that's all for this edition of "dateline." i'm craig melvin. thank you for watching. [music playing] >> a very good morning, and welcome to street signs. i'm julianna teitelbaum, and these. >> are your headlines. jittery trade in. european markets. >> after china. >> retaliates. within minutes of us trade restrictions going into effect. leveling tariffs. on u.s. imports from coal to crude and dragging google into the mix. ubs blows past earnings. >> expectations. >> with shares initially rising before reversing course. ceo sergio ermotti warns of significant risks from trade

tensions. >> the tariff wars. >> would most likely translate into economic consequences, which. >> in turn would. >> force central. >> banks to. >> stop the easing path and potentially even have to reverse. >> chip maker. >> infineon surges after. raising its. full year outlook, as. first quarter results. >> come in. >> slightly better than expected. cfo sven schneider tells. cnbc the firm has. been resilient. >> we are still navigating in a pretty difficult market environment, which is, from a structural perspective, very supportive for us, but we still need to go through the inventory correction and in certain areas, the market demand is still weak. >> and u.s. >> futures point modestly lower as attention turned to tech earnings. >> today, with alphabet. >> next up after the bell.

so the new global. trade war continues. china has now retaliated, hitting the u.s. with. tariffs of its own from february 10th. beijing will impose a 15% duty on american coal and lng, and an additional 10% tariff on crude oil, farm equipment and some autos. in a sign of a widening impact, china's anti-monopoly monopoly regulator also announced the launch of an investigation into google. so all of that fresh this morning for investors to digest. and this, of course, after president trump delayed implementing tariffs on mexico and canada for 30 days, but not china in return, america's neighbors will bolster border enforcement to clamp down on immigration and drug smuggling. following talks with canada's justin trudeau and mexico's claudia sheinbaum, trump said he would seek to negotiate a new trade arrangement over the next month and avoid pushing ahead with a threatened 25% tariffs on the two countries. so markets had a roller coaster day in

response to these developments yesterday. it really was a day of two halves with positive momentum building in the second half of the session. us markets did end lower, but that positive momentum carried through into asia. and on your screens there you can see the asian session overnight, the hang seng market up 2.8%. we were even higher at one stage. chinese listed hong kong listed chinese stocks rather hit a three month high in the overnight session. the nikkei 225, 7/10 of a percent higher. the topics, about 6/10 of a percent higher in the kospi also higher. of course, this comes after heavy selling in the previous session. we saw those japanese automakers hit hard yesterday in response to the news of these new tariffs. so a bit of a rebound overnight. but worth noting we've held on to the gains despite these new retaliatory tariffs coming through from china. as for u.s. futures, here's the early look at wall street. we are looking at a pullback in the dow jones of north of 100 points. the nasdaq holding steady. of course we do have tech earnings in focus as well playing a role.

s&p 500 looking to open about 12 points lower at this stage. forex markets have also had quite a roller coaster 48 hours this morning. we've got the euro trading slightly weaker versus the dollar. sterling as well on the back foot versus the greenback around one 2423. the mexican peso yesterday in sharp focus surging 3% intraday to close 1% stronger after news came that we would see a delay of these tariffs. so a lot of action in fx markets. global yields also in focus. yesterday we saw a sizable flattening of the curve for u.s. treasuries. investors pricing in stronger inflation near term and scaling back expectations of a fed cut in response to the new trade war that's kicked off this morning. we are seeing yields higher across the globe. we've got the us ten year trading around 4.57% at the moment, german bonds trading around 2.4%. gilts of course, impacted somewhat by the bank of england decision due out on thursday. they're trading around 4.5%. now back here in

europe, let's take a look at how trade is coming together. about an hour into the session you've got the stoxx 600 down about 4/10 of a percent. and it's been a jittery session in europe from a regional perspective. here's a split across the bourses in europe this morning. overall we've got the benchmark down 4/10 of a percent. and every region has participated in the sell off. you've got ftse 100 down half a percent. the xetra dax down about 20 basis points or so. the cac40 and the ftse mid also lower. now from a sector perspective the autos continue to suffer. you have got the autos down 9/10 of a percent. as those stocks remain in the crosshairs of this global trade war. food and bev also taking a hit this morning down 1.1%. you've got the drinks makers in focus. financial services down more than 1% from an earnings perspective. we've got ubs in focus there and telcos down more than 1%. vodafone dragging that basket of stocks lower. taking a look at the earners in more detail, i

think this explains a lot of the move lower that we're seeing in the sector. space tech down 7/10 of a percent. and excuse me up 7/10 of a percent. these are the best performing stocks in the market. you've got infineon shares trading sharply higher this morning on the back of those earnings. banks up 2/10 of a percent. insurance and retail hold round out the more resilient parts of the market. now let's take a look if we can at the worst performing sectors in the market here. you've got the single stocks. today's big earners in focus. we've got ubs down nearly 4%. let's zoom in on what we heard from the bank this morning. the company posted a fourth quarter net profit beat and said it wants to boost buybacks this year. net profit surged to $770 million, well ahead of a $483 million forecast. ceo sergio ermotti told cnbc that the bank's investment banking division is performing well. >> for us, it's always very important in investment bank to match or to get very close to the best in class in those areas

