DeepSeek Triggers Selloff | Bloomberg Surveillance 01/27/2025
>> I AM POSITIVE BECAUSE IT IS A CHANGE IN TONE. >> THERE'S A LOT OF OPTIMISM EVERYWHERE ABOUT WHAT THE U.S. WILL DO.
>> THERE IS REASON FOR OPTIMISM. THERE ARE GREEN SHOOTS PEOPLE ARE ABLE TO POINT TO. >> AS AMERICA GOES SO GOES THE WORLD. >> THIS IS BLOOMBERG SURVEILLANCE WITH JONATHAN FERRO, LISA ABRAMOWICZ AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY, GOOD MORNING. FOR AUDIENCE WORLDWIDE,
BLOOMBERG SURVEILLANCE STARTS NOW. A HUGE SHAKEUP IN GLOBAL TECH. EQUITY FUTURES DOWN ACROSS THE BOARD. THE PRESSURE CONCENTRATED ON THE NASDAQ MONTHS AGO THE NASDAQ 100 IS CLOSE TO 5%. NOW NEGATIVE BY 4.7. NVIDIA DOWN DOUBLE DIGITS PLUS. PREMARKET -13%, UNLUCKY FOR THEM , A DEEP SEEK, A CHINESE AI LAB SAYING THEY CAN DO MORE WITH LESS.
AND THE BENEFICIARIES OF IT. >> THE DISRUPTORS ARE BECOMING DISRUPTIVE AND THAT'S THE THEORY AND THE FEAR WITH SOME OF WHAT DEEP SEEK PROMISES WHICH IS AS YOU SAY TO DO MORE WITH LESS. THEY DON'T NEED THAT INVESTMENT, THEY DON'T NEED THE HUGE DATA CENTERS AND THE CERTAIN TYPES OF ENERGY THEY JUST NEED A LITTLE BIT AND IT MAKES IT SOMETHING ACCESSIBLE FOR A LOT OF DIFFERENT COMPANIES IF IT IS ACTUALLY TRUE. THE KEY QUESTION IS HOW MUCH DOES THIS DEMONSTRATE HOW LOPSIDED THIS HAS BEEN IN THE MARKET WITH A COUPLE OF NAMES REALLY TAKING ALL THE MOMENTUM.
>> IT'S NOT JUST NVIDIA THAT WILL INHABIT THE BIG SPENDERS. MICROSOFT AND META DOWN IN THE PREMARKET AS WELL. THE BUZZ OVER THE WEEKEND WAS ABSENTLY MASSIVE.
TWO, THE BUZZ AROUND THE UTILITY PLAYERS, CHECK OUT SIEMENS ENERGY IN EUROPE. THE BIGGEST DECLINE ON THE DAX THIS MORNING WE ARE NOW DOWN BY 20 .6%. WE HAVE TO ASK A QUESTION AS TO WHEN THIS IS REALLY REALISTIC.
WE SEE THIS MORNING ASKING IF IT'S A SYNTHETIC SCARE AND RAISING QUESTIONS ABOUT WHETHER THIS WILL SUBSIDIZE THE STATES IN CHINA. THOSE QUESTIONS WILL BE ASKED THROUGH THE MORNING. >> IT IS AN IMPORTANT POINT. IS THERE SOMETHING BEHIND-THE-SCENES THAT ISN'T AS EFFICIENT AS USING SO MANY FEWER GP USE, FEWER CHIPS FROM NVIDIA.
IT RAISES A LOT OF QUESTIONS AT A TIME OR POTENTIALLY THIS IS A FRAGILE U.S. MARKET THAT IS REALLY CONCENTRATING IN A COUPLE OF BIG TECH NAMES AND IF THEY COULD BE DISRUPTED COULD THAT REMOVE SOME OF THE U.S. EXCEPTIONALISM STORY THAT COULD POTENTIALLY HURT CHINA. >> THEY'VE DONE THIS WITH SERIOUS LIMITATIONS TO CHIP ACCESS.
>> THE U.S. WAS TRYING TO AVOID THIS. THEY HAD EXPORT CONTROLS THE MOST ADVANCED CHIPS OF CHINA, A DEEP SEEK WAS ABLE TO DEVELOP THIS AI MODEL WITHOUT THAT. AN INTERVIEW LAST YEAR THIS IS WHAT THE FOUNDER SAID, THE PROBLEM THEY ARE FACING HAS NEVER BEEN FUNDING FOR THE EXPORT CONTROL AND ADVANCED CHIPS. IT SEEMS THEY WERE ABLE TO GET TO THIS INCREDIBLE POINT POTENTIALLY WITHOUT THAT ACCESS. JONATHAN:
EARNINGS SEASON THIS WEEK. MICROSOFT AND META WE WILL HEAR FROM TESLA AS WELL THURSDAY, NEXT WEEK YOU WILL HEAR FROM A WHOLE LOT MORE INCLUDING THE LIKES OF MICROSOFT AND AMAZON. >> WHAT IS FASCINATING IS THE SPEND THAT A LOT OF THESE COMPANIES ARE BAKING TOWARD SOME OF THESE INVESTMENTS IN CHIPS ETC.. WILL THEY BE PUNISHED FOR THOSE INVESTMENTS. WE HEARD ABOUT META BEING 50 TO $60 BILLION OF INVESTMENTS. WILL IT BECOME A LIABILITY FOR THEM AT A TIME WHEN THERE WAS A QUESTION ABOUT WHEN THOSE TYPES OF INVESTMENTS ARE NEEDED.
>> JORDAN ROCHESTER TALKED ABOUT THIS IS HAPPENING AFTER WHAT HE CALLS A TEXAS HOLD 'EM ALL IN PUSH ON CHIPS THAT'S COMING NOT JUST FROM META AND NVIDIA BUT ALSO THIS WHITE HOUSE WHEN IT COMES TO STARGATE PUSHING MILLIONS OF DOLLARS TOWARDS AI AND ALL-INCLUSIVE OF WHAT THAT MEANS. DATA CENTER CHIPS AND THE LIKE SPRING >> DOWN BY 2.5% ON THE S&P AND DOWN A LOT MORE ON THE NASDAQ 100. WE WILL CATCH UP WITH STEVE AT FEDERATED ON THE LATEST SELLOFF IN EQUITIES. AS PRESIDENT TRUMP WALKS BACK TEAR OF THREATS AGAINST COLUMBIA AND NINA RICHARDSON OUT OF THE FED DECISION ON WEDNESDAY.
WE BEGIN WITH STOCKS FALLING AS CHINESE AI START OF DEEP SEEK DEMONSTRATING A CAN DO MORE WITH LESS RAISING QUESTIONS OVER THE FUTURE OF AMERICANS TECH DOMINANCE. STEVE IT IS GOOD TO SEE YOU. WHAT'S YOUR INITIAL REACTION TO THIS. IT'S OBVIOUS FOR THE CHIP PLAYERS OF THIS IS REAL, NOT
GREAT NEWS FOR NVIDIA. WHAT DOES IT MEAN FOR THE BIG SPENDERS PRINT THE MICROSOFT'S, THE MEADOWS. >> I AM NOT BUILT WELL FOR PANICKING SO I KNOW THERE'S A LOT OF EXCITEMENT AND PANIC THIS MORNING.
I THINK THERE'S THREE KEY POINTS . THE FIRST IS IS IT REAL. IS IT REAL OR IS THERE SOME SPENDING THAT'S NOT BEING COUNTED FOR PRINT LET'S TAKE A BREATH AND FIND OUT. IF IT IS REAL PAID I'M NOT SURE THIS IS UNIVERSALLY AS BAD AS A RUN THOUGHT IT WOULD BE. IT CERTAINLY IS FOR THE INFRASTRUCTURE BUILDOUT PLAY HERE BUT IN TERMS OF AI IMPLEMENTATION, IN TERMS OF THE AI BUILDOUT IF YOU ARE TELLING ME THAT COMPANIES LIKE META AND GOOGLE, YOU PICK THE COMPANY.
IF THEY CAN IMPLEMENT EFFECTIVE AI WITHOUT THE CAPEX MEANING THAT THERE IS MORE CHAOS FLOW BUT CAN RETURN TO SHAREHOLDERS. THAT'S NOT A BAD THING. IT IS NOT GREAT FROM A GEOPOLITICAL PERSPECTIVE BUT AN EFFICIENCY PERSPECTIVE WHAT WE MAY BE AT HERE IS WE CROSS THAT CISCO MOMENT WHERE IT'S ALL ABOUT THAT.
NOW IT BECOMES ABOUT BUILDING OUT USING THE INTERNET AND CREATING A NEW BUSINESS MODEL AROUND THAT. THE THIRD POINT AND THIS IS ONE THAT ALWAYS BEARS REPEATING, THIS IS WHY YOU BUILD A DIVERSIFIED PORTFOLIO PAID IT IS NOT GREAT TO HAVE THE ENTIRETY OF YOUR CAPITAL AND SEVEN NAMES BECAUSE THINGS LIKE THIS CAN HAPPEN, A DISRUPTION HAPPENS AND IF YOU LOOK TODAY WAS CARNAGE ACROSS THE MARKET BUT THE VALUE STOCKS LOOK A LOT BETTER IN THE SMALL CAPS LOOK A LOT BETTER. AND YOU ONLY NEED A ROOF WHEN IT IS RAINING. >> RIGHT NOW IT IS RAINING SO LET'S TALK ABOUT THAT PER THE DECLINE WITH MICROSOFT AND META TRADITIONALLY DON'T TO SINGLE NAMES BUT YOU THINK THERE IS AN OPPORTUNITY TO GET INTO THOSE NAMES NOW OR WOULD YOU WAIT TO SEE THINGS SETTLE DOWN. >> I THINK YOU WILL SEE A FEW DAYS HERE OF RETHINKING. WE WILL HAVE SOME ALGORITHMS HITTING SOME TODAY.
YOU ARE PEOPLE ASKING QUESTIONS ABOUT WHAT'S THE RIGHT VALUATION. VERY INTERESTING TO SEE WITH THE EARNINGS REPORTS THIS WEEK. CAN COMPANY MANAGEMENT PIVOT TO TALKING ABOUT A THIS IS REAL OR IT'S NOT AND IF IT IS REAL HERE SOME SAVINGS WE MAY BE ABLE TO REACH ON CAP.
THAT MIGHT BE EARLY TO DO IN THE NEXT WEEK OR SO AND SO I'M SURE THESE BE UNDER SOME PRESSURE BUT I LOOK OUT AND I SEE THE AI STORY IS NOT ABOUT WHO CAN SPEND THE MOST MONEY DEVELOPING AI. THAT WAS NEVER WHAT WAS ABOUT. IT'S WHO CAN UTILIZE AI AND MONETIZE IT TO MAKE THEIR COMPANY THAT MUCH BETTER PRETTY WHO CAN DELIVER THAT SOLUTION AND IF THIS ALLOWS THEM TO DELIVER THAT SOLUTION QUICKER OR CHEAPER WITHOUT THE BOND ENERGY OR CHIPS, SO MUCH THE BETTER IN THE LONG RUN. >> DOES IT UNDERMINE THE U.S. EXCEPTIONALISM STORY.
>> I DON'T THINK THAT STORY WAS BUILT JUST ON CHATGPT. IT IS BUILT ON THIS IDEA THAT WE ARE THE GREATEST INNOVATOR IN THE WORLD TRADE YOU MAY HAVE FOUND A CHEAPER WAY TO DO THIS IN CHINA. THIS IS NOT A COUNTRY THAT ISN'T COMPETING HARD. BUT WHEN YOU LOOK AT THE U.S. YOU HAVE KIND OF A POPULATION GROWTH ADVANTAGE. AS BAD AS OUR DEMOGRAPHICS LOOK COMPARED TO OUR PAST WE DON'T HAVE THE 10, 20 OR 30% WORKING AGED CLIENTS THAT YOU DO HAVE IN CHINA AND JAPAN AND EUROPE AND THEN ALSO GREAT.
