China's DeepSeek AI Rocks Global Tech Stocks, Bitcoin Slips Below $100K | The Opening Trade 01/27

China's DeepSeek AI Rocks Global Tech Stocks, Bitcoin Slips Below $100K | The Opening Trade 01/27

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>> GOOD MORNING FROM LONDON, I AM ANNA EDWARDS ALONGSIDE GUY JOHNSON AND KRITI GUPTA. NASDAQ FUTURES TEMPLE AND CONCERNS A CHEAPER AI MODEL FROM DEEPSEEK COULD THREATEN U.S. TECH. PRESIDENT TRUMP HOLDS OUT HITTING COLUMBIA WAS WEEPING TARIFFS AFTER REACHING A DEAL ON THE RETURN OF DEPORTED MIGRANTS. MARKETS PRAISE FOR A BIG LEAP FROM CENTRAL BANKS WITH THE FED AND ECB SAID TO DELIVER RATE DECISIONS. >> WE ARE TAKING OUT THIS MONDAY WITH A GLOOMY MOOD. YOU'RE A STOCK -- EURO STOXX 50 FUTURES DOWN OVER 1%.

AT THE REAL PAIN IS CONCENTRATED IN THE U.S., SPECIFICALLY NASDAQ 100 FUTURES DOWN 2.1%. WE HAVE ONE EYE ON MERCHANT SANCTIONS, ANOTHER EYE ON TERRACE. RENFREW DOWN .71%. THE COUNTDOWN TO "THE OPENING TRADE" STARTS NOW. >> GOOD MORNING, OR IS IT? IT FEELS LIKE WE ARE FIRMLY RISK OFF. TECH WILL BE A BIG THEME THIS WEEK. TALKING ABOUT WHAT IS HAPPENING

WITH DEEPSEEK, BUT ALSO THE TARIFF AGENDA FRONT AND CENTER. WHAT WILL THAT MEAN FOR MARKETS AND AN IMMIGRATION ANGLE, AND IT GETS INTERESTING AND IT COMES TO RISK ASSETS IN THE UNITED STATES. THAT IS THE SET UP THIS MORNING. DEEPSEEK, WHERE DID THIS ONE COME FROM? ANNA: TOM WAS SHOWING A CHART AT THE NEW SEARCHES FOR DEEPSEEK HAVE TAKEN OFF IN THE LAST MONTH OR SO. BLOOMBERG INTELLIGENCE HAVE BEEN WRITING ABOUT THIS FOR UP TO ONE YEAR. THIS IS NOT A SECRET, BUT THE FACT THAT IT IS PERFORMING SO WELL ON THE APPLE APP STORE SINGE TO HAVE INTERESTED A LOT OF PEOPLE. THIS LARGE LANGUAGE MODEL COULD RIVAL WHAT WE HAVE SEEN FROM OPENAI AND META, AND SO THE LOGIC GOES IF THEY CAN DO IT CHEAPLY WITH ADVANCED CHIPS AND DO IT IN A SPECIFIC WAY THAT MEANS THAT TRAINING IS DONE MORE DEEPLY, THEN WHY DO YOU NEED TO SPEND SO MUCH MONEY ON ALL OF THE NVIDIA CHIPS AND SUPPLY CHAIN? U.S.

FUTURES TRADE DOWN. WE DO NOT KNOW A LOT ABOUT DEEPSEEK. KRITI: IT WAS NOT THE BIG POINT OF WHAT APPLE, MICROSOFT, AMAZON WERE ABLE TO HAVE SUCH AN EDGE. AT THEY ARE SITTING ON

TRILLIONS OF CASH THEY CAN DEPLOY. IF YOU DO NOT NEED THE TRILLIONS IN CASH, CAN ANYONE DO THIS? GUY: THAT IS THE TAKE AWAY. OUR GUEST WILL JOIN US AND HAS SOME INTERESTING TAKES ON THIS. WHY NOW? WHY ARE THE CHINESE ANNOUNCING THIS NOW? AND ARE THEY REALLY DOING THIS WITH THE BASIC CHIPS, OR HAVE THEY GOT THEIR HANDS ON SOME HOT PRESENT THAT IS THE REALITY OF THE SITUATION? ANNA: AND IS IT REALLY AS CHEAP AS THEY WOULD PRESENT? WE HAVE OUR OWN TEAM SAYING WE HAVE TO TREAT THESE NUMBERS WITH A GREAT DEAL OF CAUTION. RICHARD WINDSOR ECHOING THAT SAYING WHAT IS THE ROLE OF THE CHINESE STATED THIS? KRITI: IN THE LAST COUPLE OF WEEKS THE PREVIOUS HE HAS COME OUT SAYING MAYBE WE NEED TO START BUDGETING FOR HOW WE GET INVEST IN AI, WHICH SOUNDS SIMILAR TO WHAT WE ARE CHEERING OUT OF THE U.S.

GOVERNMENT, STATES AS PERFECTLY TO THE DRAMA OF THE LAST 48 HOURS WHEN IT COMES TO THE U.S. GOVERNMENT. TARIFFS ON COLUMBIA TIED TO THE IMMIGRATION POLICY HAVING A RIPPLE EFFECT ON THINGS LIKE OIL, COFFEE, CUT FLOWERS. GUY: VALENTINE'S DAY IS COMING. KRITI: IT LOOKS LIKE THE DEAL IS COME THROUGH. WE DO NOT KNOW THE SPECIFICS OF THE DEAL, BUT HE COMES BACK TO THIS IDEA THAT THIS TARIFF SABER RATTLING AS STARTED, AND TO THE ACHILLES' HEEL OF THE STRATEGY IS THE EFFECT ON INFLATION FOR EVERYDAY CUSTOMERS. ANNA: THIS IS A LOW RISK WHEN IT COMES TO THE U.S.

FROM COLUMBIA BECAUSE THEY DO NOT PROVIDE MUCH ON THINGS FROM COLUMBIA. AWAY FROM THE SPECIFICS OF COLUMBIA, IT TELLS US MORE ABOUT THE WAY TRUMP IS PREPARED TO USE THESE TARIFFS AND HOW WE WILL SEE THIS REFLECTED IN MARKETS. FX REACTING AND THE WAY HE WILL ANNOUNCE THINGS ON SOCIAL MEDIA OUT OF NOWHERE AND THAT IS THE VOLATILITY WE GET USED TO. GUY: TWO TAKEAWAYS, TRUMP IS

PREPARED TO USE TARIFFS. ALSO THE IMMIGRATION IMPORTANT. WE HAVE NOT TALKED A LOT ABOUT IMMIGRATION, WITH THE FED COMING THAT LABOR MARKET STORY WILL BE REALLY IMPORTANT, AND IF THE LABOR MARKET TIGHTENS THAT WILL RIPPLE THROUGH THE SERVICE SECTOR AND INTO OTHER AREAS OF THE ECONOMY. THAT WILL BE INFLATIONARY AND SOMETHING THE FED HAS TO PAY ATTENTION TO. THE BANK OF CANADA HAS RUN SIMULATIONS. IF A 25% TARIFF IS IMPOSED THAT IS A 6% DECLINE IN CANADIAN GDP, AND THE IMPACTS WILL BE RIPPLED AROUND THE WORLD. ANNA:

AND WE ARE GOING INTO FED WE CAN CENTRAL BANKERS WILL BE UNDER PRESSURE TO COMMENT OR NOT COMMIT. DO WE HAVE ENOUGH INFORMATION THAT NOW THE FED HAS TO START FACTORING FIST SENTIMENT ANALYSIS DOES JEROME POWELL GET TO REST BY THIS BARRIER SAY WE HAVE NOT SEEN THE POLICY YET. GUY: WE DID NOT KNOW ENOUGH TO BE ABLE TO TALK AT THIS POINT PROPERLY ABOUT WHAT IMPACT THIS IS GOING TO HAVE.

CLEARLY, POWELL WILL FACE QUESTIONS ABOUT WHETHER THE WHITE HOUSE KNOWS MORE ABOUT ON TERRY POLICY THAT HE DOES, BECAUSE THAT IS WHAT TRUMP IS IMPLIED, BUT THE ECB WILL BE INTERESTING AS WELL. THAT WILL BE MORE ABOUT MACROECONOMICS. KRITI: MAYBE THIS IS A BIG DEAL. EVEN IF WE DO NOT KNOW THE INS AND OUTS OF THE TERROR POLICY, BUT MAYBE THAT IS WHY YOU TAKE A DEBIT STANCE. IF WE ARE LOOKING AT THE ROADMAP FROM MARCH 2019 WHEN THE FIRST ERA OF THESE TRUMP TARIFFS CAME, JAY POWELL WAS QUICK TO SAY WE NEED AN INSURANCE RATE THAT. GUY: YOU DID NOT HAVE THE INFLATION RISK EVENT. WE WERE IN A VERY LOW INFLATIONARY ENVIRONMENT, AND AS A RESULT HE COULD BY THAT CARD BECAUSE HE DID NOT HAVE THE RISK OF INFLATION SITTING HERE. ANNA:

HOW MUCH POLICY DO YOU NEED TO SEED TO GIVE YOU THAT INFLATION RISK. IS IT ENOUGH TO HAVE THE EXECUTIVE ORDERS AND THE PLANES FLYING AROUND? IS THAT ENOUGH OR DO THEY NEED TO SEE OTHER RETROSPECTIVE DATA ABOUT THE NUMBER OF PEOPLE WHO HAVE LEFT THE COUNTRY? KRITI: HOW MUCH OF THE INFLATIONARY EFFECT IS EXTRA PEOPLE COMING INTO THE COUNTRY? GUY: THAT IS BEEN A HUGE DRIVER YOU COULD ARGUE OF U.S. OUTPERFORMANCE IS SIMPLY BEING A DEMOGRAPHIC FACTOR HARD TO QUANTIFY IN DIFFICULT TO DETERMINE ONCE YOU PLUG IT INTO THE MODELS WHAT YOU WERE SEEING. THERE WAS SO MUCH TO DISCUSS MONDAY MORNING. IT IS RISK OFF. I WILL THAT RIPPLE THROUGH ASSET CLASSES. WE WILL FIND OUT. KLAUS WILL BE JOINING US FROM

J.P. MORGAN. FINANCIAL SPONSORS COVERAGE WILL REDUCE THE TITLE AND FIGURE OUT WHAT IS GOING ON THERE. CITIBANK'S HEAD OF EUROPEAN STRATEGY WILL JOIN US. GOLDMAN SACHS A LITTLE BIT CYNICAL JUDGING BY WHAT I'VE READ ON WHAT IS HAPPENING WITH THE DEEPSEEK MODEL.

COHEAD OF CEEMEA. KRITI: THAT MUST BE A FUN BUSINESS CARD TO HAND OUT. WE TALKED ABOUT CENTRAL BANK EMPLOYEES THAT WE HAVE GOT THE FED, THE ECB, 20 OF EMERGING-MARKET CENTRAL BANKS. BRAZIL IS REPORTING THIS WEEK AMONG A SLEW OF OTHERS ALONGSIDE TECH EARNINGS.

ASML, META, MICROSOFT. PLENTY OF ECONOMIC DATA SPRINKLED THROUGHOUT THE WEEK. GERMAN CLIMATE DATA COMING UP TODAY, AND THEN WE END THE WEEK PCE DATA IN THE STATES AND CPI NUMBERS COMING OUT IN EUROPE. ANNA: WHAT CAN ASML ADD TO OUR UNDERSTANDING ABOUT THE TYPES OF CHIPS DEEPSEEK AS ACCESS TO AND THE EFFECTIVENESS OF THOSE U.S. BLOCKS AND SELLING TO CHINA. IT HEAR FROM MICROSOFT, META. DOES OF HUGE INVESTMENT -- OR NOT? GUY: THESE ARE EYE WATERING NUMBERS THAT THESE COMPANIES HAVE BEEN TALKING ABOUT SPENDING.

