The Rundown - Hot CPI Report Drags Down Stocks, DeepSeek Pushes Chinese Tech Into Bull Market

Episode Date: February 12, 2025

Stock market update for February 12, 2025.Follow us on Instagram@therundowndaily

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadmani, and today is Wednesday, February 12th. In today's episode, we recap the latest inflation data that has the market shocked. We also tell you why Deep Seek might be the reason why Chinese tech stocks are rallying this year. Then stick around to the end of the show for an earnings recap of DoorDash and Lyft and find out how many people watched the Super Bowl this year. I was kind of surprised by the numbers, given them.

that it was a blowout. All right, let's go. Well, Tuesday was a mixed day for the stock market. The S&P finished the day flat, while the NASDAQ dropped 0.4%. Meta stock continued its hot streak. It's now gone up for 17 days in a row. Unfortunately, the same can't be said about Tesla. Their shares have dropped for five straight sessions. Things were especially bad on Tuesday when Tesla stock dropped 6% following the news that the Chinese EV company, BYD, was partnering with Deepseek on AI Tech. We're going to talk more. about deep seeking the impact that it's having on Chinese tech stocks in a bit. But this wasn't great news for Tesla.

The stock has now dropped 19% this year, and it's on the verge of losing its trillion-dollar market cap status. So we'll have to see if it can make a bounce back today. It doesn't look great right now, though, because the markets are red across the board after we just got some new inflation data, and oh boy, it came in pretty hot. The January CPI report came out this morning, and it showed that inflation was up 3% in January compared to a year ago. that is higher than expected.

And I think what's more concerning is that prices were up 0.5% from December. That's a pretty big month-to-month increase and it could be a sign that inflation might be re-accelerating. And like I said, markets seem to be shocked by this report. I don't think many expected inflation to get back to the 3% range

and stocks are read across the board in the pre-market while I record this. I think this high inflation report pretty much eliminates any chance of a rate cut in the first half of 2025. In fact, I wouldn't be surprised if we start hearing rumors of a rate hike. That might be an overreaction.

But the next Fed meeting is on March 19th. So Jerome Powell and the Fed are going to have some time to figure out their next move. And speaking of Jerome Powell, he testified to Congress yesterday. And the whole thing was relatively drama-free. Nothing really noteworthy was said. He pretty much had the same things that he said at the Fed meeting a couple weeks ago, that the Fed is not in a rush to lower interest rates because the labor market remains healthy and inflation continues to be higher than what they would like.

This was before he saw the 3% CPI report. So yeah, pretty sure we're not getting rate cuts for a while. Let's run through some headlines. Starting with Microsoft. Microsoft is partnered with the defense startup and a role to develop augmented reality headsets for the U.S. Army. See, back in 2021, Microsoft won a $22 billion contract from the U.S. Army to build 120,000 HoloLens headsets.

But then Microsoft could never really figure out how to make them. So they discontinued making hollow lenses last year. So now they're just handing off making these headsets to Enderl. And this is a full circle moment for the founder of Enderl, Palmer Lucky. If that name sounds familiar, he was the founder of the Oculus VR headsets, which Facebook bought for $2 billion back in 2014. Palmer worked at Facebook for a couple years before getting fired in 2017. It's a whole deal.

I'll skip all the drama. But yeah, the dude knows headsets. Now, after being fired from Facebook in 2017, he started Enderl to compete with the traditional defense contractors like Northrop German and Lockheed Martin. And I say things are going pretty well for him so far. Today, the company makes drones and smart missiles for the military. They recently announced a $1 billion manufacturing facility in Ohio and they're rumored to be on the verge of raising $2.5 billion at a $28 billion valuation. So defense tech companies are hot right now. So yeah, Palmer Lucky is back to making headsets, this time for the U.S. Army. Now, this partnership

