It suddenly collapsed.
The just-revealed U.S. consumption data has collapsed. On the evening of April 14, data released by the U.S. Census Bureau showed that retail sales in the U.S. fell by 1% month-on-month in March, which exceeded market expectations of -0.4%. In addition, Wall Street giants such as Citigroup and Bank of America have discovered through analysis of US credit card spending that the situation may be far more terrifying than imagined.
At the same time, a dangerous warning suddenly came: America’s epic bubble is bursting. On April 14 local time, Jeremy Grantham, a legendary Wall Street investor and co-founder and chief investment strategist of the asset management company GMO, warned that the turmoil sweeping the banking industry in Europe and the United States is just the beginning, and there will be more in the future. More confusion ensues. In the future, U.S. stocks will face huge declines. Even in the best case, the S&P 500 index may drop by 27% from the current level, and in the worst case, it will plummet by more than 50%.
At present, the hidden dangers of artificial intelligence continue to spark heated discussions, and more and more people in the industry worry that the “advent of AI” will threaten human security. According to the latest news, on the eve of the release of the latest generation of large-scale model GPT-4, OpenAI hired a team of 50 experts and scholars to conduct a half-year “adversarial test” on GPT-4, and urgently repaired a series of serious problems. security breaches in the United States, including the manufacture of chemical weapons and cyberattacks on military systems.
On the evening of April 14, data released by the U.S. Census Bureau showed that U.S. retail sales fell by 1% month-on-month in March, which exceeded market expectations of -0.4%. The previous value was revised up from -0.4% to -0.2%.
Specifically, retail sales (excluding cars) in March fell by 0.8% month-on-month, lower than analysts’ forecast of -0.3%; retail sales at gas stations fell by 5.5% month-on-month and 14.2% year-on-year, the largest decline. In addition, sales of auto stores, furniture, clothing, food and beverages, general merchandise, especially electronics and electrical appliances stores fell sharply, down 2.1% month-on-month.
The above data means that the “lag” of the Federal Reserve’s aggressive interest rate hike policy, combined with the impact of the banking crisis on US consumption, is beginning to emerge.
After the release of the US retail sales data, data from the CME Group showed that the market currently expects the Fed to raise interest rates by 25 basis points at the May meeting at 81.6%.
It is worthy of vigilance that Wall Street giants such as Citigroup and Bank of America have discovered through analysis of US credit card spending that the situation may be far more terrifying than imagined.
In the latest “Citi Credit Card Insights” report, Citibank analyst Paul Lejuez noted that credit card data for the 16 sub-sectors he tracks show a 10.3% decline in retail spending in the third week of March (ended March 18, 2023), That was a sharp increase from the previous week’s 6.8% decline. Spending other than food fell even more, at 13.0%, compared with an 8% decline the previous week.
Bank of America warned that the bad news is that the real bad news is coming. The unexpected decline in consumption data will lead to a significant risk of contraction in the US economy in the second quarter.
In its latest consumer report, Bank of America pointed out that the “extraordinary” wage growth in the United States is weakening, which makes consumers may not be able to maintain previous spending in the face of rising inflation, and consumption will shrink.
Once the data shows that the U.S. economy has fallen into recession, it may be too late for the Fed to do anything.
Epic Bubble Burst
The danger warning came suddenly: America’s epic bubble was bursting.
On April 14, local time, a legendary investor who successfully predicted the bursting of market bubbles three times warned that the turmoil sweeping the banking industry in Europe and the United States is just the beginning, and there will be more chaos in the future.
Jeremy Grantham, co-founder and chief investment strategist at asset management firm GMO, said in an interview that the stress on the U.S. financial system is far from over.
In view of this, Grantham further warned that U.S. stocks will face huge declines in the future. Even in the best case, the S&P 500 index will drop by about 27% from the current level, and in the worst case, it will plummet by more than 50%.
Grantham pointed out that the cause of all these bubbles is that the Federal Reserve has released water in the past few years, under the low interest rate and ultra-loose monetary policy, it has spawned a super bubble, and the prices of stocks, government bonds, real estate and even cryptocurrencies are all falling. grow rapidly.
Grantham argues that this general prosperity could lead to a particularly brutal reckoning. For example, the recent bankruptcy of Silicon Valley Bank (SVB) was caused in part by a sharp drop in U.S. government bond prices due to soaring interest rates. Silicon Valley Bank’s management had decided to invest most of its capital in held-to-maturity assets (HTM) to earn interest spreads, which directly led to the deterioration of the financial situation this time.
He predicts that a U.S. recession is almost certain as the bubble bursts.
Recently, Larry Fink, CEO of asset management giant BlackRock, also likened the Fed’s rate hike to the “first domino” that fell, while the collapse of Silicon Valley Bank (SVB) was the second domino. According to Fink, a third domino could still fall, with a sudden tightening of financial conditions that could lead to more bank failures.
In addition, the International Monetary Fund (IMF) released the latest “World Economic Outlook Report” and pointed out that the recent US and European banking crises have shown that the US and other regions’ banking systems are more vulnerable than expected, which may have a negative impact on the global economy. further shock.
AI fierce material exposure
At present, the hidden dangers of artificial intelligence continue to spark heated discussions, and more and more people in the industry worry that the “advent of AI” will threaten human security.
According to the latest news, on the eve of releasing the latest generation of large-scale model GPT-4, OpenAI hired a team of 50 experts and scholars to conduct an “adversarial test” on GPT-4 for half a year, repairing a series of serious problems. security breach.
Andrew White, a professor of chemical engineering at the University of Rochester, is one of the 50-person testing team, including academics, lawyers, risk analysts and security researchers, according to media reports.
Andrew White revealed that the early version of GPT-4 can assist in the manufacture of chemical weapons, and can access information sources such as papers and compound manufacturer directories. manufacturing location.
White told the media that GPT-4 allows everyone to conduct chemical research faster and more accurately, but it also brings huge risks, and everyone may make dangerous chemical experiments.
Subsequently, OpenAI urgently patched this dangerous vulnerability.
In addition, OpenAI’s test team also evaluated the potential of GPT-4 in financial crimes, cyber attacks, etc., and its possible threats to national security and battlefield communications. During testing, researchers at the Council on Foreign Relations found that GPT-4 could provide a concrete and feasible set of cyber attacks against military systems.
More worryingly, the more people use it, the more dangerous GPT-4 may become.
Some artificial intelligence experts pointed out that as more and more people use GPT-4, there will be more and more risk points, and there will always be someone who can turn AI into a terrible weapon. When GPT is connected to the Internet, or accesses some external knowledge sources through plug-ins, it will master more and more “dangerous knowledge”.
Economist Sara Kingsley, who participated in the test, told the media that the best solution is to clearly label the possible risks of AI products, and to prepare for possible problems and create a safety valve.