DO THEY NEED TO DO THAT? EVEN IF DEEPSEEK IS DOING THIS WITH HOPPER, DO YOU NEED TO SPEND THIS MUCH MONEY ON BLACKWELL? WHERE DOES THE PAIN GET WELL? NVIDIA OR HYPER SCALARS. KRITI: OIL EARNINGS, NOT THIS WEEK, DEUTSCHE BANK AND ADDITION TO TECH AND CENTRAL BANKS. PERHAPS CLUES ON THE BROADER ECONOMY AS WELL. GUY: LET'S SET YOU UP WITH OTHER

NEWS YOU NEED TO NOTE THIS MONDAY MORNING. CHINA FACTORY ACTIVITY HAS UNEXPECTEDLY SLOWED AHEAD OF THE LUNAR YOUR HOLIDAY. TODAY'S OFFICIAL PMI FOLLOWING TO THE LOWEST -- FALLING TO THE LOWEST LEVEL SINCE AUGUST. FLATLINING AT 59.2. ECONOMIST ARE WARNING TO SLOW DOWN THIS MONTH A LITTLE BIT MORE SEVERE THAN USUAL.

IN THE MIDDLE EAST, ISRAEL AND LEBANON HAVE AGREED TO EXTEND THEIR CEASE-FIRE TO FEBRUARY 18 TO ALLOW TROOPS TO WITHDRAW. IN GAZA ISRAEL SAYS A DISPUTE OVER CIVILIAN HOSTAGES IS BEING RESOLVED WITH THE DEAL TO RELEASE ANOTHER ROUND OF HOSTAGES THURSDAY. DEVELOPMENTS COME AGAINST THE BACKDROP WITH PRESIDENT TRUMP CONTROVERT SURELY CALLING ON EGYPT AND JORDAN TO ACCEPT MORE PALESTINIAN REFUGEES HAD WHAT COULD BE A SIGNIFICANT SHIFT IN U.S. POLICY. THE PRESIDENT SAID THIS RESETTLEMENT COULD BE TEMPORARY OR LONGER-TERM. IN GERMANY SNAP ELECTION FOUR WEEKS AWAY AND THE POLITICAL TEMPERATURE RISING. TENS OF THOUSANDS OF PEOPLE MARCHING IN GERMAN CITIES OVER THE WEEKEND.

YOU CAN SEE THE PROTEST OVER THE FAR RIGHT AFD PARTY. ELON MUSK MADE A SURPRISE VIRTUAL APPEARANCE AT THE PARTY CAMPAIGN LUNCH ON SATURDAY. >> I THINK YOU WANT MORE SELF-DETERMINATION FROM THE COUNTRIES AND LESS FROM BRUSSELS.

THERE IS TOO MUCH BUREAUCRACY, TOO MUCH CONTROL FROM GLOBAL ELITE. THERE SHOULD BE MORE DETERMINATION BY INDIVIDUAL COUNTRIES, SO I VERY MUCH HOPE THE AFD DOES WELL. GUY: THE POLLS DO NOT POINT TO THAT DIRECTION, BUT IS HE HAVING A POSITIVE EFFECT OR NEGATIVE EFFECT? SIGNIFICANT PROTEST AGAINST THE AFD. IT DOES HE CHANGE THE EQUATION? ANNA: I WAS GOING TO COME AT IT FROM A DIFFERENT ANGLE. WE HAVE SEEN A LOT OF SUPPORT ON THE GROUND FROM THE AFD, BUT WITHIN THE POLITICS OF GERMANY THERE ARE A LOT OF PEOPLE RAISING QUESTIONS ABOUT WHETHER THE FIREWALL WILL SUSTAIN. WE ASKED THE SAME IN FRANCE. OLAF SCHOLZ RAISING AN EYEBROW AT WHAT THE CDU ARE DOING RIGHT NOW PROPOSING IMMIGRATION ADMINISTRATION -- LEGISLATION THAT TRACKS WITH THE TERRITORY. GUY:

TACITLY THE IDEA IS THAT THEY ARE CHANGING THE POLICY MIX, YOU COULD RELY ON THE A.M. THE. ANNA: WE HAVE SEEN THAT IN OTHER GEOGRAPHIES. CENTER-RIGHT POLITICS TACKING RIGHT TO CAPTURE SUPPORT FOR THE RIGHT. KRITI: IT PHYSICALLY SURPRISING POLICY MOVE. YOU HAVE MORE QUESTION ON THE IMMIGRATION FRONT. I DO NOT THINK GERMANY ADDS THE

SAME QUESTION THAT THE U.S. AND CANADA HAS WHEN IT COMES TO IMMIGRATION AND MAY BE DOES NEED TO PINCH A FEW PENNIES WHEN IT COMES TO THE COST OF A TAKE WITH SOME OF THESE DEPORTATION MEASURES. ANNA: WE WILL GET OLIVER CROOK ON THE PROGRAM LET ON TO EXPLAIN THE NUANCE BEHIND THIS GERMAN STORY. WE WILL GET BACK TO CORPORATE EARNINGS STORIES AS WELL.

COMING UP, RYANAIR CUTS HIS PASSENGER GROWTH TARGET AS GOING STRUGGLES TO MEET ITS LIMITS. THE ROLE ELON MUSK IS PLAYING IN THE FEDERAL ELECTION OF GERMANY NEXT MONTH. NEXT WE WILL BE TALKING ABOUT FIXED INCOME. A FIXED INCOME MANAGER AT ALL SPRING GLOBAL INVESTMENTS. WHAT HAVE WE LEARNED?

IF YOU WANT TO GET INVOLVED IN ANY OF THESE GUYS CONVERSATIONS, IB+BBTV<GO> IS THE FUNCTION TO USE THIS MORNING AND EVERY MORNING. THIS IS BLOOMBERG. GUY: GOOD MORNING, 42 MINUTES TO THE MARKET OPEN IN EUROPE. WE ARE FIRMLY RISK OFF. THE TECH TRADE REPRESENTED STRONGLY MORE SO IN THE STATES THAN IN EUROPE, BUT NEVERTHELESS WE ARE LOWER PLUS THE TARIFF NARRATIVE. KRITI: YOU TALKED ABOUT THE TARIFF STORY. THAT USUALLY TRANSLATES TO DOLLAR STRENGTH. NOT EVEN JUST AGAINST COLUMBIA,

BUT ALL EM CURRENCIES. CHINA HAS BEEN TRYING TO GET MORE TRADE VOLUME WITH COLUMBIA ON AND STILL YOU WERE SEEING WEAKNESS IN THE CHINESE YUAN, THE MEXICAN PESO, THE MOST LIQUID EM CURRENCY, BUT STRENGTHENED THE JAPANESE YEN. 155.82 ON DOLLAR-YEN, AND EVEN A SLIGHT BID ON THE SWISS FRANC. WHERE YOU WERE NOT SEEING VOLATILITY IS THE BOND MARKET. IF YOU LOOK AT A ROADMAP FROM DONALD TRUMP'S FIRST EVENT IS RATION YOU DID SEE THAT SHOW UP IN THE BOND VOLATILITY.

I WILL TAKE YOU BACK TO GIVE THOUSAND 19 WHEN WE FIRST HAD TARIFF SPIKES. VOLATILITY INCREASED AND DECREASED AS HE GOT TRADE DEALS WITH CHINA. THIS IS THAT COVID PANDEMIC. WE WILL FAST-FORWARD TO THE BANKING CRISIS AT A PASSPORTING TO DONALD TRUMP'S ELECTION. VOLATILITY IS COMING DOWN AND THE BOND MARKET.

IS THAT IT DISLOCATED WE WILL SEE OR MAYBE WE ARE WAITING TO HEAR FROM SOME OF THE CENTRAL BANKS AROUND THE WORLD. WE WILL GET PLENTY OF THAT NOT JUST WHEN THE FEDERAL RESERVE, BUT PLENTY OF EM BANKS AS WELL, BRAZIL, CHILE, BANK OF CANADA AND SWEDEN. GUY: DO THEY HAVE ENOUGH INFORMATION TO ACT AT THIS POINT IN A CLEAR-SIGHTED WAY. LET'S FIND OUT. A FIXED PORTFOLIO MANAGER SITTING NEXT TO US AROUND THE TABLE. GOOD MORNING.

DOES THE FED HAVE ENOUGH INFORMATION TO GIVE US A DIRECTION ON TRADE? >> I DO NOT THINK IT DOES. WE SAW THAT IN THE DECEMBER MEETING AND STATE AND SINCE. ULTIMATELY WHAT THE FED CAN DO RIGHT NOW IS FLAG POTENTIAL RISKS TO CURRENT DATA AND LEAVE THINGS ON HOLD. GUY: SO WE HAVE TO WAIT FOR DONALD TRUMP AT WHETHER OR NOT HE IS SERIOUS ABOUT TARIFFS. >> I BELIEVE SO. WE MAY NOT SEE IT UNTIL THE

SECOND QUARTER, BECAUSE THAT IS WHEN TRUMP'S TRADE POLICY IS DUE. ANNA: THE DIFFICULTY IS WE WILL NEVER KNOW THE FULL STORY ON TARIFFS. THE WHOLE TIME THE TRUMP IS IN THE WHITE HOUSE KEY WILL HAVE THE POWER TO IMPOSE IT TARIFF WHENEVER AND WHEREVER EHE WANTS TO. WE HAVE SOME CLARITY GRADUALLY COMING THROUGH ON OTHER THINGS, EXECUTIVE ORDERS AROUND IMMIGRATION. WHAT IS THE PROCESS FOR THE FED DEALING WITH SOME OF THIS, BECAUSE YOU CANNOT JUST IGNORE IT OR 4 OR 5 YEARS.

>> THEY CANNOT IGNORE IT BUT THEY CANNOT PREEMPT IT. ANNA: THEY ARE DESTINED TO BE BEHIND THE CURVE BECAUSE THEY WILL HAVE TO WAIT FOR BACKWARD LOOKING DATA TO SHOW THEM WHAT PEOPLE EXPECT WILL COME. >> WE ALL KNOW THERE WAS SO MUCH POLICY UNCERTAINTY INTO THIS YEAR, NEXT YEAR AND THE HEREAFTER, AND THAT WILL BE A HUGE DRIVER OF NOT JUST U.S. GROWTH, GLOBAL CLOSED-END INFLATION -- GLOBAL GROWTH AND INFLATION. THE MARKETS CANNOT REACT. THIS IS WHY WE ARE SEEING

MYOPIC SHORT TERMISM. ANNA: ALL THE WAY THROUGH THE REPORT OF JANUARY, WE SAW YIELDS ON THE RISE, BECAUSE THEY WERE WORRIED ABOUT WHAT TRUMP WOULD MEAN FOR INFLATION. AND THEN WE GET TO WEEK ONE OF HIS PRESIDENCY SECOND TIME AROUND, AND ACTUALLY THINGS CALMED DOWN. HOW LONG DO WE REMAIN IN THAT CALM PLACE.

>> THINK ABOUT HOW MUCH WAS PRICED INTO INTEREST RATES. IT WAS A HUGE DISLOCATION COMPARED TO THE ACTUAL REALITIES. THE CURRENT PRICING NOT JUST ON THE FED, BUT OUT OF THE ECB, BANK OF JAPAN LOOKS RIGHT GIVEN THE CURRENT INFORMATION. THERE IS A LOT LESS PANIC THAT THE MARKET WILL HAVE TO ADJUST INTEREST RATE EXPECTATIONS, SO THAT AS LEAD THE MARKET TO FIND SOME EQUILIBRIUM. KRITI: THE CONSENSUS GOING INTO THE U.S.

ELECTION WAS THAT DONALD TRUMP EQUALS INFLATION. IS IS THE FEAR OF INFLATION MAKING BOND MARKETS COMPLACENT? >> USUALLY BE THINK ABOUT BOND MARKETS BEING THE WATCHDOG AND INFLATION. 10 YEAR AT OVER 4.5%, WHICH IS NOT OUT RAGES IS EXPECTATIONS

MIGHT BE. THE MARKET IS STRUGGLING TO PRICE THE FOR THE FUTURE -- THE FORWARD FUTURE, SO RIGHT NOW IT IS TRADING ON SHORT-TERM RELEASES, AND THEIR INFLATION HAS BEEN OK. KRITI: WHAT IS DRIVING THE 10 YEAR? SO MUCH OF IT IS TIED TO THE FED POLICY BECAUSE RESPOND TO THE FISCAL POLICY, BUT IS THERE AN ARGUMENT TO MADE BREAKEVENS ARE INFLATION EXPECTATIONS FROM CONSUMERS, THE AMOUNT OF FUNDS IN THE MARKET IN THE FRONT END OF THE CURVE IS DRIVING THE BELLY IN THE LONG END? >> CERTAINLY. THAT IS BEEN DIFFICULT TO GET MONEY MARKET OR SHORT-TERM MONEY TO MOVE FURTHER UP THE CURVE. DURATION IS BEEN OUT THERE FOR A WHILE.

