January 28 2025

FLASH…Treasury secretary Scott Bessent Confirmed…
1. Big Tech Weathers AI Stock Plunge as Suppliers Tumble
2. Hedge Fund Billionaire Dalio Warns of AI-Driven Market Bubble
3. White House Freezes Federal Grant Programs
4. ICE Arrests Increase After Slow Start Under Trump Administration
5. Philadelphia Whole Foods Unionizes
January 28, 1986: The space shuttle Challenger explodes after liftoff

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FLASH…Treasury secretary Scott Bessent Confirmed…

1. Big Tech Weathers AI Stock Plunge as Suppliers Tumble

Monday’s AI crash was led by…the “chips and shovels” that supported the development of AI, not the developers of these fancy programs themselves. Nvidia stock was down 17%, losing more than half a trillion dollars of value, nuclear-power stocks Constellation Energy, Vistra, Oklo and NuScale Power were down 21%-28%, and data-center supplier Vertiv Holdings was off 30%. What about the AI companies? What are the prospects for Microsoft-backed OpenAI, Alphabet, Amazon-backed Anthropic, Elon Musk’s xAI and all the others to make money when faced with a low-cost competitor? DeepSeek is, after all, available, like Meta’s Llama, to download and tweak free.  On Monday this wasn’t the main concern, with Microsoft off 2.1%, Alphabet 4.2% and Amazon slightly up. They have big, profitable businesses they are using to finance AI development, and will also be able to use the techniques DeepSeek shared to lower their own costs. But they just lost one of the biggest barriers to entry. If a new AI model can be produced for just a few million dollars by the tech arm of a Chinese hedge fund, maybe others can do the same.

Article Source: WSJ

2. Hedge Fund Billionaire Dalio Warns of AI-Driven Market Bubble

Investor exuberance over artificial intelligence has fuelled a “bubble” in US stocks that resembles the build-up to the dotcom bust at the turn of the millennium, billionaire investor Ray Dalio has warned. Dalio told the Financial Times that “pricing has got to levels which are high at the same time as there’s an interest rate risk, and that combination could prick the bubble”. The warning from Dalio, the founder of hedge fund Bridgewater Associates and one of the highest-profile figures on Wall Street, comes as concerns swirl over whether the boom in US AI stocks has gone too far. Investors also remain concerned about elevated borrowing costs, worries that sharpened after Federal Reserve officials in December trimmed their expectations for rate cuts this year. “Where we are in the cycle right now is very similar to where we were between 1998 or 1999,” Dalio said. “In other words, there’s a major new technology that certainly will change the world and be successful. But some people are confusing that with the investments being successful.” The late 1990s saw a run-up in tech valuations, powered in part by low interest rates and growing adoption of the internet, followed by a brutal correction that came as Alan Greenspan’s Fed tightened monetary policy.

Article Source: FT

3. White House Freezes Federal Grant Programs

The White House budget office is ordering a pause to all grants and loans disbursed by the federal government, according to an internal memo sent to agencies Monday, creating significant confusion across Washington. In a two-page document, Matthew J. Vaeth, the acting director of the White House Office of Management and Budget, instructs federal agencies to “temporarily pause all activities related to obligations or disbursement of all Federal financial assistance.” The memo, a copy of which was obtained by The Washington Post, also calls for each agency to perform a “comprehensive analysis” to ensure its grant and loan programs are consistent with President Donald Trump’s executive orders, which aimed to ban federal diversity, equity and inclusion initiatives, and limit clean energy spending, among other measures. The memo states its orders should not be “construed” to impact Social Security or Medicare recipients, and also says the federal financial assistance put on hold “does not include assistance provided directly to individuals.” But the document says programs affected are “including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

Article Source: WaPo

4. ICE Arrests Increase After Slow Start Under Trump Administration

The Trump administration is ramping up arrests of immigrants in the country illegally, government data show. U.S. Immigration and Customs Enforcement made nearly 1,200 arrests on Sunday and just under 1,000 on Saturday, marking an uptick after arrest numbers in President Trump’s first few days in office were roughly in line with daily averages seen under the Biden administration. ICE arrested approximately 310 people a day during former President Joe Biden’s last year in office.

Article Source: WSJ

5. Philadelphia Whole Foods Unionizes

Workers at a Whole Foods Market in Philadelphia voted on Monday to become the first unionized store in Amazon’s grocery chain, opening a new front in the e-commerce giant’s efforts to fend off labor organizing in multiple segments of its business. Employees at the sprawling Whole Foods store, in the city’s Spring Garden neighborhood, voted 130 to 100 in favor of organizing with the United Food and Commercial Workers union, the National Labor Relations Board said. Store employees said they hoped a union could help negotiate higher wages, above the current starting rate of $16 an hour, and better benefits. Some longtime employees, who have been with Whole Foods since well before Amazon bought the chain in 2017, said reductions in benefits and cuts in staffing levels when Amazon took over, among other changes, had been sources of frustration.

Article Source: NYT

January 28, 1986: The space shuttle Challenger explodes after liftoff

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Sources

2. https://www.wsj.com/tech/ai/deepseek-tech-stocks-a3e83478?mod=WSJ_home_mediumtopper_pos_2

3. https://www.ft.com/content/eef8dbc9-bd04-4502-bdc2-1092aa4251b2

4. https://www.washingtonpost.com/business/2025/01/27/white-house-pauses-federal-grants/

5. https://www.wsj.com/politics/policy/trump-ramps-up-deportation-effort-after-slow-start-546d9954?mod=hp_lead_pos7

6. https://www.nytimes.com/2025/01/27/business/whole-foods-union-vote.html