YOU TOOK TECHNOLOGY AND MADE IT MORE EFFICIENT BUT LET'S NOT FORGET THE MAGNIFICENT SEVEN ARE MAGNIFICENT FOR A REASON. ONE OF THEM OWN SOCIAL MEDIA, THE OTHER OWNS SMART PHONES PER YOU CAN KEEP ON GOING DOWN THE LIST. SO DOES THIS MEAN THERE OTHER COMPANIES AND OTHER COUNTRIES THAT WILL COMPETE AND CHALLENGE THAT DOMINANCE, SURE. BUT THAT EXISTED LAST FRIDAY AS
WELL. >> I WAS LOOKING AT THE CALENDAR AHEAD TO WHAT WAS COMING UP TODAY. AND THIS WEEK IT WAS THE FED DECISION, IT WAS CORE PCE, THE EARNINGS FOR SOME TECH PLAYERS AND THERE IS THE OVERLAY OF THE POLICIES. I'M THINKING WHAT A MAELSTROM OF INFORMATION. NOW NONE OF IT MATTERS. IT SEEMS THAT THE FED AND THE
GOVERNMENT ARE OFFSIDES AND THE TECHNOLOGICAL ADVANCEMENT IS IN THE FRONT SEAT. HOW MUCH IS THAT REALITY, AS I CAN SUCKLE THE OXYGEN OUT OF THE ROOM AT A TIME WHEN THERE'S A LOT OF NOISE ELSEWHERE. >> I THINK THAT'S WHY YOU BUY IF YOU SEE WEAKNESS. AS A LOT OF POSITIVES OUT THERE OTHERWISE. THERE'S GOING TO BE SOME DISRUPTION MAY BE THE MAG SEVEN AREN'T AS DOMINANT AS THEY HAVE BEEN.
I DON'T KNOW IF THAT IS A BAD THING. I THINK IF YOU SEE A MARKET BROADEN OUT IF THE BENEFICIARIES OF AI START TO PLAY OUT HERE COMPANIES THAT CAN USE AND IMPLEMENT THIS TECHNOLOGY BECOME MORE EFFICIENT. IF THAT'S CHEAPER THAT BROADENS OUT THE OPPORTUNITY SO, YOU'VE GOT A LOT OF POSITIVES GOING ON.
INFLATION HAS COME DOWN FROM NINE TO THREE. WE THINK IT'S GOING TO TWO AND A HALF. WE HAVE A FED, I THINK THE DATA YOU'VE TAX RATES SO THIS ACTUALLY ENHANCES A THING WE'VE BEEN TALKING ABOUT OF THE LAST COUPLE OF WEEKS WHERE IF YOU LOOK AT A PRETTY CONSTRUCTIVE OUTLOOK FOR US FOR THIS YEAR AND YOU TRY TO FIGURE OUT WHAT ARE THE DOWNSIDE RISKS IN THE UPSIDE RISKS. ALL THE DOWNSIDE RISKS ARE SHORTER-TERM. IT IS CONCERNED THAT INFLATION WILL COME DOWN AND THE FED IN THIS STUBBORN PERIODS OR THE SAUSAGE MAKING OVER POLICY OR NOW THIS CONCERN THAT WE HAVE TO WORK THROUGH.
ON THE OTHERS IS INFLATION THAT IS COMING DOWN AND RATES THAT ARE COMING DOWN AT A POLICY THAT WILL BE MADE. MAYBE CISCO HAS HAD ITS MOMENT, IF NVIDIA IS THIS GENERATION'S CISCO, BUT NOW THERE'S OPPORTUNITIES POTENTIALLY FOR A WHOLE HOST OF COMPANIES IF THIS IS REAL TO IMPLEMENT IT ON A MUCH CHEAPER AND MUCH MORE EFFECTIVELY AND THAT'S GOING TO BE THE REAL VALUE. >> YOU MENTION GEOPOLITICAL CONCERNS. DO YOU EXPECT MORE POLICIES LIKE EXPORT CONTROLS OR TARIFFS BECAUSE OF THIS? >> I THINK IT IS INCREDIBLE THAT WE HAVE HAD THE COLUMBIA EPISODE YESTERDAY WITH WE ARE NOT LETTING YOU IN. IT ANY OTHER WEEK THAT WOULD'VE BEEN 90% OF THE DISCUSSION. I DON'T KNOW.
I THINK THAT THIS PRESIDENT IS CERTAINLY GOING TO USE TARIFFS IS NEGOTIATING TOOL. WE SAW THAT VERY WELL THIS WEEKEND. AND I THINK GENERALLY SPEAKING THERE IS BIPARTISAN SUPPORT TO MAKE SURE THE UNITED STATES BECOMES A LEADER IN EMERGING TECHNOLOGIES AND I DON'T THINK THAT CHANGES TODAY. WHEN SPUTNIK WAS LAUNCHED IT WAS A SHOCKING MOMENT FOR THE UNITED STATES.
WE STILL GOT TO THE MOON FIRST. YOU MAY END UP SEEING THE SAME THING. >> DO YOU THINK THIS IS A WAKE-UP CALL AND WE CAN SEE EVEN A BIGGER PUSH FROM THIS ADMINISTRATION IT COMES TO AI.
>> I THINK IF IT IS REAL IT IS, BECAUSE IT TELLS YOU CAN JUST THROW MONEY AT IT YOU HAVE TO INNOVATE AND LET THE ENGINEERS LEAD AS OPPOSED TO JUST THINK IT'S A STORY ABOUT THROWING MONEY SO WE WILL SEE. IT MAY NOT BE REAL BUT IF IT IS, MAYBE YOU'VE GOT TO THINK MORE HOLISTICALLY ABOUT HOW YOU SUPPORT THOSE COMPANIES AND NOT JUST CHIPS. HERE'S ANOTHER INTERESTING TIDBIT. DOES THIS MAKE TAIWAN LESS IMPORTANT AND DOES THAT LOWER GEOPOLITICAL TENSIONS BECAUSE IF YOU CAN ADVANCE IN AI WITHOUT INVADING TAIWAN THAT IS A LOT CHEAPER. JONATHAN: STEVE, IT IS GOOD TO SEE YOU. FUTURES DOWN ACROSS THE BOARD
ON THE NASDAQ 100. LOOKING AT NVIDIA IN THE PREMARKET DOWN BY CLOSE TO 12. LISA: I LOVE WHAT STEVE SAID ABOUT THE CISCO MOMENT. WE'VE BEEN TALKING ABOUT THIS SPRING TALKING ABOUT HOW THERE WILL BE A SHIFT FROM THE INFRASTRUCTURE AND CHIPS TO THE APPLICATION RATE IS THIS THAT MOMENT REGARDLESS OF THE TRUTH IF WE ARE ASKING EXACTLY WHAT'S HAPPENING HERE.
>> LET'S GET YOU AN UPDATE ON STORIES ELSEWHERE WITH YOUR BLOOMBERG BRIEF. >> JUST TO EMPHASIZE THE HEIGHT, THE CHINESE AI START UP WE'VE BEEN TALKING ABOUT IS TOP OF THE IPHONE DOWNLOAD CHARTS OVER THE WEEKEND ABOUT THEIR LATEST MODEL BEING COST-EFFECTIVE IF YOU BEEN TALKING ABOUT OR RUNNING UNLESS ADVANCED CHIPS. A CHECK ON THOSE TUMBLING DOWN. ELSEWHERE IN THIS MARKET, RYANAIR SHARES ARE RISING. THE EUROPEAN LOW COST CARRIER
BOOSTED STRONGER-THAN-EXPECTED THIRD-QUARTER EARNINGS DRIVEN BY HOLIDAY BOOKINGS BUT ALSO PASSENGER GROWTH TARGETS THE SECOND TIME IN THREE MONTHS DUE TO THE DELIVERY DELAYS. RYANAIR SAID THE CONSTRAINED MARKET FOR AIRCRAFT WILL HELP THEM COMMAND HIGHER PRICES. LET'S GET THE LATEST ON THE WILDFIRES IN LOS ANGELES. THE REGION IS GETTING ITS FIRST
RAINFALL IN MONTHS POSING A NEW RISK OF LANDSLIDES. FLOOD WATCH IS IN EFFECT FOR LOS ANGELES COUNTY AND SEVERAL ROADS ARE CLOSED DUE TO MUD FLOWS PER THE PALISADES FIRE IS NOW 90% CONTAINED. THE FIRE THAT DESTROYED MUCH OF ALTADENA IS 98% UNDER CONTROL. THAT'S YOUR BRIEF. JONATHAN: UP NEXT ON THE PROGRAM, THE TARIFF THREAT IN ACTION. >> TO ME THE MOST YOU TO FORWARD IN THE DICTIONARY IS TARIFF. AND IT'S MY FAVORITE WORD.
THE TARIFF SYSTEM MADE SO MUCH MONEY. IT WAS WHEN WE WERE THE RICHEST. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING.
♪ JONATHAN: STOCKS DOWN HARD. NEGATIVE BY 2.4% ON THE S&P 500 DOWN BY FOUR ON THE NASDAQ 100. YIELDS ARE LOWER WE ARE DOWN BY 12 BASIS POINTS. THE SINGLE NAME PRICE ACTION IS PRETTY CRAZY OUT THERE. NVIDIA IS DOWNGRADE LOSSES FOR THE LIKES OF MICROSOFT. UTILITIES UP LAST YEAR. BEAR THAT IN MIND LOOK ME THE
LIKES OF SIEMENS ENERGY. LISA: THIS CHALLENGES THE IDEA THAT A LOT OF PEOPLE AND TALKING ABOUT WITH ARTIFICIAL INTELLIGENCE WE WOULD NEED THAT MUCH MORE ENERGY. AND ESSENTIALLY YOU DON'T NEED TO BUY THAT WITH CHIPS ACCORDING TO THIS NEW RUBRIC. YOU DON'T NEED THAT MUCH ENERGY, THIS RAISES A QUESTION ABOUT WHETHER CHIP EXPORTS JUST MADE CHINA MORE INNOVATIVE TO DO MORE WITH LESS.
THAT'S WHAT PEOPLE ARE GRAPPLING WITH. JONATHAN: ROB I AM GOING TO BRING YOU INTO THE CONVERSATION EARLIER THAN I TYPICALLY WOULD. WE ARE GOING TO START ON THIS PRE-HOUSE SPOOKED YOU THINK WASHINGTON D.C.
WILL BE EVEN WHAT MAY BE IS COMING OUT OF CHINA IN THE PAST WEEK? ROB: PRETTY SPOOKED. THE CONCERN HAS ALWAYS BEEN AS RECENT TRIPS OVER TO CHINA THEY WILL OUTCOMPETE US. THE BIDEN ADMINISTRATION PUTTING A LOT OF CHIP EXPORT RESTRICTIONS. THE TRUMP ADMINISTRATION HAS NOT PULLED ANY OF THAT OFFER EIGHT I SUSPECT THEY WILL KEEP IT ON AND MIGHT ADD TO IT. ANNMARIE: DO YOU THINK BIDEN WAS TOO SLOW? DID THIS LAST ADMINISTRATION DRAG THEIR FEET LOOKING TO COMBATING CHINA. ROB: THE TRUTH OF THE MATTER IS IF WE ARE LOOKING AT DECEIVING QUICKLY COMES TO TECH AND INNOVATION, IF WE ARE LOOKING FOR THEM TO BE FAST, I AM NOT SURE THEY HAVE EVER REALLY FOLLOWED THROUGH ON THAT PROMISE.
THE ISSUE, OF THE BUG OR MAYBE THE BENEFIT OF DEMOCRACY IS IT JUST MOVES REALLY SLOWLY. ANNMARIE: THE FACT WE HAVE THIS NOW, NOTE TRUMP LIKES USE TARIFFS AS A THREAT. DOES A STORY LIKE THIS MAKE THAT SITUATION MORE LIKELY. ROB: WE WILL HAVE TO SEE HOW HE RESPONDS TO THE NEWS.
