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• 00:00Good morning. This is Bloomberg Daybreak Europe. I’m Tom Mackenzie in London. These are the stories that set your agenda. The bond selloff goes global. Japanese benchmark yields soar to their highest in more than a decade. That’s after German ten year bunds tumbled the most since 1990. Stocks gain as Donald Trump gives carmakers a one month exemption from tariffs. The French president offers a nuclear shield for Europe as leaders gather for an emergency security summit in Brussels. Plus, the European Central Bank all but certain to cut rates today. But the path ahead leaves economists deeply divided. We are live in Frankfurt for ECB decision day. Earnings crossing from Lufthansa. Good morning. Good Thursday morning to all of you. The German airline saying 2025 adjusted earnings quite significantly higher year on year. An airline, of course, that struggled with a labor strife last year. The analysts out there expect some pretty decent demand for the logistics part of the business, but that could be a challenge when it comes to the competitiveness of Chinese airlines eating maybe into some of Lufthansa’s market. The lines crossing on the earnings front for that company. And we will be watching that stock, of course, at the open 8 a.m. UK time. The stock is up about 60% year to date over one year, currently just one and a half percent. Let’s get to the broader markets right now because we’re talking about the bond selloff and my goodness, is it pronounced? Look at the 110 year over in Japan currently yielding around 1.5%. We saw on a basis point move 30 basis points on the benchmark bund yesterday. It has rippled across the eurozone. It’s impacted the U.K., the sell off in gilts and over in Asia as well. To what extent does that continue today in terms of futures on bonds, pointing to further pressure, further upside in yields as well? The European stocks futures picture, though, on the gains of yesterday. Defense play again in focus. Plus, infrastructure. Stocks powering the lead yesterday in the European equity markets currently pointing to gains this Thursday, 7/10 of a percent. And the outperformance now of European stocks versus their US counterparts, the S & P, the most pronounced in a decade on a quarterly basis. Europe futures UK futures point gains of 5/10 of a percent. US futures currently pointing up by 2/10 of a percent. We have jobless claims out of the US later today as well. NASDAQ 100 futures currently pointing up by 58 points. Let’s flip the board and have a look at the cross eye set, particularly on the DAX futures. Of course, that is the DAX future. The button futures, I should say. The DAX put in a stinker of a performance yesterday with gains of more than 3% on the German benchmark. But when it comes to the bunds, you saw that 30 basis point move higher on yields yesterday. The sell off expected that big flat to continue today. Yields pointing higher again on benchmark German debt. Of course, on that significant pivot around spend on defense. The benchmark ten year stateside currently yielding 431. You have seen the sell off in treasuries as well, yields up again four basis points in the session. Euro dollar. Look at the strength that’s come through for the single currency back above 108, hedge funds piling into positions around the single currency. To what extent will the ECB pull back in terms of expectations on additional rate cuts? That decision later today, Brent, at $69 a barrel, currently up 3/10 of percent, but still on track for the lowest pricing on oil in about six months. Now, shares of U.S. automakers jumping after President Trump gave automakers a one month exemption from new tariffs on Mexico and Canada. Industry leaders met with administration officials yesterday to ask for a reprieve. We spoke with the big three auto dealers. We are going to give a one month exemption on any autos coming through. USMCA. Reciprocal tariffs will still go into effect on April 2nd. But at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage. Asia transport team leader Katrina Nicholas. Joining me now for the reaction to this. So the pressure coming from the automakers, of course, on a tariff that would have been hugely damaging to that sector. What has the reaction been to this delay of one month? Well, the initial reaction has definitely been one of relief. Investors pushing up shares of the major automakers Stellantis rallying by as much as, you know, the most in three years. But really what this does for the automakers themselves is buy them time, time to think about how they can shift production to the US from places like Canada and Mexico. Trump administration officials have been very clear that the point of these tariffs is to bring production and investment back to America. And certainly that’s what the automakers are now trying to figure out. They have a month to think about how they’re going to do this, because, of course, shifting supply chains and indeed moving production from one car facility to another is not something that can just happen at the flick of a switch. Katrina. What ultimately does it mean for this sector if they are not able to derail these tariffs in the long term? What does it mean for automakers if these tariffs are reimposed in a month’s time? Well, they really packed is probably going to be felt by consumers from the automakers themselves. You know, supply chains will likely seize up. And we’re hearing reports that average car prices in the US could go up by, you know, thousands of dollars. One report has car prices going up by about $12,000 per car. Now, this, of course, is going to be a huge impact to consumers that are already feeling the squeeze. There are also suggestions