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š Chinese AI Rattles Wall Street
Plus: Trump vs FED
Good morning & Happy Monday.
Chinaās DeepSeek AI breakthrough has shaken global markets, with tech stocks dropping sharply and raising questions about U.S. tech dominance, while Colombia backed down on deportation flight restrictions after pressure from Trump. Meanwhile, the Federal Reserve faces potential clashes with Trump over interest rates, and a severe worker shortage looms over the construction industry. Itās going to be a big week.
Grab your Cappuccino and let's get into it! āļøšļø
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Markets
šØ DeepSeek shakes up stocks as traders fear for US tech leadership
Chinese AI startup DeepSeek shook global tech markets Monday, sparking doubts about U.S. dominance in artificial intelligence. The companyās cost-effective AI model, which operates on less-advanced chips, raised concerns over Nvidiaās soaring valuations, leading to a 3.2% drop in Nasdaq 100 futures and steep losses for Europeās tech sector, with ASML shares down 8%.
Meanwhile, Chinese AI stocks soaredāMerit Interactive surged to daily limits, riding its ties to DeepSeekās breakthrough. As investors rethink AIās reliance on advanced chips, Nvidia fell over 6%.
šØš³ Why China Startup DeepSeek Could Spell Trouble For Nvidia, AI Stocks
DeepSeek unveiled a new AI model on Jan. 20, claiming it was trained at a fraction of the cost of systems from OpenAI, Google, and Meta. Unlike U.S. giants using proprietary tech, DeepSeek leveraged open-source tools to achieve competitive results.
Speculation swirls over its hardware, with reports suggesting the use of Nvidiaās less-powerful H800 chips, though some claim it has accessed advanced H100 chips despite U.S. export bans. Analysts are now questioning how this development could reshape the demand for semiconductors and computing power.
šŗšø Colombia backs down on deportation flights after Trump tariffs threat
The U.S. has dropped plans for tariffs on Colombia after Bogota agreed to accept deported migrants without restrictions, the White House announced. This follows Colombian President Gustavo Petroās earlier resistance to U.S. military deportation flights, proposing instead to use civilian planes. Now, Colombia will accept migrants on U.S. military aircraft āwithout limitation or delay,ā, after backing down under Trumpās pressure.
āļø Trump vs FED
The Federal Reserveās first 2025 meeting is set against the backdrop of President Donald Trumpās calls for lower interest rates, sparking potential clashes with policymakers. Trump, speaking virtually at the World Economic Forum, said he would "demand" rate cuts, while Fed officials have signaled no immediate changes amid concerns about persistent inflation.
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The construction industry needs to attract 439,000 new workers this year to meet demand, otherwise costs will rise, and the recent immigration crackdown will likely cause prices to rise.
DeepSeek gets Silicon Valley talking.
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Appleās worst start to a year since 2008
š§µ Finally had a chance to dig into DeepSeekās r1ā¦
Let me break down why DeepSeek's AI innovations are blowing people's minds (and possibly threatening Nvidia's $2T market cap) in simple terms...
ā Morgan Brown (@morganb)
1:19 AM ā¢ Jan 27, 2025
DeepSeek is the black swan OpenAI and $NVDA didn't see coming.
CNBC is all over it, questioning what happens next now that this free open source model costs 30x less to operate on old hardware.
ā Financelot (@FinanceLancelot)
5:24 PM ā¢ Jan 26, 2025
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