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Top stories today:
1. CBO estimates debt deal to save $1.5T; House should approve bill tonight
2. 22-word AI doomer risk statement gets signed by everyone except Elon
3. Apple MR headset to have 4K displays for each eye: display analyst
4. Fidelity values Twitter equity at $11B, -67% since Elon's acquisition
5. NVIDIA hits $1T market cap, but closes at $992B

0. Data and calendar

1. CBO estimates debt deal to save $1.5T, in between the NYT ($1T) and McCarthy ($2T) estimates

• 30% savings vs. the original House GOP bill, which had $5T in savings over 10 years. - CBO letter

• Debt-to-GDP still is only reduced by 4 p.p., from 118% to 114% of GDP by 2033, vs. 106% in the original House GOP bill.

Our view: this deal doesn't change the U.S.'s very-long-term debt problem

• As our graph shows, the trajectory of debt-to-GDP is little changed by this debt deal: it still goes up by about 2 percentage points per year.

• However, it can take decades for the debt to become unsustainable. For example, Japan's debt-to-GDP is 2.3x higher than the U.S.'s, at 226% debt-to-GDP. Even then, it suffers from a low inflation “problem,” not a high inflation one.

• The debt problems would be solved if the U.S. grew at 4% rather than 2%. At that growth rate, debt-to-GDP would be stable, even without spending cuts.

  • What matters most for U.S. economic growth is innovation, i.e., new technologies. What can accelerate that is not macro but microeconomics — micro-regulatory reform, in all sectors of the economy, would be the greatest unleasher of economic growth.

• The most likely scenario is for the debt to be inflated away. Rather than 4% growth, 4% long-term inflation would also solve the problem, assuming current interest rates.

The bill is expected to be passed by the House tonight

• House Minority Leader says McCarthy promised 150+ GOP votes.

  • And that the bill will be passed, when combined with the Democratic votes (218 votes are needed in total). - Bloomberg

The bill got through the House rules committee on Tuesday by 7-6

• 7/9 Republicans voted yes, and all 4 Dems voted no. - POLITICO

• Rep. Bishop (R-N.C.) threatened a push to remove McCarthy from the leadership role, but said that he doesn't make “single decisions,” so he would need support from other members of the House Freedom Caucus. - POLITICO

• There could be a delay in the Senate, as a single Senator can use measures to delay the vote by as much as 1 week. - POLITICO

2. 22-word AI doomer risk statement gets signed by everyone except Elon Musk

• 22-word statement is simple to avoid controversy and increase signatures.

It was signed by the CEOs of Google Deepmind, OpenAI, and Anthropic, but notably not Elon Musk

• Close to 400 signatories already, including:

  • Google Deepmind CEO Demis Hassabis

  • OpenAI CEO Sam Altman

  • Anthropic CEO Dario Amodei

  • MIRI co-founder and most popular AI doomer, Eliezer Yudkowsky - The Verge, Center for AI Safety

• But no signs of Elon Musk, which could mean something benign or most likely that he wants to set himself apart from most other people in the area.

  • He has said he wants to build a “TruthGPT,” an AI that is not politically correct and just seeks the truth.

Another notable absence was Meta Chief AI Scientist Yann LeCun

Who thinks it is way too early to worry about a super-intelligent AI:

Eliezer Yudkowsky remains a permabear on human survival

Our view: this statement is fine, but AI regulation only makes sense for national security risks

• If there is a 1% chance of future AI killing humanity, it is worth having global governments regulate that risk.

  • The IAEA has successfully curbed nuclear disaster, so it should be a good model to follow.

  • But worries about unemployment are overblown. We have heard this before with every technology, and these predictions are always wrong, as they incorrectly assume people can’t change and learn new skills.

3. Apple MR headset to have 4K displays for each eye: display analyst

This suggests 2x the number of lines that the Meta Quest Pro has

• Meta Quest Pro: 1800 × 1920px - 9to5Mac

• Apple MR headset: 4000 × 4000 px (assuming the 1.41 inches diagonally mean 1×1 inch)

  • Helps explain the expected ~$3K price point, vs $1K for the Quest Pro and $400 for the Quest 2.

