Speaker 1: So China has a major announcement today that could send the markets crashing down and bankrupt Elon Musk. That's the subject of today's video and check out these headlines. China's DeepSeek sets off AI market rout. You also got this. Wall Street set to open lower as DeepSeek sows doubts about AI spending. And basically this whole DeepSeek thing, it is competition for OpenAI slash chat GPT. This is China's answer to that. It is in the App Store now in the USA, opened at number one. You can see right here. There's DeepSeek, the AI assistant right ahead of chat GPT, ahead of Threads, ahead of Teemo, etc. It is opening at number one, ahead of Blue Sky. Get used to seeing this blue whale thing. On top of that, we're trading very high valuations, meaning that stocks are overpriced. I've showed you this chart before. I'll show it to you again. This is the Shiller-Peay ratio. We're trading at a price-to-stock ratio at 38, which is very high. Historically, 44 has been the highest in the dot-com bubble. And what I think we're seeing right now, where we are in the markets, is a combination of crazy dot-com bubble, you know, tulip mania, plus great financial crisis, meaning that overprinting of money and everyone's on leverage. You put these two combinations together and you have the figurehead of Elon Musk. That shows you where we are. Because, right, Elon Musk is the hype guy living off all of this hype stock, borrowing on his hype stock. And what happens if his stock crashes suddenly, which we could see with this kind of stuff, because basically, China's going to come in and undercut everyone's prices and eat everyone's margins, and frankly, eat everyone's lunch. This is sort of why we're talking about this stuff and warning you about this. And this is the announcement was today. More. DeepSeek shakes up stocks as traders fear the U.S. tech leadership, right? USA may not be the leader anymore. Chinese AI lab, DeepSeek, massively undercuts open AI pricing. And you have like these kind of things. I'll show you guys this. There was a really fascinating chart. Here it is right here. It says DeepSeek has priced their models 20 to 40 times cheaper than open AI. That's insane. 20 to 40 times cheaper. Part of what was really fascinating about this, and we're talking about DeepSeek, is they're interviewing the founder and they're saying, okay, what's the bottlenecks to DeepSeek? Like, how can you compete with American companies like open AI? You know, what about your code? What about your hardware? What's going on? I guess the bottleneck was actually getting chips. And if you don't know, if you've been following the stock market, there was this mad rush to get Nvidia chips. And everyone's like, oh, yes, AI is the future. You're all going to make money. Everyone's going to subscribe to the chat GBT. And Elon Musk is like, you know, suing to try to get into this game. He's been suing open AI. He sued it like five times. And, you know, effectively, we were all quote betting on the future that that's going to be the end-all be-all. Now, what happens if it turns out you don't need Nvidia chips? What happens if you overpaid for all these chips and you haven't got your return on investment yet, right? Because you're kind of betting that everyone's going to subscribe to your services. And what happens if China's DeepSeek actually ends up being equal, maybe better, maybe a little bit worse, but coming at a much, much lower cost? That's what's spooking Wall Street at the moment. That's why I showed you guys that chart. DeepSeek has priced their models 20 to 40 times cheaper than open AI. This is actually major, major news. On top of that, you have to understand and put this stuff into perspective because I've been talking about this with you guys on the channel, how this is part of a global phenomenon in several industries where basically you have the rise of Chinese tech. So for example, last time we checked the Apple iPhone, I think they're third place in China behind like, you know, there's Huawei over there. Was it plus one's another one? Xiaomi's another phone. I'm saying that there's multiple brands and basically they're not king of the roost anymore. On top of that, Chinese phones coming cheaper than the Apple iPhone. And when the economy goes south, which is what has been happening in China, not just China, but around the world, the consumer's like, well, I don't really want to pay for a premium product when I can get a pretty good product for a lower price, right? And it's the same kind of stuff with BYD and Tesla. BYD was actually backed by Warren Buffett. They come in much, much cheaper than the Tesla's and in many cases, I would argue could be better. And this is, yes, I know the Tesla fan was like, oh, Chris, you're speaking sacrilege. But when I show you guys the price of these things, the BYD, the Tesla, you're like, okay, you get it. So I'll, when we talk about pricing, I'll show you right here. So these are the pricing of the Teslas. These are the prices of the BYDs. So for example, the lowest price Tesla comes in at like 44,000, something like that. So compared to say the BYD Seagull coming in at 10,000, that's one fourth the cost. I mean, you guys see the problem here, right? Tesla Model Y around 46, the BYD Dolphin at 16. Then you got the Tesla Model X at 81,000, the BYD Yuan Plus at 18,000. And you heard that correctly. The Tesla X, Model X comes in at 81,000 and you can get a BYD Yuan Plus for 18,000. Or you could call it 19 if you want to be, you know, bump it up a little bit and round it up. But regardless, you're looking at a much, much lower cost. And again, if the consumer can, you know, get a comparable quality and maybe even better, and I would argue better styling. And we're just talking about the Chinese vehicles, right? What about the Korean vehicles? Now the Korean vehicles can't come in at the lower prices of the Chinese ones. And I've done some reviews on the Korean stuff. Guys, I live here in Korea. The Korean manufacturers are worried about the Chinese