Author: essay

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OpenAI launches new AI model – and it talks, sees and hears!

Chatbot GPT-4o

OpenAI has just unveiled its latest flagship model, GPT-4o. This remarkable model can reason across audio, vision, and text in real time.

Multimodal interaction

GPT-4o accepts any combination of text, audio, and image as input and generates corresponding outputs in any of these modalities. It’s a step toward more natural human-computer interaction.

Fast response time

GPT-4o can respond to audio inputs in as little as 232 milliseconds, with an average of 320 milliseconds – similar to human conversation speed.

Improved language understanding

It matches GPT-4 Turbo performance on English text and code, with significant improvements in non-English languages. Plus, it’s 50% cheaper in the API.

Vision and audio understanding

GPT-4o excels in understanding images and audio compared to existing models.

Training

Unlike previous Voice Mode (which used separate models), GPT-4o is trained end-to-end across text, vision, and audio. This means it processes all inputs and outputs using the same neural network.

Exploring capabilities

OpenAI is still exploring what GPT-4o can do and its limitations. It’s a promising step toward more versatile AI interactions.

More here on the OpenAI website

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Anthropic launches Claude in Europe – its AI chatbot

AI Chatbot

Anthropic, the artificial intelligence (AI) startup backed by Amazon, reported on Monday 13th May 2024 that it’s launching its generative AI assistant Claude in Europe on Tuesday 14th May 2024.

Claude.ai will be accessible to both individuals and businesses via the web and an iPhone app. While it is already free on both platforms in the U.K., Anthropic states that this marks the product’s inaugural launch for users in the EU and non-EU nations such as, Switzerland, Norway and Iceland.

Anthropic is introducing a paid subscription-based version of its Claude assistant, named Claude Pro, which will provide users with access to all its models, including the highly advanced Claude 3 Opus.

In its announcement about launching Claude in European countries, Anthropic emphasized security and privacy as central aspects.

Earlier this year, the EU enacted the first significant global regulatory framework to govern AI.

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With a 20,000% increase over the past decade – has Nvidia’s stock peaked?

NVIDIA Corporation (NVDA) has experienced remarkable growth over the past decade.

Historical stock price trends

As of 10th May 2024, NVIDIA’s closing stock price stood at: $898.78

As of 10th May 2024, NVIDIA’s closing stock price stood at: $898.78

NVIDIA’s stock reached an all-time high of $950.02 on 25th March 2024. The 52-week high stands at $974.00, which is 9.7% higher than the current share price. Conversely, the 52-week low was $280.46, which is considerably below the current price.

Annual percentage changes

In 2024, the average stock price reached $763.29, marking a year-to-date rise of 79.30%.

In 2023, NVIDIA’s stock price experienced a remarkable surge of 239.02%.

Conversely, in 2022, the stock price witnessed a decline of 50.27%.

Throughout the past decade, the stock has undergone considerable volatility, exhibiting both notable gains and significant losses.

Focus

NVIDIA began as a pioneer in PC graphics and has since expanded its focus to artificial intelligence (AI) solutions. Its GPUs (graphics processing units) are pivotal in AI, high-performance computing (HPC), gaming, and virtual reality (VR) platforms.

The company’s parallel processing capabilities, powered by thousands of computing cores, are vital for executing deep learning algorithms. Additionally, NVIDIA is active in emerging markets such as robotics and autonomous vehicles.

Market position

NVIDIA holds a dominant position in the Data Centre, professional visualization, and gaming markets. Its success is bolstered by strategic partnerships with leading cloud service providers and server vendors.

Financial performance

NVIDIA’s revenue and profit have seen substantial growth over time. Its emphasis on AI and new technologies suggests a strong potential for further expansion. In summary, despite NVIDIA’s stock achieving impressive gains, it is still influenced by market trends and technological changes.

Its peak status hinges on multiple elements such as industry movements, competitive landscape, and upcoming innovations. Investors are advised to meticulously assess these factors when determining the stock’s future prospects.

Considering a long-term investment yet expecting a downturn, it might be prudent to realise some profits now, given the enormous 20,000% surge in stock value.

Take some profit and buy again after a pull-back.

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Arm reportedly to launch AI chips in 2025 as Softbank plan AI data centres

AI

Arm, with a 90% holding by SoftBank, is reportedly set to establish an AI chip unit with the goal of developing a prototype by spring 2025.

This initiative is aimed at catching up with the booming AI market, currently dominated by Nvidia.

Arm, alongside competitors such as AMD, Intel, and Qualcomm, is accelerating efforts to gain position in the AI sector.

SoftBank is negotiating with contract manufacturers, including Taiwan’s TSMC, to produce the AI chips. Mass production is expected to commence in autumn 2025.

Arm’s shares have surged by nearly 45% this year, bringing its market capitalization to over $113 billion.

The chip designer based in the U.K., plans to create an AI chip unit to develop a prototype by spring 2025.

