[0:13]It's 5:00 a.m. in New York City. Good morning. I'm Vonnie Quinn with your Bloomberg brief. Let's get you set up for the day. Stocks wavering after a heavy sell-off on continued AI disruption fears. This in time for this sell-off in logistic stocks. Markets now shifting their focus to the latest inflation print, wrapping up a busy week of economic data. And aluminum falling as President Trump is said to be working to narrow the scope of tariffs on some metals products. So let's take a look at these markets. As you can see, wavering now, the S&P 500 showing futures pointed lower. Nasdaq perhaps not so much, but we have raised our gains for the year for these indices. We were down 1.6% in the S&P yesterday, more than 2% on the Nasdaq 100. It's this rolling AI concern, right? Yesterday it hit logistics companies. Let's take a look at the bond universe because we're waiting CPI later, and the consensus is for a 2.5% gain in core year over year. We have had 10-year yield. It actually dipped below 410 earlier on. Right now, just a little above that, and the 2-year yield back down to well below 350. And take a look at these metals prices because the FT reporting that President Trump is considering rolling back some of that 50% tariff on aluminum, for example, and steel. And as you can see, that's bringing down prices. Although, we do likely still have a shortage in some of these metals with China limiting its production since last year. All right, let's get a look at some individual movers this interesting Friday the 13th. Let's get across to London and Aber Abu Omar. Good morning, Vonnie. Let's start with the upside in the market. Applied Materials is doing pretty well in the pre-market today. The semi, uh, the semiconductor manufacturer is up almost 12%, and it's it's raised, it's gotten some upward revisions by analysts this morning in London. And that is primarily on surprising upbeat results that it posted yesterday. Vonnie, two things that I want to mention here when it comes to applied materials is demand for memory chips and AI computing. So when we speak about the crunch in memory chips and the negative impact that it's left on some of the market, uh some of the stocks in the market, applied materials is on the positive side of that trend. Next up, we've got Rivian, and it's another uncanny winner in today's pre-market. The EV manufacturer is up almost 19% this morning, and it's almost a contrast to a trend that we've seen with other car manufacturers including Ford, General Motors, uh that have posted dried offs when it comes to EVs, especially with everything that is happening in the Trump administration when it comes to environmental challenges. And then finally, we've got DraftKings. The uh online betting platform is suffering this morning, down almost 15%. And one thing that they brought up is the competition that they've gotten from prediction markets, uh and that is what is happening with DraftKings. Those are the stocks we're keeping an eye on, Vonnie. Fantastic stuff. Fabir, thank you so much. Ab will be back with us later in the hour, and also coming up this hour, we're going to count you down to that CPI data with Max Kettner of HSBC. Plus, we go live to the Munich Security Conference. We'll be speaking with the chair of the Ukrainian Parliament Anti-Corruption Committee, Anastasiya Radin. So, futures lower for the most part now after the Nasdaq 100 goes down more than 2%. Investors awaiting January CPI data coming at 8:30 Eastern. Let's bring in Bloomberg's Morwenna Coniam, and also Jamie Rush of Bloomberg Economics. Thanks to you both. Marwenna, let me start with you because 30% of S&P 500 companies yesterday hit an 8-week high. Many of them also hit an 8-week low, right? But it was fewer than half that. So this is being spun perhaps as more of a rotation trade than just a broad-based sell-off. Is that a good interpretation? Well, I think there is definitely some rotation there, but um we're seeing things looking fairly flat this morning. And also, it comes after, you know, accidental gains in the tax sector, and yesterday we saw a sell-off there. I think what was particularly interesting was that it's this AI fear trade as it's being called, um that's hitting different sectors. Um when you get this spark of anxiety about an AI disrupter, so, you know, yesterday it was a firm which had developed an AI logistics model. But previously it had been a karaoke company. It's not a huge company. Whether that's actually a disrupter for the logistics sector, I think the jury's still out on that. But it stemmed a um a sort of panic amongst those stocks which really saw um then make quite heavy losses. Today we're seeing a steady picture for, you know, US futures. We've seen the um stocks 600 in Europe, um be fairly mixed with technology shares gaining. So I think it is a a sort of reactive trade at the moment that we keep seeing unwinding, and it's a case of where to look next. Yeah, it's it's terrifying for those trying to pick a sector, I guess, right? Or do you just wait it out? Jamie, let me ask you why the 10-year yield went below 410. Is this purely CPI, or is this also the