i just would like to get also your thoughts on the share price performance, because when i was comparing granger's performance over the last year with a couple of peers, there seems to be a little bit of pressure on the company. however, with better regulation ahead and rental growth likely to continue and to be a reality here, explain to us why do you think the markets have not favored the stock over the last year? general election, if you look at the sort of pivot point, there was a fear that with a socialist government, we might they might not want to stimulate the growth of rental homes from all of our conversations. that's actually not not been the case. and of course, it's true to say that granger has outperformed the real estate sector generally. so for the last sort of two and a half years, until our share price dipped, we were actually

an upper quintile performer in the real estate sector. and i would argue that with high occupancy, good rental growth, that performance in share price should return because the performance in the company is very strong. >> helen, it was a pleasure speaking with you. hopefully we can do this again in the near future. helen gordon, the ceo of granger. coming up on the show, we'll break the latest results from german industrial giant bosch and speak to the chairman, stefan hartung. that conversation is coming up next. first on cnbc. >> hello. >> welcome to t-town. >> black men. >> over. >> 40 everywhere. >> these guys experience a drop in testosterone. >> don't worry. >> it happens to all of us. >> some guys took my advice. >> about how. >> to. >> boost their testosterone. >> and some didn't. >> this guy got the message loud and clear. >> that's right. eugenics. >> total t.

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back into the sector after the deep sea sell off. novartis shares rise as the pharma giant posts a solid fourth quarter beat, and asia's optimistic guidance for the year ahead. the ceo of simon tells cnbc europe's pharma sector must also step up to its american rivals. >> one of the challenges for our industry is to get europe to really pay for innovation and keep europe competitive, especially in a world where the united states is prioritizing competitiveness. >> apple shares rise in extended trade, boosted by strong services revenue, but iphone sales missed forecasts, while the tech giant's china business takes a hit. president trump pledges to slap, slap tariffs of 25% on canadian and mexican imports from saturday, but weighs up whether to exclude oil from the measures. >> we're going to make that determination probably tonight on oil. yeah. >> because they send us oil. we'll see. it depends on what the price is. >> if the oil is properly

priced, if they treat us properly. >> let's look at the latest data out of germany. at this stage, bond yields are moving lower after data showed regional inflation cooling across germany. consumer prices in the most populous state of north rhine-westphalia is 2%, with closely watched figures from bavaria and saxony also coming in lower. staying in germany, the german conglomerate bosch has posted full year sales revenue of ■k790.5 billion. that marks a 1% decline on the year in nominal terms. the chairman, stefan hartung, pinned the decline on a weak macro environment, as well as a slowdown in key business areas such as electric vehicles. the company also warned it sees further cost pressures ahead in 2025. i'm pleased to introduce this. the chairman of the board of management at bosch, stefan

hartung. stefan, great to have you on the show. first and foremost, just explain to us a little bit, give us more color, really, on the fact that we are seeing a total sales revenue lower from 2023. the statement does highlight that you believe you were held back by market developments, but which ones explain this performance to us? >> yeah. >> that's actually the surprising point. it's a 19.90 point 5 billion only. so it's a minus one against previous year. and that's in all sectors we work. we have no growth pretty much in the automotive sector. we have a steep decline in the industrial sector, which is led by the questions of large machinery but also factory building worldwide. we have a decline also in the in the energy sector a bit, and we have a still not really exciting consumer business in the year 24. >> well, let's dig into the different segments of the business. then i was looking at the numbers for mobility. we're also down on the year. give us a

little bit more color there. because obviously mobility is such an important part of your performance. explain why sales are so weak on a yearly basis. >> growth. because obviously over the year we saw the automotive market not growing, so the vehicle production didn't grow a lot, a very small numbers. and obviously we had this worldwide. so even in china, the in china sales didn't grow much. just the china exports were a bit of a positive sign. the european side was shrinking. and pretty much if you do on the regional side, the us was marginally plus. so overall there was no big growth stimulus specifically because then also we saw technology shift because the electric vehicle shift was getting much slower than we actually anticipated before. >> speaking of the breakdown of the geographical breakdown, the numbers for europe also under pressure. i'm just wondering here where how are you looking at the geographical breakdown of your business, given the

