Tag: finance

By Benjamin Picton, senior macro strategist at Rabobank,

US stocks fell sharply on Monday as the market reacted to news that Chinese AI chatbot DeepSeek had overtaken American rivals to become the most downloaded free app in Apple’s US app store. DeepSeek’s developers claim that its open-source DeepSeek-V3 model was trained for just $6m, compared to price tags thought to be in the billions for the latest iterations of Western rivals. The emergence of an almost-as-good AI utility created at much lower cost that also uses much less energy has set the proverbial cat amongst the pigeons.

Consequently, the S&P500 was down more than 1.5% and the NASDAQ dropped by more than 3% as the rich valuations in AI-adjacent tech leaders were suddenly called into question. The impression that perhaps NVIDIA’s super expensive GPUs may not be absolutely essential for AI competitiveness saw the stock fall by 17%, wiping out $589bn in market cap in a single session. That is a new one-day record for value destruction in a single name.

Similarly, Germany’s Siemens Energy fell by almost 20% and the utilities sector of the S&P500 fell by 2.3% as markets priced in the possibility that the AI revolution might not be as energy-hungry as previously supposed. Brent crude was down by 1.8% to $77.08/bbl and bonds were mostly bid as traders perhaps noticed that US stocks offer no risk premia over fixed income securities.

This is one of those moments where market chatter spills out of dealing rooms to become a topic of concern in matters of state. Donald Trump had just finished announcing hundreds of billions of Dollars to tool up American enterprise to win the 21st-century equivalent of the Space Race. Similarly, much of Joe Biden’s China trade policy was geared towards ensuring that China could not replicate or even access US semiconductor technology, which is just as critical for military applications as it is for superimposing Trump’s face over Rocky training montages.

The launch of what is, on face value, a Chinese AI Sputnik is clearly enough of a concern to prompt market wobbles. This places fresh question marks over the ‘new era thinking’ that has propelled valuations for US tech leaders into the stratosphere. However, as this Daily noted yesterday there are reasons to be cynical.

1. Firstly, DeepSeek is open-source, so in theory any competitive advantage that it has should be able to be quickly replicated by established names who are no doubt pouring over the source code as I type.

2. Secondly, a number of analysts have already suggested that the claimed costs for training the model are likely bogus, and that it is very likely that DeepSeek has in fact relied on US chips that it wasn’t supposed to have and may not be able to access in the future.

So, China’s AI Sputnik may actually be an AI Potemkin Village, but the potential involvement of even outdated American chips in developing the system suggests that more tightening of export controls and knowledge transfer will be in the offing. Certainly the funnelling of chat prompts and user details back to Chinese servers to be perused by the Chinese government is likely to be a cause for concern in national security circles.

Could DeepSeek be targeted with ‘divest or die’ type orders in the same way that TikTok has been? DeepSeek is already circling the wagons by restricting new signups to users with a Chinese mainland phone number due to a “large-scale malicious attack”.

Tariffs on immediate neighbors close US land borders to attempts at transhipment from China or other unfavoured nations. Universal tariffs on all import origins create a barrier at US ports to attempts at transhipment through other countries, while export controls place barriers on sensitive goods and knowhow flowing out of the United States and potentially into the hands of adversaries. Preferential access (or any access) to the US consumer market will likely be dangled as a carrot for those nations willing to play ball with the geostrategic goals of the new administration.

In short, under the second Trump administration the United States is fighting fire with fire by adopting long-standing Chinese trade practises to win the competition with China. We are trending in the direction of bifurcation and strategic decoupling, which should be a concern for anyone who continues to think that they can stand under the US defence umbrella while pursuing trade policies that do not align with US interests. We aren’t in liberal free-trade Kansas anymore, Toto. This is now the land of the quid pro quo.
 

By Gabrielle Temaat of The College Fix

‘The outlook for higher education is dire,’ group states

Scholars should “loudly oppose” and resist compliance with the Trump administration, the American Association of University Professors said in a new report.

Titled “Against Anticipatory Obedience,” the report, published this month, states the re-election of Donald Trump poses significant threats to higher education, including potential assaults on tenure and academic freedom.

