Podcast Summary: CNBC’s Halftime Report – "The Deepseek Selloff" (January 27, 2025)

Introduction On January 27, 2025, CNBC's Halftime Report delved into the significant market turbulence caused by the Deepseek AI selloff. Hosted by Scott Wapner, the episode featured insights from prominent market figures including Josh Brown, Bryn Talkington, Joe Terranova, Steve Weiss, and Dan Ives. The discussion centered around the precipitous decline of Nvidia and other tech stocks amid fears of emerging Chinese competition.

1. The Deepseek AI Selloff: Causes and Implications

Overview of the Selloff The episode opened with a stark overview of the market downturn, highlighting that the NASDAQ had plunged by 3%, with Nvidia experiencing one of its worst days since March 2020. Scott Wapner set the stage by emphasizing the gravity of the situation:

Scott Wapner [00:42]: "Front and center this hour, the deep sell off air stocks as you know by now, plunging today on fears of an emerging Chinese competitor."

Bryn Talkington’s Analysis Bryn Talkington provided a detailed analysis of the selloff, attributing it to both rational recalibrations of the GPU market and speculative unwinding:

Bryn Talkington [01:53]: "I think there's a component of today's sell off where people are very reasonably recalibrating their expectations for how big the total addressable market for new GPU sales is. But then I think there's an even bigger component that's just speculators being unwound."

She emphasized the excessive leverage in the market:

Bryn Talkington [01:53]: "It's an absolute casino that's been built on the back of a legitimately amazing growth story."

Technical Innovations vs. Market Reactions Talkington also discussed Deepseek AI's technological advancements, arguing that the innovation—such as training a large language model (LLM) more cost-effectively—should accelerate AI adoption rather than diminish chip demand:

Bryn Talkington [03:00]: "The technological innovation of having an LLM train itself through reinforcement learning is impressive. The cost efficiency... doesn't mean, though, that chip demand is at risk."

2. Market Reactions and Analyst Perspectives

Divergent Views on Nvidia’s Future The panelists presented mixed views on Nvidia's outlook. While some, like Dan Ives, advocated for selling Nvidia shares amid uncertainty, others like Bryn and Joe Terranova suggested a more measured approach.

Dan Ives [13:29]: "If you have a position in Nvidia and you are concerned about the position, sell something today and hope the sale that you're making is a terrible sale."

Conversely, Bryn countered the panic, suggesting that such overreactions are typically temporary:

Bryn Talkington [25:02]: "An outsized reaction like this is almost always going to be characterized as punk in hindsight. It's very rare that these types of moves represent the end of something."

Impact on Other Tech Stocks Joe Terranova highlighted that the selloff extended beyond Nvidia to other chipmakers like Taiwan Semiconductor, which he viewed as a buying opportunity given their crucial role in AI infrastructure.

Joe Terranova [23:56]: "If chips are cheaper... I would buy one today because the future is extremely bright just got a lot brighter."

3. Investment Strategies Amid Volatility

Risk Management The season's volatility prompted discussions on risk management. Bryn introduced their in-house model, Goaltender, which relies solely on technical indicators to navigate uncertain markets.

Bryn Talkington [42:39]: "We use technicals for risk management. We have an in house model called Goaltender... it has no economic inputs whatsoever."

Advisory on Leveraged Positions Dan Ives cautioned retail investors against excessive leverage, advocating for reducing risk during turbulent times.

Dan Ives [24:37]: "If you are comfortable feeling uncomfortable about something like that, make sure you enjoy that to the hilt. But if you're in an uncomfortable position... just sell a little something to make yourself feel better."

4. Broader Market Movements and Stock Highlights

Home Depot as a Strategic Buy Josh Brown introduced Home Depot as his latest buy, underscoring its potential as a rates trade and comeback story amid falling mortgage rates.

Bryn Talkington [27:32]: "What you're basically seeing is people reacting to that 10 year now... could break below four and a half percent. And if that happens these stocks will continue to lift."

Other Stock Discussions The panel also touched upon stocks like Twilio, Starbucks, and the implications of their recent performances and future outlooks.

Bryn Talkington [32:00]: "I'm long [Starbucks] and may God have mercy on my soul when we get this number in the morning."

5. NASDAQ 100’s 40th Anniversary and Technological Shifts

Deirdre Bosa’s Insights Deirdre Bosa shed light on the NASDAQ 100's performance and the impact of Deepseek AI’s innovations on the index. She highlighted the sustainability of growth-oriented companies within the NASDAQ despite current setbacks.

Deirdre Bosa [37:21]: "Lower costs can be better for the marketplace. It could be more company by company specific story."

Systemic Concerns Addressed Bosa addressed concerns about leveraged ETFs and their potential systemic threats, reassuring that current measures are robust enough to handle such volatilities.

6. Concluding Insights and Future Outlook

Navigating Uncertainty The episode concluded with a consensus that while the Deepseek selloff has introduced significant uncertainty, strategic risk management and selective investment opportunities remain viable paths forward.

Bryn Talkington [16:20]: "They have the opportunity to not [panic]. And a lot of that is dependent on how you went into today, how over how overly bullish you already were."

Final Takeaways The panel emphasized the importance of understanding market dynamics, leveraging technical analysis for investment decisions, and maintaining a balanced portfolio to weather ongoing and future market fluctuations.

Notable Quotes with Timestamps

• Bryn Talkington [01:53]: "It's an absolute casino that's been built on the back of a legitimately amazing growth story."
• Dan Ives [13:29]: "If you have a position in Nvidia and you are concerned about the position, sell something today..."
• Bryn Talkington [25:02]: "An outsized reaction like this is almost always going to be characterized as punk in hindsight."
• Joe Terranova [23:56]: "If chips are cheaper... I would buy one today because the future is extremely bright..."
• Bryn Talkington [42:39]: "We use technicals for risk management. We have an in-house model called Goaltender..."
• Bryn Talkington [27:32]: "People reacting to that 10 year now... could break below four and a half percent..."
• Deirdre Bosa [37:21]: "Lower costs can be better for the marketplace. It could be more company by company specific story."

Conclusion The Halftime Report episode provided a comprehensive analysis of the Deepseek AI-induced selloff, balancing perspectives from market optimists and cautious analysts. The discussions underscored the complexities of navigating a market influenced by rapid technological advancements and speculative trading behaviors. Investors were advised to employ robust risk management strategies and stay informed about underlying market fundamentals to make prudent investment decisions amid ongoing volatility.