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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg DAYBAC podcast, available every morning on Apple,

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Speaker 2: Spotify or wherever you listen. It's Wednesday, the nineteenth of

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Speaker 2: February in London. I'm Caroline Hepkea and.

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Speaker 1: I'm Stephen Carroll. Coming up today, Donald Trump proposes large

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Speaker 1: levies on imports of cars and other products and his

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Speaker 1: latest tariff salvo.

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Speaker 2: The US says Russia's sanctions will remain for now as

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Speaker 2: the US administration urges Ukraine to sign an economic partnership.

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Speaker 1: Plus sparing no expense. HSBC announces a big profit beat

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Speaker 1: as the bank doubles down on its drive to cutcasts.

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Speaker 3: Let's start whether round up of our top stories.

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Speaker 1: Donald Trump says he will likely impose tariffs of around

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Speaker 1: twenty five percent on all imports of cars, semiconductors, and pharmaceuticals.

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Speaker 1: The US president says he plans to announce the new

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Speaker 1: charges on the second of April. European and Asian automakers,

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Speaker 1: including VW and Hyundai, could be the face the biggest

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Speaker 1: hit from the levies. America currently imports around eight million

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Speaker 1: cars and light trucks each year. Speaking two reporters at

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Speaker 1: his Marilago Club, Trump doubled down on his plan to

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Speaker 1: rebalance the US's trading relationships across the globe.

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Speaker 4: It'll be twenty five percent and higher, and it'll go

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Speaker 4: very substantially higher over course of a year. But we

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Speaker 4: want to give them time to come in because, as

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Speaker 4: you know, when they come into the United States and

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Speaker 4: they have their plant or factory here, there is no tariff.

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Speaker 4: So we want to give them a little bit of

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Speaker 4: a chance.

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Speaker 1: The new charges would come on top of Trump's previously

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Speaker 1: announced twenty five percent tariffs on steel and aluminium imports,

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Speaker 1: set to take effect in March. Last week, the US

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Speaker 1: president also ordered his administration to look into imposing broad

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Speaker 1: reciprocal tariffs on trading partners across the globe.

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Speaker 2: As Trump looks to remodel America's global trading relationships, administration

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Speaker 2: is continuing its efforts to shrink the US federal government.

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Speaker 2: At the center of that effort is Elon Musk and

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Speaker 2: his Department of Government Efficiency team, who have faced criticism

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Speaker 2: and lawsuits over their approach to cutting spending. But speaking

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Speaker 2: to Fox News channels Hannity alongside President Trump, Elon Musk

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Speaker 2: sought to justify the approach.

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Speaker 5: The overall goal is to try to get trillion dollars

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Speaker 5: out of the deficit, and if the deficit is not

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Speaker 5: brought under control, America will go bankrupt. This is a

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Speaker 5: very important thing for people to.

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Speaker 2: Understand Musk's comments too. Fox News came as a US

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Speaker 2: judge rejected a bid for immediate court intervention from Democrats

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Speaker 2: who say that he does not have the authority to

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Speaker 2: reshape the US government and its spending. Meanwhile, US Treasury

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Speaker 2: Secretary Scott Bessent says that Musk's Doze team already have

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Speaker 2: already identified and estimated fifty billion dollars in savings. He

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Speaker 2: told Fox News that taxpayers don't need to worry about

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Speaker 2: the Musque's team approach accessing their private data.

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Speaker 5: I think it's unfortunate that they're trying to kind of

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Speaker 5: a lampoon what Elon Musk and the Dose teams doing.

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Speaker 5: I think it's very unfortunate they're trying to be fear

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Speaker 5: mongerers with the American people.

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Speaker 2: Bessent also told Fox News he thinks Ukraine's President Vlodomi

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Speaker 2: Zelenski will sign an economic partnership agreement with the US

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Speaker 2: that hands over half the value of Ukraine's vast mineral

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Speaker 2: rights to the US as compensation for aid. The US

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Speaker 2: Treasury Secretary says that Trump wants to show Ukrainians that

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Speaker 2: the US supports them, whilst demonstrating to US taxpayers that

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Speaker 2: there will be a return on the money that has

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Speaker 2: already been sent to the country.

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Speaker 1: The U s Secretary of State Mark Rubio has told

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Speaker 1: European allies that the US will keep sanctions on Russia

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Speaker 1: in place at least until a deal to end the

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Speaker 1: Ukraine conflict has reached. The assurance comes after America's most

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Speaker 1: your diplomat held face to face talks in Saudi Arabia

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Speaker 1: with his Russian counterpart for the first time since Moscow's

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Speaker 1: full scale invasion of Ukraine. Speaking after the meeting, Rubio

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Speaker 1: insisted peace talks would include all major parties.

