Meta boss bows to Trump re-aligning with their ‘free speech’ mandate

AI

Mark Zuckerberg’s recent actions seem to be driven by a mix of strategic business decisions and political pragmatism.

As Trump prepares to retake the White House, Zuckerberg has made several changes at Meta, including scaling back content moderation and fact-checking, and moving safety teams to Texas. These moves appear to align with Trump’s stance on free expression and reducing censorship.

Additionally, Zuckerberg and other tech leaders are likely seeking to build a favorable relationship with the incoming administration to navigate potential regulatory challenges and maintain their business interests. It’s a complex dance of power and influence, with both sides looking to benefit from the alliance.

Recalibrating for Trump

Zuckerberg, who has been summoned to Washington eight times to testify before congressional committees during the last two administrations, wants to be perceived as someone who can work with Trump and the Republican Party, it would appear.

Though Meta’s content-policy updates caught many of its employees and fact-checking partners off-guard, a small group of executives were formulating the plans in the aftermath of the U.S. election results. By the New Year – managers had reportedly begun planning the public announcements of its policy change.

It has been noted that Meta typically undergoes major ‘recalibrations’ after power changes hand. Meta adjusts its policies to best suit its business model and reputational needs based on the political landscape.

Does the company remain true to its original founding principles, whatever they are – or does it ‘cozy up’ with power to re-position itself to benefit politically? Let’s put some more money in the Trump inauguration pot.

Nothing new here then – but go watch the video of Zuckerberg’s announcement.

Does it may you cringe – or is it just me?

Nvidia unveils new powerful mini-AI computer designed for developers

AI chip

Nvidia is pushing the boundaries of AI technology with its new mini-AI computer, Project DIGITS, recently unveiled at CES 2025

Priced at $3,000, this mini powerhouse aims to bring cutting-edge AI capabilities to individual desks, making it accessible for AI researchers, data scientists, and students who need to develop and test AI models locally.

At the heart of Project DIGITS is Nvidia’s GB10 Grace Blackwell Superchip, a remarkable component that promises up to 1 petaflop of AI performance. This level of computational power enables the mini-AI computer to run large AI models with up to 200 billion parameters, making it suitable for some of the most complex AI tasks.

The computer features 128GB of unified DDR5X memory and up to 4TB of NVMe storage, ensuring that users have ample space and speed to handle data-intensive applications. This combination of memory and storage is particularly beneficial for those who work with large datasets or need to run multiple AI experiments simultaneously.

One of the standout feature of Project DIGITS is its focus on local AI development. By providing a powerful AI platform that doesn’t rely on cloud infrastructure, Nvidia is addressing the needs of developers who require immediate, on-demand AI capabilities. This local approach not only offers faster performance but also enhances data privacy and security, as sensitive data doesn’t need to be transmitted over the internet.

Nvidia’s Project DIGITS is set to be available from Nvidia and its manufacturing partners starting in May 2025. With its impressive specifications and focus on local AI development, this mini-AI supercomputer is poised to become an essential tool for those looking to innovate and iterate on AI projects. Whether you’re an AI enthusiast, a seasoned data scientist, or a curious student, Project DIGITS promises to bring powerful AI capabilities directly to your workspace.

Apple’s inaccurate AI news alerts demonstrate that its technology has a problem

AI

It’s not just any Artificial Intelligence… its Apple Intelligence

Last week, a newly launched feature by Apple that uses artificial intelligence to summarise users’ notifications inaccurately summarised BBC News app notifications, falsely claiming that British darts player Luke Littler had won the PDC World Darts Championship (before he actually did) and that Luigi Manione shoots himself – both were incorrect.

This is not the first instance of Apple’s AI system, known as Apple Intelligence, disseminating false news notifications to users. The BBC has been attempting for approximately a month to persuade Apple to resolve the issue.

Apple informed the BBC that it is working on an update to address the issue by indicating when the text displayed in notifications is summarisation generated by Apple Intelligence.

Apple touts its AI-generated notification summaries as an effective way to group and rewrite previews of news app notifications into a single alert on a users’ lock screen.

It’s a feature Apple says is designed to help users scan their notifications for key details and cut down on the overwhelming barrage of updates many smartphone users are familiar with.

However, this has resulted in what AI experts refer to as ‘hallucinations’ – responses generated by AI that contain false or misleading information.

The BBC want Apple to fix the issue urgently or remove the failed AI system entirely.

“These AI summarisations by Apple do not reflect – and in some cases completely contradict – the original BBC content,” the BBC reportedly said.

“It is critical that Apple urgently addresses these issues as the accuracy of our news is essential in maintaining trust.”

Warning issued for stock market bubble

AI bubble

Howard Marks, a widely respected value investor and co-founder of Oaktree Capital Management, recently issued a memo highlighting several cautionary signs of a potential bubble in the stock market.

Marks, who famously foresaw the dot-com bubble, pointed out that today’s high market valuations could lead to poor returns over the long term or even sharp declines in the near term.

