Hi, and welcome to today's Bay Area Times daily newsletter. Top stories today: 1) Bing's AI makes the same mistakes as Google's, 2) CPI expected at 6.2%, 3) Biden names Brainard as top adviser, 4) Amazon shows off driverless taxi, and 5) cars are losing importance to younger generations.

0. Data and calendar

1. Bing's AI makes the same mistakes as Google's

• Bing's AI tells falsehoods and hallucinations: Researcher Dmitri Brereton did a great job in documenting how unreliable the New Bing is in finding correct answers. From questions about vacuums, Mexico, financial statements, and more, Bing AI follows in the footsteps of its father, ChatGPT, and makes severe errors and hallucinations. - Blog

• Likely why New Bing is in closed beta. Microsoft talked a big game, but clearly this product is not ready to be used as a reliable search engine.

Will the MSFT x GOOG gap close?

• A 13% spread between the two stocks has appeared since Microsoft's AI event last Tuesday. Both stocks are little changed in the pre-market, signaling that markets still believe that Microsoft's AI will take market share and profits away from Google.

A startup competitor: Neeva AI

• Nothing that Google can't do. We don't see Neeva doing anything that Google cannot do. To disrupt Google's leadership in search, a 10x better feature is necessary. Like a generative AI that actually worked and would integrate into other apps like Word, Excel, PowerPoint, etc. Meaning Microsoft is still the main threat here. - Techcrunch

• Writer.com, LLMs for enterprise: in related news, Writer announced an update to their enterprise models, which fine-tune an AI LLM based on the company's own content and style guides. Many of these startups are popping up, and it's unclear what competitive advantage any have. - Techcrunch

2. Today: CPI expected to fall from 6.5% to 6.2%

• Broad CPI: expected 0.4% MoM and 6.2% YoY, from -0.1% and 6.5%, respectively.

• Core CPI: expected 0.3% MoM and 5.4% YoY, from 0.3% and 5.7%.

Will core inflation go back to its historical 2% level?

• Risk of core inflation stabilizing in the 3-5% range: we see that as the most likely scenario, assuming the current rate curve, peaking at around 5%. Core inflation is very sticky, and in 2021 it really decoupled from the 1.5%-2.5% range it had been hovering in since 2012.

• Risk skewed to the upside: Markets seem very optimistic that we will return to the 2% days shortly. They might be right, but given the possibility of persistently high inflation (and the small probability of hyperinflation, if there are additional fiscal issues), the inflation risk looks positively skewed. - WSJ, CNBC

3. Biden names progressive Lael Brainard as his top economic adviser

• Dovish promotion while inflation is high: Brainard is widely seen as dovish, perhaps the most dovish member of the FOMC committee. Her promotion signals that Biden wants looser monetary and fiscal policies, which could be a problem for inflation, which is still very far away from its target. - Bloomberg, WSJ

Brainard's view on future rates, assuming she's FOMC's most dovish member

4. Amazon's Zoox shows off driverless taxi in CA

• Just 1 test with employees. The company still has a long (regulatory) road to go until it gets wide approval by any state. Zoox calls its car "the world’s first purpose-built robotaxi on open public roads with passengers," but we're sure its competitors would disagree. - Bloomberg

• Google's Waymo and Cruise already beta testing in SF. The market leader Waymo has a fleet of around 700 cars, and Cruise has one of 137. - Techcrunch

5. Cars losing importance to younger generations

• Causes: ride-sharing apps like Uber, belief in climate change

• Consequences: future stagnation in U.S. automobile revenue - Washington Post

• Trend will only accelerate with driverless taxis. In a future world of widespread driverless taxis, car ownership is likely to go down significantly. Economically, that system is more efficient as cars could be used close to 24 hours per day, rather than the current 0-2 hours per day.

6. Other headlines

• Tesla's NY workers seek to unionize; their salaries start at $19/hour.

• Palantir reports first ever profitable quarter.

• Twilio lays off 17% of its staff, 1.5K employees.

• Junior VCs face tough job market as deals dry up.

• Eric Schmidt invests in $13M Istari round, focused on AI defense systems.

• Walmart asking tech workers to come in office 2x week, closing some hubs.

• Twitter algorithm now back showing more Elon Musk tweets.

• Twitter paid API delayed "by a few more days", likely a freemium model.

• TikTok said to launch Creator Fund 2.0, paywalled videos.

• Apple releases fix for some iPhone zero-click exploits.

• iPhone 14 Pro Max's materials cost $464, 4% more than the iPhone 13 Pro Max.

• SBF's civil trials delayed until after his criminal trial, which starts on October 2.

• SBF's lawyers admit to client using VPN twice.

• Binance has a new Chief Compliance Officer: Gemini's former COO Noah Perlman.

• AI porn deepfakes are becoming a thing that needs banning.

• U.S. defends takedowns of flying objects, denies sending spy balloons to China.

• NORAD tweaked its radar filters to find smaller, slower flying objects.

• Russia sees 500K-1M people exodus, including 10% of IT workers.

• Moldova's pro-West president accuses Russia of planning a coup.

• Trump's Georgia criminal case will have partial report released on Thursday.

• George Santos' campaign filings show $365K in unexplained spending.

• Superbowl has 113M viewers, only losing to 2015 and 2017 games, both at 114M.

7. Interesting tweets, memes, and images

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