u from being the hunter to being the hunted. wolff: i'm never content. even when we win, i'm already worrying about the next race or the next year. we gotta go for these championships. ♪♪ >> a very good morning to you and. welcome to street signs. i'm julianna tatelbaum, and these are your headlines. europe's defense and aerospace sector hits a record high as leaders gather for an emergency meeting in paris. under pressure to boost defense spending. and us officials prepare for talks with russia. germany's foreign minister says europe must take a stand. this is a. >> moment of truth. >> everybody in the world. >> has to decide. whether you stand on the side of the free world. >> or. >> you stand.

>> on. >> the side. >> of those. >> who fight against the free world. >> transatlantic ties are thrown into doubt after us vice president jd vance hits out at the continent. in a controversial speech at the munich security conference. >> what i. >> worry about is the threat. >> from within. >> the retreat. >> of europe. >> from some. >> of. its most fundamental. >> values, values. shared with the united. >> states of america. >> candidates clash in a fiery four way debate as germany enters its final week of campaigning, with the mainstream party heads hitting out at the far right alternative for germany. we'll speak with fdp bundestag member otto fricke at 930 gmt. and tencent shares climbed to their highest level in over three years, as the chinese tech giant looks to integrate deep sea ai model into one of its key apps.

our top story this morning geopolitics. u.s. officials will meet russian representatives in the coming days in saudi arabia to begin negotiations toward a russia ukraine peace deal. an aide close to ukrainian president volodymyr zelensky told nbc that ukraine had not been invited to join that meeting. but president trump told reporters on sunday that zelensky would be involved in conversations about peace. meanwhile, a number of european leaders will meet in paris later today to discuss the situation in ukraine after an invitation from president macron. >> the élysée. said the leaders. >> will discuss the us administration's approach to ukraine, as well as security concerns in europe. we are seeing quite a strong bid for european defense names in europe this morning on the back of developments over the weekend in munich, with jd vance opening things up with quite a controversial and heavy handed speech. and that was really targeting europe. we are now seeing a reaction in stock

markets. mattel up nearly 7%. you got. us up more than 3%. bae systems up five, 4.5%. huge demand for these defense names as the view seems to be, as the us ramps up pressure on europe to spend. >> more. >> we will see a reaction from european leaders will, of course be watching the meeting taking place in paris today with bated breath. now prime minister keir starmer, interestingly says the uk is ready to contribute to security guarantees for ukraine by put through putting british troops on the ground. in an article for the telegraph, starmer said the uk can play a unique role in helping europe and the us work together, and called on european countries to do more to meet security demands. so keir starmer here in the uk, trying to act as a bridge of sorts between the us and europe. now the flurry of weekend activity came after us vice president jd vance used. >> that. >> speech that i mentioned at the munich security conference to blast european countries

criticizing politicians across the continent on issues including free speech, security and migration. >> the trump administration is very. concerned with european security and believes that. we can. >> come to a. >> reasonable settlement between. >> russia and ukraine, and we also believe that it's. >> important in. >> the coming years for europe to. step up in a big way to provide for its. >> own defense. >> the threat. >> that i worry the most about vis a vis europe. >> is not russia, it's not china, it's not. >> any other external actor. and what i worry about is the threat from within. the retreat. >> of europe. from some. >> of its most fundamental values. >> values shared with the united states. >> of america. >> us secretary. >> of state marco rubio says ukraine and europe would be part of any, quote, real negotiations over the russia ukraine war. speaking to cbs, rubio said conversations had not yet reached that point and that the us wanted to see if president

putin was serious about wanting peace. ukrainian president volodymyr zelensky told nbc's meet the press that ukraine would have to be involved in any discussions. >> i will never accept any. decisions between the united states and russia about ukraine. never. and our people? never. and our adults and children and everybody. it can't be so. this is the war in ukraine against us, and this is our human losses. and we are thankful for all the support. unity between usa in usa, around ukraine support. bipartisan unity, bipartisan support. we are thankful for all of this. but there is no any leader in the world who can really make a deal with putin without us. about us. >> well, europe really came under fire this weekend in munich. thankfully, sylvia was there all weekend speaking to leaders about the conversations that were taking place between these leaders in munich. sylvia,

right now we are looking ahead to president macron meeting with select european leaders in paris to try to come up with a response and a unified view on where to go next with regards to support for ukraine. what can europe. >> do to. >> regain the seat at the negotiating table? they found themselves really left on the sidelines, with the us going direct to russia for these conversations. >> so the meeting in. >> paris is very important, julianna. >> it remains to. >> be. >> seen how much detail will obtain. >> but there is a question. >> mark as to. >> whether they could go as far. >> as saying that they are prepared. >> to send. >> troops to ukraine. >> that would. >> be part of broader efforts. >> to secure. >> security guarantees for kyiv. because there's. >> a realization. >> in europe. >> that. >> the united. >> states is unlikely to do that. >> if we take. >> a step back and. >> we. try to understand what happened. >> this weekend and where we. >> are at. >> this. stage in the geopolitical. >> scene.