between Microsoft and Enderol and still needs to be approved by the Department of Defense, and Microsoft will still be involved. They're going to provide cloud computing and artificial intelligence capabilities. And speaking of artificial intelligence, we have to talk about Deepseek because Chinese tech stocks have been on a bull run since Deepseek became a viral sensation. The Hangsang Tech Index, which tracks some of Chinese biggest tech companies, has gone up 25% since mid-January, far outpacing the NASDAQ's 4.4% growth over that same period. According to the financial times, investors are showing renewed interest in the Chinese tech sector, especially after Deepseek showed their AI model that rivaled U.S. Big Tech giants like ChatGPT,

despite operating on a tight budget. You know, since Deep Seek's model launched in mid-January, other Chinese companies have launched their own models that seem to be pretty competitive. Like Alibaba released upgrades to their Quinn AI model, which outperformed Deep Seeks offering. Meanwhile, the Chinese EV giant BYD just began selling cars equipped with its God's Eye self-driving technology. And this is at no extra cost. For comparison, Tesla charges 90s. $99 per month for its self-driving software in the U.S.

BID is offering it for free. And all of this AI innovation is happening in China, despite the U.S.'s chip export restrictions to China. These companies don't have access to Nvidia's latest advanced AI chip. There's still the Singapore loophole that I'm sure a lot of these Chinese tech companies are utilizing. For some reason, Singapore accounts for 20% of Nvidia's revenue. Kind of sus. But still, what these Chinese tech companies are doing is very impressive.

And it's caught the attention of investors. So the big question now is the U.S. going to impose tighter restrictions on chip exports to China? Or does it even matter? Because right now, China is in the middle of an AI tech boom. I think the deep seek moment in China is similar to the chat GPT moment that we had in the U.S. back in 2020. Everyone took AI seriously after chat GPT came out. And the same thing is happening in China. Everyone's taking Chinese AI seriously after Deepseek came out.

So shout out to anyone that bought some Chinese tech stocks earlier this year. You're probably feeling pretty good right now. Let's talk about some stocks making moves today. DoorDash stock is up this morning after the company reported their second ever quarterly profit since going public in 2020. Company also posted better than expected growth for the current quarter. The total order value on the app jumped 21%, and the company's revenue, which is a cut that it takes from these total order values, grew by 25%. Both those metrics topped Wall Street expectation. You know, DoorDash is the largest food delivery service in the U.S.

In fact, they're by far the largest. They control two-thirds of the market. That might be a surprise to a lot of people. It was to me. I thought that Uber Eats would have a bigger market share, but no, it's not even close. DoorDash dominates. Their market share is nearly triple that of Uber's food delivery unit. I'm not going to lie, I was kind of a DoorDash skeptic, but it's pretty clear.

We're all kind of addicted to ordering food on our phones. That wasn't just a pandemic thing. That seems to be permanent. And DoorDash is the leading company to provide that service. That's why the company continues to see massive growth, and they're starting to make profits as well. DoorDash stock is up more than 2% this morning in reaction to these earnings, and the stock is up more than 15% this year. Now, on the flip side, Lyft's stock is down sharply

after the company shared a weak outlook for first quarter gross bookings. And they're blaming it on cold weather. They said that the cold weather is resulting in falling demand for ride sharing and bike rentals. Now, to make matters worse, they've had to lower their prices to stay competitive. Lyft is just having a hard time competing with Uber. They said that their Q2 bookings will take a 2% hit because of losing its partnership with Delta Airlines who signed a multi-year deal with Uber. So it's tough for Lyft right now.

The stock is down around 10% this morning in reaction to these earnings. Let's wrap the show with the fun fact. The Super Bowl had record viewerships for the third straight year, and it has a lot to do with streaming. 126 million people tuned in to watch the Philadelphia Eagles absolutely destroy the Kansas City Chiefs. And the fact that it was a blowout I thought would hurt the viewership numbers didn't seem to matter.

Fox averaged 115.5 million viewers, while the network's free streaming service to be brought in 13.6 million viewers. That's very impressive. Another 800,000 viewers came from NFL digital properties. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. Got a lot going on in the markets. Make sure you guys are tuning into the podcast to stay in the loop.

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