Discussions are reportedly ongoing with contract manufacturers like Taiwan’s TSMC for the production of the AI chips. It was reported that production is anticipated to start in fall 2025.

Arm is responsible for designing the core architecture for these chips. The company licences its designs to companies including Qualcomm and Nvidia and earning royalty fees from each sale. The company asserts that 99% of high-end smartphones utilize Arm technology.

Ambition

Established by Japanese billionaire Masayoshi Son, SoftBank is heavily investing in AI. The company has new plans to allocate $960 million by the following year to enhance its generative AI computing capabilities. In June 2023, Son expressed SoftBank’s ambition to occupy a leading role in the AI revolution.

Reportedly, SoftBank aims to establish AI data centres equipped with proprietary chips throughout the U.S., Europe, Asia, and the Middle East by 2026.

For the fiscal year concluding in March 2024, SoftBank recorded a 7.24 billion Japanese Yen ($4.6 billion) profit in its Vision Fund.

This was the first profitable year for the principal tech investment division since 2021.

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How to Pick Stocks: A Beginner’s Guide

Investing in individual stocks can be both thrilling and profitable, yet it carries inherent risks. To make informed decisions, it’s important to adhere to some fundamental steps.

Define Your Goals

Before diving into stock picking, consider your investment goals

Invest for the longer-term, it works!

KIS – Keep It Simple! Keep your investment strategies as simple as possible.

Generate income – For regular payouts, consider focusing on dividend-paying stocks.

Preserve capital – If your primary goal is to keep pace with inflation and safeguard your savings, consider opting for lower-risk investments.

Grow capital – If you’re a young investor aiming for long-term growth, you might consider higher-risk stocks, being cautious with your selections.

Invest for the long-term

Choose your investment strategy

Value Investing – Consider purchasing stocks that are undervalued and have been neglected by the market.

Growth Investing – Invest in companies that exhibit signs of success and have the potential for further advancement.

Momentum Investing – Dispose of underperforming assets and invest in successful ones by following market trends. Be ruthless – there is no room for emotion!

Pound-Cost Averaging – Gradually invest money into the market to reduce the impact of volatility. Look into investing in funds or unit trusts.

Stay informed

Before selecting individual stocks, it’s crucial to stay informed about broader economic trends. Consult financial news websites and specialized magazines to gauge the performance of various industries. For example, economic volatility or significant global incidents, such as the emergence of a new virus variant, can affect the stock market.

Pay close attention to economic announcements from central banks, like interest rate changes. Monitor the newswires regularly and track market trends.

Explore industries you understand

Focus on investing in sectors you understand well. For instance, if your expertise lies in technology, look towards tech companies. If renewable energy is your area of interest, consider stocks in that domain. Knowledge of the industry can lead to more informed evaluations of companies.

Assess company fundamentals

When evaluating a specific stock, consider the following

Financial Health – Examine the company’s balance sheet, income statement, and cash flow. Scrutinize the levels of company debt. Observe the sales and purchases by directors. Determine if they are financially stable.

Earnings Growth – Verify whether the company has demonstrated consistent growth in its earnings over time.

Valuation – Comparing a stock’s price-to-earnings (P/E) ratio with that of its industry peers is crucial for assessing its market value relative to its earnings.

Competitive Advantage – A company’s competitive edge can stem from a unique product, a strong brand, or other distinctive factors. These elements can set a business apart and enable it to outperform its rivals in the market.

After a general market downturn – there is usually a good opportunity to pick-up good companies at a knock down bargain price.

Diversify your portfolio

It’s wise not to concentrate all your resources in a single area. Diversify your investments across various sectors and asset classes. Look into exchange-traded funds (ETFs) or mutual funds to gain wider market exposure. Consider precious metals such as gold maybe and keep cash on the sidelines for those occasional deals that crop up from time to time.

In summary

Selecting stocks involves thorough research, patience, and a vision for the long-term. Keep in mind that all investments carry some level of risk – past performance is not indicative of future outcomes. It is advisable to seek guidance from a financial advisor prior to making any investment choices.

Remember, investing involves risk, and it’s essential to do thorough research and consider professional advice before making any investment decisions. 

RESEARCH! RESEARCH! RESEARCH!

Good luck with your stock-picking choices.

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Scientists create ‘world’s purest silicon’ – it has the power to change the world

Purest silcon created

Scientists have recently achieved a remarkable breakthrough by creating pure silicon, which could pave the way for quantum computing

The world’s purest silicon

Researchers have developed an ultra-pure form of silicon, known as silicon-28 (Si-28), which is fundamental for ‘silicon-spin qubits’ in quantum computers. This advancement addresses a major challenge in quantum computing: the ‘fragile quantum coherence.’

Quantum computers tend to accumulate errors quickly due to slight environmental changes, affecting their dependability.

