Chapter 1: What is the main topic discussed in this episode?
Today's number, 219. That's how many hours it takes on average for adults to go from friends to best friends. Today's other number is 1,000. That's how many hours I've spent with Scott Galloway. However, I still haven't made it out of the acquaintance zone. Money market's bad. If money is evil, then that building is hell. The show goes on! The folks in there have watched the show so,
Welcome to Profiteer Markets. I'm Ed Elson. It is February 19th. Let's check in on yesterday's market vitals. The major indices' paired gains after the Federal Reserve minutes were released. The official record of their last meeting revealed rising concerns over inflation. It also showed several officials may want to raise rates if inflation persists. That news sent treasury yields climbing.
Meanwhile, Bitcoin fell to roughly $66,000. Okay, what else is happening? Anthropic and OpenAI have grabbed most of the headlines recently, but Chinese companies have been busy releasing very powerful AI models of their own. It seems that Lunar New Year, which began on Tuesday, has become China's unofficial launch season.
Alibaba kicked things off with RinBrain, a model designed to help robots understand the physical world. They also unveiled Quen 3.5, a coding and agent-focused model that is up to five times faster than its predecessor. Meanwhile, ByteDance dropped C-Dance 2.0, a video generation tool, as well as Dubow 2.0, its deep reasoning model.
And then Zipu released GLM5, which is engineered for agentic intelligence. The throughline behind all of these announcements? All of these models are reportedly matching and even beating U.S. competitors on multiple key benchmarks. Okay, here to break down this season of launches, we're speaking with Profiteer Media's very own Alice Han, co-host of the China Decode podcast.
Alice, good to see you.
Hi, Adam. Happy New Year. Happy Year of the Fire Horse.
Happy Year of the Fire Horse. That seems to be part of the story here, which is right as the Lunar New Year shows up, we see tons of new models coming out from these Chinese companies, these new AI models. Seadance, Dubao, GLM5. I mean, a lot of these names are kind of dominating the headlines, at least in China. What do you make of these new AI models that have come out of China?
How important are they? What do they mean for consumers and investors?
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Chapter 2: What are the latest AI launches from Chinese companies?
So the way that I think about it is that the American models are really focusing on precision, on reasoning at the highest level as a really quest for AGI. The Chinese models are really figuring out how to create a market in which everyday people, engineers, corporates even, are downloading locally, experimenting, fine-tuning, and just capturing the benefits of cheaper, faster products. models.
So I don't think there's a direct comparison. I think that the market exists for both these models, so to speak, to coexist.
One of the things that we're also seeing is just the benchmarking. I mean, I can't tell how seriously I'm supposed to take these benchmarking leaderboards. It seems that things are constantly shifting. But when you look at the leaderboards, when you look at the stats on which is the best model, which is the best performing, the fastest, however you define best. I'm not sure how they define it.
The Chinese models tend to be the best, or at least they tend to be at the top of the rankings. What do you make of that? Does that mean that the Chinese models are better? Does that mean they're going to overtake the American models? Or again, is this perhaps maybe apples to oranges and these benchmarks maybe don't make sense?
Well, I love that you asked that question, Ed. I think often that the benchmarks can be red herrings.
There's a good Harding principle in computer science that is applied to this, which suggests that even although they may meet those benchmark goals and exceed the other models, there are certain unquantifiable goals and performance outcomes that they may still be inferior in certain respects to the clods and the open AIs of the world. So again, back to my previous point, Ed, I really think
that if you care about privacy and cheapness and speed, maybe you go for Quen, you go for Jaipur, you go for Kimmy. But if you care about frontier, cutting-edge reasoning, precision, then you are still going to favor the clods and the open AIs. So it's really different universes that they inhabit. And I think benchmarks can often be red herrings, even although...
There's incentive for these models to come out and say that we're exceeding the benchmarks of other rivals and competitors. But again, you know, the cost is something that is directly comparable. It's no surprise that the Chinese models are 10, 20 times cheaper. And I think that that with cost deflation inertia will continue to favor the Chinese.
At what point will the cost really change and shift the way the market works here? I mean, consumers, I think, they know about open AI. They're beginning to know about Anthropic and learning about Claude. So there's maybe some brand loyalty there. But... I feel like at a certain point, if you're presented with an option that is 10 or 20 times cheaper, you go with that option.
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Chapter 3: How are Chinese AI models outperforming U.S. competitors?
They tend to be better at other languages. And so if you're a global company where you care about a Chinese-Asian speaking market, that could also be quite an important distinction.
One name we haven't mentioned, which was very popular about a year ago, seems to be less popular today, is DeepSeek. Where does DeepSeek sit in all of this?
Well, I think DeepSeek is still a leader. They still have a lot of the high-level AI talent, and that counts a lot when you think about the AI competition domestically and globally. I do know for a fact, although I'm not sure if I should say this, that DeepSeek is working a lot with local governments, with government bodies in China to integrate AI into local public governance.
And I think this is coming at a time where, you know, Ed will be watching with bated breath in the next two weeks or so, because the 15th five-year plan is going to come out. And it's very, very clear now that AI plus is going to be a huge cornerstone of the policy for the next five years. So AI in every realm, including in public governance and public service and utilities.
So DeepSeek is still a player, but I think the latest models coming out of Alibaba, even Kimmy, show us that in China, at least, the AI race is hyper-competitive. It's not just a duopoly, or even centered around three players, which is increasingly what's happening, it seems, in the U.S. There's many different players, and I think they can capture different parts of the market.
All right. Alice Han, co-host of the China Decode podcast. Alice, thank you. Appreciate your time. Thanks so much, Ed. After the break, the euro may take on the dollar. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at edwardelson.substack.com.
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Chapter 4: What implications do China's AI advancements have for consumers and investors?
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We're back with Profity Markets. President Trump's chaotic trade policy has rattled Europe, and some countries are weighing new methods to push back. For Sweden, that means reconsidering its use of the krona as its currency and switching to the euro. The country's finance minister just backed a formal inquiry into euro adoption, which would strengthen the country's trade ties to the EU.
A full embrace of the EU's common currency would also be a vote of confidence in the euro, just as the dollar's dominance has fallen into question. In the past year, the euro has climbed 13%. Meanwhile, the dollar has declined 9%.
So for more on what this currency plan in Sweden means, we are speaking with Robin Brooks, senior fellow at the Brookings Institution and also former chief FX strategist at Goldman Sachs. Robin, thank you for joining us in Property Markets. Yeah, my pleasure. Thanks for having me.
So this decision, or we haven't reached a decision, but at least Sweden appears to be mulling over the prospect of ditching the krona, which they've had for years, and moving over to the euro. It appears that this kind of has to do with... The relationship between the US and Europe, or at least global uncertainty, this seems to be somewhat a response to that.
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