☀️☕️ Altman back at OpenAI

📝 Focus

• Altman back at OpenAI

📊 In the Markets

• Nvidia Beats and Doesn’t 

• Kardashian Trufflin Trufflin

• Binance Buys Time

• Fed Geeks

📖 MoneyFitt Explains

🎓️ Soft Landing

💸 Personal Finance Corner

• 5 Questions to Ask Your Agent Regarding Policy Proposals

📚 What We’re Reading

📝 Focus

Altman back at OpenAI

Ousted OpenAI co-founder Sam Altman will return to lead the company amid recent turmoil. A new board will supervise the reinstatement of Altman and former president and fellow co-founder Greg Brockman, who resigned when Altman was fired. 

Under this arrangement, a new board will initially be chaired by former Salesforce chief Bret Taylor, with former Treasury Secretary Larry Summers and Adam D’Angelo the only remaining one of the board members who originally moved to fire Altman.

This resolution follows a dramatic crisis involving employees, investors and the four-person board. Almost the entire staff wrote an open letter demanding Altman’s return while Microsoft's Satya Nadella supported Altman over the weekend, offering backing or rehiring options and on Wednesday praised the board changes.

..... ▷ The issue was between the non-profit OpenAI Inc, where the board sat, and the company it (in theory) controlled, OpenAI Global LLC. 

That was the for-profit operating company that was recently valued at $86bn and was VC and strategic partner backed.

The tension seemed to have been in finding the balance between making money (providing at least enough revenue so it all doesn’t go bust given the cost of computing) against fears of global annihilation at the hands of AI. 

..... ▷ According to a report by Reuters, shortly before Sam Altman's ousting, OpenAI researchers warned the board about a potentially powerful AI discovery threatening humanity. 

A project called Q* showed potential in solving maths problems, hinting at a path to Artificial General Intelligence, or AGI, capabilities, since maths, rather than generative AI like ChatGPT, is seen as a frontier of generative AI development. 

The danger is of course that sentient or very highly intelligent machines might conclude that the destruction of humanity was in their best interests. 

..... ▷ Also, before Altman’s announced return, Elon Musk waded in on X waving a letter apparently from former employees alleging that Altman engaged in misconduct, abuse of power, and other unethical practices. “These seem like concerns worth investigating,” he added. 

Musk was an original founder of OpenAI but left because of conflicts of interest with Tesla and concerns about the dangers to humanity of uncontrolled AI. 

He subsequently set up a competing AI firm called xAI, with an AI model called Grok, a chatbot with "real-time access" to X's data, purportedly giving it a significant edge over rivals relying on the internet and older archives. 

🇸🇬 Singapore: Let’s Get MoneyFitt!

📊 In the Markets

Asia-Pacific markets were directionless on Wednesday, with Japan and Korea marginally up, HK flat and China off 1%. Markets were muted as minutes from the Federal Reserve’s Halloween meeting were released the day before and showed that most of the FOMC, the interest rate setting body, continues to think that monetary policy has to be restrictive, meaning interest rates need to stay high, and had little appetite for rate cuts.

In Europe, markets were similarly undecided with the pan-regional (not just eurozone or even EU) Stoxx 600 index slightly higher following two lacklustre sessions. 

The oil and gas sector slumped 1.7% on reports that the OPEC+ meeting scheduled for Sunday would be pushed back to Thursday on Saudi unhappiness with the production levels of several African countries. Brent crude initially fell 5% after the news, but settled down only mildly lower at $81.96. The benchmark oil price is now 16% down from the $98 peak hit in late September, pulled down by both rising supply and concern about weak demand in a potential economic slowdown.

The UK’s FTSE-100 blue chip index closed mildly lower, partly in the oil price but also with traders digesting the government’s Autumn Statement budget announcement, which included changes to various benefits programmes, a freeze on alcohol duties and a rise in the minimum wage. A surprise tax giveaway will impact 27 million workers and, with business tax breaks, is estimated to cost £20 billion per year. Along with a rise in the minimum wage, this led some critics to suggest political motivations. 

The government does have some “headroom” to address the stagnant economy, but at £6.5bn, it is relatively small compared to previous years and the Office for Budget Responsibility warned that it could be hard to generate the savings (such as on welfare) that would be needed. 

The current inflation rate in the UK is 4.6%, as of October 2023,  down from a peak of 11.1% in October 2022, but still well above the Bank of England's target of 2%, so the impact of the fiscal boost will be watched closely. 

US stocks, after digesting the FOMC minutes from the day before, pushed higher to approach year-to-date highs, after three months of declines, driven by growing confidence that the Federal Reserve is done with interest rate hikes.

The S&P 500 is now up 9% for the month to date, heading into Thursday’s Thanksgiving break.