Our view: Apple could have a last-mover advantage in headsets

• Like Apple did with the iPhone, iPad, and Watch, it wasn't the first to market, but it learned from the others and released a product that completely dominated its segment.

  • This might happen too with VR/MR, leaving Meta behind as the 2nd player, even as its VR segment lost $14B in 2022.

• Tim Cook in 2016: “It doesn't bother us that we are second, third, fourth or fifth if we still have the best. We don't feel embarrassed because it took us longer to get it right. For Apple, being the best is the most important and trumps the other two by far. - CNBC

4. Fidelity values Twitter equity at $11B, -67% since Elon's acquisition

• Unclear how Fidelity calculates this valuation, or even whether it uses confidential data from the company. - Bloomberg, Fidelity report

• In related news, Twitter is trying to outsource mobile ad monetization to InMobi. The partnership is currently limited to 1 test market and started on May 13, just after Linda Yaccarino was hired as CEO. - DigiDay

5. NVIDIA hits $1T market cap, but closes at $992B

The magic share price is $404.86:

It would be the 6th company in the 4 comma club ($1T is $1,000,000,000,000)

• Cathie Wood prefers Tesla stock, thinking NVIDIA is properly priced. Of note, Wood's ARKK ETF has performed similarly to the S&P 500 since inception, with much higher volatility. - Bloomberg

NVIDIA's revenue growth was led by its growing data center business

NVIDIA's revenue is still smaller than Intel's, which is worth $125B

6. Other headlines

Tech

• ByteDance moves Lemon8 under TikTok CEO supervision.

• Foxconn sees AI server business growing at least 2x in 2H.

• Legal AI: judge requires lawyers to attest they fact-checked any AI use.

• Intel CEO interview on how they can fight back vs. NVIDIA's overtaking.

• AI regulators and how to restrain them: Reason.

Biotech

• Longevity investment bulletin: Longevica, Biophytis, Recursion.

• FDA proposes new, 1-page medication guide for patients.

Business

• Elon, Jamie Dimon warn against China decoupling.

• Adidas loses court bid to freeze $75M Yeezy payment, should still win case.

• HP revenue -22% YoY to $12.9B in Q1, HPE +4% to $7.0B.

• Twilio meets with activist as supervoting protection expires next month.

• Github closing San Francisco offices.

• Elizabeth Holmes surrenders and enters prison in Texas.

Crypto

• Moonpay CEO, execs cashed out $150M in 2021 round.

• Binance tests accepting bank collateral for large clients.

• FTX estate reaches $2B in cash, spending $500M/year in fees.

• FTX: government appeals independent examiner decision, despite costs.

• SBF: U.S. asks Bahamas if superseding indictments violate extradition deal.

• Binance Australia has BTC at 20% discount, as withdrawals are halted.

• Nansen fires 30% of staff in cost reduction effort.

• China benefits from current U.S. regulations: Coinbase.

  • Hong Kong: a look at the Chinese city's actions in May.

U.S. politics

• Trump wants to end birthright citizenship for children of undocumented.

• 45% say best candidate against Biden “definitely Trump”: Monmouth poll.

• DeSantis’s 1st campaign speech has focus on culture wars.

• DeSantis saves Trump criticism for when asked by press.

• Biden's sexual assault accuser says she defected to Russia.

• Ashli Babbiitt's mother arrested after allegedly striking a counter-protester.

World

• Moscow hit with 8+ drones, but no deaths or escalation.

• Prigozhkin continues to criticize Putin's military leaders.

• Xi tells young to “eat bitterness” as youth unemployment hits high.

• China, India removing visas from each other's journalists.

• North Korea: 1st spy satellite launch fails, falling into sea.

• Pentagon: China jet fighter flew too close to U.S. spy plane.

• Blinken urges Turkey and Hungary to allow Sweden into NATO.

• Taliban, Qatar held secret talks.

• UAE complains U.S. did not do enough to stop Iran from seizing 2 oil tankers.

7. Interesting tweets, memes, and images

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