that's all for this edition of "dateline." i'm andrea canning. thank you for watching. [theme music] welcome to. >> squawk box. it's 8 a.m. >> here in london. >> 9 a.m. ct. >> and stock markets. >> across europe are opening up for trade. it is the first european reaction to. >> that fairly. >> violent sell off stateside. >> 4% off the nasdaq yesterday as tech stocks were punished. around concerns. >> of recession. certainly mounting fears of some sort of economic. slowdown stateside thanks to the tariffs. >> the lingering. >> uncertainty that. >> now threatens. >> to hit capex. and investment decisions. >> a big. >> meeting stateside today that markets are. >> watching closely with ceos.

>> to be. meeting with trump, and the markets are hoping for some stability this morning. you can see europe out of the gates today. >> after yesterday. >> we saw. >> losses in the market here. just giving back some of the highs we've seen. so far for this month. the sector gainers at this hour. we are seeing industrials move into the green up 6/10 of a percent. >> so again the. >> cyclicals have it in europe. >> construction materials. >> autos utilities all moving positive at this hour. autos. the one to watch on the back of some early market moves to the downside in volkswagen stock. let's take a look at some of the losers on the stoxx 600 this morning, where we are seeing areas lose steam. it is travel and leisure that is down more than 1%. so the weakest area of this market. healthcare retail food and beverage. rounding out some of the underperformers. the european bourses. we saw a couple of negative sessions yesterday as we rounded out the trading session about two down in a row for the dax. the french market and italian stocks. five down in a row for the ftse 100. this morning we're seeing the ftse still look a little bit soggy. it's given up the 8600

mark as it trades down about a quarter of 1%, waiting for a print on the dax. pre-market we've seen higher french stocks opening up stronger, modestly positive territory, more than half of a percent in the green, about 2/10 up on italian names. so we are seeing glimmers of green on this european market open. the other bourses across the board in europe this morning a couple of unchanged as we wait for a print there on the smi. the ibex trades down a fraction. so it is a little bit cautious at this early hour. the asx two but portuguese stocks in the green is a mixed bag is what we're watching this morning in reaction to the selling that caught up wall street yesterday as markets reacted to the macro. giuliana. >> one stock we're watching closely this morning is volkswagen. the automaker warning trade tensions and weak demand loom over its outlook for the year ahead. the carmaker says it expects operating. returns to. come in lower. >> in. >> 2025. >> even with. >> sales revenue expected to climb by 5%. this after it posted a 15% drop in full year operating profit for 2024. we'll

bring you anita's interview with cfo arno antlitz at 830 gmt. here's a look at the broader auto space. we are trading higher by about 1.5% for volkswagen. we saw futures indicating for that stock a lower open but not the case. mercedes-benz up 8/10 of a percent. bmw also up about 1% this morning. so green for the automakers. what's in. >> store for. >> the us open. >> here's a. >> look for you at us futures. we are holding on to the early gains. the dow jones looking to rebound 100 points s&p looking at a basically flat start. and the nasdaq looking to add back about 33 points. all eyes on tech which led the losses yesterday. what are we looking at across the key us tech names the mag seven microsoft nvidia apple all looking to open slightly lower. now tesla looking at a stable start to trade today after the mammoth sell off yesterday. 15% lower for the automaker. >> let's get some. >> thoughts with tom hallick, who is the ceo of strategy asset managers. tom, we are picking up on the back of a real red ink

day stateside as the bears circled. what do you make of the violent selling action, particularly around technology names stateside? >> well, thanks. thanks for having me. and there's so much. >> volatility going on in. >> the. >> markets right now. >> especially because. >> of the. >> tariff talks. >> but what. >> we're. >> really excited. >> about is the kind of the. long term outlook. >> that a lot of people. >> aren't talking. >> about right now. >> there are. >> lots of. >> things that we're. >> going to. focus on, such. as deregulation. pro-growth policies. >> and when. >> you. >> have m&a activity. >> picking up. >> out there, we. >> see something a. >> little bit on the horizon that's a little bit more positive. >> for everybody. >> what about a recession, tom? a big fear yesterday was that look, given the investment decisions now being put on hold capex to thanks to uncertainty around tariffs, we could be talking about a recession if this goes on much longer. probability of that went up in a number of the big investment houses. do you think that is something that investors need to keep on their investment horizon?

>> you know. >> the. >> probability of. >> a recession. >> is definitely a. >> lot. >> higher right now. >> but if you. >> look if. >> you look at all of. >> the. >> structure around the markets right. >> now. >> it's very, very. >> healthy for. >> us to have a sell off. >> we haven't seen a 10%. >> correction since about 2022. >> we're starting. >> to experience. that right now. >> even if we go beyond 10%. >> and we do go. >> into a. >> recession, i think. >> it's going to be very, very short lived, and we're going to experience. a much stronger market in the second half of the year. >> so what would you be doing right now from an investment perspective? is it time to step in and buy the dip, or would you wait? given that you say we could see another leg lower? >> well. >> it's a good question. >> you know. >> as an active. >> manager, stock selection matters. >> and we talked. >> to. >> our clients. >> on a daily basis. >> about this. on our research. >> call this morning. >> we talked about the technical. >> aspect of the market and the. correction that we're nearing. but but. >> the focus. >> and what the. >> theme. >> that we're. >> looking at and we talked.

