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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Day Baker a podcast. Give morning.

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Speaker 2: It's Wednesday, the fourth of February. I'm Caroline Hepkitt in London.

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Speaker 1: And I'm Stephen Carolin Brussels. Coming up today. Traders dump

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Speaker 1: software stocks as anthropics new AI tool sparks a two

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Speaker 1: hundred and eighty five billion dollars sell off.

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Speaker 2: Prominent investor Michael Barry warns of a Bitcoin death spiral

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Speaker 2: as almost half a trillion dollars is wiped off digital

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Speaker 2: assets in just days plus.

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Speaker 1: Seeking a critical deal. Why despite growing tensions, the EU

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Speaker 1: is still preparing to offer the US a rare Earth partnership.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: Traders have dumped stocks from across the software, financial services,

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Speaker 1: and asset management sectors after a new AI automation tool

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Speaker 1: from Anthropic sparked a massive sell off. The latest release

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Speaker 1: is super Charge, disruption fears that have been simmering across

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Speaker 1: the software industry for months. Jeffrey Favuza, who works on

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Speaker 1: the equity trading desk at Jeffries, summed up the two

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Speaker 1: hundred and eighty five billion dollar route as an apocalypse

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Speaker 1: for software as a service stocks. He added that trading

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Speaker 1: is very much get me out styles selling Man Deep,

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Speaker 1: saying Bloomberg Intelligence's senior global head of Technology Research isn't

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Speaker 1: quite so severe in his assessment right now.

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Speaker 3: What we're seeing is, you know, the power of these large,

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Speaker 3: angrid models in coming up with a new interface, a

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Speaker 3: chat part or some sort of a simple interface where

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Speaker 3: you can throw in data, you can automate, you know,

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Speaker 3: steps off your workflow. But generalizing that everything you know

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Speaker 3: will be fully automated is a stretch.

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Speaker 1: Man Deep speaking there. As software stocks slid from India

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Speaker 1: to Japan following similar declines among their US and European peers.

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Speaker 2: Almost half a trillion dollars has been wiped off cryptocurrencies

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Speaker 2: in less than a week. Is the sell off accelerated,

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Speaker 2: Bitcoin dropped as much as seven percent, falling to just

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Speaker 2: under seventy three thousand dollars on Tuesday, its lowest level

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Speaker 2: since early November. Famed big short investor Michael Burrie is

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Speaker 2: now warning that the plunge could deepen into a self

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Speaker 2: reinforcing death spiral, in his words, inflicting lasting damage on

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Speaker 2: companies that have spent the past year stockpiling the token.

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Speaker 1: The European Union is preparing to pitch the United States

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Speaker 1: on a critical mineral's partnership to curb the influence of China.

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Speaker 1: Bloombergunderstands the memorandumum understanding will look at several ways to

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Speaker 1: cut dependencies through joint projects and export restrictions. Bloomberg Freddie

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Speaker 1: Filstone has more.

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Speaker 4: Key pillars of the EU proposal will look at price

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Speaker 4: support mechanisms and plans to jointly source the minerals which

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Speaker 4: are crucial for modern technology. It also recommends ways to

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Speaker 4: ship yield both markets from an oversupply of outside minerals,

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Speaker 4: and suggests that two sides build supply chains with each other.

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Speaker 2: Crucially, the EU.

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Speaker 4: Plan also insists both sides respect each other's territorial integrity

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Speaker 4: following US threats to seize the Danish territory of Greenland.

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Speaker 4: In London, Freddie Foulston Bloomberg Radio.

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Speaker 2: London's Metropolitan Police have started a criminal probe into politician

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Speaker 2: Peter Mandelssohn over his ties to Jeffrey Epstein. Authorities are

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Speaker 2: investigating the former minister over alleged misconduct in public office.

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Speaker 2: The news follows Mandelson's resignation from the House of Lords

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Speaker 2: after the Prime Minister, Kirs Starmer called his actions disgusting.

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Speaker 2: But the leader of the opposition can be bade not

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Speaker 2: questioned Mandelssohn's previous appointment as the UK ambassador to the

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Speaker 2: United States.

