Hi, and welcome to today's Bay Area Times daily newsletter. Top stories today: 1) FDIC tries another SVB auction as markets react strongly, 2) Meta halts NFTs, 3) Microsoft lays off AI ethics team, likely to announce GPT-4 on Thu, 4) Stanford releases Alpaca AI, and 5) at 8:30 AM ET, CPI is expected at 6.0%.

0. Data and calendar

1. FDIC planning another Silicon Valley Bank auction

• After denying at least one offer made by another institution. It is believed that the FDIC doesn't want any of the Big 4 banks (those above $1T in assets) buying SVB, which has $212B in assets and $175B in deposits, as per above. - WSJ

• Apollo is talking to General Catalyst, a16z, Redpoint, and others as it considers bidding for part of the bank. - The Information

Regional stocks crash 12%, down 25% over 5 days

Some, like First Republic Bank, have crashed 70%+

Credit Suisse CDS reaches record as it finds "material weakness" in reporting since 2021

• This is after they delayed their annual report release on March 9. Their Chairman Axel Lehmann is also forgoing a payment of $1.6M for his first year on the job, which is the kind of good news that could be a sign of extremely bad news to come. - Bloomberg

• Could they be next to fall? That's the question on everyone's mind.

Short-term yields are falling around the world

Markets are pricing in just 1 more 25 bps hike, in March or May

• Fed whisperer agrees: WSJ's Nick Timiraos, seen by many as Fed Chairman's Powell closest ally in the press, has a very dovish article out, suggesting that an interest rate "break" might be coming. - WSJ

In related news...

• Biden initially was against any bailout, but was convinced by Yellen and others.

• Barney Frank (from Dodd-Frank): Regulators shut Signature to show "crypto is toxic."

• Reason: everyone is learning the wrong lessons from SVB's collapse.

• Asian startups lose confidence in U.S. banking after SVB panic.

2. Meta to stop working on NFTs

Weirdly announced via Twitter:

• Meta is shifting from the metaverse to AI. Be it metaverse VR or metaverse crypto, it is clear that Meta is slowly listening to its customers and to markets, both of which have shown they want a focus shift: AR is not yet possible, and VR and NFTs are not that popular with consumers -- but AI is.

3. Microsoft lays off AI ethics and society team

• <30-person team was fired as part of latest 10K employee cut. Microsoft still maintains an Office of Responsible AI, though. - Platformer

• Unclear why a company should have an AI ethics team. We are very skeptical of AI doomers who proclaim that AI will destroy the world or cause joblessness. All previous technologies have significantly helped the world (and the unemployed), so the burden of proof is on them.

More importantly, this Thu: Microsoft AI event, where GPT-4 might be announced

• GPT-4 with multimodal capabilities is expected. Microsoft Germany CTO let it slip last week that GPT-4 would be announced this week, most likely at this event. We expect another increase in GPT text quality (although still far from AGI) and the launch of multimodal capabilities (input and output of audio, videos, images, etc.).

4. Stanford announces Alpaca AI, fine-tuning of open-source LLaMA, with similar results to GPT-3

• It only cost them $600 to run the fine-tuning. These Stanford researchers started with the 7B version of Meta's open-source LLaMA LLM, then fine-tuned it with 52K instruction-following demonstrations generated with GPT-3. The result? A model that fares pretty close to GPT-3, but is open-source. - Stanford, Simon Willison

• Will multimodal GPT-4 be as easy to emulate? If all large language models can be replicated using fine-tuning from their own results, that's bad news for Microsoft and OpenAI, who currently lead the field.

5. Today at 8:30 AM ET: CPI report

The title says it all:

• Expect rates and stock markets to move significantly if there is a major surprise here.

• We expect rates to decline but stabilize in the 3-5% range in 2023. It will be very tough to bring expectations down to 2%, unless there is a major bank crisis or recession (deflationary) or if the Fed makes more credible hawkish statements.

6. Venture capital falls around the world

Rest of World reports that venture funding fall is not only concentrated in the U.S.:

7. Other headlines

Tech

• YC to stop doing late-stage investments, lays off 17 (20%).

• Large part of Microsoft's $1B OpenAI investment went to buying NVIDIA GPUs.

• Wordpress to acquire ActivityPub plugin so blogs can connect to Mastodon.

• Medicare using AI to cut off payment for care.

Business

• California state appeals court says Uber's independent contracting is constitutional.

• Chinese self-driving startup WeRide files for $500M U.S. IPO.

• GitLab stock down 33% as guidance is revised down to 25% growth for next year.

• Pfizer agrees to buy Seagen for $43B, expected to close in 1 year.

• Qualtrics accepts $12.5B cash offer from Silver Lake and CPP Invest. to go private.

• Porsche to launch all-electric SUV, as competition with Tesla rises.

Crypto

• Binance is in talks to purchase Coindesk, up to $300M.

• Binance to suspend GBP deposits and withdrawals.

• Do Kwon and associates being investigated by Justice Department.

• Euler Finance hit by $197M flash-loan attack, U.S. likely to investigate.

• BUSD's trading is suspended on Coinbase.

• Coinbase insists it doesn't list securities, asks for more guidance from SEC.

• Signature Bank's Signet platform will continue to work under reformed bank.

Washington and more

• DeSantis says protecting Ukraine border is not a U.S. "vital national interest."

• Trump blames Pence for Jan. 6 riot.

• Trump steps up attacks on DeSantis, "dead as a dog."

• Michael Cohen testifies before Trump NY hush money grand jury; Trump won't.

• House GOP quietly halts inquiry into Trump's alleged profiting from the presidency.

• China's Xi to speak with Zelensky for 1st time since war broke out.

• Ukrainian pessimism grows as military is short of skilled troops, munitions.

• Saudis effectively blocked Israeli Foreign Minister's trip to UN conference.

• Want to beat China? Let in more Chinese, Reason argues.

8. Interesting tweets, memes, and images

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