“That’s a good one – could be worth a few bob”.
“Working from home again I see – and what’s this one called?” – “I call it… TABLET!”
“How wonderful it is that nobody need wait a single moment before starting to improve the world.”
Anne Frank 1929 – 1945
Annelies Marie “Anne” Frank, 1929 – 1945 was a German-born Jewish girl who authored a diary that chronicled her family’s life while concealed during the Nazi occupation of the Netherlands. The renowned diarist, Anne Frank, detailed daily existence from their secret refuge in an Amsterdam attic.
Frank kept and regularly wrote in a diary she had received as a birthday present in 1942.
After their arrest, the Frank family was sent to concentration camps. Anne Frank and her sister, Margot, were moved from Auschwitz to Bergen-Belsen concentration camp on November 1, 1944, where they both passed away, likely from typhus.
See Wikipedia
Swiss central bank cuts rates by 0.25% in third reduction this year
The Swiss National Bank on Thursday 26th September 2024 took another step to loosen monetary policy this year, bringing its key interest rate down by 0.25% to 1.0%
The cut in interest rates occurs against a backdrop of muted domestic inflation and a surge in the Swiss franc’s value.
Notably, it marked the first instance of a major Western central bank lowering interest rates in March 2024.
Mervyn King’s perspective on interest rates and inflation – too low for too long
Lord Mervyn King, the former Governor of the Bank of England, has been a prominent voice in the ongoing debate about interest rates and inflation. His insights are particularly valuable given his extensive experience in central banking and economic policy
King has been critical of the Bank of England’s approach to interest rates in recent years. He argues that the central bank kept rates too low for too long, which he believes contributed significantly to the current high levels of inflation. According to King, the prolonged period of low interest rates created an environment where inflation could take root and grow unchecked. This, he suggests, was a misstep that central banks around the world are now grappling with.
In his recent comments, King has emphasised the need for a balanced approach to managing inflation. While he acknowledges that raising interest rates is a necessary tool to combat rising prices, he also warns against the potential negative impacts of aggressive rate hikes. King points out that rapid increases in interest rates can stifle economic growth, leading to higher unemployment and other economic challenges.
King’s perspective is that central banks should have acted more decisively when inflation first began to rise. By delaying action, they allowed inflation to become more entrenched, making it harder to control. He advocates for a more proactive stance in the future, where central banks are quicker to adjust interest rates in response to economic indicators.
As policymakers prepare for potential further rate hikes, King’s cautionary advice serves as a reminder of the delicate balance required in monetary policy. His insights underscore the importance of not only addressing inflation but also considering the broader economic implications of interest rate decisions.
In summary, Mervyn King calls for a nuanced approach to interest rates, one that carefully weighs the need to control inflation against the potential economic fallout of higher rates. His views highlight the complexities of monetary policy in today’s economic landscape
UK economic growth revised down to 0.5%
The UK’s economic growth for the period between April and June 2024 was lower than initially estimated, as reported by the ONS
The Gross Domestic Product (GDP), which quantifies the economic activity of companies, governments, and individuals within a country, increased by 0.5%, a revision from the preliminary figure of 0.6%.
Both the manufacturing and construction sectors experienced greater declines than initially calculated.
This information comes to light as the Labour government, which prioritises economic growth, gears up to present its first Budget at the end of October 2024.
The Office for National Statistics (ONS), the publisher of these statistics, noted a significant 3.1% decrease in the production of transport and related equipment during this quarter, following a sustained period of expansion, a stark contrast to the initially estimated 0.7% decrease.
The ONS indicated that this downturn could be attributed to factories scaling back production in anticipation of the transition towards electric vehicle manufacturing.
Additionally, the construction sector saw a downturn, continuing the trend of decreased new home construction.
However, the ONS said that the outlook was improving.
U.S. Fed preferred inflation measure came in at 2.2% in August 2024
In August 2024, U.S. inflation edged closer to the Federal Reserve’s target, potentially paving the way for future reductions in interest rates, according to a report from the U.S. Commerce Department released Friday 27th September 2024
The personal consumption expenditures price index (PCE), which is the Fed’s preferred gauge for assessing the cost of goods and services in the U.S. economy, increased by 0.1% for the month. This increment set the annual inflation rate at 2.2%.
Economists had anticipated a 0.1% monthly increase in the PCE inflation figure and a 2.3% rise from the previous year.