>> there's a. >> huge shift. >> europe has. >> realized that. >> they can no. >> longer rely on the united. >> states. >> and they have to secure themselves. they have to be prepared from a security point of view going forward. there's a lot of. reports suggesting. >> that the united states. >> could be prepared. >> to. remove some of its troops. >> and military. >> equipment from. >> the. >> european continent. >> i've been trying. >> to get information on that. there's no confirmation. >> of it as of yet, but i just. >> heard from. >> one european. >> official who told me. >> that us officials. >> speaking in. >> brussels midweek. >> and in. >> munich, made very clear they are fully committed to nato. >> but the. >> shift in us focus is. >> to china. >> and therefore. >> it may. >> come with changes. >> in europe too. >> it is too. >> early to. >> tell whether that will. >> mean fewer american troops on the. >> european continent. >> and less. >> military equipment as well. but nonetheless, there's a realization that the trump administration has other. priorities when it comes. >> to foreign.

>> policy at this stage and what we are. >> witnessing also. >> with the paris meeting is that the european governments are. >> trying to come. >> together. are trying. >> to find a plan. >> to make. >> sure that they will have a say in these. peace talks. >> here's the. >> president of. >> finland speaking to. >> me over the weekend. >> explaining how. >> he thinks this is going to work. >> the table is. >> quite set. >> it is. >> ukraine and russia. >> the united states. >> and europe in one. >> form or another. >> hopefully with the special. >> envoy or whatever is decided. that's the setup. >> because you cannot decide. >> on european. >> security or on ukraine without ukraine or. >> without europe. >> it's simply impossible. so where do we. >> go from here? >> what are. >> the next steps? >> one of. >> them is very clear. we are. >> likely to see european governments. >> spending more. >> on defense. >> from a. european perspective. >> the question mark at this stage. >> is whether. >> they're. >> going to. >> try and strike any sort of. >> commercial deals with the. united states when. >> it. comes to new defense

investments. france is actually pushing for the opposite. >> they believe that they have. >> to spend more. >> on european defense. they are. finding themselves isolated, and therefore they believe that by buying. >> european defense. >> by having. european contracts, is the way also. >> to convince. >> european voters that this is the best approach. here's the explanation. >> from the. french minister of foreign affairs. >> there are. >> big challenges. >> for europe. >> and my colleagues here. >> have mentioned them, and one. >> of. >> them is to. >> scale up the defense spending. and of. >> course. >> if we have to spend. >> one or 2 or 3 additional. >> gdp points. >> into defense. >> spending. >> it will be. >> it will. >> only be. >> accepted by. >> our people. if this creates. jobs in europe. >> if this creates value. >> in europe. and this is why president macron. >> since 2017, has pushed hard on the idea of. >> european preference for. >> defense. >> because this. >> is a. >> question of. >> sustainability, of the defense effort. >> that. >> we need to sustain.

>> that comment was part. of the. >> conversation i had on the main stage of the munich security conference. >> around europe's place in the world, and. >> what a pivotal. >> time to have. >> that. >> conversation. >> because. >> as. >> i told you. >> earlier. >> the continent. >> mostly the eu, norway. >> and the uk. >> are finding. >> themselves alone. at this stage. they're having. >> to. >> rethink their. >> whole system. and so. when you. >> look at the geopolitical. >> scene right. >> now. >> one of the question. marks is what does this mean also from a chinese perspective? that's one of the angles that we haven't discussed. >> in detail a lot. >> but when i heard that the. chinese minister for foreign. >> affairs on the stage here. >> he made the comment. >> that china is actually a point of. >> stability, a point. >> of certainty. and a moment. >> of a lot of uncertainty in the. geopolitical scene. but when you and. >> when. >> i ask. >> the some of the ministers. >> of foreign. affairs from europe on how. >> are they going to go about. >> this. >> are they going to try and forge new relations with other

parts of the world, given that now they can't rely so much on the united states? well, the answer. >> is yes. >> but china is not where they're looking. they are not looking at new security ties with beijing. here's the foreign secretary. >> for the. >> uk. >> david lammy, explaining. >> why the meeting i had just before coming. >> to the munich security conference was. >> with the chinese. >> foreign minister. >> wang li, raising real issues about why. >> it is that there. >> are chinese companies. providing dual use. >> technology that. >> assisting russia. >> to kill. >> people on the european. >> continent, and these are. very serious questions. so we recognize that there's a pacing concern. >> also in the indo-pacific and rising. >> tensions in the china seas, particularly. >> all of that. >> requires capability. all of that requires the transatlantic alliance. alliance. >> so i'll.

>> just try to summarize. >> what has happened over the weekend with these two. >> participants of. >> the munich security. conference told me that this is. >> a. >> new level of. crisis for the europeans. giuliana. >> when you think about the modern history, where what they did in terms of the greek. >> crisis. >> brexit and the. >> covid pandemic, that's much smaller. >> much smaller than what they're. >> facing right now. the challenge. at this stage is much. >> bigger because it's shaking the. >> foundations of. >> european democracies. >> it's quite. >> a list of crises to stack up against here, sylvia. so i guess highlighting the gravity of the situation. sylvia, i want to just zoom in on the united states involvement with ukraine and the type of support that they are potentially willing to extend, and for what the us is trying to extract value from ukraine, saying that they're pushing for a deal with ukraine to secure access to ukraine's

natural resources after. >> the war. >> what does ukraine have to say about this? >> so the ukrainians are not against the idea. they actually believe. >> that. striking some sort of commercial. >> deal with the united. states would. >> be helpful. >> but only if that actually brings security. guarantees for kyiv. >> on top of that. >> the problem with the latest proposal on the. >> table is that the. >> americans are reportedly. asking for 50%. >> of ukraine's critical minerals. >> the ukrainians are. >> saying, look, that's too much. >> and actually. >> violates our laws. we can't go as far. >> as that. but on. >> top of that, you're asking just too much without. giving us security guarantees that you're. >> going to be protecting ukraine in. >> the future. >> so they're not against. >> the idea. and that actually. >> could be a solution here. but the ukrainians. >> need to see more commitment. from the americans. >> in order to sign that deal.

