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Top stories today:
1. Elon: Tesla will have a ChatGPT moment with Full Self-Driving
2. OpenAI CEO Sam Altman testifies; supports regulation but no moratorium
3. McCarthy says debt ceiling deal could be reached by end of week
4. Zoom announces investment in Anthropic after partnership with OpenAI
5. Google Cloud launches 2 AI tools for biotech

0. Data and calendar

1. Elon: Tesla will have a ChatGPT moment with Full Self-Driving

• “If not this year, I'd say no later than next year.”

  • “Suddenly 3M cars will be able to drive themselves with no one. And then 5M cars, and then 10M cars.”

And they will try some advertising

• “Worth the try”, after listening to shareholders, who applauded it when Elon announced it on stage, during Tesla's annual shareholder meeting, which preceded the CNBC interview.

• “Some chance that [AI] will go wrong,” when talking about AI doomer risk.

  • Did not want to talk about X AI, saying only that there will be a launch event.

Our view: having to do ads is a sign of a cracked moat

• EV competitors, especially Chinese ones, are undercutting Tesla on price and rapidly copying features, which have contributed to margin compression. - Insider

• Full self-driving (FSD) could be a way to renew Tesla's moat, assuming it is indeed launched over the next year and that competitors’ cannot easily copy it.

  • FSD should be harder to copy, as it is mostly an AI/software innovation, rather than pure hardware.

Elon: “I am the reason OpenAI exists”

• He invested the initial $50M in OpenAI and created its name, after talking to then Alphabet CEO Larry Page.

• He's still irritated that OpenAI became closed-source and for-profit, even though the latter is not entirely accurate (OpenAI the non-profit still has control over OpenAI the for-profit).

  • Elon is worried Microsoft can cut off OpenAI, because they allegedly have the source code of ChatGPT.

He thinks that China will eventually take over Taiwan

• “The Chinese economy and the rest of the global economy are like conjoined twins. It would be like trying to separate conjoined twins.”

He thinks that wanting to work from home while the majority of workers can't is immoral

Elon: “I'll say what I want to say”, and if we lose money, “I don't care”, “so be it”

Read more: Techcrunch, CNBC.

2. OpenAI CEO Sam Altman testifies before Senate; supports regulation but no moratorium

Altman's 3-point plan for regulation:

1. New government agency with the power of issuing (and revoking) licenses to large AI models.

2. Safety standards for AI models, which would test for the ability of the AI to “exfiltrate into the world,” i.e., go rogue.

3. Independent audits, done by independent experts.

• An international agency would be preferable, similar to the International Atomic Energy Agency, which regulates nuclear energy usage.

  • Our view: this makes sense in the context of AI being a national security risk, not for “economic risks” like job displacement, as markets can solve those problems properly.

• Ad-supported ChatGPT? Altman didn't commit to an ad-free ChatGPT, when asked.

• Altman was together with Gary Marcus, professor at NYU, and Christina Montgomery, Chief Privacy and Trust Officer at IBM.

Our view: Senate bipartisan legislation is very possible, but it might face opposition in the House

• Senators from both parties explicitly supported more legislation. Very notable to us was Sen. Lindsay Graham, a Republican, saying that an agency with the power to issue AI licenses was needed.

  • Unclear whether the House GOP would go for this kind of legislation, though, especially the Trumpist wing.

3. McCarthy says debt ceiling deal could be reached by Sun, as Biden goes to Japan

• Speaker McCarthy semi-bullish on a deal: “We’ve got a lot of work to do. It is possible to get a deal by the end of the week. It’s not that difficult to get to an agreement.” - Bloomberg

  • Schumer said the meeting was “good, productive,” with everyone agreeing that a default is a horrible option.

  • Some Democratic Senators are bearish on a deal, and think Biden will have to go with the 14th Amendment. - POLITICO

• Biden cut short his trip to Asia, after some GOP criticism. He returns Sunday from Japan after the G7 meeting, skipping stops in Australia and Papua New Guinea. He is leaving for Japan today. - WSJ

Our view: GOP likely to get around half the cuts it wants

• Debt-to-GDP will go up either way. A fair estimate is the mid-price between the Dem and the GOP proposals: 112% debt-to-GDP in 10 years.