where we want to compete. so if i look across equities, effects, capital markets, activities, you know, and also in m&a and leverage finance, we are definitely not only. growing our revenues as a function of constructive market conditions, but we are also gaining market share. and the effect this is what you see is now the effect of the two teams at the ubs and credit suisse teams. working together for the full year. >> well, carolyn joins us now. she just conducted that interview with sergio ermotti. carolyn, the shares this morning have really whipsawed around. we're now trading sharply lower for ubs. how do you explain the share price reaction this morning. >> look to be. >> honest, giuliana. >> good morning to you. i think. most of that will. >> be profit taking. >> deutsche bank out with a really interesting note this morning saying that shares of very richly valued. they're pricing in a lot of the expected future profitability here and shares giuliana have had a

really good run so far this month. yesterday we saw the big declines in line with the market, but overall shares up by double digits more than 15%. so i'm sure there is a degree of profit taking here because numbers by and large were better than expected. we're seeing the profit before tax $1 billion. the net profit $0.8 billion. that was better than expected too. on top of that, you've got the higher than expected divi announcement and the share buyback program that has been flagged for 2025 of $3 billion. >> there is some. >> uncertainty related to that when it comes to regulation. and capital surcharges, but that remains to be seen. we'll probably get more clarity on that over the summer. but obviously the big topic for up for discussion when it comes to the investment community and clients of ubs is. how confident do they feel about investing? how confident do they feel about putting their money to work? and what about the m&a side of the side of the business? i asked sergio monte, the ceo of ubs,

about how much visibility he had on the business this year. >> of course, the ongoing tariff discussions are creating uncertainties. as you can see in the current environment, the market is very sensitive to any positive or negative developments. it's quite good to see that part of this tension have been priced in the market. so in a sense, you know, the market is now watching for any escalation or solutions in order to determine what's next. of course, an escalation of tariffs. the tariff wars would most likely translate into economic consequences in terms of potential recessions or inflationary pressure, which in turn would force central banks to stop the easing path and potentially even have to reverse. that would definitely be something that the market have not been pricing on, and would lead into higher spikes in

volatilities. >> but right now, your clients. are still taking risks. they're not putting everything in cash. >> no, no right now. look, you know, i think that generally speaking, the amount of businesses, the amount, you know, the quality of the business is quite good. there is also, of course, always seasonality factors. but if you look at in the investment banking part of the equation, if you look at m&a and new issues and so on and so forth. volumes and are down 26% year to date. so while we see a constructive environment in the pipeline and the willingness for buyer and seller to engage in new opportunities, the truth of the matter is that as of the end of january, the market is in terms of volumes, is down 26%. >> now, giuliana, before i hand it back over to you, the big sword of damocles that is hanging over the share price last year at least, and over the

company, of course, is still regulation swiss regulation in the sense that the federal council is yet to announce what the capital surcharge will be as a result of the of the updated too big to fail regulation. we're expecting some news flow on that towards the middle of this year. it could be anything from 15 to 25 billion chf. what does that mean for capital returns? that is the big question going forward. giuliana. >> carolyn, we will certainly be prepping for that and look forward to your continued coverage of ubs. thanks for bringing us that interview. now, elsewhere in the banking sector. net income at bnp paribas surged past expectations in the fourth quarter, rising by 15.7% amid a boost in trading activity. but the french lender lowered its profit targets for 2025, saying it will target further cost savings. charlotte spoke to the cfo, lars macneil, about the results and his expectations for the upcoming quarter. >> it's a great quarter, yeah. strategies that we put in place are delivering and we basically

it's a good pivotal moment to turn into 25. >> and so basically. >> the foundations. >> have been laid for. >> 2025 and beyond. so if we look at it revenue is up. >> 11% to. >> over 12 billion. we have positive jobs that come. >> with it. and so. basically good. >> cost control like a billion of cost reduced and all. >> of that. the net. income up. >> 15%, up to. >> ■k72.3 billion. on top of th. >> our common equity. >> tier one. >> went up. it went up 20. >> basis points to 12.9%. >> and we are. committed to the shareholders. so we have a committed a 60% payout ratio over the year 25. we're going to continue this into 26. and on top of that we're going. >> to introduce. >> a new interim payment in september. >> so on to the tech sector. infineon has raised its full year outlook, citing currency effects, expecting 2025 revenue to be flat to slightly up versus previous expectations of a decline. annette spoke to the cfo, sven schneider, and asked

about the potential impact from tariffs. >> this is not a good news for the industry. we have benefited a lot from free trade. from international lean and just in time supply chains and of course, since a couple of years, for various reasons, we need to prepare for backups. generally speaking, we have a very well diversified sales and manufacturing footprint globally. so we are well positioned and we have to analyze all these different tariffs and counter-tariffs. but if tariffs would be answered by counter-tariffs, be it china, be it eu, us, this is not positive. and of course we would need to factor that in into our guidance. >> anita. infineon shares are sitting firmly at the top of the market this morning, up more than 10%. what color can you give us around what infineon had to say about demand for its chips?