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Speaker 5: I think that the Prime Minister has to take full responsibility,

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Speaker 5: but there are a lot of questions that his chief

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Speaker 5: of staff needs to answer.

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Speaker 6: Who knew what when?

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Speaker 5: Why did the vetting go wrong? Why did they skip

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Speaker 5: over lots of better qualified people and allow our country

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Speaker 5: to be embarrassed in this way?

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Speaker 2: Conservative Party leader Kemy Baide not speaking the following the

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Speaker 2: release of US Justice Department files which appear to show

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Speaker 2: Mandleson forwarding internal Downing Street emails to Epstein. The European

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Speaker 2: Commission is also assessing whether the former Labor peer breached

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Speaker 2: its code of conduct through contact with Epstein, given that

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Speaker 2: Mandelson was the EU's Trade Commissioner from two thousand and

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Speaker 2: four to two thousand and eight.

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Speaker 1: Novo Nordisk has warned of a steep decline in sales

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Speaker 1: of its drugs, in a move that's shocked investors. The

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Speaker 1: company says it's expects sales will fall by as much

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Speaker 1: as thirteen percent due to lower prices for its blockbuster

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Speaker 1: weight glass medicines driven by a US government push to

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Speaker 1: bring down drogcasts. Novo's American depositary receipts fell by fifteen

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Speaker 1: percent on Tuesday, their biggest decline since July. Novo's CEO,

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Speaker 1: Mike Doustar, spoke to Blue after the announcement.

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Speaker 7: Of course, I can understand that negative numbers are not

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Speaker 7: good news to the market, but once again, this is

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Speaker 7: something that we had anticipated, and the obesity market is

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Speaker 7: quite dynamic, and the reason the range has its numbers

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Speaker 7: on each end is because so many things can happen.

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Speaker 1: Never noticed. CEO Mike dad starts speaking there as The

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Speaker 1: company also announced that it'll start and you share buyback

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Speaker 1: program worth as much as two point four billion dollars.

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Speaker 2: Santander has announced a five billion euro share buy back

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Speaker 2: after confirming it has agreed to buy Webster Financial for

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Speaker 2: twelve billion euros. The deal will give Santander a major

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Speaker 2: presence in the northeast of America. It is one of

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Speaker 2: the largest ever US transactions by a European lender. Spain's

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Speaker 2: biggest bank reporting better than expected fourth quarter net income

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Speaker 2: this morning, coming in at three point seven six billion euros.

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Speaker 2: The results were brought forward after Santander announced that it

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Speaker 2: will pay a total consideration of seventy five dollars per

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Speaker 2: share in cash and stock for Webster.

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Speaker 1: Well, that's bringing some of the other big European bank

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Speaker 1: earnings out. This morning, UBS announcing a share buyback of

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Speaker 1: three billion dollars, with the potential for more, as its

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Speaker 1: fourth quarter net income came in more than two hundred

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Speaker 1: million dollars ahead of expectations. Profits at the Swiss landers

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Speaker 1: Key wealth management units came in at one point two

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Speaker 1: nine billion dollars that was slightly below estimates. In France,

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Speaker 1: Credi Agricol's profits missed expectations in the fourth quarter, coming

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Speaker 1: in at one point zero three billion dollars. That has

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Speaker 1: cost Rows to revamp it's Italian business, and it's set

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Speaker 1: aside more money for souring loans and other risks.

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Speaker 2: President Donald Trump has insisted that the United States and

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Speaker 2: Ivon are maintaining diplomatic talks, even after a drone incident

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Speaker 2: in the Arabian Sea, which has pushed all prices up

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Speaker 2: for a second day. The US says that it shot

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Speaker 2: down a drone in self defense that quote aggressively approached

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Speaker 2: the USS Abraham Lincoln with quote unclear intent. Now following

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Speaker 2: this skirmish, Trump told reporters that the White House that

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Speaker 2: talks with him on are ongoing.

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Speaker 8: They are negotiating. They'd like to do something, and we'll

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Speaker 8: see if something is going to be done. They had

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Speaker 8: a chance to do something a while ago and it

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Speaker 8: didn't work out, and we did midnight Hammer. I don't

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Speaker 8: think they want that happening again, but they would like

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Speaker 8: to negotiate. We are negotiating with them right now.

