it was john. >> hello and welcome. >> to street signs. >> i'm karen cho. >> and these are. >> your headlines. president trump and vladimir. >> putin agree. >> to immediately. start negotiations on ending the. >> war in ukraine. >> us defense. secretary pete. >> hegseth rejects. >> the suggestion. >> the move could. be seen. as appeasing putin. >> the whole. >> world and the united states. is invested and interested in. >> peace. >> a negotiated. >> peace. >> as president trump has said. stopping the killing. and so. >> that will.

>> require both sides. >> recognizing things they don't want to. >> europe's stoxx. >> 600 hits. >> a record in early. >> trade. >> buoyed by german earnings, but siemens. >> ceo roland. >> busch sounds the alarm on the economy. >> we have. >> to change something. we have to get this german economy back into. >> a growth momentum. we cannot live with a contraction. >> of very, very. >> low growth. >> consumer contrast. >> shares in nestlé rise after. topping forecasts. >> despite posting. its weakest sales growth. >> in more than. >> 20 years. >> while unilever. >> shares sink. >> on a weak outlook. the ceo tells cnbc. >> what his key focus is. >> the merger is on track and. >> we've always. >> said that from the moment of. >> announcement that we're. >> keen. >> to demerge in the. >> fourth quarter of 2025. >> so that's what. >> that's what we. >> want to do. >> and the uk narrowly. >> avoids economic. contraction in. the last. >> quarter of 2024. but 0.1% growth may. >> not be enough to ease. >> pressure on. >> chancellor rachel reeves.

>> i'm still not satisfied with the level of growth that our economy is achieving, and. that's why i. >> am determined to go. further and. >> faster in. delivering the. >> economic growth. >> and the improvements in living. >> standards. >> that our country deserves. >> let's get into. >> the latest on geopolitics. >> as us. >> president donald trump. >> said, he. >> has agreed with russian. president vladimir. >> putin to immediately. >> start negotiations. >> on ending the war. >> in ukraine, following a. >> call with. >> the russian president. >> trump said the. >> pair would. >> hold further meetings, including. >> in person. trump also. >> held a. call with. >> ukrainian president volodymyr. >> zelensky. >> saying they are charting. >> the next. >> steps for. >> a lasting. >> reliable peace. speaking in the oval. >> office. >> trump told reporters that all three. >> leaders want. >> to see peace. >> we had a great. >> call and. >> it lasted for. >> a long time, over.

>> an. >> hour. this morning. >> i also. >> had with. >> president zelensky. >> a very good. >> call after that. >> and i think. >> we're on the way. >> to getting peace. >> i think president. >> putin wants peace. >> and president. >> zelensky wants peace. >> and. i want peace. >> i just. >> want to see people. stop getting killed. >> ukraine's european allies were quick to stress the importance of their. >> role in the. >> peace process. >> a group of foreign ministers. issued a statement having. >> met. >> in paris. saying they are looking. >> forward to working. >> with the us on the. >> path forward. but europe and. ukraine must be part. >> of any negotiations. >> speaking ahead of a meeting of. nato defense ministers. >> in brussels, us defense secretary pete. hegseth said russia's war. >> against ukraine should lead to. >> action from european members of the alliance. >> this aggression needs to be a wake up call. americans are an active part of this alliance, as we have been and will continue to. but when it comes to defense spending, even 2% of gdp is not

enough. three and four. and ultimately, as president trump has said, 5% of defense spending is critical. a realization that there is a russian war machine that is sought to take more and more land in ukraine, and standing up against that is an important european responsibility. >> we have. >> seen. >> a reaction in energy markets. >> energy stocks were. >> movers to. >> the downside. >> stateside yesterday. >> and if you look at what. >> we're seeing on the. >> price of. wti and crude also. >> in retreat. >> modest tick lower. and don't forget this is somewhat of a. >> cautious trading pattern. >> any road. to peace negotiations. >> still seems long and. >> windy from here. >> and what you've got on markets is sort of a. >> measured reaction. >> at this early. stage that if. >> we do. >> have any negotiated settlement, what. >> that could that mean. >> for any supply disruptions that have been priced into the market, but also the demand story. >> so big moving. >> pieces here. >> the iea. >> has revised up its global. >> oil demand growth forecast. >> for this. >> year to. 1.1 million barrels. >> per day, after. >> a downgrade in 2024. >> it says.

>> china will. continue to lead and lots of detail here to get into. >> with. >> busoni, who is head of the. oil markets division. >> at the iea. toro, thank you so much for. >> joining us today. >> just give. >> us some of the takeaway messages from the latest update in your report. >> thank you and good morning. yes. so our latest oil market. >> report. >> we're seeing. >> that oil demand growth. >> this year. is expected at 1.1. >> million barrels. >> a day. that's slightly higher than what we saw in 2024, when we had less than 900,000 barrels a day. and we're really seeing china remaining a driver of growth. but its growth is only a fraction of what we've seen in recent years. so 200,000 barrels a day of growth expected from china in 2025. of course, that's. about 20% of the global. increase compared to 60% over the past decade. and we're seeing other economies in asia, particularly, taking up a larger share of growth. and we're seeing oecd then going back to structural declines this year.