When food and energy are excluded, the core PCE, which rose by 0.1% in August 2024, showed a 2.7% increase from the same period last year.
Federal Reserve officials often give more weight to the core PCE as a more accurate indicator of long-term inflationary trends. The projections were 0.2% monthly and 2.7% annually.
China’s tech stocks rally to 13-month high on new stimulus
Chinese technology stocks, such as the previously underperforming Alibaba, have surged this week, reaching peaks not observed in over a year
The stock surge follows the announcement of stimulus measures by China’s central bank to boost the world’s second-largest economy.
On Thursday 26th September 2024 in the U.S., Alibaba’s shares closed above $100 for the first time since August 2023.
Tencent’s shares ended at their highest point in over two and a half years.
Yuan hits strongest level against U.S. dollar in over 16 months
China’s yuan hit its strongest level in over 16 months on Wednesday 25th September 2024 after Beijing unveiled a slew of stimulus measures to shore up the slowing economy on Tuesday 24th September 2024.
The Chinese yuan had weakened against the U.S. dollar over the last several weeks, as the dollar strengthened, and as investors fretted about China’s economic growth prospects pre-stimulus measure.
Unlike the Fed’s focus on a main interest rate, the PBOC uses a variety of rates to manage monetary policy.
Chinese stocks up sharply after Beijing confirms stimulus measures
Chinese stocks continued to rise following state media reports that China’s top leaders have endorsed the government’s recent measures to bolster their economy.
The CSI 300 index in Mainland China continued its rally for a seventh consecutive day, reaching its highest point in about four months, subsequent to a meeting of China’s highest officials confirming the government’s latest economic stimulus actions.
South Korea’s Kospi index surged by 1.9%, driven by advances in semiconductor company SK Hynix, which declared the commencement of mass production of the world’s inaugural 12-layer HBM3E chip, utilised in AI applications.
See SK Hynix Newsroom report here
U.S. consumer confidence falls the most in three years
In September 2024, consumer sentiment plummeted, marking the most significant drop in over three years, driven by escalating concerns over employment and business conditions, according to a report by the Conference Board released on Tuesday 24th September 2024.
The consumer confidence index reportedly fell to 98.7 from 105.6 in August 2024, marking the largest one-month drop since August 2021. This was contrary to the forecast of 104 and a stark contrast to the 132.6 reading in February 2020, just before the Covid pandemic’s onset.
All five components surveyed by the organisation declined this month, with the most significant decrease observed in the age bracket of 35-54 with incomes under $50,000.
Concerning
“Consumer evaluations of the present business conditions have turned negative, and the outlook on the current labour market has further weakened. There is also a growing pessimism about future labour market conditions, business conditions, and income prospects,” the Conference Board’s chief economist reportedly commented.
This significant dip in the confidence index last occurred as inflation began its ascent to the highest point in over four decades.
Following the announcement, stocks experienced temporary declines, and Treasury yields decreased.
UK’s wealth creators are threatening to exit en masse ahead of proposed tax changes
Labour’s proposal to dismantle the UK’s non-dom tax system may lead to an exodus of the ultra-wealthy, as advisors and research bodies have cautioned.
Switzerland, Monaco, Italy, Greece, Malta, Dubai, and the Caribbean are becoming popular relocation destinations, sensing the apprehension among affluent investors.
Meanwhile, London’s super-prime real estate market could experience a decrease in transactions, although this may present opportunities for wealthy U.S. and other global buyers.
Nearly two-thirds (63%) of affluent investors have indicated they would depart from the U.K. within two years or ‘sooner’ if the Labour government proceeds with its intention to abolish the colonial-era tax concession.
Furthermore, 67% stated they would have chosen not to migrate to Britain initially, as per a recent Oxford Economics study evaluating the impact of these plans.
The UK’s non-dom regime, a tax rule with a 200-year history, allows individuals residing in the UK but domiciled elsewhere to not pay tax on foreign income and capital gains for up to 15 years. As of 2023, an estimated 74,000 people enjoyed the status, up from 68,900 the previous year.
Labour last month set out plans to abolish the status, expanding on a pledge set out in its election manifesto
Dow up 500 points, S&P 500 closes above 5700 as both reach new highs!
Stocks soared on Thursday 19th September 2024, with the Dow Jones Industrial Average and the S&P 500 reaching new record highs, following the Federal Reserve’s decision on Wednesday to cut interest rates by half a percentage point.
