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| | Donald Trump famously warned in 2016 that the stock market’s outperformance during the final months of Barack Obama’s presidency was a bubble. On Monday, after a small Chinese startup threatened notions of U.S. supremacy in artificial intelligence technology, investors are reckoning with the possibility that the Trump-fueled stock market surge may also be overinflated. The emergence of DeepSeek, which purportedly produced an easy-to-use competitor to OpenAI’s personal assistant tool for less than $6 million, has forced market participants to reassess investments that pushed valuations of high-flying tech companies like Nvidia and Microsoft into the stratosphere during Silicon Valley’s AI boom. Once DeepSeek climbed to the top of Apple’s download charts, investors began to unload shares of businesses that are at the forefront of the U.S. industry. The stakes are especially high for Trump because of the emphasis his administration has placed on AI as a driver of future economic growth. As Declan Harty and I report, Trump has made investments in new infrastructure to support the industry a cornerstone of his economic agenda, throwing his weight behind a $500 billion venture led by OpenAI, SoftBank and Oracle to build data centers and energy projects that he says will create up to 100,000 jobs. Last week, he signed an executive order to boost the technology, which he said would drive growth, “enhance our economic and national security, and improve our quality of life.” If DeepSeek is as affordable and transformative as advertised, the stock market bull run that welcomed Trump back to the White House could hit a major roadblock. “Valuations remain extended, and while vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification,” said Seema Shah, chief global strategist at Principal Asset Management. “The 2025 theme of US exceptionalism is now facing uncertainty, with ongoing concerns around tariffs and inflation adding to market challenges.” We’ll see if the selloff continues when markets open at 9:30. Given the premium that Trump has often placed on the performance of the stock market, an ongoing rout would provide an inauspicious backdrop as his administration pushes an aggressive economic agenda that could usher in tax cuts and high tariffs. Speaking of which… It’s TUESDAY — As always, you can find Sam at ssutton@politico.com.
| | | | A message from the Consumer Bankers Association: Keeping the lights on. Paying rent on time. Feeding their families. Overdraft services help consumers in need cover essential expenses. Research shows that 73% of consumers who overdraft frequently do so intentionally, appreciating the service and understanding the fees involved. The CFPB's regulation of overdraft creates arbitrary price caps that ignore the real, transparent costs of providing these services—forcing banks to scale back this lifeline. Learn how CBA is fighting to protect access to overdraft. | | | | | The Federal Open Market Committee will hold a closed meeting at 9 a.m. … The Senate Commerce, Science and Transportation Committee will hold a hearing on the Panama Canal at 10 a.m. … The Consumer Confidence Index will be released at 10 a.m. … The Commerce Department’s National Institute of Standards and Technology will hold a virtual meeting of the National Artificial Intelligence Advisory Committee at 2 p.m. … Bessent in — The Senate voted 68-29 to confirm Scott Bessent as the 79th Treasury secretary on Monday evening. Bessent, a macro hedge fund founder and a former top investor for George Soros, won over some Democratic senators who viewed him as well-qualified for the role given his deep experience in financial markets,Michael Stratford and Jasper Goodman report. — “All partisanship aside, overall, he’s a qualified person,” said Ruben Gallego (D-Ariz.), calling Bessent “someone that we could work with.” — Bessent’s arrival at Treasury comes amid speculation about whether — and when — Trump will follow through on his pledge to impose universal tariffs on imports. The FT’s Aime Williams and Demetri Sevastopulo on Monday reported that Bessent is pushing a plan that would place a 2.5 percent levy on imported goods and then raise the rate by the same amount each month. Whoa — From Jennifer Scholtes: “President Donald Trump’s budget office on Monday ordered a total freeze on “all federal financial assistance” that could be targeted under his previous executive orders pausing funding for a wide range of priorities — from domestic infrastructure and energy projects to diversity-related programs and foreign aid.” Chopra pitches debanking rules — CFPB Director Rohit Chopra appeared on a panel Monday in a virtual discussion about debanking hosted by the Federalist Society, reports Katy O’Donnell. “I do think there is a role for advancing fair access rulemaking that would make clear that you cannot debank based on whatever you want if you are a chartered national bank,” Chopra said. “Inasmuch that we do have rules we should try to make sure that they are as bright-line as possible,” he added. Chopra, whose days as the head of the consumer bureau are widely understood to be numbered, said he hopes