Good morning. In today’s edition:

• 🤖 China’s buzzy new AI model
• 😋 The fastest-growing snack category
• 🪲 Insects farm, too

… and more.

Ready, Set, Go: Today’s news should be a ~4.75-minute read (1,264 words).

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“Happiness must be grown in one's own garden.”

–Mary Engelbreit (b. 1952)

The US has the Miracle on Ice – and now, China has the Miracle on AI-ce.

Silicon Valley is buzzing over a pair of new AI models developed by Chinese researchers that match or exceed the performance of the most advanced systems from top American companies, despite using inferior chips and far fewer resources.

Some quick background: DeepSeek, a relatively unknown Chinese AI research lab, released its next-gen chatbot model called V3 late last month. In third-party benchmark tests, V3 matches the capabilities of OpenAI's GPT-4o and Anthropic's Claude Sonnet 3.5 – while outperforming other top competitors, such as Meta's Llama 3.1.

• Then last week, DeepSeek introduced R1, a reasoning-focused model that also performs on-par with or better than OpenAI’s top reasoning model, o1, in many of the same third-party tests.

But the hype is about more than impressive results. DeepSeek’s models have received praise from several top Silicon Valley executives – including a16z founder Marc Andreessen and Microsoft CEO Satya Nadella – for two main reasons: 1) they’re far cheaper to build and run than competitors, and 2) they’re completely free and open source.

1. DeepSeek says its V3 chatbot was trained in two months for just $5.6 million using reduced-capability chips from Nvidia, compared to OpenAI’s $100+ million price tag for training GPT-4. DeepSeek’s R1 model also runs queries at ~$0.14 per million tokens, or 98% cheaper than OpenAI's o1 reasoning model ($7.50).
2. Unlike most leading AI models, which are proprietary, both V3 and R1's code and training methods are completely open source under the MIT license. This means anyone can grab the model, use it, and modify it without restrictions.

Big picture: As of this weekend, DeepSeek’s V3 and R1 models were both ranked in the top 10 on Chatbot Arena, a chatbot performance rating platform hosted by UC Berkeley researchers. That’s ahead of competitors like Anthropic’s Claude and Meta’s Llama – but behind the two top-rated models, Google’s Gemini and OpenAI’s GPT-4o.

📊 Flash poll: Do you regularly use AI models like ChatGPT, Gemini, or Claude?

• Yes
• No

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The US housing market and Eeyore – both are down in the dumps. Existing home sales in 2024 turned in their weakest year in nearly thirty years, the National Association of Realtors said Friday.

• Existing home sales fell 0.7% last year to 4.06 million, the weakest showing since 1995, when the US had ~70 million fewer people.
• Annual existing homes sales traditionally clock in around 5 million.

Prices higher than the lost balloons in Up

A supply/demand mismatch driven by low inventory – a 3.3-month supply at the current sales pace (vs. 4-6 months in a more balanced market) – has helped drive home prices to a record high. The median home sales price in 2024 was $407,500, up 4.7% year over year.

In addition to high prices, elevated mortgage rates (~7%) have kept prospective buyers on the sidelines – whether to maintain their existing, less-expensive mortgage or for affordability reasons.

First-time homebuyers are especially affected. The annual share of homebuyers ditching the shared walls and noisy ceilings of an apartment last year was 24%, the lowest on record.

🤔 More trouble in 2025? While the housing market has some momentum heading into the New Year – existing-home sales increased in December for the third straight time on a monthly basis, which hasn’t happened since 2021 – sales are still well below historical levels. Mortgage rates are also expected to remain above 6% this year.

In the little over three weeks since being rolled out, New York City’s new congestion pricing has been a Clearasil for traffic. Tl;dr: It appears to be working – for most.

Quick reminder: On January 5, NYC enacted the country’s first policy that charges drivers a toll for entering a central business district; people coming into Manhattan at or below 60th Street during peak hours by car are now paying $9 (with higher fees for trucks and charter/tour buses) on top of existing tolls and any parking fees.

• With the policy, the city aims to raise $15 billion for mass transit infrastructure.

The data: In the two weeks following January 5, traffic entering Manhattan on the weekdays dropped by 6% compared to baseline numbers for January weekdays.

• Traffic speeds are also up, and trip times have shortened vs. before congestion pricing went into effect.
• Nearly all of the reduced vehicle entries to the congestion pricing zone appear to be due to personal vehicles no longer making the trip, according to a Bloomberg analysis.

But…Not everyone’s happy with the effects thus far – like parking garage owners and restaurateurs, who are launching margin-squeezing promotions and altering delivery schedules to adjust for the higher costs.

👀 Looking ahead: Challenges to congestion pricing await. On the state level, at least 17 bills are in motion to repeal or pare it back, while President Trump promised on the campaign trail to “TERMINATE” the policy.

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BUSINESS & MARKETS

• 📈 US markets rose last week (S&P: +1.7%; Dow: +2.2%; Nasdaq: +1.7%).
• 🤖 Meta plans to spend as much as $65 billion this year to expand its AI infrastructure, CEO Mark Zuckerberg said Friday.
• 📱 The White House is in talks to have Oracle and US investors take over TikTok, according to NPR. | 📝 Perplexity submitted an updated bid for TikTok; US gov’t would have an up to 50% stake in the new entity.

