>> this is bloomberg "daybreak: europe" i'm tom mackenzie in london these are the stories that set your agenda. concerns about overvalued ai stretch into a second day with asian tech stocks extending the wall street selloff triggered by

china's progress with technology. nvidia edges up post-market after losing 589 billion dollars in value. the biggest one-day drop in u.s. market history. the chipmaker says deepseek's advances will keep demand strong for its chips. donald trump calls deepseek's release a wake-up call for u.s. firms to stay competitive. on tariffs the president says he wants across-the-board levies quote much bigger than 2.5%. tom: good morning, happy tuesday. where do markets go after the rout of yesterday? the nasdaq 100 following 3%. the s&p lower about 1.5%. and that historic drop for

nvidia, losing around $600 billion of market cap, down 16-17% by the end of the close and the ripple across across the mag seven, on a week when you get four of the seven reporting earnings. the other factor to weigh up for investors is the terror threat being put back on the table by president trump. he wants them above 2.5% in terms of that across the board tariff. we will see how that unfolds with his treasury secretary in place. european futures unchanged, looking for more clarity on how this ai story involves. ftse 100 futures up 0.2 percent, s&p futures after the drop yesterday flat, nasdaq futures pointing up 0.2% after dropping more than 3% yesterday. let's have a lacrosse asset. we will remind ourselves that the fed is making that decision tomorrow. 4.55 on the benchmark 10-year, yields are up two basis points. euro-dollar at 1.04. the story of dollar strength is

back today, that's weighing on a number of currency pairs including big euro and the pound, the euro down 0.5% weaker in the session on strong u.s. dollar, and that ties largely to the tariff story that comes through from trump and his treasury secretary. brent at $77.47, and copper softer at 0.6%, trump calling out the metals sector for an area where tariffs could be imposed along with chips and pharmaceuticals paid less cross over to asia where avril hong is standing by. avril: it's that continued reassessment of the ai investment case. the deepseek fallout continues. asia getting hit hard, japan the drag today, an extension of yesterday's losses, the nikkei today declining the most in two weeks. many major markets in asia are shot. hong kong on a half day.

this is the picture going into the long weekend. chinese tech shares are doing well, and if they continue outperformance by the time these big u.s. tech names are done with earnings this week, and after the long lunar new year holiday, our mliv colleagues have flagged maybe it is time for a new narrative. some of these chinese tech names are doing well today because of this idea they could benefit from cheaper ai costs thanks to deepseek. as we look through japan, the deep losses today were no thanks to the chip shares, advantest, two day losses 18%, they supply testers to nvidia its worst rout since august, softbank under pressure. the stocks rallied hard last week thanks to softbank saying it was participating in the u.s. ai infrastructure fund. just to show you how the entire ai supply chain is getting forced into a re-think, this week furukawa, this a data

center and cable maker seeing steep losses, tep also under pressure today. really that re-think well underway in the asia-pacific. tom: avril in singapore thank you indeed. with a check on the infrastructure around the energy piece in terms of the pressure. does software gain on the back of developments from deepseek? potentially longer-term question. to details, chinese start up has upended global markets, and we saw that in pronounced fashion yesterday as it's cost-efficient ai model is likened to openai in capabilities. the release of r1 has sent shockwaves through the u.s. tech industry leading to reevaluation of the economics of the ai investment boom. let's bring in bloomberg intelligence's robert lea. robert has been following this company about seven months, so

he has been ahead of the curve compared to many. is this the multi trillion dollar question, is this the turning point for the ai sector? could this kill demand ultimately for nvidia's products? >> nothing like a loaded question to start this little section off, thanks for that. is this a valuation correction or does this have more fundamental impact on the outlook for these businesses, nvidia included? i suppose on the latter part, you have heard nvidia's response, and things could go two ways. because with the emergence of lower-cost models from deepseek and the like, it could seed the market. on a positive scenario maybe that helps stimulate demand in the market and could be a positive thing. i'm not one to sit on the fence normally but the debate on that side remains uncertain because