AI scare trade? Well, I mean, it's it's a classic move to safe assets, right? So if you get a big sell-off in equities, you should be expecting some correlations and then data correlation with bonds. So I suppose that that for me explains it. I don't think you can relate it to the macro data. Um on the macro data, though, of course, a lot is changing. We're getting a lot of information about the labor market, a lot of inflation about about inflation, uh and that is shaping people's bets on on on the Fed, of course. All right, guys, thank you so much for letting us off for the day. That's Morewenna Coniam and Jamie Rush. Now, two other top stories trending on the terminal this morning. Europe discussing how to develop its own nuclear deterrent due to concerns that the US is no longer a reliable military partner. Sources say French President Emmanuel Macron is expected to offer nuclear deterrents to the rest of Europe in a speech this month. At the moment, only the UK and France have atomic weapons. L'Oreal shares declining after the French beauty group posted disappointing sales growth in the fourth quarter. Results of the Lux division, which includes brands like Lancome and East Laron were hurt by a persistent slowdown in the travel retail business in Asia. Sales growth at the unit was well short of estimates. And Citigroup boosted the pay of CEO Jane Fraser to $42 million for 2025, putting her among the highest paid US banking heads. The compensation includes $1.5 million of a base salary, $6.1 million in the cash incentive awards, and the rest in stock awards. The pay bump puts Fraser's total package for the year just $1 million behind that of JP Morgan Chase's Jamie Dimon. Venezuela planning to grant more oil production land to Chevron and Spain's Repsol as the Trump administration pushes for private companies to rebuild the nation's energy sector. In an interview with Bloomberg TV, US Energy Secretary Chris Wright said companies like Chevron will be seeing benefits from an increase in production. I think in the first year, we'll see pretty significant 30-40% growth in Venezuelan oil production this year. You could continue production uh growth rate at a pretty good clip. Venezuela does have the largest proved oil reserves, which is the technical concept, much larger than the US. Bloomberg oil strategist Julian Lee joins now with the latest. Julian, how realistic is this? Is it just going to be Chevron and Repsol that takes advantage of what the US is trying to offer these big companies? Well, I think Chevron and Repsol are sort of in a poll position because they have uh existing projects there, um and they can build on those. They can uh restore some of the uh above ground infrastructure that I think is is uh severely degraded in Venezuela. Um and I think that's probably where uh the easy wins are, uh for production. Um looking beyond that, uh we're seeing companies expressing an interest in uh new acreage in Venezuela. There's there's certainly, um, uh huge areas that that are right for exploration, but I think that is a much longer-term proposition. And there are still huge issues, I think that the industry uh is is going to have to come to terms with, um, not least is the money that uh companies are owed for uh previous nationalizations of of their assets in Venezuela. Uh uncertainty over the political stability in the country and what sort of uh guarantees of of uh security and safety for their staff uh companies will get from the US. Um yes, there are there are some short-term gains to to be had. Uh whether uh this growth of of 30 to 40% in production uh is realistic and that's sort of, you know, 250, 350,000 barrels a day. Uh that remains to be seen and whether that will continue year after year, I think at the moment at least is questionable. So Julian, the US is obviously trying to help out, but what can Venezuela do? Does Venezuela have the wherewithal to help companies? Well, I I think what Venezuela has done already is is to uh change the investment law, um to give um uh a much more opportunity for uh foreign companies to invest under um the model that that Chevron has been using. That hasn't been open to to other companies uh until very recently. Uh that I think will uh will help. Uh but I think there are, you know, there are huge underlying uh social, economic, and and political problems in in Venezuela uh that still have to be overcome. Now, you know, oil companies are um uh very used to uh investing in in politically troubled uh parts of the world. And we've just seen uh companies uh taking up new exploration acreage in Libya in in North Africa, uh another, uh you know, very troubled uh country. So that that won't uh necessarily push them away entirely, but this is not uh like investing in uh Texas uh or investing in uh some of the the other sort of, if you like, base load production provinces for these companies. All right, Julian, thank you so much. Great contacts there from Bloomberg's Julian Lee. Coming up, a potential metal tariff rollback. Aluminum prices down this morning as reports say the Trump administration is planning to readjust its policy. This is Bloomberg.