when you think about what all of these changes in. >> geopolitics means for business, yes, there's a story here for, for. >> the critical minerals industry. >> this is likely to be. >> you know, front and. >> center of. >> what the peace negotiations. could mean for ukraine. and then, of course, we are looking at defense stocks. >> soaring today because. >> the expectation. >> is that we are. >> entering a new. >> phase in geopolitics. and geopolitics, and. >> these companies. >> are likely to benefit from that as well. so there's. >> two important business angles. >> as well. >> to keep in mind as we monitor this. >> new chapter in. >> the. >> geopolitical scene. >> fascinating, sylvia, to know that the ukraine has not taken that off the table as something that they'd consider in a deal with the us. and to your point about those defense stocks. >> is. >> reading through some of the analysts commentary this morning in deutsche bank's robin winkler, saying in a blog post that he thinks that these recent developments could prove to be an important catalyst for german defense and fiscal policy after the election on sunday. so a lot

to play for potentially with these defense names. sylvia, thank you for your comprehensive coverage of the munich security conference. you can find more coverage. and sylvia's conversation with the eu's foreign policy chief on cnbc.com. still ahead on street signs. european defense stocks bouncing on the prospect of higher spending will bring you the latest market action next. >> the fbi calls it house stealing. >> the latest scam. >> or a cyber thief transfers the title. >> of your home out of your name. >> and steals. >> your hard earned equity. >> it's roughly. >> 60 to 90 days for that person. >> even figure. >> out that they're the victim of this crime. >> you start getting foreclosure. >> notices. >> and you. >> realize you've. >> got four mortgages on your house that you didn't. >> even know existed. >> unfortunately. >> it's on you to protect >> it's on you to protect yourself. you might already be a a sleep number® smart bed is perfect for couples the climate360® smart bed is the only bed

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today. m taylor available on the apple app store or android? >> get invested. join the club. >> as a woman, i wanted to. >> experience financial. >> independence and become financially independent in my retirement. >> join the club new member save with a special offer for a limited time at cnbc.com. terms and restrictions apply. >> welcome back to street signs. let's get a check on european markets this morning. equities in are trading higher. we're up by about a third of a percent for the stoxx 600. after quite a strong run for the european market. the stoxx 600 gained about 1.8% last week, its eighth positive week in a row. so that positive momentum continuing today. bear in mind the us market is closed today for

presidents day, so no steer from us futures this morning. it is all about europe. let's break it down by region. what's happening across the bourses. you have a little bit of underperformance from the cac40 trading slightly below the flat line outperformance from italy. footsie up about 1%. >> the xetra. >> dax also holding up quite. >> well, up about. >> 4/10 of a percent. last week the dax led the weekly gains, advancing another 3.3%. so that strength in the german market continues. ftse 100 up about 13 basis points now. >> one sector. >> is in particular focus in particular demand this morning and that is aerospace and defense. you can see the sector basket within the stoxx up about 2.1% overall. it has been a strong run over the last five years. you can see quite an impressive chart up nearly 90%. let's break it down though and see what's. driving those gains. it is the defense names on the back of these developments in munich over the weekend, and the expectation that we're going to see a lot more spending, potentially from europe if we can get agreement from european leaders. you've got ba systems

up more than 4%. you've got rheinmetall up more than 5%. so real strength in those defense names this morning nick nelson joins me now head of global equity strategy at absolute strategy. nick it's great to have you with us. let's kick off the. conversation there with this rally we're seeing in defense names this morning. it's somewhat interesting because this has been a theme we've been talking about for quite some time. the prospect of europe spending more on defense. why wasn't it baked into the market already? >> well, look, it's something. >> we've. >> been positive on tsr. >> for over. two years now. >> almost three years, actually, since the invasion of ukraine. and it's. >> the. >> theme we've been running. >> for that period of time. and it's basically the view that, you. >> know, europe is. >> just going to. >> have to spend. >> some more on defense in this new world order. >> and i think in reality. >> the events of the weekend at munich. >> as. >> we were just hearing from that report. >> have just brought it. >> home about how this is very immediate. >> you know, this isn't. >> an issue for the next six months, 12 months, 18 months. this is an issue for now. >> so i think. >> it's a. >> theme that's live. it's a

powerful theme and it's super important for europe. and this is why we're seeing this move in markets today. >> what do you think of european markets more broadly. they've actually performed really well. we've got eight straight weeks of gains for the stoxx 600, despite what is still a really difficult macroeconomic picture. why has europe outperformed. and do you think that we're going to continue to see strength in the european market? >> yeah you're right. it's had a very. >> good. >> start to the year. and if you look at last year and the year before, in fact take the charts back to sort of ten, 15 years, of course, it's been a. >> almost a perennial underperformer. >> particularly relative to, to the us. and i think. >> a few. >> things have happened here. i mean, there are some relatively attractive valuations and there are some kind of stock specific themes going on within europe. but actually for us, the macro. >> backdrop is. >> still superior. in the us. we think. this year is all about earnings. we think we've already had the multiple expansion in equities. so now it's can companies. deliver this these profits. and we think the us corporate sector is in a much better position to do that than europe. so we're just. >> neutral on european. equities with with the.

