that's all for this edition of "dateline." i'm andrea canning. thank you for watching. >> good morning, and welcome. >> to. >> street signs. i'm julianna tatelbaum. and these are your headlines. european auto makers slide as president trump looks to escalate his trade war, promising additional 25% tariffs on imports of cars, drugs and chips. european defense stocks line up a third straight day of gains, after the us and russia pledged to strengthen cooperation. and trump pushes back on ukrainian calls for a role in the talks. >> i hear. >> that, you know, they're upset

about not having a seat. well, they've had a seat for three. years and a long time before that this could have been settled very easily. >> uk assets shrug off a hot. >> cpi print coming in at 3%, the highest in almost a year, and. >> philips falls to the bottom of. >> the stoxx 600 after quarterly sales grow less than expected, driven by a double digit slide in china, ceo roy jacobs tells cnbc the company is prepared to respond to trade tensions. >> we have. >> been reducing. >> the export from china to the us significantly, so we have that included in the. >> guidance now. >> it's hard to speculate. >> what will be coming. >> beyond that, but what i can say is. >> we are very. >> adaptive and agile in seeing when it. >> will happen. how can we. >> react to that? >> well, another day, another tariff headline. u.s. president donald trump has said he intends to impose. further tariffs of around 25% on imports of cars,

pharmaceuticals and semiconductors. speaking to. >> reporters. >> trump said. >> he would make an official. >> announcement and. >> provide more. >> details on april 2nd. trump also said he is. >> weighing the. >> possibility of further tariff. increases on chips. >> and pharmaceutical. >> products over the. course of the year. >> now, this fresh. >> round of levies comes. >> in addition to separate. >> measures targeting. >> china steel. >> and aluminum and broad global. reciprocal tariffs that were announced last week. >> let's get a check. >> on how some of these key sectors are trading this morning. you are seeing a bit. >> of a. >> pullback in german autos. you've got volkswagen down about 1% this morning. porsche also down by about 1.25%. but no major moves to the downside there. so i would say fairly modest reaction at this stage in terms of the chip sector. here's a look at the tariff exposed names. we are seeing a little bit of positive momentum behind these. infineon shares up about 1% stmicro trading higher by about 6% this morning. meanwhile, us. >> and. >> russian diplomats agreed to

establish a new diplomatic. channel and lay the groundwork . >> quote. convinced that russia would. >> engage in a serious process to end. >> the. >> war, while russian foreign minister sergey lavrov said moscow would not accept the presence of peacekeeping troops. from nato countries in ukraine. russian state media has cited the kremlin saying a meeting between putin and trump may happen this month, a timeline trump described as probable. yesterday, president trump was critical of ukraine's president zelensky in a mar a lago press conference, saying it has been a long time since elections were held in the country and appearing to accuse ukraine's leadership of being responsible for the war beginning. >> i have. >> the power to. >> end this war and i think it's going very well. but today i heard, oh, well, we weren't invited. well, you've been there for three years. you should have ended it three years. you should have never started it. you could have made a deal. i could have made a deal for ukraine. that

would have given them almost all of the land, everything, almost all of the land. and no people would have been killed and no city would have been demolished, and not. >> one dome. >> would have been knocked down. but they chose not to do it that way. >> and dan joins us now. he's been tracking all of the developments around this story. dan, there was already fierce swirling in europe that president trump was looking to end the war in ukraine on russia's terms. and these latest comments from mar a lago certainly don't don't don't suggest anything else. trump now signaling that there. >> should be elections. >> in ukraine. the optics don't look good here for ukraine. >> that's exactly right. >> and trump's. >> call for fresh. >> elections in. >> ukraine. certainly. >> raising the. >> alarm bell in kyiv and in the european. >> capitals as well. also, giuliana, as you flagged reporting only in the last. hour here from russian news. >> sources saying. >> that president vladimir putin. >> and.

>> us president donald trump. >> could meet. >> as early as this month. that's according to the kremlin spokesman. dmitry peskov. >> speaking to. >> those russian news agencies. peskov also. saying that these. us russia talks in riyadh were an important step towards reaching a settlement on the war. but he also said that as a first step, the moscow-washington relationship had to be re-animated before it could be restored. and that, of course, came after we. saw the trump administration opening these direct talks with moscow to try and end the war in ukraine. of course, without kyiv or any of those european leaders at the table, we're told that this first round of discussions in riyadh lasted around 4.5 hours, with the us and russia essentially agreeing here to establish diplomatic teams and channels for next steps. now, this has been described to me as a good start to talks, but make no mistake, it's going to be a long and difficult process here. even if trump and putin did meet before the end of this month,

it's unclear when and where and exactly what they would have to announce at this stage. so we're keeping all of that in the back of our mind as we watch these headlines develop. but for its part, of course, ukraine is really standing firm here. zelensky canceled his own trip to saudi arabia and says ukraine will not accept any deal that's imposed on it without its consent. and european allies, of course, echoed that sentiment as well. both parties looking pretty bruised here, i guess you could say, after trump called for those fresh elections in ukraine and europe was also sidelined for at least this part of the negotiation. >> dan, i think bruised is probably the perfect word choice there. really appreciate you bringing us up to speed with the latest. turning to the markets, we are seeing more demand for the defense names in europe this morning. on the expectation that we will see more defense spending. you've got ryan mittal up a further 2%, leonardo up more than 3%, rank up another 2.5%. that stock has done