that some car models might just cease production altogether. It just simply won’t make sense to have them manufactured. Supply chains. I also mentioned they could seize up as well. And that’s before you really even get to the financial impact on automakers bottom lines. This is an industry where automakers are struggling to maintain single digit margins because of the pressure they’re under. And many of them are also losing billions of dollars in the shift to EV. So the financial impact on their bottom lines is going to be significant and severe. And the impact on consumers as well is going to be very significant also. Yet could hardly have come at a worse time for the global auto industry. Bloomberg’s Asia transport team leader Katrina Nicholas, thank you for the context on that reprieve, at least for now. When it comes to tariffs on automakers being postponed for a month, let’s cross over to Asia right now. Standing by for us, of course, in Singapore is April Hong And April, I know the focus is on, of course, the bond market reaction, but also another reminder that innovation continues to lift stocks, particularly in Hong Kong. Yeah, particularly for Baba. That’s the voice we’re seeing today. But let’s take a step back first to the big picture. I mean, you look at Chinese stocks, right? There is no reprieve for China in terms of tariffs, but it doesn’t seem to matter. It looks like from the NPC there were enough positive sell buys to keep the party the momentum going. The Hang Seng tech at the highest level since December 2021. With that focus yesterday on tech and consumption, of course, we’re going to be looking ahead to a big briefing from some of these top securities finance chiefs in the next hour. But as you say, A.I., that’s the boost. And in terms of Alibaba search, you talk about great timing, right? Because we hear how it’s unveiling this model that it says can rival the performance of deep sea at a fraction of the data. And this is a stock, mind you, that’s climbed 80% now since the January low. So a lot to keep the party going. As I say, developers also doing well today. Local media reports that there could be more easing of restrictions to come in China. So the board again, I wanted to highlight as well, when we look at tariff approval, maybe more accurate to say tariff skepticism, the stock mood is good, including in Japan. But the German bond rout has certainly spread to this part of the world. The yield on the ten year Japan highest since 2009. If you’re looking at Australia, the yield move today, something we haven’t seen since October. And you asked earlier, does this continue? I think one portfolio manager put it best, Trump’s kind of kick start, this historic shift in defense economic policies. And until we can see clarity on the direction of that shift, it’s going to be really difficult to be bullish on bonds. Tom. Okay, Everyone in Singapore will stay on the shift around defence spending then, because EU leaders are gathering today to discuss how to ramp up military spending across the bloc, potentially mobilising as much as €800 billion in additional national spending. This coming after President Emmanuel Macron of France, of course, said he will enter into talks on using France’s nuclear capabilities to defend European allies. No traditional nuclear power. Nuclear deterrent protects us. It is complete sovereign and French through and through. Since 1964, it has explicitly played a role in preserving peace and security in Europe. But in response to the historic appeal of the future German Chancellor, I have decided to open the strategic debate on the protection afforded by our deterrent to our allies on the European continent. Whatever happens, the decision has always been and will remain in the hands of the president of the Republic, head of the armed forces. Okay, let’s go to Bloomberg’s Oliver Kirk now, who is standing by in Brussels ahead of another key meeting amongst EU leaders. Seismic changes in the defense space of Europe seem to be coming day in and day out. Oliver, what is expected from the meeting today? Yeah. Tom, I mean, listen, we’ve been hearing for months and months for people that this is sort of historic moment for Europe, historic moment for European defence. And frankly, it is now at this point starting to actually feel like one that is down to what the EU is proposing. That is what is being proposed at the national level. I think a lot of it is already under some of the leadership of Frederick Mertz, the incoming chancellor of Germany, who really just unleashed an absolutely spectacular package here in Germany to discuss about a potentially something approximating €1,000,000,000,000 worth of spending on infrastructure and defense. You see that illustrated in the German bond market, moves you haven’t seen since the fall of the Berlin Wall. So it’s beginning to not just sound like a historic moment, but really to feel like one. And what the EU leaders are here to discuss today are some of the measures that Ursula von der Leyen laid out a little bit earlier in the week. This is supposed to unleash up to €800 billion worth of different sort of spending actions that can be done at the national level and at the EU level. Just a reminder to some of what those are. We’re talking about €150 billion worth of loans that would be extended by the EU. They’re also talking about easing the fiscal rules on individual member states of the European Union in order to be able to create more capacity within those nations to spend on defence. And we should say Frederick Mertz, the incoming chancellor of Germany, the Germans are lobbying for this. It’s the Germans that are lobbying to the European Union to ease fiscal rules across the European sector. This is