The Dow Jones climbed 522.09 points to close at 42025, surpassing 42000 for the first time. The S&P 500 ascended to a close of 5713, breaking the 5700 threshold. Meanwhile, the Nasdaq Composite jumped 2.51% to finish at 18013.
Dow Jones one-day chart
S&P 500 one-day chart
UK, Japan and China leave rates unchanged after jumbo U.S. cut
Bank of England holds UK interest rate at 5%
Interest rates are “now gradually on the path down”, the Bank of England governor reportedly said after borrowing costs were held at 5%.
He later reportedly remarked that inflation had “come down a long way” but warned the Bank would need to see more evidence that it will remain low before cutting rates further.
Bank of Japan holds rate steady at around 0.25%
The Bank of Japan has maintained its benchmark interest rate at approximately 0.25%, marking the highest rate since 2008, following a two-day meeting.
The People’s Bank of China (PBOC) holds rates at 3.35%
The People’s Bank of China (PBOC) unexpectedly held the one-year loan prime rate (LPR) at 3.35%, as well as the five-year LPR at 3.85%.
London is again Europe’s best stock market!
The London Stock Market has recently been hailed as Europe’s best stock market!
According to a survey by Bank of America, Wall Street says that the UK is now the most preferred equity market in Europe.
This positive sentiment comes as the FTSE 100 hit recent highs, reflecting a shift in investor confidence towards the UK stock market.
It’s quite a turnaround, especially considering the challenges the UK market has faced in recent years.
U.S. cuts interest rate aggressively by 0.50% bringing the Fed rate range to 4.75% – 5.0%
The Federal Open Market Committee (FOMC) has voted to reduce the interest rate by 0.50% after having maintained its benchmark rate within the range of 5.25% to 5.50% since July 2023
The previous rate was the highest seen for 23 years and remained unchanged even though the Fed’s favoured inflation gauge has decreased from 3.3% to 2.5%, and the unemployment rate has climbed from 3.5% to 4.2% during this period.
Following the interest rate cut today, 18th September 2024 of 0.50%, the new rate now stands at 4.75% to 5.0%.
UK inflation sticks at 2.2% unchanged in August 2024
UK inflation was reported at 2.2% for August 2024, according to the Office for National Statistics (ONS) data released on Wednesday 18th August 2024
The consumer price index (CPI) figure aligned with the forecasts of analysts and remained consistent with July’s inflation rate of 2.2%.
Previously, the headline CPI had stabilised at 2% in both May and June 2024, which met the Bank of England’s target rate.
Big Tech aiming to raise $100 billion for AI data centres
In a substantial effort to strengthen the infrastructure required for artificial intelligence (AI), BlackRock and Microsoft have unveiled a significant fundraising endeavour.
The initiative, dubbed the Global AI Infrastructure Investment Partnership (GAIIP), seeks to secure $30 billion in private equity capital, with the possibility of leveraging up to $100 billion including debt financing.
The main objective of this initiative is to establish new and larger data centers to accommodate the escalating demand for computing power spurred by advancements in AI. These data centres are vital for meeting the growing computational requirements of AI applications, which necessitate substantial processing power and storage capacity. Additionally, the partnership will focus on investing in the energy infrastructure required to operate these data centres in an environmentally sustainable manner.
BlackRock, the global investment management corporation, contributes its vast network of corporate relationships and private equity expertise. Microsoft, a pioneer in technology and AI, offers the necessary technological expertise and industry leadership. Together, their goal is to establish a strong infrastructure that will bolster AI innovation and contribute to economic expansion.
The investment will be primarily directed towards the United States, with a portion also being allocated to partner countries. This strategic emphasis aims to boost American AI competitiveness and encourage worldwide cooperation. The partnership is designed to support an open architecture and a wide-ranging ecosystem, enabling a variety of partners and companies to leverage the infrastructure.
NVIDIA, a leading force in AI technology, will contribute to GAIIP by providing its expertise in AI data centres and manufacturing facilities. This partnership is anticipated to improve AI supply chains and energy procurement, offering advantages to both consumers and the broader industry.
This collaboration marks a substantial move towards establishing the infrastructure of tomorrow and powering it in an eco-friendly manner.
Gold rushes to a new all-time high
Gold prices have soared to unprecedented levels, reaching a new all-time high of $2,585 per ounce
This surge is driven by a mixture of economic and geopolitical factors that have heightened investor interest in the precious metal.
