Market News 7/30

Markets

Competing effects of central banks, healing supply chains affect recession odds

Why the Drivers of Lower Inflation Matter

Recent positive developments in inflation have sparked a debate regarding the extent to which central banks' interest rate increases have contributed to this progress. The outcome of this debate is crucial for understanding the future trajectory of inflation and interest rates. In the past week, both the Federal Reserve and the European Central Bank raised their benchmark interest rates to the highest level seen in 22 years and have not ruled out the possibility of further increases.

If it turns out that the recent progress in inflation cannot be solely attributed to the impact of higher interest rates, it suggests that central banks might have room to reduce rates before a potentially painful recession takes hold.

Central banks generally believe that their actions influence inflation by using higher interest rates to dampen demand for goods, services, and labor, leading to increased unemployment. This, in turn, exerts downward pressure on both prices and wages.

Politics

America’s Military Trails Russia and China in Race for the Melting Arctic

Last fall, while patrolling the Bering Sea, the U.S. Coast Guard Cutter Kimball encountered a significant sight – seven Chinese and Russian vessels sailing in a double line near the Aleutian Islands in Alaska. Among them was the Nanchang, the main Chinese ship belonging to a new class of cruiser-destroyers capable of launching over 100 guided missiles. According to U.S. military officials and national security experts, these ships were engaged in a joint exercise and ventured into U.S. waters, sending a clear message about the strategic importance of the region to Moscow and Beijing.

Although it's not uncommon to encounter Russian warships and Chinese research vessels in the area, which includes the Aleutians, a crucial chain of volcanic islands dividing the Pacific Ocean from the Bering Sea and Arctic Ocean, witnessing these combatants forming a surface action group and sailing together is a rare occurrence. The Aleutians hold historical significance as the site of fierce battles during World War II. Notably, the Coast Guard base at Dutch Harbor, located in one of the small island cities called Unalaska, plays a vital role in the region and handles more fish than any other port in the United States.

Rear Adm. Nathan Moore, who was the Coast Guard commander for the Alaska region, expressed the rarity of witnessing such a group of combatants sailing together. He recently assumed the role of deputy commander for the Atlantic.

Tech

Outcry Against AI Companies Grows Over Who Controls Internet’s Content

Authors, artists, and internet publishers are expressing growing concern over the widespread use of generative AI, which is increasingly relying on their creative works as input.

This rising awareness has sparked a conflict between the parties responsible for the inputs (content creators) and the outputs (AI companies) of these new artificial intelligence tools. The main point of contention is whether and how content originators should be fairly compensated for their contributions. This dispute has the potential to disrupt the AI boom just as it appears ready to revolutionize the global economy.

Major players in the artificial intelligence industry, including OpenAI (backed by Microsoft) and Google, have developed generative AI systems like ChatGPT by gathering vast amounts of data from the internet and utilizing training algorithms to enable these systems to mimic human speech. While the companies argue that using this data without compensation is within the bounds of legality, they are open to engaging in discussions with content creators to address the matter.

Sports

Terence Crawford Seizes the Moment to Become Undisputed Boxing Champion

Just two days before his significant boxing match, Terence Crawford took to Instagram and shared a video seeking suggestions for who should accompany him during his walkout to the ring. He specifically mentioned fellow champion Shakur Stevenson and expressed his desire to have the iconic rapper Eminem walk him out for his highly anticipated welterweight title bout against Errol Spence Jr.

Stevenson acknowledged Eminem's greatness and praised him as one of the greatest of all time (GOAT). However, he mentioned that he had never seen Eminem performing a walkout for any boxer in the past.

Not long after, Eminem, the Grammy-Award winning rapper, responded to the video with enthusiasm. He expressed how crazy and exciting the idea was and hailed Terence Crawford as one of his favorite boxers. The exchange between the boxing champion and the renowned rapper created quite a buzz and anticipation for the upcoming fight.