really the sort of historic moment that these leaders are facing. Where they’re going to face some resistance potentially is in the form, as ever, of Viktor Orban, the head of in Hungary, who will be sort of very resistant to a number of these these initiatives. However, they are going to be able to circumvent him potentially on sort of qualified majorities on a number of them, the two areas where they’re going to have some difficulty. And this is also what we’re to be watching very closely. Time discussed in this meetings, because this was not discussed by Ursula von der Leyen earlier this week, the question of joint debt, issuing joint bonds at the European level. How alive is this discussion at this point in time? I think it’s an inevitable conversation in months to come. But is it a conversation that will start now? And then this question of frozen Russian assets time Right. This is something that now is recurring as a sort of potential way in order to get more money funded to Ukraine and also for European defence. We right now have sort of loans backed by the proceeds of those. Are they going to look more seriously at touching those underlying frozen Russian assets under the sort of impetus and the sort of great sort of revolution for European defence that has been started by Donald Trump? Yeah, it’s on when Europe seems to be breaking the glass and reaching for the alarm. What happens in terms of the intelligence sharing the news yesterday that the US has cut off intelligence sharing with Ukraine? To what extent is that another wake up call for Europe? It is. Again, it’s one of the many wakeup calls. But again, we haven’t really had the sense that Europe, Europe’s been, I guess, awake since November. If you believe the officials and politicians we’ve been speaking to, it seems to be only getting out of bed, though, right now. And for the Ukrainians, that is a sort of serious issue because all of these initiatives take a huge amount of lag time in order to bear fruit. Zelensky is going to be here in Brussels today, as you mentioned. Tom, we should say that the US has sort of stopped delivering military aid to Ukraine a little bit earlier in the week. That means everything that’s also been in transit, everything that’s on the Polish border, all of that is frozen. And now we understand also being freezing the intelligence sharing, except for they’re still giving intelligence, apparently that pertains to defensive that could threaten Ukrainian troops. But again, this all comes to the sort of conversation that occurred in the conversation. We can call it the sort of blowup that happened in the Oval Office on Friday. And now Donald Trump really sort of aggressively turning the screws. But we should say he could turn the screws a lot further. There are a lot of ways that the United States could exert more influence on Ukraine. And Vladimir Zelensky, who has in the last few days made sort of an appeal to say, hey, listen, we’re now ready to talk about the minerals deal, sign this thing up. So listen, we’ll see how the Europeans can progress us a little bit further. But the wake up call in Europe may have come in time for the Europeans may have, but it may have come a little bit too late for the Ukrainians. That being said, the Europeans will be wanting to say, you know, put forward everything that they can for Ukraine. We’ll see what they yield to this meeting. From what we understand, they can basically create to continue to deliver hardware and weapons to Ukraine that can get them at least to the summer. So it buys a little bit of time. But again, the alarm bells are ringing everywhere in Europe, but nowhere more than in Kiev. Okay. Oliver Crook, thank you very much indeed on the ground for us ahead of another crucial meeting, of course. And that meeting could tie in to market action again. Bonds already, of course, under pressure after German yields jumped the most in decades on those plans for higher defense spending. Let’s bring in Bloomberg’s fellow title for the latest. And of course, always got an eye on these bond markets. What a day for the bond markets and the adjustment continues. Vol Tom, a historic day for the German bond market. It really can’t be said enough just how much a sea change. Yesterday’s move in the German bonds was 30 basis point rise in yield. The question to the market is now was that overblown? Look at how bond futures are trading in the overnight session. They’re pointing to further losses, more yield rises to come. Take a look at what happened to France and Italy. Those bonds also clocking similar rises in yield as well as we are just jolted by the German government’s announcement on this infrastructure spending plan. The euro has been jolted as well, Tom. It’s been rising 4% this week in the last three sessions. Tom, It’s moved the most it’s ever moved since 2015, a decade. It’s been a decade since we’ve seen these strong moves in the euro. And you look at how options positioning, it’s also showing very bullish positioning, risk reversals, showing the biggest bulls positioning we’ve seen since Covid times in five years. So you add to this a potential dovish ECB if they maintain their dovish message, look at 109 on euro dollar. And we also have to talk about the volatility that we’ve been seeing in US markets. The equity market in the US has been all over the place. Tom Five straight sessions now of 1% swings for the S & P 500. We ended yesterday on a positive note. There was the Fed’s Beige Book released last night at 7 p.m.. Didn’t mention the word recession and Bloomberg Economics is now seeing this fear about a U.S. growth scare is overblown. Okay. Some are still voicing those concerns about potential recession risks. Mohamed El-Erian yesterday raising