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Speaker 6: The first next step is working through our respective teams

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Speaker 6: at the diplomatic side, just to ensure that our diplomatic

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Speaker 6: missions can function. There's been a series of reciprocal actions

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Speaker 6: taken over the last ten years that have really diminished

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Speaker 6: our ability to operate in Moscow as an example, and

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Speaker 6: they would argue their ability to operate in Washington. We're

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Speaker 6: going to need to have vibrant diplomatic missions that are

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Speaker 6: able to function normally in order to be able to

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Speaker 6: continue these conduits.

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Speaker 1: US Secretary of State Marco Rubio speaking in Riad after

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Speaker 1: talks that excluded Ukraine and European allies. Russian officials were

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Speaker 1: also a beat after the talks, hailing the prospect of

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Speaker 1: pulling relations with the US out of the deep freeze,

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Speaker 1: even as they ruled out concessions such as allowing European

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Speaker 1: troops into Ukraine to police a PCD.

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Speaker 2: The UK Defense Secretary says Britain needs to re arm

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Speaker 2: to deal with a new era of threat from Russia.

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Speaker 2: In a speech, John Healey said that he wants to

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Speaker 2: make the Ministry of Defense run like a footy one

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Speaker 2: hundred company. He says it's the biggest shakeup of UK

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Speaker 2: defense for fifty years.

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Speaker 7: As a new government, we're delivering for defense. Over these

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Speaker 7: first seven months, we've stepped up and speeded up support

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Speaker 7: for Ukraine. We've increased spending this year by nearly three

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Speaker 7: billion pounds and we'll set a path to spending two

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Speaker 7: point five percent of GDP in the spring.

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Speaker 2: Heally wants investment in the armed forces to be paired

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Speaker 2: with reform, with the UK military being asked to ensure

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Speaker 2: better value for money for its twenty billion pound budget.

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Speaker 2: While the government has pledged to increase defense spending to

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Speaker 2: two and a half percent of UK GDP, there are

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Speaker 2: concerns from both military figures and the new US administration

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Speaker 2: that it won't be enough.

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Speaker 1: Herms is our to free all Israeli hostages in exchange

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Speaker 1: for the countries full with Gaza aiming for a permanent ceasefire.

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Speaker 1: The two sides are preparing to enter negotiations on how

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Speaker 1: to achieve a second phase of the ceasefire. Israel says

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Speaker 1: it seeks the total removal of Harmas as a governing

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Speaker 1: and military force in Gaza. The current framework expires in

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Speaker 1: early March.

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Speaker 2: Now to some earnings, HSBC expects to cut expenses by

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Speaker 2: one and a half billion dollars a year as part

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Speaker 2: of its global restructuring program. The lender detailed the plans

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Speaker 2: whilst reporting fourth quarter pre tax profit of two point

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Speaker 2: three billion dollars this morning. The numbers, which beat analyst estimates,

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Speaker 2: came as the bank announced a two billion dollar share

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Speaker 2: buy back, But our senior bank analyst Thomas Nutsel says

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Speaker 2: that the savings full short of expectations.

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Speaker 8: This is the lower end of the range which was

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Speaker 8: cited by media. One point five billions it were coming from,

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Speaker 8: probably mostly from wagers and salaries. Is around a person

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Speaker 8: of the wages and solids for ages we see. We

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Speaker 8: haven't heard of any numbers for job cuts, so I

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Speaker 8: think this is really disappointing. We were expecting a little

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Speaker 8: bit more details where the cuts will happen.

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Speaker 2: That was Bloomberg Intelligences Thomas Nutzell speaking there. In a statement,

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Speaker 2: HSBC CEO George L. Hedri said his team is creating

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Speaker 2: quote a simple, more agile firm. His remarks come after

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Speaker 2: leading the bank for roughly six months, during which time

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Speaker 2: he has wound down some investment banking operations and seen

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Speaker 2: the departure of top executives.

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Speaker 1: Those are your top stories on the markets? Yesterday, we

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Speaker 1: saw the S and P five hundred hit another record high,

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Speaker 1: finishing up by two tenths of one percent, helped by

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Speaker 1: tech shares, Intel shares jumping sixteen percent, and mid break

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Speaker 1: up speculation. European stocks also ended higher. This Toxics unded

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Speaker 1: up by three tenths of one percent. More strength and

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Speaker 1: Defense and banking names at play there. The treasury yield

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Speaker 1: the tenure yesterday rising seven basis points drag lower, and

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Speaker 1: by the continued weakness in European bonds. We've got that

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Speaker 1: tenure yield hovering at four point five five percent today

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Speaker 1: after the dollar strength and by two tenths of one

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Speaker 1: percent yesterday. It's a touchweaker in trading today. We're looking

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Speaker 1: at the euro at one oh four fifty eight, up

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Speaker 1: a tenth against the dollar this morning. Stocks in Asia,

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Speaker 1: the MSCIS specific index down by two tenths of one percent.