WE HAVE NOT ACTUALLY SEEN THE FLOWS, SO STEEPENING STILL SEEMS LIKE THE EASIEST TRADE FOR NOW. 10 YEAR AT 4.5 IS NOT SUPERCHEAP OR SUPEREXPENSIVE. GUY: THERE IS A RUMOR THAT THERE IS AN ECB MEETING THIS WEEK. I KNOW THAT THE FED WILL BE

MORE IMPORTANT. DOES EUROPE NEED CHEAPER MONEY RIGHT NOW? OR DOES IT MEAN STABILITY IN THINGS LIKE ITS RELATIONSHIP WITH TRUMP, THE UNITED STATES? IS THERE ANY ARGUMENT THAT IT WOULD BE BETTER TO HAVE A STRONGER CURRENCY? IS THERE A DANGER THE ECB BECAUSE TOO HARD, DRIVES THE EURO LOWER AND THAT TURNS OUT TO BE SOMETHING THAT IS NOT NECESSARILY A GOOD THING? >> IF YOU OFFER EUROPE A CHANCE BETWEEN GEOPOLITICAL STABILITY AND EASY MONEY THEY WOULD TAKE THE FORMER. ALL THEY CAN CONTROL IS THE LETTER -- LATTER. GUY: YOU CAN MAKE THE ARGUMENT THAT WE WILL KEEP THE CURRENCY STRONG AND THEN WE CAN BUY MORE GAS FROM AMERICA COME UP MORE STUFF, AND DOUBLECROSSED US A LESSON THAT WAS ALL PART OF OUR PROBLEM. >> ONE THING I WONDER ON THE EURO, MAY BE WE HAVE ALREADY SEEN THE WORST. THERE WAS ABSOLUTE DISASTER PRICED INTO

THE EURO. THERE IS A HUGE UNDERWEIGHT THE MARKET AS BUILT UP. IN SPRING WE HAD SHORT EURO AND WHEN YOU TO Q4. IF YOU SEE PEOPLE STARTING TO SELL THE EURO, EVEN TAKING A PAUSE, THAT COULD REBOUND. ANNA: IS THAT THE MESSAGE WE GOT FROM

PMI READINGS AT THE END OF THE WEEK? WE DID SEEM TO REPRICE EXPECTATIONS FOR HOW MUCH CUTTING WE WOULD GET FROM THE ECB? THERE IS A LITTLE BIT OF STABILITY CREEPING INTO THE GERMAN DATA. >> IT IS NOT SO MUCH ABOUT THE BIG DIRECTIONALITY, FINDING POSITIONS THAT ARE VERY CONSENSUS AND WHERE THAT ASYMMETRY IS CREEPING IN. KRITI: LAUREN, YOU HAVE GIVEN US A LOT TO THINK ABOUT. COMING UP, WE WILL TALK ABOUT HOW THE RANCH PRICING AFFECTS THE WORLD OF PRIVATE EQUITY AND THE DEALMAKING STORY AS YOU START TO SEE SOME OF THE DEAL GLUT LOOSEN. THE IPO MARKET PICKING UP ON BOTH SIDES OF THE ATLANTIC.

WE WILL BE DISCUSSING THAT WITH KLAUS HESSBERGER. RISK SENTIMENT CONTINUING TO WORSEN. EURO STOXX 50 FUTURES DOWN 1.2%. PAIN CONCENTRATED IN TO THE GERMAN DAX FUTURES. STICK WITH US. THIS IS BLOOMBERG. ANNA: WELCOME BACK, 30 MINUTES FROM THE START OF EUROPEAN EQUITY TRADING, AND THE FUTURES PICTURE. LOOKING WEAKER THIS MORNING

DOWN BY 1.3% ON ZERO STOXX 50 FUTURES. S&P FUTURES DOWN 1.5% AND NASDAQ FUTURES DOWN 2.3%. WITH MAKING A POINT ON THAT WITH CHINESE AT-LARGE LANGUAGE MODELS RAMPING UP AND PACE. BOND MARKETS ARE RISK OFF BECAUSE OF THE CHINESE TECH STORY AND THE TARIFFS DURING AROUND WHAT WE HAVE SEEN FOR PRESIDENT TRUMP AND HIS HANDLING OF COLUMBIA. YIELDS COMING DOWN A LITTLE BIT JUST THIS MORNING, SO THOSE OF THE THINGS DOMINATING MARKET THINKING AS WE GO INTO MONDAY, WEEK TWO OF THE TRUMP ADMINISTRATION SECOND TIME AROUND. WITH THE U.S.

CONTINUING TO OUTPERFORM AND PRESIDENT TRUMP MORE DEREGULATION, WHAT DOES THIS MEAN FOR 2025? SHARE WITH US HIS KLAUS HESSBERGER RECENTLY TAKING THE TEMPERATURE, THE THE APPETITE FROM GLOBAL INVESTORS AND ALL THINGS PE. GOOD TO HAVE YOU WITH US. AT WHAT IS THE OUTLOOK FOR PRIVATE EQUITY LOOK LIKE? DOES THAT LOOK LIKE WE GET SOME OF THOSE EXITS WE HAVE BEEN PROMISED? SOME OF THAT CAPITAL MARKETS ACTIVITY DELIVERING EXITS FOR SPONSORS? >> GOOD MORNING. THANKS TO BE HERE. I AM POSITIVE ON PRIVATE EQUITY FOR 2025. WE ARE EXPECTING MORE ACTIVITY ON THE EXIT SIDE. AS WE ALSO JUST TALKED IN THE BRIEFING VALUATIONS ARE CHEAP IN EUROPE, SO THERE IS MORE PUBLIC TO PRIVATE.

THE ACTIVIST -- AND YOU GUYS TALKED ABOUT IT, THE ACTIVISTS HAVE BEEN ACTIVE IN THINK OF DRIVING THE DEALS ON THE PRIVATE SIDE. ANNA: THERE WAS A LOT OF FOCUS ON THAT TEAM IN THE U.K., A LOT OF THE OPTIMISM AND CHEAPNESS OF ASSETS AND PRIVATE EQUITY INTERESTED AS A RESULT. IS THAT A WIDER EUROPEAN THEME? >> YES, ACTIVISTS ARE GOING GLOBAL EVERYWHERE IN EUROPE.

YOU SEE THEM IN GERMANY, FRANCE. THEY ARE PROBABLY TRYING TO PARTNER MORE WITH PRIVATE EQUITY TEAMS TO ACTUALLY GET THE STAND. LAST YEAR THERE WERE A LOT OF CAMPAIGNS BUT NOT TOO MANY ASSETS TRADED. THEY WANT TO MAKE SOME FLOWS HAPPEN. KRITI: HOW MUCH OF THAT EUROPEAN EP -- PE BOUQUETS IS TIED TO FISCAL POLICY IN FRANCE, GERMANY OR THE PERIPHERY GIVEN INFRASTRUCTURE DEALS ARE THE HOTTEST DEALS YOU CAN MAKE IN P E? >> I WOULD SAY EUROPE IS UNDERSELLING ITSELF.

I DO NOT KNOW IF YOU SAW OUR TEAM JUST PUBLISH SOMETHING. YOU SEE A PATTERN GROWTH IN EUROPE IS PRETTY STRONG. WE STILL GENERATE A LARGE PART OF GDP OF THE GLOBAL MIX, AND THE RATE ENVIRONMENT FOR EUROPE IS NOT SO BAD, SO I A MORE POSITIVE THAN THE EUROPEANS DESCRIBE OURSELVES. KRITI: DOES SIZE MATTER IN THIS? DO YOU HAVE TO BE A BIG PE PLAYER TO EXECUTE SOME OF THESE DEALS, GIVEN THAT CAPITAL MARKETS HAVE OPENED UP BUT MAYBE NOT TO THE EXTENT THAT THEY HAVE IN THE PAST? DO YOU HAVE TO HAVE THE CUSHION TO SUCCEED IN THIS ENVIRONMENT? >> PRIVATE EQUITY FUNDS HAVE DIFFERENTIATED THEMSELVES.

YOU SEE LARGE-CAP PLAYERS LIKE APOLLO, BLACKSTONE, KKR , BUT WE SEE QUIET, SUCCESSFUL ACTIVITY FROM MID-CAP PLAYERS WHO ARE WHITE SPECIALIZED IN THE TECH SPACE OR SOFTWARE OR SERVICES. SOMETIMES THEY ARE BETTER THAN THE LARGE-CAP COME UP MUCH MORE LOCAL, SO YOU SEE FRENCH FUNDS, GERMANY FUNDS, AND IN THE U.S. IN THE MIDWEST AND THEY ARE ACTIVE IN LOCAL ASSETS, AND THAT IS WHY SOMETIMES THEY ARE MORE SUCCESSFUL TICKET OF HIS FAMILY'S TO SELL THEM. GUY: RACHEL REES WILL MAKE A BIG SPEECH THIS WEEK TALKING ABOUT GROWTH. OTHER EUROPEAN POLITICIANS ARE REALIZING IN A TRUMP WORLD GROWTH IS IMPORTANT. IF YOU'RE UP DELIVER GROWTH, AND THE PMI'S WERE UGLY, WHAT DOES THAT MEAN FOR PRIVATE EQUITY IN EUROPE? >> I WOULD SAY THAT YOU WILL WRITE THE GROWTH IN EUROPE IS THE LESSON THAN IN THE U.S., BUT IF YOU DRILL IN A LOT OF

THE ASSETS ARE SET UP GLOBAL. MOST OF THE ASSETS HAVE EXPOSURE TO THE U.S. ACROSS EUROPE IT IS NOT GERMAN COMPANIES ARE ONLY ACTIVE IN GERMANY. PRIVATE EQUITY GUYS ARE PICKING ASSETS THAT ARE UNDERVALUED. SELL ASSETS THAT ARE ALSO GROWING AND BILLED BY DIGITAL ASSETS IN THE U.S.