extremely well in the last week, up to the tune of about 30%. bae systems also in focus today from an earnings perspective. this time, the company reported a record order backlog of 77.8 billion pounds in 2020 for the uk. defense firm says it's seen strong demand for its combat vehicles and fighter jets. the group says it remains confident for the year ahead, with full year underlying earnings rising 14% meeting analysts forecast the stock, though under some pressure this morning, down about 2.9%. we are seeing some interesting movement in yields. i want to take your attention to bonds across europe. you've got yields higher across the board. and it seems to be as investors anticipate more borrowing to fund this higher defense spending. so tying right into developments in the geopolitical space. as for wider equity markets, here's the picture for europe this morning. we're really teetering around the flat line european equities treading water after gaining further ground. yesterday we saw the stoxx 600 gain about 3/10 of a percent in yesterday's session, the main benchmark hitting a fresh all time high. so european

equities continue to perform well despite all of the uncertainty around what happens next with ukraine, with defense spending and of course, with the trade war. as for individual bourses, here's where we stand right now. you've got the ftse 100 down 3/10 of a percent. the xetra dax is trading higher this morning. cac40 under a little bit of selling pressure over in italy. we've got some green on the board now looking at the uk and a little bit more detail. we got some fresh macro data to digest. inflation in the country accelerated to its highest level in ten months in january. the headline figure of 3% was higher than forecast, and well above the recent low of 1.7% in september, according to the ons. transport, food and nonalcoholic beverages were the heaviest contributors to the upward reading, while housing and household services both declined. the hotter than expected headline print was offset by a slightly lower than predicted services reading. but with us to digest the latest inflation data in all things uk is james smith, developed markets economist from ing jame.

good morning. >> good morning. >> so looking through this inflation data this morning the headline is clearly going to be somewhat difficult for the bank of england. inflation accelerating to the highest level in ten months. when you look under the hood i'm curious how concerned you think we should be. what's driven inflation higher this time around? food and drinks. airfare is not dropping as much as seasonally expected. and then you've got higher school costs. with the new vat rules coming into effect for private schools. so with all that detail, what do you make of the 3% number? >> i think that's exactly it. >> all the things you just listed are things the bank of england doesn't really care about. right. you know, airfares. i think everybody anticipated this pickup in services inflation. there's something very strange going on with airfares around christmas. again, not something the bank of england is focused on, neither the private school fees, neither food. food was, you know, really shot higher in january. not really clear why that was. strip all of that out. i think the story is getting better. so we talk about core services inflation where you take out the noisy stuff, maybe take out rents as well. rent rental

growth has been pretty intense in the uk. again, the bank of england is not so focused on that. the news is getting better. that sort of core services view is coming down slowly. >> is that the right take from the bank of england not to be so concerned about rents? >> i think so, i mean, i suppose the question they ask is, does it tell us something about the underlying health of the economy? i think why rental growth has been so strong. it tells us more about structural shifts in the rental market, fewer landlords, you know, covid clearly created a lot of distortions. so i think, you know, does it tell us what's going to happen to, you know, things like wages, the labor market, all of that sort of stuff, maybe not. >> well, so on that note, wage growth did accelerate at the end of last year. employment figures were positively revised in december. but on the other hand, if you look at pmi, the indication is that we're going to see employers cut back on employees as they prepare for budget tax increases in april. so putting all of that together, what do you think of the health of the labor market. because

that is important to the bank of england. >> yeah, this is the major uncertainty right now. we had catherine mann, the bank of england official, two weeks ago, voting for that 50 basis point rate cut, talking about nonlinear falls in employment. i don't think we're there yet. if you look at the jobs, jobs numbers yesterday, as you said, the sort of payroll based numbers weren't so bad. vacancies, though, are well below pre-covid levels in key sectors like hospitality. you know, that should be dragging wage growth lower. i think it's still a bit of an unknown where we land in april after those tax hikes. the pmis, as you say, are bad, but redundancies are still pretty low. it's a puzzle okay. >> it's a puzzle a tricky one for the bank of england. and what did you make of the growth numbers that surprised positively we had gdp actually tick higher. but sounds like bayley's been trying to play that down. and clearly gdp is somewhat backward looking. >> yeah. and it wasn't great right. you know point 1% growth. yes. it was better than everybody expected. but it was still weaker than everybody had expected just 2 or 3 months earlier. i think we're still looking at better growth numbers this year, just by virtue of the fact the government is going to spend so much money. yes, we're getting the tax hikes coming

through, but the spending increases are much bigger. so whichever way you cut it, that will lift growth this year, with the major caveat of the jobs market, what happens there is going to be key. >> let's talk about the spending picture. keir starmer came out earlier this week pledging to put uk or british troops on the ground in ukraine spend more from a defense perspective, if they can get a backstop from the us and we can put aside what he's trying to achieve from a geopolitical strategic perspective. but just in terms of the fiscal picture in the uk, the fiscal picture is already extremely tight. does the uk actually have the financial firepower to deliver on those promises? >> i think taxes are going to have to go up again, probably not in the spring statement. you know, the big story there is that the chancellor's fiscal headroom, you know, the money left over under the fiscal rules. that's all gone because market rates are higher. now, that's actually not too easy, not too difficult to recover. you can kind of play around with the future spending assumptions and make the numbers add up. but nevertheless, you know, the true picture is it's pretty