SPORTS, MEDIA & ENTERTAINMENT

in partnership with HISTORY Channel Trivia Game from Dyce Games

• 🏈🏆 Super Bowl LIX is set: The Philadelphia Eagles beat the Washington Commanders 55-23 to win the NFC Conference Championship; the Kansas City Chiefs beat the Buffalo Bills 32-29 to win the AFC; the Super Bowl is on February 9. | 🎾🏆 Australian Open winners: 19th-seed Madison Keys upset world No. 1 Aryna Sabalenka to win her first Grand Slam title on the women’s side; world No.1 Jannik Sinner defeated Alexander Zverev to defend his Australian Open crown on the men’s side.
• 🙏 DJ Unk, the rapper who created the millennial childhood anthem “Walk It Out,” died at 43.
• 🍿 Flight Risk, directed by Mel Gibson and starring Mark Wahlberg, topped the domestic box office with $12 million in its opening weekend. | 🎤 Hans Zimmer, legendary film music composer, is reportedly in talks to recreate Saudi Arabia’s national anthem and collaborate on a few other projects for the kingdom.

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SCIENCE, SPACE & EMERGING TECH

• 💉 Novo Nordisk’s new weight-loss drug, amycretin, helped patients lose up to 22% of their weight in early-stage clinical trials; the pharma giant’s stock closed up 8.5% on Friday following the news.
• 🦖📸 A new predatory dinosaur species was recently identified from old photos of a fossil that was destroyed by bombing during World War II.
• 🌿 Cannabidoil, the compound in cannabis known as CBD, was discovered in an entirely different plant species that’s common in Brazil; this Brazilian plant doesn’t contain THC, the main psychoactive compound in cannabis.

MISCELLANEOUS

in partnership with NoNetz

• ⚖️ Ross Ulbricht, the founder of dark web drug market Silk Road who was sentenced to life in prison in 2015, received a full pardon from President Trump. | 🇨🇴 President Trump said he will impose 25% tariffs on Colombian goods coming into the US in retaliation for the government’s rejection of two US flights carrying deported Colombians back home; as of early Monday, however, the US and Colombia had agreed to the “unrestricted acceptance” of migrants from Colombia returned from the US; the tariffs will no longer go into effect "unless Colombia fails to honor this agreement." | 🏛️ Trump fired over a dozen independent inspector generals in charge of oversight at federal agencies. | 🇵🇸 Trump said he would like to see Jordan, Egypt, and other Arab countries take more Palestinian refugees; he also suggested a plan to “just clean out” Gaza and remove 1.5 million Palestinians.
• 🤝 Israel-Hamas ceasefire: Both sides reached an agreement early Sunday to release four Israeli hostages in exchange for ~200 Palestinian prisoners and for Israel to begin allowing displaced Palestinians to return to northern Gaza.
• 🇩🇪 Friedrich Merz, the front-runner to become Germany’s new chancellor, proposed plans to clamp down on migration that prompted public protests; the bill is supported by Germany’s right-wing AfD party, who hosted Elon Musk for a virtual address on Saturday.

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Meat sticks, the on-the-go gas-station snack eaten by both construction workers and Jennifer Lawrence, are currently the fastest-growing category in snacks, the Wall Street Journal reports. In other words: Slim Jim is transitioning into its final form of Big Jim.

• Sales of dried meat snacks excluding jerky were up 10.4%, to ~$3.3 billion, through December 29, 2024, compared with the same period a year earlier, according to consumer-analytics firm Circana.
• ~41 million households buy meat sticks annually, according to Conagra’s Spade.

📈 The beneficiaries: Big Meat Stick (of course). But also industry upstarts like Chomps, which started as a side hustle in 2012 and is now spinning enough meat sticks to make it the fastest-growing snack food brand in the US, according to data collected by Numerator.

☝️ Giant pandas Bao Li and Qing Bao made their long-awaited public debut at the Smithsonian's National Zoo and Conservation Biology Institute in Washington, D.C., ahead of Lunar New Year this week.

🤔 Did You Know? At least three different groups of insects – ambrosia beetles, leafcutter ants, and fungus-growing termites – have evolved to domesticate (farm) certain species of fungi.

📰 Worth a Read: What makes some of us crave self-insight more than others?

🖱 Clickbait: Five Takeaways From Bill Gates’s Interview With The Wall Street Journal

Monday: International Holocaust Remembrance Day

Tuesday: National Plan for Vacation Day

Wednesday: Federal Reserve’s first interest rate decision of 2025; RFK Jr. to face Senate confirmation hearing for health secretary

Thursday: Tulsi Gabbard to face Senate confirmation hearing for director of national intelligence

Friday: The start of February, aka Black History Month

On Friday, we covered President Trump’s recently signed executive orders aimed at reshaping the federal government’s 2.3 million-person workforce.

❓ Our question to you: In general, how do you feel about President Trump’s recent moves aimed at reshaping the federal workforce?

• 👍 Support: 35%
• 👎 Oppose: 47%
• ↔️ Neutral: 9%
• 🤷‍♀️ Unsure/other: 9%

Click here to read some of the most thoughtful longform responses.

+Note on sample size: We received 2,850 votes and 308 longform responses.

🫎 New York wildlife authorities completed quite the rescue last week, saving a 1,000-pound moose who had fallen through the ice in Lake Abanakee. Read the remarkable story here.

🍕 Pizza delivery man Connor Stephanoff trudged a half-mile through a snowstorm to deliver a $40 pizza order when the road was blocked by a crash; he received a $2.15 tip for his efforts. When a police officer at the crash site saw the young man walking back through the snow and heard of the low tip, he started a GoFundMe for the dedicated 20-year-old – which ended up raising ~$30,000.

🎒Tanzania man Innocent James founded his company, Soma Bags, in 2016. Last year, his solar-powered recycled backpacks helped 36,000+ children read and complete their homework after dark in homes without electricity.

Guess the definitions of the following Greek/Latin root words.

1. Ampl
2. Amic
3. Brev
4. Cap
5. Equ

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1. Ampl = Abundant (e.g., amplifier)
2. Amic = Friend (amicable)
3. Brev = Short (abbreviation)
4. Cap = Hold (capture)
5. Equ = Even (equal)