Summarize this content to 2000 words in 6 paragraphs in Arabic Good morning. OpenAI says it has found evidence that its proprietary model was used to train DeepSeek’s revolutionary R1. But in the US-China artificial intelligence competition, do intellectual property rules apply? Should they? Unhedged doesn’t remember there being much fuss about terms of service agreements during the Manhattan project or the space race. And, for the future of humanity, AI is supposed to be more important than either of those. Send us your thoughts: [email protected] and [email protected] FedThe Federal Reserve held rates steady today — as expected — officially bringing its cutting cycle to a pause. At first, the wording of the official statement made it seem like the Fed’s posture was more hawkish than the market expected. In December, the statement read “inflation has made progress towards the committee’s 2 per cent objective but remains elevated”. This time, the statement omitted the “progress” part. Yields on the two-year Treasury rose briefly:They fell shortly after, when chair Jay Powell dismissed the wording concern and emphasised that the central bank thinks policy is sufficiently restrictive, and inflation should continue to fall.Other than that moment of miscommunication, it was a boring press conference. Powell did not give much on the big questions of the day — tariffs, immigration, tax, and quantitative tightening. The dullness reflected the fact that monetary policy has become less important as we inch closer to the inflation target. Donald Trump has been breathing down the Fed’s neck. At Davos, the president said he would “demand that interest rates drop immediately”. After yesterday’s meeting, he posted the following on Truth Social:Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!Beneath the invective, there might be a concession to reality here. Demanding the Fed cuts rates is self-defeating at best, and the Davos demand was not repeated. If Trump wants to change the rate environment, keep inflation low, or increase growth, he’ll have to use other tools. The ball is squarely in his court. The Fed has every reason to do nothing. The jobs market is healthy, the economy is growing, we just got two sideways inflation readings, and it seems like there is enough liquidity in the system for quantitative tightening to continue. Policy should remain where it is until more good inflation news comes in, or until the employment numbers show signs of weakness. Meanwhile, we know nothing about Trump’s economic policy plans beyond some broad priorities, a few provocative actions, and a lot of hot rhetoric. Even if the Fed is starting to look at the risks posed by tariffs and deportations, as Powell has hinted it is, the strong economy means the central bank can afford to keep quiet and wait to see what develops. The same cannot be said of other central banks. The Bank of Canada cut rates earlier today and paused its quantitative tightening. Though tariffs were not the sole reason for the cut, governor Tiff Macklem was not shy about the potential impacts of Trump’s trade policies. He spent most of his conference discussing how the BoC was factoring tariffs into its forecasts and preparing to help counter the negative impacts. That the BoC is more forthcoming is part politics, and part economic fundamentals: tariffs, in any form, will hurt Canada much more than the US.Fiscal policy and monetary policy are always vying for top spot on the market’s list of concerns. For now, there is little to see at the Fed. What the market needs is clarity on the fiscal front. (Reiter)AI and marketsOne occupational hazard of being a market analyst are the periodic, acutely uncomfortable moments when it looks like days of hard work amounted to a lot of pointless shouting into the void. Data gathered, correlations teased out, hypothesis formed, historical analogies marshalled, counterarguments tested, arguments made. Events can reduce it all to so much squawking.Day three of DeepSeekWeek had a distinct flavour of this futility. What have markets really learned? Much has been learned about AI from a technical point of view, of course. But the implications of these discoveries for the economy and corporate finance are, it must be admitted, still obscure. There is some consensus that Nvidia’s competitive moat is a bit less wide than it was believed to be last week. For the rest of the Magnificent Seven, all of which have a lot at stake in the AI race, the implications of radically cheaper AI models are much less clear. Apple’s strategy of not shooting tens of billions of dollars at the problems looks a little wiser now, but that’s about it.The impact on power providers is opaque, too. Of the three utilities hit hardest this week, two (Vistra and Constellation) made significant recoveries yesterday and all three are still up over the past month. Almost all of their AI-inspired gains are still in place.We did get a smidgen of clarity last night, when Microsoft and Meta confirmed their huge capital expenditure budgets — driven by the need for compute capacity for AI — would remain vast in the near future. Meta said capital expenditure would grow 70 per cent in 2025, to as much as $65bn.Still, any recent insights into the most important trend in the most important sector in global stock markets seem very vulnerable to wholesale revision in the near term. Two familiar insights have been reinforced, however. Concentrated, expensive, and optimistic markets are sensitive beasts. Get used to short, sharp moves and countermoves, like the ones we’ve seen in the past few days. And remember that AI is a technology that can surprise even its leading practitioners. Forecasts for how it is going to evolve should be treated with scepticism.One good readBreit’s blues.
