Category: Knowledge

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Is the world shackled to debt?

World Debt

The world is in debt to the tune of $315 trillion, and counting.

$315,000,000,000,000

$315 trillion or $315,000,000,000,000 is a daunting number, it’s massive. In 2024, the global GDP reached just $109.5 trillion, just over a third of the global debt figure.

Perspective

To provide some perspective, with the world population at roughly 8.1 billion, if the debt were distributed evenly, each person would shoulder about $39,000 in debt.

As global debt reaches unprecedented levels, concerns naturally arise about its implications and origins.

Global debt

Global debt includes borrowings by households, businesses, and governments.

Household debt

Household debt, which many are familiar with, comprises mortgages, credit cards, and student loans. At the beginning of 2024, it stood at $59.1 trillion.

Corporate debt

Corporate debt, utilized by businesses for operations and growth, reached $164.5 trillion, with the financial sector contributing $70.4 trillion.

Government debt

Government debt, on the other hand, finances public services and projects without raising taxes. It can be obtained from other nations or institutions like the World Bank and the IMF, or through bond sales, which are essentially promises to pay with interest from the state to investors.

Public debt

Public debt was reported to be $91.4 trillion. While often perceived negatively, debt can be advantageous, supporting individuals in education and homeownership, aiding business expansion, and providing governments with means for economic development, social expenditures, or crisis management.

History

Historical evidence shows that public debt has been around for at least 2000 years, mainly for establishing settlements and financing wars, with governments accruing significant debts from conflicts such as the Napoleonic Wars.

Debt engulfs us all and is here to stay, but at what cost to society?

And who do we owe?

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Europe wants to place data centres in space and Microsoft wants to place them under the sea

Space data centre

Data centres are expected to consume over 3% of Europe’s electricity demand by 2030

The surge in artificial intelligence (AI) has significantly increased the demand for data centres, essential for the ‘exploding’ tech sector. This necessity has led Europe to consider spatial alternatives for digital storage, aiming to diminish reliance on energy-intensive ground facilities.

The Advanced Space Cloud for European Net zero emission and Data sovereignty (ASCEND), a 16-month study investigating the viability of deploying data centres in orbit, has reportedly reached a ‘very encouraging‘ conclusion, according to the report.

The ASCEND study, coordinated by Thales Alenia Space for the European Commission and valued at 2 million euros ($2.1 million), asserts the technical, economic, and environmental viability of space-based data centres.

“The idea [is] to take off part of the energy demand for data centres and to send them in space in order to benefit from infinite energy, which is solar energy,” according to a spokesperson for ASCEND.

Data centres are crucial for advancing digitalization; however, they demand substantial electricity and water to operate and cool their servers. The total global electricity consumption from data centres could reach more than 1,000 terrawatt-hours in 2026 – that’s roughly equivalent to the electricity consumption of Japan, as reported by the International Energy Agency.

The ASCEND study is not alone in exploring the potential of orbital data centres. Microsoft, which has already trialed the use of a subsea data centre – positioned 117 feet deep on the seafloor, is collaborating with companies such as Loft Orbital to explore the challenges in executing AI and computing in space.

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Common investing mistakes to avoid

Wise stock selection

Avoiding common investing and trading pitfalls is crucial. Here are some typical investing errors you should try to avoid.

Warren Buffett wisely cautions against investing in businesses that are not well understood. It is crucial to have a deep understanding of the company, its market sector, the broader industry, and its financial stability before committing to an investment.

Understand your investment

Take time to research whether it be a company, fund, unit trust or savings account. Make sure you understand what you are doing. Not understanding the investment is a massive failing.

Love the company, but resist falling in love with it. An emotional attachment to a specific stock can obscure your judgement. Keep in mind that investing should be a process of making rational decisions based on data, not on personal emotions.

Patience

Successful investing demands patience. Don’t anticipate immediate results; give your investments the necessary time to mature. Resist the urge to frequently check the markets and make hasty uninformed decisions.

Investment turnover

Excessive trading, known as churning, can result in significant transaction fees and tax consequences. It is advisable to adopt a long-term investment strategy and minimize superfluous trades.

Attempting to time the market

Consistently timing the market is a difficult task. Instead, the emphasis should be on the duration of market involvement. Steady contributions and maintaining investments yield benefits in the long-term.

Getting even

Clinging to underperforming investments with the hope of just breaking even can be harmful. It’s crucial to assess each investment on its own merits and be prepared to take losses when needed. Run the winners!

Diversify

Investing all your funds in a single stock or asset class heightens the risk. Mitigate this by diversifying your investments across various asset types, industries, sectors and regions.

