“Landing prohibited”
Markets remain nervous after Tuesday’s hot inflation report, as Wall Street suddenly and sharply discounted the possibility of an impending rate cut.
It also threw a damper on many investors’ belief that the U.S. economy would achieve a “soft landing.”
Why is it so dark? The consumer price index report, which beat economists’ expectations, was a stark reminder of the challenges the Fed faces in bringing inflation down to its 2% target. Even excluding volatile energy and food prices, inflation has remained largely stable and well above levels that central banks are comfortable with.
Shelter costs, including rent, also rose more than expected, and “supercore inflation” (an indicator closely watched by the Fed), which includes common “service” spending such as haircuts and legal fees, rose 4.3 points year-on-year. , the highest level since May. , according to data from Deutsche Bank.
The market reacted with shock. Investors sold Treasury securities on Tuesday over concerns that the Fed would prolong the rise in borrowing costs. That sent the Russell 2000 down nearly 4%, its worst decline in 20 months. (However, S&P 500 futures rebounded slightly on Wednesday morning as the bullish buying returned, according to a UK report.) Inflation data milder than expected That pushed up London stock prices. )
Futures markets on Wednesday were pricing in three or four rate cuts this year, down from the six or seven expected at the beginning of the year, largely silencing rate cut bulls. Jefferies economist Mohit Kumar said in a research note that these predictions “make no sense in our view.”
Concerns extend beyond the market. The outlook for rising inflation weighs on consumer and small business owner.
meanwhile, Crispy cream, coca cola and heineken Both companies warned this week that stubborn inflation could hurt earnings.
Concerns are growing over a dire economic scenario. In a soft landing, wages and the economy would grow while inflation would fall to the Fed’s target. (Treasury Secretary Janet Yellen at this camp.) And then there’s the “no-landing” scenario, where Wall Street is increasingly concerned that there will be growth but inflation will be above normal.
Some economic watchers are now warning that things will get even tougher going forward. “While the soft-landing outcome remains favorable, the no-landing scenario appears to be undervalued,” Jim Reid, a strategist at Deutsche Bank, said in a letter to investors on Wednesday.
what’s happening here
Democrats retake George Santos’ New York House seat. Former Congressman Tom Suozzi defeated his Republican opponent by a larger-than-expected margin in an early test for the 2024 election. His victory further shrinks the party’s majority in the House, which has struggled to reach agreement on many issues other than impeaching Homeland Security Secretary Alejandro Mayorkas.
Kiev again claimed that Russia was using the Starlink system. Intelligence officials cited audio recordings showing Russian troops. trying to get equipment According to the Wall Street Journal, Elon Musk is making the Arab countries’ satellite internet services available to Ukraine. Musk denied that Russia was purchasing Starlink systems. Meanwhile, Senate Minority Leader Mitch McConnell told House Republicans: Allow vote on $95 billion aid bill For Ukraine and Israel.
Foreign government hackers are using OpenAI in their attacks. An investigation released by the company and Microsoft on Wednesday found that the attackers worked for China, Iran, North Korea and Russia. Use artificial intelligence tools in their work. The twist: Generative AI wasn’t being used to create exotic new hacks, but to perform everyday tasks like drafting emails and debugging computer code.
SpaceX postpones launch of lunar lander mission. Technical issues were blamed for the delay, and another attempt is scheduled for Thursday. If all goes well, it will be the first U.S. spacecraft to make a soft landing on the moon since 1972. The spacecraft was built by Intuitive Machines, which went public last year through a merger with a blank check company.
The battle against OpenAI sets sail
Of all the legal battles OpenAI is facing, one of the most notable are copyright infringement lawsuits brought by best-selling authors like Sarah Silverman and Ta-Nehisi Coates. (The New York Times sued OpenAI and Microsoft separately.)
However, a federal judge gave up some claims From a Silverman-led lawsuit, the latest setback for legal challenges to generative artificial intelligence developers.
Only the authors’ central accusation against OpenAI remains. The group claimed that the company had “copied and imported” copyrighted works without permission or compensation. (One way to do that is through so-called shadow libraries, which store millions of texts online.) Ultimately, the authors argue that every answer ChatGPT creates is a copyright violation. claims. Because it was born from a stolen work.
Although the plaintiffs are allowed to maintain their direct copyright infringement claim, the judge overseeing the case ruled that the plaintiffs’ claims are “substantially similar or completely similar to the plaintiffs’ claims.” The court ruled that it had not found any specific examples of AI-generated output, and dismissed the other complaints. Book. ” (The author may amend the case to address that concern.)
The ruling mirrors what happened in a similar lawsuit by the authors against Mehta. They claim to have trained the LLaMA system based on their work.But the judge in the meta case raise doubts: “When I contact LLaMA, I’m not asking for a copy of Sarah Silverman’s book. I’m not asking for an excerpt,” he writes.
