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Intel shares fall after company provides weak forecast

Microchip stock chart

Intel shares fall after company provides weak forecast for earnings, but disappoints with sales.

The stock fell 8% in extended trading.

Monthly stock price chart for Intel Corp. March to April 2024

Monthly stock price chart for Intel Corp. March to April 2024

Intel actual versus consensus expectations for the quarter ended in March 2024:

Earnings per share: 18 cents vs. 14 cents expected

Revenue: $12.72 billion vs. $12.78 billion expected

For the second quarter, Intel anticipates earnings of 10 cents per share with a projected revenue of $13 billion. This projection is in contrast to analysts’ expectations, which predict earnings of 25 cents per share on sales amounting to $13.57 billion.

In the first quarter, Intel disclosed a net loss of $400 million, equivalent to 9 cents per share, as opposed to the previous year’s net loss of $2.8 billion, 66 cents per share.

Revenue was $12.7 billion versus $11.7 billion a year ago, a 9% year-over-year increase.

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WEF president warns about global debt levels

Global debt burden

Borge Brende, the president of the World Economic Forum (WEF), recently issued a stark warning about global debt levels.

Speaking at the ‘Special Meeting on Global Collaboration, Growth and Energy for Development‘ in Riyadh, Saudi Arabia, (see WEF website), he highlighted that global debt ratios are approaching levels not seen since the 1820s.

The WEF president also reportedly emphasized the risk of ‘stagflation‘ for advanced economies. He cautioned that without appropriate economic measures, the world could face a decade of low growth.

The current global growth estimate stands at around 3.2%, down from the 4% trend growth seen for decades. Brende urged governments to address the mounting debt situation and implement prudent fiscal measures to avoid triggering a global recession. 

He also noted the persistence of inflationary pressures and suggested that generative artificial intelligence could offer opportunities for developing nations. The International Monetary Fund (IMF) concurs with this concern, reporting that global public debt reached 93% of GDP last year, still 9% higher than pre-pandemic levels. 

The IMF projects that global public debt could approach 100% of GDP by the end of the decade.

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Darktrace has been sold to a private equity firm

Deal

Private equity firm Thoma Bravo has agreed to acquire Darktrace in a $5.32 billion (£4.25 billion) cash acquisition.

This translates to roughly $7.75 (£6.20) per share, which is a 44% premium over the company’s average share price as calculated over the last three months.

Darktrace, headquartered in Cambridge, focuses on cybersecurity, employing self-learning AI to counteract and automate reactions to cyber threats via its Darktrace ActiveAI Security Platform. The company caters to approximately 9,400 clients globally.

Thoma Bravo’s acquisition of Darktrace adds to its cybersecurity portfolio, which is currently estimated at around $45 billion in value. 

The loss of Darktrace from the London Stock Exchange (LSE) was described as ‘disappointing news.’ There have been calls for greater pro-business reforms to help maintain London’s attractiveness for technology companies.

Darktrace was established in 2013 by Invoke Capital, an investment firm led by Autonomy’s founder Mike Lynch. He now holds a 3.9% stake in Darktrace, positioning him to gain just over $200 million from its sale. His wife holds an additional 2.9%.

Concurrently, Lynch is entangled in a fraud trial in San Francisco. He is reportedly facing accusations of being the ‘driving force’ behind significant fraud at Autonomy.

Autonomy was the software company he co-founded and eventually sold to Hewlett-Packard for $11 billion (£8.6bn) in 2011.

The acquisition represents a significant development in the cybersecurity industry.

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Recent U.S. data is indicating inflation is proving stubborn and isn’t going away anytime soon

Inflation has become a persistent challenge for the Fed

The battle against inflation persists, gradually impacting the U.S. economy and presenting substantial challenges for the Federal Reserve.

Despite concerted efforts to control it, inflation remains stubbornly remains, leaving policymakers in a dilemma – to stimulate economic growth or to curb spiraling prices.

Let the data speak

Recent data presents a concerning scenario. Indexes from the Commerce Department, used by the Federal Reserve as indicators of inflation, reveal that prices are rising at a rate significantly exceeding the central bank’s annual target of 2%. Consumer spending persists, encouraged by the excessive amount of money circulating in the financial system.