Cut emotions

Fear and greed often result in unwise decisions. It’s crucial to remain disciplined, adhere to your investment plan, and resist the urge to make hasty decisions driven by emotions.

You

Always maintain honesty with yourself when investing. Do not persuade yourself of anything other than the FACTS regarding your investment choices!

Keep in mind that investing is a journey where learning from mistakes is an integral part of the experience. By steering clear of these common pitfalls, you’ll set yourself up for greater long-term success.

Spread out your investments. Diversify. Aim for the long term. Remove emotion. Let the winners run. And doe your RESEARCH!

RESEARCH! RESEARCH! RESEARCH!

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FACT or FICTION: there is a creature in our world that never dies

Jellyfish

It is indeed amazing and absolutely true – when the medusa (adult jellyfish) or Turritopsis Dohrnii comes to the end of its life, it descends to the ocean’s depths and commences decomposition – it starts to decay but remarkably, its cells then reassemble, not into another medusa, but into polyps.

From these polyps, new jellyfish are born. In essence, the jellyfish reverts to a previous stage of its life cycle, thus beginning life anew.

This extraordinary capability has led to it becoming known as the “immortal jellyfish.”

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Two asteroids star in Earth weekend fly-by starting 28th June 2024

Asteroid in Earth fly-by

There are two massive asteroids that will fly past Earth this week.

Asteroid (415029) 2011 UL21

Size: Approximately 7,600 feet long

Distance from Earth: It will pass by Earth at a distance of more than four million miles (over 17 times further than our moon).

Visibility: Visible with small telescopes through Sunday, appearing brightest on Friday.

Asteroid 2024 MK:

Size: Between 400 and 850 feet long

Distance from Earth: It will fly significantly closer, passing at about three quarters the distance to the moon.

Visibility: Best view from Hawaii or South America, but also visible from the southern United States.

NASA

NASA Asteroid live

Bennu asteroid

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Have you heard of the ‘Sahm Rule’ recession indicator?

Rules in a book

The ‘Sahm Rule’ serves as a heuristic indicator employed by the Federal Reserve to ascertain the onset of a recession in the economy.

The Sahm Rule is a real-time evaluation tool based on monthly unemployment data from the Bureau of Labor Statistics (BLS). Named after economist Claudia Sahm, it forecasts the onset of a recession when the three-month moving average of the national unemployment rate (U3) increases by 0.50% or more compared to its lowest point in the preceding 12 months.

This simple yet effective indicator helps policymakers monitor economic cycles and respond accordingly

Time to cut according to the ‘Sahm Rule’

Sahm has reportedly stated that the Fed is taking a significant risk by not implementing gradual rate cuts now. Last week, Federal Reserve officials significantly reduced their forecasts for rate cuts this year, shifting from three anticipated reductions noted in the March 2024 meeting to just one.

According to the creator of a well-established rule for predicting recessions, the Federal Reserve is risking an economic contraction by not lowering interest rates immediately.

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Anthropic releases its most powerful AI Chatbot

Chatbot

Anthropic, a rival to OpenAI, unveiled Claude 3.5 Sonnet on Thursday, touting it as their most advanced AI model to date.

Claude has joined the ranks of widely used chatbots such as OpenAI’s ChatGPT and Google’s Gemini. Founded by former OpenAI research leaders, Anthropic has secured backing from major tech entities like Google, Salesforce, and Amazon. Over the past year, the company has completed numerous funding rounds, reportedly amassing approximately $7.3 billion.

The announcement comes after Anthropic introduced its Claude 3 series of models in March, followed by OpenAI’s GPT-4o in May 2024. Anthropic has stated that Claude 3.5 Sonnet, the initial model from the new Claude 3.5 series, surpasses the speed of its predecessor, Claude 3 Opus.

“It shows marked improvement in grasping nuance, humour, and complex instructions, and is exceptional at writing high-quality content with a natural, relatable tone,” the company said in a blog post.

It can also write, edit and execute code in a real time workspace open for the user to engage.

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Nvidia to get 20%+ weighting as ETF fund reportedly plans to acquire $10 billion of shares

EFT fund

Nvidia’s swift ascent is poised to prompt a major technology exchange-traded fund to acquire more than $10 billion in shares of the semiconductor maker, consequently reducing its shareholding in Apple.

The Technology Select Sector SPDR Fund (XLK), which will rebalance soon, is guided by an index that will adjust based on the market cap value at Friday’s close. According SPDR Americas Research, the recalibration will reportedly position Microsoft as the leading stock, followed by Nvidia, and then Apple.

Without caps, each of the three stocks would exceed a 20% weight in the index. However, the index’s diversification rules restrict the total weight that stocks constituting at least a 5% share of the fund can hold.