Japan suggests that debt-to-GDP can still go up a lot higher (226%)

• 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 deflation “problem,” not an inflation one.

• Macroeconomics is still a very new science. Regardless, what matters most for U.S. economic growth is innovation/microeconomics, e.g., how long does it take for the FDA to approve a drug. And the U.S. has a lot of development opportunities there.

4. Zoom announces investment in Anthropic, after partnership with OpenAI

• “Federated approach to AI to leverage our proprietary AI models, those from leading AI companies such as OpenAI and Anthropic, and select customers’ own models.” - The Verge, Zoom

• Investment amount is unclear. As is the valuation.

• Integrations with “Zoom’s platform (which includes Team Chat, Meetings, Phone, Whiteboard, Zoom IQ), starting with Zoom Contact Center.”

5. Google Cloud launches 2 AI tools for biotech

1. Target and Lead Identification Suite

• Leverages Deepmind’s AlphaFold2 for drug discovery.

  • 200 million protein structures cataloged, nearly all proteins known to science.

  • Suggests lead candidate molecules by using AI.

  • Pfizer and Cerevel are already clients.

2. Multiomics Suite

• For precision medicine.

  • Transforms multiomics data into insights.

  • Colossal Biosciences is a client. - CNBC, Google

6. Record low of 1.6% willing to relocate for work

7. Record low of 21% say now it is a good time to buy a house

Likely due to high rates, as most still expect home prices to increase in value

And a record high of 17.8% of Americans are depressed

8. Other headlines

Tech

• Rumble buys Callin, David Sacks to join board.

• Hippocratic AI raises $50M seed for health LLM, claims to outperform GPT-4.

• Meta spins out Kustomer CRM at $250M valuation, after $1B acquisition.

• Meta refunding some advertisers after overspending glitch.

• Apple previews new accessibility features to be launched later this year.

• Google to delete most content of accounts with no activity for 2 years.

Legal & tech

• Elizabeth Holmes loses request to appeal freely, going to prison for 11.25 years.

• DOJ charges Chinese Apple employee with theft; he fled to China.

• Twitter sued by jailed Saudi dissident under RICO act in spy case.

• Police are auctioning phones online without erasing them first.

• Midjourney announces China launch, then removes it.

Biotech

• Ozempic and Wegovy appear to have anti-cancer effects.

• FTC seeks to block Amgen's $28B purchase of Horizon, rare for biotech.

• Alzheimer's study points to tau hypothesis and a new drug target.

Business

• CEOs of failed SVB, Signature Bank don't want to return compensation.

• Most Fed officials suggest rate pause; a few suggest further hikes.

• Tucker Carlson's firing was requirement of Dominion: board member.

Crypto

• SEC v. Ripple: agency cannot seal docs tied to former Chairman Hinman.

• Michael Lewis: interview on his new book about FTX/SBF, out Oct. 3.

• Ledger criticized for offering secret phrase recovery service.

• River, Bitcoin-related services startup, raises $35M from Thiel, others.

• EU close to approving broad crypto licensing regime, effective 2024.

U.S. politics

• IRS agent removed from Hunter Biden investigation after claiming interference.

• Immigration: U.S. is losing out by blocking much-need skilled workers.

• Pence joins Ramaswamy in proposing “sound monetary policy” for Fed.

• DeSantis again admits that Disney law was revenge, likely 1A violation.

• DeSantis’s timid Trump stance continues: PAC backs down after tweet.

• North Carolina bans abortion after 12 weeks, overriding governor veto.

World

• Nigeria: 4 U.S. Embassy staff killed.

• CIA posting Russian-language videos aiming at converting spies.

• Ukraine's Patriot air-defense system: U.S. assessing damage after strikes.

• Ukraine's Supreme Court Justice removed after $2.7M bribe accusation.

• Russian flights are being conducted with expired parts due to sanctions.

• Turkey: Biden backs “whoever wins” in May 28 runoff election.

9. Interesting tweets, memes, and images

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