>> to. our clients. >> about. >> this is, is we're reassuring them. >> that the. >> fundamentals still. >> remain strong. >> you've got dick's sporting goods on your radar as one of your favorite holdings, and i find it interesting, given the concern out there around the us consumer and a lot of the soft metrics suggesting that the us consumer is in worse shape than initially anticipated, we've seen consumer discretionary start to underperform consumer staples. what makes you so bullish on this company? >> well. >> you. >> know. >> the consumer may. >> pull back a little bit. >> and recalibrate. >> but if you've. >> been in the us and you've gone into a. >> dick's sporting. >> goods, they've really kind of cornered the market. >> as a one stop. >> sporting goods store. their earnings reports. >> are going to come out today. >> we think. >> it's going. >> to be another positive day for them. they've got a strong product assortment. >> and i. >> think that. >> they're going to do just fine. >> i mean. >> financially the. >> company has. >> surpassed the earnings per

share. revenue estimates. >> in the past. >> and i. >> think that the. >> over the past. >> five quarters, i think they're going to do. >> that in. >> this earnings announcement. >> tom broadcom another stock you're looking at. but it's in some bad company. if you look at some of the etfs and the semiconductor the philadelphia semiconductor sector now for 405. well and truly off its highs. how can broadcom lean against some of this negativity that is now sweeping up some of the us chips. >> well it's one of our largest. >> holdings in. >> the multiple portfolios. >> that we manage for. >> our. >> private clients. >> and they're seeing. >> they're continuing to see red. >> hot demand. >> for the custom. >> artificial intelligence. >> chips from the companies. >> looking for an. >> alternative to the costly. >> processors of a market leader. and like nvidia. >> we own nvidia. we like nvidia, but broadcom is working on. the hardware side of things. >> and their earnings. >> reports was. >> their. >> earnings report was very. >> very solid. we think that there's going to be. >> an expansion. >> of that going forward. and we're very very optimistic.

about broadcom especially. >> in the ai sector. >> tom we'll come back to that in just a second. we've got some breaking news at this hour. and this is around nissan motor. it's named the chief planning officer ivan espinosa as its next ceo. the news that ukita will step down. this is effective on the 1st of april. so big change at the helm here for a company that did try a tie up with its rival honda. but that led to no outcome. so a change in terms of direction for that company. tom, i want to come back to you on the ai story because having just been at a big technology event, i can see that there's huge ammunition from companies being thrown at the ai story that that is still, at this stage, intact. what do you make of, though, when it comes to the reset around big stocks that had momentum from microsoft to nvidia? is this a buying opportunity? >> well, we think so. we actually discussed that on. >> our. >> call this morning. >> as well.

>> some of the stocks. >> that we own, including some of the mag seven. >> but broadcom in particular. >> although they may have a temporary pullback we're still thinking that the active stock selection in this specific. >> technology sector. >> is one that you're going to have to pick and choose the time to. >> enter in. >> and we're very, very. >> close to that with some of the stocks. >> that. >> we own. >> tom, let me step in and ask about what's happening in the airline space. i'm not sure how how closely you follow this sector, but we're seeing some heavy selling in european airlines this morning and it seems linked to delta yesterday coming out and cutting their profit forecast. any view on what's going on there. >> you know we don't. >> hold delta or any. >> airline stock. >> in our portfolio. >> and i did. >> see the delta. >> earnings were. >> were a concern for. >> those who hold delta. >> but you know, the. >> travel industry myself i included, i think will probably experience a short term. >> pause, but a. reset and kind of a recalibration. >> as we see it. but i think the. summer months are.

>> going to. be be. >> strong again. people will. >> be traveling and maybe. >> maybe delta. will will have a better earnings report in the future. but we don't hold delta at this time. >> well, tom, i think you i would categorize you as a market bull at this stage, especially given how much negativity there is out there right now. what is the best way to hedge in case you're bullish? view doesn't materialize and things don't go quite as you expect. >> well i. >> thank you for. >> that positive comment. >> i am. >> more optimistic. >> than pessimistic. i do i. >> do think there's sector leadership out. >> there that's kind. >> of shifted. >> the market. >> has broadened. >> out quite a bit. >> less focus on the mag seven, and it's very healthy. >> for that to happen. >> maybe we're in a very. defensive position right now. you could go into. >> insurance companies. >> that we like. >> you could focus on health care companies. energy's been a sector that we feel.