and on the supply side, we're seeing the market being concerned about the impact on un sanctions on russia and iran, but strong growth coming from the americas by by led by the united states, brazil, guyana and canada, that should cover oil demand growth this year. >> tal. >> there have been reports. >> in the market. >> that russia. >> may have to pull back on some of its output because of those. >> sanctions, but lots of moving. >> pieces just overnight. >> about whether. >> there can be a peaceful resolution to this ongoing war in ukraine. if that materialized, what impact would that. >> have. >> on. >> the supply. >> side that you've just updated. >> us on? well, it's too early to say, obviously, but what we're seeing now is that russian oil exports are running about 7.4 million barrels a day. so still substantial, about 600,000 barrels a day lower than it was a year ago. but we have not seen a major impact on flows, either

production or exports from russia based on the latest sanctions. but as the wind down period runs out towards the end of the month, we'll see if russia is able to find tankers to get the oil to market, especially china and india, the largest buyer of russian oil, and how they will facilitate that with a larger share of the tankers. now sanctions by the united states. >> so there feels like there's a. >> lot. >> of trump in the oil market at this point. and if i look at one of the lines here about global oil. supply on track to increase with non opec plus producers accounting for the bulk of the increase from here. if we see those voluntary cuts remain in place from opec. plus what does drill baby. >> drill mean. >> for. the market. >> so what we're seeing we're seeing quite a mixed picture. obviously the united states remains the largest source of supply growth globally. we're expecting about 600,000 barrels a day of increase in 2025. that's slightly lower than last year, when it was 701.5 million

barrels a day of growth in 2023. but we're seeing that the shale operators in particular, we've seen a lot of mergers and consolidation across the sector, and we're seeing a lot of efficiencies across the industry. but cautious increases going forward. it's more about balance sheets and returns to investors rather than growth for growth's sake. so we'll see how the new policies will impact the industry's appetite for investments and if they will increase production. but the united states remains the largest source of supply, not just for crude oil, but also for gas liquids that are very important to feed the growing petrochemical industry, both in the united states and in china in particular. >> tal, i want to tackle. >> the demand side from trump and tariffs to what we're. >> seeing on the macro. >> because trump and. >> tariffs has put some caution into the market and concerns. that we might be talking about higher inflation, which could be somewhat of a brake on parts of the global economy. cpi, of course, overnight came through

hotter than anticipated. what is the demand picture looking like as those tariffs seem to get in the way of some of the enthusiasm we've had since we started off this year? >> so it's obviously adding a bearish tone to the market. there is concern that tariffs, especially if the tariffs are broad and far reaching and if there is retaliation, tariffs also on imports from from some of the trade partners in europe and in asia and how that will impact global trade and the economic growth in general. so obviously, if we have a broad, broad sanctions or broad tariffs apply to a wide variety of goods, trade will slow and that will have a negative impact on on economic growth and also potentially inflation that will feature. and that would again have a an effect on oil demand growth, that it could be lower as a result. tal. >> thank you very much for joining us today. we do

appreciate your time and running us through the latest in your report, tora busoni with us, head of the oil markets division at iea. a look at the european markets. we've seen momentum continue today. fresh records over the course of this week have been dotted with fresh peaks. and again we see the stoxx europe 600 climbing today. another 2/10 of a percent. so dusting on top is what we're seeing on these markets. but big drivers, if you look at some of the individual markets and clearly earnings having some factor here. if you take a look at the individual markets, german stocks had already been a standout. and you can see today thanks to more earnings news, we've got a fresh spike more than a quarter of one three quarters of 1%, up almost 8/10. now as you can see the ftse missing out on some of the action today that is sinking to an extent versus the other major boards. but we are stronger for italian stocks, french stocks and that is helping carry the stoxx europe 600 forward. let's get into the earnings. as siemens posted revenue of ■k7184 billion in the first quarter, narrowly ahead of lseg forecasts and marking a 3% increase on

2024. orders declined 7% on the year, hit by a more than 50% slide in its mobility division, with siemens citing a high number of large orders in the prior year. steve spoke to the ceo, roland bush, about how president trump's tariff plans could impact the firm's outlook. >> the biggest impact for siemens would come from. >> let's say, an increase. >> in increase in inflation if it comes to tariffs. >> obviously. >> if you. >> limit trade free trade, that increases inflation, eventually dampens growth. and that's an overall impact, which we see then via our customers and markets. if it comes to siemens, we are a global company, but we are very much local at the same time. so we have 40,000 people. >> in the. >> united states. we have 30,000. >> in india and. >> in china. so we have local manufacturing. we expanded our production in the united states. is it on electrification, on rolling stock? so we are quite global with a very global

footprint. would we have an impact for sure. but it's limited from that perspective. >> siemens towards the top of the stoxx 600 today. but thyssenkrupp let's take a look at that stock. big spike as well. you can see double digit percentage moves today as it raised its full year free cash flow outlook. now expecting up to ■k7300 million in 2025 aftera major submarine order from the german military, having previously seen a negative figure of 200 to ■k7400 million. but the german industrial conglomerate lowered its sales forecast, citing a persistently challenging market environment ahead on the show. shares in nestlé rise after the consumer goods giant tops forecasts, but unilever disappoints as it warns of a slower start to the new year. we'll take a closer look at the health of the consumer. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life