challenging for the chancellor. i think as we get into the autumn, you know, defense is one thing. public sector spending more generally is probably going to have to go up again after this next fiscal year. i think the only way you square that circle is higher taxes. >> how do they get away with that? from a political perspective? >> i think very difficult, right. particularly given that labor has said they're not going to raise, you know, the key taxes, income tax, national insurance and employees. clearly, the national insurance hike on employers is being quite painful. but, you know, if you circle back actually social security or national insurance for employees is actually still quite a lot lower than the rest of europe. i think that could actually happen again if it's not a complete disaster in april. >> that's a difficult sell for a labor government. so the spring statement in march is just around the corner. what are you expecting from that statement? it sounds like a lot of these measures that you're talking about will actually come a little bit later down the line. >> yeah, i think it's probably kicking the can. you know, i think the government needs to do some changes either. i mean to get that headroom back, either you lift taxes or you cut spending. but actually the uk's fiscal rule, it's all about what happens in five years time. so

what we've seen successive chancellors do over time is you play around with the spending assumptions in future years and you get that headroom back. i think that's what the chancellor will try to go for. the challenge, of course, is markets are still sensitive. we saw in january that gilts were the weak link in the global bond sell off. do we get that nervousness coming back again. you know the deficit next year is probably still around 4%. the gilt borrowing limit 300 billion this year, 300 billion in the next fiscal year. you know these are big numbers for markets to digest. >> and lastly on energy prices have come off in natural gas in recent weeks. to what extent could that be a tailwind for the uk economy? >> i think it's a good news story. i mean, obviously that's what's really pushing up headline inflation. this year. we're at 3% now. we could get to 3.5% later this year. some of that is energy. there's other stuff going on like water bills. i mean obviously if natural gas prices, you know, halt some of that, that's only good news. but, you know, it's not like two years ago where, you know, the big surges we were seeing was really weighing on the consumer. you know, i think it's not the same story now. >> all right. well, a tricky a

tricky puzzle, as you said, james, thank you for digesting it with us. james smith developed markets economist from img. coming up on the program hsbc reports results as new ceo george hendry pushes ahead with his overhaul. we'll discuss more after this break. >> i. >> just cleaned my entire house for $19. seriously. $19. they showed up right on time and did my dishes, my laundry. they even cleaned my windows. you just pick a date, pick a cleaner, and enjoy a spotless house for $19. i love using home aglow and i think you will too. >> i can. >> feel the. >> winds of change. >> some people like doing. >> things the hard way. >> like doing. >> their finances.

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apple app store, android, and. >> com 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 members save with a special offer for a limited time at cnbc.com. terms and restrictions apply. >> welcome back to street signs. hsbc says it will incur $1.8 billion in charges over the next two years, amid a sweeping overhaul by new ceo george lirr. the bank announced a further $2 billion buyback, bringing shareholder returns for the year up to nearly $27 billion after reporting annual profit above expectations. the stock is trading modestly higher this morning, but you can see over the last year it's traveled north of about to the tune of about 41%. emily filed this

report. >> the first. >> full year. >> report card. >> from hsbc's new ceo. george al-haidari, in what. >> he calls a. >> strong performance. >> in. >> 2024. provides firm. >> financial foundations to. >> build for the future. >> in his five months at the job. >> he has simplified operations into four. >> businesses, making a simpler. >> and more. dynamic organization. full year pretax. profit rising 6% to $32.3. >> billion, which. >> included a. $4.8 billion. >> gain from. >> the disposal. >> of its banking business in canada, while also exiting its business. >> in argentina. >> revenue coming. in flat at $65.9 billion. net interest income falling by 3.1 billion. net interest margin of 1.56%. that's a decline of ten. >> basis points. >> the bank's expected credit impairment charges stable. >> at. >> $3.4 billion. the bank declaring a fourth interim dividend of $0.36 per share. >> and a $2. >> billion share buyback plan to be. completed in the first quarter. hsbc is aiming for cost

reductions of $300 million this year, and an annualized reduction of 1.5 billion in cost base by the end of 2026. it is also. >> targeting mid-teens return on. >> average tangible equity. for each of the three years to 2027. the bank is noting that the global economic outlook remains uncertain, with downside risks from. trade frictions and supply chain disruptions. while interest rates are expected to remain volatile and uncertain in the near term, hsbc is marking its 160th anniversary this year and says the objective at the bank is to facilitate local and international trade connecting east and west, and is as relevant today as it was in 1865. reporting from hong kong, i'm emily tan. >> here's a check for you on the broader banking space. you've got hsbc trading modestly higher, as you saw. deutsche bank, unicredit, commerzbank all trading in the green this morning. alex potter joins me now investment director for european equities at aberdeen. alex thanks for joining us this

