Gray Swan

Chinese firm DeepSeek has taken the evolution of AI to a new level with its cheaper Language Learning Model. As investors scramble to digest the ramifications for stakeholders in US-made AI, Ed and Eric share their perspective. It’s not a Black Swan event but a Gray Swan, holding potential positives and negatives. Although it disrupts the AI status quo, it should speed the proliferation of AI and the realization of associated productivity gains. … Also: The stock market’s historically high valuation doesn’t worry us. Even if the Mag-7’s P/Es take a hit owing to DeepSeek, we expect that the P/Es of the S&P 493 could go higher. Earnings growth should support valuations. … And: How DeepSeek might affect the Fed’s thinking.