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>> let's take a look at some of the big consumer stocks. as nestlé has posted its weakest full year sales growth in more than 20 years, but still top forecasts. organic sales grew at a slower pace than during the pandemic. the company pointing to soft consumer demand and a challenging economic environment. the consumer giant also warned of a lower 2025 margin, but the stock is picking up today in trade, up more than 5%. unilever though. take a look at the stock and how it's performing because compare and contrast here is it. slides are going the opposite direction. down 6% it's warned of a slower start to 2025 with subdued near-term market growth. the company reported full year underlying sales growth in line with analysts expectations, and announced a spin off of its ice cream division via demerger. but the business is set to be listed in london, amsterdam and new york. giuliana joins us with more. you've been talking to the company today. i did see volume growth, though. and that jumped

out to me because a lot of the action in recent years has been about price growth. so. so what are you seeing? what jumps out to you? >> that was that was the point that hein schumacher, the ceo of unilever, was really trying to drive home. >> when i asked him about. >> these numbers that we did see volume led growth at unilever this time around. underlying sales growth of 4.2%, led by 2.9% volume growth. so unilever historically has been more price led, and investors were keen to see volumes grow. not only for unilever but also for nestlé, who delivered results this morning. and i've seen a very different share price reaction. so yes, unilever is delivering on the volume front. what has investors disappointed this morning i think is twofold. one, the outlook for 2025. they are looking at markets slowing. they saw in q4, they saw it begin in q4. and they expect it to continue in q1. so that's a little bit disappointing. the second piece is around the ice cream business. today, they announced more detail around their plans to exit the business. they will be working toward this demerger. it's on

track. today. they announced that they plan to list that spun out business on three listings, but the primary listing will be in amsterdam. so take a listen to what heinz schumacher, the ceo of unilever, had to say to me about the outlook for 2025 and about this listing news. >> we're seeing markets slow. >> i mean. >> in quarter four, we. >> see that. >> continuing in in quarter one. and obviously we have very global coverage. >> so yes. >> i mean overall market growth is important. >> for us. >> you know china. was really. >> you. >> know, around. >> zero in quarter four. and we see. >> that continuing. >> it's important. >> the us. >> did slow a little bit. but hey still. very strong. if you compare it to the rest of the of the world. so you know despite. markets obviously. >> as i said with our 2030 plan. >> we aim to grow ahead of. >> the competition. >> i feel. >> that was what we've done. >> in quarter four. we want to do that again. >> in. >> quarter one, but we see more challenging circumstances overall in the back. >> of 2025. >> with commodity. costs going up a bit, there will be somewhat more room for pricing. we're obviously careful for.

>> that. >> but that will probably come when the year. throughout the year. >> and not. >> so much at the beginning of the year, and therefore. >> we believe. >> that growth will be back weighted. >> in 2025. >> let me ask you about ice cream. sure. investors are very keen to understand this portfolio change story. it's been really a turnaround and all about pruning the portfolio for unilever. what is the update? you say ice cream is on track. what are the listing plans? tell us more. >> yeah. so what we're announcing today that first of all, the demerger is on track. and we've always said from the moment of announcement that we're keen to demerge in the fourth quarter of 2025. so that's what that's what we want to do. what we're announcing today are three things. one is a is a designate chair. you know, it will be a new company. and jean-francois van boxmeer has agreed to be the chair of that. >> new company. >> that's good. he has a lot of experience and we're happy with that choice. second, we have the country of incorporation. ice cream is established in the netherlands with its headquarters, and that country will therefore also be the country of incorporation. and then third, we're going to list

ice cream in three on three exchanges that are also the three unilever exchanges, and that's amsterdam, london and new york. >> so you didn't end up choosing one of the destinations for listing. you went with all three. >> we are going with all three. i should say. the netherlands is its country of incorporation, and therefore amsterdam is a primary listing location. >> is there still any chance that you sell the business? >> look, our. we are absolutely focused on getting the demerger done in a very successful manner. that's what all our actions are, you know, that's what. that's what we do on a daily basis. >> so i think the key, one key that i would pick out from those comments from hein schumacher, when i asked him, is there a chance you sell the ice cream business, which is one of the options and one of the options that investors seem to prefer? he didn't say no. he said the focus is on demerging the business. their plan is to list the business. but he didn't say no, that a sale is out of the question. so that might linger as a possibility. but for now, the plan is to list that

business in amsterdam as a primary listing and then also listed in london and in new york. >> the advisers are all over this one, aren't they? i mean, the trend has been to have fewer exchanges, not more. fewer listings, not more because of the overheads. and if you're shrinking a business, this is a smaller piece of the pie. then why would you keep all three listings? it feels like some sort of market breadth to have as many options as possible. i want to get to what we're seeing from the consumer, because the whole strength of brands seems to have been eroded recently. whether that's the macro getting away and people are more price conscious, so they're looking for cheaper substitutions. i mean, for instance, i mean like nutella, one of the greatest products that you could never really substitute. i think even these days people are looking at any choc hazelnut substitution. so what are you seeing? because what came through was in local market competition was fierce. wouldn't have thought the challenge was from local competitors that might have been from other higher priced alternatives. so there's a lot of competition in the mix here. >> you picked up on a really important point. i think this was also key for investors how much they will have regained in

terms of market share that they've lost to private label and to cheaper alternatives. so i asked mr. schumacher about that and whether they had reclaimed some of that lost market share. and he said actually over the last 12 weeks they've seen market share flat. what they're seeing in the consumer is a bifurcation between value customers and premium customers, and they're trying to dive more into the premium side of things premium wise. their portfolio in the us. the us is a tough market because it's so highly penetrated. it's, you know, ex-growth for the most part, which is why the likes of nestle have struggled. and you look at the share price performance of unilever versus nestle over the last couple of years. this is a bigger issue for nestlé because unilever has a much more diverse portfolio. it's not just about food, but that is certainly something that investors are watching. how market share evolves over the coming months. >> premium these days doesn't just mean brand recognition. it means gluten free, sugar free, organic. it's very different, isn't it? giuliana, thank you very much for bringing us an update on the big consumer stocks today. and let's push on to banks. a lot happening in that space today, too, as

