FT : Goldman Sachs: Everything Is Awesome

Goldman Sachs: Everything Is Awesome
The anti-Albert Edwards

Goldman Sachs’s macro analysts have been notably more optimistic than almost everyone else on the street throughout 2023, and, as a result, basically nailed it.

Sure, there are some asterisks — China actually looks messier after the great reopening proved a damp squib, the bond market still had some puke left to discharge, the stock market rally is mostly driven by the ‘magnificent seven’ and geopolitics continue to freak a lot of people out.

But it’s fair to say things have turned out a LOT better than most people would have predicted a year ago — most people, except Goldman. We do, in fact, gotta hand it to them.

Here is their victory lap, charted:


Their big 2024 macro outlook is now out, and it’s mostly notable for humming the same catchy “Everything Is Awesome” tune. If you think we’re exaggerating, the title is “The Hard Part is Over”.

Global economic growth will remain fine, there will be no US recession, inflation will continue to fall, interest rates have peaked and all major financial markets will do better than cash (which tbf is a much harder hurdle to clear than it was a few years ago).

Here are the main points from Jan Hatzius & co:

— The global economy has outperformed even our optimistic expectations in 2023. GDP growth is on track to beat consensus forecasts from a year ago by 1pp globally and 2pp in the US, while core inflation is down from 6% in 2022 to 3% sequentially across economies that saw a post-covid price surge.

— More disinflation is in store over the next year. Although the normalization in product and labor markets is now well advanced, its full disinflationary effect is still playing out, and core inflation should fall back to 2-2½% by end-2024.

— We continue to see only limited recession risk and reaffirm our 15% US n recession probability. We expect several tailwinds to global growth in 2024, including strong real household income growth, a smaller drag from monetary and fiscal tightening, a recovery in manufacturing activity, and an increased willingness of central banks to deliver insurance cuts if growth slows.

— Most major DM central banks are likely finished hiking, but under our baseline forecast for a strong global economy, rate cuts probably won’t arrive until 2024H2. When rates ultimately do settle, we expect central banks to leave policy rates above their current estimates of long-run sustainable levels.

— The Bank of Japan will likely start moving to exit yield curve control in the spring before formally exiting and raising rates in 2024H2, assuming inflation remains on track to exceed its 2% target. Near-term growth in China should benefit from further policy stimulus, but China’s multi-year slowdown will likely continue.

— The market outlook is complicated by compressed risk premia and markets that are quite well priced for our central case. We expect returns in rates, credit, equities, and commodities to exceed cash in 2024 under our baseline forecast. Each offers protection against a different tail risk, so a balanced asset mix should replace 2023’s cash focus, with a greater role for duration in portfolios.

— The transition to a higher interest rate environment has been bumpy, but investors now face the prospect of much better forward returns on fixed income assets. The big question is whether a return to the pre-GFC rate backdrop is an equilibrium. The answer is more likely to be yes in the US than elsewhere, especially in Europe where sovereign stress might reemerge. Without a clear challenger to the US growth story, the dollar is likely to remain strong.


A lot of you will want to kick the tyres on their thesis yourselves, so here is a link to the full note.

Of particular note is their argument that the “last mile of disinflation” won’t actually be that hard, won’t actually require a recession and might not even need any more rate increases.

We like the sound of this, but can’t help but worry that Goldman is tempting fate with the “hard part over” hed.

Challenges : Au cœur du procès Gourcuff, le roi de la restauration parisienne ju

Au cœur du procès Gourcuff, le roi de la restauration parisienne jugé pour trafic d’influence

Au cours des deux journées d’audience, jeudi 9 et vendredi 10 novembre, le patron de Paris Society a eu à répondre aux accusations de trafic d’influence et de recel de favoritisme dans l’attribution de la gestion des restaurants de l’hippodrome parisien de Longchamp en 2018. Il n’a pas nié les faits mais s’est efforcé de les minimiser, tout en dénonçant la "manipulation de la justice" par son ennemi intime Benjamin Patou, le patron de Moma Group. Il compte sur le droit pour obtenir sa relaxe.


Il est déjà 20h30 ce vendredi 10 novembre au Tribunal judiciaire de Paris quand le président de la 11e chambre s’adresse aux avocats des prévenus : « Il nous reste à entendre M. le procureur qui sera suivi de vos plaidoiries. Pour des questions d’organisation pouvez-vous m’indiquer combien de temps vont durer vos interventions ? »

Les trois juges ont déjà passé deux jours à éplucher minutieusement le dossier et questionné les trois prévenus : Laurent de Gourcuff, le président et fondateur de Paris Society ; le directeur du marketing de France Galop, Fabrice F. (il a changé d’employeur depuis les faits qui lui sont reprochés) ; et la personne morale « SAS Noctis », la holding créée par Gourcuff. Celle-ci appartient à 100 % au groupe Accor depuis 2022, et regroupe les participations dans les 70 restaurants, sociétés de réception et hôtels (Gigi, Piaf, Monsieur Bleu, Laurent, Apicius, Bonnie…)

« L’art » de l’invitation de Laurent de Gourcuff
Réponse des quatre défenseurs : « une heure à une heure et demie chacun, Monsieur le président ! » La négociation, qui n’en est pas une, dure deux minutes. Personne n’osera contrarier un Tribunal qui va rater le début d’un week-end bien mérité. Et qui va surtout décider de l’avenir de deux des personnes présentes. « Merci de vous efforcer de synthétiser votre propos car la soirée va être longue », tranche le juge.

En effet, il est quasiment 0h10 le lendemain, samedi 11 novembre quand la séance est enfin levée. Entre-temps, les plaideurs en robes, leurs clients et une poignée de journalistes ont profité d’une suspension de séance de 20 minutes pour aller dévaliser le seul distributeur automatique de biscuits et confiseries disponible au rez-de-chaussée de l’immense immeuble vide de la Porte de Clichy.