>> preference for the us. >> as it stands. but you're right it's had a nice bounce. back on you know what some pretty cheap valuations across the sectors. >> well i want to get to your preference for the us in just. >> a second. >> but sticking with europe within europe we've seen a really strong performance from the dow. it's trading at an all time record now. what has driven the gains in the german market. is it a story about fundamentals. domestic fundamentals or is something bigger at play? is it a political play? what's the story? >> yeah. so look, i think there's. >> a few things going on here. i mean, it's certainly disconnected from the underlying macro data. we look at, you know, the pmi data, the economy, the corporate profits, those fundamentals. it's moved away from that. and i. >> think there's a. >> few reasons for that. >> i mean. >> certainly at a. >> stock level you have had some specific stocks. you mentioned ryan mattel there. you know it's outperformed nvidia over the last couple of years. >> so that's. >> been an incredible stock i know. exactly. you've also got sap in there. you've got some other tech themes. you've had siemens energy. so they've had some sort of ai themes and defense themes and a stock specific level.

>> and i. >> think you're right, as we. look forward to sunday and this very important german election, there's some hopes that, you know, maybe whatever administration comes in next could relax the debt brake, could relax some of the fiscal policy and could enable some stimulus for europe, which, of course, is what the us has been doing very aggressively in the last couple of years. so that and i think we should combine that theme with defense. right. because that could be. >> one of. >> the ways that europe decides to actually spend some more money or needs to spend more money. and that could be how we get around some of these rules and regulations. >> it does feel like the market is priced for effectively a perfect outcome when it comes to the german election, that we are going to get a much more business friendly coalition headed by merits. but if we've learned anything over the last several years, it's that election results can surprise. so do you think that investors are perhaps being a little bit complacent about the risks around the election in germany? >> well, look. >> i think we'll find out more obviously beginning next week when we have the results. but it's going to be a complicated process. and obviously, you know, to get. >> rid of the dead brake.

>> you need the two thirds majority. and the constitutional changes and so on. and i think there's going to be quite a lot of jockeying for position. however, the results come out on sunday, monday with the with the parties going forward. but yes, i think. >> the. >> dax to us looks we actually prefer some of the periphery markets in europe. the ibex and others in the dax may have got a little bit ahead of itself just in terms of index levels. >> well, let's move on to the us where you do have a regional preference. you're neutral on europe, as you said, but you are bullish on the us. why aren't you concerned about the tariff war that seems to be escalating every week. >> yes. >> so the. >> tariffs we do have baked into our forecasts. so we think the us economy will grow just a little bit over 2% this year. reasonable gdp growth certainly higher than eurozone. and we do have baked into that almost a doubling of the effective tariffs from what they were pre this administration. so we are expecting some tariffs to come through. and at the margin that's a little bit more inflation a little bit less growth which is obviously not the mix that equities like. but we think that's manageable. and we also think that actually the

real story here is the profit cycle. so you've now got something. not only are earnings accelerating but they're broadening out. >> it's not. >> just the mag seven we're relying on anymore. almost half of the s&p 500 companies have got double digit earnings growth on the forecast numbers. and they're starting to deliver. we're having a pretty decent q4 reporting season. so for us it's all about the earnings coming through and taking the baton from what has been a sort of multiple driven market. >> i know you like the banks specifically as a sector. it's done really well as a sector already year to date. a lot of optimism around deregulation, as well as a lot of positive earnings momentum. how much more is in the banks trade and what's going to drive further gains from here? >> yeah. so we've been bullish on global banks as a whole. us banks have done very well. european banks of course. additionally if you look at the sector as a whole, we're in about ten and a half times forward earnings. so still a pretty low p e multiple because although the price action, as you say rightly has been super strong, we've seen that being backed up by earnings upgrades. so as long as the banks can

continue with these earnings upgrades. and then the icing on the cake, as you mentioned, the us could be the deregulation which could help banks to be more profitable. >> all right nick, well thanks for joining us. sharing your views. nick nelson head of global equity strategy at absolute strategy. uk business secretary jonathan reynolds says us tariffs on uk steel would be negative for both countries. in an interview with the bbc, he added that the uk has had some constructive conversations with the trump administration and stressed britain's unique relationship with the us compared to the eu or china. now, france's foreign minister told sylvia at the munich security conference that tariffs against the eu could trigger retaliation. >> no one. >> around the globe should. consider entering into. a trade war. with the with europe. >> and with the. >> eu, because there is so much to lose. in fact, the us. >> themselves. >> last time they. started a war. >> a trade war, mostly against china. >> but we got our share of this. >> trade war. >> they basically lost. they got

