Trump's Financial Deregulation and the U.S. Economy

1. Financial Deregulation under the Trump Administration

During Trump's first term, deregulation of small and medium-sized banks brought significant changes to the financial sector.
Effects:
- Banks were able to operate their total assets more freely.
- Created changes in the supply and demand for short-term bonds.
- However, some have mentioned that this deregulation, when accumulated in a bad way, could lead to SBB situations (or similar financial instability).

2. Interaction between Banks and the Bond Market

Easing bank regulations could help correct the supply and demand for short-term and long-term bonds.
Currently, banks' purchases of government bonds are low, but further easing of regulations could improve the environment for long-term bond purchases.

3. Employment Market and Consumer Sentiment

The U.S. employment market looks good on the surface, but there are "cracks" appearing in the details:
- Decreased employment opportunities for the bottom 50% income bracket.
- Although the unemployment rate is low, this is due to a decrease in the labor force participation rate.
- The decline in the manufacturing sector and polarization are reflected in the employment market.
Worsening consumer sentiment:
- Decline in future income expectations.
- Relatively high concern about a slowdown in consumption.

4. Inflation and Fed Monetary Policy Outlook

Historical data suggests that without supply issues (supply shocks), the scope of inflation is limited.
The current supply chain pressure index is also at a low level, which is positive in terms of prices.
The Fed's interest rate cuts are likely to be broader than market expectations.

5. Long-Term Impact of Trump's Economic Policies

Anticipated improvements in the trade balance and revitalization of domestic manufacturing.
However, while securing short-term liquidity effects through financial deregulation, there is a possibility of changes in the balance of the bond and stock markets.

< Summary >

The U.S. economy is showing warning signs in various areas. In particular, cracks in the employment market and declining consumer confidence are prominent, which may be the result of the tight monetary environment reflected in the Fed's continuous tightening.

Regarding Trump's Policies:

Financial deregulation may benefit banks and the bond market in the short term, but there is a possibility of accumulating structural issues.
Expectations for price stability remain, and it is expected that the Fed's cuts will be larger than the market expects.

[More…]
U.S. Employment Market Analysis
Trump's Economic Policy and Global Liquidity

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The Emergence of DeepSeek (H800) and Changes in the AI Industry

The Shock and Implications of DeepSeek H800

The shock DeepSeek H800 has brought to the AI industry is considerable.
Developed in China, the DeepSeek H800, despite using relatively 'mid-to-low-priced GPUs,' has demonstrated performance not significantly different from systems based on the high-performance GPUs (H100) of the United States.

Key points include:

Efficiency of AI Training Methods: If AI training is possible without expensive GPUs, it opens up the possibility of efficient and economical AI development.
Paradigm Shift in Existing Big Tech: It questions the existing system that has believed that AI performance would improve by purchasing a large number of high-performance GPUs.
Lower Entry Barriers and Reduced Costs: It enables AI startups and small development companies to develop AI services at relatively low costs, changing the competitiveness of the entire industry.

This may pose a new risk for GPU manufacturers like NVIDIA, and conversely, it may offer opportunities for AI development companies.

Allegations of Owning 50,000 H100s

Questions are being raised about whether DeepSeek could have achieved such performance purely with H800 alone.

Several allegations and facts are as follows:

Possibility of Using H100 GPUs: There's a possibility that DeepSeek actually possesses a large number of U.S. high-performance H100 GPUs (approximately 50,000 units) and has used them in parallel.
Allegations of Evading U.S. Export Regulations: There are rumors that China circumvented U.S. regulations to secure H100 GPUs through smuggling and utilized them for DeepSeek’s training.

Counterarguments Regarding DeepSeek's Economic Feasibility

There are also claims that DeepSeek's efficient performance is exaggerated.

Problems in Calculating H100 and Labor Costs: Considering the estimated costs of possessing a large number of H100s and the labor of DeepSeek developers, it may not actually be cost-effective.
Limitations of H800's Solo Performance: There are opinions that it is unlikely that results were achieved solely with H800, and actual performance needs to be verified.

Use of A800 GPUs?

Another allegation is that DeepSeek not only possesses H800 GPUs but also a significant quantity of A800 GPUs, which it has additionally utilized.

As the use of A800s has not been publicly mentioned, there is speculation that some technical details were intentionally hidden to exaggerate China's competitiveness.

Economic Impact and Potential Changes in the AI Industry

As a result, the AI industry could undergo the following changes:

Emergence of Efficiency-Focused AI Training Methods: New training techniques aimed at maximizing performance per cost are expected to be researched.
Intensified Competition in the AI Market: Small and medium-sized development companies are likely to achieve more with efficient GPUs, moving away from the current big tech-centric industry structure.
Global AI Reliability Issues: Although focusing on cost-effectiveness, accuracy and reliability will remain core aspects of AI solutions.

DeepSeek and NVIDIA: The Interaction Between Them

As DeepSeek puts new pressure on the GPU industry, changes are inevitable for manufacturers like NVIDIA.

NVIDIA is likely to develop more efficient GPUs or optimize hardware to adapt to changes in AI training methods.
Conversely, technological and economic debates will continue to verify the reliability of DeepSeek's claims.

< Summary >

DeepSeek H800 has implemented high-performance AI with economical GPU utilization, shocking the existing AI development and GPU industries.
However, there are counterarguments regarding the potential use of U.S. regulated hardware such as H100 and A800, and about DeepSeek's economic feasibility.
This has led to attention on the efficiency of AI training methods, and cost-effectiveness is becoming a more important factor in the AI market.