Recent market volatility has sparked questions about market efficiency. A new study suggests the rise of passive investing has led to slower reactions by active managers to price discrepancies, amplifying the impact of individual trades. The growing dominance of index funds has decreased market sensitivity to price changes, potentially leading to increased volatility, reduced capital allocation efficiency, and even market failure. While the study's conclusions remain debated, it raises concerns about the potential risks of passive investing, particularly its impact on large-cap stocks.
Google is appealing a record $4.5 billion EU antitrust fine, arguing that the penalty, levied seven years ago, punished the tech giant for its innovation. Google contends that requiring phone manufacturers to pre-install its services didn't restrict competition but fostered it. The EU court will issue a final ruling in the coming months.
Nvidia and ASML Holding NV shares plummeted on Monday after Chinese AI startup DeepSeek released a new AI model offering comparable performance to Western counterparts at a fraction of the cost. Nvidia shares fell about 9% in premarket trading, while ASML dropped as much as 11%. The Nasdaq 100 futures also slumped. DeepSeek's success raises concerns about the disruption to the current AI business model, which relies heavily on high-end chips and significant computing power. The situation highlights China's potential to circumvent US export restrictions and underscores the geopolitical implications for the tech sector.
Apple Inc. is doubling down on AI, appointing veteran executive Kim Vorrath to its AI and machine learning division. Vorrath, a VP with a proven track record of fixing troubled products, will report to AI chief John Giannandrea. This move signals a push to improve Siri and the Apple Intelligence platform, which have lagged behind competitors like OpenAI and Google. The plan includes a revamped Siri in iOS 18.4, leveraging user data for better response and app control. However, challenges remain, including recent backlash over inaccurate AI-generated news summaries. Vorrath's expertise in managing complex software projects is key to Apple's ambition of becoming an AI leader.
Bloomberg reports that Apple's new fees for app developers are under scrutiny by the European Union's antitrust regulators. Concerns have been raised that the new "core technology fee" could inflate costs for software makers. The EU is investigating whether the new charges will be passed on to consumers and whether developers will be forced to adjust their business models. Apple claims that 85% of developers on its App Store don't pay any commission.
Elon Musk announced that Neuralink's brain-computer interface device has been implanted in a third patient, with plans to implant 20 to 30 more in 2025. This technology aims to help patients with paralysis and ALS control external devices. Neuralink currently has two FDA-registered clinical trials, one for paralyzed patients and another for those needing assistive robotic arms.
In a final push before leaving office, the Biden administration plans to further restrict the export of AI chips from companies like Nvidia, aiming to prevent advanced technologies from reaching China and Russia. New regulations will create three tiers of restrictions: close allies will face minimal limits; adversaries will be effectively blocked; and most countries will face limits on total computing power, though higher caps can be obtained by meeting US security and human rights standards. Nvidia opposes the proposal, arguing it will harm economic growth and US leadership.
Bloomberg Intelligence predicts that global banks will cut as many as 200,000 jobs over the next three to five years due to the rapid advancement of artificial intelligence. AI is automating repetitive tasks, with back-office, middle-office, and operations roles most at risk. While some banks emphasize that AI will transform rather than eliminate jobs entirely, the industry will undoubtedly undergo significant changes, leading to increased profitability for banks.
Italy is in advanced negotiations with Elon Musk's SpaceX for a five-year, $1.6 billion deal to provide secure telecommunications for its government. This massive project, already approved by Italian intelligence and defense, would encompass top-level encryption for government communications, military services in the Mediterranean, and direct-to-cell satellite services for emergencies. While boosting national security, the deal faces opposition from some officials concerned about its impact on local carriers. Negotiations, stalled until recently, reportedly advanced after Prime Minister Giorgia Meloni's meeting with President-elect Trump. Alternatives, including the EU's IRIS² and building a national constellation, were considered, but deemed far more expensive.
China will expand consumption subsidies to include smartphones and other electronics to boost domestic spending amid rising external headwinds. Officials from the nation’s top economic planning agency said Friday that a national trade-in program currently covering home appliances and cars will be broadened this year to personal devices such as phones, tablets, and smartwatches. Post-Covid, Chinese consumers have held onto their smartphones longer due to a lack of exciting new features and general belt-tightening. Like with cars and washing machines, investors hope incentives will revive the world’s largest smartphone market and drive sales not only for brands like Huawei and Xiaomi but also for platforms popular with device fans like Alibaba and JD.com. The move is part of China’s efforts to encourage consumption to offset the effects of potential new US tariffs on Chinese exports, a key growth driver. For only the second time in at least a decade, top leaders last month prioritized stimulating spending and domestic demand in 2025. The government will “significantly” increase the sale of ultra-long special treasury bonds to fund the program, which also encourages companies to upgrade equipment, according to Yuan Da, deputy secretary-general of the National Development and Reform Commission. Several provinces started their own trade-in programs for personal devices and phones in late 2024, but a nationwide initiative could prove more effective. The central government committed 300 billion yuan ($41.1 billion) of funds raised from special treasury bonds in July to support the subsidies. Including local government efforts, these incentives led to a surge in car and home appliance sales starting in September. Subsidies for upgrading business equipment will also be expanded to areas including agricultural facilities, according to Yuan. A specific plan for the program’s expansion will be released soon.