TO BUY ADDITIONAL. GUY: IS IT THE OBJECTIVES -- YOU WOULD PARTNER A EUROPEAN ASSET WITH THE U.S. ASSET? IS THAT WHAT YOU WERE SAYING. WHAT IT MEANS IT WOULD BE MORE LOGICAL TO LESS THAT S8 --ASSET IN THE U.S.? >> IF I GO BACK TO 2000 IN BANKING WHEN I STARTED. IDEAL IS SOMETHING IN EUROPE AND LISTED IN THE U.S., THAT IS A TREND WE ARE SEEING. KRITI: YOU MENTIONED THAT TECH

INVESTMENTS MAY BE EASIER TO MAKE IF YOU ARE A MID-CAP FUND OR MID-CAP LATER AT THE MOMENT. NO UNFOLD -- NORDFOLD SHOOK THAT DIFFERENT SCORE WHEN SO MANY PLAYERS WERE POSITIVE ON GETTING INTO THE NEW TECHNOLOGY. WHAT IS THE LESSON LEARNED WHEN IT COMES TO INVESTING WITH SUCH ENTHUSIASM AND GETTING BURNED? >> A LESSON LEARNED IS WHEN YOU ALWAYS HAVE NEW TECHNOLOGIES COMING IN. SOME WORK OUT AND SOME DO NOT WORK OUT. AT THE MID-CAP GUYS ARE DOING, I DO NOT THINK THEY HAVE DIVERSIFIED THEIR PORTFOLIO, AND THEY ARE MUCH MORE ACTIVE IN CHANNELS WHERE THE RISK IS NOT SO BIG. YOU WANT TO BE PART OF A BIG PE SHOP WOULD PARTNER WITH THE TECH SPECIALIST, YOU OFTEN SEE THE TECH SPECIALIST SUCCEEDING, THEY BUILD A BUSINESS. KRITI: LET'S TALK ABOUT THE FENCE AS

WELL, WHICH IS A POPULAR SPACE. SATELLITE COMPANIES AND SOMETHING GETTING A LOT OF SUPPORT FROM GOVERNMENTS ACROSS EUROPE. THERE IS ESG AGITATION IN EUROPE AROUND THE DEFENSE SECTOR. WHAT ARE YOU SHARING IN

DEFENSE? >> BEFORE CHRISTMAS WE SOLD SOMETHING AND A HOTLY CONTESTED OPTION TO ANOTHER PRIVATE EQUITY FUND. WE COMPETED WITH THE IPO MARKET AND DID IT LISTED. THE INTEREST AS YOU SAY GIVE ATTRACTIVE VALUATIONS HAVE MATERIALLY INCREASED OF THE SECTOR, AND THAT IS WHY VARIOUS OTHER ASSETS WILL BE WELL RECEIVED. ANNA: THIS IS A BROAD QUESTION. WHAT IS THE ATTITUDE IN PE FOR

INVESTMENT THE LONG-TERM? FOR A LONG TIME THERE MIGHT EVENT THIS ALLEGATION THAT PES WERE NOT FOCUSED ON THE LONG-TERM AND IT WAS MUCH MORE SHORT-TERM, THEN TO GET THE CONFERENCE AT THE END OF THE TERM IN LONDON AND PEOPLE WERE SAYING PUBLIC RECORDS DO NOT HAVE THE APPETITE TO ALLOW BUSINESSES TO SPEND A LOT ON CAPEX REQUIRED AND THAT THOSE BUSINESSES MIGHT BE BETTER OFF WITH PE. HOW IS THAT EVOLVING? >> THAT IS A GREAT QUESTION, BECAUSE THERE ARE MORE SORTS OF FUNDS. THEY RAISE MORE LONG-TERM FUNDS, WHICH YOU MENTIONED BEFORE, BUT ALSO FUNDS WHERE THEY CAN PARK ASSETS LONGER. YOU CAN PROBABLY OPERATE LONGER IN PRIVATE. AT OTHER TREND WE ARE SEEING ARE THE FUNDS WHERE WE ARE ACTIVELY PARTNERING WITH PEOPLE. STRONG ASSETS WHICH YOU CAN DEVELOP LONGER. YOU FIND A LOT OF MINORITY

INVESTORS WHO WENT TO BE A PART OF IT SO THEY DO NOT HAVE TO GO PRIVATE. THAT IS A TREND WHERE WE ARE SEEING A LOT OF ACTIVITY. KRITI: KLAUS HESSBERGER, PLEASURE TO HAVE YOU ON THE PROGRAM.

I AM HEADED TO CANNES TOMORROW. WE WILL HAVE A BROADCAST LIVE. JUST SPEAKING ABOUT KKR, APOLLO, AMONG OTHERS. REALLY TALKING ABOUT JUST HOW ACCESSIBLE IT IS FOR INSTITUTIONAL INVESTORS TO GET INTO PRIVATE ORCHIDS IN THE WELL SPACE, BUT MAYBE HOW IT IS FOR EVERYDAY INVESTORS TO GET INVOLVED IN A LUCRATIVE ASSET. GUY: ALL OF THAT COVERAGE COMING UP LATER IN THE WEEK.

MONDAY MORNING, AND I FUTURES UNDER PRESSURE. CHINESE ART OF DEEPSEEK RAISING QUESTIONS ON THE FUTURE OF U.S. TECH DOMINANCE. WE WILL TALK ABOUT THAT NEXT. AT 19 MINUTES TO GO UNTIL EQUITY TRADING STARTS IN EUROPE.

THIS IS BLOOMBERG. KRITI: A LITTLE OVER 15 MINUTES AWAY FROM "THE OPENING TRADE," AND SENTIMENT IS WORSENING ACROSS THE BOARD. YOU'RE A STOXX 50 FUTURES DOWN 1%. THE FTSE 100 NOT SELLING OFF AS MUCH AS OTHER PARTS OF THE WORLD, BUT A RISK OFF KIND OF DAY. A LOT OF SELLING CONCENTRATED

IN THE DAX. MAYBE CHIPMAKERS ARE GOING TO FEEL PRESSURE. WE WILL WALK YOU THROUGH ALL OF THAT, AND NOTICED FUTURES TAKING THE BRUNT OF THE PAIN THIS MORNING DOWN OVER 2%. ALMOST 3% IF YOU WANT TO RUN UP

COMING OFF OF CONCERNS A CHINESE AI MODEL TO DISRUPT THE TECH MARKET ALTOGETHER. IT SEEMED AS COMPETITIVE WITH OPENAI TECHNOLOGY AND COULD CHALLENGE THE DOMINANCE OF U.S. CHIP COMPANIES INCLUDING NVIDIA. LET'S BRING IN SOMEONE WHO IS BEEN FOLLOWING THE STORY. ROBERT LEE JOINS THE PROGRAM. AT THE END OF THE DATE THIS IS A COST STORY.

TO WHAT EXTENT DO THE DEEPSEEK DEVELOPMENTS AWAKENED THE WORLD'S EYES TO THE FACT THAT MAY BE AI DOES NOT HAVE TO BE AS COST INTENSIVE AS WE THOUGHT IT DID? >> THAT IS EXACTLY RIGHT. ONE OF THE THINGS WE HAVE SAID CONSISTENTLY A BLOOMBERG INTELLIGENCE IS THE SOFTWARE SIDE IS NOWHERE NEAR AS HARD TO DEVELOP A LARGE LANGUAGE MODEL AS IT IS A BLEEDING EDGE SEMICONDUCTOR CHIP AT THE LIKES OF NVIDIA OR TSMC. IT IS STILL A DIFFICULT TASK. I THINK CHINA HAS INHERENT STRENGTHS IN SOFTWARE.

IT IS HOME TO TWO WITH THE LARGEST SOFTWARE COMPANIES GLOBALLY, TENCENT AND ALIBABA, AND BECAUSE OF U.S. EXPORT CONTROLS BEING A ROADBLOCK, THAT IS BREAK THEM WANT TO FOCUS ON INNOVATION AND WORK THEIR WAY AROUND THE PROBLEM, AND THAT IS WHAT DEEPSEEK HAS DONE. THEY HAVE DEVELOPED A SMALLER, MORE NIMBLE, COST-EFFICIENT NUMBER MORE ADEPT AT RUNNING ON LOCALLY SUPPLIED CHIPS. IN COST TERMS, IT IS HYPERCOMPETITIVE, SO THIS IS A WAKE-UP CALL TO SOME PEOPLE OUT THERE IN THE MARKET.

HAVING SAID THAT, THIS COMPANY HAS BEEN KNOWN FOR THE BETTER PART OF THE YEAR OR SO AND WE HAVE BEEN WRITING ABOUT IT HERE IN HONG KONG. GUY: DOES MAKE YOU WONDER WHY IT IS BECOME SO IMPORTANT RIGHT NOW. LET'S ASSUME THEY ARE DOING WHAT THEY ARE DOING AT DEEPSEEK WITH THE SIGNIFICANT LOWERING OF CHIPS AND MUCH OF THE WRITING I AM SEEING THIS MORNING. WHAT DOES IT MEAN FOR COMPETITORS, NVIDIA, TENCENT, ALIBABA? WHAT DOES IT MEAN FOR MICROSOFT, ETC.? THE KINDS OF COMPANIES THAT WILL SEE REPORTING? >> THAT IS A LONG LIST. FROM A CHECKPOINT IF YOU, AS CHINESE

COMPANIES INCREASE THEIR DOMESTIC SUPPLY IT MAKES THEM LESS RELIANT ON THE LIKES OF NVIDIA. THAT IS THE NEWS TODAY THAT SORT OF CONFIRMS THAT, AND WE EXPECT THAT TO CONTINUE. FROM A DOMESTIC INTERVIEW, IT IS A CUTTHROAT, HYPERCOMPETITIVE MARKET IN CHINA. THE BARRIERS TO ENTRY ARE KNOWN. HER LEVEL OF DIFFERENTIATION, ALTHOUGH DEEPSEEK IS A STRONG TECHNOLOGY INNOVATOR, BUT STILL THE DIFFERENTIATION IN THE MODELS IS NOT THAT HIGH. THE SECTOR HAS COMMODITY-LIKE CHARACTERISTICS. THAT MAKES IT DIFFICULT FOR COMPANIES TO CHARGE FOR THESE MODELS. THEY'RE PRICING POWER IS

LIMITED. WHAT DOES IT MEAN FOR U.S. COMPANIES? REALLY, THERE ARE NOT MANY CHINESE COMPANIES COMPETING DIRECTLY WITH THE U.S., BUT I THINK IT IS A WAKE-UP CALL TO SOME WITHIN THE U.S. INDUSTRY AND INVESTOR BASE OF

THAT CHINA IS HYPERCOMPETITIVE AND THEY ARE RAPIDLY NARROWING THE GAP ON THE SOFTWARE SIDE AND IS WELL-PLACED AS GLOBAL NUMBER TWO IN TERMS OF THE SOFTWARE SIDE OF THE AI EQUATION. FROM NVIDIA'S POINT OF VIEW, THEY ARE AN EFFECTIVE MONOPOLY IN TERMS OF WHAT THEY DO. THERE WERE A FEW COMPANIES THAT CAN TOUCH THEM AT THE MOMENT, SO I THINK FUNDAMENTALLY THE STORY REMAINS ON TRACK. AGAIN, THIS IS A WAKE-UP CALL FOR PEOPLE NOT TO BE COMPLACENT, AND ONE THING WE DO KNOW ABOUT THE TECHNOLOGY SECTOR IS THAT IT ALWAYS CHANGES COME AT THE ONLY CONSTANT I GUESS, SO THERE IS NO ROOM FOR COMPLACENCY. ANNA: THANK YOU VERY MUCH, ROBERT LEE, WITH THE LESSONS THAT WE LEARN. JOINING US NOW FROM WHAT THE MARKET IS TAKING AWAY FROM THIS STORY, MARK CUDMORE.

WE HEARD THE ANALYST VIEW ON WHAT THIS MEANS, AND THIS COMPANY IS NOT A SURPRISE. IT SEEMS TO BE GETTING MORE GLOBAL NAME RECOGNITION FOR SURE RIGHT NOW AND INTO THIS TRADING WEEK. NASDAQ FUTURES DOWN 2.6%. WHAT ARE YOU TAKING AWAY FROM A MARKET ABOUT THIS WAKE-UP CALL? MARK: I THINK IT IS MASSIVE, AND I THINK IT IS MESSY FOR TWO MAIN POINTS. IT IS NOT JUST ABOUT THE CHALLENGE TO U.S. HEGEMONY IN THIS SPACE. THAT IS A SAD STORY. ROBERT LEE ANALYZED IT PERFECTLY AND SUMMARIZE THE STORY, AND THAT DOES NOT CHANGE THE FACT THAT NVIDIA HAS A MONOPOLY IN THIS SPACE AND MANY BIG NAMES DO AS WELL.

THE REASON THIS IS A GAME CHANGER IS IT IS ABOUT COST. IT UNDERMINES THE IMMENSE AMOUNT OF MONEY SPENT ON HARDWARE BY THE U.S. MEGACAP TECH STOCKS. IT LOOKS TENUOUS THAT THEY WILL GET A RETURN ON THAT INVESTMENT. NOW THAT THIS IS OPEN SOURCE, IT REALLY MAKES IT UNLIKELY THAT THEY WILL BE ABLE TO JUSTIFY THE RETURN ON INVESTMENT GIVEN THAT THERE IS A CHEAPER ALTERNATIVES OUT THERE FOR THE WORLD TO USE.