this is a very fast-moving story. equally, there is a negative potential implication where things go the other way. we would generally have to wait and see on that. in terms of valuation, we know these stocks have been priced to perfection, very high expectations have made them vulnerable to negative news like this. within the last four hours, we said this was a real wake-up call not just for investors but people in the industry. you have the likes of president trump commenting on it. i guess ultimately cost reduction is a major driver in technology markets, that is a positive. the key issue for the industry is whether consumers will put their hands in their pockets and start paying for these products. tom: but see if we can get you off the fence for the next question then. was the market reaction yesterday overdone, or is this the biggest challenge that this

sector and story faces? >> there is something referred to as the hype cycle and even if we go back to the internet, what ultimately turned out to be a bubble in the early 2000, metaverse, crypto whatever it may be maybe it goes back to human nature, human psychology. people overestimate in the early stages of an industry. you then get a period of disappointment where expectations are realigned and ultimately, assuming that sector or industry has good fundamental underpinning, we hit steady state and onwards and upwards. it has been a one-way street for ai in terms of newsflow and sentiment the last 18 months. we are finally seeing data points come through that potentially question that narrative. i think the fundamental outlook within ai remains positive but

it is not a one-way street and the biggest challenge these companies face regardless what region of the world they are is monetization. even if you did a straw poll in the studio, how many of us are paying for ai services at the moment? we have all played around with them, looked at the free products, but if you look at the level of monetization coming through from these companies at the moment, given that they are spending tens of billions in capex per quarter, i do not think that monetizing anywhere a fast enough rate. monetization is still the greatest challenge this industry faces in the short to medium-term. tom: the question comes back to return on investment. we will see to what extent executives are drilled on that with the earnings coming through from meta and microsoft this week. thank you for the analysis. we will be discussing the tech rout and more with ark investment ceo cathie wood at

8:30 a.m. u.k. time, stay tuned for that interview. let's stay on deepseek because president trump is also weighed in, speaking at a republican party retreat in florida, take a listen. pres. trump: the release of deepseek ai from the chinese company should be a wake-up call for our industries that we need to be laser focused on competing to win. tom: it's bring in opening trade anchor kriti gupta for reaction. what do you make of the fact that trump called out deepseek in this address? what does it tell us to what extent this is a priority? >> it is a rare moment and unsurprising, rare in that a u.s. president does not comment on things that have crashed the stock market unless the collapse of lehman brothers is one example. it is a rarity for a politician to comment. that in itself is worth noting.

unsurprising he has been warning about this chinese competition narrative on the campaign trail, in his first term as president, and now in his second. what is interesting is he has subscribed to this idea ahead of this selloff that you need a lot of money to make ai actually happened. you need to invest in data centers and talent. you can see he is approaching that with the deals, with up to 500 billion, for $200 billion with softbank trying to broker these deals at enormous scale which underscores the same approach the hyper scalers and when it came ai, the barriers to entry are so high that only those sitting on billions of dollars can make it happen. i think he has been thrown for a loop as well. perhaps one thing he may be able to underscore is that in the following hours since that selloff that has shaken market valuations, you also saw security concerns come up with

deepseek and that is something donald trump has been vocal about when it comes to chinese technology in the states. tom: he does see the world through dollar symbols that is fair to say and the fact that this was cheaper maybe a good thing as well. talking of dollar signs, tariffs, the president said he wants universal tariffs to be much higher than 2.5% in contrast with an earlier report that his newly confirmed treasury secretary is pushing for the smaller number. pres. trump: in the very near future we will be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals to return production of these essential goods to the united states of america. they left us and they went to taiwan which is about 98% of the chip business by the way. and we want them to come back. tom: the main takeaway, correct

me if i'm wrong, tariffs are coming in some form or shape. we don't know exactly where but he is committed to tariffs. >> they are kind of working for him at the moment as a negotiating tactic. the drama over the weekend with colombia was a great example. we are not talking about months or years anymore, a matter of weeks given that he has so much support not only in congress but within his own administration. i thought it was interesting the comments, he is calling out specific sectors, the commodity space he mentioned as well as semiconductors, pharmaceuticals and revisiting the idea of automobiles from canada and mexico. something that actively affects the trading in europe with carmakers here. the problem is the execution of it. he and scott bessent will come across the same difficulties janet yellen and joe biden came across last term which is that every time you put in a tariff, it comes back to haunt the american consumer.

