Trump Targets China; Merz Wins Chance to Fix Germany
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest trade moves from President Trump aimed at China. In recent days, the president has ordered a key government committee to curb Chinese spending on tech, energy and other key sectors. The administration has also proposed fees on commercial ships made in China, and it's called on Mexico to impose tariffs on Chinese imports. We get more on that from Bloomberg News senior editor Bill Ferrys.

Commerce Secretary Howard Lutnick, Jameson Greer, who is Trump's nominee to lead the U.S. Trade Representative Office, and another top aide at the White House have all approached the Mexican government with the idea of them putting tariffs on Chinese imports potentially as a way of avoiding U.S. tariffs on Mexican imports.

Bloomberg's Bill Ferrys reports all these moves raise the risk of ties between the U.S. and China getting worse after President Trump hinted last week that a trade deal with China may be possible.

Meantime, Nathan, the president continues to put government workers on notice. Over the weekend, the Trump administration told at least 1,600 staffers at the U.S. Agency for International Development they were being fired. All but a fraction of the rest were placed on leave. And Elon Musk's Department of Government Efficiency sent emails to more than 2 million federal workers asking them to report what they did last week or risk being fired.

Multiple agencies, including the Pentagon and the Justice Department, are telling their employees to ignore the email for now. Republican Congressman Mike Lawler defended the Doge move on ABC's This Week, as heard on Bloomberg Radio. A new administration is always going to do a review and try to find efficiencies across the board. When you're staring down $36 trillion in debt and counting, you know, obviously something has to give.

But fellow Republican Senator John Curtis has some advice for Elon Musk. Please put a dose of compassion in this. These are real people. These are real lives. These are mortgages. It's a false narrative to say we have to cut and you have to be cruel.

Senator Curtis appeared on CBS's Face the Nation, which also airs each Sunday on Bloomberg Radio. Well, Karen, now let's turn to politics overseas, particularly in Germany, where conservative leader Friedrich Merz has emerged as the winner in Sunday's election. Preliminary results show Merz's center-right CDU-CSU alliance won almost 29 percent of the vote. Merz says he will form a new government in less than two months.

We, the CDU and the CSU, the Union, we have won the 2025 federal election.

The world out there will not wait for us and it will not wait for lengthy coalition talks and negotiations either. Friedrich Merz now has to build that coalition which typically takes weeks if not months. His most likely option is the SPD party of outgoing Chancellor Olaf Scholz which saw its worst performance since World War II falling to third place.

Well, Nathan, a dozen leaders from Europe and Canada are visiting Ukraine's capital to mark the third anniversary of Russia's invasion. The meeting to discuss security guarantees comes after President Volodymyr Zelensky said he would be ready to step down if it secured peace for his country. If to achieve peace you really need me to give up my post, I'm ready. I can trade it for NATO if there are such conditions.

Ukrainian President Zelensky speaking there through an interpreter. Meanwhile, French President Emmanuel Macron and U.K. Prime Minister Keir Starmer will meet with President Trump this week as they try to clinch a European role in the ongoing talks between Washington and Moscow on ending Russia's war with Ukraine. And as the war continues, Karen, two of Trump's top advisers, Defense Secretary Pete Hegseth and National Security Advisor Mike Waltz, are declining to describe Russia as the aggressor.

Here's Defense Secretary Hegseth. My question is, does all the finger-pointing and pearl-clutching make peace more likely? That's the enduring question the president is asking. He wants peace. And if that's the case, you've got to stare down the Russians and Vladimir Putin and who they've chosen to negotiate and have earnest conversations about difficult things, about security guarantees,

about, you know, 2014 borders, what those will look like, about NATO members. Same thing with Ukraine, constructively and productively. So standing here and saying, you're good, you're bad, you're a dictator, you're not a dictator, you invaded, you didn't, it's not useful. It's not productive. Defense Secretary Pete Hegseth made those comments on Fox News Sunday, which can be heard Sundays on Bloomberg Radio.

Let's turn to the markets now, Nathan. Futures, they're moving higher as we begin a new trading week. The biggest potential market-moving event comes on Wednesday, and that's when AI darling NVIDIA reports earnings. Cameron Dawson is chief investment officer at New Edge Wealth.

There is a lot riding on NVIDIA being able to deliver upside to the earnings estimates to effectively calm markets to say, nothing to see here. We still have very strong demand, which just means that if there's even a sliver of slight weakness or a sliver of coming in under the expectations, it certainly raises the potential for further downside volatility within NVIDIA.

