Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Daybreak Youro podcast, available every morning on Apple, Spotify or wherever you listen. It's Friday, the fourteenth of February in London. I'm Stephen Carroll coming up today. US President Trump moves to impose reciprocal tariffs on its trading partners. You can't trust him, Ukraine Zelensky sounds of warning on Vladimir Putin. Plus cuts are coming, Bloomberg learns HSBC is preparing for
a fresh round of layoffs. Let's start with a round up of our top stories. US President Donald Trump has ordered his administration to consider imposing reciprocal tariffs on its trading partners. The levees would be customized for each country and aim to offset their tariffs on US goods as well as non tariff barriers to trade.
Again, whatever they charge us with judging the EMI, so it works out very on. It's very It's a beautiful, simple system, and we don't have to worry judging too much or too little.
Reciprocal tariffs would amount Trump's broadest action to address US trade deficits. Bloomberg Senior Economic Supporter Sean Donnan says, the key focus is on how other countries tax consumers.
Value added taxes or VAT, and that's big in the EU. There's more than one hundred and sixty countries in the world that use a VAT. The US, of course, does not. This kind of rekindles a battle that the US has had on and off with Europe since the nineteen sixties over how to treat taxes and trade. But we're going to end up with some big numbers aim that some big trading partners. We just don't yet know what those numbers are going to be.
Bloomberg Shawn donnand speaking there as, Trump also told reporters that he would enact import taxes at a later date on cars, semiconductors, and pharmaceuticals, over and above the reciprocal tariffs. The US president has already imposed ten percent tariffs on Chinese goods and plans to put twenty five percent duties in all US steel and aluminium imports next month. The latest salvo on tariffs came as Trump and India's Prime
Minister Narandro Modi met in Washington. The two leaders agreed to begin negotiations to address what Trump described as long running disparities in their trade relationship.
It has been to US just about the highest tariffed nation anywhere in the world. They've been very strong on tariffs. I don't blame them necessarily, but it's a different way of doing business. It's very hard to sell into India because they have their trade bearers very strong tariffs.
Donald Trump was speaking there in that joint press conference this as Narandro Mody said the two men had agreed to more than double bilateral trade to five hundred billion dollars by twenty thirty. Trump also said the US would take steps to sell the F thirty five warplane to India as part of a bigger commitment to deepening defense ties. US has been reluctant to sell the planes to countries
where its technology might be stolen by adversaries. In Europe, leaders are still coming to terms with the u US shift and its policy towards Russia. After Trump and Putin's surprise call to discross Ukraine, Ukrainian leader of Ladimir Zelenski says he's warned the US president that Putin cannot be trusted, adding that Ukraine must be part of any peace talks.
Today, we cannot predict how it all will go on. But we must be strong. We will be very careful. We need allies and fair partners. We cannot accept as an independent country any agreements made without us.
Shap.
That was doder Mezelenski. They're speaking through a translator. The Trump administration also told European allies they should buy American weapons and military equipment to maintain the NATO alliance. This as Bloomberg Economics calculates that protecting Ukraine and expanding Europe's own militaries could cost the continent's major powers an additional three point one trillion dollars over the next ten years.
In to some breaking news this hour, and nat West has reported pre tax operating profit the beat estimates, coming in at one point four to nine billion pounds. That's above an estimate of one point four billion pounds. Net income in the fourth quarter was at one point two
five billion pounds, also beating estimates. Net interest income slightly above estimates at two point ninety seven billion pounds as well, and also news that the UK Treasury has reduced its stake in that West to seven point nine to eight percent. That's down from eight point nine percent and staying with earnings. Sales Aurmez climbed as a luxury group, benefit of from
a strong appetite over the holiday shopping season. Sales jumped almost eighteen percent in the fourth quarter at constant exchange rates, according to the latest results out from the firm this morning. That's above what analysts had been expecting, which was growth of eleven percent. Armes chairs have climbed more than twenty percent since the start of this year. HSBC is planning
any round of job cuts next week. Bloomberg understands the changes to its investment bank workforce will affect employees globally, starting in Asia. That's the CEO Jean jel Hadri continues his overhaul of Europe's biggest lender. Layoffs could begin as early as Monday and will be based on performance, job duplication and simplification, with some already underway in the firm's
markets division. JP Morgan, CEO, says the bank will scale back spending on what he called stupid diversity initiatives that he sees as wasteful. Responding to an employee question, Jamie Diamond said plans to cancel some schemes was about costs rather than backlash from the Trump administration. JP Morgan's longtime leader, also reiterated the bank's commitment to working with black, Hispanic and LGBTQ communities, but told staff that he was never
a firm believer in bias. Training and the UK's Prime Minister, Kris Starmer, met China's top diplomat as the two countries look to improve ties. The British leader joined a meeting between farm mister Wange and National Security Advisor Jonathan Powell Bloomberg James Wilcock reports.
