FT : Beware ‘death by GPT syndrome’

Beware ‘death by GPT syndrome’
Generative AI has uses for the legal and health professions but is also a trap for the unwary

Next week, a veteran New York lawyer of 30 years’ standing will face a disciplinary hearing over a novel kind of misdemeanour: including bogus AI-generated content in a legal brief.

Steven Schwartz, from the firm Levidow, Levidow & Oberman, had submitted a 10-page document to a New York court as part of a personal injury claim against Avianca airlines. The trouble was, as the judge discovered on closer reading, the submission contained entirely fictional judicial decisions and citations that the generative AI model ChatGPT had “hallucinated”.

In an affidavit, the mortified Schwartz admitted he had used OpenAI’s chatbot to help research the case. The generative AI model had even reassured him the legal precedents it cited were real. But he acknowledged that ChatGPT had proved to be an unreliable source. Greatly regretting his over-reliance on the computer-generated content, he added that he would never use it again “without absolute verification of its authenticity”. One only hopes we can all profit from his “learning experience” — as teachers nowadays call mistakes.

As many millions of people have discovered, ChatGPT can create extremely plausible, but highly fallible, content. When generative AI companies trumpet how their models are capable of passing legal and medical exams, it is not unreasonable for users to believe they are smarter than they are. 

However, in the polite words of the computational linguist Emily Bender, these models are nothing more than “stochastic parrots”, mimicking machines designed to produce the most statistically probable — not the most accurate — answer, without any concept of meaning. Or, in the less polite words of one tech executive, they are world-class bullshit generators, as Schwartz has discovered to his cost. 

Our naive faith in technology has a long history. We have a tendency to over-trust the computer, sometimes with fatal results, as is the case with “death by GPS syndrome”. Ignoring the evidence of our own eyes, car drivers have blindly followed errant GPS navigation systems on to exit ramps for highways or into the scorching heat of California’s Death Valley. A 2017 research paper identified 158 catastrophic incidents involving GPS devices, leading to 52 deaths. But, as the paper noted, what goes unrecorded are the countless cases when drivers are saved by those same devices.

Unless we are careful, future researchers might one day write papers on “death by GPT syndrome”. How far will users, and healthcare staff, unwisely rely on a chatbot for medical advice, for example? Warnings have been posted on OpenAI’s site telling users that ChatGPT can produce incorrect or misleading information and is not intended to give advice. But the World Health Organization has already seen fit to warn about errors caused by the precipitous adoption of untested generative AI systems — even if it remains enthusiastic about the technology’s longer-term potential for improving healthcare. 

In spite of their alarming technological glitches, it is clear that generative AI models will have a massive impact on the legal and health professions, and many others. Smaller, domain-specific, open-source models are proliferating, threatening to automate away much routine knowledge work.

The professional services firm PwC has signed a 12-month contract with the legal tech start-up Harvey to assist its 4,000 lawyers. Harvey’s software, based on OpenAI’s latest GPT-4 model, will be used to analyse contracts and conduct due diligence. But PwC insists that the start-up will not provide direct legal advice or replace lawyers.

Another such model is run by the start-up Scissero, founded by Mathias Strasser, a former counsel at the US law firm Sullivan & Cromwell. Scissero has launched a chatbot called Mike (also the name of a fellow lawyer of Harvey’s in the television series Suits), which has been trained on real-world legal scenarios to draft emails and mark up legal documents.

Strasser argues that the core competence of lawyers is reading, interpreting and writing language. That is also the core competence of generative AI models. “The legal industry is based on words. Lawyers are outsourced word processors,” Strasser tells me. “With GPT, you can call on a whole army of paralegals.”

But just as senior lawyers should always take responsibility for the briefs written by their over-caffeinated human paralegals at 3am, so they must critically scrutinise the output of generative AI models and be aware of their flaws. Things can, and do, go wrong. Just ask the unfortunate Schwartz.

FT : The world’s first meme bond (ish)?

The world’s first meme bond (ish)?
Evaporating half a yard is a good start at least

A year ago Gary Gensler was in London, and in a speech on the SEC efforts to reform the fixed income markets jokingly lamented that “there are no meme bonds, at least not yet”.

So, it’s not strictly speaking a plain vanilla bond . . . but Alphaville reckons that this could a good contender?


The cocaine bear in question is called the Direxion Daily 20+ Year Treasury Bull 3X Shares ETF. For those that don’t speak financial gobbledegook, that means that its an exchange-traded fund managed by Direxion that uses leverage to deliver three times the daily return of long-term Treasuries. You can read its prospectus here.

