Today the U.S. markets wrapped up the session with a solid advance: the S&P 500, Nasdaq, and Dow all closed at fresh all time highs, with tech and large-caps leading the charge. A potent mix of easing inflation numbers and resurfacing hopes that the U.S. and China might strike a trade truce powered the rally.

The prospect of tariff relief, especially around soybeans and rare-earths, and a potential meeting between Donald Trump and Xi Jinping this week lifted sentiment across global equities. Meanwhile, safe-havens like gold slid (which slipped over 3%) and bond yields ticked up slightly as the easing rhetoric poked through.

The undercurrent remains cautious: although the rally is broad, much of the move appears to be a positioning shift rather than strong conviction. Liquidity is favorable, inflation worries are momentarily relaxed, but structural issues like trade, policy & credit plumbing… are still unresolved.

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While Washington argues about regulation and ethics boards, Beijing is quietly running laps. As MishTalk points out, China’s edge in AI isn’t theoretical, but quite practical. Cheap power, government-backed infrastructure, and a willingness to blur the line between lab and factory floor mean it can scale AI faster, not just build it bigger. America may lead in frontier models, but China’s winning in cost per inference (the dull metric that decides who turns code into cash.)

It’s less about genius algorithms and more about logistics: training costs are lower, deployment cycles are shorter, and bureaucrats aren’t slowing things down to ask “what if it’s unfair?” The result is a system that can flood real-world industries like manufacturing, logistics, healthcare… with functional AI long before Silicon Valley’s next breakthrough hits the cloud.

For investors, that’s the twist. The “AI arms race” might not be about who invents the smartest model, but who gets it into everything first. And on that front, China’s combination of speed, scale, and state support may prove the most underpriced advantage in tech right now.

In this episode, Andrej Karpathy argues that the world of AI is far from the “instant job-stealing agent” narrative making headlines. According to him, the real work lies ahead: we’re still wrestling with models that learn poorly, deploy awkwardly, and lack the kind of cognitive depth humans take for granted.

He’s especially critical of current approaches to reinforcement learning: calling it “terrible” because it often rewards accidental success as if every step was the right one. Instead of mastering tasks, these models stumble into answers and then exaggerate everything they did along the way.

Karpathy also raises a quietly unsettling scenario: even if AI reaches human-level capabilities, it may simply blend into the existing 2 % growth economy rather than trigger a dramatic surge. In other words, the revolution might look like a slow upgrade, not a seismic shift. For traders and investors, this means the real risk may be the timing and structure of change, not whether it happens.

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Tomorrow is Tuesday and the start of the market’s big checkup. The FOMC begins its meeting, with Powell’s tone on Wednesday likely to steer yields and the dollar. Earnings remain active and will shape the margins story. Into midweek, watch China and Eurozone prints for confirmation that the global cycle is stabilizing. 

Friday would normally bring PCE and GDP… but these are delayed due to the shutdown, so the market will need to operate on estimates at best. Which will either validate the soft-landing script or force a rethink. Setup into Tuesday is constructive but tight. If policy and data rhyme with last week’s CPI relief, small caps, cyclicals, and quality growth can extend. If guidance or Fed language tilts tougher, expect a quick rotation back to defensives and a stronger dollar.