>> that it's a very much. >> a positive. >> sector for this year. but you. >> know, overall and we didn't even talk about financials. >> and financials. >> have shown considerable strength over the past several months. but i'm you know, i'm going to throw my cards in and say that we're we're. >> going to be. >> very, very positive for the remainder. >> of the. >> year after the second quarter. >> let me come to you on banks, because we have seen a sell off not dissimilar to what you've seen on fang stocks yesterday. the spider s&p bank etf, the kbe fell 3.8%. the fang stocks were down 4%. so similar ranges by and large. and goldman sachs one of the big stocks to the downside yesterday for the dow. is this a market saying we're concerned now that some of the promised m&a is not going to happen or we've recalibrated on the potential for more fed rate cuts? if we're talking about a recession, some of this prospect not good for the banks. >> well, it's. interesting that you bring it up. one of the key

points. >> for our market. >> outlook will be what is actually happening in the m&a market and maybe the mid-cap sectors, for example. the fundamentals still look pretty strong. there could. >> be a. >> recalibration on what you're going to pay for. for a particular company. but there is a lot of activity out there. and the focus should. >> be that. >> if there is activity, that means that some of the smart money is going. >> for deals. >> a couple other stocks. tesla down about 50 odd percent since december levels. apple's also being hurt as well. both of these stocks very individual newsflow here tesla of course i mean you can throw everything at it from elon musk is disrupting the stock to the sector disruption itself. and of course some of that came through from volkswagen today and apple really kicking into the long grass, some of its ai ambitions. how do you think about a couple of these big names? >> well, tesla for example,

apple for example, all included in the mag seven major focus on these companies. and what what's in store for the future? as you know, elon musk is. >> very busy. >> right now, and maybe he's taken his eye off the management of tesla. but in the long term, i think that the stock remains something that you would want to participate in. as for. >> the. >> other mag seven stocks we are invested in, in most all of them. we think. >> that down the. >> road you're going to want to hold them in your portfolio. we may not be adding to them right now, but i would not bet against technology and the growth of the potential that's in the future. >> that's a good line for us, tom. thank you very much. tom hallick with us, the ceo of strategy asset managers. well, coming up on the show, we'll focus on private credit with tamsin coleman, who joins us from the super return conference. that conversation up next.

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customer and use discount code tv18. >> a leading wall street analyst has warned that u.s. stocks could extend sharp declines in the coming months if recession risks materialize. morgan stanley's michael wilson, who turned positive on u.s. stocks last year, now warns that the selling will likely last until the middle of the year, although he still expects the s&p to end the year around 6500 points. markets are now pricing around 84 basis points of fed rate cuts this year, with a more than 50% chance of a cut at the central bank's may meeting. that's according to lseg data, which suggests further rate cuts in

july and september as u.s. policy changes stoke recession fears. national economic council director kevin hassett told cnbc he's bullish on the prospects for u.s. growth despite expecting, quote, blips in the data this quarter. >> i'd just be very wary. >> joe, of. >> of conversations about recession or. >> not. >> given that. >> we had two. >> negative quarters that used. >> to be a. recession under biden and then that. >> wasn't a. >> recession, i think that. >> what's. going to happen is the first. >> quarter is going to squeak into the positive category, and then the second quarter is. >> going. >> to take off as. >> everybody sees the. reality of the. >> tax cuts. >> let's talk more about what's going on in private markets with tamsin colman, senior private debt specialist at mercer. she joins us from super returns. tamsin, so great to have you on the program. we've been talking throughout the show about the sell off and the turn in sentiment in public markets. what are you seeing sentiment wise in private markets? >> good morning and. >> great to be here. >> i would say that the sentiment. >> for private markets still

remains very strong. and private credit specifically is certainly. >> an area. >> that we're. >> seeing interest. >> from investors. >> and some. >> of the reasons for that. >> is that it. >> is a floating rate asset class. and when you have rates where they are and clearly we're in a higher for longer environment, you are seeing that showing up in the bottom line for investor returns. so i think the sentiment is still very strong, strong for private credit. and we're likely to see that that continuing from here. >> you talk about the key feature of private debt markets, which is that they tend to be floating rate assets. in the last couple of days, we have seen investors dial up expectations for more fed cuts in the future. how is this poised to affect demand for private credit? if we see the federal reserve move to cut rates more than expected? >> sure. >> and i. >> think it's worth saying that in terms of the spread that you're. >> able to. >> achieve over liquid markets, which is, you know, typically what we tend to use as a proxy in terms of, you know, looking at the returns, you're able to

get in private credit, even if rates were to fall from here, you know, you would still be able to generate quite an attractive return, say, 200, maybe even slightly higher than that spread over liquid markets. so from an investor perspective, who's got the opportunity to invest across different asset classes, private credit, you know, still looks attractive when you put that lens on it. and how. >> difficult market environment is it, though this year? because i've got to say, at the start of this year we're talking about the ecb cutting, but now we're of course we've got big fiscal packages being deployed. and that is seemingly changed the backdrop for europe. in the united states. we've now ramped up expectations of rate cuts thanks to recession fears. it feels like it's incredibly fluid market. is that your perception too? >> yeah, sure. >> so i think if we were sort of speaking at the start of sort of 2024, we were seeing a lot of headlines about sort of, you know, tidal waves of defaults and sort of, you know, recessions being sort of priced in as quite, quite a high outcome. and i think a lot of

that was overblown. you know, we haven't seen that sort of tidal wave of defaults coming through. you know, i think when you're a credit investor, you're always sort of looking for the risks and looking for, you know, what the next sort of downside case would generally pessimistic people. but but i would say generally, you know, when you're investing in private credit deals, you are typically in a bilateral relationship with the borrower. you do have that control to sort of get round the table and sort of work things out. if, you know, things do get rocky, you also have maintenance covenants in your documentation, which of course provide you with some enforcement rights should things go south. and as we did see in sort of prior rocky periods, covid being one of them, you know, you often have a private equity sponsor who tends to have quite deep pockets. and we did see private equity sponsors sort of stepping in to support those borrowers in times when, you know, there was a little bit of a liquidity crunch. so i think albeit, you know, there are some some things to be wary of in the rear view mirror. i would say that generally you're in a pretty