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Speaker 1: The Nicke in Tokyo is three tenths lower as well.

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Speaker 1: Concerns about the latest tariff threats from the US on

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Speaker 1: car makers among those that are at play this morning.

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Speaker 1: So some of the shares that could potentially be effective

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Speaker 1: by that are some of the companies that can potentially

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Speaker 1: be affected by that as well. Thinking about the likes

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Speaker 1: of Toyota and Honda, they are under pressure this morning

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Speaker 1: as well. Toyota shares down by one point nine percent.

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Speaker 2: So those are the markets in a moment. We're going

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Speaker 2: to bring you more on President Trump's twenty five percent

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Speaker 2: tariff threat and possible putin summit, plus HSBC's cost cutting plan.

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Speaker 2: But another story has caught my eye this morning. One

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Speaker 2: of the greatest collections of marbles and Roman antiquities is

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Speaker 2: finally being opened up to the public. Stephen and Bloomberg

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Speaker 2: BusinessWeek has the most amazing account of how that has happened,

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Speaker 2: how Giovanni Torlonia and then his son Alessandro came to

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Speaker 2: have this huge collection. The Torlonia Collection six hundred and

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Speaker 2: twenty two pieces, a neoclassical villa in the heart of Rome,

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Speaker 2: which has an additional thousand antique objects. Now, some of

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Speaker 2: this has been shown in recent years, but Bloomberg BusinessWeek

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Speaker 2: got to go inside actually where they're doing a lot

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Speaker 2: of the restoration and have a look at some of

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Speaker 2: those marbles.

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Speaker 3: The pictures are incredible.

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Speaker 1: Yeah, it's a great story about even getting into the

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Speaker 1: buildings seem like a bit of a challenge for our

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Speaker 1: colleague James Tarmi as well. This is an anticipation of

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Speaker 1: an exhibition that's going to happen at the Art Institution

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Speaker 1: in Chicago as well, so some of these pieces will

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Speaker 1: be shown. But essentially it sounds like walking into a

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Speaker 1: museum that might have been closed for a while. A

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Speaker 1: lot of these magnificent oars works still covered up that

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Speaker 1: haven't been displayed publicly as well. So really fascinating story

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Speaker 1: and once to look forward to ahead of that exhibition

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Speaker 1: opening next month.

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Speaker 2: Now, Europe is reeling from proposals in read that the

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Speaker 2: US could cut a deal with Putin to end the

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Speaker 2: fighting in Ukraine, but perhaps sacrifice the security of Ukraine

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Speaker 2: and of Europe. Now, President Trump may also dramatically escalate

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Speaker 2: the trade wars. He proposes tariffs of twenty five percent

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Speaker 2: on pharmaceuticals, vehicles, and semiconductors joining us. Now is our

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Speaker 2: senior editor, Bill Ferries to discuss Bill A very good

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Speaker 2: morning to you. Is President Trump going to settle the

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Speaker 2: war in Ukraine, perhaps on Russia's terms or more on

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Speaker 2: Russia's terms?

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Speaker 9: Well, things are moving so quickly now, I mean literally,

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Speaker 9: it was just over a month ago that the Biden

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Speaker 9: administration was shoveling all the weaponry and money it could

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Speaker 9: out the door to help Ukraine fend off Russia. Now

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Speaker 9: we've had these talks and riad four hours of talks,

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Speaker 9: and yes to your question. The critics of the Trump

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Speaker 9: approach say that the administration has already signaled some key

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Speaker 9: issues that Russia has wanted, which is no NATO membership

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Speaker 9: for Ukraine, basically an end to a lot of the

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Speaker 9: military support, US troops not being on the ground in

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Speaker 9: Ukraine in a post war scenario. So the critics say

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Speaker 9: that a lot of this has taken place publicly. I

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Speaker 9: think Marco Rubio tried to be a little more measured

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Speaker 9: in his comments following those four hours of talks and ryod,

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Speaker 9: But it is clear that this is moving very quickly.

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Speaker 9: President Trump even saying that he could be personally meeting

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Speaker 9: with Vladimir Putin possibly by the end of the month.