>> well, actually. >> they are surprisingly. >> strong when it. >> comes to their. >> outlook. >> and compared. >> to competitors. >> so, for example. stmicro is expecting. a fall in revenues and they are now saying they're. upping their guidance. >> infineon for the full. >> year 2025, they're saying a flatlining of revenues. and this is this. despite a still challenging market environment and despite the fact that clients are still destocking their warehouses. so that beat in the first quarter of 2025 was mainly on currency effects. one has to say. so they are benefiting from the strong dollar because the bulk of their revenues is denominated in dollars. and before they didn't expect the dollar to be so strong as it is now and probably remains for the foreseeable future, given the interest rate differential between the states and the euro area. but still,

this those currency effects aside, also the automotive space is doing quite, quite well because they are also number one in china where demand for electrified vehicles is really going strong, up 10%. so they're benefiting from that as well. and then of course i and i had to ask him whether he was shocked by deep seat or whether he did see that coming and what it all means for their business. so let's take a listen to what he had to say about ai and the outlook. >> the ai. business will. >> probably have a better access. there will be more players playing in that area, more hardware. their own hardware will be needed. they need then the corresponding software, which will increase the power demand, which is good for us. and if you think about now, i call them the established player. so the hyperscalers and the big ai processor makers, our take is that they will not scale

down now. they will use these efficiencies, which are apparently possible and will probably increase the performance, which will then again translate into more energy demand. so from our perspective, no reason to downscale on on our forecasts for our ai business. >> how do you see the demand for ai solutions and your semiconductors also from the manufacturing space? because clearly that the real case is important also to have some visibility, whether i will be important for us also say in ten years. >> yeah, absolutely. i mean, there are there are these two things which we always look at. the first one is, as i said, the power which these very hungry data centers need in order to fulfill the mathematical calculation exercises. and this is something where we play from ac, dc, dc, dc up to the gpu or cpu level. and we are seeing

very, very good design wins momentums with the big players. on the other hand, ai offers also a broad perspective spectrum of options in order to increase performance and productivity in the company, which is another element we are looking at. >> so it's clear optimism coming out of infineon when it comes to ai solutions and also the demand for that chips when it comes to ai going forward. so having said that, they are still saying they do see their clients destocking their warehouses. and that destocking effect will probably last during the full year of 2025. and they are only expecting real strong demand to come back to the industry in 2026. but for the foreseeable time, infineon seems to navigate that uncertainty quite well, with the automotive space being not just one depressed european

or as well us market, but a very vibrant chinese market where they can very much benefit from the boost and electrification in the country. >> and that's a fantastic color on those. infineon earnings. thank you so much for bringing us that interview. we are going to take a quick break, but when we come back we'll get more market reaction to the latest tariff tit for tat between the us and china. we'll be right back. >> you put together like a classic always work your magic every time you. >> make this valentine's day one to remember. don't just get flowers. give her an incredible moment. from bubbles to bills to butterflies. give her a thoughtful, unforgettable, and truly special. valentine's day gift. the fast shipping ordering

is a piece of cake. send a cake. is a piece of cake. send a cake. com th (man) robinhood gold members get an ira transfer boost of 2%. when you transfer in an ira or old 401(k) by april 30th, robinhood gold will boost it by 2%. the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

available now on the apple app store, android and m taylor comm. >> invest with an advantage with cnbc pro. >> cnbc pro gives you. >> the tools that you need to become a better investor. >> go pro with a flash sale offer for a limited time at cnbc.com. slash pro flash terms and restrictions apply. >> welcome back to street signs. let's take a look at european markets and see how we're faring. now about an hour 20 into the trading session. it is still red across the board. xetra dax down about 11 basis points ftse 100 down 4/10 of a percent. fairly muted though, given all that is up in the air

with regards to the global trade war. as for u.s. futures, here's where we stand right now. we are looking at red on wall street as well. the dow jones looking to pull back a further 100 points yesterday. ultimately, the dow jones closed down by about 3/10 of a percent. after that roller coaster session. quite a turnaround intraday. what should we make of it. let's ask anastasia amoroso, chief investment strategist at icapital. she joins me now in studio. thank you so much for joining us this morning. >> what a week. >> good morning. >> to be talking. >> it's only tuesday. >> it's only. >> tuesday to be talking macro to be talking markets. yesterday there was enough in there to have lasted you know weeks. it all happened in one day. the you know we had the tariffs come through. we had the tariffs delayed. and we had a real whipsaw reaction in markets. right. what should we read into the market reaction we've seen thus far in terms of how investors are processing trump's trade policies. >> right. >> so even. though it was such. >> a roller coaster week, i don't think. >> it's out of the new normal. and i think this is what

investors should really get used to, which is if. >> tariffs is the favorite. >> word in the dictionary, according to president trump, he is going to use that word and is going to use that pretty frequently. so i think there's kind of three phases that investors. >> should think about. >> the first one. >> is when you're trying to assess the downside. >> scenario. >> really assess it and figure out what that is. and so yesterday, for example, when we. really try to, you know, add up to what is the tariffs mean on mexico and canada, maybe 10% on china, that amounted to about 5% downside for the s&p 500. we certainly didn't get there in one day. and so therefore the point number two is if you don't fully price something in, don't buy it just yet. so there's not a reason to step in aggressively and buy it yet. and at the same time, the third point is that you should always allow for this possibility of a positive outcome. because yes, we do use tariffs, but we most likely use them as a negotiating tool. and that was on full display at the end of the day yesterday. so you have to stay really nimble. and you know, i think in this day and age you really have to focus

on some of the things in the market that will give you insulation from volatility and also are more domestically tilted, because that's just the world we live in right now. >> i want to get to what those specific recommendations would be in just a moment. but in terms of tariffs and interpreting these moves moving forward, does it seem fair or the right assumption to make that these tariffs are likely to be temporary and just use as a tactic, as you said, rather than a permanent fixture of trump's presidency? >> i think some are likely to be temporary, some are not. and, you know, i think in the case of mexico and canada, 25% tariff on your neighbors, you know, that sounds like a pretty egregious amount. and when you think about why they're imposed, they're not necessarily because we run, you know, greater deficits with those countries. we do. but that's not the reason. the reason was really about immigration. the reason was about, you know, the drug concerns that the trump administration has. so i think some of those can be resolved. but when you look at, for example, the budget deficits or, excuse me, the current account deficits that we have with europe and also china, i think those are longer term issues

