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In today’s edition:
- The US Federal deficit
- Google’s Project ‘Magi’
- Apple and high-yield savings account
- a16z’s State of Crypto report
- AI-generated image wins an award
Market Snapshot
US equities ended mixed Wednesday, after another major bank, Morgan Stanley (MS) exceeded earnings expectations but other companies fell short, adding to ongoing uncertainty about the economy, and business performance. Netflix’s (NFLX) profits also topped forecasts, but its stock sank more than 4% after the company’s guidance appeared to disappoint investors.
News Summaries
Google is reportedly developing an AI search engine called Project ‘Magi,’ which will have a chat-like interface and allow users to accomplish transactions such as flight bookings directly on Google search. The limited public release is expected next month for the US market. This development substitutes traditional search methods with an intelligent chatbot that provides rapid and relevant responses. This report comes on the heels of rumors that Samsung is considering moving to Microsoft’s Bing as its default device search engine, which might cost Google $3 billion in annual sales.
The US Federal deficit remains under pressure. The deficit is projected to hit $1.4 trillion, or 6% of GDP, in 2023, which is flat year-over-year. However, rising interest rates will add substantially to the government’s borrowing costs in the coming years, making it harder to keep deficits in check. Increased enrollment and consumption in Medicare and Social Security, as well as other mandatory spending programs, also contribute to the widening deficit.
Apple has launched a high-yield savings account in partnership with Goldman Sachs. As per the offering, Apple Card users can earn a 4.15% annual yield with no fees, minimum deposit, or balance requirements. The move pits Apple against traditional financial firms and could add to the pressure on banks, which have faced withdrawals as savers seek higher returns elsewhere. The offering is part of a series of new financial offerings that generate more revenue from services and locks consumers into the Apple platform. The company generated almost 20% of its revenue from the services segment last year and is looking to expand its offerings, including an iPhone subscription program and an expanded version of its Pay Later program.
a16z has released its second annual State of Crypto report. The report noted that the number of active crypto addresses touched a record high in March 2023. The number of active crypto addresses has doubled since March 2021 to over 15 million, indicating increased participation in the space. Layer 2s, which process transactions off-chain on the Ethereum network, make 7% of all Ethereum fees, up from 1.5% a year ago, indicating more apps are building on them. The switch to Proof of Stake via The Merge has decreased Ethereum’s energy consumption. The report also revealed that the number of monthly active crypto developers has risen to 30,000, while the US’s share of global crypto developers has fallen by 26% since 2018 due to regulatory concerns.
A photographer declined a Sony World Photography Award. Boris Eldagsen, the German photographer, admitted to using artificial intelligence to create the winning entry (see Figure 1 below), revealing that photography competitions are not ready for the impact of AI. The recent progress of AI has been driven by ever-larger networks, computing power, and datasets. However, OpenAI CEO Sam Altman believes that progress involving “giant, giant models” has reached its “end of the era” and that improvements will be made in other ways. The use of AI in photography competitions raises questions about the role of technology and human creativity in art and creative industries.
