Starting today’s newsletter like my investments: with hope. Hope for the markets to be back up, because they’ve fallen 📉.

Today’s top stories:

1. Fed lowers rates by a quarter point marking last cut in 2024.

2. Microsoft bought 485,000 Nvidia chips, double that of Meta this year.

3. Honda and Nissan discuss potential merger.

4. China fires back at US tech restrictions.

5. The o1-preview model outperforms real physicians.

6. Nvidia aims for $150B cloud revenue but in its software business.

7. The DOJ calls on Perplexity Exec. in Google antitrust case.

Market Pulse

🗓️ Economic Calendar

🔥 Top Stories

1. Fed signals cautious rate cuts, eyes fresh inflation progress ⬇️

⏳️ The deets in 30 seconds:

• The Fed cuts benchmark rate to 4.25%-4.5% – a third consecutive reduction.

• Fewer cuts expected in 2025: Median projection signals two rate cuts vs. three previously.

• Inflation progress remains a key precondition for future rate adjustments.

• Unemployment forecast revised slightly to 4.3% in 2025; economic growth bumped to 2.1%.

• S&P 500 dipped, Treasury yields rose, and the Bloomberg Dollar Index climbed after the decision.

💡 How it impacts you:

• Borrowing rates: Mortgage, credit card, and personal loan rates may remain elevated, limiting refinancing opportunities. 🏡 

• Savings returns: Higher Treasury yields mean better returns on savings in money market accounts. 💲 

• Job market stability: Strong labor trends ensure job security remains resilient. 💼 

• Consumer prices: Slower inflation declines could mean persistently high living costs. 📈 

• Investment portfolios: Stock market volatility might pressure long-term investment strategies. ⚡️ 

🔮 Industry prediction:

2025’s Fed playbook is the economic equivalent of a Netflix cliffhanger: incremental progress, cautious pacing, and just enough suspense to keep markets guessing.

• Key Players:

  • 🎯 Moving Markets: Federal Reserve, Jerome Powell.

  • ⚡ Making Moves: Treasury yields, housing sector.

  • 👥 Worth Watching: Inflation trends, consumer spending.

• Timeline:

  • Early 2025: Inflation trajectory monitored.

  • Mid-2025: Likely second rate cut.

  • Year-end 2025: Economic targets reassessed.

⚡ The bottom line:

Cautious Fed policy meets resilient labor markets as inflation progress stalls—like a road trip where you hit every red light but still manage to stay on course.

2. 🚀 Microsoft outpaces rivals with 485,000 Nvidia AI chips purchased in 2024

⏳️ The deets in 30 seconds:

• Microsoft purchased 485,000 Nvidia Hopper chips in 2024, double the amount of its closest competitors Meta and ByteDance.

  • Meta acquired 224,000 Hopper chips; ByteDance and Tencent each ordered about 230,000 units.

• Global server spending will hit $229 billion in 2024, with Microsoft leading at $31 billion.

  • Nvidia chips claimed 43% of server spending in 2024.

• Google and Meta each deployed about 1.5 million of their own custom AI chips.

• Microsoft has only deployed 200,000 of its Maia chips, showing early stages in custom chip development.

💡 How it impacts you:

• Expect more AI features in Microsoft products you already use at work.

• Competition between tech giants could lead to better AI tools at lower prices.

• Chinese tech restrictions might affect global AI development and available services.

🔮 Industry prediction:

Big Tech’s AI arms race will trigger a chip Cold War, splitting global cloud ecosystems into Nvidia loyalists and in-house chip innovators.

• Who's Moving: 

  🏃‍♀️ Leading: Microsoft (the headliner)

  🚶‍♂️ Following: Meta, ByteDance, Tencent, Google
  ⌛ Waiting: Smaller cloud providers

• What's Next: 

  Now: AI chip shortage creates power players
  6 Months: Custom chip development accelerates
  1 Year: New chip makers enter the market

⚡ The bottom line: 

Microsoft's doing the tech equivalent of buying all the PS5s at launch – except these chips power the future of AI, not just gaming.

3. Honda and Nissan discuss potential merger amid challenges 🚘️ 

⏳️ The deets in 30 seconds:

• Honda and Nissan confirmed merger talks to tackle declining performance and rising EV competition.

  • Both struggle in China’s EV-dominated market, with local brands claiming 60% of sales.

• Honda’s market cap is 4x Nissan’s, indicating Honda’s likely dominance if the merger happens.

• Tesla and BYD’s success drives Japanese automakers to collaborate on electrification and software.