Consequently, it is anticipated that Microsoft and Nvidia will each approach a 21% weight, while Apple’s share is projected to drop to approximately 4.5%.

This news moved markets on 17th June 2024 and pushed the S&P 500 to a new all-time high. The Nasdaq100 index also relished the news reaching: 19902.75

The Nasdaq100 index also relished the news reaching: 19902.75

Nvidia share price 17th June 2024 – one year chart

Nvidia share price 17th June 2024
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Mastercard reportedly to remove manual card number entry for online payments and replace it with a token system in Europe by 2030

Credit card

Beginning in 2030, Mastercard will eliminate the need for Europeans to manually enter their card numbers during online checkout, regardless of the platform or device used.

The familiar 16-digit card number will be substituted with a randomly generated ‘token.’ This change will enable consumers to complete payments with a single click at the checkout page, authenticated by a thumbprint.

Mastercard reported that 100% tokenization across e-commerce sites will reduce fraud rates dramatically.

The way we pay for products and services online will feel very different in the coming years.

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Elon Musk suggests Optimus robots could make Tesla a $25 trillion company – that’s more than half the current value of the S&P 500

Humanoid robot

It has been calculated that the S&P 500’s total value is currently $45.5 trillion. Tesla’s CEO, Elon Musk, claimed on Thursday 13th June 2024 that the company’s Optimus humanoid robots could potentially raise the automaker’s value to over half of that amount.

During the 2024 annual shareholder meeting in Austin, Texas, Musk, who reportedly identifies as ‘pathologically optimistic,’ declared that Tesla is not just entering a ‘new chapter,‘ but is on the brink of beginning an entirely ‘new book,’ with Optimus poised to play a pivotal role.

Tesla initially revealed its intention to develop humanoid robots at the AI Day event in 2021, showcasing a performer in a unitard as a stand-in for a sleek, gender-neutral robot prototype.

Musk’s vision

At the shareholder meeting, Musk was reserved about Optimus’ present capabilities. He suggested that, in the future, these robots could operate in a manner akin to Star Wars’ R2-D2 and C-3PO, undertaking tasks such as cooking, cleaning, factory work, or even teaching children.

In terms of shareholder value, Musk speculated that Optimus might play a key role in boosting Tesla’s market capitalization to $25 trillion eventually. No time scale was put forward.

And, don’t forget about the development of the robot taxi and of the fully autonomous vehicle.

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Norway and Sweden discover large deposits of important rare Earth metals

Rare Earth Metal deposited by volcanic activity millions of years ago

Significant deposits of rare earth metals have been found in both Norway and Sweden.

Norway

Rare Earths Norway (REN) has announced the discovery of the largest deposit of rare earth elements in Europe at the Fen Carbonatite Complex in southeastern Norway.

The deposit reportedly contains 8.8 million metric tons of total rare earth oxides (TREOs), including an estimated 1.5 million metric tons of magnet-related rare earths, which are vital for technologies like electric vehicles and wind turbines.

This discovery marks a significant advancement in Europe’s efforts to decrease its reliance on imported rare earths, especially from China.

Sweden

The discovery in Arctic Sweden of over one million tonnes of rare earth metals could significantly aid the EU in reducing its reliance on China for these crucial elements, which are essential for a wide range of high-tech applications.

These findings are critical for the green transition and Europe’s goal of increased self-sufficiency in vital raw materials. It is crucial to acknowledge, however, that the extraction process is intricate and necessitates meticulous attention to environmental impacts.

Due to the required permitting processes and environmental assessments, it could take over a decade for the materials from these discoveries to enter the market.

Fen Carbonatite Complex

The Fen Complex, located in Nome, Telemark, Norway, is renowned for its unique assortment of igneous rocks, such as carbonatite. It represents the remnants of a volcanic feeder pipe from a volcano that erupted 580 million years ago, characterised by carbonate-rich magma. The volcanic pipe’s circular formation spans roughly 2 km in diameter.

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Gold: a precious dilemma as it becomes scarce

Gold

The shimmering appeal of gold has enchanted humans for ages, yet beneath its radiant exterior, miners face escalating challenges.

According to the World Gold Council, the gold mining sector is finding it increasingly difficult to maintain production growth as the reserves of this precious metal become scarcer.

Depletion

Discovering new gold deposits is becoming increasingly challenging as many potential areas have already been scouted, leaving limited unexplored territories. Large-scale gold mining requires extensive exploration and development, often spanning 10 to 20 years before a mine becomes operational.

Exploration

Approximately 10% of global gold discoveries produce enough metal for mining operations. The success rates for exploration are quite low, and the chances of a discovery advancing to the stage of mine development are minimal.

