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Deep Seek and the AI "Space Race"

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After reaching new record highs in recent weeks, markets fell earlier this week on worries that cheaper AI competition from China could pose risks to U.S. tech companies. (1) What caused the market reaction.

Let’s dive in.

What caused the tech market to move lower?

Much of the market run-up over the last two years has been driven by AI mania, with U.S. companies leading the charge. However, this narrative faced a test when DeepSeek, a Chinese tech startup, released an advanced (much cheaper) AI model.

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Reflections, Expectations

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I hope your start to the new year has been going well and that you made some special memories with your loved ones over the holidays. For my part, please know that it was a joy to serve you last year, and I greatly look forward to working with you in the year ahead!

As we step into 2025, I thought it would be beneficial to take a moment and reflect on what an extraordinary year 2024 was for investors.

[Not interested in market commentary? Skip to the postscript for a fun fact about 2025.]

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Tax & Policy Uncertainty

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Now that the election is over, what will the new administration prioritize in the new year? Here are a few things we’re watching in the months ahead:

The debt ceiling debate may reignite in early 2025.

The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight. (1) When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.

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Trump Wins: And Markets?

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President Trump has won reelection; what does that mean for investors?

Let's discuss.

As of this writing, Republicans have won the White House and a Senate majority, and may win a House majority. (1)

Markets reacted to the news by rallying to new record highs. (2) Does that indicate they see president-elect Trump's promises as favorable for stocks? Or is it simply a reaction to an end to election-related uncertainty? History can offer us some clues.