Marks reportedly noted that the S&P 500’s current price-to-earnings (P/E) ratio is around 22, which is near the top of the historical range. He explained that higher P/E ratios have historically led to lower returns in the long run.

Marks also expressed concern about the enthusiasm surrounding new technologies like AI, which has driven up the prices of companies like Nvidia.

Marks emphasized that investors should not be indifferent to today’s market valuations and should be cautious about the potential for a market correction.

He also raised questions about the role of automated buying from passive investors and the presumption that the largest companies will always succeed.

Euro zone inflation rose to 2.4% in December 2024 – as expected

Inflation

The annual inflation rate in euro zone increased for the consecutive month reaching 2.4% in December 2024, according to the statistics released on Tuesday 7th January 2024 by Eurostat

The reading, according to economists’ forecasts, indicated an increase from a revised 2.2% figure in November 2024. Core inflation remained steady at 2.7% for the fourth consecutive month, meeting economists’ expectations, while services inflation edged up to 4% from 3.9%.

Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September 2024, as the effect from lower energy prices fade.

The European Central Bank will monitor the full extent of increases in the reading, as well as persistence in services and core inflation. Markets currently anticipate that the ECB will reduce rates from 3% to 2% through several cuts this year.

How is AI regulation likely to affect stock markets in 2025?

AI regulation

As we head into 2025, the landscape of artificial intelligence (AI) regulation is poised to undergo significant changes, and these shifts are likely to have a profound impact on the stock markets.

The introduction of new regulations, particularly in regions like the European Union and the United States, will create both challenges and opportunities for investors.

One of the most anticipated regulatory developments is the European Union’s AI Act, which aims to set a global standard for AI regulation. This act is expected to impose stringent requirements on AI systems, particularly those used in high-risk sectors such as healthcare, finance, and law enforcement.

Companies operating in these sectors will need to invest heavily in compliance, which could lead to increased operational costs and potentially affect their profitability. As a result, stocks of companies heavily reliant on AI technologies may experience volatility as investors react to these new regulations.

In the United States, the political landscape is also shifting, with the incoming administration expected to take a more hands-on approach to AI regulation. President-elect Donald Trump has appointed Elon Musk to co-lead a new Department of Government EfficiencyDOGE‘, which will focus on nascent technologies like AI. Musk’s influence and experience in the AI field could lead to more favourable policies for AI development, but it could also result in increased scrutiny and regulation of AI applications. Musk’s AI vision differs to that of Mark Zuckerberg’s for instance.

This dual approach of promoting innovation while ensuring safety and ethical use of AI could create a dynamic and unpredictable market environment.

The impact of AI regulation on the stock markets will not be uniform across all sectors. While companies in high-risk sectors may face challenges, those in industries like healthcare and finance could benefit from AI’s transformative potential.

For example, AI-driven innovations in healthcare, such as predictive diagnostics and personalised treatment plans, have the potential to revolutionize patient care and reduce costs. Companies that successfully integrate AI into their operations and comply with regulatory requirements could see their stock prices rise as investors recognize the long-term value of these advancements.

However, the regulatory landscape is not without its risks. Companies that fail to adapt to new regulations or face compliance issues may see their stock prices suffer. Additionally, the rapid pace of technological change means that regulations may struggle to keep up, leading to potential legal and financial uncertainties for companies operating in the AI arena.

AI regulation in 2025 is likely to create a complex and dynamic environment for the stock markets. While new regulations will pose challenges for some companies, they will also open up opportunities for those that can navigate the regulatory landscape successfully.

Investors will need to stay informed and agile, as the impact of AI regulation on the stock markets will be both significant and multifaceted.

S&P 500 enjoyed a 23% gain in 2024 but 2025 may not be so good

The S&P 500 index witnessed big gains right from the start of 2024. In the first quarter of the year, it jumped up 10.20%. That’s around more than 10 times its average gain since 2000.

However, the momentum couldn’t be sustained as the S&P added 3.9% and 5.5% in the second and third quarter of 2024. In any other year, investors might not have been disappointed with those figures. But the index’s first-quarter performance set expectations so high that subsequent quarters seemed to pale in comparison.

In the final quarter of 2024, the S&P limped to a gain of just 1.9%. Making things worse, we did not get a 2024 Santa rally.

Of course, a gain is a good. But it’s hard not to e just a little disappointed when looking back at the highs we enjoyed in early 2024.

That said, a relatively weak end to the year wasn’t enough to dent the gains of the S&P 500 in the early part of 2024, where the index surged 23.30%. The index recorded no fewer than 57 record closes and this on the back of a 24.2% rise in 2023.

Big tech and Artificial intelligence stocks (the Magnificent Seven in particular) were behind much of 2024′s gains. Shares of Nvidia were up by around 171%, while Broadcom jumped 108%. To place this in context – the Magnificent 7’ stocks were responsible for more than half the S&P 500′s 2024 gain. It does beg the question – is the initial AI hype over for now or is there more to come? Has AI settled for the moment?

