From Marc to Market, January 27:
Overview: There have been two significant developments that are rocking US equities and sending US yields sharply lower. First, Chinese-made AI has taken the world by storm. Apparently, DeepSeek is cheaper to build, consumes less energy, and is faster than the other AIs. There seems to be innovations outside of replication. The second is a brouhaha over Colombia's initial refusal to accept US military planes bringing back illegal immigrants. There were tariff and counter-tariff threats before the Colombia appears to have capitulated. Trump's quick use of the tariff stick spurred a broad advance in the dollar, but as the Colombia's challenge was resolved, the dollar surrendered most of its early gains. The Mexican peso, however, remains the weakest emerging market currency, trading almost 1% lower on the day.
The S&P and NASDAQ are poised to gap sharply lower as the futures are trading about 2.5% and 4.5% lower. Asia Pacific equities were mixed after MSCI's regional index rose nearly 2.3% last week. Europe's Stoxx 600 is off by about 0.6%. The sharp equity losses have given US Treasuries a boost. The 10-year yield is off almost a dozen basis points to near 4.50%, the month's low. European benchmark yields are off mostly 3-7 bp. Gold initially fell to around $2747.50 in the Asia Pacific session after settling near $2770.60 ahead of the weekend. It recovered to nearly $2770 in Europe before stalling. March WTI extended last week 3.5% drop and dipped a little below $74 before recovering to approach the pre-weekend high near $75.20.
USD: The Dollar Index is coming off its first back-to-back weekly loss since the end of September. The technical tone has deteriorated. A close above 107.75, the neckline of a potential head and shoulders pattern is needed to begin stabilizing the technical tone....
....MUCH MORE
Earlier on DeepSeek:
"DeepSeek ‘punctures’ tech spending plans, and what analysts are saying" (NVDA; ARM; AVGO; TSM; ASML)
And January 25's "Why everyone in AI is freaking out about DeepSeek".