Quantum bits, or qubits, are analogous to classical computer bits but are extremely sensitive to environmental interference.

Technical

Current quantum computers, even when cooled to near absolute zero, can only maintain error-free operation for a very short time.

This new technique generates qubits by embedding phosphorus atoms into crystals of pure, stable silicon. A concentrated silicon beam then directs onto a silicon chip, replacing impurities with pure silicon.

As a result, the impurity levels in silicon have been significantly reduced, from 4.5% to a mere 0.0002%.

David Jamieson, a project co-supervisor from the University of Melbourne, mentioned that the team achieved this level of purity using a standard piece of equipment – an ion implanter – that’s typically found in semiconductor fabrication laboratories.

Richard Curry, a professor at The University of Manchester where extensive research took place, believes that this advancement could accelerate the development of operational quantum computers. Processes that might have taken a decade to complete could now be accomplished in potentially half that time or less.

Potential impact

Practical quantum computers have the potential to revolutionize numerous fields

  • Energy Optimization: They can solve intricate problems related to energy.
  • Artificial Intelligence: Quantum computers may significantly boost AI capabilities.
  • Drug Discovery: They could expedite drug development and molecular simulations.
  • Communication: They can enhance encryption and communication protocols.

The creation of the world’s purest silicon represents a significant step forward in the development of large-scale quantum computers.

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Much Ado About Nothing – UK GDP and the ‘r’ word

UK recession is over... already!

The U.K. economy has recovered from its ‘technical’ recession, with the gross domestic product (GDP) increasing by 0.6% in the first quarter, surpassing expectations.

Official figures released on Friday revealed this growth, which exceeded the 0.4% predicted by economists surveyed by Reuters for the previous quarter.

In the latter half of 2023, the U.K. experienced a mild recession due to ongoing inflationary pressures impacting economic performance.

Technically there is no official definition of a recession – however, two straight quarters of negative growth is widely accepted as a technical recession.

The production sector in the U.K. saw an expansion of 0.8% from January to March, whereas the construction sector experienced a decline of 0.9%. The economy witnessed a growth of 0.4% in March on a monthly basis, succeeding a 0.2% increase in February.

According to the Office for National Statistics, the services sector, which is vital to the U.K. economy, grew for the first time since the first quarter of 2023. This growth of 0.7% was primarily propelled by the transport services industry, marking its most significant quarterly growth since 2020.

Much Ado About Nothing

‘Much Ado About Nothing’ is a comedy by William Shakespeare, written around 1598 – 1599. The play is included in the First Folio, published in 1623, and is set in the Italian city of Messina.

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Arm Holdings share price drops

AI

UK chip designer Arm’s shares fell on Thursday 9th May 2024, subdued by revenue forecasts despite a strong sales quarter fueled by demand for AI applications.

Arm announced a 47% increase in fiscal Q4 revenue to $928 million on Wednesday.

This surge was propelled by its licensing business, which saw a 60% increase to $414 million for the quarter, attributed to several high-value licencing deals for AI chips.

Additionally, Arm’s royalty revenues rose 37% to $514 million year-over-year, thanks to the growing adoption of its new Armv9-based chips, which offer higher margins.

However, Arm’s revenue projection for 2025, estimated between $3.8 billion and $4.1 billion, did not meet investor expectations, with analysts anticipating $3.99 billion for the year.

What is Arm?

Contrary to chipmakers like Nvidia, which manufacture and market their own products, Arm creates the ‘architectures’ that form the foundation of chips.

These designs are then licenced to various chip manufacturers, including Qualcomm and Nvidia, with Arm earning royalties on each unit sold.

Originally founded in Cambridge, England, in 1990, Arm was an independent company listed in London until 2016, when it was acquired by Japanese tech investor SoftBank for $32 billion.

In September 2023, SoftBank listed Arm on the Nasdaq. Since its initial public offering, Arm’s share value has more than doubled, driven by the explosive demand for chips that power advanced generative AI applications, such as ChatGPT.

But this recent revenue forecast had a negative effect on its share price

Arm Holdings one year chart to 9th May 2024

The recent revenue forecast had a negative effect on its share price
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UK interest rate held at a 16-year high as Bank of England holds rates at 5.25%

On hold

The decision comes as inflation, which measures price rises over a period of time, remains above the Bank’s 2% target at 3.2%. But bank says cuts are coming.

Is the 2% target still a sensible benchmark?

The 2% inflation target set by central banks has been a widely adopted benchmark for monetary policy.

History

The 2% inflation target became prominent in the 1990s and early 2000s. Central banks, such as the Federal Reserve and the Bank of England, have aimed to maintain inflation at this level.

The Federal Reserve has typically pursued an inflation rate of about 2% since 1996.

In January 2012, then-Fed Chairman Ben Bernanke formally established the 2% target, and subsequent Fed chairs have continued to endorse this rate as the preferred level of inflation.

Why the 2% target?