DO I THINK IT MAKES TARIFFS MORE LIKELY ON CHINA, PERHAPS AT THE MARGINS YES BUT WHEN IT COMES TO FEBRUARY 1 WE ARE REALLY LOOKING CLOSELY AT THE TARIFFS ON MEXICO AND CANADA. I AM NOT EXPECTING TARIFFS ON CHINA ON FEBRUARY 1. AS WE'VE SEEN SINCE AND BEFORE, TRUMP WANTS TO AT LEAST SPEAK WITH XI JINPING, THE ODDS OF THEM GETTING TO A MAR-A-LAGO ACCORD WE KNOW THE TRUMP DEAL 2.00 MAYBE MAYBE NOT. LISA: WE WILL GET TO CANADA AND MEXICO BECAUSE THOSE ARE IMPORTANT AND COLUMBIA WE WILL BE TALKING ABOUT THIS REMINDS ME OF THE MASQUE OF THE RED DEATH WHICH IS A GREAT STORY BY EDGAR ALLAN POE. A GROUP OF PEOPLE TRY TO KEEP
THINGS OUT AND IT COMES IN ANY WAY. IT RAISES THIS QUESTION ABOUT THE OPEN-SOURCE NATURE OF DEEP SEEK AND MAY BE KEEPING SOMETHING SECRET RIGHT NOW AND THINGS ARE DEVELOPING THIS QUICKLY IS NOT THE MOST EFFECTIVE WAY TO DO THINGS. HOW MUCH IS THAT CHANGING THE DISCUSSION AROUND ISOLATIONISM IN POLITICS. ROB: I DON'T THINK IT WILL CHANGE IN THE PUBLIC AND PARTY AND TRUMPET ADMINISTRATION IN PARTICULAR. DEEPSEEK AND CHINA MORE GENERALLY IS A THREAT TO THE UNITED STATES. CHINA IS A COMPETITOR AND NOT A COLLABORATOR. IT WAS TRUMP 1.0 THE REALLY
DEFINED THAT AGENDA. BIDEN SOUGHT THROUGH AN TRUMP WILL CONTINUE TO SO I DON'T THINK THIS NEWS IS ALL OF A SUDDEN GOING TO MAKE DONALD TRUMP FREE-TRADE. I THING WE WILL STILL BE TALKING ABOUT TARIFFS AND SANCTIONS AND RESTRICTIONS FROM HERE INTO THE NEXT FOUR YEARS. LISA: I WANT TO START TALKING ABOUT WHAT THE SIGNAL IS FROM COLUMBIA, THIS IDEA THAT INITIALLY THEY WERE SHIPPING IMMIGRANTS FROM THE UNITED STATES TO COLUMBIA, DEPORTATIONS AND THEN ONE OF THE MILITARY PLANES WAS STOPPED AND DONALD TRUMP SAID WE WILL PUT 25% TARIFFS ON YOU UNLESS YOU OPEN UP AND THE TARIFFS ARE REMOVED. DOES THIS INDICATE TARIFFS ARE
NEGOTIATING TOOL OR DOES THIS INDICATE THEY ARE FOR REAL. >> BOTH I THINK IS THE SHORT ANSWER. WE'VE TALKED ABOUT IT'S REALLY INJURED BISHOPS VIEW THAT THERE WILL BE SOME TARIFFS THAT ARE IDEOLOGICAL. TALKING ABOUT DECOUPLING. TALKING ABOUT PUNISHING EUROPE AND MAYBE EVEN PUNISHING CANADA. THOSE ARE IDEOLOGICAL TARIFFS. THEY WON'T COME OFF FOR THEY HAVE BEEN PUT ON.
EVERYTHING ELSE I THINK THE TARIFFS ARE MEANT FOR NEGOTIATION. DONALD TRUMP SEES TARIFFS AS A WAY TO ENACT REVENUE AND AS A WAY TO NEGOTIATE. ARE ALL OF THOSE THINGS MUTUALLY EXCLUSIVE, MAYBE TO A CERTAIN EXTENT BUT I THINK OUTSIDE OF CHINA, OUTSIDE OF EUROPE AND MAYBE OUTSIDE OF CANADA I THINK TARIFFS ARE AIMED AT NEGOTIATION BUT IT IS THOSE IDEOLOGICAL ONES THAT WE ARE MOST CONCERNED ABOUT BECAUSE THEY ARE PROMISED AND PUT ON THEY ARE NOT COMING OFF. >> I THINK WE CAN ALL UNDERSTAND WHAT'S GOING ON HERE.
AN ISSUE AT THE SOUTHERN BORDER. PARTICULAR CENTRAL AMERICA WHEN IT COMES TO CHINA, RECIPROCITY. WITH THE EUROPEANS THERE'S BEEN QUESTIONS ABOUT PROTECTIONISM IN THE EUROPEAN BLOCK FOR DECADES PAID WHEN IT COMES TO CANADA I'M CONFUSED. I WAS CONFUSED LAST WEEK I ASKED PLENTY OF PEOPLE QUESTIONS ABOUT THIS AND I'M STILL CONFUSED. ROB:
I CAN GIVE YOU A COUPLE OF THEORIES PLAYED THE FIRST IS JUSTIN TRUDEAU AND HIS LIBERAL GOVERNMENT ARE DOWN SO IF YOU'RE DONALD TRUMP MAYBE THAT'S REASON ENOUGH TO APPLY THE TARIFF. HONESTLY 25% WOULD BE PRETTY PAINFUL. IT DOESN'T REALLY PASS MUSTER FOR ME IS THE EXCLUSIVE REASON. THE SECOND IS THIS, A NUMBER OF TRADES OR OUTSTANDING TALKING ABOUT ACCESS TO THE CANADIAN MARKET. IT IS A SIMILAR SITUATION TO
U.S. CANADA AND U.S. EUROPE AND THAT IS THE TRADE RELATIONSHIP EVEN THOUGH THE DEFENSE RELATIONSHIP IS COLLABORATIVELY POSITIVE. THE TRADE RELATIONSHIP IS NOT ALWAYS POSITIVE. SOMETIMES IT IS NEGATIVE. CANADA HAS WON MORE THAN IT HAS LOST WHEN IT COMES TO TRADE DISPUTES WITH THE U.S. AND THAT LEADS TO THE FINAL
POINT WHICH IS WE'VE DONE LOOKING AT SOME OF THE TIMING AROUND THE USMCA REVISION AND POTENTIAL RENEWAL AND HONESTLY THESE TARIFFS MAY BE AN OPPORTUNITY OR AN OPPORTUNITY TO PULL FORWARD THE VIEW BY THE EARLIER THAN IT SHOULD BE >> A LOT OF LEVERAGE HERE IF YOU STRIP OUT ENERGY GOT THE U.S. RUNNING A TRADE SURPLUS WITH CANADA. IF YOU INCLUDE ENERGY WHICH AMERICA NEEDS TO INCLUDE BECAUSE IT'S THE CRUDE THAT COMES OUT OF CANADA THAT THE UNITED STATES NEEDS. ISN'T THIS A REAL POSITION OF LEVERAGE PUT IT CAN STAY THE SAME THING FOREVER AT THIS POINT. THEY HAVE SOME LEVERAGE. ROB: ENERGY IN PARTICULAR, CRUDE OIL IS THE BEST LEVERS THAT THEY HAVE. ONE OF THE REASONS WE EXPECT SHOULD WE SEE TARIFFS ON CANADA THEY WILL EXCLUDE CRUDE OIL.
SO THEN WE TALK ABOUT A 25% TARIFF UNIVERSAL EXCEPT FOR THE MOST IMPORTANT. MAYBE IT'S 10% TARIFF EXCEPT THE MOST IMPORTANT IMPORTANT. IT IS TRUE THAT THESE TARIFFS MAY HAVE LESS BITE THAN BARK, BUT WE DO THINK CANADA IS IN THE CROSSHAIRS. IN RELATION TO MEXICO, DONALD TRUMP HAS MADE VERY SPECIFIC DEMANDS WHEN IT COMES TO WHAT HE WANTS TO SEE IN THE SHEINBAUM AND ADMINISTRATION TO AVOID TARIFFS AND I THINK THE TRUTH IS WHEN IT COMES TO CANADA THERE JUST AREN'T THOSE VERY SAME EXPLICIT TARGETS. TO SAY WE HAVE ACCEPTED YOUR DEMANDS, FOR CANADA THOSE DEMANDS ARE PRETTY VAGUE. ANNMARIE:
ISN'T TRUMP JUST IN FULL TO GO SHOOTING MODE. HE DOESN'T EVEN KNOW WHO IS GOING TO BE NEGOTIATING THE NEW USMCA WITH PRIDE IN THE END HE KIND OF HAS UPPER HAND AT THE MOMENT. ROB: IT IS A GOOD POINT AS TO THE FUTURE OF CANADIAN POLITICS. I AM NOT AN EXPERT BUT WE WILL GET AN ELECTION. AND SO I THINK IF WE ARE GOING TO ADD TO THE LIST OF ONE OF THEM IS TO HIS ENSURE THE LIBERAL PARTY DOES NOT SOMEHOW MAKE IT EXTRA ORDINARY, BACK AND GET REELECTED SO IT COULD BE TRUMP SORT OF PUTTING HIS HAND ON THE SCALES SO THAT HE'S NEGOTIATING WITH THE MORE CONSERVATIVE COLLABORATOR/COMPETITOR ON THE USMCA REVIEW DOES COME UP. >> ROB IT IS GOOD TO SEE YOU.
IF YOU ARE JUST JOINING US, A BIG SHAKEUP IN THE EQUITY MARKET WORLDWIDE ON THE S&P WE ARE NEGATIVE BY 2.4%. THE NASDAQ 100 WAS DOWN BY MORE THAN FIVE FULL PERCENTAGE POINTS, NVIDIA GETTING HIT. LISA: IT HIGHLIGHTS HOW MUCH THE AMERICAN EXCEPTIONALISM STORY HAS BEEN LEVERAGED OFF THE CHIP SECTOR IN PARTICULAR ONE NAME, NVIDIA AND SOME OF THE BIG TECH PLAYERS. THE SECOND THING IS HOW CONCENTRATED THIS EQUITY GAME REALLY HAS BEEN IN A FEW NAMES AT A TIME WHEN WE WILL GET EARNINGS AND MAYBE SOME DISRUPTION. JONATHAN: IF IT IS REAL IT THREATENS THE WHOLE ECOSYSTEM. U.S.
DOMINANCE BUILDOUT DATA CENTERS. ALL OF THOSE STORIES JUST UNRAVELING A LITTLE BIT AND I THINK IT REALLY CAPTURES THE FACT THIS WAS ALL VERY ONE SIDED. EVERYONE WAS ON THE ONE SIDE OF THE BOAT.
IT DOES NOT TAKE MUCH TO DISRUPT THINGS WHEN THINGS ARE THAT ONE-SIDED RATE LISA: WHEN YOU LOOK AT WHAT IS BEHIND DEEPSEEK IS REALLY ELEGANT AND I THINK A LOT OF PEOPLE ARE LOOKING AT THIS. IT'S A REASON MARC ANDREESSEN SAID THIS IS A SPUTNIK MOMENT. IT IS SOLVING THINGS IN A DIFFERENT WAY. JONATHAN: THE LATEST WITH BLOOMBERG'S TOM MACKENZIE AS DEEPSEEK RATTLES GLOBAL TECH STOCKS.
YOU ARE WATCHING BLOOMBERG TV. >> JONATHAN: THIS IS QUITE A START TO THE TRADING WEEK, S&P 500 DOWN 2.5%. NASDAQ 500 DOWN BY MORE THAN 4%. DEMONSTRATING THEY COULD DO MORE WITH LESS. LESS NVIDIA APPARENTLY, DOWN BY 11%. LESS ENERGY, DOWN SOMETHING
LIKE 20, MAYBE LESS OF EVERYTHING. GUESS WHAT WE WERE TALKING ABOUT LAST WEEK? A LOT OF HAPPY TALK. TAKE A LISTEN. >> THE DOMINANT MOOD IS EXTREME OPTIMISM. >> DAVOS IS ALL TRUMP, ALL AI. >> IF YOU ARE LOOKING TO TAKE ADVANTAGE OF THE UNITED STATES YOU ARE IN FOR A RUDE AWAKENING. >> IS NOT AS MANY MILES AWAY AS IT WAS.