One of the primary catalysts for this rise is the anticipation of a significant interest rate cut by the U.S. Federal Reserve. Recent economic data indicating a slowdown in the U.S. economy has led to expectations of monetary easing, which in turn has weakened the dollar. As a result, gold, which is priced in dollars, has become more attractive to investors seeking a safe haven.
In addition to economic factors, ongoing geopolitical tensions and persistent inflation concerns have further bolstered gold’s appeal. With inflation eroding the value of fiat currencies, investors are turning to gold as a hedge against currency devaluation. The metal’s historical role as a reliable store of value during times of uncertainty continues to drive demand.
Market analysts are now speculating whether gold could reach the $3,000 mark, given the current trajectory and market conditions. As the global economic landscape remains volatile, gold’s allure as a safe-haven asset is likely to persist, potentially pushing prices even higher in the coming months.
UK High Street woes continue as 38 shops reportedly close every day
In the first half of this year, pharmacies, pubs, and banks accounted for half of the closures on Britain’s High Streets, according to data. A total of 6,945 stores have shut down in 2024, averaging 38 closures per day
Taking new store openings into account, the net closure rate stands at 12 stores per day, a slight increase from the previous year.
Research by accountancy firm PwC reportedly indicates that each week, an average of 18 pharmacies, 16 pubs, and nine banks closed from January to June 2024.
In contrast, only three convenience stores and one café chain have opened, underscoring the significant transformations occurring in town centres.
The previous year recorded a net closure rate of 11 stores per day.
U.S. PPI wholesale prices rose 0.2% in August 2024
In August 2024, wholesale prices saw an increase that was roughly in line with expectations, marking the final inflation data point before the Federal Reserve’s anticipated interest rate cut due on 18th September 2024
The Bureau of Labor Statistics announced on Thursday 12th September 2024 that the producer price index (PPI), which measures the prices received by producers for goods and services for final demand, increased by 0.2% for the month, matching the consensus estimate.
Excluding food and energy, the PPI experienced a 0.3% increase, slightly above the 0.2% consensus estimate. This core increase persisted even when trade services were removed from the calculation.
Cooling inflation allows the European Central Bank to cut interest rates again
On Thursday, 12th September 2024, the European Central Bank announced a 0.25% interest rate cut, its second reduction of the rate this year
This expected decision follows a period of sluggish economic growth in the eurozone and a decrease in inflation, which approached the central bank’s 2% target in August.
The EU interest rate is now 3.5%.
UK says data centres are critical infrastructure and are designated as important as the power grid and the NHS
UK data centres are set to be classified as critical national infrastructure (CNI), aligning them with sectors such as emergency services, finance, healthcare, and utilities
This classification will ensure they receive additional government support during major incidents like cyber-attacks, IT outages, or severe weather, to reduce disruption.
Data centres, large warehouses filled with extensive computer banks, are the backbone of services like AI applications, data processing, and streaming. Despite facing criticism for their energy and water usage, the new Labour government supports the industry, with Technology Secretary Peter Kyle referring to data centres as ‘the engines of modern life.’
Currently, the UK recognises 13 sectors as critical national infrastructure, a list last revised nine years ago with the addition of space and defence.
The 13 Critical National Infrastructure Sectors
- Chemicals
- Civil Nuclear
- Communications
- Defence
- Emergency Services
- Energy
- Finance
- Food
- Government
- Health
- Space
- Transport
- Water
British Technology Minister Peter Kyle announced on Thursday 12th September 2024 that UK data centres will be designated as ‘Critical National Infrastructure’ (CNI). This status, typically reserved for essential national sectors like nuclear power, provides data centre operators with a direct communication channel to the government for threat preparation and response.
Furthermore, the government has expressed support for a proposed £3.75 billion data centre by UK company DC01UK in Hertfordshire, England, which is projected to be the largest in Europe upon completion.
The AI Race between China and the U.S.
Artificial Intelligence (AI) has become a pivotal battleground in the technological race between China and the United States.
“AI is expected to become a crucial component of economic and military power in the near future,” Stanford University’s Artificial Intelligence Index Report 2023 stated.
Both countries are significantly investing in AI research and development, striving to achieve a leading role in this revolutionary sector. This post looks at the major figures in China’s AI scene, their progress, and their comparison with their American counterparts.
China’s AI Landscape
China’s AI aspirations are propelled by a number of significant technology firms, each forging their own AI models and applications.