However, this spending spree isn’t sustainable, and consumers are dipping into their savings to fund purchases. The personal savings rate has plummeted to its lowest level since October 2022. Borrowing is up and debt is far too high!

The Federal Reserve’s primary inflation gauge, the personal consumption expenditures price index, rose to 2.7% in March, encompassing all items. The crucial core index, excluding the more volatile food and energy prices, remained constant at 2.8%. These figures highlight the ongoing inflationary pressures.

Fed’s dilemma

The Federal Reserve is navigating a precarious inflation situation. Should it shift towards rate reductions prematurely, there’s a risk that inflation might surge back in 2024. Conversely, persistent inflation could compel central bankers to not only sustain the present rates but also ponder additional increases. The aspiration for a gentle economic descent is at stake.

Outlook

Forecasters anticipate inflation to dip below 2.5% in 2024, yet challenges persist. The Federal Reserve faces the difficult task of steering the economy towards stability and controlling inflation expectations. With the central bank’s policy meeting on the horizon, speculation abounds regarding their forthcoming strategy.

Will they maintain the current interest rates or implement more assertive measures? Their decision is set to influence the economic outlook for the foreseeable future.

Conclusion

U.S. inflation continues to be a persistent challenge, and the Federal Reserve’s efforts are ongoing. The path forward demands cautious steering, as policymakers must achieve a fine equilibrium to sustain economic stability while simultaneously curbing inflation.

And remember, the Fed said inflation was ‘transitory’.

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Microsoft cloud growth accelerates thanks to AI

Microsoft AI

Microsoft’s Q3 results surpassed estimates for both revenue and earnings.

But the revenue forecast for Q4 was less than anticipated, with the company reportedly projecting $64 billion, which is below the consensus of $64.5 billion – (only just).

Revenue: $61.86 vs. $60.80 billion expected

Earnings per share: $2.94 vs. $2.82 expected

Additionally, Microsoft is reportedly boosting its capital expenditures to acquire Nvidia graphics processing units, which are essential for training and operating artificial intelligence (AI) models.

Microsoft one month share price chart 2024

Microsoft one month share price chart 2024
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Alphabet shares climbed 15% after issuing first-ever dividend

Alphabet

Alphabet announced on Thursday 25th April 2024 that it is issuing its first-ever dividend of 20 cents per share and that its board has authorised a stock repurchase of up to $70 billion.

This announcement follows Meta’s board authorising its own inaugural dividend in February. As of 31st March 2024, Alphabet, the parent company of Google, had $108 billion in cash and marketable securities.

After the announcement, which coincided with the release of first-quarter earnings that surpassed expectations, shares surged by 15% in after-hours trading.

Alphabet trading chart 25th April 2024

Alphabet trading chart 25th April 2024
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U.S. GDP slows to 1.6% significantly below expectations

U.S. GDP

The gross domestic product (GDP) from January to March 2024, grew at an annualised rate of 1.6%, significantly underperforming the projected 2.4%.

The personal consumption expenditures (PCE) price index, crucial for the Federal Reserve’s inflation assessments, climbed at an annualised rate of 3.4% for the quarter, marking the largest increase in a year.

Meanwhile, consumer spending rose by 2.5% during the quarter, a decrease from the 3.3% rise in the previous quarter and falling short of the 3% expectation.

U.S. GDP from Q1 2021 – Q1 2024

U.S. GDP from Q1 2021 – Q1 2024
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Synthesia creates AI avatars that can convey human emotions

Avatar

AI startup Synthesia on Thursday 25th April 2024 announced its ‘Expressive Avatars’. These are AI-generated digital avatars that can express human emotions including happiness, sadness, and frustration.

Synthesia, supported by the tech giant Nvidia, reportedly secured an investment of $90 million in 2023, reaching a valuation close to $1 billion.

This video was created using the Synthesia platform, it took just two minutes to create.