Production

Despite record first-quarter mine production in 2024, the overall trend is concerning. Since around 2016-2018, global gold production has plateaued, with no sustained growth.

In 2023, mine production increased by a mere 0.5% compared to the previous year. The growth rates have steadily declined over the past decade.

Reserves

Globally, around 187,000 metric tons of gold have been extracted. China, South Africa, and Australia are at the forefront of production. The United States Geological Survey estimates that there are approximately 57,000 tonnes of minable gold reserves remaining.

Regulation

The process of obtaining government permits has grown increasingly difficult, with bureaucratic procedures causing delays in mining operations. Additionally, remote mining projects necessitate infrastructure such as roads, power, and water, which adds to the costs and complexity.

In summary, the glittering seams of gold are thinning. Miners grapple with scarcity, regulatory hurdles, and the diminishing promise of new discoveries. 

As we dig deeper, the quest for gold becomes a delicate balance between ambition and reality.

Gold chart over one year

Gold chart over one year

Countries holding largest gold stockpiles of gold

Countries holding largest gold stockpiles of gold
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Is the diamond industry ‘in trouble’ as lab-grown gems gain market share?

Lab diamonds

The demand for diamonds has declined as its allure fades in a key consumer market, China.

“Diamonds don’t really fit in anymore despite the strong legacy of De Beers under Anglo,” independent diamond industry analyst Paul Zimnisky reportedly said.

According to Zimnisky’s rough diamond index, diamond prices have decreased by 5.7% this year, marking a decline of over 30% from their peak in 2022.

Lab-grown diamonds, potentially up to 85% less expensive than natural ones, are created in a controlled environment using high pressure and heat to mimic the formation of natural diamonds in the Earth’s mantle.

Sales of lab-grown diamonds have increased from a mere 2% of the global diamond jewellery market in 2017 to 18.4% in 2023, as reported by Zimnisky.

A fall in marriage rates as well as growing popularity for gold and lab-grown gems all drove down Chinese demand for diamonds, according to market research firm Daxue Consulting.

The lifting of pandemic restrictions has led consumers to redirect their spending towards travel experiences rather than diamond products.

The preference for lab-grown diamonds plays a critical role in driving down prices of natural diamonds.

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Intel unveils new AI chips as it seeks to reclaim market share

Ai microchip

Intel announced its new Xeon 6 processors at the Computex tech conference in Taiwan on Tuesday 4th June 2024.

This announcement coincides with the recent launches of new artificial intelligence chips by rivals Nvidia and AMD on Sunday and Monday 2nd and 3rd June 2024 – as they compete for dominance in the rapidly growing industry.

Intel is making efforts to catch up with Nvidia and AMD, having been relatively absent from the AI surge that led tech giants such as Meta, Microsoft, and Google to purchase a significant number of Nvidia chips.

This comes half a year after Intel’s release of its 5th Gen Intel Xeon processors for data centre workloads and a couple of months following the announcement of the Gaudi 3 processor for AI model training and deployment.

Intel also disclosed that the Gaudi 2 and Gaudi 3 AI accelerators are priced lower than those of its competitors.

Furthermore, Intel shared architectural details of its forthcoming Lunar Lake processors, aimed at expanding the AI PC category. These processors, slated for release in the third quarter, are set to rival Nvidia’s and AMD’s offerings tailored for AI PCs.

While Nvidia and AMD focus on chip design, Intel stands out by both designing and manufacturing its chips. Nevertheless, Intel’s foundry business has faced challenges, with its operating loss widening to $7 billion in 2023 compared to the previous year.

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Cisco’s ThousandEyes has unveiled an AI product designed to predict and rectify internet outages

AI net

ThousandEyes, Cisco’s internet monitoring division, has introduced a new suite of AI-driven features known as Digital Experience Assurance, or DXA, on Tuesday 4th June 2024.

The firm asserts that this new AI technology will allow customers to not only monitor but also automatically address issues affecting network quality.

Describing itself as the ‘Google Maps’ of the internet, Cisco ThousandEyes offers a comprehensive, end-to-end perspective of every user and application across all networks.

Established 15 years prior, the company has been heavily investing in AI technology in recent years.

ThousandEyes is now implementing significant AI-centric modifications to its platform, which are designed to enhance its clients’ oversight of network quality and robustness.

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Quality investing advice from one of the best, if not the best investor the world has ever seen!

A Wise Owl

Warren Buffett, renowned as one of history’s most successful investors, has imparted invaluable insights that can help steer you on your investment path.

Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1

This straightforward statement has significant connotations. Although the aim of investing is to make a profit, it is just as important to avoid losses.