hurt. >> more than they hurt the. >> people that they were targeting with that trade war. >> so everyone should. >> think twice. >> before waging a trade war with the. >> eu and. >> in fact, with with the rest of the world. if the eu is the subject. >> of the trade. >> war, wherever. >> it may. >> come from. >> the eu will retaliate. >> we've done it in the past. >> we'll do. >> it again. we'll defend our interests. in fact. >> we've built. >> up some. very powerful instruments that. >> should deter. >> anyone from. >> waging a trade war. and if this deterrence is not enough. >> then we will retaliate. if our. >> interests are. >> at stake. >> elon musk has announced his startup, x ai, will release its grok three chatbot alongside a live demo later today. musk touted the chatbots capabilities, calling it the smartest ai on earth. tsmc and broadcom are each reportedly considering deals that could split intel into two companies. that's according to the wall

street journal, citing sources familiar with the matter. broadcom is reportedly looking at intel's chip design and marketing business, while tsmc has separately considered buying some of intel's chip plants. the journal added that the two companies are not working together on the proposals, and all discussions have so far been informal. coming up on the show, chinese president xi jinping cozies up with tech titans as beijing looks to boost investor confidence in the private sector. plus, german political leaders hit out at the far right in the final week of campaigning before the national polls open. we'll speak with otto frick, a member of the bundestag for the fdp. that conversation coming up next. 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 insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even

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defense and aerospace sector hits a record high as leaders gather for an emergency meeting in paris. under pressure to boost defense spending. and us officials prepare for talks with russia. germany's foreign minister says europe must take a stand. this is a. >> moment of truth. >> everybody in the. >> world has to decide whether you stand on the side. >> of the. >> free world. or you stand on the side. >> of. >> those who fight against. >> the. >> free world. >> transatlantic ties are thrown into doubt after us vice president jd vance hits out at the continent. in a controversial speech at the munich security conference. >> what i worry about is. >> the threat. >> from within. the retreat. >> of europe. >> from some. >> of. >> its most. >> fundamental values, values. >> shared with the united. >> states of america. >> candidates clash in a fiery four way debate as germany enters its final week of campaigning, with the mainstream party heads hitting out at the far right alternative for germany. we'll speak with fdp

bundestag member otto fricke in a few moments time. and tencent shares climbed to their highest level in over three years, as the chinese tech giant looks to integrate deep seeks ai model into one of its key apps. european equity markets trading higher this morning. that positive momentum we saw last week for the last eight weeks in fact translating to trade. today the main benchmark stoxx 600 up 3/10 of a percent. we are seeing particular strength in those defense names this morning. so the european defense sector lifting the overall market from a regional perspective. here's what the bourses are doing this morning. you've got the xetra dax up half a percent. the ftse mid over in italy up 1%. the cac40 is lagging around the flat line this morning. ftse 100 up modestly as well coming into today. the dax continues to

outperform. last week it was the best performer of the bunch, advancing another 3.3% from a sector perspective. here's a look at the outperformers. the banks are. up about 1.3%. insurance up 8/10. >> you got industrials. >> up about 7/10 of a percent. >> financial services. >> also doing well. on the downside the laggards in europe here is what is dragging real estate down about 8/10 of a percent. household goods food and beverage and media. so the more defensive part of the market is lagging this morning. but overall the market is trading higher. let's focus. let's focus in now on germany, the four main candidates vying to become the next chancellor of germany clashed in a televised debate sunday night, exchanging barbs on everything from ukraine to illegal immigration and the country's deepening economic woes. incumbent chancellor. olaf scholz defended his party after u.s. vice president jd vance delivered a scathing attack on european leaders, accusing them of censoring free speech and

sidelining far right party views. vance met with afd leader alice weidel on the sidelines of the munich security conference, snubbing schulz with just seven days to go before voters head to the polls. right wing opposition parties are leading the polls, with friedrich mertz's conservative christian democrats at around 30% and vidal's far right alternative for germany at around 20%. well, i am very pleased to welcome otto frisch to the program. member of the bundestag, fdp. sir, thank you so much for joining us this morning. really keen to hear your views on what's been happening around the world and within germany. let me kick off by getting your reaction to the us vice president's comments in munich at the start of the weekend. robert habeck said that vance's speech marked a turning point in the relationship between europe and the us. do you agree? >> no. >> i tend to differ. i mean, we're in election time. so even. >> though the weather is freezing, everything else is. >> heating up. it was an

important speech. i personally. >> didn't like. >> that. >> he did it on that situation at the munich security conference because. he here we were really into other difficulties. but on. >> the other. >> side. >> keep in mind germany. >> wouldn't be germany as it is postwar and reunification. germany if there. >> weren't our american. >> friends on. >> the other. >> side. >> we really have. >> to see. >> that there are a lot of differences. >> now, on. >> the question. >> of what? >> how do we consider free speech? how do we act. >> on political influence. >> of people. >> that have a. >> lot of money and. so on, but otherwise. >> it will. >> be an important. >> speech even in years. >> to come. when we look back at that. >> point. >> because this was not that kind of speech we normally had from american presidents, vice presidents, senators. >> or house members. >> do you think that he was perhaps playing to the crowd back home in the us versus the members of the munich security conference, or perhaps even to europe? >> i think it was both. it was on the one hand side, one of the

first real. international things that he was doing. so he had to show back home. hey. >> folks, see. >> i'm here in europe and. >> old europe. >> and see, i'm telling them that the danger is coming from within, that we have to. >> do argumentation. >> that we have to have free. >> speech. >> on the other side, of course there is. >> and i got american relatives living really in the heartland in iowa that do see that america. there is a tendency of tending away from europe. and that. >> shows. >> of. >> course, a lot of the problems we're going to have as the european continent. >> may we be in the. >> european union. >> or not? >> and that is what the issue really is about. >> well, to that point, regardless of what your take is on j.d. vance's speech, the eu repeatedly finds itself at the heart of the trump administration's grievances time and time again. what is at stake for germany at this juncture? >> well. >> the one. >> thing, of. >> course. is that.