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Speaker 1: What about sanctions in this as well? The US and

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Speaker 1: Europe have sweeping sanctions in place on Russia's economy and

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Speaker 1: undeed on entities and individuals therein. Is there something that

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Speaker 1: there's perhaps the door opened to things being changed on.

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Speaker 9: This one of those well, I think one of the

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Speaker 9: more surprising things we heard from Marco Secretary State Marco

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Speaker 9: Rubio was that he talked about all the promising economic

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Speaker 9: opportunities there would be if the US and Russia could

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Speaker 9: get over this dispute in Ukraine. So certainly that would

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Speaker 9: require at the very beginning getting rid of some of

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Speaker 9: these US sanctions at the very least came in very

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Speaker 9: hard in late twenty twenty one or early twenty twenty two,

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Speaker 9: excuse me, and have had a big impact on the

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Speaker 9: Russian economy. But the new administration already kind of talking

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Speaker 9: past this future where a piece or some sort of

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Speaker 9: a deal has come to Ukraine and the US and

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Speaker 9: Russia can start restart economic ties.

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Speaker 2: What does all of this mean for Ukraine, because there've

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Speaker 2: also been various demands for mineral rights and for elections

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Speaker 2: in Ukraine.

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Speaker 9: Yeah, it hasn't exactly right. There hasn't been at a

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Speaker 9: lot of information from the US side on what Ukraine

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Speaker 9: would get out of this besides an end of the conflict.

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Speaker 9: Looks like they'd be forced to end this with Russian

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Speaker 9: troops on captured Ukrainian territory. They've been asked to give

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Speaker 9: up about fifty percent of the profits to any development

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Speaker 9: of critical minerals to the United States, but the US

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Speaker 9: hasn't said what kind of guarantees it would give Ukraine.

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Speaker 9: So President zelenskive Ukraine canceling his trip to Saudi Arabia

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Speaker 9: to try to attend some of these talks. He said

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Speaker 9: he wasn't invited, and he doesn't like the idea that

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Speaker 9: there are talks taking place without Ukraine's input.

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Speaker 1: The other story, of course, we're monitoring out of the

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Speaker 1: US as the latest threats around tariffs twenty five percent

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Speaker 1: on pharmaceuticals, on cars, and semiconductors. This is a plan

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Speaker 1: that's to be announced now in April. What more do

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Speaker 1: we know?

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Speaker 9: Yeah, President Trump making some vague, kind of vague comments

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Speaker 9: about twenty five percent on these different sectors. So it's

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Speaker 9: gone from beyond the reciprocal tariffs and the steel and

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Speaker 9: a luminum tariffs that we had talked about to hitting

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Speaker 9: directly on the automobile, semiconductor, pharmaceutical, medical technology sectors. And

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Speaker 9: he said it would be around he would talk about

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Speaker 9: it on April twenty second, around the neighborhood of twenty

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Speaker 9: five percent. It's clear that it tends to continue pushing

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Speaker 9: this tool. You need a complicated spreadsheet now to track

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Speaker 9: all the deadlines of when some of these tariffs come

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Speaker 9: into play. But those kind of things that are set

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Speaker 9: off several weeks in the future do give countries and

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Speaker 9: companies an opportunity to try to either negotiate with the

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Speaker 9: Trump administration or if you're a company to say, hey,

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Speaker 9: maybe we can try to relocate some production into the US.

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Speaker 9: But when you look at something like automobiles, that could

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Speaker 9: potentially hit eight million autos that get imported in the US.

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Speaker 9: That's half of all new auto sales in America. So

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Speaker 9: it would be very hard to avoid a big inflationary

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Speaker 9: impact if comes to pass.

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Speaker 2: Okay, Bill, thank you so much for being with us

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Speaker 2: this morning. Our senior editor Bill Ferry is joining us

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Speaker 2: on that trade story. The EU's top trade official is

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Speaker 2: actually traveling to Washington this week to meet a counterparts

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Speaker 2: in the US government in a last ditch attempt to

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Speaker 2: avoid being hit by duties perhaps in April.

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Speaker 3: We're not exactly sure yet.

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Speaker 1: Yeah, indeed, and just another strand of this as well,

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Speaker 1: we know the US has been very interested in some

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Speaker 1: of the rare earth well that they see Ukraine as having.

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Speaker 1: In our opinion, Columnistavier Blast, an expert in commodities, writing

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Speaker 1: that in fact, there's no evidence that Ukraine has these

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Speaker 1: sort of resources or rich mineral endowment that it would

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Speaker 1: be able to hand over to the US. As well,

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Speaker 1: he points to the US Geological Survey not listing Ukraine

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Speaker 1: as having any reserves, and particularly not of the kind

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Speaker 1: of rareer it's like lithium for example, that could be

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Speaker 1: very valuable, and he says that it would be a

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Speaker 1: folly to presume that there would be some sort of

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Speaker 1: huge benefit to be had from excavating rarer in Ukraine.