Uncertainties await the markets in 2025. Investors will have to contend with the incoming Trump administration’s policies, possibly higher-than-expected interest rates for the year, which in turn are keeping Treasury yields elevated, among other headwinds.

Trumps tariffs are on the way.

What could quantum computing breakthrough ‘Willow’ mean for the future of Bitcoin and other cryptos

Crypto and quantum computing

The advent of quantum computing presents both opportunities and challenges for the field of cryptography, especially in relation to cryptocurrencies.

Quantum computers, leveraging the principles of quantum mechanics, have the potential to revolutionise computing by solving certain problems significantly faster than classical computers.

One of the primary concerns is the impact of quantum computing on cryptographic algorithms that underpin the security of cryptocurrencies like Bitcoin and Ethereum.

Traditional public-key cryptography, which relies on the difficulty of factoring large prime numbers or solving discrete logarithms, could be broken by a sufficiently powerful quantum computer. Algorithms such as RSA, ECC (Elliptic Curve Cryptography), and DSA (Digital Signature Algorithm) could become vulnerable, as quantum algorithms like Shor’s algorithm are capable of efficiently solving these problems.

This potential vulnerability poses a significant threat to the security and integrity of cryptocurrency transactions. If quantum computers can crack these cryptographic codes, they could potentially access private keys, allowing malicious actors to steal funds or forge transactions. As a result, the trust that underpins the entire cryptocurrency ecosystem could be eroded.

However, the quantum threat is not without its solutions. The field of post-quantum cryptography is actively developing new cryptographic algorithms that are resistant to quantum attacks.

These algorithms leverage mathematical problems believed to be hard even for quantum computers, such as lattice-based cryptography, hash-based cryptography, and multivariate polynomial cryptography.

Transitioning to post-quantum cryptographic algorithms is crucial for ensuring the long-term security of cryptocurrencies in a quantum computing era.

In conclusion, while quantum computing poses a formidable challenge to current cryptographic systems, proactive measures and the development of quantum-resistant algorithms can mitigate these risks.

The cryptocurrency industry must stay ahead of the curve, adopting new technologies and strategies to safeguard against potential quantum threats and ensure the continued security and trust in digital currencies.

It has been estimated that the arrival of quantum computer is at least 10 years away. But is that allowing for the use of AI in its creation?

What is Willow and Quantum Computing?

Willow is the start of a new era of ultra-powerful ‘quantum’ microchips designed by Google. Willow’s speed is almost incomprehensible – according to Google, it is able to perform a computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years to solve.

This new chip design will inevitably lead to new quantum innovations and computer design over the coming years.

Ten septillion is 10,000,000,000,000,000,000,000,000 years.

If you don’t understand (not many people do) what makes up quantum computing – there is a very simplified way simplified way of thinking about the breakthrough.

Imagine a maze and how a classical computer would try to find its way through the maze from start to finish. It would try one potential path at a time. A quantum computer would be able to try each path at the same time.

The quantum computer is coming. The only delay will be in design restrictions and the power needed to run the system.

UK economy had zero growth between July and September 2024 – bad to worse

UK economic data

Revised official figures indicate that the UK economy was weaker than initially estimated between July and September 2024. The economy experienced zero growth in these three months, down from an earlier estimate of 0.1%.

UK Chancellor, Rachel Reeves reportedly stated that the challenge to fix the economy “after 15 years of neglect is huge,” and October’s Budget would “deliver sustainable long-term growth, putting more money in people’s pockets.”

However, one of the UK’s leading business groups, the CBI, said its latest company survey suggested “the economy is headed for the worst of all worlds.”

The downward revisions will be a setback for Labour, which has prioritised boosting economic growth. It has promised to deliver the highest sustained economic growth in the G7 group of wealthy nations.

Separate figures released last week showed that inflation, the rate at which prices increase over time, is rising again at its fastest pace since March 2024. But it is close to the Bank of England target of 2%

The Bank of England voted to hold interest rates at the last meeting, stating that it believed the UK economy had performed worse than expected, with no growth between October and December 2024.

Businesses have warned that measures announced in October’s Budget, including a rise in employer national insurance and a higher minimum wage, could force them to raise prices and reduce the number new jobs.

U.S. inflation reading of 2.4% for November 2024 is better than expected

Inflation PCE

The PCE price index, the Fed’s preferred inflation gauge, showed an increase of just 0.1% from October and a 2.4% annual rate – which was below expectations.

Excluding food and energy, core PCE also increased 0.1% monthly and was 2.8% higher from a year ago, with both readings being 0.1% off the forecast.

The personal consumption expenditures price index (PCE) – the Fed’s preferred inflation gauge, showed an increase of just 0.1% from October 2024.

The reading indicated a 2.4% inflation rate on an annual basis, still ahead of the Fed’s 2% goal, but lower than the 2.5% consensus estimate.

The markets cheered the inflation report and recovered loses after yesterdays (19th December 2024) FOMC meeting where the Fed announced it may only reduce interest rates on two more occasions in 2025 – even after a 0.25% rate reduction.