morning. i'm keen to get your take on hsbc's update to the market this morning. it seems like more than the numbers. this is all about the strategy. with the first full year results delivered by the new ceo. >> yeah. >> you're exactly right there, julianna. i mean, we can't look past the numbers entirely. i think they were pretty solid this morning. you've got some good revenue momentum starting to show from hsbc's wealth businesses. and the investment bank, as we've seen from lots of the peer group that have reported already, did pretty well. but you're right. it's all about the strategy here. expectations were pretty high. coming into these results, which is, i think, why the share price reaction this morning is a little more modest, i think as you as you just put it there. people were looking for cost savings numbers maybe a little bit higher than expected. but in fairness, the new ceo has said that returns over the coming three years are going to be in the mid-teens, which is at least 1 or 2 percentage points higher than where market expectations are right now. so i think it's generally a pretty solid story, and i'd describe it as

positively incremental. >> well, it certainly is positive when you look at it in terms of what they're hoping to achieve. but execution is another story. and we've heard we had heard from noel quinn, the previous ceo, that he also intended to cut staff and make some major efficiency gains that way. but he wasn't able to cut as many staff as as hoped. why has it been so difficult for hsbc in the past? >> well. >> i think hsbc has got sort of twin problems. firstly, is the sort of nice to have, which is size. it is a very large global bank and it's a little bit like turning a big ship. these things are difficult to do with any degree of speed. and the other problem is, which is also in a sense nice to have in that business, momentum has actually been a little more positive than maybe we expected at the start of noel quinn's tenure. you've had pretty good investment banking revenues all the way through 2024. and so far this year, you've also had more positive wealth performances as us interest rates have gone up quite a bit over the last couple

of years. so i think in general, noel's strategy was was incremental to i think this is another step on a very similar road. and in a sense those expectations were pretty high running into today. and that's probably why there isn't a bigger positive share price reaction. >> it's interesting, alex, that you highlight investment banking revenues being a source of positive momentum and making it easier to, you know, perhaps push through these other strategic efficiency measures because hsbc is looking to downsize and pull back some of its ib activities in in the lead up to today's results. they already made moves to scale back m&a equity underwriting in new york. does it make sense to be scaling back, especially in the us, at a time when the trump administration has come in and is expected to create a much more bank friendly environment via deregulation? >> you know, i think it does. and hsbc has slightly suffered in investment banking world from being slightly incapable of making its mind up over the last

couple of decades. much as, as you correctly pointed out, us investment banking is a good place to be right now. hsbc was simply never quite big enough to compete toe to toe with the us majors, and it's always been a sort of case of you either need to bulk up and invest very significantly, and i don't think they've got the appetite to do that relative to where they can possibly invest with greater returns in asia or get out of parts of the business. and they're choosing the latter of those two things at the moment. what it does give them the optionality to do is recycle more into asia, where they are very definitely at the top table of investment banking. and if anything, that's a that's a market where i think that might be the next leg of sort of long term secular growth. >> are you concerned at all about trade tensions between asia and the us? if we are going to see hsbc bulk up their operations there. >> i am i mean, geopolitics are very tricky for any of the large global banks at the moment, be it jp morgan, citigroup or hsbc.

hsbc sort of famously had this three legs of a stool strategy. a few years back, which is a big leg in the us, a leg in asia and one here in europe. it is increasingly difficult, i think, as trump becomes increasingly isolationist, to really follow that route. the thing i'm sort of slightly hoping happens again is that trump had a lot of anti-china rhetoric in his last administration, but didn't actually do that much that damaged sort of east west trade flows. if it is, again, going to be a case of more words than action, then i think hsbc remains in a pretty good place. but i mean, geopolitics are challenges for all of these businesses. and in fact, i've just heard the ceo on the conference call a few moments ago saying trade flows east to west are becoming increasingly fragmented. so it might not be the goods and services are going from point a to point b, but they're moving around. now. perhaps that is to make things appear slightly more friendly from a trump administration's perspective. either way, if you are one of the sort of top

three, go to global trade finance companies, which hsbc certainly is, that probably actually long term benefits you. >> it's really interesting that you're already seeing that the change in flows before any of these, before a lot of anyway, a lot of the measures that the trump administration has touted actually come to fruition and materialize. alex, what about the share buyback? we've got $2 billion announced today. how does that stack up with what you were expecting? and does that figure make sense when it comes to their capital allocation strategy, given all of the strategic changes that are underway? >> it does. well, it looks like sort of basel four as it sort of slightly colloquially named the new set of banking rules that were going to come in are now being pushed out very significantly. there is a chance that with the us deregulatory agenda, they may be thrown in the bin altogether, in which case hsbc is really well capitalized. it does. it is a huge cash flow generator that

that share buyback over the last year was closer to 3 billion than 2 billion. so some may be a little disappointed. that's been downsized slightly, but all they've said is that it's going to be a 2 billion run rate for the beginning of 2025. so it certainly gives them lots of optionality to either raise the dividend or increase that share buyback. once we get sort of further through this year, and we get a greater degree of clarity around exactly what the us administration is going to try to do about china. >> and finally, alex aberdeen is a top 30 investor in hsbc. how do you think hsbc stacks up relative to the other banking plays here? from an investment perspective? >> well, i mean, we like hsbc on the basis of its dividend. it gives us good cash flow each year. the yield on the equity is sort of roughly 6%. so that remains incredibly well underpinned. so for us it's going to remain one of our core banking holdings. all i've seen this morning is the strategy that, as i said, was positively incremental. new ceo doesn't seem to be trying to do anything