ULTIMATELY THIS IS GOOD FOR GLOBAL GROWTH, PRODUCTIVITY, GLOBAL STOCKS, BUT IT DEEPLY UNDERMINES THE MASSIVE PREMIUM WE PAY FOR U.S. MEGACAP STOCKS. I THINK THIS IS THE CATALYST PEOPLE WERE LOOKING FOR COMBINED WITH PERFECT TIMING OF TRUMP PUTTING EXTRA COSTS ON U.S. TRADE. IT IS THE CATALYST TO END 15 YEARS OF U.S. STOCK MARKET EXCEPTIONALISM. GUY: LET'S TALK ABOUT THE RIPPLE EFFECT. TALK TO ME ABOUT THE MOST

CORRELATED ASSETS OF THAT STORY. BITCOIN IS DOWN THIS MORNING. THAT IS MAYBE A REFLECTION OF THE NASDAQ STORY. HOW FAR DID THE RIPPLES SPREAD? MARK: THIS IS ABOUT UNDERMINING U.S. EXCEPTIONALISM.

IT IS SAYING U.S. STOCKS WILL FALL FURTHER AND RISE LESS IN THE GOOD TIMES GOING FORWARD. IN THE SHORT TERM WE ARE FOCUSED ON U.S. TECH NEGATIVITY. CRYPTO SEEMS TO BE SUFFERING FROM A FEW ASPECTS. THE GOING TO RESERVE -- BITCOIN RESERVE IS NOT BEEN ANNOUNCED.

THE CEO OF ONE PRICING THERE ARE ONE MILLION NEW CURRENCIES BEING CREATED EVERY WEEK, AND THIS UNDERMINES THE SECTOR. THERE ARE 36 MILLION TOKENS OUT THERE, WHICH SHOWS COMPETITION FOR ARBITRARY LINES ON THAT DATE IS SPREADSHEET. CRYPTO IS GOING THROUGH A TOUGH PERIOD. THERE IS AN OVERLAP IN TO GET INVESTMENT SECTOR, AN IDEA THAT U.S. HAS LEADERSHIP UNDER TRUMP IN

BOTH CRYPTO AND TECH, AND THOSE IDEAS ARE BEING UNDERMINED. I EXPECT U.S. TECH PERFORMANCES OVER AND I SUSPECT CRYPTO HAS A TOUGH PERIOD I HAD. -- AHEAD. KRITI: MARK CUDMORE SAVED BY THE BELL JUST AS I WAS ABOUT TO ASK HIM ABOUT CUT FLOWERS. TO GET MORE UP-TO-DATE ANALYSIS FROM HIM AND THE TEAM MLIV <GO> IS YOUR FUNCTION. >> WE HAVE A MIXED UPDATE FROM LION AIR -- RYANAIR, THE AIRLINE BEATING EXPECTATIONS BUT PROFIT DECLINING 12% GIVE IT A WEEK THIS.

AT THEY HAVE DOWNGRADED THEIR PRESENT OR TARGET FOR THE YEAR AHEAD GIVEN DELAYS AT BOEING, ONE OF THEIR KEY SUPPLIERS. WE CAN SEE THE STOCK DID HAVE A DROP IN THE LAST QUARTER OF LAST YEAR MOSTLY DUE TO THE WEAKNESS THE COMPANY WARNED OF. WE WILL WAIT TO SEE HOW THAT OPENS IN DUBLIN. IN TERMS OF M&A, COLLAPSE OF POINT IF THE BIG TESTING BILLS, VERITAS AND STS -- SGS NO LONGER TALKING ABOUT COLLABORATION. SGS COMING OFF THE STOCK SELLING ON THOSE TALKS WHEREAS VERITAS WAS RISING, SO WE WILL SEE IF THAT REVERSES. BACK IN THE U.K. NEWS ON WH SMITH, LOOKING TO OFFLOAD ITS RETAIL UNIT THAT HAS GOT AROUND 500 JOBS. THE COMPANY IS LOOKING TO FOCUS

MORE ON THE TRAVEL BILL THIS -- BUSINESS. THE STOCK NEVER RECOVERED FROM THE PANDEMIC DROP. 10 BUYS, A FAVORITE STOCK ON THE STREET.

ANALYST RATINGS, LVMH UPGRADED AT MORGAN STANLEY AND OVERWEIGHT ON THATS ONE. OCGEN OVERWEIGHT ON THE BARCLAYS RADIO -- RADAR. ANNA: THANK YOU VERY MUCH. WE WILL KEEP AN EYE ON BSF. THEY SAID ON FRIDAY THEY EXPECT TO MEET EXPECTATIONS. DIMAGGIO DENYING THEY'RE LOOKING TO SPINOFF GUINNESS. WE WILL WATCH ABOUT ONE.

TECH AND FOCUS. GUY: S&P HAS GONE FROM 160 TO 2 60. GERMANY SEEMS TO BE THE EPICENTER. S&P COULD BE INTERESTING TO WATCH AND SOME OF THE CHIP STOCKS ON THE BACK OF THIS DEEPSEEK STORY COULD BE UNDER PRESSURE. THE U.S. >> MONDAY MORNING. A LOT HAS HAPPENED OVER THE

WEEKEND. THIS CHART IS IRRELEVANT. THE WHITE LINE BEING EUROPE, THE BLUE LINE BEING THE UNITED STATES. THAT IS FRIDAY'S SESSION. BUT WE'VE GOT THE TARIFF STORY WE NEED TO FOLD IN. WE ARE GOING INTO THIS WEEK, IT FEELS, WITH SLIGHTLY DIFFERENT NEWS THEN WE ENDED LAST WEEK. WHAT OUR FUTURE IS TELLING US?

KRITI: IT FEELS LIKE THE RISK SENTIMENT IS CONTINUING, IN ADDITION TO THE IDEA WE HAD, THE BAD NEWS COMING FROM THE TARIFF STORY AND DEEP SEA STORY. 1.4% DECLINE IN THE STOCK FOR YOU TO -- THE STOXX 50 FUTURES. A LOT OF THE PAIN OVER IN THE STATES, THE NASDAQ 100 FUTURES DOWN ALMOST 3%. WE WILL SEE IF WE GET BUYING INTO THE U.S. OPEN OR CERTAINLY INTO THE

EUROPEAN OPEN. ANNA: MUCH MORE OF A GLOBALLY KNOWN BUSINESS OVER THE WEEKEND AND INTO THE WEEKEND. WE WILL KEEP AN EYE ON THAT. THE TECH SECTOR IN EUROPE, ANYWHERE THEY ARE SPENDING A LOT OF MONEY ON AI INFRASTRUCTURE, WE WILL KEEP AN EYE ON THAT.

RYANAIR ALSO IN FOCUS. WE HAVE AN UPDATE FROM THAT BUSINESS. THEY HAVE LOWERED THEIR PASSENGER GROWTH TARGET FOR 20. THEY ARE CITING BOEINGS DELIVERY DELAYS. UH SMITH -- WH SMITH ARE EXPLORING THEIR HIGH STREET BUSINESS. THEY GET MOST PROFITS NOT FROM THE HIGH STREET BUSINESS BUT THE TRAVEL RELATED BUSINESSES.

THEY ARE LOOKING PERHAPS TO OFFLOAD THE HIGH STREET ONES. WE WILL KEEP AN EYE ON THAT ONE AS WELL AS ALL THE TECH NAMES. GUY: TARIFFS IS WHAT YOU WANT TO FOCUS ON. WE ARE ABOUT TO GET THE EUROPEAN EQUITY MARKET OPEN. EXPECT IT TO DELIVER SOME DOWNSIDE. IT IS DEFINITELY RISK OFF. HOW THAT BREAKS ACROSS EUROPE,

LET'S FIND OUT. THE FTSE 100, NOT MUCH TECH. AS A RESULT OF WHICH, YOU MIGHT SEE A RELATIVE OUTPERFORMANCE OUT OF LONDON TODAY, WHICH IS GOING TO BE ADJUSTING TO WATCH. IN SOME WAYS, THAT IS NOT WHERE THE STORY IS THIS MORNING. THE STORY IS GOING TO BE ELSEWHERE. IBEX IS DOWN BY 0.8%.

WE WILL GET MORE NUMBERS COMING THROUGH OUT OF GERMANY, MAYBE A LITTLE BIT OUT OF SWITZERLAND AS WELL. BUT IT IS THE CHIP STORY. THE--MARKET WILL BE FASCINATING TO WATCH. THE GERMAN MARKET IS THICK WITH NAMES LIKE S&P, WHICH HAVE HAD A GREAT RUN AND IN SOME WAYS COULD BE A CASUALTY OF WHAT WE ARE SEEING IN NASDAQ FUTURES RIGHT NOW. WE DON'T HAVE A TRADE DATE YET. THE FTSE IS DOWN BY 0.2%. YOU PROBABLY EXPECT THESE MAIN MARKETS TO BE DOWN A LITTLE BIT MORE, BUT IT COULD TAKE A WHILE FOR THEM TO GET OPEN. WHAT ARE WE SEEING BELOW THE

SURFACE? SINGLE STOCKS, WHAT IS HAPPENING THERE? ANNA: WE ARE-- -- KRITI: WE ARE WAITING FOR GERMAN NAMES TO WAKE UP AND START TRADING. WE WILL PERHAPS SEE MORE OF A SELLOFF THEN WE ARE SEEING NOW. I AM SEEING A LOT OF UNDERPERFORMANCE IN THE OIL SPACE AS WELL, SO YOU ARE SEEING THE LIKES OF SHELL, RIO TINTO, AMONG OTHERS TAKING A BEATING. I FEEL THERE IS A LITTLE BIT OF A READTHROUGH, MAYBE MORE IN THE EARLY SEC. OF TRADING FROM MAY MAYBE THE TARIFF CONVERSATION THAN THE TECH CONVERSATION BECAUSE I AM SEEING A LOT OF EM EXPOSE COMPANIES FACING THE BIGGEST WEIGHTS. ANNA: WE HAVE MENTIONED TARIFFS AND TECH.

WE HAVE NOT MENTIONED AS MUCH THE CHINESE DATA BECAUSE THAT CHINESE DATA IS QUITE WEAK ON THE MANUFACTURING SIDE, DESPITE ALL THE EFFORT THE GOVERNMENT HAD SEEMINGLY PUT IN TO BOOSTING ACTIVITY TOWARD THE END OF THE YEAR. THAT DIDN'T DELIVER AND WE SAW DISAPPOINTING NEWS WHEN IT COMES TO CHINESE PMI'S. BASIC RESOURCES IS THE WORST PERFORMING SECTOR TODAY, DOWN BY OVER 1%.

AND SOME OF THOSE NAMES ATTACHED TO THE PROPERTY SECTOR, IT WAS CONSTRUCTION AND CONSUMPTION IN THE SERVICES SIDE THAT WAS NOT GIVING US A POSITIVE NEWS STORY OVERNIGHT FROM CHINA. LEST WE FORGET ABOUT THE CHINA DATA FLOW, THAT IS ALSO SOMETHING HAVING AN IMPACT, ASIDE FROM SOME OF THE TECH STORIES. WE ARE STILL WAITING FOR THE CAC AND THE DAX TO OPEN. GUY: NO TRADE ON INFINEON. WE NEED TO SEE THE NUMBERS TO GET A GAUGE ON WHAT IS HAPPENING. LVMH A LITTLE BIT UP. YOU GET AN UPGRADE FOR MORGAN STANLEY BUT ALSO RELATIVELY WEAK CHINA DATA, WHICH COULD RIPPLE INTO THE LUXURY SECTOR, TOO. BUT I THINK WE NEED TO WAIT AND

SEE WHAT SAP DOES. INFINEON IS DOWN BY 2.5%. THE CHIP SECTOR STORY IS BEGINNING TO MANIFEST ITSELF. WE ARE DOWN 3% ON INFINEON. KRITI: A FML FACING A VOLATILITY HALT, SO PERHAPS EXTRA PAIN.

IT IS A MARKET SELLOFF. LET'S BRING IN AN EXPERT IN TERMS OF HOW TO NAVIGATE IT, THE HEAD OF EUROPEAN EQUITY STRATEGY AT CITIGROUP. YOU PICKED A GREAT DAY TO JOIN US. HAPPY MONDAY. [LAUGHTER] YOU TIMED THIS BEAUTIFULLY. WE ARE TALKING A LOT ABOUT THIS THEME OF TECH VALUATIONS. THIS COST INTENSIVE NET.