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Meta loses $200 billion in value despite good profits shown in latest figures

Stock down

Meta Platforms Inc. suffered a serious loss, witnessing its market value plummet by $200 billion.

The decline happened following the company’s first-quarter earnings call, during which CEO Mark Zuckerberg highlighted the company’s substantial investments in artificial intelligence (AI) and the Metaverse, instead of concentrating on immediate revenue streams.

Despite a 27% increase in revenue to $36.46 billion and a net income that more than doubled to a $12.37 billion (rounded), investors were unsettled by the company’s projections for future expenses.

Shares dropped by 15.5% as Zuckerberg outlined expensive future projects, including the expansion of business messaging and the integration of ads into AI interactions.

Meta’s stock took a 15% hit in extended trading, bringing its market capitalization down to around $1.2 trillion, still a high valuation. This highlights the unpredictable nature of tech stocks, especially during significant, unmonetized product development stages.

Meta 1 day chart 24th April 2024

Meta 1 day chart 24th April 2024

Zuckerberg’s prioritization of long-term growth over immediate profits is a gamble, placing a bet on AI and the Metaverse to transform digital interactions.

This strategy carries considerable financial risks, as the recent market reaction has shown. Meta’s future now depends on the successful deployment and monetization of these cutting-edge technologies.

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AI energy consumption is shocking!

AI Energy Consumption

Powering artificial intelligence (AI) models takes a substantial toll on our planet’s energy resources.

Delving deeper into AI, it becomes crucial to comprehend the environmental impact of this technological revolution.

Current trends

A new peer-reviewed study featured in ‘Joule‘ highlights the significant energy requirements of AI. The research, carried out by Alex de Vries, a data scientist at the Dutch central bank, provides a quantification of the energy usage linked to the trends in AI capacity and adoption.

The energy appetite of AI

The AI industry is experiencing rapid growth as major technology companies incorporate AI-driven services into their platforms. These applications require significantly more power than traditional ones, resulting in online interactions that are more energy-intensive.

Projected impact

Continuing on the present course, NVIDIA could be dispatching 1.5 million AI server units each year by 2027. If these servers were to run at maximum capacity, they would consume a minimum of 85.4 terawatt-hours of electricity annually. For comparison, this amount of energy surpasses the yearly consumption of numerous small nations.

Comparisons

By 2027, it is projected that global AI-related electricity consumption may rise by 85 to 134 terawatt-hours (TWh) annually. This estimate is on par with the yearly electricity requirements of nations such as the Netherlands, Argentina, and Sweden.

Why sustainability matters

While AI heralds significant breakthroughs, its sustainability is a crucial risk factor to consider. Picture Google’s search engine evolving into a ChatGPT-style chatbot, managing nine billion interactions daily. This would cause energy demands to soar, matching the consumption of a nation like Ireland. Although this scenario isn’t immediately likely due to logistical limitations, it highlights the resource-intensive nature of generative AI applications.

As we explore the AI domain, sustainability should not be neglected. Discussing AI’s risks, such as errors and biases, should also include its environmental impact. Innovation must be balanced with responsible energy use for a sustainable future.

Conclusion

In essence, AI’s demand for power is substantial, and the challenge is to leverage its capabilities while reducing its environmental impact. We must proceed with caution to ensure our technological advances do not compromise the health of our planet.

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Tesla shares jump after affordable model announcement despite revenue drop shown in latest accounts

Electric vehicle

Tesla’s profits have significantly decreased so far in 2024, prompting the company to accelerate the introduction of new models.

The company is also reducing its workforce by thousands in an effort to improve its financial outlook. The electric vehicle manufacturer reported earnings of $1.13 billion for the first quarter, a sharp decline from $2.51 billion in the previous year.

Job losses

Owned by billionaire Elon Musk, Tesla plans to lay-off over 6,000 workers across its Texas and California locations. The firm has been challenged by reduced demand and increased competition from more affordable Chinese imports, resulting in a 43% drop in its stock value throughout 2024.

This month, Tesla announced a 10% cut in its global workforce. Revenue figures for the first quarter of 2024 showed a total of $21.3 billion, falling short of the anticipated $22 billion.