barclays raised its full year performance outlook after posting a better than expected 24% rise in annual pretax profit. the british lender saw a strong growth at its investment bank, as well as its domestic lending business. meanwhile, commerzbank said it will cut almost 4000 jobs as it unveiled more ambitious targets as part of its bid to fend off unicredit's advances. the announcement came as the german lender reported a record profit in 2024. that was up 20% to around ■k72.7 billion. anita spe to the ceo, bettina orlopp, and discussed unicredit's recent investment in the lender. >> it feels a. >> little bit like an activist investor. yeah that's true. >> it's all about style. we think it's better to talk about us. >> and our strategy instead of talking about competitors, but we take. >> it as. >> it is. i think we can prove also today with our presentations, that. >> we have answers for all the things. we are very transparent. just take our analyst. >> presentation and.

>> it's very clear. we don't need a lot of footnotes. >> we don't need. >> call out boxes to explain anything because. >> we have. >> a very simple, straightforward business model. >> and i. >> think. >> the important part is also, and that is the fact we have delivered consequently, over the past four years, what we have promised, and. >> we intend to do. >> that also in the coming years. >> i'm pleased to say octavio marenzi joins us now, the ceo of optimus. octavio, thank you very much for joining us on the back of some of the earnings today. i want to kick off with commerzbank, because i was just reading through a number of broker reactions to the numbers today, and the view is bullish, punchy on some of these revenue goals, targets and operating leverage. so the market is a little bit cautious, unsure whether the company can hit these lofty goals. what do you think? >> well, unfortunately over the years we've frequently heard from german banks that they're going to engage in all sorts of cost cutting, and it seems to always be pushed out further and further into the horizon. >> so i. >> think talk. >> is cheap, but. >> i'm a bit concerned by her

saying that she thinks this takeover by unicredit. >> and the investment. >> is all about. >> style. >> as she said, you. >> just quoted her. i think it's a very, very odd reaction to it. i think it's got nothing to do with style at all. it's quite simple. unicredit is a much, much more efficient bank than commerzbank, and unicredit has shown it can manage banks in austria and germany very, very efficiently and get very good results out of them, which commits bank has not shown. so i think now the promise is that they're going to cut headcount by 9%, whatever that means over the course of the next three years i think is basically a story that's a day late and a dollar short. i don't think the market is going to respond very favorably to it. and it's not, i think i think there's some doubt she'll be able to pull it off. i think also about her particularly, you know, i understand she's a very bright individual and very, very capable, but she has not really come through. one of the operating units within the bank, which is an unusual trajectory for a ceo to have taken. she came more from the compliance side of things. so i don't know if she's really got her hands dirty in sort of the guts of the operations of the bank has come from that side. so it might be a

difficult thing for her to pull off coming from this sort of compliance and cfo background. >> octavio, can we talk about this metric that the industry often looks at return on profitability or return on tangible equity, because the targets going from 9.2% reported over the course of 20, so sub 10% trying to get up to 12% by 2027, and the fairly mighty 15% by 2028. that is a huge step up in a short period of time. how hard is it to achieve numbers like that? >> very, very hard indeed. but coming from the starting point that they are at and it's going to require some very, very aggressive cost cutting and cost management to achieve that. now they did improve their numbers quite substantially this quarter, and that was because we saw a big increase in revenues over the top line. but bear in mind, a lot of that is associated with basically a very poor quarter they had at the end of 2023in q4 2023, where they basically took a hit for a lot of sort of swiss franc mortgages that their polish subsidiary had made and took a huge loss on. so they basically recognized that

loss then. and so this quarter now, year on year, things look much, much better. but i think it would be a mistake to assume that that's going to carry on on that trajectory. if you strip away the numbers, what is also interesting is that their non-operating expenses or, sorry, their non-interest operating expenses increased quite substantially in q4 of this year. and that's a very, very bad sign. so that's going exactly the opposite direction from where they would like it to be. those expenses are up about 9% year on year, so the bank is on the wrong track to achieve that kind of return on equity in the coming years. so it's going to take a very aggressive change. and as i said before, many times german banks have made these announcements about cost cutting and restructuring grand plans, five, ten year plans that then sort of just recede further and further over the horizon as you get closer to it. they found it very, very difficult in germany to actually cut headcount. they run into all sorts of legal and regulatory problems. the trade unions block them, the workers committees block them. they find it very, very hard to pull off. so i'd be very surprised. and i think the market is looking at her

announcements now with some skepticism as well. and the stock is down almost 1% today on the back of those strong earnings where you would expect exactly the opposite. >> in the meantime, andre orcel is cooling his heels waiting for the election to see what the mood music looks like in in germany. what do you make of whether commerzbank can fend off an approach from unicredit on the back of these numbers? >> well. >> i don't think the numbers are going to really have moved that much to fend things off. and i think the shareholders are really going to welcome it, except for the one of the largest shareholders, which is the german federal government. so i think the elections are going to play, of course, a key role in this. olaf schulz came out very strongly against this acquisition, and i think might have been in a position to block it and say, we do not want this to happen. i do not think anyone expects olaf schulz to be the next chancellor. it's looking very much like friedrich merz is going to take over, and the cdu is going to be the largest party, though this may be. maybe the afd is going to surprise us all and come out as the largest party. but i think it's clear

