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ChatGPT parent OpenAI doesn’t want to go public

Some decisions that most investors would look at very strangely

Microsoft-backed OpenAI, the company behind ChatGPT, has no plans to go public any time soon, Chief Executive Sam Altman said at a conference in Abu Dhabi. “When we develop super intelligence, we are likely to make some decisions that most investors would look at very strangely,” Altman said. “I don’t want to be sued by … public market, Wall Street etc, so no, not that interested,” he replied to a question on whether he will take OpenAI public.

OpenAI has so far raised $10 billion from Microsoft (MSFT.O) at a valuation of almost $30 billion as it invests more on building computing capacity. “We have a very strange structure. We have this cap to profit thing,” he said.

OpenAI started off as a non-profit organisation but later created a hybrid “capped-profit” company, that allowed it to raise external funds with a promise that the original non-profit operation still benefits.

The tech giants go after headsets

Meta’s heated rivalry with Apple

Meta founder Mark Zuckerberg and Apple CEO Tim Cook have spent the last several years sparring over internet privacy and digital advertising. But they’ve never competed head-to-head in a real way. That’s about to change.  With Apple officially announcing its long-awaited mixed-reality headset — the Vision Pro — on Monday, the iPhone maker and Facebook’s parent are now firmly in the same market.

Zuckerberg and Cook both see the next major era of personal computing as one that involves people putting on a headset to enter a virtual world and interacting with digital objects in 3D. Cook describes it as spatial computing, and Zuckerberg calls it the metaverse. Other technologists refer to it as mixed or augmented reality, because digital imagery can be superimposed on to the physical world. Facebook jumped into the market nine years ago, when it acquired VR headset startup Oculus for $2 billion. In late 2021, the company changed its name to Meta, and Zuckerberg committed to spending billions of dollars a quarter developing the underlying VR and AR technologies needed to make his vision of the future a reality.

As of today, Meta owns the lion’s share of a nascent market, far outpacing rivals like Sony, HTC and Magic Leap in headset sales. Research firm CCS Insight recently reported that global shipments of VR and AR headsets fell over 12% to 9.6 million in 2022 from the prior year, as consumers pulled back on discretionary spending.

Musk’s Neuralink valued at about $5 bln

Green light to conduct a trial with chips placed into human minds

Neuralink, the brain implant start-up owned by Elon Musk, is now worth around $5 billion, according to a Reuters report.

Citing five unnamed sources familiar with the matter, Reuters said that the valuation was based on privately executed stock trades. The sources added that the value of these shares was supported by purchases made by private investors ahead of a U.S. regulatory ruling in late May, Reuters noted.

On May 25, Neuralink announced that it was given the green light to conduct a trial with chips placed into human minds. However, the company has not yet received the go-ahead to use the product commercially.

In the wake of the trial’s approval, Neuralink shares privately were being offered to investors at a $7 billion valuation, or $55 a share, according to an email seen by Reuters.

Executives at Neuralink and Musk did not respond to request for comment from Reuters.

Renewables Installations In 2023 Soar To Levels We’ve Never Seen

New installations of renewable energy capacity are expected this year to surge to 440 GigaWatts (1 GW = 1 billion watts )

The energy crisis in Europe, the Inflation Reduction Act in the United States, and the continued strong expansion of green energy installations in China are all expected to contribute to the biggest-ever increase in renewable energy capacity additions this year, the International Energy Agency (IEA) said in a new report this week.

Globally, new installations of renewable energy capacity are expected to surge to 440 gigawatts (GW) this year, up by 107 GW year-on-year and the largest increase in new capacity ever seen, the IEA said in its report. Solar photovoltaic (PV) additions are set to account for two-thirds of the increase in renewable power capacity this year.

All major markets are set to see strong expansion due to the EU response to the energy crisis, the new incentives in the U.S. and India, and the continued surge in China’s renewable energy additions, the agency noted. This year and next, China will account for nearly 55% of global additions of renewable power capacity.

Natural Gas Prices Could Fall Below Zero In Parts Of Europe

European natural gas prices into a freefall 

As tepid demand for gas from power generation and industry has sent European natural gas prices into a freefall in recent weeks, traders and industry officials are not ruling out the possibility that Europe may see a brief dip to below zero for day-ahead prices in some markets this summer.

The combination of ample inventories at the end of a mild winter, steady imports of LNG, and weak demand has led to eight consecutive weeks of weekly losses in European benchmark natural gas prices, the longest weekly losing streak in more than six years.