However, Tesla’s shares saw a nearly 12.5% increase in after-hours trading following the announcement that the launch of new models would be moved up from the latter half of 2025. The company has yet to disclose the pricing for these upcoming vehicles.

On other Tesla matters…

Mr. Musk’s ‘compensation package’, previously valued at $56 billion, was rejected by a Delaware judge. The judge reportedly determined that Tesla’s directors failed to fulfill their duties to the company when they awarded Mr. Musk the payout.

With the decline in Tesla’s stock value, the compensation package is now estimated to be about $10 billion less, yet it remains larger than the GDP of many small countries.

Musk also appears to have his sights set on creating a Tesla manufacturing hub in India.

Tesla’s Cybertruck was reportedly recalled recently with a suspected accelerator pedal issue.

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FTSE 100 closes at new all-time high

FTSE 100 Index

The UK FTSE 100 stock index has reached a new record closing price on Monday 22nd April 2024

The new all-time high was likely propelled by a weakening pound and reduced tensions in the Middle East. The FTSE 100 has been the laggard for many months.

The index concluded Monday at 8023 points, setting a new record and eclipsing its previous peak of 8012 from February of the preceding year.

At the close, it had risen by 1.62%, with retailers such as, Tesco, Sainsbury’s, M&S and Ocado being among the top gainers of the day.

The shares have gained from the depreciating pound since the London Stock Exchange index includes numerous companies with significant international operations.

A depreciated pound lowers the cost of exported goods for overseas buyers and boosts the value of international business transactions.

Update

On Tuesday morning 23rd April 2024 the FTSE 100 climbed to a new intraday high of: 8080

FTSE 100 5 day chart showing the intraday high of Tuesday morning 23rd April 2024
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Voyager One phones home for the first time in 5 months

Voyager One

Voyager 1, launched in September 1977, holds the distinction of being the furthest human-made object from Earth.

It embarked on an incredible journey, venturing beyond the boundaries of our solar system and into interstellar space.

Here’s the latest update on this iconic spacecraft

Communication

On 14th November 2023, Voyager 1 experienced an unexpected glitch, rendering its binary communication code with NASA’s flight team incomprehensible.

However, after several months of indecipherable signals, Voyager 1 has resumed clear communication with Earth. On 20th April2024, the spacecraft reported back to its NASA team, detailing its health status for the first time in five months.

Although it is not yet transmitting scientific data, Voyager 1 is providing valuable information regarding the health and functionality of its onboard engineering systems.

Historic

Thirty-five years post-launch, Voyager 1 marked a milestone as the first human-made object to exit the solar system and enter interstellar space.

Six years thereafter, in 2018, Voyager 2 emulated its predecessor, venturing beyond the sun’s dominion. Together, these spacecraft stand as humanity’s lone envoys in the cosmic expanse, bearing our scientific endeavours and inquisitive spirit.

Technical repair

In March, the team operating NASA’s Voyager 1 sent a command to the spacecraft, which triggered its flight data subsystem (FDS) to transmit a complete memory readout to Earth.

The analysis of the memory dump reportedly indicated that the malfunction was due to a piece of corrupted code on a single chip, accounting for approximately 3% of the FDS’s memory.

While it’s not possible to physically repair or replace the chip, the team is adeptly shifting the problematic code within the FDS’s memory. This process apparently involves dividing the code into segments and reallocating them to different storage areas, with the goal of maintaining the smooth operation of Voyager 1’s systems.

Clever

Ultimately, Voyager 1’s recent successful communication serves as a remarkable example of human creativity and determination in space exploration. Even from its extraordinary distance from Earth, the venerable spacecraft continues to provide important updates on its status and insights into the unknowns of interstellar space.

15 billion miles and counting

Voyager 1 is approximately 15 billion miles from home. It takes about 1 day for information to travel from Voyager to Earth. Voyager 1 is travelling at an estimated speed of: 38026

Voyage One mission status

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Will Bitcoin experience another growth spurt after the latest halving event?

Bitcoin halving is a significant event in the cryptocurrency world

What is Bitcoin Halving?