yields from 10% to 30% in his view, Bloomberg’s fellow title. Thank you very much indeed. On the market reaction, of course, which has been pronounced. Coming up, the European Central Bank is widely expected, meanwhile, to cut interest rates again today, the sixth time since June. But to what extent is the glide path of lower rates now being hampered by increased defense spending? We get the latest from Frankfurt live on the ground. This is Bloomberg. Welcome back to Bloomberg Daybreak Europe. The European Central Bank poised to cut interest rates today for the sixth time since June. Very volatile economic backdrop is sowing divisions over borrowing costs. Let’s go straight to Lizzie Borden, who is in Frankfurt for us. Lizzie, a cut today. And then the question is, then what? It is indeed, Tom. And even before all the news on tariffs and defense and infrastructure policy out of Germany, out of told you anything could happen after the April meeting because analysts are divided. The Governing Council is divided. And that’s because we’re getting towards the point at which many think interest rates are neutral. You’ve got some analysts saying that this could be the last quote we see from the ECB this cycle, but they’re only saying that they could cut all the way to 1% by early 2026. And if you listen to the recent ECB speak, you’ve got some who are still worried about sticky services, inflation and higher energy costs. Others who are worried about weak growth in the euro area. But if you look at the recent data, Tom, you’ve got some encouraging signs when it comes to inflation this week. So services inflation back below 3.9% for the first time since April 2024. And if you look at the fourth quarter, actually wage growth easing somewhat. So coincidence, therefore, among policymakers that maybe they can get inflation back towards that 2% target. If I were going to control anything when that decision drops, look out for the word restrictive. If they drop that language for many, that would signal that you’re going to see a pause to the rate cuts or even an end to the rate cuts. But if they keep it, many would interpret that as a signal there is going to be another cut in April. Okay. Watching for the wording then to what extent, Lizzie, and this is such a key overhang now for the ECB does lead it much its determination to, quote, do whatever it takes on German defense, change the calculus for the ECB. And of course, those words, Tom Echo, a former occupant of this place, Mario Draghi. And as Valerie was telling you, the market moves absolutely historic, off the back burner, having their worst day since the fall of the Berlin Wall. Euro dollar moving away from parity and for all purposes, most importantly, traders paring their bets on how many cuts you’ll see from the ECB this year. Now seeing 67 basis points, of course, and that compares to 90 basis points, of course, just at the start of this week. Why? Because they see more of a boost to growth than they do to inflation. In fact, some economists at Goldman seeing as much as a 2% boost to German GDP this year, next year, I should say, which is up from 0.8%. But of course, the ultimate caveat, as it was always, will it be approved and how fast can it be implemented? Now, we’re going to await the news out of the European Council meeting in Brussels, as all he has been telling you about. But I am sure President Christine Lagarde will be asked about this today. What is the role of the ECB here if you’re going to have hefty budget deficits? Do you need to bring back the transmission protection instrument? What is the understanding at this point as to what extent the fiscal boost could offset the tariff threat from the Trump administration? We’ll tell him, of course. At the moment, it is just that threat from President Donald Trump of tariffs of 25% on autos and all other things. And ostensibly the ECB doesn’t make policy based on threats. But if you look at whether this is going to impact the projections, actually, it doesn’t look like there’ll be much of a change to growth or inflation. In fact, more so that’s likely to come because of higher energy costs and Morgan Stanley’s yen. I can Smit, who who’s a former ECB economist himself, reckons that the updated outlook is going to show price growth only getting back to Target in the first three months of 2026. So instead of this year as he envisaged before, that’s the difference here. What you could see, though, is a change of language when it comes to talking about trade. And I’d say that the disclaimer on every single page talk of the ECB is communications today are going to be the two words Donald Trump. Okay. Lizzie Borden in Frankfurt for us with a fantastic preview, of course, of that decision from the ECB. Ever more important, arguably, given the challenges and the volatility, that’s full coverage, of course, of that ECB decision in which Lizzie will play a prominent role from 115 a London time here on Bloomberg, of course, with ECB president Christine Lagarde. News conference at 145. Do not miss that. Coming up, China’s economic leaders due to speak to the media in just under an hour after setting a bullish growth target despite the US tariffs. We’ll have a preview later in the program. Will they be announcing additional fiscal stimulus? Stay with us. This is Bloomberg. Welcome back to Bloomberg Daybreak. Some breaking lines from the logistics arm that is DHL, the logistics company, of course, Global in Focus. They beat modestly in terms of the earnings full year. The outlook, though, for DHL is softer than the estimates. And this is the key line. DHL to cut 8000 positions in Germany this year. So efforts to make Germany great again, still some way off for this German government that is still