Baltic
Dry Index. 761 -17
Brent Crude 77.45
Spot Gold 2741 US 2 Year Yield 4.17 -0.10
US Federal Debt. 36.406 trillion!
‘Let China Sleep, For When She Wakes, She Will Shake The World’
Napoleon Bonaparte.
Little need for my input this morning. A six million dollar Chinese start-up blew up the Great Artificial Intelligence Bubble.
Later today a dead cat bounce, or panic selling?
But exactly where are all those paper losses? Who’s gone bust but is pretending to be solvent?
What exactly are the magnificent seven really worth?
Hong Kong stocks rise after AI sell-off fueled by
China’s DeepSeek drags Wall Street lower
Updated Tue, Jan 28 2025 12:19 AM EST
Hong Kong stocks rose Tuesday after Wall
Street saw a massive drop in shares of tech companies, while several
Asia-Pacific markets were closed for the Lunar New Year holiday.
Hong Kong’s Hang Seng Index traded 0.14%
higher.
Japan’s Nikkei 225 dropped 1.34%
while the Topix erased losses to trade flat.
Japan’s chip-related stocks extended
losses for a second day as
Chinese AI startup DeepSeek’s challenge to America’s global leadership
in artificial intelligence threatens
Asian tech companies part of the U.S. AI value chain. Advantest lost
11%. Tokyo Electron fell
4.88%, while Renesas
Electronics dipped 3.07%.
India’s Nifty 50 benchmark and the
BSE Sensex index began the day up 0.36% and 0.54%, respectively. The Reserve
Bank of India on Monday announced a slew of plans to pump more than $17 billion
into the financial ecosystem through measures including bond purchases and
currency swaps.
Australia’s S&P/ASX 200 ended the
day 0.12% lower at 8,399.1, after gains in the previous session. Weakness in
gold miners, energy and technology stocks was partially offset by gains in iron
ore miners and financial players.
Taiwan, South Korean and Chinese markets
are closed for holidays.
Overnight in the U.S., the S&P 500 and Nasdaq Composite plunged on
concerns about an artificial intelligence stock bubble popping because of the
emergence of Chinese
startup DeepSeek, which has possibly made a competitive AI model at a
fraction of the cost of Silicon Valley models.
The Nasdaq Composite lost 3.07%,
falling to 19,341.83, and the S&P 500 slid 1.46% to 6,012.28.
The Dow Jones Industrial
Average added 289.33 points, or 0.65%, to close at 44,713.58. Gains
in Apple, Johnson & Johnson and Travelers helped lift the
30-stock index.
Nvidia lost
close to $600 billion in market cap on Monday, the biggest drop for any company
on a single day in U.S. history.
Asia
markets live: DeepSeek, Japan chip stocks
Chinese AI threat triggers $1 trillion market
crash
27 January 2025 • 6:15pm
A breakthrough Chinese chatbot has sparked
alarm about the country’s
advances in artificial intelligence (AI) and wiped close to $1
trillion off global stock markets.
A heavily-censored Chinese chatbot called
DeepSeek shot to the top of Western app download charts on Monday in what was
described as a “Sputnik moment” for AI.
American technology stocks tumbled in
response, driven by fears that heavy-spending on AI by Silicon Valley companies
that has been championed by Donald Trump will fail to yield profits for
investors.
California’s Nvidia, the semiconductor
giant that has become the world’s most valuable company on the back of the AI
boom, at one point slumped by more than $600 billion in the biggest one-day
loss of value for a single company in history.
DeepSeek, a chatbot that strictly toes
Beijing’s line on issues from human rights to Taiwan, is seen as the
first Chinese AI to rival those developed by US tech giants such as Google,
OpenAI and Facebook’s owner Meta.
The Chinese AI’s inventors claim it was
developed using far less computing power than rival systems and despite trade
restrictions blocking China from accessing the most advanced AI supercomputer
components.
President Trump’s AI tsar David Sacks said
DeepSeek showed “the AI race will be very competitive”. He said: “I’m confident
in the US but we can’t be complacent.”