[11:18]loading wraps in two steps, the first stage finishes around T-minus 3 minutes. We'll hear that call out here any second. All right, we are about 3 minutes away from this launch SpaceX and NASA carrying four astronauts. They hail from the US, Europe and Russia and they'll be going to the International Space Station. Let's bring in Bloomberg's Benedict Kammel as we're just literally minutes away now from Crew 12 lift off. So Benny, this crew is partially to replace some of the crew that had to come off the ISS due to medical reasons back in January, right? Yes, that's right. So this is in some ways a normal mission, but it's also some anomalies in this. As you said, Crew 11 came back earlier than expected for a undisclosed medical situation with one of the astronauts on board. So normally what happens in this uh sort of sequence is that one crew is up there, the other one comes uh comes up to the Space Station and they sort of an orderly handoff. Um you know, they get to know each other, they do a bit of a walkthrough and so on or a float through rather. And um and in this case, um the Crew 11 was already on the ground. So some sort of as I said anomalies in this case. Now, in terms of the equipment itself, this is Falcon 9's launch of Dragon's 12th operational human space flight mission. But Falcon 9 has been having a few problems, Benny, and it's already on its 12th mission at this point. What kind of lifespan are we to expect from these types of craft? I mean, the the Falcon 9, you're right, has had some issues. Generally, it's considered a fairly reliable uh piece of kit. You know, it's had a bunch of these missions now. So it it is the sort of go-to uh rocket launcher at this point. Um the the special thing about this particular rocket obviously is that it is reusable. So we will see in the sequence that it will have a uh it's about a 10-minute sequence from start to re-entry and then landing again. So this is what makes this particular rocket special, um this reusability, which is obviously a huge leap from, you know, the old rockets that you and I might have been used to as kids, where, you know, it's it's one up and then and then that's it. So the reusability here is is the big factor. And the FAA did give it the all clear to fly today. Now, if everything goes according to plan, all of that happens, but then it takes about 10 hours for the capsule to actually get to the ISS. So I guess our crew should be landing Saturday around 3:15 Eastern, many. That's right. And they uh so while the Crew 11 did leave earlier, the the the station itself is not abandoned as such. There are three astronauts on board, uh one US astronaut, two cosmonauts, so there will be a handoff there. Those astronauts will eventually then come off that station and and uh three others will join. So this is somewhat of a handover, but it's different than what was initially planned. All right, Benedict Kammel, thank you so much. He's going to stay with us while we watch this launch. Don't forget, this is the launch of a new crew, a fresh set of members to the ISS to replace those that had to come off due to a medical leave. And I think we're just going to tune in now to the countdown to lift off. eight, seven, six, five, four, three, two, one, ignition, and lift off. Go Falcon, go Dragon, and God Speed Crew 12. And lift off. Freedom flies bound for the International Space Station. 1.7 million pounds of thrust now propelling Falcon 9 and Crew 12. Vehicle is pitching down range, and all nine Merlin vehicles have lit. We're getting good call outs on the first stage performance and propulsion so far.