staggeringly different, which can obviously introduce degrees of risk into your portfolio. so i think at the moment we remain pretty happy where we are. >> all right, alex, i appreciate you joining us. alex potter, investment director for european equities at aberdeen. phillips has reported fourth quarter sales of ■k75 billion, slightly weaker than expected. the company is targeting comparable sales growth of between 1 and 3% this year, but flagged persistent weakness in china. phillips ceo roy jacobs told cnbc the firm has been investing in artificial intelligence. >> the healthcare. >> will be at the. >> forefront of. >> adapting ai to really. >> help delivery of care. >> because it's. >> really an urgent need. >> i've spoken. >> before about the crisis. >> in healthcare. >> there's huge. >> shortages, shortages in staff. >> we also. >> see the pressure. >> for sure increasing. >> from a cost perspective. >> so we need to. >> rethink how we can. >> do it different. >> and with the latest. >> technology of ai. >> you can. >> do that. i gave you just an example in how we do that. in imaging. >> we have. >> the same in monitoring where we really use ai to be much. >> more predictive.

>> so we can be ahead. >> of. >> a. >> stroke or a heart. >> attack and therefore minimize. >> the impact. >> for the. patient and the cost to. >> the system. >> you also see. >> actually where traditionally healthcare was maybe a bit slow in some of. the adoptions of innovation. >> in ai is actually leading the adoption. >> and in many products. >> in all products of philips. actually, we have ai. >> and many. actually have already immediate impact. >> and are used today to save. >> time. >> for nurses, for doctors, and therefore. >> deliver better. >> care to. >> to. >> the people we serve. >> former top open ai executive mira moratti has launched her long awaited rival ai startup open. ai's former chief technology officer announced her new company, thinking machines lab, overnight, focusing on making the technology more accessible and customizable. moratti has poached several senior staff, including a co-founder and vice president. social media giant x is reportedly in talks to raise capital at a $44 billion valuation, the same price elon musk bought the company for in 2022. that's according to

bloomberg, which says talks are ongoing and that the details could change. the potential funding round would be the first known round since musk took the company. private pokemon go maker niantic is reportedly in talks to sell its video game business to saudi owned firm scopely for around $3.5 billion. that's according to bloomberg. the deal could reportedly be announced in the coming weeks, with the agreement set to include the pokemon title and other mobile games. both niantic and scopely owner savage games told cnbc they do not comment on rumors or speculation. still ahead on the program, german investor sentiment ticks up as markets eye potential new economic management. we'll be right back. >> they are trying. >> to shut down this legal loophole to get 100mg generic viagra, or 20mg generic cialis, delivered to your door for just

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>> these are your headlines. >> european automakers. >> slide as. >> president trump looks to escalate his trade war, promising additional 25% tariffs on imports of cars, drugs and chips. european defense stocks lined up a third straight day of gains after the u.s. and russia pledged to strengthen cooperation. and trump pushes back on ukrainian calls for a role in the talks. >> i hear that, you know, there's upset about not having a seat. well, they've had a seat for three years and a long time before that. this could have been settled very easily. >> uk assets shrug off a hot cpi print coming in at 3%, the highest in almost a year, and philips falls to the bottom of the stoxx 600 after quarterly sales grow less than expected, driven by a double digit slide in china, ceo roy jacobs tells cnbc the company is prepared to respond to trade tensions. >> we have. >> been reducing the export from. china to. >> the us significantly. >> so we have that included in the guidance now. it's hard. >> to speculate. >> what will be. >> coming beyond that. but what

i can say is. >> we are very. >> adaptive and agile in seeing when it will happen. >> how can we. >> react to that? >> let's get you a check on european equity markets this morning. investors seem to be searching for direction, shrugging off the latest chatter out of the washington administration around tariffs, with trump saying he would likely impose 25% tariffs on autos, semiconductors and pharmaceutical imports. also shrugging off ongoing tensions around ukraine and what is likely to come next in its conflict with russia. so the main benchmark essentially flat on the day in terms of the regions this morning, what the split looks like, you have got a little bit of red on the board for the french market. the cac40, down a quarter of a percent ftse 100 also trading lower, while the xetra dax continues to gain. it's been an extraordinary performer this year. the ftse in italy also doing well this morning, up about 7/10 of a percent. by a sector perspective. here are the outperformers in europe you've

got utilities probably the most defensive sector of the bunch up about 1%. oil and gas also holding up well up 7/10 of a percent. telcos and technology on the downside the sector laggards. this morning you have got at the bottom of the board basic resources down more than 1%. travel and leisure also taking a hit this morning down 9/10 of a percent. construction and retail round out the bottom of the market over in the us. us futures are looking positive. the dow jones looking to add about 30 points at the open. the nasdaq similar and the s&p 500 looking to open about five points higher at this stage. yesterday we saw modest gains on wall street energy led the market yesterday. communication services was the laggard. we've got us housing starts to look forward to building permits for january. and the fomc minutes from january to look out for stateside. now back here in europe french president emmanuel macron says he will hold fresh talks to discuss ukraine and european security today. foreign ministers from france, germany, italy and the uk were briefed by