>> that germany. still being. >> the largest country, being the. by far largest. economy on the european continent. of course, everybody. >> is focusing. >> on on the big brother in the game. the second one, of course, is there is a tendency in the united states that they think that the europeans don't solve their problems. and that is, of course, an issue that is of utmost importance for a. country as germany, that is depending on exporting their goods. and exporting their industrial production. and here. >> we. >> have a lot of problems. >> and it's not only germany, it's other countries too. so we do know within europe that things have to change, but the americans have the feeling that they are still the big brother in the background, who who comes to save whenever necessary. and that is where the conflict is. and that with the background of the ukraine, what i would really say war in the background. >> well, with the ukraine war in the background, there is so much

focus right now on defense spend. and friedrich has appeared to soften his stance somewhat on using joint debt to fund defense. this would obviously be a significant development for europe. a game changer i think many would describe it as given the latest critique from the us in munich. do you see germany pivoting and supporting joint debt issuance? >> well, we. >> have. to differ if it is about joint debt, and here we really have to go into a little bit of classic i'm a. lawyer by profession. >> if his if it is a. >> joint debt joint by several it is a problem. who is at the end paying. and that is the big problem with europe. if we have joint debt, where at the end germany is going to pay, it's not going. >> to work. >> if it is that we have to spend more on defense, it definitely right. i mean, we are coming from 1.5% gdp for defense going up to 2%, even with the last more left wing coalition where we were really going up, we had an extra budget of 100

billion for five years. that gave 20 billion every year. considering these points, defense spending is going up in germany and is going up in europe. but then on the other side, if you look on who is spending how much on ukraine, you can see a lot of differences. so i'm not quite sure whether this classic european, oh, you know, we just do joint debt, joint production, joined a climate fight everything then that's not going to work. it's always the question whether we do believe it's the single one that matters, the single member that matters, or it's just, you know, the whole bureaucracy that is going to solve problems. and let's be honest, and let's face it, the last 20 years have shown that too much bureaucracy doesn't lead to solving problems, but only to making the bureaucracy, well, bigger. and that is not what we have to do, considering defense. >> well, i suppose that puts even more pressure on the german government. as a single government, we are now less than a week away from the election,

and the expectation, the majority believe we will get a two party coalition. but the probability of a three party coalition has been rising in recent weeks. how do you see coalitions working in the future for germany? >> well, the one there's one problem that we do have. normally you have like two party coalitions where either you have the greens or the my party, the free democrats, being the smaller coalition partner of either the social democrats or or the conservatives, the christian democratic union. yet that is not working anymore, because the social democrats are down to around about 15%. and let's face it, even the leading conservative christian democrats are only at 30%. and then you need to have either a 20% coalition partner, or you have to have two coalition partners. we have to get adjusted to that. the last coalition, the so-called stoplight or traffic light coalition, didn't work at the end because when money was running out, you couldn't agree

on where to spend less. as politicians always have the problem. they agree on where to spend more, but can't agree on where to spend less. and i see the problem right now that and keep that in mind. here we come. here comes the classic german guy. considering our history different to other countries, it is very difficult for us to have a coalition with right wing parties as the alternative for deutschland, the afd. and because of that, that means that at the end, either a conservative is going with some left or green parties, or at least with one left or one social democratic party. and that always leads, of course, to the fact that there are no changes. and this is the real problem that we germans have. and last one, we yet haven't accepted that we are in a leadership role, a modern leadership role, of course, within germany or within europe. >> let me ask you about afd, and you just alluded to it here. but over the weekend, jd vance met with the co-leader of afd, alice weidel, on the sidelines of the

munich security conference. afd was not invited to participate, and he didn't sit down with olaff schulz, the current chancellor of germany. even if we don't see afd taking a role in a coalition government, which is the base case scenario, they will not enter the coalition. that's the expectation. how did the center, how does the center work with the fringes? their support for the afd is not going to go away just because they don't enter government. >> see, here. >> is the classic problem that we do have in germany. with all the dark years, we had 33 to 45. we thought with with fighting all that, with considering what our history is, we thought, you know, right wing parties getting closer to nazis will not never, ever come up. might be a problem for other european countries, but definitely not for germany. so that's not true because germany at the end are europeans have the same ideas, have the same what i would call

shortcuts, solutions for, you know, migration and problems. no migration, no problems. so we have to accept that. but here is the problem. the last 1015 years, whenever afd was getting a little bit stronger, we said, oh, you know, we have to push them away. we don't talk to them, we don't put them on podiums. we don't show that their argumentation is not working. it was like we even have that in parliament from some parties. speakers, starting with dear colleagues from the democratic parliamentary groups. and that, of course, is no answer. when you then want to say, i don't want to go into discussion with with the afd, this is the big problem. this didn't work in any european country. if there are a lot of people, for whatever reason, vote for a party like the afd. you have to get into discussions and not tell them you're stupid for voting that way. even if you can, if you think that that is right. >> sir, we'll have to leave the conversation there. really appreciate appreciate your

