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UK wants to control its own AI direction – suggesting a divergence from the EU and U.S.

UK tech

The UK is charting its own course when it comes to regulating artificial intelligence, signaling a potential divergence from the approaches taken by the United States and the European Union. This move is part of a broader strategy to establish the UK as a global leader in AI technology.

UK AI framework

Britain’s minister for AI and digital government, Feryal Clark, emphasised the importance of the UK developing its own regulatory framework for AI.

She highlighted the government’s strong relationships with AI companies like OpenAI and Google DeepMind, which have voluntarily opened their models for safety testing. Prime Minister Keir Starmer echoed these sentiments, stating that the UK now has the freedom to regulate AI in a way that best suits its national interests following Brexit.

Unlike the EU, which has introduced comprehensive, pan-European legislation aimed at harmonising

AI rules across the bloc, the UK has so far refrained from enacting formal laws to regulate AI.

Instead, it has deferred to individual regulatory bodies to enforce existing rules on businesses developing and using AI. This approach contrasts with the EU’s risk-based regulation and the U.S.’s patchwork of state and local frameworks.

Labour Party Plan

During the Labour Party’s election campaign, there was a commitment to introducing regulations focusing on ‘frontier’ AI models, such as large language models like OpenAI’s GPT. However, the UK government has yet to confirm the details of proposed AI safety legislation, opting instead to consult with the industry before formalising any rules.

The UK’s AI Opportunities Action Plan, endorsed by tech entrepreneur Matt Clifford, outlines a comprehensive strategy to harness AI for economic growth.

The plan includes recommendations for scaling up AI capabilities, establishing AI growth zones, and creating a National Data Library to support AI research and innovation. The government has committed to implementing these recommendations, aiming to build a robust AI infrastructure and foster a pro-innovation regulatory environment.

Despite the ambitious plans, some industry leaders have expressed concerns about the lack of clear rules. Sachin Dev Duggal, CEO of AI startup Builder.ai, reportedly warned that proceeding without clear regulations could be ‘borderline reckless’.

He reportedly highlighted the need for the UK to leverage its data to build sovereign AI capabilities and create British success stories.

The UK’s decision to ‘do its own thing’ on AI regulation reflects its desire to tailor its approach to national interests and foster innovation.

While this strategy offers flexibility, it also presents challenges in terms of providing clear guidance and ensuring regulatory certainty for businesses. As the UK continues to develop its AI regulatory framework, it will be crucial to balance innovation with safety and public trust

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Latest U.S. producer price index inflation rose 0.2% – in line with expectations

Inflation

The latest U.S. producer price index (PPI) data indicates that wholesale inflation increased by 0.2% in December 2024, primarily driven by higher energy costs

This rise was slightly less than the 0.4% gain witnessed in November 2024. Compared to a year earlier, producer prices were up by 3.3%.

The rise in energy prices, particularly a 9.7% increase in gasoline prices, was a significant factor in the overall increase. Food prices, on the other hand, reportedly fell by 0.1% in December 2024. Excluding food and energy, core wholesale inflation was unchanged from November 2024 but up 3.5% from a year-on-year.

The PPI report is closely watched because it can offer an early look at where consumer inflation might be headed. Some components of the PPI, such as healthcare and financial services, flow into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index

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Has ‘Rachel from accounts’ messed up the UK economy?

UK budget

The pound has continued to fall after UK government borrowing costs rose and concerns grew about public finances

Sterling dropped as UK 10-year borrowing costs surged to their highest level since the 2008 financial crisis when bank borrowing virtually ground to a halt.

Economists have warned the rising costs could lead to further tax rises or cuts to spending plans as the government tries to meet its self-imposed borrowing target.

The UK government creates its own financial crisis as it messes up its ‘go for growth’ policy

The UK economy is currently grappling with a series of financial challenges that have led to a significant fall in the value of the pound, soaring treasury yields, and high borrowing costs.

These developments have been largely influenced by the recent budget announced by Chancellor Rachel Reeves, which has sparked concerns among investors and economists alike.

Downward trajectory

The pound has been on a downward trajectory, recently hitting its lowest level since November 2023. Traders are betting on further declines, with some predicting the pound could fall as low as $1.12

This decline is partly due to the rising cost of government borrowing, which has surged to levels not seen since the 2008 financial crisis. The yield on 10-year gilts has climbed to 4.8%, while the yield on 30-year gilts has reached 5.34%, the highest in 27 years.

Recent UK budget

The recent budget has played a crucial role in these developments. Announced in October 2024, the budget included significant tax hikes and increased spending, leading to a substantial rise in government borrowing.

The budget deficit is expected to reach 4.5% of GDP this fiscal year, pushing the overall government debt close to 100% of GDP. This increase in borrowing has led to a higher supply of government debt, which in turn has driven down the price of bonds and pushed up yields.

Higher yields

Higher yields mean that the government has to pay more to borrow money, which has significant implications for its fiscal policy. The rising cost of servicing government debt could force the government to either raise taxes further or cut spending to meet its fiscal rules.

This situation is reminiscent of the market turmoil following Liz Truss’s mini budget in 2022, which also led to a sharp rise in borrowing costs and a fall in the value of the pound.

The impact of these developments extends beyond the government. Higher borrowing costs are likely to affect households and businesses as well.

Economic growth at risk

Mortgage rates, which are influenced by government bond yields, are expected to remain high, putting additional pressure on homeowners. Businesses, on the other hand, may face higher costs of borrowing, which could lead to reduced investment and slower economic growth.

The UK is facing a challenging economic environment characterized by a falling pound, high treasury yields, and rising borrowing costs.

The recent budget has exacerbated these issues, leading to increased government borrowing and higher debt levels. As the government navigates these challenges, it will need to carefully balance its fiscal policies to avoid further economic instability and ensure sustainable growth and not more ‘unfunded’ debt.

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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?

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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.

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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.”

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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.

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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.

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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 Efficiency – DOGE‘, 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.

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China’s electric vehicle boom is becoming increasingly focused on hybrids

Hybrid vehicle

Hybrid-powered vehicles are becoming more popular than battery-only ones in China, according to latest full-year reports, even as consumers move away from fossil-fuel-only cars.

Market leader BYD reported that well over half of the 4.3 million passenger cars it sold in 2024 were hybrid-powered, marking a significant reversal from 2023.

Chinese electric car start-ups that have exclusively sold battery-powered vehicles generally delivered fewer cars in 2024 compared companies that also offered hybrid models.

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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.

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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.

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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.

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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.

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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’.

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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.

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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)
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UK inflation rate rises to 2.6% to hit highest level since March 2024

The UK inflation rate has gone up for the second month in a row, rising at the fastest pace since March 2024. The UK inflation rate rose to 2.6% in the year to November 2024, according to official figures.

However, the rise was predicted by economists and was apparently within the range of the expected increase anticipated.

Fuel and clothing were significant contributors to the increase. Additionally, rising ticket prices for concerts and theatrical performances played a role according to data from the Office for National Statistics (ONS).

The Bank of England raises interest rates to maintain inflation at its target of %. The next rate decision is on Thursday 19th December 2024 and economists anticipate that rates will remain at 4.75%.

Prices for food and non-alcoholic drinks, alcohol and tobacco, and footwear all rose at a faster pace last month.

A wider measure of inflation showed housing and household services costs, including rent, rose by 3.5%.

UK inflation 2016 – 2024

UK inflation 2016 – 2024
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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.

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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
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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.

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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.

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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

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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.

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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?