“As Donald Trump assumes the presidency for a second time, the outlook for higher education is dire,” it states, adding:

The Trump administration and many Republican led state governments appear poised to accelerate attacks on academic freedom, shared governance, and higher education as a public good. They will attack the curricular authority of the faculty on a number of fronts, including professors’ ability to undertake “teaching, research, and service that respond to the needs of a diverse global public.” It is the higher education community’s responsibility not to surrender to such attacks—and not to surrender in anticipation of them. Instead, we must vigorously and loudly oppose them.

The report references the University of Chicago’s 1967 Kalven Report, which states that when society endangers the university’s core mission and its dedication to free inquiry, the university has a duty to oppose such actions.

“This is undoubtedly such a time,” the AAUP report states.

The union urges its “chapters and conferences, unions, and faculty senates across the nation” to “strengthen and reinforce faculty rights in the areas of curricular reform and course approval,” “reform policies to strengthen faculty oversight,” and “strengthen local capacity to protect tenure and academic freedom,” among other things.

In response, Lee Jussim, a professor of social psychology at Rutgers University, called the report a “riot” in a post on X.

“AAUP promotes UChicago Kalven report, the clarion call for ‘institutional neutrality,’ the idea that U’s should avoid taking stands on most controversial political issues, five months after it embraced academic boycotts as one way to address controversial political issues,” he wrote.

The AAUP announced Aug. 9 it would support academic boycotts despite its previous position, held since 2005, The College Fix previously reported. In response, over 1,000 scholars signed a petition opposing the faculty union’s new position.

The union also garnered attention last year after the union’s president, Todd Wolfson, referred to then-vice presidential candidate JD Vance as a “fascist.”

“With Vance, American Far-Right authoritarians have succeeded in elevating a fascist who vows to ‘aggressively attack universities in this country’ to within striking distance of their goal: the annihilation of American higher education as we know it,” Wolfson had said.

Americans’ consumer confidence fell for the second month in a row in January according to The Conference Board, dropping from an upwardly revised 109.5 (how do you revise ‘confidence’?) to 104.1 (vs 105.7 exp) with expectations and current conditions both falling (from upwardly revised data)…

Source: Bloomberg

That is a four month low in consumer confidence… despite most other indications of confidence and animal spirits having surged since Trump’s election…

Source: Bloomberg

“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part,” said Dana M. Peterson, Chief Economist at The Conference Board.

“All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline. Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row.

Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income.

The return of pessimism about future employment prospects seen in December was confirmed in January.”

Even the Trump-favoring states saw expectations plunge apparently – after surging in December…

Source: Bloomberg

After 3 months of rebounding, labor market conditions slumped in January…

Source: Bloomberg

Buying conditions for big-ticket items such as cars, houses and appliances softened.

Inflation and interest rate expectations rose while stock market expectations dipped in January…

Source: Bloomberg

Nonetheless, there were positive notes in other aspects of the survey. Peterson added that “consumers’ views of their Family’s Current Financial Situation were more positive, and six-month expectations for family finances reached a new series high. The proportion of consumers anticipating a recession over the next 12 months was stable near the series low.”

Authored by Steve Watson via Modernity.news,

President Trump issued an emergency directive to send active duty troops to California to help battle the fires that are still destroying people’s lives.

“The United States Military just entered the Great State of California and, under Emergency Powers, TURNED ON THE WATER flowing abundantly from the Pacific Northwest, and beyond,” Trump announced on Truth Social.

“The days of putting a Fake Environmental argument, over the PEOPLE, are OVER,” the President asserted, adding “Enjoy the water, California!!!”

The move comes after Trump signed an executive order Friday titled “Emergency Measures to Provide Water Resources in California and Improve Disaster Response in Certain Areas.”

“For weeks, residents of the Los Angeles area have watched raging fires consume their homes, belongings, beloved pets, and childhood memories. Almost immediately, firefighters were unable to fight the blaze due to dry hydrants, empty reservoirs, and inadequate water infrastructure,” the order reads.