>> I GOT A LITTLE RATTLED AT THE START, YOU SAID WE ARE COMING UP TO A BIG EVENT AND I THOUGHT IT WAS OUR INTERVIEW. JONATHAN: LIVE FROM DAVOS, SWITZERLAND, THE BIG EVENT. LISA: MY SPORT, WHICH IS LOOKING AT BOND AUCTIONS. JONATHAN: COULD I SAY YOU LOOK THE PART, WHEN YOU WALKED IN. STRAIGHTAWAY, THIS IS WHAT THE GAP CEO SHOULD LOOK LIKE.
>> IT IS PRETTY MUCH BANANA REPUBLIC TOP TWO TOE. >> I'M AN AVID WATCHER AND LISTENER. JONATHAN: LOTS OF HAPPY TALK FROM U.S. EXECUTIVES, PARTICULARLY FROM THE BANK EXECUTIVES. U.S. DOMINANCE, COMPARE AND CONTRAST LAST WEEK WITH THIS MORNING, THIS IS WHY YOU ARE SEEING THE MOVES.
WE ARE QUESTIONING THAT U.S. DOMINANCE. LISA: IT HAS BEEN BUILT ON THE BACK OF NVIDIA, DOMINANCE ON TECHNOLOGICAL EXPERTISE. IS THAT BEING UNDERMINED BY DEVELOPMENT IN CHINA? THE U.S. MARKET IS NOW WAKING UP TO IT. STEVE WAS ONTO SOMETHING WHEN HE SAID ACTUALLY IN THESE KINDS OF SELL EVERYTHING PANIC MOMENTS ARE WHEN YOU WANT TO BE A LITTLE BIT MORE CALM TO UNDERSTAND EXACTLY WHAT'S GOING ON. DOES NOT CHALLENGE DISINFLATION, SOME OF THE EFFICIENCY OF COMPANIES, ADAPTING AI MORE EASILY. JONATHAN:
NASDAQ 100 DOWN BY MORE THAN 4%. WELCOME TO THE PROGRAM. CHINESE AI START UP SAYS IT CAN DO MORE WITH LESS. ITS LATEST AI MODEL IS SEEN AS COST-EFFECTIVE AND POSES A CHALLENGE TO U.S. INDUSTRY LEADERS SUCH AS NVIDIA.
LISA: IT BASICALLY IS LESS SPECIFIC, IT THINKS HE COULD GET THE SAME RESULT BY BEING LESS SPECIFIC. RATHER THAN USING ALL OF ITS EXPERTS AT ONCE, IT USES SPECIFIC EXPERTS THAT ONLY HAVE LIGHT UP WHEN NEEDED. IT REDUCES SOME OF THE ENERGY INTENSIVE MISS AND CHIP NECESSITY. IF THIS IS TRUE AND CAN BE REPLICATED, IT CHANGES THE MODEL OF NVIDIA WINNING ALL THE TIME AND HAVING THESE TECH GIANTS INVEST LIKE THEY HAVE BEEN. ANNMARIE: THEY DID IT WITHOUT THE ACCESS TO SOME OF THE MOST ADVANCED U.S. CHIPS. TRUMP HAS BEEN IN OFFICE ONE WEEK, KEPT BY THE TRUMP ADMINISTRATION.
MY QUESTION IS WHEN HE WAKES UP, AN INDIVIDUAL WHO LIKES TO CHECK THE MARKETS, WHAT QUESTIONS WILL HE BE ASKING ON WHAT THEY COULD DO TO MAKE SURE THE U.S. STAYS DOMINANT IN THIS SPACE? I FEEL LIKE I HAVE WHIPLASH BASED ON YOUR CONVERSATION YOU HAD IN DAVOS. U.S. EXCEPTIONALISM, STARGATE, AI, TAX CUTS. THIS MORNING YOU HAVE DEEP SEEK, A LOT OF CONCERN OVER THE WEEKEND. JONATHAN: IT'S A BIG WEEK FOR THESE DEVELOPMENTS.
WE GO THROUGH THE CALENDAR AGAIN, MICROSOFT, META, DROPPING ON WEDNESDAY, APPLE ON THURSDAY. NEXT WEEK ALPHABET AND AMAZON. QUITE A TIME FOR THEM TO COME OUT AND JUSTIFY SPENDING THIS MUCH MONEY AT A TIME WHEN WE HAVE SEEN WHAT HAS TAKEN PLACE IN CHINA. LISA: HOW MUCH WILL THEY BE PENALIZED FOR SOME OF THEIR CAPITAL EXPENDITURES WHEN IT IS NOT BEING VIEWED AS NECESSARY.
JONATHAN: CHECK OUT THE FX MARKET, THE EURO HAD ITS BEST WEEK GOING BACK TO 2023. THE SITTING PRESIDENT WILL GO FORWARD WITH TARIFFS, THE WEEKEND HAPPENED, WALKING BACK TARIFF THREATS AGAINST COLUMBIA AFTER TRUMP ANNOUNCED AN EMERGENCY 25% TARIFF ON THE COUNTRY OVER DEPORTED MIGRANTS. THE WHITE HOUSE AND COLUMBIA AGREED TO ALL OF THE TERMS WITHOUT DELAY. ANNMARIE: THE WHITE HOUSE PUT OUT A STATEMENT SAYING THEY ARE LETTING THE MIGRANTS ENTER THE COUNTRY, THE TARIFFS AND SANCTIONS WILL BE HELD IN RESERVE. THEY WERE NEVER PUT IN PLACE, THIS WAS THE THREAT, WE DIDN'T GET ANY SORT OF SIGNATURE FROM THE PRESIDENT EITHER. UNLESS COLUMBIA FAILS TO HONOR THE AGREEMENT, THEN THEY WILL BE PUT IN PLACE. THE ONE THING THAT IS PUT IN
PLACE IS VISA RESTRICTIONS. YOU CAN VIEW THIS AS A CARROT AND STICK APPROACH. SPEAKING TO SOMEONE LAST NIGHT WHO SAID WHAT YOU NEED TO TAKE AWAY FROM ALL OF THIS IS HOW CONCERN CAPITALS AROUND THE WORLD ARE SEEING THIS PLAY OUT IN THE LAST 24 HOURS. LISA: NOT A LOT OF LOGIC IN TERMS OF
WHAT THEY ARE FOR, THERE ARE DIFFERENCES DEPENDING ON THE REGION. I JUST WANT TO PUT THIS IN THE RECORD, WHY BEAT UP ON CANADA? IT SEEMS UNNECESSARY. YOU KIND OF BEAT UP ON THEM. ANNMARIE: TRUMP KNOWS HE HAS TO RENEGOTIATE USMCA BY 2026.
YOU WILL NOT JUST GO AT MEXICO, HE WILL TRY TO GET WHAT HE CAN OUT OF BOTH OF THEM. YOU SEE THE RHETORIC, WHEN HE TALKS ABOUT CANADA ONE OF THE FIRST THINGS HE TALKS ABOUT IS FENTANYL COMING IN FROM THE NORTHERN BORDER. JONATHAN: YOU CAN MAKE A MUCH BETTER CASE THAT IS COMING FROM THE SOUTHERN BORDER THAN THE NORTH. THE POLITICS DON'T MAKE SENSE, THE TIMING OF THIS. THE 20 POINT GAP THAT I LOOKED AT IN THE LAST POLLS THAT I LOOKED AT.
THEY WILL TAKE A DIFFERENT LOOK AT THINGS LIKE ENERGY, THE ENERGY NEEDS OF AMERICA OVER THE NEXT SEVERAL YEARS. LISA: THE ONLY THING I COULD THINK OF IS IT IS JUST POSTURING AND THE BLOWBACK WON'T BE THAT MUCH. IT IS CANADA AND THEY WILL UNDERSTAND IF IT'S A POSTURING FIGURE. JONATHAN: I'M IN THE SAME BUCKET AS WELL. LET'S TURN TO THE LATEST IN THE MIDDLE EAST, ISRAEL AND LEBANON AGREED TO EXTEND THE CEASE-FIRE TO GIVE TROOPS TIMES TO WITHDRAWAL.
THIS IS OVER A DISPUTE OF A HOSTAGE HELD BY HAMAS. ANNMARIE: THIS ADMINISTRATION WANTS TO KEEP THIS DEAL IN PLACE , I SPOKE TO SOMEONE WHO SAID IT FEELS LIKE THEY ARE GIVING THE NEW LEBANESE PRESIDENT A CHANCE TO FORM A GOVERNMENT. SOMETHING WE HAVEN'T SEEN IN DECADES. AFTER FEBRUARY 18, DOES THIS HOLD? ISRAELI MEDIA REPORTING STEVEN WITKOFF WILL BE GOING TO ISRAEL. JONATHAN: WELCOME TO THE PROGRAM, BIG SELLOFF IN THE GLOBAL EQUITY MARKETS, U.S.
TECH STOCKS LEADING THE WAY AFTER CHINESE AI RELEASED AN UPDATE TO ITS CHATBOT. RAISING MAJOR QUESTIONS OVER THE FUTURE OF U.S. TECH DOMINANCE. TOM MACKENZIE JOINS US NOW. WELCOME TO THE PROGRAM. FOR PEOPLE WHO WORK AWARE OF THE BUZZ OVER THE WEEKEND, EXPLAIN WHAT IS DEEP SEEK? TOM: A COMPANY THAT DROP THIS MODEL ON JANUARY 25. THEY HAVE BEEN RUNNING SINCE 2023 SPUN OFF FROM A HEDGE FUND. THEY DRAW THE MODEL ON JANUARY 20. THERE HAS BEEN $6 MILLION
TRAINING IT, IT TOOK ABOUT TWO MONTHS. THIS RAISES THE QUESTION ABOUT THE COST BECAUSE IT HAS THE SAME CAPABILITIES ACCORDING TO MANY METRICS AS OPENAI, META. THE COST, PRICING, ENERGY, THAT IS THE QUESTION MARK.
THOSE ARE THE QUESTIONS BEING RAISED BY DEEP-SEA. IT IS ALREADY BUILT ON AND TESTED. IT COULD BE DEPLOYED VERY QUICKLY, IT IS OPEN-SOURCE SO THEY ARE ABLE TO SEE THE DATA AND ABLE TO TWEAK IT AS WELL. THERE ARE QUESTIONS ABOUT WHAT GOES INTO BUILDING THESE MODELS IN THE FUTURE. WHEN THEY TURN AROUND AND SAY THIS IS A SPUTNIK MOMENT FOR AI, WE HAVE TO TAKE THAT SERIOUSLY. LISA: IS THIS REAL? IS THERE SOMETHING ABOUT THIS THAT WE CANNOT SEE THAT SORT OF UNDERMINES THE PREMISE THAT EVERYTHING SOME OF THE BIG TECH GIANTS HAVE BEEN DOING THEY COULD DO WITH A LOT LESS MONEY IN ENERGY? IS THERE ANYTHING YOU COULD SEE THAT GIVES CREDENCE TO THOSE QUESTIONS? TOM: WE DON'T KNOW WHAT CHIPS THEY ARE USING, WHAT TYPES OF AI ACCELERATORS, WE HAVE TO MAKE THE ASSUMPTION THAT THEY ARE NOT USING THE MOST SOPHISTICATED NVIDIA CHIPS BECAUSE OF THE RESTRICTIONS IN PLACE.
THEY HAVE A 50,000 CLUSTER, THE HEDGE FUND DOES THAT IS FUNDING THIS RESEARCH AND LAB OF LU DEEPSEEK. THESE QUESTIONS WE STILL DON'T HAVE ANSWERS TO. IT IS VALID TO SCRUTINIZE AND QUESTION WHAT DEEPSEEK IS TELLING US. YOU HAVE TO ASSUME THIS COULD CHANGE THE EQUATION IN TERMS OF THE NEED AND SPEND COMPANIES LIKE META COMMITTED TO. NOT TO MENTION THE PARTNERING AND SPEND AND INVESTMENT AROUND ENERGY PIECE OF THIS. THIS IS AN EFFICIENT MODEL AND A PRICE POINT OF ABOUT 5% OF THE OPENAI PRICING.