candid exchanges. otto, a member of the bundestag, fdp. let turn your attention now to the kremlin. we've got some fresh lines from russia that i think you want to hear. the kremlin is saying that it is encouraging that now everyone is discussing how to stop the war in ukraine. the europeans are now talking a lot about peacekeepers. on the meeting in saudi arabia, lavrov and ushakov are flying to riyadh on behalf of putin. so it sounds like putin will not be there himself. foreign minister lavrov and kremlin foreign policy adviser ushakov will have meeting on tuesday with the us delegation in saudi arabia, putting nato forces into ukrainian territory is a very difficult question. the aim of the saudi meeting is to restore of the whole of russian us relations. meeting with u.s. officials in saudi arabia will also be devoted to preparation of possible negotiations on a ukrainian settlement, on the possible involvement of wealth fund chief kirill dmitriev in saudi. no comment there. and

when asked if lifting sanctions is part of the meeting in saudi arabia, the contacts are on restoring relations and preparations for possible negotiations on ukraine. saudi arabia, as a meeting place suits both russia and the united states. so those are some fresh lines from the kremlin on the situation, on the war in ukraine and what to expect from that meeting between the us and russia in saudi. chinese president xi jinping has held a rare meeting with business leaders at a symposium in beijing. attendees included alibaba founder jack ma, alongside top names from huawei, xiaomi, byd and wuhan. arjun joins us now with more. arjun. it's the first time in a while we've heard jack ma's name floated in association with xi jinping. what's so significant about jack ma attending this symposium. >> with jack? ma almost. became this poster. >> child for a. >> chinese government. tightening on the. chinese tech sector. as well. as billionaire entrepreneurs in the country.

and so, jack ma, being. >> in. >> the same room with xi. >> jinping. >> xi jinping addressing sort of tech bosses. >> across china. >> as well, is very significant because it feels like there's a bit of a mood shift that the chinese government, central government is saying that actually, perhaps it might be a little bit more warming to some of these private. >> business. >> particularly in the tech sector as well. and that's something we haven't really heard since the crackdown began in late 2020. and if that. >> is true, if this. >> does hold, if there's significant changes in terms of policy, in terms of support for the tech sector, that could then signal reignition of growth for many of these. businesses who face challenges in certain. areas of their companies and the businesses they operate in. and so it's right now that the symbolism. >> is there. >> in terms of jack ma and these other entrepreneurs in the room with xi, whether there is follow through, now is the next question. >> it is amazing that, as you say, it's really just served as symbolism at this point. we don't actually have a lot of color on what was discussed at the symposium, but that symbolism was enough to drive public stocks higher listed

stocks rather. on friday, we saw a massive rally in hong kong listed chinese tech stocks. to what extent is that because or to what extent is that likely to translate to vcs getting involved again in the chinese tech sector? >> yeah, i think. >> you often. >> see the sort of public markets move, and then you may see a thawing in terms of the vc space. look, vc funding has fallen off the cliff in china over the last few years. and so we haven't seen the kind of level of new companies coming up that perhaps we may have seen in the past. look, china is incredibly innovative. there's a lot of a. >> lot of. >> interesting companies that are operating in china, and a lot of them have come out from startups into these big public companies, multi-billion dollar companies. we just haven't seen that over the past few years because. of the lack of funding. now, as we talk about innovations in ai and some of these other areas, they can be capex intensive. they are going to need support. but also that can't just come from the government. there needs to be that private sector investment from vcs. and i think the key

here is, and the next few months will tell, is whether there is support for these tech businesses, whether there is a reignition of growth in some of these publicly listed companies, such as alibaba and tencent. and we'll probably hear over the next couple quarters about what that trajectory looks like. does that then unlock funding for some of these smaller enterprises in china? you know, deep tech, for example, is sort of come out of nowhere, surprised many with the innovations they've been able to show. and so it's not like innovation is dead in china, but certainly it needs some funding. >> yeah. and investors need visibility. i mean, you were in china living through the days when we had beijing coming out with massive changes to the regulatory framework that would, you know, sometimes completely change the trajectory of some of these. >> games and. >> the uncertainty. >> created by some of these regulations overnight is really what hit the markets hard. and so some certainty and a warmer environment to private tech businesses will help markets no doubt. >> raj, thanks for breaking it down for us coming up on the show. fast fashion giant sheen is reportedly under pressure to

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>> jim cramer is an excellent teacher. i don't have the time to do this full time for the value that we get. the investment, that was very much worth it. >> join the club. new member save with a special offer for a limited time at cnbc.com. join jim. terms and restrictions apply. >> welcome back to street signs. fast fashion e-commerce giant sheen is reportedly under pressure to cut its valuation to about $30 billion. that's according to bloomberg, citing people familiar with the matter. the chinese firm's shareholders are reportedly suggesting that an adjustment is needed if sheen wants to get its london listed london listing over the line. cnbc has reached out to sheen for comment. let me welcome dexter tillion to the program lead analyst for technology and telecoms at the economist intelligence unit. dexter, with regards to the tech sector, there's so many considerations now, and i think one of the most important factors to consider here when it comes to investing