being formed. Of course, pressure now being seen across the job markets. We’ve seen that in the auto sector. Now in logistics, we keep cross that stock at the open. Now, Bloomberg understands that KLARNA is set to file publicly for its U.S. IPO as soon as next week. The Stockholm based payments business aims to price the offer in early April and is targeting a valuation of more than $15 billion. Klarna is working on the listing with around 50 banks led by Goldman Sachs, Jp morgan and Morgan Stanley. Coming up, a delay for cars. Could farm goods be next? We look at possible wriggle room for reprieves from President Trump’s tariff barrage. That’s coming up. This is Bloomberg. Good morning. This is Bloomberg Daybreak Europe. I’m Tom Mackenzie in London. These are the stories that set your agenda. The bond selloff goes global. Japanese benchmark yields soared to their highest in more than a decade after German ten year buttons tumbled the most since 1990. Stocks gain as Donald Trump gives carmakers a one month exemption from tariffs, The French president offers a new color shield for Europe as leaders gather for an emergency security summit in Brussels. Plus, the European Central Bank all but certain to cut rates today. The path ahead, though, leaving economists deeply divided. We are live in Frankfurt for ECB decision day. Let’s get to these equity markets then. The DAX putting in the best gain yesterday since 2022. Bond yields closing in two 3% on the benchmark ten year today. European futures pointing higher by 9/10 of a percent. The outperformance appears to be in stocks versus the US counterparts continues as a theme with a focus on that monumental defense spend pledge coming through from Germany and other EU nations. Supposedly one of the futures points of gains currently of 51 points. S & P futures currently flat, NASDAQ 100 futures pointing up by a 10th of a percent as the tech fade tech theme stateside continue to fight. Let’s break the board and look. Cross science then yields higher on the benchmark ten year the ripple effect globally across the eurozone, across Asia in terms of the bond selloff continues at 431. Right now in the benchmark ten year, we have jobless claims out of the states later today as a marker in terms of data. But futures in germany pointing to further sell off yields pointing higher. Again, you are closing in to that 3% level. Again, the biggest jump that we saw yesterday since 1990, the euro being lifted at 108, hedge funds piling into positions on stronger single currency and the dollar on some quarters being shorted. Now, expectations that the single currency can power higher from here, one rate currently up 2/10 of a percent. Brent at $69 a barrel, down three, up 6/10 of a percent. But the trajectory has been lower for oil. Now President Trump is weighing exempting some agricultural goods from the new tariffs on Canada and Mexico. That’s after he gave automakers a one month reprieve. The US commerce secretary telling us reciprocal tariffs due in April will go ahead. Some tariffs will come on right away and then some tariffs will go be registered and they will take three weeks or four weeks and they will come on in due course. So there’s a process for tariffs in America, but we will announce them and we will be negotiating with all these countries thereafter. And then they go into effect over a period of months. Once it’s in, they will stick. Okay. Bloomberg’s Jill Jesus joins me now with the latest. Jill, the tariff news seems to come thick and fast day in and day out, it seems. Is this is this is this a kind of concrete plan strategy by the Trump administration of flip flopping under pressure from automakers and farmers? Well, Tom, it does seem that there’s at least some kind of a negotiation strategy that seems to be unfolding here. Now, I should note this does come after some key automaker executives from Ford’s Stellantis, from GM all met with the Trump administration. You know, kind of talking about how I just kind of how precarious these tariffs really are. I mean, we’ve seen reports out here that suggest, you know, in addition to a supply chain cost, you’re looking at tariffs that would raise the costs on some automobiles by as much as 12,000 U.S. dollars, particularly on some EVs. So, I mean, really, really huge pain point for these automakers. So what this delay in terms of implementation is being done is it’s kind of designed, it seems, to help give some time for these automakers to start moving some production back to the United States. They’ve already been investing billions in doing this, but this is kind of giving them a little bit more time there. But it does just kind of show you, Tom, how fast paced a lot of these developments are, as you also just mentioned at the top of the segment. You know, there’s also this talk about maybe doing some carve outs for agricultural products instead. So I think, you know, we’re looking at a little bit of a more nuanced tariff picture than we were just a few weeks ago when this was really about, you know, this blanket, 25% tariff. I think there’s a lot more developments to come here. And, you know, I think even by the end of the week, you might see, you know, some sort of changes and differences and some more nuances in terms of how a lot of these duty packages are coming together. Yeah. Bloomberg’s Jill. Jesus. Thank you. The volatility around the tariff story takes a little bit more than a month to lift a factory out of Mexico and rebuild it in the US, though, doesn’t it? Now, President Trump on geopolitics warning Hamas that there will be what he describes as hell to pay if the militant group does not immediately release Israeli hostages still being held in Gaza. Earlier this week, Israel’s minister