>>> Weekly Market Update

The post-election rally resumed this week as a confluence of factors appeared to reinforce investor sentiment. Key November earnings reports illustrated both the US consumer and the generational AI transformation continue to perform as largely expected. Breadth, in particular, was encouraging with advancers leading decliners broadly. Importantly, US interest rates held within recent ranges. The benchmark 10-year yield remained capped by what is largely viewed as important, post-election resistance at 4.5%. Separately, President-elect Trump was forced to abandon his controversial AG nomination, suggesting Congressional Republicans can offer some modicum of restraint when he retakes control next year. Also, Trump’s speculated Treasury Secretary picks seemed to engender further confidence from investors. Finally, even a brief bout of risk aversion related to a worrisome, ratcheting up of Ukraine tensions between the US and Russia was easily digested. For now, a missile salvo that included the first ever combat use of a hypersonic, intermediate range ballistic missile by the Russians, and stepped up rhetoric by President Putin were mostly viewed through the prism of the likely final throes of the conflict, before new US administration pushes all parties to the bargaining table and hopefully yields some kind of détente.

On the data front, US PMI readings were solid and mostly in-line with expectations, led by strength in services with favorable underlying growth and signs of continued cooling inflation. Juxtaposed to that was European PMI data that plunged, with services contracting and manufacturing sinking deeper into recessionary territory. The US dollar index rose to a fresh 2-year high on Friday with the Euro testing below 1.04. Futures markets see only slightly better odds that the Fed cuts by 25 bps next month while EU markets have begun to handicap a 50 bps cut from the ECB. Bitcoin continued its run towards 100K as reports suggested Trump will look to reward crypto advocates through White House staffing decisions. For the week, the S&P and Nasdaq each gained 1.7%, while the DJIA climbed 2%.

Corporate news featured most of the final big earnings reports of the pre-holiday quarter. Nvidia maintained its lofty status as the leading edge of the AI revolution, beating quarterly expectations, though its guidance wasn’t as stellar as traders have come to expect. Management eased concerns about growth deceleration by denying recent reports about overheating issues with its Blackwell GPUs and describing demand for the new product is “staggering” with deliveries ahead of plan. The Gap hit the mark with consumers, beating estimates and raising guidance as online sales saw good growth and management reported holiday selling is off to a “strong start”. Walmart reported a strong quarter and raised guidance, but also became the latest big retailer to warn that potential new tariffs next year could force them to raise prices. In contrast, Target had terrible quarterly results, saying it had encountered some “unique” challenges and cost pressures as gross margins and operating margins fell. Baidu fell to a 52-week low after reporting quarterly results, and despite touting progress on its AI products the stock has given up all of the 40% gains it saw two months ago as China unleashed its latest stimulus barrage.


MON 11-18
(RU) US Pres Biden reportedly for the first time authorized Ukraine to use long-range missiles ATACMS to hit targets inside Russia (for now only in Kursk region) is a significant reversal in US policy – WaPo
(US) Tier1 analysts citing call with co-owner of housing advisor firm Parrott Ryan Advisor: Immigration is a key risk to US homebuilders; NAHB estimates immigrants make up 31% of construction tradesmen; Major GSE reform still seems unlikely
(US) Treasury Dept Issues Final Regulations to Sharpen and Enhance CFIUS Procedures and Enforcement Authorities to Protect National Security
ADM Reports Final Q3 $1.09 v $1.09 prelim, Rev $19.9B v $20.6Be; Affirms guidance; Foresees softer market conditions into next year
BECN Building products distributor QXO said to be in discussions to make bid - WSJ
BKKT DJT in advanced talks to buy crypto trading venue Bakkt - FT
CSCO Signs Multi-Year Agreement with MGM Resorts International; Gives MGM Resorts access to much of Cisco's software portfolio and Customer Experience (CX) services
CTVA Announces Breakthrough in Wheat Technology; Breakthrough has the potential to increase yield by 10%
INVH Announces $200M JV with a leading global real estate investment partner; Expected to deploy ~$500M, including debt, to acquire newly constructed homes
NVDA NVIDIA Accelerates Google Quantum AI Processor Design With Simulation of Quantum Device Physics

TUES 11-19
(EU) EURO ZONE OCT FINAL CPI Y/Y: 2.0% V 2.0%E; CORE CPI Y/Y: 2.7% V 2.7%E
(IR) IAEA: Iran has agreed to stop producing near-bomb grade uranium, and to allow experienced inspectors to conduct verifications
(RU) Russia Pres Putin approves updated nuclear doctrine; Russian spokesperson say Russia may use nuclear weapons in response to aggression using conventional weapons supported by a nuclear power (as announced in Sept) - Russian press
(UR) UKRAINE REPORTEDLY MAKES FIRST US-MADE ATACMS LONG-RANGE MISSILE STRIKE INSIDE RUSSIA'S BORDER REGION - UKRAINE PRESS CITING UKRAINE MILITARY OFFICIAL [**Note: Ukraine has already used UK long-range missiles Storm Shadow (which have even longer range than ATACMS) in past years to strike Crimea]
(US) Fed's Schmid (non-voter for 2024; voter for 2025; hawk): Large fiscal deficits won't cause inflation because Fed will prevent it, though that would mean higher interest rates - speech text
(US) Pres-elect Trump said to interview both Kevin Warsh and Marc Rowan for US Treasury Secretary job on Wednesday - financial press
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast from 2.5% to 2.6%
CMCSA Reportedly confirms plans to spin off NBCUniversal cable channels; Said timeframe will take 1 year to complete - press
LEU Russian low enriched uranium trade partner TENEX has export license to US suspended, effective Dec. 31st; Centrus will be in communication with its customers whose pending orders may be affected and is assessing actions to mitigate adverse impacts (update)
LOW Reports Q3 $2.99 v $2.81e, Rev $20.2B v $20.0Be; Raises mid-point of sales outlook, but trims margin; Notes continued softness in DIY bigger-ticket discretionary demand, which was partly offset by storm-related sales and positive comparable sales in Pro and online
TKA.DE Reports FY23/24 Net -€1.4B v -€2.0B y/y, adj EBIT €567M v €526Me, Rev €35.0B v €34.9Be
J Reports Q4 $1.37 v $1.36e, Rev $2.96B v $2.99Be; Book-to-bill continues to grow
WMT *EXEC: HOLIDAY PERIOD IS OFF TO PRETTY GOOD START; TARIFFS COULD FORCE WALMART RAISE PRICES; CONSUMERS ARE WAITING TO MAKE GENERAL MERCHANDISE PURCHASES UNTIL THEY SEE A COMPELLING DEAL, ESPECIALLY AS THEY PAY MORE FOR FOOD - PRE-EARNINGS MEDIA CALL WITH CNBC
WMT Q3 US Grocery SSS +mid single digit y/y; Q3 US Grocery inflation bps 100bps (primarily to eggs) v 60bps in Q2 - earnings call
WMT Reports Q3 $0.58 v $0.53e, Rev $169.6B v $167.5Be; Raises outlook again

