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Top stories today:
1. McCarthy meets Biden, but there's still no deal, with 9 days until June 1
2. Meta releases open-source speech model: 1,100 languages, beats Whisper?
3. OpenAI supports global AI regulation for huge models, not most startups
4. Fake AI image of explosion near Pentagon causes S&P to move -0.2%
5. FTX 2.0 reboot continues to be suggested by legal billings

0. Data and calendar

1. McCarthy meets Biden, but there's still no deal, with 9 days until June 1

• McCarthy still wants no tax increases and no defense cuts.

  • And he wants to keep the rule that allows House members 72 hours to review legislation, putting even more pressure on the timeline.

• White House offered 1 year with 0% growth in nondefense and defense discretionary spending and 1 year of 1% growth.

  • GOP wants 6 years of 1% growth, down from their initial 10-year ask, but starting with FY2022 levels (a difference of around $130B). - WSJ

• Both will talk daily until a deal is reached.

• Both are optimistic:

  • McCarthy: “The tone tonight was better than any other time we have had discussions.“

  • Biden: “We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.“ - Bloomberg

Our view: Time is running out for the June 1 no-money deadline, but OK for the June 15 default one

• June 1 is when the Treasury runs out of money, according to Yellen.

• But most debt payments only come in on June 15, meaning that the government may be able to delay a default until then (by shutting down the government and delaying employee checks, for example).

Our view: the GOP spending cuts are healthy, but 4% GDP growth solves the debt issue without cuts

• The original GOP proposal would decelerate the growth of debt-to-GDP by about half, from 2 p.p. a year to 1 p.p. a year (above).

  • But we don't expect they will get all they asked for. A good rule of thumb for predicting is that the final bill will contain half of the cuts, so debt-to-GDP would still climb by 1.5 p.p. a year.

• The debt problems would be solved if the U.S. grew at 4% rather than 2%. At that rate of growth, debt-to-GDP would be stable, even without spending cuts.

  • What matters most for U.S. economic growth is innovation, i.e., new technologies. What can really accelerate that is not macro but microeconomics, e.g., how long it takes for the FDA to approve a drug.

  • Micro/regulatory reform, in all sectors of the economy, would be the greatest unleasher of economic growth.

2. Meta releases open-source speech model: 1,100 languages, fewer errors than Whisper

At least that is what Meta claims:

• The project is completely open-sourced and available on GitHub. - Technology Review

Our view: Meta continues its AI open-source strategy, seeking to disrupt rivals

• Meta doesn't want to make money in AI “directly,” i.e., it appears they don't want to release a for-profit chatbot or search engine. They want to use AI to improve their social products and make more money that way.

  • A cynical view is that Meta's open-source strategy seeks to hurt Google, Microsoft, and OpenAI's efforts to commercialize AI-powered search and chatbots. The release of LLaMA was an example of this.

  • OpenAI's speech model, Whisper, was already open source, so it's natural that Meta followed suit.

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4. OpenAI clarifies it supports global AI regulation for huge models, not most startups

In a blog post, OpenAI explains in detail what CEO Sam Altman meant when he said last week they supported global regulations for AI:

• No regulation for smaller models: “It’s important to allow companies and open-source projects to develop models below a significant capability threshold, without the kind of regulation we describe here (including burdensome mechanisms like licenses or audits).”

• An IAEA-like agency for larger models: “Second, we are likely to eventually need something like an IAEA for superintelligence efforts; any effort above a certain capability (or resources like compute) threshold will need to be subject to an international authority that can inspect systems, require audits, test for compliance with safety standards, place restrictions on degrees of deployment and levels of security, etc.“ - Techcrunch, OpenAI

Meanwhile, Google CEO called for a U.S.-Europe alliance: “Increased international co-operation will be key. The US and Europe are strategic allies and partners. It’s important that the two work together to create robust, pro-innovation frameworks for the emerging technology, based on shared values and goals.“ - FT

5. Fake AI image of explosion near Pentagon causes S&P to move -0.2% for a few minutes

The S&P 500 was -0.2% for a few minutes, but rebounded quickly

Our view: in the age of AI, trusted reliable sources become even more important

• Any image, audio, or video can be fake.