Un purgatoire alors que l’on juge un groupe et son dirigeant qui détiennent les meilleures tables parisiennes pour trafic d’influence et de recel de favoritisme. Plusieurs d’entre eux seront bientôt conviés par Laurent de Gourcuff, journalistes compris, à venir tester le Maxim’s, le restaurant chic de la rue Royale, récemment passé dans le giron du groupe Paris Society. L’établissement rouvre ses portes en ce mois de novembre après quelques semaines d’une rapide rénovation.

« Je n’organise jamais de fête d’inauguration contrairement à mes concurrents. Quand vous recevez 400 personnes en une fois, vous ne pouvez pas leur montrer votre savoir-faire et vous risquez d’avoir un maximum de pique-assiette, c’est sans doute excellent pour l’ego mais inutile et coûteux […] Je préfère créer un bouche-à-oreille plus efficace en invitant 750 personnes parmi mes clients, partenaires et salariés, à venir accompagnés, pendant les deux premiers mois », détaillait à la barre Laurent de Gourcuff, deux heures plus tôt.

On lui demandait alors de s’expliquer sur ses largesses à l’égard de son coprévenu, Fabrice F., suspecté de l’avoir favorisé. Un coprévenu qui avait lui-même expliqué assez benoîtement, faisant bondir les juges : « j’exerce depuis vingt ans dans le monde du marketing sportif et les invitations sont une pratique courante, mais j’ai toujours fait la part des choses ».

LIRE AUSSIFortunes : le Paris des affaires s’installe en terrasse

« C’est peut-être pratiqué mais c’est interdit ! », n’avait pu s’empêcher de rétorquer l’un des assesseurs, signalant aussi à Laurent de Gourcuff que sa pratique d’invitations discrétionnaires à des partenaires triés sur le volet se heurte à la loi. « Vous invitez aussi Mme Hidalgo et les fonctionnaires parisiens ? » Réponse gênée de l’homme d’affaires : « je n’ai pas le souvenir d’avoir invité telle ou telle personne, je ne fais pas de distinction en fonction des professions ».

Au menu du dîner : un poste de directeur des opérations
Le procureur de la République plie son dossier en moins d’une heure, revenant rapidement sur les principaux griefs. Il requiert pour Laurent de Gourcuff une peine de 12 mois de prison avec sursis, 50 000 euros d’amende, 5 ans d’interdiction de gérer une entreprise et un an d’inéligibilité. Il est reproché au patron de Paris Society d’avoir « acheté » les faveurs du directeur marketing de France Galop lors de l’attribution par cette association du marché de la restauration, de l’événementiel et de l’animation dans l’hippodrome de Longchamp en 2018 pour 12 ans.

Le directeur du marketing de France Galop était membre de la Commission d’appel d’offres qui a désigné Noctis comme concessionnaire face à plusieurs concurrents (groupe Casino, Ludéric, Moma, Sodexo ont été candidats à divers moments). Il pilotait aussi le groupe de travail qui a préparé le dossier.

Alors que les règles encadrant un appel d’offres limitent de façon très restrictive voire interdisent les contacts entre le concédant et les candidats, le patron de Noctis et son interlocuteur de France Galop se sont passés de nombreux coups de téléphones (comme en attestent les écoutes demandées par le juge d’instruction) et se sont rencontrés à plusieurs reprises pour des repas dans les restaurants de Noctis.

Ces échanges auraient permis de favoriser le dossier proposé par Gourcuff en livrant à ce candidat des informations déterminantes sur les intentions de la commission d’appel d’offres, le contenu des autres candidatures et l’état d’esprit de son président, le banquier Edouard de Rothschild, dont l’avis est déterminant.

Ils laissent penser aussi à une tentative de Noctis de créer un climat de redevabilité avec l’un des décisionnaires. Le Tribunal s’est longuement arrêté sur l’invitation par Noctis d’une tablée de neuf convives au restaurant parisien Piaf à l’occasion de l’anniversaire de l’épouse du directeur du marketing de France Galop. Le tribunal n’a pas repris d’autres faveurs pointées par l’enquête mais a demandé aux prévenus de s’expliquer en détail sur leurs discussions concernant la possibilité d’offrir un poste de directeur des opérations de Noctis au salarié de France Galop. Une perspective de nature à fausser son jugement.

Gourcuff a cédé la holding de Paris Society au bon moment
« De qui se moque-t-on ?, s’énerve le procureur. Vous n’avez pas devant vous de simples salariés qui auraient commis l’erreur de ne pas respecter la loi parce qu’ils ne bénéficiaient pas d’une formation juridique concernant les procédures des marchés publics. Il s’agit de cadres dirigeants dont l’expérience, les responsabilités, la formation, les salaires justifient pleinement qu’ils maîtrisent la notion de favoritisme et de trafic d’influences ! »

Le Parquet demande une peine d’un an de prison avec sursis à l’encontre du responsable de France Galop et 15 000 euros d’amende. Il requiert pour la société Noctis, 150 000 euros d’amende et l’exclusion des marchés publics, une vraie catastrophe pour une entreprise dont l’un des métiers principaux consiste à exploiter des restaurants sur des sites appartenant à des organismes publics ou collectivités (ministères, musées, ville de Paris…).

Grâce à Dieu (et grâce à un timing idéal, le procès ayant été repoussé à la demande des prévenus), Gourcuff a vendu sa société au groupe Accor dirigé par son ami Sébastien Bazin pour la somme de 40 millions d’euros (chiffre non confirmé par les parties). Soit une valeur d’entreprise assez exceptionnelle de 220 millions d’euros (dont 140 millions de dette) avant ces potentielles condamnations qui empêcheraient une telle transaction. Déjà, à l’époque, le montant qui correspond à 14 fois l’Ebitda de 16 millions (loyers inclus) avait surpris les experts interrogés par Challenges, quand le ratio admis dans le métier est de 7 à 9 fois l’Ebitda.