good position with private credit to be able to defend your interest terms. >> and is the private equity market concerned a private debt market concerned about what we're seeing around tariffs, because the rest of the public markets seem to be hugely concerned in the last 24 hours? >> i think in terms of sort of macroeconomic stresses in general, i think, you know, we can look back, albeit sort of private credit, to fairly sort of a newer asset class compared to sort of some of the other asset classes, which have a much longer history. but i think generally private private credit has held up well, you know, due to some of those reasons that i outlined around the protections that you have within the asset class. so i think generally, as asset classes go, it's pretty well positioned to weather the storm. but, you know, not not being said, no asset class is completely resilient to sort of macroeconomic stresses and the environment. so it's certainly something to keep an eye on. >> can i ask you about what we're seeing in recent weeks, announcements from europe trying to get its act together. it wants private money aligned with

some of the government initiatives. have you seen anything that makes you want to deploy around, whether it's a fiscal spending package out of germany or, by and large, big defense spending out of europe? >> okay. >> i yeah, i think the key to building a very successful private credit portfolio is really to be well diversified across the different markets, right? so you want to have a good spread of your assets, not all of your eggs in one basket. so you know, wanting to invest broadly across europe, across the different countries, not sort of focusing on any one in particular. and really with private credit, it is a long term asset class. so you are looking to sort of spread your risk. you're looking to stay invested. it's you know, they're typically lock up vehicles where your money is locked up over a longer time horizon. so really it's hard to make sort of immediate calls based on, you know, current sort of macroeconomics is best to just spread your risk. and certainly that's how we sort of look at building portfolios. >> tamzin, let me ask you about the private markets becoming more accessible to individual

investors. there was a story a few weeks back about state street and apollo coming to market, launching the first private credit etf. now this is historically and still is a very illiquid asset class. what does it mean to be offering access to this illiquid asset class to effectively retail investors. >> yeah i think there's been a number of innovations in sort of the space in terms of the structures that, you know, you can offer private markets through. i think generally, of course, we have to be careful of any liquidity mismatch. we've seen a lot of semi liquid private credit products being launched. i think it's important to point out that when you actually look at the structure and the terms of those products, they do typically have protections in place. so typically sure, there's a little bit more liquidity there. you can get perhaps 5% of your nav out on a quarterly basis. but but you know, it's no more than that. there are gates put in place. there are protections. and you may be subject to redemption queues. so i think sure, you're introducing some

liquidity into into private markets, which is sort of a new frontier. and that's great if it opens it up to other investors being able to, you know, access the benefits that institutional investors have been able to access for some time now. but of course, that has to be with the protections. and so i think, you know, it's no good putting a liquid assets in, in a, in a structure and calling it liquid. you need to have those protections in place. otherwise you're clearly lining yourself up for something that's not going to be a good outcome. >> well tamzin great to hear from you. what's been going on in private markets. a new frontier as you said, especially for retail investors. if we see these etfs proliferate from here. tamzin coleman, senior private debt specialist at mercer. coming up on squawk box from high stakes union negotiations to trump tariffs. it's been a busy few months for volkswagen. we'll dive into the carmaker's earnings with cfo arno antlitz next.

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and use discount code tv18. >> welcome to squawk box. i'm karen show with giuliana talabani and these are your headlines. wall street looks to rebound from the nasdaq's worst day in over two years, with european equities searching for direction after monday's global sell off. volkswagen shares drive higher as the automaker guides for revenue growth of up to 5% this year, also looking to rebound from sliding sales in 2024. we'll hear from the cfo on athletes in a few moments time. tesla shares are moving higher in pre-market after the ev makers worst day since september 2020, amid growing pressure on ceo elon musk. meantime, the european travel and leisure stocks fall to a four month low after us carrier delta slashes its sales and earnings guidance by half, warning of a hit from economic uncertainty. >> corporate spending started to stall. consumer spending started to stall, largely domestic,

largely in the close in, but it was also exacerbated, as you know, the. >> uncertainty. >> that's out there. >> but we're off to a mixed start in european trade today, where nearly a half an hour into the trading session and quite a diverse market performance, with the airline selling off quite heavily, but actually some green on the board elsewhere. despite the heavy selling on wall street yesterday and in europe as recession fears mount, there's a look for you at the main indices. the dax looking to rebound about 6/10 of a percent. the ftse mid the cac40 also in the green a little bit of red in the uk market. a look at the sector gainers. here's who's out in front this morning. you've got basic resources up 9/10 of a percent. industrials chemicals and real estate. on the downside the laggards in the market. airlines a major sell off in the european airlines this morning.

