We Knew It Would Be a Busy Week, But This Was Just Ridiculous

We can’t make this stuff up…  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

February 01, 2025 WEBSITE | UNSUBSCRIBE

We Knew It Would Be a Busy Week, But This Was Just Ridiculous Dear Reader, Last weekend, we expected a busy stretch in the markets. But even we didn’t expect this. AI chaos. The Fed teasing us with rate cuts it definitely wasn’t going to give. A massive stock selloff. And just when we thought we could take a breath — Trump lobs 25% tariffs at Canada and Mexico starting today. But we’d be remiss not to mention the midair collision over Washington, D.C. that left no survivors. Our thoughts are with the victims and their families. It was a tragic and sobering moment in a week that had already felt unhinged. So, where do we even begin? The AI bubble nearly burst when DeepSeek, an obscure Chinese AI firm, suddenly claimed to have cracked the code on cheap, open-source AI. If true, that would mean the billions poured into AI infrastructure — by Microsoft (MSFT), Meta (META), and Nvidia (NVDA) — were wasted. Investors panicked. Nvidia plunged. AI stocks took a beating. It was carnage. Then came the Fed. Powell stepped up to the mic and essentially told everyone, “You’re not getting a rate cut anytime soon, but thanks for playing.” Investors pouted. Big Tech earnings from Microsoft and Meta tried to shake off the AI panic, showing they’re still spending billions on AI infrastructure. But markets weren’t buying it. And just when it seemed like we might close out the week quietly, Trump announced 25% tariffs on Canada and Mexico. Auto stocks tanked. Energy prices shot up. Markets scrambled to figure out what it all meant. All in all, the market got punched about five different times this week. But here’s the thing… When the dust settles, opportunities emerge. And that’s exactly what we’re going to talk about. AI Panic: Did DeepSeek Just Kill Nvidia? The week started with a bang — a big, China-shaped one. DeepSeek, a Chinese AI startup led by a hedge fund guy, dropped a bombshell. It claimed to have built an AI model just as powerful as OpenAI’s but with 80% less computing power and at a fraction of the cost. That’s like saying you built a Ferrari in your garage using parts from a lawnmower. The market reaction was swift and ugly. Nvidia, the king of AI chips, got demolished, losing nearly $600 billion of market cap in a single session. Microsoft, Meta, and Google (who’ve been pouring billions into AI) saw their stocks take a hit too. If AI doesn’t need massive data centers and expensive chips anymore, then what was all that spending for? But not everyone bought the hype. Elon Musk called DeepSeek’s claims fake. Others pointed out that the company might’ve just stolen OpenAI’s work and rebranded it. And now, U.S. officials are investigating whether DeepSeek illegally obtained Nvidia’s chips through Singapore. Enrique took a deep dive into DeepSeek this week and wasn’t buying it either. He laid out three key reasons why this whole thing reeks of a setup: No way a tiny Chinese startup beat the best AI researchers in the world. No way they built it for just $6 million when others have spent billions. The timing (released right as Trump took office) looks way too convenient. And then there’s the hedge fund connection. What are the odds that a hedge fund guy creates an AI startup, releases “earth-shattering” news, and then AI stocks nosedive by a trillion dollars? There’s speculation that DeepSeek’s backers might have shorted the entire AI sector before releasing their “disruptive” AI model. Now, Nvidia didn’t stay down for long. After the market digested what was happening, AI stocks stabilized — a sign that the panic was overblown. And that could mean massive buying opportunities ahead.

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The Fed Speaks… And Says Nothing New Wednesday, Jerome Powell walked up to the mic and crushed the market’s dreams. Investors were hoping for a clear signal that rate cuts were coming. Instead, they got a vague speech about how the Fed “isn’t in a hurry” to lower rates. The market didn’t like that. Stocks dipped. Bond yields ticked up. And somewhere, a group of Wall Street traders probably threw their Bloomberg terminals out the window. But here’s the real takeaway: Inflation is cooling, but not enough. The economy is still strong. Trump’s trade policies add a layer of uncertainty. Greg summed it up best: Wednesday’s FOMC announcement was a nothing burger. So, what does that mean? If you’re a long-term investor, nothing changes. If you’re a trader, buckle up — volatility isn’t going anywhere. Meta & Microsoft: Still Spending Like It’s 2023 If DeepSeek made investors question AI’s entire future, then Microsoft and Meta’s earnings on Wednesday were a desperate attempt to restore faith. Microsoft’s cloud revenue slowed, spooking investors. Meta is still spending like crazy on AI infrastructure, but Wall Street is giving Zuck a pass. Both companies made it clear: they’re all-in on AI, no matter what DeepSeek says. The problem? Wall Street is losing patience. Investors want proof that all this spending is actually going to pay off. Greg pointed out that tech got slammed this week, but the rest of the market? Not so much. Cyclical stocks (industrials, energy, financials) held up just fine. That’s a huge sign that AI panic isn’t spreading to the broader market. For now, Microsoft’s stock dipped after earnings, while Meta’s held steady. But the next few months will be critical. What’s Next? The Opportunities Created by This Chaos This past week was one of the most chaotic in months, but chaos always creates opportunity. Some stocks got unfairly punished. Others got sold off purely out of panic. Greg pointed out that this wasn’t a “tech disaster” at all. Just a sector rotation, something that happens all the time. And on Monday, we’re diving into the biggest opportunities created by this mess. Enrique has a batch of oversold stocks that are poised to bounce back — companies that got caught in the crossfire but are still fundamentally strong. Until Monday, Nick Editor, Truth & Trends

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