UNDERMINED BY THIS CHINESE AI MARKET. HOW MUCH OF THAT IS AN ISOLATED TECH STORY, AS OPPOSED TO MAY BE POPPING THE BUBBLE THAT HAS BEEN TECH VALUATIONS? >> POPPING THE BUBBLE IS A BIG WORD STILL, BUT IT HAS BEEN PART OF OUR STORY, OF OUR VIEW TOWARDS THE END OF THE YEAR WHEN WE HAVE BEEN ARGUING THAT THIS VERY ONE-WAY POSITIONING INTO MEGA CAP TECH IN THE U.S. IS BECOMING VERY RISKY. FOR US, THE BEST DIVERSIFIER AWAY FROM IT IS IN EUROPE, BECAUSE EVERY OTHER REGION HAS ITS OWN PROBLEMS. OF COURSE, IF

FUTURES ARISE, THE NASDAQ WILL BE DOWN AS SUGGESTED, THEN EUROPEAN TECH WILL BE DOWN AS WELL. FOR ME, MORE THAN GEOPOLITICAL RISKS IN THE NEAR FUTURE, IT IS ALL ABOUT EARNINGS. ALL EYES WILL BE ON THIS TECH RESULT, ESPECIALLY IN THE U.S.. IT NEEDS TO DELIVER PERFECTION. GUY: THERE'S SOME REALLY BIG NUMBERS. JUST IN TERMS OF SOME OF THE NUMBERS I AM LOOKING AT AT THE MOMENT, SIEMENS ENERGY IS DOWN. I NEED TO CHECK WHAT IS GOING

ON WITH THAT BECAUSE SIEMENS IS DOWN REALLY HARD. BUT NAMES LIKE SCHNEIDER ALSO DOWN REALLY HARD. SCHNEIDER, WHICH IS A DATA CENTER STORY.

WE HEARD FROM THE COMPANY, THAT STOCK IS DOWN BY 6%, 7% AT THE MOMENT. A SMI IS DOWN BY 6%, 7% AS WELL. ANNA: ASML IS OPEN AND DOWN. GUY: THESE ARE QUITE BIG NUMBERS. IN SOME WAYS, EUROPE IS IN THEORY -- DOES NOT HAVE THAT TECH STORY. BUT SOME OF THE HEAVY LIFTING

HAS BEEN DONE BY EUROPEAN TECH. KRITI: WE WILL BUILD ON THAT BECAUSE WE ARE TALKING BUT THE VALUATIONS STORY. HAS IN THE VALUATIONS TO STORY BEEN MOSTLY THE U.S.? WHY ARE WE SEEING THESE NUMBERS? >> THEY ARE CORRELATED TO TRADE. YOU COULD ARGUE OVER MEDIUM TERM, NOT VERY SHORT-TERM TODAY WHEN YOU HAVE A KNEE-JERK REACTION, THAT THE FACT THAT EUROPEAN TECH HAS DONE PRETTY BUSY LAST YEAR.

YOU DON'T HAVE THESE CRAZY VALUATION PRESSURES OUT OF THE U.S., BUT IT IS NOT CHEAP BECAUSE -- GUY: WHAT IS THE BEAT ON EUROPE TO U.S. TECH? IF U.S. TECH FALLS OUT OF BED, YOU GET A BIG DROP, WHAT IS THE READ ACROSS TO EUROPE? >> DEFINE FALL OUT OF BED. [LAUGHTER] GUY:

LET'S SAY YOU GO DOWN BY 5% ON U.S. TECH, YOU GO DOWN BY 2% ON EUROPE, OR 10%. IT IS REALLY UNCLEAR AT THIS POINT. >> THE GROWTH SECTOR IN THE U.S. IS AROUND 50% OF THE ENTIRE INDEX. IN THE U.S., IT IS 15.

NOT ONLY TALKING TECH, IT IS GROWTH. IN THEORY, YOU HAVE SMALLER DIRECT IMPACT. BUT IT WILL BE IMPACTED. IN A PROPER RISK OFF ENVIRONMENT, EUROPE IS GOING TO BE AT RISK. BUT ACCORDING TO OUR MODELS, IT WILL BE A BUYING OPPORTUNITY BECAUSE AT THE END OF THE DAY, IT IS ABOUT THE GLOBAL GROWTH PROSPECTS. GUY: MARK CUDMORE WAS POSTULATING THIS COULD BE THE END OF U.S.

EXCEPTIONALISM. WHAT DOES THAT LOOK LIKE? >> FOR US FROM AN EQUITY MARKETS PERSPECTIVE, THE LAST TWO YEARS HAVE BEEN ALL ABOUT MEGA CAP TECH, AND ALL THE GAMES OUT OF S&P HAVE BEEN DRIVEN BY THIS VERY FEW NUMBER OF STOCKS. WHY? BECAUSE GROWTH WAS SCARCE. IF GROSS -- GROWTH IS SCARCE, YOU BUY IT AT ANY COST. THE VIEW FOR THIS YEAR, AND THAT IS TO DO WITH THIS GLOBAL GROWTH PROSPECTS, FROM THE ECONOMICS PERSPECTIVE, WE ARE COMING FROM VERY LOW LEVELS, SO WE CAN ASSUME SOME POSITIVE U.S. GROWTH IS HOLDING UP OK FOR NOW. OUR VIEW FOR THIS YEAR IS YOU

COULD SEE A BROADENING OF UPS ACROSS SECTORS AND REGIONS. SO, IF YOU SEE THE RIGHT CONDITIONS TO BUY THE REST OF THE S&P INDEX, THESE HAVE BEEN CALLS, EQUALLY WEIGHTED VERSUS THE MAG SEVEN, IF YOU SEE THE MACRO ECONOMIC CONDITIONS TO GO FOR THIS TRADE, EUROPEAN INDEX OFFERS YOU A VERY SIMILAR GROWTH PROFILE TO THE REST OF THE S&P AT SUBSTANTIALLY LOWER COST. YOU DON'T NEED TO PAY UP FOR IT. THE REST OF THE S&P IS VERY EXPENSIVE AS WELL. ANNA: IF WE SEE THE BROADENING TRADE IN THE U.S., THAT COULD PLAY

OUT WELL FOR EUROPEAN STOCKS. AS WE LOOK AT THESE THEMES WE ARE PLAYING WITH, THEY ARE COMING AT US THICK AND FAST, THERE'S QUESTIONS AROUND AI IN THE UNITED STATES AND WHETHER HYPER-SCALARS HAVE BEEN SPENDING TOO MUCH MONEY TO PROVIDE THAT SERVICE TO OTHERS, TOO MUCH CAPEX THERE, THEN THERE IS THE THEME OF TARIFFS AND WHAT WE HAVE LEARNED FROM THE WAY THE TRUMP ADMINISTRATION WILL USE THOSE TARIFFS, FROM A EUROPEAN SO STOCK PERSPECTIVE, WHAT MAKES YOU MORE WORRIED? ARE YOU MORE WORRIED ABOUT THE TARIFF STORY, OR YOU MORE WORRIED ABOUT U.S. TECH AND HOW VULNERABLE THAT IS? WHICH HAS MORE READ ACROSS INTO EUROPE? >> FOR THE EUROPEAN INDEX, PROBABLY TARIFFS, IF THEY GO FULL ON, WHICH IS NOT OUR VIEW, AND WHAT HAS HAPPENED OVERNIGHT, IT LOOKS LIKE IT IS NEGOTIATING TOOL FOR NOW. THE EUROPEAN MARKET HAS PRICED IN A LOT OF THESE TARIFF RISKS IN A VERY DIFFERENTIATED WAY TOWARDS THE END OF THE YEAR.

IF INDEED THERE IS HUGE PRESSURE, WE COME TO REPORTING CENTER AND THEY DISAPPOINT, THE MARKETS WILL BE DOWN. BUT OVER MEDIUM-TERM, IT IS NOT AS BAD FOR THE EUROPEAN MARKET AS FULL ON TARIFFS WOULD BE, COMING BACK WITH THE RHETORIC OF PUNISHING THE REST OF THE WORLD. ANNA: WHAT ABOUT THE RATES STORY AND THE WAY THAT LINKS INTO YOUR VIEW? WE SAW A RATES GLOBALLY, THE U.S. IN PARTICULAR, BUT GLOBALLY RISING THROUGH EARLY JANUARY,

THEN MODERATING A LITTLE BIT, STABILIZING A LITTLE BIT. OBVIOUSLY IT DEPENDS ON WHY RATES RISE, WHETHER GROWTH DRIVER OR INFLATION FEARS. IS THAT THE BASE CASE? >> WE HAD A SUPERSTRONG SELL OFF IN GLOBAL BONDS, STARTING IN SEPTEMBER. WHAT HAPPENS WHEN THE SELLOFFS ABATE TO EQUITIES GOING FORWARD? ACTUALLY, YOU HAVE A VERY WIDE RANGE. EUROPEAN EQUITIES COULD BE UP SUBSTANTIALLY, OR THEY COULD BE DOWN. DIFFERENTIATED FACTORS, WE LOOKED ACROSS MANY FACTORS WITHIN THE MACRO WORLD. IT INFLATION STABLE OR FALLING,

AND IS OUR PMI'S STABLE -- RPMI'S STABLE OR GROWING? I MENTIONED AT THE BEGINNING, WHAT IS GOING TO HAPPEN TO GLOBAL ECONOMIC GROWTH? THEY WILL BE A PROBLEM FOR LEVERAGED PARTS OF THE MARKET. FOR EXAMPLE, THE LAST YEAR, WE HAVE DONE UTILITIES. IT IS A RATES CALL ON INFRASTRUCTURE. BUT OVERALL, IF RATES ARE HIGH BECAUSE GROWTH IS STRONG, AND THERE ARE SIGNS THAT INFLATION IS IN CONTROL AROUND THE WORLD, OVER THE MEDIUM TERM, NOT TODAY, IT COULD BE A BULLISH CALL FOR CONTINUATION OF THE CYCLICAL TRADE CATCH UP THAT WE HAVE BEEN SEEING IN EUROPE. GUY: THAT IS THE MEDIUM-TERM PICTURE. GREAT TO SEE YOU. THANKS FOR STOPPING BY TO SEE

US. LET'S TALK ABOUT TODAY BECAUSE TODAY WE ARE CERTAINLY SEEING SOME FAIRLY BIG MOVES. TAKE A LOOK AT WHAT IS HAPPENING WITH THE CORE SIX.

ANYTHING RE RELATED TO THE AI STORY IS DOWN. ALL THESE COMPANIES AROUND THE DATA CENTER STORY UNDER SIGNIFICANT PRESSURE. PRIVATE EQUITIES ALSO IN ON THAT TRADE. LET'S PAY ATTENTION TO THAT, TOO. WHAT YOU ARE SEEING IS TECH UNDER CIGNA BEGIN PRESSURE. THE MARKET IS SEEKING SAFETY ELSEWHERE.

SOME OF THE PHARMACY STOCKS DOING RELATIVELY WELL. >> THE MOVERS ARE SLAMMED. WE HAVE SEEN SIEMENS ENERGY, DOWN 16%. ALSO SEEING A BB IN SWITZERLAND, LEGRAND, ALL OF THESE COMPANIES, ANYONE WITH EXPOSURE TO THE CHIP SPACE GETTING HIT ON THIS DEEP SEEK NEWS THAT HAS TAKEN THE MARKET BY SURPRISE AT THE MOMENT. MEANWHILE, RYANAIR GAINING. WE DID SEE A DECLINE IN THEIR PROFIT AND SOME OF THEIR PASSENGER NUMBERS, BUT QUARTERLY SALES ARE BETTER THAN EXPECTED.

IN TERMS OF THE M&A, LOTS GOING ON TODAY. WE DID SEE THE NEWS THAT VERITAS AND SDS NO LONGER GOING TO BE MERGING,, AND THEREFORE WE ARE SEEING A RETRACEMENT COMING BACK UP. THAT WAS THE ONE DOING THE BUYING, THEREFORE IT GOT HIT, VERITAS COMING DOWN AT THE MOMENT. IN THE LONDON MARKET, WH SMITH, THAT WAS LOOKING HIGHER IN THE PREMARKET INDICATIONS.