By reducing choices that put your portfolio at risk, you enhance the chance of earning profits. Consider it protecting your capital before pursuing returns. In contrast to those who gamble on the stock market, Buffett prioritizes careful risk management.

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price 

Rather than concentrating only on low-priced stocks, it’s wise to invest in outstanding companies with robust economic foundations and competitive edges. Although top-notch companies seldom seem inexpensive, their enduring profitability may warrant a fair premium. Notable firms that Buffett has backed include Apple, American Express, Coca-Cola.

Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble 

Be ready to grasp opportunities as they come. Instead of a small thimble, arm yourself with a bucket to gather the metaphorical riches. That is, capitalize on favorable market conditions and make smart investments when suitable chances emerge.

Invest in yourself 

Buffett advocates for self-improvement, highlighting the importance of effective communication, both written and verbal. Developing this skill can greatly enhance your value.

Diversify

Diversify your investments among various assets to mitigate risk. Look into index funds and exchange-traded funds (ETFs) – unit trusts, stocks and shares, gold and hold cash to achieve widespread diversification.

Start early

The effectiveness of compounding is maximized when you start investing early. Being consistently invested over time is more beneficial than attempting to predict market movements.

Automate

Establish automatic contributions to your investment accounts. Regular investments over time can result in significant growth.

The principles that capture the influence of fear and greed on investing were articulated by Warren Buffett.

Buffet advises: ‘Be fearful when others are greedy, and greedy only when others are fearful.‘ 

Fear and Greed

Fear

When investors collectively succumb to fear from ongoing stock market declines, they often resort to selling their shares, which in turn exacerbates the fall in prices.

Greed

In bull markets, it’s common for investors to exhibit excessive greed, pursuing rapid wealth and speculative trends.

Buffett’s wisdom

Warren Buffett, often referred to as the ‘Oracle of Omaha’, is known for his disciplined, long-term approach to investing. He specializes in value investing, which involves purchasing companies that seem to be undervalued by the market.

The rule

When others exhibit greed (buying aggressively), it’s prudent to exercise caution. On the flip side, when others are fearful (selling in a panic), it may be an opportune time to be greedy (buying at reduced prices).

Application

Fearful times

In times when fear prevails in the market, prices might plummet as a result of panic selling. Buffett advises exercising caution in these situations.

Greedy times

When others display excessive optimism (greed), it presents an opportunity to acquire undervalued assets.

Successful investing requires maintaining balance, adhering to fundamental principles, and steering clear of emotional extremes.

Investing is a marathon, not a sprint; hence, patience, discipline, and ongoing education are crucial.

Remember… ALWAYS do your own careful research! Or better still, take professional financial advice. Actually – just do both!

RESEARCH! RESEARCH! RESEARCH!

Disclaimer: this article is for informative purposes only! Do not trade nor invest unless you FULLY understand what you are doing – even then it is wise to take qualified financial advice.

Possible read: Buffet – The Biography (Amazon listing – other good outlets available)

Wikipedia: Warren Buffet

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AI power hungry data centres go green in Singapore

AI thirst for power

Singapore is actively addressing the dual challenges of the increasing demand for artificial intelligence (AI) and the pressure on energy resources. The nation recently unveiled a green data centre roadmap to bolster its digital economy aspirations.

Growing AI Demand and Energy Strain

With the increasing demand for digital and AI computation, the requirement for data centre capacity has grown. This heightened demand is exerting pressure on national energy networks, calling for urgent attention.

Goals

The Green Data Centre plan is designed to deliver a minimum of 300 megawatts of extra capacity. Singapore’s strategy includes improving energy efficiency in all data centres, implementing energy-efficient IT equipment, and providing incentives or grants to promote resource efficiency.

Sustainability

Singapore acknowledges the substantial contribution of data centres to its ICT sector’s emissions, accounting for 82% of the sector’s emissions and 7% of the nation’s total electricity consumption. By prioritizing energy efficiency, renewable energy, and sustainability, Singapore strives to maintain its position as a premier digital hub while reducing its environmental impact.

International status

Singapore’s data centers capitalize on the nation’s global standing as a commercial and digital centre. The city-state ranks as the second-largest data center market in Southeast Asia and holds the sixth position in the Asia-Pacific region.

In conclusion, Singapore’s focus on green data centres demonstrates its pledge to sustainable development amidst increasing energy needs driven by AI. With an emphasis on energy efficiency and renewable energy, Singapore seeks to harmonize technological progress with ecological stewardship.

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What is the Hindenburg Omen? A recent report suggests it has been triggered…

Red Stock market

The Hindenburg Omen is a technical indicator that signals a higher likelihood of a stock market crash.