pressures in europe, is this likely to continue this year? do you have to step up, perhaps your presence elsewhere? >> no. the only markets that really performed quite well with more than 5% growth were the americas, north america as well as also south america. so clear direction for us to increase our business footprint in the americas, which we did. first steps in 24. you saw we bought a company from jci for a substantial amount of money, and we are increasing our investments in the us. so this is going continuously forward. europe really has to get the competitors back into shape, because the competitiveness will be the major issue of 25 for the markets. and obviously we are very strong in europe. any shrinking of that market is not good for us. >> you have highlighted their higher investments in the united states. you also present in in mexico. from what i saw, what i would like to understand here is that how are you protecting the business potentially against the tariffs from the united states under the trump administration? how are you viewing this, these tensions at the geopolitical

level? >> well, i also hope that terrorists will not come as substantial as they were discussed, because the tie between mexico and the us is very important. mexico is a good manufacturing base, also good market with the population. but on the other hand, this work has always been quite successful between the us and mexico. so i hope the issues between the countries will be solved without tariffs. if they will come. tariffs obviously further steps have to be taken. >> do you have any calculations, any estimates in terms of what sort of impact you could see on your business? if we indeed see tariffs put forward? >> no, i don't have that available now because i think we have to observe carefully what is really implemented that is varying very much on the implementation. and we have also to be careful that we don't prejudge, that we end up in a world which is just hindered by high transaction costs. i still believe we will have a world which is still collaborating, but in some areas the competition will just rise tremendously and competitiveness

will be the key issue and everybody will have the best competitiveness. if he leverages the best partnerships on this planet. >> you're bringing up the issue of competitiveness once again, and i've read also your comments in the past on how european officials need to do more on that regard. we've had a change in narrative from european officials when it comes to competitiveness. they have now have a set of measures that they want to implement as well. what do you need to see from them in order to feel that they are addressing these issues on competitiveness? because despite the measures that they announced this week, this is the sort of policy that does take a while to actually see the benefits of it. >> i know there's always a time problem we have, but still the measures have to come from regulatory side because some regulation is just hindering business. it's making business difficult. so it's pretty much like the voice of the world is right now. anything that makes business easier, anything that attracts capital, anything that is making business more easygoing in terms of reaching to consumers and customers is a

positive sign. so the language which comes from brussels now is much better and much promising, and we have now to see the actions coming. >> i also would like to get your thoughts on ai. obviously, this is also a segment that you're investing on. what i would like to understand here is how are you perhaps looking at what's happening on a global level with the deep sea events that we had at the start of this week? how is that perhaps impacting your business, and how are you positioning in terms of ai investment going forward? >> well, we are on the application side of ai, so we have 5000 ai developers which really bring ai into product. so this is the most exciting area. so same time we see all these difficulties in the market. we should be happy to live in this time. with all this technology explosion takes place, we believe that the ai will revolutionize again and again in the next months. so it's no surprise that there are technology positive shocks coming around the planet all the time. that's the nature of ai. and by the way, it will increase productivity a lot, especially for software production, but

also from functionality wise, we will see dramatic increase in functionality in products, mobility, consumer as well as industry. >> while we await for the developments on that front. in the meantime, thank you for your time today. stefan hartung, the chairman of the board of management at bosch. now, i want to check on how we're moving in terms of u.s. futures as we prepare to see the start of the trading day on wall street later today. yesterday was a strong session for us equities. we actually saw the dow ending the day up about 4/10 of a percent. also similar moves for the nasdaq. but all in all when you look at the week to date performance i want to highlight this. when you think about the dow and the nasdaq, we are seeing completely different narratives so far on a week to date. performance. yes, later today could change this narrative, but at this stage we are seeing the dow on track to finish the week up 1%. the nasdaq on the other side is likely to finish the week down 1.4%, according to yesterday's closure figures. let's see what will happen. of course,

throughout today's session, we're going to get a lot of data coming through, including pce figures. there's also, of course, new earnings to develop and to monitor from an investment point of view. let's see whether that's going to change the market sentiment. but indeed the tech story has been a very important one for wall street. this week i want to take you to other developments. but staying stateside, the us president, donald trump, has said mexico and canada will be hit with 25% tariffs on saturday, accusing both countries of treating the us very unfairly when it comes to trade. trump said, however, that he is still considering whether or not oil will be included in the measures, outlining what would influence his decision. >> we may or may not. we're going to make that determination probably tonight. >> on oil. >> yeah. >> because they. >> send us oil. >> we'll see. it depends on what the price is. >> if the oil is properly. >> priced, if. >> they. >> treat us properly, which they don't. >> look, mexico and canada. >> have never. >> been good. >> to us on trade.