of economy and industry spoke to us about Trump’s impact on the war. What has changed is the attitude of the Trump administration. If Biden was restraining Israel, the Trump administration is very supportive, and so the ecosystem has changed. Let’s bring in Bloomberg’s Dan Williams then for how the warning from Trump could tie in to ongoing negotiations. What is your expectation? What are we hearing, Dan, about the impacts of this Trump warning? Well, so far, the Hamas response has been quite measured. It’s basically repeated its position that it wants to enter talks on the so-called phase two of the ceasefire plan. Of course, those talks on its terms, the sides are divided and rigidly given that Israel, with U.S. support, wants to see phase two leading to a Gaza without Hamas. Hamas, perhaps understandably from its position, is not open to that position. What we’re seeing here with Trump is the U.S. president making clear that he’s now taking this personally. We heard a month ago him threatening the gates of hell would be open on Hamas over what was then a hold up in the hostage talks. Now, he issued this latest post on social media having met surviving recovered hostages, having heard about their plight, having heard their appeals to help the remaining hostages come out. And he’s basically telling Hamas on an individual level that he intends to see. Well, to put it, frankly, them dead unless they deliver the hostages. Now, it’s there’s no intention the U.S. intends to deliver on this. What he also says is the U.S. is providing Israel with everything it needs to finish the jobs as it as Trump would put it. So there is an indication here that if Israel does resume this war in Gaza, as it is threatened to do now that the interim truce has expired, it would have the full support of the United States. Okay, bye. Stan Williams on an important update out of the region. Thank you. Now to China, where the National People’s Congress is continuing in Beijing. The main day yesterday, of course, we expected more news today, the country’s economic heads due to give a news conference in about 15 minutes time. This after the nation set that GDP growth target in the wake of US tariffs at about 5%. Bloomberg’s chief North Asia correspondent, Stephen Angle has been on the ground for us covering all of this. Joining us now from the media center in Beijing where that conference, press conference will take place. So, Steve, we’ll be listening in to the details. Steve, what are you expecting to hear? Well, we have all those top economic and financial leaders of the agencies here in Beijing in attendance. You have the PRC, the top planning body of the finance minister, the Commerce ministry, which could be interesting because they’re the ones that imposed those retaliatory tariffs on the Trump tariffs. So he might have something to say about that. The PBOC, the central bank governor Pangong Chang, is here as well. And it’s just going to be our opportunity, our one opportunity each year to hear directly from them. Last year they kind of were reading from the same script and they talked about belt tightening, belt tightening and more belt tightening. Well, this year we’re probably going to be talking a little bit more how we’re going to reach that fairly ambitious growth target of around 5%, because that’s what they hit last year. That’s what they set last year. But they didn’t have a Trump trade war going on. So many economists that I’ve heard from since the work report yesterday from the Premier League say it’s going to be a tough task to meet that target, given the external shocks and that there could be more stimulus needed throughout the year. Steve, on that point, what is given the people you’ve been speaking to and hearing from in Beijing, what is the expectation of that? That ambitious growth goal will be challenged by by potential additional tariffs coming through from the Trump administration? Yeah. So Larry Hu, the chief economist for China for Macquarie Group, he says it very succinctly. He says if the Trump administration brings those tariffs up to 60% as threatened on the campaign trail, that could knock two percentage points, a full two percentage points off China’s GDP. So we’re talking in the three territory. But again, that just points to the need for pro-growth stimulus here and pro domestic demand stimulus. And that is the number one priority of the that’s the marching orders, if you will, to the agency heads that we’re going to be hearing from in less than a half hour. And also part and parcel with that, boosting domestic demand is stabilizing the property sector. Households across China have lost paper wealth, considerable paper wealth. The wealth negative effect is sizable, and it is translated to less consumer spending by people. Okay. Bloomberg’s chief North Asia correspondent Stephen Engle on the ground for us ahead of another crucial meeting and press conference out of Beijing. We’ll keep across that, of course. Any lines the cross. Stephen, thank you. Coming up, I’m going to be speaking exclusively to the CEO of French satellite provider Eutelsat, whose shares have more than tripled this week. It’s been a remarkable stock performance. That conversation coming up next. This is Bloomberg. Let’s return to the EU now, where leaders are meeting to mobilise billions for European defence after the US stop providing some intelligence for Ukraine. Bloomberg’s Oliver Crook is in Brussels ahead of another key meeting. What can we expect then, Ollie? Yeah. So listen, Tom is going to be a number of different facets of this meeting, of course, with Vladimir Zelensky, the president of Ukraine will be here speaking with European leaders convened for this emergency meeting. But really, Tom, it’s been