The Prime Minister’s spokesman downplayed
suggestions the UK was at risk of being left behind, saying Britain had
“significant strengths in AI” and “some very strong players in the market”. Sir
Keir Starmer has said the UK should become one of the “great AI
superpowers”.
US tech companies have committed to
spending hundreds of billions in the belief that building super-human AI will
require unprecedented investments in data centres, electricity and microchips.
Last week Donald Trump hailed a $500
billion (£400 billion) plan by the tech companies OpenAI, SoftBank and Oracle
as the “largest AI infrastructure project in history”. In contrast, DeepSeek
claims that one of its recent systems cost just $5.6 million to develop.
The claim sparked alarm about possible
overspending by US companies. America’s Nasdaq stock market fell by more than 3
per cent on Monday, with the drop at one point wiping more than $1 trillion off
the index of technology stocks. Shares in Nvidia fell by more than 15 per
cent.
Marc Andreessen, the Trump-backing Silicon
Valley venture capitalist, said DeepSeek’s latest “R1” system was “one of the
most amazing and impressive breakthroughs I’ve ever seen” and called it “AI’s
Sputnik moment”, in reference to the Soviet satellite that shocked the Western
world in 1957 and accelerated the Cold War space race.
More
Chinese
AI threat triggers $1 trillion market crash
Nvidia Loses $589 Billion as DeepSeek Batters
Stock
January 27, 2025 at 11:33 PM GMT
Wall Street had a shock to the system on concerns that a cheap artificial intelligence-model from Chinese startup DeepSeek could make valuations that have powered the bull market tough to justify. From New York to London and Tokyo, equities got hit hard on Monday. And while the slide did come after a torrid rally, the underlying reasons behind Monday’s rout could cause longer-term damage. The Nasdaq 100 sank 3% while the S&P 500 dropped 1.5%. A closely watched gauge of chipmakers also plunged the most since March 2020. Nvidia, heretofore the posterchild of America’s AI frenzy, sank 17%—the biggest market-cap loss for a single stock ever. But no hard feelings says Jensen Huang: Nvidia’s CEO just called DeepSeek’s latest innovation “excellent.” —Natasha Solo-Lyons
Nvidia Loses $589 Billion as DeepSeek Batters Stock: Evening Briefing Americas - Bloomberg
Finally, tech stocks. Just how many more DeepSeek AI firms has China (Japan, South Korea, UK, the EU, Australia, Canada, your tech nation here,) got, still to come in the years ahead?
CNBC Daily Open: Nvidia plunges as DeepSeek
triggers questions on its value
Published Mon, Jan 27 2025 8:35 PM EST
What you need to know today
$600 billion plunge in Nvidia
Nvidia shares plunged nearly 17% on
Monday, its worst day since
March 2020,
on concerns raised by China’s DeepSeek artificial intelligence model. The
chipmaker lost close to $600
billion in market cap, the biggest drop for any company on a
single day in U.S. history. Other stocks related to AI, such as Micron, Arm Holdings and Broadcom in the U.S., as well as ASML and Tokyo Electron in global
markets, also fell sharply.
DeepSeek raises questions on AI
investments
Chinese
AI startup DeepSeek on Monday released its reasoning model R1, which rivals
OpenAI’s o1. Its main claim to fame is that the model was built with chips less
powerful than those U.S. AI firms use and could have cost
less than 10% of Meta’s Llama, according to estimates
by Jefferies analysts. That fanned fears that the huge investments into AI by
U.S. firms are unwarranted and a bubble waiting to pop.
Energy shares fizzle out
Power companies
most exposed to
the tech sector’s data center boom plunged Monday, as DeepSeek’s claims led
investors to question how much energy artificial intelligence applications will
actually consume. Vistra closed
nearly 30% lower while Talen Energy and GE Vernova tumbled more
than 20%. All three stocks gave up this year’s gains.
Tech shares battered
Major U.S. benchmarks fell Monday on a broad
retreat by semiconductor and AI-related stocks, though the Dow Jones Industrial
Average managed to advance. The pan-European Stoxx 600 index ticked down
0.07%, recovering from
steep losses earlier.
