Today’s top stories
Wall Street’s reporting season begins. Citigroup’s quarterly profits fell more than a third as it was hit by slower corporate spending, a dearth of deals and a costly round of lay-offs. JPMorgan’s profits were boosted by higher interest rates, as were those of Wells Fargo. BlackRock profits jumped too as assets under management reached $9.4tn.
The EU’s energy regulator warned governments against a repeat of emergency energy measures, saying they could increase fossil fuel use and send the wrong signal to investors.
The investment chief at one of the world’s top hedge funds warned that the US battle with inflation was far from over. A top Federal Reserve official said two more quarter-point rate rises would be needed this year to bring it under control.
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Good evening.
Promotional work on the Barbie movie is among the casualties of Hollywood’s first industry-wide shutdown since 1960, with actors’ remuneration for artificial intelligence “digital doubles” one of the key sticking points in talks with studio and streaming bosses.
The strike is the most visible sign of discontent so far from workers alarmed at the relentless rise of AI. It follows a week of warnings from US regulators to the OECD and the United Nations about its potential side-effects.
The Federal Trade Commission yesterday launched a wide-ranging probe into ChatGPT maker Open AI to examine whether people had been harmed by the chatbot’s creation of false information and to investigate breaches of privacy and data security.
The OECD on Tuesday called on its member states to prepare for the negative side-effects from the mass adoption of AI in the workplace. Potential benefits, such as higher job satisfaction and productivity gains, had to be weighed against downsides, particularly for traditionally highly-skilled occupations, it said.
Big Tech is moving swiftly to capitalise on developments. Meta, which is racing to catch up with Microsoft-backed OpenAI and Google, yesterday said it would release a commercial version of its AI model, allowing start-ups and businesses to build custom software on top of the technology.
The promise of AI has also revitalised venture capital activity in Silicon Valley. In recent weeks, software group Databricks has bought generative AI start-up MosaicML for $1.3bn, Thomson Reuters paid $650mn for legal services AI group Casetext, Robinhood bought credit card start-up X1 for $95mn, and finance automation company Ramp acquired Cohere.io, a start-up with an AI-powered customer support tool.
Until now, much of the hype around AI, particularly the generative kind, has focused on fun aspects. For example, you can listen here to how the FT’s music critic used it to create an original fake song in the style of Tom Waits (spoiler alert: it’s pretty bad).
For Unesco, the UN’s scientific and cultural organisation, the implications are much darker. It weighed in on Wednesday, arguing that AI-driven neurotechnology, which connects computers with the brain, was advancing so fast that it threatened human rights and needed global regulation.
“The promise,” said Gabriela Ramos, assistant director-general for social and human sciences, “may come at a high cost in terms of human rights and fundamental freedoms, if abused. Neurotechnology can affect our identity, autonomy, privacy, sentiments, behaviours and overall wellbeing.”
What, I wonder, would Barbie make of all that?
Need to know: UK and Europe economy
UK public finances are in a “very risky” position, with government debt set to hit 310 per cent of GDP in 50 years, the Office for Budget Responsibility warned. The economy shrank in May as an extra bank holiday suppressed activity, but the fall of 0.1 per cent was less than economists had expected.
Prime minister Rishi Sunak backed pay rises for public sector workers of about 6.5 per cent but only after ministers were ordered to find significant savings from their budgets.
New research highlights how England’s cities are recovering from the pandemic faster than rural areas.
UK estate agents are at their most gloomy since 2009 as surging mortgage rates hit the market, according to a new survey. The housing affordability crunch has made the gap between those with and without parental wealth much worse, says John Burn-Murdoch. The number of homes for rent meanwhile has hit a 14-year low.
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The eurozone trade deficit nearly disappeared in May as falling energy prices reduced the value of imports while car and food exports rebounded.
Germany set out plans for a tougher approach to China, focusing on “de-risking” the relationship with its largest trading partner. A parliamentary report in the UK said the government was failing to respond to Chinese spying.
Need to know: Global economy
China is struggling to revive its stricken property market but help for developers is not translating into investor confidence or rising sales. The country’s exports in June suffered their biggest year-on-year decline since the start of the pandemic, adding to concerns over economic growth. Here’s our new explainer on why China is on the brink of deflation.
The second part of our series on how the US is rewriting the rules of the global economy examines other countries’ attempts to keep up with Washington’s new found love of subsidies.
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Africa editor David Pilling compares the recovery chances of the two biggest economies south of the Sahara. For South Africa, things are likely to get worse before they get better. In Nigeria, there is some hope that things can start to get better first, he writes.
Australia picked a new central bank chief after a backlash against its interest rate tightening cycle last year. The first tasks of Michele Bullock, the first female governor of the Reserve Bank of Australia, are to implement a swath of reforms and bring inflation under control.
Farm robots are set for a new period of growth as labour costs rise. Their increasing capabilities are making possible a more tailored, plant-by-plant approach to cultivation that can minimise inputs such as water and agrichemicals. Read more in our special report: Sustainable food and agriculture.
Need to know: business
The US drug regulator approved the country’s first-ever over-the-counter birth control pill, marking a significant development in a nationwide battle over reproductive rights. Opill, made by the Irish-American pharmaceutical group Perrigo, will be available at pharmacies, convenience stores, grocery stores and online.
More misery is in store for European air passengers this summer. Staff shortages in air traffic control and congested skies caused by the war in Europe are set to disrupt schedules while London Gatwick airport will be hit by a walkout over pay.
Still, global airlines are hoping for a better summer than last year after spending to boost operational resilience. One carrier that’s not too worried is Delta Air Lines, which recorded the highest revenue and earnings in its history and a 65 per cent surge in sales of transatlantic flights. Cathay Pacific is also enjoying a post-pandemic rebound.
Cornwall hopes to become a hub in the UK production of lithium, a key component for electric car batteries. Success rests on a handful of developers battling to secure capital.
Science round up
Scientists are edging closer to declaring the Anthropocene epoch, or the point when humanity’s influence on the Earth’s geology became irreversible. Columnist Camilla Cavendish says this is our final warning on climate.
The World Health Organization classified aspartame, an artificial sweetener commonly found in fizzy drinks, as “possibly carcinogenic”, sparking the risk of a consumer backlash against industry giants such as PepsiCo and Coca-Cola.
Commentator Anjana Ahuja says the deep sea is in danger of turning into an invisible wild west after a UN deadline for finalising regulations over mining in international waters expired without agreement. Countries now have the green light to apply for mining licences in search of minerals linked to the green energy transition. UK MPs called for a pause to protect biodiversity.
UK space policy needs stronger leadership and better co-ordination if the country is to thrive in the fast-growing small satellite market, according to a parliamentary report. Efforts to set up western Europe’s first commercial launch facilities had been hampered by poor collaboration between regulators, it said.
Something for the weekend
Try your hand at the range of FT Weekend and daily cryptic crosswords.
Some good news
The UN said Aids could be ended by 2030 as it published a new report outlining the path to elimination.
Source: Economy - ft.com
