☀️☕️ DramaGPT

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📝 Focus

• DramaGPT

📊 In the Markets

• Ex-X advertisers

• Bayer Beware

• Don’t cry for Milei, Argentina

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🎓️ Board of Directors

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• Budgeting 101: Why a Strong Budget Is a Catalyst for Financial Freedom

📝 Focus

DramaGPT

The AI world was stunned on Friday when OpenAI CEO Sam Altman and fellow co-founder Greg Brockman were fired by the OpenAI board of directors, triggering a frenzy of speculation over the weekend and fevered behind-the-scenes activity. OpenAI sparked the generative AI trend with ChatGPT's sensational release last November.

The board didn’t say much but cited “communication” issues, suggesting concern regarding Altman's external fundraising efforts, potentially up to $100 billion for AI ventures outside OpenAI and potential conflicts of interest. The speed and safety of AI development seem to be another issue.

Employees and major investors, including those invested in OpenAI's ChatGPT, like Microsoft and venture capital backer Vinod Khosla, explored options to remove the board and reinstate Altman. A memo from chief strategy officer Jason Kwon circulated among staff, expressing optimism about Altman and Brockman's potential return. 

By Sunday, Altman had returned to the office amidst mounting pressure from executives, staff, and investors who sought his reinstatement after his sudden dismissal… but wearing an OpenAI guest pass, tweeting a photo of it and saying sourly that it would be “the first and last time” he’d be wearing it.

..... ▷ The planned sale next month of OpenAI employee shares, valuing the startup at $86 billion, is also in limbo following Altman's abrupt firing. 

The transaction would make OpenAI one of the world's most highly-valued private firms, some way behind ByteDance and SpaceX but even larger than Shein and Stripe.

..... ▷ The OpenAI board operates under a unique mandate focused on AI development for global benefit. 

Unlike typical for-profit boards, which prioritise shareholder interests, OpenAI's board is committed to an altruistic charter, ensuring AI advancements serve humanity. Their primary objective is to navigate AI's safe and ethical development rather than maximise profits. 

This distinction places emphasis on societal impact and responsible innovation, diverging significantly from the profit and share price-driven approach commonly seen in most traditional corporate boardrooms.

..... ▷ Originally founded by a group of Silicon Valley's leading lights, such as Elon Musk (since departed) as a non-profit with a mission to promote "friendly AI" to "advance AI safely for humanity", OpenAI has an unusual “capped-profit” investment structure, in which investors in the company can make a profit, but only up to 100x their original investment. (It doesn’t seem to cap the profitability of the company.)

Any excess is supposed to be redistributed to the original pre-2019 non-profit organisation, OpenAI Nonprofit, or to society at large to balance the need for funding (including for its quest to develop AGI) and its stated commitment to safety and social good… but it is opaque quite how that mechanism would work in practice.

Some critics have questioned the transparency and accountability of the hybrid for-profit/non-profit structure put in place in 2019, as well as its alignment with the original mission of OpenAI.

🇸🇬 Singapore: Let’s Get MoneyFitt!

📊 In the Markets

Europe traded firmer on eurozone inflation, showing a sharp slowdown, with October’s year-on-year inflation reading coming in at 2.9% compared to 4.3% in September. Over in the UK, retail sales came in way below expectations with a 2.7% year-on-year and 0.3% month-on-month drop, with clothing and household purchases the hardest hit. Shares of Sweden’s Volvo (which also has 48.3% ownership of EV player Polestar) collapsed over 11% to hit a record low on Friday after its HK-listed parent Geely announced it had sold off 3% of its shares, though it retains 78%.

In Asia, Hong Kong stocks were pulled down by e-commerce giant Alibaba on the shelving of value-creating spinoffs (cloud, supermarkets) announced as part of the breakup into 6 units of Jack Ma’s giant e-commerce and tech conglomerate back in March. The breakup at the time was greeted very positively for unlocking heaps of value, especially for the cloud business (the 3rd largest in the world), but general investor optimism over China’s reopening has since evaporated. 

Wall Street inched up on Friday, but remarks from various influential Fed officials about the likelihood of rate cuts clouded the outlook. Vice Chair Michael Barr hinted at a peak in rates, while San Francisco Fed's Mary Daly and Boston Fed President Susan Collins advocated for more evidence on cooling inflation. 