Bitcoin halving, which happens roughly every four years, cuts the rate of new Bitcoin creation by half. This event is tied to the method of recording and generating Bitcoins. Transactions are logged on a blockchain, a ledger accessible to all.

Miners compile transactions into blocks and connect them by resolving cryptographic challenges, earning new bitcoins as their reward.

Satoshi Nakamoto, the enigmatic creator of Bitcoin, designed the cryptocurrency to have a maximum circulation of 21 million coins. To ensure this, the Bitcoin protocol halves the reward given to miners every 210,000 blocks, an event that occurs approximately every four years.

The Latest Halving

The latest Bitcoin halving took place in the early hours of Saturday 20th April 2024, reducing the reward for adding a new block of transactions to the blockchain from 6.25 Bitcoins to 3.125. Bitcoin’s halving will persist until the total supply approaches the 21 million cap, anticipated around the year 2140.

Impact on Bitcoin Price

The halving of Bitcoin reduces the number of new coins entering circulation, which, in theory, could drive up the price if demand remains constant.

According to economic principles, a stable demand coupled with a reduced supply should lead to a price increase.

Analysis of the three previous halvings (in 2012, 2016, and 2020) indicates an average price surge of 16% in the 60 days post-halving.

Typically, investors see the highest price increase approximately 500 days following a halving event.

Despite a recent drop from its peak, Bitcoin holds a high-level interest for crypto investors, even with its volatile behaviour. It has posted a 40% increase in 2024 compared to the same period last year.

In summary, the halving of Bitcoin reduces the availability of new coins, which could lead to an increase in value. However, the complete effects may only become apparent gradually over time.

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Global police forces take down massive scam website that defrauded thousands of victims

Online fraud

UK police have dismantled a gang that provided a technology service enabling criminals to use fraudulent text messages to defraud victims

Britain’s Metropolitan Police announced on Thursday 18th April 2024 that the ‘LabHost‘ website had been utilised by 2,000 criminals to pilfer personal details from users.

The police have reportedly identified approximately 70,000 UK individuals whose details were compromised via LabHost’s websites. The websites of LabHost have been disrupted and now displays a notice indicating that the services have been seized by law enforcement.

They have arrested 37 people worldwide and are contacting victims affected by the scam.

Phishing scam

Officers say younger people who grew up with the internet were the most likely to fall for the ‘phishing’ scam.

What is ‘phishing’

‘Phishing’ is a type of social engineering attack where perpetrators trick individuals into disclosing sensitive information or downloading malware. This often entails the use of deceptive emails or messages that mimic reputable entities, luring users to input their login details on counterfeit websites.

See Wikipedia definition.

The technology enabled scammers without technical expertise to inundate victims with deceptive messages aimed at eliciting online payments.

Authorities focused on the gang’s website, LabHost, which facilitated the despatch of these messages and steered victims towards counterfeit websites. These sites mimicked authentic online payment or shopping platforms.

ID theft

This operation allowed the perpetrators to pilfer personal identity details, including 480,000 card numbers and 64,000 PIN codes. It was referred to as ‘fullz data‘ in criminal circles, according to the police.

The exact amount of money stolen remains unknown. However, detectives estimate that the LabHost site generated close to £1 million ($1.25 million) in profits.

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Meta’s new AI Chatbot has arrived

Meta announces new Chatbot assistant

Meta’s complimentary artificial intelligence (AI) assistant, known as Meta AI, is being introduced across its social media platforms, including WhatsApp, Instagram, Facebook, and Messenger.

The assistant is reportedly designed to respond to queries, craft animations, and produce ‘high-quality’ images, according to Meta CEO Mark Zuckerberg in a recent video posting.

Zuckerberg also noted that the company has integrated ‘real-time knowledge’ from Google and Microsoft’s Bing to enhance the assistant’s responses.

The development of Meta AI is based on the company’s most advanced large language model, Meta Llama 3, which was unveiled on the same day – Thursday 18th April 2024.

