Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg DAYBAC podcast, available every morning on Apple,
Speaker 2: Spotify or wherever you listen. It's Wednesday, the nineteenth of
Speaker 2: February in London. I'm Caroline Hepkea and.
Speaker 1: I'm Stephen Carroll. Coming up today, Donald Trump proposes large
Speaker 1: levies on imports of cars and other products and his
Speaker 1: latest tariff salvo.
Speaker 2: The US says Russia's sanctions will remain for now as
Speaker 2: the US administration urges Ukraine to sign an economic partnership.
Speaker 1: Plus sparing no expense. HSBC announces a big profit beat
Speaker 1: as the bank doubles down on its drive to cutcasts.
Speaker 3: Let's start whether round up of our top stories.
Speaker 1: Donald Trump says he will likely impose tariffs of around
Speaker 1: twenty five percent on all imports of cars, semiconductors, and pharmaceuticals.
Speaker 1: The US president says he plans to announce the new
Speaker 1: charges on the second of April. European and Asian automakers,
Speaker 1: including VW and Hyundai, could be the face the biggest
Speaker 1: hit from the levies. America currently imports around eight million
Speaker 1: cars and light trucks each year. Speaking two reporters at
Speaker 1: his Marilago Club, Trump doubled down on his plan to
Speaker 1: rebalance the US's trading relationships across the globe.
Speaker 4: It'll be twenty five percent and higher, and it'll go
Speaker 4: very substantially higher over course of a year. But we
Speaker 4: want to give them time to come in because, as
Speaker 4: you know, when they come into the United States and
Speaker 4: they have their plant or factory here, there is no tariff.
Speaker 4: So we want to give them a little bit of
Speaker 4: a chance.
Speaker 1: The new charges would come on top of Trump's previously
Speaker 1: announced twenty five percent tariffs on steel and aluminium imports,
Speaker 1: set to take effect in March. Last week, the US
Speaker 1: president also ordered his administration to look into imposing broad
Speaker 1: reciprocal tariffs on trading partners across the globe.
Speaker 2: As Trump looks to remodel America's global trading relationships, administration
Speaker 2: is continuing its efforts to shrink the US federal government.
Speaker 2: At the center of that effort is Elon Musk and
Speaker 2: his Department of Government Efficiency team, who have faced criticism
Speaker 2: and lawsuits over their approach to cutting spending. But speaking
Speaker 2: to Fox News channels Hannity alongside President Trump, Elon Musk
Speaker 2: sought to justify the approach.
Speaker 5: The overall goal is to try to get trillion dollars
Speaker 5: out of the deficit, and if the deficit is not
Speaker 5: brought under control, America will go bankrupt. This is a
Speaker 5: very important thing for people to.
Speaker 2: Understand Musk's comments too. Fox News came as a US
Speaker 2: judge rejected a bid for immediate court intervention from Democrats
Speaker 2: who say that he does not have the authority to
Speaker 2: reshape the US government and its spending. Meanwhile, US Treasury
Speaker 2: Secretary Scott Bessent says that Musk's Doze team already have
Speaker 2: already identified and estimated fifty billion dollars in savings. He
Speaker 2: told Fox News that taxpayers don't need to worry about
Speaker 2: the Musque's team approach accessing their private data.
Speaker 5: I think it's unfortunate that they're trying to kind of
Speaker 5: a lampoon what Elon Musk and the Dose teams doing.
Speaker 5: I think it's very unfortunate they're trying to be fear
Speaker 5: mongerers with the American people.
Speaker 2: Bessent also told Fox News he thinks Ukraine's President Vlodomi
Speaker 2: Zelenski will sign an economic partnership agreement with the US
Speaker 2: that hands over half the value of Ukraine's vast mineral
Speaker 2: rights to the US as compensation for aid. The US
Speaker 2: Treasury Secretary says that Trump wants to show Ukrainians that
Speaker 2: the US supports them, whilst demonstrating to US taxpayers that
Speaker 2: there will be a return on the money that has
Speaker 2: already been sent to the country.
Speaker 1: The U s Secretary of State Mark Rubio has told
Speaker 1: European allies that the US will keep sanctions on Russia
Speaker 1: in place at least until a deal to end the
Speaker 1: Ukraine conflict has reached. The assurance comes after America's most
Speaker 1: your diplomat held face to face talks in Saudi Arabia
Speaker 1: with his Russian counterpart for the first time since Moscow's
Speaker 1: full scale invasion of Ukraine. Speaking after the meeting, Rubio
Speaker 1: insisted peace talks would include all major parties.