[15:02]T plus 30 seconds into the Crew 12 mission on board Dragon and Falcon 9. The vehicle is going to throttle down in preparation for Max Q. That's the largest structural load that the vehicle will see on ascent. Good call out there. There's that call out for Stage 1 throttle down. Passed through Max Q a few seconds here. Max Q.
[15:29]Big news, we have passed through Max Q. Vehicle is supersonic.
[15:38]That call out that the vehicle is supersonic means it's traveling faster than the speed of sound. Stage one now throttling up.
[15:51]That call out for one Bravo means we're in the second and final abort mode for the first stage. Continuing to get good performance. The crew is now already pulling over two G's. Next up, we'll have a couple of events happening in rapid succession. First is that engine chill on the second stage and back engine, and then we'll have Miko or main engine cutoff where the nine engines on the first stage will cut off ahead of the first and second stages. Stage off. We reached Max Q just a few seconds ago. That's where the peak mechanical stress is on the rocket and it's probably the most sensitive time. Looks like we've had a fantastically successful launch. So those four astronauts, one from the European Space Station, one from Russia and two US, who have been quarantining actually in Houston and Florida's Kennedy Space Center are firmly on their way now to the International Space Station. A successful launch with a rocket lift off, the first stage booster landing, the Dragon capsule freedom separating from the upper stage and now on its way. Let's get back to Benedict Kammel to give us a little bit more context about what happens next, Benny. So is that basically all of the dangerous stuff out of the way and the crew are very successfully on their way now and the Falcon 9 just needs to re-enter orbit and dock at some point. Yes, you make it sound very simple, but that's essentially essentially how it works. And uh so we will see these separations of these different stages uh and then eventually we'll have the the Dragon capsule actually make its way to the Space Station. Um so the the actual sequence, the separation sequence and the re-entry of the of the rocket, that's a fairly short event. It's only about 10 minutes. So that's one thing to watch that that rocket always an an awe-inspiring uh sight to see that rocket land again uh at Cape Canaveral. Um so as you said, four astronauts on board, two men, two women, uh a novel uh case in in the European participant. This is his this is her, I should say, Sophie is her name, her first uh space flight. Um Jessica Mayer, who's one of the pilots, uh it's her first uh second flight on board uh the the this uh her second mission. So, you know, we have have a good mix of of people there on board uh this spacecraft. And as you said, um several hours for them to sort of reach uh velocity and then make their way to the ISS. Well, they have time, and they need to relax, right? In fact, that's one of the things they're going to be doing up there, they're going to be studying things like how the human body relaxes in space. And it's a long duration expedition. This is a 9-month expedition for these astronauts and cosmonauts. But when you think about it in the context of the ISS, it's been up there for 25 years. So perhaps not that long. Yes, I mean, this is this is obviously something that takes a huge toll on the human body, uh these these long space flights, all these long sojourns at on the ISS. Um and they will be studying as you said, um medical experiments, some things around pneumonia, blood flow and so on. Um they will probably also do some tests to the actual space station. Remember, this is, as you said, a device that's been up there for 25 years and is slowly but surely reaching the end of its lifespan. Um around 2030 is probably when it will be decommissioned. At this point, unclear what will replace uh the Space Station. There is no real concept out there yet. NASA is exploring several options. They're in talks with three major companies to to look at what might follow the ISS. But this is obviously been a a very important part of space exploration and experimentation in space, um and and it'll be very difficult to replicate this kind of a very complex station. And also something that is that is truly international. I mean, it's in the name, but you can see in the makeup of the people now flying uh to to the station, as I said, we have one European participant, a Russian participant, two from the US. So it's always had that sort of international, um very sort of, uh, you know, uh makeup. So that's also something to to to note. Benny, thank you so much, and we wish them