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Top stories today:
1. Today at 2 PM: markets price in an 87% chance of a 25 bps hike
2. New $225M AI chatbot Pi launches, and disappoints
3. VP Harris to meet CEOs of Alphabet, Microsoft, OpenAI on AI safety
4. Midjourney v5.1 launches, looks comparable to OpenAI's DALL-E 2

0. Data and calendar

1. Today at 2 PM: markets price in an 87% chance of a 25 bps hike

Fed whisperer Nick Timiraos says the big question is what's next: “After Federal Reserve officials likely agree to raise interest rates this week, their conversation will shift to a question weighing heavily on investors that they will find difficult to answer: Are they finished? Officials are on track to focus their meeting Tuesday and Wednesday on how to communicate their rate outlook.” - WSJ

The curve already prices in 200 bps of cuts over the next 18 months

Our view: markets are almost always wrong in long rate predictions, so take them with a grain of salt

2. New $225M AI chatbot Pi launches, and disappoints

• Secretive about underlying technology: Pi developer Inflection AI refuses to say, and so does Pi.

• Raised $225M in a single 2022 round. - Forbes, Inflection AI

Our view: its quality is simply worse than GPT-4

• “Kind and supportive”, “creative and fun”… excuses for being worse.

  • They are not putting out any performance statistics, also a bad indicator.

• Which makes us think: how will Elon and X.AI build something better?

Meanwhile, Microsoft is testing privacy-focused dedicated ChatGPT servers

• “Later this quarter Microsoft’s Azure cloud server unit plans to sell a version of ChatGPT that runs on dedicated cloud servers where the data will be kept separate from those of other customers, according to two people with knowledge of the upcoming announcement. The idea is to give customers peace of mind that their secrets won’t leak to the main ChatGPT system, the people said.

  • But it will come at a price: The product could cost as much as 10 times what customers currently pay to use the regular version of ChatGPT, one of these people said.” - The Information

3. VP Harris to meet CEOs of Alphabet, Microsoft, OpenAI, Anthropic on AI safety

• The invitation says the administration seeks “a frank discussion of the risks we each see in current and near-term AI development, actions to mitigate those risks, and other ways we can work together to ensure the American people benefit from advances in AI while being protected from its harms.” - Bloomberg

Our view: why give this job to the VP?

• If AI has the risk of killing us all, shouldn't POTUS be heavily involved?

  • Just like his ignoring of Tesla when doing car events, President Biden does not have a great track record in terms of being pro-technology.

  • Not that Trump was any different: as a reminder, he brought Peter Thiel close to him during the transition, then ignore all his suggestions (including Balaji for FDA chief, which would have been exceptional).

4. Midjourney v5.1 launches, looks comparable to OpenAI's DALL-E 2

Our view: the quality gap is smaller in text-to-image than it is in LLMs and, likely, in text-to-video

• We're seeing diminishing rates of improvement in text-to-image AI models, and their current output is already unbelievable.

  • In contrast, LLMs are very much sub-human in intelligence and hallucinate/lie frequently, and text-to-video models are still very incipient and do not produce anything of commercial value.

5. Twitter getting closer to 1K employees

From 8K pre-Elon, according to Insider:

It is also restoring free API access to governments and public services

6. Visualizing this century's bank failures

• Still far from 2008 in failure count and size, especially if you adjust for inflation, which this graph does not do.

7. Other headlines

Tech

• Cohere AI (enterprise LLMs) close to raising $250M at $2B valuation.

• Musk to NPR: “should we assign @NPR to another company?”

• Apple and Google working together to stop unwanted AirTag tracking.

• TikTok's head of trust and safety for the U.S. leaving.

• Love.com, new supplement store, launched by Bolt co-founder.

• Bluesky invites being sold on eBay for $100+, 55K users.

Biotech

• FDA releases draft guidance on decentralized clinical trials.

Business

• Carl Icahn's net worth plummets $10B after Hindenburg report.

• TheSkimm, newsletter pioneer, lays off 13%, 22 people.

• Ben Smith, Jonah Peretti, Nick Denton interview on Smith's new book.

• AMD revenue falls 9% YoY to $5.89B.

• Match revenue -1% YoY to $787M.

• Ford profit at $1.8B, from -$3.1B in Q1 2022.

• Unity does 3rd and largest layoff: 8% / 600 people, half the offices.

• College good: 4-year degree predicts high-paying jobs in your 30s.

• Luxury industry still sees China as key market/growth opportunity.

Crypto

• Coinbase opening offshore derivatives exchange in Bermuda.

• DCG revenue $180M in Q1, -46% YoY but +63% QoQ.

• Tax: 30% crypto energy excise tax pushed by White House.

• Balaji closes $1M BTC bet by paying $500K and donating $1M.

• Bloomberg editorial says crackdown “best thing that ever happened.”

U.S. politics

• White House officials open to compromise on debt limit.

  • 5 ways the debt limit fight could end.

  • House Dems aim to lure some moderate GOPers to pass a clean debt hike.

• Trump wants to skip some debates, “I'm up by too many points.”

• Tucker Carlson's text that alarmed Fox: “it's not how white men fight.”

• DeSantis’s travel records shielded from disclosure by Florida GOP.

World

• China sends drones around Taiwan in new surveillance tactic.

• Russia still manages to smuggle sensitive EU tech, despite sanctions.

• Russia sentences 2 connected to Dugina murder to 3.5 years in prison.

• Japan: NATO to open office in the region.

8. Interesting tweets, memes, and images

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