Answer: DeepSeek is the Chinese Artificial Intelligence (AI) equivalent to OpenAIs ChatGPT, GROK, or CoPilot here in the United States. China’s DeepSeek claims to be more efficient than competitors, especially as it relates to power consumption. The release of Chinese AI DeepSeekand the concerns about competition with other platforms are overblown. Similar to the ban on TikTok, there is a proposed ban on DeepSeek brought about by Republican Senator Josh Hawley. Hawley sites concern about DeepSeek’s “security, privacy, and ethics.”
Growth, but Slower Growth
This year we’re seeing earnings and performance broaden beyond the usual suspects in technology names. This doesn’t mean that fundamentals for tech names have deteriorated. MAGMAN (Microsoft, Apple, Google, Meta (formerly Facebook), Amazon, and NVIDIA) are on track to grow again this year. AI interest remains with MAGMAN name expecting to increase capital expenditures (CAPEX) by approximately 49% year-over-year in 2025.
Despite uncertainty about inflation, interest rates, the political landscape, and AI domestic stocks ended January2025 broadly positive. These highlight continued optimism for the U.S. economy. The Federal Reserve left interest rates alone at their last meeting. The inference is that they are waiting for obvious signs that inflation will continue to slow on its own while they wait to see how government’s trade and fiscal priorities impact prices in the short term.
Growth, but a slower rate of incremental growth is expected. Meanwhile, as a percentage of total employment, the rate of unemployment has decreased. Also, the labor force participation rate increased ever so slightly from 62.5% in December to 62.6% in January 2025. Labor force participation rate is the percentage of working age adults in the US who are employed or looking for work.
Short-term market volatility may reduce any hint of irrational exuberance, a term coined by Alan Greenspan in 1996 when he was Chairman of the Federal Reserve Board. Balancing optimism with a small dose of pessimism may be beneficial as growth is expected to continue, but not at the rates seen in recent years as we came out of Covid and the dash for cash as we rode the wave of an increased money supply.
Executive Orders signed by President Trump reveal crucial elements of what to watch for, especially with trade policy. On January 31st, Trump announced 25% tariffs on goods from Canada and Mexico and a 10% tariff on goods from China. In typical Trump style, the tariffs were intended to bring these countries to the negotiation table, and they did. Tariffs on Canada and Mexico are delayed for 30 days as the two countries agreed to correct immigration and drug enforcement neglect. The intention of the tariffs is to protect our interests by eliminating or reducing the movement of illegal immigrants and fentanyl into the United States. Only time will tell how many of the other executive orders, including restrictions on the flow of technology to China, will make it past Congress and legal challenges. The United States under Trump intends to shift economic priorities inward creating a strong focus on US based companies.
2025 started out strong with anticipation of whether that trend will continue. Uncertainty remains as we keep a close eye on inflation and policy decisions, including a ban on DeepSeek in the United States. We anticipate volatility and emotional reactions in markets based on innovative technology and policy terms are formulated as the new administration uses policies to achieve objectives not directly tied to reasons why tariffs were implemented in the past. Short-term pain is designed to bring long-term gain. Stay focused and plan accordingly.
Source: FactSet February 7, 2025.
The opinions expressed are those of the writer as of February 19, 2025, but not necessarily those of Raymond James & Associates, and subject to change at any time based on market conditions and other factors. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and investors may incur a profit or a loss. Mention of specific company names is not a recommendation to buy or sell those stocks.
Certified Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. This article was provided by Darcie Guerin, CFP®, First Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email darcie.guerin@raymondjames.com.
