Good morning, and happy Presidents’ Day. US government layoffs expanded over the weekend while cuts to Medicaid threaten to divide Republicans. Traders are kept guessing on tariffs. And the BAFTAs offer a possible Oscars preview. Listen to the day’s top stories.

US government layoffs expanded to Medicare and Medicaid, the FDA and the Centers for Disease Control over the weekend, according to emails reviewed by Bloomberg. That's helping fuel a quiet rebellion among Republicans representing working-class and lower-income areas, who warn cuts to the health-care system will hurt constituents. Also sure to agitate: Elon Musk's DOGE is trying to access individual taxpayer data, a person familiar said.

Elsewhere in government, Donald Trump asked the Supreme Court to let him fire the head of an independent US agency that protects government whistleblowers. Top officials at the Department of Homeland Security were told to immediately stop work connected to climate change. And the president’s top economic adviser told CBS he’ll meet regularly with Federal Reserve Chair Jerome Powell, giving the president a channel to convey his opinions to the central bank.

Trump said he’s open to allowing Europe to buy US-made weapons to give to Ukraine. He also said Ukrainian President Volodymyr Zelenskiy will be involved in peace talks with Russia, a day after top US advisers suggested the negotiations might go on without him. For its part, the EU is working on a major new package to ramp up defense spending and support Kyiv.

In the Middle East, Israeli Prime Minister Benjamin Netanyahu threatened to open the “gates of hell” on Hamas if all remaining hostages aren’t released. Three hostages were released from captivity in Gaza and 369 Palestinians were freed from Israeli jails in a ceasefire swap over the weekend. Earlier, Netanyahu reiterated his support for Trump’s “bold vision” for Gaza’s future.

Apple is adding more AI tweaks to its lineup. Among the highlights, the company plans to put Apple Intelligence on its Vision Pro headset in a bid to boost interest in the device. Meanwhile, a long-promised overhaul for Siri is said to be facing engineering problems and software bugs, threatening to postpone or limit its release.

Deep Dive: Rally On

Wall Street’s been guessing “will he or won’t he” on tariffs since Trump took office last month promising sweeping levies on geopolitical allies and rivals alike.

• Despite the risk of a global trade war, equity indexes continue to rally, with the S&P 500 Index finishing last week within points of an all-time high.
• The question now is whether the buyers spurring these gains are appropriately assessing what the president will do as strategists warn investors may be underestimating the risks of levies.

The Big Take

Illustration by Carolina Moscoso

Wall Street banks are retreating from China's $67 trillion financial market as geopolitical tensions and economic woes shatter their expansion dreams.

Opinion

US Vice President JD Vance, during the Munich Security Conference. Photographer: Alex Kraus/Bloomberg

JD Vance’s speech in Munich will probably alter Europe’s security outlook as much as Vladimir Putin’s did 18 years ago, Marc Champion writes. Europe needs to take on the challenge of ensuring their collective security in a post-American order.

Before You Go

Ralph Fiennes in Conclave. Source: Focus Features

With the Oscars two weeks away, the BAFTAs provided a few hints as Conclave, a film about scheming cardinals selecting the next pope, nabbed best picture. Adrien Brody won best actor for The Brutalist, which earned four awards, tying with Conclave.

Stephen Curry was crowned MVP at the All-Star Game playing to fans in his home stadium in San Francisco. LeBron James, who was due to play in his 21st consecutive All-Stars competition, had to sit out of play because of an ongoing foot and ankle injury.

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