Finance

Chinese autonomous trucking company TuSimple has rebranded to CreateAI, with a focus on video games and animation, the company announced Thursday.
Now, just over two years after CEO Cheng Lu rejoined the company in the role after being pushed out, he expects the business can break even in 2026.
CreateAI expects to lower the cost of top-tier, so-called triple A game production by 70% in the next five to six years, Cheng said.

Workers setting up the TuSimple booth for CES 2022 at the Las Vegas Convention Center on Jan. 3, 2022.
Alex Wong | Getty Images News | Getty Images

Embattled Chinese autonomous trucking company TuSimple has rebranded to CreateAI, focusing on video games and animation, the company announced Thursday.
The news comes as GM folded its Cruise robotaxi business this month, and the once-hot sector of self-driving startups has started to weed out stragglers. TuSimple, which straddled the U.S. and China markets, had its own challenges: concerns over vehicle safety, a $189 million settlement of a securities fraud lawsuit and delisting from the Nasdaq in February.

Now, just over two years after CEO Cheng Lu rejoined the company in the role after being pushed out, he expects the business can break even in 2026.
That’s thanks to a video game based on the hit martial arts novels by Jin Yong that’s slated to release an initial version that year, Cheng said. He anticipates “several hundred million” in revenue in 2027 when the full version is launched.
Before the delisting, TuSimple said it lost $500,000 in the first three quarters of 2023, and spent $164.4 million on research and development during that time.
Company co-founder Mo Chen has a “long history” with the Jin Yong family and started work in 2021 to develop an animated feature based on the stories, Cheng said.

The company claims its artificial intelligence capabilities in developing autonomous driving software give it a base from which to develop generative AI. That’s the next-level tech powering OpenAI’s ChatGPT, which generates human-like responses to user prompts.

Along with the CreateAI rebrand, the company debuted its first major AI model called Ruyi, an open-source model for visual work, available via the Hugging Face platform.
“It’s clear our shareholders see the value in this transformation and want to move forward in this direction,” Cheng said. “Our management team and Board of Directors have received overwhelming support from shareholders at the annual meeting.”
He said the company plans to increase headcount to around 500 next year, up from 300.

Cutting production costs by 70%

While still under the name TuSimple, the company in August announced a partnership with Shanghai Three Body Animation to develop the first animated feature film and video game based on the science fiction novel series “The Three-Body Problem.”
The company said at the time that it was launching a new business segment to develop generative AI applications for video games and animation.
CreateAI expects to lower the cost of top-tier, so-called triple A game production by 70% in the next five to six years, Cheng said. He declined to share whether the company was in talks with gaming giant Tencent.
When asked about the impact of U.S. restrictions, Cheng claimed there were no issues and said the company used a mix of China and non-China cloud computing providers.
The U.S. under the Biden administration has ramped up limits on Chinese businesses’ access to advanced semiconductors used to power generative AI. More

The Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022.
“Today was a closer call but we decided it was the right call,” Chair Jerome Powell said.
The Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations.

WASHINGTON – The Federal Reserve on Wednesday lowered its key interest rate by a quarter percentage point, the third consecutive reduction and one that came with a cautionary tone about additional cuts in coming years. 
In a move widely anticipated by markets, the Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022 when rates were on the move higher. 

Though there was little intrigue over the decision itself, the main question had been over what the Fed would signal about its future intentions as inflation holds steadily above target and economic growth is fairly solid, conditions that don’t normally coincide with policy easing. 
Read what changed in the Fed statement.

In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations. The two cuts indicated slice in half the committee’s intentions when the plot was last updated in September. 
Assuming quarter-point increments, officials indicated two more reductions in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update as the level has drifted gradually higher this year. 
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Chair Jerome Powell said at his post-meeting news conference. “We can therefore be more cautious as we consider further adjustments to our policy rate.”

“Today was a closer call but we decided it was the right call,” he added.
Stocks sold off sharply following the Fed announcement, with the Dow Jones Industrial Average closing down more than 1,100 points while Treasury yields soared. Futures pricing pared back the outlook for cuts in 2025, according to the CME Group’s FedWatch measure.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Powell said.
For the second consecutive meeting, one FOMC member dissented: Cleveland Fed President Beth Hammack wanted the Fed to maintain the previous rate. Governor Michelle Bowman voted no in November, the first time a governor voted against a rate decision since 2005. 
The fed funds rate sets what banks charge each other for overnight lending but also influences a variety of consumer debt such as auto loans, credit cards and mortgages. 
The post-meeting statement changed little except for a tweak regarding the “extent and timing” of further rate changes, a slight language shift from the November meeting. Goldman Sachs said the adjustment was “hinting at a slower pace of rate cuts ahead.”