the story about basically what we’ve been hearing for the last three months, that this is a historic moment for the Europeans, a real wakeup call. That’s what we’ve been hearing again and again and again. And, Tom, it’s finally beginning to actually feel like one, right? We’ve got sort of huge impetus from the EU in terms of their defense spending, which they say they want to liberate, up to €800 billion worth of spending. That is going to be some indirect loans from the EU that is going to be easing potentially fiscal rules. And we should say that maybe the most significant thing is that those easing of fiscal rules in order to allow for member states to acquire more debt to debt financed defense has been coming from no one other than the Germans. That tells you sort of how serious this moment is. And the Germans, for their part, led by Fredric March, sort of in waiting as the chancellor to be also talking about reforming the debt brake, unleashing hundreds and hundreds of billions of euros. So this is really now beginning to feel like the historic moment that we’ve been hearing from all of the other sort of leaders. But we’ll also be watching very closely, Thomas, how Viktor Orban interacts with all of these initiatives, wanting to block a number of them. They’ll be able to circumvent him on a few. But the two key ones that I’ll be watching out for today, Tom, is the question of joint debt. How active is this conversation? At this point in time? It is almost an inevitable conversation. I want to know how active it is at this very moment and also the question of Russian assets that are being held in Europe, hundreds of billions of dollars. Are they going to consider actually tapping them? Okay. Joint debt on Russian assets. Bloomberg’s on the ground for us ahead of that meeting. Ollie, thank you. Let’s stay on the defense space right now. Bring in executive at the heart of this conversation. Shares in French satellite provider Eutelsat have soared this week. The stock tripling tripling in three days on speculation that its oneweb network of satellites could replace Elon Musk’s StarLink as the Internet provider in Ukraine. They gained further momentum after Reuters reported it is in talks to provide secure satellite communications for the Italian government. Eutelsat CEO Eva Vanek joins us now for an exclusive conversation. Eva, thank you for your time. Let’s start with the stock price rally. It has been a remarkable is it rational what you make of the moves in the stocks and whether and whether it’s got further to run? Thank you for the question and thank you for having me. It’s clear that it’s been a crazy week from Monday on and following I think, the last couple of weeks of discussions across Europe about stepping up on defense, stepping up on a general spending to defend ourselves has taken, of course, a positive turn for pretty much all stocks linked to defense. And Eutelsat saw that effect very strongly this week after the discussions last week around the StarLink and a potential pull out of Ukraine. StarLink has been there since the very early start of it and provided a lot of communication. And we are actually also, as you tell, said it together with a German distributor, providing a lot of capacity to Ukraine. And it is a key element of modern warfare to have strong communication capabilities from space. Now, Satcom has always been a military weapon, but with now with the low earths constellation, it’s even more key in terms of keeping a communication and keeping communication open and actually providing intelligence to armed forces. So have you had conversations with European leaders about replacing StarLink in Ukraine with Oneweb? Yes. And they’ve intensified over the last couple of weeks. Until now, we have been together. Was darling there? But it’s clear that everybody’s asking us today, can you actually replace especially the very large number of terminals that StarLink has across Ukraine? And that’s something we’re looking very actively at. Yes. So what are the challenges? How do you get to to that? To that point, I believe StarLink has about 40,000 terminals in Ukraine right now. You have about a 10th of the number. How do you ramp up and how quickly for Ukraine? Well, at Eutelsat we actually have a multitude of terminal suppliers. We also have some stock that we are now of course, looking at because that would be the faster to deploy to Ukraine. The stock that we we have already and setting priority to providing this to Ukraine and then conversations with various terminal suppliers. We are lucky to have multiple but with a military grade but also a more commercial grade. And Ukraine, it might, of course, need a mix of both. So that’s something we are looking quite actively at. Will it involve partners with other providers will involve support specific material support from from European governments. It would require, of course, financial support and potentially also logistic supports. We have a strong steward already working in Ukraine, so we believe that they are very, very strong to handle that. We do not, as darling, manufacture our own terminals. We do that through partners, a committee in steering Italian, and that would be a conversation with all of these in order for them to potentially ramp up. If we were to get up to the 40,000, we can get to at least a couple of thousands with the stock on hand. And that’s what we are looking at in the very short term. So so on specifics on that question, how many units do you have in Ukraine right now? And when do you get to that couple of thousand? Now we have a couple of thousands in Ukraine today. They’re not all I mean, some of them are, of course, needs to get on the network. But we are talking a symbol tens of times of that. If we were to replace all of the StarLink terminals. And what’s the realistic timeframe to getting to 40,000? 