THAT IS WHERE YOU COULD SEE VERY RAPID DEPLOYMENT. IT DOESN'T CHANGE THE INNOVATION STORY, THE ADOPTION STORY, IT POSES A QUESTION FOR THE BUILDERS OF THE MODEL LIKE META SPECIFICALLY AND COMPANIES THAT FEED INTO THE SUPPLY CHAIN. IF YOU ARE BUYING AI, THIS COULD BE GOOD NEWS. LISA: IT RAISES THE QUESTION ABOUT KEEPING MODELS PROPRIETARY , IT MAY BE OPEN SOURCED, IT IS A BETTER, MORE EFFICIENT WAY TO CREATE THE MOST ADVANCED ECOSYSTEM.
HOW MUCH IS THAT ALONE CHANGING THE CONVERSATION AND FRANKLY THE COMMUNITIES? TOM: THAT SPECIFICALLY IS A QUESTION FOR META AS WELL. THEY WENT INTO THAT OPEN-SOURCE PROPOSITION TO DRIVE DOWN THE COST OF OPEN-SOURCE BUT RAISE THE MARGIN VARIABLE TO GET THROUGH THE APPS THAT ARE BUILT. THEY WANT TO SQUEEZE OPENAI AND ANTHROPIC.
THE FACT THAT DEEPSEEK TOOK OPEN-SOURCE CODE AND BUILD ON IT AS WELL AS TAKING HARDWARE, PRESUMABLY FROM NVIDIA AND USED IT TO INCORPORATE, THAT WILL RAISE A QUESTION. WILL THIS TRUMP ADMINISTRATION LOOK LIKE WHEN THE BIDEN ADMINISTRATION LOOKED INTO HUAWEI, WILL THEY LOOK TO THAT PLAYBOOK AND LOOK AT ADDITIONAL RESTRICTIONS? THEY ARE ALREADY IN PLACE FOR HARDWARE AND SOFTWARE. HOW FAR THEY GO IN TERMS OF TRYING TO CARVE OUT SPACE? ANNMARIE: I'M SURE A LOT OF THOSE HARDWARE PROPOSALS ARE BEING DRAWN UP. WHEN IT COMES TO THE TECH COLD WAR, HOW MUCH DOES THIS CHALLENGE THE NOTION THAT CHINA IS YEARS BEHIND THE UNITED STATES? TOM: ON THE READING OF HOROWITZ AND OTHERS WHO HAVE LOOKED AT THIS MODEL AND STRESS TESTED IT, I HAVE PLAYED AROUND WITH IT, EACH STEP YOU COULD POSE QUESTIONS ABOUT CHINA YOU GET NOTHING. CHINA IS ABLE TO INNOVATE AND ITERATE ON THE BACK OF WESTERN TECHNOLOGY.
THEY HAVE DONE THAT WITH TIKTOK AND THE FACT THAT IT BECAME THE LEADING SOCIAL MEDIA APP AND ELECTRIC VEHICLES, THE CHALLENGE THAT POSES TO THE EUROPEAN INDUSTRY. WHEN IT COMES TO AI AND MODELS, CHINA HAS THE SKILLS, ENGINEERS, PARTICULARLY SYSTEMS ENGINEERS. THEY HAVE THE DATA AND THEY ARE ABLE TO BUILD AND ITERATE, INNOVATE ON WESTERN TECHNOLOGY. THAT IS A CATCH UP MANY HAVE NOT PREDICTED IN THE AI SPACE. JONATHAN: CERTAINLY ON DISPLAY OVER THE LAST WEEK. OUT OF THE CITY OF LONDON, NVIDIA IS DOWN 11% IN THE PREMARKET. LISA: THE VALUATIONS GOT VERY
ELEVATED AND A LOT OF PEOPLE PLACED BETS ON THIS STORY, MULTIPLES THAT WERE INCREDIBLY HIGH. THAT MIGHT BE THE BIGGEST TAKE OF ALL. JONATHAN: IT'S A WAKE-UP CALL OF TIMES WHEN THINGS WERE VERY ONE-SIDED. LET'S GET AN UPDATE AND CROSS OVER TO DANI BURGER. DANI: U.S. STEEL DOUBLING DOWN ON ITS CONFIDENCE SAYING THE ENTRANCE OF THE CORE HOLDINGS ARE NOT ALIGNED. HOLDINGS IS PUSHING THE COMPANY TO ABANDON THE NIPPON STEEL D EAL. THEY TOLD BLOOMBERG THEY WILL
PUSH U.S. SALES AND LITIGATION TO RESCUE IT. INSTEAD COLLECT A $565 MILLION FEE. BLOOMBERG HAS LEARNED ELON MUSK HAS INITIATED CONVERSATIONS ABOUT USING BLOCKCHAIN AT THE NEW DEPARTMENT OF GOVERNMENT EFFICIENCY.
THE TESLA CEO HAS MUSED ABOUT THE IDEA AS A WAY TO TRACK FEDERAL SPENDING, SECURE DATA, MAKE PAYMENTS, MANAGE BUILDINGS. COVID-19 LIKELY ORIGINATED FROM A LAB LEAK RATHER THAN A NATURAL SOURCE ACCORDING TO THE CIA. THE AGENCY ALIGNS WITH THE FBI AND DEPARTMENT OF ENERGY WHICH SAID THE DEPARTMENT WHICH SAID THE VIRUS LEAK FROM A LAB IN WUHAN, CHINA. THAT IS YOUR BRIEF. JONATHAN: MORE FROM DANI IN 30 MINUTES. UP NEXT, A RESILIENT LABOR MARKET. >> THE U.S. LABOR MARKET HAS BEEN THE MOST
RESILIENT MARKET IN THE WORLD. NO QUESTION. IT WILL CREATE DEMAND AND DEMAND WILL CREATE DEMAND FOR TALENT. JONATHAN: LOTS OF DATA THROUGH THE WEEK AND A FED RESERVE DECISION THAT WE HAVE HARDLY TALKED ABOUT. THAT CONVERSATION, UP NEXT. JONATHAN: MAJOR MOVES WORLDWIDE, EQUITIES DECLINED, DOWN ACROSS THE BOARD. EQUITY FUTURES OFF BY 2.3%. MUCH BIGGER MOVES ON THE NASDAQ 400.
YIELDS DOWN BY 11 BASIS POINTS ON THE 10 YEAR IN AMERICA, DOWN TO 4.51. NVIDIA LOWER BY 11.6 PERCENT. META, SOME OF THE BIG SPENDERS DOWN BY 4%. UTILITIES LAST YEAR ON THE S&P UP BY 20%. SIEMENS ENERGY DOWN BY 20%. LISA: THIS HIGHLIGHTS JUST HOW FAR SOME OF THIS NARRATIVE HAS GONE ABOUT AI, WHICH I THINK IS INTERESTING AND IS GOING TO HAVE LASTING LEGS REGARDLESS OF WHAT HAPPENS IN TERMS OF HOW MUCH THIS COULD BE REPLICATED, THE CHINESE MODEL. IT REALLY FOCUSES ON PEOPLE GETTING A LITTLE OVER THE SKIS WITH THE FED. THAT HAS ALSO SHIFTED THIS
MORNING. JONATHAN: FED RESERVE DECISION JUST AROUND THE CORNER. THE SURVEILLANCE ELSEWHERE THIS MORNING, THE LABOR MARKET. >> THE U.S. LABOR MARKET HAS BEEN THE MOST
RESILIENT IN THE WORLD, NO QUESTION, HANDS DOWN. WE HAVE HELD UNEMPLOYMENT FAIRLY STEADY. WORKFORCE PARTICIPATION STEADY. WE HAVE AN OVERHEATED AT NUMBERS THAT TRADITIONALLY THEY WOULD SAY WOULD BE OVERHEATING. GROWTH WILL CREATE DEMAND AND DEMAND CREATES DEMAND FOR TALENT. THE TONE IS MORE OPTIMISTIC. JONATHAN: STRONG U.S. LABOR MARKET AND INFLATION
RAISING BETS THAT THEY WILL KEEP RATES AT A HOLD THIS WEEK. JAY POWELL SAID TO GIVE HIS FIRST NEWS CONFERENCE SINCE TRUMP'S INAUGURATION. IT IS GOOD TO SEE YOU BACK FROM DAVOS WELCOME TO THE STUDIO. A LOT OF PEOPLE ASSUME THIS FOR CHAIRMAN POWELL, DO YOU SHARE THIS VIEW? NELA: WHAT THE FED SIGNALS ON WEDNESDAY IS SUPER IMPORTANT FOR THE REST OF THE YEAR. BORROWING COSTS ARE STILL AT RECORD HIGHS.
WE HAVE SEEN THESE RATE CUTS TAKE ROUTE AND INFLUENCE MOVES, IT HASN'T TRANSLATED YET. THAT'S WHAT MAINSTREET IS WAITING FOR. THAT WILL KEEP THE LABOR MARKET RELEVANT IN 2025 AS A KEY COMPONENT OF U.S. GROWTH. LISA: WHAT DO WE EXPECT TO HEAR FROM THEM OTHER THAN WE DON'T GET INVOLVED IN POLITICS? NELA: YOU WILL HEAR THAT.
I THINK IT WILL BE A NUANCE TO THOSE COMMENTS. THEY WILL TRY TO SIGNAL FUTURE PATHS AND TIPPED THEIR HAND. THEY WANT TO ENGAGE WITH WALL STREET, WITH STAKEHOLDERS AND THE AMERICAN PUBLIC OF WHAT IS NEXT FOR THE FEDERAL RESERVE. THERE WILL BE SOME CONFIDENCE ON THE FUTURE DIRECTION OF THE ECONOMY. ECONOMIC GROWTH IS A HUGE PART OF THEIR OVERALL CONTEXT. THERE WILL BE SOME THOUGHTS ON A FUTURE DIRECTION OF THE LABOR MARKET AND INFLATION.
YOU WILL GET MORE THAN -- WE ARE PAUSING FOR NOW, COME BACK AFTER THE COMMERCIAL BREAK. YOU WILL PROBABLY NOT GET A DEFINITIVE RATE PATH FOR 2025. LISA: THIS RAISE THE QUESTION OF THE RELEVANCE OF THE FED, EVEN GOVERNMENT POLICIES THAT SEEM SO FAR MOVED FROM SOME OF THESE CHANGES HAPPENING IN TECHNOLOGY THAT COULD DISRUPT THE LABOR MARKET. DO YOU SEE A QUICKER ADOPTION OF AI COMPLETELY CHANGING THE LABOR DYNAMIC IN THE WAY THE FED CANNOT LAY OUT BASED ON CURRENT INFORMATION? NELA: AI IS JUST ONE OF TWO MEGATRENDS THAT I'M WATCHING.
NOT NECESSARILY THE DRUGS THEMSELVES BUT HOW THEY ARE EXECUTED. A LOT OF THEM ARE AUTOMATED, WHAT DOES THAT LEAVE ROOM FOR? AGE, THE FACT THAT THE U.S. WORKFORCE IS RAPIDLY AGING WITH 10,000 AMERICANS TURNING 65 EVERY SINGLE DAY. THAT IS 4 MILLION HITTING RETIREMENT AGE EVERY YEAR. THAT MEANS EMPLOYMENT GROWTH WILL SLOW DOWN SIGNIFICANTLY OVER THE LAST DECADE. A FRACTION OF WHAT IT WAS THE
PREVIOUS DECADE. YOU TAKE GENERATIVE AI AND ADVANCES AND IT RAPIDLY AGING WORKFORCE WITH SKILLS AND DOMAIN KNOWLEDGE WALKING OUT THE DOOR EVERY DAY AND WHAT DO YOU HAVE LEFT? THAT IS CERTAINLY STRUCTURAL CHANGE WHERE THE FED WILL HAVE TO CONFRONT. THEY ARE HERE AND NOW TRYING TO GET TO THAT 2% TARGET. ANNMARIE: THERE'S A TON OF COUNTRIES DEALING WITH MUCH OLDER GENERATION AND ACTUALLY DON'T HAVE POPULATION GROWTH. IS AI AND TECHNOLOGY ACTUALLY MATCHING THE MOMENT FOR WHAT THE LABOR FORCE REQUIRES? NELA: YOU THINK ABOUT HOW AN ECONOMY WOULD CHANGE WITH MORE OLDER WORKERS. IT WOULD BE IN HEALTH CARE.