But stocks with ties AI, such as Siemens Energy and Schneider Electric, ended the day
sharply lower.
[PRO] Nvidia sell-off an ‘overreaction’:
Tom Lee
Nvidia’s
slump is “an overreaction” at a scale close to the 2020 pandemic-sparked
sell-off, Tom Lee, head of research at Fundstrat Global Advisors, told CNBC.
Here’s why Lee isn’t changing his
mind on Nvidia for now.
The bottom line
The Nvidia rout, triggered by
DeepSeek-induced worries that AI models don’t actually need billions of
dollars’ worth of expensive chips, is deep and scary. There’s no other way of
putting it.
Prior to Monday, the chipmaker was the
most valuable publicly traded company. After the sell-off, which wiped close to
$600 billion in Nvidia’s market capitalization, the company dropped to third
place, behind Apple and Microsoft.
To put that tectonic shift into context,
Nvidia’s plummet in market cap is larger than the entire market value of Netflix and double that of Wells Fargo, noted CNBC’s
Adrian van Hauwermeiren.
And it matters for investors because
Nvidia, in all likelihood, holds a place in their portfolios, considering how
much the stock market has relied on the chipmaker for its gains the past two
years. Even if investors, for some reason, are not exposed to Nvidia, its
shares are among the top 15 holdings of 469 exchange traded funds, according
to VettaFi,
added van Hauwermeiren.
Nvidia aside, other AI-adjacent plays fell
steeply, causing the tech-heavy Nasdaq Composite to slide 3.07%. The S&P
500 lost 1.46%. However, the Dow Jones Industrial Average, which climbed 0.65%,
was somewhat shielded from the Monday bloodbath by gains in Apple, Johnson
& Johnson and Travelers.
“It’s a good example of selling first and
asking questions later, and investors sort of feeling that valuations are a bit
stretched for technology in general and for semiconductors in particular,” said
Sam Stovall, chief investment strategist at CFRA Research.
“We’re going to have volatility,
especially when we’re dealing with a richly valued market and exogenous
events,” Stovall added.
Indeed, the CBOE VIX index — which
measures the strength of 30-day price changes of the S&P and is hence seen
as Wall Street’s fear gauge — jumped by 20.5% on Monday, though it managed to
dip from the 45% increase earlier in the day.
More
CNBC Daily Open:
Nvidia plunges as DeepSeek triggers questions on its value
How China’s new AI model DeepSeek is threatening
U.S. dominance
Published Fri, Jan 24 2025 8:00 AM EST Updated
Mon, Jan 27 2025 12:03 PM EST
A little-known artificial intelligence lab
out of China has ignited panic throughout Silicon Valley after releasing AI
models that can outperform America’s best despite being built more cheaply and
with less-powerful chips.
DeepSeek, as the lab is called, unveiled a
free, open-source large language model in late December that it says took only
two months and less than $6 million to build, using reduced-capability chips
from Nvidia called
H800s.
The new developments have raised alarms on
whether America’s global lead in artificial intelligence is shrinking and
called into question Big Tech’s massive spend on building AI models and data
centers.
In a set of third-party benchmark tests,
DeepSeek’s model outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o and
Anthropic’s Claude Sonnet 3.5 in accuracy ranging from complex problem-solving
to math and coding.
DeepSeek on Monday released R1, a
reasoning model that also outperformed OpenAI’s
latest o1 in many of those third-party tests.
“To see the DeepSeek new model, it’s super
impressive in terms of both how they have really effectively done an
open-source model that does this inference-time compute, and is super-compute
efficient,” Microsoft CEO Satya Nadella said at the
World Economic Forum in Davos, Switzerland, on Wednesday. “We should take the
developments out of China very, very seriously.”
DeepSeek also had to navigate the strict
semiconductor restrictions that the
U.S. government has imposed on China, cutting the country off from access to
the most powerful chips, like Nvidia’s H100s. The latest advancements suggest
that DeepSeek either found a way to work around the rules, or that the export
controls were not the chokehold Washington intended.