Price stability

The 2% inflation target was selected as it provides a balance between preventing problematic inflation and avoiding damaging deflation. Does it work?

Avoiding deflation

Deflation, characterized by falling prices, can hinder economic growth. Central banks target a 2% inflation rate to avert deflation and ensure stability.

Creditor-Debtor compromise

The 2% inflation target represents a balance between creditors’ preference for lower inflation and debtors’ inclination towards higher inflation.

Challenges

Changing economic environment

In recent years, the global economy has encountered distinct challenges, including sluggish growth, technological upheavals, and demographic changes. Consequently, there is a debate on whether the 2% inflation target requires reassessment.

Persistently low inflation

Despite the efforts of central banks, inflation has persisted below the 2% mark in numerous advanced economies, sparking debates over the potential need to modify the target.

Trade-offs

Aiming for a 2% inflation rate can occasionally clash with other policy objectives, like employment or financial stability. It’s crucial for central banks to judiciously manage these competing priorities.

Revision

Several central banks are revising their strategies. For example, the European Central Bank (ECB) has adopted a more adaptable inflation target, permitting temporary exceedances to balance out extended periods of below-target inflation.

The Bank of England also considers broader economic factors when setting policy, rather than rigidly adhering to the 2% target.

IIn summary, although the 2% inflation target has been a helpful benchmark, central banks are progressively willing to adjust their strategies in response to evolving economic conditions. The current debate focuses on striking an optimal balance between stability, growth, and adaptability.

Central banks saw this period of inflation as ‘transitory’ – it wasn’t. It could be argued that their lack of action led to a bigger inflation problem overall.

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Why are mortgage rates still going up?

Home loans increasing

Mortgage rates are still going up due to expectations that the Bank of England might not cut borrowing costs as much as expected. 

Higher-than-expected inflation figures at this point, have led to increased forecasts for UK interest rates, prompting lenders to raise the cost of new mortgage deals.

Those considering purchasing their first home or relocating have probably been monitoring the recent rise in mortgage rates closely. In the past few weeks, numerous lenders have increased the interest rates on new fixed mortgage deals, thus making borrowing costlier. Existing homeowners planning to remortgage this year might have anticipated falling rates, not an upward trend.

So, what’s driving this trend?

Borrowing costs are increasing

Mortgage rates typically reflect the actions of the Bank of England, especially changes to its benchmark interest rates, commonly referred to as the base rate. An increase in the base rate makes borrowing costlier. Swap rates, which are essentially agreements to exchange interest rates between parties for a specified duration, have a considerable impact on fixed-rate mortgage agreements. Consequently, as lenders face higher borrowing costs, fixed-rate mortgages tend to increase. With several recent rises in the base rate, mortgage rates have escalated accordingly.

Lenders’ strategies

Lenders are exercising caution in managing their customer base. The recent increases in rates do not reflect a rapid cycle as observed in the previous two years. Rather, lenders are strategically adjusting their rates. Earlier in the year, a mini price war among lenders led to favorable interest rates for borrowers. Nonetheless, these rates have subsequently increased, with lenders adopting a more conservative approach to pricing. For instance, the average interest rate for a two-year fixed deal rose from 5.55% at the end of January to 5.93% more recently.

Lenders don’t want too many customers

Mortgage brokers emphasize that the recent changes do not signify a new cycle of rapidly increasing rates, such as those experienced over the past two years.

Current mortgage rates remain below the peak of last summer and are not escalating as sharply as they did following the mini-budget of 2022. Nevertheless, some borrowers were expecting rates to consistently decrease throughout the year.

Two more key factors have created the current bump in the road.

  • Firstly, the global economic outlook has not been as positive as many would have hoped. The U.S. central bank again said it would keep interest rates unchanged, because the rate of rising prices (inflation) had proved more persistent than expected.
  • Secondly, lenders tend to move in a pack. A mortgage provider wants to set its rates to be competitive, but not too low to be suddenly inundated with custom and unable to cope with the demand.

For home buyers and owners, the financial landscape has shifted slightly; obtaining a mortgage now is somewhat more costly than it was a year ago.

According to Rightmove, the average monthly mortgage payment for a typical first-time buyer’s property, based on a standard five-year fixed, 85% loan-to-value mortgage, has risen to £1,117 from £1,056 the previous year.

Those facing the end of their two-year or, especially, five-year mortgage deals may see their monthly payments increase by hundreds of pounds, as their previous rates could have been below 2%.

Expectations and inflation

Market expectations are crucial. The Bank of England’s Monetary Policy Committee (MPC) affects mortgage rates through its decisions. The MPC recently indicated that rate cuts would not occur as soon or as frequently as once anticipated, due to persistent inflation and other economic considerations. As a result, mortgage rates have been gradually increasing.