Speaker 6: The first next step is working through our respective teams
Speaker 6: at the diplomatic side, just to ensure that our diplomatic
Speaker 6: missions can function. There's been a series of reciprocal actions
Speaker 6: taken over the last ten years that have really diminished
Speaker 6: our ability to operate in Moscow as an example, and
Speaker 6: they would argue their ability to operate in Washington. We're
Speaker 6: going to need to have vibrant diplomatic missions that are
Speaker 6: able to function normally in order to be able to
Speaker 6: continue these conduits.
Speaker 1: US Secretary of State Marco Rubio speaking in Riad after
Speaker 1: talks that excluded Ukraine and European allies. Russian officials were
Speaker 1: also a beat after the talks, hailing the prospect of
Speaker 1: pulling relations with the US out of the deep freeze,
Speaker 1: even as they ruled out concessions such as allowing European
Speaker 1: troops into Ukraine to police a PCD.
Speaker 2: The UK Defense Secretary says Britain needs to re arm
Speaker 2: to deal with a new era of threat from Russia.
Speaker 2: In a speech, John Healey said that he wants to
Speaker 2: make the Ministry of Defense run like a footy one
Speaker 2: hundred company. He says it's the biggest shakeup of UK
Speaker 2: defense for fifty years.
Speaker 7: As a new government, we're delivering for defense. Over these
Speaker 7: first seven months, we've stepped up and speeded up support
Speaker 7: for Ukraine. We've increased spending this year by nearly three
Speaker 7: billion pounds and we'll set a path to spending two
Speaker 7: point five percent of GDP in the spring.
Speaker 2: Heally wants investment in the armed forces to be paired
Speaker 2: with reform, with the UK military being asked to ensure
Speaker 2: better value for money for its twenty billion pound budget.
Speaker 2: While the government has pledged to increase defense spending to
Speaker 2: two and a half percent of UK GDP, there are
Speaker 2: concerns from both military figures and the new US administration
Speaker 2: that it won't be enough.
Speaker 1: Herms is our to free all Israeli hostages in exchange
Speaker 1: for the countries full with Gaza aiming for a permanent ceasefire.
Speaker 1: The two sides are preparing to enter negotiations on how
Speaker 1: to achieve a second phase of the ceasefire. Israel says
Speaker 1: it seeks the total removal of Harmas as a governing
Speaker 1: and military force in Gaza. The current framework expires in
Speaker 1: early March.
Speaker 2: Now to some earnings, HSBC expects to cut expenses by
Speaker 2: one and a half billion dollars a year as part
Speaker 2: of its global restructuring program. The lender detailed the plans
Speaker 2: whilst reporting fourth quarter pre tax profit of two point
Speaker 2: three billion dollars this morning. The numbers, which beat analyst estimates,
Speaker 2: came as the bank announced a two billion dollar share
Speaker 2: buy back, But our senior bank analyst Thomas Nutsel says
Speaker 2: that the savings full short of expectations.
Speaker 8: This is the lower end of the range which was
Speaker 8: cited by media. One point five billions it were coming from,
Speaker 8: probably mostly from wagers and salaries. Is around a person
Speaker 8: of the wages and solids for ages we see. We
Speaker 8: haven't heard of any numbers for job cuts, so I
Speaker 8: think this is really disappointing. We were expecting a little
Speaker 8: bit more details where the cuts will happen.
Speaker 2: That was Bloomberg Intelligences Thomas Nutzell speaking there. In a statement,
Speaker 2: HSBC CEO George L. Hedri said his team is creating
Speaker 2: quote a simple, more agile firm. His remarks come after
Speaker 2: leading the bank for roughly six months, during which time
Speaker 2: he has wound down some investment banking operations and seen
Speaker 2: the departure of top executives.
Speaker 1: Those are your top stories on the markets? Yesterday, we
Speaker 1: saw the S and P five hundred hit another record high,
Speaker 1: finishing up by two tenths of one percent, helped by
Speaker 1: tech shares, Intel shares jumping sixteen percent, and mid break
Speaker 1: up speculation. European stocks also ended higher. This Toxics unded
Speaker 1: up by three tenths of one percent. More strength and
Speaker 1: Defense and banking names at play there. The treasury yield
Speaker 1: the tenure yesterday rising seven basis points drag lower, and
Speaker 1: by the continued weakness in European bonds. We've got that
Speaker 1: tenure yield hovering at four point five five percent today
Speaker 1: after the dollar strength and by two tenths of one
Speaker 1: percent yesterday. It's a touchweaker in trading today. We're looking
Speaker 1: at the euro at one oh four fifty eight, up
Speaker 1: a tenth against the dollar this morning. Stocks in Asia,
Speaker 1: the MSCIS specific index down by two tenths of one percent.
