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