Change in economic outlook

The cut came even though the committee jacked up its projection for full-year 2024 gross domestic product growth to 2.5%, half a percentage point higher than September. However, in the ensuing years the officials expect GDP to slow down to its long-term projection of 1.8%. 
Other changes to the Summary of Economic Projections saw the committee lower its expected unemployment rate this year to 4.2%, while headline and core inflation according to the Fed’s preferred gauge were pushed higher to respective estimates of 2.4% and 2.8%, slightly higher than the September estimate and above the Fed’s 2% goal. 
The committee’s decision comes with inflation not only holding above the central bank’s target but also while the economy is projected by the Atlanta Fed to grow at a 3.2% rate in the fourth quarter and the unemployment rate has hovered around 4%. 

Though those conditions would be most consistent with the Fed hiking or holding rates in place, officials are wary of keeping rates too high and risking an unnecessary slowdown in the economy. Despite macro data to the contrary, a Fed report earlier this month noted that economic growth had only risen “slightly” in recent weeks, with signs of inflation waning and hiring slowing. 
Moreover, the Fed will have to deal with the impact of fiscal policy under President-elect Donald Trump, who has indicated plans for tariffs, tax cuts and mass deportations that all could be inflationary and complicate the central bank’s job.
“We need to take our time, not rush and make a very careful assessment, but only when we’ve actually seen what the policies are and how they’ve been implemented,” Powell said of the Trump plans. “We’re just not at that stage.”

Normalizing policy

Powell has indicated that the rate cuts are an effort to recalibrate policy as it does not need to be as restrictive under the current conditions. 
“We think the economy is in [a] really good place. We think policy is in a really good place,” he said Wednesday.
With Wednesday’s move, the Fed will have cut benchmark rates by a full percentage point since September, a month during which it took the unusual step of lowering by a half point. The Fed generally likes to move up or down in smaller quarter-point increments as its weighs the impact of its actions. 
Despite the aggressive moves lower, markets have taken the opposite tack. 
Mortgage rates and Treasury yields both have risen sharply during the period, possibly indicating that markets do not believe the Fed will be able to cut much more. The policy-sensitive 2-year Treasury yield jumped to 4.3%, putting it above the range of the Fed’s rate.
In related action, the Fed adjusted the rate it pays on its overnight repo facility to the bottom end of the fed funds rate. The so-called ON RPP rate is used as a floor for the funds rate, which had been drifting toward the lower end of the target range.

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EVERY BUSINESS in Ukraine has a reference point. For Mykhailo Travetsky, a farmer in Pryluky, it was the first six weeks of the all-out invasion. As a Russian column stalled on a nearby highway, his farm became no-man’s land. Locals fought gun battles to keep the Russians off it. Shells whizzed overhead. And Mr Travetsky milked his cows twice a day in body armour, automatic rifle cocked at his side. More

U.S. Federal Reserve Chair Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., November 7, 2024. 
Annabelle Gordon | Reuters

The Federal Reserve on Wednesday projected only two quarter-point rate cuts in 2025, fewer than previously forecast, according to the central bank’s medium projection for interest rates.
The so-called dot-plot, which indicates individual members’ expectations for rates, showed officials see their benchmark lending rate falling to 3.9% by the end of 2025, equivalent to a target range of 3.75% to 4%.The Fed had previously projected four quarter-point cuts, or a full percentage point reduction, in 2025, at a meeting in September.

At the Fed’s last policy meeting of the year on Wednesday , the committee cut its overnight borrowing rate to a target range of 4.25%-4.5%.
A total of 14 of 19 officials penciled in two quarter-point rate cuts or less in 2025. Only five members projected more than two rate cuts next year.
Assuming quarter-point increments, officials are indicating two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update, a level that has gradually drifted higher this year. 
Here are the Fed’s latest targets from 19 FOMC members, both voters and nonvoters:

Arrows pointing outwards

The projections also showed slightly higher expectations for inflation. Projections for headline and core inflation according to the Fed’s preferred gauge were hiked to 2.4% and 2.8%, respectively, compared to the September estimates of 2.3% and 2.6%.