WEDS 11-20
(RU) REPORTEDLY RUSSIA PRES PUTIN IS OPEN TO DISCUSSING A UKRAINE CEASEFIRE DEAL AND SECURITY GUARANTEES FOR UKRAINE WITH US PRES-ELECT TRUMP AND ALSO OPEN TO WITHDRAWING FROM "RELATIVELY SMALL" PATCHES OF UKRAINE TERRITORY, BUT RULES OUT MAKING ANY MAJOR TERRITORIAL CONCESSIONS AND INSISTS UKRAINE ABANDON AMBITIONS TO JOIN NATO - PRESS CITING RUSSIAN SOURCES
(UK) OCT CPI M/M: 0.6% V 0.5%E; Y/Y: 2.3% V 2.2%E (highest annual pace since Apr)
(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y to accelerate again to 2.7% from 2.6% for Oct US CPI Y/Y
(US) Follow Up: Some House Republicans may block Pres-elect Trump from using a recess appointment on attorney general nominee Gaetz, but Pres-elect Trump said to be convinced that Speaker Johnson is on board for recess appointments idea; Several House Republicans would vote against any motion to go into recess - Axios
(US) Pres-elect Trump reportedly to revive the Keystone XL oil pipeline - Politico
(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y to accelerate again to 2.7% from 2.6% for Oct US CPI Y/Y
(US) Reportedly Pres-elect Trump is looking more seriously at Sen. Bill Hagerty (R-Tenn.) for Treasury secretary – Axios
*TTN Reminder: In late Sept, Iran was said to be brokering talks to send advanced Russian supersonic anti-ship missiles to Yemen's Houthis, which would be a “game changer” for regional security; That press report cited that Russia did not make final decision on it, but would potentially arm the Houthis in case "Western states decide to allow Ukraine to use their weapons to strike farther into Russian territory"
BARC.UK TTN Summary of 03:45ET J.P. Morgan UK Leaders Conference: Credit environment in the UK remains benign with Q3 loan loss rate at 3 basis points; US cards delinquencies higher than last year as expected but have stabilized.
F Plans to cut 4K jobs in Europe by end-2027, including 2.9K jobs in Germany
NVDA Reports Q3 $0.81 v $0.75e, Rev $35.1B v $33.2Be; Affirms Blackwell production shipments are scheduled to begin in Q4
NVDA TTN Summary of 17:00ET Earnings Call: There are 'no issues' with overheating in the liquid-cooled Grace Blackwell servers; Blackwell is now in the hands of all our major partners; Expects to deliver more Blackwells in Q4 than previously estimated; Customers are gearing up to deploy Blackwell at scale and demand for Blackwell is 'staggering'
PANW Reports Q1 $1.56 v $1.48e, Rev $2.14B v $2.12Be; Announces 2:1 stock split; Raises guidance
TGT Reports Q3 $1.85 v $2.29e, Rev $25.2B v $25.9Be; Cuts outlook and guides Q4 weak; Encountered some unique challenges and cost pressures
TJX Reports Q3 $1.14 v $1.09e, Rev $14.1B v $14.0Be; Says Q4 is off to a strong start, but guides Q4 below est at midpoint; Planning to enter Spain with its TK Maxx banner in early 2026

THRS 11-21
(RU) Russia Pres Putin: After long range attacks from Ukraine, this regional conflict has gained elements of a global one - Statement
(UR) REPORTEDLY UKRAINE AIR FORCE SAYS RUSSIA FIRED ICBM AS PART OF OVERNIGHT ATTACK - PRESS (UNCONFIRMED) [**Note: first time a missile of this power and range has been used during Ukraine/Russia war]
(US) BOFA INSTITUTE: WEEK-TO-NOV 16TH TOTAL CARD SPENDING +0.6% Y/Y V +1.0% ON AVERAGE IN OCTOBER; Within the sectors we report, online electronics, airlines & lodging showed the biggest y/y rise since Nov 3rd
(US) Fed’s Barkin (voter for 2024; non-voter for 2025): Do not want to prejudge December decision; Fed should not preemptively adjust monetary policy ahead of possible changes in economic policy; US more vulnerable to inflation shocks - FT
(US) Fed's Schmid (non-voter for 2024; voter for 2025; hawk): Fed will wait to react to fiscal policy - Q&A session
(US) INITIAL JOBLESS CLAIMS: 213K V 220KE (lowest since Apr); CONTINUING CLAIMS:1.908M V 1.88ME (~1-yr high)
(US) NOV PHILADELPHIA FED BUSINESS OUTLOOK: -5.5 V +8.0E
(US) Reportedly Pres-elect Trump's search for a Treasury secretary remains in flux, with Trump telling allies and advisers in recent days that he’s yet to be completely sold on the candidates he’s interviewed so far - press
(US) US Pres Elect Trump names Pam Bondi as Attorney General - press
(US) TRUMP SAID TO CONSIDER HAVING KEVIN WARSH SERVE AS TREASURY SEC AND THEN FED CHAIR - WSJ Timiraos
(US) Redfin: The number of homebuyers and sellers contacting Redfin agents has jumped over the last week, with Redfin’s Homebuyer Demand Index posting its biggest Y/Y increase since early 2022
(US) WEEKLY EIA NATURAL GAS INVENTORIES: -3 BCF VS. +5 BCF TO +7 BCF INDICATED RANGE (first negative reading since early Sept)
(JP) JAPAN OCT NATIONAL CPI Y/Y: 2.3% V 2.3%E; CPI EX FRESH FOOD (CORE) Y/Y: 2.3% V 2.2%E
(ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 7.75%; AS EXPECTED
BIDU Reports Q3 (CNY) 16.60 v 20.40 y/y, Rev 33.6B v 34.4B y/y; Notes in Nov, its AI bot ERNIE handled approximately 1.5B API calls daily v 600M in August
DE Reports Q4 $4.55 v $3.90e, Net Sales $9.28B v $9.15Be; Guides initial FY25 below est
DE Guides initial FY25 R&D expenses down slightly; Oct US/Canada Retail Sales of 2WD Tractors and Combines drop was bigger for Deere comparing with industry average - earnings slides
ESTC Reports Q2 $0.59 v $0.38e, Rev $365M v $354Me; Raises guidance, CFO to leave December 31, 2024
GAP Reports Q3 $0.72 v $0.56e, Rev $3.83B v $3.80Be
GOOGL Exec: To file our own proposals in Dec and to make our broader case in 2025
INTU Reports Q1 $2.50 v $2.36e, Rev $3.28B v $3.14Be; Guides Q2 light, affirms FY25 outlook
OPENAI.IPO Reportedly considering launching a browser product to challenge Google – TheInformation
PDD Reports Q3 (CNY) 18.59 v 19.67e, Rev 99.4B v 102.8Be (v 68.8B y/y); Notes intensified competition and ongoing external challenges