It continues, “Today, at least 28 people have lost their lives and thousands more have lost everything else, with some damage estimates calculating hundreds of billions of dollars in damage.”

The order further states “it is in the Nation’s interest to ensure that California has what it needs to prevent and fight these fires and others in the future.”

It adds that “it is the policy of the United States to provide Southern California with necessary water resources, notwithstanding actively harmful State or local policies. And it is the policy of the United States to assist Americans in disaster areas through responsive policies that more effectively empower them to rebuild and regain their livelihoods.”

Meanwhile, the he California Department of Water Resources has denied that the military has yet entered California, noting that “The federal government restarted federal water pumps after they were offline for maintenance for three days. State water supplies in Southern California remain plentiful.”

Where was all this water when California was on fire and hydrants were dry?

— rdub67 (@rdub067) January 28, 2025

The development comes after Trump eviscerated the LA mayor to her face last week, demanding that bureaucracy be put aside to help people deal with the disaster.

*  *  *

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Polaris shares fell 6% in premarket trading after the company, known for producing ATVs, UTVs, jet skis, and snowmobiles, surprised investors with guidance for a 65% year-over-year decline in adjusted EPS for 2025, coming in far below expectations. 

Citi analyst James Hardiman told clients earlier that the downward revision was very “alarming,” warning about President Trump’s tariff battle with China could result in additional downward pressure for EPS for the full year. 

“While management suggested on their 3Q call that a good starting point for 2025 EPS would be flat with 2024, which was guided to $3.25, at the time, management officially initiated 2025 adjusted EPS guidance at just $1.10,” Hardiman said, adding his team maintained a “Neutral” rating on PII shares. 

Polaris’ Yearly Forecast (courtesy of Bloomberg):

• Sees adjusted EPS about -65% from 2024’s $3.25; estimate $3.06

• Sees sales -1% to -4%

However, Polaris reported better-than-expected revenue in the fourth quarter, though sales fell 23% year-over-year to $1.76 billion. High interest rates deterred consumers from purchasing RZRs, Sportsman ATVs, and other offroad vehicles. 

Here’s a snapshot of the fourth quarter: 

• Sales $1.76 billion, -23% y/y, estimate $1.68 billion (Bloomberg Consensus)

• Off Road sales $1.44 billion, -25% y/y, estimate $1.36 billion

• On Road sales $180.8 million, -21% y/y, estimate $209.8 million

• Marine sales $137.4 million, -4.1% y/y, estimate $118.3 million

• Adjusted gross profit margin 21.1% vs. 20.8% y/y, estimate 21.3%

• Cash and cash equivalents $287.8 million, -22% y/y, estimate $397.8 million

• Adj. EPS 92c, estimate 90c

Covid bump ended in 4Q22. 

Polaris’s YoY revenue growth is the worst since GFC. 

Bloomberg noted: 

• For 2025, expects margin headwinds from negative mix, planned reductions in production leading to negative absorption in addition to the restoration of the company’s employee profit- sharing program

• Primary factors affecting fourth-quarter sales were lower volume due to planned reductions in shipments as we actively managed dealer inventory in a subdued retail environment

Shares are back to Covid crash levels. 

Bottoming fishing is a dangerous game… 

Several months ago, Polaris CEO Mike Speetzen warned that “consumer confidence and retail demand remained challenging.”

Authored by Mike Shedlock via MishTalk.com,

If you think Canada has such a great nationalized health care system, you need to reconsider.

Death by Delay

SecondStreet reports 15,474 Canadians Died Waiting for Health Care in 2023-24

Today, SecondStreet.org released government data showing an additional 15,474 patients in Canada died in 2023-24 before receiving various surgeries or diagnostic scans. However, that number is incomplete, as several governments provide either partial data, or simply do not track the problem.

SecondStreet.org collected the data by filing Freedom of Information (FOI) requests across Canada. When the data collected is extrapolated across jurisdictions which did not provide data, the number actually nearly doubles, to around 28,077. These figures cover everything from cancer treatment and heart operations to cataract surgery and MRI scans.