It measures the percentage of new 52-week highs and lows against a set reference percentage. The simultaneous occurrence of new highs and lows suggests a statistical anomaly from the norm, potentially foreshadowing a stock market downturn.

The four main criteria for a Hindenburg Omen signal

  • The daily number of new 52-week highs and 52-week lows in a stock market index must be greater than a threshold amount (typically around 2.2%).
  • The ratio of 52-week highs to 52-week lows cannot be more than two times.
  • The stock market index must still be in an uptrend (determined using a 10-week moving average or the 50-day rate of change indicator).
  • The McClellan Oscillator (MCO), which measures the shift in market sentiment, must be negative.

Once the criteria are satisfied, the Hindenburg Omen remains active for 30 trading days, and any subsequent signals within this time frame should be disregarded.

Confirmation of the Hindenburg Omen occurs if the McClellan Oscillator (MCO) stays negative throughout this period, while a positive MCO invalidates it.

Traders typically employ this indicator alongside other technical analysis methods to determine optimal selling times. However, it’s crucial to remember that the Hindenburg Omen is not infallible and should be used in conjunction with other market factors.

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Microsoft’s AI system Recall can take screenshots

Copilot

The UK’s data protection authority, the Information Commissioner’s Office (ICO), is reportedly making inquiries into a new screenshot feature available from Microsoft.

This feature, known as Recall, is a component of the Copilot+ suite and aims to take encrypted snapshots of a user’s laptop screen at intervals, storing them on the device. The ICO is examining the feature to determine the privacy protections in place.

Recall is designed to enable users to search their computer usage history using natural language, effectively creating a type of photographic memory of their activity. Concerns have been voiced about the feature’s potential to become a ‘privacy nightmare’ due to its ability to capture sensitive information. Microsoft has clarified that Recall is a voluntary feature, giving users the choice over the snapshots it collects. The data is kept on the local device and is inaccessible to Microsoft or others without access to the device.

The ICO’s investigation aims to ensure that companies thoroughly evaluate and address any risks to individual rights and freedoms prior to launching new technologies. Microsoft has reiterated its dedication to privacy and security, noting that these principles were integral to the development of Recall. The company has also indicated that users can specify the snapshots collected by Recall and that Microsoft Edge’s private browsing mode is not included.

Awareness of software features and privacy settings is crucial for users, particularly regarding personal data handling. The ICO’s inquiries represent a move towards addressing privacy concerns and safeguarding user data.

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IMF recommends UK interest rates should be cut to 3.5% by end of 2025

UK Charts

The International Monetary Fund (IMF) advises that the Bank of England should contemplate reducing its interest rates to 3.5% by the end of 2025.

This suggestion is made as the UK’s economy steadily recovers from the recession caused by the pandemic, while policymakers are dealing with inflationary challenges.

The ‘thinking’ behind the recommendation

Economic Recovery and Inflation Outlook

The IMF’s recommendation is grounded in its assessment of the UK’s economic trajectory.

Growth Forecast

The International Monetary Fund has upgraded its growth forecast for the UK in 2024, signaling a positive outlook. It anticipates growth of 0.7% this year and 1.5% in 2025.

Inflation

The IMF anticipates that UK inflation will decline to near the Bank of England’s target of 2% and stabilise at this rate in early 2025, indicating that inflationary pressures are within manageable limits.

Soft Landing

The UK economy is said to be approaching a ‘soft landing‘ following the mild recession of the previous year. Policymakers are focused on finding a balance between fostering growth and managing inflation.

Monetary Policy Considerations

The Bank of England’s Monetary Policy Committee (MPC) has been closely monitoring economic indicators and inflation trends. Here’s why the IMF’s recommendation matters:

Interest Rate Peaks

The Monetary Policy Committee has indicated that interest rates might have reached their peak. The current restrictive monetary policy is having an impact on the actual economy and the dynamics of inflation.

Market Expectations

Analysts anticipate the first interest rate cut by September 2024 at the latest. Market expectations align with this projection, with the base interest rate likely to be lowered to 4% by the end of 2025.

Balancing Act

Policymakers face the delicate task of supporting economic recovery while preventing runaway inflation. The IMF’s suggestion aims to strike this balance.

Implications for Borrowers and Savers

Mortgage Holders

Variable Rate Mortgages

If you have a variable rate mortgage, a rate cut could reduce your monthly payments. However, keep an eye on your lender’s response to any rate changes.

Fixed Rate Mortgages

Fixed-rate borrowers won’t immediately benefit from rate cuts, but they should still monitor the situation. If rates continue to fall, refinancing might become attractive.

Savers

Savings Accounts

Lower interest rates typically lead to diminished returns on savings accounts. It may be wise to diversify your investments to seek potentially higher yields in other areas.