UP 6%, POTENTIALLY GOING TO BE SELLING ALL THEIR HIGH STREET RETAIL. UNIVERSAL MUSIC HAVE A DEAL WITH SPOTIFY ON REDISTRIBUTION RIGHTS AND COMPENSATION FOR ARTISTS THIS MORNING. FINALLY ON THE RATING CHANCE I WANTED TO FLAG, B.A.T. WAS ONE OF THE BEST PERFORMERS.

UBS LIKES IT DUE TO THE BUYBACK OUTLOOK. THE STOCK IS GAINING AT 4% ON THE LONDON MARKET THIS MORNING. ANNA: JOE EASTON WITH SOME OF THE READ ACROSS WE ARE SEEING FROM THE DEEPSEEK STORY. COMING UP, MORE ON RYANAIR AS IT CUTS ITS PASSENGER GROWTH TARGET. WE WILL GET TO THAT AND CONTINUE TO FOCUS ON TECH AS WELL. THIS IS BLOOMBERG.

ANNA: WELCOME BACK. 8:17 HERE IN LONDON. JUST INTO A RECESSION IN EUROPE, AND WE ARE SEEING A READ ACROSS DEEPSEEK. THIS MOBILE SEEMS TO HAVE TAKEN SOME BY SURPRISE, MANY IN THE CHINESE MARKET FOLLOWING THIS SO FOR A WHILE, BUT IS HAVING AN IMPACT ON EUROPEAN TECH NAMES.

NASDAQ FUTURES DOWN BY 3.1% RIGHT NOW. IT IS CERTAINLY SOMETHING THAT WAKES US UP AND MAKES US TAKE NOTICE. LET'S GET ANALYSIS FROM RICHARD WINSOR, FOUNDER OF THE INDEPENDENT RESEARCH BUSINESS RADIO FREE MOBILE. I SUPPOSE THE QUESTION THAT IS BEING RAISED, WHAT WE SEE REFLECTED IN NASDAQ FUTURES TODAY, DOES THIS UNDERMINE THE BUSINESS STRATEGY THAT HAS SEEN SO MANY BIG TECH NAMES SPEND SO MUCH MONEY ON AI INFRASTRUCTURE, AI TECHNOLOGY? IS IT UNDERMINED BY HOW CHEAPLY THE CHINESE SEEM TO BE DOING THIS? >> THE SHORT ANSWER IS, DON'T KNOW.

END THE REASON FOR THAT IS, IF YOU CAST YOUR MIND BACK TO MAKING SUPER ADVANCED CHIPS, THERE WAS A LOT OF PROPAGANDA AROUND THAT. THE QUESTION IS, THE MAIN THING IS, IT IS IMPOSSIBLE TO TELL AT THIS POINT IN TIME. THE GOOD NEWS IS THAT DEEPSEEK APPEARS TO HAVE MADE ENOUGH INFORMATION AVAILABLE THAT SOMEONE CAN GO OFF AND REPLICATE IT. IF THEY COULD REPLICATE IT WITH THAT LEVEL OF PERFORMANCE, WHICH I WOULD SAY IS DEFINITELY RAIL, WITH THAT LEVEL OF COST, THEY ARE TAKING A WHOLE STEP FORWARD IN TERMS OF ARTIFICIAL INTELLIGENCE EFFICIENCY. GUY: IN TERMS OF THE COMPUTE THAT IS REQUIRED TO DO WHAT THIS COMPANY IS DOING, THOUGH, IS IT POSSIBLE WITH ANYTHING BELOW HOPPER? IS THAT SOMETHING WE CAN LOOK AT AND UNDERSTAND, OR IS IT IMPOSSIBLE TO TELL? >> THE ANSWER IS, IT IS POSSIBLE. THE QUESTION IS, IF YOU TRAIN ON THE CHIPS THAT WE KNOW DEEPSEEK HAS, WHICH IS AN ARRAY OF 100, WHICH IS THREE OR FOUR GENERATIONS AGO VERSION OF NVIDIA, THEY COULD HAVE DONE IT BUT IT WOULD HAVE TAKEN A LONG TIME AND COST A FORTUNE IN TERMS OF ELECTRICITY. THE CONSENSUS IN THE MARKET IS

THEY HAD ACCESS TO A RANGE OF H 100'S, BUT THAT IS NOT REALLY WHAT IS BEING QUESTIONED BECAUSE EVERYONE HAS ACCESS TO IT. THE QUESTION IS, THE TECHNIQUES THEY'VE USED, HAVE THEY BEEN ABLE TO TRAIN IT AT THAT LEVEL OF PERFORMANCE BY TRAINING AT $6 MILLION. KRITI: DOES NOT APPLY TO THE ROADMAP OR BARRIERS TO ENTRY THEY ARE BEING COMPARED TO, THE LIKE NVIDIA -- THE LIKES OF NVIDIA OR MICROSOFT? >> THE REASON WHY EVERYONE IS GETTING NERVOUS IS, IF YOU SAY IN THE FUTURE DEMAND FOR AI IS GOING TO BE X AND YOU NEED Y AMOUNT OF CAPACITY TO TRAIN IT, AND WE ASSUME THAT DEEPSEEK'S TRAINING METHOD IS CORRECT AND IT WORKS, THEN SUDDENLY IF DEMAND FOR AI DOES NOT INCREASE BY 30 TIMES, THE AMOUNT OF DATA CENTERS WE NEED JUST DROPPED BY 90% OR MORE. THAT IS WHAT IS GOING ON RIGHT NOW.

THE ANSWER TO THAT QUESTION IS, THERE IS NO WAY TO TELL UNTIL SOMEONE HAS TRIED TO REPLICATE WHAT DEEPSEEK HAS DONE. ANNA: THE QUESTION IS, TO ANSWER THAT THEN, TO GET TO THAT, DO WE REPLICATE IT, TRY TO TRAIN THE MODEL AND DO INFERENCE AND SEE IF OTHER PEOPLE CAN DO IT FOR SUCH LOW COST, HOW LONG DOES THAT TAKE? IS THAT LATER TODAY OR A WEEK? A YEAR? >> A COUPLE OF MONTHS, I WOULD HAVE THOUGHT. THE TRAINING TIME FOR A MODEL TYPICALLY SEEMS TO BE AROUND 30 DAYS. A MONTH OR TWO, I SAID WE WOULD GET AN INDICATION ONE WAY OR ANOTHER. THE OTHER WAY TO LOOK AT IT WHICH IS NOT SO NEGATIVE, IF THE COST OF AI FALLS BY MORE THAN 80%, YOU WOULD ARGUE THAT DEMAND FOR IT WOULD INCREASE EVEN MORE BECAUSE IT BECOMES SO MUCH CHEAPER AND ECONOMICALLY VIABLE TO USE IN SO MANY DIFFERENT INDUSTRIES AND USE CASES.

THAT IS ANOTHER WAY TO LOOK AT IT. GUY: I AM LOOKING AT ANYBODY ASSOCIATED WITH A DATA CENTER THIS MORNING, UNDRESSING TO BEGIN PRESSURE. I IMAGINE NVIDIA WILL BE DOWN PRETTY SHARPLY. WALK ME THROUGH THE CONCENTRIC CIRCLES OF HOW THIS RIPPLES OUT FROM THIS STORY. WHICH STOCKS GET HIT HARDEST?

HOW LONG DOES THAT LAST? IF IT IS A 90% DROP, HOW DO YOU PRICE THAT INTO SOME OF THESE STOCKS? >> THAT IS A GREAT QUESTION. THE ANSWER IS, I THINK THE WAY YOU LOOK AT THIS IS, LOOK AT HOW MUCH THESE THINGS HAVE RUN UP. LOOK HOW MUCH ABOVE THE RATIOS THESE THINGS ARE ON THE AI HYPE, AND ALL THAT VALUATION COMES OUT. THAT IS YOUR WORST CASE SCENARIO. I THINK THAT IS UNLIKELY TO OCCUR.

THERE IS A LOT OF USE CASES FOR IT. DEMAND WILL CONTINUE. EVEN THOUGH DEEPSEEK MAY HAVE CUT THE PRICES TO TRAIN A MASSIVELY, THERE IS STILL A COLOSSAL ARMS RACE GOING ON BETWEEN CHINA AND THE UNITED STATES AND THE WEST, WHICH MEANS I DON'T THINK EVEN IN THE LIGHT OF THIS SPENDING IS GOING TO COME BACK ANYTIME SOON SIMPLY BECAUSE OF THE GEOPOLITICAL ENVIRONMENT AND IN TERMS OF WHAT IS GOING ON IN TERMS OF THE RACE TO GET TO ADVANCE ARTIFICIAL INTELLIGENCE. GUY: RICHARD, ALWAYS APPRECIATE THE CONTEXT AND YOUR THOUGHTS. THANK YOU FOR JOINING US THIS MORNING ON THE BACK OF THIS BREAKING STORY. BREAKING? MAYBE THAT IS THE WRONG PHRASE. THIS STORY DEVELOPING OVER THE

LAST FEW DAYS AND WEEKS. TODAY, IT IS CERTAINLY HAVING AN IMPACT. RICHARD WINDSOR, FOUNDER OF FREE RADIO MOBILE. RYANAIR STOCK UP THIS MORNING. THE STOCK IS UP BY 2.2%, AS YOU CAN SEE ON THE SCREEN. THE COMPANY DOWNGRADING SOME OF ITS FORWARD NUMBERS BECAUSE IT SIMPLY IS NOT GETTING THE AIRCRAFT THAT IT WANTED FROM BOEING. MANUFACTURING CONSTRAINTS THAT COMPANY IS UNDER. THE CEO TOLD US A LITTLE BIT

EARLIER ABOUT THE FACT THAT HE IS STARTING TO SEE, HE HAS JUST BEEN IN SEATTLE AT THE BOEING FACILITY, HE IS STARTING TO SEE SOME LIGHT AT THE END OF THE TUNNEL. >> THE REMAINING 29 AIRCRAFT IN OUR 210 ORDER BOOK WILL BE DELIVERED AHEAD OF NEXT SUMMER, THE SUMMER OF 2026, WHICH ENABLES US TO CATCH UP ON THE GROWTH WE LOST THIS YEAR AGAINST 200 15 MILLION PASSENGERS. I THINK BOEING HAVE TURNED THE CORNER ON THE PRODUCTION SIDE OF THINGS. THEY FIXED THEIR BALANCE SHEET LAST YEAR. THE MANAGEMENT TEAM ARE EXECUTING ON THE PLAN. OF COURSE WE ARE DISAPPOINTED

WE WILL BE LEFT SHORT AIRCRAFT AGAIN THIS SUMMER. GUY: BLOOMBERG'S AVIATION LEAD JOINING US ON THE STORY. HOW HELD BACK IS RYANAIR AT THE MOMENT BECAUSE THEY CANNOT GET THE AIRCRAFT? >> WELL COME OUT TO SOME DEGREE, THEY ARE STILL HELD BACK. -- WELL, TO SOME DEGREE, THEY

ARE STILL HELD BACK. THEY WENT FROM 210 TO 200 6 MILLION. THAT IS IN THE SPACE OF SIX MONTHS. THINGS HAVE NOT IMPROVED.

IF YOU LOOK AT THE STOP, INVESTORS ARE CLEARLY LOOKING AT IT IN A HALF GLASS FULL SORT OF WAY. THEY ARE LOOKING AT THE PROFIT NUMBERS, THE OUTLOOK. THEY ARE PROBABLY LATCHING ONTO THE COMMENT WE HEARD JUST NOW THAT BOEING HAS TURNED THE CORNER. THERE IS SOME DEGREE OF

OPTIMISM BUILT INTO THIS THAT THEY HAVE REALLY HIT THE BOTTOM NOW AND IT IS SORT OF UPWARD FROM HERE. THE OTHER THING IS, ANYONE LOOKING FOR SOMETHING GOOD IN THE STOCK WILL LOCK -- LATCH ONTO THIS. THEY HAVE SOME ROOM TO RECOVER. THIS IS A STOCK THAT CLEARLY HAS ROOM TO MOVE, AND THAT IS WHAT WE ARE SEEING THIS MORNING. ANNA: THEY ARE REALLY BUCKING THE NEGATIVE TREND AND MOVING HIGHER THIS MORNING. WE HEARD FROM THE CEO AN INTERESTING PHRASE.

