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

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Speaker 2: This is the Bloomberg DAYBIQ podcast, available every morning on Apple,

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Speaker 2: Spotify or wherever you listen. It's Tuesday, the twenty eighth

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Speaker 2: of January in London. I'm Caroline Hepka and.

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Speaker 3: I'm Stephen Carroll coming up today. Deep Seek drives a

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Speaker 3: deep route. The emergence of the Chinese AI drives high

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Speaker 3: tech stocks to a one trillion dollar loss as experts

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Speaker 3: assess the low cost offering.

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Speaker 2: Donald Trump vows to impose across the board tariffs that

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Speaker 2: are much bigger than two and a half percent.

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Speaker 3: Plus, throwing the kitchen sink at growth. The UK plans

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Speaker 3: to allow firms to invest their pension fund surpluses into

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Speaker 3: their own businesses.

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

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Speaker 3: Sam Altman says deep Seek's AI model is impressive, in

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Speaker 3: Vidio says it's excellent, and US President Donald Trump believes

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Speaker 3: it's a sign that competition from China is growing.

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Speaker 4: The release of deep Seek AI from a Chinese company

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Speaker 4: should be a wake up call for our industries that

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Speaker 4: we need to be laser focused on competing to win.

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Speaker 3: Investors agree with the US President Deepseek's sudden fame is

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Speaker 3: driven a one trillion dollar selloff in global tech stocks,

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Speaker 3: as the Chinese startup has upended the perceived superiority of

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Speaker 3: Silicon Valley's Artificial Intelligence UBS's cohead of Global Asset Allocation,

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Speaker 3: Adrian zurcher It says AI trades are no longer easy money.

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Speaker 5: There will be still massive investments going on, but short term,

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Speaker 5: I think the easy beta trade of the AI is

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Speaker 5: behind us. You probably have to do a bit more

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Speaker 5: at digging. You have to do research. These companies have

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Speaker 5: to deliver on earnings. They have to confirm that they

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Speaker 5: have a plan at least to monetize that, and otherwise

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Speaker 5: we will see that investors which are really piled into

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Speaker 5: these stocks will actually retreat.

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Speaker 3: Adrian Zerzer's comments come as the US tech industry scrambles

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Speaker 3: to understand how deep seek pulled off the feet and

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Speaker 3: whether the company did so as cheaply as it claims.

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Speaker 3: Although unproven, some analysts and experts suspect that the Chinese

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Speaker 3: startup built its chatbot on the back of Western technology,

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Speaker 3: sidestepping the enormous costs of developing large language models.

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Speaker 2: Invest The concern about Deep Seek drove in video to

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Speaker 2: a record stock market drop. Shares in the AI chip

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Speaker 2: maker tumbled seventeen percent on Monday, erasing five hundred and

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Speaker 2: eighty nine billion dollars from the company's market cap. The

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Speaker 2: drop also saw Nvidia CEO Jensen Ung's fortune fall by

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Speaker 2: more than twenty billion dollars. That says the Bloomberg Billionaires

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Speaker 2: Index of the world's five hundred riches people lost to

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Speaker 2: combined one hundred and eight billion dollars in the selloff. Well,

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Speaker 2: Deep Seek has ruled the public markets. Venture capital firms

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Speaker 2: including Battery Ventures Andreson Horowitz and Menlo Ventures are not phase.

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Speaker 2: They're saying that the rise of a formidable Chinese rival

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Speaker 2: could be motivation for US tech companies and lead to

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Speaker 2: faster AI adoption.

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Speaker 3: Deep seeks AI assistant called R one, has upended many

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Speaker 3: of the assumptions inside Silicon Valley about the economics of

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Speaker 3: building AI. Its biggest selling point. The model was developed

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Speaker 3: at a fraction of the cost of competing products from

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Speaker 3: the likes of Open Ai and Meta. Michelle Guide is

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Speaker 3: the CEO of the Croke Institute for Tech Diplomacy at

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Speaker 3: Pardi University.

