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Top stories today:
1. Google to add AI chat and more short videos to search
2. Senate GOP says no to clean debt hike
3. Berkshire Hathaway annual meeting top insights
4. To watch on Wed: CPI and core CPI expected at 5.6% and 5.0% YoY
5. Trump 45% x Biden 38%: ABC Poll

0. Data and calendar

1. Google to add AI chat and more short videos to search

• AI chat and short videos for NORA queries, those with No One Right Answer. “Google plans to place greater emphasis on responding to queries that can’t be easily answered by traditional web results[.] Google search visitors might be more frequently prompted to ask follow-up questions or swipe through visuals such as TikTok videos in response to their queries. The company has already moved to integrate some online forum posts and short videos in search results, but it plans to emphasize such material even more in the future.”

• Focus on young people and content creators: “Google plans to make its search engine more “visual, snackable, personal, and human,” with a focus on serving young people globally, according to the documents. It plans to incorporate more human voices as part of the shift, supporting content creators in the same way it has historically done with websites, the documents say.” - WSJ

Our view: AI is nothing new, but more focus on short videos/content creators is

• AI and content creators are possibly the 2 big trends of the 2020s. AI is obvious; on the latter, we already see many news writers going direct via Substack. Even regarding cable news, we will likely see its former biggest star Tucker Carlson going direct shortly. Google is right to adapt its products to these trends.

• TikTok is still likely larger than Shorts in total minutes per day, as many of these Shorts users just watch it because they are on Youtube or Google Search.

  • Kids 4-18 spend 91 minutes per day vs 56 on Youtube, according to a 2021 study. - Techcrunch

2. Senate GOP says no to clean debt hike, as credit insurance reaches 1.6%

• Signed by 43 Republicans, more than the 40 necessary to halt legislation.

As a reminder, the House GOP passed a bill that would raise the debt ceiling in exchange for spending cuts

• 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.

Biden and Yellen are skeptical of using the 14th Amendment to ignore the debt ceiling

• Biden: “I’ve not gotten there yet,” Biden said when asked about the possibility in an interview Friday with MSNBC.” - Bloomberg

• Yellen: “All I want to say is that it’s Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that President Biden and US Treasury can take to prevent that catastrophe.” - Bloomberg

Using premium bonds or a $1T platinum coin could avert the debt ceiling

• Premium bonds: Replace existing bonds with some with super-high coupons. They would have the same face value (the law's criteria for the debt ceiling), but a very different selling price, which is money inside the Treasury's coffers. - NYT

• $1T platinum coin: The Treasury has the power to issue platinum coins with any face value, so why not issue a $1T one and deposit it at the Fed? Literally printing money. Wikipedia

Credit default swaps are at an all-time high

Our view: the most likely scenario is a compromise, even though the GOP bill is a good first step

• Senate GOP letter mentions “starting point”: “The Senate Republican conference is united [in] support of spending cuts and structural budget reform as a starting point for negotiations on the debt ceiling.”

  • Stability of long-term debt-to-GDP is the key factor that efficient markets would use to price in interest rates and inflation expectations.

  • Using the 14th Amendment, premium bonds, or the $1T coin is too risky: those options would likely bring a Constitutional crisis, and the Supreme Court would have to act extremely quickly to avoid a potential June 1 default.

3. Berkshire Hathaway annual meeting top insights

Buffett and Munger put on a great show on Saturday. We will be there in person next year. Top insights below:

• USD is the only option for reserve currency: “We are the reserve currency, I see no option for any other currency to be the reserve currency. We should be very careful [about inflation and money printing.] It's very hard to see how you recover once you let the genie out of the bottle and people lose faith in the currency. [It's] madness to just keep printing money.” - Warren Buffett

• Apple “better business than any we own:” “Apple has a position with consumers where they’re paying 1,500 bucks or whatever it may be for a phone. And the same people pay $35,000 for having a second car, and [if] they had to give up a second car or give up their iPhone, they give up their second car. I mean, it’s an extraordinary product. We don’t have anything like that that we owned 100% of, but we’re very, very happy to have 5.6%.” - Buffett

• “You should write your obituary and then try to figure out how to live up to it. It’s not that complicated.” - Buffett

• Too many wealth managers: “Having a huge proportion of the young and brilliant people all going into wealth management is a crazy development in terms of its natural consequences for American civilization. We don’t need as many wealth managers as we have.” - Charlie Munger

4. To watch on Wed: CPI and core CPI expected at 5.6% and 5.0% YoY

5. Trump 45% x Biden 38%: ABC Poll

• +7 becomes +6 when only counting registered voters, which is a better metric than the entire population (the ideal metric is likely voters, but this poll did not include that).

This is the widest margin in favor of Trump in many weeks

• ABC News polling has a D+0.8 bias, while Rasmussen, which scored +7 in early April, has an R+1.4 bias, according to FiveThirtyEight.

Trump is 51% x 26% DeSantis, in line with other polls

The perception of a bad economy is negatively affecting Biden

Our view: markets correctly price in that Trump is the wide GOP favorite, at 64% odds

And that Trump x Biden is a coin flip, being so far from the election and with narrow polling

6. Other headlines

Tech

• China and AI: a look at how firms respond to chips sanctions.

• “Father of AI” more worried about nuclear bombs than “little dangers of AI.”

• DEF CON AI Village to test LLMs for bugs, Aug 10-13.

• Twitter: Elon wants a new metric: unregretted user minutes.

• 54.5% of Twitter Blue subscribers in November had canceled by May.

• Bluesky not giving invites to heads of state, not even to Biden.

• AI-powered apps: a list of cool apps, including GrammarlyGO.

• ChatGPT contractors: behind the scenes on the $15-per-hour labelers.

Biotech

• Hevolution Foundation announces $115M grant opportunity.

• Rapamycin: a powerful anti-aging drug that went unnoticed.

• Zuzalu: a look at the longevity-focused pop-up city/network state.

Business

• Bain Capital raising $4B for new global special situations fund.

• London IPOs questioned as investors shun tech stocks and worry about Brexit.

• Elizabeth Holmes profile: forget Elizabeth, she's now Liz, mother of 2.

• Lower tech stock prices hit employees, lowering salaries.

• Data science masters are at all-time high, 10K students graduate/year.

Crypto

• Binance pauses BTC withdrawals 2x due to BCR-20-related high fees.

• PEPE holder turns $263 into $3.8M in 3 weeks.

• Meme coin speedrun: some teach how to issue tokens in 27 seconds.

U.S. politics

• Leaked DeSantis video from 2018 shows no intent to contradict Trump.

• Tucker approached by Rumble, Daily Wire, others; talked to Elon.

World

• China could help bring peace to Ukraine by year-end: Western officials.

• Wagner group reverses after Russian support and will stay in Bakhmut.

• China closed off access to databases after U.S. think tank report.

• Monarchies: a guide to the world's 29 kings.

7. Interesting tweets, memes, and images

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