While the benchmark price is unlikely to drop below zero, some regional day-ahead natural gas prices in Europe could see sub-zero prices briefly this summer, if demand remains weak and renewable power generation holds high, traders and industry officials at the E-World energy fair in Essen, Germany, told Bloomberg.

Is Nvidia Stock Overbought?

 A.I. craze

The monster rally in Nvidia Corp.’s stock following the semiconductor maker’s stunningly bullish revenue outlook has produced the most oversold reading by one widely followed technical metric since just before the previous record close in November 2021. But history suggests that overbought doesn’t necessarily mean the rally is over. Although the four other times the stock reached overbought readings as high as they are now did precede pullbacks, three of those pullbacks were short-term in nature, and not enough to derail the longer-term uptrends.

The stock NVDA, -3.78% climbed 2.3% in afternoon trading toward a record close Friday, a day after rocketing 24.4% following the chip maker’s blowout earnings report. Meanwhile, the Relative Strength Index, known by chart watchers as RSI, rose to an 18-month high of 83.64 on Friday.

The RSI is a momentum indicator that compares the magnitude of recent gains with the magnitude of recent losses. Typically, many believe RSI readings above 70 indicate a stock is overbought, which to chart watchers means it has rallied too far and too fast compared with its historical performance and that investors are likely to cash in some gains.

Elon Musk Warns of ‘Tragic’ Housing Crisis

Potential for a Crash

Elon Musk is not shy about sharing his opinion on pretty much everything, recently weighing in on the U.S. housing market. The mega-billionaire Tesla CEO and Twitter owner let it be known that he thinks the housing market is facing a crisis that could be headed for a crash.

That opinion was shared in response to a May 13 tweet from Chen Fang, the chief operating officer of BitGo, a digital asset trust and security company. As The Street reported, Fang’s tweet was itself in reply to a couple of previous tweets addressing the high cost of buying a home in many U.S. markets.

“Existing people in houses can’t afford to sell — existing being renting can’t afford to buy,” Fang said in his tweet. “We are stuck in this limbo until the job market crashes and existing people with houses are forced to default on their mortgages sending the real estate market into the next death spiral ????”

After seeing Fang’s tweet, Musk responded with a tweet of his own that said: “Tragically accurate.”

Whether or not these doomsday scenarios come to pass remains to be seen. There’s no question that the housing market faces some serious challenges right now. Prices are still historically high, inventory remains low, and mortgage rates have more than doubled over the past couple of years, according to Federal Reserve data.

The tech trade is back, driven by A.I. craze

Prospect of a less aggressive Fed

Forget about the debt ceiling. Tech investors are in buy mode.

The Nasdaq Composite closed out its fifth-straight weekly gain on Friday, jumping 2.5% in the past five days, and is now up 24% this year, far outpacing the other major U.S. indexes. The S&P 500 is up 9.5% for the year and the Dow Jones Industrial Average is down slightly. Excitement surrounding chipmaker Nvidia’s blowout earnings report and its leadership position in artificial intelligence technology drove this week’s rally, but investors also snapped up shares of MicrosoftMeta and Alphabet, each of which have their own AI story to tell.

And with optimism brewing that lawmakers are close to a deal to raise the debt ceiling, and that the Federal Reserve may be slowing its pace of interest rate hikes, this year’s stock market is starting to look less like 2022 and more like the tech-happy decade that preceded it.

“Being concentrated in these mega-cap tech stocks has been where to be in this market,” said Victoria Greene, chief investment officer of G Squared Private Wealth, in an interview on CNBC’s “Worldwide Exchange”. “You cannot deny the potential in AI, you cannot deny the earnings prowess that these companies have.”

US debt ceiling: Democrats and Republicans agree deal in principle

Joe Biden and his Republican opponents have agreed in principle to raise the US debt ceiling and avert a default

President Joe Biden described the agreement as a “compromise”, while House Speaker Kevin McCarthy said it “was worthy of the American people”. The deal, after weeks of bitter negotiations, still needs to be approved by a divided Congress. The Treasury has warned the US will run out of money on 5 June without a deal.

The US must borrow money to fund the government because it spends more than it raises in taxes. Republicans have been seeking spending cuts in areas such as education and other social programmes in exchange for raising the $31.4tn (£25tn) debt limit.

Details of the tentative deal have not officially been released – but CBS, the BBC’s partner in the US, reported that non-defence government spending would be kept flat for two years and then rise by 1% in 2025. It was unclear how exactly a government programme that provides food-purchasing assistance for people on low or no incomes would change.

