September 22, 2023

Microsoft to Roll Out Generative AI in Windows and Office App

📰 News Organizations

  • Microsoft to Roll Out Generative AI in Windows and Office App. Microsoft Corp. said its AI assistant for Windows will start rolling out Sept. 26 and the Office AI app will be widely available Nov. 1 as the software giant continues to bake generative AI into its products.

  • Rupert Murdoch to Step Down as Chair of Fox and News Corp. Murdoch, 92 years old, will exit his roles atop each company as of November when they hold annual meetings, the companies said. He will be appointed chairman emeritus of each company.

  • Cisco Makes Largest Ever Acquisition, Buying Splunk. Cisco is acquiring cybersecurity firm Splunk for $157 per share in an all-cash deal. Cisco will finance the deal using a combination of cash and debt. The acquisition deepens the company’s bet on security software.

  • Bank of England Holds Interest Rate at 5.25 Percent After Two Years of Hikes. This comes as the CPI inflation was reported to slow down from 6.8 percent in July to 6.7 percent in August. This may have swayed the decision of the MPC members.

  • U.S. Jobless Claims Fall To 8-Month Low Of 201,000 With Businesses Avoiding Layoffs. The number of Americans who applied for unemployment benefits last week fell to an eight-month low of 201,000, reflecting the reluctance of businesses to lay off workers.

  • US Existing-Home Sales Fall to Seven-Month Low on Rates, Supply. Contract closings decreased 0.7% from a month earlier to a 4.04 million annualized pace, National Association of Realtors data showed. Low inventory helped drive up the median selling price to $407,100.

🐦 Twitter

  • Stocks selling off in response to higher interest rates makes sense, but if recession risk creeps up you'd think interest rates would fall. And in 2 1/2 months 2024 estimates become "this year's numbers." Trying to weigh all this when thinking about equity valuations. Source.

  • Markets are now no longer pricing in any rate cuts until September 2024. Just three months ago, 4 rate cuts were expected by the end of 2023. Now another rate hike is back on the table by December and no rate cuts are expected for a year. Source.

  • After 29 consecutive monthly increases for multifamily housing units under construction, August marked first decline since February 2021 (only a slight drop, however). Source.

  • The top 10 holdings in the S&P 500 now make up 30.5% of the index, the highest concentration we've seen with data going back to 1980. Source.

  • Traders are coming to terms with the idea of "higher for longer," with benchmark rates now expected to remain at 5% for most of 2024. How much does this affect companies and consumers who have locked in low rates now but will be pressed to refinance in the next couple of years. Source.

  • The stock market expects a Fed pivot combined with an earnings recovery. As such, the market’s multiple has risen to 19-20x, which based on a 4% equity risk premium, is justified. But the “jaws” between the soft-landing and rate narratives continues to widen. Source.

Keep leverage moderate, avoid balloon repayments, maintain flexibility on pre-pay, no recourse. Raise equity with reasonable return expectations focused on yield & with no set exit date.

Moses Kagan

📓 Online Publications

  • Tether Ventures Into AI With Northern Data in $427M Nvidia Chip Splurge. The chips will be deployed through Northern Data’s cloud service, Taiga Cloud, with plans to offer access to customers starting late in the fourth quarter.

  • PayPal Rolls Out PYUSD Stablecoin to Venmo Users. Paypal said the company’s stablecoin pegged to the U.S. dollar, is already available to Venmo users and will be rolling out fully in the coming weeks.

  • Native USDC Rolls Out Across Polkadot Ecosystem. Circle has begun issuing USDC via the Polkadot Asset Hub, making it accessible to all Polkadot Layer 1s, also known as parachains. Polkadot said the integration will bolster liquidity.

  • Binance Participated in MiCA Discussion with European Banking Authority. Some of the conversation centered on whether stablecoin operators can get a grace period when applying for EMI licenses in compliance with MiCA.

  • eToro Secures Crypto Registration in Cyprus to Expand in EU. The registration will authorize it to offer regulated crypto services to all countries in the European Union from one single entity known as eToro Europe Digital Assets.

🎧 Podcasts

  • Two-Year Treasury Yield Hits Highest Point Since 2006 After Fed Decision. The S&P 500 fell about 1 percent after the announcement, but it was the two-year US Treasury yield that caught the most attention. It hit a 17-year high. Source(1:35)

  • Companies Ease Off On Share Buybacks As Rising Interest Rates Push Up Costs. Corporate buybacks in the US are down — way down, actually. Share buybacks slumped to their slowest pace since the early stages of the pandemic, and analysts say that the trend is likely to continue. Source(1:50)

  • AI vs. Authors. Prominent authors, including John Grisham and George R.R. Martin, are suing OpenAI for copyright infringement, claiming that the company used their work without permission for training its language models. Source(10:00)

  • Central Banks and Inflation Challenges. Central banks may face inflation challenges as they have not yet reached restrictive interest rate levels. Central banks waiting for previous hikes to impact demand could result in disappointing disinflation expectations. Source(17:30)

  • Foreclosed Properties are at a Remarkably Low Point, the Lowest Since 2002. There are fewer foreclosures than in the past two decades. Meanwhile, instances of 90-day late payments on mortgages are also exceedingly rare, with very few homeowners falling behind on their payments. Source(9:30)