that that friedrich merz is going to be the next chancellor of germany, and he has given speeches and presentations where he's mentioned commerzbank and unicredit. and it's a bit unclear really what he means, though he sort of thunders and pounds the podium and makes very strong statements. but when you really listen or look at the words that he's using, he's really not saying anything. i'm very concerned about it. but at the same time, he said he's not against banking consolidation happening within europe. and this, of course, would be a step in that direction. so i think we can expect him to be more positive about this acquisition than than all of us would be. >> octavio, there is a debate as to whether andre o'connell needs this commerzbank takeover, because i think this week he was debating with some of the shareholders about whether there's more value to extract. and even today on the front foot, talking about the conditions becoming a little bit tougher as we talk about lower interest rates from here, but there's still value to be extracted as some shareholders debate whether to sell some of their stock in unicredit. what do you think lies ahead? is it still an easy road for orcel to extract value, or does he need the takeover? >> well. >> i think. >> he's extracted as much value

as he's going to get. so does he need a takeover? i think yes, i think it's going to be very positive for unicredit. if he can pull that through, does he absolutely need commerzbank? i don't think he has to have that bank. i think he looked at that as a particularly easy target because unicredit had done so well in germany. and commerzbank is a bite sized piece. they might be able to take over relatively easily. i mean, maybe he has his sights also on deutsche bank. i'm sure he has had a close look at them and said that would be another target that suffers from some of the similar problems from commerzbank that they might be able to resolve. so that would be another target. but there's all sorts of banks all over europe that he could turn his targets on. it just seemed that commerzbank was a nice fit, fit very well into the unicredit strategy overall and what they've been able to achieve. he needs acquisitions, but he doesn't necessarily need commerzbank. >> imagine i can imagine christian saving over at deutsche bank would put up one hell of a fight though. octavio, thank you very much for joining us. octavio marenzi, ceo of optimus. ahead on the show, the uk economy narrowly avoids contraction in the fourth quarter and a boost for

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beginning investors. i'm always learning. >> closing bell over time for eastern cnbc. >> welcome to street signs i'm karen chow and these are your headlines today. president trump and vladimir putin agreed to immediately start negotiations on ending the war in ukraine. us defense secretary pete hegseth rejects the suggestion that the move could be seen as appeasing putin. >> the whole. >> world and the united states. >> is invested. >> and interested in peace, a negotiated peace. as president trump has said, stopping the killing. and so. >> that will require. >> both sides recognizing things they don't want to. >> europe's stoxx 600 hits a record in early trade, buoyed by german earners. but siemens ceo roland busch sounds the alarm on the economy.

>> the merger. >> is on track and we've always said from the moment of announcement that we're keen to demerge in the fourth quarter of. >> 2025. >> so that's what that's what we want to do. >> consumer contrast shares in nestle rise after topping forecasts. despite posting its weakest sales growth in more than 20 years, while unilever shares sink on a weak outlook, the ceo tells cnbc what his key focus is. us government to delete entire agencies and save $1 trillion under his department of government efficiency overhaul. >> it looks like a corporate turnaround. >> but at a at a much larger. >> scale. >> there'll be some disruption. >> but at the end of the day. >> we'll have people. >> move. >> from, like i. >> said, from. >> low to negative productivity roles to. >> in the government sector. >> to higher. >> productivity roles in. >> the. >> private sector. >> let's take a look at some of the data respite for rachel

reeves. the uk economy logged surprise in the fourth quarter, with gdp rising 0.1% against expectations of a contraction of the same amount for 2024 as a whole, gdp grew 0.9%. and you can see this is how uk assets are responding today. sterling is climbing up a third of a percent. one 2481 in morning trade, uk chancellor rachel reeves told our sister channel sky news her work to improve the wider economy is not yet done. the growth. >> numbers have come in higher than many. >> expected. >> but i'm still not satisfied with the level of growth that our economy is achieving, and. >> that is. >> why i am determined to go further and faster. >> in delivering. >> the economic growth and the improvements. >> in living standards that. >> our country deserves. >> let's take a look at the broader benchmark bit of tariffs, geopolitics and of course, earnings in the mix still. and the market is firmer, modestly up by about a third of a percent. but earnings certainly driving the german

stock market forward. we've seen records on these markets even in recent days. so topping up on some of those levels. but we're seeing, of course, the geopolitics around whether there could be a peaceful resolution around ukraine having an impact on the oil market, impacting some energy stocks today. and a look at those european plays, this is the mixed picture. that is the european indices this morning. you can see ftse falling as a result of some of those geopolitics down 8/10 plus the dax though strong. and that's picked up a bit more speed just in the last 20 minutes or so. the french market following close behind bouncing about 9/10 of a percent. and you've got italian stocks in the mix to more modest levels on that chart. european autos this is how it looks across the board. the michelin effect numbers from that company, the tire maker really driving the sector forward. and don't forget, it's been somewhat of an unappreciated, to put it kindly, sector in recent times. and we've got a bounce taking place. volkswagen up more than 4%. mercedes two bmw on the front foot. well speaking of news from the sector, nissan and honda