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Speaker 6: Well, it's not a game changer in the sense that

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Speaker 6: we've known for quite a while that China wants to

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Speaker 6: be the global leader in artificial intelligence. So you've stated

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Speaker 6: it publicly many, many times, and we know that they

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Speaker 6: want to marshal all aspects of their society to do that,

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Speaker 6: So there should be no surprises here. It's a game

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Speaker 6: changer in the sense that all it should do is

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Speaker 6: double down American efforts to move faster, smarter, and maybe

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Speaker 6: more cheaply.

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Speaker 3: Michelle Guida's comments come as demand for Deep Seeks R

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Speaker 3: one was so high on Monday that the company was

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Speaker 3: forced to limit signups to those with mainland Chinese telephone numbers.

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Speaker 3: Like all other Chinese made AI models, Deep Seek self

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Speaker 3: censors on topics deemed politically sensitive in China are one

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Speaker 3: to flex questions about Tianaman Square, president cheating ping, or

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Speaker 3: the possibility of China invading Taiwan.

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Speaker 2: Donald Trump says that he will go even further and

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Speaker 2: enact across the board tariffs much bigger than two and

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Speaker 2: a half percent. The president added that he would hold

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Speaker 2: off on setting the measures for now, which he says

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Speaker 2: will protect the country. He told reporters about the plans

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Speaker 2: on Air Force one whilst flying back from a Florida

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Speaker 2: speech where he also pledged sect to specific levies.

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Speaker 4: In particular, in a very near future, we're going to

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Speaker 4: be placing caraffs on farm production of computer chips, semiconductors,

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Speaker 4: and pharmaceuticals to return production of these essential goods to

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Speaker 4: the United States of America. They left us, and they

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Speaker 4: went to tai and we want them to come back.

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Speaker 2: Donald Trump speaking there at the House Republican Conference at

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Speaker 2: Trump National Doral in Miami. The dollar rose against every

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Speaker 2: major currency following the threats, whilst copper and aluminium both

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Speaker 2: declined on the idea of sectoral tariffs.

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Speaker 3: President's Trump's pick for Treasury Secretary, Scott bess And, has

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Speaker 3: been confirmed, winning a Senate vote sixty eight to twenty nine.

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Speaker 3: The former hedge fund manager secure the backing of all

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Speaker 3: Republican Senators and fifteen Democrats.

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Speaker 7: Mister Besant's candidacy ought to enjoy bi partisan support, and

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Speaker 7: I encourage my colleagues on both sides of the aisle

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Speaker 7: to join with me in confirming his nomination. He is

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Speaker 7: the right person for this job, and I commend President

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Speaker 7: Trump in making such an excellent selection.

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Speaker 3: Republican Senator Mike Crappo there speaking in support of best

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Speaker 3: Ends during the proceedings. He became Trump's fifth cabinet pick

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Speaker 3: to be confirmed in a relatively drama free hearing. According

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Speaker 3: to the Financial Times, Best Centers already backing universal tariffs

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Speaker 3: on US imports starting at two and a half percent.

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Speaker 2: To the UK now, where the government plans to allow

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Speaker 2: companies to invest surpluses from their pension funds into their

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Speaker 2: core business. The proposal is expected to form a major

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Speaker 2: part of Chancellor Rachel Reeves's Growth speech tomorrow. Bloomberg's James

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Speaker 2: Walcock reports there.

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Speaker 8: Are one point one trillion pounds worth of assets in

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Speaker 8: Britain's defined benefit pension system. The scheme is set up

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Speaker 8: to guarantee employees a pre arranged amount when they retire,

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Speaker 8: and many funds have more than they need. The government

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Speaker 8: wants to free up that cash buffer to put at

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Speaker 8: least fifty billion pounds back into capital investment. Ironically, some

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Speaker 8: funds are in the green due to high yields on

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Speaker 8: UK government bonds, and that shows the risk. Many point

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Speaker 8: out just because funds have a surplus today, that doesn't

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Speaker 8: mean it won't become a deficit tomorrow. In London, James

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Speaker 8: Walcock Bloomberg Radio.