Speaker 1: The Nicke in Tokyo is three tenths lower as well.
Speaker 1: Concerns about the latest tariff threats from the US on
Speaker 1: car makers among those that are at play this morning.
Speaker 1: So some of the shares that could potentially be effective
Speaker 1: by that are some of the companies that can potentially
Speaker 1: be affected by that as well. Thinking about the likes
Speaker 1: of Toyota and Honda, they are under pressure this morning
Speaker 1: as well. Toyota shares down by one point nine percent.
Speaker 2: So those are the markets in a moment. We're going
Speaker 2: to bring you more on President Trump's twenty five percent
Speaker 2: tariff threat and possible putin summit, plus HSBC's cost cutting plan.
Speaker 2: But another story has caught my eye this morning. One
Speaker 2: of the greatest collections of marbles and Roman antiquities is
Speaker 2: finally being opened up to the public. Stephen and Bloomberg
Speaker 2: BusinessWeek has the most amazing account of how that has happened,
Speaker 2: how Giovanni Torlonia and then his son Alessandro came to
Speaker 2: have this huge collection. The Torlonia Collection six hundred and
Speaker 2: twenty two pieces, a neoclassical villa in the heart of Rome,
Speaker 2: which has an additional thousand antique objects. Now, some of
Speaker 2: this has been shown in recent years, but Bloomberg BusinessWeek
Speaker 2: got to go inside actually where they're doing a lot
Speaker 2: of the restoration and have a look at some of
Speaker 2: those marbles.
Speaker 3: The pictures are incredible.
Speaker 1: Yeah, it's a great story about even getting into the
Speaker 1: buildings seem like a bit of a challenge for our
Speaker 1: colleague James Tarmi as well. This is an anticipation of
Speaker 1: an exhibition that's going to happen at the Art Institution
Speaker 1: in Chicago as well, so some of these pieces will
Speaker 1: be shown. But essentially it sounds like walking into a
Speaker 1: museum that might have been closed for a while. A
Speaker 1: lot of these magnificent oars works still covered up that
Speaker 1: haven't been displayed publicly as well. So really fascinating story
Speaker 1: and once to look forward to ahead of that exhibition
Speaker 1: opening next month.
Speaker 2: Now, Europe is reeling from proposals in read that the
Speaker 2: US could cut a deal with Putin to end the
Speaker 2: fighting in Ukraine, but perhaps sacrifice the security of Ukraine
Speaker 2: and of Europe. Now, President Trump may also dramatically escalate
Speaker 2: the trade wars. He proposes tariffs of twenty five percent
Speaker 2: on pharmaceuticals, vehicles, and semiconductors joining us. Now is our
Speaker 2: senior editor, Bill Ferries to discuss Bill A very good
Speaker 2: morning to you. Is President Trump going to settle the
Speaker 2: war in Ukraine, perhaps on Russia's terms or more on
Speaker 2: Russia's terms?
Speaker 9: Well, things are moving so quickly now, I mean literally,
Speaker 9: it was just over a month ago that the Biden
Speaker 9: administration was shoveling all the weaponry and money it could
Speaker 9: out the door to help Ukraine fend off Russia. Now
Speaker 9: we've had these talks and riad four hours of talks,
Speaker 9: and yes to your question. The critics of the Trump
Speaker 9: approach say that the administration has already signaled some key
Speaker 9: issues that Russia has wanted, which is no NATO membership
Speaker 9: for Ukraine, basically an end to a lot of the
Speaker 9: military support, US troops not being on the ground in
Speaker 9: Ukraine in a post war scenario. So the critics say
Speaker 9: that a lot of this has taken place publicly. I
Speaker 9: think Marco Rubio tried to be a little more measured
Speaker 9: in his comments following those four hours of talks and ryod,
Speaker 9: But it is clear that this is moving very quickly.
Speaker 9: President Trump even saying that he could be personally meeting
Speaker 9: with Vladimir Putin possibly by the end of the month.