have called off their blockbuster $60 billion merger deal, but a pledge to continue working together on electric vehicles. the honda ceo, toshiro mibe, said there are concerns the company would be worse off if an integration with nissan did not make progress. however, he confirmed honda is not considering a hostile takeover of its japanese rival. gerry fowler joins us now head of european equity strategy at ubs. gerry, thank you very much for joining us. thank you. let's start wide because it feels as though the investor community is very comfortable, despite a lot of the risks that still lurk out there, from trade tariffs to the geopolitics, even macro concerns, if inflation picks up again, what do you make of the sentiment gauge for now? >> well. >> ironically, in the in many of the meetings that i've done, particularly in the us, there's actually a lot of optimism that the change will bring. >> good results. >> and to some extent, you can see that reflected in bond yields having risen very quickly. and that's not just inflation expectations which are going up. and that's commensurate with both growth and the potential for tariffs. but also the real yield going

up. but just recently we're getting a bit more nervousness creeping in. the real yield is coming down. inflation expectations are still rising. that looks a bit more like a stagflationary impulse that reflects the market getting a little bit more concerned about stagflation in the us. that's part of the reason. and that uncertainty, that policy uncertainty in the us is. perhaps one of the reasons why there's been quite a lot of demand to diversify away from the us. you know, 72% of global market cap is in us equities. so it really doesn't take much money to move from the us elsewhere to have a fairly big market impact. and that's what we've seen in europe. we've seen hedge funds in particular buying, and we're getting a lot of incoming from regional allocators about whether there's tactical performance can continue. >> it felt as though it was back to basics yesterday, as we saw that cpi number cross and the market went hot. cpi number bit more cautious on the market. the yield shoots up even with some pretty amazing breakthroughs around a phone conversation with vladimir putin and trump that could have ramifications for the geopolitics that didn't really move the needle as much on markets versus the cpi. >> yeah. so the cpi was

interesting because it was a fairly narrow beat and we were expecting it to be high, just not that high. but we are expecting it to come down quite sharply back down to the 0.2 range in the coming months. so it was a little bit of a january 1st off. and remember, we've seen big prints on both inflation and jobs in the january data for the last couple of years, perhaps seasonal adjustments, perhaps something just more seasonal in what's happening in the economy. but absolutely in europe we upgraded europe relative to the. us today. europe is now an overweight in a global allocation. and that's partly because in the last couple of months, there's just been a small suite of incremental negatives, the potential for a ceasefire in ukraine. and we can think about how that passed through the economy. less fiscal contraction in france, potentially fiscal expansion in germany, a variety of things that are starting to stack up that investors are starting to price as potentially producing a better earnings growth environment. so expectations in europe for growth are now about 6% and stable, which is a change because they've been been downgraded through the second. >> half of last year. you're saying there's more upside on european indices. well even though records on some of the

markets. >> now well this is the fantastic question. so from our macro modeling perspective europe has now caught up to where it should have been a month or two ago. and the us market is a little bit elevated to where it should be. so the question is if there is relative outperformance of europe, which we believe there is, is it going to be driven by european upside or us downside or both? personally, i've got a little bit of a preference. the us might be a bit vulnerable, particularly with mag seven earnings starting to roll over, but there's certainly plenty of momentum and enthusiasm in europe that i don't think has been fully backed by regional allocators with large amounts of money that are generally neutral to underweight europe and have been feeling that pain and heavily, typically heavily overweight or at least neutral in the us. and so just the weight of money might push things a little bit further yet. and obviously, the soft data has been suggesting that we will see an economic improvement. hopefully we see that in the data as well. >> one big headwind could be tariffs and trump. we're still seeing negotiations play out. and we're talking about sectors that are loved by investors, pharmaceuticals and unloved by investors being autos. what is the impact if we do see some

trade tariffs on this scenario as. >> you know. yeah, it's really interesting in our analysis the complication with tariffs is that they're highly redistributive. and you're not quite sure who the winner and loser is. is it the importer or the exporter or the consumer or the government who's paying the bill. and so you get these quite wide range of outcomes for what a the tariff scenario we're forecasting might produce to gdp and growth in inflation. so in the us it's more likely a stagflationary impulse lower growth, higher inflation. but in europe it's more of a recessionary impulse, just lower growth without any material impact on inflation. so it's going to be very interesting. it's much more of a stock specific maybe a sector specific story. you can see consumer services dramatically outperforming goods in the us because of this potential tariff concern a little bit of that in europe with the tariff losers baskets being, you know, much weaker than the market in the last few weeks, but we just don't quite know yet where the dust will settle. it probably not particularly macroeconomically important unless we start thinking about confidence effects, and we'll see that in the pmis in the next week or two. >> you were raking over some of

these key sectors before the election, and what the tariff implications would be on consumer discretionary, autos, tech, food. the problem for me is we see earnings cross. it's very stock specific, meaning even today the bifurcation of you know nestlé versus other sector. so what do you do in that scenario. is it the only way it is to go drill down to the individual names? is that the only way to play this trade? >> well, it's a very high alpha environment. a lot of the sector performances can be reasonably correlated, but the sector divergences can be reasonably significant. so what definitely has worked, we've got a framework that covers how stocks behave and sectors behave through the business cycle, earnings valuation and sentiment. and what's clear is that the earnings momentum is a really important factor in europe. so about half the market at the moment is being upgraded in earnings expectations. that's things like telcos and lots of the consumer sectors. some of the industrials as well utilities as well. so we do like consumer utility telcos capital goods. but a decent amount of the market is still experiencing downgrades as well. so there's an offset. but at the sector level you can get quite a lot of information out of out of earnings momentum. and then with our very good crowding data,