well. That international crew that will be joining the three others that have been skeleton manning the ISS since January. I'm sure they'll be very happy to see them and have them join. That's Bloomberg's Benedict Kammel. All right, back in Washington. Aluminum dropping now following a report the US is planning to reduce some import tariffs on steel and aluminum. This comes as President Trump doubled import tariffs on steel and aluminum to 50% in June of last year. Joining us now is Jonathan Tamari of Bloomberg Government. What's prompting this assuming that this report is true and that President Trump will actually take down these tariffs to some extent, Jonathan? Yeah, and we don't have a lot of detail. There hasn't been an official announcement, but we do know the White House is on a major push to try to address concerns about the cost of living here in the United States. Uh this is a major issue heading into the elections this November that are going to decide control of Congress. And we've seen that there are even some Republicans who are really concerned about the cost of living. Uh six of them in the house voted against the President's tariffs on Canada this week. So, there's a lot of concern among Republicans about how this is playing electorally, and you would have to think that that's a driver of this change. At what point will it make President Trump look weak if he needs to reverse course on some of these policies, which he's already been doing? And, you know, particularly as tariff policies, they were the cornerstone of his administration. They are, but we've also seen that the President, as you've pointed out, has reversed course many times. He's made a lot of deals. He's reduced tariffs in results as a result of lobbying from business executives who've come to the White House. So, there has not been an emphasis on consistency in these things. It's more kind of the threat and the showing the willingness to do it and bringing people to the table that has really been the focus of the President uh very often. Jonathan, can I ask you about the DHS? Because we avoided the partial shutdown, but that didn't include the DHS. There was no agreement on that, and now the Senate has failed to cut a deal as it heads to recess. What happens next? So, the two sides are trading discussions, the White House and Senate Democrats are are are trading proposals right now, but it sounds like they're still pretty far apart. Uh Democrats are pretty dug in here. They think the public is with them on the reforms that they're calling for to ICE. So so the Department of Homeland Security is going to shut down on Saturday. The Senate and House are both out for next week, so there's not a really prospects of a quick return. I will say that much of the department is is funded for from some previous bills, so it might be a long time before we see any practical effects on the ground of this. And Jonathan, I just want to point out that that booster has now successfully landed. So it was basically a 100% successful launch here for the Falcon 9, uh combination of NASA and SpaceX equipment, and those astronauts have headed out to the ISS. Again, that booster has landed back into orbit and uh back on Earth, and there doesn't seem to have been any damage done. Jonathan, what about internationally? The president is facing, you know, several sort of self-imposed deadlines really when it comes to talks. But the latest one is obviously Iran, and he seems to be maybe annoying is is too much of a word, but he seems to be at least motivating Israel to visit the United States to try and get him to back off any kind of a deal with Iran. Yeah, it's a rare kind of split between President Trump and BB Netanyahu. Uh Netanyahu was here in the US this week. Uh he expressed concerns that about a possible bad deal. And and, you know, foreign leaders know they've got to tread carefully when it comes to President Trump and his negotiations. He takes a lot of pride in those things, but it was some push back. We did not see the two men in public, which is kind of a rare thing when you have a foreign leader here. So it suggests there is some some rare tension here, but the President says that he's pushing forward and he thinks that a deal is possible. Um we'll see what happens, but yeah, clearly there's some some small, at least some level of tension between the President and BB Netanyahu on this. All right. Meanwhile, there's another carrier strike group headed to the Middle East. Our thanks to Jonathan Tamari of Bloomberg Government. Coming up, we're going to look ahead to CPI with Max Kettner, Chief Multi Asset Strategist at HSBC.
[24:22]This is Bloomberg Brief. I'm Vonnie Quinn in New York.