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Speaker 1: You can read having your blasts please spoonbrig dot com

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Speaker 1: for a slash opinion.

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Speaker 2: Let's think about earnings now from Europe's largest bank, HSBC.

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Speaker 2: Fourth quarter pre tax profit was a big beat at

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Speaker 2: two point three billion dollars, but the bank has also

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Speaker 2: announced a major restructuring program for the next two years.

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Speaker 2: For more, let's bring in Bloomberg's senior Asia finance correspondent

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Speaker 2: and Marin Chowdry and Breen.

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Speaker 3: Good morning.

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Speaker 2: What can you tell us in terms of the overview

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Speaker 2: of what HSBC announced this morning?

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Speaker 10: Yes, good morning. You know, there were a lot of

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Speaker 10: expectations in what was going to be announced, but the

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Speaker 10: actual statement was a lot more muted than expected. Albeit

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Speaker 10: the fourth quarter profit numbers were pretty good, you know,

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Speaker 10: it beat expectations two point three billion dollars. They also

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Speaker 10: announced a two billion dollars share buyback, which is great

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Speaker 10: news for shareholders. However, what analysts will be looking for

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Speaker 10: today is perhapserhaps more details on their massive restructuring. So

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Speaker 10: what they have said is that they are taking there's

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Speaker 10: going to be a one point eight billion dollars in

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Speaker 10: costs linked to severance packages and other upfront costs which

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Speaker 10: they haven't really detailed on what exact how many staff

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Speaker 10: to be let go at this point in time, and

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Speaker 10: this particular cost will be taken over this year and

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Speaker 10: into twenty twenty six.

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Speaker 1: Yeah, and indeed this is that cost gotting a key

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Speaker 1: part of the CEO Jorgel Hedry's plans since he took

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Speaker 1: over his leadership at the bank last September as well

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Speaker 1: in context, how big are changes that's being proposed at HSBC.

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Speaker 10: Right, You know with the new CEO, George Hedri who

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Speaker 10: was the previous CFO, are very much focused on numbers,

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Speaker 10: as to be expected. He's been at their home for

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Speaker 10: roughly six months and HSBC has essentially witnessed one of

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Speaker 10: the biggest upheavals in more than a decade. So he's

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Speaker 10: wound down some of the lenders investment banking operations across Europe,

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Speaker 10: the UK and Americas in a bit too focus in

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Speaker 10: areas where he can, as it says, better serve its

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Speaker 10: corporate and institutional clients. And these broad moves have also

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Speaker 10: seen a slew of top execs heading for the exits.

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Speaker 10: And you know, in a nutshville, he's honed the focus

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Speaker 10: on the bank to Asia and selective markets in the

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Speaker 10: Middle East. And the important thing to note is that

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Speaker 10: he has warned staff and the general you know in

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Speaker 10: the investment community that he was going to take and

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Speaker 10: access such So days after taking over from the previous CEO,

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Speaker 10: nol Quinn, he told a town hall meeting in Hong

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Speaker 10: Kong that he'd be focused on keeping a lid on costs,

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Speaker 10: and essentially six weeks later he unveiled a revamp that

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Speaker 10: also involved creating a new global Commercial and Institutional Banking unit,

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Speaker 10: through which combines the lender's two largest divisions. So you've

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Speaker 10: got now Hong Kong and the UK as a staff

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Speaker 10: and a loan business. So you know, he's been a

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Speaker 10: very busy man.

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Speaker 8: Yeah.

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Speaker 2: I mean they had a huge footprint, didn't they. I

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Speaker 2: was reading something like one hundred different countries. So that's

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Speaker 2: been paired back quite a bit. What of the two

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Speaker 2: billion dollar share buyback, and also HSBC's share price right

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Speaker 2: the buy back.

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Speaker 10: They have been doing share buybacks over the last few

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Speaker 10: quarters since let's say at least twelve months, so that's

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Speaker 10: not surprising. I think the amount was slightly lower than expected,

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Speaker 10: but shareholders are generally pretty happy with the share price.

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Speaker 10: You know, it surged almost fifteen percent this year to

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Speaker 10: date in London, and they were up around one percent

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Speaker 10: in Hong Kong trading after the results announcement. They actually

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Speaker 10: started off slightly lower early this morning, so it pears

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Speaker 10: that given the shared price turning around, investors are generally

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Speaker 10: happy with the results.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 1: Carol. Join us again tomorrow morning for all the news

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