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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak Youro podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Friday, the fourteenth of February in London.

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Speaker 1: I'm Stephen Carroll coming up today. US President Trump moves

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Speaker 1: to impose reciprocal tariffs on its trading partners. You can't

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Speaker 1: trust him, Ukraine Zelensky sounds of warning on Vladimir Putin.

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Speaker 1: Plus cuts are coming, Bloomberg learns HSBC is preparing for

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Speaker 1: a fresh round of layoffs. Let's start with a round

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Speaker 1: up of our top stories. US President Donald Trump has

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Speaker 1: ordered his administration to consider imposing reciprocal tariffs on its

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Speaker 1: trading partners. The levees would be customized for each country

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Speaker 1: and aim to offset their tariffs on US goods as

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Speaker 1: well as non tariff barriers to trade.

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Speaker 2: Again, whatever they charge us with judging the EMI, so

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Speaker 2: it works out very on. It's very It's a beautiful,

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Speaker 2: simple system, and we don't have to worry judging too

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Speaker 2: much or too little.

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Speaker 1: Reciprocal tariffs would amount Trump's broadest action to address US

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Speaker 1: trade deficits. Bloomberg Senior Economic Supporter Sean Donnan says, the

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Speaker 1: key focus is on how other countries tax consumers.

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Speaker 3: Value added taxes or VAT, and that's big in the EU.

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Speaker 3: There's more than one hundred and sixty countries in the

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Speaker 3: world that use a VAT. The US, of course, does not.

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Speaker 3: This kind of rekindles a battle that the US has

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Speaker 3: had on and off with Europe since the nineteen sixties

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Speaker 3: over how to treat taxes and trade. But we're going

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Speaker 3: to end up with some big numbers aim that some

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Speaker 3: big trading partners. We just don't yet know what those

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Speaker 3: numbers are going to be.

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Speaker 1: Bloomberg Shawn donnand speaking there as, Trump also told reporters

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Speaker 1: that he would enact import taxes at a later date

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Speaker 1: on cars, semiconductors, and pharmaceuticals, over and above the reciprocal tariffs.

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Speaker 1: The US president has already imposed ten percent tariffs on

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Speaker 1: Chinese goods and plans to put twenty five percent duties

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Speaker 1: in all US steel and aluminium imports next month. The

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Speaker 1: latest salvo on tariffs came as Trump and India's Prime

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Speaker 1: Minister Narandro Modi met in Washington. The two leaders agreed

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Speaker 1: to begin negotiations to address what Trump described as long

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Speaker 1: running disparities in their trade relationship.

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Speaker 2: It has been to US just about the highest tariffed

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Speaker 2: nation anywhere in the world. They've been very strong on tariffs.

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Speaker 2: I don't blame them necessarily, but it's a different way

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Speaker 2: of doing business. It's very hard to sell into India

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Speaker 2: because they have their trade bearers very strong tariffs.

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Speaker 1: Donald Trump was speaking there in that joint press conference

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Speaker 1: this as Narandro Mody said the two men had agreed

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Speaker 1: to more than double bilateral trade to five hundred billion

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Speaker 1: dollars by twenty thirty. Trump also said the US would

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Speaker 1: take steps to sell the F thirty five warplane to

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Speaker 1: India as part of a bigger commitment to deepening defense ties.

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Speaker 1: US has been reluctant to sell the planes to countries

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Speaker 1: where its technology might be stolen by adversaries. In Europe,

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Speaker 1: leaders are still coming to terms with the u US

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Speaker 1: shift and its policy towards Russia. After Trump and Putin's

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Speaker 1: surprise call to discross Ukraine, Ukrainian leader of Ladimir Zelenski

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Speaker 1: says he's warned the US president that Putin cannot be trusted,

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Speaker 1: adding that Ukraine must be part of any peace talks.

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Speaker 4: Today, we cannot predict how it all will go on.

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Speaker 4: But we must be strong. We will be very careful.

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Speaker 4: We need allies and fair partners. We cannot accept as

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Speaker 4: an independent country any agreements made without us.

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Speaker 5: Shap.

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Speaker 1: That was doder Mezelenski. They're speaking through a translator. The

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Speaker 1: Trump administration also told European allies they should buy American

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Speaker 1: weapons and military equipment to maintain the NATO alliance. This

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Speaker 1: as Bloomberg Economics calculates that protecting Ukraine and expanding Europe's

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Speaker 1: own militaries could cost the continent's major powers an additional

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Speaker 1: three point one trillion dollars over the next ten years.