that may actually result in some tariffs. and there's a third point to that, which is when you look at what the trump administration is trying to do later this year, which is to extend the us tax cuts. and you can't really extend that by without finding some ways to pay for the budget deficit. so i do think tariff revenue will feature prominently as a pay for, for some of those budget cuts. and just to put some numbers around it, today we collect something like $79 billion in tariffs from around the world, a lot of it from china. but if, let's say we do have a universal tariff where we impose a greater tariff on china, you could you could get to 300 or $400 billion in tariff revenue. and so that actually does start to provide an offset. >> would you be positioning now for the possibility of tariffs on europe, given that, as you just said, if we do see trump impose tariffs on europe, they're likely to be longer lasting and than than what we saw with mexico and canada. >> i think the way to position it, i guess, is twofold. you

know, i do think that some caution is warranted because, you know, we've clearly heard from the trump administration that he does want to do something we don't know when, we don't know how. but i would take him at his word. there likely will be that headline that will wake us up once again on monday morning, and that will send shockwaves, you know, around the markets here. so i would be prepared for that. but at the same token, as i mentioned, at some point that becomes priced in. and so i think the math is for every 1% increase in the effective us tariff rate, you can expect a half a percent downside for european stocks. so let's say, you know, the effective rate does go up by five percentage points. so maybe that's two and a half or 3% downside in european stocks. maybe it's worse than that. but once you start to price that in, that does become an opportunity. that does become a buying opportunity. so i guess i was positioned with a little bit of caution now, but at the same time having the dry powder to step in and buy things once they're dislocated. >> so where do you see the best opportunity right now? you talk about some of these sectors that are insulated to the volatility that we are almost inevitably going to get, and some of those

domestically focused us names. >> yes, domestically focused us names. you could look to financials. you can look at real estate and you could utilities. and financial sector has been a great one to be in not only because it's domestically focused but because we do have a solid economy. we have an environment where lower rates should actually spur lending growth in the united states. and that's not currently being priced into a lot of those models. and we also have an environment where deregulation should boost capital market activity. that's a positive for financials as well. so i like that sector. it behaved better than some of the other stocks yesterday. you can look to utilities and you could also look to real estate. so one of the things that we saw happen yesterday is the back end of the yield curve has actually fallen. the yields were moving lower. so that supports some of the yield sensitive sectors like real estate like utilities. and then utilities generally you know, have been de-risked at the tail end of last week because of the eye trade, but actually very little i benefit is currently being assigned to utilities. and you do have a lot of domestic

exposure. so i would look to those. and then if we really wanted to broaden that out to not just equities but also alternative investments, i would really look there. and that was part of our outlook this year, which is to say we expect a lot of volatility in the public markets. and so looking at private equity, looking at private credit, looking at private infrastructure can actually give you some of that insulation. >> and what about the sectors that you want to avoid here. those that are going to be exposed and perhaps easy wins to prevent yourself from blowing up over the next few months? >> i think there's two sectors that would be particularly cautious about. the first one would be consumer discretionary and consumer staples. and you know, first of all, the margins for those sectors are very thin. and you have to look at the numbers and it depends on the company, but probably a decent percentage of their cost of goods sold get imported. and so to the extent that those get hit and they have to absorb those costs by further narrowing the margins, i think that's a big risk to some of those sectors. the other one would be information technology, because when you go back to 2018, for example, you remember tech and

semiconductors in particular really get hit in those circumstances. so i would be cautious around those. you know, i will say that part of the tech supply chain has shifted out of china, for example, and it has, you know, in terms of foreign revenues from china, they have been quite diminished. so you have that. but at the same time, if we have export controls and if we have further tariffs, i think the tech sector kind of the hardware tech sector really could get hit. so i'd be cautious on that, but most likely would buy that on the pullback. >> all right. well anastasia thank you so much for stopping in. great to speak with you anastasia amoroso chief investment strategist at icapital. plenty of food for thought there. now coming up on the show, it's a trying time for drinks makers as a sector dealing with downbeat sales now has trump tariffs added into the mix. we'll discuss 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 retirement. but we quickly realized we needed a way to supplement our income. our friend sold their policy to help pay their medical bills, and that got me thinking. maybe selling our policy could help with our retirement. i'm skeptical, so i did some research and called coventry direct. they explained life insurance is a valuable asset that can be sold. we learned we could sell all of our policy, or keep part of it with no future payments. who knew? we sold our policy. now we can relax and enjoy our retirement as we had planned. 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.

magic every time you. >> make this valentine's day one to remember. don't just get flowers. give her an incredible moment. from bubbles to bills to butterflies, give her a thoughtful, unforgettable, and truly special valentine's day gift with fast shipping. ordering is a piece of cake. ordering is a piece of cake. send a a sleep number® smart bed is perfect for couples the climate360® smart bed is the only bed that cools and warms on each side and all our smart beds adjust the firmness for each of you and now, save 50% on the new sleep number® limited edition smart bed. shop a sleep number® store near you. go to cnbc.com slash disruptors to apply now. entries closing soon.