• The merger would create the third-largest global automaker by sales, behind Toyota and Volkswagen.

💡 How it impacts you:

• EV buyers: Expect more affordable and innovative electric cars from a stronger Honda-Nissan alliance.

• Jobs: Restructuring risks could heighten globally if overlap efficiencies are pursued.

• Investors: Nissan shares surged 23.7%; watch for future gains if talks succeed.

• Tech development: Accelerated progress in autonomous and EV tech could benefit consumers.

🔮 Industry prediction:

The Honda-Nissan alliance could be a real-life Transformers crossover, with two rivals combining forces to battle Tesla and BYD in the EV revolution.

• Who's Moving:

  🏃‍♀️ Leading: BYD, Tesla.

  🚶‍♂️ Following: Honda, Nissan.

  ⌛ Waiting: Mitsubishi, Mazda.

• What's Next:

  Now: Exploring synergies in electrification and cost-sharing.

  6 Months: Merger structure finalized or dropped.

  1 Year: Potential launch of co-branded EVs.

⚡ The bottom line:

Honda and Nissan’s merger talk is a "power-up" move to survive the EV battleground dominated by Tesla and Chinese brands.

4. China fires back at US tech restrictions with $150B worth of deal reviews 🔄

China’s potential antitrust target list

⏳️ The deets in 30 seconds:

• China launched antitrust probe into Nvidia's 2020 Mellanox acquisition worth $7.1B.

  • China has conditionally approved eight US tech mergers worth over $150B since 2019.

• Beijing plans to investigate more US tech deals as retaliation against export controls.

• Chinese regulators can fine companies up to 10% of global revenue or force deal unwinding.

• Nvidia faces scrutiny over alleged discrimination in H20 chip access for Chinese customers.

💡 How it impacts you:

• Delayed releases of new chip technologies and products.

• Higher prices for electronics due to regulatory compliance costs.

• Limited access to certain AI and computing capabilities.

• Reduced choice in software tools and tech products.

🔮 Industry prediction:

Tech deals about to enter their Game of Thrones era – every merger needs to survive winter in Beijing

• Who's Moving:

  • 🏃‍♀️ Leading: China, leveraging antitrust as a countermeasure.

  • 🚶‍♂️ Following: U.S. tech giants seeking alternative markets.

  • ⌛ Waiting: Regulators in other economies eyeing similar tactics.

• What's Next:

  • Now: Strategic pause in major tech acquisitions.

  • 6 Months: Companies restructuring deals to navigate both markets.

  • 1 Year: Shift in deal strategies as companies diversify operations to bypass China’s leverage.

⚡ The bottom line:

Chinese regulators just turned tech deal approvals into a high-stakes game of diplomatic Jenga.

5. OpenAI’s o1-preview model outshines physicians in clinical reasoning tasks 🧠

⏳️ The deets in 30 seconds:

• OpenAI's o1-preview model outperformed both earlier AI models and human doctors in complex medical diagnosis tasks, 

  • It correctly diagnosed 88.6% of cases compared to GPT-4's 72.9%.

• The study used 143 complex medical cases from the New England Journal of Medicine (NEJM) to test the AI's capabilities.

  • In differential diagnosis, it included the correct answer 78.3% of the time, outperforming GPT-4’s 72.9%.

  • For NEJM Healer clinical reasoning cases, it nailed perfect scores in 78/80 cases, leaving attending physicians (28/80) in the dust.

• Chain-of-thought (CoT) reasoning lets the model "think longer," improving its step-by-step critical thinking.

💡 How it impacts you:

• Doctors: AI tools like o1-preview could assist in complex diagnosis and reduce errors.

• Patients: Faster, more accurate diagnoses mean better outcomes and fewer delays.

• Clinicians: AI could boost decision-making on tests and treatments, saving time in critical cases.

• Hospitals: Integrating AI could cut costly diagnostic mistakes, streamlining clinical workflows.

• Tech companies: Models like this set new standards, pushing for better AI benchmarks.

🔮 Industry prediction:

AI in medicine is about to become the new stethoscope – essential, ever-present, and smarter with every update..

• Who's Moving: 
  🏃‍♀️ Leading: OpenAI, major medical institutions
  🚶‍♂️ Following: Healthcare providers, insurance companies
  ⌛ Waiting: Regulatory bodies, smaller hospitals

• What's Next: 
  Now: Integration into research and training
  6 Months: First pilot programs in major hospitals
  1 Year: Standard part of medical education

⚡ The bottom line:

OpenAI's latest medical AI is serving "House M.D. but without the attitude" energy – diagnosing complex cases faster and more accurately than human doctors while showing its work.