that works now because the american economy is strong. will let happen again in say two years where the cycle can change? that's where i think scott bessent privately may be issuing some mornings that you can't go as tough as previously stated. tom: kriti gupta will be along with the team monitoring those european stocks in terms of the pharma space and autos on the back of this news. it was a bruising session on wall street, as fears around china's ai progress spark that tech selloff paid nvidia bruising close to $600 billion in market share. the biggest one-day drop in history. let's bring in mliv strategist mark cranfield for more analysis on this. the dollar stronger in asia today. is that a tariff story or an ai story? >> a little bit of both but probably slightly more to do with the tariff front. in fact it was a story that

developed yesterday, as credit was saying earlier with the colombia situation in response to tariffs, and foreign-exchange traders had an easy week last week. donald trump's first week in presidency did not have much to do on the tariff front, dollar was weaker. maybe people came into this week complacent and bank everything changed. not only did we get the first salvos yesterday, we got a follow-up today, there was an interview with scott bessent and the follow-up with trump himself. tariffs are very much around and dislocations are coming back in the foreign-exchange market. the fact that u.s. dollar is getting strong against g10 counterparts is a strong signal that traders are taking this seriously. if it was just the emerging space, maybe you could say it is a bit of a one-off thing, but the, australian dollar and japanese yen are all on the back foot there is a haven bid for the swiss franc which has

traditionally been the outstanding currency if you are looking for a safe play. huge options volumes yesterday for the swiss franc. people are getting concerned and it is not likely to go away in a hurry. an easy first week, a much more difficult second week and foreign-exchange traders are going back to analyze the playbook in 2018, 2019 how do we deal with the fact that tariffs may come and how does that apply to the u.s. dollar? is looking like that again and foreign-exchange traders are taking note of what mr. trump has done in the past. tom: reaching for that 2018 playbook with volatility back in fx markets and the flight to safety with the swissie in focus. mark cranfield, thank you as always for the context. global tech under pressure as that cost-effective model by chinese startup deepseek is raising questions about the dominance of u.s. technology. we will switch focus to europe.

travelperk a major start up the european space raising a lot of capital. how is the deepseek story going to impact european startups with that ai focus? that question to the president and coo of that company coming up. this is bloomberg. ♪

tom: with silicon valley grappling with the impact of chinese startup deepseek upending global markets, travelperk has raised $200 million in its latest funding round to expand its u.s. presence. the travel management startup is hoping to invest more into its ai capabilities with the emergence of a more cost-effective model from deepseek raising questions about

the competitiveness of products developed by western firms. please to say i'm joined exclusively by travelperk's president and coo jean-christophe tauney-bucalo. thanks for joining us. it is a big raise, you are valued at 2.7 billion u.s. dollars, you have serious backers as well. let's start with the question about deepseek and the impacts on the tech space. does a cheaper more cost-effective model with similar capabilities to the likes of openai, is that good or bad news for a company like yours? jean-christophe: for a company like ours it is quite neutral. the reason is what we do is work on our own set of data. we use the different type of technology that are available, whether they are, open source or not, and then we process it and use the technology on top of our data. what is important for us is to have the human capability.

we have x particle physicists that work for us, the key is having the capability to interpret the technology and take whatever model is most suited to the job to be done. because we are not in the business of building model, we are in the business of using model to deliver the best value to customers. tom: are you looking at the models you use and reassessing? if openai are charging $200 for their top end model, are you read looking at the models you use and re-incorporating deepseek? jean-christophe: it is not the main motivation because in the grand scheme this is something that will impact widely the consumer industry, but for us, it's more about is this model adapted to what we are trying to achieve? in that we have always used our model to deliver the best value.