>> welcome back to street signs i'm giuliana tannenbaum and these are your headlines. jittery trade in european markets after china retaliates. within minutes of us trade restrictions going into effect. leveling tariffs on u.s. imports from coal to crude and dragging google into the mix. ubs blows past earnings expectations, with shares initially rising before sharply reversing course. ceo sergio ermotti warns of significant risks from trade tensions. >> the tariff wars would most likely translate into economic consequences, which in turn would force central banks to stop the easing path and potentially even have to reverse. >> chip maker infineon surges after raising its full year outlook, as first quarter results come in slightly better than expected. cfo sven schneider tells cnbc the firm

has been resilient. >> we are still navigating in a pretty difficult market environment, which is, from a structural perspective, very supportive for us, but we still need to go through the inventory correction and in certain areas the market demand is still weak. >> and u.s. futures point modestly lower as attention turns to tech earnings today, with alphabet next up after the bell. we're an hour and a half into the trading session here in europe. and it has been a jittery start to trade a lot of movement in the stock market. we are off the lows of the morning though. worth noting despite news of retaliatory tariffs from china early this morning, just minutes after the us tariffs came into effect, we are seeing a little bit of resilience, some settling around the tariff story anyway as investors turn their

attention to earnings today a number of big corporates reporting. so overall we are lower. but we are off the lows of the morning in terms of the sector laggards. let's take a look at what is performing worst in europe this morning. you've got financial services down 1.25% ubs shares down more than 5%. initially shares moved higher on the back of earnings. but then as investors digested what they heard from the swiss giant, shares moved sharply lower. food and bev also under particular pressure, down 9/10 of a percent. you've got diageo in there among the worst performers in the market. a weak report on the earnings front. they actually withdrew their medium term guidance as well. on the flip side, the more resilient part of the market in europe this morning. here's a picture for you. technology up half a percent. you've got infineon performing very well up about 10% after delivering earnings of their own banks holding up well as as well utilities and travel and leisure. now let's dive into some of the big earners. french software firm dassault systemes says it expects sales growth to

continue to grow up to up as much as 8% this year, after 5% growth in 2024. software revenue grew 9% in the fourth quarter, boosted by demand from the defense and aerospace sectors. the company made two cuts to its outlook last year amid a slowing auto industry. vodafone has announced an almost half $1 billion share buyback after third quarter revenue rose. the group also reiterated its full year guidance after total services revenue grew more than 5% to top ■k77.9 billion. but services revenue in the key german market fell 6.4%. and we are seeing vodafone shares come under pressure this morning. we're down 5.7% into the drinks space. diageo has removed its medium term growth targets as it battles sluggish growth and trump tariff uncertainty. the drinks maker, which boasts the us as its main market, removed its target of 5 to 7% growth in organic net sales, which it has

held since 2021. our next guest says president trump's tariffs couldn't come at a worse time for alcohol companies, which are already reeling from downbeat sales amid an ongoing cost of living crisis. johnny forsyth, food and drink senior director at mintel, joins me now. thank you, johnny, for being with us this morning. so over the last couple of weeks, as we've heard from a number of drinks companies on the earnings front, we've heard the same story time and time again. the drink sector is struggling. alcohol sales are down. to what extent do you think this is structural versus cyclical? >> i think there's. >> a. >> real worry. >> that this is structural. and that. >> the pandemic may have been a last hurrah for the. drinks industry. >> you've got some serious headwinds. so consumer confidence is still. >> very fragile. >> and i think diageo in particular. >> were hoping. >> that you'd. >> see a much. increased consumer confidence. >> this year. that hasn't. >> really happened. >> consumer confidence is still very shaky. and it doesn't get any more. >> discretionary as. >> a purchase than premium

spirits. >> and that's really where diageo are relying on. >> what are the big structural drivers? >> well health is the. real worry. so we're seeing that the population is increasingly worried about their drinking. you've got the attorney general of the us. >> saying that. >> that packaging of alcohol. >> should. have a cancer warning. >> you've got a new generation gen z who. >> are much more sober. >> curious, as they would say, than than previous generations. so i think the. >> worry from an. >> alcohol perspective is that really, you know, people are starting to realize, actually, that drinking comes with serious risks to your health. >> and i'm curious about the younger generation, because there's so much debate as to why this term sober, curious, which is an interesting one. i hadn't heard that before. why they're sober, curious, and why they are shying away from alcohol. i'm curious if you want to weigh in on that, and then i can ask my next question. >> it's a it's a really good question. i think actually. >> we've seen the general. >> population. >> particularly in europe.

>> kind of moving away from alcohol over the last. >> few decades. >> so i think in a way, the younger generations. >> just are kind of. >> increasing that, that trend that was already building. but i think, you know, the young always kind of position themselves against their, their. >> elders and. >> tend to do the opposite of what their elders do. and their parents are quite big drinkers. so i think a lot of them have decided that actually. you know, it's not a good look. >> i don't really. >> want to do that. and i think also that they are probably the most, most health obsessed generation that we've ever seen. they've been born in an era of social media where you've got health influencers all over the place. >> a. >> lot more kind of health knowledge as well. so that's really shaped their thinking. >> and what about in the us? my question, my next question is around marijuana usage. we've seen marijuana usage rise in the us. we're seeing a lot of traction in some states around legalizing marijuana. how much of how much to what extent is that a substitute for drinking among this younger generation? >> i think to a certain extent,