secretary of state rubio about the us russia talks with the state department, saying the group would remain in close contact. french foreign minister manuel barroso confirmed he spoke to his us counterpart rubio, adding that the american official told him that the us was looking to forge a sustainable peace deal in ukraine. well, let's discuss with holger schmieding, chief economist from berenberg. holger, help us make sense of all these headlines and conversations swirling around ukraine here. are we actually getting any closer to a de-escalation of the conflict? clearly, you've got european leaders working to figure out how much more support they can offer to ukraine. on the other hand, you've got russia coming out in the last 24 hours, reiterating that they want to achieve their goals in ukraine and that their most important main thing is for russia to achieve their goals in ukraine. it doesn't seem like these two things are working together here. >> yeah, absolutely. so far the various positions are not yet

compatible. and what we have to say is that recent events have strengthened the hand of putin because the us, in a way, has given three bargaining chips sort of away. namely, the us has said that ukraine has to cede territory. that is not a big surprise, but this is something which should be, if any, if at all, at the end of negotiations, not at the start. the us has sort of ruled out immediate nato membership for ukraine, and now trump seems ready to award putin one big prize, namely, to have an in-person meeting between the two. that is to rehabilitate putin on the global stage without putin making or suggesting any concessions yet. so, so far, this from a european or ukrainian side is not going exactly in the right direction. >> and you've got in the last 12 hours or so, president trump suggesting that ukraine should be holding elections. that's also a pretty difficult optic for ukraine. >> that is certainly difficult.

ukraine is at war. of course, elections in ukraine will have to be held after the war, but to elections while the war is still raging, while there is no settlement yet would be, say, a serious upset. and in addition, that is not really anything for trump to say. if there is a place in europe where we really should have free elections, it would be russia, not ukraine, which has a legitimately elected president, which has a parliament that, forced by russia, has declared martial law. and during martial law, elections are not that easy. so again, this is not going the right way from a european perspective. having said that, the advisers around trump, including the foreign minister and others, probably have a bit of a cooler head. so it is still quite possible that the advisers around trump will see to it that the actual negotiations, the outcome is acceptable. but the way trump has started is not very encouraging, to put it

mildly. >> holger, how do you see this whole troops on the ground playing situation playing out at the start of the week in paris, european leaders seemed really focused on this question of whether they'd be willing to send troops on the ground. olaf schultz said this is not the conversation to be having right now. and then you've got russia coming out saying that they are categorically opposed to european troops deploying to ukraine. so are the europeans just totally off base, focusing their efforts on troops at this point? >> well. >> if this is indeed. >> not the key issue at the moment. having said that, if there is an armistice, it would have to be policed, as trump has ruled out directly having us troops on the ground, european troops would be the ones as to whether it's the right moment for it to discuss that, well, it's always good to make plans for that, and it would be good to tell the us and russia that europe would be ready for such a role. as to the german part in it. ask us, please, the day

after the election, not just a few days ahead of the election, as this is, of course, a hot topic, i am fairly confident that in the end, europe would be willing and hopefully able to field troops to police an armistice in the in ukraine. but to do that effectively, to really deter russia from any future attack would probably mean that the us would have to promise to back up these european troops in case russia were to breach the deal. if there is a deal and were to attack ukraine again. >> should we even be considering a scenario where the us says europe, you're on your own, you've got to defend yourself. now, we're not going to be there with a backstop. >> well. >> we have to consider this scenario. i hope that cooler heads prevail in the us, that the us sees that, for instance, in its long strategic competition with china, it would be good to have europe as an ally. after all, we are the

second biggest market in the world. and so i hope cooler heads prevail in washington. but at the moment, the direct signals from trump are not encouraging. having said that, remember there once was a bromance, a real romance between trump and another brutal autocrat that is the fat guy from north korea. and that did not end with a deal. so it is still possible that trump and putin do not find sort of a solution that is simply the kind of give away to putin. but it's still quite possible that trump listens to his better advisers and drives a hard bargain with putin to get an outcome for ukraine that is acceptable to ukraine, the victim of this aggression. >> so let's go down that path. if the war does end with an outcome that is acceptable to ukraine, what does it mean for relations between europe and russia? do we see a lifting of sanctions? do we see europe

resuming the purchase of natural gas from russia. >> a lifting of sanctions, or at least a partial lifting of sanctions, could be part of the deal? in a way, i hope not, because any lifting of sanctions will, of course, mean that over time, russia would have more resources, more earnings, again to rebuild its military machine and thus pose a threat to europe as to imports from russia. it in case of a deal once again, in case of a deal, it would probably mean that ukraine can decide whether it resumes the transit of gas through ukrainian territory to europe. if ukraine gets the revenues from that, the transit fees, that would be good. i do not expect germany to really want to reopen the nord stream pipeline, unless poland and the baltic country countries were to say yes to that. i think that at least much of the political german mainstream has learned the lesson that when it

comes to these touchy relations with russia, to dependency on russia, we should not overrule objections from our eastern neighbors, poland and the baltic countries. >> i just want to flag to viewers that we're getting some live images of the minister of foreign affairs for russia, sergey lavrov, speaking to russian parliament right now in moscow. he is talking about the priorities of russian foreign policy. we'll keep an eye out for any key headlines, but just want to make you aware that he is speaking this morning. holger, we have seen natural gas prices come down by about 20% in the last week or so as the prospects of a peace agreement become a little bit more positive, or at least something that we are considering here. how big of a tailwind could it be for the european economy? if we do see natural gas prices continue to fall? >> well, this erases a bit the rise in natural gas prices, which we had seen in the month before. so far, this is not yet a fall significant enough to