To summarize, the escalation in mortgage rates is attributed to several factors, including higher borrowing costs, the conservative tactics of lenders, and the anticipations of the market. It is crucial for prospective homebuyers and current homeowners to keep a vigilant eye on these trends to make well-informed decisions.

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IMF warns U.S. and China trade divisions threaten a ‘reversal’ for global economy

U.S. & China trade tensions

Tensions between Washington and Beijing have intensified, with the U.S. ramping up trade restrictions and sanctions on China due to national security concerns.

Since Ukraine’s invasion, there has been a roughly 12% drop in trade between the blocs, and foreign direct investments have decreased by 20% compared to those within the bloc’s constituents.

If these divisions persist, the IMF forecasts that the economic impact on global GDP could be as high as 7% in the worst-case scenario.

A senior International Monetary Fund official cautioned on Tuesday, 7th May 2024, that the rift between the U.S. led Western and China-aligned economic blocs endangers global trade cooperation and economic growth.

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Gold bars from vending machines – whatever next – coffee at Royal Mint?

Gold bars

Buy gold bars from South Korea’s convenience stores and vending machines

South Korean convenience stores are now the latest attraction for gold enthusiasts. Instead of the typical snacks and beverages, customers can now buy gold bars.

Convenience store gold bars

GS Retail, one of South Korea’s largest convenience store chains, introduced gold bars in vending machines at select locations in September 2023. These machines offer five different sizes, ranging from a tiny 0.13-ounce bar to a bigger 1.3-ounce bar.

The most sought-after option is the diminutive 0.13-ounce gold bar, with a price tag of approximately $225. It’s the younger demographic – individuals in their twenty’s and thirty’s – who are eagerly acquiring these lustrous assets. They possibly view gold as a secure refuge in the face of worldwide inflationary pressures and heightened global geopolitical tensions.

GS Retail has reported total sales of gold bars amounting to $19 million in the past nine months, concluding in May. The rising popularity of these bars has led the company to increase the number of stores offering them, aiming to reach 50 locations by the end of the year.

CU collaboration

In a competitive move, CU, the nation’s premier convenience store chain, has partnered with the Korea Minting and Security Printing Corporation (KOMSCO) to sell mini gold bars ranging from 0.1 to 1.87 grams. These diminutive bars have been on sale at CU stores since April.

The pricing of these mini gold bars is tied to fluctuating international gold prices, updated daily. Evidently, even these small quantities of gold are attracting keen interest from young consumers.

Accessibility and fun

The soaring popularity of gold bars in South Korea can be attributed to their accessibility. With convenience stores at every corner, purchasing gold has become as simple as walking in and making a selection.

A representative from Inha University reportedly noted that while some may purchase gold bars as a serious investment, others might buy them for the novelty and ease of access. Imagine the allure of picking up a gold bar along with your daily groceries.

To sum up, convenience stores in South Korea have become modern-day treasure chests, where gold bars are sold next to daily necessities. Whether for investment purposes or for a bit of indulgence, these shiny objects are creating a buzz in the country known for K-pop and kimchi.

So, next time you visit a Korean convenience store, don’t miss the chance to check out the shiny vending machine – it could present a golden opportunity.

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UK Border control take back control as passport e-gates fail, again!

UK Border Force

The Home Office eventually resolved a nationwide ‘issue’ that led to significant delays at passport e-gates.

UK airports such as Heathrow, Gatwick, Edinburgh, Birmingham, Bristol, Newcastle, and Manchester have all reported delays in arrivals late on Tuesday 7th May 2024 due to a Border Force issue.

E-gates, which are automated gates utilizing facial recognition technology to verify a person’s identity, allow entry into the country without the need for interaction with a Border Force officer.

According to the government’s website, there are over 270 e-gates installed at 15 air and rail ports across the UK, designed to facilitate faster entry into the country. However, this recent outage has necessitated manual processing of passengers by Border control staff.

The Home Office, responsible for the Border Force, announced in an early Wednesday 8th May 2024 statement: ‘eGates at UK airports resumed operation shortly after midnight.‘

A Home Office spokesperson reportedly attributed the disruptions to a ‘system network issue’ (whatever that means) – initially reported at approximately 19:50 BST, indicating the problems lasted over four hours. They assured that ‘border security was never jeopardized, and there is no evidence of any malicious cyber activity.’

Nothing new – it’s happened before and it’s a miserable experience!

Britain’s automated border gates system experienced a crash in May 2023, leading to extensive queues and delays for passengers lasting several hours.

Additionally, the country’s air traffic system suffered a meltdown in August 2023 due to a technical issue, disrupting the National Air Traffic Service for a prolonged period. The recurring nature of these incidents raises questions about the underlying causes.

Why does it KEEP happening?

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FTSE 100 in record territory

The FTSE 100 soared past 8300, reaching a new record high amid busy trading as London markets reopened after the bank holiday.

A catch-up trading session is evident, with mainland-listed stocks having a robust session on Monday 7th May 2024 and continuing to rise. The FTSE reached around 8335 in intraday trading.

