Crypto News: Deep slump

Good morning. Stocks plunge as the buzz around Chinese AI DeepSeek rattles markets. Trump holds off on Colombia tariffs after a deal on migrants. And get your resume ready: Elon Musk's DOGE is hiring. Listen to the day's top stories.

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The AI disruptor is here. Chinese startup DeepSeek rocked the AI sector, raising questions about US tech dominance and casting doubts on sky-high valuations for companies such as Nvidia. DeepSeek's low-cost R1 model, which is now the top app on Apple's iPhone download charts, is "one of the most amazing and impressive breakthroughs," according to renowned tech investor Marc Andreessen. Here is an explainer on why DeepSeek is freaking out the AI world.

Whether DeepSeek will mean deep trouble for Big Tech is dominating market chatter going into the new week. Stocks tumbled with chip giants Nvida and ASML, both of which have benefited hugely from the surge in AI spending, leading the downward spiral. Global tech stocks are now on track for a $1.2 trillion wipeout.

China's DeepSeek Showcases Tech Advance Despite US Curbs

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Markets were also rattled by the spat between the US and Colombia, which reinforced worries about the weaponization of tariffs. Donald Trump threatened to impose levies on billions of dollars of trade in Colombian oil, coffee and cut flowers for the country's refusal to receive deportees, before abruptly pulling the ultimatum as a deal was reached. As the crackdown on migrants escalates, China pledged to take back its undocumented citizens in the US. Here is how the deportation raids are playing out.

It's Federal Reserve decision week. The central bank is widely expected to hold interest rates steady, which may provide relief to the bond market after its recent selloff. But not everyone is on the same page: Prominent bond investor Marc Seidner from Pacific Investment Management Co. expects officials to cut rates more aggressively than many in markets expect.

Israel and Lebanon agreed to extend their ceasefire until Feb. 18 to give Israeli troops more time to withdraw. In Gaza, Israel began to allow Palestinians to return to northern parts of the enclave. Trump ended a Biden administration hold on supplying 2,000-pound bombs to Israel and called on Egypt and Jordan to accept more Palestinian refugees.

Deep Dive: Big Tech Knife-Edge

The world's biggest tech companies start reporting fourth-quarter earnings this week and this time there's a key distinction: Profit growth is projected to come in at the slowest in almost two years. That's even before DeepSeek took center stage.

Alphabet, Meta and other tech stocks rallied at the start the year, keeping them near record highs, but this reporting period may prove sobering for equities bulls.
Profits at the so-called Magnificent Seven are projected to increase by 22% for the quarter from a year earlier, the smallest jump since the beginning of 2023.

The Big Take

Photographer: Carsten Snejbjerg/Bloomberg

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Opinion

Source: Bloomberg

DeepSeek has delivered a timely lesson that the leadership of Trump's Stargate AI initiative shouldn't ignore—scarcity can fuel innovation, Catherine Thorbecke writes. Americans should be cautious that excess spending doesn't breed waste.

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Before You Go

Photographer: Kent Nishimura/Bloomberg

Now hiring. Elon Musk's Department of Government Efficiency has set up a job site to recruit software engineers and tech staffers. Key requirements on your resume: Applicants must be US citizens, agree to work in-office in Washington, DC, and provide up to three examples of "exceptional ability."

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