Le patron du Moma, "lanceur d’alerte", sur écoutes
Les quatre avocats auraient pu être très brefs dans leurs plaidoiries, leurs clients n’ayant pas nié un seul instant les faits qui leur sont reprochés. L’un d’entre eux a même fait cet aveu : « ce n’est pas agréable pour moi de défendre ce dossier où les erreurs de mon client sont nombreuses, je ne demande pas que l’on décerne une médaille aux prévenus ! »

Mais les plaideurs ont su trouver ailleurs que dans les faits de quoi justifier leurs efforts d’éloquence : les subtilités du droit et l’incrimination systématique du concurrent de Noctis, le groupe Moma, seul plaignant de cette procédure mais qui a retiré sa plainte initiale dans un souci d’apaisement et qui n’a pas voulu assister à l’audience, sans donc possibilité de se défendre.

Après un passionnant développement juridique sur la matérialité du trafic d’influence, la notion de favoritisme, de leur recel et le principe de corruption, les arguments se sont très vite concentrés sur le lanceur d’alerte, décrit comme celui qui tente de « manipuler la justice » (selon les avocats de Gourcuff) : Benjamin Patou

Défait du marché de l’hippodrome de Longchamp, le patron de Moma Group s’en est étonné auprès du Parquet, provoquant l’ouverture de l’enquête. Il a été dépeint comme l’empêcheur de tourner en rond pour les défenseurs de Gourcuff. On a cru assister au procès de Benjamin Patou qui pourrait plutôt être considéré comme une victime du trafic d’influence et du favoritisme, s’il est avéré.

L’instruction a mis sur écoutes le téléphone du patron de Moma. Le magistrat instructeur avait été sensible aux affirmations de Gourcuff qui se dit victime d’un acharnement de son concurrent. Ces écoutes, visiblement passionnantes en raison du carnet d’adresses de Patou, versées au dossier, sont entre les mains de Gourcuff notamment, qui s’indigne en privé de leur contenu et promet les mines de sel à certains interlocuteurs, mais ces écoutes n’ont pourtant pas suffi à convaincre le juge de stopper l’instruction.

Dans leurs plaidoiries, il s’agissait pour les défenseurs de Gourcuff et Noctis de démontrer que le patron de Moma, accessoirement ancien associé et ancien ami de jeunesse du prévenu, avait déposé une candidature tellement mauvaise que la commission d’appel d’offres ne pouvait la retenir, et qu’il n’était donc pas utile de s’inquiéter des contacts privilégiés de Noctis avec le directeur du marketing de France Galop.

Fin du traité de Paix entre les deux ennemis intimes Patou et Gourcuff
Pas sûr que les juges aient suivi le raisonnement mais la démonstration a été faite si clairement que Laurent de Gourcuff n’entend plus respecter le contrat d’armistice signé en décembre 2019 avec son ennemi intime et qu’il avait demandé à Challenges de publier dans ses colonnes (Rubrique Double Jeu p. 106 du n°634 daté du 12 décembre 2019).

Il s’y félicitait de « pouvoir imaginer une partie de leur avenir ensemble » après le retrait de la plainte de Patou dans l’affaire de l’hippodrome car « elle reposait sur des faits qui s’étaient révélés inexacts ». Cela fait quatre ans, que pour sa part, Patou a tourné la page. Pour la petite histoire, c’est l’ancien président Nicolas Sarkozy, intime de Patou et administrateur d’Accor, actionnaire de Paris Society qui avait demandé aux deux parties de faire la paix. Le texte de leur trêve avait été âprement négocié par les avocats de Patou et Gourcuff. Que risque celui qui ne respecte pas ce traité de paix ?

Au moment où Laurent de Gourcuff inaugure son nouveau fleuron Maxim’S après une rénovation de 2 millions d’euros, le climat est loin d’être apaisé. Les héritiers du couturier Pierre Cardin contestent la signature de ce contrat par l’un d’entre eux et s’interrogent sur l’empressement de leur cousin de signer avec Paris Society alors qu’il existait au moins une autre offre mieux-disante.

Autre litige, révélé dans une enquête de Libération datée du 9 novembre 2023, Patou suspecterait Gourcuff d’avoir usé à nouveau des mêmes méthodes de séduction éprouvées avec France Galop pour convaincre le patron de VIParis, gestionnaire de l’hôtel Salomon de Rothschild à Paris. En jeu : l’exploitation du restaurant de ce site, jusque-là dans la sphère de Moma. VIParis, leader européen du tourisme d’affaires qui est également le gestionnaire du parc des expositions de la Porte de Versailles, de celui de Villepinte et du Palais des congrès de la Porte Maillot est une filiale du géant de l’immobilier Unibail-Rodamco-Westfield.

Succession : comment l’empire Cardin a viré à la guerre des clans
Libération s’étonne : « hasard ou coïncidence, le dirigeant de VIParis quitte ses fonctions sans la moindre explication… » après les protestations de Patou auprès de ses administrateurs et actionnaire. Certes, il n’est pas tenu aux règles strictes des appels d’offres publics, pas plus que le neveu de Pierre Cardin, mais si cette nouvelle attribution contestée débouche à nouveau sur une plainte, et oblige le tribunal correctionnel à l’examiner, il sera difficile à Noctis de démentir qu’il existe un système faussant l’attribution des concessions de restaurants à Paris, et qu’une jalousie pathologique est le seul moteur des détracteurs.

L’ensemble des personnes physiques et morales citées ici sont présumées innocentes dans l’attente du jugement qui sera prononcé le 8 février 2024.

WSJ : China’s Spending on Green Energy Is Causing a Global Glut

China’s Spending on Green Energy Is Causing a Global Glut
The country’s massive funding of renewables has drawn odd newcomers and led to an oversupply of solar components

China’s newest solar-energy manufacturers include a dairy farmer and a toy maker.