Fixed-Term Deposit

Current fixed-term deposits will remain unaffected; however, new deposits might generate lower yields. It is advisable to carefully assess your alternatives.

Conclusion

The IMF’s recommendation highlights the intricate balance between fostering economic recovery and managing inflation. As the Bank of England considers its next steps, it is crucial for borrowers and savers to remain informed and adjust their financial strategies as needed.

For homeowners, investors, and savers alike, grasping the potential consequences of rate cuts is key to making well-informed choices in an ever-changing economic environment.

Disclaimer: The information provided here is based on current projections and should not be considered financial advice. It is not given as financial advice – it is for discussion and analysis only!

Consult a professional advisor for personalised recommendations.

Remember – always do your careful research first!

RESEARCH! RESEARCH! RESEARCH!

Update

The Bank of England has given its strongest hint yet that interest rates could be cut this summer. This comment was observed in a recent speech given by the deputy governor of the Bank of England.

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UK Prime Minister announces snap general election for 4th July 2024

UK election

On 22nd May 2024, UK Prime Minister Rishi Sunak announced a snap general election for 4th July 2024 This decision caught many by surprise, as the election was called more than around six months earlier than legally required.

Election Date: 4th July 2024 – let the fireworks begin

The Conservative Party, led by Rishi Sunak, is facing significant challenges in opinion polls, trailing behind the opposition Labour Party.

The economy, immigration, health services, and cost of living have been identified as key issues for voters.

Labour, led by Sir Keir Starmer, is considered the clear frontrunner, with a substantial lead in recent polls.

Since 2010, the Conservatives have seen five prime ministers: David Cameron, Theresa May, Boris Johnson, Liz Truss, and now Rishi Sunak.

Sir Keir described the past 14 years as “Tory chaos” and emphasised that it’s time for change.

So, the UK is gearing up for an early election, and the outcome will be closely watched both domestically and internationally

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Big tech companies pledge AI safety commitments

AI Kill Switch!

Leading technology companies, such as Microsoft, Amazon, and OpenAI, have united under a significant international accord for artificial intelligence (AI) safety measures, established at the Seoul AI Safety Summit on Tuesday 21st May 2024.

Following the agreement, firms from various nations, including the UK, China, Canada, the U.S., France, South Korea, and the United Arab Emirates, have pledged to voluntarily commit to the secure development of their cutting-edge AI models.

Framework

AI model developers who have not already done so agreed to issue safety frameworks that detail how they will address the challenges posed by their advanced models, including the prevention of technology misuse by malicious entities.

These frameworks will feature ‘red lines’ that tech companies will establish to delineate the types of risks associated with advanced AI systems that are deemed ‘unacceptable.’ These risks encompass, but are not limited to, automated cyberattacks and the potential for bioweapons.

Kill switch

In the event of such dire scenarios, companies have declared their intention to introduce a ‘kill switch’ that would halt the development of their AI models should they be unable to ensure the mitigation of these risks.

“It is unprecedented for so many prominent AI firms from diverse regions of the world to concur on identical commitments regarding AI safety,” Rishi Sunak, the UK Prime Minister reportedly said on Tuesday 21st May 2024.

He further noted that these commitments would guarantee that the world’s foremost AI companies will maintain transparency and accountability concerning their safe AI development strategies.

This agreement builds upon a prior set of pledges made in November 2023 by entities engaged in the creation of generative AI software.

The involved companies have consented to seek feedback on these standards from ‘trusted actors,’ which include their respective national governments when suitable, prior to their publication in anticipation of the forthcoming AI summit – the AI Action Summit scheduled to take place in France in early 2025.

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EU gives greenlight to the world’s first significant law on artificial intelligence

Human and humanoid

On Tuesday 21st May 2024, European Union member states reached a consensus on the world’s first significant law to regulate artificial intelligence, a move echoed by institutions globally to implement controls on the technology.

The EU Council announced it has granted final approval for the AI Act, a pioneering regulation designed to establish the first extensive framework for artificial intelligence.

The EU Commission is authorized to impose fines on companies violating the AI Act, up to 35 million euros ($38 million) or 7% of their annual worldwide turnover, whichever is greater.

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Microsoft announces new PCs with AI chips

AI art

Microsoft is promoting new computers equipped with advanced chips, engineered to operate the new artificial intelligence (AI) capabilities embedded in the Windows operating system.

On Monday 20th May 2024, Microsoft unveiled a Surface Laptop and a Surface Pro tablet, both featuring a Qualcomm chip capable of executing AI tasks both online and offline.