FRI 11-22
(EU) EURO ZONE NOV PRELIMINARY MANUFACTURING PMI: 45.2 V 46.0E (29th month of contraction); Services PMI in 1st contraction in 10 months; Business sentiment dropped sharply and was the lowest since September 2023; Notes if the euro keeps weakening, purchase prices might even rise in the coming months, especially if the EU Commission imposes counter-tariffs in response to potential US tariff hikes
(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 43.2 V 44.5E (lowest since Jan and 22nd month of contraction); Notably, French companies anticipate the contraction trend in activity to carry on into 2025 as, for the first time since May 2020; Notes no sign of relief given the deadlock over the country's 2025 budget
EUR/USD *Hits two-year low following weak PMIs, particularly in services, as ECB futures now pricing 50% chance for 50bps cut in Dec v <20% chance before PMIs
USD/JPY Charles Schwab's chief global investment strategist: Traders are piling up bets against the yen again, less than a month before the next BOJ meeting on Dec 19th when a hike like the last one in August could trigger a reversal
(US) Fed semi-annual financial stability report: Asset valuation pressures remained elevated; Auto and credit card loan delinquencies are above pre-pandemic levels; Hedge fund leverage near highest level since 2013
(UK) NOV PRELIMINARY MANUFACTURING PMI: 48.6 V 50.0E (2nd straight contraction and lowest print since Feb 2024); Notes prices charged inflation resumed its downward trajectory in November, despite a faster increase in overall input costs.
- Services PMI: 50.0 v 52.0e
(US) NOV PRELIMINARY S&P MANUFACTURING PMI: 48.8 V 48.9E
(US) NOV FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 71.8 V 73.9E; - 5-10 year inflation expectations 3.2% v 3.1% prelim
(CN) European Parliament Intl Trade Committee Chair Lange: Close to agreement with China to abolish EV import tariffs
Tier1 analysts citing call with Flexport expert: In recent weeks has seen some customers pull forward orders ahead of potential tariffs and US East Coast strikes; Ocean rates could move higher in the coming months, but base case would be ocean rates trending lower in 2025 on easing pull-forward demand and new supply

TechCrunch : Sequoia marks up its 2020 fund by 25%

Sequoia marks up its 2020 fund by 25%
Sequoia says no exits, no problem.

The Silicon Valley titan of venture marked up the value of its 2020 Sequoia Capital U.S. Venture XVII fund by 24.6% in June, at the end of a 12-month period, according to PitchBook, which ran analysis on data from the Regents of the University of California’s endowment.

Sequoia’s markup is notable because the fund has yet to have any exits. This is also a favorable change for a 2020 fund vintage, given the fact that funds from that year aren’t predicted to perform well for any VC after the frothy valuations of 2020 and 2021. The mismatch is likely due to lofty AI valuations giving venture a sense of recovery that hasn’t come to fruition quite yet for other sectors. Sequoia is an investor in buzzy AI companies, including OpenAI, Glean, and Harvey, among others.

Sequoia raised more than $800 million for Fund XVII, which closed in 2022.

WWD : Harrods Builds a New Home for Timeless Luxury, Knitwear and Tailoring Bran

Harrods Builds a New Home for Timeless Luxury, Knitwear and Tailoring Brands
Harrods has created new rooms for fabric-focused brands including Brunello Cucinelli, Agnona and Colombo, and has tried to simplify the customer journey, too.

LONDON — Read the room.

That’s just what Harrods wants customers to do when they visit the designer womenswear spaces undergoing a multiyear refurbishment that began last year and will continue into 2026.

Harrods has been working with David Collins Studio to create a warm, beautifully lit environment, while the in-house team has also been thinking creatively, grouping brands and designers by theme and editing the shop floor so that it’s easier to read.

“It’s a confusing building — it’s not like a shopping street with straight lines,” said Simon Longland, the store’s director of buying, fashion.

He said the first floor, where the designer womenswear collections live, had grown organically over the years, spreading in all directions. “So what we’ve done now is reorganize, group brands that are like-minded and give them the proper space to breathe,” he said.

The new spaces are also very customer-focused, he added. “We want customers to arrive here, and be able to read the room — just like that,” he said with a snap of his fingers. “We also want to give them choice and a sense of discovery.”

The latest area to undergo refurbishment is the Designer Collection rooms, which offer a mix of shops-in-shop for bigger luxury brands such as Hermès, Brunello Cucinelli, Ralph Lauren and Yves Salomon and more specialist, niche names.

Near the row of shops-in-shop is a room that has the feel of an elegant town square. It’s filled with smaller branded spaces and pavilions for brands including Agnona, Colombo, Eleventy, Sa Su Phi, Nomadissem, Wolk Morais and Johnston’s of Elgin.

Longland said that while those brands may have different identities, they also have a lot in common. They are “ageless, timeless, seasonless,” with a focus on tailoring and knitwear and fabrics such as cashmere and silk. He also sees them as makers of wardrobe building blocks.

The newly refurbished space has a mix of wholesale and concession, and Harrods has marked the opening with a host of U.K. exclusives, including Agnona, Colombo, Wolk Morais and Nomadissem.