Google releases the first of its Gemini 2.0 AI models

Google AI

Google released the first version of its Gemini 2.0 family of artificial intelligence models in December 2024

Gemini 2.0 Flash, as the model is named is available in a chat version for users worldwide, while experimental multimodal version of the model, with text-to-speech image generation capabilities, available to developers.

‘If Gemini 1.0 was about organising and understanding information, Gemini 2.0 is about making it much more useful,’ Google CEO Sundar Pichai reportedly said in a statement.

Google’s latest large language model surpasses its predecessors in most user request areas, including code generation and the ability to provide factually accurate responses. However, it falls short compared to Gemini1.5 Pro when it comes evaluating longer contexts.

To access the chat-optimized version of the experimental Flash 2.0, Gemini users can select from the drop-down menu on both desktop and mobile web platforms. According to the company it will soon be available on the Gemini mobile app.

The multimodal version of Gemini Flash .0 will be accessible through Google’s AI Studio and Vertex AI developer platforms.

The general availability of Gemini 2.0 Flash’s multimodal version is scheduled for January, along with additional Gemini 2.0 model sizes, Google announced. The company also plans to expand Gemini 20 to more Google products in early 2025.

Gemini 2.0 signifies Google’s latest efforts in the increasingly competitive AI industry. Google is competing with major tech rivals such as Microsoft and Meta, as well as startups like OpenAI, the creator of ChatGPT, Perplexity, and Anthropic, which developed Claude.

In addition to new Flash, other research prototypes are aimed at developing more ‘agentic’ AI models and experiences. According to the company, agentic models ‘can understand more about the world around you, think multiple steps ahead, and take action on your behalf, with your supervision’.

Fed cuts interest rate by 0.25% – indicates fewer cuts in 2025

U.S. interest rate

The Federal Open Market Committee (FOMC) cut its borrowing rate to a range of 4.25% – 4.50%, mirroring its December 2022 level.

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

While the decision itself was closely watched, the primary concern centered on what they would communicate regarding its future direction, considering inflation remains above and economic growth is relatively – conditions that do not typically align with easing.

The Fed said that it would probably only lower the interest rate twice in 2025. The markets reacted with a sharp pullback with the Dow hitting a 10-day losing streak – last seen in 1974.

Dow down again – falling for 10th consecutive day

Dow down

The Dow Industrial Average dropped 1,123 points to 42,326.87, marking its 10th consecutive day of decline and the longest since 1974.

The Dow is lining up for potentially its worst weekly performance since March 2023.

The S&P 500 fell 2.95% to 5,872.16, while the Nasdaq Composite decreased 3.56% 19,392.69 as losses in the tech-heavy index accelerated at the end of the session.

Both the 30-stock Dow and the S&P 500 recorded their largest one-day loss since August 2024.

The Dow and most other indices reacted badly to the Feds interest prediction for 2025 – suggesting ‘maybe’ only two more rates cuts to come.

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)

Dow down in the doldrums after nine day losing streak

Dow Jones

On Tuesday 17th December 2024, the Dow Jones Industrial Average lost 0.61%, completing a nine-day losing streak.

The Dow Jones Industrial Average has recently experienced its longest losing streak since the 1970’s – 1978 to be precise.

The index has suffered nine consecutive days of declines. This downward trend began on 4th December, when the index closed above 45,000 for the first time, only to drop over 1,500 points since then.

However, it’s not a major fall for the 30-stock index, despite the concerning numbers – it has been a slow burn and not a ‘massive’ correction. It represents a little under around a 3.5% pullback.

Several factors contribute to this decline. Investors are bracing for the Federal Reserve’s final interest rate decision of the year, expectations of a 0.25% cut. However, stronger-than-expected retail sales in November have introduced uncertainty about the Fed’s future monetary policy. Additionally, concerns about the potential impacts of-E Donald Trump’s tariff plans have added to volatility.

Despite the Dow’s losses, the broader S&P 500 and Nasdaq Composite indices have demonstrated resilience, with the latter even achieving record highs. This divergence underscores the mixed sentiment among investors, with some rotating out of high-growth stocks like Nvidia and into other tech sectors.

Market analysts suggest that the Dow’s ‘adjustment’ may be a healthy pause, offering an opportunity for stocks to consolidate before potentially resuming their upward trajectory. Investors ought to remain vigilant, closely monitoring market trends and individual stock performance to navigate this dynamic environment effectively

The heaviest drag on the Dow is UnitedHealth, which has contributed to more than half of the index’s decline over this period.

Some of this money has likely rotated to crypto with Bitcoin notably blasting through the $100,000 mark to touch $107,000 in recent trading.

Nvidia in correction territory amid Nasdaq highs

AI microchip

Nvidia recently entered correction territory, with its stock falling over 10% from its peak. This decline comes after a robust rally fueled by investor excitement around AI technology.

Despite Nvidia’s slip, the Nasdaq Composite continues to soar to new highs, driven by strong performances from other tech giants like Apple, Microsoft, and Alphabet.