Speaker 1: What about sanctions in this as well? The US and
Speaker 1: Europe have sweeping sanctions in place on Russia's economy and
Speaker 1: undeed on entities and individuals therein. Is there something that
Speaker 1: there's perhaps the door opened to things being changed on.
Speaker 9: This one of those well, I think one of the
Speaker 9: more surprising things we heard from Marco Secretary State Marco
Speaker 9: Rubio was that he talked about all the promising economic
Speaker 9: opportunities there would be if the US and Russia could
Speaker 9: get over this dispute in Ukraine. So certainly that would
Speaker 9: require at the very beginning getting rid of some of
Speaker 9: these US sanctions at the very least came in very
Speaker 9: hard in late twenty twenty one or early twenty twenty two,
Speaker 9: excuse me, and have had a big impact on the
Speaker 9: Russian economy. But the new administration already kind of talking
Speaker 9: past this future where a piece or some sort of
Speaker 9: a deal has come to Ukraine and the US and
Speaker 9: Russia can start restart economic ties.
Speaker 2: What does all of this mean for Ukraine, because there've
Speaker 2: also been various demands for mineral rights and for elections
Speaker 2: in Ukraine.
Speaker 9: Yeah, it hasn't exactly right. There hasn't been at a
Speaker 9: lot of information from the US side on what Ukraine
Speaker 9: would get out of this besides an end of the conflict.
Speaker 9: Looks like they'd be forced to end this with Russian
Speaker 9: troops on captured Ukrainian territory. They've been asked to give
Speaker 9: up about fifty percent of the profits to any development
Speaker 9: of critical minerals to the United States, but the US
Speaker 9: hasn't said what kind of guarantees it would give Ukraine.
Speaker 9: So President zelenskive Ukraine canceling his trip to Saudi Arabia
Speaker 9: to try to attend some of these talks. He said
Speaker 9: he wasn't invited, and he doesn't like the idea that
Speaker 9: there are talks taking place without Ukraine's input.
Speaker 1: The other story, of course, we're monitoring out of the
Speaker 1: US as the latest threats around tariffs twenty five percent
Speaker 1: on pharmaceuticals, on cars, and semiconductors. This is a plan
Speaker 1: that's to be announced now in April. What more do
Speaker 1: we know?
Speaker 9: Yeah, President Trump making some vague, kind of vague comments
Speaker 9: about twenty five percent on these different sectors. So it's
Speaker 9: gone from beyond the reciprocal tariffs and the steel and
Speaker 9: a luminum tariffs that we had talked about to hitting
Speaker 9: directly on the automobile, semiconductor, pharmaceutical, medical technology sectors. And
Speaker 9: he said it would be around he would talk about
Speaker 9: it on April twenty second, around the neighborhood of twenty
Speaker 9: five percent. It's clear that it tends to continue pushing
Speaker 9: this tool. You need a complicated spreadsheet now to track
Speaker 9: all the deadlines of when some of these tariffs come
Speaker 9: into play. But those kind of things that are set
Speaker 9: off several weeks in the future do give countries and
Speaker 9: companies an opportunity to try to either negotiate with the
Speaker 9: Trump administration or if you're a company to say, hey,
Speaker 9: maybe we can try to relocate some production into the US.
Speaker 9: But when you look at something like automobiles, that could
Speaker 9: potentially hit eight million autos that get imported in the US.
Speaker 9: That's half of all new auto sales in America. So
Speaker 9: it would be very hard to avoid a big inflationary
Speaker 9: impact if comes to pass.
Speaker 2: Okay, Bill, thank you so much for being with us
Speaker 2: this morning. Our senior editor Bill Ferry is joining us
Speaker 2: on that trade story. The EU's top trade official is
Speaker 2: actually traveling to Washington this week to meet a counterparts
Speaker 2: in the US government in a last ditch attempt to
Speaker 2: avoid being hit by duties perhaps in April.
Speaker 3: We're not exactly sure yet.
Speaker 1: Yeah, indeed, and just another strand of this as well,
Speaker 1: we know the US has been very interested in some
Speaker 1: of the rare earth well that they see Ukraine as having.
Speaker 1: In our opinion, Columnistavier Blast, an expert in commodities, writing
Speaker 1: that in fact, there's no evidence that Ukraine has these
Speaker 1: sort of resources or rich mineral endowment that it would
Speaker 1: be able to hand over to the US. As well,
Speaker 1: he points to the US Geological Survey not listing Ukraine
Speaker 1: as having any reserves, and particularly not of the kind
Speaker 1: of rareer it's like lithium for example, that could be
Speaker 1: very valuable, and he says that it would be a
Speaker 1: folly to presume that there would be some sort of
Speaker 1: huge benefit to be had from excavating rarer in Ukraine.