The brands see the new area as an ideal showcase. “We are glad to embark on our expansion in the U.K. region starting with such a great partner by our side,” said Stefano Aimone, Agnona’s chief executive officer and creative director.

Aimone designed the Harrods shop-in-shop himself. It features white marble walls, antique Venetian tiling techniques and handmade glass. At the heart of the room is a wooden counter inspired by the crates once used to transport premium wools hailing from various continents.

For Wolk Morais, the Los Angeles-based tailoring brand inspired by old Hollywood style, selling at Harrods is a milestone. Until now, the brand has been stocked at small specialty stores and done commissions for private clients and the red carpet.

“It’s our first big department store,” said Brian Wolk, who cofounded the brand with Claude Morais. He added that it was Longland who “discovered” them during one fashion week at the Palais Royal in Paris.

They have filled their Harrods space with a wide range of cocooning double-face coats, capes and bolero-style jackets in colors ranging from burgundy and brown to lipstick red and hot pink. The brand caters to men and women, and comes in a range of sizes.

Although the overall space hasn’t been open for long, tailoring has been a top seller, and clients have been buying “multiple pieces across several brands,” Longland said. He added that the Italian brand Colombo, which specializes in cashmere, is the number one in terms of sales.

The area resembles Harrods’ other newly refurbished rooms: Lingerie and Lounge, Evening and Occasion, and Holiday and Swim.

The palette takes in sage, taupe, cream and burnt orange. There are gold and silver rails, while floors have been done in timber parquet and two-tone marble. Walls and panels are covered in fabric, while dressing rooms have soft lighting and three-way mirrors.

There is more to come in the new year, with Max Mara and Moncler opening large shops-in-shop near the timeless luxury rooms.

In April, the final phase of the Designer Collection rooms will open, themed around prints, dresses and more trend-driven styles. Brands will include Roksanda, La DoubleJ, Missoni, Etro and Erdem.

Next fall, Harrods’ Superbrands room, which includes Prada, Gucci, Dior and Loro Piana, will be refurbished. The International Designer rooms, which feature names such as Givenchy, Chloé and Alaïa, will get a facelift in early 2026.

WWD : Daniel Boulud Opens His First Steakhouse La Tête d’Or

Daniel Boulud Opens His First Steakhouse La Tête d’Or
The Michelin-starred chef has opened his latest restaurant at One Madison Avenue in the Flatiron District.

Michelin-starred chef Daniel Boulud, known for French fine dining, has always wanted to open a steakhouse. With La Tête d’Or, the newest restaurant under the chef’s Dinex Group, Boulud is offering his take on the classic American culinary genre.

“I always joke that five years ago I became American, and so that made it even more legitimate for me to do [a steakhouse],” he says. “But it’s still with the French touch. It’s an American French steakhouse.”

The restaurant is named for a park in Boulud’s hometown of Lyon, France, and the menu features classic steakhouse dishes filtered through Boulud’s refined approach.

“I really wanted to have the foundation of a classic steakhouse, with a celebration of seafood,” says Boulud of his approach to the menu, which features extensive raw bar options. The main draw at La Tête d’Or though is the beef, offered in various breeds — Angus, several styles of Wagyu — and cuts, from Porterhouse to French-style Côte de boeuf and filet mignon. Meat is cooked using wood and charcoal-fire grills, and finished with sauces and butters that are selected by guests. There are also several side options and seven options for potatoes, from pommes frites to pomme purée and a baked potato with truffle. “We leave the freedom to the guests to choose what they like,” says Boulud.

The restaurant works with farmers and ranches across North America. “The sourcing of our ingredients is the most important thing, relying on suppliers that have high-quality meat that are raised responsibly,” says Boulud, listing off several of the purveyors. The restaurant also features a Wagyu counter, a 10-seat chef counter that will offer a tasting menu of the premium beef, sourced from different parts of the world.

The menu also features a prime rib trolley option, where American wagyu rib eye is sliced and served tableside. “I grew up in Europe, but I lived in Denmark and I was working in a restaurant called the Baron of Beef in Copenhagen at the Hotel Plaza,” says Boulud, adding that the restaurant was known for its roast beef. “Every night I had to cook that beautiful roast for the carving trolley,” he says, adding that he hopes to introduce the trolley once the restaurant gets lunch service up and running in a few weeks. The restaurant is well positioned for lunch and after-work gatherings, located on the ground floor of the One Madison building in the Flatiron District, just below Madison Square Park.

La Tête d’Or marks a continuation of the chef’s relationship with SL Green, a commercial real estate group that includes One Vanderbilt, home to Dinex Group restaurants Le Pavillon, Épicerie Boulud and Joji. Interior design in the space was led by the Rockwell Group, and the warm dining room features wooden accents and velvet banquette seating situated underneath cathedral-style seating.

“I think people appreciate the fact that it’s classic, but with a personal touch to a lot of things,” says Boulud of early response to the restaurant. “What I love about the steakhouse is it’s classic, timeless and simple, but yet it’s complex and it gives a lot of pleasure to people,” adds Boulud. “I love that the steakhouse is also a place where larger groups gather.”

And on the topic of gathering: The restaurant also features a private room that can accommodate up to 40 people, just in time for holiday and end-of-year celebrations.

TechCrunch : OpenAI is funding research into ‘AI morality’

OpenAI is funding research into ‘AI morality’

OpenAI is funding academic research into algorithms that can predict humans’ moral judgements.

In a filing with the IRS, OpenAI Inc., OpenAI’s nonprofit org, disclosed that it awarded a grant to Duke University researchers for a project titled “Research AI Morality.” Contacted for comment, an OpenAI spokesperson pointed to a press release indicating the award is part of a larger, three-year, $1 million grant to Duke professors studying “making moral AI.”

Little is public about this “morality” research OpenAI is funding, other than the fact that the grant ends in 2025. The study’s principal investigator, Walter Sinnott-Armstrong, a practical ethics professor at Duke, told TechCrunch via email that he “will not be able to talk” about the work.

Sinnott-Armstrong and the project’s co-investigator, Jana Borg, have produced several studies — and a book — about AI’s potential to serve as a “moral GPS” to help humans make better judgements. As part of larger teams, they’ve created a “morally-aligned” algorithm to help decide who receives kidney donations, and studied in which scenarios people would prefer that AI make moral decisions.