The problem with leveraged ETFs is that they also get absolutely smashed when the market moves in the opposite direction. And in the long run, high management fees and the constant rolling of the underlying derivatives tends to incinerate money. They’re basically only useful as short-term trading instruments for bros with eToro and Robinhood accounts.

For example, TMF (the aforementioned ETF’s stock market ticker) has an 1.06 per cent annual expense ratio even before the cost of the roll, compared to 0.03-0.1 per cent for plain vanilla equity ETFs. And then there’s the fact that duration-heavy, rate-sensitive Treasuries were brutalised last year.

Here is the performance of TMF over the past five years:

But as Bloomberg’s Katie Greifeld points out, TMF suddenly seems to have sucked in a lot of money from retail punters betting that the fabled Fed pivot is coming.

Sizewise its almost $2bn of assets under management is still dwarfed by its unleveraged cousin, BlackRock’s $36bn iShares 20+ Year Treasury Bond ETF, or TLT. Underscoring the peaking-rates-bet frenzy, TLT has taken in over $10bn this year.

But TLT is probably just too sedate to ever qualify as the first ever meme bond. To use Katie’s terminology, its cocaine bear energy is de minimis. While it’s still early days for TMF, if performance starts matching and eventually reinforcing flows, you could see it gain more traction on Reddit.

The fact that it’s actually taken in a net $2.4bn of capital since inception and incinerated half a yard of it already is certainly very meme-y.

>>> US Research Calls

Research Calls

  • Upgrades:
    • Alteryx (AYX) upgraded to Buy from Neutral at BofA Securities; tgt raised to $70
    • BRF SA (BRFS) upgraded to Neutral from Underperform at BofA Securities
    • Bluebirdbio (BLUE) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $8
    • C3.ai (AI) upgraded to Outperform from Neutral at Wedbush; tgt raised to $50
    • Chevron (CVX) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $180
    • Chewy (CHWY) upgraded to Buy from Hold at Gordon Haskett; tgt $40
    • CSX (CSX) upgraded to Buy from Neutral at UBS; tgt raised to $37
    • Domino's Pizza (DPZ) upgraded to Overweight from Neutral at JP Morgan; tgt raised to $360
    • Equitrans Midstream (ETRN) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $11
    • First Solar (FSLR) upgraded to Hold from Sell at GLJ Research; tgt $157.56
    • Intercorp Financial (IFS) upgraded to Overweight from Neutral at JP Morgan; tgt $27
    • Kingsoft Cloud (KC) upgraded to Neutral from Sell at Goldman; tgt $4.50
    • Nucor (NUE) upgraded to Peer Perform from Underperform at Wolfe Research
    • MDU Resources (MDU) upgraded to Buy from Underperform at BofA Securities; tgt $22
    • Phillips 66 (PSX) upgraded to Outperform from Market Perform at TD Cowen; tgt raised to $123
    • TFI International (TFII) upgraded to Buy from Neutral at UBS; tgt raised to $143
    • Veeva Systems (VEEV) upgraded to Buy from Neutral at Guggenheim; tgt $226
  • Downgrades:
    • Adicet Bio (ACET) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $6
    • Advance Auto (AAP) downgraded to Mkt Perform from Strong Buy at Raymond James
    • Advance Auto (AAP) downgraded to Neutral from Buy at Goldman; tgt lowered to $82
    • Advance Auto (AAP) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $84
    • C3.ai (AI) downgraded to Neutral from Buy at DA Davidson; tgt $30
    • Cheniere Energy Partners (CQP) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $43
    • Exxon Mobil (XOM) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt $125
    • Johnson Controls (JCI) downgraded to Equal Weight from Overweight at Barclays; tgt $70
    • Okta (OKTA) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $85
    • Okta (OKTA) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $85
    • Sphere Entertainment Co. (SPHR) downgraded to Neutral from Outperform at Macquarie; tgt $25
    • Target (TGT) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $144
    • U.S. Steel (X) downgraded to Underperform from Peer Perform at Wolfe Research; tgt $19
    • Veritone (VERI) downgraded to Neutral from Buy at ROTH MKM; tgt lowered to $3
  • Others:
    • ABM Industries (ABM) initiated with a Neutral at UBS; tgt $48
    • Aramark (ARMK) initiated with a Neutral at UBS; tgt $42
    • ASGN Incorporated (ASGN) initiated with a Buy at UBS; tgt $80
    • Bright Horizons (BFAM) initiated with a Sell at UBS; tgt $79
    • Cintas (CTAS) initiated with a Buy at UBS; tgt $550
    • Comfort Systems (FIX) initiated with a Neutral at UBS; tgt $162
    • D.R. Horton (DHI) initiated with a Buy at Deutsche Bank; tgt $150
    • Dycom (DY) initiated with an Outperform at Raymond James; tgt $120
    • Exponent (EXPO) initiated with a Neutral at UBS; tgt $99
    • Gartner (IT) initiated with a Neutral at UBS; tgt $368
    • INmune Bio (INMB) initiated with an Outperform at Robert W. Baird; tgt $16
    • KB Home (KBH) initiated with a Hold at Deutsche Bank; tgt $49
    • Kenvue (KVUE) initiated with a Hold at HSBC Securities; tgt $27
    • Kforce (KFRC) initiated with a Neutral at UBS; tgt $62
    • Lennar (LEN) initiated with a Sell at Deutsche Bank; tgt $105
    • Madison Square Garden Entertainment (MSGE) initiated with an Outperform at Macquarie; tgt $43
    • Manpower (MAN) initiated with a Neutral at UBS; tgt $77
    • Meritage (MTH) initiated with a Buy at Deutsche Bank; tgt $200
    • NVR (NVR) initiated with a Sell at Deutsche Bank; tgt $4400
    • PulteGroup (PHM) initiated with a Buy at Deutsche Bank; tgt $95
    • Robert Half (RHI) initiated with a Buy at UBS; tgt $82
    • Rollins (ROL) initiated with a Buy at UBS; tgt $48
    • Taylor Morrison Home (TMHC) initiated with a Hold at Deutsche Bank; tgt $50
    • The Real Brokerage (REAX) initiated with an Outperform at William Blair
    • Toll Brothers (TOL) initiated with a Buy at Deutsche Bank; tgt $94
    • TRI Pointe Homes (TPH) initiated with a Buy at Deutsche Bank; tgt $42
    • UniFirst (UNF) initiated with a Neutral at UBS; tgt $185
    • VolitionRx (VNRX) assumed with a Buy at EF Hutton; tgt $6