The new entrants are examples of a green-energy spending binge in China that is fueling the country’s rapid build-out of renewable energy while also creating a glut of solar components that is rippling through the industry and stymying attempts to build such manufacturing elsewhere, particularly in Europe.

Since the start of the year, prices for Chinese polysilicon, the building block of solar panels, are down 50% and panels down 40%, according to data tracker OPIS, which is owned by Dow Jones.

Inside China, some companies fear a green bubble is about to pop.

China’s state-guided economy spent nearly $80 billion on clean-energy manufacturing last year, around 90% of all such investment worldwide, BloombergNEF estimates. The country’s annual spending on green energy overall has increased by more than $180 billion a year since 2019, the International Energy Agency says.

The rush of funding has attracted an unusual array of companies to the bustling business.

Last summer, Chinese dairy giant Royal Group 002329 2.19%increase; green up pointing triangle unveiled plans for three new projects. There was a farm with 10,000 milk cows, a dairy processing plant and a $1.5 billion factory to make solar cells and panels.

“The solar industry is improving over the long term, and the market potential is huge,” Royal Group wrote in a document outlining the project last year. More recently, Royal Group said it wants to create synergies between its core agricultural business and photovoltaics, “and promote solar technology to empower dairy owners to reduce costs and increase efficiency,” the company said in a response to The Wall Street Journal.

The milk manufacturer wasn’t alone in jumping on China’s solar bandwagon in the past two years. Other newbies include a jewelry chain, a producer of pollution-control equipment and a pharmaceutical company.

The newcomers are helping an ambitious wind and solar push in China—this year alone the country is set to install roughly as much solar as the U.S. has in total, Rystad Energy estimates.

Meanwhile, Chinese exports of everything from batteries and electric vehicles to solar panels and wind turbines have surged, raising hackles in places such as Europe and the U.S., which are trying to grow their own domestic clean-energy manufacturing.

In solar, the investment is an important reason for the huge oversupply of components, and falling prices that are pummeling profits at manufacturers around the world. Many established Chinese solar companies are warning that the fallout could be grim, with losses or bankruptcies looming.

“The entire industry is about to enter a knockout round,” said Longi Green Energy Technology 601012 1.32%increase; green up pointing triangle, one of China’s biggest solar-manufacturing companies, in its half-year financial report in August.

At least 13 companies, including Chinese industry leaders such as Jinko Solar JKS 2.56%increase; green up pointing triangle, Trina Solar 688599 0.64%increase; green up pointing triangle and Canadian Solar CSIQ 0.05%increase; green up pointing triangle, have put capacity expansion plans on hold, according to TrendForce, a Taiwan-based market intelligence firm.

Many Chinese manufacturers have been trying to unload inventory at bargain prices in Europe, one of the few big solar markets without tariffs or other barriers to panel imports. While European solar developers are delighted, the region’s already hard-pressed manufacturers are crying foul.

Some European producers were already struggling with homegrown challenges such as slow permitting, a lack of skilled labor and high energy costs, making it difficult to compete with Chinese counterparts.

The oversupply was exacerbated by barriers to imports in India and the U.S., which threw off Chinese manufacturers’ forecasts and left their panels languishing in ports and warehouses. The U.S. proved particularly unpredictable with the threatened imposition of antidumping duties and the implementation of the Uyghur Forced Labor Prevention Act, which ended up preventing panels made with Chinese polysilicon from entering the country.

The Chinese solar-manufacturing industry has gone through booms and busts before and had its share of odd new entrants. Tongwei Solar began as a fish-feed supplier that acquired a solar-panel maker during the downturn of 2013 to complement its aquaculture business with solar parks. Tongwei is now the largest polysilicon maker in the world.

This time, more than 70 listed companies—ranging from fashion, chemicals and real estate to electrical appliances—have entered the solar sector in 2022, according to data intelligence company InfoLink.

In February, Zhejiang Ming Jewelry, which runs 1,000 gold jewelry stores in China, announced plans to invest $1.5 billion to build a solar-cell factory. Last August, toy maker Mubang High-Tech announced a joint venture with the local government for a $660 million solar-cell production base.

Supply-chain disruptions from the pandemic squeezed inventories and pushed up prices in previous years. European solar buyers ordered large amounts of panels as they became available, while many Chinese manufacturers overestimated demand, said Matthias Taft, chief executive of BayWa r.e., Europe’s biggest solar distributor.

“We and others ordered massively” during the second half of 2022, he said.

The recent drop in solar prices meant Chinese panels are selling for around half of manufacturing cost for members of Europe’s solar-manufacturing industry association, said Johan Lindahl, the group’s secretary-general. Around 40% of the panels manufactured this year by members who responded to the association’s survey were languishing in inventory.

One Norwegian producer of solar wafers, a key panel component, went bankrupt in August. Its sole remaining European rival, NorSun, stopped production in recent weeks because its customers—mostly European solar cell and panel manufacturers—weren’t able to sell their products, said Carsten Rohr, NorSun’s chief commercial officer.

At this rate, Europe’s dependence on Chinese solar is increasing rather than decreasing, said Gunter Erfurt, chief executive of Swiss solar cell and panel manufacturer Meyer Burger MBTN 0.24%increase; green up pointing triangle. The company has opted to postpone its planned European expansion and instead ship the manufacturing equipment to a new factory in the U.S., which has offered big government subsidies to solar manufacturers.

Market watchers say the oversupply may work itself out faster than expected, because some companies are likely to cancel or postpone expansion plans and others are retiring old factories in favor of new ones.

Still, some Chinese industry executives such as Liu Yiyang, deputy secretary-general of the China Photovoltaic Association, are calling for local governments to tap the brakes on green-tech investment.

In January, the Shenzhen Stock Exchange issued a letter of concern to Suzhou Shijing Technology 301030 2.04%increase; green up pointing triangle, known for its pollution-control equipment. The exchange asked Shijing from where it was drawing its investment capital of $1.5 billion to build a solar-cell factory. The company’s total assets are valued at only $450 million.