According to the press release, the goal of the OpenAI-funded work is to train algorithms to “predict human moral judgements” in scenarios involving conflicts “among morally relevant features in medicine, law, and business.”

But it’s far from clear that a concept as nuanced as morality is within reach of today’s tech.

In 2021, the nonprofit Allen Institute for AI built a tool called Ask Delphi that was meant to give ethically sound recommendations. It judged basic moral dilemmas well enough — the bot “knew” that cheating on an exam was wrong, for example. But slightly rephrasing and rewording questions was enough to get Delphi to approve of pretty much anything, including smothering infants.

The reason has to do with how modern AI systems work.

Machine learning models are statistical machines. Trained on a lot of examples from all over the web, they learn the patterns in those examples to make predictions, like that the phrase “to whom” often precedes “it may concern.”

AI doesn’t have an appreciation for ethical concepts, nor a grasp on the reasoning and emotion that play into moral decision-making. That’s why AI tends to parrot the values of Western, educated, and industrialized nations — the web, and thus AI’s training data, is dominated by articles endorsing those viewpoints.

Unsurprisingly, many people’s values aren’t expressed in the answers AI gives, particularly if those people aren’t contributing to the AI’s training sets by posting online. And AI internalizes a range of biases beyond a Western bent. Delphi said that being straight is more “morally acceptable” than being gay.

The challenge before OpenAI — and the researchers it’s backing — is made all the more intractable by the inherent subjectivity of morality. Philosophers have been debating the merits of various ethical theories for thousands of years, and there’s no universally applicable framework in sight.

Claude favors Kantianism (i.e. focusing on absolute moral rules), while ChatGPT leans every-so-slightly utilitarian (prioritizing the greatest good for the greatest number of people). Is one superior to the other? It depends on who you ask.

An algorithm to predict humans’ moral judgements will have to take all this into account. That’s a very high bar to clear — assuming such an algorithm is possible in the first place.

CrunchBase : The Week’s Biggest Funding Rounds: xAI And Anthropic Headline Big W

The Week’s Biggest Funding Rounds: xAI And Anthropic Headline Big Week For AI (Again)

Just as the holiday season begins, a sleighful of companies unveiled large funding rounds. Of course, it was led by two well-known AI startups — including xAI, which had its second massive haul of cash in just six months.

1. xAI, $5B, artificial intelligence: Generative AI startup xAI raised $5 billion in a funding round valuing it at $50 billion, The Wall Street Journal reported. The new round includes investment from the Qatar Investment Authority, Valor Equity Partners, Andreessen Horowitz and Sequoia Capital. It was just in May Elon Musk’s startup officially announced its long-awaited fundraise — making it the second-most-valuable generative AI company in the world behind only competitor OpenAI. The $6 billion round valued the company at $24 billion post money.

2. Anthropic, $4B, artificial intelligence: Amazon has agreed to invest another $4 billion in AI startup Anthropic — a ChatGPT rival with its AI assistant Claude. Last fall Amazon agreed to invest up to $4 billion in Anthropic — giving the Seattle-based e-commerce and cloud titan a minority stake in Anthropic. The immediate investment was $1.25 billion, with the remaining $2.75 billion in funding coming earlier this year. That deal included Anthropic naming Amazon Web Services its primary cloud provider, as well as using AWS Trainium and Inferentia chips to build, train and deploy its models. This new investment means Amazon will have invested $8 billion into Antropic, retaining its minority stake in the startup, per an Anthropic blog.

3. LogicMonitor, $800M, IT management: LogicMonitor, which provides IT observability and monitoring, took in $800 million in new equity and debt from an investor consortium that includes PSG Equity, Golub Capital and others. The deal is part of Vista Equity Partners selling a minority stake in the company, which is now valued at about $2.4 billion. The IT infrastructure company will use the fresh cash for M&A activities and entering new markets globally. Vista bought LogicMonitor in May 2018 for about $415 million.

4. Cyera, $300M, cybersecurity: After raising a $300 million Series C led by Coatue at a $1.4 billion valuation in April, data security startup Cyera closed another $300 million windfall at more than twice its previous valuation. The New York-based company announced a $300 million Series D led by Accel and Sapphire Ventures at a $3 billion valuation. While a cybersecurity company, Cyera is certainly riding the AI wave. The startup has an AI-powered data security platform that helps security teams at companies understand what data they have and how it’s used, as well as how to secure it across a complex digital landscape. Of course, the reliance on data has only become stronger as companies drive AI initiatives. Founded in 2021, Cyera has raised $760 million to date, per the company.

5. Kong, $175M, enterprise software: Kong, a developer of cloud API technologies, closed $175 million in an up-round Series E led by Tiger Global and Balderton Capital that valued the company at $2 billion. The round was a mix of primary and secondary transactions, with no exact amount given for the primary investment. The funding comes as companies are being overwhelmed with more APIs as AI business applications grow. Founded in 2009, Kong has raised $345 million, per the San Francisco-based company.

6. Enveda Biosciences, $130M, biotech: It was just in June that Enveda Biosciences first landed on this list, after raising a $55 million round that included Microsoft as an investor. The Boulder, Colorado-based startup is back this week after raising a $130 million Series C funding round led by FPV Ventures and Kinnevik. The company uses AI-powered tools to identify a wide range of molecules produced by living organisms to create medicines. Founded in 2019, Enveda has raised $360 million, per Crunchbase.

7. Cresta, $125M, customer service: AI for contact centers is big right now and Palo Alto, California-based Cresta is the latest startup to raise massive money. The company locked up a $125 million Series D led by new investors Qatar Investment Authority and World Innovation Lab. The Cresta platform gives customers real-time insights and behavioral best practices to help human agents, while also automating mundane tasks using virtual agents. Founded in 2017, Cresta says it has raised more than $270 million.

8. Enfabrica, $115M, semiconductor: AI networking chip startup Enfabrica raised a $115 million Series C led by Spark Capital as it inches closer to its newest chip release early next year. The round comes just about 14 months after the Mountain View, California-based firm closed a $125 million Series B led by Atreides Management that also included investment from Nvidia. The new Series C investors include some of the biggest names in the chip world: Arm Holdings and Cisco Investments. Enfabrica also announced its new “groundbreaking” ACF SuperNIC chip. The startup’s networking infrastructure helps tie AI chips together — allowing for the consistent flow of data needed for modern AI workloads.