Kiss Starmer expressed his intention to build a consistent and respectful relationship between the UK and China, and according to China's Global Times, Foreign Minister Wang Yi So, the UK government had started the process of improving relations and looked forward to deepening cooperation on AI and climate change. Both China's top diplomat and the US Ambassador to Britain were
in Downing Street yesterday. It showcases the balancing act Britain is trying to pull off, trying to build ties to the world's second largest economy while avoiding the ayre of the US President Donald Trump in London, James Orcock Bloomberg Radio.
Those are your top stories. Eurostocks on the market's Eurostox fifty futures of down two tenths of one percent, so we're seeing a narrowing of the negative sentiment on European stock markets. The Eurostox fifty index actually hit a record high in trading yesterday. We've had some optimism boosted around the prospect of those reciprocal tariffs not coming until April, leaving some space for negotiation. The Mascis Specific Index six
tenths higher as well. On the currency markets, the Bloomberg Dollars Spot Index now in the red a tenth of one percent as well. That's after the drop that we saw yesterday. So the euros trailing at one of four to sixty seven against the dollar of the pound at one twenty five sixty seven. And in a moment, we'll bring you more on those announcements out of the US on tariffs. But just a word or another story that caught our eye this morning to do with how one
hedge fund is using AI. It's replaced junior analysts at the Australian hedge fund, Minotaur Capital. That's according to reporting by our colleagues Harry Brompton and Georgina McKay so their bets using their large language model have returned almost fourteen percent in the six months to the end of January,
versus almost seven percent for the MSCI All Country World Index. Now, it's not unusual that hedge funds be using AI for this sort of work, but Minotaur believes that they have developed a large language model that can digest larger amounts of information and produces two thousand word reports on any global stock. It deems has the potential to double in three years or improve tenfold in the so in decades. They combine this at making their own inquiries as a
recipe for success. But the co founder Arman Rosenberg telling Bloomberg the cost of developing that AI large language model is about half that of a junior analyst's salary. You can read more in that story on Bloomberg dot com and on the terminal. So let's turn back to tariff's then, the US President now talking about reciprocal tariffs on trading partners in response to levies, regulation or other non tariff barriers. But the timeline is key here. Let's bring in our
senior editor Bill Ferries for more. But what can you tell US about what Donald Trump has announced here.
Well, what he's announced is a really sweeping demand of his US Trade representative and his Commerce secretary to propose new levies on a country by country basis in a bid to kind of rebalance trade relations between the US
and every one of its trading partners. So that requires looking at not just what kind of tariffs those countries impose on US goods, but of non tariff barriers those countries have too, And a non tariff barrier could be things like regulations that could include things like value added tax, include a whole host of things that make selling American
goods into that country difficult. And the end result of this is expected to be a list of recommendations for again every single country on how much the US should raise tariffs against those countries to try to even things out. President Trump presented it as a very easy way of trying to rebalance trade, but the reality is it's going to be quite difficult, and it's going to take quite a bit of time, I think, to go through all of that.
Yeah, indeed, I mean, those are the key factors that markets appear to be focused on, both the timeline and the fact that this looks like a very complex and potentially unworkable task.
It is going to be complex. The Howard Lutnik, who is still Trump's nominee to lead the Commerce Department, he told reporters that he think all he thinks all the studies about this could be done by April first, and that President Trump could act on it on his recommendations after that. The reality, of course, is that that also opens up a big space of time for negotiations to
start with all the countries involved. So I would imagine any world leader who's talking or meeting with Donald Trump over the next six or seven weeks between now and April will be putting in a good word and also trying to say like what sort of measures they're willing to take, whether it's buying more American goods or reducing some of those tariffs to try to make it less likely that they will face the full impact of potential tariffs.