The new Microsoft Copilot+ PCs feature chips designed by ARM and are powered by Qualcomm’s Snapdragon X Elite and X Plus chips, which are also based on ARM architecture. These Snapdragon-powered PCs represent the initial series of devices under the Copilot+ PC brand, introducing over 20 models from various manufacturers, such as Acer.

The partnership between Microsoft, Qualcomm, and PC manufacturers is focused on providing superior processing and quick response times, with these ARM-based chips being integral to the new AI designs.

In addition, manufacturers like Lenovo, Dell, HP, Asus, Acer, and Samsung are launching AI-ready PCs featuring Qualcomm’s Snapdragon X Elite and X Plus processors. These processors offer extended battery life and compatibility with Microsoft’s Copilot AI chatbot.

Microsoft’s powerful AI vision – some tech information

Windows PCs designed for AI, known as Copilot+ PCs, are fitted with new, powerful chips capable of an astounding 40+ TOPS, ensuring all-day battery life and access to cutting-edge AI models.

Promoted as the fastest and most intelligent Windows PCs ever created, they boast features like Recall, Cocreator, and Live Captions, which can translate audio from over 40 languages into English.

These devices include sleek, lightweight, and elegantly designed models from Microsoft Surface and OEM partners such as Acer, ASUS, Dell, HP, Lenovo, and Samsung. Pre-orders are now open, with availability starting on June 18 and prices reportedly beginning at $999. This represents a major shift in the Windows platform, placing AI at the forefront of PC architecture.

This progress is a big part of Microsoft’s wider initiative to drive AI innovation onto devices, enhancing the AI capabilities that are already present in the cloud through Copilot.

This is a massive development in the deployment of AI to the masses.

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U.S. debt and deficits are generating concerns about potential threats to the economy and financial markets

Debt burden

The federal debt reportedly reached $34.5 trillion, marking an increase of approximately $11 trillion since March 2020.

This surge has sparked discussions among government and financial leaders, with a notable Wall Street firm questioning whether the associated costs could threaten the stock market’s upward trend. The Congressional Budget Office projects that the public debt will soon surpass any previously recorded levels relative to GDP.

Federal Reserve Chair Jerome Powell has emphasized the urgency for elected officials to address this issue promptly.

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AI’s excessive water consumption should be of international concern

Water precious resource

As artificial intelligence (AI) continues its rapid advancement, we must confront its environmental footprint. Beyond energy consumption, AI’s demand for water is a critical concern that demands attention.

AI data centres require cooling, and substantial amounts of fresh water are utilized for this purpose. Additionally, water is consumed in the mining and production of AI-related hardware.

The production of AI hardware utilizes and contaminates water due to the mining of rare materials like silicon, germanium, gallium, boron, lithium, gold, copper and phosphorus. The extraction of these minerals is resource-intensive and significantly affects the environment, leading to water pollution. AI is hungry for power too – the amount of additional energy required to run an AI data centre is far greater.

AI water footprint

The water consumption associated with AI is not limited to its operational phase. AI hardware production requires intensive mining for rare materials such as silicon, germanium, gallium, boron, and phosphorus. The extraction of these minerals has a substantial environmental impact and contributes to water pollution.

Additionally, AI systems’ water use extends to the production of related hardware. The extensive deployment of AI compounds this problem, putting pressure on the drinking water supplies of local communities. With the increasing adoption of AI, there is additional strain on municipalities, agriculture, and various industries that are already facing challenges due to drought and scarce water resources.

Solutions?

Researchers have explored AI’s potential to address water challenges.

Water Efficiency

AI can optimise water usage in agriculture by automating irrigation systems. Smart machines, robots, and sensors analyse data to enhance efficiency and detect leaks, as demonstrated in smart irrigation systems for crops.

Water quality monitoring

AI-powered biosensors can accurately detect toxic chemicals in drinking water, surpassing current quality monitoring practices.

Sustainable management – a double-edged sword

AI can aid in managing water security and wastewater treatment, contributing to sustainable water use. However, on the practical side, it is the willingness to implement these grand ideas and systems that is quite often the problem.

Uncharted territory

While there is peer-reviewed analysis on the role of AI in managing water and achieving Sustainable Development Goals (SDGs), the direct and indirect effects of AI on water usage are largely uncharted.

Recent reports indicate that AI systems, such as ChatGPT, may use approximately 500 millilitres of water for every 5 to 50 prompts or questions posed by a user. Given the rapid increase in chatbot usage globally, this could lead to a considerable water footprint, raising concerns among experts and environmentalists.

Conclusion

As technological advancement continues, it is imperative to move forward with caution. Achieving a balance between innovation and the responsible use of resources is essential for a sustainable future where AI contributes positively without jeopardizing our essential water resources.