WHERE WE HAVEN'T SEEN THESE HUGE ADVANCES IS SOMETHING SIMPLE LIKE THE CARE ECONOMY, WHAT IT TAKES TO BE A CAREGIVER. THAT IS A HUMAN OCCUPATION. YOU HAVE SEEN TODAY IN THE DECEMBER JOBS REPORT A HUGE INCREASE IN HIRING AND HEALTH CARE. THERE IS SOME DISCONNECT BETWEEN WHERE THE LABOR MARKET IS NOW AND WHERE THE TECH ADVANCES ARE COMING. OVER THE NEXT FEW YEARS YOU WILL SEE THEM EMERGE. ANNMARIE: THIS ADMINISTRATION BASICALLY WAS BROUGHT INTO POWER FOR ONE MAJOR REASON, PART OF THAT WAS INFLATION.
WE SEE THIS IDEA OF TARIFFS AND THE FED WILL MAYBE BE ON WAIT AND SEE. INFLATION EXPECTATIONS ARE STILL HIGH. AT SOME POINT WILL THEY HAVE TO DO MORE TO COMBAT THOSE EXPECTATIONS EVERYDAY CONSUMERS HAVE? NELA: YOU MAKE A VERY IMPORTANT POINT. WE ARE SO FOCUSED ON HITTING THAT 2% TARGET AND NOT AS FOCUSED AT ANCHORING TO 2%. THAT IS A DEGREE STRONGER THAN HITTING A 2% TARGET. THE FED HAS 400 PHD ECONOMISTS WHOSE JOB IS TO RUN THESE SCENARIOS AND THEY DO IT FOR DECADES. THIS IS NOT OUTSIDE THE FED'S
CAPACITY TO RUN SCENARIO ANALYSIS ABOUT POLICY CHANGES. THEY WILL HAVE TO BE WATCHFUL OF WHERE THE CONSUMER IS. JONATHAN: APPRECIATE YOU. GOING INTO THIS WEEK'S FEDERAL RESERVE DECISION AND THE ECONOMIC DATA AS WELL, NO DOUBT IF THIS MOVE CONTINUES CHAIRMAN POWELL WILL BE ASKED ABOUT IT ON WEDNESDAY. HOUSE PRICES, THE S&P 500 IS ANOTHER. LISA:
DOES IT GIVE HIM MORE ROOM TO EXPRESS CONFIDENCE COULD CUT AGAIN AND REMOVE POLITICAL PRESSURE FROM HIM? HOW MUCH THAT LEANS INTO SOME OF THE RALLY WE HAVE SEEN AT THE FRONT END OF THE YIELD CURVE, THE LIKES OF MARK SIDE AND ARE SAYING THEY WILL CUT ANYWAY. JONATHAN: IF HE DISAGREES HE WILL COME OUT AND SAY SO. WE WILL HEAR THAT ON WEDNESDAY AFTER THE PRESS CONFERENCE. LISA: I'M SURE HE WILL SAY THEY SHOULD'VE CUT BY 50 BASIS POINTS. RATE SHOULD BE LOWER AND INFLATION NEEDS TO COME DOWN.
ANNMARIE: HE SAYS HE KNOWS BETTER BUT DIDN'T ACTUALLY SAY HIM. JONATHAN: IF HE COULD ENGINEER THE KIND OF ENERGY PRICES IT COULD LEAD TO LOWER INTEREST RATES. THAT MAKES SENSE. LISA: SORT OF. OVER THE PAST COUPLE OF YEARS IT WASN'T AN OIL SHOCK. JONATHAN: ENERGY WAS PART OF THE STORY IN EUROPE. THE NEXT HOUR ON "BLOOMBERG
SURVEILLANCE," >> HAVING DONALD TRUMP COME INTO OFFICE IS A VERY WELCOME CHANGE, LET MARKET FORCES DRIVE. >> A LOT OF POLICIES COMING TOGETHER. >> YOU HAVE MESSAGES FROM THE TOP ABOUT PRO BUSINESS, THAT CAUSES INVESTMENT. >> THE GROWTH WILL BE SOMETHING THAT IS FRONT AND CENTER.
>> WE WILL HAVE TO SEE WHAT THE YEAR BRINGS. THERE IS MORE UNKNOWNS THAN KNOWNS IN THE EQUATION AT THIS POINT. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ, ANNMARIE HORDERN. JONATHAN: DOWN TWO POINT 35% ON THE S&P 500. LOOK AT THE NASDAQ 100, ABOUT 90 MINUTES AGO THAT WAS DOWN BY 5%. WE ARE NOW DOWN SOMETHING LIKE
4%. NVIDIA GETTING ABSOLUTELY HAMMERED IN THE PREMARKET DOWN CLOSE TO 12%. ABSOLUTELY OVERWHELMING. LISA:
THIS IS A CHINESE START UP THAT BEGAN IN 2023, WAS USING CHIPS THAT HAD LESS COMPUTING POWER AND CAME UP WITH A MODEL THAT RIVALS OPENAI WHEN YOU TAKE A MUCH LESS EXPENSIVE INFRASTRUCTURE AND FRANKLY JUST AS MUCH ACCURACY. EVERYBODY POURED CASH AND ENERGY INTO THE BUILDOUT OF CHIPS. JONATHAN: BLANKET COVERAGE INTO THE OPENING BELL FOR NOW.
MICROSOFT LOWER, MEADOW LOWER, THESE ARE THE COMPANIES THAT WILL SPEND $50 BILLION ON THIS YEAR. THE CHINESE FIRM COMING OUT SAYING WE COULD DO MORE OR AS MUCH WITH A LOT LESS. LISA: YOU MADE A GREAT POINT SAYING HOW MUCH DOES THIS RAISE THE BAR TO SHOW COMPANIES WHY ARE THEY SPENDING AS MUCH AS THEY ARE? AS WE GET THESE EARNINGS ANNOUNCEMENTS, WILL THEY BE PUNISHED EVEN MORE FOR THEIR CAPITAL EXPENDITURES AT A TIME WHEN IT COULD BE NOT NECESSARY.
JONATHAN: THIS WEDNESDAY YOU WILL HEAR FROM MICROSOFT, META, TESLA, YOU WILL HEAR FROM APPLE ON THURSDAY, GOOGLE, AMAZON, NVIDIA AT THE END OF THE MONTH. ANNMARIE: WHAT ARE THEY GOING TO SAY? WE ARE THROWING MORE MONEY AT IT? DOES THAT MATTER? WHAT YOU SEE FROM DEEPSEEK'S THEY WERE ABLE TO MAKE SOMETHING PRETTY INCREDIBLE WITHOUT THIS ACCESS TO ADVANCED U.S. SEMICONDUCTORS. FUNDING IS NOT THE PROBLEM, THE ACCESS TO THIS MONEY IS. IT'S INTERESTING WHAT THE ASSOCIATED PROFESSOR HAD TO SAY AT THE UNIVERSITY OF TECHNOLOGY IN SYDNEY. PARTICULARLY AS THEY NAVIGATE
RESTRICTIONS IN CRITICAL HARDWARE AND SOFTWARE TECHNOLOGIES. YOU HAVE TO THINK THEY DID THIS WITH THE WALLS BEING UP. WHAT COULD THEY DO IF THEY HAD MORE ACCESS? LISA: THERE'S A LARGE TAKEAWAY, WE ARE TALKING ABOUT CHANGE, WE WILL HAVE DIFFERENT NARRATIVES. BEFORE YOU GO THERE, THERE IS ANOTHER TAKEAWAY, HOW MUCH THIS MARKET GOT LOPSIDED IN ONE YEAR. THIS TO ME REALLY IS A GUT CHECK OF HOW MUCH THAT COULD REALLY BE QUICKLY SHIFTED AT A TIME WHERE WE KNOW ABOUT DEEPSEEK.
PEOPLE IN CHINA KNEW ABOUT DEEPSEEK MONTHS AGO. THERE'S A LARGER TAKEAWAY. JONATHAN: JUST TO REITERATE I THINK THAT IS REALLY IMPORTANT, WHEN YOU SEE MOVES LIKE THIS YOU HAVE TO TALK ABOUT WHERE YOU HAVE BEEN OVER THE PAST FEW YEARS. IT IS ALSO ABOUT THE MAGNITUDE OF THE MOVE. HOW ONE-SIDED EXPECTATIONS
COULD BECOME. OUR ABILITY OR CAPACITY TO ABSORB NEGATIVE NEWS IS SOMETHING WE SAW WITH RBC IN THE NEW YEAR. THESE VALUATIONS WERE SO ELEVATED INTO 2025. LISA: WE SAW THAT WITH THE TECH STOCKS IN THE LAST WEEK, ANOTHER HIGH IN THE S&P 500, THEY COULD DO NO WRONG. WHEN YOU HAVE TECHNOLOGY MOVING SO QUICKLY, SOME OF THE LARGE LANGUAGE MODELS TALK ABOUT HOW WE DON'T FULLY UNDERSTAND WHAT COMMUNICATIONS WILL BE, TO PUT ALL YOUR CHIPS IN ONE BASKET AND TALK ABOUT ELEVATED VALUATIONS INTO THE FUTURE IT BECOMES MUCH DICIER. JONATHAN: DO WE NEED TO RETHINK THE WHOLE THESIS NOW? THE STORY OF LAST WEEK, WE ARE IN DAVOS, EVERYBODY IS TALKING ABOUT ENERGY NEEDS, UTILITIES, I KEEP TALKING ABOUT THIS ONE NAME IN EUROPE, SIEMENS ENERGY, DOWN BY 21%. LISA:
I DO THINK THERE IS THIS LARGE QUESTION ABOUT WHETHER AI COULD BE DEPLOYED WITH THE INFRASTRUCTURE WE HAD. THE ANSWER WAS NO IN ITS CURRENT FORM. THE ONLY WAY TO GET IT TO HAVE THE EFFICIENCY PEOPLE NEEDED WAS TO COMPLETELY CHANGE THE CONSTRUCT. YOU STILL NEED SOME OF THOSE ENERGY SOURCES, DATA CENTERS, YOU GET A MUCH FASTER ADOPTION WHICH IS BENEFICIAL FOR LARGER RATES OF COMPANIES. JONATHAN: PREFACED WITH IF IT IS REAL, IF
IT'S REAL. ASKING THOSE QUESTIONS THEMSELVES, IS IT A SYNTHETIC SCARE? IS IT COST SUBSIDIZED BY THE STATE? HOW MUCH POWER WAS ACTUALLY USED? ALL OF THOSE DIFFERENT THINGS NEED TO WORK OUT. ANNMARIE: THERE WILL BE A TON OF QUESTIONS IN THIS GRAY AREA BECAUSE IT'S COMING OUT OF CHINA AND THEY DIDN'T HAVE ACCESS TO THESE ADVANCED CHIPS. IT IS VERY INTERESTING, WHERE
DID THE FUNDING COME FROM? IS THIS SOMETHING THAT THE CCP'S BACKING AND WHAT ELSE ARE THEY BACKING? JONATHAN: PLENTY OF COMMENTARY ON ALL OF THIS, STOCKS RETREAT FROM ALL-TIME HIGHS. HENRIETTA TREYZ AS DONALD TRUMP REITERATES A KEY TAX PLEDGE. MANDEEP SINGH. WE BEGIN THIS HOUR WITH GLOBAL STOCKS VERY MUCH UNDER PRESSURE. INVESTORS RATTLED AS CHINESE
STARTUP DEEPSEEK THREATENS TECH SECTORS. WHILE THE SECULAR TREND UPWARD SHOULD PERSIST OVER THE LONG RUN, THERE EXPENSIVE VALUATIONS SHOULD PAY INCREASED EVALUATIONS TO STOCKS. WELCOME TO THE PROGRAM, YOU WROTE THAT BEFORE THE NEWS OVER THE LAST WEEK, HOW MUCH DOES THE NEWS CHANGE YOUR THESIS FOR 2025? SEEMA: THERE ARE A LOT OF QUESTIONS, INVESTORS NEED TIME TO INGEST THE IMPACTS. AS WE SAID, THERE WAS GOING TO BE THAT VULNERABILITY. I DON'T THINK ANYONE QUITE SAW THIS COMING.
