📣 Altman partners with Apple designer

China sinking deeper

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Techonomy Barista
September 23, 2024

Welcome to the Techonomy Barista: Because staying informed shouldn't feel like a chore.

Saudi capital, Riyadh, as the leader of semiconductor manufacturing in the region, circa 2033.

What we’re covering today:

  1. Altman teams up with legendary Apple designer to make hardware.

  2. BlackRock secures $5B from Saudi wealth fund PIF.

  3. TSMC and Samsung discuss potential semiconductor installation in UAE.

  4. China central bank governor holds rare press conference on state of the economy.

  5. Impact of Fed rate cut on gold, equities.

We’re excited to announce we have launched a podcast for our top stories because we heard some of you like to listen on the move, so please give this a try and let us know if you have any suggestions! Just note that it could give slightly inaccurate information but from recent tests, it has got better. 🙂

Markets

Economic Calendar

Timeline of products Jony Ivy was responsible for during his time at Apple.
Source: Wikipedia, Techonomy Barista research.

Key takeaways:

  • Jony Ive confirms collaboration with OpenAI CEO Sam Altman on an AI hardware project.

  • Project is funded by Ive and the Emerson Collective, with potential $1 billion funding by year-end.

  • Team of 10 includes key former Apple employees who worked on the iPhone.

  • LoveFrom, Ive's company, leads device design from a newly acquired 32,000-square-foot office in San Francisco.

  • Specific details about the device remain unclear, but it's inspired by generative AI's potential to handle complex requests.

What this could mean for you:

  • Your next gadget might be an AI-powered device that makes Siri look like a flip phone. Time to start practicing your "Hey, Skynet" wake word! 🎙️

  • This collaboration could lead to more intuitive and powerful AI-integrated devices for everyday use, potentially changing how you interact with technology at home and work. 🤝 

2. Saudi wealth fund pivots with BlackRock, boosting profile of key executive 🇸🇦

Source: Bloomberg

Key takeaways:

  • BlackRock secured a $5 billion investment from Saudi Arabia's Public Investment Fund (PIF).

  • Yazeed Al Humied, PIF's deputy governor for Middle East and North Africa, is gaining prominence.

  • PIF is shifting focus to domestic investments, aligning with Saudi Vision 2030.

  • Al Humied manages nearly two-thirds of PIF's $925 billion assets.

  • International firms are increasingly courting Al Humied for Saudi business opportunities.

What this means for the international investment industry:

  • Global asset managers may need to recalibrate their strategies to align with Saudi Arabia's local investment focus, which may require establishing significant physical presence in the kingdom to secure PIF funding.

  • The rise of executives like Al Humied signals a new era of deal-making. Investment firms must cultivate relationships with key Saudi decision-makers to access the lucrative Middle Eastern market.

  • Expect a surge in Saudi-focused investment products and funds as firms scramble to capitalize on the kingdom's economic transformation. Time to dust off those oil and gas textbooks! ⛽

  • Investment professionals with local expertise and cultural understanding will be in high demand. Arabic lessons, anyone? 🎓

3. UAE eyes chip-making leap with TSMC and Samsung talks. 🇦🇪💻

Key takeaways:

  • TSMC and Samsung discussing major chip factories in UAE.

  • Projects could cost over $100 billion, funded by UAE sovereign wealth.

  • Aim to increase global chip production and potentially lower prices.

  • Technical hurdles include water purification and talent acquisition.

  • US seeks oversight on production and shipments due to China concerns.

How it affects the semiconductor industry:

  • Global chip manufacturing landscape could shift, with a new major player emerging in the Middle East.

  • Heightened competition among chip-making nations, potentially spurring further government investments.

  • New challenges in talent acquisition and retention as the industry expands to non-traditional locations.

  • Increased focus on sustainable manufacturing practices, particularly water usage in chip production.

4. China cuts rates, plans rare briefing as economy sputters 📉

Source: Bloomberg

Key takeaways:

  • PBOC cut 14-day reverse repurchase rate, signaling potential for more easing.

  • Central bank governor Pan Gongsheng to hold press conference on financial support for economic development.

  • China's 10-year government bond yield fell to 2.03%, indicating expectations for more monetary stimulus.

  • Real estate crisis has wiped out estimated $18 trillion in household wealth, and the economy expanded at slowest pace in five quarters, with deflation longest since 1999.

  • Economists suggest enforcing housing rescue package as most impactful way to boost economy, while president China could miss annual growth target of around 5%.

When a central bank implements a reverse repurchase rate, it signals the bank's monetary policy stance, often used to stabilize the economy or manage inflation by adjusting the attractiveness of holding excess reserves.

What this means for China’s economy:

  • Easing monetary policy may help combat the ongoing deflationary pressures, which have persisted for an unusually long period.

  • If the housing rescue package is more aggressively implemented, it could help stabilize the troubled real estate sector, which has been a major drag on the economy.

  • These measures highlight the challenging balancing act China faces - stimulating growth while avoiding excessive debt accumulation and maintaining currency stability.

5. Fed cuts rates: Gold hits record high, Equities poised for 14% gain. 📈

Source: Bloomberg Finance LP.

Key takeaways:

  • Fed and ECB have initiated rate-cutting cycles, impacting various asset classes.

  • Gold prices reached new record highs following interest rate cuts.

  • S&P 500 historically averages 14.2% return in 12 months after initial rate cuts.

  • Emerging market equities tend to outperform developed markets during non-recessionary rate cuts.

  • Gold prices typically rise 15.5% when rate cuts precede a recession, fall 7% without recession. EM bonds have shown superior returns across various economic scenarios during Fed easing cycles.

How it impacts you:

  • Your investment portfolio may benefit from increased equity exposure, particularly in U.S. large-cap growth stocks.

  • Consider gold investments for portfolio diversification, despite historical trends suggesting potential downside.

  • Be prepared for increased market volatility due to the upcoming U.S. election and economic uncertainties. 

  • Your savings accounts may offer lower interest rates, potentially affecting your passive income. Stay informed about economic indicators to assess whether we're heading for a soft landing or recession, as this will impact various asset classes differently.

AI

OpenAI’s new o1 model is better at reasoning and could deceive people.

Tech

SpaceX crew-9 launch 🚀: How a NASA mission turned into a rescue Op.

Heat breaks quantum entanglement 🔥🌀—Researchers accidentally set a limit on the ‘Spooky’ Effect.”

Startup

Capmont rolls out $111M fund for B2B tech startups.

Business

Alaska Airlines grounds flights due to tech outage.

Fed cuts rates: Job market impact and industry effects.

Protesters rally at Apple stores regarding war in Gaza. 🌍📱

US Politics

Harris raises $27M in NY fundraiser.

Top Economies (non-US)

Biden, Modi announce plans for new semiconductor plan in India.

Japan’s exports slow down as machinery orders shrink.

Fascinating

Source: Visual Capitalist

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