raising money will help us not so much to pay for the model themselves, but more recruit the best ai specialists around the world, so we know which model to use for each use case. that is where they devalue lies, at least for us that are not building models. i can understand it is different if you are google and actually building models. tom: it is about the talent and making sure they can adjust models to target your specific audience. before we move to the expansion to the u.s., does the cost of computer -- does it derail assumptions that the spend on will be higher to get to these -- capex will have to be hired to get to these values? jean-christophe: it doesn't i was listening to just before. it is the story of every technology it has been the same for the mobile internet, the same for internet in general. that is what allows each

technology to become mass-market. it is fantastic. it makes ai available to more people all around the world. that is really important. what i think we will see is different models being used for different use cases. we will see segmentation on the model depending on what you're trying to do very much like we have seen in model internet or internet in general. tom: let's get your expansion plans in the u.s. to what extent is the u.s. market a priority for you and the travelperk team? is it further acquisitions because you have been quite acquistive. jean-christophe: we acquired a u.s. company earlier in 2020 four. now we acquire this formidable platform out of switzerland. the u.s. is a key priority for us. the u.s. is the largest business

travel market in the world. when you work in business travel it is important to help the traveler wherever they might be in the world. most of the capital, most of the investment will be deployed in our presence in the u.s. market. tom: does that mean a u.s. ipo is something you are considering? jean-christophe: we see that quite differently. for us ipo are another funding event. they are another financing event. we have these almost funny way of thinking about travelperk on a long-term horizon, on a 100-year horizon, so the ipo might or might not be a step in our journey. tom: jean-christophe tauney-bucalo, president and coo of travelperk, on that $200 million raise. and the impacts of deepseek more broadly on the tech sector. we appreciate your time speaking exclusively after that raise.

later in the show, fears around china's ai progress sparked that selloff. we will get context whether or not the selloff yesterday is justified. that's coming up later in the show. this is bloomberg. ♪

tom: bloomberg understands the israeli prime minister benjamin netanyahu is planning to visit washington next month to meet with president trump the meeting would come weeks before the end of the first phase with the ceasefire in gaza. the middle east envoy steven witkoff is expected to travel to israel this week to discuss a longer-term solution to the conflict. president trump speaking yesterday in florida. he talked about deepseek, he

also talked about the metals market when he was discussing potential tariffs. he called out for example copper imports into the u.s. here is a check on how metals are trading this morning. iron ore currently flat, aluminum taking a bit of a hit, copper lower 46 points at 9000 per ton. was to see broad tariffs more than 2.5% particularly targeted sector tariffs as well on metals, pharmaceuticals and potentially autos. plenty more coming up. stay with us. this is bloomberg. ♪

>> good morning.

concerns about nai stretch into a second day triggered by china's progress. nvidia lost $589 billion in value, demand is strong. donald trump calls it a wake-up call. markets are taking a breather nasdaq and is lower, modest

gains and valuations being called into question. big week for earnings. the mag seven report this week. s.a.p. with decent results, s and p futures are flat and nasdaq by no means making up for losses and pointing higher the

biggest drop in history. the focus on dollar strength with donald trump wanting across the board tariffs, the euro is under pressure. yields are up, the decision will be less interesting than the commentary from jay powell. brent is 77, let's get more

analysis because we can bring in paul dobson, where do we stand? paul: good morning. that is the question after a selloff, futures not giving indication, no scion, take continuing selling and more of a

gain in chinese companies, narrative still playing out, people ask key questions about plans, possible to do things on a shoestring budget is -- is -- is -- what -- what the investment community has to ask. what is the potential? rapid advances. tom: do you shift which parts you target and is this a massive

buying opportunity? where -- where do we stand? paul: yeah, uh, the number of reasons for the selloff, big run-up in tech valuations looking stretch. big spending plans pushed up the prices so they left the market nervous so there is that when

you wondering if they wanted to hang on, how do the companies respond to? we heard from tsmc or excuse me nvidia yesterday, they need loads of chips. this is great, as we hear from them they will give us a sense of whether this will be a blow or something that can take on income stronger from. tom: executive editor paul dobson on the selloff. good moaning.

