Wall Street faced a downturn last week as inflation concerns, tariff threats, and declining consumer confidence weighed on major indices. Alphabet’s year-to-date struggles reflect a broader cooling in Magnificent Seven stocks in early 2025.

Eagles Dominate Super Bowl LIX

Philadelphia delivered a decisive 40–22 victory over the Chiefs, denying Kansas City a third consecutive championship. Jalen Hurts, named MVP, led with a commanding performance, while Patrick Mahomes struggled under heavy defensive pressure. The game lacked suspense but featured some memorable moments, including an early touchdown via the now-infamous “tush push” play.

China Implements Retaliatory Tariffs

In response to recent U.S. trade policies, China has imposed 10%–15% tariffs on American exports, including natural gas, coal, and farm equipment. Analysts warn that this escalation could increase prices for consumer goods in the U.S., particularly electronics and home appliances. The Trump administration’s initial tariffs on China, introduced on February 4, were described as an “opening salvo.” Experts are monitoring whether further negotiations will ease tensions.

AI Governance Summit in Paris

Global leaders and tech executives are convening in Paris to discuss AI regulation and innovation. Key topics include:

• DeepSeek’s Cost Efficiency: China’s DeepSeek chatbot has stunned the industry with its reported $5.6 million development cost, significantly lower than comparable U.S. AI projects.
• U.S. AI Strategy: The Trump administration aims to position the U.S. as the global leader in AI, though its approach to international governance remains unclear.
• Safety vs. Growth: OpenAI’s CEO has called for a broader perspective beyond risk mitigation, emphasizing AI’s potential for economic expansion.

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PlayStation Network Faces Major Outage

Sony’s PlayStation Network suffered a 24-hour disruption over the weekend, frustrating players worldwide. The outage peaked at 70,000 reported issues, leading Sony to compensate PlayStation Plus members with an extra five days of service.

NIH Implements Research Budget Cuts

The National Institutes of Health has begun executing significant reductions in overhead funding for research grants. Announced Friday, the cuts aim to save taxpayers over $4 billion. However, scientists argue these reductions will stifle medical innovation, jeopardize jobs, and weaken the economy in regions reliant on NIH funding.

Impact of NIH Funding

The NIH is a powerhouse for biomedical research, supporting 412,000 jobs across the U.S. Overhead costs for lab operations, hazardous waste disposal, and infrastructure have been a key component of funding.

New Cap on Overhead Costs

Previously, NIH grants included a 26% allocation for indirect costs. The new administration has imposed a 15% cap, citing high previous rates for elite institutions like Harvard and Yale. The administration argues this move ensures funds are directed toward research rather than administrative expenses.

Backlash From Scientists

Researchers claim the cuts will hinder scientific progress, affecting advancements in cancer research and other major fields. Cities heavily dependent on NIH funds, such as Pittsburgh and the Research Triangle in North Carolina, could experience economic setbacks. The University of Pittsburgh alone faces a 25% funding reduction under this policy.

Looking ahead, legal challenges from universities are expected.

Key Policy Developments

• Federal Worker Buyout Deadline Extended: A federal judge delayed the deadline for workers to accept Trump’s buyout plan until further legal arguments are heard. So far, only 3% of the federal workforce has accepted the offer.
• Honeywell Announces Corporate Split: The company will divide into three separate entities, mirroring GE’s restructuring.
• Proposed Ban on DeepSeek in Government Devices: Lawmakers introduced legislation to block the Chinese AI chatbot on U.S. government systems, citing national security concerns.

The Week Ahead

• Inflation Report: The January CPI release on Wednesday will reveal whether inflation fears are justified. Analysts predict a 0.3% monthly increase.
• Earnings Reports: McDonald’s, Coca-Cola, and Amazon will release quarterly results, offering insights into consumer spending trends.
• Amazon Union Vote: Over 4,000 workers in North Carolina will vote on unionization, potentially making this facility the second Amazon site to unionize.
• Meta Layoffs Begin: Performance-based job cuts at Meta will impact 3,600 employees, as the company moves to streamline operations.

Other Noteworthy News

• CFPB Shutdown in Progress: The new director has halted operations at the Consumer Financial Protection Bureau, though Congress has yet to formally close it.
• Elon Musk Denies Interest in Buying TikTok: Musk dismissed acquisition rumors in a video posted Saturday.
• Hostage Exchange in the Middle East: Three Israeli hostages were freed by Hamas, while Israel released nearly 200 Palestinian prisoners in return.
• Trump-Putin Talks on Ukraine: President Trump confirmed a recent phone call with Vladimir Putin regarding possible resolutions to the Ukraine conflict.
• U.S. Foreign Aid Report Released: A new analysis visualizes the scope and allocation of U.S. foreign aid spending.