9. League One Volleyball, $100M, sports: Los Angeles-based League One Volleyball, which is set to start a pro volleyball league early next year, raised $100 million in a deal led by Atwater Capital. Founded in 2019, the company has raised $160 million, per Crunchbase.

10. Spectro Cloud, $75M, enterprise software: San Jose, California-based Spectro Cloud, which allows customers to deploy and manage Kubernetes in production, completed a $75 million Series C funding led by the growth equity arm at Goldman Sachs Alternatives. Founded in 2019, the company has raised $143 million, per Crunchbase.

Big global deals
The biggest round outside the states came from across the pond.
  • London-based Lighthouse, a commercial platform for the travel and hospitality industry, raised a $370 million Series C.

WSJ : 7-Eleven, the Slurpee and a $47 Billion Takeover Battle

7-Eleven, the Slurpee and a $47 Billion Takeover Battle
The convenience chain is at the center of a bidding war between would-be buyers on two continents. Here’s why they’re hungry for it.

At 7-Eleven, it all comes back to the Slurpee.

The rainbow-hued blend of high-fructose corn syrup, flavoring and carbonated water—not exactly liquid, not exactly solid—is quintessential convenience-store fare. Quick, sweet, colorful and cheap, around $1 to $2 each.

Slurpees are big business, too. 7-Eleven, home of the Slurpee, sold 153 million of them in 2023—a brain-freezing cornerstone in an $80 billion empire of convenience. The sheer reach of 7-Eleven’s corporate parent, Tokyo-based Seven & i 3382 0.02%increase; green up pointing triangle, spanning 85,000 stores dotted across 19 countries, is rivaled only by the range of goods stocked under its stores’ 24-hour fluorescent lighting. Potato chips. Bleach. Cigarettes. Sunglasses. Power-steering fluid.

7-Eleven’s drink dispensers and glistening roller-dogs have made it a cultural icon name-checked by Bruce Springsteen and Green Day, lampooned in “The Simpsons” and portrayed in the “Grand Theft Auto” videogame series. In the 2013 movie “Escape from Planet Earth,” a Slurpee is given to an alien as a peace offering.

Now the chain is the object of a multibillion-dollar bidding war between would-be buyers on two continents. Quebec-based Alimentation Couche-Tard ATD -0.13%decrease; red down pointing triangle, which owns the Circle K convenience store chain, has offered $47 billion to buy it.

Seven & i rebuffed the Canadian firm’s initial offer, which would have augmented Couche-Tard’s existing stable of chain-store brands and powered international growth. This month, a son of the executive who founded 7-Eleven’s current owner submitted a higher bid, which would keep the brand in Japanese hands and prevent foreigners from meddling with the chain’s beloved rice balls and other local favorites.

7-Eleven was born in the U.S. a century ago. In the 1990s, it was acquired by a Japanese company that built it into the world’s largest convenience retailer on a diet of cutting-edge inventory management and logistics. Its green-and-orange branding is ubiquitous, but at the heart of its success are stores that are charmingly, assertively local: rice balls in Japan, Old Bay chicken sandwiches in the mid-Atlantic.

The 3,000-odd square feet of a typical 7-Eleven might look jam-packed and jumbled, but its roughly 3,000 different products are picked using detailed data that lets each store tailor its mix to local habits and tastes. One location should stock more bags of pretzels and another craft beer.

Thanks in part to the experience of its Japanese owner, which sells lots of fresh food from its stores, the chain is also mastering a distinctly American and surprisingly lucrative spot in food retail: “dashboard dining.” The term refers to inexpensive food that can be eaten with one hand—boneless chicken wings, a Taco Cheese Taquito or a hot dog—and is suited for customers on the go. All that could be retail gold, its would-be buyers think.

But inflation has pinched the low- to middle-income shoppers who are the convenience-store industry’s mainstays, and 7-Eleven hasn’t been immune. (The majority of its sales are outside Japan.) Shares of the parent company were down 13% in the 12 months before Couche-Tard’s initial offer in August. In October, the company slashed its profit forecast for its current fiscal year by more than 40% to about $1.09 billion, citing sluggish demand caused by inflation.

That has given Couche-Tard an opening: A deal would give the combined companies the scale to cut costs by increasing their leverage over suppliers and consolidating deliveries to stores.

Texas-born
Before it was 7-Eleven, it was known as Southland Ice Co. Founded in Dallas in 1927 by Joe C. Thompson and several partners, the company started out marketing ice, but soon expanded, thanks to the suggestion of one employee, to groceries, cigarettes, gas and other products, a one-stop shopping concept that helped spread locations throughout the U.S. via franchising agreements. After expanding its hours of operation from 7 a.m. to 11 p.m., the chain decided in 1946 to change its name to 7-Eleven.

Another landmark came in 1959, when Kansas inventor Omar Knedlik and his business partner, Dean Sperry, collaborated with a Dallas manufacturer to perfect a frozen-beverage machine. Six years later, 7-Eleven bought three of the “Icee” machines and in the late 1960s renamed the beverage the Slurpee. The Icee, now produced by another company, is still popular at movie theaters and rival convenience chains.

After an Austin, Texas, store’s successful experiment with staying open 24 hours a day to tempt college students with late-night Slurpees, 7-Eleven had its formula.

“7-Eleven really represents in many ways the American dream,” said James Keyes, who served as chief executive of 7-Eleven in the early 2000s.

The chain helped pioneer pairing retail with gas pumps, and spread automated teller machines that enabled basic banking within arm’s reach of beef jerky and granola bars. 7-Eleven’s franchisee program, Keyes said, is the first step for many immigrants looking to run a business in America.

In 1968, 7-Eleven parent Southland went public to help finance its expansion, which reached 8,200 stores by the late 1980s. It wasn’t immune to that decade’s financial turbulence, however. Seeking to avoid a takeover, the founding Thompson family in 1987 took Southland private in a leveraged buyout. It began selling assets to pay off its debts.

The chain filed for bankruptcy in 1990, and shortly afterward received a boost from across the Pacific.

Hurricane Suzuki
In 1974, a little-known Japanese retailer opened a 7-Eleven outpost in Tokyo. The store, which still operates on the same site today, was the starting point for an unlikely role reversal: The Japanese 7-Eleven chain within two decades grew big enough to take over its older U.S. sibling.