In its reply, Shijing said 60% of the investment would be provided by the local government, including building the factory infrastructure and dormitories as well as granting equipment and electricity subsidies.

When asked about the progress of the solar project, Shijing referred to its public statements. In the latest quarterly report in October, the company noted it was proceeding in an orderly manner.

FT : OpenAI chief seeks new Microsoft funds to build ‘superintelligence’

OpenAI chief seeks new Microsoft funds to build ‘superintelligence’
Sam Altman expects big tech group will back start-up’s mission to create software as intelligent as humans

OpenAI plans to secure further financial backing from its biggest investor Microsoft as the ChatGPT maker’s chief executive Sam Altman pushes ahead with his vision to create artificial general intelligence (AGI) — computer software as intelligent as humans.

In an interview with the Financial Times, Altman said his company’s partnership with Microsoft’s chief executive Satya Nadella was “working really well” and that he expected “to raise a lot more over time” from the tech giant among other investors, to keep up with the punishing costs of building more sophisticated AI models.

Microsoft earlier this year invested $10bn in OpenAI as part of a “multiyear” agreement that valued the San Francisco-based company at $29bn, according to people familiar with the talks.

Asked if Microsoft would keep investing further, Altman said: “I’d hope so.” He added: “There’s a long way to go, and a lot of compute to build out between here and AGI . . . training expenses are just huge.”

Altman said “revenue growth had been good this year”, without providing financial details, and that the company remained unprofitable due to training costs. But he said the Microsoft partnership would ensure “that we both make money on each other’s success, and everybody is happy”.

In the latest sign of how OpenAI intends to build a business model on top of ChatGPT, the company announced a suite of new tools, and upgrades to its existing model GPT-4 for developers and companies at an event on November 6 attended by Nadella.

The tools include custom versions of ChatGPT that can be adapted and tailored for specific applications, and a GPT Store, or a marketplace of the best apps. The eventual aim will be to split revenues with the most popular GPT creators, in a business model similar to Apple’s App Store.

“Right now, people [say] ‘you have this research lab, you have this API [software], you have the partnership with Microsoft, you have this ChatGPT thing, now there is a GPT store’. But those aren’t really our products,” Altman said. “Those are channels into our one single product, which is intelligence, magic intelligence in the sky. I think that’s what we’re about.”

To build out the enterprise business, Altman said he hired executives such as Brad Lightcap, who previously worked at Dropbox and start-up accelerator Y Combinator, as his chief operating officer.

Altman, meanwhile, splits his time between two areas: research into “how to build superintelligence” and ways to build up computing power to do so. “The vision is to make AGI, figure out how to make it safe . . . and figure out the benefits,” he said.

Pointing to the launch of GPTs, he said OpenAI was working to build more autonomous agents that can perform tasks and actions, such as executing code, making payments, sending emails or filing claims.

“We will make these agents more and more powerful . . . and the actions will get more and more complex from here,” he said. “The amount of business value that will come from being able to do that in every category, I think, is pretty good.”

The company is also working on GPT-5, the next generation of its AI model, Altman said, although he did not commit to a timeline for its release.

It will require more data to train on, which Altman said would come from a combination of publicly available data sets on the internet, as well as proprietary data from companies.

OpenAI recently put out a call for large-scale data sets from organisations that “are not already easily accessible online to the public today”, particularly for long-form writing or conversations in any format.

While GPT-5 is likely to be more sophisticated than its predecessors, Altman said it was technically hard to predict exactly what new capabilities and skills the model might have.

“Until we go train that model, it’s like a fun guessing game for us,” he said. “We’re trying to get better at it, because I think it’s important from a safety perspective to predict the capabilities. But I can’t tell you here’s exactly what it’s going to do that GPT-4 didn’t.”

To train its models, OpenAI, like most other large AI companies, uses Nvidia’s advanced H100 chips, which became Silicon Valley’s hottest commodity over the past year as rival tech companies raced to secure the crucial semiconductors needed to build AI systems.

Altman said there had been “a brutal crunch” all year due to supply shortages of Nvidia’s $40,000-a-piece chips. He said his company had received H100s, and was expecting more soon, adding that “next year looks already like it’s going to be better”.

However, as other players such as Google, Microsoft, AMD and Intel prepare to release rival AI chips, the dependence on Nvidia is unlikely to last much longer. “I think the magic of capitalism is doing its thing here. And a lot of people would like to be Nvidia now,” Altman said.

OpenAI has already taken an early lead in the race to build generative AI — systems that can create text, images, code and other multimedia in seconds — with the release of ChatGPT almost a year ago.

Despite its consumer success, OpenAI seeks to make progress towards building artificial general intelligence, Altman said. Large language models (LLMs), which underpin ChatGPT, are “one of the core pieces . . . for how to build AGI, but there’ll be a lot of other pieces on top of it”.

While OpenAI has focused primarily on LLMs, its competitors have been pursuing alternative research strategies to advance AI.

Altman said his team believed that language was a “great way to compress information” and therefore developing intelligence, a factor he thought that the likes of Google DeepMind had missed.

“[Other companies] have a lot of smart people. But they did not do it. They did not do it even after I thought we kind of had proved it with GPT-3,” he said.

Ultimately, Altman said “the biggest missing piece” in the race to develop AGI is what is required for such systems to make fundamental leaps of understanding.

“There was a long period of time where the right thing for [Isaac] Newton to do was to read more math textbooks, and talk to professors and practice problems . . . that’s what our current models do,” said Altman, using an example a colleague had previously used.

But he added that Newton was never going to invent calculus by simply reading about geometry or algebra. “And neither are our models,” Altman said.

“And so the question is, what is the missing idea to go generate net new . . . knowledge for humanity? I think that’s the biggest thing to go work on.”

FT : UK Takeover Panel falls victim to deal drought

UK Takeover Panel falls victim to deal drought
City mergers and acquisitions regulator posts rare loss after fees from deals dip

The UK’s Takeover Panel has become an unexpected casualty of the dealmaking drought, reporting its first deficit in almost a decade.