IT DOES ACCENTUATE THE NEED FOR DIVESTIFICATION. THE OUTLOOKS, IT WAS EXCEPTIONALISM, AT THE END OF JANUARY A LOT OF THIS HAS THE POTENTIAL TO BE REWRITTEN FOR 2025. INFLATION UNCERTAINTY THAT INVESTORS WERE DEALING WITH. JONATHAN: JUST TO FOLLOW-UP, THIS WAS A QUESTION LISA RAISED EARLIER, GIVEN WHAT WE KNOW, NOT ENOUGH BUT A FAIR DEAL, IS IT SUFFICIENT TO UNDERMINE U.S. EXCEPTIONALISM AND TECH DOMINANCE? SEEMA: IT REALLY PUTS BIGGER QUESTIONS AROUND THESE VALUATIONS. IT REMINDS INVESTORS THAT THESE COMPANIES WILL NOT NEVER HAVE COMPETITORS.
COMPANIES LIKE NVIDIA, WHAT IS GOING ON WITH THEIR FUTURE? COULD IT BE SUSTAINED? I THINK THERE HAS TO BE QUESTION MARKS. THIS EXCEPTIONALISM CAN PERSIST, PROBABLY NOT TO SUCH A SIGNIFICANT DEGREE BECAUSE OF INNOVATION. WE HAVE AN ADMINISTRATION COMING IN NOW WHO IS VERY MUCH FOCUSED ON THAT GROWTH INSURING THE U.S. KEEPS ITS STAGE. I THINK INVESTORS HAVE TO WAKE UP AND LOOK, MAYBE WE DON'T LOOK AT THE U.S. GLOBAL, IT HAS TO BE EVEN MORE PROMINENT THAN IT WAS JUST A WEEK AGO. LISA: I LOVE WHEN THE MARKET IS
FLYING HIGH WE HAVE A MILLION INVESTORS SAYING WE HAVE A BUYING OPPORTUNITY. THERE IS A TRUE BONA FIDE DIP AND PEOPLE SAY THIS MAKES US RETHINK EVERYTHING. DOES IT MAKE YOU RETHINK EVERYTHING? SEEMA: IT'S A GOOD QUESTION. WE HAVE BEEN LOOKING AT MONEY
MARKETS WONDERING WHY PEOPLE ARE NOT DEPLOYING. THE ANSWER THAT KEEPS COMING BACK AS THEY LOOK AT VALUATIONS AND THEY ARE NOT SURE. THEY WANT TO GET INTO BIG TECH BUT THEY DON'T LIKE THIS PRICE. TODAY WHEN IT COMES DOWN EVEN
FURTHER, INVESTORS WILL GET BACK IN AT THAT POINT, THERE WILL BE QUESTION MARKS. THEY WILL NOT JUMP BACK IN UNTIL THEY HAVE REAL ANSWERS. WHAT INVESTORS SHOULD BE DOING IS WHAT THE OPPOSITE IS. ONE OF THE THINGS THAT DEEPSEEK OFFERS OUTSIDE OF THE MAG7.
LISA: HOW MUCH DOES THIS ACTUALLY POINT PEOPLE TOWARDS THE DIRECTION OF WHERE AI COULD BE DEPLOYED, ARE THERE PARTICULAR AREAS THAT ARE THE QUICKEST BENEFICIARIES OF THIS TYPE OF EFFICIENCY? SEEMA: THE TWO THAT REALLY HAVE STOOD OUT TO US OUR HEALTH CARE AND AGRICULTURE. I THINK THAT STORY IS STILL VERY MUCH IN MOTION. I DON'T THINK THERE IS QUESTIONS AROUND THOSE, IT IS THOSE SPECIFIC COMPANIES THAT HAVE REALLY BENEFITED FROM THIS DRIVE UP THINKING ABOUT ALL OF THE DESTRUCTION NECESSARY TO DRIVE AI. THAT IS WHERE THE QUESTIONS ARE. IT DOES NEED SOME PRETTY GOOD NEWS FROM OTHER SECTORS AROUND THE WORLD. LISA: IS THIS A MOMENT YOU WANT TO
HAVE MORE EXPOSURE TO THE CHINESE EQUITY MARKET? SEEMA: THAT IS A GOOD QUESTION, DID WE MAKE A MISTAKE BY NOT INCREASING EXPOSURE? THERE ARE STILL A LOT OF CONCERNS AROUND THE FUNDAMENTAL STORY, ARE INVESTORS WILLING TO GO ALL IN LIKE THEY DID WITH THE U.S., THE TWO COMPANIES IN CHINA OR WILL YOU LOOK AT THE WHOLE ECOSYSTEM AND SAY LOOK, THERE ARE STILL SOME DEEP-ROOTED FUNDAMENTAL PROBLEMS INVESTORS HAVE TO CONSIDER. I DON'T THINK IT SPECIFICALLY MEANS CHINA, WHAT ARE THE OTHER COUNTRIES THAT MIGHT BE A LITTLE BIT LESS VULNERABLE POTENTIALLY TO US? ANNMARIE: YOU MENTIONED EARLIER THE U.S. WILL MAKE SURE THEY MAINTAIN TECH DOMINANCE, WE HAVE SEEN IN THE FIRST WEEK, PRESIDENT DONALD TRUMP HAS REALLY TAKEN AIM ON CANADA, MEXICO, COLOMBIA, HE HAS HELD OFF ON CHINA, WILL SOMETHING LIKE THIS PUSH THE ADMINISTRATION TO RATCHET UP THE PRESSURE ON BEIJING? SEEMA: I HAVE TO IMAGINE THE ADMINISTRATION WILL TRY TO DO THEIR HOMEWORK, HOW MUCH OF A FOCUS IT REALLY IS BEFORE THEY JUMP HEADFIRST INTO MAKING ADDITIONAL THREATS. IT DOESN'T MEAN TARIFFS WON'T COME. HOW DRASTIC COULD THEY BE? IF THIS DOES SOMETHING MEANINGFUL, TARIFFS IN CHINA COULD BE GREATER. THE U.S. HAS MORE OF A REASON TO TRY TO
REIN IN THIS. I DON'T THINK IT'S SOMETHING THAT YOU WILL START TO SEE HEADLINES. LISA: DO YOU THINK THE FED HAS EVER BEEN RELEVANT ON THE WEEK WHERE WILL HEAR FROM MICROSOFT, META, TESLA? SEEMA: HAVING SAID THAT, THIS WON'T BE THE HEADLINE NEWS ON THE BLOOMBERG. I STRUGGLE TO SEE ANYTHING FROM THE FED THIS MORNING.
WE HAVE BEEN VERY MUCH REASSURED THAT U.S. CONSUMERS ARE VERY RESILIENT. NET WORTH HAS INCREASED SO SIGNIFICANTLY. NET WORTH IN THE U.S. HAS BEEN DRIVEN HIGHER SIGNIFICANTLY BECAUSE OF EQUITY MARKET EXPOSURE. ANY KIND OF CONCERNS OF EQUITY MARKETS DOES BLEED THROUGH TO THE U.S. ECONOMY. THAT IS SOMETHING WE WON'T HEAR ABOUT FROM THE FED BUT IT IS SOMETHING THEY HAVE BEEN TRACKING VERY CAREFULLY. JONATHAN:
APPRECIATE YOUR INPUT AS ALWAYS. OFF THE BACK OF THE SELLOFF THIS MORNING, EQUITY FUTURES DOWN ACROSS THE BOARD, NVIDIA GETTING HAMMERED. SAYING THAT DESPITE CONCERNS ABOUT THIS, THE MARKET IS VERY BULLISH WITH THE PARADOX ALMOST CERTAINLY LEADING TO THE AI INDUSTRY WANTING MORE, NOT LESS. DANI BURGER RIDES INTO EXPLAIN WHAT THAT IS, EFFICIENCY INCREASES DEMAND, NOT DECREASES IT. WE SAW THAT IN THE INDUSTRIAL REVOLUTION.
DLISA: IF YOU COULD EXPEDITE THE ADOPTION YOU COULD INCREASE DEMAND ACROSS A WIDER SWATH OF TERMS. MAYBE IT WON'T BE META AND MICROSOFT BUYING ALL THE CHIPS, IT WILL BE UNITEDHEALTH OR SOME OF THESE OTHER COMPANIES DEPLOYING IT IN OTHER WAYS. A LOT OF UNKNOWN. WE DON'T NECESSARILY KNOW HOW MUCH ACTUAL INVESTMENT WENT INTO THIS, WE DON'T KNOW HOW APPLICABLE THIS WILL BE. IT COUNTERACTS SOME OF THE DOMINANT NARRATIVES WE HAVE HAD THE LAST COUPLE OF MONTHS THAT HAS DRIVEN A LOT OF THE CONCENTRATION. JONATHAN: LET'S GET AN UPDATE ON STORIES ELSEWHERE. ARE THERE ANY STORIES
ELSEWHERE? THANK YOU DANI BURGER. DANI: FUNNY YOU SHOULD SAY THAT, I WANT TO GIVE YOU A ROUNDUP OF THE DEEP SELLOFF YOU ARE SEEING. DEEPSEEK DRIVING A GLOBAL TECH SELLOFF. NVIDIA DOWN 11.3%. ITS NEW MODEL DEMONSTRATING PERFORMANCE SIMILAR TO THE WORLD'S TOP CHATBOT WITHOUT THE HIGH PRICE TAG. CHALLENGING THE NOTION THAT CHINA'S AI TECH IS BEHIND THE U.S. AT&T MEETING FOURTH-QUARTER EARNINGS EXPECTATIONS.
ONLY UP ABOUT 1% THANKS TO AN INCREASED MOBILE CUSTOMER AND FIBER-BASED INTERNET SUBSCRIBERS. SEASONAL PROMOTIONS AND BUNDLE PRODUCTS DROVE THE RESULTS. REVENUE JUMPED 1% YEAR-OVER-YEAR. THE COMMUNICATIONS GIANT CONFIRMED 82,000 NEW SUBSCRIBERS. ELSEWHERE, ISRAEL AND LEBANON AGREED TO EXTEND THEIR CEASE-FIRE THROUGH FEBRUARY 18 TO GIVE ISRAELI TROOPS MORE TIME TO WITHDRAW.
THE DEAL BETWEEN ISRAEL AND HAMAS HOLDS AFTER A DISPUTE WITH HOSTAGES WAS RESOLVED. THE RELEASE OF MORE HOSTAGES ARE SET TO BEGIN. THAT IS YOUR BRIEF. JONATHAN: THANKS FOR THIS MORNING. MORE IN ABOUT 30 MINUTES TIME. UP NEXT, HENRIETTA TREYZ BREAKING DOWN THESE BIG MOVES AND WHAT IT COULD MEAN, THAT CONVERSATION JUST AROUND THE CORNER, FROM NEW YORK CITY, THIS IS BLOOMBERG.
♪ JONATHAN: EQUITY FUTURES DOWN ACROSS THE BOARD ON THE S&P, NEGATIVE BY 2.3%. LOOK AT THAT NUMBER, WE WERE DOWN SOMETHING LIKE 5% A COUPLE HOURS AGO. PLENTY OF MESSY NAMES INCLUDING NVIDIA DOWN BY DOUBLE DIGITS THROUGH MOST OF THIS MORNING. NVIDIA DOWN BY 12% AT THE MOMENT.