have a major impact on the european economy. of course, everything helps. as i said, i do not expect nord stream to be reopened, so i do not expect gas prices to return to where they were well before putin started to plan his brutal attack on ukraine. but yes, some relief on the energy side would of course, be modestly good news for the european growth outlook and modestly good news for the inflation outlook on that. still, we have to remember if this is a if this comes down to a bad outcome for ukraine, we would have serious economic problems in europe. we might have more refugees, we might have blame games within europe, and we would then have to spend even much more on defense. so this is a very interesting mix of issues for the european economy. a deal acceptable to ukraine would be a clear positive for the european economy. a deal not acceptable

to ukraine would be a negative for european politics, and probably in the end, for the european economies as well. >> holger, really appreciate your analysis. holger schmieding, chief economist from berenberg, germany's conservative parties, the cdu and csu bloc, have taken a dip in a new yougov poll just days before voters head to the ballot box. the poll showed a 2% percentage point decline for the cdu csu bloc from the previous week to 27%, with support for the left up three percentage points, which yougov said was largely driven by younger voters. the afd continues to poll strongly, coming in at 20%. current chancellor olaf scholz spd also saw a slight gain, up a point on the week to 17%. schulz will face off with the cdu's chancellor candidate, friedrich merz tonight in the final debate between the two ahead of sunday's vote, cnbc asked bda ceo stefan computer what government his group would prefer to see after the election. >> if i look.

>> at my. >> membership, probably. >> there will. >> be a great majority for a. conservative liberal. >> coalition. >> but we will. >> collaborate with every government unless how it is, how our parties are member of it. but if you look to the party program, we probably the biggest chance of political. change in the christian democratic and christian. social union and the liberal party program. >> but it's. >> not our deal. it's the deal of the voters to decide what's happening. but after the day of the election, everybody has to be compromising and fast acting. >> and don't miss our german election coverage live from berlin next monday. that's kicking off at 6 a.m. gmt. global tank storage operator vopak has raised its dividend and announced a new share buyback after reporting full year earnings above the top end of its guidance. however, shares are trading near the bottom of the stoxx 600 this morning after the company flagged a negative market outlook for imports of clean petroleum products into

mexico and persistent technical issues at one of its lng terminals in the netherlands. cnbc spoke with the ceo of vopak, dick rochelle, and asked him whether geopolitical uncertainty around the supply and demand for oil is rattling clients. >> with the. increased geopolitical developments, tensions, as we. >> call it. >> the drive. >> for from our customers to. >> go for. >> energy security is something. >> that really. >> stands out. >> and the drive for energy. >> security, coupled with. >> the. >> fact that supply chains are being modified supply chains, new. supply chains have to be developed. >> that is. >> existing products. >> that. >> find a different home. >> and a. >> different. destination if you couple those two. so changing supply chains. >> and the. >> drive for security of supply for infrastructure in critical and strategic locations. >> around the world, that. >> is really an important part. >> coming up on the show, david beckham talks to tanya bryer about the successes of owning

his own football club or soccer club. for our us viewers, we'll hear more after the break. >> just cleaned my entire house for $19. seriously. $19. they showed up right on time and did my dishes, my laundry. they even cleaned my windows. you just pick a date, pick a cleaner, and enjoy a spotless house for $19. i love using home aglow and i think you will too. >> i can. >> feel the. >> winds of change. >> some people like doing things. >> the hard. >> way, like doing their finances with a spreadsheet instead of using quicken. quicken pulls all your financial info. >> together in dude, i really need a new phone.

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>> to the ground. >> get vested, join the club. >> one of the key benefits for me is knowing where. >> jim is going to. >> buy or sell before. he does it. >> join the club. new members save with a special offer for a limited time at cnbc.com. join jim. terms and restrictions apply. >> welcome back to the show. the ecb's interest rate cuts shouldn't ignore the tightening impact of the bank's balance sheet runoff. board member pietro cipollone warned. he suggested rates may need to fall lower than some think, as the balance sheet runoff could continue for years. you can see there on your screen. yields are higher across europe this morning. now, as we approach the end of the show, here are four things to get you up to speed ahead of the open on wall street. we'll get housing starts and building permits. data after sentiment amongst home builders fell to its lowest in five months amid concerns around tariffs. traders are closely watching minutes from the federal reserve's latest meeting, set to be released this

afternoon, and us president donald trump will address the future investment initiative in miami. and for all the football fans, manchester united is set to report earnings ahead of the opening bell today. now, just last month, football icon david beckham received the prestigious crystal award for his humanitarian work. he sat down with our very own tanya bryer on the sidelines of the world economic forum in davos to talk about his success on and off the pitch, and realizing his dream of owning a football club. tanya, i think one of the many, many unique things about david beckham is his appeal to everyone, not just football fans, but he's got so much charisma and there's such a down to earth nature about him that i think everybody will be keen to hear what he's got to say. >> absolutely, julianna. >> good morning. >> thank you for having me on. i know you're. >> a big football fan yourself. >> well, i would say i'm a growing football fan. since living in the uk. it's hard not to have it rub off on me, but in the us, it really wasn't a big thing growing up. but that's kind of changing. >> and now it is.

