There’s a whole bunch of stuff going down in the economic realm and tech news this week. Our foreign enemy might have their own AI that trounces the cost of ChatGPT. Trump and Musk are on a mission to launch financial service companies. It’s crazy yo.
DeepSeek
Monday was an awful, awful day. What happened? China let it be known that they have produced an AI startup that can rival ChatGPT in speed and accuracy, with a price tag of only $6 million. Tech stocks got wrecked, AI stocks even more.
This poses problems on a few fronts. First, we think we have the most advanced AI programs, which we may or may not, but this shows that there are other models that perform the same as our models.
Second, tech companies are spending billions, soon to be trillions, on AI. If you can get the same results for like 1000% cheaper, that’ll cause problems for a lot of companies.
Finally, because it is China, this will present a lot of geopolitical issues going forward, with tariffs and taxes. This is sooooooo not good for chipmakers in America.
Chinese data is not reliable so it could be smoke and mirrors, but this could be true, so we need to prepare accordingly.
Trump and Musk To Launch Financial Services
As mentioned on our latest podcast, Trump and Musk are trying to get into the financial services market. Trump is using Truth Social to offer cryptocurrency and ETFs on their platform Truth.Fi.
I expect there to be many other investments offered in the near future as Truth.Fi is partnering with Charles Schwab.
Not to be outdone, Musk has partnered X (Twitter for all the old heads) with Visa. X Money Account, as it’s called, will allow you to transfer funds between traditional banking accounts and their digital wallets.
You’ll also be able to use your X wallet to perform peer-to-peer lending (Venmo or Zelle). Again, I think this is just the start, and many more services will be available on X in the near future.
Interest Rates
The FED actually held interest rates at the current levels! I’m SHOCKED. Now I don’t say this lightly, but to me, the Fed has made a mess of the interest rate/inflation/labor market/GDP situations time and time again.
The best course of action is to wait and see. We have no clue what Overlord Orange Daddy’s policies will do, so it’s best to wait and see for a few months. My suspicion is that rates will need to be increased at some point in 2025 or early 2026, but I’m in the minority with this opinion.
For now, rates will be unchanged and the Fed is waiting to see where inflation, employment, and economic growth will be. Kudos FED. Like a broken watch is right twice a day, you are right in this instance.
GDP Data
GDP grew at a 2.3% clip in Q4, which was below the projected 2.5%, For 2024, GDP grew at 2.8%. SO another stat showing the economy is humming along.
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