• Reliable sources are needed to verify the integrity of any media.

  • Wikipedia has a great internal list of websites its community considers reliable or unreliable. - Wikipedia

  • Twitter needs to improve its Blue verification service, especially as one of the accounts that retweeted this fake news was the verified “BloombergFeed” account, which coincidentally, was unaffiliated with Bloomberg (it has since been suspended). - Techcrunch

6. FTX 2.0 reboot continues to be suggested by legal billings

At least we know that the company's new management is studying the idea:

Our view: rebooting FTX, IPOing or ICOing it, and distributing shares is a great way to deliver value to creditors

• The FTX estate so far has only recovered about 50% of its likely liabilities: $7B in current assets and $13B in liabilities.

  • And that doesn't even include extraordinary potential liabilities, like the IRS's $44B claim.

• FTX was once worth $32B, and Coinbase today is traded at $14B.

  • We expect FTX 2.0 to be traded at a $1B-$10B valuation if it went public shortly: on the lower end of that range if on the stock market (IPO), and on the higher end if via a crypto token (ICO).

  • FTX 2.0 could make creditors whole, without any further asset retrieval or appreciation.

7. Whatsapp rolling out Edit feature

Whatsapp catching up with Telegram, feature-wise:

Even with fewer features, Whatsapp is still #1 worldwide, in MAUs:

• Now, they just have to conquer the U.S., which is still dominated by SMS/iMessage, mostly due to inertial forces, as Whatsapp is much more global and feature-rich. - Techcrunch, Mark Zuckerberg's Facebook

8. Bakhmut: before and after

• More satellite images are coming out, and the visuals are horrific. The city was completely destroyed, and all that's left are ruins. - WaPost, NYT

9. Other headlines

Tech

• TikTok sues Montana over ban, alleging 1st Amendment violation.

• Meta fined $1.3B (1% of 2022 revenue) by EU for transferring info to U.S.

• TikTok says it will grant Oracle access to its source code as part of U.S. plan.

• TikTok focusing its e-commerce efforts in U.S., UK.

• Builder.ai, no-code startup, raises $250M Series D.

• Twitter-Elon class-action lawsuit dismissed.

• Zoom revenue +3% to $1.105B in Q1, operating margin 1%.

• AMD catching up to Intel in top CPUs.

• Micron chip ban in China: WSJ analysis.

• Jeff Bezos reportedly engaged to Lauren Sánchez: congrats!

Biotech

• Opioids: FDA approves Opvee, 1st nasal spray for overdose.

• Semaglutide: oral version of wonder drug also reduced weight by 15%.

• Semaglutide: many plans don't want to pay the $1K/mo.

• Kidney routine screening would be cost-effective: study.

Business

• Amazon to face record 18 shareholders resolutions at annual meeting on Wed.

• Max introduces $19.99/mo plan with more 4K Ultra HD content.

• Jamie Dimon, 67, has no plans of stepping down as JPMorgan CEO.

Crypto

• iPhone softens crypto policy as it allows STEPN to offer NFT trading.

• Coinbase launches new TV ads targeted at Washington: video.

• Strike adds support for USDT.

• Tokenized securities reach $225M, mostly U.S. bonds.

• Bitcoin already #2 in NFT sales.

• IOSCO unveils proposal for global crypto rules.

• OKX applies for regulatory approval in France, seeks European hub in Paris.

• BlockFi ordered to withdraw its reorganization plan, improperly released.

• Ark: U.S. risks ceding crypto lead to UAE, Korea, Australia, Switzerland.

U.S. politics

• Sen. Hawley wants additional 25% tariff on all China imports.

• Tucker Carlson won't run in 2024 “under any“: Carlson's lawyer.

• Tucker Carlson's biography is coming.

• Carroll files for more damages from Trump after CNN comments.

• Tim Scott says he won't seek to overturn election if he loses.

World

• Pacific Islands: U.S. seals military deals with PNG, Palau, and Micronesia.

• Russian PM visits China, seeks to deepen trade ties.

• U.S. keeping sanctions on Chinese Defense Minister Li Shangfu.

• Spanish government wants to ban E2E encryption: leaked doc.

10. Interesting tweets, memes, and images

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