New Edge Wealth Chief Investment Officer Cameron Dawson. NVIDIA has more than tripled since October 2023 to become a $3.3 trillion behemoth. The rally has turned it into the second biggest member of the S&P 500. Well, Karen, over the weekend, we got earnings from another behemoth, Warren Buffett's Berkshire Hathaway. Operating earnings surged 71% in the fourth quarter, and Buffett's cash hoard grew for the 10th quarter in a row to a record $334 billion.

The billionaire continues to refrain from major stock transactions. In the fourth quarter, Berkshire was a net seller of $6.7 billion worth of shares. Well, Nathan, we're getting the tally on how much New York City congestion pricing is taking in, even as its future remains in doubt. And we get the latest with Bloomberg's John Tucker. John, good morning. And good morning, Karen. The Metropolitan Transportation Authority, which manages the city's transit networks, says

New York's first in the nation congestion pricing brought in $48.6 million in its first month of operation. And the ubiquitous tolling gantries, they're going to continue operating despite President Trump's announcement he's going to kill it. Well, that promise from Trump has left Governor Kathy Hochul spoiling for a fight.

With a tweet, he claims that he is the king and therefore he has the power to destroy it. Ahoko was on Face the Nation, heard on Bloomberg Radio. She met with the president Friday at the White House. She suggested that meeting went nowhere. The governor and the MTA are suing the Trump administration to keep congestion tolls in place. The money raised is intended for subway improvements. I'm John Tucker, Bloomberg Radio.

And it's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. The Vatican says Pope Francis remains in critical condition and blood tests show early kidney failure. Doctors also say the Pope has chronic underlying lung conditions, but the Holy See Press Office says he is alert and well-oriented.

He even participated in a mass at the hospital at a small chapel. Meanwhile, religious leaders, including Archbishop of New York, Cardinal Timothy Dolan, offered their thoughts and prayers during the gatherings of the faithful yesterday. Our Holy Father, Pope Francis, is in very, very fragile health.

and probably close to death. Pope Francis, who is 88, remains on oxygen support. New York City police say they have recovered victims from a deadly boat accident on the outer edge of New York Harbor. Authorities say the boat capsized, leaving three people dead, one missing, and two others injured. One is in critical condition.

Alicia Adamas found out her father, Cecilio, did not survive. He's that man and everybody will remember him as that man because he always risked his life trying to help other people.

Alicia Andamas is waiting for the Coast Guard and the New York Police Department to find out what caused the boat to sink. The sister-in-law of Israeli hostage Eitan Horn is urging the government to negotiate the release of all the remaining Hamas-held captives. Dalia Kusnir is Eitan is not expected to be released during the first phase of the ceasefire.

We hope and need and pray and beg to continue this dynamic of releasing more and more and more hostages. Talks on the second phase have yet to begin and are likely to be harder.

The papal thriller Conclave won Best Ensemble at last night's Screen Actors Guild Awards. Ralph Fiennes accepted the award on behalf and made a light-hearted moment referencing the plot of the film. I've not been elected to speak. I've been designated to speak.

on behalf of our conclave. The drama is up for eight Academy Awards. The Oscar is set to be handed out next Sunday. Timothee Chalamet won Best Male Actor. Demi Moore won Best Actress. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you.

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♪♪♪

Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. Three best teams in the NBA in no particular order. Cleveland, Oklahoma City, and Boston. Knicks have played seven games against those teams. They're 0-7, all but one of the losses by double digits after getting blown out by the Cavs. Knicks lost to the Celtics.

118-105. They were down 19 in the first quarter, later trailed by 27. Did cut the deficit to six, but got no closer. Jason Tatum led the self, 25 points, an assist shy of a triple-double for the Knicks. Carl Anthony Towns, 24 points, 18 rebounds. Cavs and Thunder both won. Cleveland leads the East at 47-10, and OKC leads the West.

We'll be right back.

For Alex Ovechkin, now 882 career goals. He needs 13 more to break Wayne Gretzky's record. This storybook season for St. John's continues. A second victory over two-time defending national champion UConn. An 18-point halftime lead. An 89-75 win at the Garden. All five St. John's starters were in double figures for coach Rick Pitino.

