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Alibaba unveiled its latest AI reasoning model with fewer parameters. (0:15) Trade deficit soars as tariffs worries juice imports. (1:09) No Jack Daniel’s worse than a tariff. (4:45)
This is an abridged transcript of the podcast:
Our top story so far, Chinese companies are continuing to make big strides in artificial intelligence, as Alibaba (NYSE:BABA) unveiled its latest reasoning model with fewer parameters, which rivals DeepSeek’s R1 and OpenAI’s o1 mini.
The new model, called QwQ-32B, was developed with 32 billion parameters (referring to the training data that enables the model to generate desired outputs). Alibaba claims QwQ-32B can achieve performance comparable to DeepSeek’s R1 model, which uses 671 billion parameters.
Alibaba’s Qwen team evaluated the new model across a range of benchmarks to assess its mathematical reasoning, coding and general problem-solving. It more or less matched the performance of R1 and OpenAI’s cost-efficient o1 mini model.
The release comes as Alibaba committed to invest over $52 billion in its cloud computing and AI infrastructure over the next three years.
On the economic front, the U.S. trade deficit surged 34% to a record $131.4 billion in January, higher than the $123 billion shortfall expected and up from $98.1 billion in December, as fear of tariffs caused a spike in imports.
January imports rose 10% to $401.2 billion.
Wells Fargo economists say: “We ultimately expect tariffs to impart a modest stagflationary impulse of slower growth and higher inflation on the U.S. economy. The degree of the shock depends on many factors, such as exclusions and how long tariffs are in place. Today’s release highlights that the sheer threat of tariffs has already influenced behavior.”
“To the extent the surge in imports was a pull forward in demand in preparation for tariffs, we may see some payback in the coming months.”
Looking to the labor market ahead of Friday’s jobs report, Challenger, Gray and Christmas said employers announced 172,017 job cuts in February, the highest monthly total since July 2020 and the highest total for February since 2019. The jump reflects the beginning of federal workforce and spending cuts that the Trump administration is pursuing.
The February tally is more than triple the 49,795 cuts announced in January and more than double the 84,638 job eliminations announced in the same month last year.
But weekly initial jobless claims fell more than expected to 221,000.
Pantheon Macro economist Samuel Tombs says: “Layoffs are running at a higher rate than the advance initial jobless claims number … suggests.”
“Claims filed by former federal workers are not included in the advanced initial claims count, unless they also used to hold a second job in the private sector. Data for claims made by former federal workers are reported separately and with a one-week lag. Unadjusted claims by former federal workers increased to 1.6K in the week ending February 22, up from 0.6K in the previous week. They likely rose further last week, given the faster pace of DOGE job-cutting in recent weeks.”
Among active stocks, Marvell Technology (MRVL) is plunging as traders deemed its results, which looked OK at first blush, not good enough.
KeyBanc Capital Markets analyst John Vinh said the results and guidance were “solid,” but the company’s data center revenue was only in-line with estimates. Additionally, there may be some concern from investors related to its Amazon (AMZN) businesses, as Amazon’s Trainium 3 chip is likely to be developed by Amazon’s own Annapurna Labs. (Marvell won Amazon’s next-gen Trainium 2.5 Ultra).
Going a step further, Summit Insights Group analyst Kinngchai Chan downgraded Marvell to Hold, noting that investor expectations are “too high” and the company lacks the financial leverage as its application-specific integrated circuit AI business could pressure the company further.
Hims & Hers (HIMS) is down after a court denied a motion filed by two compounding trade groups over the FDA’s decision to declare that Eli Lilly’s (LLY) weight loss drug Zepbound is no longer in shortage.
Hims & Hers markets compounded versions of rival Novo Nordisk’s (NVO) weight loss therapy semaglutide at a sharp discount to the branded version.
And MongoDB (MDB) is sinking after the database solutions company provided a much weaker-than-expected outlook for fiscal year 2026.
The reason for the lower outlook centers around slower growth from MongoDB’s non-Atlas revenue. Atlas, which is a fully managed cloud database, accounted for 71% of revenue for the company during the fourth quarter of fiscal 2025.
Piper Sandler analyst Brent Bracelin said: “The initial growth outlook of 12.6% y/y (vs. our prior estimate of 17%) shakes our confidence in the durability of share gains and upside levers in the near-term.”
In other news of note, no booze is worse than expensive booze – at least according to Brown-Forman (BF.A) (BF.B) CEO Lawson Whiting.
Brown-Forman – owner of Jack Daniel’s, Woodford Reserve and Herradura among other brands – held its earnings call and Whiting criticized Ontario’s removal of U.S. alcohol products, calling it a “disproportionate response” to President Donald Trump’s tariffs on Canada and Mexico.
He said: “I mean, that’s worse than a tariff, because it’s literally taking your sales away, (and) completely removing our products from the shelves.”
But he added that Canada is “not a massive” market for Brown-Forman, and “it’s around 1% of sales. So, we can withstand.”
We’re “going to continue to try to fight for getting … reciprocal 0 for 0 tariffs, (which) is the best thing for our industry as a whole.”
And in the Wall Street Research Corner, BTIG technical strategist Jonathan Krinsky says the S&P 500 is facing more W-shaped recoveries, rather than a V-shaped bounce-back.
Krinsky said: “With the S&P 500 Index within spitting distance of its 200-day moving average, we have been receiving an increasing amount of questions as to whether we are near a bottom. Anecdotally, we get the sense that complacency has been removed, but we are not yet at any sort of fear.”
He said that investors have become accustomed to V-shaped recoveries, but there is the possibility that the recovery would be more of a “W-shaped bottom with a bounce and re-test later this month.”
In addition, he said that although surveys, such as AAII sentiment, have shown extreme pessimism among investors, “little attention was paid to the other question that is asked in that survey – stock allocation.”
As of the end of February, stock allocation dipped just slightly to 67.9% from 69.1%. During the 2022 lows, stock allocation was 62%, during the Covid-19 lockdown it bottomed to 55% and during the Financial Crisis it fell to 40%.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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