that basket of stocks down 1.4%. let's get a closer look at what's happening within the airline space. the individual movers. you've got iag down more than 3.6%. air france down nearly 6% easyjet also down nearly 2%. now why is this? a lot of the pessimism seems to be coming on the back of these delta numbers that we got after the close yesterday, delta ceo ed bastian told our u.s. colleagues that the airline is experiencing a lot of uncertainty. >> we saw companies start to pull back in terms of corporate spending started to stall. consumer spending started to stall, largely domestic, largely in the close in. but it was also exacerbated, as you know, the uncertainty that's out there. and consumers in the discretionary business do not like uncertainty. >> so he's speaking after delta came out slashing its first quarter revenue and profit outlooks, talking about demand, growing concerns about lackluster sales in some corners of the travel industry. you can see the premarket shares are down nearly 10%. and this is

having a ripple effect on broader u.s. airlines as well. we've got united airlines down more than 7% premarket, american airlines down as well. >> we've got to switch over to autos. and volkswagen has warned trade tensions and weak demand loom over its outlook for the year ahead. car makers saying it expects operating returns to come in lower in 2025. anita spoke to the cfo, arno antlitz, and asked for his take on the past year. >> we achieved, i would say. >> rather decent. >> results in. >> the last year. >> sales were. basically on the. >> total year basis, on par with prior year. >> we achieved 19. >> billion. ebit and. >> and a. >> margin of almost 6%. this is a decent. result in. >> a challenging environment. >> but and. >> what really. >> counts is we took some really. strategic decisions, not only in the last quarter, but in the whole last year. look, if you. >> look at. >> our software joint venture. >> with rivian, that. >> puts us. >> in a much. >> stronger position in. terms of software competence and software costs. >> and also on customer

features. >> look what we achieved. in china. >> we drove forward our. >> strategy in china. >> local for local. >> with tech. >> partnerships, with product partnerships and work on a much more competitive cost base. >> and third. look at the years we achieved growth in the us. >> and the. >> scout will. >> enable us. to enter all american. segment like c pickup or rugged suvs. and last but not. >> least, took. >> on volkswagen, which was in a. >> fourth quarter right before. >> christmas, a very important agreement that puts us in a much better position in terms. >> of competitiveness. >> on the cost base in europe. >> and let's talk china, because china is such. >> a crucial market. >> and here's a substantial weakness. >> do you see further. >> signs that your measures are actually. >> also are translated. >> into better sales? >> now we. >> had a difficult year in china. but as expected. >> you know, we talked at the beginning of last year. >> we said we. >> deliberately give up. >> some share because. >> in. >> china it's a very. tough pricing environment. everybody wants to.

>> grow and. >> we. >> try to. >> find. >> a sound compromise. >> between prices. >> on the one hand and volume on the other hand. and we deliberately. gave up share. >> significant two percentage points. >> but to be honest, you could also expect another market share somewhat giving up. also in 2025, we set up a lot of measures. as i talked about it, product partnerships, shopping and volkswagen. these cars will start 2026 between audi and sig. and we show some of these great. >> cars on. >> on the auto show and also our tech partnerships. we worked. >> on the. >> cost base. we bring lfp batteries, others. >> together with horizon. >> robotics, in-car infotainment. but these measures will. >> kick in. >> in the. >> course of 2026, not 2025. so as a protection second third. >> quarter 2026. >> we want to reengage in the market. >> so in other. >> words. >> this year and perhaps next year. >> as well. >> will more.

>> or less be a transition year. also still in the chinese market, is that also because your competitors are mostly actually loss. making and get a lot of money from the state? >> this is a good point. we try to find a compromise. we are not loss making, and we don't want to be loss making, and we are not expecting to be loss making. our guidance is. significant positive also for the year 2025, but we try to find a compromise between pricing and volume. look. we want to stay relevant in the market, not giving up too much share. and on the other hand, we want. >> to secure our. >> margins in order to. >> have a good. >> position to. >> reengage in the competition. 2026 onwards. >> and let's get out to annette. annette, a lot of moving parts in the auto space in the last 24 hours. we've got tesla down about 50 odd percent from its december levels. nissan today just replacing its ceo. it tells us that the industry itself is facing a lot of pressure. so how is volkswagen faring in that context? >> well, we already have. >> the management.

>> shakeup at volkswagen. >> so i think in terms of. >> personnel. >> they're quite stable. >> oliver blume got the backing. >> from the supervisory board. >> arno antlitz as well. so the team is intact. >> and the story. >> they are telling. >> us is that. >> they're investing. >> a lot. they have recalibrated. >> their. >> strategy in order to have localized products, especially. >> the. >> chinese market was. >> a problem there. >> so now. >> they do much. >> more in. >> house or in car. >> i should say entertainment. >> that's what the chinese like. >> and hope. >> that of course. >> their electrified vehicle sales will. also lift off, as we heard. from anna. just here. >> and most likely in the second half of next. >> year or or next. >> year as the market is difficult, the chinese. >> competitors. >> the majority of them is loss making and can also. introduce cars to the market at much lower prices because they are able to. produce batteries at. >> much lower prices.