ChatGPT-maker warns it might leave EU over planned AI law

Super-intelligent AI systems could threaten humanity’s existence

The boss of the company behind ChatGPT has said it might consider leaving the EU if it fails to comply with a planned law on artificial intelligence (AI). The EU’s planned legislation could be the first to specifically regulate AI. And it could require generative AI companies to reveal which copyrighted material had been used to train their systems to create text and images.

“The current draft of the EU AI Act would be over-regulating,” OpenAI’s Sam Altman said, Reuters reported. But we have heard it’s going to get pulled back.” Many in the creative industries accuse AI companies of using the work of artists, musicians and actors to train systems to imitate their work.
But Mr Altman is worried it would be technically impossible for OpenAI to comply with some of the AI Act’s safety and transparency requirements, according to Time magazine.

At an event at University College London, Mr Altman added he was optimistic AI could create more jobs and reduce inequality. He also met Prime Minister Rishi Sunak and the heads of AI companies DeepMind and Anthropic to discuss the technology’s risks – from disinformation to national security and even “existential threats” – and the voluntary actions and regulation required to manage them. Some experts fear super-intelligent AI systems could threaten humanity’s existence. But Mr Sunak said AI could “positively transform humanity” and “deliver better outcomes for the British public, with emerging opportunities in a range of areas to improve public services”.

Will The Housing Market Crash in 2023?

Sharp downturn in buyer demand

Following two years of rapid home sales and escalating home-price appreciation, the hot housing market began to downshift last summer and is now at a crawl, thanks largely to a surge in mortgage interest rates. The rising trajectory of rate increases began in March 2022 when the 30-year fixed surpassed 4%. The 30-year fixed rate climbed to a 20-year high of 7% in October and has hovered in the mid-6% range throughout 2023.

As a consequence of interest rates that are now more than double what we saw in 2020 and 2021, coupled with a sharp downturn in buyer demand, home prices have been in decline. After two years of unprecedented sales activity, does this raise red flags that the housing market is on the verge of a crash?

What is the forecast  for the housing market in the next five years? While most experts predict homebuyer demand to eventually rebound, there are warning signs for what may lie ahead. Experts say that the combination of high mortgage rates, inflated home values, lower buyer demand and a recession is a recipe for a challenging year ahead for the housing market.

First quarter Russian oil revenues 40 percent lower

Discount up to 35% per barrel

Following the implementation of the price cap policy, Russia’s oil revenues have fallen substantially compared to both pre-war levels and the elevated level at the onset of the war. According to the Russian Ministry of Finance, federal government oil revenues from January–March of 2023 were over 40 percent lower than a year prior. Before the war, oil revenues constituted 30–35 percent of the total Russian budget. In 2023, oil revenues have fallen to just 23 percent of the Russian budget. This decline in revenue has occurred despite Russia’s exporting roughly 5 to 10 percent more crude oil in April 2023 compared to March 2022.

Despite selling a consistent volume of oil, Russia makes far less revenue on each barrel because its oil now trades at a significant discount relative to Brent crude, the global benchmark oil price. Before the war, Russian crude oil traded at a discount of just a few dollars per barrel relative to Brent. In recent months, official price reporting agency data has shown that Russian Urals crude oil has traded at a discount of as much as $25-$35 per barrel less than Brent. The price cap mechanism gives importers leverage to negotiate steep discounts on their trades with Russia, evidenced in public reporting.

In response to the price cap, Russia has been forced to alter the way it taxes oil such that it institutionalizes the discounted value of Russian crude—essentially writing into law the steep discount the price cap has helped cement. This new taxation has the potential to threaten Russia’s future oil production capacity by reducing the incentive for companies to invest in equipment, exploration, and existing fields. This change comes on top of the impacts already being felt by U.S. sanctions and export controls against Russian energy firms.

Treasury to run low on cash by June 8 or 9

The Treasury may need the debt limit to be increased by June 1 or 2

The Treasury Department is expected to run out of the cash necessary to fund the federal government’s obligations by June 8 or 9 unless the debt ceiling is lifted, according to a report by Goldman Sachs.

Since the U.S. ran up against its $31.4 trillion debt limit in January this year, the Treasury has been using “extraordinary measures” which are accounting maneuvers that involve shifting funds between certain accounts to pay the government’s bills. Treasury is only able to use the extraordinary measures so long as balances in those accounts remain above $30 billion, at which point it can no longer fulfill all the federal government’s obligations.

Negotiators representing the Biden administration and congressional Republicans have been operating under the assumption June 1 will be the date on which Treasury exhausts its extraordinary measures, which could give lawmakers extra time to finalize a deal if the June 8 or 9 estimate from the Goldman Sachs note pans out. However, the report noted that there’s still a chance June 1 will be the deadline.