do you buy the dip? >> i would be cautious, this is a big catalyst, we've had very very strong years and this is that wake-up call to clear the hype, the winners will bifurcate from the losers. i would not buy it at this point. tom: maybe it leads to more rational valuations long -- longer term. as you -- as you look at the

components or indeed software parts -- parts look more attractive, adoption will be accelerated, could that prove a catalyst? anika: look at earnings for q4, tech has highest expectation what this -- the -- this -- this story puts it is -- is -- is -- is a change in the valuation and how does this impact them, how

does it lead to valuations? tom: do -- do you think hyper-scalars will have to scale back? anika: this is where -- this is the big question, if china can do it, keeping an open source could there be change? tom: you're -- you're not -- you're not -- you're not adding. what would your advice be?

to sell -- to sell -- to sell -- to sell? >> this is the point where it holds its value, the spectrum is overvalued with forgotten stocks pretty reasonable so they've adopted a barbell strategy. a -- along -- along with high-growth, blending it with u.s. -- the u.s. exposure because when we start the year we've seen -- we've seen -- we've seen yields, a much more easy cpi report, we have this

new news triggering events volatility and valued parts shine a light every time. adopting that barbell for u.s. has been working, that is a prudent way at this point. tom: that's the barbell, what about the terrorist threat, what is the -- what is the -- what is the -- what is the tariff trade at over two and a half -- over to have percent, this is trump putting weight into tariffs. guests: that's right. the markets have priced a favorable stance on tariffs.

now that we've seen the news story it will trigger aggressive stance from trump. he warned about dominance of china, flooding the market will trigger some backlash, be more prudent. we have observed small cap space providing insulation and it was em small caps dominating, that's where you get insulation.

higher share from the local markets. that is one place to take a bit of shelter. europe will struggle. anemic growth in the only good thing is accommodative monetary policy easing should help the stronger stance and value within europe, europe will be a tough one. with trump constantly hearing of

threats to raise spending is opportunity. tom: ok. thank you indeed. now ark invest ceo cathie wood will discuss trump's impact and more so do june in -- tune in. s.a.p. reported cloud sales winning customers with ai capabilities. they incentivize client and its

to shift to the cloud and we will speak with christian klein. president trump used executive orders to and citizenship for children of migrants. and eliminating diversity, equity and inclusion. the plans, next, this is blue bug -- this is bloomberg.

>> donald trump declared emergencies at the border enabling him to sidestep delays

but litigation is coming. to discuss what it means is principal at ferdinand law group and trial attorney to be a --. i want to start with the size and scope, put this in context. guests: unprecedented, dozens and dozens of odors within the first week, it is clear that he has been thinking about how to put into place is program. if we talk about immigration,

diversity, equity and inclusion initiatives, federal employees have been removed. what the president has done, mass deportation plans, declaring a national emergency, these are generally for when public health or property is threatened and he declared an energy of emergency, whether these are indeed emergencies what this does do is enables trump to put into place actions

to go forward with certain activities, military planes, military troops, military detention. there will be strong barriers. tom: as an investor i want to know what stands and what crumbles. what false to judicial pressure and withstands?

>> any actions that are a breach on rights so trump can say we are halting projects but they will move to the extent corporations put into place federal contract doors they can do an injunction and pause actions so trump would have to work with congress. significant federal rule working. he is meeting with the house of

representatives and plans for congress, there will be committees and the senate, none of this will happen quickly. tom: ok, watch this space. thank you. microsoft is in talks to buy perplexity, trump first pressured bytedance to sell our face getting banned. u.k. plans to allow companies to invest surpluses.

employers could invest to purchase equipment or provide benefits. the prime minister and the chancellor are hosting a roundtable to discuss. plenty more coming up, this is bloomberg.

tom: welcome back. let's reflect on the trade of yesterday, nvidia losing 600 billion dilutes, never seen that in history of the and it questions spending perper

blackwell chip, does that need to continue? let's flip the board because this is the catch your breath moment, does the broadening become consequence of the route? staples and finance gains of 1%, we have the opening trade and the opening trade is next.

the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

>> i am anner edwards. here's w