Speaker 1: You can read having your blasts please spoonbrig dot com
Speaker 1: for a slash opinion.
Speaker 2: Let's think about earnings now from Europe's largest bank, HSBC.
Speaker 2: Fourth quarter pre tax profit was a big beat at
Speaker 2: two point three billion dollars, but the bank has also
Speaker 2: announced a major restructuring program for the next two years.
Speaker 2: For more, let's bring in Bloomberg's senior Asia finance correspondent
Speaker 2: and Marin Chowdry and Breen.
Speaker 3: Good morning.
Speaker 2: What can you tell us in terms of the overview
Speaker 2: of what HSBC announced this morning?
Speaker 10: Yes, good morning. You know, there were a lot of
Speaker 10: expectations in what was going to be announced, but the
Speaker 10: actual statement was a lot more muted than expected. Albeit
Speaker 10: the fourth quarter profit numbers were pretty good, you know,
Speaker 10: it beat expectations two point three billion dollars. They also
Speaker 10: announced a two billion dollars share buyback, which is great
Speaker 10: news for shareholders. However, what analysts will be looking for
Speaker 10: today is perhapserhaps more details on their massive restructuring. So
Speaker 10: what they have said is that they are taking there's
Speaker 10: going to be a one point eight billion dollars in
Speaker 10: costs linked to severance packages and other upfront costs which
Speaker 10: they haven't really detailed on what exact how many staff
Speaker 10: to be let go at this point in time, and
Speaker 10: this particular cost will be taken over this year and
Speaker 10: into twenty twenty six.
Speaker 1: Yeah, and indeed this is that cost gotting a key
Speaker 1: part of the CEO Jorgel Hedry's plans since he took
Speaker 1: over his leadership at the bank last September as well
Speaker 1: in context, how big are changes that's being proposed at HSBC.
Speaker 10: Right, You know with the new CEO, George Hedri who
Speaker 10: was the previous CFO, are very much focused on numbers,
Speaker 10: as to be expected. He's been at their home for
Speaker 10: roughly six months and HSBC has essentially witnessed one of
Speaker 10: the biggest upheavals in more than a decade. So he's
Speaker 10: wound down some of the lenders investment banking operations across Europe,
Speaker 10: the UK and Americas in a bit too focus in
Speaker 10: areas where he can, as it says, better serve its
Speaker 10: corporate and institutional clients. And these broad moves have also
Speaker 10: seen a slew of top execs heading for the exits.
Speaker 10: And you know, in a nutshville, he's honed the focus
Speaker 10: on the bank to Asia and selective markets in the
Speaker 10: Middle East. And the important thing to note is that
Speaker 10: he has warned staff and the general you know in
Speaker 10: the investment community that he was going to take and
Speaker 10: access such So days after taking over from the previous CEO,
Speaker 10: nol Quinn, he told a town hall meeting in Hong
Speaker 10: Kong that he'd be focused on keeping a lid on costs,
Speaker 10: and essentially six weeks later he unveiled a revamp that
Speaker 10: also involved creating a new global Commercial and Institutional Banking unit,
Speaker 10: through which combines the lender's two largest divisions. So you've
Speaker 10: got now Hong Kong and the UK as a staff
Speaker 10: and a loan business. So you know, he's been a
Speaker 10: very busy man.
Speaker 8: Yeah.
Speaker 2: I mean they had a huge footprint, didn't they. I
Speaker 2: was reading something like one hundred different countries. So that's
Speaker 2: been paired back quite a bit. What of the two
Speaker 2: billion dollar share buyback, and also HSBC's share price right
Speaker 2: the buy back.
Speaker 10: They have been doing share buybacks over the last few
Speaker 10: quarters since let's say at least twelve months, so that's
Speaker 10: not surprising. I think the amount was slightly lower than expected,
Speaker 10: but shareholders are generally pretty happy with the share price.
Speaker 10: You know, it surged almost fifteen percent this year to
Speaker 10: date in London, and they were up around one percent
Speaker 10: in Hong Kong trading after the results announcement. They actually
Speaker 10: started off slightly lower early this morning, so it pears
Speaker 10: that given the shared price turning around, investors are generally
Speaker 10: happy with the results.
Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the
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