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good morning. Openai has found evidence that its own model was used to train Deepseek’s innovative R1. But do intellectual property rules apply in artificial intelligence competition between the United States and China? Should they do it? I don’t remember being ignored because I didn’t make a fuss about the Manhattan Project or the service contract contract during the space race. And in the future of mankind, AI is considered more important than any of them. Please send your thoughts: Robert.Armstrong@ft.com and Aiden.reiter@ft.com.
FRB
As expected, the Federal Reserve has officially paused today’s stable interest rates. At first, the words of the official statement seemed to be more tagged than the expected market. In December, the statement read, “Inflation has progressed toward 2 % of the committee, but continues to rise.” This time, the statement omitted the “progress status” part. The yield of the Ministry of Finance for two years has temporarily risen:
They soon collapsed when Jay Powell rejected the wording concerns, the central bank thought that the policy was sufficiently restricted and that inflation should continue to fall.
Except for the misunderstanding, it was a boring press conference. Powell did not give a lot of big questions on the day -tariffs, immigrants, taxes, quantitative tightening. The dullness reflects the fact that monetary policy is not so important as the inflation target approaches.
Donald Trump sucks the Fed’s neck. In Davos, the President said, “It requires that interest rates will fall soon.” After the meeting yesterday, he posted the following in the true social:
Jay Powell and the Fed did not stop the problems they had created in inflation, so they did it by unleashing American energy production, reduced regulations, re -adjusts international trade, and restored the American manufacturing industry. But you’ll be more than stopping inflation. Financing our country financially, and otherwise, be powerful again!
Under dissatisfaction, you may actually make concessions here. Requiring a Fedb reduction rate was at most self -destruction, and Davos’ demand was not repeated. He needs to use other tools if Trump wants to change the rate environment, keep inflation low and increase growth. The ball is in front of his coat.
The Fed has all reasons that do nothing. The employment market is healthy, the economy is growing, it has just gained two horizontal inflation measurements, and it seems to be enough to continue quantitative tightening. Policy should remain in a certain place until a better inflatinus is entered or until the number of employment shows a sign of weakness.
On the other hand, we do not know anything about a wide range of priorities, several provocative actions, and a Trump economic policy plan that exceeds many hot rhetoric. As Powell suggests, even if the Fed begins to see the risks of tariffs and expulsions, a powerful economy has room to keep the central bank quiet and see what will develop. It means something. The same is true for other central banks. The Canadian Bank has reduced interest rates today and paused its quantitative tightening. Customs duties were not the only reason for the reduction, but Governor Tiff McLem was not ashamed of the potential effects of Trump’s trade policy. He spent most of the conference, discussing the propelled duties in consideration of the prediction and preparing for negative effects. The closer BOC is part of politics and some economic basis. Any form of tariffs will hurt Canada much more than the United States.
Financial and monetary policy are constantly competing for top spots on market concerns. At the moment, I rarely see it on the Fed. What the market is needed is financial clarity.
(writer)
AI and market
One of the professional dangers of being a market analyst is a periodic, unpleasant moment when the days of efforts seem to be often screaming in the blanks. A tested objection and discussion of collected data, correlation, hypothesis, formed hypothesis, and historical tests. Events can all be reduced.
On the third day of Deepseekweek, it had this clear flavor. What did the market really learn? Of course, a lot of AI is learning from a technical perspective. However, the meaning of these discoveries in economy and corporate finances must be recognized and still ambiguous. There is an consensus that NVIDIA’s competitive moat is a little less width than last week. In all seven remaining parts, the meaning of the fundamentally inexpensive AI model is not so clear because all of the AI races are on many crises. The strategy of not shooting hundreds of millions of dollars due to Apple’s problem is now a bit wise, which is about it.
The impact on the power provider is also unclear. Of the three utility this week, two utility (Vistra and CONSTELLATION) has recovered significantly yesterday, and all three are still rising in the past month. Almost all of the profits inspired by their AI are still in place.
When Microsoft and Meta confirmed the huge capital expenditure budget due to the need for the calculation ability of AI, we gained the clearness of last night. Meta stated that capital spending will increase by 70 % in 2025, up to $ 650 billion.
Nevertheless, recent insights on the most important sector and most important trends in the global stock market seem to be very vulnerable to the near future wholesale revision. However, two familiar insights have been enhanced. Focusing, expensive and optimistic markets are sensitive beasts. Get used to short, sharp movements and countermoubs as seen in the past few days. And don’t forget that AI is a technology that can even surprise even the major practitioners. The prediction of how it evolves should be skeptical.
One good reading material
Breath blues.
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