“Canadians pay really high taxes and yet our health care system is failing when compared to better-performing universal systems in Europe,” said Harrison Fleming, Legislative and Policy Director at SecondStreet.org. “Thousands of Canadians across the country find themselves on waitlists — in some cases for several years -— with too many tragically dying before ever getting treated, or even diagnosed.”

Key Findings

• At least 15,474 patients died in Canada while waiting for surgeries or diagnostic scans. This figure does not include Quebec, Alberta, Newfoundland and Labrador and most of Manitoba. Saskatchewan and Nova Scotia only provided data on patients who died while waiting for surgeries – not diagnostic scans.

• If one extrapolates the data provided across provinces and health regions that did not provide data, an estimated 28,077 patients died last year on health care waiting lists.

• While some response data is vague, SecondStreet.org observed cases where patients died after waiting anywhere from less than a week for treatment to more than 14 years.

• New data from Ontario Health suggests 378 patients died while waiting for cardiac surgery or a cardiac procedure.

• Since April 2018, SecondStreet.org has identified a staggering 74,677 cases where Canadians died while waiting for care.

Another 15,000-Plus Euthanized

The National Review comments on Canada’s Socialized Health-Care Culture of Death

What a debacle. More than 15,000 people died in Canada in one year because they couldn’t access care in the country’s collapsing socialized health-care system.

But it gets worse. About the same number of people were euthanized in Canada in 2023. Some asked to be lethally jabbed because they couldn’t access health care in a timely fashion.

Free Stuff is Grand

Here are some comments to the National Review Article

• Adjusting proportionally for population, that would be 239,104 deaths in the United States and would make “Unavailability of health care” the third leading cause of death in the US, after heart disease and cancer but ahead of such massive killers as accidents, COVID, and diabetes.

• If the US adopted Canada’s approach to health care, where would Canadians go for their time-critical and technically advanced medical care? Living in the Great Satan’s shadow has its benefits!

I arrived at a similar 234,488 waiting deaths in the US if the results were similar.

Free stuff is grand, if you don’t die waiting for it.

Late Monday night aboard Air Force One, President Donald Trump told reporters that Microsoft is in discussions with the China-based tech giant ByteDance to acquire TikTok, according to a report from Bloomberg.

“I would say yes,” Trump told reporters when asked if Microsoft would purchase the short video app used by more than 170 million Americans. 

The president continued, “A lot of interest in TikTok. There’s great interest in TikTok.”

Such a deal with Chinese owner ByteDance would avert a ban in the US. On Trump’s first day in office, he signed an executive order extending the divest-or-ban deadline by 75 days. This extension gives ByteDance sufficient time to negotiate a deal with a US company. 

Last week, Trump told reporters he was open to X’s Elon Musk or Oracle founder Larry Ellison purchasing TikTok. 

In recent days, AI startup Perplexity proposed a merger plan with TikTok, with the US government receiving half of the new company, a source told Reuters. 

Earlier Monday, Trump told House Republican leaders at the Trump National Doral just outside Miami that he previously pushed for a ban of the video app under national security grounds; however, he changed his mind due to pro-Trump content creators that flourished on the platform.

“We’ll see what happens. We’re going to have a lot of people bidding on it, and if we can save all that voice and all the jobs, and China won’t be involved, we don’t want China involved, but we’ll see what happens,” he told lawmakers, referring to TikTok. 

Donald Trump said Microsoft is in talks to acquire TikTok and that he’d like to see a bidding war for the app. The US president has delayed enforcement of a ban on the app in the US, giving himself 75 days to decide on a course of action https://t.co/MWq0dGCuXp pic.twitter.com/NSooVT9XBv

— Reuters (@Reuters) January 28, 2025

Trump noted, “I like bidding wars because you make your best deal. So if there’s a bidding war, that’s a good thing.” 

And Microsoft confirmed. 

*TRUMP CONFIRMS MICROSOFT IN DISCUSSIONS ON TIKTOK

— zerohedge (@zerohedge) January 28, 2025

Shares of MSFT are muted in premarket trading in New York following the overnight report, as the DeepSeek AI fallout continues to overshadow the entire AI complex. 

