Good morning. How bad was yesterday’s tech debacle? It depends on what color glasses you happen to be wearing. I don’t mean to make this sound like a minor thing … it isn’t … as it quickly became evident that U.S. dominance in the AI space is not a certainty as non-US companies and countries are doing their best to advance from the role of understudy on to the world’s stage. But let’s look at things another way. Sure, headlines point out the move in one stock yesterday (Nvidia) was the largest “market cap drop” in history … but it might be important to keep in mind the stock decline only brought the price down to where it was last October … meaning less than 4 months of advance was eliminated. There is even one more bit of interesting news (for your water-cooler discussions today). Out of the largest 10 declines in market cap … 8 … not a misprint … 8 of the 10 belong to Nvidia! While review of the actual effect of DeepSeek will take a few days (or more), there are other items in the news. There is a proposal being made, according to Bloomberg, for an all-country tariff on imports of 2.5% … touted to “protect American industries” … and that may be just the start … as Financial Times reports the U.S. Treasury pick, Scott Bessent, feels it would then increase by the same amount each month. Opponents quickly point to the claimed result of a previous tariff (Smoot-Hawley Tariff Act of 1930) which … due to retaliation … almost completely shut down international trade … and is pointed out as one of the reasons the Great Depression lasted as long as it did. But there is a view that things are different this time, as the U.S. has a stronger “bully pulpit” today, upon which to stand, than it did a century ago. And the power of persuasion might not be limited to countries. One note of interest was how quickly Google agreed to change (on Google Maps) the naming of “Gulf of Mexico” to “Gulf of America” and Mount Denali back to Mount McKinley. It took a great amount of time to get the name “Denali” on the mountain … but what took 40 years to accomplish was undone in something like 40 minutes. The issue is the rumor that California will soon be renamed “Ivanka.” Okay, I am sure hate mail will be sent my way. That was intended as a joke. That will wrap things up for today as the market just opened barely positive on what promises to be a nervous day for investors, hoping yesterday was just a speed bump. Meanwhile, I have to run out this morning to find out just what the heck is going on with a hearing aid I sent out for repair. I brought it in more than 2 weeks ago … and haven’t heard anything since. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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