[36:26]The Munich Security Conference kicking off where discussions continue on NATO's future and war in Ukraine. Bloomberg's Oliver Crook is there and he's standing by with the top voice from Ukraine. Oli? Yeah, that's right, Vonnie. And obviously, front and center for the last four years has been the conversation around European defense, but of course, critically, Ukraine and the future for that war as these negotiations take place between the United States, Ukraine, and Russia. And I'd like to bring into this conversation, uh an important voice on this, Anastasiya Radina, who is a member of Ukrainian Parliament, and also the chair of the Anti-Corruption Committee. Anastasiya, thank you so much for joining us today. I'd like to begin, I'd like to begin just thinking now, four years basically until this war started. What is your message to the partners here that you bring to the Munich Security Conference? What do you need from them in what could be the final stretches of a negotiation to get it over the line? Sadly, currently in the ground on the ground in Ukraine, we are not seeing preparedness for peace. What we are seeing is Russia weaponizing winter cold, destroying energy infrastructure and central heating infrastructure to make lots of Ukrainian communities basically unlivable when temperatures in Ukraine are well below zero.
[37:43]Uh sadly, a lot of regions in Kiev, the capital of Ukraine, will not have central heating until the end of the of the winter. Houses frozen, because Russia is simply continuing, uh, terrorizing civil population. This does not look like readiness for peace for us. So the most important question that we are discussing now on all of the levels is security guarantees for Ukraine. Because without security guarantees and proper mechanism to ensure Russia keeps up to its promises, uh something is still would not be possible. And something that is, I think, I mean, I think you've said this is important as fighting the Russians, fighting is fighting is fighting corruption within Ukraine because that bears on whether or not there's going to be support from the United States, continued support from the Europeans, and of course, it's a fact that's used consistently, it's exploited by your enemies as well. And I'd like as the chair of the Anti-Corruption Committee for you to give us an update on where we are on some of the investigations that have been launched, namely into the energy sector. What progress can you apprise us of? Uh, just a few days ago, Transparency International released its Corruption Perception Index for 2025, and Ukraine has gained one point in that. Demonstrating increase, uh, in in our standing and progress in fighting against corruption. I think we currently are, uh, happy to say that after 10 years of anti-corruption reform, we finally have the strong independent anti-corruption institutions, uh, ready to prosecute and investigate cases regardless of political standing of people allegedly involved, regarding regarding of their, uh, place on the on the power ladder. And I think this this is actually a huge progress.
[40:55]And so obviously, there's that investigation ongoing, very high profile into the energy sector. Are there other sectors that are concerning to you that you think require attention from Anti-Corruption? Uh, in Anti-Corruption Committee in the Parliament of Ukraine, we follow very closely, uh, the the progress and, uh, we follow very closely the defense sector. At the same time, we do not have any breaking news from Anti-Corruption institutions in this in this sector, so that's probably not my place to comment on that. The defense, given how much money is flowing in is one that you'll be very sort of concerned of and sort of aware of. Just a sort of final question for you about the some of the reporting that we've heard over the last couple of days, Zelensky potentially considering a referendum of any kind of deal going to the Ukrainian people, potentially looking at an election. As a member of Parliament, do you think that that is a good idea? Do you think that bringing some of these questions to the population of Ukraine is a good idea, and do you think it's feasible? Uh, Mr. President already commented on this, and I stand by what he said. What he said is actually security first. The question is, how do we guarantee elections or referendum in a situation when Russia has challenged civil population all the time? My question here is, whether international observers that are to be present, according to international standards of elections, are they ready to come to Kupyansk, Kharkiv region, which is which is literally a kill zone, to monitor elections there? And if the answer to this question is no, then basically, how how do we have how do we even talk of any elections or referendum? Well, Anastasiya Radina, thank you so much, member of Ukrainian Parliament, and of course, the chair of the Anti-Corruption, uh, uh, uh, investigation sort of committee within the Parliament. All important, very closely watched by the United States, by the Europeans alike in order for Europe to make or Ukraine to make sort of progress in its accession to the European Union, and of course, continue to enjoy the support of the United States. Fascinating interview, Ollie. And of course, a fascinating Munich Security Conference this year given the change in the world order seemingly. That is Bloomberg's chief European correspondent Oliver Crook.
