In 2007, Steve Jobs announced the iPhone, and the revolutionary device changed not only the smartphone industry but many others as well. Now, analysts are wondering if the emergence of ChatGPT signals an "iPhone" moment for artificial intelligence. The rise of artificial intelligence is taking the tech world by storm. The technology is also making waves on Wall Street. It is early days for so-called generative AI, a form of artificial intelligence that can conjure original ideas in the form of text, video or other media. But the tool has caused a stir in companies, schools, governments and … [Read more...]
What Happens If the Fed Is Done Hiking?
In the Financial Times, Liz Ann Sonders examines what might happen if the Fed is done hiking rates. She writes: Whether the recent rate rise by the US Federal Reserve caps off the most aggressive tightening cycle in four decades is still being debated. The CME FedWatch Tool — which tracks the probabilities of rate changes implied futures trading data — indicates that investors believe that there is about an 95 per cent likelihood of no change to rates at the June monetary policy-setting meeting of Federal Open Market Committee. Staying with those odds for now, perhaps it’s time to dust … [Read more...]
Chinese Steel Market “Collapses”
After experiencing a strong rebound upon reopening after its harsh COVID lockdowns, China's steel market has "collapsed," according to Leslie Hook, Hudson Lockett, and Cheng Leng in the Financial Times. They write: Chinese iron ore prices dropped to their lowest levels in five months, as weak demand adds to evidence that the country’s economic rebound from tough coronavirus lockdowns may be faltering. After strong steel production during the first quarter, the optimism and activity that followed the end of lockdown have waned, leading to a “collapse” in the steel market and raising … [Read more...]
High Costs of Inputs Driving Sand Shortage
Sand production has become uneconomical as the costs of its inputs have risen faster than its saleable value. Kenza Bryan reports in Financial Times: The rising cost of a grain of sand is inflating the price of materials such as glass and cement even as energy bills flatten out, highlighting its importance for everything from jam jars to global infrastructure projects. Sand is the world’s most used natural material, mainly in construction and in fracking for oil and gas, as well as some industrial processes such as memory chips owing to its high quartz content. Sand is the primary raw … [Read more...]
PRICE OVER VOLUME: The Strategy Frustrating the Fed
The Federal Reserve is working to rein in inflation, but its efforts are being frustrated by companies also looking to achieve their own goals by prioritizing the price they charge for their products over the volumes they sell. Bloomberg reports: Companies from automakers to hoteliers keep on sacrificing sales volume – sometimes by design, sometimes by necessity – in favor of higher prices, a dynamic that will test the Federal Reserve’s efforts to rein in inflation. The latest set of earnings showed that businesses aren’t likely to walk away from a strategy Corbu LLC’s Samuel Rines calls … [Read more...]
The First Victim of the AI Revolution?
Chegg, an online education company run by former Yahoo! executive Dan Rosensweig announced that its performance has been hampered by students using Chat GPT instead of Chegg's services. Richard Waters reports in the Financial Times: Dan Rosensweig has been around the tech industry long enough to recognise an important platform shift when he sees one. As chief operating officer of Yahoo, he held one of the top posts in the consumer internet when the iPhone launched the mobile computing revolution. This week, Rosensweig found himself in the middle of another tech upheaval. Online education … [Read more...]
Goldman Sachs Being Probed Over Silicon Valley Bank Collapse
The SEC and US prosecutors are investigating the role of Goldman Sachs in the collapse of Silicon Valley Bank. Joshua Franklin reports in the Financial Times: Goldman Sachs’ work for Silicon Valley Bank is being reviewed as part of government investigations into the tech-focused bank’s collapse in March, the Wall Street bank disclosed on Thursday. Goldman has been criticised for its dual role with SVB, both as a buyer of $21bn in securities sold by the California-based lender and as an adviser on a failed equity raise for the bank days before SVB failed. The bank said it was … [Read more...]
Wall Street Regretting Bet on Online Retail Aggregators
Wall Street firms bet big on online retail aggregators during the pandemic, but now some firms are regretting their entrance into the market. Spencer Soper reports: During the pandemic, Wall Street banks and private equity firms invested billions of dollars in startups rolling up popular brands sold on Amazon.com Inc. The bet was that these upstarts, fueled by an online sales boom, would become the next consumer product conglomerates — like Procter & Gamble or Unilever. Then the pandemic ended, consumers returned to the stores, and Amazon’s sales growth cratered — erasing almost half … [Read more...]
Homebuilders Find Silver Lining in Higher Rates: Low Inventory
Homeowners enjoying the low-interest rates they locked in during the last decade aren't interested in selling their homes and taking on new higher rates, so homebuilders are enjoying a moment in which they are, for many buyers, the only option. Nicole Friedman reports in The Wall Street Journal: Last year’s rapid rise in mortgage rates made home purchasing far more expensive for most buyers, slowing home sales and pressuring the home-building industry. Home builders pulled back on land acquisition and new construction. Now, new single-family home sales are bouncing back with supply … [Read more...]
The Too-Big-to-Fail Banks Are Getting Bigger
Over the weekend, the Biden administration negotiated the purchase of the assets of First Republic Bank—America's second largest bank failure—by too-big-to-fail bank, JPMorgan Chase. The process will make JPMorgan even bigger. Is that wise? In The Wall Street Journal, Rachel Louise Ensign and Ben Eisen report on the firesale of First Republic, writing: Regulators seized First Republic Bank and struck a deal to sell the bulk of its operations to JPMorgan Chase & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. JPMorgan said it will assume all of … [Read more...]