>> because of david. >> and soccer. >> exactly. >> and inter miami. >> so talking of. >> which. >> i sat down with him at the world. >> economic forum. >> in davos. >> he talked to me about. receiving the prestigious. >> cristal award. >> and also. >> his dream. >> of owning the. >> football club. >> inter miami. >> i think every kid that loves the game has a dream of, you know. >> playing the game. >> and. then owning. their own club. >> you know, most. >> of. >> the time it doesn't happen, unfortunately. >> but it did. >> for me. >> i had the opportunity. >> when i first moved to la. >> to put in my contract, that at the end of that time i would own a. franchise and i could decide. >> what city i wanted. >> it in. and i knew. >> exactly at. that moment i wanted it to be in. >> miami. >> and i also wanted to give back to the game in that way. i wanted. >> to. >> be part of. >> growing the game in america. i saw the challenges. >> i knew the opportunities, and i knew that. >> we could. >> grow. >> it to. >> a. >> certain level. and it's now grown to a level where we're. >> all. >> very proud of where it is.

but we have now the world cup coming in. >> 2026. >> obviously in in canada and mexico and obviously the us. >> so it's. >> an exciting time. so i'm very proud of that and very. proud of. >> the team. >> that i own that has the greatest player to have ever played the game in it. so that's that's a nice thing. >> would you like to name him? shall i line up? >> i'll let you i'll let. you i'll. let you. >> messi. >> i mean what impact. >> did that have. >> oh. >> we worked really hard to bring someone so great. >> and so. >> big to our club. i always. promised the fans when we. when i launched the club, i always. >> said. >> i want to bring the greatest players to this city. and does it always happen? no, but it was very difficult and we worked on it for a for a long time. i sneaked into his father's hotel for a meeting five years before, and i just said, i know now's not the right time, but when your son's ready, i want him to come to miami. so over that time, we started to work, work

on him. and then we saw an opportunity. then we had to put together the deal that leo would be happy with and that would bring him to, to miami. and then i was in japan one night and i had jet lag and my phone kept on ringing and my wife elbowed me and said, please turn your phone off. i went to turn it off, and i looked at it and i saw this update of 40 messages come up on my phone. leo had announced that he's coming to miami and that was the dream, and i. i burst into tears because i knew what it meant for us. david beckham there. >> talking about. lionel messi, of course, one of the greatest players in the world, and. >> he lured him. >> to. >> inter miami. >> what is. >> extraordinary. >> julian, when i. >> was. >> talking to him. >> was of course, everybody in the whole world knows who he is and himself, victoria, the. >> children, they. >> live under the public eye. there's so much public scrutiny about everything that they do. >> and i just. >> said, how do you. cope with that? and he said, you know what? my father, my mother brought me up with such.

>> incredible values. >> and just said to get on with it. and that's what he does. he tries not to let things affect him. >> it really does seem like he is so grounded. and i was just thinking back to the queen's funeral here. and he there were, you know, major stories around him lining up with thousands of people to go pay his respects. and he probably could have had the option to come with a much more vip crowd. but he didn't. he chose to just be one of the many. and that seems to be his whole ethos. >> absolutely. >> he just he didn't want to have any fuss around him and he didn't want to have any special attention. he did queue up to see the late queen elizabeth at the funeral. and also what's so interesting, juliana. >> is. >> that he he doesn't want fuss about him. when i sat down with him at the world economic forum, you know, we thought he'd be mobbed. and he is, but. >> he handles. >> it all so beautifully. and i think for him, because he's had. such amazing success on the pitch, but also achieve so much success off the pitch, it's very

inspiring for a lot of athletes. >> yeah, he and victoria, i mean, they continue to work when they don't have to. and i think it's always really, you know, inspiring to see people who've made so much money have had so much success. and they just continue working, continue trying to, you know, do good in the world. and that seems to be the case for both of them. >> absolutely. >> they both have an incredible work ethic. and he said that's so important to be a role model himself and victoria again to their children. and he said that's what he grew up with and that's what he wants to be for his children. and as you say, they don't have to be, but they do. they both work incredibly hard. they're both incredibly successful. we saw the beckham documentary recently come out on netflix. now, his company, which is studio 99, is producing a documentary on victoria. i can't wait. >> i can't wait. i got to see the spice girls reunion tour in new york before i moved here, and it stuck with me, so i'll definitely be watching that. tanya, thank you so much for bringing us that interview. >> thank you. and talking. about watching. you can watch.

>> the. >> show in full tonight at 10 p.m. gmt on this channel, or on the cnbc international live youtube page. don't miss it. >> we certainly won't. for now, let's take a look at european equity markets and see what where we are. we are still in the green for the xetra dax and the ftse in italy. a little bit of red on the board for the cac40 and the ftse 100. investors continue to keep calm amid these new headlines from washington. around potential 25% tariffs on autos, semiconductors and pharmaceutical imports stateside. we're looking at green across the board a modestly positive start to trade. that is it for street signs i'm julianna tatelbaum. worldwide exchange is coming your way next. hey, babe. you got cirkul, right? yeah, of course. i'm not drinking enough water. hey, you got cirkul? huh? order cirkul water bottle! circling several water bottles. nooo. cirkul helps you drink more water. yeah, i

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