The City of London mergers and acquisitions watchdog, which funds itself from fees charged on transactions and filings, said it recorded a £3.8mn deficit after tax in the year to March. That marked the first such loss since 2014, according to data compiled by the Financial Times.

Staffed by a combination of employees and secondees from law firms and banks, the Takeover Panel’s limited formal powers belie the influence it wields over the City’s community of M&A bankers and lawyers.

The handful of instances where the regulator, which is an independent public body, has publicly censured dealmakers are an indication of how strictly its rules are observed. In the Panel’s 55-year history it has only deployed its most severe sanction — the “cold shoulder” that ostracises its recipients from the UK financial sector — four times, most recently with the former Rangers chair Dave King.

Credit Suisse and Freshfields were among those that received a rare “statement of public criticism” in 2015 for the way they advised on the creation of London-listed coal miner Bumi five years earlier; that was the first time the panel had ever censured a law firm.

The Takeover Panel’s income has dropped alongside a broader downturn in dealmaking, as a sharp rise in interest rates has ratcheted up the cost of debt and hit company valuations. The panel also reduced some of its fees, shrinking its income further.

“In the second half of the year, from October 2022 to March 2023, activity fell markedly in the face of inflation and rapidly increasing interest rates,” the panel said in its annual report.

“This substantial decline in market activity, coupled with exceptional legal costs this year, has led to the panel recording its first deficit for several years,” it added.

The Takeover Panel’s income fell 25 per cent in the year to March, to £11.4mn. Expenses climbed from £13.5mn to £15.7mn because of “significant increases in legal costs and IT expenditure”. The panel still has a substantial accumulated surplus of £33.5mn.

The number of firm takeover offers fell 20 per cent to 48, underlining the slowdown after the boom year of 2021. Just 12 of the deals had an offer value of greater than £1bn, down from 16 a year earlier, and none of the larger offers came after October as activity ground to a halt.

In its annual report published in July, the panel said there were signs of an increase in activity but warned that “it is not yet clear how strong or sustained this will be”.

However, data compiled by the London Stock Exchange Group showed that M&A involving a UK company fell 45 per cent in the nine months to September, compared with the same time a year earlier. That is the lowest figure for the period since 2009.

The panel is currently led by director-general Ian Hart, previously co-chair of UK investment banking at UBS.

FT :Carmakers step up EV discounts in bid to stem global demand slowdown

Carmakers step up EV discounts in bid to stem global demand slowdown
Sharp deceleration in sales growth as mainstream buyers’ appetite proves weaker than expected

Carmakers in leading western markets have significantly increased the range and scale of discounts they offer on electric vehicles in a bid to counter weaker-than-expected appetite for battery models among mainstream buyers.

Sales and financial data compiled by HSBC shows carmakers are, for the first time, having to offer deals on battery models in order to shift vehicles that previously had months-long waiting lists.

In the UK, the average discount in October was 11 per cent below the recommended retail price. In the US, discounts on EVs were at 10 per cent. A year ago, discounts were barely offered in Germany where companies are now cutting prices about 7 per cent to attract buyers.

Rising prices, negative publicity around charging and safety, political attacks on EVs as well as greater caution from mass market buyers have contributed to a sharp deceleration in sales growth.

It is the first global slowdown in EV demand since sales took off three years ago, raising concerns that car companies will be forced to sacrifice profitability by offering discounts in order to hit clean air or emissions targets across the world.

“There are clear signs of carmakers pushing EVs”, said Mike Tyndall, autos analyst at HSBC. “This was almost unthinkable at the start of the year.”


In the UK, two-thirds of new EVs sold are on offer or have heavily discounted interest rates for financing, according to numbers from AutoTrader. In the US, discounts offered on EVs have tripled in the past 12 months. 

Discounting in Germany has remained steady at 7 per cent over the past few months, but some carmakers there are still offering up to a fifth off their best-selling models.

Tesla, meanwhile, has consistently cut prices in Europe, the US and China, to support vehicle sales, denting resales values of models from rival brands. 

The warning signs have started flashing. VW delayed plans for a fourth battery factory, citing “sluggish” EV demand in Europe, while Mercedes-Benz blamed a “brutal” price war in China for falling profits. 

“The whole market has suddenly come off the boil,” said one senior auto executive.

Until recently, carmakers ploughed billions into developing EVs, spurred on by tightening emissions rules and the promise of an ocean of untapped consumer demand.

For years, the growth of the EV industry was held back by supply and some of the oversupply comes as manufacturers ramp up production. Nevertheless, decelerating demand growth has led to discounting that threatens the long-term pricing of the segment. 

The slowdown comes as carmakers struggle to convince a new tranche of buyers to switch from petrol or diesel. After the enthusiasm of the early adopters, the mass market is proving much less forgiving of the foibles of battery motoring. 

“We were always going to come to the point where the early adoption phase was going to finish, and you were going to need to make the transition to mass adoption,” said Alex Smith, who runs Volkswagen in the UK.

“At that point, you have a slightly different consumer mindset, people who want a really high degree of rational convincing, and have slightly higher bars on the conditions they demand before making a switch”. 

Those higher bars include price, and greater worries over charging infrastructure, and bad publicity about charging and safety.

The primary concern was infrastructure, said Thomas Becker, head of sustainability at BMW. “As soon as people have the confidence that infrastructure is not what’s going to stop them, then the other factors kick in.” 

Price has always been an issue for EVs, which tend to be more expensive than petrol cars although being cheaper to run.

Previously, falling battery prices and technology improvements put EVs within striking distance of petrol rivals. Consumers who could charge at home would find their overall costs — sometimes called the “Total Cost of Ownership” — were at parity with engine cars.

However, higher interest rates pushed up financing costs and put an end to that.

Car prices have risen across the board, but the price of EVs increased faster, with leasing costs increasing more for battery-run cars because of a steeper fall in resale values.