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Speaker 3: Those are your top stories on the markets. We are

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Speaker 3: looking at the Nika and Tokyo down by one point

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Speaker 3: three percent. Chinese markets are closed for the New Year holiday,

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Speaker 3: the Hang Seng in Hong Kong by a tenth of

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Speaker 3: one percent. Eurostock's fifty futures just edging slightly higher, but

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Speaker 3: of course markets still coping with that big sell off

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Speaker 3: that we saw in US equities yesterday. The Nasdak finished

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Speaker 3: down by three percent, the S and P five hundred

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Speaker 3: down by one and a half percent. Futures on Wall

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Speaker 3: Street for the moment looking pretty flat, as we're seeing

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Speaker 3: the Bloomberg Dollar Spot index three tenths stronger after those

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Speaker 3: reports about Trump tariffs. The Japanese yen seven tenth weeker

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Speaker 3: at one hundred and fifty five fifty four against the dollar,

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Speaker 3: the euro at one oh four forty two, half a

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Speaker 3: percent weeker. The pound is four tens weeker at one

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Speaker 3: twenty four to fifty two this morning.

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Speaker 2: Well, in a moment, we'll bring you more on how

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Speaker 2: markets are reacting to yesterday's big tech sell off in

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Speaker 2: the US, plus the latest from Donald Trump on his

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Speaker 2: vision for imposing tariffs on all imports into America. But

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Speaker 2: before we get to those big conversations, a story that

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Speaker 2: caught my eye this morning. Ah my, always my favorite

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Speaker 2: part of a morning program. So we're expecting the LVMH

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Speaker 2: jarnings of course after market in Europe, and there's lots

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Speaker 2: of focus on such a big company and such an

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Speaker 2: important kind of luxury name. But there's a deep dive

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Speaker 2: into the difficulties that LVMH's Tiffany's has faced. Obviously, they

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Speaker 2: bought the company four years ago. Its performance does not

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Speaker 2: seem to have stacked up against that of Louis Uito

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Speaker 2: or Dior or Bulgari, and one of our writers has

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Speaker 2: done a deep dive into maybe why that has been.

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Speaker 2: Tiffany's has really had an issue with staff attention, with morale,

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Speaker 2: with an unpredictable bonus system.

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Speaker 3: Well, I didn't realize that the New York store is

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Speaker 3: responsible for ten percent of global revenue, so it's a

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Speaker 3: very important singular location for this brand as well. And

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Speaker 3: one of the things that Jeanett highlights and her reporting

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Speaker 3: is this internal app that was rolled out called Tiffany Joy.

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Speaker 3: It was meant to be for employees to be able

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Speaker 3: to I suppose spread some of the nice parts of

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Speaker 3: their job, couple's getting engaged, things like that, but it

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Speaker 3: actually became more of a chore, and they had dubbed

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Speaker 3: its internally forced joy because everyone felt like they were

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Speaker 3: having to put so much more effort into doing this,

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Speaker 3: and importantly that it was being considered a really important

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Speaker 3: metric by higher up management, perhaps more so than keeping

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Speaker 3: staff on board or boosting sales.

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Speaker 2: Yeah. Absolutely, Look Jeanette Newman reporting the details around the CEO,

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Speaker 2: Anthony Ladreux and the America's head over at Tiffany's, Chrisopher Kilanotis,

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Speaker 2: and sort of why perhaps they stumbled a little bit. Yeah,

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Speaker 2: not sure. I can imagine anything more tricky than having

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Speaker 2: to like a post all the time, would be.

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Speaker 3: Forced to anyway, that's social media.

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Speaker 2: Yes, it's not joyful social media.