6. Nvidia aims for $150B cloud revenue target with DGX Cloud 🚀

⏳️ The deets in 30 seconds:

• Nvidia’s own cloud and AI software businesses are known as DGX Cloud and Nvidia AI Enterprise.

• It projects $150B in cloud/software revenue, more than current AWS numbers.

  • Early adopters include ServiceNow, SAP, Amdocs for AI applications.

• Software, service and support for AI to hit $2B annual revenue by 2024, exceeding specialized cloud providers like Microsoft and Google.

  • Cloud providers are developing competing chips while buying Nvidia's hardware.

  • Only 200 employees (of 30,000) currently work on Nvidia’s cloud/software initiatives.

• Nvidia spends $1B yearly on AWS/others' infrastructure for DGX Cloud.

💡 How it impacts you:

• If you’re a developer, you have more alternatives to AWS, Microsoft, and Google for specialized AI needs.

• Smaller businesses gain access to powerful AI tools, expanding opportunities beyond major cloud providers.

🔮 Industry prediction:

Nvidia’s cloud ambitions are playing out like a Marvel origin story—poised to disrupt AI cloud dominance as rivals race to counter its chip-software synergy.

• Who's Moving: 
  🏃‍♀️ Leading: Nvidia (unmatched hardware + software integration)
  🚶‍♂️ Following: CoreWeave, Google Cloud AI (custom chip development)
  ⌛ Waiting: Enterprise customers (cautious AI adoption)

• What's Next: 
  Now: Building sales channels/awareness
  6 Months: Expanding partner ecosystem
  1 Year: Possible independent data centers

⚡ The bottom line: 

Nvidia's leveraging its GPU dominance to pull an AWS-style pivot, but with only 200 dedicated employees and limited enterprise relationships, it's more moonshot than sure bet.

7. DOJ Calls Perplexity Exec to Testify in Google Antitrust Case 🛡️

The Department of Justice (DOJ) is ramping up its antitrust case against Google by seeking testimony from Dmitry Shevelenko, chief business officer at Perplexity, a rising AI search provider valued at $9 billion.

Why It Matters: ⚡️

• In August, a U.S. court ruled Google holds a search monopoly. While Google appeals, the DOJ is exploring penalties, including possibly breaking off Chrome.

• Shevelenko's testimony would focus on generative AI’s role in search access points, barriers to entry, and data sharing — critical topics for the DOJ’s case.

The Generative AI Angle: 🤖

• Tools like Perplexity and ChatGPT Search are positioning themselves as search alternatives, offering AI-generated answers to complex questions.

• Google’s response? Its own generative AI tools like AI Overviews, which layer AI-generated responses atop search results.

The Legal Tug-of-War: 🚨

• Perplexity is being squeezed by both sides:

  • DOJ wants testimony to bolster claims that Google blocks competitors.

  • Google subpoenaed Perplexity (alongside Microsoft and OpenAI) in October to prove it faces viable competition.

• As of December 11, Google claims Perplexity has provided no documents, despite agreeing to fulfill 12 out of 14 requests.

  • The sticking point? Google demands all of Perplexity’s licensing agreements, which Perplexity argues is an overreach and a burden to fulfill.

Key Terms: 💡

• Search Access Points: Platforms like Chrome where users initiate internet searches.

The Stakes: 🎟️

The DOJ’s request underscores generative AI’s emerging role in search and could influence penalties against Google’s search dominance. Meanwhile, Perplexity remains caught between legal giants, potentially setting precedents for how AI search startups navigate antitrust disputes.

🗞️ Speed Reads

🤖 AI & Tech

ChatGPT now available on WhatsApp and by simply calling their support number 1-800-242-8478 (1-800-CHATGPT), if you don’t have access to the Internet.

OpenAI rolls out their search engine - SearchGPT - to everyone with an account.

US Supreme Court agrees to hear arguments on TikTok ban on 10 Jan.

DOJ calls Perplexity Exec to testify in Google antitrust case.

💼 Startup & Business

Grammarly acquires Coda, a productivity startup.

AI boom disguises fundraising struggles for non-AI startups.

Robotics startup, Slip Robotics, raises $28M.

🏢 US Politics

Musk hires loyalists for DOGE positions.

US government could shutdown after Trump shuts down bipartisan funding bill.

🌏️ Global Affairs (non-US)

Bank of Japan keeps rates unchanged at 0.25%.

India’s growth could jump to 6.5% this year.

China’s economy loses momentum.

A rough road ahead for Germany’s economy.

💫 Mind Candy

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