in tech is how to navigate the geopolitical landscape. with president trump really firing on all cylinders here. he has made very clear that he doesn't like the chips act. talk to us about what he could do differently in the chips space. if he doesn't like the chips act and what kind of risks this poses to the semiconductor players. >> so what trump doesn't. >> like is that he doesn't like that the us is subsidizing foreign players to come in, manufacture their chips in the us like of tsmc and the like of samsung. >> he doesn't like that. and he. >> feels that the asian players have kind of stolen, quote unquote, us businesses. >> so he doesn't. >> want to give the subsidies. but those companies that have come to the us, the tsmc in arizona, the samsung in texas. >> they do. >> need these. >> subsidies in order to. >> build their factories there. the issue that he doesn't. >> like that. >> is also said that he might put some tariffs for semiconductors. >> we've seen all the big tech. companies reporting. >> the results recently, and they've said they're going to spend. >> an awful lot on capex over.

>> 300 billion across the big four. >> a lot of that. >> will be on chips. >> a lot. >> of that will be on nvidia. nvidia needs tsmc to build the chips that it designs. without tsmc. you've got a problem. >> in terms. >> of building those chips and therefore. >> building those data centers. >> and kind. >> of making those. >> kind of ai. those are things happening in the us. so what can he do? it's very difficult because tsmc is quite. >> doesn't have a monopoly. >> but is a key player. >> in that market. you don't have the. >> smc. >> you. >> can't build. you can't. >> you can't build those. >> data centers, then. >> it doesn't. >> impact on ai. so what can he do? >> it definitely. >> wants that thing to come back to the us. it definitely will. probably wants. intel to have a much bigger. >> role, but it's very, very complicated. tsmc has a big lead. it still does a. >> lot in taiwan. >> it will continue to do a lot in. >> taiwan for many. >> many different reasons. >> it can't do everything in. >> the us. so it's very. >> difficult for donald trump or anybody else to basically say. >> you know, we're not going to. >> pay you to come to the us. you still have to come into the us, although we're. >> going to. put very high

tariffs on. >> you know, you're. >> talking about the. >> latest nvidia chips, the $30,000. >> a piece. >> if you put. >> 200 tariffs. >> on that, that's $60,000. >> big tech. companies are. >> cash rich. >> but that's still a lot of money. you already planning to spend over 300 billion. we're talking. half a trillion potentially because of tariffs. so that's a big issue. >> you're in a pretty good position if you're tsmc not having a monopoly. but clearly a dominant essential player. what do trump's tariffs mean for the key tech players from a supply chain perspective. the ones that he's already floated. have we seen tech companies already try to pivot their supply chains away from china, for example, to try to get ahead of any further, further tariffs that may come into effect? >> they've been trying to do that since trump run, really, you know. >> in covid as well. they've been trying to kind of diversify a bit. but china is still a key player and a key manufacturer. so we've seen for instance apple making stuff in india and stuff in vietnam. >> those countries could also. >> be targeted with tariffs. trump has talked about

reciprocal. tariffs over the weekend. so that might happen there maybe less than china. >> but china is still a key element. >> in terms in terms. >> of, you know. >> apple, the. >> iphone smartphone. >> every other company that builds smartphone will build in china. even if they come to the us. >> that's not an issue. that's less of an issue. >> it's just going to be a higher price. >> for the us consumer. >> so that's the issue. >> is. >> more. >> on the us. >> consumer than on the us companies so far. i think you talk about. >> shin earlier, shin and. >> temu are big buyers of advertising. digital advertising from facebook and google. if there is. >> tariffs. >> you know, the de minimis rule. and if you think they might spend less on advertising, that might impact those two companies, which does quite a lot. but i do think that semiconductors is. >> really the one thing i'm. >> looking at in terms of obviously it. depends on the amount, it depends. >> on the level. >> if you. put higher level on china, that will have a bigger impact. but i'm really looking at semiconductors because ai is very important for everyone. >> everybody is. >> announcing an awful lot of spending, not just the. >> us target. >> but we see last week france

with 1 billion plus, the eu with 200 billion plus. >> huge focus for. >> a lot in there. so if the us companies are to disadvantage. >> right. >> the issue might. >> might happen there. >> in terms of europe's response, we had a guest on squawk box earlier saying that the obvious next step from europe, if we do see the us push through these reciprocal tariffs, is for europe to target big tech in the us. do you see that happening? >> it's difficult geopolitically. >> so the eu. >> has. >> got new rules. >> the digital markets act digital services act, which kind of allows the european commission to put very high fines, up to 10% of turnover for the digital markets at up to 6% for the digital services. so potentially that's kind of a lot of money. can you do that with trump in a white house without kind of any response from the us administration? i don't believe so. there's been some reports that the european european commission is looking potentially to break up certain company, but is waiting to see what the us does, especially in terms of google. that's going to be interesting as well, what the

us does itself, because there's some people in the us who believe still believe. >> that. >> antitrust is a big issue. and we'll see what happens with google. i think that's going to be a clear case. but the eu, they can do fine. but it's basically it's an escalation. yeah. it's you know it's not going to. >> be a major escalation. well dexter, that's all we have time for. thank you for coming into the studio chatting to us. dexter killian, lead analyst for technology and telecoms, economist intelligence unit. well, thank you so much for watching street signs as we try to make sense of developments over the weekend out of the munich security conference. that is it for today's show. i'm julianna tatelbaum do stay with cnbc. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our

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