Here are five things you need to know this morning
Manifest DestinAI in doubt: It’s a sea of red in tech stocks this morning in response to the launch of the latest version of Chinese artificial intelligence (AI) service DeepSeek. The open-sourced AI assistant can allegedly produce results similar to major incumbent players like OpenAI, but at a fraction of the computational, energy and financial costs. Founded in 2023, DeepSeek has operated mostly under the radar before launching the first version of its model in November. The third version launched this month and is showing some breathtaking results. Reports over the weekend suggest that the latest iteration was created with as little as US$6 million, a fraction of the hundreds of millions that have been spent developing the ChatGPTs of the world, and the billions of dollars more that investors have bid up in stock prices of anything related to the technology. Silicon Valley venture capitalist Marc Andreesen called the development the “Sputnik moment” for AI, referencing the moment in the 1950s when Russia shattered America’s belief in its own space dominance by successfully launching a satellite into orbit years before NASA could. DeepSeek is “one of the most amazing and impressive breakthroughs I’ve ever seen — and as open source, a profound gift to the world,” Andreesen said in a post on X. While the prospect of dramatically cheaper AI may prove to be a moonshot and giant leap for mankind’s productivity, it is certainly not a gift for investors in AI-related tech stocks, almost all of which are plunging into the red this morning. Chip maker Nvidia is leading the way, down more than 10 per cent. That’s roughly $200 billion worth of shareholder value by itself. While DeepSeek’s surge is a shot across the bow from China’s secretive AI capabilities, time will tell if it turns out to be a kill shot for U.S. hegemony in the sector.
Trade war of words heating up in Colombia: We’ll be watching developments in Colombia today, as the South American nation finds itself in an escalating trade war with the United States. The dispute began after the U.S. sent two military planes full of deported migrant workers to the South American nation last week, but officials in Colombia didn’t allow the flights to land and deplane. That didn’t sit well with the U.S. president, who reached for his favourite threat in response: imposing 25 per cent tariffs on all imports from the country, with a threat to increase it to 50 per cent unless they bow to his will. Cut flowers, oil and of course coffee are the main things that Colombia sells to the U.S., while it mostly buys corn in return. Colombian president Gustavo Petro exchanged barbs with Trump all weekend and investors are anxious. The Colombian peso is down almost two per cent this morning, and the local stock market is expected to open sharply lower.
Canada should cut rates quickly, economist says: A half dozen advanced economies including Canada shouldn’t delay in cutting interest rates as the job market is showing signs of recession. That’s according to a report this morning from Dario Perkins, an economist with TS Lombard and former official at Britain’s Treasury. In addition to Canada, Perkins says policymakers in the U.K., Sweden, Norway, New Zealand and Australia should “get a move on” and cut interest rates to bolster their wobbly economies. “They are reluctant to diverge from the Fed but allowing your economy to crash is not the most sensible way to support your currency,” he said, adding that “if they don’t cut quickly, they might find themselves in an unnecessary recession.” The Bank of Canada (and the U.S. Federal Reserve) are poised to announce their latest rate decision on Wednesday of this week, and while a cut is expected, the market is only expecting one more move from the BoC between now and the end of the year.
CN Rail workers could strike as soon as tomorrow: We will be keeping an eye on developments at CN Rail, after one of the rail carrier’s main unions, the International Brotherhood of Electrical Workers, said on Saturday that its members voted in favour of a 72-hour strike notice. That timeframe is set to expire as early as tomorrow. The union represents about 750 workers. The company says it has a contingency plan in place for any disruption. The major issues in the dispute are higher pay and a better work-life balance.
AT&T earnings beat: Shares in AT&T are poised for gains today after the U.S. telecom firm posted fourth quarter results premarket this morning, numbers that beat analyst expectations on most metrics. Revenue came in at US$32.3 billion, a one per cent increase and better than forecasts. The company added 482,000 new customers during the quarter, better than the 442,000 Wall Street was looking for. And adjusted earnings came in at 54 cents per share, the same as last year but ahead of expectations of 50 cents.