HE TALKED ABOUT CAPACITY BEING HUGELY CONSTRAINED, ALL TO DO WITH BOEING AND ITS ABILITY TO SUPPLY AIRCRAFT, I GUESS. WHAT DOES THAT MEAN THE FIRST RYANAIR? >> IT IS ACTUALLY GOOD NEWS FOR RYANAIR IN A TWISTED SORT OF WAY BECAUSE THE DEMAND IS THAT TRAVELERS ARE STILL GOING ON TRIPS, THEY WANT TO TRAVEL. THAT IS VERY CLEAR. THE EASTER BOOKINGS ARE LOOKING GOOD.

THE DEMAND IS IT IS THE SUPPLY SIDE THAT IS CONSTRAINED. IT IS NOT JUST BOEING AND RYANAIR. IT IS ALSO EVERY CARRIER USING AIRBUS AIRCRAFT. THE A320 ON THE AIRBUS SIDE ALSO HAS ISSUES. WE HEARD FROM WIZZ AIR THAT THEY HAVE A LOT OF AIRCRAFT ON THE GROUND. ALL THAT MEANS IS CAPACITY IS CONSTRAINED IN WHAT IS STILL A HOT MARKET.

THAT MEANS THESE CARRIERS CAN COMMAND HIGHER PRICES BECAUSE PEOPLE, AS I SAID, STILL WANT TO TRAVEL. IN SOME SLIGHTLY WEIRD WAY, THE FACT THAT THE DEMAND IS THERE HELPS ON THE PRICING SIDE. KRITI: THERE IS SOMETHING WE WILL BE KEEPING AN EYE ON. BENEDIKT KAMMEL JOINING US ON THOSE EARNINGS. NOTICE THEY ARE HIGHER BY ABOUT 2% OFF OF THAT EARNINGS REPORT.

WE THANK YOU SO MUCH. COMING UP, WE CONTINUE THE CONVERSATION WITH THE OTHER THING DRIVING RISK SENTIMENT. THERE IS -- COLUMBIA IS BEING THREATENED WITH A TARIFF BY THE U.S. KEVIN DALY FROM GOLDMAN SACHS JOINS US AROUND THE TABLE.

WE WILL TALK WITH THE EM RISK, RISK SENTIMENT, AND HOW WELL THEY ARE PRICING IN THIS TARIFF STORY. KRITI: THIS IS THE OPENING TRADE. SEEING RED ACROSS THE SCREEN, PERHAPS THE SELLING PARING BACK IN TOUCH. WE ARE SEEING THE STOXX 600 DOWN BY 0.8%. THE DAX IS WHERE A LOT OF PAIN IS CONCENTRATED, DOWN 1.2%, AS IS THE FRENCH INDEX, DOWN BY 0.9 PERCENT. PERHAPS INSULATED IS THE FTSE,

ONLY DOWN 0.3%, BUT SUFFERING FROM THE RISK OFF NARRATIVE AROUND THE WORLD. PART OF THAT WILL BE THE TECH STORY. THE OTHER PART MAY BE A BIT OF

A TARIFF CONVERSATION OVER THE WEEKEND. LET'S DIVE INTO THAT ASPECT OF THE MARKETS. THE U.S. IS GOING TO HOLD OFF ON IMPOSING TARIFFS ON COLOMBIA WHEN THE NATION REFUSED TO ACCEPT THE IMPORT OF MIGRANTS.

THEY REFUSE TO ALLOW TWO MILITARY PLANES TO LAND. LET'S BRING IN BLOOMBERG'S SENIOR EDITOR BILL FARIES ON THE SUBJECT. WALK US THROUGH THIS KIND OF U-TURN FROM THE TRUMP ADMINISTRATION. WALK US THROUGH THE DETAILS.

>> AS YOU KNOW, DONALD TRUMP CAMPAIGNED ON THIS IDEA THAT HE WAS GOING TO ROUND UP UNDOCUMENTED MIGRANTS AND SEND THEM BACK TO THE COUNTRIES THEY CAME FROM. HE HAD A VERY ACTIVE FIRST WEEK, AND THIS WAS A PART OF THAT. APPARENTLY HE HAD TWO MILITARY PLANES LOADED WITH COLOMBIAN MIGRANTS HEADED BACK TOWARDS COLOMBIA, AND THE GOVERNMENT THERE REFUSED TO GIVE THEM THE AIRSPACE OR LANDING RIGHTS TO COME DOWN. IF THIS IS THE KIND OF POLICY THAT SPREADS TO OTHER COUNTRIES WITH MORE MIGRANTS, IT WOULD HAVE PUT A DAMPER ON ONE OF PRESIDENT TRUMP'S SIGNATURE POLICIES. SO, HE HAD BACK VERY HARD, ANNOUNCING 25% TARIFFS. HE SAID THOSE WOULD GO UP TO 50% AFTER A WEEK IF COLOMBIA DID NOT BACK DOWN. AND IN THE END, THEY DID BACK

DOWN AFTER JUST SEVERAL HOURS, BASICALLY DECIDING TO ACCEPT THOSE MIGRANTS. WE DON'T KNOW IF THERE HAVE BEEN ANY OTHER CAVEATS OR POLICIES WITH IT, BUT THE PRESIDENT AND COLOMBIA DECIDING IT WOULD BE TOO COSTLY TO MOVE FORWARD WITH A FIGHT OVER THIS POLICY. GUY: THE TAKE AWAY AT THE END OF LAST WEEK WAS TRUMP TARIFFS WERE UNLIKELY TO BE DELIVERED AT A WORST-CASE LEVEL THAT THE MARKET HAD FEARED. THIS WEEKEND MAYBE CHANGING THAT A LITTLE BIT. WHAT DO WENOW KNOW MONDAY MORNING ABOUT THE NEW WHITE HOUSE REACTION FUNCTION AROUND TARIFFS AND HOW THEY ARE GOING TO BE USED? >> CERTAINLY IF YOU ARE A SMALLER ECONOMY AND THE U.S.

PRESIDENT THINKS HE CAN GET AWAY, IF THE U.S. SEEMS TO HAVE A LOT OF LEVERAGE IN THE RELATIONSHIP AS IT DID WITH COLOMBIA, TARIFFS ARE A LEGITIMATE WEAPON THAT WILL BE INVOKED ON VERY SHORT NOTICE IF YOU ARE NOT IN LINE WITH THE TRUMP ADMINISTRATION'S POLICIES. IT COULD BE A LITTLE DIFFERENT, WE DON'T KNOW, BUT IT SEEMS LIKE IT IS A LITTLE DIFFERENT WITH LARGER COUNTRIES, ECONOMIES LIKE MEXICO, WHICH ALSO REFUSED TO HAVE U.S. MILITARY PLANES DELIVER MIGRANTS BACK. WILL MEXICO FACE TARIFFS AS A RESULT? WE DON'T KNOW. WE DID SEE SOME WEAKENING IN

THE MEXICAN PESO AS PART OF THIS. GENERAL STRENGTHENING OF THE DOLLAR. BUT THOSE BIGGER FIGHTS ARE THE ONES I THINK THE MARKETS AND ANALYSTS ARE MOST CLOSELY WATCHING GOING FORWARD. ANNA: THANK YOU VERY MUCH. BLOOMBERG BILL FARIES JOINING

US WITH THE LATEST ON THIS STORY. LET'S BRING IN KEVIN DALY, HEAD OF ECONOMICS AT GOLDMAN SACHS. IT IS MORE COMPLICATED THAN EMERGING MARKETS, PERHAPS THAT IS USEFUL SHORTHAND. LET'S PICK UP WHERE WE LEFT OFF WITH BILL. WHAT WE HAVE LEARNED IS THE

SMALLER COMPANIES MAY BE WHIPPED BY THIS TARIFF POLICY AND HAVE SOME POLICIES FORCED UPON THEM BY THIS ADMINISTRATION. IS THAT WHAT WE LEARNED? >> THE NEWS ON INAUGURATION DAY WAS MORE BENIGN AT THE MARGIN THAN HAD BEEN ANTICIPATED. THERE WERE FEARS THAT A BLANKET TARIFF MIGHT BE INTRODUCED IMMEDIATELY. WE DIDN'T HAVE THAT, AND ON THE BACK OF THAT, U.S. ECONOMISTS HAVE LEARNED -- LOWERED THE PROBABILITIES OF SOME TARIFFS. BUT TARIFF RISK CLEARLY HAS NOT GONE AWAY AND WILL BE WITH US FOR A WHILE NOW.

WE STILL EXPECT AS A CENTRAL CASE QUITE A SUBSTANTIAL 20 PERCENTAGE POINT INCREASE IN EFFECTIVE TARIFFS ON CHINA. WE STILL HAVE A 40% CHANCE -- SORRY, 25% CHANCE OF MORE GENERAL TARIFFS ACROSS A NUMBER OF ECONOMIES. IT IS CLEAR THESE WILL BE USED AS BARGAINING TOOLS IN ALL MANNER OF NEGOTIATIONS GOING FORWARD. THIS IS A SIGNIFICANT SHADOW THAT WILL BE CAST OVER THE GLOBAL ECONOMY AND ACROSS EM'S IN PARTICULAR. GUY:

FOR HOW LONG -- ANNA: FOR HOW LONG IS AN INTERESTING THING TO THINK ABOUT. IT SEEMS LIKE AS LONG AS PRESIDENT TRUMP IS IN THE WHITE HOUSE, THIS IS A RISK. EVEN IF COMPANIES AVOID TARIFFS OVER A LONG TIME, TARIFFS COULD STILL COME. HE IS NOT GOING TO PLAY ALL HIS CARDS RIGHT NOW. >> ABSOLUTELY. I THINK IT IS GOING TO BE THERE

IS A RISK PERHAPS FOR MOST OF THE NEXT FOUR YEARS. I THINK OVER TIME, WE WILL GET A SENSE OF HOW PROACTIVELY HE IS GOING TO USE IT. THERE ARE COSTS FOR THE U.S., BEAR IN MIND, FOR TARIFFS. THERE ARE CONSIDERATIONS THAT HE WILL BE FACTORED IN. HE HAS BEEN CLEAR HE WANTS LOWERED INTEREST RATES IN THE U.S. HE WILL BE ADVISED THAT THE INFLAMMATION TATIAN -- THE IMPLEMENTATION OF TARIFFS WILL CAUSE INFLATION MOVING FORWARD.

THAT WILL BE PRESENT OVER THE NEXT FOUR YEARS, BUT I THINK OVER TIME WE ARE LIKELY TO GET A BETTER SENSE OF HOW PROACTIVE HE WILL BE AND HOW NERVOUS WE SHOULD BE ABOUT THEIR IMPOSITION. KRITI: THERE WAS AN ARGUMENT A COUPLE YEARS AGO THAT EM WAS WHERE A LOT OF THESE GLOBAL STRUCTURAL CRACKS WERE GOING TO SHOW UP, AND THEY HAVE PROVEN TO BE FAR MORE RESILIENT THAN A LOT OF PEOPLE EXPECTED A COUPLE YEARS AGO. OUR TARIFFS AS IMPACTFUL ON THAT NARRATIVE GIVEN THAT RESILIENCE? >> YOU RAISE A GREAT POINT. EM'S ARE ACTUALLY PERFORMING PRETTY WELL AT THE MOMENT. IF YOU LOOK AT 2024, THEY GREW

IN AGGREGATE AROUND 4%. AND HEADING INTO THIS YEAR, THE START OF 2025, ACTUALLY MOMENTUM WAS PRETTY STRONG, AND OUR HIGH-FREQUENCY INDICATORS ACROSS EM SU

2025-01-30 01:59

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