you see from the polling data that. >> the young are much. >> more positive about. marijuana than they are about alcohol. they they consider you get less of a hangover. they consider some real upsides to it. so i think that's inevitably going to. >> eat into some of. >> the share. the two don't mix particularly well. and that's kind of the perception of consumers. and then the other worry would be the weight loss drugs. and that's the big question mark. so there is some evidence that weight loss drugs actually make you less likely to want to have alcohol. and you know, if weight loss, particularly in the us, becomes a mainstream thing that a lot of consumers are doing, then that's going to have a huge impact on the alcohol industry. >> to what extent will these companies be able to make up for lost alcohol sales with 0% alternatives? they're investing so heavily in these, but then obviously they're competing with traditional nonalcoholic drinks makers. so is this a feasible strategy? >> i think it's going to be hard because i think the sales revenue from nonalcoholic beer

and wine and spirits is just a fraction of alcohol sales. so i think they're relying more on premiumization. but when you've got the threat of tariffs, consumers are less likely to want to shell out a lot of money for premium spirits. so. so i think there's a there's a real risk that they're not going to be able to make up for the shortfall in pure alcohol sales. >> what about the direct impact of these tariffs. we've obviously seen a delay to the mexico and canada tariffs that were announced by the trump administration. but the threat looms large. so you mentioned the impact of tariffs from a consumer perspective and what that might do to prices. but what what does it mean more directly for these drinks makers. >> well, alcohol particularly really relies on on exports. so you've got tequila has to be made in mexico. so there's no room for maneuver. there's no way you could shift that to an american factory. you've got the same for scotch in scotland. and diageo in particular is hugely

exposed. because it relies a lot now on on tequila and scotch sales, tequila in particular to the us. it's been one of the booming sectors in the last decade. there are already signs that that was beginning to recede, and this is going to hit that even further. >> i mean, it sounds like such a grim outlook for this sector. so, you know, typically when you hear that the next question is around consolidation, are we going to see these companies come together to try to, you know, save themselves effectively? what do you think the future looks like? >> yeah, i think the alcohol industry has always been an industry that that favors consolidation. i think that's some of the share prices now of the alcohol companies will make them viable targets. when previously they might not have been. so i would fully expect some m&a activity potentially really big deal in the next couple of years. >> all right. we'll leave it there. hopefully we'll get you on. if we do get one of those big deals come through. johnny forsyth, food and drink senior director at mintel. coming up on street signs, china hits google

with an antitrust probe at the same time as announcing further tariffs on u.s. goods. arjun will have the details up next. thank you. >> light. it guides. >> our. >> every waking moment. what we do and how we do it. but the amount of light we need can change in an instant. and when it does, you can control it. three day blinds. find the. >> light. >> for your life. take your business from launch to legendary with shopify. sell more with the world's best converting checkout. turn analytics into opportunities so you can scale further faster. take your business to a whole new level. switch to shopify. start your free

trial today. for all those making it big out there... ...shouldn't your mobile service be able to keep up with you? get wifi speeds up to a gig at home and on the go. introducing powerboost, only from xfinity mobile. now that's big. xfinity internet customers, cut your mobile bill in half vs. t-mobile, verizon, and at&t for your first year. plus, ask how to get the new samsung galaxy s25+ on us.

>> i've never had fair. skin like i have now. my life has changed. >> there's no. >> reason to watch cnbc if you're not ambitious, right? if you don't want better, better insight, better returns. >> and that's. >> not just financial, though. money is a part of it. we're talking about value. >> welcome back to street signs. the initial success of china's ai startup deep tech weighed significantly on stocks globally. and amid the fallout, some of those affected published their predictions on how the ai breakthrough could impact their own top and bottom lines. ganesh rao from cnbc pro joins us now. he has been looking at the impact of deep seek on companies. ganesh good morning. we spent so much time last week talking about the impact of deep sea emergence on nvidia and the hyperscalers, but not as much time looking at the companies that will actually be using

these models. you've done just that. share. share with us what you've learned. >> yes. as you just said, much of the stock market was focused on the cost of training. deep 6r1 ai model. it was about $6 million, is what the company says now, my colleague chloe and i have been reporting this morning about the cost of running deep 6r1 model. we've spoken to a number of companies rosen a us, us listed technology group, has spoken to us. they are trying to disrupt the auto insurance sector. they've shared some insurance as well as ai data with us. what it basically shows is that the company processed about 600,000 insurance claims in the third quarter of last year. now, according to our calculations, if they were using openai's latest or one ai model, that would cost them about $36,000 to process all of these insurance claims. now, if they switch to deep 6r1 ai model, that would be about $17,000. that's a 50% drop in running costs for rosen if

they simply swap one ai model with another. >> wow. that's tremendous savings. and i'm sure that example is you can see examples like that across industries. is it just about cost when it comes to switching to deep 6r1 from some of the incumbents. or are there other advantages. >> well, companies like these have stringent requirements when it comes to, you know, processing insurance claims. they are, after all, handling personal data. right. another firm we spoke to was ooda, ai, and they're a swedish listed group. and they have germany's, one of germany's largest health insurance groups, as a client. now, their ceo was very positive about deep 6r1 model because it's released as an open source. >> free to. >> use commercially type of model. and that means basically the company is able to run these ai models in-house on their it infrastructure without having to send sensitive data to openai or any one of the big tech players. now, ooda has also said that