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Speaker 1: In to some breaking news this hour, and nat West

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Speaker 1: has reported pre tax operating profit the beat estimates, coming

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Speaker 1: in at one point four to nine billion pounds. That's

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Speaker 1: above an estimate of one point four billion pounds. Net

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Speaker 1: income in the fourth quarter was at one point two

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Speaker 1: five billion pounds, also beating estimates. Net interest income slightly

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Speaker 1: above estimates at two point ninety seven billion pounds as well,

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Speaker 1: and also news that the UK Treasury has reduced its

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Speaker 1: stake in that West to seven point nine to eight percent.

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Speaker 1: That's down from eight point nine percent and staying with earnings.

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Speaker 1: Sales Aurmez climbed as a luxury group, benefit of from

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Speaker 1: a strong appetite over the holiday shopping season. Sales jumped

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Speaker 1: almost eighteen percent in the fourth quarter at constant exchange rates,

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Speaker 1: according to the latest results out from the firm this morning.

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Speaker 1: That's above what analysts had been expecting, which was growth

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Speaker 1: of eleven percent. Armes chairs have climbed more than twenty

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Speaker 1: percent since the start of this year. HSBC is planning

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Speaker 1: any round of job cuts next week. Bloomberg understands the

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Speaker 1: changes to its investment bank workforce will affect employees globally,

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Speaker 1: starting in Asia. That's the CEO Jean jel Hadri continues

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Speaker 1: his overhaul of Europe's biggest lender. Layoffs could begin as

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Speaker 1: early as Monday and will be based on performance, job

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Speaker 1: duplication and simplification, with some already underway in the firm's

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Speaker 1: markets division. JP Morgan, CEO, says the bank will scale

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Speaker 1: back spending on what he called stupid diversity initiatives that

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Speaker 1: he sees as wasteful. Responding to an employee question, Jamie

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Speaker 1: Diamond said plans to cancel some schemes was about costs

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Speaker 1: rather than backlash from the Trump administration. JP Morgan's longtime leader,

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Speaker 1: also reiterated the bank's commitment to working with black, Hispanic

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Speaker 1: and LGBTQ communities, but told staff that he was never

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Speaker 1: a firm believer in bias. Training and the UK's Prime Minister,

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Speaker 1: Kris Starmer, met China's top diplomat as the two countries

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Speaker 1: look to improve ties. The British leader joined a meeting

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Speaker 1: between farm mister Wange and National Security Advisor Jonathan Powell

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Speaker 1: Bloomberg James Wilcock reports.

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Speaker 6: Kiss Starmer expressed his intention to build a consistent and

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Speaker 6: respectful relationship between the UK and China, and according to

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Speaker 6: China's Global Times, Foreign Minister Wang Yi So, the UK

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Speaker 6: government had started the process of improving relations and looked

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Speaker 6: forward to deepening cooperation on AI and climate change. Both

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Speaker 6: China's top diplomat and the US Ambassador to Britain were

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Speaker 6: in Downing Street yesterday. It showcases the balancing act Britain

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Speaker 6: is trying to pull off, trying to build ties to

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Speaker 6: the world's second largest economy while avoiding the ayre of

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Speaker 6: the US President Donald Trump in London, James Orcock Bloomberg Radio.

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Speaker 1: Those are your top stories. Eurostocks on the market's Eurostox

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Speaker 1: fifty futures of down two tenths of one percent, so

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Speaker 1: we're seeing a narrowing of the negative sentiment on European

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Speaker 1: stock markets. The Eurostox fifty index actually hit a record

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Speaker 1: high in trading yesterday. We've had some optimism boosted around

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Speaker 1: the prospect of those reciprocal tariffs not coming until April,

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Speaker 1: leaving some space for negotiation. The Mascis Specific Index six

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Speaker 1: tenths higher as well. On the currency markets, the Bloomberg

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Speaker 1: Dollars Spot Index now in the red a tenth of

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Speaker 1: one percent as well. That's after the drop that we

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Speaker 1: saw yesterday. So the euros trailing at one of four

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Speaker 1: to sixty seven against the dollar of the pound at

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Speaker 1: one twenty five sixty seven. And in a moment, we'll

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Speaker 1: bring you more on those announcements out of the US

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Speaker 1: on tariffs. But just a word or another story that

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Speaker 1: caught our eye this morning to do with how one

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Speaker 1: hedge fund is using AI. It's replaced junior analysts at

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Speaker 1: the Australian hedge fund, Minotaur Capital. That's according to reporting

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Speaker 1: by our colleagues Harry Brompton and Georgina McKay so their

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Speaker 1: bets using their large language model have returned almost fourteen

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Speaker 1: percent in the six months to the end of January,

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Speaker 1: versus almost seven percent for the MSCI All Country World Index. Now,

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Speaker 1: it's not unusual that hedge funds be using AI for

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Speaker 1: this sort of work, but Minotaur believes that they have

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Speaker 1: developed a large language model that can digest larger amounts

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Speaker 1: of information and produces two thousand word reports on any

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Speaker 1: global stock. It deems has the potential to double in

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Speaker 1: three years or improve tenfold in the so in decades.