In the early 1970s, Toshifumi Suzuki was a midlevel executive at a company called Ito-Yokado, which ran a chain of Walmart-like general retailers in Japan. On visits to the U.S., Suzuki became intrigued with 7-Eleven stores, and how they made a much smaller format work.

Suzuki negotiated a licensing deal with Southland. Soon after opening the Tokyo location, his Japanese 7-Elevens rapidly multiplied, initially selling hamburgers and sandwiches. While U.S. 7-Eleven stores bet big on the Slurpee, the Japanese locations introduced rice balls and a traditional Japanese hot-pot dish called oden.

Like Southland, Suzuki tinkered with operations. At first, deliveries from as many as 70 trucks a day would cause traffic jams in front of Japan’s 7-Eleven stores. Starting in 1976, the company developed a new system that centralized delivery of products from various brands and suppliers, allowing the chain to replenish a store’s inventory with fewer than a dozen trucks today.

In 1982, 7-Eleven in Japan introduced item-by-item inventory management, using a computer system that helped stores order only what was needed based on real-time sales data, minimizing waste.

Suzuki stressed product freshness, frequent restocking, and a diverse lineup including ready-to-eat dishes matched to local tastes, and the chain thrived in Japan. When Southland filed for bankruptcy, he was ready to act, and in 1991 his Japanese company acquired a 70% stake in 7-Eleven’s parent. It bought the rest of the company in 2005.

When Suzuki started restructuring the chain’s U.S. operations, he was shocked by some stores’ condition—dimly lighted, dirty, with beer and cigarettes and soda cartons piled in the aisles. He wrote in an autobiography that he wondered: “Is this a warehouse?”

His determination to build everything from scratch, which he wrote earned him the nickname “Hurricane Suzuki,” turned around the company in three years.

Part of the chain’s strength in the U.S. has come from an operational structure that grants individual store managers autonomy to decide on their product mix and delivery schedules. For example, stores on a college campus could carry more beer and chips; an interstate off-ramp location might keep a broader range of auto supplies and sunglasses.

7-Eleven stores monitor daily sales, and collect demographic information on which loyalty members are buying what. The stores also use a distribution system in which franchises place orders every day based on company recommendations of what’s selling well nationally and regionally.

The company has spent years trying to enhance its food offerings. It now uses more than a dozen so-called commissaries that make and supply food to its U.S. locations. Each individual commissary can tailor its products to what’s popular for the stores in its region. A new Virginia commissary makes an Old Bay chicken sandwich and a jalapeño steak sandwich. The company says some of its top-selling products include hot food: wings, pizza and taquitos.

Keyes, the former 7-Eleven CEO, said this model keeps 7-Eleven flexible compared with competitors that are beholden to centralized ordering systems. The company has been drawing on sales data as it stocks a wider range of food, adding more fresh fruit and prepackaged sandwiches, Keyes said. 7-Eleven these days commands nearly 2% of grocery sales in the U.S.—more than Trader Joe’s or Whole Foods, according to industry tracker Numerator.

7-Eleven’s strategy has been especially successful in Asia. In Thailand, which has the second-largest number of locations behind Japan, stores feature a range of traditional Thai food, including chicken Thai curry.

O Canada
Across the Pacific, a rival has had its eye on 7-Eleven for almost 20 years.

Canada’s Alimentation Couche-Tard started as a single convenience store outside Montreal in 1980, since then growing to include 16,800 stores spread across 31 countries, including Canada, Scandinavia, Germany, Hong Kong and the U.S.

Alain Bouchard, the company’s founder and executive chairman, built the company through a string of deals that included Total Energies retail assets in Europe and ConocoPhillips’s Circle K convenience stores in the U.S.

Bouchard approached executives at Seven & i, 7-Eleven’s parent, informally in the early 2000s to gauge whether there was any interest in a deal, but he was rebuffed, according to the authorized 2016 biography of Bouchard by Canadian journalist Guy Gendron.

Couche-Tard has been trying to diversify away from fuel and cigarette sales and sell more fresh food, which makes up 12% of its sales, according to a research report by Stifel. Fresh food represents about a third of 7-Eleven’s Japanese sales.

“We continue to see a strong opportunity to grow together and enhance our offerings and service to millions of customers across the globe,” a Couche-Tard spokesman said. “We also remain confident in our ability to finance and complete this combination.”

The U.S. is Couche-Tard’s largest market, where it has more than 7,100 stores operating under the Circle-K brand, second only to 7-Eleven’s nearly 13,000 stores.

Couche-Tard made its opening bid for Seven & i this summer, when it sent a proposal to buy the Japanese conglomerate for $39 billion. Seven & i—whose stock-market valuation in Tokyo was equivalent to about $30 billion the Friday before Couche-Tard publicly confirmed its offer—rejected the deal, saying the offer “grossly undervalues” the company.

Couche-Tard later raised its offer to roughly $47 billion. Seven & i is resisting. Alex Miller, Couche-Tard’s CEO, and Bouchard, the founder, visited Tokyo in October but couldn’t get a meeting with Seven & i executives.

Last month, Seven & i CEO Ryuichi Isaka said that the company had “potential for significant growth globally” and aimed to nearly double its revenue to about $200 billion by 2030. He also announced a restructuring plan including spinning off noncore businesses, including supermarkets.

Last week, Junro Ito, a Seven & i executive who is a son of late founder Masatoshi Ito, offered a proposal to take the company private. Steven Hayes Dacus, head of the Seven & i special board committee considering the proposals, said the committee was “committed to an objective review of all alternatives before us.”

Pressure is growing on Seven & i to decide its future. 7-Eleven executives said in October they plan to close nearly 450 North American locations to cut costs as the company struggles to keep inflation-weary shoppers coming in. Cigarette sales are down 26% since 2019, an 80-year low, the company said.

Over the past year, 7-Eleven has been trying to improve some of its store-branded food offerings and sell more specialty beverages such as cappuccinos and lattes, which could help diversify the chain further from gas and tobacco sales.

Hidenori Yoshikawa, a consultant at Daiwa Institute of Research in Tokyo, said the cultural differences in the deal weren’t just about rice balls versus Slurpees, but also about the consequences of a big, disruptive transaction.

In the U.S., Yoshikawa said, “directors feel it’s their duty to sell to the highest bidder even if they offer one yen more.” At Japanese companies, “more so than shareholder profit, the first point people turn their attention to is what the proper shape of their community should be.”

