After Monday’s tech-fueled sell-off, buyers rushed in, snapping up the DeepSeek dip and sending stocks higher. Despite the bounce, decliners still outpaced advancers nearly 2-to-1, showing underlying weakness beneath the rally.

⚡ Closing Bell:

• Dow Jones: ⬆️ +0.3% › 44,850.4 › Powered by tech, dragged by consumer staples.

• S&P 500: ⬆️ +0.9% › Bounces back, but breadth remains weak.

• Nasdaq: ⬆️ +1.6% › Tech shakes off DeepSeek fears.

• Russell 2000: ⬆️ +0.2% › Small caps lag behind.

Sector Moves:
✅ Winners: Tech and communication services bounce back.
❌ Losers: Consumer staples lag the pack.

Treasuries & Economic Pulse:

• 10-year yield: ⬆️ 4.53% › Little changed as traders await Powell’s remarks.

• Consumer confidence dipped, marking its first decline since September.

• US home prices hit another record, pushing affordability concerns higher.

• Durable goods orders fell unexpectedly, with a sharp drop in aircraft demand

❗ What’s next?
With Big Tech earnings and a Fed rate decision today, markets are in for another volatile stretch. The question is: Was this a dead-cat bounce or a real turnaround?

#TRUTH:
❗❗❗ “Get over being a sugar cookie and keep moving forward.”
~ Admiral William H. McRaven

DeepSeek’s $5.6M Fairytale:

DeepSeek Tops the AI Charts—But the Math Doesn’t Add Up

Chinese AI startup DeepSeek shot to the No. 1 free app on Apple’s iPhone, surpassing ChatGPT and Gemini, after claiming it trained its chatbot for just $5.6M—a fraction of what U.S. tech giants have spent.

The news spooked markets, as DeepSeek’s AI competes well with leading models, despite using cheaper, U.S.-approved Nvidia chips due to export restrictions. Analysts are scrutinizing the startup’s research, questioning whether this low-cost training approach is truly scalable, and …

Here’s Why the Numbers Don’t Add Up:

› The $5.6M cost refers to one training run using 2,048 Nvidia H800 GPUs—but building a model takes multiple runs, fine-tuning, and experimentation.
But there’s a catch—it’s just the rental cost, not the total cost of ownership (TCO).

› 2,000 Nvidia H800 GPUs = $45M just for hardware.

› Total cost to build and operate a cluster? Easily in the nine-figure range.

› That doesn’t even cover AI researcher salaries, failed training runs, or data collection—all major expenses.

› On top of this, DeepSeek’s data center is backed by a major Chinese investment fund, giving it access to far more computing power than what’s being disclosed.

💡 The takeaway? Training a top-tier AI model isn’t a one-and-done deal. The real cost of DeepSeek’s R1 is likely multiples higher—but the headlines? They tell a different story.

In Sync:

Bitcoin and altcoins stumbled early in the week, shaken by DeepSeek’s AI shockwave and a broader tech selloff. But as the dust settled, crypto rebounded alongside equities, with traders eyeing today’s Fed decision as a potential catalyst.

Market Check:
› Bitcoin (BTC): ⬆️ $102,272.50 (+0.3%) › Stabilizing as AI volatility cools.
› Ethereum (ETH): ⬆️ $3,131.75 (+0.26%) › Following BTC’s recovery.
› XRP (XRP): ⬆️ $3.12 (+0.73%) › Leading the pack as investors reshuffle.
› CoinDesk 20 Index: 📉 Dropped early but rebounded with stocks.

Bitcoin’s Identity Crisis:

Bitcoin’s correlation with tech stocks just hit an all-time high, raising fresh doubts about its “digital gold” narrative. Instead of acting as an inflation hedge, BTC has been moving in lockstep with the Nasdaq—making it more of a high-beta tech play than a safe-haven asset.

The Smart Money Moves

Despite volatility, institutional players aren’t backing down:
› BlackRock (BLK +2.1%) › Doubling down on crypto exposure.
› MicroStrategy (MSTR -3.47%) › HODLing through the turbulence.

With the Fed widely expected to keep rates steady, Powell’s tone could set the stage for crypto’s next big move. Will risk assets get the green light, or are we in for another shake-up?

Lukewarm Win ☕ :

Starbucks’ holiday season wasn’t exactly a caffeine-fueled comeback—but it also wasn’t the complete burnout Wall Street braced for.

The Breakdown:

• Revenue Beat: Starbucks (SBUX) pulled in $780M in net income—down 23% YoY, but still better than the expected $766M.

• Same-Store Sales: Fell 4%, but hey, that’s better than the 5.5% drop analysts had penciled in.

• Stock Reaction: Investors took it as a win, sending shares up 4% after hours.

The “Back to Starbucks” Playbook
CEO Brian Niccol, fresh from Chipotle, is steering the company’s turnaround by bringing back the Starbucks vibes—think handwritten cup names, actual mugs, and (ironically) a no-loitering policy.

Oh, and he just cleaned house:
– Execs Out: Two top execs got the boot, including the North America president and supply chain chief—roles eliminated entirely.
– New Hires: Two of Niccol’s old Taco Bell buddies are sliding into freshly minted roles, including Chief Store Officer and Chief Store Development Officer.

The Bigger Picture:
It’s too early to call it a comeback, but Starbucks seems to be brewing something different. Investors are watching closely—because at the end of the day, coffee is still a $100B habit.

Highlights of the Day:

① Tech Stocks Rebound ✅:

• Nvidia (NVDA): ⬆️ +8.9% › Snapped back from Monday’s $589B wipeout.

• Apple (AAPL): ⬆️ +3.7% › Recovered ground ahead of earnings.

• Microsoft (MSFT): ⬆️ +2.9% › Part of Big Tech’s broad rebound.

② Powering Up: Data Center Energy Plays Surge ✅

• GE Vernova (GEV): ⬆️ +7.6% › Jumped on a new data center energy deal with Chevron.

• Vistra (VST): ⬆️ +9.2% › Surged on the same data center energy partnership.

③ Cruising & Biotech Bounce

• ✅ Royal Caribbean (RCL): ⬆️ +12% › Best performer on the S&P 500 after strong Q4 results.

• ✅ Moderna (MRNA): ⬆️ +7.9% › Continued its strong rebound from multi-year lows.

④ Weak Spots: Earnings & Cost Pressures Hit Hard ❌

• General Motors (GM): ⬇️ -8.9% › Weak 2025 outlook with no cushion for tariffs or EV policy changes.

• JetBlue (JBLU): ⬇️ -25.7% › Worst performer of the day as cost concerns mount.

• S&P Global (SPGI): ⬇️ -0.06% › Lost ground despite record-high home prices.

• Consumer Staples Sector: ⬇️ Lagged behind as risk-on sentiment returned.

Commodities Check: ✔️

• WTI Crude: ⬆️ +1% to $73.89/barrel.

• Gold: ⬆️ +1.2% to $2,772.30/oz.

• Silver: ⬆️ +1.7% to $30.92/oz.

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The stinger

Disclaimer

This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.