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🗞️ US national debt surpasses $28T

🗞️ US national debt surpasses $28T

ChatGPT highly favored among developers over Gemini

Techonomy Barista
September 17, 2024

The Techonomy Barista: disrupting your feed with news you actually want to read. 🥸

One of several residential buildings in China with no buyers, demonstrating the lull in its property market.

Today’s all-you-can-have buffet:

US national debt surpasses $28 trillion and is being ignored.
Gas power plants surge on AI boom in the US.
ChatGPT-4 favored among developers, Google’s Gemini lags.
S&P 500’s Equal-Weighted Index could be an option to diversify funds.
China’s VC industry plummets 98% since 2018 peak.

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 what you think! 🙂

Markets

Economic Calendar

Calendar shows important economic events for the top five economies of the world. All times US EST.

1. US debt passes $28 trillion as deficit hits 6% of GDP, yet Harris & Trump ignore addressing these concerns.

Source: WSJ

Key takeaways:

US Federal debt has surpassed $28 trillion, nearly 100% of GDP.
2024 budget deficit projected to exceed $1.9 trillion, over 6% of GDP.
Debt expected to grow by $22 trillion through 2034 if Congress doesn't act.
Interest costs may soon surpass annual defense spending.
Presidential candidates are making expensive promises without addressing fiscal concerns.

Source: WSJ

How it could impact you:

Higher interest rates on loans and credit cards may be on the horizon. Time to dust off that piggy bank and start saving for those big purchases. 🐷
Your retirement plans might need a reality check. Social Security and Medicare are major drivers of rising spending, but politicians are reluctant to touch them.
Tax cuts set to expire in 2025 might affect your paycheck. Both parties want to extend them for most households, but the long-term impact on the deficit is concerning.
The value of the dollar as a global reserve currency gives the U.S. more fiscal leeway, but this advantage isn't guaranteed forever.

2. Gas-fired power surges due to AI boom, defying green expectations 🔥

Source: Bloomberg

Key takeaways:

US energy companies are planning new gas-fired power generation at the fastest pace in years.
Surge in demand from AI data centers, manufacturing, and electric vehicles is driving this trend.
Gas accounted for up to 60% of new generation, surprising experts who expected renewables to dominate.
In the first half of 2024, more new gas power capacity was announced than in all of 2020.
US power-sector demand for gas could rise as much as 30% by 2030 from today's levels.

Souce: Bloomberg

How it impacts you:

Your electricity bills might go up. The Department of Energy estimates a 10% annual increase if utilities add new gas generation.
The surge in gas-fired power could slow down the transition to renewable energy, potentially affecting air quality and climate change in your area. You might want to keep that inhaler handy. 🤷‍♀️
Long-term investments in gas infrastructure could lock in emissions for decades, potentially impacting future generations' ability to meet climate goals. Maybe it's time to teach your kids how to code... and farm. 🌾

3. Google's Gemini struggles to attract developers, lags behind OpenAI 🐌

Source: Retool, The Information

Key takeaways:

Google's Gemini AI is facing difficulties in attracting developers due to complex setup processes and configuration requirements.
76% of developers use GPT-4 them compared to just 2.6% using Gemini.
Developers say Gemini takes hours to set up, versus seconds for OpenAI's API.
Google's multiple overlapping AI products and differing query formats create confusion for users.
Some larger companies still find value in Gemini, particularly for processing large amounts of information.

What this could mean for you:

Your favorite AI-powered apps might stick with OpenAI or Anthropic models. Looks like Google's "Do no evil" motto doesn't extend to "Do no confusion." 😅
If you're a budding app developer, you might find yourself spending more time setting up Gemini than actually coding. Who needs sleep when you can debug cloud configurations, right? 💤

4. S&P 500’s Equal-Weighted Index hits record high, signaling market breadth 📊

Background: The S&P 500 Equal Weight Index (EWI) is a version of the S&P 500 that assigns equal weight to each of its constituent stocks, regardless of their market capitalization. This contrasts with the traditional S&P 500 Index, where larger companies have a greater influence on the index's performance due to their higher market cap.

Source: Bloomberg

Key takeaways:

S&P 500's equal-weighted index reached an all-time high, indicating broader market participation beyond just the largest companies.
Rotation out of tech megacaps into economically sensitive sectors, suggesting investor optimism about overall economic health.
Expectations of a 0.5% Fed rate cut on Wednesday, Sep 18.
Banks outperformed the broader market on soft landing hopes.
Treasury 10-year yields declined to 3.62%, signaling lower long-term interest rate expectations.

How it impacts you:

Consider owning the equal-weighted S&P 500 Index as better risk-adjusted exposure than the market-cap-weighted version.
Your diversified investments might be performing better than you think. While tech giants have been hogging the spotlight, the average stock is quietly climbing. Time to check those dusty corners of your portfolio? 🕵️‍♂️
If you're in the market for a loan, now might be a good time to lock in rates before they potentially rise again.
Keep an eye on your sector allocation. With the market rotating, it might be time to rebalance your portfolio to align with the changing economic landscape.

5. China's venture capital industry crumbles, new start-ups plummet 98% since 2018 peak 📉

Source: Financial Times

Key takeaways:

China's venture capital industry has experienced a dramatic decline, with new start-ups falling from 51,302 in 2018 to just 1,202 in 2023.
State-backed funds now dominate the VC landscape, accounting for an estimated 80% of capital in the market.
The funding crunch has hit critical sectors like biotech, with financing for biotech and pharma start-ups dropping 60% from its 2021 peak.
Many VC firms are downsizing, with major players like Source Code Capital, HongShan, and Hillhouse cutting staff in their China offices.
The decline is attributed to factors including economic slowdown, government crackdowns on tech companies, and geopolitical tensions affecting foreign investment.

What this could mean for you:

Your dreams of becoming the next Chinese tech billionaire might need a reality check. Time to pivot from coding the next big app to perfecting your dumpling-folding skills instead. 🥟
On the bright side, with fewer start-ups competing for attention, your quirky side hustle might just stand out.