cars as well because they come in cheaper. I mean, it matters. Cost matters. If you can come in like a comparable product at lower costs, generally speaking, consumers are going to go with the lower priced product. You saw it a lot with TVs. So for example, there was a time when you could actually buy American brands of TVs, German brands of TVs, like there were different brands out there. The Japanese came in and they made really good TVs at low cost. They made radios at low cost. And now you have Korean, you know, companies that do the same kind of thing, right? You got better quality, low cost, et cetera. Now the thing is with the Chinese brands, when they first started making cars, TVs, all these kinds of things, they were like kind of crappy. They were copies, kind of crappy. They would break, et cetera. But they were just so cheap that people were to buy them. The thing is like with something like a software, like I think if you can use cheaper chips to develop software, it may not necessarily feel cheaper to you. And at the moment, all of these AI companies are bleeding cash because they have to offer their products for free to get you hooked on it. And you're saying, okay, Chris, well, what's the cost to them? Why are they losing money? Well, it takes a lot of power to run this AI, right? So you're offering your power for free. You have to pay for the power. You have to pay for all your developers, et cetera. And also too, if your main product is software, I would argue that's a risky, risky game considering that these days, I mean, code seems to find its way to Chinese companies. You guys kind of know how this game is played. On top of that, when we talk about something like a Tesla, the Tesla boys and fanboys and fangirls try to say, oh, but Chris, you're so dumb. Elon Musk and Tesla is a software company. Their major advantage is gonna be this robot driving, et cetera. So if you understand this game, Elon Musk has his factory in China. He never says anything bad about China. I would not be shocked. I would not be shocked if Tesla's tech ultimately, if their tech ultimately finds its way into Chinese cars. Would you guys be shocked? And just think about what would happen to Tesla's competitive market share after their software, right? If it even works, finds its way into Chinese cars at a much, much lower cost. You're in trouble. This is why when I show you guys these kind of charts here, this just came out today. These are analyst projections of where Tesla's gonna be for 2025 compared to Musk's forecast. No one thinks that they're gonna hit Musk's goals and they never do. And before we were like, okay, maybe you can do it. But now it's just not looking good. And so this is why the markets are freaking out. For you guys that don't understand this stuff. So basically, Musk is rotating out of Tesla. He can see the writing on the wall, right? They don't really have any new products coming. The Chinese cars are much, much cheaper. You also got competition from the Korean manufacturers. Japan will be not so far behind. On top of that, he's trying to get into this AI stuff. Trump just announced that the US is gonna try to help these investments. It was like $500 billion and there's multiple private money coming in. There'll be public support in terms of tax incentives, this kind of thing. Will there be actually your tax dollars going to see AI? You can ask Trump that kind of stuff. They're still trying to put this deal together because what's fascinating about it is Musk called it out and said, hey, you guys don't have any money. You're lying about the money. And this is literally the headline. Elon Musk throws shade at the $500 billion Stargate venture. On top of that, Musk is jumping into politics around the world. And you're like, why is he doing that? I'm thinking he's fishing for money in various places and trying to fish for lightning of regulations so he can poison your water, take your power, try to get government subsidies to stay afloat. Most companies tend to do that. They get government subsidies to stay afloat, right? So he's been getting involved in German politics. And this article came out recently. And I'm putting this together because I want you guys to understand the connections between the China deepfake and other countries, not just USA, not just American tech. Look at an example like Germany. So here, so Germany's economic model is broken. No one has a plan B. So they have an election coming up, right? And the people in Germany are worried about their economic situation, number one. Number two, immigration. Then you got energy, climate, prices, wages, pensions, and then the Ukraine war. Now there's another chart I want to show you. And this is a very key chart. This is exports of cars, okay? Now you can see the red line there that's basically China's exporting a whole bunch of cars. And you see Germany's like kind of going down a bit. What you're seeing is again, China is able to flood the market, right? In various countries around the world with cheaper cars. And if consumers are like, well, you know, I like BMWs, they're all cool and that, but I mean, I can get a Chinese car for like, you know, say a fourth of the cost, it seems to work okay. I'm not thinking the BMW is so successful anymore, right? Or I'm not thinking maybe the Volkswagen or I'm not thinking the Audi or whatever. And this really hurts the German economy because they like to export goods. Like they're basing their economy exporting goods. The government didn't really invest so much into software. They're going more into manufacturing. It's hard to turn ship around now, especially when the economies are going down. Like do you suddenly, you know, turn a ship and say, hey, we're going to start subsidizing all these software companies that try to catch up into this quote, you know, AI craze. I already questioned the AI investments as it is. Like I'm not even telling you that the Chinese companies are going to come in and profit, right? What I am telling you, they're going to drive