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Surging tech stocks allow world’s largest sovereign wealth fund to post $110 billion profit in Q1

Wealth fund

Norway’s massive sovereign wealth fund reported a first-quarter profit of 1.21 trillion kroner ($109.9 billion) – bolstered by strong returns from its technology stock investments it was announced on Thursday 18th April 2024.

Established in the 1990s, Norway’s sovereign wealth fund, the largest in the world, invests the surplus revenue from the nation’s oil and gas sector. The fund has invested in over 8,800 companies across more than 70 countries to date.

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Crypto trading ‘concentration’ apparently raises alarm for EU watchdog

Crypto

Digital assets have soared recently to unprecedented heights and then plummet just as quickly. It’s an extremely volatile financial environment.

Amid this volatility, the European Union’s securities watchdog, the European Securities and Markets Authority (ESMA), has sounded a cautionary note.

The Concentration Conundrum

ESMA’s latest report highlights a considerable concern: the high level of concentration in crypto trading. A handful of exchanges, led by Binance, dominate the market. In fact, Binance alone accounts for more than half of all crypto trading activity. While this concentration might seem advantageous from an efficiency standpoint—thanks to economies of scale—it raises significant questions.

The Ripple Effect

Imagine a scenario: Binance, Coinbase or any crypto platform for that matter experiences a catastrophic failure or malfunction. The repercussions would reverberate far beyond its platform.

The entire crypto ecosystem would feel the impact. Investors, traders, and enthusiasts would face disruptions, financial losses, and uncertainty. The interconnectedness of the crypto world amplifies the stakes.

Risk and Resilience

ESMA’s concerns centre on systemic risk. When a single entity dominates a market, vulnerabilities emerge. What if Binance falters due to technical glitches, cyberattacks, or regulatory crackdowns? The fallout could destabilise other exchanges, trigger panic selling, and erode investor confidence. The crypto market, already prone to wild swings, would face heightened turbulence.

Mitigating Measures

ESMA’s report underscores the need for vigilance. Regulatory bodies must strike a delicate balance: promoting innovation while safeguarding stability. Diversification across exchanges, robust risk management practices, and stress testing are essential. Additionally, fostering competition and encouraging new players can dilute concentration risk.

The Way Forward

Crypto enthusiasts should heed ESMA’s warning. While the allure of rapid gains remains strong, prudent risk assessment is crucial. Investors must diversify their holdings, stay informed, and choose exchanges wisely. As the crypto landscape evolves, collaboration between regulators, industry players, and investors will shape its future.

In this high-stakes game, the EU watchdog’s message is clear: Tread carefully as you navigate the digital frontier.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research and consult professionals before making investment decisions

Remember to always do your own careful research or employ regulated financial advice.

Research! Research! Research!

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A single speck of dust is halfway between the size of an atom and the size of the entire planet. How can this be possible?

Atoms and dust

The statement that a single speck of dust is halfway between the size of an atom and the entire planet Earth is a fascinating way to think about scale, and it’s based on a logarithmic, not linear, scale.

A fun fact

On a linear scale, the size of a dust speck is nowhere near the midpoint between an atom and Earth. However, if we consider a logarithmic scale, which compares things in terms of orders of magnitude rather than absolute size, the idea becomes more meaningful.

Midpoint equals 30g

  • The mass of a carbon atom is approximately 1.67377×10 to the power of −24 kilograms.
  • The mass of Earth is about 5.9736×10 to the power of 24 kilograms.
  • On a logarithmic scale, the midpoint of these two masses would be around 10 to the power of −1.5, which is roughly 30 grams.

While 30 grams is heavier than what we’d typically consider a speck of dust, it’s not too far off when we’re looking at the vast difference in scale between an atom and the Earth.

So, proportionally speaking, a speck of dust’s mass is closer to the midpoint on a logarithmic scale, even though it’s not exactly halfway.

It’s a way to visualize and understand the immense range of scales in our universe, from the very small to the very large. It’s not meant to be a precise measurement but rather an illustration of the concept of scale.