The market’s mixed signals reflect a broader trend of sector rotation. Investors are taking profits from Nvidia after its impressive gains and reallocating their capital to other promising tech stocks. This strategy allows investors to lock in profits while still capitalising on the overall bullish sentiment in the tech sector.

The Nasdaq’s resilience, despite Nvidia’s downturn, highlights the strength and diversity of the technology sector. While Nvidia’s correction is a reminder of the volatility inherent in high-growth stocks, the broader market remains optimistic about the future of technology and innovation.

Market analysts suggest that Nvidia’s correction may be a healthy pause, providing an opportunity for the stock to consolidate before potentially resuming its upward trajectory. As the tech landscape continues to evolve, both Nvidia and its peers remain at the forefront of driving the next wave of digital transformation.

Investors should stay vigilant, monitoring both market trends and individual stock performance to navigate this dynamic environment effectively.

Nvidia is still holding its $3.2 trillion market cap valuation reached this year.

Nvidia one month chart as of 16th December 2024

Nvidia one month chart as of 16th December 2024

Apple launches its Apple Intelligence – ChatGPT integration with Siri

Apple Intelligence

Apple has finally rolled out updates for iPhone on Wednesday 11th December 2024, iPad, and Mac software, featuring the highly anticipated ChatGPT integration with Siri.

The integration is activated when Siri is posed with complex questions. If a question is deemed more suitable for ChatGPT by Apple’s software, Siri will request user consent to utilise the OpenAI service. Apple has incorporated privacy safeguards into this feature, ensuring that OpenAI does not retain any requests. This integration employs the GPT-4o model from OpenAI.

No OpenAI account is necessary for Apple users to engage with the ChatGPT feature, although Apple offers paid upgrades for ChatGPT. Additionally, ChatGPT can be accessed via certain text menus.

The launch of iOS 18.2 marks a pivotal point for Apple, which is banking on Apple Intelligence to spearhead the marketing for its iPhone 16 series. Apple Intelligence encompasses a range of artificial intelligence capabilities. The ChatGPT integration was initially revealed in June 2024.

The inaugural segment of Apple Intelligence was introduced in October 2024, including text editing tools capable of proofreading or rephrasing, a revamped Siri interface that illuminates the entire phone screen, and a summary of notifications.

Next year, Apple plans to introduce a further update to Apple Intelligence, promising substantial enhancements to Siri that will enable it to perform tasks within apps.

Many investors are of the opinion that the addition of features to Apple Intelligence will enhance iPhone sales, initiate an upgrade cycle, and possibly establish Apple as a frontrunner in consumer AI.

This integration marks a significant triumph for OpenAI by showcasing its flagship product to millions of iPhone users. The financial details of the partnership between Apple and OpenAI remain undisclosed.

To install and utilise Apple Intelligence, users must have an iPhone 15, iPhone 15 Pro, or any iPhone 16 model, despite the fact that ChatGPT integration mainly operates on cloud servers – iPhone owners can enable software updates in the General tab of the Settings app.

Upon updating to the newest Apple software, users will be prompted to configure Apple Intelligence. Their devices will have to download substantial files, including Apple’s AI models, which are necessary for the service’s functionality.

The updates also bring Apple’s image creation app, named Playground, which generates images from people’s descriptions or prompts, and Image Wand, a tool that lets users edit out objects or imperfections from photos.

Apple finally issue a version of AI – not just any AI but Apple Intelligence, whatever that really means.

OpenAI releases Sora – its new AI video-generation tool

Video generation from OpenAI

OpenAI, which gained widespread attention last year due to the popularity of ChatGPT, initially announced Sora in February 2024, it has now been rolled out to users in the U.S. and other countries during the week commencing Monday 9th December 2024.

The AI video-generation model operates similarly to OpenAI image-generation tool, DALL-E: the user inputs a desired scene, and Sora produces a high-definition video clip.

Sora can also create video clips inspired by still images and can extend existing or fill in missing frames. The Microsoft-backed artificial intelligence which surged into the mainstream last year because of ChatGPT’s viral success.

OpenAI said users don’t need to pay extra for the tool, which will be included in existing ChatGPT accounts such as Plus and Pro. Employees on the livestream and OpenAI CEO Sam Altman demonstrated features like ‘Blend’ (joining two scenes together at the user’s direction), as well as the option to make an AI-generated video endlessly repeat.

Until now, Sora has mainly been available to a small group of safety testers, or ‘red-teamers’, who test the model for vulnerabilities in areas such as misinformation and bias.

It’s all part of a serious growth plan for OpenAI, as the Microsoft-backed artificial intelligence startup battles Amazon-backed Anthropic, Elon Musk’s xAI, Google’s Gemini, Meta, Microsoft and Amazon for the biggest slice of the generative AI market, which is predicted to top $1 trillion in revenue within a decade.

