Asia had a rough day; South Korea’s fell as much as 8.2%, Japan’s -4.5%, China -2.1%, Taiwan -3%, driven by concerns over AI valuations. The weakness appears to have been triggered by price increases announced by Apple () for its computers due to soaring memory chip prices, expected to domino throughout tech products.
There are concerns that costs for the AI build out will remain high, while there are increasing reports that users of AI solutions, priced in tokens, are having to restrain unlimited use due to high costs, and are switching to weaker but much cheaper AI alternatives, such as China’s DeepSeek which prices its tokens as much as 75% less than the most expensive U.S. bleeding edge AI offerings. The chatter that is pushing back its IPO to next year is seen as a sign that, currently, profitability remains a problem.
continues to fall, down 19% in a week and dropping below $69/bbl today. This is despite reports of ships being attacked in the Strait of Hormuz for not following Iran’s instructions. There has been little news about the negotiations between the US and Iran, and success is currently being judged by oil prices.
Interest rates are following oil lower, with the down 5bps and the down 2bps. The 2-year is down 15bps in a week, the 10-year is down 12 bps.
The dip buyers showed up this morning, pulling the market back to flat. Tech still remains weak, as are momentum names. It’s a tech correction more than a market correction, with the tech light indexes up for the trailing month and tech-heavy indexes down. A classic reversion to the mean, with a concern regarding an AI bubble. The trend remains positive.