FT : Leveraged hedge funds magnified August market sell-off, Fed says

Leveraged hedge funds magnified August market sell-off, Fed says
US central bank report pins blame for trading volatility partly on investors that had taken on too much debt

The sell-off in US equities in early August showed that highly leveraged hedge funds operating in a low-liquidity environment could magnify market shocks, the Federal Reserve said on Friday.

Financial markets fell sharply in the first week of August in what was seen then as a reflection of concerns over the US economy and rising interest rates in Japan, which turned against investors who had borrowed cheaply in yen in a popular trade known as the yen carry. 

In a report, the Fed blamed August’s sudden jump in market volatility in part on “highly leveraged hedge funds” quickly selling down their positions to meet internal volatility targets — not margin calls from bank lenders.

“During this event, liquidity in the Treasury market, as well as in other markets, deteriorated markedly, but market conditions improved rapidly following favourable data releases the following week,” the Fed wrote in its twice-yearly financial stability report. “Nevertheless, this episode showed once again how high leverage can amplify adverse shocks.”

The Fed said measures of leverage averaged across hedge funds in the first quarter of 2024 were at or near the highest level since 2013, when it began tracking the volume of debt used by the funds.

The central bank said sparse market liquidity, especially during times of stress, could also amplify volatility and exacerbate the fallout.

Despite its warnings about indebted hedge funds, the Fed was sanguine about overall risks in the financial system, saying that in general banks “remained sound and resilient”.

Most domestic banks, the Fed’s report said, had high levels of liquid assets, and their reliance on uninsured deposits, a trigger for the regional banking turmoil last year, had decreased.

The Fed’s report, which reflected data and information available through November 4, showed that its contacts on Wall Street were concerned about the sustainability of the US debt burden, especially if the Treasury department had to keep issuing more government bonds to pay for it.

The Fed warned that this dynamic could put “upward pressure on long-term interest rates that could further damp growth and strain sovereign and private-sector borrowers”.

Fears about inflation and in turn higher for longer interest rates were also supplanted by concerns stemming from amplified geopolitical tensions, which the Fed said could lead to a “sudden pullback from risk-taking”. 

“These developments could lead to declines in asset prices and losses for exposed businesses and investors, including those in the US,” the Fed added.

FT : The delusions behind a bitcoin strategic reserve

The delusions behind a bitcoin strategic reserve
It is a resilience strategy for the ‘hodlers’, not the US state

In July, Cynthia Lummis, a US senator from Wyoming, introduced a bill to establish what she called a “strategic bitcoin reserve”, a programme instructing the Treasury and the Federal Reserve to buy a million bitcoins over the next five years to then hold them for at least 20 more years.

Donald Trump made vague noises in support of bitcoin and crypto during his campaign. With his election, the hope behind Lummis’s bill has started to gather weight, particularly among the people with private bitcoin holdings of their own. This stands to reason. If you held a portfolio of Andy Warhol paintings and someone in Washington proposed a strategic Warhol reserve, you’d be excited too.

The bill lays out a mechanism for paying for the reserve. Any surplus the Federal Reserve returns to the Treasury would be spent instead on bitcoin. The Fed doesn’t currently return any money to the Treasury. No matter. The bill also proposes that Fed banks mark all their gold certificates to the current market price of gold, then remit the difference to the Treasury to buy bitcoin. This is all plausible, but the bill doesn’t answer the most important question facing any piece of legislation: how will this change anything at all, for anyone?

A reserve would present both a consummation and an irony for bitcoin’s hardcore supporters — the hodlers. The state would recognise what hodlers call freedom money, but also prop that up with a state programme. The preamble to Lummis’s bill argues that in return, a million bitcoin would diversify America’s assets, improving financial and monetary resilience. Unlike a traditional banking reserve, however, they would be held by the Treasury and couldn’t start to be sold until 2045. An asset you cannot sell does not give you resilience. It gives you storage costs.

A bitcoin reserve would probably appreciate in value. This is the core of the hodlers’ argument: after two decades America would remain astride the global financial system, in control of roughly one in 20 of the world’s most valuable assets. In this sense, what the bill calls a strategic reserve is just a sovereign wealth fund, leaving the Treasury with the power to, say, pay down America’s sovereign debt. The challenge there is to lay out the case for why bitcoin’s rise must inevitably continue.

It is long past time to say that bitcoin can’t serve as money. It can and does. Analysis of the bitcoin public ledger published in September in the Journal of Empirical Finance shows that holdings serve as a way to move money offshore through the Seychelles, for example. Activity increased in Brazil during inflation and in Venezuela after sanctions, but dropped in China after a ban on bitcoin mining and trading. It does seem to serve a purpose beyond speculation, though not so far in countries with functional banking systems.

The additional spike in price after Trump’s election offers a circular argument. Bitcoin is even more valuable because Trump will embrace it. Trump must embrace it because it is becoming more valuable. But the dollar has been on a tear for 50 years already, and the way Americans and foreigners use bank dollars has nothing to do with the gold that the Treasury holds at Fort Knox in Kentucky. It would likewise have nothing to do with any bitcoin the Treasury secured with a Fed surplus.

The dollar is not suspended in the air by nothing. It has always been held up by Federal Deposit Insurance, imperfect but adequate bank regulation and handshake agreements among central banks to support offshore dollars in a panic. The global dollar system is untransparent and unfair. It’s terrible for American consumers. But bitcoin hodlers have made the classic engineer’s mistake of thinking that a social system riddled with inefficiency must, like a bridge, eventually collapse.

Perhaps in a collapse an asset like bitcoin could prove valuable. Historically, however, bank money has re-emerged from the rubble of every catastrophe. We rely on dollars not because we’re stupid, but because a bank is literally a licence to print money, and a state has not yet been founded that can prevent powerful people from getting that licence. A long-term bet on bitcoin is bullish on the permanent collapse of all institutions, everywhere. It’s a nuclear put.

A bitcoin reserve would serve exactly one strategy. A Treasury with a million bitcoin would be trapped by its own portfolio. Congress could never exercise monetary sovereignty by limiting bitcoin mining or trading, because the price of the Treasury’s own assets would immediately collapse. The strategic bitcoin reserve is not a resilience strategy for the US. It’s a resilience strategy for the hodlers.