>> so i guess as he was. pointing out. >> that. >> mix is very difficult. but given the difficulties of the chinese market, they're still quite confident that. >> they can. >> turn around their. fortunes there over the course of the next. >> two years. >> another big market, of course, is the us. >> and there it's going. >> a little bit. >> better. >> but still. >> the. >> outlook, i think, is crucial. >> for 2025. everybody was expecting probably. >> perhaps a bit of more pessimism. i know in pre market we were saying that the outlook is muted, but despite all the uncertainties, they're still guiding us of an operating margin between 5.5 and 6.5%. that's not where they want to be. >> but at. >> least it's also not really at their record lows, where they had been at 2 or 3%. so i ask antoine, the cfo, why he's not happy with that outlook and what what level we should see actually of for him being happy. take a listen. >> we guided. >> for five and a half and 6.5%,

and obviously we can't be happy. why can't we be happy? look at what our prerequisites are. we have great brands, fascinating brands. audi, porsche, lamborghini, volkswagen. we have great products and we have global scale. and with these prerequisites, we should be able to do more. so what what's what's what's the reason why we are. >> not doing more in 2025. >> so this outlooks i think mirrors the challenging. competitive environment, but also. >> a company. >> and an industry in transition. we have to keep our combustion engine cars competitive for our customers. we have to invest significantly in electrification and digitalization. we ramp up evs, we ramp up software, and we want to grow in us with significant investment there. so these initiatives, they weigh on our financial kpis in 2025, but should should give us a tailwind for 2026 and beyond. and there we want to do significant more. >> you have been.

>> mentioning the. >> high cost base and also the agreement. you were managed. >> to struck. >> at the end of last year with the german labor force. so is that enough? >> i don't have a crystal ball, but what i can say, it's significant. it's really significant. let's recap what we achieved. look, our our cost increase in terms of wages we was was dampened by 1.5 billion a year, which. >> is significant. >> a second we will reduce our capacity in in germany in the in in volkswagen achieve more than 730,000. so we adapt capacity to market realities. and third, we will reduce our our headcount by 35,000 which is 30%. so these are really significant steps. and i'm confident if we and i am confident that we achieve that, if we can implement that consistently and. and 100%, we are in a much better competitive

shape than we were in the past. >> so the big elephant of course, in the room are tariffs. because volkswagen, volkswagen would not only be impacted by tariffs levied on eu products, but also on mexican products because they have a huge plant in mexico, which is meant to import the stuff into the united states. so i had to ask him what's actually his thinking and also the potential estimate, what it means for their earnings going forward. if tariffs were to be implemented. >> it's too early to say. of course, we are a global company. we opt for open markets. i'm sure you could imagine what we think about tariffs, but it's really too early to say what i can say. we already feel like an american company. now look, we have we operate a huge factory in chattanooga. we employ tens of thousands of people in volkswagen group of america. we create a thousands of jobs in south carolina for scout. so we

are an all american company already, and we want to grow in the us. >> so the optimist among analysts do say that once volkswagen has actually understood the importance of change, then they also deliver. they've done so now with a very cheap version of an electrified car, which is coming to the market at below 20,000, ■k720,0, which then might be competitive for the chinese cars flooded who are flooding the european market. so it remains to be seen. but currently there is a sense of change here in wolfsburg, and management is adamant about the fact that they're doing the right things, of course. >> and that's a brilliant for bringing us that interview. thank you for rounding out the volkswagen news this morning. sticking with the auto sector. let's take a look at tesla pre market. we've got an indication now after yesterday's 15% plunge tesla looking to stabilize somewhat this morning bouncing back about 3%. that's the indication at this early hour anyway after monday was a day to forget for elon musk. shares in

tesla suffered their biggest single day decline since september 22nd, tumbling that 15%. the stock is on a seven week losing run, with shares more than 50% off their december all time high and more than $800 billion in market cap wiped out. elsewhere, musk's x platform suffered several outages throughout the day. he says the site had been the target of a cyber attack linked to ip addresses in the ukraine area, but reuters cited an industry source who said traffic from ukraine was actually insignificant, and much of the activity appeared to be traced to the us, vietnam and brazil, among others. musk capped off the day with an interview on fox business, in which he said he expects to remain a part of the trump white house for another year, but also admitted he's struggling to keep up with running his companies. >> yeah. >> i mean, really, i just don't want. >> america to go bankrupt. >> so it's. >> a call. >> to action. you're you're hearing a call to action. >> yeah. >> you've given. >> up your other stuff. >> i mean, what. >> do. >> you how are you running. >> your other businesses? i with

great difficulty. >> yeah. >> i mean. >> but there's no turning back. you're saying. i'm just. >> here trying to. >> make government. >> more efficient. >> we're tracking apple shares pre-market. the stock coming off a near 5% decline on monday after bloomberg reported it will delay the rollout of some ai features for its siri voice assistant from next month to the coming year, according to bloomberg. some people in the tech giant's ai division think the features could be scrapped altogether. this is a big one. don't forget we've seen the new iphones delivered with the promise that they have ai features, so some sort of souped up siri with some ai capabilities was something i think a lot of consumers were waiting for. so it is a little bit disappointing that apple, again, is lagging when it comes to the ai race. just as we've seen a ton of announcements from the chinese. and when it comes

to the rest of the smartphone universe, don't forget google and its gemini technology has been powering a lot of those devices. in fact, arjun last week was telling us about the dominance of google. and was that google versus apple in the smartphone market? so now to have apple rolling over here is a big one. some of the analysts are saying does it mean there's an acquisition coming. does it mean there's going to be some sort of build out on ai? i think it is something where we've got question marks over the ai delivery from. >> apple, and disappointing for apple users who perhaps bought these new phones in hopes they would have an ai powered platform. >> does it impact the upgrade cycle? is one question i would ask at this point. now, coming up on the show, president trump is expected to meet c-suite executives today amid concerns over his tariff policies. more next.