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Speaker 1: They combine this at making their own inquiries as a

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Speaker 1: recipe for success. But the co founder Arman Rosenberg telling

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Speaker 1: Bloomberg the cost of developing that AI large language model

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Speaker 1: is about half that of a junior analyst's salary. You

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Speaker 1: can read more in that story on Bloomberg dot com

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Speaker 1: and on the terminal. So let's turn back to tariff's then,

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Speaker 1: the US President now talking about reciprocal tariffs on trading

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Speaker 1: partners in response to levies, regulation or other non tariff barriers.

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Speaker 1: But the timeline is key here. Let's bring in our

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Speaker 1: senior editor Bill Ferries for more. But what can you

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Speaker 1: tell US about what Donald Trump has announced here.

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Speaker 7: Well, what he's announced is a really sweeping demand of

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Speaker 7: his US Trade representative and his Commerce secretary to propose

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Speaker 7: new levies on a country by country basis in a

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Speaker 7: bid to kind of rebalance trade relations between the US

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Speaker 7: and every one of its trading partners. So that requires

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Speaker 7: looking at not just what kind of tariffs those countries

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Speaker 7: impose on US goods, but of non tariff barriers those

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Speaker 7: countries have too, And a non tariff barrier could be

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Speaker 7: things like regulations that could include things like value added tax,

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Speaker 7: include a whole host of things that make selling American

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Speaker 7: goods into that country difficult. And the end result of

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Speaker 7: this is expected to be a list of recommendations for

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Speaker 7: again every single country on how much the US should

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Speaker 7: raise tariffs against those countries to try to even things out.

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Speaker 7: President Trump presented it as a very easy way of

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Speaker 7: trying to rebalance trade, but the reality is it's going

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Speaker 7: to be quite difficult, and it's going to take quite

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Speaker 7: a bit of time, I think, to go through all

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Speaker 7: of that.

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Speaker 1: Yeah, indeed, I mean, those are the key factors that

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Speaker 1: markets appear to be focused on, both the timeline and

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Speaker 1: the fact that this looks like a very complex and

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Speaker 1: potentially unworkable task.

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Speaker 7: It is going to be complex. The Howard Lutnik, who

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Speaker 7: is still Trump's nominee to lead the Commerce Department, he

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Speaker 7: told reporters that he think all he thinks all the

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Speaker 7: studies about this could be done by April first, and

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Speaker 7: that President Trump could act on it on his recommendations

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Speaker 7: after that. The reality, of course, is that that also

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Speaker 7: opens up a big space of time for negotiations to

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Speaker 7: start with all the countries involved. So I would imagine

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Speaker 7: any world leader who's talking or meeting with Donald Trump

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Speaker 7: over the next six or seven weeks between now and

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Speaker 7: April will be putting in a good word and also

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Speaker 7: trying to say like what sort of measures they're willing

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Speaker 7: to take, whether it's buying more American goods or reducing

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Speaker 7: some of those tariffs to try to make it less

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Speaker 7: likely that they will face the full impact of potential tariffs.

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Speaker 1: The interesting also to see the comments from Peter Navarro

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Speaker 1: talking dismissing concerns that this might push up prices for

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Speaker 1: US consumers as well, which is, you know, one of

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Speaker 1: the factors of the economists have been thinking about.

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Speaker 7: Yeah, and it comes you know, all of this comes

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Speaker 7: of course, just yesterday there was a higher than expected

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Speaker 7: inflation reading in the US, so the trend is not

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Speaker 7: looking good. The bets on when the Federal Reserve will

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Speaker 7: cut rates have been pushed back even further. The Trump

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Speaker 7: administration and Peter Navarro basically arguing that hey, we did

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Speaker 7: some tariffs in Trump's first term, and the reality was

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Speaker 7: it was a pretty limited impact, they said. Studies have

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Speaker 7: shown that exporters to the US absorbed some of that

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Speaker 7: some of that cost with lower margins, but there were

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Speaker 7: costs passed on. And certainly, as you talk about an

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Speaker 7: inflationary environment in the US, when people were worried about

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Speaker 7: the price of eggs, the price of homes, the price

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Speaker 7: of cars, particularly with things like the steel and aluminum tariffs,

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Speaker 7: it's going to be a real difficult question politically about

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Speaker 7: whether the president goes forward with US.

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Speaker 1: Okay, Bill Ferries, our senior editor, thank you very much

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Speaker 1: for joining us this morning. Well, the threat of tariffs

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Speaker 1: on Europeanes is also hanging over the security issues being

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Speaker 1: discussed at the Munich Security Conference, which gets underway today.