his successor continues forward with a proposed rule that would crack down on debanking for political speech or religious reasons. What DeepSeek means for Washington — Our Christine Mui: “Washington’s rampant anxiety about beating China has led to policies that the industry has very mixed feelings about. On one hand, most tech firms hate the export controls that stop them from selling as much to the world’s second-largest economy, and force them to develop new products if they want to do business with China. If DeepSeek shows those rules are pointless, many would be delighted to see them go away. On the other hand, anti-China, protectionist sentiment has encouraged Washington to embrace a whole host of industry wishlist items, from a lighter-touch approach to AI rules to streamlined permitting for related construction projects. Does DeepSeek mean those, too, are failing? Or does it trigger a doubling-down?” — Trump on Monday told House Republicans that the news of DeepSeek’s apparent progress in artificial intelligence was “a positive,” Bloomberg’s Stephanie Lai and Billy House report. It’s “good, because you don’t have to spend as much money,” he said. — Bloomberg: “World’s Richest People Lose $108 Billion After Tech Selloff”
| | | | Power shifts, razor-thin margins, and a high-stakes agenda. We’ve transformed our coverage—more reporters, more timely insights, and unmatched policy scoops. From leadership offices to committee rooms, caucus meetings, and beyond, our expert reporting keeps you ahead of the decisions that matter. Subscribe to our Inside Congress newsletter today. | | | | | | | Grocery prices — Even though the rate of inflation has fallen steadily over the last two years, high prices at the grocery have forced more Americans to rely on food banks, according to Bloomberg’s Craig Torres. New faces — As the Federal Reserve weighs its next steps later this week, four new regional presidents will have a vote when it comes to setting rates, Matt Grossman reports for The WSJ. Two of those Federal Open Market Committee members, Alberto Musalem of the St. Louis Fed and the Kansas City Fed’s Jeffrey Schmid, have not held a voting seat before.
| | New poll — A new poll conducted by Fabrizio Ward, the Republican polling firm, found broad support for regulatory changes that would allow 401(k) plans to invest in private equity deals, according to results that the Pinpoint Policy Institute shared with MM. The survey found that voters back changes to more easily allow workers the choice to invest in private equity funds through their retirement plans by a 57 percent to 13 percent margin. The poll also found that 47 percent of voters approve of Trump’s early performance, while 41 percent disapprove.
| | | | A message from the Consumer Bankers Association:  
| | | | | Freeze — The Federal Deposit Insurance Corp. has frozen job offers that had been extended to 200 bank examiners in accordance with Trump’s executive order that halted federal hiring, WaPo’s Andrew Ackerman reports. The FDIC was already dealing with a shortage of examiners, which could undermine its ability to stop future bank failures. Back to the office — Meanwhile, the administration on Monday asked agencies to provide updates by the end of the week on their plans for bringing federal workers back into offices, writes Nick Niedzwiadek. — The Interior Department and EPA have directed employees to return to the office full time next month as federal agencies work to implement a presidential order designed to curb telework and remote work, Scott Streater and Kevin Bogardus report.
| | | | New Year. New Washington. New Playbook. With intensified congressional coverage and even faster delivery of policy scoops, POLITICO’s reimagined Playbook Newsletter ensures you’re always ahead of the conversation. Sign up today. | | | | | | | Jennifer Rosenthal has joined the DeFi Education Fund as its chief communications officer. Rosenthal had previously led the communications at Grayscale Investments. Former Treasury general counsel Neil MacBride has rejoined Davis Polk as a partner and co-chair of the law firm’s white collar defense and investigations practice. Kelsey Pristach has joined the SEC as a senior adviser to Acting Chair Mark Uyeda, a person with knowledge of the move tells MM. Pristach worked as a senior policy adviser and coalitions director for Sen. Cynthia Lummis for the last two years. She started Monday. — Jasper Goodman and Declan Harty
| | | | A message from the Consumer Bankers Association: The CFPB's regulation of overdraft doesn't just fail Americans trying to make ends meet. It fails to consider the consumer-friendly strides taken by banks to support customer needs, like fee caps and grace periods.
America's banks have worked to empower consumers with the information they need to make informed financial decisions, like low-balance warnings and real-time insights. These innovations were designed with the customer in mind, helping to manage their money more effectively, and access tools designed for their financial well-being.
Restrictive regulations undermine this progress and reduce consumer choice. See what's at stake. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