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Speaker 2: Is President Trump there? As White House Press Secretary Caroline

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Speaker 2: Levitt confirmed US Iran talks involving Midle East Envoy Steve

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Speaker 2: Whitkoff are still scheduled for Friday.

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Speaker 1: And those are our top stories. In a moment, more

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Speaker 1: on the software sell off sparked by fears of an

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Speaker 1: AI revolution, plus why the EU is offering the US

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Speaker 1: a partnership on critical minerals. But another story that I've

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Speaker 1: been looking at this morning, what happens when you're planning

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Speaker 1: the Winter Olympics and there's no snow. Until last month,

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Speaker 1: this was a real fear for the organizers in the

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Speaker 1: Italian Alps. Our reporters Laura Milan and Hally Warren, though,

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Speaker 1: have been looking about how climate changes reshaping winter sports

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Speaker 1: venues around the world. Lots of really interesting facts, quite

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Speaker 1: stark in fact, in this piece. In the seventy years

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Speaker 1: since Cortina held the Winter Games for the first time

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Speaker 1: in nineteen fifty six February, temperatures in the town have

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Speaker 1: warmed by three point six degrees and actually all of

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Speaker 1: the cities that have staged the Winter Game since nineteen

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Speaker 1: fifty have seen heating above the warming average for the

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Speaker 1: whole planet as well. And this is a threat to

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Speaker 1: of course all these ski resorts, but also winter sports

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Speaker 1: in general. And they've been speaking to some of the

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Speaker 1: athletes who are they themselves worried that their careers essentially

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Speaker 1: could end up disappearing because of warming temperatures that make

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Speaker 1: you know, finding snow to ski on more difficult.

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Speaker 2: Yeah, absolutely, I mean that this year's Winter Olympics and

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Speaker 2: then the Paralympics being held in lots of different venues

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Speaker 2: in Italy, they've been worries about whether actually all the

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Speaker 2: infrastructure would be ready in time. Maybe that's abating the

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Speaker 2: UK sending fifty three athletes from Team GB the excitement

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Speaker 2: is only beginning. But yes, a lot of it is

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Speaker 2: going to be generated on made snow rather than natural snow.

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Speaker 2: And that's also one of the kind of green concerns,

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Speaker 2: isn't it that snow making capacity takes up so much water?

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Speaker 1: Yeah, really interesting piece to think about it, as are

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Speaker 1: going to be looking at those incredible images from the

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Speaker 1: Winter Olympics coming up as well. We'll put a link

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Speaker 1: to that story in our podcast show Notes.

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Speaker 2: Now, let's bring you more on the massive sell off

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Speaker 2: of software shares, wiping some two hundred and eighty five

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Speaker 2: billion dollars off the valley of tech firms and their backers.

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Speaker 2: The fears were sparked by the unveiling of a new

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Speaker 2: AI tool by Anthropic for legal work. Bloomberg Tech. You

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Speaker 2: of anchor Tom McKenzie joins us now for more. Good morning, Tom.

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Speaker 2: What is this new tool and why is it cause well,

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Speaker 2: such panic really amongst investors.

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Speaker 6: Yeah, I think what we're seeing is reminiscent the Deep

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Speaker 6: Seek moment of almost a year ago, in a smaller impact,

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Speaker 6: but still to your point, two hundred and eighty five

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Speaker 6: billion dollars wiped off markets and it's not just legal

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Speaker 6: firms and financial services, but also asset managers as well.

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Speaker 6: What this is It was simply a plug in launched

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Speaker 6: by Bianthropic, who of course have built this clawed cowork

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Speaker 6: which came out in JANUARYE was very well received by

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Speaker 6: the industry. By the AI industry, Anthropic has and is

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Speaker 6: the leader in terms of enterprise AI and open AI

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Speaker 6: as the leader when it comes to consumer AI. So

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Speaker 6: Anthropic has that enterprise piece. They came out with this

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Speaker 6: plug in that essentially allows legal teams in house legal

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Speaker 6: teams to do things like contract reviews, but automate it,

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Speaker 6: so you automate contract reviews, you automate compliance legal briefings

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Speaker 6: as well. Now it does say at the end of

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Speaker 6: the description of this plug in that you do need

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Speaker 6: to have an attorney, so a lawyer in the loop

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Speaker 6: essentially to check this work, and it makes that caveat.