The committee also pushed up its projection for full-year gross domestic product growth to 2.5%, half a percentage point higher than in September. However, in the following years, the officials expect GDP to slow down to its long-term projection of 1.8%. 
As for unemployment rate, the Fed lowered its estimate to 4.2% from 4.4% previously.
— CNBC’s Jeff Cox contributed reporting. More

This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in November.
Text removed from the November statement is in red with a horizontal line through the middle.

Text appearing for the first time in the new statement is in red and underlined.
Black text appears in both statements.

Arrows pointing outwards

Watch Fed Chair Jerome Powell’s press conference here. More

Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives.
Investors are watching whether UniCredit will take the leap with a buyout of the German lender or pursue its simultaneous bid for Italy’s Banco BPM.
The German government has so far opposed UniCredit’s courtship of Commerzbank.

The Commerzbank AG headquarters, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
Emanuele Cremaschi | Getty Images News | Getty Images

Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives, as markets watch whether it will take the leap with a buyout of the German lender.
This marks an increase from a 21% holding previously.

Italy’s second-largest bank said its ownership now consists of a 9.5% direct stake and around 18.5% through derivative instruments.
UniCredit has applied to the European Central Bank for permission to acquire a stake of up to 29.9% in the German bank, as CEO Andrea Orcel simultaneously pursues a bid for Italian peer Banco BPM.
“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystalized,” UniCredit said in a press release Wednesday. “It reflects the belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany’s economic development.”
The lender stressed its position remains “solely an investment” at this time and does not impact its 10-billion-euro ($10.49 billion) offer on Banco BPM. Analysts hold that Orcel could still sweeten his bid and introduce a cash component to pursue domestic consolidation. In a statement accompanying its Banco BPM offer in November, UniCredit noted that such a merger would serve it to “consolidate its competitive position and expand its presence in Italy,” where it is second to Intesa Sanpaolo.
UniCredit has yet to warm its German takeover target or the Berlin administration to a potential deal. Commerzbank on Wednesday said it has “taken note of the announcement” but declined to comment beyond pointing to its strategy, which is currently being upgraded and will be disclosed on Feb. 13.

The German government has so far opposed Orcel’s courtship of Commerzbank, but faces its own turbulence after the collapse of the ruling coalition and Chancellor Olaf Scholz’s loss of a no-confidence vote earlier this week cleared the path for elections in February. The German administration retains a 12% holding in Commerzbank, after offloading a 4.5% stake in September in an effort to exit its position in the lender it bailed out during the 2008 financial crisis.
A merger with Commerzbank in Germany, where UniCredit operates through its HypoVereinsbank division, could create synergies in capital markets, advisors, payments and trade finance activity, analysts have previously signaled.
UniCredit shares were up 1.1% at 9:44 a.m. London time, with Commerzbank stock rising 3.1%.
— CNBC’s Greg Kennedy contributed to this report. More

The biggest laggard in the Dow Jones Industrial Average has been UnitedHealth, which has contributed to more than half of the decline over the past eight sessions.
There’s a rotation going on with investors selling out of the cyclical names in the 30-stock Dow that initially popped on Trump’s election in November.
There are many reasons to believe the Dow’s historic losing streak is not a source for major concern.

Traders work on the floor at the New York Stock Exchange on Dec. 10, 2024.
Brendan McDermid | Reuters

The Dow Jones Industrial Average has been declining for nine straight days, posting its longest losing streak since February 1978. What is going on and how concerned should investors be?
First off, let’s explain which stocks are driving the losses.

The biggest laggard in the 30-stock Dow during this losing streak has been UnitedHealth, which has contributed to more than half of the decline in the price-weighted average over the past eight sessions. The insurer has plunged 20% this month alone amid a broad sell-off in pharmacy benefit managers after President-elect Donald Trump’s vow to “knock out” drug industry middlemen. UnitedHealth is also going through a tumultuous period with the fatal shooting of Brian Thompson, the CEO of its insurance unit.