Baidu: Often referred to as the ‘Google of China,’ Baidu leads in AI development. Its premier AI model, ERNIE (Enhanced Representation through Knowledge Integration), fuels the Ernie Bot, a chatbot aimed to compete with OpenAI’s ChatGPT. Baidu asserts that ERNIE 4.0 matches GPT-4’s capabilities, demonstrating sophisticated understanding and reasoning abilities.
Alibaba: Alibaba’s AI model, Tongyi Qianwen (commonly known as Qwen), is a comprehensive set of foundational models adept at a range of tasks, from generating content to solving mathematical problems. Select versions of Qwen are open-source, enabling developers to utilize and modify them for various uses. Alibaba has announced that Qwen models are in use by over 90,000 enterprise clients.
Tencent: The Hunyuan model from Tencent is a prominent component of China’s AI landscape. Offered through Tencent’s cloud computing division, Hunyuan is tailored to facilitate a broad spectrum of applications, encompassing natural language processing and computer vision.
Huawei: In spite of considerable obstacles stemming from U.S. sanctions, Huawei persists in AI innovation. The firm has created its own AI processors, like the Kunlun series, to diminish dependence on international technology. Huawei’s AI features are incorporated into a diverse array of products, including smartphones and cloud solutions.
Comparison to the U.S.
The U.S. continues to be a dominant force in AI, with leading companies such as OpenAI, Microsoft, Google, Anthropic and Meta spearheading advancements.
Generative AI: U.S. firms have advanced significantly in generative AI, with OpenAI’s GPT-4 and Google’s Gemini at the forefront. These models excel in creating text, images, and videos from user inputs. Although Chinese models like ERNIE and Qwen are strong contenders, the U.S. maintains a slight lead in capabilities and market penetration.
Semiconductor Design: The U.S. leads the semiconductor design industry, vital for AI progress. U.S. companies command an 85% global market share in chip design, crucial for AI model training and system operation. China’s dependence on imported semiconductors is a notable obstacle, but there are ongoing efforts to create homegrown solutions.
Research and Innovation: Both nations boast strong AI research sectors, yet the U.S. edges out slightly in generating state-of-the-art AI products. U.S. tech giants frequently introduce AI breakthroughs to the market, with Chinese firms quickly gaining ground.
Government Support: The Chinese government ardently backs AI advancement, enacting strategies to spur innovation and lessen foreign tech reliance. Such support has spurred China’s AI industry’s rapid expansion, positioning it as a strong rival to the U.S.
Conclusion
The competition in AI development between China and the U.S. is escalating, as both countries achieve significant breakthroughs. Although the U.S. maintains a marginal lead in some respects, China’s swift advancement and state backing indicate that the disparity might keep closing. The quest for AI dominance by these nations is set to influence the worldwide technological and innovative landscape profoundly.
As of September 2024, it is estimated that China’s AI development is approximately nine months behind that of the U.S.
A politician in training – “OK! So, I’ve mastered the ‘smile’ – now what?”
A politician in training – “OK! So, I’ve mastered the ‘smile’ – now what?”
In August 2024 – U.S. consumer prices increased by 0.2% with core inflation exceeding expectations
As anticipated in the U.S., prices rose in August 2024, while the annual inflation rate fell to its lowest point since February 2021, according to a Labor Department report on Wednesday 11th September 2024.
This development likely now paves the way for a Federal Reserve interest rate reduction next week but maybe by only 0.25% and not the 0.50% some pundits have predicted.
The consumer price index, which measures a wide array of goods and services costs throughout the U.S. economy, rose by 0.2% for the month, matching the consensus, as reported by the Bureau of Labor Statistics.
This increase brought the year-on-year inflation rate to 2.5%, a decrease of 0.4 percentage points from July 2024 and slightly below the 2.6% prediction.
Nevertheless, the core CPI, which omits the more fluctuating food and energy prices, saw a 0.3% rise for the month, just above the 0.2% projection. The annual core inflation rate stood at 3.2%, consistent with expectations.
Apple loses EU court battle over €13 billion tax bill in Ireland
Europe’s highest court ruled against Apple on Tuesday 10th September 2024, concluding a decade-long legal dispute over the company’s tax dealings in Ireland.
The case dates back to 2016, when the European Commission directed Ireland to reclaim up to 13 billion euros ($14.4 billion) in unpaid taxes from Apple.
The Commission had determined that Apple benefited from ‘illegal’ tax advantages in Ireland for twenty years.