yes. >> in. >> the near term it will help their profit margins. but over the long term, all of these companies plan on cutting their costs to their clients to gain market share, but they also intend on implementing ai in sectors that were previously uneconomical before. >> ganesh. super interesting and great to get some tangible examples of the impact of new models like deep seek and it put some color around what we heard that this could actually be a really positive thing for industries, even if it's negative potentially for some of the hyperscalers. ganesh, thank you so much for joining us. if that story interested you, i would suggest getting online and checking out the bigger story and the impact of deep sea on the ai race by visiting cnbc pro now, sticking with the tech sector, china's state market regulator has announced an investigation into google accusing the company of violating anti-monopoly laws. the announcement came at the same time as further u.s. tariffs on chinese goods took

effect. arjun joins us now with more arjun. you know, during my visits to china, i was struck by how little of google you were actually able to access. so now hearing this morning that china has launched this probe into google in china, it's a little bit confusing. what exactly are they probing. what's the story here. >> yeah. look there was. >> very, very. >> little detail from. >> the. market regulators about. >> exactly what they are probing. they allege that perhaps google may be in violation of the securities laws over in or the anti-monopoly laws over in china. >> but you. >> are right. there's very little google business in china as it stands right now. look, you can't use google search, you can't use gmail, you can't use many google services out there as well. there are other businesses that no longer exist. for example, they opened an ai center in 2017 that was disbanded in 2019. they used to manufacture a lot of hardware there. some of the nest thermostats, the pixel phones, a lot of that's been moved out of china as well. their main

business right now in china revolves around advertising and cloud. there are google teams there on the ground in china that are trying to get chinese businesses to use google cloud and advertise on google services outside of china. so as it stands, that's where a lot of the business is. and it clearly feels, given the tensions and the rising tensions between the us and china right now, that this is very much a warning shot from china, that they have measures at hand to scrutinize us companies, particularly us tech businesses that operate in china, and that it feels to be more symbolic at this point rather than anything deeply meaningful. >> really helpful, so symbolic at this stage, but definitely one to watch. arjun, stick with us. i want to ask you about nintendo. the gaming company lowered its full year operating profit forecast by 22% after months after profits in the nine months to december declined 47%. the japanese video game maker now expects to sell 11 million switch consoles this year. that's down 12% from previously

forecast. but arjun, the shares are up 2% in trade. what's the story here? >> the market is basically discounting the quarter just gone because all focus really now is on the switch to the successor to one of nintendo's most successful consoles, like the nintendo switch was quite revolutionary when it came out in 2017. it combined this sort of hybrid approach to consoles, being able to play it on the tv and take it away from you, and it's now nintendo's second best selling console, behind the nintendo ds, with over 150 million lifetime sales. and clearly, it's been a big boost for nintendo for its stock price for the company over the past few years. but look, it's nearly eight years old. nintendo needs to come up with something new, and it wants to breathe new life into the gaming business. it very recently released a trailer for the switch two. it gave us a bit of a sneak peek at some of the hardware, but we have very little detail about things like the pricing, the games that will be available, and some of the other details around the switch

to key. here is nintendo says it has around 129 million annual playing users for its switch, and the key is managing this transition here. how does it get a fraction of these users right now to upgrade? how does it draw new users to the switch two, but also at the same time keeping existing switch users happy? and the key, i think, is going to be the pipeline of games that are available when the switch two comes to market. nintendo has some of the most iconic brands, like pokemon characters like mario available at its disposal, and the key is going to be making those hit games that are going to be drawing people to go out and spend on the new switch two when it comes out, likely later this year. >> arjun, do you think that nintendo learned its lesson from the all of the failings? i guess you could call it from trying to get users to switch from wii to their their their second edition of we clearly they they they didn't go as well as planned then. >> it didn't. and they were facing some pretty unique challenges at this time. there was a huge explosion in mobile

gaming at the time, and that was really eating away at what nintendo was doing. nintendo has always been for the younger gamer, the more casual gamer, perhaps the so-called hardcore gamers often go for a playstation and xbox or even a pc at this point. and when you think about mobile games, they are a bit more casual games. and nintendo was facing that challenge, and so they pivoted to this hybrid, almost portable console with the switch that addressed some of those mobile concerns. and so they have a solid product in the market. i think one of the things they've done very well is leverage that first party intellectual property, those sort of iconic, well-known characters that i've mentioned. and they're doing an interesting sort of move there to really spread that intellectual property across movies and other products as well. so that's going to be key, i think, to carry the nintendo brand forward and for them to convince people that they need to go out and buy the switch. >> two r, thank you so much, and i look forward to your reviews of the switch two when it comes

out. now back to our headline story this morning. china has now retaliated, hitting the u.s. with tariffs of its own. from february 10th, beijing will impose a 15% duty on american coal and lng and an additional 10% tariff on crude oil, farm equipment and some autos. lori ann joins us now from the us. lori ann, great to have you with us this morning. now, let's assume that these tariffs do come into effect later this month. what do they mean for u.s. business and supply chains. >> well. >> when it comes to the united states supply chain, when for the. >> exports. >> energy is. >> modest in terms of china's energy. >> consumption, the. >> largest consumption. >> from u.s. >> energy is lng. >> but anything that we don't sell. >> right in. >> china is. >> going. >> to be diverted over to europe. >> what we're looking. >> at now and from an investible standpoint, this is a key time. for u.s. retailers to. >> be.

