Especially for anyone who has no stock market exposure–and therefore isn’t losing money today–current stock action is very intriguing.
We know that for a long time the trend on Wall Street was to replace human traders with trading bots. Many of the latter are designed to scan the news and respond with very great speed. The ironic thing is that today’s selloff seems to have been triggered by reports a Chinese AI construct that appears to work almost as well as US-made ones but to cost orders of magnitude less. (Apparently if you use the in-China version and want info about the Tiananmen Square massacre of protesters in 1989 you’re out of luck. But otherwise it’s reported to be pretty good.)
My thoughts:
–let’s assume the story is at least substantially true
–is it so surprising that after being cut off from access to the most advanced NVDA offerings that Chinese firms would turn to using last year’s (maybe 10% less powerful) in more subtle ways than non-boycott areas that will quickly get more powerful toys to play with?
–for a while, valuations have seemed to me to be unusually stretched for the biggest tech names, meaning a correction was on the cards, even if the eventual trigger was unclear
–the AI news has erased the degrading way immigrants rounded up by ICE were shipped off to Colombia over the weekend, apparently in handcuffs and without bathrooms, as well as the inability of the White House to spell that country’s name
–I think the most serious issues for the stock market in 2025 will have less to do with tech and more to do with government policy–with tariffs, deportations and a growing government deficit (with implications for interest rates and the currency) heading the list of key variables.