More
How China’s new AI
model DeepSeek is threatening U.S. dominance
Low-Cost Chinese AI Model Worries Tech Investors
Jan. 27, 2025 7:10 AM ET
The artificial intelligence boom has
pushed companies to spend billions of dollars to maintain their edge. But the
global race has taken a surprising turn, with Chinese AI startup
DeepSeek's large language model outperforming American rivals and stirring up
fears of China overtaking the U.S. in the burgeoning new technology.
Backdrop: DeepSeek's latest LLM - called R1 - has outperformed
models from established rivals like Microsoft (MSFT)-backed OpenAI,
Meta (META) and Anthropic,
which have spent billions of dollars to scale up their LLMs. DeepSeek's
first open-source LLM - DeepSeek V3, released last December - took less than
$6M to build, using Nvidia's (NVDA) H800 chips for
training. The R1, built off the V3, is developed to perform complex reasoning
and rivals OpenAI's o1.
Bigger picture: "The new model is cost-effective and runs on
reduced-capability chips," Saxo analysts noted. "The development
raises questions about the high valuations of leading AI companies like Nvidia
and the investment case for the entire AI supply chain." Also, DeepSeek's
LLMs have been developed despite U.S. export controls to limit China's access
to the advanced chips needed for AI work. "DeepSeek's recent progress
shows that the perceived lead the U.S. once had has narrowed
significantly," said Alvin Wang Graylin, a tech expert serving as global
VP at Taiwanese firm HTC.
On the move: Doubts over U.S. dominance in the AI space, coupled
with high stock valuations, dragged the tech-heavy Nasdaq 100 futures (US100:IND) down
4.3% on Monday. Many tech stocks are sliding before the bell, led
by AI darling Nvidia's (NVDA) near 12%
drop. Other notable decliners: AMD (AMD) -6.5%, Meta
(META) -6%, Amazon
(AMZN) -5%, Alphabet
(GOOGL) (GOOG) -4%, Tesla
(TSLA) -4%. Take the WSB
survey here.
Low-Cost Chinese
AI Model Worries Tech Investors | Seeking Alpha
To suppose that the value of a common stock is determined purely by a corporation's earnings discounted by the relevant interest rates and adjusted for the marginal tax rate is to forget that people have burned witches, gone to war on a whim, risen to the defense of Joseph Stalin and believed Orson Welles when he told them over the radio that the Martians had landed.
James Grant.
Global Inflation/Stagflation/Recession Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
China
Factory Activity Shrinks Ahead of Lunar New Year
January
27, 2025
China’s
official gauge of factory activity tumbled into contractionary territory in
January as factories suspended operations days ahead of the Lunar New Year
holiday.
The
manufacturing purchasing managers index fell to 49.1 in January from 50.1 in
December, according to data released Monday by the National Bureau of
Statistics.
That
ended a three-month streak of the gauge staying above the 50 mark separating
expansion from contraction. The reading fell short of the 50.2 forecast of
economists polled by The Wall Street Journal and was the lowest level in five
months.
Both
production and demand in the manufacturing sector slowed as workers went home
for the Lunar New Year holiday that starts on Tuesday, said Zhao Qinghe, a
statistician with the statistics bureau.
The
production subindex dropped to 49.8 in January from 52.1 in December. The
subindex for total new orders declined to 49.2 in January from December’s 51.0,
and new export orders fell to 46.4, compared with 48.3 in December.
“Part
of the slowdown may be due to weaker external demand, as the new export orders
index dropped to the lowest level since March last year,” said Zhiwei Zhang, an
economist at Pinpoint Asset Management.
More
observation is needed to determine whether the slowdown in external demand is
due to slower front-loading of exports or is a seasonal effect of the holiday
period, Zhang said.
Also
released Monday was China’s industrial profit, which fell 3.3% in 2024,
worsening from the 2.3% decline a year earlier. On a positive note, industrial
profit rebounded 11.0% in December, reversing the 7.3% drop in November thanks
to Beijing’s stimulus measures introduced in the final quarter of 2024 to boost
the economy.