Wall Street also experienced another positive session, with the Dow Jones climbing for the fourth consecutive day following the Federal Reserve’s less aggressive stance, and the S&P 500 gaining too. Despite mixed results, earnings have bolstered risk appetite. The low U.S. job count has encouraged traders/investors to take heart that rate cuts will be on the agenda again soon, even if they are now late.

Bank of England

Attention will now turn to the Bank of England (BoE), which faces a decision on whether to guide the market towards a rate cut – the first in four years – or to exercise more patience. The consensus is that it’s premature for a cut this week, with August 2024 being the more likely date, although the Monetary Policy Committee’s (MPC) opinions vary.

Last month the Deputy Governor of the BoE, indicated his readiness to vote for a rate cut with little additional evidence of declining inflation, highlighting the ‘downside risks’ to the BoE’s February inflation forecast. In contrast, the Bank of England’s Chief Economist, expressed a more cautious stance in April regarding the initiation of rate cuts.

Inflation

Inflation is on a downward trajectory, expected to return to 2% in the next few months. CPI decreased from 3.4% to 3.2% between February and March 2024, and core inflation dropped from 4.5% to 4.2%. However, the BoE is likely to await April’s data before taking any decision.

Persistent wage growth of around 6% indicates continued strength in the labour market. Financial markets anticipate a Bank of England rate cut by August 2024, but it is believed the BoE may be prepared to act as early as June 2024, aligning with the anticipated policy move by the ECB.

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Apple reportedly developing AI microchips for data centres

Apple

Apple, renowned for its innovative consumer electronics, is reported to be branching into artificial intelligence (AI).

Recent reports suggest the company is developing a project dubbed ‘Project ACDC,’ (Apple Chips in Data Centre) with the goal of creating specialized AI chips for data centres.

The AI race

AI applications are becoming ever more essential in our daily routines, prompting tech giants to vie for dominance in this arena. Apple, previously trailing behind its rivals in AI, is now channelling substantial investments to bridge the gap. Project ACDC marks Apple’s strategic endeavour to position itself as a key contender in AI processing.

The role of AI microchips

Traditionally, data centres have depended on general-purpose processors, like Intel Xeon or AMD EPYC, to manage diverse workloads. AI workloads, however, demand unique features such as extensive parallelism and high computational throughput. Specialized AI chips are crucial to meet these demands.

Apple’s AI chips, designed specifically for data centre servers, aim to efficiently expedite AI tasks. These chips will facilitate capabilities such as natural language processing, image recognition, and recommendation systems. With the development of its own AI chips, Apple seeks to secure a competitive edge in the AI technology race.

Collaborating with Taiwan Semiconductor Manufacturing Co.

Apple is said to be partnering with Taiwan Semiconductor Manufacturing Co. (TSMC) to design and produce AI chips. TSMC, a top semiconductor manufacturer, is recognized for its cutting-edge process technology. Although the release timeline for these chips is not specified, their development underscores Apple’s dedication to AI.

WWDC 2024 expectations

Rumors indicate that Apple may reveal AI-based features enabled by its new chips at the Worldwide Developers Conference (WWDC) in June 2024. Should this be accurate, it could mark a significant milestone for Apple’s AI initiatives.

In conclusion, Apple’s Project ACDC signifies an aggressive move towards AI supremacy. With ongoing investments in generative AI, we can anticipate significant advancements in the near future.

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UK Ministry of Defence suffers hack and data breach

The breach involved a third-party payroll system used by the MoD

The compromised system contained names and bank details of both current and past members of the UK armed forces.

While the full extent and consequences of the breach are still under investigation, preliminary results reportedly indicate that no data was extracted during the incident.

It appears that a minimal number of addresses might have been compromised.

The Ministry of Defence (MoD) responded quickly by disconnecting the external network, which is managed by a contractor.

Affected service members will be informed as a precautionary measure and will be provided with expert advice.

Hacker’s ID not revealed

The hacker’s identity has not been revealed, but it is significant that in March, the UK and the U.S. charged China with conducting a worldwide campaign of “malicious” cyber-attacks.

These assaults targeted the Electoral Commission watchdog in 2021 and involved online “reconnaissance” of MPs’ and peers’ email accounts. The limited response to these events highlights the persistent cybersecurity challenges and the importance of constant alertness.

As the inquiry progresses, the MoD is expected to implement additional security measures to safeguard sensitive data, measures that ideally should have already been established.

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U.S. job growth totalled 175000 in April 2024 – less than expected

Non-farm payroll U.S.

Non-farm payrolls rose by 175,000 in the month, falling short of the consensus estimate of 240,000.

The unemployment rate increased slightly to 3.9%, contrary to expectations that it would remain at 3.8%. Additionally, a broader measure of unemployment rose to 7.4%, marking the highest rate since November 2021.

