Hi, and welcome to today's Bay Area Times daily newsletter. Top stories today: 1) GLIGEN AI launches, 2) Tesla cuts prices, 3) Summers warns against 25 bps, 4) China sets GDP target at 5%, and 5) CPAC poll shows Trump 62% x 20% DeSantis.

0. Data and calendar

Markets expect higher volatility on Tue and Fri

1. Microsoft researchers launch open-source GLIGEN AI, an upgrade to Stable Diffusion

• It allows you to guide the AI on where and how to draw things. In addition to the caption prompt, with GLIGEN you input the entities' names and draw their locations. - Github

• Now fully open-source and available. You can demo it on Hugging Face.

• DALL-E is probably still better. We haven't seen formal statistical comparisons, but that's our view after using them ourselves. We hope more researchers continue to work on Stable Diffusion, which has the huge advantage of being free and open source.

2. Tesla again cut prices, in a sign of stronger competition

• It is hard to build moats in hardware. Without network effects and with Tesla's self-imposed open-source patent policy, competitors have been able to copy most of Tesla's hardware features and offer them at cheaper prices.

• Tesla can stand out with self-driving and the Optimus robots. Those are two areas that involve much more software and AI, making it harder for challengers to copy.

3. Larry Summers warns against 25 bps stubbornness

• Summers thinks Fed officials should be open-minded and stop suggesting publicly that current data points towards a 25 bps hike. He believes the Fed is once again behind the curve, and that the Fed should be more hawkish.

• All eyes toward Powell's testimony to Congress Tue and Wed. At 10 AM, the speaks to the Senate and the House, respectively.

4. China sets GDP target at 5%, lowest in decades

Chinese CPI expected at 3%, unemployment at 5.5%

• Watch out for U.S.-China decoupling. That's the new buzzword for 2023, meaning the reduction of trade and economic cooperation between the two regions. Some have estimated a 7% hit to GDP with full decoupling (equivalent to 2-3 years of no growth).

• Voluntary decoupling is best: All-in-all, the best outcome for the U.S. is likely a voluntary decoupling, where U.S. companies increasingly choose to build new factories and deploy capital outside of China (hello Central and South America). A gradual, voluntary separation should have the least impact on economic activity. - Bloomberg

5. Trump wins CPAC poll 62% x 20% DeSantis

Similar margins as previous years:

Markets now price Trump at 50% odds for GOP nominee

He was closer to 40% just a few weeks ago:

• Republicans don't care about free markets anymore. In line with the trend of both parties becoming aligned in support of an extended welfare and regulatory state, and differing solely on cultural issues. - Reason

• Pompeo attacked Trump for adding $6T to the deficit. But he failed to propose any measures to reverse that, as per standard 2022 Republicanism. - Axios

• 79% of CPAC also disapprove of aid to Ukraine. - Axios

6. Poll: 66% say holding cash will be net positive

• It says more about current market conditions than predicting 2023 returns. The total sum of all investors own the total sum of all assets -- that's a tautological fact. If more of them want cash to be a higher percentage of their portfolio, the relative ratio between cash and non-cash valuations must increase, meaning that non-cash (risk) prices have to come down.

• Clear bias at place here: those who charge the 2+20% fees are more optimistic about the active fund industry; those who invest in these funds, less so.

7. DOJ proposes restricting SBF to a flip phone, specific apps and websites

In a court filing, U.S. Attorney Damian Williams writes to Judge Kaplan that the "parties" (suggesting that the defense is on board) proposes Sam Bankman-Fried be limited to a flip phone and laptop, fully tracked and limited to the apps below. - Coindesk

The whitelisted website list is quite funny, including Doordash, Uber Eats, and NFL.com:

8. Other headlines

Tech

• Amazon downsizing Alexa team, trying to increase its monetization.

• New foldable phones coming out of China: Honor, Oppo, others.

• Apple likely to launch a new iMac in Q3/Q4: screen still only 24-inch.

• AI most cited papers: U.S., Google, Meta, Microsoft dominate.

• Interview: John Schulman, OpenAI co-founder, and Jan Leike, alignment team leader.

• Medical AI already is capable of identifying cancers that human eyes do not see.

• AI roundup: companies competing with ChatGPT.

• AI scam: criminals use AI voice to impersonate family members and ask for money.

• Ozempic now used as a first-line treatment for diabetes, even before metformin.

Business

• Arm, British chip designer owned by Softbank, to raise $8B in U.S. IPO.

• Investments in certain sectors in China could be banned by Biden.

Crypto

• Multicoin Capital down 92% in 2022, still up 1,376% since 2017 inception.

• Binance.US created to distract U.S. regulators from Binance.com: WSJ.

• Binance.US is operating an unregistered securities exchange, says SEC official.

• Eco accused of pretending to lend to Goldman while lending to risky crypto protocols.

Washington and more

• Biden's annual budget to include higher personal and corporate income taxes.

• Sen. Hawley to introduce bill banning senior government officials from trading stocks.

• DeSantis' 2023 Florida plans include expansive gun rights, no real economic policy.

• Chinese giant cargo cranes could be spying tools, Pentagon believes.

• Russia continues to use Wagner ex-prisoner troops in suicide missions for Bakhmut.

• Wagner's Telegram warns Russia that Bakhmut at risk without new ammunition.

• Estonia's pro-Ukraine Reform party wins elections with 31%, EKRE gets 15%.

• Paul Manafort pays $3.15M to settle DOJ civil case about foreign bank accounts.

9. Interesting tweets, memes, and videos

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