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Speaker 3: It's tricky to do, but an interesting piece to read

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Speaker 3: ahead of those results to out later today. Let's bring

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Speaker 3: you more though on our top story this morning on

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Speaker 3: that market frenzy over deep Seek sending tip makers shares

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Speaker 3: plunging on Wall Street yesterday and video seeing that largest

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Speaker 3: market route in US stock market history. Our market's life stretts.

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Speaker 3: Mary Nicola joins US. Now for more, Mary, good to

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Speaker 3: have you on. Just talk us through the scale of

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Speaker 3: what we saw on markets on the US yesterday. How

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Speaker 3: widespread was the sell off?

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Speaker 1: Yeah, it was such a deep route, especially in tech.

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Speaker 1: So if we look at four of the biggest weights

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Speaker 1: in the Nasdaq one hundred, so that includes Nvidia, Broadcom,

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Speaker 1: If we look at Alphabet and Microsoft, they saw nearly

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Speaker 1: one trillion in market cap lost yesterday. But what we

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Speaker 1: did see is that there seems to be that rotation

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Speaker 1: into other stocks. So if you look at the S

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Speaker 1: and P five hundred equally weighted, that actually rose, even

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Speaker 1: if it was marginal, it still showed that it was rising.

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Speaker 1: So the sell off was very much concentrated in tech,

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Speaker 1: but it also emphasizes the concentration risk out there.

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Speaker 9: Yeah.

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Speaker 2: Indeed, so is it an indication of how stretched the

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Speaker 2: valuations are? I mean, how should we kind of characterize

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Speaker 2: the market moves? It does seem to have come sort

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Speaker 2: of such a shock, doesn't it.

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Speaker 1: Well, that's a thing. So this is it's deep, seek

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Speaker 1: is really shaking things up. It's calling into question how

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Speaker 1: much these companies are spending on capex, how efficient they

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Speaker 1: really are. And USAI, especially if you're looking at Nvidia

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Speaker 1: really dominated its global peers and now earnings this week

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Speaker 1: it's all about earnings and now they have to justify

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Speaker 1: what's these valuations. So we don't have Nvidia necessarily this week,

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Speaker 1: but there's there. We have other of the megatech companies

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Speaker 1: coming up, and now there's just little room on their

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Speaker 1: part for errors or else they risk an even deeper route.

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Speaker 1: So these valuations have long been frothy, that's nothing new

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Speaker 1: to us. But at least earnings had justified it, so

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Speaker 1: it was okay. And this is really basically a wake

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Speaker 1: up call for investors to broaden out and reduce the

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Speaker 1: concentration risk in this space.

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Speaker 3: Mary, how is the story playing out in Asian markets today?

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Speaker 3: Does it look like we could be over the worst

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Speaker 3: or how are you reading the signs?

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Speaker 1: So the good news for Asia, especially for the likes

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Speaker 1: of Korea and Taiwan, who probably would have suffered the

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Speaker 1: most on the back of it, is that they've actually

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Speaker 1: been closed for the lunar New Year holidays, so they've

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Speaker 1: been spared. But if you look at ai related stocks

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Speaker 1: in Japan like Tokyo Electron, Disco and Ventus, they've taken

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Speaker 1: significant hits and then you look at the other side

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Speaker 1: of the story, like the Chinese tech related stocks, especially

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Speaker 1: the hang saying they managed to eke out gains even

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Speaker 1: on half a day of trading because the Chinese markets

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Speaker 1: have been closed, so it's hard to take really a

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Speaker 1: queue on sentiment from Asia since most of it's closed,

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Speaker 1: but probably if Korea and Taiwan were open, they would

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Speaker 1: take a brunt of the hit. But overall this is

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Speaker 1: going to be positive for China related tech companies. So

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Speaker 1: if you have the likes of bay Do Tencent, they

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Speaker 1: saw the biggest gains today and for China tech more broadly,

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Speaker 1: it doesn't discount their capabilities and there's still could be

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Speaker 1: some surprises ahead and that should help them.