40,000. That’s probably a couple of months, but it’s not years. But we could at least double or triple within weeks of time. That’s mainly logistics to get it there. Can you confirm that you’ve been in talks with the Italian government about potentially providing these services to that government instead of instead of stalling, they’ve turned cautious in stalling. It’s clear that it’s been a lot of discussions in across newspapers, around Italy. And their approach with the was starting what we know today in discussions we’ve been having with the Italian government is very pleased that the Italians have realised the need for low earth constellations and they’re evaluating the options for Italy. There’s been studies on providing a constellation purely for the Italians. What’s key around low earth orbit? A constellation is that it’s it’s just not valid for a single country. They circle the entire globe and they start. You need to start with at least 6 to 8 billion if you want to get that. And doing that for a single country doesn’t make sense. So what makes a ton of sense is the collaboration. And as you know, we have the Irish Squared, which is a European secure constellation where Italy’s also a key part. Telus, Boccaccio and Tallis are key partners in that. But what did we do until I was squid gets there What we can do on fly squid gets there is what the Italians are looking at and we are in discussion with them because right now there are StarLink and us who have those constellations in orbit. So the choice is not massive if you want to have capacity there. We’ve had a very long standing collaboration with Telus about and Italians. So we are we’re already deep in those dialogues. Okay. You look like you’re closing in on a deal with Italy. It sounds like Eva. But when very good discussions with Italy and we have always been in good collaboration with them. So we certainly hope that that will continue. Okay. Ontario, over in Canada, they have apparently scrapped that that potential deal with Starling. Are you in conversations with Attari about replacing that service? I think Canada is actually interesting because Telesat, which is the Canadian operator, has their own plans for Lightspeed. However, that will probably only get there in 27, 28, 29. So of course we can help them provide something in the very short term to replace StarLink. So those are conversations we’re also going to have with Telesat, which is which is why they are launching their own their own constellation. What do they do in the short term for it? Even before we let you go, you talked about funding the need for additional funding when it comes to supporting Ukraine and the rollout of Oneweb there. What kind of number are you looking at? How much additional funding would you would you need to ramp up capacity to replace StarLink? Well, this is mainly a question of terminal cost because the capacity is already provided. So this is in the in the multiple tens of millions rather than in the in the hundreds of millions. But terminals cost typically. Well, if it’s a normal consumer terminal between five and 10,000, of course very secure military terminals, a multiple of that. But we’re in the in the several tens of millions of euros. But again, when you talk defense, that’s actually a a reasonable amount for the A needs that are served with having a stable and sovereign communication for. Okay, Eva, appreciate your time. What a consequential moment for the defense space. Of course, in the security space. Eva Vanek, CEO of Eutelsat, seeing its stock soar more than 370% just in the last month. Eva, thank you. To the earnings story around the airlines right now. Air France, KLM coming through with a beat in the fourth quarter, revenues coming in at €7.8 billion for Air France in the fourth quarter, above the estimates, marginally above the estimates. Operating income in the fourth quarter also comfortably above the estimate. So it’s a beat in terms of the fourth quarter and they see at least a 300 million E but improvement in 2025. So seeing at least a €300 million improvement this year on earnings. Now, Ben Smith, the CEO of Air France KLM, is on the trade with us later this morning. You can catch that interview at 740 London time. There’s plenty more coming up. Stay with us. This is Bloomberg. These tariffs are a self-inflicted supply shock wound, higher prices, less competitiveness because businesses are having to pay more for all their inputs and because they have to pay higher prices, less purchasing power for consumers, which means fewer jobs down the road. Former U.S. Treasury Secretary Larry Summers. That and here’s the historical context in terms of where tariffs are in the US, on average, tariffs at the highest level since the 1940s. Pretty ominous for some. You would have thought in terms of the historical context, but that’s where you were in terms of the tariff load being posed on the US economy and its trading partners. Let’s hit the ball and have a look at what’s happening in terms of German sovereign debt because there is a linkage here to what extent Europe is next, it seems in terms of Trump tariffs, To what extent will the spend on defense offset the tariff impact? Here’s what’s happening in terms of the yield jump that we have not seen since the 1990. Look, you have to go all the way back to the 1990s to see the kind of sell off that we’ve seen in German debt currently closing on a 3%, about 2.7% right now on the benchmark ten year. Does that continue today? Futures are pointing that direction. There’s plenty more coming up. Stay with us. With opening trade. That’s next. This is Bloomberg.