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Speaker 6: But it was the launch of this plug in that

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Speaker 6: led to a lot of investors saying, hang on a second,

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Speaker 6: what happens all these legal firms, what happens all these

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Speaker 6: financial services firms, What happens to broader software? If this

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Speaker 6: is just one example of how these large language models

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Speaker 6: are pushing further up into these different verticals and that

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Speaker 6: seems to have been and what was this significant catalyst

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Speaker 6: in terms of the cell of that we saw yesterday

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Speaker 6: and continue to see in the Asian session today.

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Speaker 1: And you know, this is not the first time that

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Speaker 1: we've had, as you said, a release fromanthrofic Cloud Cowork

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Speaker 1: in January boosting investor Jeter is how are the companies

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Speaker 1: seen as being most affected responding to AI?

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Speaker 6: Yeah, and I can run through some of the companies

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Speaker 6: that saw that their shares hammered yesterday towards the end

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Speaker 6: of the session. Yes, study the London stock has changed,

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Speaker 6: Trumps and Reuters, you had big asset managers and again

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Speaker 6: you've seen some big information technology companies in India really

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Speaker 6: under pressure right now. Interestingly, the hardware part of the

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Speaker 6: AI story, so the chip makers in Asia are performing

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Speaker 6: relatively well. The question, I think Stephen is going to

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Speaker 6: be to what extent this is throwing the baby out

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Speaker 6: with the bathwater. Some of these software companies, some of

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Speaker 6: these SaaS companies, and this has been called a SaaS

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Speaker 6: apocalypse by some analysts out there. Some will be able

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Speaker 6: to integrate AI and very successfully deliver their products at

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Speaker 6: are cheaper cost and more efficiently. That is a prospect

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Speaker 6: for some of these software companies. The other prospect, of course,

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Speaker 6: is that they will just have their work cannibalize, that

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Speaker 6: there will be more pressure in terms of pricing, that

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Speaker 6: the competition is just going to increase that much more.

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Speaker 6: But for now, it seems investors is kind of selling

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Speaker 6: now and they'll last questions later. But there is a

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Speaker 6: view from some analysts out there that this is also

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Speaker 6: an opportunity to buy some of these software names on

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Speaker 6: the cheap, given that arguably not on all of them

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Speaker 6: are going to be wiped out by this forum, and

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Speaker 6: someone will be able to adapt. It's just for many

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Speaker 6: investors difficult to know which ones are going to win

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Speaker 6: and which ones are going to lose at this point.

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Speaker 2: Yeah, it's so interesting, isn't it. Is it a sort

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Speaker 2: of moment of realization or not. Tom, Thank you so

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Speaker 2: much for being with us, Bloomberg Tech Europe anchor Tom McKenzie,

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Speaker 2: Stay with us. More from Bloomberg DAYBA Cube coming.

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Speaker 1: Up after this, that the European Union is planning to

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Speaker 1: pitch a critical minerals partnership to the United States to

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Speaker 1: curb China's influence. This is Europe seeks to shape the

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Speaker 1: Trump administration's pushed to strike global agreements, with meetings being

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Speaker 1: held later today. Our chief correspondent Oliver Crook is with

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Speaker 1: me now for more over. What do we know about

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Speaker 1: this EU plan?

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Speaker 9: Yeah, well, thinking about sort of the receding ground, it

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Speaker 9: seems the receding common ground between the United States and Europe.

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Speaker 9: This is one where the Europeans really hope to capitalize

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Speaker 9: where they see that the European and American interest on

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Speaker 9: critical ra materials are aligned, and they'll take advantage of

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Speaker 9: this meeting that's being held in Washington, d C. With

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Speaker 9: a number of ministers that are coming down today, and

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Speaker 9: we understand we'll get a sort of an idea of

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Speaker 9: what they're going to be talking about, which will be

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Speaker 9: about critical raw materials, trying to secure it and trying

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Speaker 9: to basically trying to move away from the dependence on China.