Despite this, equities received support from a continuing decline in the 10-year Treasury yield, reflecting buying in the bonds, and both the S&P 500 and Nasdaq closed with their third consecutive weekly gains. 

Faded casual fashion player The Gap surged over 30% on better-than-expected results and significant inventory destocking, even as its holiday-season forecast disappointed. The move takes it to a 60% gain for the year, but more importantly, it’s pretty much double where it was when a former Mattel executive credited for the Barbie-led turnaround was appointed CEO in late July. His focus is on turning around the fortunes of its Old Navy line.

Ex-X Advertisers

A wave of advertisers, including Apple, Walt Disney, Comcast, Paramount and Warner Bros have followed IBM in halting their ads on Elon Musk's X due to concerns over antisemitic content. Even before these exits, over half of the top 100 pre-Musk advertisers have abandoned the platform, while those remaining slashed spending significantly. 

Media reports found major brands' ads adjacent to "pro-Nazi" posts, prompting IBM's withdrawal of global advertising. Musk, already facing personal criticism for endorsing antisemitism, threatened a lawsuit against Media Matters, alleging a "fraudulent attack" on X. 

..... ▷ These cancellations came through the same week that Musk tweeted: “You have said the actual truth” in agreeing with an antisemitic post on his social media platform X that claimed that Jewish communities push “hatred against Whites.”

..... ▷ Despite new CEO and advertising industry stalwart Linda Yaccarino's valiant efforts to restore marketer confidence, Musk's controversial tweets and relaxed moderation policies have major ad revenues down by 50%. 

After just one year under Musk’s ownership, X is valuing itself at $19bn, compared to Musk’s $44bn acquisition price, based on the price at which it was awarding equity, or restricted stock units, to employees.

The chaos caused by advertiser exits and Musk's aggressive response paints a grim picture for X's future.

Bayer Beware

A Missouri jury ordered Bayer to pay $1.56 billion to four plaintiffs claiming Roundup caused cancer-related injuries, potentially escalating investor pressure on the company to revise its legal approach. 

The jury found Bayer's Monsanto responsible for negligence and design defects, awarding $61.1 million in compensatory damages and $500 million in punitive damages to each of the three claimants — a fourth received $100,000. 

Bayer contests the safety concerns, citing decades of studies supporting glyphosate's safety. This marks Bayer's fourth consecutive court loss, with Union Investment urging settlement negotiations. 

The company plans to challenge recent verdicts, alleging misrepresentation of EU and EPA safety assessments. 

..... ▷ Despite settling most Roundup cases in 2020 for up to $10.9 billion, approximately 50,000 claims are still pending out of 165,000 alleging personal injuries due to Roundup, acquired by the venerable German chemicals conglomerate in its fateful purchase of Monsanto in 2018.

It was highly controversial at the time due to Monsanto's long history of environmental and health controversies, particularly surrounding its widely-used herbicide Roundup. 

Before Roundup, Monsanto manufactured the dioxin Agent Orange, a toxic herbicide that caused serious health issues after use during the Vietnam War (the British had earlier established a precedent for warfare using herbicides in Malaya), and DDT, a pesticide with devastating environmental effects. 

..... ▷ Bayer’s takeover is probably one of the worst in recent corporate history and seems to have been a combination FOMO (there were a bunch of mega chemical mergers that period, like Dow+DuPont) and hubris (they’d integrated acquisitions before.) 

But they massively misjudged the product liabilities of Monsanto’s glyphosate products, such that the whole of Bayer is now worth only about two-thirds of what they paid for Monsanto. 

Don’t cry for Milei, Argentina

Over the weekend, Argentina elected outsider Javier Milei as president, aiming to revamp an economy plagued by high inflation, recession, and poverty, with his out-of-the-box (to say the least) plans clearly resonating with voters, who see him as the needed change agent

Peronist Sergio Massa conceded defeat amid continuing economic turmoil and pledged to support Milei. Milei plans drastic economic changes like shutting the central bank entirely, ditching the collapsing Argentine peso and cutting spending. 

Despite challenges like massive debts, inflation, and capital controls, many saw Milei as a fresh start, disrupting Argentina's political landscape. His coalition's lack of a majority in Congress might moderate his proposals, but Milei's supporters emphasise his potential to dismantle the status quo.