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Top stories today:
1. Biden schedules May 9 meeting to negotiate debt ceiling
1b. Yellen warns of a potential June 1 default
2. FDIC supports higher insurance limits for business accounts
3. AI fMRI-based brain decoder can read minds: 3-person study
4. Analysis: Big Tech increases CAPEX even as it cuts OPEX

0. Data and calendar

1. Biden schedules May 9 meeting to negotiate debt ceiling, as Yellen warns of a potential June 1 default

• May 9 meeting: Top 4 Congressional leaders are invited.

  • Officially, Biden says he won't change his position of wanting a debt ceiling increase with no cuts attached. - POLITICO

• June 1: Yellen said the Treasury may be “unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.” - Bloomberg

Reminder: the GOP House approved a bill that raises the debt ceiling and slows debt-to-GDP growth

• 1% nominal growth in discretionary spending: that's how the bill gets most of its deficit reduction, by putting spending growth at a rate lower than expected inflation over the next 10 years.

• Manchin wants to repeal part of the IRA, saying that energy-related tax credits ballooned from $270B to $570B. - Bloomberg

• U.S. Chamber of Commerce and Business Roundtable are also pushing for Biden to negotiate. - Bloomberg

Some people believe that the Constitution prohibits a default

• “Section 4 of the Fourteenth Amendment to the Constitution states that “The validity of the public debt of the United States … shall not be questioned.” - Robert Reich

Printing a $1T coin is also a controversial idea that would sideline Congress and “solve” the issue

• Some legal basis: “The concept of striking a trillion-dollar coin that would generate one trillion dollars in seigniorage, which would be off-budget, or numismatic profit, which would be on-budget, and be transferred to the Treasury, is based on the authority granted by Section 31 U.S.C. § 5112 of the United States Code for the Treasury Department to "mint and issue platinum bullion coins" in any denominations the Secretary of the Treasury may choose.” - Wikipedia

• Yellen suggested she was against this idea, in January: “It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that’s a gimmick” - WSJ

2. FDIC supports a higher insurance limit for business payroll and payments accounts

• New FDIC report out on Monday: “Business payment accounts pose greater financial stability concerns than other accounts given that the inability to access these accounts can result in broader economic effects.” - WSJ, FDIC

• Would require Congressional approval, and likely higher FDIC fees (see below).

Our view: it's much easier and cleaner to insure all deposits

• It's too complicated to have special insurance for particular business accounts, and it adds to administrative bloat.

• In contrast, insuring all deposits “just” costs $117B.

  • The math is: 1.27% reserve ratio x $9,200B in estimated uninsured deposits = $117B.

  • The Fed or federal government would likely foot the bill initially. Gradually, banks could be mandated to pay higher fees to the FDIC (currently, between 2.5 and 42 basis points of deposits, depending on bank size and risk).

3. AI fMRI-based brain decoder can read minds: 3-person study

• Understood stories listened just with fMRI: “After digesting several hours of training data, the new tool was able to describe the gist of stories the three participants in the proof-of-concept experiment listened to — just by looking at their functional MRI scans.” - STAT, Vice, Nature paper

  • “Closer than anyone else has” in reading minds.

  • Non-invasive, using fMRI.

  • GPT-1 (yes, 1) was used by the University of Texas at Austin study.

  • Slow journal: The paper was submitted in 2022, showing how slow academic journals are.

Our view: this was GPT-1; imagine what GPT-4+ can do

• Mind reading, whole-body organ cloning… all these technologies are possible and amazing; we just need to build them. And at least in terms of mind reading, it looks like some scientists are already working on it.

• How can AI solve aging/longevity? Age-related diseases still represent ~90% of deaths in the developed world, and most of them (e.g., cancer, heart disease, Alzheimer's) have no cure. AI applications to this problem excite us, but we haven't seen many companies working on it.

  • One particular solution that excites us is “Replacing Aging”: Jean Hébert's idea of producing brainless human clones and “just” transplanting an old person's brain into a brand-new body. It could solve all non-brain aging in one go. - Amazon

4. Analysis: Big Tech increases CAPEX even as it cuts OPEX

• Meta, Alphabet, Microsoft: AI-related CAPEX increases, as these companies have bought equipment to build new AI models and products.

• Amazon's huge CAPEX continues, reinvesting all of its cash flows into warehouses, distribution centers, and related technologies.

• Apple's low CAPEX continues, as it continues to dominate the premium smartphone market, while keeping costs low (especially for a hardware company).

5. Hollywood writers to go on 1st strike of 15 years

• Today: 11,500 Hollywood writers are entering strike effective Tuesday morning PT.

• Many daily shows are expected to go offline immediately: Colbert, Kimmel, Fallon, etc. - Deadline

Our view: opportunity for online media to shine

• Youtube and podcasts produce high-quality content and have an audience highly skewed to the next generation. Their participation in the broader video content market should also increase over the near future.

6. Other headlines

AI

• X.AI to raise cash from investors, is looking to attract more talent.

• IBM pauses hiring for roles that AI could replace, “could see 30%.”

• Chegg drops 38% after saying ChatGPT could cannibalize its business.

• Interview with Geoffrey Hinton, ex-Googler, “Godfather of AI.”

• Samsung bans AI use after ChatGPT data leak.

• TikTok actively monitors “sensitive words”, ByteDance/TikTok separation “largely cosmetic.”

• TikTok developing “made by AI” disclosures, similar to sponsored tags.

Tech

• Amazon launching more free ad-supported videos on Fire TV and Freevee.

• Vice close to bankruptcy, trying to find a buyer.

• Apple savings account attracts $1B in 4 days.

• Mastodon now easier to create an account, while Bluesky is still invite-only.

• Saudi Arabia: a look at how they invest in tech startups and VCs.

• iOS and macOS release 1st Rapid Security Response.

• WordPress drops Twitter sharing due to API price ($42K+/mo).

Biotech

• Aubrey de Grey on the Longevity Summit Dublin 2023 conference.

• Obesity: industry is back investing in the area, after semaglutide's success.

Business

• Nate Silver has been hard to replace at ABC/FiveThirtyEight.

• POLITICO founder donates $20M to train aspiring journalists.

• Ben Smith: interview on media, his new book Traffic, launching today.

Crypto

• Coinbase CEO, CFO, board member sued for selling $2.9B in stock.

• Justin Sun will no longer “mine” SUI on Binance LaunchPool.

U.S. politics

• Supreme Court case could rein in federal agencies’ arbitrary power.

• DeSantis signs law allowing death penalty if just 8 of 12 juries agree.

• DeSantis’s election police fails to send people to jail, showing strength of U.S. election system.

• Covid vaccine mandates are finally coming to an end, including for tourists.

• Trump to participate in a CNN town hall on May 10 at 9 PM ET.

• Balloon: another mysterious one flying over Ohio; not Chinese.

• Truth Social whistleblower now a barista making $16/hour.

• Pornhub blocks Utah users after new age verification law.

• Disney is sued by DeSantis’ oversight board.

World

• Putin could be arrested if he goes to BRICS Summit in South Africa in August.

• 20K Russian troops killed since December: U.S.

• Finland may allow U.S. troop deployment on Finnish territory.

• Netanyahu to be invited even if Biden doesn't do it himself: McCarthy.

7. Interesting tweets, memes, and images

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