>> negotiating manufacturing orders with their chinese manufacturers. so, as you. >> know, >> chinese, the chinese exports here got slapped with. another round of tariffs. it's going to make it more expensive. >> and starting today. >> of course, you've got more expensive items coming in. >> i've spoken with manufacturers. here that now have to renegotiate. >> with the likes of macy's, kohl's, amazon to kind. >> of. see what can they do when it comes to this workaround of these products. >> that. >> were. >> once once. >> negotiated at a certain price. >> now a little. >> bit higher. but looking. >> forward right now. >> is the time when. products are. >> being ordered for the summer, back to school and fall here in america. >> and so. >> they. >> have to lock. these prices in. and so the. >> manufacturers or these small brands. >> if you will, like shoe. >> shoe, shoe stores, they. >> are going to the. >> macy's and kohl's saying, hey listen the product. >> is now going to be.

>> x amount more. how much do you want. and that's going. >> to translate. they are. >> expecting fewer orders. >> and so this. whipsaw effect. >> is while people are probably. going to. be expecting to buy less. >> here, that. >> will impact. >> china's gdp. >> in. >> the next. >> like next six months or so, because these. >> items are going to be made and put on. >> a vessel come april or may. >> and yesterday we saw quite quickly the tariffs delayed that were due to come into effect with canada and mexico. to what extent does that complicate some of these conversations? if the companies don't have clarity as to whether the tariffs are actually going to ultimately come into effect, whether it be on mexico, canada or china? >> exactly. >> it's just. >> like the markets. nobody likes uncertainty. >> so even though. >> they put a pin in it, right, for like 30 days for. >> you know, if. >> these if these tariffs were put in place, these.

negotiations are still. >> going on even with our counterparts with mexico. >> and canada. and also if. >> you know, with the retaliatory tariffs like we saw with the threat with canada. >> yesterday, with us alcohol. that eliminates. >> trade routes. so take logistics trucking. >> there are. >> certain trucking companies that. specialize in moving alcohol. if you're not going to be moving alcohol into a country that eliminates a trade route. and so all of this uncertainty really is just. >> something that all. >> investors really need to keep. >> a. >> look at, because. >> we're very short term oriented, saying. oh yeah, they're diverted. well, not. really because businesses have to plan. >> and so they're working on. >> these, you know, these like. plan b's, plan c's, plan d's, and all of that means less orders or. >> where are we going to divert? in the end, trade is. >> like water. >> it has to move, giuliana. but the question is. >> where and. >> how much, and that translates. >> into profits or, you know, or

a hole in the wallet. >> but difficult time to be a manufacturer in the us or dealing with the us. lori-ann, thank you so much for joining us from new york this morning, lori ann larocco. now let's turn to european markets and get a check on where things stand. we're about two hours into the trading session. european equities have turned positive in part. the cac40 now in the green five basis points higher. the xetra dax has also pared back. those losses were down just eight basis points right now. so bounced off the lows of the morning. despite all the uncertainty that remains, u.s. futures will leave you with a look at how wall street is poised to open. we're still looking at red there, but now i will hand you over to our colleague stateside to take you through the rest of the morning. >> you put together like a classic, always work your magic every time you.

>> make this valentine's day one to remember. don't just get flowers. give her an incredible moment. from bubbles to bills to butterflies, give her a thoughtful, unforgettable, and truly special valentine's day gift with fast shipping. ordering is a piece of cake. send a cake com that's send a cake. >> com. 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 key. >> eugenics. total t is the unique man boosting formula powered by techno, a key ingredient clinically researched to help increase testosterone levels. to help you feel stronger, leaner, with more muscle and drive. eugenics is the number one selling testosterone brand at gnc, but you can only get your complimentary bottle by texting jeff to 215215.

>> thanks. >> it'll make you feel like a new man. and by the. >> way. >> she'll like it too. >> get your complimentary bottle of eugenics now. text jet to 215215. text now and we'll include a bottle of nugenix include a bottle of nugenix thermo, our most powerful fat i love that i can order official state lottery tickets anytime, anywhere with jackpocket. heck yeah i can play the lottery wherever i want. with jackpocket you get notifications for all the biggest lottery drawings so you never miss out and you can see your ticket on the app. plus, with new official state scratch games available on the app, more of your favorite games are right at your fingertips. not to mention jackpocket users have already been paid out over $40 million in scratcher wins. i can get used to this. order official state lottery tickets and scratchers from anywhere with jackpocket.

dave's been very excited about saving big with the comcast business 5-year price lock guarantee. five years? -five years. and he's not alone. -high five. it's five years of reliable gig speed internet. five years of advanced securit. five years of a great rate that won't change. it's back. but only for a limited time. high five. five years? -nope. comcast business 5-year price lock guarantee. powering five years of savings. powering possibilities. comcast business. available now on the apple app store, android and m taylor comm. >> invest with an advantage with cnbc pro. >> cnbc pro. >> gives you. >> the tools that you need to become a better investor. >> go pro with a flash sale

offer for a limited time at cnbc.com. slash pro flash terms and restrictions apply. >> 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. >> breaking news. china retaliates within minutes against us tariffs that went into effect just after midnight eastern time. those tariffs targeting u.s. natural gas, coal, crude and more. the country also setting its sights on google. stock futures under pressure as a result of a wild, wild day of trading yesterday. and while the north american tariffs that may be on pause, at least for now, industry groups are still sounding the alarm over a rapidly changing and uncertain business climate.