The interesting also to see the comments from Peter Navarro talking dismissing concerns that this might push up prices for US consumers as well, which is, you know, one of the factors of the economists have been thinking about.
Yeah, and it comes you know, all of this comes of course, just yesterday there was a higher than expected inflation reading in the US, so the trend is not looking good. The bets on when the Federal Reserve will cut rates have been pushed back even further. The Trump administration and Peter Navarro basically arguing that hey, we did some tariffs in Trump's first term, and the reality was
it was a pretty limited impact, they said. Studies have shown that exporters to the US absorbed some of that some of that cost with lower margins, but there were
costs passed on. And certainly, as you talk about an inflationary environment in the US, when people were worried about the price of eggs, the price of homes, the price of cars, particularly with things like the steel and aluminum tariffs, it's going to be a real difficult question politically about whether the president goes forward with US.
Okay, Bill Ferries, our senior editor, thank you very much for joining us this morning. Well, the threat of tariffs on Europeanes is also hanging over the security issues being discussed at the Munich Security Conference, which gets underway today. Our correspond to Oliver Crook is there for US and he joins US now Live Oliver Good Morning. Trade issues intertwined with security issues at this event. How worried will leaders there be about the issis they've heard from Donald Trump.
I mean, listen, they need to figure out what to prioritize of what they've heard recently from Donald Trump. I mean, the last forty eight hours alone has been a complete barrage of information. It's very hard to know really what to take away from it, what to take seriously, what to take literally. I mean, the week began with this conversation between Donald Trump and Vladimir Putin, really kind of out of the blue.
Again, a lot of people were.
Surprised by it, but again people shouldn't be that surprised by the policies that Donald Trump is advancing, and not just the substance of them, but their style. Basically, this is not a multilateral system anymore. This is a unilateral system. This is one that is going to be governed by Donald Trump and how he wants, how he wants to sort of pursue foreign policy. And for the Europeans are sort of left scrambling here. They're trying desperately to get
a seat of disable. But the concern is that this US delegation is not here to listen, it's here to talk.
This as we've heard from the Trump administration that they've told allies in Europe they want them to buy more American weapons. This is part of the continued support for NATO. Does that seem likely?
That seems very likely.
And again that is sort of one of the issues, like buying more fossil fuels, that's really for the Europeans than the Americans pushing on an open door right. The Europeans need more military hardware and they need more fossil fuels. The US is very happy to sell that to them. So that is one way in which that certainly will likely happen. But again to your earlier point, Steve, and this whole idea that all these issues are intertwined, this is a sort of staple of the sort of Trump policy.
There are not discrete trade issues, discrete antitrust regulation issues, discrete defense issues. Everything is sort of banded up together. I mean, I spoke to the highest ranking general in the German military yesterday. This is the man who commands the armed forces which they needs to bring these things into being, and I asked him, listen, if the United States is willing to use as leverage points basically anything, even on allies.
Do you feel secure buying arms and being reliant on the United States for buying arms, and he said, basically there is no other alternative.
So in short, yes, Stephen, there we'll be buying probably more US arms because they also don't have a choice.
Yeah.
Indeed, we're going to bring our listeners that interview that you did with Krstan Brewer in a moment on the program. I'm wondering, though more broadly, about the discussions that are going to be happening around Ukraine's future at the Munich Security Conference. We've had that phone call between Donald Trump and Vladimir Potin, which is really upset the US policy position until now, How is this discussion going to play out in Munich?
Again, this is a big question here, and I think for the Europeans it's a.
Very very big question right again, they want to try to get their voice heard in this conversation there. It's not clear that they're going to and we've heard a lot of different things from Donald Trump I and we've even heard from some people that this meeting with Putin could happen in a matter of weeks.
Again, we don't know.
He also said yesterday that basically there would be meetings between high level members of the Ukraine delegation, American delegation and the Russian delegation here in Munich. That came out of the absolute blue sky. So again it's very hard to know where this is proceeding. But the sense that you're getting here from the certainly from the Europeans, is that this negotiation train has already left the station.
And guess what the Europeans are not on it.
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