you've just got to be mindful that especially in europe, where there's a large concentration of sort of pot hedge funds, you can get crowding that gets to a point that sort of falls in on itself every now and then. >> any missing trades we have mentioned with, you. >> know, i mean, from a stagflation trade, the gold miners have been performing very well and we expect they will continue to do well. that's more in the us, but particularly at the moment, the weakness of the utilities and the strength of the cash flow of telcos means that shifting a little bit more defensive in europe is probably where the potential outperformance and potentially absolute performance of europe is going to come from. >> gerry, we do appreciate some market calls here. gerry fowler, with us, head of european equity strategy, ubs, us annual inflation increased to 3% in january, with the monthly figure up 0.5% to its fastest pace in nearly 18 months. the hotter than expected prints prompted a rethink over how many rate cuts can be expected this year. futures markets now expect only one cut this year, not two, and most likely not until september at the earliest. the ten year treasury yield went past 4.6%,

as investors rotated out of government bonds. a look at us futures in that context, as we count down to the session later on today, and you can see we are chasing a bit of a mixed market, some cautious behavior anticipated on the s&p 500 and the dow jones. the nasdaq looks to be chasing a bit more green perched high. about 34 points to the upside is what we're watching. it was flat and climbed higher yesterday as it wrapped up the trade, but so far for the week, it's roughly up just over 6/10 of a percent. at bridgewater, founder ray dalio is warning asset prices are beginning to look increasingly inflated. speaking to dan at the world government summit in dubai, dalio warned high prices coupled with the threat of rising rates could spell trouble. >> we're getting into a period. >> now where asset prices. >> are becoming. >> pretty high. this can look like quite like 1998 or 1999 when asset prices rise. back then we had. >> great new. >> technologies. >> you. >> know.

>> the internet. >> the.com and so on. and that went. on to be great. but pricing matters. and so when you. >> have these. high prices. >> relatively high, and. >> then you have. >> a rise. >> in interest rates. >> that can cause. >> trouble. >> there's a lot. >> of risk in the debt asset. people think. >> of. >> default risk. >> but there's. >> the money. >> and the. >> devaluation risk because. >> there won't. >> be a default. >> the central bank. >> will come. >> in and will print the money and buy it, rather than to let it that default happen. >> and that's. >> where there's the depreciation of money, the value of money. >> and so you have to think in. >> real returns, not just nominal returns. and be aware of those risks. >> alibaba chairman joe tsai has confirmed a report that the chinese tech giant will partner with apple to roll out ai features for chinese iphone users. shares in alibaba had risen to a three year high in hong kong following a report from the information. we're speaking at the world government summit. alibaba chairman tsai

hailed the pros of open source ai. >> has taught us. >> the value of open source. >> you know, if today your. >> only purpose in life. >> is to develop. >> a closed. source ai system that is the. >> smartest phd student in everything. the nobel prize winning kid. i personally think. >> the value. >> of that endeavor. is approaching. >> zero. >> coming up on the show, us president donald trump announces negotiations over the war in ukraine, will discuss with a ukrainian lawmaker right after the break.

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aims to reduce us government spending by $1 trillion. speaking virtually at the world government summit in dubai and sporting a t shirt emblazoned with the words white house tech support, musk said the public backs the measures laid out by him and the trump administration. >> reducing the size of government. >> and making. >> the government. much more accountable. >> to the people. i think is going to lead. >> to a. >> better outcome. >> for the people. >> you know, what i've said is that. we really have here a rule of. >> the bureaucracy as opposed to rule of the. >> people, democracy. >> so. in order we. want to restore. >> rule of the people. and so what. >> that means is. >> reducing the size of the federal government. basically reducing regulation. >> you know, there's. >> there's a tremendous. amount of. overregulation that's happened over time. and this. is this. >> is an. >> inevitable consequence.

>> of a long period of. >> prosperity. >> is that you're going to get. >> more and more. rules and regulations. >> more laws. >> accumulate over time. >> and the. >> normal forcing. function for getting rid of. >> rules and. >> regulations is war. so it. needs to be some kind of. existential war where you have to. >> do a reset in. order to avoid. >> being defeated in. >> a war. >> president trump has pledged to sign off on reciprocal trade tariffs on any country that charges levies on us exports, with an announcement potentially coming as soon as today. the us leader has already put duties on imports of all steel and aluminum imports into the us. house speaker mike johnson said he believes the white house will consider exemptions for certain industries, which could include autos and pharmaceuticals. meantime, indian prime minister narendra modi will meet with president trump today in washington. with new delhi's mounting trade deficit set to be a key feature of talks, according to cnbc sources. modi

is reportedly set to offer up a raft of trade concessions in a bid to stave off a trade war. the indian leader will also meet with elon musk, with i top of the agenda and a trip that comes off the back of his visit to france for the i action summit. back to our top story today. us president donald trump said he has agreed with russian president vladimir putin to immediately start negotiations on ending the war in ukraine. trump also held a call with ukrainian president volodymyr zelensky, who said they are charting the next steps for a lasting, reliable peace. alexei goncharenko joins us now. lawmaker from ukraine. alexei, thank you so much for joining us today. it seems as though president trump has set the ball in motion for a peace conversation. is this breakthrough welcome? >> yeah. >> we want. >> peace more than anybody. >> else in. >> the world. >> and the. >> conversation between president trump. >> and president. >> putin can. >> be a real path to this. >> the problem is some comments