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AI chip demand helps TSMC beat Q1 revenue and profit forecast

AI chips pushing up stock market

TSMC stands as the world’s foremost producer of sophisticated processors, boasting clientele that includes industry giants like Nvidia and Apple

Unprecedented demand for AI chips is being led by the proliferation of large language models such as ChatGPT and Chinese equivalents.

Taiwan Semiconductor Manufacturing Company (TSMC) on Thursday 17th April 2024 beat revenue and profit expectations in the Q1. Strong demand for advanced microchips, especially those used in AI tech.

TSMC’s first-quarter results

  • Net revenue: 592.64 billion New Taiwan dollars ($18.87 billion), vs. NT$582.94 billion
  • Net income: NT$225.49 billion, vs. NT$213.59 billion

TSMC announced that its net revenue has increased by 16.5% from the previous year to NT$592.64 billion, and its net income has risen by 8.9% to NT$225.49 billion. The company has forecasted its revenue for the first quarter to be in the range of $18 billion to $18.8 billion.

As the world’s largest producer of advanced processors, TSMC serves high-profile clients including Nvidia and Apple.

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IMF says Russia is expected to grow faster than all advanced economies in 2024

Oil

The International Monetary Fund calculates that Russia’s economy will expand more rapidly than all advanced economies this year.

According to the latest World Economic Outlook released by the IMF, Russia’s economy is projected to expand by 3.2% in 2024.

This growth outpaces the anticipated growth rates for the U.S. at 2.7%, the U.K. at 0.5%, Germany at 0.2%, and France at 0.7%.

G7 growth percentages

  • Russia at 3.2%
  • U.S. at 2.7%
  • France at 0.7%
  • U.K. at 0.5%
  • Germany at 0.2%

The forecast may be galling for Western countries that have endeavoured to economically isolate, restrict and punish Russia for its invasion of Ukraine in 2022.

Russia has demonstrated that Western sanctions on its industries have made it more self-sufficient and that private consumption and domestic investment remain resilient.

Oil exports

Oil and commodity exports to nations such as India and China, (two of the largest countries in the world by population) – as well as alleged sanction evasion and high oil prices, have allowed Russia to maintain strong oil export incomes streams.

UK and Europe growth

Outside of Russia, the IMF has revised its forecasts for Europe and the UK, projecting a growth of 0.5% for this year. This positions the UK as the second-lowest performer within the G7 group of advanced economies, trailing behind Germany.

The G7 also includes France, Italy, Japan, Canada and the U.S.

However, UK growth is expected to improve to 1.5% in 2025, placing the UK in the top three best G7 performers, according to the IMF.

The IMF also reported said that interest rates in the UK will remain higher than other advanced nations, close to 4% until 2029.

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Bank of England school report: must try harder – a brutal analysis of ‘out of date’ systems

Bank of England forecasts

The Bank of England (BoE) stands as a bastion of economic stability, guiding the United Kingdom through the ebbs and flows of financial tides. 

Modernising the Bank of England’s forecasting system has become a critical necessity. A recent independent review has cast a spotlight on the ‘serious deficiencies’ within its economic forecasting system, calling for an urgent modernisation.

Out of date forecasting methods

What have they all been doing for all these years to not have updated their systems?

The review, led by Dr. Ben Bernanke, a former chair of the U.S. Federal Reserve, paints a picture of an institution grappling with outdated systems and under-investment in critical infrastructure. The Bank’s staff, the report suggests, are hindered by software that is not just out-of-date but also complicates the already intricate task of economic forecasting.

This revelation comes at a time when accurate economic forecasting is more vital than ever. The world is still reeling from the effects of the pandemic, the 2008/2009 financial crisis and the UK faces unique challenges post-Brexit. The Bank’s ability to predict economic trends accurately is paramount in crafting policies that safeguard the nation’s financial health.

Deficiencies

The deficiencies highlighted are not just a matter of outdated software; they reflect a deeper need for a paradigm shift in how economic data is handled and analysed. The report recommends a complete overhaul of the system, emphasizing the need for automation of tasks that are currently performed manually.

Governor Andrew Bailey’s reportedly responded to the review by acknowledging the gravity of the situation, stating that updating the Bank’s systems is a ‘high priority’. This commitment to modernisation is a step in the right direction, but it should be followed by swift and decisive action, surely.