Meanwhile,
China’s nonmanufacturing PMI, which covers both services and construction
activity, declined to 50.2 in January versus 52.2 in December, the statistics
bureau said.
The
subindex tracking services activity dropped to 50.3 in January from 52.0 in
December, while the construction subindex tumbled to 49.3 from 53.2.
Sectors
such as transportation, hotel and catering got a boost due to the Lunar New
Year holiday in January, but construction activity was damped by the holiday
and cold weather, China’s statistics bureau said.
China Factory Activity Shrinks Ahead of Lunar New Year
Recession
fears grow as companies prepare to ramp up staff cuts
Businesses’
low confidence and growing costs complicate the Bank’s coming decision on rates
27
January 2025
Fears
of a recession are growing as business chiefs warned they will be forced to
ramp up job cuts as Rachel Reeves’s
tax raid hits growth.
Bosses
in the private sector said they expected a “significant fall” in activity over
the next three months, according to a survey by the Confederation of British
Industry (CBI).
Businesses
across all main sectors including manufacturing, services and retail forecast a
decline in January, having fallen over the previous three-month period, it
said.
Companies
are now cutting staff, moving jobs overseas and curbing investment as they battle to
cut costs and
offset the impact of the Chancellor’s looming tax changes, the CBI warned.
Alpesh
Paleja, an economist at the CBI, said: “After a grim lead-up to Christmas, the
New Year hasn’t brought any sense of renewal.
“There
is an urgent need to get momentum back into the economy. The Government can
help shift the UK’s economic narrative with more determined focus on measures
that could drive growth.”
More,
subscription required.
Recession fears grow as companies prepare to ramp up staff cuts
Covid-19 Corner
This section will continue until it becomes unneeded.
CIA reveals what they think started Covid-19 pandemic
January 26, 2025
The Covid-19 pandemic was
triggered by a leak from a Chinese lab, the CIA now believes.
It is the first time the
American intelligence agency has settled on a stance about the origin of the
virus that led to lockdowns worldwide at the beginning of the decade, NBC News reported.
Previously, it did not
take a position on where the virus – which is responsible for more than seven
million deaths – came from.
‘CIA assesses with low
confidence that a research-related origin of the Covid-19 pandemic is more
likely than a natural origin based on the available body of reporting,’ a
spokesperson for the agency said.
‘CIA continues to assess
that both research-related and natural origin scenarios of the Covid-19
pandemic remain plausible.’
The news emerged a day
after John Radcliffe, the new director of the CIA, was confirmed.
Speaking on Friday, he
said he believes US intelligence and science points to the origin of Covid
being an accidental release, or ‘lab leak’, from the Wuhan Institute of
Virology (WIV), a research institution in the namesake Chinese city.
It is the location where
the outbreak was first observed in late 2019.
The new assessment isn’t
based on new information, but rather on a review of existing information, NBC
News reported.
According to the
broadcaster, the review started in the closing weeks of Joe Biden’s
administration and was completed before Donald Trump took office on January 20.
The question of how
Covid-19 developed has been long debated.
Some, including former
National Institute of Allergy and Infectious Diseases chief Anthony
Fauci, believe it crossed over naturally to humans from bats or another intermediate
species.
Meanwhile, there has been
growing support for the theory that the virus was leaked from a Chinese lab.
This is supported by many
in Donald Trump’s administration and staff for the House Committee for
Government Oversight and Reform.
They believe it escaped
from research activities in the region, citing the location of the outbreak, as
well as US documents describing the work at WIV on similar viruses.
China has always denied
that the pandemic was caused by a lab leak and insists it happened naturally.
The New York Times
reported that the CIA believes China’s leadership doesn’t know and doesn’t want
to know the origin of the virus.
More
CIA reveals what they think started Covid-19 pandemic
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this section.
Updates as they get reported.