However, US Treasury yields rose as some fresh data in the day highlighted ongoing inflation risk. That was enough for some traders to take some profits going into the break, but overall the economy seems to be slowing at a measured pace that could avoid a recession. This would, if it happens, be the fabled soft landing 🎓 that could propel Jerome Powell to the top table of the finest Chairmen of the Federal Reserve in history alongside the likes of Paul Volcker, Alan Greenspan and Ben Bernanke (below.)

Fed Geek Corner:

1. Paul Volcker served as Chairman from 1979 to 1987 and is credited with taming historic runaway inflation by implementing tight monetary policies, which helped stabilize the economy. But in doing so, he also contributed to a long period of economic hardship.

2. Alan Greenspan, the long standing chief from 1987 to 2006, was known for his adept handling of various economic challenges, including the 1987 Black Monday crash, the dot-com bubble and the aftermath of the 9/11 attacks. He can take some credit for a generally stable economy during his tenure, but also deserves some criticism for policies that may have contributed to the 2008 financial crisis.

3. Ben Bernanke, Chairman from 2006 to 2014, played a pivotal role during the 2008 financial crisis, implementing unconventional monetary policies like quantitative easing to stabilise the US economy. His efforts, working in concert with other central bank bosses, are often praised for averting a deeper and more prolonged economic downturn.

Nvidia Beats and Doesn’t

Nvidia’s fiscal third-quarter revenue soared 206% YoY to $18.12 billion, blowing past the best guesses of Wall Street’s Finest, while net income surged to $9.24 billion from $680 million. 

The company announced after the market close on Tuesday that it expects current-quarter revenue to hit $20 billion, marking a 231% growth projection. 

Despite this, Nvidia's shares dropped 2.5% on Wednesday, suggesting sky-high investor expectations to beat expectations were somehow not fully met. 

..... ▷ Commentators pointed to how the finance chief warned that chip export restrictions would significantly impact Chinese sales and Nvidia's rather stretched valuations, but it could as easily be down to simple trader derisking heading into a market break.

Kardashian Trufflin Trufflin

Kim Kardashian's private equity firm SKKY Partners, set up 14 months ago by Kardashian and former Carlyle consumer head Jay Sammons, finally made its inaugural investment in Truff. 

The undisclosed "significant minority stake" acquisition in the truffle-infused sauce company (priced around $20 per bottle) fits the SKKY target of stakes in “high-growth, market-leading consumer and media companies”, particularly in health, wellness, food and beverages. 

This investment marks Kardashian's intent to venture beyond her very successful $4 billion brand, Skims, leveraging her massive audience, now including 364 million followers on Instagram, an increase of over 10% since last September, or 36 million people. 

..... ▷ Besides her and her partners' skills in business and financial engineering, her involvement can add to an investment's value in two ways, 1. Increase the amount of business that the company does simply by being associated with her, and 2. Increase the multiple of those revenues (sales or earnings multiplied by a number is one way of looking at the selling price of a company) by increasing the number of potentially interested investors.

Binance Buys Time

In another blow to the cryptocurrency industry, the CEO of Binance, the world's largest crypto exchange by an immense margin (even over FTX at its peak), Changpeng Zhao, commonly known as CZ, “stepped down” on November 21, after pleading guilty to federal charges related to violations of the Bank Secrecy Act (BSA). 

The move forms part of Binance’s $4.3 billion settlement agreement with the US Department of Justice (DOJ), resolving a protracted investigation into Binance's alleged anti-money laundering (AML) and sanctions violations.

The DOJ alleged that Binance enabled people in sanctioned countries, like Iran and Russia, to trade on the platform, violating US regulations against money laundering. (Binance was also under scrutiny for transactions that may have helped finance Hamas.)

..... ▷ CZ faces up to 18 months in prison, which is a tiny fraction of the 115 years of potential jail time that former rival Sam Bankman-Fried may get. 

Furthermore, CZ is based in the UAE, with whom the US does not have an extradition agreement.

..... ▷ The DOJ's settlement with Binance marks a turning point in the regulatory landscape surrounding cryptocurrency exchanges, sending a clear message that nobody gets around BSA regulations. 

The settlement also highlights the growing scrutiny of crypto platforms, particularly those operating in the United States (the US Securities and Exchange Commission thinks that crypto exchanges are basically illegal under US law.)

Binance is still also facing a different lawsuit from the SEC that alleges the company artificially inflated its US trading volume and offered crypto futures without registering as a futures commodity trading firm. 

..... ▷ Crypto enthusiasts on the other hand see this as the final clearing of the decks after the last year and a half, during which time Terra collapsed, followed by Celsius, the Three Arrows Capital, then FTX, which led to multiple more firms folding. 

The settlement just dealt to the biggest of them all is being touted as a sign the worst is past. Perhaps.