>> they've treated us very. >> unfairly on trade. >> and we. >> will be able to make. >> that up very quickly because. >> we. >> don't need the products that they have. >> us authorities have recovered the black boxes from the collision, wreckage of a regional jet and an army helicopter in washington, dc. the mid-air crash near reagan, washington national airport was the deadliest us air disaster since 2001, with officials reporting no survivors among the 67 people on board. nbc's jay gray filed this report. >> two black box data recorders. >> have been. >> pulled from the wreckage in the potomac, both located inside. >> the regional jet. >> that. >> went down. >> after a mid-air. >> collision with. >> an army. black hawk helicopter just. >> over. >> 24 hours ago. divers, though, no. >> longer in the. >> water tonight, with the mission shifting from rescue to recovery, the conditions are just too dangerous. in the dark of night. >> they'll return at. >> sunrise tomorrow. we know

that teams working in about eight feet of water. they're dealing with jet fuel and jagged wreckage from this crash. >> they've pulled dozens of victims. >> from that water. some reports saying as many as 40. while the families of. those victims continue to travel to the. crash site and a family shelter that's been set up for them here. there were 60 passengers on the flight from wichita, kansas, to washington, four crew members and three service members on the chopper, all presumed dead, which would make this the deadliest u.s. air tragedy. in almost 24 years. jay gray, nbc. >> news. >> reagan national. >> and coming up on the show, traders are closely watching today's pc print after the fed hits pause on its rate cutting cycle, we'll look at what to expect after this break.

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apply before february 10th. >> welcome back to the show. now last week in davos, karen sat down with the ecb president, christine lagarde, for a special episode of the cnbc conversation. here's a small sneak peek of what you can expect. >> ecb president christine. lagarde talks policy. >> i don't care how. >> i'm remembered. >> what i care. >> about. >> is getting the job done. >> innovation. >> i like to. >> draw the line between. >> the underlying. >> technology. >> which is fascinating, and. the assets. >> that have gone up and down and up. >> and down. >> and the return of trump. >> i think. >> what we. >> need to do here in europe is to. >> be prepared all. >> in the cnbc conversation. >> thank you. >> you can see that interview on saturday at 9 a.m. and 5 p.m.

gmt as well, and on cnbc.com as well as youtube, so no reason to miss it. meanwhile, the us economy grew less than expected in the fourth quarter, up 2.3% on an annualized basis as strong consumer spending was offset by a decline in investment for the full year. gdp rose by 2.8%, a slight dip from the 2023 figure. weekly jobless claims unexpectedly declined by 16,000 from the week prior, supporting the fed's assessment that the labor market remains solid. and as we approach the end of the show, here are three things to get you up to speed ahead of the open on wall street. we'll hear from members of the fed for the first time since wednesday's decision to hold rates. president trump has said canada and mexico will be hit by 25% tariffs from saturday. big oil earnings are on the deck, with chevron and exxon set to report numbers ahead of the opening bell. and of course, traders are

also closely watching today's pce print, with expectations for a rise from last month's reading. our us colleagues will be speaking to the chicago fed president, austan goolsbee, following the fed's decision to press pause on the rate cutting cycle. do not miss that first on cnbc interview. meanwhile, let's discuss the latest data from the united states with debra cunningham, the cio of global liquidity markets at federated hermes. good morning, debra. great to have you on the show. what i would like to understand here is how do you what do you make of the latest set of data from the united states? because of course we're going to get pc later today. but we had initial jobless claims, gdp figures, market, real estate market data. how are you interpret all of these figures? what are they telling us about the us economy? >> well, i think the data dependency that we're dealing with at this point makes. each number unique and. >> each number important. >> gdp was a little bit softer, i think, than most had expected, but still showing solid. >> growth, especially.