In line with recent patterns, the health care sector led job gains with an increase of 56,000. Notable growth was also seen in social assistance (31,000), transportation and warehousing (22,000), and retail (20,000).

In response to the job data update, market traders now anticipate a strong chance of two interest rate reductions by the end of 2024.

Stock markets jumped higher on the news.

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UK predicted to have slowest growth of richest nations in 2025

Slow growth in UK

Forecasts indicate that the UK economy will experience sluggish growth among the largest developed nations in 2025.

The Organisation for Economic Co-operation and Development (OECD) has projected a 1% increase in the UK’s gross domestic product (GDP) for 2025, which lags behind the growth rates of other G7 nations, including Canada, France, Germany, Italy, Japan and the US.

The OECD, a globally recognised think tank, has described the UK’s economic outlook as ‘sluggish‘ for the current year. The organization attributes the lackluster performance to the cumulative effects of consecutive interest rate hikes in the UK.

Additionally, the OECD has cautioned that persistent elements of high inflation and the uncertainty surrounding the Bank of England’s interest rate decisions may deter investment.

The latest forecast for the UK economy predicts a 0.4% growth for this year, a revision downward from the OECD’s earlier estimate of 0.7% growth. Consequently, Germany is the only G7 country projected to have slower growth than the UK this year.

Year on year economic growth predictions for G7 nations from the OECD

Year on year economic growth predictions for G7 nations from the OECD
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Apple announces largest-ever $110 billion share buyback

Apple

Apple shares rose by 7% in after-hours trading on Thursday 2nd May 2024, following the company’s announcement of fiscal second-quarter earnings that exceeded expectations, coupled with the unveiling of an expanded stock repurchase program.

The tech giant disclosed that its board has approved a new $110 billion share buyback plan, marking a 22% increase from the previous year’s $90 billion authorization and setting a record as the largest buyback in history, significantly surpassing Apple’s prior repurchase initiatives.

Apple one day chart 2nd May 2024

Apple accounts data summary to 30th March 2024

Revenue: $90.75 billion vs. $90.01 billion estimated 

iPhone revenue: $45.96 billion vs. $46.00 billion estimated 

iPad revenue: $5.6 billion vs. $5.91billion estimated 

Mac revenue: $7.5 billion vs. $6.86 billion estimated 

Other Products revenue: $7.9 billion vs. $8.08 billion estimated 

Services revenue: $23.9 billion vs. $23.27 billion estimated 

EPS: $1.53 vs. $1.50 estimated 

Gross margin: 46.6% vs. 46.6% estimated 

According to Apple’s latest results, iPhone sales have declined in nearly every global market. The tech giant reported that the overall demand for its smartphones decreased by over 10% in the first quarter of the year, with sales diminishing in all geographic regions except Europe.

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World’s largest cargo ship docks in UK port

Largest cargo ship

The world’s joint-largest cargo ship, the MSC Loreto, recently docked at Britain’s biggest and busiest container port.

  • Ship Name: MSC Loreto
  • Sister Vessel: The MSC Loreto shares the title of the world’s largest cargo ship with its sister vessel, the MSC Irina.
  • Length: 400 metres (approximately 1,312 feet)
  • Gross Tonnage: More than 238,000 tonnes.
  • Container Capacity: Capable of holding 24,346 standard containers, which is currently the record number.
  • Port of Arrival: The MSC Loreto arrived at the Port of Felixstowe in Suffolk from Le Havre, France.
  • Operator: The vessel is operated by the Swiss-headquartered Mediterranean Shipping Company (MSC).
  • Next Destination: The ship is due to set sail for the Algerian capital of Algiers on the country’s Mediterranean coast.

Image 400 metres for just a moment – that’s 4 trips for Usain Bolt up and down 100 metre athletics track or, about 40 double decker buses parked end to end.

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Are U.S. banks at risk of failure?

Banks at risk?

The fragility of U.S. banks: A looming financial crisis or an event unlikely to unfold?

Amid escalating interest rates and economic instability, an alarming report has surfaced, suggesting that a considerable number of U.S. banks are on the verge of collapse. This potential looming crisis is attributed to various elements that have jeopardised stability.

Hundreds of small and regional banks across the U.S. are feeling stressed.

A recent publication on the Social Science Research Network indicates that up to 186 banks in the United States may be at risk of collapse or at least severe financial damage due to a significant amount of uninsured deposits and the effects of monetary tightening.

The Federal Reserve’s policy to raise interest rates has resulted in considerable asset reductions of these banks. The study emphasizes the susceptibility of banks that depend largely on uninsured depositors, who hold account balances above the FDIC‘s insurance limit of $250,000.

The precarious situation could worsen due to a potential domino effect. Should a substantial number of uninsured depositors suddenly withdraw their funds, it ‘might’ prompt a banking crisis, endangering even insured deposits. It is estimated that nearly $300 billion in insured deposits could be at risk in such an event. Remember the financial crises of 2008/2009 – it wasn’t that long ago.

