Weekly Digest: German, French Inflation Slowdown, AI Worries


5 minutes read

Mar 31, 2023

economic indicators in German flag colors showing inflation slowing down

01/04/2023: German and French consumer prices fall in March, U.S. stock sales suffer the worst first quarter since 2009, Musk and scientists call for halt to AI race sparked by ChatGPT. And more.

💡Quote of the week

“Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization? Such decisions must not be delegated to unelected tech leaders. Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable.” Open letter, Future of Life Institute

Investment news

999.9 pure 1 kg gold bars by PAMP Suisse

📉 Gold down. In anticipation of U.S. inflation data, the gold price slumped on Thursday as higher bond yields dimmed bullion's shine.

Spot gold was up 0.2% at $1,967.17 per ounce, while U.S. gold futures were broadly unchanged at $1,967.00.

All-time highs. Gold prices have more room to run and could possibly break a new record of at least $2,500 an ounce as global banks struggle and the Fed is about to make another interest rate decision, analysts say. (CNBC)

“A sooner Fed pivot on rate hikes will likely cause another gold price surge due to a potential further decline in the U.S. dollar and bond yields,” said Tina Teng from financial services company CMC Markets. She expects gold to trade between $2,500 to $2,600 an ounce.

🇩🇪 🇫🇷 A slowdown in German, French inflation. German inflation slowed sharply in March, thanks largely to natural gas costs dropping following their surge after Russia invaded Ukraine a little over a year ago. Similarly, in France, inflation slid to a six-month low as a sharp drop in energy price inflation helped offset surging food prices. (Bloomberg)

Consumer prices in Europe’s biggest economy increased by 7.8% in March compared with 9.3% in February, the statistics office said Thursday.

In France, inflation increased by 0.9% in March, bringing the 12-month inflation rate to 6.6%, down from 7.3% in February, according to EU-harmonised data from France's statistics agency INSEE. However, food prices kept rising, reaching a record high of 15.8% after 14.8% in February.

🇪🇺 Another slowdown. The inflation rate in the Eurozone has dropped more than expected to 6.9% due to a decline in energy costs, reaching its lowest level in a year. However, economists are concerned about an acceleration in the rate of price increases for food and services, which hit new highs in March. (FT)

Core inflation, which excludes energy and food costs, increased to 5.7%, while food price inflation rose to 15.4% and services inflation increased to 5%.

🇺🇸 U.S. inflation cools. Inflation in the United States rose less than expected last month, and consumer spending stabilized, which suggests that the Federal Reserve may be close to ending its aggressive cycle of interest-rate hikes. (Bloomberg)

The Fed's preferred inflation gauge, which excludes food and energy, rose by 0.3% in February, and the overall personal consumption expenditures price index climbed by the same amount, according to data from the Commerce Department.

🇪🇸 Spain inflation halves. Spanish inflation plunged to 3.1% as energy costs fell, but persistent underlying price pressures underscored the ECB's dilemma as it weighs how much to raise rates. (Bloomberg)

Inflation in March came in at 3.1% - down from February's 6% and much lower than economists' median estimate of 3.7%.

🇺🇸 🦥 Starting slow. U.S. stock sales are having the slowest start to a year since 2009, stemming from the Fed’s aggressive rate-hike cycle and the flight to safety over the recent collapse of Silicon Valley Bank. (Bloomberg)

With recession odds rising and Fed Chair Powell promising no rate cuts this year, a slowdown in stock issuance threatens to halt dealmaking for a while.

🌎 Global economy at risk. Kristalina Georgieva, the head of the International Monetary Fund, has warned that the global economy faces risks to its financial stability because of the turmoil in the banking sector. (The Guardian)

“At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates – necessary to fight inflation – inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies,” Georgieva said.

📸 Image of the week

A meme mocking the effect of the Fed rate hikes on the banking sector hit by the failure of the Signature Bank and SVB.


gold bitcoin coins with red economic indicators in the background

🤔 It’s your last chance. “It’s probably crypto’s last shot at turning itself into something lasting, rather than a bubble that glittered for a moment, but was forgotten as soon as it popped.” (Bloomberg Opinion)

“Crypto-land isn’t so much a looking-glass parody of the modern financial system, as its sibling. Part of that comes down to the fact that many of its participants cut their teeth in traditional capital markets, and replicated their structures in the institutional architecture of decentralized finance,” Bloomberg’s David Fickling writes.

What else is happening

Overlapping Chinese and Taiwanese flags

🇹🇼 All eyes on Taiwan’s president. Taiwan's President Tsai Ing-wen arrived in New York on a sensitive U.S. visit on Wednesday, vowing not to let external pressure stop the island from engaging with the world after China threatened to retaliate if Tsai met House Speaker Kevin McCarthy. (Reuters)

Beijing, which claims Taiwan as its own territory, has repeatedly warned the U.S. not to meet Taiwan's leader, as it would show support for the island's bid for independence.

🤖 They’re after you. In the U.S. and Europe, generative AI systems like ChatGPT could automate 25% of jobs, impacting ~300 million full-time workers. (FT)

The investment bank said on Monday that "generative" AI systems like ChatGPT, which can create content indistinguishable from human output, could lead to a productivity boom that eventually raises global gross domestic product by 7% over a decade.

In the long run, however, it could also lead to a "significant disruption" in the labor market, exposing 300 million people to automation across big economies, according to Joseph Briggs and Devesh Kodnani, the paper’s authors.

🛑 Let’s take a pause. Elon Musk, Apple cofounder Steve Wozniak, and a group of artificial intelligence experts have called for a six-month pause on developing systems with more power than OpenAI's newly launched GPT-4, citing potential risks to society. (Open letter)

"Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable," said the letter issued by the Future of Life Institute.

And finally…

A meatball made from extinct mamoth DNA
Source: Reuters

🦣 Mamoth meat, anyone? A giant meatball made from flesh cultivated using extinct woolly mammoth DNA was unveiled on Tuesday at Nemo, a science museum in the Netherlands. And it’s not an April Fools' joke! (Reuters)

The meatball was created by Australian cultured meat company Vow. "We wanted to create something that was totally different from anything you can get now," Vow founder Tim Noakesmith told Reuters, adding that an additional reason for choosing mammoth is that scientists believe that climate change is to blame mammonth’s extinction.


See you next week!


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