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Speaker 9: Of course, that was one of the big levers that

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Speaker 9: Chinese used in the trade negotiations with the United States,

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Speaker 9: putting the squeeze on those rare earth magnets that we saw,

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Speaker 9: and of course the Europeans were kind of on for

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Speaker 9: the ride on that Passengers for the ride they didn't

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Speaker 9: even really seem to have any sort of effective negotiations

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Speaker 9: with the Chinese themselves. They were just getting kind of

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Speaker 9: the residue of kind of whatever the deal with the

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Speaker 9: United States was. So this idea here and what we

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Speaker 9: understand from what would be in the deal, and this

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Speaker 9: is what the Europeans are presenting, is sort of a

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Speaker 9: way to stockpile critical minerals the United States, as we

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Speaker 9: know on Monday launch date sort of twelve billion dollar

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Speaker 9: fund called Project Vault in order to stockpile some of

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Speaker 9: those minerals. Also ways of jointly sourcing minerals together, cooperating

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Speaker 9: to secure supply chains between Europe and the United States,

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Speaker 9: and potentially for the United States and EU to explore

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Speaker 9: joint critical material mineral projects and price supporting mechanisms. Now,

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Speaker 9: the timeline for this, they'd like to get negotiations basically

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Speaker 9: done in the next thirty days, and they'd like to

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Speaker 9: sign a memorandum of understanding for a roadmap within three months.

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Speaker 9: And this is of course super important not just for

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Speaker 9: the United States, but also for the Europeans. When I

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Speaker 9: was speaking to the Ryan Mattel CEO a couple of

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Speaker 9: months ago, this is the biggest defense company in Europe.

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Speaker 9: He says he has a meeting on critical raw materials

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Speaker 9: and their security once a week, every single week, in

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Speaker 9: order to make sure that there is a pipeline to

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Speaker 9: basically stockpile those minerals that you need for basically everything advanced.

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Speaker 2: Well, the big question then, olive, is whether that's going

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Speaker 2: to win favor support, whether there's going to be any

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Speaker 2: interest on the US side, given the tensions that already

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Speaker 2: exist in the transatlantic relationship.

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Speaker 9: Now, absolutely, and there are kind of different ways in

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Speaker 9: which that court of kind of friction can occur. We

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Speaker 9: should say that also notably within these discussions from our

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Speaker 9: reporting that the EU proposal also insists that both sides

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Speaker 9: respect each other's territorial integrity, which sort of is a

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Speaker 9: nod to some of the friction we've had in the

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Speaker 9: last couple of weeks over Greenland. Greenland. Of course, one

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Speaker 9: of the issues there was that there was a lot

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Speaker 9: of critical raw materials that the United States would like

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Speaker 9: to exploit. But I think also basically how you sell

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Speaker 9: this to the United States will be very very important.

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Speaker 9: This can be sold as a sort of broad headline

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Speaker 9: deal where the sort of benefit for the United States

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Speaker 9: is very very clear it has much more likelihood of

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Speaker 9: getting pushed through rather than the sort of complex, opaque

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Speaker 9: multilateral agreement, which of course the Trump administration, as we know,

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Speaker 9: is very sort of allergic to. We should also say

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Speaker 9: that one of the things that the European are trying

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Speaker 9: to pitch here is cooperating on export restrictions applied to

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Speaker 9: third countries, i e. The United States and Europe would

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Speaker 9: be sort of working together. What I think is interesting,

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Speaker 9: and I think what is different today than even two

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Speaker 9: months ago is for the Europeans when you speak to

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Speaker 9: these ministers and policymakers, there was a lot of sort

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Speaker 9: of common ground on this idea of China that if

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Speaker 9: the United States tried to enlist the Europeans to try

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Speaker 9: to have a collective approach on China, they'd be basically

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Speaker 9: pushing on an open door. After what we saw in Greenland,

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Speaker 9: after all of this stuff and all of this sort

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Speaker 9: of trust that has been burned over the last couple

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Speaker 9: of weeks, I think it's going to be more difficult.

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Speaker 9: And that is sort of exemplified right by these trips

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Speaker 9: by Mark Karney to China, by kre Starberg to China,

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Speaker 9: and to sort of hedge against the United States.

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