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:

  • OKTA -19.3%, AI -17.6%, VSCO -13.3%, NCNO -12.7%, CRWD -9.9% (also granted Impact Level 5 Provisional Authorization from DoD), M -9.5%, DG -9.1%, CRM -6.3%, PVH -2.7%, CAL -1.5%

Other news:

  • LXRX -17% (stock offering)
  • LCID -13.1% (offering of 173544948 shares of its common stock for aggregate gross proceeds to Lucid of approximately $1.2 bln)
  • CRON -5.1% (to exit existing US hemp-derived CBD-focused ops)
  • BDSX -3.6% (announces three abstracts to be presented at ASCO 2023 Annual Meeting)
  • OCS -2% (pricing of a follow-on public offering of 3500000 ordinary shares at a public offering price of $11.50 per ordinary share)
  • NIO -2% (May deliveries)
  • XPEV -0.8% (May deliveries)
  • LI -0.6% (May deliveries)

Analyst comments:

  • ACET -4.6% (downgraded to Neutral from Overweight at JP Morgan)
  • SPHR -1.1% (downgraded to Neutral from Outperform at Macquarie)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • CHWY +16.5%, VEEV +9%, PSTG +5.2%, NTAP +4.9% (also authorizes addiitonal $1 bln share repurchase program), JWN +3.3%, PHR +2%, HRL +1.7%, CRDO +1.3%, CONN +1%, SPTN +0.9%

Other news:

  • AMRN +6% (commercial partner in China EddingPharm has received regulatory approval for VASCEPA)
  • MSA +5% (names new COO)
  • OB +4.8% (cuts workforce by 10%)
  • CLLS +4.2% (announces publication of artcile on UCART20x22)
  • DHT +2.5% (acquires vessel)
  • HIW +2.5% (announces non-core asset sales of $40.2 mln)
  • NRG +2% (entered into a definitive agreement to sell its 44% equity interest in South Texas Project Electric Generating Station to Constellation Energy (CEG) for a purchase price of $1.75 bln)
  • SLDP +1.4% (names new CEO)
  • ZIP +1.3% (to reduce headcount by 270; reaffirms guidance)

Analyst comments:

  • AYX +5% (upgraded to Buy from Neutral at BofA Securities)
  • DPZ +2.1% (upgraded to Overweight from Neutral at JP Morgan)
  • MDU +1.6% (upgraded to Buy from Underperform at BofA Securities)
  • CSX +1.5% (upgraded to Buy from Neutral at UBS)
  • IFS +1.2% (upgraded to Overweight from Neutral at JP Morgan)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • CHWY +18%, VEEV +9.3%, JWN +7.2%, MSA +5%, PSTG +5%, NTAP +4.9%, OB +4.8%, CLLS +4.2%, AMRN +3.4%, BILI +3.4%, KRP +2%, SLDP +1.8%, ZIP +1.3%, CRDO +1.3%, HRL +1.2%
  • Gapping down:
    • AI -21.2%, OKTA -20%, LXRX -15.5%, VSCO -14.7%, CRWD -10.5%, LCID -10.4%, NCNO -7.7%, CONN -6.2%, CRM -5.5%, CRON -5.1%, BDSX -3.6%, OCS -2%, NIO -2%, PVH -1.5%, CAL -1.5%

i24 : Russian oligarchs and Iranian drones: New details emerge about meeting on

Russian oligarchs and Iranian drones: New details emerge about meeting on capsized spy boat

‘It wasn't a birthday party,’ says an Israeli official about the event onboard a capsized boat in which Israeli and Italian spies were gathered

New details are emerging about the circumstances of the meeting aboard a boat that capsized in Italy's Lago Maggiore on Tuesday, adding mystery and intrigue to the tragic disaster. After the Mossad confirmed that the Israeli who died was a retired intelligence agent, a former official from Israel's spy agency revealed new details about what he, and ten other Israeli agents, may have been doing aboard the ship in northern Italy.

"He was not there for vacation or a birthday party. It was not an operational mission, but it was related to his work," hinted Israeli lawmaker, and former deputy head of the Mossad, Ram Ben Barak, in an interview with Israeli radio Reshet Bet.

"It is a great pity that such a special man has left us," he continued. "It's true, one day you are the king of the world and at the end of any such activity you return home and you are a normal person, when you retire you are just a normal person."

"It's very hard work, sometimes also very Sisyphean, you can sit for 20 hours without moving and wait for someone to come out, it's not much fun," added Ben Barak, "but there are also crazy and very satisfying moments."

Italian investigative reporting, led by Corriere Della Sera, discovered the mysterious figures on the other side of the lake's shores. In the Piedmont region, but near the lake, there were reports of "heavy" Russian presence, with large real estate holdings.

Despite sanctions on many Russian oligarchs as a result of the war in Ukraine, money has continued to flow in Europe, particularly through Switzerland as well as Italy. Helped by willing foreign companies of friends, or by the movements of the wives and mistresses of the oligarchs, they have been able to continue their luxurious lives and meet with mysterious figures.

The Italian report suggested the Israelis may have been "monitoring contacts between Italian and Iranian firms," that were engaged in "dealing with civilian components used for drones" that could be used in the war in Ukraine. In addition, the area is home to a number of wealthy Italian Jews who have regular contact with high level local and international politicians, cultural figures, and other personas of note. The report suggests that the intelligence agents may have been completing or undertaking a mission related to either set of figures residing in the area, with the rapid extradition by the Italian and Israeli spy agencies only increasing the intrigue.

Le fig : Le PDG de Casino Jean-Charles Naouri en garde à vue

Le PDG de Casino Jean-Charles Naouri en garde à vue dans le cadre d'une enquête pour manipulation de cours

L'enquête a été ouverte en 2020 par le Parquet national financier (PNF), pour des faits qui remonteraient à 2018 et 2019.

Le PDG de Casino Jean-Charles Naouri a été placé en garde à vue ce jeudi 1er juin dans les locaux de la police judiciaire parisienne dans le cadre d'une enquête pour manipulation de cours et délit d'initié notamment, a-t-on appris de source proche du dossier.

Le PDG est auditionné par la Brigade financière, a précisé cette source, confirmant une information du JDD. L'enquête a été ouverte en 2020 par le Parquet national financier (PNF) pour des faits qui remonteraient à 2018 et 2019.

La semaine dernière, Jean-Charles Naouri, à la tête de Casino depuis 25 ans, a demandé au président du tribunal de commerce de Paris l'ouverture une procédure de conciliation, afin de négocier avec les créanciers du distributeur, qui étouffe sous 6,4 milliards d'euros de dettes.

Plus d'informations à venir...