Silicon Valley Bank

The collapse of Silicon Valley Bank, for example, highlights the risks associated with rising interest rates and significant withdrawals of uninsured deposits. The bank’s failure to fulfill its obligations resulted in its shutdown, which had an impact on the financial sector.

Although the number of FDIC insured institutions on the so-called ‘Problem Bank list‘ has decreased, the current economic climate has reignited concerns about the stability of smaller banks, particularly those with assets under $10 billion.

These banks face threats from commercial real estate loans and the repercussions of rising interest rates, which could lead to unrealised losses and strain their capital reserves.

As the situation unfolds, it becomes clear that without government intervention or strategic recapitalisation, the U.S. banking system could approach a crisis. This potential crisis could affect not only the banks but also the wider economy and the communities they serve.

Therefore, vigilant oversight and proactive measures are crucial to maintain the stability of the U.S. and the global financial system and protect depositors’ interests.

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Fed foe inflation forces U.S. to hold rates and they will likely remain high for some time yet!

U.S. economic health

The Fed have deliberated over ‘transitory’ inflation – (they got that wrong). They have teased us about when rates will be cut (still waiting). And now we are told no rate cut but: ‘the next rate move is unlikely to be up!’

Probably better to say and do nothing at all? Are you a bit confused? I am.

The U.S. central bank has decided to maintain interest rates, reasoning a ‘lack of further progress’ in reducing inflation. This leaves the Federal Reserve’s key rate at its highest in over two decades, between 5.25% and 5.5%.

Sticky problem

By maintaining high borrowing costs, the Federal Reserve seeks to decelerate the economy and reduce inflationary pressures. However, this also increases the financial burden on businesses due to elevated borrowing expenses and on consumers through higher mortgage and loan payments.

However, as U.S. inflation remains more stubborn than anticipated (and that is being generous), the Fed is now being closely scrutinized over its forthcoming actions.

Analysts, who had predicted rate reductions early this year, have had to delay their projections, with some even suggesting a potential rate hike.

No rate cuts but ‘hike’ unlikely – that’s helpful then

Following the declaration, the Fed Chair reportedly expressed his belief that a rate hike is ‘unlikely,’ reiterating the need for more assurance of subsiding inflation before considering a reduction.

‘The decision will truly be data-dependent; it’s going to take longer to reach that point of comfort. I don’t know how long it will take’, he reportedly stated.

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UK house prices fall as lenders raise mortgage rates

House lenders increase rates

House prices declined in April 2024, with affordability pressures persisting for potential buyers, as reported by Nationwide.

The UK’s largest building society reported a 0.4% decrease in house prices compared to the previous month. The average cost of a home now stands at £261,962, which is 4% lower than in the summer of 2022 peak.

According to the report, the increase in borrowing costs was a significant factor in the recent drop in prices.

In recent days a string of lenders raised rates on new fixed-rate mortgage deals.

The rise was driven by expectations that the Bank of England (BoE) would implement fewer and more gradual interest rate reductions.

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Binance founder Changpeng Zhao sentenced to 4 months

Cryptocurrency trading

Changpeng Zhao (CZ), the founder of Binance, who admitted to money laundering offences in November 2023, received a four-month prison sentence on Tuesday 30th April 2024.

U.S. prosecutors had suggested a sentence of 36 months for Zhao. As part of his deal with the Justice Department, the cryptocurrency billionaire resigned from his position as CEO of Binance.

The billionaire is reportedly expected to see his massive crypto fortune remain intact. His wealth is likely to continue to climb even as he serves time in prison.

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Amazon triples profits in pin-point customer led focus

Stock chart up

Amazon’s Q1 earnings and revenue exceeded expectations, emphasised by the expansion of its advertising and cloud computing sectors.

  • Earnings per share: 98 cents vs. 83 cents expected
  • Revenue: $143.3 billion vs. $142.5 billion expected

The operating income surged over 200% to $15.3 billion in the period, significantly exceeding revenue growth, indicating that the company’s cost-reduction strategies and efficiency improvements are enhancing its financial performance.

AWS contributed to 62% of the total operating profit. The net income also saw a more than threefold increase to $10.4 billion, or 98 cents per share, up from $3.17 billion, or 31 cents per share, in the previous year. There was a 13% rise in sales from $127.4 billion the previous year.

One year Amazon chart May 2023 – April 2024

One year Amazon chart May 2023 – April 2024

Amazon expects a continued rise in profitability for the Q2, albeit at a more consistent pace. The company projects its operating income to range from $10 billion to $14 billion, marking an increase from the previous year’s $7.7 billion.

It’s all about the customer

Amazon is dedicated to enhancing customer experiences daily through innovative and advanced products and services. This commitment extends to consumers, brands, sellers, enterprises, developers and content creators alike.