THE BEARS HAVE MISSED THE HISTORIC RUNNING IN TECH STOCKS THE LAST TWO YEARS, CONSTANTLY WAITING FOR THE EVENT TO END THE AI REVOLUTION TRADE. TODAY IS NO DIFFERENT. THESE ARE JUST THE OPPORTUNITIES TO OWN NVIDIA, MICROSOFT, ALPHABET, AMAZON AND THE BROADER TECH ECOSYSTEM. LISA: THIS IS NOT NECESSARILY A CHALLENGE TO THE AI REVOLUTION, WHETHER WE ARE MOVING FROM THE CHIPS TO THE APPLICATION.
ANNMARIE: NO U.S. GLOBAL COMPANY WILL USE CHINESE DEEPSEEK TO LAUNCH INFRASTRUCTURE. IS IT EVEN REAL? DO YOU WANT TO RELY SOLELY ON THIS CHINESE STARTUP WHEN THERE IS A TON OF QUESTIONS ABOUT EVERYTHING COMING OUT OF CHINA ? JONATHAN: CHINESE STARTUP DEEPSEEK RAISING QUESTIONS OVER AMERICA'S TECH DOMINANCE.
LOOKING BACK A WEEK AGO, LOOKING OUT A WEEK, HERE WE ARE. THIS ONE HAS REALLY SPOOKED EQUITY MARKETS WORLDWIDE. I EXPECT IT MIGHT'VE SPOOKED SOME PEOPLE IN WASHINGTON AS WELL, WHAT ARE YOU HEARING? HENRIETTA: ALL EYES ARE REALLY ON THE ATTENTION TO THE PHASE ONE TRADE AGREEMENT THAT WAS REACHED UNDER TRUMP'S FIRST TERM IN FEBRUARY, 20 20 AND HAD MOSTLY AN EMPHASIS ON AGRICULTURE PURCHASES. ALL OF THIS TECH STUFF, ALL OF
THE COMPONENTS WE ARE TALKING ABOUT NOW INCLUDING STATE SUBSIDIZATION IS SOMETHING THAT IS NOT INCLUDED IN THE PHASE ONE DEAL. THE FIRST ISSUE WHEN I THINK OF D.C. AND HOW THEY ARE PREPARED TO RESPOND SINCE THE SENATE IS DEALING WITH NOMINATION AND THE HOUSES ON RECESS, WHAT WILL HAPPEN FROM THE ADMINISTRATION'S PERSPECTIVE? THEY ARE REENGAGE IN ON THE PHASE ONE DEAL, THIS WILL BOLSTER THEIR RESOLVE AS SOON AS -- ANNMARIE: WHAT OPTIONS DO THEY HAVE IN THE WHITE HOUSE WHEN THEY WANT TO COMBAT SOMETHING LIKE DEEPSEEK? HENRIETTA: OBVIOUSLY WE HAVE THAT ONE EXAMPLE IN THE PIPELINE, IF YOU WANT MASSIVE SUBSIDIZATION ON THE CHIPS OR REDUCTION IN CLEAN ENERGY, THE MANUFACTURING PLANTS IN THE UNITED STATES YOU REALLY NEED AN ACT OF CONGRESS. WE ARE MONTHS AWAY FROM THAT. THE BEST THE ADMINISTRATION COULD DO CONTINUES TO BE ON THE RESTRICTIVE SIDE.
THINGS THAT WE HAVE SEEN THROUGHOUT THE BIDEN ADMINISTRATION AND WILL CONTINUE UNDER TRUMP 2.0. ANNMARIE: IF THIS IS REAL, IS AN EXAMPLE THAT EXPORT CONTROLS DON'T WORK? HENRIETTA: THE FACT THAT IT IS SO MUCH CHEAPER, THIS HAS TO BE A CORE CONCERN OF NOT JUST THE TRUMP ADMINISTRATION BUT THE WHOLE TECH UNIVERSE THAT HAS MOVED INTO THE WEST WING. THOSE ARE DEFINITELY AREAS WHERE YOU'D EXPECT TO SEE THEM REALLY GET UP IDEAS AND COME UNDER PRESSURE FOR PRESIDENT TRUMP TO COME UP WITH IDEAS TO ADVANCE THIS. LISA:
IF YOU WANT AN OPEN SOURCE, YOU ALSO WANT TO BE IMPORTING TALENT WHO HAS EXPERTISE IN SPECIFIC FIELDS RELATED TO LARGE LANGUAGE MODELS, ARTIFICIAL INTELLIGENCE. AS WE HEAR ABOUT ALL OF THE DEPORTATIONS, THE ROUNDUPS, HOW MUCH IS THE DISCUSSION ABOUT REFORM AND POTENTIALLY AMENDING SOME OF THE H1B VISAS SURROUNDING THE U.S. WORKFORCE? HENRIETTA: IT IS AN OPEN WOUND IN REPUBLICAN CIRCLES. ONE WING WANTS TO RAISE VISA FEES, MAKE IT MORE EXPENSIVE FOR MIGRANTS TO COME TO THE UNITED STATES, FOR CORPORATIONS TO HIRE APPLICANTS, TO RESTRICT THE NUMBER OF H1B VISAS DULLED OUT ACROSS THE PHARMACEUTICAL, BANKING, TECHNOLOGY SECTORS. YOU HAVE ANOTHER GROUP THAT WANTS TO EXPAND THIS ACCESS. THAT IMMIGRATION FIGHT IS ONE
THAT WE ARE SEEING PLAY OUT IN THIS BROADER CONVERSATION ABOUT RECONCILIATION. REPUBLICANS HAVE A CHANCE TO PASS LEGISLATION THIS YEAR. YOU WILL NOT SEE LEGISLATION PASSED BECAUSE WE WILL BE DEEP IN THE PRIMARY SEASON FOR THE GENERAL ELECTION OF 2026. THEY ARE MEETING THIS WEEK TO COME TO ANY KIND OF CONSENSUS THEY CAN.
THE NUMBER ONE TAKE AWAY I HAVE IS THEY NEED MONEY. THEREFORE INCREASED COSTS OF BRINGING IN HIGH SKILLED WORKERS IS ALMOST GUARANTEED TO BE PART OF THE FIRST RECONCILIATION BILL OR THE ONLY RECONCILIATION BILL. LISA: THERE ARE DIFFERENT CAMPS WITHIN THE TRUMP ADMINISTRATION, SOME OF THE BIG TECH OLIGARCHS SOME PEOPLE TALK ABOUT. YOU HAVE SOME OF THE MORE POPULOUS MEMBERS ON THE OTHER.
YOU HAVE A SENSE OF WHO IS WINNING OUT SO FAR? HENRIETTA: THE DEFICIT HAWKS ARE THE ONES WINNING OUT. I THINK IT'S A MISTAKE TO THINK ABOUT THIS IN TERMS OF WHO IN THE WHITE HOUSE IS WINNING. YOUR REAL PROBLEM IS THE HOUSE REPUBLICAN CONGRESS WHERE YOU HAVE POCKETS OF OPPOSITION TO EVERYTHING BEING PROPOSED. THIS GRAND THINKING ABOUT WHO WILL WIN THE WHITE HOUSE, WE HAVE 18 MEMBERS OF THE CAUCUS WHO WON'T VOTE FOR ANYTHING WHO WON'T HIKE BY A CERTAIN AMOUNT. YOU HAVE 30 MEMBERS WHO SUPPORT ALL OF THE CLEAN ENERGY TAX PREFERENCES IN THE INFLATION REDUCTION ACT. YOU HAVE OTHER MEMBERS WHO WANT
TO EXPAND THE CHILD TAX CREDIT. THESE SORT OF HIGH-END CONVERSATIONS ABOUT WHAT IS THE FUTURE OF THE PARTY WILL GET LOST THE SECOND WE START A NEW TAX BILL STARTING REALLY THIS WEEK AS THEY TRY TO COME UP WITH WHAT THE BUDGET RESOLUTION WILL LOOK LIKE. JONATHAN: NOTHING EASY ABOUT ANY OF THIS. APPRECIATE YOUR TIME.
HENRIETTA TREYZ THERE. ALREADY CAUSING SOME PROBLEMS, RIGHT? ANNMARIE: ABSOLUTELY. THEY HAVE ALL OF THE LEVERAGE. IF YOU DON'T HAVE A RAISE OF THE CAP AND TCJ GOES AWAY IT BECOMES A LIMITED. EVERY SINGLE REPRESENTATIVE HAS BECOME ACHING OR QUEEN. THEY COULD MAKE ANY ONE ISSUE YOU OR DIED. REPUBLICANS IN THE HOUSE HAVE
ONE OF THE SLIMMEST MAJORITIES THEY HAVE EVER DEALT WITH. THEY ARE NOT IN AGREEMENT ON A VAST MAJORITY OF ISSUES. JONATHAN: EQUITY FUTURES DOWN ACROSS THE BOARD. NEGATIVE BY 2.3%. LISA: HOW DO THEY TALK ABOUT CHANGES IN AIN HOW TO SUPPORT THAT? ANNMARIE: THEY DON'T. LISA: THAT IS PART OF THE ISSUE. JONATHAN: JONATHAN: THIS PROBABLY WAS OF THE OPERA PERFORMANCE YOU WERE LOOKING FOR, CERTAINLY NOT LOOKING LIKE THIS, BUT THE MAJOR TECH NAMES GETTING HAMMERED.
THE NASDAQ IS LOWER BY 3.8%. AS LOW AS -5% EARLY ON IN THE SESSION. LET'S CROSS OVER TO MANUS CRANNY. MANUS: NASDAQ WAS DOWN 5% AT 6:00.
WHAT HAS DEEPSEEK DONE? CHIPPED AWAY AT THE PERCEPTION OF A MOAT OF NVIDIA. YOU ARE LOOKING AT SOMEWHERE IN THE REGION OF $380 BILLION OF WH MARKET CAPITAL WIPED OUT. IT IS PERVASIVE, NOT JUST IN THE CHIPS THAT YOU USE, ENERGY.
LET'S JUST TAKE IT FORWARD AND LOOK AT HOW THAT IS PERMEATING. META DOUBLED DOWN, $65 BILLION IN TERMS OF. THEY HAVE SET UP FOUR MORE ROOMS TO UNDERSTAND WHAT DEEPSEEK IS DOING, UNDERSTANDING HOW THIS COMPANY IS PERFORMING LOWER-COST TRAINING. IT IS ABOUT THEIR ASSISTANT, WHAT DOES IT MEAN FOR THAT? MICROSOFT COMES IN DOWN 6%. AGAIN, THEY PUT 3 BILLION INTO OPENAI. NO ONE IS SAYING THAT IS A
SQUANDERING WASTE OF MONEY BUT THE NUMBERS ARE SIMPLE. IF WE CAN TRUST THESE NUMBERS, IS THIS REAL? LOTS OF QUESTIONS WE CAN ASK AROUND THAT, BUT RIGHT NOW YOU ARE QUESTIONING THAT 3 BILLION INVESTMENT INTO OPENAI. JONATHAN: THAT STOCK GETS HAMMERED. I THINK META HAS TO DROP MORE THAN 3% BEFORE MARK ZUCKERBERG PUTS ON A SUIT. LISA: HE NOW HAS HIS NECKLACE BRAND,
WHICH WILL CARRY HIM A LONG WAY BEFORE THAT. JONATHAN: AMERICAN TECH EXCEPTIONALISM PUT TO THE TEST AS DEEPSEEK REYNOLDS THE MARKET. THE NASDAQ DOWN BY 3.9%. THE TECH STOCKS ON THE STOXX 600 IN EUROPE GETTING HAMMERED AS WELL. ASML THE BIG VICTIM THERE. ANNMARIE: THIS IS PUTTING AN ABSOLUTE RANCH IN THE SUPPLY CHAI
2025-01-30 09:51