Scientists
discover new, 3rd form of magnetism that may be the 'missing link' in the quest
for superconductivity
January
23, 2025
Researchers
have obtained the first conclusive evidence of an elusive third class of magnetism,
called altermagnetism. Their findings, published Dec. 11 in the journal Nature,
could revolutionize the design of new high-speed magnetic memory devices and
provide the missing puzzle piece in the development of better superconducting materials.
"We
have previously had two well-established types of magnetism," study author
Oliver Amin, a postdoctoral researcher at the University of Nottingham in the
U.K., told Live Science. "Ferromagnetism, where the magnetic moments,
which you can picture like small compass arrows on the atomic scale, all point
in the same direction. And antiferromagnetism, where the neighboring magnetic
moments point in opposite directions — you can picture that more like a
chessboard of alternating white and black tiles."
Electron
spins within an electrical current must point in one of two directions and can
align with or against these magnetic moments to store or carry information,
forming the basis of magnetic memory devices.
A new
form of magnetism
Altermagnetic
materials, first
theorized in 2022, have a structure that sits somewhere in
between. Each individual magnetic moment points in the opposite direction as
its neighbor, as in an antiferromagnetic material. But each unit is slightly
twisted relative to this adjacent magnetic atom, resulting in some
ferromagnetic-like properties.
Altermagnets,
therefore, combine the best properties of both ferromagnetic and
antiferromagnetic materials. "The benefit of ferromagnets is that we have
an easy way of reading and writing memory using these up or down domains,"
study co-author Alfred Dal Din, a
doctoral student also at the University of Nottingham, told Live Science.
"But because these materials have a net magnetism, that information is
also easy to lose by wiping a magnet over it."
Conversely,
antiferromagnetic materials are much more challenging to manipulate for
information storage. Because they have a net zero magnetism, however,
information in these materials is much more secure and faster to carry.
"Altermagnets have the speed and resilience of an antiferromagnet, but
they also have this important property of ferromagnets called time reversal
symmetry breaking," Dal Din said.
This
mind-bending property looks at the symmetry of objects moving forward and
backward in time. "For example, gas particles fly around, randomly
colliding and filling up the space," Amin said. "If you rewind time,
that behavior looks no different."”
This
means the symmetry is conserved. However, because electrons possess both a
quantum spin and a magnetic moment, reversing time — and, therefore, the
direction of travel — flips the spin, meaning the symmetry is broken. "If
you look at those two electron systems — one where time is progressing normally
and one where you're in rewind — they look different, so the symmetry is
broken," Amin explained. "This allows certain electrical phenomena to
exist."
Finding
‘the missing link’ of superconductivity
The
team — led by Peter Wadley, a
professor of physics at the University of Nottingham — used a technique called
photoemission electron microscopy to image the structure and magnetic
properties of manganese telluride, a material formerly believed to be
antiferromagnetic.
"Different
aspects of the magnetism become illuminated depending on the polarization of
the X-rays we choose," Amin said. Circularly polarized light revealed the
different magnetic domains created by the time reversal symmetry breaking,
while horizontally or vertically polarized X-rays allowed the team to measure
the direction of the magnetic moments throughout the material. By combining the
results of both experiments, the researchers created the first-ever map of the
different magnetic domains and structures within an altermagnetic material.
With
this proof of concept in place, the team fabricated a series of altermagnetic
devices by manipulating the internal magnetic structures through a controlled
thermal cycling technique.
"We
were able to form these exotic vortex textures in both hexagonal and triangular
devices," Amin said. "These vortices are gaining more and more
attention within spintronics as potential carriers of information, so this was
a nice first example of how to create a practical device."
The
study authors said the power to both image and control this new form of
magnetism could revolutionize the design of next-generation memory devices,
with increased operational speeds and enhanced resilience and ease of use.
"Altermagnetism
will also help with the development of superconductivity," Dal Din said.
"For a long time, there's been a hole in the symmetries between these two
areas, and this class of magnetic material that has remained elusive up until
now turns out to be this missing link in the puzzle."
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
With
all this consumer debt, business debt, government debt, smaller movements in
interest rates have a magnified effect. a small movement can tip the boat.
Bill Gross.
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