of president trump. who said a lot about possible. >> cooperation with. >> russia. very. >> very warm comments. >> about putin. i just want to remind all of us that putin is a war criminal, the tyrant. so i think he should be spoken. with in. >> the manner. >> which should suit. >> his real status. status of. >> war. >> criminal and tyrant. >> yeah. >> but we hope. >> that these. >> conversations can. >> lead the. path to peace. >> alexei, can i ask you about some of the red lines here and whether they're now wavering from the ukrainian perspective, because joining nato seemed to be all important for future security, as well as reclaiming land that had been taken by russia. but as trump has been setting out some of the early negotiations here, and that's been confirmed even in conversation today from the defense secretary about how they're thinking about progressing from here. that would potentially mean not joining nato straight away, but also giving up parts of the country that have been taken by russia. how do you feel about

those two points of negotiation? >> we will never give up our land to russia. >> we will never. >> accept that these lands. >> which they occupied. >> are russian. and international law. >> is very clear about. >> this, and all other. countries are to. >> can we reclaim this? can we regain. >> the control over these territories now. without enough. >> support from the united states? not so when. >> mr. trump, mr. hicks are saying, oh. >> probably ukraine will. >> not regain that means that they decided that they. >> will not support us in the way we can do this. >> if it is the fact that means. >> that the hostilities can end when part of our territories. will be still occupied by russians. >> but once again. it doesn't. >> mean that we will accept. it anywhere in the future. this will never happen. >> russian empire collapsed. >> many times 100. >> years ago. >> 30 years ago. they will. >> collapse again. >> and we will retake our territories later. >> i think many international

watchers are mindful of what happened post crimea and the pause that took place, and then eventually regrouping and an attack on ukraine. what does it mean if ukraine is not part of nato? does that mean there's no future guarantee of security? >> that will mean that. >> there is no really very serious security guarantees, because the best security guarantee is ukrainian membership in nato. if it will be rejected in this, and if we will not receive a direct treaty like japan or south korea has with the united states, that will mean that there is. no really very serious security guarantees. in this case, it. >> looks like. >> it will be not. >> a peace, but a. >> ceasefire because russia wants to restart this war as soon as they will be ready, and as soon as they. >> will see an opportunity. >> to do this. >> can i ask you about how trump's negotiations are being perceived? the art of the deal. we've seen a very unorthodox approach to foreign policy expressed through the gaza strip. and now, of course, when it comes to ukraine, what do you make of his approach?

>> you know, to first we need to see. >> the results of. >> this approach. and for the. moment we are confused. >> many people in ukraine. >> are quite shocked with what had happened yesterday, and with. >> the. >> tone which trump used about putin. and with when he was asked, will ukrainian ukraine will be. >> equivalent partner. >> in the negotiations? and he didn't answer this question. people are very concerned, but it's too early to make a final judgment, and we will see where this approach will lead us in any way. i just want to remind all of us three years ago, it was not american marines who stopped russians near kyiv. it was ukrainian army, ukrainian soldiers with ukrainian weapons, because at that time we received something close to nothing from our allies. so now we did it once. if needed, we will do it for the second time. but here is the question whether there is international law and where is all the pledges which our partners gave to us to be with us as long as it takes?

>> alexei, as we kicked off the conversation, you mentioned how you felt about putin and what sort of repercussions there should be for him given his role in this war. but what happens when it comes to the next layer of this? any reparations, how we pay for the reconstruction of ukraine? does that need to be a central part of any discussion? >> that is very important part. today. the rough roads in russian assets, most of them, fortunately, are in europe. and i'm sure that these assets should that should be a source. it's not european or american or british taxpayers who should pay for what putin did. it is putin himself. and there is a way to do this through frozen russian assets. >> alexei, thank you very much for joining us on what is a very much moving feast here as we take a look at this breaking news. alexei goncharenko with us lawmaker ukraine. and i'm going to circle back to markets. it is proving a very large markets day in europe. but certainly parts of it. the dax again showing

further momentum now escalating more than 1.1% earnings really driving this market. we're having a conversation about reweighting as international investors that have been lighter on their european exposure. now switching to some of those positions to even overweight or at least adjusting portfolios. so what we're seeing in the dax, the french market, italian stocks on the front foot versus the ftse 100. that is still a little bit soggy at this hour. but don't forget oil stocks and the energy trade on the back of the geopolitics having some bearing. and stateside it looks like the nasdaq will be the one in the green. the others looking somewhat cautious. that's all for the show today i'm karen cho. worldwide exchange is 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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strategies. >> great to get your first reaction. >> to this print we got from nvidia. >> and when the ceos have a big announcement they come here first. >> what's your take on not just the quarter but how things look from. >> here helping you make the right moves. >> this has been a key number. the street was watching. >> a wild. >> hour of earnings. >> earnings season special coverage all this month on cnbc. it is 5 a.m. here at cnbc. >> global headquarters. >> welcome to. >> worldwide exchange. >> here is your. top five. at five. >> the hotter than expected. >> january cpi report. >> giving investors new reasons to worry despite assurances from. >> jay powell. >> we've had made great progress toward 2% last year, but we're not quite there yet, so we want to keep policy restrictive for now. >> and in. >> washington, president trump. >> doubling down on his global. >> tariff threat with new tariffs. >> possibly coming today. >> i may do it later on or i may. >> do it tomorrow. >> morning, but. >> we'll be signing. reciprocal tariffs. >> elon musk continues to push

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