Three years ago, one leading European car group offered some petrol and electric models at the same leasing rate at the same profit margin. Today, the vehicles are far apart on financing costs, according to an executive. 

And while many business buyers receive generous tax incentives, retail buyers are finding the increased prices harder to swallow, especially in markets such as the UK that have wound down purchase incentives.

“Retail demand has been more challenging,” admits Fiona Howarth, who runs the lease business Octopus EV, which sells cars in the UK and US. “Interest rates and residual values had made monthly payments higher, so finance deals are now much more expensive across the board,” she said.

This leaves the carmaker with an unpalatable choice: sacrifice margin to hit EV targets, or hold the margin firm and slow the transition to electric and risk losing ground to other rivals, especially Chinese manufacturers.

Steep price cuts have already come in for several best-selling models according to HSBC.  

In Germany last month, there was 20 per cent off the BMW i4, 11.5 per cent off the MG4 and 11pc off the Dacia Spring, which is a new lower-cost model from Renault’s entry-level brand. 

In the UK, the electric Fiat 500 and the Peugeot 208e — both models from Stellantis — were each discounted by more than 22 per cent, while VW ID3 and its sister car the Škoda Enyaq were offered with 12 per cent off. 

In the US, Hyundai was discounting the Ioniq 5 by $9,400, while Ford cut $6,700 from the price of a Mustang Mach-E, whose buyers separately qualify for a partial EV tax credit. 

Yet there is another leading factor that is putting people off buying an EV: government policy.

There are now cracks in the once dead-certainty that EVs were the only option for the future.


The decision by Brussels earlier this year to allow new petrol cars running on synthetic e-fuels to be sold after 2035, a concession handed to Germany after a flurry of lobbying, sent shockwaves across the bloc.

“People are very confused because they hear different messages in Europe now,” said Linda Jackson, head of Peugeot. Customers who thought they had to go with an EV are suddenly told there are alternatives, no matter how niche.

In the UK, the decision to postpone a ban on selling new petrol cars from 2030 until 2035 has changed the mood music around EVs.

“Anyone who was almost [about to buy an EV] has thought they have five more years now,” said Darren Ardron, who runs the Perrys dealership group in the UK. 

Consumers have also been bombarded with negative stories from anti-EV media outlets in several countries about long queue times for chargers and claims about battery fires.

“The idea of people seeing media reports all the time about queueing at a charger, that wouldn’t be good,” said BMW’s Becker, who added he did not have to queue once at a charging station while taking an electric road-trip across France earlier this summer. 

But despite the growing pessimism surrounding the industry, some executives are taking a long-term view.

Lakshmi Moorthy, UK head of BNP Paribas’ leasing group Arval, said it will “take time” for consumers to be confident to make the switch.

“We must remember: these are the early blips on what is a longer journey.”

FT : UK to press ahead with carbon border tax in 2026

UK to press ahead with carbon border tax in 2026
Programme would mirror scheme launched by EU

Jeremy Hunt, the UK chancellor, is planning to introduce levies on imported carbon-intensive goods from countries with weaker climate regulations from 2026, mirroring measures being introduced by the EU.

The plan, which could be announced in this month’s Autumn Statement, follows a consultation earlier this year on whether to introduce a “carbon border adjustment mechanism”, or CBAM, to protect industries from unfair competition from regions with lower carbon costs.

The EU soft-launched its CBAM programme in September to tackle “carbon leakage”, when companies move production to countries with weaker or non-existent carbon costs while retaining free access to markets where heavy industry pays for emissions.

Hunt is expected to announce that the UK will launch its own CBAM programme in 2026, when the EU mechanism takes effect, to avoid the risk of the UK becoming a dumping ground for carbon-intensive products facing levies by the EU.

Confirmation that the government was going ahead with the plan would be welcomed by UK industries, although officials cautioned that cross-Whitehall negotiations were continuing and any announcement could slip to the spring Budget. 

“As the UK steel industry is transiting to green steel production, it is essential that it is not continually outcompeted by high-emission, imported steel,” said Gareth Stace, director-general of trade body UK Steel.

“Europe is implementing its own CBAM, and the UK risks a damaging trade barrier with our biggest trade partner if we don’t develop and implement our own measures quickly.”

The government also faces a challenge in aligning its own carbon market with the EU’s to avoid British manufacturers facing levies on their own exports under CBAM, as carbon prices in the UK market are far lower than those on the EU market.

The Treasury raised the prospect of a CBAM in its net zero review in October 2021 but warned it would be complicated to implement. Rishi Sunak, the prime minister, said earlier this year that the idea was “reasonable and sensible” and hinted that Britain could co-operate with Brussels over its plans. 

The EU’s CBAM, which initially requires importers to collect information without charging the levy, has been “the biggest climate law ever in Europe, and some say in the world”, Peter Liese, lead negotiator for the European parliament, said last year.

Companies selling products such as iron, cement, fertiliser and power supplies into Europe from outside the bloc, and who do not face comparable carbon costs, will face new levies linked to the carbon price under the EU Emissions Trading System.

But regardless of whether the UK creates a CBAM, if it does not legally link its carbon pricing to the EU’s, British exports could still face levies if UK carbon prices remain lower.

Even exports of renewable electricity could face levies because it is not possible to identify whether power supplies come from green sources or fossil fuels when exporting from one grid to another.

“Linking our carbon pricing regime with the EU’s would exempt UK companies from these costs,” said Adam Berman, deputy director of industry body Energy UK.

The UK’s post-Brexit carbon market is a close copy of the EU ETS, but this year British carbon prices fell sharply as Sunak’s government made more carbon allowances available than previously expected. The UK carbon price is about £41 a tonne compared with £66 (€76) a tonne in the EU.

Energy UK calculates the Treasury is losing out on almost £3bn of revenue annually from weak carbon prices and has warned that about £500mn a year in border taxes will in effect be captured by the EU rather than the UK if prices continue to trade at a discount.

Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said a CBAM could help reinstate some green investor confidence that was “shaken” by Sunak’s net zero U-turns in September.

“With the EU leaping ahead with its CBAM, and the ever-present spectre of the US Inflation Reduction Act luring low-carbon investment across the Atlantic, the UK really does have to act.”

A survey last month of 400 senior managers in the UK manufacturing industry covering sectors from construction and machinery to automotives and food found that three-quarters backed the introduction of a UK CBAM, with only 8 per cent opposing it.

The survey, commissioned by think-tank E3G, found that seven in 10 British manufacturers said any future UK carbon border measure should be compatible with the European scheme.

But CBAM has been criticised by some trading rivals — in particular the US, China and South Africa — who believe the policy will unfairly penalise their manufacturers. 

The Treasury said it would announce its next steps in due course. “We do not comment on speculation ahead of fiscal events.”

>>> Europe : Brokers Upgrades & Downgrades - 13rd of November 2023 V2(+)

>>> Up
* ADP Raised to Buy at Deutsche Bank (+)
* Aker Solutions Raised to Overweight at Barclays; PT 63 kroner
* Alfen Raised to Outperform at Oddo BHF; PT 45 euros
* AlzChem Group Raised to Buy at Baader Helvea; PT 29 euros
* Brookfield Renewable Partners Raised to Outperform at RBC
* Evonik Raised to Buy at SocGen; PT 25 euros
* GN Store Nord Raised to Buy at Carnegie (+)
* M&G Raised to Neutral at JPMorgan; PT 220 pence
* Monte Paschi Raised to Buy at Deutsche Bank; PT 4.10 euros
* Oracle Raised to Buy at Edward Jones
* Pandora Raised to Outperform at CICC; PT 954 kroner
* TGS Raised to Equal-Weight at Barclays; PT 200 kroner
* Trelleborg Raised to Buy at Pareto Securities; PT 350 kronor
* Wise Raised to Buy at Peel Hunt on Business Model Resilience

>>> Down
* AKVA Cut to Sell at DNB Markets; PT 65 kroner (+)
* Aperam Cut to Add at AlphaValue/Baader
* Borgestad Cut to Hold at Norne Securities; PT 0.38 kroner
* Diageo PT Cut to 2,600 pence from 3,000 pence at Morgan Stanley
* Dr Martens Cut to Equal-Weight at Barclays; PT 140 pence
* Fraport Cut to Sell at Deutsche Bank (+)
* GARO AB Cut to Hold at DNB Markets; PT 31 kronor
* Plug Power Cut to Peerperform at Wolfe
* PGS Cut to Equal-Weight at Barclays; PT 13 kroner
* Sonae Cut to Hold at Bestinver; PT 1 euro (+)
* Technip Energies Cut to Underweight at Barclays; PT 26.50 euros
* Unity Software Cut to Peerperform at Wolfe

>>> Initiation
* B&C Speakers Rated New Buy at GBC AG; PT 23 euros
* Bridgepoint Resumed Equal-Weight at Morgan Stanley; PT 223 pence
* Cembre Rated New Buy at GBC AG; PT 42 euros
* COCA-COLA INITIATED HOLD AT JEFFERIES, PT $64
* Colgate-Palmolive Reinstated Buy at Jefferies; PT $87
* Enav Rated New Buy at GBC AG; PT 5.15 euros
* Energy Srl Rated New Buy at GBC AG; PT 2.75 euros
* Giglio Rated New Buy at GBC AG; PT 4 euros
* ID-Entity Rated New Buy at GBC AG; PT 7.10 euros
* Kempower Rated New Buy at SEB Equities; PT 38 euros
* MOLSON COORS RATED NEW HOLD AT JEFFERIES, PT $62
* MONSTER INITIATED BUY AT JEFFERIES, PT $65
* PEPSICO INITIATED BUY AT JEFFERIES, PT $203
* PROCTER & GAMBLE RATED NEW BUY AT JEFFERIES, PT $177
* Reply Rated New Buy at GBC AG; PT 122 euros
* Sanlorenzo/Ameglia Rated New Buy at GBC AG; PT 52.75 euros
* Solid World Group Rated New Buy at GBC AG; PT 6 euros
* Tesla Rated New Overweight at Guotai Junan Sec; PT $248.20 (+)
* Zignago Vetro Rated New Buy at GBC AG; PT 25 euros

>>> Call
* ABB Growth Potential Sees Citi Open Positive Catalyst Watch
* Goldman’s Kostin Says Earnings Forecasts Are Worrying Investors
* Morgan Stanley Sees Bullish Opportunities for US Assets in 2024
* Richemont PT cut at Kepler and Vontobel, 1H Signals Lower Profit (+)

>>> Stoxx 600 Pre-Market Indications

  • Novo (NOV TH) +3.5%
    • Novo Trial Shows Wegovy’s Heart Benefit in Obesity Patients (2)
    • Novo Obesity Outcomes Data and Implications: a Prescriber’s View
  • Evolution (E3G1 TH) +2.2%
  • BT (BTQ TH) +2.1%
  • Essity (ESWB TH) +1.9%
  • Vodafone (VODI TH) +1.9%
  • Nibe (NJB TH) +1.6%
  • Diageo (GUI TH) +1.6%
    • Diageo PT Cut to 2,600 pence from 3,000 pence at Morgan Stanley
  • AstraZeneca (ZEG TH) +1.4%
    • AstraZeneca’s Expansive Oncology Pipeline Suggests a Busy 2024
  • LVMH (MOH TH) +1.3%
  • Talanx (TLX TH) +1.3%
    • Talanx 3Q Ebit EU802M
  • AB InBev (1NBA TH) -0.7%
  • Fresenius SE (FRE TH) -0.8%
  • UPM-Kymmene (RPL TH) -1.2%
  • Fresenius Medical (FME TH) -1.6%