A broken compass?

The Bank of England’s forecasting system is more than a tool; it is the compass by which the nation navigates its economic future. Modernising this system is not just a recommendation; it is an imperative. As the UK charts its course in a rapidly changing global economy, the reliability and sophistication of its economic forecasting are not just beneficial but essential for continued prosperity.

In conclusion, the Bank of England’s economic forecasting system is at a crossroads. The call to modernise is clear, and the path forward must be paved with innovation, investment, and a steadfast commitment to excellence in economic stewardship.

The future of the UK’s economy depends on it.

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Does extreme flooding pose a threat to UK food security?

UK floods

Record-breaking rain has inundated the United Kingdom over the past few months, leaving fields submerged and livestock at risk.

The relentless downpours, likely exacerbated by climate change, are now threatening the very foundation of UK food production.

Challenges faced by farmers

UK farmers are facing the repercussions of extreme weather events. Fields that would normally be abundant with crops are currently waterlogged, making them barren. Livestock are also suffering, unable to graze in the inundated fields, leading to a shortage of feed. The circumstances are critical, prompting the National Farmers Union (NFU) to raise the alarm.

NFU’s concerns and calls for action

The NFU emphasizes that climate change-induced flooding imperils food security. Rachel Hallos, NFU vice president, warns that these extreme conditions could become the norm. Urgent action is needed to safeguard our agricultural systems.

  • Compensation and Support: The NFU urges the government to provide more substantial compensation to flooded farmers. The recently launched Farm Recovery Fund offers grants, but broader and longer-term assistance is essential.
  • Reduced Crop Output: Weeks of incessant rain have already impacted this year’s harvest. Crop quality may suffer, affecting both farmers and consumers.
  • Resilience and Adaptation: We cannot rely solely on imports. A clear government plan is necessary to prepare for the potential effect of extreme weather, adapt to its effects, and ensure continued food production.

Voices from the fields – case study example

A recent report from a mixed dairy, beef, and arable farmer in Gloucester whose land lies in the floodplain reportedly said that floods occurred every six years, but now they occur with alarming frequency. Cattle, unable to graze, face dwindling feed supplies. Livelihoods hang in the balance.

The farmer went on to say, ‘climate change affects us all. It threatens our food supply and prices. We must think about resilience and feeding the world amidst a changing climate.’

Conclusion

Extreme flooding transcends a natural disaster; it poses a threat to our very sustenance. In the face of such challenges in the UK, it is imperative that farmers, policymakers, and communities collaborate.

Prompt action is essential to safeguard our food security and foster resilience for the future.

Building and farming on low-lying land, often on floodplains, is likely a big part of the problem, along with the potential effects of the ever-changing climate and weather patterns.

Safety valve

Low lying land has always flooded – isn’t it natures safety valve? We cohabit with nature and low-lying land, as good as it is for farming (and building), will always flood – as it has for thousands of years.

But we do need to do more to protect our food production in the UK.

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UK inflation eases to 3.2% but down less than expected

UK inflation data March 2024

Inflation in the U.K. eased to 3.2% from 3.4% in March, the Office for National Statistics said on Wednesday 17th April 2024.

But a higher-than-expected reading creates more concern as investors push back bets on the timing of the first Bank of England (BoE) rate cut.

Economists expected 3.1% as inflation has been falling gradually since it peaked at 11.1% in late 2022.

Food prices provided the biggest downward drag on the headline rate, the ONS said, while motor fuels pushed it higher.

The core inflation rate, excluding energy, food, alcohol, and tobacco, was reported at 4.2%, slightly above the forecasted 4.1%. Services inflation, closely monitored by U.K. monetary policymakers, decreased from 6.1% to 6%, still surpassing the expectations of economists and the Bank of England (BoE).

The March core inflation figure, remaining above 4%, is expected to fuel speculation that inflation is more persistent than recent projections indicated, potentially delaying the anticipated timing of initial interest rate reductions.

UK inflation 3.2% March 2024

UK inflation 3.2% March 2024