Earlier this month, OpenAI appointed its first chief marketing officer, signalling intentions to increase marketing expenditures to expand its user base. Additionally, in October 2024, OpenAI introduced a search feature within ChatGPT, enhancing its ability to compete with search engines such Google and Microsoft’s Bing potentially attracting users who would otherwise visit those platforms for web searches.

With Sora, the creator of ChatGPT to compete with video-generation AI tools from companies such as Meta and Google, which announced Lumiere in January. Similar AI is offered by other startups, including Stability AI’s Stable Video Diffusion. Additionally, Amazon has launched Create with Alexa, a model that focuses on generating prompt-based short, animated content for children.

Video may represent the next frontier generative AI, following the integration of chat and generators into both consumer business sectors. Although the creative potential may exhilarate certain AI enthusiasts these new technologies also pose significant concerns, particularly as major political elections take place worldwide.

According to data from Clarity, a machine learning business, the number of AI-generated deepfakes has surged by 900% year over year.

The new AI frontier is both exciting and concerning at the same time.

UK economy shrinks unexpectedly for second month in a row contracting 0.1% in October 2024

The U.K. economy contracted unexpectedly in October 2024, according to data from the Office for National Statistics (ONS).

Gross Domestic Product (GDP) fell by an estimated 0.1% on a monthly basis, the ONS said Friday 13th December 2024, attributing the downturn to a decline in production output. 

It marked the second consecutive economic downturn, following a 0.1% GDP decline in September 2024. Sterling declined on the back of these disappointing figures, trading 0.3% lower against the U.S. dollar in early trade.

However, ‘real’ GDP is estimated to have grown 0.1% in the three months to October 2024, the ONS said, compared to the previous three months ending in July 2024.

In a statement on Friday 13th December 2024, U.K. Finance Minister Rachel Reeves reportedly conceded that the October figures were ‘disappointing,’ but defended the government’s economic strategies. I expect the chancellor would have been quick to own the success had the GDP improved – especially after the ‘for growth’ budget.

The economy has grown just once over the past five months and is 0.1% lower than before Labour won the election. That may suggest it’s not just the Budget that is holding the economy back. Instead, the drag from higher interest rates may be lasting longer than was calculated.

Either way, be it budget or inflation pressure – the UK economy isn’t growing.

UK GDP January 2022 – October 2024

Note: preliminary ONS figures may be revised in future assessments

U.S. annual inflation rate increases to 2.7% in November 2024 – as expected

Inflation U.S.

U.S. consumer prices rose at a faster annual pace in November 2024, a reminder that inflation remains an issue both for households and policymakers.

The consumer price index (CPI) showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday 11th November 2024. The annual rate was 0.1 percentage point higher than October 2024.

Excluding food and energy costs, the core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core number was unchanged from a month ago.

All of the numbers were in line with consensus estimates.

The data comes with Federal Reserve deciding over what to do at their policy meeting next week. Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by 0.25% at the meeting on 18th December 2024.

It is unlikely now that a January rate cut will happen as the FOMC measures the impact recent cuts have had on the economy.

Odds are of a 99% certainty of a cut in December 2024.

Tesla shares climb to record high – boosted by Trump election victory

Tesla EV

Tesla shares soared to an all-time high on Wednesday exceeding their previous record set in 2021, driven by a post-election rally and heightened enthusiasm Wall Street for Elon Musk’s electric vehicle company.

The stock increased to an intraday high of $415, exceeding its previous peak by 50 cents and closed above its highest finish of $409.97 recorded on 4th November 2021.

Tesla’s market has increased reportedly increased by around 69% this year, with nearly all of those gains occurring after Trump’s election victory early last month. The stock’s 38% rally in represented its monthly performance since January 2023 and ranks as the 10th best on record.

Reportedly according to Federal Election Commission filings, Musk invested $277 million into a pro-Trump campaign effort and transformed his support for the Republican nominee into a full-time job in the lead-up to the election. He financed an operation in swing states to register voters and utilised his social media platform, to promote his chosen candidate, often disseminating misinformation.

The world’s wealthiest individual, whose net worth has increased to over $360 billion, is poised to head the Trump administration’s ‘Department of Government Efficiency,’ DOGE – together with former Republican presidential candidate Vivek Ramaswamy.

The newly formed DOGE will be tasked with culling government bureaucracy by streamlining and junking departments.

Musk’s role may grant him authority over the budgets and staffing of federal agencies, well as the capability to advocate for the removal of inconvenient regulations. During a Tesla earnings call in October, Musk reportedly stated intention to leverage his influence with Trump to create ‘Federal approval for autonomous vehicles.’ At present, approvals are at the state level.

Is business now openly running he U.S. government?

China initiates investigation into Nvidia as the microchip battle rumbles on

Tech tug 'o' war

China has reportedly initiated a probe into Nvidia, the US computer chip manufacturer, over purported breaches of anti-monopoly regulations.

The company’s shares fell by over 3% following the announcement, signalling the latest development in the ongoing tech conflict between the U.S. and China over the profitable semiconductor market.