Great garden crowd. Hopefully we'll sell out in Seton Hall. We got three games left. We want this Big East crowd badly. Not only for the players, but for the fans who came back.

like I never expected. So we're very excited about being in the 100. That Big East crown, first in almost 40 years. Nearly assured now. St. John's has 15 Big East wins. No one else has more than 12. Rutgers gets to 500. 95-85 over USC. The freshman, Dylan Harper, 25 points, 9 assists, 6 steals. In Florida, Alex Bregman's first time wearing a Red Sox uniform. He had three hits and blew the two on home run. John Stachauer, Bloomberg Sports, County.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager and it is a new morning in Germany. Conservative leader Friedrich Merz has emerged the winner in this weekend's national elections, handing Olaf Scholz and his center-left Social Democrats their worst defeat.

since World War II, and now Merz is promising to move quickly to form a new government.

The world out there will not wait for us, and it will not wait for lengthy coalition talks and negotiations either. Conservative Friedrich Merz spoke through an interpreter following the election win. For more, we are joined from Berlin by Bloomberg Daybreak Europe anchor Stephen Carroll. Stephen, good morning. What is the difficulty ahead for Friedrich Merz to form this coalition? How significant a shift is this from the Social Democrats to this conservative bloc? Good morning.

Good morning. Yeah, perhaps not a shift that far as it's likely to be the Social Democrats that Friedrich Merz ends up going into government with. But it is a shift from the outgoing government, which were largely rejected by voters. The three parties combined that made up the outgoing government in Germany won just a third of the vote.

the vote, the leaders of all of those parties it now seems will be leaving frontline politics. We've just had an announcement from the Green Party leader Robert Habeck that he doesn't see himself holding a role in the future leadership of that party. So it falls to, if you look at the parliamentary arithmetic, to the SPD and the CDU-CSU alliance that will form that government alliance

as well. Voters opting to support Frederick Mertz's harder line on immigration, for example. We had that moment during the election campaign where he put forward a motion to Parliament to tighten some border controls and controversially secured the support of the far-right AFD to get that motion passed in one instance in Parliament.

This is going to be a shift towards conservative politics in Germany, but these are two parties that have done business in the past. They've been in coalition before. We know that they can work together. They have differences of opinion on things like tax and spending, but on issues like, for example, support for Ukraine, they are largely aligned. This is a victory for the centre, although with some notably large votes, particularly for the far right.

Well, let's talk about that vote for the far right now. In second place, the Alternative for Germany party, a party that Vice President J.D. Vance had met with just before this election. Where does this position the far right now in Germany? Well, if you listen to their chancellor candidate, Alice Weidel, she says it positions them to overtake the CDU at the next election.

This is a massive shift, a watershed moment in German politics that a far-right party could score one in five votes. And that's on, don't forget, the turnout that's the highest.

Since 1990, 84% of eligible voters turned out in Western democracy, I think almost anywhere. That's an extremely high number. So the idea of getting a very mobilised electorate and that chair of the vote tells you the space that the AFD have created for themselves in German politics. I was at their election night event.

Here in Berlin last night, there was sparkling wine and beer on arrival. There was a barbecue running outside. It was a party long before the exit polls had been announced. The polls running up to this election, which largely proved correct, had predicted they would see this significant increase in their support. They already have had an influence on the campaign. They're part of the reason that we saw Friedrich Merz from the Conservative Alliance talking more about migration.

Alice Vidal hopes to continue that influence in a leading party in opposition. Notable that the firewall, as it's known in German politics, that keeps the far right out of power has held. No party has said they will work with the AFD, but it will leave them with this leading opposition position in Parliament. They will be the main voice criticising the government.

and they will be particularly targeting the CDU Conservative Alliance to see if they can win over some of their voters by putting extra pressure on issues like migration, which polling tells us was one of the most important issues for voters running into this election. We have just 30 seconds left, Stephen. What does this election result mean for support for Ukraine now with the war entering its fourth year?

These are two parties who do support Ukraine. This is going to bolster that position from the party. The question, though, will come down to money. Where are they going to find the money for increased defence spending? As we now know, they need to make up what the US is planning to remove. The parties do support this, although not strictly on the same grounds. There will be a key matter to be negotiated through that as well. Whether or not they'll go as far as supporting joint defence spending in the EU, not clear at this point.

questions about Germany loosening the purse strings still very central in those coalition negotiations. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg

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I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak. This podcast is supported by BetterHelp, offering licensed therapists you can connect with via video, phone, or chat. Here's BetterHelp head of clinical operations Hesu Jo discussing who can benefit from therapy. I think a

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