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>> today, delaware governor matt meyer the strategy to keep delaware america's incorporation king, plus how changes in washington are impacting his state. stay ahead of the market. squawk box today, 6 a.m. eastern on. cnbc. >> overtime is about understanding what just happened in the markets that day and preparing for tomorrow. i'm looking to talk to all investors, sophisticated investors, beginning investors. i'm always learning. >> closing bell over time for

eastern. cnbc. >> well after the selling that we saw yesterday investors taking a pause for breath today. we've got an effectively flat open here in europe. underneath the surface a lot of mixed trade when you look at the sector breakdown. but at a headline level you've got the xetra dax, the cac40 in france trading higher. we are seeing some red on the board though a bit of a pullback again for the ftse 100 and the ftse mid. this after the stoxx 600 pulled back just over 1% yesterday. so in lockstep with the selling that we saw in the us but to a much more modest degree now one pocket of particular pressure in europe this morning is the airline sector. we're seeing some sharp declines in a number of the european airlines. you've got

air france klm down more than 5%, iag, the british airways owner, down nearly 4%. a lot of this weakness seems to be coming on the back of delta yesterday slashing their forecast. and that is weighing on the broader european airline space as well. >> look at those us markets yesterday the epicenter of the selling really around the nasdaq. 4% down on that index, 2 to 3% off the s&p and the dow as you can see. so reading across the board and in fact, one of the steepest sell offs we've seen in recent years on the nasdaq we saw a couple of years back. and of course we saw it during covid. but certainly sharp recall on stocks yesterday us tech premarket. let's take a look. we were talking to one analyst today who suggested on their conference call this morning. they were talking about what sort of opportunities now materializing in tech. this is how it looks in premarket around some of those big names. the ai names from microsoft to nvidia, that's been hurt by the deep tech news and concerns around the us economy that stock seeing up. apple still around its ai

ambitions. and that's a feed this morning. tesla down 50% from the december highs. that is also seen bouncing in extended trade. now bitcoin this was absolutely punished around the risk off trade yesterday. and we saw it back below the $80,000 mark. but this morning it's picked up a little bit of steam a couple of points here. trump is rewiring the us economy. but is he burning down the house with his diy is the question. because we started out the year with us exceptionalism. there's almost no other trade in town. we heard from analysts and fund managers that you were diversifying through the us market. not much of a diversification, it seems now. and some of the analysts looking at it say, look, you've seen that underperformance in europe and elsewhere that's corrected now thanks to some self-help mechanisms. so there is an argument as to whether we should be seeing an equal weight position for chinese stocks and for european equities in the rest of the world. index. and datatrek has been doing some terrific work on this. but the reality is, as the questions dangle around the us economy two

unpredictable. are we talking about tariff uncertainty that continues? are we talking about tariffs that remain in force? does that create a recession or stagflation? these concerns are undermining the direction for us stocks. and trump needs to be careful as to what he's doing here in terms of undermining sentiment, whether that repositioning now that we have seen in the works because of the underperformance in europe, does it actually stay as one of the main trades now for 2025, because the market cannot bank on trump? >> well, i think one thing to bear in mind here when it comes to trump's policy agenda is that so far, we have only seen the disruptive part of the agenda come through dovish cuts, slimming down of government tariffs and all of the geopolitical reworkings that he's trying to push through. we haven't seen the stimulative side of things. so he's still got a load of dry powder in terms of his policy agenda. tax cuts, deregulation and separate to what trump is doing. we have the fed sitting there poised to potentially cut rates further if they see a market slowdown in

the economy. so is it are you risking missing out on a, you know, a bump back in markets if you cash out now given how much dry powder we have left on the table in the us. >> contextualize the idea of not willing to rule out a recession. that was where we started with on sunday. that's what's roiled markets are every other policymaker and central banker has been hoping to rule out a recession in recent years. a recession is seen as a dirty word on markets, so the somewhat flippant response to whether that could be ruled out or not, that it could just be part of the mix of doing business and regearing the us economy. it is serious stuff. when you talk about a recession, how deep one is, is it shallow? is it avoidable? i mean, i think markets are right to react and reposition if they have been overweight, particularly on the prospect that the us is going nowhere near a slowdown. but are we genuinely dealing with a recession? i think that is still in doubt as we talk about how far the positioning should go in terms of some of the other big news flow. the us house of

representatives is set to vote today on a measure to extend government funding past friday's midnight deadline and avert a partial shutdown. president trump has backed the bill. speaker mike johnson can afford only one gop defection if all members are present and democrats oppose it. at least one republican member has already said they will not support the measure. if it passes the house, it will then face another hurdle in the senate needing the support of at least seven democrats. well, that vote is due as president trump's tariff policies come under increasing scrutiny, adding to fears over the health of the us economy. alice barr has the latest from washington. alice. >> karen shortly after the stock. >> market closed on monday. with all the gains so far this year race, the white house. >> looked to reassure. >> with. >> a statement. >> saying president. trump is set to repeat what. >> it. >> called historic job wage. >> and investment growth from his first term. >> after a rough day on wall.