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Speaker 2: Yeah, it's going to be a fascinating moment. Thank you

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Speaker 2: so much for being with us on Market's Live strategist

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Speaker 2: Mary Nicola.

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Speaker 3: Well, that's where on markets we've seen the dollar strength

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Speaker 3: and after President Trump said that he wants to enact

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Speaker 3: across the board tariffs that are much bigger than two

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Speaker 3: and a half percent. That's after his newly current confirmed

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Speaker 3: Treasury Secretary Scott bess End was reported to a favored

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Speaker 3: imposing an import tax at that level. Let's bring in

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Speaker 3: our senior editor, Bill Ferries for more on the story. Bill,

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Speaker 3: what exactly then did we hear from Donald Trump? And

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Speaker 3: I suppose how does it fit into the picture we

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Speaker 3: already have of what the US president wants in terms

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Speaker 3: of tariffs.

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Speaker 9: Well, I do think, you know, it dispels this idea

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Speaker 9: that you know, erupted maybe late last week that the

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Speaker 9: President was backing off a little bit on his pledge

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Speaker 9: to have tariffs. You know, of course, he had that

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Speaker 9: flare up with Columbia where he said he might have

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Speaker 9: tariffs of up to fifty percent at some point on Columbia,

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Speaker 9: But it was really those broad tariffs and the China

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Speaker 9: tariffs that people have been really waiting for. This report

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Speaker 9: came out from the FT today saying that Treasury Secretary

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Speaker 9: Scott bess And has been looking at implementing an initial

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Speaker 9: two point five percent tariff basically across the board. The

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Speaker 9: President coming out and saying no, no, no, I want

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Speaker 9: to rate. His quote was much bigger than two point

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Speaker 9: five percent. So we don't know where that where that

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Speaker 9: will eventually land us, but it does show the president

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Speaker 9: is still focused on this issue. He has talked about

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Speaker 9: instituting some tariffs on Canada and Mexico starting February first.

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Speaker 9: So I think it's very much in play, and that's

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Speaker 9: kind of a shot across about people in the markets

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Speaker 9: who thought maybe we were past the worst of it

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Speaker 9: last week.

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Speaker 2: Okay, in terms of you know, whether that's a blow

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Speaker 2: to the newly confirmed Treasury secretary or not, that's sort

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Speaker 2: of quite important in terms of how that relationship is

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Speaker 2: going to work. I mean, he's surely not going to

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Speaker 2: go up against President Trump. But then also in terms

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Speaker 2: of pacing and timing, you know, we saw President Trump

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Speaker 2: you know, using tarifs and got a quick change in

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Speaker 2: policy from Columbia within hours in terms of the pacing

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Speaker 2: and the timing of these tariffs.

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Speaker 9: Yeah, so during you know, during that transition period, we

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Speaker 9: had reported that one of the things that Bessentt and

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Speaker 9: some of the other top economic advisors of Trump we're

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Speaker 9: talking about was this phased in gradually increasing tariff. So

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Speaker 9: I think this two point five percent idea would fit

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Speaker 9: in well with that. You start off at that level

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Speaker 9: and then every month or every quarter or whatever you decide,

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Speaker 9: you increase it a little bit. You know, whether it's

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Speaker 9: a whether it's kind of a rebuke of Bessent. I

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Speaker 9: think in some ways Trump did his Treasury secretary of

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Speaker 9: favor because he also said basically something along the lines

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Speaker 9: of I want it bigger and Scott wants it to

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Speaker 9: be higher than that too. He could have taken a

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Speaker 9: much kind of more harsh tone against Bessent if he

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Speaker 9: really wanted to rebuke him. I think he kind of

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Speaker 9: gave him the out of, you know, Scott, why don't

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Speaker 9: you go back to the drawing board and come up

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Speaker 9: with a plan b now. So I don't think. I

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Speaker 9: don't think, given it's basically day one for Best and

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Speaker 9: I don't think he'll take that as a rebuke, but

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Speaker 9: as maybe constructive criticism.

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