In these cases, the economics of the generative AI industry are at stake. A ruling in favor of copyright holders could mean that companies like OpenAI will have to pay to train data-intensive systems. These tech companies argue that their programs qualify for fair use and that the output of their products is sufficiently different from the original work that it does not infringe copyright.
The outlook for such copyright disputes remains uncertain. The Times’ lawsuit against OpenAI and Microsoft is still ongoing, with a recent ruling against the author group, but the judge in the case involving AI-generated art generators said the ruling: Ta. in the public interest.
-
In other AI news: OpenAI gave ChatGPT better “memory” for user queries to improve future answers.and Andrei KarpathyAn AI researcher who co-founded OpenAI has left the company.
“This is actually a correction to the press release.”
—Erin Brewer, CFO of Lyft.Ride-hailing company stock I went on a rocky ride This comes after the ride-hailing company announced that it had misstated its profit growth forecast in its earnings report on Tuesday. (Instead of this year’s profit margin increasing by 500 basis points (5%), the company intended to say it would increase by 50 basis points (0.5%).)
Zuckerberg takes on Vision Pro
Apple’s $3,500 Vision Pro headset, launched two weeks ago, sparked interest in the virtual reality goggle market. And on Tuesday, top tech executives published a detailed and no-holds-barred review that sparked a lot of backlash. become a hot topic on social media.
That critic? Mark Zuckerberg’s Meta is one of Apple’s biggest competitors in the VR space. In an Instagram video, he outlined his likes and dislikes, and perhaps unsurprisingly, he strongly endorsed his company’s Quest headset.
“Up until now, I thought Quest would be a better value for many people because it’s better quality and about 1/7th the price, but now that I’ve actually used it,” he says. [Vision Pro] “Quest isn’t just a better value, it’s a better product lifespan.
“Each has different strengths, but overall Quest is better at most things people use mixed reality for.”
Zuckerberg praises the Vision Pro’s high-resolution screen and eye-tracking technology. (He said such features will be part of his future Quest headsets.)
However, he criticized it for its comfort, what he described as “motion blur” for the wearer, and its relatively small library of applications. He also criticized Apple for making the Vision Pro a closed system for developers like other devices.
And as a final boast, Zuckerberg shot an Instagram video via his Quest 3 headset.
snownomics
Power outages occurred in various places and flights were canceled. Students in many parts of the Northeast are returning home from school. Still, there’s just 3.2 inches of snow in Central Park and almost no snow in Boston.
A rapidly advancing nor’easter brought New York City’s highest snowfall in more than two years, but predictions were far from perfect. But it caused severe disruption and served as a reminder that even a mild winter can still have harsh effects.
We tested a hybrid learning infrastructure. Teachers, parents, and students in New York reported difficulty logging into remote classes. That prompted David Banks, the city’s public schools superintendent, to criticize IT partner IBM for not being “ready for prime time.”company I said it later “The problem is almost resolved.”
Your Valentine’s Day plans may go awry. More than 1,000 flights have been canceled, disrupting schedules and potentially ruining couples’ dinner plans for tonight.
Evan Gold, executive vice president of partnerships at Planalytics, which predicts how weather events affect consumer demand, said it would have been even worse for restaurant owners if the snow had fallen on Friday or Saturday. He said it would be fine.
A small ray of hope: Some businesses may have been able to unload end-of-season inventory, such as salt and gloves to prevent outdoor surfaces from freezing. “The retail calendar is now into spring, so retailers are looking to get rid of winter items,” Gold said.
speed reading
Information of sale
-
According to reports, Walmart Under negotiation to acquire Viziowas acquired by a popular television maker for more than $2 billion as part of a push to strengthen its advertising business. (WSJ)
-
donald mackenzieThe co-founder of private equity firm CVC, which led the investment giant’s takeover of F1 in 2006, is leaving. (FT)
policy
-
“This Arctic town anticipated a green energy boom. Then along came Bidennomics.” (New York Times)
-
A crypto-focused super PAC is seeking to oppose a Senate bid by California Democratic Rep. Katie Porter, who is seeking greater regulation of the industry. (New York Times)
-
Jared KushnerDonald Trump’s former White House son-in-law has said he has no intention of returning to Washington for Trump’s possible second term. (Axios)
the best of the rest
-
“Can America Turn a Productivity Boom into a Boom?” (New York Times)
-
jimmy finkelstein, the founder of the doomed news startup Messenger has suggested it may reverse course and pay severance packages to laid-off employees. (Axios)
-
The flowers you ordered for Valentine’s Day likely arrived in the United States via Miami International Airport. (New York Times)
We welcome your feedback. Please email your comments and suggestions to dealbook@nytimes.com.