And then there’s a rotation going on with investors selling out of the cyclical names in the Dow that initially popped on Trump’s election in November. Sherwin-Williams, Caterpillar and Goldman Sachs, all stocks that typically gain when the economy is revving up, are each down at least 5% in December, dragging down the Dow significantly. These names all had a big November as they were seen as beneficiaries of Trump’s deregulatory and pro-economy policies.
The Dow, largely comprised of blue-chip consumer discretionary and industrial names, is widely viewed as a proxy for overall economic conditions. The extended sell-off did coincide with renewed concerns about a weaker economy in light of a small jump in jobless claims data released last week. However, investors still remain quite optimistic about the economy for 2025 and see nothing on the horizon like the stagflationary period of the late 1970s.
Most investors are shrugging it off
There are many reasons to believe the Dow’s historic losing streak is not a source for major concern and just a quirk of the price-weighted metric that’s more than a century old.
First and foremost, the Dow anomaly comes at a time when the broader market is still thriving. The S&P 500 hit a new high on Dec. 6 and sits less than 1% from that level. The tech-heavy Nasdaq Composite just reached a record on Monday.

Meanwhile, while the length of Dow’s sell-off is alarming, the magnitude is not the case. As of Tuesday midday, the average is only down about 1,582 points, or 3.5% from the closing level on Dec. 4, when it first closed above the 45,000 threshold. Technically, a sell-off of 10% or greater would qualify as a “correction” and we are far from that.
The Dow was first created in the 1890s to model a regular investor’s portfolio — a simple average of the prices of all constituents. But it could be an outdated method nowadays given its lack of diversification and concentration in just 30 stocks.

“The DJIA hasn’t reflected its original intent in decades. It is not really a reflection of industrial America,” said Mitchell Goldberg, president of ClientFirst Strategies. “Its losing streak is more of a reflection of how investors are gorging themselves on tech stocks.”
The Dow price-weighted nature means that it’s not capturing the massive gains from megacap stocks as well as the S&P 500 or the Nasdaq. Although Amazon, Microsoft and Apple are in the index and are all up at least by 9% this month, it’s not enough to pull the Dow out of the funk.
Many traders believe the retreat is temporary and this week’s Federal Reserve decision could be a catalyst for a rebound especially given the oversold conditions.
“This pullback will be the pause that refreshes before a reversal higher to close 2024,” said Larry Tentarelli, founder and chief technical strategist of the Blue Chip Daily Trend Report. “We expect buyers to come in this week. … Index internals are showing oversold readings.”
— CNBC’s Michelle Fox, Fred Imbert and Alex Harring contributed reporting.

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We’re buying 25 shares of Home Depot at roughly $407 each and 15 shares of Blackrock at roughly $1,041. Following Tuesday’s trades, Jim Cramer’s Charitable Trust will own 200 shares of HD, increasing its weighting to 2.25% from about 2%. The Trust portfolio, used by the CNBC Investing Club, will own 75 shares of BLK after the trade, increasing its weighting to about 2.15% from about 1.75%. This is our second trade alert of the day. We raised cash Tuesday morning by trimming our position in Broadcom to lock in triple-digit percentage gains into the stock’s recent parabolic move; and also by selling Advanced Micro Devices shares on fundamental concerns. Those were sales made out of discipline. But there is another discipline we must honor: the S & P 500 Short Range Oscillator . This technical tool showed that the market became a little more oversold after Monday’s session. When the market is oversold, according to the Oscillator, we view broader market weakness as an opportunity to buy stock of quality companies. That’s why we are putting cash to work. HD YTD mountain Home Depot YTD One quality stock we’re buying into its recent weakness is Home Depot. Shares of the home improvement retailer have pulled back about 6% from its recent high and have dipped slightly since the company reported a better-than-expected third quarter . We were very encouraged by Home Depot’s earnings report, which showed the smallest decline in comparable sales in nearly two years. This was a good sign that business is bottoming and will inflect positively next year. BLK YTD mountain BlackRock YTD We’re also adding to our position in the world’s largest asset manager, BlackRock. Our most recent buy was last Monday shortly after the firm announced its $12 billion acquisition of HPS Investment Partners. This was a great deal for BlackRock because it will make it a leader in private credit, which is one of the fastest-growing areas of finance. Once the acquisition is completed, BlackRock will become a top-five credit manager with about $220 billion in pro-forma private credit client assets. Not only does the deal add to BlackRock’s growing fee base, we would argue that the stock should command a higher price-to-earnings multiple in the market as a result. The company’s recent buying spree into faster-growing opportunities like HPS and the recently closed Global Infrastructure Partners deal should cause the stock’s multiple to re-rate from a traditional money manager to that of an alternative manager, which generally gets a higher valuation in the market. (Jim Cramer’s Charitable Trust is long BLK. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More