American prices down and hurt profits for all the companies who did invest in AI. I guess it's one big, massive bubble. That's why I called it a tech bubble, plus a great financial crisis bubble. And on top of that, then you got Musk getting involved in German politics because this is what happens in these kinds of situations when economies take a downturn, companies have to lay off. There's a lot of people down on their luck, right? And they're looking for someone to blame. So that's why you see these rise of right-wing parties and they'll say, oh, it's all because of, you know, those dark people, those people that are foreign, et cetera. It's all because of them. It's, they're the ones causing all your problems, right? And they don't tell you the full truth about this stuff, about, hey guys, we're facing a global slowdown, right? All around the world. We had a whole bunch of money printing. We had a whole bunch of inflation. We just came out of pandemic, which caused inflation because that tightened supply chains. All these things added up on top of that, you know, consumers just don't want to spend so much anymore. You got lower birth rates. So that means we can't have perpetual growth forever. All these things are like leading into this, like what I consider to be like a crazy financial situation at the moment. That's sort of why we're covering this stuff. And people like a Musk are able to capture this anger that people have and direct it in a negative way. So I warn you about this guy. And I understand some people worship Musk. They think he's a hero. I disagree. I think he's basically a hype guy, a clown, and a PT Barnum, essentially a con person on top of that. We've got earnings this week, and we're going to see how companies respond to, again, this, what's the right word to say? Well, to say an entry of modern tech from Chinese companies who come in at lower costs, right? That's the best way to put it. So we got Apple, AT&T, Microsoft are all coming to report. Jim's going to report. And the big ones, you know, obviously going to be Tesla. On top of that, you have, you know, Trump, who's this volatile character who basically is like, hey, I'm going to, you know, throw tariffs on you if you don't do what I say. He got in a spat with the Columbia. He tried to, you know, Trump was using military planes, military assets to fly illegal workers back to their home countries. The home country in this situation, Columbia wouldn't take him. He's like, hey, we'll work with you if you wanted to, you know, deport people, but use civilian flights. My wife said right away, I had mentioned this thing, you mentioned this thing there. She said right away, it's like, yeah, if another country is like flying military planes into your airspace, you're probably not going to like that. Right? Like, that's what we're talking about here. And Trump's like, oh, I'm going to put 25% tariffs on you. And if you don't do it, I'll put another 25, make it 50. And this is actually a true story. I was looking at Musk's Twitter. This was just a few hours ago. He's literally tweeting out a picture of Donald Trump looking like a gangster. You can't make this stuff up. Musk says this is awesome. Trump says F around and find out. That's the crazy markets that we're in. And so I understand, guys. I understand how, you know, many other channels just try to focus on, you know, US politics, left, right. And they keep it like really small and only talking about America. But I want you to understand that there's a bigger world out there other than the USA. There's many, many other countries. We're all interrelated, right? We buy products from each other, these kinds of things. What the Trump's goal is, and I'll kind of explain this, is he essentially wants to put a bunch of tariffs on foreign companies, okay? If the foreign company slash country tries to bring in goods into USA, or a better way to put it would be American company tries to import foreign goods, you'll have to pay a tax, essentially a tariff. That's gonna raise costs for you. Now, where's that tariff money gonna go? Chances are, and this is sort of where you have to pay attention to what Trump is up to, they're creating this new agency thing called the Internal, oh, sorry, External Revenue Service. I get confused. The IRS, now he wants to have the ERS, the External Revenue Service, trying to create this new agency thing. Basically what it is, it's a way to try to funnel money into what they're calling a private, or not private, a U.S. Sovereign Fund, U.S. Sovereign Wealth Fund. I think they're gonna use that money and try to basically subsidize Musk companies, or other companies that would ever, Musk bunnies, et cetera, or just pocket it for themselves. I don't know, you can ask them. But that's sort of what we're getting at, is whenever Trump says, hey, more tariffs, more tariffs, more tariffs, it's not to benefit you. It's actually gonna raise your costs on goods, and then it's gonna try to benefit Musk, and maybe theoretically save Tesla. I think there's a lot of corruption here involved. I say that theoretically save Tesla stuff, because ultimately, I don't think the money's gonna be there because when you put higher costs on stuff, I think people are just gonna stop spending money on these things. On top of that, you're just seeing this massive meltdown of Musk. So let's say, for example, let's say, for example, I'm just playing devil's advocate. Let's say Musk does get that money from those tariffs on whatever products to pump up his companies, pump up his AI, his crypto, his Teslas, or whatever. His brand damage that he's done to himself and his companies could really, really hurt. And then on top of that, I think it's so overhyped, so overvalued, it'll drag down all of the markets. So I know we talked a lot about a lot in this particular episode, but it's all really to deep-seek the new Chinese app that's really spooking the markets. I wanna hear your thoughts. What do you think about what's going on? And I'll catch you all in the next video.