Over recent weeks, the U.S. imposed stricter restrictions on the sale of certain exports to Chinese firms, and the dispute over the industry is anticipated to persist as Donald Trump returns to the White House.

Established in 1993, the company initially gained recognition for producing computer chips designed to process graphics, especially for video games.

Today, the tech giant leads in developing chips that drive artificial intelligence (AI), boasting a market value exceeding $3 trillion.

Its increasing control over the market has drawn scrutiny from competition regulators in the U.S. and internationally. Recently, the firm confirmed that it had been approached by regulatory bodies globally, including those in the U.S., UK, European Union, South Korea, and China.

The business finds itself at the centre of escalating geopolitical and economic tensions between the U.S. and China, with both nations vying for supremacy in advanced chip technology.

Nvidia disclosed last month that sales to China, including Hong Kong, represented approximately 13% of this year’s revenue to date.

However, this figure has declined following Americas enhancement of restrictions on sophisticated technology exports to Chinese companies, citing national security concerns. Chinese state media reported that Beijing had initiated an investigation.

The inquiry alleges that Nvidia breached commitments established during its 2020 acquisition of Mellanox Technologies, a smaller entity.

This development follows the U.S.’s recent intensification of restrictions, affecting sales to 140 entities, including Chinese chip companies such as Piotech and SiCarrier, barring special authorisation.

In retaliation, China reportedly imposed stringent new regulations on the export of crucial minerals to the U.S., such as antimony, gallium, and germanium. Observers have highlighted the significance of these measures, noting they specifically target the U.S rather than imposing general restrictions.

Google unveils ‘mind-boggling’ quantum computing microchip

Quantum computing power

Google has unveiled a new chip which it claims takes five minutes to solve a problem that would currently take the world’s fastest super computers ten septillion or 10,000,000,000,000,000,000,000,000 years to complete.

Google’s Quantum Leap: The Willow chip

In a groundbreaking achievement, Google has unveiled its latest quantum computing chip, named Willow. This new chip marks a significant milestone in the journey toward realising the full potential of quantum computing, a technology that promises to revolutionise numerous fields through its unparalleled processing power.

Unprecedented speed and efficiency

At the core of Willow’s innovation is its remarkable ability to perform computations at speeds previously deemed impossible. To put this into perspective, Willow can solve a complex problem in just five minutes – a task that would take the world’s most advanced supercomputers an astounding 10 septillion years to complete. This leap in speed and efficiency showcases the potential of quantum computing to tackle problems beyond the reach of classical computers.

This quantum power combined with artificial intelligence will become a formidable force in the world, potentially a foe!

Breakthrough in Quantum error correction

One of the most significant advancements with the Willow chip lies in its approach to quantum error correction. Traditionally, error rates in quantum computations have posed a substantial barrier to practical applications. Willow, however, exhibits an exponential reduction in errors as more qubits (quantum bits) are integrated into the system. This breakthrough in error correction brings the technology closer to practical, large-scale quantum computing, paving the way for more reliable and accurate results.

Potential applications and future prospects

While Willow represents a monumental step forward, experts caution that a fully functional, widely applicable quantum computer is still years away. Nonetheless, the potential applications of quantum computing are vast, ranging from breakthroughs in medicine and drug discovery to advancements in artificial intelligence and energy solutions. With continued investment and research, Willow could be the precursor to a new era of technological innovation, fundamentally altering how we approach complex problems.

Expert insights

Leading experts in the field commend Google’s achievement, highlighting Willow’s significance in the broader context of quantum computing development. While challenges remain, the unveiling of Willow underscores the rapid progress being made and the exciting possibilities that lie ahead. As we stand on the brink of a quantum revolution, Willow serves as a beacon of what the future may hold.

Conclusion

Google’s Willow chip is more than just a technological marvel; it represents the relentless pursuit of innovation and the profound impact that quantum computing can have on our world.

As research continues and technology evolves, Willow stands as a testament to the incredible possibilities that lie within the realm of quantum physics.

Quantum computers operate on a fundamentally different principle than the computer in your phone or laptop. They utilise quantum mechanics, which governs the peculiar behaviour of particles at the smallest scales, to solve problems much more quickly than conventional computers.

The hope is that quantum computers will one day accelerate complex tasks, like the development of new medications. However, there are concerns that this power could be misused, such as breaking certain forms of encryption that safeguard sensitive information.

Google shares climbed 6% after the announcement.

UK business confidence falls to lowest level in almost two years after Labour budget

In November 2024, business confidence in the U.K. dropped to its lowest point since January 2023, as reported by BDO, a business advisory and accountancy firm.

Concurrently, KPMG noted that UK job vacancies decreased at the quickest pace since the pandemic began. This downturn coincides with warnings from businesses that the Labour Party’s ‘pro-growth’ budget could exacerbate inflation and decelerate hiring.

Tax increases do not fit well with a ‘pro-growth’ agenda. Also, GDP predictions made by the UK chancellor for 2025 through 2027 are lame.