>> when you. >> look at it. >> on an annual basis. i think what we'll see from pce today is a little. >> bit of an increase. >> and ultimately that. >> would, you know, sort. >> of give credence to the fed's position. with pausing on rate cuts. >> you know, this week. >> and we'll hear more from them. >> about what to expect. >> but i think chair powell was very. clear on wednesday at the press conference that they're in kind of a point in time when it's. >> almost like nirvana. >> you know. >> the jobs market continues to be strong. >> the growth in the overall economy. continues to be strong. there are. >> pockets of weakness, but there are also pockets of. >> high, you know, high. >> amounts of strength. and what. >> that has been doing. >> from an inflationary perspective is making. us all think that it's. >> probably going to go a little. >> bit. >> higher before. >> it goes a little bit lower. >> so that. 2% target is a tough one. it's elusive. >> it's a tough one this year. what i would like to understand,

and i'm aware that you're not in the camp that believes we're actually going to see a rate hike from the fed this year. that's correct. but i would like to understand what could be the event that actually changes the narrative into that direction. because for the time being, yes, they press pause, but ultimately the outlook is so uncertain. you just highlighted their inflationary pressures are still on the table. what could be the event that actually tips this into a favoring a hike? >> i mean, it's really the inflationary numbers. >> and what. >> what drives the inflationary numbers higher. i think it's some sort of an outside. >> shock. >> whether it's from. >> you know. >> the energy sector. >> whether it's. >> from some. >> sort of, you know. >> global issue. i think it has to be a shock because right now, when you look at the consumer, especially in the us, they're still very strong. so you're not seeing something that. >> would, you know. cause a whole lot. >> of problems there. i mean, the whole new administration is a is. a it's, you know, puts everything up. >> in. >> the air whether you're looking at tariffs.

>> whether you're looking at, you know. >> changing regulations. whether you're looking at taxes, immigration, all of those things could have potential inflationary impacts. >> that was going to be my next point, because of course we heard from the president yesterday he said that tariffs on canada are happening from this weekend onward, but they're still thinking about what to do in terms of measures that could impact oil. you've just highlighted there. you know, energy component is also still a question mark going forward. so what are what are you reading from these messages from the president. and what could be the implications here for oil prices? >> well. >> first. >> of all, we don't have a. >> lot of. detail around. >> what the 25% tariffs are. >> what are they on? i mean, we. >> you know, it. >> was noted that oil was excluded, but that doesn't mean it will be excluded forever. i think that. >> you know. >> even once the details of the plans are announced, there's. >> always negotiation. >> i mean, we saw that happen with colombia over last weekend at the beginning of this week.

and granted, that's very. >> small compared. >> to canada and mexico. but ultimately, i think it's the details of the plan, the negotiation around. >> the plan. >> and then it takes a while from an implementation standpoint, nothing happens overnight. >> before we finish up the conversations, i would like to get your thoughts on whether this is a moment that you believe. it's the moment to actually sell a big tech, given what we saw at the start of this week, given all of this uncertainty on a macro level to what are your what's the outlook there, in your opinion? >> i think, you know, we've we've been driven so much by the tech industry that may be taking some of the weight off of that is probably not a bad idea. i don't think there's a tailspin that will be expected there, but i think we're seeing broad based enough earnings across other large cap value types of products that taking a little bit off the table from a tech perspective and putting it back into the overall general market is not a bad idea at this point. >> very good. i just like to understand as well. when you

think about 2025, i've had this conversation with several guests, but what would you say is the biggest headache, especially for markets? >> i think what. >> policy changes come about from an administration standpoint? quite honestly, i think from a economic outlook standpoint, it's very good based on the fundamentals. but those fundamentals can change pretty quickly. >> and of course, the fed has been very vocal about being independent and not listening to what the president is saying. but does it make their job a lot harder, having the president saying that he actually knows more about rates than the fed itself? >> i think it's a, you. >> know. >> an annoyance. i don't think it's a vastly different type of conversations. >> that they, you know. >> conversation that they have amongst the various fed members. but it's an annoyance because, i mean, you could see it with. >> the. >> press conference on wednesday. powell was definitely annoyed. you know, the third. question he got about it is. >> like, okay. >> i'm not going to do this anymore. i'm not talking about

this. this is not, you know, part of our mandate, but it comes into play. >> yeah. >> of course, wha studio. deborah cunningham, the cio of global liquidity markets at federated hermes. now, a final check on how we're moving across european markets. we were green earlier today and that continues to be the case. i just want to tell you that for a context perspective here we are on track to see positive gains for european equities this week, but also this month. look at the performance for european equities in january. we're up about 7%. that is it for today's show i'm silvia amaro. stay with cnbc. worldwide exchange is coming up next. 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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