President Donald Trump declared a national energy emergency to boost fossil fuel power generation amid surging load demands on the grid via the ‘Powering Up America‘ theme, including AI data centers, electrification of the economy, and re-shoring trends. The move by Trump underscores a massive policy shift from the Biden-Harris regime’s ‘green’ policies that only acted as a ‘throttle’ on the economy, making US companies less competitive globally. Meanwhile, China ramped up cheap energy via an explosion in coal-fired power production.

“They can fuel it with anything they want, and they may have coal as a backup — good, clean coal,” Trump said in a virtual appearance at Thursday’s annual World Economic Forum in Davos, Switzerland. 

Trump said that if critical infrastructure, such as natural gas and oil pipelines, gets “blown up,” coal could be used as a critical backup energy source. 

He noted, “We have more coal than anybody,” adding, “We have more oil and gas than anybody.”

Trump: But nothing can destroy coal. Not the weather, not a bomb, nothing. It might make it a little smaller, might make it a little different shape. But coal is very strong pic.twitter.com/SVPLxvxKex

— Acyn (@Acyn) January 23, 2025

Trump is correct.

The US is the world’s largest producer of oil and NatGas. Although it holds the largest coal reserves globally, it ranks fourth-largest coal producer, behind China, India, and Indonesia.

With Trump pausing the war on fossil fuels, the urgent need to ramp up power production through NatGas and coal will likely become a reality. This move aims to ensure a more stable transition to a clean energy future, including nuclear, while hopefully lowering energy bills for Americans after Biden-Harris’ reckless green policies drove power prices sky-high. 

Trump’s comments on coal sent shares of Peabody Energy, the top US coal miner, surging as much as 7.6% last Thursday—the largest intraday gain since right after the November presidential election.

Will Trump’s comments produce a price floor in the low $18 handle, similar to the price action in 2023? 

Meanwhile, the Russell 3000 Coal Subsector Index climbed 4.2%.

“Trump’s support for fossil fuels is well known, but coal didn’t receive as much attention during this campaign as it did in prior elections,” Bloomberg’s Will Wade pointed out in a note. 

Meanwhile, Bloomberg Javier Blas doesn’t believe in coal’s revival: “Respectfully, I disagree. In the US we know that ultra cheap shale gas has eviscerated the economics of coal-fired power plants. In America, the biggest enemy of coal is gas.” 

President Trump told Davos that “nothing can destroy coal. Not the weather, not a bomb, nothing.”

Respectfully, I disagree. In the U.S. we know that ultra cheap shale gas has eviscerated the economics of coal-fired power plants. In America, the biggest enemy of coal is gas.

— Javier Blas (@JavierBlas) January 23, 2025

With a quarter of US coal power plants set for retirement by 2040, the question arises whether Trump’s push for stable and low-cost fossil fuel power generation will include a revival of coal. Ensuring cheap power for the transition to clean nuclear power is critical for the US and maintaining competitiveness with China in global markets.

Authored by Michael Kochin via American Greatness,

As the tide of totalitarian wokeness recedes from the swamp, some of its ugliest and most toxic creatures will find refuge as employees or grantees of tax-exempt nonprofits. In our pluralist and democratic society, we must, to some degree, tolerate organizations with intolerant, inhuman, or wicked purposes, not least because we should have the intellectual humility not to judge every cause on our present knowledge. Who knows what valuable chemotherapy will come from the poison mushroom the Sierra Club is fighting to save?

True, we need, or at any rate must suffer, the plague of foundations—for fear of an unhealthy political monoculture in which our own miscues and misdeeds go unchallenged. That does not mean these foundations’ current powers and privileges should go unscrutinized. The Ford Foundation was set up in 1936 and now controls about $17 billion in assets, and long since passed out of the effective control of the Ford family. The Rockefeller Foundation controls a mere $6 billion but is so alienated from its roots in Standard Oil money that it is divesting from fossil fuels.