>> street, with. >> investors selling. off stocks over. >> fears a trump trade. >> war could. >> tip the country into a recession, the white house, downplaying what it. called the animal. >> spirits of. >> the stock. >> market. putting out. >> a. >> list of 50 wins in 50. >> days and. >> pointing to business. >> leaders support that. >> as president trump on sunday did not rule. >> out a. >> recession this year. >> i hate. >> to. predict things like that. there is a period of transition. >> later adding. >> we're going to take in hundreds of. billions of dollars. >> in tariffs. and we're going to become so rich. >> after the president. hit top trading partners with new tariffs. china striking back with its own. tariffs on u.s. agriculture. >> products everything. >> from chicken, wheat and corn to soybeans. >> we're going. >> to have a lot of farms to. >> go out. >> of business and aren't able. >> to continue. on the current trajectory. >> canada issuing retaliatory tariffs and now the province of ontario hiking electric. >> rates for. >> a million and a half americans who. rely on canadian

power exports. >> if the united states escalates. >> i will. >> not hesitate. >> to shut the. >> electricity off. >> completely. >> on capitol hill, lawmakers sparring over the trump administration's. >> policies. >> donald trump. >> and house. >> republicans are. >> crashing the economy and hurting hard working american families. >> i believe. >> that the policies that we're putting forth are going to improve. >> the economy and bring. >> down costs. >> for people. it takes a little. >> while that as lawmakers work to pass a funding bill by friday to prevent a government shutdown. that would. only add to economic. >> uncertainty. >> a short term government funding bill made it out of committee last night, and the full. house is expected to vote later today. the senate, though, is. >> the bigger challenge. >> that's where. seven democrats. >> would have. >> to get on board, many voicing. opposition and looking. >> for a way to flex. >> some political. muscle in the face of all the trump

administration's. >> rapid changes. >> karen. >> back to you. thank you so much. reporting for us, alice barr there. well, president trump is reportedly set to meet with a group of chief executives from across the us today amid concerns around tariff policy and the potential for a recession. that's according to bloomberg, citing sources with the group, are said to include the bosses of top wall street lenders. so what we're talking about here is the business roundtable, chaired by the ceo of cisco, chuck robbins, and supposedly due to turn up at jamie dimon, the ceo of jp morgan, jane fraser, the ceo of citigroup. the message last week when i spoke to chuck robbins was that tariffs if they go on for longer, that's when some of the issues start to arise. and of course, we're hearing the same message from other ceos that the duration of tariffs is one of the concerns. if we're waiting, of course, for the detail devil in the detail as to what tariffs allies face. we were hearing from another analyst this morning that look china, even if we talk about the tariffs coming off on canada and mexico and also europe, they're

still in force around china. so what impact is that going to have in terms of global growth this year. and are we truly talking about decisions being held off to the point where it triggers a recession stateside? no doubt the message will come through very thick and fast today, especially from banks, as they see some of the numbers move around recession prospects. >> well, clearly the tariff issue is a difficult one for investors to navigate. i spoke to a former trump trade official a few weeks back on street signs, who said, you can really bucket tariffs into two categories when it comes to trump one, tariffs that are used to try to facilitate or evoke a decision or a change in policy from the neighboring country, that's the likes of canada and mexico. the issue around fentanyl and immigration at the borders. then there's the second bucket, which is much more around rebalancing an economic relationship. and those tariffs are likely to stay in place for a long period of time. and that's where the tariffs against the eu come into play. and that's where i think companies will struggle, given the length of time that those tariffs are

poised to remain in place. if they do come, given the purpose of them is to rebalance a broader economic relationship, it's not to achieve one specific goal, like in the case of the canada and mexico tariffs. >> the difficulty with the tariffs is that markets simply do not know what they're dealing with here. and the reality yesterday we were talking about the r word. prior to that we were talking about the s word stagflation and argue in many ways, in economic terms, this is far worse than the r word, because with the r word you have tools that central banks can deploy, for instance, that the central bank has your back. you see those rate cuts. but if it's stagflation that we're talking about here, where inflation stays and sticks there, but growth slows, then there are very few tools that can be deployed. and that is the prospect that is negative for tech stocks that were hit yesterday. so the question is what comes through from trump today and whether he starts to try and massage some of the sentiment that has gotten a fairly negative at this point. >> to what extent does he listen to the business leaders? i mean, if you look at his inauguration and the pictures there, it looks

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(888) 710-0554. >> a wall. >> street. >> rout, $1 trillion. >> in tech. >> gone in one day. concerns over policy and fears of a recession driving a selloff that's wiped out $4 trillion since the market peak. >> just last month. >> even the. >> world's richest. >> people are certainly not immune. >> today. >> the search. >> for. >> something to put the. >> brakes on all. >> this selling. it's 5 a.m. and you're watching worldwide exchange right. >> here. >> on cnbc. good morning. >> thanks so. much for being. >> here with us. >> i am frank holland. today we're going to.

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