The Labour budget has notably affected U.K. business confidence for a variety of critical reasons:

  • Tax Increases: The budget introduced a substantial hike in National Insurance contributions for employers, raising the rate to 15% on salaries above £5,000. This increase has led to concerns about higher operational costs, which many businesses fear will result in job cuts and reduced investment.
  • Minimum Wage Hike: The budget also included an inflation-busting increase in the minimum wage. While this aims to improve living standards, it has added financial pressure on businesses, particularly those in sectors with tight margins like retail and hospitality.
  • Economic Uncertainty: The combination of these measures has created a sense of economic uncertainty. Businesses are worried about their ability to absorb these additional costs, leading to a decline in overall optimism.
  • Investment Concerns: The increased costs have forced many businesses to reconsider their investment plans. Some have already announced cuts to expansion projects and other growth initiatives.
  • Next Increase: in public workers pay looms nigh.

These factors have collectively contributed to a significant drop in business confidence, with many firms bracing for a challenging economic environment ahead

Bitcoin breaks the $100,000 barrier

In a historic moment for the cryptocurrency world, Bitcoin has finally breached the $100,000 mark.

This milestone, reached on 5th December 2024, signifies a notable triumph for Bitcoin enthusiasts and investors who have endured the market’s volatility over the years.

The cryptocurrency value surge past $100,000 followed Donald Trump’s election as President of the United States. Trump’s favorable stance on crypto and his commitment to deregulate the sector are believed to have enhanced investor confidence. The momentum was further increased by his decision to nominate Paul Atkins, a recognized proponent of cryptocurrency, as the new chairman of the Securities and Exchange Commission (SEC).

Since the creation of the first Bitcoin ETF there have been massive inflows invested in this asset helping to push Bitcoin ever higher.

Bitcoin’s ascent to $100,000 has been tumultuous. Beginning the year at approximately $38,505, the cryptocurrency has experienced an impressive 155% increase to date. The surge was especially notable in the fortnight after Trump’s victory, with Bitcoin’s value soaring by about 45%.

Bitcoin’s ascent has triggered a ripple effect throughout the wider cryptocurrency market, now valued at a combined $3.78 trillion. This upsurge has reinforced Bitcoin’s preeminence in the digital asset arena and garnered considerable interest from institutional investors.

Despite the festive atmosphere, some analysts warn that Bitcoin’s well-known volatility is still worrisome. Although numerous investors have realized significant profits, the asset’s high-risk profile may not be appropriate for all. Nevertheless, the prevailing mood within the cryptocurrency community is one of optimism, fueled by the expectation that the incoming administration will create a regulatory climate more conducive to digital assets.

Bitcoin’s record-breaking streak continues, signaling a bright future for the renowned cryptocurrency. Its evolution from a peer-to-peer electronic cash system to a trillion-dollar asset highlights the revolutionary impact of blockchain technology.

U.S. stocks have a November to remember as Dow touches 45,000

High Dow

On Friday 29th November 2024, the Dow Jones reached a new record high, closing at 44,910 points after breaching 45,000 temporarily

This formed part of a wider market surge that led the S&P 500 and Nasdaq Composite to also hit record peaks. It concluded a remarkable month for the stock market, marked by the Dow achieving its most substantial monthly gain of the year, all thanks to Trump winning the U.S. election.

In November, the S&P 500 experienced a 5.73% rise, and the Dow Jones Industrial Average recorded a notable 7.54% increase, both marking their most robust monthly performances for the year. Concurrently, the Nasdaq Composite enjoyed a 6.21% surge, its largest monthly gain since May.

Recently, a host of factors have pumped up investors’ sentiment for stocks. 

The presidential election concluded with Donald Trump decisively securing the presidency. This eliminated any uncertainty, which is often disliked by investors. Additionally, Trump’s support for the stock market, tax cuts, cryptocurrency, and deregulation is well-received by investors.

The U.S. economy expanded at an annualised rate of 2.8% in the third quarter. Although the gross domestic product is projected to grow by 1.31% in the fourth quarter, this still signifies an expansion, countering concerns of a potential recession hitting the U.S. economy.

Even a slowing growth rate can have its advantages. It provides the U.S. Federal Reserve with greater motivation to implement a second rate cut this year at its December 2024 meeting, potentially boosting economic activity.

Moreover, the seasonal strength of stocks in November 2024 has infused investors with a sense of optimism.

Entering December 2024, it’s challenging to disregard the current bull market, given the favourable conditions.

U.S. stocks are experiencing a robust year-end rally, partly due to short sellers being compelled to purchase stocks to close their positions as the year concludes.

This surge of buying could propel the S&P 500 to reach 6,300, suggesting a 5% increase for December 2024 and a 32.1% rise throughout 2024, surpassing the 24.2% gain seen in 2023.

Additionally, there’s the significant boost in cryptocurrency values, often referred to as the ‘Trump pump,’ – and this too is currently underway.

Dow Jones one-day chart as of 29th November 2024

Dow Jones one-day chart as of 29th November 2024