These foundations, and the endowed nonprofit sector more broadly, have been captured by a set of woke officers largely unsupervised by equally woke boards of trustees. They are globalist and frequently antihuman, but they benefit from tax privileges at the expense of the American people. The Ford Foundation has given hundreds of millions to Black Lives Matter and similar causes, and nothing to those whose homes and businesses were destroyed by BLM rioters. The Rockefeller Brothers Foundation pays anti-Semitic protestors on Ivy League campuses while claiming to be balanced because it funds the no less murderously intentioned astroturf organization, the Orwellian-monikered Jewish Voices for Peace.

We can’t and we shouldn’t make every rich man in America either blow his stash on drawing to inside straights and launching fast rockets or donate it to more humane causes. But we can require that all nontaxable foundations come to subserve the views of current donors, by requiring every entity in the nonprofit sector to spend down its endowment in a short period of time. At the moment, private foundations are required to spend 5% of their endowment a year. Given market performance, especially in inflationary times, that is far from sufficient to ensure that these foundations do not outlive the intentions of their donors and eat American civilization.

The Federal government should set a spending level sufficient to ensure that all nonprofits are disendowed in a reasonable amount of time. If a 20% required annual payout is not sufficient, we can try 25% or even 50%. If a foundation can’t find a way to spend that money within its alleged lawful purposes, no worries: it can just write a check to the IRS for the difference between what it managed to spend and the required payout. Our national debt is so large that Uncle Sam could swallow all the $1 trillion dollars or more assets of all the private foundations in America with barely a burp.

If the Feds want to be really cynical, the IRS can police the payouts to detect shifting of endowments through shell foundations while ignoring the looting of endowments by foundation executives. No great harm will come to the world from nonprofit vice presidents flying off to Tahiti in private jets with bags of loot and nostrils coated in white powder—we cannot say the same for the money these foundations have lawfully and conscientiously spent on the agendas they hold in good faith.

The Ford Foundation claims to have faith and fidelity to the American nation and pride in the broader American story and to serve, rather than subvert American democratic capitalism. Given its role in funding and promoting the hateful and mendacious 1619 Project, which sought to undermine our faith in America by teaching that Black slavery was the essential pillar of the American project, it is time to put that claim to the destructive test by watching it spend itself down to nonexistence.

The bloated nonprofit sector feeds off American wealth and abuses fundamental freedoms to undermine both liberty and prosperity. Time for some political chemotherapy…

NATO Secretary General Mark Rutte on Monday spoke in Lisbon, Portugal alongside the country’s Prime Minister Luis Montenegro. The Portuguese prime minister pledge that his country will meet its 2% goal by 2029, but Rutte emphasized this “will not be enough”. 

Of course, Rutte primarily had Russia in mind when he spoke the following: “We know that the goal of 2%, now set a decade ago, will not be enough to meet the challenges of tomorrow.”

“To keep NATO strong, we must, however, continue to adapt and to guarantee our security in the future, we also need to ramp up our efforts now. That also means we need to spend more on our defense,” he added.

It has been confirmed that Portugal, a founding member of NATO, only spent 1.5% of its GDP on its NATO commitments in 2023.

White Rutte has been sounding a similar theme and warning since replacing Stoltenberg last year, these calls to go well beyond 2% spending will only amplify now that Trump is in office in the US, and is a reflection of Trump’s own longtime insistence on much higher spending, at a bar of 5%.

The Trump effect has already borne fruit:

Lithuania and Estonia have become the first NATO members to pledge an increase in defense spending to five percent of GDP, according to a report by the Financial Times.

Lithuanian Foreign Minister Kestutis Budrys and Estonian Prime Minister Kristan Michal confirmed their countries’ commitment to strengthening defense capabilities in response to regional security concerns, the report said.

Newsweek and other publications have specifically cited pressure from Trump as well as preparation for his policies as the driving factor that made this happen.

Lithuanian Foreign Minister Kestutis Budrys acknowledged, “Of course, there’s pressure… from our main and biggest ally in NATO. We cannot ignore those messages.”

But Trump’s high bar of the 5% target is going to be a tall order for most NATO allies, so they can certainly expect to keep feeling the pressure over the next four years.

As we detailed previously, Trump recently proposed a more ambitious 5 percent goal, saying during a Jan. 7 press conference at Mar-a-Lago that “they can all afford it.”