Part 2/8:
This upheaval has raised critical questions: What is driving this volatility? How does the newly released AI model, Deep Seek from China, fit into this picture? And what are the implications for the economy under the Trump Administration, heavily reliant on a thriving stock market?
Understanding the Catalyst: Deep Seek
Deep Seek, an AI model that emerged from a small Chinese firm, has stirred significant anxiety in financial markets. Unlike its Western counterparts, which command hefty investments, Deep Seek's recent model, R1, was developed with a meager budget of just $6 million—a stark contrast to OpenAI's hundreds of millions. Such drastic cost savings—96% cheaper than similar technology—pose a competitive threat that alarms investors across the board.