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Speaker 1: Our correspond to Oliver Crook is there for US and

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Speaker 1: he joins US now Live Oliver Good Morning. Trade issues

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Speaker 1: intertwined with security issues at this event. How worried will

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Speaker 1: leaders there be about the issis they've heard from Donald Trump.

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Speaker 5: I mean, listen, they need to figure out what to

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Speaker 5: prioritize of what they've heard recently from Donald Trump. I mean,

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Speaker 5: the last forty eight hours alone has been a complete

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Speaker 5: barrage of information. It's very hard to know really what

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Speaker 5: to take away from it, what to take seriously, what

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Speaker 5: to take literally. I mean, the week began with this

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Speaker 5: conversation between Donald Trump and Vladimir Putin, really kind of

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Speaker 5: out of the blue.

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Speaker 8: Again, a lot of people were.

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Speaker 5: Surprised by it, but again people shouldn't be that surprised

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Speaker 5: by the policies that Donald Trump is advancing, and not

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Speaker 5: just the substance of them, but their style. Basically, this

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Speaker 5: is not a multilateral system anymore. This is a unilateral system.

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Speaker 5: This is one that is going to be governed by

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Speaker 5: Donald Trump and how he wants, how he wants to

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Speaker 5: sort of pursue foreign policy. And for the Europeans are

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Speaker 5: sort of left scrambling here. They're trying desperately to get

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Speaker 5: a seat of disable. But the concern is that this

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Speaker 5: US delegation is not here to listen, it's here to talk.

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Speaker 1: This as we've heard from the Trump administration that they've

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Speaker 1: told allies in Europe they want them to buy more

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Speaker 1: American weapons. This is part of the continued support for NATO.

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Speaker 1: Does that seem likely?

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Speaker 8: That seems very likely.

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Speaker 5: And again that is sort of one of the issues,

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Speaker 5: like buying more fossil fuels, that's really for the Europeans

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Speaker 5: than the Americans pushing on an open door right. The

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Speaker 5: Europeans need more military hardware and they need more fossil fuels.

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Speaker 5: The US is very happy to sell that to them.

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Speaker 5: So that is one way in which that certainly will

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Speaker 5: likely happen. But again to your earlier point, Steve, and

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Speaker 5: this whole idea that all these issues are intertwined, this

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Speaker 5: is a sort of staple of the sort of Trump policy.

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Speaker 5: There are not discrete trade issues, discrete antitrust regulation issues,

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Speaker 5: discrete defense issues. Everything is sort of banded up together.

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Speaker 5: I mean, I spoke to the highest ranking general in

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Speaker 5: the German military yesterday. This is the man who commands

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Speaker 5: the armed forces which they needs to bring these things

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Speaker 5: into being, and I asked him, listen, if the United

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Speaker 5: States is willing to use as leverage points basically anything,

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Speaker 5: even on allies.

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Speaker 8: Do you feel secure buying arms and being reliant on

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Speaker 8: the United States for buying arms, and he said, basically

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Speaker 8: there is no other alternative.

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Speaker 5: So in short, yes, Stephen, there we'll be buying probably

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Speaker 5: more US arms because they also don't have a choice.

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Speaker 3: Yeah.

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Speaker 1: Indeed, we're going to bring our listeners that interview that

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Speaker 1: you did with Krstan Brewer in a moment on the program.

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Speaker 1: I'm wondering, though more broadly, about the discussions that are

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Speaker 1: going to be happening around Ukraine's future at the Munich

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Speaker 1: Security Conference. We've had that phone call between Donald Trump

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Speaker 1: and Vladimir Potin, which is really upset the US policy

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Speaker 1: position until now, How is this discussion going to play

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Speaker 1: out in Munich?

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Speaker 8: Again, this is a big question here, and I think

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Speaker 8: for the Europeans it's a.

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Speaker 5: Very very big question right again, they want to try

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Speaker 5: to get their voice heard in this conversation there. It's

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Speaker 5: not clear that they're going to and we've heard a

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Speaker 5: lot of different things from Donald Trump I and we've

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Speaker 5: even heard from some people that this meeting with Putin

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Speaker 5: could happen in a matter of weeks.

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Speaker 8: Again, we don't know.

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Speaker 5: He also said yesterday that basically there would be meetings

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Speaker 5: between high level members of the Ukraine delegation, American delegation

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Speaker 5: and the Russian delegation here in Munich. That came out

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Speaker 5: of the absolute blue sky. So again it's very hard

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Speaker 5: to know where this is proceeding. But the sense that

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Speaker 5: you're getting here from the